SUKHI BHAIYA CHAPTER 3 PRIVATE, PUBLIC AND GLOBAL ENTERPRISES SUKHVINDER SINGH CLASSES

3.1 INTRODUCTION – MIXED ECONOMY KA Forms: Run just like a government department, under a concerned
TADKA 🌏 Departmental Undertaking
Statutory Corporation
minister.
📌 Example:
After India got independence in 1947, our leaders wanted
development for everyone, not just profit-making for a few. Government Company Indian Railways → under
So, India followed Socialistic Pattern of Economy → more 📌 Example: Indian Railways, LIC, ONGC. Railway Minister
focus on public welfare. Industrial Policy Timeline India Post → under Ministry
But instead of going 100% socialist or 100% capitalist, we took 1948 & 1956 – Public Sector Zindabad ✅ of Communications
the middle path → Mixed Economy. Public sector given dominant role for rapid industrialisation. Features of Departmental Undertaking (Mnemonic: BIG MA)
💡 Mixed Economy = Both Public Sector (Government) + Private Some industries reserved only for public sector. B – Budget from Government – Financed from Annual
Sector (Individuals) work together for economic growth. Private sector entry restricted (via licensing). Budget & revenue goes to government treasury.
📌 Example: 1948–1991 – 4 Decades of Public Sector Dominance 🕰 I – Inbuilt Audit – Subject to same accounting & audit
Think of India’s economy as a cricket team — some players Result: Slow growth, low efficiency. rules as other govt. activities.
(businesses) are run by the Government, others are run by 1991 – Economic Reforms 💡 G – Government Employees – Staff are govt. employees
private owners, but they all play for Team India’s growth. Disinvestment of public sector units. (UPSC, SSB recruitment, IAS officers as heads).
3.2 PRIVATE SECTOR AND PUBLIC SECTOR Greater role for private sector. M – Managed by Ministry – Direct control of a
Encouragement of Foreign Direct Investment (FDI). government ministry.
India’s economy is divided into two main sectors:
1️⃣ Private Sector 🏢 Entry of Global Enterprises.
Post-1991 Indian Economy
A – Accountability to Parliament – Minister is answerable
to Parliament.
Owned & managed by individuals or group of individuals.
Now we have: Merits of Departmental Undertaking (Mnemonic: CAPS)
Main aim: Profit-making.
Forms: 1. Public Sector Units (PSUs) C – Complete Govt. Control → Full ownership & control by
2. Private Sector Enterprises govt. ministry.
Sole Proprietorship
Joint Hindu Family Business 3. Global Enterprises (MNCs) A – Answerable to Parliament → Performance regularly
reviewed.
Partnership
Co-operative Society 3.3 Forms of Public Sector Enterprises P – Public Revenue Source → Earnings go to government
The Government plays a big role in the formation of the public treasury.

📌
Joint Stock Company
Example: Reliance Industries, TATA Motors, Infosys. sector. S – Security Friendly → Best for strategic industries

2️⃣ Public Sector 🏛 These enterprises are owned by the public (taxpayers) and are
accountable to the public through Parliament.
(defence, atomic energy).
Limitations of Departmental Undertaking (Mnemonic:
Owned & managed wholly or partly
They are mainly of three types: FLDRIP)
by Government (Central or State).
Aim: Public welfare 1. Departmental Undertaking F – Flexibility Missing→ Low autonomy, slow
2. Statutory Corporation improvements.
+ Economic development.
Can be part of a ministry or created 3. Government Company L – Lack of Quick Decisions → Delay due to approvals
1️⃣ Departmental Undertaking from ministry.
by a Special Act of Parliament.
Oldest & most traditional form of public enterprises. D – Defensive Approach → Bureaucrats avoid risky
ventures.
SUKHI BHAIYA SUKHVINDER SINGH CLASSES
R – Red Tapism → Excessive formalities even for small L – Limited Accountability → Accountable to 📌 Examples:
matters. Parliament/State Legislature. BHEL (Bharat Heavy Electricals Ltd.)
→
I – Interference (Political) Ministers may influence Merits of Statutory Corporation (Mnemonic: FAR NO) ONGC (Oil and Natural Gas Corporation)
decisions. F – Freedom → Operational independence, less political SAIL (Steel Authority of India Ltd.)
