types of public sector

Before publishing your Articles on this site, please read the following pages: 1. Unable to Take Advantage of Opportunities – Sometimes good opportunities slip away because of the overcautious and conservative attitude of officials who don’t allow these undertakings to go in for risky business ventures. The government companies suffer from some limitations as discussed below: i. The public sector might provide services that a non-payer cannot be excluded from such as, services which benefit all of society rather than just the individual who uses the services. Body Corporate – These have a separate legal entity. 7. 7. When the activities are of national importance with a centralised control. Government control – The main purpose of a government company being registered like other companies, is defeated as the management and administration rests in the hands of the government since government is the sole shareholder. These have full authority to manage their profits earned from the sale of goods and services. 4. Thus, the economic development is ensured. Gas and Oil 6. It does not include private companies, voluntary organizations, and households. Limited scope – As the bureaucrat’s over­cautious and conservative approval does not allow them to take risky ventures these enterprises are unable to take advantage of business opportunities. Levels of Public sector are organized at three levels: Federal or National, Regional (State or Provincial), and Local (Municipal or County). Police Services 10. Further, a Government company may also be formed as a joint venture in which the Government holds majority of shares while the other part of share capital is subscribed by one or more than one joint venture partners. Limitations of Departmental Undertakings: The various limitations of a department and undertaking are discussed below: i. Examples of organizations in the public sector include: 1. It is a corporate body has the capacity of acting in its own name is financially independent with a clear control over a specified area or a particular type of commercial activity. A Government company is formed and registered under the Companies Act, 2013 which contains provisions relating to Government companies. 3. The various merits of a departmental undertaking are explained below: i. Centralised control – These are subject to effective control by the Parliament over their operations. Autonomous entity – Except for a few issues/matters which require prior approval of a particular ministry as per the Act, these are autonomous organisations and frame their own policies and procedures within the powers assigned to them by the Act. It can enter into contracts with third parties. It can sue and be sued by others. Hindustan Machine Tools, Hindustan Steel and Hindustan Cables were set on this pattern. Where the Government acquires a private sector company because of its mismanagement to protect the interests of the minority shareholders. 2. De facto privatisation or a renewed role for the EU? iv. Therefore, it may be more sensitive to the changing needs, tastes, etc., of the public. Control – It is subject to direct control of the ministry as it is generally considered to be a major subdivision of the Government department. The public sector was given the responsibility to fabricate the infrastructure for other sectors of the economy, focus on the key and provide for goods and services essential for the economy. 6. There is no need for registration and completion of legal formalities. Its main aim is to increase wealth. 3. They are not government or civil servants and are not governed by government rules and regulations but some of the officers of these enterprises are taken from government departments, on deputation, to head these organisations. It is established under a specific Act. There is no departmental interference by bureaucrats. Flexibility of Operations – There is considerable flexibility in the operations of a Government company. The various merits of a statutory corporation are explained below: i. Education (Schools, Libraries) 2. When the Government wants to launch a business in collaboration with a private sector partner, either foreign or Indian. It can sue or be sued and can enter into contracts under its own name. Promotions are generally based on seniority and not on the basis of performance. As a result, a suitable collaboration may be formed for technology and finances. 1. 2. Public sector institutions operate within a complex legislative framework. 8. Limited operational flexibility – In reality, all actions a statutory corporation are subject to many rules and regulations and does not enjoy as much operational flexibility as stated above. Afterwards, the corporation may raise funds through loans from the Government and financial institutions. Nominating these Directors sometimes becomes a political process. Management – A Government company is managed by a Board of Directors nominated by the Government and other shareholders. Healthcare 7. The fallacy of the ‘public sector.’. No Interference – These are autonomous bodies. 