Samacheer Kalvi Class 11 Commerce Solutions Chapter 9 Government Organisation

I. Choose the Correct Answer

 

Question 1. The share capital of the government company must not be less than ............
(a) 49%
(b) 51%
(c) 50%
(d) 25%
Answer: (b) 51%
In simple words: For a company to be called a government company, at least 51% of its shares must be owned by the government. This ensures the government has control over its operations.

🎯 Exam Tip: Remember the 51% threshold for government companies, as it's a key legal definition point.

 

Question 2. Airport Authority of India is a public enterprise ....................... Identify the form of organisation
(a) Statutory Corporations
(b) Departmental Undertakings
(c) Multi-National Corporations
(d) State Owned Company
Answer: (b) Departmental Undertakings
In simple words: The Airport Authority of India works like a regular government department. This means it is directly controlled by the government and works under a specific ministry.

🎯 Exam Tip: Understand the key differences between various public enterprise forms to correctly classify examples like the Airport Authority of India.

 

Question 3. The oldest form of organisation in public sector .......................
(a) Public Sector Undertakings
(b) Departmental Undertakings
(c) Multi National Corporations
(d) Statutory Corporation
Answer: (b) Departmental Undertakings
In simple words: Departmental undertakings are the oldest way governments have managed businesses. They are like extensions of government ministries.

🎯 Exam Tip: Knowing the historical progression of public sector organization types helps in understanding their evolution and characteristics.

 

Question 4. A Government company purchases shares in the name of .......................
(a) Prime Minister
(b) President
(c) Chief Justice of India
(d) State Chief Minister
Answer: (b) President
In simple words: When a government company buys shares, it does so in the name of the President of India. This is a formal legal requirement.

🎯 Exam Tip: Remember that official government actions, especially involving property or shares, are legally carried out in the name of the President.

 

Question 5. The primary objective of the state enterprises is to .......................
(a) Earn profit
(b) Provide Employment
(c) Serve the People
(d) All the Above
Answer: (c) Serve the People
In simple words: State enterprises mainly aim to help the public and provide services, rather than just making money. They often focus on social welfare.

🎯 Exam Tip: Understand that public sector enterprises prioritize social welfare and service delivery over profit-making, which distinguishes them from private companies.

II. Very Short Answer Questions

 

Question 1. State the different types of public sector enterprises.
Answer: The different types of public sector enterprises are:

• Departmental Undertakings
• Public Corporation
• Government Company

These structures allow the government to manage various industries and services effectively.
In simple words: There are three main kinds of public businesses: those run like government departments, special companies set up by law, and companies where the government owns most of the shares.

🎯 Exam Tip: When listing types, provide clear, distinct categories to ensure full marks.

 

Question 2. What is the basic feature of a Departmental undertaking?
Answer: The basic features of a Departmental undertaking are:
1. Formation: A departmental undertaking is set up as a full-fledged ministry or as a part of an existing ministry. It means it is a direct part of the Government.
2. No Separate Entity: It does not have its own independent legal identity, separate from the Government. It operates as one with the government itself.
In simple words: A departmental undertaking is directly run by the government and is not seen as a separate business. It's just another part of a government ministry.

🎯 Exam Tip: Clearly state that these undertakings are inseparable from the government and are formed by administrative decisions, not separate laws.

 

Question 3. Give two examples for each of the following.
Answer: Here are examples for each type of enterprise:
1. Private sector enterprises – Reliance Industries & Hindustan Lever Limited. These are companies owned and run by private individuals or groups.
2. Global enterprises – Tata; Mahindra & Mahindra. These are large companies that operate in many countries around the world.
3. Public enterprises – Coal India Ltd &Steel Authority of India. These are businesses owned and controlled by the government.
In simple words: Private businesses are like Reliance. Big global businesses are like Tata. Government businesses are like Coal India.

🎯 Exam Tip: Provide diverse and well-known examples for each category to illustrate your understanding clearly.

 

Question 4. State the form of public enterprises which is most suitable for projects related to National Security.
Answer: Departmental undertakings are the most suitable form of public enterprises for projects related to National Security. Industries like defence and atomic power need to be managed directly by government departments. This structure helps maintain high levels of secrecy in their important work.
In simple words: For national security projects, like making defence items or atomic power, government departments are best because they can keep secrets well.

🎯 Exam Tip: Emphasize the unique advantage of departmental undertakings for national security: their ability to maintain strict secrecy and direct government control.

 

Question 5. The Industrial Policy Resolution 2001 exclusively reserved for few industries for the public sector. Name these industries.
Answer: The Industrial Policy Resolution 2001 reserved specific industries solely for the public sector. These industries are: Arms, ammunition and related defence equipment, Atomic energy, Coal and lignite, Mineral oils, Minerals mentioned in the schedule to the Atomic Energy order 1953, and Railway transport. These are critical areas where government control is seen as essential.
In simple words: In 2001, some important industries like making weapons, atomic power, coal, oil, special minerals, and railways were kept only for the government to run.

🎯 Exam Tip: Memorize the specific industries reserved for the public sector under policy resolutions, as these lists are frequently tested.

