I.

Case of India
: Total: 3287,590 sq km
land: 2,973,190 sq km
water: 314,400 sq km
: 1.13 billion
rth : Total population-' 63.99 years
male.' 63.25 years
female: 64.77 years
; Based on English common law; limited judicial
review of legislative, acts
: 1,217,490 USO (2008) in millions
PP) ; $2700 (2008)
>y sector : Agriculture." 24%
industry: 21%
services.' 55%
Source.. CIA World Fact Book 2008.
India's leaders--especially the first prime minister Jawaharlal Nehru, who introduced the five-year
plans-believed that strong economic growth and increased income among the poorest groups were
necessary goals for the new nation. Government was assigned an important role in this process, and
since 1951, a series of plans had guided the country's economic development. Although there was
considerable growth in the 19505, the long-term rates of growth were not remarkable and was less
than those of many other Asian countries. From 1951 to 1979, the economy grew at an average rate
of about 3.1 per cent a year at constant prices, or at an annual rate of 1.0 per cent per capita. During
this period, industry grew at an average rate of 4.5 per cent a year, compared to an annual average
of 3.0 per cent for agriculture. Many factors contributed to the deceleration of the economy after the
,mid-19605, but economists differ over the relative importance of those factors. Wars with China in 1962
and with Pakistan in 1965 and 1971; a flood of refugees from East Pakistan in 1971; droughts in 1965,
·0 1966, 1971, and 1972; currency devaluation in 1966; and the first world oil Crisis, in 1973-74, all jolted
~ the economy during the period

I Developments during I 950s to I 970s Many early post-independence leaders were influenced

byshi fo_ .ti.yeadusts Tad cabo tjeedc ~e t~rv~ thanuidbalaefe necoy'om~ ude le opmsfateen ~
 general Interest while particular prcgrammes and measures helped the pccr. The leaders alsc believed
that industrialisation was the key tc economic develcpmenf and this belief had a strong fccthcld in
India because cf the country's large size, substantial natural rescurces, and desire tc develop its cwn
'defense industries.
The industrial Policy Rescluticn cf 1948 gave the gcvemment a mcncpcly in armaments, atomic
energy, and railroads, and exclusive rights to set up industries fcr ifcn and steel, aircraft manufactur-
ing, shipbuilding and telephcne and telegraph equipment. Private companies Operating in these fields
were guaranteed at least ten years cf additional Ownership befcre the gcvemment tack them aver.
The Industrial Pclicy Rescluticn cf 1956 greatly extended the preserve cf the gcvemmenf. There were
seventeen industries exclusively in the public sector. The government took the lead in anofner twelve
Industries, but private companies cculd also engage in prcducticn.
The Planning Commission was established in 1950. Answerable cnly tc the Prime Minister, the
Commission is independent cf the cabinet. The Prime Minister is the chairperson of the Commission,
and an expert cf the rank cf the minister cf state serves as the deputy chairperson.
The Five-Year plans are an important concept in the maxed economy of India. Even as the actual
results differ frcm plan targets in important respects, the plans help guide investment Priorities, and
financial mcbilisation.
In 1970, Mcncpclies and Restrictive Practices Act was designed to Provide the government with
additicnal infcrmaticn cn the structure and investments of all firms with assets of more than Rs 200
mlllicn. It aimed at strengthening the licensing system in order to decrease the concentration of Private
economic pcwer, and to place restraints on certain business Practices considered contrary to the Public
Interest.
The 19805 The rate cf growth marked improvement in the 19808. From 1980 to 1989, the economy
I grew at an annual rate cf 5.5 per cent, or 3.3 per cent on a Per capita basis. Industry grew at an annual
ate cf 6.6 per cent and agriculture at 3.6 per cent. Investment rose from about 19 Per cent of the GDP
in the early 19708 tc nearly 25 per cent in the early 19808. India, however, required a higher rate of
investment tc attain higher economic growth.
Government policies in the Recent Years The Government has Played an ifnPortant role in

~e lu aeh i~vaepete sheens g tria ~

mnts since e~rlv 19808, the ball started rolling only after 1991 when if ifnPlemented new reforms

