The merits of departmental undertaking are:
1. The government enjoys full control over the departmental undertaking.
2. The risk of misuse of public funds is comparatively less in the case of a departmental undertaking, as it is subject to budgetary, accounting and audit controls.
3. It has greater accountability to the parliament.
The demerits of departmental undertaking are:
1. A departmental undertaking is subject to interference by the ministers, members of political parties and chief Government officials. Therefore, the smooth working of a departmental undertaking is disturbed.
2. Business losses are not taken seriously by a departmental organisation.
3. A department undertaking suffers from the absence of continuity of policies because of frequent change of government officials and ministers and change of government.
