Journal of Commerce and Trade April 2016

Double-Blind Reviewed, Refereed and Indexed International Journal of Commerce, Trade and Management
Established: 2005
R.N.I. No. Delhi UPENG 2006/17831
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http://econpapers.repec.org/article/jctjournl/
ISSN 0973-4503 (PRINT)

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ISSN 2454-1702 (ONLINE)
Impact Factor 3.860 (Cosmos)

Chief Editor : Dr. Himanshu Agarwal
Editor : Dr. S. K. Agarwal
Co-Editors : Dr. M. D. Somani
Dr. S. Rajaram
INDEX
1. A Review of Pre-Keynesian Neoclassical Business
Cycle Theory Christopher K. Manner 7-15
2. Bilateral Trade of India with Middle East Countries :
A Study of Iran Anuj Gupta, Ravi Kumar 16-27
3. Implementation of Goods and Service Tax (GST) in India and
its Control over the Tax Collection Pranesh Debnath 28-35
4. Linkage Between Human Resource Management and
Firm Performance Avinash Singh 36-44
5. Social Media Marketing : Opportunities and Challenges
Dr. Kulwant Singh Rana, Anil Kumar 45-49
6. A Conceptual Perspective on Brand Switching Behaviour of
Consumers in Telecommunication Industry
Md. Shahnawaz Abdin, Dr. N. H. Mullick 50-58
7. An Analysis of NPAs Management in PSBs, PVTSBs and FBs
Parasuraman Subramani, Dr. N. Sathiya 59-76
8. Foreign Direct Investment in Defence Sector in India :
Problems and Prospects Dr. Dinesh Mahajan 77-84
9. A Study of Health Insurance Business In India
Dr. Trilochan Sharma 85-90
10. A Study of E-Commerce and Online Shopping
Rashmi Vashishtha, Dr. Sudhir Kumar 91-96
11. Analysis of Relationship among Critical Factors in the
Construction Projects Dr. Seema Sharma 97-100
12. Employee Engagement, Training and Career Development
(Tata Tele Services Limited A Case Study) Shikha Vashishtha 101-108
13. A Study of Buying Behaviour of Customers Towards
Branded and Non-Branded Gold Jewellery
with Reference to Meerut City Dr. Kavita Saxena 109-114
14. Biographien : Raghuram Govind Rajan 115-116
15. Book Review : The Man of the Moment J. N. Sharma 117-118
GFRAD
Volume 11 Number 1 April 2016
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editorjct@gmail.com
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Established : 2005
Impact Factor 3.860
April 2016 Vol. XI No. 1 IMPACT FACTOR 3.860 ISSN (P) : 0973-4503 ISSN (E) : 2454-1702
RNI : UPENG 2006/17831
ISSN (PRINT) 0973-4503

ISSN (ONLINE) 2454-1702
RNI UPENG 2006/ 17831
Double-Blind Reviewed, Refereed and Indexed International Journal

Vol. XI No. 1 : April, 2016
Patrons
Dr. Ramesh Mangal
Retd. Proessor, DAVV, Indore
Dr. M. L. Agarwal
Retd. Professor, D. N. College, Meerut
Dr. R. A. Agarwal
Retd. Professor, Meerut College, Meerut
Chief Editor
Dr. Himanshu Agarwal

Associate Professor
Faculty of Commerce and Business Administration
D. N. College, Meerut -250002, UP, India
Phone : +91 9412125893
Editor
Dr. S. K. Agarwal
Associate Professor
Faculty of Commerce and Business Administration
D. N. College, Meerut -250002, UP, India
Phone : +91 9411826871
Co-Editors
Dr. M. D. Somani
Dr. S. Rajaram
Associate Professor
Department of Commerce
Mata Jija Bai Govt.Girls PG College,
Moti Tabela, Indore - 452004, M.P., India
Phone: + 91-9425346346
Associate Professor
Department of Business Administration
Kalasalingam University, Krishnakoil,
Tamil Nadu, India
Phone: + 91-9659797417
Indexed :
Cabells Directory,Ulrichs Directory, Citefactor, Repec, Econ Biz, Idea, CC-BY, Journal Seek, Connect Journals
Published by :
Society for Advanced Management Studies
in Association with
Global Foundation for Research and Academic Development
Journal of Commerce & Trade
www.jctindia.org 1
About
Journal ISSN (E) : 2454-1702
April 2016 Vol. XI No. 1 IMPACT FACTOR 3.860
ISSNthe
(P) : 0973-4503
RNI : UPENG 2006/17831
Journal of Commerce and Trade (JCT) is an International Double Blind Reviewed, Indexed and Referred Bi-annual
Publication of the Society for Advanced Management Studies in association with Global Foundation for Research and Academic
Development. It was started in October, 2005. It is both a Print and Online Journal and is published in the months of April and
October every year.
The Journal is registered with RNI bearing No. Delhi UPENG 2006/17831 and is also recognized by ISSN (Print) 0973-4503 and
ISSN (Online) 2454-1702. It is an International Journal intended for Professors, Scholars, Teachers, Academicians, Professionals
and Students. It has been alloted impact factor 3.860 by Cosmos Foundation.
The Journal welcomes new, bonafide and genuine researches in the field of Commerce, Economics, Law, Management and
Trade. Articles, Case studies, Discussions, Book Reviews and Biographies of the Legends in above fields are given place in the
JCT. It, also, throws the light on the contemporary issues of global interests in Commerce and Management.
It has the following repositors : Cabells Directory, USA; Ulrich Directory; Cite factor; RePEc, Econ Biz, Idea, CC-BY,
Journal Seek Directory and Connect Journals. All the articles are published only after the proper approval of the Editorial Board
and the Blind Review Committee. The submitted articles are published in the consultation with the Editors and Editorial Boards
decision. The acceptance and rejection is informed by email. The submitted papers should be as per Submission Guidelines and
should be in Scholarly Style. All the information regarding the journal, its periodicity, subscription details are available on
journals website www.jctindia.org. All the back issues of the journal are available free of cost on website.
The template of the paper, submission guidelines and other support regarding the writing of the paper are given on the
website of the journal. The Journals website www.jctindia.org is the best interactive and supportive journal website on the net.
JCT never rejects any article. It asks only for improvements and modifications.
All the submitted manusctipts are scanned via Anti-Plagiarism Software and Google Search.
Journal of Commerce and Trade is both a Print and Online Journal. You can also see, explore and print previous issues
simply by login on our Home Page. JCT can be subscribed at National and International levels.
Online Payment Facility is also available on the JCT Website.
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Meerut
Bi-Annual (Six monthly)
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Arihant Electric Press, Meerut
Dr. S. K. Agarwal
Indian
25, Murari Puram, Garh Road, Meerut, UP, India.
I, Dr. S. K. Agarwal, hereby declare that the particulars given above are correct to the best of my knowledge.
Dr. S. K. Agarwal
Editor
@ 2016, JCT, Vol. XI No. 1, Meerut, India
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Date of Publication : 30 April, 2016
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Commerce
Trade : ISSN
Editorial
Board*
April 2016 Vol. XI No. 1Journal
IMPACT of
FACTOR
3.860 ISSNand
(P) : 0973-4503
(E) : 2454-1702
RNI : UPENG 2006/17831
Prof. M. Saeed Professor, College of Business, Minot State University, Minot, USA.
Prof. Koji Sano Professor, Faculty of Economics and Business Administration, Fukushima University, Japan.
H. M. R. P. Herath Department of Marketing Management, University of Kelaniya, Sri Lanka.
Dr. Joseph M Mula Associate Professor, Faculty of Business,University of Southern Queensland, Queensland, Australia.
Dr. Hamid Saremi Vice-Chancellor, Islamic Azad University of Iran, Quchan Branch Iran.
Dr. Anura Amarasena Faculty of Business and Economics, Monash University, Churchill, Australia.
Dr. Michael Kenneth Holt Associate Professor, Austin Peay State University, Claksville (TN) US 37044.
Dr. Himanshu Sharma Department of Information Technology, Nizwa College of Technology, Nizwa, Oman.
Terry Parrish Principal, Ice Academy, Leicester, UK.
Dr. M. Rajarajan Professor, City University, London, UK.
Dr. Radhe S. Prodhan Professor, Central Department of Management, Tribhuvan University, Nepal.
Dr. Massod Ali Mirza Department of Commerce, Aligarh Muslim University, Aligarh, UP, India.
Dr. A. P. Singh Associate Professor, Faculty of Commerce and Business Administration, Meerut College, Meerut, UP, India.
Dr. Umesh Holani Director, Institute of Commerce and Management, Jiwaji University, Gwalior, MP, India.
Dr. Somesh Kumar Shukla Professor in Commerce, University of Lucknow, Lucknow, UP, India.
Dr. Anurag Agarwal Associate Professor, S. S. (PG) College, Sahajahanpur, UP, India.
Dr. C. S. Sharma Professor, Shri Ram College of Commerce, University of Delhi, New Delhi, India.
Dr. G. P. Prasain Head, Department of Commerce, Manipur University, Imphal, Manipur, India.
Dr. K. D. Gaur Indian Council of Social Science Research, New Delhi, India.
Dr. V. K. Agarwal Principal, I.P. (PG) College, Bulandshahr, UP, India.
Dr. G. B. Kashyap Head, Department of Economics, SSV College, Panchsheel Nagar, UP, India.
Dr. Nasib Ahmad Associate Professor, Department of Commerce & Business Admn., Jamia Millia Islamia, New Delhi, India.
Dr. S. P. Singh Saint Marys Academy, Meerut, UP, India.
Dr. S. K. Chauhan Associate Professor in Commerce, Government College, Pihani, UP, India.
Dr. Abhay Bansal Professor Amity University, Noida, UP, India
Dr. Samir Gupta Assistant Professor, University of Delhi, Delhi, India.
Dr. K. S. Meenakshisundram Great Lakes Institute of Management, Chennai, India.
Dr. R. K. Singhal Associate Professor, Faculty of Commerce and Business Administration, D.N. College, Meerut, UP, India.
Dr. Mayank Agarwal Assistant Professor, Department of Economics, M. M. (PG) College, Modinagar, Ghaziabad, UP, India
Dr. Arvind Yadav Assistant Professor, Government College, Badalpur, UP, India.
Dr. S. K. Tayal Retd. Professor, Government College, Noida, UP, India.
Dr. S. K. Sharma Associate Professor, Department of Commerce, HNB Garhwal University, Tehri Garhwal, UK, India.
Dr. Mukund M. Tapkir Professor, SHN Institute of Management & Research for Women, Pune, Maharastra
Smt. Tripta Sharma Department of Commerce, RCA Girls PG College, Mathura, UP, India.
Dr. M. K. Gupta Associate Professor, PG Dept. of Commerce, Pt. JLN Govt. PG College, Faridabad, Haryana, India.
Dr. Sudipti Banerjea Professor of Commerce, University of Calcutta, Kolkata, India.
Dr. Mukesh Jain Head, Department of Commerce, Govt. PG College, Noida, UP, India.
Dr. Kapil Bansal SRM University, Meerut.
Dr. Pavnesh Kumar Head, Department of Management, Indira Gandhi National Tribal University, Amarkantak.
Dr. M. Sheik Mohamed Professor, Jamal Institute of Management, Jamal Mohamed College, Tiruchirappaili.
Dr. Mehmet Sachin Faculty of Economics & Admn. Sciences, Canakkale Onsekiz Mart University, Agakoy, Biga-Canakkale.
* http://www.jctindia.org/editors-editorial.html
www.jctindia.org 3
Chief Editor Speaks
Journal of Commerce and Trade
RNI : UPENG 2006/17831
Vol. XI No. 1 : April, 2016
Swachh Bharat Mission of PM NAMO has more bright meaning than it appeared two years ago. The
public has undertaken it as a simple hygiene message programme.
It is first time when a PM has crafted a conscious desire to move beyond partisan political concerns and
addressed societal themes that touch peoples daily lines through a free-reach radio talk Mann Ki Baat.
Modi showed his position above political dogma and political puppetry shows. He analysed what can start
the economy with a justified paddling towards a right direction. He did not follow any Bakwas policies whether
they were opposed or favoured by earlier governments. Which had been a trend of Indian political Drama. Modi
has undertaken an expansionist approach that is best described as Keynesian.
Modi appreciated and revived previously opposed MNREGA and AADHAR schemes, which had been
debunked by BJP. And, stored cold Privalisation which Atal Bihari Vajpayee favoured previously.
Modi and his team has done a lot to India with par-excellence, honesty, devotion and continuity. The
Railways and the railway stations, the oil prices, the LPG subsidy allocation, the LPG availability, the power, the
security issues, the banking reforms and everything is being dealt very smartly only to give smoothness to the lives
of Indian citizens. Corruption is lowered. The development process is energized with speedy corrections in the
economy.
The foreign visits of Modi have been objected by various politicians. But, these visits are not simple sight
seen visits. It has strengthen the image of India beyond India. It has given stability in the relations with the World.
It has been a trend that the most powerful PMs in the world have traveled maximum number of the countries in 10
months after sworning-in of the post.
Here to note, correction in RBI policy of Inflation control has also been initiated through inflation targeting
framework. For this, the RBI Act, 1934 was amended as part of the Finance Bill. In the past, the RBI had not
systematically used either CPI or WPI as the inflation target. Soon, the government will notify the level of inflation,
it wants the RBI to largest in the next five years.
Modi, no doubt has substituted political dogmatic absolutes to managerial flexibility. Modi has proved to
be a real Leader than a Boss. If he has worked continuously for 10 years like this, India will become not only world
leader undoubtly but will be a different country also. Help to come Modi Revolution and Condemn Yaha to Aise
hi Chalega team of years.
Now, you have 21st issue in your hands. I am thankful to all concerned and associated ones. We have
done a lot and trying to give more value to the writings of our learned authors. If you have any suggestions, please
write to me at editorjct@gmail.com.
Chief Editor
editorjct@gmail.com
www.jctindia.org
Index
RNI : UPENG 2006/17831
Journal of Commerce and Trade: Vol. XI No. 1: April, 2016
1.
2.
A Reveiw of Pre-Keynesian Neoclassical Business Cycle Theory

Christopher K. Manner
7-15
Bilateral Trade of India with Middle East Countries : A Study of Iran

Anuj Gupta, Ravi Kumar
16-27
Implementation of Goods and Service Tax (GST) in India and its Control over the
Tax Collection
Pranesh Debnath
28-35
Linkage Between Human Resource Management and Firm Performance

Avinash Singh
36-44
Social Media Marketing : Opportunities and Challenges

Dr. Kulwant Singh Rana, Anil Kumar
45-49
A Conceptual Perspective on Brand Switching Behaviour of Consumers in

Telecommunication Industry
Md. Shahnawaz Abdin, Dr. N. H. Mullick
50-58
An Analysis of NPAs Management in PSBs, PVTSBs and FBs

Parasuraman Subramani, Dr. N Sathiya
59-76
Foreign Direct Investment in Defence Sector in India: Problems and Prospects

Dr. Dinesh Mahajan
77-84
A Study of Health Insurance Business In India

Dr. Trilochan Sharma
85-90
10. A Study of E-Commerce and Online Shopping

Rashmi Vashishtha, Dr. Sudhir Kumar
91-96
3.
4.
5.
6.
7.
8.
9.
11. Analysis of Relationship among Critical Factors in the Construction Projects

Dr. Seema Sharma
97-100
12. Employee Engagement, Training and Career Development

(Tata Tele Services Limited A Case Study)
Shikha Vashishtha
101-108
13. A Study of Buying Behaviour of Customers Towards Branded and Non-Branded

Gold Jewellery with Reference to Meerut City
Dr. Kavita Saxena
109-114
14. Biographien : Raghuram Govind Rajan
115-116
15. Book Review : The Man of the Moment : Narendra Modi

J. N. Sharma
117-118
www.jctindia.org 5
www.jctindia.org
RNI : UPENG 2006/17831
http://EconPapers.repec.org/RePEc:jct:journl:v:11:y:2016:i:1:p:7-15
https://ideas.repec.org/a/jct/journl/v11y2016i1p7-15.html
http://jctindia.org/april2016/v11i1-1.pdf
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Pages 7-15
A Review of Pre-Keynesian
Neoclassical Business Cycle Theory
Christopher K. Manner
Ph. D. , Union University, Jackson TN, USA
Abstract
Although some practicing economists believe there was no macroeconomics before Keynes, historians of economic thought
recognize a rich and varied stream of literature on monetary and business cycle theory that predate and form the context for
Keyness General Theory. Accordingly, the present paper examines many of the popular Neoclassicalbusiness cycle theories
developed prior to the Keynesian Revolution. There are several valuable classifications of these theories; however, it is
common to sort the writings on business cycles according to the cause attributed. In particular, this paper will follow an
early twentieth century convention, using the terms originating cause and self-generating cycle to describe the
various business cycle theories.Originating causes, such as war and weather, keep the business system in a continual state
of unbalance. The business responses to those originating causes create a self-generating cycle of recurrent upward and
downward movements in economic activity.
This paper should prove useful to teachers (and students) of macroeconomics who wish to complement their technical
material with a historical perspective.
Keywords: Business Cycle Theory, Neoclassical School, Originating Cause, and Self-Generating Cycle.
1.
INTRODUCTION
Economic change is one of the most vital and
all-pervading of economic problems. Change in
economic conditions determines the amount of available
employment, and has an important influence on the
use of leisure, the rate at which people marry and
divorce, attitudes toward religion, and the liberality of
ideas. Many social theorists believe that economic
change has a disproportionate influence on life in
general. Some have suggested that we should slow
down technological progress, so that there would be
fewer changes for which adjustment is needed. Some
have suggested various minor policy adjustments for
reducing fluctuations. Others have suggested that the
capitalist system should be replaced by socialism or
communism.
The understanding of economic change is often
the critical factor determining success or failure in

business. Of even more importance, an understanding
of economic change is essential to the development of
sound social policy. Policy makers need to know why
economic change takes place, how it can be measures,
and the extent to which it can be forecasted.
In general, economists believe economic
change can be logically explained. If economic activity
tends to be higher at one time than at another, there
are good reasons for the difference. It is possible to
determine the factors responsible for economic growth.
The alterations from prosperity to recession and from
recession to prosperity become explainable if we are
aware of all of the forces acting upon these changes.
Economists have long recognized that business
fluctuations are cyclical in nature. The business cycle
may be defined as a recurrent upward and downward
www.jctindia.org 7
movement in total economic activity which, in practice,

rises and falls successively to above and below normal
levels of production. This definition of business cycles
emphasizes a fixed recurrence of phases. Although
there are numerous ways of classifying and defining
the phases of the business cycle, for the discussion at
hand, a very simple classification of the phases will
suffice. We can speak of two phases: the phase of
incline, and the phase of decline. The phase of incline
lasts as long as the cyclical movement is upward and
the phase of decline lasts as long as the cyclical
movement is downward. Cyclical movement is usually
measured by industrial production, gross domestic
product or some other measure of aggregate economic
activity.
2.
PURPOSE OF THE STUDY

According to Diebold, "A striking and easily
forgotten fact is that, before Keynes and Klein, there
really was no macroeconomics" (in Adams, 1992, p.
31, Diebold's emphasis). In contrast, Dimand (2003)
stresses that the business cycle theory forming the
context for Keynes's General Theory was much more
than "passing asides of classical and Neoclassical value
theorists" (p.121). Economists analyzed fluctuations
in output and employment long before the Keynesian
Revolution. In fact, historians of economic thought
recognize a rich and varied stream of literature on
business cycle theory that predate the General Theory.
As Dimand (2003) states, "Keynes transformed
macroeconomics, but a substantial and valuable body
of macroeconomics already existed to be transformed"
(p. 146).
In light of these observations, the aim of this
paper is to examine pre-Keynesian business cycle
theory. Because the literature is so rich and diverse,
this study will focus on the work of those scholars
generally considered coming from the Neoclassical
tradition.
The Neoclassical School includes a large body
of work dedicated to the understanding of business
cycles. Although extremely diverse, a common thread
in the literature is the acceptance of the precepts of
orthodox economics thought. From these
8
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presuppositions they derived a body of theory that early

twentieth century economists classified into two broad
categories: (1) originating cause theories and (2) selfgenerating cycle theories. It is the purpose here to
examine the most popular of these theories and to point
out the position occupied in the whole process by the
factors selected as causes.
3.
ORIGINATING CAUSE THEORIES
According to Clark (1934) and Bratt (1937),

total economic activity moves in cycles because of
originating causes which keep the business system in a
continual state of unbalance, and also because of
business responses through which the forces set up by
the originating causes produce a cycle. Early twenty
century economists used the term "originating cause"
to refer to exogenous causes or factors from outside
the economic system. The business responses to
originating causes, in turn, create a "self-generating
cycle" of recurrent upward and downward movements.
Fundamental principles of neoclassical
economic analysis explain the tendency of economic
forces to seek an equilibrium. The originating causes
of business cycles prevent production from taking
place at the balanced levels. Originating causes may
drive production either above or below the balanced
level. Originating causes, influential in creating business
fluctuations, include the weather, inventions and
discoveries of new or improved processes and of new
goods, wars, and cyclical movements in foreign
countries.
3.1
Weather Variations
The oldest of the originating cause theories of
the business cycle relates to the weather and its impact
on agricultural crops. The production of any
agricultural crop may vary either from a variation in
acreage planted or from a variation in the yield per
acre. In practice, the principle variation in most crops
is due to variations in the yield. Variations in yield are
chiefly due to a variation in weather conditions. Many
scholars, notably W. S. Jevons (1884) and H. L.
Moore (1914), attempted to explain business cycle
variations solely on the basis of this variation in the
yield of agricultural crops. If the yield is above average,
the prices will be below average. With lower agricultural

prices the costs of industrial firms are reduced, their
profits are increased, and they are encouraged to
expand. There is an opposite result when yields are
below normal.
H.L. Moore (1914), who worked out the
weather theory with great care, showed how weather
changes may produce changes in crop yields, which
produce a change in the price of raw agricultural
commodities. This, in turn, changes the cost of
agricultural products purchased by industrial
enterprises, which causes a change in business activity.
Moore's analysis of rainfall in the central part of the
United States showed evidence of an eight-year cycle.
The behavior of rainfall was matched with pig-iron
production and measurements of the general price
level. He discovered that pig-iron production lagged
approximately two years and the price level four years
behind rainfall variations. Based on these lags, he
inferred a meaningful relation between cycles in rainfall,
cycles in crops, and cycles in aggregate economic
activity.
Huntington (1919) held that the business cycle
is due to mental attitudes, which are indirectly affected
by the weather. In particular, changes in the weather
cause changes in health, which impact mental attitudes.
The link between mental attitudes and the business cycle
was never explained.
W.S. Jevons' (1884) theory attributed the
weather cycle to the sun spot cycle. Later, when
scientists found that the length of the sun spot cycle
had been miscalculated, Jevons' son, H.S. Jevons
(1910), conveniently revised the length of the business
cycle. Mata and Shaffner (1934) presented evidence
indicating a relationship between sunspots and other
solar phenomena and general business conditions,
although they found no evidence between solar cycles
and weather cycles. The clearest relationship found
was between the variation in solar faculae (i.e. bright
spots) and Persons' yearly Index of Total Production
in the United States, 1875-1930. In two recessions,
1903-1904 and 1913-1914, the changes in solar
faculae were above normal.
Mata and Shaffner (1934) suggested that the
RNI : UPENG 2006/17831
relationship they found between business conditions

and solar phenomena may be explained by two possible
mechanisms involving biological changes, an approach
somewhat similar to Huntington's. First, the number of
sunspots controls the amount of ultraviolet rays that
reach the earth, and this may alter human health.
Second, there is a cycle in the magnetic activity of the
earth similar in length to that of solar phenomena. Since
nerve energy is electrical in nature, Mata and Shaffner
(1934) surmised that a direct biological effect may
result from the variation in the magnetic activity of the
earth.
By the 1930s, economists were beginning to
doubt that business cycles move in general with cycles
in solar phenomena. As Mata and Shaffner (1934)
recognized, even if solar phenomena could explain the
cyclical turning points, it appears difficult to see how
solar phenomena can be held responsible for the
factors creating the self-generating phases of incline
and decline.
3.2
Invention and Discovery

The commercial utilization of inventions and
discoveries in the development of new goods tends to
drive production toward or away from balanced levels.
The commercial application of improved processes in
the production and management of industry results in
an increase in productivity. Such an increase, of sizable,
results in vast increases in the potential output of goods
without any increases in the labor power. If the demand
for the good is inelastic, or if the manufacturers decline
to make reasonable decrease in the price of the good,
much labor will be displaced. In time, this displaced
labor will be taken up in new industries, in the expanding
of old industries, or in re-employment in the given
industry. If this increase in productivity occurs in the
early part of a prosperity period, demands for new
capital goods or for durable consumer goods will likely
be great enough to absorb the displaced labor force.
Since the additional labor offered on the market at this
point will tend to keep wages down, profits will be
increased and production will tend to move even
further above balanced levels. However, if this increase
in productivity occurs at the peak of the cycle, after
the increasing demand for capital goods has tapered
www.jctindia.org 9
off and wage rates are high, the displaced labor will
not be so readily absorbed. The result will be a
decrease in purchasing power, and then a decrease in
total production, tending to drive production down
toward balanced levels. If the increase in productivity
occurs in a depression period, profits may increase
and therefore encourage capital investment, tending
to drive production back up to balanced levels. It may
be, however, that the increase in productivity will be
offset by the resistance of wage rates to decline. If
such occurs, labor will be displaced, with no tendency
toward reabsorption while business is declining; the
total purchasing power will be decreased, tending to
drive prices down, and tending to drive production
still further below balanced levels. Temporarily, the
increase in productivity may not increase profits.
Both Schumpeter (1927) and England (1915)
emphasized the idea that innovations come in waves,
and initiate periods of activity followed by crisis and
depressions. Invention and discovery are closely
related to several forces present in the self-generating
cycle (discussed in section 3). Schumpeter (1927) has
shown that imitators of successful innovators accentuate
business activity during the phase of incline, and that
this leads to an unstable prosperity. This, in turn,
increases the proportion of capital goods produced
during prosperity, and adds to credit extension. It may
be that the business cycle would not occur without the
progress made possible by invention and discovery,
but these forces alone do not comprise a sufficient
explanation. As Bratt (1937) observed, Schumpeter's
theory of the business cycle "does not explain the
intensified fluctuations in derived demand for durable
goods, nor several self-generating cyclical forces,
including the cyclical shift in the efficiency of workers
and the slow rate of change in the habits of
consumption in prosperity" (p.144).
3.3
War
Many have suggested, at times, that wars are
chiefly or solely responsible for business cycles. Wars
drive industrial production away from balanced levels
in two ways. First, goods purchased for war purposes
are destroyed rather than consumed in the normal
economic process. Second, wars are almost invariably
10 www.jctindia.org
RNI : UPENG 2006/17831
financed by inflation.
Production of goods for war creates an atypical
pattern of scarcity. In addition, dictatorial policies are
usually followed, by means of which, artificial stimulus
is given to the production of certain goods, over and
above that which would be induced in any case by the
abnormal scarcity due to war consumption. Capital
funds which otherwise would be used to produce
dwellings and peace-time factories must be shifted into
the production of ammunition, weapons, and ships.
After the war ends, vast accumulated shortages appear
in residential building and in factories for producing
consumer goods, since depreciation and obsolescence
will have continued during the war. The making up of
the deficits will abnormally stimulate industry.
Major wars are often financed by inflation.
Instead of taxing at the time to pay for the war,
governments resort to the flotation of large bond issues.
Real savings are not large enough to buy these bonds
in addition to the private investments necessary for the
conduct of the war, and therefore the bonds must be
purchased on credit. If the bond market should prove
inadequate, the government would resort to paper
money inflation. In a social sense, when the war is over
it is paid for whether by inflation or taxation. Many of
the goods which were created have been destroyed,
and they cannot be made at a later date. Society has
already paid for these goods, and it is merely a matter
of against whom the costs are to be levied. In other
words, the question is whether the funds are to be
obtained by taxation and the wealth redistribution
effected immediately, or whether the funds are to be
obtained by inflation and the redistribution put off to
some extent. The later method is often chosen.
Bratt (1937) and others cited war inflation as
an originating cause of business cycle movements. Its
primary characteristic is to force a rise in prices. This
price rise lightens the burden of debts and people
become optimistic. Since prices are rising, money
cannot be expected to buy as much in the future, so
people shift from money to goods, and that causes
prices to rise still further. The result is an upward spiral
of mounting prices and a piling up of debts, since it is
now profitable to owe money. This upward spiral
movement has the same characteristic as the upward

movement of the business cycle. Due to these
psychological factors, prices inevitably go higher than
justified by the additional credit created over and
above real savings.
At this point, one of two things may happen.
Mounting quantities of credit may be created by the
flotation of bonds or by the printing of money. For a
time, people are abnormally active in trying to convert
their money into goods. Production is driven above
the balanced level. Ultimately the money comes to be
worth nothing. All debts or money claims are of little
or no value. Only equities and ownership are of value.
Such an experience is disruptive and production is
driven below balanced levels until people again have
faith in credit and contracts.
Instead of uncontrolled inflation resulting, the
government may contract credit or at least discontinue
its expansion. The resulting decline in prices paralyzed
business and is a powerful factor tending to drive
production below normal levels.
3.4
Business Conditions in Foreign Countries

Other than for major depressions, business
cycles often move with some independence across
countries. An opposite phase of the business cycle in
foreign countries may act as an originating cause of on
the home country's cyclical condition. Suppose, for
example, the home country is in a depression and most
of the other countries of the world were in a prosperity
phase. Prices would be high in these foreign countries
but low at home, and therefore exports would be
stimulated and imports would be discouraged. An
outlet for additional goods at current prices would thus
be provided, and this would tend to drive the home
country back to normal. If the home country were in a
prosperity phase, but most of the rest of the world
were in depression, exports from the home country
would be discouraged and imports would be
encouraged. This situation would be a drag on further
upward movements of production, which is already
above normal levels, and therefore would be beneficial
if not carried too far.
Rapid industrial or agricultural development in
RNI : UPENG 2006/17831
foreign countries serve to lower prices, and therefore

acts as an unbalancing factor on the same industries in
the home country. The unbalancing effect is especially
pronounced if these industries in the home country
customarily have a large export balance. In agriculture,
the net effect on total production is somewhat
uncertain. On the one hand, agricultural production is
approximately maintained for a time, prices are
reduced, therefore costs of industries using these
products are reduced, profits are increased, and these
industries tend to expand and production is driven
above balanced levels. On the other hand, the
purchasing power of farmers is reduced and therefore
they can buy fewer goods. This reduces the sales of
many companies, tending to drive production below
balanced levels.
In the case of manufacturing industries, unless
they are protected by a tariff, foreign competition
reduces prices and requires contraction. Such
contraction releases factors of production for other
industries, but nevertheless introduces a force tending
to drive production below balanced levels.
3.5
Episodic Theories
In commenting on the frequency distributions
of business cycles obtained by W.C. Mitchell, Working
(1928) expressed a widely held view:
"The form of several of the distributions (of
length and amplitude) is precisely what one should
expect if business cycles result in considerable measure
from a cumulation of the influence of mutually
independent chance factors. We have too much
evidence of the interaction of economic forces in
business cycles to accept such a theory as a complete
explanation, but there may be more truth than is now
generally admitted in the episodic theory of business
cycles, as thus revised" (p. 89).
"Episodic" theories of the business cycle state
that each depression, and each recovery has its own
unique cause. In many cases, some single force may
be predominant in making for depression or recovery,
but there may be, and usually is, more than one
originating cause creating the unique characteristics of
the particular business cycle. Veblen (1904), Fisher
www.jctindia.org 11
(1913), and Adams (1925) seemed to have espoused

such a theory at times. Mitchell (1923) phrases it, "like
all historical phenomena, each cycle is, strictly speaking,
a unique phase of human experience" (p. 658).
4.
SELF-GENERATING CYCLE
THEORIES
Originating cause theories of the business cycle
suggest that exogenous factors keep the business
system in a continual state of unbalance. They are called
originating because they are not generated within the
round of the cycle itself. However, originating causes,
in and of themselves, do not produce a business cycle.
As stated earlier, originating causes throw production
off of balanced levels. As soon as their operation is
discontinued, production might be expected to return
to balanced levels if no other forces were at work.
The responses of the business system to these
originating causes create the business cycle. The
business responses to originating causes create a selfgenerating cycle of recurrent upward and downward
movements in economic activity. That is, one phase of
the business cycle grows out of the preceding phase.
Bratt (1937) and others referred to this line of reasoning
as self-generating cycle theories.
Various writers have attempted to trace the
responsibility of the business cycle to some particular
characteristic of the business process. These include,
psychological factors, over-investment, malinvestment,
money and credit, and consumers' income and saving.
4.1
Psychological Factors
Many early twentieth century economists
traced the cumulative change in business activity to
psychological factors. According to this approach,
businessmen are constantly trying to forecast the future.
These forecasts impact short-run operations and the
development of long-term contractual obligations.
Because business conditions change erratically, errors
in forecast occur. According to Pigou (1927), these
errors are likely to become generalized. That is, the
optimistic errors of some do not offset the pessimistic
errors of others. As Pigou (1927) puts it, "optimistic
error and pessimistic error, when discovered, give birth
to one another in an endless chain" (p. 103). This
12 www.jctindia.org
RNI : UPENG 2006/17831
"chain" of errors gives rise to large fluctuations in

economic activity. For example, technological
improvements may lead people to take an overly
optimistic view. Errors of optimism will be realized
when competition tightens and profit margins begin to
shrink. This realization brings a halt to optimistic
tendencies and the economy begins to decline.
Eventually, optimism gives way to pessimism. Excessive
pessimism offsets optimism, and trough of the business
cycle is reached when the pessimistic errors are
detected.
Hexter (1925) also attributed the business
cycle to emotional aberration. According to his theory,
variations in the birth and death rates create alternations
of optimism and pessimism, and that these in turn create
the cycle. Huntington (1919) also traced variations in
business directly to variation in mental attitudes.
4.2
Over-Investment
Capital goods industries are typically more

sensitive to the business cycle than consumer nondurable goods industries. According to a number of
neoclassical economists, this greater cyclical sensitivity
is the result of a serious imbalance that occurs during a
phase of economic incline. For example, an upswing
originating in the capital goods sector brings with it an
increased demand for raw materials, such as iron, steel,
cement and, lumber. Consequently, investment to add
capacity to these industries is essential. According to
Spiethoff (1902), these areas of business activity
become overdeveloped and it is impossible to use the
entire supply of raw materials in the construction of
more capital equipment and durable consumer goods.
Ultimately, a decline in capital goods production
spreads to consumer goods industries and sets off a
decline in overall economic activity.
Tugan-Baranovski (1894) held that current
savings are not sufficient to satisfy demand for capital
in prosperity, and a crisis is brought on because the
demand for capital cannot be satisfied. Conversely,
investments fall below savings made in the depression,
and when investing becomes aggressive once more,
recovery is underway.
Hobson (1909) held that the large incomes,
existent in a prosperity, lead to over-saving and hence

to over-investment, until there is an excess supply of
capital. In the following depression over-saving ceases,
the excess supply of capital is used up, and recovery
becomes possible. His theory is an apparent
contradiction of Tugan-Baranovski's, but actually there
is no essential contradiction. Whereas Hobson suggests
that too much cash is allocated to investment in
prosperity, Tugan-Baranovski argues that too much
credit is extended. Hobson points out that a
disproportionate share of aggregate savings comes
from upper-income groups in society. As such, oversaving can be corrected through a more equitable
distribution of income.
4.3
Malinvestment
Malinvestment, a term often used by Austrian
economists, is a form of over-investment that occurs
due to unsustainable increases in the money supply
and artificially low interest rates. The main proponent
of the malinvestment theory is Hayek (1932). His
theoretical explanation of the business cycle focuses
on arbitrary tampering with the credit mechanism,
which impedes the natural flow of economic activity.
According to Hayek, businessmen must
constantly decide how to channel resources between
production for current consumption (consumer goods)
and production for future consumption (capital goods).
Similarly, consumers allocate money income between
consumption and saving. A market-determined
interested rate assures that these decisions correspond.
That is, there is a balance between the savings plans
of consumers and the needs of businessmen for
investment funds.
The disrupting factor, according to Hayek's
explanation, is the banking system. If the central bank
increases the supply of money, the interest rate falls
below its equilibrium level. Businessmen respond by
allocating more resources to the production of capital
goods. As workers are hired and/or wages rise in
producer-goods industries, consumer income grows.
The result is an increase in consumer demand. Assuming
consumers do not increase the proportion of saved
income, consumer demand will eventually rise relative
RNI : UPENG 2006/17831
to the rise in funds available for investment. Banks

respond to declining reserves by raising interest rates.
Businessmen, who undertook investment assuming
available credit and favorable interest rates, now find
their costs have risen. Discouraged by the higher interest
rates, they abandon their capital projects. The ultimate
consequence of this malinvestment is economic decline.
Businesses liquidate inventories, the price level falls,
profits decline, and large-scale unemployment results.
4.4
Money and Credit
The monetary explanation of the business cycle

is based on changes in the supply of money and bank
credit and their impact on effective demand. One of
the earliest and best-known proponents of a monetary
explanation of the business cycle is R.G. Hawtrey.
Hawtrey (1913) emphasized the impairment of bank
reserves and how interest rates direct the use of credit.
As the business cycle reaches its peak, "traders" (a
term Hawtrey used to describe manufacturers,
retailers, and wholesalers) reduce new orders as profit
margins begin to fall. In response to declining orders,
manufacturers cut back their operations and a
downward spiral in business activity sets in. Income
payments and employment fall, bank loans contract,
and households save cash rather than spend it. The
severity of the downturn depends on what Hawtrey
referred to as development of a "credit deadlock." This
occurs when banks shift the composition of their
portfolios from short-term business loans to longerterm securities in the investment market. Because of
unfavorable assessments of future demand, the
investment market is hesitant to use these funds for
new capital equipment. The result is a reduction in shortterm interest rates, an increase in orders for goods,
and renewed activity in manufacturing. Conversely,
during expansion, it becomes increasingly difficult for
banks to expand credit. Once they are loaned up, they
become more selective in their lending and charge
higher interest rates. Higher interest rates affect the
margins of manufacturers, wholesalers, and retailers
and set in motion a contraction of business activity.
Other advocates of a monetary explanation
of the business cycle include Hansen (1921) and
www.jctindia.org 13
Schluter (1923). They held that banks increase

purchasing power by lending larger and larger quantities
of credit in a period of prosperity until the undue
extension of credit places a strain on bank reserves, at
which time the credit must be deflated. In the following
depression, idle funds accumulate in the banks enabling
them to start a new movement of expansion.
4.5
Consumer Income and Over-Saving
Several writers attributed the business cycle

to the characteristic behavior of income payments,
spending, saving, and prices. Aftalion (1927) and
Bouniatian (1928) developed theories largely
dependent upon the tendency for consumers to save
too much in prosperity. They suggest that there is a
rapid increase in the production of capital goods in the
phase of incline. This leads to a large capacity to
produce consumer goods, resulting in a decline in the
marginal demand prices for consumer goods. With the
increase in the available quantity of goods, people are
not willing to spend as much for each good, leading to
a decline in price. This failure to buy all of these goods,
if it is a result of the consumers' valuation, must be due
to the fact that consumers begin to save too large a
portion of their income.
Lederer (1925) stressed the dispersion of
various prices when general prices are rising or falling,
concluding that this leads to an in income level that is
insufficient to take the goods off the market in prosperity
and excessive income for the purpose of taking goods
off the market in depression. Foster and Catchings
(1925) and Hastings (1923) also stressed this alternate
deficit and excess of consumer income. The relative
variation in consumers' income, however, does not
explain the excessive variation in the production of all
durable goods. Adams (1925) has attempted to relate
these variations, attributing an excessive consumers'
income in prosperity to an increased production of
capital equipment. In the latter part of the phase of
prosperity, however, consumers' income suffers not
from being excessive, but from being too small to take
off the market, at the then present prices, the goods
which could be created by the then existent capacity.
14 www.jctindia.org
RNI : UPENG 2006/17831
Another form of the over-saving theory points

out that consumer demand is alternately larger and
smaller than the current supply of goods because of a
lag in the change of wage rates behind the change in
the price of goods. During an economic expansion,
this lag induces greater investment and productive
capacity tends to outpace consumer demand. Due to
a lack of effective consumer demand, the purchasing
power of wage-earners is insufficient to absorb the
flow of goods from the new productive facilities.
5.
CONCLUSION
Although Keynes transformed the nature and

language of macroeconomics, a rich and varied stream
of literature on business cycle theory existed before
the General Theory. As Mitchell (1927) observed,
"Before the end of the nineteenth century there had
accumulated a body of observations and speculations
sufficient to justify the writing of histories of the theories
of crises" (p.7). The purpose of this paper is to bring
to light some of the popular Neoclassical business cycle
theories that predate and form the context for Keynes's
General Theory.
The Neoclassical School has contributed to
our understanding of economics by identifying the
forces that cause business cycles. It may be concluded
that past attempts to trace the business cycle to a single
cause have been unsuccessful. The business cycle must
be viewed as the result of all of the forces which create
it. Most economists would agree that the interrelationships of the economic processes are so great
that it is futile to attempt to trace the business cycle to
any single cause. Nonetheless, the purpose of this
paper is to show the worth of the ideas involved.
The present paperis intended for teachers (and
students) of macroeconomics wishing to complement
their technical material with a historical addendum. As
such, the material presented herein has been stated,
so far as possible, in accordance with commonly
accepted and long-published transcripts of the
theorists' ideas.
m
RNI : UPENG 2006/17831
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Germany: A Study of Monthly Data, 1902-08, University of Wisconsin.
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Hexter, M.B. (1925). Social Consequences of the Business Cycle, Houghton, Mifflin Company, Boston.
Huntington, E. (1919). World-Power and Evolution, Yale University Press.
Jevons, H.S. (1910). The Suns Heat and Trade Activity, P.S. King & Son, London.
Jevons, W.S. (1884). Investigations in Currency and Finance, Macmillan & Company, Ltd., London.
Lederer, E. (1925). Konjunktur und krisen. Grundr. d. Sozialokonomik, 4, Tubingen, 354-413.
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www.jctindia.org 15
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Pages 16-27
Bilateral Trade of India with Middle East

