Unit 1BUSINESS AND DIFFERENT CHAMBERS OF COMMERCE AND INDUSTRY IN INDIAA chamber of commerce is also known as a board of trade, is a kind of business network. Its aim is toenhance the business interest of the members. The Chambers could have a board of directors, who inturn would recruit a President, CEO and other required staff for the administration of the Chamber.Chambers Of Commerce is formed with the purpose of1. Strengthening Local economy.2. Creating business networking opportunities.3. Communicating with government for the business community.4. Addressing the grievances of members.5. Creating a strong local economy.PUBLIC DISTRIBUTION SYSTEMPublic Distribution System (PDS) is an Indian food security system. Established by the Government ofIndia under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with stategovernments in India, it distributes subsidized food and non-food items to Indias poor. Majorcommodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through anetwork of Public distribution shops, also known as Ration shops established in several states across thecountry. Food Corporation of India, a Government-owned corporation, procures and maintains thePublic Distribution System.In terms of both coverage and public expenditure, it is considered to be the most important foodsecurity network. However, the food grains supplied by the ration shops are not enough to meet theconsumption needs of the poor or are of inferior quality. The average level of consumption of PDS grainsin India is only 1 kg per person / month. The PDS has been criticised for its urban bias and its failure toserve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to muchcorruption in the process of extricating the poor from those who are less needy. Today, India has thelargest stock of grain in the world besides China, the government spends Rs. 750 billion ($13.6 billion)per year, almost 1 percent of GDP, yet 21% remain undernourished. Distribution of food grains topoor people throughout the country is managed by state governments. As of date there are about4.99 lakh Fair Price Shops (FPS) across IndiaOverviewBoth the central and state governments shared the responsibility of regulating the PDS. While thecentral government is responsible for procurement, storage, transportation, and bulk allocation of foodgrains, state governments hold the responsibility for distributing the same to the consumers through theestablished network of Fair Price Shops (FPSs). State governments are also responsible for operational
responsibilities including allocation and identification of families below poverty line, issue of rationcards, supervision and monitoring the functioning of FPSs[clarification needed].Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month,while a household above the poverty line is entitled to 15 kg of foodgrain on a monthly basis.A BPL card holder should be given 35 kg of foodgrain and the card holder above BPL should be given 15kg of food grain as per the norms of PDS. However, there are concerns about the efficiency of thedistribution process.Public distribution shopA public distribution shop also known as Fair Price Shop (FPS), part of Indias Public Distribution Systemestablished by Government of India, is a kind of shop in India which is used to distribute rations at asubsidized price to the poor. As of date there are about 4.99 lakh Fair Price Shops (FPS) across India.Locally these are known as "ration shop" and chiefly sell wheat, rice, kerosene and sugar at a price lowerthan the market price. However, other essential commodities may also be sold. These are also calledFair Price Shops. For buying items from this shop one must have a ration card. These shops are operatedthroughout the country by joint assistance of central and state government. No doubt the item fromthese shops are much cheaper but are of poor quality. Ration shops are now present in most localities,villages towns and cities. India has 478,000 shops constituting the largest distribution network in theworld.The introduction of rationing in India dates back to the 1940s Bengal famine.this rationing system wasrevived in the wake of acute food shortage during the early 1960s, prior to the Green Revolution.Fallouts of P.D.S SystemThe Public Distribution System of India is not without its defects. With a coverage of around 40croreBPL(Below Poverty Line) families, a review of the PDS has discovered the following structuralshortcomings and disturbances:1. Growing instances of the consumers receiving inferior quality food grains in ration shops.2. Deceitful dealers replace good supplies received from the F.C.I(Food Corporation of India) withinferior stock and sell FCI stock in the black market.3. Illicit fair price shop owners have been found to create large number of bogus cards to sell foodgrains in the open market.4. Many FPS dealers resort to malpractice, illegal diversions of commodities, hoarding and blackmarketing due to the minimal salary received by them.5. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poorthus resulting in their food insecurity.6. Identification of households to be denoted BPL status and distribution to granted PDS services hasbeen highly irregular and diverse in various states. The recent development of Aadhar UIDAI cards
has taken up the challenge of solving the problem of identification and distribution of PDs servicesalong with Direct Cash Transfers.7. Regional allocation and coverage of FPS are unsatisfactory and the core objective of pricestabilization of essential commodities has not met.GOVERNMENT CONTROL OVER PRICE AND DISTRIBUTIONPrice controlsPrice controls are governmental restrictions on the prices that can be charged for goods and services ina market. The intent behind implementing such controls can stem from the desire to maintainaffordability of staple foods and goods, to prevent price gouging during shortages, and to slow inflation,or, alternatively, to insure a minimum income for providers of certain goods or a minimum wage. Thereare two primary forms of price control, a price ceiling, the maximum price that can be charged, and aprice floor, the minimum price that can be charged.Historically, price controls have often been imposed as part of a larger incomes policy package alsoemploying wage controls and other regulatory elements.Although price controls are often used by governments, economists usually agree that price controlsdont accomplish what they are intended to do and are generally to be avoided.Government control over distribution and price of essential commodities in IndiaGovernment control over distribution and price of essential commodities is an important feature of ashortage economy. Production serves no purpose if the goods produced are not delivered to the finalconsumer at the right time in the right quantity and at the right price.The existing private sector trade channels in India cannot be wholly relied upon due to their mal-practices and their general tendency to exploit the scarcity situation. Adulteration, hoarding, cornering,profiteering, black marketing and other anti-social and unethical practices make people cry for publicdistribution system.Rationing of food grains was introduced during the Second World War period. It was withdrawn afterthe Independence but it was again introduced on a statutory basis in 1954. The basic legal frame forcommodity control is provided by the Essential Commodities Act, 1955.This Act provides, in the interest of the general public, for government control over the production,supply and distribution of essential commodities which are listed. These commodities fall into threeclasses—a) food items,b) raw materials for industries andc) products of the centrally-controlled industries.
