Business Environment

1. Bring out the nature and causes for globalization of industry.

Improved transport, making global travel easier. For example, there has been a rapid growth in air-travel,
enabling greater movement of people and goods across the globe.
Containerisation. From 1970, there was a rapid adoption of the steel transport container. This reduced the
costs of inter-modal transport, making trade cheaper and more efficient.
Improved technology which makes it easier to communicate and share information around the world. E.g.
internet. For example, to work on improvements on this website, I will go to a global online community, like
elance.com. There people from any country can bid for the right to provide a service. It means that I can often
find people to do a job relatively cheaply because labour costs are relatively lower in the Indian sub-continent.
Growth of multinational companies with a global presence in many different economies.
Growth global trading blocks which have reduced national barriers. (e.g. European Union, NAFTA, ASEAN)
Reduced tariff barriers encouraging global trade. Often this has occurred through the support of the WTO.
Firms exploiting gains from economies of scale to gain increased specialisation. This is an important feature of
new trade theory.
Growth of global media.
Global trade cycle. Economic growth is global in nature. This means countries are increasingly interconnected.
(e.g. recession in one country affects global trade and invariably causes an economic downturn in major
trading partners.)
Financial system increasingly global in nature. When US banks suffered losses due to sub-prime mortgage
crisis, it affected all major banks in other countries who had bought financial derivatives from US banks and
mortgage companies.
Improved mobility of capital. In past few decades there has been a general reduction in capital barriers,
making it easier for capital to flow between different economies. This has increased the ability for firms to
receive finance. It has also increased the global interconnectedness of global financial markets.
Increased mobility of labour. People are more willing to move between different countries in search for work.
Global trade remittances now play a large role in transfers from developed countries to developing countries.
2. Is economic planning necessary?
Economic planning
refers to any directing or planning of economic activity outside the mechanisms of the market. Planning is an
economic mechanism for resource allocation and decision-making held in contrast with the market
mechanism. Most economies aremixed economies, incorporating elements of market mechanisms and
planning for distributing inputs and outputs.[1] The level of centralization of decision-making ultimately
depends on the type of planning mechanism employed; as such planning may be based on either centralized
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or decentralized decision-making.[2]
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Economic planning can apply to production, investment, distribution or all three of these functions. Planning
may take the form of directive planning or indicative planning. An economy primarily based on central
planning is a planned economy; in a planned economy the allocation of resources is determined by a
comprehensive plan of production which specifies output requirements.[3]

Objectives of Economic Planning

Planning is adopted only in Socialistic and Communist countries and also in Mixed Economy
1. Planning decides in which direction the Country should go.
2. How much resources should be allotted to each sectors
3. How much to be produced for the present and future periods.
4. Planning helps the country to achieve what it can achieve in decades if it is left to natural transformation.
5. Planning helps to use the maximum utility of the scarce resources
6. Planning is headed by central committee and it decides the periods to be adopted for planning
7. Even in capital countries where such strict formalities is not adopted they still decide plan ahead for the
country
1. Increase in the Rate of Economic Development
One of the most important objectives of Economic Planning is to increase the rate of economic development.
Capital formation should be carried out. Infrastructure facilities should be extended and social overhead such
as education, technical training and health facilities should be increased. Planning in Pakistan should be done
keeping in mind that country is populous and there are too many people looking for jobs, hence labor
intensive projects should be given priority, which will absorb labor force and employment opportunities will
increase. Increase in employment will increase national income and per capital income. Standard of living of
people will raise and rate of domestic savings will increase.
2. Diversification of Economy
All sectors of economy should be given proper importance. No sector of economy should be neglected.
Pakistan is an agrarian country, the development of industry of Pakistan depends upon agriculture, therefore
more emphasis should be given to agriculture. Since population is too much and it is further increasing at a
fast rate, therefore production of food grains should be increased.
3. Price Stability
Increase in price level hits the poor and fixed income people very much, whereas decrease in price reduces
profit margins of the businessmen, which causes reduction in investment. One economic planning is to
maintain the price stability. Through planning equal distribution of national wealth be made. The society
should not be divided between "Haves and Have-nots"
4. Higher Standard of Living
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Economic Planning should ensure that good education; technical training and better medical facilities are
available to all the people of the country. Every one should be provided a reasonable accommodation. Thus
policy should standard of living of the masses.
5. Improving Balance of Payments
All out efforts should be done under planning that balance of payments continues to improve. Export oriented
and import substitutions industries should be given importance. Luxurious goods should be banned and small
and agro-based industries should be given concessions and facilities. Imports should be reduced and export
increased, in order to improve foreign exchange earnings. Dependence on foreign aid and grants should be
curtailed.

3. Discuss the role of culture factors in promoting business.

Until recently, culture was perceived as part of social policy and was not tied to economics. This approach
changes in the mid 1990s. Since that time, a growing impact of culture on the economy is observable – three
different trends are spoken of: the “economisation of culture”, “commodification of culture” and the
“culturalisation” of the economy. This is accompanied by a huge increase in the number of academic papers
and programmes concerning the subject of the economy and employment in the field of culture.

Investments undertaken in the field of culture – besides intangible, social profits – frequently have an
economic dimension as well. The subsidy amount for cultural undertakings is multiplied, owing to culture
industries, which contribute to increased employment and generate gross national product value. It should be
pointed out that investments in cultural infrastructure fulfil, just as other public expenditures, functions of
development multipliers.
Two effects of investments undertaken in the field of culture can be distinguished.
One of them is the expansion of the regional economic base that comprises an impulse for further
development. This development is expressed by improvement of the market and marketing situation of
existing commercial entities (e.g. a positive change in a region’s image), improvement in the standard of living
of residents (expansion of the cultural infrastructure and increased access to culture) as well as an increase in
the number of jobs associated with the investment realization process, and then with the functioning of new
elements of a region’s fixed assets.
The second effect results from the stimulating impact of public expenditures by income – demand multipliers.
Increasing the income of commercial entities and households, these expenditures stimulated additional
demand, which has a large impact on local markets for goods and services.

Culture industries also have a significant share in the economic development of societies and regions. One of
the most common definitions of the notion of a “culture industry” relates to all private businesses and
independent contractors active in publishing, artistic, music, film or audiovisual industries. This definition can
be expanded to other related products and services, for example to cultural tourism or the media. Besides the
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subject of action on affiliation to culture industries, earnings related criteria are decisive. The size of entities
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does not play a role here; they can be individual artists, small and mid-sized enterprises or large media
concerns.

Culture industries are characterised by a high level of innovation and creativity in the market, where most
goods and services cannot be properly substituted. Culture industries create jobs outside the public sector.
Various culture industry sectors in which mid-sized and small enterprises dominate, have large employment
potential and are strongly anchored in local communities and regional networks. Cultural industries are the
sector of the economy with the highest employment factor. They generate a large number of jobs, in an age
of cooling off or even stagnation of the world economy. The sector of culture industries is today, after
undergoing difficulties caused by over-investment in the dotcom and computer-network sector – the most
dynamically growing branch of the world economy. It creates strong economic incentives due to the high level
of final product transformation. Thus, it requires a highly qualified workforce, professionals of specific
specializations, employing university graduates of various majors, creating developmental conditions of
society educated at a high intellectual potential.

It should be emphasized that the EU encourages Member States to cooperate for the benefit of promoting
culture industries and to consider the role of the culture sector in creating new jobs. At the same time the EU
draws attention of the European Commission to the need to take culture industries into consideration in
Community activities and programmes, as well as to popularize information on the potential that structural
funds have for culture industries. This is demonstrated by EU interest in creating the largest support potential
for culture industries, especially in the framework of structural funds.

According to recent surveys, the share of added value generated in the culture sector in GDP in Poland equals
5,5%, and the sector share in creating GDP about 4,5%. Even more so, in papers of the European Commission,
the culture sector and culture industries are also perceived as the fastest growing sector of the economy,
generating jobs and significant income. According to European Commission reports, some 3,5 million persons
worked in the culture sector in European Union countries, and the share of this sector in creating GDP ranges
between 3-5 %.

According to the report titled Exploitation and development of the job potential in the cultural sector in the
age of digitalisation, in 1999 as much as 7,2 million workers were employed in the culture sector. In the year
1995-1999 the number of persons working in this sector increased on average by about 2,1% annually,
whereby the growth rate reached 4,8% annually in the case of persons working in jobs directly related to
creativity. The potential offered by the fast growing media and digital technologies market for the culture
sector warrants particular emphasis. It is expected that increased employment in culture sector jobs will be
characterised by continuously high trends – due to the growing demand for products and services generated
by the culture sector.
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According to the Eurostat Labour Force Survey data from 2002, employment in the field of culture equalled
2,5% of the total number of employees in the EU. The employment level in the field of culture rates from
1,4% in Portugal and Slovakia to 3,7% in Estonia. Furthermore, 40% of those working in the culture field have
a university education, which means – in comparison to 25% in other sectors – that people working in the
culture sector possess better education than the remaining workers in the EU.

According to the above data, workers in the culture sector comprise a high percentage of persons working in
the EU, which translates into a significant share of the culture sector in generating GDP.
In general, culture as a significant factor of economic growth
impacts on the housing and location attractiveness of regions for residents and investors,
determines the development of tourism (it is estimated that cultural tourism comprises nearly 70% of tourism
traffic worldwide),
creates the labour market,
is a significant contributor to GDP,
creates culture industries,
causes multiplier economic processes jointly defined by development of the social infrastructure,
jointly defines the metropolitan functions of cities,
conducive to the allocation of human resources in developing sectors
creates a positive image.
4. What is balanced regional development?
Meaning of Balanced Regional Development:
Balanced regional development is an important condition for the harmonious and smooth development of a
country. It does not imply equal development of all regions of a country. Rather it indicates utilisation of
development potential of all areas as per its capacity so that the benefit of overall economic growth is shared
by the inhabitants of all the different regions of a country.

Thus the regional balance implies uniform distribution pattern of the planned investment among different
regions of a country. Alternatively, regional balance demands distribution of investment in such a way so that
the regional rates of growth in different parts of the country be equally attained, eliminating the regional
disparities prevailing in the country.

Thus to attain regional balance, it is quite important that the backward regions should try to attain higher rate
of growth than that of developed areas.
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Balanced regional development does not indicate attainment of self-sufficiency of level of industrialization or
uniform economic pattern for each state rather it simply indicates wide spread diffusion of industry in
backward areas.
The balanced regional development is broadly guided by the people in backward areas which can be attained
simply through its development of agriculture, industry, infra-structure, trade and commerce. According to
Mumford, “it is a problem of increasing habitability, a problem of social and economic renewal.”
Thus by the term regional development, we mean economic development of all regions simultaneously,
raising their per capita income and living standards by exploiting their natural and human resources fully.
Considerations and Need for Balanced Regional Development:
Balanced regional development as a policy is considered both on economic, social and political grounds. The
policy is considered in order to redress inequalities between different regions of a country and also for raising
standard of living to a higher level at a uniform rate.

The Second Five Year Plan documents of India observed in this connection, “In any comprehensive plan of
development, it is axiomatic that the special needs of the less developed areas should receive due attention.
The pattern of development must be so devised as to lead to balanced regional development.”

Balanced regional development is having both economic and non- economic considerations.
Economic Considerations:
Balanced regional development is advocated mostly for the following three economic considerations:
(a) Utilisation of local resources:
Balanced regional development paves the way for optimum utilisation of resources available in different
regions of the country. Over concentration of industrial activity into certain centres leads to wastage of local
resources like raw materials, fuels, labour, skills, etc. for their non utilisation.
(b) Expansion of employment opportunities:
Employment opportunities in a country will be expanded uniformly at a satisfactory rate under balanced
regional development opportunities in different industries over different parts of the country.

(c) Utilisation of Infra-structural Facilities:

Balanced regional development paves the way for total utilisation of various infra-structural facilities like
means of transport and communications, power resources, irrigation facilities, educational and health facilities
developed in all the different regions of the country.
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Non-Economic Considerations:
The following are the two non-economic considerations of balanced regional development:

(a) Socio-Political Arguments:

Balanced regional development can remove those socio-political problems related to health, housing, law and
order, cultural decadence etc. arising out of concentration of industries at a few points. Moreover, it can avoid
the necessity of large scale emigration of labour to distant industrial centres through regional dispersion of
industrial activity.
Besides, balanced regional development can pave the way for an egalitarian society having negligible
differentials in per capita incomes and other parameters existing between classes and regions.
(b) Strategic Considerations:
Balanced regional development favours regional dispersion of industrial activities under strategic
considerations, i.e., under considerations of national defence and industrial security. Now-a-days,
concentration of industries at a few points is risky as it becomes easy targets of attack and bombardment
during wars.
Proper Strategy for Regional Development:
Development of backward regions requires a proper strategy to be adopted for attaining a balanced regional
development.
Adoption of a proper strategy includes:
(a) An examination of the existing criteria for the identification of backward areas of the country,
(b) Adoption of a selective and purposeful system of fiscal incentives so as to fulfill the basic objectives of
expansion of employment opportunities, utilisation of available local resources, exploitation of local
development potential, linkage effects, distributional impact, expansion of infra-structural facilities, etc.,
(c) Proper co-ordination of development strategy formulated by various agencies, viz., the central and State
Governments, financial institutions, private sector units, etc.,
(d) Adopting location specific and appropriate project oriented programmes having importance on growth
centre approach,
(e) Introducing a sustained programme of investment by the public sector to realise the objective of
employment expansion and income distribution, if) development of proper and adequate institutional
framework to attain the development of backward areas.

In this connection, Gunner Myrdal has rightly observed that, “inequality and the trend towards rising
inequality stand as a complex of inhibitions and obstacles to development and consequently there is an urgent
need for reversing the trend and creating greater equality as a condition for speeding up development.”
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Balanced regional development is a well known proven objective. All regions must develop itself along with
the national economy. Different regions can try to utilise its potential fully as an integral part of the country.
Thereby, with the advancement of national economy, all round regional development is attained.

Under the present circumstances, what is imperative is that in order to reduce regional imbalance, it is
necessary to exploit the natural resources of backward regions, to work continuously in those directions
where development is attained and also to attain a selective and judicious dispersal of the available resources
so as attain rational and balanced regional development.

5. State the credit control measures of the R.B.I.

1. The Bank Rate Policy:
From the very inception of the Reserve Bank of India (1935) until November 1951, the bank rate was kept
unchanged at 3 p.c.
However, since then, it has been raised from time to time. Bank rate remained virtually inoperative between
1981 and 1991 as the RBI pegged it at 10 p.c. for the period 1981-91.
It was raised to 11 p.c. on 3 July, 1991 and to 12 p.c. on October 1991 for curbing money supply and reducing
liquidity, credit and hence aggregate demand.
Reliance on bank rate on the part of the RBI has been greatly reduced. In the early months of 1997, we found
stringent monetary growth as well as some sort of ‘recession’ in industries. Seeing this, the RBI in June 1997
lowered down the bank rate from 12 p.c. to 10 p.c. in two stages. Again, in April 1998, bank rate was slashed
to 9 p.c., 8 p.c. in March 1999 and 7 p.c. in April 2000. It was raised to 7.50 p.c. in February 2001.
As some sort of price stability was achieved, the RBI kept on reducing the bank rate from time to since 2001.
Bank rate was lowered down to 6 p.c. in April 2003. However, from 2003 to the present time (i.e., January
2009), bank rate has been kept unchanged at 6 p.c.
In fact, the RBI has been emphasising less on the bank rate and putting greater reliance on repo rate and
reverse repo rate. Repo rate is the rate at which commercial banks take loans from the RBI by depositing
securities while reverse repo rate is the rate at which the RBI sells securities to the commercial banks. Increase
in repo rate means control over the money supply.

In November 2006, repo rate was raised to 7.25 p.c. and to 7.75 p.c. in October 2007 which the aim of
reducing liquidity of cash so that current inflationary tendencies can be curbed. In April 2008, both repo rate
and reverse repo rate have been kept unchanged at 7.75 p.c. and 6 p.c., respectively.

The second quarter of the current fiscal year 2008-2009 saw an ugly head of high dose of inflation with the
record rise in prices of crude oil ($ 147 per barrel), global rise in the prices of foodgrains. Indian economy wit-
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nessed an inflation rate of nearly 13 p.c. in September 2008. The RBI had to intervene in the money market to
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curb excess liquidity. It then raised repo rate to 8.5 p.c. in June 2008 and to 9 p.c. in September 2008. Reverse
repo rate had, however, been kept at 6 p.c.

Against the backdrop of recessionary tendencies developed in the banking industry, share market, etc. in mid-
October 2008, the RBI cut the repo rate to 8 p.c. on 20 October 2008. As these measures were considered to
be inadequate against the growing economic meltdown in India, the RBI kept on lowering repo rate to 6.5 p.c.
in December 2008 and again slashed to 5.5 p.c. on 2 January 2009. Likewise, reverse repo rate was reduced
from 6 p.c. in October 2008 to 5 p.c. in December 2008 and again to 4 p.c. in 17 January 2009.

2. Open Market Operations (OMOs):

The RBI Act has empowered the Bank to buy and sell government securities, treasury bills, other approved
securities and short-term commercial bills. But this provision has served very little purpose, largely due to the
absence of a organised bill market in the country. Moreover, the bulk of government securities in India are
held by institutional investors, notably commercial banks and insurance companies.

Consequently, dealings of the RBI in regard to open market operations are largely confined to them. However,
the RBI has not been using it as an anti-inflationary weapon. After economic reforms the RBI has been widely
undertaking switch operations purchase of one loan against sale of another.
This means this instrument has been reactivated by the RBI. Active use of OMO was made in 1993-95 to curb
inflationary tendencies. The RBI has had to divest government securities from its portfolio through the OMO.

3. Cash Reserve Ratio (CRR):

This is a very important and effective instrument of credit control. The RBI used this instrument for the first
time in 1960 when there was a sharp increase in commodity prices.
This technique of credit control has been used very frequently in recent years with a view to stabilising prices.
It was raised to 5 p.c. in June 1970. Since this measure had failed to yield necessary results, the cash reserve
ratio was raised again to 7 p.c. in September 1973.

Due to huge growth of liquidity in the economy over time, this ratio was raised from time to time. Following
the recommendations of the Narasimham Committee, the Government has decided to reduce CRR to a level
below 10 p.c. over a four-year period. By January 1997, CRR had been lowered down to 10 p.c. as suggested
by the Narasimham Committee. The CRR was reduced further from 10 p.c. to 9.5 p.c. in November 1997, and
again raised to 11 p.c. in August 1998 to reduce liquidity.
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Since then the RBI has been reducing it regularly as soon as stability in price level was reached. It was lowered
down to 4.50 p.c. in 2002-03 and again raised to 5.50 p.c. in January 2007 with the increase in oil price and low
rainfall.

Since then, we have been seeing a rise in the CRR almost regularly witnessing a high price rise. CRR had been
raised to 8 p.c. in May 2008 and again to 8.25 p.c. in May 2008, with no sign of drop in inflationary situation. In
order to control excess liquidity, the RBI raised CRR to 8.75 p.c. in July 2008 and to 9 p.c. in September 2008 so
as to check a high inflation rate of almost 13 p.c.

Meanwhile, in September-end 2008, the US economy plunged into deep recession, although its signs were
visible at least since March-April 2008. Its impacts were felt by the major economies of the world in late
September and early October. Several drastic measures had been taken by the US Government and many
other Governments of Europe, China, Japan, etc. for concerted action. Indian share market witnessed also
such cataclysm. Share prices plummeted down to an abnormally low level, thereby threatening the morale of
investors.
It had been estimated by the RBI that the banking industry was starving of liquidity to the tune of at least Rs.
90,000 crore. To prevent further erosion of confidence amongst investors and the banking industry, the RBI
decided immediately and that too without hesitation to take immediate measures to come out of the crisis. It
employed the most “directest” method of credit instrument to inject more liquidity in the banking industry
and mutual funds.
First, it lowered down CRR from 9 p.c. to 8.50 p.c. on October 6 and to 7.50 p.c. on October 10 so as to infuse
liquidity of Rs. 60,000 crore in banks. However, as the downhill in share market could not be prevented on
desired direction, further cut in CRR to 7 p.c. was made on October 14 to provide additional money of Rs.
40,000 crore in the banking industry.
The RBI had injected Rs. 1,25,000 crore in the economy but it had failed to check the exit of foreign
institutional investors from the stock market resulting in a drop in Sensex below 10,000 mark on 17 October
2008. Meanwhile, recessionaries tendencies deepened further.
To inject more liquidity, the RBI cut the CRR to 5.5 p.c. in November 2008 and to 5 p.c. in January 2009. We
will have to wait to a future date to get the desired results. However, only one good thing that is visible is that
the inflation rate has been showing some sort of decelerating trend. It came to down to less than 6 p.c. on end
January 2009.
4. Statutory Liquidity Ratio (SLR):
Apart from cash reserve requirements (CRR) that all commercial banks have to meet with the RBI, the Banking
Regulation Act of 1949 says that the banks are under obligation to invest a certain amount of gold and
unencumbered government and other approved securities as secondary reserve. This is called the SLR.
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However, since 1970, the RBI has been raising it gradually and banks are complying with it. It was raised to
38.5 p.c. in April 1990. The motive behind raising SLR over the past several years was the desire to mobilise
even larger resources through the so-called market borrowings in support of Central and State budgets.

Following the recommendations of the Narasimham Committee, SLR had been lowered down to the floor of
25 p.c. (October 1997). Consequent upon the amendment of the Banking Regulation Act in 2007, the statutory
floor of 25 p.c. has been removed and the RBI has been provided the discretion to prescribe the SLR at a lower
level. Accordingly, since 1 November 2008, the SLR stands reduced to 24 p.c.

5. Selective Credit Control (SCC):

The RBI has used this method for regulating the flow of credit of specific branches of economic activity and
thus check the misuse of borrowing facilities.
Commercial banks have been prohibited from extending credit for speculative hoarding of such commodities
by traders. This is the main thrust of selective controls.
SCC was first introduced in early 1956 as part of the RBI’s policy of ‘controlled expansion’. Usually, the
following commodities are covered by the SCC: foodgrains, major oil seeds and vegetable oils, cotton and
kapas, sugar, gur and khandsari, cotton textiles, including cotton yarn, manmade fibres and yarn, and fabrics
made out of manmade fibres (including stock-in-process)’.
There has been no change in the selective credit controls imposed by the RBI against price-sensitive essential
commodities in 1994- 95. During April 1996, there was an across- the-board liberalisation of selective credit
controls on bank advances against some price- sensitive essential goods.
One form of selective credit control introduced in 1965 was the Credit Authorisation Scheme. With the aim of
liberating and deregulating the financial system, the RBI abolished this scheme in 1998. The RBI no longer
relies on this technique of credit control.
6. Explain the role of SEBI in improving the functioning of stock exchanges.
Securities Exchange Board of India (SEBI) was set up in 1988 to regulate the functions of securities market.
SEBI promotes orderly and healthy development in the stock market but initially SEBI was not able to exercise
complete control over the stock market transactions.
SEBI
It was left as a watch dog to observe the activities but was found ineffective in regulating and controlling
them. As a result in May 1992, SEBI was granted legal status. SEBI is a body corporate having a separate legal
existence and perpetual succession.
Reasons for Establishment of SEBI:
With the growth in the dealings of stock markets, lot of malpractices also started in stock markets such as
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price rigging, ‘unofficial premium on new issue, and delay in delivery of shares, violation of rules and
regulations of stock exchange and listing requirements. Due to these malpractices the customers started
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losing confidence and faith in the stock exchange. So government of India decided to set up an agency or
regulatory body known as Securities Exchange Board of India (SEBI).

