Commerce Business Environment Sem I

First Year B.
Com
Business Environment
:Authors:
Dr. K. Srinivasa Rao
Lecturer in Commerce
Govt. Degree College, Ravulapalem
Sri. V. Krishna Mohan

Principal (Retired)
SKBR College, Amalapuram
:Editor:
Dr. P. Mohan Reddy
Professor of Commerce
Sri Venkateswara University
Tirupathi
ANDHRA PRADESH
STATE 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 portion
of 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.D

Academic Officer
III
Foreword
The Andhra Pradesh State Council of Higher Education, in line

with the directions of the Hon’ble Chief Minister of Andhra
Pradesh, introduced English Medium in all Degree programmes
from this academic year 2021-22. As part of empowering the
students 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 are
written in English, with the gist of the content in Telugu to enable the students
to comprehend the conttent in their mother tongue. The bilingual text books is
envisioned on the core concept of Outcome Based Education, highlighting the
learning outcomes for every chapter. These are better called as bilingual
resources rather than textbooks, as the APSCHE has developed a template for
the bilingual textbooks designing them with concepts and frameworks going
beyond the usual reading material.
Furhering the detailed description of the topics, as per the common syllabus of
the Redesigned Curricular Framework for Choice Based Credit System, the
bilingual text book contains Glossary, where certain important terms which
the student might be unfamiliar with are identified and explained in one or
two sentences, which is not a mere dictionary meaning. Links to online videos
or audios which will be useful for futher reading and understanding of the
topics are given under the interactive links. To foster further reading,
information on online resources, articles or another text book pertaining to
the content are provided. To make the text book more of a resourceful book,
Curricular Activities, wherein suggested activities that could be taken up in
realization of the outcomes are provided for the benefit of students. To help
the students to assess understanding the content, Self Assessment instruments
are provided. For Advanced Learners, caters to the needs of advanced learners
providing them with additional material about the topics. Finally, for every
chapter References are provided.
IV
I sincerely appreciate the Authors and the Editors for taking pains in bringing
out this bilingual text book in a record time, replete with knowledge which fosters
the academic progression of students. I earnestly thank my Academic Officers,
Dr. B.S. Selina, Sri. Srirangam Mathew, Dr. P. Anil Kumar for their coordinating
activities and Prof. K. Rama Mohana Rao, The Vice- Chairman of APSCHE under
whose guidance the publication is brought out.
V
PROGRAMME: B COM
Course Code:
Domain Subject: Commerce

Semester-wise Syllabus under CBCS
(w.e.f. 2020-21 Admitted Batch)
I Year B Com – Semester – I

Course 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 of
Business 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 Year
Plans
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 of
Business towards Stakeholders - Demonetisation, GST and their Impact - Political Stability -
Legal Changes.
VI
Suggested Readings:
1. K. Aswathappa : Essentials of Business Environment, Himalaya Publishing House
2. Francis Cherunilam : Business Environment,Himalaya Publishing House
3. Dr S Sankaran: : Business Environment, MarghamPublications
4. S.K. Mishra and V.K. Puri : Economic Environment of Business, HPH
5. Rosy Joshi and Sangam Kapoor : Business Environment, Kalyanai Publications
6. A C Fernando: Business Environment, Pearson
7. Dr V Murali Krishna, Business Environment, Spectrum Publications
8. 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
VIII
Introduction to
Chapter
1 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 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
1
n<Û ë ´j· T ne˝Àø£ q +
˝≤uÛ≤\T bı+<˚ ñ<˚›X¯+ ‘√ edüTÔ ùde\ ñ‘·Œ‹Ô eT]j·TT $Áø£j·÷\qT »]ù| Á|üÁøÏj·T‘√ ≈£L&çq
yê´|üø±\qT yê´bÕs¡+ nì n+{≤s¡T. yê´bÕs¡+ nH˚~ b˛{° <Ûsä ˝¡ À ø£deºü TsY ø√dü+ edüTeÔ ⁄\T
eT]j·TT dù e\qT n+~dü÷Ô yê´bÕs¡y‘˚ ≈Ô· î£ ˝≤uÛ≤\qT bı+<ä&ÜìøÏ |Á j ü T· ‹ïdüTqÔ ï Ä]úø£ ø±s¡´ø£˝≤|ü+
>± #Ó|üŒe#·TÃ. nìï yê´bÕs¡ ìs¡íj·÷\T <ëì #·T≥÷º ñqï nH˚ø£ n+XÊ\ <ë«sê
|Á uü ≤Û $‘·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 düwæºkÕÔsTT. n+<äTe\¢
yê´bÕs¡y‘˚ \Ô· T eT]j·TT yê´bÕs¡ ìsê«Vü≤≈£î\T düs¬ q’ düeTj·T+˝À düs¬ q’ ìs¡j í ÷· \T rdüTø√e&ÜìøÏ
yê´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|’

<äwæìº øπ +ÁBø£]+#·&yÉ TÓ qÆ ~. yê´bÕs¡ |ü]düsê\ ìs¡«#·q+, yê´bÕs¡ |ü]düsê\T yê´bÕsê\qT
m˝≤ |Á uü ≤Û $‘·+ #˚kÕÔj÷Ó $e]+#·&+É »]–+~. yê´bÕs¡ |ü]düsê\ jÓTTø£ÿ bÁ ÕeTTK´‘· 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 to

gain profits. Business is an economic activity trying to gain profits for the
entrepreneur, and provide goods and services for the customer at a
competitive price. All business decisions are influenced by several factors
which surround it. All those factors together are termed as business
environment. Any changes in business environment creates new
opportunities and threats to the businesses. Thus a good awareness of
business environment is necessary for entrepreneurs and business managers
to make proper decisions at opportune times.
The present chapter attempts to define business, and throw a light on

characteristics and objectives of business. It also defines business
environment, explain how business environment influences businesses.
Importance and various characteristics of business environment are also
discussed.
3
1. 1. yê´bÕs¡+
1.1.1.ns¡e∆ TT
yê´bÕs¡+ nH˚~ Á|üdTü ‘Ô · düe÷»+˝À ˇø£ eTTKýÓTqÆ 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, yê{Ï ñ‘·Œ‹Ô ˝Ò<ë ø=qT>√\T≈£î $ìjÓ÷–+#˚ e÷qe ø±s¡´ø£˝≤bÕìï yê´bÕs¡+ n+{≤s¡T.
Ç~ ìs¡+‘·se¡ TT ø=qkÕπ> ø±s¡´Áø£eT+>± u≤$+#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 ªªedüTe

Ô ⁄\ ø=qT>√\T, neTàø±\ Á|üÁøÏjT· <ë«sê dü+|ü<qä T ñ‘·Œ‹Ô #˚jT· &ÜìøÏ
˝Ò<ë dü+|ü<qä T Ä]®+#·&ÜìøÏ ìπs•∆ +∫q e÷qe ø±s¡´ø£˝≤|ü+.μμ
n<äTìø£ düe÷»+˝À yê´bÕs¡+ nìï ø±s¡´ø±˝≤bÕ\≈£î øπ +Á<ä _+<äTe⁄. yê´bÕs¡+˝À @<√ ˇø£ ø±s¡´ø£˝≤bÕ\qT
˝≤uÛ≤ù|ø£‘å √ ìs¡+‘·sêj·T+>± #˚jT· &É+ eTTKýÓTqÆ \ø£Då +. 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<qä T Ä]®+#˚ <Û´˚ j·÷\‘√
edüTùÔ de\ ñ‘·Œ‹Ô, ø=qT>√\T, neTàø±\T, |ü+|æD° ˝≤+{Ï ø±s¡´ø£˝≤bÕ\qT ìsê≥+ø£+>± #˚|fü ºÒ Á|üÁøÏjT˚ yê´bÕs¡+.μμ
yê´bÕs¡+ nH˚ |ü<+ä es¡øÔ +£ , yêDÏ»´+,yê{Ï nqTã+<ä es¡øÔ £ düV‰ü j·Tø±˝…q’ |ü+|æD,° u≤+øÏ+>¥, ;Ûe÷, s¡yêD≤
yÓTT<ä\>∑T nìï ø±s¡´ø£˝≤bÕ\ düe÷Vü‰s¡+>± #Ó|Œü e#·TÃ. Ä<ÛTä ìø£ Á|ü|+ü #·+˝À yê´bÕs¡+ e÷qe e‘·T\Ô ˝À n‘·´+‘·
Á|ü<ëÛ qyÓTqÆ ~. .
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£Då ≤\T

Ä]∆ø£ eéVü‰s¡eTT
yê´bÕs¡+ nH˚~ ˇø£ Ä]∆ø£ eéVü‰s¡+>± u≤$+#·ã&ÉT‘·T+~. Bì Á|ü<ëÛ qyÓTqÆ \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, eTqdü‘Ô ê«ìøÏ, Áù|eT, nqTsê>∑+ yÓTT<ä\>∑T yê{ÏøÏ düeTã+~+∫q
ø±s¡´ø£˝≤bÕ\qT yê´bÕs¡+>± #·÷&É˝eÒ TT. Ç+<äT˝À ‘·|Œü ìdü]>± edüTeÔ ⁄\T ˝Ò<ë ùde\≈£î dü+ã+~+∫q $ìjÓ÷>∑+
˝Ò<ë e÷]Œ&ç »]– ñ+&Ü*.
edüT,Ô 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+ã
nedüsê\ 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 <ëìì
ªªñ‘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. MEANING
Business is a major economic activity in all modern societies. It is connected with the production
and sale of goods and services required by people. The purpose behind business activities is to
earn money by meeting people’s demands for goods and services. Business can be defined as a
continuous economic activity involving the production and sale of goods and services undertaken
with 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 providing
or acquiring wealth through buying and selling goods.”
Business is central to our lives. Business refers to any occupation in which people regularly engage
in an activity with a view to earn profit. The activity may consist of production or purchase of goods
for 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 provides
any 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 of

goods 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 and
network of auxiliary services like distribution, banking, insurance, transport to provide goods and
services to the society at a profitable price.
1.1.2. CHARACTERISTICS OF BUSINESS
An economic activity
Business is considered to be an economic activity because its main objective is earning money or
livelihood. Normal and emotional activities like love, affection, sympathy, caring for a child or
any 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. Services
may include facilities offered to consumers in the form of transportation, banking, electricity, and
the like.
Production of goods and services

The main activity of business is to sell of goods or services to the needy people. If a person wants
to sell goods to others for consumption, he needs to acquire the goods first. Either he produces the
goods or acquires the goods from the producer. Thus, every business enterprise acquires the goods
from producers for further sale to consumers or users. The word service also occupies the same
meaning as goods in the concept of business.
5
edüTÔ ùde\ neTàø£eTT ˝Ò<ë e÷]Œ&ç:
ˇø±H=ø£ <Ûäs¡ e<ä› edüTÔ ùde\qT e÷]Œ&ç #˚j·T&É+ nH˚~ yê´bÕs¡+ jÓTTø£ÿ eTTKyÓTÆq \ø£åDeTT. edüTÔe⁄\qT ‘·q
kı+‘· nedüsê\ ø√dü+ ñ‘·Œ‹Ô #˚ùdÔ <ëìì yê´bÕs¡+ nq C≤\eTT. kı+‘· >∑ôVA|üjÓ÷>±\≈£î #˚ùd ñ‘·Œ‹Ô
ø±s¡´ø£˝≤bÕ\T yê´bÕs¡+ ø±C≤\e⁄. n+fÒ @<√ ˇø£ <Ûäs¡ e<ä› edüTÔ ùde\qT Ç‘·s¡T\≈£î e÷]Œ&ç #˚j·T&É+ ˝Ò<ë
neTà&Üìï yê´bÕs¡+>± uÛ≤$+#ê*.
ìs¡+‘·s¡ ø±s¡´ø±˝≤|ü+:
yê´bÕs¡+ nH˚~ ˇø£ ìs¡+‘·sêj·T+>± »]π> eéVü‰s¡+. ˇø£ e´øÏÔ ‘·qe<ä› ñqï ˇø£ edüTÔe⁄qT n$Tà‘˚ <ëìì
yê´bÕs¡+ nqC≤\eTT. Ä e´øÏÔ edüTÔe⁄\qT ˝≤uÛ≤s¡®q <äwæº‘√ ìs¡+‘·sêj·T+>± neTTà‘·÷ ñ+&Ü* .
˝≤uÛ≤ù|ø£:å
˝≤uÛ≤ù|ø£å yê´bÕsêìøÏ ÁbÕD+ e+{Ï~. yê´bÕs¡+˝À ˝≤uÛ≤\T edüTqÔ ï+‘· ø±\y˚T yê´bÕs¡ dü+düú J$düT+Ô ~. ˝≤uÛyÑ T˚
yê´bÕs¡ Á|üÁøÏjT· qT ñ‘˚»Ô |üsT¡ düT+Ô ~. ø±ì ˝≤uÛ≤\T düùV≤‘·Tø£+>±, Hê´j·TdüeTà‘·+>± ñ+&Ü*. neTàø±\qT ô|+#·&+É
˝Ò<ë e´j·÷\qT ‘·–Z+#·&É+ <ë«sê ˝≤uÛ≤\qT ô|+#·Tø√e#·TÃ.
˝≤uÛ≤\ nì•Ã‹:
yê´bÕs¡+˝À ô|{Ïºq ô|≥Tºã&ç øÏ ‘·–q |òü*‘·+ ˝≤uÛÑ+ s¡÷|ü+˝À edüTÔ+~. ◊‘˚ ˝≤uÛÑ+ K•Ã‘·+>± edüTÔ+~ nì
#Ó|üŒ˝ÒeTT. ˇø£ y˚\ ˝≤uÛÑ+ edüTÔ+<äì #Ó|üŒ>∑*–Hê n~ m+‘· yÓTT‘·Ô+˝À edüTÔ+<äH˚~ #Ó|üŒ˝ÒeTT. n+‘˚ ø±ø£
˝≤uÛÑ+ ˝Ò<ë qwüº+ sê&ÜìøÏ düe÷Hêeø±XÊ\T ñHêïsTT.
qwüº uÛj
Ñ 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|üŒ{ÏøÏ nqTø√ì dü+|òüT≥q\ e\q, yê´bÕs¡ ˇ&ç<äT&ÉT≈£î\ e\q Ä•+∫q neTàø±\T ˝Òø£ qcÕº\T e#˚Ã
neø±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_ÛsT¡ #·T\T, bòÕwüH‡é , 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˝≤ $düÔ‘·yÓTÆq~. es¡Ôø£eTT, yê´bÕs¡eTT eT]j·TT yêDÏ»éTT nH˚ |ü<ë\qT
eTqeTT #ê˝≤ m≈£îÿe>± yê&ÉT‘·T+{≤eTT. es¡øÔ e£ TT nH˚ |ü<eä TT edüTÔ ùde\ ø=qT>√\T neTàø±\≈£î dü+ã+~+∫q~.
ø±ì yê´bÕs¡eTT nH˚ |ü<eä TT˝À edüTùÔ de\ ñ‘·Œ‹Ô qT+&ç n$ |ü+|æD° »]π> es¡≈î£ ñqï nìï n+XÊ\T ˝…øÿ£ ˝ÀìøÏ
ekÕÔsTT. nq>± |ü]ÁX¯eT, es¡Ôø£eTT eT]j·TT yê{ÏøÏ nqTã+<äyÓTÆq nìï es¡Ôø£ düVü‰j·Tø±\T ø£\dæ ñ+{≤sTT.
yê´bÕs¡eTT jÓTTø£ÿ |ü]~ ˝ÀìøÏ düe÷»+˝À >∑\ nìï e÷qe nedüsê\T eT]j·TT e÷qe dü+ã+<ä ø±s¡´ø£˝≤bÕ\T
ekÕÔsTT. e÷q nedüsê\qT rs¡Ã>∑*π> nìï s¡ø±˝…’q edüTÔ ùde\qT n+~+#·&É+ ˝À Ç$T&ç ñqï nìï #·s¡´\qT
yê´bÕs¡+ #·]ÃdüTÔ+~.
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 services
Directly or indirectly, business involves transfer or exchange of goods and services for value. If goods
are produced not for the purpose of sale but say for internal consumption, it cannot be called a
business activity. Cooking food at home for the family is not business, but cooking food and selling it
to others in a restaurant is business. Thus, one of the essential characteristics of business is that there
should be sale or exchange of goods or services between the seller and the buyer.
Dealings in goods and services on a regular basis

Business involves sale of goods or services on a regular basis. One single transaction of sale or
purchase cannot be considered as business. For example, if a person sells his domestic radio set
even at a profit, it will not be considered a business activity. But, if he sells radio sets regularly, it will
be regarded as a business activity.
Profit earning
The main characteristic of business is to earn income by way of profit. No business can survive for
long time without earning profit. That is why businessmen make all possible efforts to maximize
profits, by increasing the volume of sales or reducing costs.
Uncertainty of return
Every business invests money to run its activities with an objective of earning profit. But it is not
certain that the business will earn profit or bare loss. Even if we earn profits from business, we
cannot assume what amount of profit will be earned. Also, there is always a possibility of losses being
incurred.
Element of risk
Risk and profits are the two variables of every business. Risk is caused by some unfavorable events
in 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 the
market, 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 inter
linked. Trade simply denotes purchase and sale of goods, whereas ‘business’ includes all activities
from production to distribution of goods and services. It includes industry, trade and other activities
like banking, transport, insurance, and warehousing which facilitate production and distribution of
goods 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, are
business 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\ qT
ã{Ïº 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<ë
yê´bÕs¡+˝À ‘êqT ∫es¡>± kÕ~Û+#ê\qT≈£îH˚ $wüj·T+. yê´bÕs¡ dü+düú jÓTTø£ÿ <Û˚´j·÷\˝À n‹ eTTKýÓTÆq~ edüTÔ
ùde\q+~+#·&É+ <ë«sê ˝≤uÛ≤s¡®q.
yê´bÕs¡ dü+düú nH˚~ düe÷»+˝À ˇø£ uÛ≤>∑+. ø±ã{Ïº BìøÏ ø=ìï kÕe÷õø£ uÛ≤<ä´‘·\T ≈£L&Ü e⁄+{≤sTT. ø±s=Œπs{Ÿ
kÕe÷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 ˝Òøb£ ˛˝Ò<Tä . ˝≤uÛ+Ñ MT<ä m≈£îÿe <äwæº ô|{Ïº $T–*q <Û´˚ j·÷\qT e~*y˚dqæ f…‘¢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˝ÀìøÏ
rdüTø=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÷¬sÿ{Ÿ ˝À ‘·q e~›øÏ
|ü⁄Hê<äT\T y˚dTü ø=+≥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÷¬sÿ{Ÿ ˝À dæsú |¡ &ü ≥É +

yê´bÕs¡ dü+düú e÷¬sÿ{Ÿ ˝À dæús¡ |ü&É≥+ nH˚~ ÁbÕ<Ûä$Tø£ <Û˚´j·T+. e÷¬sÿ{Ÿ ˝À ñqï $$<ä b˛{°<ës¡T\qT
m<äTs=ÿì $ìjÓ÷>∑<ës¡T\ ≈£î nedüs¡yÓTÆq, Äø£s¡¸D°j·TyÓTÆq, $\Te\‘√ ≈£L&çq edüTÔ ùde\q+~+#·&É+ e\q
$ìjÓ÷>∑<ës¡T\≈£î ‘·|æÔ #˚≈£L]Ãqf…Æ¢‘˚ yê´bÕs¡ dü+düú\T e÷¬sÿ{Ÿ ˝À ì\<=≈£îÿø√>∑\T>∑T‘êsTT.
qMø£sD¡
ø=‘·Ô Ä˝À#·q\qT, ø=‘·Ô edüTÔ ùde\qT düwæº+#·&É+ qMø£s¡D>± #Ó|üŒe#·TÃ. á qMø£s¡D ¬s+&ÉT s¡ø±\T
1.edüTÔ ùde\qT s¡÷bı+~+#·&+É ˝À qMø£sD¡ . 2. edüTÔ ùde\qT n+~+#·&+É ˝À q÷‘·q‘ê«ìï Çe«&É+. Á|üdTü ‘Ô e· TTqï
b˛{° Á|ü|+ü #·+˝À Á|ü‹ dü+düú q÷‘·q Ä$wüÿs¡D\qT s¡÷bı+~dü÷Ô ñ+&Ü* ˝Òøb£ ˛‘˚ e÷¬sÿ{Ÿ ˝À b˛{°ì ‘·≥Tºø=q˝Ò<Tä .
8
The scope of business encompasses all human activities, which tend to satisfy needs and wants of the
human beings living in a society. A large part of the business is concerned with providing the final or
finished products or goods to the people desiring them.
Business is universal and everywhere. It is essential to ensure the production and distribution of
goods and services to satisfy the economic wants of people at a profit. The nature and scope of
business are changing very quickly. The people, who are engaged in business, must have to cope with
the 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 organizations
produce goods and services to generate profit but such activities create impact on society as well as
the whole community. The responsibility of businessman is to provide the goods and services in a way
which 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 certain
objectives, which refer to all that the business people want to get in return for what they do. It is
generally believed that business activity is carried on only for profit. Business persons themselves
proclaim 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 several
objectives, including social responsibility to survive and prosper in the long run. Profit is found to be
the leading objective but not the only one. Although earning profit cannot be the only objective of
business, its importance cannot be ignored. Profit may be regarded as an essential objective of
business 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 of
society to earn immediate profit
Earning profits
One of the objectives of business is to earn profits on the capital employed. Profitability refers to
profit in relation to capital investment. Every business must earn a reasonable profit which is very
important for its survival and growth.
Productivity
If 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
9
eqs¡T\qT düeT≈£Ls¡TÃø=qT≥:
Á|ü‹ yê´bÕs¡ dü+düú ‘·q≈£î ø±e\dæq uÛÖ‹ø£ eT]j·TT $‘·Ô eqs¡T\qT düeT≈£Ls¡TÃø√yê*. dü+dü\ú T ‘·eT≈£î n+<äTu≤≥T˝À
ñqï eqs¡T\qT ñ|üjÓ÷–+#·Tø=+≥÷ yê{Ïì e~› #˚düTø√yê*.
Hêj·Tø£‘«· |ü]eƒ T ô|+bı+~+#·&+É

yê´bÕs¡ dü+dü\ú ˝À ìs¡jí ÷· \qT neT\T|üs#¡ ˚ uÛ≤<ä´‘· ô|’ kÕúsTT y˚TH˚CŸ yÓT+{Ÿ ≈£î ñ+≥T+~. ø=ìï dü+<Ûsä ê“¤\˝À
yês¡T ìs¡íj·÷\qT rdüTø=ì neT\T #˚j·T&É+ »s¡T>∑T‘·T+~. ìs¡«Vü≤≈£î\≈£î dü]jÓÆTq HÓ’|ü⁄D≤´\qT n+~+∫
dü+düúqT e~› #˚j·T&É+ ˝À yê]ì bÕÁ‘·<ës¡T\qT #˚j·T&É+ ≈£L&Ü dü+düú\ jÓTTø£ÿ Á|ü<Ûëq <Û˚´j·T+.
ñ<√´>∑T\ |üì‘·q+ eT]j·TT yÓK’ ]˝À e÷s¡TŒ

Á|ü‹ yê´bÕs¡ dü+düú ñ<√´>∑T\ ô|’ Ä<Ûës¡ |ü&ç |üì#˚düTÔ+~. ñ<√´>∑T\T ‘êeTT |üì #˚düTÔqï dü+düú |ü≥¢ dü]jÓÆTq
yÓ’Ks¡T\qT ø£*– ñ+&Ü* ˝Òì#√ Ä dü+düú ìπs∆•+∫q \øå±´\qT #˚s¡Tø=q˝Ò<äT. ø±ã{Ïº Á|ü‹ dü+düú ‘·q |üìyê]
$wüj·T+˝À Á|ü‘˚´ø£yÓTÆq ÁX¯<ä› #·÷|æ+#ê*. yês¡T ‘·eT |üìô|’ ÁX¯<ä› #·÷ù|˝≤ ìs¡íj·÷\T rdüTø√yê*. |üìyê]˝À
nqT≈£L\yÓTÆq yÓ’Ks¡T\T ô|+bı+~+#˚˝≤ #·÷&Ü*.
kÕe÷õø£ uÛ≤<Û´ä ‘·
yê´bÕs¡ dü+düú\T ‘êeTT @ düe÷»+˝À ◊‘˚ ø=qkÕ>∑T‘·THêïjÓ÷ Ä düe÷»+ jÓTTø£ÿ uÛ≤<ä´‘·\qT >∑T¬sÔs¡>±*.
düeTdü´\ |ü≥¢ kÕqT≈£L\+>± düŒ+~+#ê* . düeTdü´\qT ‘·eT<Óq’ XË*’ ˝À ‘·eTe+‘·T düV≤ü ø±s¡+‘√ |ü]wüÿ]+#·>\∑ >±*.
ø±ã{Ïº ˇø£ dü+düú düe÷»+ |ü≥¢, $ìjÓ÷>∑<ës¡T\ |ü≥¢, Á|üuÛÑT‘·«+ |ü≥¢ $TÁX¯eT <Û˚´j·÷\qT HÓs¡y˚s¡Ãe\dæ
ñ+≥T+~.
1. 2. yê´bÕs¡ |ü]düsê\T
Fig. 1.1
10
ensure continuous survival and progress, every enterprise must aim at greater productivity by the
best use of available resources.
Market standing
Market standing refers to the position of an enterprise in relation to its competitors. Business enterprise
must aim at standing on stronger footing in terms of offering competitive products to its customers
and serving them to their satisfaction.
Innovation
Innovation is the introduction of new ideas or methods in the way something is done or made. There
are two kinds of innovation in every business (i) innovation in product or service; and (ii) innovation
in the various skills and activities needed to supply them. No business enterprise can flourish in a
competitive world without innovation. Therefore, innovation becomes an important objective.
Physical and financial resources

Every 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 Business
enterprise must aim at acquiring these resources according to their requirements and use them efficiently.
Manager performance and development

Business enterprises need managers to conduct and coordinate business activity. Various programmes
for 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 attitude

Worker’s performance and attitudes determine their contribution towards productivity and profitability
of any enterprise. Management attitude towards workers in the enterprise determine the workers
attitude. Therefore, every enterprise must aim at improving its workers performance. It should also
try to ensure a positive attitude on the part of workers.
Social responsibility
Social responsibility refers to the responsibility and obligation of business firms to contribute for
solving social problems and work for society surrounded to it in a socially desirable manner. Thus, a
business enterprise must have multiple objectives to satisfy different individuals and groups, for its
own survival and prosperity.
11
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, uÛ÷Ñ $T, ˙s¡T e+{Ï yê{Ïì ø£*|æ |ü]düsê\T n+{≤s¡T. düJe uÛ≤>±ìï düJe |üsêés¡D nì, ÁbÕD+
˝Ò≈î£ +&Ü ìØ®e+>± ñqï uÛ≤>±ìï uÛÖ‹ø£ |üsêés¡D+ nì |æ\TkÕÔsT¡ .
Environment nH˚ |ü<+ä ˝À Á|üø£ ‹ |üsy¡ TÓ qÆ n+XÊ\T, kÕe÷õø£ n+XÊ\T kÕ+düÿ‹ø£ |üsy¡ TÓ qÆ n+XÊ\T ø£\dæ
ñHêïsTT. ˇø£ e´øÏÔ ˝Ò<ë dü+düú ‘·q J$‘· >∑eTq+˝À ‘·q #·T≥÷º ñqï Á|üø£ ‹, >±*, ˙s¡T, düe÷»eTT, dü+düÿ‹
eT]j·TT ‘·q J$‘êìï Á|üu≤Û $‘·+ #˚ùd nìï n+XÊ\ ø£\sTTø£H˚ |ü]düsê\T n+{≤s¡T. á |üsêés¡D+ uÛÖ‹ø£
|üsêés¡D+, kÕ+|òTæ ø£ |üsêés¡D+, eTH√Vü≤s¡yTÓ qÆ |üsêés¡D+, Ä]∆ø£ |üsêés¡D\T>± $uÛõÑ +#·e#·TÃ
1 .2. 2 . yê´bÕs¡ |ü]düsê\T

ªªyê´bÕs¡ dü+dü\ú |üìrs¡TqT Á|üu≤Û $‘·+ #˚jT· T n+XÊ\qT yê´bÕs¡ |ü]düsê\Tμμ nì ìs¡«∫+#·e#·TÃ . yê´bÕs¡ dü+dü\ú
|üì, rs¡T‘ÓqTï\qT nH˚ø£ n+XÊ\T Á|üu≤Û $‘·+ #˚kÕÔsTT. yê´bÕs¡d+ü dü\ú T düe÷»+˝À ˇø£ uÛ≤>∑+>± ìs¡«Væ≤+#·ã&ÉT‘·THêïsTT
ø±ã{Ïº düe÷»+˝À <Óq’ +~q n+XÊ\˝À @s¡Œ&˚ e÷s¡TŒ\≈£î Á|ü‘´· ø£+å >±qT, |üs√ø£+å >±qT Ç$ Á|üu≤Û $‘·+ ne⁄‘êsTT.
yê´bÕsêìøÏ yê{Ï |ü]düsê\≈£î n$HêuÛ≤e dü+ã+<Ûeä TT ñqï~. Á|üu≤Û $‘·+ #˚ùd $$<Ûä ø±s¡ø±\qT, yê{Ï˝Àì
e÷s¡TŒ\qT m|üŒ{Ïø|£ ⁄ü Œ&ÉT n<Û´ä q+ #˚d,æ $X‚w¢ +æ ∫ ‘·–q yê´bÕs¡ ìs¡j
í ÷· \qT, Á|üD≤[ø£\qT ‘·j÷· s¡T#˚dTü ø=qe\dæq
nedüs+¡ yê´bÕs¡ dü+dü\ú ≈£î ñqï~.
düe÷»+˝À nH˚ø£ |ü]düsê\ eT<ä´ yê´bÕs¡ dü+dü\ú T |üì #˚dTü +Ô {≤sTT. @ |ü]düsê\˝À yê´bÕs¡+ ‘·q ø±s¡´
ø£˝≤bÕ\qT ø=qkÕ–düT+Ô <√ yê{ÏH˚ yê´bÕs¡ |ü]düsê\T nì |æ\TkÕÔsT¡ . dü+dü≈ú î£ yÓ\T|ü\ ø±ì ˝Ò<ë ãj·T≥ ø±ì ñ+&ç,
<ëìô|’ dü+dü≈ú î£ ìj·T+Á‘·D≤~Ûø±s¡+ ñHêï , ˝Ò≈î£ Hêï yê´bÕsêìï Á|üu≤Û $‘·+ #˚ùd nìï n+XÊ\ düe÷Vü‰sêìï
ªªyê´bÕs¡ |ü]düsê\Tμμ >± ù|s=ÿqe#·TÃ.
1.2.3. yê´bÕs¡ |ü]düsê\T- \ø£Då ≤\T

Business Environment has been defined by Bayard O. Wheeler as “the total of all things
external to firms and industries which affect their organization and operation”.
Keith and Davis defines “Business environment is the aggregate of all conditions events
and influences that surround and affect it.”
As per the definition of S.P. Robbins and Mary Colters “Business environment refers to
institution or forces that effect the organizations performance”.
12
1. 2. BUSINESS ENVIRONMENT
1. 2.1. ENVIRONMENT
The 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 abiotic
factors such as light, air, water, soil etc.
The environment may comprise a combination of natural, social and cultural conditions which impact
the life of a person or community through broad application to the surroundings. This means that
environmental issues such as pollution, crime and noise should be considered. Environment is the sum
of conditions in which an organism has to survive or maintain its life process. It influences the growth
and development of living organism.
In other words, environment refers to those factors that surrounds living beings from all sides and
affect their lives . It consists of atmosphere, hydrosphere, lithosphere and biosphere. It’s chief
components are soil, water, air, organisms and solar energy. It has provided us all the resources for
leading a comfortable life.
1.2.2. BUSINESS ENVIRONMENT
The environment of any organization is the aggregate of all conditions, events and influences that
surround and affect it. Business environment encompasses the ‘climate’ or set of conditions which
include economic, social, political or institutional in which business operations are conducted. It consists
of several factors that affect the functioning, growth, profitability of the business. Factors that constitute
a business environment are customers, suppliers, competitors, investors, technology, economic
conditions, government etc. All these factors affect the success or failure of any business and bring
several opportunities, threats, and challenges to it.
According to Barry M. Richman and Melvgn Copen “Environment consists of factors that are
largely if not totally, external and beyond the control of individual industrial enterprise and their
managements. These are essentially the ‘givens’ within which firms and their management must operate
in 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 the
economic, governmental, market, supplier, technological, geographic, and social settings to determine
opportunities and threats to their firms.
From the above definitions we can extract that business environment consists of factors that are
internal and external which affect or influence the business. Proper understanding of the business
environment helps in framing better strategies as per business opportunities and enhances the overall
performance.
13
yê´bÕs¡ dü+dü≈ú î£ ãj·T≥ ñqï ø±s¡ø±\T:
yê´bÕs¡ |ü]düsê\T yê´bÕsêìøÏ ãj·T≥ ñqï X¯≈î£ \Ô ø£\sTTø£ >± #Ó|Œü e#·TÃ. yê´bÕsêìøÏ á n+XÊ\ô|’ ‘·–q
ìj·T+Á‘·D ñ+&É<Tä . Ç$ ãj·T≥ qT+&ç yê´bÕsêìï nH˚ø£ s¡ø±\T>± Á|üu≤Û $‘·+ #˚dTü +Ô {≤sTT.
kÕ<Ûës¡D eT]j·TT Á|ü‘´˚ ø£ X¯≈î£ \Ô T: yê´bÕsêìï Á|üu≤Û $‘·+ #˚ùd n+XÊ\T s¬ +&ÉT s¡ø±\T>± $uÛõÑ +#·e#·TÃ.
Á|ü‘´˚ ø£ X¯≈î£ \Ô T : Ç$ dü+düqú T ˝Òø£ |ü]ÁX¯eTqT Á|ü‘´˚ ø£+>± Á|üu≤Û $‘·+ #˚kÕÔsTT n+fÒ yê´bÕsêìøÏ , yê´bÕsêìøÏ
Ç$ y˚sT¡ y˚sT¡ >± ñ+{≤sTT. $ìjÓ÷>∑<ës¡T\T, düô|<¢’ ës¡T\T, b˛{°<ës¡T\T yÓTT<ä˝q’… $ Á|ü‘´˚ ø£ X¯≈î£ \Ô T >± #Ó|Œü e#·TÃ.
 kÕ<Ûës¡D X¯≈î£ \Ô T: Ç{Ïº |ü]düsê\T nìï yê´bÕs¡ dü+dü\ú , |ü]ÁX¯eT\ ô|q’ düe÷qyÓTqÆ Á|üu≤Û e+ #·÷|ü⁄‘êsTT.
ñ<ëVü≤s¡D≈£î kÕe÷õø£, »HêuÛ≤, kÕ+πø‹ø£ dü+ã+<äyTÓ qÆ |ü]düsê\T nìï yê´bÕsê\qT ˇπø$<Û+ä >± Á|üu≤Û $‘·+
#˚kÕÔsTT.
n+‘·s‘Z¡ · dü+ã+<ä+
yê´bÕs¡ |ü]düsê\˝À ñ+&˚ ø±s¡ø±\T n+‘·s‘Z¡ · dü+ã+<ä+ ø£*– ñ+{≤sTT. ˇø£ ø±s¡ø+£ jÓTTø£ÿ Á|üu≤Û e+ $T–*q
ø±s¡ø±\MT<ä ≈£L&Ü |ü&TÉ ‘·T+~. ñ<ëVü≤s¡D≈£î Á|üuTÑÛ ‘ê«\T e÷]q|ü⁄Œ&ÉT sê»ø°jT· ø±sêø±\ Á|üu≤Û e+, Hê´j·÷‘·àø£,
yê´bÕs¡, $<˚o , Ä]∆ø£ ø±s¡ø±\ô|’ |ü&ÉT‘·T+~. e÷s¡TŒ\≈£î ˝Àqe⁄‘·T+~
yê´bÕs¡ |ü]düsê\T ‘·s¡#·÷ e÷s¡TŒ\≈£î ˝Àqe⁄‘·÷ ñ+{≤sTT. ˇø£ e÷s¡TŒ Ç+ø=ø£ e÷s¡TŒ≈£î ø±s¡D+ ne⁄‘·T+~.
ø±ã{Ïº yê´bÕs¡ |ü]düsê\qT düJeyÓTÆq$>±qT düVü≤»yÓTÆq$>±qT #Ó|üŒe#·TÃ.
 nì•Ã‘·yÓTÆq$
yê´bÕs¡ |ü]düsê\T K∫Ã‘·yTÓ qÆ $ ø±e⁄. e÷s¡TŒ\≈£î >∑T] ne⁄‘·÷ e⁄+{≤sTT eT]j·TT nì•Ã‘·+>± ñ+{≤sTT. ˇø£
ø±s¡ø+£ ˝À e÷s¡TŒ e\q $T–*q ø±s¡ø±\T m≥Te+{Ï e÷s¡TŒ\≈£î ˝Àqe⁄‘êjÓ÷ #Ó|Œü ˝ÒeTT. e÷s¡TŒ nqT≈£L\+>±
ñ+&Ée#·TÃ ˝Ò<ë Á|ü‹≈£L\+>± ñ+&Ée#·TÃ.
Fig: 1.2
14
1.2.3. CHARACTERISTICS OF BUSINESS ENVIRONMENT
Totality of External Forces

Business environment is the mix of all those factors/forces which are available outside the business
and over which the business has no control. It is the group of many such forces that influence the
business.
Specific and General Forces

The 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, competitive
firms, investors and the like.
General
These forces affect all the firms of an industry equally, e.g., social, political, legal and technical situations.
Interrelatedness
The different factors of business environment are co-related. The effect of one factor may influence
many other factors. For example, let us suppose that there is a change in the import-export policy
with the coming of a new government.
In this case, the coming of new government to power and change in the import-export policy are
political and economic changes respectively. Thus, a change in one factor affects the other factor.
Dynamic Nature
As it is clear that environment is a mixture of many factors and changes in some or the other factors
continue to take place. Therefore, it is said that business environment is dynamic.
Uncertainty
Nothing can be said with any amount of certainty about the factors of the business environment
because they continue to change quickly. The professional people who determine the business strategy
take into consideration the likely changes beforehand.
But this is a risky job. For example, technical changes are very rapid. Nobody can anticipate the
possibility of these swift technical changes. Anything can happen, anytime. The same is the situation of
fashion.
Complexity
Environment comprises of many factors. All these factors are related to each other. Therefore, their
individual effect on the business cannot be recognised. This is perhaps the reason which makes it
difficult for the business to face them.
15
ãVüQfi¯ ø±s¡ø±\T
yê´bÕs¡ |ü]düsê\T ˝À #ê˝≤ ø±s¡ø±\T ñ+{≤sTT. Ç$ ˇø£<ëìø=ø£{Ï dü+ã+<ä+ ø£*– ñ+{≤sTT eT]j·TT á
dü+ã+<ëìï n+#·Hê y˚jT· ˝ÒeTT. BìøÏ ø±s¡D+ Äj·÷ ø±s¡ø±\≈£î yê´bÕsê\T $$<ä s¡ø±\T>± Á|üu≤Û $‘·eTÚ‘êsTT.
 dü+ã+<ä+
yê´bÕs¡ |ü]düsê\T düMT|ü |ü]düsê\‘√ dü+ã+<ä+ ø£*– ñ+{≤sTT. ø±ã{Ïº ˇø=ÿø£ÿ ÁbÕ+‘·+˝À ñqï
yê´bÕsê\T yê{Ï düMT|ü |ü]düsê\≈£î ˇø=ÿø£ÿ $<Ûä+>± Á|üuÛ≤$‘·+ ne⁄‘êsTT. Ç$ ˇø=ÿø£ÿ <˚X¯+˝À ˇø=ÿø£ÿ
$<Ûä+>±qT, ˇπø <˚X¯+˝À ÁbÕ+‘êìøÏ ÁbÕ+‘êìøÏ y˚πs $<Ûä+>±q÷ Á|üuÛ≤e+ #·÷|ü⁄‘êsTT.
1.2.4. yê´bÕs¡ |ü]düsê\T |ü]~ - ÁbÕeTTK´‘·

Á|üdüTÔ‘· yê´bÕs¡ Á|ü|ü+#·+˝À yê´bÕs¡ |ü]düsê\qT ns¡∆ #˚düTø=qe\dæq nedüs¡+ Á|ü‹ dü+düú≈£î ñqï~ . Ç~
yê´bÕsêìï n_Ûe~› |ü<+äÛ ˝À q&É|&ü ÜìøÏ, dü]jÓTÆ q Á|üD≤[ø£\T s¡∫+#·Tø√e&ÜìøÏ ñ|üj÷Ó >∑ |ü&TÉ ‘·T+~. yê´bÕs¡
|ü]düsê\ jÓTTø£ÿ |ü]~ì $$<ä ø±s¡ø±+XÊ\ düVü‰j·T+‘√ ns¡∆+ #˚düTø=q e#·TÃqT. yê´bÕs¡ neø±XÊ\qT
n&É¶+≈£î\qT, |ü]o*düTÔ+~.
yê´bÕs¡ |ü]düsê\ n<Ûä´j·Tq+ yê´bÕsêìøÏ dü+ã+~+∫q neø±XÊ\qT n+<äT˝Àì Çã“+<äT\qT ìX¯‘·+>±

$e]düT+Ô ~. Bì e\q neø±XÊ\qT n+~|ü⁄#·TÃø√e#·TÃ. u≤Vü≤´ |ü]kÕsê\ n<Û´ä j·Tq düV‰ü j·T+‘√ yê´bÕsêìøÏ
>∑\ Á|üe÷<ë\qT >∑eTì+∫ yê{Ïì m<äTs=ÿqe#·TÃ .
Á|üD≤[ø£\T s¡∫+#·&+É ˝ÀqT, ìs¡j

í ÷· \T rdüTø√e&É+˝ÀqT düV≤ü ø£]düT+Ô ~
yê´bÕs¡ $»j·÷ìøÏ Á|üD≤[ø± s¡#·q eTTKýÓTÆq~. yê´bÕs¡ |ü]düsê\ n<Ûä´j·Tq+ <ë«sê yê´bÕsêì≈£îqï
˝À≥TbÕ≥¢qT >∑eTì+∫ uÛÑ$wü´‘Y Á|üD≤[ø£\qT s¡∫+#·e#·TÃ.
ñ|üj÷Ó >∑øs£ y¡ TÓ qÆ eqs¡T\qT n+~düT+Ô ~

yê´bÕs¡+ |ü]düsê\ ô|’q Ä<Ûës¡ |ü&ÉT‘·T+~. á |ü]düsê\˝À nH˚ø£ s¡ø±\ eqs¡T\T ≈£L&Ü ø£\dæ ñ+{≤sTT.
yÓT{°Øj·T˝Ÿ, eT÷\<Ûqä +, ø±]à≈£î\T yÓTT<ä˝q’… ø±s¡ø±\ n<Û´ä j·Tq+ Ç+<äT˝À Ç$T&ç ñ+~. yê´bÕs¡ eqs¡T\n<Û´ä j·Tq+,
yê{Ï $ìjÓ÷>∑+ >∑T]+∫ Ç~ |ü]o*düTÔ+~.
HÓ|’ ⁄ü D≤´\qT ô|+#·T‘·T+~

ìs¡+‘·s¡ yê´bÕs¡ |ü]düsê\ n<Û´ä j·Tq+ e\q ìsê«Vü≤≈£î\≈£î |ü]düsê\ ô|’ |ü≥Tº ô|s¡T>∑T‘·T+~. Ç~ yê] Ä˝À#·Hê
X¯øìÔÏ e÷s¡TÃ‘·T+~. >=|üŒ ìs¡j
í ÷· \qT rdüTø=q&É+˝ÀqT, dü+düú #·s´¡ \qT ìj·T+Á‹+#·T≥ ˝ÀqT, dü+düqú T n_Ûe~›
|ü<ä+˝ÀìøÏ q&ç|æ+#·T≥≈£î Bì n<Ûä´j·Tq+ nedüs¡+.
e÷s¡TŒ\qT m<äTs=ÿH˚+<äT≈£î dæ<+›ä #˚dTü +Ô ~

|ü]düsê\ n<Ûä´j·Tq+ e÷s¡TŒ\qT n<Ûä´j·Tq+ #˚j·T&Éy˚T. ìs¡+‘·s¡+ e÷s¡T‘·Tqï |ü]düsê\T yê´bÕsêìï @
$<Ûä+>± Á|üuÛ≤$‘·+ #˚düTÔHêïjÓ÷ |ü]o*+#·&É+ Ç+<äT˝À Ç$T&ç ñqï~. e÷s¡T‘·Tqï yê´bÕs¡ |ü]düsê\≈£î
nqT>∑TD+>± yê´bÕs¡ dü+düú Á|üD≤[ø£\qT e÷s¡TŒ #˚jT· T≥≈£î, ìs¡+‘·se¡ TT e÷s¡TŒ\qT kÕ«>∑‹+∫ yê{Ïøq£ T>∑TD+>±
16
Relativity
Business environment is related to the local conditions and this is the reason as to why the business
environment happens to be different in different countries and different even in the same country at
different places.
1.2.4. IMPORTANCEAND SCOPE OF BUSINESSENVIRONMENT
Proper understanding of the business environment helps in framing better strategies as per business
opportunities and enhances the overall performance. Scope of Business Environment is explained in
points as given below:
Identifies Business Opportunities and Threats

Business environment helps business in identifying various opportunities and threats. When a business
is able to detect market opportunities intime, it can easily take advantage of such opportunity at
earliest. It can earn maximum returns by availing such opportunity before the competitors. By proper
interaction between business and its environment all threats can be easily detected. It will enable
business in taking corrective measures intime.
Helps in Planning and Policy Formulation

Proper understanding of business environment helps in formulating better policies and strategies. It
conveys all current information regarding market conditions to business. All opportunities and threats
are scanned through the study of the business environment. Businessmen are properly aware of
environment and thereby take all decisions according to it. Their entire plan can be changed effectively
and efficiently through environmental awareness.
Provides Useful Resources

Businesses depend on the environment in which they operate for several resources. Business
environment supplies several inputs like raw materials, capital and labour which are used by the
business for its operations. These inputs are converted into goods and services for satisfying the
needs of the market. Without proper supply of inputs, business cannot continue its operations. It is
fully dependent upon environment for taking inputs and delivering the required goods or services.
Improves Performance
Business environment has an effective role in accelerating the overall performance of business
organizations. Through continuous environmental awareness, managers update their knowledge and
skills. Environmental study serves as the medium of educating management. Monitoring of environment
provides qualitative information which helps in developing strategic thinking. It enables managers to
adopt suitable management practices to control and improve the performance of businesses.
Helps in Coping with Rapid Changes

Factors which constitute business environment are dynamic in nature. They keep changing continuously
from time to time. These changes include changes in customer’s preferences, fashion, technology,
economic conditions etc.
17
yê´bÕs¡ dü+düúqT n_Ûe~› #˚j·TT≥≈£î Ç~ Á|üj·T‹ïdüTÔ+~.
yê´bÕs¡ Á|ü‹wü̃ 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\qT
dü+‘·|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 düV≤ü ø£]düT+Ô ~

|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≥≈£î
ø±e\dæq Á|üD≤[ø£\qT ‘j·÷s¡T #˚j·Te#·TÃ. dü+düú ≈£î ñqï düyêfi¯q¢ T m<äTs=ÿq e#·TÃ. Á|üD≤[ø±j·TT‘·yÓTÆq
n<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 services
with profit motto.
2. Business enterprise: Business enterprise refers to a person or organisation spotting a business

opportunity and setting up a business.
3. Profit: Financial gain, especially the difference between the amount earned and the amount
spent in buying, operating, or producing something.
4. Insurance: An arrangement/ agreement by which a company undertakes to provide a guarantee

of compensation for specified loss, damage, illness, or death in return for payment of a specified
premium.
5. Capital investment: A capital investment is defined as a sum of cash acquired by a company to

pursue its objectives, such as continuing or growing operations. It also can refer to a company’s
acquisition 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 the
manufacture of a good or the provision of a service.
7. Strategies: a plan of action designed to achieve a long-term or overall aim.
18
Proper understanding of the business environment helps business in detecting all these frequently
occurring changes easily. It enables them in dealing with these changes efficiently by taking appropriate
actions at right time. Managers through continuous monitoring of environment are sensitive to such
changes and respond accordingly.
Enhances Business Image

Business through proper understanding of its environment are able to improve its public image. They
are more responsive and sensitive to the environmental needs through proper knowledge of business
environment. Study of environment provides them information for making realistic plans and
implementing them effectively. Businesses are able to provide better service and serve the interest of
entire society. People are happy with the business and develop confidence towards it. This enables in
developing a better image in market.
Assists in Facing Competition

Business environment communicates all details about competitors in market to business. Awareness
regarding the actions and strategies of competitors is crucial for every business for meeting competition
effectively. It helps business in formulating plans and policies in accordance with the competitor’s
actions. Businesses are able to face challenges and competition in market through systematic planning
in 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 organisms
in an ecosystem and include animals, plants, microorganisms, dead organisms, and even animal
waste.
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 important
abiotic 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 financial
investments.
12. Business Environment: It is the sum total of all the factors that can influence a business.
19
TEST YOUR UNDERSTANDING
1. Which of the following is not an economic activity?

A) A doctor practicing
B) A lawyer practicing law
C) A professional cricketer playing cricket
D) A student playing cricket
2. Which of the following is not a characteristic of a business?

A) Production of goods and services
B) Sale or exchange of goods and services
C) Profit earning
D) Certainty of return
3. Which of the following is an objective of a business?

A) Innovation
B) Worker performance and attitude
C) Social responsibility
D) 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 because
A) Doesn’t involve production of anything new
B) Doesn’t involve profit motto
C) Doesn’t fulfil human wants
D) All the above
6. The term business environment refers to ……..factors which impact functioning of a firm
A) External factors
B) Internal factors
C) Management related factors
D) Internal and External factors
7. Which of the following is not a feature of Business Environment

A) Interrelated elements
20
B) Dynamic nature
C) Complexity
D) Continuity
8. Which of the following is not a General force on a business

A) Political situation
B) Social situation
C) Competitive firms
D) Legal situation
9. Factors which are beyond the control of a business are called…..

A) Supply
B) Demand
C) Profit
D) External factors
10. Which of the following is the useful outcome of the study of business
A) Identifies Business Opportunities and Threats
B) Helps in Planning and Policy Formulation
C) Helps in Coping with Rapid Changes
D) All the above
ANSWERS
1 2 3 4 5 6 7 8 9 10
D D D A D D D C D D
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.
21
22
Dimensions of Business
Environment and
Environmental Analysis
Learning Outcomes:

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 Layout:
Chapter
2.1. Dimensions of Business Environment
2
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
23
n<Û ë ´j· T ne˝Àø£ q +
yê´bÕsê\qT |Á uü ≤Û $‘·+ #ù̊d n+XÊ\qT yê´bÕs¡+ |ü≥¢ yê{ÏøÏ ñqï |Á ‘ü ´˚ ø£‘\· T, yê´bÕs¡+ô|’ yê{Ï
Á|üuÛ≤e kÕúsTT, yê´bÕs¡+ yê{Ïì @ kÕúsTT˝À m<äTs=ÿq>∑\e⁄, yê´bÕsê\‘√ yê{Ï nqTdü+<Ûëq+
eT]j·TT yê{Ï ñìøÏ e+{Ï yê{Ï Ä<Ûës¡+>± eØZø]£ +#·ã&É‘êsTT. |Á dü Tü ‘Ô · n<Ûë´j·T+ yê´bÕsê\qT
Á|üuÛ≤$‘·+ #˚ùd eT]j·TT yê´bÕs¡ |ü]düsê\ ˝Àì $$<Ûä ø√D≤\˝À eØZø£]+#·>∑\ $$<Ûä n+XÊ\qT
$e]+#·&ÜìøÏ |Á j ü T· ‹ïdüT+Ô ~.
yê´bÕsê\qT Á|üuÛ≤$‘·+ #˚ùd düeTdü´\T eT]j·TT n$ yê´bÕsê\qT m˝≤ Á|üuÛ≤$‘·+ #˚j·T>∑\y√

‘Ó\TdüTø√e&É+ ìs¡íj·÷\T rdüTø√e&É+˝À #ê˝≤ eTTK´+. á düeTdü´\qT ˝Ò<ë ø±s¡ø±\qT m˝≤
>∑T]Ô+#ê\H˚ <ëìô|’ <äwæº kÕ]+∫q n<Ûä´j·Tq+ |üsêés¡D $X‚¢wüD>± |æ\Teã&ÉT‘·T+~. uÛÑ$wü´‘·TÔ˝À
yê´bÕs¡ yê‘êes¡D+˝À m˝≤+{Ï e÷s¡TŒ\T #√≥T#˚düT≈£î+{≤j·TH˚ <ëì >∑T]+∫ ≈£L&Ü ˇø£ yê´bÕs¡
y˚‘Ô· Ä˝À∫+∫ ñ+&Ü*. Bìì |üsêés¡D dü÷#·q n+{≤s¡T. mì«sêHéyTÓ +≥˝Ÿ kÕÿì+>¥ nH˚~ yê´bÕs¡
|ü]düsê\ ô|’ <äwæº ô|fÒº Á|üÁøÏj·TqT dü÷∫düTÔ+~. Á|üdüTÔ‘· n<Ûë´j·T+ |üsêés¡D $X‚¢wüD jÓTTø£ÿ \øå±´\ô|’
<äwæºì πø+ÁBø£]düTÔ+~, |üsêés¡D dü÷#·qqT ìs¡«∫düTÔ+~. SWOT $X‚¢wüD eT]j·TT PESTLE
$X‚¢wüD e+{Ï |üsêés¡D kÕÿì+>¥ jÓTTø£ÿ $$<Ûä |ü<ä∆‘·T\qT $X‚¢wædüTÔ+~
24
CHAPTER OVERVIEW
All the factors that can influence businesses are classified based on their
features such as their specificity towards a business, their level of impact
on a business and to what level a business can manage them, their
connection with the businesses and their point of presence with respect to
a business. The present chapter tries to bring out various factors that can
influence businesses and classify them among different dimensions of
business environment.
Being aware of what issues can affect businesses and how they can affect a
business is very important in making decisions. A study focused on how to
identify these issues or factors is called as environmental analysis. One
must also have an idea of what changes might take place in business
environment in future to keep oneself prepared and make decisions. This
is called as environmental forecasting. Environmental scanning refers to
process by which one keeps an eye on business environment. Present
chapter throws a light on objectives of environmental analysis, define
environmental forecasting and bring out different methods of environmental
scanning like SWOT analysis and PESTLE analysis.
25
2.1.yê´bÕs¡ |ü]düsê\ eØZø£s¡D
yê´bÕs¡ ø±s¡´ø£˝≤bÕ\qT Á|ü‘´· ø£+å >± >±ì |üs√ø£+å >± >±ì Á|üu≤Û $‘·+ #˚ùd ø±s¡ø±\qT $$<ä esêZ\T>± $uÛõÑ +#·&+É
»]–+~. BìH˚ yê´bÕs¡ |ü]düsê\ eØZø£s¡D n+{≤s¡T. yê´bÕs¡ eédüú ‘√ ñqï dü+ã+<ëìï ã{Ïº yê´bÕs¡
|ü]düsê\qT #ê˝≤ s¡ø±\T>± $uÛÑõ+#·&É+ »]–+~. M{Ï˝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+>± eédüj

ú TÓ Tø£ÿ |ü]~ ˝À ñ+&ç yê{Ïì dü+düú ìj·T+Á‘·D #˚ùd $<Û+ä >± ñ+{≤sTT.
Ç$ #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+düú
jÓTTø£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·TT
Hê´j·÷‘·àø£ |ü]düsê\T, »HêuÛ≤ |ü]düsê\T, uÛ÷Ñ uÛÖ‹ø£ |ü]düsê\T yÓTT<ä˝q’… yê{Ïì ãVæ≤s¡‘Z · |ü]düsê\T >± #Ó|Œü e#·TÃ.
Ç$ ìj·T+Á‹+#·˝Òì $<Ûä+>± ñ+{≤sTT.
Fig-2.1
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\T
n+{≤s¡T. yê´bÕs¡ dü+düú\T ìs¡íj·÷\T rdüTø√e&É+˝À Ç$ Á|ü<Ûëq bÕÁ‘· eVæ≤kÕÔsTT. M{Ï˝À eTTKýÓTÆq$.
$\Te\ $<ÛëqeTT
Á|ü‹ yê´bÕs¡ dü+düú ‘·q ø±s¡´ø±˝≤bÕ\qT ø=qkÕ–+#·&É+˝À ø=ìï $\Te\qT bÕ{ÏdüTÔ+{≤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 ‘·–q
ÁbÕ<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|˙\qT
ìs¡sí TT+#·Tø=+≥T+~.
dü+düú $<ÛëqeTT eT]j·TT <Û˚´j·÷\T

Á|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
26
2.1. DIMENSIONS OF BUSINESS ENVIRONMENT
The dimension of the business environment refers to the factors and forces which constitute direct or
indirect 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, the
internal environment and external environment.
The internal factors are generally regarded as controllable factors because the company has control
over these factors, these factors can be easily managed. The external factors are beyond the control
of 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 as
uncontrollable factors.
Some of the external factors have a direct and close impact on the firm. These factors are classified
as micro environment. There are other external factors which affect an industry very generally. They
are 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 called
internal environment of the business. They include a value system, Vision, Mission and Objectives,
Management Structure and Nature, Internal Power Relationship, Human Resources and Company
Image and Brand Equity.
Value System
The value system of the founders and those at the helm of affairs has important bearing on the choice
of business, the mission and objectives of the organization, business policies and practices. It is a
widely acknowledged fact that the extent to which the value system is shared by all in the organization
is an important factor contributing to success. The value system and ethical standards are also among
the 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 were
responsible for the voluntary incorporation in the Articles of Association of TISCO, its social and
moral 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 profitable
businesses (liquor) of the ailing Parry group was sold off as the liquor business did not fit into the value
system of the Murugappa group.
Vision, Mission and Objectives

The business domain of the company, priorities, direction of development, business philosophy, business
policy etc., are guided by the vision mission and objectives of the company.
27
ìs¡sí TT+#·Tø=ì <ëìø£qT>∑TD+>± Á|üD≤[ø£\qT dü+kÕú>‘∑ · ìs¡j
í ÷· \qT rdüTø=ì eTT+<äT≈£î b˛‘·T+~. M{ÏHê<Ûës¡+>±H˚
dü+dü\ú jÓTTø£ÿ |üìrs¡T eT]j·TT dü+düú $»j·÷\T n+#·Hê y˚jT· &É+ »s¡T>∑T‘·T+~. ˇø£ dü+düú jÓTTø£ÿ ÁbÕeTTK´‘·\T,
n_Ûe~› #·s¡´\T, yê´bÕs¡ dæ<ë›+‘ê\T yÓTT<ä˝…’q$ $»Hé-$TwüHé eT]j·TT \øå±´\T Á|üuÛ≤$‘·+ #˚kÕÔsTT.
ìs¡«Vü≤D ≈£Ls¡TŒ -dü«uÛ≤eeTT

yê´bÕs¡ dü+düú\jÓTTø£ÿ ìs¡«Vü≤D $<ÛëqeTT, uÀsY¶ Ä|òt &Ó’¬sø£ºs‡Y ìj·÷eTø£+, yê] jÓTTø£ÿ HÓ’|ü⁄D´‘·\T eédüú jÓTTø£ÿ
ìs¡«Vü≤DqT Á|üuÛ≤$‘·+ #˚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\T

eédüú˝À ô|’ kÕúsTT y˚TH˚CŸ yÓT+{Ÿ n+~+#˚ düVü‰ø±sêìï ã{Ïº 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<√´>∑dTü \Ô eT<Û´ä ñqï dü+ã+<ä+ yê´bÕs¡ ìs¡jí ÷· \≈£î eT]j·TT yê´bÕs¡ $»j·÷ìøÏ <√Vü≤<ä |ü&TÉ ‘·T+~.
e÷qe eqs¡T\T
dü+düú\ ˝À |üì#˚ùd e÷qe eqs¡T\ s¡÷bÕ˝…’q HÓ’|ü⁄D≤´\T, ˙‹ ìj·Te÷\T, ìã<ä›‘· e+{Ï$ dü+düú\ jÓTTø£ÿ
ã˝≤\T eT]j·TT ã\V”≤q‘·\T>± ne‘·]kÕÔsTT. düe÷»eT˝À e÷s¡T‘·Tqï |ü]dæ‘Ô T· \qT ã{Ïº dü+düqú T e÷s¡TÃø√e&ÜìøÏ
ø=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¡TŒqT
Áb˛‘·‡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 $‘·Ô düVü‰j·T+, dü+jÓ÷>±\T
yÓTT<ä\>∑T dü+<Ûësê“¤\˝À dü+düú≈£îqï Á|ü‹wü˜ u≤>± ñ|üjÓ÷>∑ |ü&ÉT‘·T+~. e÷¬sÿ{Ï+>¥ eT<Ûäés¡TÔ\qT
ìs¡ísTT+#·Tø√e&É+˝ÀqT, neTàø£|ü⁄ ø±+Á{≤≈£îº\qT, ø=‘·Ô edüTÔe⁄\ ‘·j·÷Ø ˝Àq÷ á Á|ü‹wü̃ ñ|üjÓ÷>∑ |ü&ÉT‘·T+~.
Áu≤+&é áøÏ«{° ≈£L&Ü #ê˝≤ dü+<Ûäsê“\˝À dü+düú ≈£î ñ|üø£]düTÔ+~. Ç+ø± nH˚ø£ s¡ø±˝…’q n+‘·s¡Z‘· |ü]düsê\T
yê´bÕsêìï Á|üuÛ≤$‘·+ #˚kÕÔsTT n$.dü+düú≈£îqï ÄdüTÔ\T, dü<äTbÕj·÷\T, ñ‘·Œ‹Ô düeTs¡∆‘·, kÕ+πø‹ø£‘·qT ñ
|üj÷Ó –+#·Tø=q&É+ yÓTT<ä\T>∑Tq$ yê´bÕs¡+˝À b˛{°ì ‘·≥Tºø=q&É+ ˝À ñ|üø]£ kÕÔsTT. |ü]XÀ<Ûqä 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÷¬sÿ{Ï+>¥ eqs¡T\T, eT<Ûäés¡TÔ\T, Áu≤+&é $\Te, |ü+|æD° HÓ{Ÿ esYÿ yÓTT<ä˝…’q$ dü+düú jÓTTø£ÿ e÷¬sÿ{Ï+>¥
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&Ü
yê´bÕs¡+ jÓTTø£ÿ kÕÔsTTì Á|üuÛ≤$‘·+ #˚düTÔ+~.
28
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 Nature

The organizational structure, the composition of the Board of Directors, extent of professionalisation
of management etc., are important factors influencing business decisions. Some management structures
and styles delay decision making while some others facilitate quick decision making.
The share-holding pattern can have important managerial implications. There are very large companies
where majority of the share is held by the promoters like Wipro and there are large firms where the
promoters’ position is very vulnerable like the Tata group of companies. Financial institutions have
large share holding in many Indian companies. The stand of nominees of financial institutions can be
very decisive in several critical instances.
Internal Power Relationship

Factors 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 their
implementation. The relationship between the members of Board of Directors and between the chief
executive and the Board are also critical factors.
Human Resources
The characteristics of the human resources like skill, quality, morale, commitment, attitude etc., could
contribute to the strength and weakness, of an organization. Some organizations find it difficult to
carry out restructuring or modernization because of resistance by employees whereas they are smoothly
done in some others. The involvement, initiative etc., of people at different levels may vary from
organization to organization. The organizational culture and overall environment have bearing on
them.
Company Image and Brand Equity

The 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 Factors
There are a number of other internal factors which contribute to the business success or influence the
decision-making. They include the following.
 Physical assets and facilities like the production capacity, technology and efficiency of the
productive apparatus, distribution logistics etc., are among the factors which influence the
competitiveness of a firm.
 R & D and Technological Capabilities, among other things, determine a company’s ability
to innovate and compete.
29
2.1.2. ãVæ≤s¡Z‘· |ü]düsê\T
yê´bÕs¡ |ü]düsê\T nH˚ e÷≥ |üP]Ô>± ãVæ≤s¡Z‘· |ü]düsê\πø #Ó+<äT‘·T+~. ãVæ≤s¡Z‘· |ü]düsê\T nq>± dü+düú ≈£î
yÓ\T|ü\ ñ+&ç dü+düúqT Á|üuÛ≤$‘·+ #˚ùd ø±s¡ø±\T. M{Ï˝À ø=ìï ø±s¡ø±\T Á|ü‘·´ø£å+>±qT ø=ìï |üs√ø£å+>±qT
yê´bÕsêìï Á|üuÛ≤$‘·+ #˚kÕÔsTT. ◊‘˚ á ãVæ≤s¡Z‘· ø±s¡ø±\T dü+düú jÓTTø£ÿ ìj·T+Á‘·D˝À ñ+&Ée⁄. á ãVæ≤s¡Z‘·
ø±s¡ø±\qT dü÷ø£åà ø±s¡ø±\T eT]j·TT dü÷ú\ ø±s¡ø±\T>± $uÛÑõ+#·e#·TÃ.
Fig.2.2
2.1.2.1.dü÷ø£àå ø±s¡ø±\T
yê´bÕs¡ eédüú\˝À $ìjÓ÷>∑<ës¡T\≈£î ùde\T n+~+#·≥+˝À Á|ü‘·´ø£å+>±qT, n‹ <ä>∑Zs¡>±qT ñ+&ç Á|üuÛ≤e+
#·÷ù| ø±s¡ø±\T dü÷ø£àå ø±s¡ø±\T>± ù|s=ÿqe#·TÃ. Ç$. düô|<¢’ ës¡T\T, |ü+|æD<° ës¡T\T, b˛{°<ës¡T\T, $ìjÓ÷>∑<ës¡T\T
eT]j·TT kÕ<ës¡D Á|ü»\T >± #Ó|üŒe#·TÃ.
düô|<¢’ ës¡T\T
dü÷ø£åà |ü]düsê\˝À Ç~ Á|ü<ÛëqyÓTÆq~. Á|ü‹ dü+düú≈£î ø=+‘·eT+~ düô|’¢<ës¡T\T ñ+{≤s¡T. Ms¡T eTT&ç|ü<ësê›\qT
˝Ò<ë Ç‘·s¡ edüTÔe⁄\qT düô|’¢ #˚düTÔ+{≤s¡T. á düô|’¢<ës¡T\ jÓTTø£ÿ ìã<ä›‘·, $XÊ«dü+ ô|’ dü+düú jÓTTø£ÿ eTqT>∑&É
Ä<Ûës¡|&ü ç ñ+≥T+~. Ms¡T düô|¢’ #˚ùd yÓT{°Øj·T˝Ÿ qT ã{Ïº dü+dü\ú jÓTTø£ÿ edüTeÔ ⁄\ HêD´‘· Ä<Ûës¡ |ü&ç ñ+≥T+~.
Ms¡T yÓT{°Øj·T˝Ÿ düô|’¢ #˚j·T&É+˝À nì•Ã‹ ñqïf…Æ¢‘˚ dü+düú\T eTT&ç|ü<ësê›\qT m≈£îÿe>± ì\« ñ+#·Tø√e\dæ
edüTÔ+~. ø±ã{Ïº m≈£îÿe eT÷\<ÛäHêìï yÓ∫Ã+#·e\dæ edüTÔ+~. ø±ã{Ïº düô|’¢<ës¡T\qT m+#·Tø√e&É+ ˝À dü+düú\T
C≤Á>∑‘·Ô eVæ≤+#ê*.
Fig.2.3
30
 Marketing Resources like the organization for marketing, quality of the marketing men, brand
equity and distribution network have direct bearing on marketing efficiency. They are also
important for brand extension, new product introduction etc.
 Financial factors like financial policies, financial position and capital structure are also important
internal environment affecting business performances, strategies and decisions.
2.1.2. EXTERNAL ENVIRONMENT

The term business environment, generally, refers to external environment and includes factors which
are outside the control of the enterprise. Some of the external factors have a direct and intimate
impact on the business enterprise. These factors are classified into micro environment and macro
environment.
2.1.2.1 . MICRO ENVIRONMENT

“The micro environment consists of the factors in the company’s immediate environment that affects
the 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.
Suppliers
An important force, in the micro environment of a company is the suppliers. The suppliers are those
who supply the inputs like raw materials and components to the company. The importance of reliable
sources of supply to the smooth functioning of the business is obvious. Uncertainty regarding the
supply or other supply constraints often compels companies to maintain high inventories causing cost
increases.
It had been pointed out that factories in India maintained indigenous stocks of 3-4 months and imported
stocks 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.
Customers
The major task of a business is to create and sustain customers. A business exists only because, of its
customers. Monitoring the customer sensitivity is, therefore, a prerequisite for the business’ success.
A company may have different categories of consumers like individuals, households, industries and
other commercial establishments, government and other institutions.
31
$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 $ìjÓ÷>∑<ës¡T\
nedüsê\qT e÷s¡T‘·Tqï ø√¬sÿ\qT, n_Ûs¡T#·T\qT, n\yê≥¢qT >∑eTì+∫ yê{Ïì ‘·|æÔ |üs¡#˚$<Ûä+>± ‘·eT
ø±s¡´ø£˝≤bÕ\qT n_Ûe~› #˚düTø√yê* ˝Òø£ b˛‘˚ yê{Ï 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“¤\˝À
dü+düú\qT eT÷ùdy˚j·Te\dæq |ü]dæú‹ ñ+≥T+~. ø±ã{Ïº dü+düú\T kÕ<ÛäýÓTÆq+‘· m≈£îÿe eT+~ $ìjÓ÷>∑<ës¡T\T
ñ+&˚≥≥T¢ #·÷düTø√yê*.
>√¢ã˝…C’ wÒ Hü é e∫Ãq ‘·sê«‘· dü+dü\ú T jÓTTø£ÿ |ü]düsê\T <˚X¯ m\¢\T <ë{Ï Á|ü|+ü #·+ n+‘·{øÏ Ï $dü]Ô +#êsTT. e÷¬sÿ{Ÿ
≈£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+#· $ìjÓ÷>∑<ës¡T\T >±
e÷sês¡T. b˛{° K+&Ü‘·sê\T <ë{Ï+<äì #Ó|üŒe#·TÃ.
b˛{°<ës¡T\T
yê´bÕs¡ eédü\ú |üìrs¡T b˛{°<ës¡T\ô|’ Ä<Ûës¡ |ü&ç e⁄+≥T+<äq&É+˝À n‹X¯j÷Ó øÏ˝Ô <Ò Tä . dü+düú jÓTTø£ÿ edüTeÔ ⁄\≈£î
düe÷qyÓTÆq edüTÔe⁄\T ˝Ò<ë Á|ü‘êé÷ïj·T edüTÔe⁄\qT ‘·j·÷s¡T #˚ùd dü+düú\T e÷¬sÿ{Ÿ ˝À b˛{°<ës¡T\T>±
uÛ≤$+#·ã&É‘ês¡T. ˇø£ $ìjÓ÷>∑<ës¡T ‘êqT Ks¡TÃô|≥º<ä\#·Tø=qï yÓTT‘êÔìï <˚ìô|’ ñ+#ê* nH˚ dü+<äs¡“¤+˝À á
b˛{°<ës¡T\ edüTÔe⁄\T ˝Ò<ë Á|ü‘êé÷ïj·T edüTÔ\T Á|üuÛ≤e+ #·÷|ü⁄‘êsTT. ø±ã{Ïº b˛{°<ës¡T\T>± ì*#˚ dü+düú\T
˝Ò<ë Ç‘·s¡ Á|ü‘êé÷ïj·T dü+dü\ú T yê´bÕs¡ eédü\ú |üìrs¡TqT Á|ü‘´· ø£+å >± eT]j·TT |üs√ø£+å >± Á|üu≤Û $‘·+ #˚kÕÔsTT.
e÷¬sÿ{Ï+>¥ eT<Û´ä es¡T\Ô T

@ yê´bÕs¡ eédüú¬ø’Hê e÷¬sÿ{Ï+>¥ 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˝…’q
nH˚ø£ n+XÊ\˝À |ü+|æD<° ës¡T\ô|’ Ä<Ûës¡|&ü ‘É êsTT. á kÂø£sê´\˙ï düs¬ q’ düeTj·T+˝À n+~+#·Tq≥T¢ |ü+|æD<° ës¡T\T
˝Òø£b˛‘√ dü+düú\T Çã“+<äT\≈£î >∑T]e⁄‘êsTT
$‘·Ô düV‰ü 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&ç
ñ+≥T+~. nedüsy¡ TÓ qÆ düeTj·÷\˝À ø±e\dæq Á<äe´ düV‰ü j·÷ìï n+~+#·&ÜìøÏ dü]jÓTÆ q dü+dü\ú qT m+#·Tø√yê*.
Bìì Ä<Ûës¡+>± #˚düTø=H˚ Á|üD≤[ø£\T s¡∫+#·Tø√e&É+ »s¡T>∑T‘·T+~. ø±ã{Ïº $‘·Ô dü+düú\T yê´bÕsêìøÏ n‘·´+‘·
nedüsy¡ TÓ qÆ |ü]düsê\T.
düe÷»+
ˇø£ yê´bÕs¡ dü+düú @ düe÷»+˝À ◊‘˚ q&ÉTdüT+Ô <√ <ëì #·T≥÷º Äe]+∫ ñqï Á|üC≤˙ø£+ ≈£L&Ü eTTKýÓTqÆ dü÷ø£àå
|ü]düsê\T>± uÛ≤$+#ê*. Ç<˚ n‹ eTTKýÓTqÆ ~. 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+~.
32
Depending on a single customer is often too risky because it may place the company in a poor
bargaining position, apart from the risks of losing business, consequent to the winding up of business
by 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 only
that the markets of other countries are becoming more open, the Indian market is becoming more
exposed to the global competition and the Indian customer is becoming more “global” in his shopping.
Competitors
A firm’s competitors include not only the other firms which market the same or similar products but
also all those who compete for the discretionary income of the consumers. For example, the competition
for a company’s televisions may come not only from other television companies. If the consumer
decides to spend his discretionary income on recreation, he will still be confronted with a number of
alternatives to choose from like T.V., stereo, two-in-one, three-in-one etc. The competition among
such alternatives which satisfy a particular category of desire is called generic competition.
Marketing Intermediaries
The immediate environment of a company may consist of a number of marketing intermediaries which
are “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 company
find customers or close sales with them”, physical distribution firms which “assist the company in
stocking and moving goods from their origin to their destination such as warehouses and transportation
firms; marketing service agencies which “assist the company in targeting and promoting its products
to the right markets such as advertising agencies, marketing research firms, media firms and consulting
firms; and financial intermediaries which finance marketing activities and insure business risks.
Marketing intermediaries are vital links between the company and the final consumers. A dislocation
or disturbance of the link, or a wrong choice of the link, may cost the company very heavily. Hindustan
Lever faced major challenge when there is a collective boycott in Kerala on the issue of trade margin.
Financiers
Another important micro environmental factor is the financiers of the company. Besides the financing
capabilities, their policies and strategies, attitudes could not be implemented without a good financing
institution to the firm. Hence the financers are also an important micro environment to the firm.
Public
A company may encounter certain public in its environment. Public is any group that has an actual or
potential interest in or impact on an organization’s ability to achieve its interests. Media , voluntary
organizations, and local citizens are some examples.
33
2.1.2.2.dü ÷ ú \ |ü ] dü s ê\T
yê´bÕs¡ dü+dü\ú T ìj·T+Á‘·D #˚jT· ˝Òì |ü]düsê\qT dü÷\ú |ü]düsê\T n+{≤s¡T. yê´bÕs¡ dü+dü\ú ≈£î dü÷ø£å |ü]düsê\ø£+fÒ
dü÷ú\ |ü]düsê\ô|’ |ü≥Tº ‘·≈£îÿe>± ñ+≥T+~. dü+düú\T á dü÷ú\ |ü]düsê\qT m+‘·es¡≈£î ne>±Vü≤q #˚düTø=ì
yê{Ïì Ä#·]kÕÔjÓ÷, yê{Ïì nqTø£]kÕÔjÓ÷ <ëìì Á|üø±s¡y˚T Ä dü+düú\ jÓTTø£ÿ $»j·÷\qT ˝…øÏÿ+#·e#·TÃ. á
dü÷\ú |ü]düsê\qT n+‘· düT\Te⁄>± eTq≈£î nqT≈£L\+>± e÷s¡TÃø=q˝ÒeTT. eTqy˚T yê{ÏøÏ nqT≈£L\+>± ìs¡j í ÷· \T
rdüTø√yê*.
Fig.2.4
Ä]∆ø£ ø±s¡ø±\T
yê´bÕs¡ eédüú\ eTqT>∑&É eT]j·TT n_Ûe~› nH˚ø£ Ä]∆ø£ ø±s¡ø±\ô|’ Ä<Ûës¡|ü&ç ñ+≥T+~. M{Ï˝À eTTKýÓTÆq$
Ä]∆ø£$<ÛëHê\T eT]j·TT |üqTï $<ÛëHê\T, eékÕj·Tø£, bÕ]ÁXÊ$Tø£ eT]j·TT yê´bÕs¡ $<ÛëHê\T, Ä]∆ø£
dü«s¡÷|ü+, Ä_Ûe~› πs≥T, C≤rj·T Ä<ëj·T |ü]e÷D+ yÓTT<ä˝…’q$. e&û¶πs≥T¢ ô|]–q|ü⁄Œ&ÉT Bs¡Èø±*ø£ Ä<ëj·T
|üÁ‘ê\T eT]j·TT &çu+… #·s¢¡ ô|’ e&û¶ sπ ≥T¢ ô|s¡T>∑T‘êsTT n+<äTe\q dü+dü\ú Ä]∆ø£ dæ‹ú ô|’ Á|üu≤Û e+ |ü&TÉ ‘·T+~. Ä]∆ø£
e÷+<Ûä´ |ü]dæÔ‘·T\˝À edüTÔe⁄\ jÓTTø£ÿ <Ûäs¡\T ô|s¡T>∑T‘êsTT . n+<äTe\q yê´bÕs¡ ø±s¡´ø£˝≤bÕ\T eT+<ä–kÕÔsTT.
$ìjÓ÷>∑<ës¡T\ jÓTTø£ÿ Ä<ëj·÷\T ‘·–Zq|ü⁄Œ&ÉT ˝Ò<ë ô|]–q|ü⁄Œ&ÉT BìjÓTTø£ÿ Á|üuÛ≤e+ yê]jÓTTø£ÿ ø=qT>√\T X¯øÏÔ
ô|’ |ü&ÉT‘·T+~. edüTÔe⁄\ jÓTTø£ÿ &çe÷+&ÉT, düô|’¢\T e÷s¡‘êsTT. Á|üuÛÑT‘·« Ä]∆ø£ $<ÛëHê\T e÷]q|ü⁄Œ&ÉT yê{Ï
Á|üuÛ≤e+ ø±s=Œπs{Ÿ {≤ø˘‡, m>∑TeT‹ ~>∑TeT‹ düT+U≤\ ô|’ |ü&ç, n~ yê´bÕs¡ eédüúqT Á|üuÛ≤$‘·+ #˚düTÔ+~.
Ä]∆ø£ eédüú˝À e÷s¡T‘·Tqï |ü]dæú‘·T\≈£î nqT>∑Tq+>± s¡÷bı+~+#·ã&˚ bÕ]ÁXÊ$Tø£ $<ÛëHê\T Ä]∆ø£ eédüú˝Àì
yê´bÕs¡ dü+düú\ìï+{Ïì Á|üuÛ≤$‘·+ #˚kÕÔsTT
sê»ø°jT· eT]j·TT #·≥º ø±s¡ø±\T

sê»ø°j·T ø±s¡ø±\≈£î yê´bÕs¡ e´düú\≈£î #ê˝≤ düìïVæ≤‘·yÓTÆq dü+ã+<ä+ ñqï~. Á|üuÛÑT‘ê«\qT @s¡Œs¡#˚ sê»ø°j·T
bÕØº\T s¡÷bı+~+#˚ $<ÛëHê\T, #·{≤º\T yê´bÕs¡ eédü\ú qT Á|üu≤Û $‘·+ #˚kÕÔsTT . Äj·÷ Á|üuTÑÛ ‘ê«\T nqTdü]+#˚
$<ÛëHê\T, ìã+<äq\T, #·{≤º\T Äj·÷ sê»ø°j·T bÕØº\ n_ÛÁbÕj·÷\qT Ä˝À#·q\qT Á|ü‹_+_+|ü#˚kÕÔsTT.
sê»ø°j·T dæús¡‘·«+ ˝Ò<ë ndæús¡‘·«+, yê´bÕs¡ eédüú\ |üì rs¡T‘ÓqTï\qT Á|üuÛ≤$‘·+ #˚kÕÔsTT. $$<Ûä Á|üuÛÑT‘ê«\
eT<Ûä´ @s¡Œ&˚ dü+ã+<Ûë\T n+‘·sê®rj·T yê´bÕsêìï ≈£L&Ü Á|ü‹_+_+|ü #˚kÕÔsTT. yê´bÕsê\≈£î nqT≈£L\+>±
rdüTø=H˚ Á|üuÛÑT‘·« ìs¡íj·÷\ e\q ñ<√´>±\ ø£\Œq, ñ‘êŒ<äø£‘·, m>∑TeT‹ ~>∑TeT‘·T\ rs¡T e÷s¡T‘·T+~.
34
2.1.2.2.MACRO ENVIRONMENT
The macro forces are, generally, more uncontrollable than the micro forces. When the macro
environment 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 to
these environmental factors or they simply follow them. Important macro environment factors include
economic environment, political and regulatory environment, social/cultural environment, demographic
environment, technological environment, natural environment, and global environment.
Economic Environment
There is close relationship between business and its economic environment. Business obtains all its
needed inputs from the economic environment and it absorbs the output of business units. The important
components in economic environment are as outlined below:
 Interest Rate - For example, interest rates of fixed-income instruments prevalent in an

economic 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 to
businesses.
 Customer’s Income- If the income of customers increases, the demand for goods and services
will rise too.
 Economic Policies – Policies like corporate tax rate, export duty and import duty influence
a business.
Political and Legal Environment

It consists of forces like the Government’s attitudes towards businesses, ease-of-doing-business
policies, the stability of the Governing body and peace within the country. All of these factors are
extremely 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 increasing
employment, productivity and import and export of various products.
 Example - A pro-business government will make foreign investments more attractive in that
country.
Technological Environment
Technology is understood as the systematic application of scientific or other organized knowledge to
practical tasks. Technology changes fast and to keep pace with it, businessmen should be ever alert
to 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.
35
kÕ+πø‹ø£ø±s¡ø±\T
ô|s¡T>∑T‘·Tqï $C≤„q+ n+~düTqÔ ï Ä~Ûìø£ kÕ+πø‹ø£ $C≤„Hêìï yê´bÕs¡ dü+dü\ú T >∑eTì+∫, ‘·<qä T>∑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.
Á|üø£ ‹ø£ ˝Ò<ë uÛÖ‹ø£ ø±s¡ø±\T

uÛÖ‹ø£ yê‘êes¡D+ yê´bÕs¡ dü+düú\≈£î ø=ìï eqs¡T\qT n+~düTÔ+~. >±*, ˙s¡T, uÛÑ÷$T eT]j·TT Kì» dü+|ü<ä
yÓTT<ä˝…’q$ uÛÖ‹ø£ yê‘êes¡D+˝À yê´bÕs¡ dü+düú\≈£î \_ÛkÕÔsTT. dü+düú\T yê≥ìï+{Ï˙ >∑]wüº kÕúsTT˝À ñ
|üj÷Ó –+#·Tø=ì ˝≤uÛ≤\T dü+bÕ~kÕÔsTT. Á|üø£ ‹ì ãfÒº yê´bÕs¡ dü+dü\ú jÓTTø£ÿ eTqT>∑&,É ˝≤u≤\ ùdø£sD¡ Ä<Ûës¡|&ü ç
ñ+{≤sTT. ø±ã{Ïº á dü+düú\T Á|üø£‹ì |ü]s¡øÏå+#·e\dæ ñqï~.
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¡˝’C… ÒwüHé Á|üÁøÏj·T ‘·sê«‘· uÛ≤s¡‘· <˚X¯+˝À
nH˚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 ˝ÀìøÏ
e÷s¡e\dæ e∫Ã+~.
kÕe÷õø£ - kÕ+düÿ‹ø£ ø±s¡ø±\T

kÕe÷õø,£ kÕ+düÿ‹ø£ n+XÊ\˝À edüTÔqï e÷s¡TŒ\T ≈£L&Ü yê´bÕs¡ eédüú\qT Á|üuÛ≤$‘·+ #˚kÕÔsTT. Á|ü»\jÓTTø£ÿ
Jeq XË*’ , Ä#ês¡ eéVü‰s¡\˝À e#˚Ã e÷s¡TŒ\ ø£qT>∑Tq+>± yê´bÕs¡ dü+dü\ú T ‘·eT jÓTTø£ÿ ñ‘·Œ‘·T\Ô qT e÷s¡TÃø√yê*.
düe÷»+˝À edüTÔqï e÷s¡TŒ\T, #Ó’‘·q´+ ≈£î nqT>∑Tq+>± yê´bÕs¡ dü+düú\T ‘·eT eP´Vü‰\qT s¡∫+#·Tø√e\dæ
edüTÔ+~. Á|ü»\ Ä#êsê\qT ã{Ïº edüTÔ ìs¡íj·÷\T rdüTø√yê*. $\Te\≈£î m≈£îÿe ÁbÕ<Ûëq´‘·qT Ç∫Ã düe÷C≤ìø£
<ä>∑Zs¡>± Ä˝À∫+#ê*. e÷s¡T‘·Tqï |ü]dæú‘·T\T, n\yê≥¢ Á|üø±s¡+ edüTÔ ñ‘·Œ‹Ô e÷s¡TÃø√yê*.
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=+‘· y˚Ts¡≈î£ Á|üu≤Û $‘·eTe⁄‘·T+~. m≈£îÿe>± ãVæ≤s¡‘Z · ø±s¡ø±\e\q Á|üu≤Û $‘·eTe⁄‘·T+~.
sê»ø°j·T ø±s¡ø±\T Ä]∆ø£ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚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+~.
36
Natural Environment
Business, an economic pursuit of man, continues to be dictated by nature. Business depends on
nature and what is the relationship between the two constitutes an interesting study. If the organizations
forget the natural environment, they cannot sustain forever.
Global or international Environment

The changing dimension of the business environment gives birth to an advanced international
environment for companies in a country. It denotes a periphery in which international companies run
their business transactions across national borders. From liberalization, Indian companies are forces
to view business issues from a global perspective. Business responses and managerial practices must
be fine-tuned to survive in the global environment.
Social and cultural Environment

It 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 financial
opportunity for several market segments like sweet manufacturers, gifting products suppliers,
etc.
 Value : A company which follows long-held values like social justice, freedom, equal
opportunities, 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 vegetables
and gluten-free food is increasing. Therefore, companies which manufacture food items keeping
this in mind attract more crowds.
2.1.3. ENVIRONMENT – BUSINESS RELATIONS

Business is the product of the technological, political-legal, economic, social – cultural, global and
natural factors amidst which it functions. Three features are common to this web of relationship
between business and its environment.
There is symbolic relationship between business and its environment and among the environmental
factors. In other words, business is influenced by its environment and in turn, to certain degree, it will
influence the external forces. Similarly, political-legal environment influences economic environment
and vice-versa. The same relationship exists between other environmental factors too. These
environmental forces are dynamic. Particular business firm, by itself, may not be in a position to
change its environment. But along with other firms, business will be in a position to mould the environment
in its favor.
37
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\ $X‚w¢ üD n+{≤s¡T.
ˇø£ eédüú jÓTTø£ÿ ãVæ≤s¡Z‘· |ü]düsê\T @ eédüúqT m+‘·es¡≈£î Á|üuÛ≤$‘·+ #˚kÕÔjÓ÷, Äj·÷ |ü]düsê\ jÓTTø£ÿ
neø±XÊ\T, n&É+¶ ≈£î\qT ø=\e&ÜìøÏ |ü]düsê\ $X‚w¢ D ü ñ|üj÷Ó >∑|&ü TÉ ‘·T+~. yê´bÕs¡ dü+dü≈ú î£ ñqï nedüsê\T,
düeTdü´\T, yê{Ïì düwæº+#˚ yê´bÕs¡ |ü]düsê\qT Ç~ n<Ûä´j·Tq+ #˚düTÔ+~.
|òæ*|t ø√≥¢sY n_ÛÁbÕj·T+ Á|üø±s¡+ |ü]düsê\ $X‚¢wüD n+fÒ e÷s¡T‘·Tqï düe÷» ˇs¡e&ç ì ˝…øÏÿ+#˚ Á|üÁøÏj·T
2.2.1..|ü]düsê\ $X‚¢wüD jÓTTø£ÿ Á|ü<Ûëq <Û˚´j·÷\T

 Á|üdüTÔ‘· düe÷»+˝À edüTÔqï Á|ü<Ûëq e÷s¡TŒ\qT >∑eTì+#·T≥. yê{Ïø£qT>∑TD+>± Á|üD≤[ø£\T s¡Væ≤+#·T≥
 ÁkÕº≥õø˘ ìs¡íj·÷\T rdüTø=qT≥≈£î ø±e\dæq neX¯´ø±\qT n+~+#·T≥
 yê´bÕs¡ dü+düú˝À ñqï neø±XÊ\qT ns¡∆eTj˚T´˝≤ #˚dæ dü+düú≈£î ø=‘·Ô neø±XÊ\qT ‘Ó*j·T#˚j·T&É+.
 C≤rj·T n+‘·sê®rj·T düe÷»+˝À edüTÔqï kÕe÷õø£, Ä]∆ø£ e÷s¡TŒ\ jÓTTø£ÿ Á|üuÛ≤yêìï n+#·Hêy˚j·TT≥.
%o% yê´bÕs¡ dü+düúqT &Ó’q$Tø˘ >± q÷‘·q‘·«+‘√ ñ+&˚˝≤ #˚düTÔ+~.
|ü]düsê\ $X‚w¢ Dü 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÷¬sÿ{Ÿ kÕúsTT˝À, C≤rj·T n+‘·sê®rj·T kÕúsTT\˝À >∑T]Ô+#·ã&ÉT‘·T+~.
kÕÿì+>¥: >∑T]Ô+∫q ø±s¡ø±\qT ì•‘·+>± |ü]o*+#·&Üìï kÕÿì+>¥ n+{≤s¡T. Äj·÷ ø±s¡ø±\ jÓTTø£ÿ Á|üuÛ≤e
kÕúsTTì ≈£L&Ü n+#·Hê y˚kÕÔs¡T.
$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:: ôô|’ 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. M{Ïì eTqeTT n+#·Hê
y˚jT· ˝ÒeTT. ø±ã{Ïº |ü]düsê\ kÕÿì+>¥ nH˚ Á|üÁøÏjT· <ë«sê yê´bÕs¡ dü+düú jÓTTø£ÿ |ü]düsê\qT ìX¯‘+· >± |ü]o*dü÷Ô
ñ+&Ü*.kÕÿì+>¥ ˝À eédüú jÓTTø£ÿ n+‘·s¡Z‘· eT]j·TT ãVæ≤s¡Z‘· |ü]düsê\qT+&ç $wüj·T ùdø£s¡D #˚j·T&É+,
uÛ$Ñ wü´‘Y ˝À sêuÀj˚T neø±XÊ\T eT]j·TT düeTdü´\qT C≤Á>∑‘>Ô· ± |ü]o*+#·&+É , dü+düú ≈£î dü+ã+~+∫q uÛ$Ñ wü´‘Y
qT Á|üuÛ≤$‘·+ #˚ùd nìï $wüj·÷\qT XÀ~+#·&É+ ñ+{≤sTT.
38
2.2. ENVIRONMENTAL ANALYSIS
Environmental analysis is the study of the organizational environment to pinpoint environmental variables
or factors that can significantly influence the organizational operations. Environmental analysis is the
assessment of opportunities and threats in the external environment of business. Relatively qualitative
and involves the identification of the business needs and determines solutions to the business problems
created by the components of business environment. It is related with the performance characteristics
of the functional areas of the firm
According to William F. Glueck, Environmental Analysis is “The process by which strategists monitor
the economic, legal, competitive, geographic, technical and social setting to determine opportunities
and 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 term
perspective.
 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 context
within 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 at
the 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 information
for 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, to
improve its position in the market. The identification is performed at various levels, i.e. company
level, market level, national level and global level.
 Scanning: Scanning implies the process of critically examining the factors that highly influence the
business, as all the factors identified in the previous step does not affect the entity with the same
intensity. 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 their
effect on different business levels and on the business as a whole. Different tools available for the
|ü]düsê\ kÕÿì+>¥ |ü<‘›ä T· \T
Áø£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÷#êsêìï
ìj·T‘· ø±*ø£+>± ìs¡+‘·s+¡ ùdø£]+#·&+É »s¡T>∑T‘·T+~. ùdø£]+∫q düe÷#êsêìï n_Ûe~› #˚dTü ≈£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£ düeTdü´
m<äTs¬ q’ |ü⁄Œ&ÉT dü+ã+~‘· düe÷#ês¡+ø=s¡≈î£ Á|ü‘´˚ ø£yTÓ qÆ düsπ « ˝Òø£ n<Û´ä j·Tq+ #˚dæ $esê\qT $X‚d¢ +æ #·&+É »s¡T>∑T‘·T+~.
Ç~ ‘ê‘êÿ*ø£ |ü<ä›‹.
~«rj·T düe÷#ês¡ $X‚¢wüD |ü<ä›‹

á |ü<‹›ä ˝À ˇø£ düeTdü´qT $X‚w¢ +æ #·T≥ ø√dü+ nedüsy¡ TÓ qÆ ~«rj·T <ä‘êÔ+X¯+ ô|’ Ä<Ûës¡|&ü ≥É + »s¡T>∑T‘·T+~. dü+düú
˝À|ü\ ˝Ò<ë ãj·T{Ï dü+düú\ &˚{≤qT Ç+<äTø√dü+ ñ|üjÓ÷–kÕÔs¡T. Á|üuÛÑT‘·« ˝Ò<ë Á|üy˚{Ÿ dü+düú\ düe÷#ês¡+
Ç+<äT≈£î ñ|üjÓ÷>∑ |ü&ÉT‘·T+~.
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~› ˝À
e#˚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|’ kÕúsTT
n~Ûø±s¡T\T |ü]düsê\ $X‚w¢ D ü <ë«sê uÛ$Ñ wü´‘Y qT }Væ≤+∫ $<Ûëq ìs¡j
í ÷· \T rdüT≈£î+{≤s¡T. n$ sπ |ü{Ï ø±˝≤ìøÏ
u≤>± ñ|üjÓ÷>∑ |ü&É‘êsTT.
|ü]düsê\ uÛ$Ñ wü´‘Y n+#·Hê - |ü<‘›ä T· \T

