What is Economic Environment? meaning and definition

Meaning: The totality of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers and institutions.

How to Defines the Economic Environment in India?

To solve economic problems of our country, the government took several steps including control by the State of certain industries, central planning and reduced importance of the private sector.

 The main objectives of India’s development plan are:

• Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty.
• Become self-reliant and set up a strong industrial base with emphasis on heavy and basic industries.
• Reduce inequalities of income and wealth.
• Adopt a socialist pattern of development — based on equality and prevent exploitation of man by man.

As a part of economic reforms, the Government of India announced a new industrial policy in July 1991.

The broad features of this policy were as follows:

• The Government reduced the number of industries under compulsory licensing to six.
• Disinvestment was carried out in case of many public sector industrial enterprises.
• Policy towards foreign capital was liberalized. The share of foreign equity participation was increased and in many activities, 100 percent Foreign Direct Investment (FDI) was permitted.
• Automatic permission was now granted for technology agreements with foreign companies.
• Foreign Investment Promotion Board (FIPB) was set up to promote and canalize foreign investment in India.