The Central Government is empowered to declare any commodity as an essential commodity for thepurpose of the Act.The Government has now listed over 60 commodities as essential commodities. For the purpose of thisAct, essential commodity means any of the following classes of commodities:(i) Cattle fodder including oil cakes,(ii) Coal including coke and other derivatives,(iii) Component parts of automobiles,(iv) Cotton and woolen textiles,(v) Drugs,(vi) Foodstuffs including edible oils,(vii) Iron and steel,(viii) Paper and newsprint,(ix) Petroleum and petroleum products,(x) Raw cotton,(xi) Raw jute,(xii) Any other class of commodity which the Central Government may declare to be an essentialcommodity for the purpose of this Act.
Unit 2CONSUMER PROTECTION ACT OF 1986Consumer Protection Act of 1986 is an act of Parliament of India enacted in 1986 to protect interests ofconsumers in India. It makes provision for the establishment of consumer councils and other authoritiesfor the settlement of consumers disputes and for matters connected therewith.Contents [hide]Consumer Protection CouncilConsumer Protection Councils are established at the national, state and district level to increaseconsumer awareness.Central Consumer Protection CouncilIt is established by the Central Government which consists of the following members:1. The Minister of Consumer Affairs, – Chairman, and2. Such number of other official or non-official members representing such interests as may beprescribed.State Consumer Protection CouncilIt is established by the State Government which consists of the following members:1. The Minister in charge of consumer affairs in the State Government – Chairman.2. Such number of other official or non-official members representing such interests as may beprescribed by the State Government.3. such number of other official or non-official members, not exceeding ten, as may be nominatedby the Central Government.4. The State Council is required to meet as and when necessary but not less than two meetingsevery year.Consumer Disputes Redressal AgenciesConsumer CourtDistrict Consumer Disputes Redressal Forum (DCDRF): Also known as the "District Forum" establishedby the State Government in each district of the State. The State Government may establish more thanone District Forum in a district. It is a district level court that deals with cases valuing up to 2 million(US$37,000).
State Consumer Disputes Redressal Commission (SCDRC): Also known as the "State Commission"established by the State Government in the State. It is a state level court that takes up cases valuing lessthan 10 million (US$180,000)National Consumer Disputes Redressal Commission (NCDRC): Established by the Central Government.It is a national level court that works for the whole country and deals with amount more than 10 million(US$180,000).ObjectivesObjectives of Central CouncilThe objectives of the Central Council is to promote and protect the rights of the consumers such as:-a) the right to be protected against the marketing of goods and services which are hazardous to lifeand property.b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods orservices, as the case may be so as to protect the consumer against unfair trade practices.c) the right to be assured, wherever possible, access to a variety of goods and services at competitiveprices.d) the right to be heard and to be assured that consumers interests will receive due consideration atappropriate forums.e) the right to seek redressal against unfair trade practices or restrictive trade practices orunscrupulous exploitation of consumers; andf) the right to consumer education.Objectives of State CouncilThe objects of every State Council shall be to promote and protect within the State the rights of theconsumers laid down in clauses (a) to (f) in central council objectives.JurisdictionJurisdiction of District Forum1) – Subject to the other provisions of this Act, the District Forum shall have jurisdiction toentertain complaints where the value of the goods or services and the compensation, if any, claimeddoes not exceed rupees twenty lakhs.2) – A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction:-
a) the opposite party or each of the opposite parties, where there are more than one, at the timeof the institution of the complaint, actually and voluntarily resides or carries on business or hasa branch office or personally works for gain, orb) any of the opposite parties, where there are more than one, at the time of the institution of thecomplaint, actually and voluntarily resides, or carries on business or has a branch office, orpersonally works for gain, provided that in such case either the permission of the District Forumis given, or the opposite parties who do not reside, or carry on business or have a branch office,or personally work for gain, as the case may be, acquiesce in such institution; orc) the cause of action, wholly or in part, arises.Jurisdiction of state councilSubject to the other provisions of this Act, the State Commission shall have jurisdiction:-a) to entertainI. complaints where the value of the goods or services and compensation, if any, claimedexceeds rupees twenty lakhs but does not exceed rupees onecrore; andII. appeals against the orders of any District Forum within the State; andb) to call for the records and pass appropriate orders in any consumer dispute which is pendingbefore or has been decided by any District Forum within the State, where it appears to the StateCommission that such District Forum has exercised a jurisdiction not vested in it by law, or hasfailed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally orwith material irregularity.Jurisdiction of National CouncilSubject to the other provisions of this Act, the National Commission shall have jurisdiction—a) to entertainI. complaints where the value of the goods or services and compensation, if any, claimedexceeds rupees one crore; andII. appeals against the orders of any State Commissionb) to call for the records and pass appropriate orders in any consumer dispute which is pendingbefore or has been decided by any State Commission where it appears to the NationalCommission that such State Commission has exercised a jurisdiction not vested in it by law, orhas failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdictionillegally or with material irregularity.Limitation period
1) The District Forum, the State Commission or the National Commission shall not admit acomplaint unless it is filed within two years from the date on which the cause of action hasarisen.2) Not with standing anything contained in sub-section (1), a complaint may be entertained afterthe period specified in sub-section (1), if the complainant satisfies the District Forum, the StateCommission or the National Commission, as the case may be, that he had sufficient cause fornot filing the complaint within such period: Provided that no such complaint shall beentertained unless the National Commission, the State Commission or the District Forum, as thecase may be, records its reasons for condoning such delay.ROLE OF VOLUNTARY ORGANIZATION IN PROTECTING CONSUMER RIGHTSConsumer organizations are advocacy groups that seek to protect people from corporate abuse likeunsafe products, predatory lending, false advertising, astroturfing and pollution.Consumer organizations may operate via protests, campaigning or lobbying. They may engage in single-issue advocacy (e.g., the British Campaign for Real Ale (CAMRA), which campaigned against keg beer andfor cask ale) or they may set themselves up as more general consumer watchdogs, suchas the Consumers Association in the UK.One common means of providing consumers useful information is the independent comparative surveyor test of products or services, involving different manufacturers or companies (e.g., Which?, ConsumerReports, etcetera).Another arena where consumer organizations have operated is food safety. The needs for campaigningin this area are less easy to reconcile with their traditional methods, since the scientific, dietary ormedical evidence is normally more complex than in other arenas, such as the electric safety of whitegoods. The current standards on mandatory labelling, in developed countries, have in part been shapedby past lobbying by consumer groups.The aim of consumer organizations may be to establish and to attempt to enforce consumer rights.Effective work has also been done, however, simply by using the threat of bad publicity to keepcompanies focus on the consumers point of view.Consumer organizations may attempt to serve consumer interests by relatively direct actions such ascreating and/or disseminating market information, and prohibiting specific acts or practices,or bypromoting competitive forces in the markets which directly or indirectly affect consumers (such astransport, electricity, communications, etc.).Consumer organizations India(i) Consumer Guidance Society of India(ii) The Consumers Eye India
