Here, we will discuss the summary and key facts in MCQ format of Chapter 3: Private, Public and Global Enterprises | Part I: Foundations of Business | Business Studies |Textbook for Class XI
1. What was the major aim of the Industrial Policy Resolution of 1948?
a) Abolish the public sector
b) Define the respective roles of the public and private sectors
c) Promote only foreign investment
d) Privatise all industries
Answer: b) Define the respective roles of the public and private sectors
In the Industrial Policy Resolution 1948, the Government of India had specified the approach towards development of the industrial sector. The roles of the private and public sector were clearly defined, and the government, through various Acts and Regulations, was overseeing the economic activities of both the private and public sector.
2. Which Industrial Policy Resolution gave significant importance to the public sector?
a) Industrial Policy Resolution, 1948
b) Industrial Policy Resolution, 1956
c) Industrial Policy, 1977
d) Industrial Policy, 1991
Answer: b) Industrial Policy Resolution, 1956
The 1956 policy gave the public sector a major role in accelerating industrialisation while recognising the mutual dependence of public and private sectors.
The Industrial Policy Resolution, 1956 had also laid down certain objectives for the public sector to follow so as to accelerate the rate of growth and industrialisation. The public sector was given a lot of importance, but at the same time mutual dependency of public and private sectors was emphasised.
3. Which of the following was a major feature of the New Industrial Policy of 1991?
a) Greater government control over private enterprises
b) Complete restriction on foreign investment
c) Greater freedom to the private sector and encouragement of FDI
d) Expansion of the public sector into all industries
Answer: c) Greater freedom to the private sector and encouragement of FDI
The 1991 industrial policy was radically different from all the earlier policies, where the government was deliberating disinvestment of the public sector and allowing greater freedom to the private sector. At the same time, foreign direct investment was invited from business houses outside India.
4. Departmental undertaking is the:
a) Newest form of public enterprise
b) Oldest and traditional form of public enterprise
c) Private form of enterprise
d) Cooperative form of enterprise
Answer: b) Oldest and traditional form of public enterprise
A departmental undertaking operates as an extension of a government ministry and is directly controlled by it.
5. Which of the following companies is a departmental undertaking?
a) Indian Railways
b) LIC
c) SBI
d) Tata Steel
Answer: a) Indian Railways
Indian Railways is a classic example of a departmental undertaking.
6. What is the nature of the employees of a departmental undertaking?
a) Private employees
b) Government employees
c) Cooperative members
d) Shareholders
Answer: b) Government employees
Employees are government servants and their service conditions are governed by government rules.
7. Revenue earned by a departmental undertaking is generally:
a) Paid to shareholders
b) Retained by employees
c) Paid into the Government Treasury
d) Distributed among employees
Answer: c) Paid into the Government Treasury
Funding comes through government budgetary appropriation, while revenue earned is credited to the Government Treasury.
8. Which is a major limitation of departmental undertakings?
a) High public accountability
b) Direct government control
c) Red-tapism and lack of flexibility
d) Revenue to government treasury
Answer: c) Red-tapism and lack of flexibility
Direct ministerial control can result in delays, red-tapism, and limited flexibility in business decisions.
9. A statutory corporation is created by:
a) Companies Act
b) Special Act of Parliament
c) Partnership Act
d) Executive Order
Answer: b) Special Act of Parliament
The Act defines its powers, functions, and privileges.
Examples of statutory corporations are:
1. Life Insurance Corporation of India (LIC)
2. Food Corporation of India (FCI
3. Reserve Bank of India ( RBI)
10. Employees of statutory corporations are generally:
a) Civil servants
b) Government employees
c) Employees governed by the corporation's Act
d) Members of Parliament
Answer: c) Employees governed by the corporation's Act
They are not government/civil servants and are generally governed by the corporation's own service provisions.
