This document provides an overview of key economic concepts including different economic systems (capitalism, socialism, mixed), monetary policy, fiscal policy, the Indian union budget, and types of budgets. It discusses the objectives and features of different economic systems, monetary and fiscal policy, and defines terms like liberalization and globalization. It also summarizes the key aspects of the Indian union budget for 2020-21 such as the themes of aspirational India, economic development for all, and caring society.

1. Economic and Business Environment
Conducted by
Mr. S. B. Bansode
(M.com., G.D.C.&A.,SET, NET)

2. UNIT I
ECONOMIC SYSTEMS
&
BUSINESS

3. ECONOMIC SYSTEM
• An economy is a system of organizations and institutions that
either facilitate or play a role in the production and distribution of
goods and services in a society. Economies determine how
resources are distributed among members of society; they
determine the value of goods or services and they even determine
what sorts of things can be traded or bartered for those services and
goods.

4. TYPES OF ECONOMIC SYSTEM
• Capitalism Economy
• Socialism Economy
• Mixed Economy

5. CAPITALISM ECONOMY
• The economic system in which business units or factors of
production are privately owned and governed is called capitalism.
• The profit earning is sole aim of business units.
• Government of that country does not interfere in the economic
activities of the country.
• Capitalism economy known as Free Market Economy.
• Example of Capitalistic Economy :
US, Japan, Canada, Mexico etc.

6. FEATURE OF THE CAPITALISM
SYSTEM
• Private ownership
• Inheritance
• Free enterprises
• Consumer Sovereginity
• Profit Motive
• Competition
• Price Mechanism
• Role of Government
• Freedom of choice of occupation
• Freedom to save and invest

7. SOCIALISM ECONOMY
• Under socialism economic system, all the economic activities of
the country are controlled and regulated by the government.
• Under this economic system government appoint a central
planning authority that takes all economic decisions and
formulates an exhaustive plan to achieve the set objectives.
• Socialism is a complete social system which differ from capitalism
not only in the absence of private ownership of mean of production
but also in its basic structure and mode of functioning
• Example of socialism economy: Soviet Russia, China, Vietnam,
Cuba etc.

8. FORMS OF SOCIALISM
• Democratic Socialism
All the economic activities are controlled by the government
but people have the freedom of choice of occupation and
consumption.
• Totalitarian Socialism
This is also known as communism. Under this, people are
obliged to work under the direction of government.

9. FEATURES OF SOCIALISM
ECONOMY
• Government Ownership
• Central authority
• Social welfare
• Restriction on occupation
• Fixation of wages and prices
• Absence of competition
• Equality of opportunity
• Abolition of Exploitation of labour

10. MIXED ECONOMY
• Mixed Economy is the mixture of both capitalism and socialism
feature.
• In this economic system, both public and private sector co-exist.
• Some factor of production are privately owned and some are
owned by government.
• In this economic system both public and private sector play key
role in development of country.
• Best example of mixed economy is India.

11. FEATURES OF MIXED ECONOMICS
• Co-existence of public and private sector
• Classification of industries
• Intervention Role of states
• Profit motive cum Social Welfare
• Economic planning

13. GANDHIJI’S TRUSTEESHIP
CONCEPT
• Trusteeship is a socio-economic philosophy propounded by Mahatma
Gandhi.
• The Gandhiji Principle of Trusteeship is closely related to the “Social
Responsibility of Business”. According to the Gandhiji Concept of
Trusteeship “All business firms must work like a trust.”
• All the assets of the firm should be held by a 'trust' and should be used
for the welfare of the society. The firm should keep only a small part of
its profits for the respectable livelihood of its owners. The remaining part
of the profit should be distributed equally to all sections of the society
• It provides a means by which rich people will be trustees of a trust that
looks after the welfare of the people in general.