Grahak Shakti-Bengaluru-Karnataka-Non profit Non Political Voluntary Consumer Organisation workingfor the empowerment of Consumer for over two and half decades.Very dedicated and doing yeomenservice to the society. They have a large membership base with about 21 Life Timers who contributetheir time and energy honorarily. It is driven by a passionate Managing Trustee who leads from frontand puts in his money to steer the organisation. They are very principled and have earned ConsumerConfidence. They have faced several crisis for being bold and uncompromising in their outlook.Remarkable indeed.INDUSTRIAL POLICY RESOLUTIONIndustrial Policy Resolution of 1956 (IPR 1956) is the resolution adopted by the parliament of India inApril 1956. It was first comprehensive statement on industrial development of India. The 1956 policycontinued to constitute the basic economic policy for a long time. This fact has been confirmed in all theFive Year Plans.According to this Resolution the objective of the social and economic policy in India was theestablishment of a socialistic pattern of society. It provided more powers to the governmentalmachinery. It laid down three categories of industries which were more sharply defined. Thesecategories were:a) Schedule a-those industries which were to be an exclusive responsibility of the state.b) Schedule B-those which were to be progressively state-owned and in which the state wouldgenerally set up new enterprises, but in which private enterprise would be expected only tosupplement the effort of the state; andc) Schedule C-all the remaining industries and their future development would, in general be leftto the initiative and enterprise of the private sector.Fair and non-discriminatory treatment for the private sector, encouragement to village and small- scaleenterprises, removing regional disparities, and the need for the provision of amenities for labour, andattitude to foreign capital were other salient features of the IPR 1956.NEW INDUSTRIAL POLICY OF THE GOVERNMENTThe Industrial Policy plan of a country, sometimes shortened IP, is its official strategic effort toencourage the development and growth of the manufacturing sector of the economy. Thegovernment takes measures "aimed at improving the competitiveness and capabilities of domestic firmsand promoting structural transformation." A countrys infrastructure (transportation,telecommunications and energy industry) is a major part of the manufacturing sector that usually has akey role in IP.Industrial policies are sector specific, unlike broader macroeconomic policies. They are sometimeslabeled as interventionist as opposed to laissez-faire economics. Examples of horizontal, economywidepolicies are tightening credit or taxing capital gain, while examples of vertical, sector-specific policies
comprise protecting textiles from foreign imports or subsidizing export industries. Free marketadvocates consider industrial policies as interventionist measures typical of mixed economy countries.Many types of industrial policies contain common elements with other types of interventionist practicessuch as trade policy and fiscal policy. An example of a typical industrial policy is import-substitution-industrialization (ISI), where trade barriers are temporarily imposed on some key sectors, such asmanufacturing. By selectively protecting certain industries, these industries are given time to learn(learning by doing) and upgrade. Once competitive enough, these restrictions are lifted to expose theselected industries to the international marketThe major objectives of the new industrial policy are as(i) Maintenance of a sustained growth in productivity and gainful employment;(ii) rectification of the distortions or weaknesses that may have crept in the industrial structure as hasdeveloped over the last four decades; (iii) consolidation of the strength build up during the last fourdecades of economic planning and to build on the gains already made; (iv) attaining of internationalcompetitiveness. The pursuit of the above cited objectives will be tempered by the need to preserve theenvironment as well as the need to ensure the efficient use of available resources.1. Industrial Licensing:(i) Industrial licensing policy and procedures have also been liberalized from time to time. A fullrealization of the industrial potential of the country calls for a continuation of this process of change.(ii) Major policy initiatives and procedural reforms are called for in order to actively encourage and assistIndian entrepreneurs to exploit and meet the emerging domestic and global opportunities andchallenges.(iii) The bedrock of any such package of measures must be taken to the attainment of technologicaldynamism and international competitiveness requires that enterprises to be enabled to respond swiftlyto fast-changing external conditions that have become characteristic of todays industrial world.(iv) Government policy and procedures must be geared to assist entrepreneurs in their efforts.(v) The system of reservation for public sector undertakings has been evolved towards the ethos ofgreater flexibility and private sector enterprise has been gradually allowed to enter into many of theseareas on a case by case basis.(vi) This calls for bold and imaginative decisions designed to remove restraints on capacity creation,which at the same time, ensure that overriding national interests are not jeopardized.(vii) Thus industrial licensing will henceforth be abolished for all industries, except those specified,irrespective of the levels of investment.2. Foreign Technology and Investment:
Foreign investment in India is regulated by the Govt, from the very beginning. Therefore, for any foreigninvestment or technology, prior approval of the Govt, is necessary which leads to unnecessary delays.Thus, the new industrial policy prepares a list of high invest priority and high technology in whichautomatic approval will be given for direct foreign investment up to 51 percent equity.Such clearance will be available if foreign equity covers the foreign exchange requirement for importedcapital goods. Moreover, in order to provide access to international markets, majority foreign equityholding up to 51 per cent equity will be allowed for trading companies primarily engaged in exportactivities.Apart from this, a special Empowered Board would be constituted to negotiate with various largeinternational firms and approve direct foreign investment in selected areas.Regarding the foreign technology agreements automatic approval will be given in identified high priorityindustries up to a lumpsum payment of Rs. 1 crore, 5 per cent royalty for domestic sales and 8 per centfor exports, subject to total payments of 8 per cent of sales over a period of ten years from the date ofagreement or seven years from commencement of production.3. Public Sector:The public sector has been the centre to the philosophy of our development. But in spite of its hugeinvestment, public sector enterprises could yield a very low rate of return on capital investment.Numerous, public sector undertakings are incurring losses regularly.Thus, in a bid to face the situation, the Govt, should restructure the potentially viable units. This priorityarea for future growth of PSEs included-essential infrastructure, technology development, explorationand exploitation of minerals and oil, products with strategic consideration etc.Moreover, the new policy has now reduced the list of industries under public sector to 8 as against 17industries reserved in 1956 policy. The new industrial policy also states that the govt will raise thestrength of those public sector units included in the list of reserved industries.The Govt will also review the existing public sector undertakings. Industries earning higher profits will beprovided with much higher degree of management autonomy through MoU. Apart from all this, the govthas also taken a decision to disinvest the equity shares of selected public units.4. MRTP Limit:Under the MRTP Act, firms having assets over a certain size of Rs. 100 crores since 1985 were classifiedas MRTP firms. These firms were allowed to start only selected industries on a case by case approval.But now the Govt has realized that the MRTP limit has become deleterious in its effect on industrialgrowth.Therefore, new policy states that the pre-enter scrutiny of investment decisions by the MRTP companieswill no longer be required.
