Business Environment

1. ASPECTS AND ITS EFFECT ON BUSINESS

2.  UNDERTAKEN SICE JULY 1991
 VIEW TO INCREASE THE PRODUCTIVITY AND
EFFICIENCY OF THE ECONOMY.
 REDUCED COMPETITION
 CREATING MORE COMPETITIVE ENVIRONMENT
NEED OF NEW ECONOMIC POLICY
 DUE TO ECONOMIC CRISIS 1991
 LOW FOREIGN EXCHANGE RESERVE
 INCREASED IN NATIONAL DEBT(FISCAL
DEFICIT)
 PRICE RISING

3. 1.LIBERALISATION
• Liberalising the economy against unnecessary
controls and regulation
• Abolished the system of industrial licensing
except 8 industries
2. PRIVATISATION
 Widening the scope and role of private sector
 Introduction of private ownership in public
owned units
 Greater participation of private individuals
 55% contribution by private sector for the
development of economy

4.  Credit support to private sector from financial
institutions.
3.GLOBALISATION OF THE ECONOMY
 FDI is allowed in high technology and high
investment priority sector
 No permission was required for hiring foreign
technician
 Rupee has been devalued, so export was
increased and import was restricted (outflow
of foreign capital)
 NEW EXIM POLICY 1992-97 was introduced.
Improve trade (export –import) practices
 Custom duty was has been reduced from 250%
to 35%

5. 4. NEW PUBLIC SECTOR POLICY
 Emphasis to shift public to private sector
 Reduction in list of reserved industries to 17
to 8
 Sick PSE (public sector enterprises) policy
were redesigned.
 Disinvestment of shares in PSE and
encourage the investment to private
sector(general public)
5. MODERNISATION
 Introduction of modern techniques in
production system
 Growth of electronic and computer
industries in economy

6.  Corporate merger and collaborations is
allowed to face new challenges
 Modernisation of sick units (public and private
both)
6.FINANCIAL REFORMS
 Reduction in liquidity ratio( CRR, SLR is
reduced so people have more money and
boom in society)
 Reconstitution of Banking sector
 Giving more freedom to banks and ending
dual control of RBI and Finance Ministry.
 Introducing capital market change
 Liberal treatment to foreign Banks

7.  For recovery of loans special speedy
machinery were established
7. FISCAL REFORMS
 To reduce fiscal deficit
 Initiative was taken to reduce public
expenditure by increasing Taxes.

8.  ALLOW ENTRY OF PLAYERS
 ECONOMICAL BENEFITS
 CONTROL INFLATION
 INCREASED IN FDI
 INCREASE IN TOTAL PROFITS
 EXPLOITATION OF WORKERS
 LACK OF LONG TERM VISION

9.  EFFICIENT UTILISATION OF RESOURCES
 HIGH QUALITY OF SERVICES
 MINIMISING THE LOSS
 REDUCE MALPRACTICES
 LESS POLITICAL INTERFERENCE
 REDUCE IN PERSONNEL PROBLEM
 EXPLOITATION OF CONSUMERS
 NO CHECK ON MONOPOLIES
 UNECONOMIC SERVICES

10.  HUGE AMOUNT OF FORIGN INVESTMENT
 UPDATED TECHNOLOGY
 FREE FLOW OF CAITAL
 LOWER PRICES WITH HIGH QUALITY
 INCREASE IN INDUSTRIALISATION
 PROVIDE EMPLOYMENT
 REDUCES JOBS AND INCOMES
 POOR LABOUR PRACTICES
 RISK AND UNCERTAINITIES