Economic Environment and Policy-

Session-1: Course Outline

Prof. Tarun Das, Ph.D.

Prof. Tarun Das, IILM EEP-1 Course Outline 1

 Economic Environment and Policy
Course Outline
Prof. Tarun Das
Contents
1. Profile of Resource Person
2. Course Objectives, Learning
Outcome and Pedagogy
3. Course Outline
4. Course Modules, Sessions and
Topics
5. Assessment Criteria
6. An Introduction to Macroeconomics
Prof. Tarun Das, IILM EEP-1 Course Outline 2
1.1 Resource Person- Prof. Tarun Das
• Has 38 years experience for development
management. Worked in last 20 years as:
1. Adviser (Modeling), Planning Commission, Govt.
of India, New Delhi, 1987-1988.
2. Economic Adviser, Min of Finance, India, 1989-
Feb 2006.
3. Professor (Public Policy), IILM, March 2006-May
2007.
4. Asian Development Bank Strategic Planning
Expert, Ministry of Finance, Govt. of Mongolia,
Ulaanbaatar, June 2007- June 2008.
5. Consultant, Commonwealth Secretariat, London,
July - August 2008.
6. World Bank Consultant to Uzbekistan, Tashkent,
Sep-Oct 2008.

Prof. Tarun Das, IILM EEP-1 Course Outline 3

1.2 Resource Person- Prof. Tarun Das
• Worked as Consultant to the:
World Bank, ADB, GDN, IMF, ILO, UNDP,
UN Economic & Social Council for Asia & Pacific,
UN Conference for Trade and Development,
UN Institute for Training and Research,
UN Statistical Institute for Asia and Pacific,
UN Economic Commission for Africa.
• Worked in 17 countries:
Cambodia, Ethiopia, Gambia, India, Indonesia, Japan,
Lao PDR, Malaysia, Mongolia, Nepal, Philippines,
Samoa, Senegal, Switzerland, Thailand, UK, and USA.
• Attended conferences in 10 countries:
Bangladesh, Belgium, China, France, Germany, Ireland,
Malaysia, Morocco, Singapore, UAE.

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1.3 Resource Person- Prof. Tarun Das
• Research/Teaching Interest: Public Policy,
Econometrics, Research Methodology, Economic
Environment and Reforms, Poverty, Inequality,
Public Debt and External Debt
• Possesses diversity in skills in Teaching,
Training, Research, Policy Planning and Modeling.
Published books and papers on reforms, fiscal
policies, performance and program budgeting,
transport modeling, public debt, external debt,
poverty, inequality, FDI, privatisation, technology
transfer etc..
• Qualifications: MA in Econ. (Gold Medalist),
Calcutta University, 1969.
-Ph.D. in Econ, as Commonwealth Scholar,
East Anglia Univ., England, U.K., 1977.

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 2.1 Course Objective
• The objective of this course is to
facilitate the learning of macro business
environment for informed decision
making.
• The focus of the course is on holistic
understanding of the functioning of the
economy and putting business in
broader macroeconomic framework .
• More emphasis will be laid on
understanding of basic concepts,
methodology, techniques, their uses and
limitations, rather than formal proofs
and derivation of formula.
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 2.2 Learning Outcome
At the end of the course students will have:
• Comprehensive knowledge of the macro-economic
framework, national income and its components,
key macro-economic variables, concepts, and tools
for effective business planning and decision
making.
• Comprehensive understanding of the Indian and
global public policies, economic environment and
institutions, which affect corporate planning, good
governance and business prospects.
• Practical experiences of team work, group
responsibility and effective network.

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 2.3 Pedagogy
1. Teaching techniques will consist of formal lectures,
case studies and discussion sessions.

2. Selected case studies will be given so as to help

students to relate theoretical concepts with real life
situations in economic analysis, policy formulation
and planning.

3. Students are also required to prepare group project

reports on topical issues relating to economic
environment and policy and present the group
project reports in the class.

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 2.4 Pedagogy
4. Students will be provided with course material
well in advance. To make classroom
presentations by the teacher more meaningful
and effective, students are required to come
prepared and collect related information and data
from journals and websites, and participate
actively in classroom sessions.
5. In order to learn leadership, teamwork and
networking with each other, students are
encouraged to participate actively in group
discussions and preparation of project reports.

