STATUTARY CORPORATIONS

Statutory Corporations are autonomous entities formed by a special act of parliament. The powers, functions, rules, regulations etc. pertaining to the statutory corporation’s employees and its relationship with the governmental departments. However, the Parliament cannot interfere in the working of such corporations. These entities are managed by board of directors constituted by the government. It is a corporate person and has the right to enter into contracts or carry out activities in its own name. These corporations are financially dependent on the state and work with the motive of earning maximum profits i.e. these entities are commercial in nature.

The employees of statutory corporations are not called government employees and are recruited by the corporation itself without any interference of the government, but the employees are entitled to the uniform pay and other benefits by the government. These entities are free to decide and plan their own functioning and structure but remain accountable to the parliament and the public. The plan made by the corporation must be in line with the main statute under all circumstances. The advantage of being financial dependent on government is that these corporations can raise the required capital in an easier manner by floating bonds at a low rate of interest and decide the usage of the same on its own. However, the autonomy is in written only as the ministers, political parties, government officials etc. tend to exercise their influence on the decision making within the corporations. Further, these corporation lack the sense of initiative as they do not face any kind of competition in the market and only have to strive for maximum profit of their own. These corporation are thus, suitable for ventures that require large-scale investment and monopoly powers in the market. Airport Authority of India, National Highways Authority of India, Food Corporation of India, Life Insurance Corporation, Unit Trust of India, Employees’ State Insurance Corporation are a few examples of Statutory Corporations in India.