Political Environment Org

POLITICAL ENVIRONMENT By: Sayad Rashid

Business Political Environment

By: Sayad Rashid

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Political Structure in India 

The country attained freedom on 15 August 1947. The Constitution of the Republic came into effect on 26 January 1950.

 Free India's first Prime Minister, Pandit Jawaharlal Nehru .  The Constitution was made flexible enough to adjust to the demands of social and economic changes within a democratic framework. Adopting the path of democracy, the country held its first general elections in 1952. Business Political Environment

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Parallel state structure Formal political structure of the states parallels that of the national government National state • President Governor • Prime Minister Chief Minister • Parliament Assembly • Supreme Court High Court Business Political By: Sayad Rashid 3 Environment

Political system and business The political system prevailing in a country decides, promotes, fosters, encourages, shelters, directs and controls the business activities of that country.

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Basic Political philosophies  Two basic political philosophies exist all over the world:



Democracy (refers to a political

system in which the supreme power is in the hands of the people. )

Totalitarianism (also called authoritarianism, refers to a political system in which individual freedom is completely subordinated to the authority of the state.) By: Sayad Rashid Business Political 5 Environment

Basic Political philosophies Cont…  Democracy comprises two types: o Pure Democracy (Requires every citizen to take part in governance.) o Republican (exists when leaders, elected by people, do the ruling.)

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Basic Political philosophies (Cont…)  Totalitarianism, in itself, is of four types: o Theocratic

(When the religious leaders of a country also act as political leaders.)

o Secular

(When political leaders are guided by military and bureaucratic power)

o Right-wing

(private ownership is endorsed by government, market forces are also allowed a free play, but political freedoms are rarely granted)

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Sayad Rashid 7 o Tribal By:(Exists when a political party that

THREE INSTITUTIONS The political system under democratic dispensation comprises three vital institutions:  Legislature Executive or Government Judiciary Business Political Environment

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THREE INSTITUTIONS (Continue)  Legislature is the most powerful institution vested with such powers like policy making, law-making, budget approving, executive control and acting as a mirror of public opinion.  It decide such vital aspects as the type of business activities the country should have, who should have, who should own them, what should be their size of operations, what should happen to their Business Political By: Sayad Rashid 9 earnings and other related factors. Environment

THREE INSTITUTIONS (Continue) Parliamentary system of government – the executive authority is responsible to the Parliament.

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THREE INSTITUTIONS (Continue) Executive or Government the centre of political authority having the power to govern those it serves.  The founder of our constitution provided for a federal set-up ,with powers being divided between the national and the state governments. The power of central and state governments is described in this constitution. Business Political Environment

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THREE INSTITUTIONS (Continue)  Business Responsibilities to Government: a) b) c) d) e) f) Business Political Environment

Tax Payment Voluntary Programmes Providing Information Government Contracts Government Services Political Activity By: Sayad Rashid

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THREE INSTITUTIONS (Continue)  Government Responsibilities to Business: a) Establishment and Enforcement of Laws b) Maintenance of Order c) Money and Credit d) Orderly Growth e) Infrastructure f) Information g) Assistance to small industries h) Transfer of Technology i) Government Competition Business Political By: Sayad Rashid j) Inspection and Licences Environment

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THREE INSTITUTIONS (Continue)  Judiciary determines the manner in which the work of the executive has been fulfilled. It sees to it that the exercise of executive authority conforms to the general rules laid down by the legislature.  It also settles the relationship between private citizens, on the one hand, and between citizens and government on the other. Business Political By: Sayad Rashid 14 Environment

System of Laws  There are four basic legal systems prevailing around the world: • Islamic law (derived from the interpretation of the holy Quran and is found in the countries where Muslims are in majority.)

• Socialist law

(Comes from the Marxist socialist systems and continues to influence regulations in former and present communist countries.)

• Common law

(derived from English law and found in countries which are under British influence.)