Purpose and Role of SEBI:

SEBI was set up with the main purpose of keeping a check on malpractices and protect the interest of
investors. It was set up to meet the needs of three groups.
1. Issuers:
For issuers it provides a market place in which they can raise finance fairly and easily.
2. Investors:
For investors it provides protection and supply of accurate and correct information.
3. Intermediaries:
For intermediaries it provides a competitive professional market.
Objectives of SEBI:
The overall objectives of SEBI are to protect the interest of investors and to promote the development of stock
exchange and to regulate the activities of stock market. The objectives of SEBI are:
1. To regulate the activities of stock exchange.
2. To protect the rights of investors and ensuring safety to their investment.
3. To prevent fraudulent and malpractices by having balance between self regulation of business and its
statutory regulations.
4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc.
Functions of SEBI:
The SEBI performs functions to meet its objectives. To meet three objectives SEBI has three important
functions. These are:

i. Protective functions
ii. Developmental functions
iii. Regulatory functions.
1. Protective Functions:
These functions are performed by SEBI to protect the interest of investor and provide safety of investment.
As protective functions SEBI performs following functions:
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(i) It Checks Price Rigging:

Price rigging refers to manipulating the prices of securities with the main objective of inflating or depressing
the market price of securities. SEBI prohibits such practice because this can defraud and cheat the investors.

(ii) It Prohibits Insider trading:

Insider is any person connected with the company such as directors, promoters etc. These insiders have
sensitive information which affects the prices of the securities. This information is not available to people at
large but the insiders get this privileged information by working inside the company and if they use this
information to make profit, then it is known as insider trading, e.g., the directors of a company may know that
company will issue Bonus shares to its shareholders at the end of year and they purchase shares from market
to make profit with bonus issue. This is known as insider trading. SEBI keeps a strict check when insiders are
buying securities of the company and takes strict action on insider trading.

(iii) SEBI prohibits fraudulent and Unfair Trade Practices:

SEBI does not allow the companies to make misleading statements which are likely to induce the sale or
purchase of securities by any other person.

(iv) SEBI undertakes steps to educate investors so that they are able to evaluate the securities of various
companies and select the most profitable securities.

(v) SEBI promotes fair practices and code of conduct in security market by taking following steps:

(a) SEBI has issued guidelines to protect the interest of debenture-holders wherein companies cannot change
terms in midterm.

(b) SEBI is empowered to investigate cases of insider trading and has provisions for stiff fine and
imprisonment.
(c) SEBI has stopped the practice of making preferential allotment of shares unrelated to market prices.
2. Developmental Functions:
These functions are performed by the SEBI to promote and develop activities in stock exchange and increase
the business in stock exchange. Under developmental categories following functions are performed by SEBI:
(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI tries to promote activities of stock exchange by adopting flexible and adoptable approach in following
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way:
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(a) SEBI has permitted internet trading through registered stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of issue.
(c) Even initial public offer of primary market is permitted through stock exchange.
3. Regulatory Functions:
These functions are performed by SEBI to regulate the business in stock exchange. To regulate the activities of
stock exchange following functions are performed:

(i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as
merchant bankers, brokers, underwriters, etc.
(ii) These intermediaries have been brought under the regulatory purview and private placement has been
made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer agents, trustees,
merchant bankers and all those who are associated with stock exchange in any manner.
(iv) SEBI registers and regulates the working of mutual funds etc.
(v) SEBI regulates takeover of the companies.
(vi) SEBI conducts inquiries and audit of stock exchanges.

The Organisational Structure of SEBI:

1. SEBI is working as a corporate sector.
2. Its activities are divided into five departments. Each department is headed by an executive director.
3. The head office of SEBI is in Mumbai and it has branch office in Kolkata, Chennai and Delhi.
4. SEBI has formed two advisory committees to deal with primary and secondary markets.
5. These committees consist of market players, investors associations and eminent persons.

Objectives of the two Committees are:

1. To advise SEBI to regulate intermediaries.

2. To advise SEBI on issue of securities in primary market.
3. To advise SEBI on disclosure requirements of companies.
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4. To advise for changes in legal framework and to make stock exchange more transparent.
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5. To advise on matters related to regulation and development of secondary stock exchange.

These committees can only advise SEBI but they cannot force SEBI to take action on their advice.

7. Evaluate the role of government in economic activity and its impact on business.
Governments create the rules and frameworks in which businesses are able to compete against each other.
From time to time the government will change these rules and frameworks forcing businesses to change the
way they operate. Business is thus keenly affected by government policy. Key areas of government policy that
affect business are:
Economic policy
A key area of government economic policy is the role that the government gives to the state in the economy.
Between 1945 and 1979 the government increasingly interfered in the economy by creating state run
industries which usually took the form of public corporations. However, from 1979 onwards we saw an era of
privatisation in which industries were sold off to private shareholders to create a more competitive business
environment.
Taxation policy affects business costs. For example, a rise in corporation tax (on business profits) has the same
effect as an increase in costs. Businesses can pass some of this tax on to consumers in higher prices, but it will
also affect the bottom line. Other business taxes are environmental taxes (e.g. landfill tax), and VAT (value
added tax). VAT is actually passed down the line to the final consumer but the administration of the VAT
system is a cost for business.
Another area of economic policy relates to interest rates. In this country the level of interest rates is
determined by a government appointed group - the Monetary Policy Committee which meets every month. A
rise in interest rates raises the costs to business of borrowing money, and also causes consumers to reduce
expenditure (leading to a fall in business sales).
Government spending policy also affects business. For example, if the government spends more on schools,
this will increase the income of businesses that supply schools with books, equipment etc.

Government also provides subsidies for some business activity - e.g. an employment subsidy to take on the
long-term unemployed.
Legal changes
The government of the day regularly changes laws in line with its political policies. As a result businesses are
continually having to respond to changes in the legal framework.
Examples of legal changes include:
i. The creation of a National Minimum Wage which has recently been extended to under-18's.
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ii. The requirement for businesses to cater for disabled people, by building ramps into offices, shops etc.
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iii. Providing increasingly tighter protection for consumers to protect them against unscrupulous business
practice.
iv. Creating tighter rules on what constitutes fair competition between businesses.
Today British business is increasingly affected by European Union (EU) regulations and directives as well as
national laws and requirements.

8. Discuss the rationale for encouraging F.D.I.

Introduction
Foreign Direct Investment (FDI) in developing countries in the 1990's was the leading source of external
financing and has become a national developmental strategy for almost all countries in the world as a vehicle
for technology transfer and an important source of nondebt inflows for attaining competitive efficiency in
creating a meaningful network of global interconnections. FDI is an effective way to lead developing countries
in their march towards economic development. It opens up new opportunities to home countries to optimise
their earnings by employing their idle resources. India also adopted the same strategy by creating conducive
environment for foreign capital. To ensure this, the Government deliberately created a trade deficit within
limit on current account. The Government thus aims to enlarge the scope of FDI in India in a selective and
smooth manner. India is also a signatory in World Trade Organisation and is thus bound to open market for
services which includes trade also.
Liberalisation, in its very philosophy, is good for consumers and provides them the status of 'kings'. The
opportunities of competition (national vs. foreign) always matter for efficiencies. Choice, better quality and
services as well as downward pressure on prices outweigh other possible negative impacts. During 1991,
whenever and wherever competition was allowed to seep-in, this elementary proposition of economics got its
empirical proof. Retail sector today straddles as assorted segments. Food is its important segment. Farmers
should get higher prices; without consumers paying higher prices. There is thus a need to reform the retail
trade in India. There are gainers and there are losers from the reform process. But one should try to look at
that side of the picture where gains are accruing to the maximum segments of the economy. One should also
have faith in the resilience of the system. System gradually modifies itself according to the changed
circumstances to ensure its minimum losses. The present paper traces the ongoing debate regarding opening
of retail trade to FDI. It provides a strong analytical and rational framework to judge the arguments regarding
the liberalisation process.

FDI Policy in Retail Trade In India

India being a signatory to World Trade Organisation's General Agreement on Trade in Services, which include
wholesale and retailing services, had to open up the retail trade sector to foreign investment. There were
initial reservations towards opening up of retail sector arising from fear of job losses, procurement from
international market, competition and loss of entrepreneurial opportunities. However, the government in a
series of moves has opened up the retail sector slowly to Foreign Direct Investment (FDI). In 1997, FDI in cash
16

and carry (wholesale) with 100% ownership was allowed under the Government approval route. It was
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brought under the automatic route in 2006. 51% investment in a single brand retail outlet was also permitted
in 2006. Until 2011, Indian Central Government denied FDI in multibrand retail, forbidding foreign groups from
any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited
to 51% ownership, provided the total investment by foreigners in the company is at least $100 million. In
November 2011, India's Central Government announced retail reforms for both multi-brand stores and single-
brand stores. These market reforms paved the way for retail innovation and competition with multi-brand
retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The
announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011,
under pressure from the opposition, Indian Government placed the retail reforms on hold till it reaches a
consensus. But, finally the Central Government opened up the Indian retail trade for foreign capital. …
9. Discuss the responsibility of business towards stake holders.
Profitability
The main responsibility of small and large business managers is to run profitable businesses and generate cash
flow over the long term. Managers often have to meet certain performance metrics, such as profit margin,
annual sales growth and return on investment. Managers can drive profitability by increasing sales, managing
costs or a combination. Innovation, targeted marketing and effective product positioning can lead to sales
growth, while managing overhead costs and improving processes can result in reduced costs. Companies can
also achieve sales growth by seeking out new geographic markets or by acquiring competitors with
complementary products.
Disclosure
Managers should provide full and timely disclosure of relevant information to stakeholders. Senior
management and investors need timely and comprehensive financial information to make investment
decisions. Regulatory authorities rely in part on company disclosures to verify compliance with government
regulations. Employees, suppliers and customers need to know any bad news immediately so that they can
make alternative plans. The bad news may include the sudden loss of a major customer, introduction of new
products by competitors, or adverse regulatory decisions. By disclosing the bad news promptly, managers
demonstrate respect for their stakeholders.
Ethics
Companies should have codes of ethics for their managers and employees. These codes should govern how
managers deal with their stakeholders, such as treating suppliers fairly, providing customers with advance
warning of problems with their orders and staying true to corporate values, such as not collaborating with
companies that employ child labor or ignore environmental laws. Companies should train new and existing
employees on these ethics codes and publish the documents on their internal websites. Managers should
consult with employees when drafting ethics guidelines because consultation facilitates implementation.
Considerations
For a small business, the owner might be able to manage all the stakeholder relationships. However, as small
businesses grow in size and complexity, the number of stakeholder relationships can grow exponentially,
making it impossible for one person to manage all of them effectively. Support structures for managing
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stakeholders include investor relations departments, public relations managers and dedicated senior
managers, such as vice presidents of government and community relations.
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10. Bring out the role of (a) board of directors and (b) capital market in bringing out honest business practices.
The roles of the board of directors include :-
Establish vision, mission and values
Determine the company's vision and mission to guide and set the pace for its current operations and future
development.
Determine the values to be promoted throughout the company.
Determine and review company goals.
Determine company policies
Brefi Group facilitates corporate retreats to help boards review strategy or develop vision, mission and values
statements.
Set strategy and structure
Review and evaluate present and future opportunities, threats and risks in the external environment and
current and future strengths, weaknesses and risks relating to the company.
Determine strategic options, select those to be pursued, and decide the means to implement and support
them.
Determine the business strategies and plans that underpin the corporate strategy.
Ensure that the company's organisational structure and capability are appropriate for implementing the
chosen strategies.
Brefi Group's free e-course includes modules to help you set strategy:

PEST and SWOT analyses

Determining strategic options
Strategies and plans
Delegate to management
Delegate authority to management, and monitor and evaluate the implementation of policies, strategies and
business plans.
Determine monitoring criteria to be used by the board.
Ensure that internal controls are effective.
Communicate with senior management.
Brefi Group's free e-course includes a module on delegation to management. You could subscribe to the e-
18

course, or access the module here.

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Exercise accountability to shareholders and be responsible to relevant stakeholders
Ensure that communications both to and from shareholders and relevant stakeholders are effective.
Understand and take into account the interests of shareholders and relevant stakeholders.
Monitor relations with shareholders and relevant stakeholders by gathering and evaluation of appropriate
information.
Promote the goodwill and support of shareholders and relevant stakeholders.
Find out more about corporate governance.

Responsibilities of directors
Directors look after the affairs of the company, and are in a position of trust. They might abuse their position
in order to profit at the expense of their company, and, therefore, at the expense of the shareholders of the
company.
Consequently, the law imposes a number of duties, burdens and responsibilities upon directors, to prevent
abuse. Much of company law can be seen as a balance between allowing directors to manage the company's
business so as to make a profit, and preventing them from abusing this freedom.
Directors are responsible for ensuring that proper books of account are kept.
In some circumstances, a director can be required to help pay the debts of his company, even though it is a
separate legal person. For example, directors of a company who try to 'trade out of difficulty' and fail may be
found guilty of 'wrongful trading' and can be made personally liable. Directors are particularly vulnerable if
they have acted in a way which benefits themselves.

The directors must always exercise their powers for a 'proper purpose' – that is, in furtherance of the reason
for which they were given those powers by the shareholders.
Directors must act in good faith in what they honestly believe to be the best interests of the company, and not
for any collateral purpose. This means that, particularly in the event of a conflict of interest between the
company's interests and their own, the directors must always favour the company.
Directors must act with due skill and care.
Directors must consider the interests of employees of the company.
Concept and Meaning of Capital Market
Capital Market is one of the significant aspect of every financial market. Hence it is necessary to study its
correct meaning. Broadly speaking the capital market is a market for financial assets which have a long or
indefinite maturity. Unlike money market instruments the capital market instruments become mature for the
period above one year. It is an institutional arrangement to borrow and lend money for a longer period of
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time. It consists of financial institutions like IDBI, ICICI, UTI, LIC, etc. These institutions play the role of lenders
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in the capital market. Business units and corporate are the borrowers in the capital market. Capital market
involves various instruments which can be used for financial transactions. Capital market provides long term
debt and equity finance for the government and the corporate sector. Capital market can be classified into
primary and secondary markets. The primary market is a market for new shares, where as in the secondary
market the existing securities are traded. Capital market institutions provide rupee loans, foreign exchange
loans, consultancy services and underwriting.

Functions of Capital Market

squareSignificance, Role or Functions of Capital Market
Like the money market capital market is also very important. It plays a significant role in the national
economy. A developed, dynamic and vibrant capital market can immensely contribute for speedy economic
growth and development.

Let us get acquainted with the important functions and role of the capital market.
Mobilization of Savings : Capital market is an important source for mobilizing idle savings from the economy. It
mobilizes funds from people for further investments in the productive channels of an economy. In that sense
it activate the ideal monetary resources and puts them in proper investments.
Capital Formation : Capital market helps in capital formation. Capital formation is net addition to the existing
stock of capital in the economy. Through mobilization of ideal resources it generates savings; the mobilized
savings are made available to various segments such as agriculture, industry, etc. This helps in increasing
capital formation.
Provision of Investment Avenue : Capital market raises resources for longer periods of time. Thus it provides
an investment avenue for people who wish to invest resources for a long period of time. It provides suitable
interest rate returns also to investors. Instruments such as bonds, equities, units of mutual funds, insurance
policies, etc. definitely provides diverse investment avenue for the public.
Speed up Economic Growth and Development : Capital market enhances production and productivity in the
national economy. As it makes funds available for long period of time, the financial requirements of business
houses are met by the capital market. It helps in research and development. This helps in, increasing
production and productivity in economy by generation of employment and development of infrastructure.
Proper Regulation of Funds : Capital markets not only helps in fund mobilization, but it also helps in proper
allocation of these resources. It can have regulation over the resources so that it can direct funds in a
qualitative manner.
Service Provision : As an important financial set up capital market provides various types of services. It
includes long term and medium term loans to industry, underwriting services, consultancy services, export
finance, etc. These services help the manufacturing sector in a large spectrum.
Continuous Availability of Funds : Capital market is place where the investment avenue is continuously
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available for long term investment. This is a liquid market as it makes fund available on continues basis. Both
buyers and seller can easily buy and sell securities as they are continuously available. Basically capital market
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transactions are related to the stock exchanges. Thus marketability in the capital market becomes easy.
These are the important functions of the capital market.
squareConclusion on Capital Market
The lack of an advanced and vibrant capital market can lead to underutilization of financial resources. The
developed capital market also provides access to the foreign capital for domestic industry. Thus capital market
definitely plays a constructive role in the over all development of an economy.

11. Explain the concept of business as a social system.

“Social business” is a white-hot buzzword right now. However, there is little consensus as to what it actually
means. In a #socbizchat Twitter chat hosted by online magazine CMSWire last fall, top consultants, executives,
and marketers spent over an hour debating the question, “What is Social Business?” without gaining an inch of
common understanding.
It seems that most people know it when they see it, but can’t tell you what it is in layman’s terms. While I
appreciate the definitions that are out there, many are not packaged for the masses of businesses and non-
profit organizations trying to harness the power of social networks. Take, for instance, the following definition
by Cheryl Burgess:
“Social businesses implement social technologies, strategies and processes that span across their entire
enterprise, creating and optimizing collaborative ecosystems of employees, customers, partners, suppliers,
communities and stakeholders in a safe and consistent way.”
While I agree with Cheryl’s definition and most of the points in her post, the definition lacks the clarity and
succinctness to be sticky in the minds of everyday businesspeople. The potential of social business and online
communities is so exciting and far-reaching that I often suffer from the same verbal excesses when describing
how social business impacts organizations.
In an effort to make the concept of social business more clear, the team at Socious has developed a clear
definition of social business.
What is Social Business?
Concise? Yes. Simple? No. This definition is as expansive as the business problems that online communities
solve. For further clarity, let’s break this definition into its parts.

Organization
Social business is the ability for an ORGANIZATION to use its communities to improve its performance.
An organization could be a Fortune 500 corporation, private company, or a nonprofit, such as an association or
user group. Obviously, organizations are made up of people. Since people are coming at social business from
all angles and organizational situations, the definition could easily be brought down to an individual or
departmental level. In that case, social business would be the ability for you or your group to use your
organization’s communities to do your job better. However, in most contexts, social business refers to
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improving the results for the business or organization as a whole.

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Communities
Social business is the ability for an organization to use its COMMUNITIES to improve its performance.
While online communities are the most common type of community, organizations have always had
communities – communities of employees, communities, of customer, communities of suppliers, etc. Until the
last decade, these communities where offline and had limited opportunities for collaboration and collective
support. These days, it is rare for a community to not have an online component. Even if your community is
based around a conference or live event, a significant amount of engagement occurs online before, during,
and after the event.
In this definition, communities refers to the many communities that exist in and around an organization. These
can include:
Customers or members
Prospects
Employees
Channel partners
Suppliers
Volunteers
Product partners and consultants
Analysts and media
Donors
Conference attendees
User groups
Chapters
Grassroots supporters
In addition, an organization’s communities can exist in many forms online – from engaging your market and its
media in an active Twitter community to a private online community where customers can find the
information and people they need to be successful with your products or services.
Performance
Social business is the ability for an organization to use its communities to IMPROVE ITS PERFORMANCE.
In the same way that this definition is purposefully broad enough to apply to many types of organizations, it
also address the wide array of goals that an organization can have at any given time. Here are a few examples
of performance indicators:
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Improving brand perception

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Finding new customers

Passing favorable legislation
Closing more sales faster
Improving customer satisfaction while reducing support costs
Increasing customer retention and repeat business
Communities Often Overlap to Improve Performance
The measurable impact that social business has on an organization is not contained in silos. Communities are
often most impactful when brought together with other communities. For an example, collaboration among
your customer service teams, customers, and partners could help to control support costs. In another
example, members of an association and the membership services staff can work together to increase the
value of joining the organization to prospective members by providing exclusive content and expertise in the
online community.
12. Explain the entry strategies of any one Indian global company.
One of the first and most important issues for a multinational considering doing business in India is ownership
structure. Multinationals that enter the country on a stand-alone basis, our experience shows, generally fare
better than those that use Indian partners to create joint ventures. Most global companies that opted for
them have exited the Indian market, while some have purchased the stakes of their partners or established
majority shareholdings. One global consumer goods company, for example, bought out its Indian partner
because of differences over product marketing and brand positioning. The multinational is now doing well in
all the segments where it competes.
Multinationals that choose joint ventures as their entry vehicle into India think that a local partner can better
navigate the market’s complexities and manage regulatory issues. There is some truth to that idea, but in
practice, joint ventures often tend to emphasize short-term performance over long-term goals, long-term
commitment, and an alignment between the interests of the global and local partner. Without management
control and a clear path to ownership, global companies may have no alternative but to exit the market. Joint
ventures can be beneficial in some cases, but they are not essential if a multinational regards India as a priority
market and regulations allow the company to have majority or complete. When joint ventures are necessary,
multinationals should ensure that they have real management control and a clear path to ownership should
that become necessary.
Partnerships with Indian companies need not be limited to joint ventures— multinationals should also
consider strategic alliances with local players. An international technology manufacturer and an Indian
company, for example, set up a local manufacturing plant that went on to double its production volumes
every 18 months. This achievement set it on the path to becoming the largest of the multinationals’ plants in
India, with the world’s lowest costs and high profit margins. From the multinational’s point of view, the
success of this strategic alliance moved India from the “nice to have” category into an essential part of its
international operations.
A global pharmaceutical company established itself as a stand-alone entity but developed strategic alliances
with a local manufacturer in licensing and supplies for the generic and off-patent segments. These agreements
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helped the multinational to enter India’s fast-growing market for low-cost, easily accessible branded generics
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and off-patent medicines.

Winning in India requires an intense and concerted effort. The multinationals need top leaders willing to make
a commitment to the Indian operation and to localize and empower it. They must adapt to the Indian
consumer’s demand for innovative, low-cost delivery systems and high value for money products, as well as
identify and implement an appropriate ownership model. Finally, senior executives of these companies should
not neglect the management of local stakeholders, such as regulators and activists. The best efforts to localize
an Indian business model will come to naught if these influential groups are overlooked.

