Forms of Government Organisation

Public enterprises in India are organised into three broad forms, each with a different relationship to the Government and a different degree of independence in day-to-day working.

1. Departmental Undertaking. This is the oldest and simplest form — the enterprise is run as a department of the Government itself, financed entirely through the Government budget (annual appropriation), with its revenue paid directly into the Consolidated Fund. It is staffed by government (civil) servants, subject to the same budgeting, accounting and audit rules (audited by the Comptroller and Auditor General) as any other government department, and is directly answerable to the concerned Minister and, through the Minister, to the Legislature. Examples: Indian Railways, India Post (Postal Department), All India Radio.

Its accountability chain runs straight up the government hierarchy: Departmental Undertaking → answerable to its Department/Secretary → answerable to the concerned Minister → answerable to Parliament/the Legislature.

2. Statutory (Public) Corporation. This form is created by a special Act passed by Parliament or a State Legislature, which itself defines the corporation's powers, objectives, capital structure and the extent of Government control. It is a separate legal entity — it can own property, sue and be sued in its own name — and is financed by the Government (fully or largely), but manages its day-to-day affairs with far more autonomy than a departmental undertaking, without needing to follow ordinary government budgeting/service rules. It is still ultimately answerable to the Legislature and the concerned Ministry, but through its own annual report rather than direct departmental control. Examples: Life Insurance Corporation of India (LIC), Reserve Bank of India, Food Corporation of India.

3. Government Company. A Government Company is registered and incorporated under the Companies Act, 2013, exactly like a private company, in which not less than 51% of the paid-up share capital is held by the Central Government, a State Government, or jointly by both (together with any Government company). It is governed primarily by company law rather than a special statute, has its own Board of Directors, and enjoys the greatest operational autonomy of the three forms, while the Government still exercises ultimate control through its majority shareholding. Examples: Bharat Heavy Electricals Limited (BHEL), Steel Authority of India Limited (SAIL), Oil and Natural Gas Corporation (ONGC).

| Basis | Departmental Undertaking | Statutory Corporation | Government Company |

|---|---|---|---| …