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Public, Private and Global Enterprises – Class 11 Business Studies notes, important questions and MCQs

NCERT Class 11 Business Studies, chapter 3. Notes, key terms, important questions with answers and MCQs.

Chapter overview

The Indian economy has a private sector, owned by individuals and companies, and a public sector, owned by central, state or local governments. Public enterprises are organised as departmental undertakings, statutory corporations or government companies. Global enterprises (multinational corporations) operate in many countries, and joint ventures and public-private partnerships combine the strengths of different partners.

Forms of public enterprises

Departmental undertakings are run as departments of a ministry and financed by the government budget, such as the Railways and Posts.
Statutory corporations are created by a special Act of Parliament or a state legislature, have a separate legal entity and financial autonomy, such as the Life Insurance Corporation of India (1956).
Government companies are companies in which at least 51 per cent of the paid-up share capital is held by the central or state governments; they are registered under the Companies Act.

Changing role of the public sector

Earlier, the public sector built infrastructure, promoted balanced regional development and controlled key industries.
Since 1991, reforms have reduced reserved industries, encouraged disinvestment, and given autonomy to profitable enterprises (Maharatna, Navratna, Miniratna).
Loss-making units were revived or closed; memoranda of understanding set performance targets.

Global enterprises, joint ventures and PPP

Multinational corporations have huge capital, operate in many countries, use advanced technology and marketing, and have centralised control from the head office.
A joint venture is formed when two or more firms pool resources for a common purpose, sharing ownership, control and profit.
A public-private partnership (PPP) combines government and private resources to build and operate public infrastructure such as roads and airports.

Key terms

Public sector: enterprises owned and managed by the central, state or local government
Statutory corporation: a public enterprise created by a special Act of the legislature
Government company: a company in which at least 51 per cent of paid-up capital is held by the government
Multinational corporation: a company that operates in several countries while controlled from its home country
Joint venture: a business formed by two or more firms pooling resources and sharing control and profit

Important questions with answers

What is a government company?2 marks

A government company is a company in which at least 51 per cent of the paid-up share capital is held by the central government, one or more state governments, or both. It is registered under the Companies Act, has a separate legal entity and is managed by a board of directors.

What are the features of multinational corporations?3 marks

Multinational corporations have huge capital resources and operate in many countries through branches and subsidiaries. They use advanced technology and strong marketing and advertising, often through foreign collaboration. Their control is centralised at the head office in the home country, while branches follow its policies.

Compare the three forms of public enterprises and explain the changing role of the public sector since 1991.5 marks

Public enterprises are organised in three forms. Departmental undertakings, such as the Railways and Posts, are run as departments of a ministry; they are financed from the government budget, staffed by civil servants and accountable to the ministry, so they have little autonomy and are slow in decision-making. Statutory corporations, such as the Life Insurance Corporation of India, are created by a special Act of Parliament or a state legislature; they have a separate legal entity, financial autonomy and their powers are defined in the Act, combining public accountability with business flexibility. Government companies are registered under the Companies Act, with at least 51 per cent of paid-up capital held by the government; they have a separate legal entity and are managed like private companies, with greater flexibility. Earlier, the public sector built infrastructure, developed key industries, promoted balanced regional development and created employment. Since 1991, reforms reduced the number of industries reserved for the public sector, encouraged disinvestment of government shares, revived or closed sick units, used memoranda of understanding to set performance targets, and granted autonomy to profitable enterprises as Maharatnas, Navratnas and Miniratnas. The public sector now competes with private and global enterprises and increasingly works through public-private partnerships.

Quick revision

Departmental undertaking, statutory corporation, government company.
Government company: at least 51 per cent government shareholding.
Post-1991: disinvestment, Navratnas.
MNCs, joint ventures, PPP.

Exam tips

Make a table comparing the three forms of public enterprise on formation, autonomy and finance.
Remember one example of each: Railways (departmental), LIC (statutory), and any government company.

Practice MCQs

The Indian Railways is an example of a
1. government company
2. private company
3. statutory corporation
4. departmental undertaking
Show answer
Answer: (d) departmental undertaking. It is run under a ministry.
The Life Insurance Corporation of India is a
1. departmental undertaking
2. cooperative
3. private company
4. statutory corporation
Show answer
Answer: (d) statutory corporation. It was created by an Act in 1956.
A company operating in many countries is a
1. multinational corporation
2. sole proprietorship
3. cooperative
4. departmental undertaking
Show answer
Answer: (a) multinational corporation. Its control is centralised.
In a government company, the government holds at least
1. 26 per cent
2. 51 per cent
3. 75 per cent
4. 100 per cent
Show answer
Answer: (b) 51 per cent. This is the legal definition.
A statutory corporation is created by
1. registration under the Companies Act
2. a special Act of the legislature
3. a partnership deed
4. a ministry order
Show answer
Answer: (b) a special Act of the legislature. Its powers are defined in that Act.
Two firms pooling resources and sharing control for a common purpose form a
1. merger always
2. joint venture
3. sole proprietorship
4. cooperative
Show answer
Answer: (b) joint venture. Ownership is shared.
Which form of public enterprise has the least autonomy
1. government company
2. departmental undertaking
3. statutory corporation
4. joint venture
Show answer
Answer: (b) departmental undertaking. It is part of a government department.
Selling part of government shares in a public enterprise to the public is
1. nationalisation
2. disinvestment
3. merger
4. licensing
Show answer
Answer: (b) disinvestment. It is a post-1991 reform.

All chapters of Class 11 Business Studies

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.