13. How do you explain the failure of governance mechanisms a Satyam?

Suspected Intention of Acquisition
Satyam is the India's fourth-largest software development and information technology(IT) consulting
company. (2008)

2008 Financial Crisis

Maytas Infra and Maytas Properties were two real estate and property companies promoted by two
sons of Satyam's Chairman.
The Corporate Governance Mechanisms Adopted by Satyam
Corporate Governance mechanisms:

1. Comprised by owners, managers and board

2. Separation of ownership and control
3. Lower the agency cost, not to interfere the operation, maximize the profits
Responsibility of Audit Committee, the Internal and External Auditors
An internal audit by the team headed by the CFO

An external audit, performed by PricewaterhouseCoopers(PwC)

The audit committee, headed by an independent board member

Loopholes of Government's Regulations and Laws
Characteristics of the board of directors
The right of appointment and removal

Vote down the falsification of financial statement

System of reward and penalties

Diversification of executive directors

Separation of supervision and management

Limitation of the time on supervision

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Diversification of the board

 The Scandal of Satyam
Company Background
Satyam was India's fourth largest information technology group by revenue

Satyam won numerou award for innovation, governance, and corporate accountability.

Unfortunately, less than five months after winning the Global Peacock Award, Satyam became the
centerpiece of a massive accounting fraud.
Result of the Scandal
Accounting Scandal
A corporate scandal occurred in India in 2009.

Ramaliga Raju-Chairman created INR 71.36 billion in the financial statement.

From past 7 years accounting books were cooked:

1.Profits were inflated
2.Understated liability and overstated debts
3.Accrued interests
4.The gaps in the balance sheet are due to the inflated profits
14. Do you think that India is a case of growth without prosparity? justify your answers.
Economic growth in India has left many without water:

About 60 per cent of aquifers in India will be in a critical condition in another 15 years if the trend of
indiscriminate exploitation of ground water continues, the World Bank has said in a report.

In its latest report on the country’s ground water level, the bank has expressed concern over the rate
of depletion of water table in the country and has called for immediate corrective measures.

Around 29 per cent of ground water blocks in the country are semi-critical, critical or overexploited and
the situation is deteriorating rapidly. By 2025, an estimated 60 per cent of ground water blocks will be
in a critical condition. Climate change will further strain ground water resources, the report said.

15. How do u explain the growing resistance to land acquisition for industries in India ?
In India, protests by farmers about land acquisition in the country's most populated state have focused
attention on the growing conflict about land, as the economy modernizes. The growing resistance by rural
communities about giving up their land for industrial expansion is throwing up new challenges for India.
The violent protests in the northern state, Uttar Pradesh, earlier this month were sparked by demands by
farmers for higher compensation for land taken from them to build a highway connecting New Delhi with the
tourist hub, Agra, home to the Taj Mahal. Three farmers were killed in the demonstration.
The clashes are the latest in a series of protests which have erupted in many parts of the country about efforts
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to acquire farmland for infrastructure projects or industry.

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As India industrializes, businesses are in search of more land to build factories. The government is under
pressure to quickly improve rickety infrastructure and build more highways, power stations and railways to
meet the needs of an expanding economy.
The only free land available is populated, fertile farm land across rural India. Moving farmers and tribal
communities off the land is not always proving to be easy.
Farmers complain
Some farmers complain that compensation given for their land is too low. And, they worry about loss of their
livelihood in a country where two thirds of the billion-plus people live off the land.
Devinder Sharma of the Forum for Biotechnology and Food Security in New Delhi says promises of
employment in the new industries do not materialize for the bulk of the farmers whose land is taken away. He
says many of them are driven to an uncertain future in cities.
He says the new economy cannot sustain the kind of employment which farming provides in a populous
country.
"No industry or group of industries can provide the kind of jobs or the scale of jobs India needs," Sharma said.
"In a country which has 600 million farmers including their families, I don't think any industry has the
capability or even industrial sector has the capability to provide even jobs to even one-tenth of that
population."
However, businesses argue that an expanding industry can provide millions of new jobs and transform India to
an industrialized nation.
Hurdles
The hurdles in acquiring land are slowing down investment and industrial expansion. Mining and steel projects
proposed by big companies, such as ArcelorMital, Posco, and Vedanta Resources, are in hiatus as efforts are
made to resolve conflicts with local populations. Plans for new power plants, roads and special economic
zones to promote trade are facing similar hurdles.

An economist at the Federation of Indian Chambers of Commerce and Industry, Anjan Roy, says the issue is
complex and needs answers which can address the interests of both sides. He says one of the suggestions is to
make the displaced rural communities stakeholders in the new industries.

"Possibly giving them some stake, for example while putting up land for a new mine, giving them a stake in the
mine, or some kind of shareholding in the industrial units which are coming up, that kind of gives a solution.
One has to try out many solutions, a combination of them," said Roy.

It is widely believed that Maoist rebels – regarded as India's biggest internal security threat – are gaining
26

influence as they tap the growing resentment in the countryside about land acquisition issues.
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Reports that local officials often collude with business interests to take away land from villagers against their
will has deepened such resentment.
Many food analysts also worry that handing over large chunks of farmland to industry could spark a food
security crisis in a country which has a large population to feed and where spiraling food prices already pose a
worry for millions of poor people.
Government stand
Indian Finance Minister Pranab Mukherjee told parliament recently that a balance will have to be struck
between the demands of industry and those of rural India.
"We shall have to ensure that the farmers are not disturbed, their interests are not jeopardized, because they
have to play the most positive role in respect of ensuring food security," Mukherjee said.
Indian authorities admit that there is need for new legislation to protect the interests of farmers. But two bills
which have been drafted are pending before parliament. These proposed laws are meant to ensure that
farmers get compensation for their land at the market price. They also address issues of rehabilitation, jobs
and training for those affected.
Development analysts say that the government has little time to lose in addressing these complex issues to
ensure that the transition from a country of small farmers to a modern economy is a smooth one.
16. Discuss the impact of FII’s in Indian capital market.
The Foreign Institutional Investors (FIIs) have emerged as noteworthy players in the Indian stock
market and their growing contribution adds as an important feature of the development of stock
market in India. To facilitate foreign capital flows, developing countries have been advised to
strengthen their stock market. As a result, the Indian stock markets have reached new heights and
became more volatile making the research work in this dimension of establishing the link between FIIs
and stock market volatility. Hence, it’s an interesting area of research to examine the role of FIIs in
Indian Capital Markets. Foreign institutional investors have gained a significant role in Indian stock
markets. The dawn of 21st century has shown the real dynamism of stock market and the various
benchmarking of sensitivity index (Sensex) in terms of its highest peaks and sudden falls. In this context
present paper examines the contribution of foreign institutional investment in sensitivity index
(Sensex). Also attempts to understand the behavioral pattern of FII during the period of 2009 to 2013
and examine the volatility of BSE Sensex due to FII. The data for the study uses the information
obtained from the secondary resources like website of BSE sensex and SEBI. We attempted to explain
the impact of foreign institutional investment on stock market. Also attempts to present the
correlation between FII and BSE Sensex. This research studies the relationship between FIIs investment
and stock indices. For this purpose India’s major index i.e. BSE Sensex is selected. This index would be
used for to represent the picture of India’s stock markets. So this project reveals the impact of FII on
the Indian capital market. The study has founded that the equity and debt return has a significant and
positive impact on FII, but given the huge volume of investment, foreign investors could play a role of
market makers ad book their profit, i.e. they can buy financial assets when the prices are declining
thereby jacking up the asset price and sell when the asset prices are increasing. The study suggest
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whenever there is inflow of FII investment we can see the raise in the index. Similarly whenever there
is pullback of investment by FII, there is bearish trend in the index movement.
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17. Do you agree with the view that India is trapped and static? Justify your answer.
18. Discuss the disconnect between economic performance and Government performance in the context of
India being a distributional coalitia.

19. Draw stakeholder map for Infosys

Infosys Limited (formerly Infosys Technologies Limited) is an Indian multinational corporation that
provides business consulting, information technology and outsourcing services. It has the main
headquarter in Bangalore, Karnataka.[2]
Infosys is the third-largest Indian IT services company by 2016 revenues,[3] and the fifth largest
employer of H-1B visa[4][5] professionals in the United States in FY 2013.[6] On 15 February 2015, its
market capitalisation was ₹ 263,735 crores ($42.51 billion), making it India's sixth largest publicly
traded company

20. Evaluate the performance of public enterprises in India.

The evaluation of the performance of public sector is rather difficult. Public enterprises should be evaluated in
terms of social cost-benefits rather than commercial profitability alone.

The performance of the public sector can be made on the following grounds:
1. The share of the public sector in the net domestic product has been steadily increasing. The public sector
accounts for one-fourth of the total income of the economy. The compound rate of annual growth of the
public sector was 6 per cent whereas that of the private sector was only 2.8 per cent.
2. If we evaluate the relative efficiency of investment in the public enterprises against the performance of
private enterprises, we find that private enterprises are, on an average, 2.5 times more profitable than public
enterprises.
For every hundred rupees invested, the private enterprise yields a return of Rs. 11.40, while the same amount
in the public enterprise yields only Rs. 4.70.
We must not forget that public enterprises are mostly concentrated in basic, core and heavy industries where
the rate of return is very low and also in sick enterprises taken over by the Government, such as the National
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Textile Corporation and Coal India Limited.

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The economic efficiency of a public sector industry should be considered in terms of the transformation of the
industrial structure, modernisation, higher labour productivity on a countrywide scale etc.
The fact is that a higher proportion of the value produced by the public sector industries is realised outside
this sector and it is therefore very difficult to estimate the efficiency of public sector enterprises in terms of
cost and profitability.
B.H. Dholakia advocates the adoption of the total factor productivity criterion to judge the efficiency of public
sector enterprises.
The criterion examines the contribution made by the enterprise to the country’s net national product in terms
of rent, wages and salaries, interest and profit.
Adopting this criterion Dholakia finds that over the period 1967-68 to 1975- 76, the overall economic
efficiency of the public enterprises increased at a rate of 2.44 percentage points per annum whereas that of
private sector enterprises could increase by only 0.59 percentage points per annum.
3. Share in Capital Formation:
Public sector has played an important role in capital formation. The share of the public sector in the total gross
fixed capital formation in the country was 41 per cent during the first and second Plans and 49 per cent during
the third Plan.
It reduced to 42 per cent in the fourth Plan and 40 per cent in the fifth Plan. But it again rose to 47 per cent in
the sixth Plan and 48 per cent in the seventh Plan.
It should be pointed out that investment in the private sector producing luxury goods should be evaluated
lower than the similar type of investment in the public sector which is engaged in the production of basic
goods and infrastructural services to the economy.
Considering this, capital formation in the public sector is very significant for a developing economy like India.
4. Public Sector Enterprises and Employment:
In India the organised sector is very small as it provides 10 per cent of the total employment in the economy
and about 90 per cent is provided by the unorganised sector.

The workers employed in the public sector constituted only 7 per cent of the total labour force in the country
and those employed in the organised private sector was 3 per cent. The number of persons employed in the
public sector enterprises stood at 23.05 lakhs as on March 31, 1991.

The public sector is a model employer which provides the workers better wages and other facilities compared
to the private sector. The public sector enterprises have also spent huge amount for the development of
townships around industries.
5. Public Sector and Foreign Exchange Earnings:
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Foreign exchange earnings of public enterprises have been substantial and they have also helped in saving
foreign exchange through their efforts at import substitution. Capital goods and industrial machinery which
were imported about three decades ago are now being manufactured in the country itself.
This has saved valuable foreign exchange. Public sector export earnings went up from Rs. 2143 crore in 1980-
81 to Rs. 6366 crore in 1989-90. In addition to actual exports by manufacturing units foreign exchange is also
earned from services rendered by air corporations and shipping companies etc.
6. Financial Performance:
The value of sales of public sector enterprises is an indicator of their contribution to the flow of goods and
services in the economy. The total turnover of public enterprises amounts to Rs. 1, 18,355 crore in 1990-91.
Public enterprises contribute to national exchequer in the form of interest on government loans, income tax
and excise duty. In 1990-91 Central Government units generated about Rs. 11,372 crore of resources; it
contributed about Rs. 1,400 crore towards tax and Rs. 4,100 crore towards interest.
As far as net profit after tax is concerned, the position was unsatisfactory up to 1980-81. However, the
situation improved and public sector made impressive profits. In 1981-82 net profit after tax was Rs. 445 crore
which went upto 3,789 crore in 1989- 90 but fell to Rs. 2,368 crore in 1990-91.

21. Outline the impact of External stakeholders on a business firm.

Business are complex pieces in the social ecosystem, both impacted by and impacting a wide variety of groups
in the external environment. As a leader or manager at an organization, understanding both internal and
external stakeholder needs is the central responsibility. Decisions should be made in a way that ensures all
stakeholders are considered.
External Stakeholders
There are quite few external stakeholders for business to keep in mind when making decisions and carrying
out operations. These include, but aren't limited to, customers, suppliers, creditors, communities,
governments and society at large:
Customers
The primary purpose of providing goods and services is to fill needs. Understanding the needs of an
organizations core customer base, and optimizing operations to best fill those needs, is therefore a significant
part of managing a business. Interacting with customers through social media, emails, storefronts, user testing
groups, and the delivery of services and goods is an important aspect of maintaining a strong community (and
a strong sense of what customers want from the organization).
Nowadays, big data plays a significant role in determining what users want. Through understanding trends,
habits and trajectories in user data, organizations can anticipate the needs of users and refine their value
proposition.
Suppliers
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Suppliers and other strategic alliances are interdependent, where the success of one will impact the success of
another. As a result, suppliers are closely related to organizations as key external stakeholders. Timely
payments, shipments, communication and operational processes is key to maintaining a strong relationship
with this stakeholder group.
Local community
Business can be a great benefit to a community, providing tax money, local access to unique goods and
services, jobs and community development programs. However, businesses can also be a drain on a
community through increasing traffic, creating pollution, hurting small businesses and altering real estate
prices. As a result, businesses must look at the needs of the community, and ensure that negative
repercussions are minimized while community engagement is maximized.

Government
Governments tax businesses, and therefore have a firm stake in a businesses success. Indeed, it could be
considered that governments are primary stakeholders, considering the profit motive involved. Governments
also provide regulatory oversight, ensuring that accounting procedures, ethical practices and legal concerns
are being handled responsibly by business representatives.

Broader Society
With the digital and global economy, businesses can have significant impacts on society at large. Companies
like Airbnb and Uber have transformed entire industries, creating dynamically different economies with a
wider variety of participants than ever. Walmart has substantially impacted the viability of small businesses in
many regions. What food is sold at fast food chains have huge impacts on global health. Manufacturing
facilities in developing nations are transforming entire ecosystems. Social networks are collecting vast
amounts of data. All of these concepts aren't intrinsically good or bad, they are simply impacts of business on
the broader world at large. Managing these to ensure outcomes are positive for society as a whole is a critical
responsibility.

Other
While other stakeholder groups could be discussed at length, these are a few of the key pillars in stakeholder
theory.
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22. Why does countries like Malaysia attract more FDI than India?
With increase in globalisation, the Malaysian economy that had put a freeze on the expansion of foreign
retailers in 2005 has also started to welcome FDI once again starting 2006. The local retailers thus, have found
themselves competing with large foreign players by targeting niche markets in their home economies. The
intense competition posed by foreign retailers has provided additional motivation for local retailers to
leverage on retail technology so as to better understand consumer purchasing behaviour, optimise operational
procedures in terms of cost minimisation and output maximisation and to enhance the overall efficiency of
retailing. The rapid expansion of foreign owned retailers such as Giant, Tesco, Ikea and Carrefour was initially
expected to dominate the retail landscape in Malaysia by 2010. However, it has been seen that even with the
existence of such multinational retailers the local retailers still continue to flourish in the economy of
Malaysia. As a part of the effort to promote goods made by local retailers, the government has imposed a
quota on goods displayed on foreign retail shop shelves to ensure that reasonable shelf space is given to
Malaysian manufacturers and retailers. Employment has risen steadily over time due to such foreign retailers.
Also the investment brought into Malaysia through retail sector has contributed largely to the development of
its infrastructure.
In India, the retail sector has played a phenomenal role throughout the world in increasing productivity of the
consumer goods and services. It is currently one of the largest industries in in various countries in terms of
employment and establishments. Most of the developed economies very much rely on their retail sector as a
driver for their growth. In India, retail industry is the largest among all industries contributing 10% of the
country’s GDP and almost 8% of its employments. It is one of the most dynamic and fast paced economies that
is considered a hub for FDI opportunities. Today, FDI which used to be viewed as unhelpful, negative and
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bringing inappropriate technology to developing countries has a radically different view from the beginning of
the period has emerged. FDI is now seen as beneficial and nearly all countries try to provide a welcoming
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climate for investment. Countries increasingly recognise that they can affect the attraction of FDI using both
general economic policies and appropriate specific FDI policies. However, at the same time as country
governments have begun to realise the positive aspects of FDI, a more cause and effect based view on FDI and
development has now emerged in the research community, which views the impact of FDI on economic
growth as not only positive or negative, but that the effects depend on the type of FDI, firm characteristics,
economic conditions and policies. The type and sequencing of general and specific policies in areas covering
investment, trade, innovation and human resources are now seen as crucial in affecting the link between FDI
and development. While FDI is often superior in terms of capital and technology, spillovers to local economic
development is not automatic. Appropriate policies to benefit from FDI include building up local human
resource and technological capabilities to raise the absorptive capacity. Besides this, the rising income and
convergence of consumer’s tastes and preferences, greater knowledge and demand for foreign brands and
emergence of retail credit facility will act as locomotives for the growth in demand for FDI in retail. This would
not only lead to the development of infrastructure in India, but would also help in improving employment,
purchasing power, credit facilities, etc. It would help debt ridden domestic companies such as Pantaloons,
Provogue, etc.
Hence, we conclude that FDI in retail in India has both pros as well as cons. The success of FDI, thus depends
on the policy structure developed by the government of India. The new policy given by the government of
India would provide a significant boost to the $28 Bn Indian retail market which is expected to reach $260 Bn
by 2020. With sluggish growth in the developed markets across the globe and Indian retailers being bogged
down by high debt and high cost of expansion, the new policy presents a win-win situation for both foreign
and Indian retailers. The stock markets also reflected the positive outlook for the sector, by pushing up some
retail stocks by up to 30% within 2 days of the announcement of such policy in 2011. The policies
implemented would positively impact a wide section of the Indian population. Consumers are expected to
save 5-10% on their regular household expenditure and get a wider choice of products. Farmers will get 10-
30% higher remuneration for their produce as back end infrastructure investment will eliminate the
middlemen. The infusion of capital and setting up of new stores will also provide a boost to real estate as well
as create 3-4 million new jobs in retail and a further 4-6 million jobs in logistics, contract labour, security, etc.
It would also help in the overall efficiency of Indian economy.
23. Define good corporate governance.
Corporate governance is the system of rules, practices and processes by which a company is directed and
controlled. Corporate governance essentially involves balancing the interests of a company's many
stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the
community. Since corporate governance also provides the framework for attaining a company's objectives, it
encompasses practically every sphere of management, from action plans and internal controls to performance
measurement and corporate disclosure.
!--break--Governance refers specifically to the set of rules, controls, policies and resolutions put in place to
dictate corporate behavior. Proxy advisors and shareholders are important stakeholders who indirectly affect
governance, but these are not examples of governance itself. The board of directors is pivotal in governance,
and it can have major ramifications for equity valuation.
24. Outline the problem of fiscal deficit in India?
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Understanding Fiscal Deficit :

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It is the deficit generated when Govt. spending/expenditure exceeds Govt. income/revenue in a financial year.
On the other hand if the Govt. revenue were to be more than the Govt. expenditure, then we say that there
was a fiscal surplus in that financial year.
Fiscal Deficit/Surplus is said to be one of the main indicators of financial health of any government.
To understand better we will look into the components of Govt. expenditure and income.
Why Fiscal Deficit is a problem?
Many economists feel that some amount of fiscal deficit is good. This is because, a fiscal deficit means that
Govt. is spending more and a govt. spending reasonable amount on various social and welfare schemes will
give a stimulus to growth and push demand. This, in normal situations will lead to growth of the economy as
production increases to meet the demand. It is useful at this point to refer our post on Economic Ecosystem to
get a complete picture of the economic cycle.
The problem arises when the fiscal deficit becomes unmanageable or is wrongly timed. For India, the ideal
fiscal deficit number is believed to be below 3% of GDP. Presently, we are facing a fiscal deficit of 4.9% of GDP
for the year 2012-13, which is very high.
Investors’ nerves got frayed due to panic when the govt. went ahead with its ambitious food security bill
which has the potential to add significantly to the already high fiscal deficit. The govt.’s trials to assure the
investors failed to break ice and there is still a lot of scepticism if the govt. can meet its fiscal deficit target of
4.8% GDP for the year 2013-14.
What exactly is the problem with having a high fiscal deficit? Here are some pointers to understand the
adverse effects :
Contributes to CAD adversely due to unsustainable subsidies.
Leads to high inflation when demand is pushed by govt. spending with no proportionate increase in supply.
Govt. may borrow money at high interest rates intending to spend it for boosting economic growth. But doing
so in an already high fiscal deficit scenario will lead to high interest rate regime and will not have the desired
effect as corporates will not have capacity to grow in a high interest rate regime.
Hardening of bond yields due to increased deficit funding.
Higher deficit funding leads to routing of money to fund govt. spending instead of more productive economic
activities which will lead to lower domestic savings.
Low apetite of corporates to invest in high interest regime will ring alarm bells for FIIs leading to outflow of
foreign capital.
Massive outflow of foreign capital through bond and capital markets will lead to falling markets and Rupee
depreciation which is pretty much the case now. An unstable currency will further panic FIIs which may lead to
further outflow of foreign capital starting a vicious cycle.
Not able to control and bring down the level of high fiscal deficit may lead to a downgrade of rating by
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sovereign rating agencies. As these sovereign ratings are seen as the indicators of economic health of a nation,
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a downgrade of rating will mean further reduction in investments by foreign companies and agencies in India.
25. What are the measures to reform PE’s in India?
So why has India fallen off the pedestal? According to the report, multiple factors are at play. The report
notes: “The Chinese slowdown has been predicted by many and is starting to occur, albeit growth remains
above 7% and no doubt this is impacting on transaction activity confidence. India is under more than just
economic pressure, with political burdens and policies having an adverse effect on corporate growth.”
Pointing out that the survey was done before the recent pro-reform measures announced by the Indian
government, Harish H. V., partner, India leadership team at Grant Thornton India says: “The Indian political
scenario over the past year has been one of significant challenge which has impacted the reforms process and
also impacted progress on various projects, be it in the public or private sector. Some of the policy measures
like retrospective taxation and confusion on GAAR [General Anti-Avoidance Rules] have also contributed to
negative sentiment from an investor perspective. There is a clear perception of lack of decisiveness on the part
of the government in major policy areas, especially those in infrastructure….”
Arun Natarajan, founder and CEO of Venture Intelligence, a Chennai–based research services firm focused on
PE and M&A deals, adds that slow to non-existent reforms and lack of profitable exits continue to be the main
dampeners. Says Natarajan: “Indian PE has been facing challenges which are a mix of both country-level issues
and industry-level issues. The lack of economic reforms over the past several years and retrograde steps like
the attempt to tax transactions retrospectively [like in the Vodafone-Hutch deal] have shaken global investor
confidence. On top of that, the lack of good returns — especially the huge overhang of un-exited investments
from the 2006-2007 period — is something that LPs [limited partners] have been quite critical of.”
What does India need to do to regain its popularity in the PE sector? Harish lists down some immediate
measures:
1. The first step is to recognize the PE sector as a separate sector which comprises financial investors and not
strategic investors from an approval perspective. Also, there is a need to clarify rules on taxation related to
GAAR and other aspects and confirm that retrospective taxation will not be applied on structures that confirm
to law at the point they were created.
2. Recognize the value that PE firms bring about in terms of creation of new entrepreneurs and economic
growth and treat them as a separate category from a capital markets perspective by allowing them faster
processes and flexible rules for investing in companies through different structures. Obviously, this needs to
be done for qualified PE firms only, Harish notes.
3. Ensure that projects are not stymied through policy measures once they commence.

