Business Environment Final PMD Modified - APSCHE

First Year B.Com

Business Environment:Authors:

Dr. K. Srinivasa RaoLecturer in Commerce

Govt. Degree College, Ravulapalem

Sri. V. Krishna MohanPrincipal (Retired)

SKBR College, Amalapuram

:Editor:

Dr. P. Mohan ReddyProfessor of Commerce

Sri Venkateswara UniversityTirupathi

ANDHRA PRADESHSTATE COUNCIL OF HIGHER EDUCATION

(A Statutory Body of the Government of A.P)

I

B.Com. (First Year- Semester-I) : Business Environment

Authors : Dr. K. Srinivasa Rao Dr. V. Krishna Mohan

Editor : Dr. P. Mohana Reddy

First Edition : 2021: No. of Pages:

All Copyrights @ APSCHE

First Edition: 2021

Published by APSCHE, Atmakur(V), Mangalagiri(M), Guntur

All rights whatsoever in this book are strictly reserved and no portionof it may be reproduced by any process for any purpose without the

written permission of the copyright owners.

II

APSCHE TEXT BOOK

COORDINATING COMMITTEE

Prof. K. Rama Mohana Rao, Ph.D.Vice-Chairman

Dr. B.S. Selina, M.A., Ph.D.Academic Officer

Sri G. Srirangam Mathew, M.Sc., (Ph.D)Academic Officer

Dr. P. Anil Kumar, M.Sc., Ph.DAcademic Officer

III

Foreword

The Andhra Pradesh State Council of Higher Education, in linewith the directions of the Hon’ble Chief Minister of AndhraPradesh, introduced English Medium in all Degree programmesfrom this academic year 2021-22. As part of empowering thestudents joining Degree programmes from vernacular medium,the Andhra Pradesh State Council of Higher Education is bringing out podcasts,video casts and notably the bilingual text books. These bilingual books arewritten in English, with the gist of the content in Telugu to enable the studentsto comprehend the conttent in their mother tongue. The bilingual text books isenvisioned on the core concept of Outcome Based Education, highlighting thelearning outcomes for every chapter. These are better called as bilingualresources rather than textbooks, as the APSCHE has developed a template forthe bilingual textbooks designing them with concepts and frameworks goingbeyond the usual reading material.

Furhering the detailed description of the topics, as per the common syllabus ofthe Redesigned Curricular Framework for Choice Based Credit System, thebilingual text book contains Glossary, where certain important terms whichthe student might be unfamiliar with are identified and explained in one ortwo sentences, which is not a mere dictionary meaning. Links to online videosor audios which will be useful for futher reading and understanding of thetopics are given under the interactive links. To foster further reading,information on online resources, articles or another text book pertaining tothe content are provided. To make the text book more of a resourceful book,Curricular Activities, wherein suggested activities that could be taken up inrealization of the outcomes are provided for the benefit of students. To helpthe students to assess understanding the content, Self Assessment instrumentsare provided. For Advanced Learners, caters to the needs of advanced learnersproviding them with additional material about the topics. Finally, for everychapter References are provided.

IV

I sincerely appreciate the Authors and the Editors for taking pains in bringingout this bilingual text book in a record time, replete with knowledge which fostersthe academic progression of students. I earnestly thank my Academic Officers,Dr. B.S. Selina, Sri. Srirangam Mathew, Dr. P. Anil Kumar for their coordinatingactivities and Prof. K. Rama Mohana Rao, The Vice- Chairman of APSCHE underwhose guidance the publication is brought out.

V

PROGRAMME: B COM Course Code:

Domain Subject: CommerceSemester-wise Syllabus under CBCS

(w.e.f. 2020-21 Admitted Batch)

I Year B Com – Semester – ICourse 1C: Business Environment

Learning Outcomes:

At the end of the course, the student will able to;

Understand the concept of business environment. Define Internal and External elements affecting business environment. Explain the economic trends and its effect on Government policies. Critically examine the recent developments in economic and business policies of the

Government. Evaluate and judge the best business policies in Indian business environment. Develop the new ideas for creating good business environment.

SYLLABUS:

Unit–I:Overview of Business Environment:Business Environment – Meaning – Characteristics – Scope -Macro and Micro Dimensions ofBusiness Environment - Environmental Analysis.

Unit – II: Economic Environment:Economic Environment – Nature of the Economy – Structure of Economy – Economic Policies& Planning the Economic Condition – NITI Ayog – National Development Council – Five YearPlans

Unit–III: Economic Policies:Economic Reforms and New Economic Policy – New Industrial Policy – Competition Law –Fiscal Policy – Objectives and Limitations – Monetary Policy and RBI

Unit – IV: Social, Political and Legal Environment: Concept of Social Responsibility ofBusiness towards Stakeholders - Demonetisation, GST and their Impact - Political Stability -Legal Changes.

VI

Suggested Readings:1. K. Aswathappa : Essentials of Business Environment, Himalaya Publishing House2. Francis Cherunilam : Business Environment,Himalaya Publishing House3. Dr S Sankaran: : Business Environment, MarghamPublications4. S.K. Mishra and V.K. Puri : Economic Environment of Business, HPH5. Rosy Joshi and Sangam Kapoor : Business Environment, Kalyanai Publications6. A C Fernando: Business Environment, Pearson7. Dr V Murali Krishna, Business Environment, Spectrum Publications8. Namitha Gopal, Business Environment, McGraw Hill

Suggested Co-Curricular Activities:• Seminar on overview of business environment• Debate on micro v/s macro dimensions of business environment• Co-operative learning• Seminar on Monetary policies of RBI• Debate on social, political and legal environment• Group Discussions on Global environment and its impact on business• To learn about NITI Ayog and National Development Council• Seminars on Economic policies like New Industrial policy, Fiscal policy etc.• Reports on WTO,BRICS, SAARC etc.• Examinations (Scheduled and surprise tests) on all units

VII

Introduction to

Business Environment

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the nature and scope of the business 2. define vision, mission and goals of business 3. understand environment and business environment 4. examine the characteristics of business environment 5. judge the importance of environment for success of a business

Chapter

1

1

Chapter Layout: 1.1. Business

1.1.1. Meaning 1.1.2. Characteristics of Business

1.1.3. Scope of Business 1.1.4. Objectives of Business 1.2. Business Environment

1.2.1. Environment 1.2.2. Business Environment 1.2.3. Characteristics of Business Environment 1.2.4. Importance and Scope of Business Environment

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˝≤uÛ≤\T bı+<˚ ñ<›X¯+ ‘√ edüTÔ ùde\ ñ‘·Œ‹Ô eT]j·TT $Áø£j·÷\qT »]ù| Á|üÁøÏj·T‘√ ≈£L&çqyê´|üø±\qT yê´bÕs¡+ nì n+≤s¡T. yê´bÕs¡+ nH~ b˛° <Ûäs¡ À ø£düºeTsY ø√dü+ edüTÔe⁄\TeT]j·TT ùde\qT n+~dü÷Ô yê´bÕs¡y‘·Ô≈£î ≤uÛ≤\qT bı+<ä&ÜìøÏ Á|üj·T‹ïdüTÔqï Ä]úø£ ø±s¡ ø£ ≤|ü+>± #Ó|üŒe#·TÃ. nìï yê´bÕs¡ ìs¡íj·÷\T <ëì #·T≥÷º ñqï nH˚ø£ n+XÊ\ <ë«sêÁ|üuÛ≤$‘·eTe⁄‘êsTT. Ä ø±s¡ø±\˙ï ø£*|æ yê´bÕs¡ |ü]düsê\T n+≤s¡T. yê´bÕs¡ |ü]düsê\˝À˝À @<Ó’Hê e÷s¡TŒ\T yê´bÕsê\≈£î ø=‘·Ô neø±XÊ\T eT]j·TT ø£cÕº\qT düwæºkÕÔsTT. n+<äTe\¢yê´bÕs¡y‘·Ô\T eT]j·TT yê´bÕs¡ ìsê«Vü≤≈£î\T dü¬s’q düeTj·T+˝À dü¬s’q ìs¡íj·÷\T rdüTø√e&ÜìøÏyê´bÕs¡ |ü]düsê\ >∑T]+∫ eT+∫ ne>±Vü≤q nedüs¡+.

Á|üdüTÔ‘· n<Ûë´j·T+ ˝À yê´bÕs¡ ìs¡«#·q+, yê´bÕs¡ \ø£åD≤\T eT]j·TT yê´bÕs¡ \øå±´\ô|’<äwæºì πø+ÁBø£]+#·&ÉyÓTÆq~. yê´bÕs¡ |ü]düsê\ ìs¡«#·q+, yê´bÕs¡ |ü]düsê\T yê´bÕsê\qTm˝≤ Á|üuÛ≤$‘·+ #kÕÔjÓ÷ $e]+#·&É+ »]–+~. yê´bÕs¡ |ü]düsê\ jÓTTø£ÿ ÁbÕeTTK´‘· eT]j·TT$$<Ûä \ø£åD≤\T ≈£L&Ü á n<Ûë´j·T+˝À #·]Ã+#·&É+ »]–+~.

2

CHAPTER OVERVIEW

Businesses involve production and sale of goods and services in order togain profits. Business is an economic activity trying to gain profits for theentrepreneur, and provide goods and services for the customer at acompetitive price. All business decisions are influenced by several factorswhich surround it. All those factors together are termed as businessenvironment. Any changes in business environment creates newopportunities and threats to the businesses. Thus a good awareness ofbusiness environment is necessary for entrepreneurs and business managersto make proper decisions at opportune times.

The present chapter attempts to define business, and throw a light oncharacteristics and objectives of business. It also defines businessenvironment, explain how business environment influences businesses.Importance and various characteristics of business environment are alsodiscussed.

3

1. 1. yê´bÕs¡+1.1.1.ns¡∆eTT

yê´bÕs¡+ nH~ Á|üdüTÔ‘· düe÷»+˝À ø£ eTTKýÓTÆq Ä]∆ø£ eéVü‰s¡+ . Ç~ edüTÔ ùde\ ñ‘·Œ‹Ô Ò<ë e÷s¡ø£+‘√eTT&ç|ü&ç ñqïeéVü‰s¡+. Bì yÓqTø£ ñqï eTTKýÓTÆq ñ<›X¯+ ˝≤uÛ≤s¡®q Ò<ë dü+|ü<ä Äs¡®q. edüTÔ,ùde\qT˝≤uÛ≤ù|ø£å‘√ neTà&ÜìøÏ, yêÏ ñ‘·Œ‹Ô Ò<ë ø=qT>√\T≈£î $ìjÓ÷–+# e÷qe ø±s¡ ø£ ≤bÕìï yê´bÕs¡+ n+≤s¡T.Ç~ ìs¡+‘·s¡eTT ø=qkÕπ> ø±s¡ Áø£eT+>± u≤$+#ê*. Bì <ë«sê e÷qe ø√¬sÿ\qT dü+‘·|æÔ |üs¡#·&É+ »s¡T>∑T‘·T+~.

L. H. Vü‰H Á|üø±s¡+ yê´bÕs¡+ n+fÒ ªªedüTÔe⁄\ ø=qT>√\T, neTàø±\ Á|üÁøÏj·T <ë«sê dü+|ü<äqT ñ‘·Œ‹Ô #j·T&ÜìøÏÒ<ë dü+|ü<äqT Ä]®+#·&ÜìøÏ ìπs∆•+∫q e÷qe ø±s¡ ø£ ≤|ü+.μμ

n<äTìø£ düe÷»+˝À yê´bÕs¡+ nìï ø±s¡ ø±˝≤bÕ\≈£î πø+Á<ä _+<äTe⁄. yê´bÕs¡+˝À @<√ ˇø£ ø±s¡ ø£ ≤bÕ\qT˝≤uÛ≤ù|ø£å‘√ ìs¡+‘·sêj·T+>± #j·T&É+ eTTKýÓTÆq \ø£åD+. Ç~ edüTÔ ùde\qT n+~+∫ e÷qe ø√¬sÿ\qT dü+‘·|æÔ|üs¡#·&É+˝À ìeT>∑ïyÓTÆ ñ+≥T+~.

ñ]«ø, Vü‰+Ÿ \ Á|üø±s¡+ ªª e÷qe⁄\ nedüsê\qT rs¡Ã&É+ <ë«sê ˝≤uÛ≤ù|ø£å, dü+|ü<äqT Ä]®+# <Û˚ j·÷\‘√edüTÔùde\ ñ‘·Œ‹Ô, ø=qT>√\T, neTàø±\T, |ü+|æD° ≤+Ï ø±s¡ ø£ ≤bÕ\qT ìsê≥+ø£+>± #|üfÒº Á|üÁøÏjT yê´bÕs¡+.μμ

yê´bÕs¡+ nH |ü<ä+ es¡Ôø£+, yêDÏ»´+,yêÏ nqTã+<ä es¡Ôø£ düVü‰j·Tø± …’q |ü+|æD°, u≤+øÏ+>¥, ;Ûe÷, s¡yêD≤yÓTT<ä\>∑T nìï ø±s¡ ø£ ≤bÕ\ düe÷Vü‰s¡+>± #Ó|üŒe#·TÃ. Ä<ÛäTìø£ Á|ü|ü+#·+˝À yê´bÕs¡+ e÷qe e‘·TÔ\˝À n‘· +‘·Á|ü<ÛëqyÓTÆq~. .

According to Keith Davis, “Business as any form of commercial activity to satisfy the economic wants of people at a profit”

1. 1. 2. yê´bÕs¡+ \ø£åD≤\TÄ]∆ø£ eéVü‰s¡eTTyê´bÕs¡+ nH~ ø£ Ä]∆ø£ eéVü‰s¡+>± u≤$+#·ã&ÉT‘·T+~. Bì Á|ü<ÛëqyÓTÆq \ø£å + dü+|ü<ä Äs¡®q Ò<ë ≤uÛ≤s¡®q.s√EyêØ ≈£î≥T+ã ø±s¡ Áø£e÷\T, u≤y√<«>±ìøÏ, eTqdüÔ‘ê«ìøÏ, Áù|eT, nqTsê>∑+ yÓTT<ä\>∑T yêÏøÏ düeTã+~+∫qø±s¡ ø£ ≤bÕ\qT yê´bÕs¡+>± #·÷&É ÒeTT. Ç+<äT˝À ‘·|üŒìdü]>± edüTÔe⁄\T Ò<ë ùde\≈£î dü+ã+~+∫q $ìjÓ÷>∑+Ò<ë e÷]Œ&ç »]– ñ+&Ü*.

edüTÔ,ùde\≈£î dü+ã+~Û+∫q eéVü‰s¡+:yê´bÕs¡+ e÷qe nedüsê\≈£î edüTÔ, ùde\≈£î n+~+#˚ eéVü‰s¡+. ˇø£ e´øÏÔ ‘·q e´øÏÔ>∑‘· Ò<ë ≈£î≥T+ãnedüsê\ ì$T‘·Ô+ e÷Á‘·y˚T ø=qT>√\T #˚ùd edüTÔe⁄\qT ªª$ìjÓ÷>∑ edüTÔe⁄\Tμμ nì n+≤s¡T. ˇø£ edüTÔe⁄qT‹]– ny˚Tà ñ<›X¯ +‘√ Ò<ë <ëìì Ç‘·s¡ edüTÔe⁄\qT ñ‘·Œ‹Ô #˚j·T&ÜìøÏ eTT&çdüs¡T≈£î>± ø=qT>√\T #˚ùdÔ <ëììªªñ‘êŒ<äø£ edüTÔe⁄\Tμμ . yê´bÕs¡+˝À ùde\T ≈£L&Ü edüTÔe⁄\≈£î düe÷Hês¡∆+>± uÛ≤$+#·&É+ »s¡T>∑T‘·T+~.

4

1.1. BUSINESS

1.1.1. MEANINGBusiness is a major economic activity in all modern societies. It is connected with the productionand sale of goods and services required by people. The purpose behind business activities is toearn money by meeting people’s demands for goods and services. Business can be defined as acontinuous economic activity involving the production and sale of goods and services undertakenwith a motive of earning profit by satisfying human needs in society.

According to “L.H. Haney” “Business may be defined as human activities directed towards providingor acquiring wealth through buying and selling goods.”

Business is central to our lives. Business refers to any occupation in which people regularly engagein an activity with a view to earn profit. The activity may consist of production or purchase of goodsfor sale, or exchange of goods or supply of services to satisfy the needs of other people.

According to Urwick and Hunt, “Business is any enterprise which makes, distributes or providesany service which other members of the community need and are willing to pay for it”.

In terms of Professor Owen,”Business is any enterprise engaged in production and distribution ofgoods for sale in a market in rendering services for a price.”

As a final point, business is a activity which includes the advanced fields of Trade, Commerce andnetwork of auxiliary services like distribution, banking, insurance, transport to provide goods andservices to the society at a profitable price.

1.1.2. CHARACTERISTICS OF BUSINESS

An economic activityBusiness is considered to be an economic activity because its main objective is earning money orlivelihood. Normal and emotional activities like love, affection, sympathy, caring for a child orany other works linked with sentimental reason cannot be considered as an economic activity.Goods may consist of consumable items or capital goods like machinery, furniture, etc. Servicesmay include facilities offered to consumers in the form of transportation, banking, electricity, andthe like.

Production of goods and servicesThe main activity of business is to sell of goods or services to the needy people. If a person wantsto sell goods to others for consumption, he needs to acquire the goods first. Either he produces thegoods or acquires the goods from the producer. Thus, every business enterprise acquires the goodsfrom producers for further sale to consumers or users. The word service also occupies the samemeaning as goods in the concept of business.

5

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qwüº uÛÑj·T+yê´bÕs¡+˝À qwüº uÛÑj·T+ nH˚~ Á|ü<ÛëqyÓTÆq \ø£åD≤\˝À ˇø£Ï. yê´bÕs¡+ jÓTTø£ÿ Á|ü<Ûëq ñ<›X¯+ ˝≤uÛ≤s¡®H˚nsTTq|üŒÏøÏ nqTø√ì dü+|òüT≥q\ e\q, yê´bÕs¡ &ç<äT&ÉT≈£î\ e\q Ä•+∫q neTàø±\T Òø£ qcÕº\T e#˚Ãneø±X¯+ ñqï~. yê´bÕs¡+˝À ˝≤uÛ≤s¡®q≈£î m+‘· neø±X¯+ ñqï<√ qwüº+ sê&ÜìøÏ ≈£L&Ü n+‘˚ neø±X¯+ñqï~. $ìjÓ÷>∑<ës¡T\ n_Ûs¡T#·T\T, bòÕwüHé‡, sê»ø°j·÷\T, kÕ+πø‹ø£ e÷s¡TŒ\T, Á|üe÷<ë\T, b˛° yÓTT<ä …’q$qwüº uÛ≤j·÷ìï ô|+#˚ ø±s¡ø±\T>± #Ó|ü⁄Œø√e#·TÃ.

1.1.3. yê´bÕs¡+- |ü]~yê´bÕs¡+ nH˚ |ü<ëì≈£îqï |ü]~ #ê˝≤ $düÔ‘·yÓTÆq~. es¡Ôø£eTT, yê´bÕs¡eTT eT]j·TT yêDÏ»´eTT nH˚ |ü<ë\qTeTqeTT #ê˝≤ m≈£îÿe>± yê&ÉT‘·T+≤eTT. es¡Ôø£eTT nH |ü<äeTT edüTÔ ùde\ ø=qT>√\T neTàø±\≈£î dü+ã+~+∫q~.ø±ì yê´bÕs¡eTT nH |ü<äeTT˝À edüTÔùde\ ñ‘·Œ‹Ô qT+&ç n$ |ü+|æD° »]π> es¡≈£î ñqï nìï n+XÊ\T …ø£ÿ˝ÀìøÏekÕÔsTT. nq>± |ü]ÁX¯eT, es¡Ôø£eTT eT]j·TT yêÏøÏ nqTã+<äyÓTÆq nìï es¡Ôø£ düVü‰j·Tø±\T ø£\dæ ñ+≤sTT.

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yê´bÕs¡+ $X¯« yê´|üÔyÓTÆq ˇø£ Ä]∆ø£ ø±s¡ ø£ ≤|ü+. Ç~ edüTÔ ùde\ ‘·j·÷Ø qT+&ç $ìjÓ÷>∑+ es¡≈£î >∑\

6

Sale or exchange of goods and servicesDirectly or indirectly, business involves transfer or exchange of goods and services for value. If goodsare produced not for the purpose of sale but say for internal consumption, it cannot be called abusiness activity. Cooking food at home for the family is not business, but cooking food and selling itto others in a restaurant is business. Thus, one of the essential characteristics of business is that thereshould be sale or exchange of goods or services between the seller and the buyer.

Dealings in goods and services on a regular basisBusiness involves sale of goods or services on a regular basis. One single transaction of sale orpurchase cannot be considered as business. For example, if a person sells his domestic radio seteven at a profit, it will not be considered a business activity. But, if he sells radio sets regularly, it willbe regarded as a business activity.

Profit earningThe main characteristic of business is to earn income by way of profit. No business can survive forlong time without earning profit. That is why businessmen make all possible efforts to maximizeprofits, by increasing the volume of sales or reducing costs.

Uncertainty of returnEvery business invests money to run its activities with an objective of earning profit. But it is notcertain that the business will earn profit or bare loss. Even if we earn profits from business, wecannot assume what amount of profit will be earned. Also, there is always a possibility of losses beingincurred.

Element of riskRisk and profits are the two variables of every business. Risk is caused by some unfavorable eventsin the business. The risks are related with certain factors like changes in consumer tastes and fashions,changes in methods of production, strike or lockout in the work place, increased competition in themarket, fire, theft, accidents, natural calamities, etc.

1.1.3. SCOPE OF BUSINESS

The scope of business is very wide. Trade, business are very similar concepts and are also interlinked. Trade simply denotes purchase and sale of goods, whereas ‘business’ includes all activitiesfrom production to distribution of goods and services. It includes industry, trade and other activitieslike banking, transport, insurance, and warehousing which facilitate production and distribution ofgoods and services.

According to F.C. Hooper, “The whole complex field of commerce and industry, the basic industries,processing and manufacturing industries, the network of ancillary services : distribution, banking,insurance, transport and so on, which serve and inter-penetrate the world of business as a whole, arebusiness activities.”

7

ø±s¡ ø±˝≤bÕ\ düe÷Vü‰s¡+. ◊‘˚ yê´bÕs¡+ jÓTTø£ÿ |ü]~ ì\ø£&É>± ñ+&É<äT. Ç~ ø±\ e÷q |ü]dæÔ‘·T\ qTãÏº e÷s¡T‘·÷ ñ+≥T+~.

1. 1.4. yê´bÕs¡ <Û´j·÷\T

yê´bÕsêìøÏ <Û´j·÷\T n‘· +‘· eTTKýÓTÆq$. yê´bÕs¡ <Û´j·TeT+fÒ ∫e] |òü*‘·+ Ò<ë #˚s¡e\dæq >∑eT´+ Ò<ëyê´bÕs¡+˝À ‘êqT ∫es¡>± kÕ~Û+#ê\qT≈£îH˚ $wüj·T+. yê´bÕs¡ dü+düú jÓTTø£ÿ <Û´j·÷\˝À n‹ eTTKýÓTÆq~ edüTÔùde\q+~+#·&É+ <ë«sê ˝≤uÛ≤s¡®q.

yê´bÕs¡ dü+düú nH~ düe÷»+˝À ø£ uÛ≤>∑+. ø±ãÏº BìøÏ ø=ìï kÕe÷õø£ uÛ≤<ä ‘·\T ≈£L&Ü e⁄+≤sTT. ø±s=ŒπsŸkÕe÷õø£ uÛ≤<Ûä ‘· nH˚~ Bì˝À Á|ü<ÛëqyÓTÆq~. ˝≤uÛ≤s¡®qH˚ eTTK´ $~Û>± u≤$+#˚ ìsê«Vü≤≈£î\T $T–*q<Û˚ j·÷\qT $düà]+# neø±X+ ≈£L&Ü Òø£b˛ Ò<äT. ≤uÛÑ+ MT<ä m≈£îÿe <äwæº ô|Ïº $T–*q <Û˚ j·÷\qT e~*ydæqf…Æ¢‘düe÷»+˝À yê´bÕs¡ dü+düú\T eTq>∑\>∑ Òe⁄. $ìjÓ÷>∑<ës¡T\ dü+πøåeT+, ñ<√´>∑T\T, düe÷»+, Á|üuÛÑT‘·«+yÓTT<ä …’q nìï n+XÊ\≈£î ÁbÕ<Ûëq´‘· Çe«e\dæ ñ+≥T+~. düe÷»+˝Àì nìï $uÛ≤>±\qT |ü]>∑D˝ÀìøÏrdüTø=ì ˝≤uÛ≤s¡®q qT ø=qkÕ–+#·e\dæq nedüs¡+ m+‘Ó’Hê ñqï~.

˝≤uÛ≤\qT Ä]®+#·&É+yê´bÕs¡ dü+düú\ jÓTTø£ÿ Á|ü<Ûëq <Û´j·T+ ˝≤uÛ≤s¡®q. ‘êeTT düeT≈£L]Ãq eT÷\<Ûäq+ô|’ ‘·–q sêã&çì Ä•+∫yê´bÕs¡+ #˚j·T&É+ »s¡T>∑T‘·T+~. Á|ü‹ yê´bÕs¡+ ‘·–q+‘· ˝≤uÛ≤\qT dü+bÕ~+∫ e÷¬sÿŸ ˝À ‘·q e~›øÏ|ü⁄Hê<äT\T ydüTø=+≥T+~.

ñ‘êŒ<äø£‘·@ dü+düú nsTT‘˚ edüTÔ ùde\qT ñ‘·Œ‹Ô #˚dæ düeTs¡›e+‘·+>± n+~+#·>∑\T>∑T‘·T+<√ <ëìì ñ‘êŒ<äø£‘· À HÓ’|ü⁄D´+ñqï dü+düú >± #Ó|üŒã&ÉT‘·T+~. ñ‘êŒ<äø£‘· qT eTT&ç|ü<ësê∆\T eT]j·TT ñ‘êŒ<äø£ edüTÔe⁄\‘√ b˛*Ã #Ó|üŒe#·TÃ.Á|ü‹ yê´bÕs¡ dü+düú ‘·q≈£î n+<äTu≤≥T˝À ñqï eqs¡T\qT $ìjÓ÷–+#·Tø=+≥÷ ñ‘êŒ<äø£‘·· qT HÓ’|ü⁄Dé+‘·+>±ô|+bı+~+#·Tø√yê*.

e÷¬sÿŸ À dæús¡|ü&É≥+yê´bÕs¡ dü+düú e÷¬sÿŸ ˝À dæús¡ |ü&É≥+ nH˚~ ÁbÕ<Ûä$Tø£ <Û´j·T+. e÷¬sÿŸ ˝À ñqï $$<ä b˛°<ës¡T\qTm<äTs=ÿì $ìjÓ÷>∑<ës¡T\ ≈£î nedüs¡yÓTÆq, Äø£s¡D°j·TyÓTÆq, $\Te\‘√ ≈£L&çq edüTÔ ùde\q+~+#·&É+ e\q$ìjÓ÷>∑<ës¡T\≈£î ‘·|æÔ #˚≈£L]Ãqf…Æ¢‘˚ yê´bÕs¡ dü+düú\T e÷¬sÿŸ À ì\<=≈£îÿø√>∑\T>∑T‘êsTT.

qMø£s¡Dø=‘·Ô Ä˝À#·q\qT, ø=‘·Ô edüTÔ ùde\qT düwæº+#·&É+ qMø£s¡D>± #Ó|üŒe#·TÃ. á qMø£s¡D ¬s+&ÉT s¡ø±\T1.edüTÔ ùde\qT s¡÷bı+~+#·&É+˝À qMø£s¡D. 2. edüTÔ ùde\qT n+~+#·&É+˝À q÷‘·q‘ê«ìï Çe«&É+. Á|üdüTÔ‘·eTTqïb˛° Á|ü|ü+#·+˝À Á|ü‹ dü+düú q÷‘·q Ä$wüÿs¡D\qT s¡÷bı+~dü÷Ô ñ+&Ü* Òø£b˛‘ e÷¬sÿŸ À b˛°ì ‘·≥Tºø=q Ò<äT.

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The scope of business encompasses all human activities, which tend to satisfy needs and wants of thehuman beings living in a society. A large part of the business is concerned with providing the final orfinished products or goods to the people desiring them.

Business is universal and everywhere. It is essential to ensure the production and distribution ofgoods and services to satisfy the economic wants of people at a profit. The nature and scope ofbusiness are changing very quickly. The people, who are engaged in business, must have to cope withthe changing environment because the people’s attitudes, habits, tastes, likes and dislikes, norms,beliefs, values, perceptions and motives are changing with the change of time.

Business also deals not only with profit motto but also with social responsibility. Business organizationsproduce goods and services to generate profit but such activities create impact on society as well asthe whole community. The responsibility of businessman is to provide the goods and services in a waywhich is not harmful to the society.

1.1.4. OBJECTIVES OF BUSINESS

An objective is the starting point of business. Every business is directed to the achievement of certainobjectives, which refer to all that the business people want to get in return for what they do. It isgenerally believed that business activity is carried on only for profit. Business persons themselvesproclaim that their primary objective is to produce or distribute goods or services for profit

However, it is widely accepted that business enterprises are part of society and need to have severalobjectives, including social responsibility to survive and prosper in the long run. Profit is found to bethe leading objective but not the only one. Although earning profit cannot be the only objective ofbusiness, its importance cannot be ignored. Profit may be regarded as an essential objective ofbusiness for various reasons:

Too much emphasis on profit to the exclusion of other objectives can be dangerous for good business.Obsessed with profit, business managers may neglect all other responsibilities towards customers,employees, investors and society at large. They may even be inclined to exploit various sections ofsociety to earn immediate profit

Earning profitsOne of the objectives of business is to earn profits on the capital employed. Profitability refers toprofit in relation to capital investment. Every business must earn a reasonable profit which is veryimportant for its survival and growth.

ProductivityIf an enterprise is efficient in delivering goods and services, it is said to be good in productivity.Productivity is calculated by comparing the value of outputs with the value of inputs. In order to

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ensure continuous survival and progress, every enterprise must aim at greater productivity by thebest use of available resources.

Market standingMarket standing refers to the position of an enterprise in relation to its competitors. Business enterprisemust aim at standing on stronger footing in terms of offering competitive products to its customersand serving them to their satisfaction.

InnovationInnovation is the introduction of new ideas or methods in the way something is done or made. Thereare two kinds of innovation in every business (i) innovation in product or service; and (ii) innovationin the various skills and activities needed to supply them. No business enterprise can flourish in acompetitive world without innovation. Therefore, innovation becomes an important objective.

Physical and financial resourcesEvery business requires physical resources like plants, machines, offices, etc., and financial resources,i.e., funds to be able to produce and supply goods and services to its customers. The Businessenterprise must aim at acquiring these resources according to their requirements and use them efficiently.

Manager performance and developmentBusiness enterprises need managers to conduct and coordinate business activity. Various programmesfor motivating managers need to be implemented. Manager performance and development therefore,is an important objective. The enterprises must actively work for this purpose.

Worker performance and attitudeWorker’s performance and attitudes determine their contribution towards productivity and profitabilityof any enterprise. Management attitude towards workers in the enterprise determine the workersattitude. Therefore, every enterprise must aim at improving its workers performance. It should alsotry to ensure a positive attitude on the part of workers.

Social responsibilitySocial responsibility refers to the responsibility and obligation of business firms to contribute forsolving social problems and work for society surrounded to it in a socially desirable manner. Thus, abusiness enterprise must have multiple objectives to satisfy different individuals and groups, for itsown survival and prosperity.

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1.2..1 |ü]düsê\T

Environment nH |ü<ä+ Áô|ò+#Y uÛ≤wü ˝Àì Environ nH |ü<ä+ qT+&ç ñ<ä“$+∫+~. Bì ns¡∆+ #·T≥÷º ñqï|ü]düsê\T. eTq #·T≥÷º ñqï düJe nq>± eTqTwüß´\T, yÓTTø£ÿ\T , »+‘·Te⁄\T eT]j·TT ìØ®e ø±s¡ø±\T nq>± >±*,yÓ\T‘·Ts¡T, uÛÑ÷$T, ˙s¡T e+Ï yêÏì ø£*|æ |ü]düsê\T n+≤s¡T. düJe uÛ≤>±ìï düJe |üsêés¡D nì, ÁbÕD+Ò≈£î+&Ü ìØ®e+>± ñqï uÛ≤>±ìï uÛÖ‹ø£ |üsêés¡D+ nì |æ\TkÕÔs¡T.

Environment nH |ü<ä+ À Á|üø£‹ |üs¡yÓTÆq n+XÊ\T, kÕe÷õø£ n+XÊ\T kÕ+düÿ‹ø£ |üs¡yÓTÆq n+XÊ\T ø£\dæñHêïsTT. ˇø£ e´øÏÔ Ò<ë dü+düú ‘·q J$‘· >∑eTq+˝À ‘·q #·T≥÷º ñqï Á|üø£‹, >±*, ˙s¡T, düe÷»eTT, dü+düÿ‹eT]j·TT ‘·q J$‘êìï Á|üuÛ≤$‘·+ #ùd nìï n+XÊ\ ø£\sTTø£H |ü]düsê\T n+≤s¡T. á |üsêés¡D+ uÛÖ‹ø£|üsêés¡D+, kÕ+|òæTø£ |üsêés¡D+, eTH√Vü≤s¡yÓTÆq |üsêés¡D+, Ä]∆ø£ |üsêés¡D\T>± $uÛÑõ+#·e#·TÃ

1 .2. 2 . yê´bÕs¡ |ü]düsê\T

ªªªªªªyê´bÕs¡ dü+düú\ |üìrs¡TqT Á|üuÛ≤$‘·+ #j·TT n+XÊ\qT yê´bÕs¡ |ü]düsê\Tμμ nì ìs¡«∫+#·e#·TÃ . yê´bÕs¡ dü+düú\|üì, rs¡T‘ÓqTï\qT nHø£ n+XÊ\T Á|üuÛ≤$‘·+ #kÕÔsTT. yê´bÕs¡dü+düú\T düe÷»+˝À ø£ uÛ≤>∑+>± ìs¡«Væ≤+#·ã&ÉT‘·THêïsTTø±ãÏº düe÷»+˝À <Ó’q+~q n+XÊ\˝À @s¡Œ& e÷s¡TŒ\≈£î Á|ü‘· ø£å+>±qT, |üs√ø£å+>±qT Ç$ Á|üuÛ≤$‘·+ ne⁄‘êsTT.

yê´bÕsêìøÏ yêÏ |ü]düsê\≈£î n$HêuÛ≤e dü+ã+<ÛäeTT ñqï~. Á|üuÛ≤$‘·+ #ùd $$<Ûä ø±s¡ø±\qT, yêÏ Àìe÷s¡TŒ\qT m|üŒÏø£|ü⁄Œ&ÉT n<Ûä q+ #dæ, $X‚¢wæ+∫ ‘·–q yê´bÕs¡ ìs¡íj·÷\qT, Á|üD≤[ø£\qT ‘·j·÷s¡T#düTø=qe\dæqnedüs¡+ yê´bÕs¡ dü+düú\≈£î ñqï~.

düe÷»+˝À nHø£ |ü]düsê\ eT<ä yê´bÕs¡ dü+düú\T |üì #düTÔ+≤sTT. @ |ü]düsê\˝À yê´bÕs¡+ ‘·q ø±s¡ø£ ≤bÕ\qT ø=qkÕ–düTÔ+<√ yêÏH yê´bÕs¡ |ü]düsê\T nì |æ\TkÕÔs¡T. dü+düú≈£î yÓ\T|ü\ ø±ì Ò<ë ãj·T≥ ø±ì ñ+&ç,<ëìô|’ dü+düú≈£î ìj·T+Á‘·D≤~Ûø±s¡+ ñHêï , Ò≈£îHêï yê´bÕsêìï Á|üuÛ≤$‘·+ #ùd nìï n+XÊ\ düe÷Vü‰sêìïªªyê´bÕs¡ |ü]düsê\Tμμ >± ù|s=ÿqe#·TÃ.

1.2.3. yê´bÕs¡ |ü]düsê\T- \ø£åD≤\T

Business Environment has been defined by Bayard O. Wheeler as “the total of all thingsexternal to firms and industries which affect their organization and operation”.

Keith and Davis defines “Business environment is the aggregate of all conditions eventsand influences that surround and affect it.”

As per the definition of S.P. Robbins and Mary Colters “Business environment refers toinstitution or forces that effect the organizations performance”.

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1. 2. BUSINESS ENVIRONMENT

1. 2.1. ENVIRONMENTThe word Environment is derived from the French word “Environ” which means “surrounding”.Our surrounding includes biotic factors like human beings, Plants, animals, microbes etc and abioticfactors such as light, air, water, soil etc.

The environment may comprise a combination of natural, social and cultural conditions which impactthe life of a person or community through broad application to the surroundings. This means thatenvironmental issues such as pollution, crime and noise should be considered. Environment is the sumof conditions in which an organism has to survive or maintain its life process. It influences the growthand development of living organism.

In other words, environment refers to those factors that surrounds living beings from all sides andaffect their lives . It consists of atmosphere, hydrosphere, lithosphere and biosphere. It’s chiefcomponents are soil, water, air, organisms and solar energy. It has provided us all the resources forleading a comfortable life.

1.2.2. BUSINESS ENVIRONMENT

The environment of any organization is the aggregate of all conditions, events and influences thatsurround and affect it. Business environment encompasses the ‘climate’ or set of conditions whichinclude economic, social, political or institutional in which business operations are conducted. It consistsof several factors that affect the functioning, growth, profitability of the business. Factors that constitutea business environment are customers, suppliers, competitors, investors, technology, economicconditions, government etc. All these factors affect the success or failure of any business and bringseveral opportunities, threats, and challenges to it.

According to Barry M. Richman and Melvgn Copen “Environment consists of factors that arelargely if not totally, external and beyond the control of individual industrial enterprise and theirmanagements. These are essentially the ‘givens’ within which firms and their management must operatein a specific country and they vary, often greatly, from country to country”.

William F. Glucck defines business environment “as the process by which strategists monitor theeconomic, governmental, market, supplier, technological, geographic, and social settings to determineopportunities and threats to their firms.

From the above definitions we can extract that business environment consists of factors that areinternal and external which affect or influence the business. Proper understanding of the businessenvironment helps in framing better strategies as per business opportunities and enhances the overallperformance.

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1.2.3. CHARACTERISTICS OF BUSINESS ENVIRONMENT

Totality of External ForcesBusiness environment is the mix of all those factors/forces which are available outside the businessand over which the business has no control. It is the group of many such forces that influence thebusiness.

Specific and General ForcesThe forces present outside the business can be divided into two parts

Specific:These forces affect the firms of an industry separately, e.g., customers, suppliers, competitivefirms, investors and the like.

GeneralThese forces affect all the firms of an industry equally, e.g., social, political, legal and technical situations.InterrelatednessThe different factors of business environment are co-related. The effect of one factor may influencemany other factors. For example, let us suppose that there is a change in the import-export policywith the coming of a new government.

In this case, the coming of new government to power and change in the import-export policy arepolitical and economic changes respectively. Thus, a change in one factor affects the other factor.

Dynamic NatureAs it is clear that environment is a mixture of many factors and changes in some or the other factorscontinue to take place. Therefore, it is said that business environment is dynamic.

UncertaintyNothing can be said with any amount of certainty about the factors of the business environmentbecause they continue to change quickly. The professional people who determine the business strategytake into consideration the likely changes beforehand.

But this is a risky job. For example, technical changes are very rapid. Nobody can anticipate thepossibility of these swift technical changes. Anything can happen, anytime. The same is the situation offashion.

ComplexityEnvironment comprises of many factors. All these factors are related to each other. Therefore, theirindividual effect on the business cannot be recognised. This is perhaps the reason which makes itdifficult for the business to face them.

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RelativityBusiness environment is related to the local conditions and this is the reason as to why the businessenvironment happens to be different in different countries and different even in the same country atdifferent places.

1.2.4. IMPORTANCEAND SCOPE OF BUSINESSENVIRONMENT

Proper understanding of the business environment helps in framing better strategies as per businessopportunities and enhances the overall performance. Scope of Business Environment is explained inpoints as given below:

Identifies Business Opportunities and ThreatsBusiness environment helps business in identifying various opportunities and threats. When a businessis able to detect market opportunities intime, it can easily take advantage of such opportunity atearliest. It can earn maximum returns by availing such opportunity before the competitors. By properinteraction between business and its environment all threats can be easily detected. It will enablebusiness in taking corrective measures intime.

Helps in Planning and Policy FormulationProper understanding of business environment helps in formulating better policies and strategies. Itconveys all current information regarding market conditions to business. All opportunities and threatsare scanned through the study of the business environment. Businessmen are properly aware ofenvironment and thereby take all decisions according to it. Their entire plan can be changed effectivelyand efficiently through environmental awareness.

Provides Useful ResourcesBusinesses depend on the environment in which they operate for several resources. Businessenvironment supplies several inputs like raw materials, capital and labour which are used by thebusiness for its operations. These inputs are converted into goods and services for satisfying theneeds of the market. Without proper supply of inputs, business cannot continue its operations. It isfully dependent upon environment for taking inputs and delivering the required goods or services.

Improves PerformanceBusiness environment has an effective role in accelerating the overall performance of businessorganizations. Through continuous environmental awareness, managers update their knowledge andskills. Environmental study serves as the medium of educating management. Monitoring of environmentprovides qualitative information which helps in developing strategic thinking. It enables managers toadopt suitable management practices to control and improve the performance of businesses.

Helps in Coping with Rapid ChangesFactors which constitute business environment are dynamic in nature. They keep changing continuouslyfrom time to time. These changes include changes in customer’s preferences, fashion, technology,economic conditions etc.

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yê´bÕs¡ dü+düúqT n_Ûe~› #˚j·TT≥≈£î Ç~ Á|üj·T‹ïdüTÔ+~.

yê´bÕs¡ Á|ü‹wü ô|+#·T‘·T+~|ü]düsê\ n<Ûä j·Tq+ <ë«sê düe÷C≤ìøÏ ø±e\dæq nedüsê\T >∑T]Ô+#·e#·TÃ. ‘·<ë«sê $ìjÓ÷>∑<ës¡T\qTdü+‘·|æÔ |üs¡#·e#·TÃ. n+<äTe\q $ìjÓ÷>∑<ës¡T\T yê´bÕs¡ dü+düú |ü≥¢ eT+∫ uÛ≤eqqT ø£*– ñ+≤s¡T. Ç~yê´bÕs¡ Á|ü‹wü qT ô|+#·T‘·T+~.

b˛°ì ‘·≥Tºø=qT≥˝À düVü≤ø£]düTÔ+~|ü]düsê\ n<Ûä j·Tq+ <ë«sê Á|üdüTÔ‘· yê´bÕs¡ Á|ü|ü+#·+˝À ñqï b˛° ì n+#·Hê y˚dæ Ä b˛°ì ‘·≥Tºø=qT≥≈£îø±e\dæq Á|üD≤[ø£\qT ‘j·÷s¡T #˚j·Te#·TÃ. dü+düú ≈£î ñqï düyêfi¢qT m<äTs=ÿq e#·TÃ. Á|üD≤[ø±j·TT‘·yÓTÆqn<Ûä j·Tq+<ë«sê b˛°ì , düyêfi¢qT n~Û>∑$T+∫ n_Ûe~› kÕ~Û+#·e#·TÃ.

KEY TERMS

1. Business: Business is a Continuous activity involved making and selling products or serviceswith profit motto.

2. Business enterprise: Business enterprise refers to a person or organisation spotting a businessopportunity and setting up a business.

3. Profit: Financial gain, especially the difference between the amount earned and the amountspent in buying, operating, or producing something.

4. Insurance: An arrangement/ agreement by which a company undertakes to provide a guaranteeof compensation for specified loss, damage, illness, or death in return for payment of a specifiedpremium.

5. Capital investment: A capital investment is defined as a sum of cash acquired by a company topursue its objectives, such as continuing or growing operations. It also can refer to a company’sacquisition of permanent fixed assets such as property, plant and equipment.

6. Economic activity: An economic activity is a process that, based on inputs, leads to themanufacture of a good or the provision of a service.

7. Strategies: a plan of action designed to achieve a long-term or overall aim.

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Proper understanding of the business environment helps business in detecting all these frequentlyoccurring changes easily. It enables them in dealing with these changes efficiently by taking appropriateactions at right time. Managers through continuous monitoring of environment are sensitive to suchchanges and respond accordingly.

Enhances Business ImageBusiness through proper understanding of its environment are able to improve its public image. Theyare more responsive and sensitive to the environmental needs through proper knowledge of businessenvironment. Study of environment provides them information for making realistic plans andimplementing them effectively. Businesses are able to provide better service and serve the interest ofentire society. People are happy with the business and develop confidence towards it. This enables indeveloping a better image in market.

Assists in Facing CompetitionBusiness environment communicates all details about competitors in market to business. Awarenessregarding the actions and strategies of competitors is crucial for every business for meeting competitioneffectively. It helps business in formulating plans and policies in accordance with the competitor’sactions. Businesses are able to face challenges and competition in market through systematic planningin an efficient way.

KEY TERMS

8. Environment: Environment means anything that surround us. It can be living or non-living things.It includes physical, chemical and other natural forces.

9. Biotic: The biotic factors of an ecosystem are all the living organisms that affect other organismsin an ecosystem and include animals, plants, microorganisms, dead organisms, and even animalwaste.

10. Abiotic: Abiotic environment includes all the nonliving factors and processes in an ecosystem.Sunlight, soil (with its parameters-like acidity), water, wind, humidity, for example, are all importantabiotic factors that interact with each other and affect living organisms.

11. Financial Resources: Financial resources is a term covering all financial funds of the organization.It is the set of liquid assets of an organization, including cash, bank deposits and liquid financialinvestments.

12. Business Environment: It is the sum total of all the factors that can influence a business.

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TEST YOUR UNDERSTANDING

1. Which of the following is not an economic activity?A) A doctor practicingB) A lawyer practicing lawC) A professional cricketer playing cricketD) A student playing cricket

2. Which of the following is not a characteristic of a business?A) Production of goods and servicesB) Sale or exchange of goods and servicesC) Profit earningD) Certainty of return

3. Which of the following is an objective of a business?A) InnovationB) Worker performance and attitudeC) Social responsibilityD) All the above

4. The main objective of business in society is ______________.A) Economic and social objective.B) Cultural objective.C) Technological objective.D) No objective.

5. A housewife preparing a meal for her kids is not considered a business activity becauseA) Doesn’t involve production of anything newB) Doesn’t involve profit mottoC) Doesn’t fulfil human wantsD) All the above

6. The term business environment refers to ……..factors which impact functioning of a firmA) External factorsB) Internal factorsC) Management related factorsD) Internal and External factors

7. Which of the following is not a feature of Business EnvironmentA) Interrelated elements

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B) Dynamic natureC) ComplexityD) Continuity

8. Which of the following is not a General force on a businessA) Political situationB) Social situationC) Competitive firmsD) Legal situation

9. Factors which are beyond the control of a business are called…..A) SupplyB) DemandC) ProfitD) External factors

10. Which of the following is the useful outcome of the study of businessA) Identifies Business Opportunities and ThreatsB) Helps in Planning and Policy FormulationC) Helps in Coping with Rapid ChangesD) All the above

ANSWERS

INERACTIVE LINKS

http://ssbnc.in/files/bcommaterial/BE.pdf

https://egyankosh.ac.in/bitstream/123456789/13821/1/Unit-1.pdf

FOR ADVANCED LEARNERS…

Prepare a list of all the Occupations in your locality and Identify Business among them.

Select any Five Local Businesses and List out the factors which influence them.

1 2 3 4 5 6 7 8 9 10

D D D A D D D C D D

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Dimensions of Business

Environment and Environmental Analysis

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the dimensions of Business Environment 2. define Internal and External Environment and their components 3. examine the relations between environment and business 5. differentiate the Micro and Macro dimensions of Business Environment 6. judge the better environment for Business 7. suggest suitable Environmental Analysis techniques for a business.

Chapter

2

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Chapter Layout: 2.1. Dimensions of Business Environment

2.1.1. Internal Environment 2.1.2. External Environment 2.1.2.1. Macro Environment 2.1.2. 2. Micro Environment 2.1.3. Environment and Business Relations

2.2. Environmental Analysis 2.2.1. Objectives of Environmental Analysis 2.2.2. Environmental Scanning 2.2.3. Environmental Forecasting 2.2.4. SWOT Analysis

2.2.5. PESTEL Analysis

CHAPTER OVERVIEW

All the factors that can influence businesses are classified based on theirfeatures such as their specificity towards a business, their level of impacton a business and to what level a business can manage them, theirconnection with the businesses and their point of presence with respect toa business. The present chapter tries to bring out various factors that caninfluence businesses and classify them among different dimensions ofbusiness environment.

Being aware of what issues can affect businesses and how they can affect abusiness is very important in making decisions. A study focused on how toidentify these issues or factors is called as environmental analysis. Onemust also have an idea of what changes might take place in businessenvironment in future to keep oneself prepared and make decisions. Thisis called as environmental forecasting. Environmental scanning refers toprocess by which one keeps an eye on business environment. Presentchapter throws a light on objectives of environmental analysis, defineenvironmental forecasting and bring out different methods of environmentalscanning like SWOT analysis and PESTLE analysis.

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2.1.yê´bÕs¡ |ü]düsê\ eØZø£s¡D

yê´bÕs¡ ø±s¡ ø£ ≤bÕ\qT Á|ü‘· ø£å+>± >±ì |üs√ø£å+>± >±ì Á|üuÛ≤$‘·+ #ùd ø±s¡ø±\qT $$<ä esêZ\T>± $uÛÑõ+#·&É+»]–+~. BìH˚ yê´bÕs¡ |ü]düsê\ eØZø£s¡D n+≤s¡T. yê´bÕs¡ eédüú ‘√ ñqï dü+ã+<ëìï ãÏº yê´bÕs¡|ü]düsê\qT #ê˝≤ s¡ø±\T>± $uÛÑõ+#·&É+ »]–+~. MÏ À eTTKýÓTÆq~ 1. n+‘·s¡Z‘· |ü]düsê\T 2. ãVæ≤s¡Z‘·|ü]düsê\T.

n+‘·s¡Z‘· |ü]düsê\T kÕ<Ûës¡D+>± eédüújÓTTø£ÿ |ü]~ À ñ+&ç yêÏì dü+düú ìj·T+Á‘·D #ùd $<Ûä+>± ñ+≤sTT.Ç$ #ê˝≤ düT\uÛÑ+>± ìj·T+Á‹+#·e#·TÃ. ø±ì ãVæ≤s¡Z‘· |ü]düsê\T n+‘· düT\uÛÑ+>± e÷s¡Ã ÒeTT. Ç$ dü+düújÓTTø£ÿ |ü]~Û À ñ+&Ée⁄. Ä]∆ø£ |ü]düsê\T, kÕe÷õø£ eT]j·TT kÕ+düÿ‹ø£ |ü]düsê\T, Á|üuÛÑT‘·« eT]j·TTHê´j·÷‘·àø£ |ü]düsê\T, »HêuÛ≤ |ü]düsê\T, uÛÑ÷uÛÖ‹ø£ |ü]düsê\T yÓTT<ä …’qyêÏì ãVæ≤s¡Z‘· |ü]düsê\T >± #Ó|üŒe#·TÃ.Ç$ ìj·T+Á‹+#· Òì $<Ûä+>± ñ+≤sTT.

2.1.1. n+‘·s¡Z‘· |ü]düsê\T

yê´bÕs¡ eédüú≈£î n+‘·s¡+–ø£+>± ñ+≥÷ yê´bÕs¡ eédüú #Ó|ü⁄Œ#˚‘·\˝À ñ+&˚ ø±s¡ø±\qT n+‘·s¡Z‘· |ü]düsê\Tn+≤s¡T. yê´bÕs¡ dü+düú\T ìs¡íj·÷\T rdüTø√e&É+˝À Ç$ Á|ü<Ûëq bÕÁ‘· eVæ≤kÕÔsTT. MÏ À eTTKýÓTÆq$.

$\Te\ $<ÛëqeTTÁ|ü‹ yê´bÕs¡ dü+düú ‘·q ø±s¡ ø±˝≤bÕ\qT ø=qkÕ–+#·&É+˝À ø=ìï $\Te\qT bÕÏdüTÔ+≤sTT. á $\Te\ÁbÕ‹|ü~ø£>±H˚ ‘·qjÓTTø£ÿ yê´bÕs¡ ìs¡íj·÷\qT, Á|üD≤[ø£\qT s¡∫+#·Tø=+≤sTT. @ dü+düú ◊‘˚ $\Te\≈£î ‘·–qÁbÕ<Ûëq´‘· qT ÇdüTÔ+<√, Ä dü+düú\T e÷Á‘·y˚T Bs¡È ø±\+˝À ‘·–q $»j·÷\qT kÕ~ÛkÕÔsTT. á $\Te\ $<Ûëq+qT Ä<Ûës¡+ #˚düTø=ì ø=ìï ø£+ô|˙\T ‘·eT dü|ü¢j·TsY‡, |ü+|æD°<ës¡T\qT eT]j·TT düVü≤#·s¡ ø£+ô|˙\qTìs¡ísTT+#·Tø=+≥T+~.

dü+düú $<ÛëqeTT eT]j·TT <Û´j·÷\TÁ|ü‹ yê´bÕs¡ dü+düú ‘·q yê´bÕs¡+ jÓTTø£ÿ ñ<›XÊ\T, nqTdü]+#·e\dæq $<ÛëqeTT eT]j·TT dü+düú <Û´j·÷\qT

Fig-2.1

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2.1. DIMENSIONS OF BUSINESS ENVIRONMENT

The dimension of the business environment refers to the factors and forces which constitute direct orindirect influence over business activities. On the basis of the extent of relation with the organization,the environmental factors are classified into different types or levels. There are broadly two types, theinternal environment and external environment.

The internal factors are generally regarded as controllable factors because the company has controlover these factors, these factors can be easily managed. The external factors are beyond the controlof a company. The external environmental factors such as the economic factors, socio-cultural factors,government and legal factors, demographic factors and geo-physical factors are regarded asuncontrollable factors.

Some of the external factors have a direct and close impact on the firm. These factors are classifiedas micro environment. There are other external factors which affect an industry very generally. Theyare called macro environment, general environment or remote environment.

2.1.1. INTERNAL ENVIRONMENT

The important internal factors which have a bearing on the strategy and other decisions are calledinternal environment of the business. They include a value system, Vision, Mission and Objectives,Management Structure and Nature, Internal Power Relationship, Human Resources and CompanyImage and Brand Equity.

Value SystemThe value system of the founders and those at the helm of affairs has important bearing on the choiceof business, the mission and objectives of the organization, business policies and practices. It is awidely acknowledged fact that the extent to which the value system is shared by all in the organizationis an important factor contributing to success. The value system and ethical standards are also amongthe factors evaluated by many companies in the selection of suppliers, distributors and collaborators.

For example the value system of JRD Tata and the acceptance of it by others who matter wereresponsible for the voluntary incorporation in the Articles of Association of TISCO, its social andmoral responsibilities to consumers, employees, shareholders, society and the people.

After the EID Parry group was taken over by the Murugappa group, one of the most profitablebusinesses (liquor) of the ailing Parry group was sold off as the liquor business did not fit into the valuesystem of the Murugappa group.

Vision, Mission and ObjectivesThe business domain of the company, priorities, direction of development, business philosophy, businesspolicy etc., are guided by the vision mission and objectives of the company.

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ìs¡ísTT+#·Tø=ì <ëìø£qT>∑TD+>± Á|üD≤[ø£\qT dü+kÕú>∑‘· ìs¡íj·÷\qT rdüTø=ì eTT+<äT≈£î b˛‘·T+~. MÏHê<Ûës¡+>±Hdü+düú\ jÓTTø£ÿ |üìrs¡T eT]j·TT dü+düú $»j·÷\T n+#·Hê yj·T&É+ »s¡T>∑T‘·T+~. ø£ dü+düú jÓTTø£ÿ ÁbÕeTTK´‘·\T,n_Ûe~› #·s¡ \T, yê´bÕs¡ dæ<ë›+‘ê\T yÓTT<ä …’q$ $»Hé-$TwüHé eT]j·TT \øå±´\T Á|üuÛ≤$‘·+ #˚kÕÔsTT.

ìs¡«Vü≤D ≈£Ls¡TŒ -dü«uÛ≤eeTTyê´bÕs¡ dü+düú\jÓTTø£ÿ ìs¡«Vü≤D $<ÛëqeTT, uÀsY¶ Ä|òt &Ó’¬sø£ºsY‡ ìj·÷eTø£+, yê] jÓTTø£ÿ HÓ’|ü⁄D´‘·\T eédüú jÓTTø£ÿìs¡«Vü≤DqT Á|üuÛ≤$‘·+ #˚kÕÔsTT. ìsê«Vü≤≈£î\T rdüTø=H˚ ìs¡íj·÷\T Ä<Ûës¡+>± yê´bÕs¡+ jÓTTø£ÿ $»j·T+ Ä<Ûës¡|ü&ç ñ+≥T+~. ø=ìï eédüú\˝À ìs¡«Vü≤D ≈£Ls¡TŒ dü]>± Òø£b˛‘˚ ìs¡íj·÷\T rdüTø√e&É+˝À Ä\dü + ø±e#·TÃ.Ç~ yê´bÕsêìï rÁe+>± Á|üuÛ≤$‘·+ #˚düTÔ+~.

n+‘·s¡Z‘· n~Ûø±s¡eTT\T - dü+ã+<ë\Teédüú À ô|’ kÕúsTT y˚TH˚CŸ yÓT+Ÿ n+~+#˚ düVü‰ø±sêìï ãÏº ÁøÏ+<ä kÕúsTT˝À |üì#˚ùd $$<ä $uÛ≤>±\ n~Û|ü‘·T\ñ<√´>∑T\ |üì‘·q+ Á|üuÛ≤$‘·eTÚ‘·T+~ . &Ó’¬sø£ºs¡¢ uÀs¡T¶, y˚TH˚õ+>¥ &Ó’¬sø£ºsY, $$<ä $uÛ≤>±\ y˚TH˚»s¡T¢, $$<ä$uÛ≤>±\ ñ<√´>∑düTÔ\ eT<Ûä ñqï dü+ã+<ä+ yê´bÕs¡ ìs¡íj·÷\≈£î eT]j·TT yê´bÕs¡ $»j·÷ìøÏ <√Vü≤<ä |ü&ÉT‘·T+~.

e÷qe eqs¡T\Tdü+düú\ ˝À |üì#˚ùd e÷qe eqs¡T\ s¡÷bÕ …’q HÓ’|ü⁄D≤´\T, ˙‹ ìj·Te÷\T, ìã<ä›‘· e+Ï$ dü+düú\ jÓTTø£ÿã˝≤\T eT]j·TT ã\V”≤q‘·\T>± ne‘·]kÕÔsTT. düe÷»eT˝À e÷s¡T‘·Tqï |ü]dæÔ‘·T\qT ãÏº dü+düúqT e÷s¡TÃø√e&ÜìøÏø=ìï dü+düú\˝À ñ<√´>∑düTÔ\T düTeTTK‘· #·÷|ü Òø£b˛e#·TÃ. ø=ìï dü+düú\ Àì yês¡T #ê˝≤ düT\uÛÑ+>± e÷s¡TŒqTÁb˛‘·‡Væ≤kÕÔs¡T, nqT>∑TD+>± e÷s¡‘ês¡T.

Ç~ dü+düú≈£î dü+düú≈£î eT<Ûä e÷s¡T‘·÷ ñ+≥T+~. mø£ÿ&Ó’‘˚ e÷qe eqs¡T\T dü+düú≈£î nqT≈£L\+>± ñ+≤jÓ÷nø£ÿ&É dü+|üPs¡í $»j·T+ \_ÛdüTÔ+~.

dü+düú Á|ü‹wü eT]j·TT Áu≤+&é áøÏ«°dü+düú\ jÓTTø£ÿ eTqT>∑&É ‘·q ≈£îqï ù|s¡TMT<ä Ä<Ûës¡|ü&ç ñ+≥T+~. dü+düú\≈£î $‘·Ô düVü‰j·T+, dü+jÓ÷>±\TyÓTT<ä\>∑T dü+<Ûësê“¤\˝À dü+düú≈£îqï Á|ü‹wü˜ u≤>± ñ|üjÓ÷>∑ |ü&ÉT‘·T+~. e÷¬sÿÏ+>¥ eT<Ûäés¡TÔ\qTìs¡ísTT+#·Tø√e&É+˝ÀqT, neTàø£|ü⁄ ø±+Á≤≈£îº\qT, ø=‘·Ô edüTÔe⁄\ ‘·j·÷Ø Àq÷ á Á|ü‹wü ñ|üjÓ÷>∑ |ü&ÉT‘·T+~.Áu≤+&é áøÏ«° ≈£L&Ü #ê˝≤ dü+<Ûäsê“\˝À dü+düú ≈£î ñ|üø£]düTÔ+~. Ç+ø± nH˚ø£ s¡ø± …’q n+‘·s¡Z‘· |ü]düsê\Tyê´bÕsêìï Á|üuÛ≤$‘·+ #˚kÕÔsTT n$.dü+düú≈£îqï ÄdüTÔ\T, dü<äTbÕj·÷\T, ñ‘·Œ‹Ô düeTs¡∆‘·, kÕ+πø‹ø£‘·qT ñ|üjÓ÷–+#·Tø=q&É+ yÓTT<ä\T>∑Tq$ yê´bÕs¡+˝À b˛°ì ‘·≥Tºø=q&É+ À ñ|üø£]kÕÔsTT. |ü]XÀ<Ûäq eT]j·TT n_Ûe~›,kÕ+πø‹ø£ ã˝≤\T yÓTT<ä …’q$ q÷‘·q edüTÔe⁄\qT n_Ûe~› #˚j·T&É+˝À düVü≤ø£]kÕÔsTT.

e÷¬sÿÏ+>¥ eqs¡T\T, eT<Ûä es¡TÔ\T, Áu≤+&é $\Te, |ü+|æD° HÓŸ esYÿ yÓTT<ä …’q$ dü+düú jÓTTø£ÿ e÷¬sÿÏ+>¥HÓ’|ü⁄D≤´ìï yÓTs¡T>∑T|üs¡kÕÔsTT. dü+düú jÓTTø£ÿ $‘·Ô $<ÛëHê\T, Á<äe´‘·« dæú‹, eT÷\<Ûäq kÕÔsTT yÓTT<ä …’q$ ≈£L&Üyê´bÕs¡+ jÓTTø£ÿ kÕÔsTTì Á|üuÛ≤$‘·+ #˚düTÔ+~.

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for example..Ranbaxy’s thrust into the foreign markets and development has been driven by its mission“to become a research based international pharmaceutical company.

Management Structure and NatureThe organizational structure, the composition of the Board of Directors, extent of professionalisationof management etc., are important factors influencing business decisions. Some management structuresand styles delay decision making while some others facilitate quick decision making.

The share-holding pattern can have important managerial implications. There are very large companieswhere majority of the share is held by the promoters like Wipro and there are large firms where thepromoters’ position is very vulnerable like the Tata group of companies. Financial institutions havelarge share holding in many Indian companies. The stand of nominees of financial institutions can bevery decisive in several critical instances.

Internal Power RelationshipFactors like the amount of support the top management enjoys from different levels of employees,shareholders and Board of Directors have important influence on the decisions and theirimplementation. The relationship between the members of Board of Directors and between the chiefexecutive and the Board are also critical factors.

Human ResourcesThe characteristics of the human resources like skill, quality, morale, commitment, attitude etc., couldcontribute to the strength and weakness, of an organization. Some organizations find it difficult tocarry out restructuring or modernization because of resistance by employees whereas they are smoothlydone in some others. The involvement, initiative etc., of people at different levels may vary fromorganization to organization. The organizational culture and overall environment have bearing onthem.

Company Image and Brand EquityThe image of the company matters while raising finance, forming joint ventures or other alliances,soliciting marketing intermediaries, entering purchase or sale contracts, launching new products etc.Brand equity is also relevant in several of these cases.

Miscellaneous FactorsThere are a number of other internal factors which contribute to the business success or influence thedecision-making. They include the following.

Physical assets and facilities like the production capacity, technology and efficiency of theproductive apparatus, distribution logistics etc., are among the factors which influence thecompetitiveness of a firm.

R & D and Technological Capabilities, among other things, determine a company’s abilityto innovate and compete.

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Marketing Resources like the organization for marketing, quality of the marketing men, brandequity and distribution network have direct bearing on marketing efficiency. They are alsoimportant for brand extension, new product introduction etc.

Financial factors like financial policies, financial position and capital structure are also importantinternal environment affecting business performances, strategies and decisions.

2.1.2. EXTERNAL ENVIRONMENTThe term business environment, generally, refers to external environment and includes factors whichare outside the control of the enterprise. Some of the external factors have a direct and intimateimpact on the business enterprise. These factors are classified into micro environment and macroenvironment.

2.1.2.1 . MICRO ENVIRONMENT“The micro environment consists of the factors in the company’s immediate environment that affectsthe performance of the company. These include the suppliers, marketing intermediaries, competitors,customers and the public”

It is quite obvious that the micro environmental factors are more intimately linked with the company.The micro forces need not necessarily affect all the firms in a particular industry in the same way.Some of the micro factors may be particular to a firm.

SuppliersAn important force, in the micro environment of a company is the suppliers. The suppliers are thosewho supply the inputs like raw materials and components to the company. The importance of reliablesources of supply to the smooth functioning of the business is obvious. Uncertainty regarding thesupply or other supply constraints often compels companies to maintain high inventories causing costincreases.

It had been pointed out that factories in India maintained indigenous stocks of 3-4 months and importedstocks of 9 months as against an average of a few hours to two weeks in Japan. The liberalization,however, has caused a significant change in the situation.

Because of the sensitivity of the supply, many companies give high importance to Vendor development.Vertical integration where feasible, helps to solve the supply problem.

CustomersThe major task of a business is to create and sustain customers. A business exists only because, of itscustomers. Monitoring the customer sensitivity is, therefore, a prerequisite for the business’ success.A company may have different categories of consumers like individuals, households, industries andother commercial establishments, government and other institutions.

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$ìjÓ÷>∑<ës¡T\T@ yê´bÕs¡ eédüú¬ø’Hê $ìjÓ÷>∑<ës¡T\T n‘· +‘· Á|ü<ÛëqeTT. yê´bÕs¡ eédüú ø±s¡ ø£ ≤bÕ\˙ï $ìjÓ÷>∑<ës¡T\nedüsê\qT e÷s¡T‘·Tqï ø√¬sÿ\qT, n_Ûs¡T#·T\qT, n\yê≥¢qT >∑eTì+∫ yêÏì ‘·|æÔ |üs¡#˚$<Ûä+>± ‘·eTø±s¡ ø£ ≤bÕ\qT n_Ûe~› #˚düTø√yê* Òø£ b˛‘˚ yêÏ eTqT>∑&Éπø Á|üe÷<äy˚Ts¡Œ&ÉT‘·T+~.

ˇø£ÿs¡T Òø£ ø=~›eT+~ $ìjÓ÷>∑<ës¡T\T ñqïf…Æ¢‘˚ Äj·÷ dü+düú\≈£î uÒs¡e÷&˚ X¯øÏÔ ñ+&É<äT. ø=ìï dü+<Ûësê“¤\˝Àdü+düú\qT eT÷ùdy˚j·Te\dæq |ü]dæú‹ ñ+≥T+~. ø±ãÏº dü+düú\T kÕ<Ûä yÓTÆq+‘· m≈£îÿe eT+~ $ìjÓ÷>∑<ës¡T\Tñ+&˚≥≥T¢ #·÷düTø√yê*.

>√¢ã …’CÒwüHé e∫Ãq ‘·sê«‘· dü+düú\T jÓTTø£ÿ |ü]düsê\T <X m\¢\T <ëÏ Á|ü|ü+#·+ n+‘·ÏøÏ $düÔ]+#êsTT. e÷¬sÿŸ≈£L&Ü Á|ü|ü+#· b˛°øÏ yÓ*¢+<äì #Ó|üŒe#·TÃ. Ç|ü⁄Œ&ÉT uÛ≤s¡‘· $ìjÓ÷>∑<ës¡T\T Á|ü|ü+#· $ìjÓ÷>∑<ës¡T\T >±e÷sês¡T. b˛° K+&Ü‘·sê\T <ëÏ+<äì #Ó|üŒe#·TÃ.

b˛°<ës¡T\Tyê´bÕs¡ eédüú\ |üìrs¡T b˛°<ës¡T\ô|’ Ä<Ûës¡ |ü&ç e⁄+≥T+<äq&É+˝À n‹XjÓ÷øÏÔ Ò<äT. dü+düú jÓTTø£ÿ edüTÔe⁄\≈£îdüe÷qyÓTÆq edüTÔe⁄\T Ò<ë Á|ü‘êé÷ïj·T edüTÔe⁄\qT ‘·j·÷s¡T #˚ùd dü+düú\T e÷¬sÿŸ ˝À b˛°<ës¡T\T>±uÛ≤$+#·ã&É‘ês¡T. ø£ $ìjÓ÷>∑<ës¡T ‘êqT Ks¡TÃô|≥º<ä\#·Tø=qï yÓTT‘êÔìï <˚ìô|’ ñ+#ê* nH˚ dü+<äs¡“¤+˝À áb˛°<ës¡T\ edüTÔe⁄\T Ò<ë Á|ü‘êé÷ïj·T edüTÔ\T Á|üuÛ≤e+ #·÷|ü⁄‘êsTT. ø±ãÏº b˛°<ës¡T\T>± ì*#˚ dü+düú\TÒ<ë Ç‘·s¡ Á|ü‘êé÷ïj·T dü+düú\T yê´bÕs¡ eédüú\ |üìrs¡TqT Á|ü‘· ø£å+>± eT]j·TT |üs√ø£å+>± Á|üuÛ≤$‘·+ #kÕÔsTT.

e÷¬sÿÏ+>¥ eT<Ûä es¡TÔ\T@ yê´bÕs¡ eédüú¬ø’Hê e÷¬sÿÏ+>¥ nedüsê\T rs¡Ã&ÜìøÏ |ü+|æD°<ës¡T\T eTTK´ bÕÁ‘· eVæ≤kÕÔs¡T . Äj·÷yê´bÕs¡ dü+düú\≈£î ø±e\dæq eTT&çdüs¡T≈£î, Ä]∆ø£ eqs¡T\T, s¡yêD≤ dü<äTbÕj·÷\T, ;Ûe÷ kÂø£sê´\T yÓTT<ä …’qnHø£ n+XÊ\˝À |ü+|æD°<ës¡T\ô|’ Ä<Ûës¡|ü&É‘êsTT. á kÂø£sê´\˙ï dü¬s’q düeTj·T+˝À n+~+#·Tq≥T¢ |ü+|æD°<ës¡T\TÒø£b˛‘√ dü+düú\T Çã“+<äT\≈£î >∑T]e⁄‘êsTT

$‘·Ô düVü‰j·T<ës¡T\T@ dü+düú nsTTHê ô|≥Tºã&ç ô|’ Ä<Ûës¡|ü&ç ñ+≥T+~. Bìì düeT≈£Ls¡Ã&ÜìøÏ $‘·Ô düVü‰j·T<ës¡T\ô|’ Ä<Ûës¡|ü&çñ+≥T+~. nedüs¡yÓTÆq düeTj·÷\˝À ø±e\dæq Á<äe´ düVü‰j·÷ìï n+~+#·&ÜìøÏ dü]jÓÆTq dü+düú\qT m+#·Tø√yê*.Bìì Ä<Ûës¡+>± #˚düTø=H˚ Á|üD≤[ø£\T s¡∫+#·Tø√e&É+ »s¡T>∑T‘·T+~. ø±ãÏº $‘·Ô dü+düú\T yê´bÕsêìøÏ n‘· +‘·nedüs¡yÓTÆq |ü]düsê\T.

düe÷»+ˇø£ yê´bÕs¡ dü+düú @ düe÷»+˝À ◊‘ q&ÉTdüTÔ+<√ <ëì #·T≥÷º Äe]+∫ ñqï Á|üC≤˙ø£+ ≈£L&Ü eTTKýÓTÆq dü÷ø£åà|ü]düsê\T>± uÛ≤$+#ê*. Ç< n‹ eTTKýÓTÆq~. düe÷C≤ìøÏ dü+düú ô|’ qeTàø£+ eT]j·TT $XÊ«dü+ ø£*–+#· >∑*–q|ü⁄Œ&˚, Á|ü»\ jÓTTø£ÿ ÄdüøÏÔ ì #·÷s¡>=qï|ü⁄Œ&˚ dü+düú eTqT>∑&É ñ+≥T+~.

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Depending on a single customer is often too risky because it may place the company in a poorbargaining position, apart from the risks of losing business, consequent to the winding up of businessby the customer or due to the customer’s - switching over to the competitors of the company.

With the growing globalization, the customer environment is increasingly becoming global. Not onlythat the markets of other countries are becoming more open, the Indian market is becoming moreexposed to the global competition and the Indian customer is becoming more “global” in his shopping.

CompetitorsA firm’s competitors include not only the other firms which market the same or similar products butalso all those who compete for the discretionary income of the consumers. For example, the competitionfor a company’s televisions may come not only from other television companies. If the consumerdecides to spend his discretionary income on recreation, he will still be confronted with a number ofalternatives to choose from like T.V., stereo, two-in-one, three-in-one etc. The competition amongsuch alternatives which satisfy a particular category of desire is called generic competition.

Marketing IntermediariesThe immediate environment of a company may consist of a number of marketing intermediaries whichare “firms that aid the company in promoting, selling and distributing its goods to final buyers”.

The marketing intermediaries include middlemen such as agents and merchants who “help the companyfind customers or close sales with them”, physical distribution firms which “assist the company instocking and moving goods from their origin to their destination such as warehouses and transportationfirms; marketing service agencies which “assist the company in targeting and promoting its productsto the right markets such as advertising agencies, marketing research firms, media firms and consultingfirms; and financial intermediaries which finance marketing activities and insure business risks.

Marketing intermediaries are vital links between the company and the final consumers. A dislocationor disturbance of the link, or a wrong choice of the link, may cost the company very heavily. HindustanLever faced major challenge when there is a collective boycott in Kerala on the issue of trade margin.

FinanciersAnother important micro environmental factor is the financiers of the company. Besides the financingcapabilities, their policies and strategies, attitudes could not be implemented without a good financinginstitution to the firm. Hence the financers are also an important micro environment to the firm.

PublicA company may encounter certain public in its environment. Public is any group that has an actual orpotential interest in or impact on an organization’s ability to achieve its interests. Media , voluntaryorganizations, and local citizens are some examples.

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2.1.2.2.MACRO ENVIRONMENT

The macro forces are, generally, more uncontrollable than the micro forces. When the macroenvironment is uncontrollable, the success of a company depends on its adaptability to the environment.These Macro Environment factors cannot be managed easily. Organizations should act according tothese environmental factors or they simply follow them. Important macro environment factors includeeconomic environment, political and regulatory environment, social/cultural environment, demographicenvironment, technological environment, natural environment, and global environment.

Economic EnvironmentThere is close relationship between business and its economic environment. Business obtains all itsneeded inputs from the economic environment and it absorbs the output of business units. The importantcomponents in economic environment are as outlined below:

Interest Rate - For example, interest rates of fixed-income instruments prevalent in aneconomic environment impacts the interest rate it will offer on its debentures.

Inflation Rate- A rise in inflation rate leads to price - hike; hence, it poses limitations tobusinesses.

Customer’s Income- If the income of customers increases, the demand for goods and serviceswill rise too.

Economic Policies – Policies like corporate tax rate, export duty and import duty influencea business.

Political and Legal EnvironmentIt consists of forces like the Government’s attitudes towards businesses, ease-of-doing-businesspolicies, the stability of the Governing body and peace within the country. All of these factors areextremely crucial for a company to sustain. If the central, as well as local government sanctions,policies or acts in favour of businesses, the overall economy of the nation strengthens due to increasingemployment, productivity and import and export of various products.

Example - A pro-business government will make foreign investments more attractive in thatcountry.

Technological EnvironmentTechnology is understood as the systematic application of scientific or other organized knowledge topractical tasks. Technology changes fast and to keep pace with it, businessmen should be ever alertto adopt changed technology in their businesses.

Example: A Watch Company that sells smart-watches along with traditional watches will prosper as smart-watches are in trend recently.

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kÕ+πø‹ø£ø±s¡ø±\Tô|s¡T>∑T‘·Tqï $C≤„q+ n+~düTÔqï Ä~Ûìø£ kÕ+πø‹ø£ $C≤„Hêìï yê´bÕs¡ dü+düú\T >∑eTì+∫, ‘·<äqT>∑Tq+>∑ eéVü≤]+#ê*.>∑‘· ¬s+&ÉT <äXÊu≤›\ ø±\+˝À kÕ+πø‹ø£ $C≤„q+˝À mH√ï e÷s¡TŒ\T dü+uÛÑ$+∫HêsTT. á e÷s¡TŒ\ |òü*‘·+>±ø£+|üP´≥s¡T¢, m\Áø±ºìø˘ |ü]ø£sê\T j·T+Á‘· |ü]ø£sê\T yÓ\T>∑T˝ÀìøÏ e∫ÃHêsTT. á |ü]ø£sê\ e\q yê´bÕs¡dü+düú\ |üìrs¡T eT]+‘· y˚>∑+>±, düeTs¡∆e+‘·+>± ìs¡«Væ≤+#˚ neø±X¯+ e∫Ã+~. yê´bÕs¡ dü+düú\T dü+πø‹ø£|ü]C≤„q+qT ñ|üjÓ÷–+#·Tø=ì n_Ûe~› #Ó+<äe#·TÃ.

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ÁbÕ|ü+∫ø£ ø±s¡ø±\T Ò<ë n+‘·sê®rj·T ø±s¡ø±\T>√¢ã …’CÒwüHé nH˚ uÛ≤eq e∫Ãq ‘·sê«‘· yê´bÕs¡ eédüú\ jÓTTø£ÿ dæú‹ >∑‘·T\T |üP]Ô>± e÷]b˛j·÷sTT. Á|ü‹<˚X¯+˝ÀìøÏ ãVüQfi¯C≤‹ ø£+ô|˙\T jÓTTø£ÿ ÁbÕuÛÑ\´+ ô|]–b˛sTT+~. Bìì m<äTs=ÿq&ÜìøÏ Á|ü‹ yê´bÕs¡ dü+düú‘·q<Ó’q XË’*˝À ãVüQfi¯C≤‹ $<ÛëHê\qT nqTdü]+#·e\dæ e∫Ã+~. *ãs¡ …’CÒwüHé Á|üÁøÏj·T ‘·sê«‘· uÛ≤s¡‘· <˚X¯+˝ÀnH˚ø£ n+‘·sê®rj·T ø£+ô|˙\T n&ÉT>∑T ô|≥º&É+ e\q uÛ≤sêrj·T ø£+ô|˙\T HÓeTà~>± >√¢ã˝Ÿ mì«sêHÓà+Ÿ ÀìøÏe÷s¡e\dæ e∫Ã+~.

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2.1.3. |ü]düsê\T- yê´bÕs¡ dü+ã+<ä+yê´bÕs¡+ düe÷»+˝À ˇø£ uÛ≤>∑+. Ç~ kÕ+πø‹ø£, sê»ø°j·T , #·≥º|üs¡yÓTÆq, Ä]∆ø£, kÕe÷õø£, kÕ+düÿ‹ø£,ÁbÕ|ü+∫ø£, ÁbÕø£‹ø£ ø±s¡ø±\ #˚‘· Á|üuÛ≤$‘·eTÚ‘·÷ ñ+≥T+~. |ü]düsê\T eT]j·TT yê´bÕs¡+ n+‘·s¡Z‘·+ >±ˇø£<ëìø=ø£Ï dü+ã+<ä+ ø£*– ñ+≤sTT.

yê´bÕs¡+ |ü]düsê\e\q ø=+‘· yTs¡≈£î Á|üuÛ≤$‘·eTe⁄‘·T+~. m≈£îÿe>± ãVæ≤s¡Z‘· ø±s¡ø±\e\q Á|üuÛ≤$‘·eTe⁄‘·T+~.sê»ø°j·T ø±s¡ø±\T Ä]∆ø£ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚kÕÔsTT. n˝≤π> ˇø£<ëìø=ø£Ï Á|üuÛ≤$‘·+ #˚kÕÔsTT. n<˚$<ä+>± $T–*q ø±s¡ø±\T ≈£L&Ü Á|üuÛ≤$‘·eTe⁄‘·÷ ñ+≤sTT. Ç$ &Ó’q$Tø˘ >± ñ+&ç m\¢|ü⁄Œ&É÷ e÷s¡TŒq≈£î >∑T]ne⁄‘·÷ ñ+≤sTT. n˝≤π> yê´bÕs¡+ jÓTTø£ÿ dæú‹ ≈£L&Ü e÷s¡T‘·÷ ñ+≥T+~. ˇø£ yê´bÕs¡ dü+düú ‘·q+‘·≥‘êqT>± ‘·q |ü]düsê\qT e÷s¡TÃø=q Ò<äT. n˝≤π> Ç‘·s¡ dü+düú\T ≈£L&Ü |ü]düsê\qT e÷s¡Ã Òe⁄. |ü]düsê\≈£î˝Àã&ç ny˚ e÷s¡e\dæ ñ+≥T+~.

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Natural EnvironmentBusiness, an economic pursuit of man, continues to be dictated by nature. Business depends onnature and what is the relationship between the two constitutes an interesting study. If the organizationsforget the natural environment, they cannot sustain forever.

Global or international EnvironmentThe changing dimension of the business environment gives birth to an advanced internationalenvironment for companies in a country. It denotes a periphery in which international companies runtheir business transactions across national borders. From liberalization, Indian companies are forcesto view business issues from a global perspective. Business responses and managerial practices mustbe fine-tuned to survive in the global environment.

Social and cultural EnvironmentIt refers to people’s attitude to work and wealth; role of family, marriage, religion and education;ethical issues and social responsiveness of business.

Tradition : In India, festivals like Diwali, Christmas, Holi, etc. make provision for a financialopportunity for several market segments like sweet manufacturers, gifting products suppliers,etc.

Value : A company which follows long-held values like social justice, freedom, equalopportunities, gender equality, etc., excels in that given society.

Recurrent Trends:It refers to development or general changes in a society like consumption habits, fitness awareness,and literacy rate, etc. which influence a business. For example, the demand for organic vegetablesand gluten-free food is increasing. Therefore, companies which manufacture food items keepingthis in mind attract more crowds.

2.1.3. ENVIRONMENT – BUSINESS RELATIONSBusiness is the product of the technological, political-legal, economic, social – cultural, global andnatural factors amidst which it functions. Three features are common to this web of relationshipbetween business and its environment.

There is symbolic relationship between business and its environment and among the environmentalfactors. In other words, business is influenced by its environment and in turn, to certain degree, it willinfluence the external forces. Similarly, political-legal environment influences economic environmentand vice-versa. The same relationship exists between other environmental factors too. Theseenvironmental forces are dynamic. Particular business firm, by itself, may not be in a position tochange its environment. But along with other firms, business will be in a position to mould the environmentin its favor.

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2.2.|ü]düsê\ $X‚¢wüD

ˇø£ yê´bÕs¡ dü+düú jÓTTø£ÿ |ü]düsê\ ô|’, <ëì ø±s¡ ø±˝≤bÕ\ô|’ $$<ä yê´bÕs¡ |ü]düsê\ jÓTTø£ÿ Á|üuÛ≤e+m+‘·es¡≈£î ñ+≥T+<√ ‘Ó\TdüTø=q&ÜìøÏ #˚ùd XÀ<äqqT |ü]düsê\ $X‚¢wüD n+≤s¡T.

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|ü]düsê\ $X‚¢wüD Áø£eTeTT>∑T]Ô+#·T≥: yÓTT<ä≥>± yê´bÕs¡ eédüúqT Á|üuÛ≤$‘·+ #˚ùd ø±s¡ø±\qT ø£qT>=qT≥ »s¡T>∑T‘·T+~. Ç~ ø£+ô|˙kÕúsTT˝À >±ì, e÷¬sÿŸ kÕúsTT˝À, C≤rj·T n+‘·sê®rj·T kÕúsTT\˝À >∑T]Ô+#·ã&ÉT‘·T+~.

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$X‚¢wüD: á <äX¯ À $$<ä ø±s¡ø±\T yê´bÕsêìï $$<ä <äX¯\˝À m˝≤ Á|üuÛ≤$‘·+ #˚kÕÔjÓ÷ $X‚¢wüD #˚kÕÔs¡T.Bìø=s¡≈£î eTTK´+>± u…+#Y e÷]ÿ+>¥ , &Ó*Œ¤ f…øÏïø˘ eT]j·TT dæHê]jÓ÷ _*¶+>¥ nH˚ |ü<ä›‘·T\qT yê&É‘ês¡T.

uÛÑ$wü ‘Y n+#·Hê: ô: ô: ô: ô: ô|’ kÕúsTT\˝À >∑T]Ô+∫q $wüj·÷\qT Ä<Ûës¡+>± #˚düTø=ì uÛÑ$wü ‘Y qT n+#·Hê y˚j·T&É+,Á|üD≤[ø£\qT s¡∫+#·&É+ »s¡T>∑T‘·T+~

2.2.2.|ü]düsê\ kÕÿì+>¥ˇø£ yê´bÕs¡ dü+düú jÓTTø£ÿ |ü]düsê\T ìs¡+‘·s¡eTT e÷s¡TŒq≈£î ˝Àqe⁄‘·÷ ñ+≤sTT. MÏì eTqeTT n+#·Hêyj·T ÒeTT. ø±ãÏº |ü]düsê\ kÕÿì+>¥ nH Á|üÁøÏj·T<ë«sê yê´bÕs¡ dü+düú jÓTTø£ÿ |ü]düsê\qT ìX‘·+>± |ü]o*dü÷Ôñ+&Ü*.kÕÿì+>¥ ˝À eédüú jÓTTø£ÿ n+‘·s¡Z‘· eT]j·TT ãVæ≤s¡Z‘· |ü]düsê\qT+&ç $wüj·T ùdø£s¡D #˚j·T&É+,uÛÑ$wü ‘Y À sêuÀjT neø±XÊ\T eT]j·TT düeTdü \qT C≤Á>∑‘·Ô>± |ü]o*+#·&É+, dü+düú ≈£î dü+ã+~+∫q uÛÑ$wü ‘YqT Á|üuÛ≤$‘·+ #˚ùd nìï $wüj·÷\qT XÀ~+#·&É+ ñ+≤sTT.

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2.2. ENVIRONMENTAL ANALYSIS

Environmental analysis is the study of the organizational environment to pinpoint environmental variablesor factors that can significantly influence the organizational operations. Environmental analysis is theassessment of opportunities and threats in the external environment of business. Relatively qualitativeand involves the identification of the business needs and determines solutions to the business problemscreated by the components of business environment. It is related with the performance characteristicsof the functional areas of the firm

According to William F. Glueck, Environmental Analysis is “The process by which strategists monitorthe economic, legal, competitive, geographic, technical and social setting to determine opportunitiesand threats to their firms.”

As per Philip Kotler: “Environmental analysis is the process of assessing the emerging trends”.

2.2.1.OBJECTIVES OF ENVIRONMENTAL ANALYSIS The analysis should provide an understanding of current and potential changes taking place in

an environment. One must be aware of existing environment and also have a long termperspective.

The analysis of environment should provide inputs for strategic decision making

The environmental analysis should provide a rich source of ideas and understanding of the contextwithin which a firm operates. It should bring fresh view points into the organization.

The analysis should help the management in forecasting the impact of socio economic changes atthe national and international level.

The study should help the business to keep itself dynamic and innovative.

Techniques for Environmental analysis refer to the methods of gathering the relevant informationfor appraising the environment. There are different methods for analyzing the business environment.

PROCESS OF ENVIRONMENTAL ANALYSIS

Identifying: First of all, the factors which influence the business entity are to be identified, toimprove its position in the market. The identification is performed at various levels, i.e. companylevel, market level, national level and global level.

Scanning: Scanning implies the process of critically examining the factors that highly influence thebusiness, as all the factors identified in the previous step does not affect the entity with the sameintensity. Once the important factors are identified, strategies can be made for its improvement.

Analyzing: In this step, a careful analysis of all the environmental factors is made to determine theireffect on different business levels and on the business as a whole. Different tools available for the

|ü]düsê\ kÕÿì+>¥ |ü<ä›‘·T\TÁø£eTã<ä›yÓTÆq |ü<ä›‹á |ü<ä›‹˝À ø±e\dæq düe÷#êsêìï ˇø£ |ü<ä›‹ Á|üø±s¡+ ùdø£]+#·&É+ »s¡T>∑T‘·T+~. ø±e\dæq düe÷#êsêìïìj·T‘· ø±*ø£+>± ìs¡+‘·s¡+ ùdø£]+#·&É+ »s¡T>∑T‘·T+~. ùdø£]+∫q düe÷#êsêìï n_Ûe~› #düT≈£î+≥÷ ø±e\dæq$<Ûä+>± $X‚¢wüD #˚dæ ñ|üjÓ÷–+#·&É+ »s¡T>∑T‘·T+~.

Ä&é Vü‰ø˘ |ü<ä›‹á |ü<ä›‹˝À düe÷#êsêìï nedüs¡yÓTÆq y˚Ts¡πø ùdø£]+#·&É+ »s¡T>∑T‘·T+~. ñ<ëVü≤s¡D≈£î @<Ó’Hê ˇø£ düeTdüm<äT¬s’q|ü⁄Œ&ÉT dü+ã+~‘· düe÷#ês¡+ø=s¡≈£î Á|ü‘´ø£yÓTÆq düπs« Òø£ n<Ûä j·Tq+ #dæ $esê\qT $X‚¢dæ+#·&É+ »s¡T>∑T‘·T+~.Ç~ ‘ê‘êÿ*ø£ |ü<ä›‹.

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2.2.3. |ü]düsê\qT n+#·Hê y˚j·T&É+eP´Vü‰‘·àø£ ìs¡íj·T Á|üÁøÏj·T À uÛÑ$wü ‘Y <Û√s¡DÏ ø£*– ñ+&É≥+ eTTKýÓTÆq~. kÕ<Ûës¡D+>± |ü]düsê\ $X‚¢wüD˝À|ü]düsê\ uÛÑ$wü ‘Y n+#·Hê n‘· +‘· neX¯ ø£yÓTÆq~. |ü]düsê\ À e#˚Ã uÛÑ$wü ‘Y e÷s¡TŒ, Bì<ë«sê n_Ûe~› Àe#˚Ã e÷s¡TŒ, ~XÊ ìπs›X¯eTT eT]j·TT <ëìjÓTTø£ÿ rÁe‘·qT eTT+<äT>±H˚ n+#·Hê y˚j·÷*. eédüú Àì ô|’ kÕúsTTn~Ûø±s¡T\T |ü]düsê\ $X‚¢wüD <ë«sê uÛÑ$wü ‘Y qT Væ≤+∫ $<Ûëq ìs¡íj·÷\T rdüT≈£î+≤s¡T. n$ πs|üÏ ø±˝≤ìøÏu≤>± ñ|üjÓ÷>∑ |ü&É‘êsTT.

|ü]düsê\ uÛÑ$wü ‘Y n+#·Hê - |ü<ä›‘·T\TÄ]∆ø£ n+#·HêuÛÑ$wü ‘Y ˝À »s¡>∑uÀj˚T Ä]∆ø£ e÷s¡TŒ\qT Ç~ Væ≤düTÔ+~. Ä]∆ø£ eédüú À e#˚Ã Á<äy√´\“D+, Ä]∆ø£ e÷+<Ûä|ü]dæú‘·T\qT n+#·Hê yj·T&É+ <ë«sê uÛÑ$wü ‘Y ñ‘·Œ‹Ô, neTàø±\qT n+#·Hê yj·Te#·TÃ. dü¬s’q düeTj·T+˝À #ùdÄ]∆ø£ n+#·Hê\T dü+düú\qT qcÕº\qT+&ç ãj·T≥ |ü&Éy˚j·T>∑\T>∑T‘êsTT. mÁø±‡ºb˛ ÒwüHé , ©&é‡ n+&é ˝≤>¥‡eT]j·TT @ø£HêyÓTÁÏø˘‡ yÓTT<ä …’q$ n+#·Hê y˚ùd eTTKýÓTÆq kÕ<ÛäHê\T.

kÕ+πø‹ø£ n+#·HêkÕ+πø‹ø£ e÷s¡TŒ\ ø±s¡D+>± dü+düú À sê>∑\ e÷s¡TŒ\qT n+#·Hê y˚j·T&É+ á $X‚¢wüD˝À ñ+≥T+~. kÕ+πø‹ø£e÷s¡TŒ\ ø±s¡D+>± dü+düú jÓTTø£ÿ |ü]ø£sê\T, j·T+Á‘ê\T m+‘·es¡≈£î e÷sêÃ* nH˚~ Çø£ÿ&É n+#·Hê y˚j·T&É+»s¡T>∑T‘·T+~. ø=‘·Ô j·T+Á‘ê\T ø=Hê˝≤, Ò<ë n<Ó›≈£î rdüTø√yê˝≤ , @~ dü+düú≈£î ñ|üjÓ÷>∑ |ü&ÉT‘·T+~ nH~ Çø£ÿ&Én+#·Hêy˚j·T&É+ »s¡T>∑T‘·T+~. Bìì n+#·Hê y˚j·T&É+ ¬s+&ÉT s¡ø±\T>± ñ+≥T+~. 1. mø˘‡ b ¢πs≥Ø n+#·HêeT]j·TT 2. HêπsàÏyé n+#·Hê.

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analysis include benchmarking, Delphi technique and scenario building.

Forecasting: After identification, examination and analysis, lastly the impact of the variables is tobe forecasted.

