JAGRAN JOURNAL OF COMMERCE AND ECONOMICS · JAGRAN JOURNAL OF COMMERCE AND ECONOMICS Vol. 3, Issue...

ISSN 2321-6522

JAGRAN JOURNALOF COMMERCE ANDECONOMICS

Published By :

Jagran College of Arts, Science and CommerceA Self Financing P.G. College Affiliated to C.S.J.M. University, Kanpur

Prof. B.P. SinghChairman, Delhi School of Professional Studies and Research, Delhi Formerly Professor, Head and Dean Faculty of Commerce and BusinessDelhi School of Economics, University of Delhi

Prof. Arun KumarProfessor and Chairman, Economic Studies and Planning Centre, JNU, New Delhi

Prof. Pramod Kumar SaxenaDean, Faculty of Commerce, HOD (Accountancy and Law) Dayalbagh Educational Institute, Agra

Prof. R.C. GuptaProfessor, (Commerce) and Director, Govt. M.L.B. College of Excellence, Gwalior.

Prof. O.P. ShuklaPrincipal, National Defence Academy, Pune

Prof. H.K. SinghProfessor, Faculty of Commerce, Banaras Hindu University, Varanasi

Prof H.M. MehrotraHead, Dept. of Economics, Christ Church College, Kanpur

Dr. Vimal KumarAsst. Professor, Dept. of Economics, IIT Kanpur

Editorial Advisory Board

Shri Yogendra Mohan Gupta

Chairman, Jagran Group and Jagran Education Foundation

Shri Mahendra Mohan Gupta

CMD, Jagran Prakashan Ltd., Former Member Rajya Sabha

Smt. Ritu Gupta

Vice Chairperson, Jagran Education Foundation

Dr. J.N. Gupta

CEO, Jagran Education Foundation

Our Patrons

JAGRAN JOURNAL OF COMMERCE AND ECONOMICSMarch 2016Vol. 3, Issue 5 ISSN 2321-6522

Co-Editors

Chief Editor

Publisher

DirectorJagran College of Arts, Science and CommerceMarch 31, 2016

India is set to emerge as the world's fastest

growing major economy as it has

witnessed a significant economic growth in

recent past, growing by 7.3% in FY 2015.

Thus being one of the world's largest

economy India has made tremendous

strides in its social and economic

development. But on the other side we find

that these benefits of development are hardly shared equitably

where a huge chunk of population is struggling hard to make two

ends meet. We currently stand at a threshold of a unique

opportunity regarding governance and public management

reforms. Thus the biggest challenge before the administration at

every level is the issue of 'Good Governance'. Transparency,

Accountability and Participation are the three keywords that

define good governance which require execution at grass root

level. The talks of good governance will remain useless unless

our models of governance come out of party politics and look at

identifying the good policies on governance and focus on their

horizontal deployment across states.

The present issue attempts to address the issues of

governance, skill development and global competence,

prospects and changing scenario of Banking and Insurance

sector, emerging issues of HRM in global context and gender

based comparison in this regard. It also unveils the prospects

and legal regulatory framework of virtual currency i.e Bitcoin in

India. The paper entitled 'Youngsters at junction' compels us to

rethink about the wide spread poverty and problems of child

trafficking and child abuse. We are trying to make all possible

efforts to facilitate our readers by including papers from diverse

areas and anticipate their wider participation.

INDEX

S.No. Name of the Paper and Authors Page No.

1. Comparative Study of Financial Performance 1

of Selected Indian Banks in Turbulent Scenario

Prof. Pramod Kumar and Shikha Gupta

2. Dividend Policy in Public and Private Sector Banks 15

A Comparative Study

Dr. R. C. Gupta, Vinay Gupta and Ms. Sarika Keswani

3. ROI Vis-À-Vis EVA: A Case Study on Tata Steel 22

Radhagobinda Basak

4. Analysis of Legal and Regulatory Framework 30

for Bitcoin in India

CFA Anu Jajoo and Apoorva Gupta

5. Emerging Issues of Human Resource Management 36

in Global Context

Parul Garg and Ankit Goel

6. Present Scenario of Indian Banking System 43

Sonia Kaur

7. Enhancing Tourism Sector through the Use of ICT 51

Dr. Akhilesh Kumar Dixit

8. Youngsters at the Junctions 56

Dr. Vatika Sibbal

9. Comparison of Structural Factors Level 66

Between Male and Female Faculty of

Professional Institutes of Gwalior City

Dr. R. C Gupta and Swapna Srivastava

10. Awareness About Equity Link Insurance 75

Schemes of Life Insurance Companies

Dr. Ashutosh Mishra, Dr. Puneet Bafna and Rajesh Srivastava

11. An Institutional Framework for Good Governance in India 87

Dr. Pankaj Pandey

12. National Skill Development and Competitiveness 95

in the Global Market

Deepa Kumari

1

*Prof. Pramod Kumar**Shikha Gupta

Comparative Study of Financial Performance ofSelected Indian Banks In Turbulent Scenario

*Head & Dean, Department of Accountancy and Law, Faculty of Commerce, Dayalbagh Educational Institute (Deemed University), Dayalbagh, Agra- 282005**Research Scholar

Introduction

Today the role of Banks in the society is very important and banks helps the general public to

improve their economic conditions obliquely helps to develop the country. Without banks the financial

system can't be assumed. Banks help in mobilising savings, Financing Industry, Financing Trade,

Financing Agriculture etc. in this way banks helps in variety of manner for rapid economic growth of the

country. The crucial function of a bank is to unite those who have excess capital (like: investors), with

those who needs capital (like: individual want loan or businessmen want capital to grow). A large part of

money in circulation is controlled by banks.

As banks are crucial part of the economy the public wants to know about the financial

performance of the banks where they are investing their money or from where they are borrowing

money. Public remain confused where to invest in public sector banks or in private sector banks and

wants to know are they investing at safe place or not. So in this study the researcher has studied the

financial performance of top five private sector banks and top five public sector banks. Ratio analysis

has been used to analyse the data. This study will tell which sector is working well or whose financial

performance is better public or private. In each sector which bank's financial performance is best.

Review of Literature

After reviewing the past studies based on the analysis of financial performance of banks and

other term-lending institutions it has been found that these studies provides valuable analysis and

results. These studies have suggested many tool and techniques for better analysis and interpretation of

financial information provided by selected banks. Jyoti Gupta, Suman Jain (2012), Ramesh Chander

and Jai Kishan Chandel, (2011), Pardeep Kaur and Gian Kaur, (2013), Alias Radam and A.H. Baharom

and A.M. Dayang-Afizzah, (2008), Viverita and M. Ariff, (2011), Ramesh Chander and Jai Kishan

Chandel, (2010), Sumeet Gupta and Renu Verma, (2008) and other studies have mainly focused on

financial performance analysis of banks and term- lending institutions with a view to predict their future

success and failures.

Need/ Importance of the Study

So far, past researches have been conducted to analyse the financial performance of banks

during reform period in Indian context, therefore this research has been undertaken to examine the

financial performance in turbulent time.

Objectives

The main objectives of the study are as follows:-

(i) To compare the profitability of selected banks.

(ii) To recommend an action plan for further improvement.

2

March 2016 ISSN 2321-6522Jagran Journal of Commerce and Economics

Hypothesis

Ho: There is no impact on the financial performance of selected banks during turbulent

scenario.

Research Methodology

vSampling design:

lSample size- For attaining the different objectives, the sample size has been taken as

follows: private sector banks � 5

Public sector banks � 5

lSample selection criteria: for selecting the banks top 5 private sector banks and top 5

public sector banks have been taken on the basis of their market capitalization.

vStatistical design:

lSources of the data: The data has been collected from the annual report of the selected

banks.

lDuration of the Study: For the purpose of analysis of data, a period of five financial year

2007-08 to- 2011-12 has been taken.

lProcessing and analysis of data: The ratio analysis, different charts and diagrams has

been used to analyse the data.

Result And Discussion

(1) Net Profit Margin

Net Profit Margin = Net Profit x 100Sales

(In Percentage)

Public Sector Banks Private Sector BanksBanks Banks

2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

20.2821.01 22.5718.3112.23Indusind

Bank

5.77 9.2918.7223.2721.67

Canara

Bank

15.9417.5223.3125.2615.40HDFC

Bank

22.5420.2026.5229.1927.53

Bank of

Baroda

17.5821.3526.5028.0424.41Yes

Bank

22.1821.9429.1726.0322.41

Punjab

National

Bank

20.7823.1426.4323.7719.40ICICI

Bank

19.5417.4922.6528.7027.89

Bank

of India

23.5326.6214.0916.5513.60Axis

Bank

22.1224.2431.2632.3527.91

Source : Data has been collected from Annual Report of respective banks

Table -1, Net Profit Margin

3


v Interpretation ('ooo are omitted)

lUnion Bank of India - In the year 2011-12 the ratio decreased as the net income decrease

from Rs. 20819472 to 17871361.

lCanara Bank - In the year 2011-12 the ratio decreased due to increase in interest expense

by Rs.79205759.

lPunjab National Bank - In the year 2011-12 the ratio decreased as the interest earned

increase from Rs.269864800 to 364280305 and the net profit didn't increase in the same

proportion.

lBank of India - In the year 2009-10 the ratio decreased because the net income highly

decreased from Rs. 30073463 to 17410689 And in the year 2011-12 the ratio decrease

due to increase in interest earned.

lIndusind Bank - In the year 2007-08 the ratio decreased as the net income was only Rs.

750538 but after that the net income grow rapidly as it was Rs. 1483388 in the year 2008-

09 which is just double of 2007-08.

lHDFC Bank - In the year 2011-12 the ratio decreased as the interest earned increased

from Rs. 199282122 to 272863517 but the net income did not increase in the same

proportion.

lICICI Bank - In the year 2009-10 the ratio increased as the net profit increased by Rs.

6401848.

25

20

15

10

5

0

30

25

20

15

10

5

0

18.88 19.48

23.57 22.7 18.87

Union

Bank

of India

Canara

Bank

Bank

of

Baroda

Punjab

National

Bank

Bank

of

India

15.74

25.19 24.3423.25

27.57

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

Comparative chart (on the basis of average)

Public Sector Banks V/s Private Sector Banks

Overall average

Public Sector Banks - 20.70

Private Sector Banks - 23.22

(2) Return on Assets (ROA) Net Income Return on Assets (ROA) =---------------------------------- Average Total Assets

4


vInterpretation ('ooo are omitted)

lUnion Bank of India - In the year 2011-12 the ratio decreased as the net income decrease

from Rs. 20819472 to 17871361.

lCanara Bank - In the year 2011-12 the ratio decreased due to increase in interest expense

by Rs.79205759.

lBank of Baroda - In the year 2011-12 the ratio decreased as the net profit increased but

not in the same proportion with average total assets as it was increasing earlier.

lPunjab National Bank - In the year 2010-11 and 2011-12 the ratio decreased as the net

assets increased but during that period of time the net profit did not increased in the same

proportion.


decrease from Rs. 30073463 to 17410689.

lIndusind Bank - In the year 2007-08 the ratio decreased as the net income was only Rs.

750538 but after that the net income grow rapidly as it was Rs. 1483388 in the year 2008-

09 which is just double of 2007-08.

lYes Bank - In the year 2010-11 the ratio decreased as the net assets highly increased from

Rs. 363825107 to 590069889 but the net income did not increase in same proportion.

lICICI Bank - In the year 2009-10 the ratio increased as the net profit increased by Rs.

6401848.


Overall average

Public Sector Banks (after tax) - 1.05

Private Sector Banks (after tax) - 1.42

(3) Return on Equity Net Income

Return on Equity (ROE) = ------------------------------------- Average Stockholders' Equity


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

0.78 0.89 1.170.97 0.72Indusind

Bank

0.49 0.84 1.61 2.062.25

Canara

Bank

0.09 1.03 1.24 1.34 0.92HDFC

Bank

1.41 1.42 1.45 1.571.68

Bank of

Baroda

0.88 1.09 1.21 1.33 1.24Yes

Bank

1.42 1.52 1.61 1.521.47

Punjab

National

Bank

1.13 1.38 1.44 1.31 1.16ICICI

Bank

1.12 0.96 1.08 1.341.47

Bank

of India

1.25 1.48 0.690.79 0.73Axis

Bank

1.17 1.41 1.53 1.601.61


Table -2 - Return on Asset (In Percentage)

5



2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

18.0820.6422.7318.7913.63Indusind

Bank

8.2012.3320.7920.4420.23

Canara

Bank

15.5618.8723.1223.7215.65HDFC

Bank

18.2717.6416.6717.0418.91

Bank of

Baroda

15.0819.1822.3823.9520.95Yes

Bank

25.1925.2123.0723.2124.92

Punjab

National

Bank

18.4723.4124.6022.9320.04ICICI

Bank

12.04 8.0016.53 9.8411.40

Bank

of India

25.8125.9913.0016.2914.37Axis

Bank

18.4819.7919.6619.7520.66


Table -3 - Return on Equity (In Percentage)

v

l

by Rs.2948111.

lCanara Bank - In the year 2011-12 the ratio decreased due to increase in Reserve and

surplus by Rs. 26501368.

lBank of Baroda - In the year 2011-12 the ratio decreased as the bank issue share of

Rs. 27 crore.

lPunjab National Bank - In the year 2010-11 the ratio decreased as the bank issue share

of Rs. 2 crore and in the year 2011-12 issued share of Rs. 22 crore.


decreased from Rs. 30073463 to 17410689.

lIndusind Bank - In the year 2007-08 the ratio decreased as the net income was only

Rs. 750538 but after that the net income grow rapidly as it was Rs. 1483388 in the year

2008-09 which is just double of 2007-08.

lHDFC Bank - In the year 2009-10 the ratio decreased as the the bank issue share of Rs. 30

crore.

lICICI Bank - In the year 2009-10 the ratio increased as the net profit increased by

Rs. 6401848.

Interpretation ('ooo are omitted)

Union Bank of India - In the year 2011-12 the ratio decreased as the net income decrease


23

22

21

20

19

18

17

30

25

20

15

10

5

0

18.7619.38

20.03

21.89

19.09

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

16.3917.71

24.32

11.56

19.64

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

6



Overall average



(4) Earnings Per Share Net Income Earnings Per Share =--------------------------------------------- Number of Common Shares Outstanding


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

28.3934.1841.0732.7627.01Indusind

Bank

2.34 4.17 8.5312.3817.16

Canara

Bank

38.1750.5473.6990.8774.10HDFC

Bank

44.8652.7764.4284.39110.09

Bank of

Baroda

39.2760.9383.66107.90121.40Yes

Bank

6.7610.2314.0620.9427.67

Punjab

National

Bank

64.9798.02124.10139.90 144.00ICICI

Bank

28.4225.6836.1044.7256.08

Bank

of India

38.2057.1833.1045.4746.60Axis

Bank

29.9450.5662.0682.53102.60


(In Percentage)

v

l

decreased by Rs.2948111.

lCanara Bank - In the year 2010-11 the ratio increased due to increase in net profit by

Rs. 10044578.

lBank of Baroda - In the year 2007-08 the ratio decreased as the net profit was very less in

comparison to other year it was Rs. 14355215 and in the year 2011-12 the net profit was

highest that was Rs. 50069562.


decrease from Rs. 30073463 to 17410689.

lIndusind Bank - In the year 2007-08 the ratio decreased as the net income was only

Rs. 750538 but after that the net income grow rapidly as it was Rs. 1483388 in the year

2008-09 which is just double of 2007-08.

lHDFC Bank - In the year 2011-12 the ratio increased due to high increase in net income

from Rs. 39264009 to Rs. 51670907.

lYes Bank - The ratio is rapidly increased as it was a growth period.lICICI Bank - In the year 2009-10 the ratio increased as the net profit increased by

Rs. 6401848.


Union Bank of India - In the year 2011-12 the ratio decreased as the net income

Table -4 - Earnings Per Share

7



200

150

100

50

0

80

60

40

20

0

27.28

65.47

82.65

144.21

44.11

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank


Overall average



(5) Current Ratio Current Assets

Current Ratio =----------------------------------- Current Liabilities


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

0.52:10.55:10.45:10.48:10.47:1Indusind

Bank

0.30:10.33:10.35:10.34:10.29:1

Canara

Bank

0.55:10.45:10.43:10.45:10.54:1HDFC

Bank

0.29:10.30:10.32:10.35:10.36:1

Bank of

Baroda

0.54:10.52:10.52:10.53:10.54:1Yes

Bank

0.29:10.27:10.25:10.23:10.24:1

Punjab

National

Bank

0.45:10.43:10.40:10.43:10.42:1ICICI

Bank

0.24:10.23:10.21:10.22:10.20:1

Bank

of India

0.54:10.51:10.52:10.50:10.49:1Axis

Bank

0.32:10.29:10.28:10.26:10.25:1


(In Ratio)

v

l

highly by Rs. 541364894

lPunjab National Bank - In the year 2009-10 the ratio decreased due to deposit increase

by Rs. 395693063 but assets did not increased in the same ratio.

lIndusind Bank - In the year 2011-12 the ratio decreased due to deposit increase highly by

Rs. 79961784 and borrowings increase by Rs. 31565897.

lAxis Bank - In the year 2010-11 the ratio decreased due to increase in deposit

from Rs. 1413002175 to Rs. 1892378010 and borrowing from Rs.171695512 to

Rs. 262678824.


Union Bank of India - In the year 2009-10 the ratio decreased due to deposit increase

Table -5 - Current Ratio

8



0.6

0.5

0.4

0.3

0.2

0.1

0

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0

0.490.46

0.53

0.43

0.51

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

0.32 0.32

0.250.22

0.28


Overall average



(6) Assets Turnover Ratio Interest Earned Assets Turnover Ratio = ----------------------------------

Average Total Assets


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

7.12 7.43 7.47 7.63 8.48Indusind

Bank

8.51 9.07 8.59 8.86 1.38

Canara

Bank

8.19 8.55 7.74 7.67 8.68HDFC

Bank

9.0110.32 7.79 7.97 8.86

Bank of

Baroda

7.32 7.41 6.61 6.87 7.36Yes

Bank

9.2910.04 7.99 8.47 9.51

Punjab

National

Bank

7.89 8.66 7.88 7.99 8.70ICICI

Bank

8.27 7.98 6.92 6.74 7.62

Bank

of India

7.71 8.08 7.14 6.94 7.74Axis

Bank

7.66 8.41 7.01 7.15 8.32


(In Times)

v

l

increase from Rs. 164526150 to Rs. 211442782

lBank of Baroda - In the year 2009-10 the ratio decreased as the assets increased rapidly

as it become Rs. 2783167028 from Rs. 1795995162 but the interest earned did not

increase in the same ratio.


Union Bank of India - In the year 2011-12 the ratio increased as the interest earned

Table -6 - Assets Turnover Ratio

9


l

increase.

lHDFC Bank - In the year 2009-10 the ratio decreased due to high increase in average total

assets from Rs. 1832707732 to Rs. 2224585697.

lYes Bank - In the year 2009-10 the ratio decreased due to increase in average total assets

from Rs. 229007901 to Rs. 363825107 but the interest earned did not increase in the same

ratio.

lICICI Bank - In the year 2009-10 the ratio decreased as the interest earned decrease from

Rs. 310925484 to 257069331.

Bank of India - In the year 2010-11 the ratio decreased because the average total assets


8.5

8

7.5

7

6.5

10

8

6

4

2

0

7.62

8.16

7.11

8.22

7.52

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

9.08 8.82 9.06

7.517.71


Overall average



(7) Debt-equity Ratio Total Liabilities

Debt to Equity Ratio =---------------------------------- Total Stockholders' Equity


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

17.02:117.13:117.41:117.08:116.59:1Indusind

Bank

15.28:114.70:113.47:110.02:110.93:1

Canara

Bank

15.12:115.99:116.65:115.44:115.18:1HDFC

Bank

9.62:110.12:18.86:19.15:19.43:1

Bank of

Baroda

14.38:115.63:117.06:115.79:114.86:1Yes

Bank

10.95:111.66:110.32:114.02:113.72:1

Punjab

National

Bank

14.15:114.81:115.30:116.13:115.08:1ICICI

Bank

6.74:15.82:15.83:16.72:16.83:1

Bank

of India

15.02:114.89:117.85:118.67:116.82:1Axis

Bank

10.91:112.70:114.81:115.24:115.10:1


(In Ratio)Table -7 - Debt-equity Ratio

10



lUnion Bank of India - In the year 2011-12 the ratio decreased as the reserve and surplus increase from Rs. 121291902 to 1397150868.

lPunjab National Bank - In the year 2010-11 the ratio increased as the deposit increased from Rs.2493298030 to 3128987266.

lBank of India - In the year 2011-12 the ratio decreased due to decrease in deposit.

lHDFC Bank - In the year 2009-10 the ratio decreased due to increase in the reserve and surplus from Rs. 142209460 to Rs. 210618369 and bank also issue share of Rs. 30 crore.

lIndusind Bank - In the year 2010-11 the ratio decreased as this bank issues share of 8 crore.

lAxis Bank - In the year 2011-12 the ratio decreased as this bank issues share of 10 crore.

v


18

17

16

15

14

17.04

15.6715.54

15.09

16.65

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

15

10

5

0

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

12.88

9.44

12.13

6.39

13.75


Overall average



(8) Dividend Payout Ratio Cash Dividends

Dividend Payout Ratio = -------------------- Net Income



2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

16.6817.1115.6623.4428.73Indusind

Bank

6.0812.1318.7420.1922.34

Canara

Bank

24.5318.5115.8814.0917.28HDFC

Bank

16.4515.7216.9016.3817.30

Bank of

Baroda

23.7517.2220.9017.7616.22Yes

Bank

__ __ 12.47 8.2010.35

Punjab

National

Bank

23.4023.8617.2918.2717.75ICICI

Bank

33.0236.61 37.3135.2332.82

Bank

of India

12.2310.2124.6117.8517.40Axis

Bank

23.8923.8622.5619.7818.15

(In Percentage)Table -8 - Dividend Payout Ratio

11


v

l increased decreased

from Rs. 20819472 to Rs. 17871361 but the dividend did not distributed in the same

proportion.

lBank of Baroda - In the year 2007-08 the net profit was lowest i.e. Rs. 14355215 but bank

still paid dividend of Rs. 3409388 and in the year 2011-12 the net profit was highest i.e. Rs.

50069562 but bank still paid very low dividend i.e. Rs. 8122904.

lIndusind Bank - As the bank was not well established at that period of time and the net

income was also less and bank retain money for developmental purpose.

lHDFC Bank - In the year 2008-09 the ratio decreased as the net income increased from

Rs. 15901930 to Rs. 22449392 but the dividend did not distributed in the same proportion.

lYes Bank - As it was the establishment time of the yes bank so the bank did not distribute

any dividend during 2007-08 and 2008-09 and retain money for developmental purpose.


Union Bank of India - In the year 2011-12 the ratio as the net income


25

20

15

10

5

0

40

30

20

10

0

20.3618.05 19.17 20.11

16.46

UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

15.87 16.55

6.2

34.99

21.64


Overall average



(9) Non-performing Asset - NPA

Gross NPA- provisionNet NPA Ratio = ---------------------------------x 100 Gross Advance- provision


2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Union Bank

of India

0.42 0.61 0.81 1.19 1.70Indusind

Bank

2.27 1.14 0.50 0.28 0.27

Canara

Bank

1.03 1.09 1.06 1.11 1.46HDFC

Bank

1.3 1.98 1.50 1.05 1.65

Bank of

Baroda

0.47 0.31 0.11 0.35 0.54Yes

Bank

1.38 0.68 0.38 0.23 0.22

(In Percentage)Table -9 - Non-performing Asset

12



2007-082008-092009-102010-112011-12 2007-082008-092009-102010-112011-12

Punjab

National

Bank

0.64 0.17 0.53 0.851.52ICICI

Bank

1.49 1.96 1.87 0.94 0.62

Bank

of India

0.52 0.44 1.350.91 1.47Axis

Bank

0.36 0.35 0.36 0.26 0.25

Interpretation

lDue to recessionary trends witnessed world over, Indian economy was also affected and its growth slowed down. As a result, Bank had to restructure many accounts in the previous year. Though Indian economy has started showing symptoms of revival, it may take some time to start robust growth. Due to sluggish market conditions, number of restructured accounts could not adhere to restructuring terms and turned Non Performing Assets (NPA).

lPunjab national Bank - The year 2007-08 started with concerns emerging on asset quality, as reflected in the slippages during the previous year. The Bank not only stepped up its follow up & recovery efforts but also contained slippages by gearing up its machinery. By the end of March 2008, the Bank was able to bring the position under control. During the year, the Bank opened one Asset Recovery Management Branch (ARMB) and 9 Special Asset Recovery Cells (SARCs) raising the total number of ARMBs and SARCs to 11 & 49, respectively. These specialized branches contributed in a big way towards substantial reduction of NPAs.

lCanara bank has the highest NPA ratio amongst public banks on the back of its aggressive nature. As the banks lends out strongly to customers, the chances of them defaulting also rises.

lIf we look at the chart above, we can clearly see a differentiation between India's largest banks. bank such as HDFC Bank and ICICI Bank would garner one of the highest NPA ratio amongst private banks on the back of its aggressive nature. As the banks lends out strongly to customers, the chances of them defaulting also rises.

v



UnionBank

of India

CanaraBank

Bankof

Baroda

PunjabNational

Bank

Bank of

India

Indusind

Bank

HDFC

Bank

Yes

Bank

ICICI

Bank

Axis

Bank

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0

0.95

1.15

0.36

0.740.94

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0

0.89

1.49

0.57

1.38

0.32

13



Overall average



Conclusion

The analysis of financial statements is a process of evaluating the relationship between

component parts of financial statements to obtain a better understanding of the bank's position

and performance. The ratio analysis results showed that financial performance of the banks was

strongly influenced during turbulent scenario. The financial performance of banks did not fluctuate so

rapidly frequently in the reform period but in the turbulent scenario during which the study has been

conducted, the ratio analysis of selected banks are showing varying results.

lThe net profit margin ratio of private sector banks i.e. 23.22 is more than public sector banks

i.e. 20.70 which shows that the private sector banks are more profitable than public sector

banks.

lReturn on assets (after tax) of private sector bank i.e. 1.42 is more than public sector banks i.e.

1.05 which shows that the private sector banks are more efficient than public sector banks.

lThe earning per Share of public sector banks is 72.74 which is much more higher than the EPS

of private sector banks i.e. 39.94.

lThe current ratio of public sector banks is 0.48 and current ratio of private sector banks is 0.28

which shows that the private sector banks manage the liquidity with less current assets.

lThe debt equity ratio of private sector banks and public sector banks is 8.44 and 7.72

respectively which shows that the private sector banks arrange fund more from the way of

borrowings in comperision to public sector banks.

lThe dividend pay out ratio of public sector banks and private sector banks is 18.83 and19.05

respectively which shows that the private sector bank provide more dividend than public

sector banks.

lThe average NPA of public sector banks and private sector banks is 0.83 and 0.93. the ratio of

private sector banks is more due to the aggressive nature of private sector banks as private

sector banks sanction loan without proper documentation and verification and lend out

strongly to customer, the chances of them defaulting also rises.

Recommendations

There are some suggestions for managers by which they can enhance the financial positions

of the bank. These suggestions might be helpful for them to take decisions.

For Management

lThe management should try to improve the interest earning as well as net income and the

emphasis should be on the reduction of expenses.

lWhen the earning per share of the bank get down then the bank should increase the face value

of the share so that the number of shares can decrease.

14


The management should emphasis on borrow more fund and invest in medium term

investment.

lThe banks should arrange funds more from debt rather than equity.

lThe management should distribute less dividend to share holders and keep money for the

developmental purpose and invest the fund for the long term purpose.

lRBI's policy change from time to time, banks should be prepared for that and arrange fund

accordingly so that they will not bear any anticipatory loss

For Investors

lThe investor can have an idea through ratio analysis about the financial performance of the

bank but can't be based on the ratio analysis as there is changing scenario and due to

inflationary and deflationary trend the market highly fluctuate.

