Bandodkar PRTC - 1 · Dr. Suchitra Naik – I/c Principal, Joshi Bedekar College Dr. Vivek Sharma...

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Governing Body

Dr. V. V. Bedekar Chairman, Vidya Prasarak Mandal (Thane)

Shri Uttam Joshi Secretary, Vidya Prasarak Mandal (Thane)

Shri M. Y. Gokhale Treasurer, Vidya Prasarak Mandal (Thane)

Dr. Guruprasad Murthy Director General, Dr. V. N. Bedekar Institute of Management Studies

Dr. S. Siddhan Business Advisor, Arch Pharmalabs Ltd.

Dr. Vishnu Kanhere Chartered Accountant & Management Consultant

Shri G. G. Sathe Chartered Accountant

Shri P. S. Agwan Thane Small Scale Industries Association House

Shri Subhash Dixit Ex-President (HR-Planning), Bharati Shipyard Pvt. Ltd.

Dr. Nitin Joshi Director, Dr. V. N. Bedekar Institute of Management Studies

Published by:

Vidya Prasarak Mandal’s Dr. V.N. Bedekar Institute of Management Studies“Jnanadweepa”, Chendani, Bunder Road,Thane (W) - 400 601.MaharashtraTel.: 91-22-2536 4492Telefax: 91-22-2544 6554Email: [email protected]: www.vnbrims.org / www.vpmthane.org

Printed atPerfect Prints22, Jyoti Industrial Estate,Nooribaba Darga Road, Thane - 400 601.Tel.: 2534 1291 / 2541 3546Email: [email protected]

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Publication Ethics Policy

Srujan adopts the highest international ethics policy and standards of publishing as followed by AmericanPsychological Association (APA), Publication Manual. Srujan expects articles which are original bonafideresearch, duly checked for plagiarism in accordance with the AntiPlagiarism.NET software. Srujan stronglycondemns any form of malpractices like fabrication or falsification of data, duplication or excessive fragmentationin accordance with the APA norms. The maximum permitted reliance on others’ work is restricted to 20%.

Srujan also expects that authors must accept responsibility for their papers sent for publication. Further,authors have to base their research on “objective interpretations of evidence and unbiased interpretations offacts” in accordance with the APA Publication Manual, 6th Edition, P17.

Authors sending their papers to Srujan for publication need to validate and authenticate for the originalityof their work as well as vouchsafe for their paper being free from plagiarism apart from the declaration that thepaper sent has not been published before in, or submitted to, any other journal.

The Editorial Board of Srujan assures all contributors of scientific conduct and protection of their intellectualcapital against any abuse or misuse to advance the research interest of any other individual or group withoutthe prior written consent of the author.

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Aims and Scope

Srujan is an annual multidisciplinary management journal, published with an aim to provide a print andonline platform for management researchers, students and academicians to publish their original works andrefer for knowledge enrichment. It is the official journal of Dr. V N Bedekar Institute of Management Studies.“Srujan” means Creation. This journal was conceptualized to promote research and development in managementeducation and become a medium through which innovative ideas evolve. These ideas can then catalyze thecreation of a body of a multi-disciplinary and global management thought, which can be useful to industry,government, teaching fraternity and the student world.

Srujan has adopted a multi-disciplinary approach to highlight the developments, innovations and intellectualresearch works in the extensive field of traditional and modern management, business theory and businessmodels, intellectual contributions in management excellence and social and economic practices that contributeto business and societal growth.

Srujan considers original research works, surveys, opinions, abstracts, case-studies and essays thatdeliberate on ideas, suggestions and works that have global, national, or regional perspective.

Substantial research content in the specific verticals include, but not limited to, domains of finance, marketing,operations management, information systems, human resource, organizational theory and behavior, designthinking, project management, quality management, sustainable business management etc. will be consideredfor publication.

The journal is always open to ideas and suggestions in terms of content and publication. The ultimate goalis to increase knowledge, experience and the outcome and thereby a strong emphasis is laid on the quality andauthenticity of the content.

Open Access

‘Dr. V N Brims Srujan’ (ISSN 2456-4079 Dr. VN Brims Srujan) is an open access journal which meansthat all content is freely available without charge to the user or his/her institution. Users are allowed to read,download, copy, distribute, print, search, or link to the full texts of the articles in this journal without askingprior permission from the publisher or the author under the terms of Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License.

Publication fees

‘Dr. V N Brims Srujan’ (ISSN 2456-4079 Dr. VN Brims Srujan) charges a fee of Rs. 1000/ for articlepublication in the journal.

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SRUJAN

Editorial panel

Chief Editor

Dr. Guruprasad Murthy – Director General, Dr. V. N. Bedekar Institute of Management Studies

Associate Editors

Dr. Nitin Joshi – Director, Dr. V. N. Bedekar Institute of Management Studies

Dr. Sudhakar Agarkar – Professor, Dr. V. N. Bedekar Institute of Management Studies

Editorial Advisory Board

Dr. Madhuri Pejaver – Principal, B. N. Bandodkar College of Science

Dr. Avinash Chincholkar – Principal, VPM’s Maharshi Parshuram College of Engineering

Dr. Sunil Karve – Principal, Karmaveer Bhaurao Patil College of Arts Commerce & Science

Dr. Dilip Nayak – Principal, V.P.M’s Polytechnic

Dr. H.S. Cheema – CEO, Excelssior Education Society

Dr. Suchitra Naik – I/c Principal, Joshi Bedekar College

Dr. Vivek Sharma – Assistant Professor, Institute of Management Studies, Devi Ahilya University

Dr. Abhijeet Chaterjee – Head, Department of Management, Shri Vaishnav Institute of Management

Dr. Bharat Kulkarni – Chairman, Indo-Global SME Chamber

Dr. Yogesh Funde – Assistant Professor, Anil Surendra Modi School of Commerce, NMIMS University

Dr. Sushil Kumar Pare – Associate Professor, Thakur Institute of Management Studies & Research

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From the Management’s Desk…

SRUJAN 2019 aims to provide readers with quality peer-reviewed scholarly articles on a wide variety of multi-disciplinaryissues in the field of management. The seventeen research papers and articles of SRUJAN 2019 are contributions fromacademia, industry and business from different parts of the world viz. the US, UK and UAE, Japan and India (Chandigarh,Pune, Mumbai).

It is a practice of DR VN BRIMS to present its Journal – SRUJAN on the day of the International Conference.

The theme of the Conference for 2019 is “Global Economic Scenario: Impact on India” - Dr. VN Brims Srujan: Vol 4-2019 bearing ISSN number ISSN 2456–4079.

The international conference of DR VN BRIMS for 2019 on the theme mentioned above aims at elucidating the changesin the global economy in terms of growth, emerging markets, global power shifts and the implications of these world eventsfor India. The conference will be marked with insights, considerations, discussions and debates among national andinternational domain experts especially in international economics and policy making along with the managerial issueshovering around economic management of national and global economies. The main purpose of the conference is tounderstand the impact of the changing c global economic scenario on India.

Prevalent economic models that form the basis for a growth strategy are increasingly being cross-questioned, as towhether these models can still be positively applied to achieve sustainable growth.

We presently witness, the global economic power shifts on the canvas of the world economy. Forward plans arebecoming disruptive for governments and businesses alike. Moreover, the economic power shift will pave the way for anemerging new economic super-powers from Asia through ingenuity and resource command. This will surely create a rippleeffect and pose pressing challenges on policymakers of developed and developing economies. The global competitivenessimplies a multifaceted impact on the socio-economic structures of developing countries at large and especially India.

As industries converge and global competition intensifies, firms face increasingly complex and diverse environments.Some firms are adopting unconventional strategies to address or take advantage of these challenges. Businesses will haveto build on the essential drivers of growth: demographics and productivity, which is in turn inextricably interlinked withtechnological progress which includes industry 4.0 which is making rapid strides and entries into new forays across theglobe. Salient features of the emerging world economic order are presented in Box 1.

BOX 1

Key Findings on the World Economic OrderCourtesy: Recent Oxfam Report and PWC Projections

The world economy is likely to be more than double in size by 2050.

China may be the largest economy in the world, accounting for around 20% of world GDP in 2050,with India and Indonesia finding second and fourth places respectively (based on GDP on apurchasing power parity basis).

Vietnam, India and Bangladesh may be three of the world’s fastest growing economies by 2050.

Emerging markets will continue to be the growth engine of the global economic order.

Hence, the theme of DR VN BRIMS International Conference will also address issues on economic policy convergenceat all levels which can heed the prevailing unequal distribution of wealth in India in particular and the world in general.

We wish the readers happy reading and also look forward for useful suggestions to improve SRUJAN 2020.

Dr. Vijay V. BedekarChairman

Vidya Prasarak Mandal,Thane

Dr. Nitin JoshiDirector

DR VN BRIMS

Dr. Guruprasad MurthyDirector-GeneralDR VN BRIMS

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Editorial

It gives us immense pleasure to present the fourth volume of multi-disciplinary annual journal Srujan in theannual International conference 2019 at DR VN BRIMS. In its small journey of three years, Srujan has grown inits diversity of themes, authors, papers from myriad background truly giving an international flavour to the journal.In its initial years, Srujan has provided a platform to budding researchers, faculty fraternity and students aspiringto create an impact in the field of research. Simultaneously articles from industry persons provide rich insightsinto the way businesses are evolving.

In this issue we are presenting 17 papers on various themes with contribution from academia, industry,research scholars and students. A brief overview on the content of articles is presented below:

Currency moves have a wide impact on the global as well as the domestic economy. Ms. Srushti in herpaper on,”Turbulence in Global Currency” explores the relation between the global currency i.e. USD anddifferent parameters such as the agriculture sector, foreign exchange, money market, crude oil prices and themarket investors. The reason behind depreciating currencies of emerging countries and the changing pattern inthe global economic power shift is explored by Shankar Chatterjee in his article on “Is It Start of Another GlobalRecession”. Article “New world order: rise of multipolarity” by Deepak Agnihotri attempts to address why globalstrategies need to strike the right balance between mature, low risk advanced economies that are growing fasterrather than high risk economy of emerging markets. Prof. Milind S. Limaye in his paper “Should India be a silentspectator of Great Trade war of 2018” discusses about the trade war between two world giants i.e. USA andChina, which has started from January 2018 and is estimated to continue till 2019 while Prof. M. Guruprasadintends to address the performance, progress and preparedness of Indian Urban Cooperative Banks (UCB’s) inthe context of economic reforms, recent policy developments and other related issues.

Economy has seen a cycle of investments, growth, acquisitions and consolidations in the e-commerce spaceand contribution in total revenue by ecommerce will increase tremendously in the coming decade. In the article,“A study of foreign investments in Indian e-commerce and its effects on retail industry” by Krishnan Subramanianshows the impact of the Foreign Institutional Investments (FII) in the retail industry.

Globalisation has a huge impact on management education. The author Ms. Nisha Churi performs a 360-degree analysis of MBA education, its brand and purpose, and the factors that have influenced the evolution ofthis prestigious degree in her paper “Integration of globalisation and MBA education in context of Indian economy”.The article “Parivartan” by Parag Prabhudesai is intended to guide management students, professionals andbudding entrepreneurs with a different perspective of how education, qualification and practical experiencecoupled with acceptance to “Parivartan” (change) can impact our personal & professional lives.

Dr. Gauri Heble in her paper “Sustainable development through financial inclusion of women in India”attempts to understand sustainable development and its relation to financial inclusion and its role in the social andeconomic development of women in the country.

The global automotive industry has undergone a plethora of breakthrough developments in past decade. Inthe article “Technologies empowering global automotive industry” author Piyush Tarey discusses the currentstatus of technological revolution which is shaping future of global automotive industry. On the similar lines,mobile communication technology has revolutionized the field of advertising and consumer engagement with thesame which Deepali Manjrekar identifies this impact in her paper “Study on impact of mobile advertising onconsumer behaviour”. Education is also not left untouched by the advancements in technology. Swati A. Parab inher paper on “Students’ perception about technology in education” highlights the empowerment teacher’screativeness and incrrease in student learning though technology.

In the area of Organisational Behaviour, paper by Dr. Jashandeep and Prof. Ramandeep on the topic“Impact of emotional labour on mental health: A study of marketing executives working in the banking industry”observes that emotional labour is an antecedent of mental ill-health among private bank marketing executives of

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selected banks. “Management skills and conflict resolution within the Indian family system” by Mukulika GhoseBanerji is a study from a socio-psychological perspective to ascertain why people who are highly rated for theirmanagerial skills at work, frequently fail to demonstrate the same success at home within their families.

Study of inventory control and working capital of textile company in Thane is presented by our student Mr.Yash Sharma which involves research on the financial setup and inventory control management of a textilecompany.

Auditing plays a crucial role in any organization ensuring that business is functioning as expected andbusiness objectives are achieved. Article by Rajith Jayadevan on “Offshoring Audit work in India needsimprovement” explores the dimensions of auditing in Indian context.

Overall, current issue of Srujan provides rich diversity in the content as well as insights on contemporarybusiness scenario to the readers who will find it enriching and interesting.

Editorial desk

Dr. Smita Jape Dr. Pallavi Chandwaskar Dr. Meenakshi MalhotraAssociate Professor Assistant Professor Assistant ProfessorDR VN BRIMS DR VN BRIMS DR VN BRIMS

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1mation Technology In Indian Banks-A Review 11. Impact of Emotional Labor on Mental Health: A Study of Marketing Executives Working in 1

The Banking IndustryDr. Jashandeep Singh and Ramandeep Singh, Phagwara, Punjab

2. Student’s Perception About Technology in Education 4Swati A. Parab, Udaipur, RajasthanDr. Nitin M. Joshi, Mumbai, Maharashtra

3. Progress, Performance, Preparedness of Indian Urban Cooperative Banks (UCB’s) in the New 9Global Economic Environment with Reference to BASEL RegulationsM. Guruprasad, Mumbai, Maharashtra

4. Sustainable Development through Financial Inclusion of Women in India 16Dr. Gauri Heble, Mumbai, Maharashatra

5. Integration of Globalization and MBA Education in the Context of Indian Economy 20Nisha B. Churi, Mumbai, Maharashatra

6. Study on Impact of Mobile Advertising on Consumer Behaviour 26Deepali M. Manjrekar, Udaipur, RajasthanDr. Nitin M. Joshi, Mumbai, Maharashtra

7. Management Skills and Conflict Resolution within the Indian Family System 29Mukulika G. Banerji, Mumbai, Maharashtra

8. New World Order : Rise of Multipolarity 33Deepak Agnihotri, Mumbai, Maharashtra

9. Study of Inventory Control and Working Capital of Textile Company in Thane 37Yash Sharma, Mumbai, MaharashtraDr. Smita Jape, Mumbai, Maharashtra

10. Turbulence in Global Currency 42Srushti R. Ahire, Mumbai, Maharashtra

11. Impact of Globalization on Human Resource Management 44Jayshree Prabhu, London, U.K.

Industry Insights

12. A Study of Foreign Investments in Indian E-commerce and its Effects on Retail Industry 49Krishnan Subramanian, Head Digital IT, Raymond Apparel Ltd. Mumbai

13. Technologies Empowering Global Automotive Industry: Present and Future 52Piyush Tarey, (EIS – Automotive) TCS, Japan

14. Is it Start of Another Global Recession? 54Shankar Chatterjee, Business Analyst, 63 Moons Technologies, Mumbai

15. Parivartan: Theory of Costraints Way 58Parag Prabhudesai, Director, Bullows Paint Equipment Pvt Ltd, Pune

16. Offshore Audit Work in India Needs Improvement 64Rajith Jayadevan, Credit Suisse, U.S.

17. Should India be the Silent Spectator of Great Trade War 2018? 67Milind Limaye, Dubai, U.A.E.

Content

1DR VN BRIMS, THANE

Impact of Emotional Labor on Mental Health: A Study of Marketing ExecutivesWorking in The Banking Industry

Dr. Jashandeep Singh*[email protected]

Ramandeep Singh*[email protected]

*Assistant Professor, GNA Business School, GNA University, Punjab

Abstract : The present study observed that emotional labor is an antecedent of mental ill-health among private bank marketingexecutives of selected banks in the state of Punjab, India. This research investigated the impact of emotional labor on themental health of employees. A total of 80 respondents were surveyed and selected through a multi-stage sampling technique.It was found that there is a negative impact of emotional labor on the mental health of employees. Correlation and MultipleRegression analyses were used to ascertain results.Keywords: Emotional labor, Surface acting, Deep acting, Mental health, Marketing executives

Introduction

In order to gain competitive advantage, the employeesof service organizations are considered to perform in anunexpected way, especially, front line employees or for thosewho are engaged directly with the customers (Constantiand Gibbs, 2004). Hence, the behavior of employees requires‘emotional labor’ where they have to either hide or managetheir actual feelings for delivering a successful service(Hochschild, 1983). Such direct personal interaction relatedjobs are required to manage their behaviors. Emotional Laborhas been developed as a major element of interactive servicework (Lewig and Dollard, 2003). Emotional labor is executedin two ways, namely; surface acting and deep acting(Hochschild, 1983). Lazanyi (2011) defined surface actingas emotions displayed which are not as same as he trulyfeels and it can be further understood as when a personconceals his original emotions and act as per therequirements of the job at the workplace. On the contrary,deep acting refers to the adjustments of emotions in orderto conform to the job requirements of the organization.

Similar to any other labor, emotional labor is strenuous,energy demanding, and pushes towards emotionalexhaustion in the long run. Extreme emotional labor mayhave a negative impact on employee’s behavior as well astheir psychic and somatic well-being (Gelderen et. al., 2007;Karim, 2009). The current research work describes theemotional labor as an antecedent of mental ill-health ofprivate bank marketing executives

Emotional Labor And Mental Health

Jackson et al. (1986) explained that when an employeegets over emotionally involved in direct interactions withthe clients, often encounters burnout. Cordes andDougherty (1993) explained burnout occurs because ofemotional exhaustion, depersonalization, and reducedpersonal accomplishment. Most researchers have linkedburnout with essential organizational consequences like

turnover and performance (Grandey, 2000). TurnoverIntentions among employees are the consequence of mentalill-health caused due to Job Stress (Singh, 2016). There arecertain situations where frequent regulation of emotions isrequired, which makes an employee emotionally exhaustedor may give him the loss of energy and fatigue. While comingup with the same, the employee may lead to experience areduced sense of personal accomplishment (Cordes andDougherty, 1993). Abraham (1998) explained that emotionaldissonance is related to emotional exhaustion which isdependent upon emotional labor.

Surface Acting

Emotional labor impacts negatively the workperformance as well as personal accomplishments (Zapf,2002). Butler et al. (2003) opined that emotional labor resultsin un-dissolved emotional dissonance, hence, it will resultin higher stress levels, which occurs due to stimulationphysiological processes in controlling the actual emotions.Surface acting may lead to a compromised self-evaluationand leads to depression in the long run, which furtherreduces the level of work motivation, absenteeism andturnover intentions among employees. There is a negativeimpact of emotional labor on various personal and work-related segments (Brotheridge and Grandey, 2002).Employees performing surface acting were found moreemotionally shattered in comparison to employeesperforming deep acting (Johnson, 2004). Surface actingfound to be associated with emotional exhaustion(Brotheridge and Lee, 1998).

Deep Acting

Chu (2002) specified that deep acting implicates inaltering inner feelings by changing something more thanthe external appearance of a person. Brotheridge andGrandey (2002) detailed that deep acting is a process wherewe control our internal feelings and show the requiredfeelings, as desired by the organization. Grandey (2003)

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wrote that deep acting results in negative correlation withjob satisfaction. Deep acting often leads to self-estrangement from individual’s real emotions. Any rise inthe level of deep acting encompasses a more risk, whichmay further lead to emotional exhaustion in the long run(Lazanyi, 2011). At the same time, few other researchers areof a different point of view. Brotheridge and Grandey (2002)established deep acting helps in improving actor’sperception of effectiveness and self-image at work. Lazanyi(2011). Chu (2002) revealed that employees performing deepacting feel lesser fake, which may make them less stressful.Regulating emotions through deep acting may result in asense of accomplishment, yet it is dependent upon theemployee’s level of identification at work (Ashforth andHumphrey, 1993).

After reviewing the existing work on the topic, thefollowing hypotheses are proposed:

H1: Surface acting will have a tendency to impact themental health of bank marketing executives.

H2: Deep acting will have a tendency to impact themental health of bank marketing executives.

Statement of Research Problem

The objective of this study is to determine the impactof emotional labor on the mental health of marketingexecutives working in the private banking industry.

Research Methodology

The present study has been conducted on 80marketing executives selected through multistage samplingtechnique, covering top three private banks namely, HDFCBank, ICICI Bank, and Axis Bank within the Doaba region ofthe Punjab state. Out of the sample, 68 percent are malesand 32 percent are females; 76 percent of the respondentspossess 0-5 years of experience and 24 percent have 5-10years of experience; 62 percent possess a postgraduatedegree and 38 percent are having Bachelor’s degree.; 81percent of the respondents are in the age group of up to 28years and 19 percent in 28-35 years; 74 percent of therespondents earn up to INR 25,000 per month while 26percent earn up to INR 40,000 per month. Different scaleitems were collected from the work of various researchersfor surface acting and deep acting, and mental health (eg.CUKU, 2009; Thisera and Silva, 2017; Singh, 2016). Theindividual reliability analysis for the constructs wasmeasured by Cronbach’s alpha for scales were as: surfaceacting (alpha=0.729), deep acting (alpha=0.666) and mentalhealth (alpha=0.821) which are perfectly adequate (Field,2009).

Results and Discussion

Multiple regression analyses were performed to checkthe impact of surface acting and deep acting upon mental

health (refer to table 1) among marketing executives, wheremental health was kept as the dependent variable.

Table 1: Regression results for emotional labor and mentalhealth

Emotional Labor Factor(s) Mental Health

β

Surface Acting .32*

Deep Acting .04*

R 0.352

R2 0.213

*p <0.001

The value of R2 came out to be 0.213, which clearlyapprises that emotional labor has accounted for 21.3 percentof the variation in ‘mental health’ of marketing executives. Itis clear that surface acting (p <0.001) have a significant impacton mental health of marketing executives and deep acting (p<0.001) also has a little impact on mental health of marketingexecutives. It shows that both of the hypotheses (H1 andH2) are supported which means, mental health of employeesis being impacted by surface acting and deep actingperformed by employees at the workplace. Martinez-Inigoet al. (2007) found that there is an impact of surface actingand deep acting on emotional exhaustion. The level ofemotional labor performed is directly proportionate with thelevel of stress among employees (Lazarus, 1999), performingemotional labor may lead to emotional exhaustion (Wrightand Cropanzano, 1998), may also lead to burnout, (Kleinand Verbeke, 1999). These outcomes can further push theemployees towards mental ill-health. Emotional exhaustion,stress, and burnout are the determinants of mental ill-healthamong respondents.

Conclusion

In a husk, this part of the research was an endeavourto observe the impact of emotional labor on the mental healthof marketing executives working in private banking industryspecifically to the employees working in Doaba region ofthe Punjab State. In general, it was established that bothsubfactors of emotional labor (surface acting and deepacting) have an impact on mental health marketing executivesworking in the private banking industry.

Limitations And Future Research

Since the design of the study is cross-sectional,hence, it becomes a limitation in ascertain good results.Another limitation can be regarding the generalizability ofthe findings beyond the definite research setting. Futureresearch ought to be extended to a broader level and indiverse geographical, demographical, and organizationalbackgrounds, and should also find some other possible

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bases which may impact the mental health along with theemotional labor.

References

Abraham, R. (1998). Emotional dissonance inorganizations: A conceptualization of consequences,mediators and moderators. Leadership & OrganizationDevelopment Journal, 19(3), 137-146.

Ashforth, B. E., & Humphrey, R. H. (1993). Emotionallabor in service roles: The influence of identity.Academy of Management Review, 18(1), 88-115.

Brotheridge, C. M., & Grandey, A. A. (2002). Emotionallabor and burnout: Comparing two perspectives of“people work”. Journal of Vocational Behavior, 60(1),17-39.

Brotheridge, C. M., & Lee, R. T. (2002). Testing aconservation of resources model of the dynamics ofemotional labor. Journal of Occupational HealthPsychology, 7(1), 57-67.

Butler, E. A., Egloff, B., Wilhelm, F. H., Smith, N. C.,Erickson, E. A., & Gross, J. J. (2003). The socialconsequences of expressive suppression. Emotion, 3,48 – 67.

Constanti, P. and Gibbs, P. (2004), “Higher EducationTeachers and Emotional Labour”, InternationalJournal of Educational Management, 18 (4), 243-249.

Cordes, C. L., & Dougherty, T. W. (1993). A review andan integration of research on job burnout. Academy ofManagement Review, 18(4), 621-656.

Field, A. (2009). Discovering Statistics Using SPSS.Sage publications.


Students’ Perception About Technology in EducationSwati A. Parab

Research Scholar, Pacific Academy Higher Education and Research University, [email protected]

Dr. Nitin M. JoshiDirector, DR VN BRIMS

[email protected]

Abstract: Years ago when you look at the entire chronicle of the history of technology in education it hasprovided students and teachers with an unlimited number of options for classroom learning. Consideringthe history of technology, there are some very interesting facts that have led us to where we are today. Injust a few decades technology has brought vast improvements in teaching and the availability of classroomequipment. It helps empower teacher’s creativeness and also student learning. A classroom which consistedof a blackboard, television and VCR equipment, calculators, and very limited Internet connectivity wouldlead us back in time to experience. The number of students who owned a computer was not as prevalent asit is today where everyone has it for use. Nowadays, students expect the use of technology in theclassroom as the norm believing no world, no life without it. When we ponder on past discoveries abouthow technology has evolved in education and in key stages of development, it paints an interestingpicture of how far education has come. This paper focuses on application and convenience of technology,techniques to use technology in the classroom, contemporary technologies in education and downsidesof technology in the field of education.

Keyterms: Technology, Equipment, Flashnotes, Lore, Study blue, LEAP motion, Papertab, Chromebooks, LessonCast.

Introduction

As we see today’s classroom which no longerresembles the classrooms that we may remember as children.New adoptions brought into picture due to rise in newtechniques and new technological inventions. Some of themlike chalk has been replaced with a stylus pen, a touch onthe screen can change what colour you want your styluspen to write in on the board. Textbooks and all studymaterials which was once printed have been replaced withe-readers, also the parent-teacher conferences are conductedthrough various means of communication, it can be Skypeor via video conferencing. Technology serves differentpurposes within the classroom which can engage thestudent’s mindset to the most creative actions and can leadto fast development and rapid growth in educational centres.Not only it can be used for normal learning process but canalso help students that have limited verbal abilities. Theselessons will focus on the evolution of technology withinthe classroom - how we’ve moved from the chalkboard towhiteboard and lastly to digitalized board. We must definethe term technology in relation to education and its uses interms of students’ perception. It is any tool that can be usedto help promote student learning, including Smartboards,digital cameras, cell phones, tablets, the Internet, socialmedia, and, of course, the computer. Technology can getthe school districts to create relevant learning experiencesthat mirror students’ daily lives. In terms of enhancement

and growth leading to the advanced pavement and alsodevelopment in various stages.

Review of Literature

Knezek, 2011 examined that the Chief Executive Officerof The International Society For Technology In Education,speaks about the way ‘Learning in a technology-richenvironment enables young people to undertake meaningfulexperiences as they engage worldwide. But also they areable to connect to an informal and formal group of learningexperts and tend to develop their skills with a new proposal,new knowledge, creative ideas and aggressive expressiontowards the learning pace. He concludes by defining variousopportunities given by technology-driven learning tostudents which is not just an amazing experience but alsomakes a complete transformation in their learning aspects.

Marcinek, 2011 found out that instructionaltechnologist at Burlington High School in Burlington, MA.He explains that ‘Technology is old when you buy it whichis far too fast, and too sudden that cannot be paced witheducation. He thinks that content and skill sets have beenthriving and exciting but when it comes to combing twotracks it can create a dynamic curriculum with the help ofthis technological advancement in the learning system. Healso urges that not just by focusing on different tech toolseach year and evolving those tools into our semesterpatterns we can give our students a rich portion but

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combining the spice of healthy learning and advancedconcepts can help them get a rich dynamic curriculum.

Prensky, 2011was a speaker, writer, and designer inthe critical areas of education and learning explains that ‘The missing technological element is true one-to-onecomputing, in which each student has a device he or shecan work on also customize, keep or take home. Heconcludes stating true technological advance to occur, thecomputers must be personal to each learner which whenused properly become extensions of the students’ personalself and brain. Also, he suggests having each student’sstuff and each student’s style all over the place where theirsharing does not reduce the number for inventions andcreative minds rather any ratio that involves sharingcomputers — even two kids to the computer — will delaythe technology revolution from happening.”