14. PRINCIPLES OF TRUSTEESHIP
• Reduce inequality
• Changes of attitude of Businessman
• Consider social needs
• Socialism
• Social Pressure
• Legal pressure
• Equal distribution of wealth
• Earn money by hard work
• No right to private ownership
• Government regulation

15. FEATURES OF TRUSTEESHIP
• Trusteeship: hammer for capitalism
• Reduce Economic inequality
• State regulation of trusteeship
• No use of wealth for self satisfaction
• No private ownership
• Fixed maximum income
• Social welfare
• Production as per the social requirement

16. LIMITATIONS TRUSTEESHIP
CONCEPT
• Not relevant in today’s competitive business
• Demotivates hardworking businessman
• Concept based only on socialism
• Not accepted by shareholder
• Concept against capitalism

17. GLOBALISATION
• Globalisation is a two way traffic, first it means free competition,
high productivity using new technology and second selling goods
in a single market of the whole world.
- Russi Mody

18. ADVANTAGES OF GLOBALISATION
• Better Capacity utilisation
• Improve the reserve and Export
• Access Modern Technology
• Change in Attitude
• Expectation are fulfilled
• Higher Export

19. DISADVANTAGES OF GLOBALISATION
• International Situation not favorable
• Lack of adaptability
• Beneficial to small section
• Reality ignored
• Fear of increase in debt
• Beneficial to developed countries
• Inflow of FDI not possible

20. CHANGING ECONOMIC SYSTEM IN
CONTEXT OF GLOBALISATION
• Globalisation of Indian Business
• Exchange rate adjustment and rupee convertibility
• Import liberalization
• Opening upto Foreign Capital
• Exploiting knowledge based economy
• Adopting risk management practices
• Empowering the poor
• Growing Indian transactional Corporation
• Environment protection
• Human Development
• High Growth of agriculture

21. LIBERALISATION
• Liberalisation means the removal of control or liberal the rules and
lows by the government to encourage economic development.
• Economic liberalisation means minimum of control on
consumption, production and use of factor of production
– As consumer, all individual and families are free to take
decision as per their needs.
– All producer are free to decide to produce the commodity which
they find profitable.
– AS a owner of factor, they are free to deploy it in any use.

22. LIBERALISATION POLICY IN INDIA
• Liberalization during
• 1975-1980
• 1980-1985
• 9185-1991
• Liberalization since 1991
• New industrial Policy
• New trade policy
• Exchange policy
• Union Budget 1991-92

23. CHANGES IN INDIAN BUSINESS IN
THE POST LIBERALIZATION PERIOD
• Changes in Agriculture sector
• Changes in Service sector
• Changes in trade and commerce
– Effect in Volume of trade
– Effect on composition of trade
– Effect on Direction of trade

24. UNIT II
MACRO POLICY
ENVIRONMENT

25. MONETARY POLICY
• Monetary policy refers to the actions of central banks to achieve
macroeconomic policy objectives such as price stability, full employment,
and stable economic growth.
• Monetary policy involves influencing the demand and supply of money,
primarily through the use of interest rates.
• Monetary policy is usually carried out by an independent Central Bank of the
country. Changes in monitory policy can be made at any time during the year.
• Monitory policy refers to the policy regarding money supply and bank credit in
the country and in turn influence the savings, investment and consumer
expenditure in the economy.
• Monetary policy is an arm of macro economic policy. Monetory policy may
also be used to influence the exchange the rate of the country’s currency.
• Central Bank use monetary policy tools like, Repo/Reverse Repo, CRR, SLR ,
OMO (Open Market Operation) to control money supply or inflation.

26. TYPES OF MONETARY POLICY
• Expansionary Monetary Policy
– Implemented during recession/slowdown.
– Lower rate of interest.
– Unfavorable to save.
– Promote spending.
– Increase the money supply.
• Contractionary Monetory Policy
– Implemented during high inflation.
– Raise the interest rate.
– Decrease the money supply.

