Business Vision Jan. To Mar 2006

BUSINESS VISION
A Quarterly Journal of Management Volume 2 No. 1 Jan. - Mar. 2006
Editorial THE HONG KONG MINISTERIAL AND AFTER The Hong Kong Ministerial declaration ( Dec 05) has been the subject of intense debate in India and elsewhere as to find out the benefits that really accrue to WTO member countries, particularly the developing and the less developed. Two important issues are relevant to Indian trade and industry .First, what will be the effect on Indian market, now that the less developed countries are allowed duty free and quota free market access into the developed as well as the developing countries ? Second, how much of tariff and subsidy cuts shall have to be agreed upon from the Indian side at the ensuing negotiations at Geneva in April06? India is one of the relatively more developed among the developing countries. It has been agreed at the Hong Kong Ministerial that the products of 50 least developed countries (LDCs) can have free access into the Indian market. (also into the markets of other countries as well ).While some have observed this as a threat to the Indian domestic market due to increased competition likely to arise from large volume of imports from the LDCs and also loss of customs revenue, others have taken it as an opportunity to expand their business into the LDCs. These fears, it seems, have been exaggerated. The LDCs are no threat to Indian industry, given its superior technical and managerial expertise .For certain commodities such as textiles and leather products, it may however, be necessary for the government to introduce certain modalities. If the macro economic situation is properly managed by the government of India, the competition from a few LDCs should not be taken as serious threat to industry. The government should see that industries having good growth potential are encouraged by providing certain fiscal and monetary concessions. Some companies can take this opportunity to expand their business into the LDCs through appropriate tie-ups. The other issue regarding the tariffs and subsidy cuts has been more controversial and debatable. Although, in principle, there has been consensus among the member countries to reduce these, for enhancing the multilateral trade between the countries, the actual modalities are yet to be worked out and the same presented at the ensuing WTO meeting in April06. At the Hong Kong Ministerial, the developed countries agreed to finally end the agricultural subsidies from the year 2013 and also to gradually phase them out . So far as the industrial products are concerned, the member countries agreed to what is called the Swiss formula which stipulates that higher tariffs should be cut more than the lower tariffs. In this context, the government should focus on two issues, namely how the imports, exports and overall economic welfare of the country is affected and the implications for customs revenue. The tariff /subsidy cuts should not be uniform for all industrial goods. While the average rate could be lowered, the individual rates should be such as to enhance the growth of certain deserving industrial products. Given this scenario, the government has to carefully work out these modalities for the Geneva conference. In addition, since the Hong Kong Ministerial did not discuss much on the UN Millennium Development Goals, the G.O.I should try to see that at least at the Geneva conference these developmental issues are taken up. Dr. Kondal Rao Velchala Editor
EDITOR Dr. V. Kondal Rao

Chairman
Sister Nivedita Foundation Associate Editor T. Sudhaker Rao EDITORIAL BOARD

Chairman
Prof. T. Divakara Rao

Formerly, Head, Dept of Economics, University of Hyderabad
Prof. V. Viswanadham
Former Professor, Dept. of Commerce, O.U., Hyderabad.
V.K. Premchand
M.D., Frontier Information Technologies Ltd., Hyderabad
Dr. Aminuddin Khan

Industrial Psychologist & HRD Consultant, Hyderabad.
S. Abhiramakrishna
C.O.O., ROCSYS Technologies Pvt. Ltd., Hyderabad.
K. Satyanarayana
Executive Director, NHRD Network, Hyderabad
Krishna Sagar Rao

Corporate Strategist & CEO of Matrix Life Systems, Hyderabad
K. Narendranath
Associate Professor, Dept. of Business Management, O.U., Hyderabad.
Dr. R. Pushpavathi
Former Editor, Business Vision
Dr. G.R. Reddy Dr. P. Purushotham Rao

Professor of Commerece, O.U., Hyderabad. Consultant, Centre for Economic and Social Studies
Dr. Chetan Srivastava

Asst. Professor, Institute of Public Enterprise (IPE), O.U. Hyderabad.
Printed and Published by Dr. V. Kondal Rao

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ABIDS ADILABAD ADONI AMALAPURAM AMEERPET ANAKAPALLI ANANTHAPUR ASHOKNAGAR BHEL BHIMAVARAM BODHAN BHONGIR BHOOPALPALLY CHIRALA CUDDAPAH DILSHUKNAGAR ELURU GARIMELLA GODAVARIKHANI GUDIWADA GUDUR GUNTUR1 GUNTUR2 HABSIGUDA HANAMKONDA1 HANAMKONDA2 HINDUPUR HUZURABAD JAGITIAL JANGAON JANGAREDDYGUDEM KAKINADA KAMAREDDY KARIMNAGAR KAVALI KAZIPET-1 KAZIPET-2 KHAIRATHABAD KHAMMAM KHARKHANA KODAD KOTHAGUDEM KUKUTPALLY KURNOOL KUSHAIGUDA MACHARLA MACHILIPATNAM MAHABUBNAGAR MAHBUBABAD MANCHERIAL MANKAMMATHOTA MARKAPUR MIRYALAGUDA MVPCOLONY NAD-VAIZAG NALGONDA NANDYAL NARSARAOPET NELLORE NIRMAL NIZAMABAD NUZIVID ONGOLE ORUGALLU PALASA PONNURU PRODDUTUR RAJAMPET RAJAHMUNDRY RAMPUR S.D.ROAD SANGAREDDY SANTHOSHNAGAR SIDDIPET SRIKAKULAM SURYAPET TENALI THIRUPATHI VIJAYAWADA2 VIJAYAWADA2 VIJAYANAGARAM VIKARABAD VISAKHAPATNAM WARANGAL ABIDS ADILABAD ADONI AMALAPURAM AMEERPET ANAKAPALLI ANANTHAPUR ASHOKNAGAR BHEL BHIMAVARAM BODHAN BHONGIR BHOOPALPALLY CHIRALA CUDDAPAH DILSHUKNAGAR ELURU GARIMELLA GODAVARIKHANI GUDIWADA GUDUR GUNTUR1 GUNTUR2 HABSIGUDA HANAMKONDA1 HANAMKONDA2 HINDUPUR HUZURABAD JAGITIAL JANGAON JANGAREDDYGUDEM KAKINADA KAMAREDDY KARIMNAGAR KAVALI KAZIPET-1 KAZIPET-2 KHAIRATHABAD KHAMMAM KHARKHANA KODAD KOTHAGUDEM KUKUTPALLY KURNOOL KUSHAIGUDA MACHARLA MACHILIPATNAM MAHABUBNAGAR MAHBUBABAD MANCHERIAL MANKAMMATHOTA MARKAPUR MIRYALAGUDA MVPCOLONY NAD-VAIZAG NALGONDA NANDYAL NARSARAOPET NELLORE NIRMAL NIZAMABAD NUZIVID ONGOLE ORUGALLU PALASA PONNURU PRODDUTUR RAJAMPET RAJAHMUNDRY RAMPUR S.D.ROAD SANGAREDDY SANTHOSHNAGAR SIDDIPET SRIKAKULAM SURYAPET TENALI THIRUPATHI VIJAYAWADA2 VIJAYAWADA2 VIJAYANAGARAM VIKARABAD VISAKHAPATNAM WARANGAL ABIDS ADILABAD ADONI AMALAPURAM AMEERPET ANAKAPALLI ANANTHAPUR ASHOKNAGAR BHEL BHIMAVARAM BODHAN BHONGIR BHOOPALPALLY CHIRALA CUDDAPAH DILSHUKNAGAR ELURU GARIMELLA GODAVARIKHANI GUDIWADA GUDUR GUNTUR1 GUNTUR2 HABSIGUDA HANAMKONDA1 HANAMKONDA2 HINDUPUR HUZURABAD JAGITIAL JANGAON JANGAREDDYGUDEM KAKINADA KAMAREDDY KARIMNAGAR KAVALI KAZIPET-1 KAZIPET-2 KHAIRATHABAD KHAMMAM KHARKHANA KODAD KOTHAGUDEM KUKUTPALLY KURNOOL KUSHAIGUDA MACHARLA MACHILIPATNAM MAHABUBNAGAR MAHBUBABAD MANCHERIAL MANKAMMATHOTA MARKAPUR MIRYALAGUDA MVPCOLONY NAD-VAIZAG NALGONDA NANDYAL NARSARAOPET NELLORE NIRMAL NIZAMABAD NUZIVID ONGOLE ORUGALLU PALASA PONNURU PRODDUTUR RAJAMPET RAJAHMUNDRY RAMPUR S.D.ROAD SANGAREDDY SANTHOSHNAGAR SIDDIPET SRIKAKULAM SURYAPET TENALI THIRUPATHI VIJAYAWADA2 VIJAYAWADA2 VIJAYANAGARAM VIKARABAD VISAKHAPATNAM WARANGAL ABIDS ADILABAD ADONI AMALAPURAM AMEERPET ANAKAPALLI ANANTHAPUR ASHOKNAGAR BHEL BHIMAVARAM BODHAN BHONGIR BHOOPALPALLY CHIRALA CUDDAPAH DILSHUKNAGAR ELURU GARIMELLA GODAVARIKHANI GUDIWADA GUDUR GUNTUR1 GUNTUR2 HABSIGUDA HANAMKONDA1 HANAMKONDA2 HINDUPUR HUZURABAD JAGITIAL JANGAON JANGAREDDYGUDEM KAKINADA KAMAREDDY KARIMNAGAR KAVALI KAZIPET-1 KAZIPET-2 KHAIRATHABAD KHAMMAM KHARKHANA KODAD KOTHAGUDEM KUKUTPALLY KURNOOL KUSHAIGUDA MACHARLA MACHILIPATNAM MAHABUBNAGAR MAHBUBABAD MANCHERIAL MANKAMMATHOTA MARKAPUR MIRYALAGUDA MVPCOLONY NAD-VAIZAG NALGONDA NANDYAL NARSARAOPET NELLORE NIRMAL NIZAMABAD NUZIVID ONGOLE ORUGALLU PALASA PONNURU PRODDUTUR RAJAMPET RAJAHMUNDRY RAMPUR S.D.ROAD SANGAREDDY SANTHOSHNAGAR SIDDIPET SRIKAKULAM SURYAPET TENALI THIRUPATHI VIJAYAWADA1 VIJAYAWADA2 VIJAYANAGARAM VIKARABAD VISAKHAPATNAM WARANGAL
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BUSINESS VISION
Vol. 2 No. 1 January- March- 2006
IN THIS ISSUE
EDITORIAL NEWS ROUND UP Andhra Pradesh - Gaining Momentum Economy, Banking & Finance Going for Gold A phenomenon called Peter Drucker A tribute to the master : Prof. Peter Drucker Homage to Madhu Dandavate Dandavate was Washing his Clothes Beyond Death INSIGHT Science and Practical Reason Management Challenges and Opportunities in a Globalised Environment India Needs Second-Generation Reforms Internet Banking in Andhra Pradesh Evaluation of Employee Training in Andhra Pradesh Paper Mills Limited, Rajahmundry COVER STORY Swami Paramarthanandaji : An introduction Swami Paramarthananda and The Business of Man Making, Character Building Swami Paramarthanandajis contribution for spiritual rejuvenation in Andhra Pradesh A Wreath For Swami Paramarthananda Swami Paramarthananda : A Dynamic Monk Om Sri Ramakrishnaya Namaha FOCUS Constraints To The Fortune At The Bottom Of The Pyramid Exploring Sources of Capital for Start-ups Foreign Capital and Investment in India Marketing and Sales Retail Sector in India: Where is it headed? INTERFACE A talk with Mr.K. Venkateswar Rao SURVEY Real Estate The changing scenario in Hyderabad - T. Sudhaker Rao 112 109 - Prof T.Divakara Rao - C. Venkata Ramana - G. Ravi Kumar, G. Surender - V. Nagaraju, U. Jayalakshmi - Dr. S.R. Subba Rao 73 81 88 99 103 57 - Dr. Kondal Rao Velchala - Swami Srikantananda - Prof. I.V. Chalapathi Rao - A.S. Murthy - Smt. P. Andala Devi 58 62 64 66 70 - Dr. Amartya Sen - Dr. M.Ramamohan Rao - Praveen Garlapati - E. Naveen Nicolas - Dr. R.Madhusudana Raju 27 35 38 45 49 - Dr. Kondal Rao Velchala - Smt. N. Satyavathi - Smt. A. Lalitha Praveena - Chidanand Rajghatta, - T. Sudhaker Rao - R. Devarajan - Krishna Sagar Rao - Dr. Kondal Rao Velchala - Udayan Sharma - Uday Dandavate 1 4 12 15 17 19 21 25 26
NEWS ROUND UP
APSFC goes golden on 1st November,2005 in the presence of Mr. P. Chidambaram
Andhra Pradesh: Gaining momentum
The APSF centered its golden jubilee year on Nov. 1, 2005 and the occasion was befittingly celebrated in the presence of Union Minister for Finance, Mr. P. Chidambaram, Chief Minister Dr. Y.S. Rajasekhara Reddy and State Finance Minister Mr. Rosaiah
2004-05 is a year of landmark achievements for Andhra Pradesh State Financial Corporation (APSFC). The Corporation posted the highest ever net profit of Rs. 13.15 crore in the year 2004-05 after making requisite provision for NPAs and tax. The net profit after tax reckons an increase of 30% over the last years profit.
declined from 10.47 to 10.14% as Achievements at the end of the FY 2004-05. Further, the achievements in the key Incentive to customers result areas of sanctions (Rs. 464.69 The Corporation passed on part of crore), disbursements (Rs. 348.87 the interest cost saving made out crore), recoveries (Rs. 451.39 crore of the pre-redemption of the high towards principal and interest) are cost borrowings to its customers also all time high records. The during 2004-05 by increasing the highest performance in the key result areas enabled the Corporation to maintain its pre-eminent position among all SFCs in the country for the fourth year in succession.
The major breakthrough in the year 2004-05 was on the cost front. The NPA recovery financial expenses fell by 6.75% to Rs. 100.17 Another significant crore in 2004-05 from achievement in 2004-05 Rs. 107.41 crore in the was in respect of NPAs. previous year. PreThe Corporation could redemption of high recover Rs. 105.33 crore cost SLR bonds towards principal and aggregating to Rs. 203.98 APSFC Chairman Mr. M. Gopala Krishna interest from the NPAs crore carrying interest Presenting the Golden Jubilee Souvenir to the which contributed to the rates between 10% and Finance Minister for release reduction of the aggregate 14% was solely amount (principal plus other responsible for the decrease in the interest rebate for SSI and service expenses) from Rs. 398.40 crore to financial expenses. In addition, the sector units and also by way of refinance loan installments of Rs. direct reduction in the interest rates 363.71 crore as at the end of the 71.71 crore payable in the year to selective customers who have March, 2005. The recovery of NPAs 2004-05 and 2005-06 were paid established a very prompt was possible through well planned much ahead of the schedule and repayment track record with the and coordinated recovery efforts, this measure also contributed to Corporation over years. The constant monitoring of the assets, the interest cost saving during the Corporation had shown similar faster compromise settlements under year under review. These initiatives gesture to all its existing customers the One Time Settlement Scheme helped the Corporation to achieve in FY 2003-04 also when SIDBI and quick sale of seized units, a substantial reduction in its allowed interest rate reduction to informed its M.D., Mr. Ajeya Kallam. average borrowing cost which it. APSFC, with its dedicated and
4 Business Vision Vol.2 No.1 Jan. - Mar 2006
motivated work force, is confident of achieving the high targets set for the Golden Jubilee Year and is committed to better serve the SMEs. APSFC will continue as an effective policy instrument of the State Government to translate its objectives into a reality stated Mr. Ajeya Kallam, confidently. Speaking on the occasion of entering the golden jubilee year, Mr. M. Gopala Krishna, Chairman stated, The SME Bill now in Parliament is expected to give a boost to the growth of the small and medium enterprises. The Corporation will encourage and support entrepreneurship, and the SME sector to give a boost to employment and exports. APSFC will assist the Small industry to become Smart industry and make a smooth technological transition to grow large enough to compete globally and help spearhead the export-led growth of the country. Partnership with PSBs Andhra Pradesh Chief Minister Dr. Y.S.Rajasekhara Reddy said a Rs. 50-crore equity support would be given to APSFC. We are giving to APSFC to enable it to become one-stop shop for prospective entrepreneurs to obtain finance and get allotment of land from a single agency for setting up a unit. This will be a unique model in the country, he said. Inaugurating the Golden Jubilee celebration function of the APSFC, the Union Finance Minister Mr. P. Chidambaram offered a couple of suggestions to all the SFCs for improving their performance. The finance minister
Business Vision Vol.2 No.1 Jan. - Mar 2006
asked them to tap capital markets to raise funds. Chidambaram asked the SFCs to tie up with public sector banks to improve portfolio of lending. I believe APSFC might be the first SFC to tap markets. It has also identified SBH and Andhra Bank as potential partners for tie ups. I will do everything to make these partnerships successful, the minister said. The SFCs should also go for credit rating so that they will get concessional rate of interest on the loans that they borrow, advised the Finance Minister.
NEWS ROUND UP Visakhapatnam, exclusively for the chemical industry, Chief Minister Dr. Y.S. Rajasekhara Reddy said on November 8,2005.
Speaking at a conference on Export Excellence organized by Confederation of Indian Industry (southern region), Dr Reddy said the SEZ would be earmarked for chemical and petrochemical units, which are expected to be set up with the availability of natural gas from the Krishna Godavari Basin.
Dr Reddy said that the SEZ would be set up as a public-private partnership, with possible investment from overseas as well. He Government said the government would also be setting up a SEZ in Hyderabad for C.M announces Aadarsh the garment sector, spread over an Andhra Pradesh in three years area of 1,000 acres. The power tariff Dr. Y.S. Rajasekhara Reddy, the for the garment part would be 75 Chief Minister of Andhra Pradesh paise lesser than the current tariff announced a scheme christened as offered to industry, he said. Aadarsh Andhra Pradesh, that will be launched in April, 2006. It is He said exports from Andhra meant to ideally develop the state Pradesh had grown by 17 per cent within 3 years. The object of the in 2004-05, to Rs 17,974 crore against scheme is to provide the basic the Rs 15381 crore in the previous facilities in all villages like housing, year. This was only four per cent of sanitation, water supply, integrated Indias total exports, he said, adding women and child development, that the State expected to double its primary education, health, exports by augmenting its electricity, roads and provision of infrastructure, including quality pensions. The scheme requires an power and water. estimated Rs. 23 thousand crores CM announces steps to out of which Rs. 19 thousand encourage small industries crores are already available to the villages under different central and While participating in the Small state programmes. The state has to Industries Day on Nov.2, 2005, the arrange for the balance of Rs. 4 Chief Minister, Y.S.Rajasekhara thousand crores. Reddy announced the following incentives for setting up small AP to set up chemical SEZ in industries in the state: VIZAG The State Government will be Reduction of unit cost of setting up a special economic zone, electricity by 15 to 20 paise from 1st spread over 15,000 acres, in April, 2006.
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NEWS ROUND UP Preparation of an action plan CII to help industrial to sanction loans at lesser interest development than charged by the banks. The Confederation of Indian To rejuvenate the sick industries Industries (CII), Hyderabad and to provide subsidy, the budget chapter has come forward to help will be increased to Rs. 20 crores the growth of industries in Andhra Pradesh. The Chairman of the from the present Rs. 3 crores. A.P.Chapter of CII, Mr. Posh mater nity hospital to M.K.Patodia informed in October, come up in city 2005 that they are taking initiative A 700 bed world class maternity for the establishment of a cluster hospital will be constructed on the for industries consisting of small police transportation ground at and medium enterprises in Petla Burj near the river Musi, engineering and electronics in Chief Minister Y.S.Rajasekhar Hyderabad. The CII is planning to Reddy said. The government will prepare vision documents on allocate Rs. 30 crore for this development of textile sector, purpose once the new hospital opportunities for export and, comes up, the existing 462 bedded industrial development potential in Government Maternity Hospital at Kadapa district. They are also Nayapul will be shifted to the new planning to help the Industrial Training Institutes in Mallepally, premises. Patancheru, Vizag and Warangal to The move is aimed at reducing make them more relevant and infant and mother-mortality rates. useful to the industry. Besides, the government has increased the amount paid to Centre okays expansion of mothers after delivery at Visakhapatnam Steel Plant government hospital from Rs. 300 The Union Government has to 1000, he said. approved an Rs. 8,700 crores plan CM launches Telugu software for expansion of Visakhapatnam Steel Plant. This is the biggest fonts investment in the state in recent In an effort to take the computer times and the largest in the steel ser vices to the villages, the sector so far. The plan is to raise Government of India is trying to the plant capacity from the present develop software fonts in different 3 million tones to 10 million tones regional languages. The Telugu by 2020. The expansion will be software fonts were released by Dr. done in three phases. Phases one Y.S. Rajasekhara Reddy, on Oct. 29, and two have been clubbed to aim 2005 in the presence of Mr. at 6.3 MT by 2007-2008. Dayanidhi Maran, Union Minister VSP is also planning to roll out for IT. Among other facilities, it seamless pipes after the expansion will help to develop different which will cater to the needs of gas applications, web pages, etc. and it and oil industry. This will be the is available totally free of cost by first time in the country for any down loading from steel factory to bring out such a www.ildc.gov.in.
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product in this size range. The growing need for steel consumption globally has triggered hectic activity in steel and related sectors. Foundation laid for Sanathnagar RWC The South Central Railway (SCR), in collaboration with the Central Warehousing Corporation (CWC), has plans to set up Rail-side Warehousing Complexes (RWC) at Karimnagar and Jaggaiahpet among other locations across the State, SCR General Manager D.N.Mathur said. According to SCR officials, the Sanathnagar RWC will have three godowns each having a length of 630 meters (full length of a train). Its capacity would be 13,200 metric tons spread over an area of 10,800 square meters. The construction is likely to be completed within one year. The cost of the project is Rs. 5 crores. Rail line to Krishnapatnam Port An MOU has been signed in November, 2005 by the State Government, Rail Vikas Nigam Ltd. and Krishnapatnam Port Co.Ltd. to build a rail line from Obulavaripalle in Gutti-Renigunta section to Krishnapatnam Port over a length of 114 Km at a cost of Rs. 588 crores. A special purpose vehicle by name Krishnapatnam Railroad Co. Ltd. will take up the work. The Project is scheduled to be completed in 3 years and will help reduce the cost of transport of goods between Bellary and the Rayalaseema districts and the coast. NTPC will export ash to Middle East The Simhadri Thermal Power Project of National Thermal Power Corp. is making all efforts to export ash to Middle Eastern countries.
The Sultanate of Oman had evinced interest in importing ash for utilizing the product in concrete mix. The Simhadri project generates 16 lakh tones of fly-ash per annum and the present utilization is 47 per cent. The ministry of environment and forests has asked all the thermal power units to achieve 100 per cent ash utilization in a phased manner. For Simhadri the target year is 2012. Petro Universitys regional center at Rajamundry The University of Petroleum and Energy Studies located at Dehradun has decided to open its regional center at Rajamundry in view of the Krishna- Godavari oil and gas reserves. The universitys Deputy Director, Dr. Manoj Kumar informed that they may start with courses in B.Tech., M.Tech. and MBA in Rajamundry. AP cashes in on Bangalore chaos, woos tech investors In an attempt to cash in on the infrastructural problems of the city, the Andhra Pradesh government is trying hard to woo IT investors. Presentation was made before IT giants and foreign delegates on the infrastructural facilities available in A.P. As a result some companies had evinced interest in the secondary cities such as Tirupati. The AP government has decided to give special incentives to those IT companies opening shop in APs secondary cities. A.P. to have its first private industrial estate M.S. Chaudhuri Agro Informatics Pvt. Ltd. has decided to establish a private industrial estate in
Surampalem near Kakinada with an investment of Rs. 18 crores. Mr. M. Venkata Ramu, the companys director informed that there will be a total of 42 units dealing in sea foods, packaged foods, oil refinery, etc. Awards Simhadri Power Project bagged the prestigious International Project Management Award 2005 for showing efficiency in project management and work aspects. Nagarjuna Fertilisers and Chemicals Ltd. Won the Environmental Protection Award from the Fertiliser Association of India for the year 2004-2005. The Greentech Foundation had honoured several companies for not harming the environment in the course of their functioning and manufacturing processes. For the companies from A.P., the awards were given to Dr. Reddys Laboratories, ILTD wing at Chirala, Rajamundry division of ONGC, Tecumse Products and Hindustan Zinc in Vizag. The Indian Drug Manufacturers Association has selected Natco Pharma for award of its Patent Appreciation Award for getting patents for highly useful formulas. Satyam Computer services secured best rating for its performance in IT Consulting Market from the Forester Research, an international research organization.
NEWS ROUND UP Modadugu V.Gupta, hailing from Guntur in Andhra Pradesh, has been awarded the prestigious World Food Prize for 2005 for his contribution to improve the general health and financial conditions of the poor through expansion of aqua culture and fish farming in Asia and southeast Asia.
The annual award, known to be the equivalent of the Nobel Prize in the field of food and agriculture, was given to Gupta at a ceremony held at Des Moines in the US recently. Introduced by Nobel laureate Norman Borlaug in 1986 for outstanding achievements in food and agriculture, the award carries a proclamation by the governor of Ohio and a citation, an original sculpture created by Saul Bass and a cash award of US$ 2,50,000.. Gupta is the sixth Indian to bag this coveted award for his work in improving the nutrition levels and empowering women in over one million poor families in Bangladesh, Laos, Vietnam and Africa. The Municipal Corporation of Hyderabad(MCH) has bagged the Credit Rating Information Service India Limited (Crisil) award for the programme City Developemnt Strategy aimed at development of slums in the city. MCH standing committee chairman, D. Mohan received the award on behalf of the corporation from HDFC Chairman Deepak Parekh in Mumbai. Subrahmanyam Yadavalli, CEO of the Hyderabad-based Co-options Technologies Ltd, the only IT company in India focused on developing software for the rural sector, has been awarded the CSI7
NEWS ROUND UP Nihilent Best Technology Award 2004. The award was presented to Mr. Yadavalli on the concluding day of the Computer Society of Indias 40 th annual national convention in Hyderabad. The award was instituted by CSI and National Technologies. Infotech Vijayawada blips on BPO radar
Birlasoft to set up centre in City We will invest $25 million over next Birlasoft Ltd, the technology two years to develop our center into services division of C.K.Birla a product and marketing hub, Jayam Group, has decided to set up a told. The center has a current software development center in headcount of 20. We will hire about Hyderabad with an investment of 50 professionals this year, Jayam Rs. 10-12 crore. The center is likely said. to come up by February 2006. Mold Tek Technologies Ltd, a Apart from the organic growth plans, the company is also in the Hyderabad based firm started in process of acquiring a European October, 2005 stated that it has set company to expand its global up a legal data support services center, after it won a contract for presence. After Visakhapatnam, it is the turn Our three vertical domains such services from a company based of Vijayawada to join the BPO include banking, financial services in Kansas in the US. Mold Tek has bandwagon. and insurance (BFSI), recruited 90 people for the center, a The city known for its transport manufacturing, and software company release said. business will now have a US product companies. As the market Nipuna partners with Spirit company setting up its BPO size for each vertical is increasing facility. Lason India, a wholly- we need to expand our operations. Nipuna Services, Satyams BPO arm, owned subsidiary of Lason Inc, is The Hyderabad center would be has forged a business partnership all set to make its BPO facility up our fifth development center and with Spirit, a part of Ramanaidu and running in Vjayawada in the will have capacity to house 500 to Studios, one of the leading studios next six months. Lason is a third- 600 professionals. The proposed in filmmaking. The partnership has party BPO company providing center will be up and running by already bagged three special business process operations for its February 2006, N.K. animation projects - Lakshmi clients. Though the Lason facility Subramaniyam, senior V-P- (Telugu), Belly Full of Dreams will not be comparable to the (English) and Staten Island (English). facility HSBC has in financial ser vices group of According to Nipuna chief executive Visakhapatnam, industry analysts Birlasoft, said. officer, Venkatesh Roddam, the expect the US Companys Satyam, Microsoft team up in partnership would bring significant operations to act as anchor for China opportunities to the company in the attracting more such BPOs and call Indian IT ser vices company context of a boom in the global centers to Vijayawada. Satyam Computer Services Ltd has animation industry. There are around 20 software signed an MoU with Microsoft firms in Vijayawada and several China to jointly develop a multi- VisualSoft to merge with two IT firms others are exploring the possibility billion enterprise solutions market of setting up their operations. on the Microsoft platform in VisualSoft Technologies Ltd. merged Vijayawada certainly is a Greater China. According to the the Indian operations of AppLabs commercial-hub and possesses a Technologies, a Philadelphia, USgood investor community. Though agreement, Satyam and Microsoft for MNCs its not an apparent will together set up an adaptive based privately-held company choice now, but with some years solution center in Greater China specialising in software testing, and of commitment, we can build up to house the companys technology Esolutions, a Chennai-based the image on the global radar, consultants, who will work to software products company, with STPI Vijayawada director E. enhance RoI and reduce the total itself, VisualSoft chief financial cost of ownership, a release said. officer V. Krishnan said. Manoj Kumar told.
The merger has been affected to provide Visual Soft, a broader portfolio of services, Mr Krishnan said. Apere to hire 50 pros in city In its attempt to capture global market for data security solutions, California-based start up company Apere Inc announced setting up its India product life cycle center here. The company will focus on market analysis, product positioning, R&D to address the security needs of the enterprise, said Apere Inc president and CEO Ram Jayam.
disease. As a result of the significant unmet public health need and in the absence of a safe, single dose vaccine, World Health Organisation has identified a need Dell sets up GDC in city for development of a secondDell International Ser vices, a generation and affordable JE subsidiary of Dell Inc., has opened vaccine that has an acceptable its second global development safety profile and requires fewer doses than currently available vaccines, Bharat Biotech president Dr V Krishna Mohan said.
NEWS ROUND UP Bharat Bio ties up with Acambis operations besides reintroducing metformin, Aventis bestselling for JE vaccine City-based Bharat Biotech diabetes drug, sources familiar with International Ltd has forged a the development said. manufacturing and marketing The sources said that Aventis agreement with Cambridge-based Pharma, which is the second largest Acambis pIc relating to the latters multinational pharmaceuticals ChimeriVax-JE investigational company in India, will be hiring vaccine against Japanese nearly 1,000 people for its sales force. The strategy is to get more boots encephalitis (JE). Despite the availability of JE on the ground to market Aventis vaccines for 60 years, the virus Pharmas and sanofi-aventis diabetes continues to cause death and products the sources said.
According to the World Health Organisation India is now home to the largest number of diabetics in the world. WHO has predicted that the number of diabetics in India, currently estimated at between 3033 million, is expected to rise to 40 million in 2010 and 74 million lion by 2025. Dr Reddys buys Roche unit in Mexico Dr Reddys Laboratories Ltd said that it has entered into a definitive agreement to acquire Roches active pharmaceutical ingredient, or bulk drug business, at the latters manufacturing site in Cuernavaca, Mexico, for an investment outlay of $59 million, including working capital.
Under the agreement, Bharat Biotech will be responsible for end-stage fill or finish processing of ChimeriVax-JE at its facilities in India. Once the vaccine is approved by the Union government, the company will Laverne H. Council, vice-president of market and distribute the product Dells Global Business Solutions, opens to neighbouring countries as well. The deal would include the the companys new global development absorption of all employees at the The initial agreement is for five unit and business supply contracts, centre in Hyderabad years and the company expects Dr Reddys statement said. center in Hyderabad, which will 40% revenue coming from the With the acquisition of Roches API serve as a key center of Dells vaccine in the coming years. business at the Mexico site, Dr software development, Dells work Aventis to up headcount, will Reddys will emerge as a leading force in India, including those at sharpen diabetes focus player in custom pharmaceutical Hyderabad and Chandigarh and the GDCs, is expected to cross Identifying India as a key market, services business and position itself Sanofi-aventis, the French drug as a partner of choice for innovator 10,000 people shortly. giant which owns a majority stake companies across the globe with of Aventis Phar ma Ltd, has service offerings spanning the entire Pharma decided to ramp up its Indian value chain of phar maceutical
Business Vision Vol.2 No.1 Jan. - Mar 2006 9
NEWS ROUND UP services, the statement quoted Mr G. V. Prasad, CEO of Dr Reddys Laboratories, as saying. Manufacturing
thousands of SMEs and unorganized entities throughout the country. This MoU with SREI will improve the credit availability to construction sector entities in the SME and un-organized sector, OSI systems to expand its which were otherwise not fully served by the traditional banking Hyderabad unit channels. OSI systems is a US company which manufactures medical Goldstone Tele to make instruments pertaining to insulators anesthesia, monitoring, inspection The Goldstone Teleservices has systems, security and opto- decided to put up a unit in electronics. Keeping in view the Charlapally Industrial area for the expanding market in India, the manufacture of high voltage company has decided to slowly composite insulators. These are shift its manufacturing facility from used in transmission lines from 66 Malaysia to Hyderabad. The KV to 400 KV. The new plant will company is planning to shift to its require an investment of Rs. 30 new facility in Charlapally with crore which the company is planning to raise through rights 50,000 sqft, in January, 06. issue of its shares. Sidbi and SREI sign MoU to aid small enterprises Agri-business In a first of its kind for a public- private partnership in the Mr. Vasantha Nageswar Rao construction sector in India, the takes charge as APCOB Small Industries Development Chairman Bank of India (Sidbi) has signed a memorandum of understanding (MoU) with SR EI Infrastructure Finance Limited for extending financing to small and medium enterprises (SMEs) in the construction sector. The MoU will enable Sidbi and SREI to directly reach out to a large number of SME entities in the construction sector in order to augment the credit supply from the formal banking sector to the SME segment. According to Mr N. Balasubramanian, chairman and managing director, Sidbi, The construction sector has offered new business opportunities to
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structure was literally convulsing over the last few years to re-engineer itself by reducing the flab, cutting down costs, recovering the NPAs and drastically reducing the number of primary societies at the village level. After an elaborate exercise, a Committee appointed by the Government recommended reduction in the number of Primary Agricultural Cooperative Societies from the then existing 4464 to 2738, which the government implemented. But the analysts say that without getting rid of the aging, ill-equipped, lethargic and unmotivated staff of PACS, and upgrading the HR resources with fresh blood, no improvement is possible by simply reducing the number of PACS, but retaining the staff. They say that it will go from bad to worse, which fact, however, may be camouflaged for a few years by the induction of financial assistance from the Centre. The state is anxiously awaiting the sanction and release of Rs. 1500 crores which it had requested for from the Centre. After his election, the enthusiastic Chairman of the A.P. State Cooperative Bank (APCOB), Mr. Vasantha Nageswar Rao announced that he would strengthen the PACS to work on par with commercial banks. He stated that during 200506 the Bank will sanction Rs. 2860 crores as production credit and Rs. 460 crores as investment credit. Bumper tamarind crop affects farmers income There is a bumper tamarind crop in the southern states this year which resulted in the reduction of tamarind prices at-least by half. About 6 mandals each in Chittoor and
After a long gap of six years from the scheduled date, elections were held to the three-tier cooperative credit structure in the state in the month of November, 2005. The
Anantapur districts are known for tamarind production, and for cleaning and deseeding of tamarind imported from neighbouring states. The Government is imposing 4% sales tax which is not there in the neighbouring states .Atleast 15 thousand people are wholly dependent on tamarind production and processing in Punganur mandal of Chittoor district alone. Tender coconuts export comes down The hopes of Konaseema farmers to earn handsome profits on tender coconuts have been dashed as their prices have gone down from Rs. 2200-2500 to Rs. 1800 to 2000. Whereas 80-90 truck loads were being exported per day previously, it has come down to 30 truck loads by December, 2006.
working on extraction of oil and protein powder from the tobacco seeds. Last year India exported Rs. 1362 crores worth of tobacco to different countries. Hyderabad-based Matrix Laboratories acquires 55% stake in India enters Tuna fishing Tuna fish is much sought after in Concord Biotech Ltd of the West and Japan. Tuna stay in Ahmedabad. Indian ocean for about six months a year and then migrate to other parts. They can be caught only by long line trawlers. Only recently Tuna fishing is taken up in Vizag area with six trawlers. This sector needs urgent focus to reap more profits In brief India needs to grow at a rate of 8 per cent for the next 20 years to eradicate poverty, RBI Chief Economist Narendra Jadhav has said.
NEWS ROUND UP HSBC launches its second Global Service Centre (GSC) in Hyderabad with a capacity to house 3500 professionals.
Natco Pharma Ltd has received the approval from US Food and Drug Administration for its finished dosage formulations facility in Kothur, near Hyderabad. India topped global remittances from its citizens abroad by receiving $ 21.7 billion in 2004, according to the World Bank. Poor progress in Government self-employment schemes Though there is considerable progress in other sectors, the government is not able to achieve even a reasonable progress in providing self-employment to the youth through the various schemes launched by it. The Government targeted to provide self-employment to 2.17 lakh persons during 200405. Against this target, in the first seven months of the financial year the achievement is only 18.19 thousand.
Peddapalli grows the best Reliance Industries Ltd.(RIL) cotton will lay a trunk gas pipeline from The cotton grown in Peddapalli Kakinada to Hyderabad over a revenue division of Karimnagar is distance of 565 Km and also build attracting the highest price in the a pipeline network to supply gas country. This year one quintal of in a phased manner for domestic, cotton in Peddapalli agricultural industrial and commercial market got an average rate of Rs. purposes, by 2008. 2550/ . The rich black cotton soils ISB gets $ 1m grant from in the area are said to be the reason Goldman Sachs for its Centre for for the high quality of cotton. Analytical Finance. Tobacco for medical use Satyam sets up Satyam School The Central Tobacco Research of Leadership in Hyderabad to Institute (CTRI) in Rajamundry train its associates. has recently secured a patent for HR firms like Ma Foi and Merit producing solenosol from Trac are setting up centers in tobacco. Solenosol is used in the Hyderabad. production of some medicines and InfoSTEP Knowledge costs about Rs. 1000 per gram. The Platform, a business performance Institute is planning to start its measurement (BPM) tools production on a commercial scale provider has opened its centre of by partnering with some excellence in Hyderabad. organization. The CTRI is also
Progress made (Oct,2005) Scheme Target Achievement PMRY 43,000 438 KV Industries 1548 352 Rajiv Yuvashakti 60,000 1921 Minority welfare 18,752 330 SC welfare 39,791 7346 Handicrapped 1000 541 BC welfare 6715 638 Handlooms 30,000 6158 Sericulture 16,649 468 Total 2,17,455 18,197
- Compiled by : Nayani Satyavathi

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Economy, Banking and Finance

RBIs mid-term review The Reserve Bank of India (RBI) has cautioned against potential risk in the short and medium term on account of three key factors: Higher oil prices, growth rates flattening out in some key industries and continuing infrastructure constraints. Yet RBIs mid-term review seemed to clearly suggest that at least for the moment, the economy was firing on all cylinders, with healthy credit growth across agriculture, services and industry. With over 97% of Crisil ratings carrying a stable outlook and no rating carrying a negative outlook, the current financial health of corporate India would be... healthy. However, there are some indications that the corporate sector will have to be watchful in the short to medium term with the possible unfolding of potential risk, said RBI in its macroeconomic and monetary developments mid-term review 2005-06. The RBIs latest industrial outlook survey showed that the business expectation index for October to December quarter increased by 2.6% over the previous quarter. This indicates that the overall business situation and a host of other lead indicators, be it financial situation, availability of finance, production, order books, capacity utilisation, employment, exports
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and profits margins are expected Given the outlook for inflation in to improve during the next quarter. the context of the oil economy in This optimistic outlook is India, it may be difficult to contain corroborated by other institutions the inflation in the range of 5 to 5.5 per cent projected earlier, without an like the Centre for Monitoring Indian Economy; Crisil, National appropriate policy response, said Council of Applied Economic Mr.Y.V. Reddy, Governer, RBI, while raising the rate in the Mid-term Research and the Ministry of Review of Annual Policy of 2005Finance. 06. It is also necessary to recognize While the growth forecasts for and formulate a forward looking 2005-06 vary they tend to range policy response, in a manner that the between 2.5%-3% for agriculture, growth momentum and the potential 8.1 to 8.5% for service, 7%-7.5% for higher growth are realized for industry. without adding to inflation Some of the buoyancy is borne out expectation. by a huge pick up in bank credit in There is a public perception that the first half of the current fiscal. there is under pricing of credit for The demand for bank credit from corporates while there could be the commercial sector as on overpricing of lending to agriculture September end has grown by and small and medium enterprises 31.5%, compared with 24.9% in (SMEs). He said the current system the preceding year. Demand for had not fully met expectations. bank credit has been largely driven by agriculture, industry and RBI asks banks to provide no frills accounts housing sector. The Reserve Bank of India (RBI) has RBI revises GDP growth signaled its policy of inclusion or projection upwards non-elitist approach by asking banks The Reserve Bank of India (RBI) to make available a basic banking or raised the reverse repo rate (the no frills account with either nil or a rate at which the central bank low minimum balance requirement borrows from the banks) by 25 as well as charges that would make basis points to 5.25 per cent from such accounts accessible to vast the current level of five per cent sections of the population. with effect from October 26 in view of the current inflationary All banks are urged to give wide pressure. However, the Bank Rate publicity to the facility of such a no(the rate at which central bank frills account so as to ensure greater lends to commercial banks), has financial inclusion, the mid- term been kept unchanged at 6 per cent. review of the Reserve Bank of Indias annual policy statement for
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2005-06 said. The RBI has granted general permission to banks to issue debit cards in tie-up with nonbank entities. Indian banks stronger:RBI becoming non-performing assets of Indian banks have declined, indicating a marked improvement in their asset quality. Compared to this, the capital adequacy ratio (CAR) of banks, the most accepted measure of the soundness of banks-has remained flat about 12.5% in the last three years but has improved substantially from about 11.5% in 2000. While higher NPA levels are worse for banks, higher CARs are better. PSU banks to be told to raise Rs. 60,000 crore product (GDP) and the economy happened to grow at the rate of seven per cent annually. Where are we going to raise this capital? These are the questions that I would pose to CMDs of PSU banks when I call them for the meeting after announcement of the first half results, he said. Apart from raising capital, the PSBs, Mr. Chidambaram said, were required to upgrade their technology to increase efficiency and attract borrowers who had many options now to choose from. Mr. Chidambaram regretted that some of the other PSU banks were far behind in technology upgradation and attributed it to their earlier lack of autonomy. These banks were now charting their own course, he said. Mr. Chidambaram said the Centre and the Reserve Bank of India (RBI) will take all steps necessary to contain
Indian banks are becoming stronger by the year and could easily compare with its emerging market peers, atleast in terms of quality of assets, if not size of assets and revenues. Despite stricter rules to qualify nonperforming assets, that is delinquency rules, the quality of assets of Indian banks are now increasingly converging towards international benchmarks, the Report on Trend and Progress of Banking in India, published by the Reserve Bank of India, said.
Inaugurating the Network operating centre of Punjab National Bank (PNB) Mr Chidambaram said the PSBs would require an additional Rs. 8,0009,000 crore of capital formation During 2004-05, despite a move each year for the next five years, towards a 90 day delinquency norm provided they continued to finance from 180 days earlier, the gross 30 per cent of the gross domestic
India ranks 88th in corrupt list

