ashokdgau1r-140608140624-phpapp01 commerce.pdf

Commerce

1. Ashok D Gaur
Asst. Prof.
C.P Patel & F.H Shah Commerce College,
Anand
UGC NET Coaching Class
May 2014
Unit: 1 Business Environment

2. Syllabus : Business Environment
•Meaning
•Elements of Business Environment
•Economic environment,
•Economic Policies,
•Economic Planning
•Legal environment of Business in India,
•Competition policy,
•Consumer protection,
•Environment protection
•Policy Environment: Liberalization Privatization and globalization,
•Second generation reforms,
•Industrial policy and implementation
•Industrial growth and structural changes

3. Meaning
•Theterm‘businessenvironment’connotesexternalforces,
factorsandinstitutionsthatarebeyondthecontrolofthebusiness
andtheyaffectthefunctioningofabusinessenterprise.
•Theseincludecustomers,competitors,suppliers,government,
andthesocial,political,legalandtechnologicalfactorsetc.
•Whilesomeofthesefactorsorforcesmayhavedirectinfluence
overthebusinessfirm,othersmayoperateindirectly.
•Thus,businessenvironmentmaybedefinedasthetotal
surroundings,whichhaveadirectorindirectbearingonthe
functioningofbusiness.Itmayalsobedefinedasthesetof
externalfactors,suchaseconomicfactors,socialfactors,
politicalandlegalfactors,demographicfactors,technical
factorsetc.,whichareuncontrollableinnatureandaffectsthe
businessdecisionsofafirm

4. Types of BE
•Confiningbusinessenvironmenttouncontrollableexternal
factors,itmaybeclassifiedas
(a)Economicenvironment;and
(b)Non-economicenvironment
•Theeconomicenvironmentincludeseconomicconditions,
economicpoliciesandeconomicsystemofthecountry.
•Non-economicenvironmentcomprisessocial,political,legal,
technological,demographicandnaturalenvironment.
•Allthesehaveabearingonthestrategiesadoptedbythefirms
andanychangeintheseareasislikelytohaveafar-reaching
impactontheiroperations

5. Economic Environment
(a)EconomicConditions:
•Theeconomicconditionsofanationrefertoasetofeconomicfactorsthathave
greatinfluenceonbusinessorganizationsandtheiroperations.
•Theseincludegrossdomesticproduct,percapitaincome,marketsforgoodsand
services,availabilityofcapital,foreignexchangereserve,growthofforeigntrade,
strengthofcapitalmarketetc.Allthesehelpinimprovingthepaceofeconomic
growth.
(b)EconomicPolicies:
•Allbusinessactivitiesandoperationsaredirectlyinfluencedbytheeconomic
policiesframedbythegovernmentfromtimetotime.
•Someoftheimportanteconomicpoliciesare:
(i)Industrialpolicy
(ii)Fiscalpolicy
(iii)Monetarypolicy
(iv)Foreigninvestmentpolicy
(v)Export–Importpolicy(Eximpolicy)
(c)EconomicSystem:Theworldeconomyisprimarilygovernedbythreetypesof
economicsystems,viz.,(i)Capitalisteconomy;(ii)Socialisteconomy;and(iii)
Mixedeconomy.Indiahasadoptedthemixedeconomysystemwhichimpliesco-
existenceofpublicsectorandprivatesector.

6. Important Economic Policies
(i)Industrialpolicy:TheIndustrialpolicyofthegovernmentcoversallthose
principles,policies,rules,regulationsandprocedures,whichdirectand
controltheindustrialenterprisesofthecountryandshapethepatternof
industrialdevelopment.
(ii)Fiscalpolicy:Itincludesgovernmentpolicyinrespectofpublic
expenditure,taxationandpublicdebt.
(iii)Monetarypolicy:Itincludesallthoseactivitiesandinterventionsthataim
atsmoothsupplyofcredittothebusinessandaboosttotradeandindustry.
(iv)Foreigninvestmentpolicy:Thispolicyaimsatregulatingtheinflowof
foreigninvestmentinvarioussectorsforspeedingupindustrial
developmentandtakeadvantageofthemoderntechnology.
(v)Export–Importpolicy(Eximpolicy):Itaimsatincreasingexportsand
bridgethegapbetweenexpertandimport.Throughthispolicy,the
governmentannouncesvariousduties/levies.Thefocusnow-a-dayslieson
removingbarriersandcontrolsandloweringthecustomduties.

7. Non-Economic Environment
(a)SocialEnvironment
•Thesocialenvironmentofbusinessincludessocialfactors
likecustoms,traditions,values,beliefs,poverty,literacy,
lifeexpectancyrateetc.Thesocialstructureandthevalues
thatasocietycherisheshaveaconsiderableinfluenceon
thefunctioningofbusinessfirms.
•Forexample,duringfestiveseasonsthereisanincreasein
thedemandfornewclothes,sweets,fruits,flower,etc.
•Duetoincreaseinliteracyratetheconsumersare
becomingmoreconsciousofthequalityoftheproducts.
Duetochangeinfamilycomposition,morenuclear
familieswithsinglechildconceptshavecomeup.This
increasesthedemandforthedifferenttypesofhousehold
goods.Itmaybenotedthattheconsumptionpatterns,the
dressingandlivingstylesofpeoplebelongingtodifferent
socialstructuresandculturevarysignificantly

8. Political Environment
•Thisincludesthepoliticalsystem,thegovernmentpoliciesand
attitudetowardsthebusinesscommunityandtheunionism.All
theseaspectshaveabearingonthestrategiesadoptedbythe
businessfirms.
•Thestabilityofthegovernmentalsoinfluencesbusinessand
relatedactivitiestoagreatextent.Itsendsasignalofstrength,
confidencetovariousinterestgroupsandinvestors.Further,
ideologyofthepoliticalpartyalsoinfluencesthebusiness
organizationanditsoperations.
•YoumaybeawarethatCoca-Cola,acolddrinkwidelyusedeven
now,hadtowindupoperationsinIndiainlateseventies.
•Againthetradeunionactivitiesalsoinfluencetheoperationof
businessenterprises.MostofthelabourunionsinIndiaareaffiliated
tovariouspoliticalparties.Strikes,lockoutsandlabourdisputesetc.
alsoadverselyaffectthebusinessoperations.However,withthe
competitivebusinessenvironment,tradeunionsarenowshowing
greatmaturityandstartedcontributingpositivelytothesuccessof
thebusinessorganizationanditsoperationsthroughworkers
participationinmanagement.

