PUBLIC

ENTERPRISES
Professor & Lawyer
Puttu Guru Prasad
Senior Faculty for Management
Studies - VVIT
PUBLIC ENTERPRISES
CONTENTS
Introduction of Public Enterprise
Meaning of Public Enterprise
Characteristics of Public Enterprise
Advantages of Public Enterprise
Disadvantages of Public Enterprise
Government Role
INTRODUCTION
Public Enterprise is Owned by Government
and Managed by Government.
Its objective is to maximize social welfare
and ensure balanced economic
development.
Capital is raised from Government and
sometimes through public issues.
Operates in basic and public utility sectors.
MEANING
According to N. N. Malaya, "Public enterprises are autonomous or
semi-autonomous corporations and companies established, owned and
controlled by the state and engaged in industrial and commercial
undertakings".
A Pubic Enterprise may be defined as any commercial or industrial
undertaking owned and managed by the government with a view to
maximize social welfare and uphold the public interest.
The term public enterprise denotes a form of business organization
owned and managed by the state government or any other public
authority. So it is an undertaking owned and controlled by the local or
state or central government. The whole or most of the investment is
made by the government.
Public Enterprises consist of nationalized private sector enterprises
such as banks, Life Insurance Corporation of India (LIC), Indian
Railways and the new enterprises set up by the government such as
Hindustan Machine Tools (HMT), Gas Authority of India (GAIL), State
Trading Corporation (STC), Indian Oil Corporation (IOC), Bharath
Sanchar Nigam Ltd (BSNL) etc.
CHARACTERISTICS OF PUBLIC ENTERPRISES

Government Ownership and Management

Financed from Government Funds
Public Welfare
Public Utility Services
Public Accountability
Excessive Formalities
ADVANTAGES OF PUBLIC ENTERPRISES
Charges low prices.
Provide essential facilities like education, health, free or at
reduced prices.
Ensures efficient control of industry.
Expert administrative services.
Money can be made available for R&D.
Private monopoly which would cause high prices is
avoided.
Foreign denominations of the economy are avoided.
DISADVANTAGES OF PUBLIC ENTERPRISES

Government must bear losses or this could lead to higher

taxation.
Consumers choice is restricted to the state if the business is
a monopoly.
Regulations may be passed to curb the progress of private
business.
Lack of competition may lead to inefficiency and higher
prices.
Government interference.
Dont care attitude.
Political pressure.
Corruption and embezzlement of funds.
Foreign investment may be discouraged due to fear of
nationalization.
GOVERNMENT ROLE

Driving public sector reform to increase efficiency,

flexibility and integrity.
Leading and assisting the public sector to build a
skilled, ethical, diverse and knowledgeable
workforce.
Broadening and enhancing our evaluation and
reporting of public sector management and
administration.
Provide essential facilities at reduced prices.
THANK YOU