BUSINESS ENVIRONMENT The success of every business depends on adapting itself to the environment within which it functions.

For example, when there is a change in the government polices, the business has to make the necessary changes to adapt itself to the new policies. Similarly,a change in the technology may render the existing products obsolete, as we have seen that the introduction of computer has replaced the typewriters; the colour television has made the black and white television out of fashion. Again a change in the fashion or customers taste may shift the demand in the market for a particular product, e.g., the demand for jeans reduced the sale of other traditional wear. All these aspects are external factors that are beyond the control of the business. So the business units must have to adapt themselves to these changes in order to survive and succeed in business. Hence, it is very necessary to have a clear understanding of the concept of business environment and the nature of its various components. The term business environment connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which are uncontrollable in nature and affects the business decisions of a firm.

IMPORTANCE OF BUSINESS ENVIRONMENT

There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively. As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a farreaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways: (a) Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully. (b) Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities. (c) Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business. (d) Image Building: Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the

shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power. (e) Meeting Competition: It helps the firms to analyse the competitors strategies and formulate their own strategies accordingly. (f) Identifying Firms Strength and Weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.

TYPES OF BUSINESS ENVIRONMENT

Confining business environment to uncontrollable external factors, it may be classified as (a) Economic environment; and (b) Non-economic environment. The economic environment includes economic conditions, economic policies and economic system of the country. Non-economic environment comprises social, political, legal, technological, demographic and natural environment. All these have a bearing on the strategies adopted by the firms and any change in these areas is likely to have a far-reaching impact on their operations. Let us have a brief idea about each of these areas of business environment.

ECONOMIC ENVIRONMENT

The survival and success of each and every business enterprise depend fully on its economic environment. The main factors that affect the economic environment are: (a) Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth. (b) Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the Important economic policies are: (i) Industrial policy (ii) Fiscal policy (iii) Monetary policy (iv) Foreign investment policy (v) Export Import policy (Exim policy) The government keeps on changing these policies from time to time in view of the developments taking place in the economic scenario, political expediency and the changing requirement. Every business firm has to function strictly within the policy framework and respond to the changes therein. Important Economic Policies (i) Industrial policy: The Industrial policy of the government covers all those principles, policies, rules, regulations and procedures,which direct and control the industrial enterprises of the country and shape the pattern of industrial development.

(ii) Fiscal policy: It includes government policy in respect of public expenditure, taxation and public debt. (iii) Monetary policy: It includes all those activities and interventions that aim at smooth supply of credit to the business and a boost to trade and industry. (iv) Foreign investment policy: This policy aims at regulating the inflow of foreign investment in various sectors for speeding up industrial development and take advantage of the modern technology. (v) ExportImport policy (Exim policy): It aims at increasing exports and bridge the gap between expert and import. Through this policy, the government announces various duties/levies. The focus now-a-days lies on removing barriers and controls and lowering the custom duties. (c) Economic System: The world economy is primarily governed by three types of economic systems, viz., (i) Capitalist economy; (ii) Socialist economy; and (iii) Mixed economy. India has adopted the mixed economy system which implies coexistence of public sector and private sector.

NON-ECONOMIC ENVIRONMENT
The various elements of non-economic environment are as follow: (a) Social Environment The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. For example, during festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc. Due to increase in literacy rate the consumers are becoming more conscious of the quality of the products. Due to change in family composition, more nuclear families with single child concepts have come up. This increases the demand for the different types of household goods. It may be noted that the consumption patterns, the dressing and living styles of people belonging to different social structures and culture vary significantly. (b) Political Environment This includes the political system, the government policies and attitude towards the business community and the unionism. All these aspects have a bearing on the strategies adopted by the business firms. The stability of the government also influences business and related activities to a great extent. It sends a signal of strength, confidence to various interest groups and investors. Further, ideology of the political party also influences the business organisation and its operations. You may be aware that Coca-Cola, a cold drink widely used even now, had to wind up operations in India in late seventies. Again the trade union activities also influence the operation of business enterprises. Most of the labour unions in India are affiliated to various political parties. Strikes, lockouts and labour disputes etc. also adversely affect the business operations. However, with the competitive business environment, trade unions are now showing great maturity and started contributing positively to the success of the business organisation and its operations through workers participation in management.

(c) Legal Environment This refers to set of laws, regulations, which influence the business organisations and their operations. Every business organisation has to obey, and work within the framework of the law. The important legislations that concern the business enterprises include: (i) Companies Act, 1956 (ii) Foreign Exchange Management Act, 1999 (iii) The Factories Act, 1948 (iv) Industrial Disputes Act, 1972 (v) Payment of Gratuity Act, 1972 (vi) Industries (Development and Regulation) Act, 1951 (vii) Prevention of Food Adulteration Act, 1954 (viii) Essential Commodities Act, 2002 (ix) The Standards of Weights and Measures Act, 1956 (x) Monopolies and Restrictive Trade Practices Act, 1969 (xi) Trade Marks Act, 1999 (xii) Bureau of Indian Standards Act, 1986 (xiii) Consumer Protection Act, 1986 (xiv) Environment Protection Act (xv) Competition Act, 2002 Besides, the above legislations, the following are also form part of the legal environment of business. (i) Provisions of the Constitution: The provisions of the Articles of the Indian Constitution, particularly directive principles, rights and duties of citizens, legislative powers of the central and state government also influence the operation of business enterprises. (ii) Judicial Decisions: The judiciary has to ensure that the legislature and the government function in the interest of the public and act within the boundaries of the constitution. The various judgments given by the court in different matters relating to trade and industry also influence the business activities. (d) Technological Environment Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. The varying technological environments of different countries affect the designing of products. For example, in USA and many other countries electrical appliances are designed for 110 volts. But when these are made for India, they have to be of 220 volts. In the modern competitive age, the pace of technological changes is very fast. Hence, in order to survive and grow in the market, a business has to adopt the technological changes from time to time. It may be noted that scientific research for improvement and innovation in products and services is a regular activity in most of the big industrial organisations. Now a days infact, no firm can afford to persist with the outdated technologies. (e) Demographic Environment This refers to the size, density, distribution and growth rate of population. All these factors have a direct bearing on the demand for various goods and