27. OBJECTIVES OF MONETARY
POLICY
• Adjusting, equilibrating mechanism for demand and supply of money
market.
• Encouraging sectoral and overall development, by influencing the cost,
volume, direction of credit.
• To enable borrowers and lenders of short term funds to fulfill their
borrowing and investment requirements and an efficient market clearing
price.
• To maintain reasonable price stability.
• To balance of payments (BOP) equilibrium.
• Formulating equitable distribution of credit .
• To reduce the rigidities.
• To promote a fixed investment .
• To promote more competitive environment .
• To promote exports .
• To impart greater discipline and prudence in the operations of the
financial system .

28. FISCAL POLICY
• Fiscal policy refers to the tax and spending policies of the Central
government.
• Also known as budgetary policy.
• It is framed by central government of a country.
• Government focus on growth in GDP.
• Fiscal Policy concerns itself with the aggregate effect of government
expenditure and taxation on income, production and employment, deficit
financing and management of public debt in an economy.
• Fiscal policy and monetary policy are closely interrelated. Fiscal policy
bring about changes in money supply through budgetary deficit.

29. TYPES OF FISCAL POLICY
• Expansionary Fiscal Policy
– Used during recession
– Lower tax rate
– Increase government spending
• Contractionary Fiscal Policy
– Used when mounting inflation
– Increase tax rate
– Lower government spending

30. OBJECTIVES OF FISCAL POLICY
• To promote export and imports.
• To mobilize the available resources.
• To ensure equitable distribution of income and wealth.
• To bring price stability and control of inflation.
• To generate employment.
• To reduce the deficit in the BOP.
• To increase national income.
• To enhance foreign exchange earnings.

31. FISCAL RESPONSIBILITY
Fiscal responsibility implies a government pursues the
appropriate level of government spending and tax to:
– Maintain sustainable public finances.
– Ensure fiscal policy aids the optimal rate of economic growth.
– Maintain appropriate levels of public investment.

32. UNION BUDGET
• The word ‘budget’ has been borrowed from the English word "Bowgette" which traces its
origin from the French word “Bougette”. Word “Bougette” has arrived from the word,
‘Bouge’ which means a leather bag.
• Details of such income and expenditures statements are known as ‘Budget’. Each budget is
made for a specified duration.
• The Union Budget is the blueprint of the Government’s revenue and expenditure for a fiscal
year, starting from 1st April of one year to 31st March of the following year.
• It is presented during the month of February so that it can be materialized before the start of a
new financial year.
• According to Article 112 of the Indian Constitution, it is an extensive financial statement that
presents the Government’s estimation of revenue sources and estimated expenses for the year.
• It is classified into two parts – revenue budget and capital budget. Revenue budget contains
the government's revenue receipts and expenditure, while the Capital Budget comprises of the
government's capital receipts and payments.

33. HISTORY OF UNION BUDGET OF
INDIA
• The first Union Budget of India, a concept introduced when the
country was still under the British colonial rule, was presented on
7th April, 1860, by the then Finance Minister of India, James
Wilson.
• The first Union Budget of Independent India was presented on
November 26, 1947, by Sir R.K. Shanmugham Chetty (the first
Finance Minister of Independent India).

34. WHY GOVERNMENT PREPARES
A BUDGET?
• The Governments decide about the expenditure to be incurred on
which commodities primarily and how the money is going to be
arranged for these expenditures.
• In budget the government estimates the expected expenditures for
developmental works in different sectors of the economy e.g.
Industry, Manufacturing, Education, Health, Transport, etc.
• To meet the expenditures for the coming financial year, the
Government tries to work out the sources of revenue. ( i.e. by
imposing new taxes or increasing or decreasing the previous rates
of taxes, or to remove or impose subsidy on any commodity.)