Research Methodology:

This study has been conducted with the help of both,primary and secondary data. The primary data has beencomposed with the help of a structured questionnaireconsidering the objectives of the study. The questionnairewas finalised after conducting the pilot survey. The primarydata has been gathered with the help of 140 respondents(74 males, 66 females) to create a factual study. The samplerespondents are in the age group of 15 years to 25 years andfrom various colleges in Mumbai. These respondents are

undergoing various programmes of the University ofMumbai and are from the diverse socio-economicbackgrounds. Along with primary data, Secondary data toohas been collected for the purpose of this study. In order topresent the facts in a logical order, supporting and relatingresearch material is collected. It covers research articles,reference books, Journals and online data on the subjectmatter.

Objectives:

1. To analyse the need for technology in education.

2. To study the changing perception of students inclassroom learning.

3. To highlight the challenges of technology in education.

4. To understand the convenience of technology ineducation.

Data Analysis:

The responses are measured on five-point Likert Scalewhere,

1= Strongly Agree (SA); 2= Agree(A);

3= Neither Agree nor disagree (NAND);

4= Disagree(D); 5= Strongly Disagree(SD)

SR. STATEMENT SA A NA D SDNO. (%) (%) ND(%) (%) (%)

1 Technology plays an important role in today’s education. 64.29 33.57 1.43 0.71 0

2 Understanding of the concept is better with the help of technology 32.86 45.71 15 6.43 0than traditional classroom learning.

3 Role of the teacher cannot be replaced by technology. 44.29 32.86 15 6.43 1.42

4 Technology makes Teaching learning process effective. 37.86 51.43 7.86 2.85 0

5 Technology promotes individual learning and motivate the students. 35.71 42.86 18.57 28.56 0

6 Use of technology in education prepares our children for tomorrows 48.57 45 2.86 3.57 0advanced working conditions.

7 Rather than banning phones or YouTube, educators should find smart 50.71 38.57 10 0.72 0ways to use them.

8 Flash Notes, Study blue, paper tab, Chrome books, Snag it, Jing, 26.43 44.29 29.28 0 0Camtasia are new technologies in education.

9 As the data is saved in a computer or mobile devices, students are likely 22.14 33.57 27.14 13.57 3.58to develop poor studying habits and a lazy attitude towards education.

10 Students enrolled for online courses have higher chances of failing, 15 17.14 39.29 22.14 6.43dropping out of classes, and are less likely to benefit from them.


Discussion

Application of Technology in Education and TeachingProcess:

The effective use of Technology in Education haschanged the face of education and it has created moreopportunities in the fields of learning. Various educationaltechnologies have benefitted through the process ofadvanced learning systems with the help of technology. Ithas removed educational boundaries which both studentsand teachers can collaborate in real time using advancededucational technologies. The growth of mobile learningand long distance learning has risen due to technology inlearning. Internet technology or the web has enabledteachers to reach students across borders and also studentsfrom various countries to have access to internet technologyfor various educational courses. Online education is flexibleand affordable but at the same time needs time and efficiencyto get use to such advanced leaning techniques and build aplatform to learn so that students can attend classroomsduring their free time, and they can also have a chance tointeract with other students virtually and not just in aphysical environment. These advancements in educationaltechnologies have yielded positive results which have givenrise to growth in literacy rates also has made it easy forevery human to easily access general knowledge.Supporting both, teaching and learning processes,technology has digitised classrooms through digital learningwhich has made students more engrossed in learningactivities and interested in more online assessments. Toolslike, computers, iPads, smartphones, smart digitalwhiteboards has expanded course offerings which haveincreased student’s engagement and motivation towardslearning.

The Convenience of Technology in Education

1. Unlocks Educational Boundaries: Virtual or OnlineLearning plays an important factor for education.Locations various geographical boundaries do notdecide whether the person can attend the same classor not as there is no need of travelling from thoselocations one can easily access to the onlineassessments without even wasting a lot of money.Through technology, online education has created anew wave in the education environment and has mademany educational courses and material accessible toanyone in the world across borders.

2. Simplifies Access to Educational Resources: Studentsgain access to open educational resources throughvarious means. The public domain is freely available toanyone over the World-Wide-Web. Resources includeelectronic books (e-books), podcasts, games,educational videos and instructions, tutorials and muchmore. Teachers using lesson videos and clips online

can help inculcate a sense of understanding and builtin new thoughts and creativeness about learning byintegrating technology in their own classroom. Thesetechniques and approaches by educators promote self-training where students do not need a separate guide.

3. Technology Motivates Students: The use of computer-based instructions makes students feel in control ofwhat they learn when they learn or how they learn. It iseasy for students to learn with technology becausecomputers are patient compared to humans. And leadto a better explanation in case of examples or even incomparison to human activities.

4. Improves soft Skills: The use of computers in theclassroom has helped many students learn how to writewell-composed sentences and paragraphs. Computershave processing applications which students use totake notes in the classroom. These processingapplications have built-in dictionaries which helpstudents auto-correct spelling errors and also correcttheir grammar in a sentence.

5. Easy to learn: Educational software is designed to helpstudents learn various subjects. Theoretical subjectscan be mugged up easily, the game of numbers alsocalled finance or Maths can help through the use ofadvanced software to easily calculate the sequencesand enable a fast learning process to students.

6. Promotes self Learning: Students get differentopportunities to learn by themselves whether it is anapplication of or a new software program or say a newelectronic device. All can only be possible if there isenough scope for self-learning and also by individualmotivation.

7. Increases Collaboration: Creates a bond between theteachers and the students to easily send in feedback,notes or even explain any factor or send in links in caseof future understanding.

Smart Techniques to use Technology in Classrooms:

Using technology simply for the sake of using can bewasteful. Even by reading from a paper would be a more ofstress rather than a tab or a notepad.

A project was done on paper won’t help in transformingyour classroom out of the old black and white print,rather is can inculcate creative ideas, save time andeasy access to a variety of examples and use new linksfind new information. Problem-solving and spatialreasoning can be done in an interactive way.

Encourage kids to create own software and new ideasas it can lead to new inventions and can help prosperin the field of education or knowledge generation. Thiscan give rise to a number of important abilities, like

7DR VN BRIMS, THANE

critical thinking, creativity, problem-solving and logicalreasoning.

Mastering many apps, devices and programs inaddition to their regular lesson will probably make oneoverwhelmed as it can open its thought process tonew ideas and can lead a new invention. Once theyfigure it out, they can teach everyone else includingthe teachers or any adult.

Evaluating factors like intonation, phrasing, speed,emotion and accuracy all can be learned by themselveswhen students access to virtual media rather thanphysical classroom teaching. This can help.

Find smart ways to use even the unorganized appswhich can increase one’s knowledge generally.

A classroom is a great place for children to learn howto behave responsibly but unlike online values wouldcreate boredom and a sense of unlikeliness to emotionalaspects. Life would cater more to technological upgradation and not human fondness. Create a platformto enact both aspects simultaneously so that it has awell-developed proportion.

Cultivate their own interests- Addressing new barriersand new situatioN can help students get a chance toembrace new technical difficulties which can put themback rather they should choose to stay well versedwith the advancement and cultivate a sense of newlearning. Motivation by peers and fellowmen can helpthem gauge new investments.

Tools for New Technology Education

Flashnotes, Lore, Study Blue, LEAP Motion, Papertab,Chrome books, LessonCast.

Flashnotes: Flashnotes allows to upload lecture noteswhich students sell to other friends who need more help orresources. It helps to create a general pool of knowledgewhich expands as students continue to share their workwith one another.

Lore: This social media type of network allowsprofessors and students to communicate, follow one anotherand also discuss class work and lectures, riding the wave ofwhat works and tailoring it for education. This social aspectallows for document uploads, calendar sharing, and a gradebook option which helps interact with them.

If smartphones are the primary source for studymaterials it would have been this app that allows studentsto organize their coursework, share their materials with otherstudents. A student can easily access their class work andprepare for an exam irrespective of where he is travelling, orwhat he is doing. This helps in capitalizing on a different setof notes and study guides where students can decide for

themselves whichever course they felt is reasonable andthe application was feasible enough to retrieve.

LEAP Motion: How about you sign your name on adigital document using only your finger and the air? Yes,that is a leap motion an app where a company intent ongiving people a more natural way to interact with thecomputer. And not just get addicted to its harmful use butalso cater to their learning and development needs. This isa huge improvement from the days of the stylus and padeven with the fine motor control it was difficult to makedrawings

Chromebooks: Despite the rising numbers of thesmartbook and tablets Google’s Chromebook may snatch afew distinct advantages over the Apple iPad such as lessexpensive, one-button-push setup, control settings, atraditional keyboard for fast typing. Its Hardware fixes areless costlier.

Downsides of Technology in Education

1. Lack of interest in studying: As Everything is nowaccessible online or the data saved in a computer ormobile devices can make students develop poorstudying habits and a lazy attitude towards education.Finding their way out of lengthy topics and opting fornew trending topics which can be framed as short andsweet.

2. Makes students vulnerable to potential pitfalls: Onlineportals prove to be an invaluable educational tool as itcan also be a source of problems especially forstudents who lack basic skills. They need to maximizea device’s functionalities which can help them get usedto new devices and advancements practically. At timesunrelated topics out of school and education lead themto distraction.

3. Negative aspects: Technological tools are widely viewedas tools to entertain rather than educate, students arelikely to gravitate towards productive learning inreading a book, while they are likely to use devices toplay games or spend time on social media. This canraise a chance into false doing and wrong acts andalso into unnecessary actions leading in tremendousdrawbacks.

4. Increased challenges: Those who have been teachingusing traditional methods may not be very open to thechanges being applied. A majority of teachers believethat constant use of digital technology is affecting astudent’s attention which will lead to a bad outcomewhere their minds would just be a system basedaffecting their lives and health issues.

5. Diminish the overall value of in-person education:Online learning not only establishes a direct link to


personal interaction but affects a student’s performance.They have higher chances of failing, dropping out ofclasses with the fact that lessons delivered online orthrough digital resources lack the face-to-faceinteraction and does not cater to all their doubts.

Suggestion and Recommendations

1. Teachers should be conversant with the technology inorder to use is conveniently in the classroom.

2. The teacher should keep a track of the latesttechnological upgradations in the field of education.

Conclusion

There has been a drastic change in the arena ofeducation during the last decade. Classrooms haveundergone a change to a great extent. The traditionalteaching tools are barely seen in the classrooms. Startingfrom the Kindergarten to Post-graduation and Professionalcourses we see a lot of modernisation. Kindergarten kidsthese days are taught through audio-visuals. This hasimproved the level of knowledge retention among students.They are conveniently able to grasp the knowledge impartedby the teacher in a better way. In schools and colleges,some critical topics are dealt with by the teacher throughtechnology. This has eased the efforts put by the teacher inexplaining the concepts. Also, students are happy as nomore have to visualise what the teacher explains. Rather,they can see it and associate with the concept in a betterway. Today, each class is equipped with a projector andscreen. Practically more than 90% of the lectures areconducted with the help of projectors. Lecture notes aresent in pdf format and no more dictated in the classroom.Flashnotes, Lore, Study Blue, LEAP Motion, Papertab,Chrome books, LessonCast has become a boon to education.They have taken education to a greater height.

Around 98% of the respondents agree that technologyplays an important role in today’s education. They feel thatteaching learning process has become more effective withthe help of technology. Students feel motivated whilelearning through technology. These days we see studentshooked on to their mobile phones with a lot of things to surfon. It makes sense we understand this generation and findsmart ways to use YouTube. Technology plays acomplementary function. All said and done, the role of ateacher can never be replaced by technology.

Limitations of Study

The sample size for collecting primary data is relativelysmall. It was observed that the respondents were too carefulwhile responding to some questions listed in thequestionnaire. The findings of the study may be indicativein nature.

References

10 Top Advantages and Disadvantages of Technologyin Education. (2018). Green Garage. Retrieved from:https://greengarageblog.org/10-top-advantages-and-disadvantages-of-technology-in-education

Boss, S. (2011). Technology Integration: What ExpertsSay. Edutopia. Retrieved from: https://study.com/academy/lesson/the-history-of-technology-in-education.html

Collins, A., & Halverson, R. (2018). Rethinkingeducation in the age of technology: The digitalrevolution and schooling in America. Teachers CollegePress.

Hew, K. F., & Brush, T. (2007). Integrating technologyinto K-12 teaching and learning: Current knowledgegaps and recommendations for future research.Educational technology research and development,55(3), 223-252.

Iinuma, M. (2015). Learning and Teaching withTechnology in the Knowledge Society: New Literacy,Collaboration and Digital Content. Springer.

Kent, S. L. (2010). The Ultimate History of VideoGames: from Pong to Pokemon and beyond... the storybehind the craze that touched our li ves and changedthe world. Three Rivers Press.

Ng, W. (2015). Adopting new digital technologies ineducation: Professional learning. In New DigitalTechnology in Education(pp. 25-48). Springer, Cham.

Ramey, K. (2013). The Use of Technology – InEducation and Teaching Process. Retrieved from:https://www.useoftechnology.com/the-use-of-technology-in-education/

Reissman, H. (2017). 7 smart ways to use technologyin classrooms. TED. Retrieved from: https://ideas.ted.com/7-smart-ways-to-use-technology-in-classrooms/

Ted Talk Staff (2018). 15 Examples of New Technologyin Education. Tech Thoughts. Retrieved from: https://www.teachthought.com/technology/15-examples-of-new-technology/

The Evolution of Technology in The Classroom,Purdue University. Retrieved from: https://www.edutopia.org/article/technology-integration-what-experts-say

9DR VN BRIMS, THANE

“Progress, Performance, Preparedness of IndianUrban Cooperativebanks (UCB’s) in the new Global Economic

Environment with Reference to BASEL Regulations”M.Guruprasad

Director, Research, Universal Business [email protected]

Abstract: It is important to note that the opening up of Indian economy is almost in correspondence with the worldwide IT,internet revolution in the early 90’s. Another major transformation is the global scenario was the emergence of internationalBanking norms. India’s macroeconomic policies were conservative until early eighties. The reforms in the financial sector thussupplemented the structural changes in the real economy reflecting a paradigm shift towards increased market orientation.Reserve Bank of India (RBI) implemented Basel I norms from 1992 onwards. Basel I was followed by Basel II, Basel III.Thus, the banking sector was ushered in the era of both economic reforms in India and the emerging global regulations (Basel)in the nineties. To stay competitive, productive, processing volume of information and adhering to various risk managementnorms of the Government.The changes in the policy environment of both state and central governments concerning the operations of the urban bankingsystem have direct and indirect implications on the performance of UCBs. Hence, the basic intention of this paper was topresent the performance, progress and preparedness of Indian Urban Cooperative Banks (UCB’s) in the context of economicreforms, recent policy developments and their level of preparedness.Keywords: BASEL regulations, Global economic environment, Progress

Introduction

Co-operative banks are small-sized units organized inthe co-operative sector which operate both in urban andnon-urban centers. These banks are traditionally centeredaround communities, localities and work place groups andthey essentially lend to small borrowers and businesses.The basic strength of UCBs is its dual capacity as a local,grassroots initiative and as a local financial intermediary.The contemporary market conditions pose enormousdifficulties for their future operational capacity. This leadsto questions regarding the future of UCBs in India.

The Indian economic reform process starts with thebanking industry along with urban cooperative bankingsector. The major policy developments of UCBs have beeneffective from the year 1992–1993, i.e. post prudential normsera. The sudden changes in the policy environment of bothstate and central governments concerning the operationsof the urban banking system have direct and indirectimplications on the performance of UCBs.

Basel Norms

With the commencement of reform of the economy in1991, banks were to follow the Basel Accord. The IndianBanking industry has been undergoing rapid changesreflecting a number of underlying changes. Liberalizationand deregulation witnessed in the Indian markets in the1990s have resulted in a spurt in banking activity in India.

Banks and the regulators all over the world have beenconcerned about these risks, and the formal framework forbanks’ capital structure was evolved in 1988 with theintroduction of the “International Convergence of Capital

Measurement and Capital Standards”, popularly known asBasel I, issued by the Basel Committee on BankingSupervision (BCBS). In India, the Reserve Bank of India(RBI) implemented Basel I norms from 1992 onwards. Afterseveral discussions and revising multiple drafts, in 2004the BCBS came out with a comprehensive framework ofcapital regulation popularly known as Basel II.

Basel II was built up on three mutually reinforcingpillars minimum capital requirements, supervisory reviewprocess, and market discipline. Consolidating all these, theBCBS released the Basel III framework entitled “Basel III: AGlobal Regulatory Framework for more Resilient Banks andBanking systems” in December 2010 (revised in June 2011).According to the BCBS, the Basel III proposals have twomain objectives: To strengthen global capital and liquidityregulations with the goal of promoting a more resilientbanking sector.

Capital Accord in 1988 of Basel focused on reducingcredit risk, prescribing a minimum capital risk adjusted ratio(CRAR) of 8 percent of the risk weighted assets. Althoughit was originally meant for banks in G10 countries, the RBIalso issued similar capital adequacy norms for the Indianbanks. According to these guidelines, the banks wererequired to identify their Tier- I and Tier-II capital and assignrisk weights to the assets. Having done this, banks had toassess the Capital to Risk Weighted Assets Ratio (CRAR).

Objectives

To understand the policy initiatives for the UrbanCooperative Banking (UCB) sector by the Indian policymakers/regulators (Government of India/Reserve Bank


of India (RBI) since economic reforms

To understand and analyses the progress of the UCB’soverall and since economic reforms

To understand and analyses the performance ofselected banks on specific parameters over a period oftime.


Sampling plan of the study

In keeping with the objectives, the sample target groupconsisted of the Indian UCB sector overall and selectiveUCB’s from Mumbai /Thane region, Maharashtra.

Data Source

The analysis included doing the trends in performanceof the UCB’s overall in India and performance of selectedbanks on specific parameters over a period of time. Thepresent study is based on secondary data. The relevantdata have been collected from the RBI publications like“Annual Report on Trends and Progress of Banking in India”,‘Annual Report of RBI’, various publications of RBI websitesand annual report publications of the various UrbanCooperative Banks (UCB’s)

Literature Review

According to the study by Sayuri Shirai on‘Assessment of India’s Banking Sector reforms from theperspective of the governance of the Banking system’ (2001),allowing banks to engage in non-traditional activities hascontributed to improved profitability, cost and earningsefficiency of the whole banking sector, including public-sector banks. However, lending to priority sectors and thepublic-sector had no negative effect on profitability andcost efficiency, contrary to the expectations.

Singh Fulbag and Singh Balwinder (2006), in theirstudy ‘Funds Management in Central Cooperative Banks-Analysis of Financial Margin’ attempted to estimate theimpact of identified variables on the financial margin of thecentral cooperative banks in Punjab. The authors observedthat, the success of any organization lies in the efficient useof its resources.

Deolalkar G. H., (2008), conducted a study on ‘TheIndian Banking Sector, On the Road to Progress’ revealedthat cooperative banks emulated the changing structure andpractices of the commercial banking sector in revampingtheir internal systems, ensuring in the process timelycompletion of audit and upgrading their financialarchitecture. Further it stated that, in various regions thereis a differing pattern of cooperative banking, determinedaccording to the strength of the cooperative movement.

A study by Neelam Dhanda and Shalu Rani (2010) on

Basel I and Basel II Norms found empirical evidence for theBanks in India; based on a comparative analysis of CapitalAdequacy Ratio (CAR) for the financial year 2008-09 of theselected banks under different categories. It indicatedimproved CAR with Basel II as compared to Basel I.

According to ‘Proposed Basel III Guidelines (2010): ACredit Positive for Indian Banks’. Report, Indian bankswould find it easier to make the transition to a stricter capitalrequirement regime than some of their internationalcounterparts since the regulatory norms on capital adequacyin India are already more stringent, and also because mostIndian banks have historically maintained their core andoverall capital well in excess of the regulatory minimum.

Gurcharan Singh and Sukhmani (2011), analysed theefficiency of cooperative banks in their study ‘An analyticalstudy of productivity and profitability of district centralcooperative banks in Punjab’. The study focused onevaluation of the performance of cooperative banks in thestate of Punjab. The authors observed that, the neweconomic environment has compelled the cooperative banksto reposition themselves, to become market oriented for theirsurvival, growth and development. Cooperatives in a wayin anticipation of such changes are already busy, at theinternational level, in redefining themselves to retain socialrelevance and ensure efficiency and effectiveness in servingtheir members.

Guruprasad M., (2011) in the paper “Indian BankingIndustry – Basics to Basel” referred that the main perspectiveof Basel norms is to improve the risk management systemsof the banks as the banks aim for adequate capitalisation tomeet the underlying credit risks and strengthen the overallfinancial system of the country. The prescribed liquidityrequirements would help banks better manage pressures onliquidity in a stress scenario, he opined.

A study by Dr.K.V.S.N Jawahar Babu (2012),“Performance Evaluation of Urban Cooperative Banks InIndia” discussed the growth and the problems faced by theurban cooperative banks. According to the study, UrbanCooperative Banking is a key sector in the Indian Bankingscene, which in the recent years has gone through a lot ofturmoil. In their opinion despite credible performance byUCBs in the recent years, a large number of banks haveshown discernible signs of weakness. The operationalefficiency is unsatisfactory and characterized by lowprofitability, ever growing non-performing assets (NPA) andrelatively low capital base.

According to the RBI Report (2009) on the “WorkingGroup on Umbrella Organization and Constitution of RevivalFund for Primary (Urban) Co-operative Banks”,internationally cooperative banks, operate in networks andhave an entity which provides a wide range of services tothem such as- fund management services, lines of credit,asset management, payment and settlement system gateway,

11DR VN BRIMS, THANE

ATM networks, credit card, investment, securitisation,capital raising and other financial services.

Dr.Vaidehi Daptardar and M.Guruprasad (2018) madean attempt to understand the trend in these key parameterswith respect to Urban Cooperative Banks in recent times ingeneral and a few selected in particular in post economicreform period after initiation of Basel norms. The studyanalysed the performance of UCBs overall and also withrespect to selected Scheduled Urban Cooperative Bankshaving existence for over three decades and more. The studyanalysed their performance on three key parameters suchas NPA,CRAR and Return on Assets (ROA) which are thekey indicators reflecting financial health, risk factor andprofitability of any bank in the world. Their analysis revealedthat many UCBs at the National level and the selected UCBshave kept up with the proposed national and the Basel norms.The authors also suggested the need for policy for improvingfinancial health of Grade III and IV UCBs and the suggestedneed for implementation of the concept of Umbrellaorganization mooted by the RBI committees.

A study by M.Guruprasad (2018) on “Evolution ofTechnology in the Banking Sector” reveals that the Indianbanking sector has been adapting innovations in technologyespecially the information technology to achieve efficiencyin providing wide range of products and services to thecustomers. The study also observes that large parts of theCooperative Banking sector is now covered with a CoreBanking System developed by the National InformaticsCentre (NIC), the government’s web services organisation,which has brought them into the technology mainstream.

BASEL Norms Background

Banking Sector policy regulations in India and Baselnorms

In India, the Reserve Bank of India (RBI) implementedBasel I norms from 1992 onwards and subsequently, in 2004comprehensive framework of capital regulation popularlyknown as Basel II. India responded to the 1996 amendmentto the Basel I framework, which required banks to maintaincapital for market risk exposures, by initially prescribingvarious surrogate capital charges for these risks between2000 and 2002. These were replaced with the capital chargesas required under the Basel I framework in June 2004, whichbecame effective from March 2005.

In its mid-term review of Monetary and Credit Policyin October 1998, the RBI raised the minimum regulatoryCRAR requirement to 9 per cent, and banks were advised toattain this level by March 31, 2009. The RBI responded tothe market risk amendment of Basel I in 1996 by initiallyprescribing various surrogate capital charges such asinvestment fluctuation reserve of 5 per cent of the bank‘sportfolio and a 2.5 per cent risk weight on the entire portfoliofor these risks between 2000 and 2002.

Consistent with this approach, for Basel II also, allcommercial banks in India are implementing Basel II witheffect from March 31, 2007. It now aims to get all commercialbanks BASEL III-compliant by March 2019. So far, Indianbanks are compliant with the capital needs.

Data Analysis

UCBs in India: Policy Initiatives and Performance

The major policy developments of UCBs have beeneffective from the year 1992–1993, i.e. post prudential normsera. The sudden changes in the policy environment of bothstate and central governments concerning the operationsof the urban banking system have direct and indirectimplications on the performance of UCBs. The basic intentionof this chapter was to present a comprehensive picture ofevolution, progress and recent policy developments, issuesand challenges of UCBs.

Since the inception of the economic reforms, theGovernment of India has made many initiatives to reformthe Cooperative Banking Sector.

The Narasimham Committee (1998) recommended thatduality of control be done away with and the responsibilityof regulation of UCBs be placed on the Board for FinancialSupervision.

The RBI appointed the Marathe Committee in 1991 toaddress these issues. The Marathe committeerecommendations were related to new bank licensing, branchlicensing and area of operation etc. Marathe Committeesuggested to dispense with the “one district-one bank”licensing policy and recommended organisation of banksbased on the need for an institution and potential for a bankto mobilise deposits and purveying of credit.

RBI had also appointed a Working Group under theChairmanship of Shri Uday M. Chitale in December 1995 toreview the existing audit systems of Urban CooperativeBanks. With a view to instil professionalism m the audit ofUrban Cooperative Banks. The Working Group alsosuggested revised audit rating model for Urban CooperativeBanks.

Effective- from 1996, Urban Cooperative Banks havebeen given freedom to finance direct agricultural operations.The interest rates on deposits of urban banks have beenderegulated from 1997. They can also install ATMs withoutprior approval of RBI. Thus, in the post liberalisation era,there was a paradigm shift in RBI’s regulatory approachtowards the Urban Cooperative Banking sector. It isimportant to note that this reforms have both coincided andconsciously calibrated along with the various phases of theBasel Norms by the Indian Banking Regulators. The shift inRBI policy on Urban Cooperative Banks was a naturalcorollary of its policy stance on financial sector as the sectormoved from a controlled regime to a liberalised dispensation.


Besides, easing regulatory restrictions, a number of policypronouncements were made in the operational sphere too.

The Madhavarao Committee (1999) focused onconsolidation, control of sickness, and better professionalstandards in UCBs. The findings of the Madhava RaoCommittee on UCBs also was in favour of extending theCRAR discipline to UCBs.As per the recommendations ofthe Committee, Reserve Bank introduced CRAR norms tourban cooperative banks in a phased manner with effectform 31 March 2002.RBI introduced a risk based capitalstandard in the year 2001 for Urban Co-operative banks.Compliance with the prescribed capital ratio is monitored,on a quarterly basis by UBD through OSS (Off SiteSurveillance Division requirements of RBI).

The Government had appointed an Expert Group underthe Chairmanship of Shri T.R. Andhyarujina, former SolicitorGeneral of India, to suggest appropriate amendments in thelegal framework affecting the banking sector.

The Working Group (Vishwanathan Committee, 2006),while suggesting new instruments for raising of capital byUCBs, had observed that creating a legal framework forfacilitating the emergence of umbrella organization(s) likethose prevalent in many European countries, viz. CreditAgricole Group, Rabobank Group, Raiffeisen Bank Group,etc., appeared to be the only long term solution to enhancethe public and depositors’ confidence in the cooperativebanking sector.

The RBI introduced the Graded Supervisory Action(GSA) framework in 2003 in lieu of classification of UCBsinto Weak and Sick UCBs. Accordingly, UCBs were classifiedinto four grades - Grade I, II, III and IV depending on theirfinancial conditions. GSA envisaged supervisory measuresto be taken with respect to UCBs classified in

Grade III and IV when certain levels of CRAR, netNPA, profitability or default in CRR/SLR were breached.UCBs were subjected to supervisory action such asprohibition from expansion of Area of Operation, openingnew branches, prescribing lower exposure limits andrestrictions on dividend based on this classification. Withthe introduction of Rating Model, GSA was replaced bySupervisory Action Framework (SAF) in 2012 whereinsupervisory action was initiated based on various triggerpoints such as CRAR, gross NPA, CD ratio, profitabilityand concentration of deposits. SAF was reviewed andmodified in 2014 by advancing the trigger points forimposing directions and cancellation of licence.

Based on the working groups recommendation, theRBI has constituted the Working Group on UmbrellaOrganization and Constitution of Revival Fund for UrbanCooperative Banks (UCBs) under the Chairmanship of ShriV.S Das, Executive Director, Reserve Bank of India.

The RBI in 2011 appointed an Expert Committee onLicensing of New Urban Co-operative Banks under theChairmanship of Mr. Y.H.Malegam

The regulatory approach to UCBs has been tailoredrecognising their role and mandate for providing financialservices to the less privileged sections of the population.UCBs are, therefore, regulated under the less stringentBASEL I norms as opposed to BASEL II and III normsapplicable to commercial banks.