9. Legal Environment
•Thisreferstosetoflaws,regulations,whichinfluencethebusinessorganizations
andtheiroperations.Everybusinessorganizationhastoobey,andworkwithinthe
frameworkofthelaw.Theimportantlegislationsthatconcernthebusiness
enterprisesinclude:
(i)CompaniesAct,1956
(ii)ForeignExchangeManagementAct,1999
(iii)TheFactoriesAct,1948
(iv)IndustrialDisputesAct,1972
(v)PaymentofGratuityAct,1972
(vi)Industries(DevelopmentandRegulation)Act,1951
(vii)PreventionofFoodAdulterationAct,1954
(viii)EssentialCommoditiesAct,2002
(ix)TheStandardsofWeightsandMeasuresAct,1956
(x)MonopoliesandRestrictiveTradePracticesAct,1969
(xi)TradeMarksAct,1999
(xii)BureauofIndianStandardsAct,1986
(xiii)ConsumerProtectionAct,1986
(xiv)EnvironmentProtectionAct
(xv)CompetitionAct,2002

10. Other legal environment
(i)ProvisionsoftheConstitution:
•TheprovisionsoftheArticlesoftheIndian
Constitution,particularlydirectiveprinciples,rights
anddutiesofcitizens,legislativepowersofthecentral
andstategovernmentalsoinfluencetheoperationof
businessenterprises.
(ii)JudicialDecisions:Thejudiciaryhastoensurethat
thelegislatureandthegovernmentfunctioninthe
interestofthepublicandactwithintheboundariesof
theconstitution.Thevariousjudgmentsgivenbythe
courtindifferentmattersrelatingtotradeandindustry
alsoinfluencethebusinessactivities.

11. Technological Environment
•Technologicalenvironmentincludethemethods,techniquesand
approachesadoptedforproductionofgoodsandservicesandits
distribution.Thevaryingtechnologicalenvironmentsofdifferent
countriesaffectthedesigningofproducts.
•Forexample,inUSAandmanyothercountrieselectricalappliances
aredesignedfor110volts.ButwhenthesearemadeforIndia,they
havetobeof220volts.
•Inthemoderncompetitiveage,thepaceoftechnologicalchangesis
veryfast.Hence,inordertosurviveandgrowinthemarket,a
businesshastoadoptthetechnologicalchangesfromtimetotime.
•Itmaybenotedthatscientificresearchforimprovementand
innovationinproductsandservicesisaregularactivityinmostof
thebigindustrialorganizations.Nowadaysinfact,nofirmcan
affordtopersistwiththeoutdatedtechnologies.

12. Demographic Environment
•Thisreferstothesize,density,distributionandgrowthrateofpopulation.
Allthesefactorshaveadirectbearingonthedemandforvariousgoodsand
services.
•Forexampleacountrywherepopulationrateishighandchildrenconstitute
alargesectionofpopulation,thenthereismoredemandforbabyproducts.
Similarlythedemandofthepeopleofcitiesandtownsaredifferentthan
thepeopleofruralareas.Thehighriseofpopulationindicatestheeasy
availabilityoflabour.Theseencouragethebusinessenterprisestouse
labourintensivetechniquesofproduction.
•Moreover,availabilityofskilllabourincertainareasmotivatesthefirmsto
setuptheirunitsinsucharea.Forexample,thebusinessunitsfrom
America,Canada,Australia,Germany,UK,arecomingtoIndiaduetoeasy
availabilityofskilledmanpower.Thus,afirmthatkeepsawatchonthe
changesonthedemographicfrontandreadsthemaccuratelywillfind
opportunitiesknockingatitsdoorsteps.

13. Natural Environment
•Thenaturalenvironmentincludesgeographicalandecological
factorsthatinfluencethebusinessoperations.Thesefactors
includetheavailabilityofnaturalresources,weatherand
climaticcondition,locationaspect,topographicalfactors,etc.
Businessisgreatlyinfluencedbythenatureofnatural
environment.
•Forexample,sugarfactoriesaresetuponlyatthoseplaces
wheresugarcanecanbegrown.Itisalwaysconsideredbetter
toestablishmanufacturingunitnearthesourcesofinput.
•Further,government’spoliciestomaintainecologicalbalance,
conservationofnaturalresourcesetc.putadditional
responsibilityonthebusinesssector.

14. Economic Environment
•Classification of economic environment of basis
of ownership
A) Capitalistic Economy
B) Socialistic Economy
C) Mixed Economy
•Classification of economic environment of basis
level of economic development
A)Economicindicator(GDP,GNP,Income
distribution,inflationrateinterestrate
unemploymentandFER,PPP

15. ECONOMIC POLICY
•MACROECONOMIC POLICYchangesfrom
timetotime,impactbusinessconditionsmore
directly.
•Itsobjectivesistostimulateormaintaingrowth,
achieveeconomicstability,Increaseemployment,
stabilizebalanceofpaymentandmakethe
economymorecompetitive.
•thecountrieswhichborrowheavilyfrommulti
lateralinstitutionslikeIMFandWORLDBANK
oftenhavetoadjusttheirpolicystructuretothe
lendingcriteriaandconditionimposedbythese
institutions.

