Name: Hashmi Hareshbhai Sutariya

Subject name: Environment for busiess

Roll no: 33 MBA – semester (2) Division : A

Institute name: S.K Patel institute of management

Question:1- Explain the role of technology in promoting economic

development. While doing so, bring out the positive and negative
role of technology.
At a time of slowed growth and continued volatility, many countries are looking for policies that
will stimulate growth and create new jobs. Information communications technology (ICT) is not
only one of the fastest growing industries – directly creating millions of jobs – but it is also an
important enabler of innovation and development.

The number of mobile subscriptions (6.8 billion) is approaching global population

figures, with 40% of people in the world already online. In this new environment, the
competitiveness of economies depends on their ability to leverage new technologies.
Here are the five common economic effects of ICT.

1. Direct job creation

The ICT sector is, and is expected to remain, one of the largest employers. In the US
alone, computer and information technology jobs are expected to grow by 22% up to
2020, creating 758,800 new jobs. In Australia, building and running the new super-fast
National Broadband Network will support 25,000 jobs annually. Naturally, the growth in
different segments is uneven. In the US, for each job in the high-tech industry, five
additional jobs, on average, are created in other sectors. In 2013, the global tech market
will grow by 8%, creating jobs, salaries and a widening range of services and products.  

2. Contribution to GDP growth

Findings from various countries confirm the positive effect of ICT on growth. For
example, a 10% increase in broadband penetration is associated with a 1.4%
increase in GDP growth in emerging markets. In China, this number can reach 2.5%.
The doubling of mobile data use caused by the increase in 3G connections boosts GDP
per capita growth rate by 0.5% globally. The Internet accounts for 3.4% of overall GDP
in some economies. Most of this effect is driven by e-commerce – people advertising
and selling goods online.

 3. Emergence of new services and industries

Numerous public services have become available online and through mobile phones.
The transition to cloud computing is one of the key trends for modernization. The
government of Moldova is one of the first countries in Eastern Europe and Central Asia
to shift its government IT infrastructure into the cloud and launch mobile and e-services
for citizens and businesses. ICT has enabled the emergence of a completely new
sector: the app industry. Research shows that Facebook apps alone created over
182,000 jobs in 2011, and that the aggregate value of the Facebook app economy
exceeds $$12 billion.

 4. Workforce transformation

New “microwork” platforms, developed by companies like oDesk, Amazon and Sam
source, help to divide tasks into small components that can then be outsourced to
contract workers. The contractors are often based in emerging economies. Microwork
platforms allow entrepreneurs to significantly cut costs and get access to qualified
workers. In 2012, oDesk alone had over 3 million registered contractors who performed
1.5 million tasks. This trend had spillover effects on other industries, such as online
payment systems. ICT has also contributed to the rise of entrepreneurship, making it
much easier for self-starters to access best practices, legal and regulatory information,
marketing and investment resources.

 5. Business innovation

In OECD countries, more than 95% of businesses have an online presence. The

Internet provides them with new ways of reaching out to customers and competing for
market share. Over the past few years, social media has established itself as a powerful
marketing tool. ICT tools employed within companies help to streamline business
processes and improve efficiency. The unprecedented explosion of connected devices
throughout the world has created new ways for businesses to serve their customers.

Negative effect of technologies:

 Excessive competition: Today, technology evolves very quickly and this

implies that businesses must take-up these changes instantly by attempting to
keep-up with the new technologies. However, this competition may not be
favorable for starting businesses which usually tend to fail in business at an
earlier stage.
 It’s Expensive to implement new-technologies: it’s actually very costly for
small businesses to implement new technologies since they require new hardware
and software. So, businesses that can’t afford new-technologies will collapse
easily today leading to increased levels of unemployment.
 Increased levels of unemployment: Today, businesses that embrace new
technologies tend to lay-off some employees because new-technologies usually do
multiple tasks at once thus replacing the jobs that were done by some employees.
For example Facebook has less employees yet it serves billions of people while
companies like Kodak which had over 145,000-employees at the height of
 operation filed for bankruptcy. In fact, displaced workers are usually the first to
feel the impact of technology-innovation.
 Implementing new-technologies can be time-consuming and
confusing: Although keeping-up with new-technologies can be advantageous,
implementing new hardware and software is not easy and it can at times lead to a
decrease in productivity and revenue incase a technological upgrade does not go
smoothly.
 Increased levels of crime in business: with technological-advancements,
there has been an increase of crime at workplaces whereby tech-savvy employees
can easily embezzle funds and make it very difficult for the company to trace.
Additionally, hackers could also access your personal or financial-data of
customers and this can greatly affect companies today. In fact, today companies
are spending a lot of money and time on developing systems guards, like Anti-
virus software in order to prevent information theft by hackers.
 Over reliance on technology by businesses: Today, many businesses
integrate and implement technological-solution into their daily operations which
is good but this implies that businesses can’t remove these technologies without
facing serious difficulties. In fact, in the integrated technologies fail then
businesses could find it very difficult to continue their daily operations thus
affecting production levels.
 Impacts income distribution: once technology is integrated into a business,
workers displaced by technological-advances may find it difficult to find other
employment-opportunities since new jobs may require advanced skills that they
may not have. In fact, technology impacts a number of jobs involving production
of goods and services. Additionally, experts have predicted that 47 percent of all
jobs may be automated in the coming decades, Middle-class jobs will be lost and
that means the gap between the rich and poor will widen.
 Technology is taking over the educational-sector: Today, the internet has
made online-learning a great alternative to traditional classroom instruction
learning. In fact, many academic institutions are turning to blended learning
which is a mix of online and classroom learning like Khan Academy and other
colleges. However, institutions that don’t have online-courses are losing a lot of
money on extra students learning from different locations of the world.
 Increased income inequality: Countries that develop and integrate new
technologies like; USA, CHINA, RUSSIA, etc are actually experiencing a rise in
income inequality amongst their citizens. On the other hand, experts say that the
income per capita of the richest country of the world is 7-times higher than that
of the poorest country. In fact, income inequality is a major issue because it leads
to several other adverse effects like; economic inefficiency, undermining of social
stability and solidarity, increases the fraction of a population that can qualify for
some form of credit resources hence leading to a lower overall rate of saving in
the society.
 Increased environmental degradation: Technological-advances lead to an
increase in production of goods in manufacturing businesses. However, the rate
at which natural-resources are being degraded in most countries is high and
there are many health and environmental issues arising like air-pollution,
 waterborne diseases and exposure to harmful chemicals. In fact, the changes in
the climate globally have increased the risk of natural disasters and other
environmental risks which greatly affect the economies of different countries.
 Increased risks in the financial sector: Today, technology is allowing
people to carryout online-banking, mobile-banking and online transactions
through the use of Visa-card, PayPal and other services. However, these online
services have increased on the risk of theft and other crimes in the financial
sector today. For example, hackers can easily access your credit card details today
and then use that information to steal a lot of money online.

Question:-2 What is the difference between monetary policy

and fiscal policy? Discuss Budget 2020-21 announced by the
Finance Minister of India.
Monetary policy Fiscal policy

Definition Monetary policy is the process by Fiscal policy is the use of

which the monetary authority
controls the supply of money ,
often targeting a rate of interest
to attain a set of objectives
oriented towards the growth and
stability of the economy.
Effect Cost of borrowing
Distribution Higher interest rates hit
homeowners but benefit savers
Exchange rate Higher interest rates cause
appreciation
Politics Monetary policy set by
independent central bank
Supply –side Limited impact
Liquidity trap Cuts in interest rates may not
work in liquidity trap
government expenditure and
revenue collection to influence the
economy.
Budget deficit
Depend which taxes you raise.
No effect on exchange rates
Changing tax and government
spending highly political.
Higher taxes may affect incentives
to work.
Fiscal policies advised in very
deep recessions.