Countries : A Study of Iran
Anuj Gupta
Research Scholars (JRF), Faculty of Commerce, Banaras Hindu University.
Ravi Kumar
Research Scholars (SRF), Faculty of Commerce, Banaras Hindu University.
Abstract
From the recent past, it has been seen that the structure of international trade is made simple & smoothening. India is
having a good political, cultural & economic relationship with Iran. Iranian oil is very popular in India while the cereals
& other food materials are popular in Iran. The need of present hour is to build stronger trade relation with Middle East
nations, among them Iran is an important country. From the study it has been found that the trade balance is negative for
India in the recent past. The share of total export to Iran is also very low. Hence, policies should be made to encourage this
trade between the two nations. Oil is the chief commodity imported due to its natural superiority. An alternative use for oil
must be developed to decrease the use of oil in the nation. Better export of arts & artifacts must be done to improve the
quantity of export from India. Political relation must be made stronger to enhance the trading between the nations.
Providing better environment to the exporters through subsidies, financial & technical assistance, etc. to enhance the total
growth of export will be a better option.
Keywords: smoothening, Iranian oil, trade relation, Middle East, better environment.
1.
INTRODUCTION
Foreign trade has played an important role in
the development of any nation. It has helped in
developing various types of relationship among the
trading countries. India & Iran relations span centuries
marked by meaningful interactions. The two countries
shared a border till 1947 and share several common
features in their language, culture and traditions. Both
South Asia and the Persian Gulf have strong
commercial, energy, cultural and people-to-people
links. However, the trade relations have traditionally
been controlled by Indian import of Iranian crude oil
resulting in overall trade balance in favor of Iran. Both
the countries have immense share in educational system
also. Many students of Iran come to India, vice-versa.
Apart from social, cultural, educational & historical
linkage, both the country posses economic trade
behavior with each other from long era. Indus valley
16 www.jctindia.org
civilization too shows many traces of trade among the

two nations. In the recent past, the two countries
exchanges huge amount of energy & edibles. In this
paper, the emphasis is made on the status of
international trade between them & some opportunities
thereon. Recently, the P.M. of India visited in Iran
building good relation among the citizens. A trade of
petroleum product will took place with the essence of
pipe line building among Iran-Afghanistan-PakistanIndia. It is assumed that more emphasis is made on
the global peace & empowerment with the said project.
2.
OBJECTIVE OF THE STUDY

Following are the major objectives of this
research paper :
(a)
To study the present status of both the
countries in World Trade.
(b)
(c)
(d)
(e)
3.
To analyze the trend of export & import of

Iran, & Indias share in it.
To analyze the composition of export & import
between India & Iran.
To analyze the impact of growth of Irans
import on Indias share.
To procure suggestive measures for the
improvement of trade between India & Iran.
LITERATURE REVIEW
Various books, journal, research papers, etc.

could be found in the related study. Some books of
business ethics acts as a base of the study. Some of
the prominent works done in the related field are
mentioned below.
In his book, P. Cateora, the base of
international marketing management is explained
thoroughly, with the context of South Asia. Elements
of international marketing are elaborated in detail,
which has helped in understanding the topic. Export
Management of B.S.Rathor has helped in understanding
the concept of foreign trade & various international
issues. Indian Trade Journal has helped in
understanding the various bilateral trades between
various countries. Balloch in his research paper has
elaborated the economic trade relation between IndiaIran in a well defined manner. Ilias in his research paper
analysed the impact of US relations & Irans economic
conditions. A.Gupta has explained in his research paper
various data analysis technique, which has helped in
making this paper. Mousavi has explained the India-
RNI : UPENG 2006/17831
Iran relation after New Delhi declaration in a deeper

manner that has helped in taking decision of making
this paper. Various political issues have also been
explained in that paper. Leverett has explained the USChina trade relation in a brief format. It has summarized
their related relations. . Further, H. Zangeneh (1997),
author, drew conclusion in his study direction &
evolution of International Trade in Iran: An Empirical
Analysis about international trade after revolution in
Iran based on all economic indicators such as GDP,
private per capita consumption, private investment,
external debt, inflation and non-oil export. M. Alaei
far (2000), author, studied the relationship between
oil export and economic growth in the Iran from 1959
to 1999 in his paper The Relationship between Export
and Economic Growth: assessing from Iran (19591999), with the help of combining production function
and international trade development theories, a six
variable (economy, growth, petroleum, exports, capital,
labor) and developed vector auto regression (VAR)
made.
4.
METHODOLOGY
In this research paper, secondary data is used
to the greater extent. The data received from various
sources are properly classified into tables, graphs, etc.
The information is transformed into meaningful
conclusion in the form of percentage share, annual
growth, etc. Various statistical tools like index number,
mean, etc. is used. The secondary data is taken from
the published reports of Ministry of Commerce (India),
Central Bank of Iran, EXIM bank, DGFT, WTO, etc.
Table 1: Status of World trade

US dollar at current prices (Millions)
Year
World Export
World Import
Total Word Trade
Trade Balance
2010
15301000
15511000
30812000
-210000
2011
18338000
18503000
36841000
-165000
2012
18496000
18713000
37209000
-217000
2013
18954000
19026000
37980000
-72000
2014
19002000
19091000
38093000
-89000
Source : Statistical Database, WTO

www.jctindia.org 17
The table 1 shows the status of total world

trade for the last five years. It has been shown that the
trade balance of total world trade is negative
consecutively. It was largest in the year 2012 &
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smallest in 2013. In the year 2014 the amount of total

trade was biggest. The growth in total trade was highest
in year 2011.
Figure 1: Status of Export-Import of World in the last five years
Source : Table 1
The figure 1 is the diagrammatical

representation of table 1. The amount of total export
& import is shown in the blue & red bar diagram
respectively for the last five years. From the diagram

it has been clearly viewed that there is not very huge
difference between the total world export-import.
Figure 2 : Worlds Trade balance for the last five year
18 www.jctindia.org
It has been seen from the figure 2 that there is

an average negative trade balance of -150600 US $
million every year. The balance was highest in the year
RNI : UPENG 2006/17831
2012. There is a zigzag pattern for trade balance in

the last five year.
Table 2: Share in total world export by India & Iran in the last five years
Year
World
Export
Indices Of World
Export
(2010 Base Year)
Indias
Export
Indices Of India
Export
(2010 Base Year)
Irans
Export
Indices Of Iran
Export
(2010 Base Year)
2010
15301000
100
226351
100
101316
100
2011
18338000
119.848376
302905
133.820924
132000
130.285444
2012
18496000
120.880988
296828
131.136156
104000
102.649137
2013
18954000
123.874257
314848
139.097243
82500
81.4284022
2014
19002000
124.187962
321596
142.078453
88800
87.6465711
Source : Author calculation
In the table 2, the share of the two countries in

the world's export is shown. It is seen clearly that both
India & Iran is covering less than 1% of the total
world's export for all the years. The growth of export
of India is moving positively while that of Iran is

negatively. This growth was highest in 2011 for both
the countries. Lowest or negative growth was highest
in 2013 for Iran.
Table 3 : Share in total world import by India & Iran in the last five years
Year
World
Import
Indices Of World
Import
(2010 Base Year)
Indias
Import
Indices Of India
Import
(2010 Base Year)
Irans
Import
Indices Of Iran
Import
(2010 Base Year)
2010
15511000
100
350233
100
65404
100
2011
18503000
119.289536
464462
132.615145
61760
94.4284753
2012
18713000
120.643414
489694
139.819492
57092
87.2912972
2013
19026000
122.661337
465397
132.88211
49000
74.9189652
2014
19091000
123.080395
463033
132.207131
51000
77.9768821
Source : Author calculation
In the table 3, the share of the two countries in

the worlds import is shown. It is seen clearly that both
India & Iran is covering less than 1% of the total
worlds import for all the years. The growth of import
of India is somehow moving positively while that of

Iran is negatively. This growth was highest in 2011 for
India. Lowest or negative growth was highest in 2013
for Iran.
www.jctindia.org 19
RNI : UPENG 2006/17831
Value in (US million $)
Table 4- Irans foreign Trade: - Trends

Year
Export
Export Indices
(1992-93 as
base year)
Growth
Rate
Import
Import Indices
(1992-93 as
base year)
Growth
Rate
Trade
Balance
1992-93
19868
100
23274
100
-3406
1993-94
18080
91
-8.99
19287
82.87
-17.13
-1207
1994-95
19434
97.82
7.48
12617
54.21
-33.76
6817
1995-96
18360
92.41
-5.52
12774
54.89
1.24
5586
1996-97
22391
112.69
21.95
14989
64.40
17.33
7402
1997-98
18602.31
93.63
-16.92
14621.53
62.82
-2.45
3980.8
1998-99
13104.22
65.96
-29.55
15013.88
64.51
2.68
-1909.7
1999-00
20882.34
105.11
59.35
13441.57
57.75
-10.47
7440.8
2000-01
28474.59
143.32
36.35
15860.06
68.14
17.99
12614.5
2001-02
23988.46
120.74
-14.47
18969.09
81.50
16.48
5019.4
2002-03
28109.6
141.48
17.17
22576.35
97.00
19.01
5533.2
2003-04
33991.66
171.9
20.92
30141.36
129.51
33.50
3850.3
2004-05
43834.6
220.63
28.95
38761.83
166.55
28.60
5072.8
2005-06
64524.79
324.77
47.20
43381.49
186.39
11.91
21143.3
2006-07
76190.24
383.48
18.07
49986.57
214.77
15.22
26203.7
2007-08
97667.24
491.58
28.18
58240.08
250.24
16.51
39427.2
2008-09
101288.82
509.81
3.70
70174.95
301.52
20.49
31113.9
2009-10
88326.08
444.56
-12.79
69246.57
297.52
-1.32
19079.5
2010-11
112787.7
567.69
27.69
75457.61
324.21
8.96
37330.1
Source : Central Bank of Iran
It has been seen from the table 4 that the trade

balance is continuously favorable except in 3 years
out of 19 years. The major export of Iran amounts to
the export of Iranian crude oil. Fuels & fertilizers
amount to major part of export of Iran. Cereals,
machinery, iron & steel, meat & other edible items,
nuclear reactors, etc. amount to major part of import.
The growth rate of export is far higher than the growth
rate of import in most of the year.
In the figure 3, it is shown that the blue line of
export is above the red line of import from the year
1999-00 continuously. This gap was maximum in the
year 2006-07 & minimum in 2003-04. It could be
forecasted that in coming future also the gap will exist,
20 www.jctindia.org
due to the supremacy in the oil export in the world.

Figure 3 - Trend of export-import of Iran
Source : Table 4.
RNI : UPENG 2006/17831
Table 5- Irans Total Export Oil & Gas Export and Non Oil Export & Indias Share
Value in (US Million $)
Year
Oil & gas

Export
Non Oil
Export
Total Export
Indias
share
% share of
total export
% share of Non
Oil Export
1992-93
16880
2988
19868
NA
NA
NA
1993-94
14333
3747
18080
NA
NA
NA
1994-95
14603
4831
19434
136
0.69
2.82
1995-96
15103
3257
18360
150.4
0.82
4.62
1996-97
19271
3120
22391
120.3
0.54
3.86
1997-98
15471.3
3131.01
18602.31
95.1
0.51
3.03
1998-99
9933
3171.22
13104.22
144.7
1.10
4.56
1999-00
17089
3793.34
20882.34
128.6
0.62
3.39
2000-01
24279.9
4194.69
28474.59
152.5
0.54
3.64
2001-02
19338.64
4649.82
23988.46
187
0.77
4.02
2002-03
22965.6
5144
28109.6
189.23
0.67
3.67
2003-04
27355.02
6636.65
33991.66
296.2
0.87
4.46
2004-05
36314.74
7519.86
43834.6
473
1.07
6.29
2005-06
53819.7
10705.09
64524.79
764
1.18
7.13
2006-07
62011.49
14178.76
76190.24
836.64
1.09
5.90
2007-08
81566.66
16100.57
97667.24
837.47
0.85
5.20
2008-09
82402.52
18886.3
101288.82
1159.44
1.14
6.14
2009-10
66189.64
22136.44
88326.08
1264.49
1.43
5.71
2010-11
86192.87
26594.82
112787.7
1821.71
1.61
6.84
Source : Central Bank Of Iran
The table 5 shows the share of Indias import

in the total export of Iran. It has been seen that India
doesnt covers very huge amount of share in the export
of Iran. The uniqueness of Irans oil & gas has made
the country economically stronger. The substitute of
crude oil is still not present in the world due to this the
need of such oil has not decreased anyway. The share
of India is continuously increasing at a very slow rate
in these 19 years. The share in non-oil export is in the
range between 2.82% to 7.13% in the given period.
In the figure 4, it has been shown the coverage

relationship between total export of Iran & Indias share
in it. It has been analyzed that from the year 2004-05
this share is increasing very slowly. The share was
highest in the year 2010-11 while it was lowest in
1997-98. With this we can conclude that India is not
the major partner of export of Iran. Iraq & UAE are
the major exporting countries for Iran. They are
increasing their import from Iran continuously.
www.jctindia.org 21
RNI : UPENG 2006/17831
Figure 4 - Indias share in total export of Iran
Source : Table 5.
Table 6- Irans total Import and Indias Share

Year
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
22 www.jctindia.org
Total Import
23274
19287
12617
12774
14989
14621.53
15013.88
13441.57
15860.06
18969.09
22576.35
30141.36
38761.83
43381.49
49986.57
58240.08
70174.95
69246.57
75457.61
Indias Share
NA
NA
214.1
222
231
230
204
199
253.8
560.8
716.8
883.4
1221
1115
1440.22
1457.33
1818.9
1792.94
1296.91
% share of Total Import

NA
NA
1.70
1.73
1.42
1.57
1.36
1.48
1.60
2.96
3.17
2.93
3.15
2.57
2.88
2.50
2.59
2.58
1.71
RNI : UPENG 2006/17831
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.945627
R Square
0.89421
Adjusted R Square
0.887158
Standard Error
7674.673
Observations
17.000
ANOVA
df
SS
MS
Significance F
Regression
7.47E+09
7.47E+09
126.7907
1.03E-08
Residual
15
8.84E+08
58900612
Total
16
8.35E+09
Coefficients
Standard
Error
t Stat
P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
4641.371
3196.135
1.452182
0.167047
-2171.03
11453.77
-2171.03
11453.77
X Variable 1
35.89106
3.187445
11.26014
1.03E-08
29.09718
42.68494
29.09718
42.68494
Multiple R = 0.945627, the value of multiple

R shows statistic nearer to 1. It implies that there is
high impact of import of Iran upon the share of India.
The table 6 shows the share of Indias export in the
import of Iran for the given period. It has been seen
that the share of India export in Irans import is
decreasing in the last three years of the study period.

The range of share is in between 1.42% to 3.17%.
The import from Iran is rising while export to Iran is
decreasing slowly. In the year 2002-03 the share was
maximum amounting to 3.17% whereas in the year
1996-97 it was lowest at 1.42%.
Figure 5- Indias share in total import of Iran
www.jctindia.org 23
In the figure 5, it has been shown the coverage

relationship between total import of Iran & Indias share
in it. It has been analyzed that the share is irregular in
nature. The import share is increasing & decreasing
without any pattern. The share was highest in the year
RNI : UPENG 2006/17831
2002-03 while it was lowest in 1998-99. With this we

can conclude that India is not the major partner of
import for Iran. UAE, Germany & China are the major
importing countries for Iran. They are increasing their
export to Iran continuously.
Table 7 - Top 10 import commodities in India from Iran (based on 2 digit HS level)
HS Code
Commodity
27
Mineral Fuels, Mineral Oils And Products Of Their Distillation;
Bituminous Substances; Mineral Waxes.
29
Organic Chemicals
Inorganic Chemicals; Organic Or Inorganic Compounds Of
Precious Metals, Of Rare-Earth Metals, Or Radi. Elem. Or Of
28
Isotopes.
31
Fertilisers.
39
Plastic And Articles Thereof.
08
Edible Fruit And Nuts; Peel Or Citrus Fruit Or Melons.
38
Miscellaneous Chemical Products.
41
Raw Hides And Skins (Other Than Furskins) And Leather
25
Salt; Sulphur; Earths And Stone; Plastering Materials, Lime
And Cement.
70
Glass and glassware.
Total Import from Iran
Total Import of India
%Share Of Iran
Value In (US Million$)
2013-14
8,556.95
2014-15
7,292.13
%Growth
-14.78
502.17
637.73
26.99
279.20
559.55
134.20
67.74
43.17
13.95
430.43
230.09
127.27
104.66
38.95
18
54.17
-58.88
-5.16
54.5
-9.77
29.07
19.62
2.82
10,307.16
4,50,199.78
2.2895
17.46
13.73
8,955.02
4,48,033.40
1.9987
-11.03
386.78
-13.12
-0.48
Source : Ministry of Commerce (Export Import Data Bank)
In the table 7 it is seen that there is a vast

difference between the top most imported commodity
& the 10th ranked commodity. It is also seen that the
said table is giving information related to the import of
top 10 commodities up to 2 digits HS Code. The
growth % is negative for 5 commodities & positive for
5 commodities. The overall import from Iran & its share
in total import of India is also decreased at -13.12%

& 1.9987% respectively. The import of India is also
decreased in the same year at -0.48 %. Mineral oils,
fuels, etc. are imported most from Iran in both the year.
The diagrammatic view of table is shown in Figure 4
& 5. Figure 4 shows non-oil imports while figure 5
shows oils import from Iran.
Figure 6 - Trend in import of non-oil

commodities from Iran
Figure 7 Trend in import of oil commodities

from Iran
Source : Table 7
24 www.jctindia.org
Source : Table 7
RNI : UPENG 2006/17831
Table 8 - Top 10 export commodities in India from Iran (based on 2 digit HS level)
Value In (US Million$)
HS Code
Commodity
10
Cereals.
72
2013-14
2014-15
%Growth
1968.73
1239.72
-37.03
Iron And Steel
290.16
654.48
125.56
29
Organic Chemicals
201.12
240.22
19.44
84
Nuclear Reactors, Boilers,

Appliances; Parts Thereof.
Mechanical
154.38
211.96
37.3
85
Electrical Machinery And Equipment And Parts Thereof; Sound

Recorders And Reproducers, Television Image And Sound
Recorders And Reproducers, and Parts.
221.09
161.85
-26.8
23
Residues And Waste From The Food Industries; Prepared Animal

Fodder.
681.37
156.25
-77.07
55
Man-Made Staple Fibres.
97.75
127.44
30.37
73
Articles Of Iron Or Steel
43.13
122.21
148.73
Coffee, Tea, Mate And Spices
120.48
105.8
-12.18
87
Vehicles Other Than Railway Or Tramway Rolling Stock, And

Parts And Accessories Thereof.
25.76
95.89
272.2
4971.35
4175.06
-16.02
3,14,405.30
3,10,338.48
-1.29
1.5812
1.3453
Machinery
And
Total Export To Iran

Total Export From India
%Share Of Iran
Source : Ministry of Commerce (Export Import Data Bank)
In the table 8 it is seen that

there is a huge difference between
the top most imported commodity
& the 10th ranked commodity. It
is also seen that the said table is
giving information related to the
export of top 10 commodities up
to 2 digits HS Code. The growth
% is negative for 4 commodities &
positive for 6 commodities. The
overall export to Iran & its share in
total import of India is also
decreased by -16.02% & to
1.3453% respectively. The export
of India is also decreased in the
same year by -1.29 %. Cereals are
exported most to Iran in both the
year.
Figure 8 Trend in export of top 10 commodities to Iran
Source : Table 8.
www.jctindia.org 25
The diagrammatic view of table is shown in

Figure 8. The figure 8 helps in understanding the
relationship of the export in the two years. In certain
commodities the difference is seen positive while in
some it is negative.
5.
MEASURES TO ENHANCE TRADE

BETWEEN INDIA & IRAN
Following measures should be taken by the
government, traders & other planning bodies to
enhance the trade between the two countries :
(a)
Analyzing the demand of the product in the
country Iran & trying to produce such
products.
(b)
Getting the procedure of foreign trade easier
so that more people are engaged in it.
(c)
Usage of advance technologies & methods to
increase the quality & quantity of the product.
(d)
Procuring the research in the field of fuel
revolution & finding new energy resources, so
that the import of oils could be reduced.
(e)
Subsidies should be given to the units which
are engaged in export of commodities.
(f)
Easy form of financial & technical guidance to
exporting units.
(g)
Appropriate marketing of home made
products, enhancing quality thereon.
(h)
Taking steps in reducing the usage of inorganic
chemicals & fertilizer, & promoting the organic
chemicals produced in India.
(i)
Building strong political relationship in
enhancing all types of trade.
(j)
Set up of export houses nearer to the region
of exporters.
6.
RNI : UPENG 2006/17831
LIMITATION OF STUDY
The commodities which are related to foreign

trade between the two nations, only those commodities
are considered & centralized. The present study is a
unique one. It shows economic & social relationship
between India & Iran. Hence, it would be fruitful for
all. The composition includes the major commodities
traded. Data of last 10 years is taken into analysis.
But there may be certain areas which are not covered
in the study. It is mainly due to individual researcher's
constraint & resource limitation. The study is highly
depending upon secondary data which is received from
various sources.
7.
CONCLUSION
The relationship between the countries are
nothing new, these find its traces in the Indus Valley
civilization. The international peace is a big topic in the
present era. Good economic & trade relation between
India & Iran will help in building the long term peace
& security in Gulf nations & Indian sub-continent. The
study reveals the negative trade balance for India from
various years. Some commodities like Iranian oils could
not be stopped suddenly. Its alternative must be found
like CNG, E-bikes, etc. Proper transportation activities
must be followed to cover greater region of research.
It has been seen that the import & export of India
from Iran is reducing. The reason for such activities
must be taken care. In this study it is helping the reader
to find a bilateral relationship between India & Iran.
Planning must be done in the field of research &
development for the said field. The work is fruitful for
the government, exporters, importers & other planning
authorities.
m
REFERENCES
1.
2.
3.
Balooch, M. (2009), Iran and Indias Cooperation in Central Asia, China and Eurasia Forum Quarterly,
7(3): 25-29.
Dimelis, S. and K. Gatsios (1995), Trade with Central and Eastern Europe: the case of Greece, in R.
Faini and R. Portes (eds), EU trade with Eastern Europe: adjustment and opportunities, London, Centre
for Economic Policy Research, pp. 123-166.
Gupta.A.(2015). Impact of Marketing Practices Followed By Agro-Based Units on Consumer
Consumption: With Special Reference to Varanasi District.IRJSS Vol.4(11),30-36,Nov(2015)
26 www.jctindia.org
4.
5.
6.
7.
8.
9.
10.
11.
12.
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Ilias, S. (2010), Irans Economic Conditions: U.S. Policy Issues, Congressional Research Service, USA.
Jbili, A., V. Kramarenko and J. Bailn (2007), Islamic Republic of Iran: Managing the Transition to a
Market Economy, The International Monetary Fund (IMF), http://www.imf.org/External/Pubs/NFT/2007/
iran/market/market.pdf
Leverett, F. and J. Bader (2005), Managing China-U.S. Energy Competition in the Middle East, The
Washington Quarterly, 29(1):187201.
Maloney, S. (2010), Sanctioning Iran: If Only It were So Simple, The Washington Quarterly, 33(1):131147.
Mousavi, M. A. (2011), Indo-Iran relations since New Delhi declarations, in A. Alam (eds), India and
Iran: an assessment of contemporary relations, New Century Publications, New Delhi, pp. 32-51.
Sagar, R. (2009), State of Mind: What Kind of Power will India Become?, International Affairs, 85(4):
801-816.
Torbat, A. E. (2005), Impacts of the US Trade and Financial Sanctions on Iran, The World Economy,
28(3): 407434.
Valibeigi, M. (1993), Islamic Economics and Economic Policy Formation in Post Revolutionary Iran: A
Critique, Journal of Economic Issues, 27(3): 793-812.
Vollrath, T. L. (1991), A Theoretical Evaluation of Alternative Trade Intensity Measures of Revealed
Comparative Advantage, Weltwirtschaftliches Archiv, 127(2): 265279.
www.jctindia.org 27
RNI : UPENG 2006/17831
Pages 28-35
Implementation of Goods and Service Tax

(GST) in India and its Control over the
Tax Collection
Pranesh Debnath
Assistant Registrar (Finance), Tripura University (A Central University), Suryamaninagar, Pin-799022
Email: praneshdebnath@gmail.com
Abstract
Goods and Service Tax (GST) is a destination base indirect tax collected by central as well as state government to meet the
public expenditure as a part of important mechanism of fiscal system of a nation. Unlike other prevailing indirect taxes
Goods and Services Tax and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of
goods as well as services with a input tax credit facility on output tax liability at the national and state level in an uniform
modus. In this study an attempt has been made to draw the road map in connection with levy and collection of GST and its
sharing between centre and state. Hence, GST is expected to unite the country economically as it will subsume various forms
of taxes that are currently levied at different points subsuming the multiple types of taxes charged at different rate at present.
Keywords: GST, IGST, SGST, CGST, Indirect Tax Structure.
1.
INTRODUCTION
Given the passage of the Constitution (122nd)

Amendment Bill, 2014 for Goods and Services Tax
(GST) in the LokSabha on 6th May, 2015, the
Government of India seems committed to replace all
the different kind of indirect taxes levied on goods and
services by the Centre and States which is proposed
to be implement by 1st April, 2016 (Budget Speech
2015 by Mr.Arun Jaitley, Former Finance Minister,
Government of India). Goods and Service Tax is a
destination based tax collected in a multi-point of
production, sales and rendering of services at uniform
manner with a facility of claiming an input tax credit on
output tax. In simple terms, GST may be defined as a
tax on goods and services, which is liveable at each
point of sale or provision of service, in which at the
time of sale of goods or providing the services the seller
or service provider may claim the input credit of tax
which he has paid while purchasing the goods or
procuring the service. It is basically a tax on final
consumption. In a GST regime it is anticipated that the
28 www.jctindia.org
tax base will be comprehensive, as virtually all goods

and services will be taxable, with minimum exemptions.
GST will be a game changing reform for Indian economy
by developing a common Indian market and reducing
the cascading effect of tax on the cost of goods and
services (Kumar, 2014). It will impact the Tax
Structure, Tax Incidence, Tax Computation, Tax
Payment, Compliance, Credit Utilization and Reporting
leading to a complete overhaul of the current indirect
tax system. India is going to implement the duel GST
model for levy and collection of taxes. Where both
Centre and States will simultaneously levy GST across
the value chain. Tax will be levied on every supply of
goods and services. Centre would levy and collect
Central Goods and Services Tax (CGST), and States
would levy and collect the State Goods and Services
Tax (SGST) on all transactions within a State. The
input tax credit of CGST would be available for
discharging the CGST liability on the output at each
stage. Similarly, the credit of SGST paid on inputs
would be allowed for paying the SGST on output. No
cross utilization of credit would be permitted. The
Centre would levy and collect the Integrated Goods

and Services Tax (IGST) on all inter-State supply of
goods and services. The IGST mechanism has been
designed to ensure seamless flow of input tax credit
from one State to another. The inter-State seller would
pay IGST on the sale of his goods to the Central
Government after adjusting credit of IGST, CGST and
SGST on his purchases. The exporting State will
transfer to the Centre the credit of SGST used in
payment of IGST. The importing dealer will claim credit
of IGST while discharging his output tax liability (both
CGST and SGST) in his own State. The Centre will
transfer to the importing State the credit of IGST used
in payment of SGST. As per expert opinion and
previous study like (Kumar, 2014; Garg, 2014;
Bhiwandikar, 2013; Government of India, 2009),
implementation of GST in India will absorbed the
numerous indirect taxes in central as well as state level.
The taxes which are going to subsumed by the GST at
Central level are: 1) Central Excise Duty; 2) Additional
Excise Duties; 3) The excise Duty levied under the
Medicinal and Toiletries Preparation Act; 4) Service
Tax; 5) Additional Customs Duty); 6) Special Additional
Duty of Customs ; 7) Surcharges; and 8) Cesses. And
finally state level taxes and levies to be subsumed: 1)
VAT/Sales tax; 2) Entertainment tax (unless it is levied
by the local bodies); 3) Luxury tax; 4) Taxes on lottery,
betting and gambling; 5) State Cesses and Surcharges
in so far as they relate to supply of goods and services;
6) Entry tax not in lieu of Octroi. But Alcohol, tobacco,
petroleum products shall continue to be outside the
GST regime.
The remaining paper is structured as follows:Section two summarises the relevant literature related
to the objectives of this proposed work. Section three
discusses the methodology of research work. Section
four presents the discussion to achieve the framed
objectives and finally section five concludes the present
research.
2.
LITERATURE REVIEW
The first journey of GST (in some countries it
is known as Value Added Tax) was started in France
in the year 1950 AD (Lin, 2008; Palil & Ibrahim,
2012). Presently near about 160 countries are having
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the GST as a part of their indirect tax collection. Across

the glove a wide range of Value Added Taxes are
applicable with a highest rate of 40% in Gambia; 21%
in Argentina and Belgium; 20% in Bulgaria, Austria,
United Kingdom and Albania; 19.25% in Cameroon;
Angola and Australia at 10%; Singapore 7%; and
lowest rate of 5% is pertinent in Canada, Japan, Niue
and Nigeria (Sanusi et al.,2015; Onji, 2009; Ezeoha
& Ogamba, 2010). Although, initially the Government
of India proposes three rates namely 20% for goods,
16% for services 10% for essential items but it is yet
to come out with a fixed and specific rate of GST to
be levy and collected (Bhiwandikar, 2013).
(Garg, 2014) Studied "Basic Concepts and
Features of Good and Service Tax in India", and found
that GST is the most logical steps towards the
comprehensive indirect tax reform in India since
independence. GST will create a single, unified Indian
market to make the economy stronger. Experts said
that GST is likely to improve tax collections and Boost
Indias economic development by breaking tax barriers
between States and integrating India through a uniform
tax rate. Implementation of GST will increase the tax
compliance among the tax payers as each person in
the value chain who gets input tax credit has an incentive
to ensure that the previous persons has paid the tax.
As a whole tax administration will be easier for the
government (Sanusi et al., 2015). Under GST, the
taxation burden will be divided equitably between
manufacturing and services, through a lower tax rate
by increasing the tax base and minimizing exemptions.
India is a federal country where both the Centre and
the States have been assigned the powers to levy and
collect taxes through appropriate legislation. It has been
proposed that there would be a "Dual GST "model in
India, taxes will be levied by both centre (Central
GST) and state (State GST) on Goods and Services.
Hence, a dual GST would be according to the
Constitutional requirement of fiscal federalism (Kumar,
2014). (Vasanthagopal, 2011) Studied "GST in India:
A Big Leap in the Indirect Taxation System", and found
that the positive impacts are dependent on a neutral
and rational design of the GST, balancing the conflicting
interests of various stakeholders, full political
www.jctindia.org 29
commitment for a fundamental tax reform with a

constitutional amendment. GST would be a big rise in
the indirect taxation system and also give a new impetus
to India's economic change. It is also noted that, buoyed
by the success of GST, more than 160 countries have
introduced GST in some form to other and is fast
becoming the preferred form of indirect tax in the Asia
Pacific region.
Many study like (Kumar, 2014; Bhiwandikar,
2013; Garg, 2014) has been done which are basically
stranded on understanding of concept of GST, and
criticizing the existing taxation system in India. But none
of the study fund which are in the ground of the
explanation and understanding of mechanism of levy
and collection of GST between centre and state. Hence
this study has been undertaken by the researcher to
explore the answer of the following research question.
What would be the mechanism of levy and collection
of GST between centre and state? What is the
rationality of implementing the GST in India? What is
the opportunities and challenges of GST?
To address the above mention research
questions the present study has undertaken to achieve
the following objectives :
1.
To know the rationality behind the movement
towards GST model.
2.
To study the collection mechanism tax under
GST regime.
3.
To know the opportunities and challenges of
GST implementation.
3.
METHODOLOGY
Methodology is designed keeping in pace with
the objectives set and to address the research problem.
This paper made an attempt to sightsee the
understanding about GST and the proposed mechanism
of collection and sharing of taxes between centre and
state. It also tries to see the opportunities and
mechanism of GST & its probable impact. This study
is centred on secondary information and fact collected
from books, journals, magazines, newspaper and
websites. The study is conceptual in nature and it is
supported more by facts than by numerical data. A
pictorial demonstration has been used for lucid
30 www.jctindia.org
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understanding about the mechanism of collection and

sharing of GST between centre and states and how
the input credit is claimed. The study is further limited
to the discussion of the possibilities of implementation
of Goods and Service Tax in India for the International
Competitiveness.
4.
DISCUSSION AND ANALYSIS

This section is further subdivided into three
sub-section to discuss about the rationality, collection
mechanism and opportunities and challenges of GST.
Ratiationality Behind the GST
Presently, the Constitution empowers the
Central Government to levy excise duty on
manufacturing and service tax on the supply of services.
Further, it empowers the State Governments to levy
sales tax or value added tax (VAT) on the sale of goods.
This exclusive division of fiscal powers has led to a
multiplicity of indirect taxes in the country. In addition,
central sales tax (CST) is levied on inter-State sale of
goods by the Central Government, but collected and
retained by the exporting States. Further, many States
levy an entry tax on the entry of goods in local areas.
This multiplicity of taxes at the State and Central levels
has resulted in a complex indirect tax structure in the
country that is ridden with hidden costs for the trade
and industry. Firstly, there is no uniformity of tax rates
and structure across States. Secondly, there is
cascading of taxes due to 'tax on tax'. No credit of
excise duty and service tax paid at the stage of
manufacture is available to the traders while paying
the State level sales tax or VAT, and vice-versa. Further,
no credit of State taxes paid in one State can be availed
in other States. Hence, the prices of goods and services
get artificially inflated to the extent of this 'tax on tax'.
GST will have a far reaching impact on almost all the
aspects of the business operations in the country, for
instance, pricing of products and services; supply chain
optimization; IT, accounting and tax compliance
systems. What is the justification of GST? To answer
this question this study begin by elaborating on the
important concept of cascading effect of taxes. It is
also, logically, referred to as "taxes on taxes". It is simple
to illustrate suppose Mr.A sells goods to Mr. B after
charging sales tax, and then Mr. B re-sells those goods
to Mr. C after charging sales tax. While Mr. B was

computing his sales tax liability, he also included the
sales tax paid on previous purchase, which is how it
becomes a tax on tax.
Source : https://www.quora.com/How-will-the-goodsand-sevices-tax-GST-work-...
This was the case with the sales tax few years
ago. At that time, a VAT system was introduced
whereby every next stage dealer used to get credit of
the tax paid at earlier stage against his tax liability. This
reduced an overall liability of many traders and also
helped to reduce inflationary impact this had on the
prices. Similar concept came in the duty on manufacture
- The Central Excise Duty - much before it came for
sales tax. The CENVAT credit scheme (earlier known
as MODVAT) was also a welcome move by trade
and industry where credit of excise duty paid at the
input stages was allowed to be set-off against the
liability of excise on removal of goods. With effect from
2004, this system was extended to Service Tax also.
Moreover, cross utilization of credit between excise
duty and service tax was also permitted. To a huge
extent, the problem of cascading effect of taxes is
resolved by these measures. However, there are still
problems with the system that have not been resolved
till date. The problem is addressed here. The credit of
Input VAT is available against Output VAT. In the same
manner, the credit of input excise/service tax is available
for set-off against output liability of excise/service tax.
However, the credit of VAT is not available against
excise and vice versa. We all know that VAT is
computed on a value which includes excise duty. In
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the same manner, CENVAT credit is allowed only for

the Excise duty paid on inputs, and not on the VAT
paid on the input raw material. This shows that there is
a tax on tax. Excise duty and service tax are levied by
the Central Government, while the VAT is levied by
the State Government, which is one of the reasons
why such a cross-utilisation of credits was not allowed.
However, this does not constitute a valid reason that
justifies the cascading effect of taxes. For the people,
it makes no difference if a tax is levied by the Centre
or the State - a tax is a tax, and there is a tax on tax.
The GST is introduced to combat this problem, among
many others.
Hence, the introduction of GST would mark
a clear departure from the scheme of distribution of
fiscal powers envisaged in the Constitution. At the same
time GST will also help to build a transparent and
corruption-free tax administration (Sanusi et al., 2015)
as it is evident from other developing country as well.
The proposed dual GST envisages taxation of the same
taxable event, i.e., supply of goods and services,
simultaneously by both the Centre and the States.
Therefore, both Centre and States will be empowered
to levy GST across the value chain from the stage of
manufacture to consumption. The credit of GST paid
on inputs at every stage of value addition would be
available for the discharge of GST liability on the
output, thereby ensuring GST is charged only on the
component of value addition at each stage. This would
ensure that there is no 'tax on tax' in the country. GST
will simplify and harmonise the indirect tax regime in
the country. It is expected to reduce cost of production
and inflation in the economy, thereby making the Indian
trade and industry more competitive, domestically as
well as internationally. It is also expected that
introduction of GST will foster a common or seamless
Indian market and contribute significantly to the growth
of the economy. Due to the seamless transfer of input
tax credit from one stage to another in the chain of
value addition, there is an in-built mechanism in the
design of GST that would incentivize tax compliance
by traders.
www.jctindia.org 31
What is the mechanism of GST?

