TN State Board 11th Commerce Important Questions Chapter 9 Government Organisation
State the different types of public sectors enterprises.
Different types of public sectors enterprises are –
- Departmental undertaking,
- Public corporation,
- Government companies.
What is the basic feature of a Departmental undertaking?
Basic feature of a Departmental undertaking are:
- Ultimate Responsibility.
- Governmental Financing.
- Accounting and Audit.
- Managed by Civil Servants.
- Sovereign Immunity.
Give two examples for each of the following:
(i) Private sector enterprises,
(ii) Global enterprises,
(iii) Public enterprises.
(i) Private sector enterprises:
Example of private sector include sole proprietorship, partnership, Joint Hindu Family.
(ii) Global enterprises:
An MNC is a company whose, business operations extend beyond the country in which it has been incorporated,
(a) Coca cola corporation,
(b) Unilever Limited.
(iii) Public enterprises:
Hindustan Machine Tools, TamilNadu Police Department, LIC, ONGC, Coal mines.
State the form of public enterprises which is most suitable for projects related to National Security.
Strategic industries like defence and atomic power cannot be better managed other than government departments. Departmental undertakings can maintain secrecy in their working.
The Industrial Policy Resolution 2001 exclusively reserved for few industries for the public sector. Name these industries.
A public corporation enjoys internal operational autonomy; as it is free from Governmental control. Atomic power, Coal mines, Lignite, Mineral oil, Defence, Armed forces and Defence equipments.
List the areas where the state or central ownership is a preferred form of business organisation. Justify your choice of areas.
- Coal mines Authority Limited.
- Steel Authority of India Limited.
- Bharath Heavy Electrical Limited.
- Indian Telephone Industries.
- TamilNadu Agro Industries.
- TamilNadu State Transport Corporation Limited.
- TamilNadu Small Industries.
A company owned managed and controlled by central government or state government is called a government company. 51% of the paid up share, capital is held by State or Central government.
What are the different kinds of organisations that come under the public sector?
Departmental undertaking This is considered as a department attached to the ministry of a government. Its administration is in the hands of the chief administrative officer of the ministry.
This is established under a specific statute passed in the parliament. It is known as a statutory corporation because it is created by a statute.
A Government company is one in which not less than 51% of the paid up capital is held by the Central Government or by ahy one or more State Governments or partly by the Central Governments and partly by one or more State Governments.
eg: Bharat Heavy Electricals Limited, Steel Authority of India Limited, etc. A subsidiary of a Government company is also treated as a Government company. A Government company also enjoys a separate corporate existence. It should not be identified with the Government and its employees are not Government employees.
List the names of some enterprises under the public sector and classify them.
Departmental undertaking: post and Telegraph, atomic power.
- Coal mines authority Limited,
- Bharath Heavy Electricals Limited,
- Steel Authority of India Ltd.
Define Departmental undertakings.
This is considered as a Department attached to the Ministry of Government. Its Administration is in the hands of Chief Administrative Officer of the Ministry. Here the Department is a part of the Government.
This is oldest form of State enterprise.
eg: Radio and Television, BSNL, Railways, Post and Telegraph, Atomic Power, Defence.
What is meant by Government Company?
A “Government company” is defined under Section 2(45) Of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”.
What are the advantages and disadvantages of Departmental undertaking?
Following are the advantages of the departmental undertaking.
(i) Easy Formation:
It is easy to set up a departmental undertaking. The depart¬mental undertaking is created by an administrative decision of the Government, involving no legal formalities for its formation.
(ii) Direct and Control of Parliament or State Legislature:
The departmental undertaking is directly responsible to the Parliament or the State legislature through its overall head i.e. the minister concerned.
(iii) Secrecy Maintained:
Strategic industries like defence and atomic power cannot be better managed other than government departments. Department undertakings can maintain secrecy in their working.
(iv) Lesser Burden of Tax on Public:
Earnings of departmental undertaking are entirely paid into Government treasury, resulting in lesser tax burden on the public.
(v) Instrument of Social Change:
Government can promote economic and social justice through departmental undertakings. Hence, a departmental undertaking can be used by the Government, as an instrument of social change.
Following are the major limitations of the departmental undertaking.
There is too much of procedures which results in delay. Commercial organisation cannot afford delay in taking decisions.
(ii) Incidence of Additional Taxation:
Losses incurred by a departmental enterprise are met out of the treasury. This very often necessitates additional taxation the burden of which falls on the common man.
(iii) Lack of Competition:
Civil Servants are given control of these undertakings who may not have business outlook or commercial experience. So, they run the undertaking in their own fashion without considering the sovereignty of the consumers.
(iv) Casual Approach to Work:
As officers of a departmental undertaking are subject to frequent transfers; they develop a sense of casual approach to work. As a result, the operational efficiency of the undertaking suffers a lot.