35. TYPES OF UNION BUDGETS
• Union Budget can be classified into two parts
– Revenue budget
– Capital budget

36. REVENUE BUDGET
• Revenue budget comprises of the government's revenue receipts
and revenue expenditure.
• Revenue receipts can be further classified into tax revenue (income
tax, excise duty, corporate tax, etc.) and non-tax revenue (interest,
profit, fees, fines, etc.).
• Revenue expenditure refers to the regular expenses incurred from
the daily functioning of the government as well as for the range of
services offered to the public. In the event that the revenue
expenditure is greater than the revenue receipts, the government is
said to incur a revenue deficit.

37. CAPITAL BUDGET
• Capital budget, whose components are of a long-term nature,
consists of capital expenditure and capital receipts.
• Some of the primary sources of government receipts include loans
from citizens, Reserve Bank of India (RBI) and foreign
governments.
• Capital expenditure, on the other hand, comprises of costs incurred
on development and maintenance of equipment, machinery, health
facilities, building, education, etc.
• When the government's expenditure is greater than the total
revenue collected, a state of fiscal deficit occurs.

38. OTHER TYPES OF BUDGET
• Traditional or General Budget
• Performance Budget
• Zero Based Budget
• Outcome Budget
• Gender Budget

39. TRADITIONAL OR GENERAL BUDGET
• The initial structure of the general budget is known as the Traditional
Budget.
• The main aim of the General Budget is to set up financial control over the
Executive and the Legislative.
• This budget contains the details of income and expenditure of the
Government.
• This budget contains the details of the expenditure in different sectors done
by the Government. However, the result of this expenditure is not explained
in this budget.
• The main idea behind the traditional budget that is to solve the problems of
independent India and to achieve the development.
• The need and importance of drafting a Performance Budget was accepted
and it was presented as a complimentary budget to the earlier Traditional
budget.

40. PERFORMANCE BUDGET
• When the outcome of any activity is taken as the base of any
budget, such a budget is known as ‘Performance Budget’.
•
• First time in the world, the performance budget was made in the
USA. An Administrative Reforms Commission was set up in 1949
in America under Sir Hooper. This commission recommended for
making a ‘Performance Budget’ in the USA.
• In the Performance Budget, it is the compulsion of the government
to tell that 'what is done', 'how much done' by it for the betterment
of the people.
• In India, the Performance Budget is also known as the ‘Outcome
Budget’.

41. ZERO BASED BUDGET
• Under Zero-based budgets, every activity is decided based on Zero basis i.e. the
previous expenditures are not considered.
• Peter Pyre is known as the father of ‘Zero Based Budgeting’ who presented this
sort of budget in 1970. This system of budgeting was first used in the Georgia
State of USA by its Governor Jimmy Carter.
• In the zero-based budget, neither expenses incurred during the previous
financial years are not considered nor the expenditure of the last financial year
used for the coming years.
• This budget is also known as ‘Sun Set Budget’ which means the finance
department has to present the zero-based budget before the end of the financial
year.
• There are two primary reasons for adopting this type of Budget in India.
(i) The continuous revenue deficit in the budget of the country.
(ii) Poor implementation of the Performance Budget.
In India, the Zero Based Budgeting was introduced by the mainstream
Research organization, Council of Scientific and Industrial Research and the
Central Government adopted the same in 1987-88.

42. OUTCOME BUDGET
• Outcome Budget acts as a pathfinder for all the Ministries and
Departments which helps in improving Services, the performance
of the programmes.
• In India, development-related schemes such as MGNREGA,
NRHM, Mid Day Meal, PMGSY, Digital India, Prime Minister
Skill Development Council, etc. are started every year. The large
sum of money is spent on these schemes every year. However, at
present, the government doesn’t have any parameters to measure
the results of these schemes. Sometimes, the delay in
implementation of the schemes causes an increase in the cost of
these schemes. Therefore, in order to reduce this cost,
the Government of India introduced the Outcome Budget in 2005.

43. GENDER BUDGET
• If a budget describes the schemes and plans for the welfare of
children and females, it is known as Gender Budget.
• Through Gender Budget, the Government declares an amount to be
spent over the development, Welfare, Empowerment schemes and
programmes for Females.

