- Private Sector
The private sector consists of business owned by individuals or a group of individuals.
- Public Sector
The public sector consists of various organisations owned and managed by the government.
- Forms of organizing Public Sector Enterprises
- Departmental Undertaking: This is the oldest and traditional form of organizing public sector enterprises. It is organized , financed and controlled in much the same way as any other government department.
|Funding from govt. treasury||Full govt. control||Bureaucratic control|
|subject to accounting |
and audit controls applicable to other Government activities
|Complete secrecy||Lack of incentives|
|Employees are govt. servants||Proper use of public money||Red tapism|
|Subdivision of govt. department||Generation of revenue||Inflexibility of operations|
|Accountable to ministry||Socio-economic objectives||Financial dependence|
- Statutory Corporations
It is a body corporate set up under a special Act of the parliament or of the state legislature.
|Established under a special statute||Internal autonomy||Corruption|
|Separate legal entity||Quick decisions||Lack of competition|
|Owned by govt.||Economies of scale||Nominated board|
|Service motive||Efficient management||Rigid structure|
|Financial Autonomy||Parliamentary control||Abuse of monopoly|
- Government Company
A company in which not less than 51 percent of the paid up share capital is held by the central govt. or by one or more state govt. or jointly by the central or state govt. is called a govt. company.
|Incorporated under companies Act||Easy Formation||Lost relevance of Companies Act|
|Separate legal entity||Internal autonomy||Evades constitutional responsibility|
|Owned by govt. at least to the extent of 51%||Flexibility of operations||Autonomy in name|
|Own staff||Expert management||–|
|Financial autonomy||Collaboration with private sector or foreign countries||–|
- Changing Role of Public Sector
- Development of infrastructure
- Regional balance
- Economies of scale
- Check over concentration of economic power
- policy towards the public sector since 1991
- Reduction of no. of industries reserved for the public sector from 17 to 8 (and then to 3)
- Disinvestment of shares of public sector enterprises
- Referring of sick public units to BIFR
- Memorandum of Understanding (granting management more autonomy)
- Global Enterprises
It refers to a business enterprise that operates in more than one country. It is also known as Multinational enterprise.
|Features of Global enterprise|
|Aggressive marketing strategies|
- Joint Venture
It refers to an enterprise set up jointly by two or more business concerns.
|Greater resources and capacity||Both parties want to have majority stake|
|Access to advanced technology||Legal restrictions on foreign investment|
|Access to new markets||Difference in cultures|
|Low production costs||Lack of coordination|
Public sector: It refers to enterprises owned by Govt.
Departmental undertakings: They are established as departments of ministry.
Statutory corporations: They are public enterprises brought into existence by a Special Act of the Parliament.
Government company: These companies are established under the Indian
Companies Act, 1956.
Regional balance: Removing regional disparties.
Memorandum of Understanding: A system by which managements are to be granted greater autonomy but held accountable for specified results.
Global enterprises: Enterprises operating in more than one nation.