Meaning, Origin, Classification And Characteristics Of Public Enterprises

What are the Objectives of Public Enterprises?

In India, public enterprises have been assigned the task of realising the objectives laid down in the Directive Principles of State Policy. I really enjoy this work it explained all what I need to know about public sector and private sector. A cut-throat competition between both the sectors, to prove itself better over the other sector. So, the article attempts to outline the differences between public sector and the private sector in tabular form.

Public enterprise, a business organization wholly or partly owned by the state and controlled through a public authority. Some public enterprises are placed under public ownership because, for social reasons, it is thought the service or product should be provided by a state monopoly. Utilities (gas, electricity, etc.), broadcasting, telecommunications, and certain forms of transport are examples of this kind of public enterprise. To help economic development, to provide qualitative goods and services, to control monopoly, to provide import substitution, to save foreign currencies and to increase government revenues are the objectives of the public enterprise.

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There is no proper evaluation of demand and supply and expected costs and benefits. Public enterprises help in the establishment of a welfare state in the country. These enterprises supply essential commodities at cheaper rates. Private industries tend to concentrate in certain regions while other regions remain backward.

What are the Objectives of Public Enterprises?

Public Sector is a part of the country’s economy where the control and maintenance are in the hands of Government. If we talk about Private Sector, it is owned and managed by the private individuals and corporations. In Part four the extent to which privatisation can solve the problems of public enterprise is discussed.

Objectives Of State Enterprises

Another administrative form that is popular in parts of the world is the state company, which is simply an ordinary joint-stock company whose shares are owned wholly or partly by the state. Therefore one of the important goals of public sector enterprises in India has been promotion of capital formation. Public enterprises occupy an important position in the Indian economy. They were set up by the government to speed up the process of economic development as well as to achieve certain social objectives. They have played a major role in fostering industrial and economic development of the nation by providing the necessary infrastructure and providing essential services. The aim of the public sector is to serve people, but private sector enterprises are established with the profit motive. Public enterprises can provide goods and services that are beneficial to the public.

  • If private sector is given a free hand, industrialisation will lead to exploitation of consumers.
  • In Public Sector, you have to pay lots of money to the government officers even for a simple work, for no reason.
  • However in the Private Sector, your job is never secured, even if you give years to it, you can be fired anytime just because of a single mistake.
  • Most of the public savings are being available through nationalized banks and financial institutions.

These corporations are those organisations of public enterprises whose ownership belongs to the Government but whose management is given in the hands of a Board appointed by the government under an Act of the Parliament. The public enterprises, even though not to be commercially profit-oriented ventures like the private enterprises, are also expected to give an adequate or reasonable return on investment made on them.

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These enterprises can serve as powerful means of economic and social change. Private sector concerns do not come forward to establish such industries. The basic infrastructure required for rapid industrialisation has been built up, through the production of strategic capital goods. Public enterprises seek to offer gainful employment to millions.

  • For the progress and development of any country, both the sectors must go hand in hand as only one sector cannot lead the country in the path of success.
  • The private sector companies are divided on the basis of sizes like small & medium enterprises and large enterprises which are either privately or publicly traded organizations.
  • The basic issue involved in the fixation of performances budget is that of developing work programmes and perfor­mance expectations by assigned responsibility, necessary for the attainment of the goals and objectives of the enterprise.
  • Examples are Electoral commission, Mineral commission, Ghana Atomic Agency Commission, etc.
  • The development of different areas is also considered by the government while setting up new units.

To help the economic development of the country in planned manner by establishing different industrial and commercial enterprises. The fruits of progress must be shared by all sections of society. To en­sure this it is necessary to remove, or reduce, con­centration of wealth and economic power in pri­vate hands. In fact, discouraging concentration of economic power and preventing the growth of monopolies and big business have been the de­clared objectives of the Government throughout the plan period. It is also the duty of the government to effect equal development of every area under its domain.