Emphasis should be on controlling and regulating-the monopolistic, restrictive and unfair tradepractices. Moreover, provisions of the MRTP Act will be strengthened to enable the MRTP commissionto take appropriate action in respect of these practices.5. Location Policy Liberalized:Regarding the location of industries in cities of less than 1 million populations, no industrial approval isrequired from the centre. In cities, with more than 1 million populations, industries other than those ofnon-polluting in nature will be located outside 25 kms. of its periphery.6. Abolition of Phased Manufacturing Programme:To increase the pace of indigenization, phased manufacturing programme was enforced. The new policyhas totally abolished such programmes as the Govt, feels, due to substantial reforms of trade policy anddevaluation of rupee, there is no need to enforce such programmes.7. Removal of Mandatory Convertibility Clause:Banks and financial institutions have financed a large part of industrial investment that has followed amandatory convertibility clause.This has provided no option to convert loans into equity this was an un-warranted threat to private firm.The new industrial policy has removed this system.
Unit 3CONCENTRATION OF ECONOMIC POWERAs business gets bigger, there is also an increased concentration of economic power. Excessiveconcentration of economic power is rarely good for society. Monopoly makes a market dysfunctional ...and society is at the mercy of the monopolist. Markets are efficient because of the interaction of manysellers and many buyers ... together with widely available useful information.Big does not necessarily mean bad ... but it has the potential to be bad when there is monopoly or nearmonopoly. Oligopoly may not be much better than monopoly ... while overt collusion is usually againstthe law, many behaviors in an oligopoly look very much like the behavior in a monopoly. Big does meanconcentration of economic power ... and this concentration of economic power usually ends up creatingdistortion ... or worse ... in the economy, and in society.Concentration of economic powers is often associated with high profits ... high profits arising morebecause of the practice of "restraint of trade" than because of profits that are arising from operationalproductivity. The longer term dynamic that emerges from concentration of economic power is a focuson the protection and maintenance of the status quo.When Professor Yunus talks about the systemic dysfunction of the socio-economic system, this issomething of what he is talking about. Concentration of economic power means that little resources areleft to be allocated to facilitate socio-economic improvement at the bottom of the pyramid.At its worst, concentration of economic power is maintained by physical thuggery. In a moresophisticated environment, the concentration of economic power is maintained by the interlockinginterests of business and politics ... in other words ... oligarchy. Rule of law should be a good thing ... butall too often rule of law protects special interests more than it protects the public interest.The matters are complex ... and to make matters worse ... the data to help understand the situation areusually unavailable or difficult to access or understand. In this situation, the dialog is between differingopinions rather than being built on meaningful data.Community Analytics (CA) may help by having metrics that show how good socio-economic progress andperformance can be ... compared to the status quo that we have to live with because that is what thosein control most want!INDIA’S FOREIGN CAPITAL AND COLLABORATIONSA country needs natural resources, adequate levels of savings, latest technical know how, skilled humanresources etc. for economic development. Compared to developed countries, developing countries aredeficit of these resources. Lack of resources and skilled labor forces may prompt them to seekassistance from economically well developed countries. Assistance may be in the form of eithertechnical knowledge or investments and very often, both. It may be through collaborations with foreign
countries or private companies. In India, such collaborations have always been predominant from thetime of independence itself. Government has always welcomed such foreign investments with somerestrictions giving new paths of co-operation. Also, its policy has undergone several changes sinceindependence. Foreign investment policy has a direct impact on inflow of foreign money, skills andknowledge.What are the merits of foreign capital?No doubt, a developing country like India has many reasons to welcome fund inflows that can play animportant role in the economic development of our nation.1. Some natural resources may go unnoticed or unexploited in the absence of technology. So,welcoming new ideas can help in the effective use of resources and prevent them from going tothe waste.2. Also, new technologies can help in upgrading present techniques giving more result thus savingman power, money and time.3. When new technologies are welcomed, employment opportunities also are created. So, it givesmany employment opportunities, particularly to new professionals with new ideas. So, skilledlabor force can be used in a better way.4. They can supply domestic savings and capital formation thereby accelerating the investmentrate for the economic development of the country.5. New technologies can bring new markets and marketing experts too, thus helping to sell Indiangoods in international markets for good prices.6. Backbone of development of a country, of course, is agriculture and industry. Foreign capital canprovide infrastructure for both.Foreign investment policy in IndiaInvestment policy of India can be broadly classified into two periods – 1948-1990 and 1991 onward. Till1990, there were only restricted policies and regulated inflows. But from 1991 onward, India witnessedliberalization of foreign investment laws.The restrictive period – 1948-1990At First, the policy of independent India was reflected in Industrial Policy Resolution (IPR) which fullyaccepted the participation of foreign capital, particularly with new technology ideas to promoteindustrialization in our country. But certain regulations were also attached which required ownershipand control in Indian hands. In 1949, the then Prime Minister of India, Pt. JawaharLal Nehru made astatement in constituent assembly bringing three major issues namely, no discrimination betweenforeign and Indian enterprises, fair compensation to foreign investors if need arises for thenationalization of a foreign enterprise and also allowed them to remit profits if foreign exchange