According to experts, since the UCBs are still underBasel I norms, the CRAR computed under these norms maynot adequately reflect resilience and ability to absorb shocks.Reserve Bank understanding these constraints of the UCBsin raising capital, therefore, has allowed the UCBs to continueunder Basel I norms.

In pursuance of the recommendations of the MaratheCommittee (1992), the Reserve Bank followed an activelicensing policy for UCBs to allow them to tap area-specificdeposit mobilisation and credit absorption potential. As aresult, the period 1993-2004 witnessed a proliferation in thenumber of UCBs. Their poor financial health prompted theReserve Bank to conceive a Vision Document in 2005, whichenvisaged a multilayered regulatory and supervisorystrategy aimed at shoring up their viability. The ensuingmergers/ amalgamations/exits led to a reduction in the numberof UCBs. Beginning with 2004-05, the UCB sector hasundergone 128 mergers till March 2017 with Maharashtraaccounting for the maximum number of them, followed byGujarat and Andhra Pradesh.

As on March 31, 2017, there were 1562 UCBs withdeposits aggregating ‘ 443,468 crore and advances totalling‘ 261,225 crore. The sector accounted for about 3.6 per centof deposits and 2.9 per cent of the advances of the

banking sector. On an aggregate, deposits clocked agrowth of 13.1 per cent and advances grew by 6.6 per centyear-on-year during 2016-17. The gross NPAs stood at littlemore than 7 per cent. The return on assets (ROA) was 0.77per cent and about 91 per cent of the banks were reasonablywell capitalised with Capital to Risk weighted AssetsRatio(CRAR) above 9 per cent..

Performance of UCBs: Analysis of trends

Notwithstanding the sharp fall in the number of UCBs,there was a massive expansion in their balance sheetsunderscoring the effectiveness of the consolidation drive.In recent years though, UCBs’ growth in assets hasdecelerated to close to its long run average. The success ofthe consolidation drive of the UCBs is visible in otherparameters as well. The share of Tier II UCBs3 – both innumber and assets – has increased rapidly over time. Alongwith consolidation, a significant development has been themovement in the mode of distribution of total deposits of


the UCBs to larger size buckets. This is indicative of theexpansion and diversification of their customer base. In2016-17, the shift in the distribution of advances towardslarger buckets was less discernible than the shift in thedistribution of deposits (in millions).

Table 1 Deposits and Advances of Urban Co-operative Banks(End-March 2017)

Year ended Number of Deposits AdvancesMarch 31, UCBs

1991 1307 10157 8003

1992 131 1 1 1108 8713

1993 1306 13531 10132

1994 1305 16769 12172

1995 1300 20101 14795

1996 1327 24165 17908

1997 1355 30714 21550

1998 1502 40692 27807

1999 1590 52681 34214

2000 1645 71 189 45995

2001 1618 80840 54389

2002 1854 93069 62060

2003 1941 101546 64880

2004 1926 1 10256 67930

2005 1872 105021 66874

2006 1853 1 14060 71641

2007 1813 121391 79733

2008 1770 1398.71 904.44

2009 1721 1570.42 962.34

2010 1674 1831.50 1124.36

2011 1645 2118 .80 1364.98

2012 1618 2386 .41 1577.93

2013 1606 2768 .30 1810.31

2014 1589 3155.03 1996.51

Source: Report on trend and progress of Banking inIndia . RBI.

As discussed earlier, UCBs are important purveyorsof credit to socially underprivileged and deprived sectionsof the urban and semi urban populace. The sector has over79 lakh borrowers and 5.36 crore depositors.

Graph 1and 2 :Trends in Deposits Growth and Trends inAdvances Growth

While reviewing the progress made by the UCBs interms of their deposits and advances during the last 10years, it was observed that there has been continuousgrowth in their deposits and advances.(Graph 1 and 2).Though there has been reduction in the number of UCBsfrom 2004 onwards, the total banking business (depositsplus advances) of UCBs has shown continuous increasesignifying that the banks have been able to garner morebusiness.

Now let us analyse the performance of the banks undersome key variables.

Performance under CAMEL rating

The financial strength of an UCB is adjudged by theCAMELS rating assigned to it. Capital is a critical criterionfor determining the business model of the UCBs given theirpermissible activities. It is also an important parameter inthe CAMELS rating.


Table - 2 Rating-wise Distribution of UCBs (End-March 2017) (Amount in Billion)

Rating Numbers Deposits Advances

Banks % Share in Total Amount % Share in Total Amount % Share in Total

1 2 3 4 6 6 7

A 397 26.4 1.443 32.6 824 31.6

B 828 63.0 2.366 63.1 1.411 64.0

C 274 17.6 628 12.0 319 12.1

D 63 4.0 108 2.4 69 2.3

Total 1,562 100.0 4,435 100.0 2,613 100.0

The share of UCBs the lowest CAMELS ratingcategory ‘D’ has consistently come down since 2013-14.The distribution of UCBs in rating categories other than ‘D’did not show any perceptible change between March 2016and March 2017.

It may be seen that there has been a notable decline inthe number of UCBs that were assigned the supervisoryrating of ‘C’ or ‘D’ since 2007.

CRAR Distribution of UCB’s

Basel I norms have been made applicable to UCBs inso far as it relates to credit risk. As per the existing norms,UCBs are required to maintain capital charge for credit riskbased on 1988 capital accord and surrogate capital chargeon market risk through an additional risk weight of 2.5percent. The CRAR position of banks is given in the Table.It is observed that out of 1721 UCBs as of March 31, 2009,237 (13.7 percent) UCBs have CRAR lower than theprescribed CRAR of 9 percent. Out of these banks 145 (8.4percent) UCBs have CRAR less than 3 percent.

Table- 3 CRAR-wise Distribution of UCBs: CRAR-wiseDistribution of UCBs (End-March 2017)

CRAR Scheduled Non- All(in Per cent) UCBs scheduled UCBs

1 2 UCBs3 4

CRAR < 3 4 110 114

3 <= CRAR < 6 0 9 9

6 <= CRAR < 9 l 8 9

9 <= CRAR < 12 4 160 164

12 <= CRAR 41) 1.231 1.276

Total 54 1,508 1,562

Against the statutory minimum requirement of CRARfor UCBs at 9 per cent, 82 per cent of the non-scheduledUCBs maintained CRAR above 12 per cent in 2016-17.

Overall, the number of UCBs having CRAR of lessthan 3 per cent has come down from 224 as on March 31,2008 to 160 as on March 31, 2013 to 114 as on March 31,2017. The percentage of UCBs complying with theregulatory prescription of CRAR of 9 per cent has increasedover the years from 82.3 per cent as on March 31, 2008 to88.1 per cent as on March 31, 2013 to 91.5 per cent as onMarch 31, 2017.

Non-Performing Assets (NPA)

Table -4 Non-Performing Assets of UCBs (End-March)(Amount in billion)

Item 2016 2017

1 2 3

1. Gross NPAs 160 186

2. Net NPAs 61 68

3. Gross NPA Ratio (%) 6.1 7.1

4. Net NPA Ratio (%) 2.2 2.7

The UCBs’ Gross and Net NPAs showing a increasingtendency since last few years which is a general trend acrossthe banking sector as a whole. The Gross NPA ratio stood at7.1 per cent at end-March 2017 as compared to 6.1 per centat end-March 2016. The Net NPA ratio stood at 2.7 per centat end-March 2017 as compared to 2.2 per cent at end-March2016. This needs to be contained for sustaining a betterperformance.

Observations and Conclusions

An observation of the above data analysis of most ofthe shows the following

- Various policy changes were initiated by the Indianpolicy makers and regulators for strengthening the UCBsector.

- Overall the UCB’s are progressive as indicated by theirbusiness growth over a period of time.


- It has been found that overall, UCB’s performance hasincreased as measured by their CAMEL ratings andtheir CRAR measurement where majority of the bankscomply with the norms prescribed by RBI as a part ofstrengthening the banks and BASEL normspreparedness.

- However, it may be noted that the UCBs’ Gross andNet NPAs showing a increasing tendency since lastfew years.

A further analysis of the sustainability of the UCB’son various other performance at the overall and at theindividual banks level would reveal a clear picture of theprogress and preparedness of the UCB’s. The concept ofUmbrella organization mooted by the Malegaon Committeeneed to be considered to strengthen the UCB’s.

References

Babu, D. J. (2012). -”Performance Evaluation of UrbanCooperative Banks In India”. IOSR Journal of Businessand Management (IOSRJBM) ISSN: 2278- 487XVolume 1, Issue 5 .

BANK OF INTERNATIONAL SETTLEMENTS (BIS), (1991)Amendment of the Basel capital accord in respect ofthe inclusion of general provisions/general loan-lossreserves in capital.

BANK OF INTERNATINAL SETTLEMENTS(BIS)(1994), Amendment to the 1988 Capital AccordRecognition of Collateral.

BANK OF INTERNATINAL SETTLEMENTS(BIS)(2005), Amendment to the capital accord to incorporatemarket risks.

BANK OF INTERNATINAL SETTLEMENTS(BIS)(2015), Regulatory Consistency AssessmentProgramme (RCAP), Assessment of Basel III risk-basedcapital regulations – India.

Basel III (2010): A Global regulatory Framework for moreresilient banks & banking Systems.

Fulbag Singh and Balwinder Singh (2006), “Fundsmanagement in the central cooperative banks of Punjab-an analysis of financial margin”, The ICFAI Journal ofManagement, Vol. 5, pp.74-80.

Deolalkar, G. H. ((2008)). The Indian Banking Sector,On the Road to Progress.

Guruprasad. (2011). Indian Banking Industry - Basicsto Basel. International Jpurnal of Research inCommerce,Economics and Business .

Dr.Gurcharan Singh and Sukhmani (2011) “AnAnalytical Study Of Productivity And Profitability OfDistrict Central Cooperative Banks In Punjab”, Journalon Banking Financial services and Insurance Research,Vol. 1 Issue 3 (June2011), pp. 128-142.

Guruprasad.M. (2015). Non Performing Assets in IndianBanks – Post Economic Reforms – Trends. ‘SilverJubilee of Indian Economic Reforms (1991-2016) : ABalance Sheet’, One Day Interdisciplinary NationalSeminar( UGC Sponsored), Adarsh College. Badlapur.

M.Guruprasad. (2018). Evolution of Technology in theBanking Sector. Srujan. 3, pp. 17-25. Mumbai:Dr.V.N.Brims.

13 Janakiraman, U. (2008). Operational RiskManagement In Indian Banks in the context of Basel II:A Survey of the state of preparedness and challengesin developing the framework Reserve Bank of India.Global Journal of Finance and Banking Issues V .

14.Rani, N. D. (2010). Basel I and Basel II Norms: SomeEmpirical Evidence for the Banks in India . IUP Journalof Bank Management , 21-35.

RBI. (2009). Report on trend and progress of Bankingin India . RBI.

RBI: 2009: Report on High Power Committee:

18.RBI: 2015: Report on High Power Committee on UCBs

Shirai, S. (2001). ‘Assessment of India’s Banking Sectorreforms from the perspective of the governance of theBanking system’ . Presentation at ESCAP-ADB JointWorkshop.

Dr.Vaidehi Daptardar and M.Guruprasad (2018).Evaluation of Performance of Urban Co-operative Banksin BASEL Framework. Interdisciplinary NationalConference on Economics,Banking-Finance & SocialSciences. 4, pp. 127-135. Mumbai: KES Shroff Collegeof Arts & Commerce.


Sustainable Development through Financial Inclusion of Women in IndiaDr. Gauri Heble

FacultyDR VN BRIMS

[email protected]

Abstract: Large sections of the Indian society today still live in villages and rural areas and are deprived of basic facilities suchas financial literacy and credit delivery mechanisms. India has been a witness to extraordinary growth and development in thelast few decades. At the same time, India is also a land of contrasts where a large chasm exits between various sections of thesociety. Women comprise of a little over half the world’s population. However, studies suggest that their contribution toeconomic growth is dismal and thus unable to reach its full potential. This result in significant socio-economic consequencesin the country. Their economic empowerment should to be a priority as it is a major catalyst for economic progress anddevelopment. Financial inclusion of women is directly linked to empowerment. Women Empowerment enables women tounderstand and identify their strength and exercise more control over their own lives and their family. It provides them a senseof well-being, freedom and greater power and confidence in decision making. Financial inclusion of women can build genderequality by empowering them, thus providing them with economic independence and greater control over their financial lives,finally leading to Financial Empowerment of women. It is imperative to understand whether the goals of sustainable developmenttargeted towards women are being achieved or not. This paper attempts to understand sustainable development and itsrelation to financial inclusion of women in India. It also makes an attempt to delve on the role of financial inclusion in the socialand economic development of women in the country. Data for the study has been gathered through secondary sources whichinclude reports of the World Bank, The United Nations, the Reserve Bank of India, NABARD, various books on financialinclusion and sustainable development and other articles on this subject.Keywords: Financial inclusion, Gender parity, Inclusive Growth, Sustainable development, Women empowerment

Introduction

Financial Inclusion-A Step towards Development

Large sections of the Indian society today still live invillages and rural areas and are deprived of basic facilitiessuch as financial literacy and credit delivery mechanisms.India has been a witness to extraordinary growth anddevelopment in the last few decades. At the same time, Indiais also a land of contrasts where a large chasm exits betweenvarious sections of the society. For a nation to progress, itis imperative that all sections of society develop and growtogether. The wide gap existing between the upper sectionsand those living in poverty has to be reduced. Poverty inthis context denotes not only insufficient income, but alsodearth of basic facilities that are needed to be a part of theeconomic system like easy access to financial assistance.Poverty alleviation is possible when the rural and semi-urbanpopulace are provided with financial assistance. Financialresources have to be channelized towards these sections ofthe society. Low-income groups are often completelydisregarded by financial institutions. This is essentiallybecause of the complexities involved in providing financeto them. Banking and financial facilities should be madeavailable to the entire population without discrimination.Public Policy must focus on Financial Inclusion as Indianow faces one of its biggest challenges-Financial Exclusion.

Financial Inclusion is the delivery of financial servicesat affordable costs to sections of disadvantaged and low-income segments of society. There are many arduouschallenges in the area of financial inclusion includingstrengthening credit delivery mechanisms, bridging the gap

between the sections of society that are financially excludedand providing financial literacy to these sections. FinancialInclusion ensures access of financial services to low incomegroups at an affordable cost. The Committee on FinancialInclusion set up in 2006 chaired by Dr. C. Rangarajan hasdefined Financial Inclusion as “Financial inclusion may bedefined as the process of ensuring access to financialservices and timely and adequate credit where needed byvulnerable groups such as weaker sections and low-incomegroups at an affordable cost” The Committee on FinancialSector Reforms, chaired by Dr.Raghuram Rajan says“Financial Inclusion, broadly defined, refers to universalaccess to a wide range of financial services at a reasonablecost. These include not only banking products but alsoother financial services such as insurance and equityproducts”

The main objective of Financial Inclusion is to providea formal banking system to the less privileged, make themfinancially literate and give them confidence to makeinformed financial decisions. Financial inclusion ensuresthat all people have access to appropriate and desiredfinancial products and services. It ensures that financialresources are channelized towards weaker sections of thesociety. It also makes sure that banking and financial facilitiesshould be made available to the entire population withoutdiscrimination. Financial Inclusion provides growth in allsections of the society. This results in reduction of disparitiesin terms of income and savings through all sections ofsociety which leads to overall development of the nation.Poverty Eradication is sole objective of the financialinclusion. It narrows the chasm and bridges up the gap


between the upper sections and weaker sections of societywhich comprise of low-income groups. Financial Inclusionensures inclusive growth and financial stability of the weakersections as they can open employment avenues forthemselves and sustains their livelihood. Financial Inclusionalso educates these sections regarding investment andsavings which can be mobilised and effectively utilised forthe capital formation and growth of the economy.

In India, The Reserve Bank of India has persistentlybeen framing new policies and guidelines to promotefinancial inclusion. The banking sector has undergone majortransformation and developed the banking network bysetting up of more and more new branches, installation ofnew ATMs especially in rural and semi-urban areas,implementation of EBT (Electronic Benefit Transfer) andBC(Business Correspondent) model. The Reserve Bank ofIndia defines Financial Inclusion as “a process of ensuringaccess to appropriate financial products and services neededby all sections of the society in general and vulnerablegroups such as weaker sections and low-income groups, atan affordable cost in a fair and transparent manner byregulated mainstream institutional players”.

Sustainable Development and Women

Sustainable development reduces poverty in countriesthrough proper financial, environmental and social means.A World Bank study conducted in 1999 opines thatpolicymakers have many possible interventions to increasesustainability. The ability to measure poverty accurately isan imperative element of any country’s development policy.This ability helps to identify the poorest in the countrythereby allowing governments administer interventionseffectively. The main aim of eradicating poverty is the coreof the Sustainable Development Goals (SDGs). The UnitedNations General Assembly (UNGA), in September 2015,formally adopted the “universal, integrated andtransformative” 2030 Agenda for Sustainable Development.This Agenda is a set of 17 Sustainable Development Goals(SDGs) which are to be implemented and achieved in everycountry from the year 2016 to 2030. Today, sustainabledevelopment can reduce poverty and empower massesespecially women, if efforts are taken in the right direction.Gender Equality has rightly been described as a globaldevelopment priority by the United Nations. The globalbody has recognised it as a standalone SustainableDevelopment Goal (SDG).

Women comprise of a little over half the world’spopulation. However, studies suggest that their contributionto economic growth is dismal and thus unable to reach itsfull potential. This result in significant socio-economicconsequences in the country. Their economic empowermentshould to be a priority as it is a major catalyst for economicprogress and development. A report published by the UnitedNations titled, ‘Turning Promises into Action: Gender

Equality in the 2030 Agenda for Sustainable Development’concurs that achievement of Sustainable Development Goalsis difficult without gender equality and womanempowerment. Financial inclusion of women is directly linkedto empowerment. Women Empowerment enables women tounderstand and identify their strength and exercise morecontrol over their own lives and their family. It providesthem a sense of well-being, freedom and greater power andconfidence in decision making. Financial inclusion of womencan build gender equality by empowering them, thusproviding them with economic independence and greatercontrol over their financial lives, finally leading to FinancialEmpowerment of women.

Objectives of the Study

The paper attempts to understand the meaning, impactand contribution of Financial Inclusion on the IndianEconomy and Indian Populace. It attempts to understandsustainable development and its relation to financialinclusion of women in India. It also tries to delve on the roleof financial inclusion in the social and economicdevelopment of women in the country.


Data for the study has been gathered throughsecondary sources which include reports of the World Bank,The United Nations, the Reserve Bank of India, NABARD,various books on financial inclusion and sustainabledevelopment and other articles on this subject.

Sustainability, Financial Inclusion and WomenEmpowerment- The Connection

Akin to many societies the world over, women in Indiahave also been the target of gender discrimination and bias.The responsibility of managing a family and household isviewed as the responsibility of the women alone. Researchhas shown that women are more resilient when it comes tosavings and home management. Hence, there is an urgentneed to change this thought process and bring women fromthe lower income groups and rural areas into the mainstream,thus empowering them to take part in the decision-makingprocess both inside and outside their homes. The UnitedNations opines that that achievement of SustainableDevelopment Goals is difficult without gender equality andwoman empowerment. Women Empowerment meansunderstanding one’s identity in order to exercise morecontrol over one’s life as well as family. Financial inclusionof women can build gender equality by empowering them,thus providing them with economic independence andgreater control over their financial lives, finally leading toFinancial Empowerment of women. Studies have shown thatdespite efforts by the government to provide assistance inevery manner possible, many women are denied access toit.


Women Empowerment has several different facets. Itis a vibrant rainbow with many different hues, each colouradding a new dimension to the strength and confidence ofa woman. Social empowerment is the process of developinga sense of self-confidence and changing social relationshipsto include more and more people in institutions andprogrammes to promote their development and well-being.This is particularly helpful for bringing the poor anddisadvantaged people and women into the social circle withthe aim of increasing their skills and confidence so that theyengage and participate in the decision-making process oftheir homes as well as communities. Economic empowermentof women helps them to exercise greater control over boththeir lives and families. It enables them to take financialdecisions and also participate in the decision-making processof their families. It allows women to enjoy financialindependence, thus giving them greater security andconfidence

According to the Global Findex database (2014), thepopulace joining the formal financial system increased from35 percent in 2011 to 53 percent in 2014. Yet, more than 50percent of adults in the poorest of 40 percent of thehouseholds still do not have access to a formal bankingsystem and more so, women. The number of women nothaving access to a formal financial system stands at anastonishing 245 million. CRISIL (2013) measured the extentof financial inclusion in India in the form of an index. Thisuses non-monetary aggregates for calculating financialinclusion. The three parameters of the index were branch,deposit and credit penetration. The parameters used by theCRISIL Inclusix include the number of individuals havingaccess to various financial services rather than focusing onthe loan amount. More recently, The World Economic Forumpublished its annual Global Gender Gap Report. The WorldEconomic Forum’s annual Global Gender Gap Reportmeasures and ranks 144 countries on four parameters:economic participation and opportunity, educationalattainment, health and survival, and political empowerment.India ranks 15th out of 144 countries in politicalempowerment, it is ranked 112th for education and 141st forhealth and survival. The economic participation ranking is139th out of 144 with a 66 percent gender gap. The WorldBank recently published the results of its Global FindexSurvey (2017). According to this index, 77% of Indian womennow own a bank account against 43% and 26% in 2014 and2011.

Most of the developing countries like India attachhigh importance to development of women and their activeparticipation. Many initiatives have been taken by theGovernment over the years to promote women empowermentby bringing more and more women under the ambit of thebanking system. This leads to Financial Empowerment ofwomen. Financial inclusion of the people especially womenhas several advantages. Bank accounts provide women a

platform to save their earnings for future investments andto take control of their own finances. Women are alsoempowered to control their household expenditure budgets.Financial inclusion refers to universal access to a wide rangeof financial services at a reasonable cost. These include notonly banking products but also other financial services suchas insurance and equity products (Planning Commission,2009)

The Reserve Bank of India (2005) proposed financialinclusion based on the business facilitators/ businesscorrespondent model in India. This was based on theBrazilian success story in India. This report identified supplyand demand gaps to explain the lack of penetration of bankingservices in the rural areas. Financial Inclusion is when basicbanking services are made available to sections ofdisadvantaged people and low-income groups at anaffordable cost. It includes access to formal financial systemby introducing several initiatives. One such initiative is theMicrofinance intervention. Microfinance is now emergingas a powerful instrument of women empowerment.Microfinance was first used as a tool for empowerment ofthe poor by Professor Muhammad Yunus of Bangladesh.He was awarded the 2006 Nobel Peace Prize forestablishment of the Grameen Bank. Microfinance is theprovision of small amounts of finance to the poor, especiallywomen in rural areas. This comes with flexible repaymentschedules at very reasonable rates of interest. It providessmall loans and savings facilities to people who remainexcluded from formal financial services. It is an importantpolicy measure used to provide credit to the vulnerable andunderprivileged sections of society with the main aim ofpoverty alleviation. India is gradually turning into one ofthe largest micro finance markets in the world. The PradhanMantri Jan Dhan Yojana (PMJDY) programme is anothergovernment initiative aimed at providing financial servicesto all Indians. However, as gender disaggregated data is notavailable, the impact of the initiative on women’s financialinclusion is still not clear.

Conclusion

For a nation to progress, it is imperative that allsections of society develop and grow together. The widegap existing between the upper sections and those living inpoverty has to be reduced. This means that efforts have tobe made to bring the entire population across all strata underthe ambit of financial inclusion. Public Policy has to bedesigned in such a way so as to encompass maximumnumber of people in rural and semi-urban areas underfinancial inclusion. This can be done when regulatory andgovernment bodies work towards achieving completefinancial inclusion and inclusive growth by regulatingfinancial inclusion. However, there are many arduouschallenges in the area of financial inclusion, the main beingilliteracy and lack of awareness amongst people of the lowerstrata. In India, many policies and programs have been


adopted by the governments and also the Reserve Bankwith the aim of providing basic banking facilities to the weakersegments of society. In spite of this, we are way behind inthe process of providing basic financial services to thepeople with a huge percentage of the population stillremaining unbanked. The vision of the Reserve Bank ofIndia is to open 600 million accounts of new customers by2020 so that more and more people have access to financialservices. The journey to Financial Inclusion in India is nodoubt difficult but is achievable only through properregulation and implementation of policies ensuring thatfinancial resources are properly channelized towards weakersections of the society and ensuring that banking andfinancial facilities are made available to the entire populationin the country without discrimination.

References

World Bank, “Women’s Financial Inclusion and theLaw”, 2018.

Chakraborty K.C. “Financial Inclusion in India:Journey so far and way forward”, RBI Bulletin, 2013.

CRISIL, “Inclusix Financial Inclusion Index”, June2013.

Ghate, Prabhu (2007). Microfinance: The Challengesof Rapid Growth. New Delhi, India: Sage Publications.

Government of India (2008), “Committee on FinancialInclusion” (Chairman: Dr. C. Rangarajan).

Kabeer, Naila (2005): “Is Microfinance a ‘Magic Bullet’for Women’s Empowerment? Analysis of Findings fromSouth Asia”, Economic and Political Weekly.

Karmakar, K.G. (2008) Microfinance in India, New Delhi:Sage Publications.

Paramasivan C, Ganeshkumar V. (2013) Overview ofFinancial Inclusion in India, International Journal ofManagement and Development Studies.

Paramasivan C, Ganeshkumar V. “Overview ofFinancial Inclusion in India”, International Journalof Management and Development Studies. 2013.


Integration of Globalization and MBA Education in the Context ofIndian Economy

Nisha Balvant ChuriChief Consultant, Beyond Consultant

[email protected]

Abstract : This paper reviews Integration of Globalization and MBA Education in the context of Indian Economy. The authorperforms a 360-degree analysis of MBA education, its brand and purpose, and the factors that have influenced the evolutionof this prestigious degree. First, the author delves deep in the past, in search of roots and discusses the motives and drivingforces behind the initial MBA education. Second, the text will explore the reasons for the exponential growth of MBA collegesin India from 10 in 1970 to around 5000 in 2018 and how the globalization influenced that growth. Third, the author analysesthe correlation between the increase in the number of institutions and the MBA brand value and the current usefulness ofMBA education. Fourth, the author provides a viewpoint on how this post-globalization era and current protectionistpolicies across the globe will shape the future of MBA education. In this section, the author covers the growth of globalprotectionist politics and events ranging from Brexit to Trumpism and shift in Indian politics from farmer-centric toManufacturing (Make-in-India). In the end, the final section offers solutions on how to improve the institutions’ MBAofferings such that the prospective students would benefit. It is hoped that this paper will provide a unique perspective onthe betterment of the MBA brand.Keywords: MBA, Education, Globalization, Indian economy.

Introduction

The Master of Business Administration (MBA orM.B.A.) degree has become one of the most preferredprofessional degrees in India. The belief that MBA helps aperson reach a higher level in an organization faster has ledto an increase in management institutions in India in the lastfew years. With over 3200+ All India Council for TechnicalEducation (AICTE) accredited management institutionsoffering MBA or PGDM (Post Graduation Diploma inManagement) program, many students and professionalsare opting for this prestigious course.

However, if one takes one’s eyes off this rosy pictureand sees clearly one would realise that MBA program isfacing a wide range of challenges. As per the experts, basedon the current employment scenario, there is an immediateneed to restructure the program to meet industry demands.This text focuses why the changes to the MBA program arerequired and the course of action for its long-term survivorin India. For the purpose of this article, the author focusesonly on full-time MBA or PGDM or similar masters programs.

The Initialisation of MBA Degree

Beginning in the USA

In the early 20th century, U.S. commerce wasexperiencing explosive growth and companies startedseeking scientific approaches to management (Tuck Schoolof Business History, n.d.). The first business school in theUSA was The Wharton School of the University ofPennsylvania, established in 1881. And the Harvard GraduateSchool of Business Administration established the firstMBA program in 1908. By 1950s, the USA was turning out 4thousand MBAs per year (Castro, 1981).

India

India’s oldest business management school, XLRI,was founded in 1949. The first institute in India to offer anMBA was Indian Institute of Social Welfare and BusinessManagement (IISWBM), established in 1953. This was theculmination of the joint initiative taken by the University ofCalcutta, the Government of West Bengal, the Governmentof India and the captains of industry to set up a managementeducation Institute. (Indian Institute of Social Welfare andBusiness Management, n.d.)

