Category: Commerce Notes PPT

An agreement between the buyer and the seller based on which goods and services are exchanged is called a Transaction. Transaction record in accounting is defined as a business occurrence that has a monetary effect on the financial records of a firm. 

Example: Purchase of machine, land or building, sale to a customer in credit or cash, etc. Accrual and Cash accounting are two ways in which any business transaction is recorded. In accrual-based accounting, the focus is on the transactions where income is earned and expenses are incurred, whereas Cash accounting income is recorded when credit payments or cash payments are made.

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What are  Transactions in Accounting and the Methods of Transaction Records?

So, what is transaction accounting? When a transaction in accounting occurs, it can be recorded in various ways. Some of them are listed as follows that will help you understand the fundamental question of “What is a transaction in accounting?”

Journal and Ledger Entries

The first thing any accountant will learn is recording a transaction in the form of a journal. This is considered as the most basic way to record any type of transaction. In Journal and ledgers, the accountant manually adds the debit and the credit for each transaction. Therefore, this process is subject to error. In practical scenarios, Journals are not used. Instead, automated approaches such as accounting software like Tally are used to record simple transactions. 

Receipts

If a supplier invoice is received, the accountant can record it in the accounts payable section of any accounting software. This will create a journal entry that will credit the accounts payable and debit the expenses. 

Issuance of Invoice

When issuing an invoice to a supplier, the accountant will first enter data regarding price, quantity and tax amount to make a bill in the accounting software and then the software will automatically credit the sales account. 

Supplier Payments

When a payment is made to the supplier, the accountant will enter the invoice number in the software which will result in a credit or cash account in the transaction records of the firm. 

Paychecks

The Payroll management system is used by the accounts to manage employee payments for salary and other incentives. The amount to be paid and the hours worked by the employee are added in the software along with other relevant information. The software then creates a journal where the cash account gets credited.

Solved Examples

All the above-mentioned techniques of maintaining transaction records create the necessary accounts and ledgers. From here the transaction gets made into proper financial statements and bookkeeping takes place.

The following examples will explain the basic method of recording transactions in the form of a journal. 

1.  Recording of Transaction 1 NCERT Solutions

The business was started by Mr A on 19th August 2020 with cash of Rs 1,00,000. Record the following transaction in the books of Mr A.

2. Recording of Transaction 2 NCERT Solutions

Goods purchased by Ravi from Mahesh for Rs 10,000 on 19th August 2020.

Process of the Recording of Transactions

Seven steps are taken while recording transactions. The seven steps are:

• Analyzing each transaction and determine the effect of the transaction on different accounts

• Recording the transaction in the form of a double-entry bookkeeping journal.

• Transferring the information that is recorded in the journal to different types of ledger accounts.

• Prepare a trial palace which will help determine the error in recording accounts, if any,

• Make adjustment entries wherever needed

• Prepare the adjusted trial balance

• Finally, complete bookkeeping by preparing financial statements of the balance sheet and profit and loss account.

• There are certain documents called transaction source documents that help determine the related business transactions in financial records. Examples of such documents are Bank stunts, cash register, credit card receipts, packing slip, time card, etc.

Tips for Recording Transactions

Learning and practicing a combination of theoretical and practical subjects can be difficult. However, there are a few tips that can be useful for students. 

A good student not only acquires the important topics, instead they choose to know problems of every type. Conceptual understanding is really important and that can only be attained by solving multiple questions and not just of one type, but rather questions of all types. This opens up your mind and prepares it to work with a broader aspect, hence polishing the concepts even more. 

Do not skip on the next chapter without testing yourself for the one you have just completed. Practice questions related to that chapter so that you’re more clear with the concepts. This will help you gain confidence too. Looking over the notes might not be enough and hence, you need to go through the chapter thoroughly as almost all the topics can be considered important. This also helps you to take a clearer picture of how much you have understood, what are your weaker areas, what are your strengths and every other important thing. 

Studying before the deadline is not a quality of a good student. If you wish to work on your concepts and better understanding, then you need to study from day one and not rely on one-day hard work. You may also miss many topics if you study just before the exam. It might help you in the short run but in the long run, you can remember only those concepts that you have understood and not crammed. Hence, students are advised to be consistent and put in all their efforts into achieving the goals that they have set for themselves. 

