by Current economic issues have a strong impact on business activities. Changes in inflation, interest rates, government policies, and global conditions directly affect cost, demand, investment, and profitability. Businesses must understand these issues to survive and grow. In a group discussion, students should present facts, examples, and clear opinions in simple language.
1. Inflation and Rising Prices
Inflation increases the cost of raw materials, fuel, and wages. This raises production cost for businesses. Many Indian companies face pressure to increase prices, which may reduce demand. Small businesses suffer more because they cannot easily pass higher costs to consumers. Inflation also reduces purchasing power of people, affecting sales.
2. Interest Rate Changes
Interest rates decided by RBI affect borrowing cost. Higher interest rates increase loan cost for businesses, reducing investment and expansion. Lower interest rates encourage companies to borrow and invest. Startups and MSMEs are highly affected by interest rate changes in India.
3. Government Policies and Taxation
Government policies like GST, corporate tax, and subsidies influence business decisions. Simplification of GST has helped many businesses, but compliance cost is still high for small firms. Policy stability is important for long term business planning.
4. Unemployment and Skill Gap
High unemployment reduces consumer spending, affecting demand. At the same time, businesses face skill shortage in some sectors like technology. This mismatch affects productivity and growth of businesses in India.
5. Global Economic Conditions
Global slowdown, wars, and trade restrictions affect Indian exports and imports. Changes in crude oil prices increase transportation and production cost. Businesses dependent on foreign markets face uncertainty.
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