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1. UNIT I
1. Indicators of Internal and External Business Environment
2. Environmental Scanning and Risk Assessment
3. Concepts of Economic Systems
4. New Industrial Policy 1991
5. Recent Financial and Economic Reforms
6. Latest Monetary and Fiscal Policy and their impact on Business
Environment

2. Relationship between an Organization and its Environment
The interactions between organization and environment in some primary areas.
1. Exchanging Information
• An organization and its environment exchange information between
themselves. Organizations need information about the external environment
for planning, decision-making and control purposes. Hence, they analyze the
environment’s variables along with studying their behavior and changes.
• Further, the information generated by this analysis helps the organization
handle the problems of uncertainty and complexity of the business
environment. Therefore, firms try to gather information pertaining to market
conditions, economic activity, technological developments, demographic
factors, socio-political changes, competition activities, etc.
• Also, the organization also transmits information to external agencies. It does
so, either voluntarily or inadvertently. Therefore, the exchange of information
is an important interaction between an organization and its environment
forming the basis of their relationship.

3. 2. Exchanging Resources
Apart from exchanging information, an organization and its environment also exchange resources. A firm needs
inputs like finance, manpower, equipment, etc. from its environment. Typically, the resources required by an
organization are categorized into 5 M’s:
• Men or Manpower
• Money
• Method
• Machine
• Material
• An organization uses these inputs to produce goods or services or both. Acquisition of these inputs usually
requires an interaction between the firm and the markets. This interaction can be in the form of competition
or collaboration. Nevertheless, the purpose is to ensure a constant supply of inputs.
• On the other hand, the organization depends on its environment for the sale of its goods and services. This
process also requires interaction between the firm and its environment. Further, the firm must
• Perceive the needs of the environment and develop products or services to meet those needs.
• Satisfy the demands and expectations of the clientele groups. These groups are:
• Consumers
• Employees
• Shareholders
• Creditors
• Suppliers
• Local Community
• The general public, etc.

4. 3. Exchanging Influence and Power
• The third important interaction between an organization and its environment is the
exchange of influence and power. By now, we understand that the external
environment holds considerable power over a firm due to the following reasons:
• The business environment is inclusive
• It has a command over the resources, information, etc. which the firm requires
• It offers opportunities for growth on one hand and threats and constraints on the
other
• Hence, the environment can impose its will on the organization. On the other hand,
there are times and scenarios when an organization holds a position wherein it can
wield considerable power and influence over some aspects of the external
environment. This usually happens when the firm has command over resources and
information.
• An organization with a higher degree of power over its environment has more
autonomy and freedom of action. Also, the firm can dictate terms to its environment
and mold them to its will.

5. An Organization’s Response to its Environment
• In order for an organization to respond well to its environment, it must be able
to monitor and make sense of its environment and have an internal capacity to
develop effective responses. An organization’s response to its environment can
be of the following three types:
1. Administrative: These are either proactive or reactive responses to specific
environments leading to forming or redefining the organization’s purpose and
key tasks.
2. Competitive: A change in the competitive environment can force an
organization to respond with actions that can help it gain a competitive
advantage over its rivals.
3. Collective: Many organizations cope with environmental dependence
problems through strategic collective responses including methods like co-
opting, bargaining, alliances, etc.

6. Environmental Scanning
The purpose of the scan is the identification of opportunities and threats affecting the business for making
strategic business decisions. As a part of the environmental scanning process, the organization collects
information regarding its environment and analyzes it to forecast the impact of changes in the environment. This
eventually helps the management team to make informed decisions.

7. Indicators of business Environment

9. The internal factors are generally regarded as controllable factors because the
company has control over these factors; it can alter or modify such factors as its
personnel, physical facilities, organisation and functional means, such as marketing
mix, to suit the environment.
1. Value System
Meaning of Values can be defined as those things that are valued by someone. In
other words, values are what is considered 'important' by an individual or an
organization. Examples include courage, honesty, freedom, innovation etc.
• The value system of the founders and those at the helm of affairs has important
bearing on the choice of business, the mission and objectives of the organisation,
business policies and practices. It is a widely acknowledged fact that the extent to
which the value system is shared by all in the organisation is an important factor
contributing to success.
• The value system and ethical standards are also among the factors evaluated by
many companies in the selection of suppliers, distributors, collaborators etc.

10. Jindal Steel & Power
Our Values -- POSSIBLE
1. Passion for People
2. Ownership
3. Sustainable Development
4. Sense of Belonging
5. Integrity
6. Business Excellence
7. Loyalty
8. Entrepreneurship

11. 2. Vision, Mission and Objectives
• The business domain of the company, priorities, direction of development,
business philosophy, business policy etc., are guided by the vision, mission and
objectives of the company.
• A vision is a vivid mental image of what you want your business to be at some point in
the future, based on your goals and aspirations. Having a vision will give your business
a clear focus, and can stop you heading in the wrong direction
• A mission statement is a concise explanation of the organization's reason for existence.
It describes the organization's purpose and its overall intention. The mission statement
supports the vision and serves to communicate purpose and direction to employees,
customers, vendors and other stakeholders
• Business objectives are the specific and measurable results companies hope to
maintain as their organization grows. Entrepreneurs and business leaders must track
performance in every part of their business to make sure they're moving in the right
direction.

12. 3. Management Structure and Nature
• The organizational structure, the composition of the Board of Directors, extent of
professionalization of management etc., are important factors influencing business
decisions.
• Some management structures and styles delay decision-making while some others
facilitate quick decision-making.
• The Board of Directors being the highest decision-making body which sets the
direction for the development of the organization and which oversees the
performance of the organization, the quality of the Board is a very critical factor for
the development and performance of company.
• The private sector in India presents extreme cases in this respect. At one end, there
are companies with highly qualified and responsible Board and at the other end
there are companies which do not possess these qualities.
• The shareholding pattern could have important managerial implications. There are
very large companies where majority of the share is held by the promoters (like
Wipro) and there are large firms where the promoters’ position is very vulnerable
(like the Tata Group of Companies).
• Financial institutions had large shareholding in many Indian companies. The stand of
nominees of financial institutions could be very decisive in several critical instances.

