Answer:
Ans. These are established as departments of the ministry and are financed, managed and controlled by either central government or state government. Examples: Indian railways, post and telegraph.
Features
1. No separate entity: It does not have separate legal entity.
2. Finance: It is financed by annual budget allocation of the government and all its earnings go to governm.ent treasury.
3. Accounting and Audit: The government rules relating to audit and accounting are applicable to it.
4. Staffing: Its employees are government employees and are recruited and appointed as per government rules.
5. Accountability: These are accountable to the concerned ministry.
Merits
1. It is more effective in achieving the objective laid down by government as it is under the direct control of govt.
2. It is a source of government income as its revenue goes to government treasury.
3. It is accountable to parliament for all its actions which ensures proper utilisation of funds.
4. It is suitable for activities where secrecy and strict control is required like defence production.
Demerits
1. It suffers from interference from minister and top officials in their working.
2. It lacks flexibility which is essential for smooth operation of business.
3. It suffers from red tapism in day to day work.
4. These organizations are usually insensitive to consumer needs and do not provide goods and adequate service to them.
5. Such organisations are managed by civil servants and government officials who may not have the necessary expertise and experience in management.
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