services. For example a country where population rate is high and children constitute a large section of population, then there is more demand for baby products. Similarly the demand of the people of cities and towns are different than the people of rural areas. The high rise of population indicates the easy availability of labour. These encourage the business enterprises to use labour intensive techniques of production. Moreover, availability of skill labour in certain areas motivates the firms to set up their units in such area. For example, the business units from America, Canada, Australia, Germany, UK, are coming to India due to easy availability of skilled manpower. Thus, a firm that keeps a watch on the changes on the demographic front and reads them accurately will find opportunities knocking at its doorsteps. (f) Natural Environment The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. Business is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. It is always considered better to establish manufacturing unit near the sources of input. Further, governments policies to maintain ecological balance, conservation of natural resources etc. put additional responsibility on the business sector.

What Is Business Environment?

Meaning: - The term Business Environment is composed of two words Business and Environment. In simple terms, the state in which a person remains busy is known as Business. The word Business in its economic sense means human activities like production, extraction or purchase or sales of goods that are performed for earning profits.On the other hand, the word Environment refers to the aspects of surroundings. Therefore, Business Environment may be defined as a set of conditions Social, Legal, Economical, Political or Institutional that are uncontrollable in nature and affects the functioning of organization. Business Environment has two components:
1.Internal Environment 2. External Environment

Internal Environment: It includes 5 Ms i.e. man, material, money, machinery and management, usually within the control of business. Business can make changes in these factors according to the change in the functioning of enterprise.
External Environment: Those factors which are beyond the control of business enterprise are included in external environment. These factors are: Government and Legal factors, Geo-Physical Factors, Political Factors, Socio-Cultural Factors, Demo-

Graphical factors etc. It is of two Types: 1. Micro/Operating Environment 2. Macro/General Environment

Micro/Operating Environment: The environment which is close to business and affects its capacity to work is known as Micro or Operating Environment. It consists of Suppliers, Customers, Market Intermediaries, Competitors and Public. (1) Suppliers: They are the persons who supply raw material and required components to the company. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier.
(2) Customers: - Customers are regarded as the king of the market. Success of every business depends upon the level of their customers satisfaction. Types of Customers: (i) Wholesalers (ii) Retailers (iii) Industries (iv) Government and Other Institutions (v) Foreigners (3) Market Intermediaries: - They work as a link between business and final consumers. Types:(i) Middleman (ii) Marketing Agencies (iii) Financial Intermediaries (iv) Physical Intermediaries

(4) Competitors: - Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors. (5) Public: - Any group who has actual interest in business enterprise is termed as public e.g. media and local public. They may be the users or non-users of the product. Macro/General Environment: It includes factors that create opportunities and threats to business units. Following are the elements of Macro Environment:
(1) Economic Environment: - It is very complex and dynamic in nature that keeps on changing with the change in policies or political situations. It has three elements: (i) Economic Conditions of Public (ii) Economic Policies of the country (iii)Economic System (iv) Other Economic Factors: Infrastructural Facilities, Banking, Insurance companies, money markets, capital markets etc.

(2) Non-Economic Environment: - Following are included in non-economic environment:(i) Political Environment: - It affects different business units extensively. Components: (a) Political Belief of Government (b) Political Strength of the Country (c) Relation with other countries (d) Defense and Military Policies (e) Centre State Relationship in the Country (f) Thinking Opposition Parties towards Business Unit

(ii) Socio-Cultural Environment: - Influence exercised by social and cultural factors, not within the control of business, is known as Socio-Cultural Environment. These factors include: attitude of people to work, family system, caste system, religion, education, marriage etc. (iii) Technological Environment: - A systematic application of scientific knowledge to practical task is known as technology. Everyday there has been vast changes in products, services, lifestyles and living conditions, these changes must be analysed by every business unit and should adapt these changes. (iv) Natural Environment: - It includes natural resources, weather, climatic conditions, port facilities, topographical factors such as soil, sea, rivers, rainfall etc. Every business unit must look for these factors before choosing the location for their business. (v) Demographic Environment :- It is a study of perspective of population i.e. its size, standard of living, growth rate, age-sex composition, family size, income level (upper level, middle level and lower level), education level etc. Every business unit must see these features of population and recongnise their various need and produce accordingly. (vi) International Environment: - It is particularly important for industries directly depending on import or exports. The factors that affect the business are: Globalisation, Liberalisation, foreign business policies, cultural exchange. Characteristics:1. 2. 3. 4. 5. 6. 7. 8. Business environment is compound in nature. Business environment is constantly changing process. Business environment is different for different business units. It has both long term and short term impact. Unlimited influence of external environment factors. It is very uncertain. Inter-related components. It includes both internal and external environment.

