shakti publication cover · 2015-01-08 · Shakti International Journal of Management Research and...

EDITORIAL BOARD CHIEF EDITOR MANAGING EDITOR

DR. PAVAN MISHRA DR. SONIYA RAJPOOT Prof. and Group Director Lecturer

Rajeev Gandhi Management Institute, Bhopal INDIA Smart Ashok Technological Institute, Vidisha INDIA

EDITORIAL TEAM

DR. MANORAMA SAINI Reader& Head, Humanities Department

Smart Ashok Technological Institite, Vidisha, INDIA

DR.KAMRAN Asst. Professor

Pt.Jawaharlal Institute of Management Vikram University ,Ujjain , INDIA

SAMEER ELWIN BHAGIRATHI 735 Queen Street East • Toronto, Ontario

ADRIAN FARLEY Managing Director

Farley & Associates Ltd (UK Immigration Specialists)

MAHIMA AGOCHIYA Business Development, Advisor at McMaster University

Toronto , Ontario

ADVISORY BOARD

DR. ARUN K.TRIVEDI Managing Director

Global Business Development Consultant At Vorse Solutions (UK) Limited

London

DR. K.K. SAXENA Head & Professor

Deptt. of Humanities &Social Science IIT Kanpur (U.P.) INDIA

DR. NAGESHWAR RAO Professor

Pt.Jawaharlal Institute of Management Vikram University Ujjain (M.P.)

Ex-Vice Chancellor(Open University Allahabad) INDIA

DR. P.K. CHOPRA Director

VNS Institute of Management, Bhopal INDIA

DR. P.K. MISHRA Professor

C.R.I.M., Barkatullah University,Bhopal Ex-Vice Chancellor (DAVV. Indore) INDIA

DR. ZAVED AKHTAR Former Dean (Management)

Former Chairmen Dept. Business Administration, AligarhMuslim

University, Aligarh , INDIA

DR. L.P. PATERIYA Head & Professor

Deptt. of Management Studies Guru Ghasidas University INDIA

DR. Y.S.THAKUR Head & Professor

Faculty of Management Studies Dr. Harisingh Gour University,Sagar INDIA

ISSN : 2319-5444

Shakti International Journal of Management & Research & Development

(A referred Journal)

Vol-1 Issue-1 March 2013

In This Issue

IMPACT OF INFORMATION TECHNOLOGY ON HUMAN RESOURCE DEVELOPMENT

ENERGY MANAGEMENT IN BHOPAL CITY

INDIAN RETAIL REALISM : IS IT REALLY GROWING?

REPORT ON ETHICS AND BUSINESS MANAGEMENT

A LITERATURE STUDY ON TRENDS IN RETAIL

PRACTICES AND THEIR IMPACT ON TRADITIONAL RETAILING IN INDIA

FINANCIAL INCLUSION IN INDIAN SCENARIO

BALANCE OF TRADE IN INDIA

MICROINSURANCE IN INDIA

MPACT OF INTERNAL DEBT OF MADHYA PRADESH ON ITS SGDP

Prof. Rajesh Kumar Sharma

Prof ( Dr.) Pavan Mishra Prof. Shashikant Nagpure

Prof. R. K. Shukla

Payal Sharma

Arvind kumar Lariya

Bhagwan Singh Dr. Anjaney K. Pandey

Devendra Prasad Pandey Amit Kumar Katiyar

Sachin Jain

Prashant Tiwari

Govindarajan Chetty Dr. V. K. Jain

Dr. Sanjay Jain

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05

15

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45

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Managing Director Message

Dear Members, contributors and subscribers,

It's indeed a matter of great satisfaction, to persue the first issue of International Journal by Shakti Publication, " Shakti International Journal of Management Research & Development" .There are a lot of challenges which the growing economies face in the realms of basic necessities in life. Management can play a very distinct role in bringing about such changes. It is very important that different stakeholders unite and collaborate on issues which confront the society. One of the key objectives of research should be its usability and application. This journal attempts to document and spark a debate on the research focused on Management in context of emerging geographies. The sectors could range from education, energy, environment, health care , transport, shelter, manufacturing and service areas. The key focus would however be the emerging sectors and research which discusses application and usability in societal or consumer context whether individual or industrial.

I would like to thank all the editorial team members, reviewers and initial team which has helped in making this journal a possibility. We hope that the research featured here sets up many new milestones. We have had an overwhelming response from some very eminent Editors and researchers globally to support as Editorial Team. I look forward to make this Endeavour very meaningful.. I extend my congratulations and best wishes to all who have made their contributions as paper contributors and editors of this journal. Wish you all, the very best in future.

Devesh Arya Managing Director

Ret. Administrative Officer Samrat Ashok Technological Institute

(Engineering college) Vidisha (M.P.) INDIA

CHIEF EDITOR

It gives me a great pleasure to launch this journal, " Shakti International Journal of Management Research & Development" .The journal wants to accomplish lots of milestones in terms of defining and redefining paradigms to achieve excellence in the area of Management research.

There are a lot of challenges which the growing economies face in the realms of basic necessities in life. As is well known there has been tremendous increase in the field of management institutes during the past 2 decades, ever since the field was opened the private sector. But there has not been commensurate improvement in its quality resulting into Luke warm demand for the degree holders passing out of these institutes. This has led to adverse comments being made by the employers' organizations. It is high time that serious thought is given to quality aspect of management education. This is where the Management Research and Develop¬ ment may be applied towards management education to uplift it from its present position. All these experiences in strategy formulation, marketing, HR , financing in various segments of service industry . We would like to showcase the state of art research with lot of rigour and freshness in its approach. We value your support immensely and invite you to be a part of this research movement.

DR. PAVAN MISHRA CHIEF EDITOR

Prof. and Group Director Rajeev Gandhi Management Institute, Bhopal

INDIA

Shakti International Journal of Management Research and Development

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IMPACT OF INFORMATION TECHNOLOGY ON HUMAN RESOURCE DEVELOPMENT

BY Prof. Rajesh Kumar Sharma

Assistant Professor VNS Institute of Management, Bhopal (MP)

e-mail: [email protected]

ABSTRACT:

Strength of a nation is now measured based on the level of technology it possesses and with the "technovation" (technology and innovation) is the key for growth of the organization. It is the single most important factor that drives organization. Organizations are likely to sustain that are able to identify consumer preferences, predict market trends, innovate new products and produce world class product and services. In this scenario, there is a need to clearly identify new technology, modern manufacturing processes, ensure quality in production and improve skills of the employees so that they are able to adapt to new environment. By doing so organizations are expected to improve upon their knowledge management function. It is therefore essentional to understand new technology paradigm and dovetail skilled human resource in the process to achieve human factor engineering to enable quality product and services are rendered to the society. It is in the light of the above; HR functions are required to be seen to meet the impact of technology. The article examines the current trend in new technology and development of human skills in its light.

Key words: Organizations, Technology, HR Functions, Human Resource2

INTRODUCTION :

Traditionally labour, land, raw material and capital are considered to be factors of production. Capacity of a nation is judges based on how in abundance these resources were existing. But the situation has changed. Strength of a nation is now measured based on the level of technology. A nation has to keep pace with technology development and discard obsolete technology, processes and practices. Technology and innovation (technovation) is the key for growth and competence. Changes are necessary for growth. Technovation is the single most important factor that drives the organizations. Competitive advantage goes to that organization, which can absorb, apply and coordinate new technological developments. In the present environment, organization will only sustain that are able to identify consumer preferences, predict market trends, innovate new products and produce world class product and services.

SPECIAL FEATURE OF NEW TECHNOLOGY AND PROCESSES

1. RESEARCH AND DEVELOPMENT

Organisations have to meet the ever changing demands of large number of customers of variety of products and services. This is decided by study of markets, consumer perception and the market trends. Time factor plays an important role in the whole process. Organisations therefore should endeavour and identify new products and services, develop, test market, manufacture and market the same in the least possible time. Research and development therefore should cater for the following: 3

• Shorter product life cycle

• Shorter product change over cycles

• Short production runs

• Higher rate of new product development

mailto:[email protected]


2. TOTAL QUALITY CONTROL

Edward Deming Philip and Grosby have made a unique contribution to the humanity by introducing concept of total quality management. They emphasized total quality management in every organization. Quality is an organization-wide concept and not merely restricted to any particular department. It is continuous process. Organizations should insist on zero defect production. Quality and productivity integration is required to be achieved by the organization. Total quality control (TCQ) or company-wide total quality management are prerequisite for any organization to achieve growth. Management must insist and promote technological innovation. Fear of mistakes by the subordinates should be removed and failures encouraged, that is how people will generate new ideas, product, services and predict human needs. All employees must be made quality conscious.

3. KNOWLEDGE MANAGEMENT

Organisations consider knowledge as strategic resource. They believe that wide spectrum of knowledge is necessary for decision making. Due to computerization, organizations can store volumes of knowledge that can be retrieved as and when required. Tacit knowledge is important. Organizational policies must promote retention of old employees so that the tacit knowledge is not 4 lost due to individual leaving the organization. Knowledge management cycle i.e. procurement, synthesis, interpretation, dissemination and creating new knowledge should be continuous.

4. TECHNOLOGY BASED SKILLS

Greater shift to a new techno-economic paradigm based on new set of concepts of quality, responsiveness, speed of market, flexibility and efficiency in service are the corner stones of new technology. Greater emphasis on creativity and innovations, competitive strategy based on technology and training of employees in multiple work skills, participation and ability of employees to take greater responsibility. Emphasis is laid on the following points.

• Computer aided designs (CAD).

• Computer aided manufacturing (CAM).

• Increased use of decision support systems (DSS).

• Technological changes in information handling and office automation.

CURRENT TRENDS IN INDUSTRY AND BUSINESS

Globalisation has led to transnational strategic alliances between firms. Knowledge intensive nature of production has led to automation and lesser human participation. Changing customer demands have led to more customized products and services leading segmented production and markets having divided in penny packets. The following trends have been noticed.

1. Faster product renewal to meet the ever changing demands.

2. Access to state of the art technology has led to lower usage of traditional material, reduced use

of resource-based inputs as various synthetic substitutes having been developed.

3. Higher expectations of stake-holders.

4. Transnational strategic alliances. 5

5. The trend has led to work being undertaken by cross-functional teams leading to lack of cultural formation and continued cohesion among the team members.

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IMPACT OF TECHNOLOGY ON HUMAN RESOURCE

The basic objective of ergonomics is to properly balance the anatomical, physiological, perceptual and information processing capabilities and limitation of human operators against the requirements of tasks, equipment, tools and machines in work situations. Ergonomics or human factor engineering is concerned with achieving the best fit between human skills and technology. It utilizes results and insights from psychology, anatomy and physiology with that of machines and tools to achieve optimum output. It focuses on the scientific study of human capabilities, (IQ & EQ) to work performance. While doing so, it takes into considerations the environmental severities like heat, fumes, vibrations, toxic substances and fatigue to human mind and body. Technology is a systematic application of organized knowledge to practical tasks. In recent days technology has been developed beyond anybody's comprehension. Technology has led to reduces distances, explore universe, map any place on the earth, explore genetical issues and produce product and services that give leisure to human beings. The effect of technology on human resources is as under:

1. Jobs have been upgraded hence an enhance level of intellect is now required to handle most of the jobs hitter to handled by unskilled or semi-skilled labour.

2. Highly technical jobs have resulted in displacement of people unless they have kept pace with the technological development.

3. For those employees, who pick up and acquaint themselves with new technology, the job will be challenging and rewarding. Working class, in general, stands to gain through increased productivity, reduced prices an increased real wages - all by product of new technology.

4. Technology has attributed development and promotion of human relations. Introduction of team work, quality control teams are outcome of technology-human interface. 6

5. Job holders have become highly knowledgeable and hard core professionals. Organizations have become "techno-structure" having ideal combination of scientists, technocrats and management specialists.

FUTURE CHALLENGES

1. Governance: Achieving legitimacy for dispersion of power, decision making and accountability.

2. Employment: Satisfying social needs for job creation and employee demands for secure and challenging employment.

3. Environment: Integrating restorative economics and sustainable development into the main stream of corporate competitive strategy.

4. Infrastructure Development: Building and maintaining physical and social infrastructure necessary for social and corporate success.

5. Public-Private Sector Roles: Working together to achieve a viable synergy for growth.

CONCLUSION

Globalised environment, technology based short product cycles, market growth has led organizations to tailor human resource management functions. Organizations have to review external and internal environment continuously and implement change. This is required to be growth oriented and competitive. Those organization cannot survive that do not keep human resources fully trained and management cadre developed.


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REFERENCE

1. Bhatia S.K., "New Compensation Management in Changing Environment" Deep & Deep Publication, (P) Ltd., New Delhi, 2006.

2. Kondalkar V.G., "Organisation Behaviour", New Age International Publishers, New Delhi, First Revised Edition, 2008.

3. P.N. Rastogi, "Management of Technology and Innovation", competing, through technological excellence, Sage Publications, New Delhi, First Edition, 1995.


ENERGY MANAGEMENT IN BHOPAL CITY

BY

Prof ( Dr.) Pavan Mishra Director

Rajeev Gandhi Management Institute, Bhopal

Prof. Shashikant Nagpure HOD

Deptt Of Mechanical Girdhar College Of Management

Mandideep,Bhopal

Prof. R. K. Shukla HOD

Girdhar College Of Engineering Mandideep,Bhopal

Abstract

In this paper, an attempt is made to prepare an energy management model for Bhopal city along with policy recommendations for optimal energy utilization and management. At the outset, the authors have reviewed the related literature on energy management in the urban system. The entire work is divided into the following sections, such as, energy resource assessment, energy and economy, energy and transportation, forecasting the energy demand and supply, alternate energy sources and technologies, energy conservation and demand-side management and energy management measures in India, and are reviewed thoroughly and presented. Subsequently, an attempt is made to establish the importance of energy in urban development by using Systems concept. Bhopal city has been chosen for investigation in this study. A detailed methodology is developed for organizing the survey at the grassroots level to evolve feasible strategies for optimal energy management in the study area. An attempt is further made to assess the available energy resource in the city, and the energy consumption by source wise in the city and estimating the energy gap in the year 2011. The paper concludes with preparation of a detailed energy management.

Key words: Energy, Resource Assessment, Economy, Organizations, Management Article Outline

1. Introduction

2. Literature review

2.1. Energy consumption

2.2. Energy and environment

2.3. Energy and transportation.

2.4.Energy demand analysis and forecasting

2.5. Alternate energy sources and technologies

3. Energy management in Bhopal city

3.1. Study area profile

3.2. Methodology

3.3. Assessment of available energy resources

3.4. Assessment of energy consumption pattern

3.4.1. Domestic sector

3.4.2. Traffic and transportation profile of Bhopal city

3.5. Forecasting the demand and supply of energy

3.6. Optimal energy management in Bhopal city

3.7. Energy management model at city level

4. Conclusions

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1. Introduction

Man's history is a living testimony to his growth from a mere medium-sized mammal to his present position as the earth's dominant species by harnessing and manipulating energy at each and every stage of his evolution. His increasing dependence on energy is an unrealized truth. It is one of basic necessities of life; required both as a means of production and to enhance the quality of life. In fact, a country's Gross Domestic Product is a direct reflection of the central role of energy as an input.

There is an increasing realization of the deep impact of energy on the economy and environment. It has been observed that even international relations among various economies (developed and developing) are being governed by energy factor. The formation of various groups having similar energy consumption and economic development highlights this further. Energy statistics across the globe reveal a startling variation across different regions. A wide disparity is observed with regard to energy consumption and economic development. In fact, the richest 20 per cent of the world's population use 55 per cent of the total final energy, the remaining (80 per cent) of the global population using only the rest 45 per cent of final energy. Even across a nation, there are varied energy consumption pattern in various zones. The economically prosperous states of Gujarat, Punjab, Maharashtra, etc., show a high-energy consumption pattern

An attempt has been made in this paper to study the energy-consumption pattern and available energy resources in a Bhopal city. Data has been collected from secondary and primary sources. Primary survey has been done to estimate the consumption pattern of various forms of energy in the domestic sector.

2. Literature review

Literature review—one of the important aspects of a research study gives the necessary latest information pertaining to the various related issues, concerns and the latest developments at global level taken to solve the given problem(s) in different contexts. A number of publications, books, journals, technical papers, seminar proceedings, newsletter, unpublished project reports, Ph.D thesis, M.E. dissertation, etc., have been studied to understand the energy sector in urban context. The study has been dealt with under two sections as follows.

2.1. Energy consumption

Man's dependence on commercial/non-commercial energy is increasing day by day with increasing urbanization and population growth. World primary energy consumption increased by 2.7 per cent in 2005, against a strong growth of 4.4 per cent in 2004. Growth slowed from 2004 in every region and for every fuel. The strongest increase in energy consumption was again observed in the Asia Pacific region, which rose by 5.8 per cent, while North America once more recorded the weakest growth, at 0.3 per cent whereas

China accounted for more than half of global energy consumption growth . In India, industrial sector consumes about half of the total final commercial energy, followed by transport sector. The energy intensity in all the sectors is very high as compared to the developed economies. Energy consumption pattern in the residential sector varies widely not only among the rural and urban areas, but also across various income classes. The heterogeneity of the social fabric and disparity in lifestyles result in a wide range in the standards of living and ways of satisfying energy requirements.

2.2. Energy and environment

Energy has strong socio-economic and environmental linkages. Most of the environmental problems that confront mankind today are connected to the use of energy in one-way or another. There is a discernible human influence on global climate .The human benefits of energy production, supply and consumption frequently have an environmental downside that may in turn affect human health and quality of life. These ill effects related to increased energy use have risen considerably with increasing energy demand in recent decades. Some of the problems accompanying energy supply include soil, water, air, noise pollution, ozone

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depletion, greenhouse gas effects, risks of nuclear energy use, genetic disorders, large-scale destruction of landscapes due to the extraction of fossil-fuels, maritime pollution, ecological consequences of hydropower projects leading to massive interference with ecosystems, catastrophic accidents like Chernobyl, etc. Energy development and environment therefore, need to be integrated and not seen as adversaries to find a way towards sustainable energy development.

2.3. Energy and transportation

Two salient features highlighting the modern civilization are the ever-growing magnets of urbanization and industrialization. Urban centers are attractive magnets for the surrounding areas due to ample employment opportunities, better infrastructure, educational facilities, etc. An efficient transport network becomes an inevitable necessity and it becomes one of the biggest challenges to the Authorities of the urban systems. Bigger the level of urbanization and economy, greater is the challenge. Transport does play a significant role in the over all development of a nation's economy. However, this sector also accounts for substantial and growing proportion of air pollution in cities. This sector is a major consumer of petroleum fuels. Almost half of the total consumption of petroleum products in India is attributed to the transport sector mostly in the form of gasoline and high-speed diesel.

Transport demand can be classified under three broad categories depending on the lead distances, namely urban and suburban transport, regional and national transport, and international transport. The first two categories are more important with regard to energy consumption and environmental impacts. Factors like absence of good transport system, failure of railways to meet the increasing freight and passenger travel demand and increased mobility has led to increasing pressure on personalized transport (which is many times more energy intensive besides the extra environmental costs). Supply security, congestion and substantial air pollution in urban areas calls for an urgent need to make the transport policy sustainable and energy efficient. Various case studies done in the metropolitan cities in India suggest this dire requirement.

2.4. Energy demand analysis and forecasting

A reasonable knowledge of present and past energy consumption and future demand are primary requirements for energy planning. An accurate energy demand forecasts is primarily required to enable timely, reasonable and reliable availability of energy supplies to ensure proper functioning of the economy. Errors in demand projections lead to shortages of energy, which may have serious repercussions on economic growth, and development of a nation.

Demand forecasts can be made either on the basis of statistical evaluation and projections of past consumption or on the basis of specific micro studies. Energy demand models are used to aid planners and policy makers in evaluating past experiences, studying the impact of future policies and forecasting demand for planning purposes.

2.5. Alternate energy sources and technologies

A renewed interest is being paid to alternate energy sources and technologies across the globe with increasing pressure on the conventional sources of energy. Nonconventional/renewable energy technologies have a role to play in socio-economic development and It is necessary to use Renewable energy technologies for two reasons:

• Inability of conventional systems to meet the growing energy demands in an equitable and sustainable manner; and

• Large-scale adverse impacts of conventional energy production and consumption on the physical and human environment.

India is the only country in the world with an independent ministry, Ministry of Nonconventional Energy Sources (MNES) established in 1992, for the promotion of renewable energy technologies.

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The key issues facing renewable energy technologies depend on their level of technological maturity and the kind of market they face. Key issues in the sector are found to be related to high initial cost of Renewable energy technologies, pricing of conventional energy, lack of indigenous R&D demonstration, lack of public awareness, lack of requisite infrastructure, etc.

3. Energy management in Bhopal city

With this knowledge, we have attempted to study the energy consumption, demand pattern for Bhopal city as a case study, using primary and secondary sources of data, estimating the shortages in the year 2011 A.D. and giving recommendations and policy guidelines to be adopted for the energy management in the study area.

3.1. Study area profile

Bhopal city, the capital of Madhya Pradesh State is the urban system taken for this investigation Bhopal , Capital of Madhya Pradesh which the area under the Municipal Corporation limits is 285 km2. The total population of the city grew from 10.62 lakh in 1991 to 14.33 lakh in 2001. The Population Density of Bhopal 15 person per hours (PPH). The city, being a capital city, is an administrative center commanding and influencing a vast region. It is an important educational and commercial center with negligible industries.

