Q.5:- Why is the government company form of organization preferred to other types in the public sector?
The government company form of organization is preferred to other types in the public sector because of the following advantages it offers
(i) Simple Procedure of Establishment A government company can be easily formed as compared to other public enterprises. There is no need to get a bill passed by the Parliament or State Legislature. It can be formed simply by following the procedure laid down by the Companies Act.
(ii) Working on Business Principles The government company works on business principles. It is independent in financial and administrative matters. Its Board of Directors usually consists of professionals and persons of repute.
(iii) Efficient Management The management of a government company ensures efficiency in managing the business as it is more accountable than other forms of public enterprises because the annual report of the government company is placed before both the House of Parliament.
(iv) Competition These companies pose a healthy competition to private sector which ensures availability of goods and services at reasonable prices and good quality.