2.2.2. ENVIRONMENTAL SCANNING

The environment of a business is extremely dynamic in nature and it is constantly changing. The futureis uncertain. Hence, the organization must keep a close watch on its environment using environmentalscanning. Environmental analysis recognize Strengths, Weaknesses, Opportunities and Threats of anorganization. The organization can take necessary steps according to this analysis and plan for thefuture improvements. The firm must strive to build on or maximize its advantage by makingimprovements in its immediate plans, strategies, and resources. There are three approaches, whichcould be adopted for, sorting out information for environmental scanning.

Approaches to Environmental Scanning

Systematic ApproachUnder this approach, information for environmental scanning is collected systematically.Information is collected continuously and the same is updated in regular intervals. This informationrelated to markets and customers, changes in legislation and regulations. This information hasdirect impact on an organization’s activities. This information is necessary not only for strategicmanagement but also for operational activities.

Ad hoc ApproachUsing this approach, an organization may conduct special surveys and studies to deal with specificenvironmental issues from time to time. Such studies may be conducted, for instance, whenorganization has to undertake special projects, evaluate existing strategy or devise new strategies.Changes and unforeseen developments may be investigated with regard to their impact on theorganization.

Processed form of ApproachFor adopting this approach, the organization uses information in a processed form available fromdifferent sources both inside and outside the organization. When an organization uses informationsupplied by government agencies or private institutions, it uses secondary sources of data andthe information is available in processed form

2.2.3. ENVIRONMENTAL FORECASTINGStrategic decision-making requires a future orientation. Naturally, forecasting is an essential elementin environmental analysis. Forecasting is concerned with developing plausible projections of thedirection, scope, and intensity of environmental change.

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Á|üuÛÑT‘·« $<ÛëHê\ n+#·HêÁ|üuÛÑT‘·«+ rdüTø=H ìs¡íj·÷\<ë«sê e#Ã e÷s¡TŒ\qT n+#·Hêyj·T&É+ Ç+<äT˝À ñ+≥T+~. Á|üuÛÑT‘·« ìs¡íj·÷\T @$<Ûä+>± dü+düúqT Á|üuÛ≤$‘·+ #˚kÕÔsTT, <˚X¯ Ä]∆ø£ e´edüúqT @ $<Ûä+>± ìj·T+‘·kÕÔsTT, @ø£kÕ«e÷´\qT @$<Ûä+>±n&ÉT¶≈£î+≤sTT, Äs√>∑ ø£s¡yÓTÆq b˛°ì @$<Ûä+>± ì\u…&É‘êsTT, Bì e\q dü+düú≈£î e#˚Ã ˝≤uÛ≤\ô|’ Á|üuÛ≤e+yÓTT<ä …’q$ n+#·Hê y˚j·Tã&É‘êsTT. BìøÏ ø±e\dæq düe÷#ês¡+ yêsêÔ |üÁ‹ø£\T, »s¡ï˝Ÿ‡, e÷>∑C…’Hé‡ qT+&çbı+<äe#·TÃ.

neTàø±\ n+#·HêBì <ë«sê dü+düú uÛÑ$wü ‘Y À ô|]π> neTàø±\qT n+#·Hê y˚düTÔ+~. m+‘· es¡≈£î neTàø±\qT ô|+#·>∑\eTT, yêÏ<Ûäs¡\T, á ô|s¡T>∑T<ä\ m+‘·ø±\+ ñ+≥T+~ nH˚ n+#·HêqT y˚j·T>∑\T>∑T‘·T+~.

2.2.4. SWOT $X‚¢wüD

ˇø£ dü+düú jÓTTø£ÿ Á|üD≤[ø£ qT s¡∫+#·&É+˝À Ä Á|üD≤[ø£ jÓTTø£ÿ <Û˚´j·÷\T K∫Ã‘·+>± ìs¡«∫+#·ã&Ü¶j·÷, ÄÁ|üD≤[ø£ dü+ã+~+∫ nìï ø±s¡ø±\qT >∑T]Ô+#· ã&Ü¶j·÷ Ò<ë nì ‘Ó\TdüTø√e&ÜìøÏ SWOT $X‚¢wüD ñ|üø£]düTÔ+~. ø£ dü+düú jÓTTø£ÿ ã˝≤\T, ã\V”≤q‘·\T, neø±XÊ\T, dü+ø£≤\T >∑T]+∫ á $X‚¢wüD˝À ‘Ó\TdüTø√e#·TÃ.

SWOT $X‚¢wüD ì»yÓTÆq düe÷#ês¡+ Ä<Ûës¡+>± ã˝≤\qT , ã\V”≤q‘·\qT n+#·Hêy˚düTÔ+~. Bì˝À eTT+<äT>±Væ≤+∫q $wüj·÷\ CÀ*øÏ b˛≈£î+&Ü ì»yÓTÆq düe÷#ês¡+ y˚Ts¡≈£î $X‚¢wüD #˚düTÔ+~.

SWOT $X‚¢wüDqT Ç~es¡ À yê´bÕsê\≈£î Ò<ë dü+düú\≈£î $X‚¢wüD #˚ùd yês¡T .Á|üdüTÔ‘· ø±\+˝À Á|üuÛÑT‘ê«\T,˝≤uÛ≤ù|ø£å Òì dü+düú\T, e´≈£îÔ\T, ô|≥Tºã&ç<ës¡T\T, e´ekÕÔ|ü≈£î\T ≈£L&Ü ñ|üjÓ÷–düTÔHêïs¡T. SWOT À Hê\T>∑TÁ|ü<Ûëq ø±s¡ø±\T ñHêïsTT.

ã˝≤\Tˇø£ dü+düú ‘êqT @ n+XÊ\˝À >=|üŒ>± ñ+≥T+<√ eT]j·TT @ n+XÊ\˝À Ç‘·s¡ dü+düú\ ø£Hêï $_Ûqï+>± ñ+≥T+<√ <ëìì Ä dü+düú≈£îqï ã\+>± #Ó|üŒe#·TÃ. ã\yÓTÆq Áu≤+&é, $XÊ«düyÓTÆq $ìjÓ÷>∑<ës¡T\T, ã\yÓTÆq ÄdæÔn|ü⁄Œ\ dæú‹, Á|ü‘˚´ø£yÓTÆq kÕ+πø‹ø£‘· yÓTT<ä˝…’q$ dü+düú\ ã˝≤\T>± #Ó|üŒe#·TÃ.

ã\V”≤q‘·\Tdü+düú\T Ä•+∫q kÕeTsê∆´ìï #˚s¡Tø√˝Òø£ b˛e&Üìï ã\V”≤q‘·>± #Ó|üŒe#·TÃ. dü+düú\T $T–*q dü+düú\‘√ b˛°|ü&É≤ìøÏ m+‘·es¡≈£î n_Ûe~› #Ó+<ë˝À ã\V”≤q‘· ‘Ó*j·TCÒdüTÔ+~. ã\V”≤qyÓTÆq Áu≤+&é, düsêdü] ≥s√ïesY#˚s¡Tø√e&É+, n‘· ~Ûø£ n|ü⁄Œ\ kÕúsTT, dü+|üPs¡í+>± Òì düô|’¢ >=\TdüT , dü]|ü&Éì eT÷\<Ûäq kÕúsTT yÓTT<ä …’q$ã\V”≤q‘·\T>± #Ó|üŒe#·TÃ.

neø±XÊ\Tdü+düú\≈£î ãVæ≤s¡Z‘·+>± ø£\dæe#Ã nqT≈£L\yÓTÆq ø±s¡ø±\T eT]j·TT b˛° Á|üjÓ÷»Hê\qT neø±XÊ\T>± #Ó|üŒe#·TÃ.ø=ìï dü+<äsê“¤\˝À Á|ü»\≈£î e#˚Ã düeTdü \T ≈£L&Ü yê´bÕs¡ dü+düú\≈£î neø±XÊ\T>± e÷s¡‘êsTT.

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Environmental forecasting is a technique whereby managers attempt to predict the future characteristicsof the organizational environment and hence make decisions today that will help the firm deal with theenvironment of tomorrow.

Types of Environmental Forecasting

Economic ForecastingEconomic forecasting envisages the general economic condition like, boom or depression, upswingor downswing of the economy. Corresponding to these forecasts, sales and revenues of the businessgo up or down. In case of depression, timely forecast can prevent the firms from incurring losses. Themain techniques in this forecast are Extrapolation, Leads and Lags, Econometrics

Technological Forecasting This forecasting analyses the impact of technological changes on the firm. It finds out the rate at whichtechnology is changing, what will be the impact of new machines and equipment’s on existing plantand machinery, should the firm continue with the existing machines or replace them, in case ofreplacement, should they buy the new machine or take it on lease, what will be the impact of thesedecisions on profits. This forecasting can be done in two ways i.e. Exploratory forecasting and Normative forecasting

Forecasts Regarding Government PoliciesGovernment policies change from time to time to boost the economy. It may give fiscal incentives topromote investment in plant and machinery or some incentives may be withdrawn. This is done toregulate the national economy, prevent monopoly and promote healthy competition. Changes inGovernment’s policy and their impact on profits can be predicted through information published invarious journals and newspapers.

Sales ForecastingThe sales forecast helps the firm to retain or increase its share of goods in the market. “The salesforecast is a prediction of expected sales, by product and price, for a number of months or years.”This is done irrespective of the size of the firms.

2.2.4. SWOT ANALYSIS

SWOT analysis is a business analysis process that ensures that objectives for a project are clearlydefined and that all factors related to the project are properly identified. The SWOT analysis processinvolves four areas: Strengths, Weaknesses, Opportunities and Threats..

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths andweaknesses of an organization, initiatives, or within its organization. The organization needs to keepthe analysis accurate by avoiding pre-conceived beliefs or grey areas and instead focusing on real-lifecontexts. Companies should use it as a guide and not necessarily as a prescription.

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dü+ø£≤\Tdü+düú\≈£î Vü‰ìø£*–+# $$<ä ø±s¡ø±\qT dü+ø£≤\T n+≤s¡T. yê´bÕs¡ dü+düú\≈£î eTT&ç|ü<ësê∆\ <Ûäs¡\T ô|s¡>∑&É+,$ìjÓ÷>∑<ës¡T\ n_Ûs¡T#·T\˝À e÷s¡TŒ, b˛° ô|s¡>∑&É+, eTT&ç|ü<ësê›\T, ÁXÊ$T≈£î\ ø=s¡‘· yÓTT<ä …’q$ dü+ø£≤\T>±#Ó|üŒe#·TÃ. SWOT $X‚¢wüD yê´bÕs¡ dü+düú\T eP´Vü‰‘·àø£yÓTÆq ìs¡íj·÷\T rdüTø√e&É+˝À ñ|üjÓ÷>∑|ü&ÉT‘·T+~. Ç~yê´bÕs¡ dü+düú\ jÓTTø£ÿ ã˝≤\T , ã\V”≤q‘·\qT ìs¡«∫+∫ neø±XÊ\qT n+~|ü⁄#·TÃø√&ÜìøÏ, dü+ø£≤\qT‘=\–+#·Tø√e&ÜìøÏ ø±e\dæq $<Ûëq ìs¡íj·÷\T #˚j·T&É+˝À u≤>± ñ|üø£]düTÔ+~. yê´bÕs¡ dü+düú\T ‘·eTyê´bÕsêìø£+‘·ÏøÏ >±ì ø=ìï $uÛ≤>±\≈£î >±ì eP´Vü‰‘·àø£ ìs¡íj·÷\T rdüTø√e&É+˝À SWOT düVü≤ø£]düTÔ+~.

2.2.5.2.2.5.2.2.5.2.2.5.2.2.5.PESTEL $X‚¢wüDyê´bÕs¡ |ü]düsê\ $X‚¢wüD ≈£î ñ|üjÓ÷–+#˚ n‘· +‘· $es¡D≤‘·àø£ $X‚¢wüD PESTEL $X‚¢wüD. ìsê«Vü≤≈£î\TeT]j·TT eP´Vü≤ ø£s¡Ô\T ‘·eT e÷¬sÿŸ Á|üdüTÔ‘·+ mø£ÿ&É ñ+<√ ‘Ó\TdüTø√e&ÜìøÏ á $X‚¢wüDqT ñ|üjÓ÷–kÕÔs¡T.uÛÑ$wü ‘·TÔ À dü+düú mø£ÿ&É ñ+≥T+<√ eTT+<˚ ‘Ó\TdüTø√e&ÜìøÏ ≈£L&Ü Ç~ düVü‰j·T|ü&ÉT‘·T+~. PESTEL $X‚¢wüD˝À yê´bÕs¡ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚ùd $$<Ûä n+XÊ\qT $X‚¢wæ+#·&É+ »s¡T>∑T‘·T+~. PESTEL ˝Àì Á|ü‹nø£ås¡+ ø±s¡ø±\ dü$T‹ì dü÷∫düTÔ+~. á ø±s¡ø±\T Á|ü‹ |ü]ÁX¯eTqT Á|ü‘· ø£å+>± Ò<ë |üs√ø£å+>± Á|üuÛ≤$‘·+#˚j·Te#·TÃ.

PESTEL ˝Àì nø£åsê\T á ÁøÏ+~ $wüj·÷\qT dü÷∫kÕÔsTT:sê»ø°j·T ø±s¡ø±\T - PÄ]úø£ ø±s¡ø±\T - EkÕe÷õø£ ø±s¡ø±\T - SkÕ+πø‹ø£ ø±s¡ø±\T - T#·≥º|üs¡yÓTÆq ø±s¡ø±\T - L|üsê´es¡D ø±s¡ø±\T - E

Table 2.1. SWOT Analysis

Strengths Weaknesses 1. What is our competitive advantage? 1. Where can we improve? 2. What resources do we have? 2. What products are underperforming? 3. What products are performing well? 3. Where are we lacking resources?

Threats Opportunities 1.What new regulations threaten operations? 1.What technology can we use to improve

operations 2 .What do our competitors do well? 2.Can we expand our core operations? 3. What consumer trends threaten business? 3. What new market segments can we explore?

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SWOT Analysis was first used to analyze businesses. Now it’s often used by governments, nonprofits,and individuals, including investors and entrepreneurs. There are four components in SWOT analysis.They include:

StrengthsStrengths describe what an organization excels at and what separates it from the competition: astrong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For example,a hedge fund may have developed a proprietary trading strategy that returns market-beating results.It must then decide how to use those results to attract new investors.

WeaknessesWeaknesses stop an organization from performing at its optimum level. They are areas where thebusiness needs to improve to remain competitive: a weak brand, higher-than-average turnover, highlevels of debt, an inadequate supply chain, or lack of capital are some weaknesses.

OpportunitiesOpportunities refer to favorable external factors that could give an organization a competitive advantage.For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market,increasing sales and market share.

ThreatsThreats refer to factors that have the potential to harm an organization. For example, a drought is athreat to a wheat-producing company, as it may destroy or reduce the crop yield. Other commonthreats include things like rising costs for materials, increasing competition, tight labour supply and soon.

A SWOT analysis is a great way to guide business-strategy meetings. It is powerful tool to discussthe company’s core strengths and weaknesses, define the opportunities and threats, and therebybrainstorm ideas. An organization can use a SWOT for overall business strategy sessions or for aspecific segment such as marketing, production, or sales. This way, we can see how the overallstrategy developed from the SWOT analysis will filter down to the segments below before committingto it. We can also work in reverse with a segment-specific SWOT analysis that feeds into an overallSWOT analysis.

2.2.5. PESTEL ANALYSIS

The most used detailed analysis of the environment is the PESTLE analysis. Managers and strategybuilders use this analysis to find where their market currently is. It also helps foresee where theorganization will be in the future. PESTLE analysis consists of various factors that affect the businessenvironment. Each letter in the acronym signifies a set of factors. These factors can affect everyindustry directly or indirectly.

The letters in PESTLE, also called PESTEL, denote the following things:

Political factors Economic factors Social factors Technological factors Legal factors Environmental factor

P for Political factorsThe political factors involve the country’s current political situation. It also reads the global politicalcondition’s effect on the country and business.

E for Economic factorsEconomic factors involve all the determinants of the economy and its state. These are factors that canconclude the direction in which the economy might move. So, businesses analyze this factor based onthe environment. It helps to set up strategies in line with changes.

S for Social factorsCountries vary from each other. Every country has a distinctive mindset. These attitudes have animpact on the businesses. The social factors might ultimately affect the sales of products and services.

T for Technological factorsTechnology is advancing continuously. The advancement is greatly influencing businesses. Performingenvironmental analysis on these factors will help you stay up to date with the changes. Technologyalters every minute. This is why companies must stay connected all the time. Firms should integratewhen needed. Technological factors will help you know how the consumers react to various trends.

L for Legal factors

Legislative changes take place from time to time. Many of these changes affect the business environment.If a regulatory body sets up a regulation for industries, for example, that law would impact industriesand business in that economy. So, businesses should also analyze the legal developments in respectiveenvironments.

E for Environmental factorsThe location of a business influences its trade. Changes in climate can affect the trade. The consumerreactions to particular offering can also be an issue. This most often affects agri-businesses.It is truethat industry factors have an impact on the company performance. Environmental analysis is essentialto determine what role certain factors play in your business. PEST or PESTLE analysis allowsbusinesses to take a look at the external factors. Many organizations use these tools to project thegrowth of their company effectively.

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KEY TERMS1. Brand equity: Brand equity refers to a value premium that a company generates from a productwith a recognizable name when compared to a generic equivalent. Companies can create brandequity for their products by making them memorable, easily recognizable, and superior in quality andreliability.

2. Human resources: The personnel of a business or organization, regarded as a significant asset interms of skills and abilities. Human resources (HR) is the division of a business that is charged withfinding, screening, recruiting, and training job applicants, as well as administering employee-benefitprograms.

3. Management structure: A management structure describes how a company organizes itsmanagement hierarchy. It also determines how the roles, power and responsibilities are assigned,controlled, and coordinated, and how information flows between the different levels of management.

4. Articles of association: Articles of association form a document that specifies the regulations fora company’s operations and defines the company’s purpose. The document lays out how tasks are tobe accomplished within the organization, including the process for appointing directors and the handlingof financial records.

5. Logistics: Logistics is the overall process of managing how resources are acquired, stored, andtransported to their final destination.

6. Suppliers: A supplier is an entity that supplies goods and services to another organization. Thisentity is part of the supply chain of a business, which may provide the bulk of the value containedwithin its products.

7. Marketing intermediaries: Independent firms which assist in the flow of goods and servicesfrom producers to end-users; they include agents, wholesalers and retailers; marketing services agencies;physical distribution companies; and financial institutions.

8. Indigenous: The word ‘indigenous’ refers to the notion of a place-based human ethnic culture thathas not migrated from its homeland, and is not a settler or colonial population.

9. Export Duty : Export duties consist of general or specific taxes on goods or services that becomepayable when the goods leave the economic territory or when the services are delivered to non-residents.

10. Import Duty: Import duty is a type of tax levied on the import and specific exports of a nation’scustoms authorities.

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11. Secondary Sources: a secondary source of information is one that was created later by someonewho did not experience first-hand or participate in the events or conditions he is researching.


1. Which of the following are dimensions of Business environment.A. Economic environmentB. Technological environmentC. Social environmentD. All the above

2. ............are generally considered as controllable factors.A. Internal factorsB. External factorsC. Cost of productionD. None of these

3. Environment which is outside the control of business is called.A. Internal environmentB. External EnvironmentC. Micro environmentD. Macro environment

4. Micro environment is also called asA. General environmentB. Operating environmentC. Economic environmentD. Political environment

5. Marketing intermediaries are categorized under……. Environment.A. ExternalB. MacroC. MicroD. Remote.

6. …… is the process of analyzing the environment for the identification of the factors which impact on the business.

A. Environmental analysisB. SWOT analysisC. Environment ForecastingD. Factor analysis

7. The analysis which helps to diagnose the competitive forces and to identify the strengthand weakness is called…..

A. SWOT analysisB. Competitive analysisC. Structural analysisD. Financial analysis

8. Strategy of a firm is shaped by…………………A. MissionB. ObjectivesC. SWOTD. All the above

9. Which of the following are the part of PESTLE analysisA. Political factorsB. Economic factorsC. Social factorsD. All the above are parts

10. Which of the following is not a political riskA. Government regulationB. Cost of productionC. WarD. Civil unrest

ANSWERS

INERACTIVE LINKS

https://www.google.co.in/books/edition/Organisations_and_the_Business_Environme/Tk8sBgAAQBAJ?hl=en&gbpv=1&dq=types+of+business+environment&printsec=frontcover


1 2 3 4 5 6 7 8 9 10

D A B B C A A D D B

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Imagine you are the manager for a business enterprise. Prepare a SWOT analysiss for your business.Listout different factors influencing a local business and segregate them into different dimensions.

Learning Outcomes: After reading this chapter, the student should be able to:

1. understand Economic Environment 2. differentiate the various structures of economic systems 3. understand various economic policies of a nation. 4. summarize the objectives of Economic Planning in India 5. critically examine the objectives of NITI Aayog and Planning

Commission

Chapter Layout: 3.1. Economic Environment 3.1.1. Components in Economic Environment 3.2. Types of the Economic System 3.3. Capitalist Economy 3.3.1. Characteristics of Capitalist Economy 3.3.2. Advantages of Capitalist Economy 3.3.3. Disadvantages of Capitalist Economy 3.4. Socialist Economy

3.4.1. Characteristics of Socialist Economy 3.4.2. Advantages of Socialist Economy 3.4.3. Disadvantages of Socialist Economy 3.5. Mixed Economy

3.5.1. Characteristics of Mixed Economy 3.5.2. Advantages of Mixed Economy 3.5.3. Disadvantages of Mixed Economy 3.6. Structure of the Economic System 3.7. Economic Policies

Chapter

3

Economic Environment

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n<Ûë´j·T ne˝Àø£q+

yê´bÕs¡+ jÓTTø£ÿ $»j·÷ìï ìsê∆]+#·&ÜìøÏ <˚X¯+ ˝À ñqï Ä]úø£ |ü]dæú‘·T\T eTTKýÓTÆq$. á Ä]úø£|ü]dæú‘·T\qT Ä]úø£ |ü]düsê\T nì n+≤s¡T. <˚X¯+˝À ñqï Ä]úø£ eédüú, Ä]úø£ eédüú ìsêàD+ ,Ä]úø£$<Ûëq ìs¡íj·÷\T eT]j·TT Á|üD≤[ø£\T n˙ï Ä]úø£ |ü]düsê\ À uÛ≤>∑+ >± |ü]>∑DÏ+#·ã&ÉT‘·T+~.

Á|üdüTÔ‘· n<Ûë´j·T+ $$<Ûä s¡ø±\ Ä]úø£ eédüú\qT, yêÏ \ø£åD≤\qT, Á|üjÓ÷»Hê\qT eT]j·TT ˝ÀbÕ\qT$X‚¢wædüTÔ+~. á n<Ûë´j·T+ eTTK´+>± $$<Ûä Ä]úø£ $<ÛëHê\qT ìs¡«∫düTÔ+~ eT]j·TT n˝≤+Ï Ä]∆ø£$<ÛëHê\ ˝Àì ø±s¡ ø£ ≤bÕ\ dü«uÛ≤e+, |üì |ü]dæú‹ eT]j·TT Ä]úø£ ø±s¡ ø£ ≤bÕ\ ÄdæÔ j·÷»e÷q´+Ä<Ûës¡+>± Ä]úø£ eédüú jÓTTø£ÿ $$<ä s¡+>±\ $uÛÑ»q >∑T]+∫ #·]ÃdüTÔ+~. Ä]úø£ $<ÛëHê\T eT]j·TTyêÏ jÓTTø£ÿ dü+øÏå|üÔ |ü]#·j·T+ ≈£L&Ü Çe«ã&Ü¶sTT, Ç$ ‘·s¡Tyê‹ n<Ûë´j·÷\˝À $es¡+>±#·]Ã+#·ã&É‘êsTT.

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CHAPTER OVERVIEW

The economic conditions prevailing in a country are important to ascertainthe success of a business. These economic conditions are referred to aseconomic environment. The kind of economic system present in the country,structure of economy, and economic policy decisions and planning are allpart of economic environment.

The present chapter attempts to define different kinds of economic systemsand their characteristics in detail while analyzing their advantages anddisadvantages. Also, it defines various economic structures and discussessectorization of economy based on nature of activity, work condition andasset ownership of economic activity. Brief introduction of economic policiesand its components are also given which will be dealt in detail in laterchapters.

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3.1. Ä]∆ø£ |ü]düsê\T

yê´bÕs¡ |ü]düsê\qT ¬s+&ÉT s¡ø±\T>± eØZø£]+#·e#·TÃ. yÓTT<äÏ~ Ä]∆ø£ |ü]düsê\T, ¬s+&Ée~ Ä]∆πø‘·s¡ |ü]düsê\T.yê´bÕsêìï Á|üuÛ≤$‘·+ #˚ùd nìïs¡ø±\ Ä]∆ø£ ø±s¡ø±\qT Ä]∆ø£ |ü]düsê\T n+≤s¡T. ˇø£ <˚X¯ Ä]∆ø£ eédüúnq>± Ä <˚X¯ Á|ü»\ jÓTTø£ÿ Jeq Á|üe÷D kÕúsTT, bı<äT|ü⁄ -ô|≥Tºã&ÉT\ n\yê≥T¢, <˚X¯ bÕ]ÁXÊ$Tø£ $<ÛëHê\T,Á<äe´ $<Ûëq+, ø√X¯ $<Ûëq+, <˚X¯+˝Àì dü+|ü<ä, Ä<ëj·T+ $$<ä esêZ\ eT<Ûä @$<ä+ >± |ü+|æD° #˚j·Tã&ç+~,Á<äy√´\“¤q, Ä]∆ø£ e÷+<Ûä |ü]dæú‘·T\T, Á|ü»\ jÓTTø£ÿ e´j·T $<ÛëqeTT Ò<ë $ìjÓ÷>∑ $<ÛëqeTT yÓTT<ä …’qø±s¡ø±\ìï+Ïì Ä <˚X¯ Ä]∆ø£ |ü]düsê\T>± #Ó|üŒe#·TÃ.

ˇø£ <˚X¯+ ˝Àì Ä]∆ø£ |ü]düsê\ô|’ Ä <˚X¯ yê´bÕs¡+ Ä<Ûës¡ |ü&ÉT‘·T+~. <˚X¯+˝Àì Ä]∆ø£ |ü]düsê\qT+&ç e#˚Ãnìï ø±s¡ø±\ qT ñ‘·Œ‹Ô ø=s¡≈£î $ìjÓ÷–+#·Tø=+≥T+~. n˝≤π> ‘·j·÷¬s’q edüTÔe⁄\qT neTTàø√&ÜìøÏ ≈£L&ÜÄ]∆ø£ |ü]düsê\ô|’ Ä<Ûës¡ |ü&ÉT‘·T+~. kÕ<Ûës¡D+>± Á|ür yê´bÕs¡+ <˚X¯ Ä]∆ø£ |ü]düsê\˝À uÛ≤>∑+>±H˚ eTq+uÛ≤$+#·&É+ »s¡T>∑T‘·T+~. ø±ãfÒº $T–*q Ä]∆ø£ |ü]düsê\qT yê&ÉTø√e&É+ düùV≤‘·Tø£y˚T. ˇø£ <˚X¯ Ä]∆ø£|ü]düsê\˝À #ê˝≤ ø±s¡ø±\qT eTq+ >∑eTìkÕÔeTT . nìï ø±s¡ø±\qT #Ó|üŒ&É+ ø£wüºy˚T nsTTq|üŒÏøÏ u≤>±Á|üuÛ≤e+ #·÷ù| ø=ìï Ä]∆ø£ ø±s¡ø±\T ~>∑Teq ñ<äVü≤]+#·&ÉyÓTÆq~.

3.1.1. Ä]∆ø£ |ü]ø£sê\˝Àì n+XÊ\TÄ]∆ø£ eédüú jÓTTø£ÿ dü«uÛ≤eeTTÄ]∆ø£ eédüú nH~ ø£ <X+ jÓTTø£ÿ Ä]∆ø£ $<ÛëHê\T dü+kÕú>∑‘· $<ÛëHê\ jÓTTø£ÿ ìs¡+‘·s¡ Á|üÁøÏj·T >± #Ó|üŒe#·TÃ.á dü+kÕú>∑‘· neT]ø£ <ë«sê n+<äTu≤≥T˝À ñqï eqs¡T\qT $ìjÓ÷–+#·&É+ <ë«sê edüTÔùde\qT ñ‘·Œ‹Ô #dæÁ|ü»\ jÓTTø£ÿ ø√¬sÿ\qT rs¡Ã&É+˝À düVü‰j·T |ü&ÉT‘·T+~. <˚X¯+˝Àì Á|ü‹ yê´bÕs¡ dü+düú ≈£L&Ü á Ä]∆ø£$<ÛëHê\ø£qT>∑TD+>± ‘·q Á|üD≤[ø£\qT m+#·Tø√yê*. ˇø£ <˚X¯+ ô|≥Tºã&ç <ëØ $<ÛëHêìï nqTdü]düTÔqïf…Æ¢‘˚nø£ÿ&É Á|üy≥T yê´bÕsêìøÏ , eédüú\≈£î ÄkÕÿs¡eTT+≥T+~. Äj·÷ yê´bÕs¡ dü+düú\ô|’ Á|üuÛÑT‘·«+ jÓTTø£ÿ n»e÷sTTw”Ò<ë ìj·T+Á‘·D #ê˝≤ ‘·≈£îÿe>± ñ+≥T+~.

n<˚ kÕeTýê<ä Ä]∆ø£ eédüÔqT nqTdü]düTÔqïf…Æ¢‘˚ Ä <˚X¯+˝À yê´bÕsê\T eT]j·TT ñ‘·Œ‹Ô eT]j·TT düô|’¢ n+‘êÁ|üuÛÑT‘·«+ #˚‘·T\˝À ñ+≥T+~. ø±ì $TÁX¯eT Ä]∆ø£ $<ÛëHêìï nqTdü]+#˚ <˚X¯+˝À Á|üuÛÑT‘·« eT]j·TT Á|üy˚≥Tdü+düú\ jÓTTø£ÿ ø£\sTTø£qT #·÷&Ée#·TÃ. @yÓTÆq|üŒÏøÏ ø£ <˚X¯+ jÓTTø£ÿ yê´bÕs¡ eédüú ô|’ Ä <˚X¯ Ä]∆ø£ $<ÛëHê\Á|üuÛ≤e+ ‘·|üŒìdü]>± ñ+≥T+~.

Ä]∆ø£ eédüú ≈£Ls¡TŒˇø£ <˚X¯ Ä]∆ø£ eédüú À $$<ä s¡+>±\ ø£\sTTø£qT Ò<ë $$<ä s¡+>±\ qT+&ç m+‘·es¡≈£î eédüú Á|üuÛ≤$‘·eTÚ‘·T+<√ <ëì Ä]∆ø£ eédüú ≈£Ls¡TŒ >± #Ó|üŒe#·TÃ. Á|ü‹ Ä]∆ø£ eédüú ˝Àq÷ nø£ÿ&É \_Û+#˚ düVü≤» eqs¡T\Hê<Ûës¡+>± #düTø=ì eTTK´+>± eT÷&ÉT s¡+>±\ ≈£î ÁbÕ<Ûëq´‘· ñ+≥T+~. n$ ÁbÕ<Ûä$Tø£ s¡+>∑eTT (eékÕj·TeTT,n&Ée⁄\T, >∑qT\T) ~«rj·T s¡+>∑eTT Òø£ bÕ]ÁXÊ$Tø£ s¡+>∑eTT eT]j·TT ‘·rj·T s¡+>∑eTT Ò<ë ùdyê s¡+>∑eTT.Á|ü‹ eédüú ø=ìï $<ÛëHê\qT, Á|üyTj·÷\T, $<ÛäT\T Ä<Ûës¡+>± #düTø=ì q&ÉTdüTÔ+~. ø£ Á|üuÛÑT‘·«+ jÓTTø£ÿ |üqTï$<ÛëHê\T, ã&Ó®≥T¢, $‘·Ô düô|’¢, e&û¶ πs≥T¢, ø±]àø£ $<ÛëHê\T, <oj·T j·÷»e÷q´+ eT]j·TT Ç‘·s¡ $<ÛëHê\˝ÀÁ|üuÛÑT‘·«+ jÓTTø£ÿ n»e÷sTTw” yÓTT<ä …’q$ n˙ï Ä <˚X¯ Ä]∆ø£ $<Ûëq+ô|’ Ä<Ûës¡|ü&ç ñ+≤sTT. ˇø£ <˚X¯ Ä]∆ø£

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3.1. ECONOMIC ENVIRONMENT

Business environment can be classified into two major categories - the Economic environment andthe Non-Economicenvironment. Economic environment refers to all those economic factors whichhave influence on business in a given scenario. The economic system of the country, lifeexpectancyof the public, savings, investment, industrialpolicies of the country, monitory policy and fiscal policies,income, distribution of income, inflation, expenditure styles of the consumers are the basic componentsof the economic environment.

Business depends on the economic environment for allthe needed inputs. It also depends on theeconomic environment to sell its finished goods. Naturally, the dependence of business on the economicenvironment is total and it is not surprising because, as it is rightly said, business is one unit of the totaleconomy. It is difficult to be precise about the factors that constitute the economic environment of acountry. However, there are some factors which have considerable influence.

Fig-3.1

3.1.1. COMPONENTS IN ECONOMIC ENVIRONMENT

The Nature of Economic SystemAn Economic System can be defined as a continuous process of setting up the institutional arrangementsby the nation so as to satisfy the needs of the people to the maximum extent by utilizing the limitedresources and thereby providing the goods and services. Every business has to plan according to thenature of the economic system of the country.

If a country follows capitalistic pattern of economic system, there is a greater scope for privateentrepreneurs and there will be no interference of the government and its control over the businessfirms. If the government selects socialistic pattern of economic system, there will be a full control onbusiness and supply system. If the government follows mixed economy there will be public sector aswell as private sector. Hence, it can be concluded that there is great impact on business system ofthe country by its economic system.

The Structure of the EconomyThe structure of the economy includes the factors such as the contribution of different sectors thatexist in the economy and ownership of businesses. There are three sectors that exist in every economy

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with different priorities according to availability of its natural resources. The three sectors are PrimarySector (Agriculture) Secondary Sector (Industrial Sector) and Tertiary Sector (Services Sector).

Economic PoliciesEach economic function is based on unique set of conditions and assumptions. The economicpolicy of the governmentcovers the system of setting levels of taxation; government budgets; the moneysupply; interest rates as well as the labour market, ownership and many other areas of governmentinterventions into the economy. The government frames economic policies in the form of industrialpolicy, fiscal policy, monitory policy, foreign policy and EXIM Policy which directly influence all thebusiness activities.

Economic PlanningEconomicPlanning can be defined as a process of conceiving; initiating; regulating andcontrolling economic activity by the state, according to set priorities with a view to achieve well-defined objectives within a given time.Economic planning is a resource allocation mechanism basedon a computational procedure for solving a constrained maximization problem with an iterative processfor obtaining its solution. Planning is a mechanism for the allocation of resources between and withinorganizations contrasted with the market mechanism.

Economic Factors and ProblemsThe economic factors involve a number of factors like economic conditions, gross domestic product,per capita income, capital formation, foreign exchange reserves and growth of foreign trade. Thesefactors have strong influence on the operation and growth of business. Problems like unemployment,poverty, recession, inflation also have great impact on business line of a country.

Global Economic PolicyA business enterprise dealing with foreign trade will be influenced by the economic environment oftheir own country as well as the international business policies. Today, every business is facingcompetition from the businesses of other countries on the globe. Policies of the international organizationlike WTO, IMF and World Bank have great impact on the business of any nation in the light ofglobalization. Hence, the stand of the country pertaining to international business relations may influencethe Economic environment of the said country.

3.2. TYPES OF THE ECONOMIC SYSTEMThe way scarce resources get distributed within an economy determines the nature of economicsystem. There are different types of economic systems used throughout the world. Broadly, theyare capitalistic economy, socialistic economy and mixed economy. Each type of economy has itsown strengths and weaknesses.

An economic system is an organized way in which a country allocates resources and distributesgoods and services across the whole nation or a given geographic area. It includes the combination ofseveral institutions, entities, agencies, decision-making processes and patterns of consumption thatmake up the economic structure of a specific community.

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Fig. 3.2

3.3. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú

ô|≥Tºã&ç <ëØ Ä]∆ø£ eédüú À <˚X¯+ Àì ñ‘·Œ‹Ô eT]j·TT |ü+|æD° n+‘ê Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝À ñ+≥T+~.edüTÔ ùde\ ñ‘·Œ‹Ô &çe÷+&é eT]j·TT düô|’¢ \ Ä<Ûës¡+>± »s¡T>∑T‘·T+~ ø±ãÏº Bìì e÷¬sÿŸ Ä]∆ø£ eédüúnì≈£L&Ü n+≤s¡T. ô|≥Tºã&ç<ëØ $<Ûëq+ e´øÏÔ>∑‘· yê<ä+ nH˚ yê<ëìï qeTTà‘·T+~. Á|üy˚≥T j·÷»e÷q´+MT<ä Ä<Ûës¡|ü&çq ñ‘·Œ‹Ô , |ü+|æD° eT]j·TT $ìjÓ÷>∑<ës¡T\ n;Ûwüº+ y˚Ts¡≈£î Ä+ø£å\T Òì e÷¬sÿÏ+>¥ $<Ûëq+Ç+<äT˝À ñ+≤sTT. Ç~ |üP]Ô>± e´øÏÔ yê<ä+ qT düeT]∆düTÔ+~. n+<äTe\q Bìì Ä+ø£å\T Òì Ä]∆ø£ $<ÛëqeTTnì e÷¬sÿŸ Ä]∆ø£ $<ÛëqeTT nì n+≤s¡T. Ç~ ¬s+&ÉT s¡ø±\T>± ø£ì|ædüTÔ+~.

1.|üPs¡«ø±\|ü⁄ |üP]Ô ùd«XÊÃ $<ÛëqeTT. Á|üuÛÑT‘·«+ jÓTTø£ÿ Á|üyTj·T+ ñ+&É<äT Ò<ë #ê˝≤ ‘·≈£îÿe2.ìj·T+Á‹‘· ô|≥Tºã&ç<ëØ $<ÛëqeTT. Ç+<äT˝À ø=+‘· y˚Ts¡≈£î Á|üuÛÑT‘·« CÀø£ + ñ+≥T+~.

3.3.1. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú \ø£åD≤\Tô|≥Tºã&ç<ëØ $<Ûëq+ jÓTTø£ÿ ndü\T dü«s¡÷|üeTT |üP]Ô ùd«XÊÃ $<ÛëqeTT. Á|üy˚≥T e´≈£îÔ\ @$<Ûä+>±q÷ n<äT|ü⁄#˚j·Tã&És¡T. yê]øÏ q∫Ãq $<Ûä+>± yês¡T ô|≥Tºã&ç ñ+#·e#·TÃ. yê]øÏ q∫Ãq ñ‘·Œ‘·TÔ\qT #˚j·Te#·TÃ. nqTø=qï<Ûäs¡≈£î edüTÔ ùde\qT neTàe#·TÃ. @$<ÛäyÓTÆq ìj·T+Á‘·D Òì á Ä]∆ø£ $<ÛëHêìøÏ ÁøÏ+~ \ø£åD≤\qT >∑eTì+#·e#·TÃ.

Á|üy≥T j·÷»e÷qéTTÇ~ ÄdæÔ Vü≤≈£îÿ\qT Á|üy≥T e´≈£îÔ\|üs¡eTT #düTÔ+~. edüTÔ ùde\ ñ‘·Œ‹Ô eT]j·TT |ü+|æD° Á|üy≥T e´≈£îÔ\ #‘·T\≈£îe~* y˚düTÔ+~.

eT÷\<ÛäqeTT ô|s¡T>∑T‘·T+~.ô|≥Tºã&ç <ëØ eédüú Á|üy˚≥T e´≈£îÔ\ eT<Ûä b˛°ì ñ+≥T+~. me¬s’‘ b˛°ì »sTTkÕÔs√ yê] øÏ m≈£îÿe uÛ≤>∑eTTe÷¬sÿŸ <ä≈£îÿ‘·T+~. ø±ãÏº á $<Ûëq+˝À e´≈£îÔ\T q÷‘·q yê´bÕs¡ $<ÛëqeTT\TqT Ä#·]+∫ ñ‘·Œ‹Ôì m≈£îÿe#˚j·TT≥≈£î ˝≤uÛ≤\qT >∑&ç+#·T≥≈£î Á|üj·T‹ïkÕÔs¡T.

eT÷\<Ûäq πø+ÁBø£s¡DÇ~ <˚X¯+˝Àì ãVüQ ø=~›eT+~ #˚‘·T\˝À eT÷\<ÛäqeTT πø+ÁBø£‘·+ ø±e&ÜìøÏ <√Vü≤<ä+ #˚düTÔ+~. #ê˝≤

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The goal of the economic system of a society is to determine what to produce, how to produce, andfor whom to distribute goods and services. The primary goal of an economic system is to providepeople with a minimum standard of living or quality of life.

3.3. CAPITALIST ECONOMY

Capitalistic economy is an economic system in which private individuals or businesses own capitalgoods. The production of goods and services is based on supply and demand in the general marketknown as a market economy.

The system of capitalistic economy stresses the philosophy of individualism believing in private ownershipof all agents of production in private sharing of distribution processes that determine the functionsrewards of each participant, and in individual expression of consumer choice through a free marketplace. In its political manifestation, capitalistic economy may fall in a range between extremeindividualisms and anarchism (no government) and the acceptance of some state sanctions. Thecapitalist system is also known as free enterprise economy and can be classified asgiven below.

The old, laissez-faire capitalistic economy where government intervention in the economyis absent or negligible; and

The modern, regulated or mixed capitalistic economy, where there is a substantial amountof government intervention.

3.3.1. CHARACTERISTICS OF CAPITALIST ECONOMYThe purest form of capitalistic economy is free market or laissez-faire capitalistic economy. Here,private individuals are unrestrained. They may determine where to invest, what to produce or sell,and at which prices to exchange goods and services. The laissez-faire marketplace operates withoutchecks or controls. The following are the primary characteristics of capitalistic economy.

Private OwnershipCapitalistic economy is based on property rights and on the principles that the government shouldleave economic production to the private sector.

Capital AccumulationCapitalistic economy is a competitive system whereby capital is accumulated by individuals who aresuccessful in the market. This is intended to give individuals incentive to work, innovate and improvethings.

Capital ConcentrationIn a capitalist system, capital typically becomes concentrated such that a relative small number ofpeople, known as a capitalist class, own much of the property in a nation.

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‘·≈£îÿeeT+~ m≈£îÿe dü+bÕ<äqqT ≈£L&É>∑≥Tº≈£î+≤s¡T. M]H uÛÑ÷kÕ«eTT\T Ò<ë ô|≥Tºã&ç<ëØ es¡Z+ >± >∑T]ÔkÕÔs¡T.

dü«düÃ¤+<ä Á|üyXeTTô|≥Tºã&ç<ëØ $<Ûëq+˝À e´≈£îÔ\ Ò<ë dü+düú\ Á|üyXeTT dü«düÃ¤+<äeTT . me¬s’Hê m|ü⁄Œ&Ó’Hê eédüú ÀìøÏ Á|üy•+#·e#·TÃ. yê´bÕsêìï ÁbÕs¡+_Û+#·e#·TÃ. ‘·q≈£î q∫Ãq $<Ûä+>± ‘·q yê´|üø±ìï ìs¡ísTT+#·Tø√e#·TÃ.

wüs¡‘·T\T Òì e÷¬sÿŸ eédüúÄ]∆ø£ ìs¡íj·÷\T Á|üuÛÑT‘·« $<ÛëHêìøÏ nqT≈£L\+>± rdüTø√yê\ì Ä+ø£å\T ñ+&Ée⁄. mes¡T≈£î q∫Ãq $<Ûä+>± yês¡T‘·eT ô|≥Tºã&çì $ìjÓ÷–+#·Tø=ì edü÷Ô‘·Œ‹Ôì #˚|ü≥º e#·TÃ. edüTÔe⁄\ jÓTTø£ÿ <Ûäs¡\qT Á|üuÛÑT‘·« CÀø£ + Ò≈£î+&Üìs¡ísTT+#·e#·TÃ.

ÁXÊ$Tø£ es¡ZeTTô|≥Tºã&ç<ëØ $<Ûëq+˝À dü+|ü<ä n+‘ê #ê˝≤ ∫qï es¡Z+ #˚‘·T\˝À πø+ÁBø£‘·yÓTÆ ñ+≥T+~. <˚X¯+˝Àì $T–*qes¡ZeTT ô|’ yê] e<ä› y‘·Hê\≈£î |üì #düTÔ+~. BìH ÁXÊ$Tø£es¡ZeTT n+≤s¡T. M]øÏ Ç#Ã y‘·Hê\T ÁXÊ$Tø£es¡ZeTTyê]≈£îqï &çe÷+&é düô|’¢\ Ä<Ûës¡+>± ìs¡ísTT+#·ã&É‘êsTT. ÁXÊ$Tø£ es¡ZeTT m≈£îÿe y‘·Hê\ø=s¡≈£î yê] $<ë´kÕÔsTTìÒ<ë yê] HÓ’|ü⁄D´kÕúsTTì ô|+#·Tø√e\dæ edüTÔ+~. HÓ’|ü⁄DéTTqïyê]øÏ m≈£îÿe &çe÷+&ÉT ñ+≥T+~.

b˛°ô|≥Tºã&ç<ëØ $<Ûëq+ b˛°ì Áù|πs|ædüTÔ+~. eédüú\T, ‘êeTT ‘·j·÷s¡T#ùd edüTÔ ùde\ HÓ’|ü⁄D´‘· Hê<Ûës¡+>± yê]<Ûäs¡\ Hê<Ûës¡+>± yês¡T e÷¬sÿŸ ˝À ì\<=≈£îÿø√e&É+ »s¡T>∑T‘·T+~. b˛°ì ‘·≥Tºø√>∑*–q dü+düú\T eédüú À ñ+≤sTT. $T–*q$ ìÁdüÿ$TkÕÔsTT. á$<Ûä+>± b˛° HêDýÓTÆq edüTÔùde\qT Áb˛‘·‡Væ≤düTÔ+~. eédüú À ø±e\dæqb˛°ì ì\u…≥º≤ìøÏ Á|üuÛÑT‘·«+ Á|üj·T‹ïdüTÔ+~.

3.3.2. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú düT>∑TD≤\T1. <˚X¯ Ä]∆ø£ dü+|ü<ä dü+düú\ ø=s¡≈£î C≤Á>∑‘·Ô>± Á|üD≤[ø± ã<ä›+>± ñ|üjÓ÷–+#·ã&ÉT‘·T+~.2. ñ‘·Œ‹Ô <ës¡T\T, $ìjÓ÷>∑<ës¡T\T, ÁXÊ$T≈£î\T ‘·eT≈£î q∫Ãq $<Ûä+>± yê´|üø±\qT #düTø=H ùd«#Û·Ã \_ÛdüTÔ+~.

&çe÷+&ÉT Ä<Ûës¡+>± ñ‘·Œ‹Ô ìs¡ísTT+#·ã&ÉT‘·T+~.3. e÷s¡T‘·Tqï ø±˝≤ìøÏ nqT>∑TD+>± eédüúqT e÷s¡TÃø√e#·TÃ. ø±e\dæq ùd«#Û·Ã <=s¡T≈£î‘·T+~.4. <Ûäs¡\ ìs¡íj·TeTT, e÷¬sÿŸ ìs¡íj·TeTT e÷¬sÿŸ |ü]dæú‘·T\ø£qT>∑TD+>± »s¡T>∑T‘êsTT. @ ø£ÿ] ìs¡íj·T+ MT<ä

Ä<ës¡|ü&ç eédüú |üì#˚j·T<äT.

Fig-3.3

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Voluntary ParticipationCapitalistic economy is based on a system of voluntary participation whereby everyone is free to startany company he imagines or pursues any career he desires.

Free MarketsEconomic decisions are made by the market as opposed to a government. Market participants freelydecide how to allocate capital and what prices to set for goods. This can be contrasted with systemsof government control where the government decides what will be produced and how much it willcost.

Wage LaborIn a capitalist system, much of the capital is usually owned by a small capitalist class. Most people ina capitalist system offer their labour to the market to earn a living. This group is known as the workingclass. Wages are set by supply and demand.People may pursue education and self-improvement toachieve higher wages by becoming qualified for professions that are in high demand.

CompetitionCapitalistic economy relies on intensive competition to allocate resources efficiently, improve thingsand lower prices. If the government interferes in the market by preferring one firm over another,competition can break down. Likewise, if a firm becomes extremely large it begins to resemble agovernment that controls an entire industry without competition. Governments play a role in designingand enforcing rules to keep competition alive.

Welfare Capitalistic economyA pure form of capitalistic economy, known as laissez-faire capitalistic economy is a survival of thefittest system where the government plays no role in the economy. At present this system is rare. Inpractice, governments impose regulations, taxes, tariffs and subsidies. Ideally, this is all designed forthe good of the public to raise the quality of life of a nation.

For example, a government can tax the capitalist class to provide a basic quality of life for all residentsin areas such as education, infrastructure, transportation and healthcare. A government can also protectconsumers, workers and the environment by regulating businesses.

3.3.2. ADVANTAGES OF CAPITALIST ECONOMY The resources are utilized efficiently and economically.

Producers, consumers and the workers all enjoy economic freedom and are free to work,as they like. Goods are produced according to the taste, preference and demand of consumers.

Capitalist system can make changes according to the needs and circumstances of the economy.It has inbuilt flexibility.

An automatic equilibrium is brought about by the operation of price mechanism and marketforces. No central direction is required for the operation of the economy.

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5. Á|ü‹ e´øÏÔ ‘·q≈£î q∫Ãq ìs¡íj·÷\T rdüTø=H˚ ùd«#Û·Ã ñqï~. Á|üuÛÑT‘·«+ jÓTTø£ÿ #=s¡u≤≥T ñ+&É<äT.6. e´≈£îÔ\T ‘·eT≈£î ø±e\dæq+‘· yê´bÕsêìï #˚düTø√e#·TÃ, Ä<ëj·÷\qT, dü+|ü<äqT ô|+#·Tø√e#·TÃ.7. ô|≥Tºã&ç<ës¡T\≈£î m≈£îÿe ≤uÛ≤\T ekÕÔsTT ø±ãÏº qwüº uÛÑj·T+ ñqï yê´bÕsê\˝ÀìøÏ ≈£L&Ü ñ<ä eT<ës¡T\T

Á|üy˚•kÕÔs¡T. q÷‘·q kÕ+πø‹ø£‘· qT e÷s¡TŒ\≈£î neø±X¯$TdüTÔ+~.8. ô|≥Tºã&ç <ës¡T\T m≈£îÿe dü+|ü<äqT ≈£L&É>∑&É‘ês¡T. ÇÏº <˚XÊ\˝À Á|ü»\T m≈£îÿe Jeq Á|üe÷D≤\qT ø£*–

ñ+≤s¡T.9. ô|≥Tºã&ç<ëØ $<ÛëqeTT eT÷\<Ûäq ø£\ŒqqT ô|+bı+~düTÔ+~.

3.3.3. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú ˝ÀbÕ\T1. ô|≥Tºã&ç<ëØ $<Ûëq+˝À dü+|ü<äqT ÄkÕ«~+#·&É+ dü+|òüT+˝À >ös¡e+>± uÛ≤$+#·ã&ÉT‘·T+~. Ç~ $T–*q

yê] $wüj·T+˝À e÷qe $\Te\T nD>∑<=ø£ÿã&É‘êsTT.2. $T‹MT]q b˛° e\q eqs¡T\ e<ë m≈£îÿe ne⁄‘·T+~.3. me]¬ø’‘˚ m≈£îÿe dü+|ü<ä ñ+≥T+<√ yêπs m≈£îÿe dü+bÕ~kÕÔs¡T. $T–*qyês¡T n˝≤π> ñ+&çb˛‘ês¡T. Ç~

esêZ\eT<Ûä n+‘·sêìøÏ <ë]rdüTÔ+~.4. esêZ\ eT<Ûä b˛s¡T, <Ûäs¡\ j·TT<ë›\T, <Ûäs¡\ nÁ–yÓT+≥T¢ #ê˝≤ ns¡T<äT>± ø£ì|ækÕÔsTT. <Ûäs¡\ ôdŒ≈£î´ ÒwüHé

ø£ì|ædüTÔ+~.5. düe÷»+˝À ñqïyês¡T, Òìyês¡T nH˚ ¬s+&ÉT esêZ\T>± $&ÉBj·Tã&ÉT‘·T+~. á esêZ\ eT<Ûä yÓ’s¡+ düyÓTà\T,

˝≤øö≥T¢, bÕ]ÁXÊ$Tø£ ‘·>±<ë\≈£î <ë]rdüTÔ+~. ô|≥Tºã&ç <ës¡T\T y‘·q Je⁄\qT <√#·Tø=+≤s¡T.6. ñ<ä eT<ës¡T\qT me]˙ Á|üuÛÑT‘·«+ ìj·T+Á‘·D #˚j·T<äT. M] eT<Ûä @$<äeTsTTq dü+<ÛëqeTT ñ+&É<äT.

Bìe\q Ä]∆ø£ e÷+<Ûä eTT, Á<äy√´\“¤qeTT yÓTT<ä\>∑T düeTdü \T ekÕÔsTT.7. ÁXÊ$T≈£î\ y˚‘·Hê\T nqTø=qï+‘·>± ñ+&Ée⁄. ‘·<ë«sê M] ø=qT>√\T X¯øÏÔ ‘·>∑TZ‘·T+~. Ç~ $ìjÓ÷>∑+ ô|’

Á|üuÛ≤e+ #·÷|ü⁄‘·T+~. Bì e\q ñ‘·Œ‹Ô À ‘·>∑TZ<ä\ ø±s¡D+>± ìs¡T<√´>∑+ ô|]π> neø±X¯+ m≈£îÿe.8. ô|≥Tºã&ç<ëØ eédüú À neTàø£+<ës¡TøÏ m≈£îÿe n~Ûø±sê\T nqTuÛÑ$kÕÔ&ÉT. $ìjÓ÷>∑<ës¡T≈£î ùd«#Û·Ã ñ+&É<äT.

ø±u≤Ïº neTàø£+<ës¡T @ø£kÕ«eT´ Vü≤≈£îÿ\qT nqTuÛÑ$kÕÔ&ÉT. $ìjÓ÷>∑<ës¡T ‘·≈£îÿe Á|üe÷D≤\Tqï edüTÔe⁄\qT≈£L&Ü m+#·Tø√e\dæ edüTÔ+~. ñ‘·Œ‹Ô<ës¡T\<˚ ô|’#˚sTT>± ñ+≥T+~

3.4. kÕeTýê<ä Ä]∆ø£ eédüúkÕeTýê<ä Ä]∆ø£ eédüÔ dü+|ü<ä eT]j·TT ñ‘·Œ‹Ô ø±s¡ø±\ô|’ |üP]Ô>± Á|üuÛÑT‘·« πø+ÁBø£s¡D eT]j·TT n»e÷sTTw”sê»´ eédüú. dü+|ü<ä nq>±, ÄdüTÔ\T, bòÕø£ºØ\T,j·T+Á‘·kÕe÷Á–, >∑qT\T yÓTT<ä …’q nìï ñ‘·Œ‹Ôø±s¡ø±\qT ñ|üjÓ÷–+∫ Á|ü»\ jÓTTø£ÿ nedüsê\qT dü+‘·|üÔ |üs¡#·>∑*π> πø+ÁBø£‘· Ä]∆ø£ eédüú. Ç~ Á|üuÛÑT‘·« eT]j·TT Á|ü»\düVü≤ø±sêìï |üP]Ô>± qeTTà‘·T+~. dü+|ü<ä Á|üuÛÑT‘·« nBÛq+˝À ñ+&ç, Ä dü+|ü<äqT Á|ü»\+<ä] eT<Ûä düe÷q+>±|ü+|æD° ø±ã&É≤ìï düe÷» düs¡«»q düe÷Hê‘ê«ìï kÕeTýê<ä eédüÔ |üP]Ô>± qeTTà‘·T+~.

ø£eT÷´ì»+ eT]j·TT kÕeTýê<ä+ nH˚$ ¬s+&ÉT Ç+#·T$T+#·T πø s¡ø£yÓTÆq dæ<ë›+‘ê\ô|’ @s¡Œ&çq sê»ø°j·Teédüú\T. Ç$ dü+|ü<äqT düe÷» |üs¡+ #˚j·TT≥˝ÀqT düe÷Hê‘ê«ìï kÕ~+#·T≥˝ÀqT πø uÛ≤eqqT ø£*– ñHêïsTT. Á|üdüTÔ‘· Á|ü|ü+#·+˝À |üP]Ô>± kÕeTýê<ä+ ñqï düe÷C≤\T #ê˝≤ ‘·≈£îÿe. kÕeTýê<ä uÛ≤yê\Tqï|üŒÏøÏø=+‘· y˚Ts¡≈£î ô|≥Tºã&ç<ëØ $<ëq+ uÛ≤eq\T ≈£L&Ü Ç+<äT˝ÀìøÏ nqTeT‹+#·ã&ÉT‘·Tqï~.

62

There is no interference in economic matters. Every individual is free to take decisions asto his economic activities keeping in mind his own-interest.

Every producer tries to earn as much as possible by increasing his output, bringing newercommodities into the market etc.

Entrepreneurs are encouraged to invest more money even in the projects involving high riskby providing them incentives. This results in technological progress and new innovations,which involves great risks.

The capitalist countries have become rich and affluent, and people of such countriesenjoy higher standard of living.

Capitalistic economy encourages Capital formation

3.3.3. DISADVANTAGES OF CAPITALIST ECONOMY In a capitalist economy, wealth enjoys the prestige in the society, which results in erosion of

human values.

There is a large-scale wastage of resources due to unnecessary competition.

In capitalist system, owners of the means of production can earn more as compared to thosewho do not possess much means of production. This brings wide inequalities in the distributionof income and wealth.

In modern capitalist market group rivalries and price wars, price-agreements etc. are commonlyfound. Speculative practices are also present in the system.

In capitalist countries, society possesses two classes such as haves and have-nots. Suchdivision results in conflict in the form of strikes, lockouts and industrial disputes in theeconomy. Under capitalistic economy, capitalists generally exploit the poor laborers.

There is no coordination among the activities of different producers and consumers undercapitalistic economy. It is entirely left to the operation of market mechanism. This gives rise tothe problem of inflation and deflation.

Capitalist system creates unemployment problem also. Under capitalist economy, laborersare not paid reasonably. So, their purchasing power becomes less. This reduces the aggregatedemand in the economy, which results in less production and unemployment.

Capitalistic economy is basically a sellers’ market where consumer has no freedom. This isbecause, under capitalist economy, producers enjoy monopoly in the market and producesubstandard goods. So, it is the producer who influences the market and not the consumer.

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1991 øÏ eTT+<äT U.S.S.R ø£ kÕeTýê<ä sê»éTT . nìï ñ‘·Œ‹Ô ø±s¡ø±\qT Á|üuÛÑT‘·« n~q+˝À ñ+#·Tø=H˚~.Á|ü»\≈£î kı+‘·+>± @MT nqTeT‹+#·ã&˚~ ø±<äT. Ç|üŒÏ |ü]dæÔ‹ y˚s¡T>± ñqï~ HÓeTà~ HÓeTà~>± <˚XÊ\TkÕeTýê<ä+ qT+&ç ô|≥Tºã&ç<ëØ $<Ûëq+, $TÁX¯eT Ä]∆ø£ $<Ûëq+ yÓ’|ü⁄q≈£î eTs¡\T‘·THêïsTT.

ñ<ëVü≤s¡D≈£î ≈£Lú≤ rdüTø=+fÒ. Ç~ |üP]Ô>± kÕeTýê<ä sê»´+. nìï Ä]∆ø£ eéVü‰sê\T Á|üuÛÑT‘·«+ #˚‹˝ÀH˚ ñHêïsTT. $<ä , >∑Vü≤ nedüsê\T, dü_‡&û ÄVü‰s¡+ düô|’¢ ∫es¡≈£î $H√<ä ø±s¡ Áø£e÷\T ≈£L&Ü Á|üuÛÑT‘·«yT ìs¡«Væ≤düTÔ+~.á <˚X¯+˝À kÕºø˘ mπø‡Ã¤+õ ≈£L&Ü Ò<äT n+fÒ Çø£ÿ&É ô|≥Tºã&ç<ëØ #Ûêj·T\T eT#·TÃ≈£î ≈£L&Ü ø±qsêe⁄. 80%ÁXÊ$Tø£ X¯øÏÔ |üP]Ô>± Á|üuÛÑT‘·« |üìø√dü+ ìjÓ÷–+#·ã&ÉT‘·T+~.

3.4.1. kÕeTýê<ä Ä]∆ø£ eédüú \ø£åD≤\TkÕeTýê<ä+ nH˚ |ü<ä+ nìï+Ïø£Hêï ÁbÕ<Ûëq´‘· dü+‘·]+#·Tø=qï~. kÕeTýê<ä+ nH˚~ ˇø£ Ä]∆ø£ eédüú.Ç+<äT˝À nìï ñ‘·Œ‹Ô ø±s¡ø±\qT Á|üuÛÑT‘·«y˚T n»e÷sTTw” #˚dü÷Ô n~Ûø±s¡+ ø£*– ñ+≥T+~. ø=ìï ìã+<Ûäq\≈£î˝Àã&ç Á|üy˚≥T dü+|ü<ä nH˚ e÷fÒ ñ+&É<äT. Bì jÓTTø£ÿ eTTK´ \ø£åD≤\T ÁøÏ+<ä ñ<äVü≤]+#·&ÉyÓTÆq~.

düe÷» j·÷»e÷qéTTkÕeTýê<ä eédüú À nìï ñ‘·Œ‹Ô ø±s¡ø±\≈£î düe÷»y˚T Á|ü‹ì~Û >± ñ+≥T+~. n+fÒ Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝ÀÒ≈£î+&Ü Á|üuÛÑT‘·«+ n~Ûø±s¡+ ø£*– ñ+≥T+~. Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝À dü+|ü<ä >±ì ÄdüTÔ\T >±ì ñ+&Ée⁄.

ø±ãÏº dü+bÕ<äq+‘ê ÁÁ|üuÛÑT‘·«+ Á|ü»\ dü+πøåeT+ ø√dü+ πø≤sTTdüTÔ+~.

Ä]∆ø£, kÕe÷õø£ , sê»ø°j·T düe÷q‘·«+<äìø£, ù|<ä nH˚ ‘˚&Ü Ò≈£î+&Ü n+<ä]˙ düe÷q>± kÕeTýê<ä+ #·÷düTÔ+~. @$<ÛäyÓTÆq düeTdü \T ñ+&Ée⁄.Á|ü»\+<ä]øÏ Ä]∆ø£, sê»ø°j·T, kÕe÷õø£ düe÷q‘·«+ Çe«ã&ÉT‘·T+~.

Ä]∆ø£ Á|üD≤[ø£\T<˚X¯ n_Ûe~› ø=s¡≈£î, Á|ü»\ dü+πøåeT+ ø=s¡≈£î Á|üuÛÑT‘·«eTT ø=ìï <Û´j·÷\qT m+#·Tø=ì <ëì ø=s¡≈£î Á|üD≤[ø£\qTdæ<ä›+ #˚düTÔ+~. á Á|üD≤[ø£\ <ë«sê nìïs¡ø±\ kÕe÷» düeTdü \qT ñ‘·Œ‹Ô eT]j·TT |ü+|æD° $wüj·÷\qT|ü]wüÿ]+#·&É+ »s¡T>∑T‘·T+~. á Á|üD≤[ø£ s¡#·q eT]j·TT neT\T #˚j·TT≥ ø=s¡≈£î πø+ÁBø£‘· eédüús¡÷bı+~+#·ã&ÉT‘·T+~.

Á|üuÛÑT‘·«+ jÓTTø£ÿ bÕÁ‘·kÕeTýê<ä eédüú À Á|üuÛÑT‘·«+ jÓTTø£ÿ bÕÁ‘· #ê˝≤ ø°\ø£yÓTÆq~. ìs¡íj·÷\T rdüTø√e&É+, <ëìì neT\T #j·T&É+,ìj·T+Á‘·D, |ü+|æD°, $ìjÓ÷>∑+, ô|≥Tºã&ç, $<˚o yêDÏ»´+ yÓTT<ä\>∑T n+XÊ\≈£î dü+ã+~+∫q ìs¡íj·÷\qTrdüTø√e&É+˝À Á|üuÛÑT‘·«+ eTTK´ bÕÁ‘· b˛wædüTÔ+~.

ø£ dü nedüsê\T n+<äT‘êsTTø£ dü nedüsê …’q ÄVü‰s¡+, Äyêdü+, $<ä , Äs√>∑ +, JeH√bÕ~ Òø£ ñ<√´>∑+ n+<ä]ø° n+<äTu≤≥T˝À ñ+≤sTT.Á|üuÛÑT‘·«+ á uÛ≤<ä ‘·qT rdüTø=+≥T+~. @$<ÛäyÓTÆq ‘˚&Ü #·÷|ü≈£î+&Ü n+<ä]ø° ø£ dü nedüsê\T rs¡&É+ e\qÁ|ü»\T Á|üuÛÑT‘·«+ jÓTTø£ÿ ÁbÕ<ÛëHê´‘·qT >∑T]ÔkÕÔs¡T. Á|üuÛÑT‘ê«\T ã\+>± ñ+&˚ ≤ düVü‰j·T |ü&É‘ês¡T.

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3.4. SOCIALIST ECONOMY

Socialistic economy is a populist economic and political system based on public ownership of themeans of production. These means include the machinery, tools, and factories used to producegoods that aim to directly satisfy human needs. Socialists believe that everything in society is made bythe cooperative efforts of the state andpublic. Socialists contend that shared ownership of resourcesand central planning provide a more equal distribution of goods and services and a more equitablesociety. Communism and Socialistic economy are political and economic systems that are related butoften confused with each other. Communism and Socialistic economy are political and economicsystems that share certain beliefs, including greater equality in the distribution of income.

Today, it would be hard to point to countries that are purely socialist. Still, there are countries thatidentify as majorly socialist, though they also incorporate some little forms of capitalistic economy orcommunism. Before its collapse in 1991, the U.S.S.R was a socialist state. All the means of productionwere controlled by the state. If anybody wanted essential items, he had to get it from the government.Cow and the land were owned by the state. Owning a cow for commercial purposes would betreated as a crime.

Cuba is another prominent example of a socialist nation. The government controls the economy, alllevels of education, the national health education, housing, maintains subsidized food programs, utilities,and even entertainment. The country does not have a stock exchange, which is a major indicator thatthe country is not capitalistic. About 80 percent of the workforce in Cuba work in state facilities.

3.4.1. CHARACTERISTICS OF SOCIALIST ECONOMY

The term Socialistic economy has become increasingly popular, though many have been misusing theterm without a proper understanding of its real meaning. Socialistic economy is an economic systemof social organization where the means of production are socially owned, rather than being privatelyowned. The main characteristic features of Socialistic economy are explained as follows:

Collective OwnershipIn Socialistic economy, all means of production are owned by the community, i.e., Government, andno individual can hold private property beyond certain limit. Therefore, it is government which utilizethese resources in the interest of social welfare.

Economic, Social and Political EqualityUnder Socialistic economy, there is almost equality between rich and poor. There is no problem ofclass struggle.

Economic PlanningUnder Socialistic economy, government fixes certain objectives. In order to achieve these objectives,government adopts economic planning. All types of decisions regarding the central problems of an

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b˛° Ò<äTÁ|üuÛÑT‘·«y˚T nìï nedüsê\≈£î ‘·–q ñ‘·Œ‹Ô #˚|ü&ÉT‘·T+~ ø±ãÏº e÷¬sÿŸ ˝À b˛° ñ+&É<äT. Á|üuÛÑT‘·«+ ø±e\dæqnedüsê\H˚ >∑T]ÔdüTÔ+~ ø±ì $$<ä ÁbÕ‘êé÷ïj·÷\ CÀ*øÏ b˛<äT ø±ãÏº $ìjÓ÷>∑<ës¡T≈£î m+|æø£ #˚düTø=H˚ X¯øÏÔñ+&É<äT. ô|’>± e÷¬sÿŸ X¯≈£îÔ\T |üì#˚j·Te⁄ ø±ãÏº b˛° nH˚<˚ ñ+&É<äT.

<Ûäs¡\ ìj·T+Á‘·DÁ|üuÛÑT‘·«yT ñ‘·Œ‹Ô eT]j·TT |ü+|æD° #düTÔ+~ ø±ãÏº <Ûäs¡\qT ìs¡ísTT+# n~Ûø±s¡eTT Á|üuÛÑT‘ê«ìπø ñ+≥T+~. ô|’>±˝≤uÛ≤\qT dü+bÕ~+# uÛ≤eq Ò<äT ø±ãÏº ñ‘·Œ‹Ô øÏ nedüs¡yÓTÆq <Ûäs¡\qT ìs¡ísTTùdÔ dü]b˛‘·T+~. <Ûäs¡\T ô|s¡>∑≥+,ìj·TeTÔ+#·&É+ nH˚ dü+ùd´ sê<äT.

kÕe÷õø£ dü+πøåeT+düe÷»+ ÁX‚j·TdüT‡ ø√dü+ kÕeTýê<ä eédüÔ Á|üj·T‹ïdüTÔ+~. ÁXÊ$Tø£ X¯øÏÔ <√#·Tø√e&É+ qT+&ç s¡øÏådüTÔ+~. ÁXÊ$Tø£nedüsê\qT, Vü≤≈£îÿ\qT ø±bÕ&É≥+ <ë«sê Á|ü‹ ˇø£ÿ]ø° nedüsê\T rs¡Ã&É+ <ë«sê kÕe÷õø£ ÁX‚j·TdüT‡≈£îbÕ≥T|ü&ÉT‘·T+~.

3.4.2. kÕeTýê<ä Ä]∆ø£ eédüú düT>∑TD≤\T1. πø ˇø£ kÕe÷õø£ es¡Z+ ñ+≥T+~. <Ûäìø£ uÒ<ä ‘˚&Ü Ò<äT. ÁXÊ$Tø£ <√|æ&û nqï e÷fÒ Ò<äT.

2. <X+˝À ñqï n˙ï kÕe÷õø£ eqs¡T\qT ìj·T$T‘· Á|üD≤[ø£ Á|üø±s¡+ düe÷» dü+πøåeT+ ø√dü+ ñ|üjÓ÷–+#·&É+»s¡T>∑T‘·T+~.

3. düe÷»+˝À ñqï n˙ï düeTdü \≈£î Á|üD≤[ø£\T s¡∫+#· ã&É‘êsTT. kÕeTýê<ä eédüú dü+‘·T*‘· n_Ûe~›ø√dü+ |üì#düTÔ+~.

4. düTdæÔs¡ Ä]∆ø£ eédüú ø√dü+ Á|üuÛÑT‘·«+ Á|üj·T‹ïdüTÔ+~ yê´bÕs¡ #·Áø±\T &ç<äT&ÉT≈£î\T ñ+&Ée⁄.

5. kÕe÷õø£ dü+πøåeT+ ø=s¡≈£î m≈£îÿe Á|üj·T‘·ï+ »s¡T>∑T‘·T+~. n+<ä]øÏ düe÷q neø±XÊ\T Çe«ã&É‘êsTT.Á|ü»\ kÕeT<Ûä + y˚Ts¡≈£î n+<ä]øÏ JeH√bÕ~ Çe«ã&ÉT‘·T+~.

6. <˚X¯+˝Àì Á|üø£‹ø£, e÷qe, uÛÖ‹ø£ eqs¡T\qT <˚X¯ Ä]∆ø£ n_Ûe~›ø√dü+ ñ|üjÓ÷–+#·e#·TÃ.

7. nìï eqs¡T\qT Á|üuÛÑT‘·«+ $ìjÓ÷–düTÔ+~. ø±ãÏº n_Ûe~› #Ó+<äT‘·Tqï <XÊ\≈£î $TøÏÿ* ñ|üjÓ÷>∑|ü&ÉT‘·T+~.

3.4.3. kÕeTýê<ä Ä]∆ø£ eédüú ˝ÀbÕ\T1. $ìjÓ÷>∑<ës¡TD≈£î m+|æø£ neø±X+ Ò<äT. Á|üuÛÑT‘·«+ |ü+|æD° #ùd edüTÔ ùde\qT e÷Á‘·yT $ìjÓ÷–+#ê*.

2. Á|üuÛÑT‘·« ìj·T+‘·‘·«+ m≈£îÿe>± ñ+≥T+~. Á|üC≤kÕ«$Tø£ $\Te\T ñ+&Ée⁄

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economy are taken in the economic plans. There is a Central Planning Authority, which plans for theeconomy.

Positive Role of GovernmentIn Socialistic economy, government plays significant role in decision making. Thus, government hascomplete control over economic activities like distribution, exchange, consumption, investment andforeign trade.

Provision of Basic NeedsIn a socialist economy, the basic needs – food, shelter, clothing, education, health and employment –are provided by the government without any discrimination. This is one of the greatest advantages ofSocialistic economy. Provision of basic needs by the government can, however, result in the massesthinking that they cannot survive without the government, creating a perfect environment for the riseof authoritarian governments.

No CompetitionTypically, when anybody wants to buy a car, there is limited choice. There are no different brands and different models with varying features and prices. It’s up to you to choose the best one for you. Thesame applies for many other products. In a socialistic economy, there is no competition in the marketsince the state is the sole entrepreneur. The state only focuses on provision of necessities, whichresults in limited consumer choice.

Price ControlOne might be wondering how prices are regulated in an economy without any market competition. Insocialistic economies, the prices of products are controlled and regulated by the state. The states setsboth the market price for consumer goods and the accounting price which helps managers to makedecisions about the production of goods.

Social WelfareAnother major reason behind the rise of socialistic economy was to protect the working class fromthe exploitation. The state takes care of the working class through employment protection, minimumwages and trade union recognition rights.

3.4.2. ADVANTAGES OF SOCIALIST ECONOMY

There is only one class in a socialistic economy and hence, there is no question of exploitationof labour.

All types of natural resources are utilized in a most organized manner. Its main objective is toexploit these resources for the welfare of society.

In order to solve various problems in the system there is proper economic plan in this type ofeconomy. Thus, socialistic economy will adopt the balanced development strategy.

Economic stability is maintained by the government on the basis of economic planning. Thereare no cyclical fluctuations in such a system.

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The aim of socialist economy is to maximize social welfare of the society. It provides equalopportunities of employment to all individuals according to their abilities.

The Central Planning Authority is the main figure in a socialist economy. It coordinates thenatural, human and physical resources to achieve economic progress of the country.

This type of economic system is most suitable to the needs of developing countries as allmeans of production are controlled by the government.

3.4.3. DISADVANTAGES OF SOCIALIST ECONOMY A consumer has no choice of his own, he acts as a mere slave under this system. Government

produces goods and services keeping in view the needs of the people. Socialist economy is always less democratic as it possesses no element of freedom. It is also

like government dictatorship. Government rules the country according to its own interest. No automatic function in system

exists at all. All economic activities are controlled by the government. Thus, they develop all evils of

bureaucracy like favouritism, delay, corruption and other evils. Socialist economy is very rigid and not susceptible to change according to requirements.

Hence, people work like a machine and never get any incentive to work. All the economic activities are performed by the Central Authority on behalf of the government.

Hence, it is overburdened with daily activities and, therefore, it gets very less time to thinkand plan for the economic prosperity of the country.

Planning is a long process in a socialist economy. This expenditure is unnecessarily wastefuland a burden on the national economy.

3.5. MIXED ECONOMY

A mixed economic system is a system that combines aspects of both capitalistic economy and Socialisticeconomy. A mixed economic system protects private property and allows a level of economic freedomin the use of capital, but also allows for government to interfere in economic activities in order toachieve social aims. Mixed economies typically maintain private ownership and control of most of themeans of production, but often under government regulation. Mixed economies socialize selectindustries that are deemed essential or that produce public goods. Mixed economic system isnot laissez-faire systems, because the government is involved in planning the use of some resourcesand can exert control over businesses in the private sector. Government may seek to redistributewealth by taxing the private sector, and using funds from taxes to promote social objectives.

3.5.1. CHARACTERISTICS OF MIXED ECONOMYCo-existence of the Private and Public SectorsCo-existence of the private and public sectors is the outstanding feature of mixed economy. Certainindustries will be in the public sector and certain industries in the private sector. Private individuals

69

Á|üD≤[ø± ã<ä›yÓTÆq Ä]∆ø£ eédüúá $<Ûëq+˝À πø+ÁBø£‘· Á|üD≤[ø± $uÛ≤>∑+ ñ+≥T+~. <˚X¯ n_Ûe~›, ÁbÕ<Ûä$Tø£ uÛ≤<ä ‘·\T HÓs¡y˚s¡TÃ≥ø=s¡≈£îÁ|üD≤[ø£\qT s¡∫+∫ yêÏì dü|òü©ø£‘·+ #j·TT≥ ø=s¡≈£î $‘·Ô, ø√X $<ÛëHê\ <ë«sê Ä]∆ø£ eédüúqT ìj·T+Á‹düTÔ+~.

Á|üy≥T dü+|ü<ä$TÁXeT Ä]∆ø£ eédüú À Á|üy≥T ÄdüTÔ\≈£î Á|üy≥T eédüú\≈£î ÄkÕÿs¡eTTqï~. e´≈£îÔ\≈£î kÕ«eT‘· ÄdüTÔ\T dü+bÕ~+#·Tø=HkÂ\uÛÑ eTTqï~.

kÕe÷õø£ ÁX‚j·TdüT‡Ç~ kÕe÷õø£ ÁX‚j·TdüT‡qT Á|ü<Ûëq <Û j·T+ >± uÛ≤$düTÔ+~. Ç~ kÕeTýê<ä eédüú Àì eT+∫q Á>∑Væ≤+∫qf…Æ¢q~.ã&ÉT>∑T esêZ\≈£î #˚j·T÷‘·ì∫Ã düe÷»+˝À ñqï ‘ês¡‘·e÷´\qT s¡÷|ü⁄ e÷|ü&ÜìøÏ, kÕe÷õø£ s¡ø£åD, ìs¡T<√´>∑ìs¡÷à\q, ù|<ä]ø£ ìs¡÷à\q e+Ï nH˚ø£ kÕe÷õø£ ø±s¡ Áø£e÷\T Ç+<äT˝À ñ+≤sTT.

yê´bÕs¡ ñ<›X+˝≤uÛ≤\Hê]®+#˚ yê´bÕs¡ ñ<›X¯+ ø£*– ñqï|üŒÏøÏ kÕe÷õø£ ÁX‚j·TdüT‡ <Û´j·÷ìøÏ ≈£L&Ü m≈£îÿe ÁbÕ<Ûëq´‘·ìdüTÔ+~.

ndüe÷q‘·\ ‘=\–+|ü⁄düe÷»+˝À ñqï Ä<Ûëj·T, dü+|ü<ä\ ndüe÷q‘·\qT ‘=\–+#·T≥≈£î ø±e\dæq #·s¡ \qT #˚|ü&ÉT‘·T+~.

|üP]Ô Ä]∆ø£ ùd«#Û·Ã$TÁX¯eT Ä]∆ø£ eédüú À |üP]Ô Ä]∆ø£ ùd«#Û·Ã Çe« ã&ÉT‘·T+~. me¬s’Hê mø£ÿ&Ó’Hê yê´bÕsê\qT ÁbÕs¡+_Û+#·e#·TÃ.$ìjÓ÷>∑<ës¡T\T ≈£L&Ü ‘·eT≈£î q∫Ãq ñ‘·Œ‘·TÔ\qT ø=qT>√\T #˚düTø√e#·TÃ. @$<ÛäyÓTÆq Ä+ø£å\T ñ+&Ée⁄.

3.5.2. $TÁX¯eT Ä]∆ø£ eédüú düT>∑TD≤\T1. Á|üuÛÑT‘·« Á|üy˚≥T eédüú\ eT<Ûä b˛° ñ‘·Œ‹Ô |ü+|æD°\˝À n‘· ~ø£ Á|ü‹uÛÑ ø£qãs¡TdüTÔ+~.

2. Á|üuÛÑT‘·« s¡+>∑+ qT+&ç e∫Ãq ≤uÛ≤\‘√ düe÷»+˝À ñqï ndüe÷q‘·\qT ‘=\–+|ü⁄≈£î Ks¡TÃ #˚j·Te#·TÃ.

3. $TÁXeT Ä]∆ø£ eédüú À Ä]∆ø£ ø±s¡ ø£ ≤bÕ\T ø£ Á|üD≤[ø£ Á|üø±s¡+ neT\T #j·Tã&É‘êsTT. düeTs¡∆e+‘·yÓTÆqÁ|üD≤[ø£\T e\q eédüú≈£î eT+∫ #˚≈£Ls¡T‘·T+~.

4. Á|üD≤[ø±ã<ä›yÓTÆq Ä]∆ø£ $<ÛëHê\T Ä]∆ø£ eédüúqT ì<ëq+>± ñ+#·T‘·T+~.

5. $ìjÓ÷>∑ <ës¡T\ n_Ûs¡T#·T\ y˚Ts¡≈£î ñ‘·Œ‹Ô »s¡T>∑T‘·T+~. ø±ãÏº $ìjÓ÷>∑<ës¡T\ kÕs¡«uÛÖe÷~Ûø±s¡+\_ÛdüTÔ+~.

6. Á|üuÛÑT‘·« Á|üy˚≥T s¡+>±\ eT<Ûä b˛° düeTs¡∆e+‘·yÓTÆq , qMø£s¡D\‘√ ≈£L&çq ñ‘·Œ‹Ôì #·÷&Ée#·TÃ.

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and firms own private sector industries. Profit will be the primary motive of private sector industries.In public sector, industries are owned and managed by the Government. Public industries will alsohave profit motive but that too for the promotion of social welfare.

Existence of Joint Sector-A mixed economy also has a joint sector which is run jointly by the stateand private enterprises. It is organized on the basis of a joint stock company where the majorityshares are held by the state.

Regulation of Private Sector-Under mixed economy, Government exercises strict control andregulation over private sector industries. Even though everyone is free to start a company or anindustry as he desired, but he is to follow some regulations stipulated by the government.

Planned Economy-There is a central planning authority in a mixed economy. A mixed economyoperates on the basis of some economic plan. All sectors of the economy function according to theobjectives, priorities and targets laid down in the plan. In order to fulfill them, the state regulates theeconomy through various monetary, fiscal and direct control measures. The aim is to check the evilsof the price mechanism.

Private Property-Under mixed economy, private firms and individuals have right to own and useproperty. But some restrictions have been imposed on private individuals so as restrict or prevent theconcentration of wealth in the hands of few.

Social Welfare-The principal aim of a mixed economy is to maximize social welfare. This featureincorporates the merits of Socialistic economy and avoids the demerits of capitalistic economy. Toremove inequalities of income and wealth, and unemployment and poverty, useful measures such associal security, public works, etc. are adopted to help the poor. On the other hand, restrictions areplaced on the concentration of monopoly and economic power in the hands of the rich throughvarious fiscal and direct control measures.

Motive of Business Concerns-The motive of the business concerns is profit but coupled with theobjective of social welfare.

Reduction of Inequalities of Income and Wealth- The Governmentstake steps to reduce inequalitiesof income and wealth. For this purpose, governments impose progressive taxation and introduceregulations on wealth concentration.

Complete Economic Freedom\-There is complete economic freedom in mixed economy. Hence,the consumer is free to buy any commodity they like.

3.5.2. ADVANTAGES OF MIXED ECONOMY There will be competition between public and private industries, which will result in greater

efficiency and production in a mixed economy.

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7. á eédüú À kÕe÷õø£ ÁX‚j·TdüT‡≈£î m≈£îÿe ÁbÕ<Ûëq´‘· Çe«ã&ÉT‘·T+~. Á|üy˚≥T Á|üuÛÑT‘·« $uÛ≤>±\T Á|ü»\ÁX‚j·TdüT‡≈£î ÁX¯$TkÕÔsTT.

8. e´øÏÔ>∑‘· Vü≤≈£îÿ\T |ü]s¡øÏå+#·ã&É‘êsTT. Á|ü»\T ‘·eT≈£î q∫Ãq edüTÔe⁄\qT ñ|üjÓ÷–+#·>∑*π> ùd«#Û·ÃÇe«ã&ÉT‘·T+~.

3.5.3. $TÁX¯eT Ä]∆ø£ eédüú ˝ÀbÕ\T1. $TÁX¯eT Ä]∆ø£ eédüú À Á|üuÛÑT‘·« Á|üy˚≥T eédüú\ eT<Ûä nHês√>∑ ø£s¡yÓTÆq b˛° ñ+≥T+~.

2. Á|üy˚≥T s¡+>±ìøÏ ‘·–q+‘· ùd«#Û·Ã ñ+&É<äT. Á|üuÛÑT‘·«+ Á|üy≥T s¡+>±ìï …’ôdì‡+>¥, ìj·T+Á‘·D ù|]≥n<äT›ø=+≥T+~.

3. á eédüú À Á|üuÛÑT‘·« s¡+>∑+ jÓTTø£ÿ ndüeTs¡∆‘· Á|üdüTÔŒ≥+>± ø£q|ü&ÉT‘·T+~. Ç~ m≈£îÿe qcÕº\≈£î >∑T]ne⁄‘·÷ ñ+≥T+~. Á|ü» Ò Bì uÛÑ]+#ê*.

4. eT÷\<Ûäq ø=s¡‘·, Á|üuÛÑT‘·« ìj·T+Á‘·D\ eT<Ûä Á|üy˚≥T s¡+>∑+ n_Ûe~› Ä•+∫q kÕúsTT˝À ñ+&É<äT. Ç~ìs¡T<Û√´>∑ düeTdü qT nì•Ã‹ì ô|+#·T‘·T+~.

5. $TÁXeT Ä]∆ø£ e´«düú À Á|üy≥T s¡+>∑+ dü¬s’q Á|ü‹uÛÑqT #·÷|üø£b˛e#·TÃ. Ç~ C≤rsT÷ø£s¡D≈£î <ë] rdüTÔ+~.

3.6. Ä]∆ø£ eédüú ìsêàDeTT

ˇø£ Ä]∆ø£ eédüú @ ø±s¡ø±\‘√ ì+&ç ñ+≥T+<√ @ s¡+>±\ ø£\sTTø£‘√ ñ+≥T+<√ <ëìì Ä]∆ø£ eédüú ìsêàDeTTn+≤s¡T. Á|ü<Ûëq+>± ø£ Ä]∆ø£ eédüú <ëì≈£îqï düVü≤» dü+|ü<äqT ñ|üjÓ÷–+#·Tø=H˚ Áø£eT+˝À eT÷&ÉT s¡+>±\ø£\sTTø£‘√ ñ+≥T+~.

uÛ≤s¡‘· Ä]∆ø£ eédüú ˝À ñqï düVü≤» dü+|ü<ä jÓTTø£ÿ j·÷»e÷qéTT, |üì rs¡T Ä<Ûës¡+>± #˚düTø=ì eT÷&ÉTÁ|ü<Ûëq e÷sêZ\qT >∑T]Ô+#·&É+ »]–+~. n$ ÁbÕ<Ûä$Tø£ s¡+>∑eTT, bÕ]ÁXÊ$Tø£ s¡+>∑eTT eT]j·TT ùde\ s¡+>∑eTT.

Fig. 3.4

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The profit of public sector industries goes to the Government and as a result inequalities ofincome will be reduced in mixed economy.

In a mixed economy, economic activities are carried out as per plan. The entire economicsystem is subject to systematic planning of the Government.

The economic activities take place in a planned manner. So there will be economic stabilityin mixed economy.

Goods are produced as per the wishes of the consumers, which results in consumer’ssovereignty in a mixed economy.

Competition between public and private sectors increasesefficiency, initiative, innovationand productivity.

Gives importance to the promotion of social welfare. Both private and public sectors workfor the welfare of people.

Individual rights are protected. People have freedom to buy any commodity.

3.5.3. DISADVANTAGES OF MIXED ECONOMY There is unhealthy competition between private and public sectors in a mixed economy.

There is no freedom to private sector in mixed economy. This is because Government regulatesprivate industries through its various regulations and licensing.

Inefficiency of public sector is another demerit of mixed economy. They may suffer fromheavy losses. People will have to bear these losses.

On account of capital scarcity, Government regulation and control, the growth of privatesector may be less than what is fixed in plan. It may lead to unemployment and uncertaintiesin a mixed economy.

There is always a threat of nationalization in the mixed economic system because of whichthe private sector does not work actively.

3.6. STRUCTURE OF THE ECONOMIC SYSTEM

The structure of the economy includes the factors such as the contribution of different sectors thatexist in the economy. There are three sectors that exist in every economy with different prioritiesaccording to availability of its natural resources.

Indian economy can be classified into various sectors on the basis of ownership, working conditionsand the nature of the activities.

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ÁbÕ<Ûä$Tø£ s¡+>∑+<˚X¯+ jÓTTø£ÿ düVü≤» dü+|ü<äqT|üjÓ÷–+∫ Á|ü‘· ø£å+>± $ìjÓ÷–+∫ #ùd ø±s¡ Áø£e÷\ ø£\sTTø£ á s¡+>∑+˝À ñ+≥T+~. e´ekÕj·T s¡+>∑+, >∑qT\ s¡+>∑+, eT‘·Ù´ |ü]ÁX¯eT, n&Ée⁄\ ô|+|üø£+, bÕ&ç |ü]ÁX¯eT yÓTT<ä …’q$ BìøÏñ<ëVü≤s¡D>± #Ó|üŒe#·TÃ. n+fÒ eTq+ $ìjÓ÷–+#˚ #ê˝≤ edüTÔe⁄\T á ÁbÕ<Ûä$Tø£ s¡+>∑+ qT+&˚ eTq+bı+<äT‘·T+≤eTT.

~«rj·T s¡+>∑+Ç~ ÁbÕ<Ûä$Tø£ s¡+>∑+ n+~+#˚ eTT&ç|ü<ësê∆\T, edüTÔe⁄\qT|üjÓ÷–+∫ |ü]ÁX¯eT\˝À ‘·j·÷¬s’q edüTÔe⁄\qTn+~+#˚ s¡+>∑+ >± Bì >∑T]ÔkÕÔs¡T. bÕ]ÁXÊ$Tø£ ñ‘·Œ‘·TÔ …’q eÁkÕÔ\T, |ü+#·<ës¡, ÇqTeTT, yÓTT<ä …’q edüTÔe⁄\qTn+~+#˚ s¡+>∑+>± Bìì #Ó|üŒe#·TÃ. Ç~ bÕ]ÁXÊ$Tø£ edüTÔe⁄\qT n+~+#˚ s¡+>∑+ ø±ãÏº á s¡+>±ìïbÕ]ÁXÊ$Tø£ s¡+>∑+ nì ≈£L&Ü n+≤s¡T.

‘·rj·T s¡+>∑+ Ò<ë ùde\ s¡+>∑+Ç~ Á|ü<ÛäeT ~«rj·T s¡+>±\T n_Ûe~› #Ó+~+#·&ÜìøÏ ø±e\dæq ùde\qT n+~+#˚ s¡+>∑+ >± #Ó|üŒe#·TÃ. ás¡+>∑+˝À m≥Te+Ï edüTÔe⁄\qT ñ‘·Œ‹Ô #˚j·T&É+ »s¡T>∑<äT. ø±ì yÓTT<äÏ ¬s+&ÉT s¡+>±\≈£î ø±e\dæq ùde\qTn+~kÕÔsTT. MÏ À s¡yêD≤, u≤+øÏ+>¥, ;Ûe÷, Á<äe´ düs¡|òüsê yÓTT<ä\>∑T ùde\T á s¡+>∑+ ÁøÏ+<ä≈£î ekÕÔsTT. áùde\ s¡+>∑+ bÕ]ÁXÊ$Tø£ s¡+>±ìøÏ ø±e\dæ $\Te\qT CÀ&çdüTÔ+~.

dü+|òüTÏ‘· s¡+>∑+á s¡+>∑+˝À ñ<√´>∑ ìã+<äq\T K∫Ã‘·+>± ìs¡ísTT+#·ã&É‘êsTT. ñ<√´>∑düTÔ\ jÓTTø£ÿ kÕe÷õø£ uÛÑÁ<ä‘·≈£î Vü‰MTñ+≥T+~. á s¡+>∑+˝À |üì#˚ùd ø±]à≈£î\≈£î ñ<√´>∑ uÛÑÁ<ä‘· ñ+≥T+~. Ms¡T |üì #˚ùd y˚fi¯\T, J‘·+ yÓTT<ä …’qyêÏøÏ Vü‰MT ñ+≥T+~. m≈£îÿe>± |üì#dæq ø±˝≤ìøÏ ‘·–q+‘· m≈£îÿe J‘·+ bı+< ôd≈£L´]°ì ø£*– ñ+≤s¡T.

ndü+|òüTÏ‘· s¡+>∑+á s¡+>∑+˝À |üì#˚ùd ø±]à≈£î\T >∑Vü≤ dü+ã+<ä s¡+>∑+˝À |üì #˚düTÔ+≤s¡T Ò<ë dü«j·T+ ñbÕ~ s¡+>∑+˝À Ò<ëy˚‘·q ø±]à≈£î\T>± |üì#˚düTÔ+≤s¡T. á s¡+>∑+˝À |üì #˚ùd ø±]à≈£î\T dü+|òüTÏ‘·+>± ñ+&Éø£b˛e&É+ e\q M]øÏdü]jÓÆTq ñ<√´>∑ uÛÑÁ<ä‘· ñ+&É<äT. dü]jÓÆTq Ä<ëj·T+ ì#˚Ã ñ<√´>±\T ≈£L&Ü <=s¡ø±e⁄. ndü+|òüTÏ‘· s¡+>∑+ Àñqï ø±]à≈£î\≈£î dü]jÓÆTq uÛÑs√kÕ ñ+&É<äT. M]øÏ dü]jÓÆTq ø±]àø£ dü+|òü÷\T ≈£L&Ü ñ+&Ée⁄

Á|üuÛÑT‘·« s¡+>∑+á s¡+>∑+ kÕe÷õø£ dü+|ü<ä≈£î j·÷»e÷q´+ eVæ≤düTÔ+~. á dü+|ü<ä Ä]∆ø£ e´edüú À uÛ≤>∑+. Bìì ñ|üjÓ÷–+∫ Á|üuÛÑT‘·« ùde\qT Á|ü»\≈£î n+~+#·&É+ »s¡T>∑T‘·T+~. Á|üuÛÑT‘·« s¡+>∑+ ˝≤uÛ≤ù|ø£å ‘√ |üì #˚j·T<äT.Á|üuÛÑT‘·«+ |üqTï\ s¡÷|ü+˝À ≈£Ls¡TÃø=qï dü+|ü<äqT Á|ü»\≈£î ùde\ s¡÷|ü+˝À n+~düTÔ+~. .Á|üy≥T s¡+>∑+mø£ÿ&Ó’‘˚ dü+|ü<ä jÓTTø£ÿ j·÷»e÷q´+ Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝À ñ+≥T+<√, edüTÔ ùde\ ñ‘·Œ‹Ô |ü+|æD° Á|üy˚≥Te´≈£îÔ\ kÕ«BÛq+˝À ñ+≤jÓ÷ Ä s¡+>±ìï Á|üy˚≥T s¡+>∑+ n+≤s¡T. á s¡+>∑+ jÓTTø£ÿ eTTK´ ñ<›X¯+ ≤uÛ≤ù|ø£åe÷Á‘·yT.