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Nationalised Banks on Various Service Parametres�, Altius Shodh Journal of Management & Commerce.

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performance of banks in Pakistan after Merger and Acquisition�, Journal of Global Entrepreneurship Research.

lQamar Abbas, Ahmed Imran Hunjra, Rashid Saeed, Ehsan-Ul-Hassan, Muhammad Shahzad Ijaz,(2014) �Analysis of

Pre and Post Merger and Acquisition Financial Performance of Banks in Pakistan�, Information Management and

Business Review, Vol. 6.

lJyoti Gupta, Suman Jain, (2012) �A study on Cooperative Banks in India with special reference to Lending Practices�,

International Journal of Scientific and Research Publications, Volume 2, Issue 10.

lRamesh Chander and Jai Kishan Chandel, (2011) �An Evaluation of Financial Performance and Viability of Cooperative

Banks - A Study of Four DCCBs in Haryana (India)�, Kaim Journal of Management and Research Vol.3, No.2

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INDUSTRY�.

lPardeep Kaur and Gian Kaur, (2013) �A study of cost efficiency of Indian commercial banks- An impact of mergers�,

African Journal of Business Management, Vol7(15).

lAlias Radam and A.H. Baharom and A.M. Dayang-Afizzah, (2008) �Effect of mergerson effciency and productivity:

Some evidence for banks in Malaysia�, MPRA Paper No. 12726.

lViverita and M. Ariff, (2011) �Efficiency measurement and determinants of Indonesian bank efficiency�, Paper to

Academy of Financial Services.

lRamesh Chander and Jai Kishan Chandel, (2010) �FINANCIAL VIABILITY AND PERFORMANCE EVALUATION OF CO-

OPERATIVE CREDIT INSTITUTIONS IN HARYANA (INDIA)� , International Journal of Computing and Business

Research (IJCBR), Vol(1).

lS. Qasim Shah, Dr. Imran Naseem, Shah Gul, Sehrish Nisar, Takreem Zara Naqvi, Musaddiq Hussain and Aisha, (2012)

�Financial Performance of Public and Private Banks in Pakistan: A Comparative Analysis�, Science Series Data Report

Vol 4.

lSumeet Gupta and Renu Verma, (2008) �Comparative Analysis of Financial Performance of Private Sector Banks in

India: Application of CAMEL Model�, Journal of Global Economy, Vol 4 No.2.

l

15

Introduction

Dividend policy is defined as the policy of distributing the earning between the dividend

and maintenance. Practically dividend is payable whenever the board of directors states to

disburse whether it might be annually, semi annually or monthly. Banks have today, improved

essential trust of the public. Banking industry offers a large range of services surrounding the

needs of public in different walks of life.

The purpose of the research study is to compare the dividend policy of the overall Indian

banks public and private both with reference to the shareholder's point of view from the year 2003

- 2013. This research will help to find which sectors' dividend policy is more attractive for the

shareholders. Should the shareholders go to invest in the Public sector banks or in private sector

banks to maximize his/her return on the investment? This research study is concerned with an

analysis of data of Indian banks from 2003 � 2013 for comparison of public and private sector

banks' dividend policy.

To compare the dividend policy of public and private sector banks, investigation time

period consists of 10 years which is from the year 2003 � 2013. To compare the dividend policy of

both these sectors, 12 banks of India listed in NSE in which 7 banks are of public and 5 banks of

the private sector have ben selected.

In this research study, market-to-book value ratio was used to measure the

shareholder's wealth and dividend yield ratio was used to analyze the dividend policy. To

consider the dividend policies in depth and its effect on the shareholder's wealth, two more ratios

were included i.e. profitability and P/E ratio. Dividend Payout Ratio, Return on Assets Ratio,

Leverage Ratio and Net Margin ratio are used as the independent variables and market-to-book

value as the dependent variable.

The study will focus on factors affecting dividend policy and comparison between

dividend policy of Public and Private Sector Bank


Chawala and Srinavasan (1987) studied the impact of dividend and retention on share

price. The objectives of their study were to estimate a model to explain share price, dividend and

retained earnings relationship, to test the dividend, retained earnings hypotheses and to examine

the structural changes in the estimated relations over time. As per the financial theories they

expected the coefficients of both dividend and retained earnings to be positive in the price

equation. Similarly in the dividend supply function also they expected a positive sign for current

earnings and previous dividend.

Dividend Policy in Public and Private Sector Banks: A Comparative Study

*Mr. Vinay Gupta**Dr. R. C. Gupta

***Ms. Sarika Keswani

*Research Scholar, Commerce Jiwaji University, Gwalior**Prof. in Commerce, M. L. B. Govt. College of Excellence Lashkar, Gwalior - 474009 (M.P.) India***Assistant Professor, ITM University, Gwalior

16


Pradhan (1990) made a study on stock market behavior of Nepal which was based on the

data collected for 17 enterprises from 1986 to 1990. The objectives of this study were to assess

the stock market behavior in Nepal and to examine the relationship of market equity, market value

to book value, price-earnings, and dividends with liquidity, profitability, leverage, assets

turnover, and interest coverage. Some findings of this study, among others, were that higher the

earnings on stocks, larger the ratio of dividends per share to market price per share. Dividend per

share and market per share was positively correlated. There is positive relationship between the

ratio dividend per share to market price per share and interest coverage.

Mahapatra and Sahu (1993) conducted research on determinants of corporate dividend

behavior in India- an econometric analysis. The objectives of their study were to examine the

relative significance of some known dividend models in the Indian situation and to enquire into the

determinants of corporate dividend behaviour with the help of some regression models. Their

study was based on judgmental sample of 90 companies for the period 1977/78 to 1988/89. After

using various regression equations they found that dividend decision is primarily governed by

cash flow, a measure of company's capacity to pay and dividend paid in the previous year, in

majority of the sample companies. Among other determinants, investment demand has been

found having significant impact on the dividend decision of electrical goods and chemical

industries.

Olson and McCann (1994) have conducted a research on the linkage between dividend

and earnings. The purpose of this paper has been to empirically test the linkage, if any, between

dividends and earnings. The Granger causality test was used for two measures of dividends and

earnings: the level of variables and deviations from expected values. An autoregressive model for

earnings was estimated and contrasted to a bi-variate model that included dividend information

as well as an autoregressive earnings series. The results of the study indicate that the inclusion of

the dividend data improves the predictability of earnings using both the level of the variables and

deviations from expected values measures.

Amidu and Abor (2006) conducted research; this study examines the determinants of

dividend payout ratios of listed companies in Ghana. The analyses are performed using data

derived from the financial statements of firms listed on the GSE during a six-year period. Ordinary

Least Squares model is used to estimate the regression equation. Major findings of the study

were that there is a positive relationship between dividend payout and profitability, cash flow, and

tax. The results suggest that, profitable firms tend to pay high dividend.

Pandey and Bhatt (2007) examined the dividend behavior of Indian companies. Do Indian

firms follow stable dividend policies? How do the monetary policy restrictions affect the dividend

payouts of the firm? They used the Lintner's (1956) model to test for dividend stability of firms in

India. They used the GMM estimator, which accounts for heterogeneity and is most suitable in a

dynamic setting. Their results establish the validity of the Lintner model in the emerging Indian

market, and prove the underlying dynamic relationship between current dividends as dependent

variable and current earnings and past dividends as independent variables. Further, their results

also show that the Indian firms have lower target payout ratios and higher adjustment factors.

Objectives

lTo know the impact of Profitability on dividend payout ratio in banking sector in India.

lTo know the impact of P/E ratio on dividend payout ratio in banking sector in India.

lTo know the impact of BVPS on dividend payout ratio in banking sector in India.

lTo know the impact of Dividend Yield ratio on dividend payout ratio in banking sector in

India.

lTo know the difference between dividend payout of public and private sector banks in

India.

The Research Model


Type of Study

The study on the topic �Dividend Policy in Public and Private Sector Banks: A

Comparative Study� is empirical in nature to find out the impact of Profitability, P/E ratio, BVPS

and Dividend Yield Ratio on Dividend Payout Ratio.

Sample Design and Size

i.Dividend policy having at least ten years track record were only considered for the study.

ii.The time period chosen for the study was 10 years (1st April 2003 to 31st March 2013).

iii.All twelve banking companies listed in NSE in India have been selected in the study.

iv.Out of twelve banks seven are of public sector and five are of private sector.

v.Random sampling has been used for this purpose.

vi.To know the impact of various factors on Dividend Policy following variable has been

taken to analyze impact.

17


Profitability

Dividend Yield Ratio

BVPS

P/E ratio Dividend Payout

Ratio

Dependent variable: Dividend Payout Ratio

Independent Variables:

lProfitability

lP/E ratio

lBVPS

lDividend Yield ratio

Statistical Analysis and Techniques

i.Multiple Regression has been applied to assess the degree of impact of Profitability, P/E

Ratio, BVPS and Dividend Yield Ratio on Dividend Payout Ratio.

ii.T-test was conducted to compare the performance of Dividend Policy among public and

private sector bank.

Instruments (Tools of Data Collection)

i.All the data is secondary and was obtained from NSE website.

ii.Other relevant data was obtained from the website of selected banks of public and

private sector.

Hypotheses:- Following Hypotheses will be tested at 5% significance level of the Multiple

regression:

l

l

l

l

l

Analysis and Interpretation

Regression

Model Summary

There is no significant impact of Profitability on dividend payout ratio in banking sector in

India.

There is no significant impact of P/E ratio on dividend payout ratio in banking sector in

India.

There is no significant impact of BVPS on dividend payout ratio in banking sector in India.

There is no significant impact of Dividend Yield ratio on dividend payout ratio in banking

sector in India.

There is no significant difference between dividend payout of public and private sector

banks in India.

18


Model R R SquareAdjusted R SquareStd. Error of the Estimate

1 1.000(a) .999 .997 .31242

Model

1Regression

Residual

Total

19


Sum of Squares Df

Mean Square F Sig,

340.873

.293

341.166

8

3

11

42.609

.098

436.543.000 (a)

Anova (b)

a. Predictors: (Constant), NET PROFIT, P/E ratio, BVPS and Dividend Yield ratio b. Dependent Variable: Dividend Payout Ratio

Coefficients (a)

Model

1 (Constant)

Net Profit

Price Earning Ratio

Book Value

Dividend Yield Ratio

Unstandardized Coefficients t Sig,

29.188

.002

-.339

-.035

-.273

.439

.000

.020

.007

.062

.511

-1.829

-1.085

-.66

66.437

3.781

-17.289

-5.138

-4.386

.000

.032

.000

.014

.022

Standardized Coefficients

B Std. Error Beta

a Dependent Variable: Dividend Payout Ratio

The null hypothesis has

not been accepted because (p<0.05, 0.032) in this study. There is significant Impact of

The null hypothesis

has not been accepted because (p<0.05, 0.000) in this study. There is significant Impact of

The null hypothesis has

not been accepted because (p<0.05, 0.014) in this study. There is significant Impact of

The null

hypothesis has not been accepted because (p<0.05, 0.022) in this study. There is significant

Impact of

T-Test :- To compare dividend policy among public and private sector banks.

One-Sample Statistics

lThere is no significant impact of Profitability on dividend payout ratio.

Profitability on dividend payout ratio in banking sector of India.

lThere is no significant impact of Price Earning ratio on dividend payout ratio.

Price Earning ratio on dividend payout ratio in banking sector of India.

lThere is no significant impact of Book value on dividend payout ratio.

Book

value on dividend payout ratio in banking sector of India.

lThere is no significant impact of Dividend Yield ratio on dividend payout ratio.

Dividend Yield ratio on dividend payout ratio in banking sector of India

Public Sector Bank

Private Sector Bank

NStd. ErrorMean

7

5

20.1543

23.2160

1.42447

8.68531

.53840

3.88419

Std. DeviationMean

20


One-Sample Test

Public Sector Bank

Private Sector Bank

tMean

Difference

6

4

.000

.004

21.4717

34.0002

Sig (2-tailed)

Df

Test Value = 0

95% Confidence Interval of the Difference

Lower Upper

18.8369

12.4318

20.154

3

23.216

0

37.434

5.977

lThere is no significant difference between dividend payout of public and private sector

banks. The null hypothesis has not been accepted because (p<0.05, 0.000, 0.004) in

this study. There is significant difference between dividend payout of public and private

sector banks.

Summary of the Hypotheses Test

There is no significant impact of Profitability on dividend payout ratio

HypothesesS/N Status

NOT ACCEPTED

There is no significant impact of P/E ratio on dividend payout ratio

There is no significant impact of BVPS ratio on dividend payout ratio

There is no significant impact of Dividend Yield ratio on dividend payout ratio

There is no significant difference between dividend payout of public and private sector banks.

1

2

3

4

5

Conclusion

Throughout the study, objectives were to find out the impact of Profitability, P/E ratio, BVPS and Dividend Yield ratio on dividend policy of banking firms. In order to achieve the goal, this paper gathered secondary data of banking listed companies traded in National Stock Exchange (NSE) and used some statistical tools to analyze all the financial information. This paper investigated the dividend policy of the firms listed in the banking industry and comparative study of dividend policy of public and private banks in India, their dependence on the accounting variables and found that the profitability, P/E ratio, BVPS and Dividend Yield ratio have significant impact on the dividend payout ratio of the firm in banking industry and also there is difference between the dividend policy of public and private sector banks.

Reference

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Bhattacharya, N. (2007). Dividend policy: A review. Retrieved January 25, 2008, fromwww.emeraldinsight.com

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lFriend, I., & Puckett, M. (September 1964). Dividends & Stock Prices. The American Economic Review, Vol. LIV: 656-682

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lGhimire, P.K. (July 2002). Dividend Policy of Listed Companies (with ref. to Banks, Finance & Insurance Companies).Unpublished Master's Degree Thesis. Shanker Dev Campus. T.U.

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ndlKhan, M.Y. and Jain. P.K. (1992). Dividend Policy Decision: Financial Management Text and Problems, (2 ed.)

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21


22

*Radhagobinda Basak

There are lots of traditional yardsticks to measure the efficiency of financial performance of a

firm, e.g. Gross Profit ratio, Net Profit ratio, Operating Profit ratio, Return on Investment (ROI), Return

on Net worth (RONW), Earnings Per Share (EPS), etc. Among them, ROI is considered as the most

indicative single index of financial performance. In all the traditional measures, surplus (net profit etc.)

of a firm is highlighted. But, from the view point of sustainability, net value generated by a firm has

much more importance than surplus created by it. Net value generated is measured by Economic

Value Added (EVA). It is a modern concept to measure financial performance.

Investors take the risk to invest in a company with the expectation of gaining some more return.

To meet their expectation is the obligation of a firm. Therefore, net profit generated by a firm after

covering the operating expenses is not the actual surplus. Rather, excess of net profit after meeting

the expectation of the shareholders may be considered as the true surplus generated by it. That is

what is called EVA. Definitely, EVA gives the indication of firm's ability to sustain in the long run. In the

present study, an attempt has been taken to measure the financial performance of Tata Steel Ltd.

based on ROI concept and EVA concept.

Key Words: Economic Value Added; Return on Investment; Net Operating Profit after Tax;

Weighted Average Cost of Capital; Capital Employed, etc.

Introduction

Traditionally, the merit of financial performance of any firm is measured by some financial

tools like Gross Profit ratio, Net Profit ratio, Operating Profit ratio, Return on Investment (ROI),

Return on Net Worth (RONW), Earnings Per Share (EPS), etc. Among these tools, ROI is the most

proficient measure. ROI is the net earnings of a firm expressed as a percentage of capital employed.

Here, net earnings refer to the excess of revenue over the operating expenses. One thing which is

not considered here is the expectation of investors. Investments involve risk. The investors take this

risk with a view to earn some risk premium. Therefore, to calculate the true surplus created by a firm,

investor's expectation must be considered. The expectation of the investors is commonly termed

as Cost of Capital (COC). The excess of net earnings over the COC is termed as Economic Value

Added (EVA). So, this is the true surplus of a firm.

EVA is generally measured by the following formula:

EVA= NOPAT- (WACC* Average Capital Employed)

Where, NOPAT = Net Operating Profit after Tax and WACC= Weighted Average Cost of

Capital.

Normally, for EVA calculation, cost of equity is computed on the basis of Capital Asset

Pricing Model (CAPM).

As EVA gives the true picture of surplus / value generated by a firm, it is considered as the

true indicator of long term sustainability of firms. In the present study, comparative analysis of ROI

ROI vis-à-vis EVA: A Case Study on Tata Steel

*Asst. Professor, Dept, of Commerce, Maharani Kasiswari College, Affiliated to University of Calcutta, Kolkata, West Bengal

23


and EVA has been evaluated to measure the financial performance of Tata Steel Ltd.

Objectives of the study

1. To measure the financial performance of Tata Steel on the basis of ROI concept as a traditional

measure

2. To quantify the value generated by Tata Steel on the basis of EVA concept as a modern measure

and

3. To make a comparative analysis between the two concepts.

Research methodology

The study is based on secondary data. Financial data of Tata Steel have been collected

from their published annual reports. The period of the study is five years- from 2010-11 to 2014-15.

To collect the data of Sensex and market price of share of Tata Steel, the website of BSE

was the source. Both Sensex and market price of share are highly volatile and are subject to socio-

economic and political condition of the country. To calculate market rate of return and market risk,

all these phenomena should be taken into consideration as they are quite natural in capital market

scenario. But to regularize the abnormality in capital market as much as possible, a long period

should be considered. That is why, in this study, data of Sensex and market share price have been

considered for a period of 12 years from 2003-04 to 2014-15.

Tata Steel is a pioneer in steel industry in India. It has a long and rich history of operating

business successfully. It is a BSE listed company also. So, the share price data are available. For

these reasons, Tata Steel has been chosen as the sample company in our study.

Literature Review

Stewart, G. Bennett (1994) conducted a study on EVA taking a large number of companies

throughout the world. It was opined that EVA approach can rightly indicate the sustainable value

created by a firm for its stakeholders.

Rakshit, Debdas and Chatterjee, Chanchal (2008) in their study, evaluated the pre-merger

and post-merger performance of ICICI Bank on EVA measurement. As per their findings, for two

years immediately after the merger, the EVA of ICICI Bank was negative. After that, the company

created values and thus ultimately became successful in achieving its goal of corporate

restructuring through merger.

Chattopadhyay, Arup and Rakshit, Debdas (2012) made a study to measure the

shareholders' value creation in FMCG industry in India. They took four approaches to measure the

shareholders' value creation, namely; the market value to book value approach, the EVA approach,

the market value added approach and the shareholders' value added approach. They found that

shareholders' value creation actually emphasizes the present value of future cash flows rather than

earnings.

24


Analysis and Findings

Financial performance of Tata Steel based on traditional concept

Return on investment (ROI) is considered as one of the most effective measures of the

financial performance of a firm. It gives us an indication about earning ability of a firm. It is opined that

the higher the ROI, the better is the financial performance. There are several approaches in

computing ROI. In our study, the following formula has been used.

ROI= Net Profit Before Interest but After Tax/Average Capital Employed*100

Where, Av. Capital Employed= (Opening Capital Employed+ Closing Capital Employed)/2

and Capital Employed= Shareholders' Fund+ Debt Fund. In the following table, the details have

been presented.

Table 1: Computation of Average Capital Employed,

Profit Before Interest After Tax and ROI

(Rs. in crore)

Particulars 2009-102010-112011-122012-132013-142014-15

1.Shareholders' Fund:Equity Share Capital 887.41 959.41971.41 971.41 971.41971.41Reserve & Surplus 36074.3945807.0251245.0554238.2760176.5865692.48

36961.8046766.4352216.4655209.6861147.9966663.892. Hybrid Perpetual Securities: - 1500 1500 1500 1500 1500

11.80% Securities - - 775 775 775 775

11.50% Securities - 1500 2275 2275 2275 2275

3. Long Term Borrowings 2363524499.0521353.2023565.5723808.0923900.37 (Debentures & Others)

4. Capital Employed 60596.8072765.4875844.6681050.2587231.0892839.26 (1+2+3)

5.Average Capital 66681.1474305.0778447.4684140.6790035.17Employed

6Profit After Tax 6865.696696.425062.976412.196439.12Add: After Tax Interest 1198.541395.531292.201362.521627.91(Taking Tax Rate 30%)

7Profit Before Interest 8064.238091.956355.177774.718067.03After Tax

8.Return on Investment 12.09 10.89 8.10 9.24 8.96 (%)[(7)/(5)*100]

Source: Different Annual Reports of Tata Steel

25


Financial performance of Tata Steel based on modern concept

Economic Value Added (EVA) is one of the most significant measures of financial performance

of a firm. Under this approach, it is examined whether a firm is creating or destructing values. It signifies

the sustainability of a firm. EVA is usually measured by the following formula:

EVA= NOPAT-COC

Where, NOPAT= Net Operating Profit after Tax and COC= Total Cost of Capital. In the present

study, NOPAT has been calculated by adding the after tax interest cost with the profit after tax. On the

other hand, COC has been computed by multiplying the weighted average cost of capital (WACC) with

average capital employed.

To compute WACC, first we need COC of each component in capital structure. Cost of equity

and cost of retained earnings are assumed to be same in this study. They have been calculated as

below.

Cost of equity (K) under Capital Asset Pricing Model (CAPM):e

K = R +ß (R -R )e f m f

Where, K= cost of equity, R= risk free rate of return, R= market rate of return and ß= risk e f m

coefficient.

Interest rate of recently issued 10 years' Government Stock 2024 has been taken as the risk

free rate of return and the rate is 8.40% p.a.

To compute market rate of return, BSE Sensex return has been calculated at first for the period st stof 12 years from 1 April 2003 to 31 March 2015 on daily basis. The average of those 2990 daily returns

has been calculated next. Then the average so calculated has been annualized by multiplying it by 272

as there were 272 working days on an average during the period of those 12 years. This annualized rate

has been taken as the market rate of return which is 23.31%.2Symbolically, ß= Cov (R , R ) /σ = r × σ /σm t m mt t m

Where, R= share price return of Tata Steel, ß = standard deviation of daily market rate of return t m

(i.e. Sensex return), σ= standard deviation of daily share price return of Tata Steel and r= correlation t mt

coefficient between daily market rate of return(i.e. Sensex return) and daily share price return of Tata st stSteel. Here, both the returns have been calculated for 12 years from 1 April 2003 to 31 March 2015 on

daily basis. Further, only the closing indices/prices are considered for calculating the daily returns

because closing price represents the sensation of the whole day. Finally, the value of β comes to 1.3327.

Putting the values in the equation, cost of equity (K) comes to 28.27% p.a.e

Cost of Hybrid Perpetual Securities (K)s

It is a fixed distribution bearing perpetual security and is not considered a debt. So, actual

distribution rate may be taken as its cost which is 11.80% p.a. and 11.50% p.a. respectively. The volume

of 11.50% securities is Rs.775 crore only which is a very minor portion of total capital employed. So, for

the sake of simplicity and on the principle of conservatism, we shall rather take 11.80% distribution rate

as the overall cost of Hybrid Perpetual Securities.

26


Cost of Long Term Borrowings (K)l

There are different kinds of debentures and term loans under this category. Due to unavailability

of proper information and for the sake of simplicity, average rate of interest on all these borrowings as a

whole has been taken as overall cost of Long Term Borrowings. Being debt, cost should be calculated

after tax. The calculation is as below:

Table 2: Computation of cost of long Term Borrowings

(Rs. in crore)

Particulars 2010-112011-122012-132013-142014-15

Interest exp. On Debentures / 1712.201993.61 18461946.462325.58Bonds & Fixed Loans

Long Term Borrowings (LTB) 24499.0521353.2023565.5723808.0923900.37

Cost of LTB (%) 6.99 9.34 7.83 8.18 9.73

Cost of LTB after tax (K) 4.89 6.54 5.48 5.72 6.81l

(Taking Tax Rate 30%)


Computation of weighted average cost of capital (WACC):

WACC is the overall cost of all the components in capital structure. WACC is the sum of the

products obtained by multiplying the individual weight of a particular component with its cost. In our

study, it has been calculated in the following way:

K= K*W+K*W+K*W0eessl l

Where, K= WACC, and W, W and W are the weights of the three components of capital 0 e s l

structure respectively. Weight refers to the proportion in which the components are in capital structure.

Weights may be calculated based on book values or market values. The calculations are shown below.

Table 3: Capital Structure of Tata Steel Ltd. showing book values as weight

(Rs. is in crore)

Elements 2010-11 2011-12 2012-13 2013-14 2014-15

BV(Rs.) WBV(Rs.) WBV(Rs.) WBV(Rs.) WBV(Rs.) W

Shareholders'46766.430.6452216.460.6955209.680.6861147.990.7066663.890.72Fund

Hybrid 15000.0222750.0322750.0322750.03 22750.02

Securities

Long Term24499.050.3421353.200.2823565.570.2923808.090.2723900.370.26Borrowings

Capital 72765.481.0075844.661.0081050.251.0087231.081.0092839.261.00Employed


27


Total market value of Shareholder's Fund for a particular year has been calculated by multiplying the

number of shares as on last date of that financial year with the closing market price per share as on that

date. It is as below.

Table 4: Computation of total market value of Shareholders' Fund

Particulars 2010-112011-122012-132013-142014-15

stNo. of shares on 31 March 959214450971214450971215229971215405971215439

stMarket price per share on 31 March (Rs.) 620.50470.40312.30 393.85316.85

Total Value of Shareholders' Fund 59519.2645685.9330331.0538251.3230772.96(Rs. in crore)


It is assumed that the book values and market values of Hybrid Perpetual Securities and Long Term

Borrowings are same.

Table 5: Capital Structure of Tata Steel Ltd. showing market values as weight

(Rs. in crore)

Elements 2010-11 2011-12 2012-13 2013-14 2014-15

BV(Rs.) WBV(Rs.) WBV(Rs.) WBV(Rs.) WBV(Rs.) W

Shareholders'59519.260.7045685.930.6630331.050.5438251.320.5930772.960.54Fund

Hybrid 15000.0222750.0322750.0422750.0422750.04Securities

Long Term24499.050.2821353.200.3123565.570.4223808.090.3723900.370.42Borrowings

Capital 85518.311.0069314.131.0056171.621.0064334.411.0056948.331.00Employed


Now, we have the individual COC of each component of capital structure and their weight. So, the

WACC may be calculated in the following way.

Table 6: Computation of WACC (taking book values as weight)

Elements 2010-11 2011-12 2012-13 2013-14 2014-15

Cost %WCost %W Cost %W Cost %W Cost %W

Shareholders' 28.270.6428.270.6928.270.6828.270.7028.270.72Fund

Hybrid 11.800.0211.800.0311.800.0311.800.0311.800.02Securities

Long Term4.890.34 6.540.28 5.480.29 5.720.276.810.26Borrowings

WACC (%) 19.99 21.69 21.17 21.69 22.36


28


Table 7: Computation of WACC (taking market values as weight)

Elements 2010-11 2011-12 2012-13 2013-14 2014-15

Cost %WCost %W Cost %W Cost %W Cost %W

Shareholders' 28.270.7028.270.6628.270.5428.270.5928.270.54Fund

Hybrid 11.800.0211.800.0311.800.0411.800.0411.800.04Securities

Long Term4.890.28 6.540.31 5.480.42 5.720.376.810.42Borrowings

WACC (%) 21.39 21.04 18.04 19.27 18.60


Now, we have NOPAT, Average Capital Employed and WACC. EVA may now be easily calculated in the

following way.

