Forms of Organising Public Sector Enterprises

For the government to take part in business and the economic life of the country, it needs some kind of organisational framework through which to function. In the private sector you have already studied the sole proprietorship, partnership, Hindu undivided family, cooperative and company. A parallel question arises for the public sector as it grows: what form of organisation should a public enterprise take?

Why public enterprises are formed

• The government has a major role in the economy, but it acts through its offices, officers and employees, who take decisions on its behalf.
• To participate directly in economic activity, the government sets up public enterprises, expected to contribute to the country's economic development in today's liberalised, competitive world.
• These enterprises are owned by the public and accountable to the public through Parliament.

Their defining characteristics

• Public ownership — they belong to the public.
• Public funds — public money is used for their activities.
• Public accountability — they answer to the public through Parliament.

Choosing a form

• The form a public enterprise takes depends on the nature of its operations and its relationship with the government; the most suitable form depends on the enterprise's own requirements.
• Whatever the form, a public sector organisation should still ensure sound organisational performance, productivity and quality standards. …