A

Project report

on

“IMPACT OF GOVERNMENT POLICIES AND LAWS ON

ETHICS”

Submitted in the partial fulfilment for the

requirement of
the degree of

“MASTERS OF BUSINESS ADMINISTRATION

IN LEADERSHIP DEVELOPMENT”

G.S.S.D.G.S. KHALSA COLLEGE, PATIALA

(SESSION 2021-2022)

SUBMITTED TO: SUBMITTED BY:

Prof. Komal Randhawa Gunveen Kaur

ROLL NO:
205216 (9916)
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 ACKNOWLEDGEMENT

It is a matter of great pleasure to present this Project report on the entitled

“IMPACT OF GOVERNMENT POLICIES AND LAWS ON ETHICS” undertaken
by me as part of my MBA curriculum. 

I am thankful to Punjabi university Patiala for offering me such a wonderful

challenging opportunity and I express my deepest thanks to faculties of the
college and Prof. Komal Randhawa, whose guidance and support was
available to me all the time. I find inadequate words to express my sincere
gratitude towards him.

It is my pleasure to pen down these lines to express sincere thanks to my

parents who had complete faith in my capabilities and also giving me the
opportunity to step in masters for flourishing my personality. I also express my
gratitude towards my mother for placing complete faith and confidence in my
ability to carry this project and for providing me her time inspiration,
encouragement, help, valuable guidance, constructive criticism and constant
interest. She took personal interest in spite of numerous commitments and
busy schedule to help us complete this project.

I express my deep sense of gratitude to my dear friends for their support and
encouragement during my presentation.

Gunveen Kaur

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Table of content

Serial no. Particulars Page no

1 What is ethics 5-6

2 Need and History of Ethical Societies 6-7

3 What is Law 8

4 Ethics and Law 8-9

5 Government Policies 9

6 Regulations 9

7 How Government Policies Affect the Ethics 10-15

8 Drawbacks of Policies 15-16

9 Suggestions 17

10 Conclusion 18

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ETHICS

Ethics (also known as moral philosophy) is a branch of philosophy which seeks to address
questionsabout morality; that is, about concepts like good and bad, right and wrong, justice,
virtue, etc.Ethicsrefers to the moral values that govern the appropriate conduct of an individual
or group. “Ethics”speaks to how we ought to live, that is, how we ought to treat others and how
we ought to run or manage our own lives.

The Word Ethics is derived from Greek word ‘ETHOS’ meaning Moral Character or Custom. It
is a set of rules and regulations or standards that guide human behavior in a society. Ethics is a
Code of Conduct. So, in this term ethics is concerned with personal conduct, moral duty and
human relation in respect of Good or bad, right or wrong, worthy and Non worthy, true or False.
In this, Says Personal Ethics guides our personal behavior whereas professional ethics guides our
professional conduct. Ethics are fixed in morals.

Simply stated, ethics refers to standards of behavior that tell us how human beings ought to act in
many situations in which they find themselves-as friends, parents,children,
citizens, businesspeople, teachers, professionals, and so on.Ethics refers to a system of moral
principles a sense of right and wrong, and goodness
and badness of actions and the motives and consequences of these actions. As applied to business
firms, ethics is the study of good and evils, right and wrong and just and unjust actions
of businessmen. Ethics is a body of principles or standards of human conduct that govern the beh
avior of individuals and groups. Ethics arise not simply from man's creation but
from humannature itself making it a natural body of laws from which man's laws follow. Ethics
is a branch
of philosophy and is considered a normative science because it is concerned with the norms ofhu
man conduct, as distinguished from formal sciences.

BUSINESS ETHICS

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The term “business ethics” includes both words: ethics and business. The “ethics” element refers
to the application of values within a business context. In the for-profit environment, the business
context means that a firm must (usually) earn a profit in order to survive and to serve its mission.
Business ethics are the rules and principles that determine what is morally right and wrong in a
business atmosphere. It's the unspoken agreement that a business will conduct itself fairly and
within the established rules. Many businesses operate within the proper ethical guidelines,
without the need for an outside agency to step inlet us take a look at the case of a food company
that attempted, very gently, to get its customers to eat less meat. In 2011, Sodexo announced
that it would participate in the “Meatless Monday” campaign, a nonprofit effort urging
consumers to eliminate or reduce the amount of meat consumed just one relatively painless day
each week. Serving less meat is good for the environment, good for consumers’ health, and
(because meat is an expensive ingredient) possibly good for the bottom line.