Sayadbased Rashid on a detailed set of laws 15 • Civil or Code lawBy: (is

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that make up a code.)

Judicial Powers  The judiciary in a country is influenced by the political system. The government of a country defines the legal framework within which firms do business and often the laws that regulate business reflect the rulers’ political ideology.  The power of the judiciary are of the dual type: iii.The authority of the courts By: Sayad Rashid to settle legal disputes; and

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Judicial Activism  In a real sense, judicial activism refers to the review power vested with the courts and its scope varies with the width of power conferred on courts. The scope is wider where the power of judicial review extends not only over executive action, as in the UK, but also other legislative action. Business Political Environment

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CONSTITUTION judiciary

Central List Central Govt.

Budget

Direct involvement in business

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Executive

Concurrent List

legislature

State List State Govt.

Local Govt.

Development/promotional Policies Organization Regulatory Guidelines (e.g.: development banks Organizations Codes Exports (SEBI, TRAI) laws Development authorities)

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THE CONSTITUTION OF INDIA  The constitution of India is the most significant document which is fundamental to the governance of the state. It is the product not of political revolution but of the research and deliberations of a body of eminent representatives of people who sought to improve upon the then existing system.  The historic Objectives Resolution which was moved by Pandit Jawaharlal Nehru on 9 December 1946 and which was subsequently adopted by the Constitution Assembly on 22 19 Business Political By: Sayad Rashid Environment January 1947, inspired the shaping of the

Parts of Constitution The Indian Constitution has three parts, viz: The Preamble The Fundamental Rights and Fundamental Duties The Directive Principles of the State Policy.

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THE PREAMBLE  The Preamble is an introduction to the Constitution and contains its basic philosophy. The Preamble to the Indian Constitution states that “We the people of India having solemnly resolved to constitute ourselves into a Sovereign, Socialist, Secular, Democratic, Republic and to secure to all citizens: justice, social, economic and political; Liberty of thought, expression, belief, faith, and worship; Equality of status and opportunity; and to promote among them all fraternity assuring the dignity of the individual and the unity and 21 Business Political By: Sayad Rashid Environment the integrity of the Nation.

THE PREAMBLE (Key Words) o Sovereign

(With the writing of the constitution, India became ‘Sovereign Republic’ like USA or the Swiss Republic.)

o Socialist

(Added to the Preamble by the 42nd Amendment of the Constitution in 1976. Socialism implies State ownership of tools of production with the benefits to inure to the public. It also advocates agrarian reforms, a strong public sector, control over private investment and wealth and national selfreliance.)

o Secular

(Was inserted in the Preamble by the 42nd Amendment of the Constitution in 1976. The real spirit of secularism is to make religion purely a private affair Business Political By: Sayad and to manage the affairs ofRashid the State free from any Environment religious influence.)

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THE PREAMBLE (Key Words) o Republic

(Implies an elected head of State. Under the republican form of Govt., on the other hand, the head of State is always elected for a fixed term. Ours is a Republican form of Govt. and for every 5 year period, we elect our President who is head of State.)

o Liberty

(Signifies the absence of any arbitrary restraint on the freedom of individual action and the creation of conditions conducive to the fullest development of the personality of the individual.)

o Fraternity

(Demands the spirit of brotherhood. This spirit is essential in our society known for its diversity.)

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THE FUNDAMENTAL RIGHTS  The Fundamental rights are defined as the basic human rights of all citizens. These rights, defined in Part III of the Constitution, apply irrespective of race, place of birth, religion , caste , creed or gender. They are enforceable by the courts, subject to specific restrictions. Business Political Environment

