Business Environment

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Cover About the Author Contents Preface Part I: Fundamental Concepts Chapter 1: The Functioning of an Economy: Basic Concepts What is an Economy? Economic Activity Wants: The Basis of All Economic Activities Circular Flow of Economic Activity Real Flows Money Flows Production Definition Consumers’ Goods and Producers’ Goods Utility Goods Free Goods and Economic Goods Consumption Goods and Capital Goods Value Wealth Classes Wealth and Welfare Consumption Human Wants Formation Categories Characteristics Standard of Living Factors Affecting the Standard of Living The Standard of Living in India Engel’S Law of Family Expenditure Scales of Preferences Savings and Investment Summary Notes Key Words Discussion Questions Suggested Readings Chapter 2: National Income Definitions Marshall’s Production-Based Definition Pigou’s Income-Based Definition Fisher’s Consumption-Based Definition Concepts in National-Income Analysis Gross National Product Net National Product National Income At Factor Cost Personal Income Personal Disposable Income Per Capita Income Measurement of National Income The Product Method The Income-Received Method The Consumption–Savings Method A Comparison of the Three Methods The Sectoral Composition of National Income Estimates of the National Income of India Post-Independence Background Special Features of the 1980–81 Series RBI’s Role in National Income Accounting Advance Estimates and Quick Estimates of National Income Difficulties in the Measurement of National Income National Income Data and the Changing Profile of the Indian Economy Characteristics of the Indian Economy The National Statistical Commission Limitations of National Income Estimation in India Determinants of the Size of a Country’s National Income Reasons for India’s Low National Income Economic Causes Political Causes Social Causes Remedies National Income and Economic Welfare Inequalities of National Income Distribution Causes Effects Capital Formation and Inequalities of Income Steps Taken by Governments to Reduce Inequalities Uses of National Income Data Summary Notes Key Words Discussion Questions Suggested Readings Chapter 3: Business and Its Environment Business: Meaning, Characteristics and Objectives Divisions of Business Characteristics of Modern Businesses Large Size Global Reach Oligopolistic Structure Based on Technology Diverse Government Control Emerging Ethical Consciousness Business Environment The Internal Environment The External Environment The Economic Environment Economic Systems Structural Equilibrium Banking and Monetary Policy Fiscal Policy Economic and Price Stability Money and Capital Market Factor Endowments Size of the Market Social Overhead Capital Income Distribution and Purchasing Power External Trade/International Environment The Non-Economic Environment The Socio-Cultural Environment The Educational Environment The Politico-Legal Environment The Demographic Environment Summary Notes Key Words Discussion Questions Suggested Readings Chapter 4: Natural Resources Introduction Land Resources Irrigation Power Eco-Efficiency Strategy of Power Grid Hydropower and Sustainable Development Forest Resources Forest and Wildlife Conservation Forest Cover Fresh Water Resources Minerals Coal Mining Iron Ore Manganese Ore Bauxite Copper, Lead and Zinc Sea Wealth Summary Notes Key Words Discussion Questions Suggested Readings Chapter 5: The Technological Environment What is Technology? Technology and Development The Contribution of Technology Managing Technology for Development Integrating Technology with Business Technology in Developing Countries Technology Acquisition and Protection Technology Transfer The Need for Technology Transfer Forms of Technology Transfer Innovations Varying Research and Development Budgets Technical Cooperation and India’s Capabilities India and the Global Knowledge Market Summary Notes Key Words Discussion Questions Suggested Readings Chapter 6: Human Resource Development Evolution What is Human Resource Development? Human Capital Human Resource Development in India Functions Human Development Index Summary Notes Key Words Discussion Questions Suggested Readings Chapter 7: India's Population and Its Impact on the Economy The Economic Effects of a Growing Population The Economic Effects of a Declining Population Factors Responsible for Changes in the Size of Population Birth Rate Death Rate Theories of Population The Malthusian Theory of Population The Optimum Theory of Population The Theory of Demographic Transition Excessive Population as an Obstruction to Growth Features of the Indian Population India’s Population Policy The Population Policy, 1976 Progress Under the Policy