Demerits of Departmental Undertaking

Departmental Undertakings have several severe drawbacks, some of which are as follows :

1. Inflexibility of Operation: 

Departmental undertakings fail to provide the flexibility required for the successful functioning of business because departmental management suffers from operational rigidity. It becomes difficult to bring about fundamental changes, reformation, and innovation that are required from time to time.

2. Delay in Decision Making: 

Employees or heads of departments in such companies are not permitted to make independent decisions without the permission of the relevant ministry. This causes delays in situations where prompt decisions are necessary. 

3. Bureaucracy and Conservative Approach: 

These enterprises are unable to take benefits of business opportunities, as they are not allowed to take risky ventures because of bureaucrats’ overly cautious and conservative approach. 

4. Red Tapism: 

Centralization in departmental undertakings causes delays in decision-making. Decisions are also delayed as a result of red tape and strict adherence to rules and regulations. In day-to-day operations, there is red tapism, and no action can be taken until it passes through the correct channels of authority.

5. Undue Government Interference: 

There is a lot of government interference. They had to take approval at every step. There is also political interference through the ministry. 

6. Insensitivity to Consumer Needs: 

Departmental officials rarely care about this important aspect of business and are typically insensitive to the interests of consumers. These organisations are frequently insensitive to customers ’ demands and fail to deliver adequate services.