4. Enforce governance practices through rule of law and punishment to economic offenders.

5. Improve court processes to deal with disputes between PE firms and corporates so that action can be taken
quickly.
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Natarajan of Venture Intelligence notes: “The fundamentals of the economy — whether it’s the relatively
strong economic growth, especially when compared to the developed world, strong domestic consumer
spending, etc. — continue to keep India attractive for multinationals and also long-term financial investors
who are the most significant source of capital for Indian PE funds. Consistent government action on the
reforms front, especially with a focus on implementation rather than mere pronouncements of intent, is likely
to be the main positive catalyst.
26. Discuss the role of SEBI in regulating Capital Market.
we explain role of SEBI in regulating Indian Capital Market more deeply with following points:

1. Power to make rules for controlling stock exchange :

SEBI has power to make new rules for controlling stock exchange in India. For example, SEBI fixed the time of
trading 9 AM and 5 PM in stock market.

2. To provide license to dealers and brokers :

SEBI has power to provide license to dealers and brokers of capital market. If SEBI sees that any financial
product is of capital nature, then SEBI can also control to that product and its dealers. One of main example is
ULIPs case. SEBI said, " It is just like mutual funds and all banks and financial and insurance companies who
want to issue it, must take permission from SEBI."

3. To Stop fraud in Capital Market :

SEBI has many powers for stopping fraud in capital market.
It can ban on the trading of those brokers who are involved in fraudulent and unfair trade practices relating to
stock market.
It can impose the penalties on capital market intermediaries if they involve in insider trading.
4. To Control the Merge, Acquisition and Takeover the companies :
Many big companies in India want to create monopoly in capital market. So, these companies buy all other
companies or deal of merging. SEBI sees whether this merge or acquisition is for development of business or
to harm capital market.
5. To audit the performance of stock market :
SEBI uses his powers to audit the performance of different Indian stock exchange for bringing transparency in
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the working of stock exchanges.

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6. To make new rules on carry - forward transactions :
Share trading transactions carry forward can not exceed 25% of broker's total transactions.
90 day limit for carry forward.
7. To create relationship with ICAI :
ICAI is the authority for making new auditors of companies. SEBI creates good relationship with ICAI for
bringing more transparency in the auditing work of company accounts because audited financial statements
are mirror to see the real face of company and after this investors can decide to invest or not to invest.
Moreover, investors of India can easily trust on audited financial reports. After Satyam Scam, SEBI is
investigating with ICAI, whether CAs are doing their duty by ethical way or not.

8. Introduction of derivative contracts on Volatility Index :

For reducing the risk of investors, SEBI has now been decided to permit Stock Exchanges to introduce
derivative contracts on Volatility Index, subject to the condition that;
a. The underlying Volatility Index has a track record of at least one year.
b. The Exchange has in place the appropriate risk management framework for such derivative contracts.
2. Before introduction of such contracts, the Stock Exchanges shall submit the following:
i. Contract specifications
ii. Position and Exercise Limits
iii. Margins
iv. The economic purpose it is intended to serve
v. Likely contribution to market development
vi. The safeguards and the risk protection mechanism adopted by the exchange to ensure market integrity,
protection of investors and smooth and orderly trading.
vii. The infrastructure of the exchange and the surveillance system to effectively monitor trading in such
contracts, and
viii. Details of settlement procedures & systems
ix. Details of back testing of the margin calculation for a period of one year considering a call and a put option
on the underlying with a delta of 0.25 & -0.25 respectively and actual value of the underlying. Link
9. To Require report of Portfolio Management Activities :
SEBI has also power to require report of portfolio management to check the capital market performance.
Recently, SEBI sent the letter to all Registered Portfolio Managers of India for demanding report.
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10. To educate the investors :

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Time to time, SEBI arranges scheduled workshops to educate the investors.

27. Explain the causes of gross inequalities in income and Wealth in India.
Growth Factor:
As development proceeds, the earnings of different groups rise differently. The incomes of the upper-income
and middle-income groups rise more rapidly than those of the poor. This happens in the early stages of growth
through which India is passing at present.
Income inequalities
The explanation lies in the shift of population from agriculture which is a slow growing sector to the modern
large industrial sector which grows more rapidly. Again, there is the capital-intensive nature of the
development of the modern sector.
Since this absorbs less labour, wages form a smaller proportion of total income. Hence, the income spread is
not wide enough. On the other hand, the capital-intensive type of growth leads to concentration of income in
those few hands who supply capital.
Highly Unequal Asset Distribution:

Incomes are derived from two main sources, namely, assets like land, cattle, shares, etc., and labour. In India a
few own a large chunk of income – earning assets. Some others, who do not own, or own a part of the assets
they operate, organise finances through banks, cooperatives, etc, and acquire/hire productive assets.

These inequalities enable the few to get incomes in the form of rent, interest and profit. As these assets
accumulate and pass on from generation to generation, the earning capacity of these increases continuously.

As for rural areas, the ownership pattern of the most important asset, namely, land, is highly unequal. The
marginal households (with holdings less than 1 hectare), which account for as many as 72 per cent of the rural
households own very little about 17 per cent of the land.

At the other end, there are those with large holdings (of more than 10 hectares) who are about 1 per cent of
the rural households. But they have under their ownership as much as 14 per cent of the area.
Private ownership of property and inheritance laws is mainly responsible for highly unequal distribution of
assets.
Inadequate Employment Generation:
People at the bottom could raise their economic status and to an extent reduce the distance separating them
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from those at the top, if they could get work. In other words, if they did not possess adequate earning assets,
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they could at least earn from their labour.

But there too the situation was not favourable. For long the increase in employment opportunities remained
less than the rise in the labour force.
Differential Regional Growth:
Of the large many at the bottom rung of incomes, a very great proportion lives in the poor backward states
regions, and most of the few at the top live in the high- income states regions.
This is the geographical facet of income inequalities for the country as a whole. Within the states also there
are inequalities, perhaps larger in the poorer states. Both these aspects are the outcome of the different
growth rates of the states, with a few having grown at a fast rate, and many having lagged behind.

28. Is Indian Society Static- Defend your answer?

Historicity of Unity in Diversity:
The Indian cultural tradition is unique. The notions of dharma (normative order), karma (personal
moral commitment] and jati (caste) as the hierarchical principles of social stratification are basic to
Indian culture. A certain level of configuration of these elements and consensus have brought about
persistence and equilibrium in Indian society, and hence no major breakdown has taken place in its
culture. It is said that the change is in the cultural system and not of the system. In other words, basic
cultural and social values and norms still continue with some modifications.

The values of dharma, karma and jati continue to guide social and cultural activities to a large extent.
Hence, change is in the system and not of the system. However, the contemporary India has witnessed
basic structural changes in economic and political fields. The traditional value system has lost its
ground to a considerable extent as the jati has acquired a new form, and it is no more an effective
mechanism of division of labour and status determination.

The uniqueness of the Indian culture does not simply refer to its esoteric nature. It requires a thorough
study in terms of its history. Absorption and assimilation characterised social and cultural change.
Aryans and Dravidians lived together. Hindus and Muslims lived in close proximity – socially and
culturally.

Later on, Christians joined them. Today, Hindus, Jains, Muslims, Sikhs, Christians and people of other
faiths participate together in the government, industry, commerce and other sectors of public life.
Thus, there has been a continuous unity even in the situation of stark diversity.

Diversity is reflected in thousands of caste groups, each having its own rituals, rites, rules and customs.
It can be seen in terms of linguistic, religious and other ethnic variations. The styles of life differ from
region to region and vary even between different castes and religious groups within the same village.
Some rulers made conscious efforts to ensure unity in diversity.
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The emperor Ashoka worked for the unity of India by achieving cultural and religious harmony and
administrative efficiency. Akbar, one of the most powerful Mughal emperors, projected the concept of
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a state religion called Din-e-Illahi, a synthesis of Hinduism and Islam.

The majority of Muslims in villages transformed their social life beyond recognition. They mingled with
Hindus freely in almost all walks of life. The Hindu rajas and Muslim kings recognized literary and
artistic abilities in individuals from both the communities. Kabir and Nanak were greatly influenced by
the teachings of Islam.

Conversion to Islam, and later on to Christianity, and today to Buddhism, has resulted in a ‘mixed’
culture. The Father of the Nation, Mahatma Gandhi, worked throughout his life to achieve national
unity and integrity through communal harmony, upliftment of the poor and downtrodden and
propagation of a just social order.

The colonial India has two histories. One is of colonialism produced by the colonisers, and the other is
of India’s culture and civilization perpetrated through its intellectual and philosophical fervour. India’s
history, its architectural treasures, its literature, philosophy, music, drama, dance, and its other fine
arts, all contributed to its social life, and could not be destroyed by alien rule. It is this history which
remained neglected during British Raj.

Mahatma Gandhi desired radical changes. However, he wished to associate such changes with India’s
tradition and cultural heritage. Jawaharlal Nehru, the architect of modern India, with a modern and
secular outlook, upheld India’s past with reverence and a sense of pride. He (1956) writes: “Yet the
past is ever with us and all that we are and that we have come from the past. We are its products and
we live immersed in it. Not to understand it and feel it as something living within us is not to
understand the present. To combine it with the present and extend it to the future, to break from it
where it cannot be so united, to make all this the pulsating and vibrating material for thought and
action – that is life.”

In another passage, Nehru highlights India’s cultural heritage. He (ibid) writes: “The rising middle
classes … wanted some cultural roots to cling on to, something that gave them assurance of their own
worth, something that would reduce the sense of frustration and humiliation that foreign conquest
and rule had produced… The past of India, with all its cultural variety and greatness, was a common
heritage of all the Indian people, Hindu, Moslem, Christian and others; and their ancestors had helped
to build it.” But Nehru never wanted the deadwood of the past to dominate the present. He was, in
fact, a man with a democratic spirit and modern outlook.

Forces of Unity in Modern India:

M.N. Srinivas (1952), a noted sociologist, writes:

“The concept of unity is inherent in Hinduism. There are sacred centres of Hindu pilgrimage in every
corner of the land. Certain salient aspects of Sanskritic culture are to be found all over the country.
India is the sacred land not only of the Hindus but also of the Sikhs, Jains and Buddhists. The Muslims
and Christians, too, have several sacred centres of pilgrimage in India. The institution of caste cuts
across diverse religious groups and gives them all a common social idiom.”
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Srinivas further notes that India, as a secular state, tolerates diversity. The Five-Year Plans, the spread
of egalitarian ideals, a single government and a common body of civil and criminal laws are enough
evidence of India’s plural character and oneness. However, one may not agree with Srinivas’
observation regarding Hinduism in general and about the caste system, in particular.

Orthodoxy of these two systems has, at times, endangered India’s unity. The two have often been
misused for suppression and exploitation of weaker sections of society, including women. Recently, the
Noble laureate Amartya Sen, pleaded for a common civil code for all the communities, including
Muslims.

The Constitution of independent India has established the ‘rule of law’ throughout the entire country.
All citizens are equal and subject to the same authority. Birth-based privileges have been abolished.
Religion, language, region, caste or community are no longer the basis of special powers and privileges.

The weaker sections of society, the Scheduled Castes (SCs), the Scheduled Tribes (STs), and the Other
Backward Classes (OBCs) have been given special concessions to bridge the gap between them and the
upper castes and classes. Today, no caste or social group suffers from any kind of social disability.
Women enjoy equal rights with men, in all respects.

The policy of ‘divide and rule’, adopted by the British to rule this country, is no more in operation.
Colonial exploitation has been replaced by processes of development and egalitarian ideology.
However, despite constitutional and legal enactments, the weaker sections and women lag behind
because of the deep-rooted entrenchment of the upper castes and patriarchy.

Factors of Disunity:
Despite a rich cultural heritage, egalitarian policies and programmes, and the ‘rule of law’, narrow
loyalties, parochial ties and primordial interests have also increased in the post-independence India.
We find divisive forces in many parts of the country. India is a land of sharp contrasts having very rich,
upper caste and class people on the one hand, and extremely poor, lower caste and class people on
the other.

There are minority groups based on a variety of considerations such as religion, language, region,
customs and traditions. Even, the so-called majority group, namely, the Hindus, is divided into several
sects, castes, clans and linguistic groups. These groups have certain aspirations for their members in
regard to better education, employment and a high standard of living.

All members belonging to different castes and communities do not have equal chance or access, and
hence they are denied ‘distributive justice’. Such a situation of unequal opportunities in life, which
itself is rooted into socially structured inequalities, aggravates tensions, mutual distrust and
frustration.

The consciousness of unity and a feeling of Indianness are seriously hampered due to situations of
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hierarchy and inequality. Today, India is faced with this problem due to a lack of synchronisation
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between the form and contents of its social structure. There is an urgent need to reduce the hiatus
between the ideal and the actual. National integration can be achieved by bridging up this gap, which
is, in fact, between the strong and the weak, the rich and the poor, the educated and the uneducated,
and between the upper caste and class and the lower caste and class people.

Ethnicity
Defining Ethnicity:
Literally speaking, the word ‘ethnos’ means nation, and the word ‘ethnicity’ is developed from it.
However, ethnicity is not defined as nationhood. It is defined as a collectivity of people of a distinct
nature in terms of race, descent and culture. Thus, an ethnic group is a social collectivity having certain
shared historicity and common attributes, such as race, tribe, language, religion, dress, diet, etc. A
combination of them in a group makes it an ethnic group, which is perceived as such by its members
and by members of other groups.

One may call this self-perception ethnic consciousness for status and for recognition as a distinct social
entity. Ethnicity is not a static or pre-ordained category; it is a manifestation of the common economic,
political, social and cultural interests and their protection by certain members in a plural society. Thus,
ethnicity, at times, is used as an instrument of mobilisation for realising social, economic and political
goals.

Ethnicity is a cultural phenomenon, and as such no culture is superior or inferior. Culture belongs to a
people, and they endear it like any other people. E.B. Tylor defines culture as “that complex whole
which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits
acquired by man as a member of society”. Culture is the man-made part of the environment.

Culture is social as it relates people in a variety of situations. Being a relational phenomenon, culture
has instrumental significance. Therefore, all ethnic entities are cultural groupings, hence they enjoy the
same position in terms of the normative orientations of different sets of people. The Constitution of
India declares that India is a secular state in which distinctions and discriminations based on caste,
creed, region, language, religion, etc., are not allowed. The people have been given ‘fundamental
rights’, according to which, primordial or ascriptive considerations do not find any place in modern
India.

Ethnicity and Culture:

An ethnic group may think that it is a living being of a unique kind. Its members generally think in terms
of a real or fictitious commonality based on common ancestory, cultural heritage, language, religion
and even economic interests. Internally, all ethnic groups are stratified despite their claim of
commonality in all respects. Ethnicity has also become a very sensitive aspect of India’s social fabric
because of ethnic cleavage, conflict, violence and hatred.
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Are ethnic groups classes? Are they the same groupings as of caste groups? A plural or multi-ethnic
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society like India would have an overlapping of ethnic, caste and class groupings. Contextuality of these
groupings is important to distinguish among ethnicity, caste and class as three bases of social ranking
and identification.

A given country consists of various communities; and facts about their origin and migration help
understand the history of its civilization. The present population of India is over 1,000 million. More
than 100 years ago, Sir Herbert Risley noted that there were 2,378 main castes among the Hindus in
India. Certainly, this number must have reached over 3,000 by this time due to the processes of fission
and social mobility.

Marriage takes place in accordance with the rules of caste endogamy, clan exogamy and avoidance of
relations on father’s and mother’s sides. Besides these caste groups, there are other communities,
such as, Muslims, Christians, Sikhs, Parsis, Jains and many tribal groups, who limit marriage and social
interaction to their own groups. However, inter-caste marriages are taking place, particularly among
the educated urban middle and upper-middle class families. Resistance to such marriages is negligible
due to weakening of the caste system.

Nature of Ethnic Conflict:

At times, ethnic groups tend to operate as diametrically opposed groups due to clash of their real or
supposed interests. Such a clash of interests may also take the form of communalism. Some groups
may take undue advantage of their large numbers or of superior social origins to corner a major share
of the national resources.

The other communities with smaller populations may feel deprived of what they feel are their
‘legitimate claims’. Situations of mutual distrust, disaffection and distance may arise between various
ethnic groups. One perspective is that ‘relative deprivation’ is the root cause of all ethnic strife. The
lack of distributive justice, differential accessibility to resources and cultural differences have been
considered the main reasons of ethnic problems.

Sometimes ethnic conflict is due to the distinction made between ‘outsiders’ and ‘insiders’. ‘We’
(insiders) against ‘they’ (outsiders] is an attitude found in all societies. Immigrants are treated as
‘foreigners’. Such a problem arises when people speaking Assamese, Bengali, Gujarati, Oriya, Hindi,
Kashmiri, Punjabi, Urdu, Marathi and Sindhi consider each other different in the national context.

As such ethnic groups may be referred as ‘primordial collectivities’. Members belonging to one state
often consider members from other states as outsiders. They would not like them to seek employment
in their state. Sub-regions, cities, towns and even villages are often used for drawing a line between
the insiders and the outsiders. The question is: can we call it ethnicity? The answer is a clear no. India is
a poly-ethnic society having distinctions based on race, caste, language, religion and territory.
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Religion:
Defining Religion:
There are two types of values:

(1) categorical or absolute values, and

(2) instrumental values.

The first refers to beliefs and practices relating to the supernatural powers. The second refers to norms
and practices related to work, efficiency, productivity, etc. Religion falls in the first category of the
value system.

Religion may be defined as “beliefs and practices related to supernatural entities, spirits and powers,
which are considered as ultimate in shaping human relations”.

Surjit Sinha refers to three components of the sociology of religion:

(1) beliefs in supernatural entities,

(2) specialists who create such beliefs, and

(3) laity who receive these beliefs in various forms.

Religion has played an important part in Indian society from the earliest times. It has assumed
numerous forms and nomenclatures in relation to different groups of people associated with it. India
has been a poly-religious society.

Transformations and changes in different religions have occurred from time to time vis-a-vis changes in
intellectual climate and social structure. Religion in India has never been static. Today, it has made
inroads into the arenas of politics and economic life. At times, affinity to religion is made an issue in
elections; and in economic and business transactions.

Religious movements have been a perpetual feature of India’s socio-cultural life. Pre-Vedic and Vedic
religions, unorthodox religious currents led by Buddha and Mahavira, and theistic religions, including
the element of Bhakti, characterize dynamics of religion in Indian society. Religious sects like
Vaishnavism, Saivism and Saktism emerged as the components of orthodox Brahmanism. In addition to
these ramifications of religion, several folk cults and religious practices were evolved by people in
various parts of India.

Religious Communities and Diversity in India:

According to the 1931 census, there were ten religious groups in India. These included: Hindus, Jains,
Buddhists, Zoroastrians, Muslims, Sikhs, Christians, Jews, and other tribal and non-tribal religious
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groups. The census of 1961 listed only seven religious categories, namely, Hindus, Jains, Buddhists,
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Muslims, and Christians, Sikhs and other religions and persuasions.

Religion is really a complex phenomenon in India. For example, elements of Sanskritic and tribal
religion are found in a mixed form at various levels. So is the interaction between the ‘great’ and the
‘little’ traditions. Integration of Sanskritic Hindu religion and tribal religion is also found. The Santhals,
for example, observe several high caste festivals. This is also the case with the lower and ‘untouchable’
castes. Some tribals worship Shiva.

M.N. Srinivas (1952) writes:

“Different tribes are Sanskritized in different degrees, and different sections of the same tribe may not
be uniformly Sanskritized.” Conversion to Christianity and Islam has been a controversial issue over the
past couple of decades.

It is said that the members of the depressed classes and tribals have converted to Christianity, Islam
and Sikhism in various parts of the country, particularly in the 1920s and also after independence. A
good number of tribals have accepted Hindu rituals and religious practices in Bihar, Bengal, Assam and
other areas. Thousands of Harijans have converted to Buddhism in Uttar Pradesh and Maharashtra.

Induced or forced conversion is certainly against the spirit of the Constitution of India and the law of
the land. There may be several factors responsible for change of religion. In recent years intense
debate has occurred on religious conversions.

One view is that the lower castes and communities are converting to Islam and Christianity because of
the oppressive nature of Hinduism. Contrary to this is the view that conversions are being induced by
the proponents of Islam and Christianity.

It has been reported that minority religions show a greater percentage of literacy than the majority
religions. Parsis, Jains, Jews and Christians have shown this pattern. With the exception of Christians,
these communities are also engaged in trade and business more than Hindus and Muslims. A study
reveals that the Parsis, Jews and Jains are ‘advanced’ in business, though their activities are not
diversified. Hindus and Muslims have a diversified occupational pattern because of their large numbers
and spread all over the country.

The minority groups are found in specific regions, sub-regions and cities, and therefore, they find
themselves in an advantageous position. Syrian Christians, Moplas, Parsis and some other groups have
been benefited because of their strategic locations in Kerala and Maharashtra.

Role of Religion in Social Integration:

M.N. Srinivas (1952) examines the role of religion in social integration as a binding force amongst
individuals and groups. However, it is more important to see how religion does this; how it functions.
Karl Marx’s dictum, “religion is the opiate of the masses”, can be found true if religion becomes a tool
of exploitation in the hands of a selected few who claim themselves its custodians and protectors.
Srinivas, however, considers religious behaviour, as a part of social life.
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He refers to three points:

(1) the relations between different castes and religious groups at the village and other local levels;

(2) the role of religion in the economic development of the country; and

(3) religion and socio-economic privileges.

Religious ethic may be conducive to the development of capitalism as observed by Max Weber.
Religion may be used as a solid so unifying force by white people in situations of crisis as explained by
Emile Durkheim.

Multi-religious villages are not as conspicuous a phenomenon as multi-caste villages in India. However,
in Uttar Pradesh, one can find Hindu tenants and Muslim landlords and vice versa. In a village in
Karnataka, a few big Hindu landowners had Muslim tenants and servants, while Muslim landowners
had Hindu servants.

The Muslims were engaged in a variety of economic activities, as they did not own much land. The
Hindus owned mango orchards, but the Muslims carried on the trade. Hindus and Muslims interacted
on several occasions, including festivals and weddings. When a particular religious community has
specialized in any economic field, its clientele belongs to various other religions.

In cities, Hindus and Muslims have been greeting each other on their festive occasions. In situations of
riots and crises, they have come to each other’s rescue. In the riots of November 1984 in Delhi and
other places, a large number of Sikhs were given shelter and protection by Hindus. Similarly, in recent
Gujarat riots, many Muslim families took refuge in houses owned by Hindus. Hindus and Muslims have
lived in amity in the country for centuries. Inter-community marriages in Punjab are a well-established
practice.