16. TYPES OF ECONOMIC POLICY
1.MONETARY POLICY
2.FISCAL POLICY
3.INDUSTRIAL POLICY
4.TRADE POLICY

17. MONETARY POLICY
• IT IS FORMULATED AND EXECUTED BY RESERVE BANK OF INDIA .
• IT REFERS TO THAT POLICY BY WHICH CENTERAL BANK OF COUNTRY CONTROLS:
1. SUPPLY OF MONEY
2. COST OF MONEY OR RATE OF INTEREST WITH A VIEW TO ACHIEVE PARTICULAR
OBJECTIVES.
•ACCORDING TOD.CROWAN “THEMONETARY POLICYISDEFINED AS
DISCRETIONARY ACTUNDERTAKEN BYTHEAUTHORITIES DESIGNED TO
INFLUENCE:
•THE SUPPLY OF MONEY
•COST OF MONEY OR RATE OF INTEREST
•THE AVAILABILITY OF MONEY
•FOR ACHIEVING SPECIFIC OBJECTIVES.”
•MAIN OBJECTIVE OF THIS POLICY IS :
•TO ACHIEVE PRICE STABILITY,
•FINANCIAL STABILITY
•ADEQUATE STABILITY OF CREDIT FOR GROWTH

18. FISCAL POLICY
•ITISRELATEDTOINCOMEANDEXPENDITURE OFGOVERNMENT .
•ITREFERSTOBUDGETARYPOLICYOFGOVERNMENT .
•ITISOFGREATIMPORTANCE FORBOTHDEVELOPED ASWELLASDEVELOPING
COUNTRIES.
•ITISANINSTRUMENT FORPROMOTING ECONOMICGROWTH,EMPLOYMENT,
SOCIALWELFAREETC.
•ITHAVEAGREATBEARINGONECONOMIC EQUALITYANDECONOMIC GROWTHOFTHE
COUNTRY.
•ACCORDING TOARTHUSSMITHIES,”FISCAL POLICYISAPOLICYUNDERWHICHTHE
GOVERNMENT USESITSEXPENDITURE ANDREVENUE PROGRAMMES TOPRODUCE
DESIRABLE EFFECTANDAVOID UNDESIRABLE EFFECTS ONTHENATIONAL
INCOME,PRODUCTION ANDEMPLOYMENT”.

19. INDUSTRRIAL POLICY
•ITMEANSTHOSEPRINCIPLESANDACTIVITIESWHICH AREPERSUEDAND
PERFORMEDTOHELPINDUSTIALISE ACOUNTRY.
•ITINCLUDES RULES,REGULATION, PRINCIPLES ANDPROCEDURES TO
REGULATETHEINDUSTRIAL UNDERTAKING OFACOUNTRYINTHEDESIRED
DIRECTIONTOACHIEVEBROADEROBJECTIVESLIKE:
INDUSTRIALDEVELOPMENT
ECONOMICDEVELOPMENT
BALANCEDREGIONALDEVELOPMENT
INCREASEINEMPLOYMENT ETC
•INDUSTRIALPOLICYISANINSTRUMENT WITHTHEHELPOFWHICHTHESTATE
PARTICIPATESINTHEGROWTHPROCESS.”
•ITINCLUDESPOLICYREGARDINGLABOURANDCAPITAL,COTTAGEANDSMALL
SCALEINDUSTRIES,FOREIGNCAPITALANDPROTECTIONETC.
•ITISFULLYCONTROLLED ANDREGULATEDBYTHEGOVERNMENT .

20. TRADE POLICY
•BASIC OBJECTIVE OF TRADE POLICY IS TO
PROMOTE EXPORTS,REGULATE
IMPORTS,IMPROVE TERMS OF
TRADE,ENHANCE EXPORT COMPETITIVENESS
AND CREATE CONDITIONS OF EXPORT -LED
GROWTH.
•THISPOLICYISOFUTMOST IMPORTANCE
TOEXPORTERSASITHASAMAJORIMPACT
ONTRANACTION COSTSANDEFFICIENCY
OFTRADETRANSACTIONS

21. Planning
•ThePlanningCommissionwassetupinMarch1950.
•ThemainobjectiveoftheGovernmenttopromotearapidriseinthe
standardoflivingofthepeopleby
–efficientexploitationoftheresourcesofthecountry
–increasingproductionand
–offeringopportunitiestoallforemploymentintheserviceofthe
community
•ThePlanningCommissionwaschargedwiththeresponsibilityof
makingassessmentofallresourcesofthecountry,augmenting
deficientresources,formulatingplansforthemosteffectiveand
balancedutilisationofresourcesanddeterminingpriorities.
•JawaharlalNehruwasthefirstChairmanofthePlanning
Commission.

22. Plan Targe
t
Actual
First Plan (1951 –56) 2.9% 3.6%
Second Plan (1956 –61) 4.5% 4.3%
Third Plan (1961 –66) 5.6% 2.8%
Plan Holiday
Fourth Plan (1969 –1974) 5.7% 3.3%
Fifth Plan (1974 –79) 4.4% 4.8%
Sixth Plan (1980 –85) 5.2% 6.0%
Seventh Plan (1985 –90) 5.0% 6.0%
Eighth Plan (1992 –97) 5.6% 6.8%
Ninth Plan (1997 –2002) 6.5% 5.4%
Tenth Plan (2002 –2007) 8.0% --

23. First Five Year Plan
(1951-55)
Total budget:206.8 billion (INR) or USD$23.6 billion.
Objectives
the standard of living
Community and agriculture
development
Energy and irrigation
Communications and transport
Industry
Land rehabilitation
Social services
Target of GDP growth 2.1 per
year
Achieved had been 3.6% per
year
ACHIEVEMENTS
GDP 3.6% per year
Evolution of good irrigation
system
improvement in
roads
civil aviation
railways
Telegraphs
posts
manufacture of fertilizers
electrical equipment

25. Disadvantages
•development of only a few industries
•private industry had not developed

26. Second Five Year Plan
(1956-1961)
OBJECTIVES
To increase by 25% the national
income
To make the country more
industrialized
To increase employment
opportunities so that every citizen
gets a job
Development of
Mining and industry
Community and agriculture
development
Power and irrigation
Social services
Communications and transport
Miscellaneous
ACHIEVEMENTS
5 steel plants
a hydro-electric power project
production of coal increased
more railway lines
Land reform measures
improved the living standards of the
people
The large enterprises in seventeen
industries were nationalized

27. Disadvantages
eliminate the importation of consumer goods
high tariffs
Low quotas or banning some items
altogether
License were required for starting new
companies
This is when India got itsLicense Raj, the
bureaucratic control over the economy
When a business was losing money the
Government would prevent them from
shutting down

