Public Enterprises

Concepts of Public Enterprises

Public enterprises are nothing but government undertakings. They are the corporate body established under the sole ownership of government incorporation with private undertakings. Government authorities also take active part in the management of the enterprise. Government directly participates in economic activities of the nation only through public enterprises

Characteristics of Public Enterprises

The following are the common features of public enterprise:

1. government ownership
2. financial autonomy
3. monopoly in business
4. separate legal entity
5. perpetual existence
6. govt. management and control
7. public accountability
8. service motive
9. business oriented
10. maturity in decision

Importance of Public Enterprises

Public enterprises have been playing important role in economic growth of the nation. Primarily, it concentrates to fulfill economic and social needs of the society along with fulfillment of economic objectives. The following are importance of public enterprises:

1. establishment heavy industries
2. development of infrastructure
3. creation of employment
4. public utility concerns
5. Source of Govt. revenue
6. avoid uncertainty
7. balanced development
8. planned development
9. preservation of national wealth
10. accelerate economic growth

Types of Public Enterprises

Public Enterprises may be classified into various types. They are:

A. Departmental undertakings:

Departmental undertaking is an enterprise which directly managed by department of a ministry. All the revenue of enterprise deposited into got treasury and payment are made through govt. budget. Such enterprise consist of railways, post office, ports etc. In the context of Nepal, Postal department is one of the examples of departmental undertaking

The common features of departmental undertakings are

1. no separate legal entity,
2. autonomous in financial activities
3. management and control
4. government rules and regulation,
5. and accountability to parliament.

B. Public corporations:

Public corporations are established through special act passed by the parliament. The objectives, nature of business, right, duties, and operating system are also clarified in the act. Their main motive is not to earn maximum profit but to involve in socio-economic welfare of society. They have a separate legal entity.

The common features of public corporations are

1. establishment government ownership,
2. separate legal entity,
3. management and control,
4. financial autonomy,
5. own employee,
6. and service motive

C. Government company:

Government Company is established according to the company act. In Government Company, the government invests whole or more than fifty percent of equity shares. The main motive for the formation of such a company is to develop economic activities with the joint effort of private and public participation. It has limited liabilities and enjoys some special facilities which are not available to other non-government enterprises.

The common features of Government Company’s are

1. incorporation,
2. ownership
3. separate legal entity,
4. management and control,
5. financial autonomy,
6. own employees and
7. accountable to parliament