Private, Public and Global Enterprises

• Introduction

  • Economic System basis
  • Role of Business Enterprises in India
  • Mixed Economy framework

• Forms of Organizing Public Sector

  • Departmental Undertakings
    • Oldest form
    • Directly under ministry control (e.g., Indian Railways, Post Office)
    • Features: Budgetary allocation, government employees, high control
    • Merits: Direct parliamentary control, secrecy maintained
    • Limitations: Red tape, lack of flexibility, political interference
  • Statutory Corporations
    • Setup under a special Act of Parliament
    • Financially independent (e.g., LIC, RBI, UTI)
    • Features: Corporate body, government owned, own staff rules
    • Merits: Operational flexibility, financial autonomy
    • Limitations: Operational rigidity, political interference in big decisions
  • Government Companies
    • Registered under Companies Act (2013 or 1956)
    • Minimum 51% paid-up capital held by government (e.g., STC, BHEL, ONGC)
    • Features: Separate legal entity, board of directors managed, audit by CAG
    • Merits: Easy formation, autonomous management
    • Limitations: Lack of accountability, evasion of constitutional responsibility

• Changing Role of Public Sector

  • Pre-1991 approach: Prime mover, infrastructure building, regional balance
  • Post-1991 Industrial Policy (New Economic Policy)
  • Key Strategies:
    • Disinvestment of public sector shares
    • Reduction in reserved industries count
    • MoU (Memorandum of Understanding) system for autonomy
    • Referral to BIFR for sick units

• Joint Ventures (JVs)

  • Definition: Collaboration between two or more enterprises for mutual benefit
  • Types:
    • International JV (Foreign + Indian investor)
    • Domestic JV (Both local investors)
  • Benefits:
    • Access to new markets and advanced technology
    • Resource sharing and risk reduction
    • Cost savings and innovation

• Global Enterprises (Multinational Corporations - MNCs)

  • Definition: Huge industrial organizations operating in multiple countries
  • Key Features:
    • Giant size and massive capital resources
    • International operations through branches/subsidiaries
    • Centralized control from home country
    • Advanced technology and aggressive marketing
  • Advantages for Host Country:
    • Employment generation and foreign investment inflows
    • Managerial expertise and technological upgradation
  • Criticisms:
    • Threat to domestic/small industries
    • Drain of wealth and cultural erosion
    • Ignoring local priorities