Motivating yourself to study is important but not every day. You need to be disciplined otherwise whenever your motivation will come down, you won’t be having the urge to study. Discipline avoids such situations. If you’re disciplined, you’ll prepare yourself to study even if you don’t feel like doing so. Stick to your schedule regardless of all the distractions around you and that’s the key to success. Hence, students shall try their level best to be disciplined at all times to be able to move forward and not let any hurdle stop them time and again.

Participation is the key to being active. Many students who do not participate in the class find the subject boring and feel tired while attending classes. Participation keeps you active throughout the class and builds up interest. Students who participate in the class tend to have good knowledge about the subject as they are aware of what is happening in the class. Hence, students who want to excel shall always stay active and participate as much as they can. 

Everyone has their way and pattern of studying. Some find it easy to study the whole day while some study just for a few hours and score better. They know their capacity. Similarly, study patterns and styles are there which can be identified by regular practice. Hence, students shall rely the most on introspection. Observe, select and stick to it. 

When you know why you’re doing something, you automatically get interested in knowing how to do it. So if you know why you’re studying a particular topic, you’ll get interested in learning more about it. This will also help you gain a deeper understanding of the concepts as well. Hence, students shall be able to find the why behind their every action and let this fuel them to take action, even when they are low on motivation. 

Competing with others isn’t a good option as you don’t know how, when, and what’s their style of studying. And, even if you know, then there’s no point competing yourself with some other person as everyone is unique and has a different aspect of thinking and acquiring things. Compete with yourself, try to hold a record of your previous marks and create a realistic goal for the next exam. This will help you score better than not anyone else, but yourself, thus leading to improvement. 

Fun Facts

1. History is written by Accountants: The first-ever recorded name in human history belonged to an accountant. The record was made 5000 years ago. The name of the accountant was “Kushim”

2. The father of modern accounts is Luca Pacioli. He was an Italian accountant who taught Leonardo da Vinci. 

Return on Investment or ROI is a performance that is measured to evaluate the profit that can be generated from an investment or it can be used to compare the profit generated by different investments. When you are going to calculate the rate of investment, the benefit that you get from an investment is divided by the cost at which you have done that investment.

This is the common information by which you can get the information on how well an investment has performed. It is usually expressed in the form of a percentage and is calculated by keeping the net profit that the investment gives to the investor upon the initial cost at which the investment was done. You can compare different investments by this rate of investment method and rank the investment in different projects. The rate of investment does not take into consideration the passage of time or tenure of the investment you made.

In this article, you are going to get the details of the rate of investment. How it is done, what is its meaning, what are the benefits of the rate of investment calculation,  what does the rate of investment ratio mean, how is the rate of investment beneficial, what we understand by a good rate of investment and other such information that will help you to get a brief knowledge of another topic. Now besides this, you will also find the Frequently Asked questions. These questions will enable you to increase your ability to understand the topic and clear all your queries. Now let’s have a look at this article that provides you with the much-needed information.

What Do You Mean by ROI?

When a business desires to measure the efficiency of its investments, it uses a financial calculator known as return on investment. ROI is a parameter used to evaluate the profit that the investor can receive concerning their investment cost. 

Return on cost or return on investment helps you to compare different investments you make so that you can come up with the best investment option. If you get a high rate of investment that means the investment is favourable so it is beneficial to invest the money while the low one indicates that this investment is not worth the investment you can go for some other one.

A firm measures its productivity or compares its returns through the ROI. It allows understanding both its frequency of gains and the amounts on a specific investment. It is an essential factor that helps to understand the profitability of an investment.  Basically, this rate of investment plays a major role in the investment and productivity of an individual or firm. 

What is the ROI Formula?

A business can measure efficiency through the ROI calculation formula. Although there are several formulas to calculate ROI, the two most common methods are listed below.

The First Method is,

[ROI = frac {text{Net Return on Investment (Benefits)}}{text{Cost of Investment}} times ] 100%

Where,

The net return is the amount that a firm receives from its investments. The costs are those expenses that a business incurs during operation during a financial year.