Ä]∆ø£ n+#·Hê
uÛÑ$wü´‘Y ˝À »s¡>∑uÀj˚T Ä]∆ø£ e÷s¡TŒ\qT Ç~ }Væ≤düTÔ+~. Ä]∆ø£ eédüú˝À e#˚Ã Á<äy√´\“D+, Ä]∆ø£ e÷+<Ûä´
|ü]dæ‘ú T· \qT n+#·Hê y˚jT· &É+ <ë«sê uÛ$Ñ wü´‘Y ñ‘·Œ‹Ô, neTàø±\qT n+#·Hê y˚jT· e#·TÃ. düs¬ q’ düeTj·T+˝À #˚ùd
Ä]∆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£HêyÓTÁ{Ïø˘‡ yÓTT<ä˝…’q$ n+#·Hê y˚ùd eTTKýÓTÆq kÕ<ÛHä ê\T.
kÕ+πø‹ø£ n+#·Hê
kÕ+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+dü≈ú î£ ñ|üj÷Ó >∑ |ü&TÉ ‘·T+~ nH˚~ Çø£ÿ&É
n+#·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+#·Hê
eT]j·TT 2. Hêπsà{Ïyé n+#·Hê.
40
analysis include benchmarking, Delphi technique and scenario building.
 Forecasting: After identification, examination and analysis, lastly the impact of the variables is to
be forecasted.
2.2.2. ENVIRONMENTAL SCANNING
The environment of a business is extremely dynamic in nature and it is constantly changing. The future
is uncertain. Hence, the organization must keep a close watch on its environment using environmental
scanning. Environmental analysis recognize Strengths, Weaknesses, Opportunities and Threats of an
organization. The organization can take necessary steps according to this analysis and plan for the
future improvements. The firm must strive to build on or maximize its advantage by making
improvements in its immediate plans, strategies, and resources. There are three approaches, which
could be adopted for, sorting out information for environmental scanning.
Approaches to Environmental Scanning
 Systematic Approach
Under this approach, information for environmental scanning is collected systematically.
Information is collected continuously and the same is updated in regular intervals. This information
related to markets and customers, changes in legislation and regulations. This information has
direct impact on an organization’s activities. This information is necessary not only for strategic
management but also for operational activities.
 Ad hoc Approach
Using this approach, an organization may conduct special surveys and studies to deal with specific
environmental issues from time to time. Such studies may be conducted, for instance, when
organization 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 the
organization.
 Processed form of Approach

For adopting this approach, the organization uses information in a processed form available from
different sources both inside and outside the organization. When an organization uses information
supplied by government agencies or private institutions, it uses secondary sources of data and
the information is available in processed form
2.2.3. ENVIRONMENTAL FORECASTING

Strategic decision-making requires a future orientation. Naturally, forecasting is an essential element
in environmental analysis. Forecasting is concerned with developing plausible projections of the
direction, scope, and intensity of environmental change.
41
Á|üuTÑÛ ‘·« $<ÛëHê\ n+#·Hê
Á|üuTÑÛ ‘·«+ rdüTø=H˚ ìs¡j
í ÷· \<ë«sê e#˚Ã e÷s¡TŒ\qT n+#·Hêy˚jT· &É+ Ç+<äT˝À ñ+≥T+~. Á|üuTÑÛ ‘·« ìs¡j
í ÷· \T @
$<Ûä+>± dü+düúqT Á|üuÛ≤$‘·+ #˚kÕÔsTT, <˚X¯ Ä]∆ø£ eédüúqT @ $<Ûä+>± ìj·T+‘·kÕÔsTT, @ø£kÕ«e÷´\qT @$<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+&ç
bı+<äe#·TÃ.
neTàø±\ n+#·Hê
Bì <ë«sê dü+düú uÛÑ$wü´‘Y ˝À ô|]π> neTàø±\qT n+#·Hê y˚düTÔ+~. m+‘· es¡≈£î neTàø±\qT ô|+#·>∑\eTT, yê{Ï
<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·÷, Ä
Á|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]£ düT+Ô ~. ˇø£ dü+düú jÓTTø£ÿ ã˝≤\T, ã\V”≤q‘·\T, neø±XÊ\T, dü+ø£{≤\T >∑T]+∫ á $X‚w¢ Dü ˝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, eékÕÔ|ü≈£î\T ≈£L&Ü ñ|üjÓ÷–düTÔHêïs¡T. SWOT ˝À Hê\T>∑T
Á|ü<Ûëq ø±s¡ø±\T ñHêïsTT.
ã˝≤\T
ˇø£ 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 $ìjÓ÷>∑<ës¡T\T, ã\yÓTÆq ÄdæÔ
n|ü⁄Œ\ dæú‹, Á|ü‘˚´ø£yÓTÆq kÕ+πø‹ø£‘· yÓTT<ä˝…’q$ dü+düú\ ã˝≤\T>± #Ó|üŒe#·TÃ.
ã\V”≤q‘·\T
dü+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\T
dü+dü\ú ≈£î ãVæ≤s¡‘Z +· >± ø£\dæe#˚Ã nqT≈£L\yÓTqÆ ø±s¡ø±\T eT]j·TT b˛{° Á|üj÷Ó »Hê\qT neø±XÊ\T>± #Ó|Œü e#·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.
42
Environmental forecasting is a technique whereby managers attempt to predict the future characteristics
of the organizational environment and hence make decisions today that will help the firm deal with the
environment of tomorrow.
Types of Environmental Forecasting
 Economic Forecasting
Economic forecasting envisages the general economic condition like, boom or depression, upswing
or downswing of the economy. Corresponding to these forecasts, sales and revenues of the business
go up or down. In case of depression, timely forecast can prevent the firms from incurring losses. The
main 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 which
technology is changing, what will be the impact of new machines and equipment’s on existing plant
and machinery, should the firm continue with the existing machines or replace them, in case of
replacement, should they buy the new machine or take it on lease, what will be the impact of these
decisions on profits. This forecasting can be done in two ways i.e. Exploratory forecasting and
Normative forecasting
 Forecasts Regarding Government Policies

Government policies change from time to time to boost the economy. It may give fiscal incentives to
promote investment in plant and machinery or some incentives may be withdrawn. This is done to
regulate the national economy, prevent monopoly and promote healthy competition. Changes in
Government’s policy and their impact on profits can be predicted through information published in
various journals and newspapers.
 Sales Forecasting
The sales forecast helps the firm to retain or increase its share of goods in the market. “The sales
forecast 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 clearly
defined and that all factors related to the project are properly identified. The SWOT analysis process
involves four areas: Strengths, Weaknesses, Opportunities and Threats..
A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths and
weaknesses of an organization, initiatives, or within its organization. The organization needs to keep
the analysis accurate by avoiding pre-conceived beliefs or grey areas and instead focusing on real-life
contexts. Companies should use it as a guide and not necessarily as a prescription.
43
dü+ø£{≤\T
dü+dü\ú ≈£î Vü‰ìø£*–+#˚ $$<ä ø±s¡ø±\qT dü+ø£{≤\T n+{≤s¡T. yê´bÕs¡ dü+dü\ú ≈£î eTT&ç|<ü ësê∆\ <Ûsä \¡ T ô|s¡>&∑ +É ,
$ìjÓ÷>∑<ës¡T\ n_ÛsT¡ #·T\˝À e÷s¡TŒ, b˛{° ô|s¡>&∑ +É , eTT&ç|<ü ësê›\T, ÁXÊ$T≈£î\ ø=s¡‘· yÓTT<ä˝q’… $ dü+ø£{≤\T>±
#Ó|Œü e#·TÃ. SWOT $X‚w¢ Dü yê´bÕs¡ dü+dü\ú T eP´Vü‰‘·àø£yTÓ qÆ ìs¡j
í ÷· \T rdüTø√e&É+˝À ñ|üj÷Ó >∑|&ü TÉ ‘·T+~. Ç~
yê´bÕs¡ dü+düú\ jÓTTø£ÿ ã˝≤\T , ã\V”≤q‘·\qT ìs¡«∫+∫ neø±XÊ\qT n+~|ü⁄#·TÃø√&ÜìøÏ, dü+ø£{≤\qT
‘=\–+#·Tø√e&ÜìøÏ ø±e\dæq $<Ûëq ìs¡íj·÷\T #˚j·T&É+˝À u≤>± ñ|üø]£ düTÔ+~. yê´bÕs¡ dü+düú\T ‘·eT
yê´bÕsêìø£+‘·{ÏøÏ >±ì ø=ìï $uÛ≤>±\≈£î >±ì eP´Vü‰‘·àø£ ìs¡íj·÷\T rdüTø√e&É+˝À SWOT düVü≤ø£]düTÔ+~.
Table 2.1. SWOT Analysis
Strengths Weaknesses
1. What is our competitive advantage? 1. Where can we improve?
2. What resources do we have? 2. What products are underperforming?
3. What products are performing well? 3. Where are we lacking resources?
Threats Opportunities
1.What new regulations threaten operations? 1.What technology can we use to improve
operations
2 .What do our competitors do well? 2.Can we expand our core operations?
3. What consumer trends threaten business? 3. What new market segments can we explore?
2.2.5.PESTEL $X‚¢wüD
yê´bÕs¡ |ü]düsê\ $X‚¢wüD ≈£î ñ|üjÓ÷–+#˚ n‘·´+‘· $es¡D≤‘·àø£ $X‚¢wüD PESTEL $X‚¢wüD. ìsê«Vü≤≈£î\T
eT]j·TT eP´Vü≤ ø£s¡Ô\T ‘·eT e÷¬sÿ{Ÿ Á|üdüTÔ‘·+ mø£ÿ&É ñ+<√ ‘Ó\TdüTø√e&ÜìøÏ á $X‚¢wüDqT ñ|üjÓ÷–kÕÔs¡T.
uÛÑ$wü´‘·TÔ˝À dü+düú mø£ÿ&É ñ+≥T+<√ eTT+<˚ ‘Ó\TdüTø√e&ÜìøÏ ≈£L&Ü Ç~ düVü‰j·T|ü&ÉT‘·T+~. PESTEL $X‚¢wüD
˝À yê´bÕs¡ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚ùd $$<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 -P
Ä]úø£ ø±s¡ø±\T -E
kÕe÷õø£ ø±s¡ø±\T -S
kÕ+πø‹ø£ ø±s¡ø±\T -T
#·≥º|üs¡yÓTÆq ø±s¡ø±\T -L
|üsêés¡D ø±s¡ø±\T -E
44
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:
Strengths
Strengths describe what an organization excels at and what separates it from the competition: a
strong 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.
Weaknesses
Weaknesses stop an organization from performing at its optimum level. They are areas where the
business needs to improve to remain competitive: a weak brand, higher-than-average turnover, high
levels of debt, an inadequate supply chain, or lack of capital are some weaknesses.
Opportunities
Opportunities 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.
Threats
Threats refer to factors that have the potential to harm an organization. For example, a drought is a
threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common
threats include things like rising costs for materials, increasing competition, tight labour supply and so
on.
A SWOT analysis is a great way to guide business-strategy meetings. It is powerful tool to discuss
the company’s core strengths and weaknesses, define the opportunities and threats, and thereby
brainstorm ideas. An organization can use a SWOT for overall business strategy sessions or for a
specific segment such as marketing, production, or sales. This way, we can see how the overall
strategy developed from the SWOT analysis will filter down to the segments below before committing
to it. We can also work in reverse with a segment-specific SWOT analysis that feeds into an overall
SWOT analysis.
2.2.5. PESTEL ANALYSIS

The most used detailed analysis of the environment is the PESTLE analysis. Managers and strategy
builders use this analysis to find where their market currently is. It also helps foresee where the
organization will be in the future. PESTLE analysis consists of various factors that affect the business
environment. Each letter in the acronym signifies a set of factors. These factors can affect every
industry directly or indirectly.
The letters in PESTLE, also called PESTEL, denote the following things:
P- sê»ø°j·T ø±s¡ø±\T
sê»ø°jT· n+XÊ\T <˚X+¯ ˝Àì Á|üdTü ‘Ô · sê»ø°jT· |ü]dæ‘ú T· \qT $e]kÕÔsTT. Ç~ <˚X+¯ eT]j·TT yê´bÕs¡+ô|’ Á|ü|+ü #·
sê»ø°j·T |ü]dæú‘·T\ Á|üuÛ≤yêìï ≈£L&Ü $X‚¢wædüTÔ+~.
E- Ä]úø£ ø±s¡ø±\T
Ä]úø£ ø±s¡ø±\T Ä]úø£ eédüú eT]j·TT <ëì dæú‹ì ìs¡ísTTkÕÔsTT. Ç$ Ä]úø£ eédüú jÓTTø£ÿ ~X¯qT ìsê∆]+#˚
n+XÊ\T. ø±ã{Ï,º |ü]düsê\ Ä<Ûës¡+>± yê´bÕsê\T á n+XÊìï $X‚w¢ kæ ÕÔsTT. e÷s¡TŒ\≈£î nqT>∑TD+>± eP´Vü‰\qT
@sêŒ≥T #˚j·T&ÜìøÏ Ç~ düVü‰j·T|ü&ÉT‘·T+~.
S- kÕe÷õø£ ø±s¡ø±\T
$$<ä <˚XÊ\T ˇø£<ëìø=ø£{Ï y˚s¡T>± ñ+{≤sTT. Á|ü‹ <˚XÊìøÏ ˇø£ $\ø£åDyÓTÆq ‘·‘·«+, yÓ’K] ñ+≥T+~. á
yÓ’Ks¡T\T yê´bÕsê\ô|’ Á|üuÛ≤e+ #·÷|ü⁄‘êsTT. kÕe÷õø£ ø±s¡ø±\T ∫e]øÏ ñ‘·Œ‘·TÔ\T eT]j·TT ùde\ neTàø±\qT
Á|üuÛ≤$‘·+ #˚j·Te#·TÃ.
T- kÕ+πø‹ø£ ø±s¡ø±\T
kÕ+πø‹ø£‘· ìs¡+‘·s+¡ n_Ûe~∆ #Ó+<äT‘√+~. Bì |ü⁄s√>∑‹ yê´bÕsê\qT u≤>± Á|üu≤Û $‘·+ #˚k˛Ô+~. á n+XÊ\ô|’
|ü]düsê\ $X‚¢wüD #˚j·T&É+ e÷s¡TŒ\‘√ ‘êC≤>± ñ+&É{≤ìøÏ düVü‰j·T|ü&ÉT‘·T+~.
f…ø±ï\J Á|ü‹ ì$Twü+ e÷s¡T‘·T+~ . n+<äTπø ø£+ô|˙\T m|üŒ{Ïø£|ü⁄Œ&ÉT á kÕ+πø‹ø£‘·≈£î <ä>∑Zs¡>± ñ+&Ü*.
nedüs¡yÓTÆq|ü⁄Œ&ÉT dü+düú\T @ø°ø£‘·+ #˚j·÷*. $ìjÓ÷>∑<ës¡T\T $$<Ûä <Û√s¡DT\≈£î m˝≤ Á|ü‹düŒ+~kÕÔs√
‘Ó\TdüTø√e&ÜìøÏ kÕ+πø‹ø£ n+XÊ\T düVü‰j·T|ü&É‘êsTT.
L- ©>∑˝Ÿ ø±s¡ø±\T
XÊdüq e÷s¡TŒ\T m|üŒ{Ïø£|ü⁄Œ&ÉT »s¡T>∑T‘êsTT. M{Ï˝À #ê˝≤ e÷s¡TŒ\T yê´bÕs¡ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚kÕÔsTT.
ˇø£ ìj·T+Á‘·D dü+düú |ü]ÁX¯eT\ ø√dü+ ˇø£ ìj·T+Á‘·DqT @sêŒ≥T #˚ùdÔ, n~ Ä Ä]úø£ eédüú˝À |ü]ÁX¯eT\T
eT]j·TT yê´bÕsêìï Á|üu≤Û $‘·+ #˚dTü +Ô ~. ø±ã{Ï,º yê´bÕsê\T dü+ã+~Û‘· |ü]düsê\˝À #·≥|º sü y¡ TÓ qÆ |ü]D≤e÷\qT
≈£L&Ü $X‚¢wæ+#ê*.
E- |üsêés¡D ø±s¡ø±\T
ˇø£ dü+düú jÓTTø£ÿ Á|ü<X˚ +¯ yê´bÕs¡ yê´bÕsê\qT Á|üu≤Û $‘·+ #˚dTü +Ô ~. yê‘êes¡D e÷s¡TŒ\T yêDÏC≤´ìï Á|üu≤Û $‘·+
#˚j·Te#·TÃ. ì]›wüº Á|ü‹bÕ<äq≈£î $ìjÓ÷>∑<ës¡T\ Á|ü‹#·s¡´\T ≈£L&Ü düeTdü´ ø±e#·TÃ. Ç~ #ê˝≤ ‘·s¡#·T>±
eékÕj·T yê´bÕsê\qT Á|üuÛ≤$‘·+ #˚düTÔ+~.
|ü]ÁX¯eT jÓTTø£ÿ ø±s¡ø±\T ø£+ô|˙ |üìrs¡Tô|’ Á|üu≤Û e+ #·÷|ü⁄‘êj·TH˚~ ì»+. yê´bÕs¡+˝À ø=ìï ø±s¡ø±\T @ bÕÁ‘·
b˛wækÕÔjÓ÷ ‘Ó\TdüTø√e&ÜìøÏ |ü]düsê\ $X‚¢wüD nedüs¡+. PEST ˝Ò<ë PESTEL$X‚¢wüD yê´bÕsê\qT u≤Vü≤´
ø±s¡ø±\qT |ü]o*+#·&ÜìøÏ nqTeT‹düT+Ô ~. nH˚ø£ dü+dü\ú T ‘·eT ø£+ô|˙ e~∆ì düeTs¡eú +‘·+>± n+#·Hê y˚jT· &ÜìøÏ
á kÕ<ÛäHê\qT ñ|üjÓ÷–kÕÔsTT.
46
 Political factors
 Economic factors
 Social factors
 Technological factors
 Legal factors
 Environmental factor
P for Political factors

The political factors involve the country’s current political situation. It also reads the global political
condition’s effect on the country and business.
E for Economic factors

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

Countries vary from each other. Every country has a distinctive mindset. These attitudes have an
impact on the businesses. The social factors might ultimately affect the sales of products and services.
T for Technological factors

Technology is advancing continuously. The advancement is greatly influencing businesses. Performing
environmental analysis on these factors will help you stay up to date with the changes. Technology
alters every minute. This is why companies must stay connected all the time. Firms should integrate
when 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 industries
and business in that economy. So, businesses should also analyze the legal developments in respective
environments.
E for Environmental factors

The location of a business influences its trade. Changes in climate can affect the trade. The consumer
reactions to particular offering can also be an issue. This most often affects agri-businesses.It is true
that industry factors have an impact on the company performance. Environmental analysis is essential
to determine what role certain factors play in your business. PEST or PESTLE analysis allows
businesses to take a look at the external factors. Many organizations use these tools to project the
growth of their company effectively.
47
KEY TERMS
1. Brand equity: Brand equity refers to a value premium that a company generates from a product
with a recognizable name when compared to a generic equivalent. Companies can create brand
equity for their products by making them memorable, easily recognizable, and superior in quality and
reliability.
2. Human resources: The personnel of a business or organization, regarded as a significant asset in

terms of skills and abilities. Human resources (HR) is the division of a business that is charged with
finding, screening, recruiting, and training job applicants, as well as administering employee-benefit
programs.
3. Management structure: A management structure describes how a company organizes its

management 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 for
a company’s operations and defines the company’s purpose. The document lays out how tasks are to
be accomplished within the organization, including the process for appointing directors and the handling
of financial records.
5. Logistics: Logistics is the overall process of managing how resources are acquired, stored, and
transported to their final destination.
6. Suppliers: A supplier is an entity that supplies goods and services to another organization. This
entity is part of the supply chain of a business, which may provide the bulk of the value contained
within its products.
7. Marketing intermediaries: Independent firms which assist in the flow of goods and services
from 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 that
has 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 become
payable 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’s
customs authorities.
48
11. Secondary Sources: a secondary source of information is one that was created later by someone
who 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 environment
B. Technological environment
C. Social environment
D. All the above
2. ............are generally considered as controllable factors.

A. Internal factors
B. External factors
C. Cost of production
D. None of these
3. Environment which is outside the control of business is called.

A. Internal environment
B. External Environment
C. Micro environment
D. Macro environment
4. Micro environment is also called as

A. General environment
B. Operating environment
C. Economic environment
D. Political environment
5. Marketing intermediaries are categorized under……. Environment.

A. External
B. Macro
C. Micro
D. Remote.
6. …… is the process of analyzing the environment for the identification of the factors
which impact on the business.
A. Environmental analysis
B. SWOT analysis
C. Environment Forecasting
D. Factor analysis
7. The analysis which helps to diagnose the competitive forces and to identify the strength
and weakness is called…..
A. SWOT analysis
B. Competitive analysis
C. Structural analysis
D. Financial analysis
8. Strategy of a firm is shaped by…………………

A. Mission
B. Objectives
C. SWOT
D. All the above
9. Which of the following are the part of PESTLE analysis

A. Political factors
B. Economic factors
C. Social factors
D. All the above are parts
10. Which of the following is not a political risk

A. Government regulation
B. Cost of production
C. War
D. Civil unrest
ANSWERS
1 2 3 4 5 6 7 8 9 10
D A B B C A A D D B
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
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.
50
Chapter
3
Learning Outcomes:

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:
Economic Environment
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
51
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+ $$<Ûä s¡ø±\ Ä]úø£ eédüú\qT, yê{Ï \ø£åD≤\qT, Á|üjÓ÷»Hê\qT eT]j·TT ˝ÀbÕ\qT
$X‚w¢ dæ Tü +Ô ~. á n<Ûë´j·T+ eTTK´+>± $$<Ûä Ä]úø£ $<ÛëHê\qT ìs¡«∫düT+Ô ~ 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£ $<ÛëHê\T eT]j·TT
yê{Ï jÓTTø£ÿ dü+øÏå|üÔ |ü]#·j·T+ ≈£L&Ü Çe«ã&Ü¶sTT, Ç$ ‘·s¡Tyê‹ n<Ûë´j·÷\˝À $es¡+>±
#·]Ã+#·ã&É‘êsTT.
52
CHAPTER OVERVIEW
The economic conditions prevailing in a country are important to ascertain

the success of a business. These economic conditions are referred to as
economic environment. The kind of economic system present in the country,
structure of economy, and economic policy decisions and planning are all
part of economic environment.
The present chapter attempts to define different kinds of economic systems

and their characteristics in detail while analyzing their advantages and
disadvantages. Also, it defines various economic structures and discusses
sectorization of economy based on nature of activity, work condition and
asset ownership of economic activity. Brief introduction of economic policies
and its components are also given which will be dealt in detail in later
chapters.
53
3.1. Ä]∆ø£ |ü]düsê\T
yê´bÕs¡ |ü]düsê\qT s¬ +&ÉT s¡ø±\T>± eØZø]£ +#·e#·TÃ. yÓTT<ä{~Ï Ä]∆ø£ |ü]düsê\T, s¬ +&Ée~ Ä]∆øπ ‘·s¡ |ü]düsê\T.
yê´bÕsêìï Á|üuÛ≤$‘·+ #˚ùd nìïs¡ø±\ Ä]∆ø£ ø±s¡ø±\qT Ä]∆ø£ |ü]düsê\T n+{≤s¡T. ˇø£ <˚X¯ Ä]∆ø£ eédüú
nq>± Ä <˚X¯ Á|ü»\ jÓTTø£ÿ Jeq Á|üe÷D kÕúsTT, bı<äT|ü⁄ -ô|≥Tºã&ÉT\ n\yê≥T¢, <˚X¯ bÕ]ÁXÊ$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˝…’q
ø±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#˚Ã
nìï ø±s¡ø±\ qT ñ‘·Œ‹Ô ø=s¡≈£î $ìjÓ÷–+#·Tø=+≥T+~. n˝≤π> ‘·j·÷¬s’q edüTÔe⁄\qT neTTàø√&ÜìøÏ ≈£L&Ü
Ä]∆ø£ |ü]düsê\ô|’ Ä<Ûës¡ |ü&ÉT‘·T+~. kÕ<Ûës¡D+>± Á|ür yê´bÕs¡+ <˚X¯ Ä]∆ø£ |ü]düsê\˝À uÛ≤>∑+>±H˚ eTq+
uÛ≤$+#·&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|üŒ{ÏøÏ 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\T

Ä]∆ø£ eédüú jÓTTø£ÿ dü«uÛ≤eeTT
Ä]∆ø£ eédüú nH˚~ ˇø£ <˚X+¯ jÓTTø£ÿ Ä]∆ø£ $<ÛëHê\T dü+kÕú>‘∑ · $<ÛëHê\ jÓTTø£ÿ ìs¡+‘·s¡ Á|üÁøÏjT· >± #Ó|Œü e#·TÃ.
á dü+kÕú>‘∑ · neT]ø£ <ë«sê n+<äTu≤≥T˝À ñqï eqs¡T\qT $ìjÓ÷–+#·&+É <ë«sê edüTùÔ de\qT ñ‘·Œ‹Ô #˚dæ
Á|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 , eédü\ú ≈£î ÄkÕÿs¡eTT+≥T+~. Äj·÷ yê´bÕs¡ dü+dü\ú ô|’ Á|üuTÑÛ ‘·«+ 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+‘ê
Á|üuÛÑT‘·«+ #˚‘·T\˝À ñ+≥T+~. ø±ì $TÁX¯eT Ä]∆ø£ $<ÛëHêìï nqTdü]+#˚ <˚X¯+˝À Á|üuÛÑT‘·« eT]j·TT Á|üy˚≥T
dü+düú\ jÓTTø£ÿ ø£\sTTø£qT #·÷&Ée#·TÃ. @yÓTÆq|üŒ{ÏøÏ ˇø£ <˚X¯+ jÓTTø£ÿ yê´bÕs¡ eédüú ô|’ Ä <˚X¯ Ä]∆ø£ $<ÛëHê\
Á|üuÛ≤e+ ‘·|üŒìdü]>± ñ+≥T+~.
Ä]∆ø£ eédüú ≈£Ls¡TŒ

ˇø£ <˚X¯ Ä]∆ø£ eédüú˝À $$<ä s¡+>±\ ø£\sTTø£qT ˝Ò<ë $$<ä s¡+>±\ qT+&ç m+‘·es¡≈£î eédüú Á|üuÛ≤$‘·
eTÚ‘·T+<√ <ëì Ä]∆ø£ eédüú ≈£Ls¡TŒ >± #Ó|üŒe#·TÃ. Á|ü‹ Ä]∆ø£ eédüú ˝Àq÷ nø£ÿ&É \_Û+#˚ düVü≤» eqs¡T\
Hê<Ûës¡+>± #˚dTü ø=ì eTTK´+>± eT÷&ÉT s¡+>±\ ≈£î ÁbÕ<Ûëq´‘· ñ+≥T+~. n$ ÁbÕ<Û$ä Tø£ s¡+>∑eTT (eékÕj·TeTT,
n&Ée⁄\T, >∑qT\T) ~«rj·T s¡+>∑eTT ˝Òø£ bÕ]ÁXÊ$Tø£ s¡+>∑eTT eT]j·TT ‘·rj·T s¡+>∑eTT ˝Ò<ë ùdyê s¡+>∑eTT.
Á|ü‹ eédüú ø=ìï $<ÛëHê\qT, Á|üyT˚ j·÷\T, $<ÛTä \T Ä<Ûës¡+>± #˚dTü ø=ì q&ÉTdüT+Ô ~. ˇø£ Á|üuTÑÛ ‘·«+ 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¡ $<ÛëHê\˝À
Á|üuÛÑT‘·«+ jÓTTø£ÿ n»e÷sTTw” yÓTT<ä˝…’q$ n˙ï Ä <˚X¯ Ä]∆ø£ $<Ûëq+ô|’ Ä<Ûës¡|ü&ç ñ+{≤sTT. ˇø£ <˚X¯ Ä]∆ø£
54
3.1. ECONOMIC ENVIRONMENT
Business environment can be classified into two major categories - the Economic environment and
the Non-Economicenvironment. Economic environment refers to all those economic factors which
have influence on business in a given scenario. The economic system of the country, lifeexpectancy
of 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 components
of the economic environment.
Business depends on the economic environment for allthe needed inputs. It also depends on the
economic environment to sell its finished goods. Naturally, the dependence of business on the economic
environment is total and it is not surprising because, as it is rightly said, business is one unit of the total
economy. It is difficult to be precise about the factors that constitute the economic environment of a
country. However, there are some factors which have considerable influence.
Fig-3.1
3.1.1. COMPONENTS IN ECONOMIC ENVIRONMENT
The Nature of Economic System

An Economic System can be defined as a continuous process of setting up the institutional arrangements
by the nation so as to satisfy the needs of the people to the maximum extent by utilizing the limited
resources and thereby providing the goods and services. Every business has to plan according to the
nature of the economic system of the country.
If a country follows capitalistic pattern of economic system, there is a greater scope for private
entrepreneurs and there will be no interference of the government and its control over the business
firms. If the government selects socialistic pattern of economic system, there will be a full control on
business and supply system. If the government follows mixed economy there will be public sector as
well as private sector. Hence, it can be concluded that there is great impact on business system of
the country by its economic system.
The Structure of the Economy

The structure of the economy includes the factors such as the contribution of different sectors that
exist in the economy and ownership of businesses. There are three sectors that exist in every economy
55
$<ÛëHê\˝À eTTKýÓTÆq$ bÕ]ÁXÊ$Tø£ $<Ûëq+, ø√X¯ $<ëq+, $‘·Ô $<Ûëq+, $<˚o e÷s¡ø£ $<Ûëq+, m>∑TeT‹
~>∑TeT‹ $<Ûëq+ yÓTT<ä˝…’q$. M{Ï nìï+{Ï jÓTTø£ÿ Á|üuÛ≤e+ Ä <˚X¯ yê´bÕs¡ $<Ûëq+ ô|’ ñ+{≤sTT.
Ä]∆ø£ Á|üD≤[ø£\T
ˇø£ <˚X¯ Ä]∆ø£ eéVü‰sê\qT eTT+<äT>± ìs¡sí TT+#·Tø=qï ìØí‘· ÁbÕ<ÛëHê´\T \øå±´\ y˚Ts¡≈î£ yê{Ïì ìØí‘· ø±\+˝À
HÓs¡y˚s¡TÃø=H˚ Á|üj·T‘·ï |üPs¡«ø£ #·s¡´\qT Á|üD≤[ø£\T n+{≤s¡T.
<˚X+¯ ˝À ñqï düeTdü´\qT kÕ~Û+#·&ÜìøÏ n+<äTu≤≥T˝À ñqï eqs¡T\qT ìπs•› +∫q y˚Ts¡≈î£ y˚Ts¡≈î£ HÓsy¡ s˚ T¡ Ãø=qT≥≈£î
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 ñ|üjÓ÷>∑ |ü&É‘êsTT.
Ä]∆ø£ ø±s¡ø±\T eT]j·TT düeTdü´\T

<˚X¯ Ä]∆ø£ eédüú eTTK´ ø±s¡ø±˝…’q Ä]∆ø£ |ü]dæú‘·T\T, dü÷ú\ C≤rjÓ÷‘·Œ‹Ô, C≤rj·÷<ëj·T+, ‘·\dü] Ä<ëj·T+,
eT÷\<Ûäq ø£\Œq, $<˚o e÷s¡ø£ Á<äe´+ eT]j·TT <ëì ô|s¡T>∑T<ä\ yÓTT<ä˝…’q$ Ä<˚X¯ yê´bÕs¡ eédüúô|’ eT]j·TT
<ëì n_Ûe~›ô|’ Á|üu≤Û e+ #·÷|ü⁄‘êsTT. eTTK´ düeTdü´˝…q’ ìs¡T<√´>∑eTT, ù|<ä]ø£eTT, Ä]∆ø£ e÷+<Û´ä eTT, yÓTT<ä˝q’… $
≈£L&Ü yê´bÕs¡ eédüúqT Á|üuÛ≤$‘·+ #˚kÕÔsTT.
>√¢ã˝Ÿ Ä]∆ø£ $<ÛëHê\T

ˇø£ <˚X¯+˝À ñqï yê´bÕs¡ eédüú\T Ä <˚X¯ Ä]∆ø£ $<ÛëHê\ô|’ eT]j·TT Ä <˚X¯+ jÓTTø£ÿ $<˚o yêDÏ»´ $<ÛëHê\ô|’
Á|üuÛ≤yêìøÏ ˝ÀHÓ’ ñ+{≤sTT. Á|üdüTÔ‘·ø±\+˝À Á|ü|ü+#·+ ˇø£ yê´bÕs¡ Vü≤uŸ >± e÷]b˛sTT+~. Á|ü‹<˚X¯+ jÓTTø£ÿ
yê´bÕs¡ $<ÛëHê\qT Á|ü|ü+#· Ä]∆ø£ dü+düú\T XÊdæ‘·THêïsTT. yê{Ï jÓTTø£ÿ Á|üuÛ≤e+ <˚X¯ Ä]∆ø£ |üìrs¡T ô|’ Á|üuÛ≤e+
#·÷|ü⁄‘√+~. WTO, IMF, Á|ü|ü+#· u≤+≈£î e+{Ï dü+düú\T Á|ür <˚X¯ yê´bÕs¡ eédüú ô|’ Á|üuÛ≤e+ #·÷|ü⁄‘·THêïsTT.
ˇø£ <˚X¯+ ‘êqT m+#·Tø=qï $<˚o yêDÏ»´ $<ÛëHê\qT ã{Ïº Ä <˚X¯ yê´bÕs¡ $<Ûëq+ Ä<Ûës¡|ü&ç ñ+≥T+~.
3.2. Ä]∆ø£ eédüú\T - s¡ø±\T

ˇø£ <˚X¯ Ä]∆ø£ eqs¡T\qT ‘·q <˚X¯ Á|üj÷Ó »Hê\≈£î eédü\ú eT<Û´ä @ $<Û+ä >± |ü+|æD° #˚dTü +Ô <√ <ëìì Ä]∆ø£ eédüú
n+{≤s¡T. Á|ü|ü+#· <˚XÊ\˝À eTTK´+>± eT÷&ÉT s¡ø±˝…’q Ä]∆ø£ eédüú\T neT\T˝À ñHêïsTT. n$ kÕeTýê<ä
Ä]∆ø£ eédüú, ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú eT]j·TT $TÁX¯eT Ä]∆ø£ eédüú. Á|ür eédüú≈£î ø=ìï ã˝≤\T eT]j·TT
ã\V”≤q‘·\T ñHêïsTT.
ˇø£ <˚X¯+ jÓTTø£ÿ Ä]∆ø£ eédüú˝À Ä <˚XÊìøÏ dü+ã+~+∫q Á|üø£‹ eqs¡T\qT, edüTÔ ùde\qT ñqï nìï s¡+>±\T
dü+dü\ú eT<Û´ä |ü+|æD° #˚jT· &É+ »s¡T>∑T‘·T+~. á dü+dü\ú eT<Û´ä |ü+|æD˝° À nH˚ø£ dü+dü\ú T, yê{Ï eT<Û´ä $ìjÓ÷>∑eTT,
Á|üD≤[ø£\T , eékÕú dü«s¡÷|üeTT yÓTT<ä˝…’qe˙ï ˝…ø£ÿ˝ÀìøÏ rdüTø√e&É+ »s¡T>∑T‘·T+~.
ˇø£ Ä]∆ø£ eédüú Ä eédüú˝À m≥Te+{Ï ñ‘·Œ‹Ô »s¡>±*, m˝≤ »s¡>±*, mes¡T ñ‘·Œ‹Ô #˚j·÷*, düe÷»+˝À edüTÔ
ùde\ |ü+|æD° m˝≤>∑ »s¡>±* nH˚~ ìs¡ísTTdüTÔ+~. ˇø£ Ä]∆ø£ eédüú ‘·q Á|ü»\≈£î ø£˙dü nedüsê\T, ø£˙dü Jeq
Á|üe÷D+, HêDýÓTÆq Jeq+ n+~+#·&É+ Á|ü<Ûëq <Û˚´j·T+ >± ñ+#·Tø=+≥T+~.
56
with different priorities according to availability of its natural resources. The three sectors are Primary
Sector (Agriculture) Secondary Sector (Industrial Sector) and Tertiary Sector (Services Sector).
Economic Policies
Each economic function is based on unique set of conditions and assumptions. The economic
policy of the governmentcovers the system of setting levels of taxation; government budgets; the money
supply; interest rates as well as the labour market, ownership and many other areas of government
interventions into the economy. The government frames economic policies in the form of industrial
policy, fiscal policy, monitory policy, foreign policy and EXIM Policy which directly influence all the
business activities.
Economic Planning
EconomicPlanning can be defined as a process of conceiving; initiating; regulating and
controlling 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 based
on a computational procedure for solving a constrained maximization problem with an iterative process
for obtaining its solution. Planning is a mechanism for the allocation of resources between and within
organizations contrasted with the market mechanism.
Economic Factors and Problems

The 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. These
factors 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 Policy

A business enterprise dealing with foreign trade will be influenced by the economic environment of
their own country as well as the international business policies. Today, every business is facing
competition from the businesses of other countries on the globe. Policies of the international organization
like WTO, IMF and World Bank have great impact on the business of any nation in the light of
globalization. Hence, the stand of the country pertaining to international business relations may influence
the Economic environment of the said country.
3.2. TYPES OF THE ECONOMIC SYSTEM

The way scarce resources get distributed within an economy determines the nature of economic
system. There are different types of economic systems used throughout the world. Broadly, they
are capitalistic economy, socialistic economy and mixed economy. Each type of economy has its
own strengths and weaknesses.
An economic system is an organized way in which a country allocates resources and distributes
goods and services across the whole nation or a given geographic area. It includes the combination of
several institutions, entities, agencies, decision-making processes and patterns of consumption that
make up the economic structure of a specific community.
57
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±ã{Ïº Bìì e÷¬sÿ{Ÿ Ä]∆ø£ eédüú
nì≈£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÷¬sÿ{Ï+>¥ $<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£ $<ÛëqeTT
nì e÷¬sÿ{Ÿ 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|üy˚Tj·T+ ñ+&É<äT ˝Ò<ë #ê˝≤ ‘·≈£îÿe
2.ìj·T+Á‹‘· ô|≥Tºã&ç<ëØ $<ÛëqeTT. Ç+<äT˝À ø=+‘· y˚Ts¡≈£î Á|üuÑTÛ ‘·« CÀø£´+ ñ+≥T+~.
3.3.1. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú \ø£åD≤\T

ô|≥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 $<Ûä+>± yês¡T ô|≥Tºã&ç ñ+#·e#·TÃ. yê]øÏ q∫Ãq ñ‘·Œ‘·TÔ\qT #˚j·Te#·TÃ. nqTø=qï
<Ûsä ≈¡ î£ edüTÔ ùde\qT neTàe#·TÃ. @$<Ûyä TÓ qÆ ìj·T+Á‘·D˝Òì á Ä]∆ø£ $<ÛëHêìøÏ ÁøÏ+~ \ø£Då ≤\qT >∑eTì+#·e#·TÃ.
Á|üy≥˚ T j·÷»e÷qéTT
Ç~ ÄdæÔ Vü≤≈£îÿ\qT Á|üy≥
˚ T e´≈£î\Ô |üse¡ TT #˚dTü +Ô ~. edüTÔ ùde\ ñ‘·Œ‹Ô eT]j·TT |ü+|æD° Á|üy≥
˚ T e´≈£î\Ô #˚‘T· \≈£î
e~* y˚düTÔ+~.
eT÷\<Ûqä eTT 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≤>∑eTT
e÷¬sÿ{Ÿ <ä≈£îÿ‘·T+~. ø±ã{Ïº 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÷\<Ûqä øπ +ÁBø£sD¡
Ç~ <˚X¯+˝Àì ãVüQ ø=~›eT+~ #˚‘·T\˝À eT÷\<ÛäqeTT πø+ÁBø£‘·+ ø±e&ÜìøÏ <√Vü≤<ä+ #˚düTÔ+~. #ê˝≤
58
The goal of the economic system of a society is to determine what to produce, how to produce, and
for whom to distribute goods and services. The primary goal of an economic system is to provide
people 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 capital
goods. The production of goods and services is based on supply and demand in the general market
known as a market economy.
The system of capitalistic economy stresses the philosophy of individualism believing in private ownership
of all agents of production in private sharing of distribution processes that determine the functions
rewards of each participant, and in individual expression of consumer choice through a free market
place. In its political manifestation, capitalistic economy may fall in a range between extreme
individualisms and anarchism (no government) and the acceptance of some state sanctions. The
capitalist 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 economy
is absent or negligible; and
The modern, regulated or mixed capitalistic economy, where there is a substantial amount
of government intervention.
3.3.1. CHARACTERISTICS OF CAPITALIST ECONOMY

The 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 without
checks or controls. The following are the primary characteristics of capitalistic economy.
Private Ownership
Capitalistic economy is based on property rights and on the principles that the government should
leave economic production to the private sector.
Capital Accumulation
Capitalistic economy is a competitive system whereby capital is accumulated by individuals who are
successful in the market. This is intended to give individuals incentive to work, innovate and improve
things.
Capital Concentration
In a capitalist system, capital typically becomes concentrated such that a relative small number of
people, known as a capitalist class, own much of the property in a nation.
59
Fig-3.3
‘·≈î£ ÿeeT+~ m≈£îÿe dü+bÕ<äqqT ≈£L&É>≥∑ Tº≈î£ +{≤s¡T. M]H˚ uÛ÷Ñ kÕ«eTT\T ˝Ò<ë ô|≥Tºã&ç<ëØ es¡+Z >± >∑T]ÔkÕÔsT¡ .
dü«düÃ+¤ <ä Á|üyX˚ e¯ TT

ô|≥Tºã&ç<ëØ $<Ûëq+˝À e´≈£î\Ô ˝Ò<ë dü+dü\ú Á|üyX˚ e¯ TT dü«düÃ+¤ <äeTT . me¬sH’ ê m|ü⁄Œ&ÓH’ ê eédü˝ú 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÷¬sÿ{Ÿ eédüú

Ä]∆ø£ ìs¡j í ÷· \T Á|üuTÑÛ ‘·« $<ÛëHêìøÏ nqT≈£L\+>± rdüTø√yê\ì Ä+ø£\å T ñ+&Ée⁄. mes¡T≈£î q∫Ãq $<Û+ä >± yês¡T
‘·eT ô|≥Tºã&çì $ìjÓ÷–+#·Tø=ì edü÷Ô‘·Œ‹Ôì #˚|ü≥º e#·TÃ. edüTÔe⁄\ jÓTTø£ÿ <Ûäs¡\qT Á|üuÛÑT‘·« CÀø£´+ ˝Ò≈£î+&Ü
ìs¡sí TT+#·e#·TÃ.
ÁXÊ$Tø£ es¡eZ TT
ô|≥Tºã&ç<ëØ $<Ûëq+˝À dü+|ü<ä n+‘ê #ê˝≤ ∫qï es¡Z+ #˚‘·T\˝À πø+ÁBø£‘·yÓTÆ ñ+≥T+~. <˚X¯+˝Àì $T–*q
es¡eZ TT ô|’ yê] e<ä› y˚‘H· ê\≈£î |üì #˚dTü +Ô ~. BìH˚ ÁXÊ$Tø£es¡eZ TT n+{≤s¡T. M]øÏ Ç#˚Ã y˚‘H· ê\T ÁXÊ$Tø£es¡eZ TT
yê]≈£îqï &çe÷+&é düô|\¢’ Ä<Ûës¡+>± ìs¡sí TT+#·ã&É‘êsTT. ÁXÊ$Tø£ es¡eZ TT m≈£îÿe y˚‘H· ê\ø=s¡≈î£ yê] $<ë´kÕÔsTTì
˝Ò<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|sπ |ædTü +Ô ~. eédü\ú T, ‘êeTT ‘·j÷· s¡T#˚ùd edüTÔ ùde\ HÓ|’ ⁄ü D´‘· Hê<Ûës¡+>± yê]
<Ûäs¡\ Hê<Ûës¡+>± yês¡T e÷¬sÿ{Ÿ ˝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\dæq
b˛{°ì ì\u…≥º{≤ìøÏ Á|üuÛÑT‘·«+ Á|üj·T‹ïdüTÔ+~.
3.3.2. ô|≥Tºã&ç<ëØ Ä]∆ø£ eédüú düT>∑TD≤\T
1. <˚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 $<Û+ä >± yê´|üø±\qT #˚dTü ø=H˚ ùd«#ÛÃ· \_ÛdTü +Ô ~.
&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÷¬sÿ{Ÿ ìs¡íj·TeTT e÷¬sÿ{Ÿ |ü]dæú‘·T\ø£qT>∑TD+>± »s¡T>∑T‘êsTT. @ ˇø£ÿ] ìs¡íj·T+ MT<ä
Ä<ës¡|ü&ç eédüú |üì#˚j·T<äT.
60
Voluntary Participation
Capitalistic economy is based on a system of voluntary participation whereby everyone is free to start
any company he imagines or pursues any career he desires.
Free Markets
Economic decisions are made by the market as opposed to a government. Market participants freely
decide how to allocate capital and what prices to set for goods. This can be contrasted with systems
of government control where the government decides what will be produced and how much it will
cost.
Wage Labor
In a capitalist system, much of the capital is usually owned by a small capitalist class. Most people in
a capitalist system offer their labour to the market to earn a living. This group is known as the working
class. Wages are set by supply and demand.People may pursue education and self-improvement to
achieve higher wages by becoming qualified for professions that are in high demand.
Competition
Capitalistic economy relies on intensive competition to allocate resources efficiently, improve things
and 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 a
government that controls an entire industry without competition. Governments play a role in designing
and enforcing rules to keep competition alive.
Welfare Capitalistic economy

A pure form of capitalistic economy, known as laissez-faire capitalistic economy is a survival of the
fittest system where the government plays no role in the economy. At present this system is rare. In
practice, governments impose regulations, taxes, tariffs and subsidies. Ideally, this is all designed for
the 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 residents
in areas such as education, infrastructure, transportation and healthcare. A government can also protect
consumers, 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 market
forces. No central direction is required for the operation of the economy.
61
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±ã{Ïº qwüº uÛÑj·T+ ñqï yê´bÕsê\˝ÀìøÏ ≈£L&Ü ñ<äéT<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. Ç{Ïº <˚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\T

1. 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|ædTü +Ô ~.
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<äéT<ës¡T\qT me]˙ Á|üuÛÑT‘·«+ ìj·T+Á‘·D #˚j·T<äT. M] eT<Ûä´ @$<äeTsTTq dü+<ÛëqeTT ñ+&É<äT.
Bìe\q Ä]∆ø£ e÷+<ÛäéTT, Á<äy√´\“¤qeTT yÓTT<ä\>∑T düeTdü´\T ekÕÔsTT.
7. ÁXÊ$T≈£î\ y˚‘·Hê\T nqTø=qï+‘·>± ñ+&Ée⁄. ‘·<ë«sê M] ø=qT>√\T X¯øÏÔ ‘·>∑TZ‘·T+~. Ç~ $ìjÓ÷>∑+ ô|’
Á|üuÛ≤e+ #·÷|ü⁄‘·T+~. Bì e\q ñ‘·Œ‹Ô˝À ‘·>∑TZ<ä\ ø±s¡D+>± ìs¡T<√´>∑+ ô|]π> neø±X¯+ m≈£îÿe.
8. ô|≥Tºã&ç<ëØ eédü˝ú À neTàø£+<ës¡TøÏ m≈£îÿe n~Ûø±sê\T nqTuÛ$Ñ kÕÔ&TÉ . $ìjÓ÷>∑<ës¡T≈£î ùd«#ÛÃ· ñ+&É<Tä .
ø±u≤{Ïº neTàø£+<ës¡T @ø£kÕ«eT´ Vü≤≈£îÿ\qT nqTuÛ$Ñ kÕÔ&TÉ . $ìjÓ÷>∑<ës¡T ‘·≈î£ ÿe Á|üe÷D≤\Tqï edüTeÔ ⁄\qT
≈£L&Ü m+#·Tø√e\dæ edüTÔ+~. ñ‘·Œ‹Ô<ës¡T\<˚ ô|’#˚sTT>± ñ+≥T+~
3.4. kÕeTýê<ä Ä]∆ø£ eédüú

kÕeTýê<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»\
düV≤ü ø±sêìï |üP]Ô>± qeTTà‘·T+~. dü+|ü<ä Á|üuTÑÛ ‘·« nBÛq+˝À ñ+&ç, Ä dü+|ü<qä T Á|ü»\+<ä] eT<Û´ä 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$T+#·T ˇπø s¡ø£yTÓ Æq dæ<ë›+‘ê\ô|’ @s¡Œ&çq sê»ø°j·T
eédüú\T. Ç$ dü+|ü<äqT düe÷» |üs¡+ #˚j·TT≥˝ÀqT düe÷Hê‘ê«ìï kÕ~+#·T≥˝ÀqT ˇπø uÛ≤eqqT ø£*– ñ
HêïsTT. Á|üdüTÔ‘· Á|ü|ü+#·+˝À |üP]Ô>± kÕeTýê<ä+ ñqï düe÷C≤\T #ê˝≤ ‘·≈£îÿe. kÕeTýê<ä uÛ≤yê\Tqï|üŒ{ÏøÏ
ø=+‘· 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 as
to his economic activities keeping in mind his own-interest.
 Every producer tries to earn as much as possible by increasing his output, bringing newer
commodities into the market etc.
 Entrepreneurs are encouraged to invest more money even in the projects involving high risk
by 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 countries
enjoy 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 those
who do not possess much means of production. This brings wide inequalities in the distribution
of income and wealth.
 In modern capitalist market group rivalries and price wars, price-agreements etc. are commonly
found. Speculative practices are also present in the system.
 In capitalist countries, society possesses two classes such as haves and have-nots. Such
division results in conflict in the form of strikes, lockouts and industrial disputes in the
economy. Under capitalistic economy, capitalists generally exploit the poor laborers.
 There is no coordination among the activities of different producers and consumers under
capitalistic economy. It is entirely left to the operation of market mechanism. This gives rise to
the problem of inflation and deflation.
 Capitalist system creates unemployment problem also. Under capitalist economy, laborers
are not paid reasonably. So, their purchasing power becomes less. This reduces the aggregate
demand in the economy, which results in less production and unemployment.
 Capitalistic economy is basically a sellers’ market where consumer has no freedom. This is
because, under capitalist economy, producers enjoy monopoly in the market and produce
substandard goods. So, it is the producer who influences the market and not the consumer.
63
1991 øÏ eTT+<äT U.S.S.R ˇø£ 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|üŒ{Ï |ü]dæÔ‹ y˚sT¡ >± ñqï~ HÓeTà~ HÓeTà~>± <˚XÊ\T
kÕeTýê<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˚ ñ
HêïsTT. $<ä´, >∑Vü≤ nedüsê\T, dü_‡&û ÄVü‰s¡+ düô|¢’ ∫es¡≈î£ $H√<ä ø±s¡´Áø£e÷\T ≈£L&Ü Á|üuTÑÛ ‘·«y˚T ìs¡«Væ≤düT+Ô ~.
á <˚X¯+˝À kÕºø˘ mπø‡Ã¤+õ ≈£L&Ü ˝Ò<äT n+fÒ Çø£ÿ&É ô|≥Tºã&ç<ëØ #Ûêj·T\T eT#·TÃ≈£î ≈£L&Ü ø±qsêe⁄. 80%
ÁXÊ$Tø£ X¯øÏÔ |üP]Ô>± Á|üuÛÑT‘·« |üìø√dü+ ìjÓ÷–+#·ã&ÉT‘·T+~.
3.4.1. kÕeTýê<ä Ä]∆ø£ eédüú \ø£åD≤\T

kÕeTýê<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÷qéTT
kÕeTýê<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\˝À
˝Ò≈£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±ã{Ïº 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+ #·÷düT+Ô ~. @$<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£\qT
dæ<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£‘· eédüú
s¡÷bı+~+#·ã&ÉT‘·T+~.
Á|üuTÑÛ ‘·«+ jÓTTø£ÿ bÕÁ‘·

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

ø£˙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\q
Á|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.
64
3.4. SOCIALIST ECONOMY
Socialistic economy is a populist economic and political system based on public ownership of the
means of production. These means include the machinery, tools, and factories used to produce
goods that aim to directly satisfy human needs. Socialists believe that everything in society is made by
the cooperative efforts of the state andpublic. Socialists contend that shared ownership of resources
and central planning provide a more equal distribution of goods and services and a more equitable
society. Communism and Socialistic economy are political and economic systems that are related but
often confused with each other. Communism and Socialistic economy are political and economic
systems 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 that
identify as majorly socialist, though they also incorporate some little forms of capitalistic economy or
communism. Before its collapse in 1991, the U.S.S.R was a socialist state. All the means of production
were 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 be
treated as a crime.
Cuba is another prominent example of a socialist nation. The government controls the economy, all
levels 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 that
the 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 the
term without a proper understanding of its real meaning. Socialistic economy is an economic system
of social organization where the means of production are socially owned, rather than being privately
owned. The main characteristic features of Socialistic economy are explained as follows:
Collective Ownership
In Socialistic economy, all means of production are owned by the community, i.e., Government, and
no individual can hold private property beyond certain limit. Therefore, it is government which utilize
these resources in the interest of social welfare.
Economic, Social and Political Equality

Under Socialistic economy, there is almost equality between rich and poor. There is no problem of
class struggle.
Economic Planning
Under 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
65
b˛{° ˝Ò<Tä
Á|üuÛÑT‘·«y˚T nìï nedüsê\≈£î ‘·–q ñ‘·Œ‹Ô #˚|ü&ÉT‘·T+~ ø±ã{Ïº e÷¬sÿ{Ÿ ˝À b˛{° ñ+&É<äT. Á|üuÛÑT‘·«+ ø±e\dæq
nedüsê\H˚ >∑T]ÔdüTÔ+~ ø±ì $$<ä ÁbÕ‘êé÷ïj·÷\ CÀ*øÏ b˛<äT ø±ã{Ïº $ìjÓ÷>∑<ës¡T≈£î m+|æø£ #˚düTø=H˚ X¯øÏÔ
ñ+&É<äT. ô|’>± e÷¬sÿ{Ÿ X¯≈£îÔ\T |üì#˚j·Te⁄ ø±ã{Ïº b˛{° nH˚<˚ ñ+&É<äT.
<Ûsä \¡ ìj·T+Á‘·D
Á|üuÛÑT‘·«y˚T ñ‘·Œ‹Ô eT]j·TT |ü+|æD° #˚düTÔ+~ ø±ã{Ïº <Ûäs¡\qT ìs¡ísTT+#˚ n~Ûø±s¡eTT Á|üuÛÑT‘ê«ìπø ñ+≥T+~. ô|’>±
˝≤uÛ≤\qT dü+bÕ~+#˚ uÛ≤eq ˝Ò<Tä ø±ã{Ïº ñ‘·Œ‹Ô øÏ nedüsy¡ TÓ qÆ <Ûsä \¡ qT ìs¡sí TTùdÔ dü]b˛‘·T+~. <Ûsä \¡ T ô|s¡>≥∑ +,
ìj·TeTÔ+#·&É+ nH˚ dü+ùd´ sê<äT.
kÕe÷õø£ dü+øπ eå T+
düe÷»+ ÁX‚j·TdüT‡ ø√dü+ kÕeTýê<ä eédüÔ Á|üj·T‹ïdüTÔ+~. ÁXÊ$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‡≈£î
bÕ≥T|ü&TÉ ‘·T+~.
3.4.2. kÕeTýê<ä Ä]∆ø£ eédüú düT>∑TD≤\T

1. ˇπø 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+øπ eå T+ ø√dü+ ñ|üj÷Ó –+#·&+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#˚dTü +Ô ~.
4. düTdæÔs¡ Ä]∆ø£ eédüú ø√dü+ Á|üuÛÑT‘·«+ Á|üj·T‹ïdüTÔ+~ yê´bÕs¡ #·Áø±\T ˇ&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|üuTÑÛ ‘·«+ $ìjÓ÷–düT+Ô ~. ø±ã{Ïº n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\≈£î $TøÏÿ* ñ|üj÷Ó >∑|&ü TÉ ‘·T+~.
3.4.3. kÕeTýê<ä Ä]∆ø£ eédüú ˝ÀbÕ\T

1. $ìjÓ÷>∑<ës¡TD≈£î m+|æø£ neø±X¯+ ˝Ò<Tä . Á|üuTÑÛ ‘·«+ |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⁄
66
economy are taken in the economic plans. There is a Central Planning Authority, which plans for the
economy.
Positive Role of Government

In Socialistic economy, government plays significant role in decision making. Thus, government has
complete control over economic activities like distribution, exchange, consumption, investment and
foreign trade.
Provision of Basic Needs

In 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 of
Socialistic economy. Provision of basic needs by the government can, however, result in the masses
thinking that they cannot survive without the government, creating a perfect environment for the rise
of authoritarian governments.
No Competition
Typically, 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. The
same applies for many other products. In a socialistic economy, there is no competition in the market
since the state is the sole entrepreneur. The state only focuses on provision of necessities, which
results in limited consumer choice.
Price Control
One might be wondering how prices are regulated in an economy without any market competition. In
socialistic economies, the prices of products are controlled and regulated by the state. The states sets
both the market price for consumer goods and the accounting price which helps managers to make
decisions about the production of goods.
Social Welfare
Another major reason behind the rise of socialistic economy was to protect the working class from
the exploitation. The state takes care of the working class through employment protection, minimum
wages 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 exploitation
of labour.
 All types of natural resources are utilized in a most organized manner. Its main objective is to
exploit these resources for the welfare of society.
 In order to solve various problems in the system there is proper economic plan in this type of
economy. Thus, socialistic economy will adopt the balanced development strategy.
 Economic stability is maintained by the government on the basis of economic planning. There
are no cyclical fluctuations in such a system.
67
3. Á|üuÛÑT‘·« \øå±´\ y˚Ts¡≈£î |üì #˚düTÔ+~. eédüú ‘·q+‘· ‘êqT>± dü«‘·+Á‘·+>± eTq>∑\>∑ ˝Ò<äT
4. Á|üuTÑÛ ‘·« ìj·T+Á‘·˝Àq&ç#˚ eédü˝ú À ñ<√´>∑kÕ«eTéTT, ã+<äTÁ|”‹, C≤|üéTT, n$˙‹ yÓTT<ä\>∑T düeTdü´\qT
m<äTs√ÿe\dæ edüTÔ+~.
5. kÕeTýê<äeTT e÷s¡TŒqT n+^ø£]+#·<äT. e÷s¡T‘·Tqï ø±˝≤ìøÏ nqT>∑TD+>± eédüú e÷s¡<äT. Á|ü»\T
j·T+Á‘ê\>± e÷]b˛sTT Çwüº+ ñqï ˝Òø£b˛sTTHê |üì#˚j·Te\dæ ñ+≥T+~. @$<ÛäyÓTÆq Áb˛‘ê‡Vü≤ø±\T ñ
+&Ée⁄.
6. Ä]∆ø£ eéVü‰sê\T øπ +ÁBj·T Á|üD≤[ø£ eédüú #·÷düTø=+≥T+~. Á|üuTÑÛ ‘·« eéVü‰sê\T eT]j·TT Ä]∆ø£ eéVü‰sê\qT
@ø£ ø±\+˝À #˚j·T&É+ m≈£îÿe uÛ≤<ä´‘·\T yÓ÷j·T&É+ #ê˝≤ ø£wüº+.
7. Á|üD≤[ø£\qT neT\T#˚jT· &É+ Bs¡øZ ±*ø£ eéVü‰s¡+. Bìø=s¡≈î£ Ks¡TÃ#˚dqæ yÓTT‘êÔ\T e<ë nj˚T´ neø±X¯+
m≈£îÿe.
3.5. $TÁX¯eT Ä]∆ø£ eédüú

kÕeTýê<ä eT]j·TT ô|≥Tºã&ç<ëØ eédüú\ jÓTTø£ÿ \ø£åD≤\qT @ø°ø£‘·+ #˚dæ $TÁX¯eT Ä]∆ø£ eédüú ñ<ä“¤$+∫+~.
$TÁX¯eT Ä]∆ø£ eédüú Á|üy˚≥T ô|≥Tºã&çì kÕ«>∑‹düTÔ+~. Á|üy˚≥T ô|≥Tºã&ç<ës¡T\≈£î ‘·–q+‘· ùd«X¯ÃqT ÇdüTÔ+~.
n+‘˚ kÕúsTT˝À Á|üuTÑÛ ‘·«+ jÓTTø£ÿ CÀø£´+ ≈£L&Ü ñ+≥T+~. kÕe÷õø£ \øå±´\qT HÓsy¡ s˚ T¡ Ã≥ ø=s¡≈î£ Á|üuTÑÛ ‘·«+ ø=+‘·
ìj·T+Á‘·D #˚düTÔ+~.
á $<Ûëq+˝À Á|üy˚≥T j·÷»e÷q´+ qT nqTeT‹dü÷ÔH˚ edü÷Ô‘·Œ‹Ô, |ü+|æD° ô|’ Á|üuÛÑT‘·«+ jÓTTø£ÿ ìj·T+Á‘·q ñ
+≥T+~. ø=ìï ø°\ø£ edüTÔe⁄\ ñ‘·Œ‹Ô $wüj·T+ ˝À ≈£L&Ü Á|üuÛÑT‘·« n»e÷sTTw” ñ+≥T+~.
Ç~ |üP]Ô ùd«#ÛêÃ¤ $<ÛëqeTT ø±<äT. ø±s¡D+ Ç+<äT˝À Á|üuTÑÛ ‘·« ìs¡+‘·s¡ CÀø£´+ ñ+≥T+~. Á|üuTÑÛ ‘·« Á|üD≤[ø£\<ë«sê
e÷Á‘·y˚T <˚X¯ dü+|ü<äqT $ìjÓ÷–+#·&ÜìøÏ Á|üy˚≥T eédüú\≈£î πø{≤sTT+#·&É+ »s¡T>∑T‘·T+~. Á|üuÛÑT‘·«+
ô|≥Tºã&ç<ës¡T\ô|’ |üqTï\qT $~Û+∫ ‘·<ë«sê e∫Ãq Ä<ëj·T+ <ë«sê kÕe÷õø£ uÛ≤<Ûä´‘·\qT HÓs¡y˚s¡TdüTÔ+~. Bì
<ë«sê dü+|ü<ä |ü⁄q]«uÛÑ»q »s¡T|ü⁄‘·T+~.
3.5.1. $TÁX¯eT Ä]∆ø£ eédüú \ø£åD≤\T

Á|üuTÑÛ ‘·« Á|üy≥˚ T s¡+>±\ ø£\sTTø£
$TÁX¯eT Ä]∆ø£ eédüújÓTTø£ÿ Á|ü<ëq \ø£åDeTT Á|üuÛÑT‘·« Á|üy˚≥T s¡+>±\ ø£\sTTø£. Á|üy˚≥T s¡+>∑+ #˚‹˝À ø=ìï
|ü]ÁX¯eT\T yê´bÕsê\T ñ+{≤sTT. M] jÓTTø£ÿ Á|ü<ëÛ q \ø£´å eTT ˝≤uÛ≤s¡q® . ø=ìï |ü]ÁX¯eT\qT Á|üuTÑÛ ‘·«y˚T q&ÉT|ü⁄‘·T+~.
Bì jÓTTø£ÿ Á|ü<Ûëq <Û˚´j·T+ ˝≤uÛ≤s¡®q ø±≈£î+&Ü kÕe÷õø£ dü+πøåeT+ >± ñ+≥T+~.
Á|üuÛÑT‘·« Á|üy˚≥T uÛ≤>∑kÕ«eTéTT-ø=ìï dü+<Ûësê“¤\˝À Á|üuÛÑT‘·« eT]j·TT Á|üy˚≥T uÛ≤>∑kÕ«eT´+ ñ+≥T+~. Bìì
C≤sTT+{Ÿ s¡+>∑+ n+{≤s¡T. Ç~ C≤sTT+{Ÿ kÕºø˘ ø£+ô|˙\ s¡÷|ü+˝À ñ+≥T+~. Ç+<äT˝À yÓTC≤]{° uÛ≤>∑eTT
Á|üuTÑÛ ‘ê«ìπø ñ+≥T+~.
Á|üy˚≥T s¡+>∑+ ô|’ ìj·T+Á‘·D-$TÁX¯eT Ä]∆ø£ eédüú˝À Á|üy˚≥T s¡+>∑+ ô|’ Á|üuÛÑT‘·«+ jÓTTø£ÿ |üP]Ô ìj·T+Á‘·D
n»e÷sTTw” ñ+{≤sTT.
68
 The aim of socialist economy is to maximize social welfare of the society. It provides equal
opportunities of employment to all individuals according to their abilities.
 The Central Planning Authority is the main figure in a socialist economy. It coordinates the
natural, 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 all
means 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 think
and plan for the economic prosperity of the country.
 Planning is a long process in a socialist economy. This expenditure is unnecessarily wasteful
and 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 Socialistic
economy. A mixed economic system protects private property and allows a level of economic freedom
in the use of capital, but also allows for government to interfere in economic activities in order to
achieve social aims. Mixed economies typically maintain private ownership and control of most of the
means of production, but often under government regulation. Mixed economies socialize select
industries that are deemed essential or that produce public goods. Mixed economic system is
not laissez-faire systems, because the government is involved in planning the use of some resources
and can exert control over businesses in the private sector. Government may seek to redistribute
wealth by taxing the private sector, and using funds from taxes to promote social objectives.
3.5.1. CHARACTERISTICS OF MIXED ECONOMY

Co-existence of the Private and Public Sectors
Co-existence of the private and public sectors is the outstanding feature of mixed economy. Certain
industries will be in the public sector and certain industries in the private sector. Private individuals
69
Á|üD≤[ø± ã<äy› TÓ qÆ Ä]∆ø£ eédüú
á $<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¡≈£î
Á|üD≤[ø£\qT s¡∫+∫ yê{Ïì dü|©üò ø£‘·+ #˚jT· T≥ ø=s¡≈î£ $‘·,Ô ø√X¯ $<ÛëHê\ <ë«sê Ä]∆ø£ eédüqú T ìj·T+Á‹düT+Ô ~.
Á|üy≥˚ T dü+|ü<ä
$TÁX¯eT Ä]∆ø£ eédü˝ú À Á|üy≥˚ T ÄdüT\Ô ≈£î Á|üy≥˚ T eédü\ú ≈£î ÄkÕÿs¡eTTqï~. e´≈£î\Ô ≈£î kÕ«eT‘· ÄdüT\Ô T dü+bÕ~+#·Tø=H˚
kÂ\uÛÑéTTqï~.
kÕe÷õø£ ÁX‚j·TdüT‡
Ç~ kÕe÷õø£ ÁX‚jT· düT‡qT Á|ü<ëÛ q <Û̊´j·T+ >± uÛ≤$düT+Ô ~. Ç~ kÕeTýê<ä eédüú ˝Àì eT+∫q Á>∑V≤æ +∫qf…q¢Æ ~.
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|üŒ{ÏøÏ kÕe÷õø£ ÁX‚j·TdüT‡ <Û˚´j·÷ìøÏ ≈£L&Ü m≈£îÿe ÁbÕ<Ûëq´‘·
ìdüT+Ô ~.
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≤\T

1. 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. $TÁX¯eT Ä]∆ø£ eédü˝ú À Ä]∆ø£ ø±s¡´ø£˝≤bÕ\T ˇø£ Á|üD≤[ø£ Á|üø±s¡+ neT\T #˚jT· ã&É‘êsTT. düeTs¡e∆ +‘·yTÓ qÆ
Á|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±ã{Ïº $ìjÓ÷>∑<ës¡T\ kÕs¡«uÛÖe÷~Ûø±s¡+

\_ÛdTü +Ô ~.
6. Á|üuÛÑT‘·« Á|üy˚≥T s¡+>±\ eT<Ûä´ b˛{° düeTs¡∆e+‘·yÓTÆq , qMø£s¡D\‘√ ≈£L&çq ñ‘·Œ‹Ôì #·÷&Ée#·TÃ.
70
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 also
have 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 state
and private enterprises. It is organized on the basis of a joint stock company where the majority
shares are held by the state.
Regulation of Private Sector-Under mixed economy, Government exercises strict control and
regulation over private sector industries. Even though everyone is free to start a company or an
industry 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 economy

operates on the basis of some economic plan. All sectors of the economy function according to the
objectives, priorities and targets laid down in the plan. In order to fulfill them, the state regulates the
economy through various monetary, fiscal and direct control measures. The aim is to check the evils
of the price mechanism.
Private Property-Under mixed economy, private firms and individuals have right to own and use
property. But some restrictions have been imposed on private individuals so as restrict or prevent the
concentration of wealth in the hands of few.
Social Welfare-The principal aim of a mixed economy is to maximize social welfare. This feature
incorporates the merits of Socialistic economy and avoids the demerits of capitalistic economy. To
remove inequalities of income and wealth, and unemployment and poverty, useful measures such as
social security, public works, etc. are adopted to help the poor. On the other hand, restrictions are
placed on the concentration of monopoly and economic power in the hands of the rich through
various fiscal and direct control measures.
Motive of Business Concerns-The motive of the business concerns is profit but coupled with the
objective of social welfare.
Reduction of Inequalities of Income and Wealth- The Governmentstake steps to reduce inequalities
of income and wealth. For this purpose, governments impose progressive taxation and introduce
regulations 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.
71
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·Ã

Çe«ã&ÉT‘·T+~.
3.5.3. $TÁX¯eT Ä]∆ø£ eédüú ˝ÀbÕ\T

1. $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<äTø› =+≥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. $TÁX¯eT Ä]∆ø£ e´«dü˝ú À Á|üy≥˚ T s¡+>∑+ düs¬ q’ Á|ü‹uÛqÑ T #·÷|üøb£ ˛e#·TÃ. Ç~ C≤rsT÷ø£sD¡ ≈£î <ë] rdüT+Ô ~.
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 ìsêàDeTT
n+{≤s¡T. Á|ü<Ûëq+>± ˇø£ 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÷&ÉT
Á|ü<ëÛ q e÷sêZ\qT >∑T]Ô+#·&+É »]–+~. n$ ÁbÕ<Û$ä Tø£ s¡+>∑eTT, bÕ]ÁXÊ$Tø£ s¡+>∑eTT eT]j·TT ùde\ s¡+>∑eTT.
Fig. 3.4
72
 The profit of public sector industries goes to the Government and as a result inequalities of
income will be reduced in mixed economy.
 In a mixed economy, economic activities are carried out as per plan. The entire economic
system is subject to systematic planning of the Government.
 The economic activities take place in a planned manner. So there will be economic stability
in mixed economy.
 Goods are produced as per the wishes of the consumers, which results in consumer’s
sovereignty in a mixed economy.
 Competition between public and private sectors increasesefficiency, initiative, innovation

and productivity.
 Gives importance to the promotion of social welfare. Both private and public sectors work
for 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 regulates
private industries through its various regulations and licensing.
 Inefficiency of public sector is another demerit of mixed economy. They may suffer from
heavy losses. People will have to bear these losses.
 On account of capital scarcity, Government regulation and control, the growth of private
sector may be less than what is fixed in plan. It may lead to unemployment and uncertainties
in a mixed economy.
 There is always a threat of nationalization in the mixed economic system because of which
the 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 that
exist in the economy. There are three sectors that exist in every economy with different priorities
according to availability of its natural resources.
Indian economy can be classified into various sectors on the basis of ownership, working conditions
and the nature of the activities.
73
ÁbÕ<Û$ä Tø£ s¡+>∑+
<˚X¯+ jÓTTø£ÿ düVü≤» dü+|ü<äqT|üjÓ÷–+∫ Á|ü‘·´ø£å+>± $ìjÓ÷–+∫ #˚ùd ø±s¡´Áø£e÷\ ø£\sTTø£ á s¡+>∑+˝À ñ
+≥T+~. eékÕj·T s¡+>∑+, >∑qT\ s¡+>∑+, eT‘·Ù´ |ü]ÁX¯eT, n&Ée⁄\ ô|+|üø£+, bÕ&ç |ü]ÁX¯eT yÓTT<ä˝…’q$ BìøÏ
ñ<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$Tø£ s¡+>∑+ n+~+#˚ eTT&ç|ü<ësê∆\T, edüTÔe⁄\qT|üjÓ÷–+∫ |ü]ÁX¯eT\˝À ‘·j·÷¬s’q edüTÔe⁄\qT
n+~+#˚ s¡+>∑+ >± Bì >∑T]ÔkÕÔs¡T. bÕ]ÁXÊ$Tø£ ñ‘·Œ‘·TÔ˝…’q eÁkÕÔ\T, |ü+#·<ës¡, ÇqTeTT, yÓTT<ä˝…’q edüTÔe⁄\qT
n+~+#˚ s¡+>∑+>± Bìì #Ó|üŒe#·TÃ. Ç~ bÕ]ÁXÊ$Tø£ edüTÔe⁄\qT n+~+#˚ s¡+>∑+ ø±ã{Ïº á s¡+>±ìï
bÕ]ÁXÊ$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. á
s¡+>∑+˝À m≥Te+{Ï edüTÔe⁄\qT ñ‘·Œ‹Ô #˚j·T&É+ »s¡T>∑<äT. ø±ì yÓTT<ä{Ï ¬s+&ÉT s¡+>±\≈£î ø±e\dæq ùde\qT
n+~kÕÔsTT. M{Ï˝À s¡yêD≤, u≤+øÏ+>¥, ;Ûe÷, Á<äe´ düs¡|òüsê yÓTT<ä\>∑T ùde\T á s¡+>∑+ ÁøÏ+<ä≈£î ekÕÔsTT. á
ùde\ s¡+>∑+ bÕ]ÁXÊ$Tø£ s¡+>±ìøÏ ø±e\dæ $\Te\qT CÀ&çdüTÔ+~.
dü+|òTü {Ï‘· 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‰MT
ñ+≥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˝…’q
yê{ÏøÏ Vü‰MT ñ+≥T+~. m≈£îÿe>± |üì#˚dqæ ø±˝≤ìøÏ ‘·–q+‘· m≈£îÿe J‘·+ bı+<˚ ôd≈£L´]{°ì ø£*– ñ+{≤s¡T.
ndü+|òTü {Ï‘· s¡+>∑+

á s¡+>∑+˝À |üì#˚ùd ø±]à≈£î\T >∑Vü≤ dü+ã+<ä s¡+>∑+˝À |üì #˚düT+Ô {≤s¡T ˝Ò<ë dü«j·T+ ñbÕ~ s¡+>∑+˝À ˝Ò<ë
y˚‘·q ø±]à≈£î\T>± |üì#˚düTÔ+{≤s¡T. á s¡+>∑+˝À |üì #˚ùd ø±]à≈£î\T dü+|òüT{Ï‘·+>± ñ+&Éø£b˛e&É+ e\q M]øÏ
dü]jÓÆTq ñ<√´>∑ uÛÑÁ<ä‘· ñ+&É<äT. dü]jÓÆTq Ä<ëj·T+ ì#˚Ã ñ<√´>±\T ≈£L&Ü <=s¡ø±e⁄. ndü+|òüT{Ï‘· s¡+>∑+ ˝À
ñqï 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|üuTÑÛ ‘·« s¡+>∑+

á s¡+>∑+ kÕe÷õø£ dü+|ü<ä≈£î j·÷»e÷q´+ eVæ≤düTÔ+~. á dü+|ü<ä Ä]∆ø£ eédüú˝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˚≥T
e´≈£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£å
e÷Á‘·yT˚ .
74
Primary Sector
In 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 as
primary sector since most of the natural products are received from this sector.
Secondary Sector
It includes the industries where finished products are made from natural materials produced in the
primary sector. Industrial production, cotton fabric, sugar cane production like activities comes under
this sector. Since this sector is associated with different kinds of industries, it is also called industrial
sector.
Tertiary Sector/Service Sector

This 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 the
production. Transport, banking, insurance, finance like services come under this sector. It provides
the value addition to a product same as secondary sector.
The natural economic movement of a country goes from agrarian economy to an industrial economy
to 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 services
exporter with its share in world services exports rising from 0.6 per cent in 1990 to 3.3 per cent in 2013.
Quaternary Activities
These are specialized tertiary activities in the ‘Knowledge Sector’ which demands a separate
classification. The quaternary sector is the intellectual aspect of the economy. It is the process which
enables entrepreneurs to innovate and improve the quality of services offered in the economy. Personnel
working 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 Activities
The quinary sector is the part of the economy where the top-level decisions are made. This includes
the 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-arrangement
and interpretation of new and existing ideas; data interpretation and the use and evaluation of new
technologies. Profession under this category often referred as ’gold collar’ professions, they represent
another subdivision of the tertiary sector representing special and highly paid skills of senior business
executives, government officials, research scientists, financial and legal consultants, etc.
Organised Sector
In this sector, employment terms are fixed and regular, and the employees get assured work and
social security. Workers in the organised sector enjoy security of employment. They are expected to
work only a fixed number of hours. If they work more, they have to be paid overtime by the employer.
75
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#˚dTü +Ô ~. Á|üuTÑÛ ‘·«+ 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˝À
ìs¡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£ $<Ûëq+ n+fÒ Á|üuÛÑT‘·«+ Ä]∆ø£ eéVü‰sê\≈£î dü+ã+~+∫q rdüTø=H˚ ìs¡íj·÷\T. Ç+<äT˝À dü+|ü<ä jÓTTø£ÿ
j·÷»e÷qéTT, |üqTï$<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<ë
e÷¬sÿ{Ÿ 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 ñqï
Á<äy√´\“D Ä]∆ø£ e÷+<Ûä´ |ü]dæú‘·T\T, ìs¡T<Û√´>∑ düeTdü´, Ä]∆ø£ e~› yÓTT<ä˝…’q yê{Ï ø=s¡≈£î \øå±´\T>± #˚düTø=ì
Ä]∆ø£ $<ÛëHê\T ìs¡ísTT+#· ã&É‘êsTT. M{ÏH˚ $<Ûëq \øå±´\T nì n+{≤s¡T. M{Ïì kÕ~Û+#·&Üìπø $<ÛëHê\T
s¡÷bı+~+#· ã&É‘êsTT.
Á|ü‹ <˚X+¯ ‘·eT \øå±´\qT kÕ~Û+#·&ÜìøÏ ø=ìï $<ÛëHê\qT ne\+_ÛdTü +Ô ~. M{Ï˝À ø=ìï eTTø£ýÓTqÆ $<ÛëHê\qT
ÁøÏ+<ä $e]+#·&É+ »]–+~. uÛ≤s¡‘· <˚X¯ Ä]∆ø£ n_Ûe~›˝À á $<ÛëHê\T eTTK´ bÕÁ‘· eVæ≤düTÔHêïsTT.
bÕ]ÁXÊ$Tø£ $<ÛëHê\T
bÕ]ÁXÊ$Tø£ s¡+>∑+˝À n_Ûe~›ì kÕ~Û+#·&ÜìøÏ, ñ‘·Œ‹Ôì ô|+#·&ÜìøÏ ne\+_Û+#˚ Á|üuTÑÛ ‘·« $<ÛëHê\qT bÕ]ÁXÊ$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≥ºyTÓ T<ä{Ï bÕ]ÁXÊ$Tø£ $<Ûëq+ $TÁX¯eT Ä]∆ø£ dü÷Á‘ê\ô|’ Ä<Ûës¡|&ü ç 1948 ˝À Á|üuTÑÛ ‘·«+ 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÷¬sÿ{Ÿ Áù|]‘· n_Ûe~›ì ø±+øÏå+#˚ ùd«#ÛêÃ yêDÏ»´ $<ÛëHêìï
Á|üø£{Ï+#·&É+ »]–+~.
es¡øÔ £ $<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+ ˇø=ÿø£ÿ <˚XÊìøÏ ˇø=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£\dæ
ñ+≥T+~.
76
Unorganised Sector
An unorganised worker is a home-based worker or a self-employed worker or a wage worker. In
this sector wage-paid labour is largely non-unionised due to casual and seasonal nature of employment
and scattered location of enterprises. The sector is marked by low incomes, unstable and irregular
employment, and lack of protection either from legislation or trade unions.
The Public Sector

In this sector, government owns most of the assets and it is the part of the economy concerned with
providing various governmental services. The purpose of the public sector is not just to earn
profits. Governments raise money through taxes and other ways to meet expenses on the services
rendered by it.
The Private Sector

In the private sector, ownership of assets and delivery of services is in the hands of private individuals
or 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 economic
policy of government covers the systems for setting levels of taxation, government budgets, the money
supply, interest rates as well as the labour market, asset ownership, and many other areas of government
interventions into the economy. Most factors of economic policy can be divided into either fiscal
policy, 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 covers
the systems for setting interest rates and government budget as well as the labour market, national
ownership, and many other areas of government interventions into the economy. Economic system
can be categorized into four main types: traditional economies, command economies, mixed
economies, and market economies.
Policy is generally directed to achieve particular objectives like inflation targets, employment generation
and 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 growth
of Indian economy are discussed below.
77
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≤\T
yÓTT<ä˝…’q $wüj·÷\T Á|ü<Ûëq bÕÁ‘· eVæ≤kÕÔsTT.
Á<äe´ $<ÛëqeTT
ˇø£ <˚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÷ øπ +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 dæØú ø£sD
¡ eT]j·TT
e÷s¡TŒ\ ø=s¡≈£î 1991 ˝À Á|üø£{Ï+#·&É+ »]–+~.
ø√X¯ $<ÛëqeTT
ø√X¯ $<Ûëq+ nH˚~ <˚X¯ |üqTï\ $<Ûëq+ ≈£î düã+~+∫q~. Á<äe´ $<Ûëq+ øπ +Á<ä u≤+≈£î ìs¡sí TT+#˚~ nsTT‘˚ ø√X¯
$<Ûëq+ Á|üuÛÑT‘·«+ ìs¡ísTTdüTÔ+~. Á|üuÛÑT‘·«+ $~Û+#˚ |üqTï\T <ëìì @$<Ûä+>± Ks¡TÃ #˚j·÷* @ $<ÛäyÓTÆq n|ü⁄Œ\T
rdüTø√yê* nH˚~ Bì˝À ìs¡ísTT+#·ã&ÉT‘·T+~. Ç~ Á<äe´$<ÛëHêìøÏ nqTã+<ä $<Ûëq+.
eékÕj·T $<ÛëqeTT
ˇø£ <˚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·T
s¡+>∑+ <ë«sê Ä•+∫q Ä<ëj·T+,eékÕj·T s¡+>±ìøÏ, Ä]∆ø£ $<ÛëHêìøÏ, düe÷C≤ìøÏ eT<Û´ä >∑\ 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˝q’… e˙ï eékÕj·T $<Ûëq+˝À ìsê›]+#·ã&É‘êsTT. eékÕj·T s¡+>±ìøÏ dü+ã+~+∫q
düMTø£‘· $<ÛëHêìï eékÕj·T $<Ûëq+ n+{≤s¡T.
m>∑TeT‹ ~>∑TeT‹ $<ÛëqeTT

ˇø£ <˚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|üuTÑÛ ‘·«+ rdüTø=qï ìs¡j
í ÷· \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.
78
Industrial Policy
Industrial 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, industrial
policy refers to “any type of selective government intervention or policy that attempts to alter the
structure of production in favour of sectors [or activities] that are expected to offer better prospects
for economic growth in a way that would not occur in the absence of such intervention in the market
equilibrium”
The first Indian Industrial Policy based on the mixed economy principle was announced in 1948
which demarcated clearly the areas of operation of the public and private sectors. This policy was
revised in 1956 which laid greater emphasis on the expanding role of the public sector. The Government
of India announced liberalised Industrial Policy on July 24, 1991. Instead of state-sponsored
development, the new policy put emphasis on market-led development.
Trade Policy
Trade policy defines standards, goals, rules and regulations that pertain to trade relations between
countries. These policies are specific to each country and are formulated by its public officials. Their
aim is to boost the nation’s international trade. A country’s trade policy includes taxes imposed on
import 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. Some
nations levy heavy tariffs on imported goods to protect their local industries. High import
taxes inflate the prices of imported goods in local markets, ensuring that local products are
more 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 to
the set safety and quality standards.
Monetary Policy
Monetary policy or credit policy concerns itself with the cost (i.e., the rate of interest) and the availability
of credit to affect the overall supply of money. The hallmark of the RBI’s monetary policy in the
1950s was that of controlled monetary expansion. To supplement the process of macro stabilisation
and 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,
79
development of alternative system of monetary controls, etc.), are being constantly made since monetary
policy measures are continuous.
Fiscal Policy
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor
and influence a nation’s economy. It is closely akin to monetary policy through which a central bank
influences a nation’s money supply.
Fiscal policy is concerned with the policy of taxation, expenditure and borrowing. Fiscal policy as
evolved over time has resulted in a tax structure with greater reliance on indirect taxation.
Agriculture Policy
Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign
agricultural products. Governments usually implements agricultural policies with the goal of achieving
a 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 production
and productivity and also for raising the level of income and standard of living of farmers within a
definite time frame. This policy is formulated for all round and comprehensive development of the
agricultural sector.
EXIM Policy
Export Import Policy is also known as EXIM Policy is a set of guidelines and instructions related to
the import and export of goods. Indian EXIM Policy contains various policy related decisions
taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports
from the country and more especially export promotion measures, policies and procedures related
thereto. Trade Policy is prepared and announced by the Central Government. In general, the policy
aims at developing export potential, improving export performance, encouraging foreign trade and
creating favorable balance of payments position.
KEY TERMS
1. Economic Environment: All the external economic factors that influence buying habits of
consumers 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 government

presenting its anticipated revenues and proposed spending/expenditure for the upcoming financial
year.
80
4. Gross Domestic Product:The total value of goods produced and services provided in a country
during one year.
5. Per Capita Income: Per capita income (PCI) or total income measures the average income
earned per person in a given area in a specified year. Per capita income is national income
divided by population size.
6. Capital Formation: Capital formation is a term used to describe the net capital accumulation
during an accounting period for a particular country. The term refers to additions of capital
goods, such as equipment, tools, transportation assets, and electricity.
7. Foreign Exchange Reserves: Foreign Exchange reserves or Forex reserves are assets such
as foreign currencies, gold reserves, treasury bills, etc retained by a central bank or other monetary
authority.
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 to

foster global monetary cooperation, secure financial stability, facilitate international trade, promote
high 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 process
to manufacture products and services that consumers will later use. Capital goods include
buildings, 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 employers
and employers or between employers and workmen or between workmen and workmen, which
is connected with the employment or non - employment or terms of employment or with the
conditions of labour of any person”.
12. Entrepreneur:An entrepreneur is an individual who creates a new business, bearing most of
the risks and enjoying most of the rewards.
13. Economic Stability: Economic stability is the absence of excessive fluctuations in the macro
economy. An economy with fairly constant output growth and low and stable inflation would be
considered 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

81
1. The economic environment in a country is dependent upon
A. Nature of economic system present
B. Economic policy and planning of the government
C. Global economic environment
D. 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 economy
A. Private ownership
B. Free market
C. Voluntary participation
D. No competition
5. Which of the following is not an advantage of socialist pattern of economy

A. Social political and economic equality
B. Provision of basic needs
C. Social welfare
D. Availability of choice to the consumer
6. Both private and public sector are present in which of the following economic systems
A. Capitalist economy
B. Socialist economy
C. Communist economy
D. Mixed economy
7. Which of the following activities doesn’t come under primary activity

A. Mining
B. Forestry
C. Agriculture
D. Teaching
82
8. Quinary activities in a economy refer to
A. Activities involving usage and extraction of natural resources
B. Activities related to industrial production of goods
C. Providing various services such as banking, teaching etc
D. Top level decision making, research and innovation
9. Which of the following is a feature of organised sector

A. Fixed working hours
B. Security of employment
C. Fixed wages
D. All the above
10. The economic policy of a government doesn’t include

A. Trade policy
B. Fiscal policy
C. Monetary policy
D. Foreign policy
ANSWERS
1 2 3 4 5 6 7 8 9 10
D A B D D D D D D D
INERACTIVE LINKS
https://www.google.co.in/books/edition/Business_Environment/
mGw8BAAAQBAJ?hl=en&gbpv=1&dq=types+of+business+environment&printsec=frontcover
83
84
Economic Planning
Learning Outcomes:

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 Layout:
4.1. Economic Planning

Chapter
4.1.1. Features of Economic Planning
4
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
85
Á|ü‹ Á|üuÛÑT‘·«+ jÓTTø£ÿ eTTKýÓTÆq $<ÛäT\˝À Ä <˚X¯ Ä]úø£ eédüú ø=s¡≈£î Á|üD≤[ø£\qT ‘·j·÷s¡T #˚j·T&É+
eT]j·TT Ä ~X¯>± ø±sê´#·s¡D‘√ eTT+<äT≈£î kÕ>∑&É+ eTTK´+. yêdüÔyêìøÏ Ç≥Te+{Ï Á|üD≤[ø£\T Ä]úø£
eédüúqT eT]j·TT <ëì˝À uÛ≤>∑yÓTÆq yê´bÕsê\qT Á|üuÛ≤$‘·+ #˚kÕÔsTT. á Á|üD≤[ø£\qT Ä]úø£
|ü]düsê\˝À eTTKýÓTÆq uÛ≤>∑+>± >∑T]Ô+#ê*. Á|üD≤[ø± dü+|òüT+ eT]j·TT C≤rj·T n_Ûe~∆ eT+&É*
e+{Ï dü+dü\ú düV‰ü j·T+‘√ ì]›wºü \øå±´\qT s¡÷bı+~+#·&+É <ë«sê eTq <˚X+¯ yÓTT<ä{À¢ |ü+#·es¡¸ |Á Dü ≤[ø£\
qT ÁbÕs¡+_Û+∫+~. Á|üdüTÔ‘·+ ˙‹ ÄjÓ÷>¥ Á|üD≤[ø± dü+|òüT+ $<ÛäT\qT ìs¡«]ÔdüTÔqï~.
yê´bÕs¡ ìs¡íj·÷\T rdüTø√e&ÜìøÏ eTT+<äT Á|üuÛÑT‘·« <äwæº @ n+X¯+ô|’ ñ+~ nH˚ <ëìô|’ yê´bÕs¡düTÔ\≈£î
ne>±Vü≤q #ê˝≤ eTTK´+. n+<äTø√dü+ C≤rj·T n_Ûe~∆ eT+&É*, Á|üD≤[ø± dü+|òüT+, ˙‹ ÄjÓ÷>¥
e+{Ï eédüú\ ìsêàD+ eT]j·TT yê{Ï |üìrs¡T dü+ã+~+∫q |ü]C≤„q+ nedüs¡+.
Á|üdüTÔ‘· n<Ûë´j·T+ á dü+düú\qT >∑T]+∫ eT]j·TT yê{Ï \øå±´\T ‘√ bÕ≥T yê{Ïô|’ $eTs¡Ù\qT ≈£L&Ü
$es¡+>± #·]ÃdüTÔ+~. uÛ≤s¡‘·<˚X¯+˝Àì |ü+#·es¡¸ Á|üD≤[ø£\ dü+øÏå|üÔ ne˝Àø£q+, yê{Ï \øå±´\T eT]j·TT
yê{Ï $»j·÷\T ≈£L&Ü á n<Ûë´j·T+ ˝À $X‚w¢ +æ #·ã&Ü¶sTT.
86
CHAPTER OVERVIEW
One of the important functions of every government is to plan the economy

of a country and move forward in that direction. Such planning in fact
influences the whole economy and businesses,thus being an important part
of economic environment. Our country initiallywent for fiveyear plans by
having specific objectives formulated with the help of bodies such as the
planning commission and the national development council. Currently NITI
Aayog took up the functions of planning commission.
The awareness of where and on what issue of economy the government’s

focus lies on is very important to make business decisions. And for that
purpose knowledge of bodies like national development, planning
commission, NITI Aayog, their structure and functioning is essential.
The present chapter discusses these bodies in detail and also their objectives
and criticism against them. A brief overview of five year plans in India, their
objectives and their achievements was also analyzed.
87
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 yê{Ïì ìØí‘·
ø±\+˝À HÓsy¡ s˚ T¡ Ãø=H˚ Á|üjT· ‘·ï |üPs¡«ø£ #·s´¡ \qT Á|üD≤[ø£\T n+{≤s¡T. <˚X+¯ ˝À ñqï düeTdü´\qT kÕ~Û+#·&ÜìøÏ
n+<äTu≤≥T˝À ñqï eqs¡T\qT ìπs›•+∫q y˚Ts¡≈£î y˚Ts¡≈£î $ìjÓ÷–+#·Tø=ì Äj·÷ eqs¡T\Tq $$<ä dü+düú\T,
$uÛ≤>±\ eT<Û´ä øπ {≤sTT+#·&ÜìøÏ Ä]∆ø£ Á|üD≤[*ø±\T ñ|üj÷Ó >∑|&ü ‘É êsTT. Ç$ <˚X¯ Ä]∆ø£ e~›øÏ <√Vü≤<ä|&ü ‘É êsTT.
Ä]∆ø£y˚‘·Ô\T Á|üD≤[ø£\qT $_Ûqï $<Ûë\T>± ìs¡«∫+#ês¡T. Á|üD≤[ø£\ jÓTTø£ÿ \øå±´\T, yê{Ïì kÕ~Û+#·&ÜìøÏ
nqTdü]+∫q f…øïÏ ø˘ , yê{Ïì kÕ~Û+∫q rs¡TqT ã{Ïº $$<ä s¡øe£ TT\T>± ìs¡«∫+#·&+É »]–+~. Á|üD≤[ø£ n+fÒ
ˇø£ 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 ˇø£ eTTKýÓTÆq Ä]∆ø£ ìs¡íj·T+. Ç~ edüTÔùde\ ñ
‘·Œ‹Ô mø£ÿ&É m|ü⁄Œ&ÉT m˝≤ »s¡>±*, M{Ïì me]øÏ πø{≤sTT+#ê* nH˚ $wüj·÷\qT düeTÁ>∑ düπs«<ë«sê
ìs¡sí TT+#·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 <Û̊´j·÷\ø√dü+ πø{≤sTT+#·&Üìï Á|üD≤[ø£\T nì
#Ó|Œü e#·TÃ.
4.1.1. Ä]∆ø£ Á|üD≤[ø£\ \ø£åD≤\T

Á|ü|+ü #· yê´|ü+Ô >± $$<ä ÄX¯j÷· \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±ã{Ïº Á|üD≤[ø£\T eédüú n_Ûe~›øÏ
nedüs¡+. ø±ì ô|≥Tºã&ç <ëØ eédüú˝À dü+|ü<ä Á|üy˚≥T e´≈£îÔ\ #˚‘·T\˝À ñ+≥T+~ ø±ã{Ïº <˚X¯ dü+|ü<äqT
düÁø£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~›ì

kÕ~Û+#·&ÜìøÏ nH˚ø£ Á|üj·T‘êï\T »s¡T>∑T‘·THêïsTT. M{Ï˝À eTTKýÓTÆq$ Á|üD≤[ø£\ neT\T. Á|ü|ü+#· e÷+<Ûä´+
‘·sT¡ yê‘· n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\˝À Á|üD≤[ø£\T n‘·´+‘· ÁbÕeTTK´‘·qT dü+‘·]+#·Tø=HêïsTT. eT+∫ Á|üD≤[ø£≈î£
ñ+&Ée\dæq ø±s¡ø±\T ÁøÏ+<ä $e]+#·&É+ »]–+~.
K∫Ã‘·yTÓ qÆ <Û´˚ j·÷\T

Ä]∆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+#·&ÜìøÏ
rdüT≈£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.
øπ +ÁBø£‘· Á|üD≤[ø£ eédüú