Prof. Tarun Das, IILM EEP-1 Course Outline 9

 3.1 Course Outline:
A quote from “Alice in Wonderland’”
“Would you tell me please, which way I ought to
go from here?” asked Alice.
“That depends a great deal on where you want
to get to,” said the cat.
“I don’t much care where ….,” said Alice.
“Then it does not matter which way you go,” said
the cat.
….. “Alice in Wonderland”, Lewis B. Carroll.
_____________________________________
Eventually Alice realized that it matters a great
deal to know “where to go” and “how to get
there”. The same is true today for any branch
of Economics.

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 3.2 Introduction to the Course-
Economic Environment and Policy
falls under the broad head of
Macroeconomics

“The master economist must be a

mathematician, historian, statesman,
philosopher. He must understand
symbols and speak in words. He must
study the present in the light of the past
for the purposes of the future.”
So said John Maynard Keynes,
regarded as the Father of
Macroeconomics.
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 3.3 Micro Economics
• Deals with allocation of resources in a
market economy
• Allocation of resources is, in fact, explained
in terms of prices of goods and prices of
factors of production

Micro-Economic Theory
Product Factor Pricing Theory of
Pricing (Theory of Economic
Distribution) Welfare

Theory of (Welfare Economics)

Production & Wages Interest
Cost (Labor) (Capital)

Theory of Rent Profits

Demand (Land) (Entrepre
neur)
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 3.4 Macro Economics
– Deals with the analysis of economy as a national
or aggregate level, such as national income,
output, employment, consumption, savings,
investment, inflation, money supply, international
trade, balance of payments etc.
– In the words of Kenneth E. Boulding
“Macroeconomics deals not with individual
quantities, but with aggregates of these
quantitities, not with individual incomes but with
national income, not with individual prices but
with price levels, not with individual output but
with national output.”
– Gardner Ackley says “Macroeconomics deals with
economic affairs at large. It concerns the overall
dimensions of economic life. It studies the
character of forests independently of trees which
compose it.”

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 3.5 Basic Macroeconomic Balance
Equations
Y=C+I+X–M (1)
Y=C+S (2)
Y = Wages+ Rent+ Interest+ Profits (3)
Where, Y = Income, C = Consumption
S = Savings, I = Investment,
X = Exports, M = Imports
Macroeconomics is the study of the behavior
of these components and the factors which
determine them.
Factors include inflation, interest rate,
exchange rate, employment etc. and public
policies and structural reforms.

Prof. Tarun Das, IILM EEP-1 Course Outline 14

 3.6 Macro Economics

Macro-Economic Theory

Theory of Theory of General Macro Theory Theory of

Income & Price Level & of Distribution Economic
Employment Inflation (Relative Growth
Factor Shares)
(Development
Economics)
Theory of Theory of
Consumpti Investment
on

Theory of Fluctuations
(Business Cycles)

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 3.7 Economic Environment
• Economic environment is the most
significant component of the business
environment. It affects the success and
failures, and the survival of a company.
Economic environment comprises 3 broad
categories:
(1) General economic conditions in terms of
GDP, per capita income, inflation, trade,
employment, poverty and inequality etc.
(2) Industrial conditions: Industrial output,
profits, employment, labor relations etc.
(3) Supply of resources – land, labor and
capital, machinery and management.

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 4.1 Modules, Sessions, and Topics
Session-1: Introduction to the Course
• About the course
• Readings
• Learning approaches
• Learning expectations
• Evaluation criteria
• How to earn good credit in this course?
Sessions 2-3 Module I: Introduction to
Macroeconomic Environment and Systems.
• Macroeconomic factors influencing business
• Brief Introduction to Economic Systems – Capitalism,
Socialism, Mixed Economy, Market Friendly Approach
• Brief Overview of Economic Planning in India
• Understanding Economic Reforms