Table 8: Computation of EVA (taking book values as weight)

(Rs. is in crore)

Particulars 2010-112011-122012-132013-142014-15

1. Profit before Interest After Tax 8064.238091.956355.177774.718067.03 (NOPAT) (Rs.)

2. Average Capital Employed (Rs.) 66681.174305.178447.584140.790035.2

3. WACC (%) 19.99 21.69 21.17 21.69 22.36

4. Total Cost of Capital Employed 13329.5616116.7716607.3318250.1120131.86 (2x3) (Rs.)

5. EVA (1-4) (Rs.) -5265.33-8024.8210252.1610475.4012064.83

6. EVA as percentage of Average -7.89628-10.7998-13.0688-12.4499-13.4001 Capital Employed (%) (5/2*100)


Table 9: Computation of EVA (taking market values as weight)(Rs. is in crore)

Particulars 2010-112011-122012-132013-142014-15

1. Profit before Interest After Tax 8064.238091.956355.177774.718067.03 (NOPAT) (Rs.)

2. Average Capital Employed (Rs.) 66681.174305.178447.584140.790035.2

3. WACC (%) 21.39 21.04 18.04 19.27 18.6

4. Total Cost of Capital Employed 14263.1015633.7914151.9216213.9116746.54 (2x3) (Rs.)

5. EVA (1-4) (Rs.) -6198.87-7541.84-7796.75-8439.20-8679.51

6. EVA as percentage of Average -9.29628-10.1498-9.93882-10.0299-9.64013 Capital Employed (%) (5/2*100)

29


Comparative analysis of performance based on traditional view and modern view

In table one, ROI has been calculated. In table eight and nine, EVA has been shown as a

percentage of Average Capital Employed. Surprisingly, we can observe that there is no parity between

the two measures. It is presented in the following table for looking at a glance.

Table 10: Comparison of ROI and EVA performance

(Rs. is in crore)

Particulars 2010-112011-122012-132013-142014-15

Return on Av. Capital Employed (Rs.) 12.09 10.89 8.10 9.24 8.96

EVA on Average Capital Employed (%) -7.89628-10.7998-13.0688-12.4499-13.4001(taking book values as weight)

EVA on Average Capital Employed (%) -9.29628-10.1498-9.93882-10.0299-9.64013(taking book values as weight)

As per conventional ROI measure, the average rate of return after tax is 9.86%. It proves the

company is being operated successfully. But according to EVA based performance, the company has

not been creating value. Rather, it is a value destroying unit. In another way, we can say that to meet the

expectation of its investors who have taken risk of investing in this company, the company needs to

increase its ROI.

Conclusion

According to traditional measurement, Tata Steel is a profit generating entity. It means it can

well manage the operating costs. From the view point of modern measurement, Tata Steel is a value

destroying entity. It means it can't fulfill its investors' expectation. We can say, COC of Tata Steel is

greater than its ROI. That is why; it can't add any economic value for its shareholders. It will affect long

term sustainability of the firm. The scenario can be changed in two ways. Firstly, the company may

increase its ROI. Secondly, it may reduce its COC. At first, the company has to find out those units which

are destroying value. Then, some strategic corporate restructuring decisions like merger, acquisition or

demerger, etc may be taken so that effective management system can be incorporated on those units

after corporate restructuring.

ReferenceslBanerjee, Bhabatosh. (1999). Financial Policy and Management Accounting. World Press, Kolkata, Sixth Edition.

lKhan, M. Y. and Jain, P.K. (2012). Basic Financial Management. Tata McGraw Hill, New Delhi, Third Edition.

lStewart, G. Bennett. (1994). EVA TM: Fact and Fantasy. Journal of Applied Corporate Finance, Vol. 7, No. 2, 71-84.

lRakshit, Debdas and Chatterjee, Chanchal. (2008). Corporate Restructuring through Mergers and Acquisitions: A Case

Study. Vidyasagar University Journal of Commerce, Vol. 13, 79-90.

lChatterjee, Arup and Rakshit, Debdas. (2010). Measures of Shareholders' Value Creation: An Assessment. Vidyasagar

University Journal of Commerce, Vol. 15.

lAnnual Reports of Tata Steel from 2009-10 to 2014-15 (www.tatasteel.com).

lBSE Sensex and Tata Steel share price data from 2003-04 to 2014-15 (www.bseindia.com).

30

*Asst. Professor, Finance, Jagran Institute of Management, Kanpur**Scholar, PGDM, Final Year, Jagran Institute of Management, Kanpur

Bitcoin is the form of digital currency created and held electronically. The internet community

that is adopting Bitcoin for electronic payment is increasing. The value of Bitcoin is highly

speculative and volatile than any other conventional currency. The most important characteristic

that makes Bitcoin different from Fiat money is that there is no central institution that control Bitcoin

networks. Its community of users, miners and exchanges control and regulate it. This makes

crypto-currency vulnerable to cyber security attacks and exposed to money laundering, terrorist

funding, drug trafficking etc. This paper explores the legal and policy issues governing the use of

digital currency in India. An attempt has been made to address the inter-disciplinary framework

adopted by policy makers and its insinuation on e-cash payment and its community.

Keywords: Bitcoin, cryptocurrency, digital payment

Introduction

Bitcoin is the peer to peer payment network that is powered by its users with no central

authority or middlemen. It is completely digital money, from a user perspective; Bitcoin is pretty

much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry

bookkeeping system in existence. The first Bitcoin specification and proof of concept was

published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in

late 2010 without revealing much about it. The community has since grown exponentially with

many developers working on Bitcoin.

It is a decentralized currency and hence is not backed by gold or silver like conventional

currency. It is created digitally using computing power in a distributed network. This network also

process transactions made with virtual currency and making Bitcoin its own payment network.

So Bitcoin is created by using software program that follows a mathematical formula.

Bitcoin relies on peer to peer networking and cryptography to maintain its integrity. This

paper takes into account the vulnerability of this system from perspective of its community

(users. miners and Bitcoin exchanges). This paper is organized in a manner where first it

discusses various laws governing Bitcoin in India and regime of a digital currency to fall under

domain of these laws. Paper then addresses the regulatory concerns regarding Bitcoin.

Literature Review

A review of literature was carried out to enhance the present level of issues that have been

addressed so far and to formulate the need for further insights into these issues. Yermack, David

in his paper 'Is Bitcoin a real currency? An economic appraisal' 2013 concluded that Bitcoin

cannot be used as a unit of account and as a store of value. He further addressed the economic

risk in using digital currency widely. Prateek Pathak (2014)pointed out the need for Indian

policymakers to convene multi-stakeholder forums to start conceptualizing inter-disciplinary

policy frameworks for designing better public policy regulations for managing virtual currencies

Analysis of Legal and Regulatory Framework for Bitcoin in India *CFA Anu Jajoo

**Apoorva Gupta

and then work on developing action plans to ensure that they reach their logical conclusion.

Suresh Babu, Dr Ponduri, and Ch Tirumala (2014) raised the problem about ambiguity among the

law enforcing authority related to the ways to regulate digital currency in India. De Filippi,

Primavera in the article concludes that regulation is needed, but that in order not to excessively

stifle innovation in this nascent ecosystem, some of the challenges might better be addressed

through self-regulation.

A number of studies have also been conducted in various other countries. With the wider

adoption of Bitcoin, economy at large is exposed to the inherent risk and hence an extensive

research on policy related matters of Bitcoin is inevitable.

Legal framework for Bitcoin in India

Jurisdiction over Bitcoin and how to deal with virtual currency is still in its infancy stage.

The Constitution of India provides for matters of which the Central Government has powers to

regulate and legislate. To understand if Bitcoin is capable of government review, an analysis of

the Indian Constitution has to be undertaken. Central Government is allowed to legislate in

respect of currency, coinage, legal tender, foreign exchange and bills of exchange, cheques,

promissory notes and other like instruments respectively. If Bitcoin falls within the purview of any

of the above outlined categories of instruments, then the Central Government would have

exclusive powers to legislate.

The principal laws with reference to Bitcoin are:

lThe Constitution of India, 1950;

lThe Foreign Exchange Management Act, 1999 (�FEMA�)

lThe Reserve Bank of India Act, 1934 (�RBI Act�);

lThe Coinage Act, 1906 (�Coinage Act�);

lThe Securities Contracts (Regulation) Act, 1956 (�SCRA�);

lThe Sale of Goods Act, 1930 (�Sale of Goods Act�); and

lThe Payment and Settlement Systems Act, 2007 (�Payment Act�).

lIndian Contract Act, 1872 (�Contract Act�)

lTaxation issues

1. FEMA, RBI And Coinage Act

The three statutes together define and regulate the issuance, utilization and disposal of 1currencies (and money). Currency' has been defined under FEMA to include, 'all currency notes,

postal notes, postal orders, money orders, cheques, drafts, travelers cheques, letters of credit,

bills of exchange and promissory notes, credit cards or such other similar instruments, as may be

notified by the Reserve Bank'. Applicability of these acts can be discussed by examining Bitcoin

as �

lA Legal Tender: The power to issue bank notes vests exclusively with the Reserve Bank of

India (�RBI�). The bank note issued by RBI is considered legal tender. But so far the

Bitcoin has not been issued by the RBI, so it should not fall within this category.

31


l

to mean and include cash in the form of coins and bank notes. This definition therefore

does not cover Bitcoin as it is neither bank notes nor coins and is consequently not

coinage in India.

lA Virtual Currency: There is no such declaration in respect of cryptocurrencies in general

or Bitcoin in particular. RBI has merely advised the public to be cautious regarding the

trading of virtual currencies. Therefore, under the provisions of existing law, Bitcoin are

not currency.

lAccording to FEMA, Indian currency is different from foreign currency. But Bitcoin is

same all over the world.

lCross border transfer of Bitcoin attracts provision of FEMA. There is different approach

across nation related to this aspect. In country like Iceland cross border transaction of

Bitcoin is prohibited, but it is allowed within nation.

2. Bitcoin as a Good and a Commodity

Bitcoin may very well fall under the category of �goods� and may be covered under the

Sale of Goods Act. The act defines goods as: �every kind of movable property other than

actionable claims and money; and includes stock and shares, growing crops, grass, and things

attached to or forming part of the land which are agreed to be severed before sale or under the

contract of sale.� Bitcoin are listed and traded on stock exchanges in various jurisdictions

around the world. Some examples are (i) Mt. Gox in Japan (previously one of the most widely

exchanges); (ii) BTC China; (iii) BitBox in the United States;(iv) Bitcurex in Poland and (v) Bitsamp

in Slovenia. Although there is no formal Bitcoin exchange in India at present, there are numerous

websites through which Bitcoin can be bought and sold.

3. Bitcoin as Payment System or Pre-paid Instrument

The RBI regulates and supervises the payment systems in India under the Payment Act.

Bitcoin, though often referred to as the peer-to-peer payment system, cannot clear or settle the

payment between the payer and the beneficiary. Thereby it is not to be treated as a 'payment

system' under the Payment Act. The directions issued by RBI stipulate that a pre-paid instrument

can be used to discharge any payment obligation equivalent to the value attached to it. Since the

value of a Bitcoin is determined by market speculation, it can be either less or more than the

payment obligation it is traded for. Therefore, it cannot be said that the value stored in the

instrument represents the value paid by the holders. This infers that the issuer of a pre-payment

instrument needs to be either a bank, NBFC or a 'person'. Therefore Bitcoin issued by the

software cannot be classified as pre-paid instruments since a server or software cannot be

termed as a 'person'. In conclusion, Bitcoin do not fall within the recognized definition of pre-paid

instruments.

4. Bitcoin Under SCRA (1956)

Bitcoin are not �issued� by anybody but are created from the activity of mining. It cannot

be considered as derivative contract as a derivative is an instrument which derives its value from

the prices, or index of prices, of underlying securities. But there is no underlying security in

A Currency Note: The term currency notes are specifically defined in Section 2(i) of FEMA

32


relation to Bitcoin. Therefore they may not qualify as a security (or a derivative) from an Indian law

perspective.

5. Bitcoin � Contracts and Enforceability

Sec. 23 of the Contract Act provides that certain considerations are unlawful and certain

contracts may be opposed to public policy There is nothing in law to suggest that Bitcoin are

opposed to public policy or otherwise unlawful. A contract relating to Bitcoin, is not such that its

enforceability would defeat the provisions of law or is otherwise fraudulent. Therefore, a contract

respecting Bitcoin, whether it is in relation to mining of Bitcoin, transfer of Bitcoin or transfer of

Bitcoin for consideration, is not per se illegal. As long as Bitcoin are not currency / legal tender,

they can only be considered as 'value for money' or goods. Therefore, Bitcoin would qualify as a

consideration under the Contract Act but not as consideration under the Sale of Goods Act.

6. Taxation of Bitcoin

When taxation is on income, it may be on Bitcoin representing such income or on Bitcoin

representing asset value. Additionally, it may also be on expenditure � cost of acquiring Bitcoin,

such as Central Sales Tax, Value-Added Tax or Service Tax. For the purpose of taxation, three

possible scenarios emerge:

i. mining of Bitcoin (similar to self-generated goodwill),

ii. Transfer of Bitcoin (where Bitcoin are either a capital asset or a stock-in-trade depending

on the activity undertaken by the tax payer), and,

iii. Transfer of Bitcoin as consideration (where Bitcoin are either a capital asset or stock-in-

trade depending on the activity undertaken by the tax payer).

lIncome Tax

Income tax to be levied on Bitcoin produced by miner as earned income. However, this is

not yet clear under Indian law which makes it difficult to conclude how it may be taxed. In

January 2014, Income Tax department raided the offices of Buysellbitco.in and further

looking at how they can impose tax on Bitcoin miners in India in the long run. However,

things are not clear until the RBI gives a clean chit to the virtual currency. Another angle to

treat under I-tax law is that Bitcoin are to be treated as consideration and the tax

implication is not on Bitcoin but the transaction itself. For instance, if the seller is a regular

trader, the income should be considered as business income at the rate of 30%. If not

business income, such income would be in the nature of capital gain.

lCentral Sales Tax / Value Added Tax

Bitcoin may fall under the category of commodity and thus come under the definition of

goods under the CST Act and thus liable for VAT.

lService Tax

For service tax to apply, Bitcoin needs to fall under the category of 'taxable service',

which states that taxable service includes services in relation to on-line information and

database access or retrieval or both in electronic form through computer network.

Therefore, the act of mining may be considered as a taxable service in terms of the

clauses as stated above.

33


Regulatory Apprehension Regarding Bitcoin

RBI Governor has showed his optimism about the future implementation of digital

currencies in society I have no doubt that down the line we will be moving towards

primarily a cashless society and we will have some kind of currencies like this which will be at work."So far, the RBI has adopted a hands-off but cautious approach towards the regulation of

Bitcoin. The RBI is cautioning users, holders and traders of virtual currencies (VCs), including

Bitcoin, about the potential financial, operational, legal, security related risks that they are

exposing themselves to.

Highlights of the major risk that the Bitcoin community is exposed to are summarized

below:

lBitcoin being in digital form are stored in digital/ electronic media that are called

electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of

password, compromise of access credentials, malware attack etc. Since they are not

created by or traded through any authorized central registry or agency, the loss of the e-

wallet could result in the permanent loss of the VCs held in them.

lPayments by VCs, such as Bitcoin, take place on a peer-to-peer basis without an

authorized central agency which regulates such payments. As such, there is no

established framework for recourse to customer problems / disputes / charge backs etc.

lValue of Bitcoin is highly volatile and speculative. There is no underlying or backing of any

asset for Bitcoin. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Table 1represents the price

fluctuation in Bitcoin using an average from the world's leading exchanges.

. He said �

34


lThus, the users are exposed to potential losses on account of such volatility in value. It is

reported that VCs, such as Bitcoin, are being traded on exchange platforms set up in

various jurisdictions whose legal status is also unclear. Hence, the traders of Bitcoin on

such platforms are exposed to legal as well as financial risks.

lBitcoin transactions are risky because of the absence of jurisdiction protecting

consumers.

lVirtual currency has little or no correlation with widely used currency and gold and as such

it cannot be used to hedge risk

l

for illicit and illegal activities in several jurisdictions. The absence of information of

counterparties in such peer-to-peer anonymous & pseudonymous systems could

subject the users to unintentional breaches of anti-money laundering and combating the

financing of terrorism.

lHigh level of computer knowledge required for using Bitcoin is another barrier to make it

widely espouse.

Analysis and Conclusion

Like Financial leverage, Technology is a double edged sword. Every new technological

advancement brings with it new legal and taxation problems. But at the same time the

significance of virtual currency in today world cannot be denied. Having experienced the success

of Debit and Credit cards, virtual currency seems to have the potential to be an efficient alternative

to traditional currency and a way towards cashless society. Due to its lack of physical presence,

bringing Bitcoin under the legal umbrella is a brainstorming task for the policy makers. The longer

the uncertainties regarding legal exposure persist, sooner the Bitcoin community will move in

adverse domain.

There may be two approaches for the authorities to deal with it. One way is that

government can turn it down like Bangladesh and Bolivia. Other way is to takeover the system

with the use of legislation. Looking at the future opportunities, first one does not seem to be

realistic. There must be in place a system that how transactions using Bitcoin can be viewed by

the authorities. Threat of terrorism and black money is the biggest concern for our nation. In this

light the delay in policy framework will be dangerous. An interdisciplinary framework at the current

stage is highly experimental.

Digital currency in general and Bitcoin in particular is a new age currency, it will create its

own ecosystem amidst of clearly defined policies for transparent and secure transactions.

Refrences:

l

lSuresh Babu, Dr Ponduri, and Ch Tirumala. "BITCOIN: THE FUTURE CURRENCY OF YOUNG INDIA."

International Journal of Entrepreneurship & Business Environment Perspectives 3.1 (2014): 721-726.

lEyal, Ittay, and Emin Gün Sirer. "Majority is not enough: Bitcoin mining is vulnerable." Financial Cryptography

and Data Security. Springer Berlin Heidelberg, 2014. 436-454.

lPathak, Prateek. "Bitcoins, Virtual Money and the Changing Dimensions of Indian Financial Law and Policy."

Virtual Money and the Changing Dimensions of Indian Financial Law and Policy (August 20, 2014) (2014).

lYermack, David. Is Bitcoin a real currency? An economic appraisal. No. w19747. National Bureau of Economic Research, 2013.

lSuresh Babu, Dr Ponduri, and Ch Tirumala. "BITCOIN: THE FUTURE CURRENCY OF YOUNG INDIA." International Journal of Entrepreneurship & Business Environment Perspectives 3.1 (2014): 721-726.

lPathak, Prateek. "Bitcoins, Virtual Money and the Changing Dimensions of Indian Financial Law and Policy." Virtual Money and the Changing Dimensions of Indian Financial Law and Policy (August 20, 2014) (2014).

lDe Filippi, Primavera. "Bitcoin: a regulatory nightmare to a libertarian dream."Internet Policy Review 3.2 (2014).

lNishith Desai Associates 2015.

lWebsites: www.bitcoincharts.com, www.thehindu.com, www.economictimes.indiatimes.com.

There have been several media reports of the usage of virtual currency, including Bitcoin,

Nakamoto, Satoshi. "Bitcoin: A peer-to-peer electronic cash system."Consulted 1.2012 (2008): 28.

35


36

Human Resource Management has undergone radical change during the last decade. It has

acquired a central position in the overall management of organizations, and is now increasingly becoming

an integral part of management strategy for developing and sustaining competitive advantage. In the

contemporary and swiftly changing commercial environment, the firms are competing not only for

capturing a larger share of the market, but also looking for high quality human talent. But due to

globalization, changes in government policies, unions, labour legislations and technology, rapidly

transforming business landscape and changing nature of consumer taste and habits, HR managers are

facing a variety of issues and challenges like managing the competencies of the employees, multicultural

work force, and to provide competitive advantage. In the emerging scenario, the role of HR manager is

changing rapidly. To manage these personal issues HRM managers have shifted to strategic

implementation with the needed employee qualifications and developing the cultural and technical

capabilities required for the strategies of the organization. This paper analyzes the various issues which

are emerging in the field of HRM. Today managers are facing an entire new array of issues like

globalization, technological advances, and changes in political and legal environment. This has led to a

paradigm shift in the roles of workforces. The great challenge of HRM is to attract, retain and nurture

talented employees. This paper concludes that these challenges can be coped up through cross cultural

training, technological and informational training of HR people and motivation of employees through

various techniques.

Key words: Human Resource Management, Globalization and Issues.

Introduction

The 1990s have brought a multitude of changes in business in their external and internal

environments. Post-liberalisation is noticeable by a change from knowledge economy to market

driven economy; from shielded market to competitive market; from monopoly to rivalry; and from

domestic trade to international trade. Such a change calls for a different approach to HR activities.

During the pre-economic liberalisation period, the HR managers had accepted reactive strategies

to solve the problems of the people but there is a need of proactive approach, a strategy which helps

HR managers to forecast events and take suitable actions before the events occur. HRM provides

competitive advantage as key to a firm's success is based on establishing a set of 'core

competencies' that will deliver better value to customers as compared to competitors. Successful

organisations are proficient at bringing together a workforce diversity to achieve a common purpose.

This is the essence of HRM. Proactive strategies call for awareness about the expected issues and

challenges the HR managers will face in the days to come.

The term 'Human Resource' refers to the individuals which comprises the workforce of an

organization. Organizations are evolving rapidly, and so is the function of Human Resources. It has

matured from a primarily administrative function, operating as the process oriented division of executive

management to a strategic element important for an organization's competitiveness. Human Resource

Emerging Issues of Human Resource Management in Global Context *Parul Garg

**Ankit Goel

*Research Scholar, Mewar University, Chittorgarh, Rajasthan

**Research Scholar, Jiwaji University, Gwalior

Management (HRM) deals with recruiting, managing, developing and motivating people including

specialized support and managing system for regulating compliance with employment and human

rights standards. The origin of HRM function arose in those organizations which introduce welfare

management practices. HRM has witnessed many changes in last 2 decades. Economic liberalization in

1991 created a hyper competitive environment. As International firms entered the Indian market bringing

with them innovative and fierce competition, which forced the Indian Companies to adapt and

implement innovative changes in their HR practices. The management of Human resources has now

become strategic important in the achievement of organizational growth and excellence. As

globalization advances and move into the information age, organizations need to adapt to the changes

in technology and the changing issues in management of people. Some critical issues have clearly

emerged - planning, recruiting and developing human resources, they all are responding to the

demands of the work place and, above all, evolving a strategy of dealing with industrial conflict.

Increasing globalization forces the organization to participate in the matter of emerging issues in

management of people.

Literature Review

Mesch, 2010: Among all the organizational factors which contribute to organizational

performance, the human resources are now regarded as the most fundamental factor. This is because

the managers in both the public and private organizations regard the human resources of their

organization as its major source of sustaining competitive advantage by having the 'best of the best'.

Human resource system is a place for recruiting selecting, motivating and efficiently manages their

people.

WFPMA, 2009: The world federations of personnel management association survey pointed

out the most important top ten HR challenges which are leadership development, organizational

effectiveness, change management, compensation, health and safety, staff retention, learning and

development, succession planning, staffing: recruitment and skill labour.

Dany et al, 2008: Unlike in the past when natural resources, technology and capital used to be

the key factors to determine the competitive advantage of the firms of one nation over the other nations,

human resource today in modern times have become the most important resource for the firms to obtain

strategic advantage over the other firm.

In the view point of Decenzo and Robins (2001) the most important challenges of HRM,

are technology, E commerce, and work force diversity, and globalization, ethical consideration of the

organization which may directly or indirectly affect the organization competitive advantages, especially

with technological advancement the effect on recruitment, training and development and job

performance with great extent can be study in organization.

Bekcer and Gehart, 1996: As a result of these changes in the global economic environment

business strategy, the field of human resource management is rapidly changing more than ever today.

Organizations' worldwide are under pressure today to continually improve their performance. The major

trends behind these competitive pressures are globalization, advances in information technology and

increasing deregulation of global markets.

37


Objectives

1. To know the emerging issues of HRM.

2. To suggest various techniques to cope up with these issues.

Methodology

The analysis of this paper is totally dependent upon secondary data like journal, books and

various website from internet.

Issues of HRM in Global Context

lDemographic Changes in Workforce and Managing Diversity

In today's tough world and tight job market, coordinating a multicultural or diverse workforce is

a real challenge for HR department. It is first and the foremost challenge of HRM. It includes

employee diverse background, age, gender, ethnicity, location, income, parental status,

religious beliefs, marital status and ancestry and work experience and higher education levels,

etc. The future success of any organizations relies on the ability to manage a diverse workforce

which means being acutely aware of characteristics common to employees, while also

managing these employees as individuals. It means not just tolerating or accommodating all

sorts of differences but supporting, nurturing, and utilizing these differences to the

organization's advantage. Effective communication, adaptability, agility and positive attitude of

HR managers can bind the diverse workforce and retain talents in the organization. As

companies become more global and are using more offshore services, it creates the need for

diversity strategies that go beyond our own national borders. It will take a whole new level of

education, tolerance and a willingness to embrace change. HR will need to provide cross-

cultural support and training for virtual global teams.

lGlobalization

Globalization refers to the merger of economics and societies around the world which means

incorporation of world trade and financial markets. Due to internationalization of business

combined with increased technology and communication capability within the companies,

has led to vast diffusion of global �best practices� in HRM in terms of problems of unaware laws,

communication, practices, competitions, change in attitudes, leadership styles, work culture,

etc. In most cases firms have traditionally changed from domestic, to international, to

multinational, and finally to globalization. At each phase, the approach to human resource

management changes frequently along with the changes in competitive strategy, company

structure, the product or service being marketed, profit margin, and expenditure required for

research and development. This affects the HR policies regarding different concerns such as

cultural and ethnic sensitivity.

lChanges in Economic Environment

In an economic situation companies suffer both internal and external pressures. The external

competitive pressure stemming from the economic crisis produces a drop in demand and an

38


39


increase in unemployment, which in turn affects the global competition in the market. On the

other hand the internal management of the company focuses on efficiency. This leads to

pressure to reduce costs and fringe expenditure. In an inflationary economy, the resources tend

to become scarce and the costs of machine, materials and labour multiply. These push up the

capital and running costs. High unemployment and layoffs are clearly HRM and managerial

issues.

Emerging Trends in Human Resources Management

l Increased demands for transparency in government and organizations.

l Increasing dispersal of national power

l Narrowing of gaps in national power between developing nations

l Increase in the power of non-state actors (businesses, organizations such as the World Bank)

Political

l

demands Government involvement in economic growth

lIncreasing gap between rich and poor individuals.

lRapidly increasing national debt to GDP ratios.

lGrowth and increasing instability of sovereign wealth funds.

lIncrease in state capitalism

Increased

Economics

lInternational and internal migrations.

lIncreased interconnectivity of people, organizations and societies.

lChanging family structure

lIncreasing power of women

lAging population growth

lIncreasing social freedom

lAccelerated pace of life (Urbanization)

Social

l

technological innovation is increasing

lGenomics "Digitization" of life styles and work life

lBreakthrough or transformative technologies

lSocial economic and cultural connectivity.

Pace of

Technological

Source - Robert C. Myrtle

l

In every area organizations are getting more and more technologically oriented which influence

the nature of work and generate obsolescence. Advanced technology has tended to reduce

the number of jobs that require little skill and to increase the number of jobs that require

considerable skill, a shift we refer to as moving from touch labour to knowledge work. The

increased automation also has reduced the employee head counts everywhere. In order to

survive in a competitive environment the organization is definitely in need of the skilled

personnels in substantial number to handle the situations and technical equipment. Hence,

technological change brings difficulties and challenges in the organization.

lChanges in Political and Legal Environment

Changes in the legal and regulatory environment means changes in political parties rules and

regulations due to which almost all aspects of HRM will be affected. Greater government's

interference in business to safeguard the interests of workers, consumers and public at large

Influence of Technology in HRM

40


creates challenges for HR professions. It is the duty of human resource and industrial relations

executives to fully examine the implications of these changes and bring about necessary

adjustment within the organization so that later utilization of human resource can be achieved.

l

The competencies of people have to be upgraded constantly. Ironically, managing innovations

in technology comes easier to us, than managing the person in the next cabin. To be emotionally

intelligent can enable employees to be more effective in intra- and inter-personal management

of emotions. Making one's own emotions and realizing the implications of our own behavior on

others around' us has gained critical importance for success. For a manager however,

developing the competencies of Emotional Intelligence could lead to a substantial increase in

individual and group productivity.

lChanging Attitudes Toward Work

Another well-established trend is for employees to define success in terms of personal self-

expression and fulfillment of potential on-the-job. They are frequently less obsessed with the

acquisition of wealth and now view life satisfaction as more likely to result from balancing the

challenges and rewards of work with those in their personal lives. Though most people still enjoy

work, and want to excel at it, they tend to be focused on finding interesting work and may pursue

multiple careers rather than being satisfied with just "having a job." People also appear to be

seeking ways of living that are less complicated but more meaningful. These new lifestyles

cannot help but have an impact on the way employees must be motivated and managed.