India continues to languish at the half-way point on the international index of corruption, even as corruption grew in rich countries as well as poorer ones, the worlds most authoritative anti-corruption watchdog Transparency International (TI) has said. Of the 159 countries surveyed, of the most corrupt places on the below the three-point mark on the corruption problem, TI said. TI chairman Peter Eigen said of poverty as well as a barrier to scourges feed off each other, of misery. Corruption must be make a real difference in freeing India secured a spot at number 88 planet. Indias ranking, which is just index, indicates a severe corruption was both a major cause overcoming it because the two locking their populations in a cycle vigorously addressed if aid is to people from poverty.
The worlds cleanest countries are Iceland, Finland and New Zealand and Switzerland is not far behind, the index said. Britain is at number 11 on the table along with the Please, remove my figure from the currency notes Netherlands. The US is some way behind at 17th place. - Courtesy : Eenadu
NEWS ROUND UP the inflation rate at moderate levels We have pension shortfall too. This and prop up the growth of the is aimed at increasing private economy. ownership of companies, making management more accountable to RBI issues regulations to shareholders, he said, adding that banks for credit cards Chinas goals apply to Indian The Reser ve Bank issued public and private sectors too. guidelines on credit card operations of Banks, asking card The FM stressed on raising savings, issuers to ensure that there is no saying they appear to be high but delay in dispatching bills. The are again a fraction of what China guidelines say the customer should saves. We should encourage be given atleast a fortnight for people to save in financial making payment before the instruments as most of the savings interests starts getting charged. are still in physical assets like gold Unsolicited loans or other credit and property. He maintained that facilities should not be offered to the rupee was still strong, despite yielding ground to the dollar, and customers. noted that the Indian currency had Govt to speed up financial gained against other major reforms currencies like euro, pound and Warning that India would be left yen. behind China in the absence of fast FM also said that the country was track refor ms, FM Mr. P witnessing strong inflows from Chidambaram said government FIls, who he noted were here to would accord top priority to stay for long. The positive sign is financial sector reforms and asked that FIl inflow in April-August has companies to ensure that large been $4.3 billion and in whole of portion of their stocks are traded 2005 has been $8.52 billion. in the market. Centre permits 49 p.c. FDI in We will press on with the financial ARCs sector reforms. Unless financial sector is efficient, we cannot In a major development for the convert savings, capital flows, tax banking sector, the Government revenues, which come out of recently threw open the asset capital expenditure into reconstruction companies (ARCs) production of goods and services to foreign direct investment leading to high growth, he said. (FDI).It has decided to permit FDI up to a maximum of 49 per cent Mr. Chidambaram, who recently in the equity capital of ARCs. toured Beijing and Shanghai, said communist China has announced Essentially, the ARCs are those a programme to raise $270 billion entities that buyout the nonby making mostly state-held stocks performing assets (NPAs) or space publicly traded. This is the biggest bad debts of banks. The NPAs shake-up of ownership since 1990. now stand at over Rs. 60,000 crore. By making all Chinas shares Interestingly, this significant step tradeable, the Chinese government in continuation of reforms in the aims to plug a pension shortfall. banking sector has come within a
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day of the U.S. Treasury Secretary John Snows arrival in India. The U.S. has been pressing for opening up of Indias financial sector. With 49 p.c. FDI allowed in ARCs, it is now open doors for the entry of foreign banks and ARCs which have been keenly waiting in the wings to enter the Indian market.The opening up would enable foreign players to assist the domestic companies in better and faster recovery of NPAs. Disinvestment of equity in nonNavratnas planned The Union Government is looking at disinvesting a small portion of equity in profit making public sector enterprises other than the Navratnas, Finance Minister P. Chidambaram said. Speaking to media persons on the sidelines of an international conference on Southern multinationals: A rising force in the world economy, Mr. Chidambaram said the Government had discussions about disinvesting small portions of equity in selective profit making public sector enterprises other than the Navratnas. Some nations had adopted restrictive policies of not extending the trade, agriculture and commodity markets to the southern nations, and these were the constraints for the bilateral growth between the North and South multinational companies (MNCs), Mr. Chidambaram said. Free movement of labour and skilled manpower along with the flow of capital from one part of the globe to the other were the key components of equitable growth. Compiled by : A. Lalitha Praveena Faculty Member, SNCPS
NEWS ROUND UP
up from 547 tons in the previous year. One estimate suggests that with around 50 million couples in the marriage zone at any given time, and calculating at the rate of a modest 10 grams per wedding, there could be a demand for 500 tons of gold from just weddings alone a nightmare scenario for sociologists studying the dowry issue, but a bonanza for gold traders. The gold lust does not leave Indians even when they go West and acquire other assets. Little Indias in the US like Devon Street in Chicago, Jackson Heights in New York, and Artesia in Los Angeles, are studded with Indian jewellery stores. There are 30 Indian jewellery outlets in the New Jersey suburb of Iselin, about one for every 10,000 Indians in the area. There is now a predictable layout for Little Indias in the West a cluster of Indian restaurants and grocery stores, sari and Indian dress outlets, Bollywood video and music marts, a temple, and jewellery stores. By Chidanand Rajghatta.(Courtesy :Times of India, Sept.4, 2005) Gold as an investment tool The good old gold is no longer confined to deck the fair-sex in India it is more and more becoming a
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Going for Gold
ast year, Indians bought $10 billion worth of gold, twice the amount of foreign investment that came into the country. By some estimates, we have now amassed $200 billion worth of gold, almost a third of our GDP. Our gold hoard is double the size of our equity holdings, twice the size of our foreign debt, and a third more than our foreign currency reserves. We have put away more gold than any other country in the world. We are Sonaland, Swarnastan.
gold consumption is in rural areas. The gold craze has deep cultural and emotional roots, which is probably why a preferred Indian term of endearment is Sonu in the north and Bangaru in the south. We go for precious, not honey. For ages, gold has been the first choice of financial security, bought, given, presented during festivals and weddings.
The word out of the World Gold Council recently is the Indian gold craze may increase with the Poverty-stricken we may be, but we economic boom, especially in rural are also bejeweled. According to India. Indian demand for gold rose some studies, two-thirds of Indias 17.6 per cent to 643 tons in 2004,
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new investment tool. Still, it stocks, real estate and gold. by the dollar have helped gold to be continues to be the main security Analysts say that such converted as a principal tool of provided by their parents to lakhs simultaneous rise is a rare investment. The oil-rich countries of brides in the form of sthree- phenomenon. Gold has broken the are being flooded with funds which dhana. In the days when parents price level of the last 18 years in they are investing in gold. The immovable property was not 2005 and reached Rs. 7585 per ten Central Banks of Russia, South generally allowed to be shared by grams in the last week of Africa and Argentina have declared daughters and in the absence of November. Anand Rathi, to increase their gold reserves. World banking habits and facilities gold Chairman of Anand Rathi over the demand for gold ornaments became the solution. It is Securities, forecasts that gold has increased by 12% in quantity and ornamental, imparts status, prices which are close to $500 an 20% by value in 2005, compared to portable, and easily encashable in ounce in international market, will the previous year. The good emergencies. The family heirlooms go up to $ 550 (Rs. 10,000 in India) monsoons, buoyant economy, and of gold ornaments, big or small, by March, 2007, and will touch $ the festive season have pushed up the demand for gold in India this often reflect stirring emotions, primitive and Gold has broken the price level of the last 18 year. Mainly because of the deep, sometimes years in 2005 and reached Rs. 7585 per ten price-rise, the Indian banks passionate and earthy, in grams in the last week of November. Gold reduced their imports: The their possessors. prices which are close to $500 an ounce in average import of gold is 800 The World Gold Council international market, will go up to $ 550 (Rs. tons per year which is 10,000 in India) by March, 2007, and will touch reported to have gone down (WGC) pointed out that $ 800 an ounce in the next three years. by 20 per cent in the current the gold consumption in year. the country scaled to an all time high of 277 tons during the second 800 an ounce in the next three India is slowly increasing gold quarter of 2005. The Council has years. Concurring with this jewellery exports which accounts for listed a new category in gold opinion, Mr. Rajesh Gupta, partner only 18 per cent of its gem and consumption retail investments. in Balaji Jewellery, Abids jewellery exports at present. Exports It reached a record 50 tons in the (Hyderabad), says that the increase of gold jewellery were $1.9 billion second quarter. During 2004, gold in gold prices has led to 25-30 in 2003-04, $3.8 billion in 2004-05 consumption in the country was percent drop in the sale of their and are expected to touch $ 5billion 617 tons, of which 100 tons went gold ornaments. Unless this year. This sector has so far been people are neglected and it needs focus and into retail investment. The retail unavoidable, postponing their purchases. strategies to improve the exports. investment in gold is primarily in the form of bars and biscuits. Recently the mutual funds also The Government is planning to There is also increasing activity in started investing in gold. Demand include hallmarking and certification gold futures trading and deliveries is outstripping the supply. Hence of goods towards development of an Indian brand in jewellery market. in the commodities exchanges the price-rise says Mr. Gupta. which recorded 5 tons in May, The present sky-rocketing price For the West- along with our yoga 2005. came in the backdrop of global for their health, our cuisine for their The specialty of the year 2005, especially its later half, is that there has been a phenomenal rise, which still continues, in the prices of
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funds turning bullish on the yellow palates, it is time to deck themselves metal in the international markets. up with our gold jewellery. The unprecedented surge in oil - T. Sudhaker Rao prices and the weakness exhibited Associate Editor, Business Vision.
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A phenomenon called Peter Drucker

- R. Devarajan
PETER DRUCKER was possibly the best-known management writer of modern times. He was hailed as the high priest of management philosophy. More than any other theoretician, Drucker defined the role and responsibility of management in a simple, straight, and sharp style. In 1937, he went to New York, and continued to teach at different locations in the US. From 1948, writing became his focus. It is possible to classify his intellectual journey into three distinct phases: Revolution (1976), Innovation and Entrepreneurship (1985), The New Realities Great Change (1995). In the first phase, Drucker was concerned with the nature of the economic society and a new world that was emerging in the early 20th century. The End Of Economic Man discusses the rise of totalitarianism, and some possible responses to it by the free world.
The early books on economics, such as The End of Economic Man (1939), The Future of Industrial Man His interests and ideas spanned the (1942), and Concept of The entire spectrum of management - from ethics to technology, from economics to knowledge management. He wrote 39 books, and over 100 articles. Aged 95, Drucker continued to write till his death on November 11. His last book is due for publication in early 2006. Drucker was born in Vienna on November 19, 1909. His father was a lawyer. His early association with Joseph Schumpeter, the economist, who was a close friend of his fathers, remained an enduring influence. At age 17, Drucker moved to Germany, where he obtained a doctorate in law. For a while he worked as a financial journalist in Frankfurt. Hc, however, returncd to Austria soon after. Later, he moved to London and worked there for several years as a merchant banker. During this period, he became acquainted with John Maynard Keynes, the great British economist.
The Future of Industrial Man takes the second theme forward, arguing that an industrial society and a free society can coexist, and that they are compatible and complementary to each other. According to Druker, the first responsibility of any management is to produce satisfactory economic results - profits. Its second is to work in a manner that is good for society, while never attempting to take over the work of the society. Wealth and freedom, for Drucker, were necessar y for a full life; one without the other is imperfect and incomplete. It is the free market Cor poration (1946). The which offers the best opportunity for management books written both. between the 1950s and the 1970s, such as The Practice of Management In the next stage, Drucker delved (1954), Managing for Results (1%4), into the mechanism of the market The Effective Executive (1966), and and made an incisive study of the Management: Tasks, Responsibilities, Corporate. Taking General Motors Practices (1974). Books on (GM) as an example of a modern philosophy that he began writing company, he brought under the in the mid-1970s such as The Unseen microscope ways in which
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NEWS ROUND UP corporations and their managers performed. Concept of The Corporation was a classic case study of GM at a time when it was the largest business house in the world. The book remains a model in management case study and research.
It was then that the second phase of Druckers writings began. He looked at management as a profession and discipline. The Practice of Management was his initial attempt to define management; many still regard it as his best book. It is here that Drucker introduced his famous doctrines management by objectives and management by results. In a subsequent book, Managing for Results, he elaborated on these two tenets. However, there has been a school of thought - spearheaded by the Quality Management group - that criticised Drucker of making management unduly obsessive about setting targets and getting results. This is a misreading of his philosophy. Management by results is an attempt to wean managers away from their rigid and ritualistic adherence to task and routine. It creates a mindset that focuses on new and novel ways to achieve results, including quality. The summum bonum of Druckers management philosophy found full expression in Management: Tasks, Responsibilities, Practices. Here, he said that machines could never replace the spark of life provided by a manager. It is the manager who breathes life into an enterprise. The primary task of
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a manager is to harness resources century-long evolution and and creat production. The progress of management. secondary task of a manager is In the third phase of his writings, about guidance and control. Drucker made a departure from the Writing about the core aspects and elements of responsibilities of a manager, management to focus on the impact Drucker was clear and categorical of business administration on in his belief that the social society. In The New Realities, he dimension of work can never be forgotten or forsaken. According talked about the linkages among to him, social responsibility is the technology, economics, government, price that must be paid by the politics, and environment and how corporate for its commercial these various forces are impinging on success. Another singular management as a function and contribution by Drucker is the role profession. he assigned to managers in the Drucker also authored a historical domain of marketing. There is only one valid definition of novel. His autobiography, Ad ventures business purpose: To create a of a Bystander, is an eypener to his customer. Markets are not created varied interests. He liked to portray by God, nature, or economic himself as an intellectual, rather than forces; but by the people who as an aca demic or a pedagogue. manage a business. Because its While his ideas and thoughts may not purpose is to create a customer, the have been groundbreaking every business has two basic functions: time, his ability to synthesise and Marketing and innovation. communicate remain unmatched. He Beginning in the 1980s, Drucker was able to package his thinking led the way in the development of within an easy-to read, knowledge management. In the conversational mode that speaks beginning of the 20th century, the directly to the businessman, without role of managers was to coordinate the efforts of a large and lowskilled talking down to him. Drucker walks labour force. By the end of it, the with the reader through every page workforce had become smaller, of his book. It is this exhilarating better educated, and more experience that wins his readers over. knowledgeable. This warranted an (The author is a Chennai-based altogether different style of freelance writer. This article has been management. Drucker had the sourced from the book Fifty Key unique advantage of witnessing Figures in Management, by Morgen both these trends. Through his writings, he has left a precious Witzel. It is further sourced by the legacy - the wisdom of his Business Vision, courtsey The Hindu observation and experience of this Business Line of Nov. 15, 2005)
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A tribute to the master : Prof. Peter Drucker

- Krishna Sagar Rao* I am humbled at the opportunity provided by the Business Vision & Dr. Kondal Rao, to pen this piece on the greatest teacher & thinker of our time - Prof. Peter Drucker. He was not just a Jesus for Management Practice but also a very rare human being with multi faceted skill sets.
I revel with you this New Year edition, to share a few insights into this great mans accomplishments and specially his writings. For more than 50 years, Peter Drucker has been without equal as a management writer and observer on issues that affect corporations and organizations of all sizes. He is a man of uncommon wisdom and perspicacity. He does not mince words; he writes clearly, concisely, and gets to the core questions and issues immediately. Pick up a book by almost any other management writer and youll probably be able to find that he or she has built on a concept that had its foundation somewhere in Druckers work. He is neither a showman, nor a guru. He is simply a smart, observant man who goes about his work with passion and common sense. And his passion is not for great, charismatic leaders, nor is it for technical flash, or brilliant strategy. Rather, his passion is for that very ordinary
entity we call the organization. He is fascinated with how people come together to, he hopes, achieve a common purpose. An organization can be extraordinarily effective, or a disaster. Most fall somewhere in between in Druckers opinion. In his most recent book, Management Challenges for the 21st Century, released last year, Drucker goes over somewhat familiar ground. But, ever the professor, he needs to repeat himself because he knows that business executives tend to make the same mistakes over and over again. This book is simple, direct, and even blunt. The single greatest challenge executives will face over the next few years, Drucker states, is to learn how to manage knowledge workers. Drucker observes that the vast majority of companies manage employees as though the company still controlled the means of production. In knowledge organizations, however, it is each workers knowledge and intelligence that combine to form the means of production. The organization cannot control or own that. A worker can leave anytime, taking the means of production with him or her. This leads Drucker to conclude that we must learn to lead and manage
people in a new way. Indeed, Drucker argues, we must look at new economy companies in an entirely new way. Companies will have to learn to look at employees as assets to be valued, rather than as costs to be expensed. The value in a knowledge company lies between the ears of each employee, more than it does in the machinery on the factory floor. Drucker, never one to resort to hyperbole to make his point, does not hesitate: It is certain that the emergence of the knowledge worker and of the knowledge workers productivity as key questions [emphasis original] will, within a very few decades, bring about fundamental changes in the structure and nature of THE ECONOMIC SYSTEM. [Caps original] Ones first reaction to these thoughts might be that Drucker is encouraging managers to develop a new style of leadership. But the word leadership is one Drucker has avoided throughout his career. He sees the job of top management as just that: a job. He speaks with no small amount of contempt for the personality cult in todays business environment. Drucker has always focused on the organization, not the person at the top. That person has a job to do each day to ensure the organizations long-term success.
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NEWS ROUND UP And for Drucker, meeting analysts expectations for quarterly earnings, or increasing shareholder value is not the test of effective management. Rather, he stresses that succession has always been the ultimate test of any top management and the ultimate test of any institution. Most top executives and boards of directors would likely receive failing grades from this unyielding professor.
the past decade has been on nonprofit organizations and that much of his time and energy has been focused on The Peter F. Drucker Foundation for Nonprofit Management.
Economic Forum in Davos was one entitled Leading in an Era of Creative Destruction. Apparently there are those who are listening. Business executives race to find the latest, flashiest guru, the one doing presentations wearing a headset and with a pyromaniacs love for flash. Meanwhile, Drucker, the sage, tells us what we need to know. More people ought not only to listen, but to act on his advice. Little better is available at any price. I pray for his soul to rest in peace. Knowing Peter Drucker so closely through his writings, I do have a doubt, whether he will still be at peace or start writing some more straight from heaven. Seriously, this great man will continue to live in the hearts of many strategic management & corporate analysts like me. * The author is a Corporate Strategist, Trainer & CEO of Matrix Life Systems, a corporate consulting organization. You can reach him at: [email protected]
This nonagenarian is not one to look wishfully on the ways things used to be. He argues with the vigor of an undergraduate for Organized Abandonment. Adapting Schumpeters theory of The model for effective the need for constant creative destinction, management is right in front of us, Drucker argues that organizations Drucker says. We have only to look must put every product, every at successful nonprofit ser vice, every process, every organizations to learn how to market, every distribution channel, manage people. We have to even every customer and end use manage people as though they were volunteers. Volunteers get on trial for its life regularly and satisfaction from what they do systematically. Organizations must because they are challenged and be committed to change, and enriched by the work, not by the organizational abandonment, a paycheck. They need a challenge, systemic and systematic effort to they need to know the abandon old methods and ideas, organizations mission and believe is the only way organizations will in it. They also need continuous survive beyond their current training and they need to see lifespan of 30 years. Interestingly, results. It should come as no among the panel presentations at surprise that Druckers focus over the recent meeting of the World
Desperately seeking 3,500 animators

Animators are in great demand with a large number of local companies having bagged animation projects from abroad. As many as 3,500 animators are required for the projects currently on but companies say there are just not enough trained animators, especially those who have knowledge of 2D animation, which requires knowledge of basic art. About half a dozen companies are looking for animators for their ongoing projects apart from
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another 10 small companies and free lancers. Since there are not enough of them, some of these companies are farming out their work on subcontracts to meet deadline pressures. The Indian animation business tops revenues of $750 million annually. About 100 studios have been set up in the country with 20,000 artists, including freelancers on their rolls. The industry is growing at 20 per cent every year.
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Homage to Madhu Dandavate

- Dr. Kondal Rao Velchala
With hindsight, as I cast a glance at the evolution of my life from its formative stages to the present turbulent times, I realize that there is an imperative need to include in our personal and social life, human values like freedom, equality, social justice, religious tolerance, secularism, environment friendliness, dignity and empowerment of women, and above all a scientific temper has to be harnessed not merely for the creamy layers of society. It has to be harmonized with the needs of the poor and the deprived who dwell in 7,00,000 villages of India, many of them living below the poverty line. If they are made to suffer in silence for long, that silence may one day explode with all its fury and destroy the gains of the technological revolution sweeping across our country today. Gandhiji gave this warning to the nation in his lifetime, a warning that we can overlook only at our own peril. - Madhu Dandavate
He was a living treasure of the country. In his passing away we have lost a great patriot, an erudite parliamentarian, a man of honor and values and above all a fine human being. I feel a deep personal loss. He goes with only friends left, he had no enemies. I salute him - V.P. Singh, former Prime Minister Madhuji represented a rare blend of so many admirable qualities. In erudition, dedication, sacrifice and selflessness, he was second to none. What was more important, he had certain other qualities such as unconquerable optimism, unfailing sense of humor and positive attitude, which I have not found in any other politicians. I had the privilege of serving him as deputy leader in parliament. As a parliamentarian with unsurpassed skills, he was noted for inoffensive criticism. It will be difficult to find another like him - S.Jaipal Reddy, Union Minister for Urban Development Dandavate was a remarkable product of a remarkable political tradition. This was the socialist movement from whose ranks came some of the most talented and certainly the most honest politicians of modern India. The integrity of these old socialists like S.M. Joshi, N.G. Goray, Dandavates own wife Prameela, Mrinal Goray was legendary - Rama Chandra Guru
The difference between a politician and a statesman is that of a difference between a mercenary and a visionary. We have too many politicians in politics today than the statesmen. I am afraid we have hardly anyone worth mentioning as a statesman It was probably Jefferson who now. Even the few we had have said A politician is one who either drifted or are drifting. thinks of the times, a statesman The last saint and the sage in is he who thinks ahead of the politics probably was Madhu times. Dandavate who died of cancer
recently in Bombay. His death was as much dedicated to service as his life as he donated his body to the Grant Medical College to be of service to doctors a dedication of the learned to the learners. What a life! What a death! What a saga of service! Madhu Dandavate was probably one
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NEWS ROUND UP Indian socialist who was not only admired but loved by one and all for his caliber and character. Probably no one else other than Gandhi and Jayaprakash Narayan were as much respected and revered for their conviction, commitment and dedication to the cause and devotion to the organization. Perhaps very close to him was Narendra Deva and his very close friend Yousuf Meherally, whose biography Madhu Dandavate himself wrote a gentleman about a gentleman.
Our last glimpse of Dandavate
Mr. R. Somaiah, Late Madhu Dandavate and Dr. Kondal Rao Velchala
Who can then say that politics cant have Gentlemen but only gunmen and sin-men? When we had men like Gandhi, Tilak, Lala Lajpath Roy, Gokhale, Jayaprakash Narayan, Narendra Dev, Lal Bahudur Shastry, Annie Besent , Yousuf Meherally and a few others like them during the days of the freedom struggle. But to be a gentleman during the days of freedom struggle was different than to be a gentleman afterwards, more so in recent times. To be a gentleman in unpolluted and uncontaminated conditions is different than to be so in conditions of utter political pollution, contamination and corruption. Many others who were gentlemen in politics died long ago but Madhu Dandavate survived to see many things becoming bad and even worse in politics but he remained good till the last.
The last glimpse of this saint and the sage in politics that we had was when he came to Hyderabad to deliver a centenary lecture on Kamala Devi Chattopadhyaya (Perhaps his last visit to Hyderabad) when my good socialist friend Ravela Somaiah and myself had a snap with him. He was already very sick by then and made the trip to Hyderabad with great difficulty only because of his love for Kamala Devi and regard for his socialist friends like us.
Dantwala, Rohit Dave, and of course, JP. They all came to realize in due course, despite their early Marxist commitment, that for the poor and the downtrodden, socialism tinged with Gandhijis thinking was the panacea and for a sustainable change in values of society and to build a just and equal society, Gandhijis methods, his emphasis on ethics in politics and his identification with the poor and the deprived could not be bettered said Surendra Mohan in an article entitled, Guiding Spirit Departs.
In the past few years of his life, Madhu Dandavate became an ardent advocate of Gandhian thinking, missed no opportunity to speak about Gandhi and collected all the material on him he could lay his hands on. He joined in this He was a gem and remained a gem, with many socialists like M.L.
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Madhu Dandavate was not only a clean but also - Dr. Kondal Rao Velchala a clear headed politician who knew his mind and a due drop on a lotus, on it but not also the mind of the Indian masses of it. well. He was the only man who as He probably was the last of the much belonged to the mass as to the Indian socialists who turned into class a brilliant scholar, organizer , a Gandhian. The irony of lover of humor and candor, a man Gandhisim is that after Gandhis without malice, a no nonsense man, death there were more Gandhians , unassuming, straight and neat who in the socialist party than in the could smile like the truth itself, very Congress itself of which Gandhi truth. himself was the leader and the Dandavate remained a fighter and a founder. In fact Congress had not gentleman throughout his life. He had a single Gandhian after fought as vibrantly against death as Gandhijis death, and the only party he fought against injustice and that had many Gandhians was the insolence. When the installation of Socialist party. life support systems became inevitable as the end seemed to near, Dandavate bravely told the doctors Not to waste scarce resources on him let me go please was his dignified stand. How many can say and said that. What a true socialist he was who could ask the doctors to conserve the money to spend on
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some others who needed it! We have politicians now who would spend any amount of the Exchequer and go to any extent for that without bothering about the plight of others, many others like them. When he was alive he came forward to offer his kidney to Jayaprakash Narayan on being told that he had to have a kidney replacement. Dandavate was a scholar in several fields and whatever he did said or wrote exhibited his depth as well as his meticulous care for detail. He must have been a wonderful teacher of physics, a career he served for two decades, that after thirty years of his good bye to teaching the Institute of Sciences in Mumbai honored him for his life time achievements. He distinguished himself most in the field of political work where he will be remembered for devoted service to the values of freedom, democracy, socialism, secularism and social justice. That he lived them in his own life is testimony to his integrity and commitment wrote Surendra Mohan in Janatha.
good speech from Madhu, and he never let his audience, whether on his side or on the opposite side, down wrote Vishwam. ***** Madhu was an ideal socialist. His socialism was not just a socioeconomic doctrine. To him it was a way of life. He never sacrificed a principle for a private or party gain. His politics had a moral basis. That is why he was a fearless champion of social justice and economic equality, of human rights and noble human values. He was an intellectual, academician, politician scholar, a parliamentarian and a fighter to the core. Integrity in public and private life was his strongest point writes Sadanand Varde. ***** His sense of honesty, integrity, probity and transparency was legendary. Among the very few persons who are acclaimed as scrupulously honest, without a single blemish on their records, he can easily come to the top said Prem Bhasin about him. Once Dandavate instructed his P.A to send the New Year Greeting cards to his friends. The PA used the government service stamps over the envelops. Having come to know of it Dandavate fretted and fumed taking him to task that public funds should not have been spent for private purposes. He was so restless at what he considered was a lapse that he could not sleep for a few nights properly and relish his food. The greeting cards became the cheating cards for him he felt. Such was his probity, honesty and transparency. His religion was humanity and compassion for the under privileged. Although he occupied a high position in the government he never gave up his simple style of living. His transparent character was evident
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Madhu : A man of many Parts

He went without a single blemish such versatility also went with wit
on his illustrious public and political career and left only shining foot prints on the sands of time. In Indias political environment this is an achievement that can be claimed not by all politicians and even less so by those who have enjoyed a stint in power. From the beginning of his long political life to its very end, Madhu trod with remarkable steadfastness, the straight and narrow path of personal probity and political morality. He was a model politician and parliamentarian, a high thinker, an elegant writer, an eloquent speaker, and above all a good human being. One comes across such a combination rarely. Madhus interests varied from science to mathematics, physics to philosophy, space to astronomy, politics to literature, theater to fine arts. Those who came to know of him only as a politician in the thick of New Delhis political strife would have been surprised to learn that he was a man of so many parts. That
and humor, and often with a cynical approach to life, was the uncommon facet of Madhus personality. He could engage you in a serious exchange of views, and he could also crack jokes and make you laugh. Indeed, he had a tremendous recall and could come up with a humorous anecdote or two to fit the occasion. His speeches in the Lok Sabha were, while being well researched and loaded with facts and figures, also interspersed with witty comments. Unsurprisingly, he was listened to with enormous respect as much for his erudition as for his light- hearted banter. His verbal attacks on government policies and personalities were aptly and intelligently targeted, but Madhu was without rancor or malice. While in the government, he was a good advocate in defence of his own and its policies and programmes. His popularity rating both in the benches and the presss gallery was always high. One could always expect a
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when he became the only minister in Morarjis cabinet to declare his assets. ***** Madhu has a scientific temper, fight against social and economic injustice, and scholarship running in his veins. He was the first noncongress railway minister and the first Nuclear Physicist Finance Minister. He was a fine orator and writer of distinction, fond of literature, classical music, theatre and Tamasha and even of obscene jokes, never short on pranks and harmless mischief, an incorrigible optimist always able to detect the silver lining on a big dark cloud, always eager to help a friend or a comrade in distress. He was emotional to the point of breaking down midway while talking of someone dear or close, great in many spheres, much greater as a human being. Among the very few persons who are acclaimed as scrupulously honest without a single blemish on their records, he can easily come to the top. Prem Bhasin All my life I have fought against injustice, and participated in constructive activities to build a new society. I have tried to give voice to the agonies and aspirations of the poor and the neglected through vigilant activism on the forum of parliament as well as struggles outside. This has been my humble contribution to fulfill our cherished dreams. The future may be dim. But not totally dark Dandavate said about himself quoting the famous poet, the late Kaifi Azmi:
A wave of anger Blew away the lamps But, yes, one remained; Its name is hope, and it flickers on
Humor was his forte

Once, when he was speaking on the railway budget as the Minister for Railways, his spectacles slipped and fell on the floor. A Congress M.P sitting next to him offered his pair of glasses. Dandavates immediate reaction created a burst of laughter in the house. He said, No, these wont do, they are short sighted. Once, K.K. Tiwari from the congress benches pointingly said, Dandavate was talking like a CIA Agent. The speaker and the Congress members asked him to withdraw his words. No sir, let him not withdraw, let it remain on the record so that the electorate should know what language he uses against his critics said Dandavate. When Dandavate was arrested in Banglore during the emergency period, the police began a thorough body search. When they began to inspect the footwear, Dandavate chided them in his inimitable way Indiraji has asked you to do the Soul Searching and not Sole Searching.
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When Murarji Desai was the Prime Minister he advised Dandavate to try his pet urine therapy, which he assured would prolong Dandavates life. Politely declining, Dandavate is reported to have said I do want to live long but I want to live with taste. During his detention in emergency, Dandavate suffered from a stomach disorder which weakened him considerably. He wrote to a friend first I had constipation, later I had loose motions which I preferred because as a socialist I believe in dynamism. Dandavate is reported to have given to the prison authorities where he was lodged about a hundred names of his close relatives with whom he was entitled to correspond. One of the names was the name of Prem Bhaisns wife Kamalas stating that she and his wife were cousin sisters to bluff them to correspond with Prem Bhaisn himself, with whom he was not entitled to correspond.
Dandavate was known for his forgetfulness. Once he is reported to have gone to Connaught Place in Delhi by a taxi. Stopping it at one place he went to purchase some medicines here and there and after doing so he came back and traveled by a taxi readily available before a shop. He paid the fare for the travel and as he went into the house the door bell rang. A taxi fellow stood before him asking him to pay the fare, which surprised him because he thought that he had already paid the fare without being aware that the other fellow was someone else and the fellow who was standing before him was the poor driver who took him to the Connaught Place earlier and waited there for two to three hours to bring him back home. Meanwhile some friends of Dandavate having come to know of it came out and paid the fare having a big laugh at his discomfiture. They obviously knew what had gone wrong on account of the forgetfulness of Dandavate. According to Dandavates friends there were many such instances of his forgetfulness.
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Dandavate was Washing his Clothes

- Udayan Sharma
At 11.30 p.m. of March 25, 1977 the phone rings at 507 Vithalbhai Patel Bhavari, Mr S.M. Joshi, one of the prominent leaders of the Janata Party, picks up the phone, speaks, and then glances at the people sprawled all over the room. The secretary of the Janata Party, Mr Surendra Mohan, is discussing the formation of a 13-member Cabinet and wondering who will get which portfolio. Mr Joshi puts down the phone, and calls out loudly to Manju, the wife of Mr Surendra Mohan: Manju, bring some laddus. Dandavate has become a minister!
A few minutes ago, Mr Dandavate had asked me, Do you soak clothes in Surf with warm water or cold? After which he had disappeared to wash his clothes. Indeed, when the news came over the phone that he had just been named to the Cabinet, he was sitting in the bathroom, beating his clothes with a stick. This was certainly something new in Indian politics. Simplicity and self help have certainly not been noticeable features in the personal habits of our past ministers. Mr Joshi distributed laddus to the eight people in the small two-room flat. For more than an hour after this, everyone discussed which ministry would suit Mr Dandavate best. Everyone expected him to become the education minister, in view of the fact that he had been an academic. At around one oclock, Mr Joshi spread himself out, said calmly, Array, I was lying. Who will make Madhu a minister?
March 26 morning. Along with the newspaper we found the traditional procession at the door which has accompanied Indian politicians all their lives, the procession of chamchas. But the minister had not changed. Not yet, at least. He was still the soft-spoken professor,. living with close friends in a tworoom flat. Those who had come to congratulate him were surprised to discover where he was staying....
Where is Mr Dandavates PA? Janab, I explained, he is a member of the Janata Party. He does not carry PAs with him when he does not need them. He is not a Congress minister. We are from the security. When can we find him?
Bhaisahab, we dont know. We are his friends. and he doesnt need security with us. You better contact Mr Dandavate and discuss this with Professor Sahab, apna dil khush him. ho gaya. I didnt think those officers could In this crowd of well wishers a reconcile themselves to the situation number of people who had stuck where a Cabinet minister was living with Congressmen before the like this. They came in. results, could be easily recognized. Who is living in this house? Doesnt Mr Dandavate soon went off to he have his family here? take his oath, wearing his newly washed clothes, and every minute No, his family has not come to after that there was either a Delhi yet. In this house, Mr Joshi, I telephone call for him, or the and some other guests of Mr Mohan doorbell rang. And of course, live. The security people looked every visitor thought that since I puzzled, scratched their heads and was answering the calls I must be went away. his personal assistant which was Mr Dandavate went to the Secretariat excellent because they were on the very first day of being sworn oiling me in the ministers in. When tired, he returned home in absence. the evening. We discovered that he In the afternoon, suddenly two had told the security people that he people entered the house, and did not need them. asked gruffly: Is Mr Madhu All over the day and particularly now, Dandavate in the house? garlands, sweets, telegrams of No, I answered as politely as I congratulations were heaped on Mr. Dadavate. could. When will he return?
The chamchas were getting into action. But 24 hours after learning I dont know. he had become a minister, Mr Who are you, his PA? Dandavate was still the simple man No, I am staying here as a friend he had been all this while. A durbar had not sat around him yet. of the family.
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In the following article Madhu Dandavates son Uday Dandavate strikes a very personal and intimate note on his fathers death.
BEYOND DEATH
Our death is not an end if we can live on in our children and the younger generation. For they are us, our bodies are only wilted leaves on the tree of life. - Albert Einstein
This poignant quote by Albert Einsten best describes the state of my mind as I was mourning the loss of my dear father. I could feel his presence in the aura of the moment when I got up to a speak during the condolence meeting in Mumbai. I realized at that moment that even when he was alive it was not his physical presence but it was his ideals, his passion, his determination, and his optimism that brought me close to him. He lived in my imagination more than he did within the physical proximity of the home we shared. As I stepped up to the microphone and looked at the audience, there was a brief moment of silence. That moment made me aware that both Nana and Aai were now united in the memory of the people who shared their journey. I realized that it was worthless to lament over the loss of the physical presence of my parents since their spirit and ideals would be firmly entrenched in my heart for years to come. It was obvious from the large gathering that by being honest to their path during their lifetime they had inspired ample numbers of people. By continuing on a path they shared with my parents, these individuals, to me, represented the spirit of Nana and Aai. My parents presence will never fade away. It will survive in the work of people like Ashok Saswadkar, Surekha Dalvi, Medha Parkar and many others who have dedicated their lives to pursue the dream of a better future for the less privileged. Mignon Mclaughlin in the Neuroties Notebook (1960) wrote, The death of someone we know always reminds us that we are still aliveperhaps for some purpose which we
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ought to re-examine. Nanas passing away made me realize that the true asset I inherited from Aai and Nana was their zest to work for the upliftment of the downtrodden and underprivileged. I realized that Nana inspired in me the skill to empathize with other people, especially with those who are less privileged than I am. From him I learned to notice the tears in peoples eyes. I realized that my mother taught me to stand up for justice. She taught me to fight for my own rights and for the rights of people who could not fight for themselves. From Nana I learned the need to maintain balance; from mother I learned that while it is natural to be angry, it is important to be able to direct anger into positive and constructive actions. All along they both encouraged in me the appreciation for beauty in art, in nature, and in people. I remember many events that have left an indelible mark in my mind. I was inspired by the courage they demonstrated while facing adverse situations. I was very much afraid at times, especially after the murder of the Communist leader, Krishna Desai, when my father was identified as the next target. This did not bother him and he went about doing his everyday activities without fear of death. I was also proud of my mother when she went around performing her duties as municipal councilor despite threats by Shiv Sainiks. I have vivid memories of driving around with her in Mumbai during the riots engineered by Shiv Sainiks in the late 60s. I remember carrying cloths for those affected by the communal riots in Bhiwandi. I also recall the day after Mrs. Gandhis brutal murder when Nana and were traveling from Mumbai to Delhi on Rajdhani Express. The
train was stopped at Faridabad and Tughalakabad stations and hysterical crowds were forcing entry into the train and pulling out Sikhs and lynching them in front of everyone (including police). I remember my father getting down from the train and making an appeal to the police to control the mobs. Subsequently I also accompanied them to the settlements of Trilokpuri in Delhi to assuage the feelings of Sikh communities that were victims of mass brutalities. Through all these experiences I learned not to be afraid. I learned a lot from their life and more from my fathers death. In the morning of November 12th the doctor told me that Nana would pass away by the evening because the oxygen in his body had begun to deplete rapidly. I shares this news with friends and family. As I sat next to him for the rest of the day, the oxygenindicator machine kept beeping, making us aware of his ultimate departure. While we held our breath, and held back our rears, Nana maintained his calm and devoted his final moments enjoying the game of cricket that was being telecast. He also asked me to play the Marathi Natya Sangeet in the background. He was very aware of the fact that this was the final leg of his journey. Until the very last moment he maintained his calm and embraced death without any remorse. His death was a beautiful moment to watch, in the words of Khalil Gibran (the proph-t}: For what is it to die, But to stand in the sun and melt into the wind? Nanas moment of departure definitely was a moment he was prepared for and he prepared others for. He believed in Leonardo da vincis description of death: As a well-spent day brings happy sleep, so a life well used brings happy death.
INSIGHT
Science and Practical Reason

