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Note on Public Enterprises

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Example of Public Enterprises in Nepal
Example of Public Enterprises in Nepal

Public enterprise is a business organization established by the government holding more than 50% of the total share with the aim of producing and distributing goods and services at a reasonable price to the public. Public enterprises are established by the government contributing total or majority capital. The government invests at least 51 percent of the total amount of paid up capital. It is managed by the government nominating board of directors or representatives. It is an industrial or commercial undertaking, which involves in the production and distribution of goods and services in order to meet its expenses. It maintains its accounts independently. It is a distinct legal entity having a corporate status. It has a perpetual life with limited liabilities. It uses a common seal as its official signature. It is established for the public service and welfare, sound industrial and commercial base and upliftment of economy of the country.

The following are some of the main definitions of a public enterprise:

"Public enterprises are established, controlled and operated by the government to produce and supply goods and services to the society."- A.N. Agrawal

"State-owned enterprises are finally autonomous and legally distinct entities wholly or partly owned by central or sub- national governments." - World Bank Report- 1998"

"Public enterprises are established, control and operated by the government to produce and supply goods and services to the society." - A.N Hansen

The following are the main characteristics of a public enterprise:

  1. State ownership: A public enterprise is owned by the government. The government holds total or least 51 percent shares of the enterprises. In most of the enterprises in Nepal, the government has full ownership.
  2. State government: A public enterprise is managed by the government. The government manages the public enterprises by the nominating board of directors and chief executives.
  3. Service motive: The primary aim of the public enterprises is to render service to the society. It works for the public service and welfare of the society. It produces and distributes qualitative goods and services at reasonable price.
  4. Public accountability: A public enterprise is accountable to the general people. It is responsible for its performance and achievement towards the government, parliament, and general people. The performance of the public enterprise is evaluated by the committees of the parliament and the state legislature.
  5. Perpetual succession: A public enterprise has a permanent life. Being a separate legal entity, its life is not affected due to changes in the government and management.
  6. Separate legal entity: A public enterprise is a distinct legal entity. It has a corporate status with a common seal. It can be sued and used against the unfair trade practices. It performs all business transaction in its own name.

Objectives:

  1. To help the economic development of the country in planned manner by establishing different industrial and commercial enterprises.
  2. To provide the qualitative goods and services of daily necessities at a reasonable price.
  3. To control monopoly and unfair trade practices in the supply of goods and services.
  4. To provide import substitution and to save foreign currencies.
  5. To increase the revenue of the government by paying taxes.

Need and Importance

  1. It increases the rate of economic growth.
  2. It develops the infrastructure like electricity, communication, banking, transportation etc.
  3. It provides qualitative goods and services of daily necessity at a reasonable price.
  4. It maintains balanced economic development.
  5. It creates greater employment opportunities in the society.
  6. It increases the revenue of government by contributing tax.
  7. It helps to earn foreign currencies by exporting goods and services and increase the foreign exchange reserve.

  • Public enterprises are established by the government contributing total or majority capital.
  • Public enterprise is a state-owned organization, which is managed by the government.
  • The characteristics of public enterprise are state ownership, state government, service motive, public accountability, perpetual succession and separate legal entity.
  • To help economic development, to provide qualitative goods and services, to control monopoly, to provide import substitution, to save foreign currencies and to increase government revenues are the objectives of the public enterprise.
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Very Short Questions

Public enterprise is a business organization established by the government holding more than 50% of the total share with the aim of producing and distributing goods and services at a reasonable price to the public. Public enterprises are established by the government contributing total or majority capital. The government invests at least 51 percent of the total amount of paid up capital. It is managed by the government nominating board of directors or representatives. It is an industrial or commercial undertaking, which involves in the production and distribution of goods and services in order to meet its expenses. It maintains its accounts independently. It is a distinct legal entity having a corporate status. It has a perpetual life with limited liabilities. It uses a common seal as its official signature. It is established for the public service and welfare, sound industrial and commercial base and upliftment of economy of the country.

In the words of A.N. Agrawal, "Public enterprises are established, controlled and operated by the government to produce and supply goods and services to the society."

According to World Bank Report- 1998, "State owned enterprises are finally autonomous and legally distinct entities wholly or partly owned by central or sub- national governments."

From the above definitions, it is clear that public enterprise is a form of business organization established by the government holding at least 51% of the total shares with the aim of producing and distributing goods and services at fair price to the society.

The following are the main objectives of public enterprises:

  1. To help the economic development of the country in planned manner by establishing different industrial and commercial enterprises.
  2. To provide the qualitative goods and services of daily necessities at a reasonable price.
  3. To control monopoly and unfair trade practices in the supply of goods and services.
  4. To provide import substitution and to save foreign currencies.
  5. To increase the revenue of the government by paying taxes.

The following are the need and importance of public enterprises:

  1. It increases the rate of economic growth.
  2. It develops the infrastructure like electricity, communication, banking, transportation etc.
  3. It provides qualitative goods and services of daily necessity at a reasonable price.
  4. It maintains balanced economic development.
  5. It creates greater employment opportunities in the society.
  6. It increases the revenue of government by contributing tax.
  7. It helps to earn foreign currencies by exporting goods and services and increase the foreign exchange reserve.

The following are the main characteristics of a public enterprise:

  1. State ownership: A public enterprise is owned by the government. The government holds total or least 51 percent shares of the enterprises. In most of the enterprises in Nepal, the government has full ownership.
  2. State government: A public enterprises is managed by the government. The government manages the public enterprises by the nominating board of directors and chief executives.
  3. Service motive: The primary aim of the public enterprises is to render service to the society. It works for the public service and welfare of the society. It produces and distributes qualitative goods and services at reasonable price.
  4. Public accountability: A public enterprise is accountable to the general people. It is responsible for its performance and achievement towards the government, parliament, and general people. The performance of the public enterprise is evaluated by the committees of the parliament and state legislature.
  5. Perpetual succession: A public enterprise has a permanent life. Being a separate legal entity, its life is not affected due to changes in the government and management.
  6. Separate legal entity: A public enterprise is a distinct legal entity. It has a corporate status with a common seal. It can be sued and used against the unfair trade practices. It performs all business transaction in its own name.

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  • "Public enterprises are established, controlled and operated by the government to produce and supply goods and services to the society." Who gave this definition?

    A.N. Agrawala


    A.N. Hansen


    S.P. Arora


    L.H. Haney


  • "Public enterprises are established, control and operated by the government to produce and supply goods and services to the society." Who gave this definition?

    A.N. Hansen


    L.H. Haney


    J.R. Batliboi


    A.N. Agrawala


  • Which one of them is the objective public enterprises?

    To help the economic development of the country in planned manner by establishing different industrial and commercial enterprises.


    To control monopoly and unfair trade practices in the supply of goods and services.


    To provide import substitution and to save foreign currencies.


    To decrease the revenue of the government by not paying taxes.


  • Which one of them is the characteristic of public enterprises?

    Sole management


    Absence of separate legal entity


    Profit motive


    State ownership


  • Which one of them is the importance of public enterprises?

    ;i:3;s:66:

    All the options are correct


    ;i:4;s:91:
    ;i:2;s:117:
  • You scored /5


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