MMPC 03 Free Solved Assignment
MMPC 03 Free Solved Assignment Jan 2022
Q1-Describe the nature and scope of Business Environment. What are the various types of Business Environment? Discuss giving examples.
Ans – Nature and scope of Business Environment
A business environment is a combination of internal and external factors and forces that significantly influence the operations of a business.
Every organisation operates in a certain kind of environment. Each organisation has some opportunities and threats associated with various forces which may be external or internal in nature.
Nature of Business Environment
Dynamic: Business environments such as internal and external business environments are highly flexible and keep on changing.
For example, changing customer preferences, new competitors entering into the market, novel technology, new marketing channels, new government policies and changing demography. MMPC 03 Free Solved Assignment
Uncertain: It is very difficult to pre assume with any degree of certainty about the factors influencing the business environment because they continue to fluctuate very quickly.
Complex: The business environment is complex as it is continuously exposed to uncertain challenges such as technological disruptions, global competition, leadership change, shifting economic, social, and regulatory conditions etc.
It may be easy to scan the environment but its impact on business decisions will be difficult to estimate. It is very difficult for a firm to survive and prosper in such an uncertain environment.
Relativity: The business environment is associated with societal norms and local conditions and this is the reason, why the business environment varies from country to country, region to region which makes it more complex
Interrelation: All the factors and forces of the business environment are related to each other. For instance, with the proclivity of youth towards western culture, the demand for fast food is also rising.
Take another example, change in political parties will result in changing monetary policy, fiscal policies, government rules, market conditions, technology, etc.
Thus, all these factors are required to be scanned properly as these factors are interrelated to each other. MMPC 03 Free Solved Assignment
Scope of Business Environment :
a) Internal and external environment: Internal environment means those factors that are within an organisation and influence the strength or weakness of the business. For example, superior raw material, inefficient human resources, etc.
External environment means those factors which are beyond the control of the business and are outside the organisation.
They provide opportunities and pose threats to business. For example, changing political and economic conditions, technological changes, etc.
b) Micro-environment and macro-environment: Sometimes internal and external environment are interchangeably reffered as micro and macro environment respectively. Micro-environment affects the working of a particular business.
It directly impacts business activities and incorporates customers, suppliers, market intermediaries, competitors, etc.MMPC 03 Free Solved Assignment
These factors are controllable to some extent. Macro environment is the general environment that impacts the working of all businesses.
It is uncontrollable and influences indirectly. Political conditions, economy, technology, etc., are part of the macro environment.
For example, Technological advancement such as blockchain, Artificial Intelligence (AI) have changed the face of business operations.
c) Controllable and uncontrollable environment: All those factors which are governed by business come under a controllable environment. Internal factors are also treated as controllable factors, such as money, men, materials, machines, etc.
Uncontrollable factors are external and are beyond the control of business namely global, technological, legal and natural changes.
For example, recent Corona pandemic is a major example of uncontrollable factor. The pandemic has hugely impacted the businesses and led to changes in strategies of operations.
d) Specific and general environment: Specific environment refers to external forces that directly influence business enterprises’ decisions and actions and are directly pertinent for the achievement of organisational goals. MMPC 03 Free Solved Assignment
The main forces that include the specific environment are customers, suppliers, competitors and pressure groups.
General environment refers to the economic, politicolegal, socio-cultural, technological, demographic, and global conditions that influence organisations.
These external forces or factors impact organisations indirectly and organisations must plan, organise, lead and control their activities by incorporating these factors.
TYPES OF BUSINESS ENVIRONMENT
There are certain factors or forces internal and external to the organisation influencing the it in both positive and negative ways. `
Internal Environment :
This includes those factors or forces that exist within an organisation influencing the performance of an organisation. MMPC 03 Free Solved Assignment
These factors are controllable in nature and organisations can attempt to change or modify these factors.