A transcript of the address delivered by Prof. Amartya Sen, Nobel Laureate at the Science Congress held in Hyderabad from December 3 to 6, 2005.
I feel very honoured to have the from this flourishing tradition and shall try to comment on the theme opportunity of speaking here that there are such magnificent of this conference, but I will also take dialogues and the liberty of using this occasion to today at this conference, opened scientific say a few things on the connection by the Prime Minister. The fact interchanges each year. between science and society in that Manmohan is a very old friend general. adds, of course, to my personal delight, but I think I am quite I begin with a few remarks on the objective in arguing that it is importance of science and wonderful that someone who is so technology, in particular subjects committed to the pursuit of linked with rural progress. One of knowledge and understanding and the leading scientists of India to who combines marvelously the whom the country has reason to be need for pragmatism with an very grateful for many innovations unshakable commitment to an (as well as for an overarching vision open society without barriers, is of science and society), M.S. doing us the honour of starting off Swaminathan, made an important this 93rd Indian Science Congress. declaration last week about the need I am, of course, very deeply to make 2006 a year of agricultural honoured by the fact that Prof. renewal and he went on to discuss C.R. Rao introduced how this objective me. I admire him There is also a critical need for an effective commitment can be pursued (the greatly. to ensure that the expanding urban prosperity in general, version I read was The Indian Science which makes our overall economic growth rate quite published in the Congress not only high, does not leave the huge mass of Indian rural Hindu on the 31st of represents a powerful population way behind. The need to be specially D e c e m b e r ) . tradition, of which we concerned with agricultural and other rural activities Underlying the sense can be proud, of thus arises both from the importance of these activities of urgency here are pursuing knowledge in and from the need for balance in economic and social the problems that Indian a thoroughly open- progress for the population as a whole, with the well- many being and freedom of all sections of the society cultivators face today: minded way, but it has also done a great deal receiving adequate attention. Our vision of the future Swaminathan refers identifiable over nearly a century of India cannot be one that is half California and half to problems dealing both to promote sub-saharan Africa. with high production communication among scientists and to bring science The theme of this conference is costs as well as the limitations of the within the reach of peoples Integrated Rural Development: infrastructure, and he also talks also understanding and practical Science and Technology. The about indirect indicators of current interest. The country has reason particular subject of my talk is difficulties, such as high indebtedness to be grateful that we can benefit Science and Practical Reason. I as well as the incidence of suicide
INSIGHT among poorer cultivators. There balance in economic and social is considerable grimness in this progress for the population as a picture. whole, with the well-being and The urgency of dealing with the freedom of all sections of the rural economy arises not only from society receiving adequate the presence of adversities in this attention. Our vision of the future sector, but also to take a different of India cannot be one that is half perspective from the successes California and half sub-saharan achieved in urban and industrial Africa.
efficiency and equity in water use, (3) reform and expansion of credit and insurance arrangements, (4) upgrading and dissemination of agricultural production methods and inputs, and (5) development and enhancement of farmer-centered marketing, sensitive to the needs of the small producers. All these steps, development in recent years, The programme for the rural which will of course have to be causing growing asymmetries and economy for 2006 07 that M.S. spelled out in greater detail, call for inequalities within the country. Swaminathan has outlined brings the use of more science and While information technology, out immediately the importance of technology, in different ways: some demand action to be global communications, undertaken in agricultural pharmaceuticals and other production and in the manufactures, and many infrastructure (including other parts of Indias social conservation and urban economy have been irrigation), others demand expanding rapidly, the departures in economic and agricultural sector has, in social institutions which too many ways, lagged quite are important for the wellsignificantly behind. Just being and freedoms of the as there is an rural population. The need overwhelming need for to get the help of science is making sure that the not confined only to the benefits of industrial and natural sciences, but apply service sector expansion (From Left) : Prof. I.V. Subba Rao and also to the different in urban India reaches the Dr. Jeevan Rao with Prof. Amartya Sen branches of social science urban poor as well as the as well. urban privileged, there is also a critical To Swaminathans list, I will add some additional areas 2 need for an effective of concentration, in particular completion of land reform, To Swaminathans list, I commitment to and increased coverage and efficiency of social will add some additional ensure that the infrastructure, particularly rural schooling and rural areas of concentration, expanding urban health care. There is a strong need to see how these in particular completion prosperity in general, priorities emanate not only from the value of social equity of land reform, and which makes our (important though that societal ethics certainly is), but increased coverage and overall economic also from considerations of efficiency and productivity efficiency of social growth rate quite in rural society and economy. There are indeed important i n f r a s t r u c t u r e , high, does not leave issues of social science involved here. particularly rural the huge mass of schooling and rural Indian rural population way science and technology in meeting health care. There is a strong need behind. The need to be specially the challenges that we face there. to see how these priorities emanate concerned with agricultural and Swaminathans programme not only from the value of social other rural activities thus arises includes (1) soil health equity (important though that both from the importance of these enhancement, (2) further societal ethics certainly is), but also activities and from the need for irrigational expansion and greater
INSIGHT from considerations of efficiency India not long after independence, considerably larger than even the and productivity in rural society but which still remains substantially highest numbers I had then and economy. There are indeed incomplete, after nearly half a suggested (16 to 23 million). important issues of social science century. There are interesting Since my own political position is involved here. What is most lessons here from the experience distinctly on the left, it was extremely important is the need for keeping of China. The Chinese political important for me to identify and an open mind on evidence and leadership abolished landlordism analyze the tension between their implications rather than being quite soon after the establishment common beliefs at that time about guided by ones pre-existing of the communist government. Chinas agricultural success this was prejudice. It is important to But they proceeded not to pass on not confined only to the left and remember that open-mindedness the land to the individual tillers, but the demographic figures that were and objectivity may not come to collectives, like cooperatives and unmistakably emerging and which easily. I am reminded of Bertrand communes. Even though there suggested a very different picture Russells complaint that even as were high hopes of big increase in one of elevated great a thinker as In this second phase of land reform beginning in 1979, in mortality and crisisAristotle was not China land was passed on directly to the tiller, often quite based collapse of always willing to small cultivators, under what was called the responsibility natality. The famine examine evidence system, and the result was one of extraordinarily rapid was, it was clear, with an open expansion of agricultural production, with the Chinese rural directly caused by the mind. Russell economy growing faster through the 1980s than any rural u n f u l f i l l e d refers in particular of economy has ever grown anywhere in the world. The first expectations to Aristotles belief impetus for economic enhancement, it must be productivity gain that women were remembered, came not from the manufacturing sector but from the Great Leap physically and Forward: in fact, from agricultural expansion. intellectually p r o d u c t i o n inferior to men, and he even productivity through such plummeted, rather than soaring, as continued to believe that women collectivization, this did not in fact expected (and as reported in cooked have fewer teeth than men (which occur. The incentive system of official agricultural statistics). they of course dont). I quote collectivist agriculture gave very Incidentally, while the agricultural Russell on Aristotle: little motivation for work of the statistics of China were mostly Aristotle maintained that women kind that was needed to raise manufactured and entirely unreliable, have fewer teeth than men; agricultural productivity. it is to the credit of demographers although he was twice married, it never occurred to him to verify this These problems were reflected in China that the mortality and statement by examining his wives even in the disastrous famines of natality statistics remained largely 1958 to 1961, the reality of which coherent and uncooked, and it is mouths. has only slowly been recognized. the tension between the two sets of Are there problems of this kind in In fact, my early attempts to statistics that opened the way for a the making of social and economic identify the famine and its huge policy based on knowledge, mortality, based on some more critical examination of what understanding and the need to unorthodox reports from China, really happened in the production and distribution of food in China examine evidence with objectivity? were greeted, I have to say, with in those terrible years. My Let me consider a couple of cases tremendous scepticism and in which a scientific approach can stonewalling, in India in particular. elementary analysis of the famine, using the entitlement approach, has help. As it happens, it is now generally been immensely improved later on First, take the programme of accepted that the mortality from by more definitive studies of the comprehensive land reforms, that famine was around 30 million, famine done by the distinguished which was begun in earnest in if not more, and this is of course
INSIGHT Chinese economist Justin Lin, using the same approach. The famine was also sustained, as I have discussed elsewhere, by the absence of a democratic system, so that the unfulfilled expectations were not brought into public scrutiny and criticism: the absence of opposition parties and of a free media allowed the scientific mistakes to survive in political and economic policy, without correction for as long as three years, even as tens of millions died.
I turn now from agriculture in particular to rural economic and There is a great deal that India can learn from Chinas diverse social success in general. That would experiences. Of course, India certainly require expansion of rural never went for collectivization of production of non-agricultural agriculture, and did not have the commodities, for which the troubled history of rural economy development and consolidation of that China had for several decades rural infrastructure power, water When, however, roads would be China went for At the time of the last census in 2001, a quarter of important. There have economic reform in Indian men, and about half of the Indian women, been considerable 1979, it not only were illiterate. The incidence of Indian people achievements in expanding took on the condemned to live without letters and numbers is rural telecommunication, globalized world not only much larger than the corresponding ratios but further progress is economy as in China or South Korea or Vietnam, but also needed here too. something to be substantially larger than the average of all the poor I want, however, to conquered rather countries taken together (even after excluding China comment particularly on than feared, it also from that list), including substantial parts of Africa. the social infrastructure, carried out many prior to the reforms. But when the both for creating greater domestic economic refor ms, reforms came in China, there were opportunities for increasing income, including a radical rearrangement no landlordism left in the country, and also for enhancing the well-being of land holding and use and and land could, thus, go directly to of rural people, which takes us control. In this second phase of the tillers without any further beyond only income generation. In land reform beginning in 1979, barrier to be broken, and this was raising productivity as well as in land was passed on directly to the the primary source of Chinas making lives of people richer and tiller, often quite small cultivators, agricultural success from the 1980s. freer, school education and basic under what was called the In India, however, land reform has health care can make important responsibility system, and the been only partially carried out, and contributions. In todays competitive result was one of extraordinarily continues to be a substantial barrier world, the need for reading, writing rapid expansion of agricultural in the expansion of agricultural and numeracy is important, both to production, with the Chinese rural production in many parts of the generate qualifications for economy growing faster through country. My own state of West employment and for the ability to the 1980s than any rural economy Bengal is an exception in this, and indeed that state has received a produce commodities according to has ever grown anywhere in the great deal of benefit precisely from specification, with maintenance of world. Even though Chinas urban the success of land reforms there, quality and reliability. This applies and industrial success has helped including a reasonably high rate of to production that has a rural base to make the country much richer, agricultural economic growth. Of among other components, but also the first impetus for economic course, West Bengal, like the other to the work and occupation of rural enhancement, it must be states in India, can also benefit people who move to urban areas in remembered, came not from the from the wide ranging programme search of income-they too can manufacturing sector but from of agricultural change outlined by
agricultural expansion. In fact, the bulk of reduction of poverty that occured in China was, due to rural economic progress, particularly in the 1980s, since urban and industrial expansion, though very rapid, has remained rather unequal in distribution.
M.S. Swaminathan, but many of the other states have to get their act together also in carrying out the completion of the overdue land reforms. 3
contribute greatly to rural wellbeing, both through remittances and through reduction of the pressure on land in the agricultural economy.
Indeed, educational neglect afflicts the lives and freedoms of a large As it happens, India seems to have proportion of Indians. At the time great difficulty still in competing of the last census in 2001, a quarter in a whole range of simple of Indian men, and about half of products in the world market and the Indian women, were illiterate. sometimes even in competing with The incidence of Indian people imports from abroad into India condemned to live without letters itself. If we look at the range of and numbers is not only much larger Chinese commodities that we see than the corresponding ratios in in, say, Europe or America today, including elementary Resources and funding are, however, not the only China or South Korea or Vietnam, but also gadgets such as clocks factors of importance in the delivery of basic substantially larger than and calculators, in education in India. There are other obstacles too. A the average of all the poor which China excels major difficulty lies in the weak institutional structure countries taken together today, and which were of primary schools in most areas of India. One (even after excluding also among the mainstays of the problem arises from considerable irregularity in the China from that list), earlier East Asian attendance by teachers in primary schools, which is including substantial parts Miracle, many of the understandably a subject of great parental of Africa. What is productions involved dissatisfaction. There are other problems as well, particularly depressing is require basic including a fairly extensive breakdown of the system that the picture of educational deficiency is education, and an of school inspection. not only severe in terms ability to read and of these later educational of the ratio of illiterates in the total write and calculate and to follow activities. The enormous waste of population, but also judged by the written instructions. massive talents resulting from bad proportion of children in schoolThe benefit of sweeping coverage or no school education cannot going age who still miss the of good quality general education but be relevant for the general opportunity of going to school. in China, which we can see in prosperity of both the rural and While the statistics of the Ministry China today (and saw earlier in the urban sectors of the Indian of Education systematically over South Korea, Taiwan and economy. report school attendance (there are elsewhere), is still not adequately inherent biases in counting heads available in India. I would argue Thus, even without raising the along with determining financial that this lacuna would be more and central issue of social justice, there allocations), it is clear from other more strongly felt once the size of are significant aggregative and sources of information, including Indian exports expand and we find efficiency considerations in National Sample Sur veys and that we need to go beyond relying, assessing what India loses through National Family Health Surveys, that on the one hand, on traditional its educational shortcomings and even though attendance has merchandise, and on the other, on disparities, particularly from the definitely increased over recent years coverage and we are still nowhere near universal the narrow range of technical inadequate (frequently) deficient quality of coverage, especially in rural areas. products both goods and services that can be produced by school education. However, using the highly trained skills of a questions of justice are also very It is, thus, particularly encouraging limited group of Indians who have central in assessing the that the government led by the done so spectacularly well in recent asymmetries and inequalities in present Prime Minister began its
years. It is also worth noting that even the extent of the success of higher or specialized education must be dependent on the size and reach of what we may call the catchment population from which it draws its recruits. Given the number of people who receive no school education and the number who get it in a very poor form at our schools, the quality of entry into higher or specialized education is severely hampered, and this cuts into the effectiveness
INSIGHT Indian education, and this is where the unacceptability of the present situation becomes utterly and manifestly clear.
INSIGHT The tenure straightaway with a strong In the studies conducted by the rural administration. commitment to expand school Pratichi Trust ( a trust I was recognition that a well functioning education. More resources are privileged to set up with the system of inspection is a basic being devoted to this purpose, and proceeds of my Nobel Prize necessity for quality control in a also in ancillary but vitally money), it has come through profession where jobs are entirely complementary activities, such as clearly how extensive the problem secure has to be reflected in the the serving of cooked mid-day of teacher absenteeism is, reform of the institutional structure meals in schools, largely financed combined with some evidence of of primary education. by the central government. Since neglect of those schools in Another important and urgent good changes demand particular in which the bulk of problem is the need to increase the appreciation, I celebrate these students come from economically voice of parents in the running of developments, but I also put in a and socially disadvantaged schools. The parent teachers plea for even greater concentration background. We need the committees have often been on this extremely important aspect cooperation of the teachers extremely ineffective, and sometimes of integrated rural comprehensively nondevelopment. We still There is, I would argue, also a strong need for functioning. The picture have a long way to go, reducing the dependence of the Indian population, varies here from region to and we have to try to particularly the rural population, on exploitative region, but the need to have cover the distance as private health care. The private sector works good working parentquickly as possible. particularly well as a supplement to public health teachers association at the Resources and care, as it has done in, say, Kerala (given the reach level of each school remain funding are, however, and quality of public health care there), but it critically important for not the only factors of cannot be a substitute for basic public health care, reversing the adversity of importance in the for reasons that economic reasoning as well as schooling in rural India today. delivery of basic empirical evidence makes abundantly clear. education in India. There are other In all these cases of proposed obstacles too. A major difficulty unions in dealing with this changes, there are, I would submit, lies in the weak institutional problem, and I am very happy that enough evidence and plausibility structure of primary schools in at least in West Bengal, we have emerging from across the world most areas of India. One problem received agreement from the which give us genuine hope of arises from considerable principal Primary Teachers making a difference if we proceed irregularity in the attendance by Association to hold a joint meeting with determination and teachers in primary schools, which soon with the Pratichi Trust to see commitment. This is certainly an is understandably a subject of great what can be jointly done to redress area of great relevance to practical parental dissatisfaction. While this serious problem. reason and policy making linked with primary school teachers are no There are other problems as well, the social sciences and probing longer underpaid in the way they including a fairly extensive empirical investigation. used to be (I remember going out breakdown of the system of 4 in demonstrations in Kolkata in my school inspection. In some of the college days in support of their areas we studied, none of the There are similar issues to be faced demand for what would seem very schools had been inspected over about the delivery of basic health In care in Indian rural society. There modest salaries now), any hope the entire last year. that their large salary increases in conversations we had, the are problems of inadequate facilities recent years would lead to the inspectors also expressed some for primary health care, but on top elimination of teacher absenteeism helplessness in not being able to of that there are also problems of and of the neglect of pupils from be frank about what they would absenteeism of health care officials poor and socially disadvantaged like to report, given the power in many areas of the country. Again, structure involved, particularly of we need the cooperation of the families has not been realized.
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relevant unions to make a joint asymmetry of infor mation move to remove this blot in our between patients and doctors, and the inability of poor and poorly public service record. One result of the inadequacy of educated rural people to tell rural public health services is the between genuine treatment and wide use of private practitioners, quackery, it is very hard to make to whom the patients even very the private sector substitute for the indigent ones are forced to go. basic role of the public sector in Sometimes they are sent there by the delivery of health care. I the public health ser vants should add that these empirical themselves. In some cases the observations are entirely in line public servants themselves seem to with what economic analysts (such prefer to see patients for money in as Kenneth Arrow, George private, rather than for free, as a Akerlof, Joseph Stiglitz and part of public service (it emerged Michael Spence) have identified as in one of the studies of the Pratichi the difficulty of a purely marketbased solution for difficulties of Trust in east India). asymmetric information, which There is also a serious problem of applies particularly strongly to exploitation based on the health care. ignorance of the patients, which takes the form of the ease and While there is much discussion right now in India about the ways immunity with which quacks operate in the private sector, and means of privatizing some fleecing the patients, in exchange economic activities in fields of for providing nothing other than manufacturing and services in placebo satisfaction. This, again, which the public sector seems to varies from area to area in rural do quite badly (and this is India, but in many cases the undoubtedly a serious problem to incidence of quackery seems quite be address, there is, I would argue, large. For example, in a district of also a strong need for reducing the Jharkhand, we founded that 62 per dependence of the Indian cent of the surveyed population is population, particularly the rural ser ved only by identifiable population, on exploitative private quacks, with another 14 per cent health care. The private sector of people being able to go only to works particularly well as a Ojhas and other magic healers, supplement to public health care, who are mercifully somewhat less as it has done in, say, Kerala (given the reach and quality of public expensive. health care there), but it cannot be I have commented earlier on the a substitute for basic public health need to pay attention to the care, for reasons that economic widespread evidence that reliance reasoning as well as empirical on collectivist organizations does evidence makes abundantly clear. not work at all well in agriculture. 5 There is a similar ground for But what about China ? pessimism, in this different case, against reliance on private health Has not China experienced similar services when public health care is success in privatizing health thoroughly deficient. Given the insurance as it has in privatizing
agriculture? China certainly abolished full public coverage of health care, at no cost prevalent prior to 1979, when it was decided quite suddenly that people will have to buy their own health insurance (unless their employers bought it for them, which happens in only a small minority of cases). What has been the result of that move? I am afraid here, unlike in the agricultural sector and in the use of the global economy for industries, privatization has not been, in any obvious sense, a success. In fact, despite Chinas much faster rate of economic growth since the reforms in 1979, the rate of expansion of life expectancy in India has been about three times as fast, on the average over this period, as that in China. Chinas life expectancy, which is now about 71 years, compares with Indias of 64 years, and the life-expectancy gap in favour of China, which was 14 years before the Chinese reforms in 1979, has now been halved to only 7 years. Note must, however, be taken of the fact that it gets increasingly harder to expand life expectancy further as the absolute level rises, and it could be argued that perhaps China has now reached a level where further expansion would be very difficult. But that reading is hard to sustain. At the time of economic reforms, when China had a life expectancy of about 68 years, the Indian state of Kerala had a slightly lower life expectancy around 67 years. By now, however, Keralas life expectancy is estimated to be higher than 75 years (a level that was reached already by the late 1990s when the last such studies were undertaken), and this is of course
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INSIGHT very considerably above Chinas life expectancy of 71 years. While the Chinese cities like Beijing and Shanghai can outmatch the state of Kerala, nearly all Chinese provinces have much lower life expectancy than Kerala.
It is useful also to look at specific points of vulnerability. Infant mortality in China has fallen very slowly since the economic reforms (almost none at all in the last decade), whereas it has continued to fall very sharply in Kerala. While Kerala had roughly the same infant mortality rate as Chinas 37 per thousand at the time of the Chinese reforms Keralas present rate is 10 per thousand (where it has stagnated over the last decade). Not surprisingly there is much talk in China now about reversing the earlier privatization of health insurance and the general packet of health care reforms that were introduced around 1979, because it is beginning to be widely recognized that these moves have not borne the fruits that they were expected to deliver. India, thus, has rather little to learn from Chinas recent experiences in health care. Indeed, India too, which does of course have provision for free public health care, needs to expand these free services across the country, rather than relying on private health care at a basic level where it has not delivered much anywhere in the world. There is an issue of democracy involved here as well. The significantly retrograde movement in the coverage of health care, through the new necessity to buy ones own health care that was introduced in China in 1979, received little public resistance as
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it undoubtedly would have met in any multi party democracy like India ( it is very hard to think that an established public facility of great value to people could be dispensed with so easily in a country where the government has to face the electorate and opposition has an effective voice). The denial of that facility certainly has had a role in the slowing down of the progress of longevity and infant mortality in China. But India has to bring the subject of basic health care as a public commitment more into the making of policy and into the nature of public discussion in the country. Democracy gives us that opportunity, but we have to seize it more fully. 6 Time for me to bring this lecture to a close. I have tried to discuss the importance of science for the tasks at hand, including integrated rural development. I have talked not only about the role of the natural sciences and engineering, but also about the role of social scientific understanding solidly based on empirical evidence as well as critical scrutiny of the theory and practice of public policy. I have also tried to emphasize the understanding that the role of science depends not merely on scientists (important as they undoubtedly are but also on the larger society.
more essential service to his country than the whole race of politicians put together. Manmohan may think this to be a rather discouraging remark, but he would be right to think that it is also a wrong diagnosis. As was discussed earlier, the growing of greater or less food, depends on social and economic arrangements as well, and in this as well as in the public support for scientific research political and social policies could make a major difference. Whether two ears of corn will in fact grow on a piece of land will depend not only on physical technology, but also on the clarity and cogency of social understanding and public policy making. Indeed, Manmohans own political insistence on removing the license Raj that dominated the Indian economy prior to his reforms in 1992 is a good example of how production and economic achievements can be enhanced through the use of social science as well as political commitment.
I have been both applauding what has already happened in India and demanding that more much more be done in areas that remain relatively neglected even today. We can learn from the failures as well as successes observable in our own country and also elsewhere in the world. It is the open-mindedness of the scientific approach that we need more than anything else in making our way through the difficult problems of practical reason that we This point of connection is face. sometimes missed. Jonathan Swift said in a much quoted remark in I am very privileged to join the eighteenth century: Manmohan Singh in participating in .whoever can make two the opening of this momentous ears of corn or two blades of grass conference in line with a remarkable to grow upon a spot of ground tradition. I welcome you all to what where only one grew before, would promises to be a wonderful deserve better of mankind, and do conference !
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Management Challenges and Opportunities in a Globalised Environment

- Dr. M.Ramamohan Rao * (The following article is an approximation of a very lucid and erudite Endowment Lecture delivered by Dr. MRammohan Rao, Dean of Indian School Of Business, Hyderabad on August 12,at the Visveswaraya Bhavan, Hyderabad . This is the Engineers L. Venkata Krishna Iyer, K.R. Srinivasa Rao & ML. Swamy Fifth Endowment Lecture organised by the Institute of Engineers (India), A.P State Centre.) Before the challenges and facilitated transactions between Globalisation, and creation of World opportunities in a globalised business to business (B2B) and Trade Organisation (WTO) are two environment are examined, it is business to consumer (B2C). In important factors responsible for the necessary to have a birds eye-view fact todays business is more and change in the business environment. of the prevailing economic and more being driven by Information Quality in goods and services has business environments in the Technology(IT). Earlier many come to occupy the center stage. The speed with which world. These are some of Quality in goods and services has come to information can be passed the key factors which occupy the center stage. The speed with on has facilitated taking of determine how a country or which information can be passed on has quick business decisions. It a company copes with its facilitated taking of quick business further gave rise to Business challenges and avails the decisions. The new business environment Outsourcing opportunities to its has led to partnerships, mergers and Process advantage. Liberalisation, acquisitions. Even in developing countries, (BPO). The new business Privatization and multinational companies partnering with environment has led to Globalisation (LPG for local companies is now a common feature. partnerships, mergers and acquisitions. Even in short) are more or less the order of the day all over the world. people were skeptical about the developing countries, multinational Even Communist countries like importance of IT. But now IT is companies partnering with local China and Russia have opened playing a vital role in the companies is now a common feature. their doors for these changes. The development of an economy The The fact that some Indian companies unbelievable progress made in dot.com boom and bust created are making acquisitions of foreign convergence of data, audio, video all-round confusion. However, companies in the latters own and communication technologies rapid changes have taken place countries could not have been has networked the world. From any since then and now IT has dreamt of a decade ago. This corner of the globe to any other permeated every field of activity. happened because the business corner information can be made This has given rise to increased houses in India and some other available on a real time basis. The competition in business activities. countries, which were enjoying a Internet is expanding with Along with the economic protected environment and lightning speed and millions of environment the business monopolies, had to step out and face transactions are daily taking place environment allover the world competition due to liberalisation and through the Internet. It has underwent tremendous changes. WTO. While the weak ones perish,
* Dean, Indian School of Business, Hyderabad
INSIGHT the strong ones will withstand the competition and thrive. The companies are acutely costconscious and learn to shed their flab. They have to adopt specialised management practices and corporate governance. The concept of social responsibility, which was largely absent in India, except for a very few companies, is being adopted by more and more business houses now.
because of intellectual property Sometimes what counts cannot be rights. Intangible assets however, can counted and what can be counted does be acquired through hiring of talent, and mergers and acquisitions. not count -Albert Einstein It is not surprising that this Practice of modern techniques in observation by Einstein, which was management will go a long way in made long ago in a different gaining competitive advantage over context, applies to the present day rivals. Techniques like project management. Now, the intangible management, financial analysis, total assets which cannot be counted or quality management (TQM), supply assessed form an important part chain management, customer relationship management, enterprise of a business. The moving force behind the resources planning, business process changing business environment is Tangible assets are those which are reengineering, data warehousing and the Information Technology. It has defmite, objective, can be touched data mining greatly help in acquiring enabled the emergence of high and which can be assessed for competitive advantage. However, performance teams in Another new factor noticed in the business these modern techniques, areas such as business environment is that the enterprises are becoming though necessary are not process reengineering. extended enterprises. They are synergising with sufficient, for, the Cross functional and other companies or businesses and building external competitors may adopt work groups systems relationships. In other words, this is establishing a the same techniques. have become value chain or backward and forward linkages, from What is needed is proper common. Another suppliers to consumers in more or less a seamless of new factor noticed in fashion. All this has become possible because of the management knowledge workers. Such the business information revolution. workers are creative, environment is that innovative and use their the enterprises are becoming value. Physical assets like land, extended enterprises. They are buildings, equipment, and intelligence most of the time. They synergising with other companies inventory, and, financial assets like create and enhance value for the or businesses and building external cash, receivables, and investments organisation. By carefully and constantly monitoring the market for relationships. In other words, this are the tangible assets. new talent, being pro-active and by is establishing a value chain or Intangible assets are those, which building up good network, the backward and forward linkages, cannot be touched and easily recruitment process can be from suppliers to consumers in defined, which are vague and successful. Facing the management more or less a seamless fashion. All cannot be easily apprised for value. challenges includes the proper and this has become possible because The intangible assets include continuing education of not only the of the information revolution. Now any information is available processes, brands, people and staff but also all the stake holders. Continuing education includes short round the clock, to internal and relationships. external sources and in numeric, Thus, the greatest challenge for any duration, long duration, and self text and graphic forms. This company or business today is to learning courses. Job content, apart enables the proper valuation of properly manage its tangible and from the routine work should have assets and reporting to all stake intangible assets. Intangible assets a window for acquiring new holders. are not easily replicable, especially knowledge, and, mentoring goes a Managerial Challenges
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long way in enriching the job employees by i) offering incentives, better and quicker results. Leading is content. In order to withstand ii) offering stock options, iii) done not by command and control competition every organisation proper recognition, iv) giving but by trust, persuasion and setting needs right-sizing from time to feedback and support or in other an example. The attributes of time. Though right-sizing generally words mentoring and, v) offering leadership of a person, as articulated by Marvin Bower in his book The connotes retrenchment of suitable compensation package. employees or downsizing, it In addition to retaining good Will to Lead are trustworthinessactually means that the employees, proper knowledge fairness, unassuming behaviour, organisation should have adequate management is essential. listening, and open mindedness. The strength-neither more nor less. Knowledge is of two types: I) leader should have sensitivity to This is not a one-time affair but Explicit and, ii) Tacit. Explicit people and situations, possess has to be periodically done. The knowledge can be articulated and initiative and good judgement, be countrys laws and the also exhibited by presentations, able to take sound and timely organisations policies should text, tables, diagrams, etc. But, tacit decisions, be flexible and adaptable, enable the accomplishment of knowledge cannot be easily and have capacity to motivate. right-sizing promptly and captured or communicated. It is Every challenge is an smoothly whenever opportunity. In the Leading is done not by command and necessary. globalized environment control but by trust, persuasion and setting an example. there are more challenges An important problem being and hence more faced by companies, especially difficult to manage and transfer opportunities. Thoroughly in the software industry, is tacit knowledge. It is embedded in understanding the global economic employee turnover. The retention of good employees at all levels is the individual employee and is and business environmentidentifying becoming difficult for many expressed through skillful the challenges getting equipped with companies. Unless values like execution. It consists of action information technology upgrading commitment to the organsiation learning. Thus it is essential to the intangible assets adopting and also to the profession are consciously adopt a policy of modern techniques of management with special attention to knowledge inculcated in the employees or they knowledge management. are selected based on the The best way of availing the management right-sizing the possession of these values opportunities in the present organization from time to timeand inherently, it is difficult to tackle scenario is by taking initiative and displaying leadership will enable any this problem because of plenty of being a front-runner which organization not only to face any available opportunities. Many requires leadership. Leading, as challenge but to convert it into an organisations try to retain their opposed to managing people, gets opportunity and derive success.
Banks have Rs 880-cr unclaimed money

The amount of unclaimed money in the accounts of banks has touched Rs. 880.74 crore. According to the definition of RBI, any account where the money has not been claimed for last 10 years, will be treated as unclaimed account. Unclaimed savings accounts get a 3.5% rate of interest. But, unclaimed fixed deposits do not earn any interest as the contract period has already been expired and the depositor has neither renewed nor claimed the amount.
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India Needs Second-Generation Reforms

Praveen Garlapati *
crippled by these ubiquitous In 1991 India faced balance of License Raj payments crisis forcing the The restrictive and powerful transaction costs. government to approach the License Raj prevented competitive Planning Commission. International Monetary fund. The bidding and corruption was the India followed the path of the Soviet IMF agreed to release two loans means and ends to doing business Union favoring huge government totaling $ 2.86 billion in 1991 and in India. The bureaucratic barriers projects to stimulate the economy. 1992. However, these loans came forced companies to apply for Between 1981-82, gross fixed with certain conditions and per mission for everything capital formation in the public sector economic polices that had to be including applying for a phone line was nearly half of the corresponding implemented by the Indian to firing employees. This resulted total in the economy1. Government Government. As a result, Indias in an overly regulated economy expenditure comprised of an economic liberalization had begun. that stifled entrepreneurship and extremely high amount of Indias The purpose of this article is to prevented companies from doing GDP. This was done through the business. provide a summary of planning commission, growth that was attained in The redundant and cumbersome licenses that subsidies to the agriculture different sectors of the companies were forced to apply for gave sector, loans to public economy since 1991 bureaucrats and politicians an enormous enterprises, and interest liberalization. amount of power and inf luence. Most payments. However, like India received its licenses were not given on merit, but rather many government projects around the world they were independence on August on influence and capital. 15, 1947 from Britain. After Indias economy grew only at an average rate not always allocated based independence India opted of 1.7% until 1980. It was dubbed the Hindu on capital-output ratios but constituency concern 2. for Fabian socialism, which growth rate. prescribed an economy Import Substitution directed by the government. Nehru The redundant and cumbersome Indias economy grew only at an believed that India should focus on licenses that companies were average rate of 1.7% until 1980. It public sector, while preventing forced to apply for gave was dubbed the Hindu growth wealth accumulation by individuals. bureaucrats and politicians an rate. The socialist economy was State controlled enterprises enormous amount of power and nowhere near achieving its full dominated almost all industries influence. Most licenses were not potential. The highly restrictive leaving either very few large private given on merit, but rather on policies placed rigorous and strict companies or very small-scale influence and capital. Generally control on all international trade. The industries competing in the market. both were achieved through bribes tight control on imports and exports This resulted in a very inefficient to government officials. These prevented almost any international marketplace, with the licensing Raj transaction costs made doing businesses into the Indian economy. controlling and regulating the business in India almost Indias tariff rates were among the entire private sector operations in intolerable. India became a highest in the world. The plan was India. slumbering economy that was to become a self-sufficient economy
1. Bardhan, Pranab. The Political Economy of Development in India. New Delhi: Oxford University Press, 1984. p.23 2. Bardhan, Pranab. The Political Economy of Developemnt in India. New Delhi: Oxford University Press, 1984. p.61 * Consultant, Reddy Marketing, Inc, 13744 Jennings Lane, Crown Point, IN 46307, e-mail:[email protected]
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that focused on importsubstitution, rather than international trade. The producer surplus far outweighed the consumer surplus, resulting in consumers having limited domestic choices at high prices. The productivity of the State, local private businesses, and the economy remained among the lowest in the world since there was no incentive to improve. Education The Indian Government decided to place an emphasis on higher education over basic education. The focus of these governmentsponsored universities was engineering, medicine, agriculture, and law. The government believed that it was better to have a few extremely educated people that will lead India and its population in an equitable way through technological advancements. One notable outcome was, this plan produced Indias world renowned IITs. The graduates from these schools did contribute to Indias development, but not close to what the Government had hoped for. The main reason for this was the highly controlled Indian economy through the Licensing Raj, which stifled many IIT graduates entrepreneurial dreams. This frustration led many best engineers to leave India in search of better opportunities abroad. Their success abroad played a very important role in support of the information technology boom in India. growth rate. Indias Gross Domestic Rate grew at 1.7% from 1950-1980, but managed to double this growth to 3.8% from 19802000. There is a range of arguments for this that include, but are not limited to the Green Revolution, increase in public investment in infrastructure, and an internal shift from the public to the private sector. However, it is important to focus on why in spite of this remarkable growth, the balance of crisis still occurred. Cause of Balance of Payment Crisis Deregulation The era of massive protection had ended. In 1991 a wave of economic reforms swept all across India. There were two major policy plans in response to the crisis: deregulation and privatization. The forty-year old License Raj was next on the list. The import licensing was replaced quickly with exim scrips. This would remove the bureaucrats from the licensing procedures needed for imports and exports. One year later, this was replaced by even a more marketoriented plan called the dual exchange rate3. The next hold the license Raj still maintained was on the industry side. The licenses required for the manufacturing sector were removed for all industries except for two in the public sector, six that had strategic and environmental concerns, and items reserved for the small-scale sector4. The complex government policies were simplified to accelerate foreign investment, trade, and transfer of technology. Privatization Privatization was the other key reform in the 1991 bailout plan. However, privatization does not always result in a more efficient industry since the bidding process is usually closed resulting in the transaction costs determining the future owner or owners of a public enterprise. The two types of corruption are rent seeking or profit seeking. Rent seeking happens when cronies are given exclusive rights in production or distribution while profit seeking occurs when cronies are allowed shares in profit-making enterprises 5. Asia Times stated, Data from the governments Department of Public Enterprise
There are two primary reasons for the balance of payment crisis in 1991. India in 1980 embarked on its new economic plan funded by short-term foreign borrowing. The external debt India had accumulated provided some basis for its remarkable jump in growth. The government did reduce state control in favor of private enterprises. However, fiscal expansion needed to be met with even greater reforms to be sustainable in the global environment. The other reason was Indias growth hit a wall in 1991 when the Gulf War broke out. Iraq was an important and primary source for Indias energy needs. The Gulf War disrupted the global supply resulting in higher oil prices. The higher oil prices combined with Indias external debt proved too much for the Indian Government to handle. Indias foreign exchange reserves were only enough for two weeks worth of imports. As a result, India realized it would not be able to 1980s During the 1980s India embarked meet its payment obligations and on a more aggressive economic had to turn to the IMF for a plan that resulted in a higher bailout.
3. Das, Gurucharan, India Unbound New York: Alfred A. Knopf, 2000. pp. 214-218 4. Ernst & Young. Doing Business in India. Ernst & Young India, 2003 p.69
39
INSIGHT show that between 1991-92 and reality the states considered them Government of India. In 1996, the 2001-02, the total profit of the as infringements on their ability to commercial losses of the State winning companies went up by 6.6 exert influence over their pricing Electricity Boards totaled $2.2 billion times, while the aggregate loss of and operational decisions on dollars or 8 per cent of Indias GDP at the time. Furthermore, these losses the losing companies increased by generating electricity. 3.4 times. Critics point out that the As a result, the 1956 Industrial do not take into account the loss of government should have sold the policy resolution was passed to productivity caused to other loss-making companies first and stress the need of electricity industries. For example, Gurcharan then decide on the highly development through state Das explains how many industries profitable oil companies6. This programs. State Electricity Boards failed to perform causing one big was a classic example of profit were created and prevented any cycle of bottlenecks. seeking that only resulted in a private utilities from adding Anyone who lived in India in the slower and inefficient economy. In generation capacities8. These SEBs 1970s and 1980s felt the horrendous the end, those that profited in the (State Electricity Boards) were shortages. There were constant marketplace were only the blackouts as power was few players that were able Data from the governments Department of unavailable. There were to afford these Public Enterprise show that between 1991-92 and shortages of coal, cement, transaction costs. The 2001-02, the total profit of the winning and steel. One seemed to high barriers to entry feed on the other. For precluded an effective companies went up by 6.6 times, while the example, once railways privatization plan that aggregate loss of the losing companies started doing badly, would have resulted in increased by 3.4 times. Critics point out that the transport of coal from the higher returns to the government should have sold the loss-making coal mines to the thermal companies first and then decide on the highly plants that made electricity central government. profitable oil companies6. This was a classic from coal was affected. If Energy example of profit seeking that only resulted in enough electricity was not In India before generated, then coal could independence, power was a slower and inefficient economy. not be mined. If coal and generated and distributed through allowed to set up power generating electric power suffered, then the the private sector. However, after stations except for Nuclear power railways could not run11. India received independence in stations. This authority still 1947, the government decided that continued to remain with Central As a result, it became clear to the the government should be Government. As a result, there was Government of India that electricity responsible for providing huge increase in the installed reform was badly needed. electricity throughout the country. capacity of electricity resulting in The first step was to identify the As a result, the government of 85,919 MW by 1997 from just main reasons why the State India passed the Electricity Supply 1,363 MW at the time of Electricity Boards were not 9 Act in 1948 to create Electricity independence . As of March 2005, sustainable. The SEB generally had Boards, which would allow private India has a total power generation an inadequate capital structure, low sector players to continue to capacity of 114,000MW. However, tariffs and poor bill collection. There still operate for only another ten years7. there is 10 a peak demand deficit were high transmission and of 12% . The Electricity Supply Act 1948 distribution losses every year. The stated the boards would have This increased capacity carries an State Electricity Boards were not freedom of operation. However, in enormous financial burden to the allowed to receive any additional
5. Desai, Padma. Financial Crisis, Contagion, and Containment. Princeton University Press,2003. pp.249-250 6. http://www.atimes.com/atimes/South_Asia/EK12Dfo3.html 7.http://www.kseboa.org/news/n19920211.shtml 8.http://www.ieo.org/world-c2-pl.html 9.http://www.powermin.nic.in/report/pb98-99.pdf 10.http://www.projectsmonitor.com/detailnews.asp?newsid=9650&secid=144
capital from private sector investment to upgrade their facilities. There was also a complete lack of good managerial and technical skills in the SEBs. The Government of India started to realize that a greater emphasis needed to be placed on improving the efficiency of supply, consumption, access to capital, and pricing of electricity. There were several main goals that the states wanted to achieve. They wanted to reduce their reliance on the federal government and raise capital from the private sector for generation, transmission and distribution. They wanted to be able to provide stable power to avoid frequent blackouts when demand peaked. Finally, they wanted to do without excessive price hikes.
Post 1991 After the economic reforms were enacted, Indias growth almost doubled again to 6-7% every year. This made a tremendous impact on the economy in terms of business development, foreign exchange reserves, and reduction in poverty. There was no one silver bullet that transformed the economy, but So the decision was made that this several important measures that could only be done by reforming improved the growth rate. power sector management and financing at the state level. Finally Tariffs in 1991 India reversed its policy on As the table shows, the import preventing private investment in tariff peak was reduced from 150% the sector. Power was removed to 35% in a decade. Now outside from the list of activities reserved competition was being allowed to for the public sector in the push the Indian economy in line Industrial Policy Resolution. The with the rest of the world. Private 1948 Act was amended to lift many consumption has been growing at of the regulatory hurdles to private a healthy pace, posting a 7.6% investment in the power sector. growth in 2003. Indian consumers The changes were made to realize now have a wide range of choices the Government of Indias that has improved their lives. The objective to bring in needed import substitution policy, which finances in the power sector. prevented so many Indian Lawrence Saez states, India needs companies to add value to their $13 billion a year for the next 13 manufactured goods, is eliminated years to increase its capacity to for most industries. The lowering 140,000 MW. A less conservative of tariffs has resulted in companies estimate of Indias annual being able to focus on their investment requirements in the comparative advantage, while Ninth and Tenth Five year Plans importing other products. This
INSIGHT would be approximately $ 9.7 has resulted in high growth across billion between 1997 and 2002, and all industries. $11.7 to $ 13.8 billion between Foreign Direct Investment 2002 and 2007 12 . The The restrictions on foreign Government of India also wanted investments were removed for many to tap the technical, and managerial industries in 1991, which contributed capabilities of the private sector, to the increase in FDI from $ 150 which was not available to the million to over $ 3 billion. The SEBs. In spite of the desperate automobile sector has been an need for energy, only 11% of the excellent example of how the Indias total capacity comes from removal of foreign participation the private sector13. restrictions resulted in a win-win
situation. The new competition that resulted from relaxed licensing of cars in India has increased from 150,000 to 1,000,000 resulting in a 300% increase in employment for the industry18. Employment was created while attaining a dramatic increase in productivity. Information Technology Indias Information Technology sector has been and will continue to be one of its fastest growing industries. There are two main reasons for its success. As discussed earlier in the paper, education played a very important factor in providing India with the quality engineers for software services. Indias colleges currently produce 3.1 million English-speaking graduates and 350,000 engineers 19 . This far outweighs U.S.s 1.3 million college graduates and 70.000 engineers. The early focus on higher education by the Indian government has paid off in the I.T. sector. Indian software programmers currently can do the same job as their American counterparts for 1/5 of the price. In terms of quantity and costs, Indian engineers enjoy a huge advantage over the Western companies they service.
11. Das, Gurucharan, India Unbound. New York: Alfred A. Knopf,2000 p. 159 12. Saez, Lawrence. Federalism without a Centre New Delhi: Sage Publications, 2002.p.182 13. Ernst&Young:Doing Business in India.Ernst&Young Indis,2003 p. 37 18. http://www.mckinseyquarterly.com/article_page.aspx?ar=1663&L2=19&L3=67 19. Fortune:July 25,2005p. 72
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Key Statistics Post 1991 Economic Reform

