question_answer

It is an organization which is a public enterprise. It came into existence by a special Act of the parliament. Its powers and functions, rules and regulations governing its employees and its relationship with government departments are defined by the Act/ statute. It is a corporate body created by the legislature with defined powers and functions and is financially independent. It has a clear control over a particular type of commercial activity or a specified area. It has a separate legal entity, i.e. in the eyes of law, it is a different person.

(a) Identify the form of organization being referred to in above lines.

(b) Explain any two merits of this form of organization.

(c) Explain any two demerits of this form of organization.

(d) Give two examples of this form of organization.

Answer:

Ans.     (a) Statutory Corporation

(b) Merits:

(a) They have operational Flexibility.

(b) They have an autonomous set up and hence they are free from interference.

(c) Demerits:

(i) Autonomy of these corporations is theoretical only. Practically there is lot of interference.

(ii) Members of Board of directors are appointed by the government who are civil servants, politicians and professionals. They also face pressure from government bodies.

(d) Reserve Bank of India, Life Insurance Corporation of India, Food Corporation of India, State Financial Corporation, Damodar Valley Corporation, State Bank of India etc.