The Impact of Government Policies on Indian Businesses

The Current State of Affairs

India’s economy is one of the fastest-growing in the world, and the country is home to around 1.3 billion people. The government has always attempted to create an environment that is conducive to business growth, and a number of policies have been introduced over the last few years with the explicit aim of improving the business climate. However, many experts argue that the government’s policies have not provided enough support to small and medium-sized enterprises and that these policies have only benefitted large corporations. It is important to examine the impact of government policies on Indian businesses to ensure that India’s economy continues to grow sustainably. Continue expanding your knowledge on the subject by exploring this meticulously chosen external site., discover new perspectives and additional information to enhance your knowledge of the subject.

The Impact of Demonetisation

Demonetisation, or the banning of high-value currency notes, was a major policy intervention that affected Indian businesses of all sizes. The purpose of demonetisation was to tackle corruption, money laundering and tax evasion by cracking down on businesses that deal in cash transactions. However, the move had a severe impact on small businesses, especially those that relied on cash transactions to survive. Many small businesses struggled to keep their doors open, and the Indian economy suffered a slowdown as a result.

The Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a comprehensive tax reform that was introduced by the Indian government in 2017. The GST replaced all indirect taxes levied on goods and services by the Indian government and aimed to simplify tax payment and collection processes. While the GST has been welcomed by many businesses, especially large corporations, small and medium-sized enterprises have struggled to adapt to the new business environment. These businesses lacked the resources to comply with the new tax regime and faced a number of tax-related challenges as a result.

Insolvency and Bankruptcy Code

The Insolvency and Bankruptcy Code (IBC) was introduced in India in 2016 with the aim of providing a simple and swift framework for the resolution of bankrupt companies. The IBC has made it easier for businesses to exit unprofitable ventures and has encouraged the growth of new businesses. The code has also made it easier for foreign investors to invest in India, as it provides for better protection of their investments. However, the IBC has faced some resistance from Indian businesses, as it has made it more difficult for them to borrow money from banks. Some businesses have complained that the IBC has made it harder for them to access credit, which is essential for their operations. If you wish to expand your knowledge further on the subject, don’t miss this carefully selected external resource we’ve prepared to complement your reading. Click now.


The Indian government has introduced a range of policies over the last few years aimed at improving the business climate in the country. While some of these policies have had positive impacts, others have had adverse effects, particularly on small and medium-sized enterprises. It is important that the government continues to monitor the impact of its policies and take corrective measures as needed. The government must strive to create an environment that supports all businesses, regardless of their size, to ensure that India’s economy continues to grow in a sustainable and inclusive manner.

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