13. 4. Internal Power Relationship
• Factors like the amount of support the top management enjoys from different levels of
employees, shareholders and Board of Directors have important influence on the decisions
and their implementation.
• The relationship between the members of Board of Directors and between the chief
executive and the Board are also a critical factors.
• 5. Human Resources
• The characteristics of the human resources like skill, quality, morale, commitment, attitude
etc., could contribute to the strength and weakness of an organization. Some organizations
find it difficult to carry out restructuring or modernization because of resistance by
employees whereas they are smoothly done in some others.
• The involvement, initiative etc., of people at different levels may vary from organisation to
organisation. The organisational culture and overall environment have bearing on them.
6. Company Image and Brand Equity
• The image of the company matters while raising finance, forming joint ventures or other
alliances, soliciting marketing intermediaries, entering purchase or sale contracts, launching
new products etc. Brand equity is also relevant in several of these cases.

14. 8. Other Factors
A. Physical Assets and Facilities like the production capacity, technology and efficiency of
the productive apparatus, distribution logistics etc., are among the factors which
influence the competitiveness of a firm. For example, as quality is very important in the
pharmaceutical industry, particularly for a global player, in the case of Core Healthcare
not only there is no compromise on quality but also the company made the quality
norms stricter than international or other relevant standards and the quality mantra
has been well imbibed throughout the organization.
B. R&D and Technological Capabilities, among other things, determine a company’s
ability to innovate and compete.
C. Marketing Resources like the organisation for marketing, quality of the marketing men,
brand equity and distribution network have direct bearing on marketing efficiency.
They are important also for brand extension, new product introduction etc.
D. Financial Factors like financial policies, financial position and capital structure are also
important internal environment affecting business performances, strategies and
decisions.

15. External Environment
• The micro-environment is basically the environment that has a direct impact on
your business. It is related to the particular area where your company operates
and can directly affect all of your business processes. In other words, it consists
of all the factors that affect particularly your business. They have the ability to
influence your daily proceedings and general performance of the company.
Still, the effect that they have is not a long-lasting one.
• The micro-environment includes customers, suppliers, resellers, competitors,
and the general public.
• The macro-environment is more general - it is the environment in the economy
itself. It has an effect on how all business groups operate, perform, make
decisions, and form strategies simultaneously. It is quite dynamic, which means
that a business has to constantly track its changes. It consists of external
factors that the company itself doesn’t control but is certainly affected by.

16. Suppliers
• An important force in the micro environment of a company is the suppliers, i.e.,
those who supply the inputs like raw materials and components to the company.
• The importance of reliable source/sources of supply to the smooth functioning of the
business is obvious. Uncertainty regarding the supply or other supply constraints
often compel companies to maintain high inventories causing cost increases.
• Vertical integration, where feasible, helps solve the supply problem.
Vertical integration requires a company's direct ownership of suppliers,
distributors, or retail locations to obtain greater control of its supply
chain. The advantages can include greater efficiencies, reduced costs, and
more control along the manufacturing or distribution process.
Vertical integration is a strategy some manufacturers use to manage all aspects of
the product development-to-delivery process
• Multiple sources of supply often help reduce risks of scarcity of raw material for
production.

17. Customers
• The major task of a business is to create and sustain customers. A business exists only
because of its customers. Monitoring the customer sensitivity is, therefore, a
prerequisite for the business success.
• A company may have different categories of consumers like individuals, households,
industries and other commercial establishments, and government and other
institutions. For example, the customers of a tyre company may include individual
automobile owners, automobile manufacturers, public sector transport undertakings
and other transport operators.
• Depending on a single customer is often too risky because it may place the company
in a poor bargaining position, apart from the risks of losing business consequent to
the winding up of business by the customer or due to the customers switching over to
the competitors of the company.
• With the growing globalization, the customer environment is increasingly becoming
global.
• Not only that the markets of other countries are becoming more open, the Indian
market is becoming more exposed to the global competition and the Indian customer
is becoming more “global” in his shopping.

18. Competitors
• A firm’s competitors include not only the other firms which market the same or similar products but also all
those who compete for the discretionary income of the consumers.
• For example, the competition for a company’s televisions may come not only from other T.V. manufacturers but
also from two-wheelers, refrigerators, cooking ranges, stereo sets and so on and from firms offering savings
and investment schemes like banks, Unit Trust of India, companies accepting public deposits or issuing shares
or debentures etc.
• This competition among these products may be described as desire competition as the primary task here is to
influence the basic desire of the consumer. Such desire competition is generally very high in countries
characterized by limited disposable incomes and many unsatisfied desires (and, of course, with many
alternatives for spending/investing the disposable income).
• If the consumer decides to spend his discretionary income on recreation (or recreation-cum-education), he will
still be confronted with a number of alternatives to choose from like T.V., stereo, two-in-one, three-in-one etc.
The competition among such alternatives which satisfy a particular category of desire is called generic
competition.
• If the consumer decides to go in for a T.V., the next question is which form of the T.V. — black and white or
color with remote control or without it etc. In other words, there is a product form competition. Finally, the
consumer encounters the brand competition, i.e., the competition between the different brands of the same
product form.
• An implication of these different demands is that a marketer should strive to create primary and selective
demand for his products.
• Consequent to the liberalization, the competitive environment in India has been undergoing a sea change.
Many companies restructured their business portfolio and strategies. In many industries where a seller’s
market existed a buyer’s market has emerged.

19. Marketing Intermediaries (independent firms which assist in the flow of goods
and services from producers to end-users; they include agents, wholesalers and
retailers; marketing services agencies; physical distribution companies; and
financial institutions)
• The immediate environment of a company may consist of a number of
marketing intermediaries which are “firms that aid the company in promoting,
selling and distributing its goods to final buyers”.
• The marketing intermediaries include middlemen such as agents and merchants
who “help the company find customers or close sales with them”, physical
distribution firms which “assist the company in stocking and moving goods from
their origin to their destination” such as warehouses and transportation firms;
marketing service agencies which “assist the company in targeting and
promoting its products to the right markets” such as advertising agencies,
marketing research firms, media firms and consulting firms; and financial
intermediaries which finance marketing activities and insure business risks.
• Marketing intermediaries are vital links between the company and the final
consumers. A dislocation or disturbance of the link, or a wrong choice of the
link, may cost the company very heavily.

