What are the special features of Public enterprises in India ?

India had some experiences of organisation and management of public enterprises in the past. However, the industrial and commercial enterprises in the public sector depict certain peculiar features.

Financial Administration And Personnel Management In Public ...

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Special features of Public enterprises in India :

1. Newness :

In most of the countries, including India, the his­tory of public enterprises is rather new. It is for the first time that the state has entered into industrial activity and business of such a large number and varied types. There are many types of industrial and com­mercial activities in which the state has entered as a pioneer in the country.

2. Largeness :

Many public enterprises are usually vast in size. The amount of capital invested is gigantic. They employ a large number of employees. In instances like that of life insurance, they affect a vast number of people. The Railways, Post & Telegraph etc. affect almost the whole nation. In the supply of steel, coal, petroleum, etc., their effect on the entire economy is stupendous. “Their large size, large investment, extensive coverage, and effect upon the people are charac­teristics of government enterprises.”

3. Established within a Short Period :


Another feature of the state enterprises is that their scope and numbers have grown rather within a short span of time. Thus in 1951 there were only 5 central public under­takings. During the First Plan their number increased to 21. But during the second Plan their number went on rising very fast. The total volume of investment also went up from a mere Rs. 29 crores to about Rs. 30,000 crores today.

4. Varied Methods of Management :

In India the state has entered into the economic arena on a wide scale. This has led to “a great deal of experimentation in the form, content, and methodology of manage­ment.” India has adopted diverse organisational patterns.

5. Maximization of Social Welfare :

One of the important objec­tives of public enterprises in India has been the establishment of a socialist pattern of society (although at present the term seems to have fallen on bad days!). The state, therefore, had to assume direct responsi­bility for the development of industries over a wide area. The idea behind such extension of the public enterprises was maximization of social gain. The state enterprises, as the ‘ principal agency of the state, have to take on heavy responsibilities in this respect. While being informed by social purpose and speaking for and acting on behalf of the community as a whole, they are to take major decisions regarding pro­duction, distribution, consumption, investment and other significant socio-economic relationships, keeping always in view the social costs.”

6. Agent for Economic Growth :

Public sector enterprises were ex­pected to usher in rapid industrial development in the country. They were supposed to act as a catalyst in the process of economic development. They were to initiate and maintain conditions for rapid and self-sustained industrial growth towards the establishment of an egalitarian society.”

7. Indigenous Pattern :


The growth of public enterprises in India did not copy any foreign pattern. It was not based on any preconceived doctrine of social and economic change. Their operation, organisation and management were based on the requirements and traditions, of the country. These went on changing with changing circumstances.

8. No Uniform Price Policy :

Any product produced in the private sector is sold at a profit. But profit making is not the only objective of a public enterprise. Hence, public enterprises follow different price policies based on profit, no-profit no-loss, and even loss, in respect of different goods and services. No uniform price policy can be recom­mended for them.

9. Incurring Losses :

Although it may sound ridiculous, another feature of public enterprises (central as well as state) in India is the propensity to incur losses. This trend has been going on since the last three decades, almost except for a few years during the seventies. The number of losing concerns also is on the rise. In 1982, their number was 78 but in 1983 the number of such concerns rose to 83.The 15 worst unit showed an annual rate of loss of Rs. 1,000 crores. This feature of the public enterprises has caused a lot of concern to the government.

10. Democratic Nature :

According to R. K. Jain, the concept of democracy is an essential element in the concept of public sector. State enterprises aim at the promotion of welfare of workers and the establishment of an industrial democracy.

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