Looking at the initial phase of management education,Government of India applied and got the grant to set up twoIndian Institute of Management (IIM) at Calcutta andAhmedabad respectively. This grant was based ontransferring American Business education knowledge andmodels and establishing collaboration with Americaninstitutes. The IIM Calcutta was established with helpinghand from the Sloan School of Management (MIT) in theyear 1961, focusing predominantly on Quantitative andOperational aspects of management. IIM Ahmadabad wasfounded in 1962, pioneered the Harvard style case methodof teaching in India with an emphasis on strategicmanagement. Later IIMs at Bangalore, Lucknow came up.(Parida, 2017). By 1970, there were ten MBA institutes inIndia.

Europe

In Europe, the dissemination of business schools cameas a result of the Marshall Plan and expansion of Americanmultinationals (Warde, 2000). Though the world’s firstbusiness school, ESCP Europe was in Paris, it was 1957when Europe offered its first MBA through INSEAD(Kaplan, 2014).


Globalization and Rapid Growth of MBA Institutionsin India

In early 80s India had about 50 institutions deliveringabout 2000 MBAs every year (Gupta, 2018). Due to theeconomic liberalisation in the year 1991, demand for MBAsincreased. In the late 19th and early 20th century, the purposeof MBA centered on education for business managers toenhance their status.

Post-mid-1990s, with booming service industry boththe supply and demand of the MBA education started torise. Individuals started to opt for MBA for better careerprospects, salary increase, career switch, opportunitiesabroad, leadership development, skills enhancement, alumnisupport, etc. The belief that MBA degree (irrespective ofother factors) would give a job or better designation orhigher salary resulted in a further increase in the number ofmanagement institutions.

After 2000, 100% Foreign Direct Investment (FDI) isallowed in higher education through the automatic route.Further, due to globalization, MNCs started their offshoreor captive units in India offering high paying jobs to skilledindividuals. As a result, the demand for MBAs increasedand by 2010 the number of institutions had grown to anastonishing 2500! According to AICTE data (see Table 1),around 4,00,000 students graduated from around 4,000management institutes in the year 2016-17.

Global Trends and Future of MBA

While there are a lot of global trends such as,technological innovation in AI, Big data, Data analytics,etc. in this section the author presents the global politicaltrends that would keep impacting the institutes andeducation in India.

Protectionism

This is the economic policy of restricting imports fromother countries through methods such as tariffs on importedgoods, import quotas, and a variety of other governmentregulations. While proponents claim that these policiesshield the stakeholders from foreign competitors, opponentsof this policy (and advocates of free trade) believe that thesepolicies have negative effects on economic growth andwelfare.

General Data Protection Regulation (GDPR)

Starting May 2018, the European Parliament andCouncil of the European Union made this law on dataprotection and privacy for all individuals within the EuropeanUnion (EU) and the European Economic Area (EEA). GDPRalso addresses the export of personal data outside the EUand EEA areas. Its aim is to give every individual controlover its personal data.

Brexit

As per the referendum of Jun’16 United Kingdom isdue to leave the EU on 29 March 2019. Economists havedifferent perspectives on this exit and its impact on the UKand Europe. However, one thing is sure that this will changethe way we do business today.

Make in India

In September 2014, Government of India launched‘Make in India’, a type of Swadeshi movement covering 25sectors of the economy. This encouraged companies tomanufacture their products in India and also increased theirinvestment. Within 2 years India received investmentcommitments worth 16.40 lakh crore and secured the placeof top designation for FDI.

The complexities for business and global markets andMNCs would be increasing. Things will become morecomplicated to manage because of national boundaries andthe new regulations. With that, the challenges for MBAswould be higher and more complicated than ever before.The role of MBAs in national and international marketswould be rapidly changing.

Objectives of The Study

This continuous growth in the number of institutions,individuals opting for MBA and MBA pass-outs started topose significant challenges. This section discusses thesechallenges in detail.

Admission Criteria

GD-PI and English as deciding factors : Further, groupdiscussion and interview scores are used to select thecandidates. Also, the process gives undue importance tothe English Language. And a talented pool of individualswith poor English can miss the opportunity.

An absence of holistic admissions : The process doesnot consider important factors in individuals’ profile suchas work experience, passions, creativity, volunteering/socialwork, other certifications, and so on.

Individuals with Almost Zero or Very Minimal WorkExperience : Around 80% of the population has zero or lessthan 2 years of work experience. Not knowing how businessworks, these individuals fail to comprehend futurechallenges, cannot contribute properly to case studies orteam assignments and thus do not acquire everything thatan MBA degree has to offer.

Curriculum

Course structure

Most of the courses are taught based on authors andexperiences from the west rather than changing


socioeconomic conditions in India. These programs adoptimported references – handbooks, papers, and theoreticalmodels. And thus, fail to give students a clear idea of thesituations they would face post-MBA.

Teaching Methods : Institutes stick to traditionaltheory based, one-way teaching. The courses lack on-job-skills required to survive and succeed in today’s dynamicworld.

Impact on Employment : The Corporate world findsthat many MBA graduates have poor soft skills and lack ofresult-driven approach. Over and again it has been arguedthat programs offered by management institutes are notaligned to real problems of the industry. Low educationquality coupled with the economic slowdown from 2014 to2016 has taken campus recruitments down by 45% (Rawat,2016). This is supported by the data from AICTE (see Table1) which shows only half of the MBA Pass outs are beingplaced for the last 6-7 years. Additionally, a study by TheAssociated Chambers of Commerce of India (ASSOCHAM)Education Committee (AEC) noted that only 7% of the pass-outs are actually employable in India except graduates fromIIMs.

Teaching Faculty

Institutes compromise on the quality of the facultymainly due to the unavailability of good competent facultyand the cost of acquiring such faculty members. Also, veryfew people enter the teaching field due to low salaries. If theprofessors do not have enough experience of today’scorporate industry, they fail to inculcate the requisite skillsto the students.

ROI

The Great Recession of 2008-2009 causedcompensations to fall and it is only recently begun to recover(The Alarming Decline Of The MBA’s ‘Value Added Ratio’,2018). Global competition has put severe pressure onemployers, decompressing pay levels for everyone includingMBAs. And hence, despite high tuition fees, the returnsfrom the post-MBA jobs are very little. While each studentspends on an average Rs. 3 to Rs 5 lakh on a two-year MBAprogramme, the monthly salary is at times measly Rs 8,000to Rs 10,000.


The author analysed several research papers andperformed an in-depth survey of twenty-three MBA orPGDM graduates involved in various MBA programs inlast fifteen years, in six different cities (Ghaziabad, Mumbai,Delhi, Indore, Manipal, Pune). The survey was carried outbetween Oct and Nov 2018.

Findings and Interpretations

The findings in the survey support the problemsdescribed in the Objectives section. Of total 25 participantsincluded in the survey,

1. 70% have less than 2 years of work experience beforestarting their MBA.

2. 80% of individuals’ MBA education have less than50% case studies (see Figure 1).

3. 76% confirm that the case studies related to Indiancompanies or Indian location were less than 50% (seeFigure 2).

4. 68% people mention that less than 50% of books werewritten by Indian authors (see Figure 3).

5. 76% of MBA graduates have less than 50% classdiscussions.

6. 60% population have less than 50% of teamassignments.

7. 71% people use less than 50% of their MBA educationin the first two to three years post-MBA (see Figure 4).

8. Currently, only 36% of the population is using theknowledge sought from MBA (see Figure 5).

9. 48% feel that their MBA degree was of little help to geta job and succeed post-MBA.

Limitations

The study had limitations in terms of sample size. Andhence, further studies are encouraged to overcome thislimitation and also investigate into other factors thatinfluence students and faculties to revive faith in MBAeducation.

Results

1. As the number of business schools increases, theeducation reaches to a wider audience, but it loses itsquality and relevance. Top business schools’curriculum is adopted without thinking of prospectivestudents’ capability, cultural backgrounds, interests,aspirations, and industries they would interact with.

2. Many engineering students (due to lower placements)and commerce students (who did not want to or couldnot go for CA/CS) keep entering the managementcolleges hoping for a job.

3. As more freshers and recently graduated students optfor MBA degree, high pay opportunities reduce. MNCshire these students for back-office or middle office jobs.With less or no experience, freshers cannot comprehendthe challenges posed by business today and take upjobs without realizing what they are good at.


4. This reduces the overall quality of output they produceand the working culture of the company. becauseemployers do not get the expected output out of MBAs,MNCs delegate work requiring lesser skills and lowerpay. Due to the huge supply of MBA graduates, thoughthese jobs do not necessarily need MBAs, are stilltaken up by them. This leads to a further reduction injobs or poor-quality jobs. A vicious cycle continues.

5. Though in some cases, the salaries are on a higherend, the job satisfaction or learning is not up to theexpectations of graduates. Talented pool suffers andstarts looking for jobs or education out of India oracquires various certifications or online/distantcourses from universities abroad.

Conclusion

Suggestions to improve institutions’ MBA offeringsare discussed below.

Review applications holistically

Applicant’s personal and professional achievements,passions, aptitude, vision should be considered whileshortlisting them.

a. Diversity: Institutes should try to maintain diversityin terms of work experience, educational andprofessional background, industries, job profiles, theconcentration to be pursued, etc. With globalisation,the need to work with people with different mindsets,attitude, culture, perceptions are rising. How to listento each other and come up with a single convincingsolution is important for personal and professionalsuccess.

b. An Option of regional language: Apart from English,applications should also be allowed in the regionallanguage to ensure everybody gets an opportunity topresent one’s case.

c. One score for all: Instead of having various entranceexaminations, having one centralised exam foradmission to any graduate institute in India would savea lot of manual efforts, money and time for everyone. Ifit was okay to use western curriculum and authors whynot use GMAT score for this purpose?

Balancing theoretical and practical learning

This can help students handle difficult situations inthe global market effectively and efficiently.

a. Encourage students to work on a business plan andstart-up for three months instead of taking aninternship. The success of the start-up on variousmeasures would help students not only in their post-MBA career but also in deciding the MBAconcentration. These start-ups would reduce the need

for jobs too.

b. Mentoring of students by alumni who are now industryexperts would help them choose the right path.

c. More case-studies relating to Indian culture, economyand the companies that come for the placement shouldbe included.

d. Peer discussions instead of traditional one-way traffictheory lectures would teach students to handle variousperspectives.

e. Focus on enhancing soft skills such as communication,entrepreneurship, leadership, critical & analyticalreasoning etc.

f. An assessment framework to not only measure theperformance of students but also the faculty needs tobe developed.

Selecting concentration

The MBA major should be selected wisely and notbased on post-MBA salary or status of a particular major orany such socioeconomic factors. One may be interested inFinance but might do well in operations considering one’sprocess-focused approach or in marketing because of thecreative nature. In such cases, students should be suggestedto take courses which merge finance with operations(financial operations or corporate finance) or finance withmarketing (pricing).

Revaluate course

Because new research keeps changing the way welearn and work, every 2 to 3 years, institutes should revaluatetheir offerings to ensure that they are truly aligned with theindustry changes. For example, a marketing major withoutan introduction to digital marketing, consumer insights and/or Search Engine Optimization (SEO) would not give all thetools required for a marketing manager’s repertoire.

Faculty

Institutes should get a mix of doctorates, entrepreneursand industry leaders as professors so that the students get tolearn from their experience. If that is not possible, guest lecturesby corporate leaders and successful start-up owners shouldbe frequently conducted to make students career ready.

Faculty Development and rigorous activity-basedtraining programmes would equip faculty with the skillsmeant for MBA in India (Parida, 2017).

International alliances

Business schools should take initiatives to tie up withthe corporate house for sharing the business ideas andmaking MBA education more realistic. Partnering with auniversity abroad (so that students can spend a quarter or


semester in that particular university) is a great way to learnthe foreign culture.

Employability

Institutes and students both should take equalresponsibility to help students become more employableand productive. Looking at hidden skills should be one ofthe top priorities of the program else MBA would be likeany other masters program in the country where one learnsthe books but does not learn anything new about oneself.

The author considers this paper to be an introductorypiece, to be complemented by further studies to enhance itsbreadth and depth.

References

AICTE dashboard. (2018, Nov 9). Retrieved fromAICTE:https://www.facilities.aicte-india.orgdashboard/pages/dashboardaicte.php

Castro, C. M. (1981). O Ensino da Administração e seusDilemas: Notas para Debates. Revista de Administraçãode Empresa, 21 (3) 58-61.

Gupta, P. M. (2018). What is happening to MBA.

Indian Institute of Social Welfare and BusinessManagement. (n.d.). Retrieved from About Us: http:/www.iiswbm.edu/AboutUs.aspx

Kaplan, A. (2014). European Management and EuropeanBusiness Schools: Insights from the History ofBusiness Schools, European Management Journal.European Management Journal, 529–534.

Parida, R. R. (2017). Indian MBA: A paradigm shift.AVN Publications, Jan.

Rawat, D. (2016, April 27). ASSOCHAM India. Retrievedfrom B and C category B-schools producing unemployable pass-outs: ASSOCHAM: http:/www.assocham.org/newsdetail.php?id=5651

The Alarming Decline Of The MBA’s ‘Value AddedRatio’. (2018, March 21). Retrieved from Poets andQuants: https://poetsandquants.com/2018/03/21/thealarming-decline-of-the-mbas-value-added-ratio/?pqcategory=business-school-news

Tuck School of Business History. (n.d.). Retrieved fromTuck School of Business: http://www.tuck.dartmouth.edu/about/facts-and-figures/history

Warde, I. (2000). Fascinantes Business Schools. LeMonde Diplomatique.

Figures and Tables

Table 1

AICTE Approved Institutes details (AICTE dashboard, 2018)

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Total Institutions 3,118 3,265 3,359 3,474 3,609 3,758 3,882

New Institutions 86 48 39 24 45 19 97

Closed Institutions 24 35 79 66 42 62 42

Total Intake 3,73,998 3,94,843 4,13,136 4,33,058 4,56,427 4,52,096 4,44,487

Faculties 45,988 55,876 56,611 58,582 60,360 51,918 40,302

Students Passed 1,80,186 1,87,038 1,86,795 1,86,449 1,79,990

Placement 98,500 1,06,217 1,02,017 1,04,701 1,03,461 95,338

Placement % with 0% 0% 59% 55% 56% 55% 53%respect to StudentsPassed

Placement % with 0% 25% 26% 24% 23% 23% 21%respect to TotalIntake

Note: The table shows the reduction in the placement scenario for MBA graduates since last few years.


Figures

Figure 1. What percentage of MBA education includes casestudies?

12%

68%

12%8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0-25% 25-50% 50-75% 75%+

% of case studies

Figure 2. What percentage of MBA case studies wererelated to Indian companies or Indian location?

32%

44%

20%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0-25% 25-50% 50-75% 75%+

% of case studies related to India

Figure 3. What percentage of MBA books were written byIndian authors?

32%

36%

20%

12%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0-25% 25-50% 50-75% 75%+

% of books by Indian authors

Figure 4. What percentage of MBA education was used inthe first 2-3 years post-MBA?

42%

29%

17%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0-25% 25-50% 50-75% 75%+

% of MBA education used

Figure 5. What percentage of MBA education is currentlybeing used in job/professions?

40%

24%

12%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0-25% 25-50% 50-75% 75%+

% of MBA education being used currently


Study on Impact of Mobile Advertising on Consumer BehaviourDeepali Milind Manjrekar

Pacific Academy of Higher Education & Research University, Udaipur (Rajasthan)[email protected]

Dr. Nitin Manohar JoshiDirector, DR VN BRIMS

Abstract : Mobile advertising is a modern advertising medium. It is a revolutionary change in the field of advertising. It is aneasier and better way to reach to target directly and advertise the product. It is considered as a new way of promoting theproduct to the potential consumer and influence consumer behaviour. It has also provided new opportunities to marketers todo their business in more effective way. Traditional advertising mediums like Television, radio, newspapers and magazine arenon personal communication tools meant more for masses while mobile marketing is reaching to people and persuading thempersonally. It is considered as interactive medium of advertising. Today it is considered as a direct and fast mean of reachingto the potential consumers regardless of geographic location. With the trends in direct marketing more attention is paid to theuse of mobile as a mean of effectively persuading potential consumer. This study aims to find impact of mobile advertising onconsumer behavior.Keywords: Mobile advertising, Marketers, Direct marketing, Potential consumer, Consumer behaviour

Introduction

Mobile Advertising is a multi-channel way of reachingto the target consumer through mobile, tablets, ipads etc.The popularity of mobile advertisements is growing in India.It has provided new opportunities for marketers to do theirbusiness. It is an easier and better way to reach to targetdirectly and advertise the product. It is considered as a newway of promoting the product to the potential consumerand influence consumer behaviour. It has also provided newopportunities to marketers to do their business in moreeffective way. Traditional advertising mediums likeTelevision, radio, newspapers and magazine are non personalcommunication tools meant more for masses while mobilemarketing is reaching to people and persuading thempersonally. It is considered as interactive medium ofadvertising. Today it is considered as a direct and fast meanof reaching to the potential consumers regardless ofgeographic location. With the trends in direct marketingmore attention is paid to the use of mobile as a mean ofeffectively persuading potential consumer.

Indian mobile market is a fastest growing market dueto the increase in the number of middle-income consumers.Thus, research on mobile advertising would impact greatlyon the way business is done. For many people, a mobilephone is medium which they can use to communicate andsocialize. Marketers while designing their marketing planhave to take into account consumers’ needs for securityand privacy. On 06 June 2017 Telecom Regulatory Authorityof India (TRAI) launched three new apps and a web portalto ensure that the Indian users are fully aware of the telecomservices that are being offered to them. Mycall app,MySpeed app and ‘Do not disturb (DND 2.0)’ apps are nowgoing to educate and ensure that there is transparency -between what consumers are actually paying for and whattelecom operators are promising to provide at a certain rate.

Mobile advertising

Mobile advertising is a form of advertising via mobile(wireless) phones or smart phone. It is a form of mobilemarketing. Mobile advertising has been recognized as oneof the most common tools of mobile marketing. As mobile isan interactive mass media and convey a more personaltouched message when informing and persuading potentialcustomers to buy a product similar to the internet, marketersare utilizing and making use of this viral marketing methodson a large scale, by which one recipient of an advertisementon mobile, will forward that to a friend. This allows users tobecome part of the advertising experience. At the bareminimum mobile ads with viral abilities can become powerfulinteractive campaigns. A key element of mobile marketingcampaigns is the most influential member of any targetaudience or community, which is called the alpha user. Someof the most popular mobile advertising applications includeadvertisements in mobile radio, advertisements on mobileInternet sites, short messages on mobile phones, textmessaging alerts and multimedia messaging (Hanley andBecker, 2008). As competition in the market has become moreintensive given new tools of marketing, getting a biggermarket share and retain existing customers as well asattracting new customers have always been a vital issue tothe survival of brands. Bargaining power of buyers isbecoming powerful over the time as substitutes of similarproducts/services in the market are significantly increasing.Companies have been searching for new techniques andtools to create their core competencies in order todifferentiate themselves from competitors. Channels ofcommunication with customers have also increased innumber. Thus, choosing the right time and the right tool tosend the right message to customers certainly helps brandsto gain competitive advantage. Customized advertisementsare becoming more a powerful marketing tool in this mobileera (Altuna and Konuk, 2009).


It is estimated that mobile app-installed ads accountedfor 30% of all mobile advertising revenue in 2014, and willover $6.8bn by the end of 2019. Other ways mobileadvertising can be purchased include working with a MobileDemand Side Platform. Another report has indicated thatworldwide mobile digital advertising spend would reach$217.42 bn in 2019 and $247.36 bn in 2020

Types of mobile advertisements

1. Click-to-download ads: The user will be directed to theAppstore or Google Play.

2. Click-to-call ads: The user will call to a phone numberafter clicking the button.

3. Image text and banner ads: A click opens your browserand re-directs you to a page.

4. Push notification

Mobile App

A mobile app or mobile application is a computerprogram or software application designed to run on a mobiledevice such as a phone/tablet or watch. Apps were originallyintended for productivity assistance such as Email, calendar,and contact databases, but the public demand for appscaused rapid expansion into other areas such as mobilegames, factory automation, GPS and location-based services,order-tracking, and ticket purchases, so that there are nowmillions of apps available. Apps are generally downloadedfrom application distribution platforms which are operatedby the owner of the mobile operating system, such as theApp Store (iOS) or Google Play Store. Some apps are free,and others are paid apps for which customer is suppose topay fees.

Consumer Attitudes towards mobile advertising

Attitudes towards an advertisement are defined as “alearned predisposition to respond in a consistently favorableor unfavorable manner toward advertising in general”(Mehta and Purvis, 1996, p. 1). The attitude of consumertowards advertising via mobile phone means consumers’attitudes towards mobile as an advertising tool. It does notrefer to consumers’ attitudes towards a particularadvertisement. In general, attitudes are psychological aspectof individual consumers to the way they react to the externalenvironment, in favorable or unfavorable manner. Bauer andGreyser (1968) and Altuna and Konuk (2009) observed thatthere was a strong correlation between customers’ generalattitudes towards mobile advertising and customers’responses to specific advertisements. For example, someadvertisements were annoying, whereas others wereacceptable and enjoyable by the consumer. This researchstudy has focused on the consumer attitudes towards mobiledevices as an advertising tool.

Objectives of the Study

To study the of impact mobile advertising on consumerbehaviour

To study the attitude of the people towards mobileadvertising

To study the relationship between the customerattitudes and behavior


The data collected for the study include both primarydata and secondary data. In the present study theinformation is collected from secondary sources referringto various books, journals, newspapers, magazines, pressclippings, published reports. The primary data have beencollected via a survey with the designed questionnairecontained information.

Convenient sampling method was used to select thesamples, based on availability of the respondents. Both maleand female participants have been selected to avoid genderimbalance. One of the requirements to participate in thissurvey was that the participant must have a mobile.

Findings

Almost all consumers come across advertisements ontheir mobile in the form of SMS, Email or notificationfrom apps downloaded in their mobile or onlineshopping portals like Amazon, Flip kart, snap deal,Myntra etc. they also receive notification from certainapps which monitor what they search to push theirproduct.

Most of the consumers respond to the advertisementif they come across good offer providing heavydiscount.

Messages they receive most of the times influence theirbuying decision. They have a favorable attitudetowards the message offering heavy discount onbranded products.

More than 50% Mobile users buy regularly from appsdownloaded on their handset.

Certain reminder messages like we miss you on ourapp are annoying, while other which provide 70 to 80%discount or good cash back offers are enjoyed by thecustomers

Discussion and Conclusion

In this cut throat competition age mobile device isplaying prominent role. Mobile device is one of the powerfultools used by the marketers to promote their products/services and influence the potential consumers. Mobileadvertisement is considered as a better marketing mix


component these days. Generally, the attitude of therespondents towards mobile advertisements is favorable.Mobile advertising messages influence the consumer buyingdecision. Mobile advertising is interactive tool ofadvertising. It conveys a more personal touched messagewhile informing and persuading potential customers to buya product or a service. So there is a personal touch in themessages. This creates favorable attitude among thepotential buyers which results in actual purchases of theproduct.

References:

Altuna, O. K. and Konuk, F. A. (2009). UnderstandingConsumer Attitudes Toward Mobile Advertising AndIts Impact On Consumers’ Behavioral Intentions: ACross-Market Comparison Of United States AndTurkish Consumers. International Journal of MobileMarketing, 4(2), 44-48.

Bauer, R. A., & Greyser, S. A. (1968). “Advertising inAmerica: The Consumer View”, Boston, MA: HarvardUniversity, Graduate School of BusinessAdministration. Carter, E (2008). Mobile Marketing &Generation Y African-American Mobile Consumers:The issue & opportunities. International Journal ofMobile Marketing. 3(1), 62-66.

Donna L. Hoffman, Thomas P. Novak, Yuanrui Li. (2015,February 11th). Online Consumer Behavior. (R. Mansell,

Ed.) Retrieved February 4th, 2017, from Wiley onlinelibrary: http://onlinelibrary.wiley.com/doi/10.1002/9781118767771.wbiedcs093/full

Hanley, M., and Becker, M. (2008). Cell Phone Usageand Advertising Acceptance Among College Students:A Four-Year Analysis. International Journal of MobileMarketing, 3(1), 67-80.

Kotler. (2007, April). Retrieved January 14, 2017, fromwordpress.com: https://comstudies.files.wordpress.com/2007/04/digital-age.pdf

Mehta, A. and Purvis, S.C. (1996). When attitudestowards advertising in general influence advertisingsuccess. Paper presented at the 1995 Conference ofthe American Academy of Advertising, Norfolk, VA,USA. Available at http://gallup-robinson.com/reprintswhenattitudesto wardsadvertising.pdf (accessed 25Nov 2012).

Plavini, P. and Durgesh, P. (2011). Attitude towardsMobile Advertising: A Study of Indian Consumers.Paper presented at the International Conference onManagement, Economics and Social Sciences(ICMESS’2011) Bangkok Dec., 2011. Sanjay, B. (2011).

Reddy, A. S. (2013, May). Cognizant. Retrieved January05, 2017, from www.cognizant.com: http://www.cognizant.com/InsightsWhitepapers/Time-for-Consumer-Goods-Companies-to-Rethink-Digital-Marketing.pdf


Management Skills and Conflict Resolution within the Indian Family SystemMukulika Ghose Banerji

INAC Assessment and [email protected]

Abstract: This research is a study from a Socio-Psychological perspective to ascertain why people who are highly rated fortheir managerial skills at work, frequently fail to demonstrate the same success at home within their families. Individuals areunable or unwilling to address acrimonious issues between family members, leaving the interpersonal dynamics to play out bythemselves with incohesive and dysfunctional outcomes eventually leading to breakdown in the family structure.As a Social Psychologist, it is a matter of notable interest that many people in management positions at work, frequently takedifficult decisions under very trying circumstances and also handle various challenging interpersonal interactions both verticaland horizontal, with objectivity and equanimity. However, the same skills fail them when they face family strife andcommunication breakdowns at home. They are unable to adopt clear unambiguous positions and a balanced attitude forresolving disputes. The common complaint by significant others within the family is that, when dealing with differencesbetween family members that need urgent redressal, people frequently resort to avoidance and procrastination. This adverselyaffects their ability to create and maintain a harmonious and positive environment within the family home.Keywords: Indian family system, Intrafamily conflicts, Management skills, Objective decision-making.

Introduction

Effective managers employ a number of personalitytraits and core competencies. Some of these have beenstudied in great details and form the core body of Principlesof Management. In the administrative theory of 14 principlesof Management (Henri Fayol), three criteria amongst manyothers are identified as necessary to effectively managepeople. These are Self efficacy, Leadership skills and effectiveDecision making. The big 5 Personality traits considered bymany as core requirements for Managers encompassnuances of these and indisputably, no manager can beeffective without gaining reliable internal competencies inthese areas.

Understanding Indian work and family environments froma Psycho-social perspective

A number of work-related entities including corporatesand government owned/managed companies in India havea slew of managers who are holding important posts and areperceived to discharge vital functions with various degreesof efficacy. A closer look at many of these functionaries willreveal a standard modus operandi of maintaining status quorather than bring about positive changes and adaptationsfor improving their outputs in terms of profits or managingtheir basic raison d’etre. A cursory look at governmentoffices will substantiate this theory that not doing anythingis far more lucrative than initiating positive change. Oneaspect contributing to this common phenomenon is the factthat some organizations do not have a high degree ofaccountability with specific targets and measurable goals.The funding comes from one source, the reporting is to anentirely different hierarchical system and the delivery isunmeasured in real terms. In stark contrast, private companiesaccountable to their shareholders have to deliver or shutshop. A closed circuit of inflow and outflow makes itmandatory for them to achieve profitability in order to

maintain momentum. In other words, where the latter aredriven by a set and ordered momentum, the former aresteeped in inertia. Managers who quickly learn the art ofmaintaining status quo, retain and hold their positions dueto vested interests and remote controls. The lesson learnt isthat doing nothing is the safest option and things will rollon even if left alone. It would be understandable therefore,if this mindset is the common faculty brought into play atthe family environment when faced with challenges.


Non-action by key managerial players even at theworkplace has led to disastrous consequences at a macroscale. As described in ‘Leader as Problem Solver & Leaderas Decision-Maker’ Quoting John Baldoni (2012)‘Unfortunately, even well-intentioned leaders can beoverwhelmed by circumstance and their own stubbornness.President Lyndon Johnson’s experience in Vietnam is onesuch example; no matter how hard he tried, Johnson couldnot bend the will of the enemy, nor remove U.S. troops in amanner he deemed honourable. Likewise, the managementof Chrysler Corporation in the late 1970s watched as thecompany continued to produce uncompetitive products andaccumulated crushing debts. Solving those problems neededradical solutions’.