Á|ü‹<˚XÊìøÏ Á|üD≤[ø£\qT s¡∫+#·&ÜìøÏ, yê{Ïì 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$
88
4.1. ECONOMIC PLANNING
Economic Planning is defined as 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 based on a computational procedure for
solving a constrained maximization problem with an iterative process for obtaining its solution. Planning
is a mechanism for the allocation of resources between and within organizations in order to attain
specific goals.
Different economists have defined economic planning in a variety of ways by keeping in mind the
goals to be achieved and the techniques for achieving them. Apart from stating that planning is a
method, 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 what
and how much is to be produced, how, when and where it is to be produced, and to whom it is to be
allocated by the comprehensive survey of the economic system as whole”.The basic objective of
planning is to exercise control over the private sector of an economy. Controls are exercised over
economic resources which are scarce. When the economic resources of the country are rationally
arranged with a predetermined purpose, it is called economic planning.
4.1.1. FEATURES OF ECONOMIC PLANNING

Economic Planning has been adopted in different parts of the world for various reasons.In socialistic
countries, where there are state owned means of production, planning has become an institutional
need. While in capitalistic countries where private ownership exists (Laissez faire), it is necessitated
for the use of resources.In less developed countries or in developing countries, it is favored to overcome
the bottlenecks and for bringing all-round development. After ‘world depression’, economic planning
has become important in underdeveloped countries of the world.The most cherished features involved
in a good economic planning are as under:
Definite Objective
The most significant feature of economic planning is that it should possess definite objectives. Planning
means conscious and deliberate undertaking for a definite objective. For instance, economic planning
has the objective to accelerate the rate of growth, elimination of trade cycles, bringing the stability and
a attain full employment in the economy.
Central Planning Authority

The existence of a central planning authority is another feature of economic planning. This central
planning authority is responsible to prepare different schemes of development and coordinating the
various activities. The central planning authority takes all decisions relating to production and
consumption in an economy.
Democratic Character
Another 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 y˚T<Ûëe⁄\T #˚ ‘·j÷· s¡T#˚jT· ã&É‘êsTT, n<˚ düeTj·T+ ˝À
á 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 #˚d÷ü Ô |ü+#·es¡¸ Á|üD≤[ø£\qT <ë«sê Á|üC≤kÕ«eT´ j·TT‘· n_Ûe~› ø=qkÕ–düT+Ô ~.
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 nìï
dü+dü\ú , eédü\ú eT<Û´ä dü+ã+<ëìï ø£*|æ ñ+∫ eédüú düC≤e⁄>± »s¡>&∑ ÜìøÏ |üì#˚dTü +Ô ~. Ç~ ˇø£ dü\Vü‰s¡÷|üø£
eédüú e÷Á‘·y˚T.
düeTÁ>∑yTÓ qÆ |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 $wüj·T+.
nq>± @<√ ˇø£ s¡+>∑+ qT n_Ûe~›øÏ #·s¡´\T rdüTø=ì eTs=ø£ sê+>±ìï e~*y˚j·T&É+ »s¡T>∑<äT. nìï s¡+>±\
n_Ûe~› Bì˝À Ç$T&ç ñ+≥T+~.
$ìjÓ÷>∑+ ø=s¡≈£î Á|üD≤[ø£

ˇø£ øπ +ÁBj·T Á|üD≤[ø£ eédü˝ú À ñ‘·Œ‹Ô ø√dü+ Á|üD≤[ø£\T y˚jT· &É+ ˇø£ÿfÒ ñ+&É<Tä . ñ‘·Œ‹Ô nsTTq edüTÔ ùde\qT
$$<ä esêZ\≈£î |ü+|æDø° Ï dü+ã+~+∫q Á|üÁøÏjT· ≈£L&Ü ñ+≥T+~. n+fÒ ˇø£ Á|üD≤[ø£ ñ‘·Œ‹Ôì n+#·Hê y˚jT· &ÉyT˚
ø±ø£ n~ <˚X¯ dü+|ü<ä eT]j·TT edüTÔ ùde\T $$<ä esêZ\ eT<Ûä´ @ $<Ûä+>± |ü+|æD° ø±yê˝À ìs¡ísTTdüTÔ+~.
düùV≤‘·Tø£yTÓ qÆ 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
$$<ä esêZ\ eT<Ûä´ n‘·´~Ûø£ düe÷» ÁX‚j·TdüT‡sTT ø√dü+ |ü+|æD° #˚j·T&É+ »s¡T>∑T‘·T+~. Ç~ eTT+<äT>±H˚ $$<ä
esêZ\≈£î @ $<Ûä+>±, @ \øå±´\ y˚Ts¡≈£î |ü+|æD° #˚j·÷˝À ìs¡ísTTdüTÔ+~.
Ä#·]+#·<–ä q $<ÛëHê\T eT]j·TT \øå±´\T

ˇø£ <˚X+¯ jÓTTø£ÿ Á|üD≤[ø£ n~ <˚X+¯ jÓTTø£ÿ dü+|ü<qä T @ \øå±´\ y˚Ts¡≈î£ ñ|üj÷Ó –+#ê˝À ìsê›]düT+Ô ~. Bì ø√dü+
ø=ìï $<ÛëHê\qT neT\T #˚düTÔ+~. ø±ã{Ïº á Á|üD≤[ø£\ @sêŒ≥T˝À C≤rj·T dü+|ü<äqT Ä]∆ø£ düTÔdæÔs¡‘· ø=s¡≈£î
@$<Ûä+>± $ìjÓ÷>∑+#ê˝À <ëì \øå±´\T nqTdü]+#˚ $<Ûëq+ ìsê›]düTÔ+~.
90
but at the same time, adequate opportunities are provided to the people to actively participate at
various levels. Having federal structure of Indian Constitution, the Union Government only uses its
fiscal, monetary and physical controls to guide and give direction in consequence with the Five
YearPlans.
Advisory Role of Planning Commission

In the decentralized set up of planning, Planning Commission is the apex body. It provides the necessary
perspective, guidance and coordination. Furthermore, it serves as a close link between different
agencies so that functioning may be smooth. In this regard, Planning Commission is an advisory body.
Comprehensiveness
Another important characteristic of planning is its comprehensiveness in scope. As central planning
authority takes all decisions regarding production, consumption and distribution, it must cover the
entire economy which must be comprehensive in scope. In other words, planning must be effective so
that the planning of one sector may not be nullified by the absence of planning in other sectors.
Planning for Consumption

In a centrally planned economy, it should not be confined to production alone but at the same time, it
must cover the distribution and consumption also. In other words, the planning authority should not
decide not only on what and how to produce but it must keep in mind and decide accordingly among
whom it is to be distributed.
Rational Allocation of Resources

Generally, in under-developed countries, available resources are scarce and these resources are
allocated in such a manner as to get maximum social welfare. It needs to fix up priorities relating to
economic development. Thus, allocation of resourcesis in accordance to these fixed priorities.
Feasible Policies and Targets

A good planning is based on the initial resources of the country to achieve the feasible goals and
policies. In this way, domestic resources are planned for attaining economic stability. Policies and
targets are to be set at the beginning of the plan. At the end of the plan review will be initiated whether
targets are achieved or not.
4.2. PLANNING COMMISSION OF INDIA

Planning Commission of India was an organization in the Government of India, which formulated
India’s Five-Year Plans, among other functions. The Planning Commission was assigned with the
task of formulating plans and allocating resources to efficiently exploit our resources in order to
promote 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 15
March 1950, with Prime Minister Jawaharlal Nehru as the Chairman. The Planning Commission did
91
4.2. uÛ≤s¡‘· Á|üD≤[ø± dü+|òüT+
Á|üD≤[ø± dü+|òTü + uÛ≤s¡‘· <˚X+¯ ˝À |ü+#·es¡¸ Á|üD≤[ø£\qT s¡÷bı+~Û+∫ yê{Ïì neT\T#˚jT· &É+ ‘·~‘·s¡ <Û´˚ j·÷\ø√dü+
@sêŒ≥T #˚j·Tã&çq uÛ≤s¡‘· Á|üuÛÑT‘·« s¡+>∑ eédüú. Ç~ uÛ≤s¡‘· <˚X¯+˝À>∑\ nìï neø±XÊ\qT, dü+|ü<äqT ñ
|üjÓ÷–+#·Tø=ì n+<ä]øÏ dü]jÓÆTq JeH√bÕ~, n_Ûe~› ø=s¡≈£î @sêŒ≥T #˚j·Tã&çq~.
Á|üD≤[ø£ dü+|òTü + H˚sT¡ >± uÛ≤s¡‘· Á|ü<ëÛ q eT+Á‹øÏ »yêãT<ëØ >± eéVü≤s¡T‡Ô+~. Ç~ e÷]Ã 15 1950 q n|üŒ{Ï
uÛ≤s¡‘· Á|ü<Ûëq eT+Á‹ »eVü≤sY ˝≤˝Ÿ HÓÁVüA >±] n<ä´ø£å‘·q @sêŒ≥T #˚j·Tã&ç+~. Á|üD≤[ø£ dü+|òüT+ sêC≤´+>∑
ã<ä›+>± @sêŒ≥T #˚j·Tã&çq dü+düú ø±<äT. ø±˙ Ç~ j·T÷ìj·THé Á|üuÛÑT‘·«+ jÓTTø£ÿ Á|ü<ÛëqyÓTÆq uÛ≤>∑eTT .
uÛ≤s¡‘· Á|üuTÑÛ ‘·«+, 1950 e÷]Ã˝À ˇø£ Á|ü‘´˚ ø£ rsêàq+ <ë«sê Á|üD≤[ø± dü+|òTü + neT\T˝ÀìøÏ rdüT≈£î sêã&çq~.
Á|üD≤[ø± dü+|òüT+ jÓTTø£ÿ Á|ü<Ûëq <Û˚´j·T+ <˚X¯+˝À ñqï düVü≤» dü+|ü<äqT |üP]Ô>± ñ|üjÓ÷–+#·Tø=ì ñ‘·Œ‹Ôì
kÕ~Û+∫ n+<ä]ø° ñ<√´>±eø±XÊ\T ø£*Œ+#·&É+ <ë«sê düe÷C≤ìøÏ ùde\T n+~+#·&É+ eT]j·TT Á|ü»\ jÓTTø£ÿ
Jeq Á|üe÷D≤\T ô|+bı+~+#·+&É+˝À Á|ü<Ûëq uÛÑ÷$Tø£ b˛wædüTÔ+~. <˚X¯+˝À ñqï düVü≤» dü+|ü<äqT n+#·Hê
y˚jT· &É+ Áø√&ûø]£ +#·&+É , ø=s¡‘>· ± ñqï dü+|ü<qä T ô|+bı+~+#·&+É , Á|üD≤[ø£\qT s¡÷bı+~+#·&+É <ë«sê ñ‘·Œ‹Ôì
ô|+bı+~+#·&É+ nH˚$ Á|üD≤[ø£ dü+|òü÷ìøÏ n|üŒ–+#·ã&çq Á|ü<Ûëq uÛ≤<ä´‘·\T. |ü+&ç{Ÿ »eVü≤sY ˝≤˝Ÿ HÓÁVüA
Á|üD≤[ø± dü+|òüT+ jÓTTø£ÿ Á|üÁ|ü<ÛäeT n<Ûä´≈£åî\T.
Á|üD≤[ø± dü+|òü÷ìøÏ Á|ü<Ûëì n<Ûä´≈£åî\T >± ñ+&ç C≤rj·÷_Ûe~› eT+&É* jÓTTø£ÿ dü÷#·q\ y˚Ts¡≈£î Á|üD≤[ø±
$<ÛäT\T ø=qkÕ–düTÔ+{≤s¡T. Á|üD≤[ø± dü+|òüT ñbÕ<Ûä´≈£åî\T eT]j·TT |üP]Ô ø±\|ü⁄ düuÛÑT´\ ‘√ ≈£L&çq uÀs¡T¶
Á|üD≤[ø£\≈£î dü+ã+~+∫q dü÷#·q\qT #˚dTü +Ô ~. Ç+ø± yê]¸ø£ Á|üD≤[ø£\T, sêÁcÕº\ Á|üD≤[ø£\T, Á|üD≤[ø£\ rs¡T
, d”ÿeTT\T eT]j·TT ÁbÕC…≈£îº\qT |üs¡ý˚øÏådüTÔ+~.
Á|üD≤[ø± dü+|òTü düuTÑÛ ´\T

n<Û´ä ≈£îå \T - Á|ü<Ûëq eT+Á‹, dü+|òüT+ jÓTTø£ÿ düe÷y˚XÊ\≈£î n<Ûä´ø£å‘· eVæ≤kÕÔs¡T.
ñbÕ<Ûä´≈£åî\T - ø±s¡´ ìsê«Vü≤ø£ n<Ûä´≈£åî\T (|üP]Ô ø±\|ü⁄ ø±s¡´ ìsê«Vü≤D)
|ü+#·es¡¸ Á|üD≤[ø£\qT ‘·j·÷s¡T #˚dæ yê{Ïì πø+Á<ä eT+Á‹ esêZìøÏ düeT]Œ+#˚ uÛ≤<ä´‘· ø£*– ñ+{≤s¡T.
ìj·T$T‘· ø±˝≤ìøÏ πø+Á<ä eT+Á‹ es¡Z+ #˚‘· ìj·T$T+#· ã&É‘ês¡T. øπ _HÓ{Ÿ eT+Á‹ sê+≈£î ø£*– ñ+{≤s¡T.
πø+Á<ä eT+Á‹ es¡Z düe÷y˚XÊ\≈£î Vü‰»s¡j˚T´ n~Ûø±s¡+ ø£*– ñ+{≤s¡T. ø±ì z≥T y˚ùd Vü≤≈£îÿ ˝Ò<äT.
bÕsYº f…ÆyéT düuÛÑT´\T -πø+Á<ä eT+Á‘·T\ ˝À ø=+‘·eT+~

mø˘‡ Ä|ò”dæjÓ÷ düuÛÑT´\T - πø+Á<ä Ä]∆ø£ XÊU≤ eT+Á‹ eT]j·TT Á|üD≤[ø± XÊU≤ eT+Á‹
uÛ≤s¡‘· <˚X¯+ Ç|üŒ{Ï es¡≈£î @&ÉT <äXÊu≤›\ Á|üD≤[ø± ø±˝≤ìï |üP]Ô #˚düTø=qï~. Á|üD≤[ø± ø±\+˝À dü+|òüT+ ø=ìï
$»j·÷\T ø=ìï n|ü»j·÷\T ≈£L&Ü ˝Òøb£ ˛˝Ò<Tä . yÓTT‘·+Ô MT<ä Á|üD≤[ø± dü+|òTü + $TÁX¯eT |ò*ü ‘ê\qT kÕ~Û+∫+<äì
#Ó|üŒe#·TÃ. 2014 ˝À qπs+Á<äyÓ÷&û >±] Á|üuÛÑT‘·« ìs¡íj·T+ y˚Ts¡≈£î uÛ≤s¡‘· Á|ü»\≈£î Ç+ø± eT+∫ |òü*‘ê\T
n+~+#·&É+ ø√dü+ Á|üD≤[ø± dü+|òüT+ qT eTT–+∫ <ëì kÕúq+˝À Ç+ø± eT+∫ kÕ~Ûø±s¡‘·qT kÕ~Û+#·&ÜìøÏ ˙‹
njÓ÷>¥ qT ø±sê´#·s¡D˝ÀìøÏ rdüT≈£î sêe&É+ »]–+~.
92
not derive its creation from either the Constitution or Statute but was an arm of the Central/Union
Government.
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 of
Indians by the productive exploitation of the country’s resources, raising production and securing
opportunities for everyone for employment in the service of society. The Planning Commission was
assigned 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 Development
Council. 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, Annual
Plans, State Plans and monitoring Plan Programmes, Projects and Schemes.
Members of the Planning Commission

Chairman – Prime Minister; presided over the meetings of the Commission
Deputy Chairman – de-facto Executive Head (full-time Functional Head);
was responsible for the formulation and submission of the draft Five-Year Plan to the
Central cabinet.
was appointed by the Central cabinet for a fixed tenure and enjoyed the rank of a
cabinet minister.
could attend cabinet meetings without the right to vote.
Part-time members – Some Central Ministers

Ex-officio members – Central Finance Minister and Central Planning Minister
India had completed about seven decades (1951-2017) of planning. During the Plan Period it has
achieved success in some directions and failed in other areas. So, India’s experience during the Plan
Period presents a mixed picture.
In 2014, Narendra Modi government decided to wind up the Planning Commission. It was replaced
with the newly formed NITI Aayog to better represent the present needs and aspirations of people of
India.
4.3. NATIONAL DEVELOPMENT COUNCIL
The National Development Council (NDC) or Rashtriya Vikas Parishad is the apex body for
decision creating and deliberations on development matters in India, presided over by the Prime
Minister. It was set up on 6 August 1952 to strengthen and mobilize the effort and resources of the
nation in support of the Five Year Plans made by Planning Commission. Its main aim is to promote
common economic policies in all vital spheres, and to ensure the balanced and rapid development of
93
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·T
kÕúsTT˝À n_Ûe~›, ìs¡j
í ÷· ‘·àø£ #·sÃ¡ \T »s¡|&ü ÜìøÏ ñqï n‘·´qTï‘· kÕúsTT eédüú . BìøÏ Á|ü<ëÛ qeT+Á‹ n<Û´ä ≈£îå \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£ $<ÛëHê\qT
‘·j·÷s¡T #˚j·TT≥.
Bì˝À uÛ≤s¡‘· Á|ü<Ûëq eT+Á‹, πø+Á<ä πø_HÓ{Ÿ eT+Á‘·T\T, nìï sêÁcÕº\ eTTKéT+Á‘·T\T ˝Ò<ë yê] Á|ü‹ì<ÛäT\T,
πø+Á<ä bÕ*‘· ÁbÕ+‘ê\ Á|ü‹ì<ÛäT\T eT]j·TT Á|üD≤[ø± dü+|òüT düuÛÑT´\T Bì˝À düuÛÑT´\T>± ñ+{≤s¡T.
C≤rj·÷_Ûe~› eT+&É*ì Á|üdüTÔ‘·+ ìs¡÷à\q #˚j·T&ÜìøÏ ìs¡íj·T+ rdüTø√e&É+ »]–+~. ø±ì á s√E es¡≈£î
Bì ø±sê´#·s¡D »s¡T>∑˝Ò<äT. ˙‹ njÓ÷>¥ @sêŒ≥T #˚dæq <ä>∑Zs¡ qT+&ç( Ç~ Ç+#·T$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·÷\T

1. <˚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\T

1. <˚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+
94
all parts of the country. The Council comprises the Prime Minister, the Union Cabinet Ministers, Chief
Ministers 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 resolution
has been passed to abolish it. Since the inception of NITI Aayog’s Governing Council (which has
almost the same composition and roles as NDC) the NDChad neither been assigned any work nor
it did not conduct any meetings. During the tenure of former Prime Ministers Atal Bihari Vajpayee
and Manmohan Singh it was felt that Planning Commission has outlived its life and needs some
reform. The existence of National Development Council was also on the same line as planning
commission.
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 the
citizens 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 assessment
of 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 and
to suggest measures for augmenting them;
4 to consider important questions of social and economic policy affecting national
development;
5 to review the working of the Plan from time to time and to recommend such measures
as 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 the
national Plan.
95
4.4. ˙‹ njÓ÷>¥
˙{Ï njÓ÷>¥ (uÛ≤s¡‘· s¡÷bÕ+‘·s¡ C≤rj·T Á|üD≤[ø£ dü+dü)ú uÛ≤s¡‘<· X˚ ¯ $<Ûëq s¡÷|üø\£ Œq dü+|òTü +. uÛ≤s¡‘· Á|üuTÑÛ ‘·«+
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‘·qT
ô|+#·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¡D
ñqï~.
˙‹ 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|üŒ{Ï 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+~.
#Ûs’Ó à¡ Hé : 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 øπ +Á<ä bÕ*‘· ÁbÕ+‘ê\ jÓTTø£ÿ ˝…|Hºæò +Ó {Ÿ
>∑es¡ïs¡T.¢
ÁbÕ+rj·T øöì‡˝Ÿ : ÁbÕ+rj·T düeTdü´\T, Á|ü‘´˚ ø£ $wüj÷· \T qT nÁ&Édt #˚jT· &ÜìøÏ Ç$ ø±˝≤qT>∑TD+>±
Ç$ @sêŒ≥T #˚j·Tã&É‘êsTT.
eédüú - ≈£Ls¡TŒ
yÓ’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+dü\ú mø˘‡ n|òw” j
æ ÷Ó düuTÑÛ ´\ kÕÔsTT˝À s=fÒwHü é |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$T‘· ø±˝≤ìøÏ Á|ü<Ûëq
eT+Á‹ ìj·T$TkÕÔs¡T.
ôdÁø£f]Ò j·T{Ÿ : nedüsêìï ã{Ïº 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¡‘·
96
4.4. NITI AAYOG
The NITI Aayog (National Institution for Transforming India) is considered to be think tank of
the Government of India, established with the aim to achieve sustainable development goals
with cooperative federalism by fostering the involvement of State Governments of India in the economic
policy-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 is

an important objective of NITI Aayog. It will provide critical directional and strategic input to the
development process, focusing on deliverables and outcomes. This, along with being as incubator
and 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, provide
strategic 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 India

Governing 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 a
holistic approach;
97
(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 ˇø£ #√{ÏøÏ ‘Ó∫Ã $<ÛëHê\ |üìrs¡TqT düMTøÏå+#·&É+. ;<ä, eT<Ûä´
‘·s>¡ ‹∑ esêZ\ qT ô|ø’ Ï rdüT≈£îsêe&ÜìøÏ $<ÛëHê\qT ìs¡sí TT+#·&+É . nD>±]q esêZ\qT n_Ûe~› #˚jT· &É+. ≈£î\,
eT‘·,*+>∑, uÛ≤cÕ, ÁbÕ+rj·T düeTdü´\qT |ü]wüÿ]+#·&É+.
4.4.2. ˙‹ njÓ÷>¥ <Û˚´j·÷\T

1. 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 <äwæº˝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<äéT<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|’ <äwæº ô|≥º&É+.
Fig. 4.1
98
 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 and
NITI 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 knowledge
but also for good governance;
 it’s a platform for monitoring and implementation of all government policies by bringing together
various 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 of

all 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.
99
4.4.3. ˙‹ njÓ÷>¥ eT]j·TT Á|üD≤[ø£ dü+|òüT+ eT<Ûä´ >∑\ uÒ<ë\T
n+X¯eTT Á|üD≤[ø± dü+|òüT+ ˙‹ njÓ÷>¥
eédüú &ç|Pü ´{° #Ós¬’ àHé, 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´\T
bÕsYº 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÷¬sÿ{Ÿ 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¡Ù

Á|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<ëìøÏ
e´‹πsø£+. Bì e\q dü+πøåeT ø±s¡´Áø£e÷\≈£î ì<ÛäT\ πø{≤sTT+|ü⁄ ‘·>∑TZ‘·T+~.
˙‹ njÓ÷>¥ ø±s¡´ø£˝≤bÕ\T øπ +Á<ä eT+Á‹ es¡+Z eT]j·TT sêÁcÕº\ jÓTTø£ÿ düV≤ü ø±s¡+ eT]j·TT |üsd¡ Œü s¡ dü+Á|ü~+|ü⁄\‘√
»s¡T>∑T‘êsTT. πø+Á<ä sêÁwüº Á|üuÛÑT‘ê«\≈£î dü÷#·q\qT #˚düTÔ+~. M{Ïì neT\T |üs¡#· e\dæq uÛ≤<ä´‘· e÷Á‘·+
Á|üuTÑÛ ‘ê«\<˚. ˙‹ njÓ÷>¥ Á|üC≤edüsê\T, kÕeT÷Væ≤ø£, øπ +ÁBø£‘· $<Ûëq\Tÿ dü+ã+~+∫ $<Ûëq ìs¡j í T· Á|üÁøÏjT· ,
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<Ûëq
uÛ≤<ä´‘·\qT ìs¡«Væ≤düTÔ+~.
100
4.4.3. DIFFERENCE BETWEEN NITI AAYOG AND PLANNING COMMISSION
Component Planning Commission NITI Aayog
Organization Had deputy Chairperson New posts of CEO with secretary rank,
A member secretary Vice-Chairperson
Full-time members Five full-time members
Secretaries or member Two part-time members
secretaries were appointed on Four cabinet ministers as ex-officio members
usual process CEO is appointed by Prime Minister.
Planning Based on top-down planning Formulates plans based on bottom-up
for government with public approach right from village level and
sector resources. integrates plans at higher level.
Relation With States A central government institution Provides a partnership with states
No representation of states Promote co-operative federalism
No structural mechanism for Provides a platform for structured and
interaction with states. regular interaction with states.
Finance Role of Finance Commission Does not have any role in fund allocation
was greatly reduced
Allocation of funds were Finance commission decides the share of
decided by the Planning taxes to States
Commission. .
Constitution and The commission reported to Governing Council has State Chief
National Development Council Ministers and Lieutenant governors.
Reporting that had State Chief Ministers
and 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 the
spirit of federalism and democracy.
 UTs are represented by Lieutenant Governors, not by Chief Ministers. This is against the
principles of federalism.
 Fund allocation to welfare schemes may get affected. For example, there is a 20 Percent
reduction in gender budgeting.
101
4.5. uÛ≤s¡‘· <˚X¯+˝À |ü+#·es¡¸ Á|üD≤[ø£\T
uÛ≤s¡‘· <˚X¯+˝À Á|üD≤[ø£\T nH˚ |ü<ä+ <˚X¯+˝À ñqï dü+|ü<äqT dü+s¡∆e+‘·+>± ñ|üjÓ÷–+#·Tø=ì <˚XÊìï n_Ûe~›
#˚jT· &ÜìøÏ Á|üuTÑÛ ‘·«+ rdüTø=H˚ Bs¡È ø±[ø£ |ü<øäÛ ±\qT ˝Òø£ #·s´¡ \qT >∑T]+∫ $e]düT+Ô ~. uÛ≤s¡‘· <˚X+¯ ˝À |ü+#·es¡¸
Á|üD≤[ø£\T kÕ«‘·+Á‘·´+ ‘·s¡Tyê‘· 1950 ˝À ÁbÕs¡+_Û+#· ã&çHêsTT. <˚X¯ Ä]∆ø£ n_Ûe~›øÏ Á|üD≤[ø£\T #ê˝≤
nedüs¡+>± >∑T]Ô+#·ã&çHêsTT.
1951 qT+&ç 2017 es¡≈î£ uÛ≤s¡‘· Ä]∆ø£ eédüú Á|üD≤[ø£\T nH˚ |ü⁄Hê~ MT<ä ì]à+#·ã&çHêsTT. Bì ø±sê´#·sD¡
eT]j·TT n_Ûe~› |ü+#·es¡¸ Á|üD≤[ø£\T <ë«sê 1951 qT+&ç 2014 eT]j·TT 2015 qT+&ç 2017 es¡≈£î ˙‹
njÓ÷>¥ <ë«sê neT\T #˚j·Tã&çHêsTT. 2017 ˝À 12 e |ü+#·es¡¸ Á|üD≤[ø£ |üP]Ô ne&É+‘√ Á|üD≤[ø£\ ø±\+
eTT–dæ+~.
|üD≤[ø£ dü+|òüT+ 1950 e÷]Ã ˝À Ä$s¡“¤$+∫+~. 1950 @Á|æ˝Ÿ 1 qT+&ç Ç~ n~Ûø±]ø£+>± Á|üD≤[ø£\qT
yÓTT<ä\Tô|{Ïº 12 |ü+#·es¡¸ Á|üD≤[ø£\qT |üP]Ô Á#˚dæq ‘·s¡Tyê‘· uÛ≤s¡‘· Á|ü<Ûëq eT+Á‹ qπs+Á<ä yÓ÷&û >±] Á|üø£≥q
y˚Ts¡≈£î Á|üD≤[ø± dü+|òüT+ jÓTTø£ÿ X¯ø£+ eTT–dæ+~. uÛ≤s¡‘· s¡÷bÕ+‘·s¡ C≤rj·T Á|üD≤[ø± dü+düú nqã&˚ ˙‹
njÓ÷>¥ Á|üD≤[ø± dü+|òüT+ jÓTTø£ÿ bÕÁ‘·qT b˛wæk˛Ô+~.
uÛ≤s¡‘· Á|üÁ|ü<ÛäeT Á|ü<ÛëqeT+Á‹ |ü+&ç{Ÿ »eVü≤sY ˝≤˝Ÿ HÓÁVüA yÓTT<ä{Ï |ü+#·es¡¸ Á|üD≤[ø£qT uÛ≤s¡‘· bÕs¡¢yÓT+≥T˝À
Á|üyX˚ ô¯ |&ÉT‘·÷ Á|üD≤[ø£\ jÓTTø£ÿ nedüsêìï H=øÏÿ #ÓbÕŒs¡T. 1951 ˝À ÁbÕs¡+_Û+#·ã&çq yÓTT<ä{Ï Á|üD≤[ø£ ÁbÕ<Û$ä Tø£
s¡+>∑+ jÓTTø£ÿ n_Ûe~›ì Á|ü<ëÛ q \ø£´å +>± rdüTø√ã&ç+~. yÓTT<ä{Ï mì$T~ |ü+#·es¡¸ Á|üD≤[ø£\T Á|üuTÑÛ ‘·« s¡+>±ìï
ã˝Àù|‘·+ #˚ùd˝≤ ì<ÛäT\ jÓTTø£ÿ |ü+|æD° eT]j·TT ô|≥Tºã&ç ñ+#·ã&ç+~. ø±ì 1997 ˝À ÁbÕs¡+_Û+∫q
‘=$Tà<äe Á|üD≤[ø£ qT+&ç Á|üuÛÑT‘·« s¡+>∑+ qT+&ç Á|üy˚≥T s¡+>∑ n_Ûe~›øÏ u≤≥\T y˚j·T&É+ »]–+~.
4.5.1. uÛ≤s¡‘· <˚X¯+˝Àì Á|üD≤[ø£\ jÓTTø£ÿ <Û˚´j·÷\T

1. C≤rj·÷<ëj·TeTT Á|ü»\ jÓTTø£ÿ ‘·\dü] Ä<ëj·TeTT ô|+#·&É+ <ë«sê Ä]∆ø±_Ûe~› kÕ~+#·T≥
2. <˚X¯ e÷qe eqs¡T\qT |üP]Ô>± ñ|üjÓ÷–+#·Tø=+≥÷ ñbÕ~ neø±XÊ\qT yÓTs¡T>∑T |üs¡#·Tø√e&É+.
3 .eTTKýÓTÆq eT]j·TT ì‘êédüs¡ edüTÔe⁄\ $wüj·T+˝À kÕ«e\+uÛÑq kÕ~Û+#·&É+ <ë«sê Á|üD≤[ø± ã<ä›yÓTÆq
n_Ûe~›.
4. uÛ≤s¡‘· <˚X¯ Ä]∆ø£ e~›‘√ bÕ≥T Ä]∆ø£ dæús¡‘·«eTT kÕ<ÛäTsTT+#·T≥. n+fÒ Bì ns¡∆+ Á<äy√´\“¤q kÕúsTTì ‘·–Zdü÷Ô
Ä]∆ø£ e÷+<Ûä´ |ü]dæú‘·T\T ˝Ò<ë <Ûäs¡\˝À ø°åD‘· ˝Ò≈£î+&Ü #·÷&É&+É .
5. düe÷»+˝À>∑\ ÁXÊ$Tø£ dü+πøåeTeTT eT]j·TT nìï esêZ\ dü+πøåeTeTT \ø£å´+>± ô|≥Tºø√e&É+. $<Ûä´, yÓ’<ä´
eT]j·TT n‘·édüs¡ ùde\qT n_Ûe~› |üs¡∫ n+<ä]ø° n+<äTu≤≥T˝À ñ+#·&É+.
6. ÁbÕ+rj·÷_Ûe~› kÕ~Û+#·T≥
7. eékÕj·T, bÕ]ÁXÊ$Tø£ eT]j·TT ùde\ s¡+>∑ n_Ûe~› <ë«sê düeTÁ>∑ n_Ûe~› eT]j·TT dü+‘·T*‘· n_Ûe~›
kÕ~Û+#·T≥.
102
NITI Aayog functions in close cooperation, consultation and coordination with the Ministries of the
Central Government and State governments. While it makes recommendations to the Central and
State 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 to
develop and coordinate the economy with efficient utilization of resources. Economic planning in
India started after independence in the year 1950 when it was deemed necessary for economic
growth and development of the nation.
From 1951 to 2017, the Indian economy was premised on the concept of planning. This was carried
through the Five-Year Plans, developed, executed, and monitored by the Planning
Commission (1951-2014) and the NITI Aayog (2015-2017). The Twelfth Plan termwas completed
by March 2017.
Planning Commis-sion was set up on 15 March 1950 and the plan era started from 1 April 1951 with
the launch-ing of the First Five Year Plan (1951-56). The new government led by Narendra Modi
has announced the dissolution of the Planning Commission, and its replacement by a think tank called
the NITI Aayog i.e. National Institution for Transforming India.
The first Indian Prime Minister, Jawaharlal Nehru, presented the First Five-Year Plan to the Parliament
of India and needed urgent attention. The First Five-year Plan was launched in 1951 which mainly
focused in the development of the primary sector. The first eight five-year plans in India emphasized
on growing the public sector with huge investments in heavy and basic industries, but since the launch
of 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 of
the 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 inflation
low 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 of
social 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.
103
8. ñ<√´>∑ ø£\Œq, ]»πs«wüq¢ neT\T eT]j·TT Á|ü>‹∑ o\ {≤πø‡wüHé $<ÛëHê\ <ë«sê Ä]∆ø£ ndüe÷q‘·\qT ‘=\–+#·T≥.
9. kÕe÷õø£ Hê´j·T+ Á|üD≤[ø£ \øå±´\ πø+Á<ä _+<äTe⁄. Bì Á|ü<Ûëq <Û˚´j·T+ ù|<ä]ø£ ìs¡÷à\q n+<ä]ø° ñ<√´>∑
neø±XÊ\T n+<äTu≤≥T˝À ñ+&˚ ˝≤ #·÷&É&É+.
10.dü+|ü<qä T düe÷q+>± |ü+|æD° #˚dæ Á|ü»\jÓTTø£ÿ ‘·\dü] Ä<ëj·÷ìï ô|]π>˝≤ ‘·<ë«sê Á|ü»\Jeq Á|üe÷DkÕúsTT
ô|]π>˝≤ #·÷&É&É+.
4.5.2. |ü+#·es¡¸ Á|üD≤[ø£\ ô|’ ne˝Àø£q+

yÓTT<ä{Ï |ü+#·es¡¸ Á|üD≤[ø£ - 1951 - 1956
á Á|üD≤[ø£ Harrod-Domar qeT÷Hê Á|üD≤[ø£
eékÕj·T+ n_Ûe~› Á|ü<Ûëq \ø£å´+>± rdüT≈£îqï~. eT]j·TT dü+‘·T*‘· Ä]∆ø±_e~›
18 XÊ‘·+ C≤rj·÷<ëj·T+ 11 XÊ‘·+ ‘·\dü] Ä<ëj·T+ e~› #Ó+<ësTT.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T : 2.1%
á Á|üD≤[ø£ $»j·Te+‘·yÓTÆq~. kÕ~Û+∫q e~› πs≥T : 3.6%
s¬ +&Ée |ü+#·es¡¸ Á|üD≤[ø£ -1956 -1961

á Á|üD≤[ø£ P.C. Mahalanobis qeT÷Hê Á|üD≤[ø£
uÛ≤Ø Á|ü]ÁX¯eT\ n_Ûe~› eT]j·TT nekÕú|üHê kÂø£sê´\ n_Ûe~› Á|ü<Ûëq \øå±´\T
<äTsêZ|üPsY, _Û˝≤jYT, s¡÷¬sÿ˝≤ ñ≈£îÿ ø£sêà>±sê\T á Á|üD≤[ø£˝À ì]à+#·ã&Ü¶sTT.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 4.5%
á Á|üD≤[ø£ $»j·Te+‘·yÓTÆq~. kÕ~Û+∫q e~› πs≥T : 4.1%
eT÷&Ée |ü+#·es¡¸ Á|üD≤[ø£ - 1961 -1966.

Bìì ‘Gadgil Yojna’ Á|üD≤[ø£ nì ≈£L&Ü n+{≤s¡T .
 eékÕj·÷_Ûe~› eT]j·TT bÕ]ÁXÊ$Tø±_Ûe~› Á|ü<Ûëq \øå±´\T. eT]j·TT
dü«j·T+ kÕ«e\+uÛÑq eT]j·TT düTdæús¡ Ä]∆ø£ eédüú kÕ~Û+#·T≥
Ç+&çj·÷ bÕøÏkÕÔHé eT]j·TT Ç+&çj·÷ #Ó’Hê j·TT<ë›\ e\q nqT≈£îqï |òü*‘ê\T kÕ~+#·˝Ò<äT.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 5.6%
kÕ~Û+∫q e~› πs≥T : 2.8%
Á|üD≤[ø± $sêeT+ - 1966 -1969.

Ç+&çj·÷ bÕøÏkÕÔHé eT]j·TT Ç+&çj·÷ #Ó’Hê j·TT<ë›\ ø±s¡D+>± Á|üD≤[ø± $sêeT+ @s¡Œ&ç+~.
1966-67, 1967-68 eT]j·TT 1968-69 eT÷&ÉT dü+e‘·‡sê\T yê]¸ø£ Á|üD≤[ø£\T neT\T#˚jT· ã&çHêsTT
eékÕj·T eT]j·TT <ëì nqTã+<ä s¡+>±\≈£î düe÷q ÁbÕ<Ûëq´‘· Çe«&É+ »]–+~.
Hê\Ze |ü+#·es¡¸ Á|üD≤[ø£ - 1969 - 1974

dæús¡‘·«+ ‘√ ≈£L&çq n_Ûe~› eT]j·TT dü«j·T+ kÕ«e\+uÛÑq Á|ü<Ûëq \øå±´\T
Á|ü<Ûëì Ç+~sê >±+BÛ >±] “Garibi Hatao”μ nH˚ ìHê<Ûä+ ‘√ eTT+<äT≈£î b˛e&É+ »]–+~.
104
 Reduction in Economic inequality through progressive taxation, employment generation and
reservation of jobs.
 Social Justice has been a central focus of planning in India. It aimedat reducing the population
living 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 of
income.
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
105
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 5.7%
á Á|üD≤[ø£ \øå±´\qT kÕ~Û+#·T≥˝À $|òü\yÓTÆq~. kÕ~Û+∫q e~› πs≥T : 3.3% e÷Á‘·y˚T
◊<äe |ü+#·es¡¸ Á|üD≤[ø£ - 1974 - 1979
ù|<ä]ø£ ìs¡÷à\q kÕ«e\+uÛÑq eT]j·TT dæús¡yÓTÆq Ä<ëj·T |ü+|æD° eTTK´ \øå±´\T
á Á|üD≤[ø£ qeT÷Hê D.P. Dhar Ä˝À#·q\ y˚Ts¡≈£î ‘·j·÷s¡T #˚dæ Ä#·]+#·&É+ »]–+~.
á Á|üD≤[ø£ 1978 dü+e‘·‡s¡+˝À Ä|æy˚j·T&É+ »]–+~.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 4.4%
kÕ~Û+∫q e~› πs≥T : 4.8%
s√*+>¥ Á|üD≤[ø£\T - 1978-79

Bìì eTT+<äT>±H˚ eTT–+∫q ◊<äe Á|üD≤*ø£≈£î ø=qkÕ–+|ü⁄>± yê]¸ø£ Á|üD≤[ø£\qT 1978-79 ˝À
ÁbÕs¡+_Û+#ês¡T.
Á|ü‹ dü+e‘·‡s¡+ Á|üD≤[ø£qT düMTøÏå+∫ ‘·sê«‹ dü+e‘·‡sêìøÏ ø=‘·Ô Á|üD≤[ø£ s¡÷bı+~+#·&É+ »]–+~.
Äs¡e |ü+#·es¡¸ Á|üD≤[ø£ - 1980 - 1985

ù|<ä]ø£ ìs¡÷à\q, $<ë´ eT]j·TT kÕ+πø‹ø£ kÕ«e\+uÛÑq Á|ü<Ûëq \øå±´\T
Ç~ ô|≥Tºã&ç jÓ÷»q, nekÕú|üHê kÂø£sê´\ ø£\Œq eT]j·TT e~› ø£\Œq yÓ÷&É˝Ÿ >± s¡÷bı+~+#·&É+
»]–+~.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 5.2%
kÕ~Û+∫q e~› πs≥T : 5.4%
@&Ée |ü+#·es¡¸ Á|üD≤[ø£ -1985 - 1990

kÕ«eT´+ dü+e~› ‘√≈£L&çq Ä]∆ø£ eédüúqT @sêŒ≥T #˚j·T&É+ Á|ü<Ûëq \ø£å´+.
ñ‘êŒ<äq , ñ<√´>∑ø£\Œq neø±XÊ\T @sêŒ≥T #˚j·T&É+.
ÄVü‰s¡ <ÛëHê´\ ñ‘·Œ‹Ô˝À oÁ|òüT n_Ûe~› kÕ~+#·T≥
yÓTT<ä{Ï kÕ]>± Á|üuÛÑT‘·« s¡+>∑+ qT+&ç Á|üy˚≥T s¡+>∑+ q≈£î ÁbÕ<Ûëq´‘· Çj·T´&É+ »]–+~.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 5.0%
kÕ~Û+∫q e~› πs≥T : 6.01%
yê]¸ø£ Á|üD≤[ø£\T -1990-91 - 1991-92.

sê»ø°j·T nì•Ã‹ ø±s¡D+>± mì$T<äe Á|üD≤[ø£ Ä\dü´+ ø±s¡D+>± yê]¸ø£ Á|üD≤[ø£\T ÁbÕs¡+_Û#·ã&çq$.
¬s+&ÉT yê]¸ø£ |üsêD≤[ø£\qT 1990-91 eT]j·TT 1991-92 ˝À á Á|üD≤[ø£\T neT\T»]bÕs¡T.
düs∞ ¡ ø£sD
¡ , Á|üy{˚ ø° s£ D
¡ eT]j·TT Á|ü|+ü Nø£sD
¡ ≈£î dü+ã+~+∫Hê q÷‘·q Ä]∆ø£ dü+düÿs¡D\T yÓTT<ä{Ï kÕ]>±
1991 ˝À neT\T˝ÀìøÏ ‘˚ã&çq$.
mì$T<äe |ü+#·es¡¸ Á|üD≤[ø£ - 1992 - 1997

e÷qe eqs¡T\ n_Ûe~›, ñ<√´>∑ ø£\Œq, $<ä´ eT]j·TT Á|üC≤s√>∑´+ Á|ü<Ûëq \øå±´\T
106
 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.
107
á Á|üD≤[ø£˝À q÷‘·q Ä]∆ø£ $<ÛëHê\T neT\T#˚j·Tã&Ü¶sTT.
á Á|üD≤[ø£ $»j·Te+‘·+>± eTT–+#·ã&ç+~.
á Á|üD≤[ø£˝À Á|ü<ÛëqeT+Á‹ s√CŸ >±sY jÓ÷»q 1993 ˝À Á|üy˚X¯ô|≥ºã&ç+~.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 5.6%
kÕ~Û+∫q e~› πs≥T : 6.78%
‘=$Tà<äe |ü+#·es¡¸ Á|üD≤[ø£ - 1997 - 2002

düe÷q‘·«+ Hê´j·T+ ‘√ ≈£L&çq e~› á Á|üD≤[ø£ jÓTTø£ÿ Á|ü<Ûëq \ø£å´+.
HêDýÓTÆq JeqeTT, dü«j·T+ kÕ«e\+uÛÑq eT]j·TT ñ<√´>∑ ø£\Œq \øå±´\T >± ñHêïsTT.
Á|ü|ü+#· Ä]∆ø£ e÷+<Ûä´ Á|ü]dæú‘·T\ ø±s¡D+>± á Á|üD≤[ø£ $»j·Te+‘·+ ø±˝Ò<äT.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 6.5%
kÕ~Û+∫q e~› πs≥T : 5.4%
|ü<äe |ü+#·es¡¸ Á|üD≤[ø£ -2002 - 2007

sêuÀj˚T |ü~ dü+e‘·‡sê\˝À ¬s{Ïº+|ü⁄ ‘·\dü] Ä<ëj·T ô|s¡T>∑T<ä\ Á|ü<Ûëq \ø£å´+
ù|<ä]ø£+ eT]j·TT ìs¡T<√´>∑ düeTdü´ ìs¡÷à\q \T \øå±´\T>± ñHêïsTT.
ù|<ä]ø±ìï 2012 Hê{ÏøÏ 15 XÊ‘êìøÏ ‘·–Z+#ê\qï~ eTs=ø£ \ø£å´+.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 8.1%
kÕ~Û+∫q e~› πs≥T : 7.76%
|ü<äø=+&Ée |ü+#·es¡¸ Á|üD≤[ø£ -2007 - 2012

Bìì C. Rangarajan ‘·j·÷s¡T #˚dæ neT\T˝ÀìøÏ rdüT≈£îsêe&É+ »]–+~.
oÁ|òüT eT]j·TT n~Ûø£ dü$Tà[‘· e~› Á|ü<Ûëq \ø£å´+.
nø£åsêdü´‘·qT 85 XÊ‘êìøÏ ô|+#·&É+ ≈£L&Ü \ø£å´+>± ô|≥Tºø√e&É+ »]–+~.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 8.6%
kÕ~Û+∫q e~› πs≥T : 7.9%
|üHïÓ +&Ée |ü+#·es¡¸ Á|üD≤[ø£ -2012 -2017

Bì Á|ü<Ûëq ñ<˚›X¯+ ªªy˚>∑e+‘·yÓTÆq, eT]+‘· ø£\T|ü⁄ø=ì eT]j·TT dæús¡yÓTÆq e~∆μμ.
\ø£å´+ >± ìs¡ísTT+∫q e~› πs≥T: 8%.
kÕ~Û+∫q e~› πs≥T :
4.5.3. |ü+#·es¡¸ Á|üD≤[ø£\˝À kÕ~Û+∫q $»j·÷\T

Á|üD≤[ø£\ jÓTTø£ÿ Á|ü<ëÛ q \ø£´å + uÛ≤s¡‘· <˚X+¯ ˝À oÁ|òTü yÓTqÆ n_Ûe~›ì kÕ~Û+#·&+É . Á|üD≤[ø£\T ÁbÕs¡+_Û+#˚ Hê{ÏøÏ
uÛ≤s¡‘· <˚X¯ kÕúsTT #ê˝≤ u≤<ëø£s¡+>± ñqï|üŒ{ÏøÏ |ü+#·es¡¸ Á|üD≤[ø£\T neT\T #˚j·T&É+ e\q $$<ä s¡+>±\˝À
nqT≈£L\yÓTÆq, oÁ|òüTyÓTÆq e÷s¡TŒ\qT rdüT≈£î sêe&É+ »]–+~. uÛ≤s¡‘· <˚X¯ |ü+#·es¡¸ Á|üD≤[ø£\e\q ÁøÏ+~
$»j·÷\T kÕ~+#·&É+ »]–+~
108
 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
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
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
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 all
sectors. At the beginning of the first Five Year Plan, India was in under developed stage. By adopting
the Five Year Plans, India had achieved robust changes in various sectors.
Growth in National Income and Per Capita Income

One of the major objectives of the planning in India wasrapid growth in national income and per
capital income. At the time of firstFive Year Plan, the national income was Rs. 1.32 lakhs crores
which raised to 47.67 lakhs crores in 11th plan period. But, the growth of per capita incomewas little
109
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\. Bìì
Á|üD≤[ø± ø±\+˝À #ê˝≤ $»j·Te+‘·+>± kÕ~Û+#·&+É »]–+~. yÓTT<ä{Ï |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<ä{Ï |ü+#·es¡¸ Á|üD≤[ø± ø±\+˝À 3687.00 ñqï ‘·\dü] Ä<ëj·T+ 2020-21 dü+e‘·‡sêìøÏ
s¡÷. 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+. Hê{ÏøÏ 264
$T*j·THé ≥qTï\≈£î #˚s¡Tø=qï~. ÄVü‰s¡ <ÛëHê´\ $wüj·T+˝À dü«j·T+ kÕ«e\+uÛÑq kÕ~Û+#·&ÉyÓTÆq~. Ç~
K∫Ã‘·yTÓ qÆ n_Ûe~›.
bÕ]ÁXÊ$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±\+˝À
bÕ]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§>∑TZ
ñ‘·Œ‹Ô 2011-12 Hê{ÏøÏ 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|Hü ê kÂø£sê´\ n_Ûe~›

ø£˙dü nekÕú|üHê kÂø£sê´˝…’q s¡yêD≤ düØ«düT\ $wüj·T+˝À 1950-51 Hê{ÏøÏ 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£yÓTÆq
n_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 Hê{ÏøÏ 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´ Hê{ÏøÏ $<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~› 6.01
XÊ‘·+>± qyÓ÷<äT ø±e&É+ e~›ì dü÷∫düTÔ+~.
110
bit low due tohigh growth rate of population. Even then, the per capita income during the period of
first Five Year Plan was Rs. 3687.00has raised up to Rs. 1,28,967.00 by the end of 2020-21.
Agriculture Development
From 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 the
growth of agricultural production from 50.8 million tons in 1950-51 to 264 million tons in the year
2014. It is a significant achievement.
Industrial Development
As the industrial development wasthe main objective of the secondFive Year Plan and subsequent
plans, the allocationshelped thedevelopment of industrial sector in India. The major industrial goods
accounted highest growth rate. The coal production was 32 million tons in 1950-51 raised up to 583
million tons in 2011-12. Iron production which was 3 million tons in 1950-51 raised to 167 million
tons in 2011-12. It is an increase by 56 times.
Development in Basic needs

Major achievements in transport services were observed.As on 1950-51, the railway network is
54000 K.M which raised up to 64000 KM. More growth is witnessed in road transport as well,as
national 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 in
2012-13. It was the maximum capacity achieved.
Development in Education System

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

A significant growth in development of health services in the plan period was found, owing to huge
allocation 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.
111
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¡+>±ìøÏ
øπ {≤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¡Ù

uÛ≤s¡‘·<˚X¯+ e˝… yÓ’$<ÛäýÓTÆq eT]j·TT ô|<ä› <˚XÊìøÏ, πø+ÁBø£‘· Á|üD≤[ø£ <ëì @¬ø’ø£-dü]b˛j˚T $<Ûëq+ ø±s¡D+>±
ˇø£ Vü≤<äT› <ë{Ï |üì#˚j·T˝Ò<äH˚ uÛ≤eq #ê˝≤ ø±\+>± ñ+~.
bÕ¢ì+>¥ ø£$TwüHqé T øπ +Á<ä Á|üuTÑÛ ‘·«+ ìj·T+Á‹düT+Ô ~ ø±ã{Ï,º ì<ÛTä \ øπ {≤sTT+|ü⁄ $wüjT· +˝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<ä{Ï ø=ìï |ü+#·es¡¸ Á|üD≤[ø£\˝À kÕ~Û+∫q e~∆ πs≥T #ê˝≤ ‘·≈î£ ÿe>± 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 sustained
drop-in economic activity featuring high unemployment and negative GDP growth.
2. Decentralization: transfer of authority and responsibility from center to subordinate or
quasi-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 governments
in which both work together on a variety of issues and programs.
5. Deflation:Deflation is when consumer and asset prices decrease over time, and purchasing
power increases
.
112
deaths and epidemic diseases. Also, there were many programmes that were implemented for kids
and 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 to
allocating funds.
 Due to the top-to-bottom approach in centralized planning, it was felt that the states needed
to have greater say in planning their expenditure.
 The Planning Commission was seen to be imposing its diktats on states who could have
better known what and how much they needed.
 The growth rate achieved during the first few five-year plans was very low and was mocked
as Hindu rate of growth.
 Plans failed to accommodate contingencies such as wars and famines, which resulted in
falling short of objectives.
KEY TERMS
6. Public Sector:The public sector consists of governments and all publicly controlled or publicly
funded 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 their
work. Exploitation is the act of selfishly taking advantage of someone or a group of people in
order to profit from them or otherwise benefit oneself.
8. Sustainable Development:Sustainable development can be defined as development that

meets the needs of the present without compromising the ability of future generations to meet
their own needs.
9. Bottom-Up Approach :A participative approach to planning in which there is involvement at

all levels. In this approach plans are developed at the lower levels of an organization and
funneled 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 country
witnessed in later years was the LPG reforms(Liberalization, Privatization, Globalization).
113
12. Inclusive Growth:Inclusive growth means economic growth that creates employment
opportunities and helps in reducing poverty. It means having access to essential services in
health and education by the poor. It includes providing equality of opportunity, empowering
people through education and skill development.
13. Sustainable Growth:Sustainable economic growth means a rate of growth which can be
maintained without creating other significant economic problems, especially for future
generations.
1. Which of the Following is not an objective of Indian Planning?

A. Economic development and increased standard of living
B. Self sufficiency and economic stability
C. Increased employment and labour Welfare
D. International peace and foreign relations
2. Which of the following bodies is responsible for formulation and submission of Five year
plans to the Cabinet?
A. NITI Aayog
B. National Development Council
C. Finance ministry
D. National Planning Commission
3. Who is the chairman of NITI Aayog

A. President of India
B. Vice- President of India
C. Prime Minister of India
D. Central Finance Minister
4. Who among the following is part of Governing Council of the NITI Aayog
A. Chief Ministers of all states
B. Chief Ministers of Delhi and Puducherry
C. Lieutenant governor of Andaman and Nicobar Island
D. All the above
5. Which of the following statements is false with respect to Functioning of NITI Aayog
A. NITI Aayog can allocate Funds
B. NITI Aayog Promotes Co-operative Federalism
C. CEO is appointed by the prime minister
D. NITI Aayog follows Bottom Up model of planning
114
6. The slogan GARIBI HATAO was made popular during which Five year plan
A. Fourth five year plan
B. Fifth five year plan
C. Sixth five year plan
D. Rolling plans
7. Pradhan Mantri Rozgar Yojna was launched during which Five year Plan
A. Seventh five year plan
D. Eighth five year plan
8. The objective of Twelfth five year plan is

A. Sustainable growth
B. Faster and more inclusive growth
C. Growth with justice and equity
D. Reduction of poverty and unemployment
9. From which plan onwards private sector is given more priority over public sector
A. Seventh five year plan
D. Eighth five year plan
10. The objective of Eleventh five year plan is

A. Sustainable growth
B. Faster and more inclusive growth
C. Growth with justice and equity
D. Reduction of poverty and unemployment
ANSWERS
1 2 3 4 5 6 7 8 9 10
D D C D A A D A D B
INERACTIVE LINKS
www.niti.gov.in
https://www.britannica.com/topic/economic-planning/Stages-of-planning-in-developed-countries
115
116
Economic Reforms
Learning Outcomes:

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.Chapter
Economic Reforms in India
5.1.1. India before 1991
5
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
117
1991 Ä]úø£ dü+düÿs¡D\ ø±s¡D+>± uÛ≤s¡rj·T Ä]úø£ eédüú >=|üŒ |ü]es¡Ôq≈£î >∑T¬s’+~. yê´bÕs¡ |ü]düsê\
jÓTTø£ÿ nìï s¡+>±\T n+fÒ kÕe÷õø£, sê»ø°jT· , |Á |ü +ü #· eT]j·TT Ä]úø£ |ü]düsê\T 1991 ‘·sê«‘· düs∞¡ ø£sD¡
Áô|’y˚{°ø£s¡D eT]j·TT Á|ü|ü+Nø£s¡D ø±s¡D+>± e÷s¡TŒ≈£î >∑T] ne⁄‘·÷ e#êÃsTT. n<˚$<Ûä+>± |ü]ÁX¯eT\
|üìrs¡T $<Ûëq+ m|üŒ{Ïø£|ü⁄Œ&ÉT e÷s¡T‘·Tqï Á|üuÛÑT‘·« bÕ]ÁXÊ$Tø£ $<Ûëq+ô|’ m≈£îÿe>± Ä<Ûës¡|ü&ç ñ+≥T+~.
uÛ≤s¡‘· <˚X¯+ ˝À neT\T˝ÀìøÏ e∫Ãq LPG dü+düÿs¡D\T eT]j·TT bÕ]ÁXÊ$Tø£ $<ÛëHê\T ¬s+&É÷ yê´bÕs¡
|ü]düsê\qT n<Û´ä j·Tq+ #˚jT· &ÜìøÏ eTTKýÓTqÆ $wüjT· + >± rdüTø√e#·TÃ.
Á|üdüTÔ‘· n<Ûë´j·T+ 1991 øÏ eTT+<äT uÛ≤s¡‘·<˚XÊìï eT]j·TT LPG dü+düÿs¡D\ e\¢ 1991 ‘·sê«‘· m˝≤+{Ï
e÷s¡TŒ\≈£î >∑T] ne⁄‘·÷ e∫Ã+~ eT]j·TT Ç~ uÛ≤s¡rj·T yê´bÕs¡ |ü]düsê\qT m˝≤ Á|üuÛ≤$‘·+ #˚dæ+~
nH˚ Ä˝À#·qqT Çø£ÿ&É #·]Ã+#·&+É »]–+~. bÕ]ÁXÊ$Tø£ $<ÛëHê\T eT]j·TT yê{Ï eTTKýÓTqÆ \ø£Då ≤\qT á
n<Ûë´j·T+ ˝À $|ü⁄©ø£]+#·&yÉ TÓ qÆ ~.
118
CHAPTER OVERVIEW
Indian economy went through a great transformation due to economic reforms

of 1991. All spheres of business environment i.e social, political, global and
economic environment changed after 1991 due to liberalisation privatisation
and globalisation that were brought forward. Similarly the way how industries
function is highly dependent on industrial policy of the government which
changes from time to time. Both LPG reforms and industrial policies are an
important subject matter to the study of business environment.
The present chapter gives an idea of India before 1991 and what changes
were brought due to LPG reforms and how it affected the Indian business
environment. The industrial policies and their important features from time
to time were also studied.
119
5.1. uÛ≤s¡‘· <˚X¯+˝À Ä]∆ø£ dü+düÿs¡D\T
ˇø£ <˚X¯+˝À Ä]∆ø£ eédüú ≈£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¡ékÕq+>± 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+~+#·&ÜìøÏ
rdüT≈£î sêã&çq #·s¡´>± n_Ûe]í+#·e#·TÃ. Bì˝À f…ø±ï\J n_Ûe~›ø,Ï |ü]ÁX¯eT\ ˝…’ôdì‡+>¥ $<ÛëHêìøÏ, Á|üy˚≥T
s¡+>∑+ ô|’ ñqï nes√<ë\T ‘=\–+#·&ÜìøÏ, $<˚o e÷s¡ø£ì\«\≈£î dü+ã+~+∫q $<ÛëHê\T eT]j·TT $<˚o
es¡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 :

<Ûsä \¡ ˝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+&˚~. á
ø±\+˝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+&ç
n|ü⁄Œ>± rdüTø=H˚~. ø=‘·Ô ø£¬s˙‡ ì eTTÁ~+#·&É+ <ë«sê uÛ≤s¡‘· ]»s¡T« u≤+≈£î Bìì düeT≈£LπsÃ~. ∫es¡≈£î
Á<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|’ rÁe
Á|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|üuTÑÛ ‘·«+ 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\qT
m≈£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
#˚jT· e\dæq |ü]dæ‹Ô e∫Ã+~. 1991 Hê{ÏøÏ e&û¶ #Ó*+¢ #·e\dæq uÛ≤<ä´‘· yÓTT‘·+Ô Á|üuTÑÛ ‘·« e´j·T+˝À 36.4 XÊ‘êìøÏ
ô|]–+~. n+<äTe\q Ä]∆ø£ dü+düÿs¡D\≈£î |üPqTø√e\dæ e∫Ã+~.
#Ó*+¢ |ü⁄\ X‚w+ü ˝À Á|ü‹≈£L\ <Û√s¡DT\T

ˇø£ <˚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*+¢ #·˝ìÒ dæ‹ú øÏ #˚sT¡ ø=+{≤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 Hê{ÏøÏ s¡÷. 19367 ø√≥T¢>± ñqï~. á ˝À≥T qT |üP&ÉTÃø√&ÜìøÏ $<˚o
n|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+~.
120
5.1. ECONOMIC REFORMS IN INDIA
The term economic reform broadly indicates necessary structural changes that were brought in the
internal and external spears of an economy. It includes policies ment for the economic grouth of a
country and achieving economic efficiency. Economic reforms can be achieved through various
methods like reforming the existing tax laws, competition policy, de-regulation of market, reforming
government pending pattern etc. In India, Economic reforms refer to the fundamental changes that
were launched in 1991 with the plan of liberalizing the economy and increasing the rate of economic
growth. Government of India started economic reforms in 1991 in order to rebuild internal and
external conditions in the Indian economy. The reforms were intended at bringing in larger cooperation
of the private sector in the growth journey of the Indian economy. Policy changes were proposed
with regard to technology up-gradation, industrial licensing, removal of restrictions on the private
sector, foreign investments, and foreign trade.
REASONS FOR ECONOMIC REFORMS:

Rise in Prices
Price to all commodities before economic reforms rise continuously in India. The inflation rate increased
from 6.7 percent to 16.7 percent. Due to inflation, economic position became worse in India. Main
reason for inflation was rapid increase in money supply. It was due to deficit financing. Deficit
financing means spending more by a Government, than its income by borrowing from sources like
RBI, Multilateral Organisations. RBI provides this loan by printing new currency notes. Cost of
production increases due to inflation. High rates of inflation beyond controle can lead to Economic
downfall.
Rise in Fiscal Deficit

Fiscal deficit means difference between total expenditure and total receipts excluding loans. Increase
in non-development expenditure, fiscal deficit of the government had been increasing. To cover the
fiscal 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 total
government expenditure. Hence, the government had to move for economic reforms.
Increase in Adverse Balance of Payments

The difference between total inflow of money into and total outflow from a country is called balance
of payments. If the total exports of a country is lower than the total imports, the foreign exchange
falls short for payment. This problem of adverse balance of payments arise before 1991. It is due
to 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 and
rose in 1990- 91, to Rs. 17,367 crores. To cover this deficit, large amount of foreign loans had to be
obtained. So liability of loan and its interest payment increased heavily. This lead the government to
adopt new approaches to better the economic situation.
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
121
Á|üuÛÑT‘·« s¡+>∑+ ˝À X¯Sq´ Á|ü‹uÛÑ
Á|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|üuÛTÑ ‘·« 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 M{Ïe\q Á|üuÛÑT‘ê«ìøÏ n|ü⁄Œ\ u≤<ä m≈£îÿyÓ’+~.
$<˚o e÷s¡ø£ ì\«\ ø°åD‘·

uÛ≤s¡‘· <˚X+¯ ˝À $<˚o e÷s¡ø£ ì\«\T 1990-91 Hê{ÏøÏ #ê˝≤ ~>∑Te kÕúsTTøÏ #˚sT¡ ø=HêïsTT. Ç$ 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 Hê{ÏøÏ n$ s¡÷.6252 ø√≥¢ ~>∑Te≈£î #˚sT¡ ø=HêïsTT. ‘·sê«‘· Ç$ |üP]Ô>± ø°Då +Ï ∫ ∫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£ eédüú

uÛ≤s¡‘· <˚XÊìøÏ 1947 Ä>∑düTº 15 q kÕ«‘·+Á‘·´+ e#˚Ã Hê{ÏøÏ ù|<ä]ø£+, eékÕj·T bÕ]ÁXÊ$Tø£ s¡+>±\˝À nH˚ø£
ˇ&ç<äT&ÉT≈£î\T m<äTs=ÿ+≥Tqï |ü]dæú‹ ñ+&˚~. 1951 ˝À uÛ≤s¡‘· <˚X¯+ nqTdü]+∫q |ü+#·es¡¸ Á|üD≤[ø£\T ‘√
yÓTT<ä{Ï |ü+#·es¡¸ Á|üD≤[ø£˝À ÁbÕ<Û$ä Tø£s+¡ >∑ n_Ûe~›ì Á|ü<ëÛ q \ø£´å +>± #˚dTü ø=ì ‘·sê«‘· 1956 ˝À ÁbÕs¡+_Û+∫q
eTVü‰˝≤H√_dt yÓ÷&É˝Ÿ >± |æ\Teã&˚ s¬ +&Ée |ü+#·es¡¸ Á|üD≤[ø£ Á|üuTÑÛ ‘·« 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≥T
Á|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≥¢ ˝ÀìøÏ
sêe&Üìï n&ÉT≈¶ î£ HêïsTT. Ç~ 1980 Hê{ÏøÏ uÛ≤s¡‘· <˚X¯ Ä]∆ø£ eédüqú T düãÔ ‘› · kÕúsTTøÏ rdüT≈£î e#êÃsTT. Bì e\q
1950 qT+&ç 1980 Hê{ÏøÏ 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 Hê{ÏøÏ <˚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≤+≈£î
eT]j·TT n+‘·sê®rj·T Á<äe´ ì~Û e+{Ï n+‘·sê®rj·T dü+dü\ú 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+dü\ú qT+&ç düs∞¡ ø£sD
¡ $<ÛëHê\ yÓ|’ ⁄ü ˇ‹Ô&ç ô|]–+~. Bì e\q ‹]–
es¡øÔ £ ìã+<äq\T neT\T #˚jT· e\dæ e∫Ã+~ eT]j·TT $<˚o ì\«\ ìj·T+Á‘·D ø√dü+ $<˚o ô|≥Tºã&ÉT\ uÀs¡Tq¶ T
1968 ˝À HÓ\ø=\Œ&É+ »]–+~. Bì Á|ü<Ûëq ñ<˚›X¯+ uÛ≤s¡‘· <˚X¯+˝À >∑\ ø£+ô|˙\˝À 40 XÊ‘·+ <ë{Ï ô|≥Tºã&ç
ô|fÒº dü+düú\ qT eTT+<äT>± ìj·T+Á‘·D #˚j·T&É+.
122
Poor Performance of Public Sector Undertakings
Public sector undertakings are wholly owned by the government. The Indian government have
invested crores of rupees in these enterprises. These public sector undertakings did not perform well
due to political interference and lack of proper competition and thus became big liability for government
in early nineties.
Fall in Foreign Exchange Reserves
Indians foreign exchange reserve fell to low in 1990-91 and it was insufficient to pay for an import
bills. 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 had
to think about economic reforms.
5.1.1. INDIA BEFORE 1991

On 15 August 1947, when India achieved independence, the country was in struggle with widespread
poverty and crises in agriculture sector as well as industrial sector. The First Five Year Plan was
launched in 1951 with prime objective of the development of the primary sector. In 1956, the
Second Five Year Plan , famously known as the Mahalanobis Model, was announced. The main
focus 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 outside
world. The Indian currency, the rupee, was highly inconvertible and high tariffs and import licensing
prevented foreign goods from reaching the market. By 1980, this had created widespread economic
stagnation. The annual growth rate of the Indian economy had stagnated around 3.5 percent from the
1950s 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 war
and severe drought, the Indian government was forced to take monetary aid from the International
Monetary Fund and World Bank. By that time, rupee was devalued to fight inflation and devalue
exports. Further, the former system of tariffs and export subsidies was abolished. Pressure from
international financial institutions had caused a shift towards economic liberalization. Trade restrictions
were reintroduced and the Foreign Investments Board was established in 1968 to scrutinize companies
investing 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 the
world, The government by 1990, began pursuing economic liberalization. The governments relaxed
the restrictions on business creation and import controls to promote the growth of the
telecommunications and software industries. With the Nationalization of banks in 1969 and the
Monopolies and Restrictive Trade Practices (MRTP) Act of 1970, the License system was further
strengthened. The Balance of Payment crisis arose in the 1970s and it was worse at the end of
1980s. The balance of payments situation came to the edge of collapse in 1991, mainly because the
current account deficits which were financed from abroad. The economic situation of India was
critical; the government was close to default. With India’s foreign exchange reserves at 1.2 billion
123
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 düŒwüyº TÓ qÆ +<äTq,
1990 Hê{ÏøÏ Á|üuTÑÛ ‘·«+ Ä]úø£ düs∞¡ ø£sD¡ qT ø=qkÕ–+#·&+É ÁbÕs¡+_Û+∫+~. f…*ø£eT÷´ìπøwüH‡é eT]j·TT kÕ|òºt y˚sY
|ü]ÁX¯eT\ e~∆ì Áb˛‘·‡Væ≤+#·&ÜìøÏ düV‰ü yê´bÕs¡ düwæº eT]j·TT ~>∑TeT‹ ìj·T+Á‘·D\ô|’ Á|üuTÑÛ ‘ê«\T |ü]$T‘·T\qT
dü&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≤´˝…H‡é 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 Hê{ÏøÏ j·÷uÛ’… XÊ‘êìøÏ |ü&bç ˛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>± ñ
qï|üŒ{Ïø° á $<Ûëq+ ø=qkÕ–+~. Áô|’y˚{Ÿ s¡+>±ìøÏ nqTeT‹ ñqï #√≥ ˝…’ôdì‡+>¥ eédüú #ê˝≤ K{Ïq+>± ñ
+&˚~, eT]j·TT bÕ]ÁXÊ$Tø£ ˝…ô’ dHé‡ bı+~q ‘·sê«‘· e÷Á‘·yT˚ ô|≥Tºã&ç ô|≥º>*∑ >π kÕúsTT˝À ñ+&˚~ . 860 øÏ ô|>’ ±
edüTeÔ ⁄\T Á|ü‘´˚ øÏ+∫ ∫qï ‘·sV¡ ‰ü ñ‘·Œ‹Ô<ës¡T\ ø√dü+ Á|ü‘´˚ øÏ+#·ã&Ü¶sTT, M{Ï˝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<Óq’ $<˚o e÷s¡øÁ£ <äyê´ìï Ä<ë #˚jT· &É+ nedüse¡ Tì uÛ≤$+#ês¡T. $ìjÓ÷>∑ edüTeÔ ⁄\T ~>∑TeT‹
#˚j·Tã&Ée⁄ ø±ã{Ïº <˚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¡yÓTÆq
eT÷\<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 $<ÛëHê\ <ë«sê <˚X¯ Ä]úø£ eédüú˝À yÓTs¡T>∑T<ä\ rdüT≈£îsêe&ÜìøÏ Á|üuÛÑT‘·«+
Á|üy˚X¯ô|{Ïºq nedüs¡yÓTÆq e÷s¡TŒ˝Ò Ä]úø£ dü+düÿs¡D\T. uÛ≤s¡rj·T Ä]úø£ eédüú≈£î dü+ã+~Û+∫ Ä]úø£ dü+düÿs¡D\T
1991 ˝À Ä]úø£ eédüqú T ñ<ës¡|]ü #˚ eT]j·TT <ëì Ä]úø£ e~∆ sπ ≥TqT y˚>e∑ +‘·+ #˚ùd Á|üD≤[ø£‘√ ÁbÕs¡+_Û+∫q
ÁbÕ<∏ä$Tø£ e÷s¡TŒ\qT dü÷∫düTÔ+~. Ä]úø£ dü+düÿs¡D\ jÓTTø£ÿ eTTKýÓTÆq \ø£åD≤\T *ãs¡˝…’CÒwüHé, Á|üy˚f…ÆCÒwüHé
eT]j·TT >√¢ã˝…’CÒwüHé. M{Ïì kÕ<Ûës¡D+>± LPG nì |æ\TkÕÔs¡T.
uÛ≤s¡‘<· X˚ ¯ q÷‘·q Ä]úø£ $<ÛëHêìï n|üŒ{Ï Á|ü<ëÛ ì Áo |æ$ qs¡d+æ Vü‰sêe⁄ Hêj·Tø£‘«· +˝À Á|üuTÑÛ ‘·«+ 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·T
ø£¬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&Ü
n+{≤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÷¬sÿ{Ÿ <Û√s¡DÏô|’ ø=‘·Ô CÀø£´+
ø£*Œ+#·&+É .
124
U.S. Dollars in January 1991 and exhausted to fifty percent by June 1991. The foreign exchange
reserves were very low barely enough to cover three weeks of essential imports. India was very
nearer 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 continued
despite the public sector’s low performance. Licensing system was very rigid where the private
sector was allowed, it could invest only after getting an industrial license. Over 860 items were
reserved 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 felt
necessary to conserve scarce foreign exchange. Consumer goods simply could not be imported so
domestic producers faced no import competition. Producers could import capital goods and
intermediates needed for production, but this generally required an import license.
5.1.2. NEW ECONOMIC POLICY-1991

Economic reforms were the required changes introduced by the government to bring an improvement
in the economy of a country through various reforms and policies. Economic reforms in connection
with Indian economy refers to the fundamental changes that were initiated in 1991 with the plan of
liberalising the economy and quickening its rate of economic growth. The important features of the
economic 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 then
Prime Minister Sri P. V. Narasimha Rao. Major changes have been taken by reducing the import
duties, open reserved sector for the private players, devaluated the Indian currency to increase the
export. This is also known as the LPG Model of growth. The main objectives behind the launching of
the New Economic Policy in 1991 were;
 to throw Indian Economy into the arena of ‘Globalization and to give it a new thrust on market
orientation.
 intended to bring down the rate of inflation
 intended to move towards higher economic growth rate and to build sufficient foreign exchange
reserves
 to achieve economic stabilization and to convert the economy into a market economy by removing
all kinds of un-necessary restrictions.
 to permit the international flow of goods, services, capital, human resources and technology,
without many restrictions.
125
 Á<äy√´\“D+ πs≥TqT ‘·–Z+#·&ÜìøÏ ñ<˚›•+#·ã&ç+~
 n~Ûø£ Ä]úø£ e~∆ sπ ≥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÷¬sÿ{Ÿ 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 düwæº+#·&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…’\ Hê{ÏøÏ 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£ eédüôú |’ $~Û+∫q Ä+ø£\å qT ‘·–+Z #·&ÜìøÏ Ä]úø£ dü+düÿs¡D\T Á|üyX˚ ô¯ |≥ºã&Ü¶sTT.
ø=‘·Ô Ä]úø£ $<Ûëq+ ˝À øÏ+~ #·s¡´\T rdüTø√ã&Ü¶sTT:
düs∞¡ ø£sD¡
q÷‘·q Ä]úø£ $<Ûëq+ nqedüsy¡ TÓ qÆ ìj·T+Á‘·D\T eT]j·TT ìã+<Ûqä \≈£î e´‹πsø£+>± Ä]úø£ eédüqú T düs∞¡ ø£]+#·&ÜìøÏ
@sêŒ≥T #˚dæ+~. Çø£ÿ&É, düs¡∞ø£s¡D πøe\+ yêDÏ»´+ eT]j·TT |ü]ÁX¯eTqT nyê+∫Û‘· |ü]$T‘·T\ qT+&ç $eTTøÏÔ
#˚jT· &Üìï dü÷∫düT+Ô ~. Ä]úø£ eédüqú T düs∞¡ ø£‘·+ #˚jT· &ÜìøÏ eT]j·TT $<Ûëq+˝À bÕs¡<sä Ù¡ ø£‘q· T rdüT≈£îsêe&ÜìøÏ,
q÷‘·q bÕ]ÁXÊ$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|üÔ
C≤_‘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÷¬sÿ{Ÿ nedüsê\≈£î nqT>∑TD+>± |ü]ÁX¯eT\T ‘·eT kÕeTsêú´ìï ùd«#·Ã>¤ ± $dü]Ô +#˚+<äT≈£î nqTeT‹+#·ã&É‘êsTT.
 ñ‘·Œ‹Ô<ës¡T\T @<ÓH’ ê edüTeÔ ⁄qT ñ‘·Œ‹Ô #˚jT· &ÜìøÏ ˝Ò<ë e÷¬sÿ{Ÿ˝Àì &çe÷+&é≈î£ nqT>∑TD+>± ‘·eT ñ‘·Œ‹Ôì
yÓ$’ <Û´ä |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+<ädüTÔ
Á|üyX˚ ÊìøÏ yÓfi≤¢*‡q nedüs+¡ ˝Ò<Tä eT]j·TT n$ Ç|ü⁄Œ&ÉT yê{Ï |ü]e÷D≤ìï $dü]Ô +#·&ÜìøÏ nqTeT‹+#·ã&Ü¶sTT
126
 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 in
the economy as a means to improving the productivity and efficiency of the system. This was to be
achieved by removing the barriers to entry and the restrictions on the growth of firms.
MEASURES ADOPTED IN THE NEW ECONOMIC POLICY

Due to various controls, the economy became passive by nineties. The entrepreneurs were unwilling
to enter into new industries because laws like MRTP Act 1969. Rate of economic growth of the
economy came down. In such a scenario economic reforms were introduced to reduce the restrictions
imposed 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 controls
and regulations. Here, the liberalisation simply indicates liberating the trade and industry from unwanted
restrictions. In order to liberalise the economy and to bring transparency in the policy, the New
Industrial 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 and
strategic concern, social reasons, hazardous chemicals and overriding environmental concerns and
items 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 and
machinery for small scale industries (SSI) and ancillary units from Rs. 60 lakh and Rs. 75 lakh
respectively 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 make
necessary imports. The aforesaid measures have liberalised the industries to take prompt decisions
so 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 this
policy, private sector has been freed from licensing and other restrictions. Industries licensing is
127
 1996-97˝À, bÕ]ÁXÊ$Tø£ dü+düÿs¡D\ $<Ûëq+ ∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\T (SSI) eT]j·TT nqTã+<Ûä j·T÷ì≥¢
ø√dü+ bÕ¢+{Ÿ eT]j·TT j·T+Á‘ê\˝À ô|≥Tºã&ç |ü]$T‹ s¡÷. 60 \ø£å\T eT]j·TT s¡÷. 75 \ø£å\T es¡Tdü>±
s¡÷. 3 ø√≥T¢ ≈£î eT]j·TT ∫qï s¡+>±ìøÏ ≈£L&Ü s¡÷. 5 \ø£å\ qT+&ç s¡÷. 25 \ø£å\T ≈£î ô|+#·ã&ç+~.
 ãVæ≤s¡+>∑ e÷¬sÿ{Ÿ qT+&ç $<˚o e÷s¡ø£Á<äyê´ìï ø=qT>√\T #˚j·T&ÜìøÏ eT]j·TT nedüs¡yÓTÆq ~>∑TeT‘·T\T
#˚j·T&ÜìøÏ |ü]ÁX¯eT\T ñ∫‘·+. ô|’q ù|s=ÿqï #·s¡´\T |ü]ÁX¯eT\qT ñ‘·Œ‹Ô˝À yê{Ï kÕeTsêú´ìï ô|+#·&ÜìøÏ
eT]j·TT e÷¬sÿ{Ÿ˝À ãVæ≤s¡+>∑ b˛{°ì m<äTs=ÿH˚+<äT≈£î dü‘·«s¡ ìs¡j
í ·÷\T rdüT≈£îH˚˝≤ düs¡∞ø£‘·+ #˚XÊsTT.
 >∑‘·+˝À, Áô|’y˚{Ÿ s¡+>∑+ ˝À ø=‘·Ô yê´bÕs¡+ ÁbÕs¡+_Û+#·&ÜìøÏ Á|üuÛÑT‘·«+ qT+&ç ˝…’ôdHé‡ bı+<äe\dæ ñ+~.
Á|üdTü ‘Ô · $<Ûëq+˝À, Áô|y’ {˚ Ÿ s¡+>∑+ ˝…ô’ dì‡+>¥ eT]j·TT Ç‘·s¡ |ü]$T‘·T\ qT+&ç $eTTøÏÔ bı+~+~. |ü]ÁX¯eT\≈£î
eT<ä´+, dæ>s¬∑ {Ÿ, s¡øDå£ |ü]ø£sê\T, bÕ]ÁXÊ$Tø£ ù|\T&ÉT |ü<ësêú\T, eT+<äT\T, Á|üe÷<äøs£ ¡ s¡kÕj·THê\ ø√dü+
e÷Á‘·y˚T |ü]ÁX¯eT\ ˝…’ôdì‡+>¥ nedüs¡+.
Á|üy{˚ ø° s£ D¡
ø=‘·Ô Ä]úø£ $<Ûëq+ jÓTTø£ÿ eTs=ø£ eTTKýÓTÆq \ø£åD+ Áô|’y˚{°ø£s¡D $<ÛëHêìï Áb˛‘·‡Væ≤+#·&É+. Áô|’y˚{°ø£s¡D n+fÒ
Á|üuTÑÛ ‘·« s¡+>∑+ ø√dü+ >∑‘+· ˝À ]»sY« #˚jT· ã&çq |ü]ÁX¯eT\qT kÕú|+æ #·&ÜìøÏ Áô|y’ {˚ Ÿ s¡+>±ìï nqTeT‹+#·&+É . á
$<Ûëq+ øÏ+<ä nH˚ø£ Á|üuÛÑT‘·« s¡+>∑ dü+düú\T Áô|’y˚{Ÿ s¡+>±ìøÏ $Áø£sTT+#·ã&Ü¶sTT. eTs√ e÷≥˝À #ÓbÕŒ\+fÒ,
Áô|y’ {˚ ø° s£ D¡ nH˚~ Áô|y’ {˚ Ÿ s¡+>±ìï Á|üuTÑÛ ‘·« s¡+>∑ j·T÷ì≥¢ j·÷»e÷q´+˝À bÕ\T|ü+#·T≈£îH˚ Á|üÁøÏjT· . Áô|y’ {˚ ø° s£ D¡ ≈£î
Á|ü<ëÛ q ø±s¡D+ sê»ø°jT· CÀø£´+. ~ì ø±s¡D+>± Á|üuTÑÛ ‘·« s¡+>∑ dü+dü\ú T qcÕº˝À¢ q&Ée&É+. ìs¡«Vü≤D dü«‘·+Á‘·+>±
|üì#˚j·T˝Òø£ b˛e&É+. ñ‘·Œ‹Ô kÕeTs¡ú´+ ‘·≈£îÿe>± $ìjÓ÷–+#·ã&É≥+. b˛{° eT]j·TT kÕeTsêú´ìï ô|+#·&ÜìøÏ,
Ä j·T÷ì≥¢ Áô|’y˚{°ø£s¡D nìyês¡´+.
Áô|’y˚{°ø£s¡D ø√dü+ ÁøÏ+~ #·s¡´\T rdüTø√ã&Ü¶sTT:

 Á|üuÛÑT‘·« s¡+>∑+ ø√dü+ ]»sY« #˚j·Tã&çq |ü]ÁX¯eT\ dü+K´qT 17 qT+&ç 8 øÏ ‘·–Z+#·&É+.
 mì$T<äe Á|üD≤[ø£ eTT–+|ü⁄˝À yÓTT‘·Ô+ ô|≥Tºã&çøÏ Áô|’y˚{Ÿ s¡+>∑+ yê{≤qT 55 XÊ‘êìøÏ ô|+#·&É+.
Á|üuÛÑT‘·« s¡+>∑ dü+düú\ Á|üuÛÑT‘·« áøÏ«{° ôVA*¶+>¥\qT Áô|’y˚{Ÿ e´≈£îÔ\ n~Ûø£ uÛ≤>∑kÕ«eT´+ ø√dü+ ø±]à≈£î\T
eT]j·TT Á|ü»\˝À $Áø£sTT+#·&É+.
 C≤rj·T Ä]úø£ dü+dü\ú qT+&ç Áô|y’ {˚ Ÿ s¡+>∑ dü+dü\ú ≈£î dü+kÕú>‘∑ · s¡TD eT<ä‘› T· . n+<äTe\q á Áô|y’ {˚ ø° s£ D¡ #·s´¡
Áô|’y˚{Ÿ s¡+>∑+ jÓTTø£ÿ kÕeTsêú´ìï eT]j·TT ñ‘êŒ<äø£‘·qT ô|+#·T‘·T+<äì u≤$+#·&É+ »]–+~.
Á|ü|+ü Nø£sD¡
Ä]úø£ eédüú jÓTTø£ÿ Á|ü|ü+Nø£s¡D nH˚~ Á|ü|ü+#·+˝Àì n_Ûe~∆ #Ó+~q bÕ]ÁXÊ$Tø£ <˚XÊ\‘√ ñ‘·Œ‹Ô, yêDÏ»´+
eT]j·TT Ä]úø£ ˝≤yê<˚M\≈£î dü+ã+~Û+∫q <˚X¯+ jÓTTø£ÿ |üs¡düŒs¡ #·s¡´qT dü÷∫düTÔ+~. Ä]úø£ eédüú Á|ü|ü+Nø£s¡D
n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\≈£î düyêfi¯ó¢ eT]j·TT neø±XÊ\T ¬s+&ç+{Ï˙ n+~düTÔ+~. Á|ü|ü+Nø£s¡D˝À n_Ûe~∆
#Ó+<äT‘·Tqï <˚XÊ\T n+‘·sê®rj·T b˛{°‘·‘·« düyê\TqT m<äTs=ÿH˚+<äT≈£î ‘·eTqT ‘êeTT dæ<ä∆+ #˚düT≈£î+≥THêïsTT.
128
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 reserved
for 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 public
sector units. The main reason for privatisation was that public sector undertaking were running in
losses due to political interference. The management could not work independently. Production capacity
remained under-utilized. To increase competition and efficiency, privatisation of that units was
inevitable. 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 and
public 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 private
sector and economy at large.
Fig-5.1
Globalization
Globalisation of the economy simply indicates free interaction of the country in issues relating to
production, trading and financial transactions with other countries of the world. Globalisation of the
economy offers both challenges and opportunities to the developing countries. While facing the trend
of 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£sD¡ e\q uÛ≤s¡‘· Ä]∆ø£ eédü˝ú 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 Ä{Ày˚T{Ïø˘ >± nqTeT‹ \_ÛdüTÔ+~.
 $<˚o kÕ+πø‹ø£ ˇ|üŒ+<ë\≈£î dü+ã+~Û+∫, n~Ûø£ ÁbÕ<Ûëq´‘· ø£*–q |ü]ÁX¯eT˝À Ä{Ày˚T{Ïø˘ 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⁄ 20
XÊ‘·+ ‘·–+Z #ês¡T, Ç~ m>∑TeT‘·T\qT ≈£L&Ü Áù|sπ |æ+∫+~, ~>∑TeT‘·T\qT ìs¡T‘ê‡Vü≤|ü]∫+~ eT]j·TT $<˚o
eT÷\<Ûäq Á|üyêVü‰ìï ô|+∫+~.
 Á|ü|ü+#·+‘√ uÛ≤s¡‘· Ä]úø£ eédüúqT y˚>∑e+‘·+>± düeTÁ>∑|üs¡#·&É+ ø√dü+ nìyês¡ýÓTÆq ø£<ä*ø£qT

rdüT≈£îsêe&ÜìøÏ, πø+Á<ä ã&Ó®{Ÿ 1992-93 uÛ≤s¡rj·T s¡÷bÕsTTì bÕøÏåø£+>± e÷πsÃ˝≤ #˚dæ+~ eT]j·TT
1993-94 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÷¬sÿ{Ÿ ìs¡ísTT+∫q e÷]Œ&ç πs≥T eédüúqT Á|üy˚X¯ô|{Ïº+~.
 ø£¬s+{Ÿ nøö+{Ÿ ø£q«]º_*{° yÓ’|ü⁄ ˇø£ 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\T
ô|≥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¡D
q÷‘·q $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \øå±´\T. uÛ≤s¡rj·T |ü]ÁX¯eT jÓTTø£ÿ b˛{°‘·‘·«+ eT]j·TT ‘·<ë«sê <ëì
m>∑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\T
eT]j·TT ~>∑TeT‘·T\ $wüj·T+˝À e÷¬sÿ{Ÿ X¯≈£îÔ\T m≈£îÿe bÕÁ‘· b˛wæ+#·&ÜìøÏ nqTeT‹+#·ã&Ü¶sTT. Ä>∑wüßº
31, 2002 q, ø=‘·Ô $<˚o yêDÏ»´ $<Ûëq+ 2004-09 Á|üø£{Ï+#·ã&ç+~, Ç~ Á|ü|ü+#· e÷¬sÿ{À¢ b˛{°‘·‘ê«ìï
yÓTs¡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·TyÓTÆq
kÕúsTT˝À düe]+∫+~. Bì Á|üø±s¡+, 2007-2008 ã&Ó®{Ÿ˝À ø£düºyéT‡ &É÷´{° jÓTTø£ÿ >∑]wüº πs≥T 250 XÊ‘·+
130
competition. With the introduction of new economic policy, Indian economy has accepted the challenge
of 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 available
for foreign direct investment upto 51 per cent of equity.
 In respect of foreign technology agreements, automatic permission is provided in high priority

industry upto a sum of Rs. 1 crore. No permission is required for hiring foreign technicians or for
testing indigenously developed technology abroad.
 In order to make international adjustment of Indian currency, rupee was devalued in July 1991 by
nearly 20 per cent which also stimulated exports, discouraged imports and raised the influx of
foreign capital.
 In order to make an inevitable move for the expeditious integration of Indian economy with that
of the world, the Union Budget 1992-93 has made Indian rupee partially convertible and then the
rupee was made fully convertible in 1993-94 budget. Accordingly, in March 1993, the Government
introduced 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 transactions
on trade account were freed from exchange control. Capital account convertibility is now being
targeted.
 A new five year export-import policy, 1992-97 was announced by the Government on March
31, 1992. The main objectives of the new policy are to establish the framework of globalisation
of India’s foreign trade, to promote productivity, modernisation and competitiveness of Indian
industry and thereby to enhance its export capabilities and also to simplify and streamline the
procedures governing exports and imports.
 The policy removed all restrictions and controls on the external trade and market forces are
allowed to play a greater role in respect of exports and imports. Again on August 31, 2002, a
new Foreign Trade Policy 2004-09 was announced which has simplified the trade practices
further for improving our competitiveness in the global market.
 In order to bring the Indian economy within the ambit of global competition, the government has
modified the customs duty to a considerable extent. Accordingly, the peak rate of customs duty
has 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 taken
several measures like:
131
qT+&ç 10.0 XÊ‘êìøÏ ‘·–Z+#·ã&ç+~.
 $<˚o ô|≥Tºã&ÉT\T eT]j·TT f…ø±ï\J Á|üyêVü‰ìï ô|+#·&ÜìøÏ Á|üuÛÑT‘·«+ nH˚ø£ #·s¡´\T rdüT≈£î+~:
 n~Ûø£ ÁbÕ<Ûëq´‘· ø£*–q |ü]ÁX¯eT\ $<˚o kÕ+πø‹ø£ düVü≤ø±sêìï eT+ps¡T #˚j·T&É+
 Áô|y’ {˚ Ÿ bÕ]ÁXÊ$Tø£y‘˚ \Ô· <ë«sê $<˚o kÕ+πø‹ø£‘q· T ~>∑TeT‹ #˚dTü ≈£îH˚ ùd«#·Ã¤ eT]j·TT <˚oj·T kÕ+πø‹ø£‘q· T
$<˚XÊ\˝À |üØøÏå+#·&ÜìøÏ nqTeT‹
 $<˚o ô|≥Tºã&ÉT\T eT]j·TT düVü≤ø±s¡ Á|ü‹bÕ<äq\qT Ksês¡T #˚j·T&ÜìøÏ $<˚o ô|≥Tºã&ÉT\ Áb˛‘ê‡Vü≤ø£ uÀs¡T¶
(FIPB) @sêŒ≥T #˚j·T&É+ eT]j·TT
 FERA/FEMA ø£+ô|˙\≈£î sêsTTr\qT n+~+#·&É+.
. n+‘·sê®rj·T b˛{° ì ‘·≥Tºø=q&ÜìøÏ Á|üuTÑÛ ‘·«+ ‘·q #Ó*+ ¢ |ü⁄\ ˝À≥TqT dü]#˚jT· &ÜìøÏ eT]j·TT n+‘·sê®rj·T
yêDÏ»´+˝À uÛ≤s¡‘·<˚X¯ yê{≤qT ô|+#·&ÜìøÏ nH˚ø£ #·s¡´\T rdüT≈£î+~.
q÷‘·q Á|üuTÑÛ ‘·« s¡+>∑ $<ÛëqeTT

q÷‘·q Ä]úø£ $<Ûëq+ jÓTTø£ÿ eTs=ø£ eTTKýÓTÆq \ø£åD+ Á|üuÛÑT‘·« s¡+>∑ $<Ûëq+˝À e÷s¡TŒ. ø=‘·Ô $<Ûëq+ <ëì
ÁbÕ<Ûëq´‘·qT |ü_¢ø˘ s¡+>∑+ qT+&ç Áô|’y˚{Ÿ s¡+>±ìøÏ e÷]Ã+~.
q÷‘·q bÕ]ÁXÊ$Tø£ $<Ûëq+ <ë«sê Á|üuÛÑT‘·« s¡+>∑+˝À rdüT≈£î sêã&çq eTTK´ ìs¡íj·÷\T
 Á|üuÛÑT‘·« s¡+>±ìøÏ ]»sY« #˚j·Tã&çq |ü]ÁX¯eT\ C≤_‘êqT 17 qT+&ç 8 øÏ ‘·–Z+#·&É+ eT]j·TT ]»sY«¶
ÁbÕ+‘ê˝À¢ m+|æø£ #˚dæq b˛{°ì Á|üy˚X¯ô|≥º&É+
 eqs¡T\qT ô|+#·&ÜìøÏ eT]j·TT Á|üuÛÑT‘·« s¡+>∑ dü+düú\ j·÷»e÷q´+˝À kÕ<Ûës¡D Á|ü»\T eT]j·TT
ø±]à≈£î\ $düÔ ‘· uÛ≤>∑kÕ«e÷´ìï Áb˛‘·‡Væ≤+#·&ÜìøÏ Á|üuTÑÛ ‘·« s¡+>∑ dü+dü\ú \˝À ô|≥Tºã&ÉT\ ñ|üd+ü Vü≤s¡D.
 ã\V”≤q+>± ñqï Á|üuTÑÛ ‘·« s¡+>∑ dü+dü\ú \ ø=s¡≈î£ $<ÛëHêìï Áô|y’ {˚ Ÿ s¡+>∑+‘√ düe÷q+>± s¡÷bı+~+#ês¡T.
|ü⁄qs¡TJ®eq |ü<∏äø±\ dü÷Árø£s¡D ø√dü+ ã\V”≤q+>± ñqï Á|üuÛÑT‘·« s¡+>∑ dü+düú\ \T BIFR øÏ
dü÷∫+#·ã&É‘êsTT
 ìs¡«Vü≤D ø±+Á{≤ø˘º ˝Ò<ë yÓTyÓ÷sê+&ÉyTé Ä|òt n+&ÉskY Õº+&ç+>¥ |ü<‹›ä <ë«sê |üìrs¡TqT yÓTs¡T>∑T|üs#¡ &· +É ,
Ä•+∫q |òü*‘ê\≈£î uÛ≤<äT´\qT #˚dü÷Ô y˚TH˚CŸyÓT+{Ÿ\≈£î m≈£îÿe dü«j·T+Á|ü‹|ü‹Ô Çe«ã&ÉT‘·T+~
q÷‘·˙ø£sD¡
ñ‘·Œ‹Ô eédüú˝À Ä<ÛäTìø£ kÕ+πø‹ø£‘·\qT Á|üy˚X¯ô|≥º&ÜìøÏ q÷‘·q Ä]úø£ $<Ûëq+ n~Ûø£ ÁbÕ<Ûëq´‘·ìk˛Ô+~. á
$<Ûëq+ m\Áø±ºìø˘‡ eT]j·TT ø£+|üP´≥sY\ n_Ûe~∆ì düT\uÛÑ‘·s¡+ #˚düTÔ+~. yÓTs¡T¬>’q kÕ+πø‹ø£ |ü]C≤„Hêìï
Á|üy˚X¯ô|≥º&ÜìøÏ, n~Ûø£ kÕ+πø‹ø£‘· ~>∑TeT‹øÏ dü+ã+~Û+∫q nìï $<˚o düVü≤ø±s¡ Á|ü‹bÕ<äq\qT Á|üuÛÑT‘·«+
nqTeT‹k˛Ô+~. Áô|’y˚{Ÿ bÕ]ÁXÊ$Tø£y˚‘·Ô\T dü+ø°¢q ìã+<Ûäq\ <ë«sê nqT≈£îqï düeTj·T+˝À ìj·Te÷\qT
Ksês¡T #˚jT· &ÜìøÏ ùd«#·Ã>¤ ± ñHêïsTT. dü«<˚o kÕ+πø‹ø£ |ü]C≤„q+ n_Ûe~∆ ≈£L&Ü Áb˛‘·‡Væ≤+#·ã&ÉT‘√+~. Áô|y’ {˚ Ÿ
ø£+ô|˙\T ≈£L&Ü |üqTï sêsTTr\ <ë«sê ‘·eT kı+‘· |ü]XÀ<Ûäq eT]j·TT n_Ûe~∆ (R&D) πø+Á<ë\qT n_Ûe~∆
#˚düTø√yê\ì Áb˛‘·‡Væ≤+#·ã&Ü¶sTT.
|ü⁄sê‘·q ñ≈£îÿ, eÁdü,Ô »q|üHês¡, #·ø¬ ÿs¡, ‘√\T |ü]ÁX¯eT\ Ä<ÛTä ìø°øs£ D¡ ≈£î #·s´¡ \T rdüTø√ã&Ü¶sTT . Ç~ dü«j·T+düeT~∆ì
132
 granting foreign technical collaborations of high priority industries;
 freedom to import foreign technology by private entrepreneurs and also to test indigenous
technology abroad;
 establishing Foreign Investment Promotion Board (FIPB) for finalizing foreign investment
and collaboration proposals and
 offering concessions to FERA/FEMA companies.
 In order to meet the international competitiveness, the Government has taken various steps
for correcting its balance of payments deficit and also to increase the share of India in
international trade.
New public sector policy

