A Public Corporation is a body corporate formed by a special Act of Parliament or by the central or state legislature. It is fully financed by the government. Its powers, objects, limitations etc. are also decided by the Act of legislature.
For example, Indian Airlines, Air India, State Bank of India, Life Insurance Corporation of India, Food Corporation of India, Oil and Natural Gas Corporation, etc.
Features of Public Corporation
The main characteristics of a public corporation are as follows:
- It is created by an Act of Parliament or central or state legislature.
- The powers, objectives, and limitations of public corporations are defined in the Act only.
- It operates under the total control of the central or state government.
- It is a separate legal entity. It gets incorporated automatically when Act is passed in the Parliament.
- It is managed by the Board of Directors who are nominated by the government.
- It has its own rules of recruitment and remuneration for its staff and employees.
- It enjoys administrative autonomy as it is relatively free from political interference.
- The main motive of this is to service to the general public.
- It is accountable to Parliament or state legislature for its operation. It has to submit its annual report on its working.
- The Accounts of Public Corporation are generally audited by the Comptroller and Auditor General.
Advantages of Public Corporation
The main advantages of public corporation are:
- Administrative Autonomy – It is able to manage its affairs with independence and flexibility.
- Quick Decision – A public corporation is relatively free from red Taoism, as there is less file work and less formalities to be completed before taking decision.
- Service Motive – It’s activities are discussed in parliament. This ensures protection of the public interest.
- Efficient Staff – It can have their own rules and regulations regarding remuneration and recruitment of employees. It can provide better facilities and attractive terms of services to staff to secure efficient working from its staff.
- Professional Management – Its Board of Directors consists of business experts and also the representatives of various groups such as labour, consumers nominated by the government.