This section has dedicated to find out the
mechanism of levying, collection and mutual sharing of
taxes between state and centre assuming a GST rate
at 16 (sixteen) percent and taking some of the states
and specific places in the country.
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But we see that SGST never went to the central

government, still the credit is claimed. This is the
drawback of GST system. Since this amounts to a
loss to the Central Government, the state government
compensates the central government by transferring
the credit to the central government.
Case 1: Sale in one state, resale in the same

state:
In this example, goods are moving from
Mumbai to Pune. As it is a sale within a state, CGST
and SGST will be levied central and state government
respectively. The collection goes to the Central
Government and the State Government as pointed out
in the picture. Then the goods are resold from Pune to
Nagpur. This is also a case intra state transaction, so
CGST and SGST will be levied. Sale price is increased
so tax liability will also increase. In the case of resale,
the credit of input CGST and input SGST (INR 8) is
claimed as shown; and the remaining taxes go to the
respective governments.
Case 2: Sale in one state, resale in another state:

In this case, goods are moving from Indore to
Bhopal. Since it is a sale within a state, CGST and
SGST will be levied. The collection goes to the Central
Government and the State Government as pointed out
in the picture. Later the goods are resold from Bhopal
to Lucknow (outside the state). Therefore, IGST will
be levied. Whole IGST goes to the central government.
Against IGST, both the input taxes are taken as credit.
32 www.jctindia.org
Case 3: Sale outside the state, resale in that state:

In this case, goods are moving from Delhi to
Jaipur. Since it is an interstate sale, IGST will be levied.
The collection goes to the Central Government. Later
the goods are resold from Jaipur to Jodhpur which is
within the state. Therefore, CGST and SGST will be
levied. Against CGST and SGST, 50% of the IGST
that is INR 8 is taken as a credit. But we see that
IGST never went to the state government, still the credit
is claimed against SGST. Since this amounts to a loss
to the State Government, the Central government
compensates the State government by transferring the
credit to the State government.
In a nutshell, CGST and SGST shall be treated

separately. The payment of CGST shall be allowed to
be taken as input credit and will only be utilised against
CGST payment on that particular goods and services.
As far as SGST is concerned same rule will be
followed i.e., cross utilisation of input credit shall not
be allowed between CGST and SGST.
3.
(a)
4.
Recompenses of present tax system on

implementation of GST in India:
Implementation of GST will leads to better
compliance as each person in the value chain who gets
input tax credit has an incentive to ensure that the
previous person has paid tax. The other benefit is that
the differentiation between goods and services is
removed, and tax credit is available across this
distinction. Having a uniform tax across India with input
credit is also likely to remove the tax bottlenecks in
transactions that span two or more states. This would
help India evolve from a fragmented market structure
to a single national market.
Apart from full allowance of credit, there are
several other advantages of introducing a GST in India:
1.
Reduction in prices: Due to full and seamless
credit, manufacturers or traders do not have
to include taxes as a part of their cost of
production, which is a very big reason to say
that we can see a reduction in prices.
2.
Increase in Government Revenues: This might
seems to be a little vague. However, even at
the time of introduction of VAT, the public
revenues actually went up instead of falling
because many people resorted to paying taxes
rather than evading the same. However, the
government may wish to introduce GST at a
Revenue Neutral Rate, in which case the
revenues might not see a significant increase
in the short run. However, in the long run it
will increase due to high compliance and less
avoidance. Under Goods and Services Tax,
the tax burden will be divided equally between
Manufacturing and services. This can be done
through lower tax rate by increase Tax base
and reducing exemptions.
5.
6.
7.
8.
(b)
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Less compliance and procedural cost: Instead

of maintaining big records, returns and
reporting under various different statutes, all
assessee will find comfortable under GST as
the compliance cost will be reduced. Hence
tax payers are no longer required to keep
record of CGST, SGST and IGST separately.
Move towards a Unified GST: Internationally,
the GST is always preferred in a unified form
i.e., one single GST for the whole nation,
instead of the dual GST format). Although
India is adopting Dual GST looking into the
federal structure, it is still a good move
towards a Unified GST which is regarded as
the best method of Indirect Taxes.
GST is a transparent Tax and also reduce
numbers of indirect taxes. With GST
implemented a business premises can show
the tax applied in the sales invoice. Customer
will know exactly how much tax they are
paying on the product they bought or services
they consumed.
GST will not be a cost to registered retailers
therefore there will be no hidden taxes and
the cost of doing business will be lower. This
in turn will help Export being more
competitive.
In GST System bothe Central GST and State
GST will be charged on manufacturing cost
and will be collected on point of sale. This will
benefit people as prices will come down which
in turn will help companies as consumption
will increase.
Biggest benefit will be that multiple taxes like
octroi, central sales tax, state sales tax, entry
tax, license fees, turnover tax etc will no longer
be present and all these will be brought under
the GST. Doing Business now will be easier
and more comfortable as various hidden
taxation will not be present.
What are the challenges towards
implementation of GST?
Although the GST will remove the numerous
www.jctindia.org 33
shortcomings of present tax system. However, for the

successful implementation of the same, we must be
cautious about a few aspects. Following are some of
the factors that must be kept in mind about GST:
State governments have trade lobbies in the
transportation and retail industry which claim that a
monopolistic situation can be created with GST since
it favours supply chain efficiencies for those with deep
pockets. State governments believe GST will reduce
revenues. The Central government and the Opposition
have locked horns over what should and should not
be part of GST. GST may only include 100 items in its
purview; e-commerce may not be part of it.
It is really required that all the states implement
the GST together and that too at the same rates.
Otherwise, it will be really cumbersome for businesses
to comply with the provisions of the law.
For smooth functioning, it is important that the
GST clearly sets out the taxable event. Presently, the
CENVAT credit rules, the Point of Taxation Rules are
amended/ introduced for this purpose only. However,
the rules should be more refined and free from
ambiguity. However, this new GST move would have
the same drawbacks of existing tax system because
parliament would have power to make laws that
override any law made by state legislatures.
The GST is a destination based tax, not the
origin one. In such circumstances, it should be clearly
identifiable as to where the goods are going. This shall
be difficult in case of services, because it is not easy to
identify where a service is provided, thus this should
be properly dealt with. More awareness about GST
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and its advantages have to be made, and professionals

like us really have to take the onus to assume this
responsibility.
5.
CONCLUSION
GST is the most logical steps towards the
comprehensive indirect tax reform in our country since
independence. GST is liveable on all supply of goods
and provision of services as well combination thereof
at a different stage of production, distribution of goods
and rendering of services. GST will create a single,
unified Indian indirect tax market subsuming all forms
of prevailing taxes at present except alcohol, tobacco
and petroleum products to make the economy stronger.
Experts are argued that GST is likely to improve tax
collections and boost India's economic development
by breaking tax barriers between States and integrating
India through a uniform tax rate. Under GST, the
taxation burden will be divided equitably between
manufacturing and services, through a lower tax rate
by increasing the tax base and minimizing exemptions
(Garg, 2014). In the new tax regime i.e. in GST
structure in every steps of production/ distribution input
tax credit will be allowed against the output tax liability.
Even cross utilization between CGST and IGST as
well as SGST and IGST will be allowed but between
CGST and SGST will not be entertained. Any business
transaction within a particular state shall be liable to
pay SGST to state and IGST to centre. However,
interstate transactions are subject to IGST only which
is equivalent to SGST plus CGST.
m
REFERENCES
1.
2.
3.
4.
5.
Bhiwandikar, M. (2013). Goods and Service Tax. Tactful Management Research Journal, 110-113.
Ezeoha, A. E., & Ogamba, E. (2010). Corporate Tax Shield or Fraud? Insight from Nigeria. International
Journal of Law and Management, 52(1), 5-20.
Kumar, N. (2014). Goods and Service Tax in India: A Way Forward. Global Journal of Multidisciplinary
Studies, 3(6), 216-225.
Lin, S. (2008). Chinas Value Added Tax Reform, Capital Accumulation, and Welfare Implications. China
Economic Review, 19(2), 197-214.
Onji, K. (2009). The Response of Firms to Eligibility threasholds from the Japanese Value Added Tax.
Journal of Public Economics, 93(5-6), 766-775.
34 www.jctindia.org
6.
7.
8.
9.
10.
11.
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Palil, M. R., & Ibrahim, M. A. (2012). The Impacts of Goods and Service Tas (GST) on Moddle Income
Earners in Malayasia. World Review of Business Research, 1(3), 192-206.
Sanusi, S., Omar, N., & Sanusi, Z. M. (2015). Goods and Service Tax (GST) Governance in Malayasian
New Tax Environment. Procedia Economics and Finance, 31, 373-379.
Garg, G. (2014). Basic Concepts and Features of Good and Service Tax In India. International Journal
of scientific research and management, 2(2), 542-549.
Government of India. (2009). First Discussion Paper of Goods and Service Tax in India. The Empowered
Committee of State Finance Ministers.
Kumar, N. (2014). Goods and Service Tax in India: A Way Forward. Global Journal of Multidisciplinary
Studies, 3(6), 216-225.
Vasanthagopal, R. (2011). GST in India: A Big Leap in the Indirect Taxation System. International
Journal of Trade, Economics and Finance, 2(2).
Webliography :
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2.
3.
4.
5.
6.
7.
8.
http://www.business-standard.com/article/economy-policy/what-is-gst-a...
http://www.mapsofindia.com/my-india/government/gst-one-step-towards...
http://taxguru.in/goods-and-service-tax/gst-origin-indian-model-destinati...
https://www.quora.com/How-will-the-goods-and-sevices-tax-GST-workhttps://www.quora.com/How-will-the-goods-and-sevices-tax-GST-work- ...
http://www.ey.com/IN/en/Newsroom/News-releases/EY-budget-2015-implementation-of-gst-on-april2016-a-reality-or-mirage
http://dor.gov.in/Gstintro
https://www.quora.com/
www.jctindia.org 35
RNI : UPENG 2006/17831
Pages 36-44
Linkage Between Human Resource

Management and Firm Performance
Avinash Singh
M. Com., UGC NET
Student, Manuri, Allahabad
Abstract
The impact of human resource management (HRM) policies and practices on firm performance is an important topic in the
field of human resource management. In theoretical literature and the emerging conventional wisdom among human
resource professionals there is a growing consensus that organizational human resource policies can, if properly configured,
provide a direct and economically significant contribution to firm performance. A critical reading of the academic literature
shows that the relationship between human resource management and firm effectiveness is a phenomenon with major
implications on organizational performance. Objective of this research is to determine key determinants of formal human
resource planning that contributes towards performance in the Private Banking Sector. The data collected from 25 offices
including head offices from Allahabad District of U.P. Results from the factor analysis on HRP measures selection, training,
and incentives and the organizational performance measures which arejob satisfaction, efficiency, employee motivation
and technology constitutes significant and a positive relationship with other. As modern HR practices are implemented in
telecom sector and companies would spend more on Human Resources, it would lead towards High performance achievement.
This paper comprehensively studies the links between human resource management practice and firm performance and
highlights the points how HRM practices can improve the organizational performance.
Keywords : Human Resource Planning, Teecom Sector, Organizational Performance, Selectyion, Training and Incentives.
1.
INTRODUCTION
The impact of human resource management
(HRM) policies and practices on firm performance is
an important topic in the field of human resource
management. In theoretical literature and the emerging
conventional wisdom among human resource
professionals there is a growing consensus that
organizational human resource policies can, if properly
configured, provide a direct and economically
significant contribution to firm performance.
Performance in the context of organization is not only
a broad concept which has been used synonymously
with productivity, efficiency, effectiveness but it has also
been a subject of study for researchers. Many efforts
have been made by HRM theorists to try to establish a
36 www.jctindia.org
casual link between a HRM & performance. This has

led to growing number of studies which examine the
potential contribution that good human resource policy
can make to improving organization performance.
2.
REVIEW OF THE LITERATURE

Acknowledging the relevance of all types of
resources to contribute to excellent performance,
researchers emphasize that in the context of
globalization, human resources are vital to achieve
success in the most effective and efficient ways. It is
generally accepted that "people are the key assets in
the new world market and that all other assets are
nothing more than commodities that can be purchased
at market prices, because only the human asset has
potential to learn, grow, and contribute". However,

there is a continual debate as to what in particular
provides value to the organization - human resources
or their management: 1) some authors maintain that
sustained competitive advantage lies in the human
resources and not in HRM practices; 2) other authors,
though, highlight that competitive advantage is created
through HRM practices and not human resources, as
it does not suffice to hire best people in order to gain
the competition; 3) third group of authors suggests a
unifying approach to the critical role of both human
resources and HRM in the enhancement of sustaining
of competitive advantage.
In 1954, "Drucker" emphasized that personnel
management are worried "about their inability to prove
that they are making a contribution to the enterprise".
The presenting HRM as a new approach to personnel
management has provided an opportunity to contradict
to repeated criticisms that human resources do not add
value to the organization. Therefore, the researchers
have become active carrying out empirical research
Theoretical perspective
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aimed at providing evidence that HRM results in higher

organizational performance.
The first systematic empirical studies of the
HRM and performance link were published by Arthur
in 1994, MacDuffie in 1995, including one of the most
cited articles in this area by Huselid in 1995. In the
course of eighteen years the huge number of studies in
different industries and different countries were
conducted. Although the bulk of literature seems to
accept that HRM practices have a significant impact
on organizational performance, Assuming the relevance
of empirical finding, there is the need theoretically to
approve link by providing some theories, otherwise
the analysis of constructs and link between them will
lack scientific rationale.
After calculation of 47 theories and
approaches at last findings demonstrated a deficiency
in the literature regarding theories and concluding that
contingency theory, resource-based view and the
AMO framework are the three most commonly used
theories.
Author
Main statements
Contingency theory
Jackson and Schuler, 1987;

Snell and Youndt, 1995;
Delery and Doty, 1996
Seeking for better organizational performance HRM

strategy has to fit with business strategy.
Resource based View
Barney, 1991
Grant, 1991
Competitive advantage comes from the internal

resources that the organization possesses.
AMO framework
Appelbaum, Bailey, Berg,

and Kalleberg, 2000
Organizational interests are best served by an HRM

system that attends to employees' interests, namely
their skill requirements, motivations and the quality
of their job
Table : The theoretical perspective on link
3.
OBJECTIVES OF THE STUDY

The basic objective of this study is to measure
the basic determinants of Human Resource Planning
which can progress the organizational performance in
the Private sector Banks. Major focus was first to
check the continuation of formal human resource
planning and identifying the variables which can increase
the organizational performance as given below :
v
v
To help the Private Sector Banks in managing

their staffing problems.
To ensure effective utilization and maximum
development of human resources
To ensure respect for human beings
To achieve and maintain high morale among
employees
www.jctindia.org 37
4.
SIGNIFICANCE OF THE STUDY
Human resource planning has its real

significance in the Private Sector Banks as it is a key
driver towards building and maintaining organizational
performance in India. So this research will absolutely
give a positive path towards making Private Sector
Banks HR competitive as compared to other sectors,
as we will check that the Private Banking Sector has
an effect on their organizational performance by
following the modern practices of HR.
5.
HYPOTHESES
As this research is investigative in nature and
the researcher had to check the availability and
existence of Human Resource Planning and some of
its tools in the Private Sector Banks, there are some
hypotheses which we developed :
AlternativeHypotheses
v
H1: HRP has a significant relationship with
employee motivation
v
technology
v
efficiency
v
H4: HRP has a significant relationship with job
satisfaction
SampleSize
Among the Private Sector Banks, I visited
more than 25 offices including head offices. The data
collected from Allahabad District of UP, we made a
questionnaire regarding this research topic which was
covering almost all of the above mentioned tools
regarding human resource planning.
Quantitative Analysis
Analysis based on some statistical tools
including some HRP variables and some qualitative
variables to measure the organizational performance
in the results which explain the relationship of one
variable with another and those numerical values proves
our hypothesis.
Qualitative analysis has been done to show
the importance of Human resource planning.
38 www.jctindia.org
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Linear Regression Test

Linear regression is used to check the effect
of dependent variables with independent variables.As
we have four latent factors of organizational
performance which are job satisfaction, motivation,
efficiency and technology are there. In regression
analysis, performance measures have been taken as
dependent variables and the latent factors of human
resource planning such as selection, training and
incentives these are our independent variables of
research.
Effect of HRP on Organizational Performance
Organiztional performance can be measured
through financial stability and productivity, but when
we have to relate human resource planning with the
organizational performance, than we consider someof
other variables like efficiency and effectiveness,
employee motivation, job satisfaction, trust on
employees.
Human resource planning is surrounded by
three basic level practices which can increase the
organizational performance :
1)
To increase the knowledge, skills and abilities
among employees.
2)
To enhance their empowerment like giving
them employment security and organize some
participation programms for employees.
3)
To give them motivation through both incentive
means like giving them compensation and
benefits, and also through internal promotion
like promoting them with their job status.
Employee
motivation
Job
satisfaction
Organizational
Performance
Technology
Efficiency
Fig. Factors of HR affecting Organizational Performance
Relationship of Employee Motivation

with Independent Variables :
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Table 1 : Model Summary

Model
R Square
Adjusted R
Square
Std. Error of the

estimate
DurbinWatson
.461
.212
.197
3.20535
2.967
In the above table the value of R square indicates that total variation in dependent variable employee
motivation is explained by the independent variables i.e. selection, incentives, training and the remaining is due to
some other factors.
Table 2 : ANOVA
Model
1
Sum of Squares
df
Mean Square
Sig.
Regression
431.842
143.947
14.010
.000
Residual
1602.789
156
10.274
Total
2034.631
159
The ANOVA table suggests that the relationship of employee motivation with independent variables is
highly significant and its value is (.000).
Table 3 : Coefficients
Model
Unstandardized coefficients
Std. Error
(Constant)
2.678
1.477
Selection
.857
.563
Incentives
1.544
Training
.203
Standardized coefficients
Beta
Sig.
t
1.813
.072
.110
1.523
.130
.257
.431
6.015
.000
.271
.054
.748
.456
In the above table of coefficient, employee motivation is highly significant with incentives only; its significance
level is (.000). As the incentives among the employees in an organization increases, the employee motivation
increases. The value of Beta (.431) suggests that there is a positive relationship between employee motivation and
incentives.
Model
R Square
Adjusted R
Square
Std. Error of the

estimate
DurbinWatson
.246
.060
.042
.26047
2.504
In the above table the value of R square indicates that total variation in dependent variable employee
motivation is explained by the independent variables selection, incentives, training and the remaining is due to some
otherfactors.
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Table 5 : ANOVA
Model
1
Sum of Squares
df
Mean Square
Sig.
.679
.226
3.339
.021
Residual
10.583
156
.068
Total
11.263
159
Regression
ANOVA table suggests that the relationship of technology with independent variables is significant at 1%
level and its value is (.021)
Model
Std. Error
(Constant)
2.025
.120
Selection
.084
.046
Incentives
.017
Training
.049
Sig.
Beta
t
16.869
.000
.146
1.846
.067
.021
.063
.807
.421
.022
.173
2.213
.028
In the above table of coefficient, technology is significant with selection; its significance level is (.067). The
selection process improves with the help of improvements in technology. The value of Beta (-.146) suggests that
there is a negative relationship of technology with selection. Technology is also significant with training, as technology
improves the training process also improves. The value of Beta (.173) suggests that there is a positive relationship
technology with training.
Relationship of Efficiency with Independent Variables:
Model
R Square
Adjusted R
Square
Std. Error of the

estimate
DurbinWatson
.649
.422
.411
.58823
2.506
In the above table the value of R square indicates that total variation in dependent variable efficiency is
explained by the independent variables selection, incentives, training and the remaining is due to some other factors.
Table 8 : ANOVA
Model
1
Sum of Squares
df
Mean Square
Sig.
Regression
39.366
13.122
37.923
.000
Residual
53.979
156
.346
Total
93.345
159
40 www.jctindia.org
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ANOVA table suggests that the relationship of efficiency with independent variables is significant at 1%
level and its value is (.000).
Model
Std. Error
(Constant)
.098
.271
Selection
.959
.103
Incentives
.138
Training
.178
Beta
Sig.
t
.361
.718
.575
9.285
.000
.047
.180
2.924
.004
.050
.220
3.580
.000
In the above table of coefficient, efficiency is highly significant with selection; its significance level is (.000).
The efficiency in an organization improves as the selection process is refined. The value of Beta (.575) suggests that
thereis a positive relationship of efficiency with selection. Efficiency is also significant with incentives (.004), as
more the incentives will be provided to the employees; the more it will bring efficiency in terms of time saving and
expenditures. The valueof Beta (.180) suggests that there is a positive relationship of efficiency with incentives.
Efficiency is also highly significant with training (.000), as more and more will be the training the efficiency among
the organization increases. The value of Beta (-.220) suggests that there is a negative relationship of efficiency with
training.
Relationship of Job Satisfaction with Independent Variables:
Model
R Square
Adjusted R
Square
Std. Error of the

estimate
DurbinWatson
.414
.046
.027
37.63192
2.353
In the above table the value of R square indicates that total variation in dependent variable job satisfaction
is explained by the independent variables selection, incentives, training and the remaining is due to some other
factors.
Table 11 : ANOVA
Model
1
Sum of Squares
df
Mean Square
Sig.
Regression
10593.912
3531.304
2.494
.062
Residual
220921.234
156
1416.162
Total
231515.147
159
ANOVA table suggests that the relationship of job satisfaction with independent variables is significant at
10% level and its value is (.062).
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Model
Std. Error
(Constant)
11.829
17.345
Selection
14.884
6.606
Incentives
1.985
Training
3.729
t
.496
.179
2.253
.026
3.014
.052
.659
.511
3.186
.092
1.170
.244
6.
MAJOR FINDINGS OF THE STUDY

From all analysis shown above, it can easily
be found out that human resource management is
compulsory and a strategic component and the modern
practices of human resource management (HRM) that
can make an organizations employee more capable
and distinctive for their work, the purpose of this
research was to check the performance of private
sector banks and the impact of the determinants of
Human Resource Planning on the qualitative
performance measures. The practices of Human
Resources are their real success as they are following
the modern practices and methods of Human Resource
Management. We had checked selection, training,
and incentives with our performance measures which
are having a positive and significant result with each
other.
HRM STRATEGIES FOR IMPROVING
PERFORMANCE
1. Improving performance through soft
HR policies: jobs satisfaction, employee commitment
and motivation have often been regarded as HR
dimensions to organizational performance. Employees
enthusiast of the soft model of HRM argues should be
treated as valued assets, a source of competitive
advantage through their commitment, adaptability and
high quality (of skills performance and so on). Recent
42 www.jctindia.org
Beta
Sig.
.682
In the above table of coefficient, job

satisfaction is significant with selection only; its
significance level is (.026). Thevalue of Beta (-.179)
suggests thatthere is a negative relationship between
job satisfaction and selection and the reason is due to
tough selection criteria or reference based hiring.
7.
research into HRM & performance, (Guest & Hoque

1999) has found that there is a positive association
between these dimensions & organizational
performance.
2. Quality initiatives & organizational
performance: Quality has been a central theme in
HRM in which product service quality is widely seen
as an important way of organizational performance by
attracting & retaining satisfied customers. During
1980s increased competition from overseas, rapid
innovation of new technology and shareholders profit
demand left many organizations with no choice but to
look for ways to keep costs down and to organize the
work of employer in ways that are more profitable
consequently, there has been a widespread uptake of
quality initiatives.
3. Increasing performance through skill
training: It has been widely argued, training &
development of employees is essential to organizations
which seek to gain competitive advantage through a
highly skilled & flexible workforce may cut costs as a
major ingredient for high productivity and quality
performance. A more highly skilled workforce may
increase productivity by producing higher level of
output or by producing output of greater value. A well
maintained & motivated workforce in private sector
banks may cut costs of supervision as they possess
skills to inspect their own work. They can minimize
the downtime of the machinery because they are able
to diagnose faults on machinery and are even able to
repair them. A skilled workforce can also improve the
firms functional flexibility since they are much easy to
retrain due to their relatively broad knowledge base
of multi skills. A technically competent workforce will
also give management confidence in utilizing new

technology & provide employers with more scope for
rapid adjustment to changes in production method,
product requirements & technology.
8.
CONCLUSION AND
RECOMMENDATIONS
Literature review shows the concern of

specialists to identify the relationship between human
resource management practices and firm performance.
Although, few studies have been completed, the
development of this field is emerging strongly. Human
resource management function must be interpreted in
terms of influencing factors (environment, strategy, size
of organization). Use performance indicators other than
financial ones, provides a better analysis of the
relationship between human resources and
performance. Different human resource practices
should be coherent & complement each other. Human
resource systems should be in line with the business or
competitive strategy of the organization. The human
resource system adopted by the organization should
be compatible with its operating environment. It is
argued that the HRM route to performance/
competitiveness requires a stable & high trust
environment. The investigation into the links between
human resource strategy & performance should
necessarily be lodges in a broader context. For
instance, where does the firms performance pressure
come from? To what extent is the way firms manage
constrained by external & internal factors which are
beyond control e.g. legislation, labour, product market,
finance, finding situation, inter firm relationship &
traditions of management labour relations? How
efficiently are performance targets set measured &
monitored in / by the firm & what is the likely, impact
of these practices on long term performance of the
firm on the well being & experience of work individuals.
Firms should accept well fitted (and bundled) HR
policies in order to increase their competitiveness.
From the regression test, the level of
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significance (.000) confirms that motivation is depicting

positive and a significant relationship with incentives.
As more and more incentives would be provided to
the employees, the motivation level will increase.
Secondly, the technology is our second dependent
variable with having positive and significant effect on
the employee training; the significance level is (.028).
This shows that as there will be an up gradation in
technology, the easier would be to train people. The
third dependent variable is efficiency; its significance
level with incentives is (.004). When incentives
provided to the employees in an organization, it will
increase the efficiency of that organization. Thus, it is
having a significant and a positive relationship with each
other. Selection is also highly significant with efficiency
(.000), which interprets if the right criterion to select
people is followed in an organization, it will bring
efficiency. The last independent factor is job
satisfaction; only selection is showing significant (.026)
but a negative relationship with job satisfaction. Hence
our H0 is rejected but H1 is accepted that Human
Resource Planning has significant relationship with
organizational performance. As HR practices would
improve and companies would spend more on Human
Resources, it would lead towards High performance
achievement and Human Resource should have to be
treated as a strategic component in other sectors of
India.
Recommendations
This research is very helpful for Private Sector
Banks in almost all over the world, as the determinants
of Human Resource Planning like selection, training,
and incentives are having a significant and positive
relationship with organizational performance measures
which are job satisfaction, technology, employee
motivation and efficiency. This research is only based
on the qualitative measures of performance, but for
future research quantitative measures can also be taken
to measure performance.
m
www.jctindia.org 43
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Guest, D. E. (1997). Human resource management and performance : a review and research agenda.
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Human Resource Management: Integrating the universalistic, contingent, configurational and contextual
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and theoretical challenges. In The new workplace: A guide to the human impact of modern working
practices, (eds) D. Holman, T. D. Wall, C. W. Clegg, P. Sparrow and A. Howard. John Wiley & Sons,
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Pages 45-49
Social Media Marketing :

Opportunities and Challenges
Dr. Kulwant Singh Rana
Professor in Commerce and Management Studies, H. P. University, Shimla - 5
Anil Kumar
Assistant Professor in Commerce, Shyamlal College (Eve.), University of Delhi
Abstract
Consumer is the basic foundation of every business. What consumer seeks, thinks, prefers and buys is of great importance to
marketers to know and study the buying behavior of people. Every person has their own taste and preferences. It is
influenced by many factors. Traditionally buyers concentrate on different aspects of products like quality, price and brand
preferences, but now in present time many consumers relied also on social recommendations while making purchase
decision. Many consumers are using blogs/ face book reviews and ratings as mean to seek recommendation. Peer advice
and find product / service information. So social media is serving as an all-purpose medium to engage with consumers at all
stages of the consumer decision journey. India is in transition stage we are moving from traditional marketing tools like, TV,
radio, magazine etc. to modern marketing tools i e. Social media tools face book, corporate blogs, video channels, banners
as on social nets. The trend of online marketing is increasing all over the world as well as in India also. Main focus of the
proposed study is to provide an understanding to the concept social media marketing and to find out the challenges and
opportunities for social media marketing in India.
Keywords : Concept of Social Media, Online Marketing, Challenges and Opportunities.
1.
INTRODUCTION
Nowadays technology is constantly changing,
and when your brand is a part of the social networks it
is obvious that it be able to change with it. Globally,
companies are increasingly using social media and
adopting new type of networked enterprises to exploit
emerging market opportunities. According to a survey
by McKinsey & Co. released in November 2011,
Two thirds of big companies now use social networks
or blogs. Most companies are using social media to
increase their financial performance and market share.
Companies use social networking technologies for a
range of business processes as also generate new ideas.
Social networking and blogs, in particular, are used
largely in externally focused processes that gather
competitive intelligence and support marketing efforts.
Social media has changed the way companies interact
with customers. A fully networked business environment
means better access to customer profiles and

preferences. Companies seeking advantage over
competitors cannot ignore social media as it helps them
connect and engage with customers. The meaning of
the term social media can be derived from two words
which constitute it. Media generally refers to advertising
and the communication of ideas or information through
publications/channels. Social implies the interaction of
individuals within a group or community. Taken
together, social media simply refers to communication/
publication platforms which are generated and
sustained by the interpersonal interaction of individuals
through the specific medium or tool. Social media
marketing consists of the attempt to use social media
to persuade consumers that ones company, products
and/or services are worthwhile. Social media marketing
is marketing using online communities, social networks,
blog marketing and more.
www.jctindia.org 45
2.
LITERATURE REVIEW
Trusov, Buckling, and Pauwles, (2009),

explained that social media platforms provide a userfriendly tool for users to invite and converse with other.
This type of interaction has given voice to millions of
consumers who now have the capacity to talk to each
other and are able to share their experiences and
opinions with a global audience at little or no cost.
Joseph, (2010), suggested that social media
presents marketers with the opportunity to execute
more emotional touch points in areas where consumers
are able to connect with each other and share their
experiences. These touch points are hugely emotional
and offer marketers the opportunity to connect and
engage with consumers correctly and generate
exposure for the organizations brands.
Gunelius (2011), defined that social media
marketing as a form of direct or indirect marketing
that is used to build awareness, recognition, recall and
action for a brand, business, and towards the product
with using the tools of social web, such as blogging,
micro-blogging, social networking, social
bookmarking, and content sharing.
Xiang & Gretzel, (2014), suggested that
Social media content is intentionally crafted by
customers in an attempt to educate and advise others
about products, services, brands, and issues. By the
Social media contents are updated frequently and
indexed favorably by search engines in a more frequent
manner. So Social media has significant and persuasive
effect on brands.
India Trend Survey (2015), depicted that
Indian organizations use social media much more than
the global average and their counterparts in emerging
economies. Survey answers key questions that many
marketers have in India such as what is the business
objective for using social media, what are some of the
best tactics, what is the average social media budget,
how do you measure social media, and what is the
future of social media.
3.
1.

To provide an understanding to the concept
social media marketing.
46 www.jctindia.org
RNI : UPENG 2006/17831
2.
To find out the challenges and opportunities

for social media marketing in India.
4.
RESEARCH METHODOLOGY
This paper is a descriptive in nature of study.