Another important feature of new economic policy is its change in public sector policy. The new
policy has shifted its emphasis from public to private sector.
The Industrial Policy has undertaken the following four major policy decisions in respect of
public sector:
 reduction in the list of industries reserved for the public sector from 17 to 8 and introducing
selective competition in the reserved areas;
 disinvestment of shares in PSEs to raise resources and encourage wider participation of

general 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 which
are unlikely to turn around will be referred to BIFR(Boar for Industrial and Financial
Reconstruction) 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 held
accountable for results;
Modernisation
The New Economic Policy has been providing high priority to the introduction of modern techniques
in production system. The policy facilitates the growth of sunrise industries, i.e. electronics and
computers. In order to introduce better and improved technology, the government is permitting all
foreign collaboration proposals related to the import of high technology. Private entrepreneurs are
now free to finalise the terms of such collaborations. Development of indigenous technology was also
encouraged. Private companies are also encouraged to develop their own Research and Development
(R&D) centers through tax concessions.
133
kÕ~Û+#·&ÜìøÏ, n+‘·s‘Z¡ · $ìjÓ÷>∑+, m>∑TeT‘·T\≈£î s¬ +&ç+{ÏøÏ nedüse¡ Tj˚T´ n~Ûø£ HêD´‘· >∑\ edüTeÔ ⁄\ ñ‘·Œ‹ÔøÏ
eT]j·TT Ks¡TÃ ‘·–Z+#·&ÜìøÏ nedüs¡+ nsTT´+~.
Á<äe´ $<Ûëq dü+düÿs¡D\T

qs¡dæ+Vü≤+ ø£$T{° dæbòÕs¡düT\ Á|üø±s¡+, Ä]úø£ s¡+>±ìï dü+düÿ]+#·&ÜìøÏ Á|üuÛÑT‘·«+ nH˚ø£ #·s¡´\T #˚|ü{Ïº+~.
 *øÏ«&ç{° ìwüŒ‹Ô˝À ‘·–+Z |ü⁄,

 &Ó’¬sø˘º Á¬ø&ç{Ÿ 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£ Á{ÏãT´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÷¬sÿ{Ÿ dü+düÿs¡D\qT |ü]#·j·T+ #˚j·T&É+.
ø√X¯ $<Ûëq dü+düÿs¡D\T

q÷‘·q Ä]úø£ $<Ûëq+ jÓTTø£ÿ eTs=ø£ eTTKýÓTqÆ \ø£D å + Ä]úø£ $<Ûëq dü+düÿs¡D\qT Á|üyX˚ ô¯ |≥º&+É . 1990-91˝À
Á<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 4.4
XÊ‘êìøÏ ‘·–+Z #·&ÜìøÏ Á|üuTÑÛ ‘·«+ $$<Ûä Ä]úø£ #·s´¡ \qT ÁbÕs¡+_Û+∫+~. á \øå±´ìï kÕ~Û+#·&ÜìøÏ, Á|üuTÑÛ ‘·«+ Á|üC≤
e´j·T+ô|’ $$<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+{Ïì
ô|+#·&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 $~Û+#·&É+,
dü_‡&û\ ‘·–Z+|ü⁄, m¬ø’‡CŸ eT]j·TT ø£düºyéT düT+ø±\ πs≥T ìs¡íjTÓÆ +#·&É+, 1999-2000 ã&Ó®{Ÿ˝À e´j·T dü+düÿs¡D\
ø£$TwüHqé T @sêŒ≥T #˚jT· &É+, sêÁwüº eT]j·TT øπ +Á<ä Á|üuTÑÛ ‘·« s¡+>∑ dü+dü\ú T eT]j·TT ñ|üd+ü Vü≤s¡DqT Áø£eTãB∆ø]£ +#·&+É ,
á dü+düú\≈£î ã&Ó®{Ÿ eT<ä›‘·T, {≤]|òt ìsêàD+ jÓTTø£ÿ ùV≤‘·TãB∆øs£ ¡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 Hê{ÏøÏ 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 ‘·sT¡ yê‘· ø±\+ Ä{ÀyÓTTu…˝’ Ÿ s¡+>∑+ jÓTTø£ÿ $düsÔ D
¡ qT #·÷dæ+~. Bì |ò*ü ‘·+>± yÓ÷{≤s¡T yêVü≤Hê\T
134
Steps were taken for the modernisation of the age-old steel, textile, jute, sugar, leather industries
having rich potential. This is important for attaining self reliance and also for cost reduction and
production of high quality goods required for both internal consumption and exports.
Financial Reforms
As per the recommendations of the Narasimham Committee, the Government has undertaken various
measures 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 Reforms
Another important feature of New Economic Policy is to introduce fiscal policy reforms. The
Government initiated various fiscal measures in order to reduce the fiscal deficit from 8.4 per cent of
GDP 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 expenditure
and took initiative to raise its both tax and non-tax revenue. The other measures include imposition of
fiscal discipline by both Central and State Governments, reduction of subsidies, rationalisation of
excise and custom duties rate structure, constituting Expenditure Reforms Commission in 1999-
2000 budget, streamlining the working of State and Central public sector enterprises and withdrawal
of budgetary support to these enterprises, rationalisation of tariff structure and user charges of
transport 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.
135
düT\uÛÑ+>± \uÛÑéTe⁄‘êsTT. á s¡+>∑+˝À b˛{° ô|]–+~ eT]j·TT yÓ÷{≤s¡T yêVü≤Hê\ <Ûäs¡\T ‘·>±ZsTT.
 dü+düÿs¡D\T Ä{À $&çu≤>±\T, f…*ø£eT÷´ìπøwüHé‡, kÕ|òtºy˚sY, bòÕsêàdü÷´{Ïø£˝Ÿ‡, ãjÓ÷f…ø±ï\J, ØôdsYÃ n+&é

&Óe\|tyTÓ +{Ÿ eT]j·TT XÊÁdüyÔ ‘˚ \Ô· T, f…ø±ï\õdüT\º T, &Üø£sº T¡ ,¢ qs¡T‡\T, ñbÕ<Ûë´j·TT\T, y˚TH˚CŸyTÓ +{Ÿ Ábıô|wò qü ˝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<ÛäýÓTÆq+‘· $düÔs¡D »]–+~. yêdüÔyêìøÏ, á s¡+>∑+ Ä]úø£ dü+düÿs¡D\ jÓTTø£ÿ
n‹ô|<ä› \_∆<ës¡T\˝À ˇø£{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+|òüT{Ï‘·
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·TT
Á|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+~.
 e÷¬sÿ{Ÿ Ä<Ûë]‘· Ä]úø£ dü+düÿs¡D\T ‘·s¡#·T>± <Ûäì≈£î\T eT]j·TT ù|<ä\ eT<Ûä´ eT]j·TT eTÚ*ø£ dü<äTbÕj·÷\
yÓqTø£ã&çq eT]j·TT eT]+‘· n_Ûe~∆ #Ó+~q sêÁcÕº\ eT<Û´ä ndüe÷q‘·\qT ô|+#·&ÜìøÏ ≈£L&Ü <ë]rXÊsTT.
 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|üŒ{Ïø°, yê{Ïô|’ <äwæº πø+ÁBø£]+#·˝Ò<äT. ø±s¡D+>± $<ä´ eT]j·TT Äs√>∑´ dü÷∫ø£\ jÓTTø£ÿ ‘·≈£îÿe
kÕúsTT\˝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\T

bÕ]ÁXÊ$Tø£ $<Ûëq+ nH˚~ ‘·j÷· Ø s¡+>∑+ jÓTTø£ÿ |ü⁄s√>∑‹ì n+#·Hê y˚jT· &ÜìøÏ Á|üuTÑÛ ‘·«+ ìπs•› +∫q Á|üe÷D≤\T
eT]j·TT #·s¡´\ dü+ø£\q+. Ç~ <˚X¯ Ä]úø£ e~∆ eT]j·TT n_Ûe~∆ì ô|+bı+~düTÔ+~. bÕ]ÁXÊ$Tø£ $<Ûëq+
jÓTTø£ÿ Á|ü<ëÛ q \ø£´å + $$<ä s¡+>±\ eT<Û´ä ˝Ò<ë ˝À|ü\, ~>∑Te qT+&ç n~Ûø£ ñ‘êŒ<äø‘£ · ø±s¡´ø£˝≤bÕ\≈£î e÷s¡&+É .
$$<Ûä dü+düú\ b˛{°‘·‘·«+ eT]j·TT kÕeTsêú´\qT Áb˛‘·‡Væ≤+#·&ÜìøÏ eT]j·TT yÓTs¡T>∑T|üs¡#·&ÜìøÏ Bì <ë«sê
Á|üuÛÑT‘·«+ #·s¡´\T rdüT≈£î+≥T+~. bÕ]ÁXÊ$Tø£ $<Ûëq+ nH˚~ Á|üuÛTÑ ‘·«+ |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£
$<Ûëq+ Á|ü<ëÛ q+>± s¬ +&ÉT uÛ≤>±\qT ø£*– ñ+&Ée#·TÃ. yÓTT<ä{~Ï bÕ]ÁXÊ$Tø°øs£ D¡ dü«uÛ≤yêìï ìs¡sí TT+#˚ Á|üuTÑÛ ‘·«
uÛ≤eC≤\+ eT]j·TT ¬s+&Ée~ Ç|üŒ{Ïπø ñqï uÛ≤eC≤\+ yÓqTø£ ˇø£ ì]›wüº #·Á{≤ìï n+~+#˚ bÕ\ø£ ìj·Te÷\T
eT]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£ÿ
e÷s¡Z<äs¡Ùø£‘·«+ eT]j·TT ìã+<äq\T n+~+#˚ düeTÁ>∑ uÛ≤eq.
136
 The post 1991 era witnessed an expansion of the automobile sector which resulted easy
availability of motor vehicles, increased competition in the sector and reduction in prices of
motor vehicles.
 Reforms led to the achievement of recognizable increases in international competitiveness in

a number of sectors including auto components, telecommunications, software,
pharmaceuticals, biotechnology, research and development, and professional services provided
by scientists, technologists, doctors, nurses, teachers, management professionals and similar
professions.
 There was a vast expansion of the telecommunication sector. In fact, this sector has been one
of the biggest beneficiaries of economic reforms. The telecom policy evolved from the National
Telecom Policy in 1994 to open sectors to private players.
 The reforms were largely in the formal sector of the economy, the agriculture, urban informal
sector and forest dependent communities did not see any reforms. This led to uneven growth
and unequal distribution of economic freedom among people.
 Economic liberalization in the organized manufacturing sector has led to growth with very
little additional employment.
 Market-based economic reforms also often lead to increasing disparities between the rich
and the poor and between infrastructurally backward and more developed states.
 Social sectors like health and education have been neglected. These areas although very
important, were not focused upon and the result can be seen in the dismally low levels of
education 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 percent
in 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 progress
of 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 the
competitiveness and capabilities of various firms.
The industrial policy refers to such formal declaration by the government through which general
policies for industries adopted by the Government are made public. Any industrial policy may have
mainly 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
137
bÕ]ÁXÊ$Tø£ $<ÛëHê\T \øå±´\T
oÁ|òTü bÕ]ÁXÊ$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¡+>±ìøÏ
nqT≈£L\yÓTÆq ô|≥Tºã&ç yê‘êes¡D≤ìï düwæº+#·&É+‘√bÕ≥T Á|üuÛÑT‘·« s¡+>∑+˝À ô|≥Tºã&ÉT\ ø√dü+ eqs¡T\qT
düMTø£]+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~. Á|üuÛÑT‘·«+ ‘·q e÷s¡Z+˝À, <˚X¯+˝À y˚>∑e+‘·yÓTÆq bÕ]ÁXÊ$Tø£ n_Ûe~∆ì
Áb˛‘·‡Væ≤+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~.
düeT‘·T\´ bÕ]ÁXÊ$Tø£ eédüú

Á|üdTü ‘Ô · ndüe÷q bÕ]ÁXÊ$Tø£ ìsêàD≤ìï dü]#˚jT· &ÜìøÏ bÕ]ÁXÊ$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±ã{Ïº,
bÕ]ÁXÊ$Tø£ ìsêàD+˝À á ndüeT‘·T\´‘·\T dü]#˚ùd $<Ûä+>± bÕ]ÁXÊ$Tø£ $<ÛëHêìï s¡÷bı+~+#ê*‡ e∫Ã+~.
Ä]∆ø£ X¯≈î£ \Ô øπ +ÁBø£sD¡ ìs√<Ûeä TT

bÕ]ÁXÊ$Tø£ $<Ûëq+ ìj·TeTìã+<äq\T |ü_ø¢ ˘ eT]j·TT Áô|y’ {˚ Ÿ s¡+>±\ ø√dü+ ø±s¡´ø£˝≤bÕ\ ]»πs«wüq¢ $~$<ÛëHê\qT
n+~+#·&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£ $<Ûëq+ \ø£å´+. <˚X¯+˝À
ø=ìï ÁbÕ+‘ê\T bÕ]ÁXÊ$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 $<ÛëHê\qT
s¡÷bı+~+#·&É+ bÕ]ÁXÊ$Tø£ $<Ûëq+ jÓTTø£ÿ |üì. uÛ≤s¡‘· Á|üuÛÑT‘·«+ jÓTTø£ÿ yÓTT≥ºyÓTT<ä{Ï bÕ]ÁXÊ$Tø£ $<Ûëq
Á|üø£≥q nsTTq 1948 ‘·sê«‘· e∫Ãq 1956 ˝À 1977 eT]j·TT 1980 ˝À ø=ìï ∫qï e÷s¡TŒ\T eT]j·TT
dües¡D\‘√ 1991 es¡≈£î neT\T˝À ñqï Á|üuÛÑT‘·« s¡+>∑ Ä~Û|ü‘·´ bÕ]ÁXÊ$Tø£ n_Ûe~∆ $<Ûëq+˝À ñ+≥÷
e∫Ã+~. 1991 ˝À, eT]j·TT 1956 bÕ]ÁXÊ$Tø£ $<Ûëq+˝À düT<ä÷s¡ e÷s¡TŒ\T »]>±sTT. p˝…’ 1991 ø=‘·Ô
bÕ]ÁXÊ$Tø£ $<Ûëq+ Á|üdüTÔ‘·+ bÕ]ÁXÊ$Tø£ n_Ûe~∆øÏ eTTkÕsTT<ëqT Á|üø£{Ï+∫+~.
5.2.1. bÕ]ÁXÊ$Tø£ $<ÛëqeTT - 1948

1948, @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>± $uÛÑõ+∫+~:
Á>∑÷|t - 1:: Äj·TT<Ûë\T eT]j·TT eT+<äT>∑T+&ÉT kÕeTÁ–, nDTX¯ø,ÔÏ s¬ ˝’ «Ò \T yÓTT<ä˝q’… ÁbÕ<∏$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˝…’q
ø°\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
138
ideology. Thus, industrial policy is a comprehensive concept which provides guidance and out-lines
of the policy for establishment and working of industries.
OBJECTIVES OF INDUSTRIAL POLICIES
Rapid Industrial Development

The industrial policy of the Government of India is aimed at increasing the pace of industrial
development. It seeks to create a favourable investment climate for the private sector as well as
mobilise resources for the investment in public sector. In its way, the government seeks to promote
rapid industrial development in the country.
Balanced industrial Structure

The 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 capital
goods sector was not developed at all and basic and heavy industries were absent. So, the industrial
policy had to be framed in such a manner that these imbalances in the industrial structure are corrected.
Prevention of Concentration of Economic Power

The industrial policy seeks to provide a framework of rules, regulations and reservation of spheres of
activity for the public and the private sectors. This is aimed at reducing the monopolistic tendencies
and preventing concentration of economic power in the hands of a few big industrial houses.
Balanced Regional Growth

Industrial 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 industrially
backward. It is the task of industrial policy to work out programmes and policies which lead to
industrial development or industrial growth.
The Industrial policy of 1948, which was the first industrial policy statement of the Government of
India, was changed in 1956 in a public sector dominated industrial development policy that remained
in force till 1991 with some minor modifications and amendments in 1977 and 1980. In 1991, far
reaching changes were made in the 1956 industrial policy. The new Industrial Policy of July 1991
heralded the framework for industrial development at present.
5.2.1. INDUSTRIAL POLICY 1948

On 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
139
‘·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¡ý˚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£ $<Ûëq+ 1948 ≈£î{°s¡ eT]j·TT ∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\qT
yê{Ï ÁbÕ<Ûëq´‘·qT ã{Ïº yê{Ïì s¡ø+åÏ #·&ÜìøÏ Á|üjT· ‹ï+∫+~. Ç~ Á|üXd¯ yÔü TÓ qÆ bÕ]ÁXÊ$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·TT
ìs¡«Vü≤D˝À yê] uÛ≤>∑kÕ«eT´+ ø£*Œ+∫+~. bÕ]ÁXÊ$Tø£ $<Ûëq+ 1948 <˚X¯ bÕ]ÁXÊ$Tø°øs£ D¡ ≈£î $<˚o eT÷\<Ûqä +
jÓTTø£ÿ ÁbÕeTTK´‘·qT >∑T]Ô+∫+~, nsTT‘˚ ìj·T+Á‘·D uÛ≤s¡‘<· X˚ +¯ #˚‘T· ˝À¢H˚ ñ+&Ü\ì ìs¡sí TT+∫+~. bÕ]ÁXÊ$Tø£
$<Ûëq rsêàq+, 1948 neT\T #˚j·T&ÜìøÏ Á|üuÛÑT‘·«+ 1951 ˝À |ü]ÁX¯eT\ (n_Ûe~∆ eT]j·TT ìj·T+Á‘·D)
#·{≤ºìï ÄyÓ÷~+∫+~.
5.2.2. bÕ]ÁXÊ$Tø£ $<ÛëqeTT - 1956

bÕ]ÁXÊ$Tø£ $<Ûëq+, 1956 ˇø£ $düÔ‘·yÓTÆq |üÁ‘·+ eT]j·TT ªªuÛ≤s¡‘·<˚X¯ Ä]úø£ sêC≤´+>∑+μμ nì ù|s¡T >±+∫+~.
Ç~ bÕ]ÁXÊ$Tø£ n_Ûe~∆øÏ dü+ã+~Û+∫q nìï n+XÊ\qT ø£\T|ü⁄ø=qï~. Ç~ Á|üuÛÑT‘·« s¡+>±ìï bÕ]ÁXÊ$Tø°ø£s¡D
πø+Á<ä+>± @sêŒ≥T #˚dæ+~. @Á|æ˝Ÿ 30, 1956 q, Á|üuÛÑT‘·«+ bÕ]ÁXÊ$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± eédüúqT 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. M{Ï˝À Hê\T>∑T |ü]ÁX¯eT\T, n$ Äj·TT<Ûë\T
eT]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´\T
eT]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·TT
kÕe÷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.
140
industries. Also, the existing industries were allowed to function for 10 years. After the end of the
tenure, the State would review and take adequate decisions.
Group 3 – A total number of 18 industries including heavy chemicals, sugar, cotton textile and
woollen 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 government
regulation and supervision.
Group 4 – All the remaining industries. However, the government can participate or intervene if the
need arises.
Apart from the four fold classification of the industries; the Industrial Policy 1948 endeavoured
to protect cottage and small scale industries by according them priority status. It also emphasised on
establishing harmonious industrial relations; gave high priority to fair wage rates; social security to
workers and their participation in management. The industrial policy 1948 had acknowledged the
significance of foreign capital for industrialisation of the country, but it was decided that the control
should remain with Indian hands. To implement the Industrial Policy Resolution, 1948, the Government
passed the Industries (Development and Regulation) Act in 1951.

The Industrial Policy, 1956 was an elaborate document and was hailed as “Economic Constitution of
India” It touched virtually all aspects of Industrial development. It established the public sector as
epicenter of industrialization. On April 30, 1956, the Government revisited the Industrial Policy, 1948
and announced the Industrial Policy Resolution, 1956 (IPR, 1956). There were three reasons behind
the revision:
The introduction of the Constitution of India

The adoption of a planning system
The 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 Central
Government monopolies and the rest under State Governments.
Schedule B – A list of 12 industries open to both the public and private sectors. However, these
industries 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.
141
bÕ]ÁXÊ$Tø£ $<Ûëq+, 1956 ñbÕ~Û neø±XÊ\qT $düÔ]+#·&ÜìøÏ ∫qï ‘·s¡Vü‰ eT]j·TT ≈£î{°s¡ |ü]ÁX¯eT\
ÁbÕeTTK´‘·qT ≈£L&Ü H=øÏÿ #Ó|æŒ+~.
5.2.3. bÕ]ÁXÊ$Tø£ $<ÛëqeTT - 1977

1977, &çôd+ãsY ˝À Á|üuÛÑT‘·«+ ‘·q q÷‘·q bÕ]ÁXÊ$Tø£ $<ÛëqeTT 1977 qT bÕs¡¢yÓT+≥T˝À Á|üø£{Ï+∫+~. á
$<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£å´+ Á>±MTD ÁbÕ+‘ê\T eT]j·TT ∫qï |ü≥ºD≤\˝À $düÔ]+∫ ñqï ≈£î{°s¡ eT]j·TT ∫qï
|ü]ÁX¯eT\ düeTs¡úe+‘·yÓTÆq n_Ûe~›. 1977 bÕ]ÁXÊ$Tø£ $<Ûëq+ ªª∫qï j·T÷ì{Ÿμμ qT ìs¡«∫+∫+~. Ç~
50,000 ø£+fÒ ‘·≈î£ ÿe »HêuÛ≤ ø£*–q |ü≥D º ≤\T ˝Ò<ë Á>±e÷\˝À j·T+Á‘ê\T eT]j·TT |ü]ø£sê\˝À ô|≥Tºã&ç s¡÷.
1 \ø£å es¡≈£î ø£*–q j·T÷ì{Ÿ >± ìs¡«∫+∫+~. bÕ]ÁXÊ$Tø£ $<Ûëq Á|üø£≥q, 1977 jÓTTø£ÿ Á|ü<Ûëq \ø£åD≤\T:
∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\ ô|’ Á|ü‘˚´ø£ <äwæº.
1977 $<Ûëq+ ∫qï ‘·s¡Vü‰ eT]j·TT ∫qï |ü]ÁX¯eT\≈£î n‘·´~Ûø£ ÁbÕ<Ûëq´‘·ì∫Ã+~. õ˝≤¢\ |ü]~Û˝À |ü]ÁX¯eT\
nedüsê\qT rs¡Ã&ÜìøÏ Á|ü‹ õ˝≤¢˝À ˇø£ õ˝≤¢ |ü]ÁX¯eT\ øπ +Á<ëìï @sêŒ≥T #˚j÷· \ì bÕ\d” Á|üø{£ +Ï ∫+~. ∫qï
|ü]ÁX¯eT\ nedüsêìï rs¡Ã&ÜìøÏ Ç+&çj·THé Ç+&ÉÁdæºj·T˝Ÿ &Óe\|tyÓT+{Ÿ u≤´+ø˘ Ä|òt Ç+&çj·÷˝À Á|ü‘˚´ø£ ôd˝Ÿ
@sêŒ≥T #˚j·TqTqï≥T¢ Á|üø£{Ï+∫+~.
ÁXÊ$Tø£ - kÕ+πø‹ø£‘· n_Ûe~›

eT÷\<Ûäq ÁbÕ<Ûëq´ |ü]ÁX¯eT\≈£î _Ûqï+>± ∫qï eT]j·TT ≈£î{°s¡ |ü]ÁX¯eT\˝À ìeT>∑ïeTj˚T´ ø±]à≈£î\ ñ‘êŒ<äø£‘·
eT]j·TT Ä<ëj·÷ìï ô|+#·&ÜìøÏ ∫qï eT]j·TT kÕ<Ûës¡D j·T+Á‘ê\T eT]j·TT yê{Ï dü¬s’q $ìjÓ÷>±ìï n_Ûe~∆
#˚j·T&ÜìøÏ Á|ü‘˚´ø£ Á|üj·T‘êï\ô|’ á $<Ûëq+ H=øÏÿ #Ó|æŒ+~. ∫qï eT]j·TT ≈£î{°s¡ |ü]ÁX¯eT\T $düÔ]+#·&ÜìøÏ
Áb˛‘·‡Væ≤+#·ã&Ü¶sTT.
Á|üuTÑÛ ‘·« s¡+>∑+ jÓTTø£ÿ nedüs+¡ >∑T]Ô+|ü⁄

á bÕ\d” Á|üuTÑÛ ‘·« s¡+>∑ j·T÷ì≥¢ kÕ<Û´ä ‘·, düeTs¡‘ú · eT]j·TT ˝≤uÛ<Ñ ëj·Tø£‘ô· |’ <äwæº ô|{Ï+º ~. kÕ<Û´ä yÓTqÆ +‘· ‘·≈î£ ÿe
qcÕºìï uÛÑ]+#·&ÜìøÏ Á|üuÛÑT‘·«+ ø°åDÏdüTÔqï |ü]ÁX¯eT\qT m+|æø£ #˚düT≈£î+≥T+<äì Ç~ Á|üø£{Ï+∫+~. kÕ«BÛq+
#˚düT≈£îqï j·T÷ì≥¢qT |ü⁄qs¡T<ä∆]+#·&ÜìøÏ eT]j·TT ìs¡«Væ≤+#·&ÜìøÏ ‘·ø£åD #·s¡´\T rdüT≈£î+≥T+~.
dü«<˚o kÕ+πø‹ø£‘· ô|’ <äwæº

uÛÑ$wü´‘·TÔ˝À |ü]ÁX¯eT\ n_Ûe~∆øÏ dü«<˚o kÕ+πø‹ø£ |ü]C≤„Hêìï kÕ<ÛäýÓTÆq+‘· es¡≈£î ñ|üjÓ÷–+#·Tø√yê\ì á
bÕ\d” |æ\T|ü⁄ì∫Ã+~. nsTT‘˚, n<ÛäTHê‘·q s¡+>±\ ø√dü+, Á|üuÛÑT‘·«+ $<˚XÊ\ qT+∫ n+<äTu≤≥T˝À ñqï ñ‘·ÔeT
kÕ+πø‹ø£ |ü]C≤„Hêìï ø=qT>√\T #˚dTü +Ô ~. á $<Ûëq+ $<˚o kÕ+πø‹ø£ |ü]C≤„Hêìï ñ|üj÷Ó –+#ê\ì |æ\T|ü⁄ì∫Ã+~.
dü«j·T+ kÕ«e\+uÛqÑ ô|’ <äwæº
á $<Ûëq+ ø£˙dü m>∑TeT‹ eT]j·TT >∑]wüº+>± dü«j·T+ düeT~∆ ø√dü+ |æ\T|ü⁄ì∫Ã+~. ÁbÕ<Ûëq´‘· ø£*–q
|ü]ÁX¯eT\ n_Ûe~∆øÏ nedüs¡yÓTÆq ~>∑TeT‘·T\ô|’ Ä+ø£å\qT ‘=\–+#ê\ì |æ\T|ü⁄ì∫Ã+~.
ÁbÕ+rj·T düeT‘Í˝≤´_Ûe~›
düeT‘Í\´ ÁbÕ+rj·T n_Ûe~∆ Á|üj÷Ó »Hê\ ø√dü+ á bÕ\d” ˝À Á|üuTÑÛ ‘·«+ ìs¡j
í T· + rdüT≈£î+~. 10 \ø£\å »HêuÛ≤
<ë{Ïq yÓTÁ{ÀbÕ*≥Hé q>∑sê\T eT]j·TT 5 \ø£å\ ø£+fÒ m≈£îÿe »HêuÛ≤ ñqï Ç‘·s¡ q>∑sê\˝À ø=ìï |ü]$T‘·T\≈£î
142
The IPR, 1956 also stressed the importance of small-scale and cottage industries for expanding
employment opportunities.
5.2.3. INDUSTRIAL POLICY STATEMENT, 1977
In December 1977, Government announced its New Industrial Policy through a statement in the
Parliament. The main thrust of this policy was the effective promotion of cottage and small industries
widely dispersed in rural areas and small towns. 1977 Industrial policy defined a “tiny unit” as a unit
with investment in machinery and equipment upto Rs. 1 Lakh and situated in towns or villages with a
population of less than 50,000. The main features of the Industrial Policy Statement, 1977 are:
Special Focus on Small”scale Industries

The 1977 policy gave highest priority to the small scale and tiny industries. The policy declared to
establish one District Industries Centre in each district to meet the requirement of industries within
that district. It also announced to establish a separate cell in the Industrial Development Bank of India
to cater to the need of the small industries.
Focus on Labour”intensive Technology

In contrast with capital intensive industries, this policy emphasized on special efforts to develop small
and ordinary machines and their optimal use to enhance productivity and income of the workers
engaged in small and cottage industries. Small and cottage industries encouraged to expand.
Viability of Public Sector

The policy emphasized on the viability, efficiency and profitability of the public sector units. It declared
that government will selectively take over sick industries to bear minimum possible loss; and will take
immediate measures to rehabilitate and manage the units taken over.
Focus on Indigenous Technology

The 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-sufficiency
This policy called for minimum export and maximum possible self-sufficiency. It called for removing
restrictions on those imports which are needed for development of priority industries.
Balanced Regional Development

The government decided in the interest of balanced regional development; no more licences will be
issued for the establishment of industries within certain limits of metropolitan cities having a population
exceeding 10 lakh and in other cities having a population exceeding 5 lakh.
Restrictions on Foreign Investments
The policy declared that the foreign investment in the “unnecessary areas” was prohibited. This was
virtually a complete NO to the foreign investment. This policy is also remembered for a very important
143
˝Àã&ç |ü]ÁX¯eT\ kÕú|üq≈£î Çø£ô|’ ˝…’ôdHé‡ \T C≤Ø #˚j·Tã&Ée⁄.
$<˚o ô|≥Tºã&ÉT\ô|’ Ä+ø£\å T

ªªnqedüs¡yÓTÆq ÁbÕ+‘ê˝À¢μμ $<˚o ô|≥Tºã&ÉT\qT ìùw~Û+∫q≥T¢ á $<Ûëq+ Á|üø£{Ï+∫+~. Ç~ yêdüÔe+>± $<˚o
ô|≥Tºã&ÉT\≈£î |üP]Ô ìùw<ä+. á $<Ûëq+ ≈£L&Ü #ê˝≤ eTTKýÓTÆq ìã+<Ûäq ø√dü+ >∑Ts¡TÔ+#·Tø√ã&ÉT‘·T+~. bòÕ¬sHé
mπø‡Ã¤+CŸ s¬ >∑T´˝ÒwHü é j·÷øº̆ (FERA) 1973 Á|üø±s¡+ ‘·eT $<˚o áøÏ«{°ì 40 XÊ‘·+ es¡≈î£ nqTeT‹+∫q $<˚o
ø£+ô|˙\qT uÛ≤s¡rj·T ø£+ô|˙\‘√ düe÷q+>± |ü]>∑D+Ï #ê\ì Á|üø≥ £ q ù|s=ÿ+~. ø√ø± ø√˝≤ eT]j·TT IBM e+{Ï
ø£+ô|˙\T ìã+<Ûäq\qT bÕ{Ï+#·ì ø±s¡D+>± |ü]ÁX¯eT eT+Á‹ C≤sY® ô|òsêï+&ÓCŸ ø√ø˘ eT]j·TT IBM \qT
uÛ≤s¡‘·<˚X¯+ qT+&ç ãVæ≤düÿ]+#·&É+ »]–+~. .
5.2.4. bÕ]ÁXÊ$Tø£ $<ÛëqeTT -1980

1980, p˝…’ 23 q Á|üuTÑÛ ‘·«+ á ø=‘·Ô bÕ]ÁXÊ$Tø£ $<ÛëHêìï Á|üø{£ +Ï ∫+~. bÕ]ÁXÊ$Tø£ $<Ûëq Á|üø≥£ q, 1980
<˚oj·T e÷¬sÿ{Ÿ˝À b˛{°ì Áb˛‘·‡Væ≤+#ê*‡q nedüsêìï, Ä<ÛTä ˙ø£sD¡ , m+|æø£ #˚dqæ düs∞¡ ø£sD
¡ eT]j·TT kÕ+πø‹ø£
e~› ì Á|ükÕÔ$+∫+~. bÕ]ÁXÊ$Tø£ ñ‘êŒ<äø£‘· eT]j·TT bÕ]ÁXÊ$Tø£ s¡+>∑+˝À b˛{°‘·‘ê«ìï ô|+#·&ÜìøÏ
bÕ]ÁXÊ$Tø£ s¡+>±ìï düs¡∞ø£]+#·&É+ \ø£å´+>± ìs¡ísTT+∫+~.
1980 bÕ]ÁXÊ$Tø£ $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£åD≤\T.

Á|üuTÑÛ ‘·« s¡+>±ìøÏ }|æ]
Á|üuÛÑT‘·« s¡+>∑ dü+düú\ kÕeTsêú´ìï ô|+#ê\ì Á|üuÛÑT‘·«+ ìs¡ísTT+∫+~. Bì ø√dü+ Äj·÷ dü+düú\ ìs¡«Vü≤DqT
ã˝Àù|‘·+ #˚j·T&ÜìøÏ, ô|ò’HêHé‡ eT]j·TT e÷¬sÿ{Ï+>¥ s¡+>∑+˝À y˚TH˚CŸyÓT+{Ÿ ø±´&ÉsY\qT n_Ûe~∆ #˚j·÷\ì
Á|ü‹bÕ~+∫+~. Ç~ Á|üuTÑÛ ‘·« s¡+>∑+˝Àì bÕ]ÁXÊ$Tø£ $uÛ≤>±\qT n<Û´ä j·Tq+ #˚j÷· \ì eT]j·TT yê{Ï n_Ûe~∆øÏ
ì]›wüº <äX¯\qT dü÷∫+#ê\ì ≈£L&Ü Á|ü‹bÕ~+∫+~.
Ä]∆ø£ düe÷K´ $<Ûëq+

bÕ]ÁXÊ$Tø£+>± yÓqTø£ã&çq$>± >∑T]Ô+#·ã&çq Á|ü‹ õ˝≤¢˝À ø=ìï πø+Á<äø£ ø£sêà>±sê\ @sêŒ≥T‘√ Ä]úø£ düe÷K´
uÛ≤eqqT Áb˛‘·‡Væ≤+#ê\ì Á|ü‹bÕ~+#·ã&ç+~.
∫qï‘·sV¡ ‰ü dü+dü\ú |ü⁄q]ïs¡«#·q+

∫qï j·T÷ì≥¢ n_Ûe~∆ì Áb˛‘·‡Væ≤+#·&ÜìøÏ, Á|üuÛÑT‘·«+ ∫qï j·T÷ì≥¢ ìs¡«#·Hêìï düe]+∫+~.
∫qï j·T÷ì≥T¢- ô|≥Tºã&ç |ü]$T‹ s¡÷.\ø£å qT+&ç s¡÷ .2 \ø£å\≈£î ô|+|ü⁄
∫qï |ü]ÁX¯eT\T- ô|≥Tºã&ç |ü]$T‹ s¡÷. 10 \ø£å\ qT+&ç s¡÷. 20 \ø£å\≈£î ô|+|ü⁄ eT]j·TT
 nqTã+<Ûä dü+düú\ - ô|≥Tºã&ç |ü]$T‹ s¡÷ .15 \ø£å\ qT+∫ s¡÷. 25 \ø£å\≈£î ô|+|ü⁄ #˚j·T&É+ »]–+~.
Á>±MTD |ü]ÁX¯eT\ n_Ûe~›

n~Ûø£ ñbÕ~Û eT]j·TT n~Ûø£ ‘·\dü] Ä<ëj·÷ìï düwæº+#·&ÜìøÏ #˚H˚‘·, Vü≤düÔø£fi¯\T eT]j·TT U≤B |ü]ÁX¯eT\≈£î
Á|ü‘˚´ø£ ÁX¯<ä∆ Çe«ã&ÉT‘·T+~, ‘·<ë«sê Á>±MTD ÁbÕ+‘ê\ y˚>∑e+‘·yTÓ Æq e~∆ kÕ<ÛäéTe⁄‘·T+~.
144
provision. The statement stated that foreign companies that diluted their foreign equity up to 40 per
cent under Foreign Exchange Regulation Act (FERA) 1973 were to be treated at par with the Indian
companies. Companies like Coca Cola and IBM did not comply with the provisions and Industry
Minister George Fernandez threw the Coke and IBM out of India.

Government 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, selective
Liberalization, and technological up-gradation. The objective was to liberalize the industrial sector to
increase industrial productivity and competitiveness of the industrial sector. The main features of the
Industrial Policy of 1980 were.
Revitalisation of the Public sector

The government decided to raise the efficiency of public sector undertakings. For this purpose, it
proposed to strengthen their management and develop man-agement cadres in the field of finance
and marketing. It also proposed to study the industrial units of the public sector and suggest specific
steps for their betterment.
Economic Federalism
It proposed to promote the concept of economic federalism with the setting up of a few nucleus
plants in each district, identified as industrially backward, to generate as many ancillaries small and
cottage industries for their development.
Redefining the small Units

To 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 industries

To generate higher employment and higher per capita income, handlooms, handicrafts and Khadi are
given greater attention so that a faster growth of the rural areas is made possible
Removal of regional imbalances

For this, the state encouraged industrial units in backward areas.
Industrial sickness
The policy statement outlined clearly its approach towards sick units
 Management of sick units would be taken over only in exceptional cases on grounds of
public interest where other means for their revival are not feasible.
145
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‘·\T
nHês√>∑´ 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\ <äcÕº´ nkÕ<Ûës¡DyÓTÆq dü+<äsê“¤\˝À e÷Á‘·y˚T
rdüTø√ã&ÉT‘·T+~. Çø£ÿ&É yê{Ï |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÷ì{Ÿ\T Äs√>∑´ø£sy¡ TÓ qÆ j·T÷ì{Ÿ\‘√ $©q+
#˚j·T&ÜìøÏ Áb˛‘·‡Væ≤+#·ã&É‘êsTT.
n~Ûø£ ñ‘·Œ‹Ô kÕÔsTT Áø£eTãB›øs£ D¡

Áô|y’ {˚ Ÿ ôdø±ºs˝Y À, Áø£eTãB∆ø]£ +∫q n<äq|ü⁄ kÕeTs¡´ú +‘√ düV‰ü yÓTT‘·+Ô kÕeTsêú´ìøÏ kÕú|qü #˚jT· ã&çq kÕeTs¡´ú +˝À
25 XÊ‘·+ es¡≈î£ kÕeTs¡´ú $düsÔ D¡ Ä{Àe÷{Ïø˘ >± n+<äTu≤≥T˝À ñ+≥T+~. FERAeT]j·TT MRTP ø£+ô|˙\qT
m+|æø£ Ä<Ûës¡+>± |ü]>∑DÏ+#ê*‡ ñ+≥T+<äì ù|s=ÿHêïs¡T. n+‘˚ø±≈£î+&Ü, á dü<äTbÕj·÷ìï ∫qï s¡+>±ìøÏ
]»sY« #˚dæq edüTÔe⁄\≈£î dü+ã+~Û+∫ Çe«≈£L&É<äT.
5.2.5. bÕ]ÁXÊ$Tø£ $<ÛëqeTT -1991

bÕ]ÁXÊ$Tø£ s¡+>∑+˝À b˛{°ì Áb˛‘·‡Væ≤+#·&ÜìøÏ Áô|y’ {˚ Ÿ dü+dü\ú Á|üyX˚ ÊìøÏ n&É+¶ ≈£î\qT dü&*É +#˚ Á|ü<ëÛ q \ø£´å +‘√
ø=‘·Ô bÕ]ÁXÊ$Tø£ $<Ûëq+ p˝…’, 1991 q Á|üø£{Ï+#·ã&ç+~. Ç~ ñ‘êŒ<äø£‘·˝À e~∆ì ø=qkÕ–+#·&É+, ñbÕ~Ûì
bı+<ä&É+ eT]j·TT n+‘·sê®rj·T b˛{°‘·‘ê«ìï kÕ~Û+#·&É+ ≈£L&Ü \ø£å´+>± ô|≥Tº≈£î+~.Ä]úø£ eédüú˝À Áô|’y˚{Ÿ
uÛ≤>∑kÕ«e÷´ìï Áb˛‘·‡Væ≤+#·&ÜìøÏ, Á|üuTÑÛ ‘·« s¡+>±ìøÏ ]»sY« #˚jT· ã&çq |ü]ÁX¯eT \T 17 qT+&ç 8 øÏ >∑D˙j·T+>±
‘·–+Z #·ã&Ü¶sTT. Á|ü‘´˚ øÏ+∫, f…*ø£eT÷´ìπøwüH,é |üesY, msTTsY Á{≤Hé‡b˛sY,º ô|Á{À*j·T+, s¡+>±\˝À Áô|y’ {˚ Ÿ s¡+>∑+
nqTeT‹+#·ã&ç+~. ø=‘·Ô bÕ]ÁXÊ$Tø£ $<Ûëq+, 1991 e÷¬sÿ{Ÿ X¯≈£îÔ\≈£î kÂø£sê´\T ø£*Œ+#·&É+ eT]j·TT
kÕeTsêú´ìï ô|+#·&É+ Á|ü<Ûëq \ø£å´+. ÁøÏ+~ $wüj·÷\ô|’ Á|ü‘˚´ø£ ÁX¯<ä› #·÷|ü&ÉäyÓTÆq~
L- düs¡∞ø£s¡D (Á|üuÛÑT‘·« ìj·T+Á‘·D ‘·–Z+|ü⁄)
P- Áô|’y˚{°ø£s¡D (Áô|’y˚{Ÿ s¡+>∑+ bÕÁ‘· eT]j·TT |ü]~Ûì ô|+#·&É+)
G- >√¢ã˝…’CÒwüHé (Á|ü|ü+#· Ä]úø£ eédüú‘√ uÛ≤s¡‘· Ä]úø£ eédüú nqTdü+<Ûëq+)
LPG ø±s¡D+>± bÕ‘·, ø=‘·Ô <˚oj·T dü+dü\ ú T, ãVüQfi¯ C≤rj·T ø£+ô|˙\T eT]j·TT ~>∑TeT‹ #˚dTü ≈£îqï edüTeÔ ⁄\‘√
b˛{° |ü&Ü*‡ edüT+Ô ~. p˝…’ 24, 1991 q, uÛ≤s¡‘· Á|üuTÑÛ ‘·«+ ø=‘·,Ô düs∞¡ ø£‘· bÕ]ÁXÊ$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\T

Á|üuTÑÛ ‘·« @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£+,
146
 Sick units with adequate potential for revival would be encouraged to merge with healthy
units.
Regulation of Unauthorised Excess Capacity

In the private sector, capacity expansion up to 25 percent of installed capacity would be automatically
available to the overall capacity including regularised excess capacity. It was stated that FERA and
MRTP companies were to be considered on a selective bases. Moreover, this facility was not to be
given in respect of items reserved for the small sector.
The New Industrial Policy was declared on July, 1991 with the major aim of loosening the barriers to
entry for private firms to encourage competition in the industrial sector. It also aims to sustain growth
in the productivity, gainful employment and to attain international competitiveness.
To encourage private participation in the economy, the areas of industry reserved for the public
sector have been considerably reduced from 17 to 8. In particular, telecommunication, power, air
transport, petroleum, sectors were opened for private sector. The New Industrial Policy, 1991 had
the main objective of providing facilities to market forces and to increase efficiency. Larger roles
were 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 National
Companies and imported items
On July 24, 1991, the Government of India announced a new, liberalized industrial policy. This policy
scrapped 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 for
foreign participation in the country’s industrial sector.
HIGHLIGHTS OF POLICY
Government Monopoly
The 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, the
policy had implied threat of closure of sick public sector enterprises to increase efficiency of the
public sector.
147
e÷+>∑˙dt Kì»+, ã+>±s¡+, yÓ+&ç, sê–, d”d+ü , õ+ø˘, nDT KìC≤\T ‘·e«ø£+ eT]j·TT s¬ ˝’ «Ò . Ç+ø±, á $<Ûëq+
Á|üuÛÑT‘·« s¡+>∑ kÕeTsêú´ìï ô|+#·&ÜìøÏ ø°åq <äX¯˝À ñqï Á|üuÛÑT‘·« s¡+>∑ dü+düú\qT eT÷dæy˚j·÷\ì dü÷∫+∫+~.
bÕ]ÁXÊ$Tø£ ˝…ô’ dì‡+>¥ $<Ûëq+

á $<Ûëq+ 18 |ü]ÁX¯eT\ dü+øÏå|üÔ C≤_‘ê $TqVü‰ nìï |ü]ÁX¯eT\≈£î bÕ]ÁXÊ$Tø£ ˝…’ôdì‡+>¥ì s¡<äT› #˚dæ+~. á
18 |ü]ÁX¯eT\ C≤_‘ê 1999 ˝À eT]+‘·>± düe]+#·ã&ç+~, Bì <ë«sê Ä dü+K´ Äs¡T |ü]ÁX¯eT\≈£î nq>±
Á|üe÷<äø£s¡ s¡kÕj·THê\T, ‘·TbÕø° eT+<äT >=+&ç eT]j·TT ù|\T&ÉT |ü<ësê›\T, bı>±≈£î ñ‘·Œ‘·TÔ\T, Ä\ÿVü‰*ø˘
bÕ˙j·÷\T eT]j·TT m\Áø±ºìø˘, @s√ùdŒdt eT]j·TT s¡ø£åD |ü]ø£sê\T e+{Ï |ü<ësêú\≈£î ‘·–Z+#·ã&ç+~. nsTT‘˚,
á $<Ûëq+˝À ∫qï ‘·s¡Vü‰ s¡+>±ìøÏ ]»sY« #˚j·Tã&çq |ü]ÁX¯eT\T n˝≤π> ]»sY« #˚dæ ñ+#·ã&Ü¶sTT.
$<˚o ô|≥Tºã&ÉT\T eT]j·TT eT÷\<Ûqä eTT

Ç~ uÛ≤s¡‘·<˚X¯+˝À $<˚o ø£+ô|˙\T yÓTC≤]{° yê{≤qT ø£*– ñ+&É{≤ìøÏ nqTeT‹+∫q yÓTT<ä{Ï bÕ]ÁXÊ$Tø£
$<Ûëq+. 47 n~Ûø£ ÁbÕ<Ûëq´‘· ø£*–q |ü]ÁX¯eT\˝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]ÁX¯eT\T
51 XÊ‘·+ $<˚o áøÏ«{° es¡≈î£ Á|ü‘´· ø£å $<˚o ô|≥Tºã&ÉT\ ø=s¡≈î£ Ä{Ày˚T{Ïø˘ 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˝À
m˝≤+{Ï n&É¶+≈£î\T ñ+&Éeì Vü‰MT Çe«ã&ç+~. bòÕ]Hé mπø‡Ã¤+CŸ ¬s>∑T´˝ÒwüHé j·÷ø˘º -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·÷ø˘º <ë«sê uÛÑØÔ #˚j·Tã&ç+~.
$<˚o kÕ+πø‹ø£ ˇ|üŒ+<ë\T

n~Ûø£ ÁbÕ<Ûëq´‘· ñqï |ü]ÁX¯eT\˝À $<˚o kÕ+πø‹ø£ ˇ|üŒ+<ë\ ø√dü+ Ä{Ày˚T{Ïø˘ nqTeT‹ s¡÷. 1 ø√{Ï es¡≈£î,
<˚oj·T neTàø±\≈£î 5 XÊ‘·+ sêsTTr eT]j·TT m>∑TeT‘·T\≈£î 8 XÊ‘·+, ˇ|üŒ+<ä ‘˚B qT+&ç 10 dü+e‘·‡sê\
eé~Û˝À ˝Ò<ë ñ‘·Œ‹Ô ÁbÕs¡+uÛÑyÓTÆq 7 dü+e‘·‡sê\ qT+&ç yÓTT‘·Ô+ 8 XÊ‘·+ neTàø±\ #Ó*¢+|ü⁄≈£î ˝Àã&ç nqTeT‹
áj·Tã&ç+~. Ç+ø± Á|üuÛÑT‘·«+ $<˚o kÕ+πø‹ø£ ì|ü⁄DT\ ìj·÷eTø±ìï düs¡∞ø£]+∫+~.
Á|üuTÑÛ ‘·« s¡+>∑ dü+dü\ú ô|≥Tºã&ÉT\ô|’ |ü⁄q:|ü]o\q

eP´Vü‰‘·àø£, ôV’≤f…ø˘ eT]j·TT nedüs¡yÓTÆq eTÚ*ø£ dü<äTbÕj·÷\ô|’ Á|üuÛÑT‘·« s¡+>±ìï <äwæº˝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+dü\ú uÀs¡T\¶ T eT]+‘· Ábıô|wò qü ˝Ÿ>± ‘·j÷· s¡T #˚jT· ã&É‘êj·Tì eT]j·TT n~Ûø£ n~Ûø±sê\T ÇkÕÔeTì Vü‰MT
Çe«ã&ç+~.
MRTP#·≥+º ˝À dües¡D\T
MRTP 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, $©q+ eT]j·TT fÒø√esY eT]j·TT ø=ìï |ü]dæú‘·T\˝À &Ó’¬sø£ºs¡¢
ìj·÷eTø£+ ø√dü+ πø+Á<ä Á|üuÛÑT‘·«+ jÓTTø£ÿ eTT+<ädüTÔ ÄyÓ÷<ä+ nedüsêìï Ç~ ‘=\–düTÔ+~. MRTP ø£+ô|˙\≈£î
MRTP|ü]$T‹ s¡÷. 100 ø√≥T¢. Á|üdTü ‘ Ô +· MRTP#·{≤ºìøÏ ã<äT\T>± b˛{° #·≥+º 2002 neT\T˝ÀìøÏ ‘˚ã&ç+~.
148
Industrial Licensing Policy
This 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 like
drugs and pharmaceuticals, hazardous chemicals, explosives such as gun powder and detonating
fuses, 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 Capital

This was the first Industrial policy in which foreign companies were allowed to have majority stake in
India. 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 for
direct foreign investment up to 51 percent foreign equity. It was promised that there will be no
bottlenecks of any kind in this process provided that foreign equity covers the foreign exchange
requirement for imported capital goods. A promise to carry out some amendments in Foreign Exchange
Regulation Act -1973 was later replaced by FEMA in 1999
Foreign Technology Agreements

Automatic permission was given for foreign technology agreements in high priority industries up to a
lump 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 7
years from commencement of production. Further, government eased hiring of foreign technicians.
Review in Public Sector Investments

A promise was made to review the portfolio of public sector investments with a view to focus the
public sector on strategic, high-tech and essential infrastructure. This indicated a disinvestment of the
public sector. The PSUs which were chronically sick and which are unlikely to be turned around
were to be referred to the Board for Industrial and Financial Reconstruction (BIFR). It was promised
that Boards of public sector companies would be made more professional and given greater powers.
Amendments to MRTP Act

The MRTP Act was amended to remove the threshold limits of assets in respect of MRTP companies
and dominant undertakings. This eliminates the requirement of prior approval of Central Government
for establishment of new undertakings, expansion of undertakings, merger, amalgamation and takeover
and appointment of Directors under certain circumstances. The MRTP Limit for MRTP companies
was made Rs. 100 Crore. Currently, MRTP act is replaced by Competition Act 2002.
Tiny Sector
The 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 labourers

The Government announced to establish a National Renewal Fund (NRF) to provide a social safety
net to the labour. This fund was established in 1992 and two schemes were brought under this- first
149
∫qï |ü]ÁX¯eT\T
∫qï j·T÷ì{Ÿ jÓTTø£ÿ ìs¡«#·q+ s¡÷. 5 \ø£å\T ø£+fÒ ‘·≈£îÿe ô|≥Tºã&ç |ü]$T‹ ø£*–q j·T÷ì{Ÿ>± e÷s¡Ãã&ç+~.
C≤rj·T |ü⁄q]ïe÷q ì~Û

ø±]à≈£î\≈£î kÕe÷õø£ uÛÁÑ <ä‘· n+~+#·&ÜìøÏ C≤rj·T |ü⁄qs¡T<äs∆ D¡ ì~Û @sêŒ≥T #˚jT· qTqï≥T¢ Á|üuTÑÛ ‘·«+ Á|üø{£ +Ï ∫+~.
á ì~Û 1992 ˝À kÕú|æ+#·ã&ç+~. Bì <ë«sê eéd”úø£‘· s¡+>∑+˝À ùV≤‘·TãB∆ø£]+#·ã&çq ø±]à≈£î\ ø√dü+
yê\+≥Ø ]f…Æ¬sà+{Ÿ d”ÿyéT eT]j·TT Ø-Áf…Æì+>¥ d”ÿyéT\T neT\T˝ÀìøÏ rdüT≈£îsêã&Ü¶sTT.
Voluntary Retirement Scheme and another Re-Training Scheme for rationalised workers in organised
sector.
Key Terms
1. Foreign Investments: Foreign investment involves capital flows from one nation to another in
exchange for significant ownership stakes in domestic companies or other assets.
2. Fiscal Deficit: Fiscal deficit, the condition when the expenditure of the government exceeds its
revenue in a year, is the difference between the two. Fiscal deficit is calculated both in absolute
terms and as a percentage of the country’s gross domestic product (GDP).
3. Foreign Exchange Reserves: Foreign exchange reserves are important assets held by the
central bank in foreign currencies as reserves. They are commonly used to support the exchange
rate and set monetary policy.
4. Economic Stagnation: Stagnation is a situation that occurs within an economy when total
output is either declining, flat, or growing slowly.
5. Current Account Deficits: A current account deficit occurs when the total value of goods and
services 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 for
the 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 the
holding entitles the holder to a right to vote, to profits available for distribution and to assets
available for distribution on a winding up of that company.
8. FERA: The Foreign Exchange Regulation Act (FERA) was legislation passed in India in 1973
that 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 exchange
and the import and export of currency.
150
9. FEMA: Foreign Exchange Management Act, The Central Government of India formulated an
act to encourage external payments and across the border trades in India.
10. Memorandum of Understanding (MoU): A memorandum of understanding is an agreement

between two or more parties outlined in a formal document.
11. Import License: An import license is a document issued by a national government authorizing
the 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 a
statement 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 from
sources other than taxes.
1. Government of India started economic reforms in the year

A) 1991 B) 1948 C) 1956 D) 1980
2. Deficit financing is the means borrowing by Government to meet its deficit from.
A) State Governments
B) General Public
C) Reserve Bank of India
D) 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) Liberalisation
B) Privatisation
C) Globalisation
D) All of the above
5. Industrial licensing system was abolished in the Industrial Policy

A) Industrial Policy 1948
B) Industrial Policy 1956
C) Industrial Policy 1977
D) Industrial Policy 1991
6. The First Industrial Policy in India in the year.
151
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”

9. The Industrial Policy declared to establish one District Industries Centre in each district to
meet the requirement of industries within that district.
10. As per the Industrial Policy Resolution, 1991, What is the allowed limit for FDI.
A) 49% B) 50% C) 51% D) 52%
ANSWERS
1 2 3 4 5 6 7 8 9 10
A C C D D B A C D C
INERACTIVE LINKS
https://en.wikipedia.org/wiki/Economic_liberalisation_in_India
https://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.
152
Economic Policies
Learning Outcomes:
Chapter Layout:
Chapter
6.1. Economic the
1. understand Policies
components in economic policies ;
6.2. 6
2. outline
Competition
the objectives
Act-2002of different economic policies in In
3. describe theSalient
6.2.1. impactFeatures
of economic policies over
of Competition the business
Act-2002
4. examine theMRTP
6.2.2. differences between
Act 1969 monitory policy
Vs Competition and fisc
Act-2002
5. judge
6.3. thePolicy
Fiscal role of RBI in controlling monitory policy proce
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
153
yê´bÕsê\T ìs¡«Væ≤+#˚ Ä]úø£ |ü]düsê\ ìs¡«Vü≤D #˚jT· &É+˝À |Á uü TÑÛ ‘·« Ä]úø£ $<Ûëq+ ø°\ø£ bÕÁ‘· b˛wædTü +Ô ~.
ø£+ô|˙\ #·≥º+, b˛{° #·≥º+, m>∑TeT‹ eT]j·TT ~>∑TeT‹ #·{≤º\T e+{Ï $$<Ûä #·{≤º\ düVü‰j·T+‘√ Á|üuÛÑT‘·«+
Ä]úø£ |ü]düsê\qT ìj·T+Á‹düTÔ+~, n<˚$<Ûä+>± Á|üuÛÑT‘·«+ ø√X¯ $<Ûëq+ eT]j·TT Á<äe´ $<Ûëq+ nH˚ ¬s+&ÉT
eTTK´ $<Ûëq kÕ<ÛHä ê\T ñ|üj÷Ó –düT+Ô ~.
ø√X¯ $<Ûëq+ n+fÒ Á|üuÛÑT‘·«+ ‘·q Ä]úø£ eéVü‰sê\qT ìs¡«Væ≤+#˚ $<ÛëHêìøÏ dü+ã+~Û+∫q~. Ä<ëj·T+
eT]j·TT e´j·T+. Á|üuÛÑT‘·«+ ˝À≥TqT m˝≤ ìs¡«Væ≤düTÔ+<äH˚~ Ç+<äT˝À ñ+{≤sTT. Bìì ø√dü+ $düÔs¡D $<Ûëq+
˝Ò<ë dü+ø√#· Ä]úø£ $<Ûëq+ nH˚ |ü<ä›‘·T\qT Ä#·]+#·&É+ »]>∑T‘·T+~. Á<äe´ $<Ûëq+ nH˚~ u≤´+ø˘ πs≥T,
q>∑<äT ì\« ìwüŒ‹Ô yÓTT<ä˝…’q $$<Ûä kÕ<ÛäHê\qT ñ|üjÓ÷–+∫ Ä]úø£ eédüú˝À Á<äe´ düs¡|òüsê eT]j·TT e&û¶
πs≥¢qT ]»sY« u≤´+ø˘ Ä|òt Ç+&çj·÷ ìj·T+Á‹+#˚ $<ÛëHêìï dü÷∫düTÔ+~. ]»sY« u≤´+ø˘ Ä|òt Ç+&çj·÷ yê{Ïì
m˝≤ ñ|üjÓ÷–düTÔ+<äH˚ <ëì Ä<Ûës¡+>± Ç~ #Íø£ Á<äe´ $<Ûëq+ ˝Ò<ë ø£]ƒq Á<äe´ $<ÛëHêìï nqTdü]düTÔqï≥T¢
#ÓãT‘ês¡T.
á n<Ûë´j·T+˝À |Á uü TÑÛ ‘·«+ jÓTTø£ÿ $$<Ûä <Á eä ´ $<Ûëq kÕ<ÛHä ê\T eT]j·TT |Á uü TÑÛ ‘·« ø√X¯ eT]j·TT <Á eä ´ $<ÛëHê\‘√
bÕ≥T b˛{° #·≥+º >∑T]+∫ $es¡+>± #·<Tä e⁄‘êeTT.
154
CHAPTER OVERVIEW
Economic policy of Government plays a key role in setting up economic

environment in which businesses operate. Government control economic
environment with the help of various legislation like companies act, competition
act , export and import laws etc. Similarly the two key policy tools of
Government are fiscal policy and monetary policy.
Fiscal policy relates to the manner in which Government manages its finances
viz. income and expenditure. On how Government manages deficit it is called
expansionary or contractionary fiscal policy. Monetary policy refers to the way
in which Reserve Bank of India control the money supply and interest rates in
the economy using various tools like bank rate, cash reserve ratio etc. The
tools can be classified into qualitative and quantitative. Based on how RBI
uses them it is said to be following is cheap money policy or tight money
policy. In this chapter we study in different policy tools of Government and
fiscal and monetary policies of Government along with competition act in
detail
155
6.1. Ä]∆ø£ $<ÛëqeTT
ˇø£ <˚X¯+ jÓTTø£ÿ Ä]úø£ $<Ûëq+ <ëì |üqTï\ ìj·Te÷\T, Á|üuÛÑT‘·« ã&Ó®{Ÿ\T, Á<äe´ düs¡|òüsê, e&û¶ πs≥T¢ eT]j·TT
Ä]úø£ eédüú˝À Á|üuÛÑT‘·« CÀø£´+ ø£*Œ+#·Tø√>∑\ nH˚ø£ Ç‘·s¡ s¡+>±\˝À >∑\ Á|üuÛÑT‘·« $<Ûëq+ >± #Ó|üŒe#·TÃ. Ä]úø£
$<Ûëq+˝Àì n+XÊ\qT Á<äe´ $<Ûëq+ eT]j·TT ø√X¯ $<Ûëq+ nì $uÛÑõ+#·e#·TÃ. Á<äe´ $<Ûëq+ nH˚~ <˚X¯
Ä]úø£ eédüúqT |üs¡ý˚øÏå+#·&ÜìøÏ eT]j·TT Á|üuÛ≤$‘·+ #˚j·T&ÜìøÏ <ëì Ks¡TÃ kÕúsTT\T eT]j·TT |üqTï πs≥¢qT
düsT¡ u› ≤≥T #˚jT· &ÜìøÏ Á|üuTÑÛ ‘·«+ Á|ü‹bÕ~+∫q ìj·Te÷\ düe÷Vü‰s¡+. ø√X¯ $<Ûëq+ Á<äe´ düs|¡ süò ê eT]j·TT e&û¶
πs≥¢≈£î dü+ã+~Û+∫ πø+Á<ä u≤´+øÏ+>¥ jÓTTø£ÿ #·s¡´\T eT]j·TT $<ÛëHê\T ø£\dæ ñ+{≤sTT. Ä]úø£ $<Ûëq |üÁ‘·+
\ø£å´+>± ì]›wüº yÓTÆq |òü*‘ê\qT kÕ~Û+#·&ÜìøÏ Ä]∆ø£ $<Ûëq+ kÕ<Ûës¡D+>± ìπs›•düTÔ+~.
Ä]∆ø£ $<ÛëqeTT jÓTTø£ÿ \øå±´\T

Á|ü‹ bÕ\d”˝À <˚X¯ ÁX‚j·TdüT‡ ø√dü+ kÕ~Û+#ê*‡q ø=ìï \øå±´\T ñ+{≤sTT. <˚XÊìï n_Ûe~∆ #˚j·T&Éy˚T Ä]úø£
$<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£å´+. n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\˝À Ä]úø£ $<Ûëq+ jÓTTø£ÿ \øå±´\T e~∆ eT]j·TT
n_Ûe~∆ì ìsê›]+#·&É+ >± ñ+{≤sTT.
Ä]úø£ e~∆
n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\˝À, y˚>∑e+‘·yÓTÆq Ä]úø£ e~∆ì kÕ~Û+#·&É+ Ä]úø£ $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£å´+.
düs¡fi¯+>± #ÓbÕŒ\+fÒ Ä]úø£ e~∆ nH˚~ Ä]úø£eédüú˝À yÓTT‘·Ô+ ñ‘·Œ‹Ô ô|s¡T>∑T<ä\qT dü÷∫düTÔ+~. Ç~ Ä<ëj·÷\
ô|s¡T>∑T<ä\≈£î <ë]rdüT+Ô ~. n~Ûø£ kÕúsTT ñ‘·Œ‹Ôì ñ|üj÷Ó –+#·T≈£îH˚˝≤ $ìjÓ÷>∑<ës¡T\qT Áù|sπ |ædTü +Ô ~ eT]j·TT
yÓTs¡T¬>’q J$‘·+ ø√dü+ HêDýÓTÆq Jeq Á|üe÷D≤\qT n+~düTÔ+~.
|üP]Ô ñbÕ~Û
Ä]úø£ e~∆ <˚X+¯ ˝À n+<äTu≤≥T˝À ñqï nìï eqs¡T\qT ñ|üj÷Ó –+#·T≈£îH˚˝≤ #˚dTü +Ô ~. Ç~ ñ‘·Œ‹Ô ô|s¡T>∑T<ä\qT
Áb˛‘·‡Væ≤düTÔ+~. ø=‘·Ô yê´bÕsê\T eT]j·TT bÕ]ÁXÊ$Tø°ø£s¡D ô|s¡T>∑T<ä\ ø±s¡D+>± <˚X¯+˝À |üP]Ô ñbÕ~ÛøÏ
neø±X¯+ ñ+~. |üP]Ô ñbÕ~Û e´øÏÔ>∑‘· uÛÑÁ<ä‘·qT n+~düTÔ+~, Ç~ Á|ü>∑‹ì Áb˛‘·‡Væ≤düTÔ+~, <˚X¯ Á|ü»\ >ös¡yêìøÏ
<√Vü≤<ä+ #˚düTÔ+~.
yÓTs¡T>¬ q’ Ä<ëj·T |ü+|æD°

e÷¬sÿ{Ÿ Ä]úø£ eédüú\˝À ndüe÷q‘·\qT >∑eTì+#·e#·TÃ. eqs¡T\ ndüe÷q |ü+|æD° eT]j·TT dü+|ü<ä ˝À
ndüe÷q‘·\qT >∑eTì+#·e#·TÃ. düV≤ü » eqs¡T\T eT]j·TT Ç‘·s¡ ø±s¡D≤\ e\¢ ÁbÕ+rj·T ndüeT‘·T\´‘· ñ+&Ée#·TÃ.
Ç~ rÁeyÓTÆq kÕe÷õø£ dü+πøåeT ñ\¢+|òüTq≈£î <ë]rdüTÔ+~. Ç{Ïº ndüe÷q‘·\T, dü+|ü<ä eT]j·TT Ä<ëj·÷\
yÓTs¡T¬>’q |ü+|æD° eT]j·TT ÁbÕ+rj·T ndüeT‘·T\´‘·\qT ‘·–Z+#·&ÜìøÏ Ä]úø£ $<ÛëHê\T s¡÷bı+~+#·ã&É‘êsTT.
e÷qe n_Ûe~∆ eT]j·TT yÓTs¡T¬>’q |üì

e÷qe n_Ûe~∆ nH˚~ Jeq HêD´‘· yÓTs¡T>∑T<ä\≈£î dü÷∫ø£. Ç~ Ä]úø±_Ûe~∆ jÓTTø£ÿ eTTK´ \ø£å´+>±
|ü]>∑D+Ï #·ã&ÉT‘·T+~. $<ä´ eT]j·TT nø£så êdü´‘· sπ ≥T, Jeq Á|üe÷D+, b˛wüø±Vü‰s¡ kÕúsTT, X¯øÔÏ $ìjÓ÷>∑+ e+{Ï
nH˚ø£ n+XÊ\T e÷qe n_Ûe~∆ ì ø=\e&ÜìøÏ ÁbÕ<∏ä$Tø£ n+XÊ\T. n˝≤π>, n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£
eédüú\˝À e÷qe n_Ûe~∆ eT]j·TT yÓTs¡T¬>’q |üì Ä<ÛäTìø£ \øå±´\T. eT+∫ Ä]úø£ $<ÛëHê\qT s¡÷bı+~+#·&É+
156
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 in
which Government intends to handle these issues. Most factors of economic policy can be divided
into fiscal policy and monitory policy. Fiscal policy is the proposed set of rules by the government
to adjust its spending levels and tax rates to monitor and influence the Nation’s economy. Monetary
policy deals with central banking actions regarding the money supply and interest rates. Policy is
generally directed to achieve particular objectives or policy goals.
OBJECTIVES OF ECONOMIC POLICY

Every policy has some set of goals and objectives which are to be achieved for the purpose of
welfare of the Nation. The main objective of the economic policy is to develop the Nation. The
goals of the economic policy in developing countries is to promote the economy to ensure growth
and development. It is worth to mention here that the concept of economic development is distinct
from the concept of economic growth as traditionally defined.
Economic Growth
In 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. It
leads to an increase in incomes, inspiring consumers to utilize higher levels of production and improves
quality of life for better standard of living.
Full Employment
Economic growth enables to use of all available resources in the economy. It encourages the increase
in production. Due to new businesses and growth in industrialization, there is an opportunity for full
employment in the country. Full employment yields the individual security, which, in turn, promotes
progress, contributes to dignity of the people of the country.
Better Distribution of Income

In market economies, we can observe inequalities and uneven distribution of the resources and
wealth are observed. There may be regional imbalances due to its natural resources and other
reasons. Inequitable wealth distribution goes against social welfare. Economic policies are designed
so as to reduce the inequalities, equitable distribution of wealth and income and to reduce regional
imbalances.
Human Development and Decent Work

Human development index is an indicator of improvement in the quality of life . It is considered to be
the important objective of economic development. There are many factors like education and
literacy rate, life expectancy, the level of nutrition, consumption of energy through which quality of
life can be measured. Also, human development and decent work are the modern goals in growing
economies. By designing the good economic policies, a Nation can achieve the objectives of human
development and decent work.
157
<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≥¢˝À
ôV≤#·TÃ‘·>T∑ \Z T n+‘·sê®rj·T yêDÏC≤´ìï Á|üu≤Û $‘·+ #˚kÕÔsTT eT]j·TT <˚X¯ Ä]úø£ J$‘·+˝À nì•Ã‹øÏ >∑T] #˚kÕÔsTT.
Ä]úø£ dæús¡‘·«+ ìsê∆]+#·&ÜìøÏ Ä]úø£ $<Ûëq+ ˇø£ X¯øÏÔe+‘·yÓTÆq |ü]ø£s¡+.
Hê´j·TyÓTqÆ b˛{° ìs¡«Vü≤D

ø£deºü TsY eT]j·TT mø±qMT <äcÕº´ yê´bÕs¡+˝À b˛{° nedüs+¡ . Ç~ <˚X¯ dü+øπ eå ÷ìï ô|+#·T‘·T+~. düeTs¡eú +‘·yTÓ qÆ
@ø£kÕ«eT´ e´‹πsø£ bÕ\d” <ë«sê <˚XÊ\ Ä]úø£ $<ÛëHê\qT ìsê∆]+#·e#·TÃ.
#·Áø°jT· ôV≤#·TÃ‘·>T∑ \Z ìyês¡D

yê´bÕs¡ #·Áø±\T eT]j·TT yêDÏ»´ #·Áø±\T ùd«#êÃ¤ e÷¬sÿ{Ÿ Ä]úø£ eédüú\ jÓTTø£ÿ eTTKýÓTÆq \ø£åD+. Ç$
ìj·T‘·ø±\ |ü]D≤e÷\‘√ Ä]úø£ ø±s¡´ø£˝≤bÕ\˝À Áø£eT+ ‘·|üŒ≈£î+&Ü #·Áø°j·T ôV≤#·TÃ‘·>∑TZ\qT dü÷∫kÕÔsTT. Ä
#·Áø°j·T ôV≤#·TÃ ‘·>∑TZ\qT qT+&ç Ä]úø£ eédüúqT ø±bÕ&É&É+ Ä]∆ø£ $<Ûëq+ jÓTTø£ÿ ˇø£ eTTKýÓTÆq \ø£å´+.
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
‘·|Œü $T–*q uÛ≤s¡‘<· X˚ +¯ yÓTT‘êÔìøÏ e]ÔdTü +Ô ~. nø√ºãsY 1999 ˝À uÛ≤s¡‘· Á|üuTÑÛ ‘·«+ ìj·T$T+∫q Áo mdt.$.mdt.
sê|òTü eHé ø£$T{° dæbÕò s¡dTü \ô|’ á #·≥+º ÄyÓ÷~+#·ã&ç+~. á ø£$T{° y˚T 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\T
eT]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≤yêìï
ø£*– ñ+&˚ ø±s¡´ø£˝≤bÕ\qT ìs√~Û+#·&ÜìøÏ kÕú|æ+#·ã&ç+~
b˛{° #·≥+º ,2002- \øå±´\T

 düsd ¡ yü TÓ qÆ <Ûsä \¡ ≈£î eT+∫ ñ‘·Œ‘·T\Ô T eT]j·TT ùde\qT n+~+#·&+É <ë«sê $ìjÓ÷>∑<ës¡T\ Á|üj÷Ó »Hê\qT
ø±bÕ&É≥+.
 uÛ≤s¡rj·T e÷¬sÿ{À¢ Äs√>∑´ø£s¡yÓTÆq b˛{°ì Áb˛‘·‡Væ≤+#·&É+.
 ∫qï ø£+ô|˙\ Á|üj÷ Ó »Hê\qT ìs√~Û+#·&+É ˝Ò<ë e÷¬sÿ{Ÿ˝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+.
158
Stability of Prices and Rates of Foreign Exchange
Instability in economy adversely affects the growth and the welfare of the Nation. Fluctuations in
foreign exchange rates affect international trade and introduce an element of uncertainty into the
economic life of the country. Economic policy is a powerful instrument to ensure the economic
stability.
Maintenance of Fair Competition

Competition in business is essential for better customer satisfaction and economic growth. It increases
the welfare of the Nation. Economic policies of the Nations should ensure effective antimonopoly
policy.
Avoidance of Cyclical Fluctuations

Business cycles and trade cycles are the essential feature of free market economies . These refer to
regular cyclical fluctuations in economic activity with their own consequences. An important goal of
the 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 to
replace MRTP Act 1969. The competition bill was introduced in 2001 in Lok sabha and was passed
in December 2002. Competition Act is also known as Anti-Trust Law. This act was applicable to
whole of India expect Jammu and Kashmir at the time of introduction. This Act was passed on the
recommendations of Sri S.V.S Raghavan Committee which wass appointed by the Government of
India in October 1999. Committee submitted the report in May 2000 and parliament passed the
new law in December 2002 named as The Competition Act- 2002. The provisions of the Competition
Act 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 adverse
effect 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 position
in 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 and
amalgamation.
159
6.2.1. b˛{° #·≥º+- 2002 - eTTK´ \ø£åD≤\T
b˛{° e´‹πsø£ ˇ|üŒ+<ë\T
b˛{° #·≥+º -2002 Á|üø±s¡+ ∫qï ∫qï yê´bÕsê\‘√ düV‰ü dü+dü\ú ‘√ düV‰ü yê´bÕs¡ dü+dü\ú T , e´≈£î\Ô T ˝Ò<ë e´≈£î\Ô
nk˛dæjT˚ wüqT¢ ñ‘·Œ‹Ô, düs|¡ süò ê, |ü+|æD,° ì\«, düeTTbÕs¡q® ˝Ò<ë edüTeÔ ⁄\ ìj·T+Á‘·D ˝Ò<ë ùde\ dü<Tä bÕj·÷ìøÏ
dü+ã+~Û+∫ ˇ|üŒ+<ë\˝ÀøÏ Á|üy•˚ +#·≈L£ &É<Tä . Ç~ uÛ≤s¡‘· yê´bÕs¡ s¡+>∑+˝À b˛{° ô|’ ªªÁ|üX+¯ dü˙j·TyÓTqÆ Á|ü‹≈£L\‘·qTμμ
ø£*–+#·e#·TÃ. Ç≥Te+{Ï ˇ|üŒ+<ë\T #Ó\¢≈£L&Éì$ >± |ü]>∑DÏ+#·ã&É‘êsTT. n≥Te+{Ï ˇ|üŒ<ë\T ÁøÏ+<ä
$e]+#·&yÉ TÓ qÆ ~.
 neTàø£+ ˝Ò<ë ø=qT>√\T <Ûäs¡\qT Á|ü‘·´ø£å+>± ˝Ò<ë |üs√ø£å+>± ìs¡ísTT+#·&É+.
 ñ‘·Œ‹Ô, düs|¡ süò ê, e÷¬sÿ≥T¢, kÕ+πø‹ø£ n_Ûe~∆, ô|≥Tºã&ç ˝Ò<ë ùde\ dü<Tä bÕj·÷ìï |ü]$T‘·+ #˚jT· &É+ ˝Ò<ë
ìj·T+Á‹+#·&+É .
 e÷¬sÿ{Ÿ ˝Ò<ë ñ‘·Œ‹Ô jÓTTø£ÿ eT÷˝≤ìï |ü+#·Tø√e&É+ ˝Ò<ë e÷¬sÿ{Ÿ jÓTTø£ÿ n+‘·s¡Z‘· uÛÖ>√[ø£ ÁbÕ+‘·+,
edüTÔe⁄\ dü«uÛ≤e+ ˝Ò<ë ø£düºeTs¡¢ dü+K´ ˝Ò<ë Ç‘·s¡Á‘ê @yÓ’Hê e÷sêZ\T πø{≤sTT+#·&É+.
 Á|ü‘·´ø£å+>± ˝Ò<ë |üs√ø£å+>± _&é, f…+&Éf…+&É]+>¥ e+{Ï $wüj·÷\˝À ]–Z+>¥ ≈£î <ë]rùd ˇ|üŒ+<ë\T.
á ˇ|üŒ+<ë\T s¬ +&ÉT s¡ø±\>± ñHêïsTT. yÓTT<ä{~Ï ªøÏ‹å » düe÷+‘·s¡ ˇ|üŒ+<ä+μ. Ç~ e÷¬sÿ{À¢ ˇπø kÕúsTT˝À
|üì#˚ùd ¬s+&ÉT ˝Ò<ë n+‘·ø£+fÒ m≈£îÿe b˛{° yê´bÕsê\ eT<Ûä´ düVü≤ø±sêìøÏ dü+ã+~Û+∫q ˇ|üŒ+<ë\T.
¬s+&Ée~ ì\Te⁄ ˇ|üŒ+<ä+. á ˇ|üŒ+<ë\T düs¡|òüsê >=\TdüT jÓTTø£ÿ $$<Ûä kÕúsTT\˝Àì dü+düú\ eT<Ûä´ ñ
+{≤sTT. ñ<ëVü≤s¡D≈£î, ø£q÷‡éTsY m\Áø±ºìø˘‡ ‘·j÷· Ø<ës¡T ]f…\Æ sY‘√ ì\Te⁄ ˇ|üŒ+<ëìï ø£*– ñ+&Ée#·TÃ,
Bì Á|üø±s¡+ ‘·≈£îÿe <Ûäs¡\≈£î ã<äT\T>± yê] ñ‘·Œ‘·TÔ\qT Áb˛‘·‡Væ≤düTÔ+~.
Ä~Û|‘ü ´· kÕúq+ <äT]«ìjÓ÷>∑+

edüTÔe⁄\T ˝Ò<ë ùde\ ø=qT>√\T ˝Ò<ë neTàø£+˝À ˇø£ dü+düú Á|ü‘·´ø£å+>± ˝Ò<ë |üs√ø£å+>± nHê´j·TyÓTÆq ˝Ò<ë
$eø£å‘√ ≈£L&çq |ü]dæú‘·T\qT $~ÛùdÔ ˝Ò<ë ñ‘·Œ‹Ô ˝Ò<ë kÕ+πø‹ø£ n_Ûe~∆ì |ü]$T‘·+ #˚ùdÔ ˝Ò<ë $ìjÓ÷>∑<ës¡T\
|üø±å q ø=‘·Ô Ä|üsπ ≥s Á|üyX˚ ÊìøÏ Ä≥+ø£+ @s¡Œ&ç‘.˚ Ä~Û|‘ü ´· kÕúq+ <äT]«ìjÓ÷>±ìøÏ dü+ã+~Û+∫q ìã+<Ûqä \≈£î
dü+ã+~Û‘· e÷¬sÿ{Ÿ˝À Ä~Û|‘ü ê´ìï ìs¡sí TT+#·&+É nedüs+¡ . Ä~Û|‘ü ´· kÕúq+ ˇø£ dü+düqú T dü«‘·+Á‘·+>± |üì#˚jT· &ÜìøÏ
˝Ò<ë #·s¡´ <ë«sê b˛{°<ës¡T\qT Á|üuÛ≤$‘·+ #˚j·T&ÜìøÏ nqTeT‹düTÔ+~.
ø±+_H˚wHü \é T
á #·≥º+ ø±+_H˚wüHé\ ø±s¡´ø£˝≤bÕ\qT ìj·T+Á‹+#·&ÜìøÏ s¡÷bı+~+#·ã&ç+~. Ç~ düeTTbÕs¡®q, $©Hê\T
˝Ò<ë düy˚Tàfi¯Hê\ >∑T]+∫ $e]+#˚ |ü<ä+. ÄdüTÔ\T ˝Ò<ë ≥s√ïesY |üs¡+>± #·≥º+˝À ù|s=ÿqï Á|üy˚X¯ |ü]$T‘·T\qT
$T+∫q ø£\sTTø£, uÛ≤s¡‘·<˚X¯+˝À dü+ã+~Û‘· e÷¬sÿ{Ÿ˝À b˛{°ô|’ Á|ü‹≈£L\ Á|üuÛ≤yêìï ø£*–+#˚ neø±XÊìï
ø£$TwüHé |ü]o*+#·e#·TÃ.
160
6.2.1. SALIENT FEATURES OF COMPETITION ACT-2002
Anti-Competitive Agreements
Enterprises, persons or associations of enterprises or persons, including cartels, shall not enter into
agreements in respect of production, supply, distribution, storage, acquisition or control of goods or
provision of services, which cause or are likely to cause an ”appreciable adverse impact” on competition
in India. Such agreements would consequently be considered void. The following aspects of
agreements can be considered anti - competitive;
 directly or indirectly determine sale or purchase prices,
 limit or control production, supply, markets, technical development, investment or provision of

services,
 share the market or source of production or provision of services by allocation of inter alia
geographical 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 agreements
related to co-operation between two or more competing businesses operating at the same level in
the market. The second one is vertical agreement. These agreements are between firms at different
levels of the supply chain. For instance, a manufacturer of consumer electronics might have a vertical
agreement with a retailer according to which the latter would promote their products in return for
lower prices.
Abuse of dominant position

If an enterprise imposes directly or indirectly unfair or discriminatory conditions in purchase or sale of
goods or services or restricts production or technical development or create hindrance in entry of
new operators, it can be considered as abuse of dominanat position. The provisions relating to abuse
of dominant position require determination of dominance in the relevant market. Dominant position
enables an enterprise to operate independently or effect competitors by action
Combinations
The Act is designed to regulate the operation and activities of combinations, a term, which contemplates
acquisition, mergers or amalgamations. Combination that exceeds the threshold limits specified in the
Act in terms of assets or turnover, which causes or is likely to cause adverse impact on competition
within the relevant market in India, can be scrutinized by the Commission.
Competition Commission of India

Competition Commission of India is a body corporate and independent entity possessing a common
seal with the power to enter into contracts and to sue in its name. It consists of a chairperson, who is
to be assisted by a minimum of two, and a maximum of six, other members. It is the duty of the
Commission to eliminate practices having adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
161
ø±+|æ{°wüHé ø£$TwüHé Ä|òt Ç+&çj·÷
ø±+|æ{°wüHé ø£$TwüHé Ä|òt Ç+&çj·÷ nH˚~ ˇø£ düuÛÑT´\ ø±s=Œπs{Ÿ ˝Ò<ë dü«‘·+Á‘· dü+düú. Ç~ ˇ|üŒ+<ë\˝ÀøÏ
Á|üy˚•+#·&ÜìøÏ eT]j·TT <ëì ù|s¡T MT<ä <ëyê y˚j·T&ÜìøÏ ˇø£ kÕ<Ûës¡D eTTÁ<äqT, n~Ûø±sêìï ø£*– ñ+≥T+~.
Ç+<äT˝À ˇø£ #ÛÓ’sY|üs¡‡Hé eT]j·TT n‘·ìøÏ düVü‰j·T+>± ø£˙dü+ Ç<ä›s¡T, eT]j·TT >∑]wüº+>± Äs¡T>∑Ts¡T düuÛÑT´\T
eT]j·TT Ç‘·s¡ düuTÑÛ ´\T ñ+{≤s¡T. b˛{°ô|’ Á|ü‹≈£L\ Á|üu≤Û e+ #·÷ù| |ü<‘∆ä T· \qT ‘=\–+#·&+É , b˛{°ì Áb˛‘·‡Væ≤+#·&+É
eT]j·TT ì\u…≥Tºø√e&É+, $ìjÓ÷>∑<ës¡T\ Á|üjÓ÷»Hê\qT ø±bÕ&É&É+ eT]j·TT uÛ≤s¡‘·<˚X¯ e÷¬sÿ≥¢˝À yêDÏ»´
ùd«#·Ã¤qT ìsê∆]+#·&É+ ø£$TwüHé $~Û. á ø£$TwüHé @<Ó’Hê #·≥º+ øÏ+<ä kÕú|æ+#·ã&çq #·≥ºã<ä∆yÓTÆq dü+düú ˝Ò<ë
n~Ûø±] qT+&ç d”«ø£]+#·ã&çq b˛{° düeTdü´\ô|’ n_ÛÁbÕj·÷ìï Çyê«* eT]j·TT dü÷#·q #˚j÷· *. Á|ü»\≈£î b˛{°
#·≥º+ ô|’ ne>±Vü≤q ø£*Œ+#ê* eT]j·TT b˛{° düeTdü´\ô|’ •ø£åD Çyê«*. uÛ≤s¡‘·<˚X¯+˝À b˛{°ô|’ Á|ü‹≈£L\
Á|üuÛ≤e+ #·÷ù| @yÓ’Hê uÛ≤s¡‘·<˚XÊìøÏ yÓ\T|ü\ »s¡T>∑T‘·Tqï nHê´j·TyÓTÆq ˇ|üŒ+<ë\T ˝Ò<ë Ä~Û|ü‘·´ kÕúq+ ˝Ò<ë
ø±+_H˚wüHé\ <äT]«ìjÓ÷>∑+ô|’ $#ê]+#˚ n~Ûø±s¡+ ø£$TwüHé≈£î ñ+~. Ç+ø±
uÛ≤s¡‘·<˚X¯+ yÓ\T|ü\ ˇø£ ˇ|üŒ+<ä+ neT\T #˚j·Tã&ç ñqï$
@<Ó’Hê ø±+Á{≤≈£îº bÕØº uÛ≤s¡‘·<˚X¯+ yÓ\T|ü\ ìedædüTÔqï$
Ä~Û|ü‘·´ kÕúHêìï <äT]«ìjÓ÷>∑+ #˚ùd @<Ó’Hê dü+düú uÛ≤s¡‘·<˚XÊìøÏ yÓ\T|ü\ ñ+&ç
uÛ≤s¡‘·<˚X¯+ yÓ\T|ü\ ø£\sTTø£ kÕú|æ+#·ã&ç
ø£\sTTø£≈£î ˇø£ bÕØº $<˚XÊ\˝À ñ+&ç eT]j·TT
n≥Te+{Ï ˇ|üŒ+<ä+ ˝Ò<ë Ä~Û|ü‘·´ kÕúq+ ˝Ò<ë ø£\sTTø£ qT+&ç ñ‘·ŒqïeTj˚T´ @<Ó’Hê Ç‘·s¡ $wüj·T+ ˝Ò<ë
nuÛ≤´dü+ ˝Ò<ë #·s´¡ uÛ≤s¡‘<· X˚ ÊìøÏ yÓ\T|ü\ ñ+&ç dü]Vü≤<äT› <ë{Ïq düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ, øπ +Á<ä Á|üuTÑÛ ‘·«+
jÓTTø£ÿ eTT+<ädüTÔ ÄyÓ÷<ä+‘√ @<Ó’Hê <˚X¯+˝Àì ˝Ò<ë $<˚o @C…˙‡‘√ @<Ó’Hê ne>±Vü≤q ˇ|üŒ+<ëìï qyÓ÷<äT
#˚j·T&ÜìøÏ ø£$TwüHé≈£î n~Ûø±s¡+ ñ+~.
ø£$TwüHé Ä<˚XÊ\ düMTø£å......
ø£$TwüHé ñ‘·sÔ T¡ «‘√ u≤<Û|ä &ü qç @ e´øÏÔ nsTTHê, Äs¡s¶ Y #˚dqæ ‘˚B qT+&ç eTTô|Œ’ s√E˝À¢>± ‘·q Äs¡s¶ ìY düMTøÏ+å #·&ÜìøÏ
ø£$TwüH≈é î£ <äsU¡ ≤düTÔ #˚dTü ø√e#·TÃ. ˇø£yfi˚ ¯ <äsU¡ ≤düT<Ô ës¡T ‘·–q düeTj·T+˝À <äsU¡ ≤düTÔ #˚dTü ø√e&ÜìøÏ ìs√~+#·ã&çq≥T¢,
düø±\+˝À |æ{wÏ Hü é <ëK\T #˚jT· &ÜìøÏ neø±X¯+ ˝Òq≥T¢ ø£$TwüHé dü+‘·|æÔ #Ó+~‘˚ eTTô|Œ’ s√E\ >∑&TÉ e⁄ eTT–dæq
‘·sê«‘· ≈£L&Ü ø£$TwüHé ]eP´ n|æøπ¢ wüHìé d”«ø£]+#·e#·TÃ. Äs¡s¶ Y Çe«ã&çq e´øÏøÔ Ï ‘·q yê<äqqT $ì|æ+#˚ neø±XÊìï
Çe«≈£î+&Ü @ Äs¡¶sYì düe]+#·≈£L&É<äT. eT]j·TT n‘·qT ñ‘·Ôs¡T«\˝À bÕØº>± ñqï &Ó’¬sø£ºsY »qs¡˝Ÿ yê<äqqT
≈£L&Ü $qe\dæ ñ+≥T+~.
n|”Œ˝Ÿ
ø£$TwüHé jÓTTø£ÿ @<Ó’Hê ìs¡íj·T+ ˝Ò<ë ñ‘·Ôs¡T«‘√ u≤<Ûä|ü&çq @ e´øÏÔ nsTTHê ø£$TwüHé ìs¡íj·T+ ˝Ò<ë Äs¡¶sY jÓTTø£ÿ
ø£eT÷´ìπøwüHé ‘˚B qT+&ç ns¡yÓ’ s√E\˝À|ü⁄ düTÁ|”+ø√s¡Tº≈£î n|”Œ˝Ÿ #˚j·Te#·TÃ. bÕØº\ düeTà‹‘√ #˚dæq ø£$TwüHé
jÓTTø£ÿ @<Ó’Hê ìs¡íj·T+ ˝Ò<ë Ä<˚XÊìøÏ e´‹πsø£+>± n|”Œ˝Ÿ ñ+&É<äT.
»]e÷Hê
me¬s’Hê Ä<˚XÊ\qT bÕ{Ï+#·&É+˝À $|òü\yÓTÆ‘˚ n≥Te+{Ï bÕ{Ï+#·ì Á|ü‹ s√p s¡÷.ˇø£ \ø£å, >∑]wüº+>± s¡÷. |ü~
ø√≥T¢ es¡≈£î »]e÷Hê $~Û+#·e#·TÃ. ˇø£y˚fi¯ me¬s’Hê C≤Ø #˚dæq Ä<˚XÊ\qT bÕ{Ï+#·ø£b˛‘˚ ˝Ò<ë á ôdø£åHé øÏ+<ä
$~Û+∫q »]e÷Hê #Ó*¢+#·&É+˝À $|òü\yÓTÆ‘˚, n‘·ìøÏ eT÷&˚fi¯¢ es¡≈£î C…’\T•ø£å ˝Ò<ë s¡÷. 25 ø√≥T¢ es¡≈£î
»]e÷Hê ˝Ò<ë ¬s+&ç+{Ïì $~Û+#·e#·TÃ..
162
The Commission is also required to give opinion on competition issues on a reference received from
a statutory authority established under any law and to undertake competition advocacy, create public
awareness and impart training on competition issues. Commission has the power to inquire into unfair
agreements or abuse of dominant position or combinations taking place outside India but having
adverse 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 of
Understanding or arrangement with any foreign agency of any foreign country with the prior approval
of Central Government.
Review of orders of Commission

Any person aggrieved by an order of the Commission can apply to the Commission for review of its
order within thirty days from the date of the order. Commission may entertain a review application
after the expiry of thirty days, if it is satisfied that the applicant was prevented by sufficient cause from
preferring the application in time. No order shall be modified or set aside without giving an opportunity
of being heard to the person in whose favour the order is given and the Director General where he
was a party to the proceedings.
Appeal
Any person aggrieved by any decision or order of the Commission may file an appeal to the Supreme
Court 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 the
parties.
Penalty
If 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 imposed
under this section, he shall be punishable with imprisonment for a term which will extend to three
years, 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 is
false in any material particular or knowing it to be false or omits to state any material particular
163
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’Hê
yÓT{°]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\T
ø£+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˝Ò{Ÿ Á{ÏãT´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 ñqï
ø£+ô|˙\ $düÔs¡DqT ìs√~ÛdüTÔ+~, á ø£+ô|˙\T ‘·eT yê´bÕsêìï $düÔ]+#·&ÜìøÏ Á|üuÛÑT‘·« nqTeT‹ rdüTø√yê*.
eT]j·TT M{Ï <äwæìº >∑T‘êÔ~|Û ‘ü ´· + qT+&ç b˛{°øÏ eT[¢+#ê*‡q nedüs+¡ ñ+~. n+<äTe\¢, uÛ≤s¡‘· e÷¬sÿ{À¢ b˛{°ì
rdüT≈£îsêe&ÜìøÏ ˇø£ ø=‘·Ô #·≥º+ s¡÷bı+~+#·ã&ç+~ eT]j·TT »qe] 14, 2003 q ¬>õ{Ÿ Ä|òt Ç+&çj·÷˝À
Á|ü#T· ]+#·ã&ç+~.
e.dü+ MRTP #·≥º+ 1969 b˛{° #·≥º+ 2002
1. MRTP #·≥º+, uÛ≤s¡‘·<˚X¯+˝À #˚dæq yÓTT<ä{Ï b˛{° #·≥º+ Ä]úø£ eédüú˝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\T
eT]j·TT ìã+<Ûäq\qT ø£*– ñ+≥T+~. #˚j·Tã&ç+~.
2 Ç~ dü+düÿs¡D\≈£î eTT+<äT <äcÕº+‘·+ô|’ Ç~ dü+düÿs¡D\ nq+‘·s¡ <äcÕº+‘·+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÷¬sÿ{Ÿ düú\+˝À $ìjÓ÷>∑<ës¡T\ Ädü≈£îÔ\T
eT]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 yê{Ïì 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#·TÃ
n~Ûø±s¡+ ñ+~.
164
knowing it to be material, such person shall be liable to a penalty which shall not be less than Rs. 50
lakhs 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 assets
were Rs.100 crore, because these companies need to take government permission to expand their
business. 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 for
bringing competition in the Indian market.
S.No MRTP Act, 1969 Competition Act - 2002

