The collapse of the Soviet Union and disintegration of other socialist economies changed the political environment for

business considerably. Suddenly, government failure, including the failure of public enterprises, became the focus of attention. Governments began to adopt policies desi gned to reduce the scope of State intervention in the economy giving more breathing space to private sector enterprises. Thus, all of a sudden, the political environment became more conducive to private business activity. "The pendulum had swung from the State-dominated development model of the 1960s and 1970s to the minimalist State of the 1980s." How the political environment for business in India has changed in the postindependence period would be clear from Bo . Changing Political Environment of Business in India !hen India became independent in "#$%, income per capita had been stagnating for half a century, and modem industry was minimal. The Nehru Years 1947- 4. India&s first 'rime (inister, )awaharlal *ehru, saw industriali+ation as the ,ey to alleviating poverty, and a powerful State with a planned economy as essential if the country was to industriali+e rapidly, accelerate public saving and investment, and reduce the role of foreign trade and achieve self-sufficiency. -nli,e many .ast /sian countries, which used State intervention to build strong private sector industries, India opted for State control over ,ey industries. Believing the potential of agriculture and e ports lobe limited, Indian government ta ed agriculture by s,ewing the terms of trade against it and emphasi+ing import substitution. They saw technical education as vital for industriali+ation. !ari"i #atao$ 19 -77% -nder 'rime (inister Indira Gandhi, two ma0or shifts too, place in the role of the State. irst! the neglect of agriculture was reversed through Slate activism in subsidi+ing new seeds and fertili+ers, agricultural credit, and rural electrification. The green revolution too, off, and by the mid-"#%1s India was self-sufficient in grain. The se"ond shill was the tightening of State control over every aspect of the economy. -nder the slogan of gari#i haw 2abolish poverty3, ban,s were nationali+ed, trade was increasingly restricted, price controls were imposed on a wide range of products, and foreign investment was s4uee+ed. The State achieved a stranglehold on the economy. 5et growth of gross 6rom Bo %.", changes in the political environment of business in India during the post-independence period are very clear. Briefly stated they are as follows7
8

State activism with focus on industriali+ation during "#$%-9$ 2no important role to

foreign trade3.
8 State

activism e tended to almost all areas of the economy "#99-%% 2grant of

agricultural subsidies, ban, nationali+ation, price controls, restrictions on foreign investment, etc.3.
8

:ela ation of economic controls, spending boom and rising fiscal deficits during :eform phase, "##" to the present 2abolition of industrial licensing, reduced import tariffs, financial liberali+ation, boost to private and foreign investment, etc.3

"#%%-#".
8

!lo"al Political Environment% !ith the disintegration of the Soviet -nion, the bipolar world political economy has now become unipolar with the only global superpower being -S/. It is -S/ that now guides and controls practically all international financial and trade institutions li,e the I(6 2International (onetary 6und3, !orld Ban, and !T;. The over+ealous re0ection of government imposed by the -S/ and the international financial institutions on the developing countries has proved to be disastrous in these countries. .ven the symbols of free mar,et economy li,e -S/ itself, )apan and .urope have been plunged into recession during the last few years and nobody is sure till when they will be able to e tricate themselves from the mess in which they have plunged themselves, it has not been appreciated fully by these countries that li,e the State-dominated industriali+ation, Stateless business activity was also destined to fail. In other words, growth of business without effective State is almost impossible. Some awareness of this truth is now in evidence as -S/, .uropean and )apanese governments are at various stages of implementation of large-scale &bailout& programmes involving e penditures of billions and billions of dollars to boost their economies. How successful these economies are in beating recession and once again in providing a healthy economic environment to business will depend on how effective this &State intervention& is. The <onstitution of a country is an important document. It describes the aspirations of the people, lays down their rights and states the political and socio-economic ob0ectives of governance. It outlines economic and political powers of the government and its duties towards the people. =istributions of powers between the different layers of government are also specified. In this section, we shall focus on the <onstitution of India.

The <onstitution of India was adopted by the <onstituent /ssembly on *ovember >9, "#$# and came into force on )anuary >9, "#?1. The <onstitution which envisages parliamentary form of government is 6ederal in character with unitary features. It distributes legislative power between 'arliament and State legislatures and provides for vesting of residual powers in 'arliament. 'ower to amend the <onstitution also vests in 'arliament.

The Pream"le The 'reamble to the Indian <onstitution states that @!., TH. '.;'A. ;6 I*=I/, having solemnly resolved to constitute India into a S;B.:.IG*, S;<I/AIST, S.<-A/:, =.(;<:/TI< :.IAIBAI< and to secure to all its citi+ens7
C C C C

)-STI<., social, economic and politicalD AIB.:T5 of thought, e pression, belief, faith and worshipD .E-/AIT5 of status and of opportunityD and to promote among them allD 6:/T.:*IT5 assuring the dignity of the individual and the unity and integrity of the nationD

I* ;-: <;*STIT-.*T /SS.(BA5 this twenty-si th day of *ovember "#$#, do H.:.B5, /=;'T, .*/<T /*= GIB.T; ;-:S.AB.S THIS <;*STIT-TI;*.@

/s is clear from the above, the <onstitution of India clearly lays down that social, economic and political 0ustice, li#ert$ and e%ualit$ of opportunity are to be the guiding principles of the State policy. In =ecember "#?$, the Indian 'arliament accepted the So"ialist &attern of So"iet$ as the ob0ective of socio-economic policies. In "#%9, it was incorporated into the 'reamble of the <onstitution through $>@d /mendment. /s is clear, the above direction and guidelines were laid down to define the contours of the political rules governing the functioning of the State.

&undamental 'ights

The <onstitution of India offers all citi+ens, individually and collectively, some basic freedoms. These are guaranteed in the 'onstitution in the form of si #road "ategories of undamental (ights whi"h are )usti"ia#le. /rticles "> to F? contained in 'art III of the <onstitution deal with 6undamental :ights. These are7
".

:ight to e4uality including e4uality before law, prohibition of discrimination on grounds of religion, race, caste, se or place of birth and e4uality of opportunity in matters of employment. :ight to freedom of speech and e pressionD assemblyD association or unionD movementD residenceD and right to practice any profession or occupation 2some of these rights are sub0ect to security of the State, friendly relations with foreign countries, public order. decency or morality.3

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