3.2. Methodology

Random sampling technique has been adopted to carry out the required primary survey in the study area. The area coming under the jurisdiction of Municipal Corporation has been considered for investigation. For the purpose of having good development administration, the municipal area is divided into six administrative zones and 56 wards. The Investigators have studied carefully the zonal administrative boundaries and the ward boundaries to have equal representation in the survey among different socio-economic groups. Further, four zones are selected purposely since the other two zones are almost identical to selected zones and is presented . These all selected zones have good number of wards, of which 20 wards are chosen by employing random sampling technique, which represent all selected four zones. Further, 100 households were chosen from all the selected wards by employing random sampling techniques to conduct the survey and the method employed for selecting the households is presented .The surveyed houses have been classified into various income groups with annual income less than Rs. 60,000, Rs. 60,000-1,20,000, Rs. 1,20,000-2,00,000 and greater than Rs 2,00,000 per annum. An attempt has been made to achieve an exact representation of various groups as they actually exist.

3.3. Assessment of available energy resources

The primary requirement for preparation of an optimal energy management plan of a city is to rightly assess the availability of energy resources in the existing system. This includes the conventional supply of energy in the existing system as well as the potential sources (explored and unexplored) which can be used to augment the energy supply. Based on the existing supply, estimates can be made about the gap between energy demand and supply in the future.

Energy use at the local level is classified into fuel wood, charcoal, coal, petroleum products, and electricity. These types of energy are transported and distributed by various agencies (Central government agencies, State government agencies, private contractors, etc.) for using the same in domestic, commercial, industrial and transport sectors. Owing to the great difficulties in getting data for bio-fuels (firewood, chips, charcoal, etc., for which market is highly unorganized) and kerosene consumption, they have not been considered for assessment in the given investigation. The following section deals with assessment of current and potential energy sources for Bhopal city:

(1) Electricity: The authority responsible for supplying electricity to the city is Madhya Pradesh State Electricity Board ( M P S E B ) . The requirement of electricity in the city is not very high as the city lacks industrial base. The

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Table 1

Electricity consumption (MU) pattern in Bhopal city

Sl. No. Sector 2000-2001 2002-2003 2004-2005 2006-2007

1 Commercial 230 298 384 484

2 Domestic 862 998 899

3 Small/medium industries 45 46 66 49

4 Large and heavy industries 98 117 128 113

5 Public tubewells 97 106 66 101

6 Street light 38 40 29 41

7 Jal Sansthan 61 60 60 63

8 State tubewells and pump canals 14 15 15 15

9 World Bank tubewell 4 4 4 4

Total 1449 1252 1368 1520

Percentage increase in electricity 101.0 9.3 11.1

consumption —

Source: Bhopal Electricity Supply Authority (LESA), Bhopal.

The table clearly illustrates that domestic sector is the biggest consumer of electricity in the city, followed by the commercial sector. The low electricity consumption in industrial sector is a clear representative of the non-industrial nature of the city.

(2) Petrol and diesel: The city is supplied with petrol 144000 kiloliter/year and diesel 126000 kiloliter from the various petrol pumps of the city. The demand for petrol and diesel has been found to be increasing at the rate of 6 and 10 per cent per annum, respectively.

3.4. Assessment of energy consumption pattern

A typical Indian urban system is a heterogeneous mix of varying energy consumption pattern amongst various sections of society and in different sectors. Greater is the size of urban center; greater is its energy requirement. Even among the urban centers of same size and population, great variations are found with regard to energy consumption. A number of factors are responsible for this, such as, urban form, type of transport system and management, modern technology penetration and adoption, price of fuels, economic base, economic status of people, lifestyle, awareness regarding energy-environment linkages, etc. Domestic and transport sectors are considered to be two great energy consumers and have been considered to study the energy consumption pattern in this investigation.

3.4.1. Domestic sector

The energy consumption pattern and the sources of energy are varying and it is directly related to income, living standard and various other factors, which helped in arriving at plausible recommendations in the later part of the study.

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year wise electricity consumption in the city is presented.


• Number of households and population distribution: In the present study, 100 households have been surveyed from different parts of the city. The surveyed schedules are classified into four groups on the basis of their income, and the results are presented.

Table-2 : Number of households in the sample survey in Bhopal (income in Rs/year)

Sl. no. Income Total no. of

households

Percentage Population %age Household

size

1 < 60,000 21 21.0 127 27.5 6.05

2 60,000-1.2 lacs 27 27.0 102 22.0 3.78

3 1.2-2 lacs 27 27.0 115 24.4 4.25

4 > 2 lacs 25 25.0 118 25.6 4.72

Total 100 100.0 462 100.0

Source: Field survey conducted by the Investigators in Bhopal.

• Vehicular distribution: Bhopal, though a capital state lacks a good public transportation system. The people, therefore, prefer to use personal vehicles. The distribution of vehicles in different income groups of the sample household is presented. It shows a high percentage of two-wheelers. The ownership of vehicles shows an increasing trend along with increase in income. The higher income groups prefer four-wheelers for going to work place and nearby towns, whereas for market they prefer using two-wheelers. The lower income group people are more dependent on two-wheelers and public transportation.

• Consumption pattern of electricity: Electricity is one of the most widely used commercial energy in the urban system. It is available in refined form, and hence it is very easy to use, as compared to other energy resources. More electrical energy-based appliances are being used with technology improvement. Consumption pattern of electricity at household level has been studied carefully and presented . The table illustrates that the per capita electricity consumption is increasing along with the increase in income, highlighting the strong link between electricity consumption and income.

Table. 3

Consumption pattern of electricity in the sample survey in Bhopal in

the year 2001 (income in Rs/year)

Sl. no. Income Qty. of electricity used Percentage Per capita

(units/month) consumption

(units/month)

1 < 60,000 1155 4.9 9.09

2 60,000-1.2 lacs 5960 25.8 58.43

3 1.2-2 lacs 7175 30.9 62.39

4 >2 lacs 8900 38.4 75.42

Total 23,190 100.0

Source: Field survey conducted by the Investigators in Bhopal in 2001.

• Consumption pattern of petrol and diesel: Bhopal city has radial pattern. The work nodes are centered so people have to come from far off places to these central nodes. Petrol consumption is high in this sector while diesel use is less as presented . The table indicates the lack of a strong public transport system and high ownership and usage of personalized vehicles by the high-income group people in the system.

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Table . 4 Consumption pattern of petrol and diesel in the sample survey in

Bhopal in the year 2001 (income in Rs/year)

Sl. Income Consumption Percen Per capita Consumption Percen Per capita

of petrol/ tage consumption of diesel/ tage consumption

month (litres) (liters/month) month (litres) (liters/month)

1 < 60,000 80 3.3 0.63 0 0 0

2 60,000-1.2 560 23.3 5.49 0 0 0

lacs

3 1.2-2 lacs 852 35.5 7.41 64 64 0.56

4 >2 lacs 908 37.9 7.69 0 0 0

Total 2400 100 64 100

Source: Field survey conducted by the Investigators in Bhopal in 2001.

3.4.2. Traffic and transportation profile of Bhopal city

Energy and transportation have strong linkages. A detailed study has therefore, been considered in this study. The salient features of the study pertaining to transportation can be enlisted as follows:

(i) Roads

• Transport modes and growth of vehicles

Main public modes: city bus, tempo, cycle rickshaw, carts.

Predominance of slow moving vehicles nearly 70 percent.

Share of public slow mode is higher than the public fast mode.

Most of the existing road bridges are overloaded.

Main junctions/intersections within the city overloaded.

Lack of parking facilities.

Lack of proper control and traffic management measures.

Being a capital city and center stage of politics, a lot of rallies and processions carried out by various political parties take place in the central core area creating acute traffic chaos.

3.5. Forecasting the demand and supply of energy

Having knowledge of the potential demand for various fuels and energy types and the then prevalent supply of energy, if the conditions remain unchanged, is quintessential for any policy preparation. Owing to the rapid rate of change due to various factors, the forecasting has been done only for a short period, year 2001-2011.

• Population: The forecasted population in the year 2011 will be 18.20lakh and the total increase in population will be 3.87lakh.

• Electricity, petrol, diesel and LPG: The estimated requirements and shortfall of electricity, petrol, diesel and LPG are presented.

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Table . 5

Estimated requirement and shortfall of electricity, petrol and diesel in 2011

Sl. Energy Unit Req in Req in Estimated Assumed average growth

no. type 2001 2011 shortfall rate per capita per annum

in 2011 for projections (%)

1 Electricity MWh 1,403,307 4,258,980 3,359,889 10

2 Petrol KL 84,886 257,730 185,975 6

3 Diesel KL 136,831 354,904 218,073 10

Source: Calculated by the Investigators based on discussion in the text.

3.6. Optimal energy management in Bhopal city

In the light of the studies taken in detail for domestic and transport sectors, the two major consumers of energy, a plausible set of policy guidelines has been proposed for feasible and workable management of energy in Bhopal city. The recommendations can be put under three broad categories viz.,

(i) Methods of supply augmentation.

(ii) Energy efficiency and conservation measures/ DSM.

(iii) Policy measures to be taken by the Government Authorities.

4.6.1. Methods of supply augmentation

This section primarily deals with augmentation of electricity supply through nonconventional technologies and innovative methods.

• Promotion of market development and infrastructure development for propagation of renewable energy technologies

The city has a nodal agency for renewable energy called, Non-conventional Energy Development Agency (NEDA). Inspite of this, the household survey reveals that the market penetration of these renewable energy technologies is very poor. The barriers to the commercialization of Renewable Energy Technologies like lack of user confidence, information dissemination, unreliable after-sales service, lack of credit infrastructure, poorly developed markets, etc. need to be removed.

Solar photovoltaic and solar thermal have a good potential in the area and the technologies should be made more popular. To improve market penetration, subsidy should be directed for promoting market development and infrastructure development at the local level.

• Transport sector

Transportation sector accounts for major part of the city's fossil fuel consumption. The energy consumption in this sector is found to be increasing at the rate of 10 per cent per annum and this demand is bound to increase in future. Given the increasing energy crunch, there is an urgent need for introducing energy-efficiency and energy-conservation measures in this sector. There are five principal ways to influence transport systems efficiency and reduce energy consumption, as discussed under:

(i) Urban land-use planning

Urban land-use planning can optimize transportation activity by allowing public transportation to lay a substantial role. This is a long-term measure.

Bhopal is following a concentric model of growth There are few major nodes occupying the central part of the city. Everybody has to commute from far-off places to these central nodes. The problem being further compounded by the absence of an efficient mass transportation system. If the present system prevails,

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very soon citizens will be wasting 50 per cent of their working time on streets negotiating to reach their destinations. Thus, the restructuring of urban pattern is a necessity to make the city compatible for the operation of an efficient mass transport system.

(i) Modal mix

The differences in specific energy consumption per passenger-km for the different modes of motorized travel clearly indicate that the car and two-wheeler consume about two to three times more quantity of energy on a direct and indirect basis than the collective land transport modes. The efficiency potential thus makes it very clear that public transport need to be given patronage. Efficient use of intermediate public transport combined with mass transportation system will reduce the use of private vehicles.

(ii) Behavioral and operational aspects

These are mainly non-technical and non-vehicle-related influences on the actual consumption of a vehicle, such as, driving behavior, road conditions and traffic flow. Making the driver visually aware of the excessive fuel consumption, in particular, can correlate driving behavior. Increasing congestion, however, diminishes possible gains in vehicle fuel efficiency (whatever little is there).

(iii) Traffic management

To achieve a sustainable and energy-efficient urban transport, the traffic management has to be made effective. Some of the recommendations in this regard for Bhopal city can be as follows:

• To distribute the traffic volume on main corridors, it is suggested the timings of offices, schools, financial institutions, and commercial establishments should be segregated.

• Terminal facilities for public transport to be planned at outer cordon areas.

• The existing parking facility on all major roads and commercial areas is highly inefficient. An in-depth study need to be done in this regard and accordingly, a holistic plan need to be made and implemented to increase the parking facility in major areas.

• The existing public transport system and intermediate transport system is very inefficient and time consuming. There are no well-designed terminals and the buses stop anywhere. People, especially those using two-wheelers are willing to use public transport if the latter is made efficient.

• The outer ring road provides a bypass to through traffic between major and National and State highways and, if completed can greatly reduce the congestion in the core area. This will also reduce the energy consumption to a considerable extent. The project therefore, need to be completed on a priority basis.

3.6.3. Policy measures to be taken by the government authorities

Some of the broad measures to be taken by the Authorities are as follows:

• The electricity pricing structure should be re-shapened. The subsidies from residential and agriculture sectors need to be removed, as it often results in apathy on the part of endusers with regard to energy conservation. Incentives can be given to big establishments and large consumers to invest in energy efficient measures.

• Metering system underwent a change with the introduction of electronic meters in the city. However, meter tampering has often been reported. Theft rates are quite high in the city. Metering should be done at all the feeder lines.

• Various building codes with focus on energy-efficient and cost-effective buildings need to be introduced by the Development Authority.

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3.7. Energy management model at city level

An energy management model has been proposed at city level. This can be applied for other cities as well. The formation of a managing body has been proposed. The body will have all the necessary information— the overall energy scenario—with regard to production, supply, present requirements and future requirements of the city. A database has also been proposed for this, as it will act as a useful tool for the managing body. The structure of the body is presented .

• At the highest level of the body, there will be a Chief Managing Director. He will monitor the functions of the body and will keep a track on various activities of the body.

• The body will be divided into three sections, each headed by a Deputy Chief Managing Director:

(A) Electricity;

(B) Petroleum products;

(C) Renewable energy technologies (RETs)/Non-conventional methods.

In the proposed model, the administration will have the knowledge about the demand and supply of energy by product wise, in different sectors and from different sources. In case the quantity of energy requirement is very high in a particular season, it will be communicated to the respective DSM departments by the field officers. The respective departments Managing Directors will report the matter to the respective Deputy Chief Managing Directors, who in turn will report to the Chief Managing Director. In the model, the Managing Directors are empowered to take necessary timely action to solve the problem and to keep transparency in the system the field officers can directly meet the Chief Managing Director, if required. In case of higher demand and lesser supply, the Chief Managing Director will in turn request the production system at State and National levels for augmenting/diverting the supply. He will also look at the possibility of supplying the increased demand through the RET section at local level. All the Managing Directors will have meeting with the respective Deputy Chief Managing Director, and the Deputy Chief Managing Directors will have meeting with the Chief Managing Director for making policies and their implementation. A detailed database shall be maintained by each section, which will be regularly monitored for policy appraisal and necessary action. The proposed model, if implemented, will pave the way for efficient energy management at city level.

4. Conclusions

The modern world of globalization and urbanization is ruled by energy equations. It is undoubtedly, one of the basic necessities of life. The condensed literature study review of the various linkages highlights this paramount role of energy. A study of various energy management measures taken in the country, show a lacuna at micro-level. An attempt has, thereafter, been made to assess available energy sources and prevailing energy consumption pattern in the domestic sector and transport sector of Bhopal city. Having taken a detailed investigation of the prevalent energy consumption trends, the paper concludes with the policy guidelines and recommendations to be adopted to meet the energy challenge presented by year 2011. Methods have been suggested for taking supply augmentation measures as well as demand-side management measures. The model presented, if implemented by the proposed administration promises to encourage energy savings and make optimum utilization of the available energy resources in the city.

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15

INDIAN RETAIL REALISM : IS IT REALLY GROWING?

BY PAYAL SHARMA

Lecturer Mahakal Institue of Management-Ujjain (M.P.)

E-mail- [email protected] Mobile No- 09300550535

ABSTRACT

Indian retail business values at around US$ 550 billion as of now and about four per cent of it accounts for the organized sector. A report by Boston Consulting Group (BCG) has revealed that the country's organized retail is estimated at US$ 28 billion with around 7 per cent penetration. It is projected to become a US$ 260 billion business over the next decade with around 21 per cent penetration.

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually.10

In this paper main focus on the reality facts of retail industry in India like: is Indian retail industry is growing according to researcher expectation or just an artificial boom? What are the reasons or challenges behind unhurried growth in this industry after knowing the existing opportunities? Why other country are interested to enter into the Indian market. Suggestions for the retailer to clutch the opportunity and lastly conclusion will drown.

Key Words: Retail, Retailers, Challenges, Foreign Direct Investment. INDIAN RETAIL REALISM: IS IT REALLY GROWING?

INTRODUCTION

Retail industry is the one of the largest private sector in the world which contributes to 8% of the GDP and provide employment to the on sixth of the labor force. The projected retail trade is expected to be approx 7 trillion US $. The Indian retail evaluation was started with the barter system and grown slow with the Mella's, Kirana store known as unorganized sector. In other side organized retail came in existence in India with the commence of "First Malls" in 1999. The start of Ansal's plaza in Delhi and Crossroads in Mumbai, this stores lightened the sudden increase of organized retails in India. Even renowned news journals have reported that "merely three shopping malls" existed till 2002 in India.

However, if one were to define shopping centre's or malls as enclosed shopping spaces, then Mumbai's Crawford Market (opened in 1869) and Kolkata's New Market (1874) surely have the pride of place as the pioneering malls in India. Delhi's Connaught Place (opened in 1931) should also definitely be considered, with its covered arcades. Recently, New Delhi's partially underground Palika Bazaar, the mini-malls of the late 1980s on Bangalore's Brigade Road, and shopping centers built by private developers in Ahmadabad and other cities have all had a role to play in the evolution of organized retail spaces in the country. So, it would be accurate to view the most recent offspring of a long lineage or organized shopping centers.

In India there are major three types of retail or available traditional, established and emerging formats.



Figure: 1

Major Retail Formats

Traditional Format Established Formats Emerging Format

Salesman Kirana stores Exclusive Retail Outlet

Haats Convenience/Departmental Store Hypermarket

Mandies Pan/Beedi Shop International Retailer Malls/Special Malls

Company/Multi Brand Malls/Special Malls Multiplexes

store Company/Multi Brand Store

As far as Indian context retail industry contributes 14% of our GDP and the second largest industry next to agriculture which provide employment to good number of persons. Now according to a survey, India is classified in to the fifth most attractive retail destination and second among the countries in Asia. Worldwide it is ranked as fifth most attractive retail destination.

1. LITERATURE REVIEW

Sonia (2010), author has mainly covered the growth rate in the retail sector as well as current trends, planning, key strategies adopted by the retail store. She wants to explore the ethical beliefs and practice of retail industry in India. She is suggested the methods to support sales people how to deal with new condition in the retail marketing to satisfy customer and as well as increase self satisfaction in retail jobs.

Mohan Guruswamy et al (2011), author investigated the impact of FDI in retail sector in India, they have analyzed the facts related to FDI and found that it will created bad economy in India. They were found that retail sector is facing financial problem in India and suggested that RBI is need to provide proper fund to the unorganized retails to grow there business as organized. They are also suggested that Indian government has to enter through national commission to create policy to hake it the FDI problem in retails.

R. N. Wakchaure (2011), in this paper author has analyzed the positive aspects retailed to new job opportunity if FDI will enter into in Indian retail sector. Because the retails sector is the second largest source for employment in India, if it will grow than job opportunities also grow equally but another important aspect discussed by the research is that, if FDI will enter into the retail sectors which is the organized retails, what will going to happened with the unorganized retails and there family business. He has find out that FDI will create new jobs opportunities for the young generation, so government should be liberalize with the FDI in retail.

Santosh Kumar Yadav (2010), this paper is covering the current trends, strategies, opportunities, challenges of the retail sector, it also investigating the consumer knowledge for the brands awareness in different social economic segments in India and the growth of retail in urban and semi urban retail markets.

Chirag B.Rathod (2006), this paper is covering the emerging patterns in Indian retail industry and comparing present to its past trends , its growth patterns and the challenges faced by the Indian retail industry. The find that the retail industry is growing rapidly many giant business enterprises are planning to enter into the retail sector, even foreign companies are also interested to invest in Indian retail sector. Its have huge scope for new investors as well as existing companies both. Retail sector is the best method of 100% utilization of promotional tools.

India Report (2010), in this report research has been conduct to understand the retailer problem. Mainly retail respondents interviewed to understand the reason of late line up in retail sector as compare to other sectors. Research found that the although organized retail sector have only 6% market share potential but the growth rate is speedy, sudden growth 0% to 6% so it's a good sign for the future growth in retail sector.

Ketan Dewan (2010), article mainly focusing on the challenge facing by the Indian retail industry. In his article he is providing the strategies which should be adopted to face challenges by the retailers Like : proper promotional techniques , interaction and engagement with consumers at store level and also serve

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after sales services to the customers.

Kamaljit Anand (2010), his article on the best use of promotional tools for maximizing the retails industry efficiency. He suggested that if retailer will optimize the right use of sales promotion in FMCG sector they can easy grow there market share. He is also suggested that campaign and customer relation management will also increase best way to handle the challenges and expand the market.

