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Business Environment i n COUNTRY ( INDIA )

1. Business Environment i n COUNTRY ( INDIA ). 2. Which are the 5 main issues impeding a business conducing business environment in your country ? Write down the issues next to the arrows. Economical. Political. Business Environment. Social. Education. Population.

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Business Environment i n COUNTRY ( INDIA )

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  1. 1 Business Environment in COUNTRY ( INDIA)

  2. 2 Which are the 5 main issues impeding a business conducing business environment in your country? Write down the issuesnext to the arrows Economical Political Business Environment Social Education Population

  3. Justify the choice of the issues:

  4. 3 At which level should these issues be addressed? Indicate the levelwhichis the mostrelevant to tackle the particularissue, asshownbelow (eg. Local, national, sectorallevel etc. ) Economical All level Political Business Environment Govt. level Social Political level Educational Population School / College level Govt. level

  5. 4 Are these currently priorities for my BMO? Indicate if the issuesidentifiedform part of the strategicpriorities of your BMO (Strategic plan, Business Agenda, Lobbying short-termactionplan etc.) as in the example … level Issue 1 Issue 2 Business Environment … level Issue 5 … level Issue 3 Issue 4 …level … level

  6. Annexure I [ Economic situation] • Indian Economy Overview • "India is clearly becoming a more and more important player on the world stage in G20 context, in terms of its role in the global economy. It is very useful for us to exchange ideas and build the basis for future collaboration," according to Mr. Ben Bernanke, Chairman, US Federal Reserve. • India is the fifth best country in the world for dynamic growing businesses, according to the Grant Thornton Global Dynamism Index. The index gives a reflection of how suitable an environment it offers for dynamic businesses. • In addition, India's economic confidence registered an increase of 8 points, to reach 68 per cent in August 2012 as compared to the previous month, according to the 'Ipsos Economic Pulse of the World' survey. This makes India the fourth most economically confident country in the world. • India ranks fourth on Ernst & Young's (E&Y) renewable attractiveness index. India ranks second on the solar index, and third on the wind index, as per the latest study by E&Y and UBM India Pvt. Ltd. • Moreover, Indian firms took pride at the 2012 Plats Top 250 Global Energy Company Rankings. Six of the 12 Indian companies which were in the ranking, also made it to the list of top 50 fastest growing companies.

  7. Annexure I [ Economic situation] The Economic Scenario • India is expected to be the second largest manufacturing country in the next five years, followed by Brazil as the third ranked country, as per Deloitte Touche Tohmatsu Ltd (Deloitte). • Some of the other important economic developments in the country are as follows: • The cumulative amount of foreign direct investments (FDI) equity inflows into India were worth US$ 179,025 million between April 2000 to August 2012, of which US$ 8,166 million was recorded during the April 2012 to August 2012 period, according to the latest data published by Department of Industrial Policy and Promotion (DIPP) • Total exports from the Indian services sector stood at US$ 11.94 billion in September 2012, up 6.3 per cent from US$ 11.23 billion in September 2011, as per data released by the Reserve Bank of India (RBI) • Foreign institutional investors (FIIs) remain substantially bullish on Indian markets and have invested over US$ 13 billion into Indian stocks so far in 2012

  8. Annexure I [ Economic situation] • Mergers & acquisitions (M&A) and private equity (PE) deal activities witnessed an increase in October 2012 with cumulative value worth US$ 3.1 billion from 90 transactions • PE firms have invested US$ 2.5 billion in India across 97 deals in the third quarter (Q3) of 2012, registering four per cent increase in terms of value, as compared to US$ 2.4 billion in Q3 of 2011, according to a study by PricewaterhouseCoopers (PwC) • Foreign institutional investors (FIIs) made a net investment of Rs 11,364 crore (US$ 2.05 billion) in the equity market and of Rs 7,851.70 crore (US$ 1.41 billion) in the debt market up to October 12, 2012 in the current year, according to data released by the Securities and Exchange Board of India (SEBI) • Foreign investments in Indian markets through Participatory Notes (P-Notes) peaked to a seven month high of Rs 1,46,600 crore (US$ 26.41 billion) in September 2012, sustained by expectations of fresh initiatives by the Government on policy reforms as well as the QE3 in the US boosting investor sentiment • India is expected to receive remittances worth US$ 70 billion in 2012, emerging on top of the list of developing countries which are expected to receive a total of US$ 406 billion remittances in 2012, according to the World Bank

  9. Annexure II [Politicalsituation] • The political situation in India remains murky, and elections will be held in key states early this year. Uttar Pradesh, the country’s most populous state, will hold elections in seven phases, which will unfold during most of February. Punjab, a significantly smaller state in terms of population, will also hold elections in January and March. • In these and other states, the Indian National Congress, India’s ruling party, faces serious opposition, and further dramatic developments cannot be ruled out if it does not perform well. • On the economic front, inflation, which is around 8 percent, remains a serious issue for India, persisting in a manner that few of its policymakers had anticipated. While food inflation has fallen to levels below 8 percent from its recent high of 20 percent, inflation in non-food manufacturing has risen 8 percent from 3 percent. • Early last year, food inflation was a major concern, so inflation’s shift in momentum toward non-food manufacturing has surprised policymakers. Some analysts attribute this development to the government’s pursuit of initiatives to support rural employment and guarantee prices for certain agricultural products.