1. 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 economy
regulations 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 the
monopolistic and restrictive trade competition to protect consumer interests at
practices. 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 principle
ofnatural justice.
6 MRTP Commission has the power to pass The Competition Act can pass an order
only “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 competition
formation of fund for its activities. fund for promotion of competition advocacy
165
7 H˚sê\≈£î m≥Te+{Ï »]e÷Hê $~Û+#·ã&É<äT H˚sê\≈£î »]e÷Hê $~Û+#·>∑\<äT
8 MRTP #·≥º+ <ëì ø±s¡´ø£˝≤bÕ\≈£î b˛{° #·≥+º ø±+|æ{w° Hü é 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+düú
dü+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£yTÓ qÆ ~>± |ü]>∑D+Ï #· ã&ÉT‘·T+~.
10 MRTP ø£$TwüHé #ÛÓ’s¡àHéqT πø+Á<ä Á|üuÛÑT‘·«+ ø£MTwüHé #ÛÓ’s¡àHé qT |ü<äM $s¡eTD #˚dæq Hê´j·T
ìj·T$TdüT+Ô ~. ì|ü⁄DT\T, $$<Ûä s¡+>±\˝À e‹Ô HÓ’|ü⁄D´+ ø£*–q
e´øÏÔ, yêDÏ»´+, |ü]ÁX¯eT, ô|ò’HêHé‡ s¡+>±\˝À
ì|ü⁄DT˝…’q düuÛÑT´\‘√ ≈£L&çq ‘√ ≈£L&çq ø£$T{°
ìj·T$TdüT+Ô ~.
6.3. ø√X¯ $<Ûëq+

|òædüÿ˝Ÿ nH˚ |ü<ä+ |ü_¢ø˘ ˝Ò<ë ùdº{Ÿ Áf…»Ø ˝Ò<ë Á|üuÛÑT‘·« ì<ÛTä \T nH˚ ns¡ú+ e#˚Ã ª|òædtÿμ nH˚ |ü<ä+ qT+&ç
rdüTø√ã&ç+~. ø√X¯ $<Ûëq+ nH˚~ ˇø£ <˚X¯+ jÓTTø£ÿ Ä]úø£ eédüúqT |üs¡ý˚øÏå+#·&ÜìøÏ eT]j·TT Á|üuÛ≤$‘·+
#˚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´
$<ÛëHêìøÏ <ä>∑Z] dü+ã+<Ûä+ eT]j·TT |üs¡düŒs¡ Ä<Ûë]‘·yÓTÆq~. Bì <ë«sê ôd+Á≥˝Ÿ u≤´+ø˘ ˇø£ <˚X¯+ jÓTTø£ÿ Á<äe´
düs¡|òüsêqT Á|üuÛ≤$‘·+ #˚düTÔ+~. ø√X¯$<Ûëq+ nH˚ |ü<ä+ m≈£îÿe>± Á_{Ïwt Ä]úø£y˚‘·Ô C≤Hé y˚THêsY¶ ø°Hé‡ (1883-
1946) Ä˝À#·q\ Ä<Ûës¡+>± Á|ü#ês¡+ #˚jT· ã&ç+~. ø√X¯$<Ûëq+ nH˚~ Á|üuTÑÛ ‘·«+ Äs¡q® ø£+fÒ m≈£îÿe ˝Ò<ë ‘·≈î£ ÿe
Ks¡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 #˚jT· &É+ <ë«sê Ä]úø£ eédüqú T Á|üu≤Û $‘·+ #˚jT· &ÜìøÏ Á|üuTÑÛ ‘·«+ rdüT≈£îH˚ #·s´¡ \qT $e]+#·&ÜìøÏ
ñ|üjÓ÷–+#˚ |ü<ä+. Ç~ Á<äe´+ m˝≤ ñ|üjÓ÷–+#·ã&ÉT‘·T+<äH˚ ìs¡íj·÷\ yÓqTø£ ñqï Ä]úø£ ñ<˚›XÊìï ≈£L&Ü
dü÷∫düT+Ô ~. Á|üuTÑÛ ‘·«+ nedüs+¡ nqT≈£î+fÒ Ä]úø£ eédüqú T 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 düwæº+#˚ 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 düwækº ÕÔsTT, ‘·<ë«sê n~Ûø±s¡T\T Áô|y’ {˚ Ÿ s¡+>∑+ qT+&ç edüTeÔ ⁄\T eT]j·TT ùde\≈£î Ks¡TÃ #˚ùd
yÓTT‘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£ dæsú ‘¡ ê«ìï kÕ~Û+#·&ÜìøÏ Ä<ëj·÷\qT
ùdø£]+#·&+É eT]j·TT Ks¡TÃ #˚jT· &ÜìøÏ Á|üuTÑÛ ‘·«+ nqTdü]+#˚ nìï ø±s¡´ø£˝≤bÕ\≈£î dü+ã+~Û+∫q<˚ ø√X¯ $<Ûëq+μμ
166
and creation of awareness about competitive
issues and training as may be prescribed in
its rules.
9 Entity having status of dominant position is 9 Entity having status of dominant position is
itself considered as bad. not considered as bad. Whereas abuse
of dominant position affecting consumer
interest is considered as immoral.
10 The Chairman of MRTP commission was 10 The chairman of the commission will
appointed by Central Government. be appointed by a committee consisting of
retired judiciary, person having professional
expertise 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 or
Government funds. Fiscal policy is the means by which a government adjusts its spending levels and
tax rates to monitor and influence a Nation’s economy. It is closely related and interdependent to
monetary policy through which a central bank influences a nation’s money supply. The word Fiscal
policy 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 less
than it receives.
“Fiscal policy” is the term used to describe the actions of a government taken to influence an economy
by purchasing products and services from businesses and collecting taxes. It also refers to the economic
intent behind the decisions for how the money is used. Governments lower taxes and raise spending to
boost the economy if needed; typically, they spend on infrastructure projects that create jobs and
income and social programmes. If the economy is doing well, it can reduce spending and increase
taxes. Businesses create enough jobs at these times so officials can reduce the amount spent on goods
and services from the private sector.
According to Samuelsson “Fiscal Policy concerned with all those activities which are adopted by the
Government to the collect revenues and make the expenditure so that economic stability could be
attained 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.
167
6.3.1. ø√X¯ $<Ûëq+ jÓTTø£ÿ \øå±´\T
ø√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¡TqT
yÓTs¡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¡eú +‘·yTÓ qÆ düMTø£sD¡ <ë«sê n_Ûe~∆:

ø√X¯ $<Ûëq+ jÓTTø£ÿ Á|ü<Ûëq \ø£å´+ y˚>∑e+‘·yÓTÆq Ä]úø£ e~∆ eT]j·TT n_Ûe~∆ì kÕ~Û+#·&É+. á \ø£å´+ Ä]úø£
eqs¡T\ düMTø£sD¡ <ë«sê kÕ~Û+#·e#·TÃ. uÛ≤s¡‘<· X˚ +¯ ˝Àì øπ +Á<ä eT]j·TT sêÁwüº Á|üuTÑÛ ‘ê«\T eqs¡T\qT düMTø£]+#·&ÜìøÏ
ø√X¯$<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\qT
düMTø£]+#·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·÷ìï
kÕ~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\T
m≈£îÿe>± edü÷\T #˚kÕÔs¡T. M{Ïì 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·TyÓTÆq
uÛ≤>±ìï ù|<ä]ø£ ìs¡÷à\q ø±s¡´Áø£e÷\ neT\T˝À ô|≥Tºã&ç ô|&ÉT‘·T+~.
<Ûsä \¡ dæsú ‘¡ «· + 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|’ ‘·≈î£ ÿe |üqTï\T eT]j·TT düT+ø±\T m≈£îÿe ô|≥Tºã&çì Áb˛‘·‡Væ≤kÕÔsTT eT]j·TT ‘·‘Œ· *¤ ‘·+>±
m≈£îÿe ñbÕ~Ûì düwæºkÕÔsTT. Á>±MTD ÁbÕ+‘ê˝À¢ì düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ uÛ≤s¡‘· Á|üuÛÑT‘·«+ $$<Ûä Á>±MTD
ñbÕ~Û ø±s¡´Áø£e÷\qT #˚|ü{Ïº+~. n<˚$<Ûä+>±, |ü≥ºD ÁbÕ+‘ê˝À¢ kÕ+πø‹ø£+>± ns¡Ω‘· ñqï e´≈£îÔ\≈£î ñbÕ~Û
168
Specific objectives of fiscal policy:
Fiscal policy of India always has two objectives, namely improving the growth performance of the
economy and ensuring social justice to the people. Hence, the fiscal policy is designed with following
objectives:
Development through effective Mobilisation of Resources: The principal objective of fiscal

policy is to ensure rapid economic growth and development. This objective of economic growth and
development can be achieved by Mobilisation of Financial Resources. The central and state
governments in India have used fiscal policy to mobilise resources. The financial resources can be
mobilised through taxation, public savings and private savings.
Reduction in inequalities : Fiscal policy aims at achieving equity or social justice by reducing
income inequalities among different sections of the society. The direct taxes such as income tax are
charged more on the rich people as compared to lower income groups. Indirect taxes are also more
in the case of semi-luxury and luxury items which are mostly consumed by the upper middle class and
the upper class. The government invests a significant proportion of its tax revenue in the implementation
of 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 control
inflation and stabilize price. Therefore, the government always aims at control the inflation by reducing
fiscal deficits, introducing tax savings schemes and thereby productive use of financial resources.
Employment Generation: The government is making every possible effort to increase employment
in the country through effective fiscal measures. Investment in infrastructure has resulted in direct and
indirect employment. Lower taxes and duties on Small-Scale Industrial (SSI) units encourage more
investment and consequently generate more employment. Various rural employment programmes
have been undertaken by the Government of India to solve problems in rural areas. Similarly, self
employment scheme is taken to provide employment to technically qualified persons in the urban
areas.
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 regional
imbalances 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 incentives
to the exporters to boost up the export from the country. In the same way import curbing measures
are also adopted to check import. Hence the combine impact of these measures is improvement in
the balance of payment of the country.
Increases National Income: It’s the strength of the fiscal policy that brings out the desired results
in the economy. When the government wants to increase the income of the country then it increases
the direct and indirect taxes rates in the country. There are some other measures like reduction in tax
rate so that more people get motivated to pay actual tax.
169
ø£*Œ+#·&ÜìøÏ dü«j·T+ ñbÕ~Û |ü<Ûäø±\qT Á|üy˚X¯ô|&ÉT‘·T+~.
düeT‘·T\´ ÁbÕ+rj·T n_Ûe~∆:

<˚X+¯ ˝À ÁbÕ+rj·T ndüeT‘·T\´‘·qT ‘·–+Z #·&ÜìøÏ Á|üuTÑÛ ‘·«+ q<äT\T ô|’ Äqø£≥\º qT ì]à+#·&+É , $<äT´‘Y, bÕsƒX¡ Ê\\T,
s√&ÉT¢, bÕ]ÁXÊ$Tø£ ÁbÕC…≈£îº\T yÓTT<ä˝…’q $$<Ûä ÁbÕC…≈£îº\T q&É|üã&ÉT‘·THêïsTT. Ç~ Á|üC≤ e´j·T+ düVü‰j·T+‘√
»s¡T>∑T‘·T+~.
#Ó*+¢ |ü⁄\ X‚w+ü ˝À ˝À≥TqT ‘·–+Z #·&+É :

<˚X+¯ qT+&ç m>∑TeT‹ì ô|+#·&ÜìøÏ Á|üuTÑÛ ‘·«+ ø=+‘· ø±\+ m>∑TeT‹<ës¡T\≈£î m>∑TeT‹ Áb˛‘ê‡Vü≤ø±\qT ÇdüT+Ô ~.
n<˚ $<Ûä+>± ~>∑TeT‹ì ‘·–Z+#·&ÜìøÏ ~>∑TeT‹ ìj·T+Á‘·D #·s¡´\T ≈£L&Ü #˚|ü&ÉT‘·T+~. n+<äTe\¢ á #·s¡´\
dü+j·TTø£Ô Á|üuÛ≤e+ <˚X¯+ jÓTTø£ÿ #Ó*¢+|ü⁄ X‚wü+˝À düeT‘·T\´‘· yÓTs¡T>∑T|ü&ÉT‘·T+~.
C≤rj·T Ä<ëj·÷ìï ô|+#·&+É :

ø√X¯ $<Ûëq+ jÓTTø£ÿ ã\+ Ä]úø£ eédüú˝À ø±e\dæq |òü*‘ê\qT n+~düTÔ+~. Á|üuÛÑT‘·«+ <˚X¯ Ä<ëj·÷ìï
ô|+#ê\qT≈£îqï|ü⁄Œ&ÉT n~ <˚X¯+˝À Á|ü‘·´ø£å eT]j·TT |üs√ø£å |üqTï πs≥¢qT ô|+#·T‘·T+~. n+‘˚ ø±≈£î+&Ü |üqTï πs≥T
‘·–+Z |ü⁄ e+{Ï ø=ìï Ç‘·s¡ #·s´¡ \T <ë«sê ≈£L&Ü Á|ü»\T ‘·eT |üqTï\˝À e∫Ãq yêdüeÔ |üqTï‘·–+Z |ü⁄qT &çbÕõ{Ÿ
#˚jT· &ÜìøÏ Áù|sπ |æ+#·ã&É‘ês¡T.
eTÚ*ø£ dü<Tä bÕj·÷\ n_Ûe~∆:

bÂs¡T\ dü+πøåe÷ìï ô|+#·&ÜìøÏ dü+ã+~Û‘· Á|üuÛÑT‘·«+ ¬s’˝Ò«\T, bÕsƒ¡XÊ\\T, Äqø£≥º\T, $<äT´‘Y, s√&ÉT¢ yÓTT<ä˝…’q
ÁbÕC…≈£îº\ô|’ &ÉãT“ Ks¡TÃ #˚dæq|ü⁄Œ&ÉT, n~ <˚X¯ eTÚ*ø£ dü<äTbÕj·÷\qT yÓTs¡T>∑T|üs¡TdüTÔ+~. <˚X¯ Ä]úø£ e~∆ì
eT]+‘· y˚>∑e+‘·+ #˚j·T&ÜìøÏ yÓTs¡T¬>’q eTÚ*ø£ dü<äTbÕj·÷\T ø°\ø£+>± ñ+{≤sTT.
$<˚o e÷s¡ø£ Á<äe´ Äs¡®q:

πø+Á<ä Á|üuÛÑT‘·«+ Ç#˚Ã Áb˛‘ê‡Vü≤ø±˝…’q ø£düºyéT &É÷´{°˝À $TqVü‰sTT+|ü⁄, <˚oj·T e÷¬sÿ≥¢˝À edüTÔe⁄\qT ñ‘·Œ‹Ô
#˚ùd≥|ü⁄Œ&ÉT m¬ø‡’ CŸ &É÷´{°˝À sêsTTr e+{Ï Áb˛‘ê‡Vü≤ø±\qT n+~+∫q|ü⁄Œ&ÉT, Ç~ <˚oj·T ô|≥Tºã&ÉT\qT ô|+#·&ÜìøÏ
$<˚o ô|≥Tºã&ç<ës¡T\qT Áù|πs|ædüTÔ+~. Bì ø±s¡D+>± $<˚o e÷s¡ø£ Á<äe´ Äs¡®q ô|s¡T>∑T‘·T+~.
6.3.2. ø√X¯ $<ÛëqeTT- |ü]$T‘·T\T

ˇø£ <˚X+¯ jÓTTø£ÿ Ä]∆ø£ e÷+<ä´+ eT]j·TT Ä]úø£ dæsú ‘¡ «· düeTj·÷\˝Àq÷ ø√X¯ $<Ûëq+ ÁbÕ<Ûëq´‘· bı+~q|üŒ{Ïø,°
<ëì Ä#·s¡D≈£î dü+ã+~+∫ nH˚ø£ düeTdü´\T ˝Ò<ë |ü]$T‘·T\T ñHêïsTT.
$<Ûëq|üsy¡ TÓ qÆ n\XÊ´\T :
kÕ<Ûës¡D+>± ˇø£ $<Ûëq ìs¡íj·÷ìøÏ eT]j·TT <ëì Ä#·s¡D˝À ì]›wüº #·s¡´ »]π> düeTj·÷ìøÏ eT<Ûä´ ø=+‘· eé~Û
ñ+≥T+~. á eé~Û ì]›wºü Ä]úø£ $<Ûëq+ m+‘· es¡≈î£ Á|üu≤Û ee+‘·+>± ñ+≥T+<√ ìs¡sí TTdüT+Ô ~. á n\XÊ´\˝À
eT÷&ÉT s¡ø±\T ñHêïsTT. >∑T]Ô+|ü⁄ $sêeT+, n~Ûø±]ø£ $sêeT+ eT]j·TT Ä#·sD¡ $sêeT+. \øå±´\qT #˚sT¡ ø√e&ÜìøÏ
á $sêe÷\T düeTdü´ ø±e#·TÃ.
170
Development of Infrastructure: When the Government of the concerned country spends money
on the projects like railways, schools, dams, electricity, roads etc to increase the welfare of the
citizens, it improves the infrastructure of the country. An improved infrastructure is the key to further
speed 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 POLICY

Although fiscal policy gained prominence during depressions and economic stability of a country, yet
its 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 time
when the fiscal measure is being performed. The duration of this interval determines the extent to
which 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 coming
events 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 framed
cannot be suitably planned. In fact, success of fiscal measures depends on the accurate predictions of
various 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 public
authority to frame the correct size and nature of fiscal policy on the one hand and to foresee the
correct timing of its application on the other. It is, however, too much to expect that the government
would be able to correctly determine the size, nature of composition and appropriate execution-time
of fiscal policy.
Adverse effect on redistribution of income:

It is felt that fiscal policy measures redistribute income, the actual effect will be uncertain. If income
is redistributed in favour of the low-income classes whose marginal tendency to consume is high, the
effect will be increase in total demand. But the fiscal action will be contraction if larger part of the
additional 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 the
private entrepreneurs have to face a competition from public enterprises in securing labour, raw
171
uÛ$Ñ wü´‘Y n+#·Hê:
ø√X¯ $<Ûëq+ jÓTTø£ÿ eTs=ø£ n‘·´+‘· eTTK´ |ü]$T‹ Ä]úø£ ndæús¡‘· jÓTTø£ÿ sêuÀj˚T dü+|òüT≥q\qT n+#·Hê
y˚jT· &É+. Ä<ëj·÷ìï m+‘·es¡≈î£ ô|+#·>\∑ + nH˚~ n+#·Hê y˚jT· ˝Òq|ü⁄Œ&ÉT Ks¡TÃ #˚j÷· *‡q yÓTT‘·+Ô ˝Ò<ë ã&Ó{® Ÿ
u≤´˝…Hé‡ jÓTTø£ÿ dü«uÛ≤e+ eT]j·TT |ü]~Ûì n+#·Hê y˚dæ ‘·–q $<Ûä+>± Á|üD≤[ø£ #˚j·T˝ÒeTT. yêdüÔyêìøÏ ø√X¯
$<Ûëq $»j·T+ $$<Ûä Ä]úø£ ø±s¡´ø£˝≤bÕ\ jÓTTø£ÿ K∫Ã‘·yÓTÆq n+#·Hê\ô|’ Ä<Ûës¡|ü&ç ñ+≥T+~. dü]>± n+#·Hê
y˚jT· ˝Òq|ü⁄Œ&ÉT Ädæsú ‘¡ · s¡TEe⁄ ne⁄‘·T+~.
ø√X¯ $<Ûëq+ jÓTTø£ÿ dü¬s’q |ü]e÷D+ eT]j·TT dü«uÛ≤e+:

ø√X¯ $<Ûëq+ jÓTTø£ÿ $»j·T+ <ëì jÓTTø£ÿ |ü]e÷Hêìï ìs¡ísTT+#·&É+ ˝Àq÷ s¡÷bı+~+#·&É+ ˝Àq÷ eT]j·TT
<ëìì Ä#·s¡D˝À ô|≥º&É+˝ÀqT Ä<Ûës¡|ü&ç ñ+≥T+~. nsTT‘˚, Ä]úø£ $<Ûëq+ jÓTTø£ÿ |ü]e÷D+, ≈£Ls¡TŒ jÓTTø£ÿ
dü«uÛ≤e+ eT]j·TT ‘·–q neT\T-düeTj·÷ìï Á|üuÛÑT‘·«+ dü]>±Z >∑T]Ô+#·>∑\<äì nìï dü+<Ûësê“¤\˝ÀqT #Ó|üŒ˝ÒeTT.
Ä<ëj·T |ü⁄q]«uÛ»Ñ q Á|ü‹≈£L\ Á|üu≤Û e+:

ø√X¯ $<Ûëq+ neT\T #˚j·T&É+ e\q Ä<ëj·T+ |ü⁄q:|ü+|æD° ne⁄‘·T+~. ø±ì, Bì Á|üuÛ≤yêìï K∫Ã‘·+>±
n+#·Hê y˚j·T˝ÒeTT. ‘·≈£îÿe Ä<ëj·T esêZ\≈£î nqT≈£L\+>± Ä<ëj·÷ìï |ü⁄q:|ü+|æD° #˚ùdÔ, $ìjÓ÷–+#˚
<Û√s¡DÏ m≈£îÿe>± ñ+fÒ, <ëì Á|üuÛ≤e+ yÓTT‘·Ô+ &çe÷+&é˝À ô|s¡T>∑T‘·T+~. nsTT‘˚ n<äq|ü⁄ Ä<ëj·T+˝À m≈£îÿe
uÛ≤>∑+ Ä<ë #˚ùd Á|üe‹Ô ñqï e´≈£îÔ\≈£î yÓ[‘˚ Ä]úø£ #·s¡´ dü+ø√#·+ @s¡Œ&Ée#·TÃ.
d”«j·T-Ä|òôt d{Ï+º >¥ Á|üu≤Û e+:

Á|üuÛÑT‘·« |ü]Vü‰s¡ ø√X¯ $<ÛëHê\T Áô|’y˚{Ÿ ô|≥Tºã&ÉT\qT ìs¡T‘ê‡Vü≤|üs¡TkÕÔsTT. BìøÏ ø±s¡D+ Áô|’y˚{Ÿ eékÕú|ü≈£î\T
ø±]àø£, eTT&ç |ü<ësêú\T eT]j·TT Ä]∆ø£ s¡øDå£ ˝À Á|üuTÑÛ ‘·« dü+dü\ú qT+&ç b˛{°ì m<äTs√ÿe\dæ ñ+≥T+~. n+‘˚ø±≈£î+&Ü,
e÷+<ä´+ ÁbÕs¡+uÛÑ+˝À Ä]úø£ ø±s¡´ø£˝≤bÕ\˝À Á|üuÛÑT‘·«+ jÓTTø£ÿ n~Ûø£ Á|üy˚Tj·T+ Áô|’y˚{Ÿ eékÕú|ü≈£î\qT ìsêXÊ
yê<ä+ yÓ|’ ⁄ü ã\|üsT¡ kÕÔsTT. |ü_ø¢ ˘ e´j·T+ jÓTTø£ÿ $düsÔ D¡ Áô|y’ {˚ Ÿ Ks¡TÃ\ |ü]$T‹‘√ eTT&ç|&ü ç ñ+&Ée#·TÃ. |üs´¡ ekÕq+>±,
Ä]úø£ #·s¡´\T d”«j·T-Ä|òtôd{Ïº+>¥ ø±e#·TÃ.
C≤rj·T Ä<ëj·T+˝À ‘·–+Z |ü⁄:

Ä]∆ø£ e÷+<Ûä´ düeTj·T+˝À düeT‘·T\´ ã&Ó®{Ÿ qT Ä]úø£ Äj·TT<Ûä+>± ˝≤uÛÑ<ëj·Tø£+>± e]Ô+|üCÒj·Te#·TÃ. |ü_¢ø˘
e´j·÷\qT me]ø=s¡¬ø’‘˚ Ks¡TÃ #˚kÕÔyÓ÷ yês¡T ø£˙dü+ |üqTï #Ó*¢+|ü⁄<ës¡T\ ø£+fÒ düe÷q+>± Ks¡TÃ #˚j·T&ÜìøÏ
dü«\Œ+>± yÓTT>∑TZ #·÷|ü⁄‘ês¡T. ˇø£y˚fi¯, Ç~ |üqTï #Ó*¢+|ü⁄<ës¡T\ ø£+fÒ ∫qï~>± e÷]‘˚, düeT‘·T\´ ã&Ó®{Ÿ øÏ+<ä
Ä]úø£ ø±s¡´Áø£e÷\T C≤rj·T Ä<ëj·T+˝À ‘·–Z+|ü⁄qT ‘ÓkÕÔsTT.
ìs¡T<√´>∑ düeTdü´≈£î |ü]cÕÿs¡+:

ô|s¡T>∑T‘·Tqï |üì Á|üj·T‘êï\ düs¡|òüsê kÕúsTTì dü]>± $ìjÓ÷–+#·Tø√˝Òø£ b˛‘˚ ø√X¯ $<Ûëq+ jÓTTø£ÿ \ø£å´+
z&çb˛‘·T+~. ñ‘êŒ<äø£ kÕeTs¡ú´+ ô|s¡>∑&É+ eT]j·TT |üì Á|üj·T‘êï\ düs¡|òüsê ô|s¡>∑&É+‘√ C≤rj·T Ä<ëj·T+
ô|s¡T>∑T‘·T+~. ø±˙, |üqTï #·s´¡ \T ø£]qƒ +>± ñ+fÒ, n$ K∫Ã‘·+>± |üì #˚ùd Áb˛‘ê‡Vü‰ìï Á|üu≤Û $‘·+ #˚kÕÔsTT. Ç~
ø√X¯ $<ÛëHêìøÏ eTTKýÓTÆq |ü]$T‹.
172
materials and finances. Moreover, increased involvement of the government in economic activity at
the onset of recession strengthens the pessimistic expectations of the private entrepreneurs. The
expansion 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 conditioned
by 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 fiscal
programmes 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 of
work effort. The money National Income will rise with increase in productive efficiency and increased
supply of work effort. But, if the tax measures are stringent and too high, they will certainly affect the
incentive 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 the
subsequent problem of debt management. Because deficit budgeting is the normal fiscal cure, public
debt is made for financing it. And if the process of recovery from depression is long, the creation of
budget deficit year after year will create a huge problem of debt repayment and debt management.
6.3.3. TYPES OF FISCAL POLICY

There are three types of the Fiscal Policies viz. neutral, expansionary and contractionary.
Neutral Fiscal Policy
A neutral fiscal policy means that total government spending is fully funded by the tax revenue. The
government takes a neutral fiscal policy stance when the economy is in a state of equilibrium.
Expansionary Fiscal Policy

An expansionary fiscal policy means that the government spending is more than tax
revenue. Government needs to spend more than its revenue during the time of recessions. This is
because recession occurs when there is a general slowdown in economic activity. Governments
usually respond to recessions by adopting expansionary fiscal policies, such as increasing money
supply, increasing government spending and decreasing taxation. When the tax is decreased, there is
more money left with people and they can spend more.
Contractionary fiscal policy

Contractionary fiscal policy occurs when government spending is lower than tax revenue. When the
tax 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 on
welfare activities and increases taxation, less money will be left with the people to spend, and this will
reult in reduction of demand which will cut down inflation.
173
s¡TD ìs¡«Vü≤Dô|’ Á|ü‹≈£L\ Á|üu≤Û e+:
ìs¡T<√´>∑+ eT]j·TT Ä]∆ø£ e÷+<Ûä´ düeTj·T+˝À ø√X¯ #·s¡´\ ñ|üjÓ÷>∑+ ‘·s¡#·T>± s¡TD ìs¡«Vü≤D jÓTTø£ÿ ‘·<äT|ü]
düeTdü´‘√ eTT&ç|ü&ç ñ+≥T+~. ˝À≥T ã&Ó®{Ÿ nH˚~ kÕ<Ûës¡D ø√X¯ ìyês¡D ø±ã{Ïº, <ëìøÏ ô|ò’HêHé‡ #˚j·T&ÜìøÏ
|ü_¢ø˘ n|ü⁄Œ #˚j·Tã&ÉT‘·T+~. eT]j·TT Ä]∆ø£ e÷+<Ûä´+ qT+&ç ø√\T≈£îH˚ Á|üÁøÏj·T düTBs¡È+>± ñ+fÒ, ‘·<äT|ü]
dü+e‘·‡sê\˝À ã&Ó®{Ÿ ˝À≥T @s¡Œ&É≥+ s¡TD #Ó*¢+|ü⁄ eT]j·TT s¡TD ìs¡«Vü≤D jÓTTø£ÿ uÛ≤Ø düeTdü´qT düwæºdüTÔ+~.
6.3.3. ø√X¯ $<Ûëq+ - s¡ø±\T

ø√X¯ $<ÛëHê\˝À eT÷&ÉT s¡ø±\T ñHêïsTT. n$.
‘·≥düú ø√X¯ $<Ûëq+

‘·≥düú ø√X¯ $<Ûëq+ n+fÒ yÓTT‘·+Ô Á|üuTÑÛ ‘·« e´j·T+ |üP]Ô>± |üqTï Ä<ëj·T+ <ë«sê ì<ÛTä \T düeT≈£Ls¡TdüT+Ô ~. Ä]úø£
eédüú düeT‘Í\´ dæú‹˝À ñqï|ü⁄Œ&ÉT Á|üuÛÑT‘·«+ ‘·≥düú Ä]úø£ $<Ûëq yÓ’K]ì rdüT≈£î+≥T+~.
$düÔs¡D ø√X¯ $<Ûëq+

$düsÔ D¡ ø√X¯ $<Ûëq+ n+fÒ |üqTï Ä<ëj·T+ ø£+fÒ Á|üuTÑÛ ‘·« e´j·T+ m≈£îÿe. Ä]∆ø£ e÷+<Û´ä + düeTj·T+˝À Á|üuTÑÛ ‘·«+
<ëì Ä<ëj·÷ìøÏ $T+∫ Ks¡TÃ #˚j·÷*‡ ñ+≥T+~. Ä]úø£ ø±s¡´ø£˝≤bÕ\˝À kÕ<Ûës¡D eT+<ä>∑eTq+ ñqï|ü⁄Œ&ÉT
e÷+<ä´+ dü+uÛÑ$düTÔ+~. &ÉãT“ düs¡|òüsê ô|+#·&É+, Á|üuÛÑT‘·« e´j·÷ìï ô|+#·&É+ eT]j·TT |üqTï ‘·–Z+#·&É+ e+{Ï
$düÔs¡D ø√X¯ $<ÛëHê\qT ne\+_+#·&É+ <ë«sê Á|üuÛÑT‘ê«\T kÕ<Ûës¡D+>± Ä]∆ø£ e÷+<Ûë´\≈£î Á|ü‹düŒ+~kÕÔsTT.
|üqTï ‘·–Zq|ü⁄Œ&ÉT, e´≈£îÔ\‘√ m≈£îÿe &ÉãT“ $T–* ñ+&ç, yês¡T m≈£îÿe Ks¡TÃ #˚j·Te#·TÃ.
dü+ø√#· ø√X¯ $<Ûëq+

|üqTï Ä<ëj·T+ ø£+fÒ Á|üuTÑÛ ‘·« e´j·T+ ‘·≈î£ ÿe>± ñqï|ü⁄Œ&ÉT dü+ø√#· ø√X¯ $<Ûëq+ @s¡Œ&ÉT‘·T+~. Á|üuTÑÛ ‘ê«ìøÏ |üqTï
Ä<ëj·T+ m≈£îÿe>± ñqï|ü⁄Œ&ÉT, n<äq|ü⁄ Á<äyê´ìï Á|üuÛÑT‘·« s¡TD≤ìï #Ó*¢+#·&ÜìøÏ ñ|üjÓ÷–+#·e#·TÃ.
6.3.4. ø√X¯ $<Ûëq+ jÓTTø£ÿ uÛ≤>±\T:

ø√X¯ $<Ûëq+ ˝À Hê\T>∑T ø°\ø£ uÛ≤>±\T ñHêïsTT. n$:
|üqTï\ $<Ûëq+ :
Á|ü‘·´ø£å+>± eT]j·TT |üs√ø£å+>± |üqTï\T $~Û+#·&É+ <ë«sê Á|üuÛÑT‘·«+ ‘·q Ä<ëj·÷ìï bı+<äT‘·T+~. Á|üuÛÑT‘·«+
s¬ +&ÉT ø±s¡D≤\ e\¢ Hê´j·Tã<äy∆ TÓ qÆ |üqTï $<ÛëHêìï nqTdü]+#·&+É eT]j·TT düs¬ q’ |üqTï sπ ≥¢qT $~Û+#·&+É #ê˝≤
eTTK´+. n~Ûø£ |üqTï\T Á|ü»\ ø=qT>√\T X¯øÏÔì ‘·–ZkÕÔsTT, ñ‘·Œ‹Ô eT]j·TT ô|≥Tºã&ç ‘·>∑Z&ÜìøÏ <ë]rkÕÔsTT.
‘·≈î£ ÿe |üqTï\T kÕ<Ûës¡D Á|ü»\‘√ Á<äyê´ìï m≈£îÿe e~*y˚kÕÔsTT ‘·<ë«sê n~Ûø£ e´j·T kÕúsTT\≈£î <ë]rdæ n~Ûø£
Á<äy√´\“D+ @s¡Œ&É e#·TÃ.
e´j·T $<Ûëq+ :
Á|üuÛÑT‘·« e´j·T+˝À ¬s$q÷´ e´j·T+ eT]j·TT eT÷\<Ûäq e´j·T+ ñ+{≤sTT. Á|üuÛÑT‘·« ã&Ó®{Ÿ nH˚~ Á|üuÛÑT‘·« e´j·T
$<ÛëHêìï s¡÷bı+~+#˚ n‹ eTTKýÓTqÆ kÕ<Ûqä +. ã&Ó{® Ÿ nH˚~ ˝À≥T Á<äe´ $<Ûëq+ >± ≈£L&Ü ñ|üj÷Ó –+#·ã&ÉT‘·T+~
nq>± Á|üuÛÑT‘·« e´j·T+ eT]j·TT Ä<ëj·T+ eT<Ûä´ n+‘·sêìï |üP]+#·&É+.
174
6.3.4. COMPONENTS OF FISCAL POLICY
Four 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 correct
tax rates because of following two reasons – higher taxes will cause a reduction in the purchasing
power of the people leading to decrease in production and investment and lower taxes will
leave more money with the general public leading to high spending levels and thus high inflation.
 Expenditure Policy – Government Expenditure includes revenue expenditure and capital

expenditure. The government budget is the most important instrument embodying the
expenditure policy of the government. The budget is also used for deficit financing i.e.filling the
gap between Government spending and income.
 Investment & Disinvestment Policy – Optimum levels of domestic as well as a foreign

investment are needed to maintain economic growth. Decisions has to which sectors should
be made open for private investment, foreign investment forms an important part of Fiscal
Policy. 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 is
called a surplus. If the Government spends more than income, then it is called a deficit. To fund
the deficit, the Government has to borrow from domestic or foreign sources. It can also print
money for deficit financing. These decisions of the Government, whether to go for deficit
financing or not and the manner of the deficit financing can have long term effect on the economy.
Fig: 6.1
175
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≈£îÿe
Ks¡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⁄Œ
rdüTø√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·TT
ìj·T+Á‹+#·ã&ÉT‘·T+~. Á<äe´ $<Ûëq+ nH˚~ nedüsy¡ TÓ qÆ ø£s¬ ˙‡ì eTTÁ~+#·&+É , Á<äe´ düs|¡ süò ê ˝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˝Àì
u≤>±˝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£ eédüú˝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±\T

Á<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+ <˚XÊìøÏ
düV‰ü j·T|ü&TÉ ‘·T+~. ]»s¡T« u≤+≈£î ‘·q |ü]~˝Àì yêDÏ»´ u≤´+≈£î\≈£î s¡TD dü<Tä bÕj·÷\ô|’ e&û¶ sπ ≥¢qT ô|+#·T‘·T+~
eT]j·TT Á|ü‹>± yêDÏ»´ u≤´+≈£î\T ‘·eT U≤‘ê<ës¡T\≈£î Á¬ø&ç{Ÿ\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+&ç
yêDÏ»´ u≤´+≈£î\≈£î eT]j·TT yêDÏ»´ u≤´+≈£î\ qT+&ç Á|ü»\≈£î q>∑<Tä düs¡|òüsê Áø£eT+>± ì*|æy˚j·Tã&ÉT‘·T+~.
düsfi¡ ¯ 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\T

Á<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 ˇø£ <˚X¯+˝Àì πø+Á<ä u≤´+≈£î\ <ë«sê ìs¡ísTT+#·ã&ç ìs¡«Væ≤+#·ã&É‘êsTT . Ç~ Ä]úø£ eédüú˝À
Á<äe´ düs|¡ süò ê eT]j·TT e&û¶ sπ ≥¢ ìs¡«Vü≤D≈£î dü+ã+~Û+∫q~. ø√X¯ $<Ûëq+ nH˚~ Á|üuTÑÛ ‘·«+ Ks¡TÃ #˚ùd eT]j·TT
176
6.4. MONETARY POLICY
Monetary policy is designed, executed and controlled by the Reserve Bank of India. Monetary
policy 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 money
supply and changing interest rates by RBI. With the help of monetary policy, a Central Bank
manage the currency levels in the country with the help of interest rates and lending levels of credit.
6.4.1. TYPES OF MONETARY POLICY

There are two types of monetary policy. One is tight monetary policy and the other is cheap money
policy.
Tight money policy

Tight monetary policy tends to decrease the money supply. At the time of inflation, this policy will
help 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, the
public are disinterested to borrow money from banks. The money supply from RBI to commercial
Banks and Commercial Banks to Public will stop due to high interest rates.
Cheap money policy

Cheap monetary policy tends to increase the money supply. At the time of deflation and economic
depression, this policy will help the Nation. In this policy RBI wishes to enhance the money supply
by decreasing the interest rates to commercial banks and in-turn commercial banks reduce the
interest rates on loans to customers. The public will show the interest to take loans from banks and
automatically the flow of money will increase.
6.4.2. DIFFERENCES BETWEEN MONETARY POLICY AND FISCAL POLICY

Monetary policy and fiscal policy are two different tools that have an impact on the economic activity
of a country. Monetary policies are formed and managed by the central banks of a country and such
a policy is concerned with the management of money supply and interest rates in an economy. Fiscal
policy is related to the way a government is managing the aspects of spending and imposing taxes. It
is 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 the
fiscal deficit of the economy. Below are certain points of difference between the monetary and fiscal
policy
177
|üqTï\T $~Û+#˚ n+XÊ\qT ìs¡«Væ≤+#˚ $<ÛëHêìøÏ dü+ã+~Û+∫q~. Ç~ Ä]úø£ eédüqú T dæØú ø£]+#·&ÜìøÏ eT]j·TT
Ä]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|üuÑTÛ ‘·«+
eédüú˝À e&û¶ πs≥¢qT ìj·T+Á‹+#·&É+˝À ñ|üjÓ÷–+#˚ Ä]úø£ kÕ<Ûäq+. Ç+<äT˝À
πø+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·÷ìøÏ
dü+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<ëÛ q \ø£´å + Ä]∆ø£ eédüú jÓTTø£ÿ dæús¡‘·«+ Ä]∆ø£ eédüú jÓTTø£ÿ e~›
mπø‡Ã¤+CŸ sπ ≥¢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|üu≤Û e+ sπ ≥T¢ yÓTs¡T>∑T|ü&‘É êsTT #·÷|ü<Tä .
\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|üu≤Û e+ Á<äe´ $<Ûëq+ Ä]úø£ eédüú˝À s¡TD≤\ô|’ ø√X¯ $<Ûëq+ ã&Ó®{Ÿ ˝À≥Tô|’
Á|üu≤Û e+ #·÷|ü⁄‘·T+~ Á|üu≤Û e+ #·÷|ü⁄‘·T+~.
6.4.3. Á<äe´ $<Ûëq+ - <Û˚´j·÷\T

Á<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≈£î
Äs√>∑´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÷¬sÿ{Ÿ $düÔs¡D≈£î <ë]rdüTÔ+~.
ø£s¬ ˙‡ e÷]Œ&ç sπ ≥¢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≥¢qT
ìj·T+Á‹+#·e#·TÃ. ñ<ëVü≤s¡D≈£î ]»s¡T« u≤´+ø˘ eT]+‘· ø£s¬ ˙‡ì C≤Ø #˚jT· &É+ <ë«sê Á<äe´ düs|¡ süò êqT ô|+#·e#·TÃ.
178
Basis Monetary Policy Fiscal Policy
Definition 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 tax
of money and the interest rates in an revenues and policies related to
economy expenditure for the benefit of the
economy
Management Central Bank Ministry of Finance
Measures 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 economy
Impact on Exchange rates improve when there is It has no impact on the exchange rates
Exchange rates higher interest rates
Targets 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 Inflation
Monetary policies can target inflation levels. A low level of inflation is considered to be healthy for the
economy. If inflation is high, tight monetary policy can address this issue.
Reduce Unemployment
Monetary policies can influence the level of unemployment in the economy. For example, a cheap
monetary policy generally decreases unemployment because the higher money supply stimulates
business activities that lead to the expansion of the job market.
179
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 dæØú ø£]+#·&+É :

yêdüeÔ dü÷\Ô C≤rjÓ÷‘·Œ‹Ô eT]j·TT dü+uÛ≤e´ dü÷\Ô C≤rjÓ÷‘·Œ‹Ô s¬ +&ç+{Ïô|’ Á<äe´ $<Ûëq+ eTTKýÓTqÆ Á|üu≤Û yêìï
#·÷|ü⁄‘·T+~. bÕ]ÁXÊ$Tø£+>± n_Ûe~∆ #Ó+~q <˚XÊ\T yê´bÕsêìï ìj·T+Á‹+#·&É+ <ë«sê Ä]úø£ eédüúqT
dæØú ø£]+#·&ÜìøÏ Á<äe´ $<Ûëq+ô|’ Ä<Ûës¡|&ü ‘É êsTT. ø±˙ ˝À‘Óq’ Ä]∆ø£ e÷+<Ûë´\˝À Ç~ ìÁwæÿj·T+>± e÷s¡T‘·T+~.
düùV≤‘·Tø£yTÓ qÆ <Ûsä ¡ dæsú ‘¡ «· +:

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&ç
ø±s¡´ø£˝≤bÕ\qT y˚>∑e+‘·+ #˚j·T&É+ <Ûäs¡\ô|’ n~Ûø£ ˇ‹Ô&çì düwædº üTÔ+~. uÛ≤s¡‘·<˚X¯+˝À ÄVü‰s¡ Á<äy√´\“D+ BìøÏ
ì<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∑ +‘·yTÓ qÆ 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«sê
y˚>∑+>± 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\qT
rs¡Ã&ÜìøÏ Bs¡øÈ ±*ø£ ãTTDdü<Tä bÕj·T+ nedüse¡ Te⁄‘êsTT. á s¬ +&ÉT s¡ø±\ s¡TD≤\ nedüsêìï yêDÏ»´ u≤´+≈£î\T
eT]j·TT n_Ûe~∆ u≤´+≈£î\ <ë«sê rs¡Ãe#·TÃ. ‘·≈î£ ÿe e&û¶ sπ ≥¢ e<ä› s¡TD≤\T düT\uÛ+Ñ >± \_Û+#·&+É ô|≥Tºã&ç ˝Ò<ë
düe÷» ñ‘·Œ‹Ô kÕeTs¡´ú + $düsÔ D¡ ≈£î neø±XÊ\qT yÓTs¡T>∑T|üsT¡ düT+Ô ~ eT]j·TT Áù|sπ |ædTü +Ô ~. Bì |ò*ü ‘·+>±, Ä]úø£
eédüú eTTqT|ü{Ï ø£+fÒ y˚>∑+>± e~∆ #Ó+<äT‘·T+~.
e÷]Œ&ç sπ ≥T dæsú ‘¡ «· +:
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&É
Á<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‘£ q· T 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£ eédüú
eT]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<ÛHä ê\T eT]j·TT >∑TD≤‘·àø£ kÕ<ÛHä ê\T>± $uÛõÑ +#·e#·TÃ. <˚X+¯ ˝À Á<äe´ düs|¡ süò êqT ìj·T+Á‹+#·&ÜìøÏ uÛ≤s¡rj·T
]»s¡T« u≤+≈£î $düÔ‘·+>± ñ|üjÓ÷–+#˚ bÕ\d” kÕ<ÛäHê\T ÁøÏ+<ä $e]+#·&É+ »]–+~.
180
Regulate Currency exchange rates
Using its fiscal authority, a Central Bank can regulate the exchange rates between domestic and
foreign currencies. For example, the Central Bank may increase the money supply by issuing more
currency. In such a case, the domestic currency becomes cheaper relative to its foreign counterparts.
Stabilising the Business Cycle

Monetary policy has an important effect on both actual GDP and potential GDP. Industrially advanced
countries rely on monetary policy to stabilise the economy by controlling business. But it becomes
passive in deep recessions.
Reasonable Price Stability

Price stability is the most important goal which can be pursued most effectively by using monetary
policy. In a developing country like India, the acceleration of investment activity in the face of a fall in
agricultural 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 Growth

Monetary policy can promote faster economic growth by making credit cheaper and more readily
available. Industry and agriculture require two types of credit short-term credit to meet working
capital needs and long-term credit to meet fixed capital needs. The need for these two types of credit
can be met through commercial banks and development banks. Easy availability of credit at low rates
of interest stimulates investment or expansion of society’s production capacity. This in its turn, enables
the economy to grow faster than before.
Exchange Rate Stability

In an ‘open economy’that is, one whose borders are open to goods, services, and financial flows the
exchange-rate system is also a central part of monetary policy. In order to prevent large depreciation
or appreciation of the rupee in terms of the US dollar and other foreign currencies under the present
system of floating exchange rate the central bank has to adopt suitable monetary measures.
Increases Productivity
The goals of monetary policy is to promote maximum productivity. Reserve Bank of India increases
the 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 in
production resulting the employment generation .
6.5. ROLE OF RBI IN MONETARY POLICY

Central Banks use various tools to implement monetary policies. Reserve Bank of India have a key
role in controlling the monetary levels in India. These tools can be divided into quantitative tools and
qualitative tools. The following are the widely utilized policy tools by Reserve Bank of India to
regulate and control the supply of money in the country.
6.5.1. |ü]e÷D≤‘·àø£ kÕ<ÛäHê\T
|ü]e÷D≤‘·àø£ kÕ<ÛHä ê\qT RBI ñ|üj÷Ó –+#˚ kÕ+Á|ü<ëj·T kÕ<ÛHä ê\T nì ≈£L&Ü n+{≤s¡T. á kÕ<ÛHä ê\T Á<äe´
|ü]e÷D+ e÷s¡TŒ≈£î dü+ã+~Û+∫q$. á kÕ<ÛäHê\T Ä]úø£ eédüú˝À u≤+≈£î\ |üs¡|ü‹ jÓTTø£ÿ yÓTT‘·Ô+ Á<äe´+ qT
ìj·T+Á‹+#·&ÜìøÏ s¡÷bı+~+#·ã&Ü¶sTT. á kÕ<ÛäHê\T yê{Ï dü«uÛ≤e+˝À |üs√ø£å+>± ñ+{≤sTT eT]j·TT Ä]úø£
eédüú˝À |üs¡|ü‹ |ü]e÷D≤ìï Á|üuÛ≤$‘·+ #˚j·T&ÜìøÏ ñ|üjÓ÷–+#·ã&É‘êsTT. Á|ü<Ûëq kÕ<ÛäHê\T >± u≤´+ø˘ πs≥T,
ãVæ≤s¡+>∑ e÷¬sÿ{Ÿ 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˘ sπ ≥T
u≤´+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»´
u≤´+≈£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»´
u≤´+≈£î\T Á|ü»\≈£î eT]j·TT yê´bÕs¡ dü+dü\ú ≈£î yê] s¡TD≤\ô|’ e&û¶ sπ ≥TqT ô|+#·T‘êsTT, ‘·<ë«sê Á|ü»\T ‘·≈î£ ÿe
&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 sπ ≥¢qT ‘·–+Z ∫q|ü⁄Œ&ÉT, yêDÏ»´ u≤´+≈£î\≈£î s¡TD≤\T #Íø£>± eT]j·TT düT\uÛ+Ñ >±
e÷s¡‘êsTT. Ç~ yêDÏ»´ u≤´+≈£î\T ‘·≈î£ ÿe s¡TD sπ ≥Tô|’ s¡TDÁ>∑V≤” ‘·\≈£î n|ü⁄Œ\T Çe«&ÜìøÏ nqTeT‹düT+Ô ~, Ç~
s¡TDÁ>∑V”≤‘·\T eT]j·TT yê´bÕs¡y˚‘·Ô\qT eT]+‘· Áb˛‘·‡Væ≤düTÔ+~.
zô|Hé e÷¬sÿ{Ÿ eéVü‰sê\T

Á<äe´ e÷¬sÿ{Ÿ˝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÷¬sÿ{Ÿ eéVü‰s¡+ >± |æ\Teã&ÉT‘·T+~. Ç~ ÄsY_◊ jÓTTø£ÿ Á<äe´ $<Ûëq+ ˝À Á|üeTTK kÕ<Ûäq+. ÄsY_◊
eT˙ e÷¬sÿ{Ÿ˝À ôd≈£L´]{°\qT $Áø£sTTùdÔ, Áô|’y˚{Ÿ eT]j·TT yêDÏ»´ u≤´+≈£î\T eT]j·TT e´≈£îÔ\T ≈£L&Ü yê{Ïì
ø=qT>√\T #˚kÕÔsT¡ . yêDÏ»´ u≤´+≈£î\ qT+&ç ÄsY_◊øÏ Á<äe´+ ã~© #˚jT· ã&ÉT‘·T+&É≥+‘√ Ç~ Ç|üŒ{Ïøπ ñqï Á<äe´
düs|¡ süò êqT ‘·–dZ Tü +Ô ~. eTs√yÓ|’ ⁄ü , ÄsY_◊ yêDÏ»´ u≤´+≈£î\ qT+&ç ôd≈£L´]{°\qT ø=qT>√\T #˚dqæ |ü⁄Œ&ÉT, $Áø£sTT+#˚
yêDÏ»´ u≤´+≈£î\T yês¡T Ç+‘·≈î£ eTT+<äT ÄsY_◊˝À ô|≥Tºã&ç ô|{Ïqº yÓTT‘êÔìï n+<äT≈£î+{≤sTT. á $<Û+ä >± Á<äe´
düô|’¢ ìj·T+Á‹+#· ã&ÉT‘·T+~.
s¬ b˛ sπ ≥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«ìï
ìs¡«Væ≤+#·&ÜìøÏ s¡TD+ rdüT≈£îH˚ sπ ≥T. ì<ÛTä \ ø=s¡‘· ˝Ò<ë ø=ìï #·≥|º sü y¡ TÓ qÆ #·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\˝À
ˇø£{.Ï
]esY‡ sπ b˛ sπ ≥T
ø=ìïkÕs¡T¢ ]»s¡T« u≤+≈£î e÷¬sÿ{Ÿ˝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
Fig 6.3
6.5.1. QUANTITATIVE TOOLS
The quantitative tools are also known as conventional tools or traditional tools used by the RBI. These
instruments are related to the quantity and volume of the money. These instruments are designed to control the
total volume of money of the bank credit in the economy. These instruments are indirect in their nature and are
used 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 Rate
The bank rate is the minimum rate at which the central bank lends money and rediscounts first-class
bills of exchange and securities held by commercial banks. When RBI gets a hint that inflation is
rising, it increases the bank interest rates so that commercial banks borrow less money and the
inflation stays under control. Commercial banks also increase their lending rate to the public and
business 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 will
become cheap and easier. This allows the commercial banks to lend money to borrowers on a lower
lending 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 known
as open market operations. This is a popular instrument of the RBI’s monetary policy. If RBI sells
securities in the money market, private and commercial banks and even individuals buy it. This leads
to a reduction in the existing money supply as money gets transferred from commercial banks to the
RBI. On the other hand, when RBI buys securities from the commercial banks, the commercial
banks that sell receive the amount they had invested in RBI before.
Repo Rate
A Repo rate is a rate at which commercial banks borrow money by selling their securities to the RBI
to maintain liquidity. Commercial banks sell their securities in case of a shortage of funds or due to
some statutory measures. It is one of the main instruments of the RBI to keep inflation under control.
183
<ë«sê Á|üj÷Ó »Hê\qT bı+<äT‘êsTT. <˚X+¯ ˝À n~Ûø£ Á<äy√´\“D+ düeTj·T+˝À ]»s¡T« u≤+≈£î ]esY‡ s¬ b˛ sπ ≥TqT
ô|+#·T‘·T+~ Ç~ ]»s¡T« u≤+≈£î ‘√ m≈£îÿe ì<ÛäT\qT ì*|æy˚j·T&ÜìøÏ u≤´+≈£î\qT Áb˛‘·‡Væ≤düTÔ+~.
#·≥ãº <ä∆ *øÏ«&ç{° ìwüŒ‹Ô

%#·≥ãº <ä∆ *øÏ«&ç{° ìwüŒ‹Ô nH˚~ q>∑<Tä , ã+>±s¡+ ˝Ò<ë Ç‘·s¡ ôd≈£L´]{°\ s¡÷|ü+˝À yêDÏ»´ u≤´+≈£î ìs¡«Væ≤+#ê*‡q
&çbÕõ≥¢ ø£˙dü XÊ‘·+. Ç~ ø£deºü Ts¡≈¢ î£ Á¬ø&ç{Ÿ 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>∑<Tä ]»sY« ìwüŒ‹Ô

%q>∑<äT ]»sY« ìwüŒ‹Ô øÏ+<ä yêDÏ»´ u≤´+≈£î\T πø+Á<ä u≤´+ø˘ e<ä› ø=+‘· ø£˙dü &çbÕõ{ŸqT ì\«\T>± ø£*– ñ
+&Ü*. u≤´+≈£î yÓTT‘·+Ô &çbÕõ{Ÿ\≈£î nqT>∑TD+>± ]»s¡T« u≤+≈£î e<ä› ì\«\˝À ñ+#ê*‡q q>∑<Tä XÊ‘·+. Bìì
e÷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<ÛHä ê\qT ]»s¡T« u≤+≈£î Á<äe´ $<Ûëq+ jÓTTø£ÿ m+|æø£ kÕ<ÛHä ê\T nì ≈£L&Ü n+{≤s¡T. á kÕ<ÛHä ê\T
Á¬ø&ç{Ÿ jÓTTø£ÿ $$<Ûä ñ|üjÓ÷>±\ eT<Ûä´ $eø£å ø√dü+ ñ|üjÓ÷–+#·ã&É‘êsTT; ñ<ëVü≤s¡D≈£î, ~>∑TeT‹ ø£+fÒ
m>∑TeT‹øÏ nqT≈£L\+>± ˝Ò<ë nqedüsy¡ TÓ qÆ ãTTD düs|¡ süò ê ø£+fÒ nedüsy¡ TÓ qÆ s¡TDdüs|¡ süò ê ø√dü+ ñ|üj÷Ó –+#·e#·TÃ.
á |ü<‹∆ä s¡TDÁ>∑V≤” ‘·\T eT]j·TT s¡TD<ë‘·\ô|’ Á|üu≤Û e+ #·÷|ü⁄‘·T+~. %RBI% ñ|üj÷Ó –+#˚ |üs|¡ ‹ü ìj·T+Á‘·D
jÓTTø£ÿ ø=ìï m+|æø£ kÕ<ÛäHê\T ÁøÏ+<ä $e]+#·&ÉyÓTÆq~.
e÷]®Hé \qT @s¡Œs¡#&· +É

u≤´+≈£î n+~+#˚ ˝Ò<ë ô|H’ò êHé‡ #˚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 #˚jT· &É+ e\q ñbÕ+‘·+˝À s¡TD |ü]e÷D+˝À e÷s¡TŒ≈£î <ë]rdüT+Ô ~. á kÕ<Ûqä + nedüsy¡ TÓ qÆ
s¡+>±\≈£î Á¬ø&ç{Ÿ düs¡|òüsêqT Áb˛‘·‡Væ≤+#·&ÜìøÏ eT]j·TT nqedüsy¡ ÓTÆq 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. eékÕj·T s¡+>±ìøÏ eT]+‘·>± Á¬ø&ç{Ÿ düô|’¢
øπ {≤sTT+#ê\ì ÄsY_◊ uÛ≤$k˛Ô+<äì nqT≈£î+<ë+, n|ü⁄Œ&ÉT ÄsY_◊ e÷]®Hqé T ‘·–dZ Tü +Ô ~ n+fÒ s¡TD+˝À 80-90
XÊ‘·+ ≈£L&Ü s¡TD+>± #Ó*¢+#·e#·TÃ.
HÓ‹’ ø√<√“<äeTT
HÓ’‹ø√<√“<äeTT nH˚~ ]»s¡T« u≤+≈£î qT+&ç yêDÏ»´ u≤´+≈£î\≈£î #˚ùd dü÷#·q\qT $e]düTÔ+~. Ç~ Á<äy√´\“D
ø±\+˝À |üs|¡ ‹ü ì ìs√~Û+#·&+É ˝À düV‰ü j·T|ü&TÉ ‘·T+~. ]»s¡T« u≤+≈£î ìã+<Ûqä \≈£î nqT>∑TD+>± m˝≤+{Ï ø£]qƒ
#·s¡´\T rdüTø√≈£î+&Ü uÛ≤s¡rj·T u≤´+øÏ+>¥ eédüúô|’ 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.
184
Reverse Repo Rate
Sometimes, the RBI borrows money from commercial banks when there is excess liquidity in the
market. In that case, commercial banks get benefits by receiving the interest on their holdings with the
RBI. At the time of higher inflation in the country, RBI increases the reverse repo rate that encourages
banks 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 liquid
cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep
before offering credit to customers.
Cash Reserve Ratio (CRR)

Under the CRR the commercial banks have to hold a certain minimum amount of deposit as reserves
with the central bank. The percentage of cash required to be kept in reserves as against the bank’s
total deposits, is called the CRR.
6.5.2. QUALITATIVE TOOLS

Qualitative instruments are also known as selective instruments of the RBI’s monetary policy. These
instruments are used for discriminating between various uses of credit; for example, they can be used
for favouring export over import or essential over non-essential credit supply. This method has an
influence on both borrowers and lenders. Following are some selective tools of credit control used
by the RBI
Margin Requirement
Margin is referred to the certain proportion of the loan amount that is not offered or financed by the
bank. Change in marginal can lead to change in the loan size. This instrument is used to encourage the
credit supply for the necessary sectors and avoid it for the unnecessary sectors. That can be done by
increasing 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 will
reduce the margin, and even 80-90 percent of the loan can be allotted.
Moral Suasion
Moral suasion refers to the suggestions to commercial banks from the RBI that helps in restraining
credits in the inflationary period. RBI implies pressure on the Indian banking system without taking
any strict action for compliance with rules. Through monetary policy, commercial banks get informed
of the expectations of RBI. The RBI can issue directives, guidelines, suggestions for commercial
banks regarding reducing credit supply for speculative purposes under the moral suasion.
Rationing of Credit
RBI fixes a credit amount to be granted for commercial banks. Credit is given by limiting the amount
available for each commercial bank. For certain purposes, the upper credit limit can be fixed, and
banks have to stick to that limit. This helps in lowering the bank’s credit exposure to unwanted
sectors. This instrument also controls the bill rediscounting.
185
Á¬ø&ç{Ÿ sπ wüì+>¥
yêDÏ»´ u≤´+≈£î\≈£î eT+ps¡T #˚jT· e\dæq s¡TD|üs|¡ ‹ü yÓTT‘êÔìï RBI ìs¡sí TTdüT+Ô ~. Á|ü‹ yêDÏ»´ u≤´+≈£î≈£î
n+<äTu≤≥T˝À ñqï yÓTT‘êÔìï |ü]$T‘·+ #˚jT· &É+ <ë«sê s¡TD|üs|¡ ‹ü Çe«ã&ÉT‘·T+~. ø=ìï Á|üj÷Ó »Hê\ ø√dü+,
m>∑Te s¡TD |ü]$T‹ì ìs¡ísTT+#·e#·TÃ eT]j·TT u≤´+≈£î\T Ä |ü]$T‹øÏ ø£≥Tºã&ç ñ+&Ü*. nyê+∫Û‘· s¡+>±\≈£î
u≤´+ø˘ |üs|¡ ‹ü ì ‘·–+Z #·&+É ˝À Ç~ düV‰ü j·T|ü&TÉ ‘·T+~. á kÕ<ÛHä ê\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 and
downswings in the broad measures of economic activity
2. Trade Cycles: A trade cycle refers to fluctuations in economic activities specially in

employment, output and income, prices, profits etc.,
3. Cyclical Fluctuations: Cyclical fluctuations is a term used to describe oscillations that

occur 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 choose
the winner of a bidding process while others submit.
5. Amalgamations: Amalgamation is the combination of two or more companies into a new

entity by combining the assets and liabilities of both entities into one.
6. Competition Appellate Tribunal(CAT): The Competition Appellate Tribunal is a statutory

organization established under the provisions of the Competition Act, 2002 to hear and
dispose of appeals against any direction issued or decision made or order passed by
the Competition Commission of India.
7. Central Bank: A central bank is a financial institution that is responsible for overseeing the
monetary system and policy of a nation or group of nations, regulating its money supply, and
setting interest rates.
8. Tax Savings Schemes: Tax Saving Schemes is the best way to make investments to save
tax 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 governments
provide to firms or industries within the national economy, in order to help them secure
foreign markets.
186
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 the
government realized that it has occurred.
11. Administrative Lag : Administrative lag arises from the time it takes to enact the needed
statutes. Operational lag results from how much time it takes for the effect of tax changes to
be 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 the
financial health of a country.
14. Government Debt: Public debt is the total amount, including total liabilities, borrowed by
the government to meet its development budget.
1. When did the Competition Act, 2002, come into force?

A. 01 April 2004
B. 31 March 2003
C. 01 May 2002
D. 23 April 2003
2. Which section of the Competition Act, 2002 deals with Penalty for failure to comply with
directions of Commission and Director-General ?
A. Section 47 of the Competition Act, 2002
B. Section 44 of the Competition Act, 2002
C. Section 43 of the Competition Act, 2002
D. Section 49 of the Competition Act, 2002
3. Fiscal policy in India is formulated by

A. Reserve Bank of India
B. Planning Commission
C. Finance Ministry
D. Securities and Exchange Board of India
187
4. Fiscal deficit in the union budget is equal to
A. Net increase in internal and external borrowings
B. The difference between current expenditure and current revenue
C. The sum of monetized deficit and budgetary deficit
D. Net increase in the union government’s borrowing from the Reserve Bank of India
5. Which is not in the types of Fiscal Policy

A. Neutral Fiscal Policy
B. Expansionary Fiscal Policy
C. Contractionary fiscal policy
D. Positive Fiscal Policy
6. Monitory Policy is concerned with

A. Central Government
B. State Governments
C. State Bank of India
D. Reserve Bank of India
7. Which of the following is not the work of RBI?

A. Bank of the banks
B. Credit controller
C. Custodian of foreign currency
D. 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 General
B. Central Government
C. State Bank of India
D. Reserve Bank of India
9. The following is not used as a Monitory policy instrument by Reserve Bank of India
A. Bank Rate
B. Repo Rate
C. Statutory Liquidity Ratio
D. Lending to Business Entities
188
10. Which is not a qualitative tool of RBI
A. Margin Requirement
B. Moral Suasion
C. Rationing of Credit
D. Selective credit control
ANSWERS
1 2 3 4 5 6 7 8 9 10
B C C A D D D D D A
INERACTIVE LINKS
https://www.rbi.org.in/

Visit RBI website. Go through the Vision and Mission of RBI. Observe the press releases
archives.
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 from
recession.
190
Social and Political
Environment
Learning Outcomes:
Chapter Layout:
Chapter
7.1. 1. Social Environment
understand the nature of society and complexities of
7
2. 7.1.1. Factors
understand theinfluencing
objectives social
of theenvironment
business seeking
7.1.2.
society.Social Environment Indicators
3. asses the Political Scenario
7.2. Social Responsibility
4. examine the Political Stability
7.2.1. Responsibility of Business towards Stakehold
5. relate between Government and Business.
7.2.2 Barriers of Social Responsibility.
7..3. Political Environment

7.3.1. Political Institutions
7.3.2. Responsibilities of Business towards Governm
7.3.3. Responsibilities of Government towards Busin
191
n<Û ë ´j· T + ne˝Àø£ q +
>√¢ã˝…’CÒwüHé Á|üdüTÔ‘· <äcÕº+‘·+˝À á n<Ûë´j·T+ jÓTTø£ÿ Ø&ÉsY düe÷» dü«uÛ≤e+ eT]j·TT yê´bÕs¡
dü+øÏw¢ ‘ºü \· qT ns¡+ú #˚dTü ≈£î+{≤s¡T. n<Ûë´j·T+ jÓTTø£ÿ n<Û´ä j·Tq+ kÕe÷õø£ |üsêés¡D+ô|’ ne>±Vü≤q
ÇdüTÔ+~ - ã\V”≤q esêZ\T, yÓqTø£ã&çq ‘·s¡>∑‘·T\T, yÓTÆHê]{°\T eT]j·TT eTVæ≤fi¯\≈£î neø±XÊ\
ø√dü+ nìï s¡+>±\˝À |ü⁄s¡Twüß\‘√ düe÷q+>± eTVæ≤fi¯\≈£î düe÷q ôVA<ë ø√dü+ &çe÷+&é. düe÷»+
jÓTTø£ÿ nuÛÑT´qï‹ $<ä´, Á|ü»\ düTBs¡ÈyÓTÆq eT]j·TT Äs√>∑´ø£s¡yÓTÆq J$‘· ø±\+ MT<ä Ä<Ûës¡|ü&ç
ñ+≥T+~.
yê´bÕs¡+ jÓTTø£ÿ kÕe÷õø£ u≤<Û´ä ‘· n+‘·s‘Z¡ · eT]j·TT u≤Vü≤´ yê{≤<ës¡T\ ÄdüøìÔÏ s¡ø+åÏ #·&+É . yês¡T
j·T»e÷qT\T eT]j·TT ñ<√´>∑T\T, Á|üuÛÑT‘·«+, dü+|òüT+, $ìjÓ÷>∑<ës¡T\T/ø£düºeTs¡T¢, düs¡|òüsê<ës¡T\T
eT]j·TT s¡TD<ë‘·\T yÓTT<ä˝…’q$ sê»ø°j·T |üsêés¡D n<Ûä´j·Tq+ uÛ≤s¡‘· sêC≤´+>∑+˝Àì eT÷&ÉT
eTTKýÓTÆq nej·Tyê\ >∑T]+∫ ‘·–q+‘· C≤„Hêìï n+~düTÔ+~.
1. XÊdüqdüuÛÑ
2. m–®≈L£ ´{Ïyé eT]j·TT
3. Hê´j·Teédü.ú
eT÷&ÉT eTTKýÓTÆq nej·Tyê\T dü«‘·+Á‘· dü«uÛ≤e+ ø£*– ñ+{≤sTT. nsTT‘˚, n&çàìÁùdºwüHé≈£î eT]j·TT
|Á »ü \≈£î @yÓH’ ê düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ düT|Á +” ø√s¡Tº CÀø£´+ #˚dTü ≈£î+≥T+~.
192
CHAPTER OVERVIEW
The reader of this chapter gets an understanding of the Nature of Society

and Complexities of Business in the present scenario of Globalisation.
The study of the chapter gives awareness of Social Environment – Demand
for opportunities for weaker sections, backward classes, minorities and
women; Demand for equal status for women with men in all fields.
Upliftment of the society depends on Education, long and healthy life
span of people.
The Social Responsibility of Business is to protect the interest of the internal

and the external stakeholders. They are Owners and Employees,
Government, Community, Consumers/Customers, Suppliers and Creditors
etc. The study of Political Environment gives ample knowledge of the
three important organs of Indian Constitution.
1. Legislature
2. Executive and
3. Judiciary.
The three important organs are independent in nature. However, the

Supreme Court interferes for settling any issues of the Administration
and people.
193
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·TT
kÕe÷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 düV≤ü ø±s¡ dü+|òTü + yÓTT<ä˝q’… $. kÕe÷õø£ |üsêés¡D+ ÁbÕ<∏$ä Tø£+>± yê´bÕs¡+ ñqï düe÷»+˝Àì Ä#êsê\T
eT]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\T
kÕe÷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«\Œ
eé~Û˝À m˝≤+{Ï Á|üu≤Û yêìï #·÷|üe⁄. nsTT‘˚ á n+XÊ\˙ï Bs¡øÈ ±\+˝À yê´bÕs¡+ô|’ >=|üŒ Á|üu≤Û yêìï #·÷|ü⁄‘êsTT.
7.1.1. kÕe÷õø£ |ü]düsê\qT Á|üuÛ≤$‘·+ #˚ùd ø±s¡ø±\T

 yÓqTø£ã&çq ‘·s¡>∑‘·T\T, ã\V”≤q esêZ\T, yÓTÆHê]{° eT]j·TT eTVæ≤fi¯\≈£î ñbÕ~Û neø±XÊ\
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£
#Ó‘’ q· ´+.
 u≤*ø£\ $<ë´ kÕúsTTì yÓTs¡T>∑T|üs¡#·&ÜìøÏ kÕe÷õø£ ñ<äéT+
7.1.2. kÕe÷õø£ |üsêés¡D+ - dü÷∫ø£\T

 Jeq Á|üe÷D+
 $<ä´ - ôd’Hé‡ eT]j·TT f…ø±ï\J s¡+>±\˝À düe÷»+˝Àì nìï esêZ\ nuÛTÑ ´qï‹ ø√dü+ Á|ü»\≈£î
‘·|üŒìdü] $<ä´ ø£fi¯ eT]j·TT dü+düÿ‹.
 Äs√>∑´+ eT]j·TT BsêÈj·TTe⁄ -<˚X¯+˝À ìedæ+#˚ Á|ü»\ Äs√>±´ìï |ü]s¡øÏå+#·&ÜìøÏ ‘·–q ì<ÛäT\
πø{≤sTT+|ü⁄.
7.2.yê{≤<ës¡T\≈£î yê´bÕs¡+ kÕe÷õø£ u≤<Ûä´‘· uÛ≤eq

uÛ≤s¡‘· sêC≤´+>∑+ bÂs¡T\≈£î ÁbÕ<∏ä$Tø£ Vü≤≈£îÿ\‘√u≤≥T Á|ü‹ e´øÏÔø° ôVA<ë, ùd«#·Ã¤, k˛<äs¡uÛ≤e+, düe÷q‘·«+
yÓTT<ä˝…’q n+XÊ\qT Á|ükÕ~+∫+~. n<˚ dü+<äs¡“¤+˝À Á|ü‹ bÂs¡T&É÷ düe÷C≤ìøÏ u≤<Ûä´‘· eVæ≤+#ê*. Á|ü‹
bÂs¡T&É÷ #·≥º|ü]~Û˝À düe÷C≤ìøÏ »yêãT<ës¡T>± eéVü≤]+#ê*.
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¡d+ü dü\ú T ‘·eT ñ‘·Œ‘·T\Ô 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 organizations
and social institutions like caste, religion, professions of class structure etc
Example: Weavers Society, Milk Production Cooperative Society etc.,
Social environment basically comprises customs and traditions of the society wherein the business
exists. Standard of living, habits, preferences taken and education level of the people residing in the
society where the business is existing are also included in the social environment. Businessmen cannot
neglect various components of social environment though all these components do not show any
impact in short span on business. But all these factors will have a great influence on the business in
the 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 discrimination
basing 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 in
the fields of science And Technology; Art And Culture.
 Health and long life -Allocation of adequate funds to preserve and keep health of the people
living in the country.
7.2 . SOCIAL RESPONSIBILITY

The Constitution of India gifts every individual to enjoy status, fraternity, liberty, equality and freedom
in 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 as
he depends much upon the society.
195
dü+dü\ú T ‘·eT≈£î nqT>∑TDyÓTqÆ ø=qT>√\T<ës¡T/¢ ø£deºü Ts¡¢ ø√dü+ düe÷»+ô|’ Ä<Ûës¡|&ü ‘É êsTT. ø£qTø£ yê´bÕs¡ dü+dü\ú T
düe÷C≤ìøÏ u≤<Ûä´‘· eVæ≤+#ê*. πøe\+ ‘·eT ˝≤uÛ≤s¡®q MT<ä <äèwæº kÕ]+#·&Éy˚T >±ø£ kÕe÷õø£ dü+πøåe÷ìøÏ
u≤<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 ã{Ïº yê´bÕs¡ dü+düú\T
kÕe÷õø£ u≤<Ûä´‘· |üPs¡«ø±\+ qT+N nqTdü]+#ês¡˙, Á|üø£è‹ yÓ’|üØ‘ê´\sTTq es¡<ä\T, ‘·TbòÕqT¢, uÛÑ÷ø£+bÕ\T
yÓTT<ä˝q’… $ dü+uÛ$Ñ ùdÔ <Ûqä e+‘·T˝…q’ yê´bÕs¡dTü \Ô T ñ<ës¡+>± u≤~Û‘T· \≈£î u≤dü≥>± ì*#ês¡˙ ‘Ó\Tk˛Ô+~. C≤‹|æ‘·
eTVü‰‘êà>±+BÛ e÷{˝À¢ ªªø£deºü Ts¡T¢ yê´bÕs¡+ô|’ Ä<Ûës¡|&ü ˝É <Ò ìä , yê´bÕs¡d+ü dü˝ú Ò ø£deºü Ts¡ô¢ |’ Ä<Ûës¡|&ü Üj·T˙, yê]øÏ
yê´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\´+ bÕ{Ï+#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¡®q
eTTK´<Û˚´j·T+‘√ |üì#˚ùd Á|ü‹ yê´bÕs¡ dü+kÕú HÓ’‹ø£ $\Te\qT bÕ{Ï+#˚ Áø£eT+˝À düe÷»+˝À Á|ü<Ûëq esêZ˝…’q
ñ<√´>∑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‘·\T
eT]j·TT düVü≤yê´bÕs¡ dü+düú\≈£î u≤<Ûä´‘· eVæ≤+#ê*.
ñ<√´>∑T\T
yê´bÕs¡ dü+düú $»j·Te+‘·+>± ø=qkÕ>∑&ÜìøÏ ñ<√´>∑T\ düV≤ü 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¡qÔ qT n_Ûq+~+∫q+<äTe\¢ ‘·eT e´øÏ‘Ô ê«ìøÏ >∑T]Ô+|ü⁄ \_Û+∫+<äH˚
Ä‘·à$XÊ«kÕìï ô|+bı+~+#·e\dæq u≤<Û´ä ‘·qT yê´bÕs¡ dü+dü\ú T rdüTø=qï+<äTe\¢ j·T»e÷ì, ñ<√´– dü+ã+<Ûë\T
yÓTs¡T>∑e⁄‘êsTT.
$ìjÓ÷>∑<ës¡T\T:
yê´bÕsêìøÏ $ìjÓ÷>∑<ës¡T¢ yÓHïÓ eTTø£ ˝≤+{Ïyês¡T. $ìjÓ÷>∑<ës¡¢ MT<ä Ä<Ûës¡|&ü ¶É yê´bÕs¡ dü+dü≈ú î£ ‘·eT yê´bÕsêìøÏ
|ü⁄Hê<äsTTq $ìjÓ÷>∑<ës¡¢≈£î u≤<Ûä´‘· eVæ≤+#ê*‡ ñ+≥T+~.
HêD´‘· : $ìjÓ÷>∑<ës¡¢ dü+πøåe÷ìï ø√πs yê´bÕs¡dü+düú\T HêDýÓTÆq ñ‘·Œ‘·T\Ô qT e÷Á‘·y˚T $ìjÓ÷>∑<ës¡¢≈£î
düs¡|òüsê #˚j·÷*. n+<äTø√dü+ dü¬s’q |ü+|æD° eédüúqT m+#·Tø√yê*. ˝Òì#√ ø£èÁ‹eT ø=s¡‘·qT düèwæº+#˚
196
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 exchanges
goods and services for money. It means business searches for potential market where products are
sold. Market is one of the segments in the society. It seems business totally depends on the society
to find suitable buyers and customers to sustain consistently in the market. Being dependent, business
has an obligation towards society. The obligation otherwise is known as social responsibility of
business. Hence, social responsibility is understood as an obligation of business to tend towards the
welfare 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 profits
but should seek the welfare of the society as well. Business does not exist in isolation. Every segment
of the society aids for the success of business. Hence it is the responsibility of the business to seek the
welfare of various segments of the society.
Social responsibility of business was there in good olden days also. In times of natural calamities like
drought, floods, cyclones the affluent businessmen of such area used to contribute for food, clothing
and shelter to the needy. Our ancestors used to tell us the magnificent stories how the leading
businessmen look after the welfare of the poor in times of crisis. As Mahatma Gandhiji said “That a
customer is not dependent on us. But we i.e. the business houses depend on the customer. We are
not serving him. He gives an opportunity to serve”. It is very important for the business to strike a
balance between profit maximization and welfare of the society.
7.2.1. RESPONSIBILITY OF BUSINESS TOWARDS STAKEHOLDERS

Business 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 objective
of 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-business
firms.
Employees
No organization is successful without integration and heartful co-operation of the workers or
employees. Responsibility of business towards employees/workers is highly essential. Business has
to 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 good
work and conduct. It elevates the morale of employees and recognizes their personality.
Consumers
Consumers are the backbone for every business. Being so much dependent, business has a definite
responsibility towards consumers, as consumers/customers are the foundation for business.
Responsibility of business towards consumers concentrates on the following:
197
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|üy÷Ó wüHé : e÷¬sÿ{Ÿ˝À n+<äTu≤≥T˝À ñqï edüTÔ ùde\ HêD´‘ê Á|üe÷D≤\T, düsT¡ ≈£î\ <Ûsä \¡ ÷ yê´bÕs¡ Á|üø≥£ q\˝À
bı+<äT|üs#¡ ê*. Bìe\¢ ø£©Ô düsT¡ ≈£î\qT, ‘·≈î£ ÿe HêD´‘· ø£*–q düsT¡ ≈£î\qT e÷¬sÿ{À¢øÏ sê≈£î+&Ü ìs√~Û+#·e#·TÃ.
düs¬ q’ HêD´‘ê Á|üe÷D≤\T, |ü]e÷D+ ø£*–q edüTÔ ùde\qT $ìjÓ÷>∑<ës¡≈¢ î£ düsd¡ yü TÓ qÆ <Ûsä \¡ ≈£î düs|¡ süò ê #˚jT· &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|üuTÑÛ ‘·«+
yê´bÕs¡ dü+düú\T #·≥ºã<ä∆+>± eéVü≤]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|üuTÑÛ ‘·«+ ‘·s|¡ ⁄üò q yê´bÕs¡ dü+dü\ú T dü«#·Ã+¤ <ä+>± kÕe÷õø£ ø±s¡´Áø£e÷\˝À uÛ≤>∑kÕ«eTT\j˚T´ u≤<Û´ä ‘·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¡+>± eéVü≤]+∫ düVü‰j·Tø£ ø±s¡´Áø£e÷\˝À uÛ≤>∑kÕ«eTT\T ø±e&É+ u≤<Ûä´‘ê d”«ø±s¡y˚T.
198
 Quality: Quality goods and services should be produced and supplied seeking the welfare
of the consumers. Availability of goods and services should be within the reach of the
consumers, avoiding exploitation due to artificial scarcity. Hence, the selection of channel of
distribution is one of the most important concepts to make goods easily available to the
consumers. While launching a new product or service, the business has to think thoroughly
about preferential tastes and considerations of the consumers.
 Sales Promotion: Consumers are informed about the details and uses of the products available
in the market through felicitous advertisement. Advertisement has to educate the consumers
to avoid adulteration and poor quality of goods. Proper information is to be given to consumers
to avoid use of spurious products.
Supply of right quantity and quality of goods and services at affordable prices to different classes of
consumers is highly appreciated. Befitting mechanism is to be provided to address the grievances of
customers/consumers. ‘CONSUMERISM’ is very active now a days as the Government enacted
‘Consumer Protection Act, 1986’ to safeguard the interests of consumers.
Government
Business 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 the
Government. It is the responsibility of business units to pay taxes honestly and promptly on
their sales and inputs. Proprietors of business firms have to deduct tax before payment of
salaries and wages to their employees and remit the collection to the Government.
 Participation in voluntary programmes: It is the responsibility of business firms to come

out voluntarily to render service to the society on behalf of the Government participating in
relief operations in times of calamities like cyclones, floods, earth quakes and other pandemic
situations.
 Furnishing Information: It is the responsibility of the leaders of the business firms to feed
necessary information for formulating new rules and regulations.
 Service to the Government: The leader of the business offer service to the Government
sending delegates along with government authorities to foreign countries for exploring the
prospects of trade and industry in our country.
 Government Contracts: Government announces various projects for the welfare and
development of the society inviting tenders from suitable business houses. Many business
houses bid for contracts of the government. The business firm qualified in the bid has to carry
out the projects according to the required specifications and standards.
199
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|üuTÑÛ ‘ê«ìøÏ ùde\+~+#·&+É :

$<˚o |üs¡´≥q\T #˚ùd n~Ûø±s¡ãè+<ä+ düuÛÑT´\‘√ bÕ≥T yê´bÕs¡ dü+düú\ Hêj·T≈£î\T ≈£L&Ü bÕ˝§Zì uÛ≤s¡‘·<˚X¯+
yê´bÕsê_Ûeè~∆øÏ ø£*dæe#˚Ã kÕqT≈£L\ n+XÊ˝Ò$T{À $<˚o yê´bÕs¡ dü+düú\≈£î ‘Ó*j·TCÒj·÷*. á u≤<Ûä´‘·qT
d”«ø£]+∫q+<äTe\¢ eTq <˚X¯+˝À es¡Ôø£+, yêDÏ»´+, |ü]ÁX¯eT\T n_Ûeè~∆ #Ó+<˚ neø±XÊ\T yÓTs¡T>∑e⁄‘êsTT.
Á|üuTÑÛ ‘·« ø±+Á{≤≈£î\º T:

kÕe÷õø£ dü+øπ eå T+, n_Ûeè~∆ ø√dü+ Á|üuTÑÛ ‘·«+ nH˚ø£ ÁbÕC…≈î£ \º qT #˚|&ü TÉ ‘·T+~. yê{Ïì düÁø£eT+>± |üP]Ô #˚jT· &ÜìøÏ
nqTuÛÑe+ ñqï yê´bÕs¡ dü+düú\qT f…+&És¡T¢ ø√dü+ ÄVü‰«ìdüTÔ+~. Ä f…+&És¡¢˝À ns¡Ω‘· kÕ~Û+∫q yê´bÕs¡ dü+düú≈£î
ÁbÕC…≈£îº |üqT\qT n|üŒC…|æŒ HêD´‘ê Á|üe÷D≤\T bÕ{Ïdü÷Ô düø±\+˝À |üP]Ô #˚j·TeTì Á|üuÛÑT‘·«+ ìπs›•düTÔ+~.
ˇ|üŒ+<ä+˝À ñqï nìï n+XÊ\qT |ü]>∑Dq˝ÀøÏ rdüT≈£îqï yê´bÕs¡ dü+düú ÁbÕe÷DÏø£ |ü<ä∆‘·T\˝À ÁbÕC…≈£îº |üP]Ô
#˚ùd kÕe÷õø£ u≤<Ûä´‘·qT d”«ø£]düTÔ+~.
|üsêés¡D+
|üsêés¡D+ |ü]s¡øÏå+∫ uÛ≤$‘·sê\≈£î n+~+#·e\dæq u≤<Ûä´‘· Á|ü‹ bÂs¡T&É÷ d”«ø£]+#ê*. á u≤<Ûä´‘·qT yê´bÕs¡
dü+düú\T ≈£L&Ü m≥Te+{Ï $TqVü‰sTT+|ü⁄ ˝Ò≈£î+&Ü d”«ø£]+#ê*. Á|ü|+ü #· yê´|üÔ+>± |üsêés¡D |ü]s¡ø£åD n‹
Á|ü<Ûëq n+X¯+>± uÛ≤$düTÔqï ‘·s¡TD+˝À yê´bÕs¡ dü+düú\T á #·s¡´\≈£î ñ|üÁø£$T+#ê*.
Á|üøè£ ‹ eqs¡T\ |ü]s¡øDå£ :

dü«#·Ã¤yÓTÆq >±*, ˙s¡T, yÓ\T‘·Ts¡T yÓTT<ä˝…’q eqs¡T\T e÷qyê[øÏ Á|üø£è‹ Á|ükÕ~+∫q es¡+. yê{Ïì C≤Á>∑‘·Ô>±
ñ|üjÓ÷–+#·Tø√yê*. ø±\+ >∑&ÉTdüTÔqï ø=B› Á|üø£è‹ eqs¡T\T ‘·]–b˛j˚T neø±XÊ\T m≈£îÿe. n+<äTø√dü+
Á|ü‘êïe÷ïj·T eqs¡T\ nH˚«wüD #˚j·Te\dæq u≤<Ûä´‘· kÕe÷q´ bÂs¡T\‘√u≤≥T yê´bÕs¡ dü+düú\≈£î ≈£L&Ü ñ+<äì
Á>∑Væ≤+#ê*.
Á|üø£è‹ eqs¡T\qT ø±bÕ&ÉTø=H˚ $wüj·T+˝À á ÁøÏ+~ e÷sêZ\T ø=+‘·es¡≈£L ñ|üø£]kÕÔsTT:

 ˙{Ïì ‘·≈£îÿe>± ñ|üjÓ÷–+#·&É+.
 |ü⁄qs¡T‘êŒ<äø£ eqs¡T\ $ìjÓ÷>∑+.
 nedüs¡+ ˝Òì düeTj·T+˝À ˝…’≥¢qT Ä]Œy˚j·T&É+.
 |ü⁄q]«ìjÓ÷>∑|üs¡#˚ edüTÔe⁄\T m+|æø£ eT]j·TT Øôd’øÏ¢+>¥.
ø±\Twü´ ìj·T+Á‘·D:
ø±\Twü´ ìj·T+Á‘·D≤ #·s´¡ \T rdüTø√yê*‡q u≤<Û´ä ‘· Á|ü‹ yê´bÕs¡ dü+dü≈ú L£ ñ+~. Á|üe÷<äøs£ ¡ yêj·TTe⁄\T, e´sêú\T
eT]j·TT eTTs¡T>∑T ãj·T{ÏøÏ $&ÉT<ä\ #˚ùd dü+<äs¡“¤+˝À |üsêés¡D+ ø±\Twü´+ ne⁄‘√+~. M\sTTq+‘· es¡≈£L
ø±\Twü´+ ‘·–+Z #·&ÜìøÏ #·s´¡ \T rdüTø√e&É+ eT]j·TT Øôdø’ +¢Ï >¥, |ü⁄q]«ìjÓ÷>∑+ #·s´¡ \T nqTdü]+#·&+É e÷qyê[øÏ
ÁX‚jT· düÿs¡+.
200
Environment:
It is the basic responsibility of every citizen to protect the environment to offer a promising future to
the next generations. Business is also not an exception from this primary duty and responsibility of
protecting 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 Resources

Natural resources are a valuable gift to the human beings. They are scarce having the characteristic
of exhausting at a higher rate. They must be used judiciously. It is the responsibility of citizens as well
as business houses to find out alternative resources to meet the needs of people. There are several
ways to conserve natural resources such as:
 Using less water.

