Public Sector Enterprise

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Departmental Undertakings

  • Oldest among the public enterprises.

  • Organized, managed and financed by the Government.

  • Controlled by a specific department of the government.

  • Each such department headed by a minister.

  • Important decisions taken by the controlling ministry.

  • Parliament lays down the general policy for such undertakings.

Features of Departmental Undertakings

Merits of Departmental Undertakings

Fulfillment of social objectives:

  • Fulfill its social and economic objectives.

    For example: opening of post offices in far off places, broadcasting and telecasting programmes

  • Lead to the social, economic and intellectual development of the people.

Responsibility to the public:

  • The concerned minister has to satisfy the public with his replies.

  • As such they cannot take any step.

  • These undertakings are responsible to the public through the parliament.

Control over Economic Activities:

Helps the government to exercise control over the specialized economic activities.

Contribution to Government Revenue:

  • Surplus of the departmental undertakings belong to the government.

  • Leads to increase in government income.

  • If there is deficiency, it is to be met by the government.

Little Scope for Misuse of Funds:

  • Subject to budgetary accounting and audit control.

  • Possibilities of misuse of their funds is considerably reduced.

Limitations of Departmental Undertakings

  • The Influence of Bureaucracy: On account of government control it suffers from all the ills of bureaucratic functioning.

  • Excessive Parliamentary Control: On account of the Parliamentary control difficulties come in the way of day-to-day administration

  • Lack of Professional Expertise: Not managed in a professional manner and suffer from deficiency leading to unnecessary drainage of public funds

  • Lack of Flexibility: In that lack flexibility because its policies cannot be changed instantly.

  • Inefficient Functioning: Such organisations suffer from inefficiency because of incompetent staff and lack of adequate incentives to improve efficiency of the employees.