Keeping in view the objectives, the Secondary data
has been used to make the study more relevant and
authentic. The data has been collected from the
following sources, i.e. Books, Journals, Reports,
Magazines, Newspaper and Social Websites etc.
5.
CONCEPT SOCIAL MEDIA

MARKETING
The concept of Social Media Marketing is top
of the agenda for many business executives today.
Today, we are living in 21st century and people do not
find time to come & interact with each other. Social
media helps in connecting themselves with social
networking sites through which now people can stay
far and yet remain connected. Traditional Media of
Marketing; Traditional advertising channels refer to
those old advertising media that existed before the
advent of the internet. Over the years traditional
advertising channels have been used in promotions,
marketers have used traditional forms of marketing
such as, sales promotion, media advertising, public
relations and direct marketing to encourage prospects
to take action or persuade existing customers to
continue buying their products/ services. This has been
done with an aim of increasing sales through branding.
Social Media of Marketing; Social media has gained
a lot of popularity over the past few years, and as a
result of this popularity, Social media marketing is now
increasingly becoming an ingrained aspect of political
campaigns, national defense strategies, public policy,
public relations, brand management and even intra
company communication. Since the major task of
marketing as tool used to inform consumers about the
companys products, who they are and what they offer,
social marketing plays an important role in marketing.
Other traditional Media have experienced decline in
both business and popularity. Palmer and Lewis
(2009), argued that the main stream media channels
have faced many challenges in recent times that have
led to closure with TV facing down turn in their profits
chances of success. Social media marketing

is providing competitive edge to the businesses
in following ways: Market the business
product, Relate to customers, Attract quality
staff, Feedback from customers, Gathering
information.
levels. The companies have been tightened their

budgets especially advertising budgets which have
shifted to online channels, i.e. Facebook, You Tube,
Google+, LinkedIn, Twitter and Corporate blogs etc.
Present Status of Social Media Marketing in
India
Indian social media scene represents a fastemerging and influential domain of information
exchange involving nearly 60% of the 83 million Internet
users in the country. While Facebook and twitter
continue to dominate the social media scene, Twitter
and some other Indian micro blogging websites are
also becoming very popular. The rising significance of
social media in India is demonstrated by the fact that
almost all the conventional media have registered their
presence on the social networking websites. According
to Telecom Regulatory Authority of India data, there
are 83 million Internet users in India and more than
56% of them are on broadband. According to media
reports, an increasing number of Indian corporations
are turning to social media in an attempt to reach out
to their customers in the wake of marketing budget
cuts. Indian corporations are not new to the virtual
world, having made their presence felt in Second Life.
As of today, top IT firm Wipro is running Innovation
Centers on social media, while Infosys is using Twitter
to address customer concerns.
Opportunities of Social Media Marketing
In India- Effective use of social media can bring great
opportunities for your business, but will require some
thought and planning. Moving with fast-paced
developments in online technology and interaction tools
can help to enhance your brand, boost your profile
and perhaps even win new business. However you
need to keep a healthy sense of perspective on what
your business is able to put into social media, and whats
realistic to expect in return. India has huge potential of
social media marketing. Here is some current emerging
opportunities are available in Market in the ways social
media marketing, so they can improve their business.
1.
Providing Competitive Edge to
Businesses: Social media is a powerful tool
that business owners can use to increase
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2.
Brand Recognition : Social media networks

are just new channels for your brands voice
and content. This is important because it
simultaneously makes you easier and more
accessible for new customers, and makes you
more familiar and recognizable for existing
customers.
3.
Opportunities to Improve brand loyalty :

Brands who engage on social media channels
enjoy higher loyalty from their customers. A
strategic and open social media plan could
prove influential in morphing consumers into
being brand loyal.
Opportunities to Switching and
Adaptation: Every post you make on a social
media platform is an opportunity for customers
to convert. When you build a following, youll
simultaneously have access to new customers,
recent customers, and old customers, and
youll be able to interact with all of them and
every their reaction could lead to a site visit,
and eventually a conversion. Not every
interaction with your brand results in a
conversion, but every positive interaction
increases the likelihood of an eventual
conversion.
Higher Brand Authority : Interacting with
your customers regularly is a show of good
faith for other customers. When people go to
compliment or brag about a product or service,
they turn to social media. And when they post
your brand name, new audience members will
want to follow you for updates. The more
people that are talking about you on social
media, the more valuable and authoritative
your brand will seem to new users.
Decreased Marketing Costs : A marketer
4.
5.
6.
www.jctindia.org 47
companies spread good and bad news just as

quickly. Moreover, if customers want to vent
their anger on your product or service, they
can use your social network account.
Managers need to understand how to handle
these challenging situations quickly and
effectively. Also, as social media is not as
widely moderated or censored as mainstream
media, individuals can say anything they want
about a company or brand, positive or
negative.
found as little as six hours of effort per week

has enough to generate increased traffic. If you
can lend just one hour a day to developing
your content and syndication strategy, you
could start seeing the results of your efforts.
Even paid advertising through Facebook and
Twitter is relatively cheap (depending on your
goals, of course
Richer Customer Experiences : Social
media, at its core, is a communication channel
like email or phone calls. Every customer
interaction you have on social media is an
opportunity to publicly demonstrate your
customer service level and enrich your
relationship with your customers.
8.
Improved Customer Insights : Social media
also gives you an opportunity to gain valuable
information about what your customers are
interested in and how they behave, via social
listening.
9.
Brand development : Brand development
on social media could be described as
marketing that never sleeps. Social media
marketing allows brands to interact with
customers outside of traditional marketing (i.e.
postal mail, commercials, physical coupons).
Brand development on social media is about
developing unique content that resonates well
with followers. Engaging content can create
buzz and virality, thus generating organic (and
free) viral reach for your brand.
Social media challenges for business :
Social networks can help companies spread good
news fast. There are so many social media tools and
platforms it can be hard to know where to begin and it
can also spread bad news just as quickly. Moreover,
if customers want to vent their anger on your product
or service, they can use your social network account.
Managers need to understand how to handle those
situations quickly and effectively. It can be a drain on
your time and a potential distraction from your core
business. Some of the main challenges to consider are:
1.
Quick feedback : Social networks can help
7.
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RNI : UPENG 2006/17831
2.
3.
4.
5.
Lack of Brand Control : Several available

Media laws, because social network marketing
encloses publishing or transfer of the on-line
contents there are also certain legal settings if
it comes to the advertisement in social
network. There are a Lack of Brand Control,
Thus business must be especially careful in the
market research and advertising laws not to
cross legal borders.
Competing with other Brand : Directly and
indirectly your brand is competing with other
alternative brand. These days all business
owners watch out on social media market to
know the status of their brand and activities of
other alternative brand. And it makes
competitive behavioral challenge among the
business owners towards their product.
Time Allocation : Taking time out for social
media related activities, it is very likely that
you are always in a pinch for time and might
not be able to prioritize your efforts on social
media. Most business owners believe that they
need to spend hours on their media pages to
make sure that they are building a solid online
presence. However, that is not exactly true.
You dont need to stay glued to your computer
at all hours of the day, but exact identify peak
hours and devote that time for strengthen your
business with social media.
Contents Management : Creating fresh
content on a daily basis can prove to be a
challenges task for business owners. This is
6.
another reason why business owners unwilling

to adopt social media marketing.
Other : Some other important and business
effective challenges which are given below :
v What do you hope to achieve by using
social media?
v How much time you can devote to social
media?
v
What are the most effective platforms to

use?
What are you trying to achieve for your

business?
While social media gives you the chance to

build brand awareness and customer loyalty, there are
also dangers in participating in a public conversation
forum. We need to have a clear idea of how to handle
negative feedback about your business. We need to
ensure that what you post and how you interact with
people presents a professional image to the world.
Although this new web culture provides a richer
customer experience, it also raises issues of how
businesses use and manage these new technologies.
Its important to consider the legal implications and
best practice using social media.
6.
CONCLUSION
It has been concluded from the research paper,
Nowadays technology is constantly changing, and
when your brand is a part of the social networks it is
RNI : UPENG 2006/17831
obvious that it be able to change with it. Globally,

companies are increasingly using social media and
adopting new type of networked enterprises to exploit
emerging market opportunities. Social networking and
blogs, in particular, are used largely in externally
focused processes that gather competitive intelligence
and support marketing efforts. Social media has
changed the way companies interact with customers.
A fully networked business environment means better
access to customer profiles and preferences. It benefits
customers because they get more direct and personal
access. The rapid growth of business through social
media is an indication of a sweeping change in the way
businesses are conducted. Companies seeking
advantage over competitors cannot ignore social media
as it helps them connect and engage with customers.
We need to have a clear idea of how to handle negative
feedback about your business. In addition to ensure
that what you post and how you interact with people
presents a professional image to the world. Writing
down a set of rules for how you will manage and
overcome these challenges. Although this new web
culture provides a richer customer experience, it also
raises issues of how businesses use and manage these
new technologies. Its important to consider the legal
implications and best practice using social media. Social
media has also raised customer expectations. They now
expect immediacy in their online interactions - where
content is regularly updated and any comments they
make are quickly replied.
m
REFERENCES
1.
2.
3.
4.
5.
6.
Gallaugher, J., & Ransbotham, S. (2010), Social media and customer dialog anagement at Starbucks. MIS
Quarterly Executive, 9(4), 197-212.
Gunelius, S. (2011), 30 minutes of social media marketing, McGraw Hills publication. New York.
Joseph, J., (2010), The Experience Effect: Engage Your Customers with a Consistent and Memorable
Brand Experience. New York: AMACOM.
Trusov, M. Bucklin, R.E. and Pauwels, K., (2009), Effects of Word-of-Mouth Versus Traditional Marketing:
Findings from an Internet Social Networking Site. American Marketing Association, September 2009, 73,
pp.90-102. University of technology, LULEA, Sweden, July 6, 2011.
Xiang, Z., & Gretzel, U. (2014), Role of social media in online travel information search Tourism
Management, .pp. 179-188.
India Trend Survey (2015) Accessed on Nov. 12, 2015;
http://www.ey.com/in/en/srrvices.advisory/social-media-marketing-india-trendsstudy-2015.
www.jctindia.org 49
RNI : UPENG 2006/17831
Pages 50-58
A Conceptual Perspective on Brand

Switching Behaviour of Consumers
in Telecommunication Industry
Md. Shahnawaz Abdin
Assistant Professor, Department of Management, Faculty of Management, Jamia Hamdard, New Delhi
Dr. N. H. Mullick
Associate Professor, Department of Management, Faculty of Management, Jamia Hamdard, New Delhi
Abstract
The best thing to happen to mankind was the mobile phone. India has emerged as the fastest growing mobile phone market
in the world. Mobile phone was thought of as a magical gadget in the past. It is a reality now. With the advent of advanced
technologies like GSM, CDMA, WLL and 3G technology and growing number of service providers, the competition has
increased many folds. Every day, companies belonging to both the public sectoras well as the private sector are putting in
their resources and efforts to improve their services so as to give maximum benefit to their customers. Hyper competition in
the telecommunication industry, availability of number of subscriber options for consumers, diverse tariff rates offered by
each player influence consumers to switch their services providers. This paper focuses on enlisting factors influencing
consumer switching behaviour in telecommunication industry. However, one thing is certain. By providing value added
services and effective pricing strategies; telecom service providers can influence and control to a large extent the consumer
brand switching behaviour and can retain customers.
Key Words : Telecommunication Industry, Brand Switching, Buyer Behaviour, Technology and Competition.
1.
INTRODUCTION
It is often said that it is easier to retain existing
customers than to attract new customers. It is five times
costlier to attract new customers than to hold on to
existing customers. The concept of brand switching
becomes all the more important in the above mentioned
context. Who would like to lose a customer in today's
era of hyper-competition. Existing customers are like
treasure. Once you get them, do not lose them. Losing
customers could be extremely damaging for
telecommunication companies. Once a customer goes
away from you, he/she may or may not come back to
you. The idea of brand loyalty and the corresponding
idea of brand switching have gained too much
importance and popularity in modern day extremely
competitive telecom sector. The Indian telecom sector,
50 www.jctindia.org
seen as providing the most affordable services in the

world, has grown by leaps and bounds in the last
decade. This remarkable journey to 100 million
consumers is a good enough proof of the vision and
commitment of a company that benchmarks itself with
the best in the world (Sunil Bharti Mittal, 2009). The
rise in information technology and mobile devices has
made the Indian mobile phone service market highly
competitive. Indian mobile market is one of the fastest
growing markets in the world. In the last decade, India
has seen a number of telecom companies venturing
into this sector with low tariff rates.
One of the important developments that
spurred the brand switching behavior of consumers
was the introduction of Mobile Number Portability
(MNP). It is now possible for a telecom consumer to
change his / her service provider without changing the

mobile number. Hyper competition, availability of
number of subscriber options for consumers, diverse
tariff rates offered by various players led consumers
to switch service providers like never before.
Inmodern era, people are using higher order functions
like accessing mails, connecting to social networking
sites, communicating through Whatsapp, video
conferencing, gaming, video blogging, music on
demand and a host of other functions through mobile
phones. Mobile phones are no longer seen as only a
cell phone. Rather, they have become Smart Phones.
We also call them as Hand Held Device. This indicates
towards the plethora of advantages that mobile phones
bring with themselves. This has led to an increase in
the demand for hi-tech mobile services and thus the
telecommunication service providers are giving their
best to satisfy customers' needs. The increase and
retention of loyal customers has become a key factor
for long-term success of the telecommunication
companies. Nowadays, telecom companies emphasize
not only on winning new customers but also on retaining
the existing ones.
Switching costs are costs that are incurred by
buyers for terminating transaction relationships and
initiating a new relation. Porter (1980) defined
Switching cost as a onetime cost facing a buyer wishing
to switch from one service provider to another. Jackson
(1985), however, defined switching cost as the
psychological, physical and economic costs a customer
faces in changing a supplier. Jackson's definition reflects
the multi-dimensional nature of switching cost,
especially in relation to the telecommunication industry.
In the telecommunication sector there are a number of
critical costs that must be considered when switching.
These include the cost of informing others of the change
(friends, colleagues and business associates), the cost
of acquiring new lines, cost associated with breaking
long standing relationships with a service provider, cost
of learning any new procedures in dealing with the new
service provider and cost of finding a new service
provider with comparable or higher value than the
existing firm.
Apart from these, there is time and
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psychological cost of facing uncertainty with the new

service provider (Dick and Basu, 1994; Guillotine,
1989). Losing a consumer is a serious setback for the
firm in terms of its present and future. (Zeithaml, Berry
and Parasuraman, 1996). Some researchers have
investigated different levels of loyalty while others have
explored the influence of individual factors on loyalty.
The current paper is going to highlight specific factors
in telecommunication sector that influence consumers
switching among brands.
2.
LITERATURE REVIEW
Joseph and Joachim (2009) studied switching

cost and its relationship with customer retention, loyalty
and satisfaction in the Nigerian telecommunication
market. The author found that there is a positive
relationship between customer satisfaction and
customer retention. It was found that customer
satisfaction positively affects customer retention. The
switching cost has a significant effect on the level of
customer retention.
Douglas A. Galb (1999) highlighted issues and
trade-offs that should be considered in regulating prices
for changing between service providers. Service
providers, customer acquisition cost, the cost to
customer of changing service providers and the level
of change are important factors in evaluating the effects
of a network operator's charge for shifting customers
between service providers.
M. Satish, K.J Naveen, V. Jeevananthan,
(2011) identified the factors that influence the
consumers to switch between service providers. They
concluded that there is some relationship between
switching the service provider and the factors like poor
network coverage, frequent network problems, high
calling rates, influence from family and friends etc. Xuan
Zhang (2009) studied about the impact of relationship
marketing tactics on customer satisfaction and trust of
consumers, which in turn would increase customer
loyalty. The study was done by focusing on Swedish
mobile telecommunication sector. An analytical model
is developed as a guideline to test the relationships
between relationship marketing tactics, relationship
quality (trust and satisfaction) and customer loyalty.
www.jctindia.org 51
RNI : UPENG 2006/17831
Andres Kuusik (2007) used LOGIT method

for testing the level of loyalty of 1000 customers of the
biggest telecommunication company in Estonia. The
author analyzed four factors affecting customer loyalty.
These were customer satisfaction, trustworthiness,
image and importance of relationship.
after the adoption of Mobile Number Portability. Poor

network coverage of the previous service provider,
better sms pack from new service provider and full
talk time on recharge were found to be some of the
reasons for switching from one service provider to
another.
Richard Lee, Jamie Murphy (2005), explored

determinants that cause mobile phone customers to
transit from being loyal to switcher. They concluded
that there are different factors which affect the
customers to switch from loyalty to switching intentions
such as price, technical service quality, functional
service quality, switching costs, etc. The result showed
that price was the most important factor which affected
the customers to switch loyalties to another telecom
service provider.
Jessy John (2010) explored the factors that
influence customer loyalty of BSNL mobile customers.
A sample size of 100 consumers of BSNL mobile
services in Jaipur city was taken and surveyed to assess
the reasons behind the hard core customer loyalty even
in an environment with high quality alternatives. The
author recommended that BSNL mobile service
enterprises should work on its problems related to
servers in order to further strengthen its customer
satisfaction and loyalty. Dick and Basu (1994)
uncovered the point that mobile subscribers incur
switching costs when changers take advantage of lower
call rates and potentially better services.
The concept of customer retention in
telecommunication industry in Sri Lanka was studied
by Silva, K.A (2009). The author found that the most
important factor in continuing an existing service
provider was the ability of the service provider to give
value to the customer. This was followed by assurance
and responsiveness. The least important factors were
legal undertaking tangibility and payment terms.
Kumaraval, Kandasamy (2011) concluded that Idea
cellular, Bharti Airtel and Vodafone emerged as most
preferred mobile service operators in terms of Mobile
Number Portability in Indian telecom sector.
Hitesh Parmar and Jaidip Chaudhari (2012)
studied 100 customers from Surat City to
comparatively analyze customer satisfaction before and
Gordon and Terrence (2000) studied

Customer satisfaction with services: putting perceived
value into the equation. This research enquired into
the relationship between three elements - core service
quality, relational service quality and perceived value
along with customer satisfaction and future intentions
across four services. The results showed that core
service quality (the promise) and perceived value were
the most important factors of customer satisfaction with
relational service quality (the delivery) a significant but
less important factor. A relationship between customer
satisfaction and future intentions was established. The
relative importance of the three drivers of satisfaction
varied among services. Specifically, the importance of
core service quality and perceived value was reversed
depending on the service. One of the major
conclusions was that both perceived value and service
quality dimensions should be incorporated into
customer satisfaction models to provide a more
comprehensive picture of the drivers of customer
satisfaction leading to customer loyalty.
Serkan Aydin, Gkhan zer, mer Arasil,
(2005) conducted a study on "Customer loyalty and
the effect of switching costs as a moderator variable:
A case in the Turkish mobile phone market".The
purpose of the study was to throw some light on
customer loyalty vis a vis GSM mobile telephony. In
the GSM mobile telephony sector, the main
prerequisite for protecting the subscriber base is to
win customer loyalty, a major necessity for the upkeep
of a brand's life in the long term. To achieve this aim,
customer satisfaction and trust must be measured and
"switching costs" identified. The latter may hint at
subscribers' preference for rival operators more
expensive. In this regard, the paper's aim was to
measure the effects of customer satisfaction and trust
on customer loyalty, and the direct and indirect effect
of "switching cost" on customer loyalty. The findings
52 www.jctindia.org
of this study showed that the switching cost factor

directly affects loyalty, and has a moderator effect on
both customer satisfaction and trust. Therefore, it plays
a critical role in winning customer loyalty. However,
switching cost was measured as a one-dimensional
factor, but switching cost in fact contains psychological,
financial and procedural sub?dimensions.With respect
to the findings, trust has more importance than
customer satisfaction in engaging loyalty, since trust
contains belief in the brand, which provides positive
outcomes not only in the present but also in the future.
But customer satisfaction does not contain this
dimension. So, the effect of trust on loyalty becomes
greater than the effect of customer satisfaction.
Therefore, any GSM operator who wishes to maintain
its current subscriber base should concentrate on
winning its subscribers' trust. This was one of the major
insights provided by this study.
In almost a majority of the telecommunications
literature, satisfaction has emerged as a strong predictor
of loyalty to wireless service providers (Gerpott, Rams,
& Schindler, 2001; Kim & Yoon, 2004). In particular,
Gerpott et al. express that in the context of the German
mobile cellular telecommunications market, some
earlier theoretical arguments for a causal link between
customer satisfaction and customer loyalty and highlight
the case for distinguishing between customer loyalty
and customer retention (the latter consisting of a
measure of how unlikely a customer is to terminate a
service). Gerpott et al. find in their empirical work that
satisfaction results into customer retention, but only
via customer loyalty. They also found that the mobility
barrier created by the lack of portability of mobile
access numbers in the German mobile cellular market
is a strong driver of customer retention. In other words,
a customer may not feel any loyalty to the service
provider, but remain in the business relationship for
various reasons such as inertia, habit, and high switching
costs. Kim refer to such customers as "spuriously
loyal".
An important area of research has focused on
identifying determinants of customer defection, or what
is technically referred to as customer churn. Customer
defection or exit refers to a customer decision to
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terminate business with a particular service firm

(Stewart, 1998). In some studies, researchers have
had access to actual defection data, as opposed to
data on intention to defect. A complete review of such
research is beyond the scope of the present paper.
However, some of the important studies are mentioned
here.
Worthy of mention among such research is
Keaveney (1995) who studied the reasons for
customer switching behaviour in service industries in
general. FollowingKeaveney's (1995) exploratory
investigation, a number of other articles focused on
attitudinal, behavioural and demographic characteristics
of switchers versus non-switchers in the context of online service (Keaveney & Parthasarathy, 2001);
reasons for defection in retail banking services (Colgate
& Hedge, 2001); and the reason why customers do
not defect in the context of the financial service industry
(Colgate & Lang, 2001). Chakravarty, Feinberg, and
Rhee (2004) studied the effects of various
characteristics of relationships between banks and their
customers on an individual customer's probability to
switch from one bank to another.
3.
1.
2.
3.
4.
5.
4.
RESEARCH OBJECTIVES
The following are the objectives of this paper:
To understand the concept of customer
satisfaction in telecommunication industry.
To throw light on components of customer
satisfaction in telecommunication industry.
To understand the notion of customer
satisfaction leading to customer loyalty in
telecommunication industry.
To know the various reasons of brand
switching and customer churn in
telecommunication industry.
To gain insight into the factors critical for
customer retention in telecommunication
industry.
The methodology used for this paper is as
below:
www.jctindia.org 53
1.
2.
3.
It is a descriptive study. The paper studies an

existing phenomenon in telecommunication
industry called as consumer brand switching.
It is based on secondary information and data.
Information has been taken from various
research papers, research journals, websites,
books, etc.
Based on review of literature and assessment
of various studies combined with
contemporary industry scenario and consumer
behavior, an attempt has been made to
highlight various issues regarding customer
brand switching in telecommunication industry.
5.
ANALYSIS
Research indicates that there are at least eight
factors that play an important role in switching
consumers in telecommunication industry. These
factors are:
1. Service Quality
2. Brand Image
3. Trust
4. Satisfaction
5. Customer Loyalty
6. Switching Cost
7. Value Added Services
8. Price
Let us have a look at some statistical data from
India.
(Data As on 31st March, 2015)
Telecom Subscribers (Wireless +Wireline)
Total Subscribers
996.49 Million
% change over the previous quarter 2.63%
Urban Subscribers
577.18 Million
Rural Subscribers
419.31 Million
Market share of Private Operators 89.89%
Market share of PSU Operators 10.11%
Tele-density
79.38
Urban Tele-density
148.61
Rural Tele-density
48.37
54 www.jctindia.org
RNI : UPENG 2006/17831
Wireless Subscribers
Total Wireless Subscribers
969.89 Million
% change over the previous quarter 2.75%
Urban Subscribers
Rural Subscribers
555.71 Million
414.18 Million
GSM Subscribers
CDMA Subscribers
917.73 Million
52.16 Million
Market share of Private Operators 91.68%

Market share of PSU Operators 8.32%
Tele-density
Urban Tele-density
Rural Tele-density
77.27
143.08
47.78
Wire-line Subscribers
Total Wire-line Subscribers
% change over the previous quarter
Urban Subscribers
Rural Subscribers
26.59 Million
-1.50%
21.47 Million
5.12 Million
Market share of Private Operators

Market share of PSU Operators
Tele-density
Urban Tele-density
Rural Tele-density
No. of Village Public Telephones
(VPT)
No. of Public Call Office (PCO)
24.93%
75.07%
2.12
5.53
0.59
5,85,981
7,36,855
Internet/Broadband Subscribers
Total Internet Subscribers
Narrowband subscribers
Broadband subscribers
Wired Internet Subscribers
Wireless Internet Subscribers
Urban Internet Subscribers
Rural Internet Subscribers
Total Internet Subscribers
per 100 population
302.35 Million
203.15 Million
99.20 Million
19.07 Million
283.29 Million
190.60 Million
111.76 Million
24.09
Urban Internet Subscribers

per 100 population
Rural Internet Subscribers
per 100 population
49.07
12.89
Telecom Financial Data (QE Mar-15)

Gross Revenue (GR) during
the quarter
Rs.65227 Crore
% change in GR over the previous

quarter
1.99%
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Sistema
9.09
8.92
Videocon
MTNL
4.99
6.91
7.13
7.06
Quadrant
Loop
2.39
2.90
2.96
----
Total
933.01
996.49
A. Service Providerwise Market Share as on

28th February, 2014
Revenue & Usage Parameters (QE Mar-15)

Monthly ARPU GSM Full Mobility
Service
Monthly ARPU CDMA Full Mobility
Service
Minutes of Usage (MOU) per subscriber
per month GSM Full Mobility Service
Minutes of Usage (MOU) per subscriber
per month CDMA Full Mobility Service
Total Outgoing Minutes of Usage for
Internet Telephony
Rs.120
Rs.108
383 Minutes
265 Minutes
245 Million
Data Usage of Mobile Users (for the QE

Mar-15)
Data Usage per subscriber per month GSM
89.06 MB
Data Usage per subscriber per month CDMA
278.22 MB
Service Provider Wise Subscribers Base
(In Million)
Company QE March 2014 QE March 2015
Bharti
208.75
229.43
Vodafone
166.62
183.88
Idea
135.79
157.81
Reliance
112.13
110.65
BSNL
113.14
93.64
Aircel
70.15
81.40
Tata
64.55
67.99
Telewings
35.61
45.62
The Indian telecom consumer is highly price

senstitive. In such a scenario, brand switching is a
common phenomenon especially after the possibility
of MNP (Mobile Number Portability).
Consumers attach a lot of importance to the
concept of brand.Kotler defined brand as a name,
term, sign, symbol, or design, or combination of them
which is intended to identify the goods of one seller or
group of sellers and to differentiate them from those of
competitors. Consumers have some assessment of
corporate image or brand image and try to resonate it
with their self-image. This becomes one of the
important factors for brand switching.
The concept of service quality is also of
considerable importance. Quality is usually
conceptualized as an attitude that does the evaluation
of the service offered. Quality is basically a sum total
of evaluated experiences. Customers judge service
quality on the basis of overall firm's superiority and
excellence. If service is high in quality it is regarded as
a key to success in most competitive service markets.
Many researches have indicated that customer
satisfaction and the customer's trust in a service firm
www.jctindia.org 55
are directly influenced by the service quality being

provided. If pre-purchase expectations are fulfilled
with the kind of service quality being provided the
customers might be satisfied. The telecom industry
which is basically a service industry, service quality is
an important factor to deliver customer satisfaction and
loyalty. There could be two distinct service quality
dimensions which are technical quality and functional
quality. Technical quality is something that customers
get as a result of dealings with the service provider.
Whereas the functional quality is something that has to
do with how the service has been delivered.As
compared to technical quality, functional quality tends
to be more important in customer satisfaction.
Researchers have identified five distinctive dimensions
of cell phone service quality. These are network
coverage, billing, pricing, data and customer services.
Contemporary research has tried to set up the
bases for improving the understanding of customers'
switching behavior and can be expressed in two main
areas:
(1)
The factors and the processes underlying
customer switching decisions.
(2)
The exact factors that encourage switching.
Research available discriminates among the
three determinants of switching decisions using the
Switching Path Analysis Technique (SPAT): (a) Pushing
determinants (the basis to switch to another supplier).
(b) Pulling determinants (factors that stimulate the
customers to come reverse to the original supplier)
and (c) Swayers (they do not cause switching by
themselves; they can only lessen or reinforce the
switching decision). There are several other leading
factors that associate with the customer switching
decision and those factors are the consumer's attitude,
behavior, and the socio-demographic characteristics.
Core service failure has been found as the
major cause of customer's switching behavior in some
studies. Core service failures might be itself the major
cause or it could be accompanied by other reasons
that makes the customer to switch. Core Service
Failures include all the failures that are due to errors or
technical problems caused by the service providers
56 www.jctindia.org
RNI : UPENG 2006/17831
themselves. Core service failures could include the

errors of billing, service mistakes and service disasters.
If the customer sees billing errors or finds a delay in
correcting those errors, he or she is likely to switch to
another service provider.
One of the most important factors in switching
behavior is Pricing. Pricing generally includes call
charges, rates, penalty, surcharges or fees. Customers
switch at times when they perceive that the price is
high especially when compared to reference price.
Customers often compare the prices of competitors
for the same service.
High prices can negatively influence the
purchase probabilities of customers. Customers relate
prices to service quality and then generate
dissatisfaction or satisfaction. And if a customer thinks
that the price is comparatively fair then only that
customer would go for transaction with service
provider. There are two dimensions of price perception.
The first one is rationality of prices which shows the
way that how the price is being perceived by the
customers as compared to competitors. And the other
is basically the value for money. High quality services
as compared to low quality equivalents cost more. Price
could be thought of as being the most influential factor
on customer satisfaction and trust. A lot of customers
switch due to pricing issues of high and unfair pricing.
Deceptive and hidden charges are also important
elements that trigger brand switch.
Inconvenience caused by the service providers
leads the customers to switch to another service
operator. Such inconvenience includes the factors such
as time elapse, long hours of operations, waiting for
the service or location of the operator. As in customer
services the clients have to wait for so long on the
telephone for the customer representative. One solution
could be to fill time so as to reduce the impatience and
anger of the customer waiting for his/her call to be
answered.
The following model illustrates how various
factors affect customer experience which in turn leads
to brand loyalty or brand switching.
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Figure: A conceptual model of factors affecting customer experience and

its impact on brand switching
Core Service
Marketing
Strategy and
Pricing
Positive
Customer
Experience
Long Term
Relationship
Negative
Customer
Experience
Brand Switch
Customer
Experience
Value Added
Service
Customer
Service
6.
CONCLUSION
In modern times, customer is the king of
business. He / she should be the focus of all attention
from the company. The option of Mobile Number
Portability (MNP) has made the telecommunication
consumer even more informed and powerful. It is,
therefore, critical for telecommunication service
providers to hang on to existing customers while trying
to attain new customers. It is easier and cheaper for
firms to retain existing customers than going after and
attracting new customers. Telecom companies must
ensure to undertake every effort to keep existing
customers happy. The company must make all possible
attempts to establish a relationship of absolute trust
with customers. Any breach of trust or even a hint of
breach of trust would be very harmful for the
company's business prospects. A common complaint
by customers is that while the service providers
announce a low call rate/price for the package, there
are some hidden charges which are not specified. The
company may find a legal recourse in "Terms and
Conditions Apply" or what is popularly known today
as TnC, but will distance itself from the consumers.
The company will have to answer customers whom

they were trying to fool.
In the light of changing calling patterns of
customers, rate plans need to be optimized to ensure
that it best suits the customer's needs to prevent
customers from switching.Network services are the
most important pillars in telecom industry. Network
services include call quality, network connectivity, and
network coverage. From a customer's point of
viewdropped calls, stagnant or broken conversations
can frustrate the customers.
Telecom service providers must ensure that
their billing systems are in line to continue sending out
correct and exact bills. Customers switch over to
different service providers due tovarious reasons. The
reasons could be that the service provider fails to meet
the needs of its customers because of the changing
demand patterns and situations. Or a customer might
get better offers from its competitors. However if the
ultimate motive of any business is to get knowledge of
consumer behavior, and how and why fluctuations can
take place in the customer base, it would be very
helpful for the effective management of customer
www.jctindia.org 57
relationships. Responding to consumers' complaints is

also very critical for customer retention. Customers
also churn many times because they perceive the
service provider's response and handling of their
complaints as ineffective and insensitive.
It could be safely concluded that the more the
customers stay in a business association with the service
provider the more value they could generate. Customer
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switching behaviour is therefore a serious deterrent in

maintaining healthy long-term relationships with
consumers. It is thus imperative for telecommunication
service providers to understand the true nature of
customer switching behavior and control factors that
trigger switching. In the absence of such an effort
telecommunication service providers may not be able
to hold back existing customer base for long.
m
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58 www.jctindia.org
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Pages 59-76
An Analysis of NPAs Management in PSBs,

PVTSBs and FBs
Parasuraman Subramani
Research Scholar, Research Department of Commerce, Sri Vijay Vidalaya College of Arts and Science,
Dharmapuri, Periyar University, Tamilnadu
Dr. N. Sathiya
Assistant Professor, Research Department of Commerce, Sri Vijay Vidalaya College of Arts and Science,
Dharmapuri, Periyar University, Tamilnadu
Abstract
Non-Performing Assets (NPAs) are one of the biggest challenges facing the global banking system, and particularly Indian
banks. Some years before these banks were in flourishing heights, but health of these banks deteriorated because of NPAs.
Many Indian banks have been controlled their NPAs up to a level, but some banks still have been failed to control their
NPAs. As a result, NPAs hitting the profitability, liquidity and solvency, in addition to posing threat on quality of asset and
survival of these banks. It involves the necessity of provisions, which reduces the overall profits and shareholders value. The
problem of NPAs is not only affecting the banks but also the whole economy. In fact high level of NPAs in Indian banks is
nothing but a reflection of the state of health of the industry and trade. It is essential to trim down NPAs to improve the
financial health in the banking system. In the background of these developments, this study strives to examine the state of
affair of the NPAs of the Public Sector Banks (PSBs), Private Sector Banks (PVTSBs) and Foreign Banks (FBs) in India. The
study is based on the secondary data retrieved from Statistical Tables Relating to Banks in India. This paper analyses the
position of NPAs in PSBs, PVTSBs and FBs for the period of 2009-10 to 2014-15.
Keywords : Non-Performing Assets, Profitability, Liquidity, Public Sector Banks, Private Sector Banks and Foreign Banks.
1.
INTRODUCTION
NPAs can be defined as a loan or an advance
where payment of interest or repayment of installment
of principal (in case of term loans) or both remains
unpaid for a certain period. In India, the definition of
NPAs has changed over time. According to the
Narasimham Committee Report (1991), those assets
(advances, bills discounted, overdrafts, cash credit
etc.,) for which the interest remains due for a period
of four quarters (180 days) should be considered as
NPAs. Subsequently, this period was reduced, and
from March 31, 2004 onwards when interest or
principle payments due to a bank remains unpaid for
more than 90 days, the entire bank advance
automatically turns intoNPAs. If NPAs not controlled
timely will reduce the earning capacity of assets and
badly affect the Return on Investment (ROI). The cost
of capital will go up, the assets liability mismatch will

widen, higher provisioning requirement on mounting
NPAs adversely affect capital adequacy ratio (CRAR)
and banks profitability. Economic value added (EVA)
by banks will get upset because EVA is equal to the
net operating profit minus cost of capital. NPAs cause
to decrease the value of share sometimes even below
the book value in the capital market and affect the risk
facing ability of banks. Ever mounting NPAs, Risk
management and Basel II norms, Consolidation,
Mergers and Acquisitions, overseas expansion,
technology changes, government reforms, skilled
manpower and consumer protection etc. are the major
challenges and problems being faced by the Indian
banking Industry during last decades due to competitive
environment and adoption to the international best
practices. The PSBs and PVTSBs are now facing acute
www.jctindia.org 59
competition from the FBs who are trying to tap the

Indian domestic market after adoption of economic
reforms. In spite of the overall growth in business of
PSBs and PVTSBs, particularly in advancing loan in
much liberal manner, the number of defaulters is also
increasing from time to time. So it seems highly
important to have a study on the management of NPAs
in banking sector. Thus, a need arise to study the
concept of NPAs and its trend over a period of years
for PSBs, PVTSBs and FB in India.
2.
(i)
(ii)
(iii)
CLASSIFICATION OF NPAs
Standard assets
Standard assets are the ones in which the bank
is receiving interest as well as the principal amount of
the loan regularly from the customer. It is also very
important to note that in this case the arrears of interest
and the principal amount of loan do not exceed 90
days at the end of financial year. If asset fails to be in
category of standard asset that is amount due more
than 90 days then it is NPAs and NPAs are further
need to classify in sub categories.
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Sub-standard assets: with effect from 31

March 2005,a substandard asset would be
one, which has remained NPAs for a period
less than or equal to 12 month.
Doubtful assets: With effect from March 31,
2005 an asset would be classified as doubtful
if it remained in the sub standard category for
12 months.
Loss assets : A loss asset is one which is
considered uncollectible and of such little value
that its continuance as a bankable asset is not
warranted- although there may be some
salvage or recovery value. Also, these assets
would have been identified as Loss Assets
by the bank or internal or external auditors or
the RBI inspection but the amount would not
have been written-off wholly.
3.
CAUSES OF NPAs
The causative factors for rising NPAs in the
banks are 3 Bs i.e. Business Environment, Borrower
and Banker. These causes are elaborated on next page.
Table 1 : Provisional Norms

Standard
StandardAssets
Assets
(a)
(b)
(c)
(d)
Sub-standard Assets
15% for total outstanding
Doubtful Assets
Up to 1 year
1 to 3 years
More than 3 years:(i) Outstanding stock of NPAs as
on March 31, 2010
Direct advances to agricultural and SME sectors at 0.25%;

Residential Housing loans beyond Rs. 20 lakh at 1%;
Commercial Real Estate loans at 1%.
All other advances not included in (a), (b) and (c) above, at 0.40%
(Tier II), 0.25% (Tier I)
25%
20%
30%
40%
-60% with effect from March 31, 2011
(ii) Advance classified as

100%
Doubtful for more than
3 years on or after April 1, 2010
Loss
Loss Assets
Assets
60 www.jctindia.org
100% of the outstanding

RNI : UPENG 2006/17831
Causes of NPA
4.
Business Environment
Borrower
Banker
Business environment refers to economy,

regulatory regime, legal system and political climate
in which banks are operating. The causative factors
attributing to business environment are as under: Recession in the economy
Sudden change in Global & Domestic markets
Lack of conducive legal system for loan recovery
i.e. inadequate legal provisions on foreclosure &
bankruptcy laws and dilatory legal procedures in
enforcing security rights
Lack of cohesive regulatory framework
Political pronouncements like debt relief
Socio-political pressures on commercial credit
decisions
Vitiated loan repayment culture
Policy reversal i.e. changes in governmental
policies, for example cancellation of Telecom &
Coal mine licences in recent times.
Natural Calamities
Scams
The causative factors

attributing to borrowers are
as under: Improper choice of
project/activity
Adoption of obsolete
technology
Promoters/ Management
disputes
Inefficient management
Resource crunch
Strained labour relation
Diversion & siphoning of
funds
Wilful defaulter
Fraudulent intention
The causative factors

attributing to bankers are as
under: Lack of credit skill
Delay in credit decision
& disbursement
Credit decision taken
under extraneous
influences
Lack of proper credit
monitoring
Lack of effective NPA
management
TYPES OF NPAs
(a)
Gross NPAs: Gross NPAs is an advance
which is considered irrecoverable, for bank has made
provisions, and which is still held in banks books of
account. Gross NPAs are the sum total of all loan assets
that are classified as NPAs as per RBI Guidelines as
on Balance Sheet date. Gross NPAs reflects the quality
of the loans made by banks. It consists of all the
nonstandard assets like as sub-standard, doubtful, and
loss asset. It can be calculated with the help of following
ratio: Gross NPAs Ratio = Gross NPAs / Gross
Advances
(b)
Net NPAs: Net NPAs are those type of NPAs
in which the bank has deducted the provision regarding
NPAs. Net NPAs shows the actual burden of banks.
Since in India, bank balance sheets contain a huge
amount of NPAs and the process of recovery and write
off of loans is very time consuming, the banks have to
make certain provisions against the NPAs according
to the central bank guidelines. It can be calculated by
following ratio:
Net NPAs = Gross NPAs Provisions /Gross
Advances Provisions
5.
(a)
(b)
(c)
IMPACT OF NPAs
Profitability : NPA means booking of money
in terms of bad asset, which occurred due to
wrong choice of client. Because of the money
getting blocked the profitability of bank
decreases not only by the amount of NPAs
but NPAs lead to opportunity cost also as that
much of profit can be invested in some return
earning project/asset. So NPAs not only affect
current profits but also future stream of profits,
which may lead to loss of some long-term
beneficial opportunity. Another impact of
reduction in profitability is low ROI (Return
on Investment), which adversely affect current
earning of bank.
Liquidity : Money is getting blocked lead to
lack of enough cash in hand which lead to
borrowing money for short period of time from
outside which lead to additional cost to the
bank. Difficulty in operating the functions of
bank is another cause of NPAs. Due to lack
of money Routine payments and dues are not
paid on time.
Credit loss : In case of bank is facing problem
www.jctindia.org 61
of NPAs then it adversely affect the value of

bank in terms of market credit. It will lose its
goodwill and brand image because as we have
discussed earlier that bank is not able to pay
its dues on time and its negative impact is that
people start withdrawing their money from
bank which then cause liquidity problem and
also decrease in credibility.
Involvement of management : Time and
efforts of management is another indirect cost
which bank has to bear due to NPAs
otherwise time and efforts of management in
handling and managing NPAs would have
been diverted to some fruitful activities, which
would give good returns. Now a days banks
have special employees to deal and handle
NPAs, which is additional cost to the bank.
(d)
6.
COMPREHENSIVE APPROACH TO
NPAs MANAGEMENT & EWS
The Banks will require a comprehensive
approach to NPAs management that includes not just
curative but also preventive actions across the credit
life cycle.While tools such as automated decision
making, early warning solution (EWS), external credit
data can further strengthen a banks existing credit
origination and appraisal process and drive lower
RNI : UPENG 2006/17831
NPAs formation, in our view post-facto measures such

as default management, covenant enforcement, and
independent collateral liquidation can help banks better
manage their existing NPAs stock.
Although we believe there are a number of
gaps in the current credit capabilities of Indian banks,
and those operating in Continental Europe and Latin
America, the matter needs to be approached in a
phased manner by focusing on a select few capabilities
initially. Some of the capabilities that should be
prioritized include external data acquisition for credit
assessment models, early warning framework and
collateral management for credit monitoring, soft
landing and care programs for default management and
centralized recovery and collection.
Business Case for an EWS : Through
multiple engagements across large global banks, we
believe that implementing an EWS can help
substantially reduce banks NPAs. A comprehensive
early warning framework that included identifying the
right customer segment, understanding the data
landscape, formulating early warning triggers and
creating a risk mitigation plan, resulted in 15-20%
reductions in NPAs among some of the large global
banks we have worked with.An EWS can also help
banks irrespective of scale, scope and region:
Prventive NPA Phase
Figure 1 : High level approach to NPAs Management

Risk assessment models
Credit Origination
and Appraisal
Credit Monitoring
Line and limit assignment

Risk assessment and decision process integration
Risk mitigation techniques and workflows
Automated acquisition models and scorecards leveraging

multiple sources of information e.g., firmographic,
bureaus, financial information, news flow, etc.
Integration of centralized risk assessment models
and branch level decision process
Automated risk ratings systems
Automated centralized risk rating systems
Early warning systems

Portfolio analytics and feedback
Early warning systems based on analytics driven

rules and qualitative inputs
Dynamic collateral management
Dynamic collateral management with emphasis

on periodic revaluation and prudent cross-
Curative NPA Phase
collateralization logic
Default Management
Default recognition
Regulatory compliant default identification logic
Soft landing and care programs
Segment based collections strategy including
Loan restructuring
call-center capacity planning, prospensity scorecards,
Collection analytics
dialer-manual mix, fraud scorecards, etc.