GLOBALIZATION The human society around the world, over a period of time, has established greater contact, but the pace has increased rapidly since the mid 1980s.The term globalization means international integration. It includes an array of social, political and economic changes. Unimaginable progress in modes of communications, transportation and computer technology have given the process a new lease of life.The world is more interdependent now than ever before .Multinational companies manufacture products across many countries and sell to consumers across the globe. Money, technology and raw materials have broken the International barriers. Not only products and finances, but also ideas and cultures have breached the national boundaries.Laws, economies and social movements have become international in nature and not only the Globalization of the Economy but also the Globalization of Politics, Culture and Law is the order of the day. The formation of General Agreement on Tariffs and Trade (GATT), International Monetary Fund and the concept of free trade has boosted globalization. Globalization in India

In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model known as Liberalization, Privatization and Globalization in India (LPG), was to make the Indian economy one of the fastest growing economies in the world. An array of reforms was initiated with regard to industrial, trade and social sector to make the economy more competitive. The economic changes initiated have had a dramatic effect on the overall growth of the economy. It also heralded the integration of the Indian economy into the global economy. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1 billion and inflation was as high as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India. Then the following measures were taken to liberalize and globalize the economy. Steps Taken to Globalize Indian Economy Some of the steps taken to liberalize and globalize our economy were: 1. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19%. 2. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector. 3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%), defense industries (26%) etc. 4. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's. The Merits of Globalization are as follows: There is an International market for companies and for consumers there is a wider range of products to choose from. Increase in flow of investments from developed countries to developing countries, which can be used for economic reconstruction. Greater and faster flow of information between countries and greater cultural interaction has helped to overcome cultural barriers. Technological development has resulted in reverse brain drain in developing countries. The Demerits of Globalization are as follows: The outsourcing of jobs to developing countries has resulted in loss of jobs in developed countries. There is a greater threat of spread of communicable diseases. There is an underlying threat of multinational corporations with immense power ruling the globe. For smaller developing nations at the receiving end, it could indirectly lead to a subtle form of colonization. Summary India gained highly from the LPG model as its GDP increased to 9.7% in 2007-2008. In respect of market capitalization, India ranks fourth in the world. But even after globalization, condition of agriculture has not improved. The share of agriculture in the GDP is only 17%. The number of landless families has increased and farmers are still committing suicide. But seeing the positive effects of globalization, it can be said that very soon India will overcome these hurdles too and march strongly on its path of development.

THE OPPORTUNITIES AND DANGERS OF GLOBALIZATION

The global climate at the end of the twentieth century has been marked by a move away from national sovereignty and toward globalization. More and more, in the areas of industry, environmental law, trade and finance, the world is looking to global policies, networks and solutions, rather than individual state controls. This integration of national economies has both opportunities and dangers for the industrialized and the developing nations of the world. The

opportunities explain why and how the move toward globalization began, and the dangers describe the newest challenges to modern politicians, economists, environmentalists, and sociologists.The first, and primary, opportunity of globalization is free trade and the resultant effect on the global economy. Freer trade means more trade, which results in increased financial flows. As trade and financial flows increase, capital redistributes laterally and, in theory, that redistributed capital can pull impoverish countries up from the bottom. The idea of free trade is based on the writings of eighteenth century economist Adam Smith. Smith spoke of laissez-faire economics in his book The Wealth of Nations, and taught that privatized business and trade promotes more economic activity than state controlled business and thus could provide even more money from the state through the collection of income taxes (Ferraro, 294, 1998).Adam Smith was speaking, for the most part, on a national or continental level of free trade, but many have applied these same concepts to global trade. In his article, "Making it Work" (1998), Jeffery Sachs describes the importance of free trade to the development of non-industrialized countries, declaring [g]lobal capitalism genuinely is the best chance for the developing world to gain a foothold on the economic-growth ladder (3). He, and others, feels that abolishing trade barriers is the surest way of offering every nation equal opportunity for advancement.A second opportunity of globalization is the creation of transnational regulatory frameworks (TRFs). As nations have less and less control over their individual economies and industries, and the global network assumes more control, the global network must also assume more responsibility for the welfare of both the individual nations and the global community. Therefore, a sort of global socialism develops. For instance, as developing countries of Latin America became more and more indebted during the 1980s, the institution known as the International Monetary Fund (IMF) emerged as a lender of last resort, willing to bail those drowning countries out of debt in exchange for acceptance of stringent economic structural adjustments. More recently, the IMF is now supplying about 20 African nations with $3 billion in loans, intended to aid in debt relief and industrial developments. Money must flow into struggling nations, such as Africa and Latin America, if they are ever to pull themselves out of debt. Loans of such size would not likely be funded by any one individual country but are made possible through the networking effects of globalization (Lawrence, 2, 1998).A cynic may wonder why industrialized nations care enough to create organizations for the sole purpose of salvaging the credit of developing and highly indebted nations. As may be suspected, their intentions are not wholly altruistic. Because of globalization, finances of a developing country are directly tied to the finances of a fully developed country, such as the U.S. In fact, the lesser developed countries owe their loans to banks in the U.S. and Europe. If the LDCs defaulted, the financial markets of the developed world would be hit very hard, if not collapse. Also, corporations in the U.S. and Europe, such as clothing manufacturers, know that they can build factories in LDCs and have significantly less overhead and labor costs, increasing their desire to protect the economies, and their opportunities, in developing nations. It is not surprising, then, that corporate America is in favor of even further IMF-style aid to Africa, and are heavily supportive of the African Growth and Opportunity Act ("Corporation," 1, 1998). Hence, another advantage of globalization is that it requires the developed and developing countries to be intertwined, ensuring that

