Security Concerns in E-Commerce and Their Solutions

 Q. Explain security concerns in E-Commerce with solutions. 

Ans. Essential security requirement for safe electronic payments are: 

1. Confidentially: Information should be protected from eyes of unauthorized internal users,external hackers and from being intercepted during transmission on communication networks by making it unintelligible to the attacker. 

2. Integrity: Ensuring that information will not be accidentally and maliciously altered or destroyed during transmission. On retrieval or receipt at the other end of a communication network the Information should appear exactly as was stored or sent. It should be possible to generate an alert on any modification, addition or deletion to the original content. 

3. Availability: The Information that is being stored or transmitted across communication networks should be available whenever required and to whatever extend as desired within pre-established time constraints.

4. Authenticity: Authenticity is a method to verify the buyer’s identity before payment is authorized. It should be possible to prevent any person or object from masquerading as some other person or object.  When a message is received it should therefore be possible to verify whether it has indeed been sent by the person or object ciming to be the originator.

5. Non-Repudiability: It is the protection against customer’s denial of orders placed and against merchant’s denial of payment mode. After sending/ authorizing a message, the sender should not be able to, at a later date, deny having done so. Similarly, the recipient of a message should not be able to deny receipt at a later date.

6. Encryption: Encryption is a process of making messages indecipherable except by those who have an authorized decryption key.

7. Auditability: Audit data must be recorded in such a way that all specified confidentiality and integrity requirements are met. 

Security Schemes (or Security Solution): Main security schemes for electronic payment systems are :

1. Encryption 

2. Digital Signature 

3. Security Certificates

1. Encryption: 

Control against Network Threats (Encryption): An effective and practical way to safeguard data transmitted over networks is by encryption. The process required an encryption device (key) for converting the original message into a code, as well as decryption device (key) for translating the code back into recognizable text. In business data processing, this can be accomplished by using specialized computer software. There are two types of encryption:

(i) Symmetric encryption or secret key cryptography: Secret key encryption is beased on a single key. In this scheme, the same key is used by a sender (for encryption) and a receiver (for decryption). The most widely accepted algorithm for secret key encryption is the Data Encryption Standard (DES). Essentially, therefore, for every period of partners engaging in secure communications, a new key has to be generated and securely maintained. 

(ii) Asymmetric encryption or public key cryptography: Public key cryptosystems are built around the possession of a pair of keys - a public key and a private key by each entity washing to engaged in secure communications. While, as the name suggests, the public key is known to everyone, the private private key is known only the owner. The algorithm used to generate these keys is such that if either of these keys is used to encrypt a message, only the corresponding key in the key pair will be able to decrypt it. The most popular algorithm with public key cryptography is the RSA (Rivest, Shamir and Adelman) algorithm. This algorithm has never been broken by hackers so it is seen as the safest encription method known to date. This scheme is used to provide both the services of confidentiality and authentication. RSA algorithm is usually used to transmit the secret key of DES algorith because DES algorithm is more efficient and faster in handling encryption and decryption. 

2. Digital Signatures: The digital signatures are a means of ensuring authentication of electronic information. Digital signature is an electronic signature whose authenticity is guaranteed through encryption and a password.

The digital signature technology involves:

(i) Private Key: A unique combination known only do the signer. It is a used to encrypt the message. 

(ii) Message Digest: The encrypted message that is created with the help of private key. 

(iii) Public Key: A code sent to the receiver separately to enable the decryption of the message digest. It is also available on the website of the certification authority.

In this scheme, a message is encrypted with the sender’s private key to generate the ‘signature’. The message is then sent to the destination along with the signature. The recipient decrypts the signature using the sender’s public key, and if the result matches with the copy of the message received, the recipient can be sure that the message was sent by the claimed originator and that the message has not been modified during transmission, since only the originator is in possession of the corresponding encryption key. 

The RSA algorithm is widely used to implement digital signatures. The other popular algorithm is the Digital Signature Algorithm (DSA) developed by the US National Institute of Standards and Technology. 

