Business and Commercial Knowledge

GOVERNMENT POLICIES FOR BUSINESS GROWTH

After studying this chapter, you will be able to:

1. Highlight the pervasiveness of the influence of government policies on business.

2. Distinguish among government policies on the basis of their scope and impact.

3. Describe the major shifts in government policies on business since independence.

4. Explain the concept and importance of liberalization.

5. Explain the concept and measures of globalization policy.

6. Describe privatization as a source of new opportunities of business growth.

SUMMARY

This chapter elaborates the importance of government policies on business. The government policies in some cases help in facilitating business, whereas in many other cases they are restrictive, controlling and regulating in nature. After Independence, India followed a mixed economic policy. A large number of Government companies (popularly called Public Sector Undertakings or PSUs) existed beside the private sector companies. After sticking to this controlled economic model for a long period of time, Government of India ushered in an era of policy shift during 1991. This policy change was popularly referred to as LPG (Liberalization, Privatization and Globalization). With this policy shift, the equity market strengthened. A lot of Foreign Direct Investments (FDI) flown in different sectors of the Indian economy. These policy changes resulted in the metamorphosis of the Indian economy.