Public Sector Enterprises: Features, Merits and Limitations of Statutory Corporations

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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.

Examples of Statutory Corporations

Examples of Statutory Corporations

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.


  • 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.


  • 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.

Merits and limitations of Statutory Corporations

Merits and Limitations of Statutory Corporations

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