the former can not simply write off the latter.A last opportunity of globalization is the institution of intellectual property rights. Since the global community is becoming so much closer and integrated, it is no longer adequate to simply honor copyrights within a nationstate. Therefore, intellectual property rights have been instituted to protect copyrights worldwide. While the ability to apply such protections is a clear advantage of globalization, the need for such protections is a disadvantage of globalization. Also, while intellectual property rights are an opportunity for industrialized nations, they are a hindrance to developing countries. Those nations that developed in the years following Britains industrial revolution adopted Britains technologies at will, facilitating their own development. With todays intellectual property rights, however, currently developing countries will no longer be afforded such help and will instead need to develop their own technologies.The dangers of globalization are often tied into the opportunities of globalization; we often find that one policy that benefits one nation or social group harms another. For instance, while free trade is an opportunity for consumers to buy the best goods at the best prices, it also endangers the non-symbolic analysts (NSAs) of the nations with the highest standards of living, and hence, the highest wages and production costs. Symbolic analysts, those persons who have the ability to translate the technological languages, are often the members of industrialized society with the most vocational and economic freedom. They can work and live anywhere they wish and are unaffected by physical location of industry because they are linked by the world wide web. They are an elite minority, about one-fifth of the population here in the United States, but they have the most political clout because they possess the majority of the countrys wealth. So then, what symbolic analysts want, symbolic analysts get (Reich, 290, 1991).What the symbolic analysts want is inexpensive service of the highest quality. What symbolic analysts know is that foreign workers are often more qualified, and almost always more affordable, than American workers. The disparity between the wage demands of the American NSAs and the compensation offered by the symbolic analysts creates what has been termed a labor shortage. In reality, however, there is no labor shortage at all. As Robert Reich explains in his article, "The Politics of Secession" (1991), there are plenty of American workers who would be happy to work for a decent wage but cannot support families on the wages that immigrants will accept. Symbolic analysts prefer to hire the immigrants, who are often well trained, and, in doing so, abandon the NSAs of our country. The situation is further complicated by the fact that, once the symbolic analysts have come to rely on foreigners for their in-person services, there is less incentive to invest in training for American NSAs, further reducing their potential earnings (Reich, 289, 1991).Another opportunity of globalization that also has dangers is the destruction of trade barriers involved in the process of free trade. When the IMF provides a loan of last resort, it also institutes a stringent set of economic structural adjustments intended to boost the economy of the ailing country in the long term, even if it is painful in the short term. One such adjustment is the forced abolition of trade barriers, tariff and otherwise. The intention of such policies is to let the free market bring wealth to all nations, in a sort of lateral redistribution of capital. In the short term, however, destroying trade barriers means leaving a developing countrys infant industries unprotected in the face of international competition. This collapse of

domestic industry will inevitably counteract any intentions to increase manufactured exports. In fact, since the introduction of free trade, due to IMF policies or otherwise, many developing countries have experienced decreases in their terms of trade ("Globalization," 84, 1997).As an example of how that can happen, consider the following. In the past, developing countries modeled their trade policies after the protectionism utilized by fully industrialized nations, such as the U.S., and often used a development plan called Import Substitution Industrialization. Under such a plan, hefty tariff barriers stall manufactured imports and raw materials are heavily exported for income. Meanwhile, infant industries are being developed, which will be the eventual industrial base for the developing country. The plan worked fairly well until OPEC restricted the supply of oil, causing an oil price shock, and the developing countries suddenly found themselves with debts that they could not pay. The IMF stepped in and covered the debts, saving the nations from the economic disaster of loan default. When the IMF instituted its policies, however, the infant industries, meant to be the industrial base of the developing nation, could not compete without the protection of tariff barriers increasing the prices of manufactured imports, and they collapsed. It is yet to be seen if free trade will, in fact, pull such impoverish countries out of debt, and into prosperity, but, at least in the short term, free trade has certainly hindered independent industry in lesser developed countries.Forced movement of people, and the resultant racial tensions, can also be seen as dangers of globalization. In his article, Tucson North and South, Robert Kaplan describes the racial and economic climate if Tucson, Arizona. The city is divided into the prosperous north, inhabited by white, symbolic analysts joined to each other and the developed world by the world wide web, and the impoverish south, inhabited by socially alienated whites and immigrant Mexicans, both joined together and divided from each other by gangs. The Mexican immigrants find low paying jobs, displacing the white NSAs of Tucson who are unwilling to work for such low wages. The whites resent their resultant unemployment, and the process produces racial disharmony (Kaplan, 56, 1998).Immigration, however, does not always result in racial tensions. Kaplan also writes about Vancouver in his article entitled, "Canada: The Wild Card." In contrast with Tucson, which draws unskilled Mexican immigrants seeking low paying jobs that they could not find in their home country, Vancouver draws highly skilled foreign symbolic analysts, who are, in fact, a boon to the economy of the city. The difference is astounding. Whereas in Tucson, immigration is resented and considered a financial drain, Vancouver welcomes its mostly Asian immigrants with open arms. While in Tucson the whites and the Mexicans stay separated-by either gang signs or North/South Tucson divisions, the whites and the Asians of Vancouver easily intermingle, and frequently intermarry, without conflict (Kaplan, 52, 1998).Facilitation of the activities of Transnational Criminal Organizations (TCOs) is another danger of globalization. For instance, global financial markets allow the TCOs to move money and goods from country to country with ease, allowing them to take advantage of whatever country has the most money and the most lax law enforcement. Secondly, the porous borders that have accompanied free trade ease smuggling; high trade volumes mean less chance for suspicion, inspection, and identification of smuggled goods. Thirdly, and critically, relaxed capital flows have been vital in the facilitation of money laundering. Criminal organizations can simply recycle drug profits like a multi-

