Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises Short Questions | business studies Class 11 CBSE

Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises Short Questions | business studies Class 11 CBSE | ByteNotes.in

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Question 1

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What is a departmental undertaking? State any two of its characteristics.

A departmental undertaking is the oldest form of public enterprise, established as a department of a ministry and treated as an extension of the government itself.
Its funding comes directly from the government treasury as an annual budgetary appropriation, and all revenue earned is deposited back into the treasury.
Employees of departmental undertakings are government servants whose recruitment and service conditions are the same as other government employees, often headed by IAS officers.

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Question 2

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Define a statutory corporation and state how it is brought into existence.

A statutory corporation is a public enterprise created by a Special Act of Parliament, which defines its powers, functions, and rules governing employees.
It is a corporate body with defined powers and financial independence, exercising clear control over a specified area or type of commercial activity.
Being created by legislation, it can sue and be sued, enter into contracts, and acquire property in its own name, making it a distinct legal entity separate from the government.

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Question 3

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What is a government company as defined under the Companies Act, 2013?

A government company is any company in which not less than 51 percent of the paid-up capital is held by the central government, state government(s), or a combination thereof.
It includes a company that is a subsidiary of such a government company, and its shares are held in the name of the President of India.
It is established and governed under the Companies Act, 2013, and can be formed either as a private limited or public limited company.

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Question 4

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Distinguish between the private sector and the public sector.

The private sector consists of businesses owned and managed by individuals or groups of individuals, whereas the public sector consists of organisations owned and managed by the central or state government.
Private sector enterprises aim primarily at profit maximisation, while public sector enterprises are also driven by social objectives such as regional balance and infrastructure development.
Private sector organisations include sole proprietorships, partnerships, and companies, while public sector organisations may take the form of departmental undertakings, statutory corporations, or government companies.

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Question 5

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State any four advantages of departmental undertakings.

They facilitate effective parliamentary control over their operations and ensure a high degree of public accountability to the nation.
The revenue earned by these enterprises goes directly to the government treasury, thereby serving as a source of income for the government.
They are most suitable for activities involving national security since they are under the direct control and supervision of the concerned ministry.
Being directly under ministry oversight, they ensure that government policies are implemented uniformly and consistently across their operations.

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Question 6

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What are the main disadvantages of departmental undertakings?

These undertakings fail to provide operational flexibility essential for smooth business functioning, as all decisions require ministerial approval, leading to delays.
There is excessive red tapism in day-to-day operations and significant political interference through the ministry, hampering efficiency.
These organisations are usually insensitive to consumer needs and do not provide adequate services, and they are unable to exploit business opportunities due to the over-cautious bureaucratic approach.

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Question 7

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State any four features of a statutory corporation.

A statutory corporation is set up under a Special Act of Parliament, which defines its objects, powers, and privileges.
It is wholly owned by the state, which bears both the profits and losses, and it is independently financed through borrowings from the government or from public revenues.
It is not subject to the same accounting and audit procedures as government departments and is not directly connected to the central budget.
Its employees are not government or civil servants; their service conditions are governed by the founding Act itself.

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Question 8

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Why are statutory corporations considered valuable instruments for economic development?

Statutory corporations combine the power and authority of the government with the operational initiative and flexibility of private enterprises, making them uniquely suited to drive economic progress.
They enjoy financial independence from the central budget, allowing them to raise funds through their own revenues and borrowings, thus enabling large-scale operations without constant government funding.
They frame their own policies and procedures within the powers assigned by the Act, enabling them to respond more quickly to economic opportunities compared to departmental undertakings.

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Question 9

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What are the disadvantages of a government company form of organisation?

Since the government may be the sole shareholder in some companies, the provisions of the Companies Act lose much of their practical relevance, reducing the effectiveness of corporate governance.
Government companies evade constitutional responsibility that a government-financed body should have, as they are not directly answerable to Parliament.
The management and administration effectively rests in the hands of the government, defeating the main purpose of incorporating them as independent companies.

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Question 10

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How does the government company form of organisation differ from a statutory corporation?

A government company is established under the Companies Act, 2013 without requiring a separate Act of Parliament, whereas a statutory corporation can only be created by a Special Act of Parliament.
The employees of a government company are governed by the Memorandum and Articles of Association, while those of a statutory corporation are governed by the provisions of the founding Act.
A government company can raise funds from the capital market in addition to government shareholding, whereas a statutory corporation raises funds through borrowings from the government or from its own revenues.

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Question 11

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What is disinvestment? State its main objective.

Disinvestment is the process by which the government sells its equity shares in public sector enterprises to the private sector and the general public.
The primary objective is to raise resources for the government and encourage wider participation of the general public and workers in the ownership of these enterprises.
Disinvestment also aims to improve managerial performance, ensure financial discipline, and reduce the government's direct involvement in commercial activities.

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Question 12

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State the four major reforms introduced for the public sector in the Industrial Policy of 1991.

The policy aimed to restructure and revive potentially viable Public Sector Units (PSUs) and to close down those which could not be revived.
It sought to bring down the government's equity in all non-strategic PSUs to 26 percent or lower, and to fully protect the interests of workers during restructuring.
The policy introduced a Memorandum of Understanding (MoU) system to grant managements greater autonomy while holding them accountable for specified performance results.

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Question 13

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What is the significance of the Memorandum of Understanding (MoU) system introduced for public sector enterprises?

The MoU system grants public sector managements greater operational autonomy to take independent business decisions without constant ministerial interference.
Under this system, clear performance targets are set for each public sector unit, and the unit is held accountable for achieving those targets.
The MoU is signed between the public sector unit and its administrative ministry, defining their relationship, responsibilities, and the degree of autonomy granted.

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Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises | Short Questions

What is a departmental undertaking? State any two of its characteristics.

Define a statutory corporation and state how it is brought into existence.

What is a government company as defined under the Companies Act, 2013?

Distinguish between the private sector and the public sector.

State any four advantages of departmental undertakings.

What are the main disadvantages of departmental undertakings?

State any four features of a statutory corporation.

Why are statutory corporations considered valuable instruments for economic development?

What are the disadvantages of a government company form of organisation?

How does the government company form of organisation differ from a statutory corporation?

What is disinvestment? State its main objective.

State the four major reforms introduced for the public sector in the Industrial Policy of 1991.

What is the significance of the Memorandum of Understanding (MoU) system introduced for public sector enterprises?

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