NCERT Solutions for Class 11 Business Studies Chapter 3: Private, Public and Global Enterprises (NCERT 2026–27)
These Class 11 Business Studies Chapter 3 solutions cover Private, Public and Global Enterprises, the chapter that explains how India’s mixed economy works through the private sector, the public sector and global enterprises. You will learn the three forms of organising public sector enterprises — departmental undertakings, statutory corporations and government companies — the changing role of the public sector after the 1991 reforms, the features of global enterprises (MNCs), and the meaning and benefits of joint ventures and public private partnership (PPP). Below you get step-by-step, exam-ready answers to every NCERT exercise question, plus key terms, extra practice, MCQs, Assertion–Reason and FAQs.
Class: 11Subject: Business StudiesBook: Business Studies (Part I)Chapter: 3Chapter Name: Private, Public and Global EnterprisesSession: 2026–27
Chapter 3, Private, Public and Global Enterprises, explains that India is a mixed economy in which both privately owned and government-owned businesses operate. The economy is divided into the private sector (sole proprietorship, partnership, joint Hindu family, cooperative and company) and the public sector (organisations owned and managed by the central or state government). Public enterprises take three forms — departmental undertakings, statutory corporations and government companies — each with distinct features, merits and limitations. The chapter then traces the changing role of the public sector: from building infrastructure, ensuring regional balance, achieving economies of scale, checking concentration of economic power and import substitution, to the post-1991 reforms of liberalisation, privatisation, disinvestment and MoUs. Finally it covers global enterprises (MNCs) and their features, joint ventures (contractual and equity-based) and their benefits, and the Public Private Partnership (PPP) model.
Key Terms & Concepts
Mixed economy: an economy in which both private and government enterprises are allowed to operate, as in India; it is classified into the private sector and the public sector.
Private sector: businesses owned by individuals or a group of individuals — sole proprietorship, partnership, joint Hindu family, cooperative and company.
Public sector: organisations owned and managed by the central or state government, either partly or wholly; characterised by public ownership, use of public funds and public accountability.
Departmental undertaking: the oldest form of public enterprise, run as a department of a ministry, financed from the government treasury, with government-servant employees and no separate legal entity (e.g., Railways, Post and Telegraph).
Statutory corporation: a public enterprise created by a Special Act of Parliament that defines its powers, functions and rules; it is a body corporate, financially independent, can sue and be sued, and combines government power with operational flexibility.
Government company: a company registered under the Companies Act, 2013 in which not less than 51% of the paid-up capital is held by the central and/or state government(s); includes a subsidiary of a government company.
Disinvestment: the sale of equity shares of public sector enterprises to the private sector and the public, to raise resources and widen ownership.
Privatisation: transferring ownership, management or commercial risk of public sector enterprises to the private sector to improve efficiency and free public resources.
Global enterprises / MNCs: multinational corporations that operate in more than one country, marked by huge capital resources, foreign collaboration, advanced technology, product innovation, aggressive marketing, wide market territory and centralised control.
Joint venture: the pooling of resources and expertise by two or more businesses to achieve a common goal, sharing risks and rewards; it may be contractual (no new entity) or equity-based (a new jointly owned entity).
Public Private Partnership (PPP): a relationship between public and private entities that allocates tasks, obligations and risks optimally for infrastructure and other services (e.g., Kundli Manesar Expressway Ltd.).
NCERT Exercise — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises section. Answers are original, written in CBSE exam-ready style.
Short Answer Questions
1. Explain the concept of public sector and private sector.
ANSWERThe Indian economy is a mixed economy and is broadly classified into two sectors — the private sector and the public sector.Private sector: It consists of business enterprises owned, managed and controlled by private individuals or a group of individuals. The main forms of organisation in this sector are sole proprietorship, partnership, joint Hindu family business, cooperative society and company. The primary motive of private sector enterprises is to earn profit.Public sector: It consists of various organisations owned and managed by the government — either partly or wholly — by the central or state government. They may be a part of a ministry or come into existence by a Special Act of Parliament. The government participates in the economic activities of the country through these enterprises, which are characterised by public ownership, use of public funds and accountability to the public through Parliament.
2. State the various types of organisations in the private sector.
ANSWERThe private sector consists of business owned by individuals or a group of individuals. The various forms of organisation in the private sector are:(i) Sole proprietorship — owned, managed and controlled by a single individual.(ii) Partnership — an association of two or more persons who carry on a business and share its profits and losses.(iii) Joint Hindu family business — a business owned and carried on by the members of a Hindu Undivided Family.(iv) Cooperative society — a voluntary association of persons formed for mutual benefit and self-help.(v) Company — an association of persons registered under the Companies Act, having a separate legal entity (private or public limited).