Mathew Joseph (2008), this study is survey of the economy where large cooperates are entering onto the retail business. This survey is based on a survey of 2020 unorganized small retailers across major cites: 1318 consumers shopping at both organized and unorganized retail outlets; 100 intermediaries; and 197 farmers. In addition, a "control sample" survey was done of 805 unorganized retailers who are not in the vicinity of organized retail outlets in four metro cities. Detailed interviews were also carried out for 12 large manufacturers, 20 small manufacturers and six established modern retailers. They have found impact on unorganized retailer there is less amount of fall down in there market share. There is no fall down for employment in unorganized sector. The impact on customer is that they are benefited with the offers given by the organized retailers. There is no adverse impact on intermediary of organized sector. Farmers getting benefit from direct selling through organized sectors.

2. OBJECTIVES OF STUDY

The present study is based upon the conceptual approach to identify the reasons of slow growth rate in retail industry and strategies for the retailers try to win the challenges of the industry. Specifically the objectives of the study are:

1. To identify the cause slow growth in India.

2. To identify the role of Indian government, to support for grow this industry

3. RESEARCH METHODOLOGY

The study is based upon secondary data covering the period when retail marketing was started till date. The study is related to comparison between Indian retail industries versus other countries those much involved in the retail. The data has been collected from the different Indian government websites, articles, news related to retail industry, through review of many researches related to retail marketing.

4. ANALYSIS AND FINDINGS

First part of this section is analysis; it covers the reasons of slow growth rate of retail industry after apple opportunities. Second part will cover two subsection first present step by step strategies for the Indian retailers and second sub section will provide the suggestion to convert growth into speedy from the steady growth.

4.1 REASONS OF STEADY GROWTH NOT SPEEDY GROWTH

Over the past few years, the retail sales in India are hovering around 33-35% of GDP compared to around 20% in the US. The table gives the picture of India's retail trade as compared to US and China.

Figure: 2

India's retail trade as compared to US and China

Country Trade (US $) Employment (%) Shops (million) Organized (%) sector Share

India 180-394 7 12 2-3

China 360 12 2.7 20

US 3800 12.6-16 15.3 80

Source: The Economist

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Figure: 3

Asia retail sales growth by volume (%pa)

Territory 2007 2008 2009 2010 2011 2012 2013 2014

Australia 5.5 0.7 1.4 0.8 0.2 2.0 2.0 2.0

China 11.4 14.7 16.8 14.8 14.6 12.4 11.6 11.7

Hong Kong 9.0 -0.4 -2.2 5.6 1.3 1.5 2.6 2.4

India 4.6 1.7 3.4 1.5 3.9 5.6 5.6 5.8

Indonesia 11.3 7.8 2.7 4.4 4.2 4.6 4.8 4.8

Japan -0.2 -0.5 -0.9 1.3 0.8 0.5 0.4 0.4

Malaysia 10.1 7.0 -1.5 2.3 3.3 5.0 3.7 3.8

New Zealand 2.1 -1.7 -1.3 1.3 2.3 2.4 2.5 2.4

Philippines 5.3 3.0 0.9 7.0 3.2 4.3 4.5 4.7

Singapore 7.8 1.2 -2.0 1.6 3.2 2.9 4.4 5.1

South Korea 4.8 0.5 -0.2 0.8 2.0 2.4 2.7 2.2

Taiwan 4.6 0.3 -1.4 9.4 2.3 1.5 0.6 0.6

Thailand 7.5 -2.5 -2.7 3.3 4.8 5.2 5.5 6.1

Vietnam 9.9 3.6 3.9 13.1 10.6 9.2 8.6 9.8

Source: Economist Intelligence Unit Actual Estimates Forecasts

These are the facts that show Indian retail sector is grooming year by year. This comparative chart shows the growth rate world wide and specific Asia reason.

But still there are some reasons or challenges which restrict the path of Indian retail industry those reasons are as follows:

Governmental Policy:

•Tax Policy: government is planning to implement uniform value-added tax all over India, currently' Differential tax rate system is used by the different states. It will increase the cost burden of retail investors.

•Restriction on FDI: government is restricting FDI in this industry which create a limited exposure for the best practices.

•Land availability: Governmental land and zonal constraint creating hurdles for establishing organized mall, shopping zone. Stamp duties, lack or ownership are also the one more factor of challenge faced by the retail industry.

Location: Scarcities of land availability also demoralize the retail investors, because unorganized retails are near by the homes and organized store are far from the reach of the customer. Location is the essential factors for the success retail stores.

Funds availability: Retail sector is still legging to get a tag of "Industry" which makes difficult environment to get funds from banks and other financial organization.

Infrastructural Development: improper infrastructural development like roads, logistic service, electricity,

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pan India suppliers, warehouses all these things are restricting the speedy growth of the industry.

Talented Professionals: retail industry requires talented, knowledgeable professionals for the proper use of there scar resource for profit maximization, especially in the middle level management. Indian is lagging to provide proper quality education to make trained professional for this industry.

Supply Chain: many of the Indian retailers are facing supply chain facility, because of that there are using long supply chain or many intimidators are involved to reach end customer, it will increase the over all cost by 15% it create impact of the price of the products.

Competition from "Kirana Stores": this sector is struggling competition from the local kirana stores those are grabbing the location benefits near by the customer's homes. Personal attention, good personal customer relationship, and other facility is create shopping easy for the customers. Right Customer: industry is still not able to identify the right customer for them. Need of the customer, though for retail store, paying capacity this knowledge is unavailable with the retail players.

Retail contraction: retail contraction refers to the unaccounted loss of retail goods. This loss includes theft by employees, administrative errors, shoplifting by customers or vendor fraud. IT facilitated techniques such as CCTV and software solutions dedicated to the retail sector can be implemented so as to increase employee morale but it includes cost which creates adverse effect on profit margin.

Low margin: complexities of retailing such as quick price fluctuation constant threat of product obsolescence and low margins makes it a persistent industry which shows extraordinary growth but less attractive for investment. Manufactures are still using intermediates to Retailers and so margins remain low to Retailers.

Large Geographical area: India is having large geographical area which includes different languages, cultural, norms and value boundaries, this scattered marked arise the problem of customer identification for their product.

5. STRATEGIES OR SUGGESTIONS TO MAKE GROWTH SPEEDY

Industry like retail which is still struggling to achieve its position as "Industry", the major player of this industry firstly they have to identify the current or future opportunities, trends and prospects in this industry.

Current and Future Scenario of Retail

• Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.

• Number of shopping malls is expected to increase at a CAGR of more than 18.9% from 2007 to 2015.

• Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50%.

• Organized retailing of mobile handset and accessories is expected to reach close to Rs. 5000 Crore by 2010.

• Driven by the expanding retail market, third party logistic market is forecasted to reach US$ 20 Billion by 2011. • Apparel, along with food and grocery, will lead the organized retailing in India.

• Growth of Retail and its Distribution

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The NCAER, based on its Market Information Survey of Households (MISH), has projected that the consuming class consisting of the "aspirers", the middle class and the rich with annual household income of above Rs. 90,000 will rise from about 336 million in 2005-06 to 505 million in 2009-10. This implies a huge growth potential of retail in the country. The sales of the Indian retail industry have been about US$ 322 billion (Rs. 14,574 billion) in 2006-07,amounting to about 35 per cent of India's GDP. It is the seventh largest retail market in the world. Indian retail industry is projected to grow to about US$ 590 billion by 2011-12 and further to over US$ 1 trillion by 2016-17 (Figure- 4).

Figure -4

Size of Indian retail (in US $ bn)

Source : Technopark Analysis, CSO and Other Sources

This works out to an annual compound growth rate of about 13 per cent during 2007- 12 and a slower 11 per cent during 2012-17.

The major drivers of growth of Indian retail Industry are:

• Rising income levels

• A la,rge segment of young population

• Nuclear family structure

• Growing literacy

• A rapidly expanding middle class

• Increasing number of working women

• Growing urbanization increasing media penetration

• Growing consumer acceptance of modern retail formats

• Changing lifestyles of the Indian households

• Better shopping experience and larger verity goods

Secondary they have to Thorley identify the challenges and problem faced by their retail segment in which they dealing. And identify the difference between myths and reality of retail industry.

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Figure: 5

Bursting retail Myths and Reality

Bursting Retail Myths

Common Assumption Myths Reality

Luxury retail is an over-hyped segment in the Indian context

Highway mall will be successful in India

Discount formats should be located outside city limits

Organized F & G retail is challenged by India's traditional

home delivery system

Mega developer retailer collaboration are required in India

Mega malls and huge stores are best for Indian consumers

India's tier-III towns will experience a major boom

Trend professional are available in good number

Source: Cushman & Wakefield Research

5.1 SUGGESTION FOR RETAIL PLAYER

Government should be liberal: government should take liberal steps to provide financial support for the small retailers so, can they will convert their unorganized store into organized stores.

Increasing manufacturer's own retail presence. Manufacturers are also entering to increasing their own retail presence in order to compete with modern retailers. Apparel manufacturers, for example, are opening exclusive showrooms to give their brands more visibility and to strengthen their position in this competitive scenario.

Helping small retailers. Most of the FMCG companies interviewed stated that their companies were available to assist small retailers by "adopting" them and helping them upgrade service levels, systems, and operations. They anticipate that, in the next few years, the number of such "adopted" stores would almost double.

Compete with Kirana stores: implement customer loyalty programs for new product ideas, brand building, proper promotional techniques, and enhanced customer services. It can be achieved through:

• Face to face interaction with customer ate ever level of the store

• Qualitative after sales services. • Creating image on the consumer mind with quick services. Identify customer: they have to identify the right customer for their retail stores to increase demand. To identify they have to search the answers of these questions:

• Who will be my customer?

• Why customer will pay? What is value to him?

• What should be the degree of after sales services?

• Who are the influencing groups?

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Chain Supply should be smaller: to reduce cost manufacturer have to reduce the size of suppliers or using the less number of intermediates. It will increase the profit margin and the profit margin will support to grow the market.

Specialized Training Institutes: if major players want the growth in the right direction in retail they have to establish their own training institute, where they can make a team of qualitative professionals especially for the middle level management.

6. CONCLUSION

There are plenty of opportunities for organized retailing, the unorganized sector does cash in on the tax advantage. The uneven and unstructured segment makes it difficult to administer the tax system. This is a macro issue from the organized retailing side. The other obstacle is to change the mind block of customers, who tend to perceive organized retailers to be far more expensive than unorganized ones with no specific distinction between the two in terms of the clear value. Retailer has to adopt adequate strategies to come over from the challenges and pitfalls of the retail industry like they have to identify the right way to make customer ready to except that organized retails are also providing quality products with reasonable prices. Appropriate promotional strategy is used to aware consumer from the benefits of the organized retail stores. Research should be conducted before deciding the location for their retail malls, shopping centers.

As far as Indian context retail industry contributes 14% of our GDP and the second largest industry next to agriculture which provide employment to good number of persons. Now according to a survey, India is classified in to the fifth most attractive retail destination and second among the countries in Asia. Worldwide it is ranked as fifth most attractive retail destination. There is a significant growth is assumed by the retailer in next couple of years which is the basic reason of attractiveness of domestic investors as well as foreign investors.

7. REFERENCES

A report by Boston Consulting Group (BCG)

A research report on "Booming Retail In India" available at: http://www.rncos.com/Report/IM112.htm

Chirag B.Rathod and Devang J.Desai (2006), Indian Retail Industry: Emerging Trends and Challenges, SCMS Journal of Indian Management, Pp.56-67.

Devangshu Dutta ,article available at: http://www.fibre2fashion.com/industryarticle/4/347/myth-and-reality-of-the-retail-revolution1.asp

India Report (2010), India Report Retail Reality: The Way Ahead for India's Retail Business.

Ketan Dewan (2010),Challenges faced by the retail industry in India, FICCI NEWS, Vol. 4, Pp. 6-8

Kamaljit Anand (2010), promotions optimizations in FMCG retail ,Vol. 4, Pp.12-18

Mathew Joseph, Nirupama Soundararajan, Manisha Gupta, Sanghamitra Sahu (2008),A Report: Impact Of Organized Retailing On The Unorganized Sector, Indian Council For Research On International Economic Relations.

Mohan Guruswamy, Kamal Sharma, Jeevan Prakash Mohanty and Thomas J. Korah, "FDI in India's Retail Sector More Bad than Good?",

R. N. Wakchaure(2011), Foreign Direct Investment And Emploment Opportunities In Indian Retail Sector, Indian Streams Research Journal, Vol. 1, pp.162-167

Sonia(2010) , Changing Face of Indian Retail Sector: Ethics, Challenges and Opportunities Journal of Economics and Sustainable Development, Vol. 2, Pp. 55-59

Santosh Kumar Yadav, Hitendra Bargal, Ashish Sharma, Rajeev Shukla, Bhanu Saxena, Manish Phalke, and Nitish Ghune (2010), "Growth And Challenges Of Retail Market In India", A journal of University of Kelaniya Shri Lanka.

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http://www.rncos.com/Report/IM112.htm

http://www.fibre2fashion.com/industryarticle/4/347/myth-and-


23

Report on Ethics and business Management

BY Arvind kumar Lariya

Lecturer, Maharana Pratap Management Institute Bhopal (M.P.)

[email protected]

Abstract

This paper identifying the problem of ethics in business, what are challenges in this areas. Just like Tata and other world largest business ethics supported company. It is a big challenging task today. How to face and run the organization what is the key role it is the study about that . ISO 14000 is designed to provide customers with a reasonable assurance that the performance claims of a company are accurate. In fact, ISO 14000 will help integrate the environmental management systems of companies that trade with each other in all corners of the world. The institute recognizes companies that truly goes beyond making statements about doing business 'ethically' and translate those words into action. Of these companies, 26 are new to the list in 2010, while there are 24 companies which have been dropped off from the 2009 list due to ethical violations.

Here is a Bummer, not a Single India company features in this list of most Ethical companies in the world. Solae, LLC, a world leader in soy-based ingredients within the food and nutritional industry, has been recognized as one of the world's most ethical companies for implementing upright business practices and initiatives in harmony with company and social objectives.

Key Words : Ethics , ISO 14000, Social objectives , Companies.Report on Ethics and business Management

INTRODUCTION

Ethics is a moral principles and values, which justify two things. First, ethics refers to wellfounded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom. Secondly, ethics refers to the study and development of one's ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly-based.

WHAT IS BUSINESS ETHICS?

The concept has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders. Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofit or for-profit. In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits.



Many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and so these people don't take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace.

12 Ethical Principles for Business Executives :-

Ethical principles are standards of conduct defining the kind of behavior an ethical person should and should not engage in. The following list of principles incorporate the characteristics and values that most people associate with good character and ethical behavior These principles not only provide a guide to making decisions they also establish the criteria by which your decisions will be judged by others.

1. HONESTY. Ethical executives are, above all, worthy of trust. They are honest in all their actions and communications. They are not only truthful they are candid and forthright. Ethical executives do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means and when trust requires it they supply relevant information and correct misapprehensions of fact.

2. INTEGRITY. Ethical executives earn the trust of others through personal integrity. They demonstrate moral courage, doing what they think is right even when there is great pressure to do otherwise. Ethical executives are principled, honorable, upright and scrupulous. They fight for their beliefs and do not sacrifice principle for expediency.

3. PROMISE-KEEPING. Ethical executives can be trusted because they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.

4. LOYALTY. Ethical executives justify trust by being loyal to their organization and the people they work with. They do not put their loyalty above other ethical principles but they place a high value on protecting and advancing the lawful and legitimate interests of their companies and their colleagues

5. FAIRNESS. Ethical executives strive to be fair and just in all dealings. They do not exercise power arbitrarily nor do they use overreaching or indecent means to gain or maintain any advantage nor take undue advantage of another's mistakes or difficulties. Ethical executives manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded; willing to admit they are wrong and, where appropriate, change their positions and beliefs.

6. CARING - CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and kind. They always consider the business, financial and emotional consequences of their actions on others and seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.

7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin. Ethical executives adhere to the Golden Rule, striving to treat others the way they would like to be treated.

8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their business activities.

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9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their duties, are well-informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.

10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.

11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company's good reputation and the morale of it's employees by engaging in no conduct that might undermine respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct of others.

12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.

3 SOURCES OF MORAL OBLIGATION :-

1. Law-Based Moral Obligations. Good citizens have a moral as well as a legal obligation to abide by laws; it is part of the assumed social contract of a civilized society. If a law is unjust, however, (such as those that mandated ethnic and religious persecution during the Nazi regime and those that discriminated against a person on the basis of race in South Africa and elsewhere) there may be a moral obligation to disobey it under the specific and demanding doctrine of civil disobedience. Many, but by no means all, of these moral standards of conduct are so fundamental to healthy social relations that they have been codified into laws. For example, most aspects of the moral duty to not endanger or harm others are embraced in criminal and civil laws prohibiting homicide, assaults, drunk driving, and other dangerous behavior. Similarly, the ethical duty to be honest is enforceable by laws forbidding perjury, robbery, forgery, fraud, and defamation among others. Nevertheless, in struggling to be an ethical person we need to remember that many forms of dishonesty remain solely within the moral domain. If we fail to perform or live up to a legal duty, we can be criminally prosecuted or sued. If we fail to live up to a moral duty, the external sanction is blame and condemnation — and, if one has a well developed conscience, feelings of guilt and shame leading to remorse.

2. Agreement-Based Moral Obligations. The second source of moral obligation is agreement. Even if an agreement doesn't reach the level of an enforceable contract, there is a moral obligation to do the things we agree to do, especially if others are counting on us to do so. When we borrow money promising to pay it back in a week, or tell a friend we will pick her up at the airport, or take a job involving the supervision of other employees, we undertake a moral duty to do what we say we will do and perform dutifully the responsibilities of the positions we accept. This kind of duty is the product of the commitments we make to others and is the basis of the ethical principle requiring us to keep our promises. The idea that we have a moral obligation to keep our promises seems so basic as to be hardly worth mentioning. But nothing can be taken for granted anymore. As a lawyer, I am troubled by the popularity of a relatively new philosophy that analyzes contractual obligations and other commitments purely in terms of economic impact. According to this line of reasoning, there is an inherent right to breach a promise so long as one is willing to pay for any damages caused. The moral obligation to keep one's word is treated as an irrelevant sentimentality.

3. Moral Principle as the Basis of Moral Obligation. The third source of moral obligation is moral principle, a standard of conduct that exists irrespective of laws or agreements. The great German ethicist, expressed the power of moral principle when he said, "Two things fill my mind with ever-increasing wonder and awe: The starry heavens above me and the moral law within me."Moral principles can be mandated by religious doctrine or derived through rational philosophical reasoning. In other words, if abiding by a law or living up to a contract requires dishonest or disrespectful conduct that violates my core moral principles, as an ethical person I must honor the principles even if it means being prosecuted or sued. Such decisions, however, must be made cautiously and with due recognition of the ethical implications of breaking laws and breaching

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contracts. The moral principles of trustworthiness and citizenship establish a very strong presumption that laws should be obeyed and commitments should be kept.

GLOBAL GREEN STADARDS

This report is a heads-up analysis about ISO 14000 standards. A decade from now we may recognize these standards as one of the most significant international initiatives for sustainable development. ISO 14000 defines a voluntary environmental management system. Used in conjunction with appropriate goals, and with management commitment, the standards will help improve corporate performance. They will provide an objective basis for verifying a company's claims about its performance. This is particularly important in relation to international trade, where at present almost anyone can make assertions about environmental performance - and there are only limited means to address veracity.

Consumers, governments and companies up and down the supply chain are all seeking ways to reduce their environmental impact and increase their long-run sustainability. For companies, the key goals are to become more efficient - to get more output per unit of input - while earning profits and maintaining the trust of their stakeholder. The ISO 14000 voluntary standards will help. It is important to note that the ISO 14000 standards do not themselves specify environmental performance goals. These must be set by the company itself, taking into account the effects it has on the environment, and the views of its stakeholders. How then can ISO 14000 help meet the global need to move toward sustainable development? .Implementation of a management system based approach will help companies focus attention on environmental issues, and bring them into the main stream of corporate decision-making.

ISO 14000 is designed to provide customers with a reasonable assurance that the performance claims of a company are accurate. In fact, ISO 14000 will help integrate the environmental management systems of companies that trade with each other in all corners of the world.

Interpretation :

When any company take ISO 14000 than consumer have a trust on product . today consumer more aware about surrounding , so company also more alert and involved in this area. If you involved than trustiness will be increased.

Seminar on business ethics :-

The seminar is being organised by Gujarat Technological University (GTU) which has collaborated with the Shri Mahavira Jaina Vidyalaya's C K Shah Vijapurwala Institute of Management (CKSVIM) and the Federation of Gujarat Industries (FGI). tnn

GTU had organised the first national conference on business ethics for 'global success of Indian businesses' in September 2010 at Ahmedabad in collaboration with CKSVIM.

After the first national conference, GTU has in fact introduced a paper on business ethics and corporate governance as an elective subject for all MBA colleges of the state. This subject will be taught to budding managers at management institutes from fourth semester from this academic year,director of CKSVIM Dr Rajesh Khajuria said while addressing media persons here on Tuesday.

As India is emerging as preferred investment destination, it is important that upcoming entrepreneurs are given seeds of ethics and corporate governance,said FGI president Geeta Goradia, adding that with large multi nationals adopting ethical audit policy, Indian companies too will have to learn the nuances of ethical business if India is to become a big exporter to the world.

Except the inaugural session on Friday, all other sessions are panel discussions. A unique feature of this national conference is the second round table on ethics which will be also held during the programme.