(v) Government Interference:
There is an excessive government interference and control in department organisation. These undertakings are not given freedom to decide their own policies. Centralised control leads to delay in action. Red-tapism and bureaucracy have become the limiting features of these organisations.
What are the features of Public corporation?
(i) Special statute:
A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).
(ii) Separate Legal Entity:
A public corporation is a separate legal entity with perpetual succession and common seal. It has an existence, independent of the Government.
It can own properly; can make contracts and file suits, in its own name.
(iii) Capital Provided by the Government:
The capital of a public corporation is provided by the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.
(iv) Financial Autonomy:
A public corporation enjoys financial autonomy. It prepares its ‘ own budget; and has authority to retain and utilize its earnings for its business.
(v) Management by Board of Directors:
Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day-to-day working of the corporation.
What are the Features of Government company?
(i) Registration Under the Companies Act:
A Government company is formed through registration under the Companies Act, 1956; and is subject to the provisions of this Act, like any other company. However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications.
(ii) Executive Decision of Government:
A Government company is created by an executive decision of the Government, without seeking the approval of the Parliament or the State Legislature.
(iii) Separate Legal Entity:
A Government company is a legal entity separate from the Government. It can acquire property; can make contracts and can file suits, in its own name.
(iv) Whole or Majority Capital Provided by Government:
The whole or majority (at least 51%) of the capital of a Government company is provided by the Government; but the revenues of the company are not deposited into the treasury.
(v) Majority of Government Directors:
Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.
(vi) Own Staff:
A Government company has its own staff; except Government officials who are sent to it on deputation. Its employees are not governed by civil service rules.
What are the advantages and disadvantages of Public corporation?
Advantages of Public Corporation:
(i) Bold Management due to Operational Autonomy:
A public corporation enjoys internal operational autonomy; as it is ’ free from Governmental control. It can, therefore, run in a businesslike manner. Management can take bold decisions involving experimentation in its lines of activities, taking advantage of business situations.
(ii) Legislative Control:
Affairs of a public corporation are subject to scrutiny by Committees of Parliament or State Legislature. The Press also keeps a watchful eye on the working of a public corporation. This keeps a check on the unhealthy practices on the part of the management of the public corporation.
(iii) Qualified and Contented Staff:
Public corporation offers attractive service conditions to its staff. As such it is able to attract qualified staff. Because of qualified and contented staff, industrial relations problems are not much severe. Staff has a motivation to work hard for the corporation.
(iv) Tailor-Made Statute:
The special Act, by which a public corporation is created, can be tailor-made to meet the specific needs of the public corporation; so that the corporation can function in the best manner to achieve its objectives.
(v) Not Affected by Political Changes:
Being a distinct legal entity, a public corporation is not much affected by political changes. It can maintain continuity of policy and operations.
Disadvantages of Public Corporation:
(i) Autonomy and Flexibility, Only in Theory:
Autonomy and flexibility advantages of a public corporation exist only in theory. In practice, there is a lot of interference in the working of a public corporation by ministers, government officers and other politicians.
(ii) Misuse of Monopolistic Power:
Public corporations often enjoy monopoly in their field of operation. As such, on the one hand they are indifferent to consumer needs and problems; and on the other hand, often do not hesitate to exploit consumers.
(iii) Rigid Constitution:
The constitution of a public corporation is very rigid. It cannot be changed, without amending the Statute of its formation. Hence, a public corporation could not be flexible in its operations.
(iv) Low Managerial Efficiency:
Quite often civil servants, who do not possess management knowledge and skills, are appointed by the government on the public corporation. Board of Directors, of a public corporation. As such, managerial efficiency of public corporation is not as much as found in private business enterprises.
(v) Problem of Passing a Special Act:
A public corporation cannot be formed without passing a special Act which is a time consuming and difficult process. Hence, the scope for setting up public corporations is very restricted.
What are the features of Departmental organisation?
Features of Departmental organisation:
The salient features of a departmental undertaking are as follows:
(i) Ultimate Responsibility:
The ultimate responsibility for the management of a departmental undertaking lies with the minister concerned; who is responsible to the Parliament or State Legislature for the affairs of the departmental undertaking. The minister, in turn, delegates his authority downwards to various other management levels, in the departmental undertaking.
(ii) Governmental Financing:
The departmental undertaking is financed through annual budget appropriations by the Parliament or the State Legislature. The revenues of the undertaking are paid into the government treasury.
(iii) Accounting and Audit:
The departmental undertaking is subject to the normal budgeting, accounting and audit procedures, which are applicable to all Government departments.
(iv) Managed by Civil Servants:
The departmental undertaking is managed by civil servants, who are subject to same service conditions as applicable to civil servants of the Government.
(v) Sovereign Immunity:
A departmental undertaking cannot be sued anybody, without the consent of the Government.