The National Population Policy, 2000 Trends in Population and Family Welfare Programme The Scorecard Summary Notes Key Words Discussion Questions Suggested Readings Chapter 8: Capital Formation, Savings and Investment What Comprises Capital? Capital Formation Growth in Capital Formation Sources of Capital Formation Capital Formation in India Capital Accumulation Factors Affecting Capital Accumulation Capital Accumulation in Developing Countries Savings Sources of Savings Domestic Savings in India (1951–2008) Investment Rate of Investment and Capital Formation Reasons for the Low Level of Investment in India Investment Commission Summary Notes Key Words Discussion Questions Suggested Readings Part II: Economic Systems and Policies Relating to Business Chapter 9: Economic System and Capitalism What is an Economic System? Capitalism Private Property Consumer Sovereignty Freedom of Enterprise Enlightened Self-Interest Profit Motive Competition Existence of Markets and Prices Absence of a Central Plan Limited Government Active Entrepreneurship Class Conflict Use of Advanced Technology Specialization Based on Division of Labour Extensive Use of Money Merits Automatic Functioning Greater Efficiency and Incentive for Hard Work Higher Rate of Capital Formation and Growth Economic Development and Prosperity Optimum Utilization of Resources A Just System of Reward and Penalty Democratic System Adaptability Encouragement to Enterprise and Risk Taking Demerits Excessively Materialistic Not as Productive as Other Economic Systems Gives Rise to Class Conflict Social Injustice and Economic Inequality Ignores Human Welfare Periodic Economic Instability and Unemployment Precedence of Property Rights Over Human Rights Emergence of Monopolies Misallocation of Resources Malpractices Summary Notes Key Words Discussion Questions Suggested Readings Chapter 10: Socialism What is Socialism? Features Merits Demerits Summary Notes Key Words Discussion Questions Suggested Readings Chapter 11: Mixed Economy Mixed Economy and Its Types Features of the Indian Mixed Economy Coexistence of Private and Public Sectors Nationalization of Basic Industries Reduction of Inequalities of Income Provision of Social Welfare Measures Promotion of Economic Development Through Planned Efforts Resource Allocation Through the Price System and Government Directions Government Control and Regulation of the Private Sector Consumer Sovereignty is Protected, but Government Controls Production, Consumption and Distribution Government is Committed to the Promotion of Public Welfare and Protection of Labour, the Poor and the Marginalized Control of Monopoly Prices are Determined by Market Forces, but Products of Public Sector are Governed by Administered Prices Advantages of India’s Mixed Economy Achievement of Faster Economic Growth Best Allocation of Resources Balance Between the Private and Public Sectors The Establishment of a Welfare State Heavy Capital Investment Through Planned Effort Disadvantages Undue Emphasis on the Growth of Public Sector Inefficiency of Both the Sectors Ineffective Control of the Private Sector Economic Fluctuations Failure to Solve Demographic and Unemployment Problems and Inflation Extensive and Corrupt Bureaucracy Conclusion Summary Notes Key Words Discussion Questions Suggested Readings Chapter 12: The Role of Public Policies in Governing Business Public Policy: A Definition Classification Levels Elements Public Policies and the Government Limitations of Governments in Executing Public Policy Need for Public Policies in Business The Involvement of Business in Public Policy Decision Making Business and Politics: Levels of Involvement National Economic Growth Government Regulations in Business Public Policies and Government Regulations in India Functional Regulations Summary Notes Key Words Discussion Questions Suggested Readings Chapter 13: Economic, Monetary and Fiscal Policies Economic Policy Objectives of Economic Policies Monetary Policy Evolution Goals and Objectives Functions Monetary Versus Fiscal Policy The Instruments of Monetary Policy Monetary Policy in Developing Countries The Indian Monetary Policy Instruments of the Indian Monetary Policy The Evaluation of the Indian Monetary Policy Fiscal Policy Objectives Instruments Fiscal Policy and Economic Stabilization The Evaluation of Fiscal Policy Summary Notes Key Words Discussion Questions Suggested Readings Chapter 14: Foreing Trade Policy Statement of Trade Policy Objectives of India’s Foreign Trade Policy Strategies Adopted in India’s foreign Trade Policy Partnership with Private Players Roadmap of the Trade Policy Interim Foreign Trade Policy, 2009–10 Foreign Trade Policy, 2009–14 Highlights of the Foreign Trade Policy, 2009–14 