The Key Highlights of Union Budget 2020-21 are as follows:

Prominent Themes of the Budget
governance ----ease of living---- Financial sector

Aspirational
india Economic Caring society
development

A) Aspirational india
-(agriculture ,irrigation And rural development) , (wellness ,water and sanitation) ,( education
and skills)

B) Economic development
- (Industry, Commerce and Investment) ,( Infrastructure) ,(new economy)

C) caring society
-( Women &Child, Social Welfare) ,(culture and tourism), (environment and climate change)

 Governance
Structure reform IBC GST
• Honourable • 20 per cent reduction in turn around time
exit through for trucks.
IBC for companies • Benefit to MSMEs through enhanced
threshold and composition limits
• Savings of about 4 per cent of monthly
spending for an average household.
• In last 2 years, 60 lakh new taxpayers
added and 105 crore e-way bills generated

 DIGITAL REVOLUTION
Shift to DBT Next wave
• During 2018- • Digital Governance.
19, `7 lakh crore transferred through dbt • Improve physical quality of life through
National Infrastructure Pipeline
• Disaster Resilience.
 • Social Security through Pension and
Insurance penetration.
 INCLUSIVE GROWTH
Governance guided by “Sabka Saath, Sabka Vikas, Sabka
Vishwas” with focus on:
• Preventive Healthcare: Provision of sanitation and water
• Healthcare: Ayushman Bharat
• Clean energy: Ujjawala and Solar Power
• Financial Inclusion, Credit support and Pension
• Affordable Hosuing
• Digital penetration

Financial sector
• Deposit Insurance Coverage to increase from `1 lakh to `5 Lakh per depositor.
• Eligibility limit for NBFCs for debt recovery under SARFAESI Act proposed to be
reduced to asset size of `100 crore or loan size of `50 Lakh.
• Proposal to sell balance holding of government in IDBI Bank.
• Separation of NPS Trust for government employees from PFRDAI.

•Specified categories of government securities would be opened for non resident

investors
• FPI Limit for corporate bonds to be increased to 15 per cent.
• New debt ETF proposed mainly for government securities.

Budget at glance (Rupees comes from,)

Non debt capital receipts 6%
Income tax 17%
Union excise duties 7%
Corporation tax 18%
GST 18%
Customs 4%
Non tax revenue 10%
Borrowing and other liabilities 20%
Tax proposals
Concessional corporate tax rate of 15 per cent to new domestic
 Tax concession for sovereign wealth fund of foreign governments and other foreign
investments.
  Tax benefits to Start-ups by way of deduction of 100 per cent of Concessional tax rate
for cooperatives proposed. Turnover threshold for audit of MSMEs increased.
 Extension of time limits pertaining to the tax benefits for affordable housing.
 Issuance of Unique Registration Number to all charity institutions for easy tax
compliance.
 Health cess to be imposed on imports of medical equipment given these are made
significantly in India.

 Dividend Distribution Tax removed and classical system of dividend taxation adopted.
 Simplified and New Income Tax Regime as an option to the old regime.
 Simplified GST return shall be implemented from 1st April 2020. Refund process to be
fully automated.

Agriculture, Irrigation and Rural Development

PM KUSUM to cover 20 lakh farmers for stand alone solar pumps and further 15 lakh for grid
connected pumps
• Viability gap funding for creation of efficient warehouses on PPP
mode.
• SHGs run Village storage scheme to be launched.
• Integartion of e-NWR with e-NAM.
“Kisan Rail” and “Krishi Udaan” to be launched by Indian Railways and Ministry of Civil
Aviation respectively for a seamless national cold supply chain for perishables.
• Elimination of FMD and brucellosis in cattle and PPR in sheep and goat by 2025
• Increasing coverage of artificial insemination to 70 per cent.
• Doubling of milk processing capacity by 2025.
• Agricultural credit target of `15 lakh crore for 2020-21

 Fish Production target of 200 lakh tonnes by 2022-23.

 Another 45000 acres of aquaculture to be supported.Fishery extention through 3477 Sagar
Mitras and 500 fish FPOs.
 Raise fishery exports to `1 lakh crore by 2024-25.
Wellness, Water and Sanitation
• More than 20,000 empanelled hospitals under PM Jan Arogya Yojana.
• FIT India movement launched to fight NCDs.
• “TB Harega Desh Jeetega” campaign launched to end TB by 2025
• Viability gap funding proposed for setting up hospitals in the PPP mode. 2025.
• Expansion of Jan Aushadhi Kendra Scheme to all districts by 2024.
• ODF Plus to sustain ODF behavior..
• Focus on liquid and grey water management along with waste management.
• Coverage under nikshay poshan yojna (R.s -35 lakh)
Education and Skills