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 4.2 Modules, Sessions, and Topics
Sessions 4-6
Macroeconomic framework in the context of Keynesian Model
Module II: Basic Macroeconomic Framework
• Circular flow of income, GDP, GNP, NDP, NNP etc.
• Open versus Closed Economy
• Keynesian Model
• Consumption – MPC, MPS, Multiplier
• Investment function, COR and Accelerator
• Business Cycles
Sessions 7-9
Budget, Inflation, Fiscal and monetary policies
Module III: Monetary and Fiscal Policies
• Inflation
• Role of RBI
• Monetary Policy in India
• Banking Sector Reforms
• The Union Budget
• Fiscal, revenue, and primary deficits
• Fiscal Policies

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 4.3 Modules, Sessions, and Topics
Sessions 10-12: Industrial scenario and policies.
Module IV: Industrial Policy and regulation
• Growth, problems and policy issues
• Recent changes in Industrial Policy
• Public versus private sector
• Major industries in competitive environment: Textile,
Automobile; FMCG; Electronics
• Competing in the new economic environment

Sessions 13-14: Review of Modules I to IV:

What did you we learn?
Sessions 15-17: Role of service sectors
Module V: Services Sector
• Growth, problems and policy issues
• Emerging sectors – finance, telecom and retail

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 4.4 Modules, Sessions, and Topics

Session 18-19: Dynamics of rural and agriculture business

Module VI: Understanding Rural Business
• Agriculture in the Indian economy
• Public/private initiatives to stimulate the rural
economy
• Agriculture related industries – food processing, biotechnology

Sessions 20-21: Review of Modules I to IV:

What did you we learn?
Session 22-24: External sector and balance of payments
Module VII: External Sector
• Exports/Imports and Trade Policy
• Capital flows
• Balance of payments
• Exchange rate
• WTO/other trading agreements

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 4.5 Essential References
Books
Essential Text Book:
Justin Paul, Business Environment – Text and Cases, Tata McGraw Hill

Essential Reference
• Economic Survey 2007-08, Ministry of Finance, Govt of
India.
• Reserve Bank of India- Annual Report 2008, RBI, Mumbai.
• Economic Times and Economic & Political Weekly

Additional References
• Francis Cherunilam: Business Environment-Text & Cases,
Himalaya Publishing House.
• Bimal Jalan- India’s Economic Policy: Preparing for the
Twenty First Century, Viking/ Penguin, 1997.
• T.N. Srinivasan- Eight Lectures on India’s Economic
Reforms, Oxford University Press.
• Ernst and Young- Doing Business in India, Ernst & Young
Private Ltd.
• Uma Kapila: Understanding the Problems of Indian
Economy, Academic Foundation

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 4.6 Additional References:
Publications by Professor Tarun Das
1. Economic Reforms in India- Rationale, Scope, Progress and
Unfinished Agenda, pp.1-80, Bank of Maharashtra, Planning
Dept, Pune, Feb 2003.
2. Preparation of Indices for Services Production and Prices, jointly
with A. Saha, R. Dasgupta and R. Parmar, pp1-250, National
Institute for Banking and Management (NIBM), Pune, India,
Jan 2003.
3. Implications of Globalization on Industrial Diversification in Asia,
pp.ix+1-86, UN ESCAP, Bangkok, UN Publications Sales
No.E.02.II.F.52, December 2001.
4. Foreign Investment- Technology Transfer- and Growth Nexus in
Asian economies, pp.1-158, UN ESCAP, United Nations,
Bangkok, Oct 1997.
5. Policies and Strategies for Promoting Private Sector’s Role in
Industrial and Technological Development in Asia, pp.1-171,
ST/ESCAP/1696, UN, New York, 1996.
6. Official Economic statistics- Part-1 on Government Finance
Statistics and Balance of Payments Statistics, pp.1-70, Part-
2 on Monetary and Financial statistics, UN Statistical
Institute for Asia and Pacific, Chiba, Japan, Aug 2007.

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 4.7 Additional References
Publications by Professor Tarun Das
7. Governance of Public Debt- International Experiences and
Best Practices, pp.1-44, Best Practices series No.10, UNITAR,
Geneva, 2006.
8. Financing International Cooperation behind National Borders-
a Case Study for India, pp.1-46, Office of Development
Studies, UNDP, New York. March 2006.
9. General Agreement on Trade in Services – Implications for the
Indian financial sector, pp.6-14, Bima Vidya, MDC, Mumbai,
July 2003.
10. Fiscal Policies for Management of External Capital Flows, pp.
194-207, in Corporate External Debt Management, edited by
Jawahar Mulraj, CRISIL, Bombay, Dec 1999.
11. Macro-economic Framework and Foreign Investment in India,
WG on Investment and Financial Flows, pp.1-75,
TD/B/WG.1/Misc.3/ Add.3, UNCTAD, Geneva, 1993.
12. Structural Reforms and Stabilization Policies in India –
Rationale and Medium Term Outlook, pp.20-56, in Economic
Liberalization and its Impact, edited by SP Gupta, Macmillan
India Limited, Delhi, 1993.