44. UNION GOVERNMENT BUDGET
2020-21
• Union budget 2020-21 is presented by Finance Minister Smt. Nirmala
Sitharaman in parliament on 1st February, 2020.
• Budget presented time ;- 2 hour 40 min.
• The budget is woven around three prominent themes:
– Aspirational India in which all sections of the society seek better
standards of living, with access to health, education and better jobs.
(Agriculture, Irrigation and Rural Development, Wellness, Water
and Sanitation &Education and Skills)
– Economic development for all, indicated in the Prime Minister’s
exhortation of “SabkaSaath, SabkaVikas, SabkaVishwas”.(Industry,
Commerce and Investment, Infrastructure, New Economy)
– Caring Society that is both humane and compassionate. (Women
and Child, Social Welfare, Culture and Tourism, Environment and
Climate Change)

45. UNIT III
REGULATORY FRAMEWORK
OF BUSINESS

46. Securities and Exchange Board of
India (SEBI)
• The Securities and Exchange Board of India (SEBI) is the regulator of
the securities and commodity market in India owned by the Government of India.
• SEBI was established on 12 April 1988 and given Statutory Powers on 30 January
1992 through the SEBI Act, 1992. It got statutory status from the year 1992 and
become an autonomous body to control the activities of the entire stock market of
the country.
• SEBI acted as a watchdog and have a authority of controlling and regulating the
affairs of the Indian capital market.
• SEBI inspect the accounting books of the recognizes stock exchanges in the country.
It could also call for periodical returns from such stock exchange
• SEBI becomes empowered to inspect the books and records of financial
intermediaries.
• It could constraint companies for getting listed in any stock exchange.
• It could also handle the registration of stock broker.

47. Role of SEBI as a Regulator of the
Capital Markets
• Power to make a rules for controlling stock exchange.
• To provide licenses to dealer and brokers.
• To control the merge, acquisitions and takeover the companies.
• To audit the performance of stock market.
• To protect the investor from stock market and manipulation &
fraud.

48. Insurance Regulatory and Development
Authority (IRDA)
• IRDAI is an autonomous, statutory body tasked with regulating
and promoting the insurance and re-insurance industries in India.
• IRDAI was constituted by the Insurance Regulatory and
Development Authority Act, 1999.
• IRDA oversee the growth of the insurance sector in India and also
maintain a speedy development.
• IRDAI structure :
– Ten-member body consisting of a chairman
– Five full-time
– Four part-time
All members appointed by the government of India.

49. Role of IRDA as a Regulator of the
Insurance Sector
• IRDA Issuing, renewing, modifying, withdrawing, suspending or
cancelling registrations / certificates.
• The regulatory body secures the interests of the policyholders in
areas like assigning of policy, nomination by policyholders,
insurable interest, settlement of insurance claim, surrender value of
the policy and other terms and conditions applicable to an
insurance contract.
• IRDA makes certain that the code of conduct is followed by
surveyors and loss assessors
• IRDA is an autonomous body promotes efficiency in the conduct
of insurance business

50. • IRDA specifies the requisite qualifications, code of conduct and
the practical training required for insurance intermediaries and
agents.
• It also promotes and regulates professional organizations
connected with the insurance and reinsurance business.
• The rates, advantages, terms and conditions that may be offered by
insurers in respect of general insurance business are controlled and
regulated by the regulatory body
• It also specifies the form and manner in which books of account
should be maintained and the statement of accounts should be
rendered by insurers and insurance intermediaries.
• IRDA judges the disputes between insurers and intermediaries or
insurance intermediaries

51. COMPETITION COMMISSION
• Competition Commission of India (CCI) is a statutory body of
the Government of India responsible for enforcing the Competition Act,
2002, it was duly constituted in March 2009.
• MRTP Act. 1969, replaced by the Competition Act, 2002, on the
recommendations of Raghavan committee.
• The goal of the Competition Commission of India is to create a strong
competitive environment
• The Commission consists of one Chairperson and six Members as per the
Competition Act who shall be appointed by the Central Government. The
Chairperson and other Members shall be whole-time Members.
• The commission is a quasi-judicial body which gives opinions to statutory
authorities and also deals with other cases.

