Call Now

Get The App


Chapter 3 Private, Public and Global Enterprises - BST class 11th

Meaning of Private sector, public sector and Global Enterprises  

Government of India has chosen mixed economy for Economics development of India. In the mixed economy both private sector and public sector company grow together. These both private sector and public sector company competes each other.

The 1991 industrial policy was radically different from all the earlier policies where the government was deliberating disinvestment of public sector and allowing greater freedom to the private sector. At the same time, foreign direct investment was invited from business houses outside India. Thus, multinational corporations or global enterprises which operate in more than one country gained entry into the Indian economy.

Thus, we have public sector units, private sector enterprises and global enterprises coexisting in the Indian economy

We must know clear meaning of Private Sector, Public Sector and multinational organization. These organisations affect our daily economic life and therefore become part of the Indian economy.

The private sector

Public Sector Company

Global Company- OR Multinational company


consists of business owned by individuals or a group of individuals

You must have come across all types of business organisations in your daily life. In your neighbourhood market, (Nai ki dukan , stationery ki dukan , panwari ki dukan , sadak ka idli wala , dosa wala . Big bazar, Dairy, selling milk and related products,Departmental stores,  groceries shops, stationery shops, eatables shops, Pharmacies, selling medicines shops. There are shops owned by sole proprietors or big retail organisations run by a company. Again  there are people providing you services like legal services, (Law firms)  medical services, Hospital being owned by more than one person i.e., partnership firms. These are all privately owned organisations:

These all shops can be in any form of organization such as Sole proprietorship ,

Partnership firms , HUF, Co operative societies. Even joint stock company owned by an individual or groups of individual where government stake does no exist.

1.Reliance Industries Limited.

2.Tata Consultancy Services (TCS)

3.Infosys Technologies Ltd.

4Wipro Limited.

5.Bharti Tele-Ventures Limited.

6. ITC Limited.


– Owned by government. Remember like private sector even government register its company as per company law. Government too bring  public issue , aapne 2022 mein LIC ka public issue dekhenge.

So when government register the company then it becomes public sector company.

Ab AApko government ke dwra ltd company formation karna samjh gaye honge , and ye bhi samjh gaye honge ki government dwara managed and operated by government bhi public issue lata hain .

 There are many companies  which are  owned by the government.

For example,

1.Railways is an organisation wholly owned and managed by the government.

2.The post office, in your locality is owned by the Post and Telegraph Department, Government of India, though our dependence on their postal services, particularly in cities and towns has been greatly reduced. This is because of plenty of private courier services firms operating in bigger towns.


3. Bharat Heavy Electricals Limited (BHEL)

4.Bharat Petroleum Corporation Limited (BPCL)

5.Coal India Limited (CIL)

6.Gas Authority of India Limited (GAIL)

7.Hindustan Petroleum Corporation Limited (HPCL)

8.Indian Oil Corporation Limited (IOCL)

9.National Thermal Power Corporation (NTPC)

P Agar Delhi ke connought place me jayenge then aa piss mcdonald ko dekha hoaga , ye kaha ki company hain ,?

America ki company hain , Appne Pizza Hutt ye bhi American Company,Rado Swiss company , Watch , Rolex Watch, Swiss company. Lotto is itallian brand , Adidas German multinational corporation,

Rebbock german compny subsidiary ,Burger king .





Since the Indian economy consists of both privately owned and government owned business enterprises, it is known as a mixed economy. The Government of India has opted for a mixed economy where both private and government enterprises are allowed to operate. The economy, therefore, may be classified into two sectors, viz., private sector and public sector. Then there are businesses which operate in more than one country known as global enterprises. Therefore, you may have observed that all types of organisations are doing business in the country whether they are public, private or global.

The government in its industrial policy resolutions, from time-totime, defines the area of activities in which the private sector and public sector are allowed to operate. In the Industrial Policy Resolution 1948, the Government of India had specified the approach towards development of the industrial sector. The roles of the private and public sector were clearly defined and the government through various Acts and Regulations was overseeing the economic activities of both the private and public sector. The Industrial Policy Resolution, 1956 had also laid down certain objectives for the public sector to follow so as to accelerate the rate of growth and industrialisation.