Gottman (1993) carried out a study on three types ofinteraction amongst married couples. Engagers, Validatorsand Avoiders. According to him, “The adaptation with thehighest levels of neutral affect is the avoider adaptation. Itresults in a good deal of calm interaction, but pays the pricewith emotional distance in the relationships. The interactionsare not psychologically minded or introspective. Once eachperson has stated his or her case, they tend to see thediscussion as close to an end. They consider acceptingthese differences as a complete discussion. Hence, there isvery little give and take and little attempt to persuade one


another. Often the proposed solutions to issues are quitenonspecific”.

Many of the most influential theories of marriage tendto reflect the view that “distress results from couples’aversive and ineffectual response to conflict” (Koerner &Jacobson, 1994, p. 208).


Objective of the study: This study has beenundertaken to assess why functioning and high performingmanagers are unable or unwilling to harness the samemanagerial skills for handling their family conflicts at home.The fallout of this avoidance is a breakdown in familyrelations leading to tremendous stress for all concerned andculminates in enormous emotional and psychological coststo society as a whole.

Method: 30 married couples in Mumbai wereinterviewed where the husbands were occupied as seniormanagers in their respective fields. Additionally, each partnerin the couple was administered a questionnaire individuallyto identify common causes of intrafamily strife. Parentingstyles with children were clearly indicated as being excludedfrom the scope of this study.

The husbands were asked to rate their skills at workas well as in the home front in terms of objectivity and efficacyin communication, decision making and in resolvinginterpersonal conflicts. The wives were given a separatequestionnaire asking them to rate their husband’sinterpersonal skills at work as per their understanding. Theywere then asked to rate their husband’s communication,analytical and problem-solving strategies at home to resolveintrafamily conflicts.

Significance of The Study

Speaking specifically of the Indian family system, letus have a closer look at key managerial functions which aresubverted by our affective response process imbibed duringchildhood and interchangeably connected to work placeapathy. The Indian family is bound more by emotion thanreason and longitudinal studies have strongly indicated thatboys who are brought up by emotionally distressed mothersbattling their social and intra family disadvantages learn tocompensate affectively towards their mothers believing thatthey are duty bound to do so. The normative separationprocess in terms of progressive cognitive and affectiveindependence is disrupted when emotionally discontentparental figures tend to lean on and find succour in theircloseness and interdependence with their children. Therelationship is close circuited. This insecurity is enhancedby the entry of a perceived outsider when the young maleenters into matrimony and the new bride is seen as a threatto the sanctity of the mother-son relationship. Frequentlyin Indian joint families, this tag of outsider is removed only

when the wearer is replaced by another outsider or a largerthreat. For most part, the family struggles with issues ofcontrol and retaining or dislodging affective and socialpositions. Conflicts resulting from these exchanges arefrequently brought for resolution to the senior male membersof the family and/or the young male whose perceived loyaltyis at the centre of the dispute. These are the decidingmoments which give a platform for key managerial skills tobe displayed by the significant parties. Each situation is aprecursor of the next potential conflict area and needs to beaddressed effectively, timely and decisively, traits that arefrequently missing from the forum. Abstinence from decisiveaction at such times causes cumulative build- up ofrelationship stresses leading to breakdown of the familyfabric, many times irretrievably.

Results

The majority of the women (22 out of 30) who referredto long standing and poorly addressed family conflicts,attributed the same to the personal characteristics andbehaviours of their partners. Perceived inequity in thehousehold between key family members resulting inintrafamily conflict over power and position, combined witha tendency for their male partners to withdraw in responseto conflict or adopt an aggressive and/or biased supportiveposition was identified as a prime contributor to relationshipbreakdowns and was also strongly related to maritaldissatisfaction. For six couples, the issues were unrelatedto interpersonal factors and the responses from two coupleswere non-conclusive.

Limitations

In the absence of direct observation by wives of theirhusband’s management style in the office, their responsesand scores are solely their interpretations of the workingstyles exhibited by their partners at work. Similarly, the self-ratings given by the male respondents can be questionedon count of bias. The differentials in the ratings aresignificant, not the accuracy of the actual ratingsthemselves.

Interpretation

The results indicated that while the women rated theirpartners at a significantly higher score vis a vis how theymanaged issues at work by employing key management skills,they rated them lower when it came to family resolutionstyles in terms of their proactivity, willingness and ability toobjectively understand the problem and their efficacy infinding a satisfactory resolution for all concerned withinthe family. Communication, Decision making and Problemsolving were covered in the ratings


The key Managerial questions to be asked in anyfamily conflict situation is:


Intervention

What do men do when there is a disagreement/conflictin the family? Avoidance of issues is a common problem.Non- confrontational people tend to dissuade discussionstowards active problem solving for fear of upsetting theproverbial apple cart.

Decision making

Good decisions are both ethical and effective.

Ethical decisions generate and sustain trust;demonstrate mutual respect, responsibility, fairnessand caring. These behaviours provide a foundationfor making better decisions by setting the ground rulesfor the behaviour of all members of the family.

Effective decisions are effective if they accomplishwhat we want accomplished and if they advance ourpurposes. A choice that produces unintended andundesirable results is ineffective. The key to makingeffective decisions is to think about choices in termsof their ability to accomplish our most important goals.This means we have to understand the differencebetween immediate and short-term goals and longer-range goals. In a family set up, the goals must be allinclusive covering the welfare and identity status ofeach involved family member. This needs objective andbalanced approaches with least possible affectiveinfluences. Decisions are frequently marred by loyaltyfactors and in maintaining hierarchical positions in thefamily which are perceived to be under threat.

Conflict Management

Taken in an informal set up, it is the ability to initiate aproblem-solving process aimed at settling differences in afair and objective manner, at an early stage, withtransparency, without retaliation, and as close as possibleto the source of conflict.

In order to partake in any open discussion with varyingpoints of view and also to contribute an opinion whichmaybe at divergence with other family members, it is essentialto break with the tendency to identify oneself solely withthe family unit. This common affective inclination providesa strong incentive to adopt the group’s attitudes, in thiscase, the family unit. In order to understand the dynamics atplay which subvert an open exchange of ideas and opinions,it is necessary to discuss the contribution of some attributesthat are characteristic of the traditional Indian family system:Since this research is covered by a series of articles, onesuch aspect of intra family dynamics i.e. ‘Obedience’ isdiscussed here. The other areas influencing efficacy inresolving intrafamily disputes will be the subject matter ofanother discussion.

Obedience

Research confirms that people tend to comply withthe demands of people in authority and to be swayed bytheir persuasive arguments, and that such obedience has inthe past been generally approved of by society, Obediencecan be quite mindless as established in the classic study onblind obedience by Stanley Milgram (1963). Milgram’sexperiments indicate that a significant percentage of peoplewill blindly follow the orders of authority figures, no matterwhat the effects are on other people. As Ross (1977) pointsout - ‘This misperception is an example of the fundamentalattribution error. People tend to underestimate theeffectiveness of situational factors and to overestimate theeffectiveness of dispositional ones. Clearly, the tendencyto obey an authority figure is amazingly strong’.

In the traditional Indian family system, obedience isintegral to the family culture. Children are taught to beobedient to parental figures and adults to higher socialauthorities. Wisdom is an attribute of the elders in the family,to be imbibed and learnt as it passes down the generationsthrough a process of obedience, compliance and conformityto opinions and advice of senior family members vis a vistraditional rituals and value systems. The hierarchical formatof the traditional Indian family has very little place fordiscussion and disagreements or brainstorming, consensusbuilding and experimental thought, all of which are conflictresolution skills considered integral to management students.The traditional work place culture also followed similarexpectations and seniority was respected and reverence toexperience was the norm. Obedience to senior authoritieswas the norm. Today the scenario has shifted with tectonicramifications for traditional ways of thinking and doingthings.

A manager with effective leadership skills must reflecton some key questions when faced with a conflict situationor a problem at any place, work or at the home front: Whatare my options? What happens if I do nothing? Whathappens if I do everything possible? It is also important toaccept that some problems are complex and no matter whatyou do, the solutions and options may not unfold toeveryone’s satisfaction. When that happens, the only optionmaybe containment. On the other hand, some issues arepotential crisis in waiting. These need to be recognized fortheir volatility and while some may appear to find their ownresolutions in dramatic and much needed change, most needto be put out like fires—in a swift, safe manner utilizing allviable options resulting in minimal damage. Radical solutionis not everyone’s cup of tea and neither do people have theresources to gauge which radical solution will bring benefitsand handle the crisis at hand or exacerbate the existing one.However, while it is nobody’s argument that drastic actionshould necessarily be launched into, it is important to assessthe consequences of action versus inaction, long and shortterm.


All positive problem-solving measures are effectivein some quarter, but most effective leaders will state that thebest solution is to anticipate the problem and head it offbefore it actually happens. Managers who have a goodinstinct for rooting out situations before they fester intoproblems are also adept at looking at problems in one areaand assessing that they could spread to other areas. ASystems thinking approach, as practiced in organizationallearning, teaches us how to analyse the root cause of oneproblem and then think how that root cause or itsconsequences may affect another aspect of an organization.There is no reason why the same cannot function in a familysince this has all the elements for a functioning System.However, it is essential that managers have an enhancedability to separate themselves from problems and canintellectually minimize the complexity that may exist to makethem more manageable.

Herein lies the dichotomy of the modern day Indiansocial fabric. The world of work is fast moving towards theenergy, innovation and creativity of the youth and thetraditional way of life and work is under continuous pressureto give way to the new world. Where the pressures ofaccountability and achievement of increasingly challengingtargets has inured the Indian work force to make a changeand adapt to the new world, the old world is resistant andthe expectation of obedience and acceding to the authorityof the seniors is pervasive at the home front. More men andalso some women are struggling with the need to changethe ways they communicate at home in stark contrast tohow they come across to their colleagues and take decisionsat work. The older generation being out of touch with the

changing times, is clinging steadfastly to their way of life.Their entire identity is perceived by them to be in danger ofcollapse and the resultant stress is commonly felt by allgenerations within the family home.

Intrafamily conflicts are the natural consequences ofthis stretch and Individuals are finding it hard pressed tobring the same skill set which is demanded and delivered atwork into their homes with consequences for the survivalof the traditional Indian family system.

References

Baldoni J (2012) ‘Leader as Problem Solver & Leader asDecision- maker’ Articles on Leadership/Gender,Leadeshipforwomen.

Gottman, J.M. (1993). The roles of conflict engagement,escalation, and avoidance in marital interaction: Alongitudinal view of five types of couples. Journal ofConsulting and Clinical Psychology, 61, 6-15.

Koerner, K., & Jacobson, N.J. (1994). Emotion andbehavior in couple therapy. In S.M. Johnson & L.S.Greenberg (Eds.), The heart of the matter: Perspectiveson emotion in marital therapy (pp. 207-226). New York:Brunner/Mazel.

Milgram, S. (1963) Behavioral study of obedience.Journal of Abnormal and Social Psychology, 67, 371–8.

Milgram, S. (1974) Obedience to Authority. London:Tavistock.


New World Order: Rise of MultipolarityDeepak Agnihotri

Faculty, DR VN [email protected]

Introduction

Multi-polarity was seen in 1914 with Germany, Italyand Austria on one side and Great Britain, Russia and Franceon the other. The former was called Triple Alliance whereasthe latter was called Triple Entente as they counterbalancedeach other. This brought World War leading to economic,social and financial disaster.

With Triple Alliance defeating Triple Entente, Americansand British wanted to reshape Europe making some territorialchanges in Germany which started World War II. ThoughBritain with her allies defeated the Axis Powers, the multipolarworld order could not maintain global peace.

After World War II USSR and America emerged asworld powers but later in 1990 with the collapse ofcommunism the bipolar era ended and America emerged assuper power. America became the cop of the world byintroducing its own policies.

America became the policy maker influencingcountries with the help of their structural power althoughworld peace was never a guarantee with the outbreak ofGulf war and Iraq invasion. America extending itself beyondits ability to maintain or expand its military and economiccommitments is affected by fiscal deficits, unemploymentchallenges, is losing its relative economic power. ThoughAmerica had maintained its uni-polar status for a long time,there are other powers – Russia, China and others areemerging economically gaining importance resulting in multi-polar world order.

Often China is considered challenging Americanhegemony by accessing major economic markets andstrongly holding the global arena by its manufacturingabilities thus making the Western bloc weaker.

Other emerging powers are India, Brazil, and SouthAfrica acquiring noticeable importance on the world stage.

Shift of Global Economic Power

Brazil, Russia, India and China (BRIC) are comparedwith the advanced G6 economies - United States, Japan,Germany, UK, France and Italy. It is predicted that by 2030BRIC’s combined economic power will exceed majoradvanced nations.

In the year 2000 Japan’s GDP matched Germany, UKand France together, China’s economy was just a tenth ofAmerica, Brazil was stressed finding stability, Amricanreforms had crushed Russian economy and changes were

just beginning to take place in India.

But in 2010 the picture looked different. Americaneconomy was still bigger than China though Japan facedstagnation. Germany and France were superior in Europewhile Brazil had gained on the social and inequality front inthe Lula era. India gained a quicker growth while Russianeconomy grew six-fold.

The G6 were almost ten times bigger than the BRICbut after the global crisis their supremacy contracteddrastically, to almost three times that of BRIC.

If America succeeds in the plan to cut immigration by50 percent it would suffer in its productivity and wouldaffect its growth. This would generate anti-immigrationsentiment in Europe too causing similar adverse damage.The growth will be slowed down due to maturing economyand ageing demographics.

There are new wave economies like Indonesia, Mexico,and Turkey that would emerge as powerful economies andmay expand faster than Germany and France while SaudiArabia, Nigeria, Egypt, Pakistan, Iran, Philippines andVietnam may individually be bigger than Italy. This maypose a threat to BRIC countries.

Rise of New Powers

The uni polar dominance of America is beingchallenged by new powers like China, India and Brazil. Thetraditional dominance is being challenged in the governanceof the global economy which is simply a reflection of theireconomic strength.

The forces driving the new powers though they aregrouped as BRIC are varied and intricate in global economicgovernance. Brazil and India are primarily driven by theirefforts to form alliances with other countries, enabling themto influence and enforce their economic weight while Chinahas grown in its economic strength.

These emerging powers are growing rapidly andchanging the world order of governance, changing thestructure of international production and trade, nature ofcapital flows and the pattern of consumption. The globaldistribution of power is changing, and the all-time powersare coming to terms recognizing the reality that they willhave to share the international governance in future.

Russia and Brazil being prominent suppliers of food,energy and raw material, China and India as manufacturingand service powerhouses BRIC countries are projected to


have affluent economy by 2040 and can surpass G6 economies.

But BRIC countries because of rapid development arefaced with a major challenge of maintaining social stability.With each country in BRIC having varying challenges willhave to cope with rising inequality, migration issues,employment growth, and take advantage by managingdemographic changes.

It is important for BRIC countries, given the size oftheir population, to have effective financial institutions,regulations, strong public health systems, to control andcontain ecological and economic shocks.

Any flaws in the systems of emerging powers may resultinto economic collapse thus threatening regional stability.

BRICs should strategize to engage in solid bilateralconnections with the help of IMF, World Bank, and otherinternational bodies.

The new wave of globalization is going to displacewealthy nations of today; hence they should developalternate policies of development in new growth sectors.

Emerging Markets – Rise of New Economic Powers AndAmerica’s Future

The global competition landscape is changing, so alsothe financial landscape and the future of business. Theinnovations in the emerging markets, in the field of healthcareare pushing down the cost of healthcare coverage at thesame time banking is made available on mobile phones. Theemerging market economies are rising at an unbelievable paceparticularly in BRIC countries creating opportunities andchallenges for the developed countries. In this globalisedworld, when the economies are interconnected, it is importantfor the developed country governments and business to takenote of these developing economies as they contributesubstantially to the world’s GDP. Also it matters most for acountry to be a a prominent player on the global canvas.

It is not a zero-sum game. Businesses from thedeveloped world are eyeing the emerging markets that aregrowing as they consider being present in the emergingeconomies. The center of innovation has changed; it is notonly in developed countries but has spread everywhere.Developed countries understand the importance ofinnovation for economic growth both for America and otherdeveloped countries to remain competitive and the newmarkets to compete. The future is in the emerging economies.

Europe’s global position is being rapidly challenged asthe region from China to North Korea is on the rise and Europecan only compete if they stick together or else will wither away.

It took nearly a century for the economic center ofgravity to move from Asia to Europe. After the Second WorldWar it remained in the northern hemisphere but beyondY2K in just a decade the center shifted back to Asia.

Rise of China and BRICS

With the economic stagnation in the Eurozone andthe protracted economic crisis in United States, Brazil,Russia, India, China and even South Africa (BRICS) aregaining more wealth, expertise. The consumption power isincreasing supported by the political influence to re-arrangethe global system to their advantage. This can be consideredas the beginning of the end of America’s domination.

One needs to be cautious, as China is seen to be thecontender amongst BRICS and see whether it can offer abetter model of partnership or will it turn out to be sub-imperialist power that would enforce intense practices ofexploitation and extraction of resources from poorercountries to enrich self. A fair, just and peaceful society canonly be possible through multipolarity.

BRICS leaders have set up a new development bankto mobilize resources for sustainable developmental projects.The BRICS Bank will complement the present efforts ofmultilateral and regional financial institutions for globaldevelopment and growth.

China became the new exporter of capital and entereda new role on the global stage in 2005.

China’s economic priority is ensuring access to itsgoods, expanding outward investments, and consolidatingits position as a regional and global hub of advancedproduction networks. The prominent question about Chinachallenging America is whether such rivalry will help othercountries those are developing more affluent and stable oris this situation leading to more anxiety causing distress inthe weaker economies.

In spite of the crisis and growing national debt in America,it will be misleading to imagine that China’s rise means Chinawill rule the world. America is still the largest economy.

Now the emerging economies are playing a supportingrole to America and the developed economies are still leadingmany arenas in decision making in UN, World Bank andIMF. The rise of BRICS does not mean they will assume thedominating role like America. It means in the multipolar worlda new mix of leading countries will define the global politicaleconomy together with America.

China with its philosophy to grow at all cost has helpedthem to take a giant economic leap. China achieved its growthand modernization in just three decades what the advancedeconomies could achieve it in 200 years after the industrialrevolution. But this economic leap has reached its limitsand China is also grappling with huge internal problems.China is constantly experimenting to address the need ofstability. The reforms adopted by the Party are for survivalas the current situation of the Party is at stake.

Free trade and neo-liberalism has given rise to


inequality and poverty in the region especially in India andChina. China’s market socialism in its current form is greedy,not performing normally, and clearly inefficient system thatis enormously irresponsible and weak. The changing role ofChina in global political economy misses the mark to foreseeChina in the context of neo-liberal globalization.

It will be deceptive to focus on China and India’sincreasing GDP as both the countries are hugely populatedand majority are poor. Another gap between old and newupcoming powers is the technical know-how, militarycapability and political influence in international affairs.

World’s Rising Powers have Fallen

In the later years of Bush administration and the earlyyears of Obama administration emerging powers seemed tocaptivate the foreign policy establishment leading to a newapproach of shifting global power relations.

The newly powerful economies BRICS have provedto be less predictable, more fragmented, and mostlyreinforcing American policies than their own. The optimismof 2008 that BRICS would be dominant and would reshapeglobal economies and politics have been futile. Theprosecution trial of Brazilian president and the drug scandalof Russia are the signs that the newly emerging powerswould rebuild the world are a distant dream.

The rise of emerging powers was based on the premisethat they were domestically stable, ready to project globalinfluence. A decade and half later several of the BRICS arecollapsing by their self-doing, either by stock market lapses,asset bubbles, fluctuations in commodities and finitesupplies of low wage workers. The problems are just noteconomic, but politically dysfunctional, with rising risk ofcorruption, and institutional weakness.

The expectation from the rising powers was analignment with Washington or BRICS democracies holdingwestern influence. Nothing could be achieved. The risingpowers are majorly influenced by their colonial legacy tryingto prove their post-colonial identities attending to civilprotection or conflict prevention as a vital activity.

The uniformity amongst BRICS nation can be seenover diverse issues like population growth, carbon emissionlevels, global economy and trade, climate change, nuclearproliferation or even conflicts in the Middle East. But thetwo most powerful nations, India and China, are at loggerheads over terrorism leading China to have ambition in SouthChina Sea with New Delhi’s hedging strategy ofstrengthening relations with America and Japan.

The World in 2025

The world’s current superpowers will be into chaos,with America loosening its grip on global power with newemerging powers displaying dominance and continuing

financial slowdowns

Europe will be unable to cope with the financial crisiswith many countries facing tough situations, politicalchanges and declining economies all resulting to a globalshake up ahead.

Different diverse systems and demographics will placeenormous strain on the institutions of European Union.

European nations will more and more implementprotective strategies at the same time protect their nationalborders, a thing that has already started with the majorrefugee crisis.

Russia will appear to be more aggressive internallyand externally as it will shield itself from the economicweakening. Russia will also try to find ways to reintegratethe previous Soviet republics into some logical body in orderto postpone its demographic problems enlarge its marketand above all reengage some regional safeguards.

America will become more selective and strategic whileinvolving itself in the world issues. It will be less engaged inthe world politics than the past.

Germany though has emerged successful from thefinancial crisis; it will suffer in its exports due to theprotectionist policies adopted by the other European Unionnations, thus reduced influence in Europe.

Poland with its impressive political and economicgrowth in recent years will emerge as a prominent playerwith diversification in its trade policies and relationships.

Middle East a region created by the West will start tobreak down as power void will remain to exist and Americawill maintain the distance from the region.

The world in 2050

The world economy is predicted to grow at an averageof 3% p.a. from 2014 to 2050, doubling in 2037 and tripling in2050. There will be expected slowdown in 2020 as theexpansion rate in China and some other major economiesmoderates and working age population growth slows.

The global economic power will continue to shift awayfrom America, Western Europe, and Japan as China has alreadyovertaken America to become largest economy in purchasingpower parity (PPP) and market exchange rate (MER) terms.

India has the potential to become second largesteconomy by 2050 in PPP terms and third in MER terms andIndia may be able to achieve this provided it implementssustainable programs of structural reforms.

It is expected of Mexico and Indonesia to be bigger inPPP terms than UK and France by 2030 and also Turkey canbecome larger than Italy. Vietnam and Nigeria could becomefast growing economies by 2050.


However rapid growth is not a guarantee for theemerging economies as it will require sustained and effectiveinvestment in infrastructure thus improving political, legal,economic and social reforms. Over dependence on naturalresources may impede long term growth and would requirediversification of economies. Free flow of technology,talented people doing innovations, would be the keyeconomic drivers of economic growth.

Conclusion

The occurrence of BRICS is making waves in the worldmarket with challenges to some and opportunities to others.Political challenges are posed in developed economies toframe appropriate policies that promote growth whileprovisioning social stability particularly to those displacedby the new wave.

On the other hand BRICS themselves have complexchallenges in managing their own growth in evolving politicalscenarios at the same time maintaining stability. They arestruggling to find their own identity in the global marketamongst other larger economies tackling both regional andglobal complexities.

The emerging markets have substantial potential togrow but at the same time they could be an institutionalminefield that needs cautious treading into them. Globalstrategies need to strike the right balance between mature,low risk advanced economies that are growing faster ratherthan high risk emerging markets.

ReferencesAndrew Soergel, (January 2018), The GeopoliticalTrends You Should Worry About, https://www.usnews.com/news/articles/2018-01-02/report-2018-threatened-by-chinas-rise-us-iran-tensions-moreBeams, Nick, (August 16, 2012 ),”China SlowdownDeepens Global Crisis”, World Socialist Website.Betina Dimaranan, Elena Ianchovichina, Will Martin,(August 2007), The World Bank Development ResearchGroup, Trade Team China, India, and the Future of theWorld Economy, Fierce Competition or Shared GrowthChong-en Bai, Urjit Patel, Barry Bossworth, SantiagoLevy, (July 2016), Rise of New Powers, Brookings GlobalExpert, https://www.brookings.edu/wp-content /uploads / 2016/07/200702_05newpowers.pdfDebra Killalea, (February 2016), News.com, Australia,The world in 2025: China loses power, Russia ‘won’texist’, http://www.news.com.au/finance/economy/world-economy/the-world-in-2025-china-loses-power-russia-wont-exist/news-story /7394f3e24dca89039de5ebfe24503c6cDorothy-Grace Guerrero, (March 2013), Focus on theGlobal South, The Rise of China and BRICs: A multipolar

world in the making?, https://focusweb.org/content/rise-china-and-brics-multipolar-world-makingGaddy, Clifford G. (January 2007 ), “As Russia LooksEast: Can It Manage Resources, Space and People?”Gaiko Forum.Ikenberry, G. John, (January/February 2008 ), “The Riseof China and the Future of the West: Can the LiberalSystem Survive?”, 87 Foreign Affairs.John Defterios, CNN, (June 2013), The world’s nexteconomic powers are rising — and they don’t need theWest, https://edition.cnn.com/2013/06/18/business/analysis-defterios-st-petersburg/index.html,John Hawksworth, Danny Chan, (February 2015),PWC,UK, The World in 2050, http://www.pwc.co.uk/economic-services/global-economy-watch/index.jhtmlJohn Hawksworth, Deepankar Sanwalka, (February07,2017), PWC press room release, Shift of globaleconomic power to emerging economies set to continuein long run, with India, Indonesia and Vietnam amongstar performers, https://www.pwc.in/press-releases/2017/shift-of-global-economic-power-to-emerging-economies-set-to-continue-in-long-run-with-india-indonesia-and-vietnam-among-star-performers.htmlJu, Zhongwen, (Dec.12, 2010), “Moving towardmultipolar world”, China Daily.Landry Signé, Antoinette Sayeh, Albert G. Zeufack,(May 6, 2011), The Robert H. Smith School of Business,Emerging Markets - The Rise Of New Economic Powersand America’s Future, https:// www.rhsmith.umd.edu /news /emerging-markets-rise-new-economic-powers-and-america-s-futureMaddison, Angus, (2006), “Asia in the world economy,15002030”, Asian Pacific Economic Literature, 20(2): 137Natalie Nougayrède, (September 2017), The Guardian,Global power is shifting to Asia – and Europe mustadapt to that, https://www.theguardian.com/commentisfree /2017/sep /09/global-power-shifting-asia-europe-must-adaptSuzanne Nossel, (July 2016), The World’s rising powershave fallen, http: // foreignpolicy .com /2016/07/06/brics-brazil-india-russia-china-south-africa-economics-recession/ The Great Shift of Global Economic Power -Economics, https://qrius.com/great-shift-global-economic-power/, September 8, 2017Muhammad Valeed, ((April 21, 2017), The Nation, TheRise of Multipolarity, https://nation.com.pk/21-Apr-2017/new-world-order-the-rise-of-multipolarityWoo, Wing Thye, (February 2006) “The StructuralNature of Internal and External Imbalances in China,”Journal of Chinese Economic and Business Studies 4,no. 1.


Study of Inventory Control and Working Capital of Textile Company in ThaneYash SharmaMMS II YEARDR VN BRIMS

[email protected]

Dr. Smita JapeAssociate Professor, DR VN BRIMS

Abstract : This research paper involves research on the financial setup and inventory control management of a textilecompany. Inventory forms an important part of current assets and also 10-12% part of company’s total fund is used forinventory so it should be properly managed and it also helps in maintaining proper inventory as per the requirement and it alsomakes effective use of working capital by avoiding over-stocking. This research is done on a textile company situated in thanedistrict, which is in business of production of viscose filament yarn and also produces other kinds of yarn such as tyre cordyarn etc. and having its turnover in crores of rupees. The data used in this research work is secondary data and analysis of thedata is done through various financial analysing like through calculating relevant ratios, common size statement and othertools. This research is done to get the in-depth knowledge the methods and financial set up used by textile companies for thepurpose of inventory control management and also to get an overview of its working capital cycle. So, by doing this researchI got to know that EOQ helps in proper planning of the procurement of the inventory and 5S system helps in properaccounting and proper maintenance of different kinds of inventory procured by the company.Keywords- Current assets, Current liabilities, Inventory, Turnover, Working capital.

Introduction of Company

The company is situated in the Thane district ofMaharashtra. It is a textile company which mainly producesvarious types of rayons.

The company offers the following products to themarket:

Viscose Filament Textile Yarn (Centrifugally Spun)

Continuous Spun Viscose Filament Rayon Yarn

Rayon Tyre Yarn

Carbon-di-Sulphide

Sulphuric Acid

Caustic Soda and its allied products like LiquidChlorine and Compressed Hydrogen

List of various types of products in which company isinvolved

Viscose Filament Yarn (Textile & Industrial):

Name Capacity

Centrifugal Pot Spun Viscose Filament Yarn(Single & Double Twisted Yarn) 47 TPD

Continuous Viscose Filament Yarn 10 TPD

High Tenacity Rayon Tyre Yarn 18 TPD

Industrial Chemicals

Name Capacity

Sulphuric Acid 200 TPD

Carbon Di Sulphide 50 TPD

Caustic Soda 60 TPD

Liquid Chlorine 50 TPD

Hydrochloric Acid 10 TPD

Compressed Hydrogen Gas 18000 M3/D

Anhydrous Sodium Sulphate 45 TPD


Hamlin Alan P. and Heath field David F. (1991) opinethat working capital is one of necessary thing for theproduction process and yet it is not given properconsideration in economic model of production. Theimplication of modelling the time dimension of productionand hence, the requirements of working capital are exploredand the stress is also placed on competitive advantagegained by the firms that retained flexibility in the timestructure of their production.