Good Business Ethics”: Companies with good ethical policies enjoy the following benefitto:

• Marketing advantages over their competitors through improved customer loyalty.

• Improved employee morale.

• Improved reputation management through avoidance of scandal.

• Good standing in the eyes of regulatory bodies. Source: Aveda Business Institute

NEED OF ETHICS

People do business with other people and businesses they trust. A business that is known for
dealings that are fair and ethical fare better over the long haul than those who operate using
less ethical practices. Although a business might be able to get away with fooling its customers
for a time, eventually the underhanded operations are revealed and the company is as best
vilified, at worst driven out of business. Past mass disasters like the Bhopal Gas Tragedy in
India in 1984 and the Shell Oil Spill in Nigeria in 2008 have clearly shown that when companies
are not accountable to governments, this can lead to non-compliance with basic safety and
operational standards, resulting in widespread human rights abuse. In Bhopal and Nigeria alike,
victims of disasters still await compensation from the companies (Union Carbide and Shell Oil).
In the absence of proper ethical laws, the existence of these tragedies would prevail.

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Ethical behavior goes beyond compliance: a culture of integrity reduces risk, attracts
shareholders and leads to better performance.

History of ethical societies

The Society for Business Ethics was started in 1980. The first meeting of the Society for
Business Ethics was held in conjunction with the meeting of the American Philosophical
Association (APA) in December in Boston. Other business-related association including the
Social Issues in Management Division of the Academy. The above-mentioned association
emerged as the International Association for Business and Society. With the American
development, Europeans organized the European Business Ethics Network (EBEN), which held
its first meeting in 1987. By 1990 business ethics was well established as an academic field.

WHAT ETHICS ARE NOT?

Ethics is not religion. Many people are not religious, but ethics applies to everyone.
Mostreligions do advocate high ethical standards but sometimes do not address all the types
of problems we face.

Ethics is not following the law. A good system of law does incorporate many ethical standards,
but law can deviate from what is ethical.. Law may have a difficult time designing or enforcing
standards in some important areas, and may be slow to address new problems.

Ethics is not following culturally accepted norms. Some cultures are quite ethical, but others
become corrupt -or blind to certain ethical concerns (as the United States was to slavery before
the Civil War).

Ethics is not science. Social and natural science can provide important data to help usmake better
ethical choices. But science alone does not tell us what we ought to do.Science may provide an
explanation for what humans are like. But ethics providesreasons for how humans ought to act.
And just because something is scientifically ortechnologically possible, it may not be ethical to
do it.

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WHAT IS LAW?

Law is a system of rules, usually enforced through a set of institutions. It shapes

politics,economics and society in numerous ways and serves as a primary social mediator of
relations between people. Contract law regulates everything from buying a bus ticket to trading
on derivatives markets. Property law defines rights and obligations related to the transfer and
title of personal and real property. Trust law applies to assets held forinvestment and financial
security,. Constitutional law provides a framework for thecreation of law, the protection of
human rights and the election of political representatives. Administrative law is used to review
the decisions of government agencies, while internationallaw governs affairs between sovereign
nation states in activities ranging from trade toenvironmental regulation or military action.
Writing in 350 BC, the Greek philosopher Aristotledeclared, "The rule of law is better than the
rule of any individual. The abiders of law will follow it inless it seems ethical or unethical for the
person seeking judicial help.

ETHICS AND LAW

Laws and ethics have common aim- defining proper and improper behavior. But the two are not
quite same. Laws are the society’s attempt to formalize that is to reduce to written rules- idea
about what is right and what is wrong in various walks of like. However, it is rarely possible for
written rules to capture all the variations that people give to ethics. Ethical concepts are more
complex than writing rules. Ethics deals with human dilemmas that frequently go beyond the
formal language of laws and the meanings given to legal rules. Similarities and differences apart,
legal rules help promote ethical behavior in organization. Some of the acts which seek to ensure
fair business practices in our country are the followings:

 The Foreign Exchange Regulation Act, 1973, now replaced by FEMA.

 The Companies Act, 1956.
 The Monopolies and Restrictive Trade Practices Act, 1969.
 The consumer Protection Act, 1986.
 The Environment Protection Act, 1986.

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  The Essential Commodities Act, 1955.
 Government policies on ethics
 Cultural Expression as a Human Right

 Although there is no specific mention of ‘culture’ or‘ethnicity’, the UN Universal Declaration of

Human Rights provides for the equality of individuals, prohibits discrimination based on
race/religion/language, and freedom of religion. These protections are generally accepted to
cover the right to collective protection of culture.