Consequently, HRM has become more complex than it was when employees were concerned

primarily with economic survival.

lEnhancing Organization Learning

By adopting action learning which combines the solving of actual problems in real time in the

organization with learning about how to work together better, how to solve problems more

effectively, and how to improve the learning process. HR practitioners should focus on how to

enhance organization learning.

How To Cope Up With These Issues

1.Regarding work force diversity, the HR manager should make broad strategies which help to

adjust employees in global organization; HR must increase the ability to compete in the

international market.

2.As a global company, the only way to succeed is to develop an effective global human resource

management system with personnel capable of designing and implementing transnational

business strategies.

3.Cross cultural training of HR personnel so that they understand other cultural people.

4.Motivate Professional personnel more and more so that they do not change organization more

frequently. Financial motivation is not always required they can be motivated through non-

financial incentives like encouragement, training of employee, job satisfaction, etc.

Managing the Competencies of People

41


5.In order to obtain high quality talent, organizations have to evolve policies, practices and culture

that would meet or exceed the needs and expectations of employees beyond compensation.

Factors like career growth, learning and development, exciting and meaningful work, and

making a difference through contribution, foster employee commitment and retention

6.Shifting HR strategy with changing economy � strategy of HR should be agile, capable of flexing

and adaptive to changes in the economy.

7.Technology has changed each and everything with great extent, the methods of production,

the process of recruitment and the training techniques. New equipments and technology

should be introduced and purchased by the organization and training should be provided to

young and educated workers. HR must first determine what training is necessary and then

implement training measures to ensure all workers can keep up with technological changes.

Human resource managers must also determine when it may train existing employees, and

when it must search for new workers to fill technical positions within the organization

8.Proper performance evaluation system and proper career development plans should be used

in the organization to reduce professional mobility.

9.In order to meet the challenges of human resource management, several new approaches and

techniques have been developed to improve processes like recruitment and appraisal. Work

teams have become essential part of the way business is done. Organization culture, team

performance, cultural sensitivity, organization structure, systems, processes and technology

have considerable impact on the new generation knowledge workers.

10.Ultimately, managing people is rarely the exclusive responsibility of the HR function. Every

manager's job is managing people, and successful companies are those that combine the

expertise of HR specialists with the experience of line managers to develop and utilize the

talents of employees to their greatest potential.

Result

In present scenario HR is facing various challenges like globalization; workforce diversity etc.

HR people can overcome these challenges through cross cultural training, motivation of employee,

technological and information technological training Due to all these challenges it is very difficult for HR

people to retain, attract and nurture talented employee. But it can be possible through motivational

techniques. HR executives can not only motivate employees through financial techniques but they can

also motivate them from non-financial techniques.

Conclusion

As we have discussed the dominant issues and challenges which the HR managers and

organizations face. The foremost work by the HR is to develop sound organizational structure with

strong interpersonal skill of employees. Training employees will familiarize them with the concept of

globalize human resource management to perform better in the global organization context. All these

issues and challenges like work force diversity, managing competencies, changing attitude towards

42


work, Globalization, etc, can be best managed by HR manager where they have to adopt a HR practice

which encourages rigid recruitment and selection policy, division of jobs, empowerment, encouraging

diversity in the workplace, training and development of the work force, fostering innovation, proper

assigning of duties and responsibilities, managing knowledge. By enthusiastically following all the above

aspects the value of human resource can be improved, organization efficiency can be enhanced, and

the organization will sustain to survive. Hence, the role of HRM will be more significant in future due to the

emerging scenario in global context.

References

l

84

lArmstrong, M. (2004), �A Handbook of Human Resource Management Practice", 9th Edition, South Asian Published.

lAndries J du Plessis & Beaver Bob (2008), "The Changing Role of Human Resource Managers for International

Assignments " International Review of Business Research Papers, Vol.4.No.5 pp.166-181

lBabuRavi, M. andEimani, A. (2014), �Human Resource Management: A Challenging Scenario in the Indian Context�

International Journal of Research in Applied, Natural and Social Sciences, Vol. 2, Issue 2, 135-142.

lBjorkman, I. and Stahl, G. (2006) �International Human Resource Management Research: An Introduction to the Field�,

Handbook of Research in International Human Resource Management, Cheltenham, Edward Elgar.

lBhatia, S.K. (2009). �A Handbook of HRM in Global Scenario Practices and Strategies for Competitive Success� Deep

& Deep Published.

lCollings, D.G., Scullion, H. and Morley, M.J. (2007) �Changing Patterns of Global Staffing in the Multinational Enterprise:

Challenges to the Conventional Expatriate Assignment and Emerging Alternatives�, Journal of World Business, 42,

198-213.

lKaur, Manpreet (2014), �Emerging Scenario in HRM of Corporate Sector� Online International Journal of Computing

and Corporate Research, Volume 4, Issue 2.

lParameshwar, (2014) �Emerging Trends in Human Resources Management� Indian Journal of Applied Research,

Volume 4, Issue 4, Pp. 85-86.

lRao.T.V. (1999), HRD Audit: Evaluating the Human Resource Function for Business Improvement.New Delhi: Response

Books.

lSingh, Hardeep and Singh, Bikram (2013) Human Resource Management in 21st Century: Emerging IssuesAnd

Challenges, International Journal of Organizational Behaviour & Management Perspectives © Pezzottaite Journals

Volume 2, Number 2, pp 348-352.

lSrivastava Ekta& Agarwal Nisha, (2012), "The Emerging Challenges in HRM", International Journal of Scientific &

Technology Research Volume 1, Issue 6, pp46 -48.

lScullion, H., Collings, D.G., and Gunnigle, P. (2007) �International HRM in the 21st Century: Emerging Themes and

Contemporary Debates�, Human Resource Management Journal, 17: 4, 309�319.

lStanley Vincent, G. and Albin Joseph, G. (2013)�Challenges For Human Resource Experts In Global Scenario�

International Journal of Advancements in Research & Technology, Volume 2, Issue4, Pp. 209-214.

lhttp://www.coolavenues.com/hr-zone/emerging-issues-in-human-resource-management?page=0,4.

Aruna (2011) Emerging Challenges in Human Resource Management International Referred Research Journal, pp 83-

43

Banking institution is indispensible in a modern society and it constitutes the core of money

market, an essential component of the development process of a country. Indian Banking Sector is

one of the fastest growing sectors of the economy. With steady rise in disposable income of

individuals in the country and increasing transactions through ATMs, Internet and Mobile Banking,

the Indian Banking Industry has updated itself with new policies and key changes in the year 2015.

As per the Reserve Bank of India (RBI), India's banking sector is sufficiently capitalised and well-

regulated. The financial and economic conditions in the country are far superior to any other

country in the world. Indian banking industry has witnessed better growth in the year 2015 as a

sense of optimism stems from the Government's measures towards revitalizing the industrial

growth in the country. Government of India also aims to extend insurance, pension and credit

facilities to those excluded from these benefits under the Pradhan Mantri Jan Dhan Yojana

(PMJDY). The banking sector, being the barometer of the economy is reflective of the macro-

economic variables. While the Indian economy is yet to catch strength, the Indian banking system

continues to deal with improvement in asset quality, execution of prudent risk management

practices and capital adequacy. Positive business sentiments, improved consumer confidence

and more controlled inflation are likely to prop-up the country's economic growth.

Keywords: Financial Services, Reserve Bank of India, niche banks, dramatic remaking,

capital infusion, economic growth, etc.

Introduction

Currently the Indian banking industry has a diverse structure. The present structure of

the Indian banking industry has been analysed on the basis of its organised status, business as

well as product segmentation.The recent decision of the government to capitalise public sector

banks based on their efficiency could go a long way in ending the muscle power that the state-run

banks enjoy, if the government sticks to the strategy of selective infusion of capital. Weaker

banks' survival would be in question as their ability to raise capital from the market would be

limited because of mounting non-performing loans. For diluting their owner's stake by tapping

equity markets, these banks need the government's approval, and the latter is in no mood to

oblige due to poor valuations. Rising incomes are expected to enhance the need for banking

services in rural areas and therefore drive the growth of the sector; programmes like MNREGA

have helped in increasing rural income accompanied by the recent Jan DhanYojana. The

Reserve Bank of India (RBI) has relaxed its branch licensing policy, thereby allowing banks

(which meet certain financial parameters) to set-up new branches in tier-2 to tier-6 centres,

without prior approval from RBI. It has emphasised the need to focus on spreading the reach of

banking services to the un-banked population of India.

Looking back in the previous years, we see unstable markets, high interest rates and low

investor confidence, resulting in shrinking investment and GDP growth. The underlying growth

trends remained weak, and high and continual inflation remained a key challenge and hence

Present Scenario of Indian Banking System

*Sonia Kaur

*Asst. Prof. Dept. of Commerce, Jagran College of Arts, Science and Commerce, Kanpur

44


layoffs were on a rise. But with a sense of optimism slowly creeping in the banking industry has

brought a better growth in the year 2015.NarendraModi government's growth push has also

boost hiring by at least 25% as compared to the previous years. In this year there have been a

plethora of opportunities for job seekers. Studies conducted by various firms suggest that the

Banking and Financial sectors will also see a considerable rise in hiring. With less than 30% of the

Indian population having access to bank accounts, top banking firms are looking to expand and

venture into the untapped rural markets which hold great prospect in boosting market growth and

creating new job opportunities.

The RBI has granted licenses to new private banks and is in the process of granting

licenses to small payment banks. The final license for niche banks has been issued in the first

quarter of 2015-2016. Consequently, new jobs will be created as per requirement. According to

HR Services, the banking sector will generate 7-10 lakh jobs in the coming decade and the

banking sector has been among the top job creators in the year 2015. Hiring in banks has also

increased owing to expansion of banks into new cities and rural locations.Recruitment in banks

all over the world remains quite a challenge for HR Directors with respect to regulation,

remuneration etc. But, with proper measures the best candidates can be chosen.

Around 24,091 vacancies have already been created for various positions in different

banks in 2015. The hiring trend may get a further boost from public sector banks with many of

them in need of fresh talent as most of their employees are scheduled for retirement in the next

couple of years.With an increase in job opportunities, the employees of the Banking Sector can

also expect a rise in their pay scales.The Banking and Financial sectors in India have traditionally

seen higher comparative pay increases, but at a modest 10%, the projected salary increase for

2015 is comparable. Discussions have been conducted to regulate bankers' compensation,

especially for those whose daily job involves taking risks that can have a significant financial

impact on the Banking Industry. National Organization for Bank Workers demanded a 19.5%

increase in salary. The All India Bank Officers' Association agreed on a 13.5% increase. If the

economy continues to move in the positive direction, the employees in Banking Sector may

actually see the promised increment.

Today banking institution is indispensible in a modern society and it constitutes the core

of money market, an essential component of the development process of a country.Indian

Banking Sector is one of the fastest growing sectors of the economy. With steady rise in

disposable income of individuals in the country and increasing transactions through ATMs,

Internet and Mobile Banking, the Indian Banking Industry has updated with new policies and key

changes in the year 2015.As per the Reserve Bank of India (RBI), India's banking sector is

sufficiently capitalised and well-regulated. The financial and economic conditions in the country

are far superior to any other country in the world. Credit, market and liquidity risk studies suggest

that Indian banks are generally resilient and have withstood the global downturn well.Indian

banking industry has witnessed better growth prospects in the year 2015 as a sense of optimism

45


stems from the Government's measures towards revitalizing the industrial growth in the country.

In addition, RBI's new measures may go a long way in helping the restructuring of the domestic

banking industry.Public-sector banks control nearly 80 per cent of the market, thereby leaving

comparatively much smaller shares for its private peers. On November 11, 2015, 192.1 million

accounts had been opened under Pradhan Mantri Jan DhanYojna (PMJDY) and 165.1 million

RuPay debit cards were issued. These new accounts have mustered deposits worth Rs.26,819

crore (US$ 4 billion).

Investments and Developments in the Indian Banking Sector

In the past few months, there have been many investments and developments in the

Indian banking sector:

1.Bandhan Financial Services raised Rs.1,600 crore (US$ 240.2 million) from two

international institutional investors to help convert its microfinance business into a full

service bank. Bandhan, one of the two entities to get a banking licence along with IDFC,

launched its banking operations in August 2015.

2.The RBI has given in-principle approval to 11 applicants to establish payment banks.

These banks can accept deposits and remittances, but are not allowed to extend any

loans.

3.The Bank of Tokyo-Mitsubishi (BTMU), a Japanese financial services group, aims to

double its branch count in India to 10 over the next three years and also target a 10 per

cent credit growth during FY16.

4.State Bank of India has tied up with e-commerce portal Snap deal and payment gateway

PayPal to finance MSME businesses.

5.The RBI has allowed third-party white label automated teller machines (ATM) to accept

international cards, including international prepaid cards, and said white label ATMs can

now tie up with any commercial bank for cash supply.

6.The RBI has allowed Indian Alternative Investment Funds (AIFs), to invest abroad, in order

to increase the investment opportunities for these funds.

7.In order to boost the infrastructure sector and the banks financing long gestation

projects, the RBI has extended its flexible refinancing and repayment option for long-

term infrastructure projects to existing ones where the total exposure of lenders is more

than Rs500 crore (US$ 75.1 million).

8.RBI governor Mr. Raghuram Rajan and European Central Bank President Mr Mario Draghi

have signed a MOU on cooperation in central banking. �The memorandum of

understanding provides a framework for regular exchange of information, policy dialogue

and technical cooperation between the two institutions. Technical cooperation may take

the form of joint seminars and workshops in areas of mutual interest in the field of central

banking,� RBI said on its website.

46


9.A MOU has been signed between the Yes Bank and the US government's development

finance institution Overseas Private Investment Corp (OPIC) to explore US$ 220 million of

financing to lend to micro, small and medium enterprises (MSMEs) in India.

10.The RBI has allowed bonds issued by multilateral financial institutions like World Bank

Group, the Asian Development Bank and the African Development Bank in India as

eligible securities for interbank borrowing. The move is expected to further develop the

corporate bonds market, RBI informed in a notification.

11.The Reserve Bank of India on 15 October 2015 formed a single Financial Inclusion Fund

(FIF) with a corpus of 2000 crore rupees. The fund was formed by merging the Financial

Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF). The RBI also

finalised the new scope of activities and guidelines for utilisation of the new FIF in

consultation with the Union Government. The new FIF will be administered by the

reconstituted Advisory Board constituted by Union Government and will be maintained

by NABARD.

12.The much awaited new Rs.1 notes finally reached banks for distribution in September

2015. The Reserve Bank of India sent the notes to various public sector banks through its

various regional offices. The Rs.1 note has been reintroduced after two decades by the

Ministry of Finance, which prints them. The government had announced earlier that

15crore Rs.1 notes will be printed every year at a cost of Rs.1.14 each, primarily to

address the shortage of lower denomination currency.

R.B.I to Issue Banknotes with Three Additional Features

The reserve bank is issuing Banknotes in Mahatma Gandhi Series 2005 with a new

numbering pattern and special features for the visually impaired in Rs.100, 500 and 1000

denominations. In the new numbering pattern, the numerals in both the number panels of these

denominations ascend in size from left to right, while the first three alphanumeric characters

(prefix) remain constant in size. Printing the numerals in ascending size is a visible security feature

in the banknotes so that the general public can easily distinguish a counterfeit note from a

genuine one.

1)Special features for the visually impaired have been introduced in order to make it easier

for them to identify banknotes, the size of the identification mark in Rs.100, 500 and 1000

denominations have been increased by 50 per cent.

2)Angular bleed lines- 4 lines in 2 blocks in Rs.100, 5 lines in 3 blocks in Rs.500 and 6 lines in

4 blocks in Rs.1000 denominations, have also been introduced.

3)The design of banknotes of Rs.100, 500 and 1000 denomination is similar in all other

respects to the current design of banknotes in Mahatma Gandhi Series 2005. All the

banknotes in these denominations issued by the Reserve Bank in the past will continue to

be legal tender.

47


4)The Reserve Bank advised banks to issue suitable instructions to all their branches

informing them about the above changes so that no inconvenience is caused to the

public.

5)Further, they are advised to ensure that the note sorting / detection machines used by

their bank are suitably calibrated for processing these banknotes.

New Instructions Issued in the Field of Indian Banking System

The response to set up niche banks in India after the banking regulator invited

applications from aspirants has been stupendous. Over 100 entities have applied to set up

payments banks and small finance banks; though the central bank made it clear that it will be

cautious in awarding licences. RBI has also paved the way for wholesale banks, or to be more

specific, banks which will only finance infrastructure projects. RBI has provided incentives for

such banks as they can now raise resources through long-term bonds (with tenure of at least

seven years) and will not have cash reserve ratio (CRR), statutory liquidity ratio (SLR) or priority

sector lending obligations. However, it is still to be seen whether the concept excites banking

aspirants. There could be another kind of niche banks. Going by the deliberations at the two-day

bankers' retreat (gyansangam) convened by the finance ministry in Pune, there is a proposal that

small public sector banks should rather focus on their strengths and not try to sell all kinds of

products. �Re-orient portfolios of small PSU banks to differentiate and focus on specific niches to

build capabilities and to optimise capital,� the summary of recommendations released after the

retreat said. This could result in some government banks selling loans only to farmers, and some

selling only to small enterprises. The one-size-fits-all theory could well be a thing of the past, so

far as the structure of public sector banks are concerned. There will be more universal banks also,

with the banking regulator thinking about "on-tap" licensing of universal banks, as compared to

the current "window" system of licensing. The guidelines for the same are expected to be

released later this year. Going ahead, the banking sector could look like what global consulting

firm McKinsey outlined at the Pune retreat, which was attended by finance ministry and RBI

officials. McKinsey suggested a three-tier banking structure. On top will be large banks, which

can happen through consolidation of some of the public sector banks, though not many believe

this is possible at this point as most government banks are now busy putting their own house in

order in terms of tackling the steep rise in bad loans. "There is no point in merging two weak banks,

this will have systemic implications," said the chief executive of a public sector bank.

The second is state-linked banks, a proposal which finds resonance with the PJ Nayak

committee. According to the recommendations of the committee, set up to review governance

structure in banks, the government should cut its shareholding below 51 per cent; set up an

omnibus bank investment company, which will be the holding company for all public sector

banks; and constitute a bank board bureau which will appoint board members as well as chief

executives. The suggestions are radical, but if implemented, public sector banks will sport a

completely different look, five years down the line. The McKinsey report also talked about policy

banks. Such entities are also a welcome step as it will implement the government's policy

48


decisions such as directed lending, which is currently being done by public sector banks. If these

banks are freed from the burden of directed lending, their efficiency will improve. One step in this

direction has already been taken with the setting up of the Micro Units Development Refinance

Agency (MUDRA) bank.

FDI in Banking Sector stR.B.I on 1 October 2015, raised reservations over a proposal to allow 100 per cent

foreign direct investment (FDI) in private banks as it might create regulatory problems. It is of the

view that 100 per cent FDI may complicate regulations for private and foreign banks. The proposal

to raise FDI limit in private sector banks was recently discussed at a meeting of officials from the

ministries of finance, commerce and industry and RBI.

Currently 74 per cent FDI is permitted in private sector banks, of which up to 49 per cent is

allowed under the automatic route and beyond that through the approval of the Foreign

Investment Promotion Board (FIPB). However, portfolio investments in the banking

sector can go up to 49 per cent.

The proposal to raise the FDI limit would help the existing private sector banks, payments

banks and small finance banks tap overseas markets to enhance their capital base.

R.B.I has recently given in-principle approval to 11 entities to set up payments banks and

to 10 entities for small banks.

Government Initiatives

There have been a lot of developments in the Indian banking sector.

The Government of India announced a capital infusion of Rs6,990 crore (US$ 1.05 billion)

in nine state run banks, including State Bank of India (SBI) and Punjab National Bank

(PNB). However, the new efficiency parameters would include return on assets and return

on equity. According to the finance ministry, �This year, the Government of India has

adopted new criteria in which the banks which are more efficient would only be rewarded

with extra capital for their equity so that they can further strengthen their position."

To facilitate an easy access to finance by Micro and Small Enterprises (MSEs), the

Government/RBI has launched Credit Guarantee Fund Scheme to provide guarantee

cover for collateral free credit facilities extended to MSEs up to Rs 1 Crore (US$ 0.15

million). Moreover, Micro Units Development & Refinance Agency (MUDRA) Ltd. was also

established to refinance all Micro-finance Institutions (MFIs), which are in the business of

lending to micro / small business entities engaged in manufacturing, trading and services

activities up to Rs 10 lakh (US$ 0.015 million).

The central government has come out with draft proposals to encourage electronic

transactions, including income tax benefits for payments made through debit or credit

cards.

The Union cabinet has approved the establishment of the US$ 100 billion New

Development Bank (NDB) envisaged by the five-member BRICS group as well as the

BRICS �contingent reserve arrangement� (CRA).

l

l

l

l

l

l

l

49


l

l

l

l

l

l

l

The government has plans to set up a fund that will provide surety to banks against loans

given to students for higher education.

The Government of India is looking to set up a special fund, as a part of National

Investment and Infrastructure Fund (NIIF), to deal with stressed assets of banks. The

special fund will potentially take over assets which are viable but don't have additional

fresh equity from promoters coming in to complete the project.

The Reserve Bank of India (RBI) plans to soon come out with guidelines, such as common

risk-based know-your-customer (KYC) norms, to reinforce protection for consumers,

especially since a large number of Indians have now been financially included post the

government's massive drive to open a bank account for each household.

To provide relief to the state electricity distribution companies, Government of India has

proposed to their lenders that 75 per cent of their loans be converted to state government

bonds in two phases by March 2017. This will help several banks, especially public sector

banks, to offload credit to state electricity distribution companies from their loan book,

thereby improving their asset quality.

The Reserve Bank of India (RBI), the Department of Industrial Policy & Promotion (DIPP)

and the Finance Ministry are planning to raise the Foreign Direct Investment (FDI) limit in

private banks sector to 100 per cent from 74 per cent.thFinance Minister Arun Jaitley on 28 September, 2015 said that the government was

looking to reduce its stake in State-run banks to 52 per cent to make them more

professional and independent. At present, the government owns over 59 per cent stake

in State Bank of India, the country's largest public sector lender, 81.5 per cent in Central

Bank of India, 76.5 per cent in IDBI Bank, about 64.5 per cent in Canara Bank, 64.4 per

cent in Bank of India, 61 per cent in Andhra Bank, over 60 per cent each in Allahabad Bank

and Punjab National Bank, and 57.5 per cent in Bank of Baroda.

Government of India aims to extend insurance, pension and credit facilities to those

excluded from these benefits under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

Conclusion and Suggestions

The banking sector, being the barometer of the economy, is reflective of the macro-

economic variables. While the Indian economy is yet to catch strength, the Indian banking system

continues to deal with improvement in asset quality, execution of prudent risk management

practices and capital adequacy. The Indian economy is on the brink of a major transformation,

with several policy initiatives set to be implemented shortly. Positive business sentiments,

improved consumer confidence and more controlled inflation are likely to prop-up the country's

economic growth. Enhanced spending on infrastructure, speedy implementation of projects and

continuation of reforms are expected to provide further impetus to growth. All these factors

suggest that India's banking sector is also poised for robust growth as the rapidly growing

50


business would turn to banks for their credit needs. Banks need to raise capital of Rs. 1.8-2 trillion

(FY15-FY16); of which 45-50% may be issued in the form of additional Tier 1, 35-40 % through

Tier II and balance through common equity. However, if there are no seekers for additional Tier 1

capital instruments, Indian banks may need to mop up Rs. 1-1.3 trillion common equity capital

over the next two years as mentioned by a rating agency report.

Also, the advancements in technology have brought the mobile and internet banking

services to the fore. The banking sector is laying greater emphasis on providing improved

services to their clients and also upgrading their technology infrastructure, in order to enhance

the customer's overall experience as well as give banks a competitive edge. Many banks,

including HDFC, ICICI and AXIS are exploring the option to launch contact-less credit and debit

cards in the market shortly. The cards, which use near field communication (NFC) mechanism,

will allow customers to transact without having to insert or swipe. Hiring in banks has also

increased owing to expansion of banks into new cities and rural locations. Recruitment in banks

all over the world remains quite a challenge for HR Directors with respect to regulation,

remuneration etc. Addressing students of the National Institute of Bank Management in Pune, Mr.

Rajan said that the banking sector will see major changes with the entry of new players, while

public sector lenders will be the biggest "change agents". He has already laid the groundwork for

the �Dramatic Remaking�. The Reserve Bank of India (RBI) plans to soon come out with

guidelines, such as common risk-based know-your-customer norms, to reinforce protection for

consumers, especially since a large number of Indians have now been financially included post

the government's massive drive to open a bank account for each household. The banking sector

is laying greater emphasis on providing improved services to their clients and also upgrading their

technology infrastructure in order to enhance the customer's overall experience as well as give

banks a competitive edge.

References:

l

lBusiness world magazine

lIndian Banking System, Dr.Sandhya Rastogi and Prateek Agarwal

lIndian Banking System: Commerce, Dr.Satish Kumar Saha

lBanking Law and Practices, K.P Kandasami, S. Natarajan and R. Parameswaran

lBanking & Current Affairs update vol.:2, Issue.: 3, December-2015

lwww.r.b.i.org.in

www.Google .com

51

Over the past sixty years, the tourism sector has grown to become a pillar of the global economy,

driven by political cooperation, social change and far-reaching advances in technology; both in

communications and infrastructure. The advances in connectivity and processing power that have

been made in ICT in recent years are undeniable. It is also true that the expansion of broadband is one

of the greatest challenges of the 21st century which, once it has been overcome, will bring an end to

the 'plague of distance' which exists in many parts of the world. This will bring us closer in becoming

the more equal and cohesive society that we dream of, in which access to the internet really does

become a citizen's right and which contributes to democratization and widening the horizons of

citizen participation. The world in which we live - in spite of its many inequalities - offers an immense

space to increase travel, since many barriers which used to prevent or slow global travel are gradually

falling. In these precarious economic times, the hospitality industry composed of tourism and travel is

facing a quintessential question. Technology has the great advantage that it allows tourism industries

to replace expensive human labour with technological labour, thus not only reducing labour costs but

also avoiding issues of customer service. Yet technology may produce a whole new set of unintended

consequences.

Tourism has become a popular global leisure activity. It is a short term and temporary

movement of people. It provides a source of income for the country. Tourism involves an overnight

stay away from the normal place of residence. It includes �travel� and �stay� in the place outside the

usual environment. Today, tourism activity is increasingly being shaped by price comparison and

combination technology; new applications of mobiles that offer a wide range of opportunities are

being developed; social networks are consolidating themselves within a more transparent market

in which citizens are able to provide services together; changes in the concept of the value chain are

producing new business models. In short, change is becoming more obvious and constant, just like

the opportunities that it is creating. India is a land of great variety and contrast. Its unique cultural

mystique, exotic heritage, aesthetic environment and outstanding natural resources have attracted

international tourists. Tourism has emerged as one of India's important industry. Today tourism is a

major source of foreign exchange earnings and employment. India is a huge market for tourism for

outbound and inbound tourists. Hospitality reflects courtesy and respect to the guest. Hospitality

occupies local services such as entertainment, accommodation and catering for tourists. It is the

business of providing catering, lodging and entertainment service and welcoming, receiving,

hosting, or entertaining guests. Hospitality Industry is closely linked with travel and tourism

industries.

