What are thel Advantages and Limitations of Government Undertakings?

Advantages:

1. Balanced growth:

By establishing public sector enterprises, a country can develop its economy in all regions. Thus there is a balanced growth. These enterprises can be developed on economic, social and regional basis.

2. Long period planning:

In comparison with private sector, public sector is in a better position to plan for future development of an industry.

3. Facilities for economic development:

Profits of public enterprises can be used by the state for financing the schemes of economic development.

4. Greater public welfare:

Private enterprises are for increasing profit but public enterprises do not work for making profit for the owner but they work to help the national economy as a whole.

5. Equal distribution of wealth:

With the help of public sector there is possibility for the Government to reduce inequalities of income and wealth among the people.

6. Better co-ordination:

Having better control of public enterprise, there is scope for better co-ordination among industries controlled by public sector.

7. Abolition of monopoly:

As all public enterprises are controlled by the State, the danger of concentration of power in a few hands can be eliminated.

8. Greater economy:

Due to unified control and large scale operation there is a possibility of economy in the working of public enterprises.

9. Better relation with labour force:

In public enterprises labourers’ interest is well protected through job security, better working condition etc.

10. Better deal to consumers:

In public sector consumers are well protected and their interest is well taken care of. If they pay a higher price for the product purchased, the benefit goes to the large community.

11. Utilization of local resources:

As public enterprises are established all over the country, it is easy to utilise local labour and raw materials available.

12. Achievement of self-reliance:

As public sector helps domestic industry, it is possible for the industry to be self reliant and the country to eliminate foreign goods.

13. Establishment of heavy and strategic industry:

These industries require huge capital, thus private enterprises are not interested in these industries. Further some strategic industries, like defense industry, are not permitted to be started by private enterprises.

14. Balanced production:

The aim of private enterprises is to make profit. Thus, there is possibility of excess production. The public enterprises are under the control of public authorities and there is possibility of balanced production of goods required by the people. Further it avoids concentration of wealth in the hands of few.

Limitations:

1. Lack of initiation and efficiency:

Lack of profit motive leads to inefficiency and slow working. Therefore decision making is not so quick in public sector like in private enterprises. Public Enterprises are managed like Government offices, thus efficiency cannot be seen in public enterprises.

2. Lack of selection of goods:

It is a kind of monopoly under the control of Government. Consumers have no choice of selection of goods. Because of the monopolistic attitude of the Government, the buyers lose the right of choice.

3. Political interference:

Due to undue influence of politicians, the public sectors cannot function smoothly and effectively. It hampers the efficient conduct of operations.

4. Slow growth:

Public enterprises have little scope for expansion and modernisation as they take a long period to establish and the return on investment is also less.

5. Poor management:

Due to excess interference by the Government and political parties, the public enterprises cannot be managed on sound lines or as per the plans laid out. Further the financing of public sector is fully in the hands of the Government, which restricts the scope for development.

6. Lack of flexibility:

There is a lack of flexibility in public enterprises. This is due to slow decision making habit of the state. Implementation of the decision also takes a long time in public enterprises.

General Advantages and Limitations of Government Undertakings ???

Advantages:

1. Balanced growth:

By establishing public sector enterprises, a country can develop its economy in all regions. Thus there is a balanced growth. These enterprises can be developed on economic, social and regional basis.

2. Long period planning:

In comparison with private sector, public sector is in a better position to plan for future development of an industry.

3. Facilities for economic development:

Profits of public enterprises can be used by the state for financing the schemes of economic development.

4. Greater public welfare:

Private enterprises are for increasing profit but public enterprises do not work for making profit for the owner but they work to help the national economy as a whole.

5. Equal distribution of wealth:

With the help of public sector there is possibility for the Government to reduce inequalities of income and wealth among the people.

6. Better co-ordination:

Having better control of public enterprise, there is scope for better co-ordination among industries controlled by public sector.

7. Abolition of monopoly:

As all public enterprises are controlled by the State, the danger of concentration of power in a few hands can be eliminated.

8. Greater economy:

Due to unified control and large scale operation there is a possibility of economy in the working of public enterprises.

9. Better relation with labour force:

In public enterprises labourers’ interest is well protected through job security, better working condition etc.

10. Better deal to consumers:

In public sector consumers are well protected and their interest is well taken care of. If they pay a higher price for the product purchased, the benefit goes to the large community.

11. Utilization of local resources:

As public enterprises are established all over the country, it is easy to utilise local labour and raw materials available.

12. Achievement of self-reliance:

As public sector helps domestic industry, it is possible for the industry to be self reliant and the country to eliminate foreign goods.

13. Establishment of heavy and strategic industry:

These industries require huge capital, thus private enterprises are not interested in these industries. Further some strategic industries, like defense industry, are not permitted to be started by private enterprises.

14. Balanced production:

The aim of private enterprises is to make profit. Thus, there is possibility of excess production. The public enterprises are under the control of public authorities and there is possibility of balanced production of goods required by the people. Further it avoids concentration of wealth in the hands of few.

Limitations:

1. Lack of initiation and efficiency:

Lack of profit motive leads to inefficiency and slow working. Therefore decision making is not so quick in public sector like in private enterprises. Public Enterprises are managed like Government offices, thus efficiency cannot be seen in public enterprises.

2. Lack of selection of goods:

It is a kind of monopoly under the control of Government. Consumers have no choice of selection of goods. Because of the monopolistic attitude of the Government, the buyers lose the right of choice.

3. Political interference:

Due to undue influence of politicians, the public sectors cannot function smoothly and effectively. It hampers the efficient conduct of operations.

4. Slow growth:

Public enterprises have little scope for expansion and modernisation as they take a long period to establish and the return on investment is also less.

5. Poor management:

Due to excess interference by the Government and political parties, the public enterprises cannot be managed on sound lines or as per the plans laid out. Further the financing of public sector is fully in the hands of the Government, which restricts the scope for development.

6. Lack of flexibility:

There is a lack of flexibility in public enterprises. This is due to slow decision making habit of the state. Implementation of the decision also takes a long time in public enterprises.