Question

Why is the government company form of organisation preferred to other types in public sector?

Answer 1

In a government company, at least 51 per cent of the company’s shares are held either by the central or by the state government. This form of organisation was established under the Indian Companies Act of 1956. The following are the reasons that the government-company form of organisation is preferred over the other forms in the public sector.

(a) A government company enjoys the maximum autonomy in all its managerial actions and decision-making processes.
(b) It faces no undue interference by the department concerned in its operations.
(c) It has its own, separate entity−that is, a government company is different from the government.
(d) It provides goods and services at reasonable rates and at the same time also ensures safe marketing activities.