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Primary SectorIn Primary sector of economy, activities are undertaken by directly using natural resources.Agriculture, mining, fishing, forestry and dairy are some examples of this sector. It is called asprimary sector since most of the natural products are received from this sector.

Secondary SectorIt includes the industries where finished products are made from natural materials produced in theprimary sector. Industrial production, cotton fabric, sugar cane production like activities comes underthis sector. Since this sector is associated with different kinds of industries, it is also called industrialsector.

Tertiary Sector/Service SectorThis sector’s activities help in the development of the primary and secondary sectors. By itself,economic activities in tertiary sector do not produce a goods but they are an aid or a support for theproduction. Transport, banking, insurance, finance like services come under this sector. It providesthe value addition to a product same as secondary sector.

The natural economic movement of a country goes from agrarian economy to an industrial economyto a service economy but India has leapfrogged from an agrarian economy to a service economy.India’s success in software and IT-enabled services (ITeS) exports, has made it a significant servicesexporter with its share in world services exports rising from 0.6 per cent in 1990 to 3.3 per cent in 2013.

Quaternary ActivitiesThese are specialized tertiary activities in the ‘Knowledge Sector’ which demands a separateclassification. The quaternary sector is the intellectual aspect of the economy. It is the process whichenables entrepreneurs to innovate and improve the quality of services offered in the economy. Personnelworking in office buildings, elementary schools and university classrooms, hospitals and doctors’offices, theatres, accounting and brokerage firms all belong to this category of services.

Quinary ActivitiesThe quinary sector is the part of the economy where the top-level decisions are made. This includesthe government which passes legislation. It also comprises the top decision-makers in industry,commerce and also the education sector. These are services that focus on the creation, re-arrangementand interpretation of new and existing ideas; data interpretation and the use and evaluation of newtechnologies. Profession under this category often referred as ’gold collar’ professions, they representanother subdivision of the tertiary sector representing special and highly paid skills of senior businessexecutives, government officials, research scientists, financial and legal consultants, etc.

Organised SectorIn this sector, employment terms are fixed and regular, and the employees get assured work andsocial security. Workers in the organised sector enjoy security of employment. They are expected towork only a fixed number of hours. If they work more, they have to be paid overtime by the employer.

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3.7. Ä]∆ø£ $<ÛëHê\T

Á|ü‹ Ä]∆ø£ eédüú ø=ìï dæ<ë›+‘ê\≈£î Àã&ç ø=ìï |ü]$T‘·T\≈£î Àã&ç |üì#düTÔ+~. Á|üuÛÑT‘·«+ nqTdü]+# |üqTï\$<Ûëq+, Á|üuÛÑT‘·« ã&Ó®Ÿ $<Ûëq+, Á<äe´ düô|’¢, e&û¶ $<ÛëHê\T, ø±]àø£ $<ÛëHê\T, Á|üuÛÑT‘·«+ Ä]∆ø£ $wüj·÷\˝À#=s¡ã&É≥+ e+Ï$ Á|üuÛÑT‘·«+ jÓTTø£ÿ Ä]∆ø£ $<Ûëq+>± #Ó|üŒe#·TÃ. Ä]∆ø£ $<Ûëq+˝À eTTKyÓTÆq$, Á<äe´ $<Ûëq+eT]sTT ø√X¯ $<Ûëq+>± #Ó|üŒe#·TÃ. ø√X¯ $<Ûëq+ |üqTï\ $<Ûëq+ eT]j·TT <ëìì @ s¡+>±\≈£î Ks¡TÃô|≥º Àìs¡íj·T+. Á<äe´ $<Ûëq+ nq>± Ç~ πø+Á<ä u≤+≈£î ìs¡ísTT+#˚ Á<äe´ düô|’¢ eT]j·TT e&û¶ $<ÛëHê\ ø£\sTTø£.

Ä]∆ø£ $<Ûëq+ n+fÒ Á|üuÛÑT‘·«+ Ä]∆ø£ eéVü‰sê\≈£î dü+ã+~+∫q rdüTø=H˚ ìs¡íj·÷\T. Ç+<äT˝À dü+|ü<ä jÓTTø£ÿj·÷»e÷qéTT, |üqTï$<ÛëHê\T, Á<äe´ $<ÛëHê\T ø£\dæ ñ+≤sTT. á Á<äe´ eédüú eT÷&ÉT s¡ø±\T>± ñ+≥T+~. n$ kÕ+Á|ü<ëj·T Ä]∆ø£ eédüú\T, ìj·T+Á‹‘· Ä]∆ø£ eédüú\T eT]j·TT $TÁX¯eT Ä]∆ø£ eédüú\T Ò<ëe÷¬sÿŸ Ä]∆ø£ eédüú\T.

Ä]∆ø£ $<Ûëq+ ˇø£ ìØí‘· <Û´j·÷\qT kÕ~Û+#·&ÜìøÏ #˚ùd Á|üj·T‘·ï+ Ò<ë \ø£å +. ˇø£ Ä]∆ø£ eédüú À ñqïÁ<äy√´\“D Ä]∆ø£ e÷+<Ûä |ü]dæú‘·T\T, ìs¡T<Û√´>∑ düeTdü , Ä]∆ø£ e~› yÓTT<ä …’q yêÏ ø=s¡≈£î \øå±´\T>± #˚düTø=ìÄ]∆ø£ $<ÛëHê\T ìs¡ísTT+#· ã&É‘êsTT. MÏH˚ $<Ûëq \øå±´\T nì n+≤s¡T. MÏì kÕ~Û+#·&Üìπø $<ÛëHê\Ts¡÷bı+~+#· ã&É‘êsTT.

Á|ü‹ <X+ ‘·eT \øå±´\qT kÕ~Û+#·&ÜìøÏ ø=ìï $<ÛëHê\qT ne\+_ÛdüTÔ+~. MÏ À ø=ìï eTTø£ yÓTÆq $<ÛëHê\qTÁøÏ+<ä $e]+#·&É+ »]–+~. uÛ≤s¡‘· <˚X¯ Ä]∆ø£ n_Ûe~› À á $<ÛëHê\T eTTK´ bÕÁ‘· eVæ≤düTÔHêïsTT.

bÕ]ÁXÊ$Tø£ $<ÛëHê\TbÕ]ÁXÊ$Tø£ s¡+>∑+˝À n_Ûe~›ì kÕ~Û+#·&ÜìøÏ, ñ‘·Œ‹Ôì ô|+#·&ÜìøÏ ne\+_Û+# Á|üuÛÑT‘·« $<ÛëHê\qT bÕ]ÁXÊ$Tø£$<ÛëHê\T n+≤s¡T. eTTK´+>± bÕ]ÁXÊ$Tø£ ñ‘·Œ‹Ô À n_Ûe~› kÕ~Û+#·&ÜìøÏ Á|üuÛÑT‘·« m+‘· es¡≈£î CÀø£ +#˚düTø√yê* nH˚ ìs¡íj·÷\T Ç+<äT˝À ñ+≤sTT.

uÛ≤s¡‘· <X yÓTT≥ºyÓTT<äÏ bÕ]ÁXÊ$Tø£ $<Ûëq+ $TÁXeT Ä]∆ø£ dü÷Á‘ê\ô|’ Ä<Ûës¡|ü&ç 1948 À Á|üuÛÑT‘·«+ Á|üø£Ï+∫+~.Bì˝À @ $uÛ≤>±\˝À Á|üuÛÑT‘·« Á|üy˚≥T eédüú\T |üì#˚j·÷˝À düŒwüº+>± ìs¡«∫+#·&É+ »]–+~. á bÕ]ÁXÊ$Tø£$<ÛëHêìï ‹]– 1956 ˝À e÷s¡TŒ #˚j·T&ÉyÓTÆq~. n|ü⁄Œ&ÉT á Ä]∆ø£ $<ÛëyÓ÷¢ Á|üuÛÑT‘·« s¡+>∑ bÕÁ‘·qT m≈£îÿe#˚j·T&ÉyÓTÆq~. ‘·<äT|ü] eTTK´+>± 1991 À e÷¬sÿŸ Áù|]‘· n_Ûe~›ì ø±+øÏå+#˚ ùd«#ÛêÃ yêDÏ»´ $<ÛëHêìïÁ|üø£Ï+#·&É+ »]–+~.

es¡Ôø£ $<ÛëHê\T$$<ä <˚XÊ\ eT<Ûä nqTdü]+#˚ es¡Ôø£ Á|üe÷D≤\T, ìj·Te÷\qT >∑T]+∫ $e]+#˚ $<ÛëHêìï es¡Ôø£ $<Ûëq+n+≤s¡T. á $<Ûëq+ ø=ÿø£ÿ <˚XÊìøÏ ø=ÿø£ÿ $<Ûä+>± ñ+≥T+~. Á|ü‹ <˚X¯+ ‘·q≈£î ø±e\dæq $<Ûä+>± es¡Ôø£$<ÛëHêìï ìs¡ísTT+#·Tø=+≥T+~. á $<Ûëq+ jÓTTø£ÿ <Û´j·T+ Ä <˚X¯ yê´bÕs¡ ø±s¡ ø±˝≤bÕ\qT n_e~›#˚j·T&Éy˚T. ˇø£ <˚X¯ es¡Ôø£ $<Ûëq+, <ëì jÓTTø£ÿ m>∑TeT‹ ~>∑TeT‘·T\ô|’ $~Û+#˚ |üqTï\ $<Ûëq+ ≈£L&Ü ø£\dæñ+≥T+~.

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Unorganised SectorAn unorganised worker is a home-based worker or a self-employed worker or a wage worker. Inthis sector wage-paid labour is largely non-unionised due to casual and seasonal nature of employmentand scattered location of enterprises. The sector is marked by low incomes, unstable and irregularemployment, and lack of protection either from legislation or trade unions.

The Public SectorIn this sector, government owns most of the assets and it is the part of the economy concerned withproviding various governmental services. The purpose of the public sector is not just to earnprofits. Governments raise money through taxes and other ways to meet expenses on the servicesrendered by it.

The Private SectorIn the private sector, ownership of assets and delivery of services is in the hands of private individualsor companies. Activities in the private sector are guided by the motive to earn profits.

3.7. ECONOMIC POLICIES

Each economy functions based on unique set of conditions and assumptions. The economicpolicy of government covers the systems for setting levels of taxation, government budgets, the moneysupply, interest rates as well as the labour market, asset ownership, and many other areas of governmentinterventions into the economy. Most factors of economic policy can be divided into either fiscalpolicy, which deals with government actions regarding taxation and spending, or monetary policy,which deals with central banking actions regarding the currency supply and interest rates.

Economic policy refers to the actions that governments take in the economic field. It coversthe systems for setting interest rates and government budget as well as the labour market, nationalownership, and many other areas of government interventions into the economy. Economic systemcan be categorized into four main types: traditional economies, command economies, mixedeconomies, and market economies.

Policy is generally directed to achieve particular objectives like inflation targets, employment generationand economic growth. Other objectives like military spending or nationalization are also important.These are referred to as the policy goals: the outcomes, which the economic policy aims to achieve.To achieve these goals, governments use policy tools which are under the control of the government.These generally include the interest rate and money supply, tax and government spending, tariffs,exchange rates, labour market regulations, and many other aspects of government.

Every country should follow some economic policies to achieve their targets according to their goals.The major economic policies which are followed in India and has played a major role in the growthof Indian economy are discussed below.

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ˇø£ <˚X¯+ jÓTTø£ÿ es¡Ôø£ $<Ûëq+˝À Ä<˚X¯+ jÓTTø£ÿ ≤]|òt $<Ûëq+, es¡Ôø£ nes√<Ûë\T eT]j·TT es¡Ôø£ s¡ø£åD≤\TyÓTT<ä …’q $wüj·÷\T Á|ü<Ûëq bÕÁ‘· eVæ≤kÕÔsTT.

Á<äe´ $<ÛëqeTTˇø£ <˚X¯+ jÓTTø£ÿ Á<äe´ $<Ûëq+˝À ãTTD |üs¡|ü‹ $<Ûëq+, <ëìjÓTTø£ÿ $\Te nq>± e&û¶ $<Ûëq+, Á<äe´ düô|’¢yÓTT<ä …’q$ ≈£L&ç ñ+≤sTT. Bìì ìj·T+Á‹+#·&ÜìøÏ Á|ü‹<˚X¯+˝Àq÷ πø+Á<ä u≤+≈£î ñ+≥T+~. uÛ≤s¡‘· ]»s¡T«u≤+≈£î 1950 ˝À yÓTT<ä≥>± Á<äe´$<Ûëq+˝À Á<äe´ ô|s¡T>∑T<ä\qT n]ø£≥º≥+ »]–+~. düs¡∞ø£s¡D $<ÛëHê\e\q uÛ≤s¡‘· <X+˝À n&ÉT–&çq $<o u≤+≈£î\ b˛° ‘·sê«‘· eTs=ø£ ø=‘·Ô $<Ûëq+ Á<äe´ dü÷Ô\ dæúØø£s¡D eT]j·TTe÷s¡TŒ\ ø=s¡≈£î 1991 ˝À Á|üø£Ï+#·&É+ »]–+~.

ø√X $<ÛëqeTTø√X $<Ûëq+ nH~ <X |üqTï\ $<Ûëq+ ≈£î düã+~+∫q~. Á<äe´ $<Ûëq+ πø+Á<ä u≤+≈£î ìs¡ísTT+#~ nsTT‘ ø√X$<Ûëq+ Á|üuÛÑT‘·«+ ìs¡ísTTdüTÔ+~. Á|üuÛÑT‘·«+ $~Û+#˚ |üqTï\T <ëìì @$<Ûä+>± Ks¡TÃ #˚j·÷* @ $<ÛäyÓTÆq n|ü⁄Œ\TrdüTø√yê* nH˚~ Bì˝À ìs¡ísTT+#·ã&ÉT‘·T+~. Ç~ Á<äe´$<ÛëHêìøÏ nqTã+<ä $<Ûëq+.

eékÕj·T $<ÛëqeTTˇø£ <˚X¯ eékÕj·T $<Ûëq+ Ä <˚X¯+ ‘·q <˚oj·T eékÕj·T s¡+>∑+ n_Ûe~›, $<˚o eékÕj·T ñ‘·Œ‘·TÔ\nqTeT‹, Á|üuÛÑT‘·« Á|üD≤[ø£\T, eékÕj·T+<ë«sê kÕ~Û+#·e\dæq ñ‘êŒ<äø£‘· yÓTT<ä …’q$ ñ+≤sTT. eékÕj·Ts¡+>∑+ <ë«sê Ä•+∫q Ä<ëj·T+,eékÕj·T s¡+>±ìøÏ, Ä]∆ø£ $<ÛëHêìøÏ, düe÷C≤ìøÏ eT<Ûä >∑\ dü+ã+<ëìï Ç~ìsê›]düTÔ+~. <˚X¯+˝À ñqï eékÕj·T<ës¡T\ jÓTTø£ÿ dæú‹, eékÕj·T+ <ë«sê e#˚Ã Ä<ëj·T+, eékÕj·T<ës¡T\jÓTTø£ÿ Jeq Á|üe÷D+ yÓTT<ä …’qe˙ï eékÕj·T $<Ûëq+˝À ìsê›]+#·ã&É‘êsTT. eékÕj·T s¡+>±ìøÏ dü+ã+~+∫qdüMTø£‘· $<ÛëHêìï eékÕj·T $<Ûëq+ n+≤s¡T.

m>∑TeT‹ ~>∑TeT‹ $<ÛëqeTTˇø£ <˚X¯+ jÓTTø£ÿ m>∑TeT‹ ~>∑TeT‘·T\ >∑T]+∫ ìsê›]+#·ã&çq ìj·TeT ìã+<äq\qT ‘Ó*j·T #Óù|Œ<˚ EXIM$<Ûëq+. Bì˝À $<o yêDÏC≤´ìøÏ dü+ã+~+∫ Á|üuÛÑT‘·«+ rdüTø=qï ìs¡íj·÷\T ñ+≤sTT. <X+ jÓTTø£ÿ m>∑TeT‹Áb˛‘ê‡Vü≤ø±\T, m>∑TeT‹ ìπs›X¯ø±\T Bì˝À $e]+#·ã&É‘êsTT. EXIM $<ÛëHêH˚ï $<˚o yêDÏ»´ $<Ûëq+nì≈£L&Ü n+≤s¡T. m>∑TeT‘·T\qT n_Ûe~› #˚j·T&ÜìøÏ $<˚o e÷s¡ø£ Á<äe´ ì\«\qT ô|+#·&ÜìøÏ Ç~‘√&ÉŒ&ÉT‘·T+~.

PROJECT FOR ADVANCED LEARNERS…

Prepare a List of all the economic environment related news items for a given month and

analyse how each change in economic environment is impacting a particular local business

of your choice.

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Industrial PolicyIndustrial Policy is defined as the strategic effort by the state to encourage economic transformation, i.e.the shift from lower to higher productivity activities, between or within sectors. Specifically, industrialpolicy refers to “any type of selective government intervention or policy that attempts to alter thestructure of production in favour of sectors [or activities] that are expected to offer better prospectsfor economic growth in a way that would not occur in the absence of such intervention in the marketequilibrium”

The first Indian Industrial Policy based on the mixed economy principle was announced in 1948which demarcated clearly the areas of operation of the public and private sectors. This policy wasrevised in 1956 which laid greater emphasis on the expanding role of the public sector. The Governmentof India announced liberalised Industrial Policy on July 24, 1991. Instead of state-sponsoreddevelopment, the new policy put emphasis on market-led development.

Trade Policy

Trade policy defines standards, goals, rules and regulations that pertain to trade relations betweencountries. These policies are specific to each country and are formulated by its public officials. Theiraim is to boost the nation’s international trade. A country’s trade policy includes taxes imposed onimport and export, inspection regulations, and tariffs and quotas.

A trade policy generally focuses on the following specifications in terms of international trade

Tariffs: Every country has the right to impose taxes on imported and exported goods. Somenations levy heavy tariffs on imported goods to protect their local industries. High importtaxes inflate the prices of imported goods in local markets, ensuring that local products aremore sought after.

Trade barriers: They are state-imposed restrictions on trading a particular product or with

a specific nation. Some of the most common forms of trade barriers are tariffs, duties, subsidies,restrictions and allocations.

Safety: This determinant ensures that only high-quality products are imported in the country.Public officials can lay down inspection regulations to ensure that the imported product conform tothe set safety and quality standards.

Monetary PolicyMonetary policy or credit policy concerns itself with the cost (i.e., the rate of interest) and the availabilityof credit to affect the overall supply of money. The hallmark of the RBI’s monetary policy in the1950s was that of controlled monetary expansion. To supplement the process of macro stabilisationand structural adjustment programmes launched in mid-1991, monetary policy has been redesigned.Market-oriented reforms (such as interest rate liberalisation, entry of private Indian and foreign banks,

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development of alternative system of monetary controls, etc.), are being constantly made since monetarypolicy measures are continuous.

Fiscal PolicyFiscal policy is the means by which a government adjusts its spending levels and tax rates to monitorand influence a nation’s economy. It is closely akin to monetary policy through which a central bankinfluences a nation’s money supply.

Fiscal policy is concerned with the policy of taxation, expenditure and borrowing. Fiscal policy asevolved over time has resulted in a tax structure with greater reliance on indirect taxation.

Agriculture PolicyAgricultural policy describes a set of laws relating to domestic agriculture and imports of foreignagricultural products. Governments usually implements agricultural policies with the goal of achievinga specific outcome in the domestic agricultural product markets.

Agricultural policy is concerned with the relations between agriculture, economics, and society.Agricultural policy of a country is mostly designed by the Government for raising agricultural productionand productivity and also for raising the level of income and standard of living of farmers within adefinite time frame. This policy is formulated for all round and comprehensive development of theagricultural sector.

EXIM PolicyExport Import Policy is also known as EXIM Policy is a set of guidelines and instructions related tothe import and export of goods. Indian EXIM Policy contains various policy related decisionstaken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exportsfrom the country and more especially export promotion measures, policies and procedures relatedthereto. Trade Policy is prepared and announced by the Central Government. In general, the policyaims at developing export potential, improving export performance, encouraging foreign trade andcreating favorable balance of payments position.

KEY TERMS

1. Economic Environment: All the external economic factors that influence buying habits ofconsumers and businesses and therefore affect the performance of a company.

2. Inflation: A general increase in prices and fall in the purchasing value of money.

3. Government Budgets: A government budget is a document prepared by the governmentpresenting its anticipated revenues and proposed spending/expenditure for the upcoming financialyear.

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4. Gross Domestic Product:The total value of goods produced and services provided in a countryduring one year.

5. Per Capita Income: Per capita income (PCI) or total income measures the average incomeearned per person in a given area in a specified year. Per capita income is national incomedivided by population size.

6. Capital Formation: Capital formation is a term used to describe the net capital accumulationduring an accounting period for a particular country. The term refers to additions of capitalgoods, such as equipment, tools, transportation assets, and electricity.

7. Foreign Exchange Reserves: Foreign Exchange reserves or Forex reserves are assets suchas foreign currencies, gold reserves, treasury bills, etc retained by a central bank or other monetaryauthority.

8. Recession:A period of temporary economic decline during which trade and industrial activity

are reduced, generally identified by a fall in GDP in two successive quarters.

9. IMF:The International Monetary Fund (IMF) is an organization of 190 countries, working tofoster global monetary cooperation, secure financial stability, facilitate international trade, promotehigh employment and sustainable economic growth, and reduce poverty around the world.

10. Capital Goods: Capital goods are physical assets that a company uses in the production processto manufacture products and services that consumers will later use. Capital goods includebuildings, machinery, equipment, vehicles, and tools. Capital goods are not finished goods, instead,they are used to make finished goods.

11. Industrial Disputes: “Industrial Disputes mean any dispute or difference between employersand employers or between employers and workmen or between workmen and workmen, whichis connected with the employment or non - employment or terms of employment or with theconditions of labour of any person”.

12. Entrepreneur:An entrepreneur is an individual who creates a new business, bearing most ofthe risks and enjoying most of the rewards.

13. Economic Stability: Economic stability is the absence of excessive fluctuations in the macroeconomy. An economy with fairly constant output growth and low and stable inflation would beconsidered economically stable.

14. Laissez-Faire: The policy of leaving things to take their own course, without interfering.Less involvement of government in business activity.

15. Tariffs:A tax or duty to be paid on a particular class of imports or exports

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TEST YOUR UNDERSTANDING1. The economic environment in a country is dependent upon

A. Nature of economic system presentB. Economic policy and planning of the governmentC. Global economic environmentD. All the above factors

2. ________ stresses the philosophy of individualism believing in private ownership.A. Capitalism.B. Socialism.C. Marxism.D. Developism.

3. In communism the _______________ determines ones employer and employment.A. State.B. Country.C. Business.D. People.

4. Which of the following is not a feature of capitalist system of economyA. Private ownershipB. Free marketC. Voluntary participationD. No competition

5. Which of the following is not an advantage of socialist pattern of economyA. Social political and economic equalityB. Provision of basic needsC. Social welfareD. Availability of choice to the consumer

6. Both private and public sector are present in which of the following economic systemsA. Capitalist economyB. Socialist economyC. Communist economyD. Mixed economy

7. Which of the following activities doesn’t come under primary activityA. MiningB. ForestryC. AgricultureD. Teaching

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8. Quinary activities in a economy refer toA. Activities involving usage and extraction of natural resourcesB. Activities related to industrial production of goodsC. Providing various services such as banking, teaching etcD. Top level decision making, research and innovation

9. Which of the following is a feature of organised sectorA. Fixed working hoursB. Security of employmentC. Fixed wagesD. All the above

10. The economic policy of a government doesn’t includeA. Trade policyB. Fiscal policyC. Monetary policyD. Foreign policy

ANSWERS

INERACTIVE LINKS


https://www.google.co.in/books/edition/Business_Environment/mGw8BAAAQBAJ?hl=en&gbpv=1&dq=types+of+business+environment&printsec=frontcover

1 2 3 4 5 6 7 8 9 10

D A B D D D D D D D

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Economic Planning


1. understand the concept of Economic planning 2. examine the importance of planning in growth journey of a country. 3. Ascertain the role of NDC and Planning Commission of India 4. judge the efficacy of Five Year Plans in India 5. to examine critically objectives of NITI Aayog and Planning

Commission 6. innovate new ideas for better economic prosperity.

Chapter

4

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Chapter Layout: 4.1. Economic Planning 4.1.1. Features of Economic Planning 4.2. Planning Commission of India 4.3. National Development Council 4.3.1. Objectives of National Development Council 4.3.2. Functions of National Development Council 4.4. NITI Aayog 4.4.1. Features of NITI Aayog 4.4.2. Objectives of NITI Aayog

4.4.3. Differences between NITI Aayog and Planning Commission

4.4.4. NITI Aayog - Criticism 4.5. Five Year Plans in India 4.5.1. Objectives of Economic Planning in India 4.5.2. Overview of Five Year Plans 4.5.3. Achievements in Indian Five Year Plans

4.5.4. Criticism on Indian Five Year Plans

CHAPTER OVERVIEW

One of the important functions of every government is to plan the economyof a country and move forward in that direction. Such planning in factinfluences the whole economy and businesses,thus being an important partof economic environment. Our country initiallywent for fiveyear plans byhaving specific objectives formulated with the help of bodies such as theplanning commission and the national development council. Currently NITIAayog took up the functions of planning commission.

The awareness of where and on what issue of economy the government’sfocus lies on is very important to make business decisions. And for thatpurpose knowledge of bodies like national development, planningcommission, NITI Aayog, their structure and functioning is essential.

The present chapter discusses these bodies in detail and also their objectivesand criticism against them. A brief overview of five year plans in India, theirobjectives and their achievements was also analyzed.

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4.1. Ä]∆ø£ Á|üD≤[ø£\T

ˇø£ <˚X¯ Ä]∆ø£ eéVü‰sê\qT eTT+<äT>± ìs¡ísTT+#·Tø=qï ìØí‘· ÁbÕ<ÛëHê´\T \øå±´\ y˚Ts¡≈£î yêÏì ìØí‘·ø±\+˝À HÓs¡ys¡TÃø=H Á|üj·T‘·ï |üPs¡«ø£ #·s¡ \qT Á|üD≤[ø£\T n+≤s¡T. <X+˝À ñqï düeTdü \qT kÕ~Û+#·&ÜìøÏn+<äTu≤≥T˝À ñqï eqs¡T\qT ìπs›•+∫q y˚Ts¡≈£î y˚Ts¡≈£î $ìjÓ÷–+#·Tø=ì Äj·÷ eqs¡T\Tq $$<ä dü+düú\T,$uÛ≤>±\ eT<Ûä πø≤sTT+#·&ÜìøÏ Ä]∆ø£ Á|üD≤[*ø±\T ñ|üjÓ÷>∑|ü&É‘êsTT. Ç$ <X Ä]∆ø£ e~›øÏ <√Vü≤<ä|ü&É‘êsTT.

Ä]∆ø£y˚‘·Ô\T Á|üD≤[ø£\qT $_Ûqï $<Ûë\T>± ìs¡«∫+#ês¡T. Á|üD≤[ø£\ jÓTTø£ÿ \øå±´\T, yêÏì kÕ~Û+#·&ÜìøÏnqTdü]+∫q f…øÏïø , yêÏì kÕ~Û+∫q rs¡TqT ãÏº $$<ä s¡ø£eTT\T>± ìs¡«∫+#·&É+ »]–+~. Á|üD≤[ø£ n+fÒˇø£ ø±sê´#·s¡D |ü<ä›‹, eTT+<äT>± ìs¡ísTT+∫q \øå±´\qT kÕ~Û+#·T≥ø=s¡≈£î ÁbÕs¡+_Û+#˚ #·s¡ \T.

H.D. Dickinson ìs¡«#·q+ Á|üø±s¡+ ªªÄ]∆ø£ Á|üD≤[ø£ n+fÒ ø£ eTTKýÓTÆq Ä]∆ø£ ìs¡íj·T+. Ç~ edüTÔùde\ ñ‘·Œ‹Ô mø£ÿ&É m|ü⁄Œ&ÉT m˝≤ »s¡>±*, MÏì me]øÏ πø≤sTT+#ê* nH˚ $wüj·÷\qT düeTÁ>∑ düπs«<ë«sêìs¡ísTT+#·ã&ÉT‘·T+~μμ.

<˚X¯+˝À ñqï Á|üy˚≥T s¡+>±ìï ìj·T+Á‹+#·&É+ Á|üD≤[ø£ jÓTTø£ÿ Á|ü<Ûëq<Û´j·T+. <˚X¯+˝À ø=s¡‘·>± ñqï düVü≤»dü+|ü<äqT nedüs¡yÓTÆq s¡+>±\ eT<Ûä eTT+<äT>± ìs¡«∫+#·ã&çq <Û j·÷\ø√dü+ πø≤sTT+#·&Üìï Á|üD≤[ø£\T nì#Ó|üŒe#·TÃ.

4.1.1. Ä]∆ø£ Á|üD≤[ø£\ \ø£åD≤\TÁ|ü|ü+#· yê´|üÔ+>± $$<ä ÄXj·÷\qT kÕ~Û+#·T≥ø√dü+ Ä]∆ø£ Á|üD≤[ø£\qT m+#·Tø√e&É+ »s¡T>∑T‘·T+~. kÕeTýê<ä<˚XÊ\˝À düVü≤» dü+|ü<ä n+‘ê Á|üuÛÑT‘·« j·÷»e÷q´+˝À ñ+≥T+~ ø±ãÏº Á|üD≤[ø£\T eédüú n_Ûe~›øÏnedüs¡+. ø±ì ô|≥Tºã&ç <ëØ eédüú À dü+|ü<ä Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝À ñ+≥T+~ ø±ãÏº <˚X¯ dü+|ü<äqTdüÁø£eT+>± ñ|üjÓ÷–+#·T≥ ø=s¡≈£î, dü¬s’q ìj·T+Á‘·D #˚j·TT≥ ø=s¡≈£î Á|üD≤[ø£\T nedüs¡+.

n_Ûe~› #Ó+<äì <˚XÊ\T, n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\˝À düeTdü \qT n~Û>∑$T+#·&ÜìøÏ, düs¡«‘√eTTU≤_Ûe~›ìkÕ~Û+#·&ÜìøÏ nH˚ø£ Á|üj·T‘êï\T »s¡T>∑T‘·THêïsTT. MÏ À eTTKýÓTÆq$ Á|üD≤[ø£\ neT\T. Á|ü|ü+#· e÷+<Ûä +‘·s¡Tyê‘· n_Ûe~› #Ó+<äT‘·Tqï <XÊ\˝À Á|üD≤[ø£\T n‘· +‘· ÁbÕeTTK´‘·qT dü+‘·]+#·Tø=HêïsTT. eT+∫ Á|üD≤[ø£≈£îñ+&Ée\dæq ø±s¡ø±\T ÁøÏ+<ä $e]+#·&É+ »]–+~.

K∫Ã‘·yÓTÆq <Û˚ j·÷\TÄ]∆ø£ Á|üD≤[ø£≈£î K∫Ã‘·yÓTÆq, ìs¡íj·÷‘·àø£yÓTÆq <Û´j·÷\T+&Ü*. Á|üD≤[ø£ n+fÒ ˇø£ <Û´j·÷ìï kÕ~Û+#·&ÜìøÏrdüT≈£îqï ìs¡íj·T+. ñ<ëVü≤s¡D≈£î ˇø£ Á|üD≤[ø£ Ä]∆ø£ e~› kÕ~Û+#·&É+, yê´bÕs¡ #·Áø±\qT ‘=\–+#·&É+, ñ<√´>∑ø£\Œq kÕ~Û+∫ ø=qkÕ–+#·&É+ yÓTT<ä …’q$ <Û´j·÷\T>± rdüTø√e#·TÃ.

πø+ÁBø£‘· Á|üD≤[ø£ eédüúÁ|ü‹<˚XÊìøÏ Á|üD≤[ø£\qT s¡∫+#·&ÜìøÏ, yêÏì neT\T#˚j·T&ÜìøÏ πø+ÁBø£‘· Á|üD≤[ø£ eédüú ‘·|üŒì dü].$$<ä |ü<Ûäø±\qT s¡∫+#·&É+, ì<ÛäT\ |ü+|æD°, n_Ûe~› ˝À düVü‰ø±s¡+, Á|üD≤[ø£\qT neT\T #˚j·T&É+ e+Ï$

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4.1. ECONOMIC PLANNING

Economic Planning is defined as conceiving, initiating, regulating andcontrolling economic activity bythe state according to set priorities with a view to achieve well-defined objectives within a giventime.Economic planning is a resource allocation mechanism based on a computational procedure forsolving a constrained maximization problem with an iterative process for obtaining its solution. Planningis a mechanism for the allocation of resources between and within organizations in order to attainspecific goals.

Different economists have defined economic planning in a variety of ways by keeping in mind thegoals to be achieved and the techniques for achieving them. Apart from stating that planning is amethod, a technique or a means to an end, the end being the realization of clearly set targets.

H.D. Dickinsondefines “Economic Planning is the making of major economic decisions on whatand how much is to be produced, how, when and where it is to be produced, and to whom it is to beallocated by the comprehensive survey of the economic system as whole”.The basic objective ofplanning is to exercise control over the private sector of an economy. Controls are exercised overeconomic resources which are scarce. When the economic resources of the country are rationallyarranged with a predetermined purpose, it is called economic planning.

4.1.1. FEATURES OF ECONOMIC PLANNINGEconomic Planning has been adopted in different parts of the world for various reasons.In socialisticcountries, where there are state owned means of production, planning has become an institutionalneed. While in capitalistic countries where private ownership exists (Laissez faire), it is necessitatedfor the use of resources.In less developed countries or in developing countries, it is favored to overcomethe bottlenecks and for bringing all-round development. After ‘world depression’, economic planninghas become important in underdeveloped countries of the world.The most cherished features involvedin a good economic planning are as under:

Definite ObjectiveThe most significant feature of economic planning is that it should possess definite objectives. Planningmeans conscious and deliberate undertaking for a definite objective. For instance, economic planninghas the objective to accelerate the rate of growth, elimination of trade cycles, bringing the stability anda attain full employment in the economy.

Central Planning AuthorityThe existence of a central planning authority is another feature of economic planning. This centralplanning authority is responsible to prepare different schemes of development and coordinating thevarious activities. The central planning authority takes all decisions relating to production andconsumption in an economy.

Democratic CharacterAnother important feature is its democratic nature. No doubt, various plans are prepared by experts

Bì<ë«sê neT\T #˚j·Tã&É‘êsTT. ñ‘·Œ‹Ô eT]j·TT $ìjÓ÷>∑+ e+Ï nìï ø°\ø£ ìs¡íj·÷\qT Bì<ë«sêH˚rdüTø√ã&É‘êsTT.

Á|üC≤kÕ«eT´ j·TT‘· \ø£å +Á|üD≤[ø£\T Á|üC≤kÕ«eT´ j·TT‘·+>± ñ+&Ü*. Á|üD≤[ø£\T yT<Ûëe⁄\T # ‘·j·÷s¡T#j·Tã&É‘êsTT, n< düeTj·T+ Àá Á|üD≤[ø£\<ë«sê n+<ä]ø° nìï kÕúsTT\˝Àq÷ düe÷q neø±XÊ\T eT]j·TT düe÷q |ü+|æD° »]π>˝≤ #·÷&Ü*.uÛ≤s¡‘· sêC≤´+>∑+ uÛ≤s¡‘· <˚XÊìï düe÷K´ sê»´+>± Á|üø£Ï+#·&É+ e\¢ uÛ≤s¡‘· Á|üuÛÑT‘·«+ Á<äe´, ø√X¯ $<ÛëHê\<ë«sê ‘·–q ìj·T+Á‘·q\T, dü÷#·q\T #dü÷Ô |ü+#·es¡ Á|üD≤[ø£\qT <ë«sê Á|üC≤kÕ«eT´ j·TT‘· n_Ûe~› ø=qkÕ–düTÔ+~.

dü\Vü‰ |üPs¡«ø£ ÁbÕÁ‘· >∑\ Á|üD≤[ø£ dü+|òüT+Á|üD≤[ø£\qT s¡÷bı+~+#·&ÜìøÏ Á|üD≤[ø± dü+|òüT+ ˇø£ ñqï‘· kÕúsTT eédüú ñeTT›Ô+~. Ç~ Á|üD≤[ø£\T‘·j·÷s¡T#˚j·T&ÜìøÏ ø±e\dæq nìï düVü≤ø±sê\T, dü\Vü‰\T, dü÷#·q\qT ÇdüTÔ+~. Ç+ø± Ç~ <˚X¯+ ˝Àì nìïdü+düú\, eédüú\ eT<Ûä dü+ã+<ëìï ø£*|æ ñ+∫ eédüú düC≤e⁄>± »s¡>∑&ÜìøÏ |üì#düTÔ+~. Ç~ ø£ dü\Vü‰s¡÷|üø£eédüú e÷Á‘·y˚T.

düeTÁ>∑yÓTÆq |ü]~Á|üD≤[ø£ jÓTTø£ÿ eTs=ø£ eTTKýÓTÆq \ø£åD+ Bì jÓTTø£ÿ düeTÁ>∑‘·. <˚X¯ πø+Á<ä Á|üD≤[ø£ j·T+Á‘ê+>∑+ ñ‘·Œ‹Ô,$ìjÓ÷>∑+ yÓTT<ä …’q rdüT≈£îqï ìs¡íj·÷\T <˚X¯eT+‘·ÏøÏ nqTe]Ô+#˚ ≤ ñ+&É≥+ nH˚~ düeTÁ>∑yÓTÆq $wüj·T+.nq>± @<√ ø£ s¡+>∑+ qT n_Ûe~›øÏ #·s¡ \T rdüTø=ì eTs=ø£ sê+>±ìï e~*y˚j·T&É+ »s¡T>∑<äT. nìï s¡+>±\n_Ûe~› Bì˝À Ç$T&ç ñ+≥T+~.

$ìjÓ÷>∑+ ø=s¡≈£î Á|üD≤[ø£ˇø£ πø+ÁBj·T Á|üD≤[ø£ eédüú À ñ‘·Œ‹Ô ø√dü+ Á|üD≤[ø£\T yj·T&É+ ø£ÿfÒ ñ+&É<äT. ñ‘·Œ‹Ô nsTTq edüTÔ ùde\qT$$<ä esêZ\≈£î |ü+|æD°øÏ dü+ã+~+∫q Á|üÁøÏj·T ≈£L&Ü ñ+≥T+~. n+fÒ ø£ Á|üD≤[ø£ ñ‘·Œ‹Ôì n+#·Hê yj·T&ÉyTø±ø£ n~ <˚X¯ dü+|ü<ä eT]j·TT edüTÔ ùde\T $$<ä esêZ\ eT<Ûä @ $<Ûä+>± |ü+|æD° ø±yê˝À ìs¡ísTTdüTÔ+~.

düùV≤‘·Tø£yÓTÆq dü+|ü<ä |ü+|æD°n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\˝À düVü≤» dü+|ü<ä eT]j·TT ñ‘·Œ‹Ô ø=s¡‘·>± ñ+≥T+~. á ø=s¡‘·>± ñqï dü+|ü<äqT$$<ä esêZ\ eT<Ûä n‘· ~Ûø£ düe÷» ÁX‚j·TdüT‡sTT ø√dü+ |ü+|æD° #j·T&É+ »s¡T>∑T‘·T+~. Ç~ eTT+<äT>±H˚ $$<äesêZ\≈£î @ $<Ûä+>±, @ \øå±´\ y˚Ts¡≈£î |ü+|æD° #˚j·÷˝À ìs¡ísTTdüTÔ+~.

Ä#·]+#·<ä–q $<ÛëHê\T eT]j·TT \øå±´\Tˇø£ <X+ jÓTTø£ÿ Á|üD≤[ø£ n~ <X+ jÓTTø£ÿ dü+|ü<äqT @ \øå±´\ yTs¡≈£î ñ|üjÓ÷–+#ê˝À ìsê›]düTÔ+~. Bì ø√dü+ø=ìï $<ÛëHê\qT neT\T #˚düTÔ+~. ø±ãÏº á Á|üD≤[ø£\ @sêŒ≥T˝À C≤rj·T dü+|ü<äqT Ä]∆ø£ düTÔdæÔs¡‘· ø=s¡≈£î@$<Ûä+>± $ìjÓ÷>∑+#ê˝À <ëì \øå±´\T nqTdü]+#˚ $<Ûëq+ ìsê›]düTÔ+~.

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but at the same time, adequate opportunities are provided to the people to actively participate atvarious levels. Having federal structure of Indian Constitution, the Union Government only uses itsfiscal, monetary and physical controls to guide and give direction in consequence with the FiveYearPlans.

Advisory Role of Planning CommissionIn the decentralized set up of planning, Planning Commission is the apex body. It provides the necessaryperspective, guidance and coordination. Furthermore, it serves as a close link between differentagencies so that functioning may be smooth. In this regard, Planning Commission is an advisory body.

ComprehensivenessAnother important characteristic of planning is its comprehensiveness in scope. As central planningauthority takes all decisions regarding production, consumption and distribution, it must cover theentire economy which must be comprehensive in scope. In other words, planning must be effective sothat the planning of one sector may not be nullified by the absence of planning in other sectors.

Planning for ConsumptionIn a centrally planned economy, it should not be confined to production alone but at the same time, itmust cover the distribution and consumption also. In other words, the planning authority should notdecide not only on what and how to produce but it must keep in mind and decide accordingly amongwhom it is to be distributed.

Rational Allocation of ResourcesGenerally, in under-developed countries, available resources are scarce and these resources areallocated in such a manner as to get maximum social welfare. It needs to fix up priorities relating toeconomic development. Thus, allocation of resourcesis in accordance to these fixed priorities.

Feasible Policies and TargetsA good planning is based on the initial resources of the country to achieve the feasible goals andpolicies. In this way, domestic resources are planned for attaining economic stability. Policies andtargets are to be set at the beginning of the plan. At the end of the plan review will be initiated whethertargets are achieved or not.

4.2. PLANNING COMMISSION OF INDIAPlanning Commission of India was an organization in the Government of India, which formulatedIndia’s Five-Year Plans, among other functions. The Planning Commission was assigned with thetask of formulating plans and allocating resources to efficiently exploit our resources in order topromote economic growth and achieve better standard of living for the people of our country.

The Planning Commission reported directly to the Prime Minister of India. It was established on 15March 1950, with Prime Minister Jawaharlal Nehru as the Chairman. The Planning Commission did

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not derive its creation from either the Constitution or Statute but was an arm of the Central/UnionGovernment.

The Planning Commission was set up by a Resolution of the Government of India in March 1950.The prime objectives of the Government were to propel a rapid increase in the living standard ofIndians by the productive exploitation of the country’s resources, raising production and securingopportunities for everyone for employment in the service of society. The Planning Commission wasassigned the responsibility of assessing all the resources of the country, enhancing scarce resources,drafting plans for the most productive and balanced usage of resources and ascertaining priorities. The Planning Commission, used to work under the overall guidance of the National DevelopmentCouncil. The Deputy Chairman and the full-time members of the Commission, as a composite body,provided advice and guidance to the subject divisions for the formulation of Five Year Plans, AnnualPlans, State Plans and monitoring Plan Programmes, Projects and Schemes.

Members of the Planning CommissionChairman – Prime Minister; presided over the meetings of the CommissionDeputy Chairman – de-facto Executive Head (full-time Functional Head);

was responsible for the formulation and submission of the draft Five-Year Plan to theCentral cabinet.

was appointed by the Central cabinet for a fixed tenure and enjoyed the rank of acabinet minister.

could attend cabinet meetings without the right to vote.

Part-time members – Some Central MinistersEx-officio members – Central Finance Minister and Central Planning Minister

India had completed about seven decades (1951-2017) of planning. During the Plan Period it hasachieved success in some directions and failed in other areas. So, India’s experience during the PlanPeriod presents a mixed picture.

In 2014, Narendra Modi government decided to wind up the Planning Commission. It was replacedwith the newly formed NITI Aayog to better represent the present needs and aspirations of people ofIndia.

4.3. NATIONAL DEVELOPMENT COUNCIL

The National Development Council (NDC) or Rashtriya Vikas Parishad is the apex body fordecision creating and deliberations on development matters in India, presided over by the PrimeMinister. It was set up on 6 August 1952 to strengthen and mobilize the effort and resources of thenation in support of the Five Year Plans made by Planning Commission. Its main aim is to promotecommon economic policies in all vital spheres, and to ensure the balanced and rapid development of

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4.3. C≤rj·T n_Ûe~› eT+&É*

Bìì C≤rj·÷_Ûe~› eT+&É* Ò<ë sêÁw”ºj·T $ø±dü |ü]wü‘Y nì ≈£L&Ü n+≤s¡T. Ç~ uÛ≤s¡‘· <˚X¯ C≤rj·TkÕúsTT˝À n_Ûe~›, ìs¡íj·÷‘·àø£ #·s¡Ã\T »s¡|ü&ÜìøÏ ñqï n‘· qTï‘· kÕúsTT e´edüú . BìøÏ Á|ü<ÛëqeT+Á‹ n<Ûä ≈£åî\T>±ñ+≤s¡T. Ç~ 1952 Ä>∑düTº 6 q @sêŒ≥T #˚j·Tã&ç+~. Bìì @sêŒ≥T #˚j·T&É+˝À Á|ü<Ûëq ñ<›X¯+ uÛ≤s¡‘·<˚X¯+˝À ñqï dü+|ü<äqT $$<ä ÄX¯j·÷\ y˚Ts¡≈£î Áø√&ûø£]+#·&É+ <ë«sê Á|üD≤[ø± dü+|òüT+ ‘·j·÷s¡T #˚ùd |ü+#·es¡ Á|üD≤[ø£\qT Áb˛‘·‡Væ≤+#·&É+ ‘·<ë«sê uÛ≤s¡‘· <˚X¯ dü+‘·T*‘· düs¡«‘√eTTU≤_e~›øÏ Ä]∆ø£ $<ÛëHê\qT‘·j·÷s¡T #˚j·TT≥.

Bì˝À uÛ≤s¡‘· Á|ü<Ûëq eT+Á‹, πø+Á<ä πø_HÓŸ eT+Á‘·T\T, nìï sêÁcÕº\ eTTK´eT+Á‘·T\T Ò<ë yê] Á|ü‹ì<ÛäT\T,πø+Á<ä bÕ*‘· ÁbÕ+‘ê\ Á|ü‹ì<ÛäT\T eT]j·TT Á|üD≤[ø± dü+|òüT düuÛÑT´\T Bì˝À düuÛÑT´\T>± ñ+≤s¡T.

C≤rj·÷_Ûe~› eT+&É*ì Á|üdüTÔ‘·+ ìs¡÷à\q #˚j·T&ÜìøÏ ìs¡íj·T+ rdüTø√e&É+ »]–+~. ø±ì á s√E es¡≈£îBì ø±sê´#·s¡D »s¡T>∑˝Ò<äT. ˙‹ njÓ÷>¥ @sêŒ≥T #˚dæq <ä>∑Zs¡ qT+&ç( Ç~ Ç+#·T$T+#·T>± C≤rj·÷_Ûe~›eT+&É* ≈£Ls¡TŒ) C≤rj·÷_Ûe~› eT+&É*øÏ @ $<ÛäyÓTÆq \ø£å + n|üŒ–+#·ã&É Ò<äT eT]j·TT eT+&É* düe÷y˚X¯+≈£L&Ü »s¡T>∑ Ò<äT.

4.3.1. C≤rj·÷_Ûe~› eT+&É*- eTTK´ <Û´j·÷\T1. <˚X¯ dü+|ü<äqT Á|üD≤[ø£\≈£î nqT>∑TD+>± eT[¢+#·&É+ Ò<ë ã˝Àù|‘·+ #˚j·T&É+.2. Ä]∆ø£ $<ÛëHê\qT nìï s¡+>±\≈£î $düÔ]+|ü#˚j·T&É+.3. <˚X¯+˝À nìï ÁbÕ+‘ê\≈£î dü+‘·T*‘· oÁ|òüT n_Ûe~› »]π>˝≤ #·÷&É&É+4. <˚X¯+ ˝Àì Á|ü»\+<ä]øÏ ø£ dü nedüsê …’q $<Ûä , yÓ’<Ûä + eT]j·TT kÕe÷õø£ ùde\T n+<˚ ≤ #·÷&É≥+.5. Á|ü»\jÓTTø£ÿ Jeq Á|üe÷D kÕúsTT ô|]π>˝≤ #·÷&É&É+.6. Á|ü»\ jÓTTø£ÿ ‘·\dü] Ä<ëj·T+ ô|]π>˝≤ #·÷&É≥+.

4.3.2..eT+&É* eTTK´ $<ÛäT\T1. <˚XÊìøÏ dü+ã+~+∫q Á|üD≤[ø£\ ø±e\dæq ìj·Te÷\T s¡÷bı+~+#·&É+. dü+|ü<äqT …øÏÿ+∫ <ëìì

Á|üD≤[ø£\≈£î n+~+#·&É+.2. Á|üD≤[ø± dü+|òüT+ s¡÷bı+~+∫q Á|üD≤[ø£\qT ÄyÓ÷~+#·&É+.3. dü+|ü<äqT $$<ä s¡+>±\≈£î πø≤sTT+#·&É+ ‘√ düVü‰ Á|üD≤[ø£\T neT\T≈£î nedüs¡yÓTÆq düVü‰j·Tø£ #·s¡ \qT

#|ü≥º&É+.4. Ä]∆ø£ $<ÛëHê\≈£î dü+ã+~+∫ ‘·\ m‘Ô düeTdü \≈£î nedüs¡yÓTÆq |ü]cÕÿsê\qT #·÷|ü&É+.5. Á|üD≤[ø£\T neT\T»s¡T>∑T‘·Tqï rs¡TqT |ü]o*+#·&É+. Á|üD≤[ø£\ jÓTTø£ÿ \øå±´\qT kÕ~Û+#·&ÜìøÏ

düeTj·÷qT≈£L\+>± nedüs¡yÓTÆq #·s¡ \qT dæbòÕs¡düT #˚j·T&É+.6. Á|üD≤[ø£\qT $»j·Te+‘·+>± |üP]Ô #˚j·T&ÜìøÏ, \øå±´\qT HÓs¡y˚s¡Ã&ÜìøÏ Á|üj·T‹ï+#·&É+

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all parts of the country. The Council comprises the Prime Minister, the Union Cabinet Ministers, ChiefMinisters of all States or their substitutes, representatives of the Union Territories.

NDC (National Development Council) has been proposed to be abolished. But till date no resolutionhas been passed to abolish it. Since the inception of NITI Aayog’s Governing Council (which hasalmost the same composition and roles as NDC) the NDChad neither been assigned any work norit did not conduct any meetings. During the tenure of former Prime Ministers Atal Bihari Vajpayeeand Manmohan Singh it was felt that Planning Commission has outlived its life and needs somereform. The existence of National Development Council was also on the same line as planningcommission.

4.3.1. OBJECTIVES OF NATIONAL DEVELOPMENT COUNCIL

1 to strengthen and mobilize the effort and resources of the nation in support of the Plan;

2 to promote common economic policies in all vital spheres;

3 to ensure the balanced and rapid development of all parts of the country;

4 to provide social amenities like education, medical care, social services, etc. to thecitizens of the country;

5 to improve the living standard of the people and

6 to increase the per capita income

4.3.2. FUNCTIONS OF THE NATIONAL DEVELOPMENT COUNCIL

1 to prescribe guidelines for the formulation of the National Plan, including the assessmentof resources for the Plan;

2 to consider the National Plan as formulated by the NITI Aayog;

3 to make an assessment of the resources that are required for implementing the Plan andto suggest measures for augmenting them;

4 to consider important questions of social and economic policy affecting nationaldevelopment;

5 to review the working of the Plan from time to time and to recommend such measuresas are necessary for achieving the aims and targets set out in the National Plan and

6 to recommend the measures for achievement of the aims and targets set out in thenational Plan.

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4.4. ˙‹ njÓ÷>¥

˙Ï njÓ÷>¥ (uÛ≤s¡‘· s¡÷bÕ+‘·s¡ C≤rj·T Á|üD≤[ø£ dü+düú) uÛ≤s¡‘·<X $<Ûëq s¡÷|üø£\Œq dü+|òüT+. uÛ≤s¡‘· Á|üuÛÑT‘·«+Bìì kÕ«e\+uÛÑq eT]j·TT dü+‘·T*‘· n_Ûe~› ì \ø£å + #˚düTø=ì, $<ÛëHê\ s¡÷|üø£\Œq˝À düVü≤ø±s¡ düe÷K´$<ÛëHê\qT ne\+_Ûdü÷Ô nìï sêÁcÕº\ jÓTTø£ÿ Ä˝À#·q\T, ÁbÕ‹ì<Ûä + $<Ûëq s¡÷|üø£\Œq˝À sêÁcÕº\ bÕÁ‘·qTô|+#·T‘·÷ uÛ≤s¡<˚X¯ n_Ûe~›ø=s¡≈£î eTT+<äT≈£î kÕ>∑T‘·T+~. BìjÓTTø£ÿ Á|ü<Ûëq uÛ≤eq “bottom-up approach”. BìøÏ 15 dü+e‘·‡sê\ Bs¡È ø±[ø£ Á|üD≤[ø£ eT]j·TT 7 dü+e‘·‡sê\ eTT+<äT#·÷|ü⁄, $X‚¢wüD eT]j·TT ø±sê´#·s¡Dñqï~.

˙‹ njÓ÷>¥ dü+|ü<ä\ πø+Á<ä+>± ñ+&ç dü+|ü<äqT, $C≤ïHêìï, HÓ’|ü⁄D≤´\qT ‘·–q+‘· y˚>∑+>± ñ|üjÓ÷–dü÷Ô|ü]XÀ<äqqT, q÷‘·q‘ê«ìï rdüT≈£î e∫Ã $$<ä n+XÊ\qT |ü]wüÿ]+#·&ÜìøÏ eP´Vü‰‘·àø£ Á|üD≤[ø£\qT s¡∫düTÔ+~.2015 À NDA Á|üuÛÑT‘·«+ n|üŒÏ es¡≈£î Top-Down yÓ÷&É Ÿ À ñqï Á|üD≤[ø± dü+|òüT+ jÓTTø£ÿ kÕúq+˝À ‹njÓ÷>¥ qT @sêŒ≥T #˚dæ+~. Ç~ ÁøÏ+~ düuÛÑT´\‘√ ≈£L&ç ñ+≥T+~.

#ÛÓ’s¡àHé : uÛ≤s¡‘· <˚X¯ Á|ü<Ûëq eT+Á‹ìs¡«Vü≤D øöì‡˝Ÿ : nìï sêÁcÕº\ jÓTTø£ÿ eTTK´ eT+Á‘·T\T eT]j·TT πø+Á<ä bÕ*‘· ÁbÕ+‘ê\ jÓTTø£ÿ …|òæºHÓ+Ÿ

>∑es¡ïs¡T¢.ÁbÕ+rj·T øöì‡˝Ÿ : ÁbÕ+rj·T düeTdü \T, Á|ü‘´ø£ $wüj·÷\T qT nÁ&Édt #j·T&ÜìøÏ Ç$ ø±˝≤qT>∑TD+>±

Ç$ @sêŒ≥T #˚j·Tã&É‘êsTT.e´edüú - ≈£Ls¡TŒyÓ’dt #Ó’sY ô|s¡‡Hé : Á|ü<Ûëq eT+Á‹ #˚ ìj·T$T+#·ã&É‘ês¡T|üP]Ô ø±\|ü⁄ düuÛÑT´\T : n+‘·sê®rj·T $X¯j·÷\ô|’ ne>±Vü≤q, |ü≥Tº ñqïyês¡T.bÕsYº f…ÆyéT düuÛÑT´\T : >∑]wüº+ >± Ç<ä›s¡T ñ+≤s¡T. Ms¡T Á|üeTTK $X¯«$<Ûë´\j·÷\T, |ü]XÀ<äHê

dü+düú\ mø‡ n|ò”wæjÓ÷ düuÛÑT´\ kÕÔsTT˝À s=fÒwüHé |ü<ä›‹˝À ìj·T$T+#·ã&É‘ês¡T.

mø˘‡ n|ò”wæjÓ÷ düuÛÑT´\T : >∑]wüº+>± q\T>∑Ts¡T ñ+≤s¡T Ms¡T πø+Á<ä eT+Á‹ es¡Z+ qT+&ç Á|ü<ÛëqeT+Á‹#˚ Hê$TH˚Ÿ #˚j·Tã&É‘ês¡T.

eTTK´ ø±s¡ ìs¡«Vü≤D n~Ûø±] : πø+Á<ä Á|üuÛÑT‘·«+ À ôdÁø£≥Ø kÕúsTT ñqï yê]ì ìj·T$T‘· ø±˝≤ìøÏ Á|ü<ÛëqeT+Á‹ ìj·T$TkÕÔs¡T.

ôdÁø£fÒ]j·TŸ : nedüsêìï ãÏº ìs¡íj·TeTÚ‘·T+~.

4.4.1. ˙‹ njÓ÷>¥ eTTK´ \ø£åD≤\T˙‹ njÓ÷>¥ uÛ≤s¡‘· <˚X¯+ jÓTTø£ÿ düs¡«‘√eTTU≤_Ûe~›øÏ ‘·–q e÷sêZ\qT yÓ‘·T≈£î≥. Ç~ @&ÉT eTTK´ dü÷Á‘ê\Ä<Ûës¡+>± |üì#˚düTÔ+~.(1) Á|ü»\ nqT≈£L\(2) nqT≈£L\ ø±sê´#·s¡D(3) bÕ˝§Zq&É+(4) kÕ~Ûø±s¡‘·

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4.4. NITI AAYOG

The NITI Aayog (National Institution for Transforming India) is considered to be think tank ofthe Government of India, established with the aim to achieve sustainable development goalswith cooperative federalism by fostering the involvement of State Governments of India in the economicpolicy-making process using a bottom-up approach. Its initiatives include “15-year road map”, “7-year vision, strategy, and action plan”, Governance – which is people-centric, participative, collaborative, transparent and policy-driven isan important objective of NITI Aayog. It will provide critical directional and strategic input to thedevelopment process, focusing on deliverables and outcomes. This, along with being as incubatorand disseminator of fresh thought and ideas for development, will be the core mission of NITI Aayog.NITI Aayog is developing itself as a State-of-the-art Resource Centre, with the necessary resources,knowledge and skills, that will enable it to act with speed, promote research and innovation, providestrategic policy vision for the government, and deal with contingent issues. It was established in 2015,by the NDA government, to replace the Planning Commission which followed a top-down model.

Chairperson : Prime Minister of IndiaGoverning Council : It comprises of the Chief Ministers of all States and Lieutenant Governors

of Union Territories.

Regional Councils : They are formed to address specific issues and contingencies impacting more than one state or region.

Organizational Framework

Vice-Chairperson : to be appointed by the Prime Minister.Members: full-time : specialists with international exposure.

Part-time Members : maximum of 2, from leading Universities, research organizations andother relevant institutions in an ex-officio capacity. Part-time members will be on a rotational basis.

Ex-Officio Members : maximum of 4 members of the Union Council of Ministers to be nominated by the Prime Minister.

Chief Executive Officer : to be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India.

Secretariat : as deemed if necessary.

4.4.1. FEATURES OF NITI AAYOG

the National institution for Transforming India will act as a catalyst for the development by aholistic approach;

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(5) n+<ä]˙ dü$Tà*q+ #˚j·T&É+(6) düe÷q‘·«+(7) bÕs¡<äs¡Ùø£‘·.

düVü≤ø±s¡ düe÷K´ $<ÛëHêìï nqTdü]+∫ nìï sêÁcÕº\≈£î C≤rj·T n_Ûe~› ¬ø’ düe÷qyÓTÆq ÁbÕ‹ì<Ûä + ÇdüTÔ+~.Ç~ ˇø£ Ä˝À#·\q e~› dü+düú e … ñ+≥T+~. $C≤ïq |òüTì>±H˚ ø±ø£ eT+∫ ø±s¡ ìsê«Vü≤ø£ dü+düú >±eéVü≤]düTÔ+~.

πø+Á<ä sêÁcÕº\ kÕúsTT\˝À ñqï $$<ä XÊK\qT ø£ #√ÏøÏ ‘Ó∫Ã $<ÛëHê\ |üìrs¡TqT düMTøÏå+#·&É+. ;<ä, eT<Ûä‘·s¡>∑‹ esêZ\ qT ô|’øÏ rdüT≈£îsêe&ÜìøÏ $<ÛëHê\qT ìs¡ísTT+#·&É+. nD>±]q esêZ\qT n_Ûe~› #j·T&É+. ≈£î\,eT‘·,*+>∑, uÛ≤cÕ, ÁbÕ+rj·T düeTdü \qT |ü]wüÿ]+#·&É+.

4.4.2. ˙‹ njÓ÷>¥ <Û´j·÷\T1. düVü‰ø±s¡ düe÷Kýê<ëìï eTT+<äT≈£î rdüT≈£îb˛e&É+, sêÁcÕº\ Á|ü‹ì<Ûë´ìï ô|+#·&É+.2. ô|’ kÕúsTT˝À neT\j˚T´˝≤ Á>±e÷\ kÕúsTT˝À Á|üD≤[ø£\T ‘·j·÷s¡T #˚j·T&É+3. Ä]∆ø£ e~› À |òü*‘ê\qT düe÷q+>± bı+<ä Òì ∫≥º∫e] es¡Z+ MT<ä Á|ü‘˚ ø£ ÁX¯<ä›4. C≤rj·T ôd≈£L´]° ÁbÕeTTK´‘·qT <äwæº À ñ+#·Tø=ì Ä]∆ø£ Á|üD≤[ø£\qT ‘·j·÷s¡T#˚j·T&É+.5. qMø£s¡D˝À n_Ûe~› ø=s¡≈£î ìs¡+‘·s¡ ne˝Àø£q+ #˚düTø√e&É+, $wüj·T ùdø£s¡D.6. <˚oj·T, $<˚o Ä˝À#·\ dü+düú\‘√ uÛ≤>∑kÕ«eT´+.7. $C≤ïq, qMø£s¡D\T eT]j·TT ñ<ä eT<ë]‘ê«ìï ô|+bı+~+#·&É+, düVü≤ø£]+#·&É+.8. $$<ä eédüú\T, s¡+>±\ eT<Ûä e∫Ãq düeTdü \qT |ü]wüÿ]+#·&É+.9. dü+|ü<ä πø+Á<ë\ n_Ûe~›øÏ |ü]XÀ<Ûäq eT]j·TT eT+∫ ìs¡«Vü≤Hê\qT n+~+#·&É+.10. kÕ+πø‹ø£ n_Ûe~›, Capacity Building \ ô|’ <äwæº ô|≥º&É+.

Fig. 4.1

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NITI Aayog is based on the 7 pillars of effective governance(1) Pro-People(2) Pro-Activity(3) Participation(4) Empowering(5) Inclusion of all(6) Equality(7) Transparency.

in NITI Aayog, the state governments has an equal role in nation’s development process andNITI Aayog promises the principle of co-operative federalism;

NITI Aayog is planned as a think tank institution which stands not only as a hub for knowledgebut also for good governance;

it’s a platform for monitoring and implementation of all government policies by bringing togethervarious Ministries at the centre and state level;

priorities include upliftment of the poor, marginalized and downtrodden and

empowering vulnerable and marginalized sections, redressing identity-based inequalities ofall kinds – gender, region, religion, caste or class.

4.4.2.OBJECTIVES OF NITI AAYOG fostering Cooperative Federalism and active involvement of states;

formulation of plans at Village - level, aggregation at higher levels;

special attention to sections at risk of not benefitting adequately from economic progress;

economic policy that incorporates National security interests;

feedback for constant Innovative Improvements;

partnerships with National and International Think Tanks;

creating Knowledge, Innovation and Entrepreneurial support system;

platform for Resolution of Inter-Sectoral and Inter-departmental issues;

state of the Art resources center for Research on good governance and

focus on Technology upgradation and Capacity Building.

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4.4.3. ˙‹ njÓ÷>¥ eT]j·TT Á|üD≤[ø£ dü+|òüT+ eT<Ûä >∑\ uÒ<ë\T n+XeTT Á|üD≤[ø± dü+|òüT+ ˙‹ njÓ÷>¥ eédüú &ç|üP´° #Ó’¬sàHé, ôdÁø£≥Ø sê+≈£î˝À %CEO

yÓT+ãsY ôdÁø£≥Ø, yÓ’dt #Ó’sY yÓTHé|üP]Ô ø±\|ü⁄ düuÛÑT´\T, ◊<äT>∑Ts¡T |üP]Ô ø±\|ü⁄ düuÛÑT´\TbÕsYº f…ÆyéT düuÛÑT´\T ìπs›•+#·ã&çq Ç<ä›s¡T bÕsYº f…ÆyéT düuÛÑT´\T|ü<ä›‹˝À ìj·T$T+#·ã&É‘ês¡T. q\T>∑Ts¡T πø+Á<ä eT+Á‘·T\T ñ+≤s¡T.

CEO qT Á|ü<Ûëq eT+Á‹ ìj·T$TkÕÔs¡T.

Á|üD≤[ø£ rs¡T Á|üuÛÑT‘·« ì<ÛäT\qT Á|üD≤[ø£ |ü<ä›‹˝À e÷¬sÿŸ Ä]∆ø£ eédüúqT Ä<Ûës¡+>±Ks¡TÃ #˚ùd˝≤ Á|üD≤[ø£\T ‘·j·÷s¡T “bottom-approach” ˝À eP´Vü‰‘·àø£#kÕs¡T. Á|üD≤[ø£\qT ‘·j·÷s¡T #˚kÕs¡T.

sêÁcÕº\‘√ πø+Á<ä Á|üuÛÑT‘·« dü+düú. sêÁcÕº\≈£î ‘·–q+‘· ÁbÕ‹ì<Ûä + ñ+≥T+~. dü+ã+<ä+ sêÁcÕº\ jÓTTø£ÿ ÁbÕ‹ì<Ûä + Ò<äT. düe÷K´ yê<ä dæ<ë›+‘·+ Á|üø±s¡+ sêÁcÕº\T

sêcÕº\ #·s¡Ã\≈£î ≈£î ÄkÕÿs¡+ Ò<äT ‘·–q #·s¡Ã\T #˚j·T&ÜìøÏ ìs¡+‘·s¡+ ÄkÕÿs¡+ñ+≥T+~.

ì<ÛäT\ ì<äT\ πø≤sTT+|ü⁄ eT]j·TT ì<äT\ πø≤sTT+|ü⁄ ˝À bÕÁ‘· ñ+&É<äT. eT+ps¡T ì<ÛäT\ eT+ps¡T ≈£L&Ü #˚düTÔ+~. πø+Á<ä Ä]∆ø£ XÊK ì<äT\qT πø≤sTT+∫

Á|üD≤[ø£\ neT\T Á|üD≤[ø£\qT eT+ps¡T #˚düTÔ+~.

Á|üD≤[ø£\ sêÁcÕº\ô|’ s¡T<äT›‘·T+~ Á|üD≤[ø£\ uÛ≤<ä ‘·qT sêÁcÕº\ô|’ yÓ÷|ü Ò<äT neT\T

4.4.4. ˙‹ ÄjÓ÷>¥ ô|’ $eTs¡ÙÁ|üD≤[ø± dü+|òüT+ e …H˚ Ç~ ≈£L&Ü sêC≤´+>∑ dü+düú ø±<äT. Ç~ @$<Ûä+>±q÷ bÕs¡¢yÓT+≥T≈£î »yêãT<ëØ ø±<äT.sêÁcÕº\ n_ÛÁbÕj·T+ rdüTø√≈£î+&Ü Á|üD≤[ø± dü+|òü÷ìï s¡<äT› #˚XÊs¡T.

πø+Á<ä bÕ*‘· ÁbÕ+‘ê\ qT+&ç eTTKéT+Á‘·T\T ø±≈£î+&Ü …|òæºHÓ+Ÿ >∑es¡ïs¡¢ ÁbÕ‹ì<Ûä + düe÷K´ yê<ëìøÏe´‹πsø£+. Bì e\q dü+πøåeT ø±s¡ Áø£e÷\≈£î ì<ÛäT\ πø≤sTT+|ü⁄ ‘·>∑TZ‘·T+~.

˙‹ njÓ÷>¥ ø±s¡ ø£ ≤bÕ\T πø+Á<ä eT+Á‹ es¡Z+ eT]j·TT sêÁcÕº\ jÓTTø£ÿ düVü≤ø±s¡+ eT]j·TT |üs¡düŒs¡ dü+Á|ü~+|ü⁄\‘√»s¡T>∑T‘êsTT. πø+Á<ä sêÁwüº Á|üuÛÑT‘ê«\≈£î dü÷#·q\qT #˚düTÔ+~. MÏì neT\T |üs¡#· e\dæq uÛ≤<ä ‘· e÷Á‘·+Á|üuÛÑT‘ê«\<. ‹ njÓ÷>¥ Á|üC≤edüsê\T, kÕeT÷Væ≤ø£, πø+ÁBø£‘· $<Ûëq\Tÿ dü+ã+~+∫ $<Ûëq ìs¡íj·T Á|üÁøÏj·T,neT\T rs¡T ø=s¡≈£î Á|üuÛÑT‘ê«\qT ã˝Àù|‘·+ #˚düTÔ+~. Ç~ <˚X¯ n_Ûe~› ø=s¡≈£î $eTs¡ÙHê‘·àø£, eP´Vü‰‘·àø£dü÷#·q\T #˚düTÔ+~. n_Ûe~›øÏ ø±e\dæq q÷‘·q Ä˝À#·q\qT n+~+#·≤ìøÏ ˇø£ Ç+≈£îuÒ≥sY >± Á|ü<ÛëquÛ≤<ä ‘·\qT ìs¡«Væ≤düTÔ+~.

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4.4.3. DIFFERENCE BETWEEN NITI AAYOG AND PLANNING COMMISSIONComponent Planning Commission NITI AayogOrganization Had deputy Chairperson New posts of CEO with secretary rank,

A member secretary Vice-ChairpersonFull-time members Five full-time membersSecretaries or member Two part-time memberssecretaries were appointed on Four cabinet ministers as ex-officio membersusual process CEO is appointed by Prime Minister.

Planning Based on top-down planning Formulates plans based on bottom-upfor government with public approach right from village level andsector resources. integrates plans at higher level.

Relation With States A central government institution Provides a partnership with statesNo representation of states Promote co-operative federalismNo structural mechanism for Provides a platform for structured andinteraction with states. regular interaction with states.

Finance Role of Finance Commission Does not have any role in fund allocationwas greatly reducedAllocation of funds were Finance commission decides the share ofdecided by the Planning taxes to StatesCommission. .

Constitution and The commission reported to Governing Council has State ChiefNational Development Council Ministers and Lieutenant governors.

Reporting that had State Chief Ministersand Lieutenant Governors.

4.4.4. NITIAAYOG-CRITICISM Like planning commission, it’s also a non-constitutional body which is not responsible to

parliament.

Dismantling planning commission without consulting the states was seen as against thespirit of federalism and democracy.

UTs are represented by Lieutenant Governors, not by Chief Ministers. This is against theprinciples of federalism.

Fund allocation to welfare schemes may get affected. For example, there is a 20 Percentreduction in gender budgeting.

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NITI Aayog functions in close cooperation, consultation and coordination with the Ministries of theCentral Government and State governments. While it makes recommendations to the Central andState Governments, the responsibility for taking and implementing decisions rest with them.

4.5. FIVE YEAR PLANS IN INDIA

The term economic planning is used to describe the long term plans of the government of India todevelop and coordinate the economy with efficient utilization of resources. Economic planning inIndia started after independence in the year 1950 when it was deemed necessary for economicgrowth and development of the nation.

From 1951 to 2017, the Indian economy was premised on the concept of planning. This was carriedthrough the Five-Year Plans, developed, executed, and monitored by the PlanningCommission (1951-2014) and the NITI Aayog (2015-2017). The Twelfth Plan termwas completedby March 2017.

Planning Commis-sion was set up on 15 March 1950 and the plan era started from 1 April 1951 withthe launch-ing of the First Five Year Plan (1951-56). The new government led by Narendra Modihas announced the dissolution of the Planning Commission, and its replacement by a think tank calledthe NITI Aayog i.e. National Institution for Transforming India.

The first Indian Prime Minister, Jawaharlal Nehru, presented the First Five-Year Plan to the Parliamentof India and needed urgent attention. The First Five-year Plan was launched in 1951 which mainlyfocused in the development of the primary sector. The first eight five-year plans in India emphasizedon growing the public sector with huge investments in heavy and basic industries, but since the launchof Ninth five year plan in 1997, attention has shifted towards making government a growth facilitator.

4.5.1. OBJECTIVES OF ECONOMIC PLANNING IN INDIA Economic Development in terms of increase in Gross Domestic Product (GDP) and Per

Capita Income.

Increased Levels of Employment and better utilization of the available human resources ofthe country.

Self-sufficiency in major commodities and also increase exports through economic planning.

Economic Stability in addition to the economic growth of India. This means keeping inflationlow and also making sure that deflation in prices does not happen.

Aim to increase labour welfare, social welfare for all sections of the society. Development ofsocial services in India, such as education, healthcare and emergency services.

Regional Development.

Comprehensive and Sustainable Development such as development of agriculture, industry,and other services sectors.

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Reduction in Economic inequality through progressive taxation, employment generation andreservation of jobs.

Social Justice has been a central focus of planning in India. It aimedat reducing the populationliving below the poverty line and provide them access to employment and social services.

Improving the standard of living by increasing the per capita income and equal distribution ofincome.

4.5.2. OVERVIEW OF FIVE YEAR PLANS

First Five Year Plan - 1951 to 1956 It was based on the Harrod-Domar model. Its main focus was on the agricultural development of the country and Balanced economic development Targeted Growth Ratewas 2.1 percent This plan was successful and achieved growth rate of 3.6 percent national income increased by 18 percent and per capita income increased by 11 percent.

Second Five Year Plan -1956 to 1961 It was based on the P.C. Mahalanobis Model. Its main focus was on the industrial development of the country and. Transport and communication development Durgapur, Bhilai, and Rourkela steel plantswere established in this plan. Targeted Growth Rate was 4.5 percent This plan was successful and achieved growth rate of 4.1 percent

Third Five Year Plan - 1961 to 1966. This plan is called ‘GadgilYojna’ also. The main target of this plan was Both agricultural & industrial development and Establishment of a self-sufficient& self-reliant economy Due toIndo-China war and Indo Pak war. this plan could not achievethe targets. Targeted Growth Ratewas 5.6 percent

Actual Growth Rate achieved was 2.8 percent

Plan Holiday - 1966 to 1969. The main reason behind the plan holiday was the Indo-Pakistan war & failure of third plan. Three annual plans was designed in the years 1966-67, 1967-68 and 1968-69 Equal priority was given to agricultural & related activities

Fourth Five Year Plan - 1969 to 1974 There were two main objective of this plan i.e. growth with stability and Progress towards

achieving a self-reliant economy

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During this plan the slogan of “Garibi Hatao” is given by Indira Gandhi. Targeted Growth Ratewas5.7 percent This plan failed and could achieve growth rate of 3.3 percent only

Fifth Five Year Plan - 1974 to 1979 In this plan top priority was given to Reduction of poverty, Attainment of self-reliance,

better distribution of income. The draft of this plan was prepared and launched by the D.P. Dhar. This plan wasterminated in 1978. Targeted Growth Rate was4.4percent Achieved Growth Rateof4.8percent

Rolling Plan - 1978-79 This plan was started with an annual plan for 1978-79 and as a continuation of the

terminated fifth year plan. Every year the plan would be assessed according to the performance of the previous plan

and a new plan was laid out accordingly

Sixth Five Year Plan - 1980 to 1985 The basic objective of this plan was poverty eradication and technological self reliance. It was based on investment in social services, infrastructural developmentand employment

generation programmes. Targeted Growth Rate was5.2percent Achieved Growth Rateof 5.4percent

Seventh Five Year Plan -1985 to 1990 Objectives of this plan include the establishment of the self sufficient economy,opportunities

for productive employment. Rapid growth in food grain production For the first time, the private sector got the priority over public sector. Its growth target was 5.0percent Achieved Growth Rateof 6.01percent

Annual Plans -1990-91& 1991-92. Eighth Five Year Plan could not take place due to political instability. Two annual programmes were formed in 1990-91& 1991-92. The New Economic Reforms, including the LPG reforms were undertaken in 1991.

Eighth Five Year Plan - 1992 to 1997 In this plan- the top priority was given to development of the human resources i.e.

employment, education, and public health. During this plan-government launched New Economic Policy of India.

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This plan was successful The Prime Minister’s Rozgar Yojana was launched in 1993 Targeted Growth Ratewas 5.6percent. Achieved Growth Rateof6.78percent.

Ninth Five Year Plan- 1997 to 2002 The main focus of this plan was “growth with justice and equity”. Improvement in quality of life, self-reliance and generation of employment The recession of the global economy was the reason for the failure of this plan. Targeted Growth Ratewas6.5percent Achieved Growth Rateof5.4percent

Tenth Five Year Plan-2002 to 2007 This plan aimed at doubling the per capita income of India in the next 10 years. Eradicate poverty & unemployment It aimedat reducing the poverty ratioof 15percent by 2012. Targeted Growth Ratewas 8.1percent Achieved Growth Rateof7.76percent

Eleventh Five Year Plan-2007 to 2012 It was prepared by the C. Rangarajan. Its main theme was “faster and more inclusive growth” To increase the literacy rate to 85percent Targeted Growth Ratewas 8.6percent Achieved Growth Rateof7.9percent

Twelfth Five Year Plan-2012 to 2017 Its main theme was “Faster, More Inclusive and Sustainable Growth”. Its growth rate target is 8percent. Achieved Growth Rateof6.7.

4.5.3. ACHIEVEMENTS IN INDIAN FIVE YEAR PLANS

The main objective of Economic plan-ning in India was to bring rapid eco-nomic development in allsectors. At the beginning of the first Five Year Plan, India was in under developed stage. By adoptingthe Five Year Plans, India had achieved robust changes in various sectors.

Growth in National Income and Per Capita IncomeOne of the major objectives of the planning in India wasrapid growth in national income and percapital income. At the time of firstFive Year Plan, the national income was Rs. 1.32 lakhs croreswhich raised to 47.67 lakhs crores in 11th plan period. But, the growth of per capita incomewas little

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C≤rj·÷<ëj·TeTT, ‘·\dü] Ä<ëj·÷\˝À e~›uÛ≤s¡‘· Á|üD≤[ø£\ jÓTTø£ÿ Á|ü<Ûëq \ø£å + C≤rj·÷<ëj·T+ eT]j·TT ‘·\dü] Ä<ëj·÷\˝À oÁ|òüT ô|s¡T>∑T<ä\. BììÁ|üD≤[ø± ø±\+˝À #ê˝≤ $»j·Te+‘·+>± kÕ~Û+#·&É+ »]–+~. yÓTT<äÏ |ü+#·es¡ Á|üD≤[ø£ À <X C≤rj·÷<ëj·T+1.32 \ø£å\ ø√≥T¢ ø±>± Ç~ |ü<äø=+&Ée Á|üD≤[ø± ø±˝≤+‘·ìøÏ 47.67 \ø£å\ ø√≥¢ kÕúsTTøÏ ô|]–+~. ø±ì‘·\dü] Ä<ëj·T+ $wüj·T+˝À ø=+#Ó+ ‘·≈£îÿe kÕúsTT ô|s¡T>∑T<ä\qT qyÓ÷<äT #˚dæ+~. BìøÏ Á|ü<Ûëq ø±s¡D+ <˚X¯»Hêu≤ ô|s¡T>∑T<ä\. yÓTT<äÏ |ü+#·es¡ Á|üD≤[ø± ø±\+˝À 3687.00 ñqï ‘·\dü] Ä<ëj·T+ 2020-21 dü+e‘·‡sêìøÏs¡÷. 128967.00 ô|]–+~.

eékÕj·T n_Ûe~›Á|üD≤[ø£\ Äs¡+uÛÑ+ qT+&ç uÛ≤s¡‘· <˚X¯+ eékÕj·T ñ‘·Œ‘·TÔ\˝À n_Ûe~› kÕ~Û+#ê\qï~ eTs=ø£ Á|ü<Ûëq \ø£å +.á \ø£å + kÕ~Û+#·&ÜìøÏ M\T>± Á|üD≤[ø£\˝À dæ+Vü≤uÛ≤>∑+ 24 XÊ‘·+ eékÕj·T n_Ûe~› ø√dü+ Ks¡TÃ #˚j·T&É+»]–+~. Bì e\q 1950-51 À 50.8 $T*j·THé ≥qTï\ >± ñqï eékÕj·T ñ‘·Œ‹Ô 2014 dü+. HêÏøÏ 264$T*j·THé ≥qTï\≈£î #˚s¡Tø=qï~. ÄVü‰s¡ <ÛëHê´\ $wüj·T+˝À dü«j·T+ kÕ«e\+uÛÑq kÕ~Û+#·&ÉyÓTÆq~. Ç~K∫Ã‘·yÓTÆq n_Ûe~›.

bÕ]ÁXÊ$Tø±_Ûe~›¬s+&Ée |ü+#·es¡ Á|üD≤[ø£ À bÕ]ÁXÊ$Tø±_Ûe~› Á|ü<Ûëq \ø£å + >± ô|≥Tºø=ì #˚dæq πø≤sTT+|ü⁄\ ø±s¡D+>±‘·<äT|ü] Á|üD≤[ø£\˝À ≈£L&Ü Ç<˚ s¡ø£yÓTÆq ˇs¡e&ç À bÕ]ÁXÊ$Tø±_Ûe~› kÕ~Û+#·&ÉyÓTÆq~. Á|üD≤[ø± ø±\+˝ÀbÕ]ÁXÊ$Tø£ ñ‘·Œ‘·TÔ\T ô|s¡T>∑T<ä\ Ç+<äT≈£î ì<äs¡ÙqeTT. 1950-51 ˝À 32 $T*j·THé ≥qTï\T >± ñqï u§>∑TZñ‘·Œ‹Ô 2011-12 HêÏøÏ 583 $T*j·THé ≥qTï\≈£î #˚s¡Tø=+~. Ç<˚ $<Ûä+>± 1950-51 ˝À 3 $T*j·THé≥qTï\T>± ñqï ñ≈£îÿ ñ‘·Œ‹Ô 2011-12 ˝À 167 $T*j·THé ≥qTï\≈£î #˚]+~. Ç~ Ç+#·T$T+#·T 51 ¬s≥T¢ô|]–+~.

nekÕú|üHê kÂø£sê´\ n_Ûe~›ø£ dü nekÕú|üHê kÂø£sê´ …’q s¡yêD≤ düØ«düT\ $wüj·T+˝À 1950-51 HêÏøÏ 54000 øÏ ÀMT≥s¡T¢ ñqï ¬s’ Ò«…’qT\T 64000 øÏ À MT≥s¡¢≈£î #˚s¡&É+ n<˚ $<Ûä+>± C≤rj·T s¡Vü‰<ës¡T\ $wüj·T+˝À 1950-51 ˝À 60000

øÏ ÀMT≥s¡¢ qT+&ç 2012 À 160000 øÏ À MT≥s¡¢≈£î ô|]–+~. $<äT´‘Y ñ‘·Œ‹Ô $wüj·T+ À ≈£L&Ü Ç<˚ s¡ø£yÓTÆqn_Ûe~›ì #·÷&Ée#·TÃ. |ü+#·es¡ Á|üD≤[ø£\ ÁbÕs¡+uÛÑ+˝À 5 _*j·THé øÏ Àyê≥T¢>± ñqï $<äT´‘Y ñ‘·Œ‹Ô 2011-12 HêÏøÏ 877 _*j·THé øÏ Àyê≥T¢ ≈£î #˚s¡&É+ n_Ûe~›øÏ dü÷∫ø£ >± #Ó|üŒe#·TÃ. Ç~ 2012-13 À 911.65$T*j·THé øÏ Àyê≥¢≈£î #˚]+~.

$<ë´s¡+>∑+ À n_Ûe~›uÛ≤s¡‘· <˚X¯+˝À Á|üD≤[ø£\T |üP]Ô nj˚T´ HêÏøÏ $<ë´ s¡+>∑ n_Ûe~› À Á|ü|ü+#·+ ÀH˚ ¬s+&Ée n‹ô|<ä› <˚X¯+>±uÛ≤s¡‘· <˚X¯+ ì\e >∑*–+~. n+<äTu≤≥T˝À ñqï >∑D≤+ø±\ Á|üø±s¡+ 2012 ˝À 6-14 dü+e‘·‡sê\ ej·TdüT‡Á>∑÷|ü⁄ yês¡T bÕsƒ¡XÊ\\˝À 96.5 XÊ‘·+ ]õwüºsY ø±ã&çHês¡T. ñqï‘· $<Ûä ˝À 1984-85 ˝À 34 \ø£å\ >± ñqï$<ë´s¡T∆\ dü+K´ 2009-10 ˝À 146.25 \ø£å\T>± ñ+&ç. Ç~ ñqï‘· $<ë´ s¡+>∑+˝À düsêdü] e~› 6.01XÊ‘·+>± qyÓ÷<äT ø±e&É+ e~›ì dü÷∫düTÔ+~.

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bit low due tohigh growth rate of population. Even then, the per capita income during the period offirst Five Year Plan was Rs. 3687.00has raised up to Rs. 1,28,967.00 by the end of 2020-21.

Agriculture DevelopmentFrom the beginning of the Five Year Plans, India has set goals for development in agricultural production.Expenditure in agriculture sector on an average 24 per cent of the entire plan period resulted thegrowth of agricultural production from 50.8 million tons in 1950-51 to 264 million tons in the year2014. It is a significant achievement.

Industrial DevelopmentAs the industrial development wasthe main objective of the secondFive Year Plan and subsequentplans, the allocationshelped thedevelopment of industrial sector in India. The major industrial goodsaccounted highest growth rate. The coal production was 32 million tons in 1950-51 raised up to 583million tons in 2011-12. Iron production which was 3 million tons in 1950-51 raised to 167 milliontons in 2011-12. It is an increase by 56 times.

Development in Basic needsMajor achievements in transport services were observed.As on 1950-51, the railway network is54000 K.M which raised up to 64000 KM. More growth is witnessed in road transport as well,asnational highway network expanded from 60000 KM in 1950-51 to 160000 KM in 2012.Electricitygeneration of 5 billion kilowatts in Five Year Plan raised upto 911.65 million kilowatts in2012-13. It was the maximum capacity achieved.

Development in Education SystemAt the end of the plan era, India was the second largest country in development of education. As perthe statistics 2012, the up to 96.5 percent rural students between the age group 6-14 wereregisteredin schools. In higher education, about 34 lakhs students had registered in 1984-85 and this studentstrength increased to 146.25 lakhs in 2009-10. There wasan average annual growth rate of 6.01percent noted in Indian higher education system.

Development in Health servicesA significant growth in development of health services in the plan period was found, owing to hugeallocation of funds to health education sector and health services in the overall plan period in India.The growth in medical colleges and hospitals were significant. There was a significant fall in infant


Visit NITI Aayogs website. Observe the Objectives and features of NITI Aayog Study the recent policy decisions made by NITI Aayog. Analyse the Success of NITI Aayog with respect to economic planning of India Do a comparative study of economic planning in various countries with that of India by browsing through internet.

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Äs√>∑ s¡+>∑+ À n_Ûe~›uÛ≤s¡‘· <˚X¯+˝À Á|üD≤[ø± ø±\+˝À Äs√>∑ s¡+>∑+˝À Ä•+∫q+‘· n_Ûe~› kÕ~+#· >∑*>±eTT. á s¡+>±ìøÏπø≤sTT+#·ã&çq ì<äT\e\q Äs√>∑ s¡+>∑+ Ç+‘· n_Ûe~› #·÷&É>∑*>±eTT. yÓT&çø£ Ÿ ø± ÒJ\T, Vü‰düŒ≥ Ÿ‡ ô|s¡T>∑T<ä\á $wüj·T+ düŒwüº+ #˚düTÔ+~. •X¯óeTs¡D≤\ ‘·>∑TZ<ä\ n+≥Tyê´<äT\T, ÁbÕD≤+‘·ø£ yê´<äT\ ‘·>∑TZ<ä\\T Äs√>∑s¡+>∑+ n_Ûe~›ì dü÷∫düTÔHêïsTT.

4.5.4. uÛ≤s¡rj·T |ü+#·es¡ Á|üD≤[ø£\ ô|’ $eTs¡ÙuÛ≤s¡‘·<˚X¯+ e … yÓ’$<Ûä yÓTÆq eT]j·TT ô|<ä› <˚XÊìøÏ, πø+ÁBø£‘· Á|üD≤[ø£ <ëì @¬ø’ø£-dü]b˛j˚T $<Ûëq+ ø±s¡D+>±ˇø£ Vü≤<äT› <ëÏ |üì#˚j·T Ò<äH˚ uÛ≤eq #ê˝≤ ø±\+>± ñ+~.

bÕ¢ì+>¥ ø£$TwüHéqT πø+Á<ä Á|üuÛÑT‘·«+ ìj·T+Á‹düTÔ+~ ø±ãÏº, ì<ÛäT\ πø≤sTT+|ü⁄ $wüj·T+˝À Á|ü‘· ]ú bÕØº\T bÕ*+#sêÁcÕº\qT •øÏå+#˚ kÕ<Ûäq+>± Ç~ ‘·s¡#·T>± eTT>∑TdüTÔ+~.

πø+ÁBø£‘· Á|üD≤[ø£ À ≤|t-≥T-u≤≥yéT $<Ûëq+ ø±s¡D+>±, sêÁcÕº\T ‘·eT e´j·÷ìï bÕ¢Hé #˚j·T&É+˝À m≈£îÿe#ÓbÕŒ*‡q nedüs¡+ ñ+<äì uÛ≤$+#ês¡T.

bÕ¢ì+>¥ ø£$TwüHé ‘·eT≈£î @$T eT]j·TT m+‘· nedüs¡yÓ÷ u≤>± ‘Ó\TdüTø√>∑*π> sêÁcÕº\ô|’ ‘·q n~Ûø±sêìï$~Û+∫q≥T¢ ø£ì|æ+∫+~.

yÓTT<äÏ ø=ìï |ü+#·es¡ Á|üD≤[ø£\˝À kÕ~Û+∫q e~∆ πs≥T #ê˝≤ ‘·≈£îÿe>± ñ+~ eT]j·TT Væ≤+<ä÷ e~∆ πs≥T>±m>∑‘ê[ #˚j·Tã&ç+~.

j·TT<ë∆\T eT]j·TT ø£s¡Te⁄ e+Ï Äø£dæàø£ |ü]dæú‘·T\≈£î nqT>∑TD+>± Á|üD≤[ø£\T $|òü\eTj·÷´sTT, Bì |òü*‘·+>±\øå±´\T Ò≈£î+&Ü b˛j·÷sTT.

KEY TERMS

1. Depression: a long and severe recession in an economy or market. It is a steep and sustaineddrop-in economic activity featuring high unemployment and negative GDP growth.

2. Decentralization: transfer of authority and responsibility from center to subordinate orquasi-independent organizations.

3. Ex-Officio Members:An ex officio member is a member of a body (notably a board,committee, council) who is part of it by virtue of holding another office.

4. Cooperative Federalism: A flexible relationship between the federal and state governmentsin which both work together on a variety of issues and programs.

5. Deflation:Deflation is when consumer and asset prices decrease over time, and purchasingpower increases

.

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deaths and epidemic diseases. Also, there were many programmes that were implemented for kidsand women welfare.

4.5.4. CRITICISM ON INDIAN FIVE YEAR PLANS For a long time, there had been a feeling that for a country as diverse and big as India,

centralized planning could not work beyond a point due to its one-size-fits-all approach.

Moreover, since the Planning Commission used to be controlled by the Central government,it often ended up as a tool to punish states ruled by the opposition parties when it came toallocating funds.

Due to the top-to-bottom approach in centralized planning, it was felt that the states neededto have greater say in planning their expenditure.

The Planning Commission was seen to be imposing its diktats on states who could havebetter known what and how much they needed.

The growth rate achieved during the first few five-year plans was very low and was mockedas Hindu rate of growth.

Plans failed to accommodate contingencies such as wars and famines, which resulted infalling short of objectives.

6. Public Sector:The public sector consists of governments and all publicly controlled or publiclyfunded agencies, enterprises, and other entities that deliver public programs, goods, or services.

7. Exploitation:The action or fact of treating someone unfairly in order to benefit from theirwork. Exploitation is the act of selfishly taking advantage of someone or a group of people inorder to profit from them or otherwise benefit oneself.

8. Sustainable Development:Sustainable development can be defined as development thatmeets the needs of the present without compromising the ability of future generations to meettheir own needs.

