The following aspects of political environment may be considered as its critical elements in relation to business: 1. Political System 2. Political Processes 3. Stability of Political Structure 4. Centre-State Relations.
Element # 1. Political System:
Indian Political system is governed by the constitution of India which was moved by Pandit Jawaharlal Nehru on 9 December 1946 and was subsequently adopted by Constituent Assembly in Jan. 1947 and came into force on 26th Jan. 1950. The constitution of Indian republic is not the product of political revolution but of research of eminent people who made an effort to improve upon the existing system. President of India is the head of Indian Union and has to act in accordance with the advice of Prime Minister of India and council of ministers.
The supreme legislative body of Indian Union is the Parliament consisting of two houses:
(a) Lok Sabha (House of People) and
(b) Rajya Sabha (Council of States)
(c) Members of Lok Sabha are chosen by direct election for a term of five years.
(d) Members of Rajya Sabha are indirectly chosen and are the elected members of legislative assemblies of state.
Few members are also nominated by the president. One third members retire every year.
States have:
(a) Legislative assemblies (Vidhan Sabha).
(b) Legislative councils (Vidhan Parishad) not all states have Vidhan Parishad.
Union Territories have Administrator who is appointed by President.
Local Government in urban areas instead has elected municipal bodies.
Element # 2. Political Processes:
Election Commission of India is an independent authority which governs the formation and functioning of political parties at national regional and state levels. The law provides for registration of political parties by Election Commission. The state or government cannot give preference to one religion as against another.
The word ‘Secular’ was inserted in the Preamble by 42nd Amendment to the constitution in 1976 which means according equal encouragement to all regions. But national leaders lay emphasis on problems focused in the light of their interest during elections. Rather they have been taking up the issues like – problems of backward classes, rural upliftment, alleviation of poverty etc. Problems of constituency of leaders become more important to focus during election campaign. This has led to no single party having clear majority. This will not only lead to political instability but will also have serious implications on the business and thus on nation.
Element # 3. Stability of the Political Structure:
Balance between executive, legislation and judiciary can lead to stable political structure. In India, ministries departments, secretariats and offices have executive power at centre and state. Comptroller and Auditor General (CAG) are appointed by president and have to report on account of Union and States to the President and respective Governors. Local leadership at times leads to political instability as a result of their vested interests. One such instability has resulted in reorganization of states by bringing out amendments in constitution. One result of such reorganization is Uttaranchal, Jharkhand and Chhattisgarh.
Element # 4. Centre-State Relations:
To avoid conflict between Union and federating states the constitution has provided for three fold distribution of power; i.e. – Union, state and concurrent.
Only central government can make policies on the subjects included in ‘Union’ list. Only state government has power to make policies on the subjects included in ‘State’ list. But both centre and state governments can make policies on subjects in ‘concurrent’ list. President, rule can be imposed under Article 356 and it also provides for dissolution of state assembly in case of failure of constitutional machinery in the states. The constitution also specifies centre state relation with respect to – (a) Distribution of financial powers between centre and state and (b) Mechanism of resource transfer from centre to states.