About Statutory Bodies and Corporations
Statutory Corporation is the one that is made by the state. They are normal companies that come under the government, their shareholders may or may not be a part of it. There can be a Statutory body with no shareholders at all and are under control of the national or sub-national government but this happens in some cases.
Statutory body meaning is a body of the government established through an Act which oversees a particular matter. Corporations refer to capitalistic enterprises established to extend a particular commodity, i.e., good or service, to its customers. When talking about government and Corporations, here, we are referring to public Corporations or public sector enterprises in particular. Let us go into some more details about these two Bodies which fall under the government of a country and its functionaries.
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Statutory Body Meaning
A Statutory body is an important body of the government which is enabled with the right to pass certain laws on behalf of the government pertaining to certain areas of government. For example, the National Commission for Women (NCW) is a Statutory body in India which focuses on the subject of providing equality for women and is authorised to pass laws in favour of this subject. We will also be looking at a long list of Statutory Bodies in India below.
A Statutory body is formed through an Act passed by the Parliament or by the State Legislature. A note to remember here is that a Statutory body, while being highly necessary to governance, is not a constitutional body. A Statutory body is set up by the Parliament itself, and each Statutory body focuses on a single subject matter.
Role of Statutory Body:
A Statutory Body is nothing more than an organisation that has the power to scan and detect the activities of the business and to make sure that they are following official rules as per the guidelines and to check their legal status.
Statutory Bodies in India
The following is a list of the most prominent Statutory Bodies in India which play an important role in the functioning of the government in terms of its purpose of appropriate representation of the people in its country. This will help make clearer what is a Statutory body in India.
National Human Rights Commission
Established in 1993, the National Human Rights Commission (NHRC) was established under the statute of the Protection of Human Rights Act in the same year. This statutory body of India works towards protecting and promoting the basic human rights, i.e. the right to life, liberty, equality and dignity of all individuals in India.
National Commission for Women (NCW)
The rights of women have been continually denied to them from the beginning, thus the National Commission for Women was established through the National Commission for Women Act in 1990 to battle this. This statutory body seeks to enable all women of India with the dignity, equality and empowerment that they deserve, by seeking to fight the problems that arise due to the discrimination and atrocities committed against women.
National Commission for Minorities (NCM)
Minorities in India consist of the religious minorities, i.e. Muslims, Buddhists, Christians, Sikhs, Jains and Zoroastrians (among others), and also socio-economic minorities who are granted Scheduled Tribe/Scheduled Caste status. The NCM, established in 1992, is a statutory organisation which seeks to safeguard and protect the interests of these minorities with the help of rightful policies, regulations and laws.
Armed Forces Tribunal (AFT)
A tribunal is a small-time court of law established for a specific purpose. The Armed Forces Tribunal is a statutory authority which was established in 2007. It is the statutory body which is solely to resolve disputes within the armed forces, i.e. the Indian Navy, Indian Air Force and Indian Army in the matters pertaining to the various armed forces-related Acts by the Indian government.
National Consumer Disputes Redressal Commission (NCDRC)
This is a body of the government of India which upholds citizens’ consumer rights. This body lists the rights of a consumer with the promise to uphold them in the case where they have been violated. While upholding consumer rights, the NCDRC also aims to spread awareness about the same among the public.
Public Corporations in India
A corporation is a company or group of companies which is owned by the list of its shareholders. A Public Corporation, which is what we are talking about here, is a corporation which is owned and operated by the government while holding the same powers as that of a private enterprise. They are also called public sector enterprises and are statutory organisations under the ownership of the government.
The essential difference between private and Public Corporations is that private company shares are held by private shareholders and public shares are traded in the stock market to raise more capital.
Here is a List of Some Public Corporation Statutory Organisations in India:
Life Insurance Corporation (LIC)
Reserve Bank of India (RBI)
Air India Corporation
Food Corporation of India (FCI)
State Bank of India (SBI)
Central Warehousing Corporation (CWC)
Oil and Natural Gas Commission (ONGC)
Advantages of Statutory Corporations
We all know that all the government never speaks in between the decision making of public Corporations, that provides them the opportunity to work like a real business. The level of freedom in the corporation is very high.
Since they are free to try and work without any formal interruption, they try new activities and take the decisions without any delay.
Changes in the political system of the nation does not create any trouble for the public Corporations and their work does not hinder or halt because of this. They work in a continuous process throughout.
Statutory corporations can hire professionals as their managers by providing them better perks than the government jobs.
Their Disadvantages :
The passing of a special law to permit the making of public corporations is one lengthy process. It is very time consuming and gets frustrating after a point.