9. Bottom-Up Approach :A participative approach to planning in which there is involvement atall levels. In this approach plans are developed at the lower levels of an organization andfunneled up through consecutive levels until they reach top management.

10. Self-Reliant Economy:A self reliant economy is when a country is completely independent,produces its own goods, and does not import goods or services.

11. LPG: The Economic reforms which changed the path of the economy that the countrywitnessed in later years was the LPG reforms(Liberalization, Privatization, Globalization).

KEY TERMS

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12. Inclusive Growth:Inclusive growth means economic growth that creates employmentopportunities and helps in reducing poverty. It means having access to essential services inhealth and education by the poor. It includes providing equality of opportunity, empoweringpeople through education and skill development.

13. Sustainable Growth:Sustainable economic growth means a rate of growth which can bemaintained without creating other significant economic problems, especially for futuregenerations.


1. Which of the Following is not an objective of Indian Planning?A. Economic development and increased standard of livingB. Self sufficiency and economic stabilityC. Increased employment and labour WelfareD. International peace and foreign relations

2. Which of the following bodies is responsible for formulation and submission of Five yearplans to the Cabinet?A. NITI AayogB. National Development CouncilC. Finance ministryD. National Planning Commission

3. Who is the chairman of NITI AayogA. President of IndiaB. Vice- President of IndiaC. Prime Minister of IndiaD. Central Finance Minister

4. Who among the following is part of Governing Council of the NITI AayogA. Chief Ministers of all statesB. Chief Ministers of Delhi and PuducherryC. Lieutenant governor of Andaman and Nicobar IslandD. All the above

5. Which of the following statements is false with respect to Functioning of NITI AayogA. NITI Aayog can allocate FundsB. NITI Aayog Promotes Co-operative FederalismC. CEO is appointed by the prime ministerD. NITI Aayog follows Bottom Up model of planning

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6. The slogan GARIBI HATAO was made popular during which Five year planA. Fourth five year planB. Fifth five year planC. Sixth five year planD. Rolling plans

7. Pradhan Mantri Rozgar Yojna was launched during which Five year PlanA. Seventh five year planB. Fifth five year planC. Sixth five year planD. Eighth five year plan

8. The objective of Twelfth five year plan isA. Sustainable growthB. Faster and more inclusive growthC. Growth with justice and equityD. Reduction of poverty and unemployment

9. From which plan onwards private sector is given more priority over public sectorA. Seventh five year planB. Fifth five year planC. Sixth five year planD. Eighth five year plan

10. The objective of Eleventh five year plan isA. Sustainable growthB. Faster and more inclusive growthC. Growth with justice and equityD. Reduction of poverty and unemployment

ANSWERS

INERACTIVE LINKS

www.niti.gov.in

https://www.britannica.com/topic/economic-planning/Stages-of-planning-in-developed-countries

1 2 3 4 5 6 7 8 9 10

D D C D A A D A D B

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Economic Reforms

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the need of economic reforms in India; 2. analyze the reasons for economic reforms adopted in India; 3. describe the components in Industrial Policies; 4. examine the basic ideology of different industrial policies adopted by the government and 5. judge the importance of economic reforms in growth and development of economy.

Chapter Layout: 5.1. Economic Reforms in India

5.1.1. India before 1991 5.1.2. New Economic Policy-1991 5.1.3. Impact of Economic Reforms on Indian Econo

5.2. Industrial Policies 5.2.1. Industrial Policy 1948

5.2.2. Industrial Policy 1956 5.2.3. Industrial Policy 1977 5.2.4. Industrial Policy 1980 5.2.5. Industrial Policy 1991

Chapter

5

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CHAPTER OVERVIEW

Indian economy went through a great transformation due to economic reformsof 1991. All spheres of business environment i.e social, political, global andeconomic environment changed after 1991 due to liberalisation privatisationand globalisation that were brought forward. Similarly the way how industriesfunction is highly dependent on industrial policy of the government whichchanges from time to time. Both LPG reforms and industrial policies are animportant subject matter to the study of business environment.

The present chapter gives an idea of India before 1991 and what changeswere brought due to LPG reforms and how it affected the Indian businessenvironment. The industrial policies and their important features from timeto time were also studied.

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5.1. uÛ≤s¡‘· <˚X¯+˝À Ä]∆ø£ dü+düÿs¡D\T

ˇø£ <˚X¯+˝À Ä]∆ø£ e´edüú ≈£î dü+ã+~+∫q n+‘·s¡Z‘·, u≤Vü≤´ ø±s¡ø±\ ˝À ìsêàD≤‘·àø£ düs¡T∆u≤≥¢qT Ä]∆ø£dü+düÿs¡D\T n+≤s¡T. <˚X¯ Ä<ëj·T dü+|ü<ä\T, <ëìøÏ düe÷+‘·s¡+>± ñqï e´j·T $<ÛëHêìøÏ dü+ã+~+∫q$<ÛäT\T, |üs¡ ekÕq+>± e∫Ãq ˝À≥T $<ÛëqeTT, <ëì jÓTTø£ÿ |ü]cÕÿs¡ e÷sêZ\T Ç+<äT˝À Ç$T&ç ñ+≤sTT.uÛ≤s¡‘· <˚X¯+˝À Ä]∆ø£ dü+düÿs¡D\T Á|üy˚≥T s¡+>±ìøÏ n‘· ~Ûø£ düVü≤ø±s¡+ n+~+∫ e~›ì ô|+bı+~+#·&ÜìøÏrdüT≈£î sêã&çq #·s¡ >± n_Ûe]í+#·e#·TÃ. Bì˝À f…ø±ï\J n_Ûe~›øÏ, |ü]ÁX¯eT\ …’ôdì‡+>¥ $<ÛëHêìøÏ, Á|üy˚≥Ts¡+>∑+ ô|’ ñqï nes√<ë\T ‘=\–+#·&ÜìøÏ, $<˚o e÷s¡ø£ì\«\≈£î dü+ã+~+∫q $<ÛëHê\T eT]j·TT $<˚oes¡Ôø£ $<ÛëHê\≈£î dü+ã+~+∫q dü+düÿs¡D\T Ç+<äT˝À Ç$T&ç ñHêïsTT.

Ä]∆ø£ dü+düÿs¡D\≈£î ø±s¡D≤\T :<Ûäs¡\˝À ô|s¡T>∑T<ä\Ä]∆ø£ dü+düÿs¡D\T neT\T≈£î |üPs¡«+ nq>± 1991 øÏ eTT+<äT ø±\+˝À <Ûäs¡\ ô|s¡T>∑T<ä\ n~Ûø£+>± ñ+&˚~. áø±\+˝À Á<äy√´\“D πs≥T Áø£eT+>± 6.7 qT+&ç 16.7 ≈£î ô|]–+~. á Á<äy√´\“D+ e\q uÛ≤s¡‘· Ä]∆ø£ |ü]dæú‹#ê˝≤ ~>∑C≤]+<äì #Ó|üŒe#·TÃ. BìøÏ ø±s¡D+ Á<äe´ düô|’¢ ˝À oÁ|òüT ô|s¡T>∑T<ä\>± >∑T]Ô+#·&É+ »]–+~. Ç~˝À≥T Á<äe´ $<Ûëq ø±s¡D+>±H˚ »]–+~. n+fÒ À≥T @s¡Œ&çq yÓTT‘êÔìï Á|üuÛÑT‘·«+ uÛ≤s¡‘· ]»s¡T« u≤+≈£î qT+&çn|ü⁄Œ>± rdüTø=H˚~. ø=‘·Ô ø£¬s˙‡ ì eTTÁ~+#·&É+ <ë«sê uÛ≤s¡‘· ]»s¡T« u≤+≈£î Bìì düeT≈£LπsÃ~. ∫es¡≈£îÁ<äy√´\“D |ü]dæú‘·T\T @s¡Œ&ç ñ‘êŒ<äø±\ jÓTTø£ÿ <Ûäs¡\T ô|s¡>∑&É+, ‘·<ë«sê n~ edüTÔe⁄\ &çe÷+&ÉTô|’ rÁeÁ|üuÛ≤e+ #·÷|æ+~.

ø√X À≥T˝À ô|s¡T>∑T<ä\Á|üuÛÑT‘ê«ìøÏ e#˚Ã Ä<ëj·T+ qT+&ç n|ü⁄Œ\qT eT]j·TT e´j·÷\qT rdæy˚j·T>± e#˚Ã<ëìì ø√X¯ À≥T n+≤s¡T.Á|üuÛÑT‘·«+ Ks¡TÃ #ùd nqT‘êŒ<äø£ e´j·T+ e\q á ø√X À≥T u≤>± ô|]–+~. Bìì |üP&ÉTÃø√e&ÜìøÏ n|ü⁄Œ\qTm≈£îÿe #˚j·Te\dæ e#˚Ã~. Á|üuÛÑT‘·« U≤C≤Hê≈£î m≈£îÿe e&û¶\T ø£≥ºe\dæq |ü]dæú‹ <ëìø√dü+ ‹]– n|ü⁄Œ\T#j·Te\dæq |ü]dæÔ‹ e∫Ã+~. 1991 HêÏøÏ e&û¶ #Ó*¢+#·e\dæq uÛ≤<ä ‘· yÓTT‘·Ô+ Á|üuÛÑT‘·« e´j·T+˝À 36.4 XÊ‘êìøÏô|]–+~. n+<äTe\q Ä]∆ø£ dü+düÿs¡D\≈£î |üPqTø√e\dæ e∫Ã+~.

#Ó*¢+|ü⁄\ X‚wü+˝À Á|ü‹≈£L\ <Û√s¡DT\Tˇø£ <˚X¯ m>∑TeT‘·T\ ~>∑TeT‘·T\ $\Te\ yÓTT‘êÔ\ À ‘˚&ÜqT #Ó*¢+|ü⁄\ X‚wü+ n+≤s¡T. <˚X¯ yÓTT‘·Ô+ m>∑TeT‘·T\ø£Hêï ~>∑TeT‘·T\ yÓTT‘·Ô+ m≈£îÿyÓ’‘ $<o e÷s¡ø£ ì\«\T #Ó*¢+#· Òì dæú‹øÏ #s¡Tø=+≤sTT. Ç≥Te+Ï $<o ì\«\düeTdü 1991 eTT+<äT uÛ≤s¡‘· <˚X¯+˝À @s¡Œ&ç+~. BìøÏ Á|ü<Ûëq ø±s¡D+ eTq <˚X¯ edüTÔe⁄\T ø±«*° $wüj·T+ À>±ì , <Ûäs¡\ $wüj·T+˝À >±ì $<˚o edüTÔe⁄\‘√ b˛° |ü&É Òø£b˛e&É+. n+<äT e\q m>∑TeT‘·T\ $\Te ‘·≈£îÿe>±ñ+&˚~. á $<˚o e÷s¡ø£ ì\«\T ø=s¡‘· Áø£y˚TD≤ ‘·>∑TZ‘·÷ e∫Ãq$. 1980-81 À s¡÷. 2214 ø√≥T¢ >± ñqï$<o e÷s¡ø£ ì\«\T À≥T 1990-91 HêÏøÏ s¡÷. 19367 ø√≥T¢>± ñqï~. á À≥T qT |üP&ÉTÃø√&ÜìøÏ $<on|ü⁄Œ\qT rdüTø√e\dæ e∫Ã+~. $<˚o n|ü⁄Œ\T <ëìMT<ä e&û¶ ≈£L&Ü ô|s¡T>∑T‘·÷ e∫Ã+~. Ç~ $<˚o e÷s¡ø£ì\«\ Á|ü‹≈£L\‘·qT m≈£îÿe #˚dæ+~.

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5.1. ECONOMIC REFORMS IN INDIA

The term economic reform broadly indicates necessary structural changes that were brought in theinternal and external spears of an economy. It includes policies ment for the economic grouth of acountry and achieving economic efficiency. Economic reforms can be achieved through variousmethods like reforming the existing tax laws, competition policy, de-regulation of market, reforminggovernment pending pattern etc. In India, Economic reforms refer to the fundamental changes thatwere launched in 1991 with the plan of liberalizing the economy and increasing the rate of economicgrowth. Government of India started economic reforms in 1991 in order to rebuild internal andexternal conditions in the Indian economy. The reforms were intended at bringing in larger cooperationof the private sector in the growth journey of the Indian economy. Policy changes were proposedwith regard to technology up-gradation, industrial licensing, removal of restrictions on the privatesector, foreign investments, and foreign trade.

REASONS FOR ECONOMIC REFORMS:Rise in PricesPrice to all commodities before economic reforms rise continuously in India. The inflation rate increasedfrom 6.7 percent to 16.7 percent. Due to inflation, economic position became worse in India. Mainreason for inflation was rapid increase in money supply. It was due to deficit financing. Deficitfinancing means spending more by a Government, than its income by borrowing from sources likeRBI, Multilateral Organisations. RBI provides this loan by printing new currency notes. Cost ofproduction increases due to inflation. High rates of inflation beyond controle can lead to Economicdownfall.

Rise in Fiscal DeficitFiscal deficit means difference between total expenditure and total receipts excluding loans. Increasein non-development expenditure, fiscal deficit of the government had been increasing. To cover thefiscal deficit, the government has to raise loans and pay interest on it. Due to rise in fiscal deficit,there was rise in public debt and interest. In 1991, interest liability became 36.4 percent of totalgovernment expenditure. Hence, the government had to move for economic reforms.

Increase in Adverse Balance of PaymentsThe difference between total inflow of money into and total outflow from a country is called balanceof payments. If the total exports of a country is lower than the total imports, the foreign exchangefalls short for payment. This problem of adverse balance of payments arise before 1991. It is dueto the fact that our export goods could not compete in price and quality with other countries’. So,deficit of balance of payments had been rising continuously. In 1980-81, it was Rs. 2214 crore androse in 1990- 91, to Rs. 17,367 crores. To cover this deficit, large amount of foreign loans had to beobtained. So liability of loan and its interest payment increased heavily. This lead the government toadopt new approaches to better the economic situation.

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There are 4 Types of Economic Reforms in Various Sectors: 1Structural Reforms Initiatives:2.Fiscal Reforms. 3.Infrastructure Reforms. and 4. Capital and Money Market Reforms

Á|üuÛÑT‘·« s¡+>∑+ À X¯Sq´ Á|ü‹uÛÑÁ|üuÛÑT‘·« s¡+>∑ dü+düú\T |üP]Ô>± Á|üuÛÑT‘·«+ jÓTTø£ÿ n»e÷sTTw” À ñ+≤sTT. uÛ≤s¡‘· Á|üuÛÑT‘·«+ á Á|üuÛÑT‘·« s¡+>∑dü+düú\ MT<ä ø√≤¢~ s¡÷bÕj·T\qT ô|≥Tºã&ç>± ñ+∫+~. ø±ì á Á|üuÛÑT‘·« s¡+>∑ dü+düú\T ˝À sê»ø°j·T CÀø£ +e\q dü]>± |üì#˚j·T Òø£ b˛e&É+ ø=ìï dü+<Ûësê“˝≤˝À ndüT\T Á|ü‹uÛÑ #·÷|ü Òø£ b˛e&É+ e\q ‘=+uÛ…’ e<äX¯ø£+˝À MÏe\q Á|üuÛÑT‘ê«ìøÏ n|ü⁄Œ\ u≤<ä m≈£îÿyÓ’+~.

$<˚o e÷s¡ø£ ì\«\ ø°åD‘·uÛ≤s¡‘· <X+˝À $<o e÷s¡ø£ ì\«\T 1990-91 HêÏøÏ #ê˝≤ ~>∑Te kÕúsTTøÏ #s¡Tø=HêïsTT. Ç$ ø£ dü+ ~>∑TeT‹_\T¢\qT #Ó*¢+#· Òì dæú‹øÏ #˚s¡Tø=HêïsTT. 1986-87 À $<˚o e÷s¡ø£ ì\«\T s¡÷. 8151 ø√≥¢ s¡÷bÕj·T\T ñ+&É>±, n$ 1989-90 HêÏøÏ n$ s¡÷.6252 ø√≥¢ ~>∑Te≈£î #s¡Tø=HêïsTT. ‘·sê«‘· Ç$ |üP]Ô>± ø°åDÏ+∫ ∫es¡≈£î~>∑TeT‹ #Ó*¢+|ü⁄\ø=s¡≈£î $<˚o øÏå|üDÏ À ã+>±sêìï neTàe\dæq |ü]dæú‹ @s¡Œ&ç+~. Áø£y˚TD≤ uÛ≤s¡‘· Á|üuÛÑT‘·«+Ä]∆ø£ dü+düÿs¡D\ yÓ’|ü⁄ n&ÉT>∑T y˚dæ+~.

5.1.1. 1991 øÏ eTT+<äT uÛ≤s¡‘· <˚X¯ Ä]∆ø£ eédüúuÛ≤s¡‘· <˚XÊìøÏ 1947 Ä>∑düTº 15 q kÕ«‘·+Á‘· + e#˚Ã HêÏøÏ ù|<ä]ø£+, eékÕj·T bÕ]ÁXÊ$Tø£ s¡+>±\˝À nH˚ø£ˇ&ç<äT&ÉT≈£î\T m<äTs=ÿ+≥Tqï |ü]dæú‹ ñ+&˚~. 1951 ˝À uÛ≤s¡‘· <˚X¯+ nqTdü]+∫q |ü+#·es¡ Á|üD≤[ø£\T ‘√yÓTT<äÏ |ü+#·es¡ Á|üD≤[ø£ À ÁbÕ<Ûä$Tø£s¡+>∑ n_Ûe~›ì Á|ü<Ûëq \ø£å +>± #düTø=ì ‘·sê«‘· 1956 À ÁbÕs¡+_Û+∫qeTVü‰˝≤H√_dt yÓ÷&É Ÿ >± |æ\Teã& ¬s+&Ée |ü+#·es¡ Á|üD≤[ø£ Á|üuÛÑT‘·« s¡+>∑ n_Ûe~›‘√ ≈£L&çq bÕ]ÁXÊ$Tø±_Ûe~›Á|ü<Ûëq \ø£å +>± eTT+<äT≈£î kÕ>∑&É+ »]–+~. Á|üuÛÑT‘·«+ jÓTTø£ÿ Á|ü<Ûëq \ø£å + Á|üuÛÑT‘·« s¡+>∑ n_Ûe~› ‘√ bÕ≥TÁ|üy˚≥T s¡+>±ìï ≈£L&Ü düe÷q+>± n_Ûe~› kÕ~+#·&ÜìøÏ á Á|üD≤[ø£\ <ë«sê m+#·Tø√e&É+ »]–+~. .

1991 dü+.˝À nq>± dü+düÿs¡D\T Á|üÁøÏj·T yÓTT<ä\T ø±ø£ eTT+<˚ uÛ≤s¡‘· <˚X¯+ Á|ü|ü+#· Ä]∆ø£ eédüú≈£î <ä>∑Zs¡>±sêe\dæq |ü]dæú‹ @s¡Œ&ç+~. uÛ≤s¡‘· ø£¬s˙‡ , s¡÷bÕsTT $\Te <ëì e÷s¡ø£ $\Te u≤>± ‘·>∑Z≥+ e\q eT]j·TT~>∑TeT‹ …’ôdqT‡\T ô|’ ìs√<Ûë\T , $<˚o ≤]|òt \T ô|s¡>∑&É+ e\q $<˚o edüTÔe⁄\qT uÛ≤s¡‘· e÷¬sÿ≥¢ ˝ÀìøÏsêe&Üìï n&ÉT¶≈£îHêïsTT. Ç~ 1980 HêÏøÏ uÛ≤s¡‘· <X Ä]∆ø£ eédüúqT düÔã›‘· kÕúsTTøÏ rdüT≈£î e#êÃsTT. Bì e\q1950 qT+&ç 1980 HêÏøÏ yê]¸ø£ n_Ûe~› kÕúsTT u≤>± ~>∑C≤] 3.5 XÊ‘êìøÏ |ü&çb˛sTT+~. Ç<˚ ø±˝≤ìøÏ‘·\dü] Ä<ëj·T kÕúsTT ≈£L&Ü dü>∑≥Tq 1.3 XÊ‘êìøÏ ~>∑C≤]+~.

1960 HêÏøÏ <˚X¯+ À HÓ\ø=ì ñqï rÁe <äT]“¤ø£å |ü]dæú‘·T\T, n< ø±\+ À uÛ≤s¡‘· - #Ó’Hê j·TT<ä∆+ ø±s¡D+>±ô|s¡T>∑T‘·÷ e∫Ãq ã&Ó®Ÿ À≥T eT]j·TT rÁe Á<äy√´\“¤q |ü]dæú‘·T\ ø±s¡D+>± uÛ≤s¡‘· Á|üuÛÑT‘·«+ Á|ü|ü+#· u≤+≈£îeT]j·TT n+‘·sê®rj·T Á<äe´ ì~Û e+Ï n+‘·sê®rj·T dü+düú\qT+&ç n|ü⁄Œ\T rdüT≈£î sêe\dæq Ç< ø±\+˝À uÛ≤s¡‘·Ä]∆ø£ eédüú Á<äy√´\“¤q+ m>∑TeT‘·T\˝À ø°åD‘· \ ø±s¡D+>± ø£¬s˙‡ $\Te qT ì\u…≥Tºø√&ÜìøÏ rÁe Á|üj·T‘·ï+#˚j·Te\dæ e∫Ã+~. ‘·sê«‹ ø±\+ ˝À yÓqTø£Ï ≤]|òt $<Ûëq+, dü_‡&û\ $<Ûëq+ Ä|æy˚j·Te\dæ e∫Ã+~.HÓeTà~>± u≤s¡‘· <X+ ô|’ n+‘·sê®rj·T dü+düú\qT+&ç düs¡∞ø£s¡D $<ÛëHê\ yÓ’|ü⁄ ‹Ô&ç ô|]–+~. Bì e\q ‹]–es¡Ôø£ ìã+<äq\T neT\T #j·Te\dæ e∫Ã+~ eT]j·TT $<o ì\«\ ìj·T+Á‘·D ø√dü+ $<o ô|≥Tºã&ÉT\ uÀs¡T¶qT1968 À HÓ\ø=\Œ&É+ »]–+~. Bì Á|ü<Ûëq ñ<›X¯+ uÛ≤s¡‘· <˚X¯+˝À >∑\ ø£+ô|˙\˝À 40 XÊ‘·+ <ëÏ ô|≥Tºã&çô|fÒº dü+düú\ qT eTT+<äT>± ìj·T+Á‘·D #˚j·T&É+.

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Poor Performance of Public Sector UndertakingsPublic sector undertakings are wholly owned by the government. The Indian government haveinvested crores of rupees in these enterprises. These public sector undertakings did not perform welldue to political interference and lack of proper competition and thus became big liability for governmentin early nineties.

Fall in Foreign Exchange ReservesIndians foreign exchange reserve fell to low in 1990-91 and it was insufficient to pay for an importbills. In 1986-87 foreign exchange reserves were Rs. 8151 crores and in 1989-90, it declined to Rs.6252 crores. Then, Government had to sell gold to meet the import liability. So, the Government hadto think about economic reforms.

5.1.1. INDIA BEFORE 1991On 15 August 1947, when India achieved independence, the country was in struggle with widespreadpoverty and crises in agriculture sector as well as industrial sector. The First Five Year Plan waslaunched in 1951 with prime objective of the development of the primary sector. In 1956, theSecond Five Year Plan , famously known as the Mahalanobis Model, was announced. The mainfocus of this plan was to emphasise on industrial development and government-led industrialization.The government planned not only for the development of public sector but also the private sector.

Before the process of reform began in 1991, the Indian economy was fairly closed to the outsideworld. The Indian currency, the rupee, was highly inconvertible and high tariffs and import licensingprevented foreign goods from reaching the market. By 1980, this had created widespread economicstagnation. The annual growth rate of the Indian economy had stagnated around 3.5 percent from the1950s to 1980s, while per-capita income growth averaged 1.3 percent.

In 1966, due to rapid inflation caused by an increasing budget deficit associated with Indo-China warand severe drought, the Indian government was forced to take monetary aid from the InternationalMonetary Fund and World Bank. By that time, rupee was devalued to fight inflation and devalueexports. Further, the former system of tariffs and export subsidies was abolished. Pressure frominternational financial institutions had caused a shift towards economic liberalization. Trade restrictionswere reintroduced and the Foreign Investments Board was established in 1968 to scrutinize companiesinvesting in India with more than 40 percent foreign equity participation.

As it became evident that the Indian economy was lagging behind the other developing Nations in theworld, The government by 1990, began pursuing economic liberalization. The governments relaxedthe restrictions on business creation and import controls to promote the growth of thetelecommunications and software industries. With the Nationalization of banks in 1969 and theMonopolies and Restrictive Trade Practices (MRTP) Act of 1970, the License system was furtherstrengthened. The Balance of Payment crisis arose in the 1970s and it was worse at the end of1980s. The balance of payments situation came to the edge of collapse in 1991, mainly because thecurrent account deficits which were financed from abroad. The economic situation of India wascritical; the government was close to default. With India’s foreign exchange reserves at 1.2 billion

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Á|ü|ü+#·+˝Àì Ç‘·s¡ n_Ûe~∆ #Ó+<äT‘·Tqï <XÊ\‘√ b˛*Ãq|ü⁄Œ&ÉT uÛ≤s¡‘· Ä]úø£ eédüú yÓqTø£ã&ç ñ+<äì düŒwüºyÓTÆq+<äTq,1990 HêÏøÏ Á|üuÛÑT‘·«+ Ä]úø£ düs¡∞ø£s¡DqT ø=qkÕ–+#·&É+ ÁbÕs¡+_Û+∫+~. f…*ø£eT÷´ìπøwüHé‡ eT]j·TT kÕ|òtº ysY|ü]ÁXeT\ e~∆ì Áb˛‘·‡Væ≤+#·&ÜìøÏ düVü‰ yê´bÕs¡ düwæº eT]j·TT ~>∑TeT‹ ìj·T+Á‘·D\ô|’ Á|üuÛÑT‘ê«\T |ü]$T‘·T\qTdü&É*+#êsTT. 1969 À u≤´+≈£î\ C≤rsT÷ø£s¡D eT]j·TT 1970 À >∑T‘êÔ~Û|ü‘· eT]j·TT ìj·T+Á‘·D yêDÏ»´|ü<ä∆‘·T\ ( MRTP ) #·≥º+‘√, …’ôdHé‡ eédüú eT]+‘· ã\|ü&ç+~. 1970 \˝À u≤´ …Hé‡ Ä|òt ù|yÓT+Ÿ dü+øå√uÛÑ+‘· …‹Ô+~ eT]j·TT 1980 \ ∫e]˝À Ç~ <ës¡TD+>± ñ+~. u≤´ …Hé‡ Ä|òt ù|yÓT+Ÿ‡ |ü]dæú‹ 1991 À |ü‘·q+n+#·T≈£î e∫Ã+~, Á|ü<Ûëq+>± ø£¬s+Ÿ nøö+Ÿ À≥T rs¡TÃø√e&ÜìøÏ $<˚XÊ\ qT+&ç n|ü⁄Œ\T ‘˚e\dæ e∫Ã+~.uÛ≤s¡‘·<˚X¯ Ä]úø£ |ü]dæú‹ øÏ¢wüºyÓTÆ, Á|üuÛÑT‘·«+ ~yê˝≤øÏ <ä>∑Zs¡>± e∫Ã+~. »qe] 1991 À uÛ≤s¡‘·<˚X¯ $<˚o e÷s¡ø£ì\«\T 1.2 _*j·THé j·TT.mdt &Ü\s¡T¢ eT]j·TT 1991 pHé HêÏøÏ j·÷uÛ…’ XÊ‘êìøÏ |ü&çb˛j·÷sTT. $<o e÷s¡ø£ì\«\T eT÷&ÉT yêsê\ nedüs¡yÓTÆq ~>∑TeT‘·T\qT ø£esY #˚j·T&ÜìøÏ dü]b˛ì |ü]dæú‹ @s¡Œ&ç+~. u≤Vü≤´ #Ó*¢+|ü⁄u≤<Ûä ‘·\ qT+&ç ø±bÕ&ÉTø√&ÜìøÏ ≈£L&Ü uÛ≤s¡‘·<˚X¯+ &ûbòÕ˝Ÿº ≈£î #ê˝≤ <ä>∑Zs¡>± ñ+~.

Áô|’y˚≥T s¡+>±ìøÏ nH˚ø£ ôdø±ºsY \˝À ô|≥Tºã&ÉT\T ô|≥º&ÜìøÏ nqTeT‹ Ò<äT. Á|üuÛÑT‘·« s¡+>∑ |üìrs¡T ‘·≈£îÿe>± ñqï|üŒÏø° á $<Ûëq+ ø=qkÕ–+~. Áô|’y˚Ÿ s¡+>±ìøÏ nqTeT‹ ñqï #√≥ …’ôdì‡+>¥ eédüú #ê˝≤ KÏq+>± ñ+&~, eT]j·TT bÕ]ÁXÊ$Tø£ …’ôdHé‡ bı+~q ‘·sê«‘· e÷Á‘·yT ô|≥Tºã&ç ô|≥º>∑*π> kÕúsTT˝À ñ+&~ . 860 øÏ ô|’>±edüTÔe⁄\T Á|ü‘´øÏ+∫ ∫qï ‘·s¡Vü‰ ñ‘·Œ‹Ô<ës¡T\ ø√dü+ Á|ü‘´øÏ+#·ã&Ü¶sTT, MÏ À #ê˝≤ m≈£îÿe m>∑TeT‹ kÕeTs¡ú +ø£*– ñHêïsTT.

<ë<ë|ü⁄>± Ç‘·s¡ n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\ ø£+fÒ ~>∑TeT‘·T\T eT]+‘· ø£]ƒq+>± ìj·T+Á‹+#·ã&ÉT‘·T+&˚$,m+<äTø£+fÒ ns¡T<Ó’q $<o e÷s¡ø£Á<äyê´ìï Ä<ë #j·T&É+ nedüs¡eTì uÛ≤$+#ês¡T. $ìjÓ÷>∑ edüTÔe⁄\T ~>∑TeT‹#˚j·Tã&Ée⁄ ø±ãÏº <˚oj·T ñ‘·Œ‹Ô<ës¡T\T ~>∑TeT‹ b˛°ì m<äTs√ÿ Ò<äT. ñ‘·Œ‹Ô<ës¡T\T ñ‘·Œ‹ÔøÏ nedüs¡yÓTÆqeT÷\<Ûäq edüTÔe⁄\T eT]j·TT eT<ä düÔ edüTÔe⁄\qT ~>∑TeT‹ #˚düTø√e#·TÃ, nsTT‘˚ BìøÏ kÕ<Ûës¡D+>± ~>∑TeT‹…’ôdHé‡ nedüs¡+.

5.1.2. q÷‘·q Ä]∆ø£ $<ÛëqeTT -1991$$<Ûä dü+düÿs¡D\T eT]j·TT $<ÛëHê\ <ë«sê <˚X¯ Ä]úø£ eédüú À yÓTs¡T>∑T<ä\ rdüT≈£îsêe&ÜìøÏ Á|üuÛÑT‘·«+Á|üy˚X¯ô|Ïºq nedüs¡yÓTÆq e÷s¡TŒ Ò Ä]úø£ dü+düÿs¡D\T. uÛ≤s¡rj·T Ä]úø£ eédüú≈£î dü+ã+~Û+∫ Ä]úø£ dü+düÿs¡D\T1991 À Ä]úø£ eédüúqT ñ<ës¡|ü]# eT]j·TT <ëì Ä]úø£ e~∆ πs≥TqT y>∑e+‘·+ #ùd Á|üD≤[ø£‘√ ÁbÕs¡+_Û+∫qÁbÕ<∏ä$Tø£ e÷s¡TŒ\qT dü÷∫düTÔ+~. Ä]úø£ dü+düÿs¡D\ jÓTTø£ÿ eTTKýÓTÆq \ø£åD≤\T *ãs¡ …’CÒwüHé, Á|üy˚f…ÆCÒwüHéeT]j·TT >√¢ã …’CÒwüHé. MÏì kÕ<Ûës¡D+>± LPG nì |æ\TkÕÔs¡T.

uÛ≤s¡‘·<X q÷‘·q Ä]úø£ $<ÛëHêìï n|üŒÏ Á|ü<Ûëì Áo |æ$ qs¡dæ+Vü‰sêe⁄ Hêj·Tø£‘·«+˝À Á|üuÛÑT‘·«+ ÁbÕs¡+_Û+∫+~.~>∑TeT‹ düT+ø±\qT ‘·–Z+#·&É+, Áô|’y˚Ÿ dü+düú\ ø√dü+ zô|Hé ]»sY«¶ s¡+>∑+, m>∑TeT‹ì ô|+#·&ÜìøÏ uÛ≤s¡rj·Tø£¬s˙‡ $\TeqT ‘·–Z+#·&É+ <ë«sê Á|ü<Ûëq e÷s¡TŒ\T rdüTø√ã&Ü¶sTT. Bìì LPG yÓ÷&É Ÿ e~› nì ≈£L&Ün+≤s¡T. 1991 ˝À ø=‘·Ô Ä]úø£ $<ÛëHêìï ÁbÕs¡+_Û+#·&É+ yÓqTø£ ñqï Á|ü<Ûëq \øå±´\T.

uÛ≤s¡‘· Ä]úø£ eédüúqT ª>√¢ã …’CÒwüHéμ s¡+>∑+˝ÀøÏ rdüT≈£îsêe&É+ eT]j·TT e÷¬sÿŸ <Û√s¡DÏô|’ ø=‘·Ô CÀø£ +ø£*Œ+#·&É+.

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U.S. Dollars in January 1991 and exhausted to fifty percent by June 1991. The foreign exchangereserves were very low barely enough to cover three weeks of essential imports. India was verynearer to default on its external balance of payment obligations.

The private sector was not allowed to invest in a number of sectors. This approach was continueddespite the public sector’s low performance. Licensing system was very rigid where the privatesector was allowed, it could invest only after getting an industrial license. Over 860 items werereserved exclusively for small-scale producers, including many that had very high export potential.

Imports were more strictly controlled than in almost any other developing country because it was feltnecessary to conserve scarce foreign exchange. Consumer goods simply could not be imported sodomestic producers faced no import competition. Producers could import capital goods andintermediates needed for production, but this generally required an import license.

5.1.2. NEW ECONOMIC POLICY-1991Economic reforms were the required changes introduced by the government to bring an improvementin the economy of a country through various reforms and policies. Economic reforms in connectionwith Indian economy refers to the fundamental changes that were initiated in 1991 with the plan ofliberalising the economy and quickening its rate of economic growth. The important features of theeconomic reforms are Liberalisation, Privatisation, and Globalisation, commonly known as LPG.

New Economic Policy of India was launched by the government under the leadership of the thenPrime Minister Sri P. V. Narasimha Rao. Major changes have been taken by reducing the importduties, open reserved sector for the private players, devaluated the Indian currency to increase theexport. This is also known as the LPG Model of growth. The main objectives behind the launching ofthe New Economic Policy in 1991 were;

to throw Indian Economy into the arena of ‘Globalization and to give it a new thrust on marketorientation.

intended to bring down the rate of inflation

intended to move towards higher economic growth rate and to build sufficient foreign exchangereserves

to achieve economic stabilization and to convert the economy into a market economy by removingall kinds of un-necessary restrictions.

to permit the international flow of goods, services, capital, human resources and technology,without many restrictions.

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Á<äy√´\“D+ πs≥TqT ‘·–Z+#·&ÜìøÏ ñ<›•+#·ã&ç+~ n~Ûø£ Ä]úø£ e~∆ πs≥T yÓ’|ü⁄ yÓfi¢&ÜìøÏ eT]j·TT ‘·–q+‘· $<o e÷s¡ø£ ì\«\qT ì]à+#·&ÜìøÏ ñ<›•+#·ã&ç+~ Ä]úø£ dæúØø£s¡D kÕ~Û+#·&ÜìøÏ eT]j·TT nìï s¡ø±\ nqedüs¡ Ä+ø£å\qT ‘=\–+#·&É+ <ë«sê Ä]úø£ eédüúqT

e÷¬sÿŸ Ä]úø£ eédüú>± e÷s¡Ã&É+. m≈£îÿe Ä+ø£å\T Ò≈£î+&Ü edüTÔe⁄\T, ùde\T, eT÷\<Ûäq+, e÷qe eqs¡T\T eT]j·TT kÕ+πø‹ø£‘· jÓTTø£ÿ

n+‘·sê®rj·T Á|üyêVü‰ìï nqTeT‹+#·&É+.

Ä]úø£ eédüú jÓTTø£ÿ nìï s¡+>±\˝À Áô|’y˚Ÿ e´≈£îÔ\, dü+düú\ uÛ≤>∑kÕ«e÷´ìï ô|+#·&ÜìøÏ. n+<äTπø Á|üuÛÑT‘ê«ìøÏ]»sY« #˚j·Tã&çq s¡+>±\ dü+K´ ‘·–Z+#·ã&ç+~. eédüú jÓTTø£ÿ ñ‘êŒ<äø£‘· eT]j·TT kÕeTsêú ìï yÓTs¡T>∑T|ü]#˚e÷s¡Z+>± Ä]úø£ eédüú À eT]+‘· b˛°‘·‘·« yê‘êes¡D≤ìï düwæº+#·&É+ ø=‘·Ô Ä]úø£ $<Ûëq+ jÓTTø£ÿ Ä˝À#·q.Á|üy˚XÊìøÏ n&É¶+≈£î\T eT]j·TT dü+düú\ e~∆ô|’ Ä+ø£å\qT ‘=\–+#·&É+ <ë«sê Bìì kÕ~Û+#ê*.

q÷‘·q Ä]∆ø£ $<Ûëq+˝À rdüT≈£îqï #·s¡ \T$$<Ûä ìj·T+Á‘·D\ ø±s¡D+>±, ‘=+uÛ…’\ HêÏøÏ Ä]úø£ eédüú ìÁwæÿj·T+>± e÷]+~. MRTP #·≥º+ 1969 e+Ï#·≤º\T ñqï+<äTq eékÕú|ü≈£î\T ø=‘·Ô |ü]ÁX¯eT˝À¢øÏ Á|üy˚•+#·&ÜìøÏ Çwüº|ü&É Ò<äT. Ä]úø£ eédüú Ä]úø£ e~∆ πs≥T‘·–Z+~. n≥Te+Ï dü+<äs¡“¤+˝À Ä]úø£ eédüúô|’ $~Û+∫q Ä+ø£å\qT ‘·–Z+#·&ÜìøÏ Ä]úø£ dü+düÿs¡D\T Á|üyXô|≥ºã&Ü¶sTT.ø=‘·Ô Ä]úø£ $<Ûëq+ ˝À øÏ+~ #·s¡ \T rdüTø√ã&Ü¶sTT:

düs¡∞ø£s¡Dq÷‘·q Ä]úø£ $<Ûëq+ nqedüs¡yÓTÆq ìj·T+Á‘·D\T eT]j·TT ìã+<Ûäq\≈£î e´‹πsø£+>± Ä]úø£ eédüúqT düs¡∞ø£]+#·&ÜìøÏ@sêŒ≥T #˚dæ+~. Çø£ÿ&É, düs¡∞ø£s¡D πøe\+ yêDÏ»´+ eT]j·TT |ü]ÁX¯eTqT nyê+∫Û‘· |ü]$T‘·T\ qT+&ç $eTTøÏÔ#j·T&Üìï dü÷∫düTÔ+~. Ä]úø£ eédüúqT düs¡∞ø£‘·+ #j·T&ÜìøÏ eT]j·TT $<Ûëq+˝À bÕs¡<äs¡Ùø£‘·qT rdüT≈£îsêe&ÜìøÏ,q÷‘·q bÕ]ÁXÊ$Tø£ $<Ûëq+, 1991 uÛÑÁ<ä‘·≈£î dü+ã+~Û+∫q eP´Vü‰‘·àø£, kÕe÷õø£ ø±s¡D≤\T, Á|üe÷<äø£s¡s¡kÕj·THê\T eT]j·TT |üsêés¡D dü+ã+<ä eT]j·TT ñqï‘· $ìjÓ÷>∑+ dü+ã+~+∫q 18 |ü]ÁX¯eT\ dü+øÏå|üÔC≤_‘ê $TqVü‰ ô|≥Tºã&ç kÕúsTT‘√ dü+ã+<Ûä+ Ò≈£î+&Ü nìï bÕ]ÁXÊ$Tø£ dü+düú\≈£î bÕ]ÁXÊ$Tø£ …’ôdì‡+>¥eédüúqT s¡<äT› #˚dæ+~.

q÷‘·q bÕ]ÁXÊ$Tø£ $<Ûëq+ |ü]ÁXÊ$Tø£ s¡+>±ìøÏ nqTeT‹+∫q düs¡∞ø£s¡D #·s¡ \T 18 |ü]ÁX¯eT\T $TqVü‰ nìï Ç‘·s¡ |ü]ÁX¯eT\T düTìï‘·yÓTÆq$ eT]j·TT m≥Te+Ï |ü]$T‹ Ò≈£î+&Ü ùws¡¢qT

@sêŒ≥T #˚j·T&ÜìøÏ eT]j·TT $Áø£sTT+#·&ÜìøÏ nqTeT‹+#·ã&É‘êsTT

e÷¬sÿŸ nedüsê\≈£î nqT>∑TD+>± |ü]ÁXeT\T ‘·eT kÕeTsêú ìï ùd«#·Ã¤>± $düÔ]+#+<äT≈£î nqTeT‹+#·ã&É‘êsTT.

ñ‘·Œ‹Ô<ës¡T\T @<Ó’Hê edüTÔe⁄qT ñ‘·Œ‹Ô #j·T&ÜìøÏ Ò<ë e÷¬sÿŸ Àì &çe÷+&é≈£î nqT>∑TD+>± ‘·eT ñ‘·Œ‹ÔìyÓ’$<Ûä |üs¡#·&ÜìøÏ nqTeT‹+#·ã&É‘ês¡T.

MRTP ø£+ô|˙\T (s¡÷. 100 ø√≥¢≈£î $T+∫ ô|≥Tºã&ç ñqï$) Ç|ü⁄Œ&ÉT ô|≥Tºã&ç ìs¡íj·÷\ eTT+<ädüTÔÁ|üyXÊìøÏ yÓfi≤¢*‡q nedüs¡+ Ò<äT eT]j·TT n$ Ç|ü⁄Œ&ÉT yêÏ |ü]e÷D≤ìï $düÔ]+#·&ÜìøÏ nqTeT‹+#·ã&Ü¶sTT

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to increase the participation of private players in the all sectors of the economy. To do so, the number of reserved sectors for government were reduced.

The thrust of the New Economic Policy has been towards creating a more competitive environment inthe economy as a means to improving the productivity and efficiency of the system. This was to beachieved by removing the barriers to entry and the restrictions on the growth of firms.

MEASURES ADOPTED IN THE NEW ECONOMIC POLICYDue to various controls, the economy became passive by nineties. The entrepreneurs were unwillingto enter into new industries because laws like MRTP Act 1969. Rate of economic growth of theeconomy came down. In such a scenario economic reforms were introduced to reduce the restrictionsimposed on the economy. The Following steps were taken under the new economic policy:

Liberalisation

The new economic policy has made provision for liberalizing the economy against unnecessary controlsand regulations. Here, the liberalisation simply indicates liberating the trade and industry from unwantedrestrictions. In order to liberalise the economy and to bring transparency in the policy, the NewIndustrial Policy, 1991 has abolished the system of industrial licensing for all industrial undertaking,irrespective of the level of investment, except for a short list of 18 industries related to security andstrategic concern, social reasons, hazardous chemicals and overriding environmental concerns anditems of elitist consumption.

The New Industrial Policy has liberalized the industries in the following lines: all other industries, except 18, are delicensed and were allowed to set up and sell shares without any restriction; industries are allowed to expand their capacity freely as per the needs of the market; producers are allowed to produce any commodity or diversify their output as per the demand in the market; MRTP companies (having investment beyond Rs. 100 crore) are now no longer required to go for pre-entry of investment decisions and they are now allowed to expand their size;

in 1996-97, the policy of industrial reforms has enhanced the investment ceilings in plant andmachinery for small scale industries (SSI) and ancillary units from Rs. 60 lakh and Rs. 75 lakhrespectively to Rs. 3 crore and that for the tiny sector has also been raised from Rs. 5 lakh to Rs.25 lakh;

industries have been set free to buy foreign exchange from open market and also to makenecessary imports. The aforesaid measures have liberalised the industries to take prompt decisionsso as to raise their efficiency in production and to face open competition in the market.

Previously, private sector had to obtain license from Government for starting a new venture. In thispolicy, private sector has been freed from licensing and other restrictions. Industries licensing is

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necessary only for industries like liquor, cigarette, defence equipment, industrial explosives, drugs,hazardous chemicals.

Privatisation

Another important feature of New Economic Policy is the promotion of the policy of privatisation.Privatisation means permitting the private sector to set up industries which were previously reservedfor the public sector. Under this policy many public sector undertakings were sold to private sector.In other words, Privatization is the process of involving the private sector in the ownership of publicsector units. The main reason for privatisation was that public sector undertaking were running inlosses due to political interference. The management could not work independently. Production capacityremained under-utilized. To increase competition and efficiency, privatisation of that units wasinevitable. The following steps were taken for privatization:

reducing the number of industries reserved for the public sector from 17 to 8;

raising the share of private sector to total investment to 55 per cent at the end of Eighth Plan;

selling the government equity holdings of public sector enterprises among the workers andpublic for greater participation of private individuals;

institutional credit support, to private sector enterprises from the National financial institutions.Thus this privatisation move is expected to raise the efficiency and productivity of the privatesector and economy at large.

Fig-5.1

GlobalizationGlobalisation of the economy simply indicates free interaction of the country in issues relating toproduction, trading and financial transactions with other countries of the world. Globalisation of theeconomy offers both challenges and opportunities to the developing countries. While facing the trendof globalisation, the developing countries are preparing themselves to face the challenge of international

129

ø=‘·Ô Ä]úø£ $<ÛëHêìï Á|üy˚X¯ô|≥º&É+‘√, uÛ≤s¡‘· Ä]úø£ eédüú Á|ü|ü+Nø£s¡DqT m<äTs=ÿH˚ düyê\TqT d”«ø£]+∫+~.

Á|ü|ü+Nø£s¡D e\q uÛ≤s¡‘· Ä]∆ø£ eédüú À e∫Ãq e÷s¡TŒ\T q÷‘·q Ä]úø£ $<Ûëq+ (1991) n~Ûø£ kÕ+πø‹ø£‘· eT]j·TT n~Ûø£ ô|≥Tºã&ç ÁbÕ<Ûëq´‘· |ü]ÁX¯eT\(nqTã+<Ûä+ III ) jÓTTø£ÿ ì]›wüº C≤_‘êqT dæ<ä∆+ #˚dæ+~, Bì˝À $<˚o áøÏ«° À 51 XÊ‘·+ es¡≈£î $<˚o Á|ü‘· ø£å ô|≥Tºã&ÉT\≈£î ÄÀy˚TÏø˘ >± nqTeT‹ \_ÛdüTÔ+~.

$<˚o kÕ+πø‹ø£ ˇ|üŒ+<ë\≈£î dü+ã+~Û+∫, n~Ûø£ ÁbÕ<Ûëq´‘· ø£*–q |ü]ÁX¯eT˝À ÄÀy˚TÏø˘ nqTeT‹s¡÷. 1 ø√Ï es¡≈£î ìs¡ísTT+#·&É+ »]–+~ . $<˚o kÕ+πø‹ø£ ì|ü⁄DT\qT ìj·T$T+#·&ÜìøÏ Ò<ë <˚oj·T+>±n_Ûe~∆ #˚dæq kÕ+πø‹ø£‘·qT $<˚XÊ\˝À |üØøÏå+#·&ÜìøÏ m≥Te+Ï nqTeT‹ nedüs¡+ Ò<äT.

uÛ≤s¡rj·T ø£¬s˙‡ n+‘·sê®rj·T düs¡T›u≤≥T #˚j·T&ÜìøÏ, s¡÷bÕsTT $\TeqT p …’ 1991 À <ë<ë|ü⁄ 20XÊ‘·+ ‘·–Z+#ês¡T, Ç~ m>∑TeT‘·T\qT ≈£L&Ü Áù|πs|æ+∫+~, ~>∑TeT‘·T\qT ìs¡T‘ê‡Vü≤|ü]∫+~ eT]j·TT $<oeT÷\<Ûäq Á|üyêVü‰ìï ô|+∫+~.

Á|ü|ü+#·+‘√ uÛ≤s¡‘· Ä]úø£ eédüúqT y˚>∑e+‘·+>± düeTÁ>∑|üs¡#·&É+ ø√dü+ nìyês¡ yÓTÆq ø£<ä*ø£qTrdüT≈£îsêe&ÜìøÏ, πø+Á<ä ã&Ó®Ÿ 1992-93 uÛ≤s¡rj·T s¡÷bÕsTTì bÕøÏåø£+>± e÷πsÃ˝≤ #˚dæ+~ eT]j·TT1993-94 ã&Ó®Ÿ˝À s¡÷bÕsTTì |üP]Ô>± e÷s¡Ã>∑*>±s¡T. Bì Á|üø±s¡+, e÷]Ã 1993 À, Á|üuÛÑT‘·«+ |üP]Ô>±@ø°ø£‘· e÷¬sÿŸ ìs¡ísTT+∫q e÷]Œ&ç πs≥T eédüúqT Á|üy˚X¯ô|Ïº+~.

ø£¬s+Ÿ nøö+Ÿ ø£q«]º_*° yÓ’|ü⁄ ø£ Á|ü<Ûëq n&ÉT>∑T e÷]Ã 1993 À uÛ≤s¡‘·<˚X¯+ rdüT≈£î+~. $<˚o e÷s¡ø£ã&Ó®Ÿ s¡<äT› #˚j·Tã&çq|ü⁄Œ&ÉT, e÷]Œ&ç πs≥T @ø°ø£‘·+ #˚j·Tã&ç+~ eT]j·TT yêDÏ»´ U≤‘ê˝À ˝≤yê<˚M\Tô|≥Tºø√e&É+ »]–+~.

q÷‘·q ◊<äT dü+e‘·‡sê\ m>∑TeT‹-~>∑TeT‹ $<Ûëq+ -1992-97, e÷]Ã 31, 1992 q Á|üuÛÑT‘·«+Á|üø£Ï+∫+~. uÛ≤s¡‘·<˚X¯ $<˚o yêDÏ»´+ jÓTTø£ÿ Á|ü|ü+Nø£s¡D #·Á≤ìï kÕú|æ+#·&É+, ñ‘êŒ<äø£‘·, Ä<ÛäTìø°ø£s¡Dq÷‘·q $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \øå±´\T. uÛ≤s¡rj·T |ü]ÁX¯eT jÓTTø£ÿ b˛°‘·‘·«+ eT]j·TT ‘·<ë«sê <ëìm>∑TeT‹ kÕeTsêú \qT yÓTs¡T>∑T|üs¡#·&É+, m>∑TeT‘·T\T eT]j·TT ~>∑TeT‘·T\qT ìj·T+Á‹+# $<ÛëHê\qT düs¡∞ø£‘·+#˚j·T&É+ eT]j·TT Áø£eTãB∆ø£]+#·&É+ Bì˝À Ç$T&ç ñHêïsTT.

á $<Ûëq+ u≤Vü≤´ yêDÏ»´+ô|’ nìï Ä+ø£å\T eT]j·TT ìj·T+Á‘·D\qT ‘=\–+∫+~ eT]j·TT m>∑TeT‘·T\TeT]j·TT ~>∑TeT‘·T\ $wüj·T+˝À e÷¬sÿŸ X¯≈£îÔ\T m≈£îÿe bÕÁ‘· b˛wæ+#·&ÜìøÏ nqTeT‹+#·ã&Ü¶sTT. Ä>∑wüßº31, 2002 q, ø=‘·Ô $<˚o yêDÏ»´ $<Ûëq+ 2004-09 Á|üø£Ï+#·ã&ç+~, Ç~ Á|ü|ü+#· e÷¬sÿÀ¢ b˛°‘·‘ê«ìïyÓTs¡T>∑T|üs¡#·&ÜìøÏ yêDÏ»´ |ü<ä∆‘·T\qT eT]+‘· düT\uÛÑ‘·s¡+ #˚dæ+~.

uÛ≤s¡‘· Ä]úø£ eédüúqT Á|ü|ü+#· b˛° |ü]~Û ÀøÏ rdüT≈£îsêe&ÜìøÏ, Á|üuÛÑT‘·«+ ø£düºyéT‡ &É÷´°ì >∑D˙j·TyÓTÆqkÕúsTT˝À düe]+∫+~. Bì Á|üø±s¡+, 2007-2008 ã&Ó®Ÿ˝À ø£düºyéT‡ &É÷´° jÓTTø£ÿ >∑]wüº πs≥T 250 XÊ‘·+

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competition. With the introduction of new economic policy, Indian economy has accepted the challengeof facing globalisation of the economy.

Globalisation of the Indian economy has made the following changes: The New Economic Policy (1991) has prepared a specified list of high technology and high

investment priority industries (Annexure III) in which automatic permission would be availablefor foreign direct investment upto 51 per cent of equity.

In respect of foreign technology agreements, automatic permission is provided in high priorityindustry upto a sum of Rs. 1 crore. No permission is required for hiring foreign technicians or fortesting indigenously developed technology abroad.

In order to make international adjustment of Indian currency, rupee was devalued in July 1991 bynearly 20 per cent which also stimulated exports, discouraged imports and raised the influx offoreign capital.

In order to make an inevitable move for the expeditious integration of Indian economy with thatof the world, the Union Budget 1992-93 has made Indian rupee partially convertible and then therupee was made fully convertible in 1993-94 budget. Accordingly, in March 1993, the Governmentintroduced a fully unified market determined exchange rate system.

Thus, a major step towards current account convertibility was taken by India in March 1993.When the foreign exchange budget was abolished, the exchange rate was unified and transactionson trade account were freed from exchange control. Capital account convertibility is now beingtargeted.

A new five year export-import policy, 1992-97 was announced by the Government on March31, 1992. The main objectives of the new policy are to establish the framework of globalisationof India’s foreign trade, to promote productivity, modernisation and competitiveness of Indianindustry and thereby to enhance its export capabilities and also to simplify and streamline theprocedures governing exports and imports.

The policy removed all restrictions and controls on the external trade and market forces areallowed to play a greater role in respect of exports and imports. Again on August 31, 2002, anew Foreign Trade Policy 2004-09 was announced which has simplified the trade practicesfurther for improving our competitiveness in the global market.

In order to bring the Indian economy within the ambit of global competition, the government hasmodified the customs duty to a considerable extent. Accordingly, the peak rate of customs dutyhas been reduced from 250 per cent to 10.0 per cent in 2007-2008 budget.

In order to increase the flow of foreign investment and technology the Government has takenseveral measures like:

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granting foreign technical collaborations of high priority industries;

freedom to import foreign technology by private entrepreneurs and also to test indigenoustechnology abroad;

establishing Foreign Investment Promotion Board (FIPB) for finalizing foreign investmentand collaboration proposals and

offering concessions to FERA/FEMA companies.

In order to meet the international competitiveness, the Government has taken various stepsfor correcting its balance of payments deficit and also to increase the share of India ininternational trade.

New public sector policyAnother important feature of new economic policy is its change in public sector policy. The newpolicy has shifted its emphasis from public to private sector.

The Industrial Policy has undertaken the following four major policy decisions in respect ofpublic sector:

reduction in the list of industries reserved for the public sector from 17 to 8 and introducingselective competition in the reserved areas;

disinvestment of shares in PSEs to raise resources and encourage wider participation ofgeneral public and workers in the ownership of PSEs;

policy for sick PSEs to be designed at par with that of the private sector. Sick PSEs whichare unlikely to turn around will be referred to BIFR(Boar for Industrial and FinancialReconstruction) for formulation of revival schemes;

improving performance through the performance contract or Memorandum of Understanding(MOU) system by which Managements are to be granted greater autonomy and heldaccountable for results;

ModernisationThe New Economic Policy has been providing high priority to the introduction of modern techniquesin production system. The policy facilitates the growth of sunrise industries, i.e. electronics andcomputers. In order to introduce better and improved technology, the government is permitting allforeign collaboration proposals related to the import of high technology. Private entrepreneurs arenow free to finalise the terms of such collaborations. Development of indigenous technology was alsoencouraged. Private companies are also encouraged to develop their own Research and Development(R&D) centers through tax concessions.

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kÕ~Û+#·&ÜìøÏ, n+‘·s¡Z‘· $ìjÓ÷>∑+, m>∑TeT‘·T\≈£î ¬s+&ç+ÏøÏ nedüs¡eTjT´ n~Ûø£ HêD´‘· >∑\ edüTÔe⁄\ ñ‘·Œ‹ÔøÏeT]j·TT Ks¡TÃ ‘·–Z+#·&ÜìøÏ nedüs¡+ nsTT´+~.

Á<äe´ $<Ûëq dü+düÿs¡D\Tqs¡dæ+Vü≤+ ø£$T° dæbòÕs¡düT\ Á|üø±s¡+, Ä]úø£ s¡+>±ìï dü+düÿ]+#·&ÜìøÏ Á|üuÛÑT‘·«+ nH˚ø£ #·s¡ \T #˚|üÏº+~.

*øÏ«&ç° ìwüŒ‹Ô À ‘·–Z+|ü⁄, &Ó’¬søº Á¬ø&çŸ Áb˛Á>±yéT\ s¡<äT›, ñ∫‘· e&û¶ πs≥¢ ìs¡íj·T+, u≤´+øÏ+>¥ nøö+Ï+>¥ eédüú À nedüs¡yÓTÆq yÓTs¡T>∑T<ä\, ìs¡s¡úø£ ÄdüTÔ\≈£î (NPAs) πø≤sTT+|ü⁄ #˚j·T&É+, Á|ü‘˚ ø£ ÁÏãT´q˝Ÿ‡ <ë«sê s¡TD≤\qT ‘·«s¡>± ]ø£eØ #˚j·T&É+, n+‘·sê®rj·T kÕúsTT, C≤rj·T u≤´+≈£î\T, kÕúìø£ u≤´+≈£î\T, Á>±MTD u≤´+≈£î\T, Áô|’y˚Ÿ s¡+>∑ u≤´+≈£î\T

yÓTT<ä …’q ø=ìï u≤´+≈£î\ kÕú|üq ø√dü+ u≤´+øÏ+>¥ eédüú |ü⁄q]ïsêàD+, $<˚o u≤´+≈£î\≈£î ñ<ës¡ ∫øÏ‘·‡. Áu≤+#Y …’ôdì‡+>¥ eédüú s¡<äT›, u≤´+≈£î\≈£î eT]+‘· ùd«#·Ã¤ Çe«&É+, uÛ≤s¡rj·T ]»s¡T« u≤+≈£î eT]j·TT Ä]úø£ eT+Á‹‘·« XÊK jÓTTø£ÿ <ä«+<ä«

ìj·T+Á‘·DqT eTT–+#·&É+ ô|ò’Hêì‡+>¥ ø£+ô|˙\T, eTs¡Ã+Ÿ u≤´+≈£î\T, eT÷´#·Te˝Ÿ |òü+&é\T yÓTT<ä …’q Ä]úø£ dü+düú\ dü+düÿs¡D eT]j·TT eT÷\<äq e÷¬sÿŸ dü+düÿs¡D\qT |ü]#·j·T+ #˚j·T&É+.

ø√X $<Ûëq dü+düÿs¡D\Tq÷‘·q Ä]úø£ $<Ûëq+ jÓTTø£ÿ eTs=ø£ eTTKýÓTÆq \ø£åD+ Ä]úø£ $<Ûëq dü+düÿs¡D\qT Á|üyXô|≥º&É+. 1990-91˝ÀÁ<äe´˝À≥TqT õ&ç|æ À 8.4 XÊ‘·+ qT+&ç 1996-97˝À 5.0 XÊ‘êìøÏ ‘·–Z+∫, Ä ‘·sê«‘· 1999- 2000 À 4.4XÊ‘êìøÏ ‘·–Z+#·&ÜìøÏ Á|üuÛÑT‘·«+ $$<Ûä Ä]úø£ #·s¡ \qT ÁbÕs¡+_Û+∫+~. á \øå±´ìï kÕ~Û+#·&ÜìøÏ, Á|üuÛÑT‘·«+ Á|üC≤e´j·T+ô|’ $$<Ûä ìj·T+Á‘·D\qT Á|üy˚X¯ô|Ïº+~ eT]j·TT <ëì |üqTï eT]j·TT |üqTïj˚T‘·s¡ sêã&ç ¬s+&ç+Ïìô|+#·&ÜìøÏ #=s¡e rdüT≈£î+~. Ç‘·s¡ #·s¡ \˝À πø+Á<ä eT]j·TT sêÁwüº Á|üuÛÑT‘ê«\T Ä]úø£ Áø£eT•ø£åD $~Û+#·&É+,dü_‡&û\ ‘·–Z+|ü⁄, m¬ø’‡CŸ eT]j·TT ø£düºyéT düT+ø±\ πs≥T ìs¡íjÓÆT+#·&É+, 1999-2000 ã&Ó®Ÿ À e´j·T dü+düÿs¡D\ø£$TwüHéqT @sêŒ≥T #j·T&É+, sêÁwüº eT]j·TT πø+Á<ä Á|üuÛÑT‘·« s¡+>∑ dü+düú\T eT]j·TT ñ|üdü+Vü≤s¡DqT Áø£eTãB∆ø£]+#·&É+,á dü+düú\≈£î ã&Ó®Ÿ eT<ä›‘·T, ≤]|òt ìsêàD+ jÓTTø£ÿ ùV≤‘·TãB∆ø£s¡D eT]j·TT s¡yêD≤ dü+düú\ $ìjÓ÷>∑<ës¡T\#ÛêØ®\T, ˙ÏbÕs¡T<ä\ ÁbÕC…≈£îº\T yÓTT<ä …’q$.

5.1.3. uÛ≤s¡‘· Ä]∆ø£ eédüú ô|’ Ä]∆ø£ dü+düÿs¡D\ Á|üuÛ≤e+ 1993-94˝À ù|<ä]ø£+ 36 XÊ‘·+ qT+&ç 1999-2000 HêÏøÏ 26.1 XÊ‘êìøÏ ‘·–Z+~. Á>±MTD ÁbÕ+‘ê˝À¢

eT]j·TT |ü≥ºD ÁbÕ+‘ê˝À¢ ù|<ä]ø£ ìwüŒ‹Ô ≈£L&Ü ‘·–Z+~. $<˚o edüTÔe⁄\≈£î dü]Vü≤<äT›\qT ‘Ó]∫, $<˚o kÕ+πø‹ø£‘·qT düT\uÛÑ+>± j·÷¬ø‡dt #˚j·T&ÜìøÏ neø±X¯+

ø£*–+~. 1991 ‘·s¡Tyê‘· ø±\+ ÄÀyÓTTu…’ Ÿ s¡+>∑+ jÓTTø£ÿ $düÔs¡DqT #·÷dæ+~. Bì |òü*‘·+>± yÓ÷≤s¡T yêVü≤Hê\T

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Steps were taken for the modernisation of the age-old steel, textile, jute, sugar, leather industrieshaving rich potential. This is important for attaining self reliance and also for cost reduction andproduction of high quality goods required for both internal consumption and exports.

Financial ReformsAs per the recommendations of the Narasimham Committee, the Government has undertaken variousmeasures for reforming the financial sector.

reduction in liquidity ratio, abolition of direct credit programmes, free determination of interest rates, necessary improvement in the banking accounting system, making provision for Non-performing assets (NPAs), establishing speedy recovery of loans by special tribunals, reconstitution of banking system for the establishment of a few banks of international standard,

National banks, local banks, rural banks, private sector banks etc., liberal treatment to foreign banks; abolition of branch licensing system, giving more freedom to banks and ending dual control of RBI and Finance Ministry, and reform of the financial institutions consisting financing companies, merchant banks, mutual

funds etc. and introducing capital market reforms.

Fiscal ReformsAnother important feature of New Economic Policy is to introduce fiscal policy reforms. TheGovernment initiated various fiscal measures in order to reduce the fiscal deficit from 8.4 per cent ofGDP in 1990-91 to 5.0 per cent in 1996-97 and then to 4.4 per cent in 1999- 2000.

In order to achieve the target, the Government has introduced various controls over public expenditureand took initiative to raise its both tax and non-tax revenue. The other measures include imposition offiscal discipline by both Central and State Governments, reduction of subsidies, rationalisation ofexcise and custom duties rate structure, constituting Expenditure Reforms Commission in 1999-2000 budget, streamlining the working of State and Central public sector enterprises and withdrawalof budgetary support to these enterprises, rationalisation of tariff structure and user charges oftransport corporations, irrigation projects etc.

5.1.3. IMPACT OF ECONOMIC REFORMS ON INDIAN ECONOMY Poverty reduced from 36 percent in 1993-94 to 26.1 percent in 1999-2000. The poverty in

rural areas and urban areas also declined.

Opened the borders to foreign goods and easier access to foreign technology.

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düT\uÛÑ+>± \uÛÑ eTe⁄‘êsTT. á s¡+>∑+˝À b˛° ô|]–+~ eT]j·TT yÓ÷≤s¡T yêVü≤Hê\ <Ûäs¡\T ‘·>±ZsTT.

dü+düÿs¡D\T ÄÀ $&çu≤>±\T, f…*ø£eT÷´ìπøwüHé‡, kÕ|òtºy˚sY, bòÕsêàdü÷´Ïø£ Ÿ‡, ãjÓ÷f…ø±ï\J, ØôdsYÃ n+&é&Óe\|tyÓT+Ÿ eT]j·TT XÊÁdüÔy‘·Ô\T, f…ø±ï\õdüTº\T, &Üø£ºs¡T¢, qs¡T‡\T, ñbÕ<Ûë´j·TT\T, yTHCŸyÓT+Ÿ Ábıô|òwüq Ÿ‡n+~+#˚ Ábıô|òwüq˝Ÿ ùde\T e+Ï nH˚ø£ $uÛ≤>±\˝À n+‘·sê®rj·T b˛°‘·‘ê«ìï >∑T]Ô+#·<ä–q ô|s¡T>∑T<ä\≈£î<ë]rdæ+~.

f…*ø£eT÷´ìπøwüHé s¡+>∑+˝À kÕ<Ûä yÓTÆq+‘· $düÔs¡D »]–+~. yêdüÔyêìøÏ, á s¡+>∑+ Ä]úø£ dü+düÿs¡D\ jÓTTø£ÿn‹ô|<ä› \_∆<ës¡T\˝À ø£Ï. 1994 À H˚wüq˝Ÿ f…*ø±+ bÕ\d” qT+&ç nìï s¡+>±\qT Áô|’y˚Ÿ dü+düú\≈£î≈£î nqTeT‹+#·&É+ »]–+~.

dü+düÿs¡D\T Ä]úø£ eédüú jÓTTø£ÿ n~Ûø±]ø£ s¡+>∑+˝À m≈£îÿe>± ñHêïsTT, eékÕj·T+, |ü≥ºD ndü+|òüTÏ‘·s¡+>∑+ eT]j·TT n≥M Ä<Ûë]‘· s¡+>±\T m≥Te+Ï dü+düÿs¡D\qT #·÷&É Ò<äT. Ç~ ndüe÷q e~∆øÏ eT]j·TTÁ|ü»\˝À Ä]úø£ ùd«#·Ã¤ jÓTTø£ÿ ndüe÷q |ü+|æD°øÏ <ë]rdæ+~.

eéd”úø£‘· ‘·j·÷Ø s¡+>∑+˝À Ä]úø£ düs¡∞ø£s¡D #ê˝≤ ‘·≈£îÿe n<äq|ü⁄ ñbÕ~Û‘√ e~∆øÏ <ë]rdæ+~.

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Äs√>∑ + eT]j·TT $<ä e+Ï kÕe÷õø£ s¡+>±\T ìs¡¢ø£å + #˚j·Tã&Ü¶sTT. á ÁbÕ+‘ê\T #ê˝≤ eTTKýÓTÆq$nsTTq|üŒÏø°, yêÏô|’ <äwæº πø+ÁBø£]+#· Ò<äT. ø±s¡D+>± $<ä eT]j·TT Äs√>∑ dü÷∫ø£\ jÓTTø£ÿ ‘·≈£îÿekÕúsTT\˝À |òü*‘êìï #·÷&Ée#·TÃ.

Ä]úø£ dü+düÿs¡D\T e~∆ì y˚>∑e+‘·+ #˚XÊsTT ø±˙ ‘·–q ñbÕ~Ûì ø£*Œ+#·&É+˝À $|òü\eTj·÷´sTT. 1993-94˝À 5.61 XÊ‘êìøÏ ‘·–Zq Á>±MTD ìs¡T<√´>∑ πs≥T, 1999-2000˝À 7.21 XÊ‘êìøÏ ô|]–+~.

5.2. bÕ]ÁXÊ$Tø£ $<ÛëHê\TbÕ]ÁXÊ$Tø£ $<Ûëq+ nH~ ‘·j·÷Ø s¡+>∑+ jÓTTø£ÿ |ü⁄s√>∑‹ì n+#·Hê yj·T&ÜìøÏ Á|üuÛÑT‘·«+ ìπs›•+∫q Á|üe÷D≤\TeT]j·TT #·s¡ \ dü+ø£\q+. Ç~ <˚X¯ Ä]úø£ e~∆ eT]j·TT n_Ûe~∆ì ô|+bı+~düTÔ+~. bÕ]ÁXÊ$Tø£ $<Ûëq+jÓTTø£ÿ Á|ü<Ûëq \ø£å + $$<ä s¡+>±\ eT<Ûä Ò<ë À|ü\, ~>∑Te qT+&ç n~Ûø£ ñ‘êŒ<äø£‘· ø±s¡ ø£ ≤bÕ\≈£î e÷s¡&É+.$$<Ûä dü+düú\ b˛°‘·‘·«+ eT]j·TT kÕeTsêú \qT Áb˛‘·‡Væ≤+#·&ÜìøÏ eT]j·TT yÓTs¡T>∑T|üs¡#·&ÜìøÏ Bì <ë«sêÁ|üuÛÑT‘·«+ #·s¡ \T rdüT≈£î+≥T+~. bÕ]ÁXÊ$Tø£ $<Ûëq+ nH˚~ Á|üuÛÑT‘·«+ |ü]ÁX¯eT\ ø√dü+ ÄyÓ÷~+∫q kÕ<Ûës¡D$<ÛëHê\T, ãVæ≤s¡+>∑|üs¡#·ã&çq Á|üuÛÑT‘·«+ <ë«sê n~Ûø±]ø£+>± Á|üø£Ï+#·&Üìï dü÷∫düTÔ+~. @<Ó’Hê bÕ]ÁXÊ$Tø£$<Ûëq+ Á|ü<Ûëq+>± ¬s+&ÉT uÛ≤>±\qT ø£*– ñ+&Ée#·TÃ. yÓTT<äÏ~ bÕ]ÁXÊ$Tø°ø£s¡D dü«uÛ≤yêìï ìs¡ísTT+# Á|üuÛÑT‘·«uÛ≤eC≤\+ eT]j·TT ¬s+&Ée~ Ç|üŒÏπø ñqï uÛ≤eC≤\+ yÓqTø£ ˇø£ ì]›wüº #·Á≤ìï n+~+#˚ bÕ\ø£ ìj·Te÷\TeT]j·TT dü÷Á‘ê\T. n+<äTe\¢, bÕ]ÁXÊ$Tø£ $<Ûëq+ nH˚~ |ü]ÁX¯eT\ kÕú|üq eT]j·TT |üì ø√dü+ bÕ\d” jÓTTø£ÿe÷s¡Z<äs¡Ùø£‘·«+ eT]j·TT ìã+<äq\T n+~+#˚ düeTÁ>∑ uÛ≤eq.

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The post 1991 era witnessed an expansion of the automobile sector which resulted easyavailability of motor vehicles, increased competition in the sector and reduction in prices ofmotor vehicles.

Reforms led to the achievement of recognizable increases in international competitiveness ina number of sectors including auto components, telecommunications, software,pharmaceuticals, biotechnology, research and development, and professional services providedby scientists, technologists, doctors, nurses, teachers, management professionals and similarprofessions.

There was a vast expansion of the telecommunication sector. In fact, this sector has been oneof the biggest beneficiaries of economic reforms. The telecom policy evolved from the NationalTelecom Policy in 1994 to open sectors to private players.

The reforms were largely in the formal sector of the economy, the agriculture, urban informalsector and forest dependent communities did not see any reforms. This led to uneven growthand unequal distribution of economic freedom among people.

Economic liberalization in the organized manufacturing sector has led to growth with verylittle additional employment.

Market-based economic reforms also often lead to increasing disparities between the richand the poor and between infrastructurally backward and more developed states.

Social sectors like health and education have been neglected. These areas although veryimportant, were not focused upon and the result can be seen in the dismally low levels ofeducation and health indicators today.

Economic reforms have accelerated growth but failed to generate adequate employment.The rural unemployment rate, after declining to 5.61 percent in 1993-94, rose to 7.21 percentin 1999-2000 which is not optimal.

5.2. INDUSTRIAL POLICIES

Industrial Policy is the set of standards and measures set by the Government to evaluate the progressof the manufacturing sector that ultimately enhances economic growth and development of the country.The main objective of the industrial policy is to shift from lower to higher productivity activities,between or within sectors. The government takes measures to encourage and improve thecompetitiveness and capabilities of various firms.

The industrial policy refers to such formal declaration by the government through which generalpolicies for industries adopted by the Government are made public. Any industrial policy may havemainly two parts first, the ideology of the Government which determines the nature of industrialisation,and second, the governing rules and principles which provide a certain framework behind existing

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bÕ]ÁXÊ$Tø£ $<ÛëHê\T \øå±´\ToÁ|òüT bÕ]ÁXÊ$Tø±_Ûe~›uÛ≤s¡‘· Á|üuÛÑT‘·«+ jÓTTø£ÿ bÕ]ÁXÊ$Tø£ $<Ûëq+ \ø£å + bÕ]ÁXÊ$Tø£ n_Ûe~∆ y˚>±ìï ô|+#·&É+. Ç~ Áô|’y˚Ÿ s¡+>±ìøÏnqT≈£L\yÓTÆq ô|≥Tºã&ç yê‘êes¡D≤ìï düwæº+#·&É+‘√bÕ≥T Á|üuÛÑT‘·« s¡+>∑+˝À ô|≥Tºã&ÉT\ ø√dü+ eqs¡T\qTdüMTø£]+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~. Á|üuÛÑT‘·«+ ‘·q e÷s¡Z+˝À, <˚X¯+˝À y˚>∑e+‘·yÓTÆq bÕ]ÁXÊ$Tø£ n_Ûe~∆ìÁb˛‘·‡Væ≤+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~.

düeT‘·T\´ bÕ]ÁXÊ$Tø£ e´edüúÁ|üdüTÔ‘· ndüe÷q bÕ]ÁXÊ$Tø£ ìsêàD≤ìï dü]#j·T&ÜìøÏ bÕ]ÁXÊ$Tø£ $<Ûëq+ s¡÷bı+~+#·ã&ç+~. ñ<ëVü≤s¡D≈£î,kÕ«‘·+Á‘ê´ìøÏ eTT+<äT, uÛ≤s¡‘·<˚X¯+˝À ø=+‘·es¡≈£î n_Ûe~∆ #Ó+~q $ìjÓ÷>∑ edüTÔe⁄\ |ü]ÁX¯eT\T ñHêïsTT.ø±˙ eT÷\<Ûäq edüTÔe⁄\ s¡+>∑+ n_Ûe~∆ #Ó+<ä Ò<äT eT]j·TT ÁbÕ<∏ä$Tø£ eT]j·TT uÛ≤Ø |ü]ÁX¯eT\T Òe⁄. ø±ãÏº,bÕ]ÁXÊ$Tø£ ìsêàD+˝À á ndüeT‘·T\´‘·\T dü]#˚ùd $<Ûä+>± bÕ]ÁXÊ$Tø£ $<ÛëHêìï s¡÷bı+~+#ê*‡ e∫Ã+~.

Ä]∆ø£ X≈£îÔ\ πø+ÁBø£s¡D ìs√<ÛäeTTbÕ]ÁXÊ$Tø£ $<Ûëq+ ìj·TeTìã+<äq\T |ü_¢ø eT]j·TT Áô|’yŸ s¡+>±\ ø√dü+ ø±s¡ ø£ ≤bÕ\ ]»πs«wüq¢ $~$<ÛëHê\qTn+~+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~. Ç~ >∑T‘êÔ~Û|ü‘· <Û√s¡DT\qT ‘·–Z+#·&É+ eT]j·TT ø=ìï ô|<ä› bÕ]ÁXÊ$Tø£ dü+düú\#˚‹˝À Ä]úø£ X¯øÏÔì πø+ÁBø£]+#·&Üìï ìs√~Û+#·&É+ Á|ü<Ûëq \ø£å + .

düeT‘Í\´ ÁbÕ+rj·÷_Ûe~›bÕ]ÁXÊ$Tø£ n_Ûe~∆ À ÁbÕ+rj·T ndüeT‘·T\´‘·qT dü]#˚j·T&É+ ≈£L&Ü bÕ]ÁXÊ$Tø£ $<Ûëq+ \ø£å +. <˚X¯+˝Àø=ìï ÁbÕ+‘ê\T bÕ]ÁXÊ$Tø£+>± |ü⁄s√>∑$TùdÔ eT]ø=ìï ÁbÕ+‘ê\T bÕ]ÁXÊ$Tø£+>± yÓqTø£ã&ç ñqï $wüj·T+‘Ó*dæ+<. düeT‘Í\´ bÕ]ÁXÊ$Tø£ n_Ûe~∆ Ò<ë bÕ]ÁXÊ$Tø£ n_Ûe~∆øÏ <ë]rùd ø±s¡ Áø£e÷\T eT]j·TT $<ÛëHê\qTs¡÷bı+~+#·&É+ bÕ]ÁXÊ$Tø£ $<Ûëq+ jÓTTø£ÿ |üì. uÛ≤s¡‘· Á|üuÛÑT‘·«+ jÓTTø£ÿ yÓTT≥ºyÓTT<äÏ bÕ]ÁXÊ$Tø£ $<ÛëqÁ|üø£≥q nsTTq 1948 ‘·sê«‘· e∫Ãq 1956 ˝À 1977 eT]j·TT 1980 ˝À ø=ìï ∫qï e÷s¡TŒ\T eT]j·TTdües¡D\‘√ 1991 es¡≈£î neT\T˝À ñqï Á|üuÛÑT‘·« s¡+>∑ Ä~Û|ü‘· bÕ]ÁXÊ$Tø£ n_Ûe~∆ $<Ûëq+˝À ñ+≥÷e∫Ã+~. 1991 ˝À, eT]j·TT 1956 bÕ]ÁXÊ$Tø£ $<Ûëq+˝À düT<ä÷s¡ e÷s¡TŒ\T »]>±sTT. p …’ 1991 ø=‘·ÔbÕ]ÁXÊ$Tø£ $<Ûëq+ Á|üdüTÔ‘·+ bÕ]ÁXÊ$Tø£ n_Ûe~∆øÏ eTTkÕsTT<ëqT Á|üø£Ï+∫+~.

5.2.1. bÕ]ÁXÊ$Tø£ $<ÛëqeTT - 19481948, @Á|æ Ÿ 30 q uÛ≤s¡‘· Á|üuÛÑT‘·«+ bÕ]ÁXÊ$Tø£ $<Ûëq rsêàq+ 1948 ì ÄyÓ÷~+∫+~ . Ç~ bÕ]ÁXÊ$Tø£s¡+>±ìï Hê\T>∑T $düÔ‘· düeT÷Vü‰\T>± $uÛÑõ+∫+~:

Á>∑÷|t - 1: : : : : Äj·TT<Ûë\T eT]j·TT eT+<äT>∑T+&ÉT kÕeTÁ–, nDTXøÏÔ, ¬s’ Ò«\T yÓTT<ä …’q ÁbÕ<∏ä$Tø£ eT]j·TT eP´Vü‰‘·àø£|ü]ÁX¯eT\T, Ç$ πø+Á<ä+ jÓTTø£ÿ Á|ü‘˚ ø£ >∑T‘êÔ~Û|ü‘· +˝À ñHêïsTT.

Á>∑÷|t - 2 : : : : : u§>∑TZ, ÇqTeTT eT]j·TT ñ≈£îÿ, HÍø±ìsêàD+, f…*Á>±|òt ‘·j·÷Ø, f…*bò Hé, Kì» q÷HÓ\T yÓTT<ä …’qø°\ø£ |ü]ÁX¯eT\T. á |ü]ÁX¯eT\˝À uÛÑ$wü ‘·TÔ À »]π> nìï n_Ûe~∆øÏ πø+Á<ä+ Á|ü‘˚ ø£ u≤<Ûä ‘· eVæ≤düTÔ+~.n˝≤π>, Á|üdüTÔ‘·+ ñqï |ü]ÁX¯eT\T 10 dü+e‘·‡sê\T |üì#˚j·T&ÜìøÏ nqTeT‹+#·ã&Ü¶sTT. |ü<äMø±\+ eTT–dæq

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ideology. Thus, industrial policy is a comprehensive concept which provides guidance and out-linesof the policy for establishment and working of industries.

OBJECTIVES OF INDUSTRIAL POLICIES

Rapid Industrial DevelopmentThe industrial policy of the Government of India is aimed at increasing the pace of industrialdevelopment. It seeks to create a favourable investment climate for the private sector as well asmobilise resources for the investment in public sector. In its way, the government seeks to promoterapid industrial development in the country.

Balanced industrial StructureThe industrial policy is designed to correct the prevailing uneven industrial structure. Thus, for example,before independence, India had some fairly developed consumer goods industries. But the capitalgoods sector was not developed at all and basic and heavy industries were absent. So, the industrialpolicy had to be framed in such a manner that these imbalances in the industrial structure are corrected.

Prevention of Concentration of Economic PowerThe industrial policy seeks to provide a framework of rules, regulations and reservation of spheres ofactivity for the public and the private sectors. This is aimed at reducing the monopolistic tendenciesand preventing concentration of economic power in the hands of a few big industrial houses.

Balanced Regional GrowthIndustrial policy also aims at correcting regional imbalances in industrial development. It is well-known that some regions in the country are industrially advanced while others are industriallybackward. It is the task of industrial policy to work out programmes and policies which lead toindustrial development or industrial growth.

The Industrial policy of 1948, which was the first industrial policy statement of the Government ofIndia, was changed in 1956 in a public sector dominated industrial development policy that remainedin force till 1991 with some minor modifications and amendments in 1977 and 1980. In 1991, farreaching changes were made in the 1956 industrial policy. The new Industrial Policy of July 1991heralded the framework for industrial development at present.

5.2.1. INDUSTRIAL POLICY 1948On April 30, 1948, the Government of India passed a policy resolution – The Industrial Policy Resolution,1948 (IPR, 1948). It divided the industrial sector into four broad groups:

Group 1 – Basic and strategic industries like arms and ammunition, atomic energy, railways, etc.Further, these were in the exclusive monopoly of the State.

Group 2 – Key industries like coal, iron and steel, shipbuilding, manufacture of telegraph, telephone,mineral oils, etc. The State took over the exclusive responsibility of all future developments in these

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‘·sê«‘·, πø+Á<ä+ düMTøÏå+∫ ‘·–q ìs¡íj·÷\T rdüT≈£î+≥T+~.

Á>∑÷|t - 3 : : : : : uÛ≤Ø s¡kÕj·THê\T, #·¬øÿs¡, |ü‹Ô eÁdüÔ eT]j·TT ñìï |ü]ÁX¯eT, dæyÓT+Ÿ, ø±–‘·+, ñ|ü⁄Œ, j·T+Á‘·|ü]ø£sê\T, ms¡Te⁄\T, s¡ã“s¡T, >±* eT]j·TT düeTTÁ<ä s¡yêD≤, yÓ÷≤s¡T, Á≤ø£ºsY, $<äT´‘Y yÓTT<ä …’q yÓTT‘·Ô+ 18|ü]ÁX¯eT\T Áô|’y˚Ÿ s¡+>±ìøÏ nqTeT‹+#·ã&Ü¶sTT. á |ü]ÁX¯eT\T Á|üuÛÑT‘·« ìj·T+Á‘·D eT]j·TT |üs¡ y˚ø£åD≈£î˝Àã&ç ñ+≤sTT.

Á>∑÷|t - 4 : : : : : $T–*q |ü]ÁX¯eT\˙ï. nedüs¡yÓTÆ‘˚ Á|üuÛÑT‘·«+ bÕ˝§Zqe#·TÃ Ò<ë CÀø£ + #˚düTø√e#·TÃ.|ü]ÁX¯eT\jÓTTø£ÿ Hê\T>∑T s¡ø±\ eØZø£s¡D ø±≈£î+&Ü bÕ]ÁXÊ$Tø£ $<Ûëq+ 1948 ≈£î°s¡ eT]j·TT ∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\qTyêÏ ÁbÕ<Ûëq´‘·qT ãÏº yêÏì s¡øÏå+#·&ÜìøÏ Á|üj·T‹ï+∫+~. Ç~ Á|üXdüÔyÓTÆq bÕ]ÁXÊ$Tø£ dü+ã+<Ûë\qT kÕú|æ+#·&ÜìøÏ≈£L&Ü H=øÏÿ #Ó|æŒ+~. Hê´j·TyÓTÆq y˚‘·q πs≥¢≈£î n~Ûø£ ÁbÕ<Ûëq´‘·ì∫Ã+~. ø±]à≈£î\≈£î kÕe÷õø£ uÛÑÁ<ä‘· eT]j·TTìs¡«Vü≤D˝À yê] uÛ≤>∑kÕ«eT´+ ø£*Œ+∫+~. bÕ]ÁXÊ$Tø£ $<Ûëq+ 1948 <X bÕ]ÁXÊ$Tø°ø£s¡D≈£î $<o eT÷\<Ûäq+jÓTTø£ÿ ÁbÕeTTK´‘·qT >∑T]Ô+∫+~, nsTT‘ ìj·T+Á‘·D uÛ≤s¡‘·<X+ #‘·T˝À¢H ñ+&Ü\ì ìs¡ísTT+∫+~. bÕ]ÁXÊ$Tø£$<Ûëq rsêàq+, 1948 neT\T #˚j·T&ÜìøÏ Á|üuÛÑT‘·«+ 1951 ˝À |ü]ÁXeT\ (n_Ûe~∆ eT]j·TT ìj·T+Á‘·D)#·≤ºìï ÄyÓ÷~+∫+~.

5.2.2. bÕ]ÁXÊ$Tø£ $<ÛëqeTT - 1956bÕ]ÁXÊ$Tø£ $<Ûëq+, 1956 ø£ $düÔ‘·yÓTÆq |üÁ‘·+ eT]j·TT ªªuÛ≤s¡‘·<˚X¯ Ä]úø£ sêC≤´+>∑+μμ nì ù|s¡T >±+∫+~.Ç~ bÕ]ÁXÊ$Tø£ n_Ûe~∆øÏ dü+ã+~Û+∫q nìï n+XÊ\qT ø£\T|ü⁄ø=qï~. Ç~ Á|üuÛÑT‘·« s¡+>±ìï bÕ]ÁXÊ$Tø°ø£s¡Dπø+Á<ä+>± @sêŒ≥T #˚dæ+~. @Á|æ Ÿ 30, 1956 q, Á|üuÛÑT‘·«+ bÕ]ÁXÊ$Tø£ $<Ûëq+, 1948 qT |ü⁄q:düMTøÏå+∫,bÕ]ÁXÊ$Tø£ $<Ûëq rsêàq+, 1956 Á|üø£Ï+∫+~. düMTø£å yÓqTø£ eT÷&ÉT ø±s¡D≤\T ñHêïsTT:

uÛ≤s¡‘· sêC≤´+>∑+ |ü]#·j·T+Á|üD≤[ø± e´edüúqT d”«ø£]+#·&É+düe÷»+ jÓTTø£ÿ k˛wü*dtº qeT÷HêqT d”«ø£]+#·&ÜìøÏ bÕs¡¢yÓT+≥T Á|üø£≥q

bÕ]ÁXÊ$Tø£ $<Ûëq+, 1956 Á|üø±s¡+, |ü]ÁX¯eT\T ÁøÏ+~ $<Ûä+>± eØZø£]+#·ã&Ü¶sTT:ôw&É÷´˝Ÿ - A - πø+Á<ä Á|ü‘˚ ø£ u≤<Ûä ‘·>± 17 |ü]ÁX¯eT\ C≤_‘ê. MÏ À Hê\T>∑T |ü]ÁX¯eT\T, n$ Äj·TT<Ûë\TeT]j·TT eT+<äT>∑T+&ÉT kÕeTÁ–, nDTX¯øÏÔ, ¬s’ Ò«\T, eT]j·TT yêj·TT s¡yêD≤ ≈£L&Ü πø+Á<ä Á|üuÛÑT‘·« >∑T‘êÔ~Û|ü‘ê´\TeT]j·TT $T–*q$ sêÁwüº Á|üuÛÑT‘ê«\ |ü]~Û À ñ+≤sTT.

ôw&É÷´˝Ÿ -B - 12 |ü]ÁX¯eT\ C≤_‘ê, Á|üuÛÑT‘·« eT]j·TT Áô|’y˚Ÿ s¡+>±\≈£î nqTeT‹+∫+~. nsTT‘˚ á|ü]ÁX¯eT\T Áø£eT+>± Á|üuÛÑT‘·« ÄBÛq+˝À ñHêïsTT.

ôw&É÷´˝Ÿ - C - $T–*q |ü]ÁX¯eT\˙ï Áô|’y˚Ÿ s¡+>∑+ n_Ûe~∆øÏ e<ä\ã&ç+~ . nsTT‘˚ yês¡T Ä]úø£ eT]j·TTkÕe÷õø£ ÁbÕ<Ûëq´‘·\T eT]j·TT Á|üuÛÑT‘·« $<ÛëHê\≈£î nqT>∑TD+>± ñ+&Ü*. Ç+ø±, n$ |ü]ÁX¯eT\ (n_Ûe~∆eT]j·TT ìj·T+Á‘·D) #·≥º+, 1951 ìã+<Ûäq\≈£î ˝Àã&ç ñ+≤sTT.

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industries. Also, the existing industries were allowed to function for 10 years. After the end of thetenure, the State would review and take adequate decisions.

Group 3 – A total number of 18 industries including heavy chemicals, sugar, cotton textile andwoollen industry, cement, paper, salt, machine tools, fertiliser, rubber, air and sea transport, motor,tractor, electricity etc. The private sector was allowed to open these industries subject to governmentregulation and supervision.

Group 4 – All the remaining industries. However, the government can participate or intervene if theneed arises.

Apart from the four fold classification of the industries; the Industrial Policy 1948 endeavouredto protect cottage and small scale industries by according them priority status. It also emphasised onestablishing harmonious industrial relations; gave high priority to fair wage rates; social security toworkers and their participation in management. The industrial policy 1948 had acknowledged thesignificance of foreign capital for industrialisation of the country, but it was decided that the controlshould remain with Indian hands. To implement the Industrial Policy Resolution, 1948, the Governmentpassed the Industries (Development and Regulation) Act in 1951.

5.2.2. INDUSTRIAL POLICY 1956The Industrial Policy, 1956 was an elaborate document and was hailed as “Economic Constitution ofIndia” It touched virtually all aspects of Industrial development. It established the public sector asepicenter of industrialization. On April 30, 1956, the Government revisited the Industrial Policy, 1948and announced the Industrial Policy Resolution, 1956 (IPR, 1956). There were three reasons behindthe revision:

The introduction of the Constitution of IndiaThe adoption of a planning systemThe Parliament‘s declaration of adopting a socialist pattern of the society

According to the Industrial Policy, 1956, the industries were classified in the following categories:

Schedule A – A list of 17 industries as the exclusive responsibility of the State. Of these, four industries,namely arms and ammunition, atomic energy, railways, and also air transport become CentralGovernment monopolies and the rest under State Governments.

Schedule B – A list of 12 industries open to both the public and private sectors. However, theseindustries are progressively State-owned.

Schedule C – All the remaining industries. The private sector had the primary initiative of development.However, they needed to fit within the economic and social priorities and policies of the Government.Further, they were subject to the provisions of the Industries (Development and Regulation) Act,1951.

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The IPR, 1956 also stressed the importance of small-scale and cottage industries for expandingemployment opportunities.

5.2.3. INDUSTRIAL POLICY STATEMENT, 1977

In December 1977, Government announced its New Industrial Policy through a statement in theParliament. The main thrust of this policy was the effective promotion of cottage and small industrieswidely dispersed in rural areas and small towns. 1977 Industrial policy defined a “tiny unit” as a unitwith investment in machinery and equipment upto Rs. 1 Lakh and situated in towns or villages with apopulation of less than 50,000. The main features of the Industrial Policy Statement, 1977 are:

Special Focus on Small”scale IndustriesThe 1977 policy gave highest priority to the small scale and tiny industries. The policy declared toestablish one District Industries Centre in each district to meet the requirement of industries withinthat district. It also announced to establish a separate cell in the Industrial Development Bank of Indiato cater to the need of the small industries.

Focus on Labour”intensive TechnologyIn contrast with capital intensive industries, this policy emphasized on special efforts to develop smalland ordinary machines and their optimal use to enhance productivity and income of the workersengaged in small and cottage industries. Small and cottage industries encouraged to expand.

Viability of Public SectorThe policy emphasized on the viability, efficiency and profitability of the public sector units. It declaredthat government will selectively take over sick industries to bear minimum possible loss; and will takeimmediate measures to rehabilitate and manage the units taken over.

Focus on Indigenous TechnologyThe policy called for use of indigenous technology as far as possible for future development of Industry.However, for sophisticated sectors, the government would buy best available technology from abroad.This policy called for a restricted use of foreign technology.

Focus on self-sufficiencyThis policy called for minimum export and maximum possible self-sufficiency. It called for removingrestrictions on those imports which are needed for development of priority industries.