  10. Annexure II [Politicalsituation] One example of these policies is the Mahatma Gandhi National Rural Employment Guarantee Act, which aims to enhance “the livelihood security of people in rural areas by guaranteeing a hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.” Another policy is the Minimum Support Price which requires government to purchase agricultural produce from farmers at a fixed price regardless of market conditions. These efforts to affect a redistribution of income have had an inflationary outcome. That forced the Reserve Bank of India, the country’s central bank, to tighten monetary policy last year in an effort to curtail the problem. Source: Bloomberg

  11. Annexure II [Politicalsituation] At the moment, economists do not expect India to exceed gross domestic product (GDP) growth of 7 percent this year. If the country’s chaotic electoral politics continue to dominate the headlines for much longer, the resulting uncertainty could cause economic growth to come in closer to 6 percent. And if investors begin to worry that economic growth is at risk, the Indian stock market could rapidly decline by 20 percent to 30 percent. But before that happens, India’s central bank will likely take steps to support the economy by lowering interest rates. Such action should be beneficial to the economy by spurring new loan activity. Annual growth in loan demand has fallen to 16 percent from more than 30 percent a few years ago. If inflation continues to dampen and growth remains weak, the central bank could cut rates by the end of the first quarter. In the short term, India’s stock market should react positively to such an action.

  12. Annexure II [Politicalsituation] Regardless of the present headwinds, India’s strong domestic demand story means that it remains an attractive investment destination for the long-term investor. Furthermore, the Bombay Stock Exchange Sensex trades at around 2 times book value, which is significantly lower than its long-term average of 3.2. That offers fundamental support at current levels. For now, I suggest hedging exposure to India via iShares MSCI BRIC Index(NYSE: BKF), whose portfolio also covers Brazil, Russia and China.

  13. Annexure III [Education ] Literacy Rate in India - To know development in a society, Literacy is another proper indicator of economic development. For purpose of census, a person in age limit of seven and above, who can both write and read with understanding in any of the language is considered as a literate in India. As per Population Census of India 2011, the Literacy rate of India has shown as improvement of almost 9 percent. It has gone up to 74.04% in 2011 from 65.38% in 2001, thus showing an increase of 9 percent in the last 10 years. It consists of male literacy rate 82.14% and female literacy rate is 65.46%. Kerala with 93.9% literacy rate is the top state in India. Lakshadweep and Mizoram are at second and third position with 92.3% and 91.06% literacy rate respectively. Bihar with 63.08% literacy rate is the last in terms of literacy rate in India.

  14. Annexure III [Education ] Government of India has taken several measures to improve the literacy rate in villages and towns of India. State Governments has been directed to ensure and improve literacy rate in districts and villages where people are very poor. There has been a good improvement in literacy rate of India in last 10 years but there is still a long way to go. • List of Steps taken by Government of India to improve Literacy Rate in India: • Free education programs to poor people living in villages and towns. • Setting up of new school and colleges at district and state levels. • Several committees have been formed to ensure proper utilization of funds allotted to improve literacy rate.

  15. Annexure IV [Population ] EFFECTS OF POPULATION EXPLOSION : The current rate of population growth in India is 1.58% and the total fertility rate is 3.11 (AskJeeves.com, Internet).Although the total fertility rate has decreased, due to the increase in the total number of women between the ages of 15 and 44 (reproductive ages), the total number of births has increased. This has lead to the current enormous population size of approximately 1 billion. This has greatly hampered the development of the Indian economy. The amount of resources that could have been available to one person a few years ago now need to be shared between two people, which is not sufficient for either of them. The population increase has lead to air and water pollution, unemployment, poverty, lack of educational resources, and even malnourished women and children.

  16. Annexure IV [Population ] Unemployment and Illiteracy: Suppose we forget about the environment, and only worry about ourselves. Nonetheless, with the increasing population, even that is not possible because with the increasing number of people, we have to share our resources with even more people. Resources of all types are limited, even employment, especially in India. India, being a developing country, has a limited number of jobs available. Due to the increasing number of people, the competition for the most menial jobs is also tremendous. According to EconomyWatch.com, in 1972-73, unemployment rates in rural areas were 1.2 for males and 0.5 for females, and in urban areas, it was 4.8 for males and 6.0 for females. This unemployment rate rose to 2.3 for males and 1.5 for females in rural areas and 4.9 for males and 8.2 for females in urban areas in 1998-99. With the increasing population, unemployment rates are bound to rise even further. Several highly educated people with Bachelors and Master’s degrees in India sit at home, because they cannot find jobs. This, I believe, is the major reason for Indians like myself to migrate to developed countries like the U.S.Such unemployment and underemployment leads to corruption and exploitation of people by the richer classes of the society. This lack of resources further leads to lack of educational resources. Due to the unavailability of resources, parents cannot afford to educate their children to higher levels. Some parents simply cannot afford to teach their children further, and in some families, children need to work along with their parents in order to bring food to the table.

  17. Annexure IV [Population ] According to the World Bank Group, “about 32 million primary school-age children, mostly girls or those from the poorest households and disadvantaged groups, are not in school; more than half of rural students drop out before completing the primary cycle, and only one-third of females make it to the secondary level.” In addition, “nearly half the population over 15 years old and about 60 percent of all women over 15 years old is illiterate.” Also, basic education has become a commodity that acts on the basis of supply and demand. Basic education has become too expensive in India for a commoner to afford for his/her children. Lack of education further leads to even more unemployment. Due to these reasons, a major part of the population is either illiterate or has the most minimum education leading them to accept minimal work in which they cannot even support themselves . Unemployment, or underemployment, further leads to poverty. This again starts the vicious cycle of poverty and population explosion discussed above. Poverty leads to an increase in the population, because poverty leads people to produce more children to increase the earning members of the family. This increases the population size of India, which further increases the unemployment rate and lack of educational facilities leading to poverty that started this whole cycle.

  18. Annexure V [Social ] Socio-cultural effect is playing a vital role which has got impact on Business environment. There are different attributes such as – Attitude of People Attitude of Wealth Marriage Religion Education Ethics Social Responsibilities These are having tremendous impact on determining – Consumer behaviour, local demand, buying decisions, brand image etc.

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