52. ROLE OF COMPETITION
COMMISSION
• To eliminate practices having adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade in the
markets of India.
• To give opinion on competition issues on a reference received from a statutory
authority established under any law and to undertake competition advocacy, create
public awareness and impart training on competition issues.
• Make the markets work for the benefit and welfare of consumers.
• Ensure fair and healthy competition in economic activities in the country for faster
and inclusive growth and development of the economy.
• Implement competition policies with an aim to effectuate the most efficient
utilization of economic resources.

53. • Effectively carry out competition advocacy and spread the information on
benefits of competition among all stakeholders to establish and nurture
competition culture in Indian economy.
• The Competition Commission is India’s competition regulator and an
antitrust watchdog for smaller organizations that are unable to defend
themselves against large corporations.
• The Competition Commission is India’s has the authority to notify
organizations that sell to India if it feels they may be negatively influencing
competition in India’s domestic market.
• The Competition Act guarantees that no enterprise abuses their 'dominant
position' in a market through the control of supply, manipulating purchase
prices, or adopting practices that deny market access to other competing
firms.
• A foreign company seeking entry into India through an acquisition or
merger will have to abide by the country’s competition laws.

54. TELECOM REGULATORY
AUTHORITY OF INDIA (TRAI)
• The Telecom Regulatory Authority of India is a statutory body set up by the
Government of India under section 3 of the Telecom Regulatory Authority of
India Act, 1997.
• The Telecom Regulatory Authority of India (TRAI) was set up in order to
have a suitable environment for the growth of the telecommunications
industry in the country.
• To increase transparency and given a data bsed overview of Indian telecom
Industry at regular interval, TRAI publish multiple reports.
• TRAI Structure:
– TRAI shall have, in addition to its chairman, at least two full-time members and not
more than two-part members, all appointed by the Central Government.
– The members should have special knowledge of, or professional experience in
telecom, industry, finance, accountancy, law, management and consumer affairs.
– Only those senior or retired Government officers can be appointed as members who
have served for at least three years as secretary/additional secretary to the Union or
State Governments.

55. ROLE OF TRAI
• To give advice to the government on any matter related to the telecom industry.
• To protect interest of consumers, monitor quality of services, inspect equipment
used in networks and make recommendations about such equipment;
• To recommend the need for and timing of introduction of new service providers and
terms and conditions of the license to a service provider.
• To ensure technical compatibility and inter-connect between different service
providers and regulate their revenue-sharing arrangements.
• Compliance of terms and conditions of license
• To maintain a register of interconnect agreements and keep it open for inspection
and to settle disputes among the service providers in this respect
• To perform any such other administration and financial function as may be entrusted
to it by the Central Government.
• To facilitate competition and promote efficiency in operations to promote the growth
of telecom services;

56. UNIT IV
SOCIAL
RESPONSIBILITY OF
BUSINESS

57. SOCIAL RESPONSIBILITY OF
BUSINESS
• Social responsibility means that businesses, in addition to maximizing
shareholder value, should act in a manner that benefits society.
• Social responsibility means that individuals and companies have a duty to
act in the best interests of their environment and society as a whole.
• Socially responsible companies should adopt policies that promote the well-
being of society and the environment while lessening negative impacts on
them.
• Companies can act responsibly in many ways, such as promoting
volunteering, making changes that benefit the environment, and engaging in
charitable giving.
• Consumers are more actively looking to buy goods and services from
socially responsible companies, hence impacting their profitability.

58. TYPES OF SOCIAL RESPONSIBILITY
• Ethical Social Responsibility
Create Moral value, this responsibility is not mentioned in any
law.
• Discretionary Social Responsibility
Voluntary Social Responsibility.
• Legal Social Responsibility
Follow the Government rules and regulations.
• Economical Social Responsibility
By using economical resources and earn genuine profit.

