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Managerial Economics - Business And Government

Introduction and Role of Business And Government

   Posted On :  30.05.2018 12:40 am

Government of India directly or indirectly plays a major role in assisting, encouraging and directing private sector, providing infrastructure facilities, controlling private economic activity, promoting public and joint sectors and planning, formulating framework for sustainable economic development of the country.

Introduction and Role of Business And Government

Introduction

 
Government of India directly or indirectly plays a major role in assisting, encouraging and directing private sector, providing infrastructure facilities, controlling private economic activity, promoting public and joint sectors and planning, formulating framework for sustainable economic development of the country. Overall economy is regulated through fiscal, monetary policy and trade policies to participate in the globalization.
 

Role Of Government In India:

 
1.      Individual freedom: Consumers enjoy freedom of consumption, production and process,
 
2.      Coexistence of public and private sector: Basic industries requiring heavy investment, and social welfare activities belong to the public sector and the rest to the private sector.
 
3.      Planning: Detailed planning is for public sector, broader targets are for the private.
 
4.      Social welfare: Policies are framed to develop backward regions, increasing employment and infrastructure facilities.
 
There are various ways in which the government may influence business operations in a country.
 
1.      Public Enterprises: Sometimes government may involve in the production of goods and services. If the commodity is a necessary one and the supply of the commodity is optimized by the government, It may maximizes the social welfare of the society.
 
2.      Price fixation: The government insists on maximum retail price to stabilize the price level in the market. Depending upon the political and economic conditions the government may raise the prices.

3.      Subsidies: States and the Central Government of India provides various kinds of subsidies to the domestic producers and for the exporters through various schemes.
 
4.      Direct and Indirect Intervention: Through taxation, Government intervenes in the business directly and indirectly through the quota system .
 
5.      Control of Monopoly: Monopoly enterprise is harmful to the welfare of consumers. The government of India passed Monopoly and Restrictive Trade Practice Act (MRTP) to control them.
 
Thus the government may participate in the production activities along with the private enterprise in an economy beside controlling, regulating and governing the activities of the latter in the general interest of maximizing the welfare of the people of the country.

 

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