Meaning, Origin, Classification And Characteristics Of Public Enterprises

With the private sector these gaps remain unfilled up simply because either there is no profit or the margin of profit is so low that a private enterpriser does not feel tempted to invest. In case public enterprise is also guided by profit motives, then the basic idea and purpose of setting up a private enterprise will be defeated. After the attainment of independence and the advent of planning, there has been a progressive expansion in the scope of public enterprises in our country. The passage of Industrial Policy Resolution of 1956 and the adoption of the socialistic pattern of society as our national goal further led to a deliberate enlargement of the role of public sector. Finally, the public sector enterprises are supposed to enable the planners and policy­makers to achieve better resource allocation, con­sistent with the development strategies of the coun­try.

These new computerized systems have been designed to work with both conventional commercial accounting firms and government agencies with minimal or no adjustments. Implementation of the NCP policies on privatisation and commercialisation. The Bureau Of Public Enterprises serves as the secretariat of the National Council on Privatisation and is charged with the overall responsibility of implementing the council’s policies on privatisation and commercialisation. In other words, internal audit is similar to internal control and checking to some extent excepting that the former is entrusted to internal stuff whereas the latter is concerned with systems or methods of efficient workings. Practically they do not produce any valuable information to the management except an instrument for controlling expenditure for acquiring funds.

Fascism is generally pro-big business, and to make the nation more self-sufficient, essential democratic freedoms are suppressed, first on political fronts, then increasingly, in economic affairs. To review the objectives for which public enterprises were established in order to ensure that they adapt to the changing needs of the economy. However, from time to time, the Government and the parliamentary committee have understood the usefulness and importance of internal auditing system which should be applied in all public sector undertakings. But it is a matter of regret that practically no public sector undertaking maintains such knowledge, efficiency and proper environment to implement such budgeting system.

Differences In The Objectives Of Private Sector And Public Sector Enterprises

The public enterprises, either by replacing or by offering competition to the private industries, can serve the best interests of the consumers. Public sector in the Indian economy has registered a phenomenal growth since Independence. The number of public enterprises under the Central Government was only 5 at the beginning of First Five- Year Plan in 1951. Not much of industrial development took place during the first Plan. In poor countries national economy is also under heavy strains. The government is required to deal with many priority programmes and each programme in its own turn is a pressing and immediate. In case each enterprise begins to depend on the government, then financial difficulties for the state will increase many fold.

In fact the public sector has come to occupy such an important place in our economy that on its effective performance depends largely the achievement of the country’s economic and social goals. The sector, which is engaged in the activities of providing government goods and services to the general public is Public Sector.

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Public sector undertakings have located their plants in backward and untraded parts of the country. Public enterprises seek to generate and mobilise surplus for reinvest­ment. These enterprises earn money and mobilise public savings for industrial development.

What are the Objectives of Public Enterprises?

There is a general feeling that as far as possible industries and enterprises should be nationalised, so that the consumer is saved from exploitation. But if the public enterprises begin to fun in loss or just maintain themselves, then tax payer will grumble and the whole process of nationalisation What are the Objectives of Public Enterprises? will receive a serious setback. For the promotion nationalisation it is essential that the public enterprises should be run on ‘Profit and Loss’ basis. Those who argue that public enterprises may earn profit argue that the profit will be used for welfare of the public.

What Are The Objectives Of Public Enterprises?

But, barring a few exceptions, the government generally followed a policy of non-interference in economic matters. In public enterprises monopoly situation prevails and in that situation it is possible to discriminate. When profit is the motive, then discrimination becomes guiding force and factor, which no society can afford. If these are earning profits and expanding, then these shall be in a position to absorb more and more people. In case these run into losses, then there will be a widespread demand that there should be retrenchment and shrinking. Therefore it is profit alone which can help in providing employment opportunities to the workers and can prove socially useful and advantageous.

It will ultimately lead to concentration of economic power in fewer hands. The existence of public sector will be a check on the private sector.

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Commercial public enterprises are businesses that are owned and operated by the government to generate profits. The government may own the business outright or it may own a minority stake. These businesses compete in the open market and are subject to the same rules and regulations as private businesses. The Public Corporations are established by special Acts of Parliament, to run the corporate form of public undertakings.

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