Let’s Discuss Public Enterprises
“It is the need of the time that public enterprises should be made to compete in the market and should be made accountable as far as profit is concerned.”
A question of much significance that is often raised in knowledgeable circles is that what should be the form of organization for running state enterprises. A suitable form of organization is sure to increase the efficiency of the concern whereas an inappropriate one often leads to dampening of even the best of efforts.
Excessive dependence on the government for finance increases government interference in the day-to-day working. These enterprises should be run on business lines and necessary autonomy should be provided to them. It is also the need of the time that the public enterprises should be made to compete in the market and should be made accountable as far as profit is concerned.
Departmental management is the form of management, which helps to run business as part of government. It is the oldest form of the organization. The governments provide the finances and the management is in the hands of the civil servants. Such a system was practiced in ancient China also and the best people were selected for the purpose after elaborate tests.
The Minster of the department is the ultimate head of the enterprise. The enterprise is subjected to legislative scrutiny. Departmental management is suitable for public utility services and strategic industries.
In many of the developing countries, post and telegraph, railways, television etc. function as government departments. In the same way strategic industries like defense and atomic power are under government control.
Public corporations are created by special statute of a state or central government. The mode and area of functioning of such an enterprise is decided by a legislative act. A public corporation is a separate legal entity created for a specific purpose.
A public corporation is clothed with the powers of the government but possesses the flexibility and initiative of a private enterprise. Such companies may be owned either by the center or the state government, but they are definitely government owned entities.
In their case either full capital or majority of the shares are owned by the government. In some cases, private investment is also allowed but the government holds at least 51 percent of the total number of shares.
Author - DeeKay
Tags - Finance, Economy
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