national corporation, and the money will be extremely difficult to trace in the global financial system (Castells, 191, 1998).Increased action of TCOs is a particularly dangerous effect of globalization, because TCOs work with little regard for peace, democracy, or capitalism. In fact, a TCO will routinely corrupt law enforcement, politicians and judges, and kill anyone they are not able to corrupt and who dares to stand in their way. They rely on violence and corruption to achieve a single end: profit. Often, in Latin American countries with weak political infrastructure, the TCOs have the ultimate power. TCOs stand in firm opposition to the idea of human rights, and their dictator-like regime must be brought to an end (Castells, 193, 1998). As if TCOs having power over politicians is not bad enough, globalization also allows for investors to have unchallenged power over politicians. Under the conditions of globalization, developing countries rely on the capital provided by investors to pay debts--both primary and to the IMF--and to support domestic industry. Due to the relaxed capital flows also accompanying globalization, however, investors can pull their money out just as easily as they invested it in the country. As Walter Wriston is quoted in Richard Coughlins article "The Peso Crash and the Asian Flu" (1998), Money only goes where its wanted and only stays where its well treated. (page 1). Politicians of developing countries must, therefore, consider the reaction of the investors before making any decisions concerning financial policy, creating a clear conflict of interest.A final danger of globalization is the overuse and abuse of natural resources. This danger could manifest itself in one of two ways. Firstly, while the goals of such TRFs as the IMF and the World Trade Organization is to aid development in lesser developed countries, that very development will mean increased global environmental degradation. In the long run, development means more superconsumers--people, like Americans, who consume and discard at will, just because we have the means and the stuff. In the short run, development means guiding each developing country past the inevitable stage of dirty industry. When nations are first developing, they tend to put national development before international ecology, and skip the costly measures that more industrialized countries now use to cut down on pollution. The effects are cyclical, because less environmental protections means less overhead, which, in turn leads to a cheaper product. A cheaper product will have increased sales, which leads to more (dirty) production. When industrialized nations try to prevent such products from crossing their boundaries, they are stopped short by the World Trade Organization. For instance, the U.S. wanted to prevent filthy, but inexpensive, Venezuelan oil from flooding their markets, and the Venezuelans termed the action a non-tariff trade barrier. The dispute was brought before the World Trade Organization, who sided with Venezuela, and ordered the U.S. to either buy the oil, or simply pay Venezuela the cost of the oil each year as compensation for lost sales. Decisions such as this, that place free trade above environmental common sense, are a great danger to the future of our global ecosystem (Bleifuss, 1, 1997). Secondly, when LDCs are forced to break down trade barriers in accordance with the policies of the IMF, and their domestic industries collapse, they have only the natural resources to fall back on for income. Once the countries begin to rely on a forest for a sole source of income, overharvest can be very tempting, or even unavoidable. The unfortunate irony is that not only does the world lose a valuable forest, but, through the process of overharvest, the underdeveloped country loses its only

source of income. These are the opportunities and dangers of globalization. As I look over my paper, the dangers seem to outweigh the opportunities, but this is not actually the case. While my list of dangers may be longer, things like TCO activity, racial tensions, and imbalance of investor power are issues of greater or lesser significance in each area across the globe, sort of site specific. On the other hand, opportunities like free trade and transnational regulatory frameworks are absolute necessities for all nations to grow and prosper in the twenty-first century. So, while the lists may seem lop-sided in one direction, my preference is for the other side. Globalization allows us to all work together for a mutually better future. Minimizing the dangers; maximizing the opportunities. The dangers of globalization can be minimized in a number of ways. Firstly, trade barriers could be lowered gradually in developing countries in an attempt to allow infant industries to better adjust to the international competition. The imbalance of power held by the Transnational Criminal Organizations may be deactivated by the global legalization of cocaine, reducing its value to nearly nothing. The imbalance of power held by investors may be lessened by policies that restrict the flows of money in and out of a country on a single business day. Overuse and abuse of natural resources can be reduced through the institution of rental policies under which developed nations pay for sections of a forest to remain intact, as compensation for lost income. Also, such nations could be encouraged to commence ecotourism, the system by which wealthy foreigner pay large amounts of money to visit untouched areas of third world countries, again using an intact forest for income, rather than a ravaged one. Opportunities could be maximized by creating transnational regulatory frameworks with representation of industrialized and non-industrialized countries, instead of the traditional industrialized only model. Also, the gradual destruction of tariff barriers and the environmental provisions described above could be considered opportunities of globalization as well as reduction in the dangers of globalization. C. THE CHALLENGE OF NATIONAL ECONOMIC POLICY IN AN ERA OF GLOBALIZATION Each country, based on its individual endowments and circumstances, will have to design and implement national policies in a range of areas that ensure the country takes advantage of the opportunities that globalization provides and at the same time deals with the risks that it introduces. In terms of the national economy, as Stiglitz6 points out, there are three distinct advantages: (a) The demand for a countrys product is no longer constrained by its own markets; (b) A countrys investment is no longer constrained by what it can save itself; (c) A countrys producers can have access (at a price) to the most advanced technology. Corresponding to these opportunities, some of the challenges are: (a) Lack of complete access to product markets caused by both trade barriers and hefty subsidies in developed countries on commodities of interest to agricultural producers; (b) Limited access to financial resources, and for some countries high conditionality attached to concessional resources; (c) The constraints on acquiring technology in terms of resources, both human and financial, and inadequate infrastructure. The era of globalization also brings about a closer degree of financial and economic integration between countries in an environment where shocks have become more global in nature and where a crisis in one country can easily affect others. This presents special challenges in the conduct of fiscal and monetary policies, particularly

