After reading this article you will learn about:- 1. Characteristics of Public Corporations 2. Advantages of Public Corporation 3. Limitations.

Characteristics of Public Corporations:

Public corporations have certain basic differences with departmental managements. These differences have given a separate entity to public corporations.

Some of the salient features of public corporations are discussed below:

1. Public corporations can sue and also be sued in the courts of law and thus have their own name and legal personality.


2. It is created by an Act of Parliament which also defines the scope of its activities. It also defines the powers, privileges and immunities of its members.

3. Public corporation is wholly owned by the government and the entire equity capital is held in the name of the government.

4. The corporations usually have considerable autonomy in shaping their policies. These have also sufficient financial independence. But at the same time general principles and policies are laid down and decided by the government.

5. The management of the corporation is appointed by the government. Generally, a Board is nominated to manage public corporations.


6. Public corporation is generally not subject to budgetary accounting and audit-controls applicable to government department.

7. The objective of public corporation is to provide goods and services to the people at reasonable prices.

Advantages of Public Corporation:

A public corporation has the following advantages:

1. Public corporations have complete freedom regarding their internal management. They can set their own goals and can decide their own line of action. They can devise their own programmes and policies.


2. Public corporations are free to take quick decisions which is very necessary for the success of a business concern. There is no government interference.

3. There is no rigidity in their working as in case of departmental undertakings. The flexibility is necessary in the case of business undertakings. According to President Roosevelt,- “It is clothed with the powers of the government but possessed of the flexibility and initiative of a private enterprise.”

4. Public corporations aim at providing goods and services to the public at reasonable prices. Though they also earn profits, their primary objective is to help the people in getting various services.

5. The management of public corporations, being in the hands of experienced and competent persons, is more efficient than that of government department. Public corporations are free to employ persons according to their own requirements.


6. It is generally not subject to budget, accounting and audit controls applicable to the government department and thus, public corporation is at freedom to utilise its funds.

Limitations of Public Corporation:

Despite many advantages, public corporations suffer from the following limitations or weaknesses:

1. Public corporations are created under some Act of Parliament. Any change in the sphere of activities of the corporations involves an amendment in the particular Act. It is difficult and takes more time.

2. Autonomy and flexibility which are the main features of public corporations have remained on paper only. All important policies are decided with government approval and the management is also appointed by the government. The corporations, therefore, have no real freedom in their working. Consequently, the smooth working of the public corporations is disturbed. So public corporations exercise limited autonomy.


3. Public corporations may indulge in anti-social activities. They may charge higher prices from the consumers or may supply them goods of inferior quality to make up their inefficiency because of the monopoly enjoyed by them.

4. Though public corporations are autonomous bodies, still they are controlled by the government. Public Accounts Committee and Auditor and Comptroller General of India exercise control on public corporations.

5. These corporations are suitable only for organising very big state enterprises and not suitable for small enterprises.