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Our attempt is to prepare a framework on ethical practices that corporates can perform well.

Interpretation :-

Seminar is major concern for development of ethics. India and other country arranging such seminar for awairing about global warming. And it is a successful idea for give knowledge to the company.

The institute recognizes companies that truly goes beyond making statements about doing business 'ethically' and translate those words into action. Of these companies, 26 are new to the list in 2010, while there are 24 companies which have been dropped off from the 2009 list due to ethical violations.

Here is a Bummer, not a Single India company features in this list of most Ethical companies in the world. Solae, LLC, a world leader in soy-based ingredients within the food and nutritional industry, has been recognized as one of the world's most ethical companies for implementing upright business practices and initiatives in harmony with company and social objectives.

Some of the other companies from the food industry which bagged this recognizable award are PepsiCo, Campbell Soup Company and General Mills. The Ethisphere Institute has reviewed nominations for companies ranging over 36 different industries from Apparel, Banking and Chemicals to Construction and Engineering, Consumer Products, Healthcare and Real Estate.

Here is the list of Most Ethical Companies in the world !

Aerospace

• Harris Corporation

• Rockwell Collins Inc.

• The Aerospace Corporation

Apparel

• Comme Il Faut

• Nike

• Patagonia

Auctions

• Barrett Jackson Auction

Company

Automotive

• Cummins

• Ford Motor Company

• Johnson Controls

Banking

• Rabobank

• Standard Chartered Bank

• Westpac Banking Corporation

Business Services

• Accenture

• Noblis

• Pitney Bowes

• Dun & Bradstreet

• Paychex

Chemicals

• Ashland

• Dow Corning Corporation

• Ecolab

• Flint Hills Resources

Computer Hardware

• Hewlett-Packard Company

Computer Software

• Adobe Systems

• Salesforce.com

Construction and Engineering

• CH2M Hill

• CRH

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• Symantec

• Teradata

• Fluor

• Granite Construction

• Parsons

Consumer Electronics

• Ricoh

• Xerox

Consumer Products

• Henkel

• Kao

• L'OREAL

• Mattel

Diversified Industries

• General Electric Co.

Electronics and Semiconductors

• Freescale Semiconductor

• Texas Instruments

Energy and Utilities

• Duke Energy

• FPL Group

• National Grid

• Sempra Energy

• Wisconsin Energy Corporation

Environmental Services

• Waste Management

Financial Services

• American Express

• The Hartford

• The Principal Financial Group

Food and Beverage

• Campbell Soup Company

• General Mills

• PepsiCo Group

• Solae

Food Service

• ARAMARK

• Sodexo

Food Stores

• Trader Joe's

• Wegmans

• Whole Foods Market

Forestry, Paper and Packaging

• International Paper

• Stora Enso Oyj

• Svenska Cellulosa

• Weyerhaeuser

Healthcare

• Cleveland Clinic

• Hospital Corporation of America

• J M Smith Corporation

• Johns Hopkins

• Premier

Hotels, Travel & Hospitality

• Rezidor Hotel Group

• Wyndham Worldwide

Industrial Manufacturing

• Caterpillar

• Deere & Company

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• Eaton

• Milliken and Company

• Rockwell Automation

• Timken

Insurance Internet

• Aflac • Google

• Swiss Re • Zappos

• Wisconsin Physicians Service

Pharmaceuticals Real Estate

• AstraZeneca • Jones Lang LaSalle

• Novo Nordisk

Aha, nice to see "Do no Evil" Google in the list of most ethical companies !

TATA AND ETHICS

The Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries.

The total revenue of Tata companies, taken together, was $83.3 billion (around Rs3,796.75 billion) in 2010-11, with 58 per cent of this coming from business outside India. Tata companies employ over 425,000 people worldwide. The Tata name has been respected in India for more than 140 years for its adherence to strong values and business ethics. Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 31 publicly listed Tata enterprises and they have a combined market capitalisation of about $81.07 billion (as on August 16, 2012), and a shareholder base of 3.6 million. The major Tata companies are

Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels. Tata Steel is among the top ten steelmakers, and Tata Motors is among the top five commercial vehicle manufacturers, in the world. TCS is a leading global software company, with delivery centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Global Beverages is the second-largest player in tea in the world. Tata Chemicals is the world's second-largest manufacturer of soda ash and Tata Communications is one of the world's largest wholesale voice carriers. In tandem with the increasing international footprint of Tata companies, the Tata brand is also gaining international recognition.

Interpretation :-

In India tata is social company which largely involved in ethics, This figer is also justify 60% involvement.

Business Ethics in a Global World:

India's Changing Ethics Sheth offered his perspective on why China and India are poised to dominate the 21st century, how Indian business practices differ from Western ones and what the consequences are for

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business ethics on a global basis.

The collapse of Communism is one of four forces that are driving the shift from the 20th century global business model to the 21st, Sheth said. He argued that the best capitalistic countries are former Communist countries, such as China: Communism imposed discipline on citizens, created greater gender equality and invested heavily in technical education.

Another driving force is that affluent nations are aging, and their traditional industries will not generate as many jobs in the future. Even in the U.S., which is not aging as fast as other affluent countries, General Motors stands as an example of a company that is hiring only one new employee for every eight who retire.

In addition, economic pragmatism means those in power have discovered economics' crucial role in elections. Sheth cited the fall of George Bush Sr., who went from being wildly popular to losing his re-election bid when the economy faltered.

Finally, Sheth cited the idea that "the world is flat": the IT revolution has leveled the playing field between emerging and advanced economies.

References :-

Aguilar, F. J. (1994), Managing Corporate Ethics, Oxford University Press, New York.

Berenbeim, R. E. (1987), Corporate Ethics, The Conference Board, New York.

Blanchard, K. and Peale. N. V. (1988), The Power of Ethical Management, Fawcett Crest, New York.

www.google.com

http://iisd.com

http://whatwillmatter.com

www.tata.com

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http://www.google.com

http://iisd.com

http://whatwillmatter.com

http://www.tata.com


A LITERATURE STUDY ON TRENDS IN RETAIL PRACTICES AND THEIR IMPACT ON TRADITIONAL RETAILING IN INDIA

Bhagwan Singh 1

Dr. Anjaney K. Pandey 2

Abstract

Present paper is a part of the doctoral research study entitled "Trends in Retail Practices and Their Impact on Traditional Retailing-Special Reference to Bhopal City". The paper discusses variousstudies undertaken with respect to retailing in India. Aspects like trends, consumer perception, consumer behavior, service quality, customer satisfaction, Indian retail market etc. are included in the paper. Various studies done by other researchers and experts are analyzed to include common aspects of organized Vs traditional retailing. It is basically aimed at to prepare a summarized report on the study of related literature regarding the topic. undertaken with the common aspects of retailing in India. It is hoped that the paper may act as a reference source for the researchers and the professionals.

Keywords : Retailing, Organized retailing, Retailing in India, Service Quality, Trends, Impact of organized retailing etc.

1. INTRODUCTION

The Government of India initiated its own public distribution system years back by starting ration shops in addition to canteen stores department for Defence personnel that was a kind of organised retailing. It also provided support to rural retail initiatives by constituting the khadi and village industries commission. The emergence of organized retail chains was seen in the 1980s when textile companies such as Bombay Dyeing, Raymond's, S Kumar and Grasim set up their own stores. In January 2006, the Union Cabinet approved the policy on foreign direct investment (FDI) in retail to further simplify procedures for investing in India and to avoid multiple layers of approvals required in some activities. To facilitate easier inflow, FDI up to 100% was allowed under the automatic route for cash and carry wholesale and export trading. However to protect the interests of Indian retailers, the FDI up to 51 % was permitted in "single brand retail". However, we are currently confronting the political disturbances due to proposal for FDI in multi-brand retail in India. On the other hand we are experiencing the concept of "shopp-tainment" in the malls and business centers. Retailing is transforming to be smart and techno-savvy. The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior in India. Modern retailing has entered into a retail market in India. The future of Indian retail industry looks promising with growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.

2. OBJECTIVES OF THE STUDY

i) To compile and classify various research findings regarding organized retailing and its impact on traditional retailing in India.

ii) To analyze and discuss the common findings of the studies referred.

3. RESEARCH METHODOLOGY

The study is an analytical and descriptive one. The data is collected solely from secondary sources

1. Ph.D. Research Scholar, MGCGV, Chitrakoot (Satna) M.P. E-mail: [email protected] 2. Head, Deptt. Of Rural Engg., MGCGV, Chitrakoot (Satna) M.P.A LITERATURE STUDY ON TRENDS IN RETAIL PRACTICES AND THEIR IMPACT ON TRADITIONAL RETAILING IN INDIA

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i.e. refereed print journals, online journals, books, reports etc. The sources are compiled and studied between 2011 till date. The findings are categorized and classified under different issues regarding organised retailing in India.

4. DETAILED REVIEW OF LITERATURE

Parasuraman et al. (1980s) conducted an exploratory investigation in the attempt to define service quality and develop a model of service quality. The results showed that regardless of the type of service, consumers used basically the similar criteria in evaluating service quality (Parasuraman et al., 1985). They labeled those 10 criteria as "service quality determinants". Since then, service quality was defined through 10 dimensions: Access, Communication, Competence, Courtesy, Credibility, Reliability, Responsibility, security, Tangibles and Understanding/ Knowing the customer. Later, they were simplified into five dimensions including Tangibles, Reliability, Responsiveness, Assurance and Empathy.Dawar & Parkar (1994): Retailer's reputation is a proxy for the retailer's credibility and can stand for signal of quality. The use of retailer's reputation is specific when it applies to an assortment of products carried within the store. Dabholkar et al. (1996) developed Retail Service Quality Model (RSQS). Based on SERVPERF, RSQS includes 28 -item scale, of which 17 items are from SERVPERF and 11 items are developed by qualitative research. It composes of 5 dimensions, namely Physical Aspects, Reliability, Personal Interaction, Problem Solving; and Policy. Sinha & Batra (1999) also find the relationship between price consciousness and private label brand purchase to be positive but also document that it can vary by different product categories. Shah (2001) reported that imagine the Kerala is the home to the largest organized retail chain in the country, there is margin free market (MFM), a 160 store chain selling almost everything from electronic and electrical appliances to food products, beverages, FMCG's, stationary and goods. Das (2000) revealed that the Indian situation is rather paradoxical. At $180 billion, the Indian retail business contributes 10-12% of the GDP higher than the some western economies, where it averages 8%. It revealed that India have the world's thickest density of outlets at 5.5% for every 1000 people between 12million retail stores, India's per capita retail space is dismissal 2 sq ft per person. Johnson (2000) reported that real estate is an issue in India, also labor is cheap, so getting products delivered home is a whole lot easier and he supposes the internet will facilitate such shopping. India could actually leapfrog the west where we will probably have drive through shopping malls. In India, your friendly local guy will deliver the other opportunity is convenience stores to do things that families do not have the time for, if both husband and wife are working. Poviah and Shirali (2001) were of the viewpoint that shopping malls are classic self service 4000- 20000 sq ft. stores with shopping carts, as popularized in India by crazy boys film, with typical focus on regular groceries, household goods and personal care products. Tesco and Nilgiris. India is namely a groceries market and here, shopping malls have not been able to eat into the business of kriyana shops. While the housewife might pick up her shampoo at a shopping mall, she continues to use her local cart pusher for daily needs such as fresh vegetables. In fact, so far organized Indian retailing has enveloped only the middle section (self esteem, social recognition) of Maslow's pyramid. Purohit & Srivastava (2001): The retailer's reputation is a high-scope cue for consumer to judge the product quality and make purchase decision. Their findings show that a low-quality brand cannot convey improvement in product quality through a warranty unless it goes through a reputable retailer. Chandrasekhar Priya (2004) selected 10 particularly ripe areas which should be hot markets for at least the next several years. These comprised of China, Hong Kong, Taiwan, India etc. Shekhar M. Raj (2005) in a study found that whether the hegemony of high streets over Indian retail can continue. Glitzy malls are coming up by dozen all over the county. With their snazzy interiors, an offering that is a mix of shopping, entertainment and leisure, and facilities like packing and childcare, the malls are beginning to pull the traffic from the traditional markets. Today we are much more comfortable with the quality the brands are connote than the word of a shopkeeper about the quality of product. More families now prefer to shop on weekends, preferably not too far from the home and away from mdden crowds and even more madding parking attendants. So it is showing that now Indian consumer is ready for organized retail. As the most likely time for shopping is the weekends so the families also look for some entertainment, eating courts and recreational activities. To fulfill all these needs we have the latest form of shopping malls where all these needs of average customer can be taken care of. Subhashini Kaul (2005) concluded that consumers satisfied with the store's service quality are most likely to remain loyal. Service quality is being

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increasingly perceived as a tool to increase value for the consumer, as a means of positioning in a competitive environment to ensure consumer satisfaction, retention and patronage. Despite its strategic importance, Indian retailers did not have an appropriate instrument to measure service quality. This study examined the Retail Service Quality Scale (RSQS) developed in the U.S for applicability to Indian retail and the scale had been found appropriate. Rao(2006) also states that security, trust, internet speed, responsiveness significantly affect online purchaser's behavior. Thirumoorthi, P. (2006) concluded that the company must concentrate more on high margin to create a better performance. Importance must be given to sales promotion. The retailers must also be asked to give more displays and discounts. Tamilarasan, R. (2007) studied in depth the variety of store dimensions and service quality dimensions and revealed that all these dimensions have to be of the changing and emerging retail scenario in India.

Malliswari, M. (2007) indicated that Indian consumer is now sowing the seeds for an exciting retail transformation that he already started bringing in larger interest from international brands/ formats. With the advent of these players, the race is on to please the Indian customer and it's time for the Indian customer sits back and enjoys the hospitality to be integrated like a king. Paromita Goswami (2007) conducted a study on how college students in urban areas shopped for apparels. The factors investigated for the study were brand conscious and needed variety and best quality for their apparel purchase. Furthermore, parents influence their purchase behavior the most, followed by peer store approval, friends' influence and peer product influence. Deb and Sinha (2007), attempted to develop a model to measure service quality by the relationship between service quality and customers' commitment to retain a relationship. They focused on price, brand name, store name and levels of advertising and collected data from 350 malls via questionnaire. The model is relevant for marketers as a tool to quantify their performance. Sinha and Kar (2007) investigated modern retail developments and growth of modern formats in India. They also analysed the challenges and opportunities available to the retailers to succeed in India and concluded that retailers need to innovate in designing the value proposition, deciding the format to deliver to the consumer and also strive to serve the consumer better, faster and at less cost. Vijayraghavan K. and Ramsurya M.V. (2007), discussed the topic in their study that it is a matter of debate as to whether Indian kirana stores would be able to survive in the face of competition from organized modern trade grocery retailers. Although traditional retail currently constitutes over 95% of the total sales in the country, smaller kiranas that are unable to compete with new age retailers in terms of variety and scale have begun losing volume in several parts of the country. Anuradha Kalhan (2007) found in her study by taking small sample survey of the impact of malls on small shops and hawkers in Mumbai points to a decline in sales of groceries, fruits and vegetables, processed foods, garments, shoes, electronic and electrical goods in these retail outlets, ultimately threatening 50% of them with closure or a major decline in business. Only 14% of the sample of small shops and hawkers has so far been able to respond to the competitive threat of the malls with the institution of fresh sales promotion initiatives. Vaishali Aggarwal (2008) concluded that among the factors important for customer satisfaction, 'quality', 'convenient location' and 'availability' got the highest rating in term of their importance to the customer on a 5-point scale. Customers were not very price sensitive and they did not pay more attention to the display and ambience of the store. Sunayna Khurana (2008) examined the differences in consumers' expectations and perceptions for service quality they received while shopping at various retail stores in Haryana. She also considered consumer demographic characteristics for the study. Statistically, she identified five prime factors for service quality viz. physical aspects reliability, personal interaction, problem-solving, and policy. Her study concluded that a wide disparity existed between expectations and perceptions for personal attention and policy factor. Alisa Nilawan (2008) conducted a study to survey customers' satisfaction with Metro Mall at Sukhumvit station and revealed that food and beverage shops, reasonable prices compared with the product quality modern decoration and location of mall, word of mouth; availability of discount coupons and prompt and attentive services of salespersons were the main factors influencing customers on visiting Metro Mall at Sukhumvit station. Sonia (2008) conducted a study on customers' perception towards Mega Marts in Ludhiana. The author highlighted that customers preferred a particular mega mart due to its convenience in terms of space, product range, billing system, multiple choice, etc., and location at an easy approach and safety. She found that in Ludhiana, customers are generally not satisfied with the safety measures and parking facilities at mega marts. She concluded that customers preferred

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cash discount offers, followed by free gifts and financing facility. Quality and discount were the most important factors in influencing customers' decision to purchase. Dr. Biradar et.al. (2008) in their article pointed out that the organized retail sector is registering tremendous growth fuelled by the unleashed spending power of new age customers who have considerable disposable income and willingness to have new shopping experience. It is emphasized that India's top retailers are largely lifestyle, clothing and apparel stores followed by grocery stores. The paper further mentions that increasing number of nuclear families, working women, greater work pressure and increased commuting time; convenience has become a priority for Indian consumers. All these aspects offer an excellent business opportunity for organized retailers in the country. Goswami P. and Mishra M.S. (2009), conducted a study that was carried across four Indian cities- two major metros (Kolkata and Mumbai), and two smaller cities (Jamshedpur and Nagpur) with around 100 respondents from each city. The results suggest Kiranas would do best to try and upgrade in order to survive. Given that modern trade outlets have deeper pockets and can afford to make mistakes and get away with it in the short term, Kiranas have to stay alert, try to upgrade and continue to serve customers well, while concentrating on innovating, evolving and remaining efficient on retailer productivity scores. V.Ramanathan (2009) in the article mentioned that the entry of organized retailers with their completely integrated marketing practices, franchising agreements, contractual selling, joint ventures and co- promotions creates a profound threat to unorganized retailers and compels them to change their style of doing business from convenience to intensive. The article reveals that unorganized retailers dealing in clothing and footwear, furniture and appliances, and beverages were among the most affected. Further the author suggests that the traditional retailers enjoyed the advantages of proximity to the customers in neighbourhood areas, long standing personal relationship with customers and providing home delivery and credit facility. Prasad & Ansari (2009) stated that web store environment and customer service have significant impact on the willingness to buy from online retail stores. They have also identified that customer service and online shopping enjoyment have significant impact on the willingness to buy from online retail stores than the perceived trust. Chandan A. Chavadi and Shilpa S. Koktanur(2010), tried to find out the various factors driving customers towards shopping malls and consumer buying response for promotional tools. They found four major factors that drive the customers towards the shopping malls. Those factors are product mix, ambience, services and promotional strategies. Customers consider fast billing, parking facility and long hours of operations as prime services. Mittal and Anupama Parashar(2010) explained that irrespective of area, people prefer grocery stores to be nearby, product assortment is important for grocery. Ambience of the grocery stores has been perceived differently by people of different areas and prices are equally important for all grocery. Perception and preference towards importance of service was also different across different areas. Sandip Ghosh Hazra and Kailash B.L. Srivastava(2010), found that firms are using service enhancement and are developing a range of techniques to measure service quality improvement. The competition between private and public sector has resulted in an increased need for service providers to identify the gaps in the market in order to improve service provisions to retain customers. Satisfactory service quality is an indispensable competitive strategy. They concluded that customer value for four dimensions of perceived service quality i.e. assurance-empathy, tangibles, security and reliability. S.P. Thenmozhi Raja, D. Dhanapal & P. Sathyapriya(2011) explained that the most critical challenge for a business is the improvement of service and product quality. They also explained that perception of retail service quality varies across different cities, the retailers can meet the customer expectations based on the factors drive them. Sharif Menon(2011) explained that brand identities were designed to reassure a public anxious about the whole concept of factory produced goods. Brands have transformed the process of marketing into one of perception building, so, image is now everything. Customers make buying decisions based around the perception of the brand, rather than the reality of the product. Perception is a fragile thing. India is lucky to have international brands, but the Indian consumer is very choosy in selecting the brands and especially in the consumable sector. The research brings out that importance of taste is one the important factor for the success of a brand. Sandhya Joshi(2011) explained that the surest path to a strong business bottom line is assuring that customers receive the highest appropriate quality of service across multiple applications and delivery mechanisms. Customers make their purchasing and defection decisions on the basis of the perceived value of the service package being offered, rather than simply their current levels of satisfaction. Fulbag Singh and Davinder Kaur(2011), explained that customer perception of service quality is concerned with the

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judgment and attitude of the customer towards quality of the service after availing the same and in turn this perception decides whether the service has provided more than what he expected then he will be satisfied and if he perceives it to be less than his expectation then he will be dissatisfied. Therefore, customer satisfaction is the summation of customer's all expressions of service quality and depends upon his own perception and expectations. Fulbag Singh and Davinder Kaur(2011), explained that an organization cannot survive in the long run if its customers are not satisfied. Customer satisfaction is the summation of customer's all expressions of service quality and depends upon his own perception and expectations. Komal Chopra (2011) pointed following prominent Indian retailers: Future Group: Future group started its operations in 1993 with Pantaloon Retail as the flagship enterprise. The company operates on a multi-format retail strategy. It's sub-brands are Pantaloons, Central, Big Bazaar, Planet Sports, Home Town, e-Zone, Aadhaar, Future Generali, Future Mediap, Blue Foods, Spaghetti Kitchen, Noodles Bar, The Spoon etc. K. Raheja Group: The Raheja Group launched its retail venture 'Shopper's Stop' in 1991. Shopper's Stop sold a range of branded apparel and private labels under the categories of apparel, footwear, fashion jewellery, leather products, accessories and home products. HomeStop, Desi Cafe, Hypercity, Inorbit, Brio etc. Reliance Retail: Reliance Retail Ltd. (RRL), the retail venture of Reliance Industries Ltd., launched its first store in November 2006 through its supermarket format called 'Reliance Fresh'. Other stores are Reliance Digital, Reliance Mart, Reliance Timeout, Reliance Trends, Reliance Jewels, Reliance Autozone, Reliance Wellness etc. Tata Group: Trent, the retail arm of Tata group launched operations in 1998. The portfolio of Trent consists of lifestyle chain called 'Westside', a hypermarket chain called 'Star Bazaar', books and music chain called 'Landmark' and family fashion stores called 'Fashion Yatra'. The Tata's also run electronic megastores under the brand 'Croma', watch and eye care stores under the brand 'Titan' and jewellery stores under the brand 'Tanishq'. RPG Group: The retail arm of RPG, called 'Spencer's Retail' was established in 1996. Spencer's focused on supermarket and hypermarket formats with verticals like food and beverage, electrical and electronic goods, home and office essentials, garments and fashion accessories, toys, personal care, music and books. Aditya Birla Group: Aditya Birla Retail Limited, the retail arm of Aditya Birla Group, ventured into retail into retail in 2007 by acquiring 'Trinethra', a south-India based chain of stores. The retail chain focused on supermarkets called 'more' and hypermarkets called 'more.MEGASTORE'. By 2009, Aditya Birla Retail had more than 600 supermarkets across India and was planning a massive expansion in the hypermarket format. Vishal Group: 'Vishal Megamart', the retail venture of Vishal Group, launched the first hypermarket in India in 1986. Since then, Vishal Megamart underwent a massive expansion and by 2009, it had presence in 100 cities and 24 states of India.