• About 150 higher educational institutions will start apprenticeship embedded courses.
• Internship opportunities to fresh engineers by urban local bodies.
• Special bridge courses to improve skill sets of those seeking employment abroad.
•Degree level online education programmes for students of deprived sections of the
society.
• Ind-SAT to be conducted in Asia and Africa under Study in India programme.
New Economy
• Knowledge Translation Clusters for emerging technology sectors
• Scaling up of Technology Clusters harbouring test beds and small scale manufacturing
facilities.
• National Mission on Quantum Technologies and applications with an outlay of Rs.8000 crore
proposed.
Industry, Commerce and Investment
•Scheme to encourage manufacturing of mobile phones, electronic equipment and semi conductor
packaging.
• National Technical Textiles Mission for a period of 4 years.
• NIRVIK Scheme for higher export credit disbursement launched.
• Setting up of an Investment Clearance Cell to provide end to end facilitation.
• Extension of invoice financing to MSMEs through TReDs.
• A scheme to provide subordinate debt for entrepreneurs of MSMEs
• Scheme anchored by EXIM Bank and SIDBI to handhold MSMEs in exports markets.

Infrastructure

• National Logistics Policy to be launched soon.

• Roads: Accelerated development of Highways.
• Railways: Four station redevelopment projects
• 150 passenger trains through PPP mode.
• More Tejas type trains for tourist destinations.
• Port: Corporatizing at least one major port.
• Air: 100 more airports to be developed under UDAAN.
• Power: Efforts to replace conventional energy meters by prepaid smart meters.
• Gas Grid: Expand National Gas Grid to 27,000 km
• Infrastructure Financing: `103 lakh crore National infrastructure Pipeline projects
announced.
• An international bullion exchange to be set up at GIFT City.
Caring Society
Women& child , social Culture and tourism
welfare:  Proposal to establish
 More than 600000 Indian Institute of Heritage
anaganwadi workers and conservation.
equipped with smart  5 archaeological
phones. sites to be developed as
 A task force to be iconic sites .
appointed to  A museum on
recommend regarding numismatics and
lowering MMR and trade to be
improving nutrition established
levels  Tribal museum in
ranchi.
 Maritime museum to
be set up at lothal.
Environment and climate
change :
 Coalition for disaster
resilient infrastructure
launched in
sepetember-2019.
 Encouragement to
states implementing
plans for cleaner air in
cities above 1 million.

Expenditure of major items

(In crores)
Ministry of Housing and Urban Affairs Rs. 50040
Ministry of Health and Family Welfare Rs. 67112
Ministry of Railways Rs. 72216
Ministry of Road Transport and Highways Rs. 91823
Ministry of Human Resource Development Rs. 99312
Ministry of Rural Development Rs. 122398
Ministry of Consumer Affairs, Food and Public Distribution Rs. 124535
Ministry of Agriculture and Farmers’ Welfare Rs. 142762
Ministry of Home Affairs Rs. 167250
Ministry of Defence Rs. 471378

Question:3- India cannot depend merely on the service sector to drive

growth. It needs a balanced growth strategy across all sectors
including agriculture and industry. Explain with suitable facts and
figures.
  The Indian economy was in distress at the brink of the country’s independence. Being a
colony, she was fulfilling the development needs not of herself, but of a foreign land. The
state, that should have been responsible for breakthroughs in agriculture and industry,
refused to play even a minor role in this regard. On the other hand, during the half
century before India’s independence, the world was seeing accelerated development and
expansion in agriculture and industry - on the behest of an active role being played by the
states.
 Today India is ranked the seventh largest economy, and third largest in terms of
Purchasing Power Parity (PPP). The Indian economy’s GDP is pegged at $ 2.9 tn. At a
press conference, Finance Minister Arun Jaitley commented, ‘We keep oscillating
between the fifth and the sixth largest economy, depending on the dollar rate. As we look
at the years ahead, we will be $ 5 tn by 2024 and $ 10 tn by 2030 or 2031.’
 The GDP per capita in India was $ 1963.55 in 2017. The GDP per Capita in India is
equivalent to 16% of the world's average, and averaged $ 693.96 from 1960 until 2017. It
reached an all - time high of $ 1963.55 in 2017.
 The adoption of the New Economic Policy in 1991 saw a landmark shift in the Indian
economy, as it ended the mixed economy model and license raj system - and opened the
Indian economy to the world. An overview of the top performing sectors of the Indian
economy is given below – 
1.    Agricultural Sector:
One of the most important sectors of the Indian economy remains Agriculture. Its share in the
GDP of the country has declined and is currently at 14%. However, more than 50% of the total
population of the country is still dependent on agriculture. Keeping this in mind, the Union
Budget 2017 - 18 gave high priority to the agricultural sector and aimed to double farmers’
incomes by 2022.
•    Government subsidies to agriculture are at an all - time high.
•    Further, cropping patterns have shifted in favour of cash crops such as sugarcane and rubber.
•    Introduction of cooperative farming like – e - choupal etc.
•    Rise of SHGs such as Lijjat Papad.
•    Agricultural land is being brought under industrial and commercial use, thereby straining the
remaining agricultural land.
•    Many export sectors have been opened for agricultural goods.
•    Food processing is emerging as a ‘Sunrise Industry’
 