59. BUSINESS SOCIAL RESPONSIBILITY
TOWARDS
• Shareholders
a. Fair rate of return
b. Provide accurate information
c. Provide information about company’s future plan of business .
• Consumer
a. Provide good quality of product at reasonable cost.
b. Not to follow unfair trade practices.
c. Ensure regular supply of goods and services.

60. BUSINESS SOCIAL RESPONSIBILITY
TOWARDS
• Worker
a. Provide healthy working condition
b. Provide opportunity to meaningful work
c. Ensure regular supply of goods and services
• Government
a. Respect the law
b. Not to create pollution ( Water, air, land & noise)
c. Paid taxes regularly.

61. IMPORTANCE OF SOCIAL
RESPONSIBILITY OF BUSINESS
• Increase Employee Morale, Attendance and Performance
• Develop Employee Skills
• Enhance Company Reputation
• Attract Investors
• Increase Customer Goodwill and Loyalty
• Improve Relationships with The Community

62. MEANING OF BUSINESS ETHICS
• Ethics means the set of rules or principles that the organization
should follow.
• Ethics shows the distinguishing between the wrong and the right
part of the businesses.
• Ethics, a standard is set for the organization to regulate their
behavior.
• The ethics that are formed in the organization are not rocket
science. They are based on the creation of a human mind. That is
why ethics depend on the influence of the place, time, and the
situation.
• Ethical Principles in Businesses from an Indian Perspective
Integrity, Loyalty, Honesty, Respect and Concern, Fairness, Leadership etc.

63. DEFINITION OF BUSINESS ETHICS
WITH EXAMPLE & ELEMENTS
• “Business ethics can be defined as socially determined moral
principles which governs business activities.”
• Examples :-
a. Follow fair trade practices.
b. Charging faire price from customer.
c. Giving faire treatment to workers.
d. Earning reasonable profit.
• Elements of business ethics :-
a. Top management committee.
b. Publication of code ( Statement of rules and regulation).
c. Measuring results .
d. Involving employees at all level (Decision making).

64. CODE OF BUSINESS ETHICS
• A code of ethics sets out an organization's ethical guidelines and
best practices to follow for honesty, integrity, and professionalism.
• For members of an organization, violating the code of ethics can
result in sanction including termination.
• In some industries, including banking and finance, specific laws
govern business conduct. In others, a code of ethics may be
voluntarily adopted.
• Need for code of ethics
– To provide guidelines for employee behaviors
– To comply with the law and government guidelines
– To established a better corporate culture
– To make proper use of company assets and property.

65. MEANING CORPORATE
GOVERNANCE
• Corporate governance is the system by which companies are
directed and controlled.
• Boards of directors are responsible for the governance of their
companies. The shareholders’ role in governance is to appoint the
directors and the auditors and to satisfy themselves that an
appropriate governance structure is in place.
• The board of directors is responsible for creating the framework
for corporate governance that best aligns business conduct with
objectives.
• Corporate governance is the combination of rules, processes or
laws by which businesses are operated, regulated or controlled.

66. DEFINITION OF CORPORATE GOVERNANCE
• “Corporate Governance is a system of rules, practices and processes
that are used by the corporation to direct and control its action.”
• “Corporate Governance means the application of best management
practices, fulfillment of law and ethical standard for effective
management and distribution of wealth and discharge of social
responsibility for sustainable development of all stakeholders.”
• The term corporate governance encompasses the internal and external
factors that affect the interests of a company’s stakeholders, including
shareholders, customers, suppliers, government regulators and
management.
• Father of Corporate Governance:- Bob Tricker (Book Written
“Corporate Governance” in year 1984)

67. NEED/ OBJECTIVE/ BENEFIT/
FEATURE OF CORPORATE
GOVERNANCE
• Safeguard the money of investor.
• Ensure success of corporate.
• Give ease of access of cheap fund.
• Foundation of good corporate Citizens.
• Attract global perspectives (Attract global companies).