position allowed. Also, foreign collaborations were encouraged in those industries which required largecapital investments, production skills and processes, export industries and those which were needed forcountry’s development as a whole. Also, foreign collaborations with equity participation wereappreciated which led to the sharp increase in its number. Thus, country witnessed outflow of profits,dividends, and royalties which led to foreign exchange crisis in the late sixties.Foreign Exchange Regulation Act (FERA) of 1973 is an act to consolidate and amend laws regulatingtransactions indirectly affecting foreign exchange payments, currency exchange and conservation andutilization of foreign exchange resources of the country. It included all non-banking companies andbranches with more than 40% foreign participation. During late seventies, India realized its poortechnology and products as compared with other nations. This was partially due to a highly protectedlocal markets and MNCs. However, Industrial Policy Statements of 1980 and 1982 gave a liberalization oflicensing rules and some exemptions under FERA.Liberalization period- 1991 onwardsIntroduction of new industrial policy in 1991 led to many radical changes in foreign investment policy.To promote foreign funds and investments, many restrictions were removed and encouragement liketax exemptions also given. It virtually welcomed foreign investors to almost every sector of India, evenrenting foreign participation with advanced technologies and adding new skills. Unlike in the past, ourcountry is promoting international business and investments even through Government delegationsvisiting other countries. They are trying to attract foreign investors to invest, seeing it as a part ofindustrialization and exchange of new ideas, skills and better use of resources, both human and non-human.India’s foreign investment policy has come a long way since 1947. Though they were warmly welcomedat first to promote rapid industrialization and foreign fund, certain restrictions and selections weremade later. But, since India’s technology did not improve as years passed by and conditions onlyworsened more, further liberalization of foreign policy became necessary to attract more investors toIndia. But often a question is raised as to whether foreign technology and investments help India in longrun or adversely affect our economy. But everyone agrees that India is far behind in the properutilization of resources and skilled people purely depending on foreign technology a lot. While manydeveloping countries like Japan and China are coming forward with many innovative ideas, we are justdepending on them, thinking how can we import their commodities at cheap rates and market it here,fooling ordinary man. Disputes won’t send by adding a single point or two.INDIAN PLANNING SYSTEMThe Planning Commission / Planning System is an institution in the Government of India, whichformulates IndiasFive-Year Plans, among other functions.The composition of the Commission has undergone a lot of change since its inception. With the primeminister as the ex-officio Chairman, the committee has a nominated Deputy chairman, who is given the
rank of a full Cabinet Minister. Mr. Montek Singh Ahluwalia is presently the Deputy Chairman of theCommission.Cabinet Ministers with certain important portfolios act as ex-officio members of the Commission, whilethe full-time members are experts of various fields like Economics, Industry, Science and GeneralAdministration.Present ex-officio members of the Commission, are Finance Minister P Chidambaram, agricultureminister SharadPawar, home minister SushilkumarShinde, health minister GhulamNabi Azad, chemicalsand fertilisers minister M K Alagiri, communications minister KapilSibal, law minister Ashwani Kumar,HRD minister M MPallamRaju and minister of state for planning Rajeev Shukla.The Commission works through its various divisions, of which there are three kind:General Planning DivisionsProgramme Administration DivisionsThe majority of experts in the Commission are economists, making the Commission the biggestemployer of the Indian Economic Services.FunctionsThe Planning Commissions functions as outlined by the Governments 1950 resolution are following:1. To make an assessment of the material, capital and human resources of the country, includingtechnical personnel, and investigate the possibilities of augmenting those resources which arefound to be deficient in relation to the nations requirement.2. To formulate a plan for the most effective and balanced utilisation of countrys resources.3. To define the stages, on the basis of priority, in which the plan should be carried out andpropose the allocation of resources for the due completion of each stage.4. To indicate the factors that tend to retard economic development.5. To determine the conditions which need to be established for the successful execution of theplan within the incumbent socio-political situation of the country.6. To determine the nature of the machinery required for securing the successful implementationof each stage of the plan in all its aspects.7. To appraise from time to time the progress achieved in the execution of each stage of the planand also recommend the adjustments of policy and measures which are deemed important vis-a-vis a successful implementation of the plan.
8. To make necessary recommendations from time to time regarding those things which aredeemed necessary for facilitating the execution of these functions. Such recommendations canbe related to the prevailing economic conditions, current policies, measures or developmentprogrammes. They can even be given out in response to some specific problems referred to thecommission by the central or the state governments.From a highly centralised planning system, the Indian economy is gradually moving towards indicativeplanning where the Planning Commission concerns itself with the building of a long-term strategic visionof the future and decide on priorities of nation. It works out sectoral targets and provides promotionalstimulus to the economy to grow in the desired direction. It also plays an integrative role in thedevelopment of a holistic approach to the policy formulation in critical areas of human and economicdevelopment. In the social sector, schemes that require coordination and synthesis like rural health,drinking water, rural energy needs, literacy and environment protection have yet to be subjected tocoordinated policy formulation. It has led to multiplicity of agencies. The commission has now beentrying to formulate and integrated approach to deal with this issue. The Planning Commission has askedthe States to hike the power tariff to save the ailing power sector. It also called upon the States to utilisethe power subsidy for improvement to essential services like drinking water supply, education andhealth for promoting inclusive growth.CriticismThe Planning Commission has faced criticism for spending 3.5 million (US$64,000) to renovate twoblocks of toilets,while declaring a very low, and arguably unrealistic, threshold of poverty of amonthly consumption of 859.6 (US$16) in urban and 672.8 (US$12) in rural areas.[
