Economic System Of India


All assignments or projects will have a compulsory presentation requirement which carries another 10%. Communication skills, visual aids, and personal grooming are the criteria for obtaining the 10%. Please use Harvard Referencing System for all the referred materials.

Answer both questions: (2Q * 15% = 30%) (Presentation = 10%)

You are required to identify a country which you think is experiencing slow 'Economic Growth'. What are the economic problems of the particular country facing?

Explain the various types of business organizations existing in the private sector.








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The Economic System of India

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Before the last decade, the 1990's, India was probably on the short list of almost every economist outside of India of the countries with the worst economic systems. India had and probably still has a parasitical class of politicians and bureaucrats that micromanage the economy in the interests of their class. They hypocritically aver that they are doing what they are doing in the interest of the people of India. There has been some official allegiance to socialism with a goal of achieving it through Stalinist central planning. The fact that the result has been some horrible mixture of state capitalism and moribund corporatism is usually attributed to incompetence and ineptitude on the part of the bureaucracy. The Indian American economist Jagdish Baghwati of Columbia University remarked that he agreed with the view that "India's misfortune was to have brilliant economists: an affliction that the Far Eastern super-performers were spared." The policies implemented by the Government of India before the last decade was brilliant only in maintaining the power and influence of the bureaucrats. Judged with respect to a promoting the welfare of the Indian people those policies were ridiculously bad, to the point of stupidity.


2.0 Slow Economic Growth is INDIA

The basic problems arise when an economy is facing recession. Analysts keep on analyzing and tracing the reasons for the crisis in economy. Because of the age of globalization and increased interdependence of world economies, any effect in one economy affects the other economy. For example in the current years of world economic crisis, imports of one economy is dependent upon others. If one economy goes into crisis, the other economy will also suffer from problems. U.S. Imports many of the products from India. If a crisis occurs in U.S., Indian exports will see a decline if US decides to cut back its imports to decrease its negative account balance. Because of global outsourcing, companies outsource materials from various other regions of the world. The economy is supposed to be handled by the government but globalization has taken this control out of the single economy. (Ellie82,2001)

India with a population in 1996 of approximately 957 million people, India's is the worlds most second populated country. It is also one of the poorest countries, with a per capital GDP of only US$338. Agriculture accounts for over 70 per cent of employment, but only 35 per cent of GDP. Although India's economy has expended substantially since 1994, continued population growth of about 2 per cent a year has slowed per capital income growth. India was part of British Empire until 1947, when British rule ended, The Indian sub continent subsequently was partitioned along religious lines to India where Hindus where predominant. The new country of India many of the formalities of the British system of government, including the parliamentary system.

( blurtit,2001)

2.1 Problem Facing by India

Water problem in India

Summers are here and the cities in India are already argumentative about water lack not to bring up many villages which lack safe consumption water. In the list of 122 countries rated on quality of portable water, India ranks a lowly 120.Although India has 4% of the world's water, studies show average availability is shrinking steadily. It is estimated that by 2020, India will become a water-stressed nation. Nearly 50% of villages still don't have any source of protected drinking water. The ground reality is that of the 1.42 million villages in India, 1, 95,813 are affected by chemical contamination of water. The quality of ground water which accounts of more than 85% of domestic supply is a major problem in many areas as none of the rivers have water fit to drink.

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over 75% of whom are children are afflicted by waterborne diseases every year. Overdependence on groundwater has brought in contaminants, fluoride being one of them. Nearly 66 million people in 20 states are at risk because of the excessive fluoride in water This problem is Link to economic crisis because this problem will effect the tourist and foreigner to come over to do business with India and they will less communication with other country as well and its will effect the economic. (Google,2011)

Overpopulated problem in India

Overpopulation in India is a serious problem, and despite the Indian government's awareness of the problem, and attempts to mitigate the problem, a real solution has yet to be found. Insofar as the ability to produce food is concerned, India can be considered a rather rich agricultural nation. However, no matter how much food is produced, a steadily increasing population can eventually cause the demand for food to outstrip the supply.