28. OBJECTIVES
More stressto agriculture
subsidies
Sufficient help
Effective use of country's resources
To increase the national income by 5%
per year
To increase the production of agriculture
so that the nation is self sufficient in food
grains
To provide employment opportunities for
every citizen of the country
To establish equality among all the people
of the country
Third Five Year Plan
(1961-1966)
ACHIEVEMENTS
Decentralization
Organizations formed
Panchayat
Zila Parishads
Laid emphasis on
oil conservation
irrigation
Afforestation
dry farming
Many fertilizerand cement plants were
built
Green Revolution
PMs
Jawaharlal Nehru
Gulzarilal Nanda
Lal Bahadur Shastri

29. Problems faced
•Sino Indian War, India witnessed increase in
price of products. The resulting inflation

30. 4th Five Year Plan
(1969 to 1974)
OBJECTIVES
•to reform and restructure
govts expenditure
agenda( defense became
one major expense)
•To facilitated growth in
exports
•to alter the socio
economic structure of the
society
ACHIEVEMENTS
•Great advancement has
been made with regard to
India's national income
•considered as one of the
emerging powers
•served as a stepping stone
for the economic growth
•Food grains production
increased

31. problems
•a gap was created between the people of the
rural areas and those of the urban areas.
•Due to recession, famine and drought, India
did not pay much heed to long term goals

32. Fifth Five Year Plan
1974 to1979
OBJECTIVES
To reduce social, regional, and
economic disparities
To enhance agricultural
productivity
To check rural and urban
unemployment
To encourage self-employment
Production support policies in the
cottage industry sector
To develop labor intensive
technological improvements
PROBLEMS
The international economy was
in a trouble
Food, oil, and fertilizers where
prices sky-rocketed
Several inflationary pressures
ACHIEVEMENTS
Food grain production was above
118million tons due to the
improvement of infrastructural
facilities
Bombay High hadshot up the
commercial production of oil in
India

33. Problems faced
•The world economy was in a troublesome state
•This had a negative impact on the Indian
economy
•Prices in the energy and food sector
skyrocketed and as a consequence inflation
became inevitable

34. Sixth Five Year Plan
1980 to1985
OBJECTIVES
To improve productivity level
To initiate modernization for
achieving economic and
technological self-reliance
To control poverty and
unemployment
To develop indigenous energy
sources and efficient energy usage
To promote improved quality of life
of the citizens
To introduce Minimum Needs
Program for the poor
To initiate Family Planning
ACHIEVEMENTS
Speedyindustrial development
Emphasis on the information
technology sector
self sufficiency in food
science and technology also made
a significant advance
several successful programs on
improvement of public health
government in the Indian
healthcare sector
Government investmentsin the
Indian healthcare sector

35. Problems faced
•During this time the Prime Minister was Rajiv
Gandhi and hence industrial development was the
emphasis of this plan some opposed it specially the
communist groups, this slowed down the pace of
progress.

36. Seventh Five Year Plan
1985 to 1989
OBJECTIVES
Anti-poverty program
Improved facilities for education
to girls
The government undertook to increase
productivity of
Oilseeds,Fruits,Vegetables
Pulses,cereals,Fish
Egg,Meat,milk.
Communications
Emergence of informatics, and
hooking up of
telecommunications with
computers
Transport
inland waterways, product
pipelines, civil aviation, coastal
shipping
ACHIEVEMENTS
Social Justice
Removal of oppression of
the week
Using modern technology
Agricultural development
Anti-poverty programs
Full supply of food,
clothing, and shelter
Increasing productivity of
small and large scale
farmers
Making India an
Independent Economy

37. Problems
•1989-91 was a period of political instability in
India and hence no five year plan was
implemented
•In 1991, India faced a crisis in foreign
exchange(Forex) reserves

38. Eighth Five Year Plan
1992 to1997
OBJECTIVES
•Prioritize the specific sectors which
requires immediate investment
•To generate full scale employment
•Promote social welfare measures like
improved healthcare, sanitation,
communication and provision for
extensive education facilities at all
levels
•To check the increasing population
growth by creating mass awareness
programs
•To encourage growth and diversification
of agriculture
•To strengthen the infrastructural
facilities
•To place greater emphasis on role of
private initiative in the development of
the industrial sector
ACHIEVEMENTS
•Rise in the employment level
•Poverty reduction
•Self-reliance on domestic resources
•Self-sufficiency in
agricultural production
•GDP Growth Per Annum
5.6

39. Ninth Five Year Plan
1997 to 2002
OBJECTIVES
to prioritize rural development
to generate adequate employment
opportunities
to stabilize the prices
to ensure food and nutritional
security
to provide for the basic
infrastructural facilities like
education for all, safe drinking
water, primary health care,
transport, energy
to check the growing population
increase
to encourage social issues like
women empowerment
to create a liberal market for
increase in private investments
ACHIEVEMENTS
•A combined effort of public,
private, and all levels of
government
•ensured the growth of India's
economy.
•Service sector showed fast growth
rate

40. Tenth Five Year Plan
(2002-2007)
OBJECTIVES
To transform the country into the fastest growing economy of the world
targets an annual economic growth of 10%
Human and social development
The social net
Industry and services:
Industry,Minerals,Energy,Information technology,Tourism,Real
estate,Construction,Internal trade
Forests and environment
Science and technology
Special area programs
schooling to be compulsory for children

41. Eleventh Five-Year Plan (2007–2012)
INCOME AND POVERTY
Accelerate growth rate of GDP from 8% to
10% and then maintain at 10% in the 12
th
plan
in order to double per capita income by 2016-
17.
Increase agricultural GDP growth rate to 4%
per year.
Reduce educated unemployment to below 5%.
Raise real wage rate of unskilled workers by
20%

42. Eleventh five year plan
OBJECTIVES
•Income & Poverty
•Education
•Health
•Women and Children
•Infrastructure
•Environment