GOVERNMENT POLICIES

A policy is a set of ideas or plans that is used as a basis for making decisions, especially in
politics, economics, or business. Government plays a significant role in creating feelings of
mutual obligation and respect in society. People must have confidence that it would protect the
public interest.Everyday government comes up with new policies and strategies. The aim to
frame these policies are bifurcated in two models:

1. To make a new regulation as required according to time.

2. To amend the existing laws to make it strong and to avoid its exploitation.

REGULATIONS

There are various regulations made by the policymakers so that the loopholes could be
eliminated and the purpose of making the law and regulation could be served.

In 1977, following a series of scandals involving bribery by U. S. firms abroad including the
Lockheed $12 million bribery case that led to the fall of the Japanese government at the time, the
U. S. government passed the Foreign Corrupt Practices Act. The Act was historic because it was
the first piece of legislation that attempted to control the actions of U.S. corporations in foreign
countries. The Act forced all companies to live up to the already existing ethical norm.

With globalization the business ethics movement has not remained confined to the Unites States.
UN has developed a voluntary Global Compact for Corporations. Over 1,500 companies
worldwide have joined the compact.

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How government policies affect the ethics?

Government policy can greatly influence the degree to which social workers are able to respect
their ethics and human rights. There are various policies framed to accomplish this objective.

CSR Policy: The Ministry of Corporate Affairs had published ‘Corporate Social Responsibility –
Voluntary Guidelines’ in December 2009. The New Companies Bill, 2013 introduced concept of
corporate social responsibility. On 1april2014 India became first country to mandate CSR for a
large number of profitable business corporates. They are mandated to earmark 2 per cent of their
profit for corporate social responsibility. Subsequently, the MCA proposed that every company
having (net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more) or (a net
profit of Rs. 5 crore or more during a year) shall be required to formulate a CSR Policy.

Fund Raising: If the company has not identified any acquisition or investment target, the
amount for this and the amount for general corporate purpose (GCP) cannot exceed 35 percent of
the total amount being raised. Also, if the acquisition target is not identified, the amount cannot
exceed 25 percent of the total amount raised. Many companies were raising money not because
they had any specific requirement, but only because the market was hot and demand for IPOs
was strong.

Employment and labour: Labour laws encompass the areas of safety, wages, hours, equal
opportunity, worker citizenship status, age and the Family and Medical Leave. The Industrial
Disputes Act, 1947 · The Minimum Wages Act, 1948 · The Employees' State Insurance Act,
1948 · The Factories Act, 1948 all are examples of government policies.

Advertising: Advertising regulations protect consumers from predatory or false claims in

advertisements and on labeling, the internet, the phone, email, the media and by potentially
harmful industries.  the FTC Act, which prohibits 'unfair or deceptive acts or practices'; the
Lanham Act, which is the federal false advertising statute; and. the Dodd-Frank Wall Street
Reform and Consumer Protection Act.

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Environmental regulations: Environment (Protection) Act 1986 (EP Act). This umbrella law
enables the central government to take measures it deems necessary to protect and improve the
environment, and to prevent, control and abate environmental pollution. Environmental
regulations address protecting our environment and are very pertinent to food, organic and
cleaning businesses. 

Tax code: Income tax was first implemented in Great Britain by William Pitt the Younger in his
budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic
Wars. In India ,tax was introduced for the first time in 1860,by Sir James Wilson in order to meet
the losses sustained by the Government on account of the Military Mutiny of 1857.
Thereafter ,several amendments were made in it from time to time. In 1886,a separate Income
tax act was passed.Income Tax Act, 1961 states provisions related to the prosecution of such
offences, failure to file a timely return, false information, deliberate attempt to evade tax,
fabrication of numbers etc. by framing these laws government tries to ensure that business
entities could file taxes without adopting any unethical practices.

Tax evasion was termed unethical but not illegal earlier. Government saw that a lot of tax is
being stolen through this measure. So, the supreme court of India termed it as illegal. Many
policies are framed time to time to eliminate unethical practices.