Hossain Saiyed Zabid and Akon Md, HabiburRahman(1997) says that the basic objective of the workingcapital management is to arrange the funds for workingcapital at the right time at right cost from the right sourcewith a view to achieve a trade-off between liquidity andprofitability.

Joshi Lalitkumar and Ghosh Sudipta (2012) studied


Turbulence in Global CurrencyMs. Srushti Rajesh Ahire

Student (M.M.S.-I), DR VN [email protected]

Abstract: Turbulence in global currency has a wide impact on various parameters of the global market i.e. agriculture sector,foreign exchanges, crude oil prices, money market, rupee rate, share market, market investors. The two important financialassets of the international financial market are the oil prices and US dollar. The investing strategies of the investors dependson the correlation to diversify investment. This research is secondary in nature and the objective is to get to know the impactof the global currency i.e. USD on different mentioned parameters. Research shows that slight change in the rate of globalcurrency causes great impact on the global market in different sectors of the global economy of different countries.Keywords: Turbulence, Agriculture sector, Crude oil prices, Money market, Rupee rate, Market investors

Introduction

Businesses all over the world are facing financial riskswhen emerging into frontier markets. There are manycurrencies available in the market but Dollar plays a vitalrole in the global economy. The only currency used forInternational Accounting is US Dollar because all othercurrencies are based on it. In today’s globalized economythe financial risk faced is turbulence in global currency as itis completely based on floating dollar standard since Woodsagreement in 1971, which has eventually led to increase inpiling of currency and credit everywhere which couldbecome unstable. Unexpected turbulence in global currencyhas shattered every trading area in the world.

Turbulence in Global Currency

Agriculture

Crude Oil Prices

Rupee RateInvestors

Foreign Exchange

Historically and currently, the most common reactionto the turbulence occurring in the global economy has beensimply to deny its premise and to find the source of economiccrisis under capitalism. The turbulence has affected the laborproductivity in agriculture. Due to introduction ofdeteriorated oil into cultivation in relation to populationgrowth, resulted into fall in the profits between the risingrents and subsistence wages needs to be increased as it isbecoming costlier to produce food. In spite of updatedscience based technologies used in agriculture, it hasretained much of its original allure as compared to originalposition.

Turbulence in global currency has not only affectedthe agriculture sector but also foreign exchanges, crude oilprices, money market, rupee rate, share market, marketinvestors. It has always been the talk of the internationalfinancial market with respect to oil prices and the US dollar,they are treated as the two important financial assets. Theinvesting strategies of the investors completely dependson the correlation i.e. when there is stable negativecorrelation the investor may diversify investment, secondlyif it is time varying the strategy can be hedged only for acertain period of time and if the correlation is weak the aimof risk diversification cannot be achieved using investmentdiversification. Many extensive researches have beenconducted on the relationship between crude oil prices andUS dollar exchange rates using different methodologies.

Literature Review

According to the researches made it indicates that therelationship shared between this assets is negative but thedegree of correlation is dynamic. For e.g. Dollar exchangerates and oil prices have negative relationship (Yousefi andWirjanto, 2004). It’s been found that there is a weak negativerelationship between oil prices and major currencies alongwith USD (Euro, British Pound, Canadian Dollar, AustralianDollar etc.) exchange rate before the crisis (Reboredo etal.,2014).


The data collected for the research is secondary innature. The data has been collected from various journals,articles etc. published in high impact journals. The objectiveof the study is to understand the relationship between theUSD and oil prices

Data Analysis

Negative relationship between the USD and oil prices

The emphasize is mainly made on two aspectsreferring to the existing interpretations i.e. first is thedenomination effect which shows that crude oil isdenominated in USD which means that slight change in theeffective exchange rate of the US dollar will eventually affect


the import price of oil in other currencies too, which willultimately affect the global demand of crude oil prices.Second is the portfolio effect which explains thedepreciating value of US dollar that will lead to decline inthe dollar assets yields, that has led to change in the investingpattern of investors to oil and other assets in their portfoliowhich resulted to rise in the prices of crude oil and a negativerelationship, vice versa.The interdependence between dollarand oil prices is retrieved simultaneously by severaltransactions and processes and hence requires concurrencycontrol, specifically affects oil price fluctuations i.e. affectsthe US dollar exchange rate and oil prices.

Most of the businesses are conducted on domesticcurrencies and hence this people do not pay close attentionto exchange rates and so the effect of currency’s revolutionis far reaching on an economy. For a common consumer,exchange rates are only considered when it comes tooccasional activities or transactions such as importpayments, foreign travel or overseas remittances. Theimportant instrument in a Central Bank’s toolkit and to setthe monetary policy in the foreign exchange market is thevalue of the domestic currency. Therefore, directly orindirectly, a number of key economic variables are affecteddue to currency levels. It may play a role in the interest youpay on your mortgage, the price of groceries in your localsupermarket, the returns on your investment portfolio andeven your job prospects. This shows imports or exports orthe nation’s international trade. In common terms, a weakercurrency will encourage exports and make expensive imports,resulting to decrease in nation’s trade deficit (or rise insurplus) overtime. For example, U.S. exporter sells millionwidgets at $10 each to a European buyer two years agowhen the exchange rate was €1=$1.25. Therefore, the costto an European buyer was €8 per widget. Now the Europeanbuyer is negotiating a better price for a large order, andsince the dollar has fallen to 1.35 per euro, the U.S. exportercan afford to sell it a price break while still clearing at least$10 per widget. Even if the new price is €7.50, which amountsto a 6.25% discount w.r.t the previous price, the currentexchange rate in dollars would be $10.13. The primary reasonwhy the export has remained competitive in internationalmarkets is the depreciating value in the domestic currency.

Investor Benefits

If, for example, a US based investor is considered whohas a strong belief that USD is in a secular decline, mayinvest in the strong overseas market, because he feels thatwith the appreciation in the foreign currencies the returnswill also be boosted. Currency moves have a wide impacton the global as well as the domestic economy. Investorscan take complete advantage by investing in the overseasmarket or in U.S. multinationals when the dollar is weak,because when one has a large forex exposure, currencymoves can prove to be a potent risk in order to hedge thisrisk through various hedging instruments available.Eventually, US dollar has shaken off the market, which hasactivated a wave of selling in emerging market currencies,bonds and stocks, which has led to difficulties in theinvesting process of the investors. On the contrary to theongoing turbulence in the global market, Rupee rate hasfallen by 23 paisa to eventually end at Rs. 68.83. Thedomestic currency swung widely between a high of 68.45and a low of 69.03 in volatile trade. This research has mainlyfocused on the effect of turbulence in global currency onagriculture, crude oil prices, exchange rate, investors andrupee rate, hence it can be concluded that single move incurrency affects each part of the market severely.


This research has helped to study the relation betweenthe global currency i.e. USD and different parameters suchas the agriculture sector, foreign exchange, money market,crude oil prices and the market investors. Currency moveshave a wide impact on the global as well as the domesticeconomy. Hence, it can be concluded that single move incurrency affects each part of the market severely.

References

Yousefi, A., &Wirjanto, T. S. (2004). The empirical roleof the exchange rate on the crude-oil price formation.Energy Economics, 26(5), 783-799.

Mensi, W., Hammoudeh, S., Reboredo, J. C., & Nguyen,D. K. (2014). Do global factors impact BRICS stockmarkets? A quantile regression approach. EmergingMarkets Review, 19, 1-17.


Impacts of Globalization on Human Resource ManagementJayashree Prabhu

Alumni, U.K.DR VN BRIMS

[email protected]

Abstract : Globalization is the process of interaction and integration between people, companies, and governments worldwide.As increased interaction between various nations, there comes the growth of international trade, ideas, and culture. Because ofits emphasis on diversity, globalization also has a deep impact on the way companies manage their workforce. Likewise,globalization has many positive and negative effects on Human Resource Management. The key result areas of HumanResource professional are transforming as we face the effects of globalization. The role of HR has become more challenging dueto a shortage in the supply of staff. Nowadays attracting human capital is as important as managing financial capital. Globalstaffing and management of a workforce diverse in culture and language skills and dispersed in different nations are the keygoals of global human resources. Only those companies, who can continuously upgrade themselves and adapt to changingglobal market scenario will be able to attract and retain high performing talent. Companies who are proactive who can foreseetheir business needs and their workforce needs can gain a competitive advantage, and thus can sustain in the global world.Keywords: Globalization, Human resource, Diversity, Human capital.

Introduction

Human resource department is continuouslyexperimenting and changing in its functioning as they facenumerous complex challenges of globalization. In the globalcompetition, which involves constant connection andintegration between other nations, decision making in theorganization has become increasingly intricate andconvoluted. An organization’s workforce can prove to be acrucial source to sustain competition and can affect importantorganizational outputs like profitability, survival, customersatisfaction and employee performance. Also, there is ashortage between demand and supply of talent which islikely to increase more in future, especially for highly skilledemployees and for the next generation of middle and seniorlevel. Many developing nations can take examples ofdeveloped nations of effectively manage human resourcemanagement in the best possible way. Global staffing andglobal leadership are two components of global humanresources with the greatest potential for powerful leveragefor global firms. Due to advancement in technology, thehuman resource department now can develop a HumanResource Information Management System that collects andstores data from various sources. This system will help toanalyze the data to provide business insights, predict futureneeds and develop strategies to fill them. Only thosecompanies which are willing to adapt and predict futurebusiness and workforce needs will likely to succeed in thisglobal competition.

Factors Driving Globalization and Challenges 0fGlobalization

Shortage of skilled staff

Due to factors like economic turnover, rapidurbanization, ageing populations, and technology changes,many companies will face talent crunch in long run. Thisshortage of workers is predicated across different industries,

including manufacturing, construction, transport andcommunications, trade, hotel and restaurants, financialservices, IT and business services, health care, publicadministration, and education. According to the WorldEconomic Forum, the number of US workers in full-timepermanent employment will drop at a considerable levelwhich would be an all-time low. There would be vast talentgaps between the supply and demand of highly skilledworkers.

Availability of labor from developing countries

Many MNC’s follow the strategy to attract talent fromoutside the country as labor is available in bulk and at lowcost. In the developed countries, USA, EU, and Japan, thecurrent annual rate of growth is less than 0.3 per cent, whilein the rest of the world the population is increasing almostsix times as fast. According to the McKinsey Global Institute,there are approximately 33 million potential professionals inemerging markets and they are growing very quickly. Thestock of suitable, young professional talent in emergingmarkets is growing at 5.5 per cent annually, while the numberin developed countries is growing at just 1 per cent annually.Furthermore, the migration of workers and outsourcing ofwork would not be limited to unidirectional flow fromemerging countries to developed countries.

Technology Advancement

Gone are the days of file management, now due totechnology advancement, various software applications likethe informative system, data analytics, warehousemanagement, etc are available in the market at low cost.This has created a global platform that allows people toplug and play, collaborate and compete, share knowledgeand share work, on a bigger scale. Cloud computing onlinevideos or teleconferences and new advances in remoteaccess and support technologies also seem to fuelglobalization. This gives an edge to the HR department to


train their manpower and develop strategies to meet up thefuture business needs. The other challenge for thecompanies is if they want to send an employee abroad forwork purposes, they must make suitable arrangements forhim/her which might even include asking him to developnew language skills. This requires a considerable amount oftime and effort to make the employees learn new platforms.Even the employee retention is of top concern for bothinternational and domestic companies.

Roles and Responsibilities of Human Resources

In order to meet the dynamic business needs, the roleof the human resource department is constantly changing.Earlier human resources were restricted to administrativework meeting short term gains and savings, but nowadaysthe role of modern human resource departments is to focuson organizations long-term objectives. Ulrich (1996) definesthe roles of human resource based on the following fourfunctions – Strategic business partner, Change Agent,Employee champion, and Administration Expert. They arealso champions of globalization and technology savvy.

Human resource should function as a strategicbusiness partner and change agent who should devise theirHR strategy in alignment with overall business strategy.Talent planning should be linked with strategic planning.Companies need to create leaders capable of generatinggrowth and profits. The human resource professional shouldbe skilled in acquiring business insight in order to predictchanges and make informed decisions at operational andstrategic levels. Human resource professionals should beconstantly upgrading themselves in order to create a workenvironment in which people will choose to be motived,happily contributing towards betterment. In short, if allpolicies, procedures, systems, best practices are placedproperly, then employees are motivated to do their best whichhelp them to grow professionally and personally both. Workflexibility is expected to be on the rise in the future workplaceincreasing the connectivity so interaction between HRmanager and line managers will be virtual without face toface meetings.

Conclusion

The increasing prevalence of globalization is drivenby a number of factors, including a shortage of talent indeveloped countries, the availability of low-cost labor andgrowing consumers in developing countries, andtechnological progress. By 2020, for every five retiringworkers, only four new workers will join the labor force inmost developed countries. The shortage between thedemand and supply of talents is likely to continue to increase,specifically for highly skilled professionals. Only themultinational companies which are willing to adapt theirhuman resource practices to the changing global labor marketconditions will be able to attract, develop and retain highperforming employees, and will likely survive, and succeedin the global competition. The human resources need tofocus on organizations long-term objectives and on future-oriented plans. Instead of focusing exclusively on internalhuman resource issues, human resource departments needto take a balanced and broader approach. HR departmentsof global companies must assemble data on factors, such asemployees, attrition and talent hiring, compensation andbenefits, ethnic, gender, cultural, and nationalitydistributions etc. Only companies who can upgradethemselves in such dynamic environment would able tosurvive in the global world.

Refrences

Evans, P. (2010). The global challenge: Internationalhuman resource management. McGraw-Hill HigherEducation.

Friedman, B. A. (2007). Globalization implications forhuman resource management roles. EmployeeResponsibilities and Rights Journal, 19(3), 157-171.

Kapoor, B. (2011). Impact of globalization on humanresource management.

Kapoor, B., & Sherif, J. (2012). Human resources in anenriched environment of business intelligence.Kybernetes, 41(10), 1625-1637.

Sathyanarayana, B. K. (2015). Human ResourceManagement and Its Changing Dimensions In TheGlobalised Era – The Strategic Focus Study. IJAR,5(1), 75-78.

Tanno, L. K., Ansotegui, I., & Demoly, P. (2018).Globalization and anaphylaxis. Current opinion inallergy and clinical immunology, 18(5), 365-369.


Industry Insights


A Study of Foreign Investments in Indian E-commerce andits Effects on Retail Industry

Krishnan SubramanianHead Digital IT, Raymond Apparel Ltd.

[email protected]

Abstract :This article highlights the key investments of foreign institutional investors into Indian e-commerce companies overthe last decade (2008-18) and explains the impact of these investments on the Indian retail industry. It starts with an overviewof the key online & offline players in the Indian retail industry across three large categories - electronics, apparels andgroceries. That is followed by a walk-through of important milestones for the online organizations over the last decade interms of investments, expansions and mergers & acquisitions along with a highlight of the key foreign investors who catalyzedthese activities. The article then moves on to the impact of these activities on the overall retail landscape in India and how ithas affected other allied industries (such as warehousing & logistics). The article concludes with the author’s commentary onfuture prospects of the Indian retail industry and what can be expected in the next 10 years. This article is intended forstudents who would like to get a better understanding of an emerging industry (e-commerce), academicians wanting to exploreits growth & impact and working professionals interested in better understanding or switching their careers towards e-commerce. The article is built upon research data from government sources (such as FDI inflow data), author’s own experiencein the e-commerce industry, balance sheets & quarterly/annual results of retail companies & investors and sectoral analysispapers from consulting firms.Keywords: E-commerce, Indian retail, Start-ups, Venture capitalists, Online sellers.

Introduction

In India, the retail industry is an important pillar of theeconomy and contributes to nearly one-tenth of the GDP. Itcovers multiple sub-industries or verticals such as fashionretail, grocery, electronics, food & beverages, etc. Till theonset of e-commerce, this industry was dominated by largeoffline players who specialized in individual verticals.

Table: Selected Key offline players in the Indian retail space

Sub-industry / Select Key Offline PlayersVertical

Fashion retailing Madura Group (part of AdityaBirla Group) owning ordistributing brands such asLouis Philippe, Van Heusen,etc.·Arvind Group owning ordistributing brands such asFlying Machine, Arrow, Gap,etc.·Future Group (also invested inmultiple individual brands) andowning or distributing brandssuch as Fashion @ Big Bazaar ·Reliance Group (retail arm asReliance Trends & distributionarm as Reliance Brands)

Grocery Future Group (through BigBazaar)·Reliance Group (throughReliance Fresh)·

Aditya Birla Group (throughMore outlets – recently soldoff)

Electronics Tata Group (through Trent)Reliance Group (throughReliance Digital)

Tata Group (through Chroma)Future Group (througheZone)Vijay Sales

In fashion & electronics retailing, the key playersparticipate in the whole value chain, i.e. sourcing &production, distribution and retailing. So a fashion playerlike Arvind Group would own mills that produce the yarns& fabric, own factories that would produce the finishedclothes, have pre-identified distributors to whom it wouldsell and also sell the product from its own shops. So theentire chain has been built and controlled for decades byfew entities.

However, in electronics, the large players primarilyact as end retailers for brands. So a large brand such asSamsung, Apple, Dell, Lenovo, etc. would make theproduct (cell phone, laptop, etc.) and sell it to a specialistdistributor (such as Redington, Ingram Micro, etc.) whowould, in turn, sell to the retailer. In this arrangement, thecapital expenditure of building the distribution networkhas been split among multiple entities. Hence, the controlof the distribution network also lies splintered amongmultiple entities.

Start of e-commerce in India

Though e-commerce websites existed in India in


multiple forms such as Rediff shopping, India Plaza, etc.,however, Flipkart was the first player to introducetechnology, scale and variety in online sales. Flipkart startedas an online seller of books in 2007. To build trust among itscustomers and to ensure fast adoption, it introducedmultiple innovative concepts which over time became thede-facto features in most commerce websites. The featuresincluded:

1. Free shipping

2. Cash payment on delivery

3. No questions asked returns policy

4. 24*7 customer support through multiple channels (e-mail, website and phone)

After stabilizing the operations and showing sufficientadoption, Flipkart raised its first round of funding from aventure capital fund named Accel Partners ($1 M in 2009)and from a hedge fund named Tiger Global ($10 M in 2010and $20M in 2011). Slowly Flipkart expanded to categoriesoutside of books and entered into electronics, consumerdurables, etc. It made its first entry into the fashion spaceby acquiring Myntra in 2014 and from then on, Myntra hasbeen running as an independent entity as part of the Flipkartgroup. Over time, Flipkart went on to raise $7.3 B from multipleventure capitalists, individual investors and hedge fundsand itself got acquired by Walmart at a valuation of approx.$ 21 B.

As part of its growth, Flipkart had to replicate theoffline distribution value chain in accordance with the onlinebusiness practices. It realized that the Indian logistics eco-system was not ready for B2C orders fulfilment on a largescale. So, it addressed the warehousing & logistics relatedneeds by launching a company called Ekart that exclusivelycatered to sellers selling on Flipkart. Ekart acted as a partnerfor first & last mile logistics, warehousing, sorting andstoring. It also acquired a company called PhonePe in 2016which now acts as Flipkart’s e-wallet and payments arm.

Three years after Flipkart, Amazon entered the Indianmarket by launching a deal comparison site calledJunglee.com in 2012 and started online retailing a year later.Leveraging learnings from its growth in the US market,Amazon spent substantial time, money & effort in buildingwarehouses and a delivery fleet called Amazon TransportServices. To compete with Flipkart, Amazon has investedclose to $7 B till date in its India operations.

In the last eight years, PayTM has emerged as thethird largest e-commerce market-place in India. It started in2010 as an electronics wallet to enable digital transactionsand entered in e-commerce retailing later in 2017. It countsChina’s Ant financial (investing arm of Alibaba Group),Japan’s Softbank and USA’s Berkshire Hathaway as its

notable investors.

Structure of the Indian e-commerce industry and its keyinvestors

Over time, key Indian e-commerce players have evolvedinto two types - horizontal & vertical players. The horizontalplayers focus on multiple categories such as fashion,electronics, furniture, consumer goods, etc. while the verticalplayers focus on one single category. Flipkart & Amazonhave emerged as the dominant horizontal players followedby PayTM and Snapdeal as a distant third & fourthrespectively. Among the vertical players, fashion hasemerged as a key category with Myntra & Jabong (part ofFlipkart group) emerging as key portals with others trailingthem (such as vilara.com, voonik.com, etc.). In the furniturespace, Pepperfry & Urban Ladder have emerged as strongcompetitors.

Table: Key online players in the Indian e-commerce space

Horizontal/Vertical Key Online Players

Multi-category Flipkart (Now owned byHorizontal Walmart)

AmazonPayTMSnapdeal

Fashion Vertical Myntra (Owned byFlipkart)Jabong (Owned by Myntra)Vilara (owned by Voonik)VoonikCraftsvilla

Furniture Pepperfry·UrbanLadder

Other niche categories Lingerie – Zivame, Prettysecrets, etc.Children’s wear – Firstcry,Babyoye, etc.

All the above e-commerce companies are dominantonly in the B2C space. E-commerce is yet to meaningfullyenter the Indian B2B space (i.e. transactions between brandsand distributors/wholesalers/retailers). In China, the e-commerce landscape is dominated by Alibaba (both B2Band B2C) and JD.com (owned by Walmart) is a distantsecond. Amazon fulfils its China orders from warehousesoutside of China.

India has emerged as a key battleground for three investorgroups.

1. Walmart – Invested $ 16 B in India through Flipkart andits affiliates

2. Amazon – Invested $ 7B in India through Amazon India


3. Softbank – Invested $ 1.4 B in India through PayTM.Additionally, it has invested almost $ 7 B in Indiathrough Uber, WeWork and some other non-retailcompanies.

These investor groups or its affiliates have extensivelyinvested in both Indian e-commerce companies and also inallied industries such as logistics, warehousing andpayments leading to deep disruptions in these industries.

Disruptive effects on retail and other industries

The disruption caused by e-commerce has been feltmost notably in the electronics industry. In the last ten years,e-commerce has emerged as a strong sales channel for thisindustry, and in categories like cell phones, almost 40 % ofthe sales now happens online. Many brands like Xiaomiand OnePlus have started as online first brands – i.e. theystarted selling on e-commerce portals first before setting upthe offline distribution & retail network. The e-commercemarket-places have also helped in creating greater productchurn among consumers, causing a consumer to keep aphone for seller time before buying a new model.

In the fashion industry, e-commerce now contributesalmost 5% of the revenue for most apparels brands. Thiscontribution is much higher for personality-driven brandssuch as Wrong (promoted by Virat Kohli), All About You(promoted by Deepika Padukone), etc.

The deep investments made by the e-commercecompanies in warehousing & logistics has led to newcompanies emerging (such as Delivery, ExpressBees, etc.)that directly compete with traditional logistics players likeDTDC, Gati, BlueDart, etc. However, the traditional logisticsplayers have also seen their revenue increase due tocontribution from e-commerce. Warehousing & logisticsindustry has also seen a huge upgrade in the back-endtechnology with all players now ready to invest time & moneyin technology to improve tracking, storing efficiencies, routeplanning, etc.

In the recent months, Amazon has emerged as a keyinvestor in the offline space by acquiring a controlling stakein More chain of stores, 5 % stake in Shoppers Stop and 9.5% stake in Future group.

Conclusion

The last decade has seen a cycle of investments,growth, acquisitions and consolidations in the e-commercespace. As the industry stabilizes and customer adoptionbecomes a norm, the focus will shift towards improvingbalance sheets and would lead to a greater focus onprofitability and cost efficiencies. We can also expect astrong focus on new categories such as groceries andexpansion of the industry to cover tier-3, 4 and 5 towns.Traditional brands & retailers will also adapt to e-commerceas a sales channel in a bigger way. This would manifest as agreater percentage contribution of e-commerce to theiroverall revenue.

References

Damodaran, H. (2018). India’s new capitalists: caste,business, and industry in a modern nation. HachetteIndia.

India, P. (2015). e-Commerce in India: Acceleratinggrowth.

Mangla, S. K., Juma, J. A., Kumar, U., & Agnani, J. E-Commerce in the Context of Trade, Competition andConsumer Protection in India.

Das, K., & Ara, A. (2015). Growth of E-Commerce inIndia.

Anuj, K., Fayaz, F., & Kapoor, M. N. Impact of E-Commerce in Indian Economy.

Hongfei, Y. (2017). National report on e-commercedevelopment in China. United Nations IndustrialDevelopment Organization, Inclusive and SustainableIndustrial Development Working Paper Series, WP17.

Graber, D. A., & Dunaway, J. (2017). Mass media andAmerican politics. Cq Press.

Singh, B. J. R., & Kaur, M. P. (2016). Corporate socialresponsibility in India. International Journal of HigherEducation Research & Development, 1(1).


Technologies Empowering Global Automotive Industry: Present and FuturePiyush Tarey

(EIS – Automotive) TCS, [email protected]

Abstract: The global automotive industry has undergone a plethora of breakthrough developments in past decade.Transformational technologies like Electrification, IoT (Internet of Things), AI (Artificial Intelligence) and Machine learninghas enabled vehicles to become fuel efficient, hyper-connected, autonomous, backed by more sensors, software and processingpower. Intelligent technologies have led to the evolution of every aspect of the industry leading to features like auto-driving,virtual showrooms and smart traffic infrastructures in developed countries. This article aims to discuss the current status oftechnological revolution which is shaping future of global automotive industry. In this, article we will briefly go through someof the major technologies that have changed the game. Article throws light on how the automotive industry has changed overlast five decades and how the next ten years will be more disruptive than last 50 years. The author with his expertise andexperience in designing technology platforms for globally leading automotive brands will describe in-depth present scenario oftechnologies empowering global automotive industry.Key words: Global technology, Automotive industry, Electric vehicles, Connected cars, Autonomous driving

IntroductionTransportation as a basic function and its various

modes, including automobiles will not lose its importance inour lives in near future. However, the most likely to be changedis the way customers interact with the products fromautomotive industry and how they use them. The technologyinnovations and the choices made by manufacturers willimpact the customer interactions with the vehicles. Globalautomotive industry has undergone a plethora ofbreakthrough developments in past decades. However, therecent adoptions of ground-breaking technologies havebrought a disruptive change and accelerated the revolutionof the automotive industry like never before. This article throwslight on the major technological shift in the industry andmakes an attempt to explore how these technologies likeelectrification, autonomous features and enhancedconnectivity have contributed to the disruption and moreadvanced features to the automobiles.Major Technologies contributing to automotive disruption

Some of the most ground-breaking technologies whichare speeding the Automotive revolution are –Electrification,Autonomous and connectivity.

Electrification- The Future cars will be more fuelefficient as all the major car manufacturers are coming upwith electric and hybrid vehicles. The rise of electric vehicletechnology is helping to reduce carbon emissions withoutbreaking the bank as more companies are designing carswith electric motors. The rush is on to build electrical gridinfrastructure, adjust business models, and roll out enoughcharging stations to meet growing EV demand. With Teslaleading the EV (electric vehicle) revolution, by releasing theelectric and hybrid vehicle that can take you to hundreds ofmiles with a single charge, companies such as VW, Generalmotors, Toyota and Nissan are also coming up with their EVfleet. The numbers are in, and in the U.S. alone, electricvehicle sales increased 21 percent last year — from 158,614vehicles sold in 2016 to 199,826 vehicles sold in 2017.December 2017 also marked the 26th consecutive month ofyear-over-year sales increases for EVs, led by the Chevy

Bolt, followed by the Toyota Prius Prime and the Tesla ModelX. Electric vehicles are also becoming more affordable withcompanies such as Hyundai, Kia, Toyota and Nissanunveiling hybrid cars under $30,000 mark.

Whereas less than 5 percent of vehicles sold in 2016were equipped with electrified-vehicle (xEV) powertrains,the industry aspires to have over 50 percent of all newmodels in 2021 equipped with xEV drivetrains.

In terms of charging stations, 2017 brought us theopening of Tesla’s largest supercharger station in NorthAmerica, located about halfway between Los Angeles andSan Francisco — something of a mix between airline waitinglounge and coffee shop. Volkswagen announced its plans toinstall 2,800 charging stations in 17 of the largest U.S. citiesby June 2019, mostly in workplaces and multifamily dwellings.

