Unit 3: Socio-cultural & technological environment

Critical elements: demographics (age, gender, population growth, urbanisation), values and beliefs, lifestyle, education, language and religion, family structure and attitudes to work and consumption.

Social responsibility is a business's obligation to act in the interests of society — owners, employees, customers, community, government and the environment. Business ethics is the application of moral principles (honesty, fairness, integrity) to business decisions. Corporate Social Responsibility (CSR) under Section 135, Companies Act 2013: companies with net worth ≥ ₹500 crore, turnover ≥ ₹1,000 crore or net profit ≥ ₹5 crore must spend at least 2% of average net profit of the last three years on CSR activities listed in Schedule VII (education, health, environment, rural development and more).

After independence, public sector enterprises (PSEs) led industrialisation in heavy industry, infrastructure and banking. Since 1991 their role has changed: disinvestment, greater autonomy (Maharatna, Navratna and Miniratna status), competition with private firms and a focus on efficiency and profitability.

Relevance of the public sector today

• Strategic sectors: defence, atomic energy, railways, space and mining need public control.
• Infrastructure and balanced regional growth: power, roads, steel plants in backward regions.
• Social objectives: affordable services (public sector banks in rural areas, LPG for the poor under Ujjwala).
• Countervailing power: prevents private monopolies; stabilises prices (FCI, oil marketing companies).
• Resource mobilisation: dividends and disinvestment proceeds fund the budget.

Problems of public enterprises

• Low returns on investment and losses in several units.
• Political interference and lack of autonomy.
• Over-staffing and slow decision-making.
• Under-utilisation of capacity and outdated technology.

Public sector reforms

• Memorandum of Understanding (MoU) system: annual performance targets agreed between the PSE and its ministry.
• Bank mergers (2019–20): ten public sector banks merged into four, reducing PSBs to twelve.

Technology changes products, processes and business models: automation, digital payments (UPI), e-commerce, AI, cloud computing and data analytics. Businesses must invest in R&D, adopt new technology quickly and manage risks such as cyber-security and obsolescence.