Beruflich Dokumente
Kultur Dokumente
Module-3
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Political System
Forms of Political System Role of Political System Political system in a country Democratic Power is vested with Decides people Promotes Totalitarian- Power is vested with Encourages one or a group of people Shelters Directs and Controls the Business Activity
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Executive Control
Acts as a mirror of public opinion
Executive/
Government Judiciary
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Generating revenue for re- Cost of production Tax Laws ( Role Direct / Control ) investment , saving affected increases, Affects
people, industry Profitability & Competitiveness
Tariffs / Subsidies / Import ban / Export ban ( Role Encourage / Shelter ) Products reserved for SSIs & Public sectors ( Role Decides / 4/20/2012 Promotes )
Limited area of operation , could not be diversified, Vertical Integration not possible ,cost increase
Industrial Policy
1948, 1956 , 1991
Industrial policy Indicates
the relationship between Government & Business It contains guidelines for govts administrative action it has no quantitative target It is not passed as a Law Violation of Industrial Policy cannot be challenged in Court
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Mixed Sector
Industry Classifications Schedule-A: ( 17 industries ) Govt. Arms , Ammunitions , Defence equipments , atomic energy , iron & steel , Heavy plant &Machinery, Heavy electrical plant , Coal & lignite, mineral oil, mining ,aircraft , air & rail transport, Telecom cables, electricity generation & distribution , ship building Schedule- B: ( 12 industries ) Private & Govt. machine tools , Ferro-alloys , drugs ,fertilizers , synthetic rubber , chemical pulp ,road transport , sea transport , carbonisation of coal , mining of aluminum & non-ferrous metals. Private sector others
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Policy Initiatives
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Industrial
Licensing
Policy
Industrial Licensing - It is required to establish, to manufacture goods at a specific location before 1991. In the new policy licensing requirement was abolished except for 1. Distillation & Brewing of alcoholic drinks 2. Manufacturing Cigarettes & Tobacco substitutes 3. All types of electronic aerospace & Defence equipments 4. Industrial Explosives 5. Certain Hazardous chemicals Exempted factories have to furnish a memorandum to Industries department Location: In the new policy projects can be established at any location except cities . In a city of 1 million population it has to be established 25kms away from city.
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Public
Sector
Policy
Number of Industries reserved for public sector reduced to 8 and then to 2 ( Atomic energy & Railway ) Growth of PSUs in the following Priority sectors 1.Essential infrastructure Goods & Services 2. Exploration & Exploitation of Oil & Mineral resources 3. Strategic Defence equipments 4. Technology development & building of manufacturing capabilities in areas which are crucial for economic development Autonomy through MOU Navaratnas Bringing down government equity to 26 % in non-Priority sector PSUs Close down PSUs which can not be revived Fully protect the interest of workers
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Foreign
Investment
Foreign Investment allowed up to 51 % of Equity capital in FERA companies Foreign Investment allowed up to 26 % of Equity capital in Defence productions sector. Up to 100 % in certain sectors ( real estate ) Stock market opened for foreign investment EXIM Policy liberalised , tariffs reduced , lifted import restrictions Foreign exchange rate policy liberalised , Rupee was made fully convertible on current account and then recently partly on capital account.
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Foreign
Technology
Agreement
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MRTP Act
Monopolies and
Restrictive Trade Practices Act
Public Sector
Public sector enterprise is an undertaking owned & managed by Government.
244 enterprises are public sector enterprises under the control of Central
Government Total investment Rs. 4,21,000 Cr. 1100 are State Public sector enterprises with 50,000 Cr. Investment These PSUs accounts for 25% of GDP & One-third of export PSUs accounts for 70 % of workers employed in organised sector
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Public Sector
Objective:
Help in rapid economic growth Earn return on investment & generate resources for development Create employment opportunity Assist & develop ancillary & small scale industries Promote redistribution of income & wealth
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Public Sector
Organisation of Public sector Units:
Public enterprises are organised in the following forms: 1. 2. 3. 4. 5. Ministry Departmental Undertakings Government Company Public corporation Holding company
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Public Sector
Organisation of Public sector Units:
Ministry Departmental Undertaking Management by a ministry, Railways, Budget to be approved by Parliament, Headed by Minister and management board It is directly subordinate to ministry, ICF, Ordnance factory, financed by annual appropriation from treasury, revenues are paid into treasury. Employees are civil servents, can be sued by following the procedure to sue the government 51% or more of equity owned by government, created under Company Law, Directors are appointed by Govt., fund from government
Government Company
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Public Sector
Navaratnas:
In 1997 govt. granted autonomy to 9 public sector units so as to support them to become global companies. These 9 companies are BHEL, BPCL, HPCL, IOC, ONGC, SAIL, VSNL, NTPC, IPCL. Later
Privatisation
Privatisation : Privatisation means transfer of ownership and /or management of an enterprise from the public sector to the private sector. Disinvestment: Disinvestment means sale of shares of public sector enterprises to outsiders. It is one of the method of privatisation. Purpose of Privatisation 1. To increase efficiency 2. To reduce the monopoly of govt. 3. To encourage private & foreign investment 4. To reduce the states administrative work 5. To encourage wider ownership of public
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Privatisation
Method of Privatisation in India:
1. Disinvestment Route This involves sale of equity shares of public sector units to outsiders. Disinvestment policy was introduced in 1991-92. Up to 20% of equity in select PSUs sold to Public sector Institutional investors like LIC, UTI . In 1993 Disinvestment committee under the chairmanship of C.Rangarajan was set up to advise on the mode of disinvestment. 1996 Disinvestment commission was set up and 58 PSUs were recommended to shift to private management without sale of shares 1999 PSUs were classified under Strategic & non-Strategic areas for disinvestment purpose. Strategic Sectors Defence equipments , arms , ammunitions, air crafts, warships, atomic energy , railways.