3. What are the different kinds of organisations that come under the public sector?
ANSWERA public enterprise may take any particular form of organisation depending upon the nature of its operations and its relationship with the government. The forms of organising public sector enterprises are:(i) Departmental undertaking — the oldest form, run as a department/extension of a ministry (e.g., Railways, Post and Telegraph).(ii) Statutory corporation — a body corporate created by a Special Act of Parliament with defined powers and functions.(iii) Government company — a company registered under the Companies Act, 2013 in which at least 51% of the paid-up capital is held by the government.
4. List the names of some enterprises under the public sector and classify them.
ANSWERSome public sector enterprises, classified by their form of organisation, are:
Form of organisation
Examples
Departmental undertakings
Indian Railways; Post and Telegraph Department; All India Radio; Doordarshan
Statutory corporations
Life Insurance Corporation of India (LIC); Reserve Bank of India (RBI); Food Corporation of India (FCI); State Bank of India (SBI); Unit Trust of India
Government companies
Steel Authority of India Ltd. (SAIL); Bharat Heavy Electricals Ltd. (BHEL); Oil and Natural Gas Corporation (ONGC); Hindustan Machine Tools (HMT); State Trading Corporation (STC)
Thus, departmental undertakings are run directly by a ministry, statutory corporations are set up by an Act of Parliament, and government companies are registered under the Companies Act with majority government shareholding.
5. Why is the government company form of organisation preferred to other types in the public sector?
ANSWERThe government company form is preferred to other forms of public enterprise because of the following advantages:(i) It can be established easily by fulfilling the requirements of the Companies Act; unlike a statutory corporation, a separate Act of Parliament is not required.(ii) It has a separate legal entity, apart from the government, and can sue, be sued, enter into contracts and acquire property in its own name.(iii) It enjoys autonomy in management decisions and acts according to business prudence and the spirit of competition.(iv) By providing goods and services at reasonable prices, it can control the market and curb unhealthy business practices.(v) It is managed by the provisions of the Companies Act like any other public limited company, giving it flexibility while keeping the government as the major shareholder.
6. How does the government maintain a regional balance in the country?
ANSWERThe government is responsible for developing all regions and states in a balanced way and for removing regional disparities. Before Independence, industrial progress was limited to a few areas such as the port towns, leaving large regions backward.To maintain a regional balance, after 1951 the government laid down in its Five Year Plans that special attention would be paid to regions lagging behind. Through public sector enterprises it deliberately set up industries in backward areas — for example, four major steel plants were located in backward regions.This was done to accelerate economic development of backward regions, provide employment to the local workforce and develop ancillary industries. At the same time, the government tried to prevent the mushrooming growth of private sector units in already advanced areas, so that growth was spread evenly across the country.
7. State the meaning of public private partnership.
ANSWERA Public Private Partnership (PPP) is a relationship between public sector and private sector entities for the allocation and completion of development projects in the context of infrastructure and other services.The PPP model allocates tasks, obligations and risks among the public and private partners in an optimal manner. The public partners are government entities such as ministries, departments, municipalities or state-owned enterprises, while the private partners can be local or foreign businesses or investors with technical or financial expertise. The public sector ensures that social obligations are met and reforms succeed, while the private sector contributes its expertise in operations, management and innovation to run the project efficiently.
Long Answer Questions
1. Describe the Industrial Policy 1991, towards the public sector.
ANSWERThe New Industrial Policy of 1991 was radically different from all earlier policies. It emphasised liberalisation, privatisation and globalisation, and redefined the role of the public sector, which was no longer to play a passive role but to actively participate and compete in the market. The Government of India introduced four major reforms in the public sector:(a) Reduction in the number of reserved industries (17 → 8 → 3): In the 1956 resolution, 17 industries were reserved for the public sector. In 1991 this was cut to 8 (restricted to atomic energy, arms and communication, mining, and railways), and in 2001 to only 3 — atomic energy, arms and rail transport. The private sector could now enter all other areas, and the public sector had to compete with it.(b) Disinvestment of shares of selected PSEs: Disinvestment involves the sale of equity shares of public sector enterprises to the private sector and the public, to raise resources and encourage wider public and worker participation in ownership. The objectives included releasing public resources locked in non-strategic PSEs for social priorities, reducing public debt and interest burden, transferring commercial risk to the private sector, and freeing enterprises from government control.(c) Policy regarding sick units same as the private sector: Sick public sector units were referred to the Board for Industrial and Financial Reconstruction (BIFR) to decide whether they should be restructured or closed down. A National Renewal Fund was set up to retrain or redeploy retrenched labour and compensate employees opting for voluntary retirement.(d) Memorandum of Understanding (MoU): Performance was to be improved through an MoU system in which managements were granted greater autonomy but held accountable for specified results, with clear targets agreed between the PSU and its administrative ministry.Overall, the policy aimed to restructure and revive viable PSUs, close down those that could not be revived, bring down government equity in non-strategic PSUs to 26% or lower, and fully protect the interest of workers.