20. Financiers
• Another important micro environmental factor is the financiers of the company.
Besides the financing capabilities, their policies and strategies, attitudes (including
attitude towards risk), ability to provide non-financial assistance etc. are very
important.
Publics
• A company may encounter certain publics in its environment. “A public is any group
that has an actual or potential interest in or impact on an organization's ability to
achieve its interests.” Media publics, citizens action publics and local publics are some
examples.
• Some companies are seriously affected by such publics.
• Environmental pollution is an issue often taken up by a number of local publics.
Actions by local publics on this issue have caused some companies to suspend
operations and/or take pollution abatement measures.
• Non-government organizations (NGOs), particularly in developed countries, have
been mounting up protests against child labor, sweat labor, cruelty against animals,
environmental problems, deindustrialization resulting from imports and so on.
Exports of developing countries, particularly, are affected by such developments.

21. Global Environment (Global environment basically consists of international
interactions of a firm over which it has no control.)
• The global environment refers to those global factors which are relevant to business,
such as the WTO principles and agreements; other international
conventions/treaties/agreements/declarations/protocols etc.; economic and
business conditions/sentiments in other countries etc.
• Similarly, there are certain developments, like a hike in the crude oil price, which
have global impact.
• Economic conditions in other countries may affect the business. For example, if the
economic conditions in a company’s export markets are very good, export prospects
are generally very good and vice versa. Recession in other countries can increase the
import threats, including dumping.
• International political factors can also affect business, like war or political tensions or
uncertainties, strained political relations between the nation and other countries
(which sometimes even culminates in sanctions).
• Developments in information and communication technologies facilitate fast cross-
border spread of cultures, significantly influencing attitudes, aspirations, tastes,
preferences and even customs, traditions and values. This has significant implications
for business.

22. The economic environment consists of external factors in a business market and the
broader economy that can influence a business. You can divide the economic
environment into the microeconomic environment, which affects business decision
making - such as individual actions of firms and consumers - and the macroeconomic
environment, which affects an entire economy and all of its participants. Many
economic factors act as external constraints on your business, which means that you
have little, if any, control over them.
Macroeconomic influences are broad economic factors that either directly or indirectly
affect the entire economy and all of its participants, including your business. These
factors include such things as:
Factors: Interest rates ,Taxes, Inflation, Currency exchange rates, Consumer
discretionary income, Savings rates, Consumer confidence levels, Unemployment
rate, Recession, Depression
Microeconomic factors influence how your business will make decisions. Unlike
macroeconomic factors, these factors are far less broad in scope and do not necessarily
affect the entire economy as a whole. Microeconomic factors influencing a business
include:
Factors: Market size, Demand, Supply, Competitors, Suppliers, Distribution chain, such
as retail stores.

23. Political and Legal Environment:
• A key factor to asses in the political environment is the stability of the local government. The
business needs to examine the country's policies toward business, including factors such as trade
and tariff policy, tax structure, anti-trust and competition regulations, union power and consumer
protection laws.
Major political factors affecting business:
• Bureaucracy ,Corruption level, Freedom of the press, Tariffs, Trade control, Education Law, Anti-trust
law, Employment law, Discrimination law
• Data protection law, Environmental Law, Health and safety law, Competition regulation, Regulation
and deregulation, Tax policy (tax rates and incentives)
• Government stability and related changes, Government involvement in trade unions and agreements
• Import restrictions on quality and quantity of product, Intellectual property law (Copyright, patents)
• Consumer protection and e Commerce, Laws that regulate environment pollution, There are
4 main effects of these political factors on business organizations. They are:
• Impact on economy
• Changes in regulation
• Political stability
• Mitigation of risk

24. Firms should track their political environment. Change in the political factors can
affect business strategy because of the following reasons:
• The stability of a political system can affect the appeal of a particular local market.
• Governments view business organizations as a critical vehicle for social reform.
• Governments pass legislation, which impacts the relationship between the firm and its
customers, suppliers, and other companies.
• The government is liable for protecting the public interest.
• Government actions influence the economic environment.
• Government is a major consumer of goods and services

25. • 2022 Index of Economic Freedom (the Index of Economic Freedom has
measured the impact of liberty and free markets around the globe, and the
2022 Index confirms the formidable positive relationship between economic
freedom and progress)
Singapore is ranked at top in 2022 Index of Economic Freedom
Free (100-80)
Mostly Free (79.9-70)
Moderately Free (69.9-60)
Mostly Unfree (59.9-50)
• Parameters considered for ranking:
Rule of Law (property rights, government integrity, judicial effectiveness)
Government Size (government spending, tax burden, fiscal health)
Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
Open Markets (trade freedom, investment freedom, financial freedom)

26. Legal Environment
• The legal environment includes the laws passed by the government as well as
the decisions rendered by the various commissions and agencies at every
level of the government. It's important that every business must function
according to the law of the area in which it wishes to operate.
• In India, business firms are required to have complete knowledge of acts like
Companies Act 1956, Consumer Protection Act 1986, Industrial Disputes Act
1947, and Competition Act 2002 and so on. For example, it is mandatory for
tobacco companies to print ‘smoking is harmful’ on its products.

27. • Different aspects of legal environment
• Anti-trust law
• Monopoly
• Mergers and acquisition
• Unnatural increase in the prices of the products
• Implications for monopolies for consumers
• Anti-trust laws in India
• Environmental protection laws
• Compliance to environment protection laws
• Environmental auditing
• Setting up an environmental management system
• Proper monitoring and reporting on impacts on the environment
• Compliance to government requirements
• Environment protection laws in India
• Labor Law
• Labor laws in India
• Health and Safety Promotion Law
• Health and safety promotion law
• Contract Law
• Contract laws in India
• Laws on consumer protection
• Warranty
• False/ misleading advertisement
• Consumer protection laws in India
• Intellectual Property Laws
• Intellectual property laws in India

28. Impacts of legal environment on businesses in India
• The government of India has formed some strict regulations in connection to selling
of certain tobacco or alcoholic products under the act of the Cigarettes And Other
Tobacco Products (Prohibition Of Advertisement And Regulation Of Trade And
Commerce, Production, Supply And Distribution) Act, 2003. It also includes the
regulations for selling the substitute for mother’s milk under The Infant Milk
Substitutes, Feeding Bottles And Infant Foods (Regulation Of Production, Supply And
Distribution) Act, 1992. All of these regulations are mandatory for the manufacturers,
advertisers and sellers to follow.
• Some of the regulations for protecting the interests of the consumers framed by the
Indian government is illustrated below:
• Advertisement of alcoholic beverages at public places is prohibited.
• Advertisements of cigarettes must carry the statutory warning. The warnings must
also be printed on the packets of cigarettes.
• Advertisements and packets of tobacco products and products like pan masala must
also carry a statutory warning.
• Advertisements and packets of baby food and substitute foods for mother’s milk must
necessarily inform the potential buyer that mother’s milk is the best, as laid down in
Section 6(a) of the Act.