(%) Import Tariff Peak Rate 14 (%) Tax Rates (US $ millions) FDI (% of GDP) Fiscal Deficit (%) Inflation15 (US $ millions) Software Industry16 Avg. Annual Growth (%) Agriculture Industry Services Private Consumption General Govt Consumption Gross domestic Investment Imports of Goods and services17 1991-1992 150 2001-2002 35
1991 56 1991 150
1993 40 1997 3,000
1997 30
1990-1991 8.4 1991 13 1993 6
1992-1993 5.7
1991-1992 150 1993-03 2.4 5.9 8.1 4.5 7.1 7.5 10.6
1995-1996 1,224 2002-2003 -5.2 6.4 7.1 -0.8 3.1 9.5 8.1 9.1 6.7 8.7 7.6 9.9 12 11.1
2000-2001 8,750 2002 2003
The other reason for the success of the I.T. industry is the lack of heavy regulation and government investment that many other industries faced. Lord Professor Meghnad Desai states, No government sector, no government plans and let us invest in the IT sector20. This precluded any public allocation of funds in the industry that would crowd out private sector participation. In fact because the I.T. industry became Indias first true global success, it enjoyed the support of the government rather than interference. The government has aggressively been attracting foreign companies to set up in India by providing tax breaks, uninterrupted power, and dedicated fiber optic lines. The I.T. industry will continue to enjoy high growth rates for a long time to come because of its highly skilled labor and high private sector participation. Fiscal Deficit Indias fiscal deficit still has not improved over the last decade of reforms. Although, the deficit was immediately cut after 1991 from 8.4% to 5.7%, it still remains extremely high. Currently the federal deficit still stands at 4.3%, which is higher than the 4.1% investors were hoping for 21. The federal deficits coupled with state deficit of 5.1% have resulted in an alarmingly high 9% fiscal deficit for India 22. The
14.http://finmin.nic.in/the_ministry/dept_revenue/observation_customs_tariff/ tru1.pdf#search=average%2otariff%20india%201991 15. Das, Gurucharan,India Unbound (New York: Alfred A.Knopf,2000)p.220 16. http://www.indianembassy.org/indiainfo/india_it.htm 17.http://www.economywatch.com/indianeconomy/India-at-a-glance.html
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problem with such a high deficit is of industries, clearer regulation reforms. Another factor what many threefold. First it crowds out public policy, infrastructure development policy analysts do not realize is that and private investment and lending and finally increased cooperation Indian politicians do not win on a the World Trade platform for economic reforms. In since it puts pressure on interest with rates. The next problem is the Organization. These measures will fact, the previous BJP government lowering of a countrys credit hopefully result in a win-win lost because it focused on rating, which results in lower FDI. situation for India and the global highlighting Indias urban growth rate, while neglecting the bulk of Finally servicing or paying off the economy. debt puts an extra burden on the The Economic goals, many times, Indias rural population. Many Indian governments financial resources. are not politically viable, given economists, politicians, and citizens The table shows that government Indias fragile coalition. Indias know what to do in India but not consumption has actually gone up previous economic reforms in how to implement these policies. The bulk of the voting from 7.1% to 9.9%. This is a result from poorly Economists have repeatedly made it clear that population in India is the managed public the Indian economy is not realizing its full lower class, which care enterprises, subsidies, and economic potential. They believe India will grow about inflation, not inefficient tax collection. faster if they implement several refor ms economic reforms. including, but not limited to, lowering tariffs, deThe recently introduced reservation of labor in small-scale industries, Agriculture Subsidies Value Added Tax system allowing multinational companies to increase One of the main key should improve tax their stake in Indian companies, privatization of disagreements between revenues. Another balance industries, clearer regulation policy, the developed nations of payment crisis is highly infrastructure development and finally increased and developing countries unlikely since India is cooperation with the World Trade Organization. is market access. India still sitting on a foreign 1991 were only achieved because has extremely restrictive trade policy exchange reserve of almost $ 150 of a balance of payment crisis in regard to the agricultural sector. billion23. However, the deficit is which allowed the IMF to impose The Economic Research Service slowing Indias potential growth several reforms. However, once the states that in 2003 the budget has rate. crisis was averted, the second allocated nearly $ 12 billion in food, generation of reforms has slowed power, and fertilizer subsidy. This is Policy Recommendations Economists have repeatedly made down. The private sector is a sharp increase from only half of it clear that the Indian economy is currently achieving limited success that in 1992. Indias tariffs have been not realizing its full economic in promoting its economic brought down significantly after the lifting of quantitative import potential. They believe India will priorities in India. grow faster if they implement several reforms including, but not limited to, lowering tariffs, dereservation of labor in small-scale industries, allowing multinational companies to increase their stake in Indian companies, privatization This is as a result of several limiting factors. The fact is the current UPA government does not have a clear mandate by the people of India. It has a coalition that requires appeasing many political parties which are against these economic restrictions allowed through the Uruguay Round Agreement on Agriculture. This per mitted agricultural tariffs as high as 300 per cent in certain products. In the fiscal year of 2002/2003, Indias tariffs have come down to a high of 115
20. http://www.pbs.org/wgbh/commandingheights/shared/minitex/ufd_indiaplanning_full.html 21.http://www.indiadaily.com/breaking_news/26652.asp 22.http://www.mckinseyquarterly.com/article_page.aspx?ar=1663&L2=19&L3=67 23.http://inhome.rediff.com/money/2005/aug/20forex.htm

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percent with an average applied rate of 33 percent 24. However, the Western nations cannot expect India to continue lower tariffs, tax, and reform its agricultural sector when they spend billions of dollars a year to subsidize their own agricultural goods. Center for International Development is a great example of how better governance and economic policies can be fostered and supported through Western universities. The same success could be replicated through working with Indias Planning Commission, which is responsible for all of Indias India and the Western nations internal fiscal transfers. Economists, pursue these counterproductive Political Scientists, and Public Policy trade policies to satisfy experts from Indian and Western constituency concerns. In the West universities could work together to only a very small minority are solve some of Indias most actually working in the In the fiscal year of 2002/2003, Indias tariffs agricultural sector as have come down to a high of 115 percent with pressing needs. opposed to Indias an average applied rate of 33 percent 24 . Conclusion population, which still However, the Western nations cannot expect The question of what India can stands at 70 percent. India to continue lower tariffs, tax, and reform do to increase its GDP growth Until, these nations its agricultural sector when they spend billions has and continues to be change this policy or of dollars a year to subsidize their own discussed. Foreign direct investment, deregulation, and allow greater access for agricultural goods. private sector participation Indias agricultural goods, I do not see any progress tax breaks are some of the have been the key to Indias being made through the WTO. incentives for companies to invest. transformation from 1991. However, Instead, Indias focus will and This will inevitably lead to state how India can achieve a higher should remain on building bilateral competition which encourages growth rate is something that has refor m, better been overlooked. Each sector is ties making the WTO a secondary market administration, and higher state different in India with different concern. growth rates as it did in China. political and constituency issues. Decentralization While a broad based analysis of the I believe the India and the rest of Soft Infrastructure Soft infrastructure such as U.S. macroeconomic climate in India is the world can achieve more than India Business Council, Asia helpful, I believe it is better to analyze limited success by pursuing a nonconventional method. I believe Society and increasing exchange of Indias growth potential through decentralization is one of the keys ideas between NRIs and their individual sectors. A combined to Indias future economic success. home country will result in financial and political analysis for Rather than focusing only on increasing exposure for India as each sector will result in a investment government plan that has a much official dialogue between the two international destination. There also needs to be higher chance of success. India can federal governments given the political constraints, local an increase in international achieve double-digit growth, the only governments can be more academic study and research question is how to push these aggressive in their policies. institutions in India. Harvards reforms through. Privatization and economic reforms have a higher chance of success when done on the local level, which will inevitably attract a larger amount of Foreign Direct Investment. Indian state governments have set up Special Economic Zones that remove some but not all of the barriers multi-national companies have encountered when entering the Indian market. Increased labor flexibility, better infrastructure, and
24. http://www.ers.usda.gov/Briefing/india/policy.htm
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Internet Banking in Andhra Pradesh

- E. Naveen Nicolas*
Online banking - also known as Internet banking - is an application that allows individuals to conduct banking transactions electronically via personal computer. The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. In order to bypass the timeconsuming, paper-based aspects of traditional banking and to manage finances more quickly and efficiently, the banking industry have began to use powerful computer networks to automate a number of daily transactions. They now provide their customers the option of online banking. On line banking provide the customers with the comfort of managing business finances such as pay bills, transfer funds, and file government remittances as well as managing investment and loans online. Thus, Online Banking provides numerous benefits to businesses and end-users. First, unlike the physical banks, Online Banking sites are more convenient since they are open 24 hours a day, seven days a week and accessible with the comfort of a mouse click. Another benefit is that Online Banking is ubiquitous. If an individual is out of the country or state, he or she could log on instantly to their online bank 24 hours a day and 7 days a week. Transaction speed is also an advantage since Online Bank sites generally execute and confirm transactions quicker than ATM processing speeds. Effectiveness could also be observed as most Online Banking sites offer sophisticated tools including account aggregation and stock quotes, and the sites are even compatible with money managing programs such as Quicken and Microsoft Money. online is still comparatively less in India and the present study is aimed at finding out the reasons for low percentage of Internet banking in Andhra Pradesh. Internet Penetration in India India has a population of more than 100 crore and with the internet penetration of about 20 million, the unexploited potential of Indias Internet market seems huge as per the report of NASSCOM (National Association of Software and Service Companies) of India.
NASSCOM recently conducted an Internet survey in 68 cities and towns. These cities and towns constitute 92 per cent of the total Internet users in India. The government of India favors development of this sector. Over the last few years, the Government of India, especially the Prime Minister and his office as well as the Ministry of Information Technology have Even though there are many made several landmark decisions that advantages of Internet Banking, have helped grow Internet the number of people banking penetration in India from a mere Table No. 1
In te rn e t C o n n e c tio n s (m illio n s ) 1 .6 4 8 11 22 27 U s e rs (m illio n s ) 5 10 18 23 49 55
D a te M a rc h 3 1 , 2 0 0 1 M a rc h 3 1 , 2 0 0 2 M a rc h 3 1 , 2 0 0 3 D ecem ber 31, 2003 D ecem ber 31, 2004 M a rc h 3 1 , 2 0 0 5
*B.Sc.Tech, MCA, MSCC, (Ph.D) RESEARCH SCHOLAR - Dept of Business Management, Osmania University. Senior Software Engineer, Choral Technologies, Jubilee hills, Hyderabad, India.
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base of 160,000 subscribers in March, 2001 to more than 27 million subscribers The increase of over 27 lakh subscribers in India in the last 15 months can be directly attributed to the private ISP policy announced by the Government of India. The table No.1 gives an idea about the continuously increasing Internet penetration rate. Rationale Behind the Study : The rationale behind the study is to find out the number of people banking online and to find out the reasons for the limited usage of Internet for banking even by the educated masses. Objectives of the Study : 1. To find out the reasons for the limited usage of Internet as a medium for banking in the state of Andhra Pradesh frequently use ATM services. Only bank Customers availing ATM services are considered for the study.
Data collection methods A questionnaire was administered to 2. To suggest measures for the elicit data on the following optimum utilization of the world parameters: wide web in the field of banking a) Information regarding the Period of Study : respondents background such as The primary data for the study has education and age been collected during the period 15th March 2005 to 15th Sept 2005. b) Information regarding the usage of ATM services Details of the study conducted: A study was conducted in the state c) The level of awareness of of Andhra Pradesh, with a sample technology oriented products size of 300 customers drawn at provided by the respective banks on random from various banks, who the Internet have a bank account and who d) Reasons for not banking online
NUMBER OF ATM CARD HOLDERS BANKING ONLINE:

ATM card holders banking on line % Of ATM card holders banking on line 21 % ATM card holders not using Internet for banking 236 % Of ATM card holders not using Internet for banking 79 %
64
From the data collected it is evident that only a limited number of Customers who avail ATM services use Internet as a medium for banking. Nearly 79 % of Customers do not bank online for various reasons, which are illustrated below REASONS FOR NOT BANKING ONLINE
S .No 1 2 3 4 5 6 7 Reasons for not banking online Security. Lack of confidence in the aspect of the system Unaware of the services offered on WWW Unaware of Technology Computer illiterate Required services not provided by the concerned bank Lengthy navigations in the website usage Others TOTAL Number of Respondents 70 28 24 38 28 18 30 236 % of Respondents 30 12 10 16 12 07 13 100 %
46
INSIGHT
come into effective use, E-business a regulated technology and it is will continue to run into trouble. readily accessible to millions of India is not yet a signatory to the people, there will always be people International Cyber Crime Treaty. who want to use it to make illicit The Treaty, the first of its kind, has gains. The security issue can be been adopted to regulate and addressed at three levels. The first is prevent Cyber Crime. United the security of customer information States, Canada, South Africa, Japan as it is sent from the customers PC and 30 members of the European to the Web server. The second is the Union have already signed the security of the environment in which treaty. The International Cyber the Internet banking server and Crime Convention is probably the customer information database first international benchmark for reside. Third, security measures must be in place to prevent unauthorized Most of the customers are not controlling and regulating cyber aware of the services provided by crime and for ensuring co- users from attempting to log into the operation among different online banking section of the the banks signatory nations for exchanging website. A large number of services which are needed on a regular basis information concerning crime and From a legal perspective, security procedure adopted by banks for are not provided through the cyber criminals. The Reserve Bank of India has authenticating users needs to be internet also set up a Working Group on recognized by law as a substitute for Customers feel that the websites signature. In India, the Information hosted by some banks are not user E-banking to examine different Technology Act, 2000, in section 3(2) friendly. To execute a business aspects of E-banking. The group provides for a particular technology operation on the internet, the focused on three major areas of (viz., the asymmetric crypto system navigation is very lengthy and E-banking i.e. (1) Technology and and hash function) as a means of Security issues (2) Legal issues and cumbersome (3) Regulatory and Supervisory authenticating electronic record. Any Security is no doubt a major issue issues. RBI has accepted the other method used by banks for in internet banking, but more than guidelines of the group and they authentication should be recognized security the legal and regulatory provide a good insight into the as a source of legal risk. hurdles, like those relating to taxes, security requirements of E- Regarding the regulatory and levies and associated paper work banking. The importance of the supervisory issues, only such banks which negatively effect business impact of technology and which are licensed and supervised transactions and movements of information security cannot be and have a physical presence in India goods are posing a more serious d o u b t e d . T e c h n o l o g i c a l will be permitted to offer E-banking threat to the growth of E-banking developments have been one of products to residents of India. With among various countries. the key drivers of the global institutions becoming more and economy and represent an more global and complex, the nature E-Banking and India: As far as India is concerned, the instrument that if exploited well of risks in the international financial legal infrastructure for promoting can boost the efficiency and system has changed. The Regulators E-banking is not yet in place. India competitivity of the banking themselves who will now be paying does not have a licensed certifying sector. However, the rapid growth much more attention to the authority appointed by the of the Internet has introduced a qualitative aspects of risk controller of certifying authorities completely new level of security management have recognized this. to issue digital signature related problems. The problem Though the Indian Government has certificates. Until digital signatures here is that since the Internet is not announced cyber laws, most Important Findings Customers view the security threat as perhaps the most serious threat. The security of Internet access to client account is the biggest challenge facing the banks. For success in the increasingly competitive financial services market, banks are finding that a comprehensive online banking strategy is essential which also provides the essential security requirements.
INSIGHT corporates are not clear about them, and feel they are insufficient for the growth of E-commerce. Lack of consumer protection laws is another issue that needs to be tackled, if people have to feel more comfortable about transacting online.
Banks should tie-up with software companies to provide quality service to the customers online. ICICI bank has a tie-up with software giants Infosys and Satyam. The ICICI group has leveraged on a number of tie-ups to come up with its various offerings. For its Internet banking ICICI bank uses Infinity from Infosys, for its credit card business it uses Vision Plus from Pay Sys, USA, for WAP services the tie-up with cellular service providers Orange and Airtel helps reach the users, while the WAP technology is being implemented by the inhouse ICICI Infotech service. To leverage the Net for its marketing initiatives ICICI bank and Satyam Info way have jointly set up a COM company to promote banking products on the Net. The bank has also entered into agreements with leading corporates like BPL, Rediff.com and Tata Communications for B2C solutions in a bid to further
48
strengthen its Internet banking product offering and services. Also ICICI has joined hands with a consortium led by Compaq to take the lead in offering a solution to the Indian e-commerce community. This consortium offers a B2B and B2C e-commerce Suggestions for the payment gateway within India. improvement of inter net Security policy should include management commitment, banking : First of all the customer should technological support and effective be taken into confidence as far as disseminations of the policy and security is concerned. Banks the security awareness of all users. should extensively propagate the Through advertisements all the detailed security plan adopted to customers should be informed arrest frauds about all the services provided on the web
If possible customer awareness
Advances in Internet security and
the advent of relevant protocols such as Integrion, SET, etc, put banks in perspective again as financial intermediaries and facilitators of complete commercial transaction via electronic networks.
Banks should adopt a different protocol other than TCP/IP. With a two-channel Internet, separating data and control signals, the B channel would be free to send information about abnormal occurrences such as a buildup of mail messages. Monitoring devices to activate switches to reroute mail bombs could use this information.
camps should be conducted to make the customer aware of the latest security measures adopted arranged by the banks in order to teach internet basics to some of the key customers Application into a Service that can be used on the Web
One day seminars should be
Banks have to make every
While designing the websites care should be taken to increase the user friendliness of the application and to reduce the cumbersome navigation
Conclusion : E-banking has revolutionized the whole concept of banking. Ebanking has become a necessary sur vival weapon and is fundamentally changing the banking industry worldwide. Today, the click of the mouse offers customers banking services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. Banks have to upgrade and constantly think of new innovative customized packages and services to remain competitive. Banks have come to realize that survival in the new e-economy depends on delivering some or all of their banking services on the Internet while continuing to support their traditional infrastructure. In the long run it is definite that only banks that provide good security and customer satisfaction will survive.
(Standard for secure Electronic Transactions) on the Internet and its widespread adoption including security measures like encryption, digital authentication, and verification of on-line identity, increase consumer confidence etc
The implementation of SET,
INSIGHT
Evaluation of Employee Training in Andhra Pradesh Paper Mills Limited, Rajahmundry

- Dr. R.Madhusudana Raju* - Mr. Md. Irfan** Introduction the right costs2. In simple terms, human resource. Hence, the The success of any organization training and development refer to company believes that training and depends on the quality of its the imparting of specific skills, development is an essential feature human resource. The quality of abilities and knowledge to an of HRD activities. The APPML is human resource in any employee. When there is wide gap having a strong base for training and organization is assessed on the between the standard performance development of its human resource basis of the skills, capabilities and and actual performance of the to have committed and skilful people commitment of the people employees there is a definite need to achieve the organizational working for that organization. for training. Employees objectives. Hence, every organization needs to performance deficiency shows the Objective of the Study have people with skills and need for training as quoted by The APPML allocates considerable capabilities. When the Randall S.Schuler3. amount to train their employees. The organizations do not have wellexpenditure on training has trained and experienced people Employee training is the most increased from Rs.5.68 lakhs in to perform the activities that 1998-99 to Rs.21.16 lakhs in 2004important sub-system of human have to be done, it is necessary 05 recording an increase of 272.54 resources development. to raise the skill levels and per cent. The company conducted increase the versatility and Training makes a very important 115 training programmes in 2004adaptability of employees 1. contribution to the development of 05 covering 774 employees from Training plays an important role the organizations human senior and junior staff and 1936 in increasing skills of individuals resources and hence to the workmen. All the efforts of the that are required by the achievement of its aims and company in the area of training and development are in organization. Employee training objectives. conformity with the companys is the most important submission, Continual improvement in system of human resources The Andhra Pradesh the quality of human resource and development. Paper Mills Limited (hereafter one of its values, Employee Training makes a very important APPML) is among the first ten empowerment for commitment to contribution to the development leading integrated pulp and paper total quality. In this context, the of the organizations human manufacturers in India4. It is an objective of this study is to evaluate resources and hence to the employee driven organization and the employee training in this achievement of its aims and is a staunch believer in continuous company. objectives. To achieve its purpose, development and growth of its training needs to be effectively employees. It believes that Methodology managed so that the right training employees are its asset and strives One should collect five types of data evaluating training is given to the right people, in the to realize their full potential. The when 6 right form, at the right time and at strength of APPML lies in its programmes . They are:
* Associate Professor, Department of Commerce & Management Studies, Andhra University, Visakhapatnam. ** Research Scholar, Department of Commerce & Management Studies, Andhra University, Visakhapatnam.
INSIGHT Reactions: - Trainees attitude through secondary data collected Training in APPML A brief towards the training program, mainly from the records of the assessment instructor, facilities, and so forth company. The company is a fair employer Learning: - Changes in There are 2,951 employees committed to progressive human knowledge of trainees or level of working in the company. Out of resource practices that extend well knowledge reached after training 2,951 employees, 357 are in senior beyond statutory benchmarks. It committed itself to enhance the Behaviour: - Changes in job staff category; 276 are in junior awareness and competence of perfor mance or level of job staff category and the remaining human resource through training and performance reached after training. 2,318 are workmen. The company development processes to enrich trains all these employees. During Results: - Changes in 2004-057, there were 155 training employee competencies. The organizational parameters (e.g., programmes participated by 2,710 APPML believes that the employees productivity, turnover, employees including 774 senior are the most important resource and strives to realize their full potential. absenteeism, etc.) and junior staff members and The company is committed to Return on Investment: - 1,936 workmen. It was decided to Monetary value of the results canvass the questionnaire among Provide work environment that (benefits of training minus costs 10 per cent of the employees who makes the employees committed and motivated for maximizing of training, expressed as a participated in training productivity; percentage) programmes during 2004-05 to In this study, the data on reactions, know their attitude towards the Establish systems for maintaining learning and behaviour aspects is training programmes, facilities and transparency, fairness and equality in dealing with employees; collected through primary source. their opinion on the improvement A questionnaire is administered of knowledge and skills after Empower employees for among the employees who training and the usefulness of the enhancing commitment, attended the training programmes. training programmes in their job responsibility and accountability; The aspects of results and returns performance. But, there was Encourage teamwork, creativity, on investments is interpreted response from 210 employees only.
Figure 1 : Model of HRD at Andhra Pradesh Paper Mills Limited, Rajahmundry
Control
Budget Actual Training calendar Objectives Approval in respect of External Training
Input
Participants/Trainees Identifying Training Needs Training Effectiveness Feedbacks Brochures and Introductory letters of Professional Training/ Academic Institutions
Output
Training
Human Resource Development
Means
Competent Faculty Infrastructure Course Material/Modules
50
INSIGHT
innovation and high achievement communication channels with development at APPML is given in orientation; employees. Figure 1. The activities of the HRD start with initiation of the heads of Provide growth and The company is having an efficient the departments who identify the opportunities for developing skill Human Resource Department to achieve these objectives with need for training for the people and knowledge; and regard to their human resource. working under them and Ensure functioning of effective The process of human resource recommend them for training. TABLE 1 Number of training programmes organized and number of participants during 1998 and 2005 Year Programmes Number of participants (in terms of Man days) Sr. Staff Jr. Staff and Workers 700 1,683 1,213 2,209 1,031 1,516 997 1,200 1,046 4,373 727 4,931 2,096 1,329 Total 2,383 3,422 2,547 2,197 5,419 5,658 3,425 TABLE 2 The cost of training programmes at APPML during 1998 and 2005 Year 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Cost(Rs.) 5,68,578.00 10,00,496.20 8,90,176.84 12,06,893.20 18,45,296.60 20,08,198.80 21,16,013.90
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
55 128 73 72 75 90 155
Source: HRD, The APPML, Rajahmundry.
Source: The HRD, The APPML, Rajahmundry.
Note: The number of participants does not tally with the total number of employees working in the company because same employee may participate in different programmes in the same year. As shown in the Table1 the number of training programmes and participants is increasing which shows the companys concern for the continuous development of its human resource. In 1999-00, there were 128 programmes conducted as the company was working for getting ISO 14001 certificate. The number of participants is more in 2002-03 and 2003-04 as the company trained all the employees to get OHSAS 1999 certificate. training programmes in the APPML are quality system implementation, energy conservation, fire fighting, customer orientation, behaviour and attitudinal changes, team building, etc. In addition, the HRD of the company conducts training programmes to improve the job The themes of training knowledge skills and problem programmes are primarily on solving skills. safety and awareness on ISO-9001, The HRD of the company is having ISO-14001 and OHSAS its own system to evaluate the (Occupational Health and Safety effectiveness of the training Assessment System)-1999 programmes. The HRD gives The concern of the company in certificates. Apart from these reports on the effectiveness of the the development of its human themes, the general modules of training programmes to the
resource reflects in its increasing cost of training and development as shown in the Table2. In a span of seven years the company increased expenditure on training by nearly four times from Rs.5.68 lakhs in 1998-99 to Rs.21.16 lakhs in 2004-05.
INSIGHT management basing on the feedback given by the heads of the different departments in a prescribed proforma on the improvement in inter-personal skills, innovation skills, job knowledge skills, productivity and quality consciousness, safety consciousness, problem solving skills, self development and attitude towards organization. The information on feedback is not available for outside sources since they treat it as most confidential. Hence, the researchers tried to evaluate the efficiency and effectiveness of the training programmes by collecting information from the employees
who participated in the in the age groups of 40-50 years and programmes through a 50-60 years respectively. 165 questionnaire. respondents accounting for 78.57 Though the researchers distributed per cent have put a service of more the questionnaire to 270 employees than 20 years. This shows the level who constitute 10 per cent of the of maturity and experience of the total employees trained during employees of APPML. Moreover, 2004-05, only 210 employees the respondents are knowledgeable responded. Of 210 respondents 46 about the organization since majority respondents are from senior staff of the respondents (186 category, 32 are from junior staff respondents) served the company in category and remaining 132 different positions in their careers in respondents are workers. the company. The company is having The employees of APPML are highly satisfied employees as revealed matured and experienced. 46.67 by the survey. 200 respondents out per cent of respondents (98 of total 210 respondents mentioned respondents) and 48.43 per cent of that they were very much satisfied respondents (87 respondents) fall with their job as shown in the Table3.
Table 3 : Job Satisfaction of the employees Employees opinion Satisfied Not Satisfied Cannot Say Total Senior Staff 41 01 04 46 (89.13) (02.17) (08.70) (100.00) Junior Staff 29 (90.63) Nil 03 (09.37) 32 (100.00) Workers 130 (98.48) Nil 02 (01.52) 132 (100.00) Total 200 01 09 210 (95.24) (02.17) (04.28) (100.00)
Figures in parentheses are percentages In APPML all the employees have undergone training many times in their career. Majority of respondents expressed that the training facilities are adequate. The training facilities include physical facilities like the building for training, good furniture and other infrastructure, audio-visual equipment and library for reference. 97.60 per cent (205 respondents) of the total respondents expressed that the physical facilities and audio-visual equipment are adequate. In the case of library facilities, only 35.23
52
per cent of total respondents who are from senior and junior staff categories mentioned that the library is adequate. 131 workers out of total worker respondents felt that the library facility is inadequate. On enquiry, it is found that these workers do not have access to library. The methods and techniques used in the training programmes in APPML are lectures, case studies, audio-visual presentations, simulations, conferences and seminars and workshops. Most
popular methods are lecture method and audio-visual presentations as per majority of respondents. 58.57 per cent of the respondents mentioned that the quality of these methods and techniques are satisfactory. Another 36.67 per cent of the respondents opined that they are good. The quality of training programmes depends on the quality of the resource persons, apart from the good physical facilities and methods and techniques used in the training programmes. The company engages both internal and external faculties.
INSIGHT
Quality of the resource persons for percent) expressed that it is programmes of one-day duration. the training programmes is good applicable to a great extent. But, majority of the respondents as 61.90 per cent of the Another 100 respondents (47.62 (151 respondents) felt that the respondents mentioned that the per cent) mentioned that it is duration of the training programmes resource persons are of good applicable to some extent. The they attended is sufficient. It is quality. The remaining respondents effectiveness of the training further mentioned by 115 are also satisfied with the quality programmes can be assessed by the respondents (54.76 per cent) that the of the resource persons. appropriate duration of the Course material is also The quality of training programmes depends training programmes important for further on the quality of the resource persons, apart should be 3 days. reference after training. In from the good physical facilities and methods APPML, course material is and techniques used in the training The HRD of APPML is supplied in all the training programmes. Course material is also organizing the training programmes and the important for further reference after training. programmes efficiently and quality of the course The effectiveness of the training effectively by taking care of material is satisfactory as programmes also depends on the appropriate quality of resource persons, methods and techniques, mentioned by 71.43 per duration of the programme. course material, cent of the respondents who received the material. The necessity for further training. 127 appropriate duration and by contents of the course material are respondents accounting for 60.48 providing good infrastructure for also adequate as mentioned by per cent said there is necessity for conducting training programmes. 93.14 per cent of the respondents. further training for them. Hence, But, there should be a method to 155 respondents found that the it is said that the training identify the training needs as the course material is very much useful programmes in APPML are company conducts the training in performing their jobs. effective. The effectiveness of the programme as a general policy. Majority of the respondents training programmes also depends Instead of identifying the employees opined that the training helped on the appropriate duration of the for training on need basis, the them to improve their skills and programme. In APPML the employees are selected for training thereby the productivity. When the training programmes are on the basis of their service and respondents are asked whether the conducted mostly for three days. experience as has been stated by the knowledge imparted in the training 91 respondents attended respondents. In APPML, there is no programmes is applicable to their programmes of 3-days duration proper method of identifying the job, 102 respondents (48.57 and 62 respondents attended training needs felt by the employees. Table 4 Awareness of the employees about the process of identification of training needs and selection of employees for training Awareness Yes No Total Senior Staff 11 (23.91) 35 (76.09) 46 (100.00) Junior Staff 07 (21.88) 25 (78.12) 32 (100.00) Workers 08 (06.06) 124 (93.94) 132 (100.00) Total 26 (12.38) 184 (87.62) 210 (100.00)
Figures in parentheses are percentages.
53
INSIGHT
According to Table 4, 184 respondents accounting for 87.62 per cent are not aware of method of identifying the training needs and procedure for selecting employees for training. The reason may be either illiteracy of workers and junior staff (majority of the employees in this category are promoted from workers category) or the reluctance on the part of the senior staff. In general, the departmental heads recommend employees from their departments on the basis of their observations of employees performance and seniority. According to the information given by the 26 respondents who are aware of the process of identification of training needs the procedure of collected from the respondents and presented in Table 5. As shown in the Table the employees in the APPML want to be involved in the process of identifying training needs by their participation in the discussions to know their deficiencies in performance, area of training and need for training. Almost all the respondents opined that authorities should discuss with them to identify their training needs. One of the sources of identifying the training needs is performance evaluation. As shown in Table 6 the employees are not aware of the performance evaluation though there are certain methods like merit rating as observed by the researchers. Suggestions on the method of Obviously, the reason is that the identifying training needs are employees performance is evaluated identification of training needs is that the head of the department consults the supervisors and the super visors, in turn, get the opinion of workers working under them about the training needs and inform the head of the department. Hence, there is some procedure for identifying the training needs in the APPML in some departments only. This procedure is to be improved and adopted in all the departments of the company since the identification of training needs is very important from the fact that it is the identification of discrepancy in the level of the employees performance.
Table 5 Suggestions of the respondents on the method of identifying the training needs Method Discussion with employees to know their deficiencies Discussion with employees to identify the desire to undergo training in a particular area. Discussion with immediate supervisor to find out training needs of employees Canvassing a questionnaire to employees to know their training needs. Total Senior Staff 17 (36.96) 14 (30.43) 13 (28.26) 02 (04.35) 46 (100.00) Junior Staff 09 (28.13) 10 (31.25) 12 (37.50) 01 (03.12) 32 (100.00) Workers 38 (28.79) 54 (40.91) 40 (30.30) Total 64 (30.48) 74 (37.14) 65 (30.95) 03 (01.43) 210 (100.00)
Nil 132 (100.00)
Figures in parentheses are percentages.

INSIGHT
by the superiors without the involvement of the employees in the performance evaluation. 177 respondents accounting for 84.29 per cent of the total respondents are not aware of the method of performance evaluation as shown in the Table 6. Majority of respondents who are not aware of the method of performance evaluation are workers. One can understand that the workers may not know about the performance evaluation due to their illiteracy. The quality of human resource directly affects the performance and profitability of the organization. In APPML, the profitability per employee increased from Rs.64,600 in 20022003 to Rs.83,400 in 2003-2004 and the productivity per employee increased from 50 tonnes in 20022003 to 54 tonnes in 2003-20045. The company has achieved a record 99 per cent capacity utilization in 2003-04 as shown in the Table 7. As shown in Table 8 the profit after tax has increased from Rs.751.85 lakhs in 1997-98 to Rs.2,335.76 lakhs in 2003-04. The financial strength of the company can be understood from the figures of earnings per share over the period as shown in Table-8. The profit after tax and earnings per share in 200001 are very high due to the take over of another company, The Coastal Papers Limited situated at Kadiam near Rajahmundry.
Table 6 Awareness of the Employees about the Method of Performance Evaluation Awareness Yes No Total Senior Staff 15 (32.61) 31 (67.39) 46 (100.00) Junior Staff 07 (21.88) 25 (78.12) 32 (100.00) Worker 11 (08.33) 121 (91.67) 132 (100.00) Total 33 (15.71) 177 (84.29) 210 (100.00)
Figures in parentheses are percentages to the vertical totals.
TABLE 7 Growth in installed capacity and actual production Year Installed Capacity Actual Capacity Production Utilization (%) 91 93 96 90 100 98 99 Year
TABLE 8 Profit after tax and earnings per share of APPML Profit After Earnings Per Tax (Rs. in Share (Rs.) lakhs) 751.85 1,102.36 1,435.36 2,803.51 1.383.46 1,926.55 2,335.76 13 20 13 25 12 16 20
1997-98 92,500 84,330 1998-99 98,500 91,543 1999-00 98,500 94,334 2000-01 98,500 88,745 2001-02 1,53,500 1,54,322 2002-03 1,53,500 1,49,874 2003-04 1,53,500 1,51,692 Source: Annual Reports of APPML
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Source: Annual Report of APPML, 2003-04

INSIGHT
The improvements in the profitability and productivity of the company can be possible only when there are committed and capable employees. In the APPML, the employees seem to be committed people one of the reasons being the commitment of the company for training and development of its human resource. Conclusions The Andhra Pradesh Paper Mills Limited is a profitable, financially viable and successful company. The success of the company can be attributed mainly to its efficient, effective and committed manpower. The reason is that the company is committed to the development of their human resource through training employees. The effectiveness and efficiency of the training in the company reflects in its increasing profits, earnings per share, and profitability and productivity per employee. And, it is also evident from the fact that all the employees of the company are very much satisfied with their jobs. The companys commitment for the development of its human resource can be understood from the figures of expenditure on training. In the foregoing analysis of employee training in the APPML, it was found that the employees are satisfied with the way the company is conducting the training programmes for them. They felt that the training is very useful in increasing their skills and job knowledge. They further mentioned that their job performance has increased after training. Though the training at APPML is proved to be efficient, the company should have a discerning look at some aspects of training like performance evaluation, identification of training needs and the involvement of the employees in the process of identifying the training needs. At present, the management is having its own performance evaluation techniques and selection of employees for various training programmes. But, the employees are not aware of these techniques and methods. Hence, if the training in the APPML should be more effective and efficient, the company should take steps to promote awareness among the employees with regard to the performance evaluation and evolve a method of identification of training needs such as having discussions with the employees and canvassing a questionnaire to the employees to know their deficiencies in their performance and ultimately the need for their training. References 1. David A. Decenzo, Stephen P. Robbins, Personnel /Human Resource Management, Third Edition, Prentice Hall India Limited, P.240. 2. Rathan Reddy, B., Effective Human Resource Training and Development Strategy, First Edition, 2005, Himalaya Publishing Co., P.2 3. Randall S.Schuler, et.al., Effective Personnel Management, Third Edition, West Publishing, New York, 1989, p.385 4. Annual Report of The Andhra Pradesh Paper Mills Limited, 2004. 5. Ibid. 6. Alliger, G.M., and Janak, E.A.: Kirkpatricks Levels of Training Criteria; Thirty Years Later, Personnel Psychology, Vol.42, 1989. Pp.331342. 7. The HRD, The Andhra Pradesh Paper Mills Limited, Rajahmundry.
Beauty buses are a hit with youth

In an innovative move APSRTC officials at Narasampet bus depot have renamed buses after popular film stars like Aishwarya Rai and Trisha to attract youth and students. They vouch that it is a success though some RTC officials were initially skeptical about the tremendous response. The elated RTC authorities are naming more buses after film stars and even hit films. One bus was named Aparachitudu after the recent blockbuster.
56
COVER STORY
Swami Paramarthanandaji
Swami Paramarthananadaji was a senior monk of the Ramakrishna order and President of the Ramalaishna Math, Hyderabad As a close associate of Swami Ranganathanandaji, the founder President of the Ramakrishna Math, Hyderabad and President of Ramakrishna Math and Mission, Belur Math. Swami Paramarthanandaji has rendered outstanding services in developing the Math to its present prestigious position with different wings like the Temple, Vivekananda Institute of Languages, Bookstall and Dispensary etc. Born in 1945 at Bangalore, he came in contact with the inspiring orbit of RamakrishnaVivekananda movement at a very young age of 8 years. As a member of Vivekananda Balaka Sangha, a cultural and spiritual centre for boys, being organized by the Ramakrishna Ashrama, Bangalore, he had the good fortune of diving deep into Indian culture and spirituality from young age itself. He always took active interest in its various cultural and spiritual activities. He practised both Carnatic Vocal and instrumental music systematically for more than 16 years. And learnt more than 1000 bhajans in various languages like Kannada, Telugu, Hindi Bengali, Sanskrit, Marathi etc. He had the good initiated by Revered Swami then Vice-President of the Mission. He joined the completion of graduation in various fields of activities Hyderabad in 1974 after Headquarters at Kolkata, as renowned Swami Ranganathanandaji Maharaj. fortune of being formally Yatiswaranandaji Maharaj, the Ramakrishna Math and Ramakrishna order, after at the age of 20 years. Working in Karnataka, he came to intense training in the Missions an assistant to the world
He could speak in Telugu, Kannada and English and has traveled extensively all over India on invitation to deliver lectures, including several universities, educational institutions and reputed cultural organizations as also in A.I.R. and T.V. Swamijis discourses on Ramakrishna Kathamrutham on every Wednesday & from 6.00 to 6.30 a.m. on Gemini T.V. were heard with rapt attention in thousands of households. He has been one of the one hundred eminent personalities of Hyderabad, notified by a leading daily of the twin cities. Under his able stewardship The Ramakrishna Math, Hyderabad has started the new Vivekananda Institute of Human Excellence for imparting various value - oriented programmes in many subjects of personality development and cultural reorientation.
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COVER STORY
The Business of Man Making, Character Building

When all are accommodated In heaven and hell, Accounts drawn up for both saint and the retrograde, A handsome man, nay, a human vanished From Hyderabad, And they all said, no, not a man, not a human But verily the divine - Dr. Kondal Rao Velchala We miss the best of the spiritual wine. Editor There are businessmen and businessmen. For some profits are the be all and the end all of business. For some others the benefits. The former are in the business of making money, the latter, in the business of making Men. The former stand for wealth, the latter for welfare. Swami Paramarthananda belonged to the latter. He was in the business of Man Making, Character Building, Caliber Boosting as the true devotee of Sri Ramakrishna and Vivekananda. He was busy, busy and busy with the business of human welfare and for reaping as much profit as possible, and indeed reaped, and that way became the richest of the rich who are after richness of that kind. But he had not had any competitors in his business, nor had he had his share of enemies and adversaries as the businessmen normally have in business jealous and envious of each other. On the other hand, the more the profit he made, the more the people admired and appreciated, and when he died he had no enemy but friends, a rare thing indeed in business. People were sad and sorry and silently wept. Not only men but even the plants, the trees and the flowers shed tears. The greenery turned moist and wet and, there was eerie silence, nay a hush, and a rush of people, pensive, pain-stricken and sobbing to have the last glimpse of the body of the man they loved, liked and held in high esteem for the services he rendered, the sacrifices he made, the love and affection he showered and the willing and welling responses that he derived for what all he did and conceived for the spiritual good. What a blessed businessman he was! What a lovable, likeable business he did! Hats off to him and the legacy and heritage he left of Service as Business, Sacrifice as Business, Love as Business, Liking as Business, Devotion as Business, Dedication as Business, Fellowship as Business. He became a millionaire, a billionaire, nay, a trillionaire. His capital was his knowledge. His capital was his wisdom. His capital was his love. His capital was his service. His capital was his sacrifice. He came with empty hands but when he left, left with overflowing treasure of overwhelming gratitude of people. Swami Vivekananda used to call only such men MANLY - men, who forget themselves only to remember and serve others. Men, who are busy in the business of making others happy by educating,
SWAMI PARAMARTHANANDA And
COVER STORY empowering, energizing and electrifying them with their inspiring and motivating speeches, writings and conversations and by identifying with the denied, the deprived, the disappointed, the hungry, the thirsty, the righteously angry. Swami Paramarthananda was a rare amalgam of many qualities of head and heart. He was the very embodiment of excellence, who excelled in everything that he touched, and yet was a person so humble, so modest, so simple, so sociable, amiable, cordial, accessible, amenable and acceptable. To see him was to like him, nay love him, respect him, revere him. He was a Personality in every sense of the word, a role model of a good human to aim and emulate, a case study to note and quote for discipline, devotion, dedication and dynamism. He was a great scholar, a great speaker, a great administrator, a positive thinker, a voracious reader, an untiring creator, a reformer and transformer, who believed in inspiring, motivating and moulding people to be good and great. He was known for his wit, wisdom and humor, and for his sense of charm in doing things. He had a creative weakness for beauty and the beautiful in the spiritual sense. For him what was Shivam was Satyam, what was Satyam was Sundaram, and he saw them all in everyone and everything Nityam. Vivekananda Institute of Human Excellence is the dream come true creation of Swamiji, which speaks volumes of his sense of creativity and urgency. This is an institution which he built to make the men Manly, to build the character and the caliber of youth in general and students in particular as Vivekananda himself had longed and desired throughout his life. It is the best dedication, nay the best benediction of Swami Parmarthananda to his spiritual hero Swami Vivekananda. He worked hard day and night to build it, which will ever remind us of a towering personality that he was aiming always at something towering, elevating, enchanting. During his presidentship of the Math he and the Math were identified as inseparable. Men came to Ramakrishna Math not only for the sake of what it stands for as a Mission but also to admire and appreciate his work and to ask him whether they could in any way be helpful to him. During his period, the Math became a hub of many religious, intellectual, cultural, educational and spiritual activities. Many beautiful constructions, plants, trees and lawns (he was a very great lover of flowers, plants and the greenery) came up around and many people visited it every day as a pilgrimage. Swamiji worked very hard even at the risk of his health and always put the organization before self. In fact if his health deteriorated, it was more because of his excessive devotion, dedication and preoccupation to do the best for it. He probably spent many a sleepless night to do all that he wished and willed to make the Math the most service oriented multidimensional organization. Whenever he was reminded of his failing health, he always used to say we are all instruments in the hands of God. The Math also did quite a good amount of philanthropic and ameliorative work during his period at Hyderabad and beyond, and did it most economically, efficiently and effectively for which it earned the encomiums of the state and the society. Swami Parmarthananda was very modern in his outlook and approach to man-making and character - building. He gave equal importance to skills and values as he knew well that mere preaching or teaching
COVER STORY of values in isolation would not appeal to the modern generation which is more after materialistic welfare than the spiritual welfare unable to understand and appreciate the desirability of a balance between them. The inability of our youth to grasp the interdependent relationship between the skills and the values are the outcome of our defective education system which lays more emphasis on skills as against the values, producing mostly students who are strong in skills but weak in morals. That the right kind of skills can only be built with right kind of values to sustain prosperity and peace in the long run is not driven home to our students and youth, nor so much the necessity of observing distributive justice to have peace along with prosperity. Many modern educational institutions (almost all) are ill equipped in terms of staff, infrastructure, time and the appropriate curriculum to educate our students for the dual purposes of values and skills. Most of the managements also lack the vision to combine them effectively in our education system. The achievement of the dual objectives of man-making and character - building requires a different kind of management, a different kind of staff and a different kind of time table and academic agenda at all levels of our education. It also requires a different kind of atmosphere and work culture. Realizing these problems in our education system, Swamiji struck upon the idea of starting the Vivekananda Institute of Human Excellence to bridge the gap, to teach and train the youth and students in particular and the employees in general to supplement the efforts of the teaching and training institutions existing already in private and public sectors. Swamiji knew that the Ramakrishna Math is the right place with the right kind of atmosphere for that. Hence he took the initiative to start it there. But his problem was not only that of building a right structure in a right atmosphere but also of identifying and associating right kind of teachers endowed with good knowledge, values and communication skills. Swamiji left no stone unturned to identify the right kind of staff for this. In fact Vivekananda Institute of Human Excellence is the only institute of higher learning in the city today which has the best staff drawn from the best talent of all the ages. He associated the best Director, Swami Srikantanandaji, the best Deputy Director, Sri A.S. Murthy and the best advisers like Prof. I.V. Chalapathi Rao, Prof. V. Vishwanatham and a few others with it. A good number of batches of students and employees have already been taught and trained by a very competent and experienced contingent of staff in the institute with very conducive and congenial atmosphere to cultivate the values. Swamiji had a vision to develop the Institute into a big educational complex like a university but his failing health dampened his energies if not his spirits to do that. He had probably had a big distress of mind and heart for not being able to do so all through his period of illness though he did not express it to anyone in so many words. But the credit goes singularly to him for conceiving an excellent project and for working it out extremely well, even though he knew it pretty well that what was being undertaken was a gigantic task in the prevailing conditions. The Institute has given a good lead to the state and the society to think of doing some thing more on similar lines in future. There is a very great need for such type of institutions but if only they are constituted with such devotion and dedication as the Swamiji had and with such atmosphere of simplicity, dignity and sanctity as that of the Ramakrishna Math.
COVER STORY To strike a personal note Swamiji had always had a soft corner for our schools and colleges named after Vivekananda and Sister Nivedita and for me associated with them and always readily responded to our invitation to visit them whenever we requested. In fact he travelled to as far a place as Karimnagar to visit our institutions and to address our students there. He had a special corner in his heart for Sister Nivedita College of Professional Studies, Vivekananda School of Post Graduate Studies and Sister Nivedita School in Hyderabad and Vivekananda Degree and P.G College and Vivekananda and Sister Nivedita Residential Schools at Karimnagar. We fondly remember Swamijis visit to Sister Nivedita College of Professional Studies to address the Convocation and to confer the Degrees on the students. We cherish very happy reminiscences of our conversations with him on educational matters. We miss him so much and feel so sad and sorry for his demise. We pay our humble homage to him in appreciation of the magnificent services that he rendered to the society through the Math, the Vivekananda Institute of Human Excellence, his dear charming creation and many other religious cultural and educational wings of the Math which he embellished with his very active association with their activities. Vivekananda School of Post Graduate Studies and Sister Nivedita College of Professional Studies, Hyderabad pay special tributes to him as Management Institutions for his extraordinary abilities of managing an august organization devoted to multidimensional religious, spiritual, social, philanthropic, cultural and educational services with extraordinary abilities beyond the managerial acumen of even the management gurus of the premier institutions of management in the world and feel proud to bring out this Special Issue of the Business Vision on him.
THE SPIRITUAL
Cam redo! This is no mere man the spiritual. No, not at all a mere person As we imagine, But like the sun the blazing, Verily the divine. Sees not with eye but with vision, Says not with intellect but with inspiration, Belongs not to this or that But to the essence, the quintessence of religion, Can say about anything, anyone Like the read, the grace fed, The mist like, the mysterious. Insures not but ensures a healing touch. Anoints with words of wisdom, soothes.
No, not at all an easy man to deal, tell But only to intensely feel. Looks not like the matter but the spirit, Speaks not like the speaking with the Tongue but with the soul, Tells not like the telling but welling, Teaches not like the teaching or preaching But like the ploughing, the sowing, Walks like the path breaking, Smiles like the glow flowering The grace showering, Moves like the dew drop on a leaf of lotus Touching untouching, Quotes not from life but from love Not from the mere living but loving, From saying but doing.
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COVER STORY
Swami Paramarthanandajis contribution for spiritual rejuvenation in Andhra Pradesh