Industries’ Reaction Summary Notes Key Words Discussion Questions Suggested Readings Part III: The Economics of Development Chapter 15: The Economics of Development The Subject and Its Spectrum Why Economic Development? What is Economic Development? Basic Determinants Criteria Costs and Gains Costs Gains Summary Notes Key Words Discussion Questions Suggested Readings Chapter 16: The Economics of Underdevelopment The Definition of Underdevelopment The Definition of an Underdeveloped Economy Underdeveloped or Developing? Non-Uniformity of Underdevelopment Characteristics of an Underdeveloped Economy Low Per Capita Income and Widespread Poverty Excessive Dependence on Agriculture Unexploited Natural Resources Primary-Producing Agricultural Economies Population Explosion Qualitatively Backward Population Disguised Unemployment Prevalence of Unemployment and Underemployment Deficiency and Poor Capital Formation Inadequate Development of Infrastructure Dependence on Exports Disparate Development Factor Disequilibrium Poor and Incompetent Administration Underdeveloped and Uncoordinated Fiscal and Monetary Organizations Existence of Inhibitory Social Institutions The Obstacles to Development Poverty Capital Deficiency Market Imperfections International Forces Foreign Rule Inhibiting Socio-Cultural Institutions Demonstration Effect Overpopulation Corruption Summary Notes Key Words Discussion Questions Suggested Readings Chapter 17 Stages and Strategies of Economic Growth Stages of Economic Growth Rostow’s Stages of Economic Growth Traditional Society The Pre-Conditions for Take-Off The Take-Off The Drive to Maturity The Age of High Mass Consumption Beyond High Mass Consumption Objections to the Take-Off Theory Balanced Versus Unbalanced Growth The Balanced Growth Theory The Meaning of Balanced Growth Critical Minimum Effort and the Big Push The Basic Postulates The Balanced Growth Doctrine: Rodan’s Analysis Nurkse’s Analysis Balanced Growth: Other Viewpoints How to Realize Balanced Growth? The Role of the State Criticism of the Theory The Unbalanced Growth Theory Summary Notes Key Words Discussion Questions Suggested Readings Chapter 18: Role of the State in Economic Development Defects of the Free-Enterprise System The Evolution of the Concept of State Participation in Economic Development The Justification and Examples of Government Intervention The Rationale for State Interventon in Economic Affairs The Scope of Governmental Action Roles of the Government Regulator Promoter Entrepreneur Planner The Extent of Government’s Participation Reasons for Governments’ Participation in Development in Poor Countries Areas Where Governmental Action is Vital Summary Notes Key Words Discussion Questions Suggested Readings Chapter 19: Economic Planning: Meaning, Evolution and Features Meaning and Definition Evolution Factors that Facilitate Successful Planning in Developing Countries Objectives Key Features of a Planned Economy Summary Notes Key Words Discussion Questions Suggested Readings Chapter 20: Industrial and Licensing Policy (1951–1991) Industrial Development in India What is an Industrial Policy? Components Importance The Industrial Policy Resolution of 1948 The Industrial Policy Resolution of 1956 The Industrial Policy of 1973 The Industrial Policy of 1977 The Industrial Policy of 1980 Important Provisions Amendments in Appendix I The New Industrial Policy of 1991 Industrial Licensing Foreign Investment Foreign Technology Agreements Public Sector The Monopolies and Restrictive Trade Practices (MRTP) Act Reforms in the Industrial Sector Industrial Licensing Industries Covered Industries Exempted How to Apply for a Licence? Registration Special Procedure for Diversification MRTP Clearance Summary Key Words Discussion Questions Suggested Readings Chapter 21: The New Economic Policy, 1991 Genesiss Background Early Crisis Management Measures: Trendsetters of the Reform Process The Three Pillars of Economic Reforms Liberalization Privatization Globalization Industry and Labour Strategy Assessment of the New Economic Policy A Balance Sheet of Economic Reforms The Emergence of Corporate Governance Summary Key Words Discussion Questions Suggested Readings Chapter 22: The Indian Economy A Retrospective on the Indian Economy The 1950S The 1960S The 1970S The 1990S The New Millennium Agricultural and Rural Development Industrial Production and Manufacturing Nfrastructure The Services Sector The Financial Services Sector Savings and Investment The Price Situation India’S National and Per Capita Income Income Distribution and Poverty The External Sector Summary Notes Key Words Discussion Questions Suggested Readings Part IV: Business and Society Chapter 23: Business and Society Business: An Integral