29. Technology and Technological Environment
Technology is the making, modification, usage, and knowledge of tools,
machines, techniques, crafts, systems, methods of organization, in order to solve
a problem, improve a pre-existing solution to a problem, achieve a goal or
perform a specific function. It can also refer to the collection of such tools,
machinery, modifications, arrangements, and procedures.
Technological Environment means the development in the field of technology
which affects business by new inventions of productions and other
improvements in techniques to perform the business work.
United Nations Conference on Trade and Development : “systematic knowledge
for the manufacture of a product, for the application of a process or for the
rendering of a service and does not extend transactions involving mere sale or
lease of goods.”
Level of Technology
• Labor based Technology
• Capital based technology

30. Technology and Innovation are related
• In the business context, innovation may be defined as “the technical, industrial
and commercial steps which lead to the marketing of new manufactured
products and to commercial use of new technical processes and equipment
1. Radical Innovation—a basic technological innovation that establishes a new
functionality (e.g., steam engine or steamboat).
2. Incremental Innovation—a change in an existing technology system that does
not alter functionality but incrementally improves performance, features, safety,
or quality or lowers cost (e.g., governor on a steam engine).
3. Next-generation Technology Innovation—a change in an existing technology
system that does not alter functionality but dramatically improves performance,
features, safety, or quality or lowers cost and opens up new applications (e.g.,
substitution of jet propulsion for propellers on airplanes).
All innovations need not be commercially successful

31. Technological change as competitive advantage
Technological change by a firm will lead to sustainable competitive advantage
under the following circumstances, which he calls the tests of a desirable
technological change.
• The technological change itself lowers cost or enhances differentiation and the
firm’s technological lead is sustainable.
• The technological change shifts costs or uniqueness drivers in favor of a firm.
• Pioneering the technological change translates into first mover advantages
besides those inherent in the technology itself.
• The technological change improves overall industry structure.

32. The 4th Industrial Revolution (4IR) is a fusion of advances in artificial intelligence (AI),
robotics, 3D Printing
the Internet of Things (IoT),
genetic engineering,
quantum computing etc.
Technology transfer is the process by which commercial technology is disseminated. This will take the
form of a technology transfer transaction, which may or may not be a legally binding contract,27 but
which will involve the communication, by the transferor, of the relevant knowledge to the recipient.
Among the types of transfer transactions that may be used, the Draft TOT Code by UNCTAD has listed
the following:28
(a) The assignment, sale and licensing of all forms of industrial property, except for trade marks,
service marks and trade names when they are not part of transfer of technology transactions;
(b) The provision of know-how and technical expertise in the form of feasibility studies plans,
diagrams, models, instructions, guides, formulae, basic or detailed engineering designs, specifications
and equipment for training, services involving technical advisory and managerial personnel, and
personnel training;
(c) The provision of technological knowledge necessary for the installation, operation and functioning
of plant and equipment, and turnkey projects;
(d) The provision of technological knowledge necessary to acquire, install and use machinery,
equipment, intermediate goods and/or raw materials which have been acquired by purchase, lease or
other means;
(e) The provision of technological contents of industrial and technical cooperation arrangements.

33. Methods of Technology Transfer
• Transfer of technology takes a variety of forms depending on the type, nature and extent of
technological assistance required. The following are the important methods of technology
transfer:
1. Training or Employment of Technical Expert: Fairly simple and unpatented manufacturing
techniques/processes can be transferred by imparting the requisite training to suitable
personnel.
Alternatively, such technology can be acquired by employing foreign technical experts
2. Contracts for Supply of Machinery and Equipment: Contracts for supply of machinery and
equipment, which normally provide for the transfer of operational technology pertaining to
such equipment, is often quite adequate for manufacturing purposes not only in small-scale
projects but also in a number of large-scale industries where the nature of technology is not
particularly complex.
3. Licensing Agreements: Licensing agreements, under which the licensor enters into an
agreement with a licensee in another country to use the technical expertise of the former, is an
important means for the transfer of technology. Licensing agreements are usually entered into
when foreign direct investment is not possible or desirable.
4. Turnkey Contracts: Transfer of complex technology often takes place through turnkey project
contracts, which include the supply of such services as design, creation, commissioning or
supervision of a system or a facility to the client, apart from the supply of goods.

34. Technology is one of the eight factors to be examined to calculate the rank in
World Competitive Index (IMD) & Global Competitiveness Report(WEF)
37th rank, India has come up on 37th rank in 2022 from 43rd in 2021 in the
World Competitive Index (The World Competitiveness Index is a comprehensive
annual assessment that serves as a global benchmark for country
competitiveness.)

35. Demographic Environment
Important demographic bases of market segmentation include the following:
• Age structure
• Gender
• Income distribution
• Family size
• Family life cycle (For example: young, single: young, married, no children; young
married with children …….)
• Occupation
• Education
• Social class
• Religion
• Race
• Nationality
The demographic environment differs from country to country and from place to place
within the same country or region. Further, it may change significantly over time.

36. • According to United Nations Population Fund (UNFPA), demographic dividend
means, "the economic growth potential that can result from shifts in a
population’s age structure, mainly when the share of the working-age
population (15 to 64) is larger than the non-working-age share of the
population (14 and younger, and 65 and older)“
Demographic Indicators
• Population
• Median Age
• Dependency Ratio
• Fertility Rate
• Life Expectancy
• Infant and Children under 5 Mortality
• Urbanization and Population Density

37. Socio- Cultural Environment
Culture, in its broadest definition, refers to that part of the total repertoire of human action
(and its product) which is socially, as opposed to genetically, transmitted”
E.B. Taylor: “Culture of civilization is that complex whole which includes knowledge, belief, art,
morals, law, custom, and other capabilities and habits acquired by man as a member of
society”.
Elements of Culture
Culture includes at least three elements, namely, knowledge and beliefs, ideals and
preferences.
• Knowledge and Beliefs: The knowledge and beliefs refer to a people’s prevailing notions of
reality. They include myths and metaphysical beliefs as well as scientific realities. As Rose
remarks, “one of the features of culture in general that is of special sociological interest is the
shared quality of a belief system. People who share a given culture tend to take a hostile
attitude towards those within their midst who cannot, or will not, accept conventional
definitions of fact.”
• Ideals: Ideals refer to the societal norms which define what is expected, customary, right or
proper in a given situation. Norms are enforced by sanctions, i.e., by rewarding the right
behavior and punishing the wrong behaviour. Folkways and mores are important aspects of
every culture. Folkways are norms of proper behaviour (like the proper way to greet a friend)
that are informally enforced. But mores are norms of obligatory behaviour considered vital to
the welfare of the group.