The public sector was given a lot of importance but at the same time mutual dependency of public and private sectors was emphasized

Types of public Enterprises

There are three types of public enterprises.


Departmental undertaking

विभागीय उपक्रम



Government departments that do some commercial activity like production, sales etc and prepares their separate accounts.

For example a department is made under AAYUSH Ministry for production and marketing of medicine to increase immunity against Covid-19. They are part of Government but are considered different for accountability, governance and accounting purpose. These are not separate legal entity like Government Companies.


Sarkari vibhag jo utpadan ya sales me laga ho

They do not do clerical or administrative work:


1.Ministry of Housing & Urban Affairs -Government press does printing of government stationery and gazettes (raj patra).


2.The Ministry of Defence- Ordinance factories produces weapons shells and bullets.


1.The Ministry of Railways-Indian Railways

2.Ministry of Communications-Postal  and telegraph,

3. the Ministry of Information & Broadcasting-All India Radio, Doordarshan. 


The departmental undertaking is the oldest and traditional form of an organization of the public sector enterprise. It is organized, financed and controlled in such a manner that any other government organization. The undertaking is under the control of a minister who is responsible to the parliament.


Statutory corporation

Sakari corporation established under special act of parliament

Like LIC


Statutory corporations are body corporates formed by a special act of parliament or by the central or state legislature. It is fully financed by the government. Its powersobjects, limitations etc. are also decided by the act of the legislature.


1.Reserve Bank of India (RBI)

2.Air India Corporation.

3.Food Corporation of India (FCI)

4. State Bank of India (SBI)

5. LIC -Life insurance corporation of india


Government company




Sarkari company (where 51% se jayeda capital is owned by Government)

And company is registered under the Companies Act.

But remember these companies too are controlled by some ministry too -

1.Ministry of Petroleum and Natural Gas-IOCL,ONGC,BPCL.HPCL,GAIL

2.Ministry of commerce -MMTC,STC

3.Ministry of Coal -Coal India

4,Civil Aviation MAINISTRY – Airport Authority of india

5. Ministry of Power – NTPC, NHPC,Power Grid.

State psu

1.DTC, DSIDC(Delhi state industrial development of corporation),DTC (Delhi Transport Corporation, BEST


PSU – Public Sector Undertaking:

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

Government’s participation in business and economic sectors of the country needs some kind of organizational framework to function.

In the public sector, as it grows, an important question arises in respect of how it is to be organised or what form of organisation it should take. The government has a major role to play in the formation of the public sector. But the government acts through its people, its offices, employees and they take decisions on behalf of the government. For this purpose, public enterprises were formed by the government to participate in the economic activities of the country. They are expected to contribute to the economic development of the country in today’s liberalised, competitive world. These public enterprises are owned by the public and are accountable to the public through the Parliament. They are characterised by public ownership, public funds being used for its activities and public accountability.

A public enterprise may take any particular form of organisation depending upon the nature of its operations and their relationship with the government. The suitability of a particular form of organisation would depend upon its requirements. At the same time, in accordance with general principles, any organisation in the public sector should ensure organisational performance productivity and quality standards.

Departmental Undertakings And its  Features

This is the oldest and most traditional form of organizing public enterprises. These enterprises are established as departments of the ministry and are considered part or an extension of the ministry itself.

The Government functions through these departments .The activities performed by these departments  are an integral part of the functioning of the government. They have not been constituted as autonomous or independent institutions and as such are not independent legal entities. They act through the officers of the Government and its employees are Government employees. These undertakings may be under the central or the state government and the rules of central/state government are applicable. Examples of these undertakings are railways and post and telegraph department.