2. What was the role of the public sector before 1991?
ANSWERAt the time of Independence and during the early Five Year Plans, the public sector was expected to play a leading role in achieving the economic objectives of the country, either by direct participation in business or by acting as a catalyst. Its main roles before 1991 were:(i) Development of infrastructure: The private sector was unwilling to invest in projects requiring heavy investment and long gestation periods. The government built up infrastructure — transport, communication, power, fuel and basic and heavy industries — as a prerequisite for industrialisation.(ii) Regional balance: The government set up enterprises in backward regions to develop all regions evenly, remove regional disparities, provide employment and develop ancillary industries.(iii) Economies of scale: Where large-scale industries with huge capital outlay were required (electric power, natural gas, petroleum, telephones), the public sector stepped in to take advantage of economies of scale, which only the government could finance.(iv) Check over concentration of economic power: By setting up heavy industries itself, the public sector prevented wealth and economic power from getting concentrated in a few private hands and curbed monopolistic practices, so benefits were shared by many.(v) Import substitution: During the second and third Plans, public sector companies in heavy engineering were established to make India self-reliant and reduce imports, while units like STC and MMTC helped expand exports.
3. Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.
ANSWERYes, public sector companies can compete with the private sector in terms of profits and efficiency, provided they are given autonomy and operate in true business spirit. After the 1991 reforms the public sector was redefined to actively participate and compete in the market rather than play a passive role.Reasons supporting competitiveness: Many public enterprises, especially government companies, possess huge financial resources, established infrastructure, skilled manpower and economies of scale. Through the MoU system they are granted greater autonomy while being held accountable for targets, which improves managerial performance. Several PSUs (e.g., ONGC, SAIL, BHEL, GAIL) are highly profitable and efficient, and disinvestment has introduced financial discipline and corporate governance.However, certain limitations have historically reduced their efficiency — political interference, red tapism, lack of flexibility, over-cautious bureaucratic decision-making and accountability to the ministry. To compete successfully, PSUs must be granted genuine operational autonomy, be free from undue political interference, modernise technology and adopt a profit-and-customer orientation.Conclusion: Public sector companies are quite capable of competing with the private sector, and the public and private sectors should be viewed as mutually complementary parts of the national economy.
4. Why are global enterprises considered superior to other business organisations?
ANSWERGlobal enterprises (multinational corporations) are gigantic organisations that operate in several countries and are considered superior to other business organisations because of the following distinctive features:(i) Huge capital resources: They possess enormous financial resources and can raise funds from various sources — equity shares, debentures, bonds, financial institutions and international banks — and enjoy high credibility in the capital market, enabling them to survive under all circumstances.(ii) Foreign collaboration: They enter into agreements with Indian companies regarding sale of technology, production of goods and use of brand names, collaborating with both public and private sector firms.(iii) Advanced technology: They possess technological superiority and conform to international standards and quality specifications, leading to industrial progress in host countries.(iv) Product innovation: They have highly sophisticated research and development departments that develop new products and superior designs, which requires huge investment that only global enterprises can afford.(v) Marketing strategies: Their marketing strategies are far more effective, supported by aggressive promotion, reliable up-to-date market information and well-known brands, so selling is not a problem.(vi) Expansion of market territory: Their operations extend beyond their own countries through subsidiaries, branches and affiliates, and their giant size gives them a dominant market position.(vii) Centralised control: They have their headquarters in the home country and exercise control over all branches, limited to the broad policy framework, with no interference in day-to-day operations.Because of these strengths, global enterprises are able to dominate markets and are often regarded as superior to ordinary business organisations.