38. • Preferences: Preferences refer to society’s definitions of those things in life which are
attractive or unattractive as objects of desire. Preferences may differ between
cultures. Interestingly enough, the judgements of the ideal or the proper do not
always correspond to our judgements of the pleasant or enjoyable. An example in
point is the temptations (not proper but desirable). “All the things I really like to do
are immoral, illegal, or fattening,” said Alexander Woollcott:
“A culture tends to provide the standards of tastes in specific lines of human activity.
Taste in the most liberal sense varies greatly with the food consumption preferences of
different cultures. But there is also taste in clothing, housing sexual practices, and in an
endless variety of possessions and activities. What is tasteful in one culture may be
highly distasteful in another.”
Cultural characteristics are very important in the formulation of pragmatic business
strategies. The cost of ignoring customs, traditions, taboos, tastes and preferences,
etc., can be very high. For example, in Italy, a US company that set up a corn-
processing plant found that its marketing efforts failed because Italians thought of corn
as “pig food”. The Nestle company brews a variety of instant coffee to satisfy different
national tastes.

39. • Cultural characteristics are very important in the formulation of pragmatic
business strategies. The cost of ignoring customs, traditions, taboos, tastes and
preferences, etc., can be very high.
Organisation of Culture
• The term organization of culture refers to the social structure and the
integration of traits, complexes and patterns that make up the cultural system.
• That cultures are organized or integrated “does not mean that every single item
of each culture is neatly and precisely integrated with everything else. It means
rather that it is normal for the parts to be somewhat organized, and that
culture traits receive their significance and meaning out of their relation to the
rest of the culture.” The social structure – “the web of organized relationships
among individuals and groups that defines their mutual rights and liabilities” –
together with traits, complexes and patterns, reflects the organization of a
culture.

40. • The important common institutions of modern cultures are the economic
system, the political administrative system, the educational system; religion,
family, expressionistic, aesthetic and recreational institutions, etc.
• Such institutions have been established to meet society’s common needs of a
biological, sociological, psychological, economic, and political nature – the type
and nature of institutions reflect the common goals, aspirations and the ways
of achieving them, definition and regulation of roles, positions,
interrelationships, etc., of the individuals and subgroups and groups and the
overall organisation of the culture.
• Culture traits, complexes and patterns also help us to understand the
organisation of a culture. A trait is a unit of observation. It may be a unit of
normative behaviour, like shaking hands or saying namaste; or it may be an
articraft, like a culture object such as a wooden bowl

41. Cultural Adaptation
• The term cultural adaptation refers to the manner in which a social system or an
individual fits into the physical or social environment. The social system may be a
small group, such as the family or a larger collectivity, such as an organisation, or
even a total society, like a tribal society.
• Adaptation is essential for survival. The type of clothing, food and dwelling, suitable
for the climatic and weather conditions, are forms of adaptations. Culture adaptation
can be viewed in a very wide context. We have adapted to the energy crisis caused by
the oil price hikes by modifying our energy policy and intensifying oil exploration,
developing, alternative source of energy and restricting oil consumption. Humanity
adapts to contagious diseases by immunization.
Cultural Shock
• Environmental changes sometimes produce culture shock – a feeling of confusion,
insecurity, and anxiety caused by the strangeness of the new environment. For
example, if a youngster, born and brought up in a large city; is posted to a bank office
in a remote village, he may experience a cultural shock. Similarly, a villager may
experience a cultural shock when he takes up a job in a large modern company in a
faraway metropolitan city or foreign nation. They have, however, to adapt to the new
culture in due course if they want to survive.

42. Cultural Transmission
• A very important character of culture is its transmissive quality. The elements
of culture are transmitted among the members of the culture, from one
generation to the next, and to the new members admitted into the culture.
Some of the aspects of a culture may be transmitted to other cultures also.
• The transmissive quality of culture makes it cumulative. Every generation
inherits a stock of cultural elements, many of which have been accumulated
over a long period of time. As time goes on, cultures accumulate more
techniques, ideas, products and skills. It is also quite obvious that certain old
elements are dropped as new ideas and traits are acquired

43. Cultural Conformity
• Individuals in a culture tend either to conform to the cultural norms or to deviate from
them. If the culture endures as it is, most people would conform to the norms.
• As Inkeles observes, “the social order depends on the regular and adequate fulfilment of
the role obligations incurred by the incumbents of the major status-positions in a social
system. It follows that the most important process in society is that which ensures that
people do indeed meet their role obligation.”
Cultural Lag
• The cultural lag thesis put forward by William F. Orgburn says that the various parts of
modern culture do not change at the same rate, and that since there is a correlation and
interdependence of parts, a rapid change in one part of our culture requires readjustments
through other changes in various correlated parts of that culture. These readjustments are
often difficult, if not impossible, to make because of a variety of factors, ranging from
ignorance to active resistance. Technological changes call for adaptive changes in non-
material culture, which is inherently conservative. The cultural lag thus places constraints
on the scope of social change through technological development.
• International business arena is replete with cases of cultural lag. It indicates that different
markets may be in different levels of readiness to accept a new product or idea. To
successfully market a new idea (including product, service, technique), it is necessary to
identify the factors causing the lag and to overcome them by taking appropriate measures.
It would be a blunder to introduce a product to a market which is not ready to adopt it.

44. OTHER SOCIAL/CULTURAL FACTORS
• Consumer Preferences, Habits and Beliefs
What is liked by people of one culture may not be liked by those of some other
culture. Significant differences in the tastes and preferences may exist even
within the same country, particularly when the country is very vast, populous
and multicultural, like India.
• Etiquettes
There are great differences in the manners of greeting people and physical
distance to be kept between people.

46. Environmental Scanning and Risk Assessment

47. Environmental scanning is the acquisition and use of information about events,
trends and relationships in an organization's external environment, the
knowledge of which would assist management in planning the organization's
future course of action.
Organizations scan the environment in order to understand external forces of
change so that they may develop effective responses that secure or improve
their position in the future.
To the extent that an organization's ability to adapt to its outside environment
depends on knowing and interpreting the external changes that are taking place,
environmental scanning constitutes a primary mode of organizational learning.
Environmental scanning is complementary to but distinct from information
gathering activities such as competitor intelligence, competitive intelligence
and business intelligence.