Soft landing and care programs for corporate defaults
and stressed assets
NPA Collections
and Legal Recovery
62 www.jctindia.org
Collection and recovery management
Independent collateral liquidation and covenant
Liquidation
Debt sale
enforcement teams
Effective pricing of bad asset for optimizing debt-sale
Litigation management
Standardized litigation management strategies
4
4
4
Reduce the new NPAs flows (and a resulting

reduction in NPAs stock).
Maximize the recovered value and reduce the
Exposure at Default with timely alerts.
Better utilize capital.
Building an EWS
Building an EWS requires banks to adopt a
custom approach that is specific to their portfolio needs.
Five steps approach that combines a banks existing
and new data sources within a strong analytical
framework offers an effective solution.
(a)
Portfolio Prioritization
For banks to derive maximum value from an
EWS within a short time-frame, they should prioritize
select customer segments (MSME, Corporate, and
Retail) within their portfolio. Depending upon the
composition of their portfolio, banks can consider
factors like loan loss provisions, cyclicality of the
portfolio, management view, regulatory guidelines,
significant deterioration in credit quality, and risk
mitigation levers, to prioritize. For example while
EWS for an MSME segment can significantly drive
lower NPAs formation, it might have limited impact
on directed lending which is governed by specific
regulatory requirements. Additionally, a proof of value
assessment through case studies can help drive
additional insight into the relevance of an early warning
framework and address portfolio requirements.
(b)
Data Landscape
A comprehensive EWS solution utilizes a mix
of the banks internal data as well as external data
elements. While banks across regions have historically
focused on traditional data sources, we have observed
that recently more successful banks have differentiated
themselves by leveraging non-traditional and powerful
data that exists both within and outside their systems.
For example; instances of bounced checks in
customers deposit account, advance tax deposit
receipts, stock market data, and more. While
evaluating alternate data sources, it is important for a
bank to clearly articulate the value of these sources
from a credit perspective and avoid the temptation of
some of the new age source/techniques that offer
RNI : UPENG 2006/17831
limited incremental value, like sentiment analysis

through social media.
The figure below illustrates various sources of
EWS trigger information. These consist of information
captured from external bureaus and public sources as
well as internal trade line and customer payment
behaviour data. Banks, particularly those operating in
India may want to also consider evaluating these
different data sources across the following dimensions:
4
Availability Although the data source might
provide very rich information, a bank might
not have access to it or the data might not be
available in a very timely manner.
4
Usability This dimension would help govern
whether the bank can use the information (e.g.,
regulatory restrictions) from an early warning
perspective.
4
Reliability The focus here is whether the
source of information is complete and
accurate. Integrity of the data source would
help determine how effective the source would
be in identifying distressed clients and possibly
avoiding raising unnecessary alerts which could
be detrimental to the business. Another
dimension banks should consider while
evaluating the different data sources is the
frequency of updates (e.g., real-time, daily,
monthly, and bi-weekly). The exercise of
identifying and shortlisting data sources needs
to be aligned to the banks portfolio segment.
A generic approach may result in negative
returns for the bank due to a large number of
false alerts. This exercise can be time and
resource consuming but banks can accelerate
through this phase by leveraging tools such as
Early Warning Trigger Library that contains a
pre-defined set of triggers mapped by their
relevance to each customer segment.
(c)
Early Warning Trigger

For an effective early warning framework, it
is important to study the pre-default behaviour of
customers in the context of the various data elements.
Defining triggers that can identify a problem before a
customer faces severe credit challenges or is already
www.jctindia.org 63
past due/default can positively impact a banks ability

to take appropriate action. While studying the predefault behaviour of customers, it is important to
identify key data attributes that show correlation with
default behaviour or stress scenario, for example a
small company with limited liquidity facing decline in
sales. This can help define triggers and their relevance
to the bank. Banks can define either simple or complex
RNI : UPENG 2006/17831
triggers. Simple triggers that are single dimensional and

are easy to capture and track, often fail to include the
interdependencies that exist in the real world and
therefore could be less predictive (e.g., decline in sales).
Whereas complex triggers which are derived from
several simple triggers can be much more powerful
predictors of business distress than a simple variable.
These variables can be combined using advanced
Figure 2 : Early Warning Data Landscape

Early Warning Systems
Quantitative
Qualitative
Labour problems
Frequent changes in plans
External
Internal
Bureau
Trade line information
Disputes amongst partners/staff

Adverse changes to government policies
Emergence of new technology
Decline in bureau scores - path and

magnitude (e.g., CIBIL)
Stress on other trade lines for

the customer
Name appearing in negative list

Increase in liens
Default on one or more repayment

obligations
Out-of-business flag
Invocation of guarantees
Service delinquency flag
Loss of key customers
Public sources
Name appearing in Ministry of
Corporate Affairs defaulters list
Inability to raise supplies on unusual
credit terms
Litigation filed in courts
Payment/Attitudinal behaviour
Increasing delinquency
High capacity utilization/Out of pattern
behaviour
Increasing percentage of customers
with 60 or 90 days past due
Dishonoured check
Avoiding contact with bank
News feeds
Negative web sentiment through
text mining
Adverse press releases on financial
or operating performance
Increasing frequency of overdrafts in

current accounts or return of checks
(derogatory credit item)
Repeated extension request
for repayment
Drop in internal ratings
Fraud related news
Financials
Declining current ratio or total
net worth
Low cash to liability
Funding of financials or auditor
qualifications
Borrower reporting stressed financials
Delay in submission of stock
statements or audited financials
Worse than expected financial
performance
64 www.jctindia.org
statistical techniques along with business intuition and

expert judgment(e.g., two consecutive quarters with
declines in year-over-year (y-o-y) advance tax deposit
of greater than 25% (based on bank information) and
declines in employee count greater than 20%). After
defining the triggers that will be used, we recommends
banks consider evaluating each one of them on two
important dimensions: hit rate and signal strength.
v
Hit rate: Of the total number of customers
flagged by the trigger, how many of the
customers ended up in default
v
Signal strength: The average time lag
between the trigger point and the actual default
event
Having triggers which are high on both
dimensions is very important. A trigger with a high hit
rate but very low signal strength is irrelevant as it does
not provide the bank with any time to action since the
customer would already be in default (e.g., customer
missing two scheduled loan repayment indicates a
distress giving this trigger a high hit rate but low signal
strength as the time lag between the trigger and default
is too short). In comparison a trigger that looks into
two consecutive y-o-y declines in the advance tax
deposit will have high signal strength as this would
indicate the client is experiencing stress in its business
model and might experience credit difficulties in coming
months, giving the bank more time to take appropriate
risk mitigation measures.
(d)
Composite Risk Index (CRI)

How banks bring together different triggers and
integrate them into score/watch-list categories is
important for a successful implementation of an EWS.
After relevant triggers are shortlisted for different
segments and portfolios based on signal strength and
hit rate analysis, each of these triggers will be assigned
an overall impact score based on statistical analysis of
the banks historical data, business intuition and expert
judgment. For each customer, a composite index score
is generated based on number of triggers hit, impact
of triggers, type of triggers and correlation between
triggers using the following logic.
Step 1: Define triggers and assign an impact score
for each of the triggers; group together
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correlated triggers into categories based on

correlation matrix.
Step 2: Identify the trigger within each trigger
category that has maximum impact score for
each customer. Simple addition of scores
from correlated triggers will overstate the
stress significantly.
Step 3: Correlation adjusted summation of impact
scores of selected triggers with maximum
impact score from each trigger category are
used to come up with a final composite
score.
Step 4: Design a rating scale to group customers into
different groups based on final composite
score. Incorporating all the triggers into a
composite risk index will provide financial
institutions with a normalized score that
enables them to monitor a multitude of
customers simultaneously on a standardized
scale.
(e)
Risk Mitigation Action Plan (RMAP)

Developing and implementing an early warning
framework is not very meaningful unless banks are
ready to integrate it with their customer management
processes and up-skill their credit officers. Identifyinga
customer in distress will not yield any result until the
Bank Credit Officer clearly understands the action that
he/she is required to take. Action plans that contain a
pre-defined set of mandatory action items (e.g., initiating
recovery, soft-landing, additional covenants) along with
certain recommended items (e.g., re-underwriting,
request updated financials) for each risk score/
category are important. In addition, banks should
create a work-flow system to effectively manage and
action the cases that are triggered by the system.
7.
NPAs LIFE CYCLE IN BANKS

The NPAs life cycle of banks has three main
stages: Identification of stressed assets and NPAs,
investigation by measurement and obtaining insight and
lastly, resolution through crisis management and
revitalization assets. The RBI has taken a number of
steps which are pushing banks in India to be more
proactive in recognition of stress and to take remedial
steps so as to preserve the economic value of assets.
www.jctindia.org 65
As a part of such efforts, Special Mention Accounts

(SMAs) classification has been recently introduced
with defining a time bound procedure towards deciding
the course and nature of remedial actions. In addition,
it is also strengthening the NPAs resolution ecosystem
in India including increase in foreign participation rules
in ARCs in India and bringing a sunset clause to the
regulatory forbearance accorded to restructured
accounts. There is also an increasing demand from
industry to keep MSMEs out of the ambit of SMAs.
(a)
Role of EWS to mitigate credit risks

Over the years, the credit monitoring function
has assumed criticality for banks, as it has direct impact
on the profitability and liquidity of their credit portfolios.
Credit monitoring can be important for the following
reasons:
(i) Dynamic portfolio mix: With changing
market conditions, a robust credit monitoring system
allows the bank to align its exposure in line with its risk
strategy.
(ii) Slippages and NPAs: Increase in slippages
and NPAs indicate low asset quality on the loan book
66 www.jctindia.org
RNI : UPENG 2006/17831
leading to credit and reputational risks for the banks.

(iii) Better capital management:Provisions
have a draining effect on the profitability of the bank
and hence the equity, which has an impact on the capital
structure.
(iv) Efficient cost management:Recovery
of NPAs could lead to incremental operational and
legal cost for the bank.
EWS can be an important tool to mitigate credit
risks through proactive monitoring. A good EWS can
include key parameters indicative of hidden problems:
(b)
v
The building blocks of a EWS

Analysis of trends in NPAs of the bank including
factors leading to NPAs
l Internal factors include diversion of funds,
time and cost overruns during project
implementation, business failure,
inefficiency in management, slackness in
credit management and monitoring,
inappropriate technology and lack of
coordination between lenders.
External factors include recession, price

escalation and currency fluctuations,
changes in government policies,
environment concerns and accident and
natural calamities to name a few.
Analysis of trends in credit portfolio
diversification
Studying the relationship between diversified
portfolio and NPAs of the bank
Profiling and analysis of concentration risk in
the bank
Evaluating the credit risk management
practices in banks
The key to success for EWS lies in identifying
l
v
v
v
v
Key Elements of EWS

Financial
Irregularity in installment
and insufficient
payments
Irregularity of operations
in the accounts
Bouncing of cheque due
to insufficient balance in
the accounts
Unpaid overdue bills
Declining current ratio
Diversion of funds
Operational
Attitude of borrowers
Information about
borrower initiating the
process of winding up or
not doing the business
Overdue receivables
External non-controllable factor like natural
calamities in the city
where borrower conduct
his business
Frequent changes in
plan and nonpayment of
wages
Use for personal comfort,

stocks and shares
by borrower
Avoidance of contact
with bank
Problem between
partners
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the triggers and customising them. The idea is to develop

proactive monitoring across the asset portfolio lifecycle
with continuous monitoring of assets from sanction till
loan closure through development of a system by
taking data-based cues from the early signs and red
flags:
(c)
The benefits of EWS

v
Definite process to govern credit monitoring,
ensuring a standardised bank-wide approach
to detect and escalate EWSs
v
Implementation of a knowledge management
system to retain the organisations learning of
each type of customer
v
Relationship managers time freed up to make
him or her capable to handle more
Others
responsibilities at the ground level
Changes in government
v
Better compliance to
policies
Death of borrower
regulatory requirements and audits
Competition in the market
8.
FACTORS
CONTRIBUTING
TO NPAs
According to the recent study
conducted by RBI, the factors
contributing to NPAs are divided into two segments.
Mitigation of credit risks
Factors Contributing to NPAs

Interna l fa cto rs
D iv ers ion o f fu nd for ex pan sion ,

d iversification , mod ern ization or fo r
t ak ing up n ew p rojects.
D iv ers ion of fu nd for assis ting o r
p rom otin g asso ciate co ncern s.
T im e or cost o verrun durin g th e
p roject imp lement ati on s tage.
B us iness failu re d ue to p ro du ct
failu re, failu re in m ark eting etc.
E xternal factors
R eces sion in th e eco no my

as a w ho le
Inp ut o r p ow er s ho rtag e
Price escal ati on o f in pu ts

E x ch ang e rate flu ctuatio ns
In efficien cy in b ank m anagem ent.

S lack nes s in cred it m anag em ent and
m on ito rin g.
In
app ro priate
tech nol ogy
or
p rob lems
related
to
mo dern
t ech no log y
(h ) Wilful defaults , sip ho nin g o f
fu nd s,
frau d,
d ispu tes,
mi sap pro priation etc.
O ther fa cto rs
C han ge in g ov ern ment

p olicies
G o vernm ent p olicies lik e
ex cise
du ty
chang es,
im po rt d ut y chang es etc.,
(g) A ccid en ts an d n atural
calam ities.
L ib eralizatio n of th e eco no my
an d th e con sequ ent pressu res
from lib eralization like several
co mp etition s,
red uction
of
t ariffs etc.
P oo r mo ni toring of credi ts and
failu re to reco gnize early
w arni ng s ign als sh ow n b y
s tand ard as sets.
S ud den crash ing of cap ital
m ark et and in ability to rai se
ad equ ate fun ds .
M is matchin g of fu nd s i.e.
u sin g l oan granted fo r sho rt
t erm for lon g term tran saction s.
(e) G rantin g of loan s to certain
s ectors o f the eco no my on th e
b asis of g ov ern men t di rectives
rath er
than
com mercial
i mperatives .
www.jctindia.org 67
9.
REVIEW OF LITERATURE
NPAs engender negative impact on banking
stability and growth. Issue of NPAs and its impact on
erosion of profit and quality of asset was not seriously
considered in Indian banking prior to 1991. There are
many reasons cited for the alarming level of NPAs in
Indian banking sector. Asset quality was not prime
concern in Indian banking sector till 1991, but was
mainly focused on performance objectives such as
opening wide networks/branches, development of rural
areas, priority sector lending, higher employment
generation, etc. The accounting treatment also failed
to project the problem of NPAs, as interest on loan
accounts were accounted on accrual basis (Siraj K.K.
& P. SudarsananPillai, 2012). NPAs not only affect
the performance of credit institutions but also have a
direct negative impact on economy (Satpal, 2014). In
the studies of Ganesan and Santhanakrishnan (2013),
it is clearly revealed that the sound financial position of
a bank depends upon the recovery of loans or its level
of NPAs. According to Sontakke and Tiwari (2013)
NPAs doesnt affect current profit but also future
stream of profit, which may lead to loss of some longterm beneficial opportunity. However according to
Vemula and Mahalingam (2012) in recent times, the
banks have become very cautious in extending loans,
the reason being mounting non-performing assets.
A Committee on Banking Sector Reforms
known as Narasimham Committee was set up by RBI
to study the problems faced by Indian banking sector
and to suggest measures revitalize the sector. The
committee identified NPAs as a major threat and
recommended prudential measures for income
recognition, asset classification and provisioning
requirements. These measures embarked on
transformation of the Indian banking sector into a viable,
competitive and vibrant sector. The committee
recommended measures to improve operational
flexibility and functional autonomy so as to enhance
efficiency, productivity and profitability (Chaudhary
S & Singh S, 2012). The main cause of mounting NPAs
in public sector banks is malfunctioning of the banks.
Narasimham Committee identified the NPAs as one
of the possible effects of malfunctioning of public sector
banks (Ramu N, 2009). It has been examined that the
reason behind the falling revenues from traditional
68 www.jctindia.org
RNI : UPENG 2006/17831
sources is 78% of the total NPAs accounted in public

sector banks (Bhavani Prasad, G. & Veena V D,
2011).
An evaluation of the Indian experience in
Financial Sector Reforms Published in the RBI Bulletin
gives stress to the view that the sustained improvement
of the economic activity and growth is greatly enhanced
by the existence of a financial system developed in
terms of both operational and allocation efficiency in
mobilizing savings and in channelizing them among
competing demands (G. Rangarajan, 1997). It has been
observed that the current banking Scenario and the
need for the policy change, opines that a major concern
addressed by the banking sector reform is the
improvement of the financial health of banks. The
Introduction of prudential norms isbetter financial
discipline by ensuring that the banks are alert to the
risk profile of their loan portfolios (S.P.Talwar, 1998).
The RBI has also conducted a study to
ascertain the contributing factors for the high level of
NPAs in the banks covering 800 top NPA accounts in
33 banks (RBI Bulletin, July 1999). The study has
found that the proportion of problem loans in case of
Indian banking sector always been very high. The
problem loans of these banks, in fact, formed 17.91
percent of their gross advances as on March 31, 1989.
This proportion did not include the amounts locked
up in sick industrial units. Hence, the proportion of
problem loans indeed was higher. However, the NPAs
of Indian Banks declined to 17.44 percent as on March
31, 1997 after introduction of prudential norms. In case
of many of the banks, the decline in ratio of NPAs
was mainly due to proportionately much higher rise in
advances and a lower level of NPAs accretion after
1992. The study also revealed that the major factors
contributing to loans becoming NPAs include diversion
of funds for expansion, diversification, modernization,
undertaking new projects and for helping associate
concerns. This is coupled with recessionary trend and
failure to tap funds in the capital and debt markets,
business failure (product, marketing, etc.), inefficient
management, strained labour relations, inappropriate
technology/technical problems, product obsolescence,
recession input/power shortage, price escalation,
accidents, natural calamities, Government policies like
changes in excise duties, pollution control orders, etc.
The RBI report concluded that reduction of NPAs in

banking sector should be treated as a national priority
issue to make the Indian banking system stronger,
resilient and geared to meet the challenges of
globalization (ParulKhanna, 2012).
Bhatia (2007) after considering the NPAs level
of PSBs, PVTSBs and FBs with a Model, comprising
two factors (Bank parameters and macroeconomic
factor) conveyed that to evaluate the financial health
and work performance of the Indian Banks NPAs is
addressed as very important factor, financial soundness
and growth of Indian banking sector affected by the
percentage of NPAs level in the banks.
Balasubramaniam C.S. (2012) evaluated the NPAs
could be reduced by good credit appraisal procedures,
effective internal control systems, and with the help of
efforts to mobilize funds in order to comply with
provisioning norms and capital adequacy requirements.
Bihari (2012) highlighted that the steps for conversion
of NPAs in performing assets. These following steps
are helpful to reduce and control NPAs level: -banks
must be aware of Right kind of borrower at the time
of selection, banks must have adequate finance at the
time of need and this must be disbursed within time,
they have to see the funds used in the right manner,
loans must be recovered timely to reduce NPAs level.
Shyamal (2012) studied that the prudential
norms and other schemes had rushed banks to improve
their performance and accordingly resulted in orderly
down of the NPAs as well as an enhancement in the
financial strength of the Indian banking structure.
Patidar&Kataria (2012) described and compared the
NPAs of PSBs and PVTSBs stated that the Priority
Sector lending has significant impact on Total NPAs in

PSBs, whereas in Priority Sector lending has no
significant impact on Total NPA. Kaur&Saddy (2011)
compared the PVTSBs and PSBs in regard to NPAs
and concluded that the extent of the NPAs is
comparatively higher in PSBs as compared to PVTSBs.
Government induced so many steps to reduce &
control NPAs level to the maximum possible extent,
so that position of Banks with regard to profitability
and efficiency can improve in future. This has led to
decline in the level of NPAs of the Indian banking
sector.
10.
The study is descriptive in nature. It is based
on secondary data. The data have been collected from
RBI reports (Statistical Tables Relating to Banks in
India), Journals, Magazines, Books, Newspapers and
Websites for the latest happening in the banking sector
in India. For analysing the data, descriptive statistics
like tabulation, percentage and ratio have been used.
The period of study will be carried out from last six
financial years from 2009-2010 to 2014-2015.
11.
OBJECTIVE OF THE STUDY
The study aims to gain insights into the concept
of loss assets of NPAs in PSBs, PVTSBs and FBs.
The following broad objectives are laid down for the
purpose of the study.
v
To assess the loan assets performance of
PSBs, PVTSBs and FBs.
v
To determine Gross Advances, Gross NPAs,
Net Advances and Net NPAs of PSBs,
PVTSBs and FBs.
Table 2 : Classification of Loan Assets of Public Sector Banks

Year
Standard Advances
Sub-Standard
Advances
RNI : UPENG 2006/17831
Doubtful Advances
(Amount in Billion)
Loss Advances
Total
Advances
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
2009-10
26,735
97.8
288
1.1
254
0.9
58
0.2
27,335
2010-11
32,718
97.8
350
1.1
332
1.0
65
0.2
33,465
2011-12
38,255
97.0
623
1.6
490
1.2
60
0.2
39,428
2012-13
43,957
96.4
815
1.8
761
1.7
68
0.2
45,601
2013-14
49,887
95.6
958
1.8
1,216
2.3
99
0.2
52,159
2014-15
53,382
95.0
1,054
1.9
1,630
2.9
100
0.2
56,167
Source: https://www.rbi.org.in/
www.jctindia.org 69
RNI : UPENG 2006/17831
and thereby improving the profitability. NPAs

havefluctuation among the banks both increase and
decrease. In case of sub-standard assets and doubtful
12.
DATA ANALYSIS AND
assets has constant increase from 288 (1.1) to 1,054
INTERPRETATION
(1.9) and 254 (0.9) to 1,630 (2.9) during the period
The above table 2 depicts the classification
of 2009-10 to 2014-15.In case of loss assets has also
of loan assets of PSBs. The standard assets has rising
increasing trend from 58 (0.2) to 100 (0.2) during the
trend from 26,735 (97.8) to 53,382 (95.0) during the
period of2009-10 to 2014-15. It indicates that the
period of 2009-10 to 2014-15. It clearly indicates
amount of NPAs has increasing year by year which
that the amount of performance assets is occupying
need to be take efficiency management andloan
the advances which reduce the provision requirements
portfolio.
Table 3 : Classification of Loan Assets of Private Sector Banks
(Amount in Billion)
v
To suggest various measures to control the

menace of NPAs.
Year
Standard Advances
Sub-Standard
Advances
Doubtful Advances
Loss Advances
Total
Advances
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
2009-10
6,265
97.3
89
1.4
66
1.0
22
0.3
6,442
2010-11
7,936
97.8
45
0.6
108
1.3
29
0.4
8,118
2011-12
9,629
98.1
52
0.5
104
1.1
29
0.3
9,814
2012-13
11,384
98.2
64
0.6
112
1.0
32
0.3
11,592
2013-14
13,371
98.2
86
0.6
114
0.8
42
0.3
13,613
2014-15
15,750
97.9
108
0.7
176
1.1
52
0.3
16,087

assets has constant increase from 89 (1.4) to 108 (0.7)
and 66 (1.0) to 176 (1.1) during the period of 200910 to 2014-15. In case of loss assets has also
increasing trend from 22 (0.3) to 52 (0.3) during the
period of 2009-10 to 2014-15. It indicates that the
amount of NPAs has increasing year by year which
need to be take efficiency management and loan
portfolio.
Table 4 : Classification of Loan Assets of Foreign Banks
(Amount in Billion)
The above table 3 depicts the classification of loan

assets of PVTSBs. The standard assets has rising trend
from 6,265 (97.3) to 15,750 (97.9) during the period
of 2009-10 to 2014-15. It clearly indicates that the
amount of performance assets is occupying the
advances which reduce the provision requirements and
thereby improving the profitability. NPAs have
fluctuation among the banks both increase and
Year
Standard
Advances
Sub-Standard
Advances
Doubtful Advances
Loss Advances
Total
Advances
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
2009-10
1,603
95.7
49
2.9
14
0.9
0.5
1,674
2010-11
1,943
97.5
19
0.9
21
1.1
11
0.6
1,994
2011-12
2,284
97.3
21
0.9
22
1.0
20
0.8
2,347
2012-13
2,610
97.0
29
1.1
27
1.0
23
0.9
2,689
2013-14
2,880
96.1
43
1.4
43
1.4
29
1.0
2,996
2014-15
3,259
96.8
23
0.7
54
1.6
30
0.9
3,366
70 www.jctindia.org
RNI : UPENG 2006/17831
2009-10 to 2014-15. It indicates that the amount of

The above table 4 depicts the classification of
NPAs has increasing year by year which need to be
loan assets of FBs. The standard assets has rising trend
take efficiency management and loan portfolio.
from 1,603 (95.7) to 3,259 (96.8) during the period
of 2009-10 to 2014-15. It clearly indicates that the
Compared to PSBs, PVTSBs and FBs, the
amount of performance assets is occupying the
NPAs level is more in PSBs and FBs of sub-standard
advances which reduce the provision requirements and
assets, doubtful assets and loss assets. But in case of
thereby improving the profitability. NPAs have
standard assets PVTSBs remain high which shows a
fluctuation among the banks both increase and
good position of PVTSBs and also it shows that they
have adopted all necessary measures in order to avoid
assets has constant increase from 49 (2.9) to 23 (0.7)
any account becoming NPAs. PSBs and FBs need to
and 14 (0.9) to 54 (1.6) during the period of 2009-10
be more cautions while granting loan and also to avoid
to 2014-15. In case of loss assets has also increasing
the occurrence of NPAs.
trend from 8 (0.5) to 30 (0.9) during the period of
Table 5 : Gross NPAs of PSBs, PVTSBs and FBs
(Amount in Billion)
Public Sector Banks
Private Sector Banks
Foreign Banks
Year
Gross
Advances
Gross
NPAs
Gross
NPAs
%
Gross
Advances
Gross
NPAs
Gross
NPAs
%
Gross
Advances
Gross
NPAs
Gross
NPAs
%
2009-10
27,334.58
573.01
2.3
5,795.35
173.07
3.0
1,632.13
71.11
4.4
2010-11
30,798.04
710.47
2.3
7,232.05
179.05
2.5
1,929.72
50.45
2.6
2011-12
35,503.89
1,124.89
3.2
8,716.41
182.10
2.1
2,267.77
62.69
2.8
2012-13
45,601.69
1,644.62
3.6
11,512.46
203.82
1.8
2,604.05
79.26
3.0
2013-14
52,159.20
2,272.64
4.4
13,602.53
241.84
1.8
2,995.76
115.68
3.9
2014-15
56,167.18
2,784.68
5.0
16,073.39
336.90
2.1
3,366.09
107.58
3.2
The above table 5 indicates the quality of

Credit Portfolio of PSBs, PVTSBs, and FBs. High
Gross NPAs ratio indicates the low Credit Portfolio
& Risk of bank and vice-versa.Over the year, the PSBs
has higher Gross NPAs ratio is5.0 during the year
2014-15 and lower Gross NPAs ratio is 2.3 during
the year 2009-10& 2010-11. Further, the PVTSBs

has higher Gross NPAs ratio is 3.0 during the year
2009-10 and lower Gross NPAs ratio is 1.8 during
the year 2012-13 & 2013-14. Similarly, the FBs has
higher Gross NPAs ratio is 4.4 during the year 200910 and lower Gross NPAs ratio is 2.6 during the year
Table 6 : Net NPAs of PSBs, PVTSBs and FBs

Public Sector Banks
Year
Net
Advances
Net NPAs
2009-10
27,013.00
293.75
2010-11
33,056.32
360.00
2011-12
38,773.08
593.91
2012-13
44,728.45
900.36
2013-14
51,011.43 1,306.23
2014-15
55,164.40 1,602.08
Source : https://www.rbi.org.in/
Net
NPAs
%
1.1
1.2
1.5
2.0
2.6
2.9
(Amount in Billion)
Private Sector Banks

Net
Net
Net
NPAs
Advances
NPAs
%
6,324.94
65.01
0.5
7,975.35
44.32
0.6
9,664.02
44.01
0.5
11,432.48
59.94
0.5
13,429.35
88.62
0.7
15,764.80
141.28
0.9
Foreign Banks
Net
Advances
Net
NPAs
1,632.60
1,955.39
2,298.49
2,636.80
2,911.54
3,241.66
29.77
12.00
14.12
26.80
31.72
17.57
Net
NPAs
%
1.8
0.6
0.6
1.0
1.1
0.5
www.jctindia.org 71
2010-11.
Whereas, the PVTSBs showed lower ratio
is1.8 during the year 2012-13 &2013-14and it
indicates the good management of PVTSBs as
compared to PSBs and FBs. PSBs and FBs should
take necessary actions under the Securitization Act to
reduce the Gross NPAs.
The above table 6 indicates the quality of
NPAs of PSBs, PVTSBs, and FBs. High Net NPAs
ratio indicates the low Credit Portfolio & Risk of bank
and vice-versa. Over the year, the PSBs has higher
Net NPAs ratio is 2.9 during the year 2014-15 and
RNI : UPENG 2006/17831
lower Net NPAs ratio is 1.1 during the year 2009-10.