 Using renewable energy.
 Turning off lights.
 Recycling.
 Selecting reusable goods.
 Managing thermostat.
Pollution Control
Suitable steps must be taken for environmental engineering to prevent all sorts of pollution. A variety
of ways and means are applied to arrest damage done to the environment by the discharge of
harmful substances. The industrial waste and sewage should be disposed of with utmost care so as
to protect environment. If possible re use and recycling methods are to be adopted to minimize
pollution.
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 to
prevent all sorts of pollution.
Community
Responsibility of business towards community or society is a moral obligation. A part of profits of the
business may be spent for civic facilities and educational needs of the neighborhood. Providing
employment opportunities in business establishments will improve the standard of living of people in
building up a better society.
Owners
Business has a separate legal entity in the eyes of existing laws. It denotes that it separates itself from
owners. Business firm does the business with the funds contributed by owners. Hence , business has
201
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£+Á{À˝Ÿ
uÀs¡T¶qT @sêŒ≥T #˚dæ+~.
düe÷»+ :
yê´bÕs¡ dü+düú\T düe÷C≤ìøÏ u≤<Ûä´‘· eVæ≤+#·&É+ ˇø£ HÓ’‹ø£ u≤<Û´ä ‘·. düe÷»+ qT+∫ |òü*‘ê\T bı+~q yê´bÕs¡
dü+dü\ú T ‘·eT ˝≤uÛ≤\˝À ø=+‘· uÛ≤>±ìï düe÷C≤_Ûeè~∆ø,Ï $<ë´|üsy¡ TÓ qÆ n+XÊ\≈£L $ìjÓ÷–+#ê*. ñ<√´>±eø±XÊ\
ø£\Œq≈£î ÁbÕ<Ûëq´‘· Çyê«*. M{Ïe\¢ 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\T
yê´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]Ãq
eT÷\<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|¡ süò ê<ës¡T,¢ ãTTD<ë‘·\T eT]j·TT Ç‘·sT¡ \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 düV≤ü ø£]+∫q düs|¡ süò ê<ës¡≈¢ î£ n+^ø£]+∫q yê´bÕs¡ wüs‘¡ T· \ Á|üø±s¡+ düø±\+˝À #Ó*+¢ |ü⁄ #˚jT· &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≤<Û´ä ‘·.
‘√{Ï yê´bÕs¡ dü+dü\ú |ü≥¢ u≤<Û´ä ‘·:

‘·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 ˝Òì
düs¡T≈£îqT düs¡|òüsê #˚j·T&É+ nHÓ’‹ø£ #·s¡´\T, ø£qTø£ yê{Ïì $düà]+#ê*.
7.2.2. kÕe÷õø£ u≤<Ûä´‘·≈£î n&É¶+≈£î\T

kÕe÷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·÷\T
rdüTø=H˚ ô|’ kÕúsTT ìsê«üVü≤≈£î\T kÕe÷õø£ u≤<Ûä´‘ê+XÊ\T yê´bÕs¡ ˝≤uÛ≤\qT ‘·–ZkÕÔsTT nH˚
uÛ≤eq‘√ ‹s¡dÿü ]düTHÔ êïs¡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˝À

ìeT>∑ïyÓTÆq yê´bÕs¡ dü+düú\T kÕe÷õø£ u≤<Ûä´‘· n+XÊìï Á|üø£ÿ≈£î HÓfÒºdüTÔHêïsTT.
202
the responsibility towards owners ensuring just and fair return on their investment/capital. Business is
also responsible for guaranteeing a steep rise of capital so as to enable the owner to continue the
business.
Suppliers, Creditors and Others

The functioning of a business firm is also affected by the suppliers, creditors and other interest groups
with whom the business has to interact. Hence business owes its responsibility towards such interest
groups i.e. prompt payment to suppliers and payment of interest along with repayment of principal
amount to Lenders/Creditors.
Responsibility towards Inter-Business

The responsibility of business includes a healthy and co-operative business relationship with different
business houses. Businessmen shall resist unfair and unethical competition and avoid unfair interference
in the business of others, such as unfair canvassing against other business firms, price-rigging, supply
of 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 the
goals of social responsibility:
 The decision makers at top level may not accept the programmes related to social
responsibility claiming that the programmes/plans are non-profitable to organization
 The main objective of any business is profit maximization. As such, the concept of
social responsibility may be kept aside while achieving the objective of profit
maximization.
 Even if a particular business unit does some socially beneficial activity it may not be
appreciated by the competitors in the market, which hampers the morale of the
businessman 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. Political
Environment constitutes all the factors relating to the policies of the political parties, and type of the
Government in power. The attitude of Government towards different groups of society and different
classes of business units directs and controls the activities. The economic and business policies are
regulated 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
203
 yê´bÕs¡ dü+düú u≤<Û´ä ‘· kÕe÷õø£ u≤<Û´ä ‘· nì dü+dü\ú T eTT+<äTø=∫Ã düe÷CÀ|üj÷Ó >∑ ø±s¡´Áø£e÷\T
#˚|ü{ÏºHê, 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°jT· 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¡+˝À
ñqï Á|üuÛÑT‘·« <äèø£Œ<Ûä+ $$<Ûä düeT÷Vü‰\T, yê´bÕs¡ dü+düú\|ü≥¢ yÓ’K]ì ‘Ó*j·TCÒkÕÔsTT. kÕe÷õø£ dæú‹>∑‘·T\qT
dü]~<ä›&ÜìøÏ, yê´bÕs¡ $<ÛëHê\ ø£≥º&çø° Á|üuÛÑT‘ê«\T ìj·T+Á‘·D #˚j·T&Éy˚T ø±≈£î+&Ü ~XÊìπs∆X¯+ #˚kÕÔsTT.
yê´bÕs¡+˝Àì $$<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±dü
ø±sê´#·s¡D≈£î <√Vü≤<ä|ü&ÉT‘·T+~.
7.3.1. sê»ø°j·T eédüú\T

uÛ≤s¡‘<· X˚ +¯ sê»ø°jT· eédüqú T q&É|+æ #·&ÜìøÏ, eTq sêC≤´+>∑+ eT÷&ÉT s¡ø±\ sê»ø°jT· eédü\ú 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˝À
ø£*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+>∑+
yê{Ï*¢Hê düMTøÏå+#˚ n~Ûø±s¡+ Hê´j·Tedüú≈£î ñ+~. m+<äTø£+fÒ eTq sêC≤´+>∑+ düs¡« dü‘êÔø£ >∑D‘·+Á‘· <˚X¯+˝Àì
bÂs¡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÷q
neø±XÊ\qT uÛ≤s¡rj·TT\≈£î es¡+>± Ç∫Ã+~.
XÊdüqdüu:ÑÛ
XÊdüqdüuÑÛ <˚Xø¯ ±\e÷q |ü]dæ‘ú T· \qT ø£qT>∑TD+>± ø=‘·#Ô {· ≤º\qT ‘·j÷· s¡T #˚jT· &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|üuTÑÛ ‘·«+ :

#·≥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|üuTÑÛ ‘·«+ ªªdüe÷Kéédüμú μ ô|’ |üP]Ô $XÊ«dü+‘√ |üì#˚dTü +Ô ~. n+fÒ øπ +Á<ä Á|üuTÑÛ ‘ê«ìø°, sêh Á|üuTÑÛ ‘ê«\≈£L
204
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 citizens
of the country and to their properties. Every government should govern the country within the
framework of the Constitution.
Thus, a stable and dynamic political environment of a country ensures business growth. The political
philosophy of Indian democracy having a stable government acts as a promoter that regulates
economic activity. However, most of the decisions of the government regarding business are based
on consideration of the political party in rule. Hence, legal and political environment of a country
provides a boundary within which business has to function. The success of the business depends
upon 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 of
India solemnly declared India to be a sovereign, socialist, secular, Democratic Republic in order to
secure justice, liberty, equality and fraternity.
Justice: Social, Economic and Political

Liberty : Liberty of thought, expression, belief, faith and worship.
Equality : Equality of Status and Opportunities
Fraternity : Assuring the dignity of individual and the unity and integrity of the Nation
The Constitution of India of democratic set up granted the legislature, executive and judiciary which
important institutions to govern the country and independent in nature.
Legislature
Legislature is the most powerful institution among three organs of the government. Legislature is the
political 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 relevant
laws from time to time to suit all the requirements of the Nation including business. The business is
bound to perform its activities within the framework of the existing laws of the land. No business unit
can function against the laws prevailing in the country.
Executive
The term government also refers to the State. The framers of our constitution made provision for
Federal 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 State
Governments are defined by the Constitution. The Central and State Governments can function
independently in the areas as defined by the Constitution. The distribution of powers aims at achieving
national integration. Government is the executive body of laws made by the legislature in a Federal
State. And the Constitution is the supreme of the land.
205
eT<Ûä´ n~Ûø±s¡ |ü+|æD° »s¡T>∑T‘·T+~.ø£qTø£ <˚XÊ_Ûeè~∆ kÕ~Û+#·&ÜìøÏ πø+Á<äÁ|üuÛÑT‘·«+ |ü\T$<Ûë\T>± Á|üj·T‘êï\T
#˚düTÔ+~. uÛ≤s¡‘· sêC≤´+>∑y˚T eTq uÛÑ÷uÛ≤>±ìøÏ n‘·T´qï‘· ñqï‘· kÕúq+˝À ñ+~.
Hê´j·Teédüú
Á|üuÛÑT‘ê«\qT q&ç|æ+#·&ÜìøÏ sêC≤´+>∑+ eT÷&ÉT Á|ü<Ûëq n+>±\qT Á|ükÕ~+#·>± bÂs¡T\ Vü≤≈£îÿ\ |ü]s¡ø£åD≈£î
u≤<Ûä´‘· eVæ≤+#˚ eT÷&Ée Á|ü<Ûëq n+>∑y˚T ªªHê´j·Teédüúμμ. Hê´j·Teédüú á ÁøÏ+~ $<ÛäT\qT u≤<Ûä´‘·j·TT‘·+>±
ìs¡«]ÔdTü +Ô ~
1) $yê<ë\qT |ü]wüÿ]+#·&É+
2) bÂs¡T\ eT<Ûä´ ã+<Ûë\qT ã\|üs¡#·&É+, $yê<ë\T |ü]wüÿ]+#·&É+
3) Á|üuÛÑT‘ê«ìøÏ, bÂs¡T\≈£L eT<Ûä´ #Ó\πs–q $yê<ë\qT |ü]wüÿ]+#·&É+
4) Á|üuÛÑT‘·«+ #˚ùd #·{≤º\≈£î uÛ≤wü´+ #Ó|üŒ&É+, $e]+#·&É+
5) Á|üuÛÑT‘·« #·s¡´\˝Àì Hê´j·Tã<ä∆‘·qT ìsê∆]+#·&É+ yÓTT<ä˝…’q$.
uÛ≤s¡‘·<˚X¯ Hê´j·Tedüú˝À düTÁ|”+ø√s¡Tº n‘·T´qï‘· Hê´j·TkÕúq+. Ä ø√s¡Tº Ç∫Ãq rs¡TŒ\qT >ös¡$+#·&É+ eT]j·TT
nqTdü]+#˚ u≤<Ûä´‘· nìï sêÅcÕº\ ôV’≤ø√s¡Tº\T, õ˝≤¢ ø√s¡Tº\T eT]j·TT Ç‘·s¡ ~>∑Te ø√s¡Tº\ô|’ ñ+~. bÂs¡T\
ÁbÕ<Ûä$Tø£ Vü≤≈£îÿ\≈£î düTÁ|”+ø√s¡Tº ø£k˛º&çj·THé. Ä]ºø£˝Ÿ 32 Á|üø±s¡+ düTÁ|”+ø√s¡Tº, Ä]ºø£˝Ÿ 226 Á|üø±s¡+ ôV’≤ø√s¡Tº
bÂs¡T\ ÁbÕ<Ûä$Tø£ Vü≤≈£îÿ\qT ø±bÕ&É‘êsTT.
7.3.2. Á|üuÛÑT‘·«+ |ü≥¢ yê´bÕs¡+ u≤<Ûä´‘·

yê´bÕs¡ dü+dü\ú T ‘·eT Á|üuTÑÛ ‘ê«\≈£î u≤<Û´ä ‘· eVæ≤+#ê*‡ ñ+≥T+~. øπ +Á<ä sêh Á|üuTÑÛ ‘ê«\÷, kÕúìø£ dü+dü\ú ÷ #˚dqæ
#·{≤º\qT >ös¡$dü÷Ô, #·≥º|ü]~Û˝À|ü\ yê´bÕs¡ es¡Ôø£, yêDÏC≤´\qT #˚j·÷*‡ ñ+≥T+~. á ÁøÏ+~ u≤<Ûä´‘·\qT
yê´bÕs¡ dü+düú\T ‘·|üŒø£ ìs¡«]Ô+#ê*.
|üqTï #Ó*+¢ |ü⁄

yê´bÕs¡ dü+düú\T #Ó*¢+#˚ |üqTï\T Á|üuÛÑT‘ê«ìøÏ Á|ü<Ûëq Ä<ëj·T eqs¡T>± ñ+{≤sTT. yê´bÕs¡ j·T÷ì≥¢ yê]
neTàø±\T, ÇHé|ü⁄{Ÿ\T eT]j·TT Ä<ëj·÷\ô|’ Áø£eT+ ‘·|üŒ≈£î+&Ü |üqTï\T #Ó*¢+#ê*‡q u≤<Ûä´‘· ñ+~. Ä<ëj·T|ü⁄
|üqTï #·≥º+, 1961 yê´bÕs¡ dü+düú\ ù| e÷düºsY\T / j·T»e÷qT\T ‘·eT ñ<√´>∑T\≈£î J‘ê\T eT]j·TT y˚‘·Hê\T
#Ó*¢+#˚ eTT+<äT |üqTï $TqVü‰sTT+#ê\ì eT]j·TT Á|üuÛÑT‘ê«ìøÏ »eT#˚j·TeTì ìπs›•düTÔ+~.
dü«#·Ã+¤ <ä ø±s¡´Áø£e÷\T

‘·TbòÕqT\T, es¡<ä\T, uÛÑ÷ø£+bÕ\T eT]j·TT Ç‘·s¡ eTVü≤e÷à] |ü]dæ‘ú ·T\ e+{Ï Á|üø£‹ yÓ’|üØ‘ê´\ düeTj·T+˝À
düe÷C≤ìøÏ ùde #˚j·T&ÜìøÏ yê´bÕs¡ dü+düú\T dü«#·Ã¤+<ä+>± eTT+<äT≈£î sêyê\ì Á|üuÛÑT‘·«+ uÛ≤$k˛Ô+~, yê´bÕs¡
dü+düú\T Á|üuÛÑT‘·« @C…˙‡\T eT]j·TT kÕúìø£ Á|üuÛÑT‘ê«ìøÏ ‘·eT #˚‘·T\qT n+~düTÔHêïsTT ñ|üX¯eTq ø±s¡´ø£˝≤bÕ\T,
#Ó≥¢ ô|+|üø£+ eT]j·TT bÕ]X¯ó<Ûä´ |üqT\T yÓTT<ä˝…’q yê{ÏøÏ dü+ã+~Û+∫q j·T÷ì≥T¢, ø=ìïkÕs¡T¢ yê´bÕs¡ dü+düú\T
|üsêés¡D |ü]s¡øDå£ , $<ä´, dü+düÿ‹ eT]j·TT Áø°&\É T e+{Ï kÕe÷õø£ dü+øπ eå T ø±s¡´Áø£e÷\qT kÕŒq‡sY #˚jT· &É+˝À
#·Ts¡T≈£î>± bÕ˝§Z+{≤sTT. ñ<ë: C≤rj·T eT]j·TT n+‘·sê®rj·T Áø°&É\T eT]j·TT ÁøÏ¬ø{Ÿ, f…ìïdt eT]j·TT Vü‰ø°
yÓTT<ä˝…’q Ä≥\qT kÕŒq‡sY #˚j·T&É+,
206
Judiciary
Essential Judicial functions:
1) Deciding Disputes
2) Settling the relationship between private citizens.
3) Settling the issues between citizens and the Government
4) 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 the
respective States, District Courts , and other Subordinate Courts are subordinate to the Supreme
Court of India. The judgment given by the Supreme Court is final and all the lower courts should
honor 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 by
Central 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 tax
Taxes paid by business firms form a major source of revenue to the government. It is the responsibility
of 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 salaries
and wages to their employees and remit the collection to the Government.
Voluntary programmes
It 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 pandemic
situations etc., Business firms extend their helping hands to Government Agencies and Local
Government units in connection with relief operations, tree planting and sanitary works etc., Sometimes
business 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 information
Businessmen usually have necessary knowledge and experience. Hence the leaders of the business
present before the decision makers the facts and problems individually or through various Forums
and plead for any modifications of the decisions. Business leaders take every possible measure to get
the 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 the
political leaders.
207
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]ÁX¯eT n_Ûe~∆øÏ Vü‰ìø£s+¡ >± ñ+fÒ, ìs¡j
í ÷· \T e÷s¡Ã&ÜìøÏ kÕ<Û´ä eTj˚T´ Á|ü‹ #·s´¡ qT rdüT≈£î+{≤s¡T. sê»ø°jT·
Hêj·T≈£î\ ìs¡íj·÷\ô|’ yê´bÕs¡ dü+düú\T Á|üuÛÑT‘ê«ìøÏ n_ÛÁbÕj·T düe÷#êsêìï n+~kÕÔsTT.
Á|üuTÑÛ ‘·« ˇ|üŒ+<ë\T

Á|üuTÑÛ ‘·«+ dü+øπ eå T+ eT]j·TT n_Ûe~∆ ø√dü+ $$<Ûä ÁbÕC…≈î£ \º qT Á|üø{£ +Ï ∫, ‘·–q yê´bÕs¡ dü+dü\ú qT+&ç f…+&Ésq¢¡ T
ÄVü‰«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|üuTÑÛ ‘ê«ìøÏ ùde

yê´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\qT
nH˚«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·TT
kÕ<Ûës¡DyÓTqÆ ~. Á|üuTÑÛ ‘·«+ $$<Ûä ø£$T{°\T eT]j·TT dü\Vü‰ uÀs¡T\¶ qT @sêŒ≥T #˚dTü +Ô ~, M{ÏøÏ yê´bÕs¡ Hêj·T≈£î\T
≈£L&Ü <˚XÊìøÏ ÁbÕeTTK´‘· ñqï düeTdü´\ô|’ ùde #˚j·T&ÜìøÏ Hê$TH˚{Ÿ #˚j·Tã&Ü¶s¡T.
sê»ø°jT· 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\˝À
yê´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\˝À
yê´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|üŒ{Ïø,°
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´‘·\T

Á|üuTÑÛ ‘ê«ìøÏ yê´bÕs¡+ #˚ùd u≤<Û´ä ‘·\ ø£+fÒ yê´bÕs¡+ |ü≥¢ Á|üuTÑÛ ‘·« u≤<Û´ä ‘·\T #ê˝≤ eTTKýÓTqÆ $. XÊ+‹uÛÁÑ <ä‘\· qT
|ü]s¡øÏå+#·&ÜìøÏ, &ÉãT“ eT]j·TT Á¬ø&ç{ŸqT 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’q
uÛ≤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£+Á{À\sY>± Á|üuÛÑT‘·«+ yê´bÕs¡+ |ü≥¢ øÏ+~ u≤<Ûä´‘·\qT ìs¡«Væ≤düTÔ+~:
kÕú|+æ #·ã&çq #·{≤º\ neT\T

yê´bÕs¡+ |üì#˚ùd #·{≤º\T eT]j·TT ìã+<Ûqä \qT Á|üuTÑÛ ‘·«+ @sêŒ≥T #˚dTü +Ô ~ eT]j·TT neT\T #˚dTü +Ô ~. yê´bÕsêìøÏ
dü+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÷\T
HêD´‘·qT yÓTs¡T>∑T|üs#¡ &· ÜìøÏ b˛{°ì ìs¡«Væ≤+#·&ÜìøÏ düV‰ü j·T|ü&‘É êsTT. >∑T‘êÔ~|Û ‘ü ê´\T Á|üuTÑÛ ‘·«+ ìj·T+Á‹+∫,
#·{≤º\qT kÕú|æ+#·&Éy˚T ø±≈£î+&Ü yê{Ïì neT\T #˚j·T&É+ Á|üuÛÑT‘·« u≤<Ûä´‘·. yê´bÕs¡ dü+düú\T ˝Ò<ë e´≈£îÔ\T ˝Ò<ë
208
Government contracts
Government announces various projects for the welfare and development of the society, inviting
tenders from suitable business houses. Many qualified business houses bid for contracts of the
government . The business firm qualified in the bid has to carry out the projects according to the
required specifications and standards.
Service to the government

The leaders of the business offer services to the Government. It is common and usual for business
executives to accompany delegates to the foreign countries for exploring the prospects of trade and
industry in our country. The Government constitutes various Committees and Advisory Boards to
which the business leaders are also nominated to serve the Nation on issues of importance.
Participation in political activity

Participation of businessmen in active politics is giving room for discussion. Some arguments are in
favour of participation of business people in political activity and some are against participation of
business 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 BUSINESS

Responsibilities of government towards business are much more important than the obligations of the
business to the government. Government has the power and will to maintain law and order, to decide
and control money and credit. Government provides adequate resources like information, technology
and infrastructure, for development of society and efficient leadership. Democratically elected Indian
Government is clear about its role and responsibilities. Government being a promoter, regulator and
controller of business activities undertakes the following responsibilities towards business:
Enforcement of established laws

Government 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 the
game” are provided by the government, which make the business system function smoothly. The
rules of the game help maintain competition for the improvement of quality. If monopolies develop
the government regulate and control them, it is the responsibility of the Government not only to
establish laws, but to enforce them. In case of differences arising between business firms or individuals
or Government Agencies, the Government provides the system of adjudication through courts.
Maintenance of law and order

Government 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 credit

Government undertakes the responsibility of providing a system of money and credit. Furthe, it is the
responsibility of the Government to regulate money and credit and protect the value and integrity of
the Rupee, so as to guard against rapid fall in its value in terms of other currencies.
209
Á|üuÛÑT‘·« @C…˙‡\ eT<Ûä´ $uÛÒ<ë\T ‘·˝…‹Ô‘˚, Á|üuÛÑT‘·«+ Hê´j·TkÕúHê\ <ë«sê rs¡TŒ Ç#˚Ã eédüúqT n+~düTÔ+~.
XÊ+‹uÛÁÑ <ä‘\· ìs¡«Vü≤D

XÊ+‹uÛÑÁ<ä‘·\ |ü]s¡ø£åD eT]j·TT e´≈£îÔ\T eT]j·TT ÄdüTÔ\qT s¡øÏå+#˚ u≤<Ûä´‘· Á|üuÛÑT‘·«+ô|’ ñ+~. XÊ+‹j·TT‘·
yê‘êes¡D+ ˝Òq|ü⁄Œ&ÉT @ yê´bÕsêìï $»j·Te+‘·+>± ø=qkÕ–+#·˝Òs¡T.
&ÉãT“ eT]j·TT Á¬ø&ç{Ÿ

&ÉãT“ eT]j·TT Á¬ø&ç{Ÿ eédüúqT n+~+#˚ u≤<Ûä´‘·qT Á|üuÛÑT‘·«+ rdüT≈£î+≥T+~. Ç+ø±, &ÉãT“ eT]j·TT Á¬ø&ç{ŸqT
ìj·T+Á‹+#·&É+ eT]j·TT s¡÷bÕsTT $\Te eT]j·TT düeTÁ>∑‘·qT ø±bÕ&É≥+ Á|üuÛÑT‘·« u≤<Ûä´‘·, ‘·<ë«sê Ç‘·s¡
ø£¬s˙‡\ |üs¡+>± <ëì $\Te y˚>∑+>± |ü&çb˛≈£î+&Ü ø±bÕ&ÉT‘·T+~.
düeT‘·T\´ n_Ûe~∆ eT]j·TT ô|s¡T>∑T<ä\

düÁø£eTyÓTÆq n_Ûe~∆øÏ e÷s¡Z+ düT>∑eT+ #˚j·T&ÜìøÏ <˚X¯+˝Àì nìï ÁbÕ+‘ê\T düe÷q+>± n_Ûe~∆ #Ó+<ë*.
Áø£eTã<ä∆yÓTÆq e~∆ düeT‘·T\´ ÁbÕ+rj·T n_Ûe~∆ì |üP]Ô ñbÕ~Û eT]j·TT dæús¡yÓTÆq Ä]úø£ eédüúqT dü÷∫düTÔ+~.
ÁbÕ+rj·T n_Ûe~∆ düeT‘·T\´‘·qT kÕ~Û+#·&ÜìøÏ Á|üuÛÑT‘·«+ eqs¡T\T eT]j·TT kÕeTsêú´\qT ø£*– ñ+~.
eTÚ*ø£ dü<Tä bÕj·÷\T

yê´bÕsêìï düeTs¡úe+‘·+>± ìs¡«Væ≤+#·&ÜìøÏ eTÚ*ø£ dü<äTbÕj·÷\qT ø£*Œ+#·&É+ Á|üuÛÑT‘·« u≤<Ûä´‘·. eTÚ*ø£
dü<äTbÕj·÷\˝À s¡yêD≤, $<äT´‘Y, ô|ò’HêHé‡, bÂs¡ kÂø£sê´\T, –&É¶+>∑T\T eT]j·TT •ø£åD bı+~q dæã“+~ ñHêïs¡T.
düe÷#ês¡+
yê´bÕs¡ dü+düú\T düeTs¡∆e+‘·+>± ñ|üjÓ÷–+#˚ ô|<ä› yÓTT‘·Ô+˝À düe÷#êsêìï Á|ü#·T]+#·&É+ eT]j·TT n+~+#·&É+
Á|üuÛÑT‘·« @C…˙‡\ u≤<Ûä´‘·. düe÷#ês¡ ùde\˝À yêDÏ»´+ eT]j·TT |ü]ÁX¯eT\T, eékÕj·T+, ø±]àø£, $<ä´,
Äs√>∑´+, u≤´+øÏ+>¥, f…ø±ï\J eT]j·TT n{≤$Tø˘ mqØ® $uÛ≤>±\T ñHêïsTT.
∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\≈£î düVü‰j·T+

uÛ≤s¡‘·<˚X¯+ eékÕj·T Ä<Ûë]‘· <˚X¯+, Ä]úø£ eédüú≈£î ô|<ä› yÓTT‘·Ô+˝À Ä<ëj·÷ìï n+~k˛Ô+~. eékÕj·T+‘√
bÕ≥T, ∫qï ‘·s¡Vü‰ bÕ]ÁXÊ$Tø£ dü+düú\T eTq Ä]úø£ eédüú˝À Á|ü‘˚´ø£ bÕÁ‘· b˛wækÕÔsTT. |ü]e÷D+˝À ∫qï>± ñ
+&É≥+ e\q, á dü+düú\T kÕ<Ûës¡D+>± ô|ò’HêHé‡, e÷¬sÿ{Ï+>¥, |ü]C≤„q+ eT]j·TT eTÚ*ø£ dü<äTbÕj·÷\≈£î
dü+ã+~Û+∫q düeTdü´\qT m<äTs=ÿ+{≤sTT. n+<äTe\¢, nedüsy¡ TÓ qÆ dü<Tä bÕj·÷\qT @sêŒ≥T #˚jT· &É+ eT]j·TT ñ
bÕ~Û neø±XÊ\qT n+~+#·>∑\ ∫qï ‘·s¡Vü‰ |ü]ÁX¯eT\T m<ä>∑&ÜìøÏ Áb˛‘·‡Væ≤+#·&É+ Á|üuÛÑT‘·« u≤<Ûä´‘·.
f…ø±ï\J ã~©
Á|üuTÑÛ ‘·« j·÷»e÷q´+˝Àì |ü]XÀ<ÛHä ê dü+dü\ú Ä$wüÿs¡D\T eT]j·TT Ä$wüÿs¡D\T ‘·T~ |ò*ü ‘êìï Áô|y’ {˚ Ÿ |ü]ÁX¯eT\≈£î
≈£L&Ü ã~© #˚kÕÔsTT. Á|üuÛÑT‘·« Áb˛‘ê‡Vü≤+ yêDÏ»´ ñ‘·Œ‹Ôì yÓTs¡T>∑T|üs¡TdüTÔ+~.
ñ<ëVü≤s¡D\T: DRDO, ISRO eT]j·TT Ç‘·s¡ Á|üuTÑÛ ‘·« j·÷»e÷q´ dü+dü\ú T ‘·eT Ä$wüÿs¡D\T eT]j·TT Ä$wüÿs¡D\qT
Áô|’y˚{Ÿ |ü]ÁX¯eT≈£î ã~© #˚kÕÔsTT.
210
Balanced development and growth
All the regions of a country should be developed equally to pave the path for orderly growth. Orderly
growth indicates Balanced Regional Development creating full employment and stable economy.
The Government has the resource and capabilities to achieve balance of regional development.
Infrastructure
The responsibility of the Government is to provide infrastructural facilities for effective functioning of
business. Infrastructural facilities include transportation, power, finance, civil amenities, warehousing
and trained personnel.
Information
It is the responsibility of the Government Agencies to publish and provide large volume of information
which is used effectively by business houses. The information services include Departments of
Commerce and Industry, Agriculture, Labour, Education, Health, Banking, Technology And Atomic
Energy.
Assistance to small scale industries

India is an agro based country contributing large volume of income to the economy. In addition to
agriculture, small scale industrial establishments play a special role in our economy. Being small in
size, these establishments generally face problems relating to finance, marketing, know-how and
infrastructural facilities. Hence, it is the responsibility of the Government to arrange required facilities
and encourage small-scale industries to grow, which can provide employment opportunities.
Transfer of technology
Discoveries and inventions of the Government owned Research Organizations transfer the end result
to private industries also. Encouragement of the Government improves commercial production.
Examples: DRDO, ISRO and other Government owned Institutions transfer their discoveries and
innovations to the private industry.
Competition with private sector

Government agencies compete with the private sector to ensure improvement in the quality of
production adhering to the established policies.
Inspection and licenses

It is one of the most important responsibilities of the government to conduct inspection activities on
private business houses. The inspection departments like food and drugs, weights and measures
ensure quality and quantity of goods. The authorities take steps for prevention of sub-standard
goods. Sometimes Government also regulates the prices for the benefit of the consumers.
Protection from foreign competition

It is major responsibility of the Government to protect and encourage indigenous industries by providing
various subsidies and incentives because indigenous industries provide employment opportunities to
the youth and bring revenue to the exchequer of the Government.
211
Áô|y’ {˚ Ÿ s¡+>∑+‘√ b˛{°
kÕú|æ+#·ã&çq $<ÛëHê\≈£î nqT>∑TD+>± ñ‘·Œ‹Ô HêD´‘·qT yÓTs¡T>∑T|üs¡#·&ÜìøÏ Á|üuÛÑT‘·« dü+düú\T Áô|’y˚{Ÿ s¡+>∑+‘√
b˛{°|&ü ‘É êsTT.
‘·ìF eT]j·TT ˝…ô’ dqT‡\T

Áô|y’ {˚ Ÿ _õHÓdt Vü≤Ödt\ô|’ ‘·ìF ø±s¡´ø£˝≤bÕ\T ìs¡«Væ≤+#·&+É Á|üuTÑÛ ‘·«+ jÓTTø£ÿ n‹ eTTKýÓTqÆ u≤<Û´ä ‘·\˝À ˇø£{.Ï
ÄVü‰s¡+ eT]j·TT eT+<äT\T, ‘·÷ìø£\T eT]j·TT ø=\‘·\T e+{Ï ‘·ìF $uÛ≤>±\T edüTÔe⁄\ HêD´‘· eT]j·TT
|ü]e÷D≤ìï ìsê∆]kÕÔsTT. düuŸ-kÕº+&És¶Y edüTeÔ ⁄\ ìyês¡D≈£î n~Ûø±s¡T\T #·s´¡ \T rdüT≈£î+{≤s¡T. ø=ìïkÕs¡T¢ Á|üuTÑÛ ‘·«+
$ìjÓ÷>∑<ës¡T\ Á|üjÓ÷»Hê\ ø√dü+ <Ûäs¡\qT ≈£L&Ü ìj·T+Á‹düTÔ+~.
$<˚o b˛{° qT+&ç s¡ø£åD

<˚oj·T |ü]ÁX¯eT\T j·TTe‘·≈î£ ñbÕ~Û neø±XÊ\qT n+~kÕÔsTT eT]j·TT Á|üuTÑÛ ‘·« KC≤Hê≈£î Ä<ëj·÷ìï n+~kÕÔsTT
m+<äTø£+fÒ $$<Ûä dü_‡&û\T eT]j·TT Áb˛‘ê‡Vü≤ø±\qT n+~+#·&É+ <ë«sê <˚oj·T |ü]ÁX¯eT\qT s¡øÏå+#·&É+
eT]j·TT Áb˛‘·‡Væ≤+#·&É+ Á|üuÛÑT‘·« Á|ü<Ûëq u≤<Ûä´‘·.
düT+ø±\T eT]j·TT ø√{≤\T

$<˚o b˛{°\ qT+&ç >∑Vü≤ |ü]ÁX¯eT\qT s¡øÏå+#·&ÜìøÏ düT+ø±\T eT]j·TT ø√{≤\T ñ|üjÓ÷–+#·ã&É‘êsTT. $<˚o
ñ‘·Œ‘·TÔ\T eT]j·TT ùde\ô|’ n~Ûø£ yÓTT‘·Ô+˝À ø£düºyéT‡ eT]j·TT düT+ø±\T $~Û+#·ã&É‘êsTT.
KEY TERMS
Bureaucracy:
A system of Government in which most of the decisions are taken by state authorities rather than
by elected representatives.
Consumerism :
An organized movement of citizens and Government to strengthen the rights and powers of
buyers.
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 authority
of state and concentrated in the hands of one person.
Urbanisation :
people moving from rural areas towards the urban areas.
212
Tariffs and Quotas
Tariffs and quotas are used to protect home industries from foreign competition. High volume of
customs and duties are levied on foreign products and services.
REVIEW QUESTIONS
1. Which of the following constitute social environment ______
a. Standard of Living
b. Education level
c. Habits
d. All of the above.
2. Social responsibility of business

a. Introduced recently
b. Observed in good olden days
c. Present & good olden days
d. None of the above
3. Responsibilities of the Government is to ________

a. Enforce laws
b. Maintain law and order
c. Protect the Nation from external forces
4. Social responsibility of business

a. Towards Government
b. Towards Suppliers
c. Towards Consumers/customers
d. All of the above
5. Who is the custodian of fundamental rights _____

a. District court
b. High court
c. Supreme court
d. Subordinate Magistrate court
6. The constitution of India gifted how many number of political institutions __

a. 3
b. 5
c. 7
213
7. Business environment includes the following environments _____
a. Internal
b. External
c. Internal and External
d. All of the above
8. Which is not included in the External Environment of Business _______

a. Owners
b. Suppliers
c. Consumers
d. Government
9. What are the causes of Pollution __

a. Air pollution
b. Water pollution
c. Sound pollution
d. All of the above
10. What are the essential functions of Judiciary

a. Interpretation of laws
b. Diciding disputes
c. Protecting fundamental rights
d. All of the above
ANSWERS
.
1 2 3 4 5 6 7 8 9 10
D A D D C A D A D D
INTERACTIVE LINKS
Social Environment: https://www.dictionary.com>...
Concept of social responsibility of business: https://www.investopedia.com>
https://www.bbamantra.com
Political Environment: https://www.mbaskool.com>
214
Legal Environment
Learning Outcomes:

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
Chapter
8.2. Demonetisation
8
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
215
n<Ûë´j·T+ ne˝Àø£q+
ªª#·≥|º sü y¡ TÓ qÆ |üsêés¡D+μμ nH˚ n<Ûë´j·T+ yê´bÕsêìøÏ dü+ã+~Û+∫q $$<Ûä #·{≤º\ >∑T]+∫ $düÔ ‘·yTÓ qÆ
ne>±Vü≤qqT ÇdüTÔ+~. Ç~ j·T»e÷qT\T eT]j·TT ñ<√´>∑T\ düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ $$<Ûä
#·{≤º\ düe÷#êsêìï n+~düTÔ+~. $$<Ûä #·{≤º\ \øå±´\T yê´bÕs¡ yê‘êes¡D+˝À kÕeTs¡kÕ´ìï
HÓ\ø=\Œ&É+. <˚X+¯ ˝Àì #·{≤º\qT bÕ{Ï+#·&+É |Á ‹ü ˇø£ÿ] $~Û. #·{≤º\qT bÕ{Ï+#·øb£ ˛e&É+ #·≥|º sü y¡ TÓ qÆ
düeTdü´\≈£î <ë]rdüT+Ô ~.
#Ó˝≤eTDÏ˝À ñqï #·≥º|üs¡yÓTÆq f…+&ÉsY &ÉãT“qT ñ|üdü+Vü≤]+#·Tø√e&Üìï &çyÓ÷ìf…ÆCÒwüHé n+{≤s¡T.

Ç{°e* H√≥¢ s¡<äT› 2016 qe+ãsY 8 q Á|üø£{Ï+#·ã&ç+~. s¡÷. 500 eT]j·TT s¡÷. 1000 ø£¬s˙‡ H√≥¢qT
qe+ãsY 9, 2016 qT+&ç #Ó˝≤eTDÏ qT+&ç ñ|üdü+Vü≤]+#ês¡T . yê{Ïì u≤´+≈£î˝À¢ &çbÕõ{Ÿ #˚j·÷\ì
uÛ≤s¡‘· |Á uü TÑÛ ‘·«+ bÂs¡T\≈£î dü÷∫+∫+~. &ûy÷Ó ìf…CÆ wÒ Hü é jÓTTø£ÿ |Á <ü ëÛ q ñ<˚X› +¯ n$˙‹, q\¢<qäÛ + eT]j·TT
rÁeyê<ä ø±s¡´ø£˝≤bÕ\qT ìs¡÷à*+#·&+É .
õ. j·Tdt. {Ï Á|üy˚X¯ô|≥º&É+ nH˚~ uÛ≤s¡‘· Á|üuÛÑT‘·«+ $|ü¢yê‘·àø£ ìs¡íj·T+. õ. j·Tdt. {Ï nH˚~ ªªˇø£ <˚X¯+
- ˇø£ |üqTïμμ dü÷Á‘·+ô|’ kÕú|æ+#·ã&ç+~. bÕs¡<äs¡Ùø£yÓTÆq |üqTï nsTTq õmdt{Ï $$<Ûä <ë∫q eT]j·TT
|üs√ø£å |üqTï\qT s¡<äT› #˚dæ+~. Ç~ ]ø±s¡T¶\T eT]j·TT U≤‘ê\ kÕ<Ûës¡D ìs¡«Vü≤DqT düT\uÛÑ‘·s¡+
#˚düTÔ+~. õ. j·Tdt. {Ï nH˚~ yÓTT‘·Ô+ <˚X¯+˝À |üqTï eédüú˝À @ø£Ø‹‘√ >∑eT´+ Ä<Ûë]‘· |üqTï.
õ. j·Tdt. {Ï jÓTTø£ÿ Á|ü<Ûëq \ø£å´+ ø±´ùdÿ&ç+>¥ Á|üuÛ≤yêìï ìyê]+#·&É+, n+fÒ |üqTïô|’ |üqTï. |üqTï
m>∑y˚‘· eT]j·TT n$˙‹ì õ. j·Tdt. {Ï ìs√~ÛdüTÔ+~. H√≥¢ s¡<äT› eT]j·TT õmdt{Ï <˚X¯ Ä]úø£ eédüúqT
dæúØø£]+#˚ \ø£å´+‘√ ñHêïsTT.
216
CHAPTER OVERVIEW
The chapter “Legal Environment” gives an elaborate understanding of various

Acts pertaining to Business. It provides information of various Acts to
settle the issues of Employers and Employees. The objectives of various
enactments are to establish harmony in the Environment of Business. It is
the duty of every one to obey the laws of the land. Non compliance of
laws leads to legal problems.
Demonetisation is the withdrawal of legal tender money in circulation.

The recent demonetisation was announced on 8th November, 2016. The
denominations of Rs. 500 and Rs. 1000 were withdrawn from circulation
with effect from 9th November, 2016. Government of India instructed the
citizens to deposit them in the banks. The main intention of demonetisation
is to eliminate Corruption, Black money and Activities of Terrorism.
The introduction of GST is a revolutionary decision of the Government of

India. GST is founded on the principle of “One Nation & One Tax”. GST,
which is a transparent tax, repealed various hidden and indirect taxes. It
facilitates simple maintenance of records and accounts. GST is a destination
based 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 are
aimed at stabilizing the economy of the Nation.
217
8.1. #·≥º|üs¡yÓTÆq yê‘êes¡D+
#·≥|º sü y¡ TÓ qÆ yê‘êes¡D+ n+fÒ Á|üuTÑÛ ‘ê«\T #˚ùd $$<Ûä #·{≤º\÷, XÊdüHê\÷, Á|üuTÑÛ ‘ê«~Ûø±s¡T\T C≤Ø#˚ùd |ü]bÕ\Hê
ñ‘·Ôs¡T«\T, πø+Á<ä, sêh Á|üuÛÑT‘ê«\T @sêŒ≥T #˚dæq $$<Ûä #·≥ºã<ä∆ $#ês¡D≤ ø£$T{°\T ˝Ò<ë ø£$TwüqT¢ C≤Ø #˚dæq
ñ‘·Ôs¡T«\T>± uÛ≤$+#ê*.
Hê´j·TkÕúq rs¡TŒ\qT judge made laws nìeéVü≤]kÕÔsT¡ . uÛ≤s¡‘· dü]Vü≤<äT\› ˝À|ü\ yê´bÕs¡+ #˚ùd Á|ü‹ dü+kÕú
á <˚X¯#·{≤º\qT >ös¡$+∫ nqTdü]+#ê*. yê´bÕs¡ ìsê«Vü≤≈£î&ÉT neT\T˝À ñqï #·{≤º\ô|’ |üP]Ô ne>±Vü≤q
ô|+#·Tø=ì ìj·TeT ìã+<Ûäq\qT ‘·÷#·. ‘·|üŒ≈£î+&Ü neT\T #˚dæ Hê´j·T ã<ä›yÓTÆq yê´bÕs¡+ #˚j·÷*. #·{≤º\qT
nqTdü]+#·ø£b˛sTTHê, n‹Áø£$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. yê{Ï˝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‘·T˝Ô q’… dæ>s¬∑ ≥¢ ù|ø£≥ô¢ |’ ªª<Û÷ä 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, 1872

yê´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
218
8.1. LEGAL ENVIRONMENT
Legal environment includes various legislations passed by the Government and administrative orders
issued by the Government Authorities. Court judgments are considered judge made laws. Decisions
of various Commissions and Agencies at every level of the Government - Centre, State or Local
should be in accordance with the established laws. It is imperative for the business to obey the law of
the land. Manager of every enterprise has to perform his business transactions with complete
knowledge of rules and regulations framed by the Government.
Noncompliance of laws leads the business firm into legal problems. Legal aspects reflect the policy
framework of the Government, structure of the country. The laws relating to business in India can be
categorized 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 regulations
of 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, 1872

The bulk of the business transactions are based on contracts. The Indian Contract Act, 1872
prescribes the law relating to contracts in India. The Act is based on the principles of English
Common 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, 1872
consists of 266 sections. It is the principal law regulating contracts in India.
219
Indian Contract Act, 1872 nqTdü]+#˚ »s¡T>∑T‘êsTT. á #·≥+º Ç+^¢wßü #·≥+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£Hå é 2 (h) Á|üø±s¡+ n–ïyÓT+≥¢˙ï #·≥|º ]ü ~Û˝À neT\T #˚jT· ã&˚ ø±+Á{≤≈£î\º 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˚ ˝≤{ÏHé
e÷≥ 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´ ˇ|üŒ+<äy˚T ø±+Á{≤≈£îº. ˇ|üŒ+<ä+ ø£˙dü+ Ç<ä›s¡÷ ˝Ò<ë n+‘·ø£+fÒ m≈£îÿeeT+~ eT<Ûä´ ñ+&Ü*. #·≥ºã<ä∆yÓTÆq
<Û̊´j·T+‘√H˚ ˇ|üŒ+<ä+˝ÀøÏ Á|üy˚•+#ê*.
Indian Trade Union Act, 1926

19e X¯‘êã›+˝À bÕ]ÁXÊ$Tø£ $|ü¢e+ ‘·s¡Tyê‘· Á|ü|ü+#·yê´|üÔ+>± nH˚ø£ e÷s¡TŒ\T #√≥T #˚düT≈£îHêïsTT. <ëìøÏ
ø±s¡D+ ñ‘·Œ‹Ô Á|üÁøÏj·T˝À dü«j·T+ #·\q j·÷+Árø£s¡D, wæ|æŒ+>¥ eT]j·TT s¡yêD≤ kÂø£sê´\˝À e∫Ãq ô|qT
dü+#·\q e÷s¡TŒ\ì #Ó|ü ø√e#·TÃ. XÊg kÕ+πø‹ø£ s¡+>±\˝À e∫Ãq qMø£sD¡ \ |ò*ü ‘·+>± bÕ]ÁXÊ$Tø£ s¡+>∑+˝Àì
ÁXÊ$Tø£es¡Z+ j·÷»e÷qés¡Z+ eT<Ûä´ es¡Zb˛s¡T Á|üã*b˛sTT+~.
ÁXÊ$Tø£ es¡Z+ ôV≤#·TÃ y˚‘·Hê\T, |üì#˚ùd #√≥ yÓTs¡T¬>’q kÂø£sê´\T Ä•+#·>±, j·÷»e÷qés¡Z+ ‘·≈£îÿe y˚‘·Hê\T
Ç∫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$Tø£ Äs¡ZHÓ’CÒwüHéμμ q+<äT uÛ≤s¡rj·T
ÁXÊ$T≈£î\ ÁbÕ‹ì<Ûä´+>± Vü‰»s¡j·÷´s¡T.
Ä<ÛTä ìø£ ÁfÒ&é j·T÷ìj·THé |æ‘êeTVüQ&Óq’ l mHé.myéT. CÀwæ nôd+;¢˝À ÁfÒ&é j·T÷ìj·THé _\T¢ Á|üyX˚ ô¯ |≥º>± n|üŒ{Ï
Á|üuÛÑT‘·«+ ‹s¡düÿ]+∫q|üŒ{Ïø° 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 , 1947μμ

ªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμ neT\T˝ÀøÏ sêø£ |üPs¡«+ bÕ]ÁXÊ$Tø£ $yê<ë\ |ü]cÕÿsêìøÏ dü¬s’q
j·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 ˇø£ j·T+Á‘ê+>∑+ @sêŒ≥T #˚XÊs¡T. Bìe\¢ ]õwüsº T¡ ¶ ÁfÒ&é j·T÷ìj·THé ‘·eT düeTdü´\qT
ìy˚~+#˚ neø±X¯+ ø£*–+~. n+<äTe\¢ #·≥ãº <ä‘∆ · ˝Òì düyTÓ à\÷, eT]j·TT ˝≤øö≥T¢ ìs√~Û+#˚ neø±X¯+ @s¡Œ&ç+~.
220
The word ‘contract’ is derived from the Latin word ‘CONTRACTUM’ which means ‘ Drawn
Together’. Simply contract is an ‘ Agreement’ enforceable by law. Section 10 of the Indian Contract
Act, 1872 says all agreements are contracts if they are made by the free consent of parties competent
to contract for lawful consideration with a lawful objective. Simply contract is an agreement between
two or more persons. The parties are bound by such agreement. Thus all agreements are not
contracts, but all contracts are agreements.
Indian Trade Union Act, 1926

The Industrial revolution in 19th century brought changes in the world. A number of changes in
methods of production, automation, shipping and transportation resulted in simultaneous changes in
the social set-up. The scientific and technological innovations in the industrial sector made a vertical
division of two classes namely the working class and the managerial class. Naturally, there is a
conflict between wage earning class and enterprenuring class. The former claims higher wages and
better 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 worker
himself. 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 International
Labour Organization (ILO). Shri N.M.Joshi the father of modern trade unionism in India introduced
a Trade Union Bill in the Assembly. Though the Government was reluctant to pass the bill, the
Government was compelled to enact the Indian Trade Union Act, 1926, because of the pressure
from political parties.
Industrial Disputes Act, 1947

After the introduction of Industrial Disputes Act, 1947 an investigation was made for settlement of
the industrial disputes between employers and employers, employers and workmen or workmen and
workmen with the right of a representation by a Registered Trade Union for prevention of illegal
strikes 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 make
provisions for prevention and settlement of industrial disputes. Thus Act is administrated by the
Department of Ministry of Labour and Employment.
The Factories Act, 1948

The 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 April
1949. The Factories Act, 1948 extends to the whole of India. The Act applies to all industrial
establishments, which falls within the meaning of factory under section 2(m) of the Act. It is a legislation
enacted for social welfare. Its main objective is to protect and safeguard the interests of the workmen
221
ªªbÕ]ÁXÊ$Tø£ $yê<ë\ #·≥º+, 1947μμ kÕe÷õø£ dü+πøåeT+ ø√dü+ rdüT≈£î e∫Ãq #·≥º+. á #·≥º+ 1947 @Á|æ˝Ÿ
HÓ\˝À neT˝À¢øÏ e∫Ã+~.
The Factories Act, 1948
bòÕø£Øº \T eT]j·T÷ bÕ]ÁXÊ$Tø£ dü+dü\ú ˝À |üì#˚ùd ÁXÊ$T≈£î\qT ñ<˚•› +∫ ªªbòÕø£Øº \ #·≥+º 1948μμì s¡÷bı+~+#·+&É+
»]–+~. á #·{≤ºìï Ä>∑wüßº 28, 1948q #·≥ºdüuÛÑ ÄyÓ÷~+#·>±, 1949 @Á|æ˝Ÿ HÓ\ qT+∫ neT\T˝ÀøÏ e∫Ã+~.
á #·≥º+ uÛ≤s¡‘·<˚X¯+ yÓTT‘·Ô+ e]ÔdüTÔ+~. bòÕø£ºØ\ #·≥º|ü]~Û˝ÀøÏ e#˚Ã nìï bÕ]ÁXÊ$Tø£ dü+düú\≈£L á #·≥º+
e]ÔdüTÔ+~.
á #·≥º+ Á|ü<Ûëq<Û̊´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£ eTTKýÓTÆq <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>∑wßü º 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 düuÑTÛ ´\ dü+K´qT 2 qT+∫ ˇø£{ÏøÏ1
‘·–Z+#ês¡T. ø£qTø£ ˇπø 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£Hå ˝é Àì 7 Á|üø±s¡+ @<ÓH’ ê ø£+ô|˙ ndü‘´· düe÷#ês¡+ düeT]ŒùdÔ Ä ø£+ô|˙
qyÓ÷<äTqT s¡<äT› #˚ùd n~Ûø±s¡+ Á{ÏãT´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+~.
222
employed in the industrial establishments. The Factories Act, 1948 directs the employer to provide
facilities in every factory:
The Industrial (Development and Regulation ) Act, 1951

The Central Government is empowered to implement its industrial policies and to enact several
legislations. The Industrial (Development and Regulation ) Bill having been passed by both the houses
of Parliament received the assent of the President of INDIA on 31st October 1951. The Act came
into force on 8th May 1952 as “The Industrial (Development and Regulation ) Act, 1951”. The Act
has 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 known
as “ 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, 1999

The Central Government of India formulated an Act to encourage external payments and Trade
across the border, Foreign Exchange Management Act, 1999 has been consistent with the emerging
frame work of the World Trade Organization (WTO). It also helped the introduction of the Prevention
of Money Laundering Act, 2002, Which came into force with effect from 1st July 2005. Foreign
Exchange Management Act, is applicable to whole India. The Act is also applicable to all branches
and offices outside India owned or controlled by a person who is resident of India Under Section- 6
of the Income Tax Act, 1961.
The FEMA’s head office known as Enforcement Directorate (ED) is in New Delhi headed by a
Director. The Directorate has five more Zonal Offices in Delhi, Mumbai, Kolkata, Chennai and
Jalandhar. 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 Chief
Enforcement Officer.
Consumer Protection Act, 1986

India is the biggest democratic country having population of more than 130 crores. Most of the
population depends upon agriculture. Majority of consumers are very poor, helpless and unorganized.
223
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£
&Ós¬’ ø£sº Y Ä<Û«ä s¡´+˝À q&ÉTk˛Ô+~. á Á|ü<ëÛ q ø±sê´\j·÷ìï ENFORCEMENT DIRECTORATE (ED) n+{≤s¡T.
eTs¡˝≤ á &Ó’s¡ø£ºπs{ŸqT ◊<äT CÀqfi¯¢>± $uÛÑõ+#ês¡T. &Ûç©¢, eTT+u≤sTT, ø=\ø£‘êÔ, #ÓHÓÌï eT]j·TT »\+<Ûäs¡¢˝À á
CÀq˝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&˚~
eékÕj·T+. uÛ≤s¡‘<· X˚ +¯ ˝Àì n~Ûø£ dü+U≤´ø£ $ìjÓ÷>∑<ës¡T\T ù|<äyês¡T, ìdü‡Vü‰j·TT\÷, ndü+|òTü {Ï‘· esêZ\yês¡T.
uÛ≤s¡rj·T e÷¬sÿ{Ÿ neTàø£+<ës¡¢ e÷¬sÿ{Ÿ ø£qTø£ ìs¡øså£ êdüT´\÷, ne÷sTT≈£î\÷ nsTTq $ìjÓ÷>∑<ës¡T\qT düT\uÛ+Ñ >±
yÓ÷dü+ #˚j·Te#·TÃ. kÕeTq´ $ìjÓ÷>∑<ës¡T\≈£î e÷¬sÿ{Ÿ ñ‘·Œ‘·TÔ\ô|’ |ü]C≤„q+ ñ+&É<äT. ø£qTø£ yê]ì yÓ÷dü+
#˚jT· &É+ düT\uÛ+Ñ .
$ìjÓ÷>∑<ës¡T\ s¡øDå£ #·≥+º , 1986 bÕs¡y¢ TÓ +≥T ñuÛj

Ñ T· düu\ÑÛ ˝Àq÷ ÄyÓ÷<ä+ bı+~ 24 &çôd+ãsY 1986 ‘˚Bq
uÛ≤s¡‘· sêh|ü‹ düeTà‹ì bı+~+~. á #·≥+º @Á|æ˝Ÿ 15, 1987 ‘˚B qT+∫ neT\T˝ÀøÏ e∫Ã+~. nH˚ø£ 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£Då ≤\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¡yéT
2. ùdº{Ÿ ø£MTwüHé
3. C≤rj·T ø£MTwüHé
6) πø+Á<ä Á|üuÛÑT‘·«+ $ìjÓ÷>∑<ës¡¢ Vü≤≈£îÿ\ |ü]s¡ø£åD¬ø’ nH˚ø£ ìj·TeTìã+<Ûäq\qT m|üŒ{Ïø£|ü&ÉT #·{≤ºìøÏ
nqTã+<Ûä+>± s¡÷bı+~düTÔ+~.
7) n<˚$<Ûä+>± sêÅcÕº\T ‘·eT sêh Á|ü‘˚´ø£ |ü]dæú‘·T\ <äècÕº´ ìj·TeTìã+<Ûäq\qT bı+<äT|üs¡#·Tø√e#·TÃ.
DISTRICT FORUM :
$ìjÓ÷>∑<ës¡T\ s¡øDå£ #·≥+º , 1986˝Àì ôdø£Hå é 9 ˇø£ õ˝≤¢˝Àì ˇø£{° ˝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¡yéTμ
n+{≤s¡T.
224
Moreover Indian market is a seller’s market and it becomes very easy to deceive illiterate and innocent
consumers. Generally a common consumer usually does not possess either knowledge or awareness
of the product. Hence a common consumer needs protection against any deceptive methods and
exploitation, as he cannot approach the Court of Law.
Consumerism
Consumerism is an organized movement of citizens. Consumers in India started their journey to raise
their voice against the spurious goods since 1969 through housewives in Mumbai. The biggest
support in this regard came from the Central Government. The Indian Parliament passed a legislation
entitled “ THE CONSUMER PROTECTION ACT, 1986”.
The Consumer Protection Bill 1986, was passed by both the houses of Parliament and it received the
assent of the President Of India on 24th December 1986. It came on statute book as Consumer
Protection Act, 1986 (68 of 1986). The Act came into force on 15th April, 1987. After many
Amendments were introduced to the existing Act, the Amendment Act of 2002, came into force with
effect from March 15th , 2003.
Objectives
The Consumer Protection Bill seeks to provide better protection to the interest of consumers. To
achieve this object, the Act makes a provision for the establishment of consumer councils and other
authorities 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 were
experienced. 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 Agencies

To provide simple, speedy and inexpensive redressal of consumer grievances, the Consumer Protection
Act, 1986 furnishes a three tier grievance redressal mechanism. Section 9 of the Act provides a
three-tier consumer disputes redressal agencies as stated below:
District forum
Section 9 of the Consumer Protection Act, 1986 empowers the State Government to form one or
more consumer dispute redressal forums by a notification named as “ District Forum” in a district. It
is also known as “Consumer Disputes Redressal Forum’.
225
ùdº{Ÿ 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 eéVü≤]kÕÔsT¡ .
ùdº{Ÿ 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+>∑+>± ùdº{Ÿ ø£MTwüHé
|üì#˚düTÔ+~. á ø£MTwüHé n|”Œfi¯¢qT $#ê]düTÔ+~. eT]j·TT sêh+˝Àì nìï &çÅdæº≈£îº bò˛s¡yéT‡ô|’ |üs¡ý˚ø£åD n~Ûø±s¡
|ü]~Û ø£*– ñ+≥T+~.
H˚wqü ˝Ÿ ø£$÷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£$÷wüHéqT
ªªC≤rj·T $ìjÓ÷>∑<ës¡T\ |ü]cÕÿs¡ ø£$÷wüHéμμ nì ≈£L&Ü eéVü≤]kÕÔs¡T. ˇø£ ø√{Ï s¡÷bÕj·T\≈£î $T+∫q
$yê<ë\qT ªªH˚wüq˝Ÿ ø£$÷wüHéμμ |ü]wüÿ]düTÔ+~. $ìjÓ÷>∑<ës¡T\ s¡øå£D #·≥º+, 1986 Á|üø±s¡+ H˚wüq˝Ÿ ø£$÷wüHé
n‹ Á|ü<Ûëq ø£$÷wüHé nì ù|s=ÿqe#·TÃ. H˚wüq˝Ÿ ø£$÷wüHé n|”Œfi¢̄qT eT]j·TT <˚X¯+˝Àì $$<Ûä ªªùdº{Ÿ ø£$÷wüHé‡μμô|’
|üs¡ý˚ø£åD≤~Ûø±s¡+ ø£*– ñ+≥T+~.
8.2. &çe÷ìf…ÆCÒwüHé
<˚X+¯ ˝À #·˝≤eTD°˝À ñqï #·≥ãº <äy∆ TÓ qÆ ø£s¬ ˙‡H√≥¢qT Çø£ô|’ #Ó\T¢u≤≥T ø±eì ñ|üd+ü Vü≤]+#·&Üìï ªª&çe÷ìf…CÆ wÒ Hü μé μ
n+{≤s¡T. 2016 qe+ãsY 8e ‘˚Bq Á|üuTÑÛ ‘·«+ &çe÷ìf…CÆ wÒ Hü é Á|üÁøÏjT· qT Á|üø{£ +Ï #·&+É kÕVü≤k˛ù|‘·yTÓ qÆ eT]j·TT
$|üy¢ ê‘·àø£yTÓ qÆ #·s´¡ >± n_Ûe]í+#·e#·TÃ. uÛ≤s¡‘· Á|üuTÑÛ ‘ê«~ÛH‘˚ · Á|ü<ëÛ qeT+Á‹ >ös¡e˙j·T l qπs+Á<äy÷Ó &ç qe+ãsY
8, 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√≥¢qT
qe+ãsY 9e ‘˚B qT+∫ &çôd+ãsY 30, 2016 ‘˚B˝À|ü⁄ u≤´+≈£î˝À &çbÕõ{Ÿ #˚düTø√e#·Ãì ìπs›•+#ês¡T. Ä ‘˚B
‘·sT¡ yê‘· qT+∫ bÕ‘· s¡÷. 500, s¡÷. 1000 ø£s¬ ˙‡ H√≥T¢ ì\« ø£*– ñ+&É&+É H˚se¡ T˙ Á|üø{£ +Ï #ês¡T. nsTT‘˚ s¡÷.
100/`, s¡÷. 50/`, s¡÷. 20/`, s¡÷. 10/` eT]j·TT s¡÷. 5/` \ ø£s¬ ˙‡H√≥T¢ #·≥ãº <äy∆ TÓ qÆ Á<äe´+>± ø=qkÕ>∑T‘·THêïsTT.
&çe÷ìf…ÆCÒwüHé $<Ûëq ìs¡íj·T Á|üuÛ≤e+ á H√≥¢ô|’ ˝Ò<äT.
&çe÷ìf…ÆCÒwüHé n+fÒ #·˝≤eTD°˝À ñqï ø£¬s˙‡ì e÷]Ã, yê{Ï kÕúq+˝À n<˚ $\Te‘√ ñqï ø=‘·Ô ø£¬s˙‡ H√≥¢qT
Á|üyX˚ ô¯ |≥º&+É ˝Ò<ë n+‘·ø+£ fÒ m≈£îÿe ˝Ò<ë ‘·≈î£ ÿe $\Te ø£*–q ø=‘·Ô ø£s¬ ˙‡ H√≥¢qT eT]j·T÷ HêDÒ\qT $&ÉT<ä\
#˚j·T&ÉeTì #Ó|üø√e#·TÃ. &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·T eTq <˚XÊìøÏ ø=‘·Ô ø±<äT. yÓTT<ä{ÏkÕ] »qe] 12, 1946
‘˚Bq, ¬s+&ÉekÕ] »qe] 16, 1978 ‘˚Bq eT]j·TT eT÷&ÉekÕ] qe+ãsY 8, 2016 ‘˚Bq Á|üø£{Ï+#ês¡T. eTq
<˚X¯ Á|ü<Ûëì >ös¡e˙j·T l qπs+Á<ä yÓ÷&ç <˚X¯ bÂs¡T\qT ÄX¯Ãsê´ìøÏ >∑T]#˚dü÷Ô #·˝≤eTD°˝À ñqï n~Ûø£ $\Te
ø£*–q s¡÷. 500/`, s¡÷. 1000/`\ ø£¬s˙‡H√≥T¢ Çø£ô|’ #·≥ºã<ä∆ $\Te ø√˝ÀŒ‘·THêïj·T˙, H√≥¢ s¡<äT› ìs¡íj·T+
rdüTø√e&ÜìøÏ <ë]rdæq |ü]dæú‘·T\÷ ø±s¡D≤\qT $e]+#ês¡T. eTq<˚X¯+˝À eT÷&ÉekÕ] &çe÷ìf…ÆCÒwüHé 2016
dü+e‘·‡s¡+˝À yÓTT<ä\e«>±, Ç+‘·≈£îeTT+<˚ j·TTs√|æj·THé j·T÷ìj·THé &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·TqT ÁbÕs¡+_Û+∫
226
State commission
Consumer Protection Act, 1986 empowers the State Governments to establish “a commission” also
known as State Consumer Disputes Redressal Commission in the state by notification. It has an
original jurisdiction to decide the matters of consumer disputes above the value of Rupees Twenty
Lakhs and below the value of Rupees One Crore. It hears appeals and exercises supervisory
jurisdiction over all the District Forums in the state.
National commission
National Consumer Redressal Commission known as “ National Commission” is the highest redressal
agency in the country. National Commission has an original Jurisdiction to decide the matters relating
to the value above Rupees One Crore. National Commission is the Apex Commission under the
Consumer Protection Act, 1986. Hence National Commission entertains appeals and exercises
supervisory powers over all the State Commissions in the country.
8.2. DEMONETISATION
Demonetisation is an attempt made by the Government withdrawing legal tender status of currency
issued by it. It means withdrawing legal tender money from circulation. Further we can say
demonetisation 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. 500
and 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 tender
money and they were not affected by the policy decision of the government of India. The basic
condition of demonetisation is to change National currency. It means demonetisation is a change of
existing currency, where new units of currency are replaced. It may involve introduction of new
currency 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, demonetisation
took place on Saturday, the 12th January, 1946. It took place for the second time on Monday, the
16th January, 1978 and the third was on Tuesday, the 8th November, 2016. Our Hon’ble Prime
Minister Shri Narendra Modi to the surprise of citizens of India made this announcement explaining
the factors which drove his government to take such an important and crucial decision of withdrawing
the denominations of Rs. 500 and Rs. 1000 from circulation with effect from 9th November, 2016. In
the recent past, the European Union called for demonetisation of existing 12 countries. The European
Union introduced a unified currency “EURO” on 1st January, 2002.
8.2.1. REASONS FOR DEMONETISATION

It is said that the decision of demonetisation is to arrest black money in the economy, to eliminate
forged/fake currency which is in the hands of terror groups to sponsor terrorism in the country. There
are many reasons for introducing demonetisation in the year end of 2016 in consultation with Reserve
Bank of India. They are:
227
j·T÷s√|æj·THé j·T÷ìj·THé˝Àì 12 <˚XÊ\≈£î e]Ô+#˚ $<Ûä+>± @ø°ø£è‘· ø£¬s˙‡ ªªj·T÷s√μμ \qT 2002, »qe] 1e
‘˚Bq Á|üyX˚ ô¯ |{≤ºsT¡ .
8.2.1. &çe÷ìf…ÆCÒwüHé≈£î ø±s¡D≤\T

ø=~›eT+~ #˚‘·T˝À¢ ñqï q\¢<Ûäq+ eT]j·TT #·˝≤eTD°˝À ñqï qøÏ© H√≥¢qT ìs√~Û+#˚ Á|ü<Ûëq ø±s¡D≤\˝À
&çe÷ìf…ÆCÒwüHé Á|üÁøÏj·T ÁbÕs¡+_Û+#ês¡T. ]»s¡T«u≤´+≈£î‘√ dü+Á|ü~+∫q ‘·<äT|ü] <˚X¯ Ä]∆ø£eédüúqT
|ü]s¡øÏå+#·Tø√e&ÜìøÏ, <˚XÊìï ∫Hêï_Ûqï+ #˚j·T&ÜìøÏ Á|üj·T‹ïdüTÔqï rÁeyê<äT\ #˚‘·T˝À¢ ñqï qøÏ© Á<äe´+
s¡÷|ü⁄e÷ù| #·s¡´˝À¢ uÛ≤>∑+‘√bÕ≥T nH˚ø£ ø±s¡D≤\T &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·T≈£î <√Vü≤<ä|ü&Ü¶sTT.
q\¢<qäÛ +:
#·≥ãº <ä‘∆ ˝· ìÒ ø±s¡´ø£˝≤bÕ\ e\¢ dü+bÕ~+∫q~ >±˙, Ä<ëj·T|ü⁄ |üqTï m>∑yù˚ d ñ<˚X› +¯ ‘√ Á|üø{£ +Ï #·ì Ä<ëj·÷ìï
ªªq\¢<Ûäq+μμ nì n+{≤s¡T. n+fÒ Á|ü»\ <ä>∑Zs¡ ñqï Ä<ëj·T eqs¡T\ ˝…ø£ÿ Á|üuÛÑT‘·« Ä<ëj·T eT~+|ü⁄<ës¡T\≈£î
‘Ó*j·T<äì ns¡+ú . q\¢<qäÛ + ø£*– ñqïyês¡T <˚X¯ Ä]∆ø£ eédü≈ú î£ düe÷+‘·s+¡ >± Ä]∆øe£ édüqú T q&çù|yê] #·s´¡ \qT
ìs√~Û+#˚ eTTUÀ´<˚X› +¯ ‘√ q\¢<qäÛ + n]ø£≥&º +É Á|ü<ëÛ q <Û´˚ j·T+>± &çe÷ìf…CÆ wÒ Hü é Á|üÁøÏjT· qT uÛ≤$+#·e#·TÃ. kÕ<Ûës¡D+>±
q\¢<Ûäq+ q>∑<äT s¡÷|ü+˝À, ]j·T˝Ÿ mùdº≥T, ã+>±s¡T ÄuÛÑs¡D≤\T, $$<Ûä ÄdüTÔ\˝À ô|≥Tºã&ÉT\ s¡÷|ü+˝À ñ
+≥T+~. q\¢<qäÛ + <˚X¯ Ä]∆ø£ eédü≈ú î£ >=&É*¶ ô|≥Tº, n‘·´+‘· Á|üe÷<äøs£ y¡ TÓ qÆ ~. Äs√>∑´ø£sy¡ TÓ qÆ düe÷C≤ìï $∫Ã¤qï+
#˚j·T&Éy˚T ø±≈£î+&Ü, Á|üuÛÑT‘ê«ìøÏ #·≥ºã<ä∆+>± sêe\dæq Ä<ëj·T eqs¡T\qT Á|üuÛÑT‘˚«‘·s¡T\≈£î eT[fl+∫q+<äTq
ù|<äyê]øÏ dü+πøåeT|òü˝≤\T Á|üuÛÑT‘·«+ düÁø£eT+>± |üP]ÔkÕúsTT˝À n+~+#·˝Ò<äT.
qøÏ© ø£s¬ ˙‡:

rÁeyê<ä düeT÷Vü‰\T düèwæ+º ∫q qøÏ© ø£s¬ ˙‡ eTq<˚X+¯ ˝À ;uÛ‘Ñ ‡· + düèwæ+º #˚ nsê#·ø£ X¯≈î£ \Ô ≈£î Ç+<Ûqä + ne⁄‘√+~.
qøÏ© ø£¬s˙‡ #·≥ºã<ä∆ ø£¬s˙‡ì b˛* ñ+≥T+~. #·≥ºã<ä∆‘· ˝Òì qøÏ© ø£¬s˙‡ ñ|üjÓ÷–dü÷Ô uÛ≤s¡‘·<˚XÊìï ndæús¡|üs¡#˚
#·≥ºe´‹πsø£ nsê#·ø±\T düèwæº+#˚ rÁeyê<äT\ Ä≥ø£{Ïº+#˚ eTTK´ #·πs´ &çe÷ìf…ÆCÒwüHé. n~Ûø£ $\Te ø£*–q ø£¬s˙‡
H√≥¢ s¡<Tä › #·s´¡ qøÏ© H√≥¢ eTTsƒê\ô|’ rÁeÁ|üu≤Û e+ #·÷|ü⁄‘√+~. n~Ûø£ s¡øDå£ ø£*–q ø=‘·Ô ø£s¬ ˙‡ H√≥¢qT Á|üuTÑÛ ‘·«+
#·˝≤eTD°˝ÀøÏ rdüT≈£î e∫Ãq+<äTe\¢ rÁeyê<äesêZ\T ‘·eT #·≥eº ´‹πsø£ ø±s¡´ø£˝≤bÕ\T ø=qkÕ–+#·&+É nkÕ<Û´ä eTì
#Ó|Œü e#·TÃ.
n$˙‹:
n~Ûø±s¡+˝À ñqï ìC≤sTTr˝Òì e´≈£îÔ\T #˚ùd yÓ÷dü|üP]‘· #·s¡´\H˚ n$˙‹ n+{≤s¡T. Á|üC≤ Jeq+˝À ñqïyê]
n$˙‹ düe÷C≤_Ûeè~∆øÏ ô|<ä› n&É¶+øÏ. n+<äTu≤≥T˝À ñqï Á|üdüTÔ‘· ø£¬s˙‡ ñ|üdü+Vü≤s¡D≤ #·s¡´\ e\¢ n$˙‹ ‘·π>Z
neø±X¯\T yÓTs¡T>∑e⁄‘êsTT.
&çõ≥˝…C’ wÒ Hü é eT]j·TT bòÕs¡à˝…C’ wÒ Hü :é

n~Ûø£XÊ‘·+ Á|ü»\T ‘·eT eéVü‰sê\T q>∑<äT˝ÀH˚ #˚kÕÔs¡T. n+<äTe\¢ Ä eéVü‰sê\T Á|üuÛÑT‘·« n~Ûø±s¡T\ <äèwæºì
Äø£]¸+#·e⁄. &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·÷q+‘·s¡ #·s¡´>± q>∑<äT eéVü‰sê\T ã<äT\T ªÄHé˝…’Héμ eéVü‰sê\ yÓ’|ü⁄ Á|ü»\
<äèwæºì eT[¢+#·&ÜìøÏ Á|üuÛÑT‘·«+ #·s¡´\≈£î ñ|üÁø£$T+∫+~. &çõ≥˝Ÿ #Ó*¢+|ü⁄\qT Áb˛‘·‡Væ≤+#˚ #·s¡´˝À¢ uÛ≤>∑+>±
Phone Pe, Google Pay, Paytm yÓTT<ä˝q ’… #Ó*+¢ |ü⁄ |ü]ø£sê\qT, Rupay eT]j·TT Bhim App \qT Á|üuTÑÛ ‘·«+
Á|üy˚X¯ô|{Ïº u≤´+≈£î U≤‘ê\ìï+{Ï˙ Ä<ÛësY q+ãs¡T‘√ nqTdü+<Ûëq+ #˚dæ+~. Bìe\¢ e´≈£îÔ\÷, dü+düú\÷ #˚ùd
228
Black Money
Black 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, valuable
ornaments of gold and jewellery. The furniture studded with precious stones, silver and transacting
foul business with foreign agencies. Black money is a peril for a healthy society and the Nation does
not get its legitimate revenue, which leaves the country in great losses.
Fake Currency
Fake currency is also known as counterfeit currency or forged currency which is a threat to the
economy of any Nation. Fake currency in the hands of terror groups promotes terrorism in the
country. Fake currency is a replica of legal tender money. Demonetisation plays a vital role to hit the
fake currency rackets. The withdrawing of the denominations of the highest value currency units out
of economy has a serious impact on the fake currency rackets. The high security new currency units
made it very difficult for the fake currency rackets to carry out the unlawful activities.
Corruption
Dishonest or fraudulent conduct of people in power is called corruption. Corruption in public life is
a barrier for development of the society. Once the existing flow of cash is withdrawn, the act of
corruption automatically comes down.
Digitalisation and Formalisation of Economy

Most 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 through
online transactions. Various instruments are available to make digital payments like Phone pay, Google
pay, Paytm etc., Rupay cards and BHIM App are also available for payments. These online
transactions can never be hidden and become transparent. This paves path for improving tax collection
and helps to reduce tax evasion.
8.2.2. SCOPE OF DEMONETISATION

The entire currency units of Rs.500 and Rs.1000 denominations were withdrawn. This has arrested
the circulation of Rs. 15.44 lakh crores. Therefore, the crux of the problem is liquidity. The
demonetisation came into effect from 9th November, 2016. Government advised the citizens to
deposit 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 Hospitals
and Pharmacies to meet emergencies. Government also permitted the citizens to pay the cash to
government agencies for house tax, electricity bills and insurance premiums etc. However, the long
queues at the bank caused some inconvenience to people and day-to-day transactions were also
disturbed.
229
eéVü‰sê\˙ï ]õwüºsY nsTT, ˇø£ n~Ûø±]ø£ eédüú Ä eéVü‰sê\qT |üs¡ý˚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\Hê
kÕeTsêú´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]~Û

n~Û ø £ $\Te ø£ * –q ≈£ ¬ s ˙‡ j· T ÷ì≥T¢ s¡ ÷ . 500/`, s¡ ÷ . 1000/`\qT #· ˝ ≤eTD° qT+∫
ñ|üd+ü Vü≤]+#ês¡T. Bìe\¢ >∑‘+· ˝À n+<äTu≤≥T˝À ñqï 15.44 \ø£\å ø√≥¢ s¡÷bÕj·T\ #·˝≤eTD° ì*∫b˛sTT+~.
Ä]∆ø£ eéVü‰sê\T #˚j·T&ÜìøÏ Á|ü»\ e<ä› q>∑<äT ìwüŒ‹Ô ˝À|æ+#·&É+ ø°\ø±+X¯+>± e÷]+~. &çe÷ìf…ÆCÒwüHé
Á|üÁøÏj·T qe+ãsY 9, 2016 ‘˚B qT+∫ neT\T˝ÀøÏ e∫Ã+~. qe+ãsY 9e ‘˚B qT+∫ &çôd+ãsY 30, 2016
‘˚B˝À|ü⁄ ‘·eT e<ä› ñqï s¡÷. 500/`, s¡÷. 1000/` ø£¬s˙‡ H√≥¢qT u≤´+≈£î˝À¢ &çbÕõ{Ÿ #˚düTø√eTì Á|üuÛÑT‘·«+
Á|ü»\≈£î ~XÊìπs›X¯+ #˚dæ+~. Ä ‘·<äT|ü] ñ|üdü+Vü≤]+|üã&É¶ ø£¬s˙‡ H√≥T¢ s¡÷. 500/`, s¡÷. 1000/` ñ+&É&É+
#·≥ºã<ä∆+ ø±<äì, H˚s¡eTì ñ<√“~Û+∫+~. ‘=*<äX¯˝À ˇø£ e´øÏÔ ˇø£ yêsêìøÏ u≤´+≈£îqT+∫ ‹]– rdüT≈£îH˚
yÓTT‘·Ô+ô|’ s¡÷. 10,000/` |ü]$T‹ì $~Û+∫+~.
nsTT‘˚ n‘·édüs¡ |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&Ü
Á|üuTÑÛ ‘·«+ nqTeT‹ì eT+ps¡T #˚d+æ ~. nsTTq|üŒ{Ïø° u≤´+≈£î\ eTT+<äT Á|ü»\T u≤s¡T\T r] ≈£L´˝À ì\ã&ç ‘·eT
s√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
$T*j·Tq¢ ø=‘·Ô |üqTï<ës¡T\qT |üqTï\ eédüú˝ÀøÏ rdüTø=∫Ã+~.
 qøÏ© s¡÷. 500/`\T, s¡÷. 1000/`\T #·˝≤eTD° qT+∫ n<äèX¯éTj·÷´sTT.
 bÕ‘·H√≥T¢ s¡<äT› #˚dæ n~Ûø£uÛÑÁ<ä‘· ø£*–q ø=‘·Ô ø£¬s˙‡ H√≥¢qT Á|üy˚X¯ô|{Ïºq+<äTe\¢ rÁeyê<äT\ e<ä› ñqï
qøÏ© H√≥T¢ |üìøÏe÷*q$>± e÷sêsTT. <ëì‘√ rÁeyê<ä\ ø±s¡´ø£˝≤bÕ\≈£î ì<ÛTä \ düs|¡ süò ê 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>∑<Tä s¡V≤æ ‘· eéVü‰sê\ kÕ<Ûqä |üP]Ô>± kÕ<Û´ä + ø±ø£b˛e#·TÃ>±˙, m≈£îÿe düeT÷Vü‰\T ÄHé˝H’… é eéVü‰sê\T
ì‘·´ø£è‘·´+ #˚jT· &ÜìøÏ n\yê≥T|ü&Ü¶sT¡ .
8.2.4. &çe÷ìf…ÆCÒwüHé qcÕº\T

&çe÷ìf…ÆCÒwüHé e\¢ ø=ìï qcÕº\T ø£\e⁄.
 &ç e ÷ìf… Æ C Ò w ü H é Á|ü Á øÏ j · T qT Á|ü u Û Ñ T ‘· « + nø£ k Õà‘· T Ô > ± Á|ü ø £ { Ï + ∫ n~Û ø £ $\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˚ ´˝≤ #˚d+æ ~.
230
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. 1000
disappeared.
 Demonetisation of legal tender money arrested the funding of terror groups and reduced
inflation.
 Demonetisation promotes cashless and transparent transactions and facilitated digital and
accurate money flow.
 Achieving cashless transactions totally are not possible in India, demonetisation encouraged
larger number of groups to go for online transactions, as there are limitations for withdrawal
of cash.
8.2.4.DISADVANTAGES OF DEMONETISATION
The Government of India suddenly declared the process of demonetisation giving a short duration for
exchange of higher denominations of Rs. 500 and Rs. 1000. This made people scared and long
queues 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 their
bank accounts, and the limit was increased to Rs. 24,000 per week. This resulted in a lot of
inconvenience 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 heavy
burden to the government.
8.2.5. IMPACT OF DEMONETISATION

Demonetisation 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 transactions
in a short period. It is witnessed that a total of 15.28 lakh crore old currency of the denomination of
Rs. 500 and Rs. 1000 was returned to the banks as against a total volume of Rs. 15.44 Lakh
Crores. It denotes that a marginal difference of 0.16 which is almost equivalent to Rs. 16000 Crores
was kept aside and warned out. A notable decline was seen in activities of terrorism and anti social
activities during post Demonetisation period. The impact on various segments are explained below.
231
 &çe÷ìf…CÆ wÒ Hü é Á|üø≥
£ q yÓ\Te&çq düeTj·T+˝À ø=‘·Ô ø£s¬ ˙‡H√≥T¢ n+<äTu≤≥T˝À ˝Òe⁄. bÂs¡T\T ˇø=ÿø£ÿ]ø°
yêsêìøÏ 10y˚\ s¡÷bÕj·T\T e÷Á‘·y˚T u≤´+≈£î\ qT+∫ rdüT≈£îH˚ yÓdTü \Tu≤≥T Ç#êÃs¡T. Ä ‘·<äT|ü] á
|ü]$T‹ì yêsêìøÏ 24y˚\ s¡÷bÕj·T\≈£î ô|+#ês¡T. nsTTHê á |ü]D≤eT+ kÕe÷q´ Á|ü»\qT nkÂø£sê´ìøÏ
>∑T]#˚dæ+~.
 e÷¬sÿ{À¢ Á<äe´ì\«\ ø=s¡‘· e\¢ <˚X¯+ dü«\Œø±*ø£ Á<äy√´\“D≤ìï #·$ #·÷&Ée\dæ e∫Ã+~.
 kÕºø˘ e÷¬sÿ≥T¢ Bì Á|üuÛ≤yêìøÏ ˝Àqj·÷´sTT.
 bÕ‘·H√≥T¢ s¡<äT› #˚dæ, Ä kÕúq+˝À ø=‘·Ô j·T÷ì≥T¢ eTTÁ<äD Á|üuÛÑT‘·«+ô|’ Ä]∆ø£uÛ≤sêìï yÓ÷|æq≥¢sTT´+~.
8.2.5. &çe÷ìf…ÆCÒwüHé Á|üuÛ≤e+

&çe÷ìf…CÆ wÒ Hü é Á|üuTÑÛ ‘·«+ rdüT≈£îqï $|üy¢ ê‘·àø£yTÓ qÆ kÕVü≤k˛ù|‘·yTÓ qÆ #·s´¡ >± uÛ≤$+#·e#·TÃ. &çe÷ìf…CÆ wÒ Hü é Á|üÁøÏjT·
|üqTï edü÷fi¯fl ô|s¡T>∑T<ä\ô|’q, ô|]–q &çõ≥˝Ÿ eéVü‰sê\ô|’q dü«\Œø±\+˝À Á|üuÛ≤yêìï #·÷|æ+∫+~. 15.28
\ø£\å ø√≥¢ $\Te >∑\ bÕ‘· ø£s¬ ˙‡H√≥T¢ s¡÷. 500/`, s¡÷. 1000/` u≤´+≈£î\ e<ä≈› î£ ‹]– #˚sêsTT. n+fÒ 15.44
\ø£å\ ø√≥¢ $\Te >∑\ ø£¬s˙‡H√≥¢≈£î >±q÷ 15.28 \ø£å\ ø√≥¢ $\Te >∑\ bÕ‘· ø£¬s˙‡H√≥T¢ u≤´+≈£î e<ä›≈£î
#˚sêsTT. n+fÒ 0.16 dü«\Œ‘˚&Ü‘√ πøe\+ 16000 ø√≥¢ s¡÷bÕj·T\T e÷Á‘·y˚T u≤´+≈£î≈£î #˚s¡≈£î+&Ü b˛j·÷sTT.
rÁeyê<äT\T eT]j·TT nkÕ+|òTæ ø£ X¯≈î£ \Ô #·≥eº ´‹πsø£ ø±s¡´ø£˝≤bÕ\T &çe÷ìf…CÆ wÒ Hü é ø±\+˝À ‘·>T∑ eZ TTK+ |ü{≤ºsTT.
&çe÷ìf…ÆCÒwüHé Á|üuÛ≤e+ á ÁøÏ+~ $<Ûä+>± $e]+#·e#·TÃ.
Ä<ëj·T|ü⁄ |üqTï #Ó*+¢ |ü⁄<ës¡T\ dü+K´ ô|s¡T>∑T<ä\:

&ç e ÷ìf… Æ C Ò w ü H é Á|ü ø £ { Ï + ∫q 2016`17 dü + e‘· ‡ s¡ + ˝À ø=‘· Ô |ü q Tï #Ó * ¢ + |ü ⁄ <ës¡ T \T 91\ø£ å \ T
ñ+&É>±, Ä ‘·<Tä |ü] dü+e‘·‡s¡+ 2017`18˝À Ä<ëj·T|ü⁄ |üqTï ø=‘·Ô #Ó*+¢ |ü⁄<ës¡T\ dü+K´ 128\ø£\å ≈£î ô|s¡>&∑ +É
ˇø£ >∑TD≤‘·àø£ |ü]D≤eT+>± #Ó|üø√e#·TÃ.
Á|ü‘´· ø£|å qü Tï\ edü÷fi¯flô|’ Á|üu≤Û e+:

&çe÷ìf…CÆ wÒ Hü é Á|üu≤Û e+ Á|ü‘´· ø£|å qü Tï\ edü÷fi¯flô|’ ≈£L&Ü 2016`17 dü+e‘·‡sêìøÏ 2017`18 dü+e‘·‡sêìø° eT<Û´ä
>∑T]Ô+#·<ä>∑Z ô|s¡T>∑T<ä\qT |ü]o*+#·e#·TÃ.
232
Impact on expansion of the tax base
Demonetisation witnessed a positive rate on tax base as shown in the following Table released by the
Central Board of Direct Taxes (CBDT)
We can observe an increase of new tax payers of 91 lakhs in 2016-17 (i.e. the period of
Demonetisation) to 128 lakhs in 2017-18 i.e. the immediate period of post Demonetisation. As the
table itself explains that there is an increase of income tax returns filed from 17.30 percent in the
financial 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 financial
year 2017-18.
Impact on direct tax collections

A notable increase was distinctly seen on the direct collections of personal income-tax advance tax
from 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 to
17.60 percent in the year 2017-18. The growth of self assessment tax of personal income-tax was
also 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 voluntarily
came 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” on
31st January, 2017, as a post - demonetisation programme. The CBDT analyzed the data of cash
deposits in bank accounts through a data mining software. The CBDT analyzed the data of various
classes 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 circulation

Demonetisation encouraged people to make online transactions. Hence Demonetisation reduces the
informal economy, which leads to reduction of currency circulation.
233
Ä|üsπ wüHé ø°H¢ é eT˙:
&çe÷ìf…CÆ wÒ Hü é Á|üÁøÏjT· ‘·<Tä |ü] Ä<ëj·T|ü⁄ |üqTï XÊKyês¡T 2017 »qe] 31e ‘˚Bq Ä|üsπ wüHé ø°H¢ é eT˙ nH˚ ˇø£
ø±s¡´Áø£e÷ìï s¡÷bı+~+#ês¡T. Bì ø√dü+ πø+Á<ä Á|ü‘·´ø£å |üqTï\ uÀs¡T¶ yês¡T ˇø£ Á|ü‘˚´ø£yÓTÆq kÕ|òtºy˚sY n_Ûeè~∆
#˚kÕs¡T. ø=‘·>Ô ± u≤´+≈£î˝À q>∑<Tä &çbÕõ{Ÿ #˚ùd e´≈£î\Ô U≤‘ê\qT &˚{≤ yÓTìÆ +>¥ kÕ|òyºt s˚ Y <ë«sê $X‚w¢ +æ ∫, >∑‘+· ˝À
Ä<ëj·T|ü⁄ |üqTï ]≥sYï\T <ëK\T #˚j·Tìyê]ì ø=‘·Ô>± Ä<ëj·T|ü⁄ |üqTï eédüú˝ÀøÏ rdüT≈£îe#êÃs¡T.
ø£s¬ ˙‡ #·˝≤eTD°˝À ‘·>T∑ <Z \ä :

&çe÷ìf…ÆCÒwüHé Á|üÁøÏj·T˝À uÛ≤>∑+>± Á|ü»\qT ÄHé˝…’Hé eéVü‰sê\T #˚j·TeTì Á|üuÛÑT‘·«+ Áb˛‘·‡Væ≤+∫+~. Bì e\¢
q>∑<äT s¡÷|ü+˝À #Ó*¢+|ü⁄\T ‘·–Zq+<äTe\¢ ø£¬s˙‡ #·˝≤eTD° ‘·>∑TZeTTK+ |ü{Ïº+~.
qøÏ© ø£s¬ ˙‡ô|’ Á|üu≤Û e+:

qøÏ© ø£¬s˙‡ <˚XÊ_Ûeè~∆øÏ >=&É¶*ô|≥Tº. ø=‘·Ô ø£¬s˙‡ H√≥¢qT n~Ûø£ uÛÑÁ<ä‘·‘√ eTTÁ~+∫q+<äTe\¢ rÁeyê<äT\ #˚‘·T˝À¢
ñqï qøÏ© ø£¬s˙‡ s¡÷|ü⁄e÷dæb˛sTT+~.
n$˙‹ô|’ Á|üu≤Û e+:

n$˙‹øÏ, q\¢q>∑<Tä ≈£î <ä>sZ∑ ¡ dü+ã+<Û+ä . ÄHé˝H’… é eéVü‰sê\T Á|üyX˚ ô¯ |{Ïqº ø±s¡D+>± q>∑<Tä #·˝≤eTD° ‘·>T∑ eZ TTK+
|ü{Ïº, n$˙‹ì n]ø£≥º&ÜìøÏ &çe÷ìf…ÆCÒwüHé ñ|üjÓ÷>∑|ü&ç+~.
yê´bÕs¡+ô|’ Á|üu≤Û e+:

&çe÷ìf…CÆ wÒ Hü é yê´bÕs¡ dü+dü\ú ô|’ Á|ü‘´˚ øÏ+∫ ∫qï‘·sV¡ ‰ü eT]j·TT eT<Û´ä ‘·sV¡ ‰ü yê´bÕs¡ dü+dü\ú ô|’ Á|ü‹≈£L\ Á|üu≤Û e+
#·÷|æ+∫+~. m+<äTø£+fÒ Ä dü+dü\ú ‘√ yê´bÕs¡ eéVü‰sê\T #˚ùd e´≈£î\Ô T kÕ<Ûës¡D+>± q>∑<Tä s¡÷|ü+˝À #˚kÕÔsT¡ .
nsTT‘˚ #·˝≤eTD°˝À ñqï q>∑<äT ‘·–Zq+<äTe\¢ Ä Á|üuÛ≤e+ yê´bÕs¡ dü+düú\ô|’q, ñ<√´>∑ neø±XÊ\ô|’q ≈£L&Ü
Á|ü‹≈£L\ Á|üuÛ≤e+ #·÷|æ+∫+~.
eékÕj·T+ô|’ Á|üu≤Û e+:

uÛ≤s¡‘·<˚X¯ Ä]∆ø£eédüú eékÕj·T+ô|’ Ä<Ûës¡|ü&ç ñ+~. á s¡+>∑+ nH˚ø£ s¡÷bÕ\˝À ñ<√´>∑ ø£\Œq #˚düTÔ+~.
eékÕj·T Ä<Ûë]‘· |üìyês¡T q>∑<Tä s¡÷|ü+˝ÀH˚ y˚‘H· êìï Ä•kÕÔsT¡ . nsTT‘˚ &çe÷ìf…CÆ wÒ Hü é Á|üÁøÏjT· e\¢ ø£s¬ ˙‡H√≥¢
#·˝≤eTD° ‘·–Z *øÏ«&ç{°ô|’ Á|üuÛ≤e+ #·÷|æ+∫+~. eékÕj·T+ô|’ Ä<Ûës¡|ü&É¶ |ü]ÁX¯eT\ô|’ ≈£L&Ü *øÏ«&ç{° Á|üuÛ≤e+
>∑D˙j·T+>± |ü]D$T+∫, ñ<√´>∑ neø±XÊ\ô|’ ≈£L&Ü Á|üuÛ≤e+ #·÷|æ+~.
8.3. >∑÷&é‡ eT]j·TT düØ«dt {≤´ø˘‡ (GST)
uÛ≤s¡‘<· X˚ +¯ ˝À |üs√ø£|å qü Tï\ $<Ûëq+˝À >∑÷&é‡ eT]j·TT düØ«dt {≤ø˘‡ ˇø£ $|üy¢ ê‘·àø£yTÓ qÆ #·s´¡ >± n_Ûe]í+#·e#·TÃ.
>∑÷&é‡ eT]j·TT düØ«dt {≤ø˘‡, 2017qT 29 e÷sYÃ, 2017 ‘˚Bq bÕs¡¢yTÓ +≥T ÄyÓ÷~+#·>±, p˝…’ 1, 2017 ‘˚B
qT+∫ neT\T˝ÀøÏ e∫Ã+~. á #·≥+º Á|ü<ëÛ q ñ<˚X› +¯ düsT¡ ≈£î\T ˝Ò<ë ùde\T ˝Ò<ë s¬ +&ç+{Ïô|H’ ê |üqTï $~Û+#·&+É .
e÷qe $ìjÓ÷>±ìøÏ ñ|üjÓ÷–+#˚ Ä\ÿVü‰*ø˘ *ø£ÿsY á #·≥º |ü]~Û˝ÀøÏ sê<äT. yê{Ïô|’ |üqTï $~Û+#˚ n~Ûø±s¡+
sêÁcÕº\≈£î Çe«&É+ »]–+~. ø±˙ bÕ]ÁXÊ$Tø£ Ä\ÿVü‰˝Ÿ e÷Á‘·+ á #·≥º |ü]~Û˝Àπø edüTÔ+~.
234
Impact on digital transaction
Demonetisation gave a good push to digital transactions. Bank accounts are linked with Aadhaar and
Aadhaar linked Apps like Bhim App and other platforms like Rupay etc.
Impact on fake currency

The Demonetisation has successfully arrested the circulation of fake currency, which hinders the
development of the Nation.
Impact on corruption
The main objective of Demonetisation is to curb corruption and black money. These elements vanished
to a great extent because of formalization of economy.
Impact on business
Demonetisation has its adverse influence on business especially on small and medium units because of
lack of liquid cash. This has also affected the employment opportunities.
Impact on agriculture
India 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 and
Service 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 to
levy 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. The
CGST is charged to compensate the earlier taxes on the form of Central excise duty, Service
235
 õmd”º >∑e÷´ìï nqTdü]+∫ $~Û+#˚ |üqTï.
 uÛ≤s¡‘·<˚X¯+ yÓTT‘·Ô+ MT<ä ˇπø ‘·s¡Vü‰ |üqTï õmd”º #·≥º+˝ÀH˚ kÕ<Ûä´+.
 õmd”º |üqTï uÛ≤s¡+ yÓTT‘·Ô+ ∫e]>± $ìjÓ÷>∑<ës¡T˝Ò uÛÑ]+#ê*.
 πø+Á<ä+ eT]j·TT sêhÁ|üuÛÑT‘ê«\T õmd”º #·≥º+ ÁøÏ+<ä @ø£ø±\+˝À |üqTï\T $~Û+#˚ n~Ûø±s¡+,
edü÷\T #˚ùd n~Ûø±s¡+ ø£*– ñ+{≤sTT.
 õmd”º >∑e÷´ìï nqTdü]+∫ $~Û+#˚ |üqTï ø£qTø£ edü÷Ô‘·Œ‹Ô »]–q Á|ü<˚X¯+˝À ø±≈£î+&Ü
$ìjÓ÷>∑+ »]π> sêh+˝ÀH˚ |üqTï $~Û+|ü⁄ »s¡T>∑T‘·T+~.
 >∑‘·+˝À $$<Ûäs¡ø±\ |üs√ø£å|üqTï\T ñ+&˚$. yê≥ìï+{Ï˙ õmd”º ˇπø >=&ÉT>∑T øÏ+<äøÏ rdüT≈£î
e∫Ã+~.
8.3.1. õmd”º˝À uÛ≤>±\T

õmd”º |ü]~Û˝À á ÁøÏ+~ Hê\T>∑T uÛ≤>±\T ñ+{≤sTT.
dæõmd”º : πø+Á<ä düs¡T≈£î\T eT]j·TT ùde\ |üqTï πø+Á<ä Á|üuÛÑT‘·«+ $~ÛdTü Ô+~. õmd”º eT÷\+>± s¡<ä›sTTq
|üs√ø£|å qü Tï\T ôd+Á≥˝Ÿ m¬ø‡’ CŸ &É÷´{°, ùdyê|üqTï, ø£dyºü Té ‡ düT+ø±\T, düs#Y êÛ Ø® yÓTT<ä˝q’… |üqTï\ e\¢ e#˚Ã Ä<ëj·÷ìï
uÛÑØÔ #˚j·T&ÜìøÏ õmd”º ñ|üjÓ÷>∑|ü&ÉT‘·T+~.
md”®md”º : sêh düs¡T≈£î\T eT]j·TT ùde\ |üqTï ˇπø sêh+˝À edü÷Ô‘·Œ‹Ô eT]j·TT ùde\T $ìjÓ÷>∑eTsTT‘˚ Ä
|üqTïqT sêhÁ|üuÛÑT‘·«+ $~ÛdüTÔ+~. BìH˚ sêh õmd”º nì ø±˙, ˝Ò<ë md”®md”º nì ø±˙ eéVü≤]kÕÔs¡T.
j·T÷{Ïõmd”º : ˇπø j·T÷ìj·THé f…]≥Ø |ü]~Û ˝À|ü\ edüTÔ ùde\ ñ‘·Œ‹Ô eT]j·TT $ìjÓ÷>∑+ »]–‘˚ yê{Ïô|’
|üqTï $~Û+#˚ n~Ûø±s¡+ j·T÷ìj·THé f…]≥ØøÏ ñ+≥T+~. BìH˚ j·T÷ìj·THé f…]≥Ø õmd”º nì ø±˙, ˝Ò<ë
j·T÷{Ïõmd”º nì ø±˙ n+{≤s¡T.
◊õmd”º : n+‘·Ásêh edüTÔe⁄ ˝Ò<ë ùde\T ˝Ò<ë ¬s+&ç+{Ïô|’Hê |üqTï $~Û+∫ edü÷\T #˚ùd n~Ûø±s¡+ πø+Á<ëìøÏ
ñ+≥T+~. Bìì Ç+{ÏÁπ>f…&é õmd”º n+{≤s¡T. Ç+{ÏÁπ>f…&é õmd”º πø+Á<ä, sêh Á|üuÛÑT‘ê«\T õmd”º øöì‡˝Ÿ
ìπs•› +∫q ìwüŒ‹Ô˝À |ü+#·T≈£î+{≤sTT.
edüTeÔ ⁄\T ˝Ò<ë ùde\ m>∑TeT‹:

m>∑TeT‘·T\qT düTHêï πs≥T düs¡|òüsê\T>± |ü]>∑DÏkÕÔs¡T. düs¡T≈£î\T ˝Ò<ë ùde\T ˝Ò<ë ¬s+&ç+{Ï˙ m>∑TeT‹ #˚dæq
yê{Ïô|’ õmd”º #Ó*+¢ #·e\dæq nedüs+¡ ˝Ò<Tä . nsTT‘˚ m>∑TeT‹<ës¡T\T ÇHé|⁄ü {Ÿ {≤ø˘‡ Á¬ø&ç{Ÿ qT ø¬ s¢ TTyéT #˚dTü ø√e#·TÃ.
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|òø˘º 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 düèwæ+º #·&+É .
236
tax, Duties of custom, Surcharges, Cess etc. The CGST is charged along with SGST or
UTGST as per the dual GST arrangement.
SGST: GST is levied by the States on Intra-State supply of goods or services or both is called
theState GST or SGST. State under GST Act, 2017 includes a Union Territory with a
Legislature.
UTGST:On every supply of goods or services or both within the Union Territory GST levied is
called Union Territory GST or UTGST.
IGST: On every Inter-State supply of goods or services or both, integrated GST (IGST) will be
levied and collected by Centre. IGST is shared between the Centre and the State in the
manner 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.
237
 ªªˇπø <˚X¯+ ` ˇπø |üqTïμμ ìHê<ä+ kÕ<Ûäq.
 Ä<äs¡ÙÁbÕj·TyÓTÆq ÇHé|ü⁄{Ÿ {≤ø˘‡ Á¬ø&ç{Ÿ qT @sêŒ≥T #˚j·T&É+.
8.3.3.õmd”º $•wüº \ø£åD≤\T

 õmd”º düs¡T≈£î\T ˝Ò<ë ùde\ düs¡|òüsê MT<˚ $~ÛkÕÔs¡T ø±˙ edü÷Ô‘·Œ‹Ô ˝Ò<ë ùde\ô|’ e÷Á‘·+ ø±<äT.
 õmd”º >∑e÷´ìøÏ dü+ã+~Û+∫q |üqTï.
 πø+Á<ä eT]j·TT sêh Á|üuÛÑT‘ê«\≈£î @ø£ø±\+˝À |üqTï y˚ùd n~Ûø±s¡+ ø£\<äT.
 $$<Ûä |üs√ø£å |üqTï\ #·{≤º\qT ‘=\–+∫, ˇπø #·≥º+>± õmd”º neT\T˝ÀøÏ e∫Ã+~.
 e÷qe $ìjÓ÷>∑ ì$T‘·Ô+ ñ|üjÓ÷–+#˚ Ä\ÿVü‰˝Ÿ $TqVü‰ $T–*q düs¡T≈£î\T eT]j·TT ùde\ô|’ õmd”º
nq«sTTkÕÔsT¡ .
 ô|Á{À*j·T+ ñ‘·Œ‘·TÔ\ô|’ õmd”º $~Û+#·T≥˝Ò<äT.
 πø+Á<ä, sêh Á|üuÛÑT‘ê«\ Á|ü‹ì<ÛäT\‘√ Á|üuÛÑT‘·«+ õmd”º øöì‡˝Ÿ ìsêàD+ #˚dæ+~. πø+Á<ä, sêh Á|üuÛÑT‘ê«\≈£î
dü+ã+~Û+∫ eT]j·TT sêÁcÕºìø°, sêÁcÕº\≈£L dü+ã+~Û+∫ nH˚ø£ n+XÊ\ô|’ õmd”º øöì‡˝Ÿ düeT‘·T\´+
bÕ{ÏdTü +Ô ~.
8.3.4.õmd”º e\¢ Á|üjÓ÷»Hê\T