49. Economic Systems
• A means by which governments organize and distribute available resources,
services, and goods across a geographic region or country
• An economic system is a network that forms the economic relationships
between individuals in society. In other words, how the people of a nation come
together to create a complex whole and conduct economic transactions with
each other.
• Economic systems are complex in the fact that they rely on millions of people
coming together in the market, driving supply and demand. If millions of people
rush to the Apple store for the latest iPhone, it sets off a chain reaction. Apple
needs to order more batteries, glass, electronic chips, and other components. In
turn, that sets off demand in those industries.
• An initial surge in demand can create a multiplying effect that ripples throughout
the economy. This surge in demand sends a signal to the whole supply chain that
more of these products are required, so more are made.

50. 1. Traditional Economic System
• Out of the four types of economic systems, the traditional economic system is the
most basic. There is no involvement by the government, so people are largely left to
conduct economic activities without influence. However, it is a very basic system that
relies on basic customs and traditions.
• Economic advances such as technology, property rights, and capital investment are
largely absent. The way of life is much simpler and the economic relationships are
basic. Bartering is commonplace and the use of cash as a medium of exchange is
almost non-existent.
2. Socialism – Command economic system
• A command economic system is often referred to as a socialist or communist system.
Under this structure, power is centralized either to the government or a sole ruler. In
turn, they decide the rules of the game and command how economic interactions
take place.
• Economic decisions such as what goods to produce, how much to produce, and its
price are decided upon by central powers. So it’s up to them to decide whether it is
socially optimal to make iPhones or PlayStations, or whether it’s best to divert these
resources to house building or agriculture.

51. • Under a command economic system, central powers own the means of
production, so can, therefore, shift it to where they see fit. For instance,
if the nation’s central powers want to start making more steel, they may
move workers from a construction site and transfer them to a steel
factory.
• Moving workers may be necessary in order to fulfill long-term economic
plans created by central planners. These long-term plans are a key part
of command economies – such as the five-year plans adopted in the
Soviet Union. In order to organize an economy from the top-down, clear
and concise information needs to be passed through the chain of
command – which is why a plan is necessary for everyone to understand
their role.

52. 3. Capitalism – Market economic system
• A capitalist economic system is where the means of production is owned and
controlled by private enterprise rather than the government. Instead of
government dictating what goods and services should be produced, these are
driven by supply and demand mechanisms.
• When consumers demand goods, it sends a signal to businesses for them to
produce more. Equally, when demand for goods falls, it sends a signal to
businesses to produce less. This in turn forces the business to offer new
products that consumers may desire instead.
• Under this form of economic system, government involvement is almost non-
existent – other than enforcing law and legal contracts. Instead, the economy is
regulated by the fluctuations in supply and demand, as well as other factors such
as brand trust and competition.

53. • The capitalist economic system relies on private individuals using capital to
produce goods and return a profit. In turn, this increases the private
enterprise’s capital stock. The issue with this however is that many individuals
can amass great economic power and wealth. Not only does this create social
discontent, but can also lead to unscrupulous business practices.
• Private monopolies can arise and over-charge consumers and provide low-
quality goods. On the other hand, it can be argued that the capitalist system is
self-regulating over the long-term. Monopolies don’t last long as customers go
elsewhere and new businesses come in to compete. Whilst bad businesses that
offer low-quality goods will get a bad reputation and go out of business.

54. 4. Mixed Economy
• A mixed economy is one of the most common forms of economic systems in
the world today. We see it in many developed nations such as the US, Japan,
and throughout most of Europe. It is simply a mixture of capitalist and
command economic systems.
• A mixed economic system often has some level of private ownership of the
means of production. However, in a mixed economy, some industries are
controlled by the government, whilst others are privately owned. For example,
healthcare in the UK is controlled by the government, as well as the BBC – the
UK’s main broadcaster.
• t is argued that by mixing together aspects of a command and capitalist
economy, we can achieve the best of both. However, there is a constant
balancing act that needs to be achieved. Too much government intervention
and markets become suffocated and the ‘invisible hand’ has little effect –
leading to shortages or wasteful oversupply. By contrast, too little government
intervention may lead to unscrupulous business practices.

55. THE FINANCIAL SYSTEM
The characteristics of the financial system have important bearing on the business and
economic development of the country. The State, through several promotional and
regulatory measures, has been making a significant contribution towards the healthy
development of the financial system.
Financial system of a nation consists of all those interdependent factors which
promote, facilitate and regulate financial flows within the economy. These include:
• The financial intermediaries like banks, NBFIs and other financial service providers.
• Promotional and regulatory organisations like the central bank (RBI) and SEBI.
• Financial instruments like securities
• Facilitating markets like stock exchange, bill market and call money market.
• Laws and other regulations.
• In other words, the financial system comprises of the financial markets and their
functional mechanisms, including the promotional and regulatory actors. The
financial market is made up, broadly, of two markets, viz., the money market and the
capital market.

56. The Monetary and Fiscal Policies affect the financial sector and the economy in
general.
• They can also be attuned to influence specific sectors or industries or segments.
• The Monetary and Fiscal Policies have important influence on the Gross
National Product (GNP).
GNP = C + I + G + X
where:
C = Private consumption expenditure
I = Private investment expenditure
G = Government expenditure
X = Net exports
Three of the components of the GNP, namely C, I and X can be influenced by the
monetary policy which can also influence the private consumption and
investment spendings and exportsand imports.