The main characteristics of Departmental undertakings are as follows:




The funding of these enterprises come directly from the Government Treasury and are an annual appropriation from the budget of the Government. The revenue earned by these is also paid into the treasury;


Accounting and audit co

They are subject to accounting and audit controls applicable to other Government activities;


Government Employee

The employees of the enterprise are Government servants and their recruitment and conditions of service are the same as that of other employees directly under the Government. They are headed by Indian Administrative Service (IAS) officers and civil servants who are transferable from one ministry to another


Subdivision of the Government department

It is generally considered to be a major subdivision of the Government department and is subject to direct control of the ministry



Accountable to the ministry

They are accountable to the ministry since their management is directly under the concerned ministry

Merits of departmental Undertaking

Departmental undertakings have certain advantages which are as follows:




These ensure a high degree of  public accountability


Revenue earned

The revenue earned by the enterprise goes directly to the treasury and hence is a source of income for the Government



These undertakings facilitate the Parliament to exercise effective control over their operations


National security

Where national security is concerned, this form is most suitable since it is under the direct control and supervision of the concerned Ministry

Limitations of departmental undertaking

This form of organisation suffers from serious drawbacks, some of which are as follows:



Flexibility No

Departmental undertakings fail to provide flexibility, which is essential for the smooth operation of business;


bureaucrat’s set up


These enterprises are unable to take advantage of business opportunities. The bureaucrat’s over-cautious and conservative approval does not allow them to take risky ventures;


Independent decision Not possible

The employees or heads of departments of such undertakings are not allowed to take independent decisions, without the approval of the ministry concerned. This leads to delays, in matters where prompt decisions are required;


Insensitive to consumer needs

These organisations are usually insensitive to consumer needs and do not provide adequate services to them.


Political interference

There is a lot of political interference through the ministry


Red tapism

There is red tapism in day-to-day operations and no action can be taken unless it goes through the proper channels of authority;

Meaning and features of Statutory Corporations

Statutory corporations are public enterprises brought into existence by a Special Act of the Parliament. The Act defines its powers and functions, rules and regulations governing its employees and its relationship with government departments.

This is a corporate body created by the legislature with defined powers and functions and is financially independent with a clear control over a specified area or a particular type of commercial activity. It is a corporate person and has the capacity of acting in its own name.

Statutory corporations therefore have the power of the government and considerable amount of operating flexibility of private enterprises.


Statutory corporations have certain distinct features, which are discussed as below:



Act of Parliament

Statutory corporations are set up under an Act of Parliament and are governed by the provisions of the Act. The Act defines the objects, powers and privileges of a statutory corporation


Accounts and audit

A statutory corporation is not subject to the same accounting and audit procedures applicable to government departments. It is also not concerned with the central budget of the Government



This type of organisation is wholly owned by the state. The government has the ultimate financial responsibility and has the power to appropriate its profits. At the same time, the state also has to bear the losses, if any;


Separate legal entity

A statutory corporation is a body corporate and can sue and be sued, enter into contract and acquire property in its own name


Financially independent

This type of enterprise is usually independently financed. It obtains funds by borrowings from the government or from the public through revenues, derived from sale of goods and services. It has the authority to use its revenues;



The employees of these enterprises are not government or civil servants and are not governed by government rules and regulations. The conditions of service of the employees are governed by the provisions of the Act itself. At times, some officers are taken from government departments, on deputation, to head these organisations.

Merits of Statutory corporation

This form of organisation enjoys certain advantages in its working, which are as follows:


Independent functioning 

They enjoy independence in their functioning and a high degree of operational flexibility. They are free from undesirable government regulation and control



Since the funds of these organisations do not come from the central budget, the government generally does not interfere in their financial matters, including their income and receipts;


Autonomous organizations

Since they are autonomous organisations they frame their own policies and procedures within the powers assigned to them by the Act. The Act may, however, provide few issues/ matters which require prior approval of a particular ministry;


Combination of government and private enterprises 

A statutory corporation is a valuable instrument for economic development. It has the power of the government, combined with the initiative of private enterprises

Limitations of statutory corporation

This type of organisation suffers from several limitations, which are as follows:

NRC -Interference


Not Much Autonomous

In reality, a statutory corporation doesnot enjoy asmuchoperational flexibility as stated above. All actions are subject to many rules and regulations;


Red Tapesim

The Government has a practice of appointing advisors to the Corporation Board. This curbs the freedom of the corporation in entering into contracts and other decisions. If there is any disagreement, the matter is referred to the government for final decisions. This further delays action.



