23th Sept: Class notes for Public Administration – frontier IAS
Public Sector Enterprises
Let us start the class from questions..
Q1. Examine the success and failure of Public Sector Enterprises since independence.
Q2. In era of liberalization, privatization and globalization do you see diminishing role of public sector. Comments.
Q3. In country like India role of public sector can not be reduced. Argue.
Q4. What are challenges before Public sector in today’s time. Suggest steps that can be taken to overcome the challenges.
Q5. Public Sector is boon or bane. Argue.
Public Sector Undertaking
3. Public Sector Undertakings:
Public sector in modern India; Forms of Public Sector Undertakings; Problems of autonomy, accountability
and control; Impact of liberalization and privatization.
and control; Impact of liberalization and privatization.
- 1947 inherited sizable public sector from British
- Ideological commitment post independence – key phenomenon
- 5 in 1951, 246 in 1994
- each Indian has a stake of nearly 500 in their success
- 23 lakh employment
1. departmental – Railways, Posts and Telegraphs (telegram seva discontinued recently), rigid, delays
2. Statutory corporation or public corporation: initially favourate. Damodhar Valley Corporation and Industrial Finance Corporation were set up.
lost shine as rigid, not performed as per expectation.
So company form most extensively used in India: greater flexibility, available experience, well defined legal terminologies,
clear preference of company form. Krishna Menon committee (1961) Govt. decided undertaking should be determined by the requirements of each case.
2nd five year plan: 33 undertakings set up, 29 companies form, 3 statutory corporations and 1 was departmental.
3. Government Company or Joint Stock company
4. Holding company
Besides 4 others type can be like Commissions, Control Boards, Cooperative Societies, Public Trusts and commodity Boards.
- Traditional and oldest form
- Railways, Posts and telegraphs, all India Radio, Doordarshan, Defence production units, Atomic Power projects, Government Printing Press.
- only Govt. can do
- financed by annual appropriation from treasury
- permanent staff consists of civil servants
- major sub division of the department of the govt.
- sovereign immunity
- Accountable to parliament
- created by executive resolution, parliament approval not required
- maximum degree of control by a minister political responsible to parliament
- clear relationship with other parts of the government structure.
- Government to have better control over its funds
- directly negates the requirements of autonomy due to excessive control
W.A. Robson said, Public Corporation is the most important invention of the twentieth century in the sphere of government institutions.
- Damodar Valley Corporation
- Industrial Finance Corporation of India
- Indian Airlines Corporation
- Air India International
- Central Warehousing Corporation
- State Electricity Boards
- State Land Mortgage Banks
- Created by a special law of legislature (either state or state). This special statute defines its objectives, powers, duties, and privileges and also prescribes the form of management and its relationship to the government departments.
- It (as a corporate body) has a separate entity for legal purposes and can sue and be sued, enter into contracts and acquire property in its name.
- It is usually independently financed except for appropriations to provide capital or to cover losses. It obtains its funds from borrowing (either from the treasury or the public) and from revenues derived from the sale of its goods and services. It is authorized to use and reuse its revenues.
- not subjected to budget, accounting and audit law and procedures
- Employees (majority cases) not civil servants, recruited and remunerated under terms and conditions
Class notes for Public Administration
- Most popular
- Registered under the Indian Companies Act of 1956.
- Min. 51% govt. share
Some important Government companies
- Bahart Heavy Electricals (P) limited
- Shipping Corporation of India limited
Some companies use the word corporation but they are actually govt. companies e.g. IOC.
- Most features of a private limited company
- created by executive resolution. Executive need not seek the approval of legislature.
- can sue and sued into contracts and acquire property in its name
- not subject to budget, accounting and audit laws
- employees are not civil servants
- Integration of all companies which are operating in the same field
- or which have strong technical and commercial affinities with each other under a common management.
- Such compnies called as subsidiaries
- Steel Authority of India limited
- Coal Authority of India Limited.
Control Board: for management of multi purpose river valley projects. Executive resolution by state or central government. e.g. Bhakra- Beas Management Board
Managing service enterprises. Created for special acts of parliament UTI, Port trusts.
To undertake development work. Created by special act of parliament. Tariff Commission, Khadi and Village Industries Commission.
to promote industrial development. Special acts of parliament. e.g. Small Scale Industries Board, Coffee Board
development and promotional activities.
Registered under Societies Registration Act.
Indian National Research Development Corporation
DEPARTMENT of PUBLIC ENTERPRISES
In 1965, Bureau of Public Enterprises was established in the ministry of Finance.
In 1985 it was replaced by a full fledged Department of Public Enterprises under the ministry of Industry.
Public Enterprises Selection Board (set up in 1974)
Chairman and three members
- Autonomous decision making body.
- Works under the administrative control of the department of personnel and training which is a part of the Ministry of Personnel, Public Grievances and Pensions.
- Make recommendations to the Government for appointment to full time board posts of chief executives, functional / executive directors and part time directors of Central public enterprises
- Advise on organizational structure
- Oversee management development activities
Public Enterprises Role & Performance
Industrial Policy Resolution 1956: Important role to Public Sector
- To accelerate economic development and rate of growth
- Economic infrastructure
- prevent monopolies and concentration of wealth
- attain self reliance in strategic fields to reduce dependence on foreign technology
- regional balance development
- employment opportunities and standard of living
- assistance for the development and expansion of small and ancillary industries
- redistribution of income and wealth
- In 1951 only 5 with investment Rs 29 crore
- In 2003, their number increased to 240 with an investment of Rs 3,33,475 crores
- all round development of the economy. Contributed entire output of lignite, copper, petroleum, 80% of zinc, 95% coal, 50% steel and aluminum, 1/3 fertilizers.
- model employers, social amenities housing, schools, hospitals, recreation centers. In 2003 1.87 million employees.
- Account for 1/4 of the export earning.
- Corporate tax, excise, custom duties, dividends. Rs 81926 crore in 2003.
- Important role in collecting savings and mobilization of resources for public investment. IDBI, IFCI, LIC, UTI, SBI and so on
Out 240, 100 are loss making, 50 sick industrial enterprises which have accumulated whooping losses.
Reasons: many for failures………………………….
Impact of Liberalization कल करेंगे