Further, the PVTSBs has higher Net NPAs ratio is
0.9 during the year 2014-15 and lower Net NPAs
ratio is 0.5 during the year 2009-10, 2011-12 and
2012-13. Similarly, the FBs has higher Net NPAs ratio
is 1.8 during the year 2009-10 and lower Net NPAs
ratio is 0.5 during the year 2014-15.
Whereas, the PVTSBs showed lower ratio is
0.5 during the year 2014-15 and it indicates the good
management of PVTSBs as compared to PSBs and
FBs. PSBs and FBs should take necessary actions
under the Securitization Act to reduce the Net NPAs.
Table 7 : Trends in Income and Expenditure of Public Sector Banks (Amount in Billion)
Net
Provisions
Operating Profit(Loss)
and
Profit
during
Interest Other
Interest Operating Interest
VII=
the year
Earned Income Expended Expenses Income Contingencies
(I+II-III-IV)
V=(I-III)
VI
I
II
III
IV
VIII
2009-10 3059.83 488.93
2119.40
660.75
940.43
376.04
768.61
392.57
2010-11 3661.35 479.65
2311.53
829.65
1349.81
550.80
999.81
449.01
2011-12 4847.32 504.00
3285.89
902.05
1561.43
668.24
1163.37
495.14
2012-13 5548.72 567.63
3879.29
1018.67
1669.43
712.56
1218.39
505.83
2013-14 6202.28 651.29
4371.39
1205.66
1830.89
906.33
1276.52
370.19
2014-15 6761.50 756.32
4809.76
1329.89
1951.74
1002.77
1378.17
375.40
Year
The above table 7 represents the Income

Dividend and safety of shareholders fund. Similarly,
and Expenditure of PSBs.The Net Interest Income has
Operating Profit has also rising trend from 768 to 1,378
constant increase from 940 to 1,951 Billion during the
Billion during the period of 2009-10 to 2014-15. It
period of 2009-10 to 2014-15. It helps to increase
indicates that the measure of efficiency and profitable
the Operating Profit. Further, Provision and
of the PSBs.
Contingencies has also increasing trend from 376 to
Whereas, Net Profit has increasing from 392
1,002 Billion during the period of 2009-10 to 2014to 505 Billion during the period of 2009-10 to 201215. It indicates that the PSBs have taken adequate
13 and then slight decrease from 370 to 375 Billion
safety measures. It has direct bearing on the profitability,
Table 8 : Trends in Income and Expenditure of Private Sector Banks (Amount in Billion)
Provisions
Operating Profit (Loss)
Net
and
Profit
during
Interest Other
Year
the year
Earned Income Expended Expenses Income Contingencies
VII=
V=(I-III)
VI
(I+II-III-IV)
VIII
I
II
III
IV
2009-10 828.06
204.23
512.06
228.51
316.01
160.61
291.73
131.11
2010-11 967.13
208.73
571.49
276.06
395.64
151.19
328.31
177.12
2011-12 1345.56 250.48
867.84
340.30
477.71
160.71
387.89
227.18
2012-13 1664.86 297.93
1071.33
404.90
493.53
196.60
486.56
289.95
2013-14 1891.36 354.74
1188.34
465.20
703.02
255.03
592.57
337.54
2014-15 2141.46 416.98
1322.49
540.09
818.96
308.59
695.85
387.26
72 www.jctindia.org
during the period of 2013-14 to 2014-15 due to higher

provision and increasing higher NPAs level. Thus, it
shows that the management of loans and recovery from
borrowers is not well.
The above table 8 represents the Income
and Expenditure of PVTSBs. The Net Interest Income
has constant increase from 316 to 818 Billion during
the period of 2009-10 to 2014-15. It helps to increase
308 Billion during the period of 2009-10 to 2014-15.
RNI : UPENG 2006/17831
It indicates that the PVTSBs have taken adequate

safety measures. It has direct bearing on the profitability,
Dividend and safety of shareholders fund.
Similarly,Operating Profit has also rising trend from
291 to 695 Billion during the period of 2009-10 to
2014-15. It indicates that the measure of efficiency
and profitable of the PVTSBs.
Whereas, Net Profit has constant increase
from 131 to 387 Billion during the period of 2009-10
to 2014-15. Thus, it shows that the management of
loans and recovery from borrowers is well.
Table 9: Trends in Income and Expenditure of Foreign Banks (Amount in Billion)
Year
Net
Interest Other
Earned Income Expended Expenses
Income
V=(I-III)
I
II
III
IV
Profit
Provisions
Operating
(Loss)
Profit
and
during
Contingencies
VII=
the year
(I+II-III-IV)
VI
VIII
2009-10
263.90
99.51
89.38
111.02
174.52
115.60
163.01
47.41
2010-11
284.93
110.12
106.23
125.69
178.70
85.95
163.14
77.19
2011-12
359.97
108.96
149.82
133.37
210.14
91.47
185.73
94.26
2012-13
422.49
112.29
187.39
143.07
235.10
88.45
204.32
115.87
2013-14
457.69
134.89
211.92
153.29
245.77
125.97
227.37
101.40
2014-15
504.43
148.99
238.35
162.61
266.08
124.43
252.46
128.03
The above table 9 represents the Income and

Expenditure of FBs. The Net Interest Income has
constant increase from 174 to 266 Billion during the
period of 2009-10 to 2014-15. It helps to increase
124 Billion during the period of 2009-10 to 2014-15.
It indicates that the FBs have taken adequate safety
measures. It has direct bearing on the profitability,
Dividend and safety of shareholders fund.
Similarly,Operating Profit has also rising trend from
163 to 252 Billion during the period of 2009-10 to
2014-15. It indicates that the measure of efficiency
and profitable of the FBs.
Whereas, Net Profit has constant increase
from 47 to 128 Billion during the period of 2009-10
to 2014-15. Thus, it shows that the management of
loans and recovery from borrowers is well.
13.
STATEMENT OF THE PROBLEM

The NPAs have always created a big problem
for the banks in India. It is just not only problem for
the banks but for the economy too. The money locked
up in NPAs has a direct impact on profitability of the
bank as Indian banks are highly dependent on income
from interest on funds lended. This study shows that
extent of NPA is comparatively very high in PSBs as
compared to PVTSBs and FBs. Although various steps
have been taken by government to reduce the NPAs
but still a lot needs to be done to curb this problem.
The NPAs level of our banks is still high as compared
to the FBs. It is not at all possible to have zero NPAs
but the bank management should speed up with the
recovery process. The problem of recovery is not with
small borrowers but with large borrowers and a strict
policy should be followed for solving this problem. The
government should also make more provisions for
www.jctindia.org 73
faster settlement of pending cases and also it should

reduce the mandatory lending to priority sector as this
is the major problem creating area. So the problem of
NPA needs lots of serious efforts otherwise NPAs will
keep killing the profitability of banks which is not good
for the growing Indian economy at all.
14.
v
RECOMMENDATIONS AND
SUGGESTIONS
While advancing loans, the three principles of
bank lending viz., Principle of Safety, Principle
of Liquidity and Principle of Profitability must
be adhered.
Banks should find out the original reasons and
purposes of the loan required by the borrower.
Proper identification of the guarantor should
be checked by the bank including scrutiny of
his/her wealth.
Framing reasonably well documented loan
policy and rules.
Sound credit appraisal on well-settled banking
norms with emphasis on reduction of NPAs.
Position of overdue accounts is reviewed on
a weekly basis to arrest slippage of fresh
account to NPAs.
Half yearly balance confirmation certificates
should be obtained from the borrowers.
A committee is constituted at Head Office, to
review irregular accounts.
Based on the recent trends, banks should
emphasize more on priority sector for reducing
the quantum of NPAs.
Banks should ensure credibility of the
borrower.
Banks should ensure that there is no diversion
of funds disbursed to the borrower.
Bank officials should frequently visit the unit
and should assess the physical conditions of
the assets, receivables and stocks therein.
Banks should get the Non Encumbrance and
Valuation of the primary and collateral
securities done.
74 www.jctindia.org
RNI : UPENG 2006/17831
Banks should critically examine and analyse

the reasons behind time overrun.
The banks should ensure that latest technology
is being used by the borrower, to avoid
obsolescence.
The banks should ensure that the assets are
fully insured.
Recovery competition system should be
extended among the staff members. The
recovering highest amount should be felicitated.
Adopting market intelligence for deciding the

credibility of the borrowers.
Creation of a separate Recovery

Department with Special Recovery Officer.
There surely is a need to distinguish between
wilful and non wilful defaulters. In case of the
latter category of defaulters, the law should
not be as harsh as in case of former category.
The recovery process is very slow; as such
the Government needs to update the process
which is fast and effective.
And last but not the least; the bank officers
shouldnt forget the ethics of doing job.
15.
CONCLUSION
Now days the serious problem faced by banks
all over the world is the growth of NPAs. The value of
loan-disbursement process is harmed because of nonrecovery of loan instalment and the interest on the loan
which in turn is the consequence of growth of NPAs
which adversely affect the lending activity of the banks.
As a result significant importance has been given, to
make stronger the capital adequacy requirements like
the measure of Capital adequacy ratio(CRAR) to
measure the capacity of banks to absorb losses
occurring from NPAs. PSBs in India have been able
to manage high level of CRAR to provide sufficient
cushion for any unexpected losses, in relation to capital
adequacy requirements. Despite the fact, rise of NPAs
in recent years remains an area of concern and should
be tackled with sincere efforts during the periods of
disbursement of loans and recovery of the same. In
recent times, the use of the method, in which
compromise settlements has been effected by banks;

certain serious concerns have been articulated from
different sections and by the Debt Recovery Tribunals.
It was examined that the banks take up different
parameter to different borrowers, and agreed for a
lesser amount as against claimed amount, regardless
of availability of plentiful securities and thus ignoring
RBI guidelines. The study finally observes that the
prudential and provisioning norms and other initiatives
RNI : UPENG 2006/17831
taken by the regulatory bodies has pressurized banks

to improve their performance, and consequently
resulted into trim down of NPAs as well as improvement
in the financial health of the Indian banking system. In
the nutshell, we can say that, however during the periods
of economic slowdown PSBs in India have shown
flexibility, management of NPAs through better quality
of advances and recovery procedures is essential for
banks to maintain their continued existence and
expansion.
m
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Pages 77-84
Foreign Direct Investment in Defence Sector

in India : Problems and Prospects
Dr. Dinesh Mahajan
Assistant Professor in Commerce, School of Business, Lovely Professional University, Phagwara, India
Abstract
India is surrounded by hostile neighbourers. The need for defence of its borders has been on priority since independence.
For this purpose defence production has to be upgraded to make it at par with the military power of other countries. A
humble attempt has been made to exhibit the trends of FDI inflows in the defence sector and to examine the problems of FDI
inflows in this sector in India. The prospects for FDI inflows in defence sector have also been highlighted. The time period
covered herein ranges from 2001 to 2015 (upto September). The study reveals that FDI inflows in this sector have fluctuated
from Rs. 2.36 millions in the year 2000-2005 to Rs. 4.80 millions in the year 2015 (upto September). The major problems in
FDI inflows in this sector are the perception of viability, selection of private partner, insufficient FDI limit, safety of
intellectual property rights, technology, availability of finance and quality of work force. The prospects for FDI in this
sector are joint ventures, likely manufacturing hub, fighter aircrafts and helicopters, cost-effective manpower, government
policy of reducing imports, increase in defence expenditure and submarines and naval vessels.
Keywords : Defence, Foreign Direct Investment, Trends, Problems, Prospects.
1.
INTRODUCTION
India has been a closed economy for many
decades which proved a major obstacle in the way of
development of various sectors in India as per their
potential. It was only during the last decade of 20th
century that India took some bold initiatives to boost
its economic growth. Many sectors were thrown open
for foreign direct investment (FDI) during this period.
This resulted in motivating the foreign investors and
they gave positive response to the steps undertaken
by Government of India. FDI can be a source of
valuable technology and know-how while fostering
linkages with local firms, which can help jumpstart an
economy (Alfaro, 2003). In recent years FDI has
gained renewed importance as a vehicle for transferring
resources and technologies across the national border
(Arshad, 2012). Now most of the developing nations
are competing for FDI in the world to foster their
economic development.
India has also become one of the important

destinations for FDI. India has many hostile neighbours
like Pakistan and China. India has been constantly
facing threat of the terrorist groups based at Pakistan,
Afghanistan, Bangladesh and in Bhutan. The more
serious concern is for Islamic State of Iraq and Syria
(ISIS) group, which is again and again issuing threats
to Indian leadership and the citizens of India. This
group is armed with latest heavy weaponry and strong
militia of Arabian fighters. They have established their
bases in countries bordering India. To cope with these
security threats India needs to modernize its defence
capabilities. This further requires huge amount of funds.
India ranks among the top ten countries in the
world in terms of military expenditure. As per the
estimates, nearly 70% of our defence requirements are
met through imports and only 30% being met through
domestic production (www.dipp.nic.in). India took the
first step towards opening the defence sector to foreign
www.jctindia.org 77
investment in 2001 when foreign investors were allowed

to hold up to 26% share in the equity holding of a joint
venture. Further, unlike earlier, the U.S. is reported to
have made some concrete proposals for co-production
and co-development of certain advanced version of
Javelin anti-tank missile (ISID, 2014). This shows the
positive response given after the allowing of FDI in
this sector.
Like China, India has one of the largest and
most broad-based defence industries in the developing
world. It produces fighter aircraft, surface combatants,
submarines, tanks, armored vehicles, helicopters,
artillery systems, and small arms. The country also has
a huge defence research and development (R&D)
establishment with considerable experience in
indigenous weapons design and development going
back more than 50 years (Bitzinger, 2014). The
government restricted private sector participation in
the past due to inherent security sensitive nature of the
industry. Therefore the private sector is relatively behind
the Defence Public Sector Units (DPSUs) in terms of
infrastructure and Defence Research and Development
Organization (DRDO) in terms of R&D capability.
However, in recent years private sector has found
favour with government and attracted huge interest
from foreign systems integrators (FICCI, 2015).
2.

The present study concentrates on achieving
the following objectives:
(a)
To exhibit the trends of FDI inflows in defence
sector in India.
(b)
To examine the problems of FDI inflows in
defence sector in India.
(c)
To highlight the prospects of FDI inflows in
defence sector in India.
3.
DATABASE AND METHODOLOGY

In the present study secondary data has been
used to attain the objectives of the study. The time
period covered herein ranges from 2000 to 2015 (upto
September). For the purpose of present study, various
issues of Secretariat of Industrial Assistance (SIA)
Newsletter, journals, newspapers and websites have
78 www.jctindia.org
RNI : UPENG 2006/17831
been extensively used. The various statistical tools used

in this study are tables and percentages.
4.
Mohanty (2004) examined Indias defence

industry in the 21st Century. It has been observed that
Indias defence-industrial strategy is directed primarily
toward achieving self-reliance. Presently, there is a clear
imbalance in requirements by the armed forces. Indias
decision to allow private participation in the defenceindustrial sector is seen as a dual aim, namely to achieve
much-needed capital and production enhancement and,
secondly, to open up to the external market through
their presence.
Singh (2010) argued that with India becoming
the worlds second largest buyer of defence equipment,
Indian policies in defence manufacturing, including the
FDI cap, have attracted widespread international
attention. Foreign firms are now keen on joint ventures
with Indian private companies for setting up
development and manufacturing facilities. The case for
raising the cap primarily rests on increasing investment
and the transfer of foreign technologies which will kickstart the development of Indian defence sector. It has
been suggested that the government must show
boldness of vision to overcome vested interests of the
DPSUs and its trade unions etc. to raise the FDI cap
in defence sector beyond 51 percent.
Malhotra (2014) examined the impact of FDI
on the Indian economy, particularly after two decades
of economic reforms, and analyzes the challenges to
position itself favourably in the global competition for
FDI. The country is consistently ranked among the
top three global investment destinations by all
international bodies, including the World Bank,
according to a United Nations (UN) report. It has been
observed that FDI inflow supplements domestic capital,
as well as technology and skills of existing companies.
It also helps to establish new companies. All of these
contribute to economic growth of the Indian Economy.
Janu and Kaur (2015) exhibited that Make
in India seems to be a promising initiative for promoting
domestic manufacturing and increasing self-reliance in
defence. Foreign Direct Investment (FDI) in defence
RNI : UPENG 2006/17831
was increased from 26 per cent to 49 per cent. There

are only a limited number of private companies in India
with the capital and resources required to produce and
develop complex defence solutions and sustain
business. All the major powers of the world are
interested in working with India in all sectors including
defence.
From the review of different studies it is clear
that much work on FDI in defence sector has been
done. Still it requires comprehensive analysis of the
problems due to which FDI in defence sector has not
been as per its potential. It will also be of much
prominence to highlight the prospects of FDI in defence
sector so that investors may be made aware about the
economically viable opportunities available in this
sector.
The FDI limit has been raised from 26% to

49%. The World Economic Forums Global
Competitiveness Report 201516 puts India at the
42th place among countries worldwide in terms of
innovation capacity (www.ey.com). This will further
help India in boosting the confidence of the investors
in defence sector and increasing the FDI Inflows.
Investor confidence in India has been
strengthened by improving economic growth and
investor-friendly moves by the new Government. But
investors have generally been cautious. In 2015, the
US and India also signed a 10-year defence
framework pact toward joint development and
manufacture of defence equipment and technology
(including jet engines, aircraft carrier design and
construction) in India.
5.
Sector attractiveness propositions:

v
Raised FDI limit to 49% from 26%.
v
Equity holding greater than 49% permitted for
state-of-the-art technology on CCS
approval.
v
Digitalized the application process.
v
Removed its restriction of the minimum 51%
holding by a single Indian entity in a defence
venture.
v
Announced tax and export incentives, such as
a weighted tax deduction of 200% for both
capital and revenue expenditure incurred on
scientific R&D (excluding expenditure on land
and building).
v
Identified 16 broad categories of defence items
that are now allowed to be exported, bringing
India at par with international laws governing
arms trade.
v
Sharply reduced the number of products for
which manufacturers require special licenses.
Extended the duration of defence industry
licenses from three to seven years
(www.ey.com).
During the period under study FDI inflows
have not been much encouraging. The trends in FDI
inflows in defence sector are as follows:
TRENDS IN FDI INFLOWS IN

DEFENCE SECTOR
The pace of FDI inflows in India has been

slower than China, Singapore, Russia and Brazil (Shah
and Parikh, 2012). India imports nearly 70 per cent
of its military equipment requirements. And despite
public declamations for over two decades by
successive governments of increasing private sector
participation in the defence sector, the MoD has openly
favoured the monopolistic and grossly underperforming state-run Defence Research and
Development Organisation (DRDO), the 41
Ordnance Factory Boards (OFBs) and eight Defence
Public Sector Units (DPSUs) in awarding design
contracts and joint ventures (JVs) with foreign Original
Equipment Manufacturers (OEMs) (http://
defencesecurityindia.com). The Government of India
has recently launched Make in India, programme, a
major national initiative that aims to make India a global
manufacturing hub. The programme has identified 25
key sectors, including defence, and hopes to boost
domestic manufacturing and attract foreign investment.
It looks to be a promising initiative for promoting
domestic manufacturing and increasing self-reliance in
defence (Janu and Kaur, 2015). For this purpose many
relaxations in FDI policy have been provided for this
purpose.
www.jctindia.org 79
Table 1: FDI inflows into Defence Sector

(2000-2015*)
(Amount in Rs. Millions)
Year
FDI equity Total FDI

Percentage
inflows in equity inflows share in total
Defence
FDI equity
Sector
inflows
RNI : UPENG 2006/17831
Table 2: Comparison of FDI Inflows in Defence

Sector with Other Sectors (2000-2015*)
(Amount in Rs. Millions)
S.No.
Sector
Total FDI
Inflows
1.
Services Sector (Fin., Banking, 2,224,340.05

Insurance, Non Fin/Business,
Outsourcing, R&D, Courier,
Tech. Testing and Analysis,
Other)
2.
Construction Development : 1,137,258.95

Townships, housing, built-up
infrastructure and constructiondevelopment projects
2000-2005
2.36
954,815.27
0.0002
2006
00
503,573
0.0000
2007
00
654,950
0.0000
2008
00
1,595,295
0.0000
2009
00
1,309,799
0.0000
2010
00
960,150
0.0000
2011
174.4
1,599,349.20
0.0109
3.
Computer Software & Hardware
934,427.15
2012
22.10
1,215,914.41
0.0018
4.
Telecommunications
883,392.48
2013
44.72
1,294,824.81
0.0035
5.
Automobile Industry
749,492.74
2014
0.04
1,753,134
2.2816
6.
Drugs and Pharmaceuticals
667,406.10
7.
Chemicals (Other than Fertilizers)
524,470.91
8.
Trading
586,262.70
9.
Power
494,278.43
10.
Metallurgical Industries
421,178.26
11.
Defence Industries
2015
(upto
September )
4.80
Cumulative
Total
248.42
1,681,922.01
13,523,726.70
0.0003
0.0018
Source : Compiled from Various issues of SIA, Newsletter.

Note: * denotes upto September.
Table 1 depicts FDI equity Inflows into

defence sector in India during the time period 2000 to
2015 (upto September) and their percentage share in
total FDI equity inflows. FDI inflows have fluctuated
from Rs. 2.36 millions in the years 2000-2005 to Rs.
4.80 millions in the year 2015 (upto September). It is
apparent from the table that defence sector has not
been able to attract a significant percentage of total
FDI inflows upto 2010. Due to the impact of global
recession there has been fluctuating trend in the inflows
of FDI and its percentage share in the total FDI inflows
in this sector during 2012-2015. This sector is very
much significant as it is concerned with security of the
citizens of India. The Government has to follow a
balanced approach while allowing FDI in this sector.
Still, India needs tremendous FDI in this sector to make
India self reliant in this sector and save the outflow of
foreign exchange.
80 www.jctindia.org
248.42
Source : SIA Newsletter, October, 2015

Note : * denotes upto September.
Table 2 exhibits the comparative position of

FDI inflows in defence sector with other viable sectors
which have received FDI inflows in large quantity. It is
evident from the table that maximum FDI inflows have
been attracted by services sector followed by
construction development and computer software &
hardware etc. It is very disappointing that FDI inflows
in defence sector are very much meager during the
period of study i.e. Rs. 248.42 millions. This is a cause
of concern for the Government of India also. Now the
present Government has made efforts to bring FDI in
this sector by taking measures like raising FDI cap to
49% and by launching 'Make in India', campaign. It is
hoped that these measures would help in increasing
FDI inflows in this sector. Still much is required to be
done to motivate the investors to invest in this sector.
6.
PROBLEMS CONCERNING FDI

INFLOWS IN DEFENCE SECTOR
(a) Economically viable only for big firms:
It has been perceived by many firms that FDI in
defence will only benefit the big firms. It would be
detrimental to indigenous defence production by public
sector units and would compromise national security.
For some companies, the biggest concern with allowing
complete foreign investment in defence relates to the
intellectual property rights over technology. That's why
companies at small scale are not showing much interest
in the defence sector production.
(b) Decision regarding private sector
partner : Another issue is that how to select a partner
in private sector for defence production. Not much
expertise is available with Indian companies and
required experience is also not available in India. Due
to these considerations investors are not much
interested in investing in India in defence sector.
Besides, R&D activity is also the limitation of Indian
companies as they don't go for extensive R&D. Under
these circumstances foreign investors are in in dilemma
whether to invest in defence sector or not.
(c) Insufficient FDI limit : Government has
kept defence sector closed for FDI due to security
reasons for a long time. This has done very much
damage to the progress of defence sector. It could not
grow as per its potential due to the restrictive policies
of the Government. But now some relaxation in FDI
limits has been provided but still this limit of 49% FDI
allowed is not much encouraging. The investors expect
more in this regard. They want the cap on FDI to be
raised to 100%.
(d) Problem of intellectual property rights:
The investors are also concerned about safety of their
intellectual property rights. As huge expenditure is
done on the development of these advanced
technologies and the equipments therefore investors
expect assurance from Indian Government regarding
this. The Government is also not having clear cut
regulations to address this problem which is acting as
an important hindrance in the inflows of FDI in this
sector.
RNI : UPENG 2006/17831
(e) Technology is main consideration :

India needs more technology rather than foreign
investment in this sector. India has unfriendly neighbours
so it needs more protection of its borders. Due to this
more sophisticated weaponry is required for our armed
forces with latest up gradations. A huge expenditure is
required to import this weaponry. Therefore
Government has realized the importance to have
manufacturing base for defence sector to keep control
over the superior technology. The countries having
superior technology are not much willing to share their
superior technology with India to keep their monopoly
intact in defence sector.
(f) Availability of finance : Finance is the
biggest issue with the small industries. While one is
going to do something new, it needs funds which are
not easily available for Micro, Small and Medium
Enterprises (MSMEs) and Government has to work
on it. There should be priority lending to these
MSMEs. Research and development (R&D) is
necessary for the defence manufacturing sector. It
requires huge funds (http://www.businessstandard.com). Again a developing country like India
is short of necessary funds for this purpose.
(g) Quality of work force : The major problem
in the way of FDI in defence sector is the quality of
work force. In India we don't have such highly technical
workforce which is required for manufacturing activity
in defence sector. It requires innovative technical
persons who have extensive experience in this sector.
The foreign players are not getting the requisite
workforce in India even after much search and they
are in a dilemma whether to invest extensively in India
or not. Even after opening of this sector for FDI still
not much FDI has come to this sector due to this reason.
7.
PROSPECTS FOR FDI IN DEFENCE

SECTOR
(a) Joint ventures : The present Government
wants private sector to acquire technology from foreign
companies and set up joint ventures in the country,
with foreign manufacturers. Tata Group, Reliance
Industries Limited, Larsen and Toubro Ltd. and
Mahindra Group are forging partnerships with global
www.jctindia.org 81
defence companies, and enhancing their production

bases in India (www.agora.mfa.gr). India is trying to
strengthen its defence capabilities and South Korea is
the genuine option for joint collaboration of defence
equipment, mainly for the navy (http://
voiceof.india.com). This is a good opportunity for
foreign players to have joint ventures with Indian
companies and to take the maximum benefit out of
this opportunity.
(b) Manufacturing hub : The major defence
sector companies are eyeing at huge Indian defence
manufacturing sector. They only want to have increase
in FDI cap in this sector. U.S. defence major and
integrated technology company Honeywell said it is
positive on the defence outlook in India. Honeywell
had partnered with Hindustan Aeronautics Ltd. (HAL)
more than 40 years ago to manufacture the Honeywell
TPE331 turboprop engines, the first fully manufactured
engine in India which powers the Dornier 228 aircraft
of the Indian Navy and Coast Guard, and for the global
market (Das, 2014). Similarly companies from other
developed countries can be attracted to this sector as
India is going to be hub of manufacturing activity in
defence in coming times.
(c) Fighter aircrafts and and helicopters :
The Indian aerospace and defence market presents
an attractive opportunity for companies across the
supply chain as the country has the third-largest armed
forces in the world with a defence budget of about 2.5
percent of its GDP. With the government gearing up to
increase domestic production of defence equipment,
global firms are entering this sector to reap the benefit
(B2B Bureau, 2015). Indian Government lead by
Congress party in the last decade has not done
concrete for the security of India as usual except its
petty politics of minority appeasement. This has
resulted in demoralization of Indian defence forces.
Now present Government led by Mr. Narendra Modi,
has started a mission to produce defence equipments
and other weaponary in India. Under this mission fighter
aircrafts, helicopters and other artillery will be
indigenously produced by having agreements with
original manufacturers of these through FDI. These
companies will have to establish their production bases
in India for this purpose.
82 www.jctindia.org
RNI : UPENG 2006/17831
(d) Cost-effective manpower : We have a

large pool of skilled persons. The average salary per
employee is also very low in India as compared to
other countries. The defence industry provides the
potential for a very dynamic career. Graduates can
get involved in solving complex problems using
emerging technology. (https://targetjobs.co.uk). On the
one hand India will be benefitted with employment
avenues for the youth but on the other hand investors
can save millions of dollars by manufacturing in India
due to cost effective manpower here.
(e) Government Policy of reducing
imports: About 70% of India's current requirements
on defence are catered by imports. The Government
has now decided to reverse these trends to save the
foreign exchange reserves. The opening of the strategic
defence sector for private sector participation will help
foreign original equipment manufacturers to enter into
strategic partnerships with Indian companies and
leverage the domestic markets and also aim at global
business. Besides helping build domestic capabilities,
this will bolster exports in the long term. Opportunities
to avail defence offset obligations to the tune of
approximately INR 250 billion during the next 7-8
years (http://www.makeinindia.com). This would result
in self-sufficiency of the country in this sector and in
reducing imports in defence sector.
(f) Increase in defence expenditure : With
the country expected to spend an estimated $100
billion over the next 10 years on arms, the opportunity
before the private sector is unprecedented. A recent
report by the Confederation of Indian Industry (CII)
and the Boston Consulting Group (BCG), underlines
the fact that India is set to become a global leader in
defence. Manufacturing Companies such as Tata
Motors, Tata Power, Mahindra and Mahindra, Ashok
Leyland, L&T, Wipro and Infosys are all part of
consortia bidding for these contracts (Mitra, 2012).
This will ensure the effective utilization of the resources
in the public sector as well as private sector.
(g) Submarines and naval vessels : Eyeing
big-ticket investment opportunities in the defence
sector under 'Make in India' drive, engineering and
construction giant Larsen & Toubro sees huge scope
in areas like submarines. It has listed indigenisation

thrust for defence equipment, interceptor boats, naval
vessels and submarines for Indian Navy and
Coastguard as investment opportunities. Its shipbuilding
arm has global scale heavy manufacturing facilities
(Press Trust of India, 2016). This is a positive
development on the domestic front which will again
boost the morale of Indian naval forces and reduce
their dependence on foreign companies.
8.
MANAGERIAL IMPLICATIONS
In the light of the environment which is being

created by the present Government for indigenous
production of the defence equipments and weaponry,
the companies in private sector in India should gear
up their efforts in becoming the front runners for
grabbing these contracts so that domestic production
in this sector may be enhanced and self reliance may
be achieved. This will not only help them in becoming
main suppliers for the government but they can develop
themselves as global leaders for supply of defence
equipments. This would further enhance their business
interests in a big way.
9.
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CONCLUSION
Defence sector is very crucial sector as it is

concerned with the safety of a nation. The present study
exhibits the trends of FDI inflows in the defence sector
and to examine the problems of FDI inflows in this
sector in India. The prospects for FDI inflows in
defence sector have also been highlighted. The time
period covered herein ranges from 2000 to 2015 (upto
September). The study reveals that FDI inflows in this
sector have fluctuated from Rs. 2.36 millions in the
year 2000-2005 to Rs. 4.80 millions in the year 2015
(upto September). The major problems in FDI inflows
in this sector are the perception of viability, selection
of private partner, insufficient FDI limit, safety of
intellectual property rights, technology, availability of
finance and quality of work force. The prospects for
FDI in this sector are joint ventures, likely manufacturing
hub, fighter aircrafts and helicopters, cost-effective
manpower, government policy of reducing imports,
increase in defence expenditure and submarines and
naval vessels.
m
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84 www.jctindia.org
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Pages 85-90
A Study of Health Insurance Business

in India
Dr. Trilochan Sharma
Senior Lecturer, Institute of Business Studies, Chaudhary Charan Singh University, Meerut
Abstract
It was 1884 when the health insurance came into existence in Germany. Initially it started for sickness and accidental
insurance. After First World War it was adopted by Great Britain, France and Soviet Union. Briton was the first country in
the world that made the health insurance compulsory for their citizens. This facility was providing at a nominal cost.
There was no any specific service and rules for health insurance in India before 194. The insurance act 1912 and 1938 was
not provided any specific rule and guidance for health insurance as both was focused on life insurance. The state insurance
scheme started in India in 1948. The central government of India started a health insurance scheme from 1954. More than
80 percent population of India is uncovered from health insurance still today. The government of India deregulates the
insurance business from the year 1999. IRDA act came into existence; it gave a new direction to the insurance industry in
India. Presently 22 companies are working in health insurance sector 19 in private sector and three others in government
sector Maharashtra is the best state in health care coverage.
Keywords : Schemes, Health, Insurance, Private, Public and performance.
1.
INTRODUCTION
Health is a most important part of life for every
human being: average age of a citizen in India is 68
years. This is also a fact that a number of citizens dying
in the absence of proper treatment of their illness. The
health insurance makes easy to the medical treatment
on a small amount of investment. The Indian
government is now properly aware about the fact. The
health insurance is only option to facilitate the medical
care to every citizen. So the government is also inspiring
the people for health insurance.
The insurance industry comes under the
financial service sector. Health insurance looks a matter
of life insurance but it comes under the non life
insurance category in India. The Life insurance
companies also rolling the health insurance product in
India.
The health insurance industry is the fastest
growing service industry in India. It has a sea of
opportunity. The maximum part of the population
depends on the private health care system/hospitals.

The patient is expensing more than the capacity. It is
enhancing the health care cost in India. The health
insurance company will facilitate the expenses and risk
of treatment both. The company can also reduce the
cost of treatment on behalf of contract signed with the
hospitals.
As per the report of world health organization
10 to 15 per cent of child died within a year of their
birth. The situation of our country is also likely to be
same. The average age of a individual is 55 year in
developing countries. There are multiple factors which
affect the health of a human being. The health insurance
policy is covering the many diseases. The factor which
determined the health of a individual is environment,
health care facilities, awareness, technological
environment and financial conditions.
2.
1.

To study the present position of health
insurance business in India.
www.jctindia.org 85
2.
3.
3.
To study the performance Health Insurance

business in India.
To study the states performance in health
insurance business in India.
METHODOLOGY
The present study is based on secondary data.

The data will be collected from magazines annual
reports and other resources of secondary data. The
appropriate statistical tools and techniques will use to
analyse the data.
SOME HISTORICAL FACTS
The health insurance came into existence in
Germany in 1884. Initially it was started for sickness
and accidental insurance. After First World War it was
adopted by Great Britain, France and Soviet Union.
The National health insurance act was come into
existence 1946 in Britain. It was come into effect from
1948 upwards. It provided the compulsory medical
care plan to individuals. The whole cost of this facility
and services would be paid by the national government.
This facility was providing at nominal cost. The free
hospital charge and other facility was providing by the
national government from 1958.
The insurance act 1912 and 1938 was not
provided any specific rule and guidance for health
insurance as both was focused on life insurance. But it
was not sufficient. Some industrial worker and their
families were covered by health insurance scheme in
India. It was on private level of those industries. The
state insurance scheme started in India in 1948. The
central government of India started a health insurance
scheme from 1954. The coverage of health insurance
is very low, only 20 percent population covered. The
citizen of India is unaware from the health insurance.
The Indian citizen has vehicle insurance but not have a
health insurance. It shows the lack of awareness about
the health risk.
In India health insurance is a part of non life
insurance business. India is the seventh largest
contributor of non life insurance in the world. The top
ten non life insurance contributor of the word is as
fellows.
The Health insurance in India is showing a very

poor picture in India. It is just a instrument of reducing
the income tax in India. It purchase after paying a
premium to the insuring company. It is only Limited to
some public organization. The government of India is
funding only two percent health care. It is not a world
class position of the sector. As of now the government
of India allowed 49% of FDI in insurance sector. It is
hope that scene will be change now.
Table - 1
Companies working in Health Insurance
Sector in India
4.
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RNI : UPENG 2006/17831
Sr.
No.
Public Sector
Sr.
No.
Private Sector
1.
Oriental
1.
Apollo Munich
2.
United India
2.
Bajaj Allianz
3.
Future Generation
3.
Bharti Axa
4.
Cholaman Dalan Ms.
5.
Future General
6.
HDFC ERGO
7.
ICIC Lombard
8.
IF
9.
L&T
10. Liberty Videocon

11. ma HDI
12. Max Bupa
13. Raheja DBT
14. Reliance
15. Religare Health
16. Royal Sundarm
17. SBI General
18. Star Health
19. Universal Sunbow
Source : Annual report IRDA, and private companies.
5.
FACILITATOR OF HEALTH
INSURANCE IN INDIA
I.
Public Sector
Public sector health care system includes
central government health schemes (CGHS) and state
provided health insurance schemes (ESIS). These

schemes are fully funded by state/ central government
and for their employees. Who are working in public
sector central/state owned and governing departments?
It facilitates the central government/ state government
for medical and health care.
(a) Central Government Health Scheme
(CGHS): The CGHS started from New Delhi in 1954.
Presently CGHS operating in Allahabad, Ahmadabad
, Bangalore , Bhubaneswar , Bhopal, Chandigarh ,
Deharadun , Guwhati, Jaipur Jabalpur, Kolkata, Delhi
, Chennai, Kanpur, Meerut Mumbai, Patana, Pune,
Ranchi, Shilong, Trivandrum and Jammu. It provides
comprehensive health care facilities for the central
government employees. It is facilitating the health care
services to the pensioners and their dependents in those
cities which are covered under CGHS schemes. It also
provides health care medicine Allopathic,
Homeopathic, Unani, Yoga and Sidha. medicine are
serving through wellness centre.
It covers the facilities of dispensary and FW
& MCH services with domiciliary care. It is Facilitating
Specialists consultation at dispensary, polyclinic and
hospital level including X-Ray, ECG and Laboratory
Examinations. It facilitate to the organization for the
purchase, storage, distribution and supply of medicines.
(b) Rastriya Svasthiya Bima Yojana
(RSBY) : The scheme Rashtriya Swasthiya Bima
Yojana has been launched for health insurance. It is
for the families of below poverty line by the Ministry
of Labor and Employment, Government of India. The
objective of RSBY is to provide protection to BPL
households from financial liabilities arising out of health
shocks that involve hospitalization. The Beneficiaries
under RSBY are entitled to hospitalization coverage
up to Rs. 30,000/-. Government has even fixed the
package rates for the hospitals for a large number of
interventions.
The following points are making deference
between RSBY and other schemes which is running
by the government.
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Empowering the beneficiary It provides

the freedom to choose public or private hospital for
the treatment any district of the country.
Business Model The scheme designed for
the benefits to all stakeholders. It designed for both in
terms of expansion of the scheme as well as for its
long run sustainability.
Insurers The insurer is paid premium for each
household to all which enrolled under RSBY. It inspires
the households to enroll under the scheme. It will
develop a better coverage under this scheme.
Government A person or BPL family will
pay 750/- per year, the government will provide him
health care. It creates a healthy competition.
Information Technology (IT) Intensive It
is first time when between health care competitors IT
applications are being used for social sector scheme
on such a large scale. Every beneficiary family is issued
a biometric enabled smart card containing their
fingerprints and photographs. All the hospitals
empanelled under RSBY are IT enabled and connected
to the server at the district level. This will ensure a
smooth data flow regarding service utilization
periodically.
Safety The scheme is used biometric smart
card it made it fool proof. It ensures that card will
reach to the real beneficiary. The biometric enabled
smart card ensures that only the real beneficiary can
use the smart card.
Portability A participant paneled he / she
will found a benefit of scheme in all over India in paneled
hospital. It shows the unique feature of this scheme.
Cash less and Paperless transactions The
scheme will provide a benefit of cashless and paperless
transactions. The hospitals are panelizing by the
scheme. The beneficiary required to show their smart
cards and verification through finger print. All the
insurers send the claim online. It is also approved
through online.
(c) Employment State Insurance Scheme
(ESIS) : The Employees State Insurance Scheme of
www.jctindia.org 87
India is providing socio-economic protection to worker

and their dependants. It provides the full medical care
for employee and their dependants that are admissible
from day one of insurable employment. The insured
employees are also entitled to a variety of cash benefits
in times of physical distress due to sickness, temporary
or permanent disablement etc. resulting in loss of
earning capacity.
v
The scheme is applicable to non-seasonal

factories employing 10 or more persons.
The Scheme has been extended to shops,

hotels, restaurants, cinemas including preview
theatres, road-motor transport undertakings
and newspaper establishments employing 20
or more persons.
The Scheme has been extended to Private
Medical and Educational institutions employing
20 or more persons in certain States/UTs.
The ESI Scheme is being implemented areawise by stages. The Scheme has already been
implemented in different areas in the following States/
Union Territories of Indian Union.
States All the States except Manipur,
Sikkim, Arunachal Pradesh Mizoram, Delhi and
Chandigarh
(d) Universal Health Insurance Scheme
(UHIS) : The four public sector general insurance
companies have been implementing Universal Health
Insurance Scheme for improving the access of health
care to poor families. The scheme provides for
reimbursement of medical expenses up to Rs.30,000/
- towards hospitalization floated amongst the entire
family, death cover due to an accident @ Rs.25,000/
- to the earning head of the family and compensation
due to loss of earning of the earning member @ Rs.50/
- per day up to maximum of 15 days. The Universal
Health Insurance Scheme (UHIS) has been redesigned
targeting only the BPL families. The premium subsidy
has been enhanced from Rs.100 to Rs.200 for an
individual, Rs.300 for a family of five and Rs. 400 for
a family of seven, without any reduction in benefits.
88 www.jctindia.org
RNI : UPENG 2006/17831
II.
Private Sector
Health insurance is also open for private sector
after IRDA act. Presently in the private sector more
than 19 players are operating in India in health care.
All the players are issuing the varieties of product for
Indian national. Industrial hubris which providing their
employee insurance cover. Many private sector
organizations are providing the facility to their
employee.
The Indian government was deregulating the
insurance sector with establishment of IRDA in the yare
1999. There are many private players in this sector
which providing the facility of health insurance in India.
But the private sector players increase the cost of health
insurance. The health insurance required focus to
improve the Quality of insurance. The new players
coming in this sector and the prices of the product are
increasing day to day. It is affecting the quality of health
insurance.
III.
Private Employers Schemes

Many employees provide the medicine facility
without any amount reviewed from the salary of the
employees. It provides medical insurance facility under
social welfare scheme or fund from their organization.
IV.
NGO and Cooperative

Some non government organization is
providing the medical facility. It is giving with a nominal
amount or without any amount. It is a facility to them
who could not afford the amount of medical illness. It
is a long term effort to develop the nongovernmental
organizations for health care.
V.
Seva Gram
Medical college is working in Maharashtra.
Akshi work in worth Gujarat, Tribunandas is working
in Khara districts where the annul daily is established
in Gujarat. Nav Sarjan work with reduced cost in more
thousand villages in Gujarat. These all NGOs working
at a very nominal premium and providing the facility of
primary as well as secondary health.
6.
PERFORMANCE OF HEALTH
INSURANCE BUSINESS :
The performance of health insurance industry
is showing a positive sign. It is improving year to year.