5. What are the benefits of entering into joint ventures and public private partnership?
ANSWERBenefits of joint ventures:(i) Increased resources and capacity: Joining hands pools financial and human resources, enabling the venture to grow and expand more quickly and face market challenges.(ii) Access to new markets and distribution networks: Partnering with a company in another country opens up a vast new market and ready-made distribution channels, avoiding the expense of setting up one’s own outlets.(iii) Access to technology: Partners gain advanced production techniques without having to develop their own technology, saving time, energy and investment and improving quality and efficiency.(iv) Innovation: Joint ventures, especially with foreign partners, allow the development of new and creative products to meet increasingly demanding markets.(v) Low cost of production: Foreign partners benefit from India’s lower cost of raw materials and labour and its technically qualified workforce, getting quality products at lower cost.(vi) Established brand name: One party benefits from the other’s established goodwill and brand, saving time and money in building a brand and a distribution system.Benefits of public private partnership (PPP): PPP brings together the strengths of both sectors. The government ensures that social obligations are fulfilled, sector reforms succeed and public investment is met, and contributes capital, assets, social responsibility, environmental awareness and local knowledge. The private sector contributes its expertise in operations, management of tasks and innovation to run the project efficiently. PPP helps develop infrastructure (power, water, sanitation, hospitals, roads, railways, etc.), transfers design and construction risk, has the potential to accelerate projects, and uses private expertise and finance for public benefit.
Projects/Assignments
1. Make a list of Indian companies entering into joint ventures with foreign companies. Find out the apparent benefits derived out of such ventures.
ANSWER (project — sample)This is a project activity, so prepare your own list from current business news and company websites. A sample list of Indian companies that have entered into joint ventures with foreign companies:
Indian company
Foreign partner
Joint venture / area
Maruti
Suzuki (Japan)
Maruti Suzuki India Ltd. — passenger cars
Tata
Starbucks (USA)
Tata Starbucks — coffee retail chain
Mahindra
Renault (France)
Automobiles
Bharti
AXA (France)
Bharti AXA Life Insurance
Hero
Honda (Japan, earlier)
Hero Honda — two-wheelers
Apparent benefits derived: access to advanced foreign technology and superior product designs, larger capital and resources, entry into new markets and distribution networks, use of an established brand name and goodwill, lower cost of production for the foreign partner, and shared risks and rewards. (Update the list with the most recent examples you find.)
Extra Practice Questions
Short Answer Type Questions
Q1. What is a mixed economy?
ANSWERA mixed economy is one in which both privately owned and government-owned business enterprises are allowed to operate. India is a mixed economy; its economy is classified into the private sector and the public sector, both of which coexist along with global enterprises.
Q2. Name the three forms of organising public sector enterprises.
ANSWERThe three forms are (i) departmental undertaking, (ii) statutory corporation, and (iii) government company. The choice depends on the nature of operations and the relationship of the enterprise with the government.
Q3. Define a statutory corporation.
ANSWERA statutory corporation is a public enterprise brought into existence by a Special Act of Parliament. The Act defines its powers, functions, rules and its relationship with the government. It is a body corporate that can sue and be sued, enter into contracts and acquire property in its own name, and is financially independent.
Q4. What is disinvestment?
ANSWERDisinvestment involves the sale of equity shares of public sector enterprises to the private sector and the public. Its objective is to raise resources, encourage wider public and worker participation in ownership, and improve managerial performance and financial discipline.
Q5. State any two features of a departmental undertaking.
ANSWER(i) Its funding comes directly from the government treasury as an annual budget appropriation, and its revenue is paid into the treasury. (ii) Its employees are government servants headed by IAS officers and civil servants, and it is subject to direct control of the concerned ministry, with no separate legal entity.
Long Answer Type Questions
Q1. Distinguish between a statutory corporation and a government company.
ANSWERA statutory corporation is created by a Special Act of Parliament, which defines its objects, powers and privileges; a government company is registered under the Companies Act, 2013 and needs no separate Act. A statutory corporation is wholly owned by the state, while in a government company not less than 51% of the paid-up capital is held by the government (the rest may be public). A statutory corporation is governed by the provisions of its own Act and its employees are governed by that Act; a government company is governed by the Companies Act and its Memorandum and Articles of Association, and is managed like any other public limited company. A statutory corporation is not subject to the usual accounting and audit procedures of government departments, whereas a government company’s auditor is appointed by the Central Government and its Annual Report is presented in Parliament or the State Legislature.
Q2. Explain the features of a government company.
ANSWERA government company has the following features: (i) it is created under the Companies Act, 2013; (ii) it can file a suit in a court of law and be sued; (iii) it can enter into contracts and acquire property in its own name; (iv) its management is regulated by the provisions of the Companies Act, like any other public limited company; (v) its employees are appointed according to the rules contained in its Memorandum and Articles of Association; (vi) it is exempt from the usual government accounting and audit rules — its auditor is appointed by the Central Government and the Annual Report is presented in Parliament or the State Legislature; and (vii) it obtains funds from government shareholding and private shareholders and is also permitted to raise funds from the capital market. Not less than 51% of its paid-up capital is held by the government.
