These are organisations set up as a Department of the Government i.e., as a part of the Government, under the control of a concerned minister. These are the oldest and traditional forms of State enterprises Eg: Railways, P&T, Atomic Power Projects, Ordinance factories etc.
Characteristic features of Departmental Enterprises:
The following are the characteristic and essential features of a Departmental Enterprise:
1. Nature of operation:
The Departmental Enterprises operate as a part of a particular ministry. For E.g.: Railways work as a Department of the Railway ministry.
2. Centralised control:
The operations of the Departmental Enterprises are under the control of an executive head that controls the activities in a centralised manner.
3. Reporting of activities:
The executive head that regulates the operational activities, reports about the progress to the immediate minister in charge of the Departmental Enterprise. The minister has direct control over the activities of the organisation.
4. Government finance:
Budgetary allocation is the main source of finance for the Departmental Enterprises. The Government in its annual budget allocates funds for the purpose of progress and improvement in these institutions.
5. Source of revenue to the Government:
The revenue from the Departmental Undertakings goes to the Government directly. It is an indirect source of revenue for the Government.
6. Accounting and auditing:
The operational activities and other affairs of the Departmental Enterprises are subject to strict Government accounting and audit.