2. The enterprises are … The government exercises control over the paid up share capital of the company. They have no say in financial and administrative matters. Public sector business cases for projects, http://blog-pfm.imf.org/pfmblog/2008/02/a-primer-on-pub.html#more, http://www.privacysense.net/terms/public-sector/, Civil service reform in developing countries, https://en.wikipedia.org/w/index.php?title=Public_sector&oldid=999983916, Creative Commons Attribution-ShareAlike License. The different types of public sector enterprises are as follows: 1.Departmental undertakings : This is the oldest and most traditional form of organising public enterprises. A statutory corporation is free to decide its service conditions. iii. The public sector (also called the state sector) is the part of the economy composed of both public services and public enterprises. The key features of a statutory undertaking are stated below: i. Governed by Act – Statutory corporations are set up under an Act of Parliament and are governed by the provisions of the Act which defines the objects, powers and privileges of a statutory corporation. The disagreement with the professionals further delays decision making. 4. Supplemental Guidance: Public … Our mission is to provide an online platform to help students to discuss anything and everything about Economics. A statutory corporation is suitable in the following situations: 1. Therefore, the top management of Government companies becomes overcautious and avoids taking risky decisions even though they may be quite relevant to the changing business environment. Government employees – The employees of the enterprise are Government servants and are headed by Indian Administrative Service (IAS) officers and civil servants who are transferable from one ministry to another. Types of organisation. 5. "The Center for Responsive Politics." (d) Joint Enterprise. Misuse of Financial Autonomy – These take loans at high rate of interest to meet urgent requirements due to delay in projects. 7. Financing – Capital of such companies comes from government shareholdings and private shareholders. 3. 3. Statutory Corporations 3. Directors of a statutory corporation are nominated by the concerned Government. Ignoring Service Motive – The directors utilise their influence and powers for their own benefit instead of the social service. Its accounts are audited by a statutory auditor, for example, Comptroller and Auditor General of India in the case of Central Government’s statutory corporations. The various merits of the government companies are described below: i. Appointments – These undertakings act through government officers. Business Management, Business, Public Sector Entreprises. There is no interference of government. As a result, there is unnecessary delay in work performance. These have a financial autonomy and prepare their own budgets. This leads to wide publicity of the working of these companies. The company can enter into a contract and can acquire property in its own name. They do not have any independent legal entity or have been established as autonomous or independent institutions. "-Murray Rothbard, The Fallacy of the Public Sector[4], Libertarians and anarcho-capitalists have also argued that the system by which the public sector is funded, namely taxation, is itself coercive and unjust. Life Insurance Corporation of India (LIC), iv. These are free from unnecessary and undesirable government interference and regulations. Finance for a departmental undertaking comes through Government budget. Parliament Interference – The directors are nominated by the government. iv. Autonomy in Operations – They are free to conduct their activities. Easy Formation – Formation of a Government company is much easier as compared to a public corporation because the company is formed under the Companies Act. It has to function according to the rules and regulations of the Government. Separate legal entity – A government company has a separate legal entity, apart from the Government. As a result, many politicians and civil servants find place in the Board of Directors. Thus, it is ensured that the public money is properly utilised. Protection of Public Interest – A Government company often works in a competitive environment. Memorandum of Association contains the objects of the company and Articles of Association contains its rules and regulations. 3. 5. Corruption – In public dealings there is bound to be corruption. When specialised activities are required to be performed with considerable flexibility and autonomy. Barlow, J. Roehrich, J.K. and Wright, S. (2010). 4. The employees of the company are appointed according to their own rules and regulations as contained in the Memorandum and Articles of Association of the company. Audit and control – They are subject to accounting and audit controls applicable to other Government activities. A stake and local, and Aid to the business operations do not have administrative! May exist at any of four levels: International ( multistate entities or partnerships ) so can... The way it operates corporation and corporation management of the corporation adversely easy Financing – Financing is done by chartered... 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On 12 January 2021, at 23:10 corporation because it is done mostly by Government the Act! Proper Utilisation of funds – all actions are approved by the Parliament or State Legislature Locomotive... Up share capital is held by the Government functions through these departments are an essential part of Government power with..., professionally competent managers are required to run company according to business prudence as it is to... Under its own name and can be established by an Act of the economy composed of all levels Government...
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