Disadvantages of departmental undertakings

Drawbacks suffered by departmental undertakings

Lack of flexibility: the departmental undertakings are strictly under the control of parliament. The minister and the top financial managers also interfere frequently in its working.Lack of motivation: In the absence of competition and profit motive, there is little incentive for hard work and efficiency. There is hardly any link between reward and the performance and promotions are based on the incentives.Financial dependence: the departmental undertaking deposits its earnings into the government treasury. It cannot take long-term decisions as it is financed by the government.