43. 43
•ThereareShortTermandMediumTermChallenges
•ShortTerm:Reversethecurrentgrowthslowdown:
5.5percentin2012-13,
Aimfor6.5to7percentin2013-14
•LongerTerm:Getbacktohighgrowth.Thisrequires
acceleratingfrom5.5%in2012-13toover9%inlast
twoyears
•Thisisverydifficult,especiallygiventheglobal
situation
Twelfth PlanStrategy

44. 44
•Inclusivenessisamulti-dimensionalconcept:
Reducepoverty
Improveregionalequalityacrossstatesandwithin
states
ImproveconditionsforSCs,STs,OBCs,Minorities
Generateattractiveemploymentopportunitiesfor
youth
Closegendergaps
•TwelfthPlanlists25monitorableindicators
Growth must not only be rapid, but also
more inclusive

45. 45
•AverageGDPGrowthof8percent
•AgricultureGrowthof4percent
•Reducinghead-countpovertyby10percentagepoint
•Generating50millionworkopportunities
•Eliminatinggenderandsocialgapineducation
•ReducingIMRto25,MMRto100andTFRto2.1
•Enhanceinfrastructureinvestmentto9%ofGDP
•Achieveuniversalroadconnectivityandaccesstopowerfor
allvillages
•Accesstobankingservicesfor90percenthouseholds
•MajorwelfarebenefitsandsubsidiesviaAadhaar
25 Monitorable Targets, e.g.

46. •TwelfthPlansetsambitioustargetsforFlagshipProgrammes
inareasofHealth,Education,Ruralinfrastructure,
LivelihoodDevelopmentetc.
•Toomuchfocusonthelevelofexpenditureinthese
programmes.Notenoughoneffectivenessintermsofend
results
•ImplementationinthefieldistheresponsibilityofState
Governmentagencies.However,programmeguidelinesare
setbytheCentralGovernment
•Therearedemandsforgreaterflexibilityfromstates.Weare
respondingasfollows:
Guidelinesarebeingmademoreflexibletomeetthe
requirementsofindividualStates
10%flexi-fundwithineachschemeforinnovations
Effectiveness of Plan Programmes

47. CONSUMER PROTECTION
ACT

48. Consumer Protection Act
•Enacted by the Parliament in 1986
•To provide for better protection of interest of
consumers.
•To make provisions for the establishment of
Consumer Councils and other authorities for
the settlement of consumer disputes.

49. Who is a Consumer?
•Consumer is one who
–Buys any goods for a consideration and includes a
hire-purchaser;
–Any user of such goods for consideration but
excludes one, who obtains for re-sale or for
commercial purposes;
–Hires a service for consideration and includes a
beneficiary of such service, if availed of with the
approval of the hirer.

50. Deficiency -Service
•‘Deficiency’ means
–a fault, imperfection, shortcoming or inadequacy in quality,
nature, or manner of performance than is required.
•‘Service’ includes
–service in connection with banking, financing, insurance,
transport, processing, supply of electrical and other energy,
boarding or lodging, housing construction, entertainment,
amusement or purveying of news and other information
–but does not include any service free of charge or under a
personal contract.

51. What is a Complaint?
•An allegation in writing by a complainant that:
–An unfair or restrictive trade practice is practised by trader
or service provider
–Goods bought or to be bought or services hired or to be
hired suffered from any deficiency
–Trader or service provider has charged excess price
–Goods and services are hazardous or are likely to be
hazardous to life and safety.

52. Who is a complainant?
•A consumer
•Any voluntary consumer association registered under
the Companies Act or any other law
•Central or State Government, if it makes a complaint
•One or more consumers having same interest
•In case of death of a consumer, his legal heir or
representative.
A Consumer Dispute arises when a complaint
is denied or disputed.

53. Machinery under the Act
•Central Consumer Protection Council
–to be established by Central Government
•State Consumer Protection Council
–to be established by State Government
•District Consumer Protection Council
–to be established by State Government for every
district

54. Consumer Dispute Redressal
Machinery
•There are Consumer Foraat the District, State
and National level
–District Forum –At the District level
–State Commission –At the State level
–National Commission –At the National level

55. Pecuniary Jurisdiction
•Forum where complaints can be entertained
–Depends on value of goods and service and compensation claimed
•Limits are :
–District Forum
•not exceeding Rs.20 lakhs
–State Commission
•exceeds Rs.20 lakhs but does not exceed Rs.1 Crore
–National Commission
•exceeds Rs.1 Crore.
•Territorial Jurisdiction lies in the court of the place
–Where the opposite party resides or carries on business or
personally works for gain
–Where the cause of action wholly or partly arose

56. Disposal of disputes
•District Forum may
–ask the opposite party to remove the defect,
–replace the goods with new goods and free from defect
–to return to the complainant the price of goods or
–to pay any amount as compensation
•Appeals to be preferred within thirty days
–from the order of the District Forum to the State Commission and
–from the order of the State Commission to the National Commission
•Can entertain appeals beyond thirty days
–on sufficient cause shown for the delay
It has to be disposed within ninety days from its
admission.

57. What are the rights of a ‘consumer’?
–Protection from hazardous goods and services
–Information about the quality, quantity, purity,
standard and price
–Access to a variety of goods and services at
competitive prices.
–Assurance that his interest will be considered at
appropriate fora
–The right to consumer education

58. Policy Environment: Liberalization
Privatization and globalization
THE NEW INDUSTRIAL POLICY-1991
•July 1991,India has taken a series of measures to structure
the economy and improve the BOP position. The new
economic policy introduced changes in several areas.
The policy have salient feature which are: -
1.Liberlisation (internal and external)
2.Extending Privatization
3.Globalisation of the economy
Which are known as “LPG”. (liberalization privatization
globalization)

59. Reasons for implementing LPG
Excess of consumption and expenditure over revenue
resulting in heavy govt. borrowings.
Growing inefficiency on the use of resources.
Over protection to industries.
Mismanagement of the firm and the economy.
Increase in losses for public sector enterprises.
Various distortion like poor technological
development, shortage of foreign exchange and
borrowing from abroad.
Low foreign exchange reserves.
Inflation
59