The speed at which this can be achieved will be decidedby how the industry will meet the technological and economicalchallenges. Some examples are - Battery cost and scale. Toreach parity in total cost of ownership and profitability, thecost of batteries would need to be reduced by 30-40%. LithiumIon battery production will need to be increase significantly tomeet demands of millions of new xEVs.

Autonomous- Autonomous systems have suddenlycaught the attention of the world with the path-breakingdevelopments in the fields of Computer Vision, GraphicalProcessing Units (GPUs) and Sensor Technologies. Anautonomous system makes use of many technologies in orderto perform its functions in an efficient and safe manner. A self-driving car uses a set of cameras for the purposes of identifyingvarious vehicles, pedestrians, objects, traffic lights and lanes.It uses the recent advances in computer vision and deep neuralnetworks, such as, Convolutional Neural Networks (CNNs)and Fully-Convolutional Networks (FCNs) to do this.

Number of cars already incorporated with semi-autonomous capabilities in the form of driver-assistedtechnologies, the combination of ever evolving processorspeed and the algorithms making this possible. TheAutonomous software using machine learning is capable oflearning on the go and make the run time decisions as good


as human drivers. These include automatic-braking sensors,motorway lane sensors, mapping technology that monitorsblind spots, cameras in the back and front of a car, adaptivecruise control and self-parking capabilities.

Google recently revealed the self-driving pod Waymo,while Local Motors released a fully-autonomous vehicle aswell. Ford hopes to have a self-driving vehicle on the roadsby 2021. In 2016, only about 1 percent of vehicles sold wereequipped with basic partial-autonomous-driving technology.Today, 80 percent of the top ten OEMs have announcedplans for highly autonomous technology to be ready forthe road by 2025.

Connectivity- Future automotive industry willpotentially be unrecognizable from its present scenario, andthe predominant agent supporting this disruption would beconnectivity. Today, there is an intense focus on how westay connected with the world outside when we’re behindthe wheel—that is, while we still need steering wheels.Before the IoT (Internet of Things), automobile data washighly limited and difficult to gather. For manufacturers,informed decisions were difficult to make — and it was nearlyimpossible to act proactively. The emergence of connectedcars has taken the world by storm, and the future is all aboutharnessing this potential goldmine of data. Vehicles are alsobecoming IoT devices which can connect to smartphonesand take voice commands for setting up a vehicle, includinga car’s infotainment system and its application preferences.

Manufacturers are beginning to learn about thetremendous opportunities they now have, to gain insightinto countless underexplored realms, such as drivingpatterns, warranty claims, inventory management,maintenance optimization, fuel consumption, and customersegmentation. They are also realizing that they need robustand reliable tech infrastructures that can automaticallyseparate the signal from the noise amid billions of sensors.Major areas where the connected cars are contributing1. Leveraging Predictive Maintenance - With sensor data

from connected cars, however, automakers canconstantly assess the performance of any and all oftheir parts in real time. This opens the door to apredictive maintenance approach, where trendingissues are monitored and addressed as they happen,limiting the fallout from large-scale recalls, minimizingunnecessary wrench time, and potentially saving livesin the process.

2. Creation of Receptive Supply Chain Networks - Theissues illuminated by predictive maintenance will havea ripple effect on the supply chain that must beaddressed as early as possible in order to avoid costlydelays in production. Through IoT data, manufacturerscan monitor and control material consumption in realtime throughout the entire chain. With this approach,there are no surprises. All issues are addressed beforethey become a reality. According to Cisco, themanufacturing world is poised to save $2.7 trillion byimproving in this area.

Operational costs and efficiencies are what separatesuccess and failure in the auto industry, and those whocapitalize on smart data analytics are best poised to thrivein the future.

Only 12 percent of cars today are equipped withembedded connectivity solutions, and monetization is stillweak (less than $1.5 billion in revenue). But the importanceof cars as part of a connected network for the consumer isgrowing. The consumers are ready and willing to changecar brands for better connectivity has doubled over thepast two years. In the premium segment, a majority of OEMshave already installed fully connected infotainment systemsin 100 percent of their new vehicles.Conclusion

Some of the greatest minds in the tech industry havejoined forces with automotive companies in order to improvethe way our vehicles operate these days. The rise of electricvehicle technology is helping to reduce carbon emissionswithout breaking the bank as more companies are designingcars with electric motors. Big data and AI are playing anessential role in the customization of vehicles as well,notifying car owners of when their vehicles and doingpredictive maintenance. Plus, the rise of self-driving vehiclesand the potential of CaaS (Cars-as-a-service) as a mobilityservice will save consumers greatly, while also increasingtheir safety. Building upon innovative technologies fromthe automotive and telecommunications industries and data-driven technology, the connected car has the potential totransform our society. The increasingly software-basednature of today’s vehicles is also important when it comesto leveraging data. Vehicles that are potential of sendinginformation back to owners, dealers, and Original EquipmentManufacturers (OEMs) about component performance canhelp diagnose problems and enable parts to be repairedmore quickly. The data feedback loop—which is leveragedto provide both safety improvements and better design andproduction of vehicle parts—is continually shortening.Combined with a more efficient vehicle design pipeline,consumers will increasingly see their driving experienceimprove at much faster paces.References:

https://www.mckinsey.com/industries/automotive-andassembly/our-insights/how-the-auto-industry-ispreparing-for-the-car-of-the-futurehttps://towardsdatascience.com/the-future-oftechnology-in-the-automotive-industry-11081c8a1999ht tps : / /medium.com/@Udaci tyINDIA/coretechnologies-used-in-self-driving-cars-538a211cda91https://www.wired.com/story/guide-self-driving-cars/https://www.wired.com/brandlab/2016/02/howconnectivity-is-driving-the-future-of-the-car/http://autocaat.org/Technologies/Automated_and_Connected_Vehicles/https://www.greentechmedia.com/articles/read/howvehicle-electrification-will-evolve-in-2018


Is it Start of Another Global Recession ?Shankar Chatterjee

Business Analyst, 63-Moons [email protected]

Abstarct : The article gives an insight about the global factors impacting the global capital market and makes an attempt tounderstand if the factors are strong enough to bring in a recession as we saw in 2008. It also summarizes India’s position againstthat global economic factor and how India is trying to adapt to the changes and address the roadblock with deters revision inthe economic policy. This article tries to bring in the prevailing oil price dynamics among the incumbent players in crude oilspace. Also tried to highlight the reason behind depreciating currencies of Emerging countries and the changing pattern in theglobal economic power shift.Keywords: Global market, Economic policy, Oil prices, Crude oil

Introduction

Stock Market is falling 300-500 points almost everyday. The BSE SENSEX has falling from 38900 levels to 34000levels in just a 2 months’ time. Similar incident took placealmost 10 years back. Around September 2008 markets wereunpredictably volatile and on September 15 the news of“Lehman Brothers files Bankruptcy” came. It’s been 10 yearsnow and similar cues are visible globally. The same questioncame to his mind “are we on the eve of another globalrecession”. If it’s a global recession again, is it going toimpact India badly?

The oil price dynamics

Oil is a crucial commodity in modern times and it’s likea weapon for the countries that has it in abundance. Nowmainly the OPEC nations are the leading producer of crudeoil and has always been dominated the international marketwith a monopolistic price cartel. But in recent times therehas been some competition to these OPEC nations fromemerging countries like Russia, Brazil, Mexico, Canada etc.These emerging countries have got sources of producingcrude at economical rates and have been able to dent on theprofitability of the OPEC nations. There is a more demand(86 million/day consumption) than supply of crude ininternational market and thus taking advantage of it theOPEC nations has started creating artificial scarcity in oilproduction resulting the price increasing to 85$ a barrel markin the international market. Another reason is the politicalinstability in Venezuela also resulted in scarcity in productionof crude oil from OPEC nations and impacting global crudeprices to soar.

Table 1: U.S. Energy Information Administration, 2016 dataCountries highlighted in Blue are OPEC member nations

Rank by Country Oil % of WorldProdu- production Productionction (bbl/day) 2016

World 80,622,000 -Production

1 Russia 10551497 13.09%

2 Saudi 10460710 12.98%Arabia

3 US 8875817 11.01%

4 Iraq 4,451,516 5.52%

5 Iran 3,990,956 4.95%

6 China 3,980,650 4.94%

7 Canada 3,662,694 4.54%

8 UAE 3,106,077 3.85%

9 Kuwait 2,923,825 3.63%

10 Brazil 2,515,459 3.12%

11 Venezuela 2,276,967 2.82%

12 Mexico 2,186,877 2.71%

24 India 734,180 0.91%

Source: Economic Undertow. Retrieved From: https://www.economic-undertow.com/2018/06/02/oil-producers/


Graph: Percentage of total world production of oil for OPECmembers nations.

Source: Economic Undertow. Retrieved From: https://www.economic-undertow.com/2018/06/02/oil-producers/

The impact of oil dynamics is seen in Indian domesticfuel prices as well. Petrol prices have gone up from anaverage price of Rs. 50 per lit. to Rs 94 per lit. and for dieselit has increased from Rs.35 to Rs 78 per lit. in a decade’s timeframe. About 80-90% of India’s oil is imported from OPECnation, mainly Iran. The recent US sanction on Iran has alsoresulted in instability of Iran’s oil production and thus it hasstarted impacting the fuel prices in India indirectly. The sharpincrease in fuel prices has witnessed an increase in thewholesale and retail consumers market as cost oftransportation has gone up due to soaring domestic fuelprices. Even Automotive industry has received a hit as thesales of cars and two-wheelers have slowed down eventhough the festive season is approaching.

Table: Average petrol prices

Year Avg. Petrol Price Avg. Diesel Price

2006 50.98 35.73

2007 46.38 32.84

2008 48.68 34.08

2009 47.58 34.9

2010 50.98 38.51

2011 66.66 43.58

2012 76.79 43.47

2013 67.62 53.44

2014 76.42 61.55

2015 70.91 56.18

2016 64.51 53.92

2017 69.59 57.67

2018 93.79 78.03

Source: Free fincal. Retrieved from: https://freefincal.com/india-petrol-diesel-historical-price-data/

Graph: Petrol and Diesel price from 2006 to 2018.

Source: Free fincal. Retrieved from: https://freefincal.com/india-petrol-diesel-historical-price-data/

Weakening Rupee and other emerging market currencies:

All the emerging market countries have beenwitnessing a heavy fall in their domestic currencies valuepegged with USD ($). The prime reason for the same is theinterest rate increment from the U.S. Federal Reserve. Aftera decade of nearly-zero interest rate, U.S. Fed Reserve hasstarted increasing interest rates which has caused currenciesof emerging markets depreciate sharply. The increase in U.Sfed Reserve interest rate has switched the foreigninvestments out of these emerging markets and are gettingparked in United States resulting in reduction of ForeignCurrency Reserve (FCR). India had seen an all time highFCR of $424.864 Bn. In June 2018 India’s FCR was declinedby $7.5 Bn to consolidate to $405.14 Bn. Further in July andAugust 2018 there has been subsequent fall in FCR by 1Bnand 3 Bn respectively. At the end of Aug the total FCRreported was US $ 400 Bn. Govt. has taken measures tostabilize falling rupee rate but with the market trends it seems,Rupee might reach a value of around 75/ $ by Dec 2018considering the fact if US Fed Reserve further increasestheir interest rates.

Table: Month wise Forex Reserve

Month End Forex Reserve (US$ Billions)Sep-17 400.205Oct-17 399.225

Nov-17 401.942Dec-17 409.072Jan-18 422.367Feb-18 420.963Mar-18 424.361Apr-18 420.366

May-18 412.824Jun-18 405.143Jul-18 404.193

Aug-18 400.848Source: RBI Website. Retrieved From: www.rbi.org


developments and would periodically bring in requiredmonetary policies to ease the market. With global economiessignaling a recession, all the eyes would be on emergingcountries especially India who has its parliamentary electionin 2019.

On a regulatory forefront Securities Exchange Boardof India (SEBI) has already started taken multiple measuresto protect any forecasted default risk/ credit risk in caseglobal recession has an adverse effect on our Indian market.With this in mind it’s time to wait and watch on the globaldevelopments and accordingly take necessary steps toadvert any financial contingencies.

Refrences

Economic Undertow (2018). Oil Producers and TheirGovernments. Retrieved From: https://www.economic-undertow.com/2018/06/02/oil-producers/

Free fincal (2018). What we can learn from Petrol, Dieselhistorical price inflation data. Retrieved from: https://freefincal.com/india-petrol-diesel-historical-price-data/

MSCI Intl Emerging Market Currency. Retrieved From:www.investing.com

RBI Website (2018). Month wise Forex Reserve.Retrieved From: www.rbi.org

South China Morning Post (2017). Another globalfinancial crisis is imminent, and here are four reasonswhy.

XE Currency Charts. Retrieved From: www.xe.com


Parivartan : Theory of Constraint Way(Professional to An Entrepreneur)

Parag Prabhudesai,Director, Bullows Paint Equipments Private Ltd.

[email protected]

Abstract : This article is intended to guide management students, professionals & budding entrepreneurs with a differentperspective of how education, qualification & practical experience coupled with acceptance to “Parivartan” (Change) canimpact our personal and professional life. As a professional, the expectations from an individual is to play a role in somespecific limited part of the whole system, unless one is a CEO. Professional is expected to work in a specific area or domainor may be department. The Entrepreneur is required to play the role of managing the whole system which grows as thebusiness expands. Entrepreneur not only has to drive people for current performance from the system, but also, he/she has tobuild the system for the future growth. The entrepreneur is expected to work in current system as well as on the futurebusinesses. Article elaborates with author’s personal experiences to accept & manage changes at various stages of professionallife. Article explains thoughts & process of decisions making while accepting to change & undergo change. Article narratesactual life situations & experiences faced during various stages from starting a business with limited resources & l furtherexplain situations & difficulties a Small & Medium scale Enterprise (MSME) faces when it plans to grow in various aspectsof business. This will further elaborate on management of a small-scale acquisition, various challenges faced in this process&further merger of entities both in terms of business processes & Human resources. Article gives further insights of Why thereis a need to accept to change& How implementation of “Project Parivartan” in operations & business practices using conceptsfundamentals of Theory of Constraints (TOC) impacted the entity& obstacles faced. It explain further how TOC approachof, Understanding impact of Constraint in a flow to maximize growth & Implement Process of Ongoing Improvement(POOGI) helped the organization. It further elaborated that for achieving this how company has established mechanisms foravoiding Bad multitasking,and implementing Full kits. Business requires visibility of key indices which is captured withProject & Product planning engines, Monitoring reports, defining items & products Buffers, along with new ways ofanalyzing & decision making with Alternate approach, to accounting with Financials in terms of Throughput (TP), TrulyVariable Cost (TVC) & Operating Expenses (OE) with different Ratios & Monitoring via Score card. This article will also givebrief insight of effects of socio-economic situations on MSME businesses due to changes in Government policies & Laws likedemonetization&Implementation of GST and other allied policies.Keywords: - Change, Decisions making, Acquisition, Merger, POOGI, TOC, TP, TVC, OE

Introduction

CHANGE (Termed as PARIVARTAN in Marathilanguage) is defined as difference in a state of affairs at adifferent point of time.

Change management is defined as a collective termfor all approaches to prepare and support individuals, teamsand organizations in making organizational changes. It isrightly said “Change is the only constant in life”. As anindividual, team or organization, in our personal andprofessional life we all go through various changes in allaspects of life at different stages of life. At times, suchchanges are forced on us by factors which are not underour control and we have to deal with it, accept and adjustwith it. As a human nature, we tend to resist to such changesas we are more comfortable in status quo or presentsituation.

There are situations when as an individual, team orprofessional, we willingly initiate the process of change(Parivartan) accepting and realizing the fact that the present

situation is not the way we want or not giving us desireresults. This willing of acceptance to the need to change isthe first and the most important stage in the process ofParivartan.

“The way to get started is to quit talking and begindoing” … Walt Disney

There is also an inherent dilemma that must beresolved for ensuring buy-in from all stakeholders and forany Change Management to succeed.

Dilemma

Every improvement is a Change.

Every Change is not an improvement.

Every stakeholder judges the improvement from theirown perspective.


Objectives

Objectives of this article are to give insight to theprocess of change in our personal & professional life. Itexplains the changes & challenges faced in our professionallife when one chooses to become an entrepreneur.

To share experiences about authors journey from aprofessional to entrepreneur, what challenges were faced tostart, run, grow business, practical situations & obstaclesfaced by MSME in the process of Acquisition & merger.

To inspire readers to become entrepreneurs and / oradopt entrepreneurial mindset in their present role.

To create awareness amongst students aboutTheoretical & Practical implementation of TOC (Theory ofConstraints) in both Products & Projects Operations.

How various TOC concepts & Tools like DBR, CCPMetc. along with alternate accounting approach is implementedto streamline business processes & to enhance overallbusiness.

To help budding entrepreneurs, in knowing challengesfaced by MSME to run & grow business & how change insocio-economic & government Policies affect variousaspects of business.

Professional to Entrepreneur

Most of the professionals enter corporate life afterbasic professional and management education which givesus the strong foundation in terms of qualification to beeligible to get employed and also educates us in basicfundamentals of theory in our field of chosen operations.At the start of our professional career, one mostly havelimited options as per our credentials but as we gainknowledge and experience we start to move upwards in termsof our professional position enhancing our accountability,responsibility and authority (ARA) to perform our role.

I had to go through this process of change sincebeginning of my professional career of 15 years till I decidedto be an entrepreneur. During these phases some lifechanging decisions changed my line of profession fromteaching to defense (Navy) to join corporate life to finallybeing an independent entrepreneur. As a part of our eco-

system surely our any such decisions to change affects ourfamily and related associates. One of the most importantparameters of success of decision to change and itsimplementation is involvement of all stakeholders who willdirectly or indirectly get involved and get affected eitherpositively or negatively.

In my 15 years of experience in corporate sector, I hadwillingly accepted assignments in various areas ofoperations – Engineering, Finance, production, logistics.This journey was started with employee with small Indianstart up and grown to achieve coveted recognition toestablish greenfield plant for a reputed MNC engineeringcompany. Before I decided to be an entrepreneur, my lastassignment was with MNC to head worldwide businessoperations.

This journey takes us through the process of YOUDO IT (YDI) to DO IT YOURSELF (DIY). As professionalswe are expected to play a specific role in part of the wholesystem which is mainly managed by various functions anddepartments headed by Head and CEOs along with theirteams. As an entrepreneur, we have to manage the entiresystem and is expected to work as well as manage business.

Being an entrepreneur, from well-settled growthoriented professional life in a corporate world is not an easydecision particularly for a person with middle class familybackground and with no previous credentials of businessin family. In our professional life, we plan our career in linewith our education and professional skills. Being atechnocrat, I was driven by my interest and liking in jobsinvolving engineering or technical aspects of job profile. Atvarious stages, analyzing my strengths and weaknessesalong with seeking professional guidance from my seniorsand well-wishers I reviewed my path & created my careerplans to become techno-commercial professional. This laterbecame my strength as a professional and an entrepreneur;I got theoretical and practical experience of both technicaland commercial aspects of business.

Entrepreneurship

As it is said, “If you don’t build your dream someonewill hire you to help build theirs”.

Most of us feel the urge to become entrepreneurs oryou may have seen your friends or acquaintances discussabout becoming entrepreneurs but few end up actuallybecoming one. Why? What is the dilemma?

On one hand, in order to protect stability / ensureregular flow of income – there is pressure to continue with ajob in an organizations in order to grow and maximize growth– the required action is to become an entrepreneur / startown venture.

The data is not in favor either. Very few entrepreneursend up becoming successful. Only 20% survive after first 5


years and only 4% after 10 years. A small fraction developsinto high growth firms.

Main reasons

1. One is lack of clarity on what value is being providedto customer. Value is only provided when it diminishessignificant limitation for a customer or creates newpossibilities. In Business to Business context, theproduct or service must help customer to make moremoney.

2. Second reason, in an organization, there are 2 flowswhich need to be managed. One is the current flow oforders and second is developing customers / productsfor future orders. The owner entrepreneur has limitedtime and hence he is in a dilemma of whether to focuson current orders, current cash flow and employeeissues or focus on the future. Urgency always trumpsimportant. In most companies, there is considerablefire-fighting required to manage current orders. OwnerEntrepreneur ends up spending considerable time infighting these fires as a manager or at times working asa technician (technician is a person who actually doesthe work). This leaves little time for working ontechnology, product and market to get future orders.This ultimately leads to stagnancy and ultimatelyclosure of business.

To be an entrepreneur, one needs critical self-analysisof our strength, weakness, opportunity in our area ofbusiness. If we analyze family history of any line of businesswe can clearly see the hierarchy in line with either familybased growth or promoters or employee based growth. Wesee more success in such entrepreneur growth as technology& experience helps to start & grow.

“You do or should do what you know” is the basicprinciple we all follow. During my eight years of professionallife at Thermax surface coatings Private Limited (TSCL), Igot introduced to field of surface coatings and further itbecame an integral part of my life till date. I along with twoprofessional colleagues at TSCL started a firm Triologics inyear 2002 for trading and manufacturing of products andservices in surface coating industry. The first learning ofentrepreneurship is to be self-disciplined and independentin all aspects of your life. You need to learn, adopt andenhance your all capabilities in do it yourself (DIY) mode.As an entrepreneur one has to manage all aspects ofbusiness, drive current performance and also must build asystem for future growth. Our company Triologics had lotsof ups and downs in the process up till now being a PrivateLimited Company.

I strongly believe that to be an entrepreneur one musthave qualification, knowledge and experience but in additionto this, one needs to be a calculated risk taker and shouldhave street smart approach. Managing all aspects of

business need knowing, finding, doing and learning manynew things you have not done before. Mistakes are ourbest teacher in our Professional as well as business life andnot repeating the same mistakes and learning from ourmistakes is the ultimate key to manage our limited resources.In the journey of Triologics, we expanded our business invarious other related fields in line with core surface coatingbusiness. Being a new entrant in our field of operations ourfocus was always on two main approaches which we followtill date, Customization (To give what customer need andnot sell only what we have) and Customer delight (To meetour committed product & service Deliverables)

Take Over and Merger

Journey & Growth of Triologics to Triologics SurfaceCoatings Private Limited (TSCPL) over the period has createdits own brand name in our field of operations particularlybeing a customer focused entity having own set of dedicatedbusiness associates across India.

TSCPL started focusing more on its unique sellingproposition of customization and earned reputation insurface coating standard products and surface coatingautomation which is the need of the industry to achievequality and quantity output with limited resources. As anentrepreneur, you have to drive current business and needto analyze changes in market economy, technology andcompetition to keep your business in line with the changesand explore possibility of growth.

Bullows Paint Equipment Private Limited (BPEPL), wasa 50 year old renowned and reputed Thane based companyhaving its footprint all across India and overseas in the fieldof surface coatings. It was looking for buyer from similarfield as their plan was to disinvest from few businesses thatthey were unable to run and manage for some valid reasons.Bullows had a unique combination of having business inboth surface coatings standard products which weredistributed through their loyal distributors and surfacecoating turnkey projects/plants which was their majorbusiness focus.

When we look for any business growth, few essentialparameters to analyze,

1. It should be in line with your existing business line

2. It should enhance your deliverables to the customers

For Triologics, having its own brand in standardproducts and strength of automation and customization,taking over this business entity should have got few distinctadvantages like having established and reputed “Bullows“brand in standard product business & expansion inbusiness of turnkey surface coating plants and projects.Triologics and Bullows together looked like a potential win-win takeover for us as it would expand the market share andbusiness.


Further, we went through a very tedious andexhaustive due diligence process ascertaining mutualcredentials and capabilities. When you take over any job orentity you have to evaluate and analyze in depth as it comeswith assets and liabilities of that role & business. Takeoverin any MSME or non-listed entity involve comparativelyless Government hassles and procedures but still Bullowsbeing a 50-year-old entity had to go through lot of obstacles,resolve legal and taxation matters. Takeover or mergerinvolves lot of Government rules, Laws and proceduresseeking experienced and qualified professional advice helpsto take right decisions at the right time.

Sir Richard Branson, Founder of Global Virgin Groupof 400 companies rightly said

“Train people well enough so they can leave but treatthem well enough so they don’t want to leave.”

Apart from technical and commercial aspects ofbusiness, an important aspect to run any entity is managinghuman resources. This becomes more critical when you haveto manage human resources in a takeover and merger entity.Triologics though took over Bullows operations recently in2016, as a management policy we decided to run two separateentities with separate physical locations and resources.

These two entities gave us expected market shareexpansion with our focused and dedicated efforts but withinspan of two years we understood the complications inmanaging two business in line with take over arrangementson paper. Sole company management is easy but forcombined entity merger of heart, soul and mind of twoseparate entities in terms of human resources, culture,employees, rules, policies, Government taxations,accounting, suppliers, customers, dealers etc created newset of obstacles and started affecting our operations &deliverables. Learning and experiencing from two years ofseparate working forced us to change our strategy andfinally we merged two entities in financial year 2018-19 underbrand Bullows. We also shifted & integrated ourmanufacturing set up at Pune from Thane. We as a founderof brand ‘Triologics’ had to give away our emotionalattachment in the interest of our business sense as Bullowsis a reputed and established brand in the market.

Project ‘Parivartan’ – TOC way

Theory of constraints (TOC) is an overall managementphilosophy introduced by Eliyahu M. Goldratt (IsraeliScientist and Business Management Consultant).

TOC is a management paradigm that views anymanageable system as constrained in achieving more of its

goals by a very small number of constraints/root cause.TOC adopts a common idiom “a chain is no stronger thanits weakest link”

We, at Bellows introduced to the philosophy of TOCwhen in our efforts to manage our enhanced businessactivities of both merged entities we observed our traditionaland established ways of operations management was notgiving us desired results.

Under the merged entity we had enough resourcesand integrated ERP system to run and monitor our businessbut to take advantage of integration we needed to establishsystem to ensure guaranteed timely Availability of ourproducts and on time completion of our Turnkey projects.Firefighting, shortages, wastages delays,employees’unhappiness, loss of confidence of dealers,customers, associates etc. These all started affecting ouroperations and working capital and created chaos in ourbusiness. We as a team of professionals and entrepreneurshad enough experience to understand negative effect ofthis chaos and our previous conventional ways of operationsmanagement were not giving us desired results.

We got team YESS (Yagna Entrepreneur SuccessServices LLP), a team of qualified and experiencedprofessionals to understand, evaluate and then implementphilosophy of TOC (Theory of Constraints) in our business.Together as a team both Bullows and YESS we hadexhaustive brain storming sessions to run through ourexisting processes, trained our team in basics of TOC.

TOC is based on a very simple, yet very profound andpowerful insight: In any complex system, the output isdetermined by one limiting factor. In other words, a chain isonly as strong as its weakest link. Any complex system ofproduction is made up of multiple linked activities, and oneof them will be the bottleneck that determines the output ofthe whole system.

The reason why this is so profound is that mostentrepreneurs spend their time trying to improve every partof the system they oversee, often with very mixed results.But if the output of the whole process — even an improvedprocess — is still limited by the bottleneck, then any effortspent optimizing anything else is basically wasted (and caneven be counterproductive).The theory of constraintstherefore says that the entrepreneur’s job is to identify whatthe bottleneck is, and then systematically improve it until itis no longer the bottleneck — at which point, somethingelse will be the bottleneck, and the job of identifying andoptimizing the bottleneck starts over.


For our project business, though it involved lot ofinterdependent processes affecting input and output fromboth internal and external resources, we started definingproject planning process and developed a task based ProjectPlanning Engine for focused monitoring of projects andobstacles of each project. We implemented first phase ofCCPM (Critical Chain Project Management) by identifyingconstraint in process and introduced full kits in all theprocesses with well-defined project sequence.Projectsequence and full kit helped us to avoid bad multi-tasking.We introduced visibility of our project management withmonitor reports to escalate obstacles in each process.

For product business we had to change our way ofthinking to manage our vendors and dealers from traditionalPUSH system of selling to PULL system. Demand drivenProduct Planning Engine was developed which gave usonline visibility and improved our delivery cycles to dealers.

As a management and an entrepreneur, we mustmanage and review our accounts and financials based ontraditional practices which sometimes either needs subjectknowledge of accounting and taxation which is in line withthe government &accounting laws. TOC provides Throughput accounting (TP accounting) a simpler and an alternateapproach to business financials with financial measures likeTP (Through Put), TVC (Truly Variable Cost), OE (OperatingExpenses) and other such related terms and ratios whichhelps the senior management in decision making.

Through Put (TP) = Rate at which system generatesgoal units. TP is a rate.

Truly Variable Cost (TVC) = The cost that vary one toone for every increase in number of units produced or thecost/expenses spent to execute that project.

