The Advantages & Disadvantages of Government Company?
Advantages
The following are some of the advantages of a government company:
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- The formation of government companies is very easy because it is formed like other joint stock companies.
- It is easy to incorporate changes in its constitution through amendments to articles because as most of the government companies are owned and controlled by the government.
- Most of the government companies run on sound business lines as they have their surpluses to run their projects.
- Government company enjoys financial autonomy because they are to depend on the government for initial investment. The profit of the companies are utilized for the further expansion activities.
- Government company facilitates all round industrial development by taking up projects in the neglected areas where private sectors hesitate to invest.
- It provides a healthy competition to private sectors.
Disadvantages
The followings are some of the disadvantages of a government company:
- Government companies are autonomy in theory, but in practice it is not autonomy because political people interfere in the day-to-day operation of the companies. Since these are dependent on the government for taking important policy decisions, red-tapism in government departments affect the working of companies.
- As most of the government companies take the assistance of civil servants, they cannot exercise better for the effectiveness of the organisation because they are not technical persons.
- Most of the government companies experience slackness in management under the grab of public services. These are not treated as efficient as private units because of this state of affairs found.