III. Short Answer Questions

 

Question 1. List the areas where the state or central ownership is a preferred form of business organisation. Justify your choice of areas.
Answer: State or central ownership is preferred in specific areas of business. Some examples include:
1. Coal Miners Authority Ltd.
2. Steel Authority of India Ltd.
3. Indian Telephone Industries
4. Tamil Nadu State Corporation Ltd.
These are often chosen because a company where the central or state government owns all or most of the capital (at least 51%) is called a Government Company. This type of ownership ensures that crucial sectors, like natural resources or infrastructure, are managed for public benefit rather than solely for profit. The government's control helps achieve wider social and economic goals.
In simple words: The government likes to own businesses in important areas like coal, steel, telephones, and state corporations. This is because when the government owns most of a company, it can make sure these important services help everyone and are not just about making money.

🎯 Exam Tip: When justifying the choice of state ownership, highlight the focus on public welfare, strategic importance, and preventing monopolies, not just the names of companies.

 

Question 2. List the names of some enterprises under the public sector and classify them.
Answer: Here are some public sector enterprises and their classifications:

Understanding these classifications helps in knowing how each enterprise is managed and governed.
In simple words: Public sector businesses can be sorted into different types. For example, Indian Railways is like a government department, while the Food Corporation of India is a special company created by law.

🎯 Exam Tip: Practice classifying various public sector enterprises based on their formation, funding, and operational autonomy. Ensure you present the answer in a clear table format.

 

Question 3. Define Departmental undertakings.
Answer: Departmental undertakings are the oldest type of public sector organization. In this setup, a public enterprise is run as either a complete ministry or a major part of a government ministry. For example, the Indian Railways are managed by the Ministry of Railways. This means they are directly controlled by the government and are not separate legal entities.
In simple words: Departmental undertakings are businesses that are part of a government department. They are managed directly by the government, just like any other government office.

🎯 Exam Tip: When defining departmental undertakings, highlight their direct government control and lack of separate legal identity.

 

Question 4. Company?
Answer: The departmental form of organisation for managing state enterprises is considered the oldest. Under this structure, a public enterprise functions as a complete ministry or a significant division within a government ministry. This type of organization is fully integrated into the government's administrative framework. For example, some transport services are run this way.
In simple words: This is the oldest type of organization where a government business works as a part of a government ministry. It is fully connected to the government.

🎯 Exam Tip: When providing definitions, ensure clarity and precision, explaining the core characteristics like formation and operational structure.

IV. Long Answer Questions

 

Question 1. What are the advantages and disadvantages of Departmental undertaking?
Answer: Departmental undertakings are the oldest way to manage state enterprises. They are integrated directly into the government structure.
Advantages:
1. Easy Formation: These are simple to set up, as they only need an administrative decision from the Government, without complex legal steps.
2. Direct Control of Parliament or State Legislature: They are directly answerable to the Parliament or State Legislature through their minister. This ensures accountability.
3. Secrecy Maintained: For sensitive industries like defence and atomic power, government departments can keep information very secure. This is crucial for national security.
4. Lesser Burden of Tax on Public Earnings: Their earnings go directly into the Government treasury, which can help reduce the tax burden on citizens indirectly. This supports public finances.
5. Instrument of Social Change: The government can use these undertakings to promote fairness in society and economic development. They can implement policies for the greater good.
6. Lesser Risk of Misuse of Public Money: Since they follow government budgeting and accounting rules, the risk of misusing public funds is lower.
7. Guided by Rules and Regulations of the Ministry: Their officers work under the direct control of the ministry, following strict rules designed for public welfare. This ensures systematic operation.
Disadvantages:
1. Red-tapism: There are often too many procedures, leading to delays. Businesses need quick decisions, which can be difficult in this system.
2. Incidence of Additional Taxation: If a departmental enterprise loses money, the government covers it from the treasury. This might lead to more taxes for the public.
3. Lack of Competition: Civil servants who manage these undertakings might not have a strong business sense. They might run them without thinking about customer needs or market competition.
4. Casual Approach to Work: Government officers are often transferred, which means they might not commit fully to one undertaking. This can make the business less efficient.
5. Government Interference: There is too much interference and control from the government, which stops these undertakings from making their own policies or innovative decisions. This reduces flexibility.
6. Lack of Professional Management and Fear of Criticism: Civil servants may not have professional management skills. Managers might avoid new ideas because they fear criticism from ministers or Parliament.
7. Financial Dependence: They rely completely on the government for money and budget. They cannot make their own long-term investment decisions, which can limit their growth.
In simple words: Departmental undertakings are easy to start and keep secrets well, especially for defence. They also help the government control important services and spend public money carefully. But they can be slow because of too many rules, might cause higher taxes if they lose money, and can suffer from a lack of business focus and constant changes in staff. They also depend a lot on government funds and face much interference.

🎯 Exam Tip: For advantages and disadvantages questions, ensure you list an equal or balanced number of points for both sides. Use clear topic sentences for each point and provide brief explanations.