 õmd”º |üqTïô|’ |üqTï #Ó*¢+#˚ $<ÛëHêìï ‘=\–+∫+~. BìH˚ |üqTïô|’ øπ ùdÿ&ç+>¥ mô|òø˘º n+{≤s¡T.
 õmd”º $<Ûëq+ kÕ<Ûës¡D+ eT]j·TT düT\uÛÑ‘·s¡+.
 düe÷»+˝À ñ+&˚ ndü+|òüT{Ï‘· esêZ\qT Áø£eTãB∆ø£]+∫+~.
 <˚X¯+ yÓTT‘·Ô+ MT<ä ˇπø |üqTïπs≥T $<Ûëq+ neT\T˝ÀøÏ e∫Ã+~.
 Á|üuÛÑT‘ê«ìøÏ düeTs¡úe+‘·+>± sêã&ç edüTÔ+~.
 Ä<äs¡Ùe+‘·yÓTÆq ÇHé|ü⁄{Ÿ {≤ø˘‡ Á¬ø&ç{Ÿ n+XÊ\T Ç$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+>±
uÛ]Ñ +#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|Á{À*j·T+ ñ‘·Œ‘·T\Ô ô|’ õmd”º $~Û+#·øb£ ˛e&É+ nìï düsT¡ ≈£î\ô|’ |üqTï @ø°øs£ D¡ ìHê<ä+ M–q≥¢sTT´+~.
8.3.6. õmd”º Á|uü ≤Û e+

uÛ≤s¡‘· Ä]úø£ eédüôú |’ Á|üu≤Û e+:
ªªˇπø <˚X+¯ ` ˇπø |üqTïμμ ìHê<ä+‘√ uÛ≤s¡‘· Á|üuTÑÛ ‘·«+ |üs√ø£|å qü Tï\ eédüqú T Á|üø±å fi¯q #˚d÷ü Ô $|üy¢ ê‘·àø£yTÓ qÆ #·s´¡ ˝À
uÛ≤>∑+>± õmd”ºì neT\T|üs¡∫+~.
238
 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 Economy
The Government of India took a revolutionary step to reform the indirect tax structure in India, with
the slogan “One Nation-One Tax”.
The idea behind introducing GST in the entire country is to benefit every citizen as well as manufacturers
and 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 is
paying, while purchasing goods and the calculation of tax is also very easy.
 Small and Medium Enterprises (SME) are benefited under composition scheme with the
introduction 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 of
goods or services.
 GST is implemented in more than 160 countries all over the world, where there is only “One
Nation, One Tax” system. GST is a transparent tax system and reduces different Indirect
taxes.
 The Government of India introduced GST in our country, which simplifies the maintenance of
records and facilitates ease of doing under composition scheme for certain categories filing of
returns became very easy.
 As there are no hidden taxes, a customer has every information about the tax system and
activity of business becomes easy.
239
õmd”º Á|üy˚X¯ô|≥º&É+ <ë«sê <˚X¯+˝Àì Á|ü‹ bÂs¡T&É÷ n<˚ $<Ûä+>± es¡Ô≈£î\T eT]j·TT ñ‘·Œ‹Ô <ës¡T\T Á|üjÓ÷»q+
bı+<ë\H˚ dü<äT<˚›XÊìï á #·≥º+ Á|ü‹_+_k˛Ô+~. Bì e\¢ |üqTï ˝…øÏÿ+|ü⁄ #ê˝≤ düT\uÛÑ‘·s¡eTsTT´+~.
 õmd”º #ê˝≤ kÕ<Ûës¡DyÓTÆq eT]j·TT düT\TyÓ’q |üqTï $<ÛëHêìï neT\T˝ÀøÏ ‘Ó∫Ã+~. ø=qT>√\T<ës¡T
‘êqT ø=qT>√\T #˚ùd edüTÔe⁄\ô|’ #Ó*¢+#˚ |üqTï yÓTT‘·Ô+ m+‘√ düT\Te⁄>± Á>∑Væ≤düTÔHêï&ÉT. n<˚ $<Ûä+>±
düT\Te⁄>± |üqTï ˝…øÏÿ+|ü⁄ #˚düTÔHêï&ÉT.
 ∫qï‘·s¡Vü‰ eT]j·TT eT<Ûä´‘·s¡Vü‰ dü+düú\T õmd”º Á|üy˚X¯ô|≥º&É+‘√ ø±+b˛õwüHé d”ÿyéT øÏ+<ä Á|üjÓ÷»+
bı+<ësTT. n+‘˚ø±≈£î+&Ü Á|üuÛÑT‘ê«ìøÏ sêã&ç ≈£L&Ü u≤>± ô|]–+~. ∫qï eT]j·TT eT<Ûä´ ‘·s¡Vü‰
dü+düú\T yê] kÕ+e‘·‡]ø£ ≥s√ïesYô|’ |üqTï #Ó*¢+#˚ yÓdüT\Tu≤≥T õmd”º ø£*Œ+∫+~.
 ø£düºyéT‡ |üqTï\T >∑D˙j·T+>± ‘·>∑Z&É+‘√ düs¡T≈£î\T eT]j·TT ùde\ m>∑TeT‘·T\T >∑D˙j·T+>± ô|]>±sTT.
 ªªˇπø <˚X¯+ ` ˇπø |üqTïμμ ìHê<ä+‘√ Á|ü|ü+#·yê´|üÔ+>± õmd”º 160 <˚XÊ\˝À neT\T˝ÀøÏ e∫Ã+~. á
|ü<ä∆‹ bÕs¡<äs¡Ùø£‘·qT dü+‘·]+#·Tø√e&Éy˚T ø±≈£î+&Ü $$<Ûä |üqTï\ #Ó*¢+|ü⁄ ‘·–Z+|ü⁄≈£î <√Vü≤<ä|ü&ç+~.
 uÛ≤s¡‘· Á|üuÛÑT‘·«+ <˚X¯+˝À õmd”º neT\T#˚dæq+<äT e\¢ yê´bÕs¡dü+düú\T U≤‘ê\T eT]j·TT ]ø±s¡T¶\
@sêŒ≥T düT\uÛÑ‘·s¡+ nsTT´+~. ø±+b˛õwüHé d”ÿeTT˝À $$<Ûä esêZ\ yês¡T |üqTï πs≥T\qT <ëK\T
#˚j·T&É+ eT]+‘· düT\uÛÑ+ nsTT´+~.
 |üqTï\ eédüú bÕs¡<äs¡Ùø£+>± ñqï+<äTe\¢ ø£+{ÏøÏ ø£qã&Éì >∑T|üÔyÓTÆq |üqTï˝ÒM ˝Òq+<äTq yê´bÕs¡
ø±s¡´ø£˝≤bÕ\T düÁø£eT+>±, düT\uÛÑ+>± ø=qkÕ>∑T‘·THêïsTT.
 ªªy˚TøÏHé Ç+&çj÷· μμ ìHê<ä+ ñ‘ê‡Vü≤+>± õmd”º neT\T≈£î düV≤ü ø£]+#·&+É e\¢ <˚oj·T e÷¬sÿ{À¢q÷, $<˚o
e÷¬sÿ{À¢q÷ uÛ≤s¡rj·T ñ‘·Œ‘·TÔ\T b˛{°øÏ ì\ã&É>∑\T>∑T‘·THêïsTT. Bì e\¢ eTq <˚X¯ $<˚o e÷s¡ø£
ì\«\T eè~∆ #Ó+<äT‘·THêïsTT.
yê´bÕs¡+:
õmd”º Á|üuÛ≤e+ yê´bÕs¡ s¡+>±\ô|’ ≈£L&Ü düeTT∫‘·+>± ñ+~. õmd”º |üqTïô|’ |üqTï $~Û+#˚ bÕ‘· |ü<ä∆‹ì
‘=\–+∫q+<äTe\¢ ñ‘·Œ‹Ô Ks¡TÃ\T ~–e∫Ã $ìjÓ÷>∑<ës¡T\≈£î ‘·≈£îÿe <Ûäs¡\πø düs¡T≈£î\T eT]j·TT ùde\T
n+<äTu≤≥T˝ÀøÏ e#êÃsTT. ˇπø |üqTï $<Ûëq+ e\¢ düsT¡ ≈£î\T eT]j·TT ùde\ <Ûsä \¡ T ‘·–Z yê{Ï &çe÷+&é ô|s¡>&∑ +É ‘√
ñ‘·Œ‹Ô kÕeTsêú´ìï ≈£L&Ü ô|+#·Tø√e\dæq nqT≈£L\ |ü]dæ‘ú T· \qT yê´bÕs¡ dü+dü\ú ≈£î õmd”º ø£*Œ+∫+~. ÁbÕ<Û$ä Tø£+>±
õmd”º Á|üyX˚ ô¯ |{Ïqº ‘=*s√E˝À¢ bÕ‘·|<ü ‹∆ä qT+∫ ø=‘·Ô |ü<‘∆ä q’Ó õmd”˝º ÀøÏ e÷s¡&ÜìøÏ ø=+‘· nkÂø£s´¡ + uÛ≤$+∫q|üŒ{Ïø°
kÕ<Ûës¡D eT]j·TT düT\uÛÑ‘·s¡yÓTÆq õmd”ºøÏ Á|ü»\+<äs¡÷ n\yê≥T |ü&Ü¶s¡T. õmd”º neT\T˝ÀøÏ sêe&ÜìøÏ |üPs¡«+
nH˚ø£ |üs√ø£å|üqTï\ #·{≤º\T neT\T˝À ñqï+<äTe\¢ $$<Ûä n~Ûø±s¡esêZ\≈£î yê´bÕs¡düTÔ\T »yêãT<ëØ>± ñ
+&Ü*‡e#˚Ã~. ø±˙ á eédü˝ú À nìï |üs√ø£å |üqTï\÷ dü+j·TTø£+Ô >± ˇπø >=&ÉT>∑T øÏ+<ä≈î£ sêe&É+‘√ yê´bÕs¡dTü \Ô T
‘·eT yê´bÕs¡ eéVü‰sê\ô|’ <äèwæº πø+ÁBø£]+#·>∑\T>∑T‘·THêïs¡T.
240
 The mission “Make in India” gets a booster from the GST and Indian goods can compete
successfully not only in domestic market, but also in foreign trade. This ultimately increases
our Foreign Exchange Reserves.
 Impact on Business
The impact of GST is on business too. GST facilitates removing tax on tax i.e. cascading effect of
taxes. Manufacturing costs come down, because of the reduction of taxes which ultimately results in
lowering prices. Goods and services become available sufficiently to the consumers because of Single
tax system. There will be an increase in demand of goods and services and the production can also
be increased in this system.
Though initially the businessmen faced some difficulties in shifting to the new system, now they are all
accustomed to the present GST. Before the introduction of GST, business people were answerable
to various authorities because of the multiple tax system and now as there is only one tax system, it
is easy for the businessmen to do their transactions.
 Impact on consumers
Majority of population in India is dependent on agriculture or agro based industries. Most of the
people belong to middle class or working class. The common man gets goods at lower prices and
can understand the percentage of tax paid because of simple and one tax system of GST.
 Impact on real estate

Real estate industry is one of the most vital industries of India. The influence of this industry on the
economy is very high. It provides employment to many sections of people. It is very important for
wealth generation. It contributes 6 to 8 percent to the GDP of the Nation. It is the major industry
after 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 is
only one and simple tax system. There are no hidden or other indirect taxes. The developers get
input tax credit (ITC) under GST, which was not properly administered previously. Buyers have
clarity over the simple tax system of GST and they are also benefited because of the reduction in
prices of property.
Naturally, people of the Nation aspire to own a house and the Real Estate industry fulfills their
dreams. 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 employment
and wealth generation.
8.4. POLITICAL STABILITY
India is the biggest democracy in the world, with diversified traditions, cultures, languages and climatic
conditions. In spite of all the diversities India stands united. The real strength of India lies in its
diversity which leads to the strong spirit of National Integration. The aspirations and sentiments of the
people of the country are reflected in the political scenario.
241
$ìjÓ÷>∑<ës¡T\T:
uÛ≤s¡‘· Á|üC≤˙ø£+ m≈£îÿeeT+~ eékÕj·TeTT ˝Ò<ë eékÕj·÷<Ûë]‘· |ü]ÁX¯eT\ô|’ Ä<Ûës¡|ü&É¶ e´≈£îÔ\T. M]˝À
eT<Ûä´‘·s¡>∑‹ ˝Ò<ë ÁXÊ$Tø£ esêZìøÏ #Ó+~qyêπs m≈£îÿe. ø£qTø£ kÕe÷q´ »qT\≈£î düs¡T≈£î\T ‘·≈£îÿe <Ûäs¡\πø
n+<äTu≤≥T˝ÀøÏ sêe&É+, yê{Ïô|’ #Ó*¢+#˚ |üqTï\ XÊ‘·+ düT\uÛÑ+>± ˝…øÏÿ+#·Tø√ >∑\>∑&É+ õmd”º Ç∫Ãq ˇø£ es¡+.
]j·T˝Ÿ mùd{º Ÿ:
uÛ≤s¡‘· Ä]úø£eédüú˝À ]j·T˝Ÿ mùdº{Ÿ s¡+>∑+ #ê˝≤ ø°\ø£yÓTÆq~. Bì Á|üuÛ≤e+ eTq Ä]úø£eédüúô|’ #ê˝≤ m≈£îÿe.
m+<äTe\¢q+fÒ <˚X¯+˝Àì $$<Ûä esêZ\ Á|ü»\≈£î ñ<√´>∑ø£\Œq #˚k˛Ô+~. dü+|ü<ä düèwæº+#·&ÜìøÏ á s¡+>∑+ ø£èwæ
eTs¡Te˝Òì~. <˚X¯ dü÷ú\ C≤rjÓ÷‘·Œ‹ÔøÏ á s¡+>∑+ düeT≈£LπsÃ yê{≤ 6 qT+∫ 8XÊ‘·+ ñ+≥T+~. n‹ô|<ä› ◊{°
|ü]ÁX¯eT ‘·s¡Tyê‘· ñ<√´>∑ø£\Œq #˚ùd~ eT]j·TT eTÚ*ø£ dü<äTbÕj·÷\T düeT≈£LπsÃ~ ]j·T˝Ÿ mùdº{Ÿ s¡+>∑y˚T.
>∑‘+· ˝À ]j·T˝Ÿ mùd{º Ÿ s¡+>∑+ $$<Ûä |üs√ø£å |üqTï\ #·{≤º\ øÏ+<ä n~Ûøy£ TÓ T‘·+Ô ˝À |üqTï\T #Ó*+¢ #ê*‡ e#˚Ã~. õmd”º
Á|üyX˚ ô¯ |{Ïqº +<äTe\¢ ˇπøkÕ] düT\uÛ‘Ñ s· +¡ >± |üqTï #Ó*+¢ #˚ neø±X¯+ e∫Ãq+<äTe\¢ >∑T|üÔ |üqTï\T>±˙, Ç‘·s¡ |üs√ø£å
|üqTï\T>±˙ ˝Òq+<äTe\¢ ]j·T˝Ÿ mùdº≥TqT n_Ûeè~∆ #˚ùd e´≈£îÔ\T ˝Ò<ë dü+düú\T õmd”º #·≥º+ øÏ+<ä ÇHé|ü⁄{Ÿ {≤ø˘‡
Á¬ø&ç{Ÿ düT\uÛÑ+>± bı+<ä>∑\T>∑T‘·THêïs¡T.
>∑èVü‰\T ø=qT>√\T#˚ùd j·T»e÷qT\T ≈£L&Ü kÕ<Ûës¡D eT]j·TT düT\uÛ‘Ñ s· y¡ TÓ qÆ |üqTï\ eédüqú T ns¡+ú #˚dTü ø=+≥THêïs¡T.
>∑èVü‰\ <Ûäs¡\T ‘·–Zq+<äTe\¢ e#˚Ã Á|üjÓ÷»q+ bı+<äT‘·THêïs¡T.
<˚X¯Á|ü»\≈£î dü«+‘· Ç\T¢ ø£*– ñ+&É&É+ ˇø£ ã\yÓTÆq ø√]ø£. yê] ø£\\qT ]j·T˝Ÿ mùdº≥T s¡+>∑+ yêdüÔe
s¡÷|ü+˝ÀøÏ rdüT≈£îedüTÔ+~. ]j·T˝Ÿ mùdº≥T s¡+>∑+ $T–*q s¡+>±\ô|’ ≈£L&Ü ˇø£ #Ós¡>∑ì eTTÁ<äqT y˚k˛Ô+~. á
s¡+>∑+ô|’ Ä<Ûës¡|ü&É¶ dæyÓT+≥T, ô|sTT+≥T eT]j·TT Ç‘·s¡ |ü]ÁX¯eT\T n_Ûeè~∆ì kÕ~Ûdü÷Ô ñ<√´>∑ neø±XÊ\T
yÓTs¡T>∑T|üsT¡ dü÷,Ô dü+|ü<ä eè~∆øÏ ‘√&ÉŒ&ÉT‘·THêïsTT.
8.4. sê»ø°j·T dæús¡‘·«+

$_Ûqï dü+düÿè‘·T\T, $_Ûqï Ä#êsê\T, $_Ûqï uÛ≤wü\T, $$<Ûä yê‘êes¡D |ü]dæ‘ú T· \T ø£*–q Á|ü|+ü #·+˝ÀH˚ n‹ô|<ä›
Á|üC≤kÕ«eT´ <˚X+¯ uÛ≤s¡‘<· X˚ +¯ . Çìï yÓ$’ <Ûë´\ eT<Û´ä uÛ≤s¡‘<· X˚ ¯ Á|ü»\+<äs÷¡ dü+|òTü {Ï‘+· >± ◊ø£eT‘ê´ìï #êfÒyêπs.
uÛ≤s¡‘·<˚X¯ ã\eT+‘ê yÓ’$<Ûä´+˝ÀH˚ ñ+<äì, n~ <˚X¯ düeTÁ>∑‘·≈£î <ë]rùd ñ‘ê‡Vü‰ìï Çk˛Ô+<äì n+‘·sê®rj·T+>±
ˇø£ uÛ≤eq. eTq <˚X¯ sê»ø°j·T eédüú˝À Á|ü»\ ÄX¯\T, Äø±+ø£å\T Á|ü‹_+_dü÷ÔH˚ ñ+{≤sTT. eTq<˚X¯ Ä]úø£
eédüú Á|üuÛ≤e+ sê»ø°j·T dæús¡‘·«+ô|’ Á|üã\+>± ñ+~. sê»ø°j·T eédüú Ä]úø£ $<ÛëHê\T ˇø£<ëì‘√ ˇø£{Ï ø£*dæ
ñ+&˚ $&çb˛˝Òì eédüú\T. õmd”º neT\T eTq <˚X¯ es¡Ôø£ yê´bÕsê\ MT<ä $<˚o b˛{° ‘·≥Tº≈£îH˚ HêD´‘ê
Á|üe÷D≤\ MT<ä nqT≈£L\ Á|üuÛ≤e+ #·÷|æ+~. uÛ≤s¡rj·T e÷¬sÿ{Ÿ >√¢ã˝Ÿ e÷¬sÿ{Ÿ‘√ b˛{° |ü&ÉT‘√+~. HêD´‘ê
Á|üe÷D≤\ |üs¡+>± nH˚ø£ düyêfi¯flqT düeTs¡úe+‘·+>± m<äTs=ÿ+~. dü+|ü<ä eè~∆øÏ õmd”º˝Àì düT\uÛÑ‘·s¡yÓTÆq |üqTï
$<Ûëq+ düVü≤ø£]+∫ n+‹eT+>± Á|üuÛÑT‘ê«ìøÏ sêã&çì ‘Ó∫Ãô|{Ïº+~. <ëì |òü*‘·+ uÛ≤s¡‘· Á|üuÛÑT‘·«+ eTÚ*ø£
dü<äTbÕj·÷\ ø£\Œq‘√ bÕ≥T kÕ+|òæTø£ dü+πøåe÷ìøÏ ≈£L&Ü ø£≥Tºã&ç ñ+~.2014 kÕ<Ûës¡D mìïø£\˝À >ös¡e l
qπs+Á<ä yÓ÷~ q\¢<HäÛ êìï yÓ*øÏrkÕÔqì, Ä |ò˝ü ≤\qT nD>±]q ù|<ä esêZ\≈£î |ü+#·T‘êqì <˚X¯ Á|ü»\≈£î yê>±›q+
242
The economy of the nation has a strong influence on the political stability. Political system and
economic policies have an inseparable bondage with each other. The implementation of GST made
the trade easy in the Nation and across the world. Quality comes from competition. The Indian
market is potential enough to compete with global markets. It is able to withstand the challenges of
quality of goods.
There is a good wealth generation in the form of simple tax system of GST which ultimately gives the
Government good Revenue. The Government inturn can spend on the development of infrastructure
and 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 general
election 2014, that steps would be taken to bring out black money, which would be spent for the
cause of the poor. As a part of the fulfillment of the promise made to the people, the Government
under the leadership of Hon’ble Prime Minister Shri Narendra Modi took a challenging decision of
demonetisation.
General elections of the Nation were held in 2019 after the announcement of demonetisation in the
year 2016 and the implementation of GST in 2017. The mandate of people was in favour of the
Government under the leadership of the Hon’ble Prime Minister Shri Narendra Modi. The judgement
of people clearly indicates the support of the Nation to the policies of the NDA Government with
particular reference to demonetisation and implementation of GST apart from many other policies.
8.5. LEGAL CHANGES

Demonetisation and GST brought many legal changes in the country. All the citizens of the Nation
should 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 Government
through banks. For this act of returning the old currency notes, the Government of India
fixed a time period till 30th December, 2016. Holding the old currency notes with the citizens
after 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 Reserve
Bank of India. If the cash withdrawal exceeds the permitted limit, tax deduction at source
will be made.
 People can perform cashless and online transactions, for which there is no restriction of
upper 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.
243
#˚kÕs¡T. Ä yê>±›q+ HÓs¡yπ̊sÃ Áø£eT+˝À uÛ≤s¡‘· Á|ü<Ûëì >ös¡e˙j·T l qπs+Á<ä yÓ÷~ &çe÷ìf…ÆCÒwüHé Á|üÁøÏj·TqT ˇø£
düyê\T>± neT\T|ü]∫ q\¢<Ûäq+ ìs√~Û+#·&ÜìøÏ $X‚wü ø£èwæ #˚kÕs¡T.
2016 qe+ãsY 8e ‘˚Bq &çe÷ìf…CÆ wÒ Hü é Á|üø≥£ q eT]j·TT 2017˝À õmd”º neT\T #˚dqæ ‘·sT¡ yê‘· 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⁄‘√+~.
8.5. #·≥º|üs¡yÓTÆq e÷s¡TŒ\T

&çe÷ìf…CÆ wÒ Hü é eT]j·TT õmd”º <˚X+¯ ˝À nH˚ø£ #·≥|º sü y¡ TÓ qÆ e÷s¡TŒ\qT rdüT≈£îe#êÃsTT. Á|üuTÑÛ ‘·« $<Ûëq ìs¡j
í ÷· \qT
<˚X¯ Á|ü»\+<äs¡÷ n+^ø£]+#ê*.
 uÛ≤s¡‘· bÂs¡T\+<äs¡÷ ‘·eT e<ä› ñqï bÕ‘· ø£¬s˙‡H√≥T¢ s¡÷. 500/` eT]j·TT s¡÷. 1000/` u≤+≈£î\
<ë«sê Á|üuÛÑT‘ê«ìøÏ ‹]– »eT #˚kÕs¡T. bÕ‘· ø£¬s˙‡ H√≥¢qT Á|üuÛÑT‘ê«ìøÏ ‹]– Çe«e\dæq >∑&ÉTe⁄qT 30
&çX¯+ãsY, 2016 es¡≈£î Ç#êÃs¡T. Ä ‘˚B ‘·s¡Tyê‘· bÕ‘· ø£¬s˙‡H√≥T¢ ø£*– ñ+&É&É+ ø=‘·Ô #·≥º+ Á|üø±s¡+
H˚s+¡ .
 ]»sY« u≤+ø˘ Ä|òt Ç+&çj·÷ C≤Ø #˚dæq ø=‘·Ô ìã+<Ûäq\ Á|üø±s¡+ u≤+≈£î\ qT+∫ &çbÕõ{Ÿ #˚dæq q>∑<äT
ˇø£ |ü]$T‹øÏ $T+∫ ‹]– rdüTø√e&É+ nqTeT‹+#·s¡T. nqTeT‹+∫q |ü]$T‹øÏ $T+∫ q>∑<äT ‹]–
rdüT≈£î+fÒ Ä<ëj·T|ü⁄ |üqTï ìã+<Ûäq\ Á|üø±s¡+ eT÷˝≤<Ûës¡+˝À |üqTï‘·–Z+|ü⁄ #˚kÕÔs¡T.
 Á|ü»\T ÄHé˝H’… é <ë«sê q>∑<Tä s¡V≤æ ‘· eéVü‰sê\T #˚kÕÔsT¡ . nsTT‘˚ yê{Ïô|’ @ $<Ûyä TÓ qÆ >∑]wü˜ |ü]$T‹ ˝Ò<Tä .
 &çe÷ìf…ÆCÒwüHé ‘·<äT|ü] q>∑<äT‘√ ≈£L&çq eédüú qT+∫ ÄHé˝…’Hé eédüú≈£î eTq Ä]úø£ eédüú e÷s¡TŒ
#Ó+~+~. Bì e\¢ eéVü‰sê\˙ï Ä{ÀyÓT{Ïø˘>± ]õwüºsY nsTT´ n~Ûø±s¡T\ <äèwæºì Äø£]¸kÕÔsTT.
 õmd”º nH˚ø£ #·≥º|üs¡yÓTÆq e÷s¡TŒ\qT rdüT≈£îe∫Ã+~.

 $$<Ûä |üs√ø£å |üqTï #·{≤º\qT ‘=\–+∫ ˇπø |üqTï eédüú>± õmd”º ne‘·]+∫+~.
 bÕ‘· $<Ûëq+ dü]ø±<äì <˚X¯+ yÓTT‘·Ô+ MT<ä ˇπø |üqTï $<ÛëHêìï õmd”º neT\T #˚dæ+~.
 bÕ‘· |ü<‹∆ä øÏ $s¡T<ä+∆ >± q>∑<Tä s¡V≤æ ‘· eT]j·TT ÄHé˝H’… é eéVü‰sê\T Á|üyX˚ ô¯ |{Ïqº +<äTe\¢ |üqTï\ #Ó*+¢ |ü⁄
eT]j·TT |üqTï ]≥sYï\ <ëK\T düT\uÛÑ‘·s¡eTj·÷´sTT.
 õmd”º |üqTï $<Ûëq+˝À ø£+{ÏøÏ ø£qã&Éì >∑T|üÔ |üqTï\qî, yÓ÷dü|Pü ]‘· $<ÛëHê\qî ìs√~Û+#·&+É »]–+~.
 ∫qï eT]j·TT eT<Ûä´‘·s¡Vü‰ dü+düú\T kÕ+e‘·‡]ø£ ≥s√ïesY Ä<Ûës¡+>± |üqTï #Ó*¢+#˚ yÓdüT\Tu≤≥T ø£\Œq
»]–+~.
 es¡Ô≈£î\≈£î, ñ‘·Œ‹Ô<ës¡T\≈£î ÇHé|ü⁄{Ÿ {≤ø˘‡ Á¬ø&ç{Ÿ düø±\+˝À, dü]jÓÆTq |ü<ä∆‹˝À #Ó*¢+|ü⁄ neT\T
#˚dæq+<äTe\¢ yê´bÕs¡ esêZ\T Á|üjÓ÷»q+ bı+<ësTT.
 ø=‘·Ô $<Ûëq+ #·≥º+˝À nH˚ø£ e÷s¡TŒ\qT rdüT≈£î e∫Ãq+<äTe\¢ yê{Ïì ns¡ú+ #˚düTø√e&É+ eT]j·TT
neT\T #˚j·T&É+ düT\uÛÑ‘·s¡yÓTÆ <˚X¯ dü+πøåe÷ìøÏ u≤≥\T y˚dæ+~.

244
 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 tax
variation in different States.
 Cashless and online transactions are introduced for payment of taxes and filing of Returns
contrary 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 are
benefited by the New Legal System.
The new systems have introduced many legal changes, which are easy for understanding and
implementation 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 Tax
on 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 State
Government as per prescribed norms.
Intrastate Business: Intra state business is business conducted within a particular state.
Interstate: Interstate business is conducted between States
REVIEW QUESTIONS
1. The last date for depositing old currency of Rs. 500 and Rs. 1000 __
a. December 31, 2016
b. January 1, 2017
c. December 30, 2016
245
2. Demonetisation encourages the following payments
a. Online transactions
b. Payment by Rupay and Bhim Apps
c. Phone Pe and Google Pay
d. All of the above
3. GST is applicable
a. All States
b. Union Territories only
c. All States & Union Territories
d. Central Govt, all States and UTs
4. GST is not levied on

a. Industrial Alcohol
b. Goods and Services
c. Petroleum products
d. None of the above.
5. A contract is discharged by the breach when a party to a contract

a. Refuses to perform his promise
b. Fails to perform his promise
c. Able to perform only a part of the promise
6. The provisions of consumer protection Act is applicable to

a. Goods
b. Services
c. Goods or Service
d. Goods and Service
7. The main objective of GST

a. Different taxes for different States
b. Different taxes for Union Territories
c. Different taxes for UTs and States
d. One Nation One Tax
8. After demonetisation, Government of India brought the following new currency units
a. Rs. 500 and Rs. 1000
b. Rs. 1000 and Rs. 2000
c. Rs. 500 and Rs. 2000
246
9. The main objective of demonetisation is
a. Encourage black money
b. Prevent black money and corruption
c. Discourage fake money only
10. GST is not levied on the following

a. Industrial Alcohol
b. Wheel chairs, Braille paper & hearing aids
c. Petroleum products
11. GST encourages

a. Tax on Tax
b. Tax evasion
c. All indirect taxes under one umbrella
12. Make in India mission is undertaken

a. To encourage indigenous manufacture
b. To import goods from abroad
c. To encourage “entrepo” trade
13. Under the consumer protection Act who shall constitute consumer protection council ______
a. President of India
b. Central Government
c. State Government
d. Supreme court of India.
14. New Companies Act came into force in the year ___
a. 1956
b. 2003
c. 2020
d. 2013
15. The full form of FEMA, 1999 is

a. Foreign Exports and Management Act
b. Foreign Exports Maintenance Act
c. Foreign Exchange Maintenance Act
d. Foreign Exchange Management Act
247
ANSWERS
1 2 3 4 5 6 7 8 9 10
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 demonetisation

https://www.voxdev.org>...
Goods and Service Tax (GST) : https://www.selfservice.gstsystem.i
248
Chapter
9
Chapter Layout: Learning Outcomes:

9.1. Global Environment Global Trade
9.2. Globalization After reading this chapter, the student should be able to:
9.2.1. Characteristics of Globalisation Organisations
1. understand the concept of Global Environment
2. define Globalisation, its advantages and disadvantages
9.2.2. Important components of Globalisation
9.2.3. Advantages of Globalisation3. analyse the impact of Globalisation in business environm
4. asses the objectives of WTO and IBRD
9.2.4. Disadvantages of Globalisation
9.3. World Trade Organization – (WTO)5. examine the functions of WTO and IBRD and its influenc
9.3.1. Organization and Structure ofEconomy
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
249
Á|ü|ü+Nø£s¡D n+fÒ <˚oj·T Ä]úø£ eédüúqT Á|ü|ü+#· Ä]úø£ eédüú‘√ nqTdü+<Ûëq+ #˚j·T&É+. 1991 LPG
dü+düÿs¡D\ ‘·s¡Tyê‘·, uÛ≤s¡‘· Ä]úø£ eédüú Á|ü|ü+#· Ä]úø£ eédüú\‘√ mqï&É÷ ˝Òq+‘·>± ø£\dæb˛sTT+~
.uÛ≤s¡rj·T dü+dü\ú T Ç|ü⁄Œ&ÉT n+‘·sê®rj·T ‘·j÷· Ø<ës¡T\‘√ b˛{° |ü&eÉ \dæ ñ+~ eT]j·TT n+‘·sê®rj·T
$ìjÓ÷>∑<ës¡T\qT ≈£L&Ü dü+‘·|æÔ #˚j·T>∑\ kÕúsTT˝À ñ+~. uÛ≤s¡rj·T Ä]úø£ |ü]düsê\T e÷Á‘·y˚T
uÛ≤s¡rj·T yê´bÕsêìï |Á uü ≤Û $‘·+ #˚kÕÔsTT ø±˙ Ç|ü⁄Œ&ÉT |Á |ü +ü #· |ü]düsê\T ≈£L&Ü |Á uü ≤Û $‘·+ #˚dTü +Ô ~.
á n<Ûë´j·T+˝À >√¢ã˝…C’ wÒ Hü ìé ìs¡«∫+#·&ÜìøÏ, <ëì \ø£Då ≤\T, uÛ≤>±\T, |Á j

ü ÷Ó »Hê\T eT]j·TT |ü]$T‘·T\T
>∑T]+∫ #·]Ã+#·&ÜìøÏ |Á j ü T· ‹ï+#·ã&ç+~.
n+‘·sê®rj·T yê´bÕs¡+˝À Ä]úø£ Áø£e÷ìï @sêŒ≥T #˚j·T&É+˝À ãVüQfi¯|øü £å Ä]úø£ dü+düú\T ø°\ø£ bÕÁ‘·
b˛wækÕÔsTT. yê] rs¡TŒ\≈£î |Á ‹ü <˚X+¯ ˝À yê´bÕsê\T ñHêïsTT. n+‘·sê®rj·T edüTeÔ ⁄\T eT]j·TT ùde\≈£î
dü+ã+~Û+∫q ìj·Te÷\‘√ WTO Á|ü‘˚´ø£+>± eéVü≤]düTÔ+~. IBRD Á|ü|ü+#·+˝ÀH˚ n‹ô|<ä› u≤´+ø˘,
|Á |ü +ü #· ù|<ä]ø±ìï ‘=\–+#·&ÜìøÏ |üì#˚dTü +Ô ~. n+<äTe\¢ á n<Ûë´j·T+˝À M{Ï n<Û´ä j·Tq+ |Á ‘ü ´˚ ø£+>±
Á|ü|ü+#· Ä]úø£ |ü]düsê\T eT]j·TT kÕ<Ûës¡D+>± yê´bÕs¡ |ü]düsê\≈£î dü+ã+~Û+∫q $wüj·÷\qT
>∑T]+∫ ≈£L\+ø£wü+>± #·]Ã+#·&É+ »]–+~.
250
CHAPTER OVERVIEW
Globalisation is the integration of domestic economy with world economy.

After LPG reforms of 1991, Indian economy is more open than ever with
the world economies. Indian firms now have to compete with international
manufacturers and can also cater to international customers. Not only Indian
economic environment affects Indian business but also the global
environment does.
In this chapter an attempt has been made to define globalisation, discuss its
characteristics, components, advantages and disadvantages of brief
explanation of what global environment means and how it impacts on
domestic business is also given.
Multilateral economic organisations play a key role in setting up the economic

order in international business. Their rulings have businesses in every country.
WTO specifically deals with rules pertaining to International goods and
services. IBRD being the biggest bank in the world, functions to eliminate
world poverty. Thus their study in this chapter is important subject matter
to global economic environment specifically and business environment in
general.
251
9.1. >√¢ã˝Ÿ |ü]düsê\T
>√¢ã˝Ÿ |ü]düsê\qT $$<Ûä <˚XÊ\ |ü]düsê\ düe÷Vü‰s¡+>± ìs¡«∫+#·e#·TÃ. dü«<˚XÊìøÏ yÓ\T|ü\ yê´bÕsê\T
m˝≤ q&ÉTkÕÔsTT eT]j·TT yê´bÕs¡ ìs¡íj·÷\T m˝≤ rdüTø√ã&É‘êsTT nH˚~ >√¢ã˝Ÿ |ü]düsê\ MT<ä Ä<ës¡|ü&ç ñ
+{≤sTT. >√¢ã˝Ÿ |ü]düsê\T nH˚~ yê´bÕs¡+ jÓTTø£ÿ dü÷\ú yê‘êes¡D+˝À uÛ≤>∑+. @ <˚Xe¯ T÷ ‘·eT Ä]úø£ eédüqú T
|üP]Ô>± ˇ+≥]>± q&É|ü˝Òe⁄. Á|ü‹ <˚X¯ Ä]úø£ eédüú @<√ ˇø£$<Ûä+>± Á|ü|ü+#· Ä]úø£ eédüú‘√ $©q+
ne⁄‘·T+~. <˚XÊ\ eT<Ûä´ n+‘·s¡Z‘· yêDÏ»´ dü+ã+<Ûë\T, ~>∑TeT‘·T\T, m>∑TeT‘·T\T, yêDÏ»´ ˇ|üŒ+<ë\T Á|ü|ü+#·
|ü]düsê\ ø±s¡ø±\≈£î ñ<ëVü≤s¡D\T >± #Ó|üŒe#·TÃ.
>√¢ã˝Ÿ mì«sêHÓà+{Ÿ ÁbÕ<∏ä$Tø£+>± ˇø£ dü+düú jÓTTø£ÿ ìj·T+Á‘·D ˝Òì n+‘·sê®rj·T |üs¡düŒs¡ #·s¡´\qT ø£*– ñ
+≥T+~. Ç|ü⁄Œ&ÉT á >√¢ã˝Ÿ e÷¬sÿ{Ÿ˝À n~Ûø£ kÕúsTT b˛{°‘‘· «· + ñqï+<äTq, nìï ø£+ô|˙\T ‘·|Œü ìdü]>± >√¢ã˝Ÿ
mì«sêHéyÓT+{Ÿì >∑Ts¡TÔ+#·Tø√yê*. ñ<ëVü≤s¡D≈£î, m\Áø±ºìø˘‡ m>∑TeT‘·T\≈£î #Ó’Hê Áb˛‘ê‡Vü≤ø±\T ÇùdÔ uÛ≤s¡rj·T
m\Áø±ºìø˘‡ ø£+ô|˙ nH˚ø£ düyêfi¢̄qT m<äTs√ÿe#·TÃ. n<˚$<Ûä+>±, #ÓH’ ê $<˚o ô|≥Tºã&ÉT\ Á|üy˚XÊìï düT\uÛÑ‘·s¡+ #˚ùdÔ
uÛ≤s¡‘·<˚X¯+˝Àì $<˚o ô|≥Tºã&ç<ës¡T\T ‘·eT ô|≥Tºã&ÉT\qT eTq <˚X+¯ qT+&ç #Ó’Hê≈£î yÓ[¢b˛e#·TÃ. n+<äTe\¢,
yê´bÕs¡ dü+düú\T ‘·eT yê´bÕsê\qT Á|üuÛ≤$‘·+ #˚ùd Á|ü|ü+#· ø±s¡ø±\ >∑T]+∫ ‘Ó\TdüTø√yê*.
9.2 Á|ü|ü+Nø£s¡D
>√¢ã˝…’CÒwüHé nH˚ |ü<ä+ yÓTT<ä≥ 20 e X¯‘êã›+ ÁbÕs¡+uÛÑ+˝À yÓ\T>∑T˝ÀìøÏ e∫Ã+~ (BìøÏ eT÷\+ Áô|ò+#Y |ü<ä+
eT+&çj·T˝…’CÒwüHéqT). 20 e X¯‘êã›+ ¬s+&Ée uÛ≤>∑+˝À Bì Á|üdüT‘Ô · nsêúìï n_Ûe~∆ #˚j·T&É+ »]–+~. Ç~
1990 \˝À u≤>± Á|üC≤<äs¡D bı+~+~.
Vü‰s¡«sY¶ _õHÓdt dü÷ÿ˝Ÿ e÷J Ábıô|òdüsY ~∏jÓ÷&ÉsY ˝…${Ÿ, ªª>√¢ã˝…’CÒwüHéμμ nH˚ |ü<ëìï Á|üjÓ÷–+∫ ñ|üjÓ÷>∑+˝ÀìøÏ
rdüT≈£î e#êÃs¡T. yê´bÕsê\T @$ ‘·j·÷s¡T #˚j·÷˝À eT]j·TT $Áø£sTT+#ê˝À ìs¡«∫+#·&É+˝À e÷¬sÿ{Ï+>¥ jÓTTø£ÿ
bÕÁ‘·qT $X¯Bø£]+∫q e´øÏÔ>± áj·Tq |òüTq‘· bı+<ës¡T. |”≥sY dü<äsê¢+&é ªÁ|ü|ü+Nø£s¡D |æ‘·μ >± ù|s¡T
>±+#ês¡T. Á|ü|ü+Nø£s¡D nH˚~ ñ‘·Œ‘·TÔ\T, kÕ+πø‹ø£‘·, düe÷#ês¡+ eT]j·TT ñ<√´>±\qT C≤rj·T dü]Vü≤<äT›\T
eT]j·TT dü+düÿ‘·T\T <ë{Ï yê´|æÔ #˚jT· &É+. Ä]úø£ |üs+¡ >±, ùd«#êÃ¤ yêDÏ»´+ <ë«sê Á|ü|+ü #·yê´|ü+Ô >± ñqï <˚XÊ\
|üs¡düŒs¡ Ä<Ûës¡|ü&É≥+ eT]j·TT Ä]úø£ düyÓTÆø£´‘·qT Ç~ $e]düTÔ+~. uÛÖ>√[ø£ dü]Vü≤<äT›\T eT]j·TT m˝≤+{Ï
n&É¶+≈£î\T ˝Ò≈£î+&Ü Ä<ÛäTìø£ Á|ü|ü+#êìï Çø£ÿ&É #·÷&Ée#·TÃ. Á|ü|ü+Nø£s¡D Bì yÓqTø£ Á|ü<Ûëq X¯øÏÔ>± ñ+~.
>√¢ã˝…’CÒwüHé uÛ≤s¡‘· <˚X¯+˝À Ä\dü´+>± yÓ\T>∑T˝ÀìøÏ e∫Ã+~. nsTT‘˚ Ç~ <˚XÊ\ Ä]úø£ $<ÛëHê\T eT]j·TT
nH˚ø£ Ç‘·s¡ n+XÊ\ô|’ uÛ≤Ø Á|üuÛ≤yêìï #·÷|æ+~.
Á|ü|ü+Nø£s¡D jÓTTø£ÿ Á|ü<Ûëq n+X¯+ ~>∑TeT‹ düT+ø±\T e+{Ï yêDÏ»´ n&É¶+≈£î\qT ‘·–Z+#·&É+ <ë«sê Á|ü|ü+#·
yêDÏC≤´ìï $düÔ]+#·&É+. ~>∑TeT‘·T\T $ìjÓ÷>∑<ës¡T\≈£î ‘·≈£îÿe <Ûäs¡\≈£î nH˚ø£ s¡ø±\ edüTÔe⁄\qT n+~kÕÔsTT
◊‘˚ n<˚ düeTj·T+˝À <˚oj·T |ü]ÁX¯eT\T b˛{°>± ñ+&É{≤ìøÏ ã\yÓTÆq Áb˛‘ê‡Vü≤ø±\qT n+~+#·ã&É‘êsTT.
m>∑TeT‘·T\T, ‘·s¡#·T>± n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\≈£î Ä]úø£ e~∆øÏ eT÷\+, |ü]ÁX¯eT\T ‘·eT dü]Vü≤<äT›\qT <ë{Ï
$Áø£sTT+#·&É+‘√ ñ<√´>∑ ø£\Œq ≈£L&Ü »s¡T>∑T‘·T+~.
Á|ü|+ü Nø£sD¡ Á|ü|+ü #· <˚XÊ\ eT<Û´ä edüTeÔ ⁄\T, ùde\T eT]j·TT dü+düÿ‹ jÓTTø£ÿ @ø°øs£ D¡ qT dü÷∫düT+Ô ~. Á|ü|+ü Nø£sD¡
252
9.1. GLOBAL ENVIRONMENT
Global environment can be defined as the environment in different countries, outside of home country
that can influence how businesses are run and how business decisions are taken. Global environment
is part of the macro environment of the business. No country can run their economy in complete
isolation. Every National economy is integrated with the global economy in some way. Internal trade
relations, imports, exports, trade agreements between Nations are examples for global environmental
factors.
Global environment basically consists of international interactions of a firm over which it has no
control. So, now in this global market with such a high level of competitiveness, all companies must
be mindful of the global environment. For example, an Indian electronics company can face many
challenges if China gives incentives for electronics exports. Similarly, foreign investors in India may
pull their investments out of our country if China eases entry of foreign investments. Thus, business
enterprises 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 term
mondialization), developed its current meaning sometime in the second half of the 20th century, and
came 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 businesses
should make and sell. Peter Sutherland, is known as the ‘father of globalisation’
Globalization is the spread of products, technology, information, and jobs across national borders
and cultures. In economic terms, it describes an interdependence and economic integration of Nations
around the globe fostered through free trade. A modern world can be seen without geographical
boundaries and any kind of barriers. Globalization has been the major force behind this. Globalization
hit 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 of
trade barriers, such as import tariffs. Greater imports offer consumers a wider variety of goods at
lower 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 sell
beyond 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 of
information, technology, and goods among countries and consumers. One of the effects of globalization
is that it promotes and increases interactions between different regions and populations around the globe.
253
n+‘·sê®rj·T kÕúsTT˝À |üsd¡ Œü s¡ Ä<Ûë]‘· Ä]úø£ ô|s¡T>∑T<ä\>± ìs¡«∫+#·ã&ç+~. Ç~ <˚XÊ\T eT]j·TT $ìjÓ÷>∑<ës¡T\
eT<Û´ä düe÷#ês¡+, kÕ+πø‹ø£‘· eT]j·TT edüTeÔ ⁄\ jÓTTø£ÿ e÷]Œ&ç‘√ ≈£L&ç ñ+≥T+~. Á|ü|+ü Nø£sD¡ Á|ü|+ü #·yê´|ü+Ô >±
$$<Ûä ÁbÕ+‘ê\T eT]j·TT »HêuÛ≤ eT<Ûä´ |üs¡düŒs¡ #·s¡´\qT Áb˛‘·‡Væ≤düTÔ+~.
9.2.1. Á|ü|ü+Nø£s¡D - \ø£åD≤\T

 >√¢ã˝Ÿ Á{≤Hé‡b˛πsºwüHé HÓ{ŸesYÿ <˚XÊ\ eT<Ûä´ düeTj·T+ eT]j·TT <ä÷sêìï ‘·–ZdüTÔ+~. düe÷#ês¡ Á|ükÕs¡+
düeTj·T+ eT]j·TT <ä÷sê\ e\¢ |ü]$T‘·+ ø±<äT. $$<Ûä Á|ü<X˚ Ê\˝À »]π> dü+|òTü ≥q\T n+<ä]ì Á|üu≤Û $‘·+
#˚kÕÔsTT.
 Ä]úø£, sê»ø°j·T eT]j·TT kÕ+düÿ‹ø£ ø±s¡´ø£˝≤bÕ\T C≤rj·T dü]Vü≤<äT›\ ≈£î |ü]$T‘·+ ø±e⁄.
 eT÷\<Ûäq+, eqs¡T\T eT]j·TT edüTÔe⁄\T <˚XÊ\ dü]Vü≤<äT›\T <ë{Ï Á|üeVæ≤kÕÔsTT. Á|ü»\T düT\uÛÑ+>±
Á|üj·÷DÏ+#· e#·TÃ, ìedæ+#·e#·TÃ ˝Ò<ë Ç‘·s¡ Á|ü<˚XÊ\˝À |üì #˚j·Te#·TÃ. düe÷#ês¡+ ˇø£ Á|ü<˚X¯+ qT+&ç
y˚πs Á|ü<˚XÊ\≈£î ‘·«s¡>± yê´|æÔ #Ó+<äT‘·T+~. ø£<ä*ø£ dü«j·T+#ê\ø£+>± ô|s¡T>∑T‘·T+~.
 e´≈£îÔ\T |üs¡düŒs¡+ dü+uÛ≤wæ+#·&ÜìøÏ m≈£îÿe neø±XÊ\T ñHêïsTT. <˚XÊ\ eT<Ûä´ eT]+‘· Ä]úø£, sê»ø°j·T
eT]j·TT kÕ+düÿ‹ø£ nqTdü+<Ûëq+ ø£ì|ædüTÔ+~. <˚XÊ\ eT<Ûä´ |üs¡dŒü s¡ #·s¡´\T eT]j·TT edüTÔùde\ e÷]Œ&ç
ñ+≥T+~.
 Á|ü|ü+#· yêDÏ»´ eT]j·TT Ä]úø£ ø±s¡´ø£˝≤bÕ\qT düT\uÛÑ‘·s¡+ #˚j·T&ÜìøÏ eT]j·TT #·s¡Ã\qT düT\uÛÑ‘·s¡+
#˚j·T&ÜìøÏ n+‘·sê®rj·T dü+düú\T Áø£eT+>± >√¢ã˝Ÿ eédüú\qT @sêŒ≥T #˚kÕÔsTT.
9.2.2. Á|ü|ü+Nø£s¡D˝Àì eTTKýÓTÆq n+XÊ\T

e÷¬sÿ≥¢ Á|ü|+ü Nø£sD¡
y˚>∑+>± n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédüú\≈£î uÛ≤Ø e÷¬sÿ≥T¢ ñHêïsTT. n_Ûe~∆ #Ó+~q Ä]úø£ eédüú\˝À, ø=ìï
ø£+ô|˙\T kÕeTsêú´\ ø£+fÒ ‘·≈î£ ÿe>± |üì#˚dTü HÔ êïsTT. n_Ûe~∆ #Ó+<äT‘·Tqï ø=‘·Ô e÷¬sÿ≥T¢ ‘·eT neTàø±\T eT]j·TT
˝≤uÛ≤\qT ô|+#·Tø√e&ÜìøÏ, Á|ü|ü+#·yê´|üÔ e÷¬sÿ≥¢˝À nH˚ø£ s¡ø±\ ñ‘·Œ‘·TÔ\T eT]j·TT ùde\T n+~+#·&ÜìøÏ
Á|ü|ü+Nø£s¡D neø±XÊ\qT ø£*ŒdüTÔ+~.
ñ‘·Œ‹Ô Á|ü|+ü Nø£sD¡ :

#ê˝≤ ãVüQfi¯C≤‹ dü+düú\T ‘·eT nqTã+<Ûä dü+düú\qT ‘·≈£îÿe y˚‘·q+ eT]j·TT ‘·≈£îÿe <Ûäs¡ ø£*–q <˚XÊ\˝À
q&ÉT|ü⁄‘·T+{≤sTT. nø£ÿ&É ‘·≈£îÿe ñ‘·Œ‹Ô e´j·T+ e\q e#˚Ã Á|üjÓ÷»Hêìï dü~«ìjÓ÷>∑+ #˚düT≈£î+{≤sTT. Bìì
ñ‘·Œ‹Ô jÓTTø£ÿ Á|ü|ü+Nø£s¡D n+{≤s¡T. ñ‘·Œ‹Ô Á|ü|ü+Nø£s¡D≈£î Á|ü<Ûëq ø±s¡D≤\T:
 Ç‘·s¡ <˚XÊ\˝À HêDýÓTÆq eTT&ç |ü<ësêú\T eT]j·TT Ç‘·s¡ uÛ≤>±\ \uÛÑ´‘·;

 $<˚XÊ\˝À ‘·≈£îÿe Ks¡TÃ‘√ ñ‘·Œ‹Ô ø±s¡ø±\ \uÛÑ´‘·;
 ‘·≈£îÿe Ks¡TÃ‘√ e÷qe eqs¡T\ \uÛÑ´‘·;
 $<˚XÊ\˝À ñ<ës¡yê<ä ø±]àø£ #·{≤º\T eT]j·TT
 Ç‘·s¡ bıs¡T>∑T $<˚XÊ\≈£î m>∑TeT‹ #˚ùd kÂø£s¡´+.
ô|≥Tºã&ç Á|ü|+ü Nø£sD¡

20 e X¯‘êã›+ ÁbÕs¡+uÛÑ ø±\+˝À yêDÏ»´+ eT]j·TT ô|≥Tºã&çô|’ n~Ûø£ kÕúsTT˝À n&É+¶ ≈£î\T ñ+&˚$. nH˚ø£ <˚XÊ\T
254
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 each
other
• 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 in
other places easily. Information can be spread quickly from place to place. Mobility will
automatically increases.
• People have more chances to interact with each other. More economic, political and cultural
integration appears among countries. There will be increasing interaction and exchange.
• Inter-governmental organisations are gradually set up global systems to facilitate global trade
and financial activities and to facilitate negotiations.
9.2.2. IMPORTANT COMPONENTS OF GLOBALIZATION
Globalization of markets
Rapidly developing economies have huge markets. In developed economies, some companies operate
below capacities. The emerging new markets offer immense opportunities to increase their sales and
profits. A wide variety of products and services are offered in world-wide markets.
Globalization of production
Many MNCs are locating their subsidiaries in low wage, and low cost countries. They take advantage
of low cost of production. This is called as globalization of production. Main reasons for globalization
of 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 countries
created barriers relating to exports, imports and foreign investment. This was done to protect the
domestic industry. The creation of General Agreement on Tariff and Trade(GATT) reduced the trade
restrictions. The establishment of World Trade Organisation (WTO) contributed for the elimination
of investment barriers substantially. Government of India also reduced the barriers on investment. It
255
m>∑TeT‘·T\T, ~>∑TeT‘·T\T eT]j·TT $<˚o ô|≥Tºã&ÉT\≈£î dü+ã+~Û+∫q n&É¶+≈£î\qT düwæº+#êsTT. eTTK´+>±
<˚oj·T |ü]ÁX¯eTqT s¡øÏå+#·&ÜìøÏ Bìì bÕ{Ï+#˚yês¡T. GATT Ä$sê“¤e+‘√ á yêDÏ»´ |ü]$T‘·T\T #ê˝≤
es¡≈î£ ‘·>±ZsTT. ‘·sê«‘· es¡˝Ÿ¶ ÁfÒ&é Äs¡HZ C’Ó wÒ Hü é (WTO) kÕú|qü ô|≥Tºã&ç n&É+¶ ≈£î\qT >∑D˙j·T+>± ‘=\–+#·&ÜìøÏ
<√Vü≤<ä|ü&ç+~. Ç+<äT˝À u≤>∑+>± uÛ≤s¡‘· Á|üuÛÑT‘·«+ ≈£L&Ü ô|≥Tºã&çô|’ n&É¶+≈£î\qT ≈£L&Ü ‘·–Z+∫+~. Bì <ë«sê
uÛ≤s¡rj·T ø£+ô|˙\˝À 51 XÊ‘êìøÏ ô|>’ ± $<˚o ô|≥Tºã&ÉT\qT nqTeT‹+∫+~. Á|üdTü ‘Ô +· 100 XÊ‘·+ m|ò&t ◊ç \≈£î
nqTeT‹ ñ+~. ô|≥Tºã&ç Á|ü|ü+Nø£s¡D≈£î eTTKýÓTÆq ø±s¡D≤\T:
 yêDÏ»´ |ü]e÷D+˝À y˚>∑+>± ô|s¡T>∑T<ä\

 nqT≈£L\yÓTÆq ô|≥Tºã&ç |ü]dæú‘·T\T
 m>∑TeT‹ eT]j·TT ˝…’ôdì‡+>¥ |ü]$T‘·T\T.
|≥Tºã&ç Á|üe÷D≤\qT düs¡∞ø£]+#·&É+.
f…ø±ï\J Á|ü|+ü Nø£sD¡ :

ø=‘·Ô>± ø£qT>=qã&çq y˚>∑e+‘·yÓTÆq eT]j·TT #Í¬ø’q ø£eT÷´ìπøwüHé, Ç+≥¬sï{Ÿ eT]j·TT m\Áø±ºìø˘ ø£eT÷´ìπøwüHé
|ü]ø£sê\T ˇπøkÕ] nH˚ø£ eT+~ e´≈£îÔ\qT nqTdü+<Ûëq+ #˚j·T>∑\ kÕeTsê∆´ìï ø£*– ñ+{≤sTT. ôd\T´˝≤sY
bò˛qT¢, bòÕ´ø˘‡ yÓTw”qT¢, ø£+|üP´≥sY msTT&Ó&é &çCH’… .é $e÷q, Á|üj÷· D+ eT]j·TT s√&ÉT¶ <ë«sê y˚>e∑ +‘·yTÓ qÆ eT]j·TT
#Í¬ø’q s¡yêD≤. Ç$ kÕ+πø‹ø£ |ü]C≤ïq+ Á|ü|ü+Nø£s¡D jÓTTø£ÿ jÓTTø£ÿ |òü*‘ê\T .‘·j·÷Ø kÕ+πø‹ø£‘·, |üìeTT≥¢
nôd+_¢+>¥ yÓTT<ä\>∑T |üqT\T Á|ü|ü+Nø£s¡De\q Á|ü|ü+#·yê´|üÔ+>± #˚|ü≥ºã&Ü¶sTT.
9.2.3. Á|ü|ü+Nø£s¡D- Á|üjÓ÷»Hê\T

 Á|ü|ü+Nø£s¡D $<˚o dü+düÿ‹ì ÄVü‰s¡+, dæìe÷\T, dü+^‘·+ eT]j·TT ø£fi¯‘√ düVü‰ nìï+{Ïì düT\uÛÑ+>±
yê´|æ+|ü #˚dTü +Ô ~.
 Á|ü|ü+#·yê´|üÔ+>± nH˚ø£ <˚XÊ\T ìs¡+‘·s¡+ nqTdü+<Ûëq+>± ñ+{≤sTT, ø±ã{Ïº C≤„q+ eT]j·TT kÕ+πø‹ø£
|ü⁄s√>∑‘·T\T ‘·«s¡>± Á|üj·÷DÏkÕÔsTT.
 >√¢ã˝…’CÒwüHé ø£+ô|˙\T ‘·eT edüTÔe⁄\qT ñ‘·Œ‹Ô #˚j·T&ÜìøÏ ‘·≈£îÿe-<Ûäs¡ e÷sêZ\qT ø£qT>=q&ÜìøÏ <ë]
#·÷|ü⁄‘·T+~. Ç~ Á|ü|ü+#· b˛{°ì ≈£L&Ü ô|+#·T‘·T+~, Ç~ <Ûäs¡\qT ‘·–ZdüTÔ+~ eT]j·TT $ìjÓ÷>∑<ës¡T\
ø√dü+ nH˚ø£ s¡ø±\ Á|ü‘êé÷ïj·÷\qT düwæºdüTÔ+~. ‘·≈£îÿe Ks¡TÃ\T n_Ûe~∆ #Ó+<äT‘·Tqï eT]j·TT Ç|üŒ{Ïπø
n_Ûe~∆ #Ó+~q <˚XÊ\˝Àì Á|ü»\T ‘·≈£îÿe &ÉãT“‘√ yÓTs¡T>±Z J$+#·&ÜìøÏ düVü‰j·T|ü&É‘êsTT.
 Á|ü|ü+Nø£s¡D ø±s¡D+>± n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\T yÓTs¡T¬>’q Jeq Á|üe÷D≤ìï nqTuÛÑ$düTÔHêïsTT.
 Á|ü|ü+Nø£s¡D qT+&ç yê´bÕsê\T ø=‘·Ô ø£düºeTsY\T eT]j·TT $_Ûqï Ä<ëj·T e÷sêZ\‘√ düVü‰ >=|üŒ ˝≤uÛÑ+
bı+<äT‘êsTT. á Á|üjÓ÷»Hê\ô|’ ÄdüøÏÔ ñqï ø£+ô|˙\T ‘·eT yê´bÕsêìï $<˚XÊ\˝À e~∆ #˚düTø√e&ÜìøÏ
nqTyÓ’q eT]j·TT $q÷‘·ï e÷sêZ\qT nH˚«wækÕÔsTT.
 ø=‘·Ô e÷¬sÿ≥¢‘√ bÕ≥T, >√¢ã˝…’CÒwüHé ø£+ô|˙\T ‘·eT Á|üdüTÔ‘· e÷¬sÿ{Ÿ˝À n+<äTu≤≥T˝À ˝Òì ø=‘·Ô, Á|ü‘˚´ø£
Á|ü‹uÛÑqT ø£qT>=q&ÜìøÏ ø£+ô|˙\qT Áb˛‘·‡Væ≤düTÔ+~.
 @ <˚X¯yÓTÆHê ˇ|üŒ+<ä+ <ë«sê kÕ+πø‹ø£ |ü]C≤„Hêìï n|ü⁄Œ>± rdüTø√e#·TÃ eT]j·TT yê] yÓTT‘·Ô+ n_Ûe~∆
ø√dü+ ‘·eT <˚X¯+˝À neT\T #˚j·Te#·TÃ. ø£˙dü e´j·T+, düeTj·T+ eT]j·TT Á|üj·T‘êï\‘√ n<ÛäTHê‘·q
kÕ+πø‹ø£ |ü]C≤„Hêìï ñ|üjÓ÷–+#·&É+ <ë«sê eTq+ Á|ü|ü+#·+˝Àì @ ÁbÕ+‘·+ qT+&ç nsTTHê ˇø£]H=ø£s¡T
düT\uÛÑ+>± ø£eT÷´ìπø{Ÿ #˚düTø√e#·TÃ.
256
allowed more than 51 percent of the foreign investment in the Indian companies. At present, 100
percent 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-linking
many people simultaneously. Cellular phones, Fax machines, Computer Aided Design. Faster and
cheaper transport by air, travel and road. These are components of globalization of IT. Manufacturing
technology, assembly line operations are undertaken globally.
9.2.3. ADVANTAGES OF GLOBALIZATION
 Globalization makes it easier to access foreign culture, including food, movies, music, and
art.
 Many countries around the world remain constantly connected, so knowledge and
technological 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 choices
for consumers. Lowered costs help people in both developing and already-developed countries
live 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 revenue
streams. Companies interested in these benefits look for flexible and innovative ways to grow
their business overseas.
 In addition to new markets, globalization allows companies to find new, specialized talent
that is not available in their current market.
 Any country can borrow the technology through the agreement and can implement it in their
country for their overall development. We can communicate each other easily from any part
of 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 other
services have been easier and better than before.
257
 Á|ü|ü+Nø£s¡D m\¢|ü⁄Œ&É÷ yÓTs¡T¬>’q ùde\qT n+~düTÔ+~. kÕ+πø‹ø£ |ü⁄s√>∑‹ <ë«sê ˙{Ï düs¡|òüsê, yÓTTu…’˝Ÿ
HÓ{Ÿe]ÿ+>¥, Ç+≥¬sï{Ÿ, $<äT´‘Y düs|¡ süò ê e+{Ï Ç‘·s¡ ùde\T eTTqT|ü{Ï ø£+fÒ düT\uÛ+Ñ >± eT]j·TT yÓTs¡T>±Z
n+<äT‘êsTT.
 kÕ+πø‹ø£ |ü⁄s√>∑‹ ø±s¡D+>±, eT]j·TT Á|ü|ü+#·yê´|üÔ+>± <ëì ã~© <˚X¯ eTÚ*ø£ dü<äTbÕj·÷\qT
yÓTs¡T>∑T|üs#¡ &· +É ˝À düV‰ü j·T|ü&TÉ ‘·T+~.
 Á|ü|+ü Nø£sD ¡ Á|ü|+ü #· <˚XÊ\ dü÷\Ô C≤rjÓ÷‘·Œ‹Ô e~∆øÏ Á|ü‹ <˚X+¯ n+~+#˚ düV≤ü ø±sêìï ô|+bı+~düT+Ô ~.
 Á|ü|ü+Nø£s¡D e÷¬sÿ{Ÿ $$<ä <˚XÊ\≈£î $düÔ‹ #Ó+<ä&Üìï Áb˛‘·‡Væ≤düTÔ+~. Ç~ <˚oj·T ø£+ô|˙\≈£î
Á|ü|ü+#·yê´|üÔ+>± #˚s¡Tø√e&ÜìøÏ neø±XÊìï n+~düTÔ+~.
9.2.4. Á|ü|ü+Nø£s¡D - ˝ÀbÕ\T

 Á|ü|+ü Nø£sD¡ yêDÏC≤´ìï ô|+#·&+É <ë«sê Á|ü|+ü #·yê´|ü+Ô >± <˚XÊ\ eT<Û´ä ndüe÷q‘·qT ô|+#·T‘·T+~. ôdŒwü˝C’… wÒ Hü é
eT]j·TT yêDÏ»´+ ‘·\dü] Ä<ëj·÷ìï ô|+∫q|üŒ{Ïø°, Ç~ kÕù|ø£å ù|<ä]ø±ìøÏ ø±s¡D+ ø±e#·TÃ.
 Á|ü|ü+Nø£s¡D ìs¡T<√´>±ìï ô|+#·T‘·T+~. >√¢ã˝…’CÒwüHé ‘·≈£îÿe <Ûsä ¡‘√ n~Ûø£ HÓ’|ü⁄D´+ ø£*–q |üì yê] ø√dü+
&çe÷+&é #˚dTü +Ô ~. ø±˙ kÕù|ø£+å >± dü+dü\ú T ã\V”≤q+>± ñqï <˚XÊ\T n‘·´+‘· HÓ|’ ⁄ü D´+ ø£*–q ø±]à≈£î\qT
ñ‘·Œ‹Ô #˚j·T˝Òe⁄. |òü*‘·+>±, Ä <˚XÊ\˝À ìs¡T<√´>∑ πs≥T ô|s¡T>∑T‘√+~.
 n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\T ~>∑TeT‹ edüTÔe⁄\ $wüj·T+˝À n_Ûe~∆ #Ó+~q <˚XÊ\ô|’ m≈£îÿe>± Ä<Ûës¡|ü&ç
ñ+{≤sTT ø±˙ Äj·÷ <˚XÊ\ m>∑TeT‹ kÕeTsêú´\T ~>∑TeT‹ ø£+fÒ ‘·≈£îÿe>± ñ+{≤sTT. á Á|ü|ü+Nø£s¡D
ø±s¡D+>± yêDÏ»´ ndüeT‘·T\´‘· @s¡Œ&ç+~.
 Á|ü|ü+Nø£s¡D |òü*‘·+>± bÕ]ÁXÊ$Tø°ø£s¡D y˚>∑+ ô|s¡T>∑T‘√+~. Ç~ Ä]úø£ e~∆ì ô|+#·T‘·T+~. ø±˙, n~
|üsêés¡D≤ìøÏ Vü‰ì #˚düTÔ+~ eT]j·TT Á|üø£‹ì <√#·T≈£î+≥T+~. Ç~ Á|ü|ü+#êìï rÁe+>± Á|üuÛ≤$‘·+
#˚dTü +Ô ~.
9.3. Á|ü|ü+#· yêDÏ»´ dü+düú - (WTO))
Á|ü|+ü #· yêDÏ»´ dü+düú n+‘·sê®rj·T yêDÏ»´ ìj·Te÷\‘√ eéVü≤]+#˚ ˇø£ >√¢ã˝Ÿ dü+dü.ú n+‘·sê®rj·T yêDÏ»´+
kÕ<ÛäýÓTÆq+‘· düC≤e⁄>±, }Væ≤+∫q $<Ûä+>± eT]j·TT ùd«#·Ã¤>± q&ç#˚˝≤ #·÷&É≥+ Bì Á|ü<Ûëq $~Û. Ç~ <˚XÊ\
eT<Ûä´ yêDÏ»´ ˇ|üŒ+<ë\qT neT\T #˚j·T&É+, ìj·T+Á‹+#·&É+ eT]j·TT ìs¡«Væ≤+#·&É+ô|’ |üì#˚düTÔ+~. düuÛÑ´
<˚XÊ\ eT<Ûä´ yêDÏ»´ #·s¡Ã\ ø√dü+ Hê´j·TyÓTÆq y˚~ø£qT n+~düTÔ+~, $yê<ë\T ‘·˝…‹Ôq|ü⁄Œ&ÉT eT<Ûäé]Ô‘·«+
#˚düTÔ+~. ~>∑TeT‘·T\T, m>∑TeT‘·T\T eT]j·TT yêDÏC≤´ìï Hê´j·T+>± ìs¡«Væ≤+#·&ÜìøÏ düVü‰j·T+ #˚j·T&É+ Bì
\ø£å´+.
Á|ü|ü+#· yêDÏ»´ dü+düú 1995 ˝À C…˙yê˝À kÕú|æ+#·ã&ç+~. ø£düºyTé ‡ düT+ø±\qT ‘·–Z+#·&É+ eT]j·TT düuÛÑ´
<˚XÊ\≈£î düs¡düyÓTÆq y˚~ø£qT düwæº+#˚ \ø£å´+‘√, 23 düuÛÑ´ <˚XÊ\‘√ 1948 ˝À @s¡Œ&çq »qs¡˝Ÿ nÁ–yÓT+{Ÿ ÄHé
{≤]|ò‡t n+&é ÁfÒ&é (GATT) nH˚ n+‘·sê®rj·T dü+düú kÕúq+˝À Ç~ e∫Ã+~. (GATT) yêDÏ»´ edüTeÔ ⁄\ yê´bÕsê\qT
ìj·T+Á‹+∫+~, nsTT‘˚ WTO f…*ø£eT÷´ìπøwüH‡é eT]j·TT u≤´+øÏ+>¥ e+{Ï edüTeÔ ⁄\T eT]j·TT ùde\ yêDÏ»´+,
n˝≤π> y˚T<Û√ dü+|ü‹Ô Vü≤≈£îÿ\T e+{Ï nH˚ø£ Ç‘·s¡ düeTdü´\˝À ≈£L&Ü bÕ˝§Z+≥T+~.
2003 Hê{ÏøÏ, Ç~ 145 eT+~ düuÛÑT´\qT ø£*– ñ+~, eTs√ 25 <˚XÊ\T ‘·eT düuÛÑ´‘·«+ >∑T]+∫ #·s¡Ã\T
»s¡T|ü⁄‘·THêïsTT. á düeTj·T+˝À, dü+düú sê»ø°j·T eT]j·TT #·≥º|üs¡yÓTÆq düeTdü´\≈£î dü+ã+~Û+∫, eT]j·TT
258
 Owing to the technological advancement, and its transfer throughout the globe helps to
improve 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 and
trade. Although specialization and trade boost the per-capita income, it may cause relative
poverty.
 Globalisation increases the unemployment. Globalisation demands for higher skilled work
with cheaper price. But, countries where institutions are relatively weak are not capable of
producing highly skilled workers. As a result, the unemployment rate is increasing in those
countries.
 Developing countries are so much dependent on the developed countries in terms of import
goods but their export capabilities are lower than import. The trade imbalance has been
occurring due to this globalisation.
 The pace of industrialization is increasing as the result of globalization. It boosts the economic
growth. 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 as
possible. 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 as
they 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 replace
another 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 creating
a 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 and
services, such as telecommunications and banking, as well as a number of other issues, such as
intellectual property rights.
As of 2003, it had 145 members, with another 25 countries negotiating their membership. By this
point, the organisation had handled more than 280 trade disputes between member countries concerning
political and legal issues, and those concerning international trade and global economics. Now,
259
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¡TŒ

Á|ü|ü+#· yêDÏ»´ dü+düú ôdÁø£fÒ]j·T{Ÿ≈£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+&ÉT
dü+e‘·‡sê\≈£î ˇø£kÕ] düe÷y˚X¯eTe⁄‘·T+~. Ç~ dü+düú jÓTTø£ÿ ìs¡íj·÷\T rdüTø=H˚ eTTK´ n+>∑+. GATT 1947
øÏ+<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
$uÛ≤>∑+. »qs¡˝Ÿ øöì‡˝Ÿ kÕúsTTøÏ ~>∑Teq Á|ü‘˚´ø£ øöì‡˝Ÿ‡ ≈£L&Ü ñHêïsTT. M{Ï˝À, øöì‡˝Ÿ |òüsY ÁfÒ&é ÇHé >∑÷&é‡,
øöì‡˝Ÿ |òüsY ÁfÒ&é ÇHé düØ«ôddt, øöì‡˝Ÿ |òüsY TRIPS eT]j·TT eT]ìï nqTã+<Ûä dü+düú\T ñHêïsTT. ÁfÒ&é n+&é
&Óe\|tyÓT+{Ÿ, u≤´˝…Hé‡-Ä|òt-ù|yÓT+{Ÿ‡ |ü]$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:9.1
9.3.2. 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 eékÕj·÷ìï $TqVü‰sTT+∫ edüTÔe⁄\ô|’ e÷Á‘·y˚T <äwæº 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·T{Ÿ $<ÛëHê\ düMTø£å eT]j·TT $yê<ë\ |ü]cÕÿsêìøÏ dü+ã+~Û+∫q j·T+Á‘ê+>±\qT

n~Ûø±]ø£+>± eT]j·TT ã˝Àù|‘·+ #˚düTÔ+~. düuÛÑ´ <˚XÊ\ $düÔs¡D eT]j·TT WTO <ë«sê eT]ìï edüTÔe⁄\T
eT]j·TT ùde\qT ø£esY #˚j·T&É+ e\q á n+X¯+ ø°\ø£+>± e÷]+~. á $wüj·T+˝À eTs=ø£ eTTKýÓTÆq
|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+~.
260
WTO has 162 members, and a further 21 countries who have applied to join, including Iran, Iraq and
Syria. The European Union countries are all members, but they come under one EU bloc.
9.3.1. Organisation and Structure of WTO

The WTO Secretariat is headed by a Director-General. The highest authority of the WTO is the
Ministerial Conference, which is a makeup of representatives of its member states. The Ministerial
Conference meets at least once in two years. It is the decision making organ of the institution. Under
GATT 1947 consensus must be achieved in order to reach a decision. Under WTO, decisions of the
Ministerial Conference and the General Council are made by consensus. The General Council is the
administrative organ. There are also special councils below the level of the General Council. These
include, Council for Trade in Goods, Council for Trade in Services, Council for TRIPS and further
subsidiary bodies. Several committees also exist, such as: Committee on Trade and Development,
Committee on Balance-of-Payments Restrictions and Committee on Budget and Finance. Unlike
GATT, 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 Trade
and 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 with
intellectual property.
 WTO Secretariat has formalised and bolstered the mechanisms for the review of policies as
well as the settlement of disputes. This aspect has become crucial due to proliferation of
member 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 to
different international markets.
 There are rules implemented for the protection of small and weak countries against the
discriminatory trade practices of developed countries.
 National Treatment articles and Most Favoured Nation (MFN) clause permits equal access
to markets for just treatment of both domestic and foreign suppliers.
 Each member country of the WTO carries single voting right and all members enjoy privilege
on the global scale.
 The WTO agreements encompass all the member states and acts as a common
forum of deliberation for the members.
261
 C≤rj·T ∫øÏ‘ê‡ edüTÔe⁄\T eT]j·TT n‘·´+‘· ÇwüºyÓTÆq <˚X¯+ (MFN) ìã+<Ûäq <˚oj·T eT]j·TT $<˚o
düs¡|òüsê<ës¡T\≈£î πøe\+ |ü]kÕÿs¡+ ø√dü+ e÷¬sÿ{Ÿ\≈£î düe÷q ÁbÕ|æÔì n+~düTÔ+~.
 WTO ˝Àì Á|ü‹ düuÛÑ´ <˚X¯+ ˇπø 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\T

n+‘·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 y˚sπ «s¡T ˇ|üŒ+<ë\ øÏ+<ä kÕú|+æ #·ã&Ü¶sTT. n$ edüTeÔ ⁄\ n+‘·sê®rj·T
yêDÏC≤´ìøÏ dü+ã+~Û+∫q ìj·Te÷\T, y˚T<Û√ dü+|ü‹Ô Vü≤≈£îÿ\ yêDÏ»´+ dü+ã+~Û‘· n+XÊ\ô|’ ˇ|üŒ+<ä+ (TRIPS)
eT]j·TT ùde\ô|’ yêDÏ»´ dü+ã+~Û‘· ˇ|üŒ+<ä+ (GATS). düuÛÑ´ <˚XÊ\ <ë«sê yêDÏ»´ ìj·Te÷\qT ñ\¢+|òæT+∫q
dü+<äsê“¤\˝À $yê<ë\ |ü]cÕÿsêìøÏ ãVüQfi¯|øü 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 ˇ|üŒ+<ë\ Á|üø±s¡+ ø£≥Tºã&ç ñ+&É{≤ìøÏ WTO
ø£wæ #˚düTÔ+~.
>√¢ã˝Ÿ nô|ø˘‡ bò˛s¡yTé >± eéVü≤]+#·&+É .

es¡˝Ÿ¶ ÁfÒ&é Äs¡ZHÓ’CÒwüHé nH˚~ yêDÏ»´ düs¡∞ø£s¡DqT |üs¡ý˚øÏå+#·&ÜìøÏ eT]j·TT #·]Ã+#·&ÜìøÏ Á|ü|ü+#· y˚~ø£ >± ñ
+≥T+~. WTO #˚|{ü qºÏ yêDÏ»´ düs∞¡ ø£sD¡ #·s´¡ \ e\q düu´ÑÛ <˚XÊ\ ùd«#êÃ¤jT· T‘·yTÓ qÆ , düsd¡ yü TÓ qÆ yêDÏ»´ bÕ\q
ø±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\T
˝Òq|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«’ bÕøÏøå £ eT]j·TT ãVüQbÕøÏøå £ yêDÏ»´ ˇ|üŒ+<ë\qT neT\T #˚jT· &É+ eT]j·TT ìs¡«Væ≤+#·&+É
düu´ÑÛ <˚XÊ\ eT<Û´ä <Ó«’ bÕøÏøå £ ˝Ò<ë ãVüQbÕøÏøå £ yêDÏ»´ ˇ|üŒ+<ë\T ‘·|Œü ìdü]>± dü+ã+~Û‘· düu´ÑÛ <˚XÊ\ bÕs¡y¢ TÓ +≥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+>± WTO
eéVü≤]düTÔ+~.
yêDÏ»´ $yê<ä |ü]cÕÿs¡+

WTO ‘·q düuÛÑ´ <˚XÊ\ eT<Ûä´ yêDÏ»´ $yê<ë\ |ü]cÕÿsêìøÏ ø£wæ #˚dTü Ô+~. Bì jÓTTø£ÿ dü«‘·+Á‘· ì|ü⁄DT\T
≈£L&çq Á{ÏãT´q˝Ÿ ˇ|üŒ+<ë\qT ns¡ú+ #˚düTø=+≥T+~ eT]j·TT dü+ã+~Û‘· düuÛÑ´ <˚XÊ\ jÓTTø£ÿ ìã<ä∆‘·\qT
ù|s=ÿ+≥÷ rs¡TŒ ÇdüTÔ+~. düuÛÑT´\ eT<Ûä´ dü+Á|ü~+|ü⁄\ <ë«sê $yê<ë\qT |ü]wüÿ]+#·&ÜìøÏ Áb˛‘·‡Væ≤düTÔ+~.
262
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 separate
agreements – rules relating to the international trade in goods; the agreement on Trade-Related Aspects
of 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 settlement
in the instances of violation of trade rules by member countries. The members are obligated under
ratified 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 member
countries 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 absence
of 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 of
respective member countries. Unless such ratification comes through, the non-discriminatory trading
system cannot be put into practice. The executed agreements will ensure that every member is
guaranteed 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. Independent
experts of the tribunal interpret the agreements and give out judgment mentioning the due commitments
of the concerned member states. It is encouraged to settle the disputes by way of consultation among
the members as well.
Optimal utilisation of the world’s resources

Resources across the world can be further optimally utilised by harnessing the trade capacities of the
developing economies. It requires special provisions in the WTO agreements for the least-developed
economies. Such measures may include providing greater trading opportunities, longer duration to
implement commitments, and also support to build the sue infrastructure.
Increasing transparency in the decision-making process

The World Trade Organisation attempts to increase transparency in the decision-making process by
way of more participation in the decision-making and consensus rule, in particular. The combined
effect of such measures helps to develop institutional transparency.
263
Á|ü|+ü #· eqs¡T\ düeTs¡e∆ +‘·yTÓ qÆ $ìjÓ÷>∑+
n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédü\ú yêDÏ»´ kÕeTsêú´\qT $ìjÓ÷–+#·&+É <ë«sê Á|ü|+ü #·yê´|ü+Ô >± ñqï eqs¡T\qT
eT]+‘· ñ‘·ÔeT+>± ñ|üjÓ÷–+#·Tø√e#·TÃ. BìøÏ n_Ûe~∆ #Ó+<äì Ä]úø£ eédüú\≈£î %WTO% ˇ|üŒ+<ë\˝À
Á|ü‘˚´ø£ ìã+<Ûäq\T rdüT≈£îedüTÔ+~. Ç≥Te+{Ï #·s¡´\ e\q m≈£îÿe ÁfÒ&ç+>¥ neø±XÊ\T eT]j·TT neø£\ŒHê
kÂø£sê´\ ìsêàD≤ìøÏ neø±X¯+ ø£\TZ‘·T+~.
ìs¡jí T· Á|üÁøÏjT· ˝À bÕs¡<sä Ù¡ ø£‘·

Á|ü|ü+#· yêDÏ»´ dü+düú ìs¡íj·÷\T rdüTø√e&É+˝À eT]j·TT @ø±_ÛÁbÕj·T ìj·TeT+˝À düuÛÑ´<˚XÊ\ uÛ≤>∑kÕ«eT´+
<ë«sê ìs¡íj·T+ rdüTø√e&É+˝À bÕs¡<äs¡Ùø£‘·qT ô|+#·&ÜìøÏ Á|üj·T‹ïdüTÔ+~. n≥Te+{Ï #·s¡´\ $TÁX¯eT Á|üuÛ≤e+
dü+kÕú>∑‘· bÕs¡<äs¡Ùø£‘·qT n_Ûe~∆ #˚j·T&ÜìøÏ düVü‰j·T|ü&ÉT‘·T+~.
n+‘·sê®rj·T Ä]úø£ dü+dü\ú eT<Û´ä düV≤ü ø±s¡+

Á|ü|ü+#· Ä]úø£ dü+düú\˝À eTTKýÓTÆq$ Á|ü|ü+#· yêDÏ»´ dü+düú, n+‘·sê®rj·T Á<äe´ ì~Û, ◊ø£´sê»´dü$T‹ yêDÏ»´+
eT]j·TT n_Ûe~∆ dü+|òüT+ eT]j·TT Á|ü|ü+#· u≤´+ø˘ \T eTTKýÓTÆq$. Á|ü|ü+Nø£s¡D sêø£‘√, ãVüQfi¯|üø£å dü+düú\
eT<Ûä´ düìïVæ≤‘· düVü≤ø±s¡+ nedüs¡+ nsTT+~. á dü+düú\T Á|ü|ü+#· Ä]úø£ $<Ûëq ìs¡íj·T dü÷Árø£s¡D eT]j·TT
neT\T ø√dü+ |üì#˚dTü HÔ êïsTT. ìs¡+‘·s¡ dü+Á|ü~+|ü⁄\T eT]j·TT |üsd¡ Œü s¡ düV≤ü ø±s¡+ ˝Òq|ü⁄Œ&ÉT, $<Ûëq s¡÷|üø\£ Œq≈£î
n+‘·sêj·T+ @s¡Œ&Ée#·TÃ.
n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\ yêDÏ»´ ÄdüøìÔÏ ø±bÕ&É≥+

n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\ yêDÏ»´ Á|üj÷Ó »Hê\qT |ü]s¡ø+åÏ #·&ÜìøÏ WTO ø£]qƒ yÓTqÆ ìã+<Ûqä \T neT\T #˚dTü +Ô ~.
Ç~ düuÛÑ´ <˚XÊ\≈£î Ä<˚XÊ\qT Çe«&É+, $yê<ë\qT |ü]wüÿ]+#·&É+ eT]j·TT düuÛÑ´ <˚XÊ\ eT<Ûä´ kÕ+πø‹ø£
Á|üe÷D≤\qT neT\T #˚ùd yê{Ï kÕeTsêú´ìï ô|+#·&ÜìøÏ ø£wæ #˚düTÔ+~.
9.3.4. Á|ü|ü+#· yêDÏ»´+˝À WTO ÁbÕeTTK´‘·

WTO ìj·Te÷\-Ä<Ûë]‘· ãVüQbÕøÏåø£ eédüúô|’ |üì#˚ùd Á|ü|ü+#· ùd«#êÃ¤ yêDÏC≤´ìï n]ø£≥º&ÜìøÏ eT]j·TT
yêDÏ»´ n&É¶+≈£î\qT ‘·–Z+#·&ÜìøÏ #˚ùd Á|üj·T‘êï\˝À eTT+<ä+»˝À ñ+~.
 Á|ü|+ü #· yêDÏC≤´ìï Áb˛‘·‡Væ≤+#˚ ~X¯>± Á|ü|+ü #·yê´|ü+Ô >± kÕ~Û+∫q |ü⁄s√>∑‹øÏ Ç~ eTTKýÓTqÆ düV≤ü ø±sêìï
n+~+∫+~. Ç~ nH˚ø£ Ä]úø£ eédüú\ n_Ûe~∆øÏ, ø=‘·Ô e÷¬sÿ≥¢ Ä$sê“¤yêìøÏ <ë]rdæ+~. yê´bÕsêìï
yÓTs¡T>∑T|üs#¡ &· +É ˝ÀH˚ ø±≈£î+&Ü Á|ü»\qT ù|<ä]ø£+ qT+&ç ãj·T≥≈£î rj·T&É+˝À ≈£L&Ü eTTK´ bÕÁ‘· b˛wæk˛Ô+~.
 Ç~ <˚XÊ\ eT<Ûä´ yêDÏ»´ ˇ|üŒ+<ë\qT neT\T #˚j·T&É+, ìj·T+Á‹+#·&É+ <ë«sê eT]j·TT düuÛÑ´ <˚XÊ\
eT<Ûä´ yêDÏ»´ #·s¡Ã\ ø√dü+ Hê´j·TyÓTÆq düVü≤ø±sêìï n+~düTÔ+~, $yê<ë\T ‘·˝…‹Ôq|ü⁄Œ&ÉT eT<Ûäé]Ô‘·«+
#˚düTÔ+~. Ç~ ~>∑TeT‘·T\T, m>∑TeT‘·T\≈£î düVü‰j·T+ #˚j·T&É+ yêDÏ»´+ Hê´j·T+>± »]π>˝≤ #·÷düTÔ+~.
 WTO Ç‘·s¡ n+‘·sê®rj·T dü+dü˝ú q’… Ç+≥πsïwüq˝Ÿ e÷ì≥Ø |ò+ü &é )T]j·TT Á|ü|+ü #· u≤´+ø˘‘√ düV≤ü ø£]düT+Ô ~.
Á|ü|ü+#· Ä]úø£ $<ÛëHê\T Hê´j·T+>± eT]j·TT düeTq«j·T+‘√ ñ+&˚˝≤ #·÷düTÔ+~. n+<äTe\¢, n+‘·sê®rj·T
yê´bÕsêìøÏ %WTO% eTTKýÓTÆq<˚ ø±ø£ |üP]Ô>± ìj·TeTìã+<äq\‘√ ≈£L&çq~.
264
Collaboration between International economic institutions
The global economic institutions include the World Trade Organisation, the International Monetary
Fund, the United Nations Conference on Trade and Development, and the World Bank. With the
advent of globalisation, close cooperation has become necessary between multilateral institutions.
These institutions are functional in the sector of formulation and implementation of a global economic
policy framework. In the absence of regular consultation and mutual cooperation, policymaking may
be disrupted.
Safeguarding the trading interest of developing countries

Stringent regulations are implemented by the WTO to protect the trading interests of developing
countries. It supports such member countries to leverage the capacity for carrying out the mandates
of the organisation, managing disputes, and implementing relevant technical standards.
9.3.4. IMPORTANCE OF WTO IN WORLD TRADE

WTO 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 promoting
global trade. This has led to the growth of a number of economies, the emergence of new
markets – all important factors not only in improving business, but also in lifting people out of
poverty.
 It does this by implementing, regulating and operating trade agreements between countries,
and provides a fair forum for trade negotiations between member countries, mediating on
disputes 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 to
ensure global economic policies are fair and cohesive. Therefore, it isn’t a matter of the
WTO 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 in
multiple countries. But the job would be a lot more difficult if these rules were unfair or
unreliable, or not consistently applied.
 The importance of a regulatory body such as the WTO is especially pressing at a time of
such pronounced global uncertainty – several of its members are currently using it to dispute
increasing protectionist tendencies, trade tariffs and immigration difficulties imposed by
developed countries .
 Understanding the work and nature of the WTO is therefore an important part of remaining
aware of the changing landscape of international landscape. In uncertain times, having the
right advice and support is crucial. WTO is the right organisation to act accordingly.
265
 $$<Ûä <˚XÊ\ eT<Ûä´ $$<Ûä ìã+<Ûäq\T eT]j·TT ìj·Te÷\ô|’ <˚XÊ\T |üì#˚kÕÔsTT, eT]j·TT n+‘·sê®rj·T
yê´bÕs¡+ ãVüQfi¯ <˚XÊ\‘√ |üì#˚ùd≥|ü⁄Œ&ÉT M{Ïô|’ nÁ>∑kÕúq+˝À ñ+&É≥+ düT\uÛ+Ñ ø±<äT. ø±˙ á ìj·Te÷\T
nHê´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 edüT+Ô ~.
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 <äX¯´+ jÓTTø£ÿ e÷s¡T‘·Tqï
Á|üø£‹ <äX¯´+ >∑T]+∫ ‘Ó\TdüTø√e&É+˝À eTTKýÓTÆq uÛ≤>∑+. nì•Ã‘· düeTj·÷˝À¢, dü¬s’q dü\Vü‰ eT]j·TT
eT<ä›‘·T Çe«&É+ ˝À WTO #ê˝≤ HÓ’|ü⁄Dé+‘·+>± |üì#˚düTÔ+~.
9.3.5. WTO ô|’ $eTs¡Ù

Á|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+~ $<Ûä+>± ñHêïsTT.
ùd«#êÃ¤ yêDÏ»´+ Á|üjÓ÷»Hê\T n_Ûe~∆ #Ó+~q <˚XÊ\≈£î m≈£îÿe>± n+~düTÔ+~.ø=‘·Ô |ü]ÁX¯eT\qT n_Ûe~∆
#˚j÷· \+fÒ n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\≈£î ø=+‘· yêDÏ»´ s¡øD
å£ nedüs+¡ . Ä]úø£ eédüqú T yÓ$’ <Û´ä |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¯˝À
düT+ø£+ s¡ø£åD kÕúsTTì ñ|üjÓ÷–+#·Tø=ì ny˚ n_Ûe~› #Ó+<äT‘·THêïsTT ø±ì n_Ûe~› #Ó+<äT‘·Tqï <˚XÊ\≈£î m{Ïº
Á|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˚~ WTO
dæ<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|’ \üò ´+:

$$<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 $~ÛdüTÔHêïsTT. Ç~ düT+ø£+ s¡ø£åDqT m<äTs=ÿ+≥Tqï n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédüú\˝À ¬s’‘·T\qT
<Óã“rdüT+Ô ~
yÓ$’ BÛ´ø£sD¡ :
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 $düÔ]+#ê*‡q nedüs¡+ ñ+~. yÓ’$<ÛäúÛÑ]‘·+ #˚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£+
266
9.3.5. CRITICISM ON WTO
The 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 criticisms
of 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. Many
developed 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 local
firm is not allowed to favour local contractors. It is argued this gives an unfair advantage to multinational
companies and can have costs for local firms and the right of developing economies to favour their
own emerging industries.
Failure to reduce tariffs on agriculture

Free trade is not equally sought across different industries. Both the US and EU retain high tariffs on
agriculture, this hurts farmers in developing economies who face tariff protection
Diversification.
Arguably, developing countries who specialise in primary products (e.g. agricultural products) need
to diversify into other sectors. To diversify they may need some tariff protection, at least in the short
term. 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 be
made from countries with the least environmental protection. Many criticise the WTO’s philosophy
that the most important economic objective is the maximisation of GDP. In an era of global warming
and potential environmental disaster, increasing GDP may be the least important. Arguably the WTO
should 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 maintain
cultural diversity. Some criticise the WTO for enabling the domination of multinational companies
which 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 benefit
the most.
267
s¡ø£åDqT ñ|üjÓ÷–+#·Tø=+≥THêïsTT. ø±ì , WTO n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\ $wüj·T+˝À yê{Ï nedüsê\qT
$düà]+∫+<äì $eTs¡Ù ñ+~.
|üsêés¡D+:
ùd«#êÃ¤ yêDÏ»´+ ‘·s¡#·T>± |üsêés¡D |ü]>∑Dq\qT $düà]düTÔ+~. ñ<ë. ùd«#êÃ¤ yêDÏ»´+ ‘·≈£îÿe |üsêés¡D
|ü]s¡ø£åD ñqï <˚XÊ\ qT+&ç ~>∑TeT‘·T\T #˚j·T&ÜìøÏ M\T ø£*Œ+∫+~. WTO jÓTTø£ÿ eTTK´ Ä]úø£ \ø£å´+ GDP
jÓTTø£ÿ >∑]w”ºø£s¡D. GDP ô|+#·&É+ n‹ eTTKýÓTÆq~ ø±e#·TÃ. ø±ì >√¢ã˝Ÿ yê]à+>¥ eT]j·TT |üsêés¡D
$|ü‘·TÔ\qT >∑T]+∫ ≈£L&Ü Ä˝À∫+#ê*. ìdü‡+<˚Vü≤+>± WTO |üsêés¡D |ü]o\q\qT Áb˛‘·‡Væ≤+#·&ÜìøÏ
eT]+‘· #˚j·Te\dæq nedüs¡+ ñ+<äH˚ $eTs¡Ù ñ+~.
ùd«#êÃ¤ yêDÏ»´+ kÕ+düÿ‹ø£ eT]j·TT kÕe÷õø£ n+XÊ\qT $düà]düT+Ô ~.

ìdü‡+<˚Vü≤+>±, ùd«#êÃ¤ yêDÏC≤´ìï |ü]$T‘·+ #˚j·T&ÜìøÏ ˇø£ düùV≤‘·Tø£yÓTÆq yê<äq @$T≥+fÒ, Ç~ kÕ+düÿ‹ø£
yÓ$’ <Ûë´ìï ìs¡«Væ≤+#·&ÜìøÏ <˚XÊ\qT nqTeT‹düT+Ô ~. ãVüQfi¯C≤‹ ø£+ô|˙\ Ä~Û|‘ü ´· + ø√dü+ kÕ+düÿ‹ø£ yÓ$’ <Ûë´ìï
‘·–Z+∫, kÕúìø£ |ü]ÁX¯eT\T eT]j·TT dü+düú\qT ∫‘·Ô&ç>± e÷πsÃ+<äT≈£î WTO |üPqTø=+≥T+<äì $eTs¡Ù ñ+~.
WTOnÁ|üC≤kÕ«$Tø£+>± ñ+<äì $eT]Ù+#·ã&ç+~.