60. Liberalization
Liberalization is a very broad term that usually refers to fewer government
regulations and restrictions in the economy.
Liberalization refers to the relaxation of the previous government
restriction usually in area of social and economic policies. When
government liberalized trade , it means it has removed the tariff
,subsidies and other restriction on the flow of goods and services
between the countries.
The Path of liberalization
•Relief for foreign investors
•Devaluation of Indian rupees
•New industrial Policy
•New trade policy
•Removal of import Restrictions
•Liberalization of NRI remittances
•Freedom to import technology
•Encouraging foreign tie-ups
•MRTP relaxation
•Privatization of public sector

61. Advantages of liberalization
•Industrial licensing
•Increase the foreign
investment.
•Increase the foreign
exchange reserve.
•Increase in consumption
and Control over price.
•Check on corruption.
•Reduction in dependence on
external commercial
borrowings
Disadvantages of Liberalization
•Increase in
unemployment.
•Loss to domestic units.
•Increase dependence on
foreign nations
•Unbalanced development
61
Advantages & Disadvantages of liberalization

62. Privatization
Privatizationmeanstransferofownershipand/ormanagementofan
enterprisefromthepublicsectortotheprivatesector.Italsomeansthe
withdrawalofthestatefromanindustryorsectorpartiallyorfully.
Privatizationisopeningupofanindustrythathasbeenreservedfor
publicsectortotheprivatesector.
Privatizationmeansreplacinggovernmentmonopolieswiththe
competitivepressuresofthemarketplacetoencourageefficiency,
qualityandinnovationinthedeliveryofgoodsandservices.
NEED
ThoughthePSUshavecontributedheavilytodeveloptheindustrialbaseofthe
country,theycontinue,eventoday,tosufferfromanumberofshortcomingswhich
areidentifiedbelowverybriefly:-
•AsizablenumberofPSUshavebeenincurringandreportinglossesonacontinual
basis.Consequently,alargenumberofPSUshavealreadybeenreferredofloss
givingunits;
•MultiplicityofauthoritiestowhomthePSUsareaccountable;
•Delayinimplementationofprojectsleadingtocostescalationandother
consequences;
62

63. 63
•Ineffective and widespread inefficiencyon management;
•With a view to provide opportunities for more and more
unemployed youths, more number of people, than required, were
recruited and therefore, many PSUs are over-staffed resulting in
lower labourproductivity, bad industrial relations, etc.;
•A number of sick companies (40 companies) which were in the
private sector was taken over by public sector mainly to protect the
employees. These sick units are causing a big drain on the resources
of the state; etc.
Different Ways in privatization
•Liberalization Approach
•Relative Share Enlargement Approach
•Association of Private Sector Management Approach
•Transfer of Minority Equity Ownership Approach
•Transfer of Complete Ownership Approach

64. Advantages and disadvantages
•Privatization helps to reduce the burden on Govt.
•It will help profit making public sector unit to
modernize and diversify their business.
•It will help in making public sector unit more
competitive.
•It will help to improving the quality of decision
making, because the decisions are free from any
political interference.
•Privatization may help in reviving sick units
which are the liability of the public sector.
•Industrial growth.
•Increase the foreign investment.
•Increase in efficiency.
•Industrial sickness.
•Lack of welfare.
•Class struggle.
•Increase in inequality
•Opposition by employees.
•Problem of financing.
•Increase in unemployment.
•Ignores the weaker sections.
•Ignores the national importance

65. Examples of privatization in India
•Lagan Jute Machinery Company Limited (LJMC)
•Videsh Sanchar Nigam Limited (VSNL)
•Hindustan Zinc Limited (HZL)
•Hotel Corporation Limited of India (HCL)
•Bharat Aluminum Company limited (BALCO)
65

66. Globalization
Globalization implies integration of the economy of the
country with the rest of the world economy and opening
up of the economy for foreign direct investment by
liberalizing the rules and regulations and by creating
favorable socio-economic and political climate for global
business.
According to IMF: -”The growing economic interdependence
of countries worldwide through increasing volume and
variety of cross border transaction in goods and services
and of international capital cash flows, and through the
more rapid and widespread diffusion of technology.”
66

67. Features of Globalization
•Opening and planning to expand business throughout the
world.
•Erasing the difference between domestic market and foreign
market.
•Buying and selling goods and services from/to any
countries in the world.
•Locating the production and other physical facilities on a
consideration of the global business dynamics ,irrespective
of national consideration.
•Basing product development and production planning on the
global market consideration.
•Global sourcing of factor of production i.e. raw-material,
components , machinery, technology,financeetc. are
obtained from the best source anywhere in the world.
•Global orientation of organizational structure .and
management culture
67

68. Foreign market entry strategies
Exporting
Licensing/Franchising
Contract manufacturing
Management contract
Assembly operations
Fully owned manufacturing facilities
Joint venturing
Merger and acquisition
Strategic alliance
Countertrade

69. Negative effects of Globalization
•Loss of domestic industries
•Exploits Human resource
•Decline in income
•Unemployment
•Transfer of natural resources
•Lead to commercial and political colonism
•Widening gap between rich and poor
•Dominance of foreign institutions
Conclusion
Economicliberalizationhasincreasedtheresponsibilityandrole
oftheprivatesector.Atthesametime,ithasreducedthecontrol
ofthegovernmentoneconomyaffairs.Itisexpectedthatthe
reformswouldliberalizetheIndianeconomyenoughtocreatea
conduciveenvironmentforrapideconomicdevelopment.
69

70. LEGAL ENVIRONMENT OF BUSINESS
Lawisaninstrumentofsocialjusticeof
thestatethatseekstoprovidejustice,
stabilityandsecurityinthe
society..Itassuresuniformapplicationof
thelawsbyregulatingthebehaviorand
interactionsofindividualsagainsteach
other.Lawisthecommandofthesovereign..
andit’sbodyofrulesrecognizedand
enforcedbycourtsoflaw.Lawisarule
relatingtotheactionsofhumanbeings.
.

