What is a Public Corporation?
Public corporation is an autonomous corporate body created by a special Act of Parliament or State Legislature with defined functions and powers. It helps in defining its duties, immunities and pattern of management also. Another name given to public corporation is statutory corporation. Government alone is responsible for subscribing the capital. Such a corporation in managed and controlled by management committee constituted as per the provisions of the Act. Committee is held responsible and answerable only to the Parliament or State Legislature as the case may be.
Public corporations are formed or established to fulfill any of the purposes given below:
- To promote, develop and operate certain schemes.
- To transfer the business of a nationalized undertaking to the corporation.
- To extend certain social and utility services.
- To facilitate the acquisition of undertakings belonging to an existing company.
Whenever the government wishes to perform a commercial activity, it goes to the Parliament and gets approval in order to set up a distinct entity. Under one act of legislature, many statutory corporations can be set up. For example, many State Financial Corporations are set up in most of the states under the State Financial Corporations Act, 1951.
Such a corporation is free from political interference, checks and controls, so in public corporation no class is exploited at the cost of another. Many defects like defects of exploitation, profiteering, speculation etc., can be avoided with the help of public corporation. It even reduces the problems of labor by providing better amenities and more attractive terms of services to its employees.