The main elements of culture which attract tourists to a particular destination fall under

following categories:

lPleasant climate

lScenic attraction

lHistorical and cultural attraction

Enhancing Tourism Sector

through the use of ICT*Dr. Akhilesh Kumar Dixit

*Assistant Professor, Dept. of Economics, Armapore P.G.College, Kanpur

52


l

lShopping

lAdventure

lVariety of cuisines

lAccommodation

lRelaxation and recreation

lHealth - care projects.

Therefore, it has been rightly said that the core concept of tourism revolves around

for 4 A's

vAttraction

vAccessibility

vAmenities

vAncillary services

Role of ICT in changing tourism scenario

As technology is evolving faster than ever before, it has made most travellers around

the world much more technology-savvy than in the past. The internet has revolutionized the

tourism industry more than any other factor in the last few decades. Also, as more people

are connected to each other, with access to the vast pool of information available online, an

increasing number of travellers are seeking information via the internet prior to making any

travel decisions. Hence, it has become important for the tourism industry to adapt and uplift

its practices and skills of the workforce within to meet changing customer behaviour.

Firstly, the marketing of the tourism destinations, products and services - Selling tourism

products and services online has changed from being just �price-conscious� to being �an

inspiration� to the viewer to travel. As the online user absorbs information from a variety of

sources, it is usually the site or information source that can best stimulate the viewer to travel

that will be remembered by the user. Digital Marketing, Search Engine Marketing, Mobile and

Location Based Marketing, and a variety of other channels exist today for reaching the potential

traveller.

Secondly, the infrastructure of the organization, which determines the readiness to

respond to customer requirements - As more travellers expect personalized products and

services to meet their demands, it is important for tourism businesses to have tools that can

store and monitor information in order to meet the individual needs of their clients. To decide

how much or how little technology is right for the tourism business, tourism tidbits offer the

following suggestions:

lRemember that tourism is about people �interfacing� with other people. No matter how

good the technology may be, technology does not provide human warmth of take-home

Accessibility

53


experiences. Be mindful that tourism is about the selling of memories and then ask yourself

at what point are you willing to sacrifice memories for efficiency.

lMake sure that the employees are well trained in the use of technology. Often tourism

centers hire people who simply are not up to the task, misuse the technology and create

more problems than they solve. Train, train and then train the people some more. Do not

update so often that the employees' knowledge base lags behind the technology's

capabilities.

lUse technology wisely, while even the best computer can never substitute the care and

love that comes from another human being. Technology if used properly can solve many

problems in tourism. Among these are:

vIssues of time - Nothing upsets the tourism industry's clientele as much as the

misuse of time. The proper use of computers to facilitate both check-ins and

check-outs of places such as hotels, allows the person-on-duty to attend to other

problems.

vClarity and consistency - In an interrelated multi-lingual world a great deal of

information can be provided to guests in their own language without linguistic,

pronunciation or grammatical errors

vEase of place - Use technology and social networks to allow visitors to research

from home and to gather basic information. However, many hotels and

transportation companies seem to hide telephone numbers on their web sites.

Combine basic information that can be given on a computer with the human side of

information. Remember that if the tourist can never reach you, then you may find

that your customer has found a more user-friendly location.

Looking ahead the Challenges

The biggest challenge imposed upon the tourism industry in adopting technology is

the lack of accurate education of the 'right' technology that is suitable for their business. There is

a very big gap between the tourism industry and the technology industry. Some organizations

have been able to tap into this gap and have turned into Online Travel Agents. However, it is not

every tourism business needs to become an Online Travel Agents to successfully utilize

technology. It is more important to understand each business's competitive edge and adopt

the related technology in order to strengthen their competencies. Even though the growth of

travellers using technology to source information is increasing at a rapid pace, the business

operators and workforce within the industry do not have sufficient knowledge, tools, and/or

strategy to utilize technology correctly. Other factors such as infrastructure and investment are

not considered as big challenges any more, as the cost to acquire hardware and connectivity

have dropped significantly over the years. India among all these countries lags behind due to its

low level of cleanliness, lack of management, infrastructural blocks in shortage of star

category hotels, roads, lack of proper dissemination of information, improvement in facilities such

54


as visa, travel agencies, etc. Safety and security is one of the important concerns of travellers in

India. The hospitality industry in India is still in a nascent stage when compared to many of the

developed countries. The tourism industry is distributed in a number of small and medium

enterprises that act as fly by night operators, thus creating an uncertainty in the market place.

Though India lacks in management and infrastructural blocks, it makes up with its unique diversity,

culture, friendly people and sheer variety of cuisine.

Advantages of Technology in tourism

lOptimal product information for customer via multimedia, global search engines and

recommendations are available.

lEffort for information gathering and travel planning (transaction costs) is reduced.

lProduct complexity is reduced.

lInformation about customer for supplier can be obtained through customer profiles,

preferences and also by knowing customer behaviour and needs.

lTourism offers greater flexibility by customized products, yield management, dynamic

pricing and dynamic packaging.

lICT tools have facilitated business transaction in the industry through networking with

trading partners, distribution of product services and providing information to consumers

across the globe.

lConsumers can directly obtain information through websites and can plan their trip and

travel

lICT pervades almost all aspects of tourism and related industry.

lInternet offers the potential to make available information and booking facilities available

to large number of tourists at relatively low costs.

lInternet also provides a tool for communication between tourism suppliers, intermediaries,

as well as end-consumers.

lICT is useful to increase efficiency, reduce cost and improve customer service.

Disadvantages of Technology in tourism

Tourism can create an imbalance where it becomes so successful that other forms of

income generation are neglected and an economic dependence on tourism is increasing. This is

fine in the good times, but can leave the country vulnerable to economic ruin, if it suffers political

upheaval, terrorist attacks, or natural disasters, and tourism consequently dips or dries up

altogether. Some tourist are not able to use websites (ICT) effectively because of number of

different causes like lack of knowledge, trust, literacy, language, skills and content availability

of credit card and low bandwidth. Inexperienced Internet users may not be able to easily reach

online suppliers or tourist portals, search engines, and online travel agencies to receive information

on flights, hotels and tourist destination or to book travel service.

55


Concluding remarks

It is a known fact that Tourism as a sector has potential economical as well as social

benefits. It is important to present the service offering in order to gain the economical advantages

and also to sustain the socio-cultural aspects of a country. In modern travel agencies business,

the Internet has proven to be an effective medium for tourism promotion and sales, so distribution

of products and services no longer depends on the quantity of printed catalogues and brochures,

but information on tourism products and services can reach millions of Internet users because

all communication problems have been removed. Marketing activities occupy an important place in

the business strategies of modern travel agency, where the Internet has recently become an

essential part of media planning. It is increasingly evident that the competitiveness and prosperity

of both enterprises and destinations in the new millennium will depend on the degree of innovation

utilised provided by the revolutionary information technology.

References

l

lKhan, M.A (2005), Principles of Tourism Development, Anmol Publication Pvt. Ltd, New Delhi, p-250.

lNarasaiah Lakshmi, M (2004), Globalization and Sustainable Tourism Development, Discovery Publishing House,

New Delhi, p- 56.

lRatti Manish, (2007), Tourism Planning and Development, Rajat Publication, New Delhi, p-25.

lKhan, M. M. (2009), Encyclopedia of Tourism, Vol. I, Himalaya Books Pvt. Ltd, Mumbai

lHoney, Martha and Gilpin, Raymond, Special Report, 2009, �Tourism in the Developing World - Promoting Peace

and Reducing Poverty� Market Research Division, Ministry of tourism, GOI, 2009 �Tourism Statistics 2008�

lBhatia A.K., Tourism Development-Principles and Practice, Sterling, New Delhi, 1992

lKandari, O.P. & Chandra Ashish, (2004), Tourism Development Principles and Practices, Shree Publishers &

Distributors, New Delhi. p - 124.

l Sharma, J. K. (2000), Tourism Planning and Development, Kanishka Publisher, Distributor, New Delhi. p- 17.

lKhan, M. A. (2005), Introduction to Tourism, Anmol Publication Pvt.Ltd, New Delhi, pp- 2 -4.

lShinde, P.G. & et.al, (1997), Environmental Studies, Sheth Publisher, Mumbai, pp- 253-254.

lChawla Romila, (2003), Tourism in the 21st Century, Sonali Publications, New Delhi

lA.Vijaya Kumar (2009), Indian Tourism Industry in 21st Century, Challenges and Responses, Sonali Publications,

New Delhi.

Cooper, C et.al (1999), Tourism Principles and Practices, Addison Wesley Longman Publishing, New York, p-5.

56

*Dr. Vatika Sibbal

Homelessness seems to have been rising throughout the world. Over 100 million people live

without shelter (almost one third of the world's population) and the harder truth is that over 11

million children live on the streets. There are an estimated 35,000 children who live on the brutal

streets of Mumbai. Of these 905 children (2.5 per cent) were found living on railway premises such

as platforms and trains. 70% of the children were boys, while 30% were girls. Over two out of five

children witnessed verbal, physical or sexual abuse, torture, and forced starving. Around 24 % of

children of the school going age were illiterate. Nearly 24% of street children were engaged in some

kind of work including selling flowers, newspapers, fruits and other items, doing odd jobs at

eateries, begging, rag picking, construction work etc. Around 15 % children were addicted to

substances like drugs, tobacco, whitener, shoe polish. One in four children do not take regular

meals due to lack of money, illness, injury or dependence on others. (Census 2001).

The study also points out lacunas in the different institutions like assistance from the police,

government agencies or NGOs for the homeless. The study pleads for better facility of the

homeless because every child has the right to lead a life, free from discrimination, inequality and

exploitation. The main objective of presented paper is to understand the common social problems

encountered among street children. Paper outlines the social issues like child labour, street

children and trafficking. In Indian street children are considered to be problematic and not paid

enough attention, only fewer and sporadic efforts to understand these problems were addressed.

In this paper, the author wants to highlight common social problems among Indian street children.

Keywords � Homelessness, street children, trafficking, child labour, sexual abuse

Life on the Street

�Everyone has the right to a standard of living adequate for the health and well-being of

himself and of his family, including food, clothing, housing and medical care and necessary

social services, and the right to security in the event of unemployment, sickness, disability,

widowhood, old age or other lack of livelihood in circumstances beyond his control.�

-Universal Declaration of Human Rights, article 25, par. 1

The experiences of the children living on the streets, reveal that the children who stay on

the street for longer time are either children who shift between home and street or are not really

sure whether they want to go back. They may get used to the life on the street and the freedom

as compared to the situation at home. City offers many opportunities for petty jobs,

entertainment and a sense of anonymity. They also develop their own coping strategies to face

the adversities of street life. As time passes, they also develop a feeling that they are likely to get

scolding and beating once they go back and feeling of homesickness becomes less disturbing

over a period of time. The presence of peers as a strong influence in their life, which may have

also gone through the same set of experiences may also help to continue being away from

home. Some of them may not even think of the option of going back. For some addiction is a

major impeding factor and it becomes a major preoccupation.

Youngsters at the Junctions

*Associate Professor, Department of Sociology, St. Andrews College of Art Science & Commerce, Mumbai

57


Who are Street Children?

There are more than 100 million street children in the world. UNICEF estimated that India

has 18 million street children which is the largest population in the world. Street children are

young people who spend a considerable time living and/or working on the streets of the world's

cities. Different countries describe street children in different ways. There is no universal

definition of �street children� and several interpretations are in common use, some covering

smaller populations of children who live in the streets, others including the much larger sector of

children who work on the streets (Thomas de Benitez 2003). Street-living children can be taken

to mean those who sleep on the street the majority of the time and retain limited or no contact with

their family of origin. Children who live on the streets without any parental support are a fraction of

the total population of street-involved children. The majority are �abandoning� rather than

�abandoned� children, who have generally left home for the street as a result of family breakdown

and violence almost invariably linked to the stress of extreme poverty.

In a country like India, there are large numbers (11 million � conservative estimate), living

in different cities and facing many challenges of survival. The past decade has seen that

organizations working with these children have looked at them as victims of abuse or neglect or as

delinquents who need protection and re-education. However in the recent times there is an

understanding that children develop their own survival strategies which results in them evolving

their own micro-culture which needs to be understood, to be able to reach them (Aptekar 2004).

In the last two decades street children as a category of vulnerable children has been

recognised as an important group of children demanding special attention. It is not easy to define

this category of children as all street children are not alike. All the attempts to define them so far

are still incomplete. The first globally accepted definition of street children was framed by UNICEF

in 1988. UNICEF has defined street children as those for whom the street (in the widest sense of

the word, i.e. unoccupied dwellings, wasteland, etc.) more than their family, has become their real

home, a situation in which there is no protection, supervision, or direction from responsible

adults.

UNICEF has further divided street children into three operational categories

1. Children on the Street: Forming the largest category, these are largely working children

who have homes; most return to their families at the end of the day.

2. Children of the Street: These children are a group who have chosen the street as their

home and it is there that they seek shelter, livelihood, and companionship. They have

occasional or rare contacts with their families.

3. Abandoned Children: These children have no contact with their families. They are

entirely on their own, not only for material survival but also for emotional and

psychological support. They include orphans, runaways and lost or destitute children.

Often these children are also referred to as "nowhere" children because they may not be

traceable.

58


Aptekar (2004), points out that the three hypotheses on which UNICEF definition is

based do not adequately explain the experiences which bring many children on the street today.

For example, it does not include children who have been war or disaster victims, children with

AIDS or who are orphaned because of AIDS, and many complex situations which force children

to be on the streets.

Street children are often among the high risk and insecure groups and vulnerable to

various forms of exploitation and abuses. They are deprived children, denied not only their rights

as children but also of their childhood. Without guidance, education and security, they are

heading for an obscure future. They are miserable and need support. Most importantly, they need

to be steered back to the mainstream of social life through proper education opportunities,

reformation, care and rehabilitation.

Living on the Streets

Street children are restricted to the perspective of treating this category of children as

different from other categories of underprivileged children. The street children in India are of two

types. Some of these children have migrated along with their parents and stay on the

pavements/street or their families have been on the pavements for a long period of time and these

children are born and brought up on the street itself; while others have run away from their native

place for various reasons and have landed on the streets of Metropolitan cities. The push factors

at their birthplace such as poverty, inadequate family support, peer influence and the pull factors

in the city like fantasy to meet movie stars, unrealistic images of city life through media and desire

to explore new life in the metropolitan city bring them to Mumbai. Therefore one comes across

many street children who have run away from home or been forcibly thrown out, due to conflicts

with parents, broken home, ill treatment by family members, or attracted to the city life through the

mass media.

Numbers of Street Children

No accurate estimate of the number of street children in India is available right now. This is

because of various reasons. Firstly, different government as well as NGOs define street children

in different ways. Secondly, they are a dynamic group of children who keep on shifting from one

place to another or their association with NGOs is often not long term. Many of them shift from one

programme to another as per their wish and convenience. And thirdly, no serious effort to create a

data base of street children has been undertaken so far.

Rane (2004), based on her study throws a light on the characteristics of street children in

India. The majority of street children are boys. Street girls are not often visible and it is difficult to

trace them. But they are the most vulnerable of street kids. A majority of street children work.

Almost half of the working street children are self-employed such as ragpickers, hawkers and

shoeshine boys. Most of the street children in India are exposed to dirt, smoke and other

environmental hazards. They are constantly exposed to sun, rain and cold. The health condition

of street children is generally poor and many suffer from chronic diseases like asthma and

59


dysentery. The children revealed that the lack of shelter, improper medical facilities, physical and

sexual abuse and lack of parental support were among the many problems they had to endure

day-to-day.

Changing Perspectives

Unfortunately, however, there is no wide-spread agreement on an alternative phrase for

�street children:� No term has yet been coined to capture both the peculiar nature of street life and

its interconnection with other aspects of vulnerability� (Volpi 2002, 3). This interrelationship

between street life and other areas of vulnerability as well as difficulties in gaining consensus over

definitions indicate that this is a group of children who can easily fall through the cracks of policy

initiatives. (Thomas de Benitez, 2003)

Panter and Brick (2002) further state that the turn of the twenty-first century has seen a

sea change of perspective in the studies concerning street youth. The presence of children

living on the street has elicited emotive public concern, been given considerable media

coverage, and in the late twentieth century, has become a matter of priority for national and

international child welfare organizations. The term street children itself has almost disappeared

from the welfare and analytical literature, which now uses different appellations to refer to street

children and other underprivileged groups. The change in perspective reflects a shift of

attention from the street as the primary focus of concern (as an unacceptable or unhealthy

environment for children) to the children themselves (paying close attention to the diversity of

their actual experiences and their own strategies for coping with adversity). Current work tends

to examine the lives of street children in light of more general analyses of poverty, social

exclusion, coping strategies, vulnerability and resilience in adversity.

Transition from Home to Street

It is important to note that most children have pointed out that the situation at home �

either excessive beating, fear of punishment were the triggering incidents as well as the main

reasons for leaving home. Or even when they had run away because of fear of others outside

home, family failed to give them the sense of security and assurance of safety. On the one hand we

believe in child's right to a family and feel that family is the most desirable place for the child to stay

and on the other hand we find that lack of conducive environment in the family was largely

responsible for pushing them on the street. At the same time in case of habitual runaways, it is

possible that children are ambivalent about their decision, they keep on being off and on the

street, shifting from home to street and vice-versa as neither could really satisfy their needs.

Parents do make a lot of efforts to search the child using all possible contacts and NGOs in the

neighbourhood. However, not many take help of the police to trace their children.

Focus of Study

This study specifically focuses on children living on Railway platforms. There are two

types of the children living on the platform: the new entrants in the city with a short term

experience of street life and the ones who have been on the street for a longer duration; both

60


having lost contact with their family. Children on the platform face many problems and are

vulnerable to abuse and exploitation. They are also likely to get addicted to vices and face multiple

health hazards.

Vatsalya Foundation and Sathi is an organization working with children on the railway

platforms and those near other transport terminals. One of the main aims of the organisation is to

establish early contact with children coming to the city and prevent them from becoming

habituated to street life and motivating others who are on the street for a longer duration to go

back to the families. These children are placed in their families by the staff of Sathi in different

parts of India.

However not all children can develop a supportive network on the street. Further these

networks have their own limitations in terms of continuity and support for the development of the

child. Some of them have to go through painful experiences of insecurity, exploitation and abuse.

Thus it is suggested by researchers that in working with street children it is important to see how

they are coping with, what they have brought with them to the street and the problems they are

facing on the street. Experiences of many organizations show that the services they provide are

helping children to cope on a day to day basis. Further, many children cannot think of long term

goals and do not feel the need to put effort towards education, health care that will help them in the

future.

Migration of children from their home to a big city is caused by a plethora of factors. In

moving out of their homes, children not only see the lack of benefits at home but also a surplus of

benefits outside home. To overcome street life and move to a better life-style would require

continuous and tremendous support and effort on part of the organisation and the children.

Sometimes children run away for trivial reasons or fears and need help to understand that their

parents care for them. Many organisations have recognised that one of the significant

alternatives is to work towards home placement of children wherever possible. This is even more

so in terms of children's right to family and that for any child, family will be the best place for

development. Recognizing that most street children have left home because they have

experienced problems and that the duration they have been away from home is long in many

cases, the placement of children in homes is indeed a challenging task.

Life with Rail Route

Where do children go when they first run away from home? The obvious answer to this

question is nowhere. But, on second thoughts, one realizes that almost all the children take the

rail route where the train takes them everywhere. Obviously, when children alight at the railway

junctions and the terminuses unaware and unknowingly, the magnitude of these places and the

fear of an unknown destination makes them think twice before they venture out of such a place.

Gradually, the junction or the terminus become their second home where, within no time, they

either pick up or are eventually are taught the norms of survival, having no contacts whatsoever

with the outside world. They provide for an opportunity to fulfill all the basic needs, not to argue the

61


cost at which these needs are fulfilled. It is from the railway station or the transport terminal that

the children venture out or are trafficked or are befriended thus becomes the single largest mode

of transportation of runaway children from one place to another.

The organizations work with children, have activities for children. It includes outreach at

stations through the deployment of street educators and social workers, drop-in centers, night

shelters, and transit homes offering food, health care, counselling and education, including

formal and vocational, family reintegration. The organizations focuses on those "street children"

or "platform children" as they are called, who have run away from home or are abandoned are

alone and/or at risk and are living with little or no parental support on or around transport terminals

and immediate environs. Their areas of concern are:

1. Focus on early intervention with children that have little or no family contact

2.Address the child's right to a family life by seeking to reintegrate children with their

families or find an alternative when this is not practicable or desirable

3.Have integrated programmes that provide immediate services and developmental

opportunities.

4.Encourage a participatory approach with children

5.Encourage advocacy on behalf of the rights of these children

6.Develop linkages with other organisations and encourage a sharing environment.

7.Document their work for future learning.

Key elements of their work are extensive outreach on the platforms, drop-in shelters at a

place away from the platform, trying to reunite the child with the family are some of the main

tasks. They also conduct games, non-formal education, group discussions on values,

meditation, story telling are also some of the other activities. Some children are repatriated

within a few days of their arrival on the railway stations whereas others who are living on the

street for quite some time and are repatriated after counselling. Some children are habitual

runaways and need more inputs for repatriation. Conducting a four weeks residential camp is

one of the strategies for motivating children for re-union with the family. This is mainly aimed at

children who have been on the streets for a longer duration.

All these inputs are aimed at helping the child to understand the problems of living on the

street, advantages of living in a family, family relationships and mutual obligations and reflect on nd rdtheir decision to leave home. Most children disclose the address of their parents after 2 or 3

week and then the process of contacting parents starts. By the end of the camp a large

percentage of children meet their parents. Before taking the child home, a group session is

organised with the parents on how to take greater care of the child and avoid repeated incidents

of running away.

Reasons for Living on Streets

Most of the respondent children said that they left home because of domestic violence

62


and deprivation of food. Increased alcohol consumption, depleting social values, poor economic

status and insecurity in life may contribute to ill treatment of children at home.

Many street children fear that they might be arrested by the police, and in the process, be

sent back to their families or to institutional care. Another major problem many street children

expressed is their inability to save money while living on the street due to the threat of being

robbed. They suffer from many health problems while residing on the street. Street children

explained that they normally suffer from various psychological problems while living on the street,

which are often associated with their inability to �cope with street life�. They suffer from the lack of

attachment and affection.

Challenges that Children Face on Streets

In India, street children are subjected to harassment and eviction by the municipal

authorities because of their unauthorized occupation of city roads and vacant places. Due to the

terror attacks the surveillance has made it increasingly difficult for homeless populations to live in

public spaces. They may have been forced to shift to nearby locations on the outskirts of the city

limits, or may even have moved to other towns and cities

The Human Rights Watch conducted a study in 1996 to understand the nature of

harassment of street children by the police. They observed that Indian street children are

routinely detained illegally, beaten and tortured and sometimes killed by police. Several factors

contribute to this phenomenon: police perceptions of street children, widespread corruption and

a culture of police violence, the inadequacy and non-implementation of legal safeguards, and the

level of impunity that law enforcement officials enjoy. The police generally view street children as

vagrants and criminals. While it is true that street children are sometimes involved in petty theft,

drug-trafficking, prostitution and other criminal activities, the police tend to assume that

whenever a crime is committed on the street, street children are either involved themselves or

know the culprit. Their proximity to a crime is considered reason enough to detain them. This

abuse violates both Indian domestic law and international human rights standards.

Street children are also easy targets. They are young, small, poor, and ignorant of their

rights and often have no family members who will come to their defence. Police have financial

incentives to resort to violence against children. Many children report that they were beaten on

the street because the police wanted their money. The prospect of being sent to a remand home,

the police station, coupled with the threat of brutal treatment, creates a level of fear and

intimidation that forces children or in some cases, their families, to pay the police or suffer the

consequences.

While spending their lives in fringe occupations - begging, rag picking, bottle vending,

hawking and performing acrobatics. Seventy per cent of the children claim they have been

abused by the police. Prostitution and abuse abound. Ironically, the police and the railway

authorities, deny the presence of these children. Hideaways, to be used at night or when the

uniformed men come too close, are roofs of bridges, dangling above live cables, along with dark

63


underground pipelines. ''The underground pipeline is our home for daily activity. We bathe, wash

our clothes, segregate our material, and eat here,'' says a 14-year-old boy at Nizamuddin. (Sinha,

2006)

Substance Abuse

Among the children interviewed, they indulged in substance use. In this study street

children were inhalant users and used drugs. They commonly smoked tobacco, chewed

tobacco, inhaled volatile substances, drank alcohol, smoked cannabis, and injected opioids. The

reasons for their high popularity is may be due to their availability and economic pricing. The

above results indicate an urgent need to find alternatives for correctional fluid and promote usage

of non-inhalant glues. Influence of peer pressure acted as the major precipitating factor for drug

abuse in street children. Abusive substances like, tobacco, alcohol, cannabis, inhalants, others

were abused to get relief from pain, to get confidence initially.

It was found that the most common reason for indulgence into substance abuse was

peer pressure followed by curiosity of taking drugs. Peer group pressure was identified as one of

the important reasons for substance abuse. They drank alcohol to be sociable, to forget worries/

frustrations , to think and work better and to cheer up. They had substance use at anytime,

morning , afternoon , evening, at night.

Interventions for Street Children

During the last two decades Government as well as Non-Government agencies have

been actively involved in developing policy as well as programmatic interventions and services

for street children. Over the years, experience of working with street children revealed that old-

fashioned approach of institutionalising street children in custodial care (often through juvenile

justice system) is not an appropriate or effective intervention. The street children have different

characteristics and needs as compared to other children in need of care and protection. Many of

them have consciously opted for life on the street because of certain life experiences. Binding

them with the rigid framework of institutional care is not the right approach. They often run away

from such institutions. Benitez (2003) identifies two types of policy initiatives for street children -

broad based and targeted initiatives. She further elaborates the difference between the two and

demonstrates how street children run the risk of being excluded from the broad based policy

initiatives.

Broad-based Initiatives

These are frequently aimed at poverty reduction, urban children at risk, social inclusion or

guaranteeing human rights to all children. They can be international, national or local initiatives,

which set out to address specific themes of importance to a wide range of disadvantaged

children. A broad-based initiative, designed to address a specific problem faced by large

numbers of poor children, is likely to be most successful for those children who have most

support and fewest �anti-social� characteristics. They seem likely to be least successful for

homeless street children who have very few sources of support, engaging in precarious day-to-

64


day survival with a range of interacting barriers impeding different areas of their lives. In practice

therefore, homeless children are more likely to be excluded from broad-based initiatives for

children, regardless of the type of underlying approach.

Conclusion

Work with street children has turned away from a discourse that categorized them as

children in need and emphasized their weaknesses and dependency, in favour of highlighting

children's own voices as citizens and their capabilities as agents of change. This reveals a shift in

the fundamental assumptions made about children (as active participants rather than underage

dependents), which itself brought about fresh approaches regarding appropriate methods for

research and interventions on behalf of children.

They further demonstrate how the new terminology 'Children at risk' can also be

problematic in dealing with street children. Public health concerns for children �at risk� come

with several important caveats. First, the risk discourse is helpful if one uses it less as a tool to

categorize children and more as a tool to formulate questions of specific importance about

children. For instance, one should ask not only what particular aspects of street lifestyles put

children's health at risk, but also what processes enable children to cope with adversity. To turn

the emphasis of risk on its head, how does one �support the social and cultural expressions of

resilience and coping in ways that effectively support children's wellbeing� (Boyden & Mann

2000). The concept of resilience, found useful in emphasizing a situational and developmental

perspective and in departing from earlier vocabularies of marginality, does need to be better

articulated in actual research with children. In this way, the concepts of risk and resilience would

help to provide an overarching view of children whose rights are being jeopardized, moving

forward the literature that previously tended to compartmentalize thinking about street children

but that now seeks to consider this particular group alongside other groups of underprivileged

children.