There is also association between religious communities and the specific economic functions they
perform. For example, Parsis are in the liquor trade. Moplah traders are found in Kerala, Mysore,
Chennai and Mumbai. Jain traders are found in Mumbai, Gujarat, Rajasthan, Karnataka and Bengal.

Such an association is found even at the village level. From amongst the Hindus, Gujarati Banias, Telugu
Komatis, Tamil Chettiars and Rajasthani Banias have played an important role in economic activities.
However, from time to time, several new caste groups have entered into commerce and trade. Caste
barriers have weakened, and spatial mobility is today far greater. The spread of various communities
all over the country and diversification of their economic activities have strengthened the process of
social integration.

The sociologist Max Weber was the first to mention a Hindu ethic consisting of the principles of
samsara (belief in the transmigration of souls) and karma (doctrine of compensation). These two
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principles together formed the basis of the caste system.

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Consequent upon this, according to Weber, caste system did not have a this-worldly rational ethic.
Weber based his analysis on extrapolation of textual notions of Hinduism. He perhaps looked at the
traditionalism and irrationality of Hinduism from the point of view of the Protestant ethic and its
relationship with the growth of capitalism in his own society. However, no necessary antithetical
relationship has been seen by many scholars between religion and economic development.

Milton Singer (1972) has found religious/ideological bases of the vama-jati order, sects and tribalism
and their relationship as functional with the processes of modernisation, nationalism, industrialisation
and bureaucracy. However, it would be quite absurd to draw the conclusion that the Hindu ethic and
caste system have essentially contributed to economic development in a positive way, and therefore,
there is no need to change these systems. This view simply explains the resilient character of Hinduism
and the caste system vis-a-vis changes in India’s economy and polity.

Social Organisation of Hindu Religion:

Hinduism is not a static religion. It has changed considerably due to the spread of scientific knowledge,
technological advancement, improved means of communication and the process of secularism. Despite
these changes, Hinduism remains a complex phenomenon. At the pan-Indian level, education, mass
media, press and migration have promoted secular values. However, at the local level, religious
practices remain unaffected to a large extent. We can see basic structural change in the countryside
along-with adherence to tradition and religious beliefs.

India has been characterised as a ‘primary’ or ‘orthogenetic’ civilisation, because it has its continuity;
an uninterrupted history despite foreign invasions and wars between rulers within the country. The
main source of strength of the Indian civilisation is the interaction between different parts of its
traditions.

The traditions, which are written, find a place in Hindu or Islamic literature, religious texts and scripts.
These are called ‘great traditions’. The traditions, which are unwritten and transmitted orally from one
generation to another, are called ‘little traditions’. These two are constantly interacting with each
other. When the elements of a great tradition filter down to the people, the process of such a spread is
known as parochialisation.

When the elements of a little tradition become a part of a great (Sanskritic) tradition, the process is
described as universalisation. To call a tradition great or little, in fact, amounts to designating people as
great and little, because it is the people who are literate or unlettered. Traditions refer to norms of
behaviour and interpersonal relations.

They are symbiotic in nature, but their hierarchy refers to a hierarchy of human beings. To call illiterate
folks little and the literate as great, even by implication, would involve a value judgement. Thus,
religion is a very complex phenomenon. It is necessary to simplify it by clarifying those canons which
put all the believers on the same wave-length without any discrimination whatsoever, based on caste,
region, cultural heritage, economic position, educational status, etc.
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Use of Religion in Fulfilling Narrow Ends:

Though religion is an integrative mechanism, it has been used to fulfill narrow social and political ends.
A number of associations and groups have been formed with religious names with a view to evoke
religious consciousness for getting support or favour from members belonging to a particular religious
group. The Hindu Mahasabha and Muslim League are glaring examples of this practice. Even educa-
tional institutions have Hindu, Jain, Muslim, Christian and Sikh names.

Language:
Defining Language:
“A language is a system of arbitrary vocal symbols by which members of a social group cooperate and
interact” [Gazetteer of India, Vol. I). Language as a system consists of a series of symbols, the meanings
of which must be learned by all those who use that language. Language is an aspect of culture…. “by
means of which the learning process is effectuated and a given way of life achieves both continuity and
change” (ibid).

The building-up of knowledge is not possible without language. As such language is not simply a
construction comprising of words, phrases and sentences based on certain rules (grammar), it is a
means of communication, and a mode of social relationship. Language is not monolithic, it is differ-
entiated and hierarchical vis-a-vis ramifications of people in society.

Thus, language is also a social phenomenon in terms of its differential association with different social
strata. Some people have command over both written and oral aspects of a given language; while
others, being simple folks, have access only to the oral aspect. Sanskritic language or any other
language may become a resource for some people, whereas a lack of knowledge of the same may
prove an obstacle in social and cultural mobility. A linguistic group or collectivity becomes, at times, a
strong primordial entity, and may turn into a sort of ethnic or communal group in opposition to some
such other group.

Role of Language in Social Integration:

Language is a living force; it is not a static phenomenon. It has changed with changes in social
formations, ruling clans and with demands of specific historical situations. Pali and Prakrit languages
were prominent in ancient India. Sanskrit enjoyed the status of carrying Hindu Sanskritic culture
throughout the country.

These were followed by modern Indo-Aryan languages like Assamese, Bengali, Gujarati, Hindi,
Kashmiri, Marathi, Oriya, Punjabi, Sindhi and Urdu. The languages in peninsular India are of Dravidian
stock (with the exception of Marathi). These include Tamil, Telugu, Malayalam and Kannada. Each of
these languages, of both the stocks, has several dialects spoken by people living in different linguistic
regions.

The rulers of medieval India brought new forms of religion, language, manners and customs compared
to those of the orthogenetic culture and civilization. The institutional basis of social order and
economic organisation remained unchanged to a large extent. The caste system and village economy
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continued to function considerably undisturbed during the medieval period. However, Indian culture
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 and political power underwent transformation, influencing language, culture and religion. A
‘Hindustani’ way of life emerged in northern India.

The writings and accounts of foreign travellers from Islamic countries promoted Arabic and Persian
languages. Though the Hindu culture, caste system and village economy remained largely unaffected
despite foreign rule, the Indo-Aryan languages rapidly developed into literary languages.

With the emergence of these languages, cultural changes occurred, including diminishing upper caste
domination, the decline of Sanskrit language, and waves of religious and social reforms, using popular
idioms and the language of laity. The confrontation of Hindu and Muslim cultures led to interesting
results and a mixed culture, particularly in North India.

29. The GDP growth rate has leap frogged after implementing policies of economic liberalization. Explain.
We have seen landmark shift in Indian Economy since the adoption of new economic policy in 1991. This had
far reaching impacts on all spheres of life in India. There can be no concrete conclusions about their impact on
Indian people. This turns out to be more of an ideological debate like capitalism vs Socialism. But there is no
doubt in the fact that those reforms were unavoidable and very compelling. There was in fact, similar wave all
across the globe after disintegration of USSR and end of the Cold War. Many Post-colonial democratic regimes,
which were earlier sheltered by USSR, lost their umbrella. They had no option, but to fall in line to new
unipolar world order dictated by USA. Even China in late 1980’s adopted ‘Open Door Policy’ through which it
liberalized its economy by shedding communist mentality completely. South East Asian economies also
reformed their economy and started engaging more with global economy. These along with China, pursued
export led growth whereas Indian economy still relies almost wholly on domestic consumption.
Note changing Sectoral composition of India economy since independence
Composition – Services – Steady significant Increase (was more marked after reforms), Industry – Less marked
increase (stagnated after reforms) , Agriculture Significant Decline
Patterns in the above graph explain inequity of Indian growth story. As per principle of economics, when a
particular sector performs disproportionately higher than average growth rate, economic wealth starts
concentrating into that sector. In this case that sector is Service sector. Within this sector, highest growth is
marked by sectors such as financial services, Real estate services etc. , which are least employment elastic.
Consequently, Growth of past decade was limited to upscale areas of the countries as almost whole service
industry, operates from these areas. Majority of India got spillover or trickle down growth from here. This
accelerated migration to urban areas. This in turned created array of social problems associated with
urbanization. It fundamentally changed pattern of Indian Society.

Now we have ultra-modern and ultra-primitive society coexisting and conflicting with each other. On one side
Social institutions like Personal Law boards, Khaps & kangaroo courts etc. tries to uphold their control over
their respective community members, on other hand there is western wave pulling out these very members.
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Undoubtedly strongest revolution of new century has been one of Information Technology, which started in
last years of past century. This revolution was different because it made globalization even more obvious and
stark. It made possible transfer of real time human labor across nations, without transfer humans themselves.
Further, it erased all boundaries which hinder free flow of information. This has benefited sharing, nurturing
and development of knowledge in societies which earlier had access only to substandard or non-updated
information. As always package is coupled with some grim realities too.

Governments all across the world has lost their capacity to regulate and ward of against malicious, false,
sensitive information and content. Rise of Islamic State demonstrates that, IT revolution has helped
development of global Terrorist links more than anything. Moreover, explicit content is freely available on
web, to which unmatured children have unrestricted access

GDP growth rate – India’s annual average growth rate from 1990 – 2010 has been 6.6 % which is
almost double than pre reforms era. GDP growth rate surpassed 5% mark in early 1980’s. This made impact of
1990’s reforms on growth unclear. Some believe that 1980’s reforms were precursor to LPG reforms. Other
things apart, it is clear that 1980 reforms led to crash of economy in 1991, which was remedied by LPG
reforms which were quite more comprehensive. It was IMF loan which gave government to adjust its
economy. It was largest ever loan given by IMF. Initially there were global doubts on India’s credibility for loan,
but India has been so far a disciplined borrower.

Industrial Growth Rate – Barring few years industrial growth rate has been not much impressive. Share of
Industry still remains stagnantly low at 25%. Worst is that India has transitioned to be a service led economy,
directly from an agrarian one. One expiation of this is end of policy of imports substitution which derived
industrial growth upto 1990. Foreign companies got free access to Indian markets and made domestic
products uncompetitive. They obviously had better access to technology and larger economies of scale.

India’s position also lagged on account of Research and innovation. Import substitution required certain
degree of investment and efforts in domestic production. It was carried out even when imports were cheaper.
This resulted in good and better capacity building upto that time. This was coupled with constant technology
denial by west, which further pushed government to spend on R&D. Technology Denial ended with
liberalization and globalization. Till that time Indian Industry was better and modern than that of China. But in
two decades China has surpassed India by huge margin in case of both Industry and innovation.

Impact on Small Scale in India

This impact shall be studied right from the beginning of colonization in 18th century. Colonization can be
considered as 1st wave of globalization. In pre colonization era, India’s textiles and handicraft was renowned
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worldwide and was backbone of Indian economy. With coming of industrial revolution along with foreign rule
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in India, Indian economy suffered a major setback and much of its indigenous small scale cottage Industry was
destroyed.

After independence, government attempted to revive small scale sector by reserving items exclusively for it to
manufacture. With liberalization list of reserved items was substantially curtailed and many new sectors were
thrown open to big players.

Small scale industry however exists and still remains backbone of Indian Economy. It contributes to major
portion of exports and private sector employment. Results are mixed, many erstwhile Small scale industries
got bigger and better. But overall value addition, product innovation and technology adoption remains dismal
and they exist only on back of government support. Their products are contested by cheaper imports from
China. Policies of government toward SSI were covered in previous article access here and here

Impact on Agriculture
As already said, share of agriculture in domestic economy has declined to about 15%. However, people
dependent upon agriculture are still around 55%. Cropping patterns has undergone a huge change, but impact
of liberalization can’t be properly assessed. We saw under series relating to agriculture that there are still all
pervasive government controls and interventions starting from production to distribution (here SPS and here –
WTO).
Global agricultural economy is highly distorted. This is mainly because imbalance in economic and political
power in hands of farmers of developed and developing countries. In developed countries, commercial and
capitalistic agriculture is in place which is owned by influential Agri corporations. They easily influence policies
of WTO and extract a better deal for themselves at cost of farmers of developing world.
Farming in developing world is subsistence and supports large number of poor people. With globalization
there has been high fluctuation in commodity prices which put them in massive risk. This is particularly true
for cash crops like Cotton and Sugarcane. Recent crises in both crops indicate towards this conclusively.
Also there is global Food vs. Fuel confusion going on. Sugar and corn are used to manufacture ethanol which is
used as fuel. In USA Corn is produced mainly for this purpose, as sugar cane is in Brazil. Now there are
apprehensions that what if converting food into fuel is more remunerative for producers? More than 1 billion
people still live in hunger, much more are just hand to mouth. It is futile to expect that free market will take
care of these people, who don’t have any purchasing power. Clearly, Agriculture is biggest market failure, but
is rarely discussed for being so in WTO.
Another global debate born out of globalization is one of GM crops. Here too powerful MNCs like Monsanto
hold the key. USA allows unhindered use of GM crops, but EU bans it. In India field trails are going on. (It was
discusses here)
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On the positive note, India’s largely self-sufficient and high value distinguished products like Basmati Rice are
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in high demand all over. Generally speaking, India is better placed to take up challenge of globalization in this
case. If done in sustainable and inclusive manner, it will have a huge multiplier impact on whole economy.
Worldwide implicit compulsion to develop Food processing Industry is another landmark effect of
globalization.
Apart from these, Farm Mechanization i.e. use of electronic/solar pumps, Tractors, combines etc. all are fruits
of globalization. Now moving a step further, Information technology is being incorporated into agriculture to
facilitate farming.
Impact on Services Sector
In this case globalization has been boon for developing countries and bane for developed ones. Due to historic
economic disparity between two groups, human resources have been much cheaper in developing economies.
This was further facilitated by IT revolution and this all culminated in exodus of numerous jobs from
developed countries to developing countries. Here US have to jealously guard its jobs as we guard our
agriculture.
IT industry
Software, BPO, KPO, LPO industry boom in India has helped India to absorb a big chunk of demographic
dividend, which otherwise could have wasted. Best part is that export of services result in export of high value.
There is almost no material exported which consume some natural resource. Only thing exported is labor of
Professionals, which doesn’t deplete, instead grows with time. Now India is better placed to become a truly
Knowledge Economy.
Exports of these services constitute big part of India’s foreign Exchange earnings. In fact, the only three years
India had Current Account surplus, I.e. 2000-2002, was on back of this export only.
Banking
Further, in banking too India has been a gainer. Since reforms, there have been three rounds of License Grants
for private banks. Private Banks such as ICICI, HDFC, Yes Bank and also foreign banks, raised standards of
Indian Banking Industry. Now there is cut through competition in the banking industry, and public sector banks
are more responsive to customers.
Here too IT is on path of bringing banking revolution. New government schemes like Pradhan Mantri Jan dhan
Yojana aims to achieve their targets by using Adhaar Card. Having said this, Public Sector Banks still remain
major lender in the country.
Similarly Insurance Industry now offers variety of products such as Unit Linked Insurance plans, Travel
Insurance etc. But, in India life Insurance business is still decisively in hands of Life Insurance Corporation of
India.
Stock Markets
Another major development is one of Stock Markets. Stock Markets are platforms on which Corporate
Securities can be traded real time. It provides mechanisms for constant price discovery, options for investors
to exit from or enter into investment any time. These are back bone of free markets these days and there is
robust trade going all over the world on stock exchanges. Their Importance can be estimated from the fact
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that, behavior of stock markets of a country is strongest indicator of health and future prospects of an
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economy.
These markets has thrown open wide array of associated services such as Investment Banking, Asset
Management, Underwriting services, Hedging advice etc. These collectively employ lakhs of people all over
India.
Similarly there are commodities market which provides avenues for investment and sale of various eligible
commodities.
Telecom Sector
Conventionally, Telecom sector was a government owned monopoly and consequently service was quite
substandard. After reforms, private telecom sector reached pinnacle of success. And Indian telecom
companies went global. However, corruption and rent seeking marred growth and outlook of this sector.
Entry of modern Direct to Home services saw improvements in quality of Television services on one hand and
loss of livelihood for numerous local cable operators.
Education and Health Sector
It should be noted that food (Agriculture), Health and education (and to lesser extent banking) are among
basic necessities, which every human being deserves and can’t do without. Unfortunately, in developing
countries there is market failure in all these sectors and majority of people can’t afford beyond a certain limit
(or can’t afford at all). Concept of free markets, globalization, liberalization etc. fails here miserably. Free
markets provide goods and services to people who can afford paying for them, not to those who deserve and
need these.
Now if we consider these sectors from angle of our inclination towards free markets, certainly there has been
lot of progress. There has been world class education available in India and Deregulation has resulted in
Mushrooming of private engineering and Medical Colleges. But in reality, this had far reaching devastating
effect on society.
These new colleges accommodate only a miniscule proportion of aspirants at very high costs. Recently, an
Independent organization ‘Transparency International’ came out with report claiming that India’s medical
system is most corrupt in the world. This was no surprise, we all know from where it starts. High fees of
education forces many aspirants to take educational loans from banks. After qualifying job market is unable to
absorb majority of them. Practice turns out to be option of last resort. Now to make a decent living and to pay
back the loans person is lured by corruption. Consequently, when many similar cases are put together, we get
a corrupt system, economy and society.
Reality is that after deregulation and liberalization, government along with other sectors, pulled its hand from
social sectors too. Now there is Mediocre to high quality options are available in private sector which can be
availed as per one’s budget. In public Sector Less than Mediocre to Mediocre options are available. This leaves
huge proportion of aspiring students and expecting patients.
On Social front India’s performance is deplored all over the world and it is probably behind all important
developing economies. This lacuna has been recognized and government has taken the charge. In case of
53

education almost universal enrollments has been achieved upto primary level and now impetus should be on
improving quality, so that student of public schools comes at par with atleast average private ones.
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30. What are the CSR issues relevant in the context of growing environmentalism?
In India companies like TATA and Birla are practicing the Corporate Social Responsibility (CSR) for decades,
long before CSR become a popular basis. In spite of having such good glorious examples; In India CSR is in a
very much budding stage. A lack of understanding, inadequately trained personnel, coverage, policy etc.
further adds to the reach and effectiveness of CSR programs. Large no. of companies are undertaking these
activities superficially and promoting/ highlighting the activities in Media. This research paper focuses on the
finding & reviewing of the issues and challenges faced by CSR activities in India.
Key Findings
The concept of corporate social responsibility is now firmly rooted on the global business agenda. But in order
to move from theory to concrete action, many obstacles need to be overcome. A key challenge facing business
is the need for more reliable indicators of progress in the field of CSR, along with the dissemination of CSR
strategies. Transparency and dialogue can help to make a business appear more trustworthy, and push up the
standards of other organizations at the same time. Some of the positive outcomes that can arise when
businesses adopt a policy of social responsibility include:
Company Benefits
Improved financial performance;
Lower operating costs;
Enhanced brand image and reputation;
Increased sales and customer loyalty;
Greater productivity and quality;
More ability to attract and retain employees;
Reduced regulatory oversight;
Access to capital;
Workforce diversity;
Product safety and decreased liability.
Benefits to the Community and the General Public
Charitable contributions;
Employee volunteer programs;
Corporate involvement in community education, employment and homelessness programs;
Product safety and quality.
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Environmental Benefits
Greater material recyclability;
Better product durability and functionality;
Greater use of renewable resources;
Integration of environmental management tools into business plans, including life-cycle
assessment and costing, environmental management standards, and eco-labeling.

31. Write a note as India as an emerging power.

The Republic of India is considered as one of the possible emerging superpowers of the world.[1][2][3][4] This
potential is attributed to several indicators, the primary ones being its demographic trends and a rapidly
expanding economy and by GDP India became world's fastest growing economy in 2015 with 7.3% GDP rate.
[5] The country must overcome many of the economic, social, and political problems before it can be
considered a superpower. It is also not yet as influential on the international stage when compared to the
United States or the former Soviet Union.
Factors in favour[
View of the Himalaya and Mount Everest as seen from space looking south-south-east from over the Tibetan
Plateau. The Himalayas in the north and north-east protect the subcontinent from bitter continental cold, save
the monsoon winds from escaping, and replenish the river watersheds and flat arable lands that have
spawned the Indian civilization.
The Metropolis of Mumbai as seen from above during night time. Mumbai is one of the most modern and
cosmopolitan cities in India
India lies in the cultural region of Indian Ocean - a zone with unprecedented potential for growth in the scale
of transoceanic commerce, with many Eurasian and increasingly Afro-Asian sea-trade routes passing through
or close to Indian territorial waters. The subcontinent's land and water resources, though strained, are still
sustaining its massive population.[citation needed] According to George Curzon, 1st Marquess Curzon of
Kedleston of the British Empire:
The central position of India, its magnificent resources, its teeming multitude of men, its great trading harbors,
its reserve of military strength, supplying an army always in a high state of efficiency and capable of being
hurled at a moment's notice upon any point either of Asia or Africa--all these are assets of precious value. On
the West, India must exercise a predominant influence over the destinies of Persia and Afghanistan; on the
north, it can veto any rival in Tibet; on the north-east . . . it can exert great pressure upon China, and it is one
of the guardians of the autonomous existence of Siam. Possession of India gave the British Empire its global
reach.[6]
Possible future advantage of location[edit]
Energy[edit]
In the future, the world is expected to exit the "fossil fuel age", and perhaps the "nuclear energy age", and
55