Director, Vivekananda Institute of Human Excellence
- Swami Srikantananda
Sri V. Kondala Rao, an educationalist, heading number of educational Institutions in Twin cities and Karimnagar is a great admirer of Swami Paramarthanandaji. When he approached me to write an article on Swami Paramarthanandaji, since I was close to him for the last 18 years, I plainly refused to do so, saying that we - the Sadhus of the Ramakrishna Order - dont give much importance to individuals. It is Sri Ramakrishna and Swami Vivekanandas mission that we are continuing and we are just instruments in carrying out that mission. But when he repeatedly pleaded to write, saying that such an article will bring an awareness among the public about the various activities of the Math and help them know the various schemes and programmes started by Revered Swami Ranganathanandaji Maharaj and ably executed by Swami Paramarthanandaji, I agreed to do so with great reluctance. Swami Paramarthanandaji came to Hyderabad in 1974 along with Revered Swami Ranganathanandaji Maharaj as his assistant, when the private Ramakrishna Ashrama, located at Secunderabad was affiliated to the Belur Math and Swami Ranganathanandaji Maharaj was appointed as President of the newly affiliated Math. Since the place was not sufficient to conduct the daily activities, the old building was sold away and the Math was shifted to the present lower tank bund premises. Sri Vengal Rao, then Chief Minister of Andhra Pradesh has kindly allotted this land on lease to start New Math. The uneven and marshy land with full of jungle, was converted into a heaven by the hard work of Revered Swami Ranganathanandaji. Swami Paramarthanandaji shouldered the responsibility of the task of transforming the Math into a heaven of spiritual activity. From the beginning, he was helping Ranganathanandaji. During the hard days of construction activities at the Math, when revered Ranganathanandaji would be away for months together on lecture tours in India and abroad, it was Paramarthanandaji who used to run the whole show of not only taking care of the administration but also of the other spiritual services at the Math. He used to sing Bhajans, deliver lectures in Telugu and in English and also had perfect control over cash, accounts and administration. Swami Ranganathanandaji once said I want a dynamic person who will work for me tirelessly and Paramarthanandaji excellently fulfilled that need. Swami Paramarthanandaji was an able administrator, an inspiring orator and a wonderful singer. He was never tired to type Swami Ranganathanandajis correspondence and many of his lectures were brought out in book-form only because of Paramarthanandajis tremendous zeal and enthusiasm. He used to type the manuscript of Swamijis lecture and Ranganathanandaji would add something new every time. Paramarthanandaji was again type and re-type, never getting tired. He used to sing Bhajans in various languages with melodious voice and perfect diction. His memory was tremendous. About 1000
COVER STORY Bhajans, he could retain in his memory and recollect while singing. When he used to sing on Ekadashis and special birthdays, he used to create a reverberating tempo that the devotees used to feel the spiritual vibrations. He was a man of the masses as well as the elite. He could maintain good relations with Government officials, politicians and also with common people. His main mission was to spread the message of Sri Ramakrishna, Sri Sarada Devi, and Swami Vivekananda to the nook and corner of Andhra Pradesh, and he did this through media, newspapers, public discourses and by making the Ramakrishna-Vivekananda literature available to the people at highly subsidized prices with the financial assistance of the Tirumala Tirupathi Devasthanams. His discourses on Sri Ramakrishna Kathamrutamu, telecast every Wednesday on Gemini T.V. were extremely popular throughout Andhra Pradesh and people used to call him T.V. Swamiji. He was the Vice-President of Ramakrishna Vivekananda Bhava Prachar Parishat and addressed lakhs of people through public functions to see the great ideals of Sri Ramakrishna and Vivekananda percolate into all sections of people. Swamiji encouraged various private Samithis. He helped them financially and also inspired them to take up the Chetana programme to spread the message of Holy Trinity. Swami Paramarthanandaji was an instrument to execute all the plans and projects started by Swami Ranganathanandaji such as Vivekananda Vani Samstha, Gramasri, Vivekananda Health Centre, Library , Book-stall etc., He kept up the traditions started by Revered Maharaj. Revered Ranganathanandaji was dead against Television. He did not allow to have T.V. in the Math campus and Paramarthanandaji also followed his footsteps. Many devotees came forward to present Television sets to the Math but Paramarthanandaji refused to accept, with the result there is no T.V. in the Math even today. Though he was mixing with people freely, he always kept his Sanyasa ideal supreme in his mind i.e., renunciation of Kamini Kanchana. His character was absolutely blemishless. He came in contact with Ramakrishna Math at the age of 7 as a member of Balaka Sangha and had his training under Senior Swamiji of Bangalore Ashrama. He had his spiritual initiation from Revered Swami Yatiswaranandaji Maharaj and Sannyasa from Swami Vireswaranandaji Maharaj. During his Presidentship of Ramakrishna Math, Hyderabad. He started various activities. Vivekananda Institute of Human Excellence was his brain child. Today VIHE is quite well known among the people of twin cities as a great training centre in moral and spiritual values and personality development skills. Regular courses are being conducted specially for the youth. More than two lakh participants received training through various courses during the last five years of its existence. Projects like Sant Darshan, Gita Darshan, Vivekananda Art Gallery, and schemes like Poor feeding, Bal Narayana Seva, Sarada Vidya Kendra, and Sarada Sankshema Nidhi, (regular monthly pension scheme to the destitute and old women) special discourses by eminent scholars and many such other activities were taken up during his able Presidentship(1997-2006). Though he was a task master, a strict disciplinarian and a bit harsh sometimes outwardly, he was full of love and compassion in the heart of his hearts. Many times people used to misunderstand him because of his straightforwardness and outspoken nature, but he did not carry any hatred for any one in his heart. From the very boyhood he was attracted by Holy Mother - as a member of Balaka Sangha at Bangalore. He always used to say, I am Mothers child. I love Mother more than Thakur and Swamiji. Just a couple of days before his passing away, when he was in ICCU, and when I was sitting just near him, he said, Swami, today I am getting a strange feeling, the moment I close my eyes I feel that Holy Mother is sitting beside me, the moment I open my eyes to see her she is not there. Till his last breath, he was only praying to Mother, saying Mother take me away, take me away and finally he returned to Mother of the universe on 26th January 2006 at 3.10 p.m. Om Shantih Shantih Shantih
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A Wreath For Swami Paramarthananda

- Prof. I.V. Chalapati Rao
Editor, Triveni
The most revered swami Paramarthananda, President of Ramakrishna Math, Hyderabad is no more . The curtain discended on his earthy career on the afternoon of 26-1-2006, the Republic Day. He visited this planet between 1945 and 2006. As the news of his demise spread like the prairie fire, not a single eye of his countless devotees and admirers was dry. The festive spirit of the Republic Day gave way to gloom and grief. He joined the Vivekanada Balaka Sangha of Rama Krishna Math, Bangalore at the tender age of seven. Worldly attractions had no fascination for him. Impressed by his devotion and renunciation, Swami Yetiswaranandaji initiated him into the Rama Krishna movement when he was hardly 22 years old. He was initiated into Brahmacharya and Sanyasa during the years 1974 and 1977 respectively by Swami Visweswaranandaji the then president of the Head quarters Rama Krishna Math and Mission, Belur He had the opportunity of working with a senior spiritual master Swami Ranganandhanandaji for a long period of 25 years after he joined the Rama Krishna Math, Hyderabad in 1974. This proved to be a wonderful combination when the Math was in its formative stages. In 1997 Swami Paramarthananda became the president of Rama Krishna Math, Hyderabad. This period of long association with the Hyderabad Math proved to be the Golden age in the history of the Math when it made rapid strides of progress and development in all aspects, especially in service activities. He won the hearts of the people who loved and revered him for his sterling qualities and human touch. Let us cite a few examples of the developmental projects and service activities of the Math during his stewardship. 1. 2. 3. 4. 5. 6. 7. 8. 9.
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Audio Visual Museum on Bhagavad gita Sarada Vidya Kendra Vivekananda Institute of Human Excellence Gita Darshanam Sant Darshanam Vivekananda Art Gallery Sarada Vanam Vivekananda Tapovanam Narayana Seva (Poor Feeding)
COVER STORY 10. 11. 12. Bala Narayana Seva A well maintained and aesthetically pleasing garden with spacious lawn Regular spiritual retreats.
In the true spirit of Swami Vivekananda, he extended the services of the Math to the rural areas by means of a mobile medical van ( mini hospital on wheels), travelled widely lecturing ad organizing community service. Lakhs of people watched him on television (Gemini T.V.) when he delivered inspiring lectures. He made Rama Krishna Vivekananda literature available to the people at heavily subsidized prices, through the courtesy of the T.T.D. His Saturday and Sunday discourses and devotional Bhajans were an unforgettable experience to the congregation. On request he addressed several universities, colleges, schools, cultural and social gatherings. Swami Paramarthananda was the Vice-President of Rama Krishna Vivekanada Bhava Parchara Parishat and has addressed the devotees conventions and clarified their spiritual doubts. He had the art of discussing abstruse and serious matters in simple language to suit the level of comprehension of the audience, often lacing his presentation with interesting anecdotes and sparkling wit and humour. The secret of his popularity was his easy accessibility and a private word of encouragement to every one whether rich or poor. He could mobilize public support for the Math and augment the resources by finding friends for his numerous projects and service activities. The Math became not only a spiritual center but also a training ground for life skills for the youth. In all these activities he was ably assisted by Swami Srikanatananda, the Director of Vivekanada Institute of Human Excellence. Their partnership proved to be productive of excellent results. A word about my association with Swami Paramarthananda as a senior member of the faculty of Vivekananda Institute of Human Excellence and as Editor of Triveni, our 75 year old literary and cultural quarterly. When the institute was inaugurated by Sri Chandrababu Naidu, Chief Minister of Andhra Pradesh in a mammoth meeting I was sitting in the audience. Swamiji announced that he wanted me to deliver lecturers in the institute. Since then I have been closely associated with the Institute. Once or twice when he was ill or unavailable, he gave me the privilege of substituting him at the Sunday lectures. He released the special issue of Triveni on the land mark occasion of Platinum Jubilee. He wrote the preface and blessed my book Culture Capsules Art of Living. Very recently he released another book of mine, Ancient wisdom, modern insights at a largely attended meeting in the auditorium of the Vivekananda Institute of Human Excellence and delivered a memorable speech. He attended the meeting in spite of his illness. Once he presented me new clothes on the birthday of Sri Rama Krishna. He blessed my grand - daughter and her husband in connection with their wedding. I can never forget the warmth of his affection in offering coffee during my visits to touch his feet and seek his blessings. May he continue to inspire us all as his presence is all the stronger in his absence.
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A DYNAMIC MONK
- A.S.Murty, MA., Dy. Director, Vivekananda Institute of Human Excellence, With the advent of Sri Ramakrishna as the saint of Dakshineswar, all the earlier essential philosophies of India and the cardinal teachings of global religions had culminated and integrated into his life and teachings. The nation witnessed a clear rejuvenation of the spiritual path of Sanatana Dharma. After the passing away of Sri Ramakrishna in 1886, Sri Sarada Devi became the guiding force of the Sangha and continued the work taken up by Sri Ramakrishna in reawakening the divine light in humanity through the disciples of the Master. Whenever some organizers approached Sri Sarada Devi for deputing some monks of the Ramakrishna Sangha for participating in spiritual festivals or for presenting discourses on Vedanta, the Mother was telling them, Look, these are the divine souls who took the human form for helping mankind realize its potential divinity and to help people in manifesting that divinity through Sadhana. Their bodies must be respected and carefully protected to get their services yield best results. She intensely desired that the various Sadhus or the spiritual aspirants with identical objectives of emancipation must come under one umbrella. This desire was fulfilled by Swami Vivekananda with the founding of Ramakrishna Math and Ramakrishna Mission. The two everlasting services to humanity rendered by Swami Vivekananda are, firstly globalization of the splendid Indian culture and heritage through lectures and writings and secondly the establishment of the Ramakrishna Math and Mission for continuing his work of reawakening mankind through Vedanta to make humanity realize that it is one with God. This great tradition of the holy trio is very eminently perpetuated by the monks of the Ramakrishna Order through their dedicated and selfless services. It is the divine spirit of the holy trio and particularly that of Swami Vivekananda that runs through the veins of these monks making each Swamiji an embodiment of spiritual wisdom and selfless service. Swami Paramarthananda is one such monk of the Ramakrishna Order who combined in himself the age old twin ideals of our nation, renunciation and service and also the Anushtaana Vedanta of Swami Vivekananda, that says, Endeavour for spiritual emancipation and attainment of Salvation through service for the public good - Atmano Mokshaartham Jagaddhitaayacha and made them a functional reality. He put these ideals into practice at the highest degree in spirit word and deed, and became an ideal monk with enlightened soul, enchanting tongue and an ever serving hand.
SWAMI PARAMARTHANANDA
COVER STORY It is a sheer divine command that he joined the Childrens Wing of the Ramakrishna Math, Bangalore at the tender age of seven. As he grew, he was totally moved by the teachings of Swami Vivekananda, of which one saying of the Swamiji - They alone live who live for others, the others are more dead than alive - changed the tenor of his life. His academic brilliance brought him close to a good job in the Reserve Bank of India but he preferred a life of renunciation and service and continued his association with the Math. In 1967, at the age of twenty two, Swami Paramarthananda took formal initiation and became a Brahmachari Swamy. In 1974 he joined the Ramakrishna Math, Hyderabad. He was formally initiated into Sanyasa in 1977 by the President of the Apex Body of the Ramakrishna Order Pujya Veereswaranandaji and closely associated himself with the then President of the Ramakrishna Math, Hyderabad, the world renowned spiritual monk and writer on Vedanta, Indian Philosophy and Culture, Pujya Swami Rangananthanandaji. He became the dynamic associate of Swami Ranganathanandaji and was instrumental in executing many schemes in making the Hyderabad Math a great spiritual centre. In 1993, when Swami Ranganathanandaji moved to Belur Math for shouldering higher responsibilities, Swami Ananyanandaji became the president and he too reposed his full confidence in him for carrying the spiritual services at the Math. In appreciation of his outstanding services, Swami Paramarthanandaji was appointed the President of the Ramakrishna Math of Hyderabad in 1997. His total identification with the Math from 1974 and his untiring efforts in transforming the Math as a Holy centre of spiritual training brought him close to the hearts of the devotees. He endeared himself to one all with boundless love, sweet inter-action and spiritual guidance. Swami Paramarthanandaji firmly believed that in the context of growing unrest and failing human relations all over the globe, the teachings of Sri Ramakrishna and Swami Vivekananda reiterating the values of Sanatana Dharma like religious harmony, transcendental wisdom and applied philosophy can, not only save the mankind from ruin, but also can provide the highest secular good and social development. He found greater religious justice in doing public service and infusing spiritual values in secular living than leading a life of recluse in deep forests and high mountains. Swami Paramarthanandaji took every opportunity of his public speeches and spiritual discourses to bring home this point to all cross sections of the society. His popularity over the TV through these discourses got him the name of TV Swami. His inborn assets of a rich, melodious and resonant voice, added with an excellent command over the Vedas, Upanishads and other scriptures, thorough knowledge of classical and devotional music and sharp ready wit and humour made him a prolific and powerful speaker. His speeches elevated the atmosphere and brought enlightening delight to the listeners.
COVER STORY Swami Paramarthanandaji is a prolific speaker. For years Swamiji gave discourses on high value subjects like the Upanishads, the Bhagavad-Gita, Viveka Chudamani, Patanjali Yoga Sutras, Narada Bhakti Sutras in Telugu on Saturday evening and in English on Sunday evening. His command over English, Telugu, Bengali, Kannada, Sanskrit and Hindi adorned each speech with references to the great sayings in these languages. Besides thousands of Slokas and quotations of Vivekananda, the Swamiji knew by heart thousands of Keertanas of Puranadara Dasa and parables of Sri Ramakrishna that are often referred to in his discourses. Swami Paramarthanandaji is a much sought after speaker in public functions and cultural programmes. Organizations like the TTD, university colleges and corporate houses regularly invited him for addressing their employees and students respectively. Swamiji took these opportunities to inspire the participants on the importance of moral values in life. He was the Chairman of the Ethics Committee of the Care hospital for the for moral orientation among doctors, The then Chief Minister, N. Chandra Babu Naidu expressed his surprise when the Swamiji was returning a few lakhs of rupees saying that it was the left over balance after the Ramakrishna Math had successfully completed a public interest project entrusted by the Government. Swami Paramarthananda is an able administrator. He had been running the Math with meticulous administrative precision. He ensured that all programmes at the Math start at the dot of the notified time. He initiated several public welfare programmes. He introduced One-rupee Meal scheme for feeding the poor and hungry. Through Sarada Bala Vikas Kendra, he arranged free distribution of bread and milk to poor children daily in the morning and free coaching for the students of high school classes in the evening. Swamiji had an appreciative heart and approving hand to accept and support any programme that benefits the public. Several proposals of his associate monk Swami Srikantanandaji received instantaneous support from him and got executed in time. The Vivekananda Institute of Human Excellence that contains excellent paintings of Vedantic Concepts, trained lakhs of participants in value orientation and personality development. The participants included students, youth, government employees, corporate officials, doctors etc. The Gita Darsan, The Dhyana Mandirs, the Sant Darsan, the Vivekananda Darsan, the Chetana Programme for educating rural masses on the Indian value systems - all stand today as the great symbols of the initiative vision of Swami Srikantanandaji and administrative acumen of Swami Paramarthanandaji. He has a keen eye for the aesthetic perfection and every inch of the Math campus offers a serene atmosphere and divine experience to the visitors. The patriotic songs of Swami Srikantanandaji sung by Swami Paramarthanandaji infused tremendous inspiration in the audience. Swamijis discourses on Vedantic, spiritual and cultural topics have a captivating power with enlightening wisdom and stimulating humour. His interpretation of Advaita has always been clear and
COVER STORY convincing. Speaking on Viveka Choodamani, he once explained as to what is creation. Creation is not Gods innovation of a new world without; it is a projection of Gods Own Self within into an expansive cosmos - Akasa, several worlds and man. The objective of Srishti is not simple creation or even projection but perfection of man through realization. When you realize that you are one with the divine, you get transformed into a powerhouse of energy with no scope for fear or failure. During his discourses, Swami Paramarthanandaji upheld the great values for which India stood for ages. He was objecting to the criticism that the values are falling. According to him, these values are eternal and infallible. It is the men that are failing to adhere to these values resulting in their own misery and decline in social and communal harmony. The reason for frustration in mankind, especially the youth, is lack of spiritual orientation and qualities like Satya, Ahimsa, Asteya - Truth, Non-violence, Selflessness etc. The Swamiji advised us to endeavour for imbibing them through awareness, faith and a systematic study. Great Upanishadic expressions vied with one another to come to his thought and tongue to embellish his sweet expressions on philosophy. He encouraged the youth and the others to harness our values through self development and co-operative endeavour, referring to the great saying of the Rig Veda: Sangachchatwam Samvadatwam Sam Vo Manaamsi Jaanataam Devaa Bhaagam Yadhaa Poorve Samjaanaanaa Upaasate. RV: 10.191.
(Assemble for a common purpose. Confer together with open minds and hearts. Pool your thoughts for integrated wisdom; for behold the great gods themselves have come to enjoy their high eminence because of their unity) With all his uncompromising discipline, Swami Paramarthananda was childlike with tender dispositions. He liked children most. He preferred to be with them and liked to address the youth and young children. He found in them the potential nation builders of tomorrow for absorbing the great ideals of Vivekananda and for forging India into a nation of all round development. In the company of children, he got himself transformed as a child, singing and making them sing patriotic songs, thus creating a reverberating atmosphere. Swamiji was a man of great and ready wit. Once, while he was getting discharged from the hospital, the doctor concerned, respectfully comforted, Dont worry Swamiji. Youll be happy. Caring least for his failing health, Swamiji quipped, What are you telling. I am Paramartha Ananda, Me and my name eternally dwell in joy. Wherefrom worry can come to me! As Poojya Gautamanandaji has rightly remarked, his services remain ever outstanding in the annals of the history of the Hyderabad Math.
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OM SRI RAMAKRISHNAYA NAMAHA

- Smt. P. Andala Devi In the Ramayana it is said that when Sri Rama along with Sri Sita and Lakshmana left for Aranyavasam, there was the lush greenery everywhere, and just a few days later when Sumanta returned to Ayodhya alone, all the trees and plants shed their green leaves in sorrow. Even so here in Hyderabad, our dear Pujya Swamy Paramarthanandaji chose a time to leave us when the leaves of the trees are falling. We have lost a great soul and by his departure, a great vacuum has been created for the inmates of the Math as well as the devotees. Swamiji had blossomed into a fragrant flower under the guidance of Pujya Swami Rangananthananda and within eight months of the departure of the latter followed suit in the foot steps of his mentor. In the 80s Swamy Ranganathananda was touring Western countries and all the responsibilities fell on the then young shoulders of Swamy Paramarthananda. As expected he did his job most religiously, conscientiously, with great devotion and dedication. He practiced to the core what was preached by Swamy Vivekananda. If only his health had permitted, he would have risen to greater heights. In the last couple of years his health was deteriorating, but that did not stop him from doing his best for the Math. In spite of his ill health he made it a point to attend all the deliberations and celebrations. His trip to Machilipatnam sounded the death knell. It was his will power which brought him amongst us on the 21st January on the birthday of Swamy Vivekananda. Till his last breath he worked to spread the message of Sri Ramakrishna Paramahamsa, Holy mother Sharada and Swamy Vivekananda. He enchanted everyone with his melodious voice. No programme was complete without his bhajans, and he used to go into great ecstasy during those moments of bliss and take all of us also to the state of a trance. The song Muthyaala moota kanna Ratanaala Raashi kanna nee Naamamu yanto Madhuram was loved by all his devotees. He was easily accessible to one and all and anybody could just walk into his office and offer pranams. Many people, who came to the Math premises after a gap of a decade, comment upon the beautiful constructions like the Sri Vivekananda Institute of Human Excellence, Gita Darshan, Sant Darshan, the
COVER STORY beautiful Sharada Vanam and Vivekananda Tapovan. The messages of the divine and the divinely have been well written with pictures inside and outside the Sharada Vanam. The beautiful Nirmal paintings in the Sant Darshan and Gita Darshan are the embellishments which nobody would like to miss. The paintings and the Murals of Gitopadesham, on both the sides of the building catch all the visitors attention. His concern for the underprivileged is demonstrated by the many activities he initiated for their benefit. In last four or five years he started the scheme of giving morning breakfast to the poor children residing around the Math Premises, and a full meal in the afternoon for about 400-500 poor people on a charge of Re. 1 only. In the evening between 5 and 8 o clock children who do not have the opportunity to be taught after returning from school are coached by good teachers who voluntarily teach them. He also had great concern for the children and desired that they should be helped to grow up with a sound value system. During the summer vacation about 100 children enroll in the Bala Vikas Kendra programme where yoga, meditation and bhajans are conducted. Stories from the epics and the lives of great people are narrated to them. His activities were not limited to his immediate surroundings. He introduced the Grama Sri, a mobile van presented by State Bank of Hyderabad to go to remote villages around Hyderabad and provide free medical aid to the needy. We, the devotees were very fortunate to have had the opportunity to listen to the melodious voices of Smt. M.S. Subbalaxmi, Smt. Vedavati Prabhakar Rao, Sri Anoop Jalota, and Sri Sharat Gupta. Great musician Amjad Ali Khan was also invited once, and all of them enthralled us with their sweet voices and music. Renowned scholars like Malladi Chandra Sekhara Sastry garu Dr. Maadugula Naga Phani Sharma garu and Sri Samavedam Shanmukha Sharma garu enlightened us, and it was Swamiji who contacted and conferred with the celebrities to render bhajans, spiritual discourses, lectures, songs and musical fixtures. His discourses stood for their clarity, simplicity and ease of understanding. This however did not in anyway take away the depth of the messages. It was this combination of content and clarity in his discourses that created the same impact on everyone in the audience regardless of age, education or other differences. Very few have this gift of depth and ease of delivery. He was one of them. I am sure the walls of the auditorium will be echoing with the bhajans in his vibrant voice for years to come even in his absence. In addition to that we shall miss his subtle humour in delivery of discourses on the Bhagawad Gita, Upanishads and other holy scriptures. I feel that in the present day scenario, where people are becoming more and more materialistic, Swamiji was a balancing force providing, the much needed tonic of the touch of the soul.
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Bottom Of The Pyramid

- Prof T.Divakara Rao*
The Fortune At The
Constraints To
C.K. Prahalad and stuart L. Hart identified a fortune to be topped by the MNCs in doing business with billions of aspiring poor which requires innovative technology and new business model as suggested by them. In this paper, Prof. Divakara Rao examines the feasibility of their new business model.
C.K. Prahalad and Stuart L. Hart than $ 1500 annual per capita business model, have been identified in their classic paper The fortune belongs to Tier 4 of the pyramid which should form a part of the at the bottom of the Pyramid have with a huge population of 4000 economic reforms, currently clearly given their views on how the million. The authors have tried to underway in India. The present MNCs should formulate their explain the kind of innovative constraints that confront adoption future business strategy in todays approaches that should be of the strategies of NBM have also fast changing world. They are of attempted by the MNCs for doing been identified. the opinion that the future At the outset, we intend to prospects of business do The bottom of the pyramid which point out that the present spate not stay with the millions constitutes of those poor with less than $ of innovations in technology of middle class consumers 1500 annual per capita belongs to Tier 4 of that has been sweeping the in developing countries as the pyramid with a huge population of 4000 world resulting in unpredictable is the case now, but with million. The authors have tried to explain future changes have been billions of aspiring poor at the kind of innovative approaches that visualised by economists as well the bottom of the pyramid. should be attempted by the MNCs for doing as management gurus long To do business with the back. For instance, the work of worlds 4 billion poor profitable business with Tier 4. Schumpeter the great people requires innovative profitable business with Tier 4. economist of the 20th century, who technology and new business Their business vision is manifest considered that innovation is the models altogether that should be in their new business innovative engine of capitalist development, developed by the MNCs. The strategies that the MNCs have been should be the guiding principle to likely rewards that flow from such advised to adopt. It seems that understand the business strategies of strategies, as rightly said by the these views equally apply to other our times. His definition of authors include growth, profits and companies domestic or innovation relates to the process by foreign who are interested to which new ideas are utilised by contributions to humankind. The world economic pyramid has capture Tier 4 market either in the entrepreneurs to create a new 4 Tiers, ( see Exhibit 1 ) the first home country or other countries combination of production abroad. In this paper, we try to resources to increase their profit. relates to the population of about 75-100 millions having more than examine the feasibility of their Innovations can take various forms $20,000 annual per capita income model, herein after called the new such as (1) the introduction of new while the second and third tiers business model (NBM), given the good or a new quality of good (2) with a population of 1500-1750 socio- economic conditions of the the introduction of a new method millions fall into the per capita Tier4 population with particular of production (3) the opening of a focus on the Indian situation. And new market (4) the conquest of a income range of $1500-$20,000. The bottom of the pyramid which in doing so, the pre requisites new source of supply of raw constitutes of those poor with less necessary for adopting the materials and (5) the designing of the strategies outlined in their new
FOCUS new organisation of any industry. According to Schumpeter, in the absence of innovation, competition in the market will eventually eliminate excess profits and leads to long run stagnation of the economy. It is therefore, imperative for the profit-seeking entrepreneurs always to comprehend new ideas that would increase profits by introducing new goods and new production methods in response to changes in both demand and production possibilities (,Yujiro Hayami,2001). Similarly the renowned management guru Peter Drucker concluded in 1986 that economic dynamics have decisively shifted
from national economy to the world economy. This may be the most importantit surely is the most striking feature of the changed world economy. He also said in 1993 that every few hundred years in western history there occurs a sharp transformation. Within a few short decades, society rearranges itselfits worldview; its basic values; its social and political structure; its arts; its key institutions. Fifty years later, there is a new world. For better understanding of the new business model suggested by the authors, we have in brief, reproduced its main components (see the exhibits) .The authors have
identified what they called as the six orthodoxies that seem to reflect the present mind-set of the MNCs (or the corporate sector) * Assumption #1 the poor are not our target consumers because with our current cost structures, we can not profitably compete for that market. * Assumption # 2 the poor cannot afford and have no use for the products and ser vices sold in developed markets. * Assumption #3 Only developed markets appreciate and will pay for new technology. The poor can use the previous generation of technology.
Exhibit 1 : The World Economic Pyramid Annual per capita income* Tiers More than $20,000 1 $ 1,500 - $20,000 2&3 Less than $ 1,500 4
Exhibit 2 : D rivers of Innovation D rivers of Innovation Increased access among the poor to TV and information Deregulation and the dim inishing role of governments and the international aid Global overcapacity combined with intense competition in Tiers 1, 2 & 3 The need to discourage migration to overcrowded
Population in Millions 75-100 1,500 - 1, 750 4,000
Im plications for M N Cs Tier 4 is becoming aware of many products and services and is aspiring to share the benefits. M ore hospitable investment climate for M N Cs in developing countries and m ore cooperation from nongovernmental organizations. Tier 4 represents a huge untapped market for profitable growth M NCs m ust create products and services for rural urban centers populations.
Exhibit 3 N ew strategies, for the bottom of the pyram id Price Perform ance Product development M anufacturing Distribution Sustainability Reduction in resource intensity Recyclability Renewable energy
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Views of Q uality New delivery formats Creation of robust products For harsh conditions (heat, dust etc) Profitability Investm ent intensity M argins Volume
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Exhibit 4: The commercial infrastructure at the bottom of the pyramid
Now, let us discuss a few important components of the above exhibits. * Assumption # 4 The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and non-profits. * Assumption #5 Managers are not excited by business challenges that have a humanitarian dimension. information and also the deregulation and the diminishing role of the governments are considered very important to exert positive impact on the MNCs for the governments recommended in the NBM, is to unleash the market competitive forces so that efficient use of the resources by the private sector is ensured.
While these two drivers of Although their present income levels cannot innovation do really create support the consumption of most of the goods, a favorable business climate produced and supplied by the MNCs, it is the to the MNCs, it would be demonstration effect that is accentuated through imperative to look into aggressive adver tisements and marketing * Assumption #6 strategies, made these vulnerable sections of the their impact from a societal Intellectual excitement is society to reduce even their food expenditure and point of view. Take, for in developed markets. It increase their non-food expenditure, particularly instance, the TV and media is hard to find talented for the consumer goods. The house holds have information spent lesser amounts on vital items such as health accessibility to the Tier 4 in managers who want to and education. India. The media and TV work at the bottom of have had their impact the pyramid. their business. In the knowledge already on the poor at the bottom to of the pyramid. The rural poors The exhibits of the NBM are economy,accessibility information is closely linked to consumption pattern has changed shown below: the extent of digital connectivity remarkably in the recent years. Drivers of innovation in the country. It brings in rural Although their present income levels (Exhibit 2) transformation at the bottom of cannot support the consumption of From among the drivers of the pyramid as to appreciate the most of the goods, produced and innovation, it is the increased use of goods and services of the supplied by the MNCs, it is the access of the poor to TV and MNCs. The diminishing role of demonstration effect that is
FOCUS accentuated through aggressive adequately filled by the private economic reforms, unlike in India advertisements and marketing sector, due to high transactions and that has facilitated significantly strategies, made these vulnerable costs and risks. This means that for registering high growth rates. (Ch. sections of the society to reduce there is a need for a more active Hanumantharao, 2005). All this even their food expenditure and public sector role in coordination reveals that how much deregulation increase their non-food activities, joint financing, and and diminishing role of the expenditure, particularly for the building needed capacity to allow government should be considered consumer goods. It has been found the private sector to fill its role. good to the country and how it by the latest National Sample Public versus private sector roles stimulates the MNCs to expand their Survey (NSS 60th round) that the in the process of economic business in that country is the crucial share of consumer goods and development has received much point that should be looked into services in monthly consumption attention in the recent decades. from the countrys specific situation. expenditure of the house holds as Moving from a government In the Indian case, the governments a whole, has gone up from 14.1% controlled development strategy to present policy is to encourage publicin 1998 to 19.1% in 2004. Another a paradigm of market based private partnership in the economy important observation the survey growth requires a myriad of under certain conditions. makes is that the house Most of the MNCs are usually accustomed to Business Strategies holds have spent lesser producing the goods with western technologies (Exhibit 3) amounts on vital items only in which they have more expertise and The strategies for the such as health and try to marketing them in Tier 4 by aggressive bottom of the pyramid education. Because of the advertisements. For many MNCs it would be suggested by the authors in very difficult to bring out such changes. The media, the consumers at present technologies although not sustainable exhibit 3 do not seem to be the bottom of the pyramid in the long run, they endanger the welfare of altogether new. The are very much confused to the poor of Tier 4 in the short term. corporate world already distinguish between knows the subtleties of essential and not so essential type institutional changes in how the product development, of expenditure. The question is programs operate and are financed, manufacturing and distribution by whether such demand of the low how institutions are organised as means of their strenuous efforts of income groups i.e. Tier 4 is to attract the private sector. .Public R&D. The authors, in support of sustainable from the business point sector role should be focused on their view point, have given many core public goods science and examples of companies like HLL, of view? innovations, Nir ma, who have successfully The other driver of innovation in technology the NBM is stated to be information and dissemination, captured the Tier4 market in India deregulation and diminishing role infrastructure ser vices and through their innovative price, of the governments. While environmental conser vation. production and distribution deregulation and the diminishing (World Bank, 2004). It has been strategies. The selling of HLL role of the government is empirically found that for products in affordable small sachets necessary for the private sector to achieving faster growth rates, has been cited as a case in point. A grow, there are certain adversaries structural reforms should precede closer look into exhibit 3 reveals that in some parts of the less developed the phase of privatisation as in the even the present business models world. Diminishing role of the case of China. The rural social adopt most of these strategies to government in countries like Africa structure in China had undergone promote their business not only in has left a vacuum that has not been a radical transformation before rural markets but also elsewhere. In
FOCUS this exhibit issues relating to have given a good number of authors have exhorted the MNCs to sustainability seem to be more examples of the efforts made by find innovative technologies to do difficult to be achieved by the institutions as well as individuals business with Tier 4 by associating MNCs. As rightly pointed out in to create the buying power among themselves with the local people and their paper, sustainability needs the poor. The role played by the environment. It has been development of new technologies Micro Finance Institutions (MFIs) emphasised that MNCs must build that take into account the local in different countries including an organisational infrastructure to India, has been cited in this address opportunity at the bottom socio economic environment and context. Also the work of some of the pyramid. This means building resource availability. Since the NGOs in the developing goods and services that are countries. In this context, It should a local base support, reorienting marketed in Tier 1 are of high be noted that there has been R&D, to focus on the needs of the resource intensity (like the ones varying degree of success of these poor, forming new alliances, increasing employment intensity, and using more energy) they are not institutions in different countries. reinventing cost structures Despite sustainable in Tier 4 markets. While In a largely populated country like the various examples cited in support this can be viewed as a good India, the efforts of these of the new business model, suggestion for a Tier 4 The commercial infrastructure shown in there are certain hurdles to business strategy, most of exhibit 4 becomes viable only if there is in make fortune at the bottom the MNCs are usually place already the physical and social of the pyramid a real success. accustomed to producing infrastructure developed by the government. The much needed buying the goods with western Government policies should give top priority power cannot be created so technologies only in which to agriculture and rural development for easily for doing business with generating productive employment which in they have more expertise turn creates the buying power for the poor. tier4. For instance, in India and try to marketing them ( a country with a large in Tier 4 by aggressive institutions met with limited proportion of population at the advertisements. For many MNCs success only.For instance, in India bottom of the pyramid) the efforts it would be very difficult to bring the average loan size provided by put in by the central and the state out such changes. The present the MFIs is too little to alleviate governments, NGOs, and the technologies although not poverty. It has been the view of corporate sector met with very little sustainable in the long run, they some practitioners (Vijay Mahajan, success to generate gainful endanger the welfare of the poor 2005) that the micro credit in the employment to Tier 4. In respect rural areas should be integrated of rural credit with out collateral, the of Tier 4 in the short term. with a whole suite of insurance efforts of the NGOs and the micro The commercial infrastructure products covering life, health, crop finance institutions though laudable, at the bottom of the pyramid and livestock, besides a range of could not reach out the majority of (Exhibit 4) agricultural and business Tier 4.( a point already stated earlier). ser vices to Poverty and unemployment are the It has been stated that the success development borrowers in order to enhance very serious problems in largely of the MNCs depends on the commercial infrastructure at the productivity. It must be noted that populated countries like India. The if buying power is created, the success stories of some companies bottom of the pyramid (see other follow-up steps shown in the such as HLL, Nirma, Arvind mills Exhibit 4) .The most important commercial infrastructure would etc might provide the corporate aspect of it is to create buying be much easier to implement. sector with some business power for the poor. It happens Putting all the components of confidence to do business with the through a) access to credit and b) income generation. The authors their business model together, the Tier 4 to a very limited extent only.
FOCUS As already stated, the strategies the buying power for the poor. In per annum and the private organised adopted by these companies are this context, it may be stated that sector at 30% per annum, their not, in any way, new . Every the growth of agriculture sector in contribution to total employment companyIndian or foreign India has not been satisfactory in would increase hardly by 1.5 to 2 always tries to explore new markets the recent years despite many per cent of the total over the Tenth that are profitable to it and develop efforts put forward by the Plan (Planning Commission,2002) appropriate strategies . So far as the government. The reason given for The employment elasticities for the market at the bottom of the the poor performance of organised and unorganised pyramid is concerned, it is difficult agriculture is that there is no manufacturing sectors are 0.10 and for many big companies proper and adequate rural 0.31 respectively (Uma Rani,2004) particularly which show that the industries are particularly the western MNCs to infrastructure irrigation, credit and modern using more capital intensive methods introduce a paradigm shift away technology. Although agriculture of production. from the business models that have contributes only about a quarter of proved efficient and relevant to GDP today, nearly 60 % of the The World Bank (2005) has outlined their expertise. There are that more emphasis should be risks and uncertainties Switching from the existing best practices of given to the following business over to the new ones suggested in about the future, the NBM entails enor mous costs and agricultural activities in order particularly with Tier 4 sufficient lead time to realise its benefits. to achieve higher growth rates. market which impose There could be even huge sunk costs in such They include a) Knowledgeobvious limitations an exercise which the company shall have led growth and sustainable beyond which the MNCs to bear. production systems b) or the big corporate sector poor still depend on agriculture for Agricultural chains and markets c) could venture to step in Tier 4 employment. The government of Higher value crops, animals and fish business. India has taken up agriculture and d) Nontraditional exports and e) Constraints at the bottom of the rural development as major poverty focused within differentiated priority in the 10th five year plan. farm types and ecological conditions. pyramid As rural population depends on The employment guarantee It is necessary for the government agriculture, it is very important to scheme, recently introduced by the of India to look into these sectors note that unless agricultural growth central government, envisaged a and find the feasibility of opening legal guarantee of employment to some of the hi-tech areas for the is satisfactory, it is extremely every individual in rural areas for MNCs. difficult to sustain the market in 100 days in a year for doing casual Tier4 for the goods and services manual labour at the statutory All this is to say that it may take much of the corporate sector, minimum wage. As the minimum time for getting income generated at particularly of the MNCs. The statutory wage is far below the the bottom of the pyramid in the commercial infrastructure shown requirements of the households, developing countries. in exhibit 4 becomes viable only if even if this scheme is implemented there is in place already the physical efficiently, the income generated is The MNCs operations, as rightly and social infrastructure developed hardly sufficient to generate large said by the authors of the NBM, by the government. Government effective demand to the goods of should comprise of new alliances, policies should give top priority to the MNCs. The planning tasks that increase employment agriculture and rural development commissions special group on intensity, and reinventing cost for generating productive employment has noted that even structures etc.In recent years there are many activities, particularly by employment which in turn creates if the organised sector grew at 20%
FOCUS way of mergers and acquisitions entails enor mous costs and There is a perceptible change in the (M&A), opening wholly owned sufficient lead time to realise its life styles of rural and semi-urban subsidiaries and joint ventures by benefits. There could be even huge people and they demand for such which the MNCs could expand sunk costs in such an exercise goods which consume more their business to many developing which the company shall have to resources just like the tier 1 goods. Commenting on the economic countries. In this context, it should bear. be noted that the host countrys There is urgent need to achieve net reforms undertaken in India, rules and regulations act as a work-connectivity for the bottom Amartya Sen is very critical about the serious constraint to business in of the pyramid. It helps quick rural reforms that ignore the social that country. Even within the transformation that enables the objectives and the values. He says country, the private sectors ability MNCs or the corporate sector to we cannot understand the to expand its coverage is subject capture the market at the pyramid. requirements of reform without to governments regulations. These As of now, in many developing sorting out what social objectives and are the exogenous shocks to the countries including India the values should be promoted by public NBM in as much as the progress has been very slow. It is policy. It would be a great mistake to Governments policies do often possible to reduce the business take reform to some means-centered, goal-independent institutional change without prior notice. In this requirement that must context, the attitude of There is urgent need to achieve net work- be pursued without India versus China in attracting FDI is a case connectivity for the bottom of the pyramid. It helps asking any questions how that in point (though, in the quick rural transformation that enables the MNCs about recent years the or the corporate sector to capture the market at the institutional demand government of India has pyramid. As of now, in many developing countries would influence the lives been trying to attract including India the progress has been very slow. It of the people that are more FDI by is possible to reduce the business costs by extending involved. (A.K.Sen, 2005).Even in China introducing more e- commerce to the rural areas. where substantial FDI flexible policies). In addition, we should not forget the costs by extending e- commerce to has flowed in, there are problems of inequality and poverty. John Taylor conditions stipulated in many the rural areas. (2005) says that inequality is growing international trade agreements as also the continuous debates taking Titus Moser and Damian Miller in China. It has been stated in the place at the WTO between the (1997) concluded that MNCs are Correspondents report that the gap developed and the developing increasingly attracted to the LDCs between the haves and have-nots is countries and their impact on the based on the size of potential getting bigger. business of the MNCs. There markets, access to natural resources For the success of the NBM, it is could be conflicts of interest and lower production costs. These expected that the governments in the between the developing and the concurrent trends have resulted in developing countries adopt flexible developed countries. Taking into record FDI to LDCs. (But) the policies to attract more FDI into account these factors, the MNCs question is about how economic certain important sectors that are always guided by the growth in LDCs can be achieved generate large positive externalities. comparative advantage principle in a more sustainable manner But in reality the attitudes of the instead of developing a new model specifically, how economic growth governments excepting a few, may be be combined with for the poor at the bottom of the can environmental protection and such that the MNCs do not find it pyramid where the risks and greater social equity Although the attractive to do business with Tier 4 uncertainties are heavy. authors of the NBM exhort the in such countries. The restrictive Switching from the existing best MNCs to capture tier 4 without policies of the governments could practices of business over to the environmental damage, it is more be due to their social concerns that new ones suggested in the NBM easily said than done in practice. fall into the realm of political
FOCUS economy. The authors have mentioned the six orthodoxies (already stated above) to reflect the mindset of those MNCs who do not venture to do business at the bottom of the pyramid and exhorted them for a radical change. Similarly, even in the case of the governments, unless there is a change in the mindset of the bureaucracy and policy makers, it is difficult for the private sector including the MNCs to do profitable business with Tier 4. In India such constraints slacken the institutional and structural reforms which is why the MNCs or the corporate sector find it difficult to make fortune at the bottom of the pyramid. What is required is therefore, that the innovative strategies of the NBM are supplemented by innovative policy approaches of the governments to achieve sustainable business with social equity at the bottom of the pyramid.
governments policy toward attracting private investments, particularly from the MNCs so that the market at Tier 4 is developed. There are also constraints arising from WTO trade regulations, host countrys bureaucratic attitudes and environmental and social equity concerns. For the success of the NBM, the governments also should supplement the efforts of the private sector including the MNCs with innovative policy supports. As of now, it is not as easy to have access to the bottom of the pyramid as has been elucidated by the authors. *Management consultant, (former Head, Dept of Economics, University of Hyderabad. And Consultant, Asian Development Bank,)
Peter Drucker Post- Capitalist Society (New York- Harper business) as cited in Michael .j. Mazarr Global Trends 2005 St Martins press, New york, 1999 National Sample Survey (NSSO) 60th round G.O.I. 2004. Reforming Infrastructure: Privatisation, Regulation and Competition World Bank, 2004 Agriculture Investment Source Book World Bank 2005, P xxi CH. Hanumanth Rao Rural Transformation in China and IndiaA post reform Comparison Economic & political weekly, Aug 13, 2005, Vijay Mahajan From Microcredit to Livelihood finance ISB insight, Sept 2005.
A. K. Sen Three Rs of Reform This paper is meant to articulate Economic Political weekly, May 7further discussion on this 13; 2005, p 1971 important area of research. Titus Moser and Damian Miller MNCs impacts on the developing Notes and references Conclusion The concepts of the paper by world (G M I, Issue 19) Cambridge While there could be a broad University Press, 1997 consensus of the strategy C.K.Prahalad and Stuart Hart were envisaged in the new business articulated in different articles that Uma Rani and Jeemol Unni model suggested by C K Prahalad appeared in Harvard Business Unorganised and Organised Manufacturing in India potential and Stuart L.Hart in their paper Review. See, for instance, The Fortune at the Bottom of the C.K.Prahakad and Kenneth for Employment Generating Pyramid there are certain practical Liberthal The end of Corporate Growth Economic & Political Weekly Oct 9-15, P 4568. difficulties (constraints) in Imperialism Harvard Business Planning Commission achieving the same. We have tried Review, JulyAug, 1998 Employment Generating Growth: to identify such constraints, keeping in view the Indian Stuart Hart Beyond Greening: Special group in targeting ten million situation. One of the important Strategies for a sustainable world Employment opportunities per year constraints is how to create the Harvard Business review, Jan G.O.I. 2002. necessary buying power at the Feb, 1997 John Taylor Inequality in China bottom of the pyramid and its Yujiro Hayami Development Correspondents Report (25 th Sept sustainability depends on the Economics (From the poverty to 2005) Also see for more details progress of agricultural growth. the wealth of Nations) 2nd edition, www.abc.net.an/correspondents/ Other constraints include the Oxford, 2001 content/2005.
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Exploring Sources of Capital for Start-ups

