Public Sector Enterprises: Characteristics of Public Enterprises

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Owned business units, managed and controlled by the central, state or local government are termed as public sector enterprises or public enterprises, also known as public sector undertakings.

  • It defined as any commercial or industrial undertaking owned and managed by the government.

  • Maximize social welfare and uphold the public interest.

It consists of nationalized private sector enterprises such as:

  • Banks

  • Life Insurance Corporation of India and

  • New enterprises set up by the government such as:

    • Hindustan Machine Tools (HMT)

    • Gas Authority of India (GAIL)

    • State Trading Corporation (STC)

Nationalized private sector enterprises

Nationalized Private Sector Enterprises

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Characteristics of Public Enterprises

Characteristics of Public Enterprises

Characteristics of Public Enterprises

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Government Ownership and Management:

  • Owned and managed by the central or state government or by the local authority.

  • Government may wholly own public enterprises or may partly be with the government and partly with the private industrialists and the public.

For example, National Thermal Power Corporation (NTPC)

Financed from Government Funds

  • Get their capital from Government Funds.

  • Government also has to make provision for their capital in its budget.

Public Welfare

  • Not guided by profit motive.

  • Major focus is on providing the service or commodity at reasonable prices.

  • Provide petroleum and gas at subsidized prices to the public.

Public Utility Services

Concentrate on providing public utility services like:

  • Transport

  • Electricity

  • Telecommunication etc.

Public Accountability

Governed by public policies formulated by the government and accountable to the legislature.

Excessive Formalities

Government rules and regulations force to observe unnecessary formalities in their operations.