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Question
Mention any three demerits of Public Sector Enterprises.
Short Note
Solution
The main demerits of public sector enterprise are:
- Lack of initiative: Public enterprises are not subject to competition, and their employees are not motivated to increase profits, innovate, or reduce losses.
- Political Interference: Due to frequent political and bureaucratic interference in the free and frequent transfer of staff from one location to another, public sector firms confront numerous challenges in their day-to-day operations.
- Underutilization of capacity: Due to the underutilization of capacity, a huge number of public sector firms are losing money. The cost of production rises as a result of the underutilization of capacity. A huge proportion of government-owned businesses operate at less than half of their installed capacity.
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Public Sector Enterprises
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