As of July 2003, India had a population of just over one billion (CIA, World Factbook). With around 170 million hectares of arable land, it has the potential to produce among the world's highest crop yields, and indeed. This problem is Link to economic crisis because The government has to mobilize more funds from time to time for furnishing then creasing population with health, education, drinking water and other basic needs. If population is controlled properly, these funds can be utilized for other productive developmental activities. In short; population growth has to be checked so as to face the challenges raised by population explosion in the economic field. (pervaizin,2009)

Beggary Problem in India

According by Delhi School of Social Work there has been a phenomenal increase in the numbers of beggars in India. In a decade since 1991 their number has gone up by a lakh. There are some 60,000 beggars in Delhi, over 3, 00,000 in Mumbai according to a 2004 Action Aid report; nearly 75000 in Kolkata says the Beggar Research Institute; 56000 in Bangalore according to police records. In Hyderabad one in every 354 people is engaged in begging according to Council of Human Welfare in 2005.It is common to find beggars at rubbish dumb, road sides, and traffic lights and under flyovers. The frail, crippled and mentally ill share space with children, women and able bodied men. This problem is Link to economic crisis because The line that separates beggars from the casual poor is getting slimmer in a country where one in every four goes to bed hungry every night and 78 million are homeless its effect economic.

Unemployment Problem In India

These sectors have started facing a typical problem. Despite a large number of educated youth, there is a shortage of skilled manpower. This is the dilemma. There are unemployed youths and the companies are facing shortage of manpower. A recent survey throws light on the problem, problems with the educated youth. They are mainly lacking three types of skills. Communication, Analytical skill and problem solving, Domain. While in interview approximately sixty percent candidates are screened due to lack of communication skills. Rest went five percent are screened for analytical skills and five percent for their lack of knowledge in the irrespective domain. Hence ninety percent of educated youth force are lacking in one of these three main skills required for job and employment. Only ten percent of educated force of India is employable. Employers are struggling hard to attract them with huge pay-packages that is increasing their production cost significantly. The employers are loosing their competitive edge in global markets. Global slow down only adds to the crisis. Corporations are now facing dual problem. The problem lies in the education system. The Indian education system has a mismatch with the requirements of the industries. Institutes teach what ever they want. Institutes do not teach what industries require. Industries do not require what institutes teach. The syllabus committees have not been interfacing with the industries. Many big industries have set-up their own in house training program to fight with the problem. Most of the newly employed youths are compulsorily undergone employers own training program. This enhances cost of employers enormously. It also wastes time, This problem is Link to economic crisis because India is an agricultural nation. As industrial and service sectors do not develop in proportion to the growth of population, most people depend on agriculture. Due to the increase in the cost of production, agriculture is becoming unprofitable. Besides, there is no increase in the employment opportunities in other sectors and this creates more unemployment problems. (Wikipedia,2001)

Educational problems of women in India

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"Women in India are facing various problems such as these problems encircle their lives, their livelihood, and their relationship with elders, their husbands and their colleagues when they work outside their homes. The old stereotype scenario is changing very fast and the new problems and dimensions are emerging. As the unemployment in India is on increase, women find themselves very hard-pressed for employment. The working women still find themselves in a very difficult position to adjust with the work and home, each one demands greater attention. The problems regarding pregnancy and maternity leaves still enrages many office bosses, they find it an excuse for sacking of their unwanted female staff. Certain services still demand unmarried girls as a qualification for job; the girls have to leave the job when they marry. Sexual exploitation and harassment is also becoming a bigger problem in big and small cities of India. The raising of children, teaching and education of the children demands greater time and energy. The office going women is unable to cope with this demand this problem is Link to economic crisis because woman will become beggars and its affect more homeless people as well. (Article,2003)

Infrastructure Problem in India

Infrastructure Problems in India can be classified into two parts, urban infrastructure problems in India and Rural infrastructure problems in India. Urban infrastructure problems in India are a age old problem. The Infrastructure problems in India mostly took a back-seat in the economic development policy drafts. The meager budgetary allocation to arrest infrastructure problems in India has so far proved to be too little to keep pace with other areas of business development in India. Moreover, the tremendous growth of Indian IT, telecommunication, manufacturing, and pharmaceutical industries has consumed the limited world class urban infrastructure available in India. The Urban Infrastructure problem in India are like this, Urban residence, Business premises, Power ,Urban transport,Water,Sewerage,Airports,Railways,Seaports,Roads,Bridges,Tourism infrastructure, Solid waste management, Projects in SEZ, Health care. This problem is Link to economic crisis because The infrastructure deficit is so critical that it could prevent India from achieving the prosperity that finally seems to be within its grasp.

Conclusion, normally things are symptomatic of the tension between scarce resources and unlimited wants and needs. That is what the economic problem is all about.

