Explaining the Objectives of Statutory Corporation

Statutory corporations are legal entities established by a special act of parliament or by a state or federal legislature. It is entirely subsidised by the government. The legislature determines its powers, objectives, and constraints, among other things.

 Air India, State Bank of India, Life Insurance Corporation of India, and others are examples.

Introduction

Statutory corporations are independent corporate bodies established by a special act of Parliament or a state legislature, with predetermined functions, duties, powers, and immunities as outlined by the act.

Statutory companies have financial autonomy and are accountable to the legislature under which they were established.

A statutory body is an important government body that has the authority to pass laws on behalf of the government in specific areas. 

For example, in India, the National Commission for Women (NCW) is a statutory agency tasked with promoting gender equality and is empowered to draught legislation on the subject.

 We’ll also look at a long list of Indian Statutory Bodies below. A statutory body is established by an Act of Parliament or the State Legislature.

 It’s important to remember that a statutory body is not a constitutional body, despite the fact that it’s critical for governance.

Features of statutory corporation

1. Corporate Body: Corporate bodies are statutory corporations. They are legal entities that are created by the law and are artificial individuals. A government-appointed board of directors oversees the operations of these corporations. These corporations have the authority to engage into contracts and conduct business under their own names.

2. State-owned corporations: Statutory corporations are wholly owned by the state, which provides full support by fully subscribing to the capital.

3. Employee Autonomy: Despite being owned by the government, employees of statutory corporations are not considered government employees. Employees are hired and compensated in accordance with the company’s policies.

4. Financial Autonomy: Statutory corporations have the ability to make financial decisions on their own. They are not subject to any type of accounting, budgeting, or auditing. However, statutory businesses can borrow money from the government in times of need.

5. Accountable to the legislature: Statutory corporations have internal management and operation freedom, but they are accountable to the state or government legislature that established them.

Merit of statutory corporation :

1. Expert Management: Statutory corporations are run by directors with extensive experience in their fields. This instils professionalism in statutory corporations’ administration.

2. Administration Autonomy: Statutory corporations have complete control over their administration.

3. Quick decision-making: Compared to other types of organisations, statutory corporations have significantly less file work and formalities, allowing for quicker decision-making.

4. Efficient Staff: The statutory corporation provides fair wages, facilities, and proper working conditions, as well as developmental programmes, to its employees. All of these factors help to drive people to work more efficiently.

Demerits of statutory corporation:

1. Although statutory corporations are autonomous on paper, their operations are impeded by influence from ministers and political parties, which compromises their autonomy.

2. Stiff laws: Statutory corporations enjoy operational flexibility, but modifying any of the existing rules is a time-consuming procedure due to rigid rules and regulations. Any changes to the existing set of rules must be proposed to parliament, which is a time-consuming process.

3. Lacks Initiative: Because these businesses have no economic incentive, their staff and management are uninterested in taking any initiative to make money.

4. Conflict of Interest Among Board Members: Members of the board of directors are appointed by the government, and there may be disagreements among them.

Conclusion

Statutory corporations are independent corporate bodies established by a special act of Parliament or a state legislature, with predetermined functions, duties, powers, and immunities as outlined by the act. Statutory companies have financial autonomy and are accountable to the legislature under which they were established. A statutory body is an important government body that has the authority to pass laws on behalf of the government in specific areas.