Answer:
Ans. It is established under a special act passed in parliament or state legislative assembly. Its objectives, powers and functions are clearly defined in the Statute /Act. Examples include Unit Trust of India, Life Insurance Corporation of India, Steel Authority of India Limited etc. Features 1. It is established under a special act which defines its objects, powers and functions. 2. It has a separate legal entity. 3. Its management is vested in a Board of Directors appointed or nominated by the government. 4. It has its own staff, recruited and appointed as per the provisions of act. 5. This type of enterprise is usually independently financed. It obtains funds by borrowing from government or from public or through earnings. 6. It is not subject to same accounting and audit rules which are applicable to Government Department.
Merits 1. Internal autonomy: It enjoys a good deal of autonomy in its day to day operations and is free from political interference. 2. Quick decisions: It can take prompt decisions and quick actions as it is free from the prohibitory rules of government. 3. Parliamentary control: Their performance is subject to discussion in Parliament which ensures proper use of public money. 4. Efficient management: Their Directors and top Executives are professionals and experts of different fields. Demerits 1. Flexibility is for name sake only: In reality, there is not much operational flexibility. It suffers from lot of political interference. 2. Lack of profit motive: Usually they enjoy monopoly in their field and do not have profit motive due to which their working turns out to be inefficient. 3. Corruption: Where there is dealing with public, rampant corruption exists. Thus public corporation is suitable for undertaking requiring monopoly powers e.g., public utilities.
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