Name any two examples of Departmental undertaking business.
Examples of Departmental undertaking:
- Radio and Television.
- Post and Telegraph.
Name any two examples of Public corporation.
Examples of Public corporation:
- RBI – Reserve Bank of India.
- UTI – Unit Trust of India.
Name any two examples of Government Company.
- Maruti Udyog.
- BHEL – Bharath Heavy Electricals Limited.
(i) Organise a debate in your class on the motion “Public Enterprises in India have failed to achieve their objectives”. Select a few good speakers for the purpose. State the points for and against the motion.
- Excesssive government control
- Delay and Redtapism.
- Tax burden to public
- Proper use of funds
- Source of income for government.
- Useful to specific industries.
(ii) Recently a discussion on “The objectives of Public sector undertakings was organised by the Friends Circle, a private cultural, organization of the city of Chennai. One of the participants, Mr. Ramesh happened to be a social worker. He observed, “the j objective of Public Enterprises is to serve the Society and not to earn profits”. Mr. Deepesh, an advocate, objected to Mr. Ramesh’s statement and gave his own view point. Thus continued the discussion.
If you have participated in that discussion, what should have been your stand and why?
Public enterprises not to earn profit. But run as commercial lines. Defence industries are look after departmental undertakings. In emergency situation private sector cannot co-operate to the government.
The objectives of public sector undertakings is to serve the society and not to earn profit.
You are a newly appointed MD of a foreign sector tourist Bus transport company. The management of the bus Transport undertaking of your city finds that its buses are not able to attract very many tourists. Private Mini-Buses are seen to be preferred by people on certain routes. As a result, the undertaking is incurring losses. Therefore, management wants to reformulate its price policyTAs a CEO or MD what advice can you give to it? Explain.
people likes attractions. Tourist bus transport company earn profit.
Mr.Sudhan is studying in B.Com, 1st year. His father, Mr.Somu is a leading businessman in Chennai. Somehow, Mr. Sudhan does not know anything about utilities. But he is to prepare a lesson for his class in this topic. He request his father for help. His father tells Mr. Sudhan that Public utilities are no different from his own business except that these are controlled by Government instead of private people.
Meanwhile, Mr. Chandrasekaran a friend of Mr. Somu comes there. Mr. Chandrasekaran is an employee of Chennai Electricity Supply Undertaking. Mr. Chandrasekaran intervenes in the conversation going on between Mr. Somu and his son and hold that Mr. Sudhan is not correct; there are other special features of public utilities, too. Perform the characters of Mr, Sudhan, Mr. Somu and Mr. Chandrasekaran and state your positions.
Government undertakes to provide various necessities like electricity, water, goal,-gas, transport, communication facilities to the people. Above public utility services given by public enterprises.
Characters of Somu: He is a business man.
(i) Private business people pay tax regularly.
(ii) Government employees are paid servants. So he cannot work efficiently.
Characters of Mr. Chandra Sekar:
He is an employee of Chennai Electricity supply board. He explains electricity is very important to the public electricity board -supplies electricity to common people, Industries and all trade.
Characters of Mr. Sudhan:
He is a BCom student. He knows everything from his textbook and also his father is also a businessman. He is getting information about business from his father.
Choose the Correct Answer:
The share capital of the government company must not be less than:
(a) 49 %
(b) 51 %
(c) 50 %
(d) 25 %
(b) 51 %
Airport Authority of India is a public enterprise. Identify the form of organisation
(a) statutory corporations
(b) departmental undertakings
(c) multi-national corporations
(d) state owned company
(b) departmental undertakings
The oldest form of organisation in public sector:
(a) public sector undertakings
(b) departmental undertakings
(c) multi national corporations
(d) statutory Corporation
(b) departmental undertakings
A Government company purchases shares in the name of:
(a) Prime Minister
(c) Chief Justice of India
(d) State Chief Minister
The primary obj ective of the state enterprises is to:
(a) earn profit
(b) provide employment
(c) serve the people
(d) all the above
(c) serve the people
Samacheer Kalvi 11th Commerce Notes Chapter 9 Government Organisation
→ State enterprise as a form of organisation gained economic importance in most of the countries of the world in recent years. During 20th century various government started to participating in industrial and commercial activities. Industrial revolution helped all round growth of industries. State enterprises helping all-round industrialisation, developing basic industries and also to provides necessities to the public.
→ The government can organise an industrial or commercial unit in any one of the following form. Department of the government separate corporation and joint stock company. In department organisation secrecy can be maintained in strategic industries like defence and atomic power. Public corporation it is an autonomous body corporate create by a special statute of a state or central government. Its main aim is to provide service to the public at reasonable price.
→ Government company owned and controlled by state or central government, annual reports regarding working of the company must placed before both the houses of parliament or legislature.