The performance of private as well as public sector is
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satisfactory. The following table is showing the

collection of premium of last eight years.
Table 2 : Premium Collected by the Health Insurance Company

(In Cr)
Insurance
2007
2008
2009
2010
2011
2012
2013
2014
Private Sector
1223.99
1832.50
2266.30
2349.80
2580
3446
4205
4482
Public Sector
1973.6
3136.50
2824.00
4883.3
6689
8015
9580
10841
Stand Alone
11.16
155.94
535.09
1072.10
1491
1608
1668
2172
Total Industry
3208.7
5125.00
6625.50
8305.2
11031
13070
15453
17495
Source : Report 2007, 2008 to 2012.
On the basis of above table we can say that

the private sector which collected a premium of Rs.
1223.99 in the year 2007. It is showing a steady growth
every year in the collection of premium. It improved
more than three times in last eight years. It is now Rs.
4482 cr at the end of financial year 2014. The public
sector also showing a satisfactory growth year to year.
The premium collected by public sector in the year
2007 was 1973.6 cr. As of now it is 10841 cr in the
end of the financial year 2014. It is also noted that the
overall industry is showing a growth year to year, it is
a good sign for the future of industry.
The following table is showing the percentage
of market share of health insurance business. The
government sector is showing a very poor performance
in this sector. It is just 20 percent in 2011 unfortunately
it is decreasing year to year. The other
nongovernmental groups are also increasing. It is
showing a growing percentage in the market share of
health insurance industry. The growth of these players
of industry is very slow.
Table 3 : Market Share of Health Insurance
(In percentage)
Sector
2011 2012 2013 2014
Government
20
17
15
12
Group other than (Govt.)
45
46
47
46
Individual
35
37
38
42
Insurance coverage is a very important issue

in every nation. It shows the penetration of that country.
It is less than the parameter of develops country. The
coverage of government sector is losing. It is also noted
that the coverage of private Sector are not so good. It
is not a good sign for the industry.
Table 3 : Number of Persons Covered
(In Lakhs)
Sector
2011
2012
2013
2014
Government
1891
1612
1494
1553
Group other than

(Govt.)
226
300
343
337
Individual
419
206
236
273
2535
2118
2073
2162
Our country is a union of 28 state and 7 union

territories. The state is a metro concern in health
insurance business. The four states in health insurance
business shows in the table Maharashtra is largest
insured people and group in India. The 31 per cent of
health insurance show comes from Maharashtra state
after Tamil Naidu is second highs premium provider in
India where 11 per cent of premium collected from
Tamil Naidu State.

www.jctindia.org 89
Table 4 : Top Four States in Health Insurance

(2013-2014)
State/Union Territory
Premium
Percentage
Maharashtra
5379
31
Tamil Naidu
1938
11
Karnataka
1773
10
Delhi
1680
10
Rest of State/UT. India
6725
38
Source : Annual reports IRDA, 2013-14
7.
POLICY ISSUED IN HEALTH

INSURANCE
In the year 2013-2014, the non Life insurers
were issued more than one cror health insurance
policies. Which covered 21.62 population of the
country? 72 per cent of total number of policies issued
by government sponsored health insurance company
and 28 per cent issued by commercial health insurance
policies. The trend of last for year shows the decreasing
trend of government sector in health insurance schemes.
8.
CONCLUSION
The journey of health insurance was started
from France in 1883. It came in Germany and Britain
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after France. The modern form of the health insurance

started after Second World War. Health insurance
nationalized by the europium countries.
The health insurance concept was started from
1938 in India. It was not a true start. In the year 1948
and 1954 was the big steps for health insurance sector.
The government was started the state insurance and
health insurance schemes.
Presently four government and nineteen private
players are operating in the health care sector. The 80
percent part of Indian population is uncovered from
the health care system. Maharashtra is the best state
in health care coverage, Where more than 30 percent
people covered by the health care system. The national
government also started some welcomed schemes
RSBY, CGHS, ESIS , are the central government
scheme for the government employee. The private
players and some NGOs also doing well. The present
government also is also moving forward in the health
care sector.
9.
SUGGESTION
It suggests that the government of India try to
make mandatory to health insurance. The process to
purchases the health care product must be promoted.
The government should make some effort to provide
the insurance coverage to every citizen of India.
m
REFERENCES
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London, 1935.
Ramnadhan, V.V.: The Efficiency of Public Enterprises, Allied Publishers Pvt. Ltd., Bombay, 1962.
Sharma, R.S.: Insurance Principles and Practice, Vora & Co., Ltd., Bombay, 1960.
Shah, K.T.: Report of sub-committee, National Planning Committee Series, Vora & Co., Publishers Ltd.,
Kalabadevi Road, Bombay, 1948.
Subba Rao, M.V.: An outline of Banking System in India, Vora & Co., Ltd., Kalabadevi Road, Bombay,
1948.
Tayler, H., Hosking and others: Life Assurance, SIR, ISAAC, Ritman & Sons Ltd., London, 1932.
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RNI : UPENG 2006/17831
Pages 91-96
A Study of E-Commerce and

Online Shopping
Rashmi Vashishtha
Reserarch Scholar, Mewar University, Gangrar, Chittorgarh, Rajasthan.
Dr. Sudhir Kumar

Associate Professor, Faculty of Commerce and Business Administration, D.N. College, Meerut
Abstract
E-commerce and online shopping in India is getting a noticeable growth as more usage of internet facilities, high educational
standards, changing life style and economical growth of the country reasons in the demand of ecommerce techniques and
tools. Versatile shopping experience and rapid development of transaction facilities is further boosting opportunities for
the remaining market segments. The biggest advantage of e-commerce is the ability to provide secure shopping transactions
via the internet and coupled with almost instant verification and validation of credit card transactions. One of the most
important issues to be addressed in electronic commerce is the area of services. The primary purpose of this study is to
examine and uncover the impact of e-commerce and also identify the issues and areas important to the implementation of
e-commerce that may help in enhancing the productivity in the economic growth of the country.
Key words : E-commerce, online shopping, internet facilities.
1.
INTRODUCTION
English entrepreneur Michael Aldrich invented
online shopping in 1979. His system connected a
modified domestic TV to a real-time transaction
processing computer via a domestic telephone line.
He believed that videotext, the modified domestic TV
technology with a simple menu-driven human
computer interface, was a new, universally applicable,
participative communication medium the first since
the invention of the telephone. This enabled closed
corporate information systems to be opened to
outside correspondents not just for transaction
processing but also for e-messaging and information
retrieval and dissemination, later known as e-business.
His definition of the new mass communications medium
as participative [interactive, many-to-many] was
fundamentally different from the traditional definitions
of mass communication and mass media and a
precursor to the social networking on the Internet 25

years later.
In March 1980, he went on to launch
Redifons Office Revolution, which allowed consumers,
customers, agents, distributors, suppliers and service
companies to be connected on-line to the corporate
systems and allow business transactions to be
completed electronically in real-time. During the 1980,
manufactured, sold, installed, maintained and supported
many online shopping systems, using videotext
technology. These systems which also provided voice
response and handprint processing pre-date the
Internet and the World Wide Web, the IBM PC, and
Microsoft MS-DOS, and were installed mainly in the
UK by large corporations. The first World Wide Web
server and browser, created by Tim Berners-Lee in
1990, opened for commercial use in 1991. Thereafter,
subsequent technological innovations emerged in 1994:
www.jctindia.org 91
online banking, the opening of an online pizza shop by

Pizza Hut, Netscapes SSL v2 encryption standard
for secure data transfer, and Internships first online
shopping system. Immediately after, Amazon.com
launched its online shopping site in 1995 and eBay
was also introduced in 1995.
2.
The emergence of e-commerce is not
revolutionarily new as it has existed for quite some
time (OECD, 1997). Since in the 1970s and 1980s,
businesses have been deploying e-commerce via
electronic data interchange (EDI) for computer to
computer exchange of standardized electronic
transaction documents within an organization or interorganizations using proprietary private valued-added
networks (VANs) as a communication medium.
However, this form of traditional e-commerce using
private value-added networks as communication
medium is costly to install and maintain, and has put ecommerce out of reach in many small and medium sized
businesses (Margherio, 1998). The arrival of the
commercial use of the Internet and its World Wide
Web (WWW) has been defining the new e-commerce
since 1993 (Zwass, 1996). With the emergence of the
Internet and World Wide Web (WWW) as a medium
for commercial transactions, it has thrust e-commerce
into the spotlight, becoming the main focus of the
international community. The Internet and WWW have
made it easier, simpler, cheaper and easily accessible
for businesses of all sizes and consumers to interact
and conduct commercial transactions electronically as
compared with the traditional approach of using private
value-added networks (Margherio, 1998). By virtue
of the Internets network architecture, e-commerce is
born global, where geographical boundaries and
political boundaries mean little in this networked
environment (OECD, 1997). As a result, ecommerce
through the Internet dramatically shrinks the distance
between producers and consumers, who can make
their purchases directly without involving traditional
middlemen such as retailers, wholesalers and
distributors. Although new intermediaries are required
(for example network access providers, electronic
payment system, and authentication and certification
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RNI : UPENG 2006/17831
services), these are far less labour-intensive than

traditional channels (Wyckoff, 1997).
Electronic retailing over the Internet or online
shopping first started in 1994 (Hsin, 2000). It is
considered as one form of direct consumer marketing
of non-store retailing using online channels. This new
concept of retailing has captured the interest of many
retailers and merchants because of the general
recognition that online shopping will establish itself as
an alternative channel alongside traditional offline retail
channels such as physical retail stores (Rowley, 2000).
Electronic retailing predominantly started in the form
of online storefronts whereby products from a single
merchant are offered to consumers through an online
catalogue. Merchants tend to choose to establish online
storefronts as an online retailing method when the
product brand names and reputations are well
established and widely known among consumers. A
good example is The Dell Online Store that sells
personal computers (The Economist, 1997) to
consumers everywhere.
Chowdhury and Ahmad (2011) conducted a
study on factors affecting consumer participation in
online shopping in Malaysia. The major focus of the
study was to describe the relationship between
independent variables and dependent variable using
Pearsons correlation method. The limitation of this
study was that it only used four variables (ability,
benevolence, integrity, and trust) in explaining the
consumer participation but did not take other important
variables into account (e.g., cost switching vendors
and the presence of third party. The study provides a
useful insight on the significant role of trust in students
for online shopping. Yulihasri, Islam and Daud (2011)
conducted a study on Factors that Influence
Customers Buying Intention on Shopping Online. The
variables that were tested included usefulness of internet
shopping, ease of use, compatibility, privacy, security,
normative beliefs, self-efficacy, attitude and students
buying intention. Pearson correlation analysis provided
statistical information about the relationship of each
independent variable with dependent variables. It was
studied that web advertising favourably influences the
purchasing of a companys products.
Karim (2013) conducted a study on online

shopping behaviour of customers and documented that
online vendors can assure their consumers for
transaction security and avoid long delays in completing
online orders and the hassle of returning goods for
better online shopping experience. Morris (2013)
conducted a study on More Consumers Prefer Online
Shopping Shoppers increasingly want whats called a
seamless omnichannel experience, meaning one in
which retailers allow them to combine online and brick
and mortar browsing, shopping, ordering and returning
in whatever combo they would like.
With the increasing size, more demand by
youth and change in the behaviour of youth towards
shopping has clearly indicated a huge market is
available to the incumbents and existing performers.
And at this stage it is important to understand the buying
behaviour of Indian customers towards online shopping
which is mandatory for a great marketing strategy by
the players in this industry. The size and growth rate of
this industry was never like this before. And considering
all this, the present study has made an attempt to
understand the online shopping behaviour of Indian
customers.
3.
PROSPERITY OF E-COMMERCE IN
INDIA
According to the survey by industry body
Assocham (The Associated Chambers of Commerce
and Industry of India), Indias e-commerce market,
which stood at $2.5 billion in 2009, reached $8.5
billion in 2012 and rose 88% to touch $16 billion in
2013. The survey also estimated that the countrys ecommerce market will soon reach $56 billion by 2023
with the rise of online retail. India is gradually becoming
the country with highest number of internet literate
population in the world and the internet penetration is
largely driven by mobile phones, with some of the
cheapest and most basic hand-sets currently offering
access to the internet.
As per data released by Telecom Regulatory
Authority of India (TRAI), Indias total internet
subscribers stood at 238.71 million as of December
31, 2013. Due to high internet penetration in India,
the adaptability of online shopping and better shopping
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experiences offered by the e-commerce websites

among Indians have increased rapidly. As a result the
numbers of internet users is expected to reach the figure
of 700 million by 2019.
The key drivers in Indian e-commerce growth
are:
(a) Increased Usage of Internet : According
to the Internet and Mobile Association of India
(IAMAI), the Internet user base in the country stood
at 190 million at the end of June, 2013. With more
and more people accessing the web through mobile
phones, the Internet user base in the country is
projected to touch 243 million by June, 2014, a yearon-year growth of 28 per cent. The growth of Internet
users has also led to a substantial growth of other digital
industries such as e-commerce and digital advertising.
(b) Rising Educational Level in Computer:
The Government of India has put new horizontal efforts
in the education of tools and techniques of computer
studies. The students of urban areas, rural areas and
business persons are attracted towards the advance
computer technologies. The development of
educational standards has enabled a great demand in
the market.
(c) Busy Lifestyle : The powerful influence
of various social media tools such as Pinterest or
Facebook allows consumers to organize their favorite
items and segment it into themed collections to share it
with others. This fuels personal expression in shopping
and makes others reflect on their purchase decision.
(d) Rising middle class with disposable
income : With the rise of small and medium enterprises,
foreign direct investment, and Indias own powerful
multinational corporations creating millions of new jobs,
a new generation of globally-minded Indian consumers
has been created. With growing job opportunities the
income sources have also increased. Because of high
spending power, customers are willingly able to pay
for the products online.
(e) Awareness of Products : People are
aware of the availability of various products in the
markets through the help of television, newspaper,
website etc. Hence, features can be known easily.
www.jctindia.org 93
(f) Easy to Find the Review of Products :

It is quite easy to find the review of products by the
help of online shopping. Ecommerce has made it
simpler to get information regarding the product and
the customers can purchase the products after getting
reviews and feedback of the product.
4.
v
GROWTH OF E-COMMERCE IN
INDIA
Online retailers would have to leverage
technology to the fullest, and by developing
strategies through analytics produced using big
data will help in making customers feel special
and increase brand loyalty.
Cash on Delivery (CoD) accounts for up to

60 per cent of transactions, according to
Internet and Mobile Association of India.
The increasing adoption and use of

Smartphones enable businesses to collect
large amount of data on consumers for
utilization to do target-based marketing and
advertising.
Product and service feedback via social media

channels have an impressionable effect on the
minds of the larger customer base.
It is necessary to create high quality and SEOfriendly ecommerce site for building long
relationship with customers with exclusive
content helps increase the profit volume ratio.
The service of providing 24 hours chat

assistance to give instance response and
guidance to customers has raised the quality
of online shopping experience.
Mobile advertising route has the potential to
increase online shoppers as they are more
comfortable with using mobile devices for
browsing and shopping, they are now more
open to getting messages from brands via their
mobiles.
5.
CHALLENGES AND OPPORTUNITIES

OF E-COMMERCE IN INDIA
The growth of e-commerce volumes in India
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RNI : UPENG 2006/17831
is attracting the attention of players around the globe.

India, the second most populous country in the world,
is home to 1.2 billion people. India is a large and
rapidly growing region with a rising middle class,
accelerating internet access and a staggering
penetration of mobile phones. India is becoming
increasingly attractive to businesses, especially to
ecommerce firms that thrive on global and scalable
business models.
There are five key challenges that e-commerce
firms are encountering in emerging Indian markets :
(a) Indian customers return much of the
merchandise they purchase online : E-commerce
in India has many first time buyers. This means that
they have not yet made up their mind about what to
expect from ecommerce websites. As a result, buyers
sometimes fall prey to hard sell. But by the time the
product is delivered, they demonstrate remorse and
return the goods. Though consumer remorse is a global
problem, it is all the more prevalent in a country like
India, where much of the growth comes from new
buyers. Returns are expensive for e-commerce players,
as reverse logistics presents unique challenges. This
becomes all the more complex in cross-border
e-commerce.
(b) Cash on delivery is the preferred
payment mode : Low credit card penetration and
low trust in online transactions has led to cash on
delivery being the preferred payment option in India.
Unlike electronic payments, manual cash collection is
laborious, risky, and expensive.
(c) Payment gateways have a high failure
rate: As if the preference for cash on delivery was not
bad enough, Indian payment gateways have an
unusually high failure rate by global standards.
E-commerce companies using Indian payment
gateways are losing out on business, as several
customers do not reattempt payment after a transaction
fails.
(d) Postal addresses are not standardized:
If you place an online order in India, you will quite
likely get a call from the logistics company to ask you
about your exact location. Clearly your address is not
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enough. This is because there is little standardization

in the way postal addresses are written. Last mile
issues add to e-commerce logistics problems.
and then, using marketing articles or social media to

establish an online presence is minimal when compared
to the costs of traditional forms of advertising.
(e) Logistics is a problem in thousands of

Indian towns : The logistics challenge in India is not
just about the lack of standardization in postal
addresses. Given the large size of the country, there
are thousands of towns that are not easily accessible.
Metropolitan cities and other major urban centres have
a fairly robust logistics infrastructure. The problem with
logistics is compounded by the fact that cash on delivery
is the preferred payment option in India. International
logistics providers, private Indian companies, and the
government-owned postal services are making a valiant
effort to solve the logistics problem. If someone could
convert the sheer size of the problem into an
opportunity, we might soon hear of a great success
story coming out of the Indian logistics industry.
(d) Choose a reliable hosting provider :

Do analyze and opt for the most reliable and cost
effective choice of servers for your business. The most
important things to measure while selecting are
choosing a hosting provider that is tried and tested,
guaranteed uptime, response times of the servers,
security and the level of support and customer care
provided.
6.
KEY POINTS FOR EFFECTIVE

ONLINE SHOPPING
(a) It must be Secure : Every customer
wishes for safe and secure transactions during
purchasing goods online. If the website is secure,
customers will tend to purchase more from it. Secure
Sockets Layer (SSL) is a standard security technology
for establishing an encrypted link between the web
server and a browser. Ecommerce websites with the
SSL certificate are able to prevent and protect the
users information when customers access their
websites.
(b) There must be Easy and
Understandable Content : The website for online
shopping should be in understandable language. The
language should be kept simple while making the
website, and if possible the translation of the content
must be given on the website in simple languages.
(c) Effectiveness and cost-efficiency
should be of concern : Internet marketing is one of
the most effective and cost-efficient methods of
advertisement. It is effective because it create a better
chance to see the impact of internet marketing on your
online business almost immediately. It is cost-efficient
because the costs associated with starting a website,
(e) Prompt Delivery and Quick Quality

Services : The processing of delivery and quick quality
services of the product is an important feature to make
the online shopping websites better than others. It must
be quick in regards of home delivery services and
payment etc.
(f) Improve business credibility through
online branding : Internet marketing campaign will
help your business increase product awareness and
brand loyalty. Maintaining an online presence via
internet marketing is a great way to keep up with the
time and provide consumers with all of the opportunities
they need 24 hours a day. As consumers browse the
web, they may come across your business name or
logo and become interested in what your business has
to offer.
7.
CONCLUSIONS
Indian e-commerce and online shopping
together plays a significant instrument in making
comprehensive growth and will definitely witness
greater changes in the coming years. It is contributing
to the economy in a significant manner and has gained
its popularity due to the fast development in the area
of information technology. Owing to the increasing
internet population, it has become easier and simpler
in dealing with the competitive market for better deals
on product. However, along with development and
changes in e-commerce, there are also security and
privacy concerns among the customers. Hence,
researchers in this field will need to study more on the
security and critical issues relate to e-commerce.
m
www.jctindia.org 95
RNI : UPENG 2006/17831
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
Dr. Anukrati Sharma, A Study on E-Commerce and Online Shopping: Issues and Influences, in
International Journal of Computer Engineering and Technology, Volume 4, Issue 1, January- February
2013, pp. 364-376.
Himani Grewal & Shivani, A Study of Ethical and Social Issues in E-Commerce, in International Journal
of Advanced Research in Computer Science and Software Engineering , Volume 2, Issue 7, July 2012, pp.
167-174.
Lotfollah Forouzandeh Dehkordi , Ali Shahnazari, Ali Noroozi, A Study of the Factors that Influence the
Acceptance of e-Commerce in Developing Countries: A Comparative Survey between Iran and United
Arab Emirates, in Interdisciplinary Journal of Research in Business, Vol. 1, Issue 6, June 2011,pp.44-49.
Niranjanamurthy M, DR. Dharmendra Chahar, 2013,, The study of E-Commerce Security Issues and
Solutions in International Journal of Advanced Research in Computer and Communication Engineering,
Vol. 2, Issue 7, July 2013,pp. 2885- 2895.
Tryambak Hiwarkar,2013, E- Commerce impact on Indian Market: a Survey on social impact in
International Journal of Advanced Research in Computer Engineering & Technology (IJARCET), Volume
2, Issue 3, March 2013, pp. 870- 874.
Indian e-commerce market up 88% in 2013, arket-up-88-in-2013 Survey/articleshow/28146273.cms7
India to have 243 million internet users by June 2014: IAMAI, http:// timesofindia.indiatimes.com/tech/
tech-news/India-to-have-243-million-internet-users-by-June-2014- IAMAI/articleshow/29563698.cms
Sonnet Debbarma, Gypsy Nandi (2014) Promoting E-Commerce in India : Main Issues and Challenges,
Department of Computer Science & Engineering and IT, School of Technology, Assam Don Bosco
University, Guwahati, Assam-781017, India.
Eastlick, M.A. and S. Lotz. 1999. Profiling Potential Adopters and Non-Adopters of an Interactive
Electronic Shopping Medium, International Journal of Retail & Distribution Management, 27(6): 9-19.
96 www.jctindia.org
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Pages 97-100
Analysis of Relationship among Critical

Factors in the Construction Projects
Dr. Seema Sharma
Lecturer, Department of Commerce, N.A.S. (PG) College, Meerut
Abstract
The critical factors are considered to be a mean for improving the effectiveness of project. Performance can be assured by
identifying and eliminating the factors that cause poor project outcomes. Thus, project managers need better understanding
of critical success/failure factors and how to measure them. The purpose of this study is to systematically investigate the
causes of project failure and how these can be prevented, managed, or controlled. Constructions projects are frequently
influenced by success factors which can help project parties reach their intended goals with greater efficiency. The aim of
this paper is to investigate the critical factors leading to construction company success. Many critical success factors such
as factors related to project managers performance, factors related to organization, factors related to project, factors
related to external environment became apparent from this study.
Key words : Critical Factors; Project Management.
1.
INTRODUCTION
Collins (1996) describes quality as the worlds
oldest documented profession. Quality professionals
use a number of definitions to define project quality.
Quality in its simplest form can be defined as: meeting
the customers expectations, or compliance with
customers specification. No matter what definition
we follow for quality, it becomes very complex when
we try to put it into actual practice. For a user, quality
is nothing but satisfaction with the appearance,
performances, and reliability of the project for a given
price range.
In the realm of project management, the
schedule, cost and quality achievement is also referred
to as the iron triangle. Out of these three aspects, it is
the achievement of schedule and cost compliances that
the project management is attending to most of the
time. This results in a half-hearted attempt to achieve
quality at project sites. In order to achieve the schedule
and cost objectives, project quality is sometimes also

overlooked. Although many studies have recognized
the importance of maintaining and doing quality projects
these aspects are sacrificed in lieu of achieving shortterm objectives, such as handing over of some critical
structures, or only part of the structures falling in the
critical path etc. Barnes (1987) emphasizes that the
control of the performance of the installation, building
or engineering structure should be managed in the same
way as the management of time and cost. In a recent
survey conducted among Indian construction
professionals, it has also been found that, out of the
five commonly used project performance criteria
compliances to schedule, cost, quality, no-dispute and
safety the quality compliance has come second next
to schedule compliance (Jha, 2004).
2.
LITERATURE REVIEW
In order to address quality related issues, a

number of studies have been conducted in different
www.jctindia.org 97
countries. Chua et al. (1999) have developed a

hierarchical model for construction project success for
different project objectives. For quality objectives they
find that it is influenced by four main project aspects,
namely, project characteristics, contractual
arrangements, project participants, and interactive
processes. Arditi & Gunaydin (1998) find that
management commitment to continuous quality
improvement, management leadership in promoting
high process quality; quality training of all personnel;
efficient teamwork to promote quality issues at the
corporate level; and effective cooperation between
parties taking part in the project are generic factors
that affect process quality. Pheng (2004), through case
studies, has shown that total quality management
(TQM) a successful management philosophy in the
manufacturing and service industry could be
replicated in the construction industry with similar
benefits. The benefits may be in terms of reduction in
quality costs, and better employee job satisfaction.
Bubshait & Al-Atiq (1999) observe that a contractors
quality assurance system, which ensures consistent
quality, is essential in preventing problems and the
reoccurrence of problems. His survey also points to
the lack of documentation of a quality system for the
majority of the contractors. Abdel-Razek (1998) has
studied the quality improvement methodology and finds
that improvement of employee satisfaction is the most
important area in contributing quality improvement in
Egypt. Ledbetter (1994) has developed a quality
performance management system (QPMS) that tracks
labor costs in three main categories: normal work,
quality management work (prevention and appraisal),
and rework (deviation correction). He has assumed
the cost of quality to be the sum total of quality
management and rework. He finds QPMS to be useful
in promoting awareness and improving the
understanding of the quality process in addition to
facilitating communication, reducing the overall cost
of quality, and directing the management to the areas
where quality improvements could be made. Love &
Smith (2003) have proposed a generic framework for
benchmarking rework at the interfaces of a projects
life cycle. As can be seen from the above discussion,
98 www.jctindia.org
RNI : UPENG 2006/17831
substantial research has been carried out that addresses

the quality issues at international levels. Under Indian
conditions, not many systematic studies have been
undertaken for construction projects. Identification of
Success and Failure Attributes An initial list of
parameters/factors was prepared from the li1
3.
CRITICAL SUCCESS FACTORS

Cooke-Davies (2002) eliminates a conceptual
difference between success criteria and success
factors. He stresses that success criteria belong to
specific measurement which needs to be formulated in
order to conclude whether project succeeds or fails.
However, success factors are more about particular
levers that can be used by project manager to increase
a probability of successful outcome of a project.
Project success factors are the elements of a project
that can be influenced to increase the likelihood of
success; these are independent variable that makes
success more likely. Project success criteria are the
measures by which judge the successful outcome of a
project; these are dependent variable which measure
project success. Success factors are those inputs to
the management system that lead directly or indirectly
to the success of the project or business. Project
success factors are not universal for all projects since
different projects and different people prioritize
different sets of success factors. Project success
criteria also vary from project to project and what is
acceptable in one project without impact on perceived
success is deemed an abject failure in another project.
For instance, taking a week delay in an IT project to
ensure the objectives are achieved may have a minor
impact for this project in terms of success. However,
this delay might be a disaster in building a function
centre, which is supposed to be undertaken before its
opening day. The project implementation process is
complex. It usually involves attention to a broad Variety
of human, budgetary, and technical variables. From a
Project Management perspective, critical success
factors (CSFs) are characteristics, conditions, or
variables that can have a significant impact on the
success of the project when properly sustained,
maintained, or managed. There is a very close link
between the type and scope of projects and respective
Critical Success Factors (CSF). The most important

CSFs within the Project life cycle are as follows :
v
Project Mission-Initial clearly defined goals

and general directions. The preparation of a
detailed project scope statement is critical to
project success.
Top Management Support- Willingness of top
management to provide the necessary
resources and authority/ power for project
success. The flexible and adequate access to
organizational resources is considered as a
core precondition for effectively executing the
project activities. This can hardly be available
without definite and timely reaction and
support from the top management of the
project-executing organization.
Competence of Project Manager- The

competence of project manager has been
identified as the most important factor for the
successful realization of their project. The
technical and administrative skills of the project
manager, as well as his/her commitment and
competence, become the most critical
component during the project life cycle.
Project Schedule/Plan- A detailed

specification of the individual action steps
required for project implementation.
Client consultation - Communication,

consultation, and active listening to all impacted
parties.
Competence of Project Team MembersRecruitment, selection and training of the

necessary personnel for the project team. The
knowledge, skills, personal aims, and personal
traits should be considered not only as a vital
component of the overall organizational culture
but also as an essential factor of the integrity
and multi-functionality of the project team.
Quality of Suppliers and Subcontractors -In

the contemporary world, it is rarely possible
for one and the same organization to have
capabilities and competencies in every aspect
RNI : UPENG 2006/17831
of the work required. Competence of project

partnership is vital for success of project.
v
Technical tasks- Availability of the required

technology and expertise to accomplish the
specific technical action steps.
Client Acceptance- The act of selling the final

project to its ultimate intended users.
Monitoring and Feedback- Timely provision

of comprehensive control information at each
stage in the implementation process.
A careful study of previous literature suggests

that critical success factors can be grouped under four
main categories. These include: (1) Project
Management Factors; (2) Procurement-related
Factors; (3) Design team-related Factors; (4) Project
Manager-related Factors.
(a) Project Management Factors : Project
management action is a key for project success.
Competent Project Managers can use management
tools to plan and execute their construction projects
to maximize the projects chances of success. The
variables in project management include adequate
communication; control mechanisms; feedback
capabilities; troubleshooting; coordination effectiveness;
decision making effectiveness; monitoring; project
organization structure; plan and schedule followed, and
related previous management experience. A number
of attributes will affect this factor, including the
communication system, control mechanism, feedback
capabilities, planning effort, organization structure,
safety and quality assurance program, control of
subcontractors works, and finally the overall
managerial actions.
(b) Procurement-related Factors : Two
attributes are used to measure this factor; they are
procurement method (selection of the organization for
the design and construction of the project) and
tendering method (procedures adopted for the selection
of the project team and in particular the main
contractor).
(c) Design team-related Factors : Designers
play a vital role as their work involves from inception
www.jctindia.org 99
to completion on a project. Design team-related factors

consist of design team experience, project design
complexity, and mistakes/delays in producing design
documents.
(d) Project Manager-related Factors: The
project manager is another key stakeholder in a
construction project and his competence is a critical
factor affecting project planning, scheduling, and
communication. Variables under this factor consist of
the skills and characteristics of project managers, their
commitment, competence, experience, and authority
(Chua et al. 1999). A construction project requires
team spirit; therefore team building is important among
different parties. Team effort by all parties to a
contractowner, architect, construction manager,
contractor, and subcontractorsis a crucial ingredient
for the successful completion of a project.
RNI : UPENG 2006/17831
4.
CONCLUSION
The methodological approach used in this
paper suggests that in order to promote successful
R&D projects some fundamental areas should be
looked at: processes, human resources, organization,
markets, technology transfer, and client involvement.
Once these critical factors were rigorously identified,
it became clear that it is feasible to design actions to
enhance impacts from positive factors and to attenuate
those springing from negative ones. Although this paper
is a contribution to the understanding of technology
management within Public Research Centers, it also
suggests a methodology to identify critical factors for
the success of any R&D project. Besides the provision
of variables explaining relationships between projects
and their success or failure, our results can help top
managers and decision makers to improve the
performance of R&D projects, for the sake of the very
centers which are committed to carry them out.
m
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Indian Institute of Technology, Delhi, India.
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100 www.jctindia.org
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Pages 101-108
Employee Engagement, Training and

Career Development
(Tata Tele Services Limited A Case Study)
Shikha Vashishtha
Research Scholar, Mewar University, Gangrar, Chittorgarh, Rajasthan.
Abstract
Employee engagement is generally the level of commitment and involvement an employee has towards his or her organization
and its core values and beliefs. An engaged employee is presumed to be aware of business context, and work dynamics with
colleagues and peer groups to improve performance within the job for the benefit and excellence of the organization. It is a
positive attitude held by the employees towards the organization and its values. The paper focuses on how employee
engagement is an antecedent of job involvement and what should a company do to make the employees engaged. The scope
of the study is limited to one organisation i.e. Tata Tele Services which is one of the major players in the Indian services
sector. The paper attempts to do an analysis of employee engagement strategies adopted by the organisation on the basis of
the widely accepted Ten Cs Model of Employee Engagement.
Key words : Job Involvement, Employee Engagement, Career, Progression Policy
1.
INTRODUCTION
Over the past decade, and particularly in the
past three years, employers and employees have faced
human capital challenges and an uncertain economy.
The economic downturn that started in 2008 has had
a significant impact on companies and the resulting
decisions made by management. These decisions have
impacted employee engagement levels and perceptions
globally, leading to changes in leading drivers of
employee engagement. In uncertain times, organizations
need to focus on harnessing the discretionary effort
that engaged employee. This makes a difference in how
companies are affected during the economic downturn,
how quickly they emerge from it, and how strong they
are in the future after the downturn passes. Employee
engagement initiative has a direct impact on the
organizations productivity. Also, employee engagement
is directly influenced by growth of the organization,
value addition experienced by employees and
employee perception of the organization. When
managers become disengaged, employees are 37%
more likely to be frustrated with company systems,

processes, and procedures. (FLS Research 2008-09)
This paper is based on a case study of Tata
Teleservices. The paper has been divided into six
sections. First section is all about introduction to
employee engagement which elaborates the issues and
its importance for organizations. Section two deals with
the conceptual overview and the third includes the
literature review. In section four strategies and initiatives
linked to employee engagement has been described
along with an analysis of different initiatives taken by
the organization and its implications based on ten Cs
of Employee Engagement model used for analysis. It
also elucidates the impact of employee engagement
initiatives on organizations performance and employee
retention. The fifth section includes the implications and
initiatives and the last section i.e. sixth section concludes
the paper.
2.
Alan M. Saks (December 2011), the study
www.jctindia.org 101
Workplace spirituality and employee engagement

describe the importance of Workplace Spirituality for
Employee Engagement Maintenance. A model of
workplace spirituality and employee engagement is
presented in which three dimensions of workplace
spirituality (transcendence, community, and spiritual
values) relate to employee engagement through four
psychological conditions (meaningfulness in work,
meaningfulness at work, safety, and availability).
Sanchez-Hernandez Isabel & David Grayson
(2011), Internal Marketing for Engaging Employees
on the Corporate Responsibility Journey. As cite by
the authers, Internal Marketing has been developed
directly from conventional marketing theory
(Woodruffe, 1995). It is based on the assumption that
the accumulated knowledge of the marketing function
can be used within the organization itself in order to
gain competitive advantage in the market as well. The
purpose of this paper is to explore whether internal
marketing could be a powerful tool for engaging
employees on the corporate responsibility journey. A
conceptual approach based on literature review is
carried out to determine the existing possibilities
provided by internal marketing to enhance corporate
responsibility.
Junghoon Lee (2012), this study empirically
tested relationships among antecedents and
consequences of employee engagement in the hotel
setting. In particular, this study provided theory-based
empirical evidence regarding whether employee
evaluations of self (i.e., core selfevaluations) and
perceptions of organizational environment (i.e.,
psychological climate) affect employee engagement.
This study also investigated how employee engagement
directly and indirectly leads to intrinsic rewards, job
satisfaction, personal attachment to an organization
(i.e., organizational commitment), and the (LMX).
Results of hypothesis testing showed that core
selfevaluations and three components of psychological
climate (managerial support for service,
interdepartmental service, and team communication)
positively influence employee engagement. The results
also revealed that employee engagement is positively
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associated with all the outcome variables.