Unit 4GOVERNMENT POLICY CONCERNING DEVELOPMENT OF BACKWARD AREASIn the facilities location problems, whether multi-plant or single plant, the industrial policies of thegovernments are very important inputs in the overall consideration. In India, the industrial developmentof backward areas for balanced regional development of the country has always been emphasized. Thishas been attempted mainly through:1. Licensing policy2. Location of public sector projects3. Investment subsidy4. Concessional finance5. Concession on income tax import duty etc and6. Setting up of industrial estatesAll the districts in the country have been classified into four categories:A. No industry districts an ‘special region’ districts,B. Moderately backward districtsC. Least backward districts, andD. Non-backward districtsThe A, B, and C categories are eligible inter-alia for subsidy on investment in fixed assets in an industrialunit, as given below:Category Percent Subsidy Maximum Limit Per unitA. 25 Rs 25 lakhB. 15 Rs15 lakhC. 10 Rs 10 lakhD. not eligible for subsidyTaking cognizance of the importance of infrastructural facilities, Government of India provides for onethird of the costs of the development of infrastructural facilities in the ‘no industry’ districts, theremaining two thirds of the cost to be met by the concerned State Government. However, the maximumlimit of Central assistance in this scheme is Rs 2 crore in a district. Even companies coming under MRTPhave been provided some concessions if they locate new plants in category “A” and “B” districts.Government of India also proposes to help the “no-industry” districts by establishing a ‘nucleus’ plant ineach such district, which would lead to a number of ancillary units. The State Governments give variousincentives to industries so that they may locate their plants in the backward areas.Notwithstanding such helpful measures from the governments, the backward area developed has to bevery successful. More than half of the industrial licenses issued during the period 1975-79 had gone tothe backward areas in the developed states. Fourteen cities and towns accounted for 60 per cent of
total employment in the industrial estates in the country. While Madras City accounted pr 82 percent ofemployment in industrial estates in Tamil Nadu, Bombay and Pune accounted for 65 per cent ofemployment in industrial estates in Maharashtra, and similarly the cities of Ahmedabad, Baroda andSurat accounted for 60 percent in Gujarat. Regarding investment Subsidy, only 15 percent of the eligibledistricts accounted for 56 percent of the subsidy amount. Moreover, most of these district are situatedclose to large urban centers – such as Mysore and Dharmapuri near Bangalore, North Arcot near Madrasand Medak near Hyderabad. In the case of the concessional finance provided by all India financialinstitutions (such as IDBI, IFCI, ICICI) only 22 of the 247 districts eligible for concessional finance receivedthe total amount of concessional finance disbursed. It is worth noting that that most of these districtswere in the developed states. Similarly there does not seem to have been a conscious effort to locatevarious public sector units in the backward areas, barring a few exceptions such as that of HindustanMachine Tools, Bharat heavy Electricals Ltd and Indian Telephone industries.Due to such performance of these governmental measures which seem to have been counterproductivethe implementation of the backward area industrial policy has come under severe criticism. Forinstance: The so called emphasis on development of backward reasons via incentives to entrepreneurs,has enabled the State to provide subsidies to industry that it was not otherwise in a position to give. Thepolicy for development of backward areas is no more than a red herring.The above told is debatable. But the point is that there are a number of factors which influence theplant location decision and all these have not been considered in an integrated manner by the policymakers. The emphasis has been more on financial incentives. However, the amount of ‘pull’ generatedby the large cities, already industrialized towns and other developed areas needs a deeper analysis bythe decision makers in order to come up with suitable measures to counter these actors exerting thepull in a direction opposite that of the intended objective. The case of backward area developmenthighlights the importance of the various issues – qualitative and quantitative, short term and long term,economic and behavioral – that influence the plant location decision. The line dividing ‘political’ issuesand social and behavioral issues is not always clear.GOVERNMENT POLICY WITH REGARD TO EXPORT PROMOTION AND IMPORT SUBSTITUTIONLIST OF EXPORT PROMOTION SCHEMESTo achieve the objectives laid down under the Foreign Trade Policy 2004-09 and double India’spercentage share of global merchandise trade by the year 2009, the government is committed toproviding a stimulus to exports through various export promotion schemes from time to time. Details ofthe existing Export Promotion Schemes are as follows:1. Advance licensing scheme2. Duty Free Replenishment Certificate (DFRC) scheme3. Duty drawback scheme4. Export Promotion Capital Goods (EPCG) scheme5. Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTPs), SoftwareTechnology Parks (STPs) scheme
6. Served from India scheme7. Target Plus scheme8. Duty Entitlement Pass Book (DEPB) Scheme9. VisheshKrishiUpajYojanaThe Government has formulated a number of export promotion schemes to support and promoteexports. Except for Duty Drawback Scheme, the policy framework for various export promotion schemesis laid down in the Foreign Trade Policy 2004-09, whereas the procedures governing the schemes aredetailed in the Handbook of Procedures, VoI-I 2004-09. The Department of Revenue has issuednotifications to operationalise the scheme.The objectives of most schemes are to neutralize the incidences of levies and duties on inputs used inexport products, based on the fundamental principle that duties and levies should not be exported.Presently, the major schemes are either duty exemption or duty remission schemes. Duty exemptionschemes enable duty-free import of inputs required for export production. An Advance Licence is issuedas a duty exemption scheme. A Duty Remission Scheme enables post export replenishment / remissionof duty on inputs used in the export product. Duty remission schemes consist of (a) DFRC; (b) DEPBScheme and Drawback. DFRC permits duty-free replenishment of inputs used in the export product.DEPB allows drawback of import charges on inputs used in the export product. The Drawback Schemeintends to neutralize the incidence of central taxes paid on inputs used in the manufacture of exportgoods.Besides, there are other schemes in operation which are basically in the nature of reward schemes toreward high performing exporters. Target Plus, Served from India and VisheshKrishiUpajYojana arereward schemes. Rewards are given on the basis of incremental exports / export turnover and suchrewards have no linkage whatsoever with the duties and taxes borne on export goods.IMPORT SUBSTITUTIONGovernmentstrategy that emphasizes replacement of some agricultural or industrialimports toencourage local production for local consumption, rather than producing for exportmarkets. Importsubstitutes are meant to generate employment, reduce foreign exchangedemand, stimulate innovation,and make the country self-reliant in critical areas such as food, defense, and advanced technology.Import substitution industrialization or "Import-substituting Industrialization" (called ISI) is a trade andeconomicpolicy based on the premise that a country should attempt to reduce its foreign dependencythrough the local production of industrialized products. The term primarily refers to 20th centurydevelopment economics policies, though it was advocated since the 18th century.A strategy for economic development which encourages industrial growth within a nation in order toreduce imports of manufactures, save foreign exchange, provide jobs, and reduce dependency. TheUnited Nations Commission for Latin America promoted import substitution policies in the 1960s, butthey were not successful, and such policies have been replaced by strategies grounded on export-ledindustrialization.