enter the "renewable-energy age" or even further into the "fusion power age", if and whenever these
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technologies become economically sustainable.[7][8][9] Being a region in the sunny tropical belt, the Indian
subcontinent could greatly benefit from a renewable energy trend, as it has the ideal combination of both -
high solar insolation[10] and a big consumer base density.[11][12][13] For example, considering the costs of
energy consumed for temperature control (a major factor influencing a region's energy intensity) and the fact
that - cooling load requirements, unlike heating, are roughly in phase with the sun's intensity, cooling from the
excessive solar radiation could make great energetic (and hence economic) sense in the subcontinent,
whenever the required technology becomes competitively cheaper.[14][15][16] India also has 25% of the
world's thorium resources.[citation needed]
The increased Indian population has prompted the creation of high rise apartment blocks in numerous cities,
including relatively minor cities like Gurgaon, where this apartment block was built.
High population[edit]
India has the world's second largest population.[17] The PGR for the country is 1.25. A very large number of
India's population, about 50% , is below the age group of 24. This provides the nation with a large workforce
for many decades, helping in its growth.[18] The government is training a 400 million-workforce, which is
larger than the population of the United States and Brazil combined.[citation needed]
Young population[edit]
Due to its high birth rate India has a young population compared to most aging nations. It has approximately
65% of its population below the age of 35. In addition, declining fertility is beginning to reduce the youth
dependency rate which may produce a demographic dividend.[19][20][21] In the coming decades, while some
of the powerful nations will witness a decrease in workforce numbers, India is expected to have an increase.
For example, while Europe is well past its demographic window, the United States entered its own in 1970
(lasting until 2015), China entered its own in 1990 (and will last until 2025), India would not enter its own
window until 2010 (and it will last until 2050).[22] Regionally, South Asia is supposed to maintain the youngest
demographic profile after Africa and the Middle East, with the window extending up to the 2070s.[23]
Global diaspora[edit]
More than 35 million Indians live across the globe.[24] Under fair opportunities, they have become socio-
economically successful.[25]
Foreign language skills[edit]
The importance of the English language in the 21st century is a topic of debate,[26][27][28] nonetheless the
growing pool of non-native English speakers makes it the best contender for "Global language" status.[29][30]
Incidentally, India has the world's largest English speaking/understanding population.[31] It claims one of the
largest workforce of engineers, doctors and other key professionals, all comfortable with English.[32] It has
the 2nd largest population of "fluent English" speakers, second only to the United States, with estimates
ranging from 150 to 250 million speakers, and is expected to have the largest in coming decades. Indians are
also learning Dutch, Italian, Japanese, Korean, Mandarin Chinese, Russian, and Spanish.[33][34]
Political factors[edit]
Main article: Politics of India
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The Machinery of the world's largest democracy: Sansad Bhavan, the Parliament of India
The BRICS leaders in 2016. Left to right: Temer, Modi, Xi, Putin and Zuma.
Democratic republicanism[edit]
India is the world's largest democratic republic, more than three times bigger than the next largest (the United
States). It has so far been successful politically, especially considering its functionality despite its difficult
ethnic composition.[35][36] The fact that India is a democracy has improved its relations with other
democratic nations and significantly improved its ties with the majority of the nations in the developed world.
[37]
Candidacy for Security Council[edit]
India has been pressing for permanent membership of the United Nations Security Council (as part of the G4
nations[38]) but with a clause that it won't exercise its veto for the next 15 years.[39] It has received backing
from France,[40] Russia,[41] and the United Kingdom.[42] However, China[43] and the United States[44] have
not been supportive of the bid. With improved India–United States relations, the United States is expected to
reconsider its stand.[45]
As of 2016,India is said to have receive support from all the five permanent members of United Nations
Security Council for its candidacy.
Foreign relations[edit]
Main article: Foreign relations of India
India has developed relationships with the world powers like the European Union,[46] Japan, Russia, and the
United States.[47] It also developed relationships with the African Union (particularly South Africa), the Arab
World, Southeast Asia, Israel and South American nations (particularly Brazil). In order to make the
environment favourable for economic growth, India is investing on its relations with China.[48] It has
significantly boosted its image among Western nations and signed a civilian nuclear deal with the United
States in March 2006. It is also working for better relationships with Pakistan.[49]
Role in international politics[edit]
Historically, India was one of the founding members of Non-Aligned Movement, and had good relationships
with Soviet Union and other parts of western world. It played regional roles in South Asian affairs, e.g. its use
of the Indian Peace Keeping Force in the Bangladesh Liberation War and in Sri Lanka. It took a leading initiative
to improve relations between African and Asian countries. India is an active member of the Commonwealth
and the WTO. The evolving economic integration politics in the West and in Asia is influencing the Indian
mood to slowly swing in favour of integration with global economy.[50] Currently, India's political moves are
being influenced by economic imperatives. New Delhi is also being observed to slowly, cautiously, and often
hesitantly, step into the unchartered role of becoming one of the two major seats of political power in Asia,
[51] the other being at Beijing. Some enlightened thinkers from the subcontinent have also envisioned, over
the long run, of a South Asian version of free trade zone and even a Union, where the South Asian nations
relinquish all past animosities and move to make economic growth a pan subcontinental phenomenon.[52]
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[53]
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Multipolarity[edit]
A new and highly controversial geopolitical strategy, being debated in the West, is whether India should be
trusted/helped to become an economically strong democratic citizen of the world and be used to balance the
powerful but non-democratic forces, to insure a more stable world.[54] Generally speaking it is discussed in
the context of adopting a policy of offshore balancing on the part of the United States. A new American
strategy towards India has been indicated in George W. Bush's recent visit to the subcontinent.[55]
Economic growth[edit]
India's current economic growth (as the world's fastest-growing major economy as of 2015) has improved its
standing on the world's political stage, even though it is still a developing country, but one that is showing
strong development. Many nations are moving to forge better relationships with India.[56][57]

The Mumbai Pune Expressway, part of a series of modern high-traffic roads in India
Economic factors[edit]
Main article: Economy of India

Prime Minister Narendra Modi at the launch of Make in India

Booming economy[edit]
The economy of India is currently the world's third largest in terms of real GDP (PPP) after the USA and the
People's Republic of China. The World Bank estimates India to overtake China as the fastest-growing major
economy in the world in 2015[58] Its record growth was in the third quarter of 2003, when it grew higher than
any other emerging economy at 10.4%.[59][60] Interestingly, estimates by the IMF show that in 2011 (see List
of countries by future GDP estimates (PPP)), India became the third largest economy in the world, overtaking
the Japanese economy and the Seventh largest economy by GDP (Nominal). India has grown at 7.5% in 2015.
Primary sector[edit]
India, growing at 9% per year, is the world's second largest producer of food next to China. Food processing
accounts for USD 69.4 billion as gross income.[61]
Secondary sector[edit]
India is still relatively a small player in manufacturing when compared to many world leaders. Some new
trends suggest an improvement in future, since the manufacturing sector is growing at 11-12%.[62][63][64]
[65][66][67]
Tertiary and quaternary sector[edit]
India currently has an expanding IT industry which is considered one of the best in the world. Some have
begun to describe India as a technology superpower.[68][69] It is considered the World's Office and is leading
in the Services Industry. This is mainly due to the availability of a large pool of highly skilled, low cost, English
speaking workforce.[70][71]
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The Geosynchronous Satellite Launch Vehicle in Shri Harikota. India is one of the few countries in the world
that has the capability of launching satellites into geostationary transfer orbits.
Science and technology[edit]
Main article: Science and technology in India
India is trying to develop more high skilled, English speaking people to fit in the future knowledge economy.
[72][73] India is becoming one of the world's leading producers of computer software and with mushrooming
R&D centres it is experiencing a steady revolution in science and technology.[74][75][76] A typical example of
India's rising scientific endeavours is that it was the 3rd nation to found a National Space Agency called ISRO,
after the USSR and the U.S. It was the third Asian nation to send satellites into space after China and Japan in
1970, starting with Aryabhata in 1975.[77][78] In January 2007, India became the fourth nation to complete
atmospheric reentry[79] In October 2008, India launched its first unmanned lunar probe, Chandrayaan 1,
which operated until August 2009.[80][81][82] On 14 November 2008, the Moon Impact Probe separated from
the Chandrayaan orbiter at 20:06 and was deliberately made to strike the Moon near the south pole, making
India the fourth country to reach the Moon's surface. Among its many achievements was the discovery of the
widespread presence of water molecules in lunar soil. On 24 September 2014 India became the fourth nation
to have a satellite orbiting Mars. India is the first Asian nation to achieve this and the first to do so in its first
try.[83] India and the United States have increased mutual cooperation in space-travel related technologies,
such as increasing the interoperability between Indian and US systems, and prospects for a commercial space
launch agreement with India that would allow US satellites to be launched on Indian vehicles.[84] India is
among the world leaders in remote sensing,[85] a technology coming to great use, among others, to Indian
fishermen & farmers.[86] India is also trying to join international R&D projects - e.g. it has recently joined the
European Galileo GPS Project[87] and the ITER for fusion energy club.[88] Some Indian educational and
research institutions like IIT,[89] NIT, BITS Pilani, IIM, IISc, TIFR and AIIMS are among the world's best.
Energy[edit]
To reduce the energy crisis, India is presently constructing ~ 9 civilian nuclear power reactors and several
hydro-power stations. On 25 January 2007, Russian president Vladimir Putin offered to build 4 more reactors
on a visit to India and India is expected to clinch this deal of strategical importance.[90] Recently it also made a
civilian nuclear energy deal with the US[91] and EU.[92] In recent years, India joined China to launch a
vigorous campaign to acquire oil fields around the world and now has stake in several oil fields (in the Middle
East and Russia).[93][94][95][96]

New Delhi Metro, operational since 2002, is seen as a model for other metros. With growth in economy and
technology, India is welcoming modernization.
Mass transit system[edit]
India is in the process of developing modern mass rapid transit systems to replace its existing system which is
seen as inadequate to cater to present and future urban requirements. A modern metro rail system is already
in place in the cities of Delhi, Mumbai, Chennai and Kolkata. Work is in progress or would be commencing
59

shortly for developing similar mass transit system in cities of NOIDA, Hyderabad, Bangalore, Indore,
Ahmedabad and Kochi. Indore is leading the track by implementing world class GPS enabled, low floor buses in
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a Rapid Transport System. With growth in economy and technology, India is welcoming modernisation. The
Indian rail network traverses the length and breadth of the country, covering a total length of 63,140 km
(39,200 miles). It is one of the largest and busiest rail networks in the world, transporting over 9 billion
passengers and over 350 million tonnes of freight annually.[97] Its operations covers twenty-seven states and
three Union territories and also links the neighbouring countries of Nepal, Bangladesh and Pakistan. However,
other public transport systems, such as buses are often not up to the standards followed in developed
countries. India is heading to wards high-speed rail in the country.

The granite tower of Brihadeeswarar Temple in Thanjavur was completed in 1010 CE by Raja Raja Chola I.
Tourism[edit]
Main article: Tourism in India
India, with its diverse and fascinating history, arts, music, culture, spiritual & social models has witnessed the
growth of a booming tourism industry.[98] India is a historic place with a diverse history of over five millennia.
About 3.9 million tourists travelled to India in 2005, each spending approximately $1,470 per person, higher
than that of France (the leading tourist destination in the world).[98] Foreign visitors in 2005 spent more than
US $15.4 billion annually in India.[99][100][101] Many travellers find the cultural diversity an enriching
experience, despite the hassles inefficiency, pollution and overcrowding.[102][103] Monuments like the Taj
Mahal are among the many attractions of this land.[104][105] As of 2006, Conde Nast Traveller ranked India
the 4th most preferred travel destination.[98] The Planning Commission expects 5.8 million tourists travelling
to India by 2010. The World Travel and Tourism Council believes India's tourism industry will grow at 10% per
annum in the next decade, making it lead the world in terms of growth.[98] Tourism contributes 6% of India's
GDP and employed 40 million people, making it an important factor in India's economic growth.[98] More
than 8 million foreign tourists arrived in the year 2015 against 7.68 million in 2014 recording a growth of 4.4
percent over 2014.[106][107]
Medical services[edit]
"First World medical services at Third World prices" - Indian Metros have emerged as the leading destination
of medical tourism. Last year, an estimated 150,000 foreigners visited India for medical procedures, and the
number is increasing at the rate of about 15 percent a year.[108]
Military factors[edit]
Agni-II ballistic missile.
Total strength[edit]
The Indian Armed Forces, India's main defence organisation, consists of two main branches: the core Military
of India and the Indian Paramilitary Forces. The Military of India maintains the third largest active duty force in
the world after China and the United States,[109] while the Indian Paramilitary Forces, over a million strong, is
the second largest paramilitary force in the world. Combined, the total armed forces of India are 2,414,700
strong, the world's third largest defence force.[110]
Army[edit]
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The Army of India, as the Indian army was called under British rule before 1947, played a crucial role in
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checking the advance of Imperial Japan into South Asia during World War II. It also played a leading role in the
liberation of Bangladesh in 1971. Today, the Indian Army is the world's third largest army after United States
Army and Chinese People's Liberation Army.
Air force[edit]
The Indian Air Force is the fourth largest air force in the world.[111][112] India recently inducted its second
indigenously manufactured combat aircraft. India is also developing the fifth generation stealth aircraft.
Navy[edit]
The Indian Navy is the world's fifth largest navy.[113] It is considered to have blue-water capabilities with
sophisticated missile-capable warships, aircraft carrier, minesweepers, advanced submarines and the latest
aircraft in its inventory, along with a significant use of state of the art technology that is indigenously
manufactured.[114] It operates two aircraft carriers and also plans to induct the INS Vikrant by 2018 followed
by a larger INS Vishal.
Integrated Guided Missile Development Program (IGMDP)[edit]
India started the IGMDP to be a self-reliant nation in missile development. The IGMDP program includes five
missiles like the Prithvi and Agni of ballistic missiles, surface to air missiles Trishul and Akash and also the anti
tank Nag missile. Prithvi and Agni missiles are inducted into the armed forces and form the basis of Indian
nuclear second strike capability. Trishul missile is declared a technology demonstrator. The Akash (Sky) is in
service with the Indian Army and the Indian Air Force. While Nag and Helina missiles are undergoing user
trials. Recently, a new weapons system, the beyond visual range air-to-air Astra missile was added to the
project. Also India has fielded many modern missiles like the anti ballistic missiles like the AAD and PAD along
with submarine launched ballistic missiles for its Arihant class of nuclear ballistic submarines. The expertise in
developing these missiles has helped Indian scientists to contribute to joint weapon development programs
like the Brahmos and Barak-II. India is also developing long range cruise missiles similar to the Tomahawk class
of missiles called Nirbhay. There are reports of India developing an intercontinental ballistic missile beyond
the range of ten thousand kilometers.[115] India is self-reliant in missile technology.[116]
Nuclear weapons[edit]
India has possessed nuclear weapons since 1974, when it did the Pokharan I nuclear tests, and the means to
deliver them over long distances. However, India is not a signatory to the Nuclear Non-Proliferation Treaty (on
grounds of security concerns and that India condemns the NPT as discriminatory).[117][118]
Arms imports[edit]
India is currently one of the world's largest arms importers, spending an estimated US$16.97 billion in 2004.
India has made military technology deals with the Russian Federation, the U.S., Israel and the EU.[119]
Current major roles[edit]
The Indian Armed Forces plays a crucial role in anti-terrorist activities and maintaining law and order in the
disputed Kashmir region. India has also participated in several United Nations peace-keeping missions,
currently being the largest contributor to UN peace keeping force and is the largest contributor to the United
Nations Democratic Fund, to which the USA, the world's only current superpower, contributes nothing.[120]
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Cultural factors[edit]
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Main article: Culture of India
History[edit]
Main article: History of India
India is one of two ancient civilizations, dating back to at least 5000 years, which have stood the test of time
and survived against all odds. Indians invented the numbering system (introduced into the West by Arabic
mathematicians, Arabic numerals), the concept of zero, basic algebra, etc.[121][122][123] India has a long
history of cultural intercourse with many regions of the world, especially within Asia, where its cultural
influence has spread through the philosophy of religions like Buddhism, Hinduism, Sikhism, etc. - particularly in
East and Southeast Asia. Many religions with origins outside the Indian continent - Islam, Christianity, Judaism,
Zoroastrianism, Bahá'í Faith - have found followers in India. Indian culture has spread to foreign lands through
wandering traders, philosophers, migration and less through conquest. According to Chinese ambassador to
the United States, Hu Shih:
India conquered and dominated China culturally for 20 centuries without ever having to send a single soldier
across her border. - Hu Shih[124][125]
Past experience of having powerful states[edit]
The Maurya, Gupta, Mughal, Vijayanagara and Chola empires provide the necessary confidence that a
powerful state can be established despite having diversity.
Cinema[edit]
Main article: Cinema of India
India's film industry produces more feature films than any other.[126] In a year, it sold 3.6 billion tickets, more
than any other film industry in the world (In comparison, Hollywood sold 2.6 billion tickets).[127] The cinemas
play a major role in spreading Indian culture worldwide. Indian cinema transcended its boundaries from the
days of film Awara, a great hit in Russia. Bollywood films are seen in central and west Asia.[128][129][130]
[131] Indian films have also found audience in eastern societies.[132] India's film industry is now becoming
increasingly popular in Western society, with Bollywood festivals occurring numerous cities[133][134] and
Bollywood dance groups performing in New Years Eve celebrations, treatment which other non-English film
industries generally do not receive.[135]

Golden temple
Unity in diversity of world view[edit]
India has a multi-ethnic, multi-lingual and multi-religious society living together. The subcontinent's long and
diverse history has given it a unique eclectic culture. It is often associated with spirituality. Thanks to its history
of both indigenous and foreign influences - like the ancient Indian religions (Buddhism, Hinduism, Jainism and
Sikhism and the ancient Middle East Asian schools of thought (Abrahamic - Islam, Christianity, Judaism etc.) -
the current Indian civilizational psyche is evolving into a complex mix of them - sometimes a superposition of
62

religious philosophies with acceptance of the conflicting cosmologies, sometimes striking a middle ground,
and sometimes taking the practical attitude - popular with the young - of "filtering the common best, and
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leaving the rest", thus leading to the creation of many syncretic mix of faiths (such as Sai Baba of Shirdi). Since
Independence, India has regained its more progressive schools of thought, like - democracy, secularism, rule
of law, esteem for human rights, rational deductive reasoning, development of Science and Technology, etc. -
are making slow but steady inroads into the collective modern Indian psyche. India's diversity forces it to
evolve strong foundations of tolerance and pluralism, or face breakup. The Indian public is now also accepting
modern western influences in their society and media - and what is emerging is a confluence of its past local
culture with the new western culture ("Social Globalisation"). For some futuristic social thinkers, the
miscegenation of diverse ancient culture with modernity, spirituality with science/technology, Eastern with
Western world-view is potentially making India a social laboratory for the evolution of futuristic global-unity
consciousness.[136][137][138]
Points against the rise of India as a superpower[edit]
Political obstacles[edit]

India has had border disputes with both China and Pakistan. This has led to 3 wars with Pakistan and a war
with China. Mapped is the location of the 1999 Kargil Conflict, which is the most recent of India's direct
military encounters with the Pakistani military.
Cost of democratic republicanism[edit]
Democratic republicanism has its value,[139] more so in a multi-ethnic country like India.[140] However, the
applicability of the "theoretical" virtues of republicanism on a country like India is sometimes questioned.[141]
[142][143] Some thinkers consider India's diverse democracy to levy a huge tax on its economy.[144] The
Indian government has to consider many interest groups before decision making. However, it should be noted
that India is relatively a much younger republic when compared to other major democracies. Moreover, it is
predicted that in the long run, India being a democracy will provide it an edge over non-democratic
competitors like China.[145]
Insurgency[edit]
India has had significant successes with quelling many insurgencies, most prominently the Punjab insurgency
(Khalistan) and the surrender of large sections of insurgent outfits like the United Liberation Front of Asom in
1992 and National Liberation Front of Tripura in 2000-2001. However the Indian government has
acknowledged that there has been a dramatic increase in support for the Maoists (Naxalite) insurgency in the
last decade.[146] Maoist rebels have increased their influence over the last 10 years, especially in regions near
Nepal, particularly by targeting and gaining support from poor villages in India. The boom in support appears
to have been also boosted by the successes of the nearly 10-year-old Maoist rebellion in Nepal. The maoist
insurgency exploits the poor by forced conscription. India's government has recently taken a new stance on
the Maoist insurgency, pulling the affected states together to coordinate their response. It says it will combine
improved policing with socio-economic measures to defuse grievances that fuel the Maoist cause.[147]
Disputes[edit]
India's growth is impeded by disputes with its neighboring China and Pakistan (over historical border and
ideological issues) and disputes with Bangladesh (over water availability and the Farakka Dam). Hence, India's
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neighbors such as China and Pakistan remain distrustful towards India. It is also occasionally burdened with
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instability issues within some localised-regions of the subcontinent. In an effort to reduce political tension and
increase economic cooperation, in recent years, India has improved its relations with its neighbors.[148]
Lack of international representation[edit]
India is not a permanent member of the UNSC, although currently it is one of the four-nations group actively
seeking a permanent seat in the council. Thus India lacks the ability to extend its influence or ideas on
international events in the way superpowers do.[149]
Economic obstacles[edit]
Poverty[edit]
As of 2011, approximately 21.9% of India's population lived below poverty line.[150][151] Poverty also begets
child labour.[152] Various reforms, including mass employment schemes have been undertaken by the
government to tackle this problem,[153] and India has been quite successful in reducing its share of poverty.
The number of people living on $1 a day is expected to fall in South Asia from 41.5 per cent in 1990 to 16.4 per
cent until 2015.[154] However, the issue of poverty in India is not fully resolved. There is consensus among
economists that overall poverty in India has declined, the extent of poverty reduction is often debated.[155]
The economic reforms of the early 1990s were followed by rates of high economic growth. Its effect on
poverty remain controversial, and the official numbers published by the Government of India, showing a
reduction of poverty from 36% (1993–94) to 26% (1999 – 00), to 22% (2004–05), have been challenged both
for allegedly showing too little and too much poverty reduction.[156] While there is a consensus on the fact
that liberalization has led to a reduction of income poverty, the picture is not so clear if one considers other
non-pecuniary dimensions (such as health, education, crime and access to infrastructure). With the rapid
economic growth that India is experiencing, it is likely that a significant fraction of the rural population will
continue to migrate toward cities, making the issue of urban poverty more significant in the long run.[157]
Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction
in overall poverty in India. He insisted that the 1999-2000 survey was well designed and supervised, and he
further defended that just because the numbers did not appear to fit preconceived notions about poverty in
India, they should not be dismissed outright.[158] Nicholas Stern, vice president of the World Bank, has
published defenses of the poverty reduction statistics. He argues that increasing globalization and investment
opportunities have contributed significantly to the reduction of poverty in the country. India, has shown one
of the clearest co-relation trends of globalization with the accelerated rise in per-capita income.[159][160]
Infrastructure[edit]
The social infrastructure in India[161] such as roads, power grid, water, communications infrastructure,
housing and education are often below standards, and not catching up with the tune of its economic progress.
[162] Continued poor infrastructure might serve as a bottleneck to further economic development. The 2012
India blackouts, which affected millions, was a result of such problems. The government is, however,
improving the infrastructure, such as expanding the freeway and highway system and bringing it up to global
standards. As of 2005, India only had 4,885 km of central-divided expressways,[163] while the U.S. and China
have 90,000 km and 41,000 km of expressways, respectively.[164]
Disorganization[edit]
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India's continual economic prosperity is also hindered by bad governance and ubiquitous red tape[165]
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(‘Bureaucratic Raj'[166]). Retrogressive government regulations affect many areas. For example, in some
states, black outs and power rationing are common due to underinvestment, differing state and local
regulations, etc.
Inflation and overheating[edit]
Despite India's growth spurt of 8% p.a. in recent years, its sustainable pace is still much lower than China's,
which puts its economy more at risk of overheating and rising inflation.[167] The Reserve Bank of India (RBI)
has acknowledged the risk of overheating and has been tightening monetary policy steadily. It is debatable
whether this alone will be sufficient to ease inflationary pressures. The economy is running near or above
capacity, and the RBI has noted that production must rise at a pace sufficient to match overall GDP growth if
further inflationary pressures are to be avoided. The Indian government has said that much of the rise in
inflation recently can be attributed to short-term supply constraints, such as a shortage of key foodstuffs
thanks to an erratic summer monsoon.[168]

