Public corporations are not an end in themselves but an extension of the government activities designed to promote public welfare’ substantiate.

When the government desires to adopt company form of organisation it may either incorporate the company by a special Act of parliament or state legislature or incorporate under companies Act, 1956. Government incorporated company under special Act; the organisation so formed is called a public corporation or statutory corporation. Public corporations are new institutions with an adequate degree of government power and a same time processing the operating flexibility of a private enterprise.

 

Public corporation is defined as a corporate body created by public authority with defined powers and functions and functionally independent. Public corporation is a corporate entity which can do business in its own, it can sue and be sued, enter into contracts, acquire property in its name. Public corporations are wholly owned by government. The employees recruited are done by rules and regulations of corporation itself. Employees in organisation are may not be influenced by political people/power, because they are not civil servants. Corporations are free from unsuitable rules and regulations and control of the government. It also provides high degree of financial flexibility and personal autonomy.

Public corporations are some extent rigid, overlapping in nature, too much bureaucracy involved. Though it is autonomous body, it should be accountable to parliament, it may decrease the efficiency. In theory, it is autonomous body but in practice it also suffers from political interference. 

Though it has certain limitations, these are negligible in consideration. To strengthen earlier point we look at the instance Damodar Valley Corporation (DVC), which shows an outstanding development in rural areas.

DVC is incorporated through act of parliament and was assigned 131.17 crs for project. Damodar valley is rich in water, mineral, land and forest resource, but it is most backward region. It is always effected by floods and socially-economically poor. DVC is instituted by central government in consultation with state government of Bihar and West Bengal. DVC provides flood control, irrigation development providing hydel and thermal projects. DVC provides programs like terracing, afforestation, promote specific cropping pattern, promote multi-plantation, bamboo-cultivation, water land reclamation program etc. It successfully eradicated malaria in that region.

DVC has launched huge number of programs for development purpose, such as water management, agricultural programs, small scale industries development, and tourism development programs. Each program has its own set of functions, due to this, there is a large overlapping and complexity involved, while discharging these functions. But in spite of these small obstacles DVC got an outstanding success in regional development. So, corporations are an extension of government activities that are designed to promote public welfare.