Organisation’s resources like men, materials, money, and machines are part of the internal environment. The different internal factors are given below:
B. Macro Environment:
These are the factors or conditions which are general to all businesses and are uncontrollable. Because of the uncontrollable nature of macro forces, a firm needs to adjust or adapt itself to these external forces. These factors are as follows:
1– Economic environment: Economic environment refers to all those forces and factors which have an economic impact on businesses.
It consists of the role of the private and public sector, monetary and fiscal policy, role of saving and investment, economic reforms, agriculture, industrial production, infrastructure, planning, basic economic philosophy, stages of economic development, trade cycles, national income, per capita income, money supply, international debt, etc.
For example, an increase in Groos Domestic Product (GDP) will increase disposable income and thus further rise in demand for products MMPC 03 Free Solved Assignment
2– Politico-legal environment: Politico-legal environment constitutes all the factors related to the activities of legislature, executive and judiciary which play a leading role in shaping, directing, developing and controlling business activities.
For example, rules and regulations, framed by the government, like licensing policy, Skill India movement, Digital India, Swachha Bharat Abhiyan, polythene ban, etc., affect the business
3- Technological environment: Technology is defined as the “Systematic application of scientific or other organised knowledge to particular tasks”.
The technology incorporates both machines (hard technology) and ways of thinking (soft technology). These organized knowledge and innovation provide new methods of producing goods and services and latest ways of operating business.
4- Global or international environment: The global environment includes all environmental factors having a global impact which is also important for shaping business activity. In the era of globalisation, the whole world is a market.
5- Socio-cultural environment: The socio-cultural environment reflects customs and values which influence business practices. MMPC 03 Free Solved Assignment
People’s attitude towards work and wealth, lifestyle, ethical issues, religion, the role of family, marriage, education and also social responsiveness of business impact the business.
For example, foreign brands like McDonalds were sensitive to Indian culture and avoided selling beef burgers in India.
6- Demographic environment: Demographic environment includes the composition and characteristics of the population.
For example, Population size and growth, the life expectancy of the people, rural-urban distribution of population, the technological skills and educational levels of the labour force are part of the demographic environment.
7– Natural environment: Natural environment includes geographical and ecological resources like minerals and oil reserves, weather and climatic conditions, water and forest resources, and port facilities.
These are very important for many business activities. For example, in places where climate conditions such as temperatures are high, demand for coolers and air conditioners will also be high. MMPC 03 Free Solved Assignment
Similarly, demand for clothes and building materials is also conditioned upon weather and climatic conditions
Q2- What are the important elements of politico-legal environment? How does the government regulate business? Discuss in detail.
Ans- POLITICAL ENVIRONMENT
A political system is assumed to be having the qualitative prerequisites such as being stable, honest, efficient and dynamic. Democracy brings in the political participation of the citizens thereby providing them personal security which in-turn contributes for growth of any business in a country.
In a political system the role of Government as a political institution is to formulate social policies aimed to deliver on high social benefits at minimum social costs.
The government thus facilitates business by making decisions and supporting the economic activity in form of health, infrastructure, education, law and order etc. implemented on different levels like local, regional, national or international.
The political environment comprises of many political factors which effect the business activities at various times and impact, like the bureaucracy levels, corruption, freedom of media and press,
tariffs and related measures of trade control, employment regulation, environmental and pollution control laws, health and social safety laws, Competition regulation and cartelization, Tax policy (tax rates and incentives),
Trade unionism and related laws, consumerism, ecommerce and related laws about the quality and quantity of the product, Intellectual property law (Copyright, patents etc.).
All this is done based on the ideology of the political party forming the government which attains it by formulating and executing them under a set of policies and programmes.
This is attained through legislations and enactments, rules and regulations, systems and procedures, policies and plans, statements and announcements, directives and guidelines by the Government, which is the essence of the politico-legal environment.
LEGAL ENVIRONMENT : MMPC 03 Free Solved Assignment
Legal environment of any country deals with rules, regulations, policies and the law of the land as whole. These laws are made for the protection of consumers, investors, environment and national interest.
For example, there are several organisations like SEBI, Consumer Commissions or National Green Tribunal (NGT) in India for the enforcement of such laws. Further, the legal environment of a country also includes taxation laws and annual budgets.
