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Class : 11
Unit : Economics

Discuss the characteristics of public enterprises.

Ans : The characteristics of public enterprises are discussed below: i) Government ownership:- Public enterprises are established under the ownership of the government or at least 51% of total shares or totally 100% share are held by the government. ii) Government management and control:- Government earned 51% of total shares or totally 100% of shares. So it is fully owned by government. Government authorities take active part in management and control of public enterprises. iii) Separate legal entity:- Public enterprises have separate legal entity. It is established in its own name. It can hold property, borrowed debts its etc. only its own name. It is created by law and dissolved by the law. iv) Perpetual succession:- Perpetual succession is another important feature of public enterprises. It is not affected by death, change government policy in its regular business activities. It can be dissolved only after completion of certain legal proceedings. v) Service motive:- The concept of public enterprises is developed in the principal to provide goods and services to the public at minimum cost. Its main motive is to provide renders service to the general people at reasonable price. Secondary motive is to earn minimum profit to meet higher expenditure. vi) Monopoly in business:- Some public enterprise have a Monopoly power in their own sector of business . Public enterprises involved in those sector where private undertaking do not show interest in the initial stage due to huge investment and low rate of return. Public enterprises have Monopoly power in business like Nepal oil Corporation, Nepal electricity authority. vii) Public accountability:- It is accountable to the general public. The board of directors and executives of the enterprises are accountable for their performance to the parliament.
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