5. SELECT ORGANIZED STORES IN BHOPAL CITY

DB City & DB Mall: With global brands in grocery, food, hosiery, textile, footwear, Fun cinema etc.

Vishal Mega Mart: Grocery, Clothing, fashion assortments, cosmetics etc.

Reliance: Reliance Digital, Reliance Fresh, Reliance Mart.

Other Names: Platinum Plaza, V-Mart, Cinepolis, Lotus, Top-n-Town, Mc-Donalds, Pizzaa-Hut, Aapurti, ITC e-chaupal, Sanchi, Vindhya Herbal, N-Mart, Raymonds, Woodlands, etc.

6. ANALYSIS OF DATA

The data collected from literature review is analysed and grouped under following heads:

6.1 Factors behind Consumer Attractiveness

When the literature is studied regarding why the consumers are attracted towards organized formats, some factors are identified. First factor to name is Retailer's reputation as it is specific when it applies to an assortment of products carried within the store. The reputation is a measure of product quality and further purchase from the customer point of view. Second factor may be named as Brand because the same perception works here also. Sometimes brand is also a status symbol in the society. Third factor can be Price because various malls and stores arrange discount sales, lottery, free gifts etc. Maximum middle class is price conscious

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and have limited budget. Promotional tools also act as driving factor in the favour of these new formats. The author personally experienced in Bhopal city where DB mall and Vishal Mega mart arrange attractive promotional activities in print and electronic media. They also sometimes do celebrity endorsement and organize shows in these shopping complexes. Friends' influence and words of mouth work a lot in promoting these malls. Service quality is also excellent in these stores. These formats facilitate with parking, entertainment, fooding, shopping, safety measures and billing system etc.

6.2 Consumer Perception and Service Quality

The author analysed the various studies and found that Service Quality is very much important for relationship building with customers. Major factors identified for ascertaining service quality are price, brand name, store name, promotional tools etc. Some researchers categorised these factors as physical aspects, reliability, personal interaction, problem solving and policy. Some others named them as tangibles, reliability, responsiveness, assurance and empathy. It is also concluded that consumer expectations, perceptions should be closely met with service quality offered.

Brands have transformed the process of marketing into one of perception building, so, image is now everything. Customers make buying decisions based around the perception of the brand, rather than the reality of the product. Perception is a fragile thing. India is lucky to have international brands, but the Indian consumer is very choosy in selecting the brands and especially in the consumable sector. Customers make their purchasing and defection decisions on the basis of the perceived value of the service package being offered, rather than simply their current levels of satisfaction. Ambience, area and price are equally important for meeting perception with quality. Actually customer perception is very much associated with service quality because the earlier determines the satisfaction or dissatisfaction with the later.

6.3 Paradigm Shift in Retailing (Including Development in Retail Formats)

It is investigated that modern retail developments and growth of modern formats are taking place in India. It is also analysed the challenges and opportunities available to the retailers to succeed in India and concluded that retailers need to innovate in designing the value proposition, deciding the format to deliver to the consumer and also strive to serve the consumer better, faster and at less cost. Glitzy malls are coming with sparkling interiors offering a mix of shopping, entertainment and leisure. They also avail packing, child amusement, parking and fooding services. It can be said that the seeds are sown for an exciting retail transformation that has already been started bringing in larger interest from international brands/ formats. The advent of big players started the competition to attract Indian customers and to choose the best alternative of them. Traditional retailers are upgrading their shops akin to branded showrooms. Some common formats are known as shopping malls, speciality stores, discount stores, convenience stores, supermarkets, departmental stores etc. Latest trend is also experienced that is web store environment and customer service has significant impact on the willingness to buy from online retail stores. They have also identified that customer service and online shopping enjoyment have significant impact on the willingness to buy from online retail stores than the perceived trust. Asian Sky shop, home shop 18, flipkart, ebay etc. are some of them. In this concern the security, trust, internet speed, responsiveness significantly affect online purchaser's behavior.

6.4 Impact of Organised formats On Traditional Formats

It is a matter of debate as to whether Indian kirana stores would be able to survive in the face of competition from organized modern trade grocery retailers. Although traditional retail currently constitutes over 95% of the total sales in the country, smaller kiranas that are unable to compete with new age retailers in terms of variety and scale have begun losing volume in several parts of the country. It can be suggested that Kiranas should try and upgrade in order to survive. Another point to be noted is that the major part of Indian population lives in rural area where the traditional players are enjoying the retailing business. Until or unless these big global players aim at catering the rural market, winning the battle of Indian retail sector would be half filled. 6.5 Customer Satisfaction Customer satisfaction can be ascertained by quality, modern

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decoration, location of mall, word of mouth; availability of discount coupons and prompt and attentive services of salespersons. Customer satisfaction is the summation of customer's all expressions of service quality and depends upon his own perception and expectations.

6.6 India : A Huge Untapped Market

Some ripe areas are identified as hot markets. Kerala is found as a home to the largest organized retail chain in the country, there is margin free market (MFM), a 160 store chain selling almost everything from electronic and electrical appliances to food products, beverages, FMCG's, stationary and goods. It boasts of a Gross turnover of Rs 500cr for the year ended 2000. The organized retail industry is expected to grow by 30% in the next five years. Country like India has all the major international retailers and has an equally impressive list of home-grown retailers. It is revealed that the Indian situation is rather paradoxical. At $180 billion, the Indian retail business contributes 10-12% of the GDP higher than the some western economies, where it averages 8%. It revealed that India have the world's thickest density of outlets at 5.5% for every 1000 people between 12million retail stores, India's per capita retail space is dismissal 2 sq ft per person. Today, 50 of the fortune 500 companies and 25 of Asian top 200 companies are retailer. It is reported that real estate is an issue in India, also labor is cheap, so getting products delivered home is a whole lot easier and he supposes the internet will facilitate such shopping. It is also found out that the organized retail sector is registering tremendous growth fuelled by the unleashed spending power of new age customers who have considerable disposable income and willingness to have new shopping experience. It is emphasized that India's top retailers are largely lifestyle, clothing and apparel stores followed by grocery stores. Much of the grocery and vegetable market is open.

6.7 Differentiated Marketing Strategies

It is concluded that the importance must be given to sales promotion. The retailers must also be asked to give more displays and discounts. It is mentioned that the entry of organized retailers with their completely integrated marketing practices, franchising agreements, contractual selling, joint ventures and co- promotions creates a profound threat to unorganized retailers and compels them to change their style of doing business from convenience to intensive. The article reveals that unorganized retailers dealing in clothing and footwear, furniture and appliances, and beverages were among the most affected. The traditional retailers enjoyed the advantages of proximity to the customers in neighbourhood areas, long standing personal relationship with customers and providing home delivery and credit facility. It is concluded by taking small sample survey of the impact of malls on small shops and hawkers in Mumbai points to a decline in sales of groceries, fruits and vegetables, processed foods, garments, shoes, electronic and electrical goods in these retail outlets,ultimately threatening 50% of them with closure or a major decline in business.

6.8 Prominent Indian Retailers

Komal Chopra (2011) studied the prominent Indian retailers. These are Future Group with subbrands Pantaloons, Central, Big Bazaar, Planet Sports, Home Town, e-Zone, Aadhaar, Future Generali, Future Mediap, Blue Foods, Spaghetti Kitchen, Noodles Bar, The Spoon etc., K. Raheja Group with: Shopper's Stop, HomeStop, Desi Cafe, Hypercity, Inorbit, Brio etc., Reliance Retail with Reliance Fresh, Reliance Digital, Reliance Mart, Reliance Timeout, Reliance Trends, Reliance Jewels, Reliance Autozone, Reliance Wellness etc., Tata Group with Trent, Westside, Star Bazaar, Landmark, Fashion Yatra, Croma, Titan, Tanishq etc., RPG Group with Spencer's Retail, Aditya Birla Group's Trinethra, more, more.MEGASTORE, Vishal Group's Vishal Megamart etc.

6.9 Select Organized Retail Exhibits From Bhopal City

DB City & DB Mall, Vishal Mega Mart, Reliance Digital, Reliance Fresh, Reliance Mart, Platinum Plaza, V-Mart, Cinepolis, Lotus, Top-n-Town, Mc-Donalds, Pizzaa-Hut, Aapurti, ITC e-chaupal, Sanchi, Vindhya Herbal, N-Mart, Raymonds, Woodlands, Ashima Mall etc.

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7. CONCLUSION

It can be concluded that the transformation of traditional retailing to organized retailing in the form of shopping malls, hypercity, supermarkets, departmental stores, convenience store, speciality stores etc. is taking place at a regular pace in India. Global retail players are opening their outlets. Urban people are enjoying "shopptainment" in these places. Big shopping complexes are doing well in big cities with international and national brands. In small cities traditional shops are upgrading their outlets that is beneficial to survive in the market. However, the shops in neighbourhood and local cart pusher are much preferred by majority of population for ration and vegetables. Huge Indian rural market is also untapped for organized retailing.

8. REFERENCES:

Aggarwal, Vaishali (2008), Role Of Retailers In Reducing Inventory And Improving Customer Satisfaction: An Empirical Study Consumer Non-Durables.

Bansal, Gautam and Singh, Amrinder (2008), Study On Consumer Perception Regarding Purchase Of Products From Big Shopping Malls, Journal of IMS Group, Vol. 5, Issue 2.

Dabholkar, P. et.al. (1996), A Measure Of Service Quality For Retail Stores: Scale development and Validation, Journal of the Academy of Marketing Sciences, Vol. 24 (Winter).

Das, S. (2000), Scenes from the Malls, Business India, November, pp 96-98.

Ghewari, Asita A. and Pawar, Satish N. (2012), A Study Of Effect Of Opening Of Malls On Small Traditional Retailers In Pimpri Chinchwad, Pune, Sinhgad International Business Review, Vol. V, Issue 1.

Goswami, Paromita (2007), Apparel Shopping Behavior Of Urban Indian Students, ICFAI Journal of Management Research, Vol. 6 (4).

Gupta and Hiremath (2011), Apparel Retail Outlet Selection: Influence Of Service Levels In Goa, Indian Journal of Marketing, Vol. 41, Issue 11.

http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retailindustry-its-growth-challenges-and-opportunities/indian-retail-industry-its-growthchallenges-and-opportunities1.asp

http://www.ficci.com/sector/33/Project_docs/Sector-prof.pdf

http://www.ibef.org/industry/retail.aspx

Johnson, M. (1993), Retail Market In India, Advertising and Marketing, pp 154-55.

Kesarvani, Hitesh (2011), E-tailing: A Paradigm Shift In Consumer's Outlook And Preference, Prabandhan and Taqniki: Management Research Journal, Vol. 5, Issue- August 2011.

Kushwaha, Shishma and Gupta, Mohinder Kumar (2011), Customer Perception In Indian Retail Industry ( A Comparative Study Of Organized And Unorganised Retail Industry), The International Journal's Research Journal of Economics and Business Studies, Vol. 01, No. 01.

Malik, Manju Rani (2011), Determinants of Retail Customer Satisfaction- A Study of Organized Retail Outlets In Kurukshetra, Indian Journal of Marketing, Vol. 41, Issue 4

Parasuraman, A. et.al. (1985), A Conceptual Model Of Service Quality And Its Implication for Future Research, Journal of Marketing, Vol. 49, No. 3.

Poviah, R. (2001), Thousands Malls, Boom Advertising and Marketing, pp 34-41.

Pradhan, Swapana (2009), Retailing Management Text and Cases, Tata Mc Graw Hill, p.p.127-141,342-350.

Shekhar, M. Raj (2005), A Study On the Changing Retail Scenerio in India, Dillard Publisher, pp 155-

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http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retailindustry-its-growth-

http://www.ficci.com/sector/33/Project_docs/Sector-prof.pdf

http://www.ibef.org/industry/retail.aspx


57.

About the Authors: 1. Bhagwan Singh is currently pursuing Ph.D. (Business Management) from Mahatma Gandhi

Chitrakoot Gramodaya Vishwavidyalaya, Chitrakoot (Satna) M.P. He holds M.B.A. (Marketing mgmt) with Retail mgmt as elective subject, M.Phil(LIS), MLIS, BLIS, B.Sc. degrees and PGDCA. He has been associated with institutions like LNCT Bhopal, MCRPV Univ. Bhopal etc. Author has five research papers published in reviewed journals and books. He has attended various international, national conferences and workshops.

Dr. Anjaney Kr. Pandey is currently Head of the Department of Rural Engineering, MGCGV Chitrakoot (Satna) M.P. Earlier he was associated with Lovely Professional University. The author has excellent combination of academic achievements. He holds BE (Mechanical Engg.), MBA and PhD (Management) degrees. Currently author is guiding 6 PhD research scholars and MPhil scholars. He has got published various research papers in reviewed journals. The author has vast experience in teaching, research & publication fields.

E-mail: [email protected]

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Singh, Bhagwan and Pandey, Anjaney K. (2011), A Perspective on Changing Retail Landscape in Bhopal City, National Journal of Engineering Science and Management, No. 2, Vol. 1, pp 108-111.

Sinha, P.K. and Kar, S.K. (2007), An Insight Into The Growth Of New Retail Formats In India, Working paper. 2007-03-04, IIM Ahemedabad.

Sonia (2008), Customer Perception Towards Mega Mart, Services Marketing, Vol. 6(4).

Suhasini Kaul (2005), Measuring Retail Service Quality: Examining Applicability Of International Research Perspective in India, IIMA Working Papers.

Thakkar, Kinnary and Prajapati, Amit K. (2011), Retail Industry- An Emerging Sector in Job Opportunities, Prabandhan & Taqniki: Management Research Journal, Vol. 5, pp 180-186.

www.flipkart.com

www.wikiepedia.com


http://www.flipkart.com

http://www.wikiepedia.com


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Financial Inclusion in Indian Scenario

*Devendra Prasad Pandey

**Amit Kumar Katiyar

Abstract

"Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. The various essential services include credit, savings, insurance and payments and remittance facilities." In India out of 19.9 Crore households, only 6.82 crore households, have access to banking services. As far as rural areas are concerned, out of 13.8 crore households in India, only 4.86 crore households have access to banking services. In urban areas only 49.52% of households have access to banking services. Over 4 1 % of adult people in India do not have bank account. There are so many factors that are affecting access to financial services by weaker sections of the society in India. Several steps have been taken by RBI and GOI to providing basic banking services to the financially excluded people. Keeping in view the National Rural Financial Inclusion Plan (NRFIP) has set a target to providing access to comprehensive financial services to at least 50% of the excluded rural households by the end of 2012 and remaining by 2015.

Keywords Banks, Financial Inclusion, 'No-Frills' Accounts, SHG's, SLBC.

Introduction

There are several factors that affect access to formal banking system in any country. They include culture, financial literacy, gender income and assets, proof of identity and so on. The RBI has taken several measures since Independence to improve access to affordable financial services through financial education, leveraging technology and generating awareness.

The aim of financial inclusion is to promote sustainable development and generating employment for a majority of population especially in rural areas. In the first ever Index of Financial Inclusion to find out the extent of reach of banking services among 100 countries, India has been ranked 50. At present only 34% of India's population has access to basic banking services. The latest National Sample Survey Organization survey reports that there are over 80 million poor people living in the cities and towns of India and they lack most basic banking services- such as saving accounts, credit, remittances and payment services, financial advisory services and so on. Low-income groups have not access to formal banking systems as they usually do not have the documents needed to open a bank account. As a result they depend on the informal sector for their savings and loan requirements. Recognizing the importance of inclusive growth in India, efforts are being taken to make the financial system more inclusive. The Report of the committee on financial inclusion headed by Dr. C. Rangarajan (2008) has observed that financial inclusion must be taken up in a mission mode and suggested a national mission on financial inclusion (NMFI) comprising representation of all stakeholders for suggesting the overall policy changes required, and supporting the stakeholders in the domain of public, private and NGO sectors in undertaking promotional initiatives.

Need for Financial Inclusion

Out of 19.9 crore households in India, only 6.82 crore households have access to banking services. As for as rural areas are concerned out of 13.8 crore households in India, only 4.16 crore rural households have access to basic banking services. In respect of urban areas, only 49.52% of urban households have access to banking services. Over 4 1 % of adult population in India does not have bank account. There are a

*Associate Prof., Mahatma Gandhi Chitrakut Gramodaya Vishwavidhyalaya Satna (M.P.) India Email ID: [email protected] Alternate E-mail ID: [email protected](M): 09918669898 **Research Scholar,Mahatma Gandhi Chitrakut Gramodaya Vishwavidhyalaya Satna (M.P.) India E-mail ID: [email protected] E-mail ID: [email protected](M): 09415739493



number of factors affecting access to financial services by weaker sections of the society in India. The lack of awareness, low income and assets, social exclusion, illiteracy is the barriers from demand side. The distance from bank branch, branch timings, cumbersome banking procedure, and requirements of documents for opening a bank account, unsuitable banking products/schemes, language, high transaction costs and attitude of bank officials are the barriers from supply side. Hence, there is a need for financial inclusion to build uniform economic development.

A sample study carried out by the Banking Codes and Standard Board of India in Revealed the poor awareness about the no-frills accounts for poor people, the accounts opening forms were not simplified and did not contain any information about the required documents under simplified KYC norms and none of the branches the staff were in a position to offer any guidance in case of the prospective customer was not in a position to produce required documents in proof of identity and address. As a result the weaker sections of India hesitate to take part in financial inclusion and help to increase the economic growth of the country.

The Eleventh Five Year Plan (2007-12) envisions inclusive growth as a key objective. The inclusive growth implies an equitable allocation of resources with benefits accruing to every section of the society. It is aimed as a poverty reduction, human development, health and provides opportunity to work and be creative. Achieving inclusive growth in India is the biggest challenge as it is very difficult to bring 600 million people living in rural India into the mainstream. One of the best ways to achieve inclusive growth is through financial inclusion.

Review of Literature

Banks have adopted several strategies to expand the outreach of their services in order to promote financial inclusion. One of the ways in which this can be achieved in a cost effective manner is through forging linkage with micro finance institutions and local communities. Banks should give wide publicity of no frills account. Banks need to redesign their business strategies to incorporate specific plans to promote financial inclusion of low income group treating it both a business opportunity as well as a corporate social responsibility (V. Leeladhar, 2005).

Access to financial services allows lower income groups to save money outside the house safely, prevents concentration of economic power with a few individuals and mitigates the risk that poor people face as a result of economic shocks (Beck, Demirguc-Kunt and Peria 2006). The breadth of financial inclusion in a region of a country is usually measured by the percentage of the people in the region who have access the bank accounts (Beck & De La Torre, 2006). This is primarily because a bank account enables poor households to perform important financial functioning such as saving money safely outside the house, accessing credit, making loan or premium payment and transferring money within the country. Thus, although a bank account cover only one aspect of financial inclusion, it may determine access for many other financial services (Littlefield et al, 2006).

Indian banking sector is grappling with the issue of financial inclusion. But, it is not altogether a new exercise. Financial inclusion was envisaged and embedded in Indian credit policies in the earlier decades also, though in a disguised form and without the same nomenclature(Rao,2007).

Microfinance offers significant potential for achieving financial inclusion. The experience of the bank in this segment has been quite encouraging. In the words of Prof. C.K.Prahlad "If we stop thinking of the poor as victims or as a burden and start recognizing them as a resilient and creative entrepreneurs and value conscious consumers, a whole world of opportunity will open up."(K.C.Chakrabarty, 2008).