Import substitution industrialization (ISI) is a trade and economicpolicy that advocates replacing foreignimports with domestic production.ISI is based on the premise that a country should attempt to reduceits foreign dependency through the local production of industrialized products. The term primarily refersto 20th-century development economics policies, although it has been advocated since the 18th centuryby economists such as Friedrich ListAdvantages and disadvantagesThe major advantages claimed for ISI include (1) increases in domestic employment, i.e., reducingdependence on non-labor-intensive industries such as raw resource extraction and export, (2) resiliencein the face of a global economic shocks, such as recessions and depressions, and (3) less long-distancetransportation of goods and less concomitant fuel consumption and greenhouse gas and otheremissions.Disadvantages claimed for ISI are that (1) the industries it creates are inefficient and obsolete, as theyare not exposed to internationally competitive industries, which constitute their rivals, and (2) the focuson industrial development impoverishes local commodity producers, who are primarily rural.Rather than maintain an inward-looking economy, the idea of catching up can be much faster withstrong competition rather than with domestic competition with people with similar levels of humancapital. Furthermore, with small external scale economies, the countrys costs maintain high andknowledge accumulation will not steadily or slowly increase. Goldar takes note that in India "thatpolicies of import substitution and domestic industrial licensing have led to considerable inefficiency inthe industrial sector, and that policies for checking concentration (restrictions against large industrialhouses, discrimination in favour of small scale units, etc.) have resulted in significant loss of scaleeconomies," (Goldar 144). Additionally, import substitution was in place as a remedy for mass poverty,unemployment and economic growth however,"The collections of Balassa and Little et al. made abundantly clear that import substitution policies hadcreated major distortions and had thereby resulted in a misuse of resources. 33 So it was increasinglyevident that something needed fixing. Two other sources of concern appeared in the early 1970s andsuggested that there were other things that needed fixing as well. The first, already referred to, was thatthe demand for labor in the new activities was growing more slowly than the rates of growth of outputand investment had led most observers to expect. As a consequence of the slow growth of employment(and other things), poverty was alleviated only modestly," (Bruton 917).
Unit 5CONTROLLER OF CAPITAL ISSUESController of Capital Issues was the regulatory authority before SEBI came into existence; it derivedauthority from the Capital Issues (Control) Act, 1947.Functions and responsibilitiesCCI has to be responsive to the needs of three groups, which constitute the market:the issuers of securitiesthe investorsthe market intermediaries.CCI has three functions rolled into one body:1. quasi-legislative,2. quasi-judicial and3. quasi-executiveIt drafts regulations in its legislative capacity, it conducts investigation and enforcement action in itsexecutive function and it passes rulings and orders in its judicial capacity. Though this makes it verypowerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunalwhich is a three-member tribunal and is presently headed by a former Chief Justice of a High court - Mr.Justice NK Sodhi. A second appeal lies directly to the Supreme Court.PowersFor the discharge of its functions efficiently, CCI has been vested with the following powers:1. to approve by−laws of stock exchanges.2. to require the stock exchange to amend their by−laws.3. inspect the books of accounts and call for periodical returns from recognized stockexchanges.4. inspect the books of accounts of a financial intermediaries.5. compel certain companies to list their shares in one or more stock exchanges.6. levy fees and other charges on the intermediaries for performing its functions.7. grant license to any person for the purpose of dealing in certain areas.8. delegate powers exercisable by it.9. prosecute and judge directly the violation of certain provisions of the companies Act.10. power to impose monetary penalties.
GOVERNMENT POLICY WITH REGARDS TO SMALL SCALE INDUSTRIESA small scale industry (SSI) is an industrial undertaking in which the investment in fixed assets in plant&machinery,whether held on ownership term or on lease or hire purchase, does not exceed Rs. 1Crore.However, this investment limit is varied by the Government from time to time.Entrepreneurs in small scale sector are normally not required to obtain a licence either from the CentralGovernment or the State Government for setting up units in any part of the country. Registration of asmall scale unit is also not compulsory. But,its registration with the State Directorate or Commissioner ofIndustries or DICs makes the unit eligible for availing different types of Government assistance likefinancial assistance from the Department of Industries, medium and long term loans from StateFinancial Corporations and other commercial banks, machinery on hire-purchase basis from the NationalSmall Industries Corporation,etc. Registration is also an essential requirement for getting benefits ofspecial schemes for promotion of SSI viz. Credit guarantee Scheme, Capital subsidy, Reduced customduty on selected items, ISO-9000 Certification reimbursement & several other benefits provided by theState Government.The Ministry of Micro, Small and Medium Enterprises acts as the nodal agency for growth anddevelopment of SSIs in the country. The ministry formulates and implements policies and programmesin order to promote small scale industries and enhance their competitiveness. It is assisted by variouspublic sector enterprises like:- Small Industry Development Organisation (SIDO) is the apex body for assisting the Governmentin formulating and overseeing the implementation of its policies andprogrammes/projects/schemes. National Small Industries Corporation Ltd (NSIC) was established by the Government with a viewto promoting, aiding and fostering the growth of SSI in the country, with focus on commercialaspects of their operation. The Ministry has established three National Entrepreneurship Development Institutes which areengaged in development of training modules, undertaking research and training and providingconsultancy services for entrepreneurship development in the SSI sector. These are:-a. National Institute of Small Industry Extension Training (NISIET) at Hyderabad,b. National Institute of Entrepreneurship and Small Business Development (NIESBUD) atNOIDAc. Indian Institute of Entrepreneurship (IIE) at Guwahati The National Commission for Enterprises in the Unorganised Sector (NCEUS) has beenconstituted with the mandate to examine the problems of enterprises in the unorganised sectorand suggest measures to overcome them. Small Industries Development Bank of India (SIDBI) acts as apex institution for financing SSIsthrough various credit schemes.