References

lAptekar L. (1992), Are Colombian Street Children Neglected? �The Contributions of Ethnographic and

Ethnohistorical Approaches to the Study of Children Anthropology and Education Quarterly� 22(4), p.326

lAptekar, L. (1994), Street children in the developing world: a review of their condition, Cross-Cultural

Resources 28, p.207

lPatel S. (1990), Street Children, hotel boys and children of pavement dwellers and construction workers in

Bombay - how they meet their daily needs, �Environment and Urbanization�2(2), p.10

lMathur M; Monika M. (2009), Incidence, type and intensity of abuse in street children in India, Child Abuse &

Neglect: 33, p.908

lKombarakaran, F.A. (2004), Street children of Bombay: their stresses and strategies of coping, Children and

Youth Services Review 26, p.867

lChatterjee A. (1992), India: The forgotten children of the cities,: Unicef.

lSkinnider E. (1999), Violence Against Children: International. Criminal Justice Norms and Strategies, p.4

lPoornima Tiwari (2007). Life on streets. Indian Journal of Pediatrics 74 283-286.

lMeena, Pardeep Khanna, Vohra AK and Rajesh Rajput (2002).

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l

Psychiatry 44(4) 348-352.

lNigam S (1994). Street Children of India � a glimpse. Journal of Health Management 7 63�67.

l

lGururaj G and Girish N (2007). Tobacco Use Amongst Children in Karnataka. Indian Journal of Pediatrics 74-

1095.

lDeepti Pagare GS, Meena Singh MM and Renuka Saha (2004). Risk Factors of Substance Use among Street

Children from Delhi. Indian Pediatrics

lJuyal R, Bansal R, Kishore S, Negi KS, Chandra R and Semwal J . Substance Use Among Intercollege

Students in District Dehradun. Indian Journal of Community Medicine 31 4.

Prevalence And Pattern Of Alcohol And Substance Abuse In Urban Areas Of Rohtak City. Indian Journal of

Atanu Ghosh (2009). Prevalence of substance abuse among street adolescents in Kolkata and suggested

mode of prevention. Indian Journal of Population Education 4 3-9.

41.

(2006)

66

*Prof. in Commerce, M.L.B. Govt. College of Excellence Lashkar, Gwalior - 474009 (M.P.) India**Research Scholar, School of Studies in Commerce, Jiwaji University, Gwalior (M.P.)

Comparison of Structural Factors Level between Male and Female Faculty of Professional Institutes of Gwalior City *Dr. R. C Gupta

**Swapna Srivastava

Structural factor is a wider concept that has been an area of research with a wide variety of

variables. Teachers desire security in job, healthy work environment, career growth,

recognition, research exposure, etc. When these needs are not fulfilled they become tense.

Dissatisfaction among workers is undesirable and dangerous in any profession. The purpose of

this study was to explore the structural factors level between male and female faculty members

of Professional Institutes of Gwalior City. The study was conducted on 120 male and female

faculty members from different Professional Institutes of Gwalior City. Descriptive Statistics and

T-Test has been used in this study to analyze the data. The study found that out of 20 variables

only variable 1 and 13 are creating significant difference. The findings of the study suggest that

most academic members of Professional Institutes were satisfied with their job. It is noteworthy

to mention that male faculty members were found more satisfied than their female

counterparts. This study can assist the management and policy makers to understand the

importance of job effectiveness from the perspective of all the variables used in this study.

Keywords: Structural factor, Teachers, Dissatisfaction, Professional Institutes,

Management.

Introduction

Structural factor is an integral part of any professional organization. It pertains to the attitude

that one develops towards one's job in due course of time or we can say it is concerned with the positive

feeling one gets from the job. With the growth of industrial revolution this topic has assumed tremendous

importance as the success of any organization or an institute depends on the efficiency of its employees

and it can only be achieved if a worker is satisfied with his working conditions. It is observed that if a

worker is not satisfied with his work, then both the quantity and quality of his output tend to suffer. On the

other hand, if his satisfaction increases then there is an improvement in both the quality and the quantity.

Behind every great man, there is a good teacher who kindles in him enthusiasm, fosters

confidence and guides him to the way of progress. Alexander the great once said, �I owe my birth to my

father but life to my teacher.� The great poet Kabirdas uttered

�Guru Govind dou khade, kaake lagoon payen,

balihari guru apki, jinh Govind diyo milaye�

(Out of Guru and Govinda, standing before him, Kabirdas touched the feet of his guru who had

shown him the way to God realization.)

The teacher is always concerned with the children who are potential of tomorrow. Tomorrow's

nation will depend upon the type of citizens trained and educated today in the temples of Saraswati (i.e.,

67


the educational institutions). Every profession has got certain aspects conducive for structural factors

and teaching profession is not an exception. Until and unless a teacher derives satisfaction in job, he

cannot initiate desirable outcomes to cater to the needs of society as well as to live up to the social

expectations. Dissatisfaction of the individual, whatever may be the occupation in which he is engaged,

results in professional stagnation and becomes harmful to the clientele. A dissatisfied teacher spells

disaster to the country's future. Dissatisfaction among the workers is undesirable and dangerous in any

profession. It is suicidal if it occurs in the teaching profession as cautioned by the Educational

Commission (1966).

Quality in teaching and learning can only be enhanced if the faculty members are satisfied and

content (Chen et al., 2006), and the health of an educational institution depends on the structural factors

of its employees (Wood, 1976). On the other hand, the goals of higher education are to provide in-depth

knowledge, seek academic development, educate students, and to coordinate national development

demands (Johnes and Taylor, 1990). These goals cannot be accomplished efficiently and are barriers to

ability utilization if low satisfaction or dissatisfaction exists in teachers in higher education sector.

Therefore, Syed et al., (2012) recognized that faculty satisfaction is the most significant aspect in higher

education and is important for the improvement, efficacy and effectiveness of the higher education

system.

The purpose of this study is to compare the structural factor level between male and female

faculty members of Professional Institutes of Gwalior City.

Some important factors influencing structural factors are:-

1.Appreciation

2.Fringe benefits

3.Job conditions

4.Nature of the work

5.Personal Growth

6.Policies and Procedures

7.Promotion

8.Age

9.Opportunities

10.Recognition and Supervision

11.Stress at work

12.Home-work interface

Literature Review

Xuong-Kiet Vuong and Minh-Quang Duong (2013) have identified 21 dimensions to measure

structural factors between the male and female faculties of the V.N.University. Xuong-Kiet Vuong and

Minh-Quang Duong indicated that with availability of all teaching aids most of the faculty members were

68


satisfied with their 21 dimensions of jobs. They expressed higher satisfaction in terms of career

promotions (M=3.25, SD= 1.10) while dissatisfaction comes with the salary (M=2.16, SD=0.76), bonus

and welfare, library, recreation; however male faculty members were more satisfied. They need to

increase their skills and techniques through training, workshops, and refresher courses.

Nitin Nayak and Madhumita Nayak (2014), states that there is different perception of all

demographic variables on structural factors. They proved that married teachers and teachers working

with government universities were more satisfied to their counterparts. (i.e. factors like satisfaction with

pay, variety of activities, environment and security). There is no effect of gender on structural factors

while the salary has the least contribution.

Nadeem Malik (2009) studied the effect of supporting factors (i.e. motivation and hygiene) on

overall structural factors. The female faculty members were more satisfied as they support the factor

work itself (most motivating aspect for faculty) while working conditions is the least motivating factors.

Demographic factors have negligible effect on the overall structural factors.

Sarita Maharjan (2012) analyzed the work motivation factors on structural factors. The result of

their research explains that the teachers are highly dissatisfied with the salary provided to them. Several

factors of structural factors which have been considered in this research work are positive attitude,

helpful and cooperative, fellows, engagement, job continuity, opportunity and etc. Motivational factors

are job in life and not to fail, reputation, educational, development, creative and new challenge, pleaser

for the moment etc. The research has used descriptive statistics and correlation analysis in the study.

Thoresen, Joyce, Bono and Patton (2001), explained relationship between structural factors

and job performance. Meta analysis was conducted on 312 samples. They used models and also tested

correlation between overall structural factors and performance.

Taskina and Ireen Akhtar (2009), this study examines the structural factors of faculty members

of private universities. This study explains that faculty members are more satisfied in some areas like

interpersonal skills, etc. and dissatisfied with salary, personal room, computer facilities, office room,

wash room facilities etc. Further in this study the author has explained that female faculty members can

make more contribution if they are utilized properly than male faculty member. The author has used both

parametric and non parametric test to analyze the data. Primary data was collected from 120

respondents.

Tilak raj and Lalita (2012) conducted a study to find out the structural factors among the private

teacher and government teachers. Results show that male teachers are more satisfied than female

teachers. The study also explained that government teachers are more satisfied than the private

teachers. The various factors which measure the satisfaction level of teachers are flexibility, job security,

high wage and independence. Wage payment is one factor which demotivates the teachers of private

schools is explained in the research work. Further the result show that even government teachers are

dissatisfied on fair promotion procedures.

Shaheen, Sajid, and Batool (2013), various factors affecting motivation of academicians are

69


salary, work load, rewards, transport, appraisal, system, carrier opportunity etc. Quantitative research

technique has been used in this study. Findings of this research are most of the faculty members are not

satisfied with the administrative policies of their university due to which the motivational level of faculty

members is low. The results of this study explain that 80% teachers are not satisfied with their present

salary, reward/incentives and administrative policies.

Singh and Tiwari (2011), have explained the relationship between motivation and structural

factors of the white collar employees using the following factors compensation package, responsibility

at work, empowerment at work, achievement, recognition, growth opportunity in career, etc. Correlation

and regression statistical tools have been used to analyze the data. The results of this study show a

positive correlation between motivation and structural factors. They have explained that motivation is

not affected by age as well as the length of the service of the employees. In this research paper

compensation package has been proven as an important factor that affects satisfaction level, whereas

self actualization appears to be the least important factor.

Tabassum and Dr.Zafar (2011), have explained the structural factors of secondary school

teachers working in district Sahiwal, Pakistan. The findings of the study show that there was a significant

difference of structural factors between male and female secondary school teachers. To analyze the

data mean score of 20 dimensions has been calculated and T-test is applied to make the comparison

between male and female teachers. In this study male teachers are more satisfied than females.

Shivan-Ying, Ya-ching, Wen-Han, Lung-Ya and Peng-Hsiang (2013), examined the relationship

between teaching quality assurance and teaching effectiveness on structural factors. Linear Structural

Equation Modeling (SEM) was employed to verify the goodness-of-fit of the overall model, structural

model and measurement model, followed by an examination of mediating effects using the Sobel Test,

Bootstrapping and the Mackinnon PRODCLIN 2 program. The research results suggest that teacher's

structural factors have a positively significant effect on teaching quality assurance and have a positively

significant effect on teaching effectiveness.

Methodology

Objectives

1.To restandardise the standardised questionnaire.

2.To compare the level of Structural factors of male and female faculty members of the

Professional Institutes.

3.To compare the Structural factors of faculty members working in different Professional

Institutes.

Hypotheses

HO1 -There is no significant difference of Structural factors between male and female faculty

members.

HO2- There is no significant difference exists on Structural factors with regard to institutional

variables.

70


Sampling Method and Sample Size

The sample is collected from the teachers working in Professional Institutes restricted to

Gwalior City. A sample of 100 teachers working in 6 different Professional institutes was taken into

consideration. Random sampling method has been used for the present study.

Research Instruments and Methods

For the present study data was collected through restandardised Questionnaire on a 5 point

Likert Scale. Questionnaire was divided in to 2 parts. First part consists of questions related to the

personal information of faculty members and second part consists of questions related to Structural

factors.

Analysis of Data

Descriptive statistics was used to measure the level of Structural factors of teachers.

Independent sample T-Test has been used in the present study and the reliability of the questionnaire

has been checked through Cronbach's Alpha i.e., 0.899.

Results and Discussions

Participants of the Study

The findings of Table 1 show that out of the 100 faculty members, 55% were male and

remaining 45% of female faculty. The respondents consisted of 62% were from the age under 30, 29%

were from 31 to 40 years old and remaining 9% of above 40 years. In terms of their academic

qualification, 29% of faculty members had Bachelor's degree, 42% of faculty members had master's

degree and almost 29% had attained a doctoral degree.

Table 1: Demographic Characteristic of Respondents of the Study

Characteristics n(100) Per.(%)

Gender

l Male

l Female

Agel Under 30

l 31 - 40

l Over 40

Academic Qualification

l Bachelor's degree

l Master's degree

l Doctoral degree

55

45

62

29

9

29

42

29

55.0

45.0

62.0

29.0

9.0

29.0

42.0

29.0

Level of Structural Factors of Faculty Members

The results of this study indicates that the range of 20 dimensions of Structural factors were between 4.34 and 3.02 for mean score and 1.80 and 1.03 for SD scores. The average score of faculty members Structural factors of Professional Institutes were M=142.60 and SD=32.42.

Regarding the 20 dimensions of Structural factors, faculty members were most satisfied with Respect from Colleagues (M=4.34 and SD=1.22), subsequently followed by Cooperation from

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Colleagues (M=4.20 and SD=1.25), Working Hours (M=4.15 and SD=1.15), Initiatives (M=4.14 and SD=1.13), Switch to another job (M=4.11 and SD=1.13), Equal concern and respect (M=4.11 and SD=1.10), Leadership Satisfaction (M=4.00 and SD=1.16), Work Satisfaction (M=3.94 and SD=1.03), Overall Structural factors (M=3.80 and SD=1.43), Working Conditions (M=3.75 and SD=1.16), Problems Treatment (M=3.74 and SD=1.38), Institution Policies (M=3.64 and SD=1.28) and Major Satisfaction in Life (M=3.62 and SD=1.19).

However, the findings of Table 2 shows the lowest satisfaction with Job Stress (M=3.02 and SD=1.80), Salary (M=3.19 and SD=1.48), Rewards and Appreciation (M=3.29 and SD=1.50), Security in job (M=3.41 and SD=1.54), Wrong Promotion (M=3.42 and SD=1.55), Career Prospects (M=3.50 and SD=1.40) and Advice Others to join the institute (M=3.51 and SD=1.27). Thus, Professional Institutes and its policy makers should invest more time in increasing the level of security in job for females, improving monetary benefits, improving the standard for rewards and appreciation and reducing the job stress, so that faculty members can work comfortably and enhance the level of Structural factors.

According to T-test, Variable 1 and 13 are only creating significant difference. Hence it proves that all other variables are insignificant. Therefore, first and second both null hypothesis are rejected.

Table 2: Results of Mean (M), and Standard Deviations (SD) of Structural factors Level of Faculty

No. Dimensions of S. F. MeanSDt Sig.

Average 142.6032.42

S 1

S 2

S 3

S 4

S 5

S 6

S 7

S 8

S 9

S 10

S 11

S 12

S 13

S 14

S 15

S 16

S 17

S 18

S 19

S 20

Initiative by faculty members

Working Hours

Career prospects

Work satisfaction

Cooperation from colleagues

Respect from Colleagues

Working Conditions

Institution Policies

Rewards and Appreciation

Job Stress

Salary

Wrong Promotion

Major satisfaction in life

Switch to another job

Problems treatment

Security in job

Advice Others to join institute

Leadership Satisfaction

Overall Structural factors

Equal concern and respect by management

4.14

4.15

3.50

3.94

4.20

4.34

3.75

3.64

3.29

3.02

3.19

3.42

3.62

4.11

3.74

3.41

3.51

4.00

3.80

4.11

1.13

1.15

1.40

1.03

1.25

1.22

1.16

1.28

1.50

1.80

1.48

1.55

1.19

1.13

1.38

1.54

1.27

1.16

1.43

1.10

32.18

31.85

22.03

33.83

29.66

31.32

28.49

24.94

19.34

14.83

18.96

19.39

26.78

27.15

23.93

19.54

24.30

30.39

23.46

32.90

.001

.183

.374

.357

.794

.212

.438

.543

.501

.644

.423

.624

.008

.713

.294

.957

.659

.858

.981

.684

No. Dimensions of S. F. Female Ranking

Average Mean (SD) 69.4 (14.56)

S 1

S 2

S 3

S 4

S 5

S 6

S 7

S 8

S 9

S 10

S 11

S 12

S 13

S 14

S 15

S 16

S 17

S 18

S 19

S 20

Initiative by faculty members

Working Hours

Career prospects

Work satisfaction

Cooperation of colleagues

Respect from Colleagues

Working Conditions

Institution Policies

Rewards and Appreciation

Job Stress

Salary

Wrong Promotion

Major satisfaction in life

Switch to another job

Problems treatment

Security in job

Advice others to join institute

Leadership Satisfaction

Overall Structural factors

Equal concern and respect by management

th6th4th16th8nd2st1th12th11th20th17th19th14th13nd2th9th18th14th7th10th5

st1th4th13th6rd3th5th6th13th13th20th19th18th10th9th13th11th17th6th12nd2

72


The Structural Factors Level between Male and Female Academic Members

Comparative ranking of job dimensions between male and female faculty based on the average scores of the each group. As shown in Table 3, the level of Structural factors among female faculty members (M=69.4, SD=14.56) and male faculty members (M=79.9, SD=15.03) were found in the study. This finding recognized that male faculty of Professional Institutes of Gwalior City were more satisfied than their counterparts. Present study results are similar to several past studies namely Xuong-Kiet Vuong and Minh-Quang Duong (2013), Bilimoria et al., (2006), Callister (2006), Hult et al., (2005), Settles et al., (2006), Seifert and Umbach (2008). On the other hand, the results of this study are also contradictory to the study of Malik et al., (2009).

Comparative ranking of Structural factors dimensions is done between male and female faculty based on the average scores of the each group. In one case, both groups are highly satisfied in same

th thway with Working Hours (ranked 4), while lowest satisfied with Salary (ranked 19).

The finding of Table 3 also shows that male and female faculty members of Professional Institutes of Gwalior City had different level of Structural factors towards various factors. Both male and female faculty members were more satisfied with Initiatives, Work Satisfaction, Working Hours and

stRespect from Colleagues. Male faculty members were more satisfied with Initiatives (ranked 1), thhowever female faculty member were ranked 6. On the contrary, female faculty members were more

nd thsatisfied with switch to another job (ranked 2) and their counterparts were ranked 9. Moreover, both male and female faculty members of Professional Institutes of Gwalior City were dissatisfied with Job Stress, Salary and Advice others to join the institute.

Table 3: Comparative Ranking of Structural Factors between Male and Female Faculty Members

Male Ranking

79.9 (15.03)

73


Limitations of the Study

1. The present study is based on the data collected from sample selected i.e., Professional

Institutes of Gwalior city but the results may vary if other regions are also considered.

2. In this study only those faculty members were considered, who are presently working in the

professional institutes.

3. The survey conducted in this study can be biased and prejudiced of the respondents. Hence

100% accuracy can't be assured.

Findings of the study

Job satisfaction of academic members is important for improvement, efficiency and

effectiveness of the higher education sector. It is clear that very little research on job satisfaction of

academic members has come from developing countries like Vietnam. Therefore, there is a need for

more data to be gathered from developing countries, and for theories to be tested in different cultural

contexts, professional, social, and economic environments.

The study reveals that faculty members are satisfied with their job but male faculty members are

more satisfied than their counterparts. Faculty members were more satisfied with Initiative by faculty

members, Working Hours, Career prospects, Work satisfaction, Cooperation of colleagues, Respect

from Colleagues, Working Conditions, Institution Policies, Rewards and Appreciation whereas faculty

members were dissatisfied with Salary, Wrong Promotion, Major satisfaction in life comes from my job,

Switch to another job if better opportunities are provided, Institute deals with the problems of faculty

members fairly, Security in job, Advice others to join the institute, Job Stress , Leadership from HOD,

Overall Structural factors and Equal concern and respect. Over all 20 dimensions of Structural factors

has been discussed in the present study.

Suggestions and Recommendations

Management should take sincere steps so that teachers can be more satisfied from their job.

Moreover, higher authorities of the professional institutes should provide sufficient research space so

that teachers can have good career prospects. More security in job should be provided to female faculty

members. Proper salary according to the government norms should be provided to the faculty

members. Right person should be promoted and institutional policies for rewards and appreciation

should be fair and impartial. Teachers should not be pressurised to do administrative work. These things

increase the workload and make their job stress.

Conclusion

Job satisfaction is very important otherwise problem of frequent employees' turnover occurs

which not only creates problem of wastage of resources for institutions but also for individuals in

maintaining stability and balance in their personal and professional life. It is hoped that the dimension

which are discussed in the present study and the result of this study will surely help the management to

improve the level of satisfaction of academic members in job. University management should provide

abundant research space and facilitate supportive. Provision of sufficient funds to universities for the

availability of modern tools, scholarly publications, properly equipped libraries and laboratories.

Moreover, higher education management clearly needs to re-examine their current institutional policies

on faculty work in order to keep highly productive faculty more satisfied with their job and to make the

necessary changes in the policies and practices to enhance job satisfaction.

ReferenceslChen, S. H., Yang, C. C., Shiau, J.Y. and Wang, H. H. (2006), �The Development of an Employee satisfaction model for

higher education�, The TQM Magazine, Vol.18 No. 5, pp. 484-500.

lWood, O. R. (1976). A research project: Measuring structural factors of the community college staff. Community College Review, 3(3), 56�64.

lJohnes, J., and Taylor, J. (1990). Performance Indicators in Higher Education: Buckingham, in Chen et al. (2006). The development of an employee satisfaction model for higher education. TQM Magazine, 18 (5): 484-500.

lSyed, A.A.S.G., Bhatti, N., Michael. S., Shaikh, F.M., and Shah, H. (2012). Structural factors of faculty members of university in Pakistan: A case study of university of Sindh Jamshoro. Modern Applied Science, 6 (7), 89-95.

lXuong-Kiet Vuong and Minh-Quang Duong (2013), �A Comparison of Structural factors Level between Male and Female Faculty at the Vietnam National University of Ho Chi Minh City�, Asian Journal of Humanities and Social Sciences, Vol.1.

lNayak,N. and Nayak, M.(2014), �A Study Structural factors Among University Teachers In India�, The Clute Institute International Academic Conference, Orlando, Florida, USA .

lMalik,N.,(2009), �A Study on Structural factors of Faculty Members at the university of Balochistan�, Journal of Research in Education, Volume 21, Number 2.

lMaharjan,S.,(2012), �Association between work motivation and structural factors�, Administration and Management Review, Vol.24, No.2.

lThoresen,C., Joyce, B., Bono, J., and Patton, G. (2001), � Structural factors-Job Performance Relationship: A Qualitative Review and Quantitative Review�, Psychological Bulletin, Vol.127, No.3, pp. 376-407.

lAli,T. and Akhter, I.(2009), �Structural factors of Faculty Members in Private Universities -In Context of Bangladesh�, International Business Research Journal, Vol.2, No.4, pp. 167-175.

lRaj,T. and Lalita, (2013), �Structural factors among teachers of private and government school: A comparative analysis�, International Journal of Social Science and Interdisciplinary Research, , Vol. 2 (9), pp 151-158.

lShaheen,I., Sajid,M. and Batool, Q.,(2013), �Factors Affecting the Motivation of Academic Staff (A case study of University College Kotli, UAJ and K)�, International Journal of Business and Management Invention, Volume 2, Issue 1, pp. 105-112.

lSingh, S. K. and Tiwari, V. (2011), �Relationship between motivation and structural factors between motivation and structural factors of the white collar employees: A case study�, SMS Varanasi, Vol. VII, No. 2, pp. 38-39.

lMuhammad, A .A., Tanveer-uz-Zaman, Tabassum, F., Iqbal, F., (2011), �A study of structural factors of secondary school teachers�, Journal of Education and Practice, Vol 2, No 1, pp. 32-37

lHuang, Huang, Chang, Chang and Kao.,(2013), �Exploring the effects of Teacher structural factors on teaching effectiveness�, International Journal of Modern Education Forum, Volume 2, Issue 1, pp. 17-30.

lDuong, M., (2013), �Analytical Evaluation of Background and Structural Environment Characteristics of Faculty Structural factors in Vietnam�, Asian Journal of Research in Social Sciences and Humanities, Vol. 3, No. 12, pp. 263-273.

lAllen N (2003), �Structural Commitment in the Military: A Discussion of Theory and practice�, Military Psychology, Vol. 15, pp. 237-253.

lAllen N J and Meyer J P (1990), �The Measurement and Antecedents of Affective, Continuance and Normative Commitment to the Organization�, Journal of Occupational Psychology, Vol. 63, pp. 1-18.

lBilimoria, D., Perry, S.R., Liang, X., Stoller, E.P., Higgins, P., and Taylor, C. (2006). How do female and male faculty members construct structural factors? The role of perceived institutional leadership and mentoring and their mediating processes. Journal of Technology Transfer, 31, 355-365.

lCallister, R.R. (2006), �The impact of gender and department climate on structural factors and intentions to quit for faculty in science and engineering fields� Journal of Technology Transfer, 31, 532-538.

lHult, C., Callister, R.R., and Sullivan, K. (2005). Is there a global warming toward women in academia? Liberal Education, 91, 50-57.

lSettles, I. H., Cortina, L. M., Malley, J., and Stewart, A. J. (2006). The climate for women in academic science: The good, the bad, and the changeable. Psychology of Women Quarterly, 30, 47�58

lSeifert, T.A., and Umbach, P.D. (2008), �The effects of faculty demographic characteristics and disciplinary context on dimensions of structural factors� Research in Higher education, 49, 357-381.

lMOWDAY, R. T., STEERS, R. M., and PORTER, L. W. �The measurement of Structural commitment� Journal of Vocational Behavior, 1979, 14, 224-247.

74


75

*Assistant Professor, Maharana Pratap Engineering College, Kanpur**HOD, International School of Business, Suresh Gyan Vihar University, Jaipur***Research Scholar, Suresh Gyan Vihar University, Jaipur

*Dr. Ashutosh Mishra**Dr Puneet Bafna

***Rajesh Srivastava

Awareness About Equity Link Insurance Schemes of Life Insurance Companies

Consumer awareness as a concept is of universal concern for all economies of the world.

In the context of a booming Indian economy and unprecedented growth being witnessed by

Insurance industry - especially life insurance, it would be interesting to examine this concept in

depth. Such a study will provide rare insights as to how to harness huge untapped market

potential for life insurance for the benefit of vast rural and urban populace. The equity-linked

endowment insurance policy with asset value guarantee with periodic premiums is a life

insurance contract between an insurance company and a policyholder where the buyer is

committed to pay regularly a predetermined premium to the company. At maturity or death of

the insured person the benefit of the contract then payable consists of the greater of the value

of some reference portfolio and some minimum guarantee payment. The reference portfolio is

typically a portfolio formed by investing some predetermined component of the policyholder's

premium in common stocks. We use financial theory to value the benefit and then take mortality

in account, assuming that the financial market is independent of the insured's health condition.

This research paper is oriented towards customer perception regarding their awareness

towards market fluctuations in the economy. Indian customers are very pron. Indian stock

market after liberalization is mainly governed by foreign institutional investors who are

interested in the core areas of economic development. That is the reason various companies

have attend high ranks in the stock prices. In this scenario life insurance companies have

started alluring Indian market with variety of equity linked insurance products to offer assurance

plus benefit of the high growth market. This paper is an attempt to envisage awareness of

Indian customers regarding equity- linked insurance schemes of various life insurance

companies.

Keywords: Awareness, Equity-linked insurance scheme, Life insurance companies,

Customer.