11. A statutory corporation is wholly owned by:
a) Private shareholders
b) Foreign investors
c) Employees
d) The State
Answer: c) The State
The government has ultimate financial responsibility for a statutory corporation and bears any losses.
12. A statutory corporation can:
a) Only enter government contracts
b) Sue and be sued in its own name
c) Not acquire property
d) Act only through a ministry
Answer: b) Sue and be sued in its own name
A statutory corporation is a separate corporate body with its own legal identity.
13. Which is a major limitation of statutory corporations?
a) Complete absence of government ownership
b) Political and government interference
c) No legal identity
d) Dependence entirely on the central budget
Answer: b) Political and government interference
Despite operational autonomy, major decisions may face government/political interference.
14. A Government Company is established under which act:
a) Special Act of Parliament
b) Companies Act, 2013
c) Partnership Act, 1932
d) Constitution of India
Answer: b) Companies Act, 2013
A separate Act of Parliament is not required.
15. Under Section 2(45) of the Companies Act, 2013, at least what percentage of paid-up capital must be held by the government for a company to qualify as a Government Company?
a) 26%
b) 49%
c) 51%
d) 75%
Answer: c) 51%
At least 51% of paid-up capital must be held by the Central Government, State Government(s), or a combination of them.
16. A Government Company can be formed as:
a) Only a public limited company
b) Only a private limited company
c) Either a private or public limited company
d) Only a statutory corporation
Answer: c) Either a private or public limited company
Government companies may take either form under the Companies Act.
17. Which of the following is a feature of a Government Company?
a) It has no separate legal entity
b) It cannot acquire property in its own name
c) It can sue and be sued in its own name
d) It is established by a Special Act of Parliament
Answer: c) It can sue and be sued in its own name
A Government Company has a separate legal entity from the government.
18. Which is an advantage of a Government Company?
a) It requires a separate Act of Parliament
b) It has no management autonomy
c) It enjoys autonomy in management decisions
d) It is directly answerable to Parliament
Answer: c) It enjoys autonomy in management decisions
It can make management decisions according to business prudence
19. What was one of the major roles assigned to the public sector after Independence?
a) Promotion of luxury goods
b) Development of infrastructure
c) Elimination of private enterprises
d) Promotion of foreign imports
Answer: b) Development of infrastructure
The public sector was expected to develop infrastructure such as transport, energy, heavy industries, and communication.
20. Public sector enterprises were deliberately established in backward regions mainly to achieve what:
a) Economies of scale
b) Regional balance
c) Import promotion
d) Foreign investment
Answer: b) Regional balance
Public sector industries were located in backward areas to promote employment, industrialisation and balanced regional development. For example, Most of Integrated Plant like Bokaro Steel Plant ( Jharkhand), Bhilai Steel Plant ( Chhattisgarh), and Rourkela Steel Plant Odisha) are established in backward areas to achieve regional balance.
23. Which of the following is an example of an industry requiring large-scale investment?
a) Retail shops
b) Electric power generation
c) Small handicrafts
d) Local restaurants
Answer: b) Electric power generation
Large industries such as steel, power, petroleum, natural gas, and telecommunications require huge capital and benefit from economies of scale.
24. Public sector enterprises in heavy engineering helped India achieve what?:
a) Import substitution
b) Import dependence
c) Higher luxury imports
d) Complete privatisation
Answer: a) Import substitution
Heavy engineering PSUs helped produce goods and machinery domestically, reducing dependence on imports.
25. Under the 1991 public sector policy, the number of industries reserved exclusively for the public sector was reduced from 17 to how many?:
a) 15
b) 12
c) 8
d) 5
Answer: c) 8
The number was subsequently reduced to 3 in 2001—atomic energy, arms, and rail transport- as stated in the textbook.
26. Which of the following defines disinvestment:
a) Purchase of all private company shares by government
b) Sale of equity shares of public enterprises to the private sector and public
c) Closure of all public enterprises
d) Increase in government ownership
Answer: b) Sale of equity shares of public enterprises to the private sector and public
Disinvestment aimed, among other things, at raising resources and improving managerial and financial discipline.