Part of Society Society, Values and Institutions The Interrelationship Between Business and Society Business–Society Interaction The Stakeholder Model of Business Primary and Secondary Stakeholders The Concept Criticisms of the Concept Socio-Economic Objectives of Business Benefits of Business to Society Problems Created by Businesses Summary Notes Key Words Discussion Questions Suggested Readings Chapter 24: Business, Labour and Government Labour: Definition and Characteristics Labour Exploitation Protection of Employees’ Interests Trade Unions Rights of Recognized Trade Unions Indian Trade Unions Defects of Indian Trade Unions Management Concerns Post-Independence Labour Legislation in India Important Legislations The Industrial Disputes Act, 1947 Problems with Indian Labour Laws Summary Notes Key Words Discussion Questions Suggested Readings Chapter 25: Consumer Protection The Rise of Consumer Protection The Government’s Role Consumer Duties and Responsibilities Consumer Protection in India The Current Scenario Legal Protection to Consumers The Consumer Protection Act, 1986 The Consumer Protection (Amendment) Act, 2002 The Prevention of Food Adulteration Act, 1954 Institutional Arrangements Under Copra The Three-Tier Redressal System in India The District Forum The National Commission Quality Standards The Bureau of Indian Standards Standards of Weights and Measures Voluntary Organizations Consumer Associations or Councils Consumer Cooperatives Coordination At the National Level Other Initiatives National Awards Publicity Measures The Customer Service Department At RBI Summary Notes Key Words Suggested Readings Chapter 26: Investor Protection Shareholders’ Rights and Responsibilities A Shareholder Rights and Postal Ballots A Guide for Investors and Shareholders Rights of a Shareholder as an Individual Rights of a Debenture Holder Shareholders’ Responsibilities Trading of Securities Transfer of Securities Depository and Dematerialization Grievance Redressal Investor Protection Definition The Need Rights to Information and Other Rights The Impact of Investor Protection Ownership and Control of Firms Development of Financial Markets Investor Protection in India Shareholder Protection in India The N.K. Mitra Committee on Investor Protection Problems of Investors in India Law Enforcement for Investor Protection Grievance Redressal Mechanisms Lacunae in Investor Protection SEBI’s Performance: A Report Card Summary Notes Key Words Suggested Readings Chapter 27: Environmental Protection The History of Environmentalism Preserving the Environment: The Role of Stakeholders Public Opinion Media Corporations Government Costs and Benefits of Environmental Regulation Trade and the Environment Industrial Pollution India’s Toxic Corridor Evidence of Pollutants Role of Corporations Improving Corporate Environmental Performance Waste Management and Pollution Control Preventing Pollution Preventing Industrial Pollution Innovative Business Practices Environmental Audit Managing Environmental Issues Improving Corporate Environmental Performance Product Differentiation Self-Regulation Government Regulation Process Innovations Redefining Markets Environmental Risk Management Environmental Management in India Charter for Voluntary Pollution Control India’s Environment Policy Laws Governing Environment The National Environmental Policy, 2004 Deficiencies in the Draft Policy Latest Developments in India’S Environment Policy Corporate India Gets Eco-Friendly Private Sector Initiatives Public Sector Efforts Future Outlook on Environment Summary Notes Key Words Discussion Questions Suggested Readings Chapter 28: Corporate Governance in India Definitions Desiderata Good Corporate Governance Obligation to Society Obligation to Investors Obligation to Employees Obligation to Customers Managerial Obligation Issues in Corporate Governance Distinguishing the Roles of Board and Management Composition of the Board and Related Issues Separation of the Roles of the CEO and Chairperson Should the Board have Committees? Appointments to the Board and Directors’ Re-Election Directors’ and Executives’ Remuneration Disclosure and Audit Protection of Shareholder Rights and their Expectations Dialogue with Institutional Shareholders Making a Socially Responsible Corporate-Investor’s Role Need for and Importance of Corporate Governance Good Governance and Corporate Performance Investors’ Preference Significance to Developing Countries Benefits to Society Benefits to Corporations The Indian Model History Clause 49 Establishment of the Serious Fraud Office A Performance Appraisal Performance Appraisal of Indian Corporations Impetus for the Growth of Corporate Governance in India Summary Notes Key Words Discussion Questions