P – Poor Consumer Orientation → Not very sensitive to interference. Features of Government Company (Mnemonic: COMPANY)
customer needs. A – Accountability → Answerable to Parliament → C – Created under Companies Act (No separate Parliament
Suitability – When to Use Departmental Undertakings? transparent working. Act needed)
1. National Security cases (Defence, Atomic Power). R – Revenue Retention → Can use earnings for own growth. O – Own Legal Identity (Can sue & be sued, own
2. When absolute govt. control is needed (India Post, All N – National Interest Friendly → Works for social welfare property)
India Radio). + development. M – Majority Shares ≥ 51% by Govt
3. Projects with huge capital needs where private sector won’t O – Operational Flexibility → More business-like approach P – Private-Style Operations (Competes like private
invest. than govt. departments. companies)
4. As a source of revenue for the govt. (Indian Railways). Limitations of Statutory Corporation (Mnemonic: PARDI) A – Appoints Staff as per its own service rules (MOA &
2️⃣ Statutory Corporation P – Political Influence → Still some interference possible in AOA)
A Statutory Corporation is a public enterprise created by a appointments & policies. N – Not bound by strict govt. accounting rules (special
Special Act of Parliament or State Legislature. A – Autonomy Misuse → Without check, risk of inefficiency. audit by govt. auditor)
This Act defines its powers, functions, rules, and R – Rigid Structure →Change in powers/rules needs Y – Yields Funds from govt. shares + capital market
regulations. Parliament approval. Merits of Government Company (Mnemonic: EASY)
It is owned by the Government but enjoys separate legal D – Delay in Decisions → Some major moves still require E – Easy to Form → Just register under Companies Act,
status and more autonomy than Departmental Undertakings. govt. nod. no special law needed
📌 Examples: I – Inflexible HR → Recruitment often follows govt.-style A – Autonomy → More freedom in business decisions than
LIC (Life Insurance Corporation of India) procedures. departmental setups
Air India (before becoming private again) Suitability – When to Use Statutory Corporations? S – Separate Entity → Legally independent from
State Bank of India (SBI) For services needing public trust + operational freedom (like government machinery
Food Corporation of India (FCI) insurance, banking). Y – Yields Public Good → Controls prices, prevents
For projects requiring large capital investment and long-term unhealthy competition
Features of Statutory Corporation (Mnemonic: LEGAL) stability. Limitations of Government Company (Mnemonic: GOI)
→
L – Legal Entity Separate legal identity, can sue or be For balancing social welfare & commercial viability. G – Govt Dominance → Even with autonomy,
sued. 3️⃣ Government Company ministers/bureaucrats influence decisions
E – Established by Act → Created through special (Registered under Companies Act, 2013) O – Oversight Missing → Not directly answerable to
legislation. A Government Company is like a normal Parliament like Departmental Undertaking
G – Government Owned → Entirely or majorly owned by company, but majority shares (≥ 51%) I – Intention Defeat → Sometimes behaves like a govt.
the government. are held by the Government — either dept. instead of a business
A – Autonomous → Freedom to take operational decisions. Central, State, or both. Suitability – When to Use?
When you want govt. ownership + private-style
SUKHI BHAIYA SUKHVINDER SINGH CLASSES
competition
For large-scale industries (steel, oil, power) needing huge investment
For balancing profit motive + public welfare
COMPARISON OF PUBLIC SECTOR ENTERPRISES – DSG COMPARISON OF PRIVATE & PUBLIC ENTERPRISES
Basis of Departmental Statutory Corporation Government
Comparison Undertaking 🏛 📜 Company 🏢 Basis Private Enterprise Public Enterprise

By ministry decision, By special Act of Owned, managed, controlled by Owned, managed, controlled by
Under Companies Act, Ownership
Formation part of govt. Parliament/State private individuals Government
2013
department Legislature Objective Main aim = Profit maximisation Main aim = Social welfare + service
≥ 51% owned by Govt. Raised from private investors, Raised from Government funds
Ownership Fully owned by Govt. Fully owned by Govt. Capital
(Central/State/Joint) banks, shares etc. (tax, budget)
No separate entity (part Managed by owners or Managed by government
Legal Status Separate legal entity Separate legal entity Management
of Govt.) professional managers officials/bureaucrats
Headed by govt. Managed by Board of Accountable to Accountable to Parliament/State
Managed by Board of Accountability
Management minister & civil servants Directors (appointed owners/shareholders Legislature
Directors as per Act
(IAS, UPSC staff) by Govt.) Slow, lengthy (due to rules,
Decision-making Quick, flexible, profit-driven
Govt. treasury & annual Govt. capital + own Share capital (Govt. + procedures, red-tapism)
Finance
budget earnings sometimes private) Usually high (profit motive, Usually low (no competition,
Efficiency
Limited accountability competition) monopoly, political interference)
Accountabilit Directly accountable to Accountable to
(audit by CAG, report Examples Reliance, TATA, Infosys Indian Railways, ONGC, LIC
y Parliament Parliament/Legislature
to Govt.)
