2017 (September)
COMMERCE
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.
Or
(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.
Or
(b)
Critically evaluate the role of Multinational Corporation in the Indian
economy. 16
Ans:
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.
Or
(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.
REMEDIES/PROTECTION UNDER THE ACT
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.
|
Basis
|
District Forum
|
State Commission
|
National Commission
|
|
Composition
|
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.
|
|
Jurisdiction
|
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
|
Or
(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
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.
CRUDE
OIL AND NON-OIL IMPORTS:
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).
III.TRADE
BALANCE
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
Or
(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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