CLASS XI: EXAM Q&A HUB
Unit 3: Public, Private & Global Enterprises
Interactive Direct Questions & Answers
Click on any question below to reveal the point-wise answer.
Q1. State the meaning of Public and Private Sector enterprises. 3 MARKS
Public Sector Enterprises are fully or partly owned, managed, and controlled by the Central or State Government. Their main motive is public welfare and providing essential services.
Private Sector Enterprises are owned, managed, and controlled by private individuals or business entities. Their primary motive is profit maximization and business growth.
Example: Bihar State Road Transport Corporation is Public, while a local shopping mall in Patna is Private.Q2. Differentiate between Public and Private sector enterprises on the basis of ownership, motive, management, and capital. 4 MARKS
The key differences are:
- Ownership: Public sector is owned by the government (Central/State). Private sector is owned by private individuals.
- Primary Motive: The public sector aims at public service and social welfare. The private sector aims strictly at profit maximization.
- Management: Public enterprises are managed by government-appointed officials or boards. Private enterprises are managed by owners or professional directors.
- Capital Source: Public sector capital comes from government funds or public issues. Private sector capital is arranged by owners or private investors.
Q3. What is a Departmental Undertaking? State any three of its features. 4 MARKS
A Departmental Undertaking is the oldest and most traditional form of organizing public enterprises. It is organized, financed, and controlled directly as a department of the government ministry.
Features:
- Funding: Financed entirely from the annual government budget. Their revenues are deposited into the treasury.
- Control: Subject to the direct and absolute control of the concerned Ministry.
- Employees: The employees are considered government servants (civil servants) and follow strict government service rules.
Q4. Explain the merits and limitations of a Statutory Corporation. 6 MARKS
A Statutory Corporation is a public enterprise brought into existence by a Special Act of Parliament or State Legislature (e.g., LIC, Food Corporation of India).
Merits:
- Operational Flexibility: They enjoy high operational autonomy and flexibility compared to departmental undertakings, as they are free from strict government accounting rules.
- Non-Interference: There is relatively less political interference in their day-to-day routine management.
- Independent Finance: They can borrow money independently from the public and retain their earnings for business expansion.
Limitations:
- Paper Autonomy: In reality, autonomy exists only on paper. Political interference is common, especially in major decisions and fund allocations.
- Rigid Rules: The Special Act strictly defines their powers, making it highly difficult and time-consuming to amend their core functions.
- Lack of Initiative: Since they do not face harsh market competition and are backed by the government, employees often lack the drive to innovate or maximize profits.
Q5. Define a Government Company as per the Companies Act, 2013. Give an example. 3 MARKS
A Government Company is any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government(s), or partly by Central and State Governments.
Example: Steel Authority of India Limited (SAIL) or Bharat Heavy Electricals Limited (BHEL).Q6. Discuss the features, merits, and limitations of a Government Company. 6 MARKS
Features:
- Registration: It is registered and governed under the Companies Act, 2013, just like any private company.
- Separate Legal Entity: It has a separate legal existence, meaning it can sue, be sued, and acquire property in its own name.
Merits:
- Easy Formation: It does not require a special Act of Parliament; it can be formed easily under the standard Companies Act.
- Operational Autonomy: It enjoys high administrative autonomy and is exempted from strict budgetary and audit controls of the government.
- Professional Management: It can hire professional managers at competitive salaries to ensure efficient operations.
Limitations:
- Government Interference: Since the government is the majority shareholder, politicians often dictate major policies, defeating the purpose of autonomy.
- Lack of Accountability: Unlike departmental undertakings, it is not directly answerable to Parliament, which can sometimes lead to the inefficient use of public funds.
Q7. State any four features of Global Enterprises (MNCs). 4 MARKS
Global Enterprises (MNCs) are massive industrial organizations that operate in multiple countries simultaneously.
Features:
- Huge Capital Resources: They possess massive financial strength and can easily raise funds from international markets.
- Advanced Technology: They use world-class, state-of-the-art technology for production, ensuring superior quality.
- Centralized Control: While they operate globally, their ultimate control and policy-making are centralized in their home country headquarters.
- Marketing Strategies: They use highly aggressive and sophisticated marketing techniques to capture global markets.
Q8. What do you mean by a Joint Venture? 3 MARKS
A Joint Venture is a business partnership where two or more independent enterprises agree to pool their capital, technology, and expertise to achieve a specific common goal.
Example: A local manufacturing company in Patna partnering with a foreign tech company to share financial risks, profits, and advanced new technology.Q9. Explain the concept of Public Private Partnership (PPP) with a suitable example. 4 MARKS
Public Private Partnership (PPP) is a long-term contract between a government agency (Public sector) and a private company (Private sector) to build public infrastructure or provide public services.
Concept & Features:
- Risk Sharing: The massive financial and operational risks are shared between the government and the private party.
- Efficiency: The private sector brings technical expertise, speed, and managerial efficiency, while the government provides legal clearances and public funds.
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