Every country’s economy is dependent upon the type of business activities being carried out in the country. But business or financial institutions we mean to say that it is a social process wherein individuals carry on common activities making their contribution to the country’s economy and at the same time living on the profit earned in business.
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Business plays a special role in the countries with free market economies and where free industrial enterprise is permissible. In olden days the policy of “Laissez fair” prevailed (i.e. the let alone principle in government), and at that time businessmen were free to run their business in whatever way they liked. Even the business of agriculture was simple as landlordism enabled Zamindars to exploit the labour of the individual farmers for their personal benefits and there was no check upon their selfish business activities.
Since the advent of industrialization in many western countries, large number of workers had to be brought together to run the machines to get large-scale production, the processes of political and economic institution underwent rapid transformation. The labourers who were being exploited started rebellion and formed associations and unions to assert their rights. The concept of welfare state, the socialism and the dignity of the individual rose to accelerate the eradication of such institutions as slavery, landlordism and the like.
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With the advent of these social changes states started taking interest in proper regulation of business and industries and tried to reconcile the interests of different constituents—farmers, industrialist, workers etc. The employers were made to provide a certain amount of minimum facilities to the employees e.g. the fixation of working hours and provision of proper working conditions. The establishment of international organization during the 20th century—the League of Nations and the United Nations, together with their specialized agencies including International Labour Organization—brought forth new principles of social behavior by businessmen over the world.
Satisfied workers are great asset to the employer and to the nation. It is a great source of profit for business in the long run. The main motive, i.e. the in any business should not be secured at the cost of any of the obligations enjoyed by the employers, but it should be designed to bring about good relationship with the worker.
The economy in the modern society comprises of public sector and private sector. The private sector is now under obligation to manage its affair more respectably to survive. The main aim of the private sector which is pervading all over is to make healthy contribution to the national economy and the concept of private profit has been given a secondary place and first priority is given to the welfare of masses.
Keeping in mind the large population of India, the plea for nationalized industry and agriculture is not possible. Therefore everybody has been emphasizing the need for small-scale industries. Large-scale industries are proposed to be set up in public sector as the state is expected to look after the welfare of employees, while in the private sector less attention is paid on the welfare of the workers as these are working with the sole motive of profit making.