Q. 1. Briefly explain the features of statutory corporation. (KVS Agra 2017)
Ans. According to the Administrative Reform Commission, the following are the features of a statutory corporation :
(i) Ownership: It is owned by the state.
(ii) Formation: It is created by or pursuant to, a special law, defining its powers, functions, privileges, form of management and its relationship with government departments.
(iii) Separate legal entity: It is a corporate body and can sue and be sued, enter into contract and acquire property in its own name.
Q. 2. State the different areas where you find the following as the suitable form of public enterprise:
(i) Government Company
(ii) Statutory Corporations
(iii) Departmental Undertaking
(i) Government Company is a suitable form of organisation in public sector where :
(a) Government wants to promote and develop certain industrial and commercial enterprises in national interest.
(b) Government wants to control a company in the private sector without nationalisation.
(c) Goverment wants to go for collaboration with domestic and foreign enterprises of private sector.
(d) The business projects require government planning and funds.
(ii) Statutory Corporations are found most suitable form of public enterprise where :
(a) Public utility services are to be provided at reasonable rates.
(b) Government wants to develop the projects for economic development.
(c) Where government funding is required with private sectors managerial efficiency to run the enterprise on competitive lines.
(d) The government wants to promote those infrastructure areas where private sector is unwilling to invest.
(iii) Departmental Undertaking are most suitable forms of organisation in public sector where:
(a) The government wants full control over the operations of enterprise.
(b) National security is the major issue/concern.
(c) The generation of revenue for the treasury is required.
(d) The projects are to be carried on strictly according to policies and direction of the government.
Q. 3. Write the features of departmental undertakings.
Ans . Some features of departmental undertakings are:
(i) Direct funding from the government: They are financed directly from the government treasury i.e., Consolidated Fund of India and through annual budget of the government. Any revenue earned by these undertakings belongs to the government and is paid into the government treasury.
(ii) Government accounting and auditing: These undertakings follow government accounting rules as framed by the Indian Audit and Accounts Department. Audit of these undertakings is also under the control of government.
(iii) Service conditions: The employees of these enterprises are government servants and their service conditions are same which are applicable to any other government servant. These undertakings are headed by officers from Indian Administrative Services, Indian Revenue Service, Indian Audit and Accounts Service, etc. The terms and condition of their recruitment and service are the same as those of any other government employees.
(iv) Control of ministry: These undertakings are sub- divisions or part of the ministry under which they are expected to work. Hence, the concerned ministry exercises full and direct control over such undertakings.
(v) Accountability to the ministry: These enterprises are established to assist the ministry in particular fields. Hence these enterprises are fully accountable to the ministry concerned.
(vi) Government accounting : These undertakings are subject to government accounting and audit control.
Q. 4. State the limitations of departmental undertakings.
Ans . Some of the limitations are:
(i) Lack of flexibility: Excessive control and rigid rules of the ministry reduce the flexibility of operations in these undertakings.
(ii) Delay in decision making: These enterprises fail to take prompt decisions because for each and every decision they have to obtain the approval from the concerned ministry. Employees and even heads of these enterprises are not allowed to take independent decisions.
(iii) Bureaucracy hinders benefits of business opportunities: These enterprises are not able to take the full benefits of business opportunities. Bureaucratic and conservative approach of the concerned ministry hinders their initiatives.
(iv) Red tapism: Departmental undertakings suffer from red tapism in its day-to-day working. Actions are taken only after following proper channels of authority.
(v) Political interference: The political interference hinders the efficient working of these undertakings. Most of the time is elapsed in attending political meetings, implementing their recommendations, etc.
(vi) Consumer needs are ignored: These enterprises are insensitive to consumer needs and do not provide adequate services to them.
Q. 5. Explain any three benefits and two criticism of Global corporations. (KVS Silchar 2017)
Ans. Benefits of Global corporations:
(i) Employment opportunities: They increase the investment level and thereby employment and income level.
(ii) Advanced technology: Developing countries are generally technologically backwards. The global corporations bring advanced technology to these countries.
(iii) Foreign capital: Global corporations make direct foreign investment, thereby speeding the process of economic development.
(iv) Growth of domestic firm: Global corporations stimulate the growth of local enterprises.
Limitations of multinational corporations /GE are as follows:
(i) Disregard of national objectives: Sometimes, the multinational companies disregard the national objectives. As a result, planning done by the government falls in vain.
(ii) Depletion of national resources: Multinational companies are set up with profit motive only. They exploit the natural resources in an unbalanced manner. So it is harmful for the economies.
(iii) Threat of obsolete technology: Sometimes in the ‘technology transfer’ process, obsolete technology is transferred as a result of which the diseconomies of scale prevail.