Balanced Regional DevelopmentThe government decided in the interest of balanced regional development; no more licences will beissued for the establishment of industries within certain limits of metropolitan cities having a populationexceeding 10 lakh and in other cities having a population exceeding 5 lakh.Restrictions on Foreign InvestmentsThe policy declared that the foreign investment in the “unnecessary areas” was prohibited. This wasvirtually a complete NO to the foreign investment. This policy is also remembered for a very important

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provision. The statement stated that foreign companies that diluted their foreign equity up to 40 percent under Foreign Exchange Regulation Act (FERA) 1973 were to be treated at par with the Indiancompanies. Companies like Coca Cola and IBM did not comply with the provisions and IndustryMinister George Fernandez threw the Coke and IBM out of India.

5.2.4. INDUSTRIAL POLICY 1980Government announced the new industrial policy on 23rd of July, 1980. The Industrial Policy Statement,1980 addressed the need for promoting competition in the domestic market, modernization, selectiveLiberalization, and technological up-gradation. The objective was to liberalize the industrial sector toincrease industrial productivity and competitiveness of the industrial sector. The main features of theIndustrial Policy of 1980 were.

Revitalisation of the Public sectorThe government decided to raise the efficiency of public sector undertakings. For this purpose, itproposed to strengthen their management and develop man-agement cadres in the field of financeand marketing. It also proposed to study the industrial units of the public sector and suggest specificsteps for their betterment.

Economic FederalismIt proposed to promote the concept of economic federalism with the setting up of a few nucleusplants in each district, identified as industrially backward, to generate as many ancillaries small andcottage industries for their development.

Redefining the small UnitsTo encourage the development of small units, the government revised the definition of small units.

Tiny units- limit of investment raised from Rs 1 lakh to Rs 2 lakhs

Small industries- limit of investment raised from Rs 10 lakhs to Rs 20 lakhs; and

Ancillaries- limit of investment raised from Rs 15 lakhs to Rs 25 lakhs

Promotion of rural industriesTo generate higher employment and higher per capita income, handlooms, handicrafts and Khadi aregiven greater attention so that a faster growth of the rural areas is made possible

Removal of regional imbalancesFor this, the state encouraged industrial units in backward areas.

Industrial sicknessThe policy statement outlined clearly its approach towards sick units

Management of sick units would be taken over only in exceptional cases on grounds ofpublic interest where other means for their revival are not feasible.

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ÁbÕ+rj·T ndüeT‘Í\´+ ‘=\–+|ü⁄Bì ø√dü+, <˚X¯+˝À yÓqTø£ã&çq ÁbÕ+‘ê\˝À bÕ]ÁXÊ$Tø£ j·T÷ì≥¢qT Áb˛‘·‡Væ≤+∫+~.

bÕ]ÁXÊ$Tø£ s¡T>∑à‘·\TnHês√>∑ j·T÷ì≥¢ |ü≥¢ bÕ\d” Á|üø£≥q <ëì $<ÛëHêìï düŒwüº+>± $e]+∫+~

nHês√>∑´ j·T÷ì≥¢ ìs¡«Vü≤D Á|üC≤ Á|üjÓ÷»Hê\ <äcÕº´ nkÕ<Ûës¡DyÓTÆq dü+<äsê“¤\˝À e÷Á‘·y˚TrdüTø√ã&ÉT‘·T+~. Çø£ÿ&É yêÏ |ü⁄qs¡T<ä∆s¡D≈£î Ç‘·s¡ e÷sêZ\T kÕ<Ûä |ü&Ée⁄.

|ü⁄qs¡TJ®eq+ ø√dü+ ‘·–q+‘· kÕeTs¡ú + ñqï nHês√>∑ j·T÷ìŸ\T Äs√>∑ ø£s¡yÓTÆq j·T÷ìŸ\‘√ $©q+#˚j·T&ÜìøÏ Áb˛‘·‡Væ≤+#·ã&É‘êsTT.

n~Ûø£ ñ‘·Œ‹Ô kÕÔsTT Áø£eTãB›ø£s¡DÁô|’yŸ ôdø±ºsY À, Áø£eTãB∆ø£]+∫q n<äq|ü⁄ kÕeTs¡ú +‘√ düVü‰ yÓTT‘·Ô+ kÕeTsêú ìøÏ kÕú|üq #j·Tã&çq kÕeTs¡ú +˝À25 XÊ‘·+ es¡≈£î kÕeTs¡ú $düÔs¡D ÄÀe÷Ïø >± n+<äTu≤≥T˝À ñ+≥T+~. FERAeT]j·TT MRTP ø£+ô|˙\qTm+|æø£ Ä<Ûës¡+>± |ü]>∑DÏ+#ê*‡ ñ+≥T+<äì ù|s=ÿHêïs¡T. n+‘˚ø±≈£î+&Ü, á dü<äTbÕj·÷ìï ∫qï s¡+>±ìøÏ]»sY« #˚dæq edüTÔe⁄\≈£î dü+ã+~Û+∫ Çe«≈£L&É<äT.

5.2.5. bÕ]ÁXÊ$Tø£ $<ÛëqeTT -1991bÕ]ÁXÊ$Tø£ s¡+>∑+˝À b˛°ì Áb˛‘·‡Væ≤+#·&ÜìøÏ Áô|’yŸ dü+düú\ Á|üyXÊìøÏ n&É¶+≈£î\qT dü&É*+# Á|ü<Ûëq \ø£å +‘√ø=‘·Ô bÕ]ÁXÊ$Tø£ $<Ûëq+ p …’, 1991 q Á|üø£Ï+#·ã&ç+~. Ç~ ñ‘êŒ<äø£‘· À e~∆ì ø=qkÕ–+#·&É+, ñbÕ~Ûìbı+<ä&É+ eT]j·TT n+‘·sê®rj·T b˛°‘·‘ê«ìï kÕ~Û+#·&É+ ≈£L&Ü \ø£å +>± ô|≥Tº≈£î+~.Ä]úø£ eédüú À Áô|’y˚ŸuÛ≤>∑kÕ«e÷´ìï Áb˛‘·‡Væ≤+#·&ÜìøÏ, Á|üuÛÑT‘·« s¡+>±ìøÏ ]»sY« #j·Tã&çq |ü]ÁXeT \T 17 qT+&ç 8 øÏ >∑D˙j·T+>±‘·–Z+#·ã&Ü¶sTT. Á|ü‘´øÏ+∫, f…*ø£eT÷´ìπøwüHé, |üesY, msTTsY Á≤Hé‡b˛sYº, ô|ÁÀ*j·T+, s¡+>±\˝À Áô|’yŸ s¡+>∑+nqTeT‹+#·ã&ç+~. ø=‘·Ô bÕ]ÁXÊ$Tø£ $<Ûëq+, 1991 e÷¬sÿŸ X¯≈£îÔ\≈£î kÂø£sê´\T ø£*Œ+#·&É+ eT]j·TTkÕeTsêú ìï ô|+#·&É+ Á|ü<Ûëq \ø£å +. ÁøÏ+~ $wüj·÷\ô|’ Á|ü‘˚ ø£ ÁX¯<ä› #·÷|ü&ÉäyÓTÆq~L- düs¡∞ø£s¡D (Á|üuÛÑT‘·« ìj·T+Á‘·D ‘·–Z+|ü⁄)P- Áô|’y˚°ø£s¡D (Áô|’y˚Ÿ s¡+>∑+ bÕÁ‘· eT]j·TT |ü]~Ûì ô|+#·&É+)G- >√¢ã …’CÒwüHé (Á|ü|ü+#· Ä]úø£ eédüú‘√ uÛ≤s¡‘· Ä]úø£ eédüú nqTdü+<Ûëq+)LPG ø±s¡D+>± bÕ‘·, ø=‘·Ô <oj·T dü+düú\T, ãVüQfi C≤rj·T ø£+ô|˙\T eT]j·TT ~>∑TeT‹ #düT≈£îqï edüTÔe⁄\‘√b˛° |ü&Ü*‡ edüTÔ+~. p …’ 24, 1991 q, uÛ≤s¡‘· Á|üuÛÑT‘·«+ ø=‘·Ô, düs¡∞ø£‘· bÕ]ÁXÊ$Tø£ $<ÛëHêìï Á|üø£Ï+∫+~.á $<Ûëq+ >∑T‘êÔ~Û|ü‘ê´\T eT]j·TT ìj·T+Á‘·D yêDÏ»´ $<ÛëHê\ MRTP ø£+ô|˙\ ÄdæÔ |ü]$T‹ì s¡<äT› #˚dæ+~.Ç+ø± Ç~ ø=ìï $TqVü‰sTT+|ü⁄\‘√ nìï ÁbÕC…≈£îº\ bÕ]ÁXÊ$Tø£ …’ôdì‡+>¥ì s¡<äT› #˚dæ+~. Ç~ <˚X¯ bÕ]ÁXÊ$Tø£s¡+>∑+˝À $<˚o uÛ≤>∑kÕ«eT´ |ü]$T‹ì ≈£L&Ü ô|+∫+~.

eTTK´ $<Ûëq ìs¡íj·÷\T - n+XÊ\TÁ|üuÛÑT‘·« @ø£kÕ«eT´+Á|üuÛÑT‘·« s¡+>∑+ ø√dü+ ]»sY« #˚j·Tã&çq |ü]ÁX¯eT\ dü+K´ 17 qT+&ç 8 |ü]ÁX¯eT\≈£î ‘·–Z+#·ã&ç+~. á|ü]ÁX¯eT\T. Äj·TT<Ûë\T eT]j·TT eT+<äT>∑T+&ÉT kÕeTÁ–, nDTX¯øÏÔ, u§>∑TZ, Kì» q÷HÓ, ÇqT|ü Kì»+ ‘·e«ø£+,

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Sick units with adequate potential for revival would be encouraged to merge with healthyunits.

Regulation of Unauthorised Excess CapacityIn the private sector, capacity expansion up to 25 percent of installed capacity would be automaticallyavailable to the overall capacity including regularised excess capacity. It was stated that FERA andMRTP companies were to be considered on a selective bases. Moreover, this facility was not to begiven in respect of items reserved for the small sector.

5.2.5. INDUSTRIAL POLICY 1991

The New Industrial Policy was declared on July, 1991 with the major aim of loosening the barriers toentry for private firms to encourage competition in the industrial sector. It also aims to sustain growthin the productivity, gainful employment and to attain international competitiveness.

To encourage private participation in the economy, the areas of industry reserved for the publicsector have been considerably reduced from 17 to 8. In particular, telecommunication, power, airtransport, petroleum, sectors were opened for private sector. The New Industrial Policy, 1991 hadthe main objective of providing facilities to market forces and to increase efficiency. Larger roleswere provided by;

L – Liberalization (Reduction of government control)P – Privatization (Increasing the role & scope of the private sector)G – Globalisation (Integration of the Indian economy with the world economy)

Because of LPG, old domestic firms have to compete with New Domestic firms, Multi NationalCompanies and imported items

On July 24, 1991, the Government of India announced a new, liberalized industrial policy. This policyscrapped the asset limit for Monopolies and Restrictive Trade Practice (MRTP) companies.

Further, it abolished industrial licensing of all projects with a few exceptions. It also raised the limit forforeign participation in the country’s industrial sector.

HIGHLIGHTS OF POLICY

Government MonopolyThe number of industries reserved for public sector was reduced from 17 to only 8 industries.These industries are . arms and ammunition, atomic energy, coal, mineral oil, mining of iron ore,manganese ore, gold, silver, mining of copper, lead, zinc, atomic minerals and railways. Further, thepolicy had implied threat of closure of sick public sector enterprises to increase efficiency of thepublic sector.

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$<o ô|≥Tºã&ÉT\T eT]j·TT eT÷\<ÛäqeTTÇ~ uÛ≤s¡‘·<˚X¯+˝À $<˚o ø£+ô|˙\T yÓTC≤]° yê≤qT ø£*– ñ+&É≤ìøÏ nqTeT‹+∫q yÓTT<äÏ bÕ]ÁXÊ$Tø£$<Ûëq+. 47 n~Ûø£ ÁbÕ<Ûëq´‘· ø£*–q |ü]ÁXeT\˝À 51 XÊ‘·+ es¡≈£î $<o Á|ü‘· ø£å ô|≥Tºã&ÉT\T nqTeT‹+#·ã&Ü¶sTT.m>∑TeT‹ ÁfÒ&ç+>¥ Vü≤Ödt\ ø√dü+, 74 XÊ‘·+ es¡≈£î $<o Á|ü‘· ø£å ô|≥Tºã&ÉT\T nqTeT‹+#·ã&ç+~. 34 |ü]ÁXeT\T51 XÊ‘·+ $<o áøÏ«° es¡≈£î Á|ü‘· ø£å $<o ô|≥Tºã&ÉT\ ø=s¡≈£î ÄÀyTÏø ÄyÓ÷<ä+ e÷s¡Z+ øÏ+<ä ñ+#·ã&Ü¶sTT.~>∑TeT‹ #˚düT≈£îqï eT÷\<Ûäq edüTÔe⁄\≈£î $<˚o e÷s¡ø£ $\TeqT $<˚o áøÏ«° ø£esY #˚dæq≥¢sTT‘˚ á Á|üÁøÏj·T˝Àm˝≤+Ï n&É¶+≈£î\T ñ+&Éeì Vü‰MT Çe«ã&ç+~. bòÕ]Hé mπø‡Ã¤+CŸ ¬s>∑T´ ÒwüHé j·÷øº -1973 À ø=ìï dües¡D\T#˚kÕÔeTH˚ yê>±›q+ ‘·s¡Tyê‘· 1999 ˝À bòÕ]Hé mπø‡Ã¤+CŸ y˚TH˚CŸ yÓT+Ÿ j·÷øº <ë«sê uÛÑØÔ #˚j·Tã&ç+~.

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Á|üuÛÑT‘·« s¡+>∑ dü+düú\ ô|≥Tºã&ÉT\ô|’ |ü⁄q:|ü]o\qeP´Vü‰‘·àø£, ôV’≤f…ø˘ eT]j·TT nedüs¡yÓTÆq eTÚ*ø£ dü<äTbÕj·÷\ô|’ Á|üuÛÑT‘·« s¡+>±ìï <äwæº À ñ+#·T≈£îì Á|üuÛÑT‘·«s¡+>∑ ô|≥Tºã&ÉT\ b˛sYº b˛*jÓ÷\qT düMTøÏåkÕÔeTì yê>±›q+ #˚j·Tã&ç+~. Ç~ Á|üuÛÑT‘·« s¡+>∑ ô|≥Tºã&ÉT\ ñ|üdü+Vü≤s¡DqT dü÷∫+∫+~. Bs¡Èø±*ø£+>± nHês√>∑ +‘√ ñqï eT]j·TT ‹]π> neø±X¯+ Òì Á|üuÛÑT‘·« s¡+>∑dü+düú\qT uÀsY¶ |òüsY Ç+&ÉÁdæºj·T˝Ÿ n+&é ô|ò’Hêì¸j·T˝Ÿ Øø£HéÁdüºø£åHé (_◊m|òtÄsY) ≈£î nqTdü+<Ûëq+ #˚j·÷*. Á|üuÛÑT‘·«s¡+>∑ dü+düú\ uÀs¡T¶\T eT]+‘· Ábıô|òwüq Ÿ>± ‘·j·÷s¡T #j·Tã&É‘êj·Tì eT]j·TT n~Ûø£ n~Ûø±sê\T ÇkÕÔeTì Vü‰MTÇe«ã&ç+~.

MRTP#·≥º+ À dües¡D\TMRTP ø£+ô|˙\T eT]j·TT Ä~Û|ü‘· dü+düú\≈£î dü+ã+~Û+∫ ÄdüTÔ\ |ü]$T‘·T\qT ‘=\–+#·&ÜìøÏ MRTP #·≥º+düe]+#· ã&ç+~ . ø=‘·Ô dü+düú\ @sêŒ≥T, $düÔs¡D, $©q+ eT]j·TT fÒø√esY eT]j·TT ø=ìï |ü]dæú‘·T\˝À &Ó’¬sø£ºs¡¢ìj·÷eTø£+ ø√dü+ πø+Á<ä Á|üuÛÑT‘·«+ jÓTTø£ÿ eTT+<ädüTÔ ÄyÓ÷<ä+ nedüsêìï Ç~ ‘=\–düTÔ+~. MRTP ø£+ô|˙\≈£îMRTP|ü]$T‹ s¡÷. 100 ø√≥T¢. Á|üdüTÔ‘·+ MRTP#·≤ºìøÏ ã<äT\T>± b˛° #·≥º+ 2002 neT\T˝ÀìøÏ ‘ã&ç+~.

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Industrial Licensing PolicyThis policy abolished the Industrial licensing for all industries except for a short list of 18 industries.This list of 18 industries was further pruned in 1999 whereby the number reduced to six industries likedrugs and pharmaceuticals, hazardous chemicals, explosives such as gun powder and detonatingfuses, tobacco products, alcoholic drinks, and electronic, aerospace and defence equipment. However,in this policy, industries reserved for the small scale sector were continued to be so reserved.

Foreign Investment and CapitalThis was the first Industrial policy in which foreign companies were allowed to have majority stake inIndia. In 47 high priority industries, up to 51 percent FDI was allowed. For export trading houses,FDI upto 74 percent was allowed. 34 Industries were placed under the automatic approval route fordirect foreign investment up to 51 percent foreign equity. It was promised that there will be nobottlenecks of any kind in this process provided that foreign equity covers the foreign exchangerequirement for imported capital goods. A promise to carry out some amendments in Foreign ExchangeRegulation Act -1973 was later replaced by FEMA in 1999

Foreign Technology AgreementsAutomatic permission was given for foreign technology agreements in high priority industries up to alump sum payment of Rs. 1 crore, 5 percent royalty for domestic sales and 8 percent for exports,subject to total payment of 8 percent of sales over a 10 year period from date of agreement or 7years from commencement of production. Further, government eased hiring of foreign technicians.

Review in Public Sector InvestmentsA promise was made to review the portfolio of public sector investments with a view to focus thepublic sector on strategic, high-tech and essential infrastructure. This indicated a disinvestment of thepublic sector. The PSUs which were chronically sick and which are unlikely to be turned aroundwere to be referred to the Board for Industrial and Financial Reconstruction (BIFR). It was promisedthat Boards of public sector companies would be made more professional and given greater powers.

Amendments to MRTP ActThe MRTP Act was amended to remove the threshold limits of assets in respect of MRTP companiesand dominant undertakings. This eliminates the requirement of prior approval of Central Governmentfor establishment of new undertakings, expansion of undertakings, merger, amalgamation and takeoverand appointment of Directors under certain circumstances. The MRTP Limit for MRTP companieswas made Rs. 100 Crore. Currently, MRTP act is replaced by Competition Act 2002.

Tiny SectorThe definition of Tiny Unit was changed as a unit having an investment limit of less than Rs. 5 Lakh.

National Renewal Fund to provide safety net for labourersThe Government announced to establish a National Renewal Fund (NRF) to provide a social safetynet to the labour. This fund was established in 1992 and two schemes were brought under this- first

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Voluntary Retirement Scheme and another Re-Training Scheme for rationalised workers in organisedsector.

Key Terms

1. Foreign Investments: Foreign investment involves capital flows from one nation to another inexchange for significant ownership stakes in domestic companies or other assets.

2. Fiscal Deficit: Fiscal deficit, the condition when the expenditure of the government exceeds itsrevenue in a year, is the difference between the two. Fiscal deficit is calculated both in absoluteterms and as a percentage of the country’s gross domestic product (GDP).

3. Foreign Exchange Reserves: Foreign exchange reserves are important assets held by thecentral bank in foreign currencies as reserves. They are commonly used to support the exchangerate and set monetary policy.

4. Economic Stagnation: Stagnation is a situation that occurs within an economy when totaloutput is either declining, flat, or growing slowly.

5. Current Account Deficits: A current account deficit occurs when the total value of goods andservices a country imports exceeds the total value of goods and services it exports.

6. Open Reserved Sector: In order to meet the pace of the globalisation the sectors reserved forthe public sectors are now open for private players.

7. Equity Holdings: equity holding means a holding of the capital in a body of persons when theholding entitles the holder to a right to vote, to profits available for distribution and to assetsavailable for distribution on a winding up of that company.

8. FERA: The Foreign Exchange Regulation Act (FERA) was legislation passed in India in 1973that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange(forex) and securities and the transactions which had an indirect impact on the foreign exchangeand the import and export of currency.

∫qï |ü]ÁXeT\T∫qï j·T÷ìŸ jÓTTø£ÿ ìs¡«#·q+ s¡÷. 5 \ø£å\T ø£+fÒ ‘·≈£îÿe ô|≥Tºã&ç |ü]$T‹ ø£*–q j·T÷ìŸ>± e÷s¡Ãã&ç+~.

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9. FEMA: Foreign Exchange Management Act, The Central Government of India formulated anact to encourage external payments and across the border trades in India.

10. Memorandum of Understanding (MoU): A memorandum of understanding is an agreementbetween two or more parties outlined in a formal document.

11. Import License: An import license is a document issued by a national government authorizingthe importation of certain goods into its territory.

12. Union Budget: the Union Budget of a year, also referred to as the annual financial statement, is astatement of the estimated receipts and expenditure of the government for that particular year.

13. Non-Tax Revenue: Non-Tax Revenue is the recurring income earned by the government fromsources other than taxes.


1. Government of India started economic reforms in the yearA) 1991 B) 1948 C) 1956 D) 1980

2. Deficit financing is the means borrowing by Government to meet its deficit from.A) State GovernmentsB) General PublicC) Reserve Bank of IndiaD) World Bank

3. First Phase Nationalization of banks in India.A) 1991 B) 1948 C) 1969 D) 1980

4. The important features of the economic reforms are A) LiberalisationB) PrivatisationC) GlobalisationD) All of the above

5. Industrial licensing system was abolished in the Industrial PolicyA) Industrial Policy 1948B) Industrial Policy 1956C) Industrial Policy 1977D) Industrial Policy 1991

6. The First Industrial Policy in India in the year.

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A) 1991 B) 1948 C) 1969 D) 1980

7. In which year New Industrial Policy was announced.A) 1991 B) 1948 C) 1969 D) 1980

8. Which of the Industrial Policy was hailed as “Economic Constitution of India”A) Industrial Policy 1980B) Industrial Policy 1991C) Industrial Policy 1956D) Industrial Policy 1948

9. The Industrial Policy declared to establish one District Industries Centre in each district tomeet the requirement of industries within that district.A) Industrial Policy 1980B) Industrial Policy 1991C) Industrial Policy 1956D) Industrial Policy 1977

10. As per the Industrial Policy Resolution, 1991, What is the allowed limit for FDI.A) 49% B) 50% C) 51% D) 52%

ANSWERS

INERACTIVE LINKS

https://en.wikipedia.org/wiki/Economic_liberalisation_in_Indiahttps://dpiit.gov.in/


Prepare a document on how globalisation as impacted the local business in your vicinity.

Analyse both advantages and disadvantages of globalisation and privatisation with respect to any particular local business.

1 2 3 4 5 6 7 8 9 10

A C C D D B A C D C

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Economic Policies

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the components in economic policies ; 2. outline the objectives of different economic policies in In3. describe the impact of economic policies over the business4. examine the differences between monitory policy and fisc5. judge the role of RBI in controlling monitory policy proce

Chapter Layout: 6.1. Economic Policies 6.2. Competition Act-2002

6.2.1. Salient Features of Competition Act-2002 6.2.2. MRTP Act 1969 Vs Competition Act-2002

6.3. Fiscal Policy 6.3.1 Objectives of Fiscal Policy

6.3.2. Limitations of Fiscal Policy 6.3.3. Types of Fiscal Policy 6.3.4. Components in Fiscal Policy

6.4. Monetary Policy 6.4.1. Types of Monetary Policy 6.4.2. Differences between Monetary Policy and Fiscal Po 6.4.3. Objectives of Monetary Policy 6.5. Role of RBI in Monetary Policy 6.5.1. Quantitative Techniques 6.5.2. Qualitative Techniques

Chapter

6

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CHAPTER OVERVIEW

Economic policy of Government plays a key role in setting up economicenvironment in which businesses operate. Government control economicenvironment with the help of various legislation like companies act, competitionact , export and import laws etc. Similarly the two key policy tools ofGovernment are fiscal policy and monetary policy.

Fiscal policy relates to the manner in which Government manages its financesviz. income and expenditure. On how Government manages deficit it is calledexpansionary or contractionary fiscal policy. Monetary policy refers to the wayin which Reserve Bank of India control the money supply and interest rates inthe economy using various tools like bank rate, cash reserve ratio etc. Thetools can be classified into qualitative and quantitative. Based on how RBIuses them it is said to be following is cheap money policy or tight moneypolicy. In this chapter we study in different policy tools of Government andfiscal and monetary policies of Government along with competition act indetail

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6.1. Ä]∆ø£ $<ÛëqeTT

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6.1. ECONOMIC POLICIES

Every economy or Government regulates itself or makes laws on issues like setting levels of taxation,Government budgets, the money supply, interest rates and likewise. Economic policy is the way inwhich Government intends to handle these issues. Most factors of economic policy can be dividedinto fiscal policy and monitory policy. Fiscal policy is the proposed set of rules by the governmentto adjust its spending levels and tax rates to monitor and influence the Nation’s economy. Monetarypolicy deals with central banking actions regarding the money supply and interest rates. Policy isgenerally directed to achieve particular objectives or policy goals.

OBJECTIVES OF ECONOMIC POLICYEvery policy has some set of goals and objectives which are to be achieved for the purpose ofwelfare of the Nation. The main objective of the economic policy is to develop the Nation. Thegoals of the economic policy in developing countries is to promote the economy to ensure growthand development. It is worth to mention here that the concept of economic development is distinctfrom the concept of economic growth as traditionally defined.

Economic GrowthIn developing countries, the principal goal of economic policy is to ensure rapid economic growth.In simplest terms, economic growth refers to an increase in aggregate production in an economy. Itleads to an increase in incomes, inspiring consumers to utilize higher levels of production and improvesquality of life for better standard of living.

Full EmploymentEconomic growth enables to use of all available resources in the economy. It encourages the increasein production. Due to new businesses and growth in industrialization, there is an opportunity for fullemployment in the country. Full employment yields the individual security, which, in turn, promotesprogress, contributes to dignity of the people of the country.

Better Distribution of IncomeIn market economies, we can observe inequalities and uneven distribution of the resources andwealth are observed. There may be regional imbalances due to its natural resources and otherreasons. Inequitable wealth distribution goes against social welfare. Economic policies are designedso as to reduce the inequalities, equitable distribution of wealth and income and to reduce regionalimbalances.

Human Development and Decent WorkHuman development index is an indicator of improvement in the quality of life . It is considered to bethe important objective of economic development. There are many factors like education andliteracy rate, life expectancy, the level of nutrition, consumption of energy through which quality oflife can be measured. Also, human development and decent work are the modern goals in growingeconomies. By designing the good economic policies, a Nation can achieve the objectives of humandevelopment and decent work.

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<ë«sê ˇø£ <˚X¯+ e÷qe n_Ûe~∆ eT]j·TT yÓTs¡T¬>’q |üì \øå±´\qT kÕ~Û+#·>∑\<äT.

<Ûäs¡\ eT]j·TT $<˚o e÷s¡ø£|ü⁄ πs≥T¢ dæús¡‘·«+Ä]úø£ eédüú À ndæús¡‘· e~∆ <˚X¯ dü+πøåeT+ ô|’ Á|ü‹≈£L\ Á|üuÛ≤e+ #·÷|ü⁄‘·T+~. $<˚o e÷s¡ø£|ü⁄ πs≥¢ ÀôV≤#·TÃ‘·>∑TZ\T n+‘·sê®rj·T yêDÏC≤´ìï Á|üuÛ≤$‘·+ #kÕÔsTT eT]j·TT <X Ä]úø£ J$‘·+˝À nì•Ã‹øÏ >∑T] #kÕÔsTT.Ä]úø£ dæús¡‘·«+ ìsê∆]+#·&ÜìøÏ Ä]úø£ $<Ûëq+ ø£ X¯øÏÔe+‘·yÓTÆq |ü]ø£s¡+.

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6.2. b˛° #·≥º+ -2002

b˛° #·≥º+ 2002, uÛ≤s¡‘· bÕs¡¢yÓT+Ÿ <ë«sê s¡÷bı+~+#·ã&ç+~. MRTP #·≥º+ 1969 kÕúq+˝À á #·≥º+s¡÷bı+~+#·&É+ »]–+~. b˛° _\T¢ 2001 À Àø˘düuÛÑ À Á|üy˚X¯ô|≥ºã&ç n~ &çôd+ãsY 2002 À b˛° #·≥º+-2002 >± ÄyÓ÷~+#·ã&ç+~.

b˛° #·≤ºìï j·÷+°-Á≥dtº ≤ nì ≈£L&Ü n+≤s¡T. á #·≥º+ neT\T˝ÀìøÏ sêã&çq düeTj·÷ìøÏ »eT÷à ø±oàsY‘·|üŒ $T–*q uÛ≤s¡‘·<X+ yÓTT‘êÔìøÏ e]ÔdüTÔ+~. nø√ºãsY 1999 À uÛ≤s¡‘· Á|üuÛÑT‘·«+ ìj·T$T+∫q Áo mdt.$.mdt.sê|òüTeHé ø£$T° dæbòÕs¡düT\ô|’ á #·≥º+ ÄyÓ÷~+#·ã&ç+~. á ø£$T° yT 2000 À ‘·q ìy~ø£qT düeT]Œ+∫+~.Bìì bÕs¡¢yÓT+Ÿ b˛° #·≥º+ 2002 ù|s¡T‘√ &çôd+ãsY 2002 ˝À ÄyÓ÷~+∫+~. b˛° e´‹πsø£ ˇ|üŒ+<ë\TeT]j·TT <äT]«ìjÓ÷>∑ uÒdæ Ä~Û|ü‘· kÕúHê\≈£î dü+ã+~Û+∫q $wüj·÷\ ô|’ b˛° #·≥º+ ≈£î n~Ûø±sê\T ñHêïsTT.á #·≥º+ Á|üø±s¡+, ø±+|æ°wüHé ø£$TwüHé Ä|òt Ç+&çj·÷ (CCI) uÛ≤s¡‘·<˚X¯+˝À b˛° jÓTTø£ÿ Á|ü‹≈£L\ Á|üuÛ≤yêìïø£*– ñ+&˚ ø±s¡ ø£ ≤bÕ\qT ìs√~Û+#·&ÜìøÏ kÕú|æ+#·ã&ç+~

b˛° #·≥º+,2002- \øå±´\T düs¡düyÓTÆq <Ûäs¡\≈£î eT+∫ ñ‘·Œ‘·TÔ\T eT]j·TT ùde\qT n+~+#·&É+ <ë«sê $ìjÓ÷>∑<ës¡T\ Á|üjÓ÷»Hê\qT

ø±bÕ&É≥+. uÛ≤s¡rj·T e÷¬sÿÀ¢ Äs√>∑ ø£s¡yÓTÆq b˛°ì Áb˛‘·‡Væ≤+#·&É+. ∫qï ø£+ô|˙\ Á|üjÓ÷»Hê\qT ìs√~Û+#·&É+ Ò<ë e÷¬sÿŸ À Ä~Û|ü‘· kÕúq+ <äT]«ìjÓ÷>±ìï ìs√~Û+#·&É+. uÛ≤s¡rj·T e÷¬sÿ≥¢ À b˛°ô|’ Á|ü‹≈£L\ Á|üuÛ≤e+ #·÷ù| |ü<ä∆‘·T\qT ìs√~Û+#·&ÜìøÏ. uÛ≤s¡rj·T e÷¬sÿ≥¢ À yêDÏ»´ ùd«#·Ã¤qT ìsê∆]+#·&É+ düeTTbÕs¡®q\T, $©Hê\T eT]j·TT düy˚Tàfi¯Hê\T e+Ï ø£\sTTø£\ ø±s¡ ø£ ≤bÕ\qT ìj·T+Á‹+#·&É+.

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Stability of Prices and Rates of Foreign ExchangeInstability in economy adversely affects the growth and the welfare of the Nation. Fluctuations inforeign exchange rates affect international trade and introduce an element of uncertainty into theeconomic life of the country. Economic policy is a powerful instrument to ensure the economicstability.

Maintenance of Fair CompetitionCompetition in business is essential for better customer satisfaction and economic growth. It increasesthe welfare of the Nation. Economic policies of the Nations should ensure effective antimonopolypolicy.

Avoidance of Cyclical FluctuationsBusiness cycles and trade cycles are the essential feature of free market economies . These refer toregular cyclical fluctuations in economic activity with their own consequences. An important goal ofthe economic policy is to liberate the economy of those ups-and-downs.

6.2. COMPETITION ACT-2002

The Competition Act, 2002 was enacted by the Parliament of India. This act is introduced toreplace MRTP Act 1969. The competition bill was introduced in 2001 in Lok sabha and was passedin December 2002. Competition Act is also known as Anti-Trust Law. This act was applicable towhole of India expect Jammu and Kashmir at the time of introduction. This Act was passed on therecommendations of Sri S.V.S Raghavan Committee which wass appointed by the Government ofIndia in October 1999. Committee submitted the report in May 2000 and parliament passed thenew law in December 2002 named as The Competition Act- 2002. The provisions of the CompetitionAct relating to anti competitive agreements and abuse of dominant positions. According to this act,Competition Commission of India (CCI) was established to prevent activities which have an adverseeffect of competition in India

Objectives of the Competition Act 2002; to protect the interests of the consumers by providing them good products and services at

reasonable prices.

to promote healthy competition in the Indian market.

to promote the interests of the smaller companies or prevent the abuse of dominant positionin the market.

to prevent those practices which have adverse impact on competition in the Indian markets.

to ensure freedom of trade in Indian markets.

to regulate the operation and activities of combinations like acquisitions, mergers andamalgamation.

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6.2.1. SALIENT FEATURES OF COMPETITION ACT-2002

Anti-Competitive AgreementsEnterprises, persons or associations of enterprises or persons, including cartels, shall not enter intoagreements in respect of production, supply, distribution, storage, acquisition or control of goods orprovision of services, which cause or are likely to cause an ”appreciable adverse impact” on competitionin India. Such agreements would consequently be considered void. The following aspects ofagreements can be considered anti - competitive; directly or indirectly determine sale or purchase prices,

limit or control production, supply, markets, technical development, investment or provision ofservices,

share the market or source of production or provision of services by allocation of inter aliageographical area of market, nature of goods or number of customers or any other similar way,

directly or indirectly result in bid rigging or collusive bidding.

There are two types of agreements. The first one is ‘horizontal agreement’. This type of agreementsrelated to co-operation between two or more competing businesses operating at the same level inthe market. The second one is vertical agreement. These agreements are between firms at differentlevels of the supply chain. For instance, a manufacturer of consumer electronics might have a verticalagreement with a retailer according to which the latter would promote their products in return forlower prices.

Abuse of dominant positionIf an enterprise imposes directly or indirectly unfair or discriminatory conditions in purchase or sale ofgoods or services or restricts production or technical development or create hindrance in entry ofnew operators, it can be considered as abuse of dominanat position. The provisions relating to abuseof dominant position require determination of dominance in the relevant market. Dominant positionenables an enterprise to operate independently or effect competitors by action

CombinationsThe Act is designed to regulate the operation and activities of combinations, a term, which contemplatesacquisition, mergers or amalgamations. Combination that exceeds the threshold limits specified in theAct in terms of assets or turnover, which causes or is likely to cause adverse impact on competitionwithin the relevant market in India, can be scrutinized by the Commission.

Competition Commission of IndiaCompetition Commission of India is a body corporate and independent entity possessing a commonseal with the power to enter into contracts and to sue in its name. It consists of a chairperson, who isto be assisted by a minimum of two, and a maximum of six, other members. It is the duty of theCommission to eliminate practices having adverse effect on competition, promote and sustaincompetition, protect the interests of consumers and ensure freedom of trade in the markets of India.

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The Commission is also required to give opinion on competition issues on a reference received froma statutory authority established under any law and to undertake competition advocacy, create publicawareness and impart training on competition issues. Commission has the power to inquire into unfairagreements or abuse of dominant position or combinations taking place outside India but havingadverse effect on competition in India, if any of the circumstances exists:

an agreement has been executed outside India; any contracting party resides outside India; any enterprise abusing dominant position is outside India; a combination has been established outside India; a party to a combination is located abroad and any other matter or practice or action arising out of such agreement or dominant position or

combination is outside India.

To deal with cross border issues, commission is empowered to enter into any Memorandum ofUnderstanding or arrangement with any foreign agency of any foreign country with the prior approvalof Central Government.

Review of orders of CommissionAny person aggrieved by an order of the Commission can apply to the Commission for review of itsorder within thirty days from the date of the order. Commission may entertain a review applicationafter the expiry of thirty days, if it is satisfied that the applicant was prevented by sufficient cause frompreferring the application in time. No order shall be modified or set aside without giving an opportunityof being heard to the person in whose favour the order is given and the Director General where hewas a party to the proceedings.

AppealAny person aggrieved by any decision or order of the Commission may file an appeal to the SupremeCourt within sixty days from the date of communication of the decision or order of the Commission.No appeal shall lie against any decision or order of the Commission made with the consent of theparties.

PenaltyIf any person fails to comply with the orders Rs. One lakh for each day during which such non-compliance occurs, subject to a maximum of Rs. Ten crore.

If any person does not comply with the orders or directions issued, or fails to pay the fine imposedunder this section, he shall be punishable with imprisonment for a term which will extend to threeyears, or with fine which may extend to Rs. 25 crores or with both.

Section 44 provides that if any person, being a party to a combination makes a statement which isfalse in any material particular or knowing it to be false or omits to state any material particular

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ôdø£åHé 44 Á|üø±s¡+, @ e´øÏÔ nsTTHê, ø±+_H˚wüHé À bÕØº>± ñ+&ç, @<Ó’Hê yÓT°]j·T˝Ÿ˝À ‘·|ü⁄Œ>± Ò<ë @<Ó’HêyÓT°]j·T˝Ÿ>± ù|s=ÿq≈£î+&Ü e~ ÒùdÔ, n˝≤+Ï e´øÏÔ <ëìøÏ u≤<Ûä ‘· eVæ≤+#ê* BìøÏ »]e÷Hê s¡÷. 50 \ø£å\Tø£+fÒ ‘·≈£îÿe ø±≈£î+&Ü >∑]wüº+>± Ç~ s¡÷. ˇø£ ø√Ï es¡≈£î $~Û+#·e#·TÃ.

b˛° #·≥º+ -2002 $<ÛäT\T: $$<Ûä |ü]ÁX¯eT\˝À b˛°ì Á|ü‹≈£L\+>± Á|üuÛ≤$‘·+ #˚ùd |ü<ä∆‘·T\qT ‘=\–+#·&É+ yê´bÕs¡+ Hê´j·T+>± b˛°>± eT]j·TT $q÷‘·ï+>± ñ+&É≤ìøÏ dü÷Œ¤]ÔìdüTÔ+~ $ìjÓ÷>∑<ës¡T\ Á|üjÓ÷»Hê\qT s¡øÏå+#·&ÜìøÏ, $ìjÓ÷>∑<ës¡T\ dü+πøåe÷ìï ô|+#·&É+ yêDÏ»´ ùd«#·Ã¤qT ìsê∆]+#·&É+ Ä]úø£ e~∆øÏ ‘√&ÉŒ&É&É+ #·≥º|üs¡yÓTÆq n~Ûø±s¡+ qT+&ç d”«ø£]+#·ã&çq dü÷#·q˝À b˛° düeTdü \ô|’ n_ÛÁbÕj·÷ìï ‘Ó*j·TCÒj·T&É+ ø±+|æ°wüHé n|”Œ ÒŸ ÁÏãT´q˝Ÿ (%CAT%) @sêŒ≥T #˚j·T&É+ dü\Vü‰ eT]j·TT dü÷#·q Çe«&É+

6.2.2. MRTP #·≥º+ 1969 Vs b˛° #·≥º+ 2002@ø£kÕ«e÷´\ ìj·T+Á‘·D #·≥º+ 1969 Á|üdüTÔ‘·+ yê&ÉTø£ À Ò<äT. MRTP #·≥º+ s¡÷ .100 ø√≥T¢ ô|’ã&ç ñqïø£+ô|˙\ $düÔs¡DqT ìs√~ÛdüTÔ+~, á ø£+ô|˙\T ‘·eT yê´bÕsêìï $düÔ]+#·&ÜìøÏ Á|üuÛÑT‘·« nqTeT‹ rdüTø√yê*.eT]j·TT MÏ <äwæºì >∑T‘êÔ~Û|ü‘· + qT+&ç b˛°øÏ eT[¢+#ê*‡q nedüs¡+ ñ+~. n+<äTe\¢, uÛ≤s¡‘· e÷¬sÿÀ¢ b˛°ìrdüT≈£îsêe&ÜìøÏ ˇø£ ø=‘·Ô #·≥º+ s¡÷bı+~+#·ã&ç+~ eT]j·TT »qe] 14, 2003 q ¬>õŸ Ä|òt Ç+&çj·÷˝ÀÁ|ü#·T]+#·ã&ç+~.

e.dü+ MRTP #·≥º+ 1969 b˛° #·≥º+ 20021. MRTP #·≥º+, uÛ≤s¡‘·<˚X¯+˝À #˚dæq yÓTT<äÏ b˛° #·≥º+ Ä]úø£ e´edüú À b˛°ì

b˛° #·≥º+, Ç~ nHê´j·TyÓTÆq yêDÏ»´ Áb˛‘·‡Væ≤+#·&ÜìøÏ eT]j·TT ø=qkÕ–+#·&ÜìøÏ|ü<ä∆‘·T\≈£î dü+ã+~Û+∫q ìj·Te÷\T eT]j·TT yê´bÕs¡ ùd«#·Ã¤qT ìsê∆]+#·&ÜìøÏ neT\TeT]j·TT ìã+<Ûäq\qT ø£*– ñ+≥T+~. #˚j·Tã&ç+~.

2 Ç~ dü+düÿs¡D\≈£î eTT+<äT <äcÕº+‘·+ô|’ Ç~ dü+düÿs¡D\ nq+‘·s¡ <äcÕº+‘·+ô|’Ä<Ûës¡|ü&ç ñ+≥T+~ Ä<Ûës¡|ü&ç ñ+≥T+~.

3 á #·≥º+ jÓTTø£ÿ \ø£å + >∑T‘êÔ~Û|ü‘ê´\ á #·≥º+ jÓTTø£ÿ \ø£å + b˛°øÏ Á|ü‹≈£L\ìj·T+Á‘·D, >∑T‘êÔ~Û|ü‘· eT]j·TT ìs√<Ûäø£ Á|üuÛ≤yê\qT ø£*– ñqï |ü<ä∆‘·T\qT ìs√~Û+#·&É+.Ä]úø£ X¯øÏÔì πø+ÁBø£]+#·&Üìï ìs√~Û+#·&É+. b˛°ì Áb˛‘·‡Væ≤+#·&É+ eT]j·TT ì\u…≥Tºø√e&É+

e÷¬sÿŸ düú\+˝À $ìjÓ÷>∑<ës¡T\ Ädü≈£îÔ\TeT]j·TT yêDÏ»´ ùd«#·Ã¤qT ìsê∆]+#·&É+.

4 dü+düú |ü]e÷D+ <ë«sê ìs¡ísTT+#·ã&ÉT‘·T+~. dü+düú jÓTTø£ÿ ìsêàD+ <ë«sê ìs¡ísTT+#·ã&ÉT‘·T+~.5 Ç~ düVü≤» Hê´j·T dü÷Á‘êìøÏ $s¡T<ä∆yÓTÆq Ç~ 4 H˚sê\qT e÷Á‘·y˚T >∑T]ÔdüTÔ+~, Ç$ düVü≤»

14 H˚sê\qT C≤_‘ê #˚düTÔ+~. Hê´j·T+ dü÷Á‘êìøÏ $s¡T<ä∆+>± |ü]>∑DÏ+#·ã&É‘êsTT. 6 MRTP ø£$TwüHé≈£î ªªø√]ø£μμ Ä<˚XÊ\T b˛° #·≥º+ n≥Te+Ï yêÏì ìs√~Û+#·&ÜìøÏ

eT]j·TT ªªì*|æy˚‘·μμ e÷Á‘·y˚T bÕdt #˚ùd eT]j·TT •øÏå+#·&ÜìøÏ ˇø£ Äs¡¶sY bÕdt #˚j·Te#·TÃn~Ûø±s¡+ ñ+~.

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knowing it to be material, such person shall be liable to a penalty which shall not be less than Rs. 50lakhs but which may extend to Rs. One crore.

Functions of the Competition Act-2002: to eliminate practices that adversely affect competition in different industries to inspire business to be fair, competition and innovative to protect interests of consumers ; enhance consumer welfare to ensure freedom of trade to support economic growth to give opinion on competition issues in a reference received from statutory authority to setup Competition Appellate Tribunal(CAT)

6.2.2. MRTP Act -1969 Vs COMPETITION Act-2002

The Monopoly and Restrictive Trade Practice Act 1969 became obsolete in the present world of cut- throat competition. The MRTP Act prevents the expansion of the companies whose assetswere Rs.100 crore, because these companies need to take government permission to expand theirbusiness. So, there was a desperate need to shift our focus from the monopoly to the competition.Hence, a new law has been enacted and published in the gazette of India on 14 January, 2003 forbringing competition in the Indian market.

S.No MRTP Act, 1969 Competition Act - 20021. MRTP Act, is the first competition law Competition Act, is implemented to promote

made in India, which covers rules and and keep up competition in the economyregulations relating to unfair trade practices.and ensure freedom of business.

2 It is based on the pre-reforms scenario. It is based on the post-reforms scenario.3 The objective of the Act is to prevent The objective of the Act is to prevent

concentration of economic power practices having adverse effect oncompetition to control monopolies, prevent and to promote as well as sustain themonopolistic and restrictive trade competition to protect consumer interests atpractices. market place and ensuring freedom of trade.

4 Determined by firm’s size. 4 Determined by firm’s structure.5 It lists out 14 offences, which are against It recognizes only 4 offences, which

the principle of natural justice. are deemed to be against the principleofnatural justice.

6 MRTP Commission has the power to pass The Competition Act can pass an orderonly “Cease” and”Desist” orders. to prevent and punish such of thoseactivities,

which abuses competition.7 No penalty for offense Offenses are penalized

8 The MRTP Act did not provide for the The Competition Act provides competitionformation of fund for its activities. fund for promotion of competition advocacy

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7 H˚sê\≈£î m≥Te+Ï »]e÷Hê $~Û+#·ã&É<äT H˚sê\≈£î »]e÷Hê $~Û+#·>∑\<äT8 MRTP #·≥º+ <ëì ø±s¡ ø£ ≤bÕ\≈£î b˛° #·≥º+ ø±+|æ°wüHé n&=«πød”ì Áb˛‘·‡Væ≤+#·&ÜìøÏ

ì<ÛäT\ n+~+#· Ò<äT. eT]j·TT <ëì ìj·Te÷\˝À ìπs›•+∫q $<Ûä+>±b˛° n+XÊ\ô|’ ne>±Vü≤q ø£*Œ+#·&ÜìøÏ eT]j·TT•ø£åD ø√dü+ b˛° ì~Ûì n+~düTÔ+~.

9 Ä~Û|ü‘· kÕúq+ jÓTTø£ÿ dæú‹ì ø£*– ñqï Ä~Û|ü‘· kÕúq+ jÓTTø£ÿ dæú‹ì ø£*– ñqï dü+düúdü+düú ≈£L&Ü #Ó&É¶~>± |ü]>∑DÏ+#· ã&ÉT‘·T+~. #Ó&É¶~>± |ü]>∑DÏ+#·ã&É<äT. $ìjÓ÷>∑<ës¡T\

Á|üjÓ÷»Hê\qT Á|üuÛ≤$‘·+ #˚ùd Ä~Û|ü‘· kÕúq+<äT]«ìjÓ÷>∑+ nHÓ’‹ø£yÓTÆq~>± |ü]>∑DÏ+#· ã&ÉT‘·T+~.

10 MRTP ø£$TwüHé #ÛÓ’s¡àHéqT πø+Á<ä Á|üuÛÑT‘·«+ ø£MTwüHé #ÛÓ’s¡àHé qT |ü<äM $s¡eTD #˚dæq Hê´j·Tìj·T$TdüTÔ+~. ì|ü⁄DT\T, $$<Ûä s¡+>±\˝À e‹Ô HÓ’|ü⁄D´+ ø£*–q

e´øÏÔ, yêDÏ»´+, |ü]ÁX¯eT, ô|ò’HêHé‡ s¡+>±\˝Àì|ü⁄DT …’q düuÛÑT´\‘√ ≈£L&çq ‘√ ≈£L&çq ø£$T°ìj·T$TdüTÔ+~.

6.3. ø√X¯ $<Ûëq+|òædüÿ˝Ÿ nH˚ |ü<ä+ |ü_¢ø˘ Ò<ë ùdºŸ Áf…»Ø Ò<ë Á|üuÛÑT‘·« ì<ÛäT\T nH˚ ns¡ú+ e#˚Ã ª|òædtÿμ nH˚ |ü<ä+ qT+&çrdüTø√ã&ç+~. ø√X¯ $<Ûëq+ nH˚~ ˇø£ <˚X¯+ jÓTTø£ÿ Ä]úø£ eédüúqT |üs¡ y˚øÏå+#·&ÜìøÏ eT]j·TT Á|üuÛ≤$‘·+#˚j·T&ÜìøÏ Á|üuÛÑT‘·«+ <ëì Ks¡TÃ kÕúsTT\T eT]j·TT |üqTï πs≥¢qT düs¡T›u≤≥T #˚ùd kÕ<Ûäq+. ø√X¯ $<Ûëq+ Á<äe´$<ÛëHêìøÏ <ä>∑Z] dü+ã+<Ûä+ eT]j·TT |üs¡düŒs¡ Ä<Ûë]‘·yÓTÆq~. Bì <ë«sê ôd+Á≥˝Ÿ u≤´+ø˘ ø£ <˚X¯+ jÓTTø£ÿ Á<äe´düs¡|òüsêqT Á|üuÛ≤$‘·+ #˚düTÔ+~. ø√X¯$<Ûëq+ nH˚ |ü<ä+ m≈£îÿe>± Á_Ïwt Ä]úø£y˚‘·Ô C≤Hé y˚THêsY¶ ø°Hé‡ (1883-1946) Ä˝À#·q\ Ä<Ûës¡+>± Á|ü#ês¡+ #j·Tã&ç+~. ø√X$<Ûëq+ nH~ Á|üuÛÑT‘·«+ Äs¡®q ø£+fÒ m≈£îÿe Ò<ë ‘·≈£îÿeKs¡TÃ #˚j·÷˝À yÓTT<ä\>∑T ìs¡íj·÷\≈£î dü+ã+~Û+∫q~.

ªªø√X¯ $<Ûëq+μμ nH˚~ yê´bÕsê\ qT+&ç ñ‘·Œ‘·TÔ\T eT]j·TT ùde\qT ø=qT>√\T #˚j·T&É+ eT]j·TT Á|ü»\ qT+&ç|üqTï\T edü÷\T #j·T&É+ <ë«sê Ä]úø£ eédüúqT Á|üuÛ≤$‘·+ #j·T&ÜìøÏ Á|üuÛÑT‘·«+ rdüT≈£îH #·s¡ \qT $e]+#·&ÜìøÏñ|üjÓ÷–+#˚ |ü<ä+. Ç~ Á<äe´+ m˝≤ ñ|üjÓ÷–+#·ã&ÉT‘·T+<äH˚ ìs¡íj·÷\ yÓqTø£ ñqï Ä]úø£ ñ<›XÊìï ≈£L&Üdü÷∫düTÔ+~. Á|üuÛÑT‘·«+ nedüs¡+ nqT≈£î+fÒ Ä]úø£ eédüúqT ô|+#·&ÜìøÏ Ks¡TÃ ô|+#·&É+ Ò<ë |üqTï\T ‘·–Z+#·&É+‘·<ë«sê ñ<√´>±\T, Ä<ëj·T+ eT]j·TT kÕe÷õø£ ø±s¡ Áø£e÷\qT düwæº+#˚ eTÚ*ø£ dü<äTbÕj·÷\ ÁbÕC…≈£îº\ô|’Ks¡TÃ #˚j·T&É+ yÓTT<ä …’qe˙ï ø√X¯ $<Ûëq+˝À uÛ≤>± Ò.

Ä]úø£ eédüú u≤>± ñ+fÒ e´j·÷ìï ‘·–Z+#·e#·TÃ eT]j·TT |üqTï\qT ô|+#·e#·TÃ. á düeTj·T+˝À yê´bÕsê\T‘·–q+‘· ñ<√´>±\qT düwæºkÕÔsTT, ‘·<ë«sê n~Ûø±s¡T\T Áô|’yŸ s¡+>∑+ qT+&ç edüTÔe⁄\T eT]j·TT ùde\≈£î Ks¡TÃ #ùdyÓTT‘êÔìï ‘·–Z+#·e#·TÃ.

XÊeT÷´\‡Hé Á|üø±s¡+ ªªÁ<äy√´\“D+ eT]j·TT Á|ü‹ Á<äy√´\“D+ Ò≈£î+&Ü Ä]úø£ dæús¡‘ê«ìï kÕ~Û+#·&ÜìøÏ Ä<ëj·÷\qTùdø£]+#·&É+ eT]j·TT Ks¡TÃ #j·T&ÜìøÏ Á|üuÛÑT‘·«+ nqTdü]+# nìï ø±s¡ ø£ ≤bÕ\≈£î dü+ã+~Û+∫q< ø√X $<Ûëq+μμ

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and creation of awareness about competitiveissues and training as may be prescribed inits rules.

9 Entity having status of dominant position is 9 Entity having status of dominant position isitself considered as bad. not considered as bad. Whereas abuse

of dominant position affecting consumerinterest is considered as immoral.

10 The Chairman of MRTP commission was 10 The chairman of the commission willappointed by Central Government. be appointed by a committee consisting of

retired judiciary, person having professionalexpertise in various fields oftrade commerce,industry, finance and the like.

6.3. FISCAL POLICY

The word fiscal has been derived from the word ‘fisk’ which means public or state treasury orGovernment funds. Fiscal policy is the means by which a government adjusts its spending levels andtax rates to monitor and influence a Nation’s economy. It is closely related and interdependent tomonetary policy through which a central bank influences a nation’s money supply. The word Fiscalpolicy is largely propagated based on the ideas of British economist John Maynard Keynes (1883-1946).Fiscal policy relates to decisions that determine whether and where a government will spend more or lessthan it receives.

“Fiscal policy” is the term used to describe the actions of a government taken to influence an economyby purchasing products and services from businesses and collecting taxes. It also refers to the economicintent behind the decisions for how the money is used. Governments lower taxes and raise spending toboost the economy if needed; typically, they spend on infrastructure projects that create jobs andincome and social programmes. If the economy is doing well, it can reduce spending and increasetaxes. Businesses create enough jobs at these times so officials can reduce the amount spent on goodsand services from the private sector.

According to Samuelsson “Fiscal Policy concerned with all those activities which are adopted by theGovernment to the collect revenues and make the expenditure so that economic stability could beattained without inflation and deflation”

6.3.1. OBJECTIVES OF FISCAL POLICY

General objectives of fiscal policy: to maintain and achieve full employment in the country; to stabilize the general price level in the economy; to stabilize the growth rate of the economy; to maintain equilibrium in the Balance of Payments and to promote the economic development of a country.

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6.3.1. ø√X¯ $<Ûëq+ jÓTTø£ÿ \øå±´\Tø√X¯ $<Ûëq+ jÓTTø£ÿ kÕ<Ûës¡D \øå±´\T: <˚X¯+˝À |üP]Ô ñbÕ~Ûì kÕ~Û+#·&ÜìøÏ eT]j·TT ø=qkÕ–+#·&ÜìøÏ Ä]úø£ eédüú À kÕ<Ûës¡D <Ûäs¡ kÕúsTTì dæúØø£]+#·&ÜìøÏ; Ä]úø£ eédüú e~∆ πs≥TqT dæúØø£]+#·&ÜìøÏ; #Ó*¢+|ü⁄\ X‚wü+ À düeT‘Í\´‘·qT ìs¡«Væ≤+#·&ÜìøÏ eT]j·TT ˇø£ <˚X¯ Ä]úø±_Ûe~∆ì Áb˛‘·‡Væ≤+#·&ÜìøÏ.

ø√X¯ $<Ûëq+ jÓTTø£ÿ ì]›wüº \øå±´\T:uÛ≤s¡‘·<˚X¯ Ä]úø£ $<Ûëq+ m\¢|ü⁄Œ&É÷ ¬s+&ÉT \øå±´\qT ø£*– ñ+≥T+~, n$ Ä]úø£ eédüú e~∆ |üìrs¡TqTyÓTs¡T>∑T|üs¡#·&É+ eT]j·TT Á|ü»\≈£î kÕe÷õø£ Hê´j·T+ n+~+#·&É+. n+<äTe\¢, ø√X¯ $<Ûëq+ ÁøÏ+~ ì]›wüº\øå±´\‘√ s¡÷bı+~+#·ã&ç+~:

eqs¡T\ düeTs¡úe+‘·yÓTÆq düMTø£s¡D <ë«sê n_Ûe~∆:ø√X¯ $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£å + y˚>∑e+‘·yÓTÆq Ä]úø£ e~∆ eT]j·TT n_Ûe~∆ì kÕ~Û+#·&É+. á \ø£å + Ä]úø£eqs¡T\ düMTø£s¡D <ë«sê kÕ~Û+#·e#·TÃ. uÛ≤s¡‘·<X+˝Àì πø+Á<ä eT]j·TT sêÁwüº Á|üuÛÑT‘ê«\T eqs¡T\qT düMTø£]+#·&ÜìøÏø√X¯$<ÛëHêìï ñ|üjÓ÷–kÕÔsTT. |üqTï\T, |ü_¢ø˘ bı<äT|ü⁄ eT]j·TT Áô|’y˚Ÿ bı<äT|ü⁄ <ë«sê Ä]úø£ eqs¡T\qTdüMTø£]+#·e#·TÃ.

ndüe÷q‘·\qT ‘·–Z+#·&É+:ø√X¯$<Ûëq+ düe÷»+˝Àì $$<Ûä esêZ\ eT<Ûä Ä<ëj·T ndüe÷q‘·\qT ‘·–Z+#·&É+ <ë«sê kÕe÷õø£ Hê´j·÷ìïkÕ~Û+#·&É+ \ø£å +>± ô|≥Tº≈£î+~. ‘·≈£îÿe Ä<ëj·T esêZ\‘√ b˛*ùdÔ <Ûäqe+‘·T\ô|’ Ä<ëj·T|ü⁄ |üqTï e+Ï Á|ü‘· ø£å|üqTï\T m≈£îÿe>± edü÷\T #˚j·T&É+, ôdMT \>∑®Ø eT]j·TT \>∑®Ø edüTÔe⁄\ $wüj·T+˝À ≈£L&Ü |üs√ø£å |üqTï\Tm≈£îÿe>± edü÷\T #˚kÕÔs¡T. MÏì m>∑Te eT<Ûä ‘·s¡>∑‹ eT]j·TT ñqï‘· ‘·s¡>∑‹ Á|ü»\T m≈£îÿe>± $ìjÓ÷–kÕÔs¡T.düe÷»+˝Àì ù|<ä Á|ü»\ |ü]dæú‘·T\qT yÓTs¡T>∑T|ü]#˚+<äT≈£î Á|üuÛÑT‘·«+ ‘·q |üqTï Ä<ëj·T+˝À >∑D˙j·TyÓTÆquÛ≤>±ìï ù|<ä]ø£ ìs¡÷à\q ø±s¡ Áø£e÷\ neT\T˝À ô|≥Tºã&ç ô|&ÉT‘·T+~.

<Ûäs¡\ dæús¡‘·«+ eT]j·TT Á<äy√´\“D ìj·T+Á‘·D:Á<äy√´\“D≤ìï ìj·T+Á‹+#·&É+ eT]j·TT <Ûäs¡qT dæúØø£]+#·&É+ ø√X¯ $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \øå±´\˝À ˇø£Ï.n+<äTe\¢, ø√X¯ ˝À≥TqT ‘·–Z+#·&É+, |üqTï bı<äT|ü⁄ |ü<∏äø±\qT Á|üy˚X¯ô|≥º&É+ ‘·<ë«sê Ä]úø£ eqs¡T\ ñ‘êŒ<äø£$ìjÓ÷>∑+ <ë«sê Á<äy√´\“D≤ìï ìj·T+Á‹+#·&É+ Á|üuÛÑT‘·«+ m\¢|ü⁄Œ&É÷ \ø£å +>± ô|≥Tº≈£î+~.

ñbÕ~Û ø£\Œq:düeTs¡úe+‘·yÓTÆq Ä]úø£ #·s¡ \ <ë«sê <˚X¯+˝À ñbÕ~Ûì ô|+#·&ÜìøÏ Á|üuÛÑT‘·«+ nìï Á|üj·T‘êï\T #˚k Ô+~. eTÚ*ø£dü<äTbÕj·÷\˝À ô|≥Tºã&ÉT\T ô|≥º&É+ e\q Á|ü‘· ø£å+>± eT]j·TT |üs√ø£å+>± ñbÕ~Û \_ÛdüTÔ+~. ∫qï ‘·s¡Vü‰bÕ]ÁXÊ$Tø£ j·T÷ì≥¢ô|’ ‘·≈£îÿe |üqTï\T eT]j·TT düT+ø±\T m≈£îÿe ô|≥Tºã&çì Áb˛‘·‡Væ≤kÕÔsTT eT]j·TT ‘·‘·Œ¤*‘·+>±m≈£îÿe ñbÕ~Ûì düwæºkÕÔsTT. Á>±MTD ÁbÕ+‘ê˝À¢ì düeTdü \qT |ü]wüÿ]+#·&ÜìøÏ uÛ≤s¡‘· Á|üuÛÑT‘·«+ $$<Ûä Á>±MTDñbÕ~Û ø±s¡ Áø£e÷\qT #˚|üÏº+~. n<˚$<Ûä+>±, |ü≥ºD ÁbÕ+‘ê˝À¢ kÕ+πø‹ø£+>± ns¡Ω‘· ñqï e´≈£îÔ\≈£î ñbÕ~Û

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Specific objectives of fiscal policy:Fiscal policy of India always has two objectives, namely improving the growth performance of theeconomy and ensuring social justice to the people. Hence, the fiscal policy is designed with followingobjectives:

Development through effective Mobilisation of Resources: The principal objective of fiscalpolicy is to ensure rapid economic growth and development. This objective of economic growth anddevelopment can be achieved by Mobilisation of Financial Resources. The central and stategovernments in India have used fiscal policy to mobilise resources. The financial resources can bemobilised through taxation, public savings and private savings.

Reduction in inequalities : Fiscal policy aims at achieving equity or social justice by reducingincome inequalities among different sections of the society. The direct taxes such as income tax arecharged more on the rich people as compared to lower income groups. Indirect taxes are also morein the case of semi-luxury and luxury items which are mostly consumed by the upper middle class andthe upper class. The government invests a significant proportion of its tax revenue in the implementationof Poverty Alleviation Programmes to improve the conditions of poor people in society.

Price Stability and Control of Inflation: One of the main objectives of fiscal policy is to controlinflation and stabilize price. Therefore, the government always aims at control the inflation by reducingfiscal deficits, introducing tax savings schemes and thereby productive use of financial resources.

Employment Generation: The government is making every possible effort to increase employmentin the country through effective fiscal measures. Investment in infrastructure has resulted in direct andindirect employment. Lower taxes and duties on Small-Scale Industrial (SSI) units encourage moreinvestment and consequently generate more employment. Various rural employment programmeshave been undertaken by the Government of India to solve problems in rural areas. Similarly, selfemployment scheme is taken to provide employment to technically qualified persons in the urbanareas.

Balanced Regional Development: There are various projects like building up dams on rivers,electricity, schools, roads, industrial projects etc run by the government to mitigate the regionalimbalances in the country. This is done with the help of public expenditure.

Reducing the Deficit in the Balance of Payment: Some time government gives export incentivesto the exporters to boost up the export from the country. In the same way import curbing measuresare also adopted to check import. Hence the combine impact of these measures is improvement inthe balance of payment of the country.

Increases National Income: It’s the strength of the fiscal policy that brings out the desired resultsin the economy. When the government wants to increase the income of the country then it increasesthe direct and indirect taxes rates in the country. There are some other measures like reduction in taxrate so that more people get motivated to pay actual tax.

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Development of Infrastructure: When the Government of the concerned country spends moneyon the projects like railways, schools, dams, electricity, roads etc to increase the welfare of thecitizens, it improves the infrastructure of the country. An improved infrastructure is the key to furtherspeed up the economic growth of the country. Foreign Exchange Earnings: When the Central Government of the country gives incentives like,exemption in custom duty, concession in excise duty while producing things in the domestic markets,it motivates the foreign investors to increase the investment in the domestic country.

6.3.2. LIMITATIONS OF FISCAL POLICYAlthough fiscal policy gained prominence during depressions and economic stability of a country, yetits practical application has a number of problems or limitations.

Policy Lags:There is generally some intervals between the time when a particular action is needed and the timewhen the fiscal measure is being performed. The duration of this interval determines the extent towhich a specific fiscal measure can be effective. There are three types of lags viz. recognition lag,administrative lag and operational lag. These lags may not help in reach the targets and objectives.

Forecasting:Another most serious limitation of fiscal policy is the practical difficulty of observing the comingevents of economic instability. Unless, it is rightly observed that the amount of revenue to be raised,the amount of expenditure to be incurred or the nature and extent of budget balance to be framedcannot be suitably planned. In fact, success of fiscal measures depends on the accurate predictions ofvarious economic activities. In its absence, it proves to be a little bit erratic.

Correct size and nature of Fiscal Policy:The most important necessity on which the success of fiscal policy will depend is the ability of publicauthority to frame the correct size and nature of fiscal policy on the one hand and to foresee thecorrect timing of its application on the other. It is, however, too much to expect that the governmentwould be able to correctly determine the size, nature of composition and appropriate execution-timeof fiscal policy.

Adverse effect on redistribution of income: It is felt that fiscal policy measures redistribute income, the actual effect will be uncertain. If incomeis redistributed in favour of the low-income classes whose marginal tendency to consume is high, theeffect will be increase in total demand. But the fiscal action will be contraction if larger part of theadditional income goes to people having higher marginal propensity to save.

Self-offsetting effect: The compensatory fiscal policies of the Government may discourage private investment, since theprivate entrepreneurs have to face a competition from public enterprises in securing labour, raw

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materials and finances. Moreover, increased involvement of the government in economic activity atthe onset of recession strengthens the pessimistic expectations of the private entrepreneurs. Theexpansion of public spending may be associated with a restriction of private spending. Consequently,the fiscal measures may be self-offsetting.

Reduction in National Income:Balanced budget multiplier as a fiscal weapon can be gainfully applied during depression is conditionedby the fact of marginal propensity to spend of the recipients of public expenditure being larger than or,at least, equal to that of the taxpayers. In case, it becomes smaller than the taxpayers, the fiscalprogrammes under balanced budget will bring about reduction in the National Income.

Solution for Unemployment: The purpose of fiscal policy will be defeated if the policy can not maintain a rising supply level ofwork effort. The money National Income will rise with increase in productive efficiency and increasedsupply of work effort. But, if the tax measures are stringent and too high, they will certainly affect theincentive to work. This is an important limitation of fiscal policy.

Adverse effect on debt management: The use of fiscal instruments during unemployment and depression is often associated with thesubsequent problem of debt management. Because deficit budgeting is the normal fiscal cure, publicdebt is made for financing it. And if the process of recovery from depression is long, the creation ofbudget deficit year after year will create a huge problem of debt repayment and debt management.

6.3.3. TYPES OF FISCAL POLICYThere are three types of the Fiscal Policies viz. neutral, expansionary and contractionary.Neutral Fiscal PolicyA neutral fiscal policy means that total government spending is fully funded by the tax revenue. Thegovernment takes a neutral fiscal policy stance when the economy is in a state of equilibrium.

Expansionary Fiscal PolicyAn expansionary fiscal policy means that the government spending is more than taxrevenue. Government needs to spend more than its revenue during the time of recessions. This isbecause recession occurs when there is a general slowdown in economic activity. Governmentsusually respond to recessions by adopting expansionary fiscal policies, such as increasing moneysupply, increasing government spending and decreasing taxation. When the tax is decreased, there ismore money left with people and they can spend more.

Contractionary fiscal policyContractionary fiscal policy occurs when government spending is lower than tax revenue. When thetax revenue of the government is more, the excess money can be used to pay the government debt.It is generally adopted to control the inflation in an economy. When Government spends less onwelfare activities and increases taxation, less money will be left with the people to spend, and this willreult in reduction of demand which will cut down inflation.

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6.3.4. COMPONENTS OF FISCAL POLICYFour key components of Fiscal Policy are as follows:

Taxation Policy – The Government gets its revenue by imposing taxes both direct and indirect.It is very important for the Government to follow a judicious taxation policy and impose correcttax rates because of following two reasons – higher taxes will cause a reduction in the purchasingpower of the people leading to decrease in production and investment and lower taxes willleave more money with the general public leading to high spending levels and thus high inflation.

Expenditure Policy – Government Expenditure includes revenue expenditure and capitalexpenditure. The government budget is the most important instrument embodying theexpenditure policy of the government. The budget is also used for deficit financing i.e.filling thegap between Government spending and income.

Investment & Disinvestment Policy – Optimum levels of domestic as well as a foreigninvestment are needed to maintain economic growth. Decisions has to which sectors shouldbe made open for private investment, foreign investment forms an important part of FiscalPolicy. Governments can raise money through disinvestment of public sector units moreover,the efficiency of those units can be enhanced through strategic disinvestment.

Debt and Surplus Management – If the Government received more than it spends, it iscalled a surplus. If the Government spends more than income, then it is called a deficit. To fundthe deficit, the Government has to borrow from domestic or foreign sources. It can also printmoney for deficit financing. These decisions of the Government, whether to go for deficitfinancing or not and the manner of the deficit financing can have long term effect on the economy.

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Fig: 6.1

ô|≥Tºã&ÉT\ $<Ûëq+ :Ä]úø£ e~∆ì ø=qkÕ–+#·&ÜìøÏ <˚oj·T eT]j·TT $<˚o ô|≥Tºã&ÉT\qT ø=qkÕ–+#·&É+ nedüs¡+.

n|ü⁄Œ eT]j·TT $T>∑T\T ìs¡«Vü≤D:Á|üuÛÑT‘·«+ Ks¡TÃ #˚ùd <ëìø£+fÒ m≈£îÿe sêã&ç eùdÔ <ëìì $T>∑T\T n+≤s¡T. Á|üuÛÑT‘·«+ Ä<ëj·T+ ø£+fÒ m≈£îÿeKs¡TÃ #˚ùdÔ <ëìì ˝À≥T n+≤s¡T. ˝À≥TqT rs¡Ã&ÜìøÏ Á|üuÛÑT‘·«+ <oj·T Ò<ë $<˚o eqs¡T\ qT+&ç n|ü⁄ŒrdüTø√yê*‡ ñ+≥T+~. n+‘˚ ø±ø£ ˝À≥T ô|ò’Hêì‡+>¥ ø√dü+ ø£¬s˙‡ ≈£L&Ü eTTÁ~+#·e#·TÃ.

6.4. Á<äe´ $<Ûëq+Á<äe´ $<Ûëq+ uÛ≤s¡rj·T ]»sY« u≤´+ø˘ <ë«sê s¡÷bı+~+#·ã&ç neT\T #˚j·Tã&ÉT‘·T+~ eT]j·TTìj·T+Á‹+#·ã&ÉT‘·T+~. Á<äe´ $<Ûëq+ nH~ nedüs¡yÓTÆq ø£¬s˙‡ì eTTÁ~+#·&É+, Á<äe´ düs¡|òüsê À e÷s¡TŒ, e&û¶πs≥T¢ e÷s¡Ã&É+ eT]j·TT n<äq|ü⁄ ì\«\qT ‘=\–+#·&É+ <ë«sê Á<äe´ düs¡|òüsêqT ìj·T+Á‘·D #˚j·T&É+ Ç+<äT˝Àìu≤>± Ò . á Á<äe´ $<Ûëq+˝À ]»s¡T« u≤+≈£î <ë«sê Á<äe´ düs¡|òüsê, e&û¶ πs≥¢ ìs¡«Vü≤D eT]j·TT ìj·T+Á‘·D#˚j·Tã&É‘êsTT. ˇø£ <˚X¯ Ä]úø£ e´edüú À Á<äe´ düs¡|òüsêqT ìs¡«Væ≤+#·&ÜìøÏ πø+Á<ä u≤´+≈£î\T Á<äe´ $<ÛëHêìï ñ|üjÓ÷–kÕÔsTT. Á<äe´ $<Ûëq+ düVü‰j·T+‘√, ˇø£ πø+Á<ä u≤´+ø˘ e&û¶ πs≥T¢ eT]j·TT s¡TD kÕúsTT\ düVü‰j·T+‘√<˚X¯+˝À ø£¬s˙‡ kÕúsTT\qT ìs¡«Væ≤düTÔ+~.

6.4.1. Á<äe´ $<Ûëq+ jÓTTø£ÿ s¡ø±\TÁ<äe´ $<Ûëq+˝À ¬s+&ÉT s¡ø±\T ñHêïsTT. ˇø£Ï ø£]ƒq Á<äe´ $<Ûëq+ eT]j·TT eTs=ø£Ï düs¡fi¯ Á<äe´ $<Ûëq+.

ø£]ƒq Á<äe´ $<Ûëq+ :ø£]ƒqyÓTÆq Á<äe´ $<Ûëq+ Á<äe´ düs¡|òüsêqT ìs¡T‘ê‡Vü≤|üs¡TdüTÔ+~. Á<äy√´\“D+ düeTj·T+˝À á $<Ûëq+ <˚XÊìøÏdüVü‰j·T|ü&ÉT‘·T+~. ]»s¡T« u≤+≈£î ‘·q |ü]~˝Àì yêDÏ»´ u≤´+≈£î\≈£î s¡TD dü<äTbÕj·÷\ô|’ e&û¶ πs≥¢qT ô|+#·T‘·T+~eT]j·TT Á|ü‹>± yêDÏ»´ u≤´+≈£î\T ‘·eT U≤‘ê<ës¡T\≈£î Á¬ø&çŸ\ô|’ n~Ûø£ e&û¶ πs≥¢qT $~ÛkÕÔsTT. n+‹eT+>±Á|ü»\T u≤´+≈£î\ qT+&ç s¡TD≤\T rdüTø√&ÜìøÏ ÄdüøÏÔ #·÷|üs¡T. n~Ûø£ e&û¶ πs≥¢ ø±s¡D+>± ]»s¡T« u≤+≈£î qT+&çyêDÏ»´ u≤´+≈£î\≈£î eT]j·TT yêDÏ»´ u≤´+≈£î\ qT+&ç Á|ü»\≈£î q>∑<äT düs¡|òüsê Áø£eT+>± ì*|æy˚j·Tã&ÉT‘·T+~.

düs¡fi Á<äe´ $<Ûëq+:düs¡fi¯ Á<äe´ $<Ûëq+ Á<äe´ düs¡|òüsêqT Áb˛‘·‡Væ≤düTÔ+~. Á<äy√´\“D+ eT]j·TT Ä]úø£ e÷+<ä + düeTj·T+˝À á$<Ûëq+ <˚XÊìøÏ düVü‰j·T|ü&ÉT‘·T+~. á bÕ\d” À ]»s¡T« u≤+≈£î ‘·q yêDÏ»´ u≤´+≈£î\≈£î e&û¶ πs≥T¢ ‘·–Z+#·&É+<ë«sê Á<äe´ düs¡|òüsêqT yÓTs¡T>∑T|üs¡#ê\ì eT]j·TT yêDÏ»´ u≤´+≈£î\T $ìjÓ÷>∑<ës¡T\≈£î s¡TD≤\ô|’ e&û¶ πs≥¢qT‘·–Z+#ê\ì ø√s¡T≈£î+≥T+~. u≤´+≈£î\ qT+&ç s¡TD≤\T rdüTø√e&ÜìøÏ Á|ü»\T ÄdüøÏÔ #·÷|ü⁄‘ês¡T Áø£eT+>± Á<äe´Á|üyêVü≤+ ô|s¡T>∑T‘·T+~.

6.4.2. Á<äe´ $<Ûëq+ eT]j·TT ø√X¯ $<Ûëq+ eT<Ûä >∑\ ‘˚&Ü\TÁ<äe´ $<Ûëq+ eT]j·TT ø√X¯ $<Ûëq+ nH˚$ <˚X¯ Ä]úø£ ø±s¡ ø£ ≤bÕ\ô|’ Á|üuÛ≤e+ #·÷ù| ¬s+&ÉT $_Ûqï kÕ<ÛäHê\T.Á<äe´ $<ÛëHê\T ø£ <˚X¯+˝Àì πø+Á<ä u≤´+≈£î\ <ë«sê ìs¡ísTT+#·ã&ç ìs¡«Væ≤+#·ã&É‘êsTT . Ç~ Ä]úø£ e´edüú ÀÁ<äe´ düs¡|òüsê eT]j·TT e&û¶ πs≥¢ ìs¡«Vü≤D≈£î dü+ã+~Û+∫q~. ø√X $<Ûëq+ nH~ Á|üuÛÑT‘·«+ Ks¡TÃ #ùd eT]j·TT

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6.4. MONETARY POLICY

Monetary policy is designed, executed and controlled by the Reserve Bank of India. Monetarypolicy includes decision such as control of money supply in the economy by controling interest rates,regulation of financial institutions. Monetary policy consists of the management and control of moneysupply and changing interest rates by RBI. With the help of monetary policy, a Central Bankmanage the currency levels in the country with the help of interest rates and lending levels of credit.

6.4.1. TYPES OF MONETARY POLICYThere are two types of monetary policy. One is tight monetary policy and the other is cheap moneypolicy.

Tight money policyTight monetary policy tends to decrease the money supply. At the time of inflation, this policy willhelp the Nation. RBI enhances the interest rates on lending facilities to commercial banks and in-turn the commercial banks also impose high interest rates to their customers on loans. Ultimately, thepublic are disinterested to borrow money from banks. The money supply from RBI to commercialBanks and Commercial Banks to Public will stop due to high interest rates.

Cheap money policyCheap monetary policy tends to increase the money supply. At the time of deflation and economicdepression, this policy will help the Nation. In this policy RBI wishes to enhance the money supplyby decreasing the interest rates to commercial banks and in-turn commercial banks reduce theinterest rates on loans to customers. The public will show the interest to take loans from banks andautomatically the flow of money will increase.

6.4.2. DIFFERENCES BETWEEN MONETARY POLICY AND FISCAL POLICYMonetary policy and fiscal policy are two different tools that have an impact on the economic activityof a country. Monetary policies are formed and managed by the central banks of a country and sucha policy is concerned with the management of money supply and interest rates in an economy. Fiscalpolicy is related to the way a government is managing the aspects of spending and imposing taxes. Itis the Government’s way of stabilising the economy and helping in the growth of the economy.

Governments can modify the fiscal policy by bringing measures and changes in tax rates to control thefiscal deficit of the economy. Below are certain points of difference between the monetary and fiscalpolicy

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|üqTï\T $~Û+# n+XÊ\qT ìs¡«Væ≤+# $<ÛëHêìøÏ dü+ã+~Û+∫q~. Ç~ Ä]úø£ eédüúqT dæúØø£]+#·&ÜìøÏ eT]j·TTÄ]úø£ eédüú e~∆øÏ düVü‰j·T|ü&ÉT‘·T+~.

Ä]úø£ eédüú jÓTTø£ÿ Á<äe´ ˝À≥TqT ìj·T+Á‹+#·&ÜìøÏ |üqTï πs≥¢ À #·s¡ \T eT]j·TT e÷s¡TŒ\T rdüT≈£îsêe&É+<ë«sê Á|üuÛÑT‘ê«\T ø√X¯ $<ÛëHêìï düe]+#·e#·TÃ. Á<äe´ eT]j·TT ø√X¯ $<ÛëHê\ eT<Ûä e´‘ê´kÕ\T ÁøÏ+~$<Ûä+>± $e]+#·&É+ »]–+~.

eT÷\+ Á<äe´ $<Ûëq+ ø√X¯ $<Ûëq+ìs¡«#·q+ Ç~ Á<äe´ Á|üyêVü≤+ eT]j·TT Ä]úø£ Ç~ Ä]∆ø£ eédüú ˝À πø+Á<ä Á|üuÛÑT‘·«+

eédüú À e&û¶ πs≥¢qT ìj·T+Á‹+#·&É+˝À ñ|üjÓ÷–+#˚ Ä]úø£ kÕ<Ûäq+. Ç+<äT˝Àπø+Á<ä u≤´+≈£î\T ñ|üjÓ÷–+#˚ Ä]úø£ kÕ<Ûäq+ Ä]∆ø£ eédüú jÓTTø£ÿ e~› ø√dü+ |üqTï

Ä<ëj·÷\T eT]j·TT e´j·÷ìøÏdü+ã+~Û+∫q ìs¡«Vü≤D ñ+≤sTT.

ìs¡«Vü≤D πø+Á<ä u≤´+ø˘ Ä]úø£ eT+Á‹‘·« XÊK#·s¡ \T Ç~ Ä]úø£ eédüú À n|ü⁄Œ\T Çe«&ÜìøÏ Ç~ ˇø£ Ä]úø£ eédüú eT÷\<Ûäq e´j·T+

e]Ô+#˚ e&û¶ πs≥¢qT ø=\TdüTÔ+~ eT]j·TT |üqTï\qT ø=\TdüTÔ+~Á|ü<Ûëq \ø£å + Ä]∆ø£ eédüú jÓTTø£ÿ dæús¡‘·«+ Ä]∆ø£ eédüú jÓTTø£ÿ e~›mπø‡Ã¤+CŸ πs≥¢ô|’ n~Ûø£ e&û¶ πs≥T¢ ñqï|ü⁄Œ&ÉT mπø‡Ã¤+CŸ Ç~ mπø‡Ã¤+CŸ πs≥¢ô|’ m˝≤+Ï Á|üuÛ≤e+Á|üuÛ≤e+ πs≥T¢ yÓTs¡T>∑T|ü&É‘êsTT #·÷|ü<äT.

\øå±´\T Á<äe´ $<Ûëq+ Ä]úø£ eédüú À Á<äy√´\“D≤ìï ø√X¯ $<ÛëHêìøÏ ì]›wüº \ø£å´+ ˝Ò<äT\ø£å +>± #˚düT≈£î+≥T+~

Á|üuÛ≤e+ Á<äe´ $<Ûëq+ Ä]úø£ eédüú À s¡TD≤\ô|’ ø√X¯ $<Ûëq+ ã&Ó®Ÿ ˝À≥Tô|’Á|üuÛ≤e+ #·÷|ü⁄‘·T+~ Á|üuÛ≤e+ #·÷|ü⁄‘·T+~.

6.4.3. Á<äe´ $<Ûëq+ - <Û´j·÷\TÁ<äy√´\“D≤ìï ìj·T+Á‹+#·&É+:Á<äe´ $<ÛëHê\T Á<äy√´\“D kÕúsTT\qT \ø£å +>± #˚düTø=+≤sTT. ‘·≈£îÿe kÕúsTT Á<äy√´\“D+ Ä]úø£ eédüú≈£îÄs√>∑ ø£s¡yÓTÆq~>± |ü]>∑DÏ+#·ã&ÉT‘·T+~. Á<äy√´\“D+ m≈£îÿe>± ñ+fÒ, ø£]ƒq Á<äe´ $<Ûëq+ á düeTdü qT|ü]wüÿ]+#·>∑\<äT.

ìs¡T<√´>±ìï ‘·–Z+#·&É+:Á<äe´ $<ÛëHê\T Ä]úø£ eédüú À ìs¡T<√´>∑+ kÕúsTTì Á|üuÛ≤$‘·+ #˚kÕÔsTT. ñ<ëVü≤s¡D≈£î, düs¡fi¯ Á<äe´ $<Ûëq+kÕ<Ûës¡D+>± ìs¡T<√´>±ìï ‘·–ZdüTÔ+~ m+<äTø£+fÒ n~Ûø£ Á<äe´ düs¡|òüsê yê´bÕs¡ ø±s¡ ø£ ≤bÕ\qT Áb˛‘·‡Væ≤düTÔ+~,Ç~ C≤uŸ e÷¬sÿŸ $düÔs¡D≈£î <ë]rdüTÔ+~.

ø£¬s˙‡ e÷]Œ&ç πs≥¢qT ìj·T+Á‹+#·&É+πø+Á<ä u≤+≈£î <ëì Ä]úø£ n~Ûø±sêìï ñ|üjÓ÷–+∫ <˚oj·T eT]j·TT $<˚o ø£¬s˙‡\ eT<Ûä e÷s¡ø£|ü⁄ πs≥¢qTìj·T+Á‹+#·e#·TÃ. ñ<ëVü≤s¡D≈£î ]»s¡T« u≤´+ø eT]+‘· ø£¬s˙‡ì C≤Ø #j·T&É+ <ë«sê Á<äe´ düs¡|òüsêqT ô|+#·e#·TÃ.

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Basis Monetary Policy Fiscal PolicyDefinition It is a financial tool that is used by It is a financial tool that is used by the

the central banks in regulating the flow central government in managing taxof money and the interest rates in an revenues and policies related toeconomy expenditure for the benefit of the

economyManagement Central Bank Ministry of FinanceMeasures It measures the interest rates applicable It measures the capital expenditure

for lending money in the economy and taxes of an economy.Focus Area Stability of an economy Growth of an economyImpact on Exchange rates improve when there is It has no impact on the exchange ratesExchange rates higher interest ratesTargets Monetary policy targets inflation in an Fiscal policy does not have any

economy specific target.Impact Monetary policy has an impact on the Fiscal policy has an impact on the

borrowing in an economy budget deficit

6.4.3. OBJECTIVES OF THE MONETARY POLICY

Fig: 6.2

Regulate InflationMonetary policies can target inflation levels. A low level of inflation is considered to be healthy for theeconomy. If inflation is high, tight monetary policy can address this issue.

Reduce UnemploymentMonetary policies can influence the level of unemployment in the economy. For example, a cheapmonetary policy generally decreases unemployment because the higher money supply stimulatesbusiness activities that lead to the expansion of the job market.

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n≥Te+≥|ü⁄Œ&ÉT, <˚oj·T ø£¬s˙‡ <ëì $<˚o Á|ü‘· s¡T∆\‘√ b˛*ùdÔ #Íø£>± e÷s¡T‘·T+~.

yê´bÕs¡ #·Áø±\qT dæúØø£]+#·&É+:yêdüÔe dü÷Ô\ C≤rjÓ÷‘·Œ‹Ô eT]j·TT dü+uÛ≤e´ dü÷Ô\ C≤rjÓ÷‘·Œ‹Ô ¬s+&ç+Ïô|’ Á<äe´ $<Ûëq+ eTTKýÓTÆq Á|üuÛ≤yêìï#·÷|ü⁄‘·T+~. bÕ]ÁXÊ$Tø£+>± n_Ûe~∆ #Ó+~q <˚XÊ\T yê´bÕsêìï ìj·T+Á‹+#·&É+ <ë«sê Ä]úø£ eédüúqTdæúØø£]+#·&ÜìøÏ Á<äe´ $<Ûëq+ô|’ Ä<Ûës¡|ü&É‘êsTT. ø±˙ À‘Ó’q Ä]∆ø£ e÷+<Ûë´\˝À Ç~ ìÁwæÿj·T+>± e÷s¡T‘·T+~.

düùV≤‘·Tø£yÓTÆq <Ûäs¡ dæús¡‘·«+:Á<äe´ $<ÛëHêìï ñ|üjÓ÷–+#·&É+ <ë«sê n‘· +‘· düeTs¡úe+‘·+>± nqTdü]+#·>∑\ n‘· +‘· eTTKýÓTÆq \ø£å + <Ûäs¡dæús¡‘·«+. uÛ≤s¡‘·<˚X¯+ e+Ï n_Ûe~∆ #Ó+<äT‘·Tqï <˚X¯+˝À, eékÕj·T ñ‘·Œ‹Ô ‘·>∑TZ‘·Tqï H˚|ü<∏ä +˝À ô|≥Tºã&çø±s¡ ø£ ≤bÕ\qT y˚>∑e+‘·+ #˚j·T&É+ <Ûäs¡\ô|’ n~Ûø£ ‹Ô&çì düwæºdüTÔ+~. uÛ≤s¡‘·<˚X¯+˝À ÄVü‰s¡ Á<äy√´\“D+ BìøÏì<äs¡Ùq+. n≥Te+Ï |ü]dæú‹˝À Á<äe´ $<Ûëq+ dü«\Œø±*ø£ <Ûäs¡ dæús¡‘ê«ìøÏ ø£wæ #˚j·T&ÜìøÏ <√Vü≤<ä+ #˚düTÔ+~.

y>∑e+‘·yÓTÆq Ä]úø£ e~∆Á<äe´ $<Ûëq+ <ë«sê ãTTD dü<äTbÕj·÷\T #Íø£>± eT]j·TT eT]+‘· düT\uÛÑ+>± n+<äTu≤≥T˝À ñ+#·&É+ <ë«sêy˚>∑+>± Ä]úø£ e~∆ì Áb˛‘·‡Væ≤düTÔ+~. |ü]ÁX¯eT eT]j·TT eékÕj·÷ìøÏ ¬s+&ÉT s¡ø±\ ãTTD |ü<Ûäø±\T nedüs¡+.ìs¡«Vü≤D eT÷\<Ûäq nedüsê\qT rs¡Ã&ÜìøÏ dü«\Œø±*ø£ ãTTDdü<äTbÕj·T+ eT]j·TT dæús¡ eT÷\<Ûäq nedüsê\qTrs¡Ã&ÜìøÏ Bs¡Èø±*ø£ ãTTDdü<äTbÕj·T+ nedüs¡eTe⁄‘êsTT. á ¬s+&ÉT s¡ø±\ s¡TD≤\ nedüsêìï yêDÏ»´ u≤´+≈£î\TeT]j·TT n_Ûe~∆ u≤´+≈£î\ <ë«sê rs¡Ãe#·TÃ. ‘·≈£îÿe e&û¶ πs≥¢ e<ä› s¡TD≤\T düT\uÛÑ+>± \_Û+#·&É+ ô|≥Tºã&ç Ò<ëdüe÷» ñ‘·Œ‹Ô kÕeTs¡ú + $düÔs¡D ≈£î neø±XÊ\qT yÓTs¡T>∑T|üs¡TdüTÔ+~ eT]j·TT Áù|πs|ædüTÔ+~. Bì |òü*‘·+>±, Ä]úø£eédüú eTTqT|üÏ ø£+fÒ y˚>∑+>± e~∆ #Ó+<äT‘·T+~.

e÷]Œ&ç πs≥T dæús¡‘·«+:düs¡fi¯yÓTÆq Ä]∆ø£ eédüú À edüTÔe⁄\T, ùde\T eT]j·TT Ä]∆ø£ Á|üyêVü‰\≈£î Vü≤<äT›\T ‘Ós¡eã&ç ñ+≤sTT . Çø£ÿ&ÉÁ<äe´ $<Ûëq+˝À e÷]Œ&ç πs≥T Á|ü<Ûëq bÕÁ‘· eVæ≤düTÔ+~. nyÓT]ø£Hé &Ü\sY eT]j·TT Ç‘·s¡ $<˚o ø£¬s˙‡\ |üs¡+>±Á|üdüTÔ‘·+ ñqï e÷s¡T‘·Tqï e÷s¡ø£|ü⁄ πs≥T Á|üø±s¡+ s¡÷bÕsTT ‘·s¡T>∑T<ä\ Ò<ë ô|s¡T>∑T<ä\qT ìyê]+#·&ÜìøÏ,πø+Á<ä u≤´+ø˘ ‘·–q Á<äe´ #·s¡ \qT nqTdü]düTÔ+~.

ñ‘êŒ<äø£‘·qT Áb˛‘·‡Væ≤+#·&É+:Á<äe´ $<Ûëq+ jÓTTø£ÿ \ø£å + >∑]wüº ñbÕ~Ûì Áb˛‘·‡Væ≤+#·&É+. dü+øå√uÛÑ+ eT]j·TT Á<äy√´\“D+ e+Ï |ü]dæú‘·T˝À¢uÛ≤s¡‘· ]»s¡T« u≤+≈£î Á<äe´ düs¡|òüsêqT ô|+#·T‘·T+~. Á<äe´ düs¡|òüsê ô|s¡T>∑T<ä\ ø±s¡D+>±, Á|ü»\ Ä]úø£ eédüúeT]j·TT ø=qT>√\T X¯øÏÔ À ô|s¡T>∑T<ä\ ñ+≥T+~. Áø£y˚TD≤ ñ‘·Œ‹Ô À ô|s¡T>∑T<ä\ @s¡Œ&ÉT‘·T+~, |òü*‘·+>± ñbÕ~Û@s¡Œ&ÉT‘·T+~.

6.5 Á<äe´ $<Ûëq+˝À RBI bÕÁ‘·πø+Á<ä u≤´+≈£î\T Á<äe´ $<ÛëHê\qT neT\T #˚j·T&ÜìøÏ $$<Ûä kÕ<ÛäHê\qT ñ|üjÓ÷–kÕÔsTT. uÛ≤s¡‘·<˚X¯+˝À Á<äe´kÕúsTT\qT ìj·T+Á‹+#·&É+˝À uÛ≤s¡rj·T ]»s¡T« u≤+≈£î ø°\ø£ bÕÁ‘· b˛wædüTÔ+~. á kÕ<ÛäHê\qT |ü]e÷D≤‘·àø£kÕ<ÛäHê\T eT]j·TT >∑TD≤‘·àø£ kÕ<ÛäHê\T>± $uÛÑõ+#·e#·TÃ. <X+˝À Á<äe´ düs¡|òüsêqT ìj·T+Á‹+#·&ÜìøÏ uÛ≤s¡rj·T]»s¡T« u≤+≈£î $düÔ‘·+>± ñ|üjÓ÷–+#˚ bÕ\d” kÕ<ÛäHê\T ÁøÏ+<ä $e]+#·&É+ »]–+~.