3. Security Certificates: Just as a passport is a universal way to establish your identity and gain entry to another country, a digital or security certificate provides identification in the electronic world. Certificate authorities (CAs) are organizations that issue security certificates. Much like the role of the passport office, the role of the CA is to validate ate the certificate holder’s identity and to “sign” the certificate so that it cannot be forged or tampered with. Once a CA has signed a certificate, the holder can present the certificate to people, websites, and network resources. 

A certificate is a unique digital ID that can be used to verify the identity of an individual. The certificate always includes a public key, the name of the entity it identifies, an expiration date, the name of the certificate authority (CA) that issued the certificate.

These certificates use public key cryptography to sign and authenticate signatures and are protect protected by public and private key pairs linked by cryptographic algorithms. These keys have the ability to encrypt and decrypt information. The digital signature component of a security certificate is your electronic identity card. The digital signature tells the recipient that the information actually came from you and hasn not been forged or tampered with.

Business Cycle: Meaning and Phases of a Business Cycle

Q. What is a Business Cycle ? Describe various phases of a Business Cycle. 

Ans. Meaning of Business Cycle: Every country witnesses boom and depression periodically. Depression is characterised by falling production, falling prices, and rise in unemployment. On the other hand, boom is characterised by rising production, rising prices and high employment percentage. These changes of boom and depression are cyclical in form. Hence, these are called Trade or Business Cycles. Rhythmic fluctuations taking place in an economy, at intervals, in the form of boom and depression are called Trade or Business Cycles.

In the words of Lord Keynes, “A business cycle is composed of periods of good trade characterised by rising prices and low unemployment percentage alternating with periods of bad trade characterised by falling prices and high unemployment percentage.”

According to Anatol Murad, “Business Cycles are alternations of prosperity and depression.”

Phases of Business Cycle: According to Prof. Schumpeter a business cycle can have four phases:

(1) Expansion or Boom,

(2) Recession, 

(3) Depression or Trough or Contraction, and

(4) Recovery.

The following figure illustrate all the four phases or stages of business cycles:

● (1) Expansion or Boom: This phase of the business cycle represents the best stage of prosperity. The objective of the national economic policy of each country is to attain this stage. In this phase hectic economic activities go on and factors of production are put to optimum use. The main characteristics of this phase are:

(i) Income or production is maximum. 

(ii) The economy reaches full employment by removing unemployment.

(iii) Prices rise very high.

(iv) Wages, rates of interest, rent and taxes increase. But increase in all these is less than increase in prices. Thus, real wages do not rise much.

(v) Because of relatively more increase in prices than cost of production, profits rise very high.

(vi) Rise in profits and possibility of their remaining high, lead to rise in the prices of shares. As a result, expectations of profits rise further. 

(vii) Under condition of prosperity, today's an entrepreneurs become optimist. All kinds of products and speculative activities grow. As a result, there is more investment.

(viii) Bank banks pursue liberal credit policy leading to more investment in machines, factory buildings, etc. It results in more productivity.

(ix) Under condition of prosperity, producers expand economic activities by stimulating demand for consumption goods and rise in price level. Explain expenditure of the consumers rise and so also demand.

(x) Under condition of prosperity, the process of expansion continues to be cumulative and self-sustained till the economy reaches the highest level of production, called boom. It is the situation of over full employment and inflation.

● (2) Recession: Under the phase of prosperity, the entrepreneurs make investments in certain ventures which do not prove to be profitable. Their optimism gives way to pessimism. Investivment shows signs of decline. Many enterprises are closed down. Unemployment spreads and income of the people falls. As a matter of fact, beyond the stage of full employment, annie increase in investment is followed by increase in interest, wages and other costs. Consequently, prices rise sharply causing fall in demand. Falling demand obliges the firms to sell their stocks at reduced prices. This paves the way for the recession. In this phase there is decline in economic activities. The main to main features of this phase are under.

(i) There is fall in income and output.

(ii) Workers are rendered unemployed.

(iii) Prices begin to fall.

(iv) Wages fall.

(v) Profits fall. There is no new borrowing despite fall in the rate of interest.

(vi) There is contradiction of bank credit.