in conditions of heightened uncertainty. It is no longer possible to formulate monetary policy independently of international and regional developments. This requires knowledge of world market conditions and continuous monitoring of financial market developments. The 1997 economic crisis highlighted the tension between achieving the benefits of market integration while minimizing the risks of market instability. Systemic risk management is becoming an integral element of the economic framework and has to reflect the broadest possible coverage of the maximum downside risks a country can face. This not only requires sound financial systems but also improving the understanding of the institutions and social and political dynamics in countries. A growing innovation in the world economy is the establishment of international standards and codes as rules of the game for all economies. Now, there are codes of good practice in monetary policy, fiscal transparency, insurance and payments systems, securities, corporate governance, accounting, statistics and bank supervision, as well as a growing array of standards in other fields. This means that there is greater scrutiny of the policies of individual countries by market participants, and policy makers have the additional burden of selling their policies to the world at large through greater transparency. The performance of economies, industries and firms is continuously compared and benchmarked across nations. This requires the harmonization of systems with internationally agreed codes and at the same time creates pressures for speedy reforms. Within a country, there is the challenge of forging liberalization policies that promote greater integration of the domestic economy into the global economy. There are pressures from trade unions, lobby groups and local businesses over the effect of these policies on jobs and the closure of local industries. These can make it politically and socially difficult to implement reforms that could benefit a country in the medium to long term. The issue of national ownership of an adjustment programme thus presents a challenge in its practical application. The responsibility for achieving the right balance and pace of adjustment lie with individual Governments, but in practice this is not simple as it appears. Building a powerful set of domestic institutions that can meet the rising demands in the race to be and remain competitive brings its own challenges. What determinants of competitiveness should a country focus on? The standard determinants of competitiveness are not only economic and technological but also include non-economic factors such as the promotion of democratic institutions, good governance and human rights. These require not only robust public systems and a vibrant private sector that can deal with sophisticated transnational companies and others in the global marketplace but also strong political and social frameworks, which take time to evolve. Without these frameworks, some countries may be trapped at the lower end of the international skills market. Such factors highlight the need for a vision in each country about its position in the dynamic global economy. To achieve this, there has to be, first, political will and good leadership. Secondly, a national consensus needs to be forged among stakeholders concerning the necessary reforms and, thirdly, appropriate institutions and policies must be put in place to meet the challenges. The rules of the game may be perceived to be unfair by some, but there are few alternatives to well-designed country policies and programmes to manage globalization. Globalization is an unstoppable phenomenon, presenting opportunities to those who are prepared and threats to those who are not. It is not easy for countries to manage globalization for their own benefit. Regional cooperation through which the countries look beyond their borders to tap and leverage others strengths could be an effective approach in this endeavour. D. THE CHALLENGES OF GLOBALIZATION:MULTILATERAL RESPONSES Globalization has become all-pervasive. It has even appeared to many to be almost a force of nature.8 Recognizing this state of affairs, the United Nations and other multilateral agencies initiated a number of international conferences at the summit or ministerial level to achieve a global consensus on issues of globalization and development and especially to ensure that, as nations and people become increasingly interconnected and interdependent, they recognize that there is a

collective responsibility to uphold the principles of human dignity, equality and equity at the global level. In addition to the Johannesburg Declaration on Sustainable Development,9 trade issues were considered in the Doha Development Agenda,10 financing for development issues in the Monterrey Consensus,11 transport transit issues in the Almaty Declaration12 and ICT issues in the Declaration of Principles of the World Summit on the Information Society. The special concerns of least developed countries were addressed in the Brussels Declaration. These documents not only spelled out the global development challenges which need to be addressed to help countries to increase the benefits they extract from globalization but also proposed plans of action for meeting the challenges. These plans gave specific roles and responsibilities to the stakeholders, especially through partnership arrangements. Stakeholders consisted of national Governments, the private sector, civil society and international and regional institutions, including international financial institutions. Particular attention was given to addressing the vulnerability of least developed and landlocked developing countries and the special structural difficulties they face in the global economy. The special problems of economies in transition were also addressed. The United Nations Millennium Declaration of 8 September 2000 sets out the convergence of views reached by 191 nations on the challenges in a range of areas including poverty, hunger, education, health and other developmental goals (for key messages from the global consensuses see box I.1).

LEGAL ENVIRONMENT The Courts:Though India has a quasi-federal structure, the judiciary is unified. Broadly, there is a three tier structure. First, each administrative district (there are over 600 districts) is headed by a District Court. Then each State has a High Court.

Since some States share the same High Court, there are 21 High Courts in India.At the apex is the Supreme Court of India situated at New Delhi. The various High Courts can have very diverse characteristics. For instance, the High Court for the small State of Sikkim has a strength of only two Judges, whereas the High Court for the State of Uttar Pradesh has about 100 Judges.The Supreme Court of India has about 25 Judges who sit in several divisions of varying strengths. Matters of fundamental significance are decided by a bench comprising of 5 Judges.Besides the broad three tier structure there are various specialized tribunals the more prominent ones being the Company Law Board; Monopolies and Restrictive Trade Practices Commission; Consumer Protection Forum; Debts Recovery Tribunal; Tax Tribunal.These Tribunals function under the supervisory jurisdiction of the High Court where they may be situated, though many of them (like the Monopolies Commission) allow an appeal directly to the Supreme Court. Judiciary:The Indian judiciary is known for its independence and extensive powers. The High Court or the Supreme Court in exercise of their Constitutionally conferred writ jurisdiction are empowered strike down legislation on the ground of unconstitutionality. They can and fairly routinely intervene with executive action as well on the ground of unreasonableness or unfairness or arbitrariness in State action.Indeed Courts can even strike down an amendment to the Constitution on the ground that it violates the basic structure of the Constitution. Besides, the High Courts and the Supreme Court have adapted an activist mantle, which goes under the name of Public Interest Litigation, whereunder they can intervene with governmental policies if it may adversely impact the public at large or the public interest is such that it requires Court intervention. The Bar:India has a unified all India Bar which means that an advocate enrolled with any State Bar can practice and appear in any court in the length and breadth of the country, including the Supreme Court of India.Foreign lawyers are not permitted to appear in courts and the entry of foreign law firms into India (for non court matters) has not yet been permitted though it is currently being debated and considered. However, they can appear in arbitrations. Court Practice And Procedure:The influence of the British Judicial System which India imbibed, continues in significant aspects. The official language for court proceedings in the High Court & the Supreme Court is English. Lawyers don a gown and a band as part of their uniform and address Judges as My Lord.The procedural law of the land as well as most commercial and corporate laws are modeled on English laws. English case law is regularly referred to and relied upon in courts.There is great emphasis on oral arguments. Almost all matters are heard extensively in open Court. Advocates are seldom restrained in oral arguments and complex hearings may well take days of arguments to conclude. Specialisation is relatively a new phenomenon and most lawyers have a wide-ranging practice. The Changing dimensions of Environmental Jurisprudence and Supreme Court of India Truth, unyielding cosmic order, consecration, Ardour and Prayer and Holy Ritual Uphold the Earth, May she the ruling Mistress of what has been and what will come to be, for us spread wide a limitless domain [Atharva Veda, 12.1.1] The message of the praise hymn to Mother Earth in the Vedas is that the earth mediates between man and the unyielding cosmic order inherent in nature. This natural bond is one of partnership and continuous renewal. So, we can infer from this ancient piece of work that humans and nature are having intimate relationship between themselves. In Ancient India, the nature was worshipped to give respect to it. The nature was enriched and clean as there was no industrialization and advancement of technology that we have today. But with the changing India, after industrial establishment in 19th century the interference