Introduction

In recent years equity link schemes have increased in popularity. In this scheme, the benefit

payable at expiration depends upon the market value of some reference portfolio. This unlike traditional

life insurance policies provide a fix benefit, or participating policies in which the benefit may be loosely

related to the investment performance and mortality experience company, the equity like policy imposes

on the policyholder the full investment risk, a risk he may well willing to assume under conditions of

uncertain inflation it he regards equity as providing a hedge against inflation. Under these contracts, the

insured makes an initial deposit (or several deposits) and during the deferral period the interest accrual

on the fund is linked to the performance of a stock or index. The Scheme would adopt top-down and

bottom-up approach of investing and will aim at being diversified across various industries and / or

sectors and/ or market capitalization. The investment emphasis of the scheme would be on identifying

76


companies with sound corporate managements and prospects of good future growth. Essentially, the

focus would be on stocks driven by long-term fundamentals. However, short-term opportunities would

also be seized, provided underlying values supports these opportunities. A portion of the scheme will

also be invested in emerging sectors, concept stocks and other primary market offerings that meet our

investment criteria. The scheme would invest a substantial portion of its investible assets (80% - 100%)

in equity and equity related instruments. Pending investment of the scheme may be invested in debt and

money market instruments and other liquid instruments or both. The scheme may have prudent

exposure to Futures and Options (F and O) to capture opportunities arising out of market imperfection

and to hedge the portfolio, whenever necessary. The economic market for such products is incomplete

due to the presence of mortality risk and standard no-arbitrage arguments do not provide unique prices.

This product involves the insurance company both in mortality risk since it is uncertain what

date the guarantee will be effective, and in investment risk since the cost of the guarantee will depend

upon the investment performance of the portfolio. A pure equity link scheme is in reality not an insurance

scheme at all, but an investment programme, in which the insurance companies invest the premium less

expenses in investment portfolio, and at expiration pays the policyholder the market value of the

investment portfolio. It is clear that this involves the insurance company in no risk, and the company is

performing no service which is not available from existing mutual fund investment plans. Of course, the

pure equity link scheme, a part of premium being allocated to the equity element, and a part of term or

endowment policy; but with this may be regarded as no insurance product, no insurance principals are

involved.

Customer awareness is rising. They want such product that can give them high return.

The customers of equity link schemes of life

insurance companies belong to urban and rural areas.


There are various studies related to Insurance Sector in India and abroad. It was found that the

numerous number of literatures are available on insurance industry and its various aspects. Few relevant

reviews are putting here in the context, they are as follows:

Møller (1998, 2001) for equity-linked insurance products; Carr et al. (2001) who put forward a

new methodology which interpolates between no-arbitrage pricing and expected utility maximization.

Rao (2003) did the performance evaluation of mutual funds in a bear market and his results

suggest that most of the mutual funds have given excess returns over expected return.

Dash, Lalremtluangi, Atwal and Thapar (2007) the researchers tried to find out rate of return

given by different insurance policies and the effect of mortality and he found that different returns are

given by different insurance policies and the mortality does not affect return.

The

current scenario in the insurance industry is a complex and competitive environment tinged with little

stability. The major hassle the industry faces is obtaining clients. This is due to the fact that the big fish in

the insurance industry dominate the sector. It has become increasingly difficult for this particular sector

to gain profits while curtailing costs. Acquisitions, mergers, have all contributed to the difficulty insurance

agents and other professionals from this industry face.

77


Goal and Jain 2010, Investment has two attributes namely time and risk. Present consumption

is sacrificed to get a return in future. The sacrifice that has to be borne is certain but the return in the

future may be uncertain. This attribute of investment indicate the risk factor. The risk is undertaken with a

view to reap some return from the investment. The main investment objective is increasing the rate of

return and reducing risk. At present, a wide variety of investment avenues are open to the investors to

suit their need and nature. The required level of return and risk tolerance level decide the choice of

investor.

Srivastava Vinay K, 2011, in our system it is the household savings, which are predominant part

of the gross national savings. So, unless small investors' hard earned money is invested with certain

amount of confidence, in equity and bond market directly or through intermediaries, we can't expect to

have a well developed financial market.

Manju G. 2012, The study of investors' preference for various stock market services is based on

long term experience in Indian market in dealing with shares and mutual funds. Most of the investors are

satisfied with the quality of services provided if taken necessary and appropriate action according to its

rules and regulations.

Purpose of the study

lTo analyze the awareness about equity link insurance scheme and purpose of investment in

insurance companies.

lTo study the age group, background, occupation, income and family size of existing customer

of equity-link insurance scheme.

lTo study which company's equity-link scheme is more preferred than other.

lTo study the convenient source for getting insurance policy for common people.


Present study is based on primary data and secondary data. A well structured questionnaire

and in-depth interview method was used to collect primary data for the analysis purpose. A survey is

carried out on randomly selected 128 respondents (Life Insurance Policyholders) from Uttar Pradesh.

The researcher depends on primary data for the purpose of analysis and interpretation. Data are

presented in the form of tables and diagrams for easy understanding. The secondary data has been

collected from various journals, books and internet links and websites of IRDA and various insurance

companies, the details of which can be found at the last page in the reference section of this research

paper.

Data Analysis

Age group

At the time of determination of Insurance premium age factor plays a very crucial role for the

insurance companies as well as customers. If age group is low then insurance companies charges low

premium and if it is high then it charges higher premium because mortality rate increases according to

age. Table 1 shows age groups of the respondents.

78


Table: 1 Age Group

(N=128)

21-26 34

27-32 31

33-38 30

39-44 18

45-60 15

Mean 25.6

Median 30

SD 8.5

AgeNo. of respondent

Source: Surveyed Data

Table 1 depicts that the age group is divided into

five categories 21-26, 27-32, 33-38, 39-44 and 45-60. The

number of respondents falling in each category is 34, 31,

30, 18 and15 respectively. The mean value is 25.6, median

value is 30 and Standard Deviation of frequencies is 8.5.

The data shows that the maximum number respondents

are falling in first two age groups from 21 to 32 (Number of

respondents 65). The equity link Insurance scheme is

related to the investment performance and mortality

experience so younger people can take more risk than

senior people.

40

30

20

10

0

21-2621-2621-2621-2621-26

343130

1815

Figure: 1 Age Group


Backgrounds of respondents

Insurance is a subject matter of sale and not to

purchase. It cannot be divided by insurance companies

according to background but in this study we found

that respondents have both urban and rural

backgrounds.

The background of surveyed data is divided in

both urban and rural. It shows wide phenomena of

Indian Insurance Industry. Urban respondents are

eager to take equity link insurance policy to earn money

in favourable conditions because of their awareness.

The data shows that 82 respondents are from urban

Table: 2 Backgrounds

(N=128)

Urban 82

Rural 46

Mean 64

Median 64

SD 25.45

BackgroundsNo. of respondent


79


Figure: 2 Backgrounds

46 Rural

82Urban1

2


Qualification

Education is very essential for choosing the

appropriate equity link scheme. Educated

customer can understand well about the positive

and negative aspects of plan. That is why

qualification plays a crucial role for understanding

the market and the benefits about equity link

insurance scheme.

background and 46 respondents are from rural background.

The mean value of surveyed data is 64. Median value is also

64 and standard deviation of frequencies is 25.45.

Awareness about insurance plays a very crucial role in its

marketing. This shows that urban respondents are more

aware about equity link insurance schemes. That is why the

number of respondents of urban background is more than

rural back ground. It shows figure 2.

Table: 3 Qualification

(N=128)

Post graduate 51

Graduate 38

Intermediate 22

High school 13

Higher secondary 3

Primary 1

Illiterate 0

Mean 18.2

Median 13

SD 18.8

QualificationsNo. of respondent


Figure: 3 Qualification

Post Graduate

GraduateIntermediateHIghSchool

HIgherSecondary

Primary Illiterate

51

38

2213

31 0


80


Family Size

Insurance is family protection device.

Insurance cover should be appropriate

according to family size. If dependents on

earning member are more then insurance

cover should be more and for fewer

dependents it should be according to need.

Table 4 shows the surveyed data of family size.

The family size in surveyed data is

divided into four categories 1to 3, 4 to 5, 6 to 7

and 8 to 10 members. The number of

respondents falling in each category is 41, 52,

22 and 13 respectively. The mean value is 32,

median value is 52 and standard deviation of

frequencies is 14.2. The data shows that the

maximum number of respondents is falling in

first two family size categories that are from 1 to

5 (number of respondents 93). The large family

size in surveyed data is less than small family

size that is why more respondents are falling in

first two family sizes. It shows figure 3.

Table: 4 Family Size

(N=128)

01-03 41

04-05 52

06-07 22

08-10 13

Mean 32

Median 52

SD 14.2

Family SizeNo. of respondent


Figure: 4 Family Size

60

50

40

30

20

10

0

01 to 0304 to 0506 to 0708 to 10


Occupation

Occupation is a source by which

people earn money and part of that money is

invested by the people for investment and risk

cover, so occupation plays a big role to

purchase equity link insurance plan.

The occupation in surveyed data is

divided into five categories that are

government employee, private employee,

businessman, farmer and labour. The number

of respondents falling in each category is

48,24,37,19 and 0 respectively. The mean

value is 25.6, median value is 37 and standard

Table: 5 Occupation

(N=128)

Government employee 48

Private employee 24

Businessman 37

Farmer 19

Labour 0

Mean 25.6

Median 37

SD 5.16

Occupation No. of respondent


deviation of frequencies is 5.16. The data shows that the maximum number of respondents is falling in

first two occupational categories which are government employee and businessman (no. of

respondents 85). The number of private employees and farmers are less. However there is no labour

who purchased equity insurance plan.

41

52

22

13

Table: 6 Income Group

(N=128)

50000-100000 6

100000-300000 37

300000-500000 43

500000-700000 24

Above 700000 18

Mean 25.6

Median 37

SD 4.44

Income Group No. of respondent


81


Figure: 5 Occupation

60

50

40

30

20

10

0GovernmentEmployee


PrivateEmployee

BusinessmanFarmer Labour

Income Group

Income denotes the level of person

in the society. It also denotes the paying

capacity, life style and expenditure of the

person.

The Income group in surveyed data

is divided into five categories are 50000-

100000, 100000-300000, 300000-500000,

500000-700000, Above 700000. The

number of respondents falling in each

category is 6, 37, 43, 24 and 18 respectively.

The mean value is 25.6, median

value is 37 and standard deviation of frequencies is 4.44. The data shows that the maximum number of

respondents is falling in two income groups which are 100000-300000 and 300000-500000 (no. of

respondents 80). While the number of respondents are less in lower income group (50,000-1,00,000)

and higher income group above (7,00,000) are less respondents. It shows lower income group does not

want to invest in equity link insurance scheme due to their less paying capacity while higher income

groups want to invest their money in other investment rather than equity link insurance scheme because

of fluctuation of market. The middle income group (3,00,000-5,00,000) wants to invest on equity link

scheme because they want to generate more money in less time facing fluctuations in market.

82


Purpose of Investment

Investment in Insurance policy fulfilled so

many purposes at a time. It may be financial

compensation, family safety, tax rebate, risk cover

and returns. In surveyed data purpose of

investments in insurance company shows table 7.

The purpose of investing in surveyed data

is divided in five categories Maximum return, Tax

rebate, Risk cover, Family safety and Financial

compensation. The number of respondents falling

in each category is 52, 37 11, 23 and 5

respectively. The mean value is 21.33, median

value is 11 and standard deviation of frequencies

Table: 7 Investment Purpose

(N=128)

Maximum return 52

Tax rebate 37

Risk cover 11

Family safety 23

Financial compensation 5

Mean 21.33

Median 11

SD 1.7

Puropose No. of respondent


Figure: 6 Income Group

50

45

40

35

30

25

20

15

10

5

0

50000-100000


100000-300000300000-500000500000-700000Above 700000

6

3743

2418

Figure: 7 Investment Purpose

Maximum Return


TaxRebate

Risk Cover

Family Safety

FinancialCompensation

52

37

11

23

5

Series 11

is 1.7. The data shows that the maximum number of respondent is falling in the first category that is

maximum return (no. of respondents 52). This shows that the main purpose of investment is maximum

return which is followed by tax rebate. Family safety ranks third followed by risk cover and last as

financial compensation.

83


Convenient Source for Getting Insurance

In this globalised and competitive

scenario getting insurance policies is not a

difficult task for anyone. Anyone who is willing

to pay premium can take insurance policy by

various authorities who are involved in

insurance business like banks, insurance

agents, financial institutions and some

websites which are also providing these

facilities. The table shows most convenient

source for getting equity link insurance scheme

chosen by respondents.

The convenient source for getting

insurance in surveyed data is divided into four

categories insurance agent, bank, brokers and

direct insurance company. The number of

respondents falling in each category is 83, 31,

3 and 11 respectively. The mean value is 32,

median is 31 and standard deviation of the

frequencies is 31.1. The table shows that the

maximum number of respondents falling in first

source category which is Insurance agent

(number of respondents 83). It is a traditional

source of getting insurance policy. It shows

that the personnel relationship of people and

Table: 8 Convenient Source of Getting Insurance

(N=128)

Insurance Agent 83

Bank 31

Brokers 3

Direct Insurance Co. 11

Mean 32

Median 31

SD 31.1

Source No. of respondent


Figure: 8 Convenient Source for Getting Insurance Plocy

InsuranceAgent


Bank Brokers DirectInsurance

Co.

83

31

3 11

Table: 9 Customer Preference(N=128)

LIC 61 I

SBI Life Insurance 33 II

Birla Sunlife 16 III

Aviva 11 IV

HDFC Standard Life Insurance7 V

Company Name

No. of respondent


Rank

Customer Preference

When there are various insurance

companies in the market, preference is given

to the insurance company because of brand

name, quality of service, number of branches,

behaviour of Insurance agent and

administrative charges etc.

The preference of customer is

divided in five companies LIC, SBI Life

Insurance, Birla sunlife, Aviva and HDFC

Standard life insurance. The number of

insurance agents is stronger that is why more respondent are falling in Insurance agent categories. Bank

is considered second reliable source of getting an insurance policy followed by direct insurance

company and lastly the brokers. It can be seen in following figure.

84


Figure: 9 Customer Preference

706050403020100

LIC


SBI LifeInsurance

BirlaSunfile

Aviva HDFCStandard

Life Insurance

Premium Policy Satisfactions

Premium of insurance policy which is cost

of risk transfer should be appropriate according to

risk. According to the involvement of hazardous

element premium is increased or decreased. In

the surveyed data respondents gave opinion

about the satisfaction with the premium policy of

the insurance company. It shown in table 10.

The premium policy satisfaction for equity

link in surveyed data is divided in two categories

yes and no. The number of respondents falling in

category yes is 113 and in category no are 15.The

mean and median value is 64 and standard

deviation of frequency is 7. The study shows IRDA

should give instruction to Insurance companies for

improving premium of insurance policy by

decreasing its cost to satisfy the remaining

respondents. It can be seen in the figure also.

Table: 10 Premium Policy Satisfaction

(N=128)

Yes 113

No 15

Mean 64

Median 64

SD 7

Openion No. of respondent


respondents falling in each

category is 61, 33, 16, and

11 respectively and 7.

The data shows that the

maximum number of

respondents is falling in the

first two categories which

belongs to public sector

while others (private sector)

are less preferred.

Figure: 10 Premium Policy Satisfaction

No15

Yes113 No

Yes


Findings

During the study and analysis of data, following conclusions have been found on the basis of

the study objectives. They are:

1. It was found that in post-liberalized-era, government service men and business man of 21-32

age group population are more aware of buying equity link insurance scheme.

2. Mostly urban educated graduates or post graduates purchase maximum equity link schemes

of insurance companies, as compared to others

3. The 4-6 family size is having maximum insurance policies as compared to other family sizes in

the study area.

61

33

1611 7

85


4. Medium income group population of income from Rs. 300000-500000 buy more insurance

products as compared to other income groups in the study area.

5. Public sector insurance company's (LIC) equity linked schemes are more preferred then private

sector (Bira Sunlife, Aviva, HDFC Standard life Insurance) insurance company's equity linked

insurance schemes.

6. Although Insurance companies are fulfilling so many purposes of investments however

maximum respondents buy equity link insurance schemes for maximum return.

7. During the study it was found, although many insurance distribution channels have grown like

banks, financial institutions, corporate agents etc. but even then the insurance agents are

dominating in case of selling and distribution of insurance products.

8. Large number of customers are satisfied with the premium policies and services of insurance

companies. It shows brighter future for the customers as well as insurance industry in India.

9. The globalised economy affected the Indian values and family system. So that more nuclear

families believed on insurance sector for covering their risk and future plans.

Conclusion

The key challenges for insurance companies is to provide insurance plans to low income

households by minimizing transaction costs. Micro insurance products are developed by life insurance

companies for under privileged people and for people in rural areas products are designed according to

their needs and income. Life insurers should provide insurance plans which are more feasible and the

endowment plans should be easily accessible to the customers. They should also try to reduce the

mortality charges because average age has been increased. Insurance companies should recruit

qualitative insurance agents so that they can provide better after sale service as it has been seen that

insurance agents are only bothered for new customers. The insurers should work towards the

development of alternate distribution channels for insurance policies. Insurance companies should try to

provide quality products, better services, clarity in terms, discloser of hidden charges if any and

minimum guarantee of the invested funds. Though insurance companies are enhancing their business

to village area but still more efforts are required to be taken to satisfy them.

Insurance company should define the equity link scheme benefits properly to the customers. It

should also clarify the policy terms and conditions to the customers. More transparency is required to be

taken in the given schemes and while making final payments to nominee. Insurance policies should be

more transparent, reduce the administration charges and minimize hidden cost as much as possible.

Government should take necessary steps regarding the awareness of insurance products in rural areas.

Apart from this as investing is all about maximizing the returns on our savings using various kinds of

financial instruments it is important to understand the investment product, its potential benefits, its

charges and risks, before investing. Thus customers should consider the following factors before

investment:

lIdentify the investment objectives,(e.g. whether it is for capital preservation or capital

growth), and investment time horizon.

86


l

aside cash savings equivalent to 3 to 6 months of his monthly income to provide for an

emergency, before he invests.

lEvaluate the risks which he can bear and his expected returns - In particular, customer

should consider whether he would be able to service his mortgage or other financial

commitments (e.g. insurance payments, saving for his child's education).

lConsider liquidity requirements - When does customer expect to withdraw his investments?

Would he need to withdraw his investments urgently? Early withdrawals may result in some

losses.

lEstimate the costs - For example, the transaction costs and any other fees and charges of the

intended investments.

lDiversify the investments - This can help to reduce the risk of being affected by any one

company, industry or region hitting hard times.

lActively manage the portfolio - While customer may not need to tend to manage every day

but they should not neglect it. Make sure he sets aside sufficient time to monitor his investments

regularly.

References

l

lDash Mihir, C. Lalremtluangi, Atwal Swimer and Thapar Supriya. 2007. A study on risk-return characteristics of life

insurance policies. Working paper http://ssrn.com/abstract=1303350.September.

lManju G., �Investors Perception towards Indian Stock Market� Journal of Banking, Information Technology and

Management. Jaipur, volume 9, no 1, January �June 2012, p85

lMøller, T., 1998. Risk minimizing hedging strategies for unit-linked life insurance contracts. ASTIN Bull. 28, 17�47.

lMøller, T., 2001. Risk minimizing hedging strategies for insurance payment processes. Finance Stochastics 5 (4),

419�446.

lSnarayanrao, M ravindran. 2003. Performance evaluation of Indian mutual funds. Working paper

http://ssrn.com/abstract=433100.

lGoel sarita and Jain S.K �Investment avenues in Financial Market� International Journal of Business Management,

Economics and Information Technology New Delhi Vol.2, Number1 January-June 2010 p 133

lSrivastava Vinay K �Depositors in Indian Capital Market� Advancement in Management, monthly journal, Indore, volume

4(5) May 2011 p5

www.licindia.in, www.sbilife.co.in, www.birlasunlife.com, www.hdfclife.com, www.avivaindia.com

Assess how much funds are available for investment- As a guide, customer should set

Carr, P., Geman, H., Madan, D., 2001. Pricing and hedging in incomplete markets. J. Finan. Econ. 62, 131�167.

This paper presents the blueprint of the good governance agenda that would enable India not only to

catch up with developed countries but also to achieve a better quality of life for its citizens. It raises various

problems of governance at the institutional level followed by a discussion on the concept of good

governance from an institutional perspective. Following these is the strategy for governance reform that

can transform existing institutions into institutions of good governance in the country. A detailed analysis

of various elements of the strategy for good governance is discussed subsequently.

Introduction

For a country to succeed it is important that the institutions must strength in terms of quality and

governance. As institutions are the vehicles for public service delivery, they need to be robust in order to

utilize public money efficiently and deliver services effectively. However, the capacities of institutions to

deliver services efficiently and effectively have eroded over a period of time so much that some consider

that the mechanism of public service delivery in India has broken down and that institutional

arrangement need to be overhauled rather than be incrementally improved. Due to the absence of an

effective system for service delivery, there is a considerable reduction in the efficiency of public service

delivery leading to avoidable wastage of public funds, even as state governments are under great fiscal

strain, saddled with unsustainable levels of debt. There is, therefore, an urgent need for reorienting the

structure and functioning of public service delivery organizations.

There are often allegations about the lack of accountability on the part of public service

organizations to deliver services effectively while those within these organizations feel constrained by

problems of being tied down by rules and accountability system checks, which constrain their freedom

to act innovatively and deliver services desired by people. There is clearly a mismatch between

accountability systems, organizational capacity and the needs of the people.

Since public service organizations in India have not kept pace with the changes in management

practices and processes in other countries, the quality of services provided by public organizations is

often perceived to be far inferior when compared with similar organizations in other countries. This

mismatch between accountability systems and the needs of the people is compounded by the lack of

effective mechanisms for the expression of the systems and the needs of the people are compounded

by the lack of effective mechanisms for the expression of the citizens' voice in the process of service

delivery. The mechanisms of giving the citizen and opportunity through voting does not seem to work

effectively as voting is very often not linked to the performance of the government.

Though most state government departments have developed citizens' charters containing

some mention of the services available to citizens and their standards, citizen's charters, by and large,

failed to develop into effective instruments of public service delivery. One of the major contributory factor

to the lack of force behind citizen's charters in their non-justifiable nature.

Then, there is an apprehension that the first generation of economic reforms, while achieving

higher rates of economic growth, bypassed large numbers of India's poor. Economic reforms are

87

*Dr. Pankaj Pandey

An Institutional Framework for Good Governance in India

*Assistant Professor, Faculty of Commerce V.S.S.D.P.G. College, Kanpur

88


perceived to have benefitted only a small section of the country's population while the majority has

remained bystanders. Even though the first generation of economic reforms have resulted in higher

rates of economic growth the rate of economic growth in India has still lagged behind countries like

China, which recorded a much higher rate of economic growth. The need of the country therefore is

faster and more inclusive economic growth, which would be very difficult to accomplish in the absence

of strong public service delivery institutions.

The Concept of Good Governance for Institutions

Good governance at an institutional level implies provision of public services effectively to meet

the needs of the citizens. As resources are always limited, it is imperative that these public services are

provided efficiently at the least possible cost. The twin objectives of efficiency and effectiveness are to

some extent counterpoised. Improving effectiveness implies providing equitable access for public

services to various sections of society and meeting the service standards of people. However, efficiency

without effectiveness and vice-versa would not lead to fulfillment of the role of public service

organizations. Some of the key elements of good governance at the institutional level are as follows:

lDefining the role of government vis-a-vis the private sector.

lResult orientation rather than output or input orientation.

lSeparation of policy, implementation and regulatory roles.

lGranting a greater degree of autonomy to public service organizations and their functionaries.

lOrganizational capacity enhancement and effective public leadership.

lResults based performance monitoring and evaluation systems.

lPutting the citizen at the center of governance.

lDeregulation, so as to make the regulatory framework focused and effective.

lEffective decentralization through devolution of functions, funds and functionaries to local

governments.

lImproving accountability through measures like performance auditing and social auditing.

lImproving transparency using the tools of e-governance.

lInformation empowerment through computerized information systems, rural newspapers and

mass media etc.

lChange management for effective institutional reform.

The Strategy for Good Governance

As it is evident that there has to be a time strategic fit between various elements in order to

achieve good governance at the institutional level to deliver services effectively to the citizen. However

focus and result orientation are the core of this strategy for good governance. In order to effectively meet

the needs of citizens and to be result oriented, service delivery institutions need a certain degree of

autonomy and a result based performance monitoring and evaluation system. Government needs to

focus on providing those services where it has comparative advantage, while decentralizing the

provision of other services to local governments and non-public sector organizations.

89


In order to ensure that decentralized and outsourced services are effectively provided to citizens,

governments have to develop new capacities for regulating these entities. In order to effectively regulate

the provision of public services, there has to be a clear separation of the policymaking, implementation

and regulatory functions of government. While ensuring that governments are able to provide public

services efficiently, it is also necessary to ensure that public services actually reach various sections of

the citizen and are in line with their expectations. in order to ensure that public services reach citizens

and meet their expectations it is necessary to have accountability and performance monitoring systems

that takes into consideration citizen's views through such contrivances as social audits and report

cards.

Elements of good governance

Citizens need to be provided with the requisite information on service delivery standards,

mechanisms for delivery of services and systems for performance monitoring of public service

organizations in order for them to contribute to public debate about the accessibility and quality of public

services, it would be possible to equip citizens with the required information by taking various steps for

ensuring transparency including the enactment and implementation of the Freedom Of Information Act

and use of various ICT tools for dissemination of information, interaction and transaction with

governments. In addition to improving effectiveness through increased transparency, ICT tools can also

contribute to an improvement of internal process efficiencies and easier citizen access to public

services.

There is apprehension in some quarters that this strategy the good governance may not be

politically acceptable. Contrary to these apprehensions similar initiatives for governance reform have

been championed by the top levels of the political executive in various countries like the USA, UK, New

Zealand, Australia and Canada. In many countries, the push towards governance reforms is the reduced

availability of public funds for providing social services, as is the case with most states of India. Since

most states of the country are constrained for funds, it would be politically prudent for them to take steps

for improving the efficiency of the governance system so that more and focused services can be

provided at lower costs. In addition to efficiency improvement the strategy of good governance, through

decentralization and outsourcing, has ingrained in itself opportunities for diversification of political risks

of failure. This strategy also provides for periodic citizen feedback to governments on their performance

so that they can effect midcourse corrections rather than be taken by surprise at the hustling.

Results Oriented Government

The institutions of governance are based on the Webereian model of bureaucracy and focus on

inputs mid outputs rather on outcome& Public organizations today are therefore concerned with internal

processes, allocations, expenditures and attainment of physical targets rather than focusing on their

impacts on the public in general. As a result of input-output orientation, very often these organizations

fail to meet the expectations of the public, while a substantial part of their resources and efforts are

wasted. Therefore, the central theme of institutional reform is to make this paradigmatic shift to focus on

results rather than on the inputs and outputs that go into the production of these results.

Performance Measurement System

Inextricably linked to results oriented approach to governance reforms is an effective

90


performance measurement system that focuses on achievement of results, assessed by an impartial

mechanism. As things stand now, allocation of resources to state government departments and

organizations is on an incremental or on a normative formula basis and bears no linkage to attainment of

results. Due to the lack of an effective performance measurement system, there is a proliferation of

inefficient programs and projects, which tend to continue forever. This situation is compounded by the

absence of bard budget constraints for allocation of resources and the system of implicit contracts

between various levels of governments mid agencies. Therefore, there is an urgent need to set up an

independent performance measurement system not only to draw the attention of public managers

towards the inefficiencies in the system but also to link the release of grants to performance.