(vii) Fall in investment sets in motion the reverse action of the multiplier. Consequently, income falls many times more than the decline in investment.

(viii) Demand of the consumers for various goods fall. 

(ix) There is a sharp decline in the stocks of goods. 

(x) There is a feeling of doubt and fear among the people. They turn pessimistic. Share prices fall.

● (3) Depression or Contraction: Once the process of recession starts, it becomes almost difficult to stop the rot. It goes on gathering momentum and ends hopeless depression. Consequently, economic activities are faced with depression or contraction. Level of output and employment is extremely low. There is heavy fall in prices and wages. Prices of goods fall much more than wages and interest, resulting into heavy losses to the entrepreneurs and traders. Workers are the hit adversely because of widespread unemployment. Production and distribution systems of the economy go out of gear. Heavy fall in profits serves as a disincentive to any new investment. Although rate of interest falls, yet no new investment takes place as marginal efficiency of capital falls more than proportionate fall in rate of interest. 

Under depression, prices of raw materials fall more than the prices of finished products. Economic condition of farmers and producers of raw material grows worse than that of the traders and producers of finished goods. Because of the reverse action of the multiplier and the accelerator, there is heavy fall in income. Share prices fall rapidly. Many indian industries are ruined. Eighth every mversously affects the entire economy. Thus, under depression, all economic factors like income, output, employment, prices, profit, interest, wages, demand etc. have a tendency to contract. Salient features of this phase are as follows:

(i) Level of output and income is low.

(ii) Unemployment increases.

(iii) Wages, interest and other costs decline.

(iv) Price level falls.

(v) Volume of the profits falls sharply. Hence, despite fall in the rate of interest, inducement to invest very low.

(vi) Cash reserves with the bank pile up and demand for credit falls. 

(vii) Old and worn-out machines are not replaced. Hence, demand for capital gods falls.

(viii) Demand for consumer goods falls.

(ix) There is an all-round decline in investment , causing reverse action of multipliers and accelerator.

(x) People grow pessimist. It affects economy adversely. 

● (4) Recovery: It is worth noting that depression phase cannot last for ever. During the phase of depression the entrepreneurs do not even replace machines and other capital goods. Production falls considerably. Stocks of goods are at their lowest. Even during the phase of depression a situation does arise wherein shortage of goods is experienced. Need for replacement of machines become so imperative that the entrepreneurs are obliged to buy new machines to replace old and worn out ones. It results into more demand for capital goods. Investment in capital goods industries increased. As a result of it, interaction of multiplier and the accelerator comes into play and there is increase in income. Demand for goods rises. There is increase in output and employment. Thus, the economy gradually moves from depression to recovery. The wave of recovery once initiated begins to feed up itself. The main features of this phase are as follows:

(i) Replacement investment results into increase and income output. 

(ii) Employment increases.

(iii) Demand for consumption and production good rises.

(iv) Prices begin to look up.

(v) There are more profits.

(vi) Costs increase relatively less.

(vii) Investment increases.

(viii) Demand for bank loans and advances increases.

(ix) Pessimism gives place to optimism.

Table. Features of Different Phases of Business Cycles 

 

Feature	Expansion or Boom	Recession	Depression	Recovery
1.  Employment	Increases	Suddenly falls	Very Low	Slowly rises
2. Output	Increases	Falls	Falls very low	Slowly rises
3. Wages	Rise	Fall	Fall very low	Begin to rise
4. Prices	Rise	Fall sharply	Fall very low	Begin to rise
5. Interest	High	Begins to fall	Very low	Begins to rise
6. Bank Credit	Expands	Suddenly falls	Falls low	Begins to expand
7. Cost of Production	Rises	Falls	Falls very low	Begins to rise
8. Stocks	Large	Fall	Fall very low	Begins to rise
9. Feeling	Optimism	Doubt and Fear	Pessimism	Optimism

Phases of Business Cycle 

Meaning and components of group dynamics.

 Q. Explain the meaning and components of group dynamics.

Ans. Meaning of Group Dynamics: Group Dynamics contains two terms – Group and Dynamics. Group is basically collectivity of two or more persons. Dynamics comes from greek word meaning force. Thus, group dynamic is concerned with the interaction of forces among group members in a social situation. Analysis of forces within a group is known as group dynamics.