Example: You might go into a shop and see two great-looking pairs of jeans but you only have enough money to buy one of them, A hospital manager may have 50 patients all wanting to have an operation immediately but there might only be sufficient resources (doctors, nurses, equipment, rooms, beds etc) At that time to treat 20 of them, A business might have received a major order for its products and wants to increase production but does not have the staff or the Equipment and raw material to meet the

Order in full, An individual in Ethiopia might want a bowl of rice to eat but has to survive on whatever they can scavenge from the parched earth

All these examples highlight the problem of scarce resources in relation to wants and needs. When we are faced with these choices, we have to go through some quite sophisticated decision making. We might not always be aware that we are making sophisticated decisions but in reality we are. Such decision making is at the heart of the subject of economics and tells us something about how humans try to tackle the economic problem.


First of all when organizing a new business, one of the most important decisions to be made is choosing the structure of a business, Business Organization is

A commercial or industrial enterprise and the people who constitute it also known as a group or a unit of people working together with a common objective of profit maximization. But profit maximization is not the only objective..They also satisfy human needs and wants by producing goods and services.

It is an industrial or commercial establishment including all of its assets and employees and is The organizational structure of a business enterprise.

Explain the various types of business organizations existing in the private sector.


Private sector means the part of the country that is own and illegal by private those and big business organization such as private and public limited companies. In a free enterprise economy, the private sector is in charge for allocate most of the possessions surrounded by the economy. This contrast with the public sector, where economic resources are owned and controlled by the state. Also known as the part of the economy that is not state restricted, and is run by persons and companies for income. The private division encompasses all for-profit businesses that are not or operated by the administration. Companies and corporations that are management run are part of what is known as the public sector, while charity and other nonprofit organizations are part of the unpaid sector. ( encyclopaedia,1977)


Sole Trader

Sole trader or sole proprietor is when a business is owned and controlled by one person who takes all the decisions, responsibility and profits from the business they run. Sole trader, The business is classed as a small business or SME as they only have one employee who is the owner of the company, Example sole trader businesses include electricians, gardeners, plumbers, decorators and plasterers which are all traditional trades and easy for the skilled tradesman to operate. They will mainly work on word of mouth marketing and work for domestic households.



Partnership is normally if you are going to start your business with one or more other people you could form a partnership. In effect, this is the same as a sole trader with all the partners sharing responsibility for managing the business. The same applies to any debts of the partnership, in that each partner is personally liable. Partnership also can say as a business entity in which two or more individuals carry on a continuing business for profit as co-owners. Legally, a partnership is regarded as a group of individuals rather than as a single entity, although each of the partners file their share of the profits on their individual tax returns. Another type of partnership can be an agreement between businesses to pursue some objective jointly. Usually, such partnerships are a joint venture or strategic alliance. (smallbusinessnotes,2003)


A corporation is a business or organization formed by a group of people, and it has rights and liabilities separate from those of the individuals involved. It may be a nonprofit organization engaged in activities for the public good; a municipal corporation, such as a city or town; or a private corporation, which has been organized to make a profit. Corporation also can explain as A corporation that is created by a group of shareholders who have ownership of the corporation, represented by their holding of common stock. Shareholders elect a board of directors who appoint and oversee management of the corporation. (articles,1999)

Private Limited Companies

A type of company that offers limited liability to its shareholders but

that places certain restrictions on its ownership. These restrictions are spelled out in the company's articles of association or bylaws and are meant to prevent any hostile takeover attempt. Private limited companies can have one or more shareholders. They cannot offer shares to the public, public limited companies must have at least two shareholders and must have issued shares to the public to a value of at least £50,000 before it can trade and Private unlimited companies - these are rare and usually created for specific reasons. (desktoplawyer,1994)


Conglomerate is a group of subsidiary companies linked together and forming a group making very different types of products. Can said as a corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate's subsidiary businesses runs independently of the other business divisions, but the subsidiaries' management reports to senior management at the parent company.


Lastly wanted to take this Opportunity to wish very Thanks to my lecturer Ms.Oh that very kind and willing to help us slowly with our coursework and explain more detail. This assignment consists of two questions. First question is slow economic growth and second is private sector. Furthermore, from first question I had learned history of India, and more important I have discover the problems that they having such us Overpopulates this was proof India is most populated among others. And for the second question have learned what is Business organization and the chart as attach above. I also learned they types of business organization such as Partnership and so on.