Meaning, Definition and Characteristics of Public Enterprises.

Meaning, Definition and Characteristics of Public Enterprises.

Public enterprises as a form of business organisation has attained a great deal of significance in recent times. During 20th century various governments have taken active part in the industrial and commercial activities. The term public enterprise denotes a form of business organisation owned and managed by the state government or any other public authority. So it is an undertaking owned and controlled by the local or state or central government. The whole or most of the investment is made by the government.

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According to A. H. Hansen, a public enterprise denotes “state ownership and operation of industrial, agricultural, financial and commercial undertakings”.


According to N. N. Malaya, “Public enterprises are autonomous or semi-autonomous corporations and companies established, owned and controlled by the state and engaged in industrial and commercial undertakings”.


The chief characteristics of public enterprises are:

Autonomous or semi-autonomous organisation: Public enterprise is an autonomous or semi-autonomous organisation because some enterprises work under the direct control of the government and some organisations are established under statutes and companies act.


State control: The public enterprises are financed, owned and managed by the government may be a central or state government.

Rendering service: The primary objective of the establishment of public enterprises is to serve the public at large by supplying the essential goods at a reasonable price and creating employment opportunities.

Useful to various sectors: The state enterprises serve all sectors of the people of the company. They do not serve a particular section of the people in the community.

Monopoly Enterprises: In some specific cases private sectors are not allowed and as such the public enterprises enjoy monopoly in operation. The state enterprises enjoy monopoly in Railways, Post and Telegraph and Energy production.


A direct channel for use of Foreign money: Sometimes the government receive foreign assistance from industrially advanced countries for the development of industries. These advances received are spent through public enterprises.

Public accountability: The state enterprises are liable to the general public for their performances because they are responsible for the nation.

Agent for implementing government plans: The public enterprises run as per the whims of the government and as such the economic policies and plans of the government are implemented through public enterprises.

Financial Independence: Though investment in government undertaking are done by the government, they become financially independent by arranging finance for day-to-day operation.

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