It refers to the forces operating in groups, which have an impact on the behaviour of group members. Group dynamics refers to those forces operating or present in the group and which influence the behaviour of the members of the group. These forces chiefly are the group composition, group norms, group leadership, group cohesiveness, etc. The study of group dynamics provides information to the managers about the way to control the behaviour of the members of the group. 

The social process by which people interact with each other in small groups is called group dynamics.  Group dynamics refers to the understanding of behavior of people in groups that are trying to solve a problem on making a decision. 

Thus, Group Dynamics refers to - 1. Social process by which people interact in a group environment. 2. The attitudinal and behavioural characteristics of a group.

Components of Group Dynamics: The major components of group dynamics are the following: 

1. Group Composition: Group Composition has an important part to play in influencing the group dynamics. Group composition depends on the extent of commonalty of the members of the group. The members of a group are either homogeneous or a heterogeneous. In the homogenous group the members have similar qualities. This similarity can be (i) Demographic, e.g. caste, sex, education, experience, age, income, culture, etc. (ii) personality (iii) abilities and (iv) opinions. In the heterogeneous group the members differ on these points.

Group Composition is important because it affects the behaviour of the members of the group and the results.  The members of both the types of groups in respect of behaviour and possible results are as follows:

(a) Homogeneous Group: The members of homogenous group have more cohesiveness. Consequently, there are less conflicts among them. Since there is no variety in their qualities, theses members are often unsuccessful in handling adverse situations

(b) Heterogeneous Group: The members of such a group have different qualities. Consequently, there is lack of cohesiveness among them. Because of this there are usually conflicts. The members have different specialities which help them to face adverse situation successfully.

In this way, we can see that the group composition affects the behaviour of the group members.

2. Group Norms: Norms refers to those standards which guide the behaviour of the members of the group. Group norms are the acceptable standards of behaviour within a group that are shared by the members of the group. Norms defines the boundaries of the acceptable and unacceptable behaviour.

Some rules are required for the successful running of the activities of a group. These rules are known as norms in a group. Normames norms are those standards which guide the behaviour of the members of the group. For example, the order of a manager to the effect that nobody will use telephone for personal use during the working hours in the office, gradually becomes a norm. These norms guide the members as to how to conduct themselves in a particular situation – what is to be done and what is not to be done. Group norms are normally unwritten (oral). They are brought to the notice of the members and after that they are bound to comply with them. Those members who ignore these norms have to face boycott from the group for which there is a provision to this effect. 

Features of Group Norms: The chief features of the group norms are as follows:

(i) Group norms guide the behaviour of the members of the group.

(ii) Group norms clearly specify the duties of the members of the group. 

(iii) Group norms can both be written and oral.

(iv) Group norms are laid down for important function.

(v) Those memers members who failed to observe the group norms can be boycotted.

(vi) There is a variety among group norms of different groups.

(vii) Group norms generally take shape gradually but if needed they can be formed quickly.

(viii) Group norms do not apply to all the members in equal measure, e.g., the members occupying high ranks may not always like to follow them as it is not necessary to do so.

They are typically created in order to –

(i) Facilitate group survival.

(ii) Make behaviour more predictable.

(iii) Avoid embarrassing situations.

(iv) express the values of the group.

Why People Conform to Group Norms? 

The members of the group conform to group norms because of the following reasons:

(i) Proper Role Pay: Every member of the group has to perform a special role. Those members who observe group norms can perform their role more effectively. Norms guide them in their action.

(ii) Self Interest: Every member of the group has to keep in mind the interest of the group. By conforming the group norms he can protect his personal interest along with the interests of the group.

(iii) Group Control: The group has a claim on the members of the group. They are afraid lest they should be boycotted by the group. That is  why they observe the group norms.

(iv) Rewards: In some of the groups, it is already known to the members that those who observe the group norms will be rewarded. They observe norms in order to get rewarded.

