Advantages and Disadvantages of Public Corporation

Advantages or Merits of Public Corporation

The following are some of the advantages or merits of public corporation.

1. Autonomy: Public corporation is an autonomous set up. Therefore it enjoys considerable independence and flexibility in its operations. Initiatives can be taken to tap opportunities and to improve efficiency.

2. Protection of public interest: Public corporations can formulate and implement policies which promote public welfare. Policies of the corporation are subject to ministerial review and parliamentary scrutiny. Therefore it would be ensured that public interest is protected and promoted.

3. Red tapism minimized: In a public corporation red-tapism and bureaucratic delays are minimized to a great extent. A file need not pass through different levels of bureaucracy as in a departmental undertaking.

4. Speedier decisions: Since bureaucracy and red-tapism are reduced to a considerable extent in public corporations, quick decisions can be taken. Delays in decision making is avoided and therefore problems can be solved faster, opportunities can be tapped in a better manner and overall functioning of the organization is improved.

5. Erase of raising funds: Since public corporations are government owned statutory bodies, they can raise the required funds by issuing bonds. They need not entirely depend on the government for their financial requirements.

6. Comparative prices: Profit is not the primary motive of public corporations. So it does not strive to charge high prices to maximize profits. Since it is basically formed to serve the public interest, it charges lower prices. Such lower prices benefit the general public and more number of people are able to consume the services of public corporations.

7. Economies of scale: Since they operate on a large scale, public corporation can reap the benefits of economies of scale. The benefits derived from economies of scale can be passed on to the general public in the form of cheaper prices, stable prices, better quality of service etc.

8. Employee welfare: A public corporation follows its own recruitment policy. It can recruit the best talent and provide them appropriate training. Better perks and amenities can be provided to the employees which improves their motivation level. Through these measures it is able to maintain a healthy employer-employee relationship, attract and retain talent and improve productivity levels.

Disadvantages or Demerits of Public Corporations

The following are some of the disadvantages or demerits of public corporations.

1. Political interference: Public corporations are a State enterprise. Though autonomy in functioning is said to be one of the strong points of public corporations, the reality is otherwise. They suffer from continued political interference and have to act according to the wishes of the political masters. For e.g. even after the steep increase in oil prices in global markets, ONGC is not able to increase its prices in the domestic markets, because of political interference.

2. Misuse of power: It enjoys immunity from parliamentary inquiry into its day-to-day functioning. Such immunity might induce some officials to misuse their power and indulge in corrupt practices. It takes considerable amount of time and effort to unearth corrupt acts and the corporation loses valuable resources.

3. Financial burden: When a public corporation incurs losses, the government provides subsidies to make good the loss. Such provision of subsidies on a regular basis places a great strain on government finances, more-so in the case of a developing economy like India.

4. Consumer interests ignored: Many public corporations operate as monopolies. Absence of competition leads to lethargic functioning, reduced focus on efficiency improvements and innovation and poor customer service with the result that consumer interests are ignored.

3 Comments

Leave a Reply




Recent Posts


Related pages


debtors ratio definitionexplain urbanisationadvertisements with propagandadecentralization benefitsdefinition of quota samplingvoidable and void contractultra vires doctrine definitiona project organizationwhat are bonds and debentureswhat is the meaning of gattroles and responsibilities of salesmanleverage ratio calculationdefinition of flexible budgetnumeric filingtypes of filing systemswhat is the difference between shares and debenturesadvantages and disadvantages of perpetual inventory systemqualitative tools of monetary policydefine debentureswhat does departmentalization meandefine indisciplineunctad commoditiessalesman duty and responsibilitymeaning of creditor in hindiwhat is chit fund companiespetty cash safewhat is the purpose of a sinking fundeliminate the middlemanexemplary damages meaningrbi nbfcdoctrine of substantial performanceimportance of reinsuranceoperating cycle of working capital managementgatt full formbank nationalisationbounced cheque definitiontypes of nonprobability sampling methodsdecentralized organizationfull convertibility of currencyjobber in stock marketindian contract act of 1872what is the role of sebirights and duties of bailormisstatement in prospectusmacroeconomics aggregatesgeneral agreement on tariffs and trade purposeunderwriter meaning in hinditechniques of budgetary controladvantages and disadvantages of importingnovation business lawvoluntary winding up of a companyadvantages of autocratic leaderdisadvantages and advantages of command economydrawbacks of fdibenefits of backward integrationpros of autocratic leadershipmultidomestic business strategycrisil managementmeaning of tourism distribution channeldemerits of foreign aiddecentralised definitionrecent monetary policy of rbiaccrued expenses and outstanding expensesimplementing tqmmultistage cluster random samplingnpv vs irraverage collection period equationretained profits definitionobjects of vouchingretail sales forecasting methodsdifferentiate between financial accounting and managerial accountingformula of average collection periodwhat is voluntary winding updefine periodicaltechniques of marginal costingwhat are debenture bondsdefine middlemenoverheads definition