The economic environment consists of macro-level factors that impact the demand and supply for businesses, including the nature of the economy, level of development, resources, income levels, and income distribution. It includes economic conditions, policies, systems, and the international business environment. Economic factors like demand, supply, money, banking, income, employment, growth, and development all affect businesses. Recent economic facts about India note contributions of MSMEs, key crops and exports, foreign currency assets, and that services are the major driver of economic growth.

1. Economic Environment
The economic environment consists of macro level
factors related to means of production and
distribution of wealth in a country or region.
These factors have a significant impact on the
demand and supply of a business of an
organization. The economic conditions
/environment includes
• The nature of the economy
• The stage of development of the country
• Economic Resources
• The level of income
• The distribution of income and assets etc

2. Components Of Economic
Environment
• Economic Conditions – Economic policies of a business
unit are largely affected by the economic conditions of
an economy. Any improvement in the economic
conditions such as standard of living , purchasing
power of public , demand and supply etc.
• Economic Policies – It refers to the action that govt.
take in the economic field. Mainly there are two type
of economic policies of government – i.e. Monetary
Policy and Fiscal Policy. Economic policies affect the
different business units in different ways. It may or may
not have favourable impact on a business unit.

3. • International nBusiness Environment- If any
business enterprises is involved in foreign trade
,then it is influenced by not only its own country
economic environment but also the economic
environment of the country from/to which it is
importing/exporting goods. There are various
rules and guidelines for these trades which are
issued by many organizations like World Bank,
WTO and United Nations etc.
• Economic System- An economic system of a
nation or a country may be defined as a
framework of rules , goals that controls
economic relations among people of the society

4. Economic Factors Affecting Business
• Demand and Supply
• Money and Banking
• Income and employment
• Economic growth and development

5. Recent Economic Environmental Facts
Of India
• Number of industries reserved for public sector –
03 ( Atomic Energy , Rail Transport and mining of
some specified minerals )
• Micro , small and medium enterprise (MSME’s)
Contribution
a) in country’s GDP – 8 %
b) in manufactured output – 45 %
c) in country’s export
• Main Food crop of India - Rice

6. • Foreign currency assets -316.132 billion dollar
• Gold Reserve – 19.038 billion dollar
• Exports- $ 312.610 billion
• Imports - $ 450.068 billion
• India’s service sector remains the major driver
of economic growth contributing 72.4 % of
GDP growth in 2014-2015.
• India has the second fastest growing services
sector after China
• The 3.61 crore MSME’s contribute 37.5 % of
country’s GDP