(v) Goodwill: Some groups enjoy a special goodwill among the people. In order to maintain this goodwill, the members have to observe the norms compulsorily.

3. Group Leadership: Group leadership is another element that influences the behaviour of the members.  Every group has a leader. The style of working of the leader has an effect on the behavior of the members of the group. He/She gives an identity to the group as a functioning unit. Groups can both be formal and informal. 

In the formal group, leaders are appointed. Their ranks, powers and responsibilities are formally laid down (explained). The chief function of these leaders is to order and direct the members in the work of achieving the objectives of the organization. On the contrary, leaders are not appointed in the informal group but are accepted because of their personality or impression. Such leaders help the members of the group in giving expression to their thoughts and helping them in getting their demands highlighted. There can be more than one leader at a time in a group.

4. Group Cohesiveness: Group Cohesiveness refers to the closeness or similarity of attitude, behaviour and performance of the members of the group. Group Cohesiveness is an indicator of the unity of the members of the group. If this cohesiveness is found in ample measure in a group then, (i) the members are cooperative, (ii) unanimity of opinion is immediately established on any point, (iii) mambers like one another, (iv) members observe group norms, (v) members perform effectively. This situation compels the members to stick to the group. On the contrary, if the cohesiveness is little short,  then (i) the members lack the spirit of cooperation, (ii) there are differences of opinion which delays decisions, (iii) members do not like one another, (iv) members ignored group norms and cannot work effectively. This situation compels the members to drift away from the group. 

Features of a Cohesive Group: A cohesive group has the following features:

(i) All the members have positive attitude towards the group objectives and group norms.

(ii) The number of the number of the members of the group is less.

(iii) Members are more loyal to the group.

(iv) Members often meet regularly at short interval.

(v) There is free and effective communication among the members.

(vi) Group of a successful history.

(vii) Members of the group feel secure and satisfied.

(viii) Members are not willing to leave the group under any condition.

(ix) Members take the final decision quickly.

(x) The goodwill of the group is greeter as compared to the goodwill of other groups. 

5. Group Status: Group status refers to the position of rank of a person in a group which he gets because of his personal qualities. A person is recognised by his status and gets motivated by high rank. The behaviour of a motivated person is different to others. In nutshell, we can say that because of the differences in the ranks, people behave differently. In an organisation there are two types of status available:

(a) Formal Status: Various posts are created in every organisation, e.g. General Manager, Functional Manager, Supervisor, etc. People get a particular post in accordance with their education, training and experience. The salary, other benefits, respect, etc. are connected with the position that one holds. One gets encouraged on seeing these things and tries to work better.

(b) Informal Status: In another organization along with the formal status one gets informal status also. Informal status is obtained with the help of experience, personality, age, sex, etc. As accepting somebody as the leader is an example an informal status.

6. Group Roles: The role means the expected behaviour of the holder of a special position in a social unit. Here a social unit can be a family, a club or an educational institution. 

The role of the members of the group is cleared in formal group. Every member remains conscious of his role. Every effort is made so that nobody can raise a finger on their role (i.e., point out any weakness or deficiency in their role). This feeling or thinking is reflected in their behaviour. On the other hand, the role of the members in an informal group is not clear. It is not explicitly laid down as to what member is expected to do in a particular situation. This is not decided at any point of time. This unclear on unspecified nature of the role of the members affect them negatively. It is, therefore, clear that greater clarity about the role of the members would give them great satisfaction and they will work in a better way for the group. 

7. Group Think: In the group, all the members have different types of information. Everything is discussed about various kinds of information. With the help of such discussion, many alternatives emerged as a possible solution to the problem. Then all the alternatives are analysed and some final decision is arrived at.  Since all the members have participated in the process of arriving at the final decision, such a decision is happily implemented. On the contrary, on some occasion, time and resources are visting in arriving at group decisions. Unnecessary controversy takes place. Suggestions includes by politics are advanced. Individual interests outweigh group interests. In the absence of individual responsibility in such decisions risk factor is ignored. In this context, it has been said that responsibility of many means nobody's responsibility. This reduces the effectiveness of the group decisions. Even then if the negative points in the group decisions are controlled a little, they can prove to be better than individual decisions.

