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The NCERT Class 11 Business Studies Chapter 3 discusses the classification of business enterprises into the private sector, the public sector, and global enterprises. It covers their features, forms, role in economic development, changing industrial policy, government company structure, regional balance, and concepts like public-private partnership (PPP) and joint ventures. These solutions provide clear, concise, and CBSE-aligned answers for effective exam preparation. You can also download the free PDF for revision.
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NCERT Solutions Class 11 Business Studies Chapter 3: Private, Public and Global Enterprises
This section provides detailed and student-friendly answers for the Class 11 Business Studies Chapter 3 exercise questions. Each answer is explained clearly to strengthen understanding and exam preparation.
Exercise
Short Answer Questions:
1. Explain the concept of the public sector and private sector.
The private sector consists of business enterprises owned, managed, and controlled by individuals or groups of individuals with the primary objective of profit maximisation. Examples include sole proprietorships, partnerships, and companies.
The public sector comprises enterprises owned, managed, and controlled by the government (central or state) with the main aim of public welfare and social benefit rather than profit. It includes departmental undertakings, statutory corporations, and government companies. The private sector promotes efficiency and innovation, while the public sector focuses on infrastructure, employment, and equitable growth.
2. State the various types of organisations in the private sector.
The private sector includes:
(i) Sole proprietorship – Business owned and managed by a single individual.
(ii) Partnership – Business owned by two or more persons under an agreement.
(iii) Joint Hindu Family Business – Controlled by members of a Hindu undivided family under Hindu law.
(iv) Cooperative societies – Voluntary associations formed for mutual benefit with democratic control.
(v) Joint stock company – Artificial person created by law with perpetual succession and limited liability.
3. What are the different kinds of organisations that come under the public sector?
The public sector includes three main forms:
(i) Departmental undertakings – Directly managed by a government department (e.g., Railways, Post).
(ii) Statutory (public) corporations – Created by a special Act of Parliament or State Legislature (e.g., RBI, LIC).
(iii) Government companies– Registered under the Companies Act, 2013, with at least 51% shareholding by the government (e.g., SAIL, BHEL).
4. List the names of some enterprises under the public sector and classify them.
Here are some of the enterprises that come under the public sector.
- Departmental undertakings: Indian Railways, Department of Posts, All India Radio.
- Statutory corporations: Reserve Bank of India (RBI), Life Insurance Corporation (LIC), Food Corporation of India (FCI).
- Government companies: Steel Authority of India Ltd. (SAIL), Bharat Heavy Electricals Ltd. (BHEL), Oil and Natural Gas Corporation (ONGC).
5. Why is the government company form of organisation preferred to other types in the public sector?
The government company form is preferred because:
(i) It is easy to form under the Companies Act, 2013, with simple registration.
(ii) It enjoys operational autonomy and flexibility like private companies, unlike rigid departmental control.
(iii) It has a separate legal entity, perpetual succession, and limited liability.
(iv) It can raise funds from the market through shares/debentures.
(v) It avoids the lengthy parliamentary procedures required for statutory corporations.
(vi) It facilitates professional management while retaining government control (minimum 51% shares).
6. How does the government maintain a regional balance in the country?
The government promotes regional balance by:
(i) Setting up public sector enterprises in backward and underdeveloped regions to create employment and infrastructure.
(ii) Providing subsidies, tax concessions, and incentives for industrial development in less-developed areas.
(iii) Developing transport, power, and communication facilities in remote regions.
(iv) Locating steel plants (e.g., Bhilai, Rourkela) and other PSUs in tribal/backward areas to reduce regional disparities and promote balanced economic growth.
7. State the meaning of public-private partnership.
Public Private Partnership (PPP) refers to a collaborative arrangement between the government (public sector) and private sector entities to finance, build, and operate infrastructure projects or provide public services. The risks, responsibilities, and rewards are shared based on a long-term contract. Examples include highways, airports, and metro projects. It combines public oversight with private efficiency and innovation.