Abstract Raising funds for a new business is one of the most common issues confronting entrepreneurs. Before trying to raise funds, start-up entrepreneurs need to decide on two things. First, whether it is possible to operate the venture using bootstrapping technique. Second, whether to opt for bank loan, venture capital or both for financing the new business. The author makes a comparison of bank loan and venture capital using various aspects like simplicity, affordability, creditworthiness, and regulatory implications. The author discusses primarily four aspects pertaining to pre-requisites for exploring alternative sources of financing of new businesses viz. need for funding, factors facilitating funding, alternate financing patterns, and comparison of bank loan and venture capital. The article emphasises the importance of a business plan for entrepreneurs and mentions the kind of information that should appear in a business plan. It suggests that a barter strategy coupled with the ability to get critical information from the markets can be used in some situations to start a new business, especially in the event of inadequacy of capital and relationships with possible bulk and individual consumers. The article recommends tapping all
- C. Venkata Ramana*
possible sources of capital and not demanded by financing agencies and just trying to tap the best source investors, which are as follows: of capital. (1) Well-rounded team, relationships, I. Introduction: growing market, solid business plan, At least there is one thing that most excellent product/service, focused entrepreneurs, venture capitalists, execution, proper targeting of consultants and researchers would investors, concise and impressive agree about new businesses. It is pitch, passion for the venture and HUMAN RESOURCE superior business model are the ten DEVELOPMENT ! important components critical to start-up success that will help entrepreneurs to get funding for new businesses. (2) Usually, it is easier to get equity financing than a bank loan. (3) On the whole, a bank loan is preferable to equity financing. (See Table 1 for a comparison of bank loan and venture capital.) (4) It is relatively easier to get development capital than to get seed capital.
Rush to the well, shout slogans, disrupt proceedings and seek adjournment. Is that all?
that adequacy and timeliness of capital enhances the success rate of new businesses. Affordability of the cost of finance is another dimension. Funding for new businesses can come from a variety of sources, the most popular being venture capital firms and banks. Before entrepreneurs aspire to get funding for a new business, there are at least four important things to be noted by entrepreneurs, as
II. Choices of Financing: There are two major types of financing a venture viz., debt financing and equity financing. Debt financing usually involves loans. Debt is repaid according to a set schedule of principal and interest. Equity financing involves obtaining financing by offering a piece of the business to venture capitalists (VCs) or private investors. In some cases a combination of both equity and debt can also be used for financing a new business. See Table 1 for a comparison of bank loan and venture capital.
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* General Manager, Global Aviation Development Society, Guntur (Andhra Pradesh).

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Table 1: Bank Loan Vs. Venture Capital Bank Loan 1. Entrepreneurs seeking bank loan need not always have proven track record. 2. Bank loans are available for entrepreneurs doing business solo or doing business with a team. 3. In general, bank loans are available for any industry/sector. 4. Getting a bank loan is a faster process compared to getting venture capital. 5. Banks play little or no role in running the company. 6. Taking a bank loan allows the entrepreneur to take the drivers seat and not to answer any investors. 7. Overall, bank loan is cheaper compared to venture capital because the entrepreneur owes only principal, interest and fees. Furthermore, the entrepreneur can retain ownership stake in his or her company. 8. Sources of debt financing include banks, finance companies, credit card companies, and private corporations. 9. Increases creditworthiness and increases the entrepreneurs chances of negotiating favorable loan terms in future. III. Getting Funding from Venture Capital Firms: The following are some of the critical components of start-up success that enhance the chances of getting funding from venture capital firms:
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Venture Capital 1. In general, entrepreneurs seeking venture capital should have proven track record. 2. In general, venture capital is available for entrepreneurs doing business with a balanced team. 3. In general, venture capital firms provide funding only for specific industries/sectors where innovative approaches are adopted. 4. Getting funding through a venture capital firm is a slow process. 5. Active venture capitalists get heavily involved in the companys operations. 6. The entrepreneurs have to answer the investors and be accountable to them. 7. Venture capital is not cheap. The investors are entitled to a share of your businesss profits for a long period. The entrepreneurs may lose control over his or her company. 8. Sources of venture capital include venture capital firms, corporations, friends and relatives. 9. An earlier successful deal in raising venture capital does not necessarily increase the entrepreneurs credibility. product, they will make a switch, so what good is it to understand the product that they are talking about in the first place. 1 Many start-up entrepreneurs articulate the idea of building a great team but they delay the process until problems arise. A great team not only enhances the
(i) Well-rounded Team: It is not an exaggeration to say that a great team will give more credibility than any other start-up essentials. Arthur Rock, a venture capital legend said I invest in people, not ideas. If you can find good people, if they are wrong about the
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chances of getting funding but also gives visibility to the start-up. Attracting highly talented employees and getting orders through relationships are some of the other advantages of a great team. The following are some of the things that are important for entrepreneurs planning to form a great team: * Choose team members with complementary skills; * Inspire and encourage team members; * If necessary take the help of mentors and consultants to resolve team issues; * Assign roles to team members based on their skills and personalities. (ii) Solid Business Plan: A business plan is like a flight plan. An experienced pilot may finish a long cross-country flight in a wellknown territory without even a flight plan. However, in case of rough weather, the pilot would swerve from his path, and may have to take the help of air traffic control (ATC) to reach his destination. There is a debate on the preparation of a business plan. Some entrepreneurs, consultants, and researchers argue that a business plan is of little use for an entrepreneur starting a new business. On the other hand, some VCs, business consultants and researchers argue that a business plan is of immense benefit to an entrepreneur starting a new business. See Table 2 for important questions to be answered about the business, and Table 3 for important personal questions to be answered about the founders.
Table 2: Important questions to be answered about the business: 1. Who is the new ventures customer? 2. How does the customer make decisions about buying this product or service? 3. To what degree is the product or ser vice a compelling purchase for the customer? 4. How will the product or service be priced? 5. How will the venture reach all the identified customer segments? 6. How much will it cost (in time and resources) to acquire a customer? 7. How much does it cost to produce and deliver the product or service? 8. How much does it cost to support a customer? 9. How easy is it to retain a customer? Source: Price, Robert W. (ed.) (2001), Annual Editions Entrepreneurship 01/02, McGraw-Hill/Dushkin, Guildford, Connecticut, USA, page 108.
Table 3: Important personal questions related to founders to be answered : 1. Where are the founders from? 2.Where have they been educated? 3.What have they accomplished professionally and personally in the past? 4. What is their reputation within the business community? 5. What experience do they have that is directly relevant to the opportunity they are pursuing? 6. What skills, abilities, and knowledge do they have? 7. How realistic are they about the ventures chances for success and the tribulations it will face? 8. Who else needs to be on the team? 9. Are they prepared to recruit high quality people? 10. How will they respond to adversity? 11. Do they have the mettle to make the inevitable hard choices that have to be made? 12. How committed are they to this venture? 13. What are their motivations?
Time Management
A husband and wife entered the dentists office. The husband said, I want a tooth pulled. I dont want gas or Novocain because Im in a terrible rush. Just pull the tooth as quickly as possible. Youre a brave man, said the dentist. Now, show me which tooth it is. The husband turns to his wife and says, Open your mouth and show the dentist which tooth it is, dear.
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FOCUS (iii)Relationships: Relationships help start-up entrepreneurs in the task of raising funds in many ways like providing visibility to the firm, providing good advice, bring introductions to partnerships, and get recommendation letters to venture capital firms. Furthermore, relationships enable start-ups to get a lot of media attention.
(iv) Growing Market: It is easier for start-ups to thrive in an environment created by market growth. Real examples of customer opportunities and specific needs are a stronger evidence and are more interesting than a consultants projection of a market size. Miscalculation of a market size is one of the most common mistakes committed by start-up entrepreneurs. Furthermore, a miscalculation of market size obviously leads to miscalculation of revenues, and a faulty pricing strategy. Start-up entrepreneurs seeking funding from venture capitalists should target a growing market. (v) Proper Targeting of Investors: Most start-up entrepreneurs have a misconception that money is the only resource that venture capitalists provide to the venture. Furthermore, very few start-up entrepreneurs try to know the detailed profile of the targeted venture capital firms, their successes and specialities. Entrepreneurs must be able to convey how the targeted venture capitalists can bring their expertise and entrepreneurial experience into play. Last but not the least, start-up entrepreneurs must be
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able to state why their opportunity involved in the operation of the is a good fit for the venture business. capitalists and how they can help (ix) Focused Execution: Research the entrepreneurs succeed. shows that successful companies (vi) Concise and Impressive differ from me-too companies in Pitch: Venture Capitalists are focused execution. Only an extremely busy people; and start- unwavering commitment to the goals up entrepreneurs need to create a of the organization coupled with a compelling summary of their focused execution will provide the business opportunities for best results. Venture Capitalists presentation within 60 seconds or recommend entrepreneurs to in less than one page. implement a particular strategy that Avoiding jargon and quickly has been first planned before the coming to the point is a must for venture was launched. However, entrepreneurs dealing with venture based on the changes in the business environment, venture capitalists may capitalists. approve a change in the strategy to (vii) Passion for the Venture: be adopted for running the business. There are a lot of entrepreneurs Sometimes a change in strategy may competing for venture capital. A be necessary to continue a successful typical venture capital firm receives business operation but focused about 3000 proposals in a year. execution is what is most important Start-up entrepreneurs can to venture capitalists. increase the chances of being one of the very few that receive venture (x) Excellent Product/Service: capital by demonstrating some Entrepreneurs should ensure that the special qualities. All other things products/services offered by their being equal, smart venture companies are of a superior quality capitalists prefer to work with and should have competitive entrepreneurs having passion and advantages over similar products excitement for the venture. In available in the market. The real test venture capitalists opinion these of the skills and knowledge of are the entrepreneurs who will entrepreneurs is to build a high level succeed. of customer loyalty such that even (viii) Superior Business Model: in the case of a tough competition Irrespective of the industry chosen in the market, the venture can to operate a business the success command a high level of sales in the of a venture is linked to the market. Venture Capitalists place a business model. An entrepreneur high value on the quality of the seeking venture capital must be products/services and competitive able to come up with a superior advantages that the products/ business model that explains why services enjoy in the market. the strategic direction chosen by IV. Need for Funding: the fir m makes sense. There are at least six factors that Furthermore, only a superior influence the need for funding both business model can address the in ter ms of alternatives and uncertainties and complexity quantum. These are discussed here.
(i) Vendor Reliability: Vendor reliability is a very important factor that decides the need for funding. Sales during the start-up stage of a business depend to a large extent on vendor reliability. Usually customers do not feel comfortable to purchase from start-ups. One way of overcoming this problem is to use relationships and contacts to market a product or service. This method is particularly effective in the service sector. Another way is to get orders from customers with the condition that customers can pay for a product or service after receiving it. Some of the factors that enhance a customers willingness to put his or her resources to risk are as follows:
* Relationships; * Public opinion about the industry; * Past experiences; Past Experiences: Irrespective of * Urgency or time constraints; the industry, sometimes customers * Availability of product/service. may not be willing to buy from start-ups. These customers get a Relationships: Inspite of the risk feeling of security of contract only and complexities involved in by buying from established dealing with a start-up, customers companies. feel assured about a product or service that is bought through a Urgency/Time Constraints: relative, friend or acquaintance. When customers are in a hurry or This will enable start-up subject to time constraints, they entrepreneurs avoid two feel comfortable to purchase from commonly asked questions by start-ups. In some cases, customers customers, viz. Why should I may not feel worthwhile to spend buy from you?, and What is the more time trying to procure from guarantee for my money?. established companies when Anyway, during the start-up phase, similar products or services are an entrepreneur needs to have available from a new business. adequate funds to operate the Availability of Product/Service: business because there is a low To some extent, the willingness of possibility of getting pre-payment customers to deal with start-ups from customers. depends on the availability of a
Public Opinion about the Industr y: There are certain businesses which are very easy to start. These businesses need little capital, no talented employees, no huge infrastructure and other resources. However, customers have a bad opinion about the players in the industry, especially, new and upcoming players. In India, some of the industries about which people have a bad opinion are overseas employment, real estate, chit funds and capital markets. Customers can recall scores of examples about companies that have cheated people, and ran away with the money collected from the public. In summary, most customers do not trust entrepreneurs starting businesses in the above-mentioned industries unless the entrepreneur is a well known-public figure or had previous track record.
FOCUS product/service. In some cases, even if a product/service is available in the market, the search costs associated with the product/service will affect the purchase decision of customers. Customers prefer to avoid spending time, effort, and money to locate a vendor. In such a case, customers will be willing to buy from start-ups.
(ii) Target Market: A start-up entrepreneurs target market is one of the factors that will decide the need for funding. Irrespective of the method of selling, a companys sales expenses increase as the size of the target market increases. Personal selling, advertising, or selling through intermediaries in large territories will involve higher expenses than doing the same in a local market. Selling to some segments like corporate houses and government establishments will involve many sales calls before the orders are obtained; and the payment made to the business. Furthermore, in the case of a start-up, sales staff need to spend a lot of time and effort to identify prospects, which in turn involves expense. (iii) Location: The success of businesses in industries like a hotel, restaurant, retailing and consulting depends to a large extent on the location of the business. Entrepreneurs have to pay upfront money for buying or leasing a building. Thus, location is also an important factor that determines the need for funding. (iv) Manpower Requirement: Industries like computer software, hardware, electronics, construction and automobiles need highly talented employees. Furthermore, training and retaining employees involves
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FOCUS heavy expenditure. Thus on whether an entrepreneur is manpower requirements also dealing with a product or service, the level of funding can be decides the need for funding. (v) Regulator y Complexity: assessed. In general, it is relatively Some industries like airlines, easier to get pre-payment for a pharmaceuticals and defence service rather than a product. Also equipment involve regulatory the type of selling along with the costs. Resources like time, money terms and conditions of the sale, and effort are needed in huge controls the quantity of funds that quantity for operating businesses are necessary to operate a business. in these sectors. It is obvious that In the case of sales made through the regulatory costs involved in relatives and friends, it is possible operating these businesses decide to get pre-payment. Even in the case of selling through the need for funding. intermediaries, it is possible to get (vi) Product/Service: Depending pre-payment. Selling a product/
Table 4. Partial list of Alternate Financing Methods 1. Use personal credit card 2. Lease rather than purchase equipment 3. Obtain advance payment from customers 4. Deliberately delay payments to suppliers 5. Choose customers who pay quickly 6. Hire temporary personnel 7. Rely on income from outside employment (i.e. do a part-time job and generate some income) 8. Borrow equipment 9. Buy on consignment from suppliers 10. Obtain loans from relatives/ friends 11. Share equipment with other businesses 12. Run business from home 13. Share employees from other businesses 14. Share office space 15. Work out barter arrangements with any suppliers 16. Adopt cost cutting measures while maintaining excellent quality of your product 17. Try to get any business incubators who would be interested in investing in your business 18. If possible, get a collateral loan by using unpaid accounts payable
service without pre-payment from the customer needs the entrepreneur to have a larger quantity of funds. V. Alternate Financing Methods: Entrepreneurs who are starting new businesses can adopt some alternate financing methods in the event of not obtaining funding from any source. A partial list of alternate financing methods are shown in Table 4. See Table 5 for important sources of infor mation and guidance pertaining to venture capital on a global level. Table 5. Sources of Infor mation and Guidance Pertaining to Venture Capital 1. Indian Venture Capital association (http://www.ivca.org) 2. National Venture Capital Association (http://www.nvca.org) 3. Venture Capital Institute (http:/ /www.vcinstitute.org) 4. TSJ Media (www.tsjmedia.com) 5. http://www.vcexperts.com 6. http://www.vcindia.com 7. Asian Venture Capital Journal (http://www.asianventure.com) 8. Center for Venture Education (http;//www.kaufmanfellows.org) 9. Venture Capital Journal (http:/ /www.venturecapitaljournal.net) 10. Wayne Brown Institute (http:/ /www.venturecapital.org)
There are no external constraints to Indias growth. Whatever constraints are there are internal.
- Dr. Manmohan Singh, Prime Minister
Growth Constraints
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He built a billion dollar business from Scratch !

It is worth mentioning about how extraordinary entrepreneurs tackle the task of entering a new business and financing it. Mark H.McCormack in his book What they dont teach you at Harvard Business School writes about a Venezuelan businessman by name Raphael Tudela. Who had built a billion dollar business from scratch in less than twenty years. See Box 1 for Raphael Tudelas story.
Several years ago I met a Venezuelan oil and shipping businessman by the name of Raphael Tudela. As I have come to know, respect, and admire him, he had impressed me as the quintessential street-smart executive. He has built a billion-dollar business from scratch in less than twenty years. He seldom deals in written contracts because his word is his bond. He has always made his own breaks. And his principal business, which is oil speculation, relies on his constant process of seeing opportunities where no one else does and taking advantage of them.
In other words, Raphael Tudela is a genius at taking the edge. One of the best illustrations of this- of how he has the facts, knows what people want, and figures out a way to give it to them- is the story of how he got into the oil business in the first place. In the mid-1960s, Tudela owned a glass manufacturing company in Carcas, but, a petroleum engineer by training, he longed to be in the oil business. When he learned from a business associate that Argentina was about to be in the market for a $20 million dollar supply of Butane gas, he went there to see if he could secure the contract. If I could get the contract, he told me, then Id worry about where Id get the butane. When he a glass manufacturer operating alone with no previous connections or experience in the oil business-got to Argentina, he discovered his competition was formidable: British Petroleum and Shell Oil. But feeling around a little bit he also discovered something else; Argentina had an oversupply of beef, which they were desperately trying to sell. By knowing this one fact- his first edge, so to speak-he became at least an equal to his Shell and BP. If you will buy $20 million of butane from me, he told the Argentine government, I will buy $20 million of beef from you. Argentina gave him the contract contingent upon his buying the beef. Tudela then flew to Spain, where a major shipyard was about to close down from lack of work. It was political hot potato and an extremely sensitive issue for the Spanish government. If you will buy $20 million of beef from me, he told them I will build a $20 million super tanker in your ship yard. The Spanish were ecstatic and delivered a message to Argentina through their ambassador there that Raphael Tudelas $20 million of beef should be sent directly to Spain. Once again he had found the edge and taken it. Tudelas final stop was in Philadelphia at the Sun Oil Company. If you will charter my $20 million supertanker which is being built in Spain, he told them, I will buy $20 million of butane gas from you. Sun Oil agreed, and Raphael Tudela fulfilled his desire to get in the gas and oil business.
Conclusion: Getting funding from venture capitalists or banks is not a matter of luck. Entrepreneurs should make focused and methodical efforts to obtain funding for their new ventures. Banks and venture capital firms will evaluate the proposals submitted by entrepreneurs thoroughly before making a decision to fund new businesses. Entrepreneurs should realize the importance of business plans and make sure that they include critical information about the venture in the business plan. Entrepreneurs can increase the chances of getting funding for their
new ventures by starting out with the critical components that are necessary for the success of their ventures. Entrepreneurs must not only gather critical information necessary for their ventures but also use that information to their advantage. If possible, entrepreneurs should try to get prepayment or use barter strategy (See Box 1 for the story of Raphael Tudela) as a source of financing or to enter a new industry with very little money and relationships. Entrepreneurs should be able to make the appropriate choice among the options of financing namely
bank loan, venture capital, and a combination of bank loan and venture capital for financing their new ventures. Most importantly, as Michael Dell (founder of Dell Computer Corporation) said The secret of startup success is not to tap the best source of capital but to tap all sources of capital. 2 References
1. Price, Robert W. (ed.) (2001), Annual Editions Entrepreneurship 01/02, McGraw-Hill/Dushkin, Guildford, Connecticut, USA, page 107-108. 2. Source: McCormack, Mark.H (1984), What they dont teach you at Harvard Business School, Bantam Books, New York, pp. 54-55.
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Foreign Capital and Investment in India

Here we are publishing a two-part article on financial sector and foreign capital, each part written by different persons. The first part describes the components of the financial sector, importance of FDI, its slow growth in India, its computation and what to do to get more FDIs. The second part goes into the facts and figures since 1992-93 of foreign investments in India, and gives a brief picture of component-wise, country-wise and industry-wise actual inflow of FDIs with cursory observations. Both the parts together throw considerable light on the subject.
PART-1 FDIs in Financial sector the thrust areas for growth

- G. Ravi Kumar - G. Surender Introduction Todays economic environment is characterized by change and complexity. To deal with concurrent challenges that characterize the current environment more and more resources have to be utilized. Even today, much of the resources remain un-harnessed for want of investment, though the savings rate in India is around 24% of Gross Domestic Product ,investment rate is just only 23.3%, leaving a resource surplus of 0.7%. Even though Indian market is being opened up to several foreign investors, and several companies had set up operations in India to cater to the Indian market, still the growth of our economy and development is moving in a very slow pace compared to many developing countries.
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To overcome this, there must be free and unrestricted flow of capital in and out of country. The ever-increasing integration of world capital markets, one of the key criterions for international financial integration, is based on movement/ co-movement of interest rates in countries over time and their comparison in terms of convergence or having a common trend. Moreover, the inward flows are promising in India to accord Foreign Direct Investment a role in the development process due to the large market size and potential, the skilled labor force and low wage cost. In its efforts to bring the FDI into alignment with international best practices, the Government, instead of merely taking the equity component into consideration, has now decided to broaden the parameters where financial sector has been opened up.
Financial Sector in India 3 Financial sector refers to the sector, which is engaged in financial businesses by acting as an intermediary between the savers and investors and providing financial services. This sector comprises a variety of financial institutions such as commercial banks, IBF operators, finance companies, credit finance companies, securities companies, life insurance companies, general insurance companies and stock markets. India has one of the most developed financial markets in the developing world. Tremendous scope exists for both banking and non-banking financial institutions of other countries. For example, the insurance sector, nationalized since 1971, has been opened up, and top companies from the United Kingdom and the United States, among others are already active in Indias financial markets.
In addition, Foreign Institutional Investors (FIIs) have been allowed to invest in the stocks and securities markets with rights of full repatriation and withdrawal. Their presence has added a new dynamism to the market. India already has foreign exchange reserves of US$27 billion which is considered very comfortable, but the country needs to use foreign skills and networks to be able to manage the huge sums for its development needs. Local financial institutions such as the Industrial Development Bank of India, ICICI, Industrial Finance Corporation of India, Unit Trust of India and the Shipping Credit and Investment Corporation of India have raised billions through the sophisticated financial instruments including Deep Discount Bonds. Indian firms are showing interest in increasing Global Depository Receipts (GDR) listed in London. American institutions are trying to promote American Depository Receipts (ADR) listed in New York. After much dithering, India has finally opened up its financial sector to private and foreign investors. Foreign Institutional Investors (FIIs) are permitted to buy or sell treasury bills and government securities in both primary and secondary markets within overall approved debt ceilings. Authorized Dealers have been permitted to provide forward cover to FIIs in respect of their incremental equity investment in India. Transactions
among FIIs with respect to Indian stocks will no longer require post facto confirmation from the Reserve Bank of India (RBI). 100 percent FII debt funds have been permitted to be invested in unlisted debt securities of Indian companies. The aggregate ceiling for investment in a company by all NRIs/PIOs/OCBs through stock exchanges has been made separate and exclusive of the investment ceiling available for FIIs. Investment limit by a single NRI/ PIO/OCB has been enhanced from 1 percent to 5 per cent of the paid up capital. Aggregate investment ceiling for NRIs/PIO/ OCBs has been raised from 5% to 10% of the paid up capital of a company. In the case of listed Indian companies the ceiling can be raised to 24 per cent under a General Body Resolution. NRIs/ PIOs/OCBs are permitted to invest in unlisted companies subject to the prevailing norms, procedures, and ceiling applicable in case of listed companies. On the other hand External Commercial Borrowing (ECB) is deployed for project related rupee expenditure in all sectors subject to certain conditions. The Government has delegated ECB approvals to RBI up to US$ 10 million under all the ECB schemes. ECB eligibility under the scheme for exporters has been raised to three times the average export performance during the last three years subject to a maximum of
FOCUS US$ 100 million. Average maturity requirement for ECB under the longterm maturity window, which is outside the ECB cap, have been reduced. Domestic rupees denominated structured obligations have been permitted to be creditenhanced by international banks/ international financial institutions joint venture partners. Prepayments of ECB by Indian corporates have been allowed if this is met out of inflow of foreign equity.
In the light of requirements of financial sector, the ongoing consolidation of financial institutions is one of the most notable contemporary features of the financial landscape both within and across many industrial countries. In recognition of this fact, and its potential implications for public policy in a variety of areas, in September 1999 Finance Ministers and Central Bank Governors of the Group of Ten asked their deputies to conduct a study of financial consolidation and its potential effects. FDIs in Financial Sector Though financial globalization has brought considerable benefits to the economy and to investors and savers, it has also changed the structure of markets, creating new risks and challenges for markets, proliferation of new financial products, rapid dematerialization of financial transactions. The emerging deregulation of financial institutions demonstrate the importance of the financial sector in the development
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FOCUS process of any modern economy. in the case of Bonus or Rights Today India is lagging behind in issue of shares, or on genuine manufacturing skills while excelling business reorganizations duly only in ser vices and business approved by the High Court.
process outsourcing. In sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery India can match the best in the world. Where as India is having the necessary skills and positive environment and attitude, it is lacking investment and better technology. Foreign Direct Investment (FDI) has become an integral part of the economic strategy of both the central and the state governments in India. India has an open system with social and political values, and a regulatory environment that provides comfort, long-term stability and security to the foreign investor. As FDI is permissible under Nonbanking Financial Services, which includes Credit Card Business and Money Changing Business, Multilateral Financial Institutions have been allowed to contribute equity to the extent of shortfall in NRI holdings within the overall permissible limit of 40 per cent in private sector banks. FDI up to 49 per cent equity has been allowed subject to licenses. Unlisted companies are permitted to float Euro issues under certain conditions. End-use restrictions on GDR/ADR issue proceeds have been removed except those on investment in stock markets and real estate. Indian companies are permitted to issue GDRs/ADRs
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Indias FDI figures are underestimated because of the exclusion of certain components that are included by International Monetary Funds (IMFs) definition. But indiscriminate across-the board alignment with the IMF definition is not meaningful either India needs to update the FDI definition in certain aspects but not in all even if that understates inflows. In fact, India has been considered an underachiever in attracting FDI. On the other hand, it has been pointed out in the FDI literature that Indian FDI is hugely underreported because of nonconformity of Indias method of measuring FDI to the international standards. While the alignment of the Indian FDI with the international norm narrows down the gap of FDI in India, merely accomplishing this is not enough to close the actual difference. Together with the ongoing attempts with the global standards, an urgent need is there in India to create a conducive investment climate to attract larger sums of FDI from the multinational companies. The academic literature acknowledges that in terms of developing countries FDI offers a host of benefits. FDI plays an important role in encouraging economic growth in many ways:
modern technology is transferred through investment flows to individual firms and this has a spillover effect into the wider economy. International investment projects bring along management expertise, skills and high level training and in fact it is much easier to access global markets and international sources of finance. Due to competition from multinational subsidiaries, FDI leads to an increase in productive efficiency. FDI benefits the host country on a macroeconomic level as well. The Balance of Payments (B0P) improves because of the inflow of investment funds and output and employment grows faster due to increased levels in savings and investment. Consumers also benefit from FDI as goods and services are competitively priced and there is a greater variety of goods and services offered with higher standards of quality. It is clear that India needs FDI now as it needs to boost the economic growth which is stuck at 6.5% (200405). However, 8% growth is forecasted for the current year. A bigger economic revival is possible if money, technology and human expertise arrive from abroad on a much larger scale than it has been coming in the last few years. As the eighties progressed, commercial banks lending to fund economic growth in the third world countries declined. the donors in the West promoted FDI. On the contrary as the Asian countries (with the exception of India) understood this
change and devised rules and regulations to attract it the donors in the West promoted FDI. India received a meager $4.3 Billion. Although, Indians are rejoicing at this amount, which is 40% higher than previous years, actually it is a drop in the bucket. Slow Growth of FDI In 2000-01, exports as a proportion of sales among a sample of 400-odd foreign direct investment (FDI)-controlled firms in India was just 11.6 per cent. And of the funds utilized by these FDI companies, 40 per cent went into acquisition of gross fixed assets such as plant and machinery. Compare this with the corresponding ratios in a similar RBI survey of nearly 2,000 public limited Indian companies. In 200001, exports as a proportion of sales was higher at 12.6 per cent and a much larger proportion of funds, 48.9 per cent, was used for the acquisition of gross fixed assets. In other words, Indian companies are showing a greater export focus than foreign firms and they are also investing more in plant and machinery. This was not unique to 2000-01. The gap, if anything, was larger in 1999-2000 and this was probably the case right through the 1990s. FII inflows are surging while FDI levels are languishing below potential. To raise FDI levels, we must address concerns of flagship foreign ventures- why is FDI only trickling into India? Poor infrastructure is a factor cited by potential investors.
FDI and that used by the RBI for computational purposes. In fact, compared to the international standard, the Indian FDI statistics appears to be limited because it includes only one component foreign equity capital reported on the basis of issue/transfer of equity of preference shares to foreign direct investors. Some of the principal components that India excludes from the IMF definition while estimating actual FDI inflows are: Reinvested earnings by foreign companies, proceeds of foreign equity listings and foreign subordinated loans to domestic subsidiaries as part of intercompany debt transactions, overseas commercial borrowings by foreign direct investors in foreign invested firms non-cash acquisition of equity, investment made by foreign venture capital investors, earnings data of indirectly held FDI enterprises, control premium, noncompetition fee etc., as per IMF definition, which are normally included in other country statistics. all of these account for a massive underestimation of FDI in India and therefore with appropriate adjustment consistent with IMF standards, the FDI data in India could be substantially enhanced.
FOCUS the stock of FDI considerably. However, from a technical point of view, it is well recognized that it is quite difficult to capture reinvested earnings. This is mainly because such transactions do not actually take place and thus have to be imputed in the balance of payments statistics. However, the understatement of the total and reinvested earnings can be prevented by the inclusion of statistics regarding the indirect ownership in subsidiaries, associates and branches, etc.
Requistes for FDI In order to gain some advantage over the other developing countries, India has to take some decisive steps like becoming more businessoriented and having more FDIfriendly policies. FDI procedures must be easier and decisions must be taken quickly. Besides, it has to create more flexible labor laws, a better labor climate and better entry and exit procedures for businesses. The Indian business networks abroad should make significant investments in mainland. Overseas Indians should try to be more entrepreneurial, enjoy family connections and have interest and financial capability to invest in India and when they do, they should receive red-carpet treatment. The government needs to focus on a rationalization of the import duties and taxes to improve the competitiveness of the manufacturing sector. The government needs to improve the infrastructure of everything from roads to telecommunications. It also needs to consider stimulating the demand side of the equation by lowering duties and taxes that make
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Reinvested earnings, which are part of foreign investor profits that are not distributed to shareholders as dividends and are reinvested in the affiliates in the host country. Since India has had foreign companies In addition, there are striking for decades and many of them elements of non-conformance have reinvested heavily over the between the IMF definition of years, quantifying this would boost
FOCUS it very expensive to buy Indian goods. Indias tariff structures make it difficult for companies based in India to compete in a world market and that, as a result, large US companies are not looking on India. Indias average import tariffs exceed 32%, more than three times higher than many other Asian economies.
Many developing countries see export-oriented foreign direct investment (FDI) as an important tool for strengthening their export competitiveness, particularly in knowledge-based industries. Policy reforms are required at the state level to make the FDI process more efficient and at the central level to reduce ground level hassles faced by foreign investors, India could be marketed better as an investment destination; this could involve setting up an investment promotion agency to provide information to potential investors on opportunities that it offers. The government should continue with export promotion schemes, but target the schemes more efficiently towards inducing foreign affiliates to diversify into the global market. The invested earnings could also be captured through appropriately designed surveys by government authorities. The non-cash acquisition of equity, which is in the form of tangible and intangible components such as provision of capital equipment, technology and know-how, brand name, etc., should be included in Indias FDI inflows. This is because the noncash flows have the potential to generate direct and spillover benefits similar to those anticipated
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from FDI in the form of equity flows, and the investment made by foreign venture capital investors should be made part of Indias FDI. It has been pointed out that hundreds of millions invested through the venture capital route do not form part of the FDI; if adjusted it could substantially enhance FDI inflows.
stable financial system, sound economic policies, rule of law and political stability, are important requirements for India to build a strong economy. To reduce Indias vulnerability due to international financial crises, it has to promote the financial sector.
References * FDI Needs Micro-Micro ReformsSumit K. Manjumdar The Hindu Concluding Remarks To develop with other countries Business Line-Tuesday August2, India must develop a strategic 2005. partnership covering not only * For More Growth, Get More FDIpeace and security, but close trade T.C. A. Ramanujam The Hindu and commercial ties; a conducive Business Line-Friday July 15, 2005. policy environment to leverage the * FDI In Real Estate Bogged Down inherent strengths of each others By Ambiguity In Norms: FICCI socio-economic systems, building Sur vey-Bureau New Delhi-The stronger physical and virtual Hindu Business Line July 14, 2005. networks; integrating the markets and nurturing shared values. * Foreign Investment in Retailing Reforms aimed at opening up and Sector Dr. Arvind Virmani, Director expanding its participation in the & Professor, ICRIER and Mr. Vipul global economy and achieving high Bhatt, Consultant, ICRIER and Ms. growth rates through trade Nitisha Patel, Research Assistant, ICRIER- Source google net. might be very helpful to India. What is, therefore needed, is to for mulate and implement a determined and differentiated approach to reviving and strengthening ties with other countries. Launching of such an approach is long overdue for India to capture the potential gains available from these ties. The promising financial sectors in India are capital markets, venture banking, consumer financing, mutual funds and infrastructure financing. To have a strong and solid economy it requires to have a healthy and robust financial system. Appropriate steps must be taken to address the weaknesses in the Indian financial system. A * Financial Sector Hemant P. Maradia-Source google net. * Globalisation requires financial sector to refine legislation-By Dr. Gift Kavari, lecturer of Economics at the University of Namibia. *FDI In construction- Bureaus Posted online; Friday, February 18,2005 at 0000 hours IST NEW DELHI, FEB 17-Source google net. * FDI to China and India: The definitional differences-Nirupam Bajpai, Nandita Dasgupta. * Abillion here and a billion there and pretty soon you are talking big money-Sen. Everett Dirksen, Vidya Mhambare (Cardiff Business School) Source google net.
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PART - II Trend of Flow of Foreign Capital into India

