Political Environment, Business Environment B Com Notes | EduRev

Business Environment

Created by: Arshit Thakur

B Com : Political Environment, Business Environment B Com Notes | EduRev

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India’s government is referred to as a “Union Government”, also known as the “Central Government”, which includes seven union territories and 28 states of the nation. There are three branches of India’s government, which are identical to those of the U.S.: Executive, Judiciary, Legislative.

India’s political economy is currently a mixed economy, but gradually moving toward a market economy. They are still seeing aspects of state ownership with the liberalization of the 1990s leading to a massive increase. Two examples of liberalization include the Prime Minister Rajiv Gandhi – 1980’s first step in the liberalization movement, but did not succeed – and the 1991 IMF Bailout which lead to a $1.8 Billion dollar bailout from IMF to India and had a major impact on liberalization.

India’s 2014 elections will take place from April 7 to May 12. This is a total of a 6 week process with votes being tallied on May 16. This will be the longest election in Indian history. The current party in power is the Indian National Congress and their opposing party is the Bharatiya Janata Party. The Indian National Congress was established in 1885 and is one of the oldest democratic parties in the world. The INC led India to independence and currently supports populism, secularism, liberalism, and the partnering of private and public sectors. The Bharatiya Janata Party was established in 1980 and is for integral humanism (rejects both capitalism and communism) and the formation of smaller states for a better government. Also, the BJP has been known for formerly spreading violence. In order to vote in India, one must be 18 years of age, have a voting card (protects against electoral fraud), and be on the Electoral Roll, which is updated yearly. Those who are deemed unsound of mind or convicted of certain criminal offenses are not allowed to vote in any elections.

Though the economy has fallen in the past year, businesses are still encouraged to come over to India because the economy is still projected to continue growing in a positive way but they also must take into account the political turmoil that is happening. The politics of the country encourages business and there are plenty of people who are willing to work hard and fill job positions. With the Indian National Congress’ main goal being to eradicate poverty, they are willing to work with businesses to ensure that the economy increases in order to decrease poverty.

As far as property rights go, foreign nationals of non-Indian origin who reside outside India cannot buy any immovable property in India. It is illegal for foreign nationals to own property in India unless they satisfy the residency requirement which say you must stay 183 days in a financial year (whereas a tourist visa lasts for only 180 days).  It is illegal to buy property on a tourist visa as well, so you cannot stay for the 180 days and then try to buy it. With all that being said, those who have parents or grandparents who were born in India can buy property. A real estate attorney should be hired though to ensure the protection of your interests and make sure that you do not get swindled. The whole process of registering property requires five procedures, which can be completed in around 44 days.

Overall, India’s political environment is dangerous to business. There is still not a market economy, and the organizations are still primarily state owned. With businesses not of Indian decent not able to own property, they have limited control over their own companies in the country. With electoral turmoil and corruption running rampant, the new elections could influence economic development substantially.

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