Dams like the Kolkewadi Dam have mitigated India's power needs.
Energy dependence and costs[edit]
India heavily depends on foreign oil - a phenomenon likely to continue until non-fossil/renewable energy
technology becomes economically viable in the country.[169] To avert an energy crisis, India is desperately
seeking alternate means of energy. India can sustain its growth to higher trajectories only by the co-operation
of other countries. As for now, India is energetically expensive since India has to import over 70% of its energy,
[170] thus making costs of comforts - like personal car or even air conditioning - extremely high. It is however,
steadily combating its energy issues.
Unemployment[edit]
Unless India finds a quick way to generate jobs, its population of unemployed youths could be a reason for
instability.[171] India's growth in the services sector and Information Technology sector has not been matched
by growth in manufacturing which can provide more jobs.[172] Some claim that this sector may lose
importance in the future.[173] India is leveraging on new sectors like the KPO (Knowledge Process
Outsourcing).[174][175]
Health[edit]
India's health scenario is dismal with diseases and malnutrition constantly affecting the poorest quarter of the
populace.[176][177][178] Mortality is still relatively high and the bane of AIDS is spreading quickly.[179]
According to a report of United Nations Development Programme, India has the highest population living with
AIDS/HIV and its economy might suffer a setback if it does not check the problem of the virus' spread. It is
estimated that India's economic growth will decline by 0.86 percentage annually if the AIDS problem is not
properly dealt with. To improve the situation, a number of projects such as the building of hospital chains (like
the Apollo Hospitals, amongst others) has laid the foundation for a health system that matches global
standards. However, these hospitals are sometimes used by foreigners as a cheap yet effective source of
health services and much remains to be done for India's very poor.
65
Page
Literacy in India grew very slowly until independence in 1947. An acceleration in the rate of literacy growth
occurred in the 1991–2001 period.
Low literacy[edit]
As per the 2001 India census, India's national literacy is only 65.2 percent.[180][181] Literacy drive is spreading
slowly to other states.[182] India's youth (age 15 to 24) literacy rate was 76.4% between 2000 and 2004.[183]
At current rates India will take no less than 20 years for a literacy of 95%.[184] Literacy in India is not
homogeneous, some states in India have more impressive literacy rates than others. Kerala, a south-Indian
state widely recognized as the most well-educated state in India, recorded an impressive 90.92% literacy rate
in 2001.[185] On the other hand, the north-Indian state of Bihar lags behind with 47.53%.[186] India's adult
literacy rates (61.3% in 2002), is just a little better compared to other nations in South Asia except Sri Lanka's
92%,[187] with Nepal next at 44%, Pakistan at 41.5% and Bangladesh the lowest at 41.1%.
Climate and environmental problems[edit]
The majority of India lies in the tropical climate zone, which may have a negative impact on its agricultural and
overall economic development. The climate thesis of economic development was first argued by Adam Smith
and recently by David Landes in his The Wealth and Poverty of Nations. Tropical areas generally average
enough rainfall, but the timing is often irregular and unpredictable. The rain drops are large and the rate of fall
often torrential. One answer to irregular moisture is storage and irrigation, but this is countered in these
regions by incredibly high rates of evaporation. In the Agra region of India, for example, rainfall exceeds the
needs of local agriculture for only two months in the year, and the excess held in the soil in those wet months
dries up in only three weeks.[188] Tropical zones are also more prone to endemic water-borne and parasitic
diseases such as cholera and malaria.[189] As a result of climate change, the Gangotri Glacier, among others,
is receding.[190][191] Also, of the 3 million premature deaths in the world that occur each year due to
outdoor and indoor air pollution, the highest number are assessed to occur in India.[192]
Social issues[edit]
Main article: Reservations in India
Communal violence[edit]
India has a diverse mix of various religions and races. The majority are Hindus by religion, followed by
Muslims, Sikhs, Christians, Jains, Buddhists, Bahaii and many more. Though most religions in India have been
practising religious tolerance in their histories, the partition and subsequent terrorism had created some
degree of uneasiness among some. [193][194][195] However, in recent years, relations between the different
religious groups have considerably changed for better. For instance, a real chunk of India's celebrities -
sporting legends, film stars, industrialists, artists, politicians, scientists, head-of-state, etc. - have come from
various non-majority roots, representing the true diversity of India.[196]
Social divide[edit]
The problem of India's social divide is often linked to its millennia-old caste system.[197] In an attempt to
eliminate the caste system, the Indian government has introduced special quotas for low-caste Indians in
educational institutions and jobs. The measure is with the motive of helping lower-caste Indians to pursue
66

higher education and thereby elevate their standard of life. However, the system is often criticised about its
Page

effectiveness as so called creamy layer (rich among the lower caste) get non-needed advantage & leave other
lower caste groups poor only.[198][199] There also have been cases of reverse-discrimination and persecution
of upper castes by lower castes.[200][201]
32. Outline the recent demographic trends in India.
This article is about the people from India. For other uses, see Indian (disambiguation).
Demographics of India
India population density map en.svg
Map showing the population density of each district in India.
Population 1,336,286,256 (July 2016 est.)[1]
Density 383 people per.sq.km (2011 est.)
Growth rate Increase 1.25% (2013) (96th)
Birth rate 20.22 births/1,000 population (2013 est.)
Death rate 7.4 deaths/1,000 population (2013 est.)
Life expectancy 68.89 years (2009 est.)
• male67.46 years (2009 est.)
• female 72.61 years (2009 est.)
Fertility rate 2.3 children born/woman (SRS 2013)
Infant mortality rate 40 deaths/1,000 live births (2013 est.)
Age structure
0–14 years 31.2% (male 190,075,426/female 172,799,553) (2009 est.)
15–64 years 63.6% (male 381,446,079/female 359,802,209) (2009 est.)
65 and over 5.3% (male 29,364,920/female 32,591,030) (2009 est.)
Sex ratio
At birth 1.10 male(s)/female (2013 est.)
Under 15 1.10 male(s)/female (2009 est.)
15–64 years 1.06 male(s)/female (2009 est.)
65 and over 0.90 male(s)/female (2009 est.)
Nationality
Major ethnic See Ethnic Groups of India
Language
Official See Languages of India

Crude birth rate trends in India

(per 1000 people, national average)[2][3][4]

Infant mortality rate trends in India

(per 1000 births, under age 1, national average)
India is the second most populous country in the world, with 1,336,286,256 (1.3 billion) people (May
2016),[1][5] nearly a fifth of the world's population. Already containing 18% of the world's population,
India is projected to be the world's most populous country by 2022, surpassing China, its population
reaching 1.6 billion by 2050.[6][7] Its population growth rate is 1.2%, ranking 94th in the world in 2013.
[8] The Indian population had reached the billion mark by 1998.
67

India has more than 50% of its population below the age of 25 and more than 65% below the age of 35.
It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and
Page

48 for Japan; and, by 2030, India's dependency ratio should be just over 0.4.[9]
India has more than two thousand ethnic groups,[10] and every major religion is represented, as are
four major families of languages (Indo-European, Dravidian, Austroasiatic and Sino-Tibetan languages)
as well as two language isolates (the Nihali language[11] spoken in parts of Maharashtra and the
Burushaski language spoken in parts of Jammu and Kashmir).
Further complexity is lent by the great variation that occurs across this population on social parameters
such as income and education. Only the continent of Africa exceeds the linguistic, genetic and cultural
diversity of the nation of India.[12]
The sex ratio is 944 females for 1000 males (2016).[13]

Religions of India (Census 2011)[29]

Reli Populati
Percent (%)
gion on

1,210,854,
All 100.00
977

966,378,8
Hindus 79.80
68

Musli 172,245,1
14.23
ms 58

Christi 27,819,58
2.30
ans 8

20,833,11
Sikhs 1.72
6

Buddh
8,442,972 0.70
ists

Others 7,937,734 0.66

Jains 4,451,753 0.37

Not
2,867,303 0.24
stated

Largest cities or towns in India

Census India, 2011 [49]

R R
a Na Stat a Stat Po
Pop. Name
n me e/UT n e/UT p.
68

k k
Page
Religions of India (Census 2011)[29]

Reli Populati
Percent (%)
gion on

3,0
Mu Mah Raja
12,478,44 1 73,
1 mba aras Jaipur stha
7 1 35
i htra n
Mumbai 0

Utta 2,9
Delh Delh 11,007,83 1 Kanpu r 20,
2
i i 5 2 r Prad 06
esh 7
Delhi
Utta 2,9
Ben Karn
1 Luckn r 01,
3 galu atak 8,425,970
3 ow Prad 47
ru a
esh 4

2,4
Hyd Tela Mah
1 Nagpu 05,
4 erab ngan 6,809,970 aras
4 r 42
ad a htra
1

Mad 1,9
Ahm
Guja 1 hya 60
5 eda 5,570,585 Indore
rat 5 Prad 52
bad
esh 1

Tami 1,8
Mah
Che l 1 18,
6 4,681,087 Thane arast
nnai Nad 6 87
ra
u 2

Wes Mad 1,7

Kolk t 1 Bhopa hya 95,
7 4,486,679
ata Beng 7 l Prad 64
al esh 8

And 1,7
Visakh
Sura Guja 1 hra 30,
8 4,462,002 apatn
t rat 8 Prad 32
am
esh 0

9 Vara Utta 3,676,841[ 1 Pimpri Mah 1,7

69

dubious  –  discuss]
nasi r 9 - aras 29,
Page

Prad Chinc htra 35

 Religions of India (Census 2011)[29]

Reli Populati
Percent (%)
gion on

esh hwad 9

1,6
Mah
1 Pun 2 Biha 83,
aras 3,115,431 Patna
0 e 0 r 20
htra
0

33. Outline the role of MNC’s in India. Compare MNC’s in India with India MNC’s.

100's of MNCs coming into Indian Market in the name of liberalization every year. What are the
primary responsibilities, accountability and moral resp to be set and imposed on Multi-national
companies spreading their wings in India?

Globalization is the driver to multi-nationalism. Large MNCs (Fortune 500 companies) have looked at
India as potential growth market, as Indian Economy would be the 4th Largest Economy in terms of
Purchasing Power parity and by 2025 it is projected to be about 60% of US Economy.

Large corporations whose entry into Indian Economy has resulted in mergers and acquisitions in a big
way through FDI, etc., Yes, those who have/having potential to do multi-million $ business are being
acquired and/or merged with the world's large organizations. This has created and/or increased the
wealth of the stake holders of Indian companies including employees. However, with this, the
balancing act between the RICH and the POOR is not maintained.

On the other hand, there has been huge loss to small and medium enterprises when a foreign company
enters Indian market to offer their products and services. Not all such companies see growth & profits
unless the local needs are met in terms of requirements, logevity, emotional fitment and the cost. In
this process, such companies end up selling with desparation and close down their business in a short
span. SMEs in specific, who have invested in products and solutions stand nowhere, but to lose the
money where they have paid it through nose.

Another instance where entrepreneursare running anciliary and distribution business for large retail
and industrial manufacturers like 3M India, GE, etc., for example under huge trust and confidence.
These MNCs load these small and medium enterpreneurs with such terms and conditions that protect
the principal companies than the entrepreneurs. Recent experience in the Indian market, where one
of the large MNCs established the business through distribution network (where direct selling was self-
70

prohibited) has started direct selling, pouching of resources from those distributors, creating havoc in
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the latter's organizations, etc., Such brutal act on MNC's part is killing the enterpreneurship in India.
 For such MNCs, global strategies matters more, than the economic condition of our country and its
people. It is just a minute's job for them to close down the business leaving all its employees and
distributors in lurch.

The question is, how do we protect the interest of our own people's interest and how our
Governments act in favor of our own countrymen in the days to come. In this corrupt economy, the
imbalance between rich and poor is well maintained and no such efforts are being put in to bring the
living of millions of our country.

High time for us to tell MNCs, to GET BACK TO BASICS OF BUSINESS, DO NOT GIVE UP MORALS AND
ETHICS WHICH HAUNTS GROWTH OF INDIAN ENTERPRENEUR AND NOT TO KILL THE SPIRIT, BUT TO
BRING IN INNOVATION, MAKE PROFITS BUT IMPROVING THE LIFE OF INDIANS BUT NOT TAKING AWAY
THE LIVELIHOOD FOR SMALL AND MEDIUM ENTERPRENEURS, THAT PROVIDE EMPLOYEMENT
OPPORTUNITIES TO CRORES.

34. Outline the working of NSE in India.

What is the 'National Stock Exchange Of India Limited - NSE'
The National Stock Exchange Of India Limited (NSE) is India's largest financial market. Established in 1992, the
NSE has developed into a sophisticated, electronic market, which ranks third in the world for transacted
volume. The NSE conducts transactions in the wholesale debt, equity and derivative markets.

BREAKING DOWN 'National Stock Exchange Of India Limited - NSE'

Based in Mumbai, India, the National Stock Exchange is a leader in market technology. The exchange's
supports more than 3,000 VSAT terminals, making the NSE the largest private wide-area network in the
country. The National Stock Exchange has been a pioneer for Indian financial markets, being the first
electronic limit order book to trade derivatives and ETFs.

35. Analyse the impact of major social problems of over population, caste and class conflicts, corruption on
the process of modernization of Indian society.
The term ‘Modernisation’ is a broader and complex term. According to S.H. Alatas, “Modernisation is a
process by which modern scientific knowledge is introduced in the society with the ultimate purpose of
achieving a better and more satisfactory life in the broadest sense of the term accepted by the society
concerned”.

Prof. Yogendra Singh says, “Modernisation symbolizes a rational attitude towards issues and their
evaluation but not from particularistic point of view”. He also says that modernisation is rooted in the
scientific world view and it has deeper and positive association with levels of diffusion of scientific
71

knowledge, technological skill and resources.

Page

Prof. S.C. Dube says, “Modernisation refers to a common behavioural pattern characterised by:
(a) A rational and scientific world view.
(b) Growth and ever increasing application of science and technology.
(c) Adaptation of new institutions emerged in the society to cope with the new situation dominated by
science and technology.

C.E. Black in his writing, “Dynamics of Modernisation” defined modernisation as, ”Modernisation is a
process by which historically evolved institutions are adopted to the rapidly changing functions that
reflect the unprecedented increase in man’s knowledge permitting control over his environment, that
accompanies the scientific revolution”. Here, Black has given prime importance to the institutions and
their roles in the process of modernisation.

W.E. Moore (1961) suggested that a modern society has specific economic, political and cultural
characteristics.

In economic sphere a modern society is characterised by:

(a) Development in technology.

(b) Specialization in economic role.
(c) Scope for saving and investment.

(d) Expansion of market (from local to international)

In political sphere modernisation of a society expects:

(a) Declining of traditional rulers.

(b) Formulation of ideology for the rulers to handle the power.

(c) Decentralization of power among the members of the society. Scope must be provided to all to
participate in the decision making process.

In the cultural sphere a modernizing society is characterised by:

(a) Growing differentiation among the major elements of culture like religion, philosophy and science.

(b) Spread of literacy and secular education.

(c) Introduction of complex institutional system for the advancement of specialized roles.

(d) Expansion of media communication.

72

(e) Development of new cultural elements based on:

Page
(i) Progress and improvement.

(ii) Expression on ability.

(iii) Emphasis on dignity of the individual and his efficiency.

Modernisation is a process of adaptation of new values, cultural elements and technology in the
various fields of life. It is indeed the ability of a society to confront, overcome and prepare itself to
meet the new challenges.

While doing so the society adopts two methods:

1. By rearranging its social structure.

2. By modifying the traditional norms and values.

Learner emphasized upon mobility and high level of participation. A modern man is more mobile in the
sense that he can more frequently move from one place to another and from one occupation to
another, from one status to another. A high degree of participation indicates a strong sense of
participation in common affairs of the state and community.

Characteristics of Modernisation:
1. It is a revolutionary process.

2. It is a multidimensional process.

3. It is a universal process.

4. It is a complex process.

5. It is a global process.

6. It is a irreversible process.

7. It is a continuous and lengthy process.

8. It is a systematic process.

9. It indicates scientific temper, rationality and secular attitude.

10. It is a phased process.

73

11. Modernized society is an open society.

Page
12. It is a progressive society.

13. It is a critical process because it requires not only a relatively stable new structure but also capable
of adopting continuously changing conditions and problems.

14. It is a centralized process.

Eisenstadt (1965) in his article “Transformation of Social, Political and Cultural Orders in
Modernisation” has given his opinion that modernisation requires three structural characteristics of a
society. Firstly, a high level of structural differentiation. Secondly, a high level of social mobilization and
thirdly a relatively centralized and autonomous institutional framework.

Modernisation is critical in the sense that it requires not only a relatively stable new structure in the
society but it also expects that the society must acquire capability of adopting to continuously changing
conditions and problems. Its success depends on the ability of the society to respond the elements. But
all societies don’t respond modernisation uniformly.

Herbert Blumer in his writing, “Industrialisation and the Traditional Order” has mentioned five different
ways through which a traditional society can respond to the process of modernisation.

(a) Rejective response:

A traditional society may not like the elements of modernisation and the society may reject it.

Mainly two factors come to the forefront to reject modernization:

(i) Human factor which includes powerful group, jamindars/land lords, middlemen etc. to protect their
vested interest.

(ii) Values system of the society which includes traditional values, customs, belief system etc. Both the
factors try to maintain traditional order and to reject the process of modernisation.

(b) Disjunctive Response:

In this type of response, modernisation as a process operates as a detached development. The old
elements and new elements co-exist but without any interference. People do not face any type of
conflicting situation due to modernisation. They could lead their traditional life.

(c) Assimilative Response:

Society, in this case, accepts the elements of modernisation without affecting its, own organisation and
way of life. It assimilates the elements within its system without disruption. For example, in Indian
74

rural society the farmers use fertilizer and other modern machineries like tractor but without affecting
Page

their pattern of life.

(d) Supportive Response:

In supportive response society accepts modern elements to strengthen the conditional order. The
traditional groups and institutions want to take advantages of use of modern elements. Here
modernisation acts as the supportive source to the traditional pattern. For example, introduction of
science and technology in educational system.

(e) Disruptive Response:

This type of response takes place, when the traditional order is underestimated at many points. It
occurs when the society tries to accommodate modern elements in the traditional order. For example,
the situation of Oriya language in Orissa.

Considering these five responses two types of situations may occur in the society. In one situation
society may respond all these in different points or period and in another situation society may express
all these responses with different combinations.

In India, response to modernisation depends on three factors as it constitutes a multi-dimensional

process. Firstly, the nature of the choice that our society has made on the preference of the people in
accepting modern elements. Secondly, interest of the people in using modern elements also counts
much for that expresses the nature of our response to the changes due to modernisation. Thirdly, the
role of the cultural tradition based on history is important as value system controls our behaviour in
using and interpreting modern elements.

Modernisation in India:
Due to modernisation so many changes are found in India:

1. Introduction of new institutions like banking, mass media communication etc.

2. Introduction of new value systems such as equality, justice, individualism, secularism etc.

3. Acceptance of scientific innovation.

4. Increase in the standard of living.

5. Introduction of large scale industries.

6. Restructuring of political system, i.e., introduction of democracy.

7. Introduction of structural changes in social institutions like marriage, family, caste etc.
75

8. Emergence of the middle class.

Page
 9. There are some eliminative changes like disappearance of cultural traits, behaviour pattern, values
etc. Example, abolition of feudal power.

10. There is shifting of attitude from sacred to secular.

11. Emergence of new forms because of synthesis of old and new elements. For example, nuclear
family in structure but functioning as joint.

12. Adoption of new cultural traits such as new election system.

36. The largest employment provider in Indi is its informal economy. Discuss the features of this informal
economy.
The informal sector, informal economy, or grey economy[1][2] is the part of an economy that is neither
taxed, nor monitored by any form of government. Unlike the formal economy, activities of the informal
economy are not included in the gross national product (GNP) and gross domestic product (GDP) of a
country.[3] The informal sector can be described as a grey market in labour.
Other concepts which can be characterized as informal sector can include the black market (shadow
economy, underground economy), agorism, and System D. Associated idioms include "under the
table", "off the books" and "working for cash".
Although the informal sector makes up a significant portion of the economies in developing countries it
is often stigmatized as troublesome and unmanageable. However the informal sector provides critical
economic opportunities for the poor[3][4] and has been expanding rapidly since the 1960s.[5] As such,
integrating the informal economy into the formal sector is an important policy challenge
The informal sector is largely characterized by several qualities: easy entry, meaning anyone who
wishes to join the sector can find some sort of work which will result in cash earnings, a lack of stable
employer-employee relationships,[12] a small scale of operations, and skills gained outside of a formal
education.[3] Workers who participate in the informal economy are typically classified as employed.
The type of work that makes up the informal economy is diverse, particularly in terms of capital
invested, technology used, and income generated.[3][12] The spectrum ranges from self-employment
or unpaid family labor[12] to street vendors, shoe shiners, and junk collectors.[3] On the higher end of
the spectrum are upper-tier informal activities such as small-scale service or manufacturing businesses,
which have more limited entry.[3][12] The upper-tier informal activities have higher set-up costs,
which might include complicated licensing regulations, and irregular hours of operation.[12] However,
most workers in the informal sector, even those are self-employed or wage workers, do not have
access to secure work, benefits, welfare protection, or representation.[4] These features differ from
businesses and employees in the formal sector which have regular hours of operation, a regular
location and other structured benefits.[12]
The most prevalent types of work in the informal economy are home-based workers and street
vendors. Home-based workers are more numerous while street vendors are more visible. Combined,
the two fields make up about 10–15% of the non-agricultural workforce in developing countries and
over 5% of the workforce in developed countries.[4]
While participation in the informal sector can be stigmatized, many workers engage in informal
76

ventures by choice, for either economic or non-economic reasons. Economic motivations include the
Page

ability to evade taxes, the freedom to circumvent regulations and licensing requirements, and the
 capacity to maintain certain government benefits.[13] A study of informal workers in Costa Rica
illustrated other economic reasons for staying in the informal sector, as well as non-economic factors.
First, they felt they would earn more money through their informal sector work than at a job in the
formal economy. Second, even if workers made less money, working in the informal sector offered
them more independence, the chance to select their own hours, the opportunity to work outside and
near friends, etc. While jobs in the formal economy might bring more security and regularity, or even
pay better, the combination of monetary and psychological rewards from working in the informal
sector proves appealing for many workers.[14]
The informal sector was historically recognized as an opposition to formal economy, meaning it
included all income earning activities beyond legally regulated enterprises. However, this
understanding is too inclusive and vague, and certain activities that could be included by that definition
are not considered part of the informal economy. As the International Labour Organization defined the
informal sector in 2002, the informal sector does not include the criminal economy. While production
or employment arrangements in the informal economy may not be strictly legal, the sector produces
and distributes legal goods and services. The criminal economy produces illegal goods and services.[4]
The informal economy also does not include the reproductive or care economy, which is made up of
unpaid domestic work and care activities. The informal economy is part of the market economy,
meaning it produces goods and services for sale and profit. Unpaid domestic work and care activities
do not contribute to that, and as a result, are not a part of the informal economy

37. How does the conflict between tradition and modernity in India? Discuss in detail.
Yogendra Singh has defined Indian society and its traditions with reference to hierarchy, holism,
transmigration or continuity and transcendence. He argues that the Indian society also contains
traditions of Islam and tribals. Prior to Yogendra Singh, the preceding sociologists such as D.P. Mukerji,
D.N. Majumdar, M.N. Srinivas, G.S. Ghurye, A.R. Desai, Milton Singer and others have also made efforts
to provide an explanation to the meaning of tradition in Indian society.

