SUBMITTED BY:Manish, Roll No.13 Manisha, Roll No.14 Mehak, Roll No.

15

 The

economic environment has been changing nationally and internationally for the last two decades. There has been Quantitative and Qualitative shift in trade and business opportunities across nations of the world. Furthermore, with advent of Liberalization, Structural Reforms and innovations in Information Technology, there is a significant increase in the mobility of Capital, Knowledge, Technology and Materials, which has increased the volatility in economic performance of India.

 Business

Environment refers to sum total of all factors-economic, political, legal, social, international etc. which affect the business directly/indirectly; positively/negatively; to larger/smaller extent. Environment is very important for business enterprises because business firms have to operate in a given environmental factors, which are numerous and complex; static/dynamic; economic/non-economic.

Business Firm cannot operate in vacuum. It has to work in certain economic and noneconomic constraints. So, It can be divided into two parts1)

Micro Env. Factors:-

Customers Suppliers Labour Competitors Regulatory Agencies

2) Macro Env. Factors:

Economic Environment Factor Political Environment Technological Environment Demographic Environment Natural Environment Socio-Cultural Environment

 Economic

Environment is those economic factors which have their affect on the working of the business. Economic Environment is affected by other Micro and Macro Environmental Factors, such as Economic

System Economic Policies Economic Growth Monetary Policies Currency Exchange Rate Level of Income Distribution

 Economic

regulatory and supervisory role in the economic system by the use of fiscal policy, industrial policy, annual budget etc. Economic Growth:- The economic performance and growth of economic industry and business is heavily dependent on growth of economy as a whole. Interest Rate:- Lower Interest Rate provide healthy opportunity for business while higher interest rate is unhealthy for business.

Policy:- Government play a crucial,

 Currency

useful for import-export regulations as per economy and business requirement. Economic Legislation:-Governments of different countries frame various legislations which regulate and control business and economy. Level of Income:-Any improvement in level of income will drive business in positive direction. Economic Condition:-Any improvement in economic condition such as standard of living, purchasing power affects the size of market.

Exchange Rate:-It is very much

 Distribution

and wealth is distributed in such a way that it is decentralized from few people to many, then it increases demand in market. International Economic Environment:-It includes international economic condition, economic trends in policy and certain other economic-political environment that has a great impact on business for export-import policy, technology transfer etc.

of Income & Wealth:-If Income

per BRIC Report, Goldman Sachs, India has never been so dynamic, vibrant and full of business opportunities.(Business Week, Aug 05) As per Peter Loescher, President & Chief Executive, Siemens, India will be among the 3 largest economies in the world by 2032. As per John Redwood Economic Competetiveness Policy Group ,UK, India is now truly a land of opportunity.
As

per Goldman Sachs Report, there are 50,000 crorepatis in India and the number is still increasing. India will be economic super power by 2050. Indian economy has highest saving rate in the world. As per recent estimate, India will surpass China by 2020 as a fastest growing economy. Indian economy is directed towards inclusive growth that is driven by affirmative action like Food Security Bill, MGNREGA, Right to Education Bill, Employment Guarantee Bill etc.
As

 Increase

in Fiscal Deficit. Deficit in Balance of Payment. External Borrowings. Mounting Inflation Rate. Failure of the public sector. Industrial Licensing policies Gulf Crisis

 Since

Independence, India followed Democratic SocialismGrowth Rate: 1951-56 :- 3.6% War Period: 1961-66 :-2.5% 1991 Onwards, India followed liberalized economic policyGrowth Rate: 1992-97 :- 6.7% In 2008, India was the second fastest growing economy in the world, but slowdown in 2009.

 Indian

market environment changes from seller market to buyer market. In 1991, New Economic Policy can be said as a bloodless revolution in Indian economy or RENAISSANCE of Indian economy. Private participation was allowed in many government monopoly areas like- air travel, power, infrastructure etc. Many reserved areas for small scale industry were open to all.

 Many

Indian MNCs like Tata, Airtel, Hindalco etc started acquiring foreign industries. Microfinance companies started growing in rural and suburban areas. PPP[public private partnerships] & PPCP[public private community partnership] are the new emerging concepts of Indian economy. Hindu growth rate of India converted into second fastest growing economy of the world.

Heads of develop ment

1st

2nd

3rd

4rth 5th

6th

7th

8th

9th

10t h

Agricultur 37.0 20.9 20.5 23.3 22.1 22.2 e & Irr. Power Industry Transport & Comm. Social services Total 7.6 4.9 9.7 14.6 18.6 18.8 16.7

20.2 17.4 23.7 17.1 21.6 100

20.6 19.4 20.0 6 18.7 25.4 26.4 7 18.8 8.2 4.00

24.1 22.9 19.7 24.3 26.5

26.4 27.0 24.6 19.5 17.4 16.0 24.1 18.3 17.4 18.9 17.4 18.6 100 100 100 100 100 100

18.7 19.8 21.3 23.2 27.2 28.1 7 100 100 100

 Phase

relatively open trade policy until the late 1950s; investment licensing began to tighten only towards the late 1950s. Phase 2:- Socialism struck with Vengeance. Phase 3:- Ad hoc Liberalization during 197579, 1980-84 and then more substantial liberalization during 1985-86 and 1986-87. Phase 4:- Systematic Liberalization from 1991 onwards.

1:- Open Foreign Investment Policy;

2007 2008 2009 2010

GDP Growth

9.40 7.30 5.40 7.20 % % % % 6.40 9.30 5.50 4.90 % % % %

CPI

National Per Capita Income Income (Rs.Crore) (Rs.)

1996-97 2000-01 2001-02 2002-03 2003-04 9,85,162 17,02,454 18,64,292 19,91,063 27,43,000 10,708 16,701 17,978 18,876 25,804

 High

inflationary pressures compelling for tightening monetary policy that results in higher cost of money. Reforms in banking sector are still low. Interest Rate is still very high compared to developed world. Deficit Financing (currently 10.3% of GDP) Lower Per Capita Income(143rd in world)

 Agriculture

Sector require major reforms and thrust to keep pace of growth because Agricultural growth rate is between 2 to 3 percent. Political hurdle in implementing economic policy.

 The

Indian economy provides a revealing contrast between how individuals react under a government controlled environment and how they respond to a market based environment. Evidence suggests that recent market reforms that encouraged individual enterprise have led to higher economic growth in the country.

 In

order to keep up the economic growth during times of the worst recession, govt. authorities in India have announced the stimulus packages to bolster economic growth. To finance the stimulus packages, the Indian govt. has raised over $100 billion over the last four quarters. The countrys public debt, acc. To the RBI, has zoomed to more than 50% of the total GDPI.

 Business

Review India gives a cut-to-cut report on how positively Indian domestic markets have grown and which are the major cities that helped channelize this growth. Carlsbad ,CA, Feb 10,2011- India is on a roll.

The countrys socio-economic structure has seen tremendous improvement since the last decade when the tools of the economic development started contributing to create a financial makeover of the country.

 Reduce

unnecessary interference of bureaucracy. Reduce fiscal deficit. Market should be made competitive. Growth in equity, both in respects of region and class. Necessary improvement in infrastructure. Industrialization should not be hampered for political advantages.

 Market

should be made more informative in either case, product or service. Cost for money for business sector to be made cheap by reforms in banking sector. Facilities for professional and technical training be increased. Indian economy to be made more regulated and with maximum transparency in policy. Better food inflation plan. Higher growth rate required for agriculture.