The government undertaking describes businesses, industries, or companies owned, operated, or controlled by the government to provide essential goods and services to the public. A government undertaking company promotes economic stability, infrastructure development, and citizen welfare. The government has undertaken several sections in India, including banking, transport, and energy, to boost the economy’s growth. The government undertaking is something that students and aspiring professionals need to understand when preparing for exams related to commerce, economics, and public administration.
What is Government Undertaking?
A government undertaking is an enterprise owned wholly or partially by the government. It is undertaken to provide essential services, regulate markets, and contribute to national development. Organisations under the undertaking may operate at the central, state, or local authority level.
A government undertaking is a firm in which the government owns more than 51% of the shares. Such ventures are primarily for the public good; they intend to offer services rather than accumulating profits. The government runs their affairs and decision-making, ensuring it serves the national interest. Such organisations receive government funds whenever needed and operate under their legal identity, distinct from the government but still very close to its objectives.
The government engages in businesses for a couple of reasons. One vital concern is that it supplies critical goods and services that the private sector cannot or will not provide, especially in health, transportation, and utilities. Such products and services should fall within a reasonable level of price. The government prevents private sector monopolies, but private sectors create employment opportunities, and it helps in the infrastructural development process, which supports the whole process of industrialisation and economic growth.
Role of Government Undertaking
The function of a government undertaking is very significant because it maintains the economy, provides central services, and helps in social prosperity. Instead of making some profit, these business ventures fulfil the cause of national growth.
- Infrastructure Development: Government Undertaking invests in infrastructure projects like roads, bridges, ports, and power plants. Examples include NTPC (energy) and NHAI (transportation).
- Economic Stability: Government Undertaking shows the stability of the industries in crucial sectors such as energy, transport, and manufacturing. State-owned industries control prices and maintain monopolies by providing commodities at nominal rates.
- Employment Generation: Government Undertaking generates mass employment opportunities, mainly in rural and semi-urban zones. For instance, Indian Railways offers employment to millions of people directly and indirectly.
- Strategic Significance: Government Undertaking in defence, energy, and communication sectors provides national security and self-reliance. Examples are Hindustan Aeronautics Limited (HAL), which produces aircraft for the Indian Air Force.
- Support to Small and Medium Enterprises: Government Undertaking collaborates with SMEs by giving them contracts and creating an economic ripple effect. Examples are Bharat Heavy Electricals Limited (BHEL), which supports local industries by outsourcing manufacturing components.
- Revenue Generation for the Government: Profitable Government Undertaking generates substantial revenue for the government in the form of taxes and dividends. For example, ONGC and Coal India contribute to the government’s income.
- Rural and Social Development: Government Undertaking take up projects related to developing rural infrastructure, education, and health. Examples include oil companies such as IOC, which sponsor the development of the rural economy as part of CSR activities.
Types of Government Undertaking
Different government undertakings vary in structure, ownership, and level while aiming at different purposes. The classification is based on ownership as well as control by the government.
Central Government Undertaking Enterprises (CPSEs)
The Government Undertaking consists of enterprises where the central government has more than 50% equity participation. The companies deal with strategic industries like energy, defence, and transportation. PSUs are essential in the economy because of these areas of concentration. Examples of Government Undertakings are BPCL (Bharat Petroleum Corporation Limited) and SAIL (Steel Authority of India Limited).
The government undertaking operates at the guidance level of the Department of Public Enterprises in terms of following accountability and efficient working. It aims to support national development through necessary services and job creation, contributing significantly to every key sector for stimulating economic growth by maintaining the influence of the government on critical industries.
State Government Undertaking Enterprises (SPSEs)
SPSEs are state government-owned enterprises with majority equity shares. They concentrate on the fulfilment of specific states’ needs in the areas of water supply, electricity, and housing. Examples include the Maharashtra State Electricity Distribution Company and the Gujarat Mineral Development Corporation.
SPSEs are essential for the regions’ development because they fairly distribute state resources. It brings up local infrastructure and critical services to enhance the general living standard while helping the economic system flourish. It plays a vital role in the equitable development of diverse regions.
Statutory Corporations
The statutory Government Undertaking is created through acts of the Parliament or the state legislatures. The most crucial aspect of such organisations is serving public welfare and providing necessary services to citizens. The statutory Government Undertaking includes the LIC and RBI, which are excellent examples of economic importance.
The statutory Government Undertaking has more freedom than other Government Undertaking enterprises since they are not subject to bureaucratic controls. This means they can make decisions faster and focus on their goals. Their operations balance the general public’s welfare with bringing about vital services to promote national development.
Public-Private Partnerships (PPPs)
PPPs combine public and private sector expertise to pursue a common mission. It executes the delivery of infrastructure and social projects more efficiently as they can mobilise public and private sector strengths. The PPP example of one such project is Delhi Metro, which delivers world-class transport to people in this country.
The working of PPPs is the bringing together infrastructure and policy support from the Government Undertaking and technical expertise and management skills from the private sector. This partnership helps PPPs complete projects on time, within budget, and to the desired quality standards. As a result, PPPs provide a win-win solution for both sectors, thus benefitting the community.
Examples of Government Undertaking
The government of India undertakes many well-known businesses and services. These Government Undertaking enterprises drive the growth of economics, infrastructure, and social welfare.
| Sector | Government Undertaking |
| Banking | State Bank of India (SBI), Punjab National Bank (PNB) |
| Oil & Gas | Indian Oil Corporation (IOC), Bharat Petroleum (BPCL) |
| Telecommunications | Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL) |
| Railways & Transport | Indian Railways, Delhi Metro Rail Corporation (DMRC) |
| Insurance | Life Insurance Corporation (LIC), New India Assurance |
| Aerospace & Defence | Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) |
Government Undertaking FAQs
What is a government undertaking?
A government undertaking is a business or enterprise owned and controlled by the government to render essential services or contribute to the development of an economy.
What are the kinds of government undertaking?
The kind of government undertaking includes departmental undertakings, statutory corporations, government companies, and public-private partnerships, or PPP.
What is government undertaking company?
A government undertaking company is an undertaking company whose ownership is possessed by the Government with at least 51%, like BHEL, SAIL, and ONGC.
What are government undertaking banks?
A Government Undertaking bank is a State Bank owned and managed by the Government. Like the State Bank of India, Punjab National Bank.
What are the examples for Government Undertaking in India?
Some examples of Government undertakings are Indian Railways, LIC, ONGC, BSNL, and State Bank of India (SBI).
