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Tuesday, September 10, 2019

M.Com Previous Year Solved Papers: Business Environment' 2017 (August - Incomplete)

2017 (September)
Paper: 101
(Business Environment)
Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.
1. (a) Explain the micro and macro factors of external environment of business.          6+10=16
Ans: Factors/Components/Elements of business environment
On the basis of extent of intimacy with the firm, the environmental factors may be classified into different levels or types. There are broadly two types of environment, the internal environment, i.e. factors internal to the firm and the external environment i.e. factors external to the firm which have relevance to it.

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.
The external factors on the other hand are, by and large, beyond the control of a company. The external or environmental factors such as the economic factors, socio-cultural factors, government and legal factors, demographic factors etc., are therefore generally regarded as uncontrollable factors.
Some of the external factors have a direct and intimate impact on the firm (like the suppliers and distributors of the firm). These factors are classified as micro environment, also known as task environment and operating environment. There are other external factors which affect an industry very generally (such as industrial policy, demographic factors etc.). They constitute what is called macro environment, general environment or remote environment. We may therefore consider the business environment at three levels:
a)      Internal environment
b)      Micro environment/ task environment/ operating environment
c)       Macro environment/ general environment/ remote environment
Although business environment consists of both internal and external environments, many people often confine the term to the external environment of business.
External Environment:
The external environment is made up of micro and macro environment.
Micro Environment: This refers to the factors which influence the prospects of a particular firm; the firm can influence them with certain efforts. They are as follows:
a) Customers: The type and the nature of the customers influence the rate of growth of any firm. The firm has to be very particular about choosing the inputs and transforming them in to the output. The cost factor is subsidiary if the firm is dealing with such customers. If the customers are more commoners the quality of the commodity if less important than the cost of production. The customers want the commodity at a lower price so the firm will have to conscious about the cost in purchasing the inputs, in employment of labour, in packing and such other factors influencing the cost.
b) Competitors:  In modern age an absolute monopoly is a very rare thing. Most of the FIRMS have to work in some type of competition such as Monopolistic Competition or Oligopoly. A Firm has to be particular about the intensity of the competition. If the competition is severe the firm will have to be very particular about keeping the costs at the lowest level so that it can sell the commodity at a competitive price.
c) Suppliers:  The quality of the commodity and the cost of production are considerably influenced by the supplies of the inputs. If the inputs are supplied at economical prices, are of standard quality and if the supply is uninterrupted and timely the firm can produce a standard quality of a commodity and sell it at reasonable prices. Often the firms employ more than one supplier so as to ensure an uninterrupted supply of inputs. If the supplies of inputs are regular, consistent and reliable there is no need to keep a larger quantity in stock.
d) Channel Intermediaries: They refer to the different levels in the chain from the production unit to the final customer. The chain incorporates the stockists, the wholesalers, the distributors, the retailer etc. If there is a high level of efficiency maintained at every part of the chain the commodity can reach the final consumer in good condition and at a reasonable price. So the Firm has to select and maintain efficient intermediaries. The firm has to offer them proper terms
e) Society: The prospects of a firm depend upon the society in which it has to work and sell its products. In a homogenous society the job of the firm is easy. The people have almost the same habits likes and dislikes, values and ethical norms. In a heterogeneous society the job of the firm is difficult. A particular product may be acceptable to a particular section of the society but not acceptable to some other sections. In a country like India a firm has to into consideration all types of sections of the community such as the religious sections, the caste, the sect, language, region etc.
Conclusion: All these forces influence the chances available to a firm to survive and develop.
Macro Environment: The macro environment comprises of those forces which influence all business firms operating in an economy. They can be studied under the following categories: economic environment, political and regulatory environment, social/ cultural environment, demographic environment and technological. The components of these environment are discussed as below:
a) Economic Environment:  The survival and success of each and every business enterprise depend fully on its economic environment. The main factors that affect the economic environment are:
(i) Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth.
(ii) Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are: Industrial policy, Fiscal policy, monetary policy, foreign investment policy and Export –Import policy. The government keeps on changing these policies from time to time in view of the developments taking place in the economic scenario.