 

Question 2. What are the features of a public corporation? (Any 5)
Answer: Here are the key features of a public corporation:
1. Special Statute: A public corporation is created by a special Act passed by the Parliament or State Legislature. This Act clearly defines its powers, goals, functions, and how it interacts with the ministry and Parliament.
2. Separate Legal Entity: It is a distinct legal body with its own identity, separate from the government. It can own property, sign contracts, and file lawsuits in its own name, and its existence continues forever.
3. Capital Provided by the Government: The government or government-controlled agencies provide the capital for these corporations. However, some public corporations also raise money from the open market.
4. Financial Autonomy: A public corporation has financial independence. It prepares its own budget and has the authority to keep and use its earnings for its business operations.
5. Management by Board of Directors: A Board of Directors, appointed or chosen by the Government, manages the corporation. There is usually no daily interference from the Government in its working.
These features allow public corporations to operate with a degree of independence while serving public interest.
In simple words: Public corporations are made by a special law, work as their own legal body, and get money from the government. They manage their own money and are run by a special board, usually without daily government meddling.

🎯 Exam Tip: When describing features, focus on the legal basis (special statute), operational independence (separate entity, financial autonomy), and governance structure (Board of Directors).

 

Question 3. What are the features of a Government Company? (Any 5)
Answer: Here are the key features of a Government Company:
1. Registration: A Government company is formed by registering under the Companies Act, 1956, just like any other private company. However, the Central Government can decide that some parts of the Companies Act might not apply or apply with changes to a Government company.
2. Executive Decision of Government: These companies are created through an executive decision by the Government. This means they do not need approval from the Parliament or State Legislature to be formed.
3. Separate Legal Entity: A Government company has its own legal identity, separate from the Government. It can buy property, make contracts, and file lawsuits in its own name.
4. Whole or Majority Capital Provided by Government: The government provides all or most (at least 51%) of the capital. However, the money earned by the company is not deposited into the government treasury; it is kept by the company.
5. Majority of Government Directors: Since the government owns most of the shares, it can appoint most of the directors to the company's Board. These companies have their own staff, and their employees are not typically subject to civil service rules, unless they are government officials on deputation.
Government companies blend public ownership with a corporate management style.
In simple words: A government company is registered like any normal company and is made by a government decision. It is a separate business with its own name and gets most of its money from the government. The government also appoints most of its directors.

🎯 Exam Tip: Highlight the blend of government ownership with corporate legal structure and management autonomy when discussing Government Company features. Remember the 51% capital rule.

 

Question 4. What are the advantages and disadvantages of a public corporation?
Answer: Public corporations are special bodies created by law to provide public services. They have both benefits and drawbacks.
Advantages:
1. Bold Management due to Operational Autonomy: Public corporations enjoy a good degree of freedom in how they operate, without much government control. This allows management to make quick and bold decisions and experiment with new ideas, acting like a business.
2. Legislative Control: Even with autonomy, they are checked by Parliament or State Legislature committees. The media also watches them closely, which helps prevent bad practices by the management. This provides accountability.
3. Qualified and Contented Staff: Public corporations can offer good working conditions to their employees. This helps them attract and keep skilled staff who are happy with their jobs.
Disadvantages:
1. Autonomy and Flexibility, Only in Theory: While they are supposed to be independent and flexible, in reality, there is often a lot of interference from ministers, government officers, and politicians. This limits their freedom.
2. Misuse of Monopolistic Power: Public corporations often have a monopoly, meaning they are the only provider in their field. Because of this, they might not care much about consumer needs and problems and could even take advantage of customers.
In simple words: Public corporations can make quick decisions and attract good staff because they are quite independent. They are also watched by the government to ensure they do well. But in reality, they often face government interference, and because they are often the only provider, they might not always put customers first.

🎯 Exam Tip: For advantages and disadvantages of public corporations, focus on the tension between their intended autonomy and the reality of political interference, as well as their market position.

 

Question 5. What are the features of the Departmental Organisation? (Any 5)
Answer: Here are the key features of a Departmental Organisation:
1. Formation: A departmental undertaking is set up as either a separate full-fledged ministry or as a sub-division of an existing ministry. It means it is a direct part of the Government, without needing separate legal creation.
2. No Separate Entity: It does not have an independent legal identity distinct from the Government. It functions as an integral part of the government itself.
3. Ultimate Responsibility: The minister in charge has the main responsibility for managing the departmental undertaking. This minister is accountable to the Parliament or State Legislature for its operations. The minister then delegates authority to various management levels.
4. Governmental Financing: The undertaking gets its money from the government's annual budget, approved by Parliament or the State Legislature. All the money it earns goes back into the government treasury.
5. Accounting and Audit: It follows the same budgeting, accounting, and audit rules that apply to all other government departments. This ensures financial transparency and control.
These characteristics highlight their direct integration into the government's administrative machinery.
In simple words: A departmental organization is formed as part of a government ministry and has no separate legal identity. The minister is fully responsible for it, and it gets its money from the government's budget. It also follows all government accounting and audit rules.

🎯 Exam Tip: When listing features of departmental organizations, emphasize their direct governmental control, financial integration, and accountability through ministers.