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Constitutional Framework Of State Control Of Business

Characteristics of Indian Constitution


1) Sovereignty: India is an independent republic and not subordinate to any other nation. 2) Democracy: govt. is run by representatives who are elected by the people of the nation. 3) Secularism: complete freedom to its citizen to preach & practice their religion.

Contd.
4) The parliamentary system: ministers and the prime minister are answerable to the parliament. 5) Separation of powers:

Federal System of the Govt.


Meaning: where the powers of the central govt. and State govt. are well-defined. Division of powers between the Central & State govt. has been done through three lists : The Union List The State List The Concurrent List

Functions of the State


Functions of State
The basic functions Activities that are Undertaken only by the State

Intermediate Functions
Govt. can work in collaboration with civil Society & markets

Activist functions Active participation of Govt. for promoting markets

Contd.
i. ii. iii. iv. v. vi. The Basic Functions:Providing pure public goods Defence Law & order Property rights Public health Protecting the poor

Basic functions Contd.


vii. Macroeconomic stability viii.Antipoverty programmes ix. Disaster relief

Intermediate Functions
i. Addressing externalities:- basic education, environmental protection ii. Regulating monopolies:- consumer protection, financial regulations. iii. Providing Social Insurance:pensions, family allowances, unemployment insurance.

Activist Functions
i. Coordinating private activity ii. Fostering markets iii. Asset redistribution

Economic Roles of the Govt.


Economic roles of Govt. Regulatory roles

Promotional roles

Entrepreneurial roles

Planning roles

1.Regulatory Roles
i. Grant of license, restriction on location of industry ii. Regulating the conduct of business ventures iii. Controlling the accrual & disposal of business income iv. Regulating the relationship with its stakeholders

2.Promotional Roles
i. ii. iii. iv. Development of infrastructure Assistance by way of subsidies Allocation of scarce resources Fiscal, monetary and other incentives

3.Entrepreneurial Roles
Govt.s participation in business through public ownership and management of industrial and commercial undertakings. Balanced regional development Promotion of capital intensive industries

4.Planning Roles
Socio-economic development Social justice Balanced regional development Rapid industrialization Employment generation Development of agriculture & small scale industries

Rationale of State Intervention


1) 2) 3) 4) 5) 6) 7) Legal framework Imperfect competition Externalities Social objectives Industrial base Balanced regional development Self reliance

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