Question

Choose the correct statement(s) regarding Public Organisations.

1. Public organisations are always fully owned by the government, with no partial ownership allowed.

2. The primary aim of public organisations is to provide goods and services at lower costs to ensure public welfare.

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

Answer:

B. 2 only

Understanding Public Organizations

• Public organizations, also known as Public Sector Undertakings (PSUs) or government entities, are establishments primarily controlled and funded by the government.
• Their overarching goal is to serve the public interest and ensure societal welfare, rather than solely focusing on profit maximization.

Ownership and Control

• It is a common misconception that public organizations are always fully owned by the government. While many are, government ownership can be full (100%) or partial.
• For instance, in Government Companies, the government holds 51% or more of the paid-up share capital. This means private shareholders can hold the remaining shares.
• Public-Private Partnerships (PPPs) are a significant model where public and private sectors collaborate to deliver projects or services, demonstrating partial government ownership or shared responsibility.
• Examples of partially government-owned entities include many listed PSUs where a portion of shares has been divested to the public, such as through disinvestments.

Primary Aim and Objectives

• The primary aim of public organizations is undeniably to provide essential goods and services at accessible or lower costs, thereby ensuring public welfare and equitable distribution.
• Unlike private entities driven by profit, public organizations often operate in areas vital for national development and social equity, such as healthcare, education, defense, public transportation, and utilities.
• They often cater to the needs of all citizens, including vulnerable sections, ensuring access to basic necessities and services that the private sector might find less profitable.

Types of Public Sector Enterprises in India (Important for Competitive Exams)

1. Departmental Undertakings: These are the oldest and most traditional form of public enterprise, directly managed by a government ministry. They are an integral part of the government and are financed by the annual budget.
   • Examples: Indian Railways, Post and Telegraph, All India Radio.
2. Statutory Corporations (Public Corporations): Established by a special act of Parliament or State Legislature, these bodies have a distinct legal entity and are financially independent of the government budget, though they are subject to government control.
   • Examples: Life Insurance Corporation of India (LIC), Reserve Bank of India (RBI), Food Corporation of India (FCI), Airports Authority of India (AAI).
3. Government Companies: Registered under the Companies Act, 2013 (or previous acts), where the Central Government or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, hold not less than 51% of the paid-up share capital.
   • Examples: Bharat Sanchar Nigam Limited (BSNL), Gail (India) Limited, Oil and Natural Gas Corporation (ONGC), Steel Authority of India Limited (SAIL).

Key Characteristics of Public Organizations

• Service Motive: Emphasis on social welfare and public service over profit.
• Public Accountability: Accountable to the legislature (Parliament/State Assembly) and ultimately to the public for their operations and expenditures.
• Bureaucratic Control: Often subject to government rules and regulations, which can lead to a more structured and sometimes slower decision-making process.
• Funding: Primarily funded through government budgets, public borrowing, or revenue generated from services, often with subsidies to keep costs low and accessible.