Podcast
Questions and Answers
What distinguishes a Departmental Undertaking from a Statutory Corporation?
What distinguishes a Departmental Undertaking from a Statutory Corporation?
- Departmental Undertakings are created by passing an Act of Parliament.
- Departmental Undertakings are financed completely by the government. (correct)
- Departmental Undertakings are managed by an independent board.
- Departmental Undertakings have a separate legal entity status.
Which of the following is a key feature of a Statutory Corporation?
Which of the following is a key feature of a Statutory Corporation?
- Subject to daily government control.
- Legal entity recognized separately from the government. (correct)
- Formed under a general business license.
- Owned by private investors.
What is a significant disadvantage of a Departmental Undertaking?
What is a significant disadvantage of a Departmental Undertaking?
- They promote quick decision-making.
- They have flexibility in operations.
- They are financially autonomous.
- They often experience bureaucratic inefficiencies. (correct)
How does a Government Company operate in relation to the government?
How does a Government Company operate in relation to the government?
Which of the following best describes the characteristics of Statutory Corporations?
Which of the following best describes the characteristics of Statutory Corporations?
What is a notable merit of Government Companies compared to Departmental Undertakings?
What is a notable merit of Government Companies compared to Departmental Undertakings?
Why might statutory corporations still experience government interference?
Why might statutory corporations still experience government interference?
What is a main advantage of departmental undertakings in terms of public accountability?
What is a main advantage of departmental undertakings in terms of public accountability?
Flashcards
Departmental Undertaking
Departmental Undertaking
Government-run businesses directly controlled by a specific ministry. They are considered part of the government.
Statutory Corporation
Statutory Corporation
Organizations created by an Act of Parliament, enjoying operational independence but owned by the government.
Government Company
Government Company
Companies where the government holds at least 51% of shares, but operating like private businesses.
Fully financed by the government
Fully financed by the government
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Separate legal entity
Separate legal entity
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Flexibility
Flexibility
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Lack of Flexibility
Lack of Flexibility
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Independent Status
Independent Status
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Study Notes
Departmental Undertaking
- Government-run businesses directly controlled by a specific ministry.
- Treated as part of the government.
- Examples: Indian Railways (Ministry of Railways), Post Office (Ministry of Communications).
- Fully financed by the government.
- Part of the government department.
- Employees are government servants.
- Complete control by the concerned minister.
- Revenue goes directly to the government treasury.
Merits of Departmental Undertakings
- Government Control: Prevents misuse of public funds.
- National Security: Suitable for sectors like defense.
- Public Accountability: Directly managed under parliament.
Demerits of Departmental Undertakings
- Lack of Flexibility: Slow decision-making due to government interference.
- Bureaucratic Approach: Leads to inefficiency.
- Red Tape: Excessive formalities delay work.
Statutory Corporation
- Special organizations created by an Act of Parliament.
- Independent in operations but owned by the government.
- Examples: RBI (Reserve Bank of India), LIC (Life Insurance Corporation of India).
- Formed under a special Act of Parliament.
- Fully owned by the government.
- Separate legal entity.
- Financial autonomy (freedom to manage finances).
- Own rules for staffing and operations.
Merits of Statutory Corporations
- Flexibility: Operational decisions taken independently.
Demerits of Statutory Corporations
- Government Interference: Still under government pressure for policies.
- Red Tapism: Delays in action.
- Rigid Structure: Fixed framework, difficult to adapt quickly.
Government Company
- Company where the government owns at least 51% of the shares.
- Operates like a private business.
- Examples: SAIL (Steel Authority of India), BHEL (Bharat Heavy Electricals Limited).
- Registered under the Companies Act.
- Managed by a board of directors nominated by the government.
- 51% or more shares owned by the government.
- Operates like a private company with some government control.
Merits of Government Companies
- Easy Formation: Registered like any other company.
- Independent Status: Operates efficiently with fewer restrictions.
- Operational Autonomy: Decisions are faster than departmental undertakings.
Demerits of Government Companies
- Limited Freedom: Controlled indirectly by the government.
- Inefficiency: Misuse of funds if not managed properly.
- Accountability Issues: Employees might lack commitment compared to private companies.
Comparison Table (Departmental Undertaking, Statutory Corporation, and Government Company)
| Aspect | Departmental Undertaking | Statutory Corporation | Government Company |
|---|---|---|---|
| Example | Indian Railways, Post Office | RBI, LIC | SAIL, BHEL |
| Formation | Part of government department | Special Act of Parliament | Registered under Co. Act |
| Control | Fully by government | Independent board | Fully by government / Independent board |
| Flexibility | Least flexible | Moderately Flexible | Most flexible (relative to Department undertaking) |
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