Dr. M.Yadagiri* B.Venkateshwarlu**
Abstract: Indian companies have found their way to global capital markets for meeting their resource requirements. As a part of globalising the economy, the Government undertook two major steps that of allowing Foreign Institutional Investors (FIIs) to invest in the Indian Capital Market and permitting Indian companies to float their stocks in foreign markets. Foreign Direct Investment (FDI) has shown a steady increase; even in the aftermath of East Asian crisis, there has been no decline. The driving force behind FDI flows among industrial countries is mergers and acquisitions. Mauritius has become the single largest investment country in the post economic reforms period. The major sectors in which such investments have been made are chemical and allied products, engineering & electronics and electrical equipment. The inflows of FDI during 2001-2002 were significantly higher when compared to the position from 1992-1993 to 2003-2004. This may be on account of economic
reforms adopted in India and encouragement given by the Government through liberalization and globalisation policies and attracting investments from various foreign countries for rapid economic development. India opens the doors As India embarked upon the route of new economic reforms and liberalization, the Indian corporates too developed a global vision. These corporates, who until now were restraining themselves to only the domestic finance available at high interest rates for financing, have come to realise that a host of investors, particularly in Europe, Asia and America, can be roped in for mobilizing funds at cheaper cost and with few hassles. Thus, Indian companies have found their way to global capital markets for meeting their resource requirements. As a part of globalising the economy, the Government undertook two major steps-that of allowing Foreign Institutional Investors to invest in the Indian Capital Market and permitting Indian companies to float their
stocks in foreign markets. Two primary instruments floated by the Indian companies in international markets are Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs) more commonly known as the Euro issues.1 A Euro issue is different from a foreign issue where the issuer is not incorporated in the country in which the securities are being issued, but the securities are denominated in the currency of the country of issue and are aimed at domestic investors in the country where the issue is made. Euro securities are transferable securities, which are to be underwritten and distributed by a syndicate. The two major instruments, which are floated in the Euro Capital Markets, are Bonds and Equities. There may also be slight variations in these instruments depending on such factors as interest rate, maturity redemption conditions and linkages to equity and other securities. The major benefit that a Euro Issue provides to the issuer company is the ability to raise funds at a lower cost.2 Also, a Euro issue can be priced at par or even at a slight premium
1. A Euro-issue is an issue where the securities are issued in a currency different from the currency of the country of issue and the securities are sold internationally to corporate and private investors in different countries. 2. Average coupon rates on convertible bonds of five year maturity in the Euro Market are 2 % to 4% as against the domestic long term interest rate of 14% or more. The cost of Euro issue approximates to 4% vis--vis domestic cost of 8% to 14% thus providing a mechanism for raising equity at a cost of which is lower than the cost of making a rights issue. * Dr. M.Yadagiri, Lecturer in Commerce, Post-Graduate Centre, Lal Bahadur College, Warangal-506 007, A.P. ** B.Venkateshwarlu, Lecturer in Economics, Lal Bahadur College, Warangal-506 007, A.P.
FOCUS depending on the market conditions. Besides these benefits, an issuer company can enlarge the market for its shares through greater exposure and at the same time, enhance its image in the international markets. International listings can provide
increased liquidity for the securities, thus making them more attractive to buyers. From an investors angle, a Euro issue provides them a simple means to diversity their portfolio globally, and have access to foreign markets.
Component-wise Actual inflow of FDI: Let us now discuss the componentwise contribution of actual inflow of FDI during the period under review. Table-I presents the relevant data.
TABLE-I Component-wise Actual inflow of FDI:
(US $ Million)
Source: RBI Annual Report, 2003-2004 NOTE: * : Relates to acquisition of shares of Indian Companies by non-residents under Section 5 of FEMA, 1999. Data on such acquisitions have been included as part of FDI since January, 1996. # : Represents the amount raised by Indian Corporates through Global Depository Receipts (FDRs) and American Depostiory Receipts (ADRs). ** : Represents inflow of funds (net) by Foreign Institutional Investors (FIIs) @ : Data for 2002-2003 are estimated as average of previous two years. @@ : Data pertain to inter company debt transactions of FDI Entities.
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The foreign investment inflows were negligible until 1992-93. Since then they have increased from $559 million in 1992-93 to $ 16,052 million in 2003-04. Direct investment increased from $ 315 million to $ 4,675 million in 200304. Foreign direct investment has shown a steady increase. Even in the aftermath of East Asia crisis, there has been no decline. Foreign investment both direct and portfolio rose to an all time high in 2003-2004 amounting to 3.0 percent of GDP and 25.5 percent of merchandise exports. Net investment by foreign institutional investors rebounded from depressed levels in the preceding year to record an unprecedented surge during 2003-2004. Portfolio flows were recycled to India following readjustments of global portfolios of institutional investors, triggered by the robust improvement in macroeconomic fundamentals, financial performance of the corporate sector and the buoyant and attractive valuations in the Indian equity markets. Portfolio investment is a new phenomenon that came to occupy a place in the capital account only after 1992-93. In 1994-95 and 2003-04 there was a substantial inflow of portfolio investment of the order of $ 3,824 million and $ 11,377 million respectively. Half of this amount came in the form of GDRs and ADRs while the other half was investment in the stocks by foreign institutional investors. In the wake of the East Asian
crisis, the portfolio investment came down very sharply in 199798. Investment by FIIs fell down by about a $ 1,484 million from the level reached in the previous year. In 1998-99 investment by Flls turned negative to the extent of $ 390 million. This is once again as a consequence of the worldwide reaction to the events in the East Asian countries. However, portfolio investment picked up in 1990-00 and stood at the level of $ 3,026 million with investment by FIIs reaching 2,135 million. Looking at the trends in foreign direct investment and in portfolio investment, it comes out clearly that while the flow in the form of direct investment was steady, portfolio investment had been somewhat volatile. Countries, because of its long-term commitment, have always preferred foreign direct investment. It also generally adds to the productive capacity of the capital receiving countries. Foreign direct investment set a new record in 1999 when global inflows touched $ 865 billion. FDI flows to developing countries reached a level of $208 billion, this was an increase of 16 per cent over 1998. The driving force behind FDI flows among industrial countries is mergers and acquisitions.3 Such acquisitions account for a substantial share of total inflows. Certain concerns have been expressed about cross-border mergers and acquisitions. It is felt that entry through the takeover of domestic firm is less beneficial for
FOCUS economic development. At the heart of these concerns is that foreign acquisitions do not add to the productive capacity but simply transfer ownership and control from domestic to foreign hands. It is also feared that such acquisitions may reduce competition in domestic markets. A concern from the political angle is that such acquisitions can lead to strategic firms or even entire industries falling under foreign control. The argument that mergers and acquisitions do not add to the productive capacity applies only at the initial stage. Cross border mergers and acquisitions are often followed by consequential investments by the foreign acquirers. Therefore, over the long term mergers and acquisitions lead to enhanced investment in production just as green field FDI does. Also even initially when the domestic firms are acquired by the foreign firms, it releases funds in the hands of domestic firms which may utilize these funds for further investment elsewhere. This possibility must also be taken into account while looking at the impact on the enhancement of productive capacity. In fact, the impact of FDI on the capital receiving country is not easy to distinguish by mode of entry, once the initial period is passed. In looking at this problem from the Indian angle, available data indicate that acquisition of shares, as part of direct investment has been a negligible proportion of the total. In the five-year period beginning 199596, the total direct investment in the
3. Recently the Government of India cleared 48 FDI proposals worth Rs. 305.90 crores, including Flextronics acquisition of Future software for Rs.185.04 Crores. The US based Honeywell internationals proposal to set up a wholly-owned subsidiary would involve an inflow of Rs.46.26 crores- The Hindu, Oct 01, 2004.
FOCUS country amount to $ 13,139 million. Of this, the acquisition of shares amounted to $1,386 million, which is roughly 10 percent of the total. While in some individual industries the share of foreign
firms might have increased because of acquisition, by and large most of the foreign direct investment to India has been green field investment.
Country-wise inflow of FDI: It is proposed to study the county wise inflow of FDI during 1992-93 to 2003-04. The data relevant to the study is presented in Table II.
TABLE II Country-wise inflows of FDI:

Country
Germany Italy Japan Mauritius Netherlands South Korea USA Others Total
(US $Million)
200001
113 29 156 843 76 24 320 349 1910
199293
21 12 26 124 21 22 132 358
199394
35 36 37 534 47 2 99 39 832
199495
35 31 95 171 45 7 203 265 852
199596
101 30 96 509 85 7 223 407 1458
199596
166 28 97 846 424 6 242 548 2057
199697
151 43 164 900 159 333 687 518 2955
199798
114 116 235 590 53 85 453 354 2000
199899
31 125 142 501 82 8 355 337 1581
200102
74 28 143 1863 68 3 364 445 2988
200203
103 NA 66 534 94 15 268 578 1658
200304
69 NA 67 381 197 22 297 429 1462
Source: RBI Annual Report, 2003-2004 NOTE: The data exclude FDI inflows under the NRI direct investment route through the RBI and inflows due to acquisition of shares under section 5 of FEMA, 1999. NA : Data not available.
The analysis of country-wise inflow of FDI indicates that the Mauritius was the biggest investing country, followed by USA, Japan, Germany, Netherlands and Italy during the period under review. Mauritius investment in 1992-93 and 1994-95 was only $124 million and $171 million respectively. Mauritius has become the single largest investing country in the post economic reforms period, it is interesting to note that some of the new countries such as Netherlands, South Korea are making significant investment in India. South Korea was the smallest investing country with $22 million in 2003-04. FDI flows
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remained subdued during 20032004 in line with the slowing down of FDI flows to the developing countries in general. Although, Mauritius continues to be the single largest source of FDI into India, its relative significance has been declining. FDI from Mauritius declined sharply during the last two years. Constituting 26.1 per cent of total FDI flow to India in 20032004 as against 32.2 percent in 2002-03 and as much as 62.3 percent in 2001-2002. The inflows of FDI during 2001-02 were significantly higher from almost all countries when compared to the position from 1992-93 to 2003-04. This may
be on account of economic reforms adopted in India and encouragement given by the Government through liberalization and globalization policies and attracting investments from various foreign countries for rapid economic development. Industry-wise inflow of FDI: In order to identify the prominent industrial sector, which has attracted highest /lowest amount of inflow of FDI during the period under review, the study of industry wise analysis of inflow of FDI is taken up. The total no. of industries have been grouped into nine types and the relevant data is presented in Table III.
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TABLE III Industry-wise inflows of FDI:
Industry Chemical & allied products Computers Engineering Electronics & Electrical equipment Finance Food and dairy products Pharmaceuticals Services Others Total 199293 47 8 70 33 4 28 3 2 163 358 199394 72 8 33 57 42 44 50 20 506 832 199495 141 10 132 56 98 61 10 93 251 852 199596 223 35 431 105 158 150 29 54 273 1458 199596 304 59 730 154 217 238 48 15 292 2057 199697 257 139 580 645 148 112 34 620 720 2955 199798 376 106 428 228 185 19 28 320 262 2000 199899 120 99 326 172 20 121 54 116 553 1581 200001 137 306 273 213 40 75 62 226 578 1910 200102 67 368 231 659 22 49 69 1128 396 2988
(US $ Million)
200203 53 297 262 95 54 35 44 509 309 1658 200304 46 151 274 103 4 63 79 431 311 1462
Source: RBI Annual Report, 2003-2004 NOTE: The data exclude FDI inflows under the NRI direct investment route through the RBI and inflows due to acquisition of shares under section 5 of FEMA, 1999.
The data in the table reveals that in the entire period of the study engineering industry has attracted $ 730million and $ 580 million of total inflow of FDI in1 996-97 and 1997-98 respectively. The major sectors in which such investments have been made are engineering, chemical & allied products, and electronics & electrical equipment. These three sectors taken together, account for more than 50 per cent of the total foreign direct investment. In that sense the sectors, which have attracted foreign direct investment are those relevant from the point of view of the growth of the economy. The service sector attracted $1,128 million during 2001-02. The pharmaceuticals followed by
finance and computer industries are the least attractive sectors for foreign investments during the period under review. It must be noted that in recently approved FDIs, the investment in power, telecom and roads sectors claimed maximum number of approvals. Hence, the investment in these sectors is likely to shoot-up in coming years and these sectors will dominate the foreign investments. For FDI to flow into India improvements are needed in physical infrastructure and this was receiving the Governments highest priority. A regulatory framework was sought to be created that would be transparent and independent and based on best international practices.
However, the analysts feel that the priority should be given to the engineering, electronics and electrical equipment, rather than to chemical and allied products, since the development of these industries will automatically pave the way for development of all the other industries. Apart from this, India has achieved substantial and appreciable achievement in the engineering industry, thus, the analysis highlights that the engineering industry is the top most priority industry for FDI. Similarly, increasing trends were noticed for almost all industries during the period of study. Conclusions: The study reveals the following broad conclusions:
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FOCUS 1. FDI inflows were negligible until 1992-93. Since then they have increased from $ 559 million in 1992-93 to $ 16,052 million in 2003-04. FDI has shown a steady increase, even in the aftermath of East Asian crisis, there has been no decline.
substantial share of total inflows.
2. Portfolio investment is a new phenomenon that came to occupy a place in the capital account only after 1992-93. In 1994-95 and 2003-04 there was a substantial inflow of portfolio investment of 8. The inflows of FDI during the order of $3,824 million and 2001-02 were significant from $11,377 million respectively. almost all countries when 3. In 1998-99 investment by FIIs compared to the position from turned negative to the extent of $ 1992-93 to 2003-04. This may be 390 million. This is a consequence on account of economic reforms in India and of the worldwide reaction to the adopted events in the East Asian countries. encouragement given by the Government through liberalization 4. Looking at the trends in foreign and globalization policies and direct investment and portfolio attracting investment from various investment, it comes out clearly foreign countries for rapid that while the flow in the form of economic development. direct investment was steady, 9. In the entire period of the study portfolio investment had been engineering industry has attracted somewhat volatile. $ 730 million and $ 580million of 5. The driving force behind FDI total inflow of FDI in 1996-97 and flows among industrial countries 1997-98 respectively. The service is mergers and acquisitions. Such sector attracted $ 1,128 million 2001-02. The acquisitions account for a during
6. The analysis of country-wise inflow of FDI indicates that the Mauritius was the biggest investing country, followed by USA, Japan, Germany, Netherlands and Italy 10. India has achieved substantial and during the period under review. appreciable achievement in the 7. It is interesting to note that some engineering industry. Thus, the of the new countries such as analysis highlights that the Netherlands, South Korea are engineering industry is the most making significant investment in priority industry for FDI. India. South Korea was the smallest investing country in India. References: 1. Gupta, K.R. Liberalisation and Globalisation of Indian Economy, Atlantic publishers and Distributors, New Delhi, 1995. 2. Gupta S.P. Liberalisation, its impact on the Indian Economy, Macmillan India, Delhi, 1993. 3. Guidelines & Procedures for Foreign portfolio Investment BSE, 1995. 4. Economic Sur vey, the Government of India, 2003-04. 5. RBI, Annual Report 2003-04. 6. CMIE, Monthly Review of the Indian Economy Various Issues. 7. Daily News Papers: The Economic Times, The Hindu.
pharmaceuticals followed by finance and computers industries are the least attractive sectors for foreign investments during the period under review.
Spurious Products causing Rs. 10 thousand crores loss

As per a report prepared by ASSOCHAM, the country and industry are loosing Rs. 10 thousand crores per year due to the sale of spurious products. The automobile industry is loosing about Rs. 3000 crores due to spurious spare parts, and the watch industry is loosing about Rs. 4000 crores due to smuggling of watches and spurious spare parts. Another Rs. 3000 crores is being lost in spurious medical instruments, cosmetics, vegetable oils, and masala powder. A need is felt to establish special courts to try such cases which only can help curb such illegitimate production, said ASSOCHAM in its report.
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In the following twin - articles Mr.Nagaraju explains the importance of the position statement to create a favourable perception in the minds of customers whereas Mrs. Jayalakshmi distinguishes between Marketing and Selling and between product charaeristics and benefits.
Marketing and Sales
Market Perception and Planning for Sales

- V. Nagaraju
Developing the position statement and key marketing messages is essential to establish the market perception. To do an effective job of developing the messages and positioning, we need to understand the difference between these two types of messages. The positioning statement should express the way we want customers to think and feel about our products and services relative to the competition. It should only contain the one most salient aspect of our product or service that we wish to instill in our clients mind. Its goal is to provide focus and direction for those communicating with the market. The supporting key marketing messages contain all the important points about our product or service. Their goal is to gain attention and interest, generate a need, and clicit action. Having consistent, focused marketing messages allow us to respond to the needs of our audience and by appealing to their wants and Developing the Positioning needs. Delivering the same message to different audiences in the same Statement manner risks missing all targets with By developing the positioning watered-down messages. One size statement prior to executing any does not necessarily fit all. marketing programs, we create clarity and consistency in the way Statement of problem and our we speak to the market. This solution: Clearly articulating our ensures continuity throughout all prospects issue and providing a of our marketing and makes all credible solution shows that we understand the prospects situation. forms of communications less If we get attention and they will listen complex and easier to manage. to what we have to offer. Without a positioning statement to guide the marketing effort, a Key benefits: Benefits are not what company is apt to waste time and we do, but now we do it. We have to resources wandering aimlessly entice our prospects with results, solutions and benefits to encourage without direction or focus. them to make an emotion-based Developing a positioning decision. Benefits include increase statement is challenging, but not in profits and revenue, improved daunting. By using the following communication, reduced expenses, guidelines, we create a two- improved customer satisfaction, or sentence statement that tells people leveraging a diverse workforce. what our product or service is, how Unique Competitive Advantage : they will benefit and why our Our UCA is what separates us from product is different from others. our competition and provides our create a demand for our services. Target customer: Identifying our prospects with a clear advantage by target audience enables us to doing business with us. Our UCA develop more effective messages should reflect how we want to be positioned, as it will most likely
Lecturer & Placement Officer Suprabath Institute for Management Computer Studies (SIMACS)
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FOCUS determine how we get perceived in art than a science. There is no the market. precise formula that can be used Developing the Key Marketing to clearly develop these messages. We should take the key points from Messages the positioning statement and Once we get that all important provide supporting evidence for positioning statement created, we those points. From there, the can develop key, supporting secondary differentiators and other messages targeted at specific messages we collected during the audiences. Our messages should positioning process can be focus on educating and informing, explored and expanded. explaining the benefits of our services, and creating an image. We have to keep in mind the They must be focused, crystal-clear following points: and speak to the needs of our Be honest and credible in our prospective clients. It should make messages. We have to tell people them want to find out more, drive who we really are and what we them to our web site, and get them really do. to take our call or, ideally, call us. We have to be clear and concise Unfortunately, unlike the with the offer, we have to make it positioning statement, developing easy for the reader of our message our key messages are more of an to know what we are promoting.
We have to test our message. We have to try our message out and measure the result we are getting to ensure that the message is clear. We have to know our audience. We have to send our message to the right audience to ensure the best use of our marketing resources. Conclusion Developing successful messages is the result of understanding our audience and what parts of our product or service are important to them. While creating them takes some time, going through the process to focus our efforts is a critical element of our marketing foundation. To do an effective job creating these critical messages it is often helpful to get an unbiased point of view to help us in their development.
The Art of Selling

- U. Jayalakshmi *
Successful sales people and marketing systems evolve over a period of time. To be successful, the salesperson has to eliminate selfish motives and think in terms of mutual benefits to be gained customer satisfaction first, and only then sellers satisfaction. Theodore Levitt, the marketing guru, many years ago, had stated that: Selling focuses on the needs of the seller. Marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his
* Faculty, SNCPS, Hyderabad
product to cash. Marketing with and personnel, is established and the idea of satisfying the needs of nurtured can a company succeed in reaching its target market and profit the customer. What he was getting at then, and goals. something which holds true even more today, is lasting customer loyalty. The art of selling cant survive without the support of the science of marketing. Without the buyers benefits, and the numbers to support those claimed benefits, no product or service can be marketed effectively. Only when clear communication between the sales and marketing departments, Self power and ability to effectively communicate and motivate others are the two most sought after contributes by sales people everywhere. These winning qualities open the doors to wonderful opportunities and help make life a productive, joyous and successful one for salesmen and sales managers. The technique to achieve this lies in identifying and understanding certain
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psychological and behavior patterns in ones own self as well as the self of others (customers). In contemporary sales management jargon, this is called sales cybernetics. Creating customers: When it comes to the customer in the sales cybernetic concepts and discipline and effective selling, the first rule to be learnt by sales people is that psychological selling is not just taking- it is more a giving. The salesman has to think in the terms of customer. To be successful, today, he has to think of what (benefits) he can afford to the potential buyer. He has to eliminate selfish motives and think in terms of mutual benefits to be gained customer satisfaction first. And then seller satisfaction. research unit in the US,90 percent of salespersons volunteered for a price cut to customers without being asked, and 80 percent believed that their product or service is too expensive. This is a strange and inexplicable phenomenon of some kind, for many marketers this situation is the problem of the sales department. But when thinking it through, it is also the marketing departments fault. After all, salespeople derive their product knowledge from company literature produced by the marketing department. When a company chooses to use its marketing literature to brag about its success and its product features rather than of talking to the potential target market in buyer language, salespeople dont have much to work with. They feel that their product is completely identical to the competition and, therefore, assume that the buyers real issue is the price. Lacking the information on the benefits that differentiate the product from competition, it is not surprising that the salespersons work hard to sound exactly like the competition, as the Vass study indicated. Salespeople are left with no choice but to compete purely on the basis of price. Marketers should consider the salespeoples needs when they conduct research. For example, when planning research among current customers, they should consult with the sales department in advance to find out what types of issues salespeople are interested in discovering and need more information. When developing and launching a new product, we have to make sure that the whole sales force knows all the benefits (not just the features) of the new product so that they can sell it based on its true merits. Literature that we design to support a selling process must speak the buyers language and clearly communicate the products benefits. Let us take one of our current brochures and count the number of statements that relate to the buyer, compared to the number of statements that brag about our company and product. How many statements start with our company or We are the No.1, How many times does the word you referring to the customer appear? Who are we really talking to in that brochure? How different is your literature from the competition?
101
Every human being, and therefore every customer, looks for self advantage. Hence it is a must for a salesman, individualize the advantages to each customer, and Planning for Sales sell the you factor rewards. Many marketers confuse features Many companies conduct careful with benefits. Features are product marketing research before characteristics, benefits are the launching a new product, and they ways those characteristics affect the generate detailed reports about the buyer. When claiming benefits you target groups opinion and must substantiate them. Armed preference regarding the product. with this effective information, On other occasions, companies salespeople would be able to sell will measure buyers satisfaction more, faster, and at higher margins. and will discover the profit or pleasure that the product provides. The art of selling depends upon In both situations marketers tend the science of marketing. to neglect to communicate the According to a research conducted findings to the salespersons on the by Vass company, a marketing field.
FOCUS Need for a Systems Approach

The systems approach in marketing helps provide complete satisfaction to the customer rather than just offering a product. If the purpose of business is to create a customer, and at a profit, then the needs of the customer have to be carefully attended to. In the consumer soft and consumer durable areas marketers have forged ahead in understanding this, but in the industrial products and services areas this concept is yet to gain a real foothold.. Wherever it has been adopted by industrial marketing companies, the systems approach expresses itself in two ways the creation of a complete product system sold as a unit (for example a computer network
system), or as a component or components which are a part of a larger user system(for example an air-conditioning system, or a telephone exchange system). A key tool in the systems approach is what is termed as a total business plan, shared with all in the company. Here we need to establish very specific objectives, and then work out detailed action plans to achieve them. The action plans have to extend through out the organization, including the manufacturing and sales wings of the company. In this, management sets specific dates and targets for the completion of jobs and defines who is responsible for them. Also it carefully measures results against the set objectives. This is done
both within financial reporting systems and through various marketing committees. Successful salespeople and marketing systems in organization do not blossom overnight. They evolve over a period of time as general managers and specialists learn to understand one another better, and learn how to structure problems and how to push out wider the frontiers of the universe within which they are operating. Recognition of the countless elements involved in marketing and the mind-boggling complexity of their interaction is a wholesome and new experience today. Companies must be prepared to invest time, money and energy in making this feasible.
Minister and stock broker

A minister dies and is waiting in line at the Pearly Gates. Ahead of him is a guy whos dressed in sunglasses, a loud shirt, leather jacket, and jeans. Saint Peter addresses this guy, Who are you, so that I may know whether or not to admit you to the Kingdom of Heaven? The guy replies Im Joe Cohen, stockbroker, of Noo Yawk City. Saint Peter consults his list. He smiles and says to the stockbroker, Take this silken robe and golden staff and enter the Kingdom of Heaven. The stock broker goes into Heaven with his robe and staff, and its the ministers turn. He stands erect and booms out, I am Joseph Snow, pastor of Saint Marys for the last forty-three years. Saint Peter Consults his list. He says to the minister, Take this cotton robe and wooden staff and enter the Kingdom of Heaven. Just a minute, says the minister. That man was a stockbroker-- he gets a silken robe and golden staff but I, a minister, only get a cotton robe and wooden staff? How can this be? Up here, we work by results, says Saint Peter. While you preached, people slept; his clients, they prayed.
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Retail Sector in India: Where is it headed?

- Dr. S.R. Subba Rao * - Dr. Ch.S. Durga Prasad**
Introduction in area. The per capita retail space is 2 sq. ft., which is the lowest in the The retail sector is a key world, as against 19 sq. ft. in the inter mediary which links United States of America (Economic producers of goods and services Times, 2001). The population of the and consumers. This process of country is projected to increase at the inter mediation accelerates rate of about 2% per annum. This economic growth. The wave of also will contribute to the growth of liberalisation and globalisation in India has activated the retail retail business. The retail business in India was estimated sector significantly. The Retail Models present study aims at at Rs.4,00,000 crore in 2001. Out of this, analysing the position of the organised sector accounted for Due to the geographical, retail sector in India in Rs.20,000 crore, i.e. a share of 5% . The cultural and socio-economic different dimensions and retail outlets in India have increased from diversity of India, retail attempts to assess as to 2.5 lakh in 1950 to 5.37 million in 1999. Of shops of different sizes and where the retail sector is these 96% are less than 500 sq. ft. in area. models have emerged. In headed. The per capita retail space is 2 sq. ft., Table 2 the various forms of The facets covered in this which is the lowest in the world, as against retail stores in India are paper include: (1) the market 19 sq. ft. in the United States of America. listed. size of the retail sector (2) the average, at a higher rate of 100% The traditional stores are primitive various models of the retail stores and 70.7% in the respective in nature catering to the people close (3) the differences between the periods. to the store. They have been thriving organised and unorganised sectors in the entire country though have (4) employment and training (5) The retail business in India was estimated at Rs.4,00,000 crore in limitations in terms of business. It is implications of the foreign direct investment (6) changes in the 2001. Out of this, the organised the convenience stores, mini and demographic profile of consumers sector accounted for Rs.20,000 large super markets, hyper markets which affect the retail sector and crore, i.e. a share of 5% (AT and the malls that have been (7) economic implications of the Kearney). The retail outlets in India emerging in larger numbers in the growth of retail sector. These have increased from 2.5 lakh in country. Some of the retail stores aspects have been dealt with in the 1950 to 5.37 million in 1999. Of maybe of special type dealing in a these 96% are less than 500 sq. ft. single product such as dress material. same order in what follows.
* Paper presented at the 17tlt Annual Convention held by the Association of Indian Management Schools, during August 28-30, 2005, at Hyderabad. ** Dr S.R Subba Rao is Professor and Dr Ch.S. Durga Prasad is Associate Professor at Xavier Vignana Jyothi Institute of Management, Secunderabad.
Market Size of the Retail Sector The retail sector has been growing in size over the years as shown in Table 1. The data show that the retail business had an annual growth of 6.7% during the period 1999-02 and 8.3% during 2002-05. The business of the organized sector had grown annually, on an
FOCUS The organised retail sector in India professional approach. Despite of rural areas which have 73% of has both domestic and higher operational costs, they seem the population of the country. In international chains. The domestic to have opportunities for growth. semi-urban areas also they play a chains operating at national level International brands such as predominant role. In urban areas include K Rahejas Shoppers Stop, McDonalds, Swarowski, Lacoste, their business maybe encouraged Pantaloon, Life Style, Music World, Dominos, Pepsi, Benetton., among upon increasingly by medium-sized the Home Store, the RPGs Health others, have entered and thrived in retail shops and bigger ones which may gradually adopt the model of and Glow, Rajan Rahejas Globus India (Economic Times, 2001). and so on. Trent is the owner of Retail rentals are rising in cities. small-sized super markets. However the Westside chain of stores. Those When big retail chains are unable the unorganised sector has limited at local level comprise of those like to get adequate space in the central opportunities for growth, with Kids Kemp (Chennai), Akbarallys parts of cities, they tend to open supply chain constraints and small (Mumbai), Trinethra (Hyderabad) their stores even in the suburbs size limitations. among others. There are consumer where their volumes of scales can Indian business groups have opened durables chain Viveks, food retailer increase over a period of time. their chains mostly in metropolitan Nilgiris. Some Indian With the availability of own centres, for the sheer volume of manufacturing companies such as transport, the upper middle class business. In metros, the smaller retail Raymonds, Reliance, Titan and and rich people may go there for shops may continue to survive with individual attention, Madura Coats have their outlets or franchisees. The The foreign retail chains are getting patronage and access to the ITC has launched e- attracted to India due to the enormous shop even at odd hours. Choupals in rural areas to growth potential of the organized retail The medium sized retail market their products, sector. The entry of international chains has stores may face difficulty in besides using them as made the competition in the sector sustaining their businesses. procurement centres. intensive. The international chains have Overall, the volume of for the Hindustan Lever has better finances and professional approach. business introduced Shakti Project in Despite higher operational costs, they seem unorganised sector will be affected adversely by the rural areas to retail its to have opportunities for growth. growth of organised sector products. in metros. The foreign retail chains are getting shopping. The middle income attracted to India due to the group people close by may visit The faster growth of organised enormous growth potential of the such stores, adding to the clientele sector may be attributed to the changes in the demographic organized retail sector. The strength. international chains functioning in Organised vs Unorganised str ucture and attitudes of the customers and improved supply India include Benetton, Marks & Seetor Spencers, Dairy Farm and others. The retail sector in India comprises chains. The intermediation could be The entry of international chains unorganised and organised high, but they can be reduced with has made the competition in the segments. In the unorganised increased volumes of purchases sector intensive. In India, the first sector, the retail shops are mostly from the suppliers and reducing their shopping mall Crossroads has owner-operated. They have a low margins. Supply chain costs can be come up in 1999 with food courts, cost structure, with smaller reduced by improving the relative recreation and large car parking premises, low labour costs and low infrastructure. A problem area is the space (Ganguly). The domestic or no taxes. They have high increase in labour costs due to the compliance of the labour laws. The chains are forced to improve their familiarity with customers. cost of educating and training the quality of products and operational standards. The international chains The unorganised sector continues retail staff and managerial personnel could also be high. have better finances and to have a monopoly role in the case
Organised retail units operate on employee benefits and payment of bigger premises, some of which taxes. Price changes are rapid and are airconditioned and have the products with low margins and generators. They keep a wide range those having high obsolescence of products of quality with brand have to be under regular watch for image. They have attractive quick sale. Good inventory ambience and some of them management is vital. The stock keeping units have to be put to the provide entertainment facilities for best use. Supply Chain has to be children. The retail chains have effective and computerisation has been attracting customers to efficiently integrate supplies increasingly due to comfort and with sales. other impressive features. Shopping has been made an Finance is an essential requirement enjoyable experience for those who of the retail sector. Organised sector will be able to get the needed wanted to take away some time for The organised retail sector is pleasure from their busy time expected to generate one schedules. They can also save Jobs in the retail sector are considered as million new jobs in the years time by quick shopping with menial, low paid and unskilled, which 2002-12. Retail sector personal selection of mindset has to be changed through a provides jobs to about 15% products. The pleasure of multi-media campaign. The organised of the employable adults. shopping experience has also retail sector is expected to generate one paved the way for increase in million new jobs in the years 2002-12. The leading institutes in consumer spending, backed Retail sector provides jobs to about 15% India are including retail education in the curriculum up by rising incomes. These of the employable adults. to provide specialised factors have increased the training. The IIM, Ahmedabad offers from banks and opportunities for growth of the funds development finance institutions. retail management courses for organised retail sector. research and consultancy. The The retail chains are attracting Unorganised sector can get such National Institute of Fashion consumers with new products, assistance under priority sector Technology and Pearl Academy of besides those normally in demand. lending though it may be difficult Fashion provide fashion retail to get such funding due to lack of Some of the outlets are similar in management courses. The retail adequate networth. looks and style to the international chain Ebony has set up Ebony Retail standards. The chains are using Employment and Training Academy to train its employees. various strategies for growth. About 8% of Indias population is Shortly, it intends to cater to the retail These include advertisements to engaged in retailing as against 20% sector in full. It aims to improve the build up image and brands, in the USA (Ganguly). Personnel level and quality of service and discounts and schemes. Some of in the stores have to be trained to professionalism in retailing and to the manufacturers have set up attend to customers at all stages provide the best talent to the retail shopping outlets, attractive from entry into the stores to the sector by setting benchmarks. The ambience and displays which give exit level. sector needs trained persons to a distinct look to the products of According to a study by Image- directly link the store and the the companies and improve their Retail, the Indian retail sector is customer. The employees should brand image. These include estimated to have recruited directly understand customer needs and Reliance, Westside, Raymonds, about 2.5 lakh trained people, with psychology Tanishq and Titan. 8-10 times of indirect employment Presently the staff for retail chains However, the costs of retail chains in the related supply chains as in are recruited based on experience or are high with high labour costs, 2005. This sector is expected to
FOCUS employ about 5 lakh skilled people by the end of 2010. In the world, the highly automated retail business is the second highest employer, after agriculture. Jobs in the retail sector are considered as menial, low paid and unskilled, which mindset has to be changed through a multi-media campaign. The national retail chains have in-house sales programmes. But many managers do not have formal training which has to be acquired through skills from others (AsiaPulse).
FOCUS academic specialisation in business administration or management. The key players in the retail sector feel the need for employing educationally qualified persons in retail business. The RPG Institute of Retail Management, Chennai, and the Retail Academy, Ahmedabad, are training people in this respect. The Indira Institute of Retail Management, Pune, offers diploma and degree courses in retail management (Samyukta).
According to McKinsey and CII report, about 40-45% of purchases in urban areas will shift to organised sector, including a substantial segment of middle income groups (Financial Express, 2000). Middle class people may get attracted to retail chains increasingly Foreign Direct The data show that during the period 2001 to due to the publicity given Investment 2007, the number of households in the case of by them about low prices Domestic and joint Consumer class is projected to increase and affordability. ventures between local significantly from 54.6 million to 90.9 million, There is a rise in incomes. and foreign units can with a growth of 66.5%. Similarly, the Rich The fashion trend is understand better the consumer needs and households are estimated to increase from 2 increasing. Some of the grow faster than the million to 6.2 million households in the same goods considered as luxury international chains, if period, with a growth of 210%. These classes by the middle class have will drive the growth of the retail chains in tuned into necessities such they compete on . India significantly. as colour television sets, If the sector is open to DVDs, music systems, foreign direct investment, it can attract huge investments from period 2001 to 2007, the number cable connections, and cell phones global retail giants such as Tesco, of households in the case of in particular have become essential Metro, Kingfisher, Carryfour and Consumer class is projected to to keep connection with people in Ahold. Big corporate houses such increase significantly from 54.6 business, office and with family and as Tatas, Birlas, Reliance, RPG, ITC million to 90.9 million, with a friends. Entertainment expenses and HLL are planning high growth of 66.5%. Similarly, the have been growing with leisure time investments in this sector Rich households are estimated to getting more value. Home decor and increase from 2 million to 6.2 looking attractive have been given (Financial Express, 2000) million households in the same importance. The TV channels are India is the sixth most attractive period, with a growth of 210%. being extensively used for advertising destination in the world for foreign These classes will drive the growth products for consumers. direct investment, after China, of the retail chains in India Liberalisation of imports have Hungary, Morocco, Russia and significantly. enabled global products with Slovakia (Economic Times 2002). innovative and attractive features to The consumer preferences for enter Indian markets. Spending time Consumers: Demographics retail stores and the likely changes, on shopping, with families or friends and Attitudes in the case of metro and urban has become a source of The nature and growth of the areas are indicated in Table 4. It entertainment and enjoyment. With Indian consumer market is shows that the Rich consumer all these, the propensity to spend is dependent upon the consumer group is likely to favour Malls as increasing and the business of classes. The data are given in Table well besides Large supermarkets organised retail sector is growing. 3, for five classes of consumers. and Hyper markets. The
The Rich are at the top with an annual income of Rs.2.15 lakh or more. Next comes the Consumer class with annual income ranging from Rs.45,000 to less than Rs.2.15 lakh. Then comes the Climbers in the income range of Rs.22,000 to less than 45,000. This is followed by Aspirants with incomes from Rs.16,000 to less than Rs.22,000. The final group is Destitutes with annual income below Rs.16,000. The data show that during the
Consumer class may get into the super markets and hyper markets mode, besides patronising the Convenience stores. The Climbers and Aspirants may also start visiting the Mini super markets.
For customers having pressure of time, quick shopping is possible with see, feel, touch experience in the retail chains. The potential target consumers number 2 million for medium brands and 150 million for middle market brands, which indicate high growth opportunities (Economic Times, 2001). Economic Implications
The growth of retail sector is an indicator of the rise in the demand for goods and services and an increase in the production of goods and services to meet the Conclusion same. The consumers are also getting increasingly aware of the In sum, the retail industry in India new products available at the global has been passing through a phase of significant growth with the
level through the print and visual media This is giving an opportunity to the producers to enter the markets with new products and services. It results in the growth of the retail market in terms of the range of goods and services, volumes and sales revenues. The direction of the growth of the retail sector in terms of geographical spread, employment provided and incomes generated will set the pace of economic growth through multiplier effect, as a contribution from the retail sector.
FOCUS establishment and expansion of retail chains of varying sizes in the organised sector. The unorganised sector continues to have its niche markets in the rural areas and may face some hurdles to grow in urban areas. Metropolitan centres will see the growth of the retail chains significantly. Among the retail models, those to cater to the middle income may have a higher growth when compared to others. Malls may have their entry in metropolitan areas to some extent, the major constraint being the availability of space. Retail industry will enhance employment opportunities notably. The industry will also be more consumer-centric. Overall, the retail industry will spur the economic growth of the country as a vital intermediary.
Table 1: Retail business in India (Amount in US $ billion) As at the end of March a) Unorganised sector b) Organised sector c) Total retail business (a+b) d) (b) as per cent of (c) 1999 148.9 1.1 150 0.7 2002 2005 176.7 3.3 180 1.8 218 7.0 225 3.2 2010 300
Source: Compiled by the authors from the information in www.ciionline.orglcommon/ 313/Background note 2004 and Report of Confederation of lndian Industry and McKinsey. Table 2: Forms of retail stores Form Traditional stores Convenience stores Mini super markets Large super markets Hyper markets Malls Area (in sq. ft.) Less than 500 750-1000 1000-2000 3500-5000 5000-15000 80000-5 lakh
Source: Compiled from the source WWW.ciionline.org.oop.cit