Provisions relating to taxation of Small Scale IndustriesIn a developing country like India, Small Scale Industries play a significant role in economic developmentof the country. They are a vital segment of Indian economy in terms of their contribution towardscountrys industrial production,exports,employment and creation of an entrepreneurial base.Theseindustries by and large represent a stage in economic transition from traditional to modern technology.Small industry plays a very important role in widening the base of entrepreneurship. The developmentof small industries offers an easy and effective means of achieving broad based ownership of industry,the diffusion of enterprise and initiative in the industrial field.Given their importance,the Government policy framework right from the First plan has highlighted theneed for the development of SSI sector keeping in view its strategic importance in the overall economicdevelopment of India. Accordingly, the policy support from the Government towards Small ScaleIndustries has tended to be conducive and favourable to the development of small entrepreneurialclass. Government accords the highest preference to development of SSI by framing and implementingsuitable policies and promotional schemes.The most important promotional policy of the Government for the SSIs is fiscal incentives in the form oftax concessions and exemptions of direct or indirect taxes leviable on production or profits.RESPONSIBILITIES OF THE BUSINESS AS WELL AS THE GOVERNMENT TO PROTECT THEENVIRONMENTAll businesses face the ethical quandary of how to maximize profits without harming or exacerbatingharm already incurred on the society and environment at large. Corporations must operate withincertain parameters in order to maintain its economic standing. In social contexts, businesses must findan economically viable function that poses no detriment to its investors, employees, consumers and thegeneral public. They must also find a function without polluting the environment, be it air, water or land.Social ResponsibilitiesSociety consists of all the individuals, families, organizations and entities affected by an activity orproduct. Businesses must maintain standards that do not harm the members of that society. Going astep further, they should, ideally, operate in a manner that promotes the growth and well-being of thatsociety. Businesses have a responsibility to help weaker and less traditional members of society; ones,when grouped together, lack a large enough collective voice to speak for themselves. At the same time,they must reconcile a way to protect traditional values and culture. Companies must promote socialliving by acting as a source of employment to qualified members of the society. Businesses should alsopromote to the society in which it operates the benefits of an active healthy lifestyle through sports andculture. Finally, it is the business responsibility to assist in the development and research areas ofscience, health, technology and education.Environmental Responsibilities
Air, water and land pollution tend to be the most detrimental forms of pollution. They are also mostoften associated with production and manufacturing attributed to large corporations. It is theresponsibility of businesses to operate in a manner that causes the least amount of depletion ofresources, the least amount of pollution and the least amount of effect on the flora and fauna in thesurrounding environment. Businesses must think globally in developing production strategies. As forenvironmental responsibilities, businesses must act in three roles to protect the environment:preventive, curative and awareness. The preventive role of businesses includes keeping productionwaste, be it gaseous, liquid or solid, out of its respective medium. Furthermore, finding uses forproduction waste or methods of disposal should be high in businesses ethical priorities. The curativerole of businesses consists of taking steps to fix damage previously incurred. These steps can and shouldoccur in conjunction with preventive steps. A business awareness role should include proper educationof employees and the general public of the "causes and consequences" of different forms of pollution.ImpactIf businesses choose to operate outside the parameters set by government, responsibility and personalconscience, the consumer backlash can prove to be detrimental to the companys financial stability.Societys attitude toward social and environmental callousness has stimulated many businesses toaccentuate the steps taken to keep the members of its society safe and healthy. Also, employees mayfind it ethically challenging to work for a company with whose policies on responsibility they do notagree.GOVERNMENT CLEARANCE FOR ESTABLISHING NEW ENTERPRISEObtain PAN No from Income Tax DeptPermanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of alaminated card, by the Income Tax Department.Open a Current AccountOpen a current account with a Bank.Register a limited Liability Partnership (LLP)The Limited Liability Partnership (LLP) is an alternative corporate business vehicle that provides thebenefits of limited liability but allows its members the flexibility of organizing their internal structure asa partnership based on a mutually arrived agreement.Register Your Company (Pvt. Ltd / Public Ltd Company)
Step by Step Procedure for Incorporating ( Starting) a Private Limited or a Public Limited Company inIndiaRegister For Service TaxService tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certainservices specified by the Central Government under the Finance Act, 1994.It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally, the service providerpays the tax and recovers the amount from the recipient of taxable service.Register for VAT / Sales TaxVAT is a multi-point destination based system of taxation, with tax being levied on value addition at eachstage of transaction in the production/ distribution chain.The State Governments, through Taxation Departments, are carrying out the responsibility of levyingand collecting VAT in the respective States. While, the Central Government is playing the role of afacilitator for the successful implementation of VAT.Excise Duty (check Applicability)Indirect tax levied on those goods which are manufactured in India and are meant for homeconsumption. Cetain industries are exempted from payment of Excise Duty.Shop & Establishment ActShop and Establishment Act is to provide statutory obligation and rights to employees and employers inthe unorganised sector of employment, i.e., shops and establishments. A state legislation; each state hasframed its own rules for the Act.Customs DutyCustoms Duty is Indirect Tax levied on Imports as well as Exports.File Entrepreneurship Memorandum at DIC (optional)Although not mandatory, you may File Part I of Entrepreneurs Memorandum to the District IndustriesCentre. This may be necessary for claiming certain incentives / subsidies and for certain formalities atthe state level.Apply For TANAll those persons who are required to deduct tax at source or collect tax at source on behalf of IncomeTax Department are required to apply for and obtain TAN.
Find State Specific Guideline & ProceduresPermissions Required at the Construction Stage1. Application for plot/shed, offer letter, payment of earnest money deposit2. Allotment of plot/shed, payment of balance occupancy price, taking over possession thereof3. Application for issuance of NOC/SSI registration4. Execution of Lease Agreement5. Application for grant of connection for construction water6. Application for grant of connection for construction powerPost Construction Clearances1. Building completion/ Drainage completion/ Tree plantation certificate2. Permission for mortgage3. No objection certificate from Pollution Control Board4. Final fire clearance5. No objection certificate from Environment Department6. Industrial safety permit7. Sanction of permanent power8. Sanction of permanent water and sewerage connectionEmployee’s Provident FundApplicable for establishments employing 20 or more persons and engaged in industry notifiedunder Section 6 of Act.Employee’s State Insurance (ESI) SchemeThe Act is applicable to non-seasonal factories employing 10 or more persons.The Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 20* or more persons.