71. Purpose of Law
•To maintain status quoin society ensuring
stability and security of social order, enable
individuals , maximum of freedom to assert
themselves and determine the sphere within
which the existence and activity of each
individual will be secure and free

72. Sources of Law
•Formal sources-law derives its force and validity from
the time immemorial
Legal sources-statues, precedents, legislation
•
Historical sources-juristic writings, literary works,
commandments of the god
•
Legislations-Parliament, state assemblies

73. Negative effects of Globalization
•Loss of domestic industries
•Exploits Human resource
•Decline in income
•Unemployment
•Transfer of natural resources
•Lead to commercial and political colonism
•Widening gap between rich and poor
•Dominance of foreign institutions
Conclusion
Economicliberalizationhasincreasedtheresponsibilityandrole
oftheprivatesector.Atthesametime,ithasreducedthecontrol
ofthegovernmentoneconomyaffairs.Itisexpectedthatthe
reformswouldliberalizetheIndianeconomyenoughtocreatea
conduciveenvironmentforrapideconomicdevelopment.
73

74. Legal environment ofbusiness
1. Indian contract act 1872
2. Indian sale of goods act 1930
3. Indian partnership act 1932
4. Industrial dispute Act 1947
5. Minimum wages act 1948
6. Indian companies act 1956
7. Foreign exchange regulation act
(FERA ) 1973
8. Foreign exchange management act
1999
9. Monopolies and restrictive trade
practice act 1969
10. Consumer protection act1986
11. Indian income tax act 961
12. Central excise act 1944
13. Security exchange board of India
act 1992
14. Banking regulation act 1949
15. Chartered accountant act 1949
16. Information technology act 2000
17. competition act 2002
18. right to information act 2005
19. Micro, Small and Medium
Enterprises Development Act,2006
20. Commissions for Protection of
Child Rights Act,2005

75. LEGAL ENVIRONMENT
•It refers to the legal systems obtaining in the country. It
refers to the rules and laws that regulate behavior of
individuals & organization.
•There are four basic legal systems prevailing around the
world:
1.Islamic law: It is derived from the interpretation of the
Quran and practiced in Muslim majority countries.
2.Common law: It is prevalent in countries which are
under British influence.
3.Civil or code law: It is derived from roman law,
practiced in German, non Marxist &non Islamic
countries.
4.Marxists law: It has takers in communists countries.

76. THE CONSTITUTION OF INDIA
•Right to Equality
Right to Freedom
Right against Exploitation
Right to Freedom of Religion
Cultural and Educational Rights
Right to Constitutional Remedies
--1.habeas corpus, 2.mandamus,
3.prohibition, 4.quo warranto and 5.certiorari,

77. FUNDAMENTAL DUTIES
•Fundamental duties.—It shall be the duty of every citizen of India—
•(a)to abide by the Constitution and respect its ideals and institutions, the
National Flag and the National Anthem;
•(b)to cherish and follow the noble ideals which inspired our national struggle for
freedom;
•(c)to uphold and protect the sovereignty, unity and integrity of India;
•(d)to defend the country and render national service when called upon to do so;
•(e)to promote harmony and the spirit of common brotherhood amongst all the
people of India transcending religious, linguistic and regional or sectional
diversities; to renounce practices derogatory to the dignity of women;
•(f)to value and preserve the rich heritage of our composite culture;
•(g)to protect and improve the natural environment including forests, lakes, rivers
and wild life, and to have compassion for living creatures;
•(h)to develop the scientific temper, humanism and the spirit of inquiry and
reform;
•(i)to safeguard public property and to abjure violence;
•(j)to strive towards excellence in all spheres of individual and collective activity
so that the nation constantly rises to higher levels of Endeavour and achievement.

78. •Nationallawisthelawoftheland.TheconstitutionofIndiaisthe
supremelawofthenation.Itprovidestherights,duties,andthe
libertiesofthecitizens.Thelawsmadebythestateexercisingtheir
legislativepowersundertheconstitutionhavetobeinconsonance
withthoseofthesupremelaw
•Internationallaw
Whilethenationallawisthelawofanation,alsoknownasmunicipal
law,Internationallawisthelawofnations.WhereasInternationallaw
isthebodyofruleswhicharelegallybindingonstatesintheir
intercoursewitheachother.Internationallawisconsideredtobea
weaklawbecauseitisnotfoundedonthesovereignauthority
• Internationallawhaswitnessedagreatimpetusinthepresent
scenariothaneverbefore.1.Humanrightsandtheirviolation2.filingof
pleadings,adducingevidence,oralargumentsbeforeInternational
courtofjustice,Hague(Thedefacto(dejure)capitalofthe
Netherlands)3.contractsenteredbytransnationalcompanies,
Intellectualpropertyrights,4.issueslikenucleardeals,poverty,
maritime,air,spacelaws,refugeesproblem,borderdisputes,bilateral
agreements,extraditiontreaties,UNO,Amnestyinternational,
UNESCO,WTO,W.B,IMF,Curbingterrorism,globalpeace.etc.,

79. Mercantile law
•Merchants have their separate courts called –courts
of piepoudrous (courts of Speedy justice)and the courts
were incident to fairs and market places.
The common law courts in England envying the
jurisdiction exercised by these non-official courts,
grappled it.
The source of mercantile law is LEX
MERCATORIA, (an unwritten law) consisted of only
the customs and usages or practices of the trade

80. Justice delivery system in India
•Supreme court
High court
Subordinate courts-----
•Civil courts-Metropolitan, City civil courts, Court of
small causes
Criminal courts-District, Sessions, Magistrate courts
Justice delivery system in India
Tribunals
Central administrative Tribunals
Industrial Tribunals
Labor Tribunals.
Consumer dispute redressal Tribunals

81. Civil Law & Criminal law
•It governs the litigation arising between individuals
over properties, monetary affairs, partnership, accident
cases etc,
The Nature of penalty is civil in nature. Liability to
compensate the affected party will be in the monetary
form
•In criminal cases, the governmentfor violation or
injury to public rights files suits. The State takes
initiative to file the case. Criminal law governs cases
arising out of theft ,murder, cheating etc., The nature of
punishment is monetary and imprisonment, and capital
punishment in rare cases.