(ii) Economic System: The world economy is primarily governed by three types of economic systems, viz. Capitalist economy; Socialist economy; and Mixed economy. India has adopted the mixed economy system which implies co-existence of public sector and private sector.
b) Political Environment: This includes the political system, the government policies and attitude towards the business community and the unionism. All these aspects have a bearing on the strategies adopted by the business firms. The stability of the government also influences business and related activities to a great extent. It sends a signal of strength, confidence to various interest groups and investors.
c) Legal Environment:  This refers to set of laws, regulations, which influence the business organisations and their operations. Every business organisation has to obey, and work within the framework of the law. The important legislations that concern the business enterprises include: Companies Act, 1956, Foreign Exchange Management Act, 1999, The Factories Act, 1948, Industrial Disputes Act, 19112, Payment of Gratuity Act, 19112, Industries (Development and Regulation) Act, 1951 etc. Besides, the above legislations, the following are also form part of the legal environment of business.
(i) Provisions of the Constitution
(ii) Judicial Decisions.
d)  Social Environment: The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. For example, during festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc.
e) Technological Environment:  Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. The varying technological environments of different countries affect the designing of products. In the modern competitive age, the pace of technological changes is very fast. Hence, in order to survive and grow in the market, a business has to adopt the technological changes from time to time.
f) Demographic Environment:  This refers to the size, density, distribution and growth rate of population. All these factors have a direct bearing on the demand for various goods and services.
g) Natural Environment:  The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. Business is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. It is always considered better to establish manufacturing unit near the sources of input.
(b) Describe the present state of Indian economy and analyse the business environment in India.         6+10=16
2. (a) Explain the main objectives and features of New Industrial Policy (1991), in India.                              4+12=16
Ans: Industrial policy 1991/ New industrial policy:  In order to solve economic problems of our country, the government took several steps including control by the State of certain industries, central planning and reduced importance of the private sector. On July 24,1991 the government of Sri Late P.V. Narasimha Rao announced a new industrial policy. Several new departures in the new policy:
a.       Scrapping of industrial licensing and registration
b.      End to monopoly law
c.       A more welcoming approach to foreign investments and
d.      Redefining the role of public sector.
The main objectives of India’s development plans were:
a)   Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty;
b)   Become self-reliant and set up a strong industrial base with emphasis on heavy and basic industries;
c)    Reduce inequalities of income and wealth;
d)   Adopt a socialist pattern of development based on equality and prevent exploitation of man by man.
Features of New Industrial Policy 1991:
a) Abolition of industrial licensing: In order to liberalise the economy and to bring transparency in the policy, the new policy has abolished the system of industrial licensing except 18 industries. The industries under licensing are coal and liquate, petroleum and its distillation products, distillation and brewing of alcoholic drinks, sugar, animal fat and oils, cigars and cigarettes of tobacco and manufactured tobacco substitutes, asbestos, plywood and other wood products, raw hides and skins, leather and other leather products, motor car, paper , hazardous chemicals, drugs and pharmaceuticals, entertainment electronics etc.. These items are in small scale sector.
b) Role of public sector: The public sector enterprises were not showing good results Inspite of huge investments. The new policy reduced the list of industries from 18 to 8 reserved for public sector. The industries are i) arms and ammunition ii)atomic energy iii) coal and lignite iv) mineral oils v) mining of iron ore, manganese ore etc. vi) mixing of copper, lead, zinc, tin etc. vii) minerals specified in the schedule to the atomic energy viii) rail transport. In 1993 the government reduced the reserved industries from8 to 6 and in may 2001 even arms and ammunition sector was opened to private sector. Now there is only 3 industries reserved for public sector.
c) Concessions from monopolies act: The new policy states that the pre-entry scrutiny of investment decisions by so called MRTP companies will no longer be required. It was not necessary to obtain approval of the centre for expansion, establishment of new undertakings, merger, amalgamation and take over and appointment of directors under certain circumstances. The emphasis now will be placed on controlling and regulating monopolistic restrictive and unfair trade practices.
