CBSE Class 12-commerce Business Studies Part I Economic Environment In India

Understand the economic environment in India from the CBSE Class 12 Commerce Business Studies Part 1 syllabus chapter Business Environment at TopperLearning. Refer to our revision notes, sample papers, video lessons, MCQs etc. to learn more about the topic.

The economic environment relates to all the economic determinants that influence commercial and consumer compliance. The term economic environment refers to all the external economic circumstances which affect the purchasing practices of customers and markets and hence influence the production of the business. As a component of economic reformation, the Government of India declared a new industrial system in July 1991. The extensive characteristics of this system were as follows:

The Government decreased the number of enterprises below mandatory licencing to six.

  • Many of the businesses held for the public sector under the initial policy were justified. The purpose of the public sector was defined only to 4 industries of vital importance.
  • Disinvestment was conducted for many public sector industrial companies.
  • Policy towards foreign funds was expanded. The percentage of foreign equity partnership was extended, and in many ventures, 100 percent Foreign Direct Investment (FDI) was allowed.
  • Automatic approval was given for technology transactions with foreign firms.
  • Foreign Investment Promotion Board (FIPB) was established to support and channelise foreign financing in India.

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