II. Very Short Answer Questions

Question 1. State the different types of public sectors enterprises.

Answer:

1. Departmental Undertaking

2. Public Corporation

3. Government Company

 

Question 2. What is the basic feature of a Departmental undertaking?

Answer:

1. Formation: A departmental undertaking is established either as a separate full — fledged ministry or as a sub-division of a ministry (i.e. department) of the Government.

2. No Separate Entity: A departmental undertaking does not have an independent entity distinct from the Government.

 

Question 3. Give two examples for each of the following:

1. Private sector enterprises

2. Global enterprises

3. Public enterprises

 

Answer:

1. Private sector enterprises

• Sole proprietorship

• Partnership

2. Global enterprises

• Coca — Cola Corporation

• Unilever

3. Public enterprises

• Life Insurance Corporation

• Oil and Natural Gas Commission (ONGC)

 

Question 4. State the form of public enterprises which is most suitable for projects related to National Security.

Answer: Strategic industries like defence, and atomic power cannot be better managed other than government departments. Departmental undertakings can maintain secrecy in their working.

 

Question 5. The Industrial Policy Resolution 2001 exclusively reserved for few industries for the public sector. Name these industries.

Answer:

1. Departmental Undertaking

2. Public Corporations

3. Government Companies

 

III. Short Answer Questions

Question 1. List the areas where the state or central ownership is a preferred form of business organisation. Justify your choice of areas.'

Answer:

1. Coal Miners Authority Ltd.

2. Steel Authority of India Ltd.

3. Indian Telephone Industries

4. Tamil Nadu State Corporation Ltd.

 

A company owned by central and/or State Government is called a Government Company. Either whole of the capital or majority of the shares are owned by the Government.

Question 2. What are the different kinds of organisations that come under the public sector? Answer:

1. Departmental Undertaking

2. Public Corporations

3. Government Companies

 

Question 3. List the names of some enterprises under the public sector and classify them.

Answer: Departmental Undertaking Public Corporations Government Companies


Question 4. Define Departmental undertakings.

Answer: Departmental form of organization of managing state enterprises is the oldest form of organization. Under departmental form of organization, a public enterprise is run as a separate full-fledged ministry or as a major sub division of a department of the Government.

 

Question 5. What is meant by Government Company?

Answer: A "Government company" is defined under Section 2(45) of the Companies Act 2013 as any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company'.

 

IV. Long Answer Questions

Question 1. What are the advantages and disadvantages of Departmental undertaking?

Answer: Advantages:

1. Easy Formation: It is easy to set up a departmental undertaking. The departmental undertaking is created by an administrative decision of the Government, involving no legal formalities for its formation.

 

2. Direct and Control of Parliament or State Legislature: The departmental undertaking is directly responsible to the Parliament or the State legislature through its overall head i.e. the minister concerned.

 

3. Secrecy Maintained: Strategic industries like defense and atomic power cannot be better managed other than government departments. Department undertakings can maintain secrecy in their working.

 

Disadvantages:

1. Red Tape and Bureaucracy: There is too much of procedures which results in delay. Commercial organisation cannot afford delay in taking decisions.

 

2. Incidence of Additional Taxation: Losses incurred by a departmental enterprise are met out of the treasury. This very often necessitates additional taxation the burden of which falls on the common man.

Question 2. What are the features of Public corporation? (Any 5)

Answer:

 1. Special Statute: A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).

 

2. Separate Legal Entity: A public corporation is a separate legal entity with perpetual succession and common seal. It has an existence, independent of the Government. It can own property; can make contracts and file suits, in its own name.

 

3. Capital provided by the Government: The capital of a public corporation is provided by the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.

 

4. Financial Autonomy: A public corporation enjoys financial autonomy. It prepares its own budget and has authority to retain and utilize its earnings for its business.

 

5. Management by Board of Directors: Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day to day working of the corporation.

 

Question 3. What are the Features of Government Company? (Any 5)

Answer:

1. Registration under the Companies Act: A Government Company is formed through registration under the Companies Act 1956; and is subject to the provisions of this Act like any other company. However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications.

 

2. Executive Decision of Government: A Government company is created by an executive decision of the Government without seeking the approval of the Parliament or the State Legislature.

 

3. Separate Legal Entity: A Government company is a legal entity separate from the Government. It can acquire property; can make contracts and can file suits, in its own name.

 

4. Whole or Majority Capital Provided by Government: The whole or majority (at least 51 %) of the capital of a Government company is provided by the Government: but the revenues of the company are not deposited into the treasury.

 

5. Majority of Government Directors: Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.

 

Question 4. What are the advantages and disadvantages of Public corporation?

Advantages:

1. Bold Management due to Operational Autonomy: A public corporation enjoys internal operational autonomy: as it is free from Governmental control. It can, therefore, run in a business-like manner. Management can take bold decisions involving experimentation in its lines of activities, taking advantage of business situations.

 

2. Legislative Control: Affairs of a public corporation are subject to scrutiny by Committees of Parliament or State Legislature. The Press also keeps a watchful eye on the working of a public corporation. This keeps a check on the unhealthy practices on the part of the management of the public corporation.

 

3. Qualified and Contented Staff: Public corporation offers attractive service conditions to its staff. As such it is able to attract qualified staff.

 

Disadvantages:

1. Autonomy and Flexibility, Only in Theory: Autonomy and flexibility advantages of a public corporation exist only in theory. In practice, there is a lot of interference in the working of a public corporation by ministers, government officers and other politicians.

2. Misuse of Monopolistic Power: Public corporations often enjoy monopoly in their field of operation. As such, on the one hand they are indifferent to consumer needs and problems; and on the other hand, often do not hesitate to exploit consumers.

 

Question 5. What are the features of Departmental organisation? (Any 5)

Answer: 1. Formation: A departmental undertaking is established either as a separate full-fledged ministry or as a sub-division of a ministry (i.e. department) of the Government.

 

2. No Separate Entity: A departmental undertaking does not have an independent entity distinct from the Government.

 

3. Ultimate Responsibility: The ultimate responsibility for the management of a departmental undertaking lies with the minister concerned who is responsible to the Parliament or State Legislature for the affairs of the departmental undertaking. The minister, in turn, delegates his authority downwards to various other management levels, in the departmental undertaking.

 

4. Governmental Financing: The departmental undertaking is financed through annual budget appropriations by the Parliament or the State Legislature. The revenues of the undertaking are paid into the government treasury.

 

5. Accounting and Audit: The departmental undertaking is subject to the normal budgeting, accounting and audit procedures, which are applicable to all Government departments.