with the nature and natural resources have started. But first time with Stockholm Conference 1972, the Indian Parliament inserted Article 48-A and Article 51A (g)in 42nd Constitutional Amendment Act, made in 1976. The Indian Judiciary from 1977 changed its perspective and a new approach to remedy the problems of public at large started through introduction of PIL(Public Interest Litigation) and Judicial activism. Environmental Jurisprudence in Kelsenian Grund Norm pure theory, with common future or one world as the super most norm (Grund norm), the subordinate norms are like right to life, right to livelihood, right to clean environment, sustainable development and prevention of pollution, elimination of poverty etc. The Indian judiciary in the recent period has been continuously found engaged in creating the environmental jurisprudence full of values for the preservation and conservation of total environment. The backdrop of the environmental philosophy which the Indian environmental jurisprudence has nurtured is the Stockholm-Conference on Human Environment, 1972. Since then, India has witnessed a series of legislative measures, administrative policy decisions, amendments of the constitution and also a new interpretation of Article 21. The judiciary has played a commendable role in ecology and environmental preservation and is also taking care of the need to have development under Articles 21, 48 A and 51 A(g) of the Constitution. So this paper inquires into the development of environmental jurisprudence in India and Supreme Court of Indias changing approach from just environment concern to human rights concern. 2. Evolution of Environmental Jurisprudence in India : In India environmental law has seen considerable development in the last two decades. Most of the principles under which environmental law works in India come within this period. The development of the laws in this area has seen a considerable share of initiative by the Indian judiciary, particularly the higher judiciary, consisting of the Supreme Court of India, and the High Courts of the States. The essence of the existing law relating to the environment has developed through legislative and judicial initiative. Today, most discussions on environmentalism in our country begin with the Stockholm Conference (1972). But, some ancient texts tell us that our society paid more attention to protecting the environment than we an imagine. These texts tell us that it was the dharma of each individual in society to protect Nature, so much so that people worshipped the objects of Nature. Trees, water, land and animals had considerable importance in our ancient texts; and the Manusmriti prescribed different punishments for causing injury to plants. Kautilya is said to have gone a step further and determined punishments on the basis of the importance of a particular part of a tree. From this, what comes in front of us is that environmental management and control of pollution was not limited only to an individual or a group, but society as a whole accepted its duty to protect the environment. Environment related rights were conspicuously absent from the original version of the Constitution of India, which was prominently dominated by business and property rights. Consequently, environmental jurisprudence was also an unknown appellation for the Indian Judiciary. The 42nd Constitutional Amendment, made in1976, changed this landscape by inducting Article 48-A and Article 51A (g) into this enviromyopic document. Simultaneously, the Supreme Court of India embarked on a creative activist phase of constitutional interpretation in the aftermath of the fiasco in A.D.M. Jabalpur v Shivakant Shukla (1976) 2 SCC 521.where it found itself helpless in defending the basic civil liberties of the citizens against executive excesses. Starting from early 1980s, the Court has developed a body of green constitutional law to safeguard the citizens health from the deleterious affects of environmental degradation. In M.C. Mehta v Union of India (Oleum Gas Leakage case) (1987) 1 SCC 395, the Supreme Court propounded the standard of absolute liability for payment of compensation to those affected by the accident in case of industries engaged in hazardous or inherently dangerous activities as opposed to the prevalent notion of strict liability under the Rylands v. Fletcher standard. The Court has adopted an expanded view of life under Article 21 and enriched it to include environmental rights by reading it along with Articles 47, 48-A