Antitrust laws: Antitrust laws guard against a variety of conspiracies against competitors,
monopolizing and price discrimination. Antitrust laws are regulations that encourage competition
by limiting the market power of any particular firm. Antitrust laws also prevent multiple firms
from colluding or forming a cartel to limit competition through practices such as price fixing.
Laws under this are:

 Consumer protection Act 1986 To promote consumer education, To establish a legal

framework for the achievement of a consumer market that is fair, accessible, efficient,
sustainable and responsible, To promote fair business practices, To protect consumers
from unfair, unreasonable and/or improper trade practices.
 The competition commission of India is formed to penalize these who are indulged in
discouraging the competition and tried to form a cartel. Recently it fined 5 tyre
companies. 

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  Under the consumer protection Act 2019, a Central Consumer Protection Authority
(CCPA) was established with a view to regulate matters involving violation of consumer
rights, misleading or false advertisements, unfair trade practices and enforcement of
consumer rights. The purpose of enforcing the Acts is to protect the public interests
including the business and the businessmen. 

Patents and trademarks:

 Trade Marks Act, 1999

 The Patents Act, 1970 (amended in 2005)
 The Copyright Act, 1957

These protect your business from competitors running off with products or names that
distinguish you from the crowd. 

Employee Retention policy:The government has privatized air India and sold it to tatas it has
laid condition that it cannot fire air India employees for one year.

Laws on IT: The Information Technology (Intermediary Guidelines and Digital Media Ethics
Code) Rules 2021 has been framed because of growing concerns around lack of transparency,
accountability and rights of users related to digital media and after elaborate consultation with
the public and stakeholders. This policy will help to protect sensitive data of users and promote
ethical conduct on online platforms.

Government imposes ethical standards on business through laws such as the Companies Act
2006, which sets rules for directors on conflicts of interest; the Bribery Act 2010;

The Companies Act 2013- Prior to this there was company act 1956. But as the wheel of time
rolled, it needed some regulations. Companies Act 2013 considered some definitions which
Companies act 1956 did not considered as of :

- Associate company
- Auditing standards
- CEO & CFO

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- Independent director
- Small company
- Promoter
- Related party
- Global Depository receipt
- Key managerial.

Some of the existing definition in the Companies Act 1956 has been modified in the Companies
Act 2013 as follows :
- Earlier excluded, Corporation sole has now been covered in definition of body of corporate.
- The term “listed company” now includes all companies listed on stock exchange

Accounting Laws:- It was enacted on May 27, 1933 during the Great Depression. ...the law was
aimed at correcting some of the wrongdoings and the Securities Exchange Act of 1934, which
saw the creation of the Securities and Exchange Commission (SEC).

The Indian Accounting Standards (Ind AS), as notified under section 133 of the Companies Act
2013, have been formulated keeping the Indian economic & legal environment in view and with
a view to converge with IFRS Standards, as issued by and copyright of which is held by the
IFRS Foundation., Ind AS notified under the Companies Act 2013.Accounting standards were
made to eliminate unethical accounting in business enterprises.
.

Example - In 2009, shortly after he took office, President Obama issued an executive order
requiring all executive agency appointees to take an ethics pledge as a prerequisite for accepting
appointment. The pledge included a lobbying ban and restrictions on appointees and lobbyists
entering and leaving the government. For instance, appointees entering the government had to
agree not to participate in any matter both “directly and substantially” related to their former
employer or clients for two years.

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Ban On Tabbaco Ads By The Govt Of India

In 1970, Congress took their anti-smoking initiative one step further and passed the Public
Health Cigarette Smoking Act. In April 1970, President Nixon signed it into law banning the
advertising of cigarettes on television and radio starting on 2 January 1971. In a case which
started in 1991 and ended in 1997, RJ Reynolds Tobacco company, marketer of Camel
cigarettes, was forced to withdraw its mascot, Joe Carmel, an animated camel, from all its
advertisements, after the California Supreme Court (USA) ruled that the company could
be prosecuted for exploiting minors.

 In 1997, in a similar study for the International Union against Cancer, the available data in the
same four countries was examined. It was found that per capita consumption of cigarettes
(15years +) had dropped between 14 and 37 % after the implementation of the ban. In three out
of the four countries, smoking among young people had decreased, while in one it remained
stable. The conclusion was that advertising bans worked if they were properly implemented as
part of a comprehensive tobacco control policy.

Child Labor (Prohibition and Regulation Act)- It was enacted in 1986, to specifically address
the situation of children in labor. However, this law distinguishes between hazardous and non-
hazardous forms of labor, and identifies certain processes and occupations from which children
are prohibited from working. It leaves out a large range of activities that children are engaged in
and are exploited and abused. This is taking on alarming proportions - nationally and
internationally.