High flexibility (works
Flexibility Very rigid, red-tapism Moderate flexibility
like private co.)
Indian Railways, India LIC, RBI, ONGC (earlier
Examples SAIL, BHEL, HMT
Post Air India)
SUKHI BHAIYA SUKHVINDER SINGH CLASSES
🌍 GLOBAL ENTERPRISES / MNC of goods. Toll roads / Highways🚘
(MULTINATIONAL CORPORATIONS) B – Balance of Payments Help: Can increase foreign Hospitals🏥 under PPP
📖 Meaning: exchange earnings. ✨ Features of PPP
A Global Enterprise (also called MNC – ❌ Limitations (Demerits) of MNCs 💡 Mnemonic = “CO-SHARE”
Multinational Corporation) is a company 💡 Mnemonic: "DRAIN" 🚰 1. Collaboration → Govt. + Private jointly work
that operates in more than one country. D – Decision Power Abroad: Control remains in foreign 2. Objective → Provide public services/infrastructure
👉 Head office in home country + country. 3. Sharing → Risk, responsibility & resources are shared
branches/subsidiaries in other countries. R – Repatriation of Profits: Profits sent back, not fully 4. Hybrid control → Govt. policy + Private efficiency
Example: Coca-Cola, Nestle, Microsoft, Samsung, McDonald’s. used in host country. 5. Agreement based → Formal contract between both parties
🔑 Features of Global Enterprises A – Adverse Impact on Local Firms: Local small industries 6. Returns → Private earns returns, Govt. ensures service
💡 Mnemonic: "BIG STAR" ✨ may suffer. 7. Examples → Metro, Airports, Highways, Hospitals
B – Big Size: Very large with huge resources. I – Interference in Politics: May influence economic &
I – International Operations: Present in many countries. political decisions.
G – Global Brand: Strong worldwide brand identity. N – Neglect of Rural Sector: Focus mostly on urban &
S – Sophisticated Technology: Use advanced R&D and profitable areas.
modern tech. 🎯 Suitability
T – Top-class Management: Professional managers from MNCs are suitable when:
different nations. A country needs foreign capital & technology.
A – Advertising Power: Heavy spending on ads & promotions Local industries need global exposure & collaboration. ✅ Strengths / Benefits ❌ Weakness / Limitations
R – Rich Finance: Strong financial base and easy access to Consumers demand world-class quality products. 💡 Mnemonic = “FAST-G” 💡 Mnemonic = “RISKY”
funds. 🌍 PUBLIC-PRIVATE PARTNERSHIP (PPP) 1. Funds mobilised from 1. Risk of profit motive > public
📌 Example: 📌 Concept private → Less burden on welfare
Nestle India → Maggi, KitKat🍫 PPP = Partnership between Government (Public) + Private Sector Govt. 2. Inequality – services may
Pepsi & Coca-Cola→ Global drinks in Indian market. Govt. → provides support, land, 2. Advanced tech & efficiency become costly
Samsung → Phones, TVs everywhere. policy, monitoring from private sector 3. Slow decision due to conflict
✅ Merits (Advantages) of MNCs Private sector → brings capital, 3. Speedy project completion b/w Govt. & private
💡 Mnemonic: "FAST JOB" 🏃‍♂️💼 technology, efficiency 4. Transparency & 4. Kickbacks & corruption
F – Foreign Investment: Brings in capital to host country. Goal → deliver public services accountability improves possible in awarding contracts
A – Advanced Technology: Transfers latest tech & know- /infrastructure like roads, airports, 5. Government focus remains 5. Yield (benefit) sometimes low
metros, hospitals etc. on policy, not execution in rural/non-profitable areas
how.
