Economic Environment of business in india


Economic Environment in India


Economic Environment of business in india
Economic Environment of business in India

Economic Environment of business in India The economic environment in India includes various macro-level factors related to the means of production and distribution of wealth that have an impact on trade and industry. This includes:

(b) The economic structure as a mixed economy recognizes the role of both the public and private sectors.

(c) Economic policies of the government, including industrial, monetary, and fiscal policies.

(d) Economic planning, which includes five-year plans, annual budget, etc.

(e) Economic indices, such as national income, distribution of income, rate, and growth of GNP, per capita income, personal settlement income, rate of savings and investment, the value of exports and imports, balance of payments, and so on.

(f) Infrastructural factors, such as financial institutions, banks, means of transport, communication facilities, and so on.

Almost all annual company reports submitted by their presidents pay a lot of attention to the general economic environment prevailing in the country and the assessment of its impact on their companies. economic environment of

Business in India is constantly changing mainly due to government policies. At the time of independence


(a) Indian economy was mainly agricultural and rural;

(b) About 70% of the working population was employed in agriculture;

(c) About 85% of the population was living in villages;

(d) the production was carried out using irrational, low productivity technology;

(e) Communicable diseases were widespread, and the mortality rate was high. It was not a good public health system. To solve the economic problems of our country, the government took several steps including state control of some industries, central planning, and reducing the importance of the private sector. The main objectives of India’s development plans were:

(a) to initiate rapid economic development to raise the standard of living, reduce unemployment and poverty;

(b) become self-reliant and establish a strong industrial base with emphasis on heavy and basic industries;

(c) reducing inequalities of income and wealth;

(d) Adoption of the socialist pattern of development – based on equality and preventing exploitation of man by man. Following economic planning, the government gave a major role to the public sector for infrastructure industries, while the private sector was largely given the responsibility of developing the consumer goods industry. Also, the government imposed many restrictions, regulations, and controls on the functioning of private sector enterprises.

In 1991 the economy faced a severe foreign exchange crisis, a high government deficit, and a rising tr The broad features of this policy were as follows: (a) The government reduced the number of industries under compulsory license to six.

(b) Several industries reserved for the public sector were eligible under the previous policy. The role of the public sector was limited to only four areas of strategic importance.

(c) was disinvested

In the case of many public areas

industrial enterprise.

(d) The policy towards foreign capital was liberalized. The share of foreign equity participation increased

And in many activities, 100 percent foreign direct investment (FDI) was allowed.

(e) Automatic permission was now given for technology agreements

with foreign companies.

(f) The Foreign Investment Promotion Board (FIPB) was set up to promote and channel foreign investment in India.

Appropriate measures were taken to remove the impediments in the way of growth and expansion of industrial units of large industrial houses. The small-scale sector has assured all possible help and given due recognition. In short, the policy sought to free the industry from the shackles of the licensing system (liberalization), significantly reduce the role of the public sector (privatization) and encourage foreign private participation in India’s industrial development (globalization).

Liberalization: The economic reforms introduced were aimed at liberalizing Indian trade and

Industry from all unnecessary controls and restrictions. He signaled the end of the license-payment-quota raj. Liberalization of Indian Industry is related to:

(i) eliminating licensing requirements in most industries except for the shortlisted,

(ii) Freedom to decide the scale of business activities end at prices despite bumper crops.

Freedom to fix prices of goods and services,

impact of demonetization

  1. Money/Interest rates
  2. the decline in cash transactions
  3. increase in bank deposits

iii. increase financial savings

  1. Private property declined as some highly demonetized notes were not returned and real estate prices fell
  2. Public Sector estate no effect
  3. Digitization Increase in Digital Transactions among New Users (RuPay/AEPS)
  4. Fall in Real Estate Prices
  5. Tax Collection Increase in Income Tax Collection due to increased disclosure

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