2.    Industry Sector:
Another important part of the Indian economy is the Industry sector. Changes such as the end of
the ‘Permit Raj’ and opening up of the economy were welcomed in the country with great
enthusiasm and optimism. As a result of these changes, the industrial potential of the economy
has increased since 1991. 
•    Proliferation of industries, from traditional iron and steel to jute and automobiles.
•    Autonomy in production, marketing and distribution.
•    Reduced red - tapism.
•    Encouragement to private investments, both domestic as well as FDI.
•    Transfer of technology and benefits of research and development to the advantage of the
economy.
•    Arrival of investment models such as joint ventures, public-private partnerships, MNCs.
•    Private players got an opportunity to enter new sectors, which were earlier under government
monopoly.
 
3.    Services Sector:
The sector that benefited most from the New Economic Policy was the services sector. Banking,
Finance, Business Process Outsourcing - and most importantly Information Technology services
- have seen double - digit growth. 
•    Indian IT giants such as Infosys, WIPRO and TCS have made their mark on the global
platform. 
•    60 percent of the GDP contribution comes from the services sector. 
•    India, with its huge demographic dividend potential, has emerged as the IT hub of the world.
•    New employment opportunities are being created in this sector.
•    Opening of transportation, tourism and medical sectors have led to the growth of service
sector competencies.
•    RBI has transitioned from being a regulator to a facilitator.
•    Product diversity of financial investments.
•    Wider penetration of services such as insurance, banking, stock market etc.
•    Considerable improvement in forex reserves.
 
4.    Food Processing:
Food processing has emerged as a high - growth, high - profit sector and is one of the focus
sectors of the ‘Make in India’ initiative. The vast availability of raw materials, resources,
favourable policy measures and numerous incentives have led India to be considered as a key
attractive market for the sector. With a population of 1.3 bn and an average age of 29, as well as
a rapidly growing middle - class population that spends a high proportion of their disposable
income on food, India boasts of a large consumer base. The total consumption of the food and
beverage segment in India is expected to increase from $ 369 bn to $ 1.14 tn by 2025. The output
of the food processing sector (at market prices) is expected to increase to $ 958 bn during the
same period. India is the second largest producer of food grains in the world, second only to
China. This sector has huge potential in India due to increasing urbanization, income levels and a
high preference for packaged and processed food. Visit the sectors category to read more about
the food processing industry.
 
5.    Manufacturing Sector:
The manufacturing sector is the second largest contributor to India’s GDP after the Services
sector. Various government initiatives like Make in India, MUDRA, Sagarmala, Startup India,
Freight Corridors, along with a whole - hearted contribution from states, will raise the share of
the manufacturing sector in the foreseeable future.
However, if India aims to raise its share of manufacturing in GDP to around 25%, the industry
will have to significantly step up its research and development expenditure. The quantum of
value addition has to be increased at all levels and the government needs to offer attractive
remuneration to motivate people to join the manufacturing sector.
 The service sector in India has the highest employment elasticity among all sectors.
Thus, it has the potential for huge growth as well as the capability to deliver highly
productive jobs - leading to revenue generation. To address the challenge of job creation,
the Skill India program aims to achieve its target of skilling/ up - skilling 400 million
people by 2022. It aims to do this mainly by fostering private sector initiatives in skill
development programs, and by providing them with the necessary funding.