27. What was the policy regarding sick public sector units under the reforms?
a) All sick units were automatically expanded
b) They were considered for restructuring or closure
c) They were transferred to foreign companies
d) They were exempted from financial review
Answer: b) They were considered for restructuring or closure
Sick PSUs were referred for consideration of revival/restructuring or winding up, depending on their viability.
28. After the economic reforms of 1991, what is the role of the public sector?
a) To remain completely protected from competition
b) To actively participate and compete in the market
c) To withdraw from all commercial activities
d) To eliminate the private sector
Answer: b) To actively participate and compete in the market
After liberalisation, the public sector's role was redefined, with greater emphasis on efficiency, profitability, accountability and competition.
29. Global enterprises are generally characterised by what?
a) Small-scale operations
b) Operations confined to one country
c) Huge size and international network of operations
d) Government ownership only
Answer: c) Huge size and international network of operations
Global enterprises/MNCs operate through branches, subsidiaries, and affiliates in several countries.
30. Which of the following is a major feature of global enterprises?
a) Limited financial resources
b) Huge capital resources
c) Dependence only on government funds
d) No access to international banks
Answer: b) Huge capital resources
They can raise funds through equity shares, debentures, bonds, financial institutions, and international banks.
31. Foreign collaboration by MNCs with Indian companies may involve:
a) Only employment exchange
b) Technology, production and brand names
c) Only government taxation
d) Only domestic transportation
Answer: b) Technology, production and brand names
Foreign collaboration may involve technology transfer, production agreements, and use of brand names.
32. The advanced technology of global enterprises contributes to:
a) Lower product quality
b) Reduction in international standards
c) Elimination of research
d) Industrial progress and better utilisation of resources
Answer: d) Industrial progress and better utilisation of resources
Key Fact: MNCs often possess technological superiority and conform to international quality standards.
33. Global enterprises are able to develop new products mainly because of their:
a) Large government subsidies
b) Sophisticated research and development departments
c) Limited market information
d) Small production capacity
Answer: b) Sophisticated research and development departments
Large MNCs can make substantial investments in R&D and product innovation.
34. In a global enterprise, control is generally exercised by whom?
a) Host-country government
b) Parent company headquartered in the home country
c) Local customers
d) Employees of each branch
Answer: b) Parent company headquartered in the home country
The parent company exercises control mainly through a broad policy framework, while day-to-day operations may remain with local units.
35. A joint venture means:
a) Merger of all companies in an industry
b) Pooling of resources and expertise by two or more businesses for a common purpose
c) Government ownership of a private company
d) Closure of two businesses
Answer: b) Pooling of resources and expertise by two or more businesses for a common purpose
Risks and rewards are shared according to the joint venture agreement.
36. Which type of joint venture does not create a new jointly owned entity?
a) Equity-based Joint Venture
b) Contractual Joint Venture
c) Government Company
d) Statutory Corporation
Answer: b) Contractual Joint Venture
In a CJV, parties agree to work together but do not create a new jointly owned entity. A franchisee relationship is a typical example mentioned in the text.
37. The key feature of an Equity-based Joint Venture is:
a) Separate entity with joint ownership
b) No ownership sharing
c) Only a temporary transaction
d) No sharing of profits or losses
Answer: a) Separate entity with joint ownership
EJV involves shared ownership, management, responsibilities, profits, and losses according to the agreement.
38. Under Public Private Partnership (PPP), the private sector mainly contributes:
a) Only legislation
b) Operational expertise, management and innovation
c) Parliamentary control
d) Only social obligations
Answer. c) 1956
Joint Hindu family business is a specific form of business organisation found only in India. It is one of the oldest forms of business organisation in the country. It is governed by the Hindu Succession Act, 1956.
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