Or

Group Think is the psychological phenomenon that occurs within a group of people which desires for a harmony or confirmity in the group results in an irational or dysfunctional decision making outcome. It occurs when members of a group exert pressure on each other to come to consensus in a decision making. It results in –

1. Careless judgements.

2. Unrealistic appraisals of alternative course of actions.

3. A lack of reality testing.

Critically Evaluate Globalisation of Indian Economy

 Q. Critically evaluate globalisation of Indian economy.

Ans. Globalisation means linking the economy of a country with the economies of other countries by means of free trade, free mobility of capital and labour, etc. It also means inviting multinational corporations to invest in India. As a result, there will be unrestricted flow of goods and services, capital, capital, people, technology and expertise among different countries of the world. There will be increased cooperation of Indian economy with different economies across the world. Capital and technology will flow from the developed countries of the world towards India. The ultimate aim of globalisation is to look upon the world as a ‘global village’. 

Evaluation: It is very necessary to have knowledge of effects of globalization in order to make its evaluation. Globalisation has both positive and negative effects on Indian economy. 

(A) Positive Effects of Globalisation:

1. Increase in Foreign Trade: As a result of foreign trade policies adopted in the weak of globalisation, India’s share in the world trade has gone up. 

2. Increase in Foreign Investment: As a consequence of globalisation, there has been a considerable increase in foreign direct investment as well as foreign portfolio investment. 

(a) Foreign Direct Investment (FDI): Foreign direct investment is made by foreign companies in order to establish wholly owned companies in another country and to manage them or to purchase shares of companies in another country for the purpose of managing such companies. The main characteristic of foreign direct investment is that native companies are managed by the foreign companies or new companies are set up in india by foreign companies. In this type of investment, it is the foreign investors who takes risk and is solely responsible for profit/loss of such company. 

(b) Portfolio Investment: Under this type of investment, foreign companies/foreign institutional investors (FIIs) buy shares/debentures of native companies, however management and control remain vested with the native/domestic companies themselves. 

Because of significant increase in foreign investment, India began to experience improvement in foreign exchange reserves. 

3. Increase in Foreign Collaborations: Globalisation has promoted collaboration of foreign companies with many Indian companies. These collaboration agreements can be technical collaboration, financial collaboration or both. In financial collaboration, foreign companies provide financial resources, while in technical collaboration modern foreign technology is provided by foreign companies. Foreign companies are setting up many enterprises in India in collaboration with Indian companies. 

4. Increase in Foreign Exchange Reserves: As a result of globalisation of Indian economy, foreign exchange reserves have also increased substantially. 

5. Expansion of Market: Globalisation has expanded the size of market. It has permitted Indian business units to expand their business in the whole world. Now multinational corporations have no national boundaries. Indian companies like Infosys, Tata Consultancy, Wipro, Tata Steel, Reliance, etc. are doing their business in many countries.

6. Technological Development: Globalisation has enabled the inflow of foreign technology, which is very superior and advanced. Now Indian business units use this modern technology.

7. Brand Development: Globalisation has promoted the use of branded goods. Now not only durable goods are branded but products like garments, juices, snacks, food grains, etc., are also branded. Foreign brands are very popular among Indian consumers. Brand development has  led to quality improvement.

8. Development of Service Sector: Globalisation has helped in development of Indian capital market. Now many foreign investors invest in Indian capital market. There has been substantial increase in inflow of foreign direct investment and portfolio investment. 

9. Development of Service Sector: Globalisation has helped in growth of service sector. With the entry of foreign countries, tremendous improvement has been witnessed in various services like telecommunication, insurance, banking, etc. 

10. Increase in Employment: Globalisation has promoted employment opportunities. Foreign companies are establishing their production and trading units in India. It has increased employment opportunities for Indians, e.g. many Indians are presently employed in foreign insurance companies, mobile companies, etc. 

11. Reduction of Brain Drain: As a result of globalisation, many multinational corporations have set up their business units in India. These MNCs provide attractive salary package and good working conditions to efficient, skilled Indian engineers, managers, professionals, etc. Now Indians get good employment opportunities in India. It has resulted in reduction in brain drain. 

