Question

Merits and demerits of public corporation

Answer 1

$\huge \frak{answer}$

Merits/Advantages of Public Corporation

The main advantages of public corporation are:

1. Administrative Autonomy. A public corporation is able to manage its affairs with independence and flexibility.

2. Quick Decision. A public corporation is relatively free from red tapism, as there is less file independence and flexibility. work and less formalities to be completed before taking decision.

3. Service Motive. The activities of public corporation are discussed in parliament. This ensures protection of public interest.

4. Efficient Staff. The public corporations can have their own rules and regulations regarding remuneration and recruitment of employees. It can provide better facilities and attractive terms of services to stall to secure efficient working from its staff.

5. Professional Management. Its Board of Directors consists of business experts and also the representatives of various groups such as labour, consumers nominated by the government.

Demerits/Disadvantages of Public Corporation

1. Autonomy on Paper Only. The autonomy and flexibility of public corporation is only for name's sake. Practically ministers, government officials and political parties often interfere with the working of these corporations.

2. Lack of Initiative. Public corporations do not have to face any competition and are not guided by profit motive. So the employees do not take initiative to increase the profit and reduce loss. The losses of public corporation are made good by the government.

3. Rigid Structure. The objects and powers of public corporations are defined by the Act and these can be amended only by amending the statute or the Act. Amending the Act is a time-consuming and complicated task.

4. Unfair Practices. The governing board of a public corporation may indulge in unfair practices. It may charge unduly high price to cover up inefficiency. Suitability. The public corporation is suitable:

(6) Where undertakings require monopoly powers.

(i) Where undertakings require special powers, defined by the Act or statute.

(iii) Where undertakings require regular grants from the government.

(iv) Where the undertakings require appropriate combination of public accountability and operational autonomy.