4) Foreign investment and technology: The new policy prepared a list of 34 industries where automatic permission will be available for direct investment up to 51 percent foreign equity. The industries included in this list were metallurgy, boiler and steam generating plants, electrical equipment, telecommunication, transportation, industrial and agricultural machinery, chemicals, hotels, tourism industry etc. automatic permission will be given for foreign technology agreement. In some sectors the FDI’s could goto 100 percent in 1997-98 but it was permitted in 2000-01. The business are pharma sector, airports, hotel and tourism industry, courier services and mass rapid transport system and internet service providers etc..
5) Location policy liberalised:  The new policy mentioned that in location other than cities of more than 10 lakh population no industrial approvals from the centre will be required except industries subject to compulsory licensing. However electronics, computer software and printing industry may be located within 25KM on peripheral. Amendments in location policy was made during 1997-98.
6) Abolition of phased manufacturing programmes: In order to increase indianisation, a phased manufacturing programme was enforced earlier. The new policy has totally abolished such programmes as the government feels due to substantial reforms of trade option policy and devaluation of rupee there is no need to reinforce such programme.
(b) Critically evaluate the role of Multinational Corporation in the Indian economy.                      16
3. (a) What is meant by Monetary Policy? Explain the main objectives of Monetary Policy.         4+12=16
Ans: Monetary Policy: Monetary policy refers to policy formulated and implemented for achieving the following objectives:
a)      Regulating the supply of money including credit money and adjusting it to the needs of the economy
b)      To control the cost of money by regulating the rates of interest.
c)       Directing the supply of money to the required channels in accordance with the plan of priorities prepared by the planning authority.
According to A.G. Hart "A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity position is known as a monetary policy."
From the above discussion, it is clear that a monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives.
Objectives of Monetary Policy: The objectives of a monetary policy in India are similar to the objectives of its five year plans. In a nutshell planning in India aims at growth, stability and social justice. After the Keynesian revolution in economics, many people accepted significance of monetary policy in attaining following objectives.
a)      Rapid Economic Growth
b)      Price Stability
c)      Exchange Rate Stability
d)     Balance of Payments (BOP) Equilibrium
e)      Full Employment
f)       Neutrality of Money
g)      Equal Income Distribution
a)      Rapid Economic Growth: It is the most important objective of a monetary policy. The monetary policy can influence economic growth by controlling real interest rate and its resultant impact on the investment. If the RBI opts for a cheap or easy credit policy by reducing interest rates, the investment level in the economy can be encouraged. This increased investment can speed up economic growth.
b)      Price Stability: All the economics suffer from inflation and deflation. It can also be called as Price Instability. Both inflation and deflation are harmful to the economy. Thus, the monetary policy having an objective of price stability tries to keep the value of money stable. It helps in reducing the income and wealth inequalities.
c)       Exchange Rate Stability: Exchange rate is the price of a home currency expressed in terms of any foreign currency. If this exchange rate is very volatile leading to frequent ups and downs in the exchange rate, the international community might lose confidence in our economy. The monetary policy aims at maintaining the relative stability in the exchange rate.
d)      Balance of Payments (BOP) Equilibrium: Many developing countries like India suffer from the Disequilibrium in the BOP. The Reserve Bank of India through its monetary policy tries to maintain equilibrium in the balance of payments. The BOP has two aspects i.e. the 'BOP Surplus' and the 'BOP Deficit'. The former reflects an excess money supply in the domestic economy, while the later stands for stringency of money. If the monetary policy succeeds in maintaining monetary equilibrium, then the BOP equilibrium can be achieved.
e)      Full Employment: Full Employment refers to absence of involuntary unemployment. In simple words 'Full Employment' stands for a situation in which everybody who wants jobs get jobs. However it does not mean that there is Zero unemployment. In that senses the full employment is never full. Monetary policy can be used for achieving full employment.
f)       Equal Income Distribution: Many economists used to justify the role of the fiscal policy are maintaining economic equality. However in recent years economists have given the opinion that the monetary policy can help and play a supplementary role in attainting an economic equality.
