State the functions and problems of public corporation.

Answer Details

Functions of a public corporation

1. Provision of essential services: They supply basic utilities such as electricity, water, railways and telecommunications that are vital to national life.
2. Prevention of private monopoly: By running strategic industries, the state prevents private individuals from monopolising and exploiting the public.
3. Employment generation: They create large numbers of jobs and thereby reduce unemployment.
4. Provision of goods and services at affordable prices: Since profit is not the main aim, services are provided cheaply for the benefit of all citizens.
5. Source of revenue and rapid development: They generate revenue for government and undertake large capital projects that private investors cannot afford.

Problems of a public corporation

1. Inadequate funding: Heavy dependence on government subventions, which are often insufficient and delayed, cripples their operations.
2. Bureaucratic red tape and delay: Excessive official procedures make decision-making slow and inefficient.
3. Political interference: Government appoints and directs the management, and undue political control leads to poor decisions and instability.
4. Corruption and mismanagement: Embezzlement, fraud and the appointment of unqualified persons lead to waste and losses.
5. Poor management and inefficiency: Absence of the profit motive breeds laxity, waste and low productivity.