12. Improvement in Standard of Living: As a result of globalisation, the standard of living of Indian population. Now Indians get better quality goods at low prices.  Globalisation has resulted in reduction of prices of many products particularly electronic items like television, AC, mobile phones, refrigerator, etc. Now middle-income group also uses these luxury products, bids were earlier used by rich class only.

(B) Negative Effects of Globalisation:

1. Ĺoss to Domestic Industries: As a consequence of globalisation, foreign competition has increased in india. Now Indian industrial units have to compete with foreign industrial units. Because of better quality and low cost of foreign goods, many industrial units have failed to face competition and have been closed. Small and cottage industries are worst hit by this increased competition. 

2. Unemployment: Foreign companies operating in India use capital intensive technology. Even some Indian companies use imported capital intensive technology. With the increasing use of computers and automatic machines, employment avenues are reduced.

3. Exploitation of Labour: Globalisation is exploiting unskilled workers by giving lower wages, less job security, long working hours. Labourers have to work even in these conditions because bad job and less wages are better than no jobs.

4. Demonstration Effect: With the easy availability of foreign goods, demonstration effect has increased among Indians. Now many consumers are using luxury products by imitating others. It has promoted tendency of wasteful consumption in India. This increasing wasteful expenditure has in turn reduced saving and capital information.

5. Increase in Inequalities: Globalisation has increased inequalities in our economy.  Globalisation has beneftted MNCs and big industrial units but small and cottage industries are adversely hit by it. It has increased income inequalities in India.

6. Dominance of Foreign Institutions: With globalisation domination of foreign institutions has increased in India. Globalisation has helped foreign companies in enlarging their market share.  For example, in Indian cold drink market, a large share is controlled by Pepsi and Coca-Cola, which are foreign companies.

7. Bad Effect on Culture and Value System: Many global companies sell such products as distort our culture and value system. The vulgar advertisements shown by some MNCs pollute the thinking of young generation. Some MNCs indulge in unethical and corrupt practices for their self-interest. These companies do not hesitate to offer bribe to high officials of host nation to allow them to enter into such transactions which only serve their own interest.

8. Less Entry in Strategic Areas: The global companies mostly take entry in consumer goods like readymade garments, cosmetics, processed foods, soft drinks, toothpaste, etc. These goods do not play vital role in the economic development of any nation. The global companies do not invest in strategic areas like power sector, steel industry, fertilizers, etc. The entry in risky projects is also very limited. Similarly, there is insufficient entry of global companies in the area of technology and capital goods. [Strategic means important or essential]

9. Problem of Brain Drain: The global companies recruit qualified and skilled engineers, technicians, experts in the host nations and after sometime, these experts are posted abroad in their foreign subsidiaries/head office. That way, global companies drain talented persons of host nation to other nations.

10. Production of Prohibited Goods: In order to get more profits, global companies indulge in production of even those goods which are harmful for the consumers. Many a times, the global companies indulge in production of such medicines and other products, the production of which is otherwise banned in their parent nation. Thus, global companies earn profit even at the cost of health of consumers. 

11. Political Interference: The global companies prove detrimental to the economic and political freedom of host countries. These companies interfere in the politics of host nation. These global companies make all efforts to bring that political party to power in the host country which is favourably inclined to them.

12. Unbalanced Regional Development: Global companies set up industries in developed cities and towns where infrastructural facilities are easily available and not in backward areas. It leads to further development of already developed areas and backward areas continued to remain backward. As a result, regional disparities increase.

13. Tax Evasion: The host country imposes corporation tax on the income of companies. To avoid this tax, global companies reduce their profits by adopting transfer pricing methods. Under this method, global companies buy intermediate goods from their subsidiaries abroad at high price and thus reduce their local profits. Similarly, global companies export their products to their subsidiaries abroad at lower prices, so as to under-value the exports and thereby show lower local profits. In other words, global companies over-invoice the imports and under-invoice the exports, so as to show less profits. That way through manipulation of bills, global companies evade tax.