Suggested Readings Chapter 29: Corporate Social Responsibility in India Conflicting Perspectives Emergence Why Social Responsibility of Business? Accountability to Society Debt to Society Definitions A Growing Global Role Theoretical Justification for CSR The Trusteeship Model The Social Entity Theory The Pluralistic Model What are Corporates Expected to do? Private Sector Needs the Goodwill of Society Models for Implementing CSR CSR as a Business Strategy for Sustainable Development Assessment of CSR Activity Inadequate Response to CSR in India Advantages Scope Different Contexts in Which CSR is Related Protecting and Promoting Stakeholders’ Interests Social Concern and Promotion of Common Welfare Programmes As an Act of Philanthropy Good Corporate Governance Itself is a Social Responsibility Corporates in the Vanguard of Rendering Social Service Social Responsibility is Abiding by Rules and Regulations Social Responsibility as the Creation of Wealth Ensuring Ecological Balance Human Element Focus Improving Productivity Sponsoring Social and Charitable Causes Corporates Should Supplement State Efforts ICC’s Practical Steps to CSR The Indian Perspective Changing Attitudes to CSR India on the Ethical/CSR Matrix Social Responsibility and Indian Corporations: A Score Card The Future of Indian CSR Summary Notes Key Words Discussion Questions Suggested Readings Chapter 30: Business Ethics in India Principles of Ethics Personal Ethics Professional Ethics Business Ethics What is not Business Ethics? Evolution Need Significance Values and Ethics in Business The Importance of Values and Ethics Values, Ethics and Business Strategy Why Should Businesses Act Ethically? Ethical Decision Making Ethical Challenges in the Changing Business Environment Benefits of Managing Ethics in the Workplace Characteristics of an Ethical Organization Recognizing Ethical Organizations Summary Notes Key Words Discussion Questions Suggested Readings Part V: Economic Legislations Chapter 31: The Mrtp and the Competition Acts The MRTP Act, 1969 Objectives Salient Features Scope Post-Liberalization Relaxations The 1991 Industrial Policy Takes the Sting Out of the MRTP Act The Regulation of Competition Corporate Control in Competition Constraints in Developing Countries The Role of Banks Ownership Concentration The Benefits of Competition Competition in the Product Market Competition in the Capital Market Encouraging Good Governance Competition is Only Part of the Solution Enforcement of Good Governance Challenges to Good Enforcement What is a Good Competition Policy? The Competition Act, 2002 Background Objectives The Competition Commission of India The Focus Areas of the Competition Act Salient Features of the Competition Commission MRTP Act and the Competition Act Implementation Summary Notes Key Words Discussion Questions Suggested Readings Chapter 32: FERA and FAMA The Foreign Exchange Regulation Act, 1973 Objectives Restrictive Provisions Provisions Relating to Enforcement, Penalty and Prosecution Draconian Nature, Content and Reach The Foreign Exchange Management Act, 1999 Objectives Administration Provisions Contravention and Penalties Investigation Functions of the Directorate of Enforcement Procedural Provisions of FEMA Adjudication and Appeals Appeals Against Orders Passed Under FERA Decision of the Bombay High Court Relating to FERA Summary Notes Key Words Discussion Questions Suggested Readings Chapter 33: The Industries (Development and Regulation) Act Objectives IDRA’s Implementing Authority The Central Advisory Council The Development Council The Government to Issue Licences The Government’s Power to Investigate The Government’s Power to Issue Directions Licensing Under the New Policy Summary Notes Key Words Discussion Questions Suggested Readings Part VI: The Industrial Sector Chapter 34: The Private Sector The Phenomenal Growth of the Private Sector Role of the Government Importance Increased Investment Following Liberalization Comparative Performance of the Public and the Private Sectors Sectoral Growth in the Private Sector Manufacturing Services Banking and Insurance Transport Community and Social Services Private Sector and Socio-Economic Development Growth of Private Sector Corporate Giants Private Sector Caused the Growth of Modern Industry Problems Faced by the Private Sector Lack of Corporate Governance in the Private Sector Summary Notes Key Words Discussion Questions Suggested Readings Chapter 35: The Public Sector in India Objectives Rationale for Its Existence Growth Organization Control Committee on Public Undertakings Bureau of Public Enterprises Policies Since 1991 De-Reservations Policy Regarding Sick Units Memorandum of Understanding “Navaratnas” Among PSUs Disinvestment