3.
EMPLOYEE ENGAGEMENT :
AN OVERVIEW
The concept of engagement has naturally

evolved from past research on high involvement,
empowerment, job motivation, organizational
commitment, and trust. All these research streams
focus on employees perceptions and attitudes about
the work environment. In some ways they are variations
on the same fundamental issue. Obviously, all
organizations want their employees to be engaged in
their work.
But what can help them predict if their
employees will give their all? Several standardized
tools exist for assessing employee engagement and then
providing feedback for making changes. These tools
tend to have several common goals and characteristics:
Create a simple and focused index of
workplace engagement-Many organizations are using
very short, simple, and easy-to-use measures that focus
on the fundamentals of a great workplace. Instead of
conducting broad culture or climate surveys with 100
or more questions, many organizations are opting for
a focused approach that measures fundamental qualities
of the workplace that likely will be important 10 years
later (e.g., feedback, trust, cooperation).
Allow for benchmarking-most organizations
want to know how they stand in comparison to other
organizations. Using a standard measure of
engagement allows an organization to see how it
measures up to other companies along a simple set of
fundamental work qualities
Empirical research on employee engagement
is relatively new. Employee retention has received
the lions share of the spotlight. This focus on retention
however has spawned several studies on engagement
- since retaining employees is dependent upon the need
to engage them. Hence, engagement studies are
beginning to take center stage. One of the most
significant threads in the current research is the
discovery that employee engagement is linked to
customer satisfaction which is linked to an
organizations financial success. Employee engagement/
satisfaction distinctly affects the bottom line. These

findings are detailed in the studies referred to in this
article. Engagement really happens at the team level a framework called VOICE helps that process.
VOICE is an acronym made up of its component parts
i.e. V is for vision, which is an emotion as well as a
financial connection as to why people should be part
of this organization; O is for opportunity. Are there
opportunities to grow and develop? ; I is for incentive.
If you do a good job do you get financial and nonfinancial rewards? ; C is for community. Do I like the
people I work with? ; C also stands for Communication,
which is about telling people about what is going on,
and gives them the confidence that people care; and E
is for entrepreneurship, defined as things such flexibility
on how people can work... Its about things like
flexibility in time so people dont feel they are being a
slave to the organization.
4.
PRIVATE SECTOR : CAREER

DEVELOPMENT PROGRAMS
Career Development Programs have been
around since the turn of the century. The number of
organizations using them has steadily increased since
the mid-1970s, as more organizations strive to meet
the needs and expectations of their employees. A 1991
survey of 1000 private agencies, 70% of the
respondents had or were planning to implement Career
Development Programs in the workplace (Gutteridge,
Leibowitz, & Shore, 1993). The increasing popularity
of Career Development Programs suggests many
organizations are willing to play a major role in career
planning and employee development. Organizations
that emphasized customer service, organizational
performance, professionalism and employee
empowerment were most likely to have Career
Development Programs. In a 1978 survey conducted
by the American Management Association on
company-sponsored Career Development Programs,
over 90% of the respondents found them to enhance
job performance, help employees use personnel
systems more effectively, and improve the utilization
of available talent (Walker & Gutteridge, 1979). In
the late 1980s, a number of large corporations (British
Petroleum Exploration, Amoco, Baxter Healthcare and
John Deere) developed and implemented
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comprehensive and visible Career Development

Programs in the workplace. Each of these companies
used methods such as career counseling, workshops,
workbooks, along with techniques such as selfassessment testing and job rotations to enhance their
employees opportunity for growth and development.
This resulted in lower employee turnover, fewer
employee complaints and higher levels of job
satisfaction. In fact, Baxter Healthcare has the lowest
employee turnover in their industry segment. The results
achieved by larger organizations caused even mid-size
and smaller organizations to implement Career
Development Programs.
5.
PUBLIC SECTOR : CAREER

DEVELOPMENT PROGRAMS
Even with the increased popularity of Career
Development Programs, the public sector has lagged
behind the private sector in instituting these programs
(West & Berman, 1993). Why is this? First,
organizations in the private sector are extremely
competitive and their bottom line is directly tied to
corporate profits. Competition occurs in a global rather
than a national context. Also, technological advances
have occurred more quickly in the private sector that
requires more highly skilled workers. Quite simply,
organizations in the private sector must maintain a
competitive edge and their overall success translates
into corporate profits. Conversely, organizations in the
public sector are service-driven and operate on
budgets that are generated primarily by taxes. Career
Development Programs in law enforcement have been
even slower in developing. In fact, career development
has been traditionally viewed as nothing more than
promoting officers through the ranks until they are
eligible to retire (Gibbons 1995, p. 16). At best,
employees are given limited guidance in professional
development and little, if any, guidance in areas
pertaining to personal growth. Economic pressures
have also attributed to the slow growth of Career
Development Programs in law enforcement. In the mid1980s, many police departments were forced to
reorganize in an effort to reduce costs. The terms
flattening and downsizing crept into the vocabulary
of many administrators (Grossman & Doherty, 1994).
This resulted in fewer and fewer opportunities for
promotions, and this trend will most likely continue

into the 21st century. As a result, organizations must
emphasize the strong value of growing and learning
ones current job, as well as, exploring other areas
within the organization. In recent years, many law
enforcement agencies have sought accreditation
through the Commission for the Accreditation of Law
Enforcement Agencies, Inc. (CALEA). This
independent accreditation process ensures that law
enforcement agencies have met specific requirements
and prescribed standards. Participating agencies devote
considerable manpower and resources in order to be
accredited. CALEA requires that participating agencies
have a documented Career Development Program
(Commission on the Accreditation for Law
Enforcement, Inc., 1991). As a result, an increasing
number of law enforcement administrators realize the
importance of Career Development Programs and they
are viewed in similar context to the private sector.
Theoretical Basis for Career Development
Career Development Programs have evolved
because of changes in the workforce (work-life
balance, diversity, focus on quality), advances in
management theory (employee motivation), changes
in managerial styles and the increasing complexity of
technology. It is these contemporary trends which have
fostered the growth of Career Development Programs.
6.
WORK FORCE CHANGES

In the past, employees tended to remain
attached to one or two organizations throughout their
careers, with loyalty to the organization and acceptance
of the employers authority being the norm (Lewis,
1986).
An even more pressing reason for
organizational change involves the demographics of the
workforce, which is experiencing a steady increase of
women, minorities, disabled, as well as, older workers.
All of the factors have caused organizations to reevaluate and assess their most valued and importance
resource, their employees. Also, Total Quality
Management (TQM) has become a dominant concern
of many organizations. With the emphasis on customer
service, quality in daily work and continuous
improvement, it is seen as essential to organizations
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that desire to maintain a competitive edge.

7.
MANAGERIAL STYLES
Changes in managerial styles have contributed
greatly to the overall success of career development.
Management scholars have long been aware of the
distinctions between Douglas McGregors Theory X
and Theory Y management styles. According to
McGregor (1960), Theory X managers assume that
employees dislike work, seek to avoid responsibility,
and need coercion and control to make them work
toward organizational goals. The Theory Y manager
believes in the inherent creativity of employees and
assumes that they are generally interested in directing
their own work. The Theory X manager was also
concerned with productivity, rather than with
employees needs for involvement. The Theory Y
manager tends to emphasize the human aspects of the
work environment.
Organizations must no longer choose between
concern for people or concern for production.
According to Blake and Mouton (1978), the most
effective managers are those who realize that employee
commitment and productivity are directly related to
the organizations overall effectiveness.
8.
TECHNOLOGY
Rapid changes in technology have transformed
every aspect of the workplace. Advances in technology
(computers, communication, etc.) have resulted in the
need for skilled professionals, and this has caused
problems for many organizations. As a result, these
organizations were forced to hire skilled technicians
or fill these positions with untrained personnel. These
technological advances further stress the importance
of having a Career Development Program. Employees
would be able to make practical career decisions based
upon the organizations current and future needs.
Organizations will benefit by being able to use existing
personnel to fill new positions.
9.
TRAINING
Proficiency in-service training

The second component of a Career
Development Program encompasses Proficiency Inservice Training. This component of the career
development initiative must be closely coordinated with

the organizations training efforts. This benefits both
the organization and its employees by keeping them
up-to-date on duties and responsibilities within present
job assignments. It also allows employees the
opportunity to maintain those skills and abilities
necessary for the job they perform. Proficiency training
subjects must consist of those elements of the training
program that are indigenous to the organization and its
operations. This type of training is job specific and
generally limited to areas that are essential to the overall
job function. A training program should be developed
and implemented which encompasses all phases of
training. This will allow employees to have a clear
understanding of the organizations formal training
requirements, as well as, demonstrate the departments
commitment to employee development.
Career specialty training
Career Specialty Training is the final
component in a Career Development Program and
provides employees with the opportunity to enhance
knowledge, skills, and abilities necessary to perform
jobs beyond the minimum level. It also allows
employees the opportunity to explore new areas of
interest and specialization that will enhance abilities and
skills in other specialized jobs. The opportunity to
attend specialty courses of instruction offered by other
organizations or institutions must be afforded to all
employees. This can be easily incorporated into the
organizations training policy.
10.
EMPLOYEE ENGAGEMENT
INITIATIVES
Case study: Tata Teleservices: HR
interventions and Employee engagement Tata
Teleservices (TTSL) many HR interventions have
earned it the distinction of being an employer of choice.
CN Nagakumar, CHRO, TTSL, believes that his
companys commitment to employee engagement is
what has earned it this accolade. The companys HR
practices include a strong HR model that talks about
alignment, assignment, engagement, empowerment and
pride of the workforce. The annual employee
engagement survey - Darpan - has been designed
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around the HR model. In order to foster a customercentric and performance-driven culture in the
organisation, the pillars of organisational culture were
defined under the acronym CRISP - customer focus,
responsibility for results, initiative with speed, selfconfidence with consciousness and passion for
achievement. A robust performance management
scheme, a reward and recognition policy, and a career
progression policy exist in the organisation, besides a
number of engagement activities. The performance
management system ensures the top down cascade of
business goals. The key performance indicators of
every employee are aligned to any one or multiples of
the five key business levers, namely revenue, profit
maximisation/cost optimisation, cash flow, customer
satisfaction and employee engagement, aligning the
entire organisation towards the vision, mission and
business plans of the organisation. The reward and
recognition (R&R) policy aims to create a framework
for recognising and rewarding the contributions of
individuals and teams, and institutionalises a culture of
openness, transparency and meritocracy. The
recognitions include Spotlight (for on-the-spot
recognition), Star of the Month, Super Stars for
achievers, Customer First Reward and Valuable
Reward. These awards are decided at both the circle
and corporate level by various business units and circle
R&R committees. TTSL strives to provide career
growth in consonance with performance, merit and
potential of an employee, while considering
organisational needs. The opportunities include Career
Progression Policy and CAS (Career Advancement
Scheme), Job Rotation Policy and Internal Job
Postings. The Career Progression Policy ensures
career progression for all employees based on their
performance rating, tenure in the role, SPARK
Assessment Center scores and potential for growth.
It also highlights the commitment to building a
leadership pipeline by grooming talent from within.
To ensure a supportive and encouraging environment,
TTSL has focused its efforts towards institutionalising
several initiatives like the employee health and well
being policy, Long Service Award on completion of
five and 10 years of service, Medical Insurance, Liberal
Personal Accident Insurance coverage etc. For
employees posted in remote geographies like the

North-East, Assam, Jammu & Kashmir, a special
geography benefit is provided. The Weavers initiative
includes sports and recreation activities for employees,
cultural and sports activities for employees children,
career counselling and corporate sustainability
initiatives. These policies also seek to create and
ensure a meaningful relationship between the employee
and the organisation. The company knows that a
relationship of mutual respect and trust is the key to
ensuring a motivated workforce. That is why TTSL
engages in a number of activities to offer employees
an opportunity to display the creative side of their
personalities. At the circle level, the company organises
various fun activities and games, including hoopla,
tambola, carrom and table tennis, besides outdoor
game championships for cricket, football and hockey.
Many of these teams have participated in intercorporate events and won for the companys pride.
Leadership development is one of the strategic
pillars at TTSL. Assessment centres form the basic
tool to identify high potential employees who undergo
a comprehensive leadership developmental
programme. The Business Leadership Programme is
carried out in association with the Tata Management
Training Centre and involves all COOs and high
performing senior leaders. An in-house enabled multirater feedback system called Reflections has been put
in place to enable senior leaders to get 360-degree
feedback and create an individual development plan.
Team-building initiatives at TTSL are not limited to the
top management alone but touch all levels of
management, aligning teams across the company
towards achieving the organisational objectives.
Regular Town halls are conducted by the MD and
COOs at corporate and circle levels respectively to
get to know the views of the people. Initiatives such
as Lunch with MD, MD Online and Phone your MD
also seek to increase interaction between employees
and the MD. A chief ethics officer and local ethics
officers have been appointed to deal with ethical issues.
A womens welfare committee, comprising senior
women employees, has been created to address
women-related issues.
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Training is an important component of

employee engagement. Training employees through
innovative workshops, cross functional teams and
collaborative working is also a key focus area in TTSL.
TTSL encourages employees to enhance their skills
and come up with innovative ideas and best practices
through initiatives like Mind Beans, Propel (Six Sigma)
and Promising Practices. Employees are also actively
encouraged to develop their personalities. The portal
Gyaan Jyoti enables people to enhance their skills
through e-learning. Employees list their fields of interest
and expertise on Gyan Tarang. TTSL then uses its inhouse expertise to conduct various training workshops
for others, thereby giving employees a chance to learn
and teach. TTSL strongly supports the Tata Group
program called SCIP (Second Career Internship
Program) which enables women who have taken a
break from their career, to restart their career. They
work on a 6-month project in any one of the Tata
Group companies and then confirmed as permanent
resources. The motivated workforce is encouraged to
give back to the community as well as TTSL has tieups with NGOs like SOS Childrens Villages and the
National Association for the Blind, and partners with
various schools under the Samvedna initiative. It also
has an active eco-club, Prakriti, which conducts
activities such as tree plantation drives, energy
conservation and wealth out of waste initiatives. The
companys CSR activities include education and the
environment as well, fully leveraging the companys
core competencies, in addition to initiatives on
affirmative action plans focused on employment
generating schemes. DIALog is the monthly Internal
Newsletter which covers the latest internal and external
news about TTSL. Apart from TTSL news, there are
specific write-ups by the senior management,
communicating pertinent and relevant issues and news.
DARPAN, the Employee Engagement Model of TTSL
covers various aspects of employee work life namely
Alignment, Assignment, Engagement, Empowerment
and Pride. EPulse is another innovative tool, which
was created to enhance engagement of employees from
the moment they join by staying in touch and taking
feedback from them from the time they join the
organization. It is an IT-enabled engagement tool to

ensure that assimilation of new employees happens in
a smooth manner. It is these and other similar activities
that have helped TTSL gain the trust of its employees
and ensured an atmosphere of enthusiasm and
commitment in the workplace.
11.
IMPLICATIONS AND NEW

INITIATIVES
The analysis gives us very clear picture that
the organisation is able to meet most of the criteria of
Ten Cs to a greater extent. Tata Teleservices has an
excellent reward and recognition policy and a career
progression policy which shows the connect parameter.
It has different programs to congratulate its employees.
Further it also provides a platform to the employees
to collaborate and increase the interaction between
superior and subordinates. The company is high on
meeting ethical standards for which it has an ethical
officer to deal with the local issues. It is suggested here
that the company can clarify the roles of the employees
from the very first step by giving them a realistic job
preview and conducting a strong induction and
orientation programme as a part of the performance
management system. Employee counselling and
mentoring techniques can be used to get the feedback
from the employee about his role and job performance.
Strategies can be suggested to form some
more communication forums including team meetings,
conferences, monthly updates on corporate goals etc.
to add more to the credibility component. Team
building exercises like small team recreational activities
e.g. bowling, skating; trips to cinemas etc. once in a
month can also be introduced. Employee engagement
is a direct reflection of how employees feel about their
relationship with boss. Thus, quality of working
relationships with peers, superiors and subordinates
can be improved by providing more opportunities to
collaborate. Though organisations are having their own
models of practising employee engagement but to
make the strategies more effective they can take into
consideration the ten Cs model of employee
engagement and try to meet every C as a parameter
to the greatest possible extent.
12.
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CONCLUSION
Acquiring skilled workforce is just not enough

in todays changing economy like ours; instead a lot
needs to be done to retain, involve and make them
committed to the organization and its goals. Thus,
engagement is a state where an individual is not only
intellectually committed but has great emotional
attachment with his/her job that goes above and
beyond the call of duty so as to further the interest of
the company. Organizations like Tata Tele Services
are not only providing their employees a great
infrastructure and other facilities but also freedom to
make their work exciting and also are providing them
an environment wherein they can say good-bye to a
monotonous work. The company focuses on retention
as an outcome of three HR focus areas - employee
motivation, career growth and remuneration and
compensation. Thus working in a safe and cooperative
environment adds to the engagement level of an
employee. We would hence conclude that raising and
maintaining employee engagement lies in thehands of
an organization and requires a perfect blend of time,
effort, commitment and investment to craft a successful
endeavor and to help them being productive employees
.The productivity seems to be in the direct proportion
to the Employee engagement. With all the positive
measures offered to the workers with quality and
quantity production as the chief aim, it may be of much
more good factor for increasing the productivity and
performing the organization in a better manner by
improving Employee engagement. The HR managers
should do well to focus their initiatives on employee
retention and on job satisfaction.
m
Here, I would like to pay my best regards to my
Supervisor Dr Sudhir Kumar, Associate Professor,
Faculty of Commerce and Business Administration,
D N College, Meerut.
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Swaminathan J and Rajasekaran ,Advances In Management, Vol. 3 (12) Dec. (2010)
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Baldev R. and Raina Anupama, Advances In Management Vol. 3 (10) Oct. (2010)
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Perspective, Jyotsna Bhatnagar & Soumendu Biswas, The Indian Journal of Industrial Relations, Vol. 46,
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Ms. Suma Prabhakaran School of Management, SASTRA University, Thanjavur., International Journal
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T. Shankar and J. Bhatnagar,(2010),Work-life Balance, Employee Engagement, Emotional Consonance/

Dissonance & Turnover Intention, Indian Journal of Industrial Relations, Vol 46, No.1, July 2010.
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Pages 109-114
A Study of Buying Behaviour of Customers

Towards Branded and Non-Branded Gold
Jewellery with Reference to Meerut City
Dr. Kavita Saxena
Associate Professor, Economics Department, D.N. (PG) College, Meerut
Abstract
History of Indian jewellery is as old as the history of the country itself. Around 5000 years ago, the desire to adorn themselves
aroused in people, leading to the origin of jewellery. Since then, Indian women and jewellery have gone in hand in hand.
There cannot be a women in India, who does not adore herself with minimum jewellery. In fact, jewellery is considered as
security and prestige of women in the country. The attraction for jewellery has been great in India that it is no more a craft
than an art. In India, gold jewellery is a store of value, a symbol of wealth and status and a fundamental part of the many
rituals. In the countrys rural population, a deep affinity for gold goes hand in hand with practical consideration of the
portability and security of jewellery as an investment.
Keywords : Jewellery, women, security, Investment.
1.
GOLD JEWELLERY MARKET IN

INDIA
Before the liberalization of the Indian economy
in 1991, only the Minerals and Metal Trading
Corporation of India (MMTC) and the State Bank of
India (SBI) were allowed gold. The abolition of the
Gold Control Act in 1992, allowed large export houses
to import gold freely Exporters in export processing
zones were allowed to sell 10 percent of their produce
in the domestic market. In 1993, gold and gold
ornaments mining were opened up for private investors
and foreign investors were allowed to own half the
equity in mining ventures. In 1997 overseas banks and
bullion suppliers were also allowed to import gold into
India. These measures led to he entry of foreign players
like DeBeers, Tiffany and Cartier into the Indian market.
In the 1990s, the number of retail jewellery
outlets in India increased greatly due to the abolition
of the Gold Control Act. This led to a highly fragmented
and unorganized jewellery market with an estimated
1,00,000 workshops supplying over 3,50,000 retailers,
mostly family-owned, single shop operations. In 2001,
India had highest demand for gold in the world; 855

tons were consumed a year, 95% of which was used
for jewellery. The bulk of the jewellery purchased in
India was designed in the traditional Indian style.
Jewellery was fabricated mainly in 18, 22 and 24 carat
gold. As Hallmarking was not very common in India,
under carat age was prevalent. According in a survey
done by the bureau of Indian Standard (BIS), mostly
gold jewellery advertised in India as 22 carat was of a
lesser quality. Over 80% of the jewellers sold gold
jewellery. The late 1990s saw a number of branded
jewellery players entering the Indian market. Titan, the
gold jewellery exporter, sold 18 carat jewellery under
the brand name kisna.
Meerut Jewellery Market
From time immemorial women have been
embellishing themselves with jewellery. In the ancient
times jewellery was deemed as a status symbol. High
profile people like the king and rulers used to adorn
themselves with precious jewellery. The status
accorded to jewellery in the ancient times has remained
totally unchanged even in the modern time. Jewellery
is considered as a must wear for women on special

occasions like festivals and wedding ceremonies.
Jewellery is famous all over the world. The gem and
jewellery industry in India has seen an unprecedented
growth during the last couples of years.
Meerut jewellery market has an important
place in Indian Jewellery market. It has own identity in
the world having customer loyalty and purity. More
over designer jewellery manufactured in Meerut District
is known for its creative and attractive designing. As
far as the origin of jewellery market in Meerut is
concerned, it started here around 1908. Till than it did
not have its identity as a jeewellery market. Before
that gold smith themselves went to the customers house
and took order for making the jewellery as per the
specification of him/her. After making the jewellery,
they also made the delivery of it and collect the money.
In most of the cases, the jewellery work was restricted
to make the jewellery from old design to new design
by melting the old jewellery, even for some making
charges. It means no stock of ready made jewellery
was maintained by the jewellers.
At that time Heera Bullian bank Limited
started ready made jewellery making besides its
traditional business of money landing. After that this
work of jewellery making got converted into a kind of
business. During this period of jeweller Jodha Mal
Kailash Chand Jain and after that Raghunandan Prasad
also opened small jewellery shops where ready made
jewellery was also available for sale. This was the
turning point of Meerut Jewellery Market. After then
Manohar Lal and Radhey Lal started their business
and they also contributed a lot for the development of
Meerut Jewellery Market. Later, a number of jewellers
came and started manufacturing and selling gold and
silver jewellery. Now Meerut is Asias largest jewellery
market. At present, Meerut consists the following four
main jewellery markets.
v
v
v
v
Abu Lane jewellery Market

Bhagat plaza jewellery Market
Sadar Bazar jewellery Market
Valley bazar jewellery Market
RNI : UPENG 2006/17831
2.
METHODOLOGY
It is micro level study based on the primary
data collected from both 50 male and female,
respondents of Service and Business class families in
Meerut city. This study is based specially on liking of
customers towards branded and Non-branded
jewellery because the area of this study is Meerut a
major jewellery market of India. The data is primarily
collected through personal interviews and questioning
with families. The questionnaire is based on their
position in family, financial and family status and their
problems.
3.
(i)

To study the customer behaviour while
purchasing.
To make the study about customers liking
towards branded jewellery and Non branded
jewellery.
To study the causes preferring branded or Non
branded jewellery by customers.
To arrive at the logical conclusion and to
purpose constructive suggestions for the
betterment of jewellery industry in Meerut.
(ii)
(iii)
(iv)
4.
ANALYSIS AND FINDINGS

Hence, the first question was to find out the
family structure and occupation as it is the main factor
for purchasing jewellery. The respondents were just
asked to tick on the family structure and occupation
they belong to. The result is as follows :
Table No. 1
Occupation
Family
structure
Service
Business
Total
Joint
09
04
13
Single
28
09
37
Total
37
13
50
74%
26%
100%
Percentage
Source : Questionnaire.
74% service sector family
26% business sector family
In study table no. 1, shows that researcher

has taken 50 families for sample. There are 13 joint
families out of 50 families, in which 09 families belong
to service class and 04 families belong to business
class. As same 37 families are single structure families
out of 50, in which 28 families belong to service class
and 09 families belong to business class. This study
shows that out of 50 families 27 persons belong to
service class which is more than business class and
joint family structure No. of persons 37 are greater in
single structure family.
Table No. 2
Occupation
Jeweller prefer
Branded Non-Branded
Jew.
Jew.
Total
Service
29
08
37
Business
05
08
13
Total
34
16
50
68%
32%
100%
Percentage
RNI : UPENG 2006/17831
68% prefer branded

jewellery
32% prefer non-branded
jewellery
In this study table no. 2, shows that there are

37 consumers belong to service class, in which
29 consumers like to purchase branded jewellery
and 08 consumers like to purchase non-branded
jewellery, where as 13 consumers are belong to
business class, in which 05 consumers prefer branded
jewellery and 08 consumer prefer non-branded
jewellery. This study shows that consumers of service
class mostly like to purchase branded jewellery. The
reasons for liking toward branded jewellery is monthly
payment service given by brands, own home budgetary
system etc.
Table no. 3 is based on purpose of purchasing
jewellery which is related to monthly income of
consumers. Researcher can see that 28 persons are
belong to 20000-40000 income class, in which 21
consumers like to purchase for marriage purpose, 04
like to purchase for investment purpose and 03 for
Table No. 3 : Income-wise Purpose of Purchasing Jewellery

S. No.
Monthly Income
No. of Person
Purpose of Purchasing
Marriage
Investment
Interest
1.
Below 20,000
02
02
2.
20,000 40,000
28
21
04
03
3.
40,000 60,000
10
03
07
4.
60,000 80,000
02
01
01
5.
80,000 1,00,000
01
01
6.
1,00,000 1,20,000
01
01
7.
1,20,000 1,40,000
8.
1,40,000 1,60,000
06
02
02
02
Total
50
31
13
06
100%
62%
26%
12%
Percentage
their own interest, Whereas 10 persons are to belong

to 40000-60000 income class, in which 03 consumers
like to purchase for marriage purpose, 07 for
investment purpose. This study shows that 06 persons
belong to 1,40,000-1,60,000 income, in which 02
persons like to purchase for marriage purpose, 02
persons like to purchase for investment purpose and
02 persons like to purchase for their own interest.
Table 4 : Characteristics of Family Jewellery
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From the above Table no. 5, it is clear that

customers like to purchase branded jewellery because
of purity and return value at the most.
Table 6 : Jewellery Prefer for Gifting Purpose
Jewellery Prefer for
Gifting Purpose
No. of
families
Branded Jewellery
23
Non-Branded Jewellery
27
50
Total
Characteristics of Family
Jewellery
No. of Points
Reasonable/Convenient
15
Taditional Design
03
Purity
02
Trust
02
Hallmark
02
Variety
02
Total
26
In the above Table no. 4, researcher can see

that the most common reason for purchasing nonbranded jewellery by customers is their budget i.e.,
reasonability.
Table 5 : Characteristics of Branded
Jewellery
Non-Branded
Jewellery
Branded
Jewellery
54%
46%
In the above table no. 6, 23 families i.e., 46%

prefer to purchase jewellery from brand for gifting
purpose, whereas 27 families i.e., 54% prefer to
purchase non-branded jewellery are most expensive
that non-branded jewellery.
Table 7 : Satisfaction from Meerut Jewellery
Market
Satisfaction from
Meerut Jewellery Market
No. of
families
Yes
46
No. of Points
No
04
Purity
24
Total
50
Trust
08
Quality
02
Hallmark
05
Return Value
13
Status Symbol
02
Variety
06
Characteristics of Branded
Jewellery
Total
65
8% customers are
not satisfied
92% customers are
satisfied
In the above Table no. 7, researcher can see

that 96% customers are satisfied from Meerut jewellery
market, whereas 4% customers are not satisfied from
Meerut jewellery market. The reason for more
satisfaction is Meerut is one the largest area in India of

jewellery market.
Table 8 : Causes for liking Non-branded
Jewellery
Causes for Purchase Branded
Jewellery
No. of
Customers
Purity, Trust and Return Value
02
Purity, Trust
02
Purity
04
Quality, Purity
01
Purity, Return Value
05
Purity, Hallmark
02
Variety, Purity, Return value
03
Purity, Variety
02
Trust and Return Value
02
Hallmar, Trust
02
Trust, Return Value, Variety
01
Status Symbol, Purity
02
Design, Quality
01
Purity, Hallmark, Trust
01
Total
30
Table no. 9, shows that in case of liking

towards non-branded jewellery, the most burning
reason is reasonability given by non-branded jewellers
to customers. Other reasons are not so important for
them.
5.
1.
2.
3.
Table no. 8 shows that consumers like to
purchase brand jewellery because of purity, return value
and trust at the most.
Table 9 : Causes given by consumers for liking
Branded Jewellery
Causes of purchasing
Non-Branded Jewellery
No. of
Consumers
Reasonable with quality
13
Purity, Trust, Hallmark
01
Traditional
02
Return Value and Varity
01
Purity
01
Reasonable, Traditional
01
Reasonable, Trust
01
Total
20
RNI : UPENG 2006/17831
4.
5.
CONCLUSION AND FINDINGS

The conclusion that draw from the study are:
The guiding factor behind purchasing jewellery
is trust, purity and return value which score
the maximum. Other factors are variety,
hallmark, influence of family and friends. The
least guiding factor for purchasing jewellery is
the quality & status symbol. Hence when a
customer goes to buy jewellery they do keep
the purity in mind followed by the return value
and the trust. Factors like variety, status
symbol do not have a very big impact on the
customers.
Branded jewellery is extremely popular since
it has 100% awareness. This may be due to
the wide spread publicity taken up by the
various brands. Brand like Tanishq is the most
popular brand in Meerut. Gitanjali is a brand
which is not very popular.
As stated in the study that there was a shift in
consumer tastes; women were increasingly
opting for fashionable and lightweight jewellery
instead of traditional chunk jewellery. It proved
to be correct by this research as respondents
have selected fashion over investment while
purchasing jewellery. Now jewellery is
regarded as more of an investment and less of
an accessory.
When jewellery is bought for gifting purpose
the population still wants to buy it from their
family jewellers.
When it comes to family jewellers, they are
popular because of the trust that their have
with their customers and also because they
charge reasonable prices. These family
jewellers are also popular for traditional design
when a customer is specially looking for
traditional jewellery.
m
RNI : UPENG 2006/17831
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
www.icmrindia.org//branded-gold-business%20Strategy%20Case.htm
Shodhganga.inflibnet.ac.in:8080/jspui/bitstream//06_chapter%203pdf
https://en.wikipedia.org/wiki/Meerut_district
www.gold.org/jewellery/india-market
www.hicow.com/indian-economy/polished-diamond/CAGR-1html
www.managementstudyguide.com/what-is-consumer-behaivour
https://en.wikipedia.org/wiki/Tanishq
www.bis.org.in/cert/hallmark.htm
www.slideshare.net//a-comparative-study-on-the-consumer-preference..
Newspapers : Times of India, Delhi times & Hindustan etc.
http://www.allbankingsolution.com/Banking-tutor/Gold/Gold-hallmarking-in-india-Gold-purity.htm
RNI : UPENG 2006/17831
Biographien
Raghuram Govind Rajan

b. February 03, 1963
Raghuram Govind Rajan is currently serving as the 23rd Governor of the Reserve Bank of India, the
central bank of India. He was chief economist at the International Monetary Fund from 2003 to 2007, the youngest
to occupy the position. Popularly known as Raghuram Rajan is among those few Indian economists who took the
risk of criticizing the US financial System at the prime of his career in early 2000s and warned the concerned
people regarding its potential catastrophes. Studying in India and abroad, Raghuram Rajan gained a wealth of
experience, which gave him a broad and analytic perspective on how systems work. Therefore, it was not a
surprise when he came up with controversial papers chaffing the finance sector. Although it received a few brickbats
initially, its strong implications on the flaws of financial sector didn't go unnoticed. However, he managed to prove
himself as right with his later endeavors and earned a worldwide respect for his substantial work, to the extent that
he was appointed as a financial advisor for the Prime Minister of India-the youngest person to hold this position.
Raghuram Rajan was born on 3 February 1963 in Bhopal, Madhya Pradesh into a Tamil Brahmin family.
He is the third of four children of R Govindarajan, an Indian Police Service officer who topped his 1953 batch. He
did his bachelor's degree in Electrical Engineering from the Indian Institute of Technology, Delhi, in the year 1985.
After that, he went to complete his post-graduate program in Management from the Indian Institute of Management
in Ahmedabad in the year 1987. Further, he wrote a thesis entitled "Essays on Banking" and received his Ph. D. in
Economics from the Massachusetts Institute of Technology in the year 1991.
After completing his Ph. D., he started his career at Chicago University as an Assistant Professor. In 1996,
he was appointed as a visiting professor at Stockholm School of Economics and Kellogg School in Northwestern
University. In 2003, he became the Economic Counselor and Director of Research at the International Monetary
Fund. In the same year, he received the Fischer Black Prize by the American Finance Association for his contribution
to the theory and practice of finance at such an early age. He is known for his analytic and critical line of thought.
In 2005, he shook the entire economy world with his controversial paper entitled "Has Financial Development
Made the World Riskier?" In 2007, he resumed his career back into teaching for a short period. Later in 2008, he
chaired the Indian Government's Committee on Financial Sector reforms. In the year 2009, Dr. Rajan wrote a
guest column for "The Economist", proposing a regulatory system that minimizes boom-bust financial cycles. In
2010, he was named in the list of top global thinkers by the Foreign Policy magazine. In November 2008, Indian
Prime Minister Dr. Manmohan Singh appointed Rajan as an honorary economic adviser. That same year, a highJournal of Commerce & Trade
RNI : UPENG 2006/17831
level committee on financial reforms, headed by Rajan, submitted its final report to the Planning Commission. He
chaired the Indian Government's Committee on Financial Sector Reforms (2007-2008).
In 2009, he became a member of the American Academy of Arts and Sciences. In 2011, he served as
President of the American Finance Association. On 10 August 2012, Rajan was appointed as chief economic
adviser to India's Ministry of Finance. He prepared the Economic Survey for India for the year 2012-13. On 5
September 2013, he took charge as the 23rd Governor of the Reserve Bank of India, at which point he took a
leave of absence from the University of Chicago Booth School of Business. Rajan's research interests were in
banking, corporate finance, and economic development, especially the role finance plays in it. Raghuram Rajan's
most important contribution has been to the theory and practice of finance. He has written numerous journals that
have revolutionized the way that economy has been handled and how it should be handled. He has raised questions
and sought the answers by working towards them himself.
Raghuram Rajan is married to Radhika Puri Rajan, whom he met while they were both students at IIM
Ahmedabad. Radhika teaches at University of Chicago Law School. She is also an Adjunct Associate Professor of
Behavioral Science at the University of Chicago Booth School of Business. They have a daughter and a son.
Raghuram Govind Rajan has the following awards to his credit :
v
Fischer Black Prize by the American Finance Association in 2003.
Financial Times Business Book of the Year award for "How Hidden Cracks Still Threaten the World
Economy" in 2010.
In November 2011 he received the Infosys Prize for Social Sciences - Economics for his work in analyzing
the contribution of financial development to economic growth, as well as the potentially harmful effects of
dysfunctional incentives that lead to excessive risk-taking.
In 2013 he was awarded the fifth Deutsche Bank Prize in Financial Economics for his "ground-breaking
research work which influenced financial and macro-economic policies around the world".
In 2014 he was conferred the Best Central Bank Governor award by Euromoney Magazine.
In 2014 He was conferred with the Governor of the Year Award 2014 from London-based financial
journal Central Banking.
m
RNI : UPENG 2006/17831
Book Review
The Man of the Moment :

Narendra Modi
M V Kamath & Kalindi Randeri
Vikas Publishing, New Delhi
ISBN : 9789325968387 : Pages 442; Price: Negotiable online; 2013; Paperback
Reviewer : J. N. Sharma, Lecturer Library Science, D. N. College, Meerut, U.P. India.

Authors : Padma Bhushan M V Kamath, the doyen of Indian journalism, has authored over 50 books.
Starting his career with the Free Press Journal in 1946, Kamath went on to become Editor of the Free Press
Bulletin, Bharat Jyoti, the Sunday edition of The Times of India and the Illustrated Weekly of India. He was special
correspondent of the Press Trust of India at the UN and Special Correspondent of the Times of India in Europe
and Washington DC. Erstwhile Chairman of Prasar Bharati and Vigyan Prasar, he is today Hon. Director of the
Manipal Institute of Communication.
Dr Kalindi Randeri was Founder-Principal of the Womens Polytechnic of S.N.D.T Womens University,
Mumbai. She was awarded the WOMAN OF THE YEAR - 1995 title as an outstanding educationist by the
Ladies Wing of the Indian Merchants Chambers, Mumbai and by the Bombay Chapter of the Zonta International
Club for Women. A Fulbright scholar, Dr Randeri has authored the book INDIAN NAMES from Classical to
Contemporary. She has also co-authored some books with M V Kamath, translated books from English into
Gujarati, and is currently working on a book on Names from Buddhist Literature.
Title and key features : The title of the book is interesting. The Man of the Moment : Narendra Modi is
a perfect read to know more about the politician. His speeches are captivating and grip everybodys attention. The
Man of the Moment : Narendra Modi is about the man himself, his style of governance and consecutive victories in
the elections.
Organization of the book : The book has been divided into two major sectionsSection I : From Grass Roots to Gujarats Helmsman
v
Beginnings of a Quest
v
Rites of Passage
v
The Threshold and Beyond
v
The Interregnum
v
The Power of Retreat
v
The Man and His Mission
v
History and Hysteria
v
The Secular Gossamer
v
Of Commissions and Reality
RNI : UPENG 2006/17831
Test of Faith
v
Renaissance Outside the Labyrinth
v
The General in Command
v
The View Beyond the Prism
v
No Full Stop; Not Yet,
Section II : From Government to Governance
v
Focus on Governance
v
Women, Tribal Welfare and Skill Development
v
Novel Developments
v
Economic and Industrial Growth
v
Beyond the Shores of Gujarat
v
Spreading Sadbhavana
v
Modi and the Media
v
Vibrant Gujarat 2013
v
Pinpricks
v
The Elections of 2012
v
The Press Post-Mortem after Election 2012
v
Will He or Wont He?
v
At Close Quarters: The Man and His Persona
The Man of the Moment is the book written by Kamath & Randeri. It gives a perfect look in the life of
Narendra Modi as a politician. Narendra Modi is the face of Indias new and revived politics. The man is known
for his amazing stamina and his disposition even when he is being criticised. Modi has been able to attract both
foreign and Indian investments through his model of governance. The book The Man of the Moment : Narendra
Modi is a perfect read to know more about the politician. His speeches are captivating and grip everybodys
attention. The Man of the Moment : Narendra Modi is about the man himself, his style of governance and
consecutive victories in the elections.
Narendra Modi unfolds the rollercoaster life and the evolution of a consummate politician who has enlarged
the contours of politics in India. Narendra Modi is poised to evolve as the ultimate game-changer of Indian
politics. His mesmeric hold over Gujarats masses has translated into three consecutive victories in the state assembly
elections. Unravel the enigma of Modi his convictions and motivations, the secret of his amazing stamina, and his
propensity to remain unfazed in the face of criticism. Accused of being communal, castigated for engineering the
2002 Gujarat riots and maligned for being a polarizing figure; Modi counterbalances these negatives with his
Gujarat model of governance, ability to attract both foreign and Indian investment, and his personal integrity.
Indeed, his connect with the youth makes him the strongest challenger to the Congress monopoly in India.
Savour the fascinating journey of Modi from an ordinary RSS pracharak to Gujarats longest serving chief minister
and now, to a larger role on the national stage as chairman of BJPs Election Committee for the 2014 general
elections And if several opinion polls and Modis popularity in the social media are anything to go by, as the
future prime minister of India!
Strong Man of Gujarat to Game-Changer of the Indian political scene June 2013 has seen the catapulting
rise of the man who started out as a humble pracharak of the BJP and a foot soldier of the RSS. While the public
at large was still debating whether to join the camp of Modi-takers or Modi-haters, and the BJP itself was arguably
acting out the theatre of the absurd, the Gujarati colossus has seized the moment and positioned himself as the
dynamo who the youth see as a possible messiah someone who can deliver the country from the deep rot of
stagnation and corruption and give the nation governance and not just political government.
m
v
Tvctdsj qujpo!Gpsn
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Double-Blind Reviewed, Refereed and Indexed International Journal of Commerce, Trade and Management

ISSN 0973-4503 (PRINT)

ISSN 2454-1702 (ONLINE)

Impact Factor 3.860 (Cosmos)

Volume 11 Number 1 April 2016

Impact Factor 3.860

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ISSN (PRINT) 0973-4503

Double-Blind Reviewed, Refereed and Indexed International Journal

Dr. Himanshu Agarwal

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