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THE FUNDAMENTAL RIGHTS

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THE FUNDAMENTAL DUTIES According to the 42nd Amendment passed in 1976 a set of Ten Fundamental Duties of citizens was included in the Constitution of India. They are : 2. To abide by the Constitution and respect the ideals and Institutions. 3. To respect National Flag and National Anthem. 4. To realise and follow the essential ideals of Nonviolence, Democracy and Secularism. 5. It is the duty of every citizen to preserve the rich heritage of our Culture. 6. To protect the Sovereignty, Unity and Integrity of our Nation. 7. To safeguard public property. 8. To defend our Country even at the cost of our life. 9. To protect Natural Resources. 10.To avoid Dowry, Gambling and other Social evils. 26 Business Political By: Sayad Rashid Environment 11.To strive towards excellence in their respective

DIRECTIVE PRINCIPLES OF STATE POLICY  The Directive Principles of State Policy (sometimes called national objectives), embodied in Part IV of the constitution, are a unique feature of our Constitution. The Directive Principles are the directives to the various governments and govt. agencies and are fundamental in the governance of the country.  There are 17 Directive Principles and they may be classified, for convenience, under four heads viz; •

Provisions dealing with Welfare (Art. 38, 42, 45, 47). • Provisions dealing with Social Justice (Art. 39, 41, Business Political By: Sayad Rashid 27 43, 46). Environment

DIRECTIVE PRINCIPLES OF STATE POLICY • Article 38(1) lays down that the State shall promote the welfare of the people by securing a social order in which justice- social, economic and political- shall inform all the institutions of national life. • Article 38(2) lays down that the State shall strive to minimise the inequalities in income, and eliminate inequalities in status, facilities and opportunities, not only among individuals but also among groups of people. • Article 39 emphasizes that the State shall direct its policy towards securing: (a) adequate means of livelihood to all citizens; (b) a proper distribution of the material resources of the community to the common good; (c) the prevention of concentration of wealth to the common detriment; (d) equal pay for equal work for both men and women; (e) the protection of strength and health of workers and avoiding Business Political By: Sayad Rashid 28 circumstances which force citizens to enter avocations Environment unsuited to their age or strength; and (f) the protection of

• Article 41 lays down that the State shall, within the limits of its economic capacity and development, make provisions for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement. • Article 42 states that the State shall make provision for securing just and humane conditions of work and for maternity relief. • Article 43 emphasis the necessity of an adequate or living wage in all sectors of economic activity. The Article enjoins that healthy conditions of work should be provided and a decent standard of living should be provided. • Article 43(A) states that the State shall take steps to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry. • Article 46, The state shall promote with special care the educational and economic interests of the weaker sections of Business Political By: Sayad Rashid 29 theEnvironment people, and, in particular, of the scheduled castes and

Distinction between Fundamental Rights and Directive Principles Fundamental Rights • Even the Government cannot take away or abridge these rights. • These rights are negative i.e., contain “don’ts”. • These are enforceable in law courts. • The Government cannot take policy decisions on these rights. • These rights strengthen political democracy. • These are natural rights. Business Political • These right are justifiable. Environment

Directive Principles • These are mere instructions to the Government. • These are positive and contain “dos”. • These are not enforceable in any court. • The Government has powers to make policy decisions on these principles • The implementation of these principles ensures social and economic democracy. • These lead to protect human rights.

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These rights are not justifiable.

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Separation of power  The separation of powers contemplates the idea that the governmental functions must be based on a tripartite division of legislature, executive and judiciary.  Each organ should be separate, distinct and sovereign in its own allocated sphere and it should not exercise the functions assigned to another.  They should function with in the spheres allotted to them. No authority created under the Constitution is supreme; the Constitution is supreme and all the authorities function under the supreme law of the land. Business Political By: Sayad Rashid 31 Environment

Division of power Indian’s Constitution distributes the items for legislation among 3 lists: • Union List (Union has exclusive power to make laws on all matters in the Union list.) • State List (state has exclusive powers to make laws in the State List. Except for the Union Territories, the centre cannot normally legislate on any matter included in the State List.) • Concurrent List (both the Union and the State can legislate on matters in the concurrent List.) Business Political Environment

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Thank U…………

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