(b) Discuss the role of direct and indirect taxes in mobilisation of resources for economic growth in India.         8+8=16
Ans: Taxes are of mainly two types: Direct and indirect
Direct taxes: Direct taxes are those which are paid directly to the government by the person to whom taxes are levied. These taxes are charged on incomes and profits. Burden of direct taxes are borne by the person to whom it is levied. He cannot transfer the burden of tax to some other parties. Example of direct taxes: income tax.
Indirect Taxes: Indirect taxes are those which are imposed on all the goods and services, and not on incomes and profits. Such taxes are collected by the sellers or service provider from their customers. Since consumers are not paying taxes directly to the government, that is why it is called indirect taxes. Example of indirect taxes: Goods and services tax.
Taxes are essential for any country not only to meet the basic need of the people but also for the economic development of the country.
Role of Direct and Indirect taxes in a developing country like India are stated below:
1)      Raising Public Revenue: Normally, the foremost objective for the imposition of taxes, that is, to collect revenue for the govt. Today the govt. has assumed responsibilities of providing social services, promoting economic development and meeting war expenditure. All these expansions in the scope of economic activities have created necessity of greater funds to be spent by the govt. The greater the need of funds, the greater is the resort of taxation.
2)      Regulation and Control: Taxation helps in regulation and control of certain goods and services. The govt. not only raises public revenue through taxation but also imposes restrictions on the use of certain goods and service in a way desirable and respectable for a healthy state of society. To restrict the consumption of harmful goods – excise duty on tobacco, liquor etc. is imposed to restrict the consumption of these harmful goods. On the other hand, there are import and export duties which also raise public revenue but their specific objectives are otherwise. Import duties (taxes) are levied in order to restrict imports of these goods which may harm the infant industries in the country. Similarly, luxury goods may be taxed heavily while being imported so as to divert the national funds to some other forms of production necessitated inside the country.
3)      Reduction of Inequalities in Income and Wealth: Taxation reduces the inequality of income and wealth. One of the chief characteristics of underdeveloped countries is that there is a vast gap between the income of persons in the highest income group and of those in the lowest income group. That is why one of the objectives of taxation is to redistribute income and wealth in such a way as to ensure more just and equitable distribution.
4)      Promotion of Capital Formation: It helps in the promotion of capital formation. In underdeveloped and developing countries, one of the main objectives of taxation is to make savings more dynamic and promote capital formation. Thus, the savings can be easily directed towards production and capital formation through the assistance of taxation.
5)      Business Stability and Maintaining Full Employment: Taxation brings business stability and maintain full employment conditions. Low rate taxation during a business depression shall accelerate more income to the people and help in raising demand and, thus, revive business activity. On the contrary, high rates of taxes and additional taxes may be useful to check inflationary pressure on prices.
6)      Political Objectives: In democratic countries taxation is used as weapon for attaining political objectives. For instance, lower and middle-class voters may be attracted by imposing high taxes on rich people and luxury goods and nominal or no taxes on goods consumed by poor and middle-class people. Thus, it also fulfils the need of political objective in a country.
7)      Increase in National Income: Taxation increases the national income. Tax is the main source of the govt. income. This income is used for productive purposes and thereby overall production is increased. This increase in production leads to increase in national income of the country along with increase in per capital income.
8)      Restriction on Unnecessary Consumption: Taxation is an effective tool to restrict the unnecessary consumption particularly of harmful commodities, such as wine, cigarettes, biris, bhang etc. When heavy tax is imposed on such commodities, the consumption of such commodities are automatically reduced. According to A.P. Lerner, “Individuals should be taxed only to the extent to make the tax-payer poorer.”
9)      Proper Standard: Another objective of taxation is the maintenance of proper standard. According to A.P. Lerner, “Taxes should not be imposed simply because the govt. needs money. Economic transaction should be taxed only when it is thought desirable to discourage these transactions. Individuals should be taxed only when it is desirable to make the tax-payer poorer.”