The changes in government policies such as trade policies, industrial policies, fiscal and monetary policies can have a great effect on the business.
For example, by increasing the limits of permissible FDIs in the retail sector has led to the emergence of global e-commerce companies.
While at the same time, it has been seen as the threat to local vendors with increasing markets for e-commerce. MMPC 03 Free Solved Assignment
ELEMENTS OF POLITICAL ENVIRONMENT :
Political Ideologies :- Political ideologies are the mix of multifaceted ideas, philosophies and objectives which is the foundation of the political parties.
Most of the political organisations are politically diverse due to the members of organisation having diverse backgrounds.
Political ideologies can differ due to multiculture environment in the country. People belonging to different social groups, ethnicities, communities, economic class or religion can have different ideologies.
These variations impact people to join or support different political parties. Harmony among different political ideologies is necessary to maintain peace and stability within a country.
Democracy has been a fundamental part of India’s progress and growth story and has helped in binding people from different cultural background and regions.
A democratic environment ensures equal political and legal rights to each and every citizen of a nation. It ensures freedom of speech, expression and opinion.
Since every citizen cannot decide for himself/herself therefore, countries practice a system of elected representatives. MMPC 03 Free Solved Assignment
The elected representatives formulate laws for a nation. These representatives are elected by the people of the nation. Democracy also ensures a fair and independent judiciary.
Civil Liberties :
Civil liberties ensure the provision of freedom and fundamental rights to every citizen. These include freedom to press, equality before law, personal and social freedom and freedom from biased government policies.
Countries with high civil liberties are considered to be free and are more preferred by companies for investments.
More liberal countries ensure fair judicial trials in case of disputes and hence are preferred by business organisations.
International Political Relations : Political relations and diplomacy with foreign nations results in more avenues for trade and business which in turn creates multi-lateral or bilateral trade opportunities. MMPC 03 Free Solved Assignment
For example, trade pacts between USA and India have resulted in several development opportunities for both the nations. Political friendship among different nations creates a favourable environment for international trade and commerce.
Political Stability : Political stability is crucial for growth and development of any economy. Political instability can hinder the flow of foreign capital and adversely affects foreign investment in the country.
For instance, clashes between two groups in a region can cause adverse effects on the economic activities in that area
Government Policy : Stable policies are better for planning corporate strategies and building-up confidence in the industry. Policies formulated with clear directions can support better economic development.
Q3- Describe the structure and working of the money market and capital market.
Ans – Money market :- The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders.
At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
STRUCTURE OF MONEY MARKET : MMPC 03 Free Solved Assignment
Financial markets have two main components money market and capital market and they both are essential for the economic development of the country.
In the following section, you will read about the money market, its importance and various instruments. The money market is a market for shortterm financial assets and assets which are close substitutes of money.
Short term implies time period of less than one year and close substitutes of money refer to those financial assets that can be converted to money with minimum/no transaction cost and without loss in value.
The major participants in the money market are scheduled commercial banks (excluding regional rural banks or RRBs), cooperative banks (excluding land development banks) and primary dealers (PDs).
The broad objectives or functions of the money market are :
• To provide equilibrating mechanism between short term surpluses and deficiencies.
• Maintaining liquidity in the system. MMPC 03 Free Solved Assignment
• Providing access to short term funds to the borrowers at minimum or realistic cost.
• To enable the central bank of the country intervention to influence and regulate liquidity in the economy.
Instruments of the Money Market :
The main instruments traded in the money market and the sub-market are:
• Call Market/ Notice Market
• Commercial Papers (CPs) Market
• Treasury Bills (T-Bills) Market
• Commercial Bills Market
• Certificate of Deposits (CDs) Market
• Money Market Mutual Funds (MMMFs)
Let us now discuss them in brief.
Call Market/ Notice Market : It is a market for short term financial fundsthatare payable immediately and in full when the lender demands them. It is for this reason that call money is also known as “money at call”. MMPC 03 Free Solved Assignment
The maturity period variesfrom one day to a fortnight (14 days). When the funds are browed/lent for a day it is called call (overnight) money.
