Private, Public and Global Enterprises
Class 11 Business Studies · Business Studies · Chapter 3
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Summary
India has a mixed economy with both privately owned and government-owned enterprises, supplemented by global enterprises operating in many countries. The private sector consists of businesses owned by individuals or groups — sole proprietorships, partnerships, joint Hindu families, cooperatives and companies. The public sector consists of organisations owned and managed by the central or state government, marked by public ownership, public funds and public accountability, and shaped by the Industrial Policy Resolutions of 1948, 1956 and 1991. Public enterprises take three forms: departmental undertakings (run as a department of a ministry, funded from the treasury, staffed by government servants — e.g. Railways, Post and Telegraph), statutory corporations (created by a special Act of Parliament with operational autonomy and a body-corporate status) and government companies (registered under the Companies Act with at least 51% government shareholding). After 1991 the role of the public sector changed through disinvestment, reduction of reserved industries, referral of sick units to the BIFR and Memoranda of Understanding for greater autonomy and accountability. Global enterprises or multinational corporations are huge organisations with vast capital, advanced technology, product innovation, marketing strength and centralised control. Joint ventures pool the resources and expertise of two or more firms (contractual or equity-based), giving access to capital, markets, technology, innovation, low-cost production and established brand names. Public Private Partnership (PPP) links public and private entities to build and operate infrastructure, transferring design and construction risk to the private partner.
Private sector and public sectorDepartmental undertakingsStatutory corporationsGovernment companiesChanging role of the public sector after 1991Global enterprises (MNCs)Joint ventures — contractual and equity-basedPublic Private Partnership (PPP)
Key terms
Public sector
Organisations owned and managed by the central or state government, characterised by public ownership, public funds and public accountability.
Departmental undertaking
The oldest form of public enterprise, run as a department of a ministry, financed from the government treasury and staffed by government servants.
Statutory corporation
A public enterprise brought into existence by a special Act of Parliament that defines its powers, objects and operational autonomy.
Government company
A company registered under the Companies Act, 2013 in which the government holds not less than 51% of the paid-up capital.
Global enterprise (MNC)
A huge industrial organisation that operates in several countries with large capital, advanced technology and centralised control.
Joint venture
The pooling of resources and expertise by two or more businesses to achieve a particular goal, sharing risks and rewards.
Extra questions & answers
Try one from this chapter
The public sector consists of enterprises owned and managed by the: