state and explain six reasons for inefficiency in govt. enterprises
Dear student,
The reasons for the inefficiency of government enterprises are:
1) Political interference: There is excessive political interference in the functioning of Government enterprises that reduces their autonomy.
2) Lack of accountability: The Government is major shareholder in Government enterprises, so all the decisions of enterprise are under Government control. The Government can exempt Government enterprise from some provisions of the Companies Act.
3) Poor planning: The planning in Government enterprises is not based upon proper evaluation, that cause undue delay and inflated cost.
4) Lack of motivation: There is centralisation of authority that hampers decisions and flexibility of operations. The directors and managers have little stake in Government enterprises and there is little incentive to work hard and improve efficiency.
5) Over capitalisation: Due to easy availability of money from the Government and inefficient financial planning, Government enterprises are usually over capitalised.
6) Fear of exposure: The accounts of Government enterprises are kept before the parliament. The management often does not initiative to enter into new areas of activity that effects the profitability and efficiency of these enterprises.
Regards
The reasons for the inefficiency of government enterprises are:
1) Political interference: There is excessive political interference in the functioning of Government enterprises that reduces their autonomy.
2) Lack of accountability: The Government is major shareholder in Government enterprises, so all the decisions of enterprise are under Government control. The Government can exempt Government enterprise from some provisions of the Companies Act.
3) Poor planning: The planning in Government enterprises is not based upon proper evaluation, that cause undue delay and inflated cost.
4) Lack of motivation: There is centralisation of authority that hampers decisions and flexibility of operations. The directors and managers have little stake in Government enterprises and there is little incentive to work hard and improve efficiency.
5) Over capitalisation: Due to easy availability of money from the Government and inefficient financial planning, Government enterprises are usually over capitalised.
6) Fear of exposure: The accounts of Government enterprises are kept before the parliament. The management often does not initiative to enter into new areas of activity that effects the profitability and efficiency of these enterprises.
Regards