Following are the different forms of organisation for managing state enterprises: 1. Departmental Form of Organisation 2. Public or Statutory Corporation 3. Government Company.

1. Departmental Form of Organisation:

Departmental form of organisation is the oldest method of organising and operating the state enterprises. A departmental enterprise is financed and controlled much in the same way as any other government department.

Departmental management is suitable for public utility services and strategic industries. In our country, railways, post and telegraph, radio and television are working as government departments. In the same way, strategic industries like defence and atomic power are under government departments. Departmental form of organisation may be run either by the Central government or State government.

2. Public or Statutory Corporation:

A public corporation is an autonomous business enterprises created by law to conduct the activities assigned to it. It is, now a days, considered to be the most suitable form of organisation for managing a government enterprise. It is wholly owned by the Central Government or a State Government. It has separate entity and can sue as well as be sued.


A public corporation has most appropriately been defined as a group of persons acting as a single legal personality.

Some of the important definitions of public corporation are given below:

1. According to Ernest Davis:

“The public corporation is a body with a separate existence which can sue and be sued and is responsible for its own finance.”


2. According to President Roosevelt:

“A public corporation is clothed with the powers of the government but possessed of the flexibility and initiative of a private enterprise.”

3. According to Herbert Morrison:

“Public corporation is a continuation of public ownership, public accountability and business management for public ends.”


4. According to Prof. Pfiffner:

“A corporation is a body framed for the purpose of enabling a number of person’s to act as a single person. The essential characteristic of a corporation is said to be this feature of several individuals who act as one. Thus corporation is viewed as an artificial person, which is authorised by law to carry particular activities and functions.”

Each public corporation is governed by a Board consisting of a Chairman and many other members, usually called Directors. On the Board of Directors are the representatives of the government as well as experts, consumers and many non-official members. The strength of each Board is fixed by an Act of legislature or the executive authority constituting the corporation.



Some important corporations in India are:

(i) Central Warehousing Corporation.

(ii) State Trading Corporation.

(iii) Industrial Finance Corporation.


(iv) Reserve Bank of India.

(v) Damodar Valley Corporation.

(vi) State Bank of India.

(vii) Employees State Insurance Corporation.


(viii) Life Insurance Corporation.

(ix) Indian Airlines.

(x) Food Corporation of India.

(xi) State Road Transport Corporation.


(xii) Air India.

(xiii) International Airport Authority of India.

(xiv) Industrial Development Bank of India.

(xv) National Co-operative Development Corporation.

3. Government Company:

It is another method of running public enterprises.

A government company is a company which is owned by central and/or state government. Either whole of the shares or majority of the shares are owned by the government. Management of these companies under the control of government. The subsidiary of a government company is also a government company.


According to Indian Companies Act, 1956,- “Government company means any company in which not less than 51 per cent of the paid up share capital is held by the Central Government or by any State Government or Governments or partly by Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a Government company.”

A Government company is formed and registered under the Companies Act, 1956 which contains special provisions relating to the government companies. But the Central Government may, by notification in the Official Gazette, direct that any of the provisions of the Companies Act, 1956 as may be specified therein, (a) shall not apply to any government company, or (b) shall apply to any government company only with such exceptions, modifications and adaptations as may be specified in the notification.

A government company may be either a private company or a public company. In our country, most of the government companies are private limited companies and their whole of the share capital is held by the Central Government and/or the State Governments.

Some of the examples of government companies in India are:

(i) The Hindustan Machine Tools Ltd.

(ii) The Hindustan Steel Ltd.


(iii) The Hindustan Aircraft Ltd.

(iv) The Hindustan Shipyard Ltd.

(v) The Hindustan Fertilisers and Chemical Ltd.

(vi) The Hindustan Cables Ltd.

(vii) Bharat Heavy Electricals Ltd.

(viii) Sindri Fertilisers Ltd.


(ix) The Indian Telephone Industries Ltd.

(x) Hindustan Insecticides Ltd.

(xi) Indian Drugs and Pharmaceuticals Ltd.

(xii) National Newsprint and Paper Mills Ltd.