If the duration of funds borrowed/lent is more than a day and upto 14 days it is called notice market.
For conducting transactionsin the call/notice market there is no need for any collateral security.
The major players in the call market are banks and primary dealers.The interest rate payable on call loans is known as the call rate.
Commercial Papers(CPs) Market : CPs are short term unsecured instruments issued by companies to raise short term debts. They are issued in the form of promissory notes and in India they were introduced in 1990.
Large corporations, primary dealers and Financial Institutions (FI) are authorised to issue CPs. The maturity duration of CPs is a minimum of 7 days and a maximum of up to one year from the date of issue. MMPC 03 Free Solved Assignment
They are typically issued to short term financial obligations like funding of the new project. They can be issued in denomination of Rs 5 lakh or multiples thereof.Further, all eligible participants need to obtain a credit rating for the issuance of CPs.
They need to have a minimum credit rating of A2 as per the Securities and Exchange Board of India (SEBI) definition and rating symbol.
CPs are issued discount to face value basis (as discussed in the T-bills example). They have many advantages like the option of diversification for the source of finance, higher returns and liquidity.
Treasury Bills or T- Bills :
T-bills are short term borrowing instruments by the government of India. These are a form of a bill that does not arise from any genuine transaction in goods.
They are a kind of promissory note issued by the Reserve Bank of India (RBI). The government uses T-bills to raise short term funds to bridge the temporary/seasonal gaps when a deficit arises due to shortfall ( situation when receipts fall short of expenditure).
At present T-bills of 91 days, 182 days and 364 daysare issued. These bills are bought and sold on a discount basis means they are zero-coupon securities and yield no interest.
For example, a 91 days T-bill of Rs 200 (which is the face value) may be issued at say Rs 198.20. So the discount on this T-bill is Rs. 1.80 and at the time of redemption it will be redeemed at the face value (i.e. Rs. 200). MMPC 03 Free Solved Assignment
The return which investors gain is the difference between the face value (maturity value) and the issue price.
T-bills are issued by RBI through auctioning.RBI conducts auctions of Tbills with a maturity period of 91 days, 182 days and 364 days every Wednesday.
The date and place of auction, maturity time period and the method of auction is announced by the RBI from time to time.
There are two main types of auctions namely multiple-price auction and uniform-price auction.
The main features of T-bills are they are negotiable instruments, highly liquid because of the short time period, secured as they are backedby the government guarantee, assured yield and low transaction cost.
The net short term market borrowing of the government through 91 days, 182 days and 364 days T bills stood at Rs.37,528 crore during 2019-20.
Certificate of Deposits (CDs) Market :MMPC 03 Free Solved Assignment
CDs are negotiable money market instrument against funds deposited in a bank or other financial institutions for a fixed time period at a specific rate of interest.
They are the bearer documents and issued in dematerialised form. Scheduled commercial banks ( except RRBs and local area bank) and selected all India FIs can issue CDs in a minimum amount of Rs. 1 Lakh and in the multiples of Rs. 1 Lakh.
The maturity period of CDs is a minimum of 7 days and a maximum up to one year. They are issued at a discount on face value.
Banks have to maintain appropriate reserve requirements i.e., Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) on the issue price of CDs.
Money Market Mutual Funds (MMMFs) :
To increase the participation of individuals and small investors in the money market and to provide additional short term funds avenues to the investors MMMFs were introduced in April 1991 and the detailed scheme of MMMFs was announced by RBI in 1992.
A mutual fund is an investment scheme mostly run by an asset management company. Money is collected from a large number of investors and this pool of money is invested in stocks, bonds and other securities. MMPC 03 Free Solved Assignment
MFs are mostly beneficial for small investors like the salaried class who park their funds in MMMFs and can gain better returns.
They offer diversification of short terms assets in terms of issues, maturity and volume, thereby spreading the risk.
Whenever investor buys mutual funds they are allotted units/share of the mutual fund. These MFs are professionally managed and investors earn income in the proportion to the number of units owned by them.