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Regulate Currency exchange ratesUsing its fiscal authority, a Central Bank can regulate the exchange rates between domestic andforeign currencies. For example, the Central Bank may increase the money supply by issuing morecurrency. In such a case, the domestic currency becomes cheaper relative to its foreign counterparts.

Stabilising the Business CycleMonetary policy has an important effect on both actual GDP and potential GDP. Industrially advancedcountries rely on monetary policy to stabilise the economy by controlling business. But it becomespassive in deep recessions.

Reasonable Price StabilityPrice stability is the most important goal which can be pursued most effectively by using monetarypolicy. In a developing country like India, the acceleration of investment activity in the face of a fall inagricultural output creates excessive pressure on prices. The food inflation in India is a proof of this.In such a situation, monetary policy has much to contribute to short-run price stability.

Faster Economic GrowthMonetary policy can promote faster economic growth by making credit cheaper and more readilyavailable. Industry and agriculture require two types of credit short-term credit to meet workingcapital needs and long-term credit to meet fixed capital needs. The need for these two types of creditcan be met through commercial banks and development banks. Easy availability of credit at low ratesof interest stimulates investment or expansion of society’s production capacity. This in its turn, enablesthe economy to grow faster than before.

Exchange Rate StabilityIn an ‘open economy’that is, one whose borders are open to goods, services, and financial flows theexchange-rate system is also a central part of monetary policy. In order to prevent large depreciationor appreciation of the rupee in terms of the US dollar and other foreign currencies under the presentsystem of floating exchange rate the central bank has to adopt suitable monetary measures.

Increases ProductivityThe goals of monetary policy is to promote maximum productivity. Reserve Bank of India increasesthe supply of money in the situations like crisis and deflation. Due to increase in supply of money,there is a growth in economy and purchase power of the people. Automatically there is a growth inproduction resulting the employment generation .

6.5. ROLE OF RBI IN MONETARY POLICYCentral Banks use various tools to implement monetary policies. Reserve Bank of India have a keyrole in controlling the monetary levels in India. These tools can be divided into quantitative tools andqualitative tools. The following are the widely utilized policy tools by Reserve Bank of India toregulate and control the supply of money in the country.

6.5.1. |ü]e÷D≤‘·àø£ kÕ<ÛäHê\T|ü]e÷D≤‘·àø£ kÕ<ÛäHê\qT RBI ñ|üjÓ÷–+# kÕ+Á|ü<ëj·T kÕ<ÛäHê\T nì ≈£L&Ü n+≤s¡T. á kÕ<ÛäHê\T Á<äe´|ü]e÷D+ e÷s¡TŒ≈£î dü+ã+~Û+∫q$. á kÕ<ÛäHê\T Ä]úø£ eédüú À u≤+≈£î\ |üs¡|ü‹ jÓTTø£ÿ yÓTT‘·Ô+ Á<äe´+ qTìj·T+Á‹+#·&ÜìøÏ s¡÷bı+~+#·ã&Ü¶sTT. á kÕ<ÛäHê\T yêÏ dü«uÛ≤e+˝À |üs√ø£å+>± ñ+≤sTT eT]j·TT Ä]úø£eédüú À |üs¡|ü‹ |ü]e÷D≤ìï Á|üuÛ≤$‘·+ #˚j·T&ÜìøÏ ñ|üjÓ÷–+#·ã&É‘êsTT. Á|ü<Ûëq kÕ<ÛäHê\T >± u≤´+ø˘ πs≥T,ãVæ≤s¡+>∑ e÷¬sÿŸ ø±s¡ ø£ ≤bÕ\T, ¬sb˛ πs≥T, ]esY‡ ¬sb˛ πs≥T, ©>∑ Ÿ ]»sY« ìwüŒ‘·TÔ\T (#·≥ºã<ä∆ *øÏ«&ç° πswüHé,q>∑<äT ]»sY« ìwüŒ‹Ô) yÓTT<ä …’q$ #Ó|ü⁄Œø√e#·TÃ.

u≤´+ø πs≥Tu≤´+ø˘ πs≥T nH˚~ πø+Á<ä u≤+≈£î s¡TD≤ìï n+~+#˚ ø£ dü e&û¶ πs≥T eT]j·TT yêDÏ»´ u≤´+≈£î\ e<ä› ñqï |òüdtº-ø±¢dt _\T¢\ e÷]Œ&ç eT]j·TT ôd≈£L´]°\qT ‹]– &çkÂÿ+Ÿ #˚düTø√e&ÜìøÏ ne\+_Û+#˚ e&û¶ πs≥T. Á<äy√´\“D+ô|s¡T>∑T‘√+<äì ]»s¡T« u≤+≈£î≈£î dü÷#·q e∫Ãq|ü⁄Œ&ÉT n~ u≤´+≈£î e&û¶ πs≥¢qT ô|+#·T‘·T+~, ‘·<ë«sê yêDÏ»ú≤´+≈£î\T ‘·≈£îÿe yÓTT‘êÔ\qT n|ü⁄Œ>± rdüT≈£î+≤sTT eT]j·TT Á<äy√´\“D+ ìj·T+Á‘·D˝À ñ+≥T+~. yêDÏ»ú≤´+≈£î\T Á|ü»\≈£î eT]j·TT yê´bÕs¡ dü+düú\≈£î yê] s¡TD≤\ô|’ e&û¶ πs≥TqT ô|+#·T‘êsTT, ‘·<ë«sê Á|ü»\T ‘·≈£îÿe&ÉãT“qT n|ü⁄Œ>± rdüT≈£î+≤s¡T, Ç~ ∫e]øÏ Á<äy√´\“D≤ìï ìj·T+Á‹+#·&ÜìøÏ düVü‰j·T|ü&ÉT‘·T+~.

eTs√yÓ’|ü⁄ ]»s¡T« u≤+≈£î u≤+≈£î πs≥¢qT ‘·–Z+∫q|ü⁄Œ&ÉT, yêDÏ»´ u≤´+≈£î\≈£î s¡TD≤\T #Íø£>± eT]j·TT düT\uÛÑ+>±e÷s¡‘êsTT. Ç~ yêDÏ»´ u≤´+≈£î\T ‘·≈£îÿe s¡TD πs≥Tô|’ s¡TDÁ>∑V”≤‘·\≈£î n|ü⁄Œ\T Çe«&ÜìøÏ nqTeT‹düTÔ+~, Ç~s¡TDÁ>∑V”≤‘·\T eT]j·TT yê´bÕs¡y˚‘·Ô\qT eT]+‘· Áb˛‘·‡Væ≤düTÔ+~.

zô|Hé e÷¬sÿŸ eéVü‰sê\TÁ<äe´ e÷¬sÿŸ˝À ÄsY_◊ Bs¡Èø±\+/dü«\Œø±\+˝À ôd≈£L´]°\qT neTà&É+ eT]j·TT ø=qT>√\T #˚j·T&É+ nH˚~zô|Hé e÷¬sÿŸ eéVü‰s¡+ >± |æ\Teã&ÉT‘·T+~. Ç~ ÄsY_◊ jÓTTø£ÿ Á<äe´ $<Ûëq+ À Á|üeTTK kÕ<Ûäq+. ÄsY_◊eT˙ e÷¬sÿŸ˝À ôd≈£L´]°\qT $Áø£sTTùdÔ, Áô|’y˚Ÿ eT]j·TT yêDÏ»´ u≤´+≈£î\T eT]j·TT e´≈£îÔ\T ≈£L&Ü yêÏìø=qT>√\T #kÕÔs¡T. yêDÏ»´ u≤´+≈£î\ qT+&ç ÄsY_◊øÏ Á<äe´+ ã~© #j·Tã&ÉT‘·T+&É≥+‘√ Ç~ Ç|üŒÏπø ñqï Á<äe´düs¡|òüsêqT ‘·–ZdüTÔ+~. eTs√yÓ’|ü⁄, ÄsY_◊ yêDÏ»´ u≤´+≈£î\ qT+&ç ôd≈£L´]°\qT ø=qT>√\T #dæq|ü⁄Œ&ÉT, $Áø£sTT+#yêDÏ»´ u≤´+≈£î\T yês¡T Ç+‘·≈£î eTT+<äT ÄsY_◊˝À ô|≥Tºã&ç ô|Ïºq yÓTT‘êÔìï n+<äT≈£î+≤sTT. á $<Ûä+>± Á<äe´düô|’¢ ìj·T+Á‹+#· ã&ÉT‘·T+~.

¬sb˛ πs≥T¬sb˛ πs≥T n+fÒ yêDÏ»´ u≤´+≈£î\T ‘·eT ôd≈£L´]°\qT ]»s¡T« u≤+≈£î øÏ $Áø£sTT+#·&É+ <ë«sê Á<äe´‘ê«ìïìs¡«Væ≤+#·&ÜìøÏ s¡TD+ rdüT≈£îH πs≥T. ì<ÛäT\ ø=s¡‘· Ò<ë ø=ìï #·≥º|üs¡yÓTÆq #·s¡ \ ø±s¡D+>± yêDÏ»´ u≤´+≈£î\T‘·eT ôd≈£L´]°\qT $Áø£sTTkÕÔsTT. Á<äy√´\“D≤ìï n<äT|ü⁄˝À ñ+#·&ÜìøÏ Ç~ RBI jÓTTø£ÿ Á|ü<Ûëq kÕ<ÛäHê\˝Àˇø£Ï.

]esY‡ πsb˛ πs≥Tø=ìïkÕs¡T¢ ]»s¡T« u≤+≈£î e÷¬sÿŸ˝À n~Ûø£ *øÏ«&ç° ñqï|ü⁄Œ&ÉT yêDÏ»´ u≤´+≈£î\ qT+&ç &ÉãT“qT n|ü⁄Œ>±rdüT≈£î+≥T+~. Ä dü+<äs¡“¤+˝À yêDÏ»´ u≤´+≈£î\T ]»s¡T« u≤+≈£î e<ä› ‘·eT ôVA*¶+>¥\ô|’ e&û¶ì bı+<ä&É+

182

6.5.1. QUANTITATIVE TOOLSThe quantitative tools are also known as conventional tools or traditional tools used by the RBI. Theseinstruments are related to the quantity and volume of the money. These instruments are designed to control thetotal volume of money of the bank credit in the economy. These instruments are indirect in their nature and areused to influence the quantity of credit in the economy. The main tools are bank rate, open market operations,repo rate, reverse repo rate, legal reserve ratios (Statutory Liquidity Ration, Cash Reserve Ratio)

181

Bank RateThe bank rate is the minimum rate at which the central bank lends money and rediscounts first-classbills of exchange and securities held by commercial banks. When RBI gets a hint that inflation isrising, it increases the bank interest rates so that commercial banks borrow less money and theinflation stays under control. Commercial banks also increase their lending rate to the public andbusiness enterprises so that people borrow less money, which will eventually help to control inflation.On the other hand, when RBI reduces bank rates, that means borrowing for commercial banks willbecome cheap and easier. This allows the commercial banks to lend money to borrowers on a lowerlending rate, which will further encourage borrowers and businessmen.

Open Market Operations (OMO)The sale and purchase of security in the long run/short run by the RBI in the money market is knownas open market operations. This is a popular instrument of the RBI’s monetary policy. If RBI sellssecurities in the money market, private and commercial banks and even individuals buy it. This leadsto a reduction in the existing money supply as money gets transferred from commercial banks to theRBI. On the other hand, when RBI buys securities from the commercial banks, the commercialbanks that sell receive the amount they had invested in RBI before.

Repo RateA Repo rate is a rate at which commercial banks borrow money by selling their securities to the RBIto maintain liquidity. Commercial banks sell their securities in case of a shortage of funds or due tosome statutory measures. It is one of the main instruments of the RBI to keep inflation under control.

Fig 6.3

183

<ë«sê Á|üjÓ÷»Hê\qT bı+<äT‘êsTT. <X+˝À n~Ûø£ Á<äy√´\“D+ düeTj·T+˝À ]»s¡T« u≤+≈£î ]esY‡ ¬sb˛ πs≥TqTô|+#·T‘·T+~ Ç~ ]»s¡T« u≤+≈£î ‘√ m≈£îÿe ì<ÛäT\qT ì*|æy˚j·T&ÜìøÏ u≤´+≈£î\qT Áb˛‘·‡Væ≤düTÔ+~.

#·≥ºã<ä∆ *øÏ«&ç° ìwüŒ‹Ô%#·≥ºã<ä∆ *øÏ«&ç° ìwüŒ‹Ô nH~ q>∑<äT, ã+>±s¡+ Ò<ë Ç‘·s¡ ôd≈£L´]°\ s¡÷|ü+˝À yêDÏ»´ u≤´+≈£î ìs¡«Væ≤+#ê*‡q&çbÕõ≥¢ ø£ dü XÊ‘·+. Ç~ ø£düºeTs¡¢≈£î Á¬ø&çŸ n+~+# eTT+<äT u≤´+≈£î\T ñ+#ê\ì uÛ≤$+# ]»sY« nedüs¡+. á]»s¡T«qT ô|+#·&É+, ‘·–Z+#·&É+ <ë«sê Á<äe´ düô|’¢qT ]»s¡T« u≤+≈£î ìj·T+Á‹düTÔ+~.

q>∑<äT ]»sY« ìwüŒ‹Ô%q>∑<äT ]»sY« ìwüŒ‹Ô øÏ+<ä yêDÏ»´ u≤´+≈£î\T πø+Á<ä u≤´+ø˘ e<ä› ø=+‘· ø£ dü &çbÕõŸqT ì\«\T>± ø£*– ñ+&Ü*. u≤´+≈£î yÓTT‘·Ô+ &çbÕõŸ\≈£î nqT>∑TD+>± ]»s¡T« u≤+≈£î e<ä› ì\«\˝À ñ+#ê*‡q q>∑<äT XÊ‘·+. Bììe÷s¡Ã&É+ <ë«sê ]»s¡T« u≤+≈£î q>∑<äT düô|’¢qT n]ø£&ÉT‘·T+~. .

6.5.2. >∑TD≤‘·àø£ kÕ<ÛäHê\T>∑TD≤‘·àø£ kÕ<ÛäHê\qT ]»s¡T« u≤+≈£î Á<äe´ $<Ûëq+ jÓTTø£ÿ m+|æø£ kÕ<ÛäHê\T nì ≈£L&Ü n+≤s¡T. á kÕ<ÛäHê\TÁ¬ø&çŸ jÓTTø£ÿ $$<Ûä ñ|üjÓ÷>±\ eT<Ûä $eø£å ø√dü+ ñ|üjÓ÷–+#·ã&É‘êsTT; ñ<ëVü≤s¡D≈£î, ~>∑TeT‹ ø£+fÒm>∑TeT‹øÏ nqT≈£L\+>± Ò<ë nqedüs¡yÓTÆq ãTTD düs¡|òüsê ø£+fÒ nedüs¡yÓTÆq s¡TDdüs¡|òüsê ø√dü+ ñ|üjÓ÷–+#·e#·TÃ.á |ü<ä∆‹ s¡TDÁ>∑V”≤‘·\T eT]j·TT s¡TD<ë‘·\ô|’ Á|üuÛ≤e+ #·÷|ü⁄‘·T+~. %RBI% ñ|üjÓ÷–+# |üs¡|ü‹ ìj·T+Á‘·DjÓTTø£ÿ ø=ìï m+|æø£ kÕ<ÛäHê\T ÁøÏ+<ä $e]+#·&ÉyÓTÆq~.

e÷]®Hé \qT @s¡Œs¡#·&É+u≤´+≈£î n+~+# Ò<ë ô|ò’HêHé‡ #ùd s¡TD yÓTT‘·Ô+˝À u≤+≈£î ‘·q e<ä› ñ+#·Tø=H ø=+‘· ìwüŒ‹Ôì e÷]®Hé n+≤s¡T.e÷]®Hé À e÷s¡TŒ #j·T&É+ e\q ñbÕ+‘·+˝À s¡TD |ü]e÷D+˝À e÷s¡TŒ≈£î <ë]rdüTÔ+~. á kÕ<Ûäq+ nedüs¡yÓTÆqs¡+>±\≈£î Á¬ø&çŸ düs¡|òüsêqT Áb˛‘·‡Væ≤+#·&ÜìøÏ eT]j·TT nqedüs¡yÓTÆq s¡+>±\≈£î <ä÷s¡+>± ñ+&É≤ìøÏ ñ|üjÓ÷–+#·ã&ÉT‘·T+~. nqedüs¡yÓTÆq s¡+>±\ e÷]®q˝ŸqT ô|+#·&É+ <ë«sê eT]j·TT Ç‘·s¡ nedüs¡yÓTÆq s¡+>±\e÷]®q˝ŸqT ‘·–Z+#·&É+ <ë«sê Á<äe´ düô|’¢qT ìj·T+Á‹+#·e#·TÃ. e´ekÕj·T s¡+>±ìøÏ eT]+‘·>± Á¬ø&çŸ düô|’¢πø≤sTT+#ê\ì ÄsY_◊ uÛ≤$k Ô+<äì nqT≈£î+<ë+, n|ü⁄Œ&ÉT ÄsY_◊ e÷]®HéqT ‘·–ZdüTÔ+~ n+fÒ s¡TD+˝À 80-90XÊ‘·+ ≈£L&Ü s¡TD+>± #Ó*¢+#·e#·TÃ.

HÓ’‹ø√<√“<äeTTHÓ’‹ø√<√“<äeTT nH˚~ ]»s¡T« u≤+≈£î qT+&ç yêDÏ»´ u≤´+≈£î\≈£î #˚ùd dü÷#·q\qT $e]düTÔ+~. Ç~ Á<äy√´\“Dø±\+˝À |üs¡|ü‹ì ìs√~Û+#·&É+˝À düVü‰j·T|ü&ÉT‘·T+~. ]»s¡T« u≤+≈£î ìã+<Ûäq\≈£î nqT>∑TD+>± m˝≤+Ï ø£]ƒq#·s¡ \T rdüTø√≈£î+&Ü uÛ≤s¡rj·T u≤´+øÏ+>¥ e´edüúô|’ á |ü<ä›‹ <ë«sê ˇ‹Ô&çì ‘ÓdüTÔ+~. Á<äe´ $<Ûëq+ <ë«sê,yêDÏ»´ u≤´+≈£î\T RBI jÓTTø£ÿ $<ÛëHê\qT ‘Ó*j·TCÒj·T&É+ »s¡T>∑T‘·T+~. á |ü<ä›‹˝À ]»s¡T« u≤+≈£î HÓ’‹ø£Ä<˚XÊ\ ÁøÏ+<ä s¡TD düs¡|òüsêqT ‘·–Z+#·&ÜìøÏ dü+ã+~Û+∫ yêDÏ»´ u≤´+≈£î\≈£î Ä<˚XÊ\T, e÷s¡Z<äs¡Ùø±\T,dü÷#·q\T C≤Ø #˚j·Te#·TÃ.

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Reverse Repo RateSometimes, the RBI borrows money from commercial banks when there is excess liquidity in themarket. In that case, commercial banks get benefits by receiving the interest on their holdings with theRBI. At the time of higher inflation in the country, RBI increases the reverse repo rate that encouragesbanks to park more funds with the RBI, which will help it earn higher returns on excess funds.

Statutory Liquidity Ratio(SLR)SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquidcash, gold or other securities. It is basically the reserve requirement that banks are expected to keepbefore offering credit to customers.

Cash Reserve Ratio (CRR)Under the CRR the commercial banks have to hold a certain minimum amount of deposit as reserveswith the central bank. The percentage of cash required to be kept in reserves as against the bank’stotal deposits, is called the CRR.

6.5.2. QUALITATIVE TOOLSQualitative instruments are also known as selective instruments of the RBI’s monetary policy. Theseinstruments are used for discriminating between various uses of credit; for example, they can be usedfor favouring export over import or essential over non-essential credit supply. This method has aninfluence on both borrowers and lenders. Following are some selective tools of credit control usedby the RBI

Margin RequirementMargin is referred to the certain proportion of the loan amount that is not offered or financed by thebank. Change in marginal can lead to change in the loan size. This instrument is used to encourage thecredit supply for the necessary sectors and avoid it for the unnecessary sectors. That can be done byincreasing the marginal of unnecessary sectors and reducing the marginal of other needy sectors.Suppose, RBI feels that more credit supply should be allotted to the agricultural sector, then RBI willreduce the margin, and even 80-90 percent of the loan can be allotted.

Moral SuasionMoral suasion refers to the suggestions to commercial banks from the RBI that helps in restrainingcredits in the inflationary period. RBI implies pressure on the Indian banking system without takingany strict action for compliance with rules. Through monetary policy, commercial banks get informedof the expectations of RBI. The RBI can issue directives, guidelines, suggestions for commercialbanks regarding reducing credit supply for speculative purposes under the moral suasion.

Rationing of CreditRBI fixes a credit amount to be granted for commercial banks. Credit is given by limiting the amountavailable for each commercial bank. For certain purposes, the upper credit limit can be fixed, andbanks have to stick to that limit. This helps in lowering the bank’s credit exposure to unwantedsectors. This instrument also controls the bill rediscounting.

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Á¬ø&çŸ πswüì+>¥yêDÏ»´ u≤´+≈£î\≈£î eT+ps¡T #j·Te\dæq s¡TD|üs¡|ü‹ yÓTT‘êÔìï RBI ìs¡ísTTdüTÔ+~. Á|ü‹ yêDÏ»´ u≤´+≈£î≈£în+<äTu≤≥T˝À ñqï yÓTT‘êÔìï |ü]$T‘·+ #j·T&É+ <ë«sê s¡TD|üs¡|ü‹ Çe«ã&ÉT‘·T+~. ø=ìï Á|üjÓ÷»Hê\ ø√dü+,m>∑Te s¡TD |ü]$T‹ì ìs¡ísTT+#·e#·TÃ eT]j·TT u≤´+≈£î\T Ä |ü]$T‹øÏ ø£≥Tºã&ç ñ+&Ü*. nyê+∫Û‘· s¡+>±\≈£îu≤´+ø |üs¡|ü‹ì ‘·–Z+#·&É+˝À Ç~ düVü‰j·T|ü&ÉT‘·T+~. á kÕ<ÛäHê\T _\T¢ Ø &çkÂÿ+Ï+>¥qT ≈£L&Ü ìj·T+Á‹kÕÔsTT.

KEY TERMS

1. Business Cycles: Business cycles are comprised of concerted cyclical upswings anddownswings in the broad measures of economic activity

2. Trade Cycles: A trade cycle refers to fluctuations in economic activities specially inemployment, output and income, prices, profits etc.,

3. Cyclical Fluctuations: Cyclical fluctuations is a term used to describe oscillations thatoccur over long periods about the secular trend line or curve of a time series.

4. Bid Rigging: Bid rigging is an illegal practice in which competing parties collude to choosethe winner of a bidding process while others submit.

5. Amalgamations: Amalgamation is the combination of two or more companies into a newentity by combining the assets and liabilities of both entities into one.

6. Competition Appellate Tribunal(CAT): The Competition Appellate Tribunal is a statutoryorganization established under the provisions of the Competition Act, 2002 to hear anddispose of appeals against any direction issued or decision made or order passed bythe Competition Commission of India.

7. Central Bank: A central bank is a financial institution that is responsible for overseeing themonetary system and policy of a nation or group of nations, regulating its money supply, andsetting interest rates.

8. Tax Savings Schemes: Tax Saving Schemes is the best way to make investments to savetax by claiming deductions available under the provisions of the Income Tax Act, 1961.

9. Export Incentives: Export incentives are a form of economic assistance that governmentsprovide to firms or industries within the national economy, in order to help them secureforeign markets.

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10. Recognition Lag: Recognition lag is the time delay between when an economic shock,such as a sudden boom or bust, occurs and when economists, central bankers, and thegovernment realized that it has occurred.

11. Administrative Lag : Administrative lag arises from the time it takes to enact the neededstatutes. Operational lag results from how much time it takes for the effect of tax changes tobe realized and be felt.

12. Operational Lag: Period between the point at which a policy or procedure is implemented,and the point when it starts to take effect.

13. Budget Deficit: A budget deficit occurs when expenses exceed revenue and indicate thefinancial health of a country.

14. Government Debt: Public debt is the total amount, including total liabilities, borrowed bythe government to meet its development budget.


1. When did the Competition Act, 2002, come into force?A. 01 April 2004B. 31 March 2003C. 01 May 2002D. 23 April 2003

2. Which section of the Competition Act, 2002 deals with Penalty for failure to comply withdirections of Commission and Director-General ?A. Section 47 of the Competition Act, 2002B. Section 44 of the Competition Act, 2002C. Section 43 of the Competition Act, 2002D. Section 49 of the Competition Act, 2002

3. Fiscal policy in India is formulated byA. Reserve Bank of IndiaB. Planning CommissionC. Finance MinistryD. Securities and Exchange Board of India

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4. Fiscal deficit in the union budget is equal to A. Net increase in internal and external borrowingsB. The difference between current expenditure and current revenueC. The sum of monetized deficit and budgetary deficitD. Net increase in the union government’s borrowing from the Reserve Bank of India

5. Which is not in the types of Fiscal PolicyA. Neutral Fiscal PolicyB. Expansionary Fiscal PolicyC. Contractionary fiscal policyD. Positive Fiscal Policy

6. Monitory Policy is concerned withA. Central GovernmentB. State GovernmentsC. State Bank of IndiaD. Reserve Bank of India

7. Which of the following is not the work of RBI?A. Bank of the banksB. Credit controllerC. Custodian of foreign currencyD. Allocating funds directly to the farmers for agricultural development

8. Which of the following fix the Repo Rate and Reverse Repo Rate.A. Comptroller and Auditor GeneralB. Central GovernmentC. State Bank of IndiaD. Reserve Bank of India

9. The following is not used as a Monitory policy instrument by Reserve Bank of IndiaA. Bank RateB. Repo RateC. Statutory Liquidity RatioD. Lending to Business Entities

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10. Which is not a qualitative tool of RBIA. Margin RequirementB. Moral SuasionC. Rationing of CreditD. Selective credit control

ANSWERS

B C C A D D D D D A

INERACTIVE LINKS


https://www.rbi.org.in/


1 2 3 4 5 6 7 8 9 10

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Visit RBI website. Go through the Vision and Mission of RBI. Observe the press releasesarchives.

Go through latest RBI Annual Report and Financial Stability Report of the country.

Go through the concepts of Quantitative Easing followed by U.S Economy to recover fromrecession.

Social and Political Environment


1. understand the nature of society and complexities of2. understand the objectives of the business seeking

society. 3. asses the Political Scenario 4. examine the Political Stability 5. relate between Government and Business.

Chapter Layout: 7.1. Social Environment

7.1.1. Factors influencing social environment 7.1.2. Social Environment Indicators

7.2. Social Responsibility 7.2.1. Responsibility of Business towards Stakehold7.2.2 Barriers of Social Responsibility.

7..3. Political Environment

7.3.1. Political Institutions 7.3.2. Responsibilities of Business towards Governm7.3.3. Responsibilities of Government towards Busin

Chapter

7

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1. XÊdüqdüuÛÑ2. m–®≈£L´Ïyé eT]j·TT3. Hê´j·Teédüú.

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192

CHAPTER OVERVIEW

The reader of this chapter gets an understanding of the Nature of Societyand Complexities of Business in the present scenario of Globalisation.The study of the chapter gives awareness of Social Environment – Demandfor opportunities for weaker sections, backward classes, minorities andwomen; Demand for equal status for women with men in all fields.Upliftment of the society depends on Education, long and healthy lifespan of people.

The Social Responsibility of Business is to protect the interest of the internaland the external stakeholders. They are Owners and Employees,Government, Community, Consumers/Customers, Suppliers and Creditorsetc. The study of Political Environment gives ample knowledge of thethree important organs of Indian Constitution.

1. Legislature

2. Executive and

3. Judiciary.

The three important organs are independent in nature. However, theSupreme Court interferes for settling any issues of the Administration

and people.

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7.1. kÕe÷õø£ |üsêés¡D+

kÕe÷õø£ |üsêés¡D+ düe÷»+ jÓTTø£ÿ dü«uÛ≤e+ô|’ Ä<Ûës¡|ü&ç ñ+≥T+~. n+fÒ, kÕe÷õø£ dü+düú\T eT]j·TTkÕe÷õø£ dü+düú\ n_Ûe~∆, ≈£î\+, eT‘·+, es¡Z ìsêàD e‹Ô yÓTT<ä …’q$. ñ<ëVü≤s¡D: MesY‡ kıôd’°, bÕ\ ñ‘·Œ‹Ô düVü≤ø±s¡ dü+|òüT+ yÓTT<ä …’q$. kÕe÷õø£ |üsêés¡D+ ÁbÕ<∏ä$Tø£+>± yê´bÕs¡+ ñqï düe÷»+˝Àì Ä#êsê\TeT]j·TT dü+Á|ü<ëj·÷\qT ø£*– ñ+≥T+~. yê´bÕs¡+ ñqï düe÷»+˝À ìedædüTÔqï Á|ü»\ Jeq Á|üe÷D≤\T,n\yê≥T¢, ÁbÕ<Ûëq´‘·\T eT]j·TT $<ë´ kÕúsTT ≈£L&Ü kÕe÷õø£ yê‘êes¡D+˝À #˚s¡Ãã&Ü¶sTT. yê´bÕs¡y˚‘·Ô\TkÕe÷õø£ yê‘êes¡D+ jÓTTø£ÿ $$<Ûä uÛ≤>±\qT ìs¡¢ø£å + #˚j·T Òs¡T, nsTT‘˚ á uÛ≤>±\T nìï yê´bÕs¡+ô|’ dü«\Œeé~Û À m˝≤+Ï Á|üuÛ≤yêìï #·÷|üe⁄. nsTT‘ á n+XÊ\˙ï Bs¡Èø±\+˝À yê´bÕs¡+ô|’ >=|üŒ Á|üuÛ≤yêìï #·÷|ü⁄‘êsTT.

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ø√dü+ &çe÷+&é. düe÷q |üìøÏ düe÷q y˚‘·q+ ø√dü+ &çe÷+&é n+fÒ, |ü⁄s¡Twüß&ÉT eT]j·TT Ád”Ô *+>∑+ Ä<Ûës¡+>± m˝≤+Ï $eø£å ˝Ò≈£î+&Ü ≈£î\+, eT‘·+, C≤‹ Ò<ë Á|ü<˚X¯+ Ä<Ûës¡+>± m˝≤+Ï $eø£å #·÷|ü≈£î+&Ü |ü⁄s¡Twüß\‘√ düe÷q+>±

eTVæ≤fi¯\≈£î düe÷q ôVA<ë ø√dü+ &çe÷+&é. eT<Ûä ‘·s¡>∑‹ ø√dü+ n<ÛäTHê‘·q |ü]ø£sê\T Ò<ë ≥÷˝Ÿ‡ eT]j·TT \>∑®Ø edüTÔe⁄\≈£î &çe÷+&é. eT<Ûä ‘·s¡>∑‹ qT+&ç ñqï‘· ‘·s¡>∑‹ es¡≈£î eT]j·TT e÷qTé˝Ÿ qT+&ç eT<Ûä ‘·s¡>∑‹ es¡≈£î kÕe÷õø£

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πø≤sTT+|ü⁄.

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yê´bÕs¡ dü+düú\T ≈£L&Ü düe÷C≤ìøÏ u≤<Ûä ‘· eVæ≤+#ê*. m+<äTø£+fÒ yê´bÕs¡dü+düú\T Á<äe´+, e÷qe eqs¡T\T,kÕ+πø‹ø£‘· eT]j·TT Ç‘·s¡ HÓ’|ü⁄D≤´\T düe÷»+ qT+∫ rdüT≈£î+≥THêïsTT ø£<ë! edüTÔ ùde\qT yê´bÕs¡+ Á<äe´+‘√$ìeTj·T+ #kÕÔsTT. n+fÒ yê´bÕs¡dü+düú\T ‘·eT ñ‘·Œ‘·TÔ\ neTàø±\¬ø’ ø=‘·Ô e÷¬sÿ≥¢qT XÀ~ÛkÕÔsTT. n+fÒ yê´bÕs¡

194

7.1 SOCIAL ENVIRONMENT

Social environment depends much on the nature of society ie., development of social organizationsand social institutions like caste, religion, professions of class structure etcExample: Weavers Society, Milk Production Cooperative Society etc.,

Social environment basically comprises customs and traditions of the society wherein the businessexists. Standard of living, habits, preferences taken and education level of the people residing in thesociety where the business is existing are also included in the social environment. Businessmen cannotneglect various components of social environment though all these components do not show anyimpact in short span on business. But all these factors will have a great influence on the business inthe long run.

7.1.1. FACTORS INFLUENCING SOCIAL ENVIRONMENT Demand for opportunities in employment for backward classes, weaker sections , minority

and women.

Demand for equal pay/wage for equal work without any discrimination basing on sex ie.,male and female

Demand for equal status for women on par with men without showing any discriminationbasing on caste, religion, race or place.

Demand for sophisticated equipment or tools and luxury items for the middle class.

Social mobility from middle class to upper class and manual to middle class.

The social movement to improve the educational level of girl child

7.1.2. SOCIAL ENVIRONMENT – INDICATORS Standard of living

Education - Compulsory education to people for upliftment of all sections of the society inthe fields of science And Technology; Art And Culture.

Health and long life -Allocation of adequate funds to preserve and keep health of the peopleliving in the country.

7.2 . SOCIAL RESPONSIBILITY

The Constitution of India gifts every individual to enjoy status, fraternity, liberty, equality and freedomin addition to many fundamental rights. At the same time the citizens of India owe a lot to the society.It is the responsibility of every citizen to be answerable to the society within the legal frame work ashe depends much upon the society.

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dü+düú\T ‘·eT≈£î nqT>∑TDyÓTÆq ø=qT>√\T<ës¡T¢/ø£düºeTs¡¢ ø√dü+ düe÷»+ô|’ Ä<Ûës¡|ü&É‘êsTT. ø£qTø£ yê´bÕs¡ dü+düú\Tdüe÷C≤ìøÏ u≤<Ûä ‘· eVæ≤+#ê*. πøe\+ ‘·eT ˝≤uÛ≤s¡®q MT<ä <äèwæº kÕ]+#·&Éy˚T >±ø£ kÕe÷õø£ dü+πøåe÷ìøÏu≤<Ûä ‘êj·TT‘·+>± eéVü≤]+#ê*. düe÷»+˝Àì Á|ü‹ es¡ZeT÷ yê´bÕsê_Ûeè~∆¬ø’ düVü≤ø£]düTÔHêïs¡T. Ä esêZ\yê]øÏ yê´bÕs¡ dü+düú\T u≤<Ûä ‘· eVæ≤+#ê*.

yê´bÕs¡ dü+düú\ kÕe÷õø£ u≤<Ûä ‘· ø=‘·Ô n+X¯y˚TMT ø±<äT. m+<äTø£+fÒ |üPØ«≈£î\ e÷≥\qT ãÏº yê´bÕs¡ dü+düú\TkÕe÷õø£ u≤<Ûä ‘· |üPs¡«ø±\+ qT+N nqTdü]+#ês¡ , Á|üø£è‹ yÓ’|üØ‘ê´\sTTq es¡<ä\T, ‘·TbòÕqT¢, uÛÑ÷ø£+bÕ\TyÓTT<ä …’q$ dü+uÛÑ$ùdÔ <Ûäqe+‘·T …’q yê´bÕs¡düTÔ\T ñ<ës¡+>± u≤~Û‘·T\≈£î u≤dü≥>± ì*#ês¡ ‘Ó\Tk Ô+~. C≤‹|æ‘·eTVü‰‘êà>±+BÛ e÷˝À¢ ªªø£düºeTs¡T¢ yê´bÕs¡+ô|’ Ä<Ûës¡|ü&É Ò<äì, yê´bÕs¡dü+düú Ò ø£düºeTs¡¢ô|’ Ä<Ûës¡|ü&Üj·T˙, yê]øÏyê´bÕs¡dü+düú\T ùde\+~+#êj·Tì ø±<äT, ùde#˚ùd neø±X¯+ ø£düºeTπs¢ Ç#êÃs¡H˚ $wüj·T+ $düà]+#·≈£L&É<äìμμ$e]+#ês¡T. ø£qTø£ ˝≤uÛ≤s¡®q≈£L, kÕe÷õø£ u≤<Ûä ‘· eVæ≤+#·&Üìø° yê´bÕs¡dü+düú\T düeT‘·T\´+ bÕÏ+#ê*.

7.2.1. yê≤<ës¡T\≈£î yê´bÕs¡ dü+düú\ kÕe÷õø£ u≤<Ûä ‘·yê´bÕs¡ dü+düú kÕe÷õø£ Ä]úø£ dü+düú. ø£qTø£ düe÷»+˝Àì dü+ã+~Û‘· esêZ\≈£î u≤<Ûä ‘· eVæ≤+#ê*. ˝≤uÛ≤s¡®qeTTK´<Û´j·T+‘√ |üì#˚ùd Á|ü‹ yê´bÕs¡ dü+kÕú HÓ’‹ø£ $\Te\qT bÕÏ+#˚ Áø£eT+˝À düe÷»+˝À Á|ü<Ûëq esêZ …’qñ<√´>∑T\T, $ìjÓ÷>∑<ës¡T¢/ø£düºeTs¡T¢, Á|üuÛÑT‘·«+, |üsêés¡D+, düe÷»+, j·T»e÷qT\T, dü|ü¢j·Ts¡T¢/ãTTD<ë‘·\TeT]j·TT düVü≤yê´bÕs¡ dü+düú\≈£î u≤<Ûä ‘· eVæ≤+#ê*.

ñ<√´>∑T\Tyê´bÕs¡ dü+düú $»j·Te+‘·+>± ø=qkÕ>∑&ÜìøÏ ñ<√´>∑T\ düVü≤ø±s¡+, $$<Ûä yê´bÕs¡ ø±s¡ ø£ ≤bÕ\‘√ nqTdü+<Ûëq+Òì<˚ eTqT>∑&É ø£wüºkÕ<Ûä +. ñ<√´>∑T\T |üì#˚j·T&ÜìøÏ dü¬s’q edü‘·T\ @sêŒ≥T, Hê´j·Tã<ä∆yÓTÆq J‘ê\T/y˚‘·Hê\

#Ó*¢+|ü⁄ yê´bÕs¡ dü+düú\ u≤<Ûä ‘·. yê´bÕs¡ ~XÊ ìs¡íj·÷\T #˚j·T&É+˝À ñ<√´>∑T\qT uÛ≤>∑kÕ«eTT\T #˚j·T&É+,ø±˝≤qT>∑TD+>± $<ë´|üs¡yÓTÆq •ø£åD≤ ‘·s¡>∑‘·T\T @sêŒ≥T #˚dæ yê] eè‹Ô HÓ’|ü⁄D≤´\qT yÓTs¡T>∑T |üs¡#·&É+ yê´bÕs¡dü+düú\ u≤<Ûä´‘·.

ñ<√´>∑T\≈£L, yê] ≈£î≥T+ã düuÛÑT´\≈£L yÓ’<ä kÂø£sê´\T @sêŒ≥T, ñ<√´>∑T\ |æ\¢\≈£î $<ë´ kÂø£sê´\T @sêŒ≥T#˚j·T&É+, ñ<√´>∑T\≈£î |ü<äM $s¡eTD Á|üjÓ÷»Hê\T ø£*Œ+#·&É+ yê´bÕs¡ dü+düú\ ÁbÕ<Ûä$Tø£ u≤<Ûä ‘·.

|üì|ü≥¢ ñ<√´>∑T\ kÕqT≈£L\ <äèø£Œ<∏ä+, eT+∫ Á|ües¡ÔqqT n_Ûq+~+∫q+<äTe\¢ ‘·eT e´øÏÔ‘ê«ìøÏ >∑T]Ô+|ü⁄ \_Û+∫+<äHÄ‘·à$XÊ«kÕìï ô|+bı+~+#·e\dæq u≤<Ûä ‘·qT yê´bÕs¡ dü+düú\T rdüTø=qï+<äTe\¢ j·T»e÷ì, ñ<√´– dü+ã+<Ûë\TyÓTs¡T>∑e⁄‘êsTT.

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HêD´‘· : $ìjÓ÷>∑<ës¡¢ dü+πøåe÷ìï ø√πs yê´bÕs¡dü+düú\T HêDýÓTÆq ñ‘·Œ‘·TÔ\qT e÷Á‘·y˚T $ìjÓ÷>∑<ës¡¢≈£îdüs¡|òüsê #˚j·÷*. n+<äTø√dü+ dü¬s’q |ü+|æD° eédüúqT m+#·Tø√yê*. Òì#√ ø£èÁ‹eT ø=s¡‘·qT düèwæº+#˚

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Likewise, business also depends much on the society to fetch various inputs needed for business.They may be money, human resources, technology and other expertise skills. Business exchangesgoods and services for money. It means business searches for potential market where products aresold. Market is one of the segments in the society. It seems business totally depends on the societyto find suitable buyers and customers to sustain consistently in the market. Being dependent, businesshas an obligation towards society. The obligation otherwise is known as social responsibility ofbusiness. Hence, social responsibility is understood as an obligation of business to tend towards thewelfare of the society along with their personal interest of earning profits.

However, it is the social responsibility of the business not to work solely for maximization of profitsbut should seek the welfare of the society as well. Business does not exist in isolation. Every segmentof the society aids for the success of business. Hence it is the responsibility of the business to seek thewelfare of various segments of the society.

Social responsibility of business was there in good olden days also. In times of natural calamities likedrought, floods, cyclones the affluent businessmen of such area used to contribute for food, clothingand shelter to the needy. Our ancestors used to tell us the magnificent stories how the leadingbusinessmen look after the welfare of the poor in times of crisis. As Mahatma Gandhiji said “That acustomer is not dependent on us. But we i.e. the business houses depend on the customer. We arenot serving him. He gives an opportunity to serve”. It is very important for the business to strike abalance between profit maximization and welfare of the society.

7.2.1. RESPONSIBILITY OF BUSINESS TOWARDS STAKEHOLDERSBusiness is a socio-economic institution. Hence, it is responsible towards different interested groups.The main objective of every business unit is earning profit. Though profit making is the main objectiveof business with values and ethics, it shall seek the welfare of different groups like employees, consumers/customers, Government, environment, community, owners, suppliers and creditors and inter-businessfirms.

EmployeesNo organization is successful without integration and heartful co-operation of the workers oremployees. Responsibility of business towards employees/workers is highly essential. Business hasto provide good working conditions and has to pay fair and generous wages/salaries to the workers

The Fig. 7.1. shows the stake holders of business.

Most important responsibility of business is to appreciate the talent of employees for their goodwork and conduct. It elevates the morale of employees and recognizes their personality.

ConsumersConsumers are the backbone for every business. Being so much dependent, business has a definiteresponsibility towards consumers, as consumers/customers are the foundation for business.Responsibility of business towards consumers concentrates on the following:

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neø±X¯+ ñ+~. düs¡T≈£î\qT m+|æø£ #˚ùd dü+<äs¡“¤+˝À $ìjÓ÷>∑<ës¡¢ n_Ûs¡T#·T\÷, yê] ÁbÕ<Ûëq´‘·\qT|ü]>∑Dq˝ÀøÏ rdüTø√yê*.

Á|üyÓ÷wüHé : e÷¬sÿŸ À n+<äTu≤≥T˝À ñqï edüTÔ ùde\ HêD´‘ê Á|üe÷D≤\T, düs¡T≈£î\ <Ûäs¡\÷ yê´bÕs¡ Á|üø£≥q\˝Àbı+<äT|üs¡#ê*. Bìe\¢ ø£©Ô düs¡T≈£î\qT, ‘·≈£îÿe HêD´‘· ø£*–q düs¡T≈£î\qT e÷¬sÿÀ¢øÏ sê≈£î+&Ü ìs√~Û+#·e#·TÃ.

dü¬s’q HêD´‘ê Á|üe÷D≤\T, |ü]e÷D+ ø£*–q edüTÔ ùde\qT $ìjÓ÷>∑<ës¡¢≈£î düs¡düyÓTÆq <Ûäs¡\≈£î düs¡|òüsê #j·T&É+n_Ûq+<ä j·T+. Á|üdüTÔ‘· ø±\+˝À $ìjÓ÷>∑<ës¡T yê<ä+ n‘· +‘· ÁbÕeTTK´‘·qT dü+‘·]+#·Tø=+~. $ìjÓ÷>∑<ës¡¢Äø±+ø£å\≈£î nqT>∑TD+>± 1986e dü+e‘·‡s¡+˝À ªª$ìjÓ÷>∑<ës¡¢ s¡ø£åD #·≥º+, 1986μμqT πø+Á<ä Á|üuÛÑT‘·«+ÄyÓ÷~+∫+~.

Á|üuÛÑT‘·«+yê´bÕs¡ dü+düú\T #·≥ºã<ä∆+>± e´eVü≤]dü÷Ô Á|üuÛÑT‘ê«ìøÏ á ÁøÏ+~ $wüj·÷\˝À u≤<Ûä ‘· eVæ≤+#ê*‡ ñ+≥T+~.|üqTï\ #Ó*¢+|ü⁄ : yê´bÕs¡ dü+düú\T #Ó*¢+#˚ |üqTï\T Á|üuÛÑT‘ê«ìøÏ n~Ûø£yÓTT‘·Ô+˝À Ä<ëj·÷ìï düeT≈£Ls¡TkÕÔsTT.yê´bÕs¡ dü+düú\T neTàø±\ô|’, Ç‘·s¡ Ä<ëj·÷\ô|’ |üqTï\qT ìC≤sTTr>± ‘·ø£åD #Ó*¢+|ü⁄\T #˚ùd u≤<Ûä ‘· ø£*–ñ+≤sTT. yê´bÕs¡ dü+düú À |üì#˚ùd dæã“+~øÏ J‘ê\T/y˚‘·Hê\T #Ó*¢+#˚ dü+<äs¡“¤+˝ÀH˚ eT÷˝≤<Ûës¡+˝À |üqTï‘·–Z+∫ Ä yÓTT‘êÔìï j·T»e÷ì Á|üuÛÑT‘ê«ìøÏ yÓqTyÓ+≥H˚ »eT #˚j·÷*.

dü«#·Ã¤+<ä ø±s¡ Áø£e÷\˝À uÛ≤>∑kÕ«eTT\e«&É+:Á|üuÛÑT‘·«+ ‘·s¡|òü⁄q yê´bÕs¡ dü+düú\T dü«#·Ã¤+<ä+>± kÕe÷õø£ ø±s¡ Áø£e÷\˝À uÛ≤>∑kÕ«eTT\jT´ u≤<Ûä ‘·qT d”«ø£]+#ê*.Á|üø£è‹ yÓ’|üØ‘ê´ …’q es¡<ä\÷, ‘·TbòÕqT¢, uÛÑ÷ø£+bÕ\T yÓTT<ä …’q$ dü+uÛÑ$+∫q|ü⁄&ÉT Á|üuÛÑT‘·«+ ‘·s¡|òü⁄q yê´bÕs¡dü+düú\T ñ<ës¡+>± e´eVü≤]+∫ düVü‰j·Tø£ ø±s¡ Áø£e÷\˝À uÛ≤>∑kÕ«eTT\T ø±e&É+ u≤<Ûä ‘ê d”«ø±s¡y˚T.

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Quality: Quality goods and services should be produced and supplied seeking the welfareof the consumers. Availability of goods and services should be within the reach of theconsumers, avoiding exploitation due to artificial scarcity. Hence, the selection of channel ofdistribution is one of the most important concepts to make goods easily available to theconsumers. While launching a new product or service, the business has to think thoroughlyabout preferential tastes and considerations of the consumers.

Sales Promotion: Consumers are informed about the details and uses of the products availablein the market through felicitous advertisement. Advertisement has to educate the consumersto avoid adulteration and poor quality of goods. Proper information is to be given to consumersto avoid use of spurious products.

Supply of right quantity and quality of goods and services at affordable prices to different classes ofconsumers is highly appreciated. Befitting mechanism is to be provided to address the grievances ofcustomers/consumers. ‘CONSUMERISM’ is very active now a days as the Government enacted‘Consumer Protection Act, 1986’ to safeguard the interests of consumers.

GovernmentBusiness houses are expected to bear a number of responsibilities to the Government.

Payment of Taxes: Taxes paid by business firms form a major source of revenue to theGovernment. It is the responsibility of business units to pay taxes honestly and promptly ontheir sales and inputs. Proprietors of business firms have to deduct tax before payment ofsalaries and wages to their employees and remit the collection to the Government.

Participation in voluntary programmes: It is the responsibility of business firms to comeout voluntarily to render service to the society on behalf of the Government participating inrelief operations in times of calamities like cyclones, floods, earth quakes and other pandemicsituations.

Furnishing Information: It is the responsibility of the leaders of the business firms to feednecessary information for formulating new rules and regulations.

Service to the Government: The leader of the business offer service to the Governmentsending delegates along with government authorities to foreign countries for exploring theprospects of trade and industry in our country.

Government Contracts: Government announces various projects for the welfare anddevelopment of the society inviting tenders from suitable business houses. Many businesshouses bid for contracts of the government. The business firm qualified in the bid has to carryout the projects according to the required specifications and standards.

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düe÷#êsêìï düeT≈£Ls¡Ã&É+:nqTuÛÑe+ Òì sê»ø°j·THêj·T≈£î\≈£î, yê´bÕs¡ #·≤º\ô|’ ne>±Vü≤q Òì Hêj·T≈£î\≈£L ø±e\dæq düe÷#ês¡+Ç∫Ã #·≥ºdüuÛÑ\˝À #˚ùd ìj·TeT ìã+<ÛäHêe[øÏ ‘·eT dü÷#·\÷, dü\Vü‰\÷ yê]øÏ ‘Ó*j·T#ÓbÕŒ*.

Á|üuÛÑT‘ê«ìøÏ ùde\+~+#·&É+:$<˚o |üs¡ ≥q\T #˚ùd n~Ûø±s¡ãè+<ä+ düuÛÑT´\‘√ bÕ≥T yê´bÕs¡ dü+düú\ Hêj·T≈£î\T ≈£L&Ü bÕ˝§Zì uÛ≤s¡‘·<˚X¯+yê´bÕsê_Ûeè~∆øÏ ø£*dæe#˚Ã kÕqT≈£L\ n+XÊ Ò$TÀ $<˚o yê´bÕs¡ dü+düú\≈£î ‘Ó*j·TCÒj·÷*. á u≤<Ûä ‘·qTd”«ø£]+∫q+<äTe\¢ eTq <˚X¯+˝À es¡Ôø£+, yêDÏ»´+, |ü]ÁX¯eT\T n_Ûeè~∆ #Ó+<˚ neø±XÊ\T yÓTs¡T>∑e⁄‘êsTT.

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ø±\Twü ìj·T+Á‘·D:ø±\Twü ìj·T+Á‘·D≤ #·s¡ \T rdüTø√yê*‡q u≤<Ûä ‘· Á|ü‹ yê´bÕs¡ dü+düú≈£L ñ+~. Á|üe÷<äø£s¡ yêj·TTe⁄\T, e´sêú\TeT]j·TT eTTs¡T>∑T ãj·TÏøÏ $&ÉT<ä\ #˚ùd dü+<äs¡“¤+˝À |üsêés¡D+ ø±\Twü + ne⁄‘√+~. M\sTTq+‘· es¡≈£Lø±\Twü + ‘·–Z+#·&ÜìøÏ #·s¡ \T rdüTø√e&É+ eT]j·TT Øôd’øÏ¢+>¥, |ü⁄q]«ìjÓ÷>∑+ #·s¡ \T nqTdü]+#·&É+ e÷qyê[øÏÁX‚j·Tdüÿs¡+.

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Environment:It is the basic responsibility of every citizen to protect the environment to offer a promising future tothe next generations. Business is also not an exception from this primary duty and responsibility ofprotecting the environment. Protection of environment is given great importance all over the world.To protect the environment, the following steps are to be taken by business:

Conservation of Natural ResourcesNatural resources are a valuable gift to the human beings. They are scarce having the characteristicof exhausting at a higher rate. They must be used judiciously. It is the responsibility of citizens as wellas business houses to find out alternative resources to meet the needs of people. There are severalways to conserve natural resources such as:

Using less water. Using renewable energy. Turning off lights. Recycling. Selecting reusable goods. Managing thermostat.

Pollution ControlSuitable steps must be taken for environmental engineering to prevent all sorts of pollution. A varietyof ways and means are applied to arrest damage done to the environment by the discharge ofharmful substances. The industrial waste and sewage should be disposed of with utmost care so asto protect environment. If possible re use and recycling methods are to be adopted to minimizepollution.

We have been facing severe problems due to Air pollution. Water pollution. Sound pollution and Soil contamination.

National Government established Central Pollution Control Board on 22nd September, 1974 toprevent all sorts of pollution.

CommunityResponsibility of business towards community or society is a moral obligation. A part of profits of thebusiness may be spent for civic facilities and educational needs of the neighborhood. Providingemployment opportunities in business establishments will improve the standard of living of people inbuilding up a better society.

OwnersBusiness has a separate legal entity in the eyes of existing laws. It denotes that it separates itself fromowners. Business firm does the business with the funds contributed by owners. Hence , business has

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Á|ü|ü+#·yê´|üÔ+>± á ÁøÏ+~ ø±\TcÕ´\T e÷qyê[øÏ Çã“+~ø£s¡+>± |ü]D$T+#êsTT.1. yêj·TT ø±\Twü´+. 2. ˙Ï ø±\Twü´+. 3. X¯ã› ø±\Twü´+. 4. uÛÑ÷$T ø±\Twü +.ø±\Twü ìyês¡D≤ #·s¡ ˝À¢ uÛ≤>∑+>± πø+Á<äÁ|üuÛÑT‘·«+ 1974 ôdô|º+ãs¡T 22e ‘˚Bq ôd+Á≥˝Ÿ bı\÷´wüHé ø£+ÁÀ˝ŸuÀs¡T¶qT @sêŒ≥T #˚dæ+~.

düe÷»+ :yê´bÕs¡ dü+düú\T düe÷C≤ìøÏ u≤<Ûä ‘· eVæ≤+#·&É+ ø£ HÓ’‹ø£ u≤<Ûä ‘·. düe÷»+ qT+∫ |òü*‘ê\T bı+~q yê´bÕs¡dü+düú\T ‘·eT ≤uÛ≤\˝À ø=+‘· uÛ≤>±ìï düe÷C≤_Ûeè~∆øÏ, $<ë´|üs¡yÓTÆq n+XÊ\≈£L $ìjÓ÷–+#ê*. ñ<√´>±eø±XÊ\ø£\Œq≈£î ÁbÕ<Ûëq´‘· Çyê«*. MÏe\¢ Á|ü»\ Jeq Á|üe÷DkÕúsTT yÓTs¡T>∑T|ü&ç, yÓTs¡T¬>’q düe÷» ìsêàD≤ìøÏ<√Vü≤<ä|ü&Ée#·TÃ.

j·T»e÷qT\Tyê´bÕsêìøÏ Á|ü‘˚ ø£ ndæú‘·«+ ñ+~. n+fÒ yê´bÕs¡ dü+düú y˚s¡T, j·T»e÷ì y˚s¡ì ns¡ú+. j·T»e÷ì düeT≈£L]ÃqeT÷\<Ûäq+‘√ dü+düú yê´bÕs¡+ #˚düTÔ+~. ø£qTø£ yê] ô|≥Tºã&çô|’ ˝≤uÛ≤\qT dü+bÕ~+∫ Çe«e\dæq u≤<Ûä ‘·yê´bÕs¡dü+düú\≈£î ñ+~. Bìe\¢ eT÷\<Ûäq+ eè~∆ #Ó+~ j·T»e÷qT\T Bs¡Èø±\+ bÕ≥T yê´bÕs¡+˝À ø=qkÕπ>neø±X¯+ ñ+≥T+~.

düs¡|òüsê<ës¡T¢, ãTTD<ë‘·\T eT]j·TT Ç‘·s¡T\T:yê´bÕsê_Ûeè~∆ À düs¡T≈£î düs¡|òüsê<ës¡T¢, düs¡T≈£î ns¡Te⁄ MT<ä Ç∫Ãq ãTTD<ë‘·\÷ ≈£L&Ü uÛ≤>∑kÕ«eTT Ò. ø£qTø£yê´bÕsê_Ûeè~∆øÏ düVü≤ø£]+∫q düs¡|òüsê<ës¡¢≈£î n+^ø£]+∫q yê´bÕs¡ wüs¡‘·T\ Á|üø±s¡+ düø±\+˝À #Ó*¢+|ü⁄ #j·T&É+,ãTTD<ë‘·\≈£î düø±\+˝À e&û¶ #Ó*¢+|ü⁄‘√u≤≥T, bı+~q ãTTD≤ìï ≈£L&Ü ‹]– #Ó*¢+#·&É+ yê´bÕs¡ dü+düú\u≤<Ûä ‘·.

‘√Ï yê´bÕs¡ dü+düú\ |ü≥¢ u≤<Ûä ‘·:‘·eT‘√u≤≥T yê´bÕs¡+ #˚ùd Ç‘·s¡ yê´bÕs¡ dü+düú\|ü≥¢ Á|ü‹ yê´bÕs¡ dü+kÕú ùdïVü≤ düVü≤ø±sê\T n+~+#ê*.nHê´j·TyÓTÆq, nHÓ’‹ø£yÓTÆq b˛° |ü&É≈£L&É<äT. Ç‘·s¡ yê´bÕs¡ dü+düú\ n+‘·s¡Z‘· $wüj·÷\˝À ø£\T>∑CÒdüTø√≈£L&É<äT.Ç‘·s¡ dü+düú\ô|’ ndü‘· Á|ü#êsê\T #˚j·T&É+, b˛°ø√dü+ <Ûäs¡\˝À e´‘ê´dü+ #·÷|ü&É+, HêD´‘ê Á|üe÷D≤\T Òìdüs¡T≈£îqT düs¡|òüsê #˚j·T&É+ nHÓ’‹ø£ #·s¡ \T, ø£qTø£ yêÏì $düà]+#ê*.

7.2.2. kÕe÷õø£ u≤<Ûä ‘·≈£î n&É¶+≈£î\TkÕe÷õø£ u≤<Ûä ‘· rdüTø=H˚ yê´bÕs¡ dü+düú\T ø=ìï n&É¶+≈£î\qT m<äTs=ÿ+≥THêïsTT.

ÁøÏ+~ kÕúsTT ìsê«Vü≤≈£î\T kÕe÷õø£ u≤<Ûä ‘ê Á|üD≤[ø£\T s¡÷bı+~+∫Hê, $<Ûëq ìs¡íj·÷\TrdüTø=H ô|’ kÕúsTT ìsê«üVü≤≈£î\T kÕe÷õø£ u≤<Ûä ‘ê+XÊ\T yê´bÕs¡ ˝≤uÛ≤\qT ‘·–ZkÕÔsTT nH˚uÛ≤eq‘√ ‹s¡düÿ]düTÔHêïs¡T.

Á|ü‹ yê´bÕs¡ dü+kÕú >∑]wüº ˝≤uÛ≤s¡®Hê<Û´j·T+‘√ |üì#˚düTÔ+~. ø£qTø£ Á|ü<Ûëq <Û´j·TkÕ<Ûäq˝ÀìeT>∑ïyÓTÆq yê´bÕs¡ dü+düú\T kÕe÷õø£ u≤<Ûä ‘· n+XÊìï Á|üø£ÿ≈£î HÓfÒºdüTÔHêïsTT.

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the responsibility towards owners ensuring just and fair return on their investment/capital. Business isalso responsible for guaranteeing a steep rise of capital so as to enable the owner to continue thebusiness.

Suppliers, Creditors and OthersThe functioning of a business firm is also affected by the suppliers, creditors and other interest groupswith whom the business has to interact. Hence business owes its responsibility towards such interestgroups i.e. prompt payment to suppliers and payment of interest along with repayment of principalamount to Lenders/Creditors.

Responsibility towards Inter-BusinessThe responsibility of business includes a healthy and co-operative business relationship with differentbusiness houses. Businessmen shall resist unfair and unethical competition and avoid unfair interferencein the business of others, such as unfair canvassing against other business firms, price-rigging, supplyof sub standard goods and like.

7.2.2 BARRIERS OF SOCIAL RESPONSIBILITY

The task of social responsibility is facing the following barriers at different levels, while achieving thegoals of social responsibility:

The decision makers at top level may not accept the programmes related to socialresponsibility claiming that the programmes/plans are non-profitable to organization

The main objective of any business is profit maximization. As such, the concept ofsocial responsibility may be kept aside while achieving the objective of profitmaximization.

Even if a particular business unit does some socially beneficial activity it may not beappreciated by the competitors in the market, which hampers the morale of thebusinessman who comes forward to render service to the society.

7.3. POLITICAL ENVIRONMENT

Political Environment plays a vital role which influences the environment of business. PoliticalEnvironment constitutes all the factors relating to the policies of the political parties, and type of theGovernment in power. The attitude of Government towards different groups of society and differentclasses of business units directs and controls the activities. The economic and business policies areregulated by the Government. The existing political system of a country promotes, encourages,directs and controls, the business activities in that Nation.

The political environment of a country has immediate and great impact on business activities. Hence,it is the responsibility of Businessman to scan the environment with keen observation in order to make

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yê´bÕs¡ dü+düú u≤<Ûä ‘· kÕe÷õø£ u≤<Ûä ‘· nì dü+düú\T eTT+<äTø=∫Ã düe÷CÀ|üjÓ÷>∑ ø±s¡ Áø£e÷\T#˚|üÏºHê, b˛° dü+düú\T n_Ûq+~+#·ø£b˛e&É+‘√u≤≥T $eT]Ù+#·&É+ e\¢ düe÷»+ ø√dü+bÕ≥T|ü&˚ yê´bÕs¡ dü+düú\ Ä‘·à$XÊ«dü+ düqï–\T¢‘√+~.

7.3. sê»ø°j·T yê‘êes¡D+

sê»ø°j·T yê‘êes¡D+ yê´bÕs¡ neø±XÊ\qT Á|üuÛ≤$‘·+ #˚düTÔ+~. sê»ø°j·T bÕØº\ $<ÛëHê\T, n~Ûø±s¡+˝Àñqï Á|üuÛÑT‘·« <äèø£Œ<Ûä+ $$<Ûä düeT÷Vü‰\T, yê´bÕs¡ dü+düú\|ü≥¢ yÓ’K]ì ‘Ó*j·TCÒkÕÔsTT. kÕe÷õø£ dæú‹>∑‘·T\qTdü]~<ä›&ÜìøÏ, yê´bÕs¡ $<ÛëHê\ ø£≥º&çø° Á|üuÛÑT‘ê«\T ìj·T+Á‘·D #j·T&Éy˚T ø±≈£î+&Ü ~XÊìπs∆X¯+ #˚kÕÔsTT.yê´bÕs¡+˝Àì $$<Ûäs¡ø±\ dü+düú\ kÕúsTT qqTdü]+∫ Á|üuÛÑT‘·« yÓ’K] e÷s¡TŒ #Ó+<äT‘·÷ ñ+≥T+~.

ÁøÏj·÷ o\+>±q÷, ìC≤sTTr>±q÷ dæús¡+>± ñ+&˚ sê»ø°j·T eédüú e´≈£îÔ\ s¡ø£åD≈£î eT]j·TT yê] ÄdüTÔ\dü+s¡ø£åD≈£L uÛÑs√kÕqT ÇdüTÔ+~. Á|ü‹ Á|üuÛÑT‘·«eT÷ sêC≤´+>±ìøÏ ˝Àã&ç |üì#˚j·÷*‡ ñ+≥T+~. <ëìe\¢yê´bÕsê_Ûeè~∆øÏ, ñqï‹øÏ ‘√&ÜŒ≥TqT Ç∫Ãq≥¢e⁄‘·T+~. dæús¡yÓTÆq ìC≤sTTr‘√ ≈£L&çq Á|üuÛÑT‘·«+ Ä]∆ø£$ø±düø±sê´#·s¡D≈£î <√Vü≤<ä|ü&ÉT‘·T+~.

7.3.1. sê»ø°j·T eédüú\T

uÛ≤s¡‘·<X+ sê»ø°j·T eédüúqT q&É|æ+#·&ÜìøÏ, eTq sêC≤´+>∑+ eT÷&ÉT s¡ø±\ sê»ø°j·T eédüú\qT Á|ükÕ~+∫+~. XÊdüqdüuÛÑ Ò<ë #·≥ºdüuÛÑ ø±s¡ ìsê«Vü≤ø£ eédüú Hê´j·T eédüú

á eT÷&ÉT eédüú\÷ dü«‘·+Á‘· +>± eéVü≤]+#˚y˚. n+fÒ ˇø£ eédüú $T–*q ¬s+&ÉT eédüú\ |üìrs¡T˝Àø£*Œ+#·Tø√≈£L&É<äT. ø±˙ Á|üuÛÑT‘ê«ìø°, Á|ü»\≈£L eT<Ûä $uÛÒ<ë\T e∫ÃHê, e´≈£îÔ\ ÁbÕ<Ûä$Tø£ Vü≤≈£îÿ\≈£î uÛÑ+>∑+yêÏ*¢Hê düMTøÏå+#˚ n~Ûø±s¡+ Hê´j·Tedüú≈£î ñ+~. m+<äTø£+fÒ eTq sêC≤´+>∑+ düs¡« dü‘êÔø£ >∑D‘·+Á‘· <˚X¯+˝ÀìbÂs¡T\≈£î düe÷q‘ê«ìï, ùd«#·Ã¤ , uÛ≤e Á|üø£≥Hê kÕ«‘·+Á‘ê´˙ï, kÂÁuÛ≤‘·è‘·«+, ñ<√´>∑ ñbÕ~Û s¡+>±\˝À düe÷qneø±XÊ\qT uÛ≤s¡rj·TT\≈£î es¡+>± Ç∫Ã+~.

XÊdüqdüuÛÑ:XÊdüqdüuÛÑ <Xø±\e÷q |ü]dæú‘·T\qT ø£qT>∑TD+>± ø=‘·Ô#·≤º\qT ‘·j·÷s¡T #j·T&É+, neT\T˝À ñqï #·≤º\˝Àì˝ÀbÕ\qT dü]#˚j·T&É+, Á|üdüTÔ‘· nedüsê\≈£î dü]|ü&Éì ñ|üjÓ÷>∑|ü&Éì |ü⁄sê‘·q #·≤º\qT ñ|üdü+Vü≤]+#·&É+yÓTT<ä …’q $<ÛäT\qT ìs¡«Væ≤düTÔ+~.

ø±s¡ ìs¡«Vü≤D≤ eédüú ( Ò<ë) Á|üuÛÑT‘·«+ :#·≥ºdüuÛÑ\T #˚dæq #·≤º\qT neT\T|üs¡#˚ u≤<Ûä ‘·qT ø±s¡ ìs¡«Vü≤D≤eédüú sêC≤´+>∑ã<ä›+>± neT\T #˚düTÔ+~.uÛ≤s¡‘·<X Á|üuÛÑT‘·«+ ªªdüe÷Kéédüúμμ ô|’ |üP]Ô $XÊ«dü+‘√ |üì#düTÔ+~. n+fÒ πø+Á<ä Á|üuÛÑT‘ê«ìø°, sêh Á|üuÛÑT‘ê«\≈£L

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changes in his organization according to the changing factors of Political Environment. A stable,honest, dynamic and efficient political system assure personal protection and security to the citizensof the country and to their properties. Every government should govern the country within theframework of the Constitution.

Thus, a stable and dynamic political environment of a country ensures business growth. The politicalphilosophy of Indian democracy having a stable government acts as a promoter that regulateseconomic activity. However, most of the decisions of the government regarding business are basedon consideration of the political party in rule. Hence, legal and political environment of a countryprovides a boundary within which business has to function. The success of the business dependsupon the challenges being faced according to the political and legal system.

7.3.1 POLITICAL INSTITUTIONS

Indian Constitution came into force on 26th January 1950. The main object of the Constitution ofIndia solemnly declared India to be a sovereign, socialist, secular, Democratic Republic in order tosecure justice, liberty, equality and fraternity.

Justice: Social, Economic and PoliticalLiberty : Liberty of thought, expression, belief, faith and worship.Equality : Equality of Status and OpportunitiesFraternity : Assuring the dignity of individual and the unity and integrity of the NationThe Constitution of India of democratic set up granted the legislature, executive and judiciary whichimportant institutions to govern the country and independent in nature.

LegislatureLegislature is the most powerful institution among three organs of the government. Legislature is thepolitical institution entrusted with the powers of policy making, law making and executive control.Legislature acts as mirror for the aspirations and opinions of the public. The Legislature makes relevantlaws from time to time to suit all the requirements of the Nation including business. The business isbound to perform its activities within the framework of the existing laws of the land. No business unitcan function against the laws prevailing in the country.

ExecutiveThe term government also refers to the State. The framers of our constitution made provision forFederal System. The term ‘Federalism’ means distribution of powers between the National /Central Government and the State Governments. The powers and functions of the Central and StateGovernments are defined by the Constitution. The Central and State Governments can functionindependently in the areas as defined by the Constitution. The distribution of powers aims at achievingnational integration. Government is the executive body of laws made by the legislature in a FederalState. And the Constitution is the supreme of the land.

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JudiciaryEssential Judicial functions:

1) Deciding Disputes2) Settling the relationship between private citizens.3) Settling the issues between citizens and the Government4) Interpretation of Laws / Statutes.5) Determining civil and criminal liabilities of private persons and State officials.6) Determining the legality of the government actions.

The Supreme Court of India is the Apex Court in India. All lower courts viz., High Courts of therespective States, District Courts , and other Subordinate Courts are subordinate to the SupremeCourt of India. The judgment given by the Supreme Court is final and all the lower courts shouldhonor the judgment of the Supreme Court.

7.3.2. RESPONSIBILITIES OF BUSINESS TOWARDS GOVERNMENT

Business firms are expected to bear a number of responsibilities to the government. Laws made byCentral Government or State Government or Local bodies must be honored by the business houses.Business houses should look at the government for support, guidance and encouragement.

Payment of taxTaxes paid by business firms form a major source of revenue to the government. It is the responsibilityof the business units to pay regular taxes on their sales, inputs and income . The Income Tax Act,1961 directs the pay masters / proprietors of business firms to deduct tax before payment of salariesand wages to their employees and remit the collection to the Government.

Voluntary programmesIt is expected by the government that business firms have to come out voluntarily to render service

to the society in times of natural calamities like cyclones, floods, earthquakes and other pandemicsituations etc., Business firms extend their helping hands to Government Agencies and LocalGovernment units in connection with relief operations, tree planting and sanitary works etc., Sometimesbusiness firms actively involve in sponsoring social welfare programmes like environment preservation,promotion of education, culture and sports etc., ex: sponsoring National and International sports and games like Cricket, Tennis and Hockey etc.,

Providing informationBusinessmen usually have necessary knowledge and experience. Hence the leaders of the businesspresent before the decision makers the facts and problems individually or through various Forumsand plead for any modifications of the decisions. Business leaders take every possible measure to getthe decisions changed, if they are detrimental to the development of trade commerce, and industry.Feedback information will be given by the business firms to the Government on the decisions of thepolitical leaders.

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düe÷#ês¡+ n+~+#·&É+yê´bÕs¡y˚‘·Ô\≈£î kÕ<Ûës¡D+>± nedüs¡yÓTÆq C≤„q+ eT]j·TT nqTuÛÑe+ ñ+≥T+~. n+<äTe\¢ ìs¡íj·T+ rdüT≈£îH˚eTT+<äT yê´bÕs¡ Hêj·T≈£î\T yêdüÔyê\qT eT]j·TT düeTdü \qT e´øÏÔ>∑‘·+>± Ò<ë $$<Ûä bò s¡yéT\ <ë«sê ‘Ó*j·T#˚kÕÔs¡T eT]j·TT ìs¡íj·÷\T @yÓ’Hê dües¡D\ ø√dü+ $»„|æÔ #˚kÕÔs¡T. yê´bÕs¡ Hêj·T≈£î\T yêDÏ»´+ eT]j·TT|ü]ÁXeT n_Ûe~∆øÏ Vü‰ìø£s¡+>± ñ+fÒ, ìs¡íj·÷\T e÷s¡Ã&ÜìøÏ kÕ<Ûä eTjT´ Á|ü‹ #·s¡ qT rdüT≈£î+≤s¡T. sê»ø°j·THêj·T≈£î\ ìs¡íj·÷\ô|’ yê´bÕs¡ dü+düú\T Á|üuÛÑT‘ê«ìøÏ n_ÛÁbÕj·T düe÷#êsêìï n+~kÕÔsTT.

Á|üuÛÑT‘·« |üŒ+<ë\TÁ|üuÛÑT‘·«+ dü+πøåeT+ eT]j·TT n_Ûe~∆ ø√dü+ $$<Ûä ÁbÕC…≈£îº\qT Á|üø£Ï+∫, ‘·–q yê´bÕs¡ dü+düú\ qT+&ç f…+&És¡¢qTÄVü‰«ìdüTÔ+~. nH˚ø£ ns¡Ω‘· ø£*–q yê´bÕs¡ dü+düú\T Á|üuÛÑT‘·« ˇ|üŒ+<ë\ ø√dü+ f…+&És¡T¢ y˚kÕÔsTT. _&é À ns¡Ω‘·kÕ~Û+∫q yê´bÕs¡ dü+düú nedüs¡yÓTÆq ôdŒdæ|òæπøwüHé\T eT]j·TT Á|üe÷D≤\ Á|üø±s¡+ ÁbÕC…≈£îº\qT ìs¡«Væ≤+#ê*.

Á|üuÛÑT‘ê«ìøÏ ùdeyê´bÕs¡ Hêj·T≈£î\T Á|üuÛÑT‘ê«ìøÏ ùde\qT n+~kÕÔs¡T. eTq <˚X¯+˝À yêDÏ»´+ eT]j·TT |ü]ÁX¯eT\ neø±XÊ\qTnH˚«wæ+#·&É+ ø√dü+ yê´bÕs¡ n~Ûø±s¡T\T $<˚o <˚XÊ\≈£î Á|ü‹ì<ÛäT\‘√ bÕ≥T sêe&É+ kÕ<Ûës¡DyÓTÆq~ eT]j·TTkÕ<Ûës¡DyÓTÆq~. Á|üuÛÑT‘·«+ $$<Ûä ø£$T°\T eT]j·TT dü\Vü‰ uÀs¡T¶\qT @sêŒ≥T #düTÔ+~, MÏøÏ yê´bÕs¡ Hêj·T≈£î\T≈£L&Ü <˚XÊìøÏ ÁbÕeTTK´‘· ñqï düeTdü \ô|’ ùde #˚j·T&ÜìøÏ Hê$TH˚Ÿ #˚j·Tã&Ü¶s¡T.

sê»ø°j·T ø±s¡ ø£ ≤bÕ˝À¢ bÕ˝§Zq&É+ÁøÏj·÷o\ sê»ø°j·÷\˝À yê´bÕs¡y˚‘·Ô\ uÛ≤>∑kÕ«eT´+ #·s¡Ã≈£î neø±X+ ø£*ŒdüTÔ+~. sê»ø°j·T ø±s¡ ø£ ≤bÕ\˝Àyê´bÕs¡y˚‘·Ô\T bÕ˝§Zq&ÜìøÏ ø=ìï yê<äq\T nqT≈£L\+>± ñ+≤sTT eT]j·TT ø=ìï sê»ø°j·T ø±s¡ ø£ ≤bÕ\˝Àyê´bÕs¡ Hêj·T≈£î\T bÕ˝§Zq&ÜìøÏ e´‹πsø£+>± ñ+≤sTT. nsTT‘, yê] uÛ≤>∑kÕ«eT´+ Á|ü‘· ø£å+>± ø£ì|æ+#·q|üŒÏø°,yê] Á|ü‹ì<ÛäT\T / Hê$T˙\T yê´bÕs¡+ ‘·s¡|ü⁄q eéVü≤]kÕÔs¡T.

7.3.3. yê´bÕs¡+ |ü≥¢ Á|üuÛÑT‘·« u≤<Ûä ‘·\TÁ|üuÛÑT‘ê«ìøÏ yê´bÕs¡+ #ùd u≤<Ûä ‘·\ ø£+fÒ yê´bÕs¡+ |ü≥¢ Á|üuÛÑT‘·« u≤<Ûä ‘·\T #ê˝≤ eTTKýÓTÆq$. XÊ+‹uÛÑÁ<ä‘·\qT|ü]s¡øÏå+#·&ÜìøÏ, &ÉãT“ eT]j·TT Á¬ø&çŸqT ìs¡ísTT+#·&ÜìøÏ eT]j·TT ìj·T+Á‹+#·&ÜìøÏ Á|üuÛÑT‘ê«ìøÏ n~Ûø±s¡+eT]j·TT dü+ø£\Œ+ ñ+~. düe÷»+ n_Ûe~∆ eT]j·TT düeTs¡úe+‘·yÓTÆq Hêj·Tø£‘·«+ ø√dü+ Á|üuÛÑT‘·«+ düe÷#ês¡+,kÕ+πø‹ø£‘· eT]j·TT eTÚ*ø£ dü<äTbÕj·÷\ e+Ï ‘·–q eqs¡T\qT n+~düTÔ+~. Á|üC≤kÕ«eT´j·TT‘·+>± mìï¬ø’quÛ≤s¡‘· Á|üuÛÑT‘·«+ <ëì bÕÁ‘· eT]j·TT u≤<Ûä ‘·\ >∑T]+∫ düŒwüº+>± ñ+~. yê´bÕs¡ ø±s¡ ø£ ≤bÕ\ Á|üyÓ÷≥sY,¬s>∑T´ Ò≥sY eT]j·TT ø£+ÁÀ\sY>± Á|üuÛÑT‘·«+ yê´bÕs¡+ |ü≥¢ øÏ+~ u≤<Ûä ‘·\qT ìs¡«Væ≤düTÔ+~:

kÕú|æ+#·ã&çq #·≤º\ neT\Tyê´bÕs¡+ |üì#ùd #·≤º\T eT]j·TT ìã+<Ûäq\qT Á|üuÛÑT‘·«+ @sêŒ≥T #düTÔ+~ eT]j·TT neT\T #düTÔ+~. yê´bÕsêìøÏdü+ã+~Û+∫q nìï n+XÊ\qT ø£esY #˚ùd #·≤º\T eT]j·TT ìã+<Ûäq\qT Á|üuÛÑT‘·«+ neT\T #˚düTÔ+~. ªªÄ≥ìj·Te÷\Tμμ Á|üuÛÑT‘·«+ n+~düTÔ+~ , Bìe\¢ yê´bÕs¡ eédüú düC≤e⁄>± |üì#˚düTÔ+~. Ä≥ jÓTTø£ÿ ìj·Te÷\THêD´‘·qT yÓTs¡T>∑T|üs¡#·&ÜìøÏ b˛°ì ìs¡«Væ≤+#·&ÜìøÏ düVü‰j·T|ü&É‘êsTT. >∑T‘êÔ~Û|ü‘ê´\T Á|üuÛÑT‘·«+ ìj·T+Á‹+∫,#·≤º\qT kÕú|æ+#·&Éy˚T ø±≈£î+&Ü yêÏì neT\T #˚j·T&É+ Á|üuÛÑT‘·« u≤<Ûä ‘·. yê´bÕs¡ dü+düú\T Ò<ë e´≈£îÔ\T Ò<ë

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Government contractsGovernment announces various projects for the welfare and development of the society, invitingtenders from suitable business houses. Many qualified business houses bid for contracts of thegovernment . The business firm qualified in the bid has to carry out the projects according to therequired specifications and standards.

Service to the governmentThe leaders of the business offer services to the Government. It is common and usual for businessexecutives to accompany delegates to the foreign countries for exploring the prospects of trade andindustry in our country. The Government constitutes various Committees and Advisory Boards towhich the business leaders are also nominated to serve the Nation on issues of importance.

Participation in political activityParticipation of businessmen in active politics is giving room for discussion. Some arguments are infavour of participation of business people in political activity and some are against participation ofbusiness leaders in political activities. However, though their participation is not visibly seen directly,their representatives / nominees act on behalf of the business.

7.3.3. RESPONSIBILITIES OF GOVERNMENT TOWARDS BUSINESSResponsibilities of government towards business are much more important than the obligations of thebusiness to the government. Government has the power and will to maintain law and order, to decideand control money and credit. Government provides adequate resources like information, technologyand infrastructure, for development of society and efficient leadership. Democratically elected IndianGovernment is clear about its role and responsibilities. Government being a promoter, regulator andcontroller of business activities undertakes the following responsibilities towards business:

Enforcement of established lawsGovernment establishes and enforces laws and regulations under which the business functions.Government enacts laws and regulations covering all the aspects pertaining to business. “Rules of thegame” are provided by the government, which make the business system function smoothly. Therules of the game help maintain competition for the improvement of quality. If monopolies developthe government regulate and control them, it is the responsibility of the Government not only toestablish laws, but to enforce them. In case of differences arising between business firms or individualsor Government Agencies, the Government provides the system of adjudication through courts.

Maintenance of law and orderGovernment has the responsibility of maintaining law and order and protecting persons and property.No business can be carried on successfully in the absence of peaceful atmosphere.

Money and creditGovernment undertakes the responsibility of providing a system of money and credit. Furthe, it is theresponsibility of the Government to regulate money and credit and protect the value and integrity ofthe Rupee, so as to guard against rapid fall in its value in terms of other currencies.

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Balanced development and growthAll the regions of a country should be developed equally to pave the path for orderly growth. Orderlygrowth indicates Balanced Regional Development creating full employment and stable economy.The Government has the resource and capabilities to achieve balance of regional development.

InfrastructureThe responsibility of the Government is to provide infrastructural facilities for effective functioning ofbusiness. Infrastructural facilities include transportation, power, finance, civil amenities, warehousingand trained personnel.

InformationIt is the responsibility of the Government Agencies to publish and provide large volume of informationwhich is used effectively by business houses. The information services include Departments ofCommerce and Industry, Agriculture, Labour, Education, Health, Banking, Technology And AtomicEnergy.

Assistance to small scale industriesIndia is an agro based country contributing large volume of income to the economy. In addition toagriculture, small scale industrial establishments play a special role in our economy. Being small insize, these establishments generally face problems relating to finance, marketing, know-how andinfrastructural facilities. Hence, it is the responsibility of the Government to arrange required facilitiesand encourage small-scale industries to grow, which can provide employment opportunities.

Transfer of technologyDiscoveries and inventions of the Government owned Research Organizations transfer the end resultto private industries also. Encouragement of the Government improves commercial production.Examples: DRDO, ISRO and other Government owned Institutions transfer their discoveries andinnovations to the private industry.

Competition with private sectorGovernment agencies compete with the private sector to ensure improvement in the quality ofproduction adhering to the established policies.

Inspection and licensesIt is one of the most important responsibilities of the government to conduct inspection activities onprivate business houses. The inspection departments like food and drugs, weights and measuresensure quality and quantity of goods. The authorities take steps for prevention of sub-standardgoods. Sometimes Government also regulates the prices for the benefit of the consumers.

Protection from foreign competitionIt is major responsibility of the Government to protect and encourage indigenous industries by providingvarious subsidies and incentives because indigenous industries provide employment opportunities tothe youth and bring revenue to the exchequer of the Government.

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KEY TERMS

Bureaucracy:A system of Government in which most of the decisions are taken by state authorities rather thanby elected representatives.

Consumerism :An organized movement of citizens and Government to strengthen the rights and powers ofbuyers.

Mitigation of risk: Buying political risk insurance is a way to manage political risk. Mitigation corporations (MNC)use such insurance to reduce the risk.

Totalitarianism :Also called authoritarianism individual freedom is completely subordinated to the power of authorityof state and concentrated in the hands of one person.

Urbanisation : people moving from rural areas towards the urban areas.

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Tariffs and QuotasTariffs and quotas are used to protect home industries from foreign competition. High volume ofcustoms and duties are levied on foreign products and services.

REVIEW QUESTIONS1. Which of the following constitute social environment ______

a. Standard of Livingb. Education levelc. Habitsd. All of the above.

2. Social responsibility of businessa. Introduced recentlyb. Observed in good olden daysc. Present & good olden daysd. None of the above

3. Responsibilities of the Government is to ________a. Enforce lawsb. Maintain law and orderc. Protect the Nation from external forcesd. All of the above.

4. Social responsibility of businessa. Towards Governmentb. Towards Suppliersc. Towards Consumers/customersd. All of the above

5. Who is the custodian of fundamental rights _____a. District courtb. High courtc. Supreme courtd. Subordinate Magistrate court

6. The constitution of India gifted how many number of political institutions __a. 3b. 5c. 7d. None of the above

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7. Business environment includes the following environments _____a. Internalb. Externalc. Internal and Externald. All of the above

8. Which is not included in the External Environment of Business _______a. Ownersb. Suppliersc. Consumersd. Government

9. What are the causes of Pollution __a. Air pollutionb. Water pollutionc. Sound pollutiond. All of the above

10. What are the essential functions of Judiciarya. Interpretation of lawsb. Diciding disputesc. Protecting fundamental rightsd. All of the above

ANSWERS.

D A D D C A D A D D

INTERACTIVE LINKSSocial Environment: https://www.dictionary.com>...Concept of social responsibility of business: https://www.investopedia.com>

https://www.bbamantra.comPolitical Environment: https://www.mbaskool.com>

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1 2 3 4 5 6 7 8 9 10

Legal Environment


1. understand the concepts of Legal Environment 2. understand the impact of Demonetisation. 3. acquire the knowledge of GST. 4. examine the various acts pertaining to Business. 5. probe into Legal Changes

Chapter Layout: 8.1. Legal Environment 8.2. Demonetisation

8.2.1 Reasons for Demonetisation 8.2.2 Scope of Demonetisation 8.2.3 Advantages of Demonetisation 8.2.4 Disadvantages of Demonetisation 8.2.5 Impact of Demonetisation

8.3. Goods and Service Tax (GST) 8.3.1 Components of GST 8.3.2 Objectives and salient features of GST 8.3.3 Salient features of GST 8.3.4 Advantages of GST 8.3.5 Disadvantages of GST 8.3.6 Impact of GST

8.4. Political Stability 8.5. Legal Changes

Chapter

8

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õ. j·Tdt. Ï jÓTTø£ÿ Á|ü<Ûëq \ø£å + ø±´ùdÿ&ç+>¥ Á|üuÛ≤yêìï ìyê]+#·&É+, n+fÒ |üqTïô|’ |üqTï. |üqTïm>∑y˚‘· eT]j·TT n$˙‹ì õ. j·Tdt. Ï ìs√~ÛdüTÔ+~. H√≥¢ s¡<äT› eT]j·TT õmdtÏ <˚X¯ Ä]úø£ eédüúqTdæúØø£]+#˚ \ø£å +‘√ ñHêïsTT.

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CHAPTER OVERVIEW

The chapter “Legal Environment” gives an elaborate understanding of variousActs pertaining to Business. It provides information of various Acts tosettle the issues of Employers and Employees. The objectives of variousenactments are to establish harmony in the Environment of Business. It isthe duty of every one to obey the laws of the land. Non compliance oflaws leads to legal problems.

Demonetisation is the withdrawal of legal tender money in circulation.The recent demonetisation was announced on 8th November, 2016. Thedenominations of Rs. 500 and Rs. 1000 were withdrawn from circulationwith effect from 9th November, 2016. Government of India instructed thecitizens to deposit them in the banks. The main intention of demonetisationis to eliminate Corruption, Black money and Activities of Terrorism.

The introduction of GST is a revolutionary decision of the Government ofIndia. GST is founded on the principle of “One Nation & One Tax”. GST,which is a transparent tax, repealed various hidden and indirect taxes. Itfacilitates simple maintenance of records and accounts. GST is a destinationbased tax with uniformity in tax system in the entire country.

The main objective of GST is to avoid cascading effect i.e., Tax on Tax.GST prevents tax evasion and corruption. Demonetisation and GST areaimed at stabilizing the economy of the Nation.

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8.1. #·≥º|üs¡yÓTÆq yê‘êes¡D+

#·≥º|üs¡yÓTÆq yê‘êes¡D+ n+fÒ Á|üuÛÑT‘ê«\T #ùd $$<Ûä #·≤º\÷, XÊdüHê\÷, Á|üuÛÑT‘ê«~Ûø±s¡T\T C≤Ø#ùd |ü]bÕ\Hêñ‘·Ôs¡T«\T, πø+Á<ä, sêh Á|üuÛÑT‘ê«\T @sêŒ≥T #˚dæq $$<Ûä #·≥ºã<ä∆ $#ês¡D≤ ø£$T°\T Ò<ë ø£$TwüqT¢ C≤Ø #˚dæqñ‘·Ôs¡T«\T>± uÛ≤$+#ê*.

Hê´j·TkÕúq rs¡TŒ\qT judge made laws nìeéVü≤]kÕÔs¡T. uÛ≤s¡‘· dü]Vü≤<äT›\ À|ü\ yê´bÕs¡+ #ùd Á|ü‹ dü+kÕúá <˚X¯#·≤º\qT >ös¡$+∫ nqTdü]+#ê*. yê´bÕs¡ ìsê«Vü≤≈£î&ÉT neT\T˝À ñqï #·≤º\ô|’ |üP]Ô ne>±Vü≤qô|+#·Tø=ì ìj·TeT ìã+<Ûäq\qT ‘·÷#·. ‘·|üŒ≈£î+&Ü neT\T #˚dæ Hê´j·T ã<ä›yÓTÆq yê´bÕs¡+ #˚j·÷*. #·≤º\qTnqTdü]+#·ø£b˛sTTHê, n‹Áø£$T+∫Hê yê´bÕs¡dü+düú\T #·≥º|üs¡yÓTÆq #·s¡ \≈£î u≤<Ûä ‘· eVæ≤+#ê*.

yê´bÕsêìøÏ nqTe]Ô+#˚ $$<Ûä #·≤º\T uÛ≤s¡‘·<˚X¯+˝À neT\T˝À ñHêïsTT. yêÏ À ø=ìï eTTKýÓTÆq #·≤º\ô|’ne>±Vü≤q ô|+#·Tø=+<ë+ : INDIAN CONTRACT ACT, 1872

WORKMENS' COMPENSATION ACT, 1923

INDIAN TRADE UNION ACT, 1926

INDUSTRIAL DISPUTES ACT, 1947

FACTORIES ACT, 1948

INDUSTRIES (DEVELOPMENT AND REGULATION) ACT 1951

THE COMPANIES ACT, 1956

THE COMPANIES ACT, 2013

INDIAN COPYRIGHT ACT, 1957

MRTP ACT 1969

PATENTS ACT 1970

CONSUMER PROTECTION ACT, 1986

TRADE MARKS ACT, 1999

FOREIGN EXCHANGE MANAGEMENT ACT, 1999 (FEMA, 1999)

#·≥º|üs¡yÓTÆq yê‘êes¡D+ <ë«sê $ìjÓ÷>∑<ës¡T\ ÄdüøÏÔ eT]j·TT Vü≤≈£îÿ\qT ø±bÕ&É&ÜìøÏ Á|üuÛÑT‘·«+ yê´bÕs¡esêZ\qT ìj·T+Á‹düTÔ+~. n+<äT≈£î ñ<ëVü≤s¡D\T :

1) eT<ä bÕq+ Á|üø£≥q\ô|’ ìùw<Ûä+2) bı>±≈£î ñ‘·Œ‘·TÔ …’q dæ>∑¬s≥¢ ù|ø£≥¢ô|’ ªª<Ûä÷eTbÕq+ Äs√>±´ìøÏ Vü‰ìø£s¡+μμ nì $ìjÓ÷>∑<ës¡T\≈£î ôV≤#·Ã]ø£

eTTÁ~+∫ Á|üø£≥q Çyê«*.3) ∫qï |æ\¢\ $ìjÓ÷>±s¡∆+ bÕ\ ñ‘·Œ‘·TÔ\ô|’ ªª‘·*¢bÕ\T Äs√>±´ìøÏ eT+∫μμ <äH˚ dü÷#·q‘√ Á|üø£≥q

eTTÁ~+#ê*.

Indian Contract Act, 1872yê´bÕs¡ eéVü‰sê\˙ï ˇ|üŒ+<ä+ô|’H˚ Ä<Ûës¡|ü&ç ñ+≤sTT. uÛ≤s¡‘·<˚X¯+˝À »]π> yê´bÕs¡ eéVü‰sê\˙ï

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8.1. LEGAL ENVIRONMENT

Legal environment includes various legislations passed by the Government and administrative ordersissued by the Government Authorities. Court judgments are considered judge made laws. Decisionsof various Commissions and Agencies at every level of the Government - Centre, State or Localshould be in accordance with the established laws. It is imperative for the business to obey the law ofthe land. Manager of every enterprise has to perform his business transactions with completeknowledge of rules and regulations framed by the Government.

Noncompliance of laws leads the business firm into legal problems. Legal aspects reflect the policyframework of the Government, structure of the country. The laws relating to business in India can becategorized as shown below.

Indian Contract Act, 1872. Workmen’s Compensation Act ,1923 Indian Trade Union Act, 1926 Industrial Disputes Act, 1947 Factories Act, 1948.Industries Development and Regulation Act 1951 The Companies Act, 2013 Indian Copyright Act, 1957.MRTP Act 1969 Patents Act, 1970 Consumer Protection Act, 1986. Trade Marks Act, 1999. Foreign Exchange Management Act, 1999. (F E M A, 1999)

The legal environment protects the consumers’ interests with the help of control and regulationsof the Government.

EX:- 1. Advertisement of alcoholic beverages is prohibited.2. Advertisements for Cigarettes carry the statutory warning “CIGARRETTE SMOKING IS INJURIOUS TO HEALTH”.3. Advertisements of Baby Food must necessarily inform the potential buyer that “Mother’s Milk is the best”.

All the above regulations are required to be followed by advertisers.