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 4.8 References of study materials
1. Rakesh Basant, Corporate Response to
Economic Reforms, EPW, March 4, 2000
2. Swaminathan A Aiyar, Times of India.
3. ICFAI Centre for Management Research, The
Indian Economy: Dealing with inflation
4. Pattnaik and Sanantaraya, Indian Experience of
Inflation, EPW, Jan. 28, 2006
5. Varsha Chitale, Budget Basics: How the books
are (not) balanced, rediff.com article
6. M H Balasubrahmanya, India’s Industrial Policy in
the Pre-Liberalization and Liberalization Periods:
A Macro Analysis, Indian Institute of Science

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 4.9 References of study materials
7. James Gordon and Poonam Gupta,
Understanding India’s Services Revolution, IMF
Working Paper WP/04/171
8. Kuttayan Annamalai and Sachin Rao, What
Works: ITC’s E-Choupal and Profitable Rural
Transformation, World Resources Institute
9. ICFAI Centre for Management Research, The
Indian Rupee-US Dollar Exchange Rate: The
Economic Impact of a Strengthening Currency
10. US International Commission, The Emergence of
India’s Pharmaceutical Industry and Implications
for US Generic Drug Market, Office of Economics
Working Paper No. 2007-05-A

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 4.10 Reference Journals and
Websites
Journals / Magazines / Newspapers
• Economic and Political Weekly
• The Economist
• Outlook Business
• Business Today
• The Economic Times
Important Websites:
• www.nationmaster.com
• www.nic.in
• www.ciionline.org
• www.indiabudget.nic.in
• www.finmin.nic.in
• www.ficci.com
• www.planningcommission.nic.in

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 5.1 Evaluation Criteria
Sl. Components Weights Week
No. (%)
1 Mid-Term Test 20 5-6

2 Group Project/ 20 7-8

Assignment
3 End-Term Test 60

Total 100

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 5.2 Evaluation Parameters
• Evaluation Parameters include
submission and presentation of Group
Project/Assignment, and completing
Mid-Term and End-Term Tests.

• It is necessary to follow the exact time

schedules for preparation and
submission of group
project/assignment as has been
indicated by the course coordinators.

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 5.3 Group Project and Presentation
• Group project/ assignment shall be comprehensive in nature.
The topic of the project/assignment shall be chosen by the
group and finalize with the course teacher by the end of sixth
week of teaching.
• The group shall be decided in consultation with the course
teacher. The credit shall be given to the analytical writing and
ability to relate with business decisions by picking up real
time situation.

• It is mandatory that the entire class is present during the

group presentation. The presentation shall be of 15-20
minutes for each group with a maximum of two presenters.
Use of PPT/ OHP is essential.
• Credit shall be given for structured presentation, analytical
content and ability to respond to queries. Course teacher
may call for group viva-voce instead of presentation if deem
fit.

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5.4 Mid Term and End Term Test
Mid-Term Test
• Mid-term test shall comprise of
objective and short answer
questions. The test shall be of one
hour duration. The test shall be
based broadly on the syllabus
covered till mid-term teaching.

End-Term Test
• This would be a two-hour open-book
examination.

Prof. Tarun Das, IILM EEP-1 Course Outline 30

 6.1 Preparation for the course
As regards preparation for the course,
in fact for any course, let me remind
you of an age-old Chinese saying:

“The best way to complete a work is to

start. Thereafter, it doest not matter at
what speed you go or if you stop for a
while for taking rest. The only condition
is that you should not leave the work in
between. Continue to work until you
finish it.”

Prof. Tarun Das, IILM EEP-1 Course Outline 31

 Thank you
Have a Good Day

Prof. Tarun Das, IILM EEP-1 Course Outline 32