The term responsibility, accountability, obligation or duty is all used interchangeably in the context of relations between Government and business.

Responsibilities of Business towards Government:

The Government has certain definite expectation from business.

The business houses are expected to fulfill the following responsibilities:

1. Regular Payment of Taxes:


Taxes are a major source of revenue for the Government. It is the responsibility of every businessman to pay regular taxes on sales, inputs and income. Moreover, it is the duty of the businessman, as an employer, to deduct the income tax from the salaries of the employees and remit the same to the government treasury.

2. Voluntary Programmes:

Another expectation of the Government from the business is that the business firms should cooperate with Government agencies on voluntary basis in connection with various programmes.

Such as:


(i) Sponsoring social welfare programmes

(ii) Cultural growth

(iii) Environmental preservation

(iv) Promoting education


(v) Population control measures

(vi) Assistance in connection with drought relief etc.

Business does all this under the name of social responsibility.

3. Providing Information:


It is another responsibility of the business houses to give feedback information to the Government on the decisions taken by the political leaders. Business has necessary knowledge and experience. They can, therefore, place before the decision makers the facts and problems and argue for the modification or changes. This can be done by them individually or collectively.

4. Government Contracts:

Due to privatisation of the economy a number of Government contracts are executed by private business houses. Many business houses submit the tenders. It is the responsibility of the business houses to carry out the projects according to required specifications and standards.

5. Providing Service to the Government:


Sometimes, some influential and competent businessmen are included in the Advisory boards constituted by the Government. Some businessmen are appointed as members of the delegations who go abroad for exploring trade and industry prospectus.

6. Corporate Contributions to Political Activities:

The business houses are involved in the political activities in the following ways:

(a) Making monetary contributions to political parties particularly at the time of elections.


(b) To contest elections as independents or on party tickets.

(c) Through lobbying, which refers to the behaviour after the election and is concerned with securing legislation in favour of business.

It is the responsibility of the business houses to make sure that their political involvement provides an additional safeguard against the authoritarian potential of a mass society.

Responsibilities of Government towards Business:

The business has its own expectations from the Government.


Specifically, the expectations of the business or the responsibilities of the Government towards business are as follows:

1. Political Institutions:

(i) Government is responsible for preparing the laws which make the business system function smoothly. In these we include various economic and business laws.

(ii) It is the responsibility of the Government to provide for the implementation of the laws.

(iii) Further, it is the responsibilities of the Government to provide a proper judicial system for settling the disputes between business firms, individuals or Government agencies.

2. Provision of a Peaceful Atmosphere:


Government has the responsibility of maintaining law and order situation in the country and to provide protection to persons and their property. No successful business can be carried on in the absence of a peaceful atmosphere.

3. Provision of a System of Money and Credit:

The Government has to provide for a system of money and credit by means of which business transactions can be effected. Further, it is the responsibilities of the Government to regulate money and credit and to protect the money value of the rupee in terms of other currencies.

4. Balanced Development & Growth:

It is the responsibility of the Government to make sure that there is balanced regional development, full employment and a stable economy. Government has the resources and capabilities for all this; the only requirement is optimum utilisation of resources.

5. Provision of a Basic Infrastructure:


It is the responsibility of the Government to provide a basic infrastructure to the business this includes provision of banking, finance, transportation, power, trained personnel, warehousing and the other civil amenities.

6. Provision of Information:

It is the responsibility of the central, state and local Governments to provide information, which is useful to the businessman in conducting their business activities. This information may be about economic and business activity in general, specific lines of business, scientific and technological developments and many other things of interest to business houses.

7. To Assist Small Scale Industries:

The Government has special responsibility towards small scale industries because these industries generally face problems relating to finance, marketing, technical know-how and infrastructure. It is the responsibility of the Government to provide these facilities and to encourage small scale sector.

8. Transfer of Technology:


Another responsibility of the Government is that whatever discoveries are made by the Government owned research institutions should be transferred to private industry so that these can be used for commercial production.

9. Competition with Private Sector:

Government should compete with the private business firms for the purpose of ensuring healthy competition, improvement in the quality and regulating the prices.

10. Licensing and Inspections:

Government agencies should inspect the private business houses to ensure quality and to prohibit the sale of substandard goods. Moreover the Government should issue licenses to competent business establishments, so that they may carry on different and useful business activities.

11. Protection from Foreign Competition:


Government should encourage the development of home industries by providing them various subsidies and incentives. Moreover, measures like Tariffs and Quotas should be used by the Government to protect business from foreign competition.

To summarise we can say that the business should have complete faith in the ideologies of the Government. Similarly, the Government should have no inherent distrust against business in the private sector. The need of the hour is that the gap between the Government and business should be removed. There should be a spirit of partnership not one of reluctant association. We should learn a lesson from Japan where the relationship between Government and business is so close that the entire working of the Japanese economy is sometimes called “Japan Incorporated.”