Group 4

BUSINESS RESEARCH
METHODS

Group 4
Meetanshi Pandey C048
Varun Prabhakar C051
Rutvi Vithalani C065
Nidhi Doshi C020
Raunak Bothra C014
Jatin Kochar C032
Rounak Jindal C028
Literature Review

The view that the Indian economy would be less adversely affected by the global economic crisis because of
limited integration and other inherent strengths has proved to be wrong. The economic boom in India that came
after the current downturn was dependent upon greater global integration in three ways: more reliance on exports
particularly of services; ever increasing reliance on capital inflows, especially of the short-term variety; and the
role these played in underpinning a domestic credit-fuelled consumption and investment boom. These in turn
made the growth process more susceptible to internally and externally generated crisis, as is now becoming clear.
Evidence of divergence of business cycles across developed and emerging market economies in the period of
globalisation were found by econometric studies. (Chandrasekhar, 2009)

Growing trade integration implied that one of the routes through which the real economy was affected was a
deceleration in exports of goods and services, which had contributed significantly to the earlier boom. A surge of
external equity and debt inflows, combined with a much smaller increase in the current account deficit and a
liberalised exchange rate regime, is likely to exert upward pressure on the domestic currency. This would
adversely affect the country’s export competitiveness and encourage further speculative inflows of capital.
To forestall such effects, the central bank typically seeks to manage the exchange rate by buying up foreign
currency and building its reserves, and this was in fact the policy of the Reserve Bank of India. (Chandrasekhar,
2009)

All that said, the four years ending in early 2008 were remarkable because of the prolonged bull run in the Indian
stock market, which to some extent did help to finance the investment boom underlying India’s growth
acceleration. Internal financial liberalisation in India had resulted in a process of institutional change in
which the role played by state-owned financial institutions and banks were substantially altered. All this is
obviously only possible if the economy is not subject to destabilising flows of capital and sharp fluctuations in
imports and exports. A greater degree of management of both trade and capital accounts is therefore a precondition
for the successful implementation of such a strategy. (Chandrasekhar, 2009)

Globalization ensured that the financial institutions around the world are linked and a crisis in a country has
repercussions throughout the world. The 2008 crisis had a limited impact on the Indian banking sector due to its
conservative approach. The effect of the 2008 crisis on the Indian banking sector is analysed by measuring the
financial performance of Indian banking sector. To measure the performance, the following indicators were used
- capital adequacy, profitability, liquidity and management performance. All ratios show that the Indian banking
sector was not affected by this event. (Avinash, 2013)
Indian banking sector only had a marginal exposure to the international banking sector due to RBI regulations and
absence of complex securities. The global recession meant that the export industry in India was affected and led
to higher defaults of loans in India but the Indian banking sector lent with very high vigilance and Indian banks
could absorb losses as it was adequately capitalized. Therefore, their profits were marginally affected. Also, Indian
banks had enough liquidity, so there was no threat of bank runs. Also, their lending had not been affected.
(Avinash, 2013)
The Government of India’s response to the financial crisis through stimulus packages and the steps taken by the
Reserve Bank of India were a culmination of the analysis of macroeconomic variables in India during the crisis
time period. The Indian economy proved to be relatively resilient, and several social programmes and a strong
banking system have helped to mitigate the impact. (Rami, 2011)

Financial innovation inevitably increases risks, while a tightly regulated financial system hampers growth. India
managed the safety net by understanding that the very goal of financial regulation and supervision is
to infuse liquidity into the banking system and to address problems being faced by various non-bank financing
companies. Banks had been provided adequate liquidity through a series of reductions in the CRR and additional
flexibility in meeting the SLR requirement. (Rami, 2011)

A GDP growth of 8.8% in the first quarter of FY2010 (ending March 2011) and 8.6% in the last quarter of FY2009
signalled a strong and durable recovery, primarily led by a healthy expansion in industry and buoyancy in services.
Moreover, the performance of agriculture was reasonable in the first quarter, after a negligible expansion in
FY2009 due to a poor summer monsoon. The subsectors that registered impressive growth included mining and
quarrying; manufacturing; electricity, gas, and water supply; construction; and trade, hotels, transport, and
communications. From the demand perspective, investment took over as the major driver of growth in the second
half of FY2009, from government consumption expenditure in the first half. (Rami, 2011)
On the external front, the central bank noted that the continued sluggishness of the global economy was
constraining export growth, while the strong domestic recovery was pushing imports and the trade deficit higher.
However, improved global investor sentiment was resulting in increased capital inflows and, if it continued, it
would abate concerns even if exports remained sluggish. (Rami, 2011)

It is clearly understood the stress due to overall external sector has been increasing post financial global crisis
period. There had been a decline in key economic indicators like import reserve cover, ratio of short debt to
external debt, ratio of foreign exchange reserves to total debt and debt servicing ratio. The rupee became more
volatile during crisis and particularly between August 2011 to October 2013. The basic reasons for this stress on
external sector can be attributed to the following reasons:
 Slowdown in domestic demand, savings and investment
 Higher inflation rate
 Slowdown of foreign capital inflows (Shylajan, 2014)