of Shares Under-Pricing of Shares Squandering Away Assets to Finance Deficits Central Public Sector Enterprises Achievements Causes of Poor Performance Summary Notes Key Words Discussion Questions Suggested Readings Chapter 36: Privatization of Public Sector Enterprises What is Privatization? The Rationale Primary Objectives Other Expected Benefits Methods of Privatization in India The Rangarajan Committee Disinvestment in the Public Sector Establishment of the National Investment Fund The Disinvestment Commission The Department of Disinvestment The Method and Mechanism of Disinvestment Strong Advocacy of Disinvestment in Economic Survey 2009–10 Problems Associated with Disinvestment Summary Notes Key Words Discussion Questions Suggested Readings Chapter 37: The Joint Sector The Proponents and Opponents of the Joint Sector The Tata Memorandum on Industrial Growth Industrial Policy Resolution, 1956 The Industrial Licensing Policy Inquiry Committee, 1969 Rationale Objectives Forms and Options Types The Evolution of Indian JSES Joint Sector with Foreign Collaboration The Joint Sector: An Evaluation Summary Notes Key Words Suggested Readings Chapter 38: Globalization, MNCs and Foreign Capital In India Factors Facilitating Globalization MNCs and Globalization Doing Business in a Diverse World Multinational Corporations Issues Relating to MNCs Advantages of MNCs Disadvantages of MNCs Regulation of MNCs MNCs in India Foreign Capital Kinds of Foreign Capital Distinction Between FDI and FII Foreign Aid Response of Foreign Capital Other Kinds of Foreign Investments NRI Investments Global Depository Receipts American Depository Receipts Foreign Currency Convertible Bonds (FCCB) India’s Policy Towards Foreign Capital Establishment of the Investment Commission Disadvantages of Foreign Capital Summary Notes Key Words Discussion Questions Suggested Readings Chapter 39: India and Intellectual Property Rights Intellectual Property The Indian Government’s Initiatives The Legislative Framework The Indian Patent System The Justice Bakshi Tek Chand Committee The Justice N. Rajagopala Ayyangar Committee Patent Rules Trademarks Evolution Role Trademarks Legislations Salient Features of Indian Trademark Act, 1999 Registration of Trademarks Infringement Offences and Penalties Copyright Acts Other IPRS Summary Notes Key Words Discussion Questions Suggested Readings Part VII: Financial Systems Chapter 40: Money: Functions and Value Evolution Animal Money Commodity Money Metallic Money Paper Money Credit Money Functions Primary Functions Secondary Functions Contingent Functions Qualities of Good Money Systems of Note Issue Kinds of Money Legal Tender Standard Money and Token Money Gresham’s Law The Value of Money Meaning The Demand for Money Supply of Money Currency Demand Deposits The Changing Value of Money: The Quantity Theory Assumptions Criticism Measuring Changes in the Value of Money: Index Numbers Definition Method of Construction Weighted Index Numbers Difficulties in the Construction Advantages Limitations The Changing Value of Money: Inflation and Deflation Inflation Deflation Inflation Versus Deflation Summary Notes Key Words Discussion Questions Suggested Readings Chapter 41: Money Markets What is a Money Market? Characteristics of Money Market Instruments Objectives Money Markets Versus Capital Markets Financial Instruments Money Market Instruments Interbank Call Markets Treasury Bills Certificates of Deposit Commercial Papers Repo Markets Term Money Markets Commercial Bill Markets Money Market Mutual Funds The Indian Money Market: Structure The Indian Money Market: Characteristics Functions of a Money Market Summary Notes Key Words Discussion Questions Suggested Readings Chapter 42: Commercial Banking What is a Commercial Bank? Functions Importance Investment Policies Liabilities Commercial Banking: A Process of Credit Creation Credit Creation Technique Limitations Indian Commercial Banks: Evolution Indian Banking Since Nationalization The Current Situation Indian Banking: Challenges Strategic Options to Cope with the Challenges Summary Notes Key Words Discussion Questions Suggested Readings Chapter 43: Functions of the Central Bank Organization and Management The Government’s Bank Bank of Issue Custodian of National Reserves As a Banker, Agent and Advisor to the Government Miscellaneous Functions The Bankers’ Bank Supervisor of Banks The Lender of Last Resort The Custodian of Member Banks’ Cash Reserves The Bank of Central Clearance, Settlement and Transfers The Controller of Credit Quantitative Weapons Selective Credit Control Summary Notes Key Words Discussion Questions Suggested Readings Chapter 44: Financial Institutions Development Banks Meaning Salient Features The Need for Financial