Question

Attempt the following.

Demerits of Government Company.

Answer 1

Though Government Company enjoys various benefits due to Government ownership and autonomy, it has following limitations:

1. Inefficiency and Corruption: The Directors have no financial stake in the company and as a result, they are indifferent towards the working of the company. Due to limited autonomy and petty politics, the efficiency of the enterprise is affected. It results in corruption.
2. Lack of Professional view: There is a lack of devotion, dedication, and Systematic approach. In fact, there is no professional approach in various operations and working of the company. Thus, from the above points, it could be seen that there is a lot of government and political interference in the Government Company which brings about its inefficiency and ineffectiveness.
3. Domination of Ministers and Politicians: The ministers of the concerned departments are in charge of the Government Company. In view of Government ownership, political interference is quite common. The Directors try to serve and achieve their political motives rather than realisation of business goals as they are nominated for political gains and not on merits.
4. Red Tapism and Delay: The bureaucratic management delays in taking decisions and implementing. There is no time frame and the employees are not devoted. There is often delay in preparing various documents and forwarding the same for taking action. Thus, delay, red tape, corruption, avoidance of work, and shirking from the responsibility is common sight in Government Company.
5. Autonomy only in Name: Though there is administrative autonomy, these companies face a lot of interference from the government in all the matters. Appointment of Directors, employees, and its working, there is no autonomy. Autonomy is only on paper and not in practice.
6. Weak Public Accountability: Absence of Government audit is a major drawback in the case of Government Company which does not assure proper Utilisation of funds. There is no control over the misappropriation of funds which leads to weak public accountability.
7. Fear of Exposure: The working of Government companies like the annual report is placed before the Parliament or State Legislature. It is exposed to press and public criticism. Therefore, the management of the government company often gets demoralized.