4. (a) Explain the main objectives and important provisions of the Consumer Protection Act, 1986.         4+12=16
Ans: OBJECTIVES OF CONSUMER PROTECTION ACT, 1986: The main objective of the act is to provide for better protection of consumers. Unlike existing laws which are punitive or preventive in nature, the provisions of this Act are compensatory in nature. The act is intended to provide simple, speedy and inexpensive redressal to the consumers' grievances, and reliefs of a specific nature and award of compensation wherever appropriate to the consumer.
The objectives of the Consumer Protection Act are as follows:
1)      To assist countries in achieving or maintaining adequate protection for their population as consumers;
2)      To facilitate production and distribution patterns responsive to the needs and desires of consumers;
3)      To encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers;
4)      To assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers;
5)      To facilitate the development of independent consumer groups;
6)      To further international cooperation in the field of consumer protection;
7)      To encourage the development of market conditions which provide consumers with greater choice at lower prices.
Important Provisions of Consumer Protection Act
Consumer is a person who uses the goods. According to the Consumer Protection Act, 1986, a consumer is one:
a)      Who buys goods or hires services for consideration,
b)      Who uses the goods or hired services with the approval of the buyer or hirer of the service,
c)       Who uses the goods/services to earn livelihood by self-employment.
Who is not a consumer?
a)      An applicant for a passport has been held to be not a consumer.
b)      An applicant for ration card is not a consumer.
c)       The beneficiaries of municipal services are not in the category of consumers.
Complaint: A complaint before an appropriate consumer forum can be made by complainant who can be:
a)      Any consumer,
b)      Any registered consumer association,
c)       Central/state govt.,
d)      One or more consumer on behalf of many consumer having same interest,
e)      Legal representative of deceased consumer within two years.
"Complaint" can be made in the following cases:
a)      An unfair trade practice or a restrictive trade practice has been adopted by any trader;
b)      The goods suffer from one or more defect;
c)       The services suffer from deficiency in any respect;
d)      Price charged for the goods mentioned in the complaint is in excess of the price fixed under any law.
e)      Goods which will be hazardous to life and safety.
Procedure for filling complaint
The complainant or his authorised agent can present the complaint in person or send it by post to the appropriate forum or Commission, as the case may be, within a period of 2 years from the date on which the cause of action has arisen. No fee is charged for filing a complaint before the District Forum or the State Commission or the National Commission. A complaint should always be supported and verified by an affidavit.
The District Forum, State Commission and National Commission are required to decide complaints, as far as possible, within three months from date of notice received by the opposite parties. For those complaints which require laboratory analysis or testing of commodities, the period is extended to five months. The consumer has the right to file an appeal within 30 days with the next higher forum if he feels justice has not been done to him. If a consumer is not satisfied with the decision of national commission he can move to Supreme Court with the require fees within 30 days.
In case it is proved that there exists a defect in the goods or that the services rendered were deficient in nature the following remedies against the seller are available to the Consumer.
a)      To remove the defect pointed out by the appropriate laboratory from the goods in question or;
b)      Replace the goods with new goods of similar description, which shall be free from any defect;
c)       Return to the complainant the price of the goods or the charges for the services rendered and / or;
d)      Pay such amount as compensation for any loss or injury suffered by the Consumer or;
e)      Remove the deficiency in the service and/ or;
f)       Discontinue the unfair or restrictive trade practice and not to repeat them and / or;
g)      Not to offer hazardous goods for sale and / or;
h)      Withdraw the hazardous goods for sale and / or;
i)        Provide adequate costs to the parties.
Judicial machinery to deal with consumer grievances and disputes
Government of India has framed a set of laws and legislations to protect the interests of consumers and the most important act framed by Government is Consumer Protection Act, 1986. This act has provided three tier redressal agencies i.e. District Forum, State Commission and National Commission.
District Forum
State Commission
National Commission
It consists of a president and two other members.
It consists of a president and two other members.
It consists of a president and four other members.
Who can be president
A working or retired judge of District Court.
A working or retired judge of High Court.
A working or retired judge of Supreme Court.
Where the value of goods or services is up to Rs. 20 Lakhs.
Where the value of goods or services is more than Rs.20 Lakhs and up to Rs 1 crores.