and 51A(g) and declaring: Article 21 protects right to life as a fundamental right. Enjoyment of life and its attainment including their right to life with human dignity encompasses within its ambit, the protection and preservation of environment, ecological balance free from pollution of air and water, sanitation without which life cannot be enjoyed. Any contra acts or actions would cause environmental, ecological, air, water, pollution, etc. should be regarded as amounting to violation of Article 21. Both these Articles unequivocally provide for protection and improvement of the environment. Inevitably, Parliament enacted the Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, 1986. With this core group of three enactments, a modest beginning was made by Parliament. Unfortunately, soft laws were enacted (and they continue to remain so) at a time when strong legislation was critical for environmental conservation. Prior to 1980s, only the aggrieved party could go to the court and seek remedy for his grievance and any other person who was not personally affected could not do so as a proxy for the victim or the aggrieved party. 3. Mere Environmental Concern to Human Rights: By1990s, it categorically declared that issues of environment must and shall receive the highest attention from this court. Indias Green Constitution now guarantees a right to healthy environment, right to clean air, right to clean water, enjoins the State and its agencies to strictly enforce environmental laws while disclosing information in respect of decisions which affect health, life and livelihood and disallows inadequacy of funds and resources as a pretext for the evasion of obligations by the State. Significant environmental principles like polluter pays, precautionary principle, sustainable development, public trust doctrine and intergenerational equity have become entrenched in the Indian law without explicit incorporation in any legislative framework. InVellore Citizens Welfare Forum v Union of India & Ors.( 1996) 5 SCC 647, the Court employed theprecautionary principle to invent the special principle of burden of proof in environmental cases where burden as to the absence of injurious effect of the actions proposed, is placed on those who want to change the status quo viz. polluter or the industrialist. In the process, in Rural Litigation & Entitlement Kendra v State of UP(1989 Supp (1) SCC 504.), the apex Court has gone beyond the statutory texts to refer extensively to international conventions and obligations of India and even to the historical environmental values reflected in the edicts of Emperor Ashoka and verses of Atharva Veda. The Supreme Court has, in clear terms, advised the State to shed its extravagant unbridled sovereign power and to pursue a policy to maintain ecological balance and hygienic environment. The activist attitude ranges across a gamut of environmental issues viz. banning aquaculture industries in coastal areas to prevent drinking water from becoming saline, issuing directions for improving quality of air in the National Capital Territory of Delhi and protecting Taj Mahal, prohibiting cigarette smoking in public places, addressing issues of solid waste management, proscribing construction activities in the vicinity of lakes and directing the lower courts to deal strictly with environmental offences. In respect of forest governance, the Supreme Court has made an enormous contribution through the case of T.N. Godavarman Thirumulpad v. Union of India (1996,(1997) 2 SCC 267). The case was set in the backdrop of critical state of national forest cover, appalling apathy of governments towards forest management and conservation and open violations of forest legislations by illegal felling in North-Eastern States. The Supreme Court, in its interpretation of Article 21, has facilitated the emergence of the environmental jurisprudence in India. Furthermore, Article 142 afforded the Supreme Court considerable power to mould its decisions in order that complete justice could be done. As the Supreme Court is the final authority as far as matters of constitutional interpretation are concerned, it assumes a sort of primal position in the Indian environmental legal system. For example, the fundamental right contained in Article 21 is often cited as the violated right, albeit in a variety of ways. In Francis Coralie Mullin v.The Administrator, UnionTerritory of Delhi(AIR 1981 SC 746.), Bhagwati, J.,

speaking for the Supreme Court, stated that:We think that the right to life includes the right to live with human dignity and all that goes along with it, namely, the bare necessaries of life such as adequate nutrition, clothing, shelter over the head and facilities for reading, writing and expressing oneself in diverse forms, freely moving about and mixing and commingling with fellow human beings. In Rural Litigation and Entitlement Kendra v. State of Uttar Pradesh (AIR 1985 SC 652.), the Supreme Court based its five comprehensive interim orders on the judicial understanding that environmental rights were to be implied into the scope of Article 21. Thus, expanding the scope and ambit of Article 21 to cover in it the rights which are not expressly enumerated, the Supreme Court has interpreted the word life to cover in it all aspects of life which go to make a mans life meaningful, complete and worth living. It will also cover his tradition, culture, heritage and health. In M.K. Sharma v. Bharat Electric Employees Union(1987 (1) SCALE 1049), the Court directed the Bharat Electric Company to comply with safety rules strictly to prevent hardship to the employees ensuing from harmful X-ray radiation. The Court did so under the ambit of Article 21, justifying the specific order on the reason that the radiation affected the life and liberty of the employees. In Subhash Kumar v. State of Bihar (AIR 1991 SC 420 ), the Court observed that: The right to live is a fundamental right under Article 21 of the Constitution, and it includes the right of enjoyment of pollution-free water and air for full enjoyment of life. If anything endangers or impairs that quality of life in derogation of laws, a citizen has the right to have recourse to Article 32 of the Constitution... . The Supreme Court, in its interpretation of Article 21, has facilitated the emergence of an environmental jurisprudence in India, while also strengthening human rights jurisprudence. There are numerous decisions wherein the right to a clean environment, drinking water, a pollution-free atmosphere, etc. have been given the status of inalienable human rights and, therefore, fundamental rights of Indian citizens. 4 .C o n c l u s i o n: Justice P.N. Bhagawati once made an insightful observation: We need judges who are alive to the socio-economic realities of Indian life. This statement explains the gradual shift in the judicial approach while dealing with the issues of sustainable development. These new cases have been set against the backdrop of a radically different socioeconomic background of national life. The annual GDP growth rate of the Indian economy has catapulted to the levels of 8 to 9 per cent against a meager 5 to 6 per cent in the previous two decades and the annual growth rate of the industrial sector has skyrocketed from the range of 5 to 7 per cent to 11.6 per cent during the period of 2002 to 2007. Thus, industrial development has become a pressing need in the current phase of economic transformation. In such a scenario, it is impossible for the higher judiciary to remain oblivious of this critical facet of national life and therefore, there is an increased probability of a pro-development bias creeping into the judgments where courts are required to review choices made between environment and development. The Judicial Activism though in most academic dialogues criticized for its over emphasizing power but when sticking to the environmental concern, Supreme Court of India has played an important role by making all legislations active which were just a piece of soft law. This post is just to give you an idea of the amount of Bribe and corruption involved in the Indian legal system. Thirty-six per cent of Indians paid bribes to the legal system in 2006. The estimated the amount paid by Indians as bribes to the legal system at about Rs 2,630 crore (Rs 26.30 billion). The majority of the bribes went to lawyers (61 per cent) followed by court officials (29 per cent) and middlemen (five per cent).And this is just the legal system, which stands second to the Police Department. I guess the Police department bribery should be easily in the range of 4000 crores. If you take the macro view of the situation, corruption is hurting our economy more than anything else.