Q3. Explain the merits and limitations of departmental undertakings.
ANSWERMerits: (i) They facilitate Parliament to exercise effective control over their operations; (ii) they ensure a high degree of public accountability; (iii) the revenue earned goes directly to the treasury and is a source of government income; (iv) where national security is concerned, this form is most suitable since it is under the direct control and supervision of the ministry. Limitations: (i) They fail to provide the flexibility essential for smooth business operation; (ii) heads cannot take independent decisions without ministry approval, causing delays; (iii) they are unable to take advantage of business opportunities because of an over-cautious, conservative approach; (iv) there is red tapism in day-to-day operations; (v) there is a lot of political interference through the ministry; and (vi) they are usually insensitive to consumer needs and do not provide adequate services.
MCQs & Assertion–Reason
1. An economy in which both private and government enterprises operate is called a:
7. In the 2001 industrial policy, the number of industries reserved exclusively for the public sector was reduced to:
(a) 17 (b) 8 (c) 3 (d) 1
8. Corporations that operate in more than one country are known as:
(a) cooperatives (b) statutory corporations (c) global enterprises (MNCs) (d) sole proprietorships
9. In a contractual joint venture:
(a) a new jointly owned entity is created (b) no new entity is created, only an agreement to work together (c) ownership is fully transferred (d) the government becomes the sole owner
10. Kundli Manesar Expressway Ltd. is given as an example of:
(a) a statutory corporation (b) a departmental undertaking (c) a Public Private Partnership (PPP) (d) a multinational corporation
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: India is described as a mixed economy.
Reason: Both privately owned and government-owned business enterprises are allowed to operate in India.
A-R 2. Assertion: A departmental undertaking has a separate legal entity of its own.
Reason: Departmental undertakings are run as departments of a ministry and their employees are government servants.
A-R 3. Assertion: A government company can be set up without a separate Act of Parliament.
Reason: A government company is established by fulfilling the requirements of the Companies Act, 2013.
A-R 4. Assertion: Global enterprises can afford highly sophisticated research and development.
Reason: Global enterprises possess huge capital resources and the ability to raise funds from many sources.
A-R 5. Assertion: In a public private partnership, the private partner ensures that social obligations are fulfilled.
Reason: Under the PPP model the private sector contributes expertise in operations, management and innovation to run the business efficiently.
Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(D).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Learn the three forms of public enterprise (departmental undertaking, statutory corporation, government company) with at least two features, two merits and two limitations each — comparison questions are very common. Remember the key number 51% for a government company and the reservation sequence 17 → 8 → 3 industries. For the changing role of the public sector, structure your answer under the headings — infrastructure, regional balance, economies of scale, check on concentration of economic power, import substitution and the four 1991 reforms (reduction of reserved industries, disinvestment, sick-unit policy, MoU). For global enterprises, memorise the seven features; for joint ventures, distinguish contractual (no new entity) from equity-based (new jointly owned entity) and list the benefits with examples.
Common mistakes to avoid
Confusing a statutory corporation (created by a Special Act of Parliament) with a government company (registered under the Companies Act).
Writing the wrong figure for a government company — it is at least 51% government paid-up capital, not 50% or 49%.
Thinking a departmental undertaking is a separate legal entity — it has no separate legal entity and its staff are government servants.
Mixing up privatisation (transferring ownership/management to the private sector) with disinvestment (selling equity shares).
Confusing contractual and equity-based joint ventures.
Frequently Asked Questions
What is Chapter 3 of Class 11 Business Studies about?
Chapter 3, Private, Public and Global Enterprises, explains India’s mixed economy — the private and public sectors, the three forms of public enterprise (departmental undertaking, statutory corporation, government company), the changing role of the public sector after the 1991 reforms, global enterprises (MNCs), joint ventures and the Public Private Partnership (PPP) model.
What are the three forms of public sector enterprises?
The three forms are the departmental undertaking (run as a department of a ministry), the statutory corporation (created by a Special Act of Parliament), and the government company (registered under the Companies Act, 2013 with at least 51% government paid-up capital).
How many questions are there in the Class 11 Business Studies Chapter 3 NCERT exercise?
The end-of-chapter exercise contains 7 Short Answer Questions, 5 Long Answer Questions and 1 Project/Assignment — all reproduced verbatim and answered step by step on this page, along with extra practice questions, MCQs and Assertion–Reason questions.
