In developing countries like India, state intervention in economic and industrial enterprises has become almost compulsory for various reasons.
The main reasons for state intervention are to:
(i) build up an industrial infrastructure and raise productivity;
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(ii) increase employment opportunities;
(iii) upgrade the standard of living by accelerating national growth and development;
(iv) render required services and cater to public utilities like power, transportation and communication as they are heavy capital investments;
(v) provide sources of credit to finance agricultural and industrial production and trade in the country; and
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(vi) reduce dependency on foreign capital and aid.
The state becomes a vital partner in industrial development and promotion of industrial enterprise both as a matter of national policy, and to ensure public control over important sectors of the economy. The Government Corporation has been described by Dimock as a publicly owned enterprise that has been chartered under federal, state or local law for a specific business of financial purpose.
In private business, there are limited liability companies consisting of a large number of shareholders, a board of directors representing the general body of shareholders and a general manager looking after routine administration of the company. In the similar way, to carry on the business and industrial activities of the government, a company-like organisation has been devised.
A Board of Directors is responsible for laying down the policies for the Corporation as well as company. The government appoints the Chairman and members of the Board. This Board is responsible for the day-to-day “management of the Corporation, which enjoys autonomy of management and flexibility of private enterprise coupled with accountability to the government.
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The Joint Stock Company form of management has been used by most of the governments. This type is also known as mixed ownership company. The government contributes substantially to its capital. The Board of Directors appointed by the government heads the management.
It includes various joint enterprises, shared between the state and private interests, which may represent individual private interests or the subscription of the citizens. India has made great use of this company form of organisation for the management of its enterprises, for example, Bharat Heavy Electricals Ltd., Bharat Electronics Ltd., and Hindustan Cable Ltd.
Now, with growing accent on disinvestment, privatisation, and contracting out, the public-private partnership enterprises are on the increase, but the format is very different from the traditional company form.
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