BS-class11-chapter 8 public enterprises

 

Concept of Public  Enterprises 

Public enterprises are business organizations owned, managed, and controlled by the government. They are established to provide important goods and services that people need in daily life, such as electricity, water, fuel, telecom, transport, and banking.

Their main purpose is public welfare, not profit. They operate in sectors where private companies may not invest enough or may charge very high prices. Public enterprises help the government maintain fair prices, ensure equal access to services, and support national development.

In summary, a public enterprise is a government-run business created to serve the public, support economic development, and provide essential services in a reliable and affordable way.

Characteristics of Public Enterprises 

  1. Government Ownership:

    Public enterprises are owned by the government. The government provides the money (capital) needed to start and run the enterprise. This ensures that the enterprise can serve public interests without worrying about profits like private companies.

  2. Government Management and Control

    : The government manages and controls public enterprises. It appoints managers, sets policies, and supervises operations to make sure the enterprise works according to national plans and priorities.

  3. Financial Autonomy

    :Although owned by the government, public enterprises can make their own financial decisions. They can prepare budgets, decide how to spend money, and invest in projects independently to run their business efficiently.

  4. Public Accountability :

    Public enterprises are accountable to the government and the public. They must regularly report their performance, income, and activities. This ensures transparency and that public resources are used properly.

  5. Monopoly in Business:

    Some public enterprises are the only providers of essential goods or services, such as electricity or water. This monopoly helps the government control prices, ensure quality, and provide services fairly to all citizens.

  6. Service Motive:

    The main goal of public enterprises is to serve the public, not just earn profit. They provide essential goods and services at reasonable prices to benefit society.

  7. Separate Legal Entity :

    A public enterprise is considered a separate legal organization. It can own property, enter into contracts, borrow money, and sue or be sued in its own name, separate from the government.

  8. Business Oriented :

    Public enterprises operate like businesses. They produce goods or services efficiently, sell them, and generate revenue. This helps them reduce dependence on government funding while still serving the public.

  9. Perpetual Existence :

    Public enterprises continue to exist even if managers, employees, or government leaders change. Their operations are stable and long-term, ensuring continuity of services.

  10. Maturity in Decision :

    Decisions in public enterprises are taken carefully after proper planning, research, and consultation. They focus on long-term public interest and national development rather than quick profits.
Types of Public enterprises 

Public enterprises are business organizations owned and run by the government to provide essential goods and services to people. In Nepal, public enterprises are mainly classified into the following types:

1. Departmental Undertaking

This type of public enterprise is run directly by a government ministry or department. It does not have a separate legal identity. All decisions, budgets, profits, and losses are handled by the government itself.
Example: Postal service, railways (if operated directly by government).
It is just like a government office doing business work.

2. Public Corporation

A public corporation is established by a special Act of Parliament. It has a separate legal identity, so it can make contracts, own property, and sue or be sued in its own name. The government owns it, but it has more independence than departmental undertakings.
Example: Nepal Electricity Authority, Nepal Telecom. Government-owned business with its own rules and freedom to operate.

3. Government Company

A government company is registered under the Company Act, where the government owns more than 50% of shares. It is managed like a private company but controlled by the government.
Example: Dairy Development Corporation, Nepal Oil Corporation.
Meaning in simple words: A company-style business where the government is the main owner.


In short:

Departmental Undertaking → Fully government-controlled

Public Corporation → Government-owned but independent

Government Company → Company form with government majority ownership


Rationale of Public Enterprises in Nepal

Public enterprises are organizations owned and operated by the government. In a developing country like Nepal, public enterprises are established not only to earn profit but mainly to support national development and public welfare. The main reasons (rationale) for establishing public enterprises are explained below:


1. Establishment of Basic Industries

Basic industries such as electricity, water supply, transportation, cement, steel, and petroleum are essential for economic development. Private investors often avoid these industries because they require large capital and involve high risk. Therefore, the government establishes public enterprises to develop these basic industries and ensure their availability to the people.


2. Avoid Uncertainty

Private businesses are mainly guided by profit and may stop production during loss or crisis. This creates uncertainty in the supply of essential goods and services. Public enterprises reduce such uncertainty by ensuring continuous production and supply of important goods and services even during difficult times.


3. Planned Development

Public enterprises help the government implement national plans effectively. Through these enterprises, the government can direct resources according to development priorities such as industrial growth, regional development, and social welfare. Thus, public enterprises support planned and systematic economic development.


4. Balanced Development

In Nepal, private industries are usually concentrated in urban or developed areas. Remote and backward regions are often ignored. Public enterprises help reduce regional imbalance by establishing industries and services in less developed areas, promoting balanced economic development across the country.


5. Creation of Employment

Public enterprises create large employment opportunities for the people. They provide jobs directly through factories and offices and indirectly through supporting industries. This helps reduce unemployment and poverty in the country.


6. Development of Infrastructure

Infrastructure such as roads, electricity, communication, irrigation, and transportation is necessary for economic growth. Public enterprises play a key role in developing such infrastructure, which also encourages private sector investment.


7. Public Utility Concern

Some services like electricity, water supply, public transport, postal services, and telecommunications are essential for daily life. Public enterprises provide these services at affordable prices with a service motive rather than profit motive, ensuring public welfare.


8. Preservation of National Wealth

Public enterprises help protect national resources such as forests, minerals, water resources, and important industries from foreign control and exploitation. This ensures that national wealth remains under government ownership and benefits the people of the country.


9. Source of Government Revenue

Many public enterprises earn profit and contribute revenue to the government in the form of dividends, taxes, and service charges. This revenue helps the government finance development projects and public services.


10. Accelerated Economic Growth

By developing industries, infrastructure, employment, and public services, public enterprises promote overall economic activities. This leads to increased production, income, and national output, resulting in faster economic growth of the country.


Conclusion

In Nepal, public enterprises are essential instruments of economic and social development. They support national planning, ensure public welfare, reduce inequality, and promote long-term economic growth. Therefore, public enterprises play a vital role in the development of the Nepalese economy.

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