57. The Government and the Central Bank (i.e., the Reserve Bank, in India) make use
of various fiscal and monetary weapons respectively to achieve stability and
growth by influencing and regulating the behaviour of the various classes of
spenders as savers, consumers and investors.
• The fiscal and monetary policies are also important determinants of business
prospects and investment decisions.
• They can help make the overall economic situation and business prospects
bright or check an unwarranted boom or unhealthy demand explosion.
• They can encourage investment and production in certain priority sectors and
discourage them in the nonpriority sectors.
• They are also capable of influencing technological choice and investment and
production patterns.
In short, the fiscal and monetary policies can influence the aggregate supply
and demand and the associated level of employment, wages, interest, rent,
prices and profit

58. • Monetary Policy refers to the use of instruments within the control of the Central Bank to influence
the level of aggregate demand for goods and services or to influence the trends in certain sectors of
the economy.
• Monetary policy operates through varying the cost and availability of credit, these producing desired
changes in the assets pattern of credit institutions, principally commercial banks. These variations
affect the demand for, and the supply of credit in the economy, and the level and nature of economic
activities.
Measures of Money Stock
• A knowledge of the measures of money stock in an economy would help us to understand monetary
policy better.
The Reserve Bank of India employs four measures of money stock, namely, M1, M2, M3 and M4.
M1: The measure of money stock designated by M1 is usually described as the money supply. The
components of money supply are currency with the public (i.e., notes in circulation, circulation of
rupee coins and circulation of small coins) and deposits (demand deposits with banks and other
deposits with the RBI). Currency with the public forms less than half of the total money supply,
whereas the demand deposits constitute more than 50 per cent of the money supply today. In
advanced countries, demand deposits form a major part of the money supply. In India, the proportion
of the currency in money supply has been declining. Two decades ago, it formed about three-fourths
as against less than 50 per cent today.
M2: M2 is M1 + Post Office Savings Bank Deposits.
M3: M3 is M1 + Time Deposits with the banks. In other words, M3 is money supply plus fixed deposits
with the banks. M3 is usually referred to as aggregate monetary resources.
M4: M4 is M3 plus the total Post Office Deposits.

59. General Credit Controls
• There are three general or quantitative instruments of credit control, namely,
The Bank Rate
Open Market Operations and
Variable Reserve Requirements
Bank Rate is used in a broader sense and refers to the minimum rate at which the
central bank provides financial accommodation to commercial banks in the discharge
of its function as the lender of the last resort.
• The Bank Rate policy seeks to affect both the cost and availability of credit. The
availability depends largely on the statutory requirements regarding the eligibility of
bills for rediscounting, and securities for collateral for advances, as also the maximum
period for which the credit is available.
Open Market Operations: Open Market Operations refer broadly to the purchase and
sale by the Central Bank of a variety of assets, such as foreign exchange, gold,
Government securities and even company shares. In India, however, in practice, they
are confined to the purchase and sale of Government securities.
Under the Open Market Operations, the central bank seeks to influence the economy
either by increasing the money supply or by decreasing the money supply.

60. Variable Reserve Ratios: Commercial banks in every country maintain, either by
the requirement of law or by custom, a certain percentage of their deposits in the
form of balances with the central bank. The central bank has the power to vary
this reserve requirement; and the variation in the reserve requirements affect the
credit creating capacity of commercial banks.
For instance, if the reserve requirement is 10 per cent, the maximum amount the
bank can lend is equivalent to 90 per cent of the total reserves. If the reserve ratio
is raised to 20 per cent, the bank cannot lend more than 80 per cent of the total
reserves.
Statutory Liquidity Ratio (SLR): Action has also been taken to prevent banks from
offsetting the impact of variable reserve requirements by liquidating their
Government security holdings.

61. The Banking Regulation Act confers on the Reserve Bank the power to give
directions to banking companies, either generally or to any banking company or
group of banking companies in particular, as to—
(a) the purposes for which advances may or may not be made;
(b) the margin to be maintained in respect of secured advances;
(c) the maximum amount of advances or other financial accommodation which,
having
regard to the paid-up capital, reserves and deposits of a banking company and
other relevant considerations, may be made by that banking company to any one
company, firm, association of persons or individual;
(d) the maximum amount up to which, having regard to the considerations
referred to in clause (c) guarantees may be given by a banking company on behalf
of any one company, firm, association of persons or individual; and
(e) the rate of interest and other terms and conditions on which advances or
other financial accommodation may be made or guarantees may be given.

62. • The Reserve Bank of India announced renewed rate hikes in the August 2022
Monetary Policy committee review. The repo rate was hiked by 50 bps to 5.40
per cent. The RBI Governor Shaktikanta Das stated that inflation is a primary
concern, and stressed that in the near term will be observing a 4 per
cent inflation. (Basis points, otherwise known as bps or "bips," are a unit of measure used in finance to
describe the percentage change in the value of financial instruments or the rate change in an index or other
benchmark. One basis point is equivalent to 0.01% )
Interest rate Rate (Percent)
Repo Rate 4.9 to 5.4
Bank Rate 5.15
Reverse Repo Rate 3.35
Marginal Standing Facility Rate 5.15

63. • Fiscal Policy is that part of Government policy which is concerned with raising
revenue through taxation and other means and deciding on the level and
pattern of expenditure.
• The fiscal policy operates through the budget.
• The Budget is an estimate of Government expenditure and revenue for the
ensuing financial year, presented to Parliament (in case of Union Budget)
usually by the Finance Minister.
• Occasionally, in times of financial crisis, Interim Budgets may be introduced
later in the year to increase taxation, expenditures, etc. Sometimes there may
be slight modifications in taxation and expenditure without the formality of a
revised budget.

64. HIGHLIGHTS OF THE UNION BUDGET 2022-23
Posted On: 01 FEB 2022 1:18PM by PIB Delhi
The Union Budget seeks to complement macro-economic level growth with a focus on micro-
economic level all inclusive welfare. The Union Minister for Finance & Corporate Affairs, Smt
Nirmala Sitharaman tabled the Union Budget 2022-23 in Parliament today.
• The key highlights of the budget are as follows:
PART A
• India’s economic growth estimated at 9.2% to be the highest among all large economies.
• 60 lakh new jobs to be created under the productivity linked incentive scheme in 14 sectors.
• PLI Schemes have the potential to create an additional production of Rs 30 lakh crore.
• Entering Amrit Kaal, the 25 year long lead up to India @100, the budget provides impetus for
growth along four priorities:
• PM GatiShakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and
Climate Action.
• Financing of investments

65. • PM GatiShakti
The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways
and Logistics Infrastructure.
PM GatiShkati National Master Plan
The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation,
seamless multimodal connectivity and logistics efficiency.
The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM
GatiShakti framework.
• Road Transport
National Highways Network to be expanded by 25000 Km in 2022-23.
Rs 20000 Crore to be mobilized for National Highways Network expansion.
• Multimodal Logistics Parks
Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four
locations.
• Railways
One Station One Product concept to help local businesses & supply chains.
2000 Km of railway network to be brought under Kavach, the indigenous world class technology and capacity
augmentation in 2022-23.
400 new generation Vande Bharat Trains to be manufactured during the next three years.
100 PM GatiShakti Cargo terminals for multimodal logistics to be developed during the next three years.