The sub-prime crisis that emanated from the United States had led to liquidity and solvency problems all around
the world. Even though India, like other developing countries, did not have direct exposure to the crisis, the effects
were felt through credit, exports, and exchange rate channels. India’s engagement with the global economy had
deepened since the 1990s, making it vulnerable to global financial and economic crises. The impact of the current
global crisis was transmitted to the Indian economy through three distinct channels, namely, the financial sector,
exports, and exchange rates. However, four factors helped India to cope with the crisis and soften its impact. They
were: (1) the robust, well-capitalized and well-regulated financial sector; (2) the gradual and cautious opening up
of the capital account; (3) the large stock of foreign reserves, and (4) a greater dependence on domestic
consumption as a driver of GDP growth. (Soumya, 2010)
The rescue efforts by the US and other G-7 authorities after the 2008 meltdown was aimed mainly to stabilize the
banking and financial system, less to restore economic growth. Recovery was not projected until 2010. However,
developing countries continued to grow despite the financial turmoil and economic downturn in the developed
economies. (Hamdani, 2008)
The IMF said growth in 2009 would come mostly from emerging market economies. But could this growth be
sustained? Much depended on the global policy response. The arrangements that were put in place among the G-
7 central banks to replenish the international credit markets needed to be extended to developing countries. Indeed,
several developing countries with adequate reserve positions – like Brazil, China, India and Nigeria – had leeway
to take proactive measures to sustain their growth. (Hamdani, 2008)
At present, the focus around the world, as also in India, has shifted from managing the crisis to managing the
recovery. The key challenge relates to the feasible fiscal exit strategy that needs to be designed and implemented.
As a response to the current global crisis, the Indian government has adopted significant discretionary fiscal
stimulus packages to promote investment and sustain aggregate demand. It is time now to move away from the
stimulus packages and concentrate on long-term policy scenarios to control the fiscal situation as well as improve
GDP growth. The magnitude of fiscal adjustment needed in the next couple of decades is almost unprecedented,
especially for countries like India with relative high debt. (Soumya, 2010)

The key challenge involves balancing between public interventions and maintaining market confidence in the
sustainability of public finances. This will involve focusing policy attention on removing some of the structural
bottlenecks on raising the potential GDP growth rate. Essentially, this will imply efforts to improve the investment
climate for both domestic and foreign investors, remove entry barriers to corporate investment in education and
vocational training, improve the delivery of public goods and services, and expand physical infrastructure
capacities, including a major effort to improve connectivity in the rural regions. Infrastructure is a key binding
constraint on India’s growth and the government should take up long-term projects to improve
infrastructure facilities. The government also needs to step-up investment in human capital
development through increased spending in areas such as primary education, primary health, and research and
development. Investment in human capital will help achieve inclusive growth, and furthermore such expenditures
should be considered as part of capital expenditure rather than as revenue expenditure. On the revenue side, one
way to exit is to increase or restore excise duties, which were reduced during the economic slowdown, to previous
levels. However, given the uncertainty about the robustness of the recovery, completely reversing the tax cuts
would affect the growth prospects. Another possible option is to broaden the tax base. This will require changes
to the tax structure, which is likely to become more important than before. (Soumya, 2010)

Objective
 • To test the correlation, if any, between academic background, gender and CGPA

Statistical Method Used

• Independent sample T test

Research Basis

T test

A t-test is an analysis of two populations means through the use of statistical examination; a t-test with two
samples is commonly used with small sample sizes, testing the difference between the samples when the
variances of two normal distributions are not known

Process

H0:There is no correlation between Educational background and CGPA in MBA

H1: Educational Background impacts CGPA in MBA

Hypothesis

• Collected Primary data from 120 samples

• Mapped the CGPA against gender and educational background
• Selected 60 Non Engineers from across divisions
• Randomly selected 60 engineers after the first selection

CGPA Frequency
Measures of Central Tendency For Entire Sample
Statistics

cgpa Gender Background

N Valid 120 120 120

Missing 0 0 0

Mean 2.8192

Median 2.8550

Std. Deviation .36805

Variance .135

Measures of Central Tendency (Gender-Wise)

Independent Sample Test (T-Test)

Results
  Here, alpha is greater than 0.05
 Implication is that the Null Hypothesis stands rejected.
 H0: There is no correlation between Educational background and CGPA in MBA, is
rejected.
 Therefore, there is a correlation between Educational Background and CGPA in MBA.

References
Chandrasekhar, J. G. (2009). The costs of ‘coupling’: the global crisis and the Indian economy.
Cambrdge Journal of Economics, 725-739.
Avinash, G. S. (2013). AN IMPACT ANALYSIS OF GLOBAL RECESSION ON THE INDIAN. International
journal of engineering and mangement sciences.

Rami, D. G. (2011). IMPACT OF GLOBAL FINANCIAL CRISIS ON THE INDIAN ECONOMY. NJRIM, 35-59.

Shylajan, C. S. (2014). Challenges in India’s External Sector During Post Crisis Period. ASCI Journal of
Management, 1-21.

Soumya, R. K. (2010). Fiscal Policy Issues for India after the Global Financial Crisis (2008-2010). ADBI
Working Paper 249, 1-38.

Hamdani, K. (2008). CAN DEVELOPING COUNTRIES BE A NEW ENGINE OF GROWTH. The Indian
Economy Review, 204-208.