Financial Inclusion-World Experience

An interesting thing which occurs from the international practice is that the more developed society is, the greater the thrust on the empowerment of the common man and low income groups. It may be worthwhile to look at the international experience in tackling the problem of financial exclusion so that we can learn from the international experience.

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In U K, 1 out of 12 households do not have basic current account with any bank. The financial inclusion task force in UK has identified three priority areas for the purpose of financial inclusion, access to banking, access to affordable credit and access to free face-to-face money advice. UK has established a financial inclusion fund to promote financial inclusion and assigned responsibility to banks and credit unions in removing financial exclusion. Basic banks no frills accounts have been introduced. An enhanced legislative environment for credit unions has been established, accompanied by tighter regulations to ensure greater protection for investors. A Post Office Card Account (POCA) has been created for those who are unable or unwilling to access a basic bank account. The concept of a Saving Gateway was introduced to encourage availing of financial services by the disadvantaged groups. The Community Finance Learning Initiatives (CFLIs) were also introduced with a view to promoting basic financial literacy among housing association tenants.

In USA, varying from state to state 10 to 20 per cent of US households lack a bank account. Among the low income families, 22 per cent do not have either a current or saving account. The Government has taken various measures to deal with the problem of financial exclusion. A civil rights law namely the Community Reinvestment Act (CRA) prohibits discrimination by banks against law and moderate income neighborhoods. The CRA imposes a affirmative and continuing obligation on banks to serve the need for credit and banking services of all the communities in which they are chartered. In fact, numerous studies conducted by Federal Reserve and Harvard University demonstrated that CRA lending a win-win proposition and profitable to banks. In this context, it is also interesting to know the other initiatives taken by a state in the United States. Apart from the CRA experiment, armed with the sanction of banking law, the State of New York Banking Department, with the objective of making available the low cost banking services to consumers, made mandatory that each banking institution shall offer basic banking account and in case of credit unions the basic share draft account, which is in the nature of low cost account with minimum facilities.

In France, as per 1984 banking act, any person refused a bank account ca approach the Bank of France, which will identify and nominate an institution to provide the bank account. In 1992, French banks signed a charter undertaking to open bank accounts at an affordable cost with related payment facilities to all.

Hence, it is seen that even in developed countries, The State has accepted financial inclusion as an important measure for socio-economic development of the poor and disadvantaged groups. Various proactive and positive actions have been initiated by the Governments to deal with the problem of financial exclusion.

Financial Inclusion in Indian Scenario

Financial Inclusion in India has been assessed by various communities in terms of its people access to avail banking services. Only 34% of India's population has access to banking services. The Eleventh five year plan (2007-12) envisions inclusive growth as a key objective. Achieving inclusive growth in India is a challenge as it very difficult to bring 600 million people living in rural India into the mainstream. One of the best ways to achieve inclusive growth is through financial inclusion.

The process of financial inclusion in India can be broadly classified into three phases. During the first phase (1960-1990), the focus was on channeling of credit to the neglected sectors of the economy. Special emphasis was also laid on weaker sections of the society. Second Phase (1990-2005) focused mainly on the strengthening the financial institutions as part of financial sector reforms. Financial inclusion in this phase was encouraged mainly by the introduction of SelfHelp Group (SHG)-bank linkage program in the early 1990s and Kisan Credit Cards (KCCs) for providing credit to farmers. The SHG-bank linkage program was launched by National Bank for Agriculture and Rural Development(NABARD) in 1992, with policy support from the Reserve Bank , to facilitate collective decision making by poor and provide 'door step' banking. During the Third Phase (2005 onwards), the financial inclusion was explicitly made as a policy objective and thrust was on providing safe facility of savings deposits through 'no-frills' accounts.

The Report of the Committee on Financial Inclusion headed by Dr. C. Rangrajan (2008) has observed that financial inclusion must be taken up in a mission mode and suggested a National Mission on Financial Inclusion (NMFI) comprising representation of all stakeholders for suggesting the overall policy changes required, and supporting stakeholders in domain of public, private and NGO sectors in undertaking promotional

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initiatives.

Several steps have been taken by Reserve Bank of India and Government to bring the financially excluded people to the fold of formal banking services. They include the following:

• Introduction of No-Frills account

• Relaxing 'Know Your Customer'(KYC) norms

• General Purpose Credit Card(GCC) schemes

• Role NGOs, SHGs, MFIs

• Business Facilitator and Business Correspondent (BC) Models.

• Nationwide Electronic Financial Inclusion System(NEFIS)

• Project Financial Literacy

• Financial Literacy and Credit Counseling(FLCC) centers

• National Rural Financial Inclusion Plan(NRFIP)

• Financial Inclusion Fund(FIF)

• Financial Inclusion Technology Fund(FITF)

With a view to enhancing the financial inclusion, in the Mid Term Review of the Policy (2005-06), the RBI advised all banks in November 2005 to make available a basic banking 'no-frills' account either with 'nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sections of the population.

The 100 per cent financial inclusion drive is progressing all over the country. The State Level Bankers Committee (SLBC) has advised to identify one or more districts for 100 per cent financial inclusion. So, far, the SLBC has identified 431 districts for 100 per cent financial inclusion. The success of the financial inclusion can be measured by the actual quantity and quality of uses of newly opened 'no-frills accounts. The number of 'no-frills' account increased from 4, 89,497 on 31st March 2006 to 3,30,24,761 on 31st March 2009.

Keeping in view the enormity of task involved, the committee on financial inclusion recommended the setting up of a mission mode National Rural Financial Inclusion Plan (NRFIP) with a target of providing access to comprehensive financial services to at least 50 per cent (55.77 million) of the excluded rural households by 2012 and remaining by 2015.

Conclusion

In achieving inclusive growth in India, the financial inclusion will play a vital role and help the nation to drive away the not only the rural poverty but also the urban poverty in India. It is the duty of every Indian citizen to ensure that all the Indian will have bank account and everybody should take part actively in achieving 100% financial inclusion in India.

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Peachy, S. and A. Roe,(2004): "Aces to Finance- What Does it Mean and How Do Savings Bank Foster Access?'', Brussels: World Saving Institute.

Report of the Committee on Financial Inclusion in India (Chairman: C. Rangrajan) (2008), Government of India.

Sen, Amartya, (2000): "Development as Freedom", Anchor Books, Newark, 2000. Treasury, H.M., (2007): "Financial Inclusion: The Way Forward".

Sujatha, B (2009), "Financial Concepts and Strategies", ICFAI.

Treasury, H.M., (2007): "Financial Inclusion: The Way Forward".

World Bank (2006), World Development Indicators, World Bank, Washington.

World Bank (2008): "Finance for All-Policies and Pitfalls in Expanding Access", World Bank, Washington.

44


45

Balance of Trade in India

Sachin Jain Asstt. Professor MBA Department

SATI VIDISHA , [email protected]

Abstract

In the era of globalization, global macroeconomic crises and the changes in the international trade pattern have accentuated the need for clearer understanding of the factors underlying a country's balance of trade position.A In this onset, this article attempts to examine the role of various determinants like real effective exchange rate, domestic consumption, FDI and foreign income on balance of trade in determining short-and-long-run trade balance behavior for India over the period,1972-73 to 2010-11. More precisely, the aim is to examine whether the trade balance is affected by exchange rates, FDI and household consumption and foreign incomes etc.Several econometric techniques and tools like Augmented Dickey Fuller test, Johansen Cointegration test and VECM , OLS have been used to observe long run as well as short run causality among different macroeconomic variables under consideration of our study. The result suggests that long run as well as short run causality existed among different macro economic variables like real effective exchange rate, FDI, domestic consumption and foreign income and foreign direct investment and foreign income have significant positive impact on balance of trade whereas domestic consumption and real effective exchange rate impacted negatively on balance of trade in India.

Keywords: Balance of trade, real effective exchange rate, domestic consumption, FDI, foreign income, India.

1. Introduction:

Indian economy and foreign trade are on a growth trajectory. Indian exports have come a long way in value terms from the time of gaining independence in 1947. Trends of global trade and policies have great influence on international trade, economic activity and growth. At the initial stage of reforms,expectation was created that such imbalances in trade would be temporary. With the inflation eradicated, consumption growth leveling off and domestic productivity enhanced through privatization and deregulation, trade deficit would tend to be gradually reversed.The aim of trade policies is to stimulate domestic output, protection to domestic industries, consumer protection and promotion of export etc. India needs various economic policies to enhance the balance of trade and boosts the economics activity and development which includes tariff structure, exchange rates, import control, export taxation, foreign exchange allocation system. In the era of globalization, global macroeconomic crises and the changes in the international trade pattern have accentuated the need for clearer understanding of the factors underlying a country's balance of trade position.

In this onset, the primary objective of this paper is to examine the role of various determinants likereal effective exchange rate, domestic consumption, FDI and foreign income on balance of trade in determining short-and-long-run trade balance behavior for India. More precisely, the aim is to examine whether the trade balance is affected by exchange rates, FDI and household consumption and foreign incomes etc.

2. India's recent Balance of Trade scenario:

Since the independence in 1947, the balance of trade in India was on deficit except two fiscal years,1972-73 and 1976-77. The trade balance has always been negative as shown in Table 1 except two years 1972-73, 1976-77. The trade deficit has been increasing in recent years. During post liberalization era, exports have done well particularly from 1992-93 to 1996-97;and from 2002-2003 to 2008-2009. The major component of import was crude oil. The persistent increase in oil price impacted on the balance of trade



adversely and the deficit was fulfilled by external capital account borrowing that cause to raise external debt burden.Therefore, the higher trade deficit could be attributed to a rise in petroleum, oil and lubricants (POL) as well as non-POL components in imports. Continued uptrend in prices in the international markets and rise in the price of gold were the major contributors to this process [Finance Ministry, (2008)]. The trade account is supported by the rising services exports.

India's services exports, at $81.3 billion (Rs3.2 trillion) in 2006-07, are fast catching up with the country's merchandise exports of $127.1 billion. The services export growth rate in 2006-07 was 32.5% compared to 2 1 % in merchandise export. [Singh,(2007)].

Indian foreign trade has grown in absolute numbers as compared to 1950-51, but its share in worldtrade has gown down from around 2.5 percent to 0.67 percent in 1991 and increased to more than one percent in 2007. During the first phase, 1950-1970, exports have grown at a very slow rate. During 1950s, the exports growth rate was 3.6 percent in dollar terms and 3.5 percent in 1960s. Due to rising imports and stagnant exports, policy of import substitution was started in 1960s to cut down on imports. Five primary commodities constituted a major portion of Indian exports and the prevailing belief was that the country had nothing much to export. Government had adopted a policy of export pessimism and import substitution during this period. Exports were largely neglected during the first and the second five-year plans, which was justified on the ground that demand for Indian exports was inelastic. Whilst the world merchandise export was growing at 6.3 per cent per annum during the 1950s, exports from India stagnated. As the world merchandise exports expanded relatively faster during the 1960s at 8.8 per cent per annum, the growth rate of India's exports improved somewhat to 3.6 per cent per annum. Clearly, the country failed to make the best use of the trade possibilities available during the 1950s and 1960s .During the period of 1970-1991 exports performance improved. Government had taken initiatives in late 1960s like establishing Indian Institute of Foreign Trade and others for promoting foreign trade. The world economy was also growing fast in 1970s. The export growth rate was 15.8 percent in 1970s before slowing down to 8 percent in 1980s.During 1970s, imports growth rate also picked up and infact, was higher than growth rate of exports. The contribution of foreign trade to GDP again reached to 11.8 per cent, the same level as on 1950-51. The export boom of the 1970s, however, could not be maintained during the first half of the 1980s. As the growth rate of world exports turned negative in the aftermath of the second oil price hike, India's exports decelerated sharply. During the second half of the 1980s, however, the world economy recovered and India's exports grew at a healthy pace (17.8 per cent). There was a genuine improvement in the export competitiveness of India during this period due to a major depreciation of the REER and increased export subsidies. This period also witnessed some doses of industrial deregulation and liberalization of capital goods imports [Joshi and Little (1994); Veeramani, (2007)].

In the post liberalization period i.e. post 1991, export and import growth has picked up and the contribution of foreign trade to GDP has increased to 17.1 percent by 2000.However during the period import growth rates has been higher than exports growth rates. Many pro-export policies were started after liberalization. Export promotion schemes prevalent during the post 1991 period include: export promotion capital goods (EPCG), duty entitlement passbook (DEPB), duty free replenishment certificate (DFRC), advance licences, special import licence (SIL), exemption from income tax, sector/market-specific schemes [e g, market access initiative (MAI), towns of export excellence, agriexport zones (AEZ), Focus Africa, and Focus Latin American Countries], and schemes for status holders, export oriented units (EOUs), units in special economic zones (SEZs), electronic hardware technology parks (EHTPs), software technology parks (STPs) and biotechnology parks (BTPs). A few more schemes (such as, target plus, served from India) have been added under the Foreign Trade Policy 2004 [RBI (2004), Malik, (2005)].

46


7.1 (A): EXPORTS, IMPORTS AND TRADE BALANCE

(US $ Million)

Year Exports Imports Trade Rate f Change (including Balance Export Import re-exports) (per cent)

1 2 3 4 5 6

1949-50 1016 1292 -276 na na

1950-51 1269 1273 -4 24.9 -1.5

1951-52 1490 1852 -362 17.4 45.5

1952-53 1212 1472 -260 -18.7 -20.5

1953-54 1114 1279 -165 -8.1 -13.1

1954-55 1233 1456 -223 10.7 13.8

1955-56 1275 1620 -345 3.4 11.3

1956-57 1259 1750 -491 -1.3 8.0

1957-58 1171 2160 -989 -7.0 23.4

1958-59 1219 1901 -682 4.1 -12.0

1959-60 1343 2016 -673 10.2 6.0

1960-61 1346 2353 -1007 0.2 16.7

1961-62 1381 2281 -900 2.6 -3.1

1962-63 1437 2372 -935 4.1 4.0

1963-64 1659 2558 -899 15.4 7.8

1964-65 1701 2813 -1112 2.5 10.0

1965-66 1693 2944 -1251 -0.5 4.7

1966-67 1628 2923 -1295 -3.8 -0.7

1967-68 1586 2656 -1070 -2.6 -9.1

1968-69 1788 2513 -725 12.7 -5.4

1969-70 1866 2089 -223 4.4 -16.9

1970-71 2031 2162 -131 8.8 3.5

1971-72 2153 2443 -290 6.0 13.0

1972-73 2550 2415 135 18.4 -1.1

1973-74 3209 3759 -550 25.8 55.7

1974-75 4174 5666 -1492 30.1 50.7

1975-76 4665 6084 -1419 11.8 7.4

1976-77 5753 5677 76 23.3 -6.7

1977-78 6316 7031 -715 9.8 23.9

1978-79 6978 8300 -1322 10.5 18.0

47


1979-80 7947 11321 -3374 13.9 36.4

1980-81 8486 15869 -7383 6.8 40.2

1981-82 8704 15174 -6470 2.6 -4.4

1982-83 9107 14787 -5680 4.6 -2.6

1983-84 9449 15311 -5862 3.8 3.5

1984-85 9878 14412 -4534 4.5 -5.9

1985-86 8904 16067 -7163 -9.9 11.5

1986-87 9745 15727 -5982 9.4 -2.1

1987-88 12089 17156 -5067 24.1 9.1

1988-89 13970 19497 -5527 15.6 13.6

1989-90 16612 21219 -4607 18.9 8.8

1990-91 18143 24075 -5932 9.2 13.5

1991-92 17865 19411 -1546 -1.5 -19.4

1992-93 18537 21882 -3345 3.8 12.7

1993-94 22238 23306 -1068 20.0 6.5

1994-95 26330 28654 -2324 18.4 22.9

1995-96 31797 36678 -4881 20.8 28.0

1996-97 33470 39133 -5663 5.3 6.7

1997-98 35006 41484 -6478 4.6 6.0

1998-99 33218 42389 -9171 -5.1 2.2

1999-2000 36822 49671 -12849 10.8 17.2

2000-01 44076 49975 -5899 19.7 0.6

2001-02 43827 51413 -7587 -0.6 2.9

2002-03 52719 61412 -8693 20.3 19.4

2003-04 63843 78149 -14307 21.1 27.3

2004-05 83536 111517 -27981 30.8 42.7

2005-06 103091 149166 -46075 23.4 33.8

2006-07 126414 185735 -59321 22.6 24.5

2007-08 163132 251654 -88522 29.0 35.5

2008-09 185295 303696 -118401 13.6 20.7

2009-10 178751 288373 -109621 -3.5 -5.0

2010-11 251136 369769 -118633 40.5 28.2

2011-12 304624 489181 -184558 21.3 32.3

2012-13 (P)a

(April-December) 214100 361272 -147172 -5.5 -0.7

Source : DGCI&S, Kolakata P: Provisional

48


7.1 (B): EXPORTS, IMPORTS AND TRADE BALANCE

(Rs. crore)

Year Exports Imports Trade Rate of Change (including Balance Export Import reexports) (per cent)

1 2 3 4 5 6

1949-50 485 61 -132 na na

1950-51 606 608 -2 24.9 -1.5

1951-52 716 890 -174 18.2 46.4

1952-53 578 702 -124 -19.3 -21.1

1953-54 531 610 -79 -8.1 -13.1

1954-55 593 700 -107 11.7 14.8

1955-56 609 774 -165 2.7 10.6

1956-57 605 841 -236 -0.7 8.7

1957-58 561 1035 -474 -7.3 23.1

1958-59 581 906 -325 3.6 -12.5

1959-60 640 961 -321 10.2 6.1

1960-61 642 1122 -480 0.3 16.8

1961-62 660 1090 -430 2.8 -2.9

1962-63 685 1131 -446 3.8 3.8

1963-64 793 1223 -430 15.8 8.1

1964-65 816 1349 -533 2.9 10.3

1965-66 810 1409 -599 -0.7 4.4

1966-67 1157 2078 -921 42.8 47.5

1967-68 1199 2008 -809 3.6 -3.4

1968-69 1358 1909 -551 13.3 -4.9

1969-70 1413 582 -169 4.1 -17.1

1970-71 1535 1634 -99 8.6 3.3

1971-72 1608 1825 -217 4.8 11.7

1972-73 1971 1867 104 22.6 2.3

1973-74 2523 2955 -432 28.0 58.3

49

a Growth rate on provisional over revised basis and based on Department of Commerce methodology.

Note : For the years 1956-57, 1957-58, 1958-59 and 1959-60, the data are as per the Fourteenth Report of

the Estimates Committee (1971-72) of the erstwhile Ministry of Foreign Trade.


1974-75 3329 4519 -1190 31.9 52.9

1975-76 4036 5265 -1229 21.2 16.5

1976-77 5142 5074 68 27.4 -3.6

1977-78 5408 6020 -612 5.2 18.6

1978-79 5726 6811 -1085 5.9 13.1

1979-80 6418 9143 -2725 12.1 34.2

1980-81 6711 12549 -5838 4.6 37.3

1981-82 7806 13608 -5802 16.3 8.4

1982-83 8803 14293 -5490 12.8 5.0

1983-84 9771 15831 -6060 11.0 10.8

1984-85 11744 17134 -5390 20.2 8.2

1985-86 10895 19658 -8763 -7.2 14.7

1986-87 12452 20096 -7644 14.3 2.2

1987-88 15674 22244 -6570 25.9 10.7

1988-89 20232 28235 -8003 29.1 26.9

1989-90 27658 35328 -7670 36.7 25.1

1990-91 32553 43198 -10645 17.7 22.3

1991-92 44041 47851 -3810 35.3 10.8

1992-93 53688 63375 -9687 21.9 32.4

1993-94 69751 73101 -3350 29.9 15.3

1994-95 82674 89971 -7297 18.5 23.1

1995-96 106353 122678 -16325 28.6 36.4

1996-97 118817 138920 -20103 11.7 13.2

1997-98 130100 154176 -24076 9.5 11.0

1998-99 139752 178332 -38580 7.4 15.7

1999-2000 159561 215236 -55675 14.2 20.7

2000-01 203571 230873 -27302 27.6 7.3

2001-02 209018 245200 -36182 2.7 6.2

2002-03 255137 297206 -42069 22.1 21.2

2003-04 293367 359108 -65741 15.0 20.8

2004-05 375340 501065 -125725 27.9 39.5

2005-06 456418 660409 -203991 21.6 31.8

2006-07 571779 840506 -268727 25.3 27.3

2007-08 655864 1012312 -356448 14.7 20.4

2008-09 840755 1374436 -533680 28.2 35.8

2009-10 845534 1363736 -518202 0.6 -0.8

50


2010-11 1142922 1683467 -540545 35.2 23.4

2011-12 1465959 2345463 -879504 28.3 39.3

2012-13 (P)a

(April-December) 1166439 1967522 -801083 9.4 4.8

Source : DGCI&S, Kolakata P: Provisional

a Growth rate on provisional over revised basis and based on Department of

Commerce methodology.

Note : For the years 1956-57, 1957-58, 1958-59 and 1959-60, the data are as per the

Fourteenth Report of

the Estimates Committee(1971-72) of the erstwhile Ministry of Foreign

Trade.

