Economic Environment in India and SWOT Analysis

Economic environment consists of various macro level factors, which have an association with the means of production and distribution of wealth and affect the country’s business and industry. Various aspects of economic environment affecting business are:
•    economic structure,
•    economic planning,
•    economic policies,
•    economic indices and
•    infrastructural factors.
The three economic structures are capitalist, socialist and mixed economy system. Economic policies like monetary, industrial and fiscal policy creates opportunities for businesses. Economic indices like national income, per capita income and value of exports and imports helps in policy formulation of the nation. In 1991 government of India formulated and implemented the new industrial policy.
The new industrial policy advocated:
•    liberalisation which is freeing the Indian industries from the hassles of licensing system,
•    privatisation which is reducing the role of public sector and
•    globalisation which is encouraging foreign private participation in India’s industrial development.
The major impact on the Indian business and industry are increasing competition, more demanding customers, rapidly changing technological environment, necessity for change, market orientation, etc. SWOT analysis refers to a strategic planning method used to evaluate the strengths, weaknesses/limitations, opportunities and threats involved in a project or a business venture. Strength refers to inherent capacities which an enterprise can use to gain over its competitors, weakness are limitations creating a strategic disadvantage relative to others, opportunities are favorable conditions which help the enterprise to improve its performance and threats are unfavorable conditions which can cause damage or risk to the enterprise.


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