Where the value of goods or services is more than Rs. 1 crores
(b) Describe the trends in composition and direction of India’s foreign trade in recent years.    8+8=16
Ans: Recent Trends and Developments in India’s Foreign Trade
I. Trade in Merchandise
EXPORTS (including re-exports)
In consonance with the revival exhibited by exports in the last four months, during January,2017 exports continue to show a positive growth of 4.32 per cent in dollar terms (valued at US$ 22115.03 million) and 5.61 per cent in Rupee terms (valued at Rs. 150559.98 crore) as compared to US$ 21199.02 million (Rs. 142568.31 crore) during January,2016.
Cumulative value of exports for the period April-January 2016-17 was US$ 220922.78 million (Rs. 1484473.55 crore) as against US$ 218532.64 million (Rs. 1420572.68 crore) registering a positive growth of 1.09 per cent in Dollar terms and positive growth of 4.50 per cent in Rupee terms over the same period last year.
Non-petroleum exports in January 2017 were valued at US$ 19422.86 million against US$ 19111.38 million in January 2016, an increase of 1.6 %. Non-petroleum exports during April - January 2016-17 were valued at US$ 196254.10 million as compared to US$ 192071.50 million for the corresponding period in 2016, an increase of 2.2%.
The growth in exports is positive for USA (2.63%),EU(5.47%) and Japan(13.43%) but China has exhibited negative growth of (-1.51%) for November 2016 over the corresponding period of previous year as per latest WTO statistics.
Imports during January 2017 were valued at US$ 31955.94 million (Rs. 217557.32 crore) which was 10.70 per cent higher in Dollar terms and 12.07 per cent higher in Rupee terms over the level of imports valued at US$ 28866.53 million (Rs. 194134.02 crore) in January, 2016. Cumulative value of imports for the period April-January 2016-17 was US$ 307311.86 million (Rs. 2065656.42 crore) as against US$ 326277.38 million (Rs. 2120158.57 crore) registering a negative growth of 5.81 per cent in Dollar terms and 2.57 per cent in Rupee terms over the same period last year.
Oil imports during January, 2017 were valued at US$ 8140.83 million which was 61.07 percent higher than oil imports valued at US$ 5054.29 million in January 2016. Oil imports during April-January, 2016-17 were valued at US$ 69062.66 million which was 5.81 per cent lower than the oil imports of US$ 73321.66 million in the corresponding period last year.
Non-oil imports during January, 2017 were estimated at US$ 23815.11 million which was 0.01 per cent higher than non-oil imports of US$ 23812.24 million in January, 2016. Non-oil imports during April-January 2016-17 were valued at US$ 238249.20 million which was 5.81 per cent lower than the level of such imports valued at US$ 252955.72 million in April-January, 2015-16. 
II. TRADE IN SERVICES (for December, 2016, as per the RBI Press Release dated 15th February 2017)
EXPORTS (Receipts): Exports during December 2016 were valued at US$ 13804 Million (Rs. 93729.71 Crore) registering a positive growth of 3.49 per cent in dollar terms as compared to positive growth of 1.72 per cent during November 2016 (as per RBI’s Press Release for the respective months).
IMPORTS (Payments): Imports during December 2016 were valued at US$ 8294 Million (Rs. 56316.59 Crore) registering a negative growth of 0.35 per cent in dollar terms as compared to positive growth of 8.37 per cent during November 2016 (as per RBI’s Press Release for the respective months).
MERCHANDISE: The trade deficit for April-January, 2016-17 was estimated at US$ 86389.08 million which was 19.82% lower than the deficit of US$ 107744.74 million during April-January, 2015-16.
SERVICES: As per RBI’s Press Release dated 15th February 2017, the trade balance in Services (i.e. net export of Services) for December, 2016 was estimated at US$ 5510 million. The net export of services for April- December, 2016-17 was estimated at US$ 48316 million which is lower than net export of services of US$ 53557 million during April- December, 2015-16. (The data for April-December 2015-16 and 2016-17 has been derived by adding April-December month wise QE data of RBI Press Release).
