📘 Chapter 3 – Public, Private and Global Enterprises

In any economy, there are different types of business organisations based on ownership and control. This chapter explains the three major forms:

1. Private Sector Enterprises

2. Public Sector Enterprises

3. Global (Multinational) Enterprises

 

✅ 1. Private Sector Enterprises

Private sector enterprises are owned, managed, and controlled by private individuals or groups. Their main goal is to earn profit.

These include:

• Sole proprietorships

• Partnerships

• Joint Hindu Family businesses

• Companies (private and public limited)

• Cooperatives (if privately run)

Features of Private Sector:

• Ownership lies with private individuals

• Profit is the main motive

• Capital is arranged by owners or shareholders

• Decisions are quick and flexible

• Less government control

 

✅ 2. Public Sector Enterprises

Public sector enterprises are owned and operated by the government (either central, state, or both). Their aim is not just profit, but also social welfare and development.

Objectives of Public Sector Enterprises:

• To provide essential goods and services

• To create employment opportunities

• To promote balanced regional development

• To reduce income inequalities

• To support the economy and public welfare

 

✳️ Forms of Public Sector Enterprises

There are three main forms of public sector enterprises in India:

 

A. Departmental Undertakings

These are directly managed by government departments (like Railways or Post Office). They are part of the government and work under a ministry.

Features:

• No separate legal status

• Managed by government officials

• Controlled by a government ministry

• Financed by the government treasury

• Employees are government employees

Merits:

• Full control by the government

• Good for national security (e.g., defence)

• Revenue goes directly to government

Limitations:

• Lack of flexibility

• Delays in decision-making

• Political interference

• Low motivation among employees

 

B. Statutory Corporations

These are public enterprises formed by a special act of Parliament or State Legislature. They have their own identity and work independently.

Examples: LIC (Life Insurance Corporation), ONGC (Oil and Natural Gas Corporation), SBI (State Bank of India – before it became a company)

Features:

• Separate legal status

• Government-owned but autonomous

• Can sue and be sued in their own name

• Not bound by government rules and procedures

Merits:

• Operational freedom

• Quick decisions

• Suited for commercial activities

• High public confidence

Limitations:

• Government still controls appointments and funding

• Political interference possible

• Less flexible than private companies

 

C. Government Companies

A government company is a company in which at least 51% of the shares are held by the government. It is registered under the Companies Act.

Examples: SAIL (Steel Authority of India Limited), BHEL (Bharat Heavy Electricals Limited), GAIL (Gas Authority of India Limited)

Features:

• Formed under Companies Act

• Separate legal entity

• Government controls the majority of shares

• Can sue and be sued

• May have both public and private investors

Merits:

• Greater flexibility in operations

• Easy to form and manage

• Works with business efficiency

• Suitable for industries that require investment and expertise

Limitations:

• Government control still exists

• Less transparency than private companies

• Sometimes used for political purposes

 

✅ 3. Changing Role of Public Sector

Over time, the public sector in India has evolved. Initially, the government owned many industries, especially after independence, to promote development. But after the 1991 economic reforms, the focus shifted to:

• Privatisation: Selling or transferring government companies to private hands

• Disinvestment: Selling a part of the government’s shares to reduce ownership

• Greater efficiency and competition

The public sector is now focused more on areas of national importance, like defence, railways, atomic energy, and infrastructure.

 

✅ 4. Global Enterprises (Multinational Corporations - MNCs)

These are large companies that operate in more than one country. They have their headquarters in one country (home country) and branches in other countries (host countries).

Examples: Coca-Cola, Microsoft, Toyota, Nestlé, Unilever

Features:

• Huge capital and assets

• Operate in many countries

• Advanced technology

• Global brand and marketing

• Centralized control but local management

Merits:

• Create employment

• Improve quality and technology

• Help in development of host countries

• Promote international trade

Limitations:

• May exploit local resources

• Can harm domestic industries

• May interfere in political matters

• Profits go to the home country

 

✅ 5. Joint Ventures and Public-Private Partnership (PPP)

• Joint Venture: When two or more businesses (including foreign companies) join hands to form a new company, sharing capital, risk, and profits.
  Example: Maruti-Suzuki, a joint venture between India’s Maruti and Japan’s Suzuki.

• Public-Private Partnership (PPP): A collaboration between the government and private companies to provide public services or infrastructure.
  Example: Metro rail projects, airports, highways.

 

✅ Conclusion

Different enterprises serve different purposes. Private sector focuses on profit and efficiency. Public sector works for national welfare and development. Global enterprises bring in foreign investment and technology. The right balance between all three is necessary for a country's growth.