A Government organisation is established under the Indian Companies Act, 1956
and is registered and run by the provisions of the Indian Companies Act. These are set up for mere business reasons and in true spirit compete with firms in the private sector. In accordance to the Indian Companies Act 1956, a government organisation means any company in which not less than 51 percent of the paid up capital is held by the central government, or by any state government or partly by one or more state governments or central governments. From the above description, it is obvious that the government controls the paid up share capital of the organisation. It is in the name of the President of India that the shares of the company are purchased. As the government is the chief shareholder and exercises control over the management of these organisations, they are called as government organisations.