The Misuse of Drugs Act 1971

Britain fulfils its obligations under these UN Conventions mainly through the Misuse of
DrugsAct 1971 (MDA), which makes it unlawful to produce, import, export, supply or
possessanything designated as a controlled drug unless an exception or exemption applies. A
large number of drugs are used mainly for medical purposes but that may also be used

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recreationally: Ritalin, for example, which is prescribed in order to dampen down
hyperactivity but abused for precisely the opposite reason. The idea of controlling
these commonly prescribed drugs is to protect their licit use (in the interests both of public health
and of the pharmaceuticalindustry) while at the same time restricting their illicit use. Strategic
laws have been framed to enable doctors, dentists, pharmacists, researchers and others to
prescribe and handle these drugs for medical use only.

The Living Wage: Building on the Minimum Wage

The Minimum Wages Act 1948 generally specifies minimum wage rates on a per day basis, and
extends to the entire country and is revised within a period of not less than five years, however
there is a provision to increase dearness allowance every two years. In less than a decade, a well-
organized coalition of community groups, labor unions, political parties, think tanks, and
churchesmade dozens of local governments across the United States into forcing designated
employers to pay workers well above the current federal minimum wage of $5.15 an hour.

Protection of Women- Domestic Violence Act, 2005. The Dowry Prohibition Act, 1961.
Sexual Harassment and Rape Laws has been made to safeguard women in the society and at
workplace. Incidence of domestic violence crosses all the barriers of class, income, rare, culture
and religion and in a highly under reported crime. Domestic violence is one of the greatest
obstacles to gender equality and securing for women their fundamental rights to equal protection
under the law and the right to life and liberty.

Drawbacks of Policies

It may also be possible that government policies may not be fullproof enough that it could
protect the ethics of the society. The current scam in national stock exchange happened due to
lack of stringent government policies. It harmed the user’s integrity. Government will now assess
the situation and will try to eliminate the loopholes or punish the culprits who did not abide by
the law.

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Government regulation creates barriers for new businesses to enter the marketplace. These
barriers give existing companies distinct competitive advantages over potential competitors.
Thus, increasing regulation benefits large existing companies, which reduces competition and
promotes unethical business practices.

There is a lot of redtapism to get approval from any government body. It may pse a challenge
for business units to ethically abide by all the prescribed laws. Example – A person wants to
start new business. He has to complete plethora of formalities to make his business
operational. This process becomes time consuming and costly.

According to a studies, economy and market growth are parallel. But the situation now
prevailing is such that market growth is at great heights but the economy does not match its pace.
It may happen that market is overvalued by some firms for manipulating the investors.
Government needs to make policy to protect the ethics of the market.

GLOBAL ORGANISATIONS

Organisations supporting the Implementation ofa Code of Ethics for Corporations .

• ILO Declaration on Fundamental Principles and Rights at Work (1998);

• OECD Guidelines for Multinational Enterprises (2000);

• United Nations Norms on the Responsibilities of Transnational Corporations and Other

Business Enterprises (2003)

• United Nations Global Compact (2000)

• Kimberley Process Certification Scheme (2000);

• Extractive Industries Transparency Initiative (2002);

• Voluntary Principles on Security and Human Rights (2007);

• Equator Principles (2006)

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SUGGESTIONS

Businesses should be encouraged to adopt ethical practice throughout their organizations and
activities. Regulatory systems and actions should support and incentivize this. Collaborative
agreements such as the Primary Authority model could include requirements that support
business ethics. Adoption of a robust and evidenced ethical business regulatory system would
enable the regulatory architecture to be rationalized. Some suggestions are:

 Political Commitment to Ethics should Reinforce the Ethical Conduct of Public Servants.
 The Decision-Making Process should be Transparent and Open to Scrutiny.
 Management Policies, Procedures and Practices should Promote Ethical Conduct
 Adequate Accountability Mechanisms should be in Place within the organosation.
 Appropriate Procedures and Sanctions should Exist to Deal with Misconduct.
 Ethical Standards should be Reflected in the Legal Framework.

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CONCLUSION

Government policies should be such that it protects the ethical values of the organizations. Laws
should coordinate with ethics in order to implement it by maintaining its purpose of existence.
government has a role in protecting society from unscrupulous business practices. However,
businesses also have a fiduciary responsibility to their shareholders and a responsibility to their
customers and to complete that, ethical conduct must be in place. A good ethical policy will
encourage ethics between competitors and employees.

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