Where there is dealing with public, rampant corruption exists;



Government and political interference has always been there in major decisions or where huge funds are involved

Meaning and features of Government Company

A government company is established under The Companies Act, 2013 and is registered and governed by the provisions of The Act. These are established for purely business purposes and in true spirit compete with companies in the private sector. According to the section 2(45) of the Companies Act 2013, a government company means any company in which not less than 51 per cent of the paid up capital is held by the central government, or by any state government 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. Under the Companies Act 2013, there is no change in the definition of a company. All provisions of the Act are applicable to government companies unless otherwise specified. A government company may be formed as a private limited company or a public limited company. There are certain provisions which are applicable to the appointment/retirement of directors and other managerial personnel.

From the above it is clear that the government exercises control over the paid up share capital of the company. The shares of the company are purchased in the name of the President of India. Since the government is the major shareholder and exercises control over the management of these companies, they are known as government companies.


Government companies have certain characteristics which makes them distinct from other forms of organizations.

These are discussed as follows:



Created under Companies Act, 2013

It is an organisation created under the Companies Act, 2013 or any other previous Company Law



The management of the company is regulated by the provisions of the Companies Act, like any other public limited company


Accounting and Audit rules procedure exemption

These companies are exempted from the accounting and audit rules and procedures. An auditor is appointed by the Central Government and the Annual Report is to be presented in the Parliament or the State Legislature;


Separate legal entity

The company can file a suit in a court of law against any third party and be sued; The company can enter into a contract and can acquire property in its own name



The government company obtains its funds from government shareholdings and other private shareholders. It is also permitted to raise funds from the capital market.



The employees of the company are appointed according to their own rules and regulations as contained in the Memorandum and Articles of Association of the company. The Memorandum and Articles of Association are the main documents of the company, containing the objects of the company and its rules and regulations;

Merits OF Government Company

Government companies enjoy several advantages, which are as follows:



Created under companies Act

A government company can be established by fulfilling the requirements of the Indian Companies Act. A separate Act in the Parliament is not required;



Curb unhealthy business practices

These companies by providing goods and services at reasonable prices are able to control the market and curb unhealthy business practices



It enjoys autonomy in all management decisions and takes actions according to business prudence


Separate legal entity

It has a separate legal entity, apart from the Government

Limitations Government Company

Despite the autonomy given to these companies, they have certain disadvantages:



No complete Autonomous

Since the Government is the only shareholder in some of the companies, the provisions of the Companies Act does not have much relevance;


Not answerable directly to the Parliament

It evades constitutional responsibility, which a company financed by the government should have. It is not answerable directly to the Parliament


Government and political interference

The government being the sole shareholder, the management and administration rests in the hands of the government. The main purpose of a government company, registered like other companies, is defeated.

Meaning of Global Enterprises and its features

At some time you must have come across products produced by Multinational Corporations (MNCs). In the last 2 decades or so. MNCs have played an important role in the Indian economy. They have become a common feature of most developing economies in the world. MNCs as is evident from what we see around us, are gigantic corporations which have their operations in a number of countries. They are characterised by their huge size, (UNILEVER ) large number of products, advanced technology (GE), marketing strategies( UNILEVER ) and network (TOYATA) of operations all over the world. Global enterprises thus are huge industrial organisations which extend their industrial and marketing operations through a network of their branches in several countries.


These enterprises operate in several areas producing multiple products with their business strategy extending over a number of countries. They do not aim at maximising profits from one or two products but instead spread their branches all over.


These corporations have distinct features which distinguish them from other private sector companies, public sector companies and public sector enterprises. These are as follows:



Marketing strategies:


The marketing strategies of global companies are far more effective than other companies. They use aggressive marketing strategies in order to increase their sales in a short period. They posses a more reliable and upto-date market information system. Their advertising and sales promotion techniques are normally very effective. Since they already have carved out a place for themselves in the global market, and their brands are wellknown, selling their products is not a problem.


Advanced technology


These enterprises possess technological superiorities in their methods of production. They are able to conform to international standards and quality specifications. This leads to industrial progress of the country in which such corporations operate since they are able to optimally exploit local resources and raw materials. Computerisation and other inventions have come due to the technological advancements provided by MNCs


Product innovation


These enterprises are characterised by having highly sophisticated research and development departments engaged in the task of developing new products and superior designs of existing products. Qualitative research requires huge investment which only global enterprises can afford.



