Political Setup – Major characteristics & their implications for business
Directive Principles of State Policy:
The Directive Principles of State Policy which have been enshrined in Part IV of the Constitution aim at realizing the high ideals of justice, liberty, equality and fraternity as outlined in the preamble to the constitution. There are ideas which are to inspire the state to work for the common good of the people and establish social and economic democracy in the country.
The phrase ‗Directive Principles of State Policy‘ means the principles which the states should keep in mind while framing the laws and formulating policy. Articles 39 to 51 contain the various directive principles. These principles are amalgamation of socialistic, Gandhian and liberal principles.
The economic importance of Directive Principles of State Policy is:
(i) To provide adequate means of livelihood for all the citizens.
(ii) To secure equal pay for work to both men and women.
(iii) To protect the workers, especially children.
(iv) To regulate the economic system of the country that it does not lead to concentration of wealth and means of production.
(v) To make provision for securing right to work, to education and to public assistance in cases of unemployment, old age, sickness and similar other cases.
(vi)To ensure a decent standard of living and facilities of leisure for all workers.
The main objective of the above noted directive principles are to enable the individual to lead a good and satisfying life. All the provisions of directive principles of state policy guide the government policies towards the business and other economic and social activities.
The government also so far enacted a number of acts and laws, policies and rules keeping in view the directive principles, which are directly related with the business operations. The various Acts like FERA, Factories Act. MRTP Act, Minimum Wages Act, Industrial (Development and Regulation) Act, Industrial policy, etc., are based on the Directive Principles of the Constitution.
The government, through these acts and regulations, protects the interests o f working men, women and children, prevents concentration of economic power, and promotes and protects the interest of small and cottage industries.
Explain the meaning, relevance and features of the Competition Act, 2002.
In 1969 Govt. has passed an act and it had given the name monopoly and restrictive trade practices (MRTP). It became popular with the name of MRTP 1969. This act has many provisions to control the monopoly and to promote the competition. It has defined RTP and also explained the powers of MRTP commission. But its scope was very narrow and Govt. of India has made new act called competition act 2002. On the place of MRTP ACT 1969 after this MRTP act 1969 was fully repealed.
Explanation of Competition Act 2002
Competition Act 2002 states that Indian traders must not do any activity for promoting monopoly. If they will do any activity in the form of production, distribution, price fixation for increasing monopoly and this will be against this act and will be void. This act is very helpful for increasing good competition in Indian economy.
Under this act following are restricted practice and these practices are stopped by this act.
1. Price fixing: If two or more supplier fixes the same price for supply the goods then it will be restricted practice.
2. Bid ragging: If two or more supplier exchange sensitive information of bid, then it will also be restricted practice and against competition.
3. Re-sale price fixation: If a producer sells the goods to the distributors on the condition that he will not sell any other price which is not fixed by producer.
4. Exclusive dealing: This is also restricted practice. If a distributor purchases the goods on the condition that supplier will not supply the goods any other distributor.
Above all activities promote monopoly so under competition act these are void and action of competition commission will not entertain by civil court.
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