Initially, only banks, FIs and their subsidiaries were allowed to set up MMMFs but corporates and others were allowed for the same from 1996. All MMMFs are governed and regulated by SEBI
The money market is divided into two parts i) Organised and ii) Unorganised.
The organised sector consists of the central bank of India or RBI, commercial banks both nationalised and private.
Further, foreign banks, cooperative banks, the discount and finance house of India and other financial institutions like IFCI, ICICI, LIC, GCI and mutual funds also operate in the money market.MMPC 03 Free Solved Assignment
The unorganised sector consists of non-bank financial intermediaries, indigenous bankers and money lenders.
STRUCTURE OF CAPITAL MARKET :
business units and investors need funds for a longer duration also for undertaking business expansions or technology upgrading and in this regard they approach the capital market.
A capital market is a market for long term securities or financial instruments having a maturity period of more than one year.
Capital markets are important for channelising savings, capital formation and industrial growth.
Capital markets comprised of two markets i) Primary Market and ii) Secondary Market.
The primary market is also known as the New Issue Market (NIM) where the issuer of the securities (shares and bonds) sell the new securities to the investors directly without any intermediaries. MMPC 03 Free Solved Assignment
Whenever the securities are offered for sale for the first time by the companies they are called Initial Public Offering (IPO). IPO is issued to raise capital for funding purpose.
Both the companies and government raise funds by the sale of new stocks in the primary market.
The secondary market is also known as the stock market. It is a place where shares, bonds, options, etc which were sold earlier are sold and purchased.
In India, you must have heard about the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) they are some of the examples of stock exchanges.
The secondary market can be either an auction market or Over the-Counter. In the auction market, trading of securities is done through the stock exchange.
In Over-the-Counter the trading is conducted without using the platform of stock exchange, it does not have any physical location and trading is done electronically.
Financial InstrumentsMMPC 03 Free Solved Assignment
Some of the major financial instruments used in capital markets are discussed below.
Shares : A share indicates a unit of ownership by the buyer of shares called shareholder/holers of the company. A shareholder has ownership in the company and has voting rights and shares the company profit or loss.
The benefit which a shareholder receives out of company profit is called a dividend. Let us understand it with an example.
Assume that there is a company know as XYZ limited and it needs funds (Rs 100 crore ) for further expansion. For raising this fund the company will go to the public
Bonds : Bonds are issued by state and central governments, companies and municipalities to raise money for a variety of projects and activities.
They are debt instruments in which the entities borrow the funds for a defined period of time at a variable or fixed interest rate.
Debentures : Debentures are also a type of debt instrument which is issued by companies for raising funds but they are not secured by physical assets or collateral.
An investor buys debentures based on the reputations and the creditworthiness of the issuer. The interest rate on debentures is higher than that of bonds.
Q4- How does technological advancement impact international business environment. Discuss.
Ans -TECHNOLOGICAL ENVIRONMENT :
A global business environment cannot function without a technological environment. The more the technology evolves, the greater the benefits obtained by a business from it.
Following are some of the important ways in which technology has helped a business environment globally: MMPC 03 Free Solved Assignment
The technological environment portrays a country’s potential in terms of the availability of raw materials and machinery which is required for the manufacturing of goods.
No company can possibly control the global environment and hence adaption of technologies may seem to be quite essential for the businesses to ensure a competitive advantage.
This unit will essentially focus on making one understand why technological environment is important for a business to flourish both nationally and internationally,
what are the advancements in technology that can help a business expand and finally what are its impacts in the global market.
IMPACT OF TECHNOLOGICAL ENVIRONMENT ON INTERNATIONAL BUSINESS :
Every businessman or marketer around the globe is now well aware of how important technology is for the businesses and what are its effects on a business environment? There are both negative and positive effects of technology for a business.
Initially, the businesses were dependent on a labour force. But with the rise in technology, businesses do not want to lag behind. MMPC 03 Free Solved Assignment
They have already started implementing newer technologies to flourish worldwide. Here are some of the ways in which the technology affects the global business environment.
