Public Enterprises and Their Structures

Bookmark added to your notes.
View Notes

What Is Public Enterprise?

There are so many government-controlled public enterprises, but what is public sector enterprise? How is it beneficial for the people living in the country or state? Well, today we are going to find out the answer to these questions, but first, let's find out the public sector enterprises meaning.

A public enterprise is autonomous or semi-autonomous corporations which are controlled by the state or national government. These enterprises came into existence to help people of the state in their commercial and industrial activities. 

Types of Public Enterprises

Given below is the list of different types of organisations that comes under the definition of public enterprise 

Departmental Organisation 

When the public enterprise is under departmental management, it runs like one of the departments of the government. One of the few examples of this type of organisation is telegraphs, broadcasting, etc. 

[Image will be Uploaded Soon]

(India Post a government-owned organisation which provides postal service all across India.)

The staff of these organisations are permanent, and in India, they were chosen based on civil service exams. In case people whom the organisation is helping with its service are not satisfied with its working, a complaint can be raised in the parliament as the organisation comes under the different sections of parliament. 

Public Corporation 

This type of enterprise comes into existence after a special act is passed by the government which defines its powers, area of function and privileges. The three main features of this type of corporation are: First, it's an autonomously running corporate body. Second, it is pretty massive in terms of the management of public enterprises. As a result, it can run its operation like a proper business without having to worry about direct parliamentary control. 

[Image will be Uploaded Soon]

(A man in government office writing payment summary)

Lastly, these types of enterprises are capable of financially self-supporting; they are set up with capital funding in the first place. Once the earning starts to come, the organisation is allowed to spend it. 

Government Company

Mostly, these enterprises run and work like a typical private limited company. The government owns the whole stock or partially, which is equal to or more than 51%. In this organisation, most of the directors are appointed by the government. The company is free to use or get sued by others. Also, it can enter a contract and can acquire a property on its own. Unlike other public corporations, it is created only when the executive decision of the government is passed. Without approval from the parliament, this company cannot be established. Also, the government has the right to reverse any of the company's acts and way of working, any time. 

Features of Public Institutions

Now that you know the meaning of public enterprise, let's shed some light on its features: 

  1. First, these companies are government-owned, and all the significant decisions are made only once the government approves them.

  2. These types of enterprises become separate legal entities; they shall have a common seal for their legal activities. 

  3. On the other hand, these companies work on perpetual succession meaning its existence can't be hampered if the employees, directors or even if its stakeholders change over time. The company is formed by the law and only law has the power to dissolve it.

  4. The company is indirectly owned and financed by the people as they are the ones who elected the government, and the government runs these public enterprises.

  5. One of the examples of public enterprises in India are Hindustan Petroleum Corporation Limited (HPCL)

  6. Both government and private shareholders are responsible for providing funds to these corporations.

  7. Only the employees who don't come under any deputation are not considered to be civil servants. 

  8. One of the most significant benefits of working in the public enterprise is its flexibility which is both operational and functional. 

  9. Likewise, to cover the losses to get funds for an upcoming project, the public corporations are self-financed. 

  10.  The people chosen to govern this body are some of the best people in their field. They are best in public service, and best in management. 

  11.  Lastly, these are some of the most stable companies that you are ever going to find, no matter how hard things get for other companies, these public enterprises will remain stable in all their dimensions.

FAQ (Frequently Asked Questions)

Q1. What is the Main Difference Between Public and Private Enterprise?


Public Enterprise: Any company which is owned, managed and controlled by the government in its daily tasks along with its long term goals is a public enterprise. These enterprises are known to be aiding the public and helping them out in times of need, such as natural calamities.

Private Enterprise: A company which is owned by a single or a group of individuals that have complete or more than 51% share of the company is called private enterprise. These could be small IT firms which are owned by a single person or multi-billion dollar company run by a board of directors having investors from different countries. The main goal of private enterprise is to make a profit by selling products and services.

Q2. What are the Forms of Organisation in Public Enterprises?

Ans: There are three different types of organisation in public enterprises, we have described each of them in brief:

Government Department: It is one of the oldest forms of running a government activity and feeling in control of the central state or state departments such as railways, defence, postal office etc.

Public Corporation: These types of enterprise started to come up around the world after the first world war was over. It is the entity which is created by the government to perform its public missions along with other public services successfully. 

Government Company:
Any company that has more than or equal to 51% of the share under control of the central government comes under this category. In addition to this, even two different state governments can partly own the shares of these companies.