Public Sector Enterprises

Statutory Corporations

Statutory Corporation refers to such organisations which are incorporated under the special Acts of the Parliament/State Legislative Assemblies. It’s also known as Public Corporation.

Features of Statutory Corporations

  • Incorporated under a special Act of Parliament or State Legislative Assembly.

  • Autonomous body and is free from government control in respect of its internal management.

  • Accountable to parliament and state legislature.

  • Separate legal existence.

  • Capital is wholly provided by the government.

  • Managed by Board of Directors,

  • Members of the board of Directors are nominated by the government.

  • Supposed to be self-sufficient in financial matters.

  • In case of necessity it may take loan or seek assistance from the government.

  • Employees of these enterprises are recruited as per their own requirement by

  • Employee’s recruitment as per the terms and conditions of recruitment decided by the Board.

Merits of Statutory Corporations

Expert Management

  • Advantages of both the departmental and private undertakings.

  • Enterprises run on business principles under the guidance of expert and experienced Directors.

Internal Autonomy

  • Decisions can be taken promptly without any hindrance.

  • Government has no direct interference.

Responsible to Parliament

  • Their activities are watched by the press and the public.

  • They have to maintain a high level of efficiency and accountability.

Flexibility

  • Independent in matters of management and finance.

  • They enjoy adequate flexibility in their operation.

  • Helps in ensuring good performance and operational results.

Promotion of National Interest

  • Protect and promote national interests.

  • Government is authorized to give policy directions under the provisions of the Acts governing them.

Easy to Raise Funds

  • Government owned statutory bodies. So, they can easily get the required funds by issuing bonds etc.

Limitations of Statutory Corporations

Government Interference

  • There is unnecessary government interference in most of the matters.

Rigidity

  • Amendments to their activities and rights can be made only by the Parliament.

  • Results in several impediments in business respond to the changing conditions and take bold decisions.

Ignoring Commercial Approach

  • Usually face little competition and lack motivation for good performance.

  • Suffer from Notes ignorance of commercial principles in managing their affairs.

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