Indian Contract Act, 1872The bulk of the business transactions are based on contracts. The Indian Contract Act, 1872prescribes the law relating to contracts in India. The Act is based on the principles of EnglishCommon Law. The Act is applicable to all States in India. Section 2(h) of the Indian Contract Act,1872, defines a contract as an agreement which is enforceable by law. Indian Contract Act, 1872consists of 266 sections. It is the principal law regulating contracts in India.

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Indian Contract Act, 1872 nqTdü]+# »s¡T>∑T‘êsTT. á #·≥º+ Ç+ ¢wüß #·≥º+ô|’ Ä<Ûës¡|ü&ç ‘·j·÷s¡T #XÊs¡T.Ç~ uÛ≤s¡‘·<˚X¯+ yÓTT‘êÔìøÏ e]ÔdüTÔ+~.

uÛ≤s¡‘· ø±+Á≤≈£îº #·≥º+, 1872˝Àì ôdø£åHé 2 (h) Á|üø±s¡+ n–ïyÓT+≥¢ ï #·≥º|ü]~Û À neT\T #j·Tã& ø±+Á≤≈£îº\ì#Ó|üŒe#·TÃ. uÛ≤s¡‘· ø±+Á≤≈£îº #·≥º+˝À 266 ôdø£åqT¢ ñHêïsTT. ªªø±+Á≤≈£îºμμ nH˚ e÷≥ ªªø±+Á≤ø£ºyéTμμ nH˚ ≤ÏHée÷≥ qT+∫ ñ<ä“¤$+∫+~.

uÛ≤s¡‘· ø±+Á≤≈£îº #·≥º+˝Àì ôdø£åHé 10 Á|üø±s¡+ ùd«#ÛêÃ¤ düeTà‹‘√ #·≥ºã<ä∆ bÕ]‘√wæø£+ #Ó*¢+#˚ ns¡Ω‘·>∑\ e´≈£îÔ\eT<Ûä |üŒ+<äy˚T ø±+Á≤≈£îº. |üŒ+<ä+ ø£ dü+ Ç<ä›s¡÷ Ò<ë n+‘·ø£+fÒ m≈£îÿeeT+~ eT<Ûä ñ+&Ü*. #·≥ºã<ä∆yÓTÆq<Û j·T+‘√H˚ |üŒ+<ä+˝ÀøÏ Á|üy˚•+#ê*.

Indian Trade Union Act, 192619e X¯‘êã›+˝À bÕ]ÁXÊ$Tø£ $|ü¢e+ ‘·s¡Tyê‘· Á|ü|ü+#·yê´|üÔ+>± nHø£ e÷s¡TŒ\T #√≥T #˚düT≈£îHêïsTT. <ëìøÏø±s¡D+ ñ‘·Œ‹Ô Á|üÁøÏj·T˝À dü«j·T+ #·\q j·÷+Árø£s¡D, wæ|æŒ+>¥ eT]j·TT s¡yêD≤ kÂø£sê´\˝À e∫Ãq ô|qTdü+#·\q e÷s¡TŒ\ì #Ó|üø√e#·TÃ. XÊg kÕ+πø‹ø£ s¡+>±\˝À e∫Ãq qMø£s¡D\ |òü*‘·+>± bÕ]ÁXÊ$Tø£ s¡+>∑+˝ÀìÁXÊ$Tø£es¡Z+ j·÷»e÷q´es¡Z+ eT<Ûä es¡Zb˛s¡T Á|üã*b˛sTT+~.

ÁXÊ$Tø£ es¡Z+ ôV≤#·TÃ y˚‘·Hê\T, |üì#˚ùd #√≥ yÓTs¡T¬>’q kÂø£sê´\T Ä•+#·>±, j·÷»e÷q´es¡Z+ ‘·≈£îÿe y˚‘·Hê\TÇ∫Ã m≈£îÿe ñ‘·Œ‹Ô kÕ<Ûäqô|’ <äèwæº πø+ÁBø£]+#·&É+ Çs¡TesêZ\ eT<Ûä b˛s¡T≈£î <ë]rdæ+~. u§+u≤sTT˝À ã≥º\$T\T¢\T ÁXÊ$T≈£î\÷, Ç‘·s¡ bÕ]ÁXÊ$Tø£ dü+düú\ ÁXÊ$T≈£î \+<äs¡÷ ø£\dæ "ALL INDIA TRADE UNION CON-

GRESS" (AITUC) >± @s¡Œ&ç 1920e dü+e‘·‡s¡+˝À ªªn+‘·sê®rj·T ÁXÊ$Tø£ Äs¡ZHÓ’CÒwüHéμμ q+<äT uÛ≤s¡rj·TÁXÊ$T≈£î\ ÁbÕ‹ì<Ûä +>± Vü‰»s¡j·÷´s¡T.

Ä<ÛäTìø£ ÁfÒ&é j·T÷ìj·THé |æ‘êeTVüQ&Ó’q l mHé.myéT. CÀwæ nôd+;¢ À ÁfÒ&é j·T÷ìj·THé _\T¢ Á|üyXô|≥º>± n|üŒÏÁ|üuÛÑT‘·«+ ‹s¡düÿ]+∫q|üŒÏø° sê»ø°j·T bÕØº\ Á|ü‹|òüT≥q‘√ ÁfÒ&é j·T÷ìj·THé _\T¢ 1926qT ÄyÓ÷~+#·&É+Á|üuÛÑT‘ê«ìøÏ ‘·|üŒìdü] nsTT+~. |òü*‘·+>± ªªÁfÒ&é j·T÷ìj·THé #·≥º+, 1926μμ neT\T˝ÀøÏ e∫Ã+~.

ªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμ neT\T˝ÀøÏ sêø£ |üPs¡«+ bÕ]ÁXÊ$Tø£ $yê<ë\ |ü]cÕÿsêìøÏ dü¬s’qj·T+Á‘ê+>∑+ Ò<äT. $yê<ä |ü]cÕÿsêìøÏ kÕ<Ûës¡D Hê´j·T dü÷Á‘ê\ qqTdü]+∫ Çs¡TbÕØº\ eT<Ûä ˇ|üŒ+<ë\qT|ü]o*+∫ |ü]wüÿ]+#yês¡T.

ªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμ neT˝À¢øÏ e∫Ãq ‘·s¡Tyê‘· j·T»e÷qT\≈£î, j·T»e÷qT\≈£L eT<Ûä e#˚Ã$uÛÒ<ë\qT, j·T»e÷qT\≈£L, ÁXÊ$Tø£ esêZìøÏ eT<Ûä e#˚Ã ‘·>±<ë\qT, ÁXÊ$T≈£î\≈£L ÁXÊ$T≈£î\≈£L eT<Ûä e#˚Ã$yê<ë\qT |ü]wüÿ]+#·&ÜìøÏ ø£ j·T+Á‘ê+>∑+ @sêŒ≥T #XÊs¡T. Bìe\¢ ]õwüºs¡T¶ ÁfÒ&é j·T÷ìj·THé ‘·eT düeTdü \qTìy~+# neø±X+ ø£*–+~. n+<äTe\¢ #·≥ºã<ä∆‘· Òì düyÓTà\÷, eT]j·TT ≤øö≥T¢ ìs√~Û+# neø±X+ @s¡Œ&ç+~.

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The word ‘contract’ is derived from the Latin word ‘CONTRACTUM’ which means ‘ DrawnTogether’. Simply contract is an ‘ Agreement’ enforceable by law. Section 10 of the Indian ContractAct, 1872 says all agreements are contracts if they are made by the free consent of parties competentto contract for lawful consideration with a lawful objective. Simply contract is an agreement betweentwo or more persons. The parties are bound by such agreement. Thus all agreements are notcontracts, but all contracts are agreements.

Indian Trade Union Act, 1926The Industrial revolution in 19th century brought changes in the world. A number of changes inmethods of production, automation, shipping and transportation resulted in simultaneous changes inthe social set-up. The scientific and technological innovations in the industrial sector made a verticaldivision of two classes namely the working class and the managerial class. Naturally, there is aconflict between wage earning class and enterprenuring class. The former claims higher wages andbetter condition of service while the latter expects maximum production at minimum wages.

The credit for organized movement in India goes to Shri N.M.Lokhande who was a factory workerhimself. He organized an agitation in Bombay in the year 1884 and called for conference of workers.The leaders of the Indian Congress Party founded “The All India Trade Union Congress” (AITUC)in the year 1920. The AITUC for the first time in the year 1920 represented at the InternationalLabour Organization (ILO). Shri N.M.Joshi the father of modern trade unionism in India introduceda Trade Union Bill in the Assembly. Though the Government was reluctant to pass the bill, theGovernment was compelled to enact the Indian Trade Union Act, 1926, because of the pressurefrom political parties.

Industrial Disputes Act, 1947After the introduction of Industrial Disputes Act, 1947 an investigation was made for settlement ofthe industrial disputes between employers and employers, employers and workmen or workmen andworkmen with the right of a representation by a Registered Trade Union for prevention of illegalstrikes and lock-outs. Industrial Disputes Act, 1947 is for social welfare.

The Industrial Disputes Act, 1947 came into existence in April 1947. The Act was enacted to makeprovisions for prevention and settlement of industrial disputes. Thus Act is administrated by theDepartment of Ministry of Labour and Employment.

The Factories Act, 1948The Law relating to labour in factories and industrial establishments entitled “ The Factories Act,1948” was passed by the constituent Assembly on August 28th , 1948 and came into force from April1949. The Factories Act, 1948 extends to the whole of India. The Act applies to all industrialestablishments, which falls within the meaning of factory under section 2(m) of the Act. It is a legislationenacted for social welfare. Its main objective is to protect and safeguard the interests of the workmen

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ªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμ kÕe÷õø£ dü+πøåeT+ ø√dü+ rdüT≈£î e∫Ãq #·≥º+. á #·≥º+ 1947 @Á|æ ŸHÓ\˝À neT˝À¢øÏ e∫Ã+~.

The Factories Act, 1948

bòÕø£ºØ\T eT]j·T÷ bÕ]ÁXÊ$Tø£ dü+düú\˝À |üì#ùd ÁXÊ$T≈£î\qT ñ<›•+∫ ªªbòÕø£ºØ\ #·≥º+ 1948μμì s¡÷bı+~+#·+&É+»]–+~. á #·≤ºìï Ä>∑wüßº 28, 1948q #·≥ºdüuÛÑ ÄyÓ÷~+#·>±, 1949 @Á|æ Ÿ HÓ\ qT+∫ neT\T˝ÀøÏ e∫Ã+~.á #·≥º+ uÛ≤s¡‘·<˚X¯+ yÓTT‘·Ô+ e]ÔdüTÔ+~. bòÕø£ºØ\ #·≥º|ü]~Û ÀøÏ e#˚Ã nìï bÕ]ÁXÊ$Tø£ dü+düú\≈£L á #·≥º+e]ÔdüTÔ+~.

á #·≥º+ Á|ü<Ûëq<Û j·T+ kÕe÷õø£ dü+πøåeT+ ø±+øÏå#·&É+. bÕ]ÁXÊ$Tø£ dü+düú\˝À ìj·T$T‘·T …’q ø±]à≈£î\ Vü≤≈£îÿ\|ü]s¡ø£åD y˚i=ø£ eTTK´yÓTÆq <Û´j·T+. ø±]à≈£î\≈£î kÂø£sê´\qT j·÷»e÷q´+ @sêŒ≥T #˚j·÷*.

The Industrial (Development and Regulation ) Act, 1951

bÕ]ÁXÊ$Tø£ $<ÛëHê\ s¡÷|üø£\Œq≈£L #·≤º\qT #˚j·T&ÜìøÏ πø+Á<äÁ|üuÛÑT‘ê«ìøÏ |üP]Ô n~Ûø±sê\T ñHêïsTT.bÕs¡¢yÓT+≥T ñuÛÑj·T düuÛÑ\˝ÀqT ÄyÓ÷<ä+ bı+~ uÛ≤s¡‘· sêh|ü‹ düeTà‹ì 1951 nø√ºãs¡T 31 ‘˚Bq bı+<ä&É+»]–+~. á #·≥º+ 1952 y˚T 8e ‘˚B qT+∫ neT\T˝ÀøÏ e∫Ã+~.

á #·≥º+ 9 #ê|üºs¡÷¢, 3 ôw&É÷´fi¯ó¢>± $uÛÑõ+|üã&ç+~. uÛ≤s¡‘·<˚X¯+ yÓTT‘êÔìøÏ á #·≥º+ e]ÔdüTÔ+~.

ø£+ô|˙\ #·≥º+, 2013 uÛ≤s¡‘·<X+˝Àì ø£+ô|˙\≈£î e]Ô+# ø=‘·Ô #·≥º+ ø£+ô|˙\ #·≥º+, 2013 . á ø=‘·Ô #·≥º+ 29 Ä>∑wüßº 2013

qT+∫ neT\T˝ÀøÏ e∫Ã+~. Ç~ uÛ≤s¡‘·<˚X¯+ yÓTT‘êÔìøÏ e]ÔdüTÔ+~. á #·≥º+˝À 470 ôdø£åqT¢, 29 #ê|üºs¡÷¢ eT]j·T÷ 7 ôw&É÷´fi¯S¢ ñHêïsTT. ø£+ô|˙\ #·≥º+, 1956˝À Òì nH˚ø£ n+XÊ\qT ø£+ô|˙\ #·≥º+, 2013˝À bı+<äT|ü]#ês¡T. ø=‘·Ô ø£+ô|˙\ #·≥º+, 2013 @ø£düuÛÑ ø£+ô|˙ @sêŒ≥T≈£î neø±X¯+ ø£*Œ+∫+~. ø=‘·Ô ìã+<Ûäq\ e\¢ Åô|’y˚≥T ø£+ô|˙ kÕú|üq≈£î ø±e\dæq ø£ dü düuÛÑT´\ dü+K´qT 2 qT+∫ ˇø£ÏøÏ1

‘·–Z+#ês¡T. ø£qTø£ πø ˇø£ÿ e´øÏÔ ªª@ø£e´øÏÔ ø£+ô|˙μμì ÁbÕs¡+_Û+#·e#·TÃ. ø=‘·Ô#·≥º+ Á|üø±s¡+ ø£+ô|˙ @sêŒ≥T Á|üÁøÏj·TqT y˚>∑e+‘·+ #˚XÊs¡T ø=‘·Ô ø£+ô|˙\ #·≥º+, 2013 ôdø£åHé Àì 7 Á|üø±s¡+ @<Ó’Hê ø£+ô|˙ ndü‘· düe÷#ês¡+ düeT]ŒùdÔ Ä ø£+ô|˙ qyÓ÷<äTqT s¡<äT› #˚ùd n~Ûø±s¡+ ÁÏãT´q˝Ÿ≈£î Ç#êÃs¡T.FOREIGN EXCHANGE MANAGEMENT ACT, 1999 (FEMA) :$<˚o #Ó*¢+|ü⁄\T #˚j·T&ÜìøÏ, d”e÷+‘·s¡ yê´bÕs¡+ #˚j·T&ÜìøÏ $<˚o e÷s¡ø£ ìs¡«Vü≤D≤ #·≥º+,1999 (FEMA 1999) ‘·j·÷s¡T #˚dæ+~. FOREIGN EXCHANGE REGULATION ACT, 1973 ñ|üdü+Vü≤]+∫, Ä kÕúq+˝À FEMA, 1999 #·≤ºìï rdüT≈£îsêe&É+ »]–+~. á#·≥º+ 01`06`2000 ‘˚B qT+∫neT˝À¢øÏ e∫Ã+~.

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employed in the industrial establishments. The Factories Act, 1948 directs the employer to providefacilities in every factory:

The Industrial (Development and Regulation ) Act, 1951The Central Government is empowered to implement its industrial policies and to enact severallegislations. The Industrial (Development and Regulation ) Bill having been passed by both the housesof Parliament received the assent of the President of INDIA on 31st October 1951. The Act cameinto force on 8th May 1952 as “The Industrial (Development and Regulation ) Act, 1951”. The Acthas Nine Chapters including Miscellaneous and Three Schedules. It extends to whole India

The Companies Act, 2013 The new law relating to companies is governed by the Companies Act, 2013 which came

into force on 29th August, 2013. It extends to the whole of India. It contains 470 sections divided into 29 chapters and 7 schedules. The Companies Act , 2013 brought about significant changes over the Old Act ie., the

Companies Act, 1956 which had 658 sections divided into 13 parts and 15 schedules. The new Act made provision for the establishment of “ One Person Company”. Thus for formation of Private Limited company, the minimum number of members has been

reduced from two to One. Therefore, a single individual alone can start a company knownas “ One Person Company”.

The new act envisages speedy incorporation process. Section 7 of the new Companies Act, 2013 confers on Tribunal, power to cancel registration

of company , if a company is found guilty of furnishing false information.

Foreign Exchange and Management Act, 1999The Central Government of India formulated an Act to encourage external payments and Tradeacross the border, Foreign Exchange Management Act, 1999 has been consistent with the emergingframe work of the World Trade Organization (WTO). It also helped the introduction of the Preventionof Money Laundering Act, 2002, Which came into force with effect from 1st July 2005. ForeignExchange Management Act, is applicable to whole India. The Act is also applicable to all branchesand offices outside India owned or controlled by a person who is resident of India Under Section- 6of the Income Tax Act, 1961.

The FEMA’s head office known as Enforcement Directorate (ED) is in New Delhi headed by aDirector. The Directorate has five more Zonal Offices in Delhi, Mumbai, Kolkata, Chennai andJalandhar. Each Zonal office is headed by a Deputy Director. Each zone is sub- divided into seven(07). Sub-Zonal offices headed by the Assistant Directors and five field units headed by the ChiefEnforcement Officer.

Consumer Protection Act, 1986India is the biggest democratic country having population of more than 130 crores. Most of thepopulation depends upon agriculture. Majority of consumers are very poor, helpless and unorganized.

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WORLD TRADE ORGANISATION (WTO) #·≥º|ü]~ÛøÏ nqT>∑TD+>± FEMA, 1999 #·≥º+ s¡÷|üø£\Œq #XÊs¡T.á #·≥º+ PREVENTION OF MONEY LAUNDREING ACT, 2002 rdüT≈£îsêe&ÜìøÏ ñ|üø£]+∫+~. eT˙˝≤+&É]+>¥#·≥º+ 2002 p …’ 1, 2005 qT+∫ neT\T˝ÀøÏ e∫Ã+~.

FEMA uÛ≤s¡‘·<˚X¯+ yÓTT‘êÔìøÏ e]ÔdüTÔ+~. FEMA, 1999 Á|ü<Ûëq ø±sê´\j·T+ (HEAD OFFICE) &Ûç©¢˝À ˇø£&Ó’¬sø£ºsY Ä<Ûä«s¡ +˝À q&ÉTk Ô+~. á Á|ü<Ûëq ø±sê´\j·÷ìï ENFORCEMENT DIRECTORATE (ED) n+≤s¡T.eTs¡ ≤ á &Ó’s¡ø£ºπsŸqT ◊<äT CÀqfi¢>± $uÛÑõ+#ês¡T. &Ûç©¢, eTT+u≤sTT, ø=\ø£‘êÔ, #ÓHÓÌï eT]j·TT »\+<Ûäs¡¢ À áCÀq˝Ÿ ø±sê´\j·÷\T &ç|üP´° &Ó’¬sø£ºsY ÄBÛq+˝À |üì#˚kÕÔsTT. Á|ü‹ CÀHéq÷ 7 düuŸCÀq¢>± |ü⁄qs¡«ØZø£]+#ês¡T.

Consumer Protection Act, 1986

uÛ≤s¡‘·<˚X¯+ 130 ø√≥¢ »qkÕ+Á<ä‘· ø£*–q Á|üC≤kÕ«eT´<˚X¯+. m≈£îÿeeT+~ »HêuÛ≤ Á|ü<Ûëq+>± Ä<Ûës¡|ü&˚~e´ekÕj·T+. uÛ≤s¡‘·<X+˝Àì n~Ûø£ dü+U≤´ø£ $ìjÓ÷>∑<ës¡T\T ù|<äyês¡T, ìdü‡Vü‰j·TT\÷, ndü+|òüTÏ‘· esêZ\yês¡T.uÛ≤s¡rj·T e÷¬sÿŸ neTàø£+<ës¡¢ e÷¬sÿŸ ø£qTø£ ìs¡ø£åsêdüT´\÷, ne÷sTT≈£î\÷ nsTTq $ìjÓ÷>∑<ës¡T\qT düT\uÛÑ+>±yÓ÷dü+ #˚j·Te#·TÃ. kÕeTq´ $ìjÓ÷>∑<ës¡T\≈£î e÷¬sÿŸ ñ‘·Œ‘·TÔ\ô|’ |ü]C≤„q+ ñ+&É<äT. ø£qTø£ yê]ì yÓ÷dü+#j·T&É+ düT\uÛÑ+.

$ìjÓ÷>∑<ës¡T\ s¡ø£åD #·≥º+, 1986 bÕs¡¢yÓT+≥T ñuÛÑj·T düuÛÑ\˝Àq÷ ÄyÓ÷<ä+ bı+~ 24 &çôd+ãsY 1986 ‘BquÛ≤s¡‘· sêh|ü‹ düeTà‹ì bı+~+~. á #·≥º+ @Á|æ Ÿ 15, 1987 ‘B qT+∫ neT\T˝ÀøÏ e∫Ã+~. nHø£ dües¡D\T»]– ªª$ìjÓ÷>∑<ës¡T\ s¡ø£åD (dües¡D) #·≥º+, 2002μμ e÷]Ã 15, 2003 qT+∫ neT˝À¢øÏ e∫Ã+~.

#·≥º+ \ø£åD≤\T :1) $ìjÓ÷>∑<ës¡T\ s¡ø£åD #·≥º+, 1986 kÕ+|òæTø£ dü+πøåe÷ìøÏ #Ó+~q #·≥º+.2) uÛ≤s¡‘·<˚X¯+ yÓTT‘êÔìøÏ á #·≥º+ e]ÔdüTÔ+~.3) $yê<ë\ |ü]cÕÿs¡ j·T+Á‘ê+>∑+ >∑T]+∫ $e]düTÔ+~4) $ìjÓ÷>∑<ës¡T\ Vü≤≈£îÿ\ |ü]s¡ø£åD, ÄÁø£eT+˝À #·≥ºã<ä∆yÓTÆq dü+düú\ @sêŒ≥T, n~Ûø±s¡T\ ìj·÷eTø£+5) $yê<ë\ |ü]cÕÿsêìøÏ eT÷&É+#Ó\ $<Ûëq+ neT\T

1. &çÅdæº≈£îº bò s¡yéT2. ùdºŸ ø£MTwüHé3. C≤rj·T ø£MTwüHé

6) πø+Á<ä Á|üuÛÑT‘·«+ $ìjÓ÷>∑<ës¡¢ Vü≤≈£îÿ\ |ü]s¡ø£åD¬ø’ nH˚ø£ ìj·TeTìã+<Ûäq\qT m|üŒÏø£|ü&ÉT #·≤ºìøÏnqTã+<Ûä+>± s¡÷bı+~düTÔ+~.

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DISTRICT FORUM :$ìjÓ÷>∑<ës¡T\ s¡ø£åD #·≥º+, 1986˝Àì ôdø£åHé 9 ø£ õ˝≤¢ Àì ø£° Ò<ë n+‘·ø£+fÒ m≈£îÿe $yê<ë\ |ü]cÕÿs¡bò s¡yéT‡ì ˇø£ H√Ï|òæπøwüHé <ë«sê @sêŒ≥T #˚ùd n~Ûø±s¡+ sêh Á|üuÛÑT‘ê«ìøÏ ø£≥ºu…Ïº+~. BìH˚ ª&çÅdæºø˘ bò s¡yéTμn+≤s¡T.

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Moreover Indian market is a seller’s market and it becomes very easy to deceive illiterate and innocentconsumers. Generally a common consumer usually does not possess either knowledge or awarenessof the product. Hence a common consumer needs protection against any deceptive methods andexploitation, as he cannot approach the Court of Law.

ConsumerismConsumerism is an organized movement of citizens. Consumers in India started their journey to raisetheir voice against the spurious goods since 1969 through housewives in Mumbai. The biggestsupport in this regard came from the Central Government. The Indian Parliament passed a legislationentitled “ THE CONSUMER PROTECTION ACT, 1986”.

The Consumer Protection Bill 1986, was passed by both the houses of Parliament and it received theassent of the President Of India on 24th December 1986. It came on statute book as ConsumerProtection Act, 1986 (68 of 1986). The Act came into force on 15th April, 1987. After manyAmendments were introduced to the existing Act, the Amendment Act of 2002, came into force witheffect from March 15th , 2003.

ObjectivesThe Consumer Protection Bill seeks to provide better protection to the interest of consumers. Toachieve this object, the Act makes a provision for the establishment of consumer councils and otherauthorities for the settlement of consumer disputes.

The Consumer Protection Act, 1986 promotes and protects the interests of the consumers, such as: Protection against marketing of goods, which are hazardous to life and property. Information about the quantity, quality, purity, standard and price of goods for protection of

the consumer against unfair trade practices; Information of variety of goods at competitive prices; Establishment of appropriate Councils and Forums for hearing the grievances of Consumers.. Provision for limitation period of one year for filing complaints. Right to Consumer Education

A few years after commencement of the Consumer Protection Act, 1986 certain problems wereexperienced. Hence “ the Consumer Protection Act, 1986” was amended in 1991, 1993 and 2002.Many changes were made by the Amendment Act of 1993.

Consumer Disputes Redressal AgenciesTo provide simple, speedy and inexpensive redressal of consumer grievances, the Consumer ProtectionAct, 1986 furnishes a three tier grievance redressal mechanism. Section 9 of the Act provides athree-tier consumer disputes redressal agencies as stated below:

District forumSection 9 of the Consumer Protection Act, 1986 empowers the State Government to form one ormore consumer dispute redressal forums by a notification named as “ District Forum” in a district. Itis also known as “Consumer Disputes Redressal Forum’.

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ùdºŸ ø£MTwüHé$ìjÓ÷>∑<ës¡T\ s¡ø£åD #·≥º+, 1986 sêh Á|üuÛÑT‘ê«\≈£î sêh ø£MTwüHé @sêŒ≥T #˚düTø=H˚ neø±X¯+ ø£*Œ+∫+~.á ø£MTwüHé qT ªªsêh $ìjÓ÷>∑<ës¡T\ $yê<ë\ |ü]cÕÿs¡ ø£MTwüHéμμ (STATE CONSUMER DISPUTES

REDRESSAL COMMISSION) nì e´eVü≤]kÕÔs¡T.

ùdºŸ ø£MTwüHé≈£î 20 \ø£å\ s¡÷bÕj·T\T $T+∫q $yê<ë\T |ü]wüÿ]+#˚ n~Ûø±s¡+ ñ+~. nsTT‘˚ Ä $yê<ëìøÏ˝ÀqsTTq edüTÔùde\ $\Te ˇø£ ø√Ïs¡÷bÕj·T\≈£î $T+#·ì $yê<ë\ |ü]cÕÿs¡ j·T+Á‘ê+>∑+>± ùdºŸ ø£MTwüHé|üì#˚düTÔ+~. á ø£MTwüHé n|”Œfi¢qT $#ê]düTÔ+~. eT]j·TT sêh+˝Àì nìï &çÅdæº≈£îº bò s¡yéT‡ô|’ |üs¡ y˚ø£åD n~Ûø±s¡|ü]~Û ø£*– ñ+≥T+~.

Hwüq Ÿ ø£$÷wüHé$yê<ë\ |ü]cÕÿs¡+˝À ªªH˚wüq˝Ÿ ø£$÷wüHéμμ n‘·T´qï‘· |ü]cÕÿs¡ j·T+Á‘ê+>∑+ nì #Ó|üŒe#·TÃ. H˚wüq˝Ÿ ø£$÷wüHéqTªªC≤rj·T $ìjÓ÷>∑<ës¡T\ |ü]cÕÿs¡ ø£$÷wüHéμμ nì ≈£L&Ü e´eVü≤]kÕÔs¡T. ˇø£ ø√Ï s¡÷bÕj·T\≈£î $T+∫q$yê<ë\qT ªªH˚wüq˝Ÿ ø£$÷wüHéμμ |ü]wüÿ]düTÔ+~. $ìjÓ÷>∑<ës¡T\ s¡ø£åD #·≥º+, 1986 Á|üø±s¡+ H˚wüq˝Ÿ ø£$÷wüHén‹ Á|ü<Ûëq ø£$÷wüHé nì ù|s=ÿqe#·TÃ. H˚wüq˝Ÿ ø£$÷wüHé n|”Œfi¢qT eT]j·TT <˚X¯+˝Àì $$<Ûä ªªùdºŸ ø£$÷wüHé‡μμô|’|üs¡ y˚ø£åD≤~Ûø±s¡+ ø£*– ñ+≥T+~.

8.2. &çe÷ìf…ÆCÒwüHé<X+˝À #· ≤eTD° À ñqï #·≥ºã<ä∆yÓTÆq ø£¬s˙‡H√≥¢qT Çø£ô|’ #Ó\T¢u≤≥T ø±eì ñ|üdü+Vü≤]+#·&Üìï ªª&çe÷ìf…ÆCÒwüHéμμn+≤s¡T. 2016 qe+ãsY 8e ‘Bq Á|üuÛÑT‘·«+ &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·TqT Á|üø£Ï+#·&É+ kÕVü≤k˛ù|‘·yÓTÆq eT]j·TT$|ü¢yê‘·àø£yÓTÆq #·s¡ >± n_Ûe]í+#·e#·TÃ. uÛ≤s¡‘· Á|üuÛÑT‘ê«~ÛH‘· Á|ü<ÛëqeT+Á‹ >ös¡e˙j·T l qπs+Á<äyÓ÷&ç qe+ãsY8, 2016e ‘˚Bq &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·T Á|üø£≥q #˚dü÷Ô <˚X¯+˝À #· ≤eTD° À ñqï n~Ûø£ $\Te ø£*–q s¡÷.500, s¡÷. 1000\ ø£¬s˙‡H√≥¢qT #· ≤eTD° qT+∫ ñ|üdü+Vü≤]düTÔHêïeT˙, 2016 qe+ãsY 9e ‘˚B qT+∫ s¡÷.500, s¡÷. 1000\ ø£¬s˙‡H√≥T¢ #·≥ºã<ä∆ $\TeqT ø√˝ÀŒ‘êj·Tì, Á|ü»\T ‘·eT <ä>∑Zs¡ ñqï Ä ø£¬s˙‡ H√≥¢qTqe+ãsY 9e ‘˚B qT+∫ &çôd+ãsY 30, 2016 ‘˚B˝À|ü⁄ u≤´+≈£î˝À &çbÕõŸ #˚düTø√e#·Ãì ìπs›•+#ês¡T. Ä ‘˚B‘·s¡Tyê‘· qT+∫ bÕ‘· s¡÷. 500, s¡÷. 1000 ø£¬s˙‡ H√≥T¢ ì\« ø£*– ñ+&É&É+ Hs¡eT˙ Á|üø£Ï+#ês¡T. nsTT‘ s¡÷.100/`, s¡÷. 50/`, s¡÷. 20/`, s¡÷. 10/` eT]j·TT s¡÷. 5/` \ ø£¬s˙‡H√≥T¢ #·≥ºã<ä∆yÓTÆq Á<äe´+>± ø=qkÕ>∑T‘·THêïsTT.&çe÷ìf…ÆCÒwüHé $<Ûëq ìs¡íj·T Á|üuÛ≤e+ á H√≥¢ô|’ Ò<äT.

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State commissionConsumer Protection Act, 1986 empowers the State Governments to establish “a commission” alsoknown as State Consumer Disputes Redressal Commission in the state by notification. It has anoriginal jurisdiction to decide the matters of consumer disputes above the value of Rupees TwentyLakhs and below the value of Rupees One Crore. It hears appeals and exercises supervisoryjurisdiction over all the District Forums in the state.

National commissionNational Consumer Redressal Commission known as “ National Commission” is the highest redressalagency in the country. National Commission has an original Jurisdiction to decide the matters relatingto the value above Rupees One Crore. National Commission is the Apex Commission under theConsumer Protection Act, 1986. Hence National Commission entertains appeals and exercisessupervisory powers over all the State Commissions in the country.

8.2. DEMONETISATIONDemonetisation is an attempt made by the Government withdrawing legal tender status of currencyissued by it. It means withdrawing legal tender money from circulation. Further we can saydemonetisation is a process of dispossession of legal tender status of currency units in circulation.Indian Government on 8th November, 2016 made an announcement of ceasing the usage of Rs. 500and Rs. 1000 denominations as the form of legal tender money in India from 9th November, 2016.The denominations of Rs. 100, Rs. 50, Rs. 20, Rs. 10 and Rs. 5 continued to remain as legal tendermoney and they were not affected by the policy decision of the government of India. The basiccondition of demonetisation is to change National currency. It means demonetisation is a change ofexisting currency, where new units of currency are replaced. It may involve introduction of newcurrency notes of same denomination or new denomination and coins.

It was not the first time that the demonetisation in India took place. For the first time, demonetisationtook place on Saturday, the 12th January, 1946. It took place for the second time on Monday, the16th January, 1978 and the third was on Tuesday, the 8th November, 2016. Our Hon’ble PrimeMinister Shri Narendra Modi to the surprise of citizens of India made this announcement explainingthe factors which drove his government to take such an important and crucial decision of withdrawingthe denominations of Rs. 500 and Rs. 1000 from circulation with effect from 9th November, 2016. Inthe recent past, the European Union called for demonetisation of existing 12 countries. The EuropeanUnion introduced a unified currency “EURO” on 1st January, 2002.

8.2.1. REASONS FOR DEMONETISATIONIt is said that the decision of demonetisation is to arrest black money in the economy, to eliminateforged/fake currency which is in the hands of terror groups to sponsor terrorism in the country. Thereare many reasons for introducing demonetisation in the year end of 2016 in consultation with ReserveBank of India. They are:

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Black MoneyBlack money means income illegally obtained or undeclared income to evade income-tax.Demonetisation was a revolutionary action taken by the Government of India to curb black money,because black money is used to maintain a parallel economy in the country. Unaccounted money/Black money is available in various forms like cash, investment in property or real estate, valuableornaments of gold and jewellery. The furniture studded with precious stones, silver and transactingfoul business with foreign agencies. Black money is a peril for a healthy society and the Nation doesnot get its legitimate revenue, which leaves the country in great losses.

Fake CurrencyFake currency is also known as counterfeit currency or forged currency which is a threat to theeconomy of any Nation. Fake currency in the hands of terror groups promotes terrorism in thecountry. Fake currency is a replica of legal tender money. Demonetisation plays a vital role to hit thefake currency rackets. The withdrawing of the denominations of the highest value currency units outof economy has a serious impact on the fake currency rackets. The high security new currency unitsmade it very difficult for the fake currency rackets to carry out the unlawful activities.

CorruptionDishonest or fraudulent conduct of people in power is called corruption. Corruption in public life isa barrier for development of the society. Once the existing flow of cash is withdrawn, the act ofcorruption automatically comes down.

Digitalisation and Formalisation of EconomyMost of the transactions are carried out in cash only. This escapes the attention of the tax authorities.Hence, the government thought of encouraging digitalization and formalization of economy throughonline transactions. Various instruments are available to make digital payments like Phone pay, Googlepay, Paytm etc., Rupay cards and BHIM App are also available for payments. These onlinetransactions can never be hidden and become transparent. This paves path for improving tax collectionand helps to reduce tax evasion.

8.2.2. SCOPE OF DEMONETISATIONThe entire currency units of Rs.500 and Rs.1000 denominations were withdrawn. This has arrestedthe circulation of Rs. 15.44 lakh crores. Therefore, the crux of the problem is liquidity. Thedemonetisation came into effect from 9th November, 2016. Government advised the citizens todeposit the available cash with them into respective bank accounts on or before 30th December,2016. There was a limit of Rs. 10,000/- withdrawing cash from bank for a person for a week.However, the Government allowed the citizens to make payments in old currency units to Hospitalsand Pharmacies to meet emergencies. Government also permitted the citizens to pay the cash togovernment agencies for house tax, electricity bills and insurance premiums etc. However, the longqueues at the bank caused some inconvenience to people and day-to-day transactions were alsodisturbed.

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eéVü‰sê\˙ï ]õwüºsY nsTT, ˇø£ n~Ûø±]ø£ eédüú Ä eéVü‰sê\qT |üs¡ y˚øÏå+∫, $X‚¢wæ+#˚ neø±X¯+ ø£*–+~.<˚X¯+ yÓTT‘·Ô+ MT<ä »]π> Ä]∆ø£ eéVü‰sê\ bÕs¡<äs¡Ùø£‘· e\¢ Á|üuÛÑT‘ê«~Ûø±s¡T\ |üqTï\ edü÷\T |ü]bÕ\HêkÕeTsêú ìï ô|+∫ yê] |üìì düT\uÛÑ‘·s¡+ #˚dæ+~. <ë|ü]ø£+ Òì eédüú À Ä]∆ø£ ≤yê<˚M\T »s¡T>∑T‘·Tqï+<äTe\¢|üqTï\ edü÷\T Á|üÁøÏj·T y˚>∑e+‘·yÓTÆ |üqTï m>∑y˚‘·≈£î neø±XÊ\qT ‘·–Z+∫+~.

8.2.2. &çe÷ìf…ÆCÒwüHé |ü]~Ûn~Ûø £ $\Te ø £*–q ≈ £ ¬s˙‡ j·T÷ì≥T ¢ s ¡÷. 500/`, s ¡÷. 1000/`\qT #·˝≤eTD° qT+∫ñ|üdü+Vü≤]+#ês¡T. Bìe\¢ >∑‘·+˝À n+<äTu≤≥T˝À ñqï 15.44 \ø£å\ ø√≥¢ s¡÷bÕj·T\ #· ≤eTD° ì*∫b˛sTT+~.Ä]∆ø£ eéVü‰sê\T #˚j·T&ÜìøÏ Á|ü»\ e<ä› q>∑<äT ìwüŒ‹Ô ˝À|æ+#·&É+ ø°\ø±+X¯+>± e÷]+~. &çe÷ìf…ÆCÒwüHéÁ|üÁøÏj·T qe+ãsY 9, 2016 ‘˚B qT+∫ neT\T˝ÀøÏ e∫Ã+~. qe+ãsY 9e ‘˚B qT+∫ &çôd+ãsY 30, 2016‘˚B˝À|ü⁄ ‘·eT e<ä› ñqï s¡÷. 500/`, s¡÷. 1000/` ø£¬s˙‡ H√≥¢qT u≤´+≈£î˝À¢ &çbÕõŸ #˚düTø√eTì Á|üuÛÑT‘·«+Á|ü»\≈£î ~XÊìπs›X¯+ #˚dæ+~. Ä ‘·<äT|ü] ñ|üdü+Vü≤]+|üã&É¶ ø£¬s˙‡ H√≥T¢ s¡÷. 500/`, s¡÷. 1000/` ñ+&É&É+#·≥ºã<ä∆+ ø±<äì, H˚s¡eTì ñ<√“~Û+∫+~. ‘=*<äX¯ À ˇø£ e´øÏÔ ˇø£ yêsêìøÏ u≤´+≈£îqT+∫ ‹]– rdüT≈£îH˚yÓTT‘·Ô+ô|’ s¡÷. 10,000/` |ü]$T‹ì $~Û+∫+~.

nsTT‘˚ n‘· edüs¡ |ü]dæú‘·T\˝À ÄdüT|üÁ‘·T\≈£L, bòÕs¡àd”\≈£L bÕ‘· ø£¬s˙‡H√≥¢qT ñ|üjÓ÷–+#·Tø√e#·Ãì ‘Ó*|æ+~.m\ÁøÏºdæ° _\T¢\T, >∑èVü≤ ÄdæÔ _\T¢\÷, ;e÷ Á|”$Tj·TyéT\T ≈£L&Ü bÕ‘· ø£¬s˙‡‘√ #Ó\T¢u≤≥T ne⁄‘êj·Tì ≈£L&ÜÁ|üuÛÑT‘·«+ nqTeT‹ì eT+ps¡T #dæ+~. nsTTq|üŒÏø° u≤´+≈£î\ eTT+<äT Á|ü»\T u≤s¡T\T r] ≈£L´˝À ì\ã&ç ‘·eTs√EyêØ nedüsê\≈£î u≤´+≈£î qT+∫ q>∑<äT rdüTø√e&ÜìøÏ #ê˝≤ nkÂø£sê´\T m<äTs=ÿHêïs¡T.

8.2.3. &çe÷ìf…ÆCÒwüHé Á|üjÓ÷»Hê\T&çe÷ìf…ÆCÒwüHé e\¢ á ÁøÏ+~ Á|üjÓ÷»Hê\T ø£\e⁄.

q\¢<ÛäHêìï n]ø£≥º&ÜìøÏ &çe÷ìf…ÆCÒwüHé <√Vü≤<ä|ü&ç+~. 2017`18 Ä]∆ø£ dü+e‘·‡s¡+˝À 12.8$T*j·Tq¢ ø=‘·Ô |üqTï<ës¡T\qT |üqTï\ eédüú ÀøÏ rdüTø=∫Ã+~.

qøÏ© s¡÷. 500/`\T, s¡÷. 1000/`\T #· ≤eTD° qT+∫ n<äèX¯ eTj·÷´sTT. bÕ‘·H√≥T¢ s¡<äT› #˚dæ n~Ûø£uÛÑÁ<ä‘· ø£*–q ø=‘·Ô ø£¬s˙‡ H√≥¢qT Á|üy˚X¯ô|Ïºq+<äTe\¢ rÁeyê<äT\ e<ä› ñqï

qøÏ© H√≥T¢ |üìøÏe÷*q$>± e÷sêsTT. <ëì‘√ rÁeyê<ä\ ø±s¡ ø£ ≤bÕ\≈£î ì<ÛäT\ düs¡|òüsê ì*∫b˛sTT+~. &çe÷ìf…ÆCÒwüHé q>∑<äT s¡Væ≤‘· eéVü‰sê\qT Áb˛‘·‡Væ≤+∫q+<äTe\¢, eéVü‰sê\˙ï bÕs¡<äs¡Ùø£‘·qT

dü+‘·]+#·Tø=HêïsTT. q>∑<äT s¡Væ≤‘· eéVü‰sê\ kÕ<Ûäq |üP]Ô>± kÕ<Ûä + ø±ø£b˛e#·TÃ>±˙, m≈£îÿe düeT÷Vü‰\T ÄHé …’Hé eéVü‰sê\T

ì‘· ø£è‘· + #j·T&ÜìøÏ n\yê≥T|ü&Ü¶s¡T.

8.2.4. &çe÷ìf…ÆCÒwüHé qcÕº\T&çe÷ìf…ÆCÒwüHé e\¢ ø=ìï qcÕº\T ø£\e⁄.

&çe÷ìf… ÆC Òw üH é Á| ü Áø Ïj·TqT Á| üu Û Ñ T‘ · «+ nø£kÕà‘ · T Ô>± Á| üø £ Ï+∫ n~Ûø £ $\Te ø £*–q s¡÷. 500/`, s¡÷. 1000/` ø£¬s˙‡H√≥¢qT u≤´+≈£î˝À e÷]Œ&ç #˚düT≈£îH˚ >∑&ÉTe⁄ dü«\Œ ø±\+ Çe«&É+bÂs¡T\≈£î Çã“+~ø£s¡+>± e÷]q |ü]D≤eT+. Ç~ Á|ü»\qT uÛÑj·÷ìøÏ >∑T] #˚j·T&Éy˚T ø±ø£, yê]ì‘êédüsê\ ø√dü+ u≤´+≈£î\T eTT+<äT u≤s¡T\T r], ≈£L´\˝À ì\ã&ç nkÂø£sê´ìøÏ >∑Ts¡jT´˝≤ #dæ+~.

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8.2.3.ADVANTAGES OF DEMONETISATION Demonetisation helped curbing black money. This helped increase of tax base and brought

12.8 million new tax payers into stream for the financial year 2017-18.

The circulation of fake currency units of higher denomination of Rs. 500 and Rs. 1000disappeared.

Demonetisation of legal tender money arrested the funding of terror groups and reducedinflation.

Demonetisation promotes cashless and transparent transactions and facilitated digital andaccurate money flow.

Achieving cashless transactions totally are not possible in India, demonetisation encouragedlarger number of groups to go for online transactions, as there are limitations for withdrawalof cash.

8.2.4.DISADVANTAGES OF DEMONETISATIONThe Government of India suddenly declared the process of demonetisation giving a short duration forexchange of higher denominations of Rs. 500 and Rs. 1000. This made people scared and longqueues were witnessed in front of banks causing a lot of inconvenience to the public. The new currency units were not available at the time of announcement of demonetisation.

Citizens were allowed to withdraw a maximum amount of Rs. 10,000 per week from theirbank accounts, and the limit was increased to Rs. 24,000 per week. This resulted in a lot ofinconvenience to the common people.

The Nation faced the problem of short term inflation due to shortage of money in the market. Stock markets were badly affected.

The withdrawal of old currency units and printing of the new currency units created a heavyburden to the government.

8.2.5. IMPACT OF DEMONETISATIONDemonetisation is a bold and revolutionary step taken by the Government considering various factors.The impact of demonetisation is significantly observed in tax collection and increase in digital transactionsin a short period. It is witnessed that a total of 15.28 lakh crore old currency of the denomination ofRs. 500 and Rs. 1000 was returned to the banks as against a total volume of Rs. 15.44 LakhCrores. It denotes that a marginal difference of 0.16 which is almost equivalent to Rs. 16000 Croreswas kept aside and warned out. A notable decline was seen in activities of terrorism and anti socialactivities during post Demonetisation period. The impact on various segments are explained below.

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Impact on expansion of the tax baseDemonetisation witnessed a positive rate on tax base as shown in the following Table released by theCentral Board of Direct Taxes (CBDT)

We can observe an increase of new tax payers of 91 lakhs in 2016-17 (i.e. the period ofDemonetisation) to 128 lakhs in 2017-18 i.e. the immediate period of post Demonetisation. As thetable itself explains that there is an increase of income tax returns filed from 17.30 percent in thefinancial year 2016-17 to 24.7 percent in the financial year 2017-18 i.e. post Demonetisation period.It is witnessed that there are 37 lakhs new tax payers at an increase rate of 7.4 percent in the financialyear 2017-18.

Impact on direct tax collectionsA notable increase was distinctly seen on the direct collections of personal income-tax advance taxfrom 22.24 percent in 2016-17 (Till August 2016) to 41.79 percent in 2017-18 (Till August 2017).Likewise a growth rate was seen in total direct tax collection from 14.54 percent in 2016-17 to17.60 percent in the year 2017-18. The growth of self assessment tax of personal income-tax wasalso seen from 18.76 percent in 2016-17 (Till August 2016) to 34.25 percent in the year 2017-18(Till August 2017).

As the table shows the growth of direct tax increased substantially. The assesses voluntarilycame forward to disclose income, and paid taxes to strengthen the economy.

Operation Clean Money (Ocm)The department of Income-tax launched a project entitled “OPERATION CLEAN MONEY” on31st January, 2017, as a post - demonetisation programme. The CBDT analyzed the data of cashdeposits in bank accounts through a data mining software. The CBDT analyzed the data of variousclasses of individuals and their cash deposits in banks and identified that they were not filing Income-tax returns previously. They were also brought into tax brackets.

Reduction of currency in circulationDemonetisation encouraged people to make online transactions. Hence Demonetisation reduces theinformal economy, which leads to reduction of currency circulation.

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Impact on digital transactionDemonetisation gave a good push to digital transactions. Bank accounts are linked with Aadhaar andAadhaar linked Apps like Bhim App and other platforms like Rupay etc.

Impact on fake currencyThe Demonetisation has successfully arrested the circulation of fake currency, which hinders thedevelopment of the Nation.

Impact on corruptionThe main objective of Demonetisation is to curb corruption and black money. These elements vanishedto a great extent because of formalization of economy.

Impact on businessDemonetisation has its adverse influence on business especially on small and medium units because oflack of liquid cash. This has also affected the employment opportunities.

Impact on agricultureIndia is an agro based economy, which provides a lot of employment in various forms. Many of the

farmers and workers dependent on the agriculture sector suffered very badly for want of liquid cash.Most of the agro-based industries also suffered a setback, because of Demonetisation.

8.3. GOODS AND SERVICE TAX (GST) Goods and Service Tax (GST) is the biggest tax reform of indirect tax in India. The Goods andService Tax, 2017 was passed in the Parliament on 29th March, 2017 and came into effect on 1st

July, 2017. The main objective of the Act is to levy tax on Goods or Services or both.

Alcoholic liquor for human consumption is out of the purview of GST. States are very free tolevy taxes on them. But, industrial alcohol is within the ambit of Goods and Service Tax(GST).

GST is a destination based tax. Uniform tax structure all over India is under GST. The burden of GST is finally borne by consumers. The centre and the states have simultaneous powers to levy, collect and administer GST. It is noted that the GST is a destination based tax. Hence, GST is received by a state in

which the goods are consumed but not by the state, where goods are manufactured. Earlier, multiple taxation took place such as central excise, service tax and state VAT.

8.3.1 COMPONENTS OF GST:

Under GST, there is just one tax with the following four components.

CGST:Central Goods and Service Tax (CGST) is the tax levied by the Central Government. TheCGST is charged to compensate the earlier taxes on the form of Central excise duty, Service

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e∫Ã+~.

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8.3.2. õmd”º <Û´j·÷\T edüTÔ ùde\ eT<Ûä @ $<ÛäyÓTÆq ‘˚&Ü Ò≈£î+&Ü |üqTï $~Û+#˚ $Ádüè‘·yÓTÆq #·≥º+ õmd”º. õmd”º eTÚ*ø£ <Û´j·T+ |üqTïô|’ |üqTï $~Û+#·&Üìï ‘=\–+#·&É+. BìH πøùdÿ&ç+>¥ mô|òøº n+≤s¡T. $$<Ûäs¡ø±\ |üs√ø£å |üqTï\ìï+Ï õmd”º ‘·q |ü]~Û À ÇeTT&ÉTÃ≈£î+≥T+~. |üqTï m>∑y˚‘·qT, n$˙‹ì n]ø£≥º&É+. ñ‘êŒ<äø£‘·qT eT]j·TT kÕeTsêú ìï ô|+#·&É+. ¬s$q÷´qT düèwæº+#·&É+.

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tax, Duties of custom, Surcharges, Cess etc. The CGST is charged along with SGST orUTGST as per the dual GST arrangement.

SGST: GST is levied by the States on Intra-State supply of goods or services or both is calledtheState GST or SGST. State under GST Act, 2017 includes a Union Territory with aLegislature.

UTGST:On every supply of goods or services or both within the Union Territory GST levied iscalled Union Territory GST or UTGST.

IGST: On every Inter-State supply of goods or services or both, integrated GST (IGST) will belevied and collected by Centre. IGST is shared between the Centre and the State in themanner as may be allowed by the GST Council.

8.3.2.OBJECTIVES OF GST Goods and Service Tax is a broad tax structure without any difference between goods and

services. The basic objective of GST is to eliminate/avoid tax on tax, which is called cascading effect. GST includes or absorbs all the major indirect taxes under different laws. Prevention of Tax evasion and corruption. Increase in productivity and efficiency. Generation of Revenue. Achieving the policy of “One Nation and One Tax”. Providing the ideal credit of input taxes (ITC).

8.3.3.SALIENT FEATURES OF GST GST is applicable on “Supply” of goods or services but not on manufacture of goods or

services. It is destination based tax. It empowers both the Centre and State simultaneously to levy tax. It replaced various existing indirect tax laws. It is applicable on all goods and services except Alcohol for human consumption. It is not levied on Petroleum products. GST Council is constituted as a joint forum of the Centre and States. The GST Council

ensures balancing of various aspects of GST between Centre and States, and among States.

8.3.4.ADVANTAGES OF GST GST eliminates tax on tax, which is known as cascading effect of tax. Very simple and easy online procedure. Unorganized sectors of society are regulated. Uniformity of tax rates all over the Nation. Higher revenue efficiency. Provision of ideal credit of input taxes (ITC). GST prevents corruption and tax evasion.

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ªª πø <˚X¯+ ` πø |üqTïμμ ìHê<ä+ kÕ<Ûäq. Ä<äs¡ÙÁbÕj·TyÓTÆq ÇHé|ü⁄Ÿ ≤ø˘‡ Á¬ø&çŸ qT @sêŒ≥T #˚j·T&É+.

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8.3.4.õmd”º e\¢ Á|üjÓ÷»Hê\T õmd”º |üqTïô|’ |üqTï #Ó*¢+#˚ $<ÛëHêìï ‘=\–+∫+~. BìH˚ |üqTïô|’ πøùdÿ&ç+>¥ mô|òøº n+≤s¡T. õmd”º $<Ûëq+ kÕ<Ûës¡D+ eT]j·TT düT\uÛÑ‘·s¡+. düe÷»+˝À ñ+&˚ ndü+|òüTÏ‘· esêZ\qT Áø£eTãB∆ø£]+∫+~. <˚X¯+ yÓTT‘·Ô+ MT<ä πø |üqTïπs≥T $<Ûëq+ neT\T˝ÀøÏ e∫Ã+~. Á|üuÛÑT‘ê«ìøÏ düeTs¡úe+‘·+>± sêã&ç edüTÔ+~. Ä<äs¡Ùe+‘·yÓTÆq ÇHé|ü⁄Ÿ ≤ø˘‡ Á¬ø&çŸ n+XÊ\T Ç$T&ç ñHêïsTT. dü+øÏ¢wüºyÓTÆq nH˚ø£ |üs√ø£å|üqTï #·≤º\qT õmd”º ‘=\–+∫+~. ªªy˚TøÏHé Ç+&çj·÷μμ ìHê<ëìï πs¬ø‹Ô+∫+~.

8.3.5. õmd”º ` qcÕº\T õmd”º #·≥º+ Á|üø±s¡+ |üqTï\ ]≥sYï‡ <ëK\T #˚j·÷\+fÒ yê´bÕs¡düTÔ\T kÕ|òtºy˚sY Ks¡TÃ\T n<äq+>±

uÛÑ]+#ê*. ;e÷ Á|”$Tj·÷\T eT]+‘· uÛ≤s¡eTj·÷´sTT. Á|ü‘˚ ø£ Á|ü‹uÛ≤e+‘·T\T $ìjÓ÷–+#˚ M˝Ÿ #ÛÓ’s¡T¢, Áu…sTT© ù||üs¡T, $ìøÏ&ç |ü]ø£sê\ô|’ ≈£L&Ü õmd”º

$~Û+∫q+<äT e\¢ Ä Á|ü‘˚ ø£ ‘·s¡>∑‹ es¡Z+ô|’ uÛ≤s¡+ yÓ÷|æq≥¢sTT´+~. ô|ÁÀ*j·T+ ñ‘·Œ‘·TÔ\ô|’ õmd”º $~Û+#·ø£b˛e&É+ nìï düs¡T≈£î\ô|’ |üqTï @ø°ø£s¡D ìHê<ä+ M–q≥¢sTT´+~.

8.3.6. õmd”º Á|üuÛ≤e+uÛ≤s¡‘· Ä]úø£ e´edüúô|’ Á|üuÛ≤e+:ªª πø <X+ πø |üqTïμμ ìHê<ä+‘√ uÛ≤s¡‘· Á|üuÛÑT‘·«+ |üs√ø£å|üqTï\ e´edüúqT Á|üøå±fiq #dü÷Ô $|ü¢yê‘·àø£yÓTÆq #·s¡ ˝ÀuÛ≤>∑+>± õmd”ºì neT\T|üs¡∫+~.

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GST repealed various complex acts of indirect taxes. Promoting “Make in India” initiative.

8.3.5. DISADVANTAGES OF GST Increased costs of software purchase for filing returns in GST is expensive. Insurance premiums have been made expensive. Taxes are also levied under GST on things like wheel chairs, Braille paper, hearing aids etc.,

penalizing physically challenged persons.

GST is not levied on Petroleum products, which is against the ideals of unification of goods/commodities.

8.3.6. IMPACT OF GST Impact on Indian EconomyThe Government of India took a revolutionary step to reform the indirect tax structure in India, withthe slogan “One Nation-One Tax”.

The idea behind introducing GST in the entire country is to benefit every citizen as well as manufacturersand traders by implementing a good and simple tax.

The GST provides simple tax structure. The buyer can have a clear idea over the tax he ispaying, while purchasing goods and the calculation of tax is also very easy.

Small and Medium Enterprises (SME) are benefited under composition scheme with theintroduction of GST and inturn, there is a good generation of revenue to the Government.SMEs can pay taxes according to their Annual turnover.

Customs duty is reduced substantially and assuch, there can be a great increase in exports ofgoods or services.

GST is implemented in more than 160 countries all over the world, where there is only “OneNation, One Tax” system. GST is a transparent tax system and reduces different Indirecttaxes.

The Government of India introduced GST in our country, which simplifies the maintenance ofrecords and facilitates ease of doing under composition scheme for certain categories filing ofreturns became very easy.

As there are no hidden taxes, a customer has every information about the tax system andactivity of business becomes easy.

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The mission “Make in India” gets a booster from the GST and Indian goods can competesuccessfully not only in domestic market, but also in foreign trade. This ultimately increasesour Foreign Exchange Reserves.

Impact on BusinessThe impact of GST is on business too. GST facilitates removing tax on tax i.e. cascading effect oftaxes. Manufacturing costs come down, because of the reduction of taxes which ultimately results inlowering prices. Goods and services become available sufficiently to the consumers because of Singletax system. There will be an increase in demand of goods and services and the production can alsobe increased in this system.

Though initially the businessmen faced some difficulties in shifting to the new system, now they are allaccustomed to the present GST. Before the introduction of GST, business people were answerableto various authorities because of the multiple tax system and now as there is only one tax system, itis easy for the businessmen to do their transactions.

Impact on consumersMajority of population in India is dependent on agriculture or agro based industries. Most of thepeople belong to middle class or working class. The common man gets goods at lower prices andcan understand the percentage of tax paid because of simple and one tax system of GST.

Impact on real estateReal estate industry is one of the most vital industries of India. The influence of this industry on theeconomy is very high. It provides employment to many sections of people. It is very important forwealth generation. It contributes 6 to 8 percent to the GDP of the Nation. It is the major industryafter IT sector in terms of employment and infrastructural development.

Previously, the real estate industry had to pay multiple taxes. With the introduction of GST there isonly one and simple tax system. There are no hidden or other indirect taxes. The developers getinput tax credit (ITC) under GST, which was not properly administered previously. Buyers haveclarity over the simple tax system of GST and they are also benefited because of the reduction inprices of property.

Naturally, people of the Nation aspire to own a house and the Real Estate industry fulfills theirdreams. The Real Estate industry has an permanent impact on other sectors also. The cement, steel,paint and other related industries also get an upbeat in the growth of business, fostering employmentand wealth generation.

8.4. POLITICAL STABILITY

India is the biggest democracy in the world, with diversified traditions, cultures, languages and climaticconditions. In spite of all the diversities India stands united. The real strength of India lies in itsdiversity which leads to the strong spirit of National Integration. The aspirations and sentiments of thepeople of the country are reflected in the political scenario.

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8.4. sê»ø°j·T dæús¡‘·«+

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The economy of the nation has a strong influence on the political stability. Political system andeconomic policies have an inseparable bondage with each other. The implementation of GST madethe trade easy in the Nation and across the world. Quality comes from competition. The Indianmarket is potential enough to compete with global markets. It is able to withstand the challenges ofquality of goods.

There is a good wealth generation in the form of simple tax system of GST which ultimately gives theGovernment good Revenue. The Government inturn can spend on the development of infrastructureand social welfare. Demonetisation of legal tender money of the higher value of Rs. 500 and Rs.1000 units was announced on 8th November, 2016 and came into effect from 9th November, 2016.

Shri Narendra Modi promised the people of the Nation in his election campaigning of the generalelection 2014, that steps would be taken to bring out black money, which would be spent for thecause of the poor. As a part of the fulfillment of the promise made to the people, the Governmentunder the leadership of Hon’ble Prime Minister Shri Narendra Modi took a challenging decision ofdemonetisation.

General elections of the Nation were held in 2019 after the announcement of demonetisation in theyear 2016 and the implementation of GST in 2017. The mandate of people was in favour of theGovernment under the leadership of the Hon’ble Prime Minister Shri Narendra Modi. The judgementof people clearly indicates the support of the Nation to the policies of the NDA Government withparticular reference to demonetisation and implementation of GST apart from many other policies.

8.5. LEGAL CHANGESDemonetisation and GST brought many legal changes in the country. All the citizens of the Nationshould accept the changes made in the policies of the Government.

Citizens should return the old currency notes of Rs. 500 and Rs. 1000 to the Governmentthrough banks. For this act of returning the old currency notes, the Government of Indiafixed a time period till 30th December, 2016. Holding the old currency notes with the citizensafter 30th December, 2016 is an offence as per the New Law.

Withdrawal of large amounts of cash is not permitted as per the new guidelines of ReserveBank of India. If the cash withdrawal exceeds the permitted limit, tax deduction at sourcewill be made.

People can perform cashless and online transactions, for which there is no restriction ofupper limits.

After demonetization, there has been a great shift from informal economy to formal economy.Formal economy is registered automatically and attracts the attention of Authorities.

The GST also brought about many legal changes.

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#˚kÕs¡T. Ä yê>±›q+ HÓs¡yπsÃ Áø£eT+˝À uÛ≤s¡‘· Á|ü<Ûëì >ös¡e˙j·T l qπs+Á<ä yÓ÷~ &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·TqT ø£düyê\T>± neT\T|ü]∫ q\¢<Ûäq+ ìs√~Û+#·&ÜìøÏ $X‚wü ø£èwæ #˚kÕs¡T.2016 qe+ãsY 8e ‘Bq &çe÷ìf…ÆCÒwüHé Á|üø£≥q eT]j·TT 2017˝À õmd”º neT\T #dæq ‘·s¡Tyê‘· 2019 uÛ≤s¡‘·kÕ<Ûës¡D mìïø£\≈£î yÓfi≤fls¡T. Á|üC≤rs¡TŒ Á|ü<Ûëì l qπs+Á<ä yÓ÷~ bÕ\q≈£î, $<ÛëHê\≈£î nqT≈£L\+>± ñ+~.n+fÒ Á|üC≤rs¡TŒ &çe÷ìf…ÆCÒwüHé, õmd”º neT\T eT]j·TT Ç‘·s¡ $<ÛëHê\ô|’ m ¶j˚T Á|üuÛÑT‘ê«ìøÏ kÕqT≈£L\<äèø£Œ<∏ä+‘√ ñ+<äì ns¡úeTe⁄‘√+~.

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neT\T #˚j·T&É+ düT\uÛÑ‘·s¡yÓTÆ <˚X¯ dü+πøåe÷ìøÏ u≤≥\T y˚dæ+~.

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The multiple tax system is replaced by single tax system with the introduction of GST.

Uniformity of tax system all over the Nation is implemented as against the old system of taxvariation in different States.

Cashless and online transactions are introduced for payment of taxes and filing of Returnscontrary to the old system.

Hidden taxes and other deceptive methods are prevented in the new system – GST.

SME’s are permitted to pay taxes under GST according to the annual turnover.

Input Tax Credit (ITC) is properly implemented and the traders and manufacturers arebenefited by the New Legal System.

The new systems have introduced many legal changes, which are easy for understanding andimplementation and thereby ultimate welfare of the Nation.

KEY TERMS

Cascade Tax Effect: Tax on Tax – It is a situation where in the consumer has to bear the load of Taxon Tax.

Formalization of Economy: Formalization of economy means encouraging people to perform “Online”transactions, which is registered and available for scrutiny.

Integrated GST (IGST): Integrated GST is shared between the Central Government and StateGovernment as per prescribed norms.

Intrastate Business: Intra state business is business conducted within a particular state.

Interstate: Interstate business is conducted between States

REVIEW QUESTIONS1. The last date for depositing old currency of Rs. 500 and Rs. 1000 __

a. December 31, 2016b. January 1, 2017c. December 30, 2016d. None of the above

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2. Demonetisation encourages the following paymentsa. Online transactionsb. Payment by Rupay and Bhim Appsc. Phone Pe and Google Payd. All of the above

3. GST is applicablea. All Statesb. Union Territories onlyc. All States & Union Territoriesd. Central Govt, all States and UTs

4. GST is not levied ona. Industrial Alcoholb. Goods and Servicesc. Petroleum productsd. None of the above.

5. A contract is discharged by the breach when a party to a contracta. Refuses to perform his promiseb. Fails to perform his promisec. Able to perform only a part of the promised. All of the above.

6. The provisions of consumer protection Act is applicable toa. Goodsb. Servicesc. Goods or Serviced. Goods and Service

7. The main objective of GSTa. Different taxes for different Statesb. Different taxes for Union Territoriesc. Different taxes for UTs and Statesd. One Nation One Tax

8. After demonetisation, Government of India brought the following new currency unitsa. Rs. 500 and Rs. 1000b. Rs. 1000 and Rs. 2000c. Rs. 500 and Rs. 2000d. None of the above

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9. The main objective of demonetisation isa. Encourage black moneyb. Prevent black money and corruptionc. Discourage fake money onlyd. None of the above

10. GST is not levied on the followinga. Industrial Alcoholb. Wheel chairs, Braille paper & hearing aidsc. Petroleum productsd. None of the above

11. GST encouragesa. Tax on Taxb. Tax evasionc. All indirect taxes under one umbrellad. None of the above

12. Make in India mission is undertakena. To encourage indigenous manufactureb. To import goods from abroadc. To encourage “entrepo” traded. None of the above

13. Under the consumer protection Act who shall constitute consumer protection council ______a. President of Indiab. Central Governmentc. State Governmentd. Supreme court of India.

14. New Companies Act came into force in the year ___a. 1956b. 2003c. 2020d. 2013

15. The full form of FEMA, 1999 isa. Foreign Exports and Management Actb. Foreign Exports Maintenance Actc. Foreign Exchange Maintenance Actd. Foreign Exchange Management Act

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ANSWERS

A D D C D D D C B C

INTERACTIVE LINKS

Legal Environment: https://www.indiastudychannel.com>...

What is Legal Environment: IndiaStudy Channel.com

Demonetisation : The economic and political consequences of India’s demonetisationhttps://www.voxdev.org>...

Goods and Service Tax (GST) : https://www.selfservice.gstsystem.i

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1 2 3 4 5 6 7 8 9 10

Chapter

9

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the concept of Global Environment 2. define Globalisation, its advantages and disadvantages 3. analyse the impact of Globalisation in business environm4. asses the objectives of WTO and IBRD 5. examine the functions of WTO and IBRD and its influenc Economy

Global Trade Organisations

Chapter Layout: 9.1. Global Environment 9.2. Globalization 9.2.1. Characteristics of Globalisation 9.2.2. Important components of Globalisation 9.2.3. Advantages of Globalisation 9.2.4. Disadvantages of Globalisation 9.3. World Trade Organization – (WTO)

9.3.1. Organization and Structure of WTO 9.3.2. Features of WTO

9.3.3. Role and Functions of WTO 9.3.4. The importance of the WTO in World Trade 9.3.5. Criticism on WTO

9.4. International Bank for Reconstruction and Development (IBRD) 9.4.1. Organisation and structure 9.4.2. Functions of IBRD 9.4.3. IBRD lending to India

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CHAPTER OVERVIEW

Globalisation is the integration of domestic economy with world economy.After LPG reforms of 1991, Indian economy is more open than ever withthe world economies. Indian firms now have to compete with internationalmanufacturers and can also cater to international customers. Not only Indianeconomic environment affects Indian business but also the globalenvironment does.

In this chapter an attempt has been made to define globalisation, discuss itscharacteristics, components, advantages and disadvantages of briefexplanation of what global environment means and how it impacts ondomestic business is also given.

Multilateral economic organisations play a key role in setting up the economicorder in international business. Their rulings have businesses in every country.WTO specifically deals with rules pertaining to International goods andservices. IBRD being the biggest bank in the world, functions to eliminateworld poverty. Thus their study in this chapter is important subject matterto global economic environment specifically and business environment ingeneral.

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9.1. GLOBAL ENVIRONMENT

Global environment can be defined as the environment in different countries, outside of home countrythat can influence how businesses are run and how business decisions are taken. Global environmentis part of the macro environment of the business. No country can run their economy in completeisolation. Every National economy is integrated with the global economy in some way. Internal traderelations, imports, exports, trade agreements between Nations are examples for global environmentalfactors.

Global environment basically consists of international interactions of a firm over which it has nocontrol. So, now in this global market with such a high level of competitiveness, all companies mustbe mindful of the global environment. For example, an Indian electronics company can face manychallenges if China gives incentives for electronics exports. Similarly, foreign investors in India maypull their investments out of our country if China eases entry of foreign investments. Thus, businessenterprises should be aware of global factors that can impact their businesses locally.

9.2 GLOBALIZATION

The term globalization first appeared in the early 20th century (supplanting an earlier French termmondialization), developed its current meaning sometime in the second half of the 20th century, andcame into popular use in the 1990s.

Theodore Levitt, a former professor at the Harvard Business School credited with coining the term“globalization” and with championing the undervalued role of marketing in defining what businessesshould make and sell. Peter Sutherland, is known as the ‘father of globalisation’

Globalization is the spread of products, technology, information, and jobs across national bordersand cultures. In economic terms, it describes an interdependence and economic integration of Nationsaround the globe fostered through free trade. A modern world can be seen without geographicalboundaries and any kind of barriers. Globalization has been the major force behind this. Globalizationhit India late but had huge impact in the Nations economic policies and various other aspects

A core element of globalization is the expansion of world trade through the elimination or reduction oftrade barriers, such as import tariffs. Greater imports offer consumers a wider variety of goods atlower prices, while providing strong incentives for domestic industries to remain competitive. Exports,often a source of economic growth for developing nations, stimulate job creation as industries sellbeyond their borders.

Globalization refers to the integration of goods, services, and culture among the Nations of the world.Globalisation is defined as the rise in economic interdependencies on a global scale. It is open flow ofinformation, technology, and goods among countries and consumers. One of the effects of globalizationis that it promotes and increases interactions between different regions and populations around the globe.

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9.2.1. CHARACTERISTICS OF GLOBALISATION• Global transportation network reduces the time and space between places. Information

transmission is not limited by time and space. Events happen in different places affect eachother

• Economic, political and cultural activities are less restricted by National borders

• Capital, resources and goods flow across boundaries. People can travel to, live or work inother places easily. Information can be spread quickly from place to place. Mobility willautomatically increases.

• People have more chances to interact with each other. More economic, political and culturalintegration appears among countries. There will be increasing interaction and exchange.

• Inter-governmental organisations are gradually set up global systems to facilitate global tradeand financial activities and to facilitate negotiations.

9.2.2. IMPORTANT COMPONENTS OF GLOBALIZATION

Globalization of marketsRapidly developing economies have huge markets. In developed economies, some companies operatebelow capacities. The emerging new markets offer immense opportunities to increase their sales andprofits. A wide variety of products and services are offered in world-wide markets.

Globalization of productionMany MNCs are locating their subsidiaries in low wage, and low cost countries. They take advantageof low cost of production. This is called as globalization of production. Main reasons for globalizationof production are:

availability of quality raw materials and components in the other countries; availability of inputs at low cost in foreign countries; availability of human resources at low cost; liberal labour laws in foreign countries and facility of exporting to other neighbouring foreign countries.

Globalization of investment

The early period of 20th century saw high levels of barriers on trade and investment. Many countriescreated barriers relating to exports, imports and foreign investment. This was done to protect thedomestic industry. The creation of General Agreement on Tariff and Trade(GATT) reduced the traderestrictions. The establishment of World Trade Organisation (WTO) contributed for the eliminationof investment barriers substantially. Government of India also reduced the barriers on investment. It

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allowed more than 51 percent of the foreign investment in the Indian companies. At present, 100percent FDI is permitted. Important reasons for globalization of investment are:

Rapid increase in the volume of trade Congenial investment conditions Limitations of exporting and licensing. Liberalizing investment criteria.

Globalization of technology:New, faster and cheaper tools of communication, Internet and electronic communication inter-linkingmany people simultaneously. Cellular phones, Fax machines, Computer Aided Design. Faster andcheaper transport by air, travel and road. These are components of globalization of IT. Manufacturingtechnology, assembly line operations are undertaken globally.

9.2.3. ADVANTAGES OF GLOBALIZATION

Globalization makes it easier to access foreign culture, including food, movies, music, andart.

Many countries around the world remain constantly connected, so knowledge andtechnological advances travel quickly. Globalization allows companies to find lower-cost ways to produce their products. It also

increases global competition, which drives prices down and creates a larger variety of choicesfor consumers. Lowered costs help people in both developing and already-developed countrieslive better on less money.

Developing Nations experience an improved standard of living due to globalization.

Businesses gain a great deal from globalization, including new customers and diverse revenuestreams. Companies interested in these benefits look for flexible and innovative ways to growtheir business overseas.

In addition to new markets, globalization allows companies to find new, specialized talentthat is not available in their current market.

Any country can borrow the technology through the agreement and can implement it in theircountry for their overall development. We can communicate each other easily from any partof the globe by using advanced technology at minimal cost, time and efforts.

Globalization always provides us better services. Through the technological advancement,our services like water supply, mobile networking, internet, electricity supply and any otherservices have been easier and better than before.

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Owing to the technological advancement, and its transfer throughout the globe helps toimprove country’s infrastructure.

Globalization ensures contribution of every country to the world GDP growth. Above all, Globalization promotes extension of market. It provides an opportunity to the

domestic companies in reaching global.

9.2.4. DISADVANTAGES OF GLOBALIZATION

Globalization can increase inequality throughout the world by increasing specialization andtrade. Although specialization and trade boost the per-capita income, it may cause relativepoverty.

Globalisation increases the unemployment. Globalisation demands for higher skilled workwith cheaper price. But, countries where institutions are relatively weak are not capable ofproducing highly skilled workers. As a result, the unemployment rate is increasing in thosecountries.

Developing countries are so much dependent on the developed countries in terms of importgoods but their export capabilities are lower than import. The trade imbalance has beenoccurring due to this globalisation.

The pace of industrialization is increasing as the result of globalization. It boosts the economicgrowth. But, it harms environment and loots the nature and it affects the globe badly.

9.3. WORLD TRADE ORGANIZATION - (WTO)The World Trade Organization is the international organization dealing with the global rules of trade.Its main function is to ensure that international trade flows as smoothly, predictably and freely aspossible. It works on implementing, regulating and operating trade agreements between countries,and provides a fair forum for trade negotiations between member countries, mediating on disputes asthey arise. It aims to help with imports, exports and conducting trade fairly.

The World Trade Organisation (WTO) was set up in 1995 in Geneva. It came about to replaceanother international organisation called the General Agreement on Tariffs and Trade (GATT),which was formed in 1948 between 23 countries, with the aim of reducing customs tariffs and creatinga fair platform for member countries. The WTO has replaced GATT and it has a much wider scope.GATT regulated trade in merchandise goods, while the WTO is also involved in trade of goods andservices, such as telecommunications and banking, as well as a number of other issues, such asintellectual property rights.

As of 2003, it had 145 members, with another 25 countries negotiating their membership. By thispoint, the organisation had handled more than 280 trade disputes between member countries concerningpolitical and legal issues, and those concerning international trade and global economics. Now,

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n+‘·sê®rj·T yêDÏ»´+ eT]j·TT >√¢ã˝Ÿ mø£Hê$Tø˘‡ >∑T]+∫ düuÛÑ <˚XÊ\ eT<Ûä 280 ø£+fÒ m≈£îÿe yêDÏ»´$yê<ë\qT |ü]kÕÿs¡+ #·÷|æ+~. Ç|ü⁄Œ&ÉT, WTO ˝À 162 eT+~ düuÛÑT´\T ñHêïs¡T. Ç+ø± ÇsêHé, Çsêø˘eT]j·TT dæ]j·÷‘√ düVü‰ eTs√ 21 <˚XÊ\T #˚s¡&ÜìøÏ <äs¡U≤düTÔ #˚düT≈£îHêïsTT. j·T÷s√|æj·THé j·T÷ìj·THé<˚XÊ\˙ïBì˝À düuÛÑT´˝Ò, ø±˙ n$ ˇπø EU u≤¢ø˘ øÏ+<ä≈£î ekÕÔsTT.

9.3.1. WTO- ìs¡«Vü≤D eT]j·TT ≈£Ls¡TŒÁ|ü|ü+#· yêDÏ»´ dü+düú ôdÁø£fÒ]j·TŸ≈£î &Ó’¬sø£ºsY »qs¡ Ÿ H˚‘·‘·«+ eVæ≤kÕÔs¡T. WTO jÓTTø£ÿ n‘·T´qï‘· n~Ûø±s¡+$Tìd”º]j·T˝Ÿ ø±qŒ¤¬sHé‡, Ç~ <ëì düuÛÑ <˚XÊ\ Á|ü‹ì<ÛäT\ ‘√ ≈£L&ÉTø=ì ñ+≥T+~. eT+Á‹es¡Z+ ø£ dü+ ¬s+&ÉTdü+e‘·‡sê\≈£î ø£kÕ] düe÷y˚X¯eTe⁄‘·T+~. Ç~ dü+düú jÓTTø£ÿ ìs¡íj·÷\T rdüTø=H˚ eTTK´ n+>∑+. GATT 1947øÏ+<ä @ø±_ÛÁbÕj·÷ìï kÕ~Û+∫ ˇø£ ìs¡íj·÷ìøÏ sêe\dæ ñ+&˚~ . ø±ì WTO øÏ+<ä, eT+Á‹es¡Z düe÷y˚X¯+eT]j·TT »qs¡ Ÿ øöì‡˝Ÿ ìs¡íj·÷\T @ø±_ÛÁbÕj·T+ <ë«sê rdüTø√ã&É‘êsTT. »qs¡ Ÿ øöì‡˝Ÿ nH˚~ |ü]bÕ\Hê$uÛ≤>∑+. »qs¡ Ÿ øöì‡˝Ÿ kÕúsTTøÏ ~>∑Teq Á|ü‘˚ ø£ øöì‡˝Ÿ‡ ≈£L&Ü ñHêïsTT. MÏ À, øöì‡˝Ÿ |òüsY ÁfÒ&é ÇHé >∑÷&é‡,øöì‡˝Ÿ |òüsY ÁfÒ&é ÇHé düØ«ôddt, øöì‡˝Ÿ |òüsY TRIPS eT]j·TT eT]ìï nqTã+<Ûä dü+düú\T ñHêïsTT. ÁfÒ&é n+&é&Óe\|tyÓT+Ÿ, u≤´ …Hé‡-Ä|òt-ù|yÓT+Ÿ‡ |ü]$T‘·T\ ø£$T° eT]j·TT ã&Ó®Ÿ eT]j·TT ô|ò’HêHé‡ô|’ ø£$T° e+Ï nH˚ø£ø£$T°\T ≈£L&Ü ñHêïsTT. GATT e … ø±≈£î+&Ü, WTO n+‘·sê®rj·T #·≥º|üs¡yÓTÆq e´øÏÔ‘ê«ìï ø£*– ñ+~.

Fig:9.19.3.2. Á|ü|ü+#· yêDÏ»´ dü+düú \ø£åD≤\T

|üPs¡«eTTqï GAAT ø£+fÒ WTO jÓTTø£ÿ |ü]~Û #ê˝≤ $düÔ‘·yÓTÆq~. ñ<ëVü≤s¡D≈£î, GAAT πøe\+eÁkÕÔ\T eT]j·TT e´ekÕj·÷ìï $TqVü‰sTT+∫ edüTÔe⁄\ô|’ e÷Á‘·y˚T <äwæº ô|Ïº+~. ø±ì WTO y˚T<Û√ dü+|ü‹Ô‘√bÕ≥T nìï edüTÔe⁄\T, ùde\T eT]j·TT ô|≥Tºã&ç $<ÛëHê\qT ≈£L&Ü ‘·q |ü]~˝ÀìøÏ rdüTø=+≥T+~.

WTO ôdÁø£fÒ]j·TŸ $<ÛëHê\ düMTø£å eT]j·TT $yê<ë\ |ü]cÕÿsêìøÏ dü+ã+~Û+∫q j·T+Á‘ê+>±\qTn~Ûø±]ø£+>± eT]j·TT ã˝Àù|‘·+ #˚düTÔ+~. düuÛÑ <˚XÊ\ $düÔs¡D eT]j·TT WTO <ë«sê eT]ìï edüTÔe⁄\TeT]j·TT ùde\qT ø£esY #˚j·T&É+ e\q á n+X¯+ ø°\ø£+>± e÷]+~. á $wüj·T+˝À eTs=ø£ eTTK´yÓTÆq|ü]o\q $$<Ûä n+‘·sê®rj·T e÷¬sÿ≥¢≈£î <ës¡T\T ‘Ós¡Teã&Ü¶sTT.

n_Ûe~∆ #Ó+~q <˚XÊ\ $eø£å‘√ ≈£L&çq yêDÏ»´ |ü<ä∆‘·T\≈£î e´‹πsø£+>± ∫qï eT]j·TT ã\V”≤q <˚XÊ\s¡ø£åD ø√dü+ WTO ø£wæ #˚düTÔ+~.

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WTO has 162 members, and a further 21 countries who have applied to join, including Iran, Iraq andSyria. The European Union countries are all members, but they come under one EU bloc.

9.3.1. Organisation and Structure of WTOThe WTO Secretariat is headed by a Director-General. The highest authority of the WTO is theMinisterial Conference, which is a makeup of representatives of its member states. The MinisterialConference meets at least once in two years. It is the decision making organ of the institution. UnderGATT 1947 consensus must be achieved in order to reach a decision. Under WTO, decisions of theMinisterial Conference and the General Council are made by consensus. The General Council is theadministrative organ. There are also special councils below the level of the General Council. Theseinclude, Council for Trade in Goods, Council for Trade in Services, Council for TRIPS and furthersubsidiary bodies. Several committees also exist, such as: Committee on Trade and Development,Committee on Balance-of-Payments Restrictions and Committee on Budget and Finance. UnlikeGATT, WTO has international legal personality.

9.3.2. FEATURES of WTO The major features of the World Trade Organisation are ..

The scope of WTO is far more expansive than the erstwhile General Agreement on Tradeand Tariff. For instance, GATT solely focused on goods while excluding textiles and agriculture.On the other hand, WTO covers all goods, services and investment policies along withintellectual property.

WTO Secretariat has formalised and bolstered the mechanisms for the review of policies aswell as the settlement of disputes. This aspect has become crucial due to proliferation ofmember countries and more number of goods and services being covered by the WTO.Another important consideration in this regard is the substantial increase in open access todifferent international markets.

There are rules implemented for the protection of small and weak countries against thediscriminatory trade practices of developed countries.

National Treatment articles and Most Favoured Nation (MFN) clause permits equal accessto markets for just treatment of both domestic and foreign suppliers.

Each member country of the WTO carries single voting right and all members enjoy privilegeon the global scale.

The WTO agreements encompass all the member states and acts as a commonforum of deliberation for the members.

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C≤rj·T ∫øÏ‘ê‡ edüTÔe⁄\T eT]j·TT n‘· +‘· ÇwüºyÓTÆq <˚X¯+ (MFN) ìã+<Ûäq <˚oj·T eT]j·TT $<˚odüs¡|òüsê<ës¡T\≈£î πøe\+ |ü]kÕÿs¡+ ø√dü+ e÷¬sÿŸ\≈£î düe÷q ÁbÕ|æÔì n+~düTÔ+~.

WTO Àì Á|ü‹ düuÛÑ <˚X¯+ πø z≥T Vü≤≈£îÿqT ø£*– ñ+≥T+~ eT]j·TT Á|ü|ü+#·yê´|üÔ+>± düuÛÑT´\+<äs¡÷düe÷q Vü≤≈£îÿ\qT bı+<äT‘ês¡T.

WTO ˇ|üŒ+<ë\T nìï düuÛÑ <˚XÊ\qT e]ÔkÕÔsTT eT]j·TT düuÛÑT´\ ø√dü+ ˇø£ kÕ<Ûës¡D #·sêÃ y˚~ø£>±|üì#kÕÔsTT.

9.3.3. Á|ü|ü+#· yêDÏ»´ dü+düú - |ü]~Û eT]j·TT <ëì $<ÛäT\Tn+‘·sê®rj·T yêDÏ»´+ ø√dü+ ìj·Te÷\qT @sêŒ≥T #˚j·T&É+ eT]j·TT neT\T #˚j·T&É+ es¡ Ÿ¶ ÁfÒ&é Äs¡ZHÓ’CÒwüHé<ë«sê n+‘·sê®rj·T yêDÏ»´ ìj·Te÷\T eT÷&ÉT yπs«s¡T |üŒ+<ë\ øÏ+<ä kÕú|æ+#·ã&Ü¶sTT. n$ edüTÔe⁄\ n+‘·sê®rj·TyêDÏC≤´ìøÏ dü+ã+~Û+∫q ìj·Te÷\T, yT<Û√ dü+|ü‹Ô Vü≤≈£îÿ\ yêDÏ»´+ dü+ã+~Û‘· n+XÊ\ô|’ |üŒ+<ä+ (TRIPS)eT]j·TT ùde\ô|’ yêDÏ»´ dü+ã+~Û‘· |üŒ+<ä+ (GATS). düuÛÑ <˚XÊ\ <ë«sê yêDÏ»´ ìj·Te÷\qT ñ\¢+|òæT+∫qdü+<äsê“¤\˝À $yê<ë\ |ü]cÕÿsêìøÏ ãVüQfi|üø£å eédüú <ë«sê WTO ìj·Te÷\ neT\T »s¡T>∑T‘·T+~. $yê<ë\T|ü]cÕÿsê\T eT]j·TT rs¡TŒ\qT düuÛÑ <˚XÊ\T ÄyÓ÷~+#·ã&çq |üŒ+<ë\ Á|üø±s¡+ ø£≥Tºã&ç ñ+&É≤ìøÏ WTOø£wæ #˚düTÔ+~.

>√¢ã Ÿ nô|ø‡ bò s¡yéT>± eéVü≤]+#·&É+.es¡ Ÿ¶ ÁfÒ&é Äs¡ZHÓ’CÒwüHé nH˚~ yêDÏ»´ düs¡∞ø£s¡DqT |üs¡ y˚øÏå+#·&ÜìøÏ eT]j·TT #·]Ã+#·&ÜìøÏ Á|ü|ü+#· y˚~ø£ >± ñ+≥T+~. WTO #|üÏºq yêDÏ»´ düs¡∞ø£s¡D #·s¡ \ e\q düuÛÑ <XÊ\ ùd«#êÃ¤j·TT‘·yÓTÆq, düs¡düyÓTÆq yêDÏ»´ bÕ\qø±s¡D+>± ‘·T\Hê‘·àø£ Á|üjÓ÷»Hêìï ñ|üjÓ÷–+#·Tø√e&ÜìøÏ M\T ø£\T>∑T‘·Tqï~ .

düuÛÑ <XÊ\ uÛÑ$wü ‘·TÔ eP´Vü‰\ >∑T]+∫ #·]ÃdüTÔ+~WTO, ãVüQfi¯|üø£å yêDÏ»´ eédüú À yêDÏ»´ #·s¡Ã\ ø√dü+ Ç‘·s¡ düuÛÑT´\qT nqTeT‹düTÔ+~. yêDÏ»´ #·s¡Ã\TÒq|ü⁄Œ&ÉT, e~∆ eT+<ä–+#·e#·TÃ eT]j·TT ≤]|òt eT]j·TT ~>∑TeT‹ dü+ã+~Û+∫q düeTdü \T @s¡Œ&Ée#·TÃ.

yêDÏ»´+ jÓTTø£ÿ eT]+‘· düs¡∞ø£s¡D, dæús¡yÓTÆq yêDÏ»´ #·s¡Ã\≈£î ≈£L&Ü á Ç+<äT˝À ìs¡íj·÷\T ‘√düTø√e#·TÃ.

<Ó’«bÕøÏåø£ eT]j·TT ãVüQbÕøÏåø£ yêDÏ»´ |üŒ+<ë\qT neT\T #j·T&É+ eT]j·TT ìs¡«Væ≤+#·&É+düuÛÑ <XÊ\ eT<Ûä <Ó’«bÕøÏåø£ Ò<ë ãVüQbÕøÏåø£ yêDÏ»´ |üŒ+<ë\T ‘·|üŒìdü]>± dü+ã+~Û‘· düuÛÑ <XÊ\ bÕs¡¢yÓT+≥T\#ÄyÓ÷~+#·ã&Ü*. n≥Te+Ï ÄyÓ÷<ä+ sêø£b˛‘˚, $eø£å‘· Òì yê´bÕs¡ eédüúqT Ä#·s¡D˝À ô|≥º ÒeTT. Á|ü‹ düuÛÑ<˚X¯+ Ç‘·s¡ düuÛÑ <˚XÊ\ m&É\ e÷¬sÿ≥¢ À Hê´j·T+>± ñ+&˚ $<Ûä+>± ˇ|üŒ+<ë\qT #˚düTø=H˚ $<Ûä+>± WTOeéVü≤]düTÔ+~.

yêDÏ»´ $yê<ä |ü]cÕÿs¡+WTO ‘·q düuÛÑ´ <˚XÊ\ eT<Ûä´ yêDÏ»´ $yê<ë\ |ü]cÕÿsêìøÏ ø£wæ #˚düTÔ+~. Bì jÓTTø£ÿ dü«‘·+Á‘· ì|ü⁄DT\T≈£L&çq ÁÏãT´q˝Ÿ ˇ|üŒ+<ë\qT ns¡ú+ #˚düTø=+≥T+~ eT]j·TT dü+ã+~Û‘· düuÛÑ <˚XÊ\ jÓTTø£ÿ ìã<ä∆‘·\qTù|s=ÿ+≥÷ rs¡TŒ ÇdüTÔ+~. düuÛÑT´\ eT<Ûä dü+Á|ü~+|ü⁄\ <ë«sê $yê<ë\qT |ü]wüÿ]+#·&ÜìøÏ Áb˛‘·‡Væ≤düTÔ+~.

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9.3.3. ROLES AND FUNCTIONS OF WTO The broad reach of WTO and its functions have been mentioned below.

Establishing and enforcing Rules for International Trade The international trading rules by the World Trade Organisation are established under three separateagreements – rules relating to the international trade in goods; the agreement on Trade-Related Aspectsof Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS). The enforcement of rules by the WTO takes place by way of a multilateral system of disputes settlementin the instances of violation of trade rules by member countries. The members are obligated underratified agreements to honour and abide by the procedures and judgments.

Acting as a Global Apex Forum World Trade organisation is the global forum for monitoring and negotiating further trade liberalisation.The premise of trade liberalisation measures undertaken by WTO is based on the benefits of membercountries to optimally utilise the position of comparative advantage due to free and fair trade regime.

Forum for member countries discuss future strategies The WTO, as a forum, allows for trade negotiations in the multilateral trading system. In the absenceof trade negotiations, growth may stunt, and issues related to tariff and dumping may go unaddressed.Further liberalisation of trade is also subject to consistent trade negotiations.

Implementing and administering bilateral and multilateral trade agreements The bilateral or multilateral trade agreements have to be necessarily ratified by the parliaments ofrespective member countries. Unless such ratification comes through, the non-discriminatory tradingsystem cannot be put into practice. The executed agreements will ensure that every member isguaranteed to be treated fairly in other members’ markets.

Trade dispute settlement The dispute settlement by the WTO is concerned with the resolution of trade disputes. Independentexperts of the tribunal interpret the agreements and give out judgment mentioning the due commitmentsof the concerned member states. It is encouraged to settle the disputes by way of consultation amongthe members as well.

Optimal utilisation of the world’s resourcesResources across the world can be further optimally utilised by harnessing the trade capacities of thedeveloping economies. It requires special provisions in the WTO agreements for the least-developedeconomies. Such measures may include providing greater trading opportunities, longer duration toimplement commitments, and also support to build the sue infrastructure.

Increasing transparency in the decision-making processThe World Trade Organisation attempts to increase transparency in the decision-making process byway of more participation in the decision-making and consensus rule, in particular. The combinedeffect of such measures helps to develop institutional transparency.

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Collaboration between International economic institutions The global economic institutions include the World Trade Organisation, the International MonetaryFund, the United Nations Conference on Trade and Development, and the World Bank. With theadvent of globalisation, close cooperation has become necessary between multilateral institutions.These institutions are functional in the sector of formulation and implementation of a global economicpolicy framework. In the absence of regular consultation and mutual cooperation, policymaking maybe disrupted.

Safeguarding the trading interest of developing countriesStringent regulations are implemented by the WTO to protect the trading interests of developingcountries. It supports such member countries to leverage the capacity for carrying out the mandatesof the organisation, managing disputes, and implementing relevant technical standards.

9.3.4. IMPORTANCE OF WTO IN WORLD TRADEWTO is at the forefront of efforts to ensure unimpeded global free trade and reduce trade barriers,operating on a rules-based multilateral system.

It has made important contributions to the progress made around the world towards promotingglobal trade. This has led to the growth of a number of economies, the emergence of newmarkets – all important factors not only in improving business, but also in lifting people out ofpoverty.

It does this by implementing, regulating and operating trade agreements between countries,and provides a fair forum for trade negotiations between member countries, mediating ondisputes as they arise. It aims at helping with imports, exports and conducting trade fairly.

WTO also cooperates with the IMF (International Monitory Fund) and World Bank toensure global economic policies are fair and cohesive. Therefore, it isn’t a matter of theWTO being important for international business, but of it being absolutely fundamental.

Different countries operate on different regulations and rules between different countries,and it’s not easy for an international business to stay on top of these when it operates inmultiple countries. But the job would be a lot more difficult if these rules were unfair orunreliable, or not consistently applied.

The importance of a regulatory body such as the WTO is especially pressing at a time ofsuch pronounced global uncertainty – several of its members are currently using it to disputeincreasing protectionist tendencies, trade tariffs and immigration difficulties imposed bydeveloped countries .

Understanding the work and nature of the WTO is therefore an important part of remainingaware of the changing landscape of international landscape. In uncertain times, having theright advice and support is crucial. WTO is the right organisation to act accordingly.