In the study of modernization in India, tradition has always been an obsession. During the 1950s, there
was a hot debate in India on tradition and modernity. In the west also, when modernization began
after enlightenment, there was a serious debate on religion, science, state and fundamentalism.

Feudalism was challenged by rationality, capitalism and science. In India, modernity needs to be
analyzed in the context of liberalism, democracy and capitalism. The Britishers had colonial power to
exploit the Indian masses, but in their effort they also wanted not to interfere in the traditional
structure of Indian society.

The princely rulers were highly antagonistic to modernity. Their survival depended on the continuity
and strengthening of tradition. And, therefore, in Indian situation also, it is quite meaningful to discuss
modernity in terms of India’s traditions and hence the obsession.

1. D.P. Mukerji’s analysis of tradition:

Dhurjati Prasad Mukerji (1894-1961), popularly called as D.P., was one of the founding fathers of
77

sociology in India. He was born in West Bengal but worked all through his life in Lucknow. He took his
Page
degrees in history and economics from Calcutta University. He was a Marxist but preferred to call
himself a Marxiologist, i.e., a social scientist of Marxism.

He analyzed Indian society from the Marxian perspective of dialectical materialism. He argued that
there is dialectical relation between India’s tradition and modernity, British colonialism and
nationalism and individualism and collectivity, i.e., sangha. His concept of dialectics was anchored in
liberal humanism.

He argued all through his works that traditions are central to the understanding of Indian society. The
relations between modernization which came to India during the British period and traditions is
dialectical. It is from this perspective of dialectics that, D.P. argued, we shall have to define traditions.

The encounter of tradition with modernization created certain cultural contradictions, adaptations and
in some cases situations of conflict also. Describing the consequences of the tradition-modernity
encounter, Yogendra Singh writes:

In D.P. Mukerji’s writing we find some systematic concern with the analysis of Indian social processes
from a dialectical frame of reference. He mainly focuses upon the encounter of the tradition with that
of the west which, on the one hand, unleashed many forces of cultural contradiction and, on the other,
gave rise to a new middle class. The rise of these forces, according to him, generates a dialectical
process of conflict and synthesis which must be given a push by bringing into play the conserved
energies of the class structure of Indian society.

The encounter between tradition and modernity, therefore, ends up in two consequences:

(1) Conflict, and

(2) Synthesis.
Indian society as D.P. envisages is the result of the interaction between tradition and modernity. It is
this dialectics which helps us to analyze the Indian society. D.P.’s concept of tradition appeared for the
first time in the year 1942 when his book Modern Indian Culture: A Sociological Study was published.
His characterization of tradition in the context of Indian culture runs as below:

As a social and historical process … Indian culture represents certain common traditions that have
given rise to a number of general attitudes. The major influences in their shaping have been Buddhism,
Islam, and western commerce and culture. It was through the assimilation and conflict of such varying
forces that Indian culture became what it is today, neither Hindu nor Islamic, neither a replica of the
western mode of living and thought nor a purely Asiatic product.

Composition of tradition:
Indian traditions are the resultants of certain historical processes. They actually construct the structure
of Indian culture. These traditions belong to several ideologies such as Buddhism, Islam, Christianity,
tribals and western modernity. The process of synthesis has, therefore, constructed these traditions.
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In this respect, it would be mistaken to believe that India’s traditions are Hindu only. In fact, they
combine traditions of various ethnic groups of the country. How the principles of various religious
ideologies shaped the Indian traditions has been interpreted by T.N. Madan as below:

In this historical process, synthesis had been the dominant organizing principle of the Hindu, the
Buddhist and the Muslim who had together shaped a worldview in which, according to D.P., ‘the fact of
being was of lasting significance’.

His favorite quotation from the Upanishads was charaivati, keep moving forward. This meant that
there had developed an indifference to the transient and the sensate and a preoccupation with the
subordination of the ‘little self to and ultimately its dissolution in the ‘supreme reality’.

D.P. tried to provide a classification of Indian traditions under three heads, viz., primary, secondary and
tertiary. The primary traditions have been primordial and authentic to Indian society. The secondary
traditions were given second ranking when the Muslims arrived in the country.

And by the time of the British arrival, Hindus and Muslims had yet not achieved a full synthesis of
traditions at all levels of social existence. There was a greater measure of agreement between them
regarding the utilization and appropriation of natural resources and to a lesser extent in respect of
aesthetic and religious traditions. In the tertiary traditions of conceptual thought, however, differences
survived prominently.

Sources of tradition:
Admittedly, traditions occupy a central place in any analysis of India’s traditions and modernization.
But D.P. has not given the contents of these traditions. The major sources of traditions are Hinduism,
Buddhism, Islam and western culture, but what traditions, for instance, of Hinduism or Islam constitute
the broader Indian tradition has not been made specific by D.P.

His weakness in this respect has been identified by T.N. Madan who says that the general make up of
Indian tradition according to D.P. could be a synthesis of Vedanta, western liberation and Marxism.
But, what about the synthesis of Islam and Buddhism? D.P. fails to provide any such synthesis of other
major traditions. T.N. Madan comments on this failure of D.P. as under:

An equally important and difficult undertaking would be the elaboration and specification of his
conception of the content of tradition. Whereas he establishes, convincingly I think, the relevance of
tradition to modernity at the level of principle, he does not spell out its empirical content except in
terms of general categories. One uncomfortable feeling that he himself operated more in terms of
institution and general knowledge than a deep study of the texts. A confrontation with tradition
through field work in the manner of the anthropologist was, of course, ruled out by him, at least for
himself.

Indian sociologists have talked enough about tradition but little effort has been made to identify the
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sources and content of tradition. And, this goes very well when we talk about D.P. Mukerji. Let us see
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other sociologists who have also written about tradition.

2. D.N. Majumdar:
Dhirendra Nath Majumdar (1903-1960) began his career as an anthropologist at Calcutta University,
where he received his Master’s Degree in 1924. He joined Lucknow University in 1928 and stayed there
for the rest of his life. His initial interest at Lucknow was in ethnographic tradition. He studied the
customs and beliefs of tribes and castes.

His understanding of Indian traditions, therefore, came through his study of tribals. Close to his
interest in tribal groups, he also conducted studies of Indian villages. As a social anthropologist,
Majumdar’s area of interest was culture. He tried to construct development of local cultures out of his
study of tribal groups and villages. In this effort of his study, he was drawn to the central role of
traditions in the development of culture. The content of his culture, naturally, was tradition.

His statement in terms of the relationship between tradition and culture is given below:

The past must be understood in the context of the present, and the present will stabilize the future if it
can find its fulfillment in the moorings of the past. There was no golden age; there can be none in the
future. Life is a process of adjustment and in its unfolding, it has thrown out individuals who are misfit
and the latter have both helped and hindered cultural progress; the misfits are misfits in the context of
a dynamic setting, and if only, the misfits could be fitted into the structure of life, the process that is
life will continue to unfold itself, adjust and march as to man’s destiny through an integration and
synthesis that constitute the core of the dynamics of culture change and culture crises.

Though the ideological perspectives of D.P. Mukerji and D.N. Majumdar are different – the former
being a Marxist and the latter a functionalist, both agree to a synthesis of tradition and modernity. D.P.
talks about adaptive changes to modernity whereas Majumdar argues that those who are misfits to
modernity will be obliged to fit themselves with the modernizing system.

However, it must be noted that D.P. was much oriented to philosophy and economics and Majumdar
was essentially a field worker. Because of his field experience, he referred to modernity in terms of
ethnographic tradition belonging to customs and traditions of tribes, castes and villages.

3. G.S. Ghurye:
Govind Sadashiv Ghurye (1893-1983) is considered to be one of the pioneers of sociology in India. He
joined Bombay University’s Sociology Department in the year 1924 and retired from there in 1959. He
was born in a conservative Maharashtrian Brahmin family. This family conservatism remained with him
all through his life. He was a voracious writer and had authored 32 books on a variety of themes.
Ideologically, he was a doctrinaire Hindu and considered Hindu scriptures as the major source of his
Indian society’s analysis.

During his creative period of writing Indian sociology was engaged in the debate on tradition and
modernity. But Ghurye did not enter into this controversy. Nor he took up the issue of the role of
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traditions in Indian society. As an orientalist, however, he stressed the importance of Indian traditions,
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especially the Hindu ethnography.

Ghurye analyzed Hindu society as a part of wider Indian civilization. For him, tradition was a heuristic
method for sociological analysis. Indian traditions are actually Hindu traditions and to understand
Indian society one must know the Hindu traditions. His wider Hindu society consists of tribals and other
non-Hindu groups.

Traditions, he insists, are essentially Hindu traditions. Whatever group we may discuss in India, it has
its origin in Hindu civilization. In his work, Social Tensions in India (1968), he argues that Hindus and
Muslims are two separate and cultural distinct groups that can hardly have any chances of integration.

His views on the integration of tribal groups are very clear. The Aborigines: So-called and their Future is
his controversial book wherein he establishes that the scheduled tribes are backward caste Hindus and
their future rests with the Hindu society.

It would not be wrong to suggest that Ghurye created a special kind of Hindu sociology and the
traditions which we have in India are Hindu traditions only. Despite Ghurye’s prolific writings on issues
pertaining to Indian society, he has not defined traditions. Nor has he discussed the impact of
modernity.

His sole concern has keen to establish that the core of Hindu society and, in this sense, the Indian
society, is tradition and this tradition has its roots in its scriptures. Religious beliefs, karma kand, rituals
and practices of this kind constitute the structure of traditions. Polity and economy hardly get any
scope in Ghurye’s discussion.

4. M.N. Srinivas:
M.N. Srinivas considers village as the microcosm of Indian society and civilization. It is the village, which
retains the traditional components of India’s tradition. Srinivas (1916-1999) occupies an eminent place
among the first-generation sociologists of India.

He belongs to the galaxy of sociologists such as G, S. Ghurye, R.K. Mukherjee, N.K. Bose and D.P.
Mukerji. He conducted fieldwork among the Coorgs and came out with his publication. Religion and
Society among the Coorgs of South India (1952). Dumont and Pocock consider the book as a classic in
India’s sociology. It is in this work that Srinivas provides a basic structure of India’s traditions. T.N.
Madan hails the publication in these words:

The strength of the Coorg lies in its being firmly grounded in a clearly defined theoretical framework
which happened to be essentially the one developed by Radcliffe-Brown who suggested the theme of
the dissertation to Srinivas. Religion and society is a very lucid exposition of the complex
interrelationship between ritual and social order in Coorg society. It also deals at length and insightfully
with crucial notions of purity and pollution as also with the process of incorporation of non-Hindu
communities and cults in the Hindu social order and way of life.
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In Religion and Society, Srinivas was concerned with the spread of Hinduism. He talked about
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‘Sanskritic’ Hinduism and its values. Related to this was the notion of ‘Sanskritization’ which Srinivas
employed “to describe the hoary process of the penetration of Sanskritic values into the remotest
parts of India. Imitation of the way of life of the topmost, twice-born castes was said to be the principle
mechanism by which lower castes sought to raise their own social status”.

Curiously, Srinivas did not take up for consideration the phenomenon of the persistence of the masses
of Hindus of low or no status within the caste system. For him, the most significant aspect of the
history of the Coorgs, worthy of being recorded and discussed, was the history of this incorporation
into the Hindu social order.

Srinivas thinks that the only meaningful social change is that which takes place among the weaker
sections for attaining higher status by imitating values of twice-born. And those of the lower castes and
tribal groups who fail in this race of imitation are doomed to remain backward.

Srinivas spells the doom as below:

Splinter groups like Amma Coorgs are decades, if not centuries, in advance of their parent groups; the
former have solved this problem by sanskritizing their customs entirely while the latter are more
conservative. What Srinivas spells out about the imitating lower castes seems to be the announcement
of a new age. If we attempt to identify traditions of Indian society, according to Srinivas, these are
found among the high castes – the twice-born. In other words, the traditions, rituals and beliefs which
are held and shared by the Brahmins, the Baniyas and the Rajputs constitute Indian traditions.

And, the beliefs of the lower sections of society, the untouchables and the tribals do not have any
status as tradition. For him, Indian traditions are high-caste Hindu traditions, lower caste traditions are
no Indian traditions. Obviously, Srinivas anchors tradition into sanskritization. Srinivas was actually
interested in caste.

He considered it to be the ‘structural basis’ of Hinduism. He was not fascinated by Hinduism in its
holistic form. He looked for it in the caste system. Thus, his thesis of Indian traditions runs something
like this: “Indian traditions are Hindu traditions, and Hindu traditions are found in caste system. Holistic
Hinduism is beyond his scope of discourse.”

Besides caste, Srinivas looks for yet another source or manifestation of tradition. He found it in the
notion of ‘dominant caste’. He first proposed it in his early papers on the village Rampura. The concept
has been discussed and applied to a great deal of work on social and political organization in India.

Srinivas was criticized for this concept with the charge that it was smuggled from the notion of
‘dominance’ which emerged from African sociology. Repudiating the critique Srinivas asserted that the
idea of dominant caste given by him had its origin in the fieldwork of Coorgs of South India.

His fieldwork had impressed upon him that communities, such as the Coorgs and the Okkaligas,
wielded considerable power at the local level and shared such social attributes as numerical
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preponderance, economic strength and clean ritual status.

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He further noted that the dominant caste could be a local source of sanskritization, or a barrier to its
spread. Sanskritization and dominant caste are therefore representating of Indian tradition. And, in this
conceptual framework, the traditions of the lower castes and Dalits have no place, nowhere in village
India; the subaltern groups occupy the status of dominant caste.

Besides religion and caste, the third tradition component of Srinivas study is village. Srinivas got the
seed idea of studying India’s villages from his mentor Radcliffe-Brown in 1945-46. When settled in India
after his return from Oxford, he conducted the study of Rampur – a Mysore village – which gave him
the concept of dominant caste. The study has been contained in the Remembered Village (1976). It is
here only that Srinivas takes some time to discuss social and economic changes which have taken place
in Rampura. He informs:

Technological change occupied a prominent place in the life of the people of Rampura soon after
independence. Technological change, of course, went hand in hand with economic, political and
cultural changes.

Here, in this part of the article, we are concerned about the meaning and definition of tradition in
Indian context. The life mission of Srinivas has been to understand Indian society. And, for him, Indian
society is essentially a caste society. He has studied religion, family, caste and village in India. He was a
functionalist and was influenced by Radcliffe-Brown, Robert Redfield and partly Evans-Pritchard.

These anthropologists were functionalists of high stature. Ideologically, they believed in status quo: let
the Dalits survive as Dalits and let the high castes enjoy their hegemony over subaltern. Srinivas’ search
for the identity of traditions makes him infer that the Indian traditions are found in caste, village and
religion. For him, it appears that Indian social structure is on par with the advocates of Hindutva say,
the cultural nationalism.

Srinivas though talks about economic and technological development, all through his works he pleads
for change in caste, religion and family. Even in the study of these areas he sidetracks lower segments
of society. They are like ‘untouchables’ for him. Srinivas has extensively talked about the social evils of
caste society; he pleads for change in caste system and discusses westernization and modernization as
viable paradigms of changes.

But his perspective of change is Brahmanical Hinduism or traditionalism. In his zeal for promoting
sanskritization, he has marginalized and alienated religious minorities. For him, Indian traditions are
those, which are manifested in caste and village. His traditions are Hinduized traditions, and in no
sense secular ones.

Srinivas in a straightforward way rejects secularism and stands in favour of Hindu traditions. In his
critique of Indian secularism which appeared in a short article in the Times of India in 1993, he finds
secularism wanting because he believes that India needs a new philosophy to solve the cultural and
spiritual crisis facing the country and that philosophy cannot be secular humanism.
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It has to be firmly rooted in God as creator and protector. Srinivas’ construction of sanskritization and
dominant caste put him closer to Hindutva ideology of cultural nationalism. At this stage of our
discussion on India’s traditions it can be said that any tradition emanating from caste system cannot be
nation’s tradition as the constitution has rejected caste.

5. A.R. Desai:
A.R. Desai is a doctrinaire Marxist. He rejects any interpretation of tradition with reference to religion,
rituals and festivities. It is essentially a secular phenomenon. Its nature is economic and it originates
and develops in economics. He finds it in family, village and other social institutions.

He also does not find the origin of tradition in western culture. Quite like other Marxists, he employs
production relations for the explanation of traditional social background of Indian nationalism is his
classical work. The book is an excellent effort to trace the emergence of Indian nationalism from
dialectical perspective.

According to him, India’s nationalism is the result of the material conditions created by the British
colonialism. The Britishers developed new economic relations by introducing industrialization and
modernization. The economic relationship is predominantly a stabilizing factor in the continuity of
traditional institutions in India, which would undergo changes as these relations change.

Desai thinks that when traditions are linked with economic relations, the change in the latter would
eventually change the traditions. It is in this context that he thinks that caste will disintegrate with the
creation of new social and material conditions, such as industries, economic freedom, education, etc.

A.R. Desai’s definition of tradition is a watershed. He does not trace it from caste, religion and ritual.
The dialectal history of India that he presents very clearly shows that traditions have their roots in
India’s economy and production relations. Despite merit of the dialectical approach applied by A.R.
Desai in the definition of tradition, Yogendra Singh argues that the merits are not without their
weaknesses.

What is wrong with A.R. Desai is that he is very profound when he applies principles of Marxism in
analyzing Indian situations, but fails at the level of empirical support. In other words, his theoretical
framework can be challenged by the strength of substantial data. The critique of Yogendra Singh runs
as under:

The important limitation of the dialectical approach for studies of social change in India is the lack of
substantial empirical data in support of its major assertions, which are often historiographic and can
easily be challenged.

In theoretical terms, however, this approach can be most viable for analysis of the processes of change
and conflict in India provided it is founded upon a sound tradition of scientific research. Despite this
limitation, some studies conducted on this model offer useful hypotheses, which can be further tested
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in course of the studies on social change.

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38. Outline the SEBI guidelines with respect to M and A and new issue.
Roughly a year ago, the Securities and Exchange Board of India (SEBI) issued a consultation paper
setting out its proposal to regulate equity-based crowdfunding in India. Comments were solicited from
the public. Earlier this week, SEBI announced that it was working on the norms and that a decision may
be taken soon.

A quick review of the SEBI paper gives us pointers to what the possible regulations could be. Under the
proposed terms, three entities, namely, the crowdfunding platform, the investor, and the issuing
company, would be regulated. The issuing company is restricted in terms of its size, the amount of
funds to be raised and its age. The investor is restricted in terms of its accreditation, minimum net
worth and, in case of eligible retail investors, the maximum investment that may be made overall or in
a single crowdfunding event. Crowdfunding platforms are also restricted in terms of who may set them
up and the checks and balances to be put in place.

While certain concepts such as accredited investors and maximum caps on investment in a single
crowdfunded venture have been transplanted from the Jumpstart Our Business Startups (JOBS) Act in
the U.S., others are homegrown. Largely, SEBI’s proposed regulations do not give an exemption to
small companies to access public funds, as in the case of the JOBS Act. Perhaps a major reason for the
lack of exemption stems from the fact that Indian corporate finance markets are simply not as
developed or sophisticated as the ones in the U.S. and other developed economies.

The proposed regulations require that equity crowdfunded companies follow the requirements in
Section 42 of the Companies Act, 2013. This means that companies may offer their securities to a
maximum of 200 persons and may have up to 50 shareholders, without being required to undertake a
public issue. Thus, the act of crowdfunding, under the SEBI, cannot include an offer for shares and can
be used only to garner interest in the company seeking funds.

Cross-border crowdfunding
However, SEBI’s paper does not take into account one critical aspect — that of cross-border
crowdfunding. A number of countries have passed regulations, falling largely into two categories. The
first is the U.S. model, which creates an exemption as described previously. Other countries that fall
into this category include Australia, Italy, Japan, New Zealand and Singapore. The second category
includes countries that do not offer an exemption, such as India, Hong Kong and Malaysia.

Of particular interest is the crowdfunding law in New Zealand. It specifically allows intermediary service
providers, such as crowdfunding portals, to be licensed. This licensing regime is intended to facilitate
suitably regulated ‘peer-to-peer lending’ and ‘crowdfunding’ services to operate. With regard to the
fund-seeking company, the upper limit for raising funds is capped at NZ$2 million, but there are no
upper limits on investment, nor is there a distinction between sophisticated and retail investors,
making New Zealand one of the most crowdfunding-friendly jurisdictions.
There are two ways we may consider the case for cross-border crowdfunding in the Indian context.
First, a company seeking funds from non-resident investors. Second, a company set up outside India
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seeking funds from investors around the world, including India. In the first case, the provisions of
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Section 42 of the Companies Act, 2013 would continue to apply.

Therefore, the question arises whether it would be possible to have a foreign company raise funds in
India and for foreign investors to participate in crowdfunding activities in India, subject to extant
inward and outward bound investment regulations and policies. But given the nature of both
crowdfunding and the global reach of the Internet, it is possible that Indian investors may be involved
in crowdfunding activities in other jurisdictions.

Overseas companies
The ability of Indian residents to invest in overseas companies, coupled with crowdfunding-friendly
laws in other countries, come together to create an interesting scenario. Assume that a company
incorporated in India is unable to raise funds from the crowd. It simply sets up a parent in a
crowdfunding-friendly jurisdiction, which then seeks crowdfunding from investors around the world.
An Indian retail investor, who was hitherto unable to participate in the equity of the Indian company, is
now able to do so, subject to the Overseas Direct Investment regulations. The funds raised by the
parent company are then invested in the Indian subsidiary. This possible scenario brings to light the
global nature of Internet-based corporate fundraising. The cross-border aspect of the platforms and,
more particularly, the uncertainty surrounding contract law application in different jurisdictions has yet
to be dealt with effectively. This has been acknowledged by the International Organization of Securities
Commissions.
Thus, we see that in jurisdictions where crowdfunding activities are not regulated, or have minimal
regulations, it would be easier to raise funds and then invest in an Indian company. The opportunities
arising from the resultant regulatory arbitrage could then be used by fund-seeking companies in India.
This regulatory arbitrage has been used in other modes of financing as well. It is not unusual to see
companies offer a minimal IPO in India only to undertake a substantially higher fundraising exercise
through a GDR issue in a listing-friendly jurisdiction, such as Luxembourg.
How does a securities regulator deal with this then? One option would be to completely ban overseas
investment by individuals unless they conform to the crowdfunding regulations. A more elegant —
albeit difficult — solution, in my opinion, requires securities regulators across the world to work
together to remove possible avenues of regulatory arbitrage.
Having said that, however, we may expect that some jurisdictions will see in this as an opportunity to
begin a ‘race to the bottom’ in terms of crowdfunding regulations. Coupled with low capital gains
taxes, a jurisdiction with a relatively low level of crowdfunding regulation would certainly attract fund-
seeking companies.
While the Internet has acted as an enabling development in almost all industries without fail, it has its
disruptive effects from time to time as well. The traditional boundaries of corporate finance are
breaking down. It is time to shed older notions of corporate finance within the frameworks of political
confines and instead address the issue of the world being better connected, even within the realm of
corporate finance.
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