Institutions The Industrial Finance Corporation of India The Industrial Credit and Investment Corporation of India The Industrial Development Bank of India The Industrial Investment Bank of India The Small Industries Development Bank of India State Financial Corporations State Industrial Development Corporations The National Small Industries Corporation State Small Industries Development Corporations Evaluation of the Role of Financial Institutions Summary Notes Key Words Discussion Questions Suggested Readings Chapter 45: The Indian Capital Market The Capital Market Constituents The Primary Market The Secondary Market Debt Market Nature Development Deficiencies Impact of Globalization Role of Securities Market in Economic Growth Regulatory Framework of the Indian Capital Market Summary Notes Key Words Discussion Questions Suggested Readings Chapter 46: The Indian Stock Market Definition Origin in India Organization and Members Functions Evolution Traditional Stock Exchanges New Types of Stock Exchanges Growth What are Sensex and Nifty? Sensex Nifty Services Rendered by Stock Exchanges Listing of Securities Advantages of Listing Regulations and Control The Securities and Exchange Board of India Summary Notes Key Words Discussion Questions Suggested Readings Chapter 47: The Securities and Exchange Board of India The Indian Securities Market Before SEBI The Securities and Exchange Board of India Act, 1992 Objectives and Functions Powers Organization Strengthening of SEBI The SEBI (Amendment) Bill, 2002 SEBI’s Role in Promoting Corporate Governance Performance Record SEBI’s Role in the New Era Primary Market Reforms Secondary Market Reforms Shortcomings The Dhanuka Committee Suggestions for SEBI’s Improvement Summary Notes Key Words Discussion Questions Suggested Readings Part VIII: The External Sector Chapter 48: India and the WTO Emergence Gatt: WTO’s Predecessor The Formation of Unctad The Distinction Between WTO and Gatt Objectives Core Principles Functions Organizational Structure Ministerial Conferences The First Ministerial Conference (Singapore, 1996) The Second Ministerial Conference (Geneva, 1998) The Third Ministerial Conference (Seattle, 1999) The Fourth Ministerial Conference (Doha, 2001) India’s Negotiating the Doha Round The Fifth Ministerial Conference (Cancun, 2003) The Sixth Ministerial Conference (Hong Kong, 2005) The Seventh Ministerial Conference (Geneva, 2009) The Dispute Settlement Mechanism The Differences Between Gatt and WTO in Settling Disputes The Performance of DSB in Setting Disputes WTO Agreements The Agreement on Agriculture The Agreement on Textiles and Clothing The Agreement on Market Access The Agreement on Trade-Related Investment Measures The Agreement on Trade-Related Aspects of Intellectual Property Rights The General Agreement on Trade in Services The Agreement on Technical Barriers to Trade Plurilateral Trade Agreements The Agreement on Anti-Dumping The Trade Policy Review Mechanism WTO and the MFN Clause The WTO, the IMF and the World Bank The WTO and Developing Countries The WTO and India Evaluation of the WTO Implementation Issues Benefits Criticisms Summary Notes Key Words Discussion Questions Suggested Readings Chapter 49: The World Bank Group Genesis A Brief History Focus Functions The World Bank Group Functions Performed by the World Bank and its Affiliates The International Bank for Reconstruction and Development The International Development Association The International Finance Corporation The Multilateral Investment Guarantee Agency The International Centre for Settlement of Investment Dispute Membership in the World Bank Funding Operations Loans, Grants and Services Loans Grants Other Services Lending Policies Guiding Principles Recent Trends Special Action Programme Bank Loan and Export Credit Future Lending Strategy Five Essential Factors for Development Identified by World Bank Comprehensive Development Framework Poverty Reduction Strategies The Millennium Development Goals IMF–World Bank’s Work: Developed Versus Poor Countries Criticism World Bank Support to India Education Healthcare Energy Infrastructure Agriculture Summary Notes Key Words Discussion Questions Suggested Readings Chapter 50: The International Monetary Fund Origin Objectives Membership The Members’ Quota Special Drawing Rights (SDR) The Bretton Woods System Gold Stocks with the IMF Borrowing Agreements Governance Organizational Structure Board of Governors Ministerial Committees The Executive Board The Bretton Woods System The Collapse of the Bretton Woods System The Impact of the Second Amendment Structural Adjustment Programmes Accountability Criticisms The India–IMF Relationship Summary Notes Key Words Discussion Questions Suggested Readings Index