68. PURPOSE OF CORPORATE
GOVERNANCE
• Conduct of business accordance with shareholder desires
(Maximizing wealth) while confirming to the basic rules of the
society embodied in law and local customs.
• Building relationship among various stakeholders in determining
the direction and performance of corporation.

69. PRINCIPLES OF CORPORATE
GOVERNANCE
• Sustainable development of all stake holders.
• Effective Management & Distribution of wealth.
• Discharge of social responsibility .
• Application of best management practices.
• Compliance of law in letter of spirit.
• Adherence of ethical standard.

70. PRINCIPLES OF CORPORATE GOVERNANCE
IN BRIEF
• All shareholders should be treated equally and fairly. Part of this is making
sure shareholders are aware of their rights and how to exercise them.
• Legal, contractual and social obligations to non-shareholder stakeholders
must be upheld. This includes always communicating pertinent information
to employees, investors, vendors and members of the community.
• The board of directors must maintain a commitment to ensure
accountability, fairness, diversity and transparency within corporate
governance. Board members must also possess the adequate skills necessary
to review management practices.
• Organizations should define a code of conduct for board members and
executives, only appointing new individuals if they meet that standard.
• All corporate governance policies and procedures should be transparent or
disclosed to relevant stakeholders.

71. CSR IN INDIAN BUSINESS
• Corporate social responsibility (CSR) requires every business to behave
ethically and improve the quality of life of society.
• Every business must decide voluntarily to contribute to a better society
and a cleaner environment.
• CSR is a concept that strikes a happy balance between economic, social,
ethical and societal concerns of a business. It forces every business to
conduct the show in the best interests of society.
• India is the first country in the world to make corporate social
responsibility (CSR) mandatory.
• As per the Companies Act, 2013. Businesses can invest their
profits in areas such as education, poverty, gender equality, and
hunger as part of any CSR compliance.

72. CSR OBLIGATION TO INDIAN
COMPANIES ACCORDING TO
COMPANY ACT. 2013
The Section 135 is applicable to companies which have an
annual turnover of
• Rs.1,000 crore or more
or
• a net worth of Rs.500 crore or more
or
• a net profit of Rs.5 crore or more.
Companies meeting the above criteria are required to
constitute a CSR Committee consists of three directors and one
director shall be an independent director.

73. companies to implement their CSR in PROJECT MODE :-
• Eradicating hunger, poverty and malnutrition, promoting health care including
preventive health care and sanitation including contribution to the Swachh Bharat
Kosh set-up by the Central Government for the promotion of sanitation and making
available safe drinking water.
• promoting education, including special education and employment enhancing
vocation skills especially among children, women, elderly and the differently abled
and livelihood enhancement projects.
• promoting gender equality, empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centres and such other
facilities for senior citizens and measures for reducing inequalities faced by socially
and economically backward groups.
• Ensuring environmental sustainability, ecological balance, protection of flora and
fauna, animal welfare, agroforestry, conservation of natural resources and
maintaining quality of soil, air and water including contribution to the Clean Ganga
Fund setup by the Central Government for rejuvenation of river Ganga.

74. • Protection of national heritage, art and culture including restoration of
buildings and sites of historical importance and works of art; setting up
public libraries; promotion and development of traditional art and
handicrafts.
• measures for the benefit of armed forces veterans, war widows and their
dependents;
• training to promote rural sports, nationally recognized sports, Paralympic
sports and olympic sports;
• contribution to the Prime Minister’s National Relief Fund or any other fund
set up by the Central Govt. for socio economic development and relief and
welfare of the Scheduled Castes, the Scheduled Tribes, other backward
classes, minorities and women;
• contributions or funds provided to technology incubators located within
academic institutions which are approved by the Central Govt.
• rural development projects
• slum area development.

75. Thank You…