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Question
Attempt the following:
Impact of new economic policy on business and industry.
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Solution
(A) Introduction: On July, 1991, the Government of India announced its New Industrial Policy. It brought about radical changes in the Economic Policy. The three main pillars of Economic reforms are L-P-G- (Liberalisation, Privatisation, and Globalisation). The main purpose was to modernise India’s Industrial system, implement new techniques, remove unproductive control, encourage private investment, and integrate our economy with the global economy.
(B) Impact of changes in Government Policy on Business and Industry:
(1) Budgetary Support: The Central Government’s budgetary support for financing the public sector outlays have declined over the years. In order to survive and grow, PSUs have to be more efficient and self-sufficient so as to compete with the private sector.
(2) Increase in Competition: Competition for Indian firms has increased due to the changes in the rules of industrial licensing and entry of foreign firms. for e.g. Service Industries like Insurance, Banking, Telecommunications, Hotel, and Airlines, etc. which were earlier in the public sector are now facing, competition from private players such as Bajaj Alliance, Max Life, Star Life, Insurance, low-cost airlines like Indigo, etc.
(3) New Trade Policy: The new trade policy has helped the Indian Firms to enter into foreign markets and earn the foreign exchange required for importing raw materials, spare parts and components they needed t for keeping their production lines going.
(4) Demanding Customers: Today’s market is customer-oriented as customers are well informed and there is a growing awareness among them about the malpractices adopted by traders, consumer rights, consumer education, and so on. Moreover, competition in the market gives the customer a wider choice in purchasing good quality products and makes customers more demanding.
(5) Need for Human Resource Development: New technologies require expert knowledge and skill in various fields. Moreover, newer markets made it compulsory for companies to acquire trained personnel with a high degree of competence and commitment. Hence, there is a need for well-trained staff and thereby develop human resources.
(6) Change in Technological Environment: Increased competition and advancements in the field 0f technology have forced the business units to develop new ways to survive and grow in the market and keep pace with the latest technological developments.
(7) Change in the Concept of Marketing: Earlier business organisations were production oriented but due to the fast-changing business world it has now become market-oriented. This changed to a societal concept where the needs of society are kept in mind by the producers. The latest is relationship marketing whereby it is not only producing goods for consumers but maintaining long term relationships with them so as to sustain them.
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