���������������������PRIVATE, PUBLIC & GLOBAL ENTERPRISES���� Prepared by:� MRS JENI TR� PGT Commerce � JNV Kodagu

What is a Private Sector?

The private sector consists of business owned by individuals or a group of individuals.

What is a Public Sector?

The Public Sector consists various organizations owned and managed by the government.

Forms of Public Sector Enterprises

1. Departmental Undertakings
2. Statutory Corporations
3. Government Company

What are Departmental Undertakings?

• It is the oldest form of organizing public enterprises
• These enterprises are established as departments of the ministry.
• The government functions through these departments.
• They are neither autonomous nor independent

Examples of Departmental Undertakings

1. Railways
2. Postal Department
3. All India Radio
4. Doordarshan

Features of Departmental Undertakings

1. They are directly funded by the government.
2. They are subject to accounting and audit controls applicable to other government activities.
3. The employees of these enterprises are government servants
4. They are under the direct control of the ministry.
5. They are accountable to the ministry

Merits of Departmental Undertakings

1) The Parliament can exercise effective control over their operations

2) High degree of public accountability

3) The revenue earned is a direct source of income of govt.

4) This form is most suitable from the point of view of national security

Demerits of Departmental Undertakings

1. Lack of Flexibility in operations
2. Lack of Initiative by the employees
3. They fail to take advantage of business opportunities
4. Red tapism – lengthy decision making process
5. Political interference from the ministry
6. Insensitivity towards consumer needs

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What are Statutory Corporations?

• They are the public enterprises brought into existence by a Special Act of the Parliament.
• This is a corporate body created by legislature with defined powers and functions.
• They have the power of the government and flexibility of private enterprises

Examples of Statutory Corporations

1) Reserve Bank of India

2) State Bank of India

3) Life Insurance Corporation

4) Employee State Insurance Corporation

5) Oil and Natural Gas Corporation

Features of Statutory Corporations

1. They are set up under an Act of Parliament.
2. They are wholly owned by the State.
3. They are body corporate.
4. They are independently financed
5. They are not subject to government departments accounting and auditing procedures
6. The employees of these enterprises are not government servants.

Merits of Statutory Corporations

1. They enjoy independence in their functioning
2. The government does not interfere in the financial matters
3. They frame their own policies and procedures
4. They are very useful for the economic development.

Demerits of Statutory Corporations

1. Less Operational flexibility in reality
2. Political interference in major decisions
3. Existence of corruption in case of public dealing
4. Restriction on the freedom of the corporation in entering into contracts

What is a Government Company?

• A Government is registered under the companies act, 2013.
• These are established for purely business purpose.
• According to Section 2 (45) of the Companies Act, 2013, a government company means any company in which not less than 51 percent of the paid up capital is held by the central government, or by any state government or partly by Central government and partly by one or more state governments and includes a company which is a subsidiary of government company.

Examples of Government Company

1. Hindustan Steel Limited
2. Steel Authority of India Limited
3. Bharat Heavy Electricals Limited
4. Madras Refineries Limited

Features of Government Company

1. It is created under the Companies Act, 2013.
2. It can file a suit in a court of law.
3. It can enter into a contract.
4. The management of the company is regulated by the provisions of the Companies Act.
5. The employees of the company were appointed according to their own rules.
6. It is permitted to raise its funds from the capital market.

Merits of Government Company

1. Separate Act is not required to form a government company
2. It has a separate legal entity
3. It enjoys autonomy (freedom) in all management decisions.
4. They play an important role in curbing unhealthy business practices

Demerits of Government Company

1. The provisions of the companies act does not have much relevance as the government is the only shareholder
2. It evades constitutional responsibility i.e. it is not directly answerable to the Parliament
3. Since the government is the only shareholder, therefore, the management and administration rests in the hands of the government.

What are Global Enterprises?

Global enterprises are those enterprises that are characterized by huge size, large number of products, advanced technology, marketing strategies and network of operations all over the world.

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