#3 Business Environment Video | For Class XII CBSE and above

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Business Environment Lecture #3

Business Environment #3 Tarun Aneja Classes

Since independence, India followed the mixed economy framework by combining the advantages of the market economic system with those of the planned economic system. On July 24, 1991, India instituted a series of ongoing economic reforms, which is now known as the New Economic Reforms of 1991.

Main Objectives of New Economic Policy – 1991, July 24  by the union Finance Minister Dr. Manmohan Singh

1.       Higher economic growth and standard of living

2.       Remove imbalances in BoP statement

3.       Remove the unnecessary restrictions of the government.(Liberlisation)

4.       Creates consumerism

5.       To permit the international flow of goods,services,capital human resources and technology into our country.(Globalisation)

6.       To increase the participation of private players in all sectors of the economy.(Privatisation)

Branches of New Economic Policy

Liberlisation:- Removing the unnecessary restrictions and government controls.

It includes:-

·         Increase in the investment limit for the small scale industries(SSI):-Investment in the small scale industries has been raised upto Rs.1Crore. So these companies can upgrade their machinery and improve their efficiency.

·         Freedom from licensing system.

·         Simplification of tax systems for better compliance of tax payments.

·         Reduction in tax rates.

·         Freedom to fixing up the prices of goods and services

·         Freedom to import capital goods

Privatisation:- It means to permitting the private sector to set up industries which was previously reserved for the public sector only. It can be adopted by two ways: A.) Selling the part of PSU stakes to the private sector (Disinvestment) & B.) Closing down the operation of sick undertakings which were came under public sector.

Globalisation:- Integration of our economy with the line of world of economy. It involves the free movement of goods and services, capital, technological know-how and many more such things.

Impact of Government policy changes on business and industries:-

1.        Increased Consumerism:- With the introduction of economic reforms since 1991 a large variety of goods and services are now available to the Indian consumers which increases competitive environment.

2.        Creates Global market:- Growing global markets in services. People can now execute trade services globally -- from  medical advice to  software  writing  to  data  processing  ,  that  could  never  really  be  traded  before.

3.        Efficient technology innovation:- It provide us the world class technological advancement so that our country’s business will grow faster.

4.        More demanding consumers:- Now-a-days customers are more demanding because they are well informed about the market info.

5.        Increased competition:- Due to increase in the number of industries in private sector, competition amongst them is also increases.

6.        Only the bestest will survive:- Thanks to the LPG policy, that the support for financing the public sector expenditure has declined.