It is absolutely necessary for the performance measurement system to focus on results rather

than on outputs. The system of result oriented performance measurement should then traverse down

the various levels of government to reach grassroots level functionaries. The performance evaluation of

all functionaries in government can thus be linked to the achievement of concrete results; Insistence on

achievement of annual work plans for performance measurement may be practically infeasible as it is

quite difficult to coordinate the work plans of functionaries at various levels and to ensure their

achievement.

An independent performance measurement system can' be set up at the state government

level to provide public managers with feedback on the extent of achievement of results at periodic

intervals during the year. At the end of the year, the Comptroller & Auditor General may call for a

performance audit, rather than a compliance audit that focuses on inputs. The results based

performance of every department of the government may be placed before the concerned legislature

annually so that there is adequate transparency on the performance of various government

departments. In order to ensure that all the programs and projects are achieving the desired results, a

five-yearly external performance evaluation would be in order.

Changes in Structure and Role of Public Organizations

Public service is often a casualty due to the lack of organizational clarity on the role to be played

by policy formulation agencies, implementing agencies and regulatory agencies. In Indian state

agencies and departments are deprived of these services due to lack of state government funds.

However, private sector involvement in the provision of social services can raise issues of information

asymmetries and principal-agent relations that can render private sector participants unaccountable to

the government machinery and the citizens.

There is also very often a feeling that privatization is the panacea for all the ills of the public

sector. This is far from true, International experience indicates that many private contracts for

outsourcing of social services very often tail, leaving public organizations as the providers of last resort.

Public organizations should therefore effectively leverage private sector thuds and capabilities without

losing their own capabilities for providing social services, when required to do so. These organizations

should also acquire effective capabilities for regulating private providers of social services. Privatization

of services also entails issues of effective redeployment of existing staff or their voluntary separation.

Many public organizations rush into privatization without acquiring adequate capabilities for effectively

structuring and managing contracts and without dealing with existing employees, which could result in

the double taxation of citizens. It is therefore vital that public organizations define their role and that of the

91


private players in order to acquire necessary capacities for monitoring the performance of private sector

contractors.

In order to make government machinery efficient, it is necessary to generate competition

between various service providers- both in the public and private sectors- so that competition

generated can bring about necessary efficiency improvements. It has been found that competition

between various service providers considerably reduces the cost of service delivery, while its quality is

expected to improve.

Decentralization

Decentralization is an effective tool for ensuring greater match of the administrative agenda with

expectations of the people. While contributing to a certain degree of efficiency improvement,

decentralization can also help nourish cutting edge level politicians and prepare them for higher-level

responsibilities in the political executive. Decentralization also helps to channelize development so as to

be in line with local priorities.

However, most of the subjects assigned for devolution in the Seventy-third and Seventy-fourth

constitutional amendments along with functionaries, have not been devolved to local bodies in many

states. Most local bodies however are caught in a low level equilibrium trap of low level of finances, which

results in low capacity and poor quality of services. These factors mutually reinforce each other to get

local bodies caught up in the low-level equilibrium trap.

Various ways of breaking out of this low level equilibrium trap are as follows and the key to

breaking out of this low level equilibrium trap is to take steps on all three fronts simultaneously:

Building organizational capabilities: Many state governments are diffident to devolve functions,

funds and functionaries to local bodies on account of the low-level of their organizational capabilities.

Without the necessary devolution of functions to local bodies, it is difficult to build up their capabilities.

Some thither ways of enhancing the organizational capabilities of local bodies include the introduction of

a fine based accounting system, setting up an effective MIS system to keep track of fund flows and their

utilization.

Improving the quality of service delivery

In order to improve the quality of services provided by local bodies, it is necessary to prescribe

the standards of services provided by local bodies to ensure betters quality of services. However there

is confusion over these roles resulting in crisscrossed administrative relations, which undermine the

efficiency of the system. There is need for separation of policymaking and implementation levels of the

government and to clarify the definition of their roles in such a manner that does not result in overlapping

jurisdiction. Such a separation not only lays down a clear policy for action but would also give greater

autonomy to implementing agencies whose service delivery would be regulated by statutory regulators.

Though India can also take this route for result attainment, there are some inherent systemic

deficiencies that constrain the utility of this approach. Among the major constraints that can render such

arrangements ineffective in India are the system of soft-budget mid the long time taken, for judicial

review of contracts in the event of disputes between the political executive and the administrative

executive on attainment of the predefined set of results. However, it would still be worthwhile to use this

arrangement to develop a system of stable tenures for achievement of results, while linking non-

92


performance to exit from public service roles.

Providing Low Cost, High Quality Citizen-centric Services

One of the major factors that are contributing to the poor quality of services is the poor financial

situation of most states in India, which have run up unsustainable levels of debt that is resulting reduction

in the proportion of development expenditure. The consequent deterioration in the quality of life of

people poses considerable political risks to incumbent governments in the states. The result oriented

governance system should therefore focus not only on the more effective delivery of public services but

also on delivering such services more cost-effectively, thereby reducing the wastage of public

resources. A good way of taking citizen needs into consideration while designing and implementing

public service systems is the participatory approach to the planning and delivery of services, as is being

practiced by the administration of Delhi. Several public organizations have entered into contracts with

non-public service providers for providing low cost, high quality and citizen-centric services. However,

the effective management of these non-public service providers requires the acquisition of new

capacities for designing and regulating the work of these agencies.

Public-private Partnerships

Well-structured public-private partnerships are an effective way of providing low cost and high

quality citizen-centric services as non-public sector organizations bring with them skills with finances

that can improve the delivery of public services. Financial constraints on state governments are so

severe that on their own states are unable to effectively manage existing functions, leave alone starting

new public services. Public-private partnerships are thus an effective vehicle for providing services to

the poor and deprived. Effective ways of ensuring the delivery of public services include such means as

social and beneficiary audits and information empowerment through starting computerized village

information centers and increasing the capacity of ground level government information systems etc.

Improving funds flow to local governments

Funds flow to local governments can be considerably improved by increasing the quantum of

fiscal devolution to local bodies; making finds transfer more predictable by capping the amount of non-

fommia devolution, increasing the quantum of untied grants to local bodies and linking funds transfers to

the performance of local bodies.

Deregulation and judicial administration

Excessive regulations increase transaction costs for citizens who avail various government

services. Therefore, regulations have to be sharp, focused and administratively efficient. However, many

regulations in the county have either outlived their utility or are in need of major overhaul. A careful

analysis of such laws should be undertaken from time to time in order to make legislation more focused

and effective. Delays in the judiciary also blunt the delivery of judicial services to the citizens. Some of the

steps that can be taken, to improve the quality of judicial administration include capping the time limits

for disposal of cases and an annual debate on the performance of the judiciary in the state legislature.

Accountability

While contemplating various steps for improving the efficiency of the governance system,

accountability has to be given its rightful place in order to ensure that well designed public services

actually reach the citizens. But an important issue that needs to be addressed is: accountability to

93


whom. There is a need to reassert the public services as a professional politically neutral, merit based

and accountable instrument for promoting good governance system and better delivery of services to

the citizens of the country.

Transparency

Transparency and accountability mutually reinforce each other in making the public service

delivery system more effective. The tools of e-governments provide a good platform for increasing the

transparency of public organizations through dissemination of information on various government

programs, processes and procedures; increased interaction with government functionaries in dealing

with various public grievances; and improved cost-effective transaction processing in the form of bill

payments, easier and foolproof access to documents like land records, etc. However, in order for the e-

governance system to be truly effective, it is necessary not only that the tools of c-governance reduce

the time and cost of interaction with citizens, but that these tools are supported by efficient internal

processes, failing which efficiency gains in providing citizen services would not be easy to achieve

Therefore, a system for ensuring transparency requires not only efficient front-end processes but also

efficient backend processes.

Information empowerment

In order to ensure accountability in providing services, citizens need to be made aware of the

standards of services that are available to them. Computerized information systems are good means for

disseminating information on government policies, programs and projects. Like Kerala, other states may

consider moving in the direction of starting computerized information center, e-governance centers in

every panchayat. As a step in this direction, states may consider phased development of e-governance

centers at the development block and village levels, other means of effective information dissemination

include strengthening public information systems at the grassroots, especially field publicity.

Role of civil society organizations

Civil society organizations play a vital watchdog role in bringing about good governance by

ensuring transparency and accountability in the government machinery by providing feedback on the

quality of services provided. These organizations also help governments in effectively delivering

outsourced social service functions. Such organizations can also help in tracking the performance of

organizations through mechanisms such as report cards on the quality of governance and delivery of

social services.

Code of Ethics for Public Servants

Public servants are an epistemic community that can commit to be bound by a code of ethics

that can help in the attainment of good governance. Elements of such a code of ethics could include:

accountability to the constitution, result oriented work, commitment to serve the citizens of India,

maintaining the highest levels of probity and efficiency, a commitment to adapt to change and to be

proactive in bringing about change.

Change Management

It is vitally important that governance reform follows a systematic process for change that would

ensure a smooth transition to a results oriented system without disrupting the provision of services to

94


citizens. Such change management initiatives need strong leaders and reform champions at the helm of

affairs. Even though this paper presents a scheme for overhauling institutions, the process of change

has to be incremental and the system should be allowed to evolve gradually to the reformed state.

Conclusion

This paper presented a strategy for the reform of public institutions that will breathe new life into

the failing health of India's institutions. This strategy will enable India's institutions to transform

themselves into institutions of good governance that will be result oriented and provide high quality and

low cost services to the citizens of India. It argues that institutions need to become performance linked,

in order to become revitalized. The push towards greater efficiency of institutions should be balanced by

the elements of effectiveness that would ensure inclusive growth and provision of services to all sections

of society. Such elements of effectiveness include those for ensuring the accountability and

transparency of institutions.

References

lRichard, N.C. (2004). A half century of development. The World Bank Conference on Development Economics.

lAzfar, O., Kahkonen, S., Lanyi, A., Meagher, P., & Rutherford, D. (1999). Decentralization, governance and public

services: The impact of institutional arrangements.

lGeorge, K. (2001). Fiscal policy rules for India? Economic & Political Weekly, March.

lOECD, (2001), Engaging citizens in policymaking: Information, consultation and public participation. Public

Management Brief No.10.

lOECD, (2002). Distributed public governance: Agencies, authorities and other autonomous bodies. Preliminary Draft.

lMittal, P.A., Kumar, M., Mohania, M.N. Nair, M.M., Batra, N., Roy, P., Saronwala, A., & Yagnik, L. (2004). A framework for

e-governance solutions. IBM Journal of Research & Development, 48 (5 & 6).

lPeter, E. (2004), Tools to support transparency in local governance, Urban Governance Toolkit Series.

lRobin, B., & Anthony, J.V. (2004). Towards a microeconomics of growth. Policy Research Paper. Washington; The

World Bank.

lShaonhua C., & Wang, Y. (2001). China's growth and poverty reduction: Recent trends between 1990 and 199.

Washington: The World Bank.

95

National Skill Development and Competitiveness in the Global Market

*Deepa Kumari

*Asst. Prof, Jagran College of Arts, Science and Commerce

�Make in India� is an international marketing campaign slogan launched by the Prime

Minister of India on 25 September 2014. The need to raise the global co education has been

identified as an important determinant of economic growth. Higher levels of educational

attainment lead to a more skilled and productive workforce, producing more efficiently a higher

standard of goods and services, which in turn forms the basis for faster economic growth and

rising living standards. The skill development initiatives support the supply of trained workers

who are adjustable dynamically to the changing demands of employment and technologies.

This policy will promote excellence and will meet the requirements of knowledge economy.

Competitiveness of the Indian manufacturing sector is imperative for the country's long term

growth. International experience shows that countries that have succeeded in linking skills

development to gains in productivity, employment and development have targeted skills

development policy towards three main objectives:

■ matching supply to current demand for skills;

■ helping workers and enterprises to adjust with the change; and

■ building and sustaining competencies for future labour market need.

Training is an important means of pursuing the overall goal of equality of opportunity and

treatment for women and men in employment and occupation. Opportunities in the labour market are

important means for women to achieve greater equality with men; and the more skilled the female

workforce is, the wider women's choices in labour markets will be, and the more likely they are to secure

equal treatment. �National Skill Development initiative will empower all individuals through improved

skills, knowledge, nationally and internationally recognized qualifications to gain access to decent

employment and ensure India's competitiveness in the global market�.

Introduction

�Make in India� is an international marketing campaign slogan launched by the Prime Minister of

India on 25 September 2014. With the aim to facilitate investment,foster innovation,enhance skill

development and protect intellectual property,the campaign aim to build a best in class infrastructure to

make India a global manufacturing hub. The goal is to create opportunities,scope and space for skill

development.New infrastructural projects have been identified like creation of new smart cities and

industrial clusters in identified industrial corridors having connectivity.New youth-focused programs and

institutions dedicated to developing specialized skills to facilitate the process of transforming India into a

manufacturing hub are also being planned. With the easing of investment caps and controls,India's high

value industrial sectors-defence,construction and railways-are now open to global participation.Policy

in Defence sector has been liberalised and FDI cap has been raised from 26 per cent to 49 per

cent.Norms are also to be eased for FDI in the Construction and Development sector.The need to raise

96


the global competitiveness of the Indian manufacturing sector is imperative for the country's long

term growth.

Manufacturers of mobile handsets are becoming the base of �Make In India� programme.

Recently, after Vivo and Shaomi companies, Geonie mobile company has also announced to

manufacture its handsets in India. For that purpose company has made contract with two mobile

handsets companies named-Dickson and Foxcon. In India, Geonie will invest around Rs. 330crores.

Education has been identified as an important determinant of economic growth. Higher levels

of educational attainment lead to a more skilled and productive workforce, producing more efficiently a

higher standard of goods and services, which in turn forms the basis for faster economic growth and

rising living standards. The skill development initiatives support the supply of trained workers who are

adjustable dynamically to the changing demands of employment and technologies. This policy will

promote excellence and will meet the requirements of knowledge economy.

Skills and knowledge are the driving forces of economic growth and social development for any

country. Countries with higher and better levels of skills adjust more effectively to the challenges and

opportunities of world of work.

The funds would be deployed more for activities than for buildings and other hard assets.

However, upgradation of machinery and equipment, teaching and learning aids will be a continuous

process. Creation of infrastructure in latest technology, needbased new initiatives, creation of

infrastructure in rural, remote and difficult areas will continue.

Objectives of Study

(1)To analyse the long-term change that challenge national skill development systems.

(2)Assessing the continued relevance and quality of training programmes.

(3)To analyse how skill development bridges the gap between employment and unemployment

(4)To find out the relation between �Make in India� and �Skill Development�.

(5) To study the impact of skill development programmes on the socio-economic life of those who

accessed training in the selected JSS (Jan Shikshan Sansthan)


Society for Education, Research and Voluntary Efforts (SERVE), Jaipur (2006) evaluated the

JSS of Farukkabad, Uttar Pradesh. It was found that, a total of 57 different trades had been chosen for

vocational education in terms of duration-wise classification, it ranged between a minimum of seven

days to the maximum of 365 days. In between there had been 60 days, 90 days and 180 days duration

courses. The coverage of females had been on the increase continuously in the years under evaluation.

Popular courses for females include Zardosi, Dress Making, Cutting and Tailoring, besides Pickles and

Purse Making, Candle Making and Beauty Culture and Health Care. Popular courses for males had been

Pashu Mitra, Zardosi and Candle Making. Perceptive response from the ample groups of beneficiaries

and instructors had revealed an overall positive image of these centres, infrastructure-wise. Further the

study observed that (1) lack of an institutional mechanism to keep a track of extrainees placement,

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including data about their employment status.

Department of Adult and Continuing Education, Sri Venkateswara University, Tirupati (2005)

conducted �Evaluation of Jan Shikshan Sansthan, Kottayam in Kerala�. It was found that there is a need

to increase the budget for these items within the overall ceiling. It was suggested that, the coverage of life

enrichment education topics in vocational courses needs special attention of the resource persons and

management. There is also a need to develop and publish or to procure reading materials relating to life

enrichment education and distribute them to the beneficiaries. The utilization of vocational skills and the

impact of programme is more among the members of self-help groups. The chances of starting self-

employment units are better in areas where gram panchayats are involved in organizing vocational

courses. In general positive impact is observed among beneficiaries. It was recommended that, the

resource persons require refresher course in their respective trades to equip them with latest skills,

trends and also orientation courses on the topics of life enrichment education

Centre for Media Studies, New Delhi (2004) evaluated the JSS of Bangalore. It was found that,

JSS has imparted vocational training in a number of courses. However, courses, which were repeated

and produced maximum number of beneficiaries, were mainly related to cutting, tailoring of different

modules including Fashion designing and computers. The selection of courses was done by the JSS

taking into account the scope of the courses in terms of engaging the beneficiaries after the training in

income generation activities and demand of the courses in the locality. However, training in the courses

related to agriculture, agriculture equipments repair, construction, sanitary fittings, automobiles which

could have been proved beneficial for the community were not imparted. Though, JSS, Bangalore has

conducted a number of courses, majority of the courses are useful mainly in urban set up. Training in

courses like sanitary fittings, construction, plumbing may also be given, which may be useful for the

community as well as the beneficiaries.

Education and Development Research Centre, Pune (2003) evaluated the JSS of Gwalior. It

was found that, agriculture extension and technology course was successfully organized for two years

with good number of participants. However, there were no other efforts for more innovative courses. No

meaningful contact was established with the agencies like Zilla Saksharata Samiti, DRDA, DIC, other

institutions or NGOs for collaborative programmes which would have benefited the Jan Shikshan

Sansthan

Skill Development Policy

International experience shows that countries that have succeeded in linking skills

development to gains in productivity, employment and development have targeted skills development

policy towards three main objectives:

■ matching supply to current demand for skills;

■ helping workers and enterprises adjust to change; and

■ building and sustaining competencies for future labour market needs.

The first objective is about the relevance and quality of training. Matching the provision of skills

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with labour market demand requires labour market information systems to generate, analyse and

disseminate reliable sectoral and occupational information, and institutions that connect employers with

training providers. It is also about equality of opportunity in access to education, training, employment

services and employment, in order that the demand for training from all sectors of society is met.

The second objective is about easing the movement of workers and enterprises from declining

or low-productivity activities and sectors into expanding and higherproductivity activities and sectors.

Learning new skills, upgrading existing ones and lifelong learning can all help workers to maintain their

employability and enterprises to adapt and remain competitive.

The third objective calls for a long-term perspective, anticipating the skills that will be needed in

the future and engendering a virtuous circle in which more and better education and training fuels

innovation, investment, technological change, economic diversification and competitiveness, and thus

job growth.

The effective utilization of skills in the workplace both depends on and contributes to conditions

conducive to innovation and enterprise development; effective labour market orientation and mediation

services; and well-informed decisions about education and training policies. Employers are important

providers of training. Young people entering the labour market acquire both technical skills and insight

into the world of work through formal and informal systems of apprenticeship, internship and other types

of workplace experience. Employers have a responsibility to provide, and employees a responsibility to

pursue, opportunities for lifelong learning, whether on the job or through training providers, to help

maintain productivity and employability in the face of change.

India's skill development

initiatives of skilling approximately 500 million people will not only benefit India but also make India the

'global manpower hub'. Among the developing countries of the world, India has the highest potential to

meet the skill gap with its large, young, English speaking population. The world shortage of skilled

manpower will stand at approximately 56.5 million by 2020 . With a target of skilling 500mn by 2020,

India can not only fulfil its own requirements but can also cater to the labour shortages in other countries

such as the U.S., France and Germany. Presently 80% of the workforce in India (both rural and urban)

does not possess any identifiable or marketable skills. Therefore, bridging this gap (through the various

skill development initiatives) could make India the global hub for skilled manpower, and also result in a

surplus of skilled manpower of approximately 47 million 2020

Prime Minister Narendra Modi's meeting with business leaders inviting them to "come and

make in India" to promote India as a manufacturing hub, the government will unveil its skill development

programme for the rural and urban poor. Skills that would be imparted are wide ranging - from creating

welders, masons, painters to training domestic nurses for elderly people or creating banking

correspondents to take care of rural banking needs.

Over the next two years, the government plans to open more than 1000 training centres across

the country and would spend about Rs. 15,000-20,000 crore.

Skill training programmes would be designed to meet demands in countries like China, US,

Japan, Russia, Germany, Middle East Countries apart from domestic demand.

.

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Roles and Responsibilities of Stake Holders:

1. Roles and responsibilities of Government (Central /State or local level)

a) Setting up priority and policy planning-statistics gathering

b) Providing regulatory framework and enabling environment for stake holders.

c) Devising financing mechanism, reward and promotional framework.

d) Capacity building of social partners.

e) Setting up of monitoring, evaluation and dissemination of information.

f) Facilitating international co-operation.

g) Setting up of a qualification framework and quality assurance mechanism.

h) Preparation of work plans to meet sector specific skill sets.

2. Roles and responsibilities of employers/industries

a) Owning Skill Development activities

b) Identification of competencies and setting up of competency standards,

c) Skill demand analysis and curriculum development.

d) Facilitating training of trainers. e) Delivery of training, monitoring and evaluation.

f) Participation in examination and certification.

g) Participation in affiliation and accreditation process

h) Sharing of work place experience, machinery and equipment.

i) Support by way of physical, financial and human resources.

j) Facilitating employment of trained graduate

3. Roles and responsibilities of trade unions:

a) Assist in developing competency standards.

b) Assist in course designing, examination and certification.

c) Raising awareness about the benefit of training, skill development plans and activities among

the workers

d) Promote skill upgradation and lifelong learning among the workers.

e) Running special skill development institutes for skill development of workers.

f) Promoting investment on skill development among the employers.

g) Facilitate improving status of VET trained graduates.

4. Roles and responsibilities of civil society organizations:

a) Raising awareness about skill development plans and activities among the public.

b) Facilitate improving status of VET trained graduates.

c) Implementing skill development programmes of the Government.

d) Assist in developing competency standards.

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e) Assist in course designing, examination and certification.

f) Promote lifelong learning among the public.

g) Promoting dignity of labour among the public.

h) Sharing experience of learning with others.

Employment and Unemployment in India

With a manpower of 1.2437 billion, it is ironic that we suffer from dearth of talent? As per recent

studies the severity of the situation can be estimated that only 10% of MBA graduates of the country are

employable and same is true for the engineering graduates where this number is as low as 17%. This

scarcity of skilled talent makes it impossible for the Talent Supply Chain to operate effectively and is an

issue which if not taken care of immediately will become uncontrollable. One can imagine the enormity of

the challenge we will face when in year 2026, 64.8% of India's population would be in the working age of

15-64 years.

Researches show that if we continue in the current pace, we would have a skill gap of 75-80%

across Industry sectors. There will be people but with skills that corporate do not require, and jobs for

which the right fit is not available. The economic impact of this vicious cycle is something one can

estimate, but the social impact of having a powerhouse of educated yet frustrated youth who are

directionless with no jobs in hand is unimaginable. Rigorous steps to tackle this challenge are thus the

need of the hour. This requires combined efforts from several stakeholders.

This phenomenon for a nation when major portion of its population is active (in the working age

15-50 years) is referred to as the stage of reaping the demographic dividend. During this phase most of

the population contributes to the country's Gross Domestic Product. It's a phase of lower dependency

ratio � that refers to the number of children or elderly dependent on each earning person. The lower the

Unemployment rate in India has increased. It is 2% in rural areas and 3% in urban India.

The unemployment rate per 1,000 population is at 27, while it was 25 two years ago. As on

January 1, 2010, the number of unemployed was 9.8 million. By January 1, 2012, it has increased to 10.8

million.

In rural areas, the unemployment rate for both male and female is almost at the same level, 2%.

But, in, urban areas, women are more unemployed than men. The rate is 5% for women and 2% for men.

These are some findings of the 68th Round Survey by the National Sample Survey Office (

NSSO), ministry of statistics and programme implementation.

The current workforce at the all-India level is 47.2 crore. More than half the population (52%) is

self-employed, while 18% work as regular wage/salaried employees and 30% as casual laborers. More

people are self-employed (56%) and work as casual laborers (35%) in rural India. In Urban India, it is the

waged/salaried (43%) who constitute a majority. They are followed by the self-employed (42%) and

casual laborers (15%).

Nearly half the population (49%) is engaged in agriculture, while 24% are working in secondary

sector and 27% in tertiary sector.

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dependency ratio -- the higher economic growth will be, all other things being equal. This extra boost to

growth is the demographic dividend.

Suggestions

Therefore to address the above challenges and reap the benefits of the demographic

opportunity, skills initiatives in India need to focus on:

a.)The �National Skills Policy� in 2009 has set a target of skilling 500million by 2022.

b.) The current skill development capacity is 3.1 million persons per annum which have to be

upgraded substantially to 12 million persons per annum.

c.) The central government should provide funding support to state government institutions to

make skills trainer a lucrative career option. This fund support shall not only allow the state

governments to retain the trainers for the schools and other institutions but also invite

participation of many more people into the training industry.

d.) Greater focus should be given to International Collaborations so that:

1. There is better Understanding of the fast changing skills demands

2. Increased FDI in Skills

3. Promoting B2B partnerships between Indian and International companies

4. Engaging Multi National Corporations to provide skills solutions that transpose the models and

practices

5. Reverse transfer the best practices from India to world.

Conclusion

Today's competitive world demands trained, certified and skilled manpower to address the

challenges of growth and converting them into opportunities. This report focuses on the existing

strategic and implementation models of Skills Development, both in India and across the world

India has one of the youngest populations in the world and a very large pool of young English-

speaking people. Therefore, it has the potential to meet the skill needs of other countries and also cater

to its own demand for skilled manpower.

Ironically, most industries in India are currently struggling with scarcity of skilled labor. Although

more than 40 million people are registered in employment exchanges, only 0.2 million get jobs.

The current education system does not focus on training young people in employable skills that

can provide them with employment opportunities. Today, a large section of India's labor force has

outdated skills. With current and expected economic growth, this challenge is going to only increase

further, since more than 75% of new job opportunities are expected to be �skill-based.

For a country to collect its full demographic dividend, it has to put enough money into education

to turn a large number of those new workers into moderately productive ones. The country's economy

has to be organized so that the available profits from a growing work force get reinvested in the

economy. Although India's demographic dividend is usually lauded as one of its strengths, this has to be

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understood with caution. Unless skilled, and provided with employment opportunities, the huge

demographic dividend that aims to propel India onto the world stage might end up being a liability rather

than an asset. The diplomas and certificates with which students graduate are usually out of sync with

the needs of the industry. As a result, industry finds it difficult to recruit adequately skilled labour and is

forced to undertake large training programs. The shortage of skilled workforce results in loss of

productivity, while training programs imply high labour costs. The National Vocational Qualification

Framework (NVQF) and National Vocational Education Qualification Framework (NVEQF) are Standards

developed by the Sector Skills Councils (SSC's) can ensure clarity of career choices, options and

acceptability of the qualifications. Skills by themselves do not automatically lead to more and better jobs.

Skills policies must be part of a broad set of policies that are conducive to high rate of growth and

investment , including investment in basic education, health care and physical infrastructure, strong

growth in good-quality employment, and respect for workers' rights. Most importantly, the �Make in

India� program represents an attitudinal shift in how India relates to investors: not as a permit-issuing

authority, but as a true business partner. Towards this, dedicated teams will guide and assist first-time

investors, from time of arrival and there will be focussed targeting of companies across sectors.

Manufacturers of mobile handsets are becoming the base of Make In India programme.

Recently, after Vivo and Shaomi companies, Geonie mobile company has also announced to

manufacture its handsets in India. For that purpose company has made contract with two mobile

handsets companies named-Dickson and Foxcon. In India, Geonie will invest around Rs.330crores.

References

lwww.india-euskills.com

llabour.nic.in

lYojana Nov.2014

lwww.oecd.org

lwheebox.com

lwww.ficci.com

lDainik Jagran Daily Newspaper (11sept 2015)

l(2001). China's growth and poverty reduction: Recent trends between 1990 and 199. Washington: The World Bank.

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