Another formula being,

[ROI = frac{(text{Final Value of Investment – Initial Value of Investment})}{text{Cost of Investment}} times ]100%

Where,

A value of an investment is the amount a business puts into its daily operations during a fiscal year. The result that you will get after this will help you to know whether the decisions of investment in the particular area for the whole year will turn out to be beneficial or not.

How is ROI Calculated?

The calculation of ROI is pretty simple and easy to interpret. One can quickly ascertain profits or benefits if they know how to calculate return on investment.

Business uses this metric to measure productivity or compare its profits. It is known that one can calculate ROI through two common formulas. One of the methods has net returns in the numerator as ROI can also be negative at times instead of positive.

A positive ROI means that the total returns are more than total cost, whereas negative ROI implies that the costs are more than its returns. A positive ROI indicates that investment is profitable for a business.

For understanding ROI, both the net returns and the cost of investments should be taken into consideration. The returns are always expressed as a percentage, and by using the ROI formula, one can separate low-value investments from high-value investments.

When an ROI turns positive or negative, it becomes easier for an investor to ascertain the performance of the investments. Through this financial tool, high-level management can take a fundamental decision before investing.

For interpreting the functioning of financial tool better, some return on investment examples are sited below:

Suppose, the cost of implementing a program amounts to Rs.30,000 and the savings accumulated in the process is Rs.50,000. The ROI can be ascertained as:

ROI = Rs.(50,000 – 30,000)/ Rs.30,000 [times] 100  = 66.67% 

It implies that for every 1 Rupee spent, its return on investment is Rs.0.6667. 

Another simple example of ROI is, the cost summary of business is Rs.20,000. It includes facilitation fees of Rs.11,000, materials costing Rs.2,000, salaries of staff amounting Rs.7,000. The total annual benefit results as Rs.60,000. 

The ROI will be calculated as:

ROI = Rs. (60,000 – 20,000)/ Rs.20,000 [times] 100   = 200%

It means that for the entire expense of Rs.20,000, its percentage return will be 200%.

What is an ROI Ratio?

The ROI is also known as a return on assets ratio, and it is a profitability calculator that evaluates the prospective performance of an asset or investment. One can calculate the ratio by applying a return on investment formula. 

It can be obtained by dividing net benefits received by total costs that a business incurs during an operation cycle. It is also named as returns ratio as it allows an investor to calculate the efficiency of a firm in utilising its assets to earn revenues. These assets include stock, machinery, cash and cash equivalents, etc.

What Do You Understand by a Good ROI in Business?

When a business puts their money into various activities such as marketing, production, and staffing, they expect a specific percentage of profit or benefit in return.

Anyone spends money with a prospective of generating revenue in return.It gets ascertained through ROI. This is why it gets considered as an essential parameter for any business activity.

A good marketing return-on-investment ratio for profitable business operation is 5:1. Any ratio over 5:1 gets recognised as a profitable one. A ratio of 10:1 is assumed as an exceptional one for any business operation.

The ratio largely depends on the cost structure of any firm and type of industry. For getting a good score, a business must cover its cost of production and marketing. It needs to get more returns than the cost of goods sold.

A good ROI  means the results are going to benefit and it is productive if you invest money in this area and if the ROI is good the form or the individual who is making the investment is on the favourable side only.

How is ROI Beneficial for a Business?

In day to day functioning of a business, ROI plays a vital role. It has wide applications due to its numerous benefits, such as:

It assists all business heads, and other top management officials to understand the proper allocation of resources.

ROI guides all investors to take essential decisions by comparing the high-value and low-value investments. 

It also helps in exploring and evaluating the potential gains from different opportunities.

It also guides an organisation in calculating its costs and understanding the possible threats of the market.

What are the Uses of ROI?

There are multiple uses of ROI in every aspect of an organisation. Some of them are listed below as:

It is an essential financial calculator useful for determining the value of returns of the past and the present. 

The ROI is a simple ratio which has a universal application to evaluate the potential of profits.

To get a more in-depth insight on the return on investment meaning, you can go through the study materials available on our website. You can also install ’s app in any smart device to take your learning with you.

