Write short note on merits of statutory organization.
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Statutory corporations are body corporates formed by a special act of parliament or by the central or state legislature. It is fully financed by the government. Its powers, objects, limitations etc. are also decided by the act of the legislature. Examples include Air India, State Bank of India, Life Insurance Corporation of India etc.
Statutory Corporations
The main characteristics of the statutory corporation are:
1. It is a Corporate Body
It is an artificial person created by law & is a legal entity. Such corporations are managed by the board of directors constituted by the government. A corporation has a right to enter into contracts & can undertake any kind of business under its own name.
2. Owned by State
State provides help to such corporations by subscribing to the capital fully or wholly. It is fully owned by the state.
3. Answerable to the Legislature
A statutory corporation is answerable either to parliament legislature or state assembly whosever creates it. Parliament has no right to interfere in the working of statutory corporations. It can only discuss policy matters & overall performance of corporations.
4. Own Staffing System
Employees are not government servants, even though the government owns & manages a corporation. Employees of various corporations receive balanced or uniform pay & benefits by the government. They are recruited, remunerated & governed as per the rules laid down by the corporation.
5. Financial Independence
A statutory corporation enjoys financial autonomy or independence. It is not subject to the budget, accounting & audit controls. After getting the prior permission from the government, it can even borrow money within & outside the country.
Statutory Corporations
The main characteristics of the statutory corporation are:
1. It is a Corporate Body
It is an artificial person created by law & is a legal entity. Such corporations are managed by the board of directors constituted by the government. A corporation has a right to enter into contracts & can undertake any kind of business under its own name.
2. Owned by State
State provides help to such corporations by subscribing to the capital fully or wholly. It is fully owned by the state.
3. Answerable to the Legislature
A statutory corporation is answerable either to parliament legislature or state assembly whosever creates it. Parliament has no right to interfere in the working of statutory corporations. It can only discuss policy matters & overall performance of corporations.
4. Own Staffing System
Employees are not government servants, even though the government owns & manages a corporation. Employees of various corporations receive balanced or uniform pay & benefits by the government. They are recruited, remunerated & governed as per the rules laid down by the corporation.
5. Financial Independence
A statutory corporation enjoys financial autonomy or independence. It is not subject to the budget, accounting & audit controls. After getting the prior permission from the government, it can even borrow money within & outside the country.
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Merits of statutory organization can be explained as follows:
Explanation: Statutory organization refers to the organization which are being formed by a special act of the parliament by the Government. Every function, powers and working of these organizations are being decided by this Act. Example: LIC Act which regulates the life insurance corporations.
Merits:
- Flexible Operations: These are flexible in operations and management as entire working is being done independently by the special act formulated for the same purpose. There is no Government's interference in the working.
- Prompt Decisions: Decisions under these organizations are promptly taken as there is less file work and a very little formalities before finalizing the decision.
Learn more about statutory organization:
Question: What is statutory corporation
Answer: https://brainly.in/question/739990
Question: Characteristics of statutory corporation .
Answer: https://brainly.in/question/13650799
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