Business, Government and Society – Learning Notes 2

Name: DIVYANSHU SHEKHAR Roll No.: 1810021

Date: 16/2/2019

The Corporations have constantly been evolving, adapting to the surrounding environment to
become more efficient and effective at the same time. Since the era of proprietorships and
partnerships in the Pre-Industrialization age to the Modern Corporations that we know of today,
there has been great advancements in the way corporations interact with surroundings and add to
the growth of the economy.
Post the Great Depression a partnership was established between the Government and the
corporations. The Government bodies took control of the power so as to promote overall
development and reduce disparity. The Government also appropriated various measures to
ensure that a conducive ecosystem is established for the economy to flourish. The government
also understood its role to help to rectify the failures in the market.
The primary functions of the government in an economy include providing public goods,
enforcing competition and also internalizing externalities. The government thus maintains steady
growth in the economy, maintains price stability and also works to provide more employment
opportunities. In order to ensure that the fruits of development are equally distributed among the
public, the government has to take up various infeasible businesses and take decisions based on
longer horizons.
One of the main resources required for any business is land. All the sectors like housing,
agriculture, energy, transportation, economic development have demand on land and affect how
it is utilized. Government being the major shareholder of the land asset is responsible for the
effective utilization of the asset. The government also many a times acquire land from the small
landholders to aggregate a large size of land which it again utilizes to meet the various land
demands. Not only landholders, there are various instances that the government has to acquire
land from the illegal squatters who have been holding illegal claims over a long period.
When acquiring land from the small landholders, the government must be sensitive towards
providing appropriate gratification as there is a sense of loss among the displaced. The
acquisition of land leads to displacement, loss of livelihood, and many other intangible losses for
the landowner which is difficult to compensate. Thus, the government is responsible for fairly
compensating the displaced landowners.
In the case of the development of SEZ, the government should have appropriated measures to
create a positive dialogue so as to profit the casualty as well as the corporations. Rather than
creating boundaries, the government should promote inclusion which will condense the sense of
loss for the casualties. Also, it is the responsibility of the corporation to understand how it is
relevant towards the immediate community and not just focus on maximizing the residual claims.
When dealing with the illegal landholders or the squatters, the government again has to be
sensitive in compensating them fairly as it is the moral responsibility of the government to look
at the public good. Thus, in the case of Dharavi, the government understands that the illegal
landholders facing with inadequate employment opportunities had to resort to Urban primacy.
So, the government should look forward to not only provide fair compensation but also to
provide more employment opportunities, competitive markets across all the states to promote
overall development. But there is a major obstacle in evenly establishing a conducive ecosystem
across all the states. For the successful establishment of ecosystem, we have to look at the supply
side of the support services which enable its formation. Also, the likelihood of success is majorly
dependent on the level of detailing that has undergone while formulating the subplans of
implementation. Moreover, the time horizon for the implementation is generally elongated as it
takes a very long time to achieve an equilibrium wherein all the support services as well as the
society and the regional culture matures.
I believe that not providing adequate compensation can have adverse effects for the economy as
well as the government. The present methods for determining the casualties and implementing
the compensations have been ad hoc and lack transparency. There is no participation of the
casualties in the whole process of transition. These issues if not handled carefully can escalate
quickly into widespread political as well as social tensions and finally lead to an arrest in the
economic growth.
The corporations while establishing the business units in any nation have to function under the
rules imposed on them. The rules are imposed to protect the interests of the factors of production,
namely labor and capital. The Govt. has to ensure that the corporations comply with the rules and
add to the GDP of the nation. The corporations also are responsible for judiciously using the
offered resources and not exploiting the resources. The Asian countries being developing
economies present great opportunities for the firms to cash in on low labor wages and increase
the residual claims, but it should be the responsibility of the firms to comply with ethical
practices.
According to the renowned economists Claudia Goldin & Lawrence Katz, the increasing
disparity among the income of the various sections of the society has become a major source of
concern which they suggested can only be reversed by putting more of society’s resources into
Education. Thus, the Government needs to push more resources towards developing a robust
educational system as well as a skill development system which can enable an inclusive growth.
I believe that the govt. can achieve this through partnerships with the private sectors and can
further analyze a mechanism to provide incentives to the partners as well as impart education to
the lower socio-economic sections at a subsidized rate.