- Technology helps in diminishing business security risks by hiring best of security specialists for preventing sudden cyber-attacks and with the use of AI and ML, such threats are being minimized.
2. Technology ensures business growth by enabling almost all business actions to be automated, thereby reducing involvement of human labour.
This has helped in increasing the sales, revenue and profit for the businesses and the usage of internet have enabled them to grow online and expand worldwide.
3. Online presence through social media channels is one of the business-oriented targets that the enterprises are trying to fulfil to grow along with the broadening of its client base.
Technological tools that help businesses identify their preferred content, optimum time of posting their service contents, automated posting and location- specific targeting to expand their business, are actually helping to establish the business better in the online world.
Tools like Google analytics are playing a major role in this.
4. Technology helps in increasing employee productivity for a business through various computer programming and software such as AI, ML, and cloud computing that helps businesses to process more information, sitting anywhere in the world, than manual methods, thereby reducing much of human involvement in such tasks.
Organizations are also using fundamental business technologies for employee performance appraisal information in the online framework to supervise the performance of its employees and create measurable goals for their employees to achieve and thereby sustain the business objectives. MMPC 03 Free Solved Assignment
5. Business technologies are now allowing companies to outsource certain business functions to other businesses in the national and global business framework.
Technical support and customer service are the two most common outsourced functions. Outsourcing therefore helps companies lower their business costs and focus on completing their business functions, which they are best at.
With the help of several technological innovations, businesses can also outsource their functions to the least expensive areas possible, including those in foreign countries as well.
Technology has revolutionized the way companies conduct business by enabling small businesses to level the playing field with larger organizations.
Small businesses use an array of tech – everything from servers to mobile devices – to develop competitive advantages in the economic marketplace.
Small business owners should consider implementing technology in their planning process for streamlined integration and to make room for future expansion. This allows owners to create operations using the most effective technology available
Q5-Write short notes on the following:
A-Balance of Payments (BoP)
Ans. The Balance of Payments (BoP) for a country can be defined as a systematic record of all the transactions between the economic units of one country (such as households, firms and the government) and the rest of the world in any given period of time.
This includes all the transaction records made among the individuals, corporates and the government and helps in keeping the flow of funds in track, to develop the economy as a whole. MMPC 03 Free Solved Assignment
Balance of Payments (BoP) is the sole integral determinant of the health of an economy as well as it relations globally.
It portrays the overall transactions of an economy with the other global economies during a given time period in a systematic and prudent manner.
The balance of payments (BOP), also known as the balance of international payments, is a statement of all transactions made between entities in one country and the rest of the world over a defined period, such as a quarter or a year.
It summarizes all transactions that a country’s individuals, companies, and government bodies complete with individuals, companies, and government bodies outside the country.
The Balance of Payments (BoP) of a country is important because:
The BoP reflects the financial and economic status of a country;
The BoP may act as an indicator to determine whether a country’s value of currency is appreciating or depreciating; MMPC 03 Free Solved Assignment
The BoP statement helps the government in making decisions on fiscal and trade policies;
The BoP statement provides vital insights into the economic dealings of a country with the rest of the world.
B. Corporate Social Responsibility (CSR)
Ans -The CSR has become one of the standard business practices of our time. For companies, the overall aim of CSR is to have a positive impact on society as a whole while it engages in maximizing the creation of shared value for the owners of the business, its employees, shareholders and stakeholders.
“Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (‘Triple-BottomLine-Approach’), while at the same time addressing the expectations of shareholders and stakeholders” (UNIDO).
Corporate Social Responsibility (CSR) in its essence fosters the business accountability from the stakeholder, shareholder and investor perspective which may include factors such as environmental protection, MMPC 03 Free Solved Assignment
care for employees, the society and public at large not only in the present context but in future too. It is a result of continuous interaction between the business and the society.
CSR and Shareholders :
Shareholders are one of the important pillars who not only invest in the company’s business but also remain associated with the financial returns in the form of profits and/or dividends.