Centralized control


They have their headquaters in their home country and exercise control over all branches and subsidiaries. However, this control is limited to the broad policy framework of the parent company. There is no interference in day-to-day operations


Huge capital resources


These enterprises are characterised by possessing huge financial resources and the ability to raise funds from different sources. They are able to tap funds from various sources. They may issue equity shares, debentures or bonds to the public. They are also in a position to borrow from financial institutions and international banks. They enjoy credibility in the capital market. Even investors and banks of the host country are willing to invest in them. Because of their financial strength they are able to survive under all circumstances.


Expansion of market territory

COKE -Swis story

 Their operations and activities extend beyond the physical boundaries of their own countries. Their international image also builds up and their market territory expands enabling them to become international brands. They operate through a network of subsidiaries, branches and affiliates in host countries. Due to their giant size they occupy a dominant position in the market.


Foreign collaboration

Starbucks TATA

Global enterprises usually enter into agreements with Indian companies pertaining to the sale of technology, production of goods, use of brand names for the final products, etc. These MNCs may collaborate with companies in the public and private sector. There are usually various restrictive clauses in the agreement relating to transfer of technology, pricing, dividend payments, tight control by foreign technicians, etc. Big industrial houses wanting to diversify and expand have gained by collaborating with MNCs in terms of patents, resources, foreign exchange etc. But at the same time these foreign collaborations have given rise to the growth of monopolies and concentration of power in few hands.

Meaning of Joint Ventures


Vistara is the brand name of Tata SIA Airlines Ltd, a JV between India’s corporate giant Tata Sons and Singapore Airlines (SIA). Bharti AXA General Insurance Co Ltd is a JV between India’s leading business group Bharti Enterprises and insurance major from France, AXA.

Max Life Insurance Company Limited is a JV between Max Financial Services Ltd and Japan’s Mitsui Sumitomo Insurance Co. Ltd. Business organisations as you have studied earlier can be of various types private or government owned or global enterprises. Now, any business organisation if it so desires can join hands with another business organisation for mutual benefit. These two organisations may be private, government-owned or a foreign company.

When two businesses agree to join together for a common purpose and mutual benefit, it gives rise to a joint venture. Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short term projects. A joint venture can be flexible depending upon the party’s requirements. These need to be clearly stated in a joint venture agreement to avoid conflict at a later stage.

A joint venture may also be the result of an agreement between two businesses in different countries. In this case, there are certain provisions provided by the governments of the two countries, which will have to be adhered to.

Thus, we see that joint ventures may mean many things, depending upon the context we are using it in. But in a broader sense, a joint venture is the pooling of resources and expertise by two or more businesses, to achieve a particular goal. The risks and rewards of the business are also shared. The reasons behind the joint venture often include business expansion, development of new products or moving into new markets, particularly in another country. It is becoming increasingly common for companies to create joint ventures with other businesses/companies and form strategic alliances with them. The reasons for these alliances may be complementary capabilities and resources such as distribution channels, technology or finance. In this kind of a joint venture, two or more (parent) companies agree to share capital, technology, human resources, risks and rewards in the formation of a new entity, under shared control.

In India, joint venture companies are the best way of doing business. There are no separate laws for these joint ventures. The companies incorporated in India are treated the same as domestic companies.

Types of Joint Ventures

A joint venture must be based on a memorandum of understanding signed by both the parties, highlighting the basis of a joint venture agreement. The terms should be thoroughly discussed and negotiated to avoid any legal complications at a later stage. Negotiations and terms must take into account the cultural and legal background of the parties. The joint venture agreement must also state that all necessary governmental approvals and licences will be obtained within a specified period.