3. Methodology:

3.1. Data and Variables:

Using the time period, 1972-73 to 2010-12 for India, this study aims to examine effect of various determinants affecting balance of trade in India. The estimation methodology employed in this study is ordinary least square method(OLS

Data types are secondary in nature and sources fromwhich these are collected are mainly

DGCI&S, Kolakata , Ministry of Foreign Trade.,Handbook of Statistics on Indian

Economy,2010-11,International Financial Statistics,(several issues).

The details of data set are depicted below:

BOT -Balance of Trade= (Export-imports) [Handbook of Statistics on Indian Economy,2010-11).

DC- Domestic consumption expenditure [Handbook of Statistics on Indian Economy,2010-11).

FDI -Foreign Direct Investment [Handbook of Statistics on Indian Economy,2010-11&UNCTAD],

REER-Real exchange rate [Handbook of Statistics on Indian Economy,2010-11]

Yf -Income from the rest of the world (IFS-IMF) various issues.

Hypothesis:

(i).Real effective exchange rate impacts positively on the trade balance.

(ii)Domestic consumption has a negative impact on trade balance.

(iii)FDI impacts positively on trade balance.

(iv)Real income to the rest of the world has a positive impact on trade balance.

4. Analysis of the results:

Before presenting the analytical result, we depict below the descriptive statistics in Table:2 to have a

51


brief snapshot of the different macro-economic variables under our consideration like balance of trade,real effective exchange rate, domestic consumption, FDI and foreign income.

Table: 2: Descriptive Statistics

Sample: 1972-73 to 2010-12

BOT REER FDI DC Yf

Mean -74096.79 88.60744 24415.79 196922.7 -19338.15

Median - 8004.000 93.04000 683.0000 82292.00 - 5956.000

Maximum 104.0000 127.5000 179059.0 943397.0 63983.00

Minimum -533681.0 60.23000 -26.00000 4538.000 -182347.0

Std. Dev. 146109.4 19.03406 49476.22 253876.7 47283.48

Skewness -2.227738 0.044042 2.234108 1.633536 -2.325102

Kurtosis 6.618572 1.888251 6.549646 4.849373 8.679342

Jarque-Bera 53.53617 2.021084 52.91803 22.90264 87.55391

Probability 0.000000 0.364022 0.000000 0.000011 0.000000

Observations 39 39 39 39 39

Source: Own estimate.

Ordinary Least Square Technique:

Table:3: Results of Ordinary Least Square Estimates

Dependent Variable: BOT

Method: Ordinary Least Squares

Sample: 1972-73 to 2010-12

Included observations: 39

Variables Coefficient Std. Error t-Statistic Prob.

C 62136.28 16773.60 3.704409 0.0007

DC -0.157271 0.035790 -4.394289 0.0001

FDI 1.755564 0.206622 8.496507 0.0000

Yf 0.451846 0.114715 3.938854 0.0004

REER -605.6093 170.5260 -3.551419 0.0011

R-squared 0.987637 Mean dependent var -74096.79

Adjusted R-squared 0.986183 S.D.dependentvar 146109.4

S.E. of regression 17174.61 Akaike info criterion 22.45946

Sum squared resid 1.00E+10 Schwarz criterion 22.67274

Log likelihood -432.9595 F-statistic 679.0532

52


Durbin-Watson stat 1.589780 Prob(F-statistic) 0.000000

Ho: There is no relationship between the variables; H1: There is relationship between the variables

Source: Own estimate.

In ordinary least square Method, we reject the hypothesis that there is no relationship between the variable and the results of the Ordinary Least Squares Regression are summarized in the Table 3. The empirical analysis on basis of ordinary Least Square Method suggests that there is either positive relationship or negative relationship among Balance of trade , FDI, real effective exchange rate,domestic consumption and foreign income.

The given coefficient shows foreign income has significant positive impact on balance of trade which has implicit implication that with increase of foreign income, balance of trade position approaches towards favourable direction, on the other hand, balance of trade deficit lessens because it may have positive impact on export. Variable of FDI shows positive impact on balance of trade as FDI flows increase which may motivate the multinational corporation to produce import substitution domestically and it can reduce import and a positive impact on balance of trade.

The effectiveness of exchange rate depreciation in improving the trade balance has long been an issue of considerable interest to economists and policy makers. The traditional Keynesian expenditure switching hypothesis suggests that a real depreciation makes home produced traded goods more competitive, thereby reducing imports and stimulating exports.

From our analysis, coefficient of real effective exchange rate shows negative impact in that as real exchange rate depreciates, it may increase the balance of trade towards the surplus.It is indicative that decrease in real effective exchange rate should increase the demand for traded industries' output by stimulating export.

5. Conclusions:

The objective of this paper is to examine the role of various determinants like real effective exchange rate, domestic consumption, FDI and foreign income on balance of trade in determining short-andlong- run trade balance behavior for India using annual data over the period 1972-73 to 2010-12.

Foreign direct investment and foreign income have significant positive impact on balance of trade whereas domestic consumption and real effective exchange rate impacted negatively on balance of trade in India

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55

MICROINSURANCE IN INDIA

Prashant Tiwari Asstt. Professor MBA Department

SATI VIDISHA [email protected]

ABSTRACT

Microfinance phenomenon is one of the most remarkable socio-economic developments of our times. For a long time the poor, because of their economic circumstance, were considered nonbankable. However, the "micro-credit phenomenon "has shown that the poor can be made creditworthy if they are organized in small groups. This clearly has profound implications not just from a finance perspective but, more importantly, from the perspective of poverty alleviation.

The importance of microfinance must be looked against the fact that even with wide network of banks in India, the low-income people especially in rural areas, have been largely bypassed by the formal banking system. The government of India has been involved in its promotion in a variety of ways. This movement needs further guidance and direction from government. This paper provides an overview of the micro-insurance scene in India and suggests strategies for its further extension. The paper should be useful for all those involved in microfinance.

KEY WORDS: Microfinance, Insurance,Poor,Strategies

INTRODUCTION:

Insurance industry of India achieved one of the highest growth rates in the world. Post liberalisation in 2000, Indian insurance industry has grown at the average rate of 15-20% every year. Microinsurance also developed as a sub-segment of the insurance industry in this period. Being a sub-segment of the conventional insurance industry, microinsurance has imbibed both the positives and negative characteristics of the larger industry, specifically in the life insurance segment.

In an effort to ensure a balanced and speedy expansion of insurance coverage in the country, the Authority has put in place the regulatory framework laying down the obligations of insurers to the rural and social sectors. These regulations impose obligations on insurers towards the rural population - to sell a specified percentage of policies and underwrite specified percentage of gross premium underwritten for life and non-life insurance companies respectively; and cover a specifi ed number of lives/assets belonging to people below poverty line or those pursuing certain traditional occupations. These obligations have been linked to the number of years of having been in operations of the respective insurer. The Government of India had set up a consulting group in 2003 to examine the existing insurance schemes for the rural poor; and on the basis of the group's recommendations, the Authority issued IRDA (Micro insurance) Regulations, 2005.

Since notifi cation of the Micro Insurance Regulations in November, 2005, the Authority has been monitoring the progress of micro insurance business and examining the possibilities of offering a facilitative approach to the industry so that the micro insurance business could take off as a class of business to further extend insurance penetration amongst various sections of the society. Towards this direction, the Authority permitted Non- Governmental Organizations (NGOs) registered as Non Profi t Companies, including NGOs registered under Section 25 of the Companies Act, 1956 to act as microinsurance agents vide its circular dated 13th March,2008, in addition to NGOs registered as societies that were already permitted to act as agents under the Micro Insurance Regulations.



With a view to giving a further fillip to micro insurance business, the Authority has reviewed comprehensively the extant regulatory architecture of the micro insurance business and issued an exposure draft on 26th July, 2012 proposing modifications to the existing IRDA (Micro Insurance) Regulations, 2005. The intent of the review is to create an encouraging regulatory environment for promoting micro insurance business in the country. Towards this end, the existing standalone delivery channel is proposed to be strengthened; encourage diversity in the products offered by insurance companies under this stream; customize products to meet the needs of the targeted sections of society; expand the coverage to include micro, small and medium enterprises; and strengthen regulatory oversight.

In the life insurance business of the micro insurance, the Individual New Business premium in the year stood at '115.68 crore for 46.20 lakh new policies, the group business premium amounted to '109.82 crore covering 1.02 crore of lives. LIC contributed most of the businessprocured in this portfolio by garnering '106.03 crore of individual premium from 38.26 lakh lives and '98.32 crore of group premium underwriting 94.44 lakh lives.

Microinsurance is growing in popularity among donors and international development agencies, perhaps because it addresses the core vulnerabilities of the poor and therefore responds to many development priorities. Microinsurance also sustains investments in other areas such as employment creation. Whether from a social protection entry point or a private sector/financial sector approach, donors are interested in the contributions of insurance to development.

These agencies can play a supportive role while enhancing good practices and professionalism at the different levels of the financial system involved in the sustainable provision of insurance to the poor. The intervention areas include:

a) market education at the potential or actual policyholder level ("client level");

b) private and public retail providers (risk carriers) offering insurance services on a financially viable basis and at the same time appropriate for low-income persons ("micro level");

c) support institutions, such as networks and associations, information clearing houses, training and technical assistance providers promoting transparency, fostering knowledge management and consumer recourse development as well as intermediaries ("meso level")

and

d) regulators, supervisors as well as policymakers ("macro level") creating an enabling environment.

In their efforts to strengthen local financial systems, donors and development agencies draw on different instruments, ranging from technical assistance grants and capacity-building support at all levels of the financial system, to soft loans to governments for various activities. Besides channelling public funds, the mobilisation of private capital through Private-public Partnership arrangements becomes increasingly important in supporting financial system development. Donors and international development agencies work in partnership with national stakeholders such as governments, civil societies and the private sector to coordinate and leverage their engagements

MICRO INSURANCE AND ITS PRODUCTS:

In order to facilitate penetration of micro insurance to the lower income segments, IRDA has formulated the micro insurance regulations. Micro Insurance Regulation, 2005 provides a platform to distribute insurance products, which are affordable to the rural and urban poor and to enable micro insurance to be an integral part

56


of the country's wider insurance system.

Microinsurance is not confined to any specific product or product line or a specific provider type. Although it is aimed at providing coverage to low-income1 households, it is also important to clarify that the term microinsurance in this paper refers to servicing a specific income segment in the emerging market jurisdictions where the insurance markets are not well developed. It is therefore important to develop principles, standards and guidelines which assist in identifying the entities that need to be regulated and providing the rationale to the supervisor to justify any differentiation between the insurers regulated by the insurance laws, the ones regulated by other laws or the entirely unregulated ones

The main thrust of micro insurance regulationsis protection of low income people with affordable insurance products to help cope with and recover from common risks with standardised popular insurance products adhering to certain levels of cover, premium and benefi t standards. These regulations have allowed Non Government Organizations (NGOs) and Self Help Groups (SHGs) to act as agents to insuranc ecompanies in marketing the micro insurance product and have also allowed both life and non-life insurers to promote combi-micro insurance products.

Life Insurance Sector

While the individual new business premium under the micro insurance segment in the year stood at '115.68 crore for 46.20 lakh new policies, the group business premium amounted to '109.82 crore covering 1.02 crore lives. LIC contributed to a signifi cant component of the business procured in this portfolio by garnering '106.03 crore of individual new business premium providing cover to 38.26 lakh lives and '98.32 crore of group premium covering 94.44 lakh lives.

The number of micro insurance agents at the end of March 2012 stood at 12,797; of which 11,546 agents pertained to the LIC and the remaining represented the private sector companies. Fifteen life insurers have so far launched 30 micro insurance products. Of the 30 products, 18 are Individual products and the remaining 12 are Group products.

The Authority is reviewing the Micro Insurance Regulations, 2005 comprehensively. In this connection, the Authority has already released an exposure draft on 26th July, 2012 with the proposal to expand the definition of Micro Insurance Agency, and to reexamine the defi nition of a Micro Insurance Product.

The duration-wise settlement of death claims under individual and group category are given inTables I.5 and I.6.

Non-life Insurance Sector

A number of products are offered by non-life insurers targeting low income segment of the population. These products include Janata Personal Accident Policy, Gramin Personal Accident Policy, Cattle/Livestock insurance, etc. Further, there are a number of tailor-made/ group micro insurance policies offered by both private and public sector insurers for the benefi t of these segments of the society. Micro insurance being a low price, high volume business, its success and sustainability depends mainly on keeping the transaction costs down. It would be recalled that section 32B and 32C of the Insurance Act, 1938 and IRDA (Obligations of insurers to rural or social sectors) Regulations stipulate obligations of insurers in respect of rural and social sector. These stipulations have also contributed a lot in development and promotion of micro insurance products by insurers in India.

57


TABLE I.1

NEW BUSINESS UNDER MICRO INSURANCE PORTFOLIO

(Premium in ' lakh)

Insurer Individual Group

Policies Premium Schemes Premium Lives covered

1150.67 750555

Private LIC 793660 3826783 964.22 10603.49 112 5461 9831.63 9444349

Total 4620443 11567.71 5573 10982.30 10194904

Note: New business premium includes first year premium and single premium.

TABLE I.2

MICRO INSURANCE AGENTS OF LIFE INSURERS

Insurer As on 1st April,

2011

Additions during

2011-12

Deletions during

2011-12

As on 31st March,

2012

Private LIC

Total 758 9724 10482 541 2910 3451 48 1088 1136 1251 11546 12797

TABLE I.3

INDIVIDUAL DEATH CLAIMS UNDER MICRO INSURANCE PORTFOLIO

(Benefit Amount in ' lakh)

Insurer Total Claims Payable Claims paid Claims repudiated Claims pending as

on March 31, 2012

No. of Benefit No. of Benefit No. of Benefit No. of Benefit

Policies Amount Policies Amount Policies Amount Policies Amount

Private 5033 580.83 5010 568.72 11.96 0.15

(100.00) (100.00) (99.54) (97.92) (2.06) (0.03)

LIC 9615 1558.1 9499 1540.40 20 (0.40) 14.50 3 (0.06) 3.18

(100.00) (100.00) (98.79) (98.87) 99 (1.03) (0.93) 17 (0.18) (0.20)

Total 14648 2138.9 14509 2109.12 119 26.46 20 (0.14) 3.33

(100.00) (100.00) (99.05) (98.61) (0.81) (1.24) (0.16)

Note: Figures in brackets show percentage of the respective total claims.

58


TABLE I.4

GROUP DEATH CLAIMS UNDER MICRO INSURANCE PORTFOLIO

(Benefit Amount in ' lakh)

Insurer Total Payable Claims paid Claims Claims written Claims pending

Claims repudiated back as on March 3 1 ,

2012

No. of Benefit No. of Benefit No. of Benefit No. of Benefit No. of Benefit

Lives Amount Lives Amount Lives Amount Lives Amount Lives Amount

5920 1173.88 5840 1165.14 49 3.93 17 2.47 14 2.34

(100.00) (100.00) (98.65) (99.26) (0.83) (0.34) (0.29) (0.21) (0.24) (0.20)

Private 124890 40574.70 124421 40432.13 0 0.00 0 0.00 469 142.57

LIC (100.00) (100.00) (99.62) (99.65) (0.00) (0.00) (0.00) (0.00) (0.38) (0.35)

Total 130810 41748.58 130261 41597.27 49 3.93 17 2.47 483 144.91

(100.00) (100.00) (99.58) (99.64) (0.04) (0.01) (0.01) (0.01) (0.37) (0.35)

Note: Figures in brackets show percentage of the respective total claims.

TABLE I.5

DURATION-WISE SETTLEMENT OF DEATH CLAIMS IN MICRO INSURANCE -

INDIVIDUAL CATEGORY

(No. of Policies)

Duration

Insurer Within 30 Days 31 to 90 91 to 180 181 Days to More than Total Claims

of Intimation Days Days 1 Year 1 Year Settled

369

Private LIC 4633 (92.40) (7.36) 11 (0.22) 1 (0.02) 0 (0.00) 5014 (100.00)

Industry 9499 (100.00) 0 (0.00) 0 (0.00) 0 (0.00) 0 (0.00) 9499 (100.00)

14132 (97.37) 369

(2.54)

11 (0.08) 1 (0.01) 0 (0.00) 14513

(100.00)

Note: Figures in brackets show percentage of total claims settled.

59


TABLE I.6

DURATION WISE SETTLEMENT OF DEATH CLAIMS IN MICRO INSURANCE - GROUP CATEGORY

(No. of Lives)

Insurer Duration

Within 30 Days of 31 to 90 91 to 180 181 Days to More than Total Claims

Intimation Days Days 1 Year 1 Year Settled

538 5840

Private LIC 5295 (90.67) (9.21) 5 (0.09) 1 (0.02) 1 (0.02) (100.00)

Industry 118687 (95.39) 5734 0 (0.00) 0 (0.00) 0 (0.00) 124421

123982 (95.18) (4.61) 5 (0.00) 1 (0.00) 1 (0.00) (100.00)

6272 130261

(4.81) (100.00)

Note: Figures in brackets show percentage of total claims settled.

ISSUES:

Though, microinsurance is susceptible to frauds (ICP 27) (by way of fictitious insurance contracts, impersonation etc) the possibility of Money Laundering is remote. It is also mentioned in this issues paper that policy holders of microinsurance cannot fetch the records required by insurers. In some countries Anti Money Laundering guidelines do not exempt microinsurance policyholders and there is a representation from the insurance players that microinsurance policy holders do deserve some relaxations like proof of permanent/ residence and photographs. According to them there is a case for not extending the scope of ICP 28 in respect of microinsurance products. The Authority issued a number of Circulars, Directions and Orders during 2011-12 as a list of all such Circulars, Directions and Orders which were issued during the period from 1st April, 2011 to 31st March, 2012

The issues identified for further consideration at the ICP level and its criteria in this paper can be grouped under five major themes:

a. Supervisory review process including licensing issues

b. Financial and prudential issues including risk based supervision

c. Governance issues

d. Operational issues

e. Market conduct issues

1. .Although general policies are in place in many jurisdictions, there is no financial sector policy framework specifically targeting at promoting financial inclusiveness and developing microinsurance. Although insurance generally falls within the general legal framework for insurance supervision, this framework is often not specifically equipped to address the low-income segments of the population. As a result there are only a very few traditional insurers who target low-income segments. Mostly, it is the informal microinsurers who cater to the needs of the low-income segments in a limited manner and are largely unregulated

60


2. Mechanisms for accessing financial data and obtaining reliable and comparable economic and social statistics for the proper evaluation of risks are either absent or in a state of evolution. And even where it exists in some form, it might not address the needs of the low-income segments

3. Supervisory staff often lack proper understanding of the ground realities related to microinsurance. They need to be sensitised and specially trained on the peculiarities of microinsurance

4. This ICP is only valid for specific microinsurers and not for traditional insures who have a microinsurance business line.

5. There is a great possibility that small microinsurers may undergo changes in control as entities may be willing to acquire or take over an existing company. Portfolio transfers in the form of outstanding claims portfolios may also be a possibility. Clear guidelines need to be put in place to ensure stability of market and protection of existing policyholders if such events are to occur. Mergers of several microinsurers to a larger microinsurance company may be a sensitive process in the case of NGOs formalising due to their different governance structure and management practice in place as NGO.

6. A periodic or ad hoc reporting to the supervisor regarding the handling of complaints/grievances might be important because of the fragile nature of the level of confidence low-income households are having in terms of insurance.

7. Setting up of alternate dispute resolution mechanisms for redressing grievances and complaints for the low-income segment could also be required as court proceedings can be costly and time consuming

Conclusions and Recommendations

1. In absolute terms, many microinsurance initiatives launched by governments, insurers and other organisations to protect the lives, health and assets of the low-income persons have made a tremendous impact, but their reach has been very limited compared to thesize of the unserved population. So far, the delivery of insurance to the low-income households has not been an integral part of many financial service providers' market strategies.

2. is affordable and yet easily accessible, and should typically include credit, savings, remittances and insurance. Without insurance, any improvements in alleviating poverty may be quickly lost due to the impact of risks.

3. The IRDA cover the essential aspects of insurance regulation and prudential supervision. However, when applying these principles to insurance services for low-income segments, it is necessary to recognise the specifics of microinsurance and the risks posed. The starting point for creating inclusive insurance markets is for insurance supervisors to develop an enabling framework to actively support the development of microinsurance on efficient lines keeping in mind the need for providing an adequate framework for policyholders' protection and financial stability.

4. It is a major challenge for regulators and supervisors to create an enabling environment for outreach and sustainability of microinsurance: providing consumer protection for this market segment, while at the same time encouraging innovative organisational and regulatory solutions to respond to the insurance needs of low-income households. Adjustments to regulatory frameworks are sometimes incorrectly perceived as being in conflict with prudential principles with the risk of creating distortions in the market place. From the policyholder's perspective, supervisors may help to guarantee that the increasing number of unregulated microinsurance schemes remain in a position to uphold the obligations to their members.

61


5. The protection of poor people's scarce funds is a critical concern. In striving to find a balance that promotes inclusion without putting an undue burden on supervisors, each supervisory authority needs to consider the specific features of its own jurisdiction; there is no one solution that fits all. This is not an easy task, especially since few role models exist so far. Creating an appropriate regulatory framework is a complex task since it involves many different actors and requires a large number of strategic and operational innovations.