Operating Expenses (OE) = All the money systemspends in order to turn investment in through put (TP),simply OE = Fixed cost to run the entity.

The TOC way of accounting majors help us in takingday-to-day business decisions and investment decisions.

Challenges & Benefits in TOC implementation

1. It is total cultural change in way of doing businessthan traditional so need lot of education & mentoringof senior team.


2. TOC thinking needs you to give away focus onindividual & department performance but it enables usto focus on final GOAL of company & aligns allfunctions.

3. TOC tools & system helps you to get visibility acrossfunctions giving you clarity in finding obstacles inprocess.

4. TOC tools introduce Buffers in time & quantity to safeguard business process from contingencies.

5. It gives us clarity in our obstacles in business.

6. It helps to maximum utilize our resources.

Socio-economic changes & Effect on MSME

For MSME, being with limited resources have tomanage and keep track of changes in the market as relatedto changes in Government laws and policies. Introductionof Goods & Service Tax (GST) and Demonetization weretwo major changes we faced in recent years. Both beingperceived as very progressive and positive decisions in thelong run had its initial adverse impact on MSME sectors.Both these changes affected the traders and retailers ascash economy or unorganized economy which then& stillhas a footprint in Indian economy had to readjust itsbusiness practices as they had to transit in organized sectorvia GST rules and regulations. It also affected working capitaland cash flows of companies as new rules and policies tookaway some advantages of time line of paying taxes as before.Though in long term both of these changes will give muchneeded stability and transparency in MSME business thosewho could not sustain will have to take alternatives. MSMEsector is backbone on Indian economy which supports largecapital OEMS and also employees’ major resources in India.All Government rules, policies, laws and changes should besupportive to this sector to achieve ease of doing business.

Conclusion

How does one resolve the dilemma of continuing inprofessional job vs becoming an entrepreneur is a bigquestion. Not everyone can immediately become anentrepreneur but everyone can start adoptingentrepreneurial mindset. What does it mean to adopt

entrepreneurial mindset? This means to look holistically atthe organization and understand the cause-effect within anorganization to identify few leverage points and focus onthese points. TOC provides the processes, tools andapplications to put holistic thinking into practice.

All of this involves Change or Parivartan in thinking/mindset.

Our journey of professional to entrepreneur hasthrown up many challenges. The biggest of them was torealize that while every improvement is a change, but notevery change is an improvement. After a lot of search, weseem to have found a process of ongoing improvement(POOGI) in Theory of Constraints, which helps us tomethodically answer the questions. Such as What toChange? What to Change to? and How to cause the Change?

We have a method to focus on the most importantaspect of the business at the present moment which impactsthe current and future well-being of the business.

Partnership with YESS has shortened the learningcycle and helped our organization to work smoothly as theirskill and knowledge had helped the organization on theimplementation of TOC which would have been difficult tobe managed otherwise by any MSME.

Refrences

The Goal – Dr. Eliyahu Goldratt.

Critical Chain Project Management – Dr. EliyahuGoldratt.

A Guide to Implementing the Theory of Constraints(TOC) – Website by Dr. Kelvyn Youngman. http://www.dbrmfg.co.nz/

Theory of Constraints – Goldratt Marketing - https://www.toc-goldratt.in/en

Theory of Constraints Practitioners Alliance - http://tocpractice.com/

3 Bottle videohttps://www.youtube.com/watch?v=mWh0cSsNmGY


Offshoring Audit Work in India Needs Improvement Rajith Jayadevan

IT Auditor, Credit Sussie, [email protected]

Absract: According to PwC Middle East, “An audit is the examination of the financial report of an organisation - as presentedin the annual report - by someone independent of that organisation. The financial report includes a balance sheet, an incomestatement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accountingpolicies and other explanatory notes.”(1) Audit can be of 2 types: Internal Auditing and External Auditing. Internal auditing isa department within the organization that provides independent assurance on the effectiveness of risk management, controland governance processes in an organization. External auditing is an independent examination done qualified auditors externalto the organization of the financial statements prepared by the organization. Doing an audit has 3 key advantages. It helpsachieve business objectives. Business processes that helps achieve business objectives needs right businessprocess and IT controls to ensure its effectiveness in achieving the right output. An audit department is necessary inpreventing debilitating misstatements in a company’s records and financial reports. Any accounting irregularities and fraudscan be detected by regularly monitoring the internal controls. Hence, auditing plays a crucial role in any organization ensuringthat business is functioning as expected and business objectives are achieved.Keyword: Accounting standards, Audit’s status , Offshoring

IntroductionAudit’s status and where is it going “U.S. practice

evolved since the late 19th century towards a process ofcollecting evidence as to assets and liabilities or what isfrequently referred to as a balance sheet audit. As a result ofextensive misleading financial reporting that contributed tothe stock market crash of 1929.

The U.S. Securities Acts of 1933 and 1934 created theSecurities and Exchange Commission (SEC), which regulatedthe major stock exchanges in the United States. Theselegislations greatly influenced auditing around the world.

“In the 1970s, a change in audit approach wasobserved from “verifying transaction in the books” to“relying on system”. Such a change was due to the increasein the number of transactions which resulted from thecontinued growth in size and complexity of companies,where it was unlikely for auditors to play the role of verifyingtransactions. As a result, auditors in this period had placedmuch higher reliance on companies’ internal control in theiraudit procedures. When internal control of the companywas effective, auditors reduced the level of detailedsubstance testing.

In the early 1980 there was a readjustment in auditors’approaches where the assessment of internal controlsystems was found to be an expensive process and soauditors began to cut back their systems work and makegreater use of analytical procedures. An extension of thiswas the development during the mid-1980s of risk-basedauditing. Risk-based auditing is an audit approach wherean auditor will focus on those areas which are more likely tocontain errors.

“The early 2000s saw various accounting scandals likeWorldCom, Enron, Tyco, etc. In response to the Enron fall

Sarbanes-Oxley Act 2002, was passed, which brought variousaccountability provisions for both management and auditors.The Sarbanes-Oxley extended the duties of auditor to auditthe adequacy of internal controls over financial reporting.

“Although the overall audit objectives in the presentperiod remained the same, i.e. lending credibility to the financialstatement, critical changes have been made to the audit practiceas a result of the extensive reform in various countries.

“The accountancy profession, and the role of audit,have responded to an increasing pace of change in oursociety, economy and capital markets. The global economyis changing at an accelerating pace with new technologychallenging traditional business models and an increasingconcentration of economic power and wealth in the handsof very large corporations. Alongside this, the nature ofvalue has evolved into a more multi-dimensional concept,including intangibles, societal and environmental factorsas well as the traditional financial resources. And the auditfirms themselves have been the subject of consolidation,meaning that in most markets globally 80 percent of theaudits are conducted by the Big Four firms.

“Technological advancements give us tools tocontinue to improve the efficiency and effectiveness ofaudits in an increasingly complex business environment,but there is still a need for the professional evaluation,judgment and skepticism that auditors bring to the task.

The changes to the financial statement audit will be shapedby four factors: technology, methodology, standards and skills.

Technology

In our connected world, historical reporting is lessrelevant than real-time reporting. With the onset of thecloud, automation and data analytics, we are already moving


down the path toward greater timeliness in financialreporting. The final stage — continuous monitoring andassurance — will benefit the public but require innovationto succeed.

Methodology

The increasing use of audit data analytics cantransform financial statement audits and will be a key elementof the transformative, data-driven audit methodology thatwill underpin a new, dynamic audit solution.

Standards

The Auditing Standards Board has recently prioritizedcertain standard-setting projects, with an eye towardtechnology and evolving practice, starting with the standardon audit evidence. Following on this work, the ASB willaddress auditing estimates, risk assessment, data analytics,quality control and professional skepticism. Withoutchanges to the standards, innovative audit methodologieswill be difficult to develop and execute.

New skills

As practice continues to evolve, auditors willincreasingly need to draw on a broader range of skill sets,from information technology to data science to analytics.The demand for new assurance service lines, such as SOCfor cybersecurity, will require expanded competencies.

Auditing in India

The Institute of Chartered Accountants of India (ICAI)is the governing body for audits in India, and is the premierprofessional accounting body in India. Only a member ofICAI can become an auditor. ICAI has set up an Auditingand Assurance Standard Board (AASB) to review auditingpractices and procedures in India, and to develop a set ofAuditing and Assurance Standards (which have since beenrenamed the Auditing, Review and Other Standards). Thesestandards are designed with a view to bring out the bestpossible outcomes while also expressing an accurate viewof the company’s financial statements. All auditors in Indiamust comply with these standards while performing an audit.

The provision of the cooling period is one of the majorareas of concern that is addressed by the SOX Act. Section206 of the SOX Act specifies that an accounting firm cannotperform an audit of a company “[i]f a chief executive officer,controller, chief financial officer, chief accounting officer, orany person serving in an equivalent position for the issuer,was employed by that registered independent publicaccounting firm and participated in any capacity in the auditof that issuer during the 1-year period preceding the date ofthe initiation of the audit.” The SEC, while framing its Ruleon “Conflicts of Interest Resulting from EmploymentRelationships” for implementing these provisions of the SOXAct, expanded the coverage of the cooling-off period from

the four specified key officers named in the Act to any personin a “financial reporting oversight role.” However,recognising the over-reaching nature of the laws, itnarrowed down the application of the cooling period to onlythe lead partner, the concurring partner, and any othermember of the audit engagement team body who providedten or more hours of audit, review. and attestation services(SEC Rule 208-2).

There are some notable differences between the SECRule and the recommendations of the NCC Report. Underthe NCC recommendations, the cooling-off period appliesto not only the audit partners but also to all the members ofthe audit engagement team. In contrast, the SEC Rule isapplicable only to the lead partner, the concurring partner,and to those members rendering ten or more hours of auditservices (the assumption being that some minimum amountof participation is required for a member to have significantinteraction with the management during the audit process).Secondly, under the NCC recommendation, the cooling-offperiod is applicable irrespective of the employment positionthat the former audit firm member takes up in the audit client,and is not restricted to positions with financial reportingand oversight roles as it is under the SEC Rule. Thirdly, theNCC recommendations apply not only to the members ofthe audit firm taking up positions in the audit client but alsoto the employees of the audit client taking up positions inthe audit firm. Finally, the cooling-off period under the NCCis two years, while it is one year under the SEC Rule.

The first two recommendations of the NCC are perhapstoo broad in their applicability and can be narrowed downto some extent. The major criterion in determining theapplicability of the law should be the ability and the incentiveof the members of the audit firm and the audit client toinfluence the effectiveness of the audit process. However,unlike the SEC Rule, the NCC recommendations that requirethe cooling-off period to also apply to employees of theaudit client while joining the audit firm is a well thought-outmove that recognises the reverse influence that formeremployees of the audit client can exercise when they arepart of the audit engagement team. In this case as well, thescope of the recommendation can be narrowed down bymaking the law applicable only to the key officers of theaudit client who are joining key positions in the audit firm.Thus, the ideal rule would be one that provides for a coolingperiod before the lead, concurring, or any significant memberof the audit engagement team takes up a financial reportingoversight role in the audit client or before a person in afinancial reporting oversight role in the audit client becomesa lead, concurring, or a significant member of the audit firm.The terms “significant audit member” could be definedbased on the nature and duration of services of the auditmember. The extent of the cooling period could be decidedbased on the norms and practices in other countries


Accounting Standards

For financial statements to have a true and fair view, itis essential that the statements are prepared in accordancewith India’s accounting standards. However, India’saccounting standards are different from worldwide acceptedInternational Accounting Standards (IAS) and InternationalFinancial Reports Standards (IFRS).

There are numerous subtleties between current Indianaccounting standards and IAS/IFRS norms. As IFRS areaccepted worldwide, it thus becomes difficult to makecomparisons between Indian companies and their foreigncounterparts. To overcome such difficulties, the new IndianAccounting Standards (Ind AS) have been prescribed andcomply with IFRS. These standards were originallysupposed to be applicable from April 1, 2011, but they areyet to be fully implemented. The new date of implementationof Ind AS is yet to be finalized, however general adherenceto them is still recommended.

Offshoring challenges between Audit in India and USA

“Auditing of U.S. corporations’ financial books, a vitalunderpinning of investor confidence, increasingly relies on workcarried out in India, where there is no clear system of oversight.

U.S. audit regulators do not conduct regular physicalinspections of offshore centers in India where U.S. auditwork is performed, Indian accounting officials and employeesof large audit firms told Reuters.

The U.S. arms of the Big Four audit firms - DeloitteTouche Tohmatsu Ltd, KPMG, PricewaterhouseCoopers andErnst & Young Global Ltd - said that work handled by Indianemployees is routine and systematically sent back for reviewto the United States.

But some audit firms are layering on more complextasks in the offshore centers and Indian workers are risingto senior positions in the auditing ranks, said Big Four firmemployees and others in the accounting industry in India.

Given the failures of U.S. auditors so alarmingly displayedin recent accounting problems - for instance, February’s $2million penalty against Ernst & Young over its past MedicisPharmaceutical Corp audits - some experts said having moreIndian auditors on the job may result in better audits.

Yet concern is growing that no coherent regulatorysystem exists to closely police the work in India, to gaugeits quality, and to take action if problems should develop.

Crunching the Numbers

Auditing is labor-intensive. In offshore centersscattered from Mumbai to Bangalore, swarms of entry-levelworkers review piles of documents and cross-check numberson balance sheets.

In India, many rookie accountants consider $10,000 agenerous annual salary; their U.S. peers earn five times that.

Attracted by wage savings and Indians’ command ofEnglish, the U.S. arms of the Big Four have opened officesor joint ventures in India and hired thousands of localworkers to do a range of tasks, including tax, consultingand audit work.

PCAOB Chairman James Doty said offshoring helpslarge firms be efficient. He added: “We have to watch, to bealert for, when efficiency becomes an enemy of quality.

The firms said that their offshored audit work meets thesame quality standards as work done in the United States.

Tough Sell for Some

There was some pushback in the United States withinfirms to some of this offshoring.

Communication was another concern. “It is tough tosupervise on a remote basis,” said Carmichael, the formerPCAOB chief auditor.

No Pact with India

No country hosts more U.S. auditing work than India.No audit failures have been traced to offshore work there,and audit work done in India is routinely sent back to theUnited States where the PCAOB can review it. But there isno formal agreement on offshoring with India, which allowsthe PCAOB unfettered access to inspect audit firms.

The PCAOB’s Indian counterpart, the Institute ofChartered Accountants of India, has no oversight of the Indianoffshore centers doing audit work on U.S. companies’ books.

Refrences

https://www.pwc.com/m1/en/services/assurance/what-is-an-audit.htmlhttps://auditmonk.wordpress.com/2017/05/12/brief-history-of-auditing/https://www.accountingtoday.com/opinion/where-is-the-audit-profession-goinghttps://www.accountingtoday.com/opinion/the-future-of-audit-looking-ahead-in-a-time-of-rapid-changehttps://www.india-briefing.com/news/introduction-audit-india-nonauditors-6416.html/https://www.reuters.com/article/us-usa-audit-india/analysis-as-more-u-s-audit-work-moves-to-india-concerns-arise-idUSBRE89F1GC20121016https://smallbusiness.chron.com/importance-auditsystem-companies-14705.html


Should India be a Silent spectator of Great Trade War of 2018 ?Milind S Limaye

Operational Risk Consultant, First Abhudhabi Bank, UAE

Abstract: The word “War” always creates fear in our mind. Be it of any kind, direct war, indirect war like Trade war, Cold waretc. Wars are fought for some reason. However, it is seen that once the war ends, not only the looser but, the winner also hasto pay the price of war. A trade war starts when a nation attempts to protect the domestic industry and its economy (bylevying import taxes, antidumping duties, ban on product import etc). In the short run, this protection policy shows positiveresult by giving a competitive advantage to domestic producers of that product. As the domestic prices would be lower bycomparison, they would receive more orders from local customers. As their businesses grow, they would add jobs. But in thelong run, it has negative impact on all countries involved. It also triggers inflation when tariffs increase the prices of imports.In this article, we will discuss about a trade war between two world giants i.e. USA and China, which has started from January2018 and is estimated to continue till 2019.Jack Ma, the chairman of Alibaba Group Holdings Ltd. said that the trade warbetween USA and China is going to last longer and have a bigger impact than most people think. He also said that the disputecould last 20 years.Keywords: Trade war, India, China

Introduction

Is this a first trade war between two or more countries?The answer is No. The first trade war was observed in 1930.USA imposed Smoot-Hawley tariffs, to support US farmerswho had been ravaged by the Dust Bowl. It increased 900import tariffs by an average of 40% to 48%. Other countriesalso retaliated by imposing their own tariffs. This trade warreduced international trade by nearly 65%. That leads therecession into depression and ultimately contributed to startof Second world war. During great Depression, USA imposedtariffs on Japanese imports (app. $300 million) over a disputein semiconductor industry, which caused limit on carshipments to USA by Japan. In 2002 also, USA imposed tariffson Chinese steel. However, it ends up with a job loss in USA.

Since Donald Trump assumed office of the Presidentof USA in January 2017, he started working on fulfilling thepromises made during election campaign. Promises includetax cuts, quitting from Paris climate deal, appointment ofSupreme Court nominees, bringing back troops from MiddleEast and most importantly, looking at Trade deals freshlyetc. Many of these promises are fulfilled, some are partiallyfulfilled and some are abandoned. Of all these promises,main promise about the Trade deals, he ambitiously nowtrying to fulfill.

During election campaign, he called North AmericanFree Trade Agreement (NAFTA) as a disaster and warnedthat Trans-Pacific Partnership (TPP) is going to be worseand hence he will withdraw from TPP. Accordingly, aftervarious negotiations, the US, Canada and Mexico signedUS-Mexico-Canada Agreement which was designed toreplace NAFTA. The provision in this new agreementspecifies that if one of the current NAFTA partners, entersa free trade deal with a “non-market” country, such as China,the others can quit in six months and form their own bilateraltrade pact. This is considered as a big blow to China forhaving a free trade pact with these countries, with whichChina has good trade relations. If this kind of provision is

repeated in other US negotiations with EU and Japan, itcould help isolate Beijing in the Global trading system.Beijing has demanded that the WTO recognized it as a“Market economy” since its WTO accession agreementexpired in December 2016, a move that would severely limitWestern trade defenses against cheap Chinese goods. Butthe US and EU are challenging the declaration, arguing thatChinese state subsidies fueling excess industrial capacity,the exclusion of foreign competitors and other practices aresigns it is still a non-market economy.

He also pledged to correct the trade deficit with China.Before launching his presidential campaign in 2015, DonaldTrump repeatedly called for a crackdown on China’s tradepractices. In one of his tweets in 2014, he said: “Remember,China is not a friend of United States”. Accordingly, afterone year of assuming his office, he declared trade war againstChina. Apart from the promise made during electioncampaign, there are several other reasons as listed belowfor this trade war imposed against China:

To punish China for restricting the US investments inChina.

As an action against predatory tactics in a lawless driveto overtake US’s technological supremacy.

China’s development plan “Made in China 2025, whichcalls for creating powerful Chinese entities in such areasas information technology, robotics, aerospaceequipment, electrical vehicles andbiopharmaceuticals.US accuses China of stealingAmerican intellectual property and Chinese firmsimitating US technologies.

US trade deficit with China at record level of $ 375.6billion in 2017.

China has disrupted the International trading systemthrough hidden subsidies, currency manipulation andtechnology theft.


US-China trade dispute time-line

January 2018 US imposed tariffs of 30% and 20% on Solar cell and washing machine imports.

March 2018 US imposed tariffs of 25% and 10% on Steel and Aluminum imports from all nations, including China.

April 2018 China responds to steel and aluminum tariffs, by slapping duties on $3 billion of US importsincluding fruits, nuts, wine at 15% and on pork at 25%.US proposed tariffs on $50 billion worth ofimports for China’s alleged abuse of Intellectual property.China threatens levy of 25% on imports ofSoybeans, cars, chemicals and aircraft.

May 2018 US China talks failed.US accused China for theft of technology and IP at World trade Organization(WTO)

June 2018 US announced tariffs on $50 billion of imports from China.US threatened to put 10% tariffs on $ 200billion of Chinese goods and levies of an additional $200 billion, if China retaliates.China vows to hitback

July 2018 Tariffs began on $34 billion of Chinese imports

August 2018 US threatened to hike proposed tariff to 25% on $200 billion of Chinese imports.China responds with$16 billion levy on US imports

September 2018 Tariff of 10% on $200 billion of Chinese goods begin. Tariff to rise to 25% in 2019. China decided toimpose tariffs on about $60 billion worth of US goods.

US Imports from China (2017) - $505.5 billion

US Exports to China (2017) - $129.9 billion

We will need to wait till mid-2019, to understand fullimpact of this trade war on both warring countries. Beloware the two news clips, each on the US and China as of firstweek of January 2019, which gives a fair idea of the currentimpact on both the nations:

China’s manufacturing sector contracted for the firsttime in 19 months in December 2018, as demand softenedamid China-US trade frictions, according to a privatesurvey. The Caixin / Markit Manufacturing PurchasingManagers’ Index (PMI) for December, fell to 49.7 from50.2 in November, marking the first contraction sinceMay 2017. That was lower than economists’ estimatescompiled by Reuters that forecast a slight decline to50.1. New orders – an indicator of future activity – fellfor the first time in two and a half years, with companiesreporting subdued demand despite some pricediscounting. New export orders shrank for the ninthmonth in a row. While production edged higher aftertwo months of stagnation, factories cut jobs for the62nd month in a row. The Caixin / Markit survey focusesmostly on smaller businesses, which are believed to bemore export oriented.

China’s official PMI showed factory activity contractedfor the first time in over two years, also pressured byweak demand at home and abroad. It suggested smalland mid-sized firms were seeing a sharper deteriorationin business conditions than larger companies, a trendthat policymakers have repeatedly tried to address

through special loan programs and steps to reduceoperating costs. With business conditions expectedto get worse before they get better, China is expectedto roll out more support measures in coming monthson top of a raft of initiatives in 2018. China’s top leaders,at an annual meeting in December, pledged to cut taxesand keep liquidity ample while pushing forward tradetalks with the US. US President Donald Trump said lastweekend that talks were progressing well. Beijing saysChina is still on track to hit its 2018 growth target ofaround 6.5%, down from 6.9% in 2017. But a furtherslowdown is expected this year even if a trade deal isreached. The World Bank predicts growth will slow to6.2% in 2019, still robust by global standards but theweakest expansion in nearly 30 years.

The first survey of December’s economic data cameout on Wednesday with diminished results: United Statesmanufacturing growth hit new lows on multiple fronts lastmonth. Results from financial data firm IHS Markit showedthe US manufacturing PMI (Purchasing Managers Index)was 53.8 in December, falling nearly 2 points from 55.3 inNovember. This represents a 15-month low for the index,while job creation also slowed to an 18-month low. “Outputand order books grew at the slowest rates for over a yearand optimism about the outlook slumped to its gloomiestfor over two years,” Markit’s chief business economist saidin a statement. “The survey also revealed signs of slowerdemand growth from customers, as well as rising concernsover the impact of tariffs. Just over two thirds ofmanufacturers reporting higher costs attributed the rise inprices to tariffs.” Manufacturers’ confidence in business


also slipped to the lowest level in nearly two years, Markitsaid, with optimism at its lowest level since October 2016.

Impact of the trade war on India

In current scenario, none of the country can be saidas self-reliant. Economies of all countries of the world areinterrelated. At the beginning of the year 2018, Indianeconomy was considered as the fastest (growth rate of 7.5%)among all the major economies in the world. However, theimpact of trade war between US and China may haveimplications which may impact Global and the IndianEconomy. Hence it is necessary to know about probableimpacts for India.

Monthly trade deficit is beyond the $16 billion permonth. The forex reserves may be adequate to coverjust about 9 months of imports. Trade war will widenthe trade deficit, make imports more expensive.However, India’s trade deficit with China may bereduced due to improved export sales with China(substitution for US imports by China – Soybeans,Cotton, Chemical products etc).

Inflation may move up in US as well as in India. Inflationexpectations are the key to interest rates and as a resultthe RBI may be constrained to increase the repo rates.This is reflected in two rate hikes in June and August.

Trade war also may impact the value of Rupee. INRmay come under pressure in the global currency marketsin addition to rising oil prices. It is observed that thevalue of $ in terms of INR has been appreciated fromRs.63.58 at January 2018 to Rs.71 in August 2018 to73.96 in Oct 2018.However, since the oil prices are easeddown, currently $ is at Rs.70.

The risk of default of corporates is increased. Indiancorporates could get crashed between two extremes.The prices of inputs may go up, due to higher importcosts but it will be difficult to pass this on. As well asrepayment foreign currency loans becomes costlier.

Increasing interest rates in US may be the worry forIndian financial market. Even a minor disruption in USfinancial market can have major implications for India.The three external risk factors – Higher tariffs, risinginterest rates and elevated bond sales, coupled withrising non-performing loans, will be disastrous, if notdealt in time and vigilantly.

By and large Indian stock markets are more stable. BSEand NIFTY 50 indices does not show any drastic upsand downs. However, rising interest rates in US willlead to outflows from Indian Bond and Equity marketsas investing in Indian markets will be less attractive.

As the US has imposed duties on steel and aluminum,India now has to pay approximately $241 million worth

of tax to the US. India, on the other hand, as a counter-measure has proposed imposing duties on 30 differenttypes of goods. This will ensure that the US has to payabout $238 million as duties to India. However, this willmake life more difficult for the end consumers aseverything that falls under the tariff scanner is expectedto become more expensive.

India may be able to gain some traction in textiles,garments and gems and jewelry, if Chines exports toUS slow down.

Opportunities for India

India will definitely gain out of this situation, evenremaining neutral. Politically also US needs a strong alliancein Asia. China also sees India as an alternate supplier for itsrequirement.

The main products imported in China from US includeproducts such as Fresh grapes, Cotton, Tobacco,Lubricating oil and Chemical products etc. It can be observedthat India also is exporting the same products to China. It’sa good opportunity for India to take US’s share and increaseour exports of these products to China. If India’s exportstake US share also, it will help India to reduce India’s tradedeficit with China by almost $63 billion.

The major products imported in US from China, whichwill be affected by the increased tariffs are Children bikes,Animal medicines, Baby cots, Roof tiles, Fridges,Dehumidifiers and Air conditioners, Car tyres, Handbagsand Luggage etc. India has the opportunity to take some ofChina’s share in export of Bikes, Electrical items and Luggageitems. However, India may not be able to increase itsmanufacturing capacity quickly and export the same to US,cheaper than China, even after the increased price due totariffs.

If India needs to take advantage of the situation, itneeds to act fast on Exports front. If India remains a silentspectator, other countries such as Brazil will take advantageof the situation.

Government initiative

India will focus on boosting its exports to the US andother global markets as Chinese shipments becomeunattractive amid a trade war between the world’s biggesteconomies, India’s trade minister said. New Delhi is focusingon a handful of items including automotive parts, chemicals,electrical equipment, among others, after the US and Chinaslapped reciprocal duties on each other’s goods, ministerSuresh Prabhu said in an interview. India’s share in globalmerchandise exports is at 1.7 percent compared to China’s12.8 percent.

“The ongoing trade tensions between the US andChina may have positive impact,” Prabhu said. “The long-


term strategy is to focus on enhancing manufacturingcapabilities with focus not only on the United States butalso keeping in view the demands in other markets, as well.”

Prime Minister Narendra Modi’s administration hasbeen exploring ways to close the gap between exports andimports which reached $17.1 billion in October. Thegovernment has imposed some import curbs to ease pressureon the current-account deficit, a key vulnerability for theeconomy and one of the reasons why the rupee has lostmore than 11 percent against the dollar this year. The risingtensions could derail established trade orders like the WorldTrade Organization and will hurt smaller nations, Prabhusaid.

Conclusion

This is the clash between two strong economies, oneis Capitalistic and the other being Socialist market economy.This is a clash between two strong countries which aretrying to extend their influence in other parts of world. Thisis clash between two personalities, Trump against XiJinping.

China is changing and opening up - but thegovernment here imposes an inordinate amount of controlover how the economy is run. And while it’s true in somesectors Chinese companies do operate on a level playing

field, there are many parts of the Chinese economy that arestill heavily protected.

On the other hand, US also has benefited from thedecades of low prices and record profits operating andmanufacturing in China has afforded American consumersand companies.

Negotiations and talks are going on. Both thecountries are selfish and also wise enough to make a truceat appropriate time. Hope to end this by first quarter in FY2019 – 2020.

References

Financial Express

Financial Times

The Washington Post

INSIGHTSIAS

Bloomberg

CNBC

Bandodkar PRTC - 1 · Dr. Suchitra Naik – I/c Principal, Joshi Bedekar College Dr. Vivek Sharma...

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