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Uploaded byDrAnurag Saxena
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Role of government in business environment

The government plays four key roles in the business environment: regulatory, promotional, entrepreneurial, and planning. For the regulatory role, the government regulates business entry, operations, and results through policies like licensing and profit/dividend ceilings. Promotionally, the government establishes infrastructure and training institutions to encourage entrepreneurship. As an entrepreneur, the government operates businesses in sectors like steel and petroleum. Finally, in its planning role, the government aims to optimally allocate resources through plans guiding industry growth and prioritizing sectors.

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ROLE OF GOVERNMENT IN BUSINESS ENVIRONMENT DR ANURAG KUMAR ASSOCIATE PROFESSOR, DEPARTMENT OF BUSINESS ADMINISTRATION , ABES EC GHAZIABAD DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Government plays four important roles in an economy : • Regulatory Role • Promotional Role • Entrepreneurial Role • Planning Role DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Regulatory Role: Government’s role in business may extend from entry into business to final results of a business. The reservation of industries for small scale, licensing system etc regulate the entry. Regulations of products/ promotional activities etc amount to conduct of business. Results of business may be regulated by measures such as ceiling on profit margins, dividends etc.DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Government regulation of the economy may broadly be classified into Direct Control and Indirect Control. Indirect Control: May be exercised through various fiscal and monetary incentives or penalties e.g. High import duty may discourage imports and tax incentives may encourage exports. Direct Control: Direct administrative and physical control is discretionary in nature i.e. they can be applied to specific industries or firms e.g. licensing. The process may be simplified in case of small scale industries and in case of some industries may be prohibitive e.g. arms and ammunition. DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Promotional Role Promotional role of the government assumes greater significance in countries like India, where infrastructure in inadequate and entrepreneurial activity is scarce. The government sets up infrastructure projects like power generation, roads, finance transport etc. The government also sets up institutions for providing training and guidance for setting up industries like DIC, NIESBUD, NSIC, SIDO, EDI etc, and also provides fiscal and monetary incentives for setting up industries.DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Entrepreneurial Role In mixed economies the government also plays the role of entrepreneur by setting up and operating businesses and bearing the risks. A number of factors have contributed to the development of Public Sector , such as Socio political factors, dearth of private entrepreneurship, unprofitable sectors, prevention of exploitation of consumers etc. Public sector, generally dominated in capital intensive industries like Steel, Petroleum, railways, arms & ammunition etc. The role of public sector is being redefined now, and is considerably less. DR ANURAG KUMAR ASSOCIATE PROFESSOR
BUSINESS ENVIRONMENT Role of Government in Business Planning Role The government plays a very important role as a planner. Government attempts to make optimum utilisation of scarce resources by directing resources from one use to another. NITI AAYOG, VARIOUS TRADE POLICY,etc indicate the role of planning by the government. These plans provide guidelines for the growth and expansion of industries and the economy in general. It also earmarks priority sectors like education, agriculture etc.DR ANURAG KUMAR ASSOCIATE PROFESSOR
The state must provide the following facilities to attain economic and industrial development. • Become Self-sufficient • Reduce Cost of Production • Provide for Shortage of Capital and Manage the Workforce • Invest in Human Capital and Promote Education • Support Agriculture • Check Disparity in Wealth and Income • Adopt Suitable Monetary and Fiscal Measures • Proper Allocation and Stabilization • Efficiency–Equity Trade-off • Merit Goods DR ANURAG KUMAR ASSOCIATE PROFESSOR
• Infrastructure and Institutional Development • Minimizing Insecurity in Doing Business • Bureaucratic Delays • Import- and Export-related Aid • Protection to Business and Making It More Competitive and Contestable • Upgradation of Technology and Focus on Innovation • Structural Factors to be Made Pro-business • Creation of New Value System in Business DR ANURAG KUMAR ASSOCIATE PROFESSOR