Key Notes: Public, Private and Global Enterprises | Business Studies (BST) Class 11 - Commerce PDF Download

Introduction

• The Indian economy comprises both privately owned and government-owned businesses.
• Private sector: Owned by individuals or groups of individuals.
• Public sector: Owned and managed by the government, either partially or entirely.

Historical Background

• The Industrial Policy Resolution of 1948 laid the foundation for India's economic development approach.
• The Industrial Policy Resolution of 1956 set goals for the public sector to boost industrialization.
• The 1991 industrial policy marked a shift towards privatization and encouraging foreign investments.

Sectors in Indian Economy

Public Sector:

• Departmental Undertakings: Government-owned, operated by government personnel, strict government control.
• Statutory Corporations: Created by special acts of Parliament, government-owned, legal entities.
• Government Companies: At least 51% government-owned, regulated by the Companies Act 2013.

Merits:

• Effective parliamentary control.
• High public accountability.
• Revenue goes to the government treasury.

Limitations:

• Lack of flexibility.
• Bureaucratic decision-making.
• Political interference.
• Often, poor service quality.

Private Sector:

• Sole Proprietorship, Partnership, Joint Hindu Family, Cooperative, Multinational Corporations, Public Ltd. Company, Private Ltd. Company.

Changing Role of Public Sector:

Development of Infrastructure:

• Crucial for industrialization.
• Government's role in funding and coordination.
• Expansion of transportation and communication facilities.

Regional Balance:

• Government ensures balanced development.
• Purposeful establishment of industries in underdeveloped regions.

Economies of Scale:

• Government investment needed for large-scale industries.
• Economies of scale achieved through mass production.

Concentration of Economic Power:

• Prevents wealth concentration in private sector.
• Public sector industries in key sectors.

Import Substitution:

• Public sector heavy engineering firms aid import substitution.
• Boosted exports through public sector enterprises.

Government Policy Since 1991:

• Reduction in the number of industries reserved for public sector.
• Disinvestment to increase private and worker ownership.
• Board of Industrial and Financial Reconstruction (BIFR) for sick units.
• Memorandum of Understanding (MOU) system for performance improvement.

Global Enterprises:

• Large conglomerates with operations in multiple nations.
• Possess huge capital, advanced technology, and global presence.
• Examples: Majority Owned Foreign Affiliates (MOFA).

Joint Ventures:

• Collaboration between two businesses for mutual gain.
• Types: Equity-Based and Contractual.
• Benefits: Resource sharing, access to technology, market expansion, product innovation.

Public-Private Partnership (PPP):

• Collaboration between public and private entities for infrastructure and services.
• Government provides funds and assets; private sector applies expertise.
• Examples: Power generation, water supply, healthcare.
• Merits: Risk sharing, project acceleration.
• Limitations: Potential conflicts, difficulty attracting private finance.