Joint Ventures are of two types —


Contractual joint venture


Equity-based joint venture

  1. Contractual Joint Venture (CJV): In a contractual joint venture, a new jointly-owned entity is not created. There is only an agreement to work together. The parties do not share ownership of the business but exercise some elements of control in the joint venture. A typical example of a contractual joint venture is a franchisee relationship. In such a relationship the key elements are:


Two or more parties have a common intention – of running a business venture;


Each party brings some inputs;


Both parties exercise some control on the business venture; and


The relationship is not a transaction-to-transaction relationship but has a character of relatively longer duration

  1. Equity-based Joint Venture (EJV): An equity joint venture agreement is one in which a separate business entity, jointly owned by two or more parties, is formed in accordance with the agreement of the parties. The key operative factor in such case is joint ownership by two or more parties. The form of business entity may vary — company, partnership firm, trusts, limited liability partnership firms, venture capital funds, etc.

       It can be made on following terms :


There is an agreement to either create a new entity or for one of the parties to join into ownership of an existing entity


Shared ownership by the parties involved


Shared management of the jointly owned entity


Shared responsibilities regarding capital investment and other financing arrangements; and


Shared profits and losses according to the agreement

Benefits of Joint Venture

Business can achieve unexpected gains through joint ventures with a partner. Joint ventures can prove to be extremely beneficial for both parties involved. One party may have strong potential for growth and innovative ideas, but is still likely to benefit from entering into a joint venture because it enhances its capacity, resources and technical expertise. The major benefits of joint ventures are as follows:


Increased resources and capacity

Joining hands with another or teaming up adds to existing resources and capacity enabling the joint venture company to grow and expand more quickly and efficiently. The new business pools in financial and human resources and is able to face market challenges and take advantage of new opportunities.


Access to new markets and distribution networks:

When a business enters into a joint venture with a partner from another country, it opens up a vast growing market. For example, when foreign companies form joint venture companies in India they gain access to the vast Indian market. Their products which have reached saturation point in their home markets can be easily sold in new markets. They can also take advantage of the established distribution channels i.e., the retail outlets in different local markets. Otherwise, establishing their own retail outlets may prove to be very expensive.


Access to technology

: Technology is a major factor for most businesses to enter into joint ventures. Advanced techniques of production leading to superior quality products saves a lot of time, energy and investment as they do not have to develop their own technology. Technology also adds to efficiency and effectiveness, thus leading to reduction in costs



: The markets are increasingly becoming more demanding in terms of new and innovative products. Joint ventures allow business to come up with something new and creative for the same market. Specially foreign partners can come up with innovative products because of new ideas and technology.



Low cost of production

: When international corporations invest in India, they benefit immensely due to the lower cost of production. They are able to get quality products for their global requirements. India is becoming an important global source and extremely competitive in many products. There are many reasons for this, low cost of raw materials and labour, technically qualified workforce; management professionals, excellent manpower in different cadres, like lawyers, chartered accountants, engineers, scientists. The international partner thus, gets the products of required quality and specifications at a much lower cost than what is prevailing in the home country.


Established brand name

: When two businesses enter into a joint venture, one of the parties benefits from the other’s goodwill which has already been established in the market. If the joint venture is in India and with an Indian company, the Indian company does not have to spend time or money in developing a brand name for the product or even a distribution system. There is a ready market waiting for the product to be launched. A lot of investment is saved in the process

Public Private Partnership (PPP)

The Public Private Partnership model allocates tasks, obligations and risks among the public and private partners in an optimal manner.


The public partners in PPP are Government entities, i.e., ministries, government departments, municipalities or state-owned enterprises


The private partners can be local or foreign (international) and include businesses or investors with technical or financial expertise relevant to the project


PPP also includes NGOs and/or community-based organisations who are the stakeholders directly affected by the project.


.. PPP is, therefore, defined as a relationship between public and private entities in the context of infrastructure and other services


Under the PPP model, public sector plays an important role and ensures that the social obligations are fulfilled and sector reforms and public investment are successfully met. The government’s contribution to PPP is in the form of capital for investment and transfer of assets that support the partnership in addition to social responsibility, environmental awareness and local knowledge


The private sector’s role in the partnership is to make use of its expertise in operations, managing tasks and innovation to run the business efficiently


Sectors in which PPPs have been completed worldwide include power generation and distribution, water and sanitation, refuse disposal, pipelines, hospitals, school buildings and teaching facilities, stadiums, air traffic control, prisons, railways, roads, billing and other information technology systems, and housing.


Explore All Chapters