66. • Parvatmala
National Ropeways Development Program, Parvatmala to be taken up on PPP mode.
Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.
• Inclusive Development
• Agriculture
Rs. 2.37 lakh crore direct payment to 1.63 crore farmers for procurement of wheat and
paddy.
Chemical free Natural farming to be promoted throughout the county. Initial focus is on
farmer’s lands in 5 Km wide corridors along river Ganga.
NABARD to facilitate fund with blended capital to finance startups for agriculture &
rural enterprise.
‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides
and nutrients.
• Ken Betwa project
1400 crore outlay for implementation of the Ken – Betwa link project.
9.08 lakh hectares of farmers’ lands to receive irrigation benefits by Ken-Betwa link
project.

67. MSME
• Udyam, e-shram, NCS and ASEEM portals to be interlinked.
• 130 lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee
Scheme (ECLGS)
• ECLGS to be extended up to March 2023.
• Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to total cover of Rs
5 Lakh Crore.
• Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated
under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
• Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs
6000 Crore to be rolled out.
Skill Development
• Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched
to empower citizens to skill, reskill or upskill through on-line training.
• Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-
Service (DrAAS).

68. Education
• ‘One class-One TV channel’ programme of PM eVIDYA to be expanded to 200
TV channels.
• · Virtual labs and skilling e-labs to be set up to promote critical thinking skills
and simulated learning environment.
• · High-quality e-content will be developed for delivery through Digital Teachers.
• · Digital University for world-class quality universal education with personalised
learning experience to be established.
Health
• An open platform for National Digital Health Ecosystem to be rolled out.
• National Tele Mental Health Programme’ for quality mental health counselling
and care services to be launched.
• A network of 23 tele-mental health centres of excellence will be set up, with
NIMHANS being the nodal centre and International Institute of Information
Technology-Bangalore (IIITB) providing technology support.

69. Saksham Anganwadi
• Integrated benefits to women and children through Mission Shakti, Mission Vatsalya,
Saksham Anganwadi and Poshan 2.0.
• Two lakh anganwadis to be upgraded to Saksham Anganwadis.
Har Ghar, Nal Se Jal
• Rs. 60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se
Jal.
• Housing for All
Rs. 48,000 crore allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana.
• Prime Minister’s Development Initiative for North-East Region (PM-DevINE)
New scheme PM-DevINE launched to fund infrastructure and social development projects in
the North-East.
An initial allocation of Rs. 1,500 crore made to enable livelihood activities for youth and
women under the scheme.

70. • Vibrant Villages Programme
Vibrant Villages Programme for development of Border villages with sparse population,
limited connectivity and infrastructure on the northern border.
• Banking
100 per cent of 1.5 lakh post offices to come on the core banking system.
Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.
• e-Passport
e-Passports with embedded chip and futuristic technology to be rolled out.
• Urban Planning
Modernization of building byelaws, Town Planning Schemes (TPS), and Transit Oriented
Development (TOD) will be implemented.
Battery swapping policy to be brought out for setting up charging stations at scale in
urban areas.

71. • Land Records Management
Unique Land Parcel Identification Number for IT-based management of land records.
Accelerated Corporate Exit
Centre for Processing Accelerated Corporate Exit (C-PACE) to be established for speedy winding-up of companies.
• AVGC Promotion Task Force
An animation, visual effects, gaming, and comic (AVGC) promotion task force to be set-up to realize the potential of this sector.
• Telecom Sector
Scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.
• Export Promotion
Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and
Service Hubs’.
• AtmaNirbharta in Defence:
68% of capital procurement budget earmarked for domestic industry in 2022-23, up from 58% in 2021-22.
Defence R&D to be opened up for industry, startups and academia with 25% of defence R&D budget earmarked.
Independent nodal umbrella body to be set up for meeting testing and certification requirements.
• Sunrise Opportunities
Government contribution to be provided for R&D in Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones,
Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems.

72. DIRECT TAXES
• To take forward the policy of stable and predictable tax regime:
Vision to establish a trustworthy tax regime.
To further simplify tax system and reduce litigation.
• Introducing new ‘Updated return’
Provision to file an Updated Return on payment of additional tax.
Will enable the assessee to declare income missed out earlier.
Can be filed within two years from the end of the relevant assessment year.
• Cooperative societies
Alternate Minimum Tax paid by cooperatives brought down from 18.5 per cent to 15 per cent.
To provide a level playing field between cooperative societies and companies.
Surcharge on cooperative societies reduced from 12 per cent to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10
crores.
• Tax relief to persons with disability
Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of
parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.
• Parity in National Pension Scheme Contribution
Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
Brings them at par with central government employees.
Would help in enhancing social security benefits.
• Incentives for Start-ups

73. • Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups
to avail tax benefit.
• Previously the period of incorporation valid up to 31.03.2022.
• Incentives under concessional tax regime
• Last date for commencement of manufacturing or production under section 115BAB
extended by one year i.e. from 31st March, 2023 to 31st March, 2024.
• Scheme for taxation of virtual digital assets
• Specific tax regime for virtual digital assets introduced.
• Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per
cent.
• No deduction in respect of any expenditure or allowance to be allowed while
computing such income except cost of acquisition.
• Loss from transfer of virtual digital asset cannot be set off against any other income.
• To capture the transaction details, TDS to be provided on payment made in relation
to transfer of virtual digital asset at the rate of 1 per cent of such consideration
above a monetary threshold.
• Gift of virtual digital asset also to be taxed in the hands of the recipient.

74. • Litigation Management
In cases where question of law is identical to the one pending in High Court or Supreme Court, the filing of appeal by the department shall be
deferred till such question of law is decided by the court.
To greatly help in reducing repeated litigation between taxpayers and the department.
• Tax incentives to IFSC
Subject to specified conditions, the following to be exempt from tax
• Income of a non-resident from offshore derivative instruments.
• Income from over the counter derivatives issued by an offshore banking unit.
• Income from royalty and interest on account of lease of ship.
• Income received from portfolio management services in IFSC.
• Rationalization of Surcharge
Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
Done to reduce the disparity in surcharge between individual companies and AOPs.
Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
To give a boost to the start up community.
• Health and Education Cess
Any surcharge or cess on income and profits not allowable as business expenditure.
• Deterrence against tax-evasion
No set off, of any loss to be allowed against undisclosed income detected during search and survey operations.
• Rationalizing TDS Provisions
Benefits passed on to agents as business promotion strategy taxable in hands of agents.
Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.