This makes companies work for shareholder’s return thus increasing transparency, giving handsome returns and enabling them in decision making enhances the shareholder’s role in the company towards wealth maximisation.
CSR and Employees
1). Equal opportunity. Grievance Redressal Mechanism.
2). Fair wages, a transparent performance appraisal system, clear work instructions and work environments and work policies.
3). Hygienic, safe and congenial working environment.
4). Setting up of labour benefit and welfare amenities.
5). Employee recognition and career growth.
6). Skill enhancement and participation in organisational decision making.
7). Employee Engagement is one of the prominent factors in organisations.
CSR and the Consumer : MMPC 03 Free Solved Assignment
1). Company offering quality products and meeting regulatory standards.
2). Customer oriented approach leading to more R&D focus and innovative products.
3). Ensure supplies at equitable prices and provide due after-sale services.
CSR and Community Participation :
1). Environmental pollution control and ecological concerns.
2). Enhanced R&D to product regulatory standards.
3). Economic development and improvement of backward areas mainly by the development of small scale businesses and community services.
C. Tax Reforms
Ans The government of India has appointed many committees to suggest measures in both the direct and indirect taxation system of the country.
Chelliah Committee 1991 : MMPC 03 Free Solved Assignment
To examine the structure of both direct and indirect taxes, a Tax Reform Committee under the chairmanship of Dr Raja J. Chelliah was constituted in 1991.
The main task of the committee was to give suggestions on ways to improve the elasticity of direct and indirect taxes, making the taxation system broad-based and fair.
Kelkar Committee :
In 2002, a task force under the chairmanship of Dr Vijay Kelkar was constituted to recommend measures for simplification and rationalisation of direct and indirect taxes. The committee recommended formulating a simple, effective and better tax system.
Kelkar Committee on Fiscal Consolidation :
In August 2012 a Committee was constituted under the chairmanship of Dr. Vijay Kelkar to outline a roadmap for fiscal consolidation. MMPC 03 Free Solved Assignment
The main reason behind constituting the Committee was that in 2012-13, the fiscal deficit was soaring high and it was estimated to reach 6.1% of GDP and a higher fiscal deficit is a cause of worry for the economy which could lead to higher inflation,
the external balance could widen, investment, growth and employment tend to weaken and the overall confidence of investor is shaken.
Direct Tax Reforms :
Direct Taxes are those taxes in which the impact and incidence of the tax fall on the same person. Examples like Income Tax, Corporation Tax, etc. A series of reforms have been introduced in the direct taxes
D-Farm Reforms 2020 :
On 27th September 2020, Ram Nath Kovind, the President of India gave his acceptance to the 3 farm bills that were earlier passed by the Indian Parliament. These Farm Acts are as follows: MMPC 03 Free Solved Assignment
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
This Act permits farmers to sell their produce outside the APMC regulated mandis but it does not abolish them.
It aims to provide lucrative prices to farmers via alternative trade channels. It also prohibits state governments from imposing any tax on the trade of produce outside the mandis.
Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 :
It creates a national framework for contract farming. Although contract farming was legal prior to the enactment of this act as well, this act aims to provide a completecomprehensive outline for such an arrangement.
This will enable farmers to contract a guaranteed price for their produce prior to production/sowing.MMPC 03 Free Solved Assignment
Essential Commodities (Amendment) Act, 2020 :
The ECA has been amended to state that the Government of India will list few commodities as essential and control their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities.
Other produce including cereals, pulses, potato, onion, edible oilseeds, and oils have been deregulated.
The amended act also states that the government will impose stock limits on essential commodities only when the rise in price is at least 100% for horticultural produce and 50% for non-perishable agricultural produce.
The enactment of these acts has created fear in the minds of farmers and has led to widespread protests.
Despite several rounds of talks, the government and the farmers have not been able to arrive at a mutually agreeable solution.
The farmers fear that increased private sector participation will lead to exploitation and that their interests will not be safeguarded.
Although the government has made several attempts to pacify the farmers, they have all been in vain.
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