WTO jÓTTø£ÿ ìsêàD+ <Ûìä ø£ <˚XÊ\T yês¡T ø√s¡T≈£îqï~. Ç~ <Ûìä ø£ WTO<˚XÊ\T >¬ \e&ÜìøÏ M\T ø£*ŒdüT+Ô <äì,
ìdü‡+<˚Vü≤+>± <Ûäìø£ <˚XÊ\T Á|üjÓ÷»q+ bı+<äT‘êj·TH˚ $eTs¡Ù ñ+~. |ü⁄s√>∑‹ ˝À eT+<ä>∑eTq+: WTO
Ä<ä«s¡´+ ˝À yê´bÕs¡ ˝≤yê <˚M\T, ÁfÒ&é sö+&ÉT¢ #ê˝≤ HÓeTà~>± ñHêïsTT. Ç$ ˇ|üŒ+<ë\ es¡≈î£ #˚sT¡ ø√e&ÜìøÏ
ø£wüº+ >± e÷s¡T‘·THêïsTT.
9.4. n+‘·sê®rj·T |ü⁄q]ïsêàD eT]j·TT n_Ûe~› u≤+≈£î (IBRD)

%n+‘·sê®rj·T |ü⁄q]ïsêàD eT]j·TT n_Ûe~› u≤+≈£î (IBRD) 189 düuÛÑ´ <˚XÊ\≈£î #Ó+~q Á|ü|ü+#· n_Ûe~∆
düVü≤ø±s¡ u≤+≈£î. Á|ü|ü+#·+˝Àì n‹ ô|<ä› &Óe\|tyÓT+{Ÿ u≤´+ø˘>±, Ç~ Á|ü|ü+#· u≤´+ø˘ Á>∑÷|t ñ<˚›XÊ\ y˚Ts¡≈£î
s¡TD≤\T, Vü‰MT\T, ]dtÿ y˚TH˚CŸyÓT+{Ÿ ñ‘·Œ‘·TÔ\T, eT<Ûä´-Ä<ëj·T eT]j·TT Á¬ø&ç{Ÿ ns¡Ω‘· ø£*–q ‘·≈£îÿe-Ä<ëj·T
<˚XÊ\≈£î dü\Vü‰ ùde\qT n+~+#·&É+ <ë«sê, n˝≤π> ÁbÕ+rj·T düyêfi¯ófl eT]j·TT Á|ü|ü+#·yê´|üÔ Á|ü‹düŒ+<äq\qT
düeTq«j·T+ #˚j·T&É+ <ë«sê eT<ä›‘·T ÇdüTÔ+~. Bì ‘êC≤ \ø£å´+ Á|ü|ü+#·yê´|üÔ+>± ù|<ä]ø±ìï ‘·–Z+#·&É+.
Á|ü|+ü #· u≤´+ø˘ Á>∑÷|t n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\≈£î s¡TD≤\T n+~+#˚ ◊<äT n+‘·sê®rj·T dü+dü\ú qT ø£*– ñ+~.
Ç$:
Ç+≥πsïwüq˝Ÿ u≤´+ø˘ |òüsY Øø£HéÁdüºø£åHé n+&é &Óe\|tyÓT+{Ÿ

n+‘·sê®rj·T n_Ûe~∆ dü+|òTü +
Ç+≥πsïwüq˝Ÿ ô|H’ò êHé‡ ø±s=ŒπswüHé
ãVüQfi¯|üø£å ô|≥Tºã&ÉT\ Vü‰MT dü+düú
n+‘·sê®rj·T $yê<ë\ |ü]cÕÿs¡ πø+Á<ä+
Ç+≥πsïwüq˝Ÿ u≤´+ø˘ |òsü Y Øø£HÁé düøº Hå£ é n+&é &Óe\|tyTÓ +{Ÿ eT]j·TT n+‘·sê®rj·T n_Ûe~∆ dü+|òTü + \qT ø£*|æ Á|ü|+ü #·
268
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 development
cooperative owned by 189 member countries. As the largest development bank in the world, it
supports 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 by
coordinating responses to regional and global challenges. Its most recent aim is to reduce the poverty
across the world.
The World Bank Group comprises five international organizations that provide loans to developing
countries. 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 nations
while 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 in
tandem. 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 nations
devastated by World War II. Following the reconstruction of Europe, the Bank’s mandate expanded
to advancing worldwide economic development and eradicating poverty. The IBRD provides
commercial-grade or concessional financing to sovereign states to fund projects that seek to improve
transportation and infrastructure, education, domestic policy, environmental consciousness, energy
investments, 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 the
Board of Governors. The IBRD has its own executive leadership and staff which conduct its normal
business operations. The Bank’s member governments are shareholders which contribute and have
the right to vote on its matters. In addition to contributions from its member nations, the IBRD
acquires most of its capital by borrowing on international capital markets through bond issues.
269
u≤´+ø˘ >± eéVü≤]kÕÔsT¡ . IBRD ˝À 189 düu´ÑÛ <˚XÊ\T ñ+&É>± IDA ˝À 173 düu´ÑÛ <˚XÊ\T ñHêïsTT. n+‘·sê®rj·T
Á<äe´ ì~Û ‘√ bÕ≥T 1944 ˝À Áu…≥Hº é e⁄&é‡ ø±qŒ¤s¬ Hé‡˝À IBRD kÕú|+æ #·ã&ç+~. IMF eT]j·TT Á|ü|+ü #· u≤´+ø˘
s¬ +&É÷ ø£*dæ |üì#˚kÕÔsTT. IBRD Á|ü<ëÛ q ø±sê´\j·T+ nyÓT]ø±˝Àì yêwæ+>∑Hº é 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£ düV‰ü j·T+ #˚jT· &É+. ◊s√bÕ |ü⁄q]ïsêàD+ ‘·sT¡ yê‘·, u≤´+ø˘ ñ<˚X› +¯ Á|ü|+ü #·yê´|üÔ Ä]úø±_Ûe~∆øÏ
eT]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 düŒVü≤,
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≤≈£îÿ
ø£*– ñ+{≤s¡T. <ëì düuÛÑ´ <˚XÊ\ düVü≤ø±s¡+‘√ bÕ≥T, IBRD u≤+&É¢ C≤Ø <ë«sê n+‘·sê®rj·T eT÷\<Ûäq
e÷¬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 - eédüú

u≤´+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 øπ {≤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 z{Ï+>¥ n~Ûø±s¡+ ñ+≥T+~.
ø±s¡´ ìsê«Vü≤ø£ uÀs¡T¶ ˝À 21 eT+~ &Ós¬’ ø£sº T¡ ¢ düuTÑÛ ´\T>± ñ+{≤s¡T. yê]˝À 6 eT+~ì Äs¡T n‹ô|<ä› yê{≤<ës¡T\T
ìj·T$TkÕÔs¡T. n$ USA, UK , |ü•ÃeT »s¡à˙, ÁbòÕHé‡, »bÕHé eT]j·TT Ç+&çj·÷. $T–*q 15 eT+~ düuÛÑT´\T
$T–*q <˚XÊ\#˚ mqTïø√ã&É‘ês¡T. Á|ü‹ ø±s¡´ ìsê«Vü≤ø£ &Ó’¬sø£ºsY ‘·q Á|üuÛÑT‘·«+ ø£*– ñqï yê{≤\ ìwüŒ‹Ô˝À
z{Ï+>¥ X¯øÏÔì ø£*– ñ+{≤s¡T. ø±s¡´ ìsê«Vü≤ø£ uÀs¡T¶ u≤´+≈£î jÓTTø£ÿ kÕ<Ûës¡D |üìì ìs¡«Væ≤+#·&ÜìøÏ HÓ\≈£î
ˇø£kÕ] Áø£eT+ ‘·|üŒ≈£î+&Ü düe÷y˚X¯eTe⁄‘·T+~.
u≤´+ø˘ n<Ûä´≈£åî&çì uÀsY¶ Ä|òt m–®≈£L´{Ïyé &Ó’¬sø£ºs¡T¢ ìj·T$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≤<Û´ä ‘· eVæ≤kÕÔ&TÉ . dü\Vü‰ ø£$T{°ì &Ós¬’ ø£sº ¢¡ uÀs¡T¶ ìj·T$TdüT+Ô ~.
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+.
270
9.4.1. Organization and Structure
The organization of the bank consists of the Board of Governors, the Board of Executive Directors
and the Advisory Committee, the Loan Committee and the president and other staff members. All the
powers of the bank are vested in the Board of Governors which is the supreme policy making body
of the bank. The board consists of one Governor and one alternative Governor is appointed for five
years by each member country. Each Governor has the voting power which is related to the financial
contribution of the Government which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest
shareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15
members are elected by the remaining countries. Each Executive Director holds voting power in
proportion to the shares held by his Government. The board of Executive Directors meets regularly
once 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 Executive
of the Bank and he is responsible for the conduct of the day-to-day business of the bank. The
Advisory committee is appointed by the Board of Directors. It consists of 7 members who are
expects 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) equilibrium
and balanced development of international trade.
 To provide guarantee for loans granted to small and large units and other projects of member
countries.
 To ensure the implementation of development projects so as to bring about a smooth

transference 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 IBRD

IBRD is playing main role of providing loans for development works to member countries, especially
to underdeveloped countries. It provides long-term loans for various development projects of 5 to
20 years duration. The main functions are..
271
 $<˚o #Ó*¢+|ü⁄\ X‚wü+˝À düeT‘·T\´‘· eT]j·TT n+‘·sê®rj·T yêDÏ»´+ jÓTTø£ÿ düeT‘·T\´ n_Ûe~∆øÏ uÛÑs√kÕ
ø√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‰MTì
n+~+#·&+É .
ï j·TT<ä∆ düeTj·÷\ qT+&ç XÊ+‹ Ä]úø£ eédüú≈£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|y’ {˚ Ÿ eT÷\<Ûqä + n+<äTu≤≥T˝À ˝Òq≥¢sTT‘˚, |ü]>∑D+Ï #·<–ä q |ü]dæ‘ú T· \ô|’
ñ‘êŒ<äø£ ø±s¡´ø£˝≤bÕ\ ø√dü+ s¡TD≤\T n+~düTÔ+~.
9.4.2. IBRD $<ÛäT\T

düuÛÑ´ <˚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±\ eé~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…ø˘º ø√dü+ u≤´+ø˘ s¡TD≤\T eT+ps¡T
#˚dTü +Ô ~.
 s¡TDÁ>∑V≤” ‘· <˚X+¯ ]»sY« ø£s¬ ˙‡\˝À ˝Ò<ë s¡TD+ eT+ps¡T #˚jT· ã&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<ä{Ï Á|ü|ü+#· u≤´+≈£î s¡TD+
1948 ˝À 86 _*j·TqT¢ US $ qT bı+~+~. e÷]Ã 2011 Hê{ÏøÏ US $ 11.2 _*j·Tq¢ eT]j·TT IDA qT+&ç
27.0 _*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|üŒ{Ïø° 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+~.
272
 provides various technical services to the member countries. For this purpose, the Bank has
established “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 Bank
itself.
 generally, Bank grants loans for a particular project duly submitted to the Bank by the member
country.
 the debtor Nation has to repay either in reserve currencies or in the currency in which the
loan was sanctioned.
 Bank also provides loan to private investors belonging to member countries on its own
guarantee, but for this loan private investors have to seek prior permission from those counties
where this amount will be collected.
9.4.3. IBRD Lending to India

India 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 loans
for the government of India and are largely used in the social sector projects that contribute to the
achievement of the millennium development goals. The first World Bank loan to India was in 1948 of
US$ 86 billion. The debt disbursed and outstanding as of March 2011 for IBRD is US$ 11.28 and
for IDA it is US$ 27 billion.
World Bank has sanctioned 75 percent of its loans to developing countries of AFRICA, Asia and
Latin America while only 25 percent was given to developed Nations of Europe. But still, it is believed
by most nations that the developed countries do have a good command of the governing body of the
World Bank because of their largest contribution to the exchequer of the bank.
Formation :1944
Headquarters :Washington, D.C., U.S.
Membership :189 countries
President :David Malpass
273
KEY TERMS
1. Inter-Governmental Organizations: An IGO is an organization composed primarily of

sovereign states, or of other intergovernmental organizations. IGOs are established by treaty
or other agreement that acts as a charter creating the group.
2. Congenial Investment: Congenial means friendly, compatible, well-suited, good-humoured

etc. ... more facilitative & congenial & supportive of foreign investment.
3. Intellectual Property Rights: Intellectual property rights are the rights given to persons
over the creations of their minds. They usually give the creator an exclusive right over the use
of 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 is
lower 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 organization

of 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 a

UN body responsible for dealing with development issues, particularly international trade.
7. Most Favoured Nation: A most-favored-nation (MFN) clause requires a country to provide

any concessions, privileges, or immunities granted to one nation in a trade agreement to all
other World Trade Organization member countries.
8. Risk Management Products: Risk management refers to the practice of identifying potential
risks 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’s

international transactions for a particular time period. Any transaction that causes money to
flow into a country is a credit to its BOP account, and any transaction that causes money to
flow out is a debit.
274
1. Who is known as the father of globalisation

A. Theodare Levitt
B. Peter Sutherland
C. Harward Business School
D. None of the Above
2. WTO was Set up in the Year

A. 1995
B. 1955
C. 1985
D. 1975
3. WTO was Established in the place of

A. IMF
B. GATT
C. IBRD
D. SAARC
4. Which is not a wing of WTO

A. Ministerial Conference
B. Dispute Settlement Body
C. General Council
D. Governor
5. WTO stands for_________

A. World Tariff Organization
B. World Tax Organization
C. World Trade Organization
D. World Trademark Organization
6. ______countries were members of WTO as on 1st January 1995.

A. 151
B. 164
C. 104
D. 139
7. ________is the headquarter of the WTO.

A. Uruguay
B. Geneva
C. New York
D. Tokyo
275
8. Head Quarters of IBRD located in
A. Brettron Woods
B. New York
C. Washington DC
D. Russia
9. IBRD was established in the year

A. 1941
B. 1944
C. 1945
D. 1949
10. Which one is not a member in world bank group

A. 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
1 2 3 4 5 6 7 8 9 10
B A B D C B B C B D
Interactive Links:
https://www.wto.org/
https://www.worldbank.org/en/who-we-are/ibrd
https://en.wikipedia.org/wiki/Globalization_in_India
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.
276
Chapter
10
Learning Outcomes:

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.
Chapter Layout:
10.1. Trade Blocks
Trade Blocs
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
277
|Á |ü +ü #· yê´|ü+Ô >± fÁ &Ò é u≤¢ø˘ ˇø£ eTTKýÓTqÆ <ä–«wüjT· +, Bì˝À <˚XÊ\T >Á ÷∑ |ü⁄\T>± @s¡Œ&ç Ä]úø£ |Á j
ü ÷Ó »Hê\
ø√dü+ |üs¡düŒs¡+ ˇ|üŒ+<ë\T #˚düT≈£î+{≤sTT. düuÛÑ´ <˚XÊ\T ne\+_+#˚ Ä]úø£ düyÓTÆø£´‘· kÕúsTT Ä<Ûës¡+>±
$$<Ûä fÁ &Ò é u≤¢ø‡˘ eØZø]£ +#·ã&Ü¶sTT. á n<Ûë´j·T+˝À $$<Ûä s¡ø±\ fÁ &Ò é u≤¢ø‡˘ , yê{Ï |Á j ü ÷Ó »Hê\T eT]j·TT
|ü]$T‘·T\qT n<Û´ä j·Tq+ #˚jT· &É+ »]–+~.
uÁ õ… ˝Ÿ s¡cÕ´ Ç+&çj÷· #ÓH’ ê eT]j·TT <äøDåÏ ≤Á|øæò ± nH˚ 5 n_Ûe~∆ #Ó+<äT‘·Tqï Ä]úø£ eédü\ú jÓTTø£ÿ düeT÷Vü≤+
Á_ø˘‡. SAARC nH˚~ 8 <˚XÊ\ düeT÷Vü≤+ nsTTq ÁbÕ+rj·T düVü≤ø±s¡+ ø√dü+ <äøÏåD≤dæj·÷ dü+|òüT+.
ASEAN n+fÒ 10 <˚XÊ\ düeT÷Vü≤+ nsTTq Äπ>ïj·÷dæj·÷ <˚XÊ\ dü+|òüT+. Á|| ü ü+#· Ä]úø£|ü]düsê\˝À
á düeT÷Vü‰\T #ê˝≤ eTTKýÓTÆq$, m+<äTø£+fÒ n$ Á|ü|ü+#· GDP eT]j·TT »HêuÛ≤˝À m≈£îÿe XÊ‘·+
ÄÁø£$T+∫ ñHêïsTT. Á_ø˘‡, kÕsYÿ \˝À uÛ≤s¡‘·<˚X¯+ düuÛÑT´&ç>± ñqï+<äTq eT]j·TT Ädæj·÷Hé‘√ <ëì
yêDÏ»´+˝À ô|<ä› uÛ≤>∑+ ñqï+<äTq n$ uÛ≤s¡rj·T yê´bÕs¡ |ü]düsê\≈£î dü+ã+~Û+∫ #ê˝≤ eTTKýÓTÆq$.
á n<Ûë´j·T+˝À á ãVüQfi¯|øü å£ dü+dü\ú T eT]j·TT fÁ &Ò é u≤¢ø\˘ qT, yê{Ï ìsêàD+, |üìrs¡T, $»j·÷\T eT]j·TT
düyêfi¯¢‘√ düVü‰ $es¡+>± n<Ûä´j·Tq+ #˚ùd Á|üj·T‘·ï+ »]–+~.
278
CHAPTER OVERVIEW
Trade block are an important phenomena in globalised world in which countries

form groups and make agreements with each other for economic benefits.
different trade blocs are classified based on the level of economic integration
the member countries adopt. Hindustan tractor we study the different kinds of
trade blocs, their advantages and disadvantages.
BRICS grouping of 5 developing economies namely Brazil Russia India China

and South Africa. SAARC stands for South Asian association for regional
cooperation which is a grouping of 8 nations. ASEAN stands for association of
southeast Asian nations which is a grouping of 10 countries. These groupings
are very significant in world economics as they amount to a big percentage of
world GDP as well as population. They are particularly significant with respect
to Indian business environment as India is a member of BRICS, SAARC and
has big chunk of its trade with ASEAN.
In this chapter an attempt has been made to study these multilateral organisations
and trade blocs in detail including their structure, functioning, achievements
and challenges
279
10.1. ÁfÒ&é u≤¢ø˘\T
ÁfÒ&é u≤¢ø˘ nH˚~ ø=ìï <˚XÊ\ düeT÷Vü≤+, Ç~ ˇø£]ø=ø£s¡T yê] Ä]úø£ dü+ã+<Ûë\≈£î dü+ã+~Û+∫ Á|ü‘˚´ø£
ˇ|üŒ+<ë\ <ë«sê @s¡Œ&ÉT‘·T+~. ˇ|üŒ+<ë\T kÕ<Ûës¡D+>± yêDÏ»´ n&É¶+≈£î\ dü&É*+|ü⁄ ˝Ò<ë ‘=\–+|ü⁄ô|’ <äwæº
ô|&É‘êsTT, á ˇ|üŒ+<ë\ ¬s+&ÉT <˚XÊ\ dü]Vü≤<äT›˝À¢ »]π> yê´bÕs¡ yÓTT‘êÔìï |ü]$T‘·+ #˚ùd #·{≤º\T. yêDÏ»´
n&É¶+≈£î\ ˝À n‘·´+‘· kÕ<Ûës¡D s¡ø±˝…’q ~>∑TeT‘·T\ô|’ |üqTï\T eT]j·TT $$<Ûä ~>∑TeT‘·T\ |ü]e÷D≤\ô|’
|ü]$T‘·T\T yÓTT<ä˝…’q$ ñ+{≤sTT. ÁfÒ&é u≤¢ø˘‡ yêDÏ»´ düs¡∞ø£s¡D≈£î eT]j·TT düuÛÑT´\ eT<Ûä´ yêDÏ»´ düwæºøÏ <ë]
rkÕÔsTT. düuÛÑT´\T ø±ì yê]‘√ b˛*ùdÔ ÁfÒ&é u≤¢≈£î\T düuÛÑ´ <˚XÊ\‘√ nqT≈£L\+>± eéVü≤]kÕÔsTT. ÁfÒ&é u≤¢ø˘\T
eTTK´+>± >√¢ã˝Ÿ Äs¡ZHÓ’CÒwüHé yÓ’|òü\´+, uÛÖ>√[ø£ kÕMT|ü´‘·, yê´bÕs¡ edüTÔe⁄\˝À kÕs¡÷|ü´‘·\T eT]j·TT
ø±+|æ¢yÓT+≥Ø\T, n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\ô|’ yêDÏ»´ |ü]$T‘·T\qT n]ø£≥º&É+, Ç‘·s¡ <˚XÊ\‘√ uÒs¡kÕsê\
X¯øÏÔì ô|+#·&É+ e+{Ï nH˚ø£ ø±s¡D≤\ e\¢ @s¡Œ&É‘êsTT.
ÁbÕ+rj·T ÁfÒ&é u≤¢ø˘ nH˚~ düuÛÑ´‘·«+ ˝Òì <˚XÊ\ ~>∑TeT‘·T\ qT+&ç ‘·eTqT ‘êeTT s¡øÏå+#·T≈£îH˚ ˇø£ |ü]$T‘·yÓTÆq
uÛÖ>√[ø£ ÁbÕ+‘·+˝Àì <˚XÊ\ düeT÷Vü≤+. ÁfÒ&+ç >¥ u≤¢ø‡˘ nH˚~ Ä]úø£ düyTÓ øÆ ´£ ‘· jÓTTø£ÿ ˇø£ s¡÷|ü+, eT]j·TT Á|ü|+ü #·
yêDÏ»´+ jÓTTø£ÿ Äø£‹ì eT]+‘·>± e~› #˚dTü +Ô ~. ÄdæjT· Hé &Óe\|tyTÓ +{Ÿ u≤´+ø˘ Çìdæ≥º ÷´{Ÿ Á|üø±s¡+ Á|üdTü ‘Ô êìøÏ
uÛ≤s¡‘·<˚X¯+˝À 42 yêDÏ»´ ˇ|üŒ+<ë\T (ÁbÕ<Ûëq´‘· ˇ|üŒ+<ë\‘√ düVü‰) neT\T˝À ñHêïsTT ˝Ò<ë dü+‘·ø£+
#˚j·Tã&Ü¶sTT ˝Ò<ë #·s¡Ã\ øÏ+<ä ˝Ò<ë Á|ü‹bÕ~+#·ã&Ü¶sTT.
10.1.1. ÁfÒ&é u≤¢ø˘ \ s¡ø±\T

ÁbÕ<Ûëq´ yêDÏ»´ ÁbÕ+‘·+
ÁbÕ<Ûëq´‘· yêDÏ»´ ÁbÕ+‘ê\T ˇø£ uÛÖ>√[ø£ ÁbÕ+‘·+˝Àì <˚XÊ\T Ç‘·s¡ ÁbÕ+‘· düuTÑÛ ´\ qT+&ç ~>∑TeT‹ #˚dTü ≈£îqï
m+|æø£ #˚dæq edüTÔe⁄\ô|’ düT+ø£+ n&É¶+≈£î\qT ‘·–Z+#·&ÜìøÏ ˝Ò<ë ‘=\–+#·&ÜìøÏ @s¡Œ&É‘êsTT. ÁfÒ&é u≤¢ø˘qT
düwæº+#·&ÜìøÏ Ç~ yÓTT<ä{Ï n&ÉT>∑T >± u≤$+#·e#·TÃ. ÁfÒ&é u≤¢ø˘ jÓTTø£ÿ düs¡fi¯yÓTÆq s¡÷|ü+ Ç~.
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¡T
ì]›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).
ñ∫‘· yêDÏ»´ ÁbÕ+‘·+

Ç‘·s¡ düuTÑÛ ´\ qT+&ç e#˚Ã nìï edüTeÔ ⁄\ô|’ es¡øÔ +£ #˚jT· &ÜìøÏ n&É+¶ ≈£î\qT ‘·–+Z #·&ÜìøÏ ˝Ò<ë ‘=\–+#·&ÜìøÏ ˇø£
ÁbÕ+‘·+˝Àì s¬ +&ÉT ˝Ò<ë n+‘·ø+£ fÒ m≈£îÿe <˚XÊ\T n+^ø£]+∫q|ü⁄Œ&ÉT ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘ê\T düwæ+º #·ã&É‘êsTT.
ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+˝À düuÛÑT´\ eT<Ûä´ es¡Ôø£+ô|’ Ä+ø£å\qT ‘=\–+#·&É+ ñ+≥T+~. n+<äTe\¢, edüTÔe⁄\T
eT]j·TT ùde\T yê{Ï eT<Û´ä ùd«#·Ã>¤ ± Á|üeVæ≤kÕÔsTT. düu´ÒÛ ‘·s¡ ÁfÒ&+ç >¥øÏ dü+ã+~Û+∫, Á|ü‹ ˇø£ÿ]øÏ Á|ü‘´˚ ø£ eT]j·TT
$_Ûqï $<ÛëHê\T ñHêïsTT. ø=+<äsT¡ düuTÑÛ ´\T n~Ûø£ sπ ≥T¢ edü÷\T #˚jT· e#·TÃ, Ç‘·sT¡ \T ‘·≈î£ ÿe edü÷\T #˚jT· e#·TÃ.
{≤]|òt\˝À e´‘ê´dü+ düuÛÑ´‘·«+ ˝Òì <˚XÊ\≈£î neø±XÊ\T eT]j·TT Á|üjÓ÷»Hê\qT n+~düTÔ+~. yês¡T ‘·≈£îÿe
{≤]|òt\T $~Û+#˚ düuÛÑ´ <˚XÊ\≈£î m>∑TeT‹ #˚kÕÔs¡T. >∑eT´kÕúq <˚X¯+˝ÀøÏ Á|üy˚•+∫q ‘·sê«‘·, yês¡T <ëìì Ç‘·s¡
düuÛÑ´ <˚XÊ\≈£î m≥Te+{Ï Ks¡TÃ ˝Ò≈£î+&Ü s¡yêD≤ #˚j·Te#·TÃ. á <ä–«wüj·÷ìï yêDÏ»´ $πøå|ü+ nì |æ\TkÕÔs¡T.
USA, ¬øq&Ü eT]j·TT yÓTøÏ‡ø√ eT<Ûä´ ñ‘·Ôs¡ nyÓT]ø± ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+ Ädæj·÷ |üdæ|òæø˘ Ä]úø£ düVü≤ø±s¡+
280
10.1. TRADE BLOCS
A trade bloc is a group of Nations that has reached a set of special agreements regarding their
economic relationships with each other. The agreements generally focus on the relaxation or elimination
of 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 the
quantities of various imports).Trading blocs lead to trade liberalization (the freeing of trade from
protectionist measures) and trade creation between members, since they are treated favourably in
comparison to non-members. Trade blocks are formed because for various reasons like failure of
global organisation, Geographical proximity, similarities and complementarities in trading items, to
curb restrictions of trade on the developing countries, to enhance bargaining power with other countries
etc.
A regional trading bloc is a group of countries within a geographical region that protect themselves
from imports from non-members. Trading blocs are a form of economic integration, and increasingly
shape 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 under
negotiation or proposed.
10.1.1. TYPES OF TRADE BLOCS

Preferential Trade Area
Preferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce or
eliminate tariff barriers on selected goods imported from other members of the area. This is often the
first small step towards the creation of a trading bloc. This is the simplest form of the trade bloc. Instead
of eliminating, the deals are usually looser. Under the preferential trade area, member countries agree to
lower tariffs for certain products. They provide preferential access to specific products but do not eliminate
tariffs altogether.
Example: South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1981)
Free Trade Area

Free Trade Areas (FTAs) are created when two or more countries in a region agree to reduce or
eliminate barriers to trade on all goods coming from other members. The free trade area involves
removing 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 charge
higher 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 destination
country, they can ship it to other member countries at no cost. This phenomenon is what we call trade
deflection.
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 Southern
Africa (COMESA) and SAARC.
281
eT]j·TT ‘·÷s¡TŒ eT]j·TT <äøÏåD ÄÁ|òæø± jÓTTø£ÿ ñeTà&ç e÷¬sÿ{Ÿ eT]j·TT kÕsYÿ yÓTT<ä˝…’q$ M{ÏøÏ eT+∫ ñ
<ëVü≤s¡D\T .
ø£dyºü Té ‡ j·T÷ìj·THé
ø£düºyéT‡ j·T÷ìj·THé˝À düuÛÑT´\ eT<Ûä´ {≤]|òt n&É¶+≈£î\qT ‘=\–+#·&É+ eT]j·TT düuÛÑT´\T ø±ì yê]ô|’ @ø°ø£‘·
u≤Vü≤´ {≤]|òtqT $~Û+#·&É+ »s¡T>∑T‘·T+{≤sTT. ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+ ø£+fÒ ø£düºyéT‡ j·T÷ìj·THé eT]+‘·
n<ÛTä Hê‘·q <äX.¯ ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘· ˇ|üŒ+<ä+˝À n+‘·Øq¢ +>± ñqï yêDÏ»´ $πø|å +ü düeTdü´qT n~Û>$∑ T+#·&+É
Bì Á|ü<Ûëq \ø£å´+. ø£düºyéT‡ j·T÷ìj·THé düuÛÑT´\T düuÛÑT´\T ø±ì yê]‘√ ÁfÒ&é #˚dæq|ü⁄Œ&ÉT ñeTà&ç {≤]|òt\≈£î
n+^ø£]kÕÔs¡T. n+<äTe\¢, düuÛÑ´‘·«+ ˝Òì <˚XÊ\≈£î {≤]|òt e´‘ê´kÕ\ qT+&ç Á|üjÓ÷»Hê\T bı+<ä&ÜìøÏ neø±X¯+
˝Ò<äT. ñ<ëVü≤s¡D: ôd+Á≥˝Ÿ nyÓT]ø£Hé ø±eTHé e÷¬sÿ{Ÿ
mø£Hê$Tø˘ j·T÷ìj·THé
mø£Hê$Tø˘ j·T÷ìj·THéé nH˚~ ø£düºyéT‡ j·T÷ìj·THé‘√ ˇø£ kÕ<Ûës¡D e÷¬sÿ{Ÿ‘√ ≈£L&ç ñqï ˇø£ s¡ø£yÓTÆq ÁfÒ&é u≤¢ø˘.
bÕ˝§ZH˚ <˚XÊ\T ñ‘·Œ‹Ô ìj·T+Á‘·D, edüTÔe⁄\ ø£<ä*ø£ ùd«#·Ã¤, ùde\T eT]j·TT ñ‘·Œ‹Ô ø±s¡ø±\T (eT÷\<Ûäq+
eT]j·TT ø±]àø£) eT]j·TT ¬s+&ç+{Ïô|’ kÕ<Ûës¡D $<ÛëHê\qT ø£*– ñ+{≤sTT. kÕ<Ûës¡D u≤Vü≤´ yêDÏ»´ $<Ûëq+.
mø£Hê$Tø˘ j·T÷ìj·THé @ø°ø£‘· ø£¬s˙‡ì ø£*– ñqï|ü⁄Œ&ÉT n~ mø£Hê$Tø˘ j·T÷ìj·THé >± e÷s¡T‘·T+~.
mø£Hê$Tø˘ j·T÷ìj·THé ñeTà&ç e÷¬sÿ{Ÿ jÓTTø£ÿ nìï n+XÊ\qT $T[‘·+ #˚kÕÔsTT eT]j·TT Ä]úø£ $<ÛëHêìï ≈£L&Ü
düeTq«j·T+ #˚kÕÔsTT. Bì ø√dü+ düu´ÑÛ <˚XÊ\T ñeTà&ç Ä]úø£ dü+dü\ú qT @sêŒ≥T #˚kÕÔsTT. n|ü⁄Œ&ÉT, düu´ÑÛ <˚XÊ\T ˇπø
ø£¬s˙‡ì ÄyÓ÷~+#·&ÜìøÏ n+^ø£]ùdÔ <ëìì mø£Hê$Tø˘ j·T÷ìj·THé nì |æ\TkÕÔs¡T. j·T÷s√|æj·THé j·T÷ìj·THé
@sêŒ≥T BìøÏ ñ<ëVü≤s¡D. j·T÷s√ CÀHé ˝À düuÛÑT´\T j·T÷s√qT ‘·eT ø£¬s˙‡>± d”«ø£]+#ês¡T.
ñeTà&ç e÷¬sÿ{Ÿ
ø±eTHé e÷¬sÿ{Ÿ nH˚~ ø£düºyéT‡ j·T÷ìj·TqT¢ eT]j·TT ñ‘·Œ‹Ô ø±s¡ø±\ Á|üyêVü‰ìøÏ n&É¶+≈£î\qT ‘=\–+#·<ëìøÏ
@s¡Œ&çq ø±+_H˚wHü é . Ç$ ˇø£ á ˇ|üŒ+<ä+ Á|üø±s¡+ düu´ÑÛ <˚XÊ\T n+^ø±sêìøÏ ekÕÔsTT. Ç$ ÁøÏ+~ $wüj÷· \ô|’
@s¡Œ&É‘êsTT.
 edüTÔe⁄\T eT]j·TT ùde\˝À yêDÏ»´ n&É¶+≈£î\qT ‘=\–+#·&É+

eT÷\<Ûäq+ eT]j·TT ø±]àø£ Á|üyêVü‰\≈£î n&É¶+≈£î\qT ‘=\–+#·&É+ (ñ‘·Œ‹Ô ø±s¡ø±\T)
düuÛÑ´ <˚XÊ\T düuÛÑ´‘·«+ ˝Òì <˚XÊ\‘√ yêDÏC≤´ìøÏ dü+ã+~Û+∫ @ø£Ø‹ $<ÛëHê\qT ø£*– ñ+<ä≥+
yêDÏ»´ n&É¶+≈£î\T düT+ø±\T eT]j·TT düT+ø£+ ø±ì$ nsTTq dü_‡&û\ e+{Ï s¡ø£åD $<ÛëHê\T ≈£L&Ü M{Ï <ë«sê
‘=\–+#·ã&É‘êsTT. $»j·T+ kÕ~Û+#·&É+˝À, düuÛÑ´ <˚XÊ\T kÕ<Ûës¡D+>± >∑T‘êÔ~Û|ü‘·´+ eT]j·TT b˛{° e´‹πsø£
|ü<ä∆‘·T\ô|’ ìã+<Ûäq\T e+{Ï ø=ìï dü÷ø£åà $<ÛëHê\qT düeTq«j·T+ #˚kÕÔsTT.
ñ<ëVü≤s¡D: ô|Á{À*j·T+ m>∑TeT‹ #˚ùd <˚XÊ\ dü+düú (ˇô|ø˘)
ÁÁ|üdTü ‘Ô +· n‘·´+‘· eTTKýÓTqÆ ÁfÒ&+ç >¥ u≤¢ø‡˘ :

j·T÷s√|æj·THé j·T÷ìj·THé- ø£düºyéT‡ j·T÷ìj·THé, ˇπø e÷¬sÿ{Ÿ eT]j·TT ˇπø ø£¬s˙‡
j·T÷s√|æj·THé ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+
282
Customs Union
A customs union involves the removal of tariff barriers between members, plus the acceptance of a
common (unified) external tariff against non-members. A customs union is a more advanced stage than
a free trade area. Its main objective is to overcome the trade deflection problem inherent in the free trade
area 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 Union
An Economic Union is a type of trade bloc which is composed of a common market with a customs
union. The participant countries have both common policies on product regulation, freedom of
movement of goods, services and the factors of production (capital and labour) and a common external
trade policy. When an Economic Union involves unifying currency it becomes an economic and
monetary union.
Economic Unions combine all aspects of the common market and also coordinate economic policy. Member
countries then form joint economic institutions for this purpose. Then, if the member countries agree to
adopt a single currency, we will call it the monetary union. The Eurozone is an example, where it consists of
EU members adopting the Euro as their currency. An example is the formation of the economic union of the
European Union.
Common market
Common market is a combination of customs unions plus the removal of barriers to the flow of factors of
production. 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. In
succeeding, member countries will usually harmonize some micro-policies such as regulations
on 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 currency
EFTA- European Free Trade Area
NAFTA- North American Free Trade Agreement between the USA, Canada and Mexico
MERCOSUR A customs union between Brazil, Argentina, Uruguay, Paraguay and Venezuela
ASEAN - Association of Southeast Asian Nations Free Trade Area (AFTA)
COMESA- Common Market of Eastern and Southern Africa
SAFTA- South Asian Free Trade Area
283
j·TT.j·Tdt.@ , ¬øq&Ü eT]j·TT yÓTøÏ‡ø√ eT<Ûä´ ñ‘·Ôs¡ nyÓT]ø± ùd«#êÃ¤ yêDÏ»´ ˇ|üŒ+<ä+
Áu…õ˝Ÿ, n¬s®+{°Hê, ñs¡Tπ>«, |üsêπ>« eT]j·TT yÓìE˝≤ eT<Ûä´ ø£dyüº éT‡ j·T÷ìj·THé
Äπ>ïj·÷dæj·÷ <˚XÊ\ ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+
‘·÷s¡TŒ eT]j·TT <äøÏåD ÄÁ|òæø± jÓTTø£ÿ kÕ<Ûës¡D e÷¬sÿ{Ÿ
<äøÏåD≤dæj·÷ ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘·+
|üdæ|òæø˘ n\j·THé‡ - 2013 - ∫©, ø=\+_j·÷, yÓTøÏ‡ø√ eT]j·TT ô|s¡÷ eT<Ûä´ ÁbÕ+rj·T yêDÏ»´ ˇ|üŒ+<ä+
10.1.2. ÁfÒ&é u≤¢≈£î\ düuÛÑT´\≈£î Á|üjÓ÷»Hê\T

e÷¬sÿ{Ÿ nqTdü+<ëq+ eT]j·TT yêDÏ»´ düwæº
düuÛÑT´\ eT<Ûä´ e÷¬sÿ{Ÿ düT\uÛÑ+>± j·÷¬ø‡dt ne⁄‘·T+~ n+fÒ düuÛÑT´\ eT<Ûä´ yêDÏ»´+ ô|]π> neø±X¯+ ñ+~.
ùd«#êÃ¤ yêDÏ»´+ n~Ûø£ <Ûäs¡ ø£*–q <˚oj·T ñ‘·Œ‹Ô<ës¡T\qT ‘·≈£îÿe <Ûäs¡ eT]j·TT eT]+‘· düeTs¡úe+‘·yÓTÆq
~>∑TeT‘·T\ <ë«sê uÛÑØÔ #˚j·T>∑*–q|ü⁄Œ&ÉT yêDÏ»´ kÕúsTT ô|s¡T>∑T‘·T+~. ‘·≈£îÿe <Ûäs¡\ ~>∑TeT‘·T\≈£î <ë]rkÕÔsTT
ø±ã{Ïº, ª$ìjÓ÷>∑ Á|üuÛ≤e+μ ‘√ ‘·≈£îÿe <Ûäs¡\ |òü*‘·+>± &çe÷+&é ô|s¡T>∑T‘·T+~.
u≤¢ø˘ ˝À|ü\ ùd«#êÃ¤ yêDÏ»´+

düuÛÑ´ <˚XÊ\T ˇø£]ø=ø£s¡T e÷¬sÿ≥¢≈£î ñ∫‘· ÁbÕ|ü´‘·qT ø£*– ñ+{≤s¡T . düuÛÑT´\T Á|ü‘˚´ø£‘·qT ø£*– ñ+&É{≤ìøÏ
Áb˛‘·‡Væ≤+#·ã&É‘ês¡T. Bì ns¡+ú ÁbÕ+rj·T kÕúsTT˝À düu´ÑÛ <˚XÊ\ eT<Û´ä ‘·T\Hê‘·àø£ Á|üj÷Ó »q+ dü÷Á‘·+ Á|üø±s¡+
$düÔ‘· Á|üjÓ÷»Hê\T ø£\T>∑T‘êsTT.
ô|<ä‘› s· V¡ ‰ü Ä]úø£ eédü\ú T

ô|<ä› e÷¬sÿ{Ÿ &çe÷+&éqT rs¡Ã&ÜìøÏ ñ‘·Œ‹Ô<ës¡T\T ‘·eT ñ‘·Œ‹Ô |ü]e÷D≤\qT ô|+#ê*‡q nedüs¡+ ñ+~.
n+<äTe\¢, yês¡T uÛ≤Ø ‘·sV¡ ‰ü Ä<ë\ qT+&ç Á|üj÷Ó »q+ bı+<äe#·TÃ, Ç~ $ìjÓ÷>∑<ës¡T\≈£î n+~+#˚ edüTùÔ de\T
‘·≈£îÿe Ks¡TÃ\T eT]j·TT ‘·≈£îÿe <Ûäs¡\≈£î n+~+#·e#·TÃ.
ñ<√´>±\T
düuÛÑ´ Ä]úø£ eédüú\ eT<Ûä´ ô|]–q yêDÏ»´+ |òü*‘·+>± ñ<√´>±\T düwæº+#·ã&Ée#·TÃ. edüTÔe⁄\T eT]j·TT ùde\
ñ‘·Œ‹Ô eT]j·TT |ü+|æD°˝À ô|s¡T>∑T<ä\ ñbÕ~Û ô|s¡T>∑T<ä\≈£î <ë]rdüTÔ+~.
s¡øDå£
ÁfÒ&é u≤¢ø˘˝Àì düuÛÑ´ <˚XÊ\ ø£+ô|˙\T ãj·T{Ï qT+&ç #Í¬ø’q ~>∑TeT‘·T\ qT+&ç s¡øÏå+#·ã&É‘êsTT. ñ<ëVü≤s¡D≈£î
#Ó’Hê eT]j·TT $j·T‘êï+ qT+&ç #Í¬ø’q ~>∑TeT‘·T\ qT+&ç EU wüO |ü]ÁX¯eTqT s¡øÏå+#·&É+ »]–+~ . ø±˙,
ø=ìïkÕs¡T¢ á s¡ø£åDyê<ä+ Á|ü|ü+Nø£s¡D≈£î Vü‰ìø£s¡+>± #·÷&Ée#·TÃ.
Ä]›ø£ m<äT>∑T<ä\
yêDÏ»´ n&É¶+≈£î\qT ‘·–Z+#·&É+ e\q, á ÁbÕ+‘·+˝Àì dü+düú\T ‘·≈£îÿe <Ûäs¡πø edüTÔe⁄\qT ñ‘·Œ‹Ô #˚ùd dæú‹˝À
ñ+{≤sTT, ‘·<ë«sê edüTÔe⁄\ &çe÷+&é ô|s¡T>∑T‘·T+~. ∫e]øÏ, Ç~ Ä]úø£ e~∆ πs≥T ô|s¡T>∑T<ä\≈£î <ë] rdüTÔ+~.
284
Pacific Alliance – 2013 – a regional trade agreement between Chile, Colombia, Mexico and Peru
10.1.2. ADVANTAGES FOR MEMBERS OF TRADING BLOCS

Market access and trade creation
Easier access to each other’s markets means that trade between members is likely to increase. Trade
creation 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 bloc

Knowing 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 comparative
advantage.
Economies of scale
Producers 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 and
lower prices for consumers.
Jobs
Jobs may be created as a consequence of increased trade between member economies. Increase in
production and distribution of goods and services leads to an increase in employment.
Protection
Firms inside the bloc are protected from cheaper imports from outside, such as the protection of
the EU shoe industry from cheap imports from China and Vietnam. But, sometimes this protectionism
can be seen as a detriment to globalisation.
Economic growth
Due to reduction of trade barriers, firms in the region would be in the position to produce goods at a
lower price which in turn improves demand for goods. Eventually, this will lead to increased economic
growth rate.
Technological development
As a firm grows they would go for higher technological developments. With formation of trade blocks
transfer of technology, knowledge and technically skilled workforce between countries becomes
easy leading to faster technological development.
Better utilization of resources

The economic integration would help to make better utilization of resources owing to growth of the
Nations there would be optimum uses of physical resources, human resources and financial resources.
285
kÕ+πø‹ø£ n_Ûe~∆
ˇø£ dü+düú ô|]π> ø=B› yês¡T ñqï‘· kÕ+πø‹ø£ n_Ûe~∆øÏ yÓfi≤Ôs¡T. ÁfÒ&é u≤¢ø˘\ @sêŒ≥T‘√ <˚XÊ\ eT<Ûä´ kÕ+πø‹ø£
|ü]C≤„q+, C≤„q+ eT]j·TT kÕ+πø‹ø£+>± HÓ|’ ⁄ü D´+ ø£*–q esYÿbò˛sY‡ ã~© y˚>+∑ >± kÕ+πø‹ø£ n_Ûe~∆øÏ <ë]rdüT+Ô ~.
eqs¡T\ yÓTs¡T¬>’q $ìjÓ÷>∑+

<˚XÊ\ n_Ûe~∆ ø±s¡D+>± eqs¡T\ yÓTs¡T¬>’q $ìjÓ÷>∑+ #˚j·T&ÜìøÏ Ä]úø£ düyÓTÆø£´‘· <√Vü≤<ä|ü&ÉT‘·T+~, uÛÖ‹ø£
eqs¡T\T, e÷qe eqs¡T\T eT]j·TT Ä]úø£ eqs¡T\ jÓTTø£ÿ ñ‘·ÔeT $ìjÓ÷>±\T ñ+{≤sTT.
$ìjÓ÷>∑<ës¡T dü+øπ eå T+
Ä]úø£ e~∆ ø±s¡D+>± ñbÕ~Û neø±XÊ\T ô|s¡T>∑T‘êsTT. Ç~ ø=qT>√\T X¯øÏÔì ô|+#·T‘·T+~ eT]j·TT Á|ü»\T ñ
qï‘· Jeq Á|üe÷D≤\qT ø£*– ñ+{≤s¡T . n˝≤π> ÁfÒ&ç+>¥ u≤¢ø˘‡ ø±s¡D+>± $ìjÓ÷>∑<ës¡T&ÉT ‘·≈£îÿe <Ûäs¡\
edüTÔe⁄\qT bı+<äT‘ês¡T. n<˚ düeTj·T+˝À n~Ûø£ HêD´‘· >∑\ edüTÔe⁄\qT bı+<äe#·TÃ.
Á|ü‘´· ø£å ô|≥Tºã&ÉT\T ô|s¡T>∑T‘êsTT

ñeTà&ç e÷¬sÿ{Ÿ eT]j·TT j·T÷ìj·THé mø±qMT\ øÏ+<ä, eT÷\<Ûqä + ùd«#·Ã>¤ ± Á|üeVæ≤düT+Ô ~, ô|≥Tºã&çì ô|+#·&ÜìøÏ
eT]j·TT ø=ìï düuÛÑ´ <˚XÊ\˝À ñ<√´>±\qT düwæº+#·&ÜìøÏ ø£+ô|˙\qT Áb˛‘·‡Væ≤düTÔ+~.
b˛{° ô|]π> ø=B› >∑T‘êÔ~|Û ‘ü ´· + ‘·>T∑ ‘Z T· +~

edüTÔe⁄\T eT]j·TT ùde\T ùd«#·Ã¤>± Á|üeVæ≤kÕÔsTT eT]j·TT $ìjÓ÷>∑<ës¡T\≈£î m≈£îÿe m+|æø£\qT düwæºkÕÔsTT.
Bìe\¢ e÷¬sÿ{À¢ b˛{° ô|s¡T>∑T‘·T+~ eT]j·TT b˛{°ì m<äTs√ÿe&É+ ˝À Ä$wüÿs¡D eT]j·TT kÕeTs¡´∆ + ô|s¡T>∑T‘·T+~.
10.1.3. ÁfÒ&é u≤¢≈£î\ e\¢ nqsê›\T

ÁfÒ&é u≤¢ø˘‡ düuÛÑ´‘·«+ ˝Òì <˚XÊ\qT Á|ü‹≈£L\+>± Á|üuÛ≤$‘·+ #˚jT· e#·TÃ. Ç$:
düuÛÑ´ <˚XÊ\ qT+&ç nes√<Ûä+

ÁfÒ&é u≤¢ø˘‡ düuÛÑ´ <˚XÊ\ Ä]úø£ eédüú\qT Áb˛‘·‡Væ≤düTÔqï|üŒ{Ïø°, düuÛÒ´‘·s¡ <˚XÊ\ ø√D+ qT+&ç, n$ |üìrs¡T˝À düuÛÑ´
<˚XÊ\≈£î s¡ø£åD≤~Ûø±]>± #·÷&Ée#·TÃ. ø=ìïkÕs¡T¢, ÁfÒ&ç+>¥ u≤¢ø˘ ˇø£ ñ‘·Œ‹Ôô|’ >∑T‘êÔ~Û|ü‘ê´ìï bı+<äe#·TÃ eT]j·TT
yê] uÒs¡kÕsê\ X¯øÏÔ #ê˝≤ m≈£îÿe>± ñ+≥T+~. düuÛÑ´‘·«+ ˝Òì <˚XÊ\ qT+∫ e#˚Ã edüTÔe⁄\ô|’ n~Ûø£ {≤]|òt\T
eT]j·TT ø£<ä*ø£\ô|’ Ä+ø£å\T $~Û+#·e#·TÃ
<˚oj·T ñ‘·Œ‘·T\Ô $\Te\T ‘·>T∑ ‘Z êsTT

ø=ìï n|ü]|üø£« yêDÏ»´ ˇ|üŒ+<ä+ <˚XÊ\ Ä]úø£ eédüú≈£î #ê˝≤ Vü‰ìø£s¡+. dü¬s’q kÕ+πø‹ø£‘· eT]j·TT HÓ’|ü⁄D´+
ø£*–q ÁXÊ$Tø£ X¯øÏÔ ˝Ò≈£î+&Ü, yêDÏ»´ ≈£L≥$T˝Àì Ç‘·s¡ düuÛÑ´ <˚XÊ\‘√ ñ‘·Œ‹Ô˝À <˚XÊ\T b˛{°|ü&É˝Òe⁄. Ç~
edüTeÔ ⁄\ HêD´‘· eT]j·TT <Ûsä \¡ $wüjT· +˝À Ç‘·s¡ düuTÑÛ ´\‘√ b˛{°ì ø√˝ÀŒj˚T <˚XÊ\≈£î <ë]rdüT+Ô ~. n+‹eT+>±,
<˚oj·T edüTÔe⁄\≈£î &çe÷+&é ‘·>∑TZ‘·T+~, |òü*‘·+>± ù|\eyÓTÆq C≤rj·T ñ‘·Œ‘·TÔ\T @s¡Œ&É‘êsTT.
|üqTï Ä<ëj·÷\ ‘·–+Z |ü⁄

{≤]|òt n&É¶+≈£î\qT ‘·–Z+#·&É+ ˝Ò<ë ‘=\–+#·&É+ <ë«sê düuÛÑ´ <˚XÊ\ jÓTTø£ÿ |üqTï Ä<ëj·T+ ‘·–Zb˛‘·T+~, Ç~
286
Consumer welfare
Owing to economic growth the employment opportunity increased, which inturn increased purchasing
power and the people enjoyed higher standard of living. Also due to trading blocs the consumer may
have 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 increase
investment 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 the
market and forces firms to increase innovation and efficiency to face competitiveness.
10.1.3. NEGATIVE IMPLICATIONS OF TRADE BLOCS

The trade blocs can negatively affect non- member Nations. This is due to the following reasons:
Common external barrier

Although trade blocs promote economies of member countries, from the perspective of non-member
states, they can be viewed as protectionist in functioning. Sometimes, a trading block can obtain
monopoly over a product and their bargaining power can go very high. High tariffs and movement
restrictions can be imposed on goods from non - member countries
Reduction of Values of domestic products

A poorly negotiated trade deal can be very harmful to a countries’ economy. Without proper technology
and skilled workforce, a country cannot compete in production with other member countries of a
trade bloc. This can lead to countries losing the competition to other members in terms of quality of
goods and prices. Eventually, the demand for domestic goods will be reduced resulting in poor
National produce.
Reduction of tax revenues

With 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 dominant
players in the block, which may not be very beneficial for all.
Loss of sovereignty and independence

Too 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 block
to control the decisions of other Nations.
Market capture and Dumping

Sometimes aggressive Nations in a trade bloc can indulge in activities like dumping of products at a
287
ã&Ó®{Ÿ ˝À≥T≈£î <ë]rdüTÔ+~. u≤¢ø˘˝Àì Ä~Û|ü‘·´ <˚XÊ\ {≤]|òt\T eT]j·TT ø£düºyéT‡ #·{≤º\‘√ Ç‘·s¡ <˚XÊ\T
ìsê∆]+#ê*‡ ñ+≥T+~, Ç~ n+<ä]ø° Á|üjÓ÷»qø£s¡+>± ñ+&Éø£b˛e#·TÃ.
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 øÏw¢ yºü TÓ qÆ eqs¡T\qT Ç‘·s¡ <˚XÊ\ ìs¡j
í ÷· \qT ìj·T+Á‹+#·&ÜìøÏ u≤¢ø˘ jÓTTø£ÿ Ä~Û|‘ü ´· <˚XÊ\T
Á|üjT· ‹ï+#·e#·TÃ.
e÷¬sÿ{Ÿ 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 yê{Ï
ñ‘·Œ‹Ô kÕeTsêú´ìï düTHêïøÏ q&ç|æ+#·&ÜìøÏ ‘·eT ñ‘·Œ‘·TÔ\qT $T–*q <˚XÊ\ ñ‘·Œ‹Ô <Ûäs¡ ø£+fÒ ‘·≈£îÿe <Ûäs¡≈£î
&É+|æ+>¥ #˚j·T&É+ e+{Ï ø±s¡´ø£˝≤bÕ\˝À bÕ˝§Zqe#·TÃ. n˝≤ e÷¬sÿ{Ÿ qT ø=\¢>={Ïºq ‘·sê«‘· ‘·eT ÇcÕºqTkÕs¡+
<Ûäs¡\qT ìj·T+Á‹+#·e#·TÃ.
10.2. BRICS
BRICS nH˚~ ◊<äT Á|ü<Ûëq es¡∆e÷q Ä]úø£ eédüú\qT nqTã+~Û+#·&ÜìøÏ s¡÷bı+~+#·ã&çq ≈£L≥$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´\T
ÁbÕ+rj·T eéVü‰sê\ô|’ >∑D˙j·TyÓTÆq Á|üuÛ≤e+ #·÷|ü⁄‘ês¡T.
2009 qT+&ç, Á_ø˘‡ <˚XÊ\ Á|üuTÑÛ ‘ê«\T @{≤ n~Ûø±]ø£ •KsêÁ>∑ düe÷y˚XÊ˝À¢ bÕ˝§Z+{≤sTT. yêdüyÔ êìøÏ <äøDåÏ ≤Á|òøæ ±
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|üÁøÏjT· Ä dü+e‘·‡s¡+ Ä>∑dTü ˝º À ÁbÕs¡+uÛyÑ TÓ Æ n~Ûø±]ø£+>± 24 &çôd+ãsY 2010 q düu´ÑÛ <˚X+¯ >± e÷]+~. ‘·sê«‘·
á ≈£L≥$T jÓTTø£ÿ $düÔ]+∫q düuÛÑ´‘ê«ìï Á|ü‹_+_+#˚˝≤ á ã+<ëìøÏ Á_ø˘‡ nì ù|s¡T e÷s¡Ãã&ç+~.
BRICS nH˚ |ü<ëìï 2001 ˝À n|üŒ{Ï nôd{Ÿ y˚TH˚CŸyÓT+{Ÿ #ÛÓ’s¡àHé >√˝Ÿ¶eTHé kÕ#Y‡ yÓTT<ä≥>± ñ|üjÓ÷–+#ês¡T.
eT]j·TT õyéT z ˙˝Ÿ ‘·q |ü_¢πøwüHé _*¶+>¥ u…≥sY >√¢ã˝Ÿ ˝À mø£Hê$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+ ˝À
Hê\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·÷sYÿ
q>∑s+¡ ˝À ôdô|+º ãsY 2006 ˝À UN nôd+;¢ »qs¡˝Ÿ &çu{Ò Ÿ e÷]®q˝¢ À düe÷y˚Xy¯ TÓ Æ ñqï‘· kÕúsTT düe÷y˚XÊ\ ÁX‚DìÏ
ÁbÕs¡+_Û+#ês¡T. s¡cÕ´˝Àì jÓTø±f…]Hé ãsYZ ˝À 16 pHé 2009 q |üP]Ô kÕúsTT <Í‘·´ düe÷y˚X¯+ »]–+~.
yÓTT<ä{Ï BRICS •KsêÁ>∑ düe÷y˚X¯+

BRICS düeT÷Vü≤+ jÓTTø£ÿ yÓTT<ä{Ï n~Ûø±]ø£ •KsêÁ>∑ düe÷y˚X¯+, jÓTø±f…]Hé ãsYZ ˝À 16 pHé 2009 q
ÁbÕs¡+uÛyÑ TÓ +Æ ~, \÷sTTCŸ ÇHêdæj÷Ó , \÷˝≤ &Ü dæ˝≤«, &ç$TÁ‹ yÓT<Ó«<˚y,é 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
288
lower price than their production cost in order to capture the business in other countries and drive
their production capacity to zero. Once, they have the market for themselves they can go back for
normal pricing or even higher.
10.2. BRICS
BRICS 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 regional
affairs.
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 Africa
began efforts to join the BRIC grouping, and the process for its formal admission began in August of
that year. South Africa officially became a member Nation on 24 December 2010. The group was
renamed 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 Asset
Management, Jim O’Neill, in his publication Building Better Global Economic BRICs. But, it was
actually coined by Roopa Purushothaman who was a Research Assistant in the original report. The
foreign Ministers of the initial four BRIC General states (Brazil, Russia, India, and China) met in New
York City in September 2006 at the margins of the General Debate of the UN Assembly, beginning
a series of high-level meetings. A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on
16 June 2009.
First BRIC summit

The 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 respective
leaders of Brazil, Russia, India, and China, all attending. The summit’s focus was on improving the
global economic situation and reforming financial institutions, and discussed how the four countries
could 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 equitable
development.
 Every member’s growth and development are considered to ensure that relations are built on
the 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 reform
institutions.
289
yÓTs¡T>∑T|üs¡#·&É+ eT]j·TT Ä]úø£ dü+düú\qT dü+düÿ]+#·&É+ô|’ •KsêÁ>∑ düe÷y˚X¯+ <äwæº kÕ]+∫+~ eT]j·TT
uÛÑ$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+#· eéVü‰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
$düÔ]+#·&É+, u≤>± ø£wæ #˚j·T&É+ eT]j·TT rÁe‘·s¡+ #˚j·T&É+ Á>∑÷|æ+>¥ jÓTTø£ÿ Á|ü<Ûëq \øå±´\˝À ˇø£{Ï.
 Á|ü‹ düuÛÑ´ <˚X¯ ô|s¡T>∑T<ä\ eT]j·TT n_Ûe~∆ e´øÏÔ>∑‘· <˚XÊ\ Ä]úø£ ã˝≤\ô|’ dü+ã+<Ûë\T ì]à+#·ã&É‘êj·Tì
eT]j·TT kÕ<ÛäýÓTÆq #√≥ b˛{°ì ‘=\–+#ê\ì uÛ≤$kÕÔs¡T.
 Ç≥Te+{Ï $_Ûqï \øå±´\T Á_ø˘‡ ˇø£ $q÷‘·ïyÓTqÆ eT]j·TT Áb˛‘·‡Væ≤+#˚ sê»ø°jT· -<Í‘·´ dü+dü>ú ± ne‘·]+#·&ÜìøÏ
Á|üj·T‹ïkÕÔsTT. Ç˝≤+{Ï$ >∑‘·+˝À Á|ü|ü+#· Ä]úø£ düeTdü´\qT |ü]wüÿ]+#·&ÜìøÏ eT]j·TT dü+düú\qT
dü+düÿ]+#·&ÜìøÏ e÷Á‘·y˚T @s¡Œ&˚$.
10.2.2. düVü≤ø±s¡ s¡+>±\T

Ä]úø£ düV≤ü 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»´ düV≤ü ø±s¡ s¡+>±\˝À ˇ|üŒ+<ë\T eTT–XÊsTT, ÇH√ïy˚wH

ü é düV≤ü ø±s¡+, ø£dyºü Té ‡ düV≤ü 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 ˇ|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+{Ÿ
e÷¬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|‘·+ #˚jT· &É+ eT]j·TT dü+düÿ‹, Áø°&É, $<ä´, dæìe÷
eT]j·TT j·TTe‘· s¡+>±\˝À düìïVæ≤‘· düVü≤ø±sêìï ô|+bı+~+#ê*‡q nedüsêìï >∑T]Ô+#ês¡T.
 ãø˘‡ düuÛÑ´ <˚XÊ\ Á|ü»\ qT+&ç Á|ü»\ eT<Ûä´ e÷]Œ&ç ‘√ ø=‘·Ô ùdïVü‰\qT @s¡Œs¡#·Tø√e&ÜìøÏ Á|üj·T‹ïkÕÔsTT.
Á_ø˘‡ Á|ü»\ eT<Ûä´ dü+ã+<Ûë\T eT]j·TT |üs¡düŒs¡ ne>±Vü≤q ô|s¡>∑≥+ , ˙‹, düeTÁ>∑‘·, yÓ’$<Ûä´+ eT]j·TT
|üsd¡ Œü s¡ nuÛ≤´dü dü÷Œ¤]‘Ô √ ô|s¡T>∑T‘êsTT.
 n˝≤+{Ï e´≈£î\Ô qT+&ç e´≈£î\Ô e÷]Œ&ç˝À j·T+>¥ &çbı¢e÷{Ÿ‡ bò˛s¡+, bÕs¡y¢ TÓ +fÒ]j·THé bò˛s¡+, ÁfÒ&é j·T÷ìj·THé
bò˛s¡+, dæ$˝Ÿ Á_ø˘‡ n˝≤π> MT&çj·÷ bò˛s¡+ Ä$s¡“¤$+#êsTT.
290
10.2.2. Areas of Cooperation
Economic Cooperation
 There are rapidly growing trade and investment flows between BRICS countries as well as
economic cooperation activities across a range of sectors.
 Agreements have been concluded in the areas of Economic and Trade Cooperation; Innovation
Cooperation, Customs Cooperation; strategic cooperation between the BRICS Business
Council , Contingent Reserve Agreement and the New Development Bank.
 These agreements contribute to realisation of the shared objectives of deepening economic

cooperation 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 mutual
understanding between BRICS peoples in the spirit of openness, inclusiveness, diversity and
mutual learning.
 Such People to people exchanges include the Young Diplomats Forum, Parliamentarian
Forum, Trade Union Forum, Civil BRICS as well as the Media Forum.Political and
Security 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 in
terms of domestic and regional challenges as well as advancing the restructuring of the global
political 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 of
the African Agenda and South-South Cooperation.
Cooperation Mechanism
Cooperation 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 enterprises

and business councils.
 Track III: Civil society and People-to-People engagement.
291
sê»ø°jT· eT]j·TT uÛÁÑ <ä‘ê düV≤ü ø±s¡+
 Á_ø˘‡ düuTÑÛ ´\T sê»ø°jT· eT]j·TT uÛÁÑ <ä‘ê düV≤ü ø±s¡+ ø√dü+ eT]+‘· düe÷qyÓTq
Æ eT]j·TT Hê´j·TyÓTqÆ 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+~düT+Ô ~. >√¢ã˝Ÿ bı*{Ïø˝£ Ÿ Ä]ÿf…øÃ£ sY jÓTTø£ÿ |ü⁄q]ïsêàD≤ìï eTT+<äT≈£î
rdüT¬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+>∑ $<Ûëq
ÁbÕ<Ûëq´‘·\≈£î dü+<Ûëq ø£s¡Ô >± ñ|üjÓ÷–+#·ã&ÉT‘·T+~.
düV≤ü ø±s¡ j·T+Á‘ê+>∑+

düuÛÑT´\ eT<Ûä´ düVü≤ø±s¡+ M{Ï <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÷´ &Û©ç ¢ (2012) ˝À »]–q Hê\Ze Á_ø˘‡ •KsêÁ>∑ düe÷y˚X+¯ ˝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£]+#·&ÜìøÏ
q÷´ &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+#˚ ˇ|üŒ+<ä+ô|’ dü+‘·ø£+ #˚XÊs¡T.
 q÷´ &Óe\|tyTÓ +{Ÿ u≤´+ø˘ , Á_ø˘‡ eT<Û´ä düV≤ü ø±sêìï ã˝Àù|‘·+ #˚dTü +Ô <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·TT
düeT‘·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¯øÔ,Ï 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\|tyTÓ +{Ÿ u≤´+ø˘ Á_ø˘‡ düuTÑÛ ´\ eT<Û´ä dü+Á|ü~+|ü⁄\ j·T+Á‘ê+>∑+ô|’ |üì#˚dTü +Ô ~, nìï düu´ÑÛ <˚XÊ\T
düe÷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+ ˇø£ 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
292
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 new
Development Bank was considered to mobilize resources for infrastructure and sustainable
development projects in BRICS and other emerging economies, as well as in developing
countries.
 During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreement
establishing the New Development Bank (NDB).
 Fortaleza Declaration stressed that the NDB will strengthen cooperation among BRICS
and will supplement the efforts of multilateral and regional financial institutions for global
development thus contributing to sustainable and balanced growth.
 NDB’s key areas of operation are clean energy, transport infrastructure, irrigation, sustainable
urban development and economic cooperation among the member countries.
 The NDB functions on a consultative mechanism among the BRICS members with all the
member 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 from
other regions and continents.
 The BRICS will need to expand its agenda for increasing its relevance in the global order. As
of now, climate change and development finance, aimed at building infrastructure dominate
agenda.
 As BRICS moves forward foundational principles of BRICS i.e. respect for sovereign equality
and pluralism in global governance are liable to be tested as the five member countries pursue
their own national agendas.
 The military standoff between India and China on the Doklam plateau, which has effectively
brought to an end the naive notion that a comfortable political relationship is always possible
amongst the BRICS members.
 China’s efforts to co-opt nation states, which are integral to its Belt and Road Initiative, into
a broader political arrangement has potential to cause conflict among BRICS members
especially China and India.
293
<˚XÊ\qT ø£*– ñ+&Ü*.
 Á|ü|ü+#· |ü≥+˝À Á_ø˘‡ ‘·q mC…+&ÜqT Ç+ø± $düÔ]+#ê*‡ ñ+≥T+~. Ç|üŒ{Ï es¡≈£î, yê‘êes¡D e÷s¡TŒ,
n_Ûe~∆ , ô|ò’HêHé‡, eTÚ*ø£ dü<äTbÕj·÷\qT ì]à+#·&É+ ˝≤+{Ï$ \ø£å´+>± ñ+~.
 Á_ø˘‡ jÓTTø£ÿ ÁbÕ<Û$ä Tø£ dü÷Á‘ê˝…q’ Á|ü|+ü #· bÕ\q˝À kÕs¡«uÛÖeT düe÷q‘·«+ eT]j·TT ãVüQeTTK >ös¡e+
e+{Ï \øå±´\‘√ eTT+<äT≈£î yÓ\T‘·Tqï|ü⁄Œ&ÉT ◊<äT düuÛÑ´ <˚XÊ\T ‘·eT kı+‘· C≤rj·T nC…+&Ü\qT |üø£ÿq
ô|≥ºe\dæq nedüsêìï |üØøÏå+#·Tø√yê*.
 &√ø±¢yTé |”su¡ƒ ÷ÑÛ $Tô|’ uÛ≤s¡‘<· X˚ +¯ eT]j·TT #ÓH’ ê eT<Û´ä ôdì’ ø£ Á|ü‹wü+º uÛqÑ Á_ø˘‡ düuTÑÛ ´\ eT<Û´ä kÂø£s´¡ e+‘·yTÓ qÆ
sê»ø°j·T dü+ã+<Ûä+ m\¢|ü⁄Œ&É÷ kÕ<ÛäéTe⁄‘·T+<äH˚ uÛ≤eq dü]ø±<äH˚ ìC≤ìï ‘˚≥‘Ó\¢+ #˚dæ+~ .
 #Ó’Hê ‘·q u…˝Ÿº eT]j·TT s√&é Çìwæj˚T{Ïyé˝À n+‘·sê“¤>∑+>± ñqï <˚XÊ\ $düÔ‘· sê»ø°j·T @sêŒ≥T≈£î
düV≤ü ø£]+#·&ÜìøÏ #˚dqæ Á|üjT· ‘êï\T Á_ø˘‡ düuTÑÛ ´\ eT<Û´ä Á|ü‘´˚ øÏ+∫ #ÓH’ ê eT]j·TT uÛ≤s¡‘<· X˚ +¯ ˝À $yê<ëìøÏ
ø±s¡DeTe⁄‘êsTT.
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+düú
eT]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£sD¡ n_Ûe~∆ì Áb˛‘·‡Væ≤düTÔ+~. Ç~ 2006
˝À <äøDåÏ Ädæj÷· ùd«#êÃ¤ yêDÏ»´ ÁbÕ+‘êìï ÁbÕs¡+_Û+∫+~. kÕsYÿ ◊ø£´sê»´dü$T‹˝À XÊX¯«‘· <Í‘·´ dü+ã+<Ûë\qT
|ü]o\≈£î&ç>± ìs¡«Væ≤düTÔ+~ eT]j·TT j·T÷s√|æj·THé j·T÷ìj·THé‘√ düVü‰ ãVüQbÕøÏåø£ dü+düú\‘√ dü+ã+<Ûë\qT
n_Ûe~∆ #˚düT≈£î+~.
kÕsYÿ jÓTTø£ÿ eTTKýÓTqÆ n+>∑+ dü∫yê\j·T+. kÕsYÿ ôdÁø£f]Ò j·T{Ÿ 16 »qe] 1987 q U≤≥à+&ÉT˝À kÕú|+æ #·ã&ç+~.
kÕsYÿ ø±s¡´ø£˝≤bÕ\ neT\TqT düeTq«j·T+ #˚j·T&É+ eT]j·TT |üs¡ý˚øÏå+#·&É+, nk˛dæj˚TwüHé düe÷y˚XÊ\≈£î ùde
#˚jT· &É+ eT]j·TT kÕsYÿ eT]j·TT Ç‘·s¡ n+‘·sê®rj·T dü+dü\ú eT<Û´ä ø£eT÷´ìπøwüHé #Ûêq˝Ÿ>± |üì#˚jT· &É+ Bì bÕÁ‘·.
ôdÁø£fÒ]j·T{Ÿ˝À ôdÁø£≥Ø »qs¡˝Ÿ, @&ÉT>∑Ts¡T &Ó’¬sø£ºs¡T¢ eT]j·TT »qs¡˝Ÿ düØ«ôddt dæã“+~ ñ+{≤s¡T. ôdÁø£≥Ø-
»qs¡˝Ÿì eT+Á‘·T\ eT+&É* <ë«sê eT÷&ÉT dü+e‘·‡sê\ bÕ≥T s=fÒwüHé |ü<ä›‹ dü÷Á‘·+ô|’ ìj·T$TkÕÔs¡T.
kÕsYÿ. ìsêàD+ eT]j·TT Á|üÁøÏjT· :

kÕsYÿ.˝À düV≤ü ø±s¡+ nH˚~ kÕs¡«uÛÖeT düe÷q‘·«+, ÁbÕ<˚•ø£ düeTÁ>∑‘,· sê»ø°jT· kÕ«‘·+Á‘·´+, düu´ÑÛ <˚XÊ\ n+‘·s‘Z¡ ·
eéVü‰sê\˝À CÀø£´+ #˚düTø√ø£b˛e&É+ eT]j·TT |üs¡düŒs¡ Á|üjÓ÷»q+ nH˚ ◊<äT dü÷Á‘ê\ >ös¡e+ô|’ Ä<Ûës¡|ü&ç ñ
+≥T+~. ÁbÕ+rj·T düVü≤ø±s¡+ kÕsYÿ düuÛÑ´ <˚XÊ\ <Ó’«bÕøÏåø£ eT]j·TT ãVüQbÕøÏåø£ dü+ã+<Ûë\≈£î |üPs¡ø£+>±
|ü]>∑D+Ï #·ã&ÉT‘·T+~. kÕsYÿ •KsêÁ>∑ düe÷y˚XÊ\T @{≤ »s¡T>∑T‘êsTT eT]j·TT dü$Tà{ŸqT ìs¡«Væ≤+#˚ <˚X+¯ nk˛dæjT˚ wüHé
#ÛÓ’sY>± ñ+≥T+~. n+<ä] n+^ø±s¡+ ÁbÕ‹|ü~ø£q ìs¡íj·÷\T rdüTø√ã&É‘êsTT, <Ó’«bÕøÏåø£ eT]j·TT $yê<ëdüŒ<ä
düeTdü´\T kÕsYÿ jÓTTø£ÿ #·s¡Ã\ qT+&ç $TqVü‰sTT+#·ã&Ü¶sTT.
294
10.3. SAARC
The South Asian Association for Regional Cooperation (SAARC) is the regional intergovernmental
organization 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 founded
in Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. The organization
promotes development of economic and regional integration. It launched the South Asian Free Trade
Area in 2006. The SAARC maintains permanent diplomatic relations at the United Nations as an
observer and has developed links with multilateral entities, including the European Union.
The important organs of the SAARC is Secretariat. The SAARC Secretariat was established in
Kathmandu on 16 January 1987. Its role is to coordinate and monitor the implementation of SAARC
activities, service the meetings of the association and serve as a channel of communication between
SAARC and other international organizations. The Secretariat comprises the secretary-general, seven
directors, and the general services staff. The secretary-general is appointed by the Council of Ministers
on the principle of rotation, for a non-renewable tenure of three years.
Structure and Process

Cooperation in SAARC is based on respect for the five principles of sovereign equality, territorial
integrity, political independence, non-interference in internal affairs of the Member States and mutual
benefit. Regional cooperation is seen as a complement to the bilateral and multilateral relations of
SAARC Member States. SAARC Summits are held annually and the country hosting the Summit
holds the Chair of the Association. Decisions are made on an unanimity basis while bilateral and
contentious issues are excluded from the deliberations of SAARC.
10.3.1. Objectives
SAARC aims to promote economic growth, social progress and cultural development within the
South 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 by
providing 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, technical
and scientific fields
 Strengthen co-operation with other developing countries
295
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+~ $<Ûä+>± ñHêïsTT:
 <äøÏåD Ädæj·÷ Á|ü»\ dü+πøåe÷ìï Áb˛‘·‡Væ≤+#·+&ç eT]j·TT yê] Jeq Á|üe÷D≤\qT yÓTs¡T>∑T|üs¡#·+&ç
 á ÁbÕ+‘·+˝À Ä]úø£ e~∆, kÕe÷õø£ |ü⁄s√>∑‹ eT]j·TT kÕ+düÿ‹ø£ n_Ûe~∆ì y˚>e∑ +‘·+ #˚jT· &É+ <ë«sê
e´≈£îÔ\+<äs¡÷ >ös¡eÁ|ü<ä+>± J$+#·&ÜìøÏ eT]j·TT yê] |üP]Ô kÕeTsêú´ìï Á>∑Væ≤+#·&ÜìøÏ neø±X¯+
ø£*Œ+#·&+É
 <äøÏåD Ädæj·÷ <˚XÊ\ eT<Ûä´ dü$Twæº dü«j·T+-Ä<Ûë]‘·qT Áb˛‘·‡Væ≤+#·&É+ eT]j·TT ã˝Àù|‘·+ #˚j·T&É+
 |üs¡düŒs¡ $XÊ«dü+, ne>±Vü≤q eT]j·TT ˇø£] düeTdü´\qT eTs=ø£s¡T ns¡∆+ #˚düTø√e&ÜìøÏ <√Vü≤<ä+
#˚jT· +&ç
 Ä]úø£, kÕe÷õø£, kÕ+düÿ‹ø£, kÕ+πø‹ø£ eT]j·TT XÊÁd”Ôj·T s¡+>±\˝À ÁøÏj·÷o\ düVü≤ø±s¡+ eT]j·TT
|üs¡düŒs¡ düVü‰j·÷ìï Áb˛‘·‡Væ≤+#·+&ç
 Ç‘·s¡ n_Ûe~∆ #Ó+<äT‘·Tqï <˚XÊ\‘√ düVü≤ø±sêìï ã˝Àù|‘·+ #˚j·T+&ç
 ñeTà&ç ÄdüøÏÔ ñqï $wüj·÷\ô|’ n+‘·sê®rj·T dü+düú\˝À ‘·eT eT<Ûä´ düVü≤ø±sêìï ã˝Àù|‘·+ #˚düTø√e&É+
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.
düV≤ü ø±s¡ ÁbÕ+‘ê\T

á ÁøÏ+~ düVü≤ø±s¡ s¡+>±\ô|’ düuÛÑ´ <˚XÊ\T n+^ø£]+#êsTT:
 eékÕj·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
 |üsêés¡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 common
interest; and
 Cooperate with international and regional organisation with similar aims and purposes.
Areas of Cooperation
The 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 region
by taking up extra responsibilities.
 Game changer for India’s Act East Policy: By linking South Asian economies with South
East Asian will bring further economic integration and prosperity to India mainly in the Services
Sector.
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.
297
 õjÓ÷ÁkÕº≥õø˘ ÁbÕeTTK´‘·: H˚bÕ˝Ÿ, uÛ÷Ñ {≤Hé, e÷©›e⁄\T eT]j·TT Áo\+ø£\qT n_Ûe~∆ Á|üÁøÏjT· eT]j·TT
Ä]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 düwæº+#·&É+˝À

düV‰ü j·T|ü&TÉ ‘·T+~.
 Á|ü|ü+#· Hêj·Tø£‘·« bÕÁ‘·: n<äq|ü⁄ u≤<Ûä´‘·\qT #˚|ü≥º&É+ <ë«sê á ÁbÕ+‘·+˝À ‘·q Hêj·Tø£‘ê«ìï
Á|ü<ä]Ù+#·&ÜìøÏ kÕsYÿ uÛ≤s¡‘·<˚XÊìøÏ ˇø£ y˚~ø£qT n+~düTÔ+~.
uÛ≤s¡‘<
· X˚ ¯ ‘·÷s¡TŒ $<ÛëHêìøÏ >π yéT #Û+˚ »sY: <äøDåÏ ≤dæj÷· Ä]úø£ eédü\ú qT Äπ>ïj·÷dæj÷· ‘√ nqTdü+<Ûëì+#·&+É
<ë«sê Á|ü<Ûëq+>± ùde\ s¡+>∑+˝À uÛ≤s¡‘·<˚XÊìøÏ eT]+‘· Ä]úø£ düyTÓ Æø£´‘· eT]j·TT ÁX‚j·TdüT‡ \_ÛdüTÔ+~.
10.3.3. kÕsYÿ ≈£î düyêfi¯ó¢

düe÷y˚XÊ\T ‘·≈î£ ÿe: düu´ÑÛ <˚XÊ\≈£î eT]+‘· ‘·s#
¡ T· >± ø£\ee\dæq nedüs+¡ eT]j·TT <Ó«’ yê]¸ø£ düe÷y˚XÊ\≈£î
ã<äT\T>± yê]¸ø£ düe÷y˚XÊ\T ìs¡«Væ≤+#ê*.
$düÔ‘· ÁbÕ+‘·+ düVü≤ø±s¡+ X¯øÏÔ eT]j·TT eqs¡T\ eT[¢+|ü⁄≈£î <ë]rdüTÔ+~.

SAFTA ˝À |ü]$T‹: düe÷#ês¡ kÕ+πø‹ø£‘· e+{Ï nìï ùde\qT $TqVü‰sTT+∫, edüTe Ô ⁄\≈£î |ü]$T‘·yTÓ qÆ
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 kÕsYÿ
neø±XÊ\qT rÁe+>± <Óã“rdüTÔHêïsTT.
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·TT
kÕe÷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+&√H˚wj æ ÷· , eT˝Òwj
æ ÷· , |ò*æ |”ŒHé‡, dæ+>∑|Pü sY eT]j·TT <∏ësTT˝≤+&é Á|üuTÑÛ ‘ê«\#˚ kÕú|+æ #·ã&ç+~,
Ä]úø£ e~∆, kÕe÷õø£ |ü⁄s√>∑‹ kÕ+düÿ‹ø£ n_Ûe~∆ì y˚>∑e+‘·+ #˚jT· &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±´\T

Ädæj·÷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 dæs

ú ‘¡ 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 Free
Trade Agreement confined to goods, excluding all services like information technology.
 Indo-Pak Relations: Escalated tension and conflict between India and Pakistan have
severely hampered the prospects of SAARC.
10.4. ASEAN
ASEAN- officially the Association of Southeast Asian Nations, is an economic union comprising 10
member states in Southeast Asia, which promotes intergovernmental cooperation and
facilitates economic, political, security, military, educational, and sociocultural integration between its
members 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 in
1984, 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 and
cultural development. The other objectives are:
 To promote regional peace and stability through abiding respect for justice and the rule of
law and adherence to the principles of the United Nations Charter.
 To promote active collaboration and mutual assistance on matters of common interest in the
economic, social, cultural, technical, scientific and administrative fields.
 To collaborate more effectively for the greater utilisation of agriculture and industries, the
expansion of their trade, the improvement of transportation and communications facilities
and the raising of the living standards of peoples.
 To promote Southeast Asian studies.
 To maintain close and beneficial cooperation with existing international and regional
organisations.
Fundamental Principles of ASEAN
 Mutual respect for the independence, sovereignty, equality, territorial integrity, and national
identity of all nations;
 The right of every State to lead its national existence free from external interference, subversion
or coercion;
 Non-interference in the internal affairs of one another;
299
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+.
eékÕj·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.
Ç|üŒ{Ïøπ ñqï n+‘·sê®rj·T eT]j·TT ÁbÕ+rj·T dü+dü\

ú ‘√ düìïVæ≤‘· eT]j·TT Á|üj÷Ó »qø£sy¡ TÓ qÆ düV≤ü ø±sêìï
ìs¡«Væ≤+#·&+É .
Ädæj·÷Hé jÓTTø£ÿ ÁbÕ<∏ä$Tø£ dü÷Á‘ê\T

nìï <˚XÊ\ kÕ«‘·+Á‘·´+, kÕs¡«uÛÖeT‘·«+, düe÷q‘·«+, ÁbÕ<˚•ø£ düeTÁ>∑‘· eT]j·TT C≤rj·T >∑T]Ô+|ü⁄ ø√dü+
|üsd¡ Œü s¡ >ös¡e+;
Á|ü‹ <˚X¯+ ‘·q C≤rj·T ñìøÏì u≤Vü≤´ CÀø£´+, nD∫y˚‘· ˝Ò<ë ã\e+‘·+ ˝Ò≈£î+&Ü q&ç|æ+#˚ Vü≤≈£îÿ;
ˇø£] n+‘·s¡Z‘· eéVü‰sê\˝À CÀø£´+ #˚düTø√ø£b˛e&É+;
XÊ+‹j·TT‘· |ü<ä∆‹˝À $uÛÒ<ë\T ˝Ò<ë $yê<ë\ |ü]cÕÿs¡+;
eTT|ü⁄ŒqT ‹s¡düÿ]+#·&É+ ˝Ò<ë X¯øÏÔì ñ|üjÓ÷–+#·&É+; eT]j·TT
‘·eT˝À ‘êeTT düeTs¡úe+‘·yÓTÆq düVü≤ø±s¡+.
10.4.2. Ç+&çj·÷ eT]j·TT Ädæj·÷Hé

 Ädæj·÷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£ $TwüHé ñ+~.
Ç+&çj·÷ eT]j·TT Ädæj·÷Hé Ç|üŒ{Ïπø 25 dü+e‘·‡sê\ |üs¡düŒs¡ #·s¡Ã\T, 15 dü+e‘·‡sê\ düe÷y˚XÊ\
kÕúsTT dü+Á|ü~+|ü⁄\T eT]j·TT 5 dü+e‘·‡sê\ eP´Vü‰‘·àø£ uÛ≤>∑kÕ«e÷´ìï Ädæj·÷Hé‘√ ø£*– ñHêïsTT.
Ä]úø£ düVü≤ø±s¡+:
Ädæj·÷Hé uÛ≤s¡‘·<˚X¯+ jÓTTø£ÿ Hê\Ze n‹ô|<ä› yêDÏ»´ uÛ≤>∑kÕ«$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 ˇπø 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‘·ý˚‘·Ô\ ø√dü+ Á|ü‘˚´ø£
300
 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 ASEAN
diplomats, Exchange of Parliamentarians, etc.
 Funds: Financial assistance has been provided to ASEAN countries from the following
Funds:
o ASEAN-India Cooperation Fund

o ASEAN-India S&T Development Fund
o ASEAN-India Green Fund
 Delhi Declaration: To identify Cooperation in the Maritime Domain as the key area of
cooperation under the ASEAN-India strategic partnership.
 Delhi Dialogue: Annual Track 1.5 event for discussing politico-security and economic
issues between ASEAN and India.
 ASEAN-India Centre (AIC): To undertake policy research, advocacy and networking

activities with organizations and think-tanks in India and ASEAN.
 Political Security Cooperation: India places ASEAN at the centre of its Indo-Pacific
vision of Security and Growth for All in the Region.
301
•ø£åD≤ ø√s¡T‡, bÕs¡¢yÓT+fÒ]j·THé\ e÷]Œ&ç yÓTT<ä˝…’q$ ñHêïsTT.
ì<ÛäT\T: á ÁøÏ+~ ì<ÛäT\ qT+&ç Ädæj·÷Hé <˚XÊ\≈£î Ä]úø£ düVü‰j·T+ n+~+#·ã&ç+~:
•Ädæj·÷Hé-Ç+&çj·÷ düVü≤ø±s¡ ì~Û
•Ädæj·÷Hé-Ç+&çj·÷ S&T &Óe\|tyÓT+{Ÿ |òü+&é
•Ädæj·÷Hé-Ç+&çj·÷ Á^Hé |òü+&é
 &Û©ç ¢ &çøsπ¢£ wüH:é ÄdæjT· Hé-Ç+&çj÷· eP´Vü‰‘·àø£ uÛ≤>∑kÕ«eT´+ øÏ+<ä düeTTÁ<ä s¡+>∑+˝À düV≤ü ø±s¡+ ø°\ø£ düV≤ü ø±s¡
s¡+>∑+>± >∑T]Ô+#·&É+.
 &Ûç©¢ dü+Á|ü~+|ü⁄\T : Ädæj·÷Hé eT]j·TT Ç+&çj·÷ eT<Ûä´ sê»ø°j·T-uÛÑÁ<ä‘· eT]j·TT Ä]úø£ düeTdü´\ >∑T]+∫
#·]Ã+#·&ÜìøÏ yê]¸ø£ #·s¡Ã\T 1.5 áyÓ+{Ÿ.
 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 HÓ{Ÿe]ÿ+>¥ ø±s¡´ø£˝≤bÕ\qT #˚|ü≥º&É+.
 bı*{Ïø£˝Ÿ ôd≈£L´]{° ø√Ä|üπswüHé: Ädæj·÷HéqT uÛ≤s¡‘·<˚X¯+ Ç+&√-|üdæ|òæø˘ $»Hé eT]j·TT Øõj·THé˝Àì
n+<ä]ø° n_Ûe~∆ πø+Á<ä+>± ñ+#·T‘·T+~.
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
m<äTs=ÿ+≥Tqï+<äTq nH˚ø£ ÁbÕ+rj·T ø±s¡´Áø£e÷\T C≤rj·T Á|üD≤[ø£\˝À #˚s¡Ãã&É˝Ò<äT.
düuÛÑT´\ sê»ø°j·T eédüú\T Á|üC≤kÕ«e÷´\T, ø£eT÷´ìdtº eT]j·TT ìs¡+≈£îX¯ <˚XÊ\‘√ düe÷q+>± $T[‘·+
#˚jT· ã&Ü¶sTT.
 <äøÏåD #Ó’Hê düeTTÁ<ä+ düeTdü´ Ädæj·THé jÓTTø£ÿ N*ø£\qT ãVæ≤s¡Z‘·+ #˚ùd Á|ü<Ûëq düeTdü´.
 Ädæj÷ · Hé e÷qe Vü≤≈£îÿ\ Á|ü<ëÛ q düeTdü´\ô|’ $uÛõÑ +#·ã&ç+~. ñ<ëVü≤s¡D≈£î, s√Væ≤+>±´\≈£î e´‹πsø£+>±
eTj·THêàsY˝À nD∫y˚‘·\T.
#Ó’Hê≈£î dü+ã+~Û+∫ @ø°ø£‘· $<ÛëHêìï #·]Ã+#·˝Òø£b˛e&É+, Á|ü‘˚´øÏ+∫ <äøÏåD #Ó’Hê düeTTÁ<ä+˝À <ëì
$düÔ‘·yÓTÆq düeTTÁ<ä yê<äq\≈£î Á|ü‹düŒ+<äq>± @MT #·]Ã+#·˝Òø£ b˛e&É+ Á|ü<Ûëq n&É¶+øÏ.
@ø±_ÛÁbÕj·÷ìøÏ ÁbÕ<Ûëq´‘· ø=ìïkÕs¡T¢ Á|ü<Ûëq ˝À|ü+>± e÷s¡T‘·T+~ - ø£wüºyÓTÆq düeTdü´\T m<äTs√ÿe&É+
ø£+fÒ e~*y˚jT· ã&Ü¶sTT.
düeTà‹ì neT\T #˚j·T&ÜìøÏ πø+Á<ä j·T+Á‘ê+>∑+ ˝Ò<äT.
Ä]úø£ ˝Ò<ë sê»ø°j·T s¡+>±\˝À ndüeTs¡úyÓTÆq $yê<ä-|ü]cÕÿs¡ j·T+Á‘ê+>∑+ ñqï~.
302
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’s
per capita GDP is the lowest at less than $1,300.
 Many regional initiatives were not able to be incorporated into National plans, as the less
developed countries faced resource constraints to implement the regional commitments.
 The members’ political systems are equally mixed with democracies, communist, and
authoritarian 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 in
Myanmar against the Rohingyas.
 Inability to negotiate a unified approach with regards to China, particularly in response to its
widespread maritime claims in the South China Sea.
 The emphasis on consensus sometimes becomes the a chief drawback – difficult problems
have 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 in
which 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 preferential
access 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 free
trade agreement and maintain little or no barriers to trade in the form of tariffs or quotas between
each other.
303
4. Customs Union: A customs union is an agreement between two or more countries to remove
trade barriers and lower or eliminate tariffs. Members of a customs union generally apply a
common external tariff on imports from non-member countries.
5. Economic Union: An economic union is an agreement between two or more nations to allow
goods, services, money and workers to move over borders freely. The European Union (EU) is
an example of an economic union.
6. Common Market: A group of countries imposing few or no duties on trade with one another and
a common tariff on trade with other countries.
7. Trade Deflection: The movement of goods or components of goods from outside a trading
arrangement to a country within such an arrangement in order for the seller to benefit from trading
preferences.
1. Which of the following is a form of Trade Blocs

A. SAARC
B. E.U
C. Customs Union
D. All of the above
2. Which is the not a member country in BRICS

A. India
B. China
C. Japan
D. Brezil
3. The First BRICS Summit was held at

A. Brezil
B. Yekaterinburg
C. Delhi
D. Bezing
4. India Hosted the BRICS Summit in the year

A. 2012
B. 2011
C. 2013
D. 2010
304
5. Which of the following is not the member country in SAARC
A. Nepal
B. Bhutan
C. Taiwan
D. India
6. What is the Full Forum of ASEAN

A. Association for South East Asian Nations
B. Administration on South East Asian Nations
C. Organisation of South East Asian Nations
D. Administration of Southern East Asian Nations
7. Where is the First ASEAN Summit was held

A. Bali
B. Jakarta
C. Manila
D. Singapore
8. What is the Head Quarter of ASEAN.

A. Bali
B. Jakarta
C. Manila
D. Singapore
9. Currently how many members are in the SAARC organisation?

A. 6
B. 7
C. 8
D. 10
10. What was the theme of the SAARC year 2016-17?
A. Year for Girls
B. Year for Environment
C. Year of Good Governance
D. 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
INTERACTIVE LINKS:
https://en.wikipedia.org/wiki/Brick
https://en.wikipedia.org/wiki/ASEAN
305

Commerce Business Environment Sem I

Uploaded by

Copyright:

Available Formats

Commerce Business Environment Sem I

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Commerce Business Environment Sem I

Uploaded by

Copyright:

Available Formats

First Year B.

Sri. V. Krishna Mohan

Authors : Dr. K. Srinivasa Rao

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

Prof. K. Rama Mohana Rao, Ph.D.

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

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

Dr. P. Anil Kumar, M.Sc., Ph.D

The Andhra Pradesh State Council of Higher Education, in line

Domain Subject: Commerce

I Year B Com – Semester – I

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

 Understand the concept of business environment.

Unit–I:Overview of Business Environment:

Unit – II: Economic Environment:

Unit–III: Economic Policies:

Suggested Co-Curricular Activities:

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

1.2. Business Environment

Á|üdüTÔ‘· n<Ûë´j·T+ ˝À yê´bÕs¡ ìs¡«#·q+, yê´bÕs¡ \ø£åD≤\T eT]j·TT yê´bÕs¡ \øå±´\ô|’

Businesses involve production and sale of goods and services in order to

The present chapter attempts to define business, and throw a light on

L. H. Vü‰H˚ Á|üø±s¡+ yê´bÕs¡+ n+fÒ ªªedüTe

1. 1. 2. yê´bÕs¡+ \ø£Då ≤\T

edüT,Ô ùde\≈£î dü+ã+~Û+∫q e´eVü‰s¡+:

In terms of Professor Owen,”Business is any enterprise engaged in production and distribution of

1.1.2. CHARACTERISTICS OF BUSINESS

Production of goods and services

1.1.3. yê´bÕs¡+- |ü]~

Dealings in goods and services on a regular basis

1.1.3. SCOPE OF BUSINESS

1. 1.4. yê´bÕs¡ <Û˚´j·÷\T

e÷¬sÿ{Ÿ ˝À dæsú |¡ &ü ≥É +

1.1.4. OBJECTIVES OF BUSINESS

Hêj·Tø£‘«· |ü]eƒ T ô|+bı+~+#·&+É

ñ<√´>∑T\ |üì‘·q+ eT]j·TT yÓK’ ]˝À e÷s¡TŒ

Physical and financial resources

Manager performance and development

Worker performance and attitude

1 .2. 2 . yê´bÕs¡ |ü]düsê\T

1.2.3. yê´bÕs¡ |ü]düsê\T- \ø£Då ≤\T

1.2.2. BUSINESS ENVIRONMENT

Totality of External Forces

Specific and General Forces

1.2.4. yê´bÕs¡ |ü]düsê\T |ü]~ - ÁbÕeTTK´‘·

yê´bÕs¡ |ü]düsê\ n<Ûä´j·Tq+ yê´bÕsêìøÏ dü+ã+~+∫q neø±XÊ\qT n+<äT˝Àì Çã“+<äT\qT ìX¯‘·+>±

Á|üD≤[ø£\T s¡∫+#·&+É ˝ÀqT, ìs¡j

ñ|üj÷Ó >∑øs£ y¡ TÓ qÆ eqs¡T\qT n+~düT+Ô ~

HÓ|’ ⁄ü D≤´\qT ô|+#·T‘·T+~

e÷s¡TŒ\qT m<äTs=ÿH˚+<äT≈£î dæ<+›ä #˚dTü +Ô ~

1.2.4. IMPORTANCEAND SCOPE OF BUSINESSENVIRONMENT

Identifies Business Opportunities and Threats

Helps in Planning and Policy Formulation

Provides Useful Resources

Helps in Coping with Rapid Changes

yê´bÕs¡ Á|ü‹wü̃ ô|+#·T‘·T+~