6. The issues identified for further consideration at the ICP level and its criteria in this paper can be grouped under five major themes:

i. Supervisory review process including licensing issues

ii. Financial and prudential issues including risk based supervision

iii. Governance issues

iv. Operational issues

v. Market conduct issues

7. All these areas are critical to the regulatory and supervisory framework of microinsurance and need to be addressed in an integrated way. It is proposed that further work should include assessing and developing features that can form the foundation for a specific guidance on the applicability of ICPs to microinsurance in each of these areas. The outcomes may then lead to developing a set of interpretations of the criteria, where required, for application of the ICPs. In this regard, IRDA shall seek guidance from the Technical Committees as their work progresses.

8. Further work is suggested on

2. market analysis to understand the un-served and under-served segments of the population,

3. adaptation of delivery channels and modes of premium payments

4. the use of new technology

5. the role of outsourcing

6. health insurance

7. complementarities with social security schemes

9. For regulatory adaptations to work, there needs to be a significant investment in capacity building at many levels. Policymakers and supervisors have to understand the risks and potential of microinsurance, therefore the transfer of knowledge and dialogue are primary concerns. Donors, international development agencies and other promoters such as insurance associations and international microfinance networks are also learning and have to be prepared to finance and technically assist supervisors as well as microinsurers. Finally, the customers who demand microinsurance services are not well educated; governments, donors and microinsurers have to assume a role in the promotion of insurance awareness and consumer education. These challenges have to be dealt with alongside the regulatory and supervisory aspects.

10. In this new era of development, many emerging markets have transformed their economies

1. and cooperatives

understanding operational aspects of different types of microinsurers, particularly mutuals in microinsurance,

62


63

through creativity, hard work, and commitment to market reform. One also observes that due to increasing prosperity, although absolute poverty is declining, inequality is growing. New thinking is needed to capitalise on opportunities and ensure continued and collective progress. Pragmatic, sensible solutions for inclusive financial sector development with a commitment to good governance will certainly benefit the poor. If we collaborate for producing welfare-enhancing synergies consistent with internationally accepted principles and standards for financial sector supervision and financial stability, we can envision to go further—and faster—in spreading the benefits of insurance to those who have been left behind

Bibliography

1. Acemoglu, D. (2003): Root Causes: A historical approach to assessing the role of institutions in economic development. Finance and Development, June 2003 (pp. 27-30)

2. CGAP (2004): "Building inclusive financial systems: Donor guidelines on good practice in microfinance"; http://cgap.org/docs/donorguidelines.pdf

3. Chatterjee A., Wiedmaier-Pfister M. (2006): Discussion Paper for Insurance Supervisors ( IAIS-CGAP Working Group, Draft Basel 2006

4. Churchill C. (ed). 2006: Protecting the poor: A microinsurance compendium (Geneva: ILO)

5. Claessens, S. (2005): Access to Financial Services, Policy Research Working Paper 3589, The World Bank, May 2005

6. Desrochers, Martin and K. Fischer (2005): "The power of networks: on the impact of integration on financial cooperative performance. A multinational survey". Annals of Public and Cooperative Economics Vol 76

7. ILO-STEP (2006) Social protection and inclusion: Experiences and policy issues. (Geneva).

8. 2005a. Health micro-insurance schemes: Feasibility Study Guide (Geneva, ILOStrategies and Tools against Social Exclusion and Poverty Programme)

9. 2005b. India: an inventory of micro-insurance schemes (Geneva).

10. 2005c. Insurance products provided by insurance companies to the disadvantaged groups in India (Geneva).

11. 2003. Guide de gestion des mutuelles de sante en Afrique (Geneva).

12. 2001a. Women organizing for social protection. The Self-employed Women's Association's Integrated Insurance Scheme, India (Geneva).

13. 2001b. The Novadeci Health Care Programme, Case study (Geneva).

14. . 2001c. Social security: issues, challenges and prospects, Report IV, International Labour Conference, 89th session, Geneva.

15. . 2001d. Social Security: A New Consensus (Geneva).

16. Guidance on Insurance Regulation and Supervision for Emerging Market Economies (1997): International Association of Insurance Supervisors, Basel

17. Insurance Core Principles and Methodology (2003): International Association of Insurance Supervisors, Basel

18. Supervisory Standard on Licencing (1998): International Association of Insurance Supervisors, Basel

http://cgap.org/docs/donorguidelines.pdf


64

Impact of Internal Debt of Madhya Pradesh on its SGDP

Govindarajan Chetty Asstt. Professor MBA Department , SATI, Vidisha,

[email protected]

Dr. V. K. Jain Rtd. HOD Commerce, SSL Jain College, Vidisha

Dr. Sanjay Jain HOD, Commerce Deptt., BHEL-PG College, Bhopal.

Abstract :

The existence of a large debt is neither an evil nor a blessing in itself. It has both adverse as well as favorable effects on the economy. It is an instrument of public policy, but it is one which should be used with care.

The problems with which the controversy is concerned are,

(1) the measurement of the burden,

(2) the costs and the benefits of the public debt, and

(3) the inter-generation distribution of the burden of public debt. The academic views about these specific aspects have been changing from time to time.

The early classical economists opposed public debt creation on the ground that the government spending is wasteful and does not provide any benefit to the community. The latter classical economists took into consideration the mutuality of advantage of public debt to the government and the lenders to the government and they had quite liberal views about the creation of public debt.

The burden of public debt need not be a matter of concern so long as the nations' income continues to rise, hence there was need for study that is there any relationship between Public debt and economic growth of the state.

Keywords: Public Debt, Internal Debt, SGDP, Anova, Regression, Correlation

Introduction

The classical economist J.B. Say observes that, "there is a grand distinction between an individual borrower and a borrowing government, that, in general, the former borrows capital for the purpose of beneficial employment, the latter for the purpose of barren consumption and expenditure."1 He believed that the burden of the debt could be shifted over a great number of successive years.

While, Adam Smith was of the view that the State was wasteful; it took borrowed funds for unproductive purposes from private capitalists and deprived them of capital which was badly needed for promoting production and trade. To quote him, "a certain portion of the annual produce turned away from serving in the function of a capital to serve in that of a revenue; from maintaining productive laborers to maintaining unproductive ones , and to be spent and wasted , generally in the course of the year, without even the hope of any future reproduction."2

Ricardo too was convinced of the wastefulness of public expenditure. He admitted that debt service involves transfer payments within the community, but did not know whether the recipients of such income



would "employ it productively" or "squander it unproductively." Ricardo was greatly concerned with the effects of public debt. "National Debt was an evil which almost any sacrifice would not be too great to get rid of. It destroyed the equilibrium of prices."3 On the question of shifting the burden of the debt to the future generations, Ricardo was explicit:.. "The argument of charging posterity with the interest of our debt, or of relieving them from a portion of such interest is often used by otherwise well informed people, but we confess, we see no weight in it."4

There has always been controversy over public debt by economist, but public debt still exist and growing. Public debt not only contributes towards the development of the states but also put them in burden of repayment with interests. Public debt has been major reason for fall of economies in past.

Very few research work has been done in Madhya Pradesh Public Finance, major contribution is by Tarash Chand Jain worked on "State Finances of Madhya Pradesh during 1957 - 1971" (5). Kingra, Gurmeet had contributed to the study of "Trends in Public Finance in Madhya Pradesh During the last decade" during 1980(6). These study were empirical study while no analytical tools were used to prove their findings.

Composition of State Government Debt

Public debt of State Governments in India consists of

(i) Loans and Advances from Central Government.

(ii) State Provident Funds,

(iii) Small Savings,

(iv) Trusts.

(v) Internal Debt, and

(vi) Endowments, Insurance and Pension funds.

Internal debt of the State Governments is composed of Market Loans and Bonds, advances from the RBI and negotiated loans from banks and other institutions such as

1. National Co-operative Development Corporation.

2. National Bank for Agriculture and rural development.

3. Life Insurance Corporation of India

4. Food Corporation of India.

5. Central Warehousing Corporation.

6. Khaadi and Village Industries Commission.

Internal Debt for Government largely consists of fixed tenure and fixed coupon borrowings (dated securities and treasury bills) which are issued through auction. Maturity profile of existing debt could be classified into three categories, namely - short, medium and long term having maturity of less than 1 year, from one year up to 7 years and more than 7 years respectively. Government is striving to gradually increase the effective maturity of the outstanding stock of dated securities to minimise the roll over risk. The weighted average maturity of dated securities issued during the year 2010-11 was 11.62 years, up from 11.16 years during 2009-10. For the issuance during 2011-12, the same has increased to 12.56 year.

Loans and advances from the Centre are given for plan and non-plan purposes. Under the Plan, funds are given for State plan schemes including plan assistance for natural calamities, Central plan schemes and centrally sponsored schemes. The non-plan loans include share of small savings, loans for non-plan Central

65


Government Schemes, Ways and Means Advances etc.

Objectives

Major contribution of public debt of Madhya Pradesh state is through Internal debt. In this paper Internal debt and its contribution to SGDP of the Madhya Pradesh state is studied. Period used is after division of Madhya Pradesh and Chattishghar i.e. 2002-2012.

Graph : Contribution of Internal debt in Public debt of MP

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

90 80 70 60

* 40 30 20 10

^ / ^ / / / / ^ ^ 4> ^ # / ^ / / / / • / / ^ ^

Table : Composition of Public debt of Madhya Pradesh

Year Market Loan

Compen -sation Bonds

Loan from Banks

NSSF Internal Debt

Loans & Advances

from Centre

Public Debt

SGDP

A B C D (A+B+C+D)= E F G H

2002-03 5576 0 1154 3934 10664 9483 20147 86832

2003-04 7848.46 2664.33 1458.75 6363.57 18601.89 9208.75 27810.64 102839

2004-05 9301.79 4079.13 1645.93 9129.24 24156.09 9112.17 33268.26 112927

2005-06 10246.09 3984.81 2125.23 12127.81 28483.94 8991.01 37474.95 124276

2006-07 11309.39 3576.94 2607.8 14172.56 31666.69 8679.7 40346.39 144577

2007-08 12646.45 3263.39 3048.26 14300.39 33258.49 8781.85 42040.34 161479

2008-09 16603.81 2855.53 3507.86 14174.43 37141.63 9490.67 46632.3 196556

2009-10 21620.29 2494.82 3680.43 14666.25 42461.8 10378.95 52840.75 226934

2010-11 24877.75 2134.11 3553.56 16248.2 46813.64 10955.81 57769.45 259903

2011-12 30282.16 1773.4 3798.14 17129.65 52983.37 12220.25 65203.62 301647

2012-13 37009.32 1412.69 4019.03 17615.39 60056.45 14607.52 74663.97 337845

Note : Values of 2011-12 is RE, Values of 2012-13 are BE

Source : Financial Accounts of Madhya Pradesh of different years, RBI bulletin of different years.

66


Methodology

Research hypothesis is H0= Internal debt may have direct relationship on Economic development of the Madhya Pradesh state (SGDP)". To prove the hypothesis, the statistical tool correlation analysis between SGDP (Dependent Variable) and (Internal Debt) independent variable were done. Considering Internal debt of Madhya Pradesh as controlling variable, and regression analysis with SGDP was done to identify the relationship between dependent and independent variables finally test it with t-test and ANOVA for hypothesis testing. Software used is PASW Statistics 18.

Correlation between Dependent and Independent Variables

SYNTAX FOR CORRELATION :

CORRELATIONS

/VARIABLES=Internal_Debt_MP SGDP_Current

/PRINT=TWOTAIL NOSIG

/MISSING=PAIRWISE.

Correlations

Correlation Ty pe: Pearson Internal_Debt_MP SGDP_Current

Internal_Debt_MP Correlation 1 .976** Internal_Debt_MP

Sig. (2-tailed) .000

Internal_Debt_MP

N 11 11

SGDP_Current Correlation .976** 1 SGDP_Current

Sig. (2-tailed) .000

SGDP_Current

N 11 11

**. Correlation is significant at the 0.01 level (2-tailed).

Interpretation of correlation result :

1. SGDP v/s Internal Debt of Madhya Pradesh: correlation is 0.976 which is very strong and positive correlation, also the f-significance test (2-tailed) is 0 which represent highly significant and is well below 0.05 i.e. 5%, hence we can conclude that SGDP is very strongly correlated to Internal Debt of Madhya Pradesh.

Regression fit test

Regression analysis is a statistical technique for estimating the relationships among two or more variables. There are different types of models, which are used to identify the relationship between two or more variables. When the relationship between two variables has to be identified, where one variable is dependent variable and another is independent variable then simple regression analysis is used. Similarly if the relationship is not linear between independent and dependent variables then non linear models like logarithmic, cubic, quadratic, s - regression, growth, compound, exponential, logistic or inverse method is preferred depending on the complexity of data and fitness of regression equation.

Choosing curve estimate model

One can choose one or more curve estimation regression models. To determine which model to use, plot the data. If variables appear to be related linearly, use a simple linear regression model can be used. When

67


variables are not linearly related, one should try to fit other models and consider checking R2 for each model. If more than one model fit well with R2 above 0.9 then, model with lesser complexity will be preferred.

Formulas used for the regression analysis are as follows:

1. Linear regression analysis.

• Model whose equation is Y = b0 + (b1 * t). The series values are modelled as a linear function

of time.

2. Logarithmic regression analysis.

• Model whose equation is Y = b0 + (b1 * ln(t)).

3. Inverse regression analysis.

• Model whose equation is Y = b0 + (b1 / t).

4. Quadratic regression analysis.

• Model whose equation is Y = b0 + (b1 * t) + (b2 * t**2). The quadratic model can be used to

model a series that "takes off" or a series that dampens.

5. Cubic regression analysis.

• Model that is defined by the equation Y = b0 + (b1 * t) + (b2 * t**2) + (b3 * t**3).

6. Power regression analysis.

• Model whose equation is Y = b0 * (t**b1) or ln(Y) = ln(b0) + (b1 * ln(t)).

7. Compound regression analysis.

• Model whose equation is Y = b0 * (b1**t) or ln(Y) = ln(b0) + (ln(b1) * t).

8. S-curve regression analysis.

• Model whose equation is Y = e**(b0 + (b1/t)) or ln(Y) = b0 + (b1/t).

9. Growth regression analysis.

• Model whose equation is Y = e**(b0 + (b1 * t)) or ln(Y) = b0 + (b1 * t).

10. Exponential regression analysis.

• Model whose equation is Y = b0 * (e**(b1 * t)) or ln(Y) = ln(b0) + (b1 * t).

SYNTEX IN PASW FOR REGRESSION CURVE FIT TEST :

DATASET NAME DataSet1 WINDOW=FRONT.

* Curve Estimation.

TSET NEWVAR=NONE.

CURVEFIT

/VARIABLES=SGDP_Current WITH Internal_Debt_MP

/CONSTANT

/MODEL=LINEAR LOGARITHMIC INVERSE QUADRATIC CUBIC COMPOUND POWER S GROWTH EXPONENTIAL

/PLOT FIT.

68


Model Summary and Parameter Estimates

Dependent Variable:SGDP_Current

Equation Model Summary Parameter Estimates Equation

R Square F df1 df2 Sig. Constant b1 b2 b3

Linear .953 181.514 1 9 .000 -9664.984 5.597

Logarithmic .791 34.076 1 9 .000 -1378913.950 151028.700

Inverse .547 10.871 1 9 .009 288575.163 -2.846E9

Quadratic .984 241.839 2 8 .000 60474.382 .936 6.533E-5

Cubic .996 543.695 3 7 .000 147292.770 -9.126 .000 -3.084E-9

Compound .977 376.495 1 9 .000 58275.810 1.000

Power .889 71.809 1 9 .000 22.417 .862

S .679 19.027 1 9 .002 12.654 -17066.711

Growth .977 376.495 1 9 .000 10.973 3.051E-5

Exponential .977 376.495 1 9 .000 58275.810 3.051E-5

The independent variable is Internal_Debt_MP.

10009 rjrj 20000,00 WOO0.W 40000.00 5000O.00 60000.00 7WO0.OO

Interna l_Debt_MP

Interpretation of Curve miing lesi:

R2 is above 0.9 for Linear regression, Quadratic regression, Cubic regression, Compound regression, Growth regression and Exponential regression, while Inverse regression, Logarithmic regression, Power regression, and S-Curve regression R2 is below 0.9 hence these methods can be eliminated.

Other regression estimates can be used, for simplification of the solution we may try to compare all remaining methods and preferred the simplest and best fit from them. Hence considering cubic regression b2 is zero and b3 are very small in range of 10-9 hence cubic regression may not be preferred. Also for quadratic regression b2 is also very small in range of 10-5 hence quadratic regression

69


Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .976a 0.953 0.948

a. Predictors: (Constant), Internal_Debt_MP

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 6.849E10 1 6.849E10 181.514 .000a

Residual 3.396E9 9 3.773E8

Total 7.189E10 10

a. Predictors: (Constant), Internal_Debt_MP

b. Dependent Variable: SGDP_Current

Coefficientsa

Model 95.0% Confidence Interval for B Model

Lower Bound Upper Bound

1 (Constant)

Internal_Debt_MP

-45228.432

4.657

25898.464

6.537

a. Dependent Variable: SGDP_Current

70

may not be preferred. Value of b1 for growth regression and exponential regression is in the range of 10-5 hence they may not be suggested.

Linear regression is much simpler and satisfies all the conditions hence it is considered and used for hypothesis testing.

Calculating ANOVA, t-test and Linear regression for independent variable : Internal Debt of Madhya Pradesh and Dependent variable as State Gross Domestic Product at current price for Madhya Pradesh.

SYNTEX IN PASW FOR ANOVA TEST :

REGRESSION

/MISSING LISTWISE

/STATISTICS CI(95) R ANOVA

/CRITERIA=PIN(.05) POUT(.10)

/NOORIGIN

/DEPENDENT SGDP_Current

/METHOD=ENTER Internal_Debt_MP.


SGDP_Curr*nt

10000.00 20000.00 30000.00 JOOOOOO 50000 00 60000.00 70000.00

Intern al_Debt_MP

Hypothesis testing was done in four steps :

• Models viability was tested calculating R, R2, Adjusted R2.

• Regression equation was drawn using Linear regression Model.

• t-test for all coefficients of Regression equation was analyzed.

• One-way Analysis of Variance was done, sum of squares of Regression and residuals were compared and significance of F values were estimated.

Analyzing R, R2, Adjusted R2 :

1. For Public Debt of Madhya Pradesh v/s SGDP (Current) of Madhya Pradesh :

R = 0.976

R2 = 0.953

Adjusted R2 = 0.948

The above stated figures show that the two parameters compared are very strongly correlated, and have very strong Linear relationship between each other. With change in Internal debt of Madhya Pradesh there will be sure change in SGDP of Madhya Pradesh.

Formulating linear Regression Equation & t-test for individual variables:

2. For Internal Debt of Madhya Pradesh v/s SGDP (Current) of Madhya Pradesh

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

B Std. Error Beta t Sig.

1 (Constant) -9664.984 15721.033 -.615 .054

Internal_Debt_MP 5.597 .415 .976 13.473 .000

a. Dependent Variable: SGDP_Current

71


72

SGDP = -9664.984+ 5.597 (Internal Debt)

With significance level of t -test for 10% is 0.000 for Internal debt and 0.054 for constant. Hence we can say that 5.4% chance that results we are seeing would have come up in a random distribution for constant, so we can say with a 94.5% probability of being correct that the variable is having some effect.

Conclusion

The existence of a large debt is neither an evil nor a blessing in itself. It has both adverse as well as favorable effects on the economy. It is an instrument of public policy, but it is one which should be used with care. In recent years, some economists have refuted the no-burden thesis and have tried to establish the fact that public debt creations imposes a burden and also the burden can be passed on to the future generations. There are others who attack this line of reasoning and advance their arguments in favour of no-burden thesis. However, even the staunch supporters of no-burden thesis do not say that the growth of public debt does not matter. The burden of public debt need not be a matter of concern so long as the nations' income continues to rise, hence there was need for study that is there any relationship between Public debt and economic growth of the state.

From the study it can be concluded that :

Very high correlation was found between Internal Debt (independent variables) and SGDP (dependent variable) i.e. 0.976, hence it can be concluded that with increase in internal debt of the Madhya Pradesh state for the economic development of the state there can be significant increase in SGDP of the Madhya Pradesh with level of significance of 94.5%. the regression equation formed was SGDP = -9664.984+ 5.597 (Internal Debt) which can be used for estimation of growth.

References

Adam Smith, (1954) The Wealth of Nations, Vol.2, Book V, Chapter 3, (J.M.Dent and Sons, London) P.407.

David Ricardo, (1951) Funding System, in Works and Correspondence of David Ricardo , Vol. IV (upc), P.187.

Edwin Cannan, (1894)Ricardo in Parliament, The Economic Journal, Vol. IV, P.421.

J.B. Say, (1964) A Treatise on Political Economy (Augustus M Kelly, New York), P.477..

Jain T.C. (1970) "State Finances of Madhya Pradesh (1957-58 to 1970-71)", Thesis for Ph.D. Vikram University, Ujjain.

Kingra G. (1980) "Trends in Public Finace in Madhya Pradesh During the last decade", Thesis for Ph.D., Rani Durgavathi University.

Levin Rubin " Statistics for management", (2000) PHI Private Ltd., p.407, p. 648


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