Minimum rent is a rent that is also known as fixed rent, dead rent, contract rent, rock rent, or flat rent. It is the minimum sum that is given to the lessor of a property by the lessee so that the lessor receives a minimum amount of sum for a specific period. And the situation where he gets a benefit from or not is called the minimum rent. Minimum rent is known as the pre-determined rent that usually remains disclosed in the agreement where all the parties give their consent. 

Royalty Detailed Summary

A royalty is a legally enforced payment made to an individual or company in exchange for continuous use of their assets, which can include copyrighted works, franchises, or natural resources. When musicians’ original songs are broadcast on the radio or television, used in movies, played at concerts, clubs, and restaurants, or consumed through streaming services, royalties are paid to them. The vast majority of royalties are revenue streams intended to recompense song or property owners who license out their assets for usage by others.

Different Types of Royalties

Royalty payments can cover a wide range of property types.Royalties from books, royalties from performances, royalties from patents, royalties from franchisees, and royalties from minerals are all examples of royalties.

1. Book Royalties: These are payments made to authors by publishers. Typically, the author will be paid a set amount for each book sold.

2. Performance Royalties: When copyrighted music is broadcast on the radio, used in a film, or featured in a commercial, the owner of the copyright is compensated in some form by a third party.

3. Patent Royalties: It is paid to inventors or creators whose patents are used to protect inventions. Then, if a third party wants to use the same patent product, they must enter into a licensing agreement and pay royalties to the patent owner. The inventor is thus compensated for their intellectual property.

4. Franchise Royalties: A franchisee, or a business owner, will pay a royalty to the franchisor in exchange for the right to open a branch in the company’s name.

Characteristics of Royalty

• A royalty is a payment made by a third party to the owner of a product or patent in exchange for the use of the product or invention.

• A licensing agreement specifies the terms of royalty payments.

• The royalty rate or amount is typically a percentage ba

• Royalty contracts should benefit both the licensor (the person who receives the royalty) and the licensee (the person paying the royalty).

Important Terms used in Royalty Agreements

1. Royalty

Royalty is a recurring payment that may be based on a sale or output. Royalty is paid by the lessee of a mine to the lessor.

2. Landlord

Landlords are individuals who have legal rights to a mine or quarry, as well as patent or copybook rights.

3. Tenet

Tenet is a writer or publisher, as well as a lessee or patent, or who rents out the owner’s rights (usually commercial or personal) for a fee.

4. Minimum Rent

A type of assurance offered by the lessee to the lessor in line with the lease agreement in the case of a deficit of output, production, or sale is known as minimum rent, fixed rent, or dead rent. 

Difference Between Rent and Royalty

Payments for the purchasing of patent, land, copyright are known as capital expenditures and are recorded as a part of fixed assets. When these payments are made for use, then they become royalty. Accounting that is related to the transactions involving payment of the royalties is called Royalty Account. A Royalty Account is called a Nominal Account. Royalties are a source of income for the owners and an expense for the users of the product. 

The difference between rent and royalty also tells us that rents are paid according to the time. The variations of time can be per day or week as well as per year. But their payment depends on the production and yield. 

Payment of the Royalties as Business Expenses

Royalty is payable for the Lessor and is based on production. Royalty account is transferred to manufacturing or trading as well as production account. Royalties are payable based on the sales that are a selling expenditure and are transferred to the Profit or Loss account. 

The parties of the royalty are known as patent-holder, lessor, author, patentee, publisher, etc. Royalties are payable based on sales and production. The amount of the royalty is variable by sales and production.

The parties of the rent are called a tenant or landlord. Rents are payable by time or week. The amount of rent is fixed.

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The key to success is evolving with the modern system and with , it will be easier to achieve success. So, come and learn with at your own comfortable pace and time at your home.

Financial management is an important activity in any organization. It is the process of planning, organizing, controlling, and monitoring the financial resources with a view to attain organizational goals and objectives. It is the best approach for controlling the financial activities of an organization such as procurement of funds, utilization of funds, accounting, payment, risk assessment, and everything that is related to money management. Read the article below to know the objectives and scope of financial management.

Objectives of Financial Management

The foremost aim of financial management is to manage the finances of an organization so that businesses are compliant with necessary rules and regulations and are successful in their field. This  process involves extensive planning and its proper execution. When done precisely, businesses flourish  and profitability increases. This is the primary reason why the finance department, along with finance or revenue managers, plays a significant role in any organization. Accordingly, the  basic objective of financial management are:

• Ensuring a regular and suitable supply of funds for the organisation.