Scanned by
Scanned by Camscanner
CamScanner
 2. Case: Prlvatlsatlen cf Alrperts and Airline
Industry
Privatisation of airports could led to better operations and lower costs of aircraft carriers. All the al
were fully owned by the government in India till recently. Under the new publicprivate partne
scheme, more and more airports have been set up in semi urban India The Cochin International F
was a project that was inaugurated in 1999, involving a partnership between the government ar
people (mainly NRls), which functions outside the domain of the Airports Authority of India It h;
to one of the most efficient airports in the country and mainly serves the huge expatriate pOpL
travailing to and from Keraia. The company has made profit and broken even, paying a dividend
shareholders. This could be an ideal showcase project for future investments in the airport sect
The competition among airports would allow airline operators to negotiate their landing prices,
would be a great aid for low cost airlines in cutting their charges, as in the case of mature mark
_____________________________________________________________________________________________
the West, which presented low cost airlines like Ryan-Air, Jet Blue (considered to be the hottest a
the PrinciPles of low-cost flying-quick turnarounds and increased aircraft utilization are very difficult to
in the American Skies), South West Airlines and so on.
imPlement in India because of the poor airport infrastructure. According to Ernest & Young industrial
Similarly, the state-owned domestic and international carriers, the Indian Airlines and the Air
consultants, India needs $10 billion (Rs 44,000 crore) in investments to upgrade their airports.
dominated the airline market till recently in India. The air ticket prices were not affordable to on
Here comes the importance of privatisation and liberaiisation. Privatisation helps more and more
citizens. Although the government had plans to divest its stake in Air India and Indian Airlines if
airports to spring up in India, which ultimately leads to better facilities at airports. It helps to bring up
it did not haPpen due to opposition from media and politicians. However, giving into the press
more and more low-cost private airlines into this highly competitive field Reduction of import duties
liberaiisation, private airlines were allowed to operate in domestic routes as a Bret step. Due
imposed, wHI help these airlines much, in lowering their fare also.
newAccording
entrants like Jet Airways,
to consultancy the state-owned
contra for Asia-PaciDcairlines started
Aviation losing
(CAPA), their market
domestic passengersharetraffic
as they
couldI
technology
grow at a muchuPgradation
faster rateand product
in the comingofferings.
years, ByMinistry of Civil
2010, there couldAviation in India
be 60 million has already
Indians travailingac
many
by air, schemes
resulting inforanthe growth
industry andRsexpansion
that's of air
30,000 crores or transport. They
$7 billion big, have made
according newAir
to CAPA. aviation
Deccan, I
which incorPorated
a private thewas
Indian airline, construction
able to draw of more
private
andsector
more airports, reconstruction
public attention of public of
by the introduction sector
their ai
and Purchase
low-cost domesticof new aircraft,
airlines. Vijayawhich help `Kingnsher
Mallaya's the carriersAirlines,
to compete With the(Bombay
Nulsi Wadis's private Dyeing)
players. `GoThe
would
Airline',also accommodate
`Spice to provide
Jef`, `Roya/ Airways', `Airadditional siofs forthus
India ExPress'..... foreign
goesairlines
the longatlistIndian airports
of low-cost and
airlines.
foreign
Most ofdirect investment
the private airlines(FDI). `
offer differentiated Products and competitive fares on first cum first serve
basis,
The which
Indianhas also worked
government as oPened
has source for
upinspiration to to
their skies Public
the sector
privateairlines
Indian like Indianwhich
aircraft, Airlines to
helps
to offertheir
reduce their services internationally. As part of this policy, some of the private airlines jnCjU-
prices.
Sahara, are able to run international flights. This open skies pol/'cy' and the entry of jOW cost cl
Question
have brought about a boom like never before for the airline industry ` -
Discuss the business environment in Airline industry.
inclu'fldingeng axe~ s~~msdu essesabsan sncond v~ab' ~e osse: s u d':if;and pensees)

~ e sTinF) tesT~ ~ uelg coa:n I is'srj

('eeharadotf'peoeu"Ation bift re f I

heTfr fee w pm er i

andA"hDelh p a re than 400 aiorPorts, just 62 of them are in active use, and

faond rrat !mt twea ost) r 4ederO'orouoftfe (fbeofae c )s ' t gwltn

pace -nlukj I _....__e_ nwo_ cfulfye h_____________ i

Scannedby
Scanned byCamScanner
CamScanner