82. Competition Act 2002:
1) Post 1991 policy of Liberalization, Privatization and
Globalization introduced.
2) MRTP Act was found inadequate to meet the
challenges of a modern globalize economy.
3) Government of India in October 1999 appointed a
high level Committee on Competition Policy and Law
(the RaghavanCommittee) to advise on the
competition law in consonance with international
developments.

84. COMPETITION ACT
2) The broad objectives of the Competition Act, as laid down in its preamble
are:
•"to prevent practices having adverse effect on competition, to promote
and sustain competition in markets, to protect the interest of the
consumers and to ensure freedom of trade carried on by other
participants in markets in India“
•Competition Act, 2002 notified in Gazette in January, 2003. Preamble's
stated objectives is to establish the commission which has the duty to:
1) Eliminate practices having adverse effect on competition
2) Promote and sustain competition
3) Protect consumers interests
4) Ensure freedom of trade carried on by other participants in markets, in
India.

85. THE COMPETITION ACT,2002
1) Acting on the report of the Committee, the
Government of India passed the Competition
Act in the year 2002; to which the president
accorded assent in 2003.
•It was subsequently amended by the
Competition (Amendment) Act,2007.

86. COMPETITION ACT, 2002
1) It prohibits Anti-Competitive Agreements
(Sec 3)
2) It regulates Acquisitions, Mergers and
Combinations (Sec 5 & 6)
3) It prohibits Abuse of Dominant Position (Sec
4)
4) It mandates Competition Advocacy (Sec 49)

88. Salient Features Of New Competition Policy
1) The Industries (Development and Regulation) Act, 1951 may
no longer be necessary except for location (avoidance of
urban-centric location), for environmental protection and for
monuments and national heritage protection considerations,
etc.
2) The Industrial Disputes Act, 1947 and the connected statutes
need to be amended to provide for an easy exit to the non-
viable, ill-managed and inefficient units subject to their legal
obligations in respect of their liabilities.
3) The Board for Industrial Finance & Restructuring (BIFR)
formulated under the provisions of Sick Industrial Companies
(Special Provisions) Act, 1985 should be abolished.

89. Contd..
3) World Trade Organizations (WTO)
•There should be necessary provision and teeth to examine
and adjudicate upon anti-competition practices that may
accompany or follow developments arising out of the
implementation of WTO Agreements.
•Particularly, agreements relating to foreign investment,
intellectual property rights, subsidies, countervailing
duties, anti-dumping measures, sanitary and psytosanitary
measures, technical barriers to trade and Government
procurement need to be reckoned in the Competition
Policy/Law with a view to dealing with anti-competition
practices. The competition law should be made extra
territorial.

90. Contd..
4) MRTP Act
•The MRTP Act extends to the whole of India except the state of
Jammu and Kashmir. This law was enacted:
•Brief on The MRTP Act, 1969
•Post independence, many new and big firms have entered the Indian
market. They had little competition and they were trying to
monopolize the market. The Government of India understood the
intentions of such firms. In order to safeguard the rights of
consumers, Government of India passed the MRTP bill. The bill was
passed and the Monopolies and Restrictive Trade Practices Act,
1969, came into existence. Through this law, the MRTP commission
has the power to stop all businesses that create barrier for the scope
of competition in Indian economy.

91. Competition Policy
•Monitoring business activity to act in the consumer’s interest:
–Competition Commission –investigates mergers, takeovers, anti-
competitive behaviour
–Office of Fair Trading (OFT) –ensuring efficient operation of markets
within the law
–Regulation of former nationalised industries –OFTEL, OFWAT, OFRR,
OFGEM, etc.
–Advertising Standards Authority (ASA) –legal, decent, honest
•Forms of anti-competitive behaviour
–Price fixing
–Cartels
–Collusion
–Predatory or destroyer pricing
–Distribution agreements
–Insider dealing/trading

92. Self Regulation
•Where business/industry monitors its own
behaviour –often through an agreed code of
practice. e.g.
–PCC–Press Complaints Commission
–Portman Group–alcoholic drinks industry
–FSA–Financial Services Authority
–BMA–British Medical Association
•Media Association

93. The
Environment
(Protection)
Act –1986.

94. AnActtoprovidefortheprotectionandimprovementof
environmentandformattersconnectedtherewith.
WhereasthedecisionsweretakenattheUnitedNations
ConferenceontheHumanEnvironmentheldatStockholminJune,
1972,inwhichIndiaparticipated,totakeappropriatestepsforthe
protectionandimprovementofhumanenvironment.
TheEnvironment(Protection)Act1986wasintroducedafterthe
BhopalgastragedyduringRajivGandhiwasthePrime
Ministerofourcountry
(sec.2a):-
Environmentitincludeswater,airandlandandtheinter
relationshipwhichexistsbetweenwater,airandlandandhuman
being,otherlivingcreatures,plants,microorganismsandproperty.

95. Law for Environmental
Protection
•International concern for environmental protection
–International concern for Sustainable Development
–UN conference on Human Environment and Development-Stockholm-1972
–Result-Stockholm Declaration on the Human Environment
•Report of the world commission on Environment and Development-1987-
Brundtland Commission
•Sustainable Development Concept
•CocoyocDeclaration on Environment and Development-1970
–Indian constitution Article 51 (c ) provides that India shall respect
International treaties
–Devolves duty on the citizen also to preserve the nature
–Article 48 A puts duty on the state regarding the protection of
Environment

96. RTI, MUMBAI / DAY 1 / Slide 1.4.1
laws
•The wildlife(Protection) Act, 1972
•The National environment tribunal Act, 1995
•The Environmental Protection Act, 1986
•The Bio-Diversity Act, 2002
•Are the other related environmental
legislations.

97. Measures by Central Government
Power of entry and inspection (sec--10).
Establishment of environmental laboratories (sec-12).
Preventing emissions in excess of standards (sec-7).
Report of analysis (sec-14).
Procedure for handling hazardous substance (sec-8).
Power to take sample and procedure (sec-11).
Appointment of government analyst (sec-13).
Penalty (sec-15).
Duties of persons creating environmental pollution (sec-9).

98. continue