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$$<Ûä <˚XÊ\ eT<Ûä $$<Ûä ìã+<Ûäq\T eT]j·TT ìj·Te÷\ô|’ <˚XÊ\T |üì#˚kÕÔsTT, eT]j·TT n+‘·sê®rj·Tyê´bÕs¡+ ãVüQfi <XÊ\‘√ |üì#ùd≥|ü⁄Œ&ÉT MÏô|’ nÁ>∑kÕúq+˝À ñ+&É≥+ düT\uÛÑ+ ø±<äT. ø±˙ á ìj·Te÷\TnHê´j·T+>± Ò<ë qeTà<ä–q$ ø±ø£b˛‘˚ Ò<ë dæús¡+>± e]Ô+#·ø£b˛‘˚ yê´bÕs¡+ #ê˝≤ ø£wüº+>± ñ+≥T+~.BìøÏ WTO |ü]cÕÿs¡+ #·÷|ü⁄‘·T+~.

WTO e+Ï ìj·T+Á‘·D dü+düú jÓTTø£ÿ ÁbÕeTTK´‘· eTTK´+>± Á|ü|ü+#· nì•Ã‹ düeTj·T+˝À ‘Ó*j·T edüTÔ+~.n_Ûe~∆ #Ó+~q <˚XÊ\T $~Û+#˚ s¡ø£åD≤‘·àø£ <Û√s¡DT\T, yêDÏ»´ düT+ø±\T eT]j·TT <˚XÊ\ eT<Ûä e\dü\Çã“+<äT\qT ‘=\–+#·&ÜìøÏ düuÛÑ <˚XÊ\≈£î %WTO% ñ|üjÓ÷>∑ø±]>± ñ+≥Tqï~.

WTO jÓTTø£ÿ |üì eT]j·TT dü«uÛ≤yêìï ns¡ú+ #˚düTø√e&É+ nH˚~ n+‘·sê®rj·T <äX¯ + jÓTTø£ÿ e÷s¡T‘·TqïÁ|üø£‹ <äX¯ + >∑T]+∫ ‘Ó\TdüTø√e&É+˝À eTTKýÓTÆq uÛ≤>∑+. nì•Ã‘· düeTj·÷˝À¢, dü¬s’q dü\Vü‰ eT]j·TTeT<ä›‘·T Çe«&É+ ˝À WTO #ê˝≤ HÓ’|ü⁄Dé+‘·+>± |üì#˚düTÔ+~.

9.3.5. WTO ô|’ $eTs¡ÙÁ|ü|ü+#· yêDÏ»´ dü+düú ‘·q düuÛÑ <˚XÊ\ eT<Ûä ùd«#êÃ¤ yêDÏC≤´ìï yÓTs¡T>∑T|üs¡#·&ÜìøÏ ø£≥Tºã&ç ñ+~. Ç<˚dü+<Ûäs¡“+˝À <ëì bÕÁ‘· $yê<ëdüŒ<ä+>± e÷]+~. WTO ô|’ ø=ìï $eTs¡Ù\T ÁøÏ+~ $<Ûä+>± ñHêïsTT.

ùd«#êÃ¤ yêDÏ»´+ Á|üjÓ÷»Hê\T n_Ûe~∆ #Ó+~q <˚XÊ\≈£î m≈£îÿe>± n+~düTÔ+~.ø=‘·Ô |ü]ÁX¯eT\qT n_Ûe~∆#j·÷\+fÒ n_Ûe~∆ #Ó+<äT‘·Tqï <XÊ\≈£î ø=+‘· yêDÏ»´ s¡ø£åD nedüs¡+. Ä]úø£ eédüúqT yÓ’$<Ûä |üs¡#·&ÜìøÏ Ç~eTTK´+. Bìì •X¯ó |ü]ÁX¯eT yê<äq n+≤s¡T. nH˚ø£ n_Ûe~∆ #Ó+~q Ä]úø£ eédüú\T ‘·eT n_Ûe~∆ <äX¯ ÀdüT+ø£+ s¡ø£åD kÕúsTTì ñ|üjÓ÷–+#·Tø=ì ny˚ n_Ûe~› #Ó+<äT‘·THêïsTT ø±ì n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\≈£î mÏºÁ|üjÓ÷»Hê\qT ø£*–+#·&É+ Ò<äT.

n‘· +‘· ÇwüºyÓTÆq <˚X¯ dü÷Á‘·+:Ç~ WTO ìj·Te÷\ jÓTTø£ÿ Á|ü<Ûëq ˝À|ü+. <˚XÊ\T eT<ä $eø£å Ò≈£î+&Ü es¡Ôø£+ #˚j·÷* nH˚~ WTOdæ<ë›+‘·+. kÕúìø£ ø±+Á≤ø£ºs¡¢≈£î nqT≈£L\+>± ñ+&É≤ìøÏ kÕúìø£ dü+düú nqTeT‹+#·ã&É<äì Bì ns¡ú+. Ç~ãVüQfi¯C≤‹ ø£+ô|˙\≈£î nHê´j·TyÓTÆq Á|üjÓ÷»Hêìï ÇdüTÔ+<äì eT]j·TT n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédüú\T‘·eT kı+‘· n_Ûe~∆ #Ó+<äT‘·Tqï |ü]ÁX¯eT\≈£î nqT≈£L\+>± ñ+&˚ ≤ Ò<äì $eTs¡Ù ñ+~.

eékÕj·T+ô|’ düT+ø±\qT ‘·–Z+#·&É+˝À yÓ’|òü\´+:$$<Ûä |ü]ÁX¯eT\˝À ùd«#êÃ¤ yêDÏ»´+ düe÷q+>± ñ+&É<äT. US eT]j·TT EU ¬s+&É÷ eékÕj·T+ô|’ n~Ûø£düT+ø±\qT $~ÛdüTÔHêïsTT. Ç~ düT+ø£+ s¡ø£åDqT m<äTs=ÿ+≥Tqï n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédüú\˝À ¬s’‘·T\qT<Óã“rdüTÔ+~

yÓ’$BÛ ø£s¡D:ÁbÕ<Ûä$Tø£ ñ‘·Œ‘·TÔ\˝À HÓ’|ü⁄D´+ ø£*–q n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\T (ñ<ë. eékÕj·T ñ‘·Œ‘·TÔ\T) Ç‘·s¡s¡+>±\≈£î $düÔ]+#ê*‡q nedüs¡+ ñ+~. yÓ’$<Ûä uÛÑ]‘·+ #˚j·T&ÜìøÏ yê]øÏ ø=+‘· düT+ø£+ s¡ø£åD nedüs¡+ø±e#·TÃ. ø£ dü+ dü«\Œø±\+˝ÀHÓ’Hê Ç~ nedüs¡+. nH˚ø£ bÕ]ÁXÊ$Tø£ <XÊ\T n_Ûe~∆ #Ó+<äT‘·Tqï|ü⁄Œ&ÉT düT+ø£+

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9.3.5. CRITICISM ON WTOThe World Trade Organisation is committed to improving free trade amongst its member countries.However, its role has been controversial – creating polarised views. These are some of the criticismsof the WTO

Free Trade benefits to developed countries more than developing countries.It is argued, developing countries need some trade protection to be able to develop new industries;this is important to be able to diversify the economy. It is known as the infant industry argument. Manydeveloped economies used a degree of tariff protection in their development phase.

Most favoured nation principle. This is a core tenant of WTO rules – countries should trade without discrimination. It means a localfirm is not allowed to favour local contractors. It is argued this gives an unfair advantage to multinationalcompanies and can have costs for local firms and the right of developing economies to favour theirown emerging industries.

Failure to reduce tariffs on agricultureFree trade is not equally sought across different industries. Both the US and EU retain high tariffs onagriculture, this hurts farmers in developing economies who face tariff protection

Diversification.Arguably, developing countries who specialise in primary products (e.g. agricultural products) needto diversify into other sectors. To diversify they may need some tariff protection, at least in the shortterm. Many of the existing industrialised nations used tariff protection when they were developing.Therefore, the WTO has been criticised for being unfair and ignoring the needs of developing countries.

Environment.Free trade has often ignored environmental considerations. e.g. Free trade has enabled imports to bemade from countries with the least environmental protection. Many criticise the WTO’s philosophythat the most important economic objective is the maximisation of GDP. In an era of global warmingand potential environmental disaster, increasing GDP may be the least important. Arguably the WTOshould do more to promote environmental considerations.

Free trade ignores cultural and social factors.Arguably, a reasonable argument for restricting free trade is that it enables countries to maintaincultural diversity. Some criticise the WTO for enabling the domination of multinational companieswhich reduce cultural diversity and tend to swamp local industries and firms.

The WTO is criticised for being undemocratic.It is argued that its structure enables the richer countries to win what they desire; arguably they benefitthe most.

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Slow progress.

Trade rounds have been notoriously slow and difficult to reach an agreement.

9.4. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT(IBRD)

The International Bank for Reconstruction and Development (IBRD) is a global developmentcooperative owned by 189 member countries. As the largest development bank in the world, itsupports the World Bank Group’s mission by providing loans, guarantees, risk management products,and advisory services to middle-income and creditworthy low-income countries, as well as bycoordinating responses to regional and global challenges. Its most recent aim is to reduce the povertyacross the world.

The World Bank Group comprises five international organizations that provide loans to developingcountries. These are:

The International Bank for Reconstruction and Development (IBRD) The International Development Association (IDA) The International Finance Corporation (IFC) The Multilateral Investment Guarantee Agency (MIGA) The International Centre for Settlement of Investment Disputes (ICSID).

IBRD and IDA are sometimes jointly referred to as the World Bank. IBRD has 189 member nationswhile IDA has 173 member nations. IBRD was established at the 1944 Bretton Woods Conference,along with the International Monetary Fund (IMF). Both IMF and the World Bank work intandem. The headquarters of IBRD is in Washington, D.C., United States.

The initial mission of the IBRD in 1944, was to finance the reconstruction of European nationsdevastated by World War II. Following the reconstruction of Europe, the Bank’s mandate expandedto advancing worldwide economic development and eradicating poverty. The IBRD providescommercial-grade or concessional financing to sovereign states to fund projects that seek to improvetransportation and infrastructure, education, domestic policy, environmental consciousness, energyinvestments, healthcare, access to food and potable water, and access to improved sanitation.

The IBRD is owned and governed by its 189 member states, with each country represented on theBoard of Governors. The IBRD has its own executive leadership and staff which conduct its normalbusiness operations. The Bank’s member governments are shareholders which contribute and havethe right to vote on its matters. In addition to contributions from its member nations, the IBRDacquires most of its capital by borrowing on international capital markets through bond issues.

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u≤´+ø >± eéVü≤]kÕÔs¡T. IBRD À 189 düuÛÑ <XÊ\T ñ+&É>± IDA À 173 düuÛÑ <XÊ\T ñHêïsTT. n+‘·sê®rj·TÁ<äe´ ì~Û ‘√ bÕ≥T 1944 À Áu…≥ºHé e⁄&é‡ ø±qŒ¤¬sHé‡˝À IBRD kÕú|æ+#·ã&ç+~. IMF eT]j·TT Á|ü|ü+#· u≤´+ø¬s+&É÷ ø£*dæ |üì#kÕÔsTT. IBRD Á|ü<Ûëq ø±sê´\j·T+ nyÓT]ø±˝Àì yêwæ+>∑ºHé DC ˝À ñ+~.

1944 ˝À IBRD jÓTTø£ÿ ÁbÕs¡+uÛÑ \ø£å +, ¬s+&Ée Á|ü|ü+#· j·TT<ä∆+ <ë«sê HêX¯qyÓTÆq j·T÷s√|æj·THé <˚XÊ\|ü⁄q]ïsêàD≤ìøÏ Ä]úø£ düVü‰j·T+ #j·T&É+. ◊s√bÕ |ü⁄q]ïsêàD+ ‘·s¡Tyê‘·, u≤´+ø ñ<›X+ Á|ü|ü+#·yê´|üÔ Ä]úø±_Ûe~∆øÏeT]j·TT ù|<ä]ø±ìï ìs¡÷à*+#·&ÜìøÏ $düÔ]+∫+~.

IBRD kÕs¡«uÛÖeT <˚XÊ\≈£î s¡yêD≤ eT]j·TT eTÚ*ø£ dü<äTbÕj·÷\T, $<ä , <oj·T $<Ûëq+, |üsêés¡D düŒVü≤,X¯øÏÔ ô|≥Tºã&ÉT\T, Äs√>∑ dü+s¡ø£åD, ÄVü‰s¡+, Á‘ê>∑T˙Ï dü<äTbÕj·T+ eT]j·TT yÓTs¡T¬>’q bÕ]X¯ó<Ûë´ìøÏ düVü≤ø±s¡+n+~+#˚ ÁbÕC…≈£îº\≈£î ì<ÛäT\ ø√dü+ yêDÏ»´-kÕúsTT Ò<ë sêsTTr ô|ò’Hêì‡+>¥ n+~düTÔ+~.

IBRD <ëì 189 düuÛÑ <˚XÊ\ j·÷»e÷q´+˝À ñ+~. Á|ü‹ <˚X¯+ uÀsY¶ Ä|òt >∑es¡ïsY‡ ÁbÕ‹ì<Ûä + eVæ≤düTÔ+~.IBRD <ëì dü«+‘· ø±s¡ ìsê«Vü≤ø£ Hêj·Tø£‘·«+ eT]j·TT dæã“+~ì ø£*– ñ+~. Ç~ <ëì kÕ<Ûës¡D yê´bÕs¡ø±s¡ ø£ ≤bÕ\qT ìs¡«Væ≤düTÔ+~. u≤´+ø˘ jÓTTø£ÿ düuÛÑ Á|üuÛÑT‘ê«\T yê≤<ës¡T\T <ëì $wüj·÷\ô|’ z≥T Vü≤≈£îÿø£*– ñ+≤s¡T. <ëì düuÛÑ <˚XÊ\ düVü≤ø±s¡+‘√ bÕ≥T, IBRD u≤+&É¢ C≤Ø <ë«sê n+‘·sê®rj·T eT÷\<Ûäqe÷¬sÿ≥¢ À s¡TD≤\T rdüTø√e&É+ <ë«sê <ëì eT÷\<Ûäq+˝À m≈£îÿe uÛ≤>±ìï bı+<äT‘·T+~.

9.4.1. IBRD ìs¡«Vü≤D - eéd üúu≤´+ø˘ ìs¡«Vü≤D ø=s¡≈£î uÀsY¶ Ä|òt >∑es¡ïs¡T¢, uÀsY¶ Ä|òt m–®≈£L´Ïyé &Ó’¬sø£ºsY‡, n&Ó’«»Ø ø£$T°, ˝ÀHé ø£$T°,Áô|dæ&Ó+Ÿ eT]j·TT Ç‘·s¡ dæã“+~ ñ+≤s¡T. u≤´+ø jÓTTø£ÿ nìï n~Ûø±sê\T uÀsY¶ Ä|òt >∑es¡ïsY‡ ≈£î πø≤sTT+#·ã&Ü¶sTT.Ç~ u≤´+ø˘ jÓTTø£ÿ n‘·T´qï‘· kÕúsTT $<Ûëq ìsêíj·Tø£ $uÛ≤>∑eTT . uÀs¡T¶ À ˇø£ >∑es¡ïsY ñ+≤s¡T eT]j·TT ˇø£Á|ü‘êé÷ïj·T >∑es¡ïsY Á|ü‹ düuÛÑ <˚X¯+ <ë«sê ◊<˚fi¢bÕ≥T ìj·T$TkÕÔs¡T. Á|ü‹ >∑es¡ïsY≈£î ‘êqT ÁbÕ‹ì<Ûä +eVæ≤düTÔqï Á|üuÛÑT‘·« Ä]úø£ düVü≤ø±sêìøÏ dü+ã+~Û+∫q zÏ+>¥ n~Ûø±s¡+ ñ+≥T+~.

ø±s¡ ìsê«Vü≤ø£ uÀs¡T¶ À 21 eT+~ &Ó’¬sø£ºs¡T¢ düuÛÑT´\T>± ñ+≤s¡T. yê]˝À 6 eT+~ì Äs¡T n‹ô|<ä› yê≤<ës¡T\Tìj·T$TkÕÔs¡T. n$ USA, UK , |ü•ÃeT »s¡à˙, ÁbòÕHé‡, »bÕHé eT]j·TT Ç+&çj·÷. $T–*q 15 eT+~ düuÛÑT´\T$T–*q <˚XÊ\#˚ mqTïø√ã&É‘ês¡T. Á|ü‹ ø±s¡ ìsê«Vü≤ø£ &Ó’¬sø£ºsY ‘·q Á|üuÛÑT‘·«+ ø£*– ñqï yê≤\ ìwüŒ‹Ô ÀzÏ+>¥ X¯øÏÔì ø£*– ñ+≤s¡T. ø±s¡ ìsê«Vü≤ø£ uÀs¡T¶ u≤´+≈£î jÓTTø£ÿ kÕ<Ûës¡D |üìì ìs¡«Væ≤+#·&ÜìøÏ HÓ\≈£îˇø£kÕ] Áø£eT+ ‘·|üŒ≈£î+&Ü düe÷y˚X¯eTe⁄‘·T+~.

u≤´+ø˘ n<Ûä ≈£åî&çì uÀsY¶ Ä|òt m–®≈£L´Ïyé &Ó’¬sø£ºs¡T¢ ìj·T$TkÕÔs¡T. n‘·qT u≤´+ø˘ N|òt m–®≈£L´Ïyé eT]j·TT u≤´+ø˘jÓTTø£ÿ s√EyêØ yê´bÕsêìï ìs¡«Væ≤+#·&ÜìøÏ n‘·qT u≤<Ûä ‘· eVæ≤kÕÔ&ÉT. dü\Vü‰ ø£$T°ì &Ó’¬sø£ºs¡¢ uÀs¡T¶ ìj·T$TdüTÔ+~.Ç~ u≤´+øÏ+>¥ jÓTTø£ÿ $$<Ûä XÊK\˝À ø±e\dæq 7 eT+~ düuÛÑT´\qT ø£*– ñ+≥T+~. ÀHé ø£$T° nì |æ\Teã&˚eTs=ø£ dü+düú ≈£L&Ü ñ+~. düuÛÑ <˚XÊìøÏ @<Ó’Hê s¡TD+ n+~+#·&ÜìøÏ eTT+<äT á ø£$T°ì u≤´+ø˘ dü+Á|ü~düTÔ+~.

IBRD\øå±´\T Ä]úø£ |ü⁄q]ïsêàD+ eT]j·TT n_Ûe~∆ ø√dü+ düuÛÑ <˚XÊ\≈£î Bs¡Èø±*ø£ eT÷\<ÛäHêìï n+~+#·&É+.

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9.4.1. Organization and StructureThe organization of the bank consists of the Board of Governors, the Board of Executive Directorsand the Advisory Committee, the Loan Committee and the president and other staff members. All thepowers of the bank are vested in the Board of Governors which is the supreme policy making bodyof the bank. The board consists of one Governor and one alternative Governor is appointed for fiveyears by each member country. Each Governor has the voting power which is related to the financialcontribution of the Government which he represents.

The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largestshareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15members are elected by the remaining countries. Each Executive Director holds voting power inproportion to the shares held by his Government. The board of Executive Directors meets regularlyonce a month to carry on the routine working of the bank.

The president of the bank is appointed by the Board of Executive Directors. He is the Chief Executiveof the Bank and he is responsible for the conduct of the day-to-day business of the bank. TheAdvisory committee is appointed by the Board of Directors. It consists of 7 members who areexpects in different branches of banking. There is also another body known as the Loan committee.This committee is consulted by the bank before any loan is extended to a member country.

Objectives To provide long-run capital to member countries for economic reconstruction and

development.

To induce long-run capital investment for assuring Balance of Payments (BoP) equilibriumand balanced development of international trade.

To provide guarantee for loans granted to small and large units and other projects of membercountries.

To ensure the implementation of development projects so as to bring about a smoothtransference from a war-time to peace economy.

To promote capital investment in member countries by the following ways;

• To provide guarantee on private loans or capital investment.• If private capital is not available even after providing guarantee, then IBRD provides

loans for productive activities on considerate conditions.

9.4.2. Functions of IBRDIBRD is playing main role of providing loans for development works to member countries, especiallyto underdeveloped countries. It provides long-term loans for various development projects of 5 to20 years duration. The main functions are..

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$<˚o #Ó*¢+|ü⁄\ X‚wü+˝À düeT‘·T\´‘· eT]j·TT n+‘·sê®rj·T yêDÏ»´+ jÓTTø£ÿ düeT‘·T\´ n_Ûe~∆øÏ uÛÑs√kÕø√dü+ Bs¡Èø±\ eT÷\<Ûäq ô|≥Tºã&çì Áù|πs|æ+#·&É+.

düuÛÑ <˚XÊ\ ∫qï eT]j·TT ô|<ä› j·T÷ì≥T¢ eT]j·TT Ç‘·s¡ ÁbÕC…≈£îº\≈£î eT+ps¡T #˚dæq s¡TD≤\≈£î Vü‰MTìn+~+#·&É+.

ï j·TT<ä∆ düeTj·÷\ qT+&ç XÊ+‹ Ä]úø£ e´edüú≈£î düTìï‘·yÓTÆq ã~©ì rdüT≈£îe#˚Ã $<Ûä+>± n_Ûe~∆ ÁbÕC…≈£îº\neT\TqT ìsê∆]+#·&ÜìøÏ.

øÏ+~ e÷sêZ\ <ë«sê düuÛÑ <˚XÊ\˝À eT÷\<Ûäq ô|≥Tºã&çì Áb˛‘·‡Væ≤düTÔ+~. Áô|’y˚Ÿ s¡TD≤\T Ò<ë eT÷\<Ûäq ô|≥Tºã&çô|’ Vü‰MT Çe«&ÜìøÏ. Vü‰MTì n+~+∫q ‘·sê«‘· ≈£L&Ü Áô|’yŸ eT÷\<Ûäq+ n+<äTu≤≥T˝À Òq≥¢sTT‘, |ü]>∑DÏ+#·<ä–q |ü]dæú‘·T\ô|’

ñ‘êŒ<äø£ ø±s¡ ø£ ≤bÕ\ ø√dü+ s¡TD≤\T n+~düTÔ+~.

9.4.2. IBRD $<ÛäT\TdüuÛÑ <˚XÊ\≈£î, eTTK´+>± n_Ûe~∆ #Ó+<äì <˚XÊ\≈£î n_Ûe~∆ |üqT\≈£î s¡TD≤\T n+~+#·&É+˝À %IBRD%Á|ü<Ûëq bÕÁ‘· b˛wæk Ô+~. Ç~ 5 qT+&ç 20 dü+e‘·‡sê\ ø±\ e´e~Û >∑\ $$<Ûä n_Ûe~∆ ÁbÕC…≈£îº\ ø√dü+Bs¡Èø±*ø£ s¡TD≤\qT n+~düTÔ+~. Bì Á|ü<Ûëq $<ÛäT\T.

düuÛÑ <˚XÊ\≈£î $$<Ûä kÕ+πø‹ø£ ùde\qT n+~düTÔ+~. á Á|üjÓ÷»q+ ø√dü+, u≤´+ø˘ ªª~ mø£Hê$Tø˘&Óe\|tyÓT+Ÿ Çìdæº≥÷´Ÿμμ eT]j·TT yêwæ+>∑ºHé À kÕº|òt ø± ÒJì kÕú|æ+∫+~.

#Ó*¢+|ü⁄ eT÷\<Ûäq+˝À <ëì yê≤˝À 20 XÊ‘·+ es¡≈£î düuÛÑ <˚XÊìøÏ s¡TD≤\T eT+ps¡T #˚düTÔ+~. s¡TD≤\ |ü]e÷D≤\T, e&û¶ πs≥T ìã+<Ûäq\T eT]j·TT wüs¡‘·T\T u≤´+ø˘ dü«j·T+>± ìs¡ísTTdüTÔ+~ kÕ<Ûës¡D+>±, düuÛÑ <˚X¯+ <ë«sê u≤´+≈£î≈£î düeT]Œ+∫q ì]›wüº ÁbÕC…øº ø√dü+ u≤´+ø˘ s¡TD≤\T eT+ps¡T

#düTÔ+~. s¡TDÁ>∑V”≤‘· <X+ ]»sY« ø£¬s˙‡\˝À Ò<ë s¡TD+ eT+ps¡T #j·Tã&çq ø£¬s˙‡˝À ‹]– #Ó*¢+#ê*‡ ñ+≥T+~. u≤´+ø˘ ‘·q dü«+‘· Vü‰MTô|’ düuÛÑ <˚XÊ\≈£î #Ó+~q Áô|’y˚Ÿ ô|≥Tºã&ç<ës¡T\≈£î ≈£L&Ü s¡TD≤ìï n+~düTÔ+~,

nsTT‘˚ á s¡TD+ ø√dü+ Áô|’y˚Ÿ ô|≥Tºã&ç<ës¡T\T á yÓTT‘êÔìï ùdø£]+#˚ øö+°\ qT+&ç eTT+<ädüTÔ nqTeT‹rdüTø√yê*.

9.4.3. uÛ≤s¡‘· <˚XÊìøÏ IBRD ãTTD kÂø£s¡ +ù|<ä]ø£+ ‘·–Z+|ü⁄, eTÚ*ø£ dü<äTbÕj·÷\T eT]j·TT Á>±MTD≤_Ûe~∆ yÓTT<ä …’q nH˚ø£ ÁbÕC…≈£îº\ ø√dü+ uÛ≤s¡‘·<˚X¯+Á|ü|ü+#· u≤´+ø˘ qT+&ç s¡TD≤\T rdüT≈£î+≥T+~. düVü≤ÁkÕ_› n_Ûe~∆ \øå±´\ kÕ<Ûäq≈£î eT]j·TT kÕe÷õø£ s¡+>∑ÁbÕC…≈£îº\ø√dü+ m≈£îÿe>± IDA ì<ÛäT\qT uÛ≤s¡‘· <˚X¯+ bı+~+~. uÛ≤s¡‘·<˚XÊìøÏ yÓTT<äÏ Á|ü|ü+#· u≤´+≈£î s¡TD+1948 À 86 _*j·TqT¢ US $ qT bı+~+~. e÷]Ã 2011 HêÏøÏ US $ 11.2 _*j·Tq¢ eT]j·TT IDA qT+&ç27.0 _*j·Tq¢ US $ n|ü⁄Œ Çe«ã&ç+~ eT]j·TT ãø±sTT ñ+~.

Á|ü|ü+#· u≤´+≈£î ÄÁ|òæø±, Ädæj·÷ eT]j·TT ˝≤ÏHé nyÓT]ø± e+Ï n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\≈£î 75 XÊ‘·+s¡TD≤\qT eT+ps¡T #˚dæ+~. $T–*q 25 XÊ‘·+ e÷Á‘·y˚T n_Ûe~∆ #Ó+~q ◊s√bÕ <˚XÊ\≈£î s¡TD≤\T>±Ç∫Ã+~. ø±˙ Ç|üŒÏø° n_Ûe~∆ #Ó+~q <˚XÊ\≈£î Á|ü|ü+#· u≤´+≈£î bÕ\ø£eT+&É*˝À eT+∫ |ü≥Tº ñ+<äì #ê˝≤<˚XÊ\T $X¯«dædüTÔHêïsTT m+<äTø£+fÒ u≤´+ø˘ KC≤Hê≈£î yê] <˚XÊ\ qT+&˚ n‹ô|<ä› düVü≤ø±s¡+ ô|≥Tºã&ç ñ+~.

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provides various technical services to the member countries. For this purpose, the Bank hasestablished “The Economic Development Institute” and a Staff College in Washington.

grants loans to a member country up to 20 percent of its share in the paid-up capital.

the quantities of loans, interest rate and terms and conditions are determined by the Bankitself.

generally, Bank grants loans for a particular project duly submitted to the Bank by the membercountry.

the debtor Nation has to repay either in reserve currencies or in the currency in which theloan was sanctioned.

Bank also provides loan to private investors belonging to member countries on its ownguarantee, but for this loan private investors have to seek prior permission from those countieswhere this amount will be collected.

9.4.3. IBRD Lending to IndiaIndia has been borrowing from the World Bank for various projects in the area of poverty reduction,infrastructure and rural development etc. IDA funds are one of the most concessional external loansfor the government of India and are largely used in the social sector projects that contribute to theachievement of the millennium development goals. The first World Bank loan to India was in 1948 ofUS$ 86 billion. The debt disbursed and outstanding as of March 2011 for IBRD is US$ 11.28 andfor IDA it is US$ 27 billion.

World Bank has sanctioned 75 percent of its loans to developing countries of AFRICA, Asia andLatin America while only 25 percent was given to developed Nations of Europe. But still, it is believedby most nations that the developed countries do have a good command of the governing body of theWorld Bank because of their largest contribution to the exchequer of the bank.

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Formation :1944Headquarters :Washington, D.C., U.S.Membership :189 countriesPresident :David Malpass

KEY TERMS

1. Inter-Governmental Organizations: An IGO is an organization composed primarily ofsovereign states, or of other intergovernmental organizations. IGOs are established by treatyor other agreement that acts as a charter creating the group.

2. Congenial Investment: Congenial means friendly, compatible, well-suited, good-humouredetc. ... more facilitative & congenial & supportive of foreign investment.

3. Intellectual Property Rights: Intellectual property rights are the rights given to personsover the creations of their minds. They usually give the creator an exclusive right over the useof his/her creation for a certain period of time.

4. Dumping: Dumping occurs when a country or company exports a product at a price that islower in the foreign importing market than the price in the exporter’s domestic market.

5. International Monetary Fund: The International Monetary Fund (IMF) is an organizationof 190 countries, working to foster global monetary cooperation, secure financial stability,facilitate international trade, promote high employment and sustainable economic growth,and reduce poverty around the world.

6. UNCOTAD : The United Nations Conference on Trade and Development (UNCTAD) is aUN body responsible for dealing with development issues, particularly international trade.

7. Most Favoured Nation: A most-favored-nation (MFN) clause requires a country to provideany concessions, privileges, or immunities granted to one nation in a trade agreement to allother World Trade Organization member countries.

8. Risk Management Products: Risk management refers to the practice of identifying potentialrisks in advance, analyzing them and taking precautionary steps to reduce/curb the risk.Description.

9. Balance of Payments: The balance of payments (BOP) is an accounting of a country’sinternational transactions for a particular time period. Any transaction that causes money toflow into a country is a credit to its BOP account, and any transaction that causes money toflow out is a debit.

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1. Who is known as the father of globalisationA. Theodare LevittB. Peter SutherlandC. Harward Business SchoolD. None of the Above

2. WTO was Set up in the YearA. 1995B. 1955C. 1985D. 1975

3. WTO was Established in the place ofA. IMFB. GATTC. IBRDD. SAARC

4. Which is not a wing of WTOA. Ministerial ConferenceB. Dispute Settlement BodyC. General CouncilD. Governor

5. WTO stands for_________A. World Tariff OrganizationB. World Tax OrganizationC. World Trade OrganizationD. World Trademark Organization

6. ______countries were members of WTO as on 1st January 1995.A. 151B. 164C. 104D. 139

7. ________is the headquarter of the WTO.A. UruguayB. GenevaC. New YorkD. Tokyo

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1 2 3 4 5 6 7 8 9 10

B A B D C B B C B D

8. Head Quarters of IBRD located inA. Brettron WoodsB. New YorkC. Washington DCD. Russia

9. IBRD was established in the yearA. 1941B. 1944C. 1945D. 1949

10. Which one is not a member in world bank groupA. The International Bank for Reconstruction and Development (IBRD)B. The International Development Association (IDA)C. The International Finance Corporation (IFC)D. World Trade Organisation(WTO)

ANSWERS

Interactive Links:https://www.wto.org/https://www.worldbank.org/en/who-we-are/ibrdhttps://en.wikipedia.org/wiki/Globalization_in_India

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For Advanced Learners: Go through the websites of WTO and IBRD Go through the World Trade Report Published by WTO Go through the Ease of doing business report and world development report published by world bank.

Chapter

10

Trade Blocs

Learning Outcomes: After reading this chapter, the student should be able to: 1. understand the concept of trade blocs 2. analyse its impact trade blocs on business environment 3. summarise the functions and criticism against SAARC, BRICS, ASEAN. 4. judge the importance, objectives of other trade blocs 5. comment the functions of trade blocs.

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Chapter Layout: 10.1. Trade Blocks 10.1.1. Types of trade blocs 10.1.2. Advantages of trade blocs 10.1.3. Negative implications of trade blocs 10.2. BRICS

10.2.1. Objectives of BRICS 10.2.2. Areas of Cooperation

10.2.3. New Development Bank 10.2.4. Challenges to BRICS

10.3. SAARC 10.3.1. Objectives

10.3.2. SAARC Achievements 10.3.3. Challenges to SAARC

10.4. ASEAN 10.4.1. Objectives of ASEAN

10.4.2. India and ASEAN 10.4.3. Challenges to ASEAN


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CHAPTER OVERVIEW

Trade block are an important phenomena in globalised world in which countriesform groups and make agreements with each other for economic benefits.different trade blocs are classified based on the level of economic integrationthe member countries adopt. Hindustan tractor we study the different kinds oftrade blocs, their advantages and disadvantages.

BRICS grouping of 5 developing economies namely Brazil Russia India Chinaand South Africa. SAARC stands for South Asian association for regionalcooperation which is a grouping of 8 nations. ASEAN stands for association ofsoutheast Asian nations which is a grouping of 10 countries. These groupingsare very significant in world economics as they amount to a big percentage ofworld GDP as well as population. They are particularly significant with respectto Indian business environment as India is a member of BRICS, SAARC andhas big chunk of its trade with ASEAN.

In this chapter an attempt has been made to study these multilateral organisationsand trade blocs in detail including their structure, functioning, achievementsand challenges

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10.1. ÁfÒ&é u≤¢ø˘\T

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Á|æ|òü¬sì¸j·T˝Ÿ ÁfÒ&é @]j·÷ øÏ+<ä, düuÛÑ <˚XÊ\T ø=ìï ñ‘·Œ‘·TÔ\≈£î düT+ø±\qT ‘·–Z+#·&ÜìøÏ n+^ø£]kÕÔsTT. yês¡Tì]›wüº ñ‘·Œ‘·TÔ\≈£î ÁbÕ<Ûëq´‘· yÓdüT\Tu≤≥T n+~kÕÔs¡T ø±˙ düT+ø±\qT |üP]Ô>± ‘=\–+#·s¡T. ñ<ëVü≤s¡D: <äøÏåD|üdæ|òæø˘ ÁbÕ+rj·T yêDÏ»´+ eT]j·TT Ä]úø£ düVü≤ø±s¡ ˇ|üŒ+<ä+ 1981).

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10.1. TRADE BLOCS

A trade bloc is a group of Nations that has reached a set of special agreements regarding theireconomic relationships with each other. The agreements generally focus on the relaxation or eliminationof trade barriers, which are laws that limit the amount of business done across two countries’ borders.The most common types of trade barriers are tariffs (taxes on imports) and quotas (limits on thequantities of various imports).Trading blocs lead to trade liberalization (the freeing of trade fromprotectionist measures) and trade creation between members, since they are treated favourably incomparison to non-members. Trade blocks are formed because for various reasons like failure ofglobal organisation, Geographical proximity, similarities and complementarities in trading items, tocurb restrictions of trade on the developing countries, to enhance bargaining power with other countriesetc.

A regional trading bloc is a group of countries within a geographical region that protect themselvesfrom imports from non-members. Trading blocs are a form of economic integration, and increasinglyshape the pattern of world trade. According to the Asian Development Bank Institute, as of now,India has 42 trade agreements (including preferential agreements) either in effect or signed or undernegotiation or proposed.

10.1.1. TYPES OF TRADE BLOCSPreferential Trade AreaPreferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce oreliminate tariff barriers on selected goods imported from other members of the area. This is often thefirst small step towards the creation of a trading bloc. This is the simplest form of the trade bloc. Insteadof eliminating, the deals are usually looser. Under the preferential trade area, member countries agree tolower tariffs for certain products. They provide preferential access to specific products but do not eliminatetariffs altogether.Example: South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1981)

Free Trade AreaFree Trade Areas (FTAs) are created when two or more countries in a region agree to reduce oreliminate barriers to trade on all goods coming from other members. The free trade area involvesremoving restrictions on trading between members. Thus, goods and services flow freely between them.Regarding non-member trading, each has separate and different policies. Some members may chargehigher rates, while others are lower. The difference in tariffs provides opportunities and benefits for non-member countries. They will export to member countries that set low tariffs. After entering the destinationcountry, they can ship it to other member countries at no cost. This phenomenon is what we call tradedeflection.Example: North American Free Trade Area (NAFTA) between the USA, Canada and Mexico;Asia Pacific Economic Cooperation (APEC) and the Common Market of Eastern and SouthernAfrica (COMESA) and SAARC.

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Customs UnionA customs union involves the removal of tariff barriers between members, plus the acceptance of acommon (unified) external tariff against non-members. A customs union is a more advanced stage thana free trade area. Its main objective is to overcome the trade deflection problem inherent in the free tradearea agreement. Customs union members agree to joint tariffs when they trade with non-members. Hence,there is no opportunity for non-member countries to take benefits from the tariff differences.EXAMPLE: Central American Common Market (CACM)

Economic UnionAn Economic Union is a type of trade bloc which is composed of a common market with a customsunion. The participant countries have both common policies on product regulation, freedom ofmovement of goods, services and the factors of production (capital and labour) and a common externaltrade policy. When an Economic Union involves unifying currency it becomes an economic andmonetary union.

Economic Unions combine all aspects of the common market and also coordinate economic policy. Membercountries then form joint economic institutions for this purpose. Then, if the member countries agree toadopt a single currency, we will call it the monetary union. The Eurozone is an example, where it consists ofEU members adopting the Euro as their currency. An example is the formation of the economic union of theEuropean Union.

Common marketCommon market is a combination of customs unions plus the removal of barriers to the flow of factors ofproduction. So, under this agreement, member states agree to:

Eliminating trade barriers in goods and services Removing barriers to the capital and labour flows (factors of production) Member countries have uniform policies regarding trade with non-member countries

Trade barriers can be tariffs and non-tariff. Protective policies, such as subsidies, are also removed. Insucceeding, member countries will usually harmonize some micro-policies such as regulationson monopoly and anti-competitive practices.EXAMPLE: The Organization of the Petroleum Exporting Countries ( OPEC)

The most significant trading blocs currently are:EU- European Union– a customs union, a single market and now with a single currencyEFTA- European Free Trade Area NAFTA- North American Free Trade Agreement between the USA, Canada and MexicoMERCOSUR A customs union between Brazil, Argentina, Uruguay, Paraguay and VenezuelaASEAN - Association of Southeast Asian Nations Free Trade Area (AFTA)COMESA- Common Market of Eastern and Southern Africa SAFTA- South Asian Free Trade Area

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Pacific Alliance – 2013 – a regional trade agreement between Chile, Colombia, Mexico and Peru

10.1.2. ADVANTAGES FOR MEMBERS OF TRADING BLOCSMarket access and trade creationEasier access to each other’s markets means that trade between members is likely to increase. Tradecreation exists when free trade enables high cost domestic producers to be replaced by lower cost,and more efficient imports. Because low cost imports lead to lower priced imports, there is a‘consumption effect’, with increased demand resulting from lower prices.

Free trade within the blocKnowing that they have free access to each other’s markets. Members are encouraged to specialise.This means that, at the regional level, there is a wider application of the principle of comparativeadvantage.

Economies of scaleProducers are required to increase their production quantities to cater the demand of larger market.Thus, they can benefit from the application of scale economies, which will lead to lower costs andlower prices for consumers.

JobsJobs may be created as a consequence of increased trade between member economies. Increase inproduction and distribution of goods and services leads to an increase in employment.

ProtectionFirms inside the bloc are protected from cheaper imports from outside, such as the protection ofthe EU shoe industry from cheap imports from China and Vietnam. But, sometimes this protectionismcan be seen as a detriment to globalisation.

Economic growthDue to reduction of trade barriers, firms in the region would be in the position to produce goods at alower price which in turn improves demand for goods. Eventually, this will lead to increased economicgrowth rate.

Technological developmentAs a firm grows they would go for higher technological developments. With formation of trade blockstransfer of technology, knowledge and technically skilled workforce between countries becomeseasy leading to faster technological development.

Better utilization of resourcesThe economic integration would help to make better utilization of resources owing to growth of theNations there would be optimum uses of physical resources, human resources and financial resources.

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Consumer welfareOwing to economic growth the employment opportunity increased, which inturn increased purchasingpower and the people enjoyed higher standard of living. Also due to trading blocs the consumer mayhave to pay lower prices and at the same time enjoy higher quality goods.

Boost direct investments.Under common market and union economies, capital is free to flow, encouraging companies to increaseinvestment and create jobs in some member countries.

Decrease monopoly power as competition increases. Goods and services flow freely and create greater choices for consumers. It increases competition in themarket and forces firms to increase innovation and efficiency to face competitiveness.

10.1.3. NEGATIVE IMPLICATIONS OF TRADE BLOCSThe trade blocs can negatively affect non- member Nations. This is due to the following reasons:

Common external barrierAlthough trade blocs promote economies of member countries, from the perspective of non-memberstates, they can be viewed as protectionist in functioning. Sometimes, a trading block can obtainmonopoly over a product and their bargaining power can go very high. High tariffs and movementrestrictions can be imposed on goods from non - member countries

Reduction of Values of domestic productsA poorly negotiated trade deal can be very harmful to a countries’ economy. Without proper technologyand skilled workforce, a country cannot compete in production with other member countries of atrade bloc. This can lead to countries losing the competition to other members in terms of quality ofgoods and prices. Eventually, the demand for domestic goods will be reduced resulting in poorNational produce.

Reduction of tax revenuesWith lowering or eliminating tariff barriers, the tax revenue of the country will shrink, leading to

budgetary deficits. Countries will have to confirm with the tariffs and customs laws of other dominantplayers in the block, which may not be very beneficial for all.

Loss of sovereignty and independenceToo much integration and interdependence can lead to loss of sovereignty of Nations. Trade blockades,political changes, policy shifts of dominant players in the block can impact other nations adversely.Strategic and critical resources can be even used as bargaining chip by dominant countries of a blockto control the decisions of other Nations.

Market capture and DumpingSometimes aggressive Nations in a trade bloc can indulge in activities like dumping of products at a

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kÕs¡«uÛÖeT‘·«+ eT]j·TT kÕ«‘·+Á‘· + ø√˝ÀŒe&É+düyÓTÆø£ ‘· eT]j·TT |üs¡düŒs¡ Ä<Ûës¡|ü&É≥+ <˚XÊ\ kÕs¡«uÛÖeT‘ê«ìï ø√˝ÀŒj˚T˝≤ #˚kÕÔsTT. yêDÏ»´ ~>∑“+<ÛäHê\T,sê»ø°j·T e÷s¡TŒ\T, u≤¢ø˘ À Ä~Û|ü‘· <˚XÊ\ $<Ûëq e÷s¡TŒ\T Ç‘·s¡ <˚XÊ\qT Á|ü‹≈£L\+>± Á|üuÛ≤$‘·+ #˚kÕÔsTT.eP´Vü‰‘·àø£ eT]j·TT øÏ¢wüºyÓTÆq eqs¡T\qT Ç‘·s¡ <XÊ\ ìs¡íj·÷\qT ìj·T+Á‹+#·&ÜìøÏ u≤¢ø jÓTTø£ÿ Ä~Û|ü‘· <XÊ\TÁ|üj·T‹ï+#·e#·TÃ.

e÷¬sÿŸ qT ø=\¢>=≥º≥+ø=ìïkÕs¡T¢ yêDÏ»´ ≈£L≥$T˝À ã\+>± ñqï <˚XÊ\T Ç‘·s¡ <˚XÊ\ yê´bÕsêìï ÄÁø£$T+#·&ÜìøÏ eT]j·TT yêÏñ‘·Œ‹Ô kÕeTsêú´ìï düTHêïøÏ q&ç|æ+#·&ÜìøÏ ‘·eT ñ‘·Œ‘·TÔ\qT $T–*q <˚XÊ\ ñ‘·Œ‹Ô <Ûäs¡ ø£+fÒ ‘·≈£îÿe <Ûäs¡≈£î&É+|æ+>¥ #˚j·T&É+ e+Ï ø±s¡ ø£ ≤bÕ\˝À bÕ˝§Zqe#·TÃ. n˝≤ e÷¬sÿŸ qT ø=\¢>=Ïºq ‘·sê«‘· ‘·eT ÇcÕºqTkÕs¡+<Ûäs¡\qT ìj·T+Á‹+#·e#·TÃ.

10.2. BRICSBRICS nH˚~ ◊<äT Á|ü<Ûëq es¡∆e÷q Ä]úø£ e´edüú\qT nqTã+~Û+#·&ÜìøÏ s¡÷bı+~+#·ã&çq ≈£L≥$T jÓTTø£ÿ|ü<ä+. Ç+<äT˝À Áu…õ˝Ÿ, s¡cÕ´, Ç+&çj·÷, #Ó’Hê eT]j·TT <äøÏåD≤Á|òæø± <˚XÊ\T düuÛÑT´\T>± ñHêïs¡T. Á_ø˘‡ düuÛÑT´\TÁbÕ+rj·T e´eVü‰sê\ô|’ >∑D˙j·TyÓTÆq Á|üuÛ≤e+ #·÷|ü⁄‘ês¡T.

2009 qT+&ç, Á_ø‡ <XÊ\ Á|üuÛÑT‘ê«\T @≤ n~Ûø±]ø£ •KsêÁ>∑ düe÷yXÊ˝À¢ bÕ˝§Z+≤sTT. yêdüÔyêìøÏ <äøÏåD≤Á|òæø±Á|üy˚XÊìøÏ eTT+<äT Hê\T>∑T “BRIC” >± düeT÷Vü≤+ #˚j·Tã&Ü¶sTT.

2010 ˝À, <äøÏåD≤Á|òæø± BRICS düeT÷Vü≤+˝À #˚s¡&ÜìøÏ Á|üj·T‘êï\T ÁbÕs¡+_Û+∫+~. <ëì n~Ûø±]ø£ Á|üy˚X¯Á|üÁøÏj·T Ä dü+e‘·‡s¡+ Ä>∑düTº À ÁbÕs¡+uÛÑyÓTÆ n~Ûø±]ø£+>± 24 &çôd+ãsY 2010 q düuÛÑ <X+>± e÷]+~. ‘·sê«‘·á ≈£L≥$T jÓTTø£ÿ $düÔ]+∫q düuÛÑ ‘ê«ìï Á|ü‹_+_+#˚ ≤ á ã+<ëìøÏ Á_ø˘‡ nì ù|s¡T e÷s¡Ãã&ç+~.

BRICS nH˚ |ü<ëìï 2001 À n|üŒÏ nôdŸ y˚TH˚CŸyÓT+Ÿ #ÛÓ’s¡àHé >√˝Ÿ¶eTHé kÕ#Y‡ yÓTT<ä≥>± ñ|üjÓ÷–+#ês¡T.eT]j·TT õyéT z ˝Ÿ ‘·q |ü_¢πøwüHé _*¶+>¥ u…≥sY >√¢ã˝Ÿ À mø£Hê$Tø˘ BRICS s¡÷bı+~+#ês¡ì qeTTà‘ês¡T.ø±˙, ndü\T ìy˚~ø£ À ØôdsYÃ ndæôdº+Ÿ>± ñqï s¡÷|ü |ü⁄s¡Tc˛‘·ÔeTHé Bìì s¡÷bı+~+#ês¡T. ÁbÕs¡+uÛÑ+ ˝ÀHê\T>∑T BRICS »qs¡ Ÿ <˚XÊ\ (Áu…õ˝Ÿ, s¡cÕ´, Ç+&çj·÷ eT]j·TT #Ó’Hê) $<˚XÊ+>∑ eT+Á‘·T\T q÷´j·÷sYÿq>∑s¡+˝À ôdô|º+ãsY 2006 À UN nôd+;¢ »qs¡ Ÿ &çuÒŸ e÷]®q¢ À düe÷yXyÓTÆ ñqï‘· kÕúsTT düe÷yXÊ\ ÁX‚DÏìÁbÕs¡+_Û+#ês¡T. s¡cÕ´˝Àì jÓTø±f…]Hé ãsYZ ˝À 16 pHé 2009 q |üP]Ô kÕúsTT <Í‘· düe÷y˚X¯+ »]–+~.

yÓTT<äÏ BRICS •KsêÁ>∑ düe÷y˚X¯+BRICS düeT÷Vü≤+ jÓTTø£ÿ yÓTT<äÏ n~Ûø±]ø£ •KsêÁ>∑ düe÷y˚X¯+, jÓTø±f…]Hé ãsYZ ˝À 16 pHé 2009 qÁbÕs¡+uÛÑyÓTÆ+~, \÷sTTCŸ ÇHêdæjÓ÷, \÷˝≤ &Ü dæ ≤«, &ç$TÁ‹ yÓT<Ó«<yé, eTH√àVü≤Hé dæ+>¥ eT]j·TT VüQ õ+≤y√,Áu…õ˝Ÿ, s¡cÕ´, Ç+&çj·÷ eT]j·TT #Ó’Hê dü+ã+~Û‘· Hêj·T≈£î\T n+<äs¡÷ Vü‰»s¡j·÷´s¡T . Á|ü|ü+#· Ä]úø£ |ü]dæú‹ì

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lower price than their production cost in order to capture the business in other countries and drivetheir production capacity to zero. Once, they have the market for themselves they can go back fornormal pricing or even higher.

10.2. BRICSBRICS is the acronym coined to associate five major emerging economies: Brazil, Russia, India,China, and South Africa. The BRICS members are known for their significant influence on regionalaffairs.

Since 2009, the governments of the BRICS states have met annually at formal summits. Originally,the first four were grouped as “BRIC” before the induction of South Africa. In 2010, South Africabegan efforts to join the BRIC grouping, and the process for its formal admission began in August ofthat year. South Africa officially became a member Nation on 24 December 2010. The group wasrenamed BRICS – with the “S” standing for South Africa – to reflect the group’s expanded membership.

The term “BRIC” is believed to be coined in 2001 by then-chairman of Goldman Sachs AssetManagement, Jim O’Neill, in his publication Building Better Global Economic BRICs. But, it wasactually coined by Roopa Purushothaman who was a Research Assistant in the original report. Theforeign Ministers of the initial four BRIC General states (Brazil, Russia, India, and China) met in NewYork City in September 2006 at the margins of the General Debate of the UN Assembly, beginninga series of high-level meetings. A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on16 June 2009.

First BRIC summitThe BRIC grouping’s 1st formal summit, also held in Yekaterinburg, commenced on 16 June 2009,with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respectiveleaders of Brazil, Russia, India, and China, all attending. The summit’s focus was on improving theglobal economic situation and reforming financial institutions, and discussed how the four countriescould better co-operate in the future. There was further discussion of ways that developing countries,such as 3/4th of the BRIC members, could become more involved in global affairs.

10.2.1. BRICS – Objectives One of the major objectives of the grouping is broadening, deepening, and intensifying

cooperation among the member countries for mutually beneficial, sustainable and equitabledevelopment.

Every member’s growth and development are considered to ensure that relations are built onthe economic strengths of individual countries and eliminate competition wherever possible.

Such diverse objectives allow BRICS to emerge as an innovative and encouraging Political-Diplomatic entity that was earlier formed just to resolve the global financial issues and reforminstitutions.

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yÓTs¡T>∑T|üs¡#·&É+ eT]j·TT Ä]úø£ dü+düú\qT dü+düÿ]+#·&É+ô|’ •KsêÁ>∑ düe÷y˚X¯+ <äwæº kÕ]+∫+~ eT]j·TTuÛÑ$wü ‘·TÔ À Hê\T>∑T <˚XÊ\T m˝≤ düVü≤ø£]+#·>∑\y√ #·]Ã+#ês¡T. BRICS düuÛÑT´\˝À 3/4 e e+‘·T n_Ûe~∆#Ó+<äT‘·Tqï <˚XÊ\T Á|ü|ü+#· e´eVü‰sê\˝À eT]+‘· m≈£îÿe>± bÕ˝§ZH e÷sêZ\ >∑T]+∫ eT]+‘· #·s¡Ã »]–+~.

10.2.1. Á_ø˘‡ - \øå±´\T |üs¡düŒs¡ Á|üjÓ÷»qø£s¡yÓTÆq, dæús¡yÓTÆq eT]j·TT düe÷qyÓTÆq n_Ûe~∆ ø√dü+ düuÛÑ <˚XÊ\ eT<Ûä düVü≤ø±sêìï

$düÔ]+#·&É+, u≤>± ø£wæ #˚j·T&É+ eT]j·TT rÁe‘·s¡+ #˚j·T&É+ Á>∑÷|æ+>¥ jÓTTø£ÿ Á|ü<Ûëq \øå±´\˝À ˇø£Ï.

Á|ü‹ düuÛÑ <˚X¯ ô|s¡T>∑T<ä\ eT]j·TT n_Ûe~∆ e´øÏÔ>∑‘· <˚XÊ\ Ä]úø£ ã˝≤\ô|’ dü+ã+<Ûë\T ì]à+#·ã&É‘êj·TìeT]j·TT kÕ<Ûä yÓTÆq #√≥ b˛°ì ‘=\–+#ê\ì uÛ≤$kÕÔs¡T.

Ç≥Te+Ï $_Ûqï \øå±´\T Á_ø‡ ø£ $q÷‘·ïyÓTÆq eT]j·TT Áb˛‘·‡Væ≤+# sê»ø°j·T-<Í‘· dü+düú>± ne‘·]+#·&ÜìøÏÁ|üj·T‹ïkÕÔsTT. Ç˝≤+Ï$ >∑‘·+˝À Á|ü|ü+#· Ä]úø£ düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ eT]j·TT dü+düú\qTdü+düÿ]+#·&ÜìøÏ e÷Á‘·y˚T @s¡Œ&˚$.

10.2.2. düVü≤ø±s¡ s¡+>±\TÄ]úø£ düVü≤ø±s¡+ Á_ø˘‡ <˚XÊ\ eT<Ûä y˚>∑+>± e~∆ #Ó+<äT‘·Tqï yêDÏ»´+ eT]j·TT ô|≥Tºã&ç Á|üyêVü‰\T n˝≤π> nH˚ø£ s¡+>±\˝À

Ä]úø£ düVü≤ø±s¡ ø±s¡´ø£˝≤bÕ\T ñHêïsTT.

Ä]úø£ eT]j·TT yêDÏ»´ düVü≤ø±s¡ s¡+>±\˝À |üŒ+<ë\T eTT–XÊsTT, ÇH√ïywüHé düVü≤ø±s¡+, ø£düºyéT‡ düVü≤ø±s¡+,Á_ø˘‡ _õHÓdt øöì‡˝Ÿ, ø£+Ï+C…+Ÿ ]»sY« nÁ–yÓT+Ÿ eT]j·TT q÷´ &Óe\|tyÓT+Ÿ u≤´+ø˘ eT<Ûä eP´Vü‰‘·àø£düVü≤ø±s¡+.

á |üŒ+<ë\T Ä]úø£ düVü≤ø±sêìï eT]+‘·>± $düÔ]+#·&É+ eT]j·TT Ç+ÏÁπ>f…&é ÁfÒ&é eT]j·TT ÇHÓ«dtºyÓT+Ÿe÷¬sÿ≥¢qT ô|+bı+~+#·&É+ uÛ≤>∑kÕ«eT´ \øå±´\ kÕ<Ûäq≈£î <√Vü≤<ä+ #kÕÔsTT.

Á|ü»\ qT+&ç Á|ü»\ eT<Ûä e÷]Œ&ç Á_ø˘‡ düuÛÑT´\T Á|ü»\ qT+&ç Á|ü»\ eT<Ûä e÷]Œ&ç ã˝Àù|‘·+ #˚j·T&É+ eT]j·TT dü+düÿ‹, Áø°&É, $<ä , dæìe÷

eT]j·TT j·TTe‘· s¡+>±\˝À düìïVæ≤‘· düVü≤ø±sêìï ô|+bı+~+#ê*‡q nedüsêìï >∑T]Ô+#ês¡T.

ãø˘‡ düuÛÑ <˚XÊ\ Á|ü»\ qT+&ç Á|ü»\ eT<Ûä e÷]Œ&ç ‘√ ø=‘·Ô ùdïVü‰\qT @s¡Œs¡#·Tø√e&ÜìøÏ Á|üj·T‹ïkÕÔsTT.Á_ø˘‡ Á|ü»\ eT<Ûä dü+ã+<Ûë\T eT]j·TT |üs¡düŒs¡ ne>±Vü≤q ô|s¡>∑≥+ , ˙‹, düeTÁ>∑‘·, yÓ’$<Ûä + eT]j·TT|üs¡düŒs¡ nuÛ≤´dü dü÷Œ¤]Ô‘√ ô|s¡T>∑T‘êsTT.

n˝≤+Ï e´≈£îÔ\ qT+&ç e´≈£îÔ\ e÷]Œ&ç À j·T+>¥ &çbı¢e÷Ÿ‡ bò s¡+, bÕs¡¢yÓT+fÒ]j·THé bò s¡+, ÁfÒ&é j·T÷ìj·THébò s¡+, dæ$˝Ÿ Á_ø˘‡ n˝≤π> MT&çj·÷ bò s¡+ Ä$s¡“¤$+#êsTT.

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10.2.2. Areas of CooperationEconomic Cooperation

There are rapidly growing trade and investment flows between BRICS countries as well aseconomic cooperation activities across a range of sectors.

Agreements have been concluded in the areas of Economic and Trade Cooperation; InnovationCooperation, Customs Cooperation; strategic cooperation between the BRICS BusinessCouncil , Contingent Reserve Agreement and the New Development Bank.

These agreements contribute to realisation of the shared objectives of deepening economiccooperation and fostering integrated trade and investment markets.

People-to-People exchange BRICS members have recognised the need for strengthening People-to-People exchanges

and to foster closer cooperation in the areas of culture, sport, education, film and youth.

People-to-People exchanges seek to forge new friendships; deepen relations and mutualunderstanding between BRICS peoples in the spirit of openness, inclusiveness, diversity andmutual learning.

Such People to people exchanges include the Young Diplomats Forum, ParliamentarianForum, Trade Union Forum, Civil BRICS as well as the Media Forum.Political andSecurity Cooperation

BRICS member political and security cooperation is aimed at achieving peace, security,development and cooperation for a more equitable and fair world.

BRICS provides opportunities for sharing policy advice and exchanges of best practices interms of domestic and regional challenges as well as advancing the restructuring of the globalpolitical architecture so that it is more balanced, resting on the pillar of multilateralism.

BRICS is utilised as a driver for South Africa’s foreign policy priorities including the pursuit ofthe African Agenda and South-South Cooperation.

Cooperation MechanismCooperation among members is achieved through:

Track I: Formal diplomatic engagement between the National governments.

Track II: Engagement through government-affiliated institutions, e.g. state-owned enterprisesand business councils.

Track III: Civil society and People-to-People engagement.

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sê»ø°j·T eT]j·TT uÛÑÁ<ä‘ê düVü≤ø±s¡+ Á_ø‡ düuÛÑT´\T sê»ø°j·T eT]j·TT uÛÑÁ<ä‘ê düVü≤ø±s¡+ ø√dü+ eT]+‘· düe÷qyÓTÆq eT]j·TT Hê´j·TyÓTÆq Á|ü|ü+#·+

XÊ+‹, uÛÑÁ<ä‘·, n_Ûe~∆ eT]j·TT düVü≤ø±sêìï kÕ~Û+#·&É+ \ø£å +>± ô|≥Tº≈£î+~.

Á_ø˘‡ <˚oj·T eT]j·TT ÁbÕ+rj·T düyêfi¢ $wüj·T+˝À $<Ûëq|üs¡yÓTÆq dü\Vü‰\qT eT]j·TT ñ‘·ÔeT |ü<ä∆‘·T\e÷]Œ&çì |ü+#·T≈£îH neø±XÊ\qT n+~düTÔ+~. >√¢ã Ÿ bı*Ïø£ Ÿ Ä]ÿf…ø£ÃsY jÓTTø£ÿ |ü⁄q]ïsêàD≤ìï eTT+<äT≈£îrdüT¬øfi¯óÔ+~. ‘·<ë«sê Ç~ eT]+‘· düeT‘·T\´+>± ãVüQbÕøÏåø£ dü+ã+<ë\qT ã\|üs¡TdüTÔ+~.

Á_ø˘‡ ÄÁ|òæø£Hé mC…+&Ü eT]j·TT <äøÏåD-<äøÏåD düVü≤ø±s¡+‘√ bÕ≥T <äøÏåD≤Á|òæø± jÓTTø£ÿ $<˚XÊ+>∑ $<ÛëqÁbÕ<Ûëq´‘·\≈£î dü+<Ûëq ø£s¡Ô >± ñ|üjÓ÷–+#·ã&ÉT‘·T+~.

düVü≤ø±s¡ j·T+Á‘ê+>∑+düuÛÑT´\ eT<Ûä düVü≤ø±s¡+ MÏ <ë«sê kÕ~Û+#·ã&ÉT‘·T+~:

Á≤ø˘ I C≤rj·T Á|üuÛÑT‘ê«\ eT<Ûä n~Ûø±]ø£ <Í‘· |üs¡yÓTÆq dü+ã+<ë\T HÓ\ø=\Œ&É+. Á≤ø˘ II Á|üuÛÑT‘·« nqTã+<Ûä dü+düú\ <ë«sê dü+ã+<ë\T ô|+#·Tø√e&É+, ñ<ë. Á|üuÛÑT‘·« j·÷»e÷q´

dü+düú\T eT]j·TT yê´bÕs¡ eT+&Éfi¯ó¢. Á≤ø˘ III: bÂs¡ düe÷»+ eT]j·TT Á|ü»\ qT+&ç e´≈£îÔ\ dü+ã+<ë\T.

10.2.3. q÷´ &Óe\|tyÓT+Ÿ u≤´+ø˘ q÷´ &Óe\|tyÓT+Ÿ u≤´+ø˘ Á|ü<Ûëq ø±sê´\j·T+ cÕ+ô|òTÆ À ñ+~. q÷´ &Ûç©¢ (2012) À »]–q Hê\Ze Á_ø‡ •KsêÁ>∑ düe÷yX+˝À Á_ø‡ eT]j·TT Ç‘·s¡ n_Ûe~∆ #Ó+<äT‘·Tqï

<˚XÊ\˝À eTÚ*ø£ dü<äTbÕj·÷\T eT]j·TT dæús¡yÓTÆq n_Ûe~∆ ÁbÕC…≈£îº\ ø√dü+ eqs¡T\qT düMTø£]+#·&ÜìøÏq÷´ &Óe\|tyÓT+Ÿ u≤´+ø˘ @sêŒ≥T #˚ùd neø±X¯+ >∑T]+∫ yÓTT<ä≥>± #·]Ã+#·&É+ »]–+~. .

bò s¡º ÒC≤ (2014) ˝À »]–q Äs¡e Á_ø˘‡ •KsêÁ>∑ düe÷y˚X¯+˝À dü+<äs¡“¤+>± Hêj·T≈£î\T ø=‘·Ô n_Ûe~∆u≤´+≈£î kÕú|æ+#˚ |üŒ+<ä+ô|’ dü+‘·ø£+ #˚XÊs¡T.

q÷´ &Óe\|tyÓT+Ÿ u≤´+ø , Á_ø‡ eT<Ûä düVü≤ø±sêìï ã˝Àù|‘·+ #düTÔ+<äì eT]j·TT Á|ü|ü+#· n_Ûe~∆ ø√dü+ãVüQbÕøÏåø£ eT]j·TT ÁbÕ+rj·T Ä]úø£ dü+düú\ Á|üj·T‘êï\≈£î eT<ä›‘·TìdüTÔ+<äì, ‘·<ë«sê dæús¡yÓTÆq eT]j·TTdüeT‘·T\´ e~∆øÏ <√Vü≤<ä+ #˚düTÔ+<äì bò s¡º ÒC≤ &çø£¢πswüHé H=øÏÿ #Ó|æŒ+~.

q÷´ &Óe\|tyÓT+Ÿ u≤´+ø˘ düuÛÑ <˚XÊ\ eT<Ûä dü«#·Ã¤yÓTÆq X¯øÏÔ, s¡yêD≤ eTÚ*ø£ dü<äTbÕj·÷\T, ÏbÕs¡T<ä\,dæús¡yÓTÆq |ü≥ºD≤_Ûe~∆ eT]j·TT Ä]úø£ düVü≤ø±s¡+ eTTK´ ø±s¡ ø£ ≤bÕ\T >± ñHêïsTT.

q÷´ &Óe\|tyÓT+Ÿ u≤´+ø Á_ø‡ düuÛÑT´\ eT<Ûä dü+Á|ü~+|ü⁄\ j·T+Á‘ê+>∑+ô|’ |üì#düTÔ+~, nìï düuÛÑ <XÊ\Tdüe÷q Vü≤≈£îÿ\qT ø£*– ñ+≤sTT.

10.2.4. Á_ø˘‡ düyêfi¯ó¢ s¡cÕ´-#Ó’Hê-uÛ≤s¡‘·<˚X¯+ jÓTTø£ÿ Ä~Û|ü‘· + ‘√ Á_ø˘‡ eTT+<äT≈£î yÓfi¯fl&É+ ø£ ô|<ä› düyê\T>± düyê\T>± ñ

+~. Á|ü|ü+#·yê´|üÔ+>± n_Ûe~∆ #Ó+<äT‘·Tqï ô|<ä› e÷¬sÿ≥¢≈£î ì»yÓTÆq Á|ü‹ì~Û ø±yê\+fÒ, Á_ø˘‡ Ç+ø±K+&Ü‘·s¡+>± e÷sê*. Bì düuÛÑ ‘·«+ ‘·|üŒìdü]>± Ç‘·s¡ ÁbÕ+‘ê\T eT]j·TT K+&Ü\ qT+&ç eT]ìï

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10.2.3. New Development Bank NDB is headquartered in Shanghai.

At the Fourth BRICS Summit in New Delhi (2012) the possibility of setting up a newDevelopment Bank was considered to mobilize resources for infrastructure and sustainabledevelopment projects in BRICS and other emerging economies, as well as in developingcountries.

During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreementestablishing the New Development Bank (NDB).

Fortaleza Declaration stressed that the NDB will strengthen cooperation among BRICSand will supplement the efforts of multilateral and regional financial institutions for globaldevelopment thus contributing to sustainable and balanced growth.

NDB’s key areas of operation are clean energy, transport infrastructure, irrigation, sustainableurban development and economic cooperation among the member countries.

The NDB functions on a consultative mechanism among the BRICS members with all themember countries possessing equal rights.

10.2.4. Challenges of BRICS The marked dominance of big three Russia-China-India is challenge for the BRICS as it

moves ahead. To become a true representative of large emerging markets across the world,BRICS must become pan-continental. Its membership must include more countries fromother regions and continents.

The BRICS will need to expand its agenda for increasing its relevance in the global order. Asof now, climate change and development finance, aimed at building infrastructure dominateagenda.

As BRICS moves forward foundational principles of BRICS i.e. respect for sovereign equalityand pluralism in global governance are liable to be tested as the five member countries pursuetheir own national agendas.

The military standoff between India and China on the Doklam plateau, which has effectivelybrought to an end the naive notion that a comfortable political relationship is always possibleamongst the BRICS members.

China’s efforts to co-opt nation states, which are integral to its Belt and Road Initiative, intoa broader political arrangement has potential to cause conflict among BRICS membersespecially China and India.

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<˚XÊ\qT ø£*– ñ+&Ü*. Á|ü|ü+#· |ü≥+˝À Á_ø˘‡ ‘·q mC…+&ÜqT Ç+ø± $düÔ]+#ê*‡ ñ+≥T+~. Ç|üŒÏ es¡≈£î, yê‘êes¡D e÷s¡TŒ,

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10.3. <äøÏåD≤dæj·÷ ÁbÕ+rj·T düVü≤ø±s¡ dü+düú (kÕsYÿ)

<äøÏåD≤dæj·÷ ÁbÕ+rj·T düVü≤ø±s¡ dü+düú (kÕsYÿ) nH˚~ <äøÏåD Ädæj·÷˝Àì <˚XÊ\ ÁbÕ+rj·T n+‘·sY Á|üuÛÑT‘·« dü+düúeT]j·TT uÛÖ>√[ø£ sê»ø°j·T dü+|òüT+. <ëì düuÛÑ <˚XÊ\T Ä|òüÈìkÕÔHé, ã+>±¢<˚XŸ, uÛÑ÷≤Hé, uÛ≤s¡‘·<˚X¯+, e÷©›e⁄\T,H˚bÕ˝Ÿ, bÕøÏkÕÔHé eT]j·TT Áo\+ø£. kÕsYÿ 8 &çôd+ãsY 1985 q &ÛÜø±˝À kÕú|æ+#·ã&ç+~. Bì Á|ü<Ûëq ø±s¡ \j·T+H˚bÕ˝Ÿ˝Àì U≤≥à+&ÉT˝À ñ+~. dü+düú Ä]úø£ eT]j·TT ÁbÕ+rj·T @ø°ø£s¡D n_Ûe~∆ì Áb˛‘·‡Væ≤düTÔ+~. Ç~ 2006˝À <äøÏåD Ädæj·÷ ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘êìï ÁbÕs¡+_Û+∫+~. kÕsYÿ ◊ø£ sê»´dü$T‹˝À XÊX«‘· <Í‘· dü+ã+<Ûë\qT|ü]o\≈£î&ç>± ìs¡«Væ≤düTÔ+~ eT]j·TT j·T÷s√|æj·THé j·T÷ìj·THé‘√ düVü‰ ãVüQbÕøÏåø£ dü+düú\‘√ dü+ã+<Ûë\qTn_Ûe~∆ #˚düT≈£î+~.

kÕsYÿ jÓTTø£ÿ eTTK´yÓTÆq n+>∑+ dü∫yê\j·T+. kÕsYÿ ôdÁø£fÒ]j·TŸ 16 »qe] 1987 q U≤≥à+&ÉT˝À kÕú|æ+#·ã&ç+~.kÕsYÿ ø±s¡ ø£ ≤bÕ\ neT\TqT düeTq«j·T+ #˚j·T&É+ eT]j·TT |üs¡ y˚øÏå+#·&É+, nk˛dæj˚TwüHé düe÷y˚XÊ\≈£î ùde#j·T&É+ eT]j·TT kÕsYÿ eT]j·TT Ç‘·s¡ n+‘·sê®rj·T dü+düú\ eT<Ûä ø£eT÷´ìπøwüHé #Ûêq Ÿ>± |üì#j·T&É+ Bì bÕÁ‘·.ôdÁø£fÒ]j·TŸ˝À ôdÁø£≥Ø »qs¡ Ÿ, @&ÉT>∑Ts¡T &Ó’¬sø£ºs¡T¢ eT]j·TT »qs¡ Ÿ düØ«ôddt dæã“+~ ñ+≤s¡T. ôdÁø£≥Ø-»qs¡ Ÿì eT+Á‘·T\ eT+&É* <ë«sê eT÷&ÉT dü+e‘·‡sê\ bÕ≥T s=fÒwüHé |ü<ä›‹ dü÷Á‘·+ô|’ ìj·T$TkÕÔs¡T.

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10.3. SAARC

The South Asian Association for Regional Cooperation (SAARC) is the regional intergovernmentalorganization and geopolitical union of countries in South Asia. Its member states are Afghanistan,Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. The SAARC was foundedin Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. The organizationpromotes development of economic and regional integration. It launched the South Asian Free TradeArea in 2006. The SAARC maintains permanent diplomatic relations at the United Nations as anobserver and has developed links with multilateral entities, including the European Union.

The important organs of the SAARC is Secretariat. The SAARC Secretariat was established inKathmandu on 16 January 1987. Its role is to coordinate and monitor the implementation of SAARCactivities, service the meetings of the association and serve as a channel of communication betweenSAARC and other international organizations. The Secretariat comprises the secretary-general, sevendirectors, and the general services staff. The secretary-general is appointed by the Council of Ministerson the principle of rotation, for a non-renewable tenure of three years.

Structure and ProcessCooperation in SAARC is based on respect for the five principles of sovereign equality, territorialintegrity, political independence, non-interference in internal affairs of the Member States and mutualbenefit. Regional cooperation is seen as a complement to the bilateral and multilateral relations ofSAARC Member States. SAARC Summits are held annually and the country hosting the Summitholds the Chair of the Association. Decisions are made on an unanimity basis while bilateral andcontentious issues are excluded from the deliberations of SAARC.

10.3.1. Objectives

SAARC aims to promote economic growth, social progress and cultural development within theSouth Asia region. The objectives of SAARC, as defined in its charter, are as follows:

Promote the welfare of the peoples of South Asia and improve their quality of life

Accelerate economic growth, social progress and cultural development in the region byproviding all individuals the opportunity to live in dignity and realise their full potential

Promote and strengthen collective self-reliance among the countries of South Asia

Contribute to mutual trust, understanding and appreciation of one another’s problems

Promote active collaboration and mutual assistance in the economic, social, cultural, technicaland scientific fields

Strengthen co-operation with other developing countries

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10.3.1. \øå±´\T<äøÏåD≤dæj·÷ ÁbÕ+‘·+˝À Ä]úø£ e~∆, kÕe÷õø£ |ü⁄s√>∑‹ eT]j·TT kÕ+düÿ‹ø£ n_Ûe~∆ì Áb˛‘·‡Væ≤+#·&É+ kÕsYÿ\ø£å +. SAARC jÓTTø£ÿ \øå±´\T, <ëì #ês¡ºsY À ìs¡«∫+#·ã&çq ÁøÏ+~ $<Ûä+>± ñHêïsTT:

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eT]j·TT Ç˝≤+Ï \øå±´\T eT]j·TT Á|üjÓ÷»Hê\‘√ n+‘·sê®rj·T eT]j·TT ÁbÕ+rj·T dü+düú‘√ düVü≤ø£]+#·+&ç.

düVü≤ø±s¡ ÁbÕ+‘ê\Tá ÁøÏ+~ düVü≤ø±s¡ s¡+>±\ô|’ düuÛÑ <˚XÊ\T n+^ø£]+#êsTT:

e´ekÕj·T+ eT]j·TT Á>±MTD≤_Ûe~∆ $<ä eT]j·TT dü+düÿ‹ ãjÓ÷f…ø±ï\J Ä]úø£, yêDÏ»´+ eT]j·TT ô|ò’HêHé‡ X¯øÏÔ |üsê´es¡D+ |üsê´≥ø£ XÊÁd”Ôj·T eT]j·TT kÕ+πø‹ø£ $C≤„Hê\T düe÷#ês¡+, ø£eT÷´ìπøwüHé eT]j·TT MT&çj·÷ <ë]Á<äj·T ìs¡÷à\q uÛÑÁ<ä‘ê n+XÊ\T e´≈£îÔ\ qT+&ç e´≈£îÔ\ |ü]#·j·÷\T ì<ÛäT\ j·T+Á‘ê+>∑+ kÕe÷õø£ n_Ûe~∆

10.3.2. kÕsYÿ eT]j·TT uÛ≤s¡‘·<˚X¯+eTT+<äT>± bıs¡T>∑T ÁbÕ+‘·+: <˚X¯+ jÓTTø£ÿ ‘·ø£åD bıs¡T>∑Tyê]øÏ ÁbÕ<Ûëq´‘· nqï~ uÛ≤s¡‘· <˚X¯+ jÓTTø£ÿ

ìHê<ä+.

296

Strengthen co-operation among themselves in international forms on matters of commoninterest; and

Cooperate with international and regional organisation with similar aims and purposes.

Areas of CooperationThe Member States agreed on the following areas of cooperation:

Agriculture and rural development Education and culture Biotechnology Economic, trade and finance Energy Environment Tourism Science and Technology Information, Communication and Media Poverty alleviation Security aspects People-to-People Contacts Funding mechanism Social development.

10.3.2. SAARC and India Neighbourhood first: Primacy to the country’s immediate neighbours.

Geostrategic significance: Can counter China (OBOR initiative) through engaging Nepal,Bhutan, the Maldives and Sri Lanka in development process and economic cooperation.

Regional stability: SAARC can help in creation of mutual trust and peace within the region.

Global leadership role: It offers India a platform to showcase its leadership in the regionby taking up extra responsibilities.

Game changer for India’s Act East Policy: By linking South Asian economies with SouthEast Asian will bring further economic integration and prosperity to India mainly in the ServicesSector.

10.3.3. Challenges to SAARC Low frequency of meetings: More engagement is required by the member states and instead

of biennial meetings, meetings should be held annually.

Broad area of cooperation leads to diversion of energy and resources.

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õjÓ÷ÁkÕº≥õø ÁbÕeTTK´‘·: HbÕ Ÿ, uÛÑ÷≤Hé, e÷©›e⁄\T eT]j·TT Áo\+ø£\qT n_Ûe~∆ Á|üÁøÏj·T eT]j·TTÄ]úø£ düVü≤ø±s¡+˝À ìeT>∑ï+ #˚j·T&É+ <ë«sê #Ó’Hê ((OBOR #=s¡e) qT m<äTs√ÿ>∑\<äT.

ÁbÕ+rj·T dæús¡‘·«+: SAARC á ÁbÕ+‘·+˝À |üs¡düŒs¡ $XÊ«dü+ eT]j·TT XÊ+‹ì düwæº+#·&É+˝ÀdüVü‰j·T|ü&ÉT‘·T+~.

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10.3.3. kÕsYÿ ≈£î düyêfi¯ó¢düe÷yXÊ\T ‘·≈£îÿe: düuÛÑ <XÊ\≈£î eT]+‘· ‘·s¡#·T>± ø£\ee\dæq nedüs¡+ eT]j·TT <Ó’«yê]¸ø£ düe÷yXÊ\≈£î

ã<äT\T>± yê]¸ø£ düe÷y˚XÊ\T ìs¡«Væ≤+#ê*.

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ùd«#êÃ¤ yêDÏ»´ ˇ|üŒ+<ä+ SAFTA neT\T dü+‘·|æÔø£s¡+>± ˝Ò<äT.

Ç+&√-bÕø˘ dü+ã+<Ûë\T: uÛ≤s¡‘Y eT]j·TT bÕøÏkÕÔHé eT<Ûä rÁe ñÁ~ø£Ô‘· eT]j·TT dü+|òüTs¡D kÕsYÿneø±XÊ\qT rÁe+>± <Óã“rdüTÔHêïsTT.

10.4.10.4.10.4.10.4.10.4. ASEAN Ädæj·÷Hé- n~Ûø±]ø£+>± Äπ>ïj·÷dæj·÷ <˚XÊ\ dü+|òüT+. Äπ>ïj·÷dæj·÷˝Àì 10 düuÛÑ <˚XÊ\‘√ ≈£L&çq Ä]úø£dü+|òüT+. Ç~ n+‘·sY-Á|üuÛÑT‘·« düVü≤ø±sêìï Áb˛‘·‡Væ≤düTÔ+~. Ä]úø£, sê»ø°j·T, uÛÑÁ<ä‘·, ôd’ìø£, $<ë´ eT]j·TTkÕe÷õø£ kÕ+düÿ‹ø£ @ø°ø£s¡DqT <ëì düuÛÑT´\T eT]j·TT Ädæj·÷˝Àì Ç‘·s¡ <˚XÊ\ eT<Ûä düT\uÛÑ‘·s¡+ #˚düTÔ+~.Ädæj·÷Hé 1967 À Ç+&√Hwæj·÷, eT Òwæj·÷, |òæ*|”ŒHé‡, dæ+>∑|üPsY eT]j·TT <∏ësTT˝≤+&é Á|üuÛÑT‘ê«\# kÕú|æ+#·ã&ç+~,Ä]úø£ e~∆, kÕe÷õø£ |ü⁄s√>∑‹ kÕ+düÿ‹ø£ n_Ûe~∆ì y˚>∑e+‘·+ #˚j·T&ÜìøÏ eT]j·TT Äπ>ïj·÷dæj·÷˝À XÊ+‹eT]j·TT uÛÑÁ<ä‘·qT Áb˛‘·‡Væ≤+#·&ÜìøÏ Ädæj·÷Hé kÕú|æ+#·ã&ç+~. Áã÷HÓ’ 1984 À düuÛÑT´ì>± #˚]+~. ‘·s¡Tyê‘·1995 ˝À $j·T‘êï+, 1997 ˝À ˝≤y√dt eT]j·TT eTj·THêàsY 1999 ˝À ø£+uÀ&çj·÷\T #˚sêsTT.

10.4.1. Ädæj·÷Hé jÓTTø£ÿ \øå±´\TÄdæj·÷Hé jÓTTø£ÿ ÁbÕ<∏ä$Tø£ \ø£å + Ä]úø£ e~∆ì y˚>∑e+‘·+ #˚j·T&É+, Bì <ë«sê kÕe÷õø£ |ü⁄s√>∑‹

eT]j·TT kÕ+düÿ‹ø£ n_Ûe~∆kÕ~Û+#·&É+ . Bì Ç‘·s¡ \øå±´\T:

ÁbÕ+rj·T XÊ+‹ eT]j·TT dæús¡‘ê«ìï Áb˛‘·‡Væ≤+#·&É+ <ë«sê Hê´j·T+ eT]j·TT #·≥º ìj·TeT+ |ü≥¢ >ös¡e+eT]j·TT ◊ø£ sê»´dü$T‹ #ês¡ºsY dü÷Á‘ê\≈£î ø£≥Tºã&ç ñ+&É≥+.

298

Limitation in SAFTA: The implementation of SAFTA has not been satisfactory a FreeTrade Agreement confined to goods, excluding all services like information technology.

Indo-Pak Relations: Escalated tension and conflict between India and Pakistan haveseverely hampered the prospects of SAARC.

10.4. ASEANASEAN- officially the Association of Southeast Asian Nations, is an economic union comprising 10member states in Southeast Asia, which promotes intergovernmental cooperation andfacilitates economic, political, security, military, educational, and sociocultural integration between itsmembers and other countries in Asia. ASEAN established by the governments of Indonesia, Malaysia,the Philippines, Singapore, and Thailand in 1967 to accelerate economic growth, social progress,and cultural development and to promote peace and security in Southeast Asia. Brunei joined in1984, followed by Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999.

10.4.1. Objectives of ASEAN

ASEAN’s primary objective is to accelerate economic growth and through that social progress andcultural development. The other objectives are:

To promote regional peace and stability through abiding respect for justice and the rule oflaw and adherence to the principles of the United Nations Charter.

To promote active collaboration and mutual assistance on matters of common interest in theeconomic, social, cultural, technical, scientific and administrative fields.

To collaborate more effectively for the greater utilisation of agriculture and industries, theexpansion of their trade, the improvement of transportation and communications facilitiesand the raising of the living standards of peoples.

To promote Southeast Asian studies.

To maintain close and beneficial cooperation with existing international and regionalorganisations.

Fundamental Principles of ASEAN

Mutual respect for the independence, sovereignty, equality, territorial integrity, and nationalidentity of all nations;

The right of every State to lead its national existence free from external interference, subversionor coercion;

Non-interference in the internal affairs of one another;

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Ä]úø£, kÕe÷õø£, kÕ+düÿ‹ø£, kÕ+πø‹ø£, XÊÁd”Ôj·T eT]j·TT |ü]bÕ\Hê s¡+>±\˝À ñeTà&ç ÄdüøÏÔ ñqï$wüj·÷\ô|’ ÁøÏj·÷o\ düVü≤ø±s¡+ eT]j·TT |üs¡düŒs¡ düVü‰j·÷ìï Áb˛‘·‡Væ≤+#·&É+.

e´ekÕj·T+ eT]j·TT |ü]ÁX¯eT\ n~Ûø£ $ìjÓ÷>∑+, yê] yêDÏ»´+ $düÔs¡D, s¡yêD≤ eT]j·TT düe÷#ês¡kÂø£sê´\ yÓTs¡T>∑T<ä\ eT]j·TT Á|ü»\ Jeq Á|üe÷D≤\ ô|+|ü⁄ ø√dü+ eT]+‘· düeTs¡úe+‘·+>±düVü≤ø£]+#·&ÜìøÏ.

Äπ>ïj·÷dæj·÷ n<Ûä j·THê\qT Áb˛‘·‡Væ≤+#·&ÜìøÏ.

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10.4.2. Ç+&çj·÷ eT]j·TT Ädæj·÷HéÄdæj·÷Hé‘√ uÛ≤s¡‘·<˚X¯ dü+ã+<Ûë\T eTq $<˚XÊ+>∑ $<ÛëHêìøÏ eT]j·TT ‘·÷s¡TŒ #·≥º+ $<ÛëHêìøÏ

|ü⁄Hê~.»ø±sêÔ À Ädæj·÷Hé eT]j·TT EAS øÏ uÛ≤s¡‘·<˚XÊìøÏ Á|ü‘˚ ø£ $TwüHé ñ+~.Ç+&çj·÷ eT]j·TT Ädæj·÷Hé Ç|üŒÏπø 25 dü+e‘·‡sê\ |üs¡düŒs¡ #·s¡Ã\T, 15 dü+e‘·‡sê\ düe÷y˚XÊ\

kÕúsTT dü+Á|ü~+|ü⁄\T eT]j·TT 5 dü+e‘·‡sê\ eP´Vü‰‘·àø£ uÛ≤>∑kÕ«e÷´ìï Ädæj·÷Hé‘√ ø£*– ñHêïsTT.Ä]úø£ düVü≤ø±s¡+:Ädæj·÷Hé uÛ≤s¡‘·<˚X¯+ jÓTTø£ÿ Hê\Ze n‹ô|<ä› yêDÏ»´ uÛ≤>∑kÕ«$T.Ädæj·÷Hé‘√ uÛ≤s¡‘·<˚X¯ yêDÏ»´+ Ä•+∫q+‘·>± ñ+~. uÛ≤s¡‘·<˚X¯ yÓTT‘·Ô+ yêDÏ»´+˝À Ç~ 10.6

XÊ‘·+.Ädæj·÷Hé ≈£î uÛ≤s¡‘· m>∑TeT‹ ‘·q yÓTT‘·Ô+ m>∑TeT‘·T\˝À 11.28 XÊ‘·+>± ñ+~. Ädæj·÷Hé-Ç+&çj·÷

Á|ò” ÁfÒ&é @]j·÷ |üP]Ô>± ñ|üjÓ÷–+#·Tø=+~.Ädæj·÷Hé Ç+&çj·÷-_õHÓdt øöì‡˝Ÿ ((AIBC) 2003 ˝À kÕú|æ+#·ã&ç+~, Ç~ uÛ≤s¡‘·<˚X¯+ eT]j·TT

Ädæj·÷Hé <˚XÊ\ qT+&ç ø°\ø£yÓTÆq Áô|’y˚Ÿ s¡+>∑ dü+düú\qT πø y~ø£ô|’øÏ rdüT≈£îsêe&ÜìøÏ ñ<›•+∫q~.

kÕe÷õø£-kÕ+düÿ‹ø£ düVü≤ø±s¡+: ASEAN ‘√ e´≈£îÔ\ qT+&ç e´≈£îÔ\ eT<Ûä´ |üs¡düŒs¡ #·s¡´qT ô|+#˚ø±s¡ Áø£e÷\T, Ädæj·÷Hé $<ë´s¡Tú\qT uÛ≤s¡‘·<˚XÊìøÏ ÄVü‰«ì+#·&É+, Ädæj·÷Hé <Í‘· y˚‘·Ô\ ø√dü+ Á|ü‘˚ ø£

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Settlement of differences or disputes by peaceful manner;

Renunciation of the threat or use of force; and

Effective cooperation among themselves.

10.4.2. India and ASEAN India’s relationship with ASEAN is a key pillar of her foreign policy and the foundation of

Act East Policy. India has a separate Mission to ASEAN and the EAS in Jakarta. India and ASEAN already has 25 years of Dialogue Partnership, 15 years of Summit Level

interaction and 5 years of Strategic Partnership with ASEAN.

Economic Cooperation:o ASEAN is India’s fourth largest trading partner.o India’s trade with ASEAN stands at approx. 10.6 percent, of India’s overall trade.o India’s export to ASEAN stands at 11.28 percent, of our total exports. The ASEAN-India

Free Trade Area has been completed.o ASEAN India-Business Council (AIBC) was set up in 2003 to bring key private sector

players from India and the ASEAN countries on a single platform.o Socio-Cultural Cooperation: Programmes to boost People-to-People Interaction with

ASEAN, such as inviting ASEAN students to India, Special Training Course for ASEANdiplomats, Exchange of Parliamentarians, etc.

Funds: Financial assistance has been provided to ASEAN countries from the followingFunds:

o ASEAN-India Cooperation Fundo ASEAN-India S&T Development Fundo ASEAN-India Green Fund

Delhi Declaration: To identify Cooperation in the Maritime Domain as the key area ofcooperation under the ASEAN-India strategic partnership.

Delhi Dialogue: Annual Track 1.5 event for discussing politico-security and economicissues between ASEAN and India.

ASEAN-India Centre (AIC): To undertake policy research, advocacy and networkingactivities with organizations and think-tanks in India and ASEAN.

Political Security Cooperation: India places ASEAN at the centre of its Indo-Pacificvision of Security and Growth for All in the Region.

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Ädæj·÷Hé-Ç+&çj·÷ ôd+≥sY (AIC): uÛ≤s¡‘·<˚X¯+˝À eT]j·TT ASEAN ˝À dü+düú\T eT]j·TT ~∏+ø˘-≤´+ø˘\‘√ $<Ûëq |ü]XÀ<Ûäq, Hê´j·Tyê~ eT]j·TT HÓŸe]ÿ+>¥ ø±s¡ ø£ ≤bÕ\qT #˚|ü≥º&É+.

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10.4.3. Ädæj·÷Hé≈£î düyêfi¯ó¢Bì e´øÏÔ>∑‘· e÷¬sÿ≥¢ Ä]úø£ eT]j·TT kÕe÷õø£ dæú‹˝À ÁbÕ+rj·T ndüeT‘·T\´‘·<Ûäìø£ eT]j·TT ù|<ä Ädæj·÷Hé düuÛÑ <˚XÊ\ eT<Ûä n+‘·s¡+ #ê˝≤ ô|<ä›~>± ñ+~ eT]j·TT Ä<ëj·T

ndüe÷q‘·ô|’ yê]øÏ $TÁX¯eT dæú‹ ñ+~.dæ+>∑|üPsY n‘·´~Ûø£ ‘·\dü] C≤rjÓ÷‘·Œ‹Ô - <ë<ë|ü⁄ $ 53,000 (2016) ø£*– ñ+&É>±, ø£+uÀ&çj·÷

‘·\dü] C≤rjÓ÷‘·Œ‹Ô $ 1,300 ø£+fÒ ‘·≈£îÿe.‘·≈£îÿe n_Ûe~∆ #Ó+~q <˚XÊ\T ÁbÕ+rj·T ø£≥Tºu≤≥¢qT neT\T #˚j·T&ÜìøÏ eqs¡T\ n&É¶+≈£î\qT

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10.4.3. Challenges to ASEAN Regional imbalances in the economic and social status of its individual markets. Gap between rich and poor ASEAN member states remains very large and they

have a mixed record on income inequality.

While Singapore boasts the highest GDP per capita—nearly $53,000 (2016), Cambodia’sper capita GDP is the lowest at less than $1,300.

Many regional initiatives were not able to be incorporated into National plans, as the lessdeveloped countries faced resource constraints to implement the regional commitments.

The members’ political systems are equally mixed with democracies, communist, andauthoritarian states.

The South China Sea is the main issue exposing the organization’s rifts.

ASEAN has been divided over major issues of human rights. For example, crackdowns inMyanmar against the Rohingyas.

Inability to negotiate a unified approach with regards to China, particularly in response to itswidespread maritime claims in the South China Sea.

The emphasis on consensus sometimes becomes the a chief drawback – difficult problemshave been avoided rather than confronted.

There is no central mechanism to enforce compliance.

Inefficient dispute-settlement mechanism, whether it be in the economic or political spheres.

KEY TERMS

1. Trade Creation: Trade creation is an economic term related to international economics inwhich trade flows are redirected due to the formation of a free trade area or a customs union.

2. Preferential Trade Area: A preferential trade area is a trading bloc that gives preferentialaccess to certain products from the participating countries.

3. Free Trade Area: A free trade area is a region in which a group of countries has signed a freetrade agreement and maintain little or no barriers to trade in the form of tariffs or quotas betweeneach other.

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4. Customs Union: A customs union is an agreement between two or more countries to removetrade barriers and lower or eliminate tariffs. Members of a customs union generally apply acommon external tariff on imports from non-member countries.

5. Economic Union: An economic union is an agreement between two or more nations to allowgoods, services, money and workers to move over borders freely. The European Union (EU) isan example of an economic union.

6. Common Market: A group of countries imposing few or no duties on trade with one another anda common tariff on trade with other countries.

7. Trade Deflection: The movement of goods or components of goods from outside a tradingarrangement to a country within such an arrangement in order for the seller to benefit from tradingpreferences.


1. Which of the following is a form of Trade BlocsA. SAARCB. E.UC. Customs UnionD. All of the above

2. Which is the not a member country in BRICSA. IndiaB. ChinaC. JapanD. Brezil

3. The First BRICS Summit was held atA. BrezilB. YekaterinburgC. DelhiD. Bezing

4. India Hosted the BRICS Summit in the yearA. 2012B. 2011C. 2013D. 2010

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5. Which of the following is not the member country in SAARCA. NepalB. BhutanC. TaiwanD. India

6. What is the Full Forum of ASEANA. Association for South East Asian NationsB. Administration on South East Asian NationsC. Organisation of South East Asian NationsD. Administration of Southern East Asian Nations

7. Where is the First ASEAN Summit was heldA. BaliB. JakartaC. ManilaD. Singapore

8. What is the Head Quarter of ASEAN.A. BaliB. JakartaC. ManilaD. Singapore

9. Currently how many members are in the SAARC organisation?A. 6B. 7C. 8D. 10

10. What was the theme of the SAARC year 2016-17?A. Year for GirlsB. Year for EnvironmentC. Year of Good GovernanceD. Year of Cultural Heritage

ANSWERS

1 2 3 4 5 6 7 8 9 10

D C B A C A B B C D

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INTERACTIVE LINKS:https://en.wikipedia.org/wiki/Brickhttps://en.wikipedia.org/wiki/ASEAN

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