Write short note on Rationale of public enterprise.

Rationale of public enterprises.

Public enterprise is an industrial, commercial or business activity of government where a return on investment is expected. Such enterprises are managed and operated by central, state or local government. The output obtained from such enterprises is not supplied free of cost.

The main features of public enterprises are as follows:

  1. The objectives of such enterprises are laid down in conformity with developmental plans. They are answerable and accountable to parliament or state legislature for their performance and fulfillment of objectives.
  2. A departmental undertaking or statutory corporation or a government company can organize a public enterprise.
  3. Government lays down certain public policies in the public interest and not guided by profit motive in order to govern such enterprises.
  4. Government provides the whole or a major part of capital needed for public enterprises.
  5. Such enterprises are managed and owned either by government or by agencies set up by the government.

Certain objectives are also there for such enterprises to follow. They are:

  1. To make use of resources in the best way in order to achieve economic growth.
  2. To ensure equitable distribution of income and wealth and to secure public welfare.
  3. To achieve rapid economic development with the help of industrial growth and development plans.
  4. To provide satisfactory employment conditions to the personnel as model employers.
  5. To ensure balanced regional development of industry and trade.
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