What are the demerits of statutory corporation?
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★ Autonomy on paper only: The autonomy & flexibility of public corporation is only for name’s sake. Practically ministers, government officials & political parties often interfere with the working of these operations.
Lack of initiative: Public corporations do not have to face any competition & are not guided by a profit motive. So the employees do not take initiative to increase the profit & reduce loss. The losses of the public corporation are made good by the government.
Rigid structure: The objects & powers of public corporations are defined by the act & these can be amended only by amending the statute or the act. Amending the act is a time-consuming & complicated task.
Clash amongst divergent interests: The government appoints the board of directors & their work is to manage & operate corporations. As there are many members, it is quite possible that their interests may clash. Because of this reason, the smooth functioning of the corporation may be hampered.
Unfair practices: The governing board of a public corporation may indulge in unfair practices. It may charge an unduly high price to cover up inefficiency.
Lack of initiative: Public corporations do not have to face any competition & are not guided by a profit motive. So the employees do not take initiative to increase the profit & reduce loss. The losses of the public corporation are made good by the government.
Rigid structure: The objects & powers of public corporations are defined by the act & these can be amended only by amending the statute or the act. Amending the act is a time-consuming & complicated task.
Clash amongst divergent interests: The government appoints the board of directors & their work is to manage & operate corporations. As there are many members, it is quite possible that their interests may clash. Because of this reason, the smooth functioning of the corporation may be hampered.
Unfair practices: The governing board of a public corporation may indulge in unfair practices. It may charge an unduly high price to cover up inefficiency.
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The demerits of statutory corporation are as follows:
- Here the public's flexibility and autonomy only exists in paper. Government interferes in their works.
- To increase profit people donot take initiative, this is a big demerit.
- Indulging in unfair practice of public governing board also considers as a demerit.
- The clash of opinion between the members in statutory also create problem.
- In this, works are very complicated and time consuming.
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