S – Skilled Employment: Creates jobs, trains workers. 👉 Simple line: “PPP is jahan sarkar aur private company milke ✅ Conclusion:
T – Trade Growth: Boosts exports/imports. ek project chalate hain, risk bhi share hota hai, reward bhi.” PPP = Best for large infra projects → Metro, Airports,
J – Joint Ventures: Collaboration with local firms. 🎯 Example Highways etc.
O – Opportunities for Consumers: Better quality & variety Delhi Metro (DMRC) 🚇 → Govt. + Private help But Govt. must regulate properly to balance profit vs public
interest.
SUKHI BHAIYA QUESTIONS FOR PRACTICE SUKHVINDER SINGH CLASSES
OBJECTIVE QUESTIONS Q11. The Indian Railways is owned, controlled, and financed State Legislature. (______)
entirely by the Government of India. Statutory Corporations enjoy both financial and
Identify the Concept
Q1. This type of enterprise works directly under a ministry 👉 Which form of organisation is this? administrative independence. (______)
Q12. ONGC Ltd. is majority-owned by the government but In a Government Company, private investors must hold at
and is financed from the government budget.
👉 Identify the concept. functions under the Companies Act. least 51% of the share capital. (______)
Q2.LIC of India was established under a special Act of 👉 Name the form of organisation. Multinational Corporations (MNCs) operate only in their
Q13. Reliance Jio joined hands with the government to spread home country. (______)
Parliament.
👉 Identify the type of public enterprise. digital services in rural areas. Public-Private Partnership (PPP) combines resources and
Q3. Hindustan Aeronautics Ltd. has more than 51% shares 👉 What form of enterprise is this? expertise of both public and private sectors. (______)
owned by the Central Government, though private investors Q14. In this type of organisation, employees are treated as MCQs
also hold shares. civil servants and are transferable to other departments. Q1. Which of the following is the oldest form of public
👉 Name the form of enterprise. 👉 Identify it. sector enterprise?
Q4. Nestlé operates in more than 150 countries, Q15. This form of enterprise is suitable where public interest a) Statutory Corporation b) Departmental Undertaking
transferring technology and capital globally. is involved but also requires private efficiency, such as c) Government Company d) Multinational Company
👉 Identify the concept. building smart cities. Q2. LIC of India is an example of:
Q5. In this model, private investors join hands with the 👉 Which concept is this? a) Government Company b) Multinational Company
government to build infrastructure like highways and Fill in the Blanks c) Statutory Corporation d) Departmental Undertaking
airports. 1. A business owned, managed, and controlled by government Q3. In a Government Company, the minimum government
👉 Which model is being referred to? departments is called a __________. ownership should be:
a) 26% b) 51% c) 75% d) 100%
Q6. This enterprise ensures strict parliamentary control, 2. The statutory corporation is created by a __________
but decision-making is very slow because of red tapism. passed in Parliament or State Legislature. Q4. Which of the following enterprises has legal identity
👉 Name the type of enterprise. 3. The minimum government ownership in a government separate from the government?
a) Departmental Undertaking b) Statutory Corporation
Q7. Air India was earlier run under a special statute but company is __________ percent of paid-up capital.
later converted into a government company. 4. Companies like ONGC, SAIL, and LIC are examples of c) Government Department d) None of these
👉 Identify both concepts. __________ sector enterprises. Q5. Hindustan Aeronautics Limited (HAL) is an example of:
a) Government Company b) Departmental Undertaking
Q8. This enterprise has the legal identity of its own, free 5. Enterprises which operate in more than one country are
from government interference, though owned by the state. called __________. c) Statutory Corporation d) Global Enterprise
👉 Identify it. 6. In Public-Private Partnership (PPP), the __________ and Q6. Which of the following is a limitation of Departmental
Undertakings?
Q9. Delhi Metro Rail Corporation was established through __________ sectors collaborate for infrastructure
partnership between Central and State Government along development. a) Professional management b) Political interference
with private support. 7. Global Enterprises are also known as __________ or c) Flexibility in operations d) Separate legal entity
👉 Which type of enterprise is this? __________. Q7. Which of the following is a feature of Multinational
Corporations (MNCs)?