In the need of power or control change and to make it more flexible in the corporation, special law has to be passed by the parliament.
In theory, these corporations work on their own and no one disturbs them. This is not the case in reality. Political disturbance disturbs the internal functioning of the corporations.
FAQs on Statutory Bodies and Corporations: Overview
1. What is a statutory corporation?
A statutory corporation is a type of public enterprise established by a Special Act of the Parliament or a State Legislature. This Act defines its specific powers, functions, objectives, and its relationship with government departments. It operates as an autonomous corporate body with a separate legal identity, distinct from the government itself.
2. What are the key features of a statutory corporation?
The key features of a statutory corporation include:
- Formation: It is created by a special legislative Act, not under the general Companies Act.
- Legal Status: It has a separate legal existence, meaning it can own property, enter into contracts, and sue or be sued in its own name.
- State Ownership: It is wholly owned by the state, whether it's the Central or a State Government.
- Management: It is managed by a Board of Directors appointed or nominated by the government.
- Financial Autonomy: It arranges its own funds and has the authority to use its revenue. It is generally self-financing.
- Staffing: It recruits and appoints its own employees, who are not considered government servants.
3. Can you provide some examples of major statutory corporations in India?
Yes, some of the most prominent examples of statutory corporations in India, each established by a specific Act, are:
- The Reserve Bank of India (RBI)
- The Life Insurance Corporation of India (LIC)
- The Food Corporation of India (FCI)
- The State Bank of India (SBI)
- The Oil and Natural Gas Corporation (ONGC)
4. What are the main advantages of forming a statutory corporation?
The primary advantages of establishing an enterprise as a statutory corporation are:
- Operational Flexibility: They are generally free from the rigid rules and bureaucratic procedures found in government departments, allowing for greater initiative.
- Quick Decisions: Due to administrative autonomy and less file work, decisions can be made more quickly compared to government undertakings.
- Administrative Autonomy: They have the power to design their own policies and procedures regarding recruitment, remuneration, and management of their staff.
- Public Accountability: They are directly accountable to the Parliament or State Legislature, which ensures their performance is scrutinised in the public interest.
5. What are the limitations or disadvantages of a statutory corporation?
Despite their benefits, statutory corporations face certain limitations:
- Political Interference: In practice, their operational autonomy can be limited due to interference from government officials and politicians.
- Rigidity in Structure: Any significant change in their objectives or powers requires an amendment to their Special Act in Parliament, which is a slow and cumbersome process.
- Potential for Inefficiency: Often operating as a monopoly, the absence of competition can sometimes lead to complacency and a lack of focus on efficiency.
6. How is a statutory corporation created, and why is this process different from a regular company?
A statutory corporation is created through a Special Act passed in the Parliament or a State Legislature. This Act serves as the charter of the corporation, outlining all its powers and functions. This is fundamentally different from a regular company, which is formed simply by registration under the general Companies Act, 2013. The key difference is the source of authority: a statutory corporation derives its very existence from a unique law made for it, whereas a regular company gets its status by following a standard procedure applicable to all companies.
7. What is the core difference between a statutory body and a constitutional body?
The core difference lies in their origin and source of power. A Constitutional Body is an institution established directly by provisions within the Constitution of India (e.g., the Election Commission or UPSC). In contrast, a Statutory Body is created by an Act of Parliament or a State Legislature (e.g., the Securities and Exchange Board of India - SEBI). Therefore, changing the structure of a constitutional body requires a constitutional amendment, while a statutory body can be altered or abolished by a simple legislative Act.
8. Why is an entity like the RBI considered a statutory corporation while NITI Aayog is not?
This distinction highlights the importance of the formation process. The Reserve Bank of India (RBI) is a statutory corporation because it was established by a specific Act of Parliament, the RBI Act of 1934. This law grants it specific powers and autonomy. On the other hand, NITI Aayog was established by an executive resolution of the Union Cabinet. It was not created by an Act of Parliament, nor is it mentioned in the Constitution. Therefore, NITI Aayog is a non-statutory, non-constitutional body, often referred to as an executive body.
9. How does a statutory corporation balance its public service obligations with commercial efficiency?
A statutory corporation is designed to merge public interest with business principles. It is expected to be financially self-sufficient and operate efficiently like a private business. However, its primary motive is public service, not profit maximisation. The Special Act that creates the corporation mandates its social objectives. This creates a challenging balance where it must make commercially sound decisions to cover its costs while ensuring its services remain accessible and aligned with national welfare, which is the very reason for its existence.
