Features of Departmental Undertaking:
The salient features of a departmental undertaking are as follows:
a) Formation:
A departmental undertaking is established either as a separate full-fledged ministry or as a sub-division of a ministry (i.e. department) of the Government.
b) No Separate Entity:
A departmental undertaking does not have an independent entity distinct from the Government.
c) Governmental Financing:
The departmental undertaking is financed, through annual budget appropriations by the Parliament or the State Legislature. The revenues of the undertaking are paid into the government treasury.
d) Accounting and Audit:
The departmental undertaking is subject to the normal budgeting, accounting and audit procedures, which are applicable to all Government departments.
e) Managed by Civil Servants:
The departmental undertaking is managed by civil servants, who are subject to same service conditions as applicable to civil servants of the Government.

Advantages of Public Corporation:
a) Bold Management due to Operational Autonomy:
i. A public corporation enjoys internal operational autonomy; as it is free from Governmental control. It can, therefore, run in a business like manner.
ii. Management can take bold decisions involving experimentation in its lines of activities, taking advantage of business situations.
b) Legislative Control:
i. Affairs of a public corporation are subject to scrutiny by Committees of Parliament or State Legislature.
ii. The Press also keeps a watchful eye on the working of a public corporation.
iii. This keeps a check on the unhealthy practices on the part of the management of the public corporation.
c) Qualified and Contented Staff:
i. Public corporation offers attractive service conditions to its staff. As such it is able to attract qualified staff.
ii. Because of qualified and contented staff, industrial relations problems are not much severe.
iii. Staff has a motivation to work hard for the corporation.
d) Tailor-Made Statute:
The special Act, by which a public corporation is created, can be tailor-made to meet the specific needs of the public corporation; so that the corporation can function in the best manner to achieve its objectives.
e) Not Affected by Political Changes:
i. Being a distinct legal entity, a public corporation is not much affected by political changes.
ii. It can maintain continuity of policy and operations.
Disadvantages of Public Corporation:
a) Autonomy and Flexibility, Only in Theory:
i. Autonomy and flexibility advantages of a public corporation exist only in theory
ii. In practice, there is a lot of interference in the working of a public corporation by ministers, government officers and other politicians.
b) Misuse of Monopolistic Power:
i. Public corporations often enjoy monopoly in their field of operation.
ii. As such,on the one hand they are indifferent to consumer needs and problems; and on the other hand, often do not hesitate to exploit consumers.
c) Rigid Constitution:
i. The constitution of a public corporation is very rigid.
ii. It cannot be changed, without amending the Statute of its formation. Hence, a public corporation could not be flexible in its operations.
d) Low Managerial Efficiency:
i. Quite often civil servants, who do not possess management knowledge and skills, are appointed by the government on the Board of Directors, of a public corporation.
ii. As such, managerial efficiency of public corporation is not as much as found in private business enterprises.
e) Problem of Passing a Special Act:
A public corporation cannot be formed without passing a special Act; which is a time consuming and difficult process. Hence, the scope for setting up public corporations is very restricted.

Features of Government Company:
a) Registration Under the Companies Act:
A Government company is formed through registration under the Companies Act, 1956, and is subject to the provisions of this Act, like any other company.
However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications.
b) Executive Decision of Government:
A Government company is created by an executive decision of the Government, without seeking the approval of the Parliament or the State Legislature.
c) Separate Legal Entity:
A Government company is a legal entity separate from the Government, It can acquire property; can make contracts and can file suits, in its own name.
d) Whole or Majority Capital Provided by Government:
The whole or majority (at least 516) of the capital of a Government company is provided by the Government; but the revenues of the company are not deposited into the treasury.
e) Majority of Government Directors:
Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.

a) Special Statute:
A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).
b) Separate Legal Entity :
A public corporation is a separate legal entity with perpetual succession and common seal. It has an existence, independent of the Government. It can own property; can make contracts and file suits, in its own name.
c) Capital Provided by the Government:
The capital of a public corporation is provided by the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.
d) Financial Autonomy:
A public corporation enjoys financial autonomy. It prepares its own budget, and has authority to retain and utilize its earnings for its business
e) Management by Board of Directors:
Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day-to-day working of the corporation.

Advantages of Departmental Undertaking;
Following are the advantages of the departmental undertaking.
a) Easy Formation:
It is easy to set up a departmental undertaking. The departmental undertaking is created by an administrative decision of the Government, involving no legal formalities for its formation.
b) Direct and Control of Parliament or State Legislature:
The departmental undertaking is directly responsible to the Parliament or the State legislature through its overall head i.e. the minister concerned.
c) Secrecy Maintained :
Strategic industries like defence and atomic power cannot be better managed other than government departments. Department undertakings can maintain secrecy in their working.
d) Lesser Burden of Tax on Public :
Earnings of departmental undertaking are entirely paid into Government treasury, resulting in lesser tax burden on the public.
e) Instrument of Social Change :
Government can promote economic and social justice through departmental undertakings. Hence, a departmental undertaking can be used by the Government, as an instrument of social change,
Disadvantages of Departmental Undertaking:
Following are the major limitations of the departmental undertaking.
a) Red-Tapism:
There is too much of procedures which results in delay. Commercial organisation cannot afford delay in taking decisions.
b) Incidence of Additional Taxation:
Losses incurred by a departmental enterprise are met out of the treasury.
This very often necessitates additional taxation the burden of which falls on the Common man.
c) Lack of Competition:
Civil Servants are given control of these undertakings who may not have business outlook or commercial experience. So, they run the undertaking in their own fashion without considering the sovereignty of the consumers.
d) Casual Approach to Work:
As officers of a departmental undertaking are subject to frequent transfers; they develop a sense of casual approach to work. As a result, the operational efficiency of the undertaking suffers a lot.
e) Government Interference:
There is an excessive government interference and control organisation in department. These undertakings are not given freedom to decide their own policies. Centralised control leads to delay in action. Red-tapism and bureaucracy have become the limiting features of these organisations.