• To ensure optimum use of funds. Once the funds are procured, they should be used in the maximum possible way at minimum cost.

• Creation of a stable capital structure. The capital distribution should strike a steady balance between debt and equity. 

• Ensuring the safety of investments. The funds should be invested in safe ventures to guarantee adequate returns.

• Ensuring adequate returns for the organisation and the shareholders.

Scope of Financial Management

Financial management helps a particular organisation to utilise their finances most profitably. This is achieved via the following two conducts.

The scope of financial management is divided into two categories:

• Traditional Approach

• Modern Approach

Let us discuss the two approaches in brief.

Traditional Approach

According to this approach,the scope of financial function is restricted to procurement of funds by the corporate organizations to meet their financial needs.

The term procurement here refers to raising of funds externally as well as the interdependent aspects of raising funds.

Following Three Things are used for the Procurement of Finance

• Institutional source of finance

• Issuance of financial instruments to collect necessary funds from the capital market.

• Legal and accounting relationship between the business and the source of finance.

According to this approach, finance is not required for the routine events but for the sporadic events like promotion, reorganization, liquidation, expansion, etc. Managing funds for these things is considered as the most important feature of financial management. The financial manager in this approach is not concerned with internal financing rather he has to maintain relationships with outside parties and financial institutions.

According to this approach, the financial manager is not responsible for the efficient use of funds whereas he is responsible to get necessary funds on fair terms from the outside parties. The traditional approach continued till the fifth decade of the 20th century.

What are the Limitation of Traditional Approach

The traditional approach of finance can be considered somewhat narrow because of several reasons. Following are the primary drawbacks and this approach.

One-sided Approach

This traditional approach gives more attention to the system of procurement and the problems that might arise during that scenario. It does not offer a system for efficient utilisation of procured funds. This approach considers the viewpoint of outside parties (like banks, financial institutions, investors) who provide funds to the business but ignores the internal parties who are responsible to take financing decisions. Therefore, a one-sided approach is also termed as an outsider-looking approach.

This approach focuses only on the financial problem of corporate enterprises but the financial problems of non corporate entities like partnership firms, and sole trade are ignored.

Traditional approach considers fund allocation as on the contingencies for sporadic incidents like business reorganization, incorporations, mergers, consolidation, etc. ignoring This approach ignores everyday financial problems that a business enterprise might face. Working capital financing decisions are also kept outside the scope of a traditional approach.

Modern Approach

By the end of the 1950 technology up-gradation, development of strong corporate structure and increasing competition made it necessary for the management to make optimum use of available natural resources.

According to this approach, the financial manager considers the broader and analytical point of view. According to the modern approach, financial management is concerned with both acquisition of funds and optimum use of available resources. The arrangement of funds is an important component of the whole finance function.

In this approach, not only sporadic events are considered but also the long term and short term financial problems are considered. The main components of financial management include financial planning, evaluation of alternative use of funds, capital budgeting, determination of cost of capital, determination of the financial standard for the success of the business, management of income, etc. Therefore, according to this approach, three important decisions are taken by the finance manager. The three decisions are:

• Investment Decision

• Financing Decision

• Dividend Decision

Let us discuss the three decisions in brief

Investment Decision

This decision is related to the selection of assets in which finds will be invested by the firms. The asset that is acquired by a firm may be a long term asset or short term asset. 

The decision taken to invest the funds in long term assets is known as capital budgeting decision. Hence, capital budgeting is the process of selecting assets or an investment proposal that yields return for a long term.

The decision taken to invest the funds in short term assets or current assets is known as working capital management. The working capital management deals with the management of current assets that are highly liquid in nature.

Financing Decision

This scope of financial management indicates the possible sources of raising finances from various resources. They are of 2 different types – Financial planning decisions attempt to estimate the sources and possible application of accumulated funds. A proper financial planning decision is crucial to ensure the availability of funds whenever required.Capital structure decisions involve identifying various sources of funds. It facilitates the selection of the best external sources for short or long-term financial requirements. The financing decision is related to the procurement of funds required at the right time. After the decision related to the fund requirement is made then the financial manager has to select the various options for financing and select the best and cost effective method for financing so that the business runs smoothly without any unnecessary obstacles such as inadequate funds.

