merits and limitation of departmental undertaking

Dear student,

Merits of Departmental Undertaking.

1) It is easy to form as no registration and legal requirements are required. It is created by Government's administrative decision.
2)There is proper use of public money as strict audit and accounting control are applicable of these undertakings.
3) It is easy to maintain secrecy.
4) These undertakings helps to increase government revenue as their revenue is deposited into government treasury.
5) These undertakings are useful for public utility.

Demerits of Departmental Undertaking.

1) These undertakings works under parliamentary control, so there is no flexibility in operations.
2) There is lack of motivation as these undertakings work for public welfare. there is no profit motive, which can enhance their efficiency.
3) They do not have any financial independence as these undertakings are financed by Government and their earning are deposited into government's treasury.
4) There is red tapism in their functioning, as they follow bureaucratic procedures which delays decisions.


  • 2
Some of the merits are-
1. easy formation
2. effective control
5.developmaent motive
6.optimum utilisation of resources

1. red tapism
2.delay in decision making
4.lack of motivation
5.rigid structure
6.inefficient management
  • 0
What are you looking for?