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.
Tags : Managerial Economics - Business And Government
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