Impact of government legislations on business in india
Government in India plays a dominant role in the Indian business activity. It directs and regulates the private business and industry through various measures. These measures have been formulated as per the guidelines laid down in the Constitution of India (section 10.3). The regulatory policies and development plans pursued. in India fall into the following main categories.
- Assisting, encouraging, and directing private sector;
- Providing infrastructural facilities;
- Controlling private activity;
- Promoting public and joint sectors; and
- Formulating a planned framework for the development and stabilisation of the economy.
In a mixed economy like India the private and the public sectors operate in coordination with each other. The public sector is organised and managed along the socialist pattern. It provides the infrastructural facilities like transport, finance and banking for the development of the private business. The promotion, control and management of this sector is the exclusive responsibility of the government. A large part of the economy in India comprises the private sector that is allowed to function freely under the regulation of the government. Besides encouraging the private sector, Government of India controls the private sector through following policies.
- Industrial and licensing policies,
- Control and regulation of monopolies.
- Fiscal policy,
- Commercial policy,
- Price policy,
- Employment policy,
- Monetary policy,
- Export-import policy,
- Environment policy, and
- Foreign exchange policy.
All these measures interfere with the market mechanism so as to remove distortions in the system and to achieve the broader goals of rapid economic growth, expansion of employment opportunities, equity, and self-reliance. We will briefly discuss those policies that have a major influence on the managerial decisions.