OVERALL TRADE BALANCE: Overall the trade balance has improved. Taking merchandise and services together, overall trade deficit for April- January 2016-17 is estimated at US$ 38073.08 million which is 29.7 percent lower in Dollar terms than the level of US$ 54187.74 million during April-January 2015-16. (Services data pertains to April-December 2016-17 as December 2016 is the latest data available as per RBI’s Press Release dated 15th February 2017)
5. (a) Analyse the structural reforms in Indian economy in recent years and its impact on the business environment of the country.                                               10+6=16
(b) What is Globalisation? Explain the gains derived by India as a member of WTO.                       6+10=16
Ans: Globalisation: Globalizations are the outcome of the policies of liberalisation and privatisation. Globalisation is generally understood to mean integration of the economy of the country with the world economy, it is a complex phenomenon. It is an outcome of the set of various policies that are aimed at transforming the world towards greater interdependence and integration. It involves creation of networks and activities transcending economic, social and geographical boundaries.
Globalisation involves an increased level of interaction and interdependence among the various nations of the global economy.  Physical geographical gap or political boundaries no longer remain barriers for a business enterprise to serve a customer in a distant geographical market.
In simple words, The term globalization can be defined as the opening one's economy toward the world economy. It means to integrate the domestic economy with world economy. The govt. of India under the prime minister ship of P. V Narasimha introduced liberalisation, privatisation and globalization during 1991 .Due to globalization the multinational corporations have been very popular. These corporations transact their business activities more than one countries. The features of globalization are given below. 
a)      Foreign direct investment upto 51% of foreign equity is allowed. 
b)      In respect of foreign technology agreement, automatic permission is provided to high priority industries upto 1 crore. 
c)       Free flow of goods and services in any country. 
d)      Free flow of capital and technology. 
e)      Rupee has been made fully convertible. 
World Trade Organisation and Its benefits to India
The WTO was established on January 1, 1995. It is the embodiment of the Uruguay Round results and the successor to GATT. 76 Governments became members of WTO on its first day. It has now 146 members, India being one of the founder members. It has a legal status and enjoys privileges and immunities on the same footing as the IMF and the World Bank. It is composed of the Ministerial Conference and the General Council.
The Ministerial Conference is the executive of the WTO and responsible for carrying out the functions of the WTO. The Ministerial Conference meets at least once every two years. The General Council is an executive forum composed of representatives of all the Members. The General Council discharges the functions of Ministerial Conference during the intervals between meetings of Ministerial Conference. The General Council has three functional councils working under its guidance and supervision namely:
a) Council for Trade in Goods.
b) Council for Trade in Services.
c) Council for Trade Related Aspects of Intellectual Property Rights (TRIPs).
Director-General heads the secretariat of WTO. He is responsible for preparing budgets and financial statements of the WTO. WTO has now become the third pillar of United Nations Organization (UNO) after World Bank and International Monetary Fund.
Services of WTO to its members including India
1.       The WTO shall facilitate the implementation, administration and operation and further the objectives of the Multilateral Trade Agreements and shall also provide the framework for the implementation, administration and operation of plurilateral Trade Agreements.
2.       It provides the framework for the implementation, administration and operation of the multilateral Trade Agreements relating to trade in civil aircraft, government procurement, trade in diary products and bovine meat.
3.       The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreements.
4.       It administers the Understanding on Rules and Procedures governing the Settlement of Disputes of the Agreement.
5.       It cooperates with the IMF and the World Bank and its affiliated agencies with a view to achieving greater coherence in global economic policy-making.
6.       With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriate, with the IMF and IBRD and its affiliated agencies.
7.       The WTO shall administer the ‘Understanding the Rules and Procedures Governing the Settlement of Disputes’.
8.       The WTO shall administer the ‘Trade Review Mechanism’
Apart from these, the other benefits which India derived from WTO:
a)      Benefits from reduction of tariffs on exports.
b)      Improved prospects for agricultural exports because the prices of agricultural products in the world market will increase due to reduction in domestic subsidies and barriers to trade.
c)       Likely increase in the exports of textiles and clothing due to the phasing out of MFA by 2005.
d)      Advantages from greater security and predictability of the international trading system.
e)      Compulsions imposed on India to be competitive in the world market.

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