Dividend Decision

It involves decisions taken with regards to net profit distribution. It is divided into two categories – 

The dividend decision is concerned with determining the percentage of profit earned to be paid to the shareholders as dividend. Here the financial manager makes the decision regarding how much dividend is to be paid out or how much to retain as retained earnings. Dividend payout decisions are critical to make so that shareholders and investors are happy and even the firm has enough funds for the business expansion.

In economics you will come across various macroeconomic concepts like– foreign trade, exports, imports, and goods and services while barely knowing what all these accurately mean. However, to be fluent in economics, one must know that the macroeconomic variable and its identities are important to study. 

Adding to the GDP, there are other important concepts to measure the economic growth which will help the economy to work smoothly. These include the gross national product and the net national product as well. 

Some Macroeconomic Identities 

Gross National Product

The GNP or the Gross National Product measures the total value of all final goods and services which are produced in a particular time period by a country’s residents. To calculate GNP, the economists need to deduct the income which is domestically earned by the foreign individuals and by the foreign companies, this adds income earned by the residents and by the companies working abroad.

There is a basic difference between GNP and GDP. Gross National Product bases and considers on the ownership, while GDP measures the total value of all the goods and services that are being produced in a country regardless of the foreign and domestic ownership. 

GNP is the total household consumption expenditure, the sum of all private investment, also a total of the government expenditure and the net exports. Value is what is added by the economists by the overseas residents and enterprises and deduct the income earned by the foreign residents and the enterprises. 

The household consumption expenditure includes the expenditure on durable goods, nondurable goods, and services. The next component is the private investment, this includes the capital expenditure or investment on new capital for producing the consumer goods. 

Government expenditure refers to the total expenditure which is expended by the federal, state, or by local governments on final goods and services. Finally, there are net exports which are referred to as the difference between the total imports and the exports.  

Net National Product

Now we will understand about the net national product or the NNP. This NNP takes into account the depreciation factor, and what is depreciation?

Depreciation is nothing but the wear and tear of the fixed assets. While in the context of NNP it also refers to the capital used to maintain the existing stock.

NNP is the total value of all the final goods and services that are produced by the factors of production of a country in a specified time chalking out or minus the depreciation amount.

To put it into a formula, NNP = GNP – Depreciation. 

Next, we should know that for calculating NNP, the economists take into consideration two very prior factors that are indirect taxes and subsidies.

The market price of any product comes with taxes, this tax amount goes to the government. Thus, while calculating the NNP, economists are required to deduct the taxes. Also, the government provides subsidies to encourage the production of certain goods and services. This being the case, we are required to add these subsidies while calculating the NNP. The NNP after considering the taxes and subsidies is called the NNP at the factor cost or the national income.

National Disposable Income and Private Income

Apart from these two concepts of GNP and NNP, the other macroeconomic identities that students need to be familiar with are the national disposable income and the private income. The national disposable income refers to the value of all the goods and services that a country has at its disposal.

The national disposable income includes its current transfers from the rest of the world (like gifts and services received from other countries). Hence, the national disposable income refers to the income which an economy has for its own consumption expenditure without having to sell off any assets for the same requirement, this makes the National Disposable Income an important economic indicator. 

Private income is the final value of all incomes that are received by the private sector. In this context, the private sector is referred to as the residents and the enterprises of a country. The Private income includes the national debt interest, and the net factor income from abroad, the current transfers from the government, and the net transfers from other countries.

Gross Domestic Product (GDP) and Welfare

We know what goods and prices are, we also know that these goods and their respective prices do affect the economy. But the question is how? So, in this context, we need to know what is meant by GDP. GDP or the Gross Domestic Product can be described as the total value of goods and services that are being produced in a country within a specific period. The GDP is calculated on an annual basis.

An economy’s GDP can be calculated by using the income and expenditure methods. After knowing the GDP, one can measure it with the GDP of the previous year or any other relevant year for comparison purposes. GDP is here used as a tool to indicate the economic performance of a country.

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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.