Also Read: CBSE Class 10 Economics Chapter 3 NCERT Solutions
Long Answer Questions:
1. Describe the Industrial Policy 1991, towards the public sector.
The Industrial Policy Resolution of 1991 marked a shift in the role of the public sector:
(i) Reduction in reserved areas: The number of industries reserved exclusively for the public sector was reduced from 17 to 8 (later to 3, and currently 2 – atomic energy and railway operations).
(ii) Disinvestment: The Government began selling partial stakes in PSUs to private investors to improve efficiency and raise resources.
(iii) Autonomy to PSUs: Selected public enterprises were granted greater managerial and financial autonomy as Navratnas, Miniratnas, and Maharatnas.
(iv) Sick units referral: Chronically loss-making PSUs were referred to the Board for Industrial and Financial Reconstruction (BIFR) for revival or closure.
(v) Focus on strategic sectors: Public sector retained in areas of national security, infrastructure, and natural resources.
The policy aimed at globalisation, liberalisation, and privatisation while ensuring public sector efficiency.
2. What was the role of the public sector before 1991?
Before 1991, the public sector played a dominant role under the Industrial Policy Resolutions of 1948 and 1956:
(i) Infrastructure development: Built basic and heavy industries (steel, power, railways) where the private sector lacked capital or interest.
(ii) Commanding heights: Controlled key sectors like defence, atomic energy, and minerals to ensure self-reliance.
(iii) Employment generation: Provided large-scale jobs, especially in backward areas.
(iv) Balanced regional growth: Set up industries in underdeveloped regions to reduce disparities.
(v) Social welfare: Supplied essential goods/services at reasonable prices and prevented monopolies.
(vi) Capital formation: Mobilised savings through nationalised banks and institutions.
It acted as a model employer with fair wages and job security, but faced inefficiencies due to over-centralisation.
3. Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.
Public sector companies can compete with the private sector in profits and efficiency under certain conditions, but generally face challenges:
Reasons for competition:
(i) Some PSUs like ONGC, NTPC, and IOCL are highly profitable due to monopoly/oligopoly in strategic sectors.
(ii) Navratnas/Maharatnas enjoy autonomy, enabling quick decisions and professional management.
(iii) Access to government support, large capital, and natural resources gives a competitive edge.
Reasons for limitations:
(i) Primary focus on social welfare over profit maximisation leads to lower pricing.
(ii) Political interference, bureaucratic delays, and overstaffing reduce efficiency.
(iii) Lack of market-driven incentives compared to private firms.
(iv) Inflexible procedures and absence of fear of closure.
With reforms (disinvestment, autonomy), many PSUs have improved performance and compete effectively.
4. Why are global enterprises considered superior to other business organisations?
Global (multinational) enterprises are considered superior due to:
(i) Huge capital resources: Access to global financial markets enables massive investments.
(ii) Advanced technology: Use of cutting-edge R&D and innovation for superior products.
(iii) International presence: Operations in multiple countries provide market diversification and risk reduction.
(iv) Professional management: Skilled global talent ensures efficient operations.
(v) Economies of scale: Large-scale production lowers costs and enhances competitiveness.
(vi) Marketing expertise: Strong branding, advertising, and distribution networks.
(vii) Foreign investment: Bring FDI, technology transfer, and employment to host countries.
5. What are the benefits of entering into joint ventures and public-private partnerships?
Look at the benefits of Joint Ventures below:
(i) Shared resources: Combines the capital, technology, and expertise of partners.
(ii) Risk distribution: Losses and uncertainties are shared, reducing individual burden.
(iii) Market access: Local partner provides knowledge of the domestic market; foreign partner brings global reach.
(iv) Cost efficiency: Economies of scale and shared infrastructure.
(v) Technology transfer: Developing countries gain advanced technology.
Here are some of the benefits of Public-Private Partnership (PPP):
(i) Efficient project execution: The Private sector brings speed, innovation, and management skills.
(ii) Reduced government burden: Private funding eases fiscal pressure.
(iii) Better quality services: Competition and expertise improve infrastructure (roads, hospitals).
(iv) Risk sharing: Operational and financial risks are allocated optimally.
(v) Long-term development: Ensures maintenance and sustainability of public assets.
Both promote collaboration for mutual growth and national development.
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