Q10. This enterprise can raise capital from international True or False
markets and spread modern technology worldwide. Departmental Undertakings are accountable to Parliament a) Local operations only
👉 Identify the concept. or b) Centralised ownership in home country
SUKHI BHAIYA QUESTIONS FOR PRACTICE SUKHVINDER SINGH CLASSES
c) Unlimited liability of owners c) ONGC – Government Company research centers, and operations in India. These companies
d) No transfer of technology d) Indian Railways – Statutory Corporation bring advanced technology and investment, but they also
Q8. Which of the following is NOT a benefit of Public- 🔥 HOTS CASE-BASED QUESTIONS dominate the local markets.
👉 Identify the form of enterprise.
Private Partnership (PPP)? Q1.The Indian Railways is owned and managed by the Ministry
a) Better risk-sharing of Railways, Government of India. It provides affordable
👉 Mention one merit and one limitation.
Q7. A steel plant is established by the Government of India
b) Improved efficiency transport services to the public but often faces issues of
under the Companies Act, where government owns 100%
c) Faster completion of projects delays, inefficiency, and huge losses.
d) Total control with the private sector 👉 Identify the form of public enterprise discussed here.
shares. It functions like a private company but is controlled

Q9. Indian Railways is an example of: 👉 State one merit and one limitation of this form.
by the Ministry of Steel.
👉 Identify this enterprise.
Q2. LIC of India is established under a special Act of
a) Departmental Undertaking b) Statutory Corporation
c) Government Company d) Private Company Parliament. It enjoys monopoly in life insurance and its policies
👉 Explain any two features.
Q8. BHEL (Bharat Heavy Electricals Ltd.) is formed under
Q10. Which public enterprise form is created by a Special are framed by government guidelines. At the same time, it is
the Companies Act. It earns profit but is mainly concerned
Act of Parliament or State Legislature? known for slow customer service.
a) Departmental Undertaking b) Statutory Corporation 👉 Which form of enterprise is LIC?
with producing heavy machinery for infrastructure growth of

c) Government Company d) Multinational Company 👉 Give two features of this enterprise.

India.
👉 Which form of public enterprise is it?
Q3. Maruti Udyog Ltd. was established with joint ownership of
Q11. Which of the following provides sovereign functions like
Government of India and Suzuki Motors of Japan. Government
👉 Explain any two merits of this form.
defense and railways? Q9. In a particular state, electricity is supplied by a
owned more than 51% shares. Later, its control shifted more
a) Statutory Corporations b) Global Enterprises department of the state government. It is run by government
towards Suzuki.
c) Departmental Undertakings d) Government Companies
👉 Identify the form of enterprise in its initial stage.
officers and financed from the state budget. Consumers
Q12. Which type of enterprise is more suitable for projects
requiring huge capital and advanced technology?
👉 Explain why government prefers this form in certain
often complain about poor service.
👉 Which form of public enterprise is this?
industries.
a) Government Company b) Departmental Undertaking Q4. Infosys Ltd. is a company formed by private promoters.
👉 Write any two drawbacks of this form.
c) Public-Private Partnership d) Statutory Corporation Q10. In a developing country, the government decides to
The government has no shareholding in it. The company works
Q13. Which of the following is a limitation of Multinational partner with a private company to build a metro rail project.
for profit and has offices in more than 30 countries.
Corporations (MNCs)? 👉 Identify the form of enterprise.
The government provides land and legal clearances while the
a) Creation of employment b) Transfer of technology 👉 Explain two features of this type of enterprise.
private company invests funds and technology.
👉 Identify this form of partnership.
c) Cultural erosion d) Access to international markets Q5. A highway project is started jointly by Government of India
Q14. Which form of public enterprise is most flexible and and a private construction company. The private company
👉 State two applications of such arrangements.
professionally managed? Q11. A multinational company like PepsiCo invests in food
collects toll charges for 15 years and then transfers it back to
processing plants in India. It provides employment,
a) Departmental Undertaking b) Government Company the government.
c) Statutory Corporation d) Joint Hindu Family Business 👉 Identify this arrangement.
technology, and global market access, but critics say it

Q15. Which of the following pairs is correct? 👉 Explain any two benefits of this model.
promotes unhealthy food culture and reduces market share of
local companies.
Q6. Google, Microsoft, Amazon, and Apple have their offices,
a) Air India – Departmental Undertaking
research centers, and operations
👉 Identify this form of enterprise.
b) LIC – Government Company
👉 Explain any two weaknesses of such enterprises.