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Privatisation
Method of Privatisation in India:
1. Disinvestment Route.Cont. Rangarajan Committee Report Recommendations: 1. Industries reserved for PSUs Up to 49% of equity can be sold 2. PSUs having dominant market share Up to 74 % can be sold 3. In all other cases equity can be sold up to 100% 4. Best disinvestment method is offering equity to public at a fixed price 5. Once shares of PSUs are traded in Stock market Fixed price method can be used . Untill such time sale can be made through auction Disinvestment Commission: 1. Was set up in 1996 , to determine extent of disinvestment, to select the PSU to be divestd, to recommend route to disinvestment, to supervise overall sale . As on date 76 PSUs were divested and Rs. 49,000 cr is raised.
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Privatisation
National Investment Fund: Set up in 2005 , into which the sale proceeds of PSUs will be credited. This fund will be used to develop Infrastructure & Education, health, employment generation and in capital projects.
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Micro Industries
Small Industries
Medium Industries
Enterprise means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner pertaining to any industry specified in the First Schedule to the Industries Development and Regulation Act, 1951.
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Micro
Small
P&M > Rs.25 L <=500
Medium
P &M >Rs.500 L< =1000
Manufacturing
<=Rs.25 L
Service
Equipment <=Rs.10 L
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Dynamic Economy
Role of SMEs
Socio-Economic Development
Accounts for
35% Industrial Production 40% - Export 60% - Employment
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Importance
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4. Integrated Infrastructure development 5. Encouraging Industry associations 6. Common Testing facility 7. Productivity Training
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4. Foreign participation
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1. THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT 2006 ( MSMED Act 2006 )
PROGRAMME (NMCP)
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Objective
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Development of skill provisioning for technological upgradation providing marketing assistance or infrastructure facilities Credit Facilities Measures against Delayed payments
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Development of skill
PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through
National Institute for small Industry Extension & Training - Hyderabad ( NISIET) Indian istitute of Entrepreneurship ( IIE ) Guwahati National Institute for Entrepreneurship & small Business Development Newdelhi ( NIESBUD )
+ 12 other Institutes
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Small Industries Development Organisation ( SIDO ) National Small Industries Corporation Ltd. ( NSIC National science and technology Entrepreneurship Development Board ( NSTEDB National Productivity Council ( NPC )
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Director of export Promotion ( DEP) Director General of Supply & Disposal ( DGSD ) Rural Industrial & Marketing Corporation ( RIMCO )
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Credit Facilities
PROMOTION DEVELOPMENT and ENHANCEMENT of Competitiveness through
Commercial Banks Counsil of Scientific & Industrial Research Small industries Service Institute National Small industry Corporation
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Micro and Small Enterprises Facilitation Council Arbitration and Conciliation Act 1996 Courts
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implementing flow )
2. Promotion of ICT in manufacturing ( Information communication Tech ) 3. Setting up Mini Tool Rooms 4. Encouragement for Quality Management Standards & Tools 5. Campaign for investment in Intellectual property
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Package : 1. Legislative backup 2. Credit support 3. Tech & Quality up gradation support 4. Marketing support 5. Empowerment of women entrepreneur
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Incentives for
Handicapped NRIs Retired defence personnel Women Entrepreneurs Exemptions from: Income tax Property tax Stamp duty Sales tax
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1. Continuous decline in gross output compared to the previous two financial years; 2. Delay in repayment of loan from institutional sources, for more than 12 months; and 3. Erosion in the net worth to the extent of 50 per cent of the net worth during the previous accounting year. Units satisfying one or more of the above criteria have to be treated as Sick unit
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Anatomical causes
1. 2. 3. 4. Underestimation of Project cost Old Technology Wrong Site Unwanted investment in Fixed assets 5. Defective Plant & Machinery Operational causes
1.
2. 3.
4. 5.
Shortage of supply in inputs Rise in raw material cost Radical change in govt. policy Recession in Industry Foreign exchange fluctuations
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Entrepreneur
A person who creates something new with value and assuming the risk & Reward
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Some Entrepreneurs
Entrepreneur Something New Value Risk Reward
Credit risk
Global productivity
Pace University
Evening College
Perception
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Types of Entrepreneurs
Type of Business Business Trading Industrial Corporate Agricultural Retail Service Franchise Growth Growth Super Growth Others Imitating Forced National/International Intrapreneur Immigrant Motivation Pure Induced Motivated Spontaneous
Stage of Development First generation Modern Classical Scale of Operation Small, Large
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Use of Technology Technical Non-Technical Professional High/Low Tech. Area Rural , Urban
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Promotion of capital formation. Immediate large-scale employment. Promotion of balanced regional development. Reduced concentration of economic power. Encourages effective resource mobilization. Promotes export trade.
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