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Table 3: Structure of the Indian consumer market Consumer class (Annual income in Rs.) Rich (2,15,000 and more) Consuming class (45,000-less than 2,15,000) Climbers (22,000-less than 45,000) Aspirants (16,000-22,000) Destitutes (below 16,000) Total Number of Households (in million) 2001 2007 Growth (%) 2.0 6.2 54.6 90.9 71.6 74.1 28.1 15.3 23.4 12.8 180.7 199.2 210.0 66.5 3.5 -45.6 -45.6 10.2
Table 4: Retail stores in metro and urban areas consumer preferences and likely changes Consumer Group Rich Consuming class Climbers Aspirants Destitutes References AsiaPulse, Indias Retail sector set to be major employment generator, Images-Retail, June 24,2002 AT Kearney. www.indiaonestop.com Economic Times (2001), New Frontiers to Retailing, January 24, p.ll. Economic Times. (2002). India Size of retail stores Presently Visited Large Super markets, Hyper markets, convenience stores C C T T Sixth in line to lure Retail FDI, November 6, p. 1. Financial Express. (2000). Retail Sector to boom if thrown open to Foreign Investments, New Delhi, November 8. Financial Express, May 11, 2005, p.1. Ganguly Saby, Retailing Industry inIndia, Likely shift LS, HM, M C, MS, LS, HM C, MS C, MS T
National Council of Applied Economic Research Samyukta Koda, The New Horizon, The Hindu December 12, 2001 1 www.ciionline.orglcommon/ 313/Background note 2004 www.ciionline.org Report of Confederation of lndian Industry and McKinsey.
A jock and a geek applying for the same job. The boss said, Boys, you need to take a test before you can get this job. So they took the test and the next day they came back to see who the boss chose. Well, he said, Both of you got the same score except Im going to choose the geek. The jock complained, Dont you think thats prejudice or something? Well, the boss said, Let me tell you what happened. Both of your papers were right all the way through until the last question came up, and the geek answered I dont know, and then when I looked at your paper, you answered, Me either.
Job Fair
INTERFACE
Hyderabad Central The Largest Seamless Mall
A talk with Mr.K. Venkateswar Rao, Mall Manager
Hyderabad Central Indias biggest seamless mall in the heart of Hyderabad City at Panjagutta crossroads is already redefining and revolutionizing the shopping experience in the city. Hyderabad Central is a venture of Pantaloon Retail (India) Limited, claimed to be the biggest and fastest growing retailing conglomerate in the country. Sprawling over 2,50,000 square feet area, Hyderabad Central houses over 300 brands across categories, such as apparel, footwear and accessories for women, men, children, infant basics, apart from a whole range of music, books, coffee shop, food court, super market (Food Bazaar), fine dining restaurant, pub and discotheque (to be launched soon). Hyderabad Central aims at offering everything that a discerning family would come to expect of under one roof in an international shopping ambience. The mall also has a separate section for services such as travel, finance, investment, insurance, concert/ cinema ticket booking, bill payments and other miscellaneous services. Tall, well-built, 39 year-old K. Venkateswar Rao (K.V.Rao) is the Mall Manager of Hyderabad Central since more than one year. His modest cabin and paperless table reveal that you are talking to an atypical local CEO who believes in results. Without referring to the computer, he can tell you instantly in which corner a particular brand is located in his sprawling mall or what product sold the highest yesterday. Affable, with a resonant voice, Mr. K.V.Rao is proving his mettle in running the largest mall in the country. An interface with him:
INTERFACE Q: What is the philosophy of mall in Banjara Hills may be the your mall? next mall springing up in A: The approach of any mall is to Hyderabad followed by one by provide the best of ambience Raheja group (Shoppers Stop) in Madhapur area. possible for the people to shop, eat and spend a good time under one roof. As far as Hyderabad Central is concerned, we are providing seamless shopping counters. You smoothly sail past from one brand or product to the other. You dont see any partitions or cabins which interfere with your movement or intrude your thoughts. We take utmost care in presenting the Q: Will they be your themes, and displaying the competitors? products. We take care about A: Yes and no. Yes because the lighting and focus and about the element of proximity may attract music we are piping in. We some of our present customers maintain our premises spick and who may not want to undergo the span. traffic hassles for coming here, if
Q: How many malls are there in Hyderabad? A: Generally a mall should have at least one lakh sqft area. By this definition, I guess that presently ours is the only mall in Hyderabad though perhaps we can loosely identify Lifestyle and Shoppers Stop and Spencers also as malls. Q: What about future malls in Hyderabad?
A: We are an up-market mall catering to sec A + segment. The average Walk-ins per day are more than 10000 people and the conversion ratio is 35%, the highest in the country. Q: People think that as in a starred hotel, the prices of products in a mall will be costlier compared to low-end s h o p s . Comment.
A: It is not true. In Hyderabad Central, we are the merchandisers. We get the products and sell them. We believe in higher volumes without increasing the margins. Further, we stock only quality products with different pricerange. This provides both quality and choice to the consumer. As a matter of fact, malls may lead to lowering of prices by avoiding some they can. inter mediaries in the supply/ No because the cake is so big that distribution chain and increasing the everyone can have a share in it. Our volumes. advantage is that we are the early movers and we have already Q: Can you please elaborate on established a name. Secondly, I your mall? expect to have more Walk-ins A: As far as our core business is (people entering the mall) in our concerned it is apparels. In addition mall compared to others because to high-end and international brands, of location advantage and this we offer our in-house brands like gives us an edge over others. John Miller, Rig, Bear, etc.
A: I understand that another 5 6 Q: What is the conversion ratio Our ground level houses Foodmalls are likely to come up. GVK of your Walk-ins? Bazaar, Marks & Spencer, Pizza Hut,
INTERFACE
We have functional departments Generally, the vendor-company gives like IT, HR, merchandise, customer us a minimum guarantee, which in relations, service desk, facilities etc. other words is, paying us a specified We provide internal and external amount irrespective of the sales, and, training to our staff. We have certain agreed percentage on sales persons from prestigious institutes beyond a point. Both these aspects like NIFT and others. Our mall are negotiated depending on various provides direct and indirect factors and then agreed upon. employment for about 1000 Regarding all the items in the mall, persons. we make the billing, maintain the Q: Are you the Mall Manager stocks, indent upon, and give proper from Day-1 of Hyderabad feed-back to the vendors. Practically Central? What problems you we alone run the show. We do not Our specialty is that we provide an had faced? lease out any part of the mall to any ideal place for celebration of A: My predecessor was an IIT / vendor to function independently. birthdays, anniversaries etc. We IIM guy who worked for about 8 Q: What is the future of retail provide ser vices like travel, weeks from Day-1 and then left. sector in India? concerts & cinema ticket booking, The fact that he left so soon bill payment, foreign exchange, should give you an idea of the A: I would just react very briefly investment and insurance services. management problems of the without going into statistics and Most important, we provide an Central in the early days. Basically, without mentioning the big players ideal platform for a new product long hours of work, patience, in the field. launch or any other promotion. team-building, supported by Retailing is going to be the next Shortly we are going to have a proper guidance from the top and boom in India after IT. Very soon multiplex too with four screens, in cooperation from colleagues and foreign participation is going to the top floor, by PVR- the leading staff were required and I had all come. Retail sector will be one of the of these. Especially I enjoy the multiplex people. big gest job providers. It will support of my able Functional accelerate the change in our outlook, Q: Can you briefly tell about Managers, Mr.C.V.Rao, who had spending/ saving habits and lifestyle. your structure? come from Bata and Mr.Alexander And malls and hyper markets are not A: The Chief Executive Officer of Paul, who had come from going to displace traditional stores, Pantaloon Retail (India) Ltd is Mr. Shoppers Stop. at least for a decade. Kishore Biyani headquartered at Q: What is the business Mumbai. arrangement between you and Q: Finally, what are your qualifications and experience? In Hyderabad Central, the head is a vendor in your mall? the Mall Manager, supported by A: Most of the vendors/ A: I am a mechanical engineer and Functional Managers, then companies have come forward on MBA. In the last 15 years I worked Departmental & Asst. their own to associate with us for Sriram Refrigiration, Honda, Departmental Managers, followed though we had invited a few National Panasonic, RPGs Food by Team Leaders and then Service international brands and national World and Reliance Petrochemicals. Partners who attend on the brands of high reputation on our I have six years experience in retail own. customers. marketing. Noodle Bar, Copper Chimney, Bombay Blue and Baskin Robbins. The first level is devoted to women and offers cosmetics, jewellery, time wear etc., in addition to womens wear. The second level is dedicated to mens wear and the third level caters to the youth. It also offers foot wear to men, women and children. The fourth level offers kidswear, home appliances, consumer durables and food court.
SURVEY
Real Estate The changing scenario in Hyderabad

- T. Sudhaker Rao*
Today in Hyderabad whether it is a way-side tea-stall or a posh drawing room the topic of conversation invariably turns to real estate. The Business Vision picked up this hot-topic for this issue and here is a panoramic presentation of real estate business (other than construction) and the connected dimensions.
Now-a-days the people in Hyderabad are looking skywards because that is where the real estate prices are hovering! The city is witnessing a never-heard of boom in real estate business- whether it is lands, plots or apartments. But the increase in the cost of apartments is no comparison to the spiralling prices of lands and plots. For example, one acre of land priced at Rs. 2 lakh about six months back in some promising areas is now being quoted at 20 to 30 lakhs whereas a sq.foot of an apartment which was being quoted at Rs. 1500 about six months back is now being offered at Rs. 1900 Place Bangalore Chennai Mumbai Delhi Hyderabad Residential Commercial Res Com Res Com Res Com Com to 2100. The increase in land prices in the City vicinity is an average 900% and in respect of apartments it is about 30%. In the most happening city in the country the first thing that is happening is that agricultural lands within 60 km radius from the City are being sold as hot cakes. For buyers, it is something like the gold-rush days in California in the 1900s! including all residential and nonresidential buildings. The real estate market is booming all over the country and its future is bright. As per Outlook Money, on average, capital values of residential properties in most metros have gone up 20-30 per cent in the past one year. Real estate has been delivering returns significantly higher than those offered by most other classes and those prevailing in most other countries. For example rental income yields are over 12% in India; 9 per cent in China and 5-8 percent in developed markets. 2004 10.61 9.70 14.50 13.90 7.42 4.95 22.21 10.38 14.99 2005 11.70 11.70 10.31 15.31 15.31 10.31 16.00 12.47 16.00 Source: outlook
*Associate Editor, Business Vision
REASONS FOR THE BOOM Returns on investment Real estate involves the purchase, sale, development of land Average rental returns on investments (Percent)
2002 8.71 6.69 11.54 12.91 7.30 7.45 10.84 9.15 13.44 2003 10.99 8.85 14.34 13.76 8.30 3.87 12.67 8.04 15.03
The above given figures indicate that the returns on real estate investment are more than 12% in 2005. Though the information of returns on residential properties in Hyderabad is not given in the above table, the information on commercial properties reveals that they are highest here which is an indication that the basic land prices are cheaper here compared to other cities.
flood-gates of demand for open plots and lands. Foreign Direct Investment. The Year 2005 has seen raging stock market climbs, gold rush and real estate boom. A spate of developments during the last couple of years have led to a sustainable boom in the real estate sector and it could take economy to new heights.
Liberalization of Foreign Direct Returns from investments in gold Investment (FDI) policy has and bank FDs have been just opened the doors for the inflow around 6-8 percent and from debt of FDI, opening a new avenue of funds and small savings just 5-8 institutional funding for an Permitting enhancement of FDI percent in the past one year. Only returns from Liberalization of Foreign Direct Investment participation from the the equities were greater, (FDI) policy has opened the doors for the inflow earlier 25% to 100%, thanks to the bull run. of FDI, opening a new avenue of institutional reducing the minimum land One reason for the rising funding for an industr y that traditionally area from 100 acres to 25 capital values is demand- depended on high cost borrowing from banks acres for the development supply gap in the and financial institutions. It is estimated that of service housing plots, country. It is estimated over $ 1.2 billion worth of investments are likely fixing the minimum built-up area at 50 thousand sq.mts. that there is a shortage of to flow into the sector over the next year. 20 million dwelling units for a construction industry that traditionally through 2011 and demand is depended on high cost borrowing development project, allowing of expected to increase. CB Richard from banks and financial minimum capitalization of $ 10 Ellis estimates that 24 million sq.ft. institutions. It is estimated that million for a wholly owned company of office real estate space is likely over $ 1.2 billion worth of are the important policy decisions to be added every year in the investments are likely to flow into taken which are encouraging FDI in country. With the Central Business the sector over the next year. The real estate. The foreign players are Districts (CBDs) almost saturated international property consultants, planning to invest in residential in most of the metros, companies Knight Frank India Research projects, IT parks, special economic are moving to the suburbs and report points out that several large zones and hospitality sector mostly even to tier II cities. This has led financial firms and private equity in partnership with Indian to demand for houses in most of funds are launching exclusive Real developers. As of now 13 foreign the suburbs of established Estate Funds (REFs). HDFC India players are financing 11 projects in locations including Hyderabad. Real Estate Fund is already different cities. Out of the 11, five Easy availability of home loans, operational with a total corpus of are taken up in AP, two each in rising income levels and tax $ 220 million. Bangolore and Kolkota and one in concessions contributed for the rising demand for dwelling units Others which are planning REFs Chennai. The projects taken up in and which in turn opened the are IDFC, ICICI Tishman AP are:
SURVEY Speyer, Ascendas India IT Parks Fund, Kotak Mahindra Realty Fund and some more. The Knight Frank report says that this will be a good route for the investors who have little knowledge of real estate sector but want to share the profits arising from this booming market. Further, the Securities Exchange Board of India (SEBI) is yet take a decision on Real Estate Mutual Funds. If permitted, the move will see investments by retail and small investors to receive income from passive investment in real estate.
SURVEY Real Estate Projects Financed by Foreign Players

Invester Cesma International Emmar Properties IJM Evan Lim & Co., (P) Ltd., Ho Hup Construction Ascendas India Country Singapore Dubai Malaysia Singapore Malaysia Singapore Project Singapore Township InternationalConvention Centre &Township Location Hyderabad Vijayawada Hyderabad
Kukatpalli Development Project Hyderabad Township Shamshabad Development Project Vanenberg IT Park Visakhapatnam Hyderabad Hyderabad
some what faster pace till then. the light of the day. And the realtors Telangana Factor But the most important reason for However, putting the Telangana jumped with joy. Literally, the very the sudden spurt in land prices issue in the cold storage by the next day the municipal election after the recent municipal elections Centre, poor show of TRS in the results came in, they increased the real estate prices as if with in the state is the vengeance . The spurt in Telangana factor. Master Plan for Hyderabad Metropolitan Area - 2020 prices was across the The hype built up Hyderabad Urban Development Authority board for flats, plots and by the Telangana Proposed Radial Roads lands. It is as if the prices, Rashtra Samithi which were leisurely (TRS) for a climbing the steps of a separate Telangana staircase till then, both before and suddenly switched over to after the previous a lift ! general elections and the What happens if the hobnobbing of the Telengana issue comes on Congress with TRS centre-stage again ? If the created an TRS takes to streets, impression that which seems to be the formation of a only course left open to separate Telangana them, and which may lead state was not far to some violence ? Or if away. This caused a the Telangana state stagnation, if not a becomes a reality? downward trend in some pockets, municipal elections and the in real estate prices in and around internal squabbles within TRS Telangana factor is no doubt a the City which were more or less made people feel that separate determinant of real estate prices not increasing at a healthy, though state, after all, is not going to see only in Hyderabad but also in the
entire state . However, there are fear that the government may not other equally important factors be able to control it. However, the which influence real estate prices Telangana issue is almost forgotten like City infrastructure now and the City continues to development and employment move forward with full steam potential created says V. R. under the new dispensation also. As a corollary to the new airport, Prasad, M.D. of Goodwill Homes The inauguration of construction Outer Ring Road (ORR) project is Pvt.Ltd. Telangana or no work for the Rajiv Gandhi being given a thrust by the has Rajasekhara Reddy government. Its Telengana, Hyderabad is poised International Airport for development, thanks to galvanised Shamshabad and success or failure can make or break Chandrababu Naidu. He prepared surrounding villages into a real the fortunes of Hyderabad . Once and nurtured Hyderabad to a take- estate business spree. completed, riding on the ORR for off stage and some distance now the City would be can develop Hyderabad Airport Development Authority another tourist on its own attraction in the steam in-spite City ! The ORR of factors like will be a twelve Te l a n g a n a lane, 165 km opines Col. N. express way. It Ranga Rao of will integrate Narne Estates with 22 newly referring to proposed the projects s a t e l l i t e like the townships and international knowledge airport, corridors that are hardware park, biotech park, going to be developed on its fringes The Prime movers knowledge park, apparel park, which will house about one million Krishna water, IT companies, and The new Rajiv Gandhi people. The knowledge corridor will International School of Business International Airport coming up in have non-polluting industries like IT, and sports stadia which Naidu Shamshabad in 5000 acres is the ITES, bio-informatics, and others. 34 initiated or completed. The Realty principal prime mover for the villages have been identified as & Leisure conducted a survey in the flourishing real estate business suitable for this purpose. ORR is said summer of 2004 on the stagnation spread over 10 villages. Its to be first of its kind in the country then existing due to the Telangana appurtenant elements like air craft and will be fully access controlled. It factor. The sample size was 500 maintenance center, flight catering, will be connected by 23 radial roads. consisting of land owners, realtors, aviation training institute, logistics It will cost around Rs. 8,200 crores buyers, bankers and others. Among and redistribution Center are also of which Rs. 3,200 crores go for other findings, the survey indicated likely to be established. construction of the road and Rs. that neither the change of The airport would start its 5000 crores for the development of government (from TDP to operations in March, 2008 to the proposed townships. The Congress) nor the separate state handle 7 million passengers and government will acquire and provide cause were responsible for the 19.93 million passengers in 2020 land for the road, sewerage treatment stagnation; the reason was the with commensurate increase in air plants, electric substations and expected political unrest and the cargo. The HADA Master Plan has similar structures but is not going to
SURVEY earmarked a total area of 14,600 acres for residential development and special reservation zone. It envisages a population of 20 lakh people in HADA area by 2020.
SURVEY fund the construction of the ORR insurance companies, financial SEZ will host around 200 companies and the development of the institutions can open their shops. in five years and has the potential of proposed townships as such. The About 7000 acres are marked for four lakh jobs, according to him. A company which comes forward to the development of hardware park garment park in about 2000 acres is Maheswaram and coming up in Kothur, near execute the project has to raise the between financial resources for the ORR. Saroornagar mandals. Companies Shamshabad, in addition to the The Dubai government has already manufacturing electric goods and apparel park which is already signed an MOU and the Swiss, white goods like fridges and functioning in Gundla Pochampalli Japanese, and Malaysian washing machines will establish of Medchal mandal. Special governments are looking into the their units here. Already Videocon Economic Zones (SEZ) in the proposal. As all this may take some has one such unit near Hardware Park, and in Gems & time, the ORR project is divided Maheswaram. The hardware park Jewellery Park, a 1000acre golf course in into two Nanakramguda phases. The Founder-President of APREDA are the other first phase Col. Narne Ranga Rao is the founder-president of the Andhra Pradesh initiatives consisting Real Estate Developers Association (APREDA). He is the pioneer realtor being taken up of the road in Andhra Pradesh. Way back in 1985 he by the from the prepared a layout in 200 acres near Bibinagar Services personnel. A Government. Gachibowli exclusively for the was sold at Rs. 50/ in The first two t o sq.yd of the layout which 1988 is costing today Rs. 1500/. Col. Ranga phases of the Shamshabad Rao then started developing East City Biotech Park over a length in 3000acres on the Warangal road. As the have been of 22 km strength of realtors was increasing he formed completely will be taken an association to adopt self regulation for real estate business booked and 17 up by sound development of and to request the Government to solve companies are H U D A their problems. He is a member of the setting up their costing National Real Estate Developers Council units. Similarly, about Rs. (NAREDCO). Asked about the real estate scenario at Hyderabad Col. Ranga the ICICI 480 crores, Rao says: while the real estate prices are abnormally high at Bangalore, Knowledge as per its they are still affordable at Hyderabad and the surrounding areas. The boom Park which is Chair man, has set in and will continue to go up with every passing moment. in the vicinity S u d h i r Reddy. Simultaneously, Mr. Reddy is expected to provide employment of Biotech Park in Shamirpet, says, the HUDA will develop a for about 30,000 persons. A semi- Medchal belt, is also booked township also in Koheda in 600 conductor manufacturing unit is completely. taking shape near Maheswaram. Private players like Raheja group are acres. Apart from the airport and ring Geethanjali Gems and Jewellery chipping in (110 Ac.) with IT park road, the government is taking Park, the biggest in the country, and other projects. Infosys several steps to attract IT got the foundation stone recently Technologies is said to be looking for companies, industries and tourists. laid by the Chief Minister. 300 acres to house their biggest The Andhra Pradesh Industrial According to Geethanjali campus in the country. Wipro is Infrastructure Corporation Chairman, Mehul Choksi, in the taking up 100 acres in Gopanpalli. (APIIC) is establishing a financial next two years the company will Thus, the various development district in 200 acres of invest Rs. 200 crore and that a projects are making the City spread Nanakramguda where banks, turnover of Rs. 5000 crore is further and further. targeted for the year 2009. The
The multitude of software companies are employing thousands of techies who are well paid. Just after stepping into the second year of their employment, they start thinking of owning a house or plot, thanks to their high salaries and easy bank loans. Many NRIs in Silicon Valley belong to A.P. Back home, they want luxury villas for their supposedly future home-coming, as well as for investment purpose. According to V.R. Prasad of Goodwill Homes the software engineers and NRIs constitute a bulk of high-end investors in real estate who are instrumental in fueling the market. The tilt of software companies towards Hyderabad for establishing their units is likely to further reinforce the demand. The woefully inadequate infrastructure in Bangalore and Chennai, and the troubles caused by the recent floods in those cities are pushing the investors towards Hyderabad as a better alternative. The Price Factor So far and even now the real estate prices are said to be considerably lower than those prevailing in other comparable cities like Bangalore and Chennai. This is one of the reasons influencing the companies as well as individuals, to opt for Hyderabad for investment in real estate. People from towns and villages within the state are rushing to Hyderabad and purchasing flats or plots because it is in real estate that they are seeing quick appreciation of their money compared to investment in banks,
SURVEY equity and chit fund companies Governments Failure most of which have become cheat The Andhra Pradesh Housing Board fund companies. Further, the Citys (APHB) has been exclusively pull and influence on rural & semiestablished to provide housing urban people is not just financial , it is psychological as well. For some facilities to middle and lower income it will open the doors of El Dorado. groups. One of the important The hype created by the objectives of the HUDA also is the Government and press has direct same. However, instead of providing influence on the people about such housing facilities and trying to Hyderabads golden future.People position the real estate prices at from North India and places like reasonable levels, they themselves Gujarat and Mumbai are coming have become super-realtors. During here and investing in commercial 1990s both the organizations failed zones and posh residential areas to develop even a single housing says Capt. J. Rama Rao, Chairman colony. The APHB has recently of Forum for Better Hyderabad. completed the Singapore township consisting of 2080 plots in 84 acres. The Driving Force And finally, the driving force It has plans to develop all the 723 behind the boom in real estate acres in stages to accommodate prices are the realtors. They consist about 80000 people. Two other of big companies dealing in residential areas are coming up with hundreds of acres to small ones the help of Malaysian companies. dabbling in one or two acres; from There is widespread criticism that the established players with 15-20 Govt agencies are jacking up land years experience in the field to prices while auctioning their plots realtors who have joined the fray which is having a spiraling effect on only yesterday and who want to the real estate prices in general. For ride the surf as long as it lasts. They example, the APHB has set up an consist of genuine and upset price above the ruling market professional businessmen to flyprice in an auction held in by-night operators to cheats and December,2005 in Kukatpalli. The even murderers. Yesterdays realtors had conveniently taken this brokers have become todays realtors. Mr. Maria Das, who has opportunity to jack up the prices. In about 20 years experience in real one instance two bidders participated estate marketing says: Most of and quoted Rs. 50,000/ sq.yd for two the mobilization advances drawn different plots, but abstained later by the irrigation projects from paying the full amounts and contractors have gone into real acquiring the plots. A year before, estate business. So is the case with in Nandagiri Hills area in the auction some land owners who sold their conducted by HUDA, similar lands, became cash-rich and did bidding took place. Such jacking up not know what to do. So they too of prices by fake bids will rain gold have become the short-term to the realtors as can be seen by the realtors. following:
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SURVEY Nandagiri Hills and Kukatpalli Phase V, V1

Existing market rate Cost of 600 sq yd plot Retail bids : Result : Loss due to Default Appreciated Value of Similar plot Gain Not only in the heart of the city but in totally undeveloped or outlying areas also the prices are jacked up artificially. For example, in Vattinagulapally village, a prominent industrial group in the power business put a bid quoting a price of Rs. 4 crore per acre which was way above the floor price of Rs. 40 lakh set by the Andhra Pradesh Industrial Infrastructure Corporation (APIIC). The second highest bidder quoted half the price. The industrial group eventually did not take the land, but the high price quoted enabled realtors to escalate land values in the adjoining layouts to Rs. 10,000 per sq yd. Rs. 12,000/sq yd Rs. 15,000 / sq yd Rs. 72,00,000 Rs. 90,00,000 Rs. 42,000 /sq yd Rs. 50,000 sq yd Prices approximately go up all around to Rs. 25,000 /sq yd Earnest money of Rs. 1,00,000 Rs. 25,000 x 600 sq yds Rs. 1.50 crore Rs. 78 lakh Earnest money of Rs. 50,000/Rs.25,000 x 600 sq yds Rs. 1.50 crore Rs. 60 lakh Citys population constitute the urban poor. During the period 1997 to 2002 the Andhra Pradesh Housing Corporation constructed in Ranga Reddy and Hyderabad districts ( interpolated to HUDA area) nearly 45, 000 houses to the poor.
concessional price could not sustain themselves due to vested interests. Though there is a Cooperative Housing Federation (Housefed) at the state level, the stingy funds at its disposal and long-winded procedures immobilized it from doing anything useful. The co-operative housing sector is a total failure. Right from day one it went into the hands of land owners, realtors and vested interests. There is not a single society in the state which can be called as a successful and ideal society says Khader Ali Khan, Additional Registrar of Cooperative Societies. Added to this, the Governments periodical Co-operative housing societies promise of allotting house-plots to which had the potential of reining its employees remains to be a paper in the prices and providing housing promise only. facility at reasonable cost also Housing for lower income thoroughly failed . After the groups introduction of Urban Land There is no legislation in Andhra Ceiling Act, the coop housing Pradesh for providing any specific sector witnessed a mushroom concession to the urban poor. growth of societies in the eighties. While the role of public agencies These were mainly formed by the is insignificant, private sector land owners to circumvent the caters to middle and higher income Act. Even the few employees groups only. As per HUDAs housing societies to which the estimate about 80 percent of the Government allots lands at
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MARKETING
Of late, marketing of lands and plots in Hyderabad has become a lot more easier. It is more or less a sellers market. 15-20 years ago people with limited means were purchasing plots a little away from city with the fond hope of building their own houses at a future date. But now ninety percent of people are buying them as an investment which they see as a better option compared to other investments. In those days selling the plots even on installment basis was extremely difficult says V.R. Prasad. Narne Estates was the first big player who marketed hundreds of plots in East City on installment basis, extensive advertising and introducing schemes like lucky dips, etc. Now the method of sale of plots is more or less standardized. Periodical advertisements are released in the print media about the layouts. The real estate companies actively
participate in house loan melas organized by banks, exhibitions like Inside Outside and note down the addresses of persons showing interest in their layouts and go on pursuing them on phone. They arrange free trips to the sites in cars or minibuses.
taken up or completed shortly. He rattles off half-a-dozen names of VIPs who have bought plots in the same layout. Unless you ask, he will not tell you in which zone the layout is located and whether it is actually approved or not. Only on your insistence he may show you The sales person or marketing with reluctance the papers related executive tells you that the Outer to the ownership of the layout. To The recent trend is to hold brochure Ring Road or Hardware Park or help you not to change your mind, release, bhoomi puja , road laying, functions by some other inviting some Government or VIPs and thus An Example of a Layout Plan private project is generate some just at a stones free publicity. throw away. He Prospective will show you buyers are also xerox copies of invited to these newspaper functions and clippings to considerable substantiate what number of plots he says. The reality are sold on the is it may be a few same day. Some kilometers away realtors are from the site! He advertising on the internet also to tells you that just specifically attract a few good and NRI customers. vastu complying plots are left and Not all the that you have to realtors directly hasten up, if you buy the lands want to buy a from the farmers plot. He creates a and prepare hype that plots are layouts. There are few and that he middle players will favour you also who purchase lands with his influence! from the farmers, He cautions you some realtors arrange on the spot keep for a few weeks or months and that the company is going to upwardly revise the prices of the registration, offer you discount if sell to realtors. The middle players plots in just a day or two. He the plot cost is paid in lumpsum, margins may vary from 50% to as assures you that todays price is or facilitate you to pay in a few or high as 200% or more depending going to increase at least two to many installments over an upon the place of the property and three fold in the next one to two extended period of time. A salaried timing of the sale. Of late a piece of years. In case you want to dispose sales person usually gets about Rs. land is going through 5-6 middlemen it of any time, he says that the 5000/per month and Rs. 1000- by the time of its registration. company will help you to do so, in 1500 incentive per site sold. Not However, the primary source for the other words you have ready all the sales persons are just lands to be plotted are the farmers interested in their targets. There are who are living for generations in the liquidity! He promises that the some principled ones who deeply vicinity of the city. The rapidly development of the layout will be
SURVEY study the purchasers financial background and need, and advise suitably. Many real estate companies employ or engage an army of sales persons. For example, Sreemitra is reported to have 90 sales persons. As per one estimate, a realtor spends about 20 to 30 % of the sale price towards the marketing of the layout.
SURVEY changing scene of real estate is often bewildring them. Kista Reddy of Rachaloor village sold his ten acres for Rs. 5 lakhs hardly two years back. Now he has to pay Rs. 5 laks if he wants to buy a plot of 500 yards for himself in the same land! Seeing him, his neighbours have become wiser and jacked up their land prices. Some land owners who have already sold their lands search for some reason to extract more money from the purchaser or to get back their lands by paying off the purchase-amount. This is leading to number of litigations and disputes. Previously the completion of transaction between the land-owner and realtor used to take anywhere between six months to two years, but now, the maximum time taken for this is 90 days only.
Layout Rules Thousands of plot-purchasers are loosing heavily because of their ignorance of layout rules and their importance. The appreciation in the value of a plot mainly depends on the situation and quality of the layout. Any layout converting open lands into plots meant for housing has first to be sanctioned by the competent authority. All layouts which are being developed without such a per mission are unauthorized. Neither civic amenities like road connections, electricity, water and sewerage disposal facility can be provided to them nor building permissions given. In Hyderabad Urban Development Authority (HUDA) limits the HUDA is the competent authority to accord the layout permissions. In other areas, the local authority i.e. the concerned Municipality or
Panchayath is the competent authority to approve the layouts. However, even now there are a few Panchayaths abutting the City and in HUDAs jurisdiction. In such Panchayaths their power to sanction layouts has been withdrawn in 1975, after HUDAs formation. The Municipalities and Panchayaths have to refer the layout applications received by them to the Director of Town and Country Planning (DTCP) who has the necessary technical inputs and whose responsibility is to plan and oversee the integrated development of townships and villages having 10000 population or more. Keeping in view the requirements of the people, future growth, and environmental factors slightly different norms are prescribed for sanction of layouts in HUDA, Municipal and Panchayath layouts. The principal requirements in these layouts are: HUDA 12m 12m If the area of layout is 4 to 10ha: 15%.If more 10ha: 10% 10% of layout area Black topped roads Underground 50% of layout area
The Principal requirements for layouts

Description Width of existing approach road to the layout should be: Minimum width of proposed roads in the layout: Minimum open space to be set apart for public purpose: than Minimum area to be set apart for amenities Type of roads to be laid in the Layout Construction of drains Maximum area under plots in a layout shall not exceed
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Gram Panchayat 10m 10m 10% of layout area
Municipality 10m 10m 10% of layout area
.. Metal roads Open
.. Metal roads Open
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The Good, The Bad and the Ugly

The spectrum of realtors consists in the sanctioned layouts even some of their schemes on of the good, the bad and the ugly. after many years of selling the installment basis to attract middleThere are realtors who develop the plots. As per one estimate there class investors. They introduce lucky layouts as per the prescribed may be about two thousand such dips or bumper draws to tempt them. nor ms. Some even provide layouts in and around Hyderabad. In case the investor defaults in additional facilities like all-round The plot owners in such layouts payment of installments, he has to compound wall or fencing, can not obtain permission to build wait till the closure of the scheme swimming pool, community their houses nor they are able to which may be a 3-4 year period. Then center, etc. For example, the city- sell their plots at prices what they too he gets only the principal amount based Sreemitra Developers hoped they would get. As per one less expenses and penalties. To take Limited has secured the ISO 9001 estimate, about 89 realtors sold care of such expected defaults, the certification from American plots to over one lakh customers firms are said to usually make at least National Standards Institute which as plots or farm lands in the 25% over bookings, and , if the studied its style of default is functioning, focus not as Expected income on a 10 acre layout of the expected, Costs: organization, the firm i. Cost of 10 acres at Rs. 10 lakh per acre (Market rate) : Rs. 1,00,00,000 process and will not be systems approach ii. Cost of brokers commission at 1% : Rs. 10,00,000 able to give and involvement iii.Cost of registration of land, etc. : Rs. 8,00,000 plots to all of people. Some iv. Cost of survey and layout development at Rs.10 lakh per acre including those who other real estate approval of layout: 1,00,00,000 h a d v. Cost of advertising and marketing at Rs. 10 lakh per acre :1,00,00,000 firms which are in booked. the forefront and vi. Cost of interest on investment at 24% for one year : 76,32,000 In fact, as earned good name vii. Total Cost:3,94,32,000 per the are Jayadarshini, Benefit norms, the Mr. Murali i. Total layout area in sq yds (10 AC x 4840): 48400sq.yds competent Mohans Jayabheri, ii. Permitted ploting area (55% of the total area): 26620 sq ds authority Narne Estates, iii. Sale price per sq yd : Rs. 2000/at first Sahara, Lahari, iv. Income on the total layout (26620x2000) Rs.5,,32,40,000 gives only a P r a g a t h i , t e n t a t i ve v. Benefit (5,32,40,000-3,94,32,000) : Rs. 1,38,08,000 Grandville, If the land is bought at Rs.50 lakh per acre and sold at Rs. 3000/ per sq yd, the a p p r o v a l Goodwill Homes for the and others. Now realtor gets a benefit of 1.160 crores on the layout. layout and many realtors are realizing that catchment areas of lakes. the final approval is given after laying genuine development of their Apparently dwelling units cannot the roads, demarcation of plots and layouts will stand them in good be constructed in such areas and avenue plantation and drainage stead. HUDA issues a final layout the investments made by those channeling works are completed by certificate only after all the people are more or less dead the realtors. Then only the layout is proposed development works are investments, unless government released for sale of plots. However, completed in a given layout. Hence, comes to their rescue. An year in practice, plots are being sold even such certificate is a test of a back, a well-known real estate before a layout is tentatively realtors sincerity. It is surprising to company, GPR- which reportedly sanctioned. The realtors induce the note that even some of the reputed developed and sold about 48 un- buyers by saying that it is in the final companies have not obtained final authorized layouts had closed stage of sanction and that they would layout approvals for their layouts. the shop and thousands of complete the works within a short A majority of the realtors do not investors had to loose heavily. time. Some realtors mislead the fulfill the basic conditions imposed Many real estate firms operate customers by stating in their
SURVEY brochures as per HUDA norms The Gram Panchayaths which extract more amounts than the or conforming to HUDA norms. came under the jurisdiction of agreed price on one pretext or other. HUDA in 1975, were empowered A few realtors even go to the extent In order to ensure that the layout to sanction layouts till 1974. But of selling the plots without having a is developed properly, the even now, based on the back-dated clear and litigation- free title. In the competent authority prescribes layout approvals plots are being year 2003 HADA issued a public that, within the layout area an sold to unsuspecting customers. caution notice where in the list of extent of land whose value is Recently HUDA has cancelled 200 un-authorized layouts in the HADA equivalent to the estimated cost of layouts earlier approved by the area was published and the the development to the layout Panchayaths. Due to widening and government instructed the should be pledged to it and which Registration can be released Department not to I CAN NOT FORGET THE GRATEFULNESS only after the Mr.D. Chandrasekhar has been working as Manager, Sales in R.K. register plots in development is undone. Alternatively, Township Promoters PVT. Ltd., and gained rich experience. He is such authorized layouts. a bank guarantee sharp, cool and friendly which qualities are very useful in his dealings. PRECAUTIONS can be provided by He shares his experiences with Business Vision: the realtor for this Any marketing person has to first identify the prospective customer TO BE TAKEN purpose. Though correctly. Whether he purchases the plot today or after two years is In the clutter of and such a fool-proof no matter. If he has the potential, realtors wilderness of real system is built into then we have to keep in touch with the rules in the him. Some persons, though estate labyrinths it interest of the plot interested, do not like to be is important for a owners, sadly due pressurized. They want to proceed at person to carefully chart his way to the indifference their own pace. If we can understand before purchasing and inability of the the attitude, it is not difficult to notch a plot. First of all supervising up a sale to a potential customer. he has to identify agencies the poor the usual sales talk or select an area purchasers are And, of-course, has to be done as per the guidelines which is likely to bleeding. The company. appreciate in value penalties imposed given by the I am happy with my profession in near future or for violation of the layout rules because it enabled me to make lasting friendships with persons in where he wants to borders on the different fields. I can not forget the gratefulness shown by some build his house. Then he has to ridiculous. For persons who have been benefited by my advice. select a layout example, in a realignment of roads, provision of sanctioned Panchayath layout the open spaces, etc., some of the plot within that area which has the concerned person who owners in such cancelled layouts approval of the competent authority contravenes any of the provisions may loose their plots partly or fully, and select a plot in it. While of the rules prescribed or any and the risk of demolition of purchasing lands or plots the requirements or obligations structures also can not be ruled following further precautions may be taken: imposed on him can be punished out. with a fine of just Rs. 1000/- and, Some realtors encroach upon the Rs. 10 per day for continuing the Some unscrupulous realtors sell neighbouring government land to offence. Under such circumstances plots without even applying for a their layouts and sell it also. If and the only course left to the layout permission or conversion when the government finds this out purchasers is to go to a consumers of agricultural land to residential such purchasers can be evicted. court. However, not obtaining purpose. Other deceptions Wherever government lands are proper documentation at the time indulged in by them are frequent abutting private layouts, it is better of purchase hinders such course alteration of layouts, sell the same to get the situation of the plot plot to more than one person, of action.
SURVEY verified in the mandal revenue the title of the lands transferred to Chevella mandals. These villages office. his name in the revenue records. have been divided into 10 categories The Urban Land Ceiling Act This process is called as mutation and a master plan is prepared to came into force in 1978. and will facilitate recording of the regulate the developments in the Sometimes, layouts are made in the purchasers name in the Record of HADA area. The master plan surplus lands surrendered to the Rights register with the mandal consists of different zones like highgovernment but still under the revenue office. If this is not done, rise promotion zone, transportation the Original Owners name zone, recreational zone, biopossession of the conser vation original owners. Purchasers should gain and If found out, the V.R. Prasad started his Goodwill Homes Pvt.Ltd. in 1999 after gaining zone Himayathsagar purchasers can be experience in the real estate marketing field for about 10 years in Jana afforestation evicted. Chaitanya Housing and Swagruha Estates. So far he completed six ventures zone . Government on his own covering about 100 acres and is doing his seventh venture in has banned Kothur. He has about 1500 customer (Purchasers) base. A talk with him: In the high construction of Q. Though you started your own (15m) medium str uctures in business about ten years back, you just (12m), and low lands near by developed 100 acres. Are you not slow, (7) rise zones residential water bodies like compared to others? tanks which are A. One reason for my slowness is that I am houses and likely to be choosy in selecting the area for development. c o m m e r c i a l submerged under Apart from my own benefit, it is my motto establishments Full Tank Level to see that my be purchasers also gain can (FTL) situation. equally. And the second constructed. In constraint is finance. Necessary details Q. What are the reasons for the the low-rise zone the plot may be obtained present boom in real estate? about a plot in a A. Apart from other reasons, premature area should be layout near by a announcements by the Government about taking up different projects and a minimum of sqm, tank. high-pitch publicity being given by the press are the important reasons in 1000 limiting the The lands my view. The recent announcement of the Government on the Reliances allotted to the Petrochemical Complex asking for 25,000 acres is an instance of premature ground area u n d e r landless poor announcement. Q. What are your important suggestions for streamlining the real construction to under lavani 20%. In the patta can not be estate business? alienated though A. Registration of plots should not be done without proper approvals of recreational use the such lands are conversion from agriculture category to residential category or for change zone of zoning. Secondly, registration should not be done for plots in unapproved m a x i m u m being plotted and sold by layouts. Thirdly, there should be a single-window clearance for layout p e r m i s s i b l e coverage shall u n s c r u p u l o u s approvals. These steps will make the business healthy. be restricted to Q. What is the status of a real estate person today? elements. 10% of site A. He has money. But no one trusts him! Similarly the area. The biolands allotted to continues in the revenue records conservation zone extends up to 10 freedom fighters and ex-army and it may lead to some mischief. Km radius at places from personnel can not be sold within The Hyderabad Airport Osmansagar and Himayathsagar 10 years of allotment date. Development Authority (HADA) lakes. Agriculture, horticulture, Lands under Protected Tenants is extending over 458.86 sq Km, floriculture activities only will be Act can not be sold without the comprising of 73 revenue villages permitted in this zone. The built up consent of the protected tenant. and 19 hamlets in Moinabad, area should be temporary in nature After purchase and registration Shamshabad, Shahbad, Kothur, and should not occupy more than of lands, the purchaser should get Rajendra Nagar, Shankarpalli and 5% of the plot area. No permanent
SURVEY construction will be permitted in the afforestation zone under Himayathsagar. Some realtors are misrepresenting the categorization of the zones or are not revealing the restrictions imposed. Hence, while buying a plot, especially in HADA area, it is better to verify in which category the proposed plot is situated.
speeding traffic on the ring-road has initiated a great social churning process in the lives of thousands of people in these parts. It is a fascinating story unfolding before ones eyes and worth documentation. On the plus side, it is creating neverbefore available opportunities for the people to take up new avocations or migrate to other villages and take up farming and adopt better standard CHANGE IN LIFESTYLE of life. On the other side those who Sensing the boom, like a are not prudent may end up Cost of one acre of land hound sniffs the scent of As reported by times of India (14-12-2005) in penury very soon. The food, some realtors with self-employed have to restart Two years ago Now foresight and instinct their lives all over once again 1 crore descended on the outlying Shamshabad 7-10 lakh at some other place. 50 lakh villages and induced the Maheswaram 3 lakh Hundreds of farmers are 50 lakh landowners to part with Hayathnagar 5 lakh leading an insecure life with 10 lakh 1 crore their lands at throw-away Shamirpet the fear of loosing their 7-10 lakh 1 crore prices and thus made a Medchal lands in Government 5 lakh 40 lakh huge killing. As the boom Patancheru acquisition. If the got underway, gauging the Government acquires their demand, rush and As reported by Eenadu( 14-12-2005) lands, the compensation competition for their given will be much less than in Maheswaram area lands, and, the value of the ruling market prices and Lowest Highest plots in the layouts made, Two years ago naturally they are averse to 1.5 lakh 10 lakh the land owners began One year ago loose a fortune. Every 3 lakh 15 lakh increasing the prices of Six months ago landowner wants the ring 5 lakh 25 lakh their lands. For them, at road or some other project Three months ago 10 lakh 40 lakh last, their matti has to come nearest his piece of In Dec 2005 20 lakh 1 crore become sona and now land but not swallow it up. even one-acre holder is a thousand rupees per day ten It is said that due to the cororpati! And there is overnight months ago. New petrol bunks manipulations of interested parties change in their lifestyles. Though have come up and dhabas are the alignment of the ORR has been there had been good rains during doing brisk business. The changed 2-3 times. this year, many fields were left Maheswaram branch of State uncultivated. The belt of villages Bank of Hyderabad is being Not only the life-style of the around Hyderabad which was swamped with stamp-duty landowners is changing but their supplying vegetables to the city payments required for registering psyche and attitudes are changing as could not do so this year resulting sale of lands. This branch alone well. The windfall wealth is creating in sky-rocketing of vegetable received Rs. 14.62 crores towards fissures and litigations within the prices which issue was even raised stamp-duty payment from July to families. In one case a 75 year old in the state Assembly. The rise in November of this year. Whereas widow is reported to have now market prices of lands can be seen the income from land registrations claimed a share in her fathers property. Some landowners who feel from the following. in Ranga Reddy district upto Dec., that they got lesser prices for their The farmer who was wielding a 2004 was Rs. 273 crores, it jumped lands are resorting to litigations and plough till yesterday and goading to Rs. 430 crores by Dec., 2005. blackmail to take back their lands. his pair of bullocks, is holding a Already, the yet to come roar of There is a widespread belief that mobile today and conversing with boeings in the airport and the mafia gangs and faction leaders of
his friends. In about six months time more than 1000 two-wheelers were sold in Maheswaram area, a totally rural and sleeping set up. Where there were no jewellery and electronic shops and four wheeler showrooms, now one can see these facilities and people walking into them with their heads tilted upwards. The sales of wine-shops have increased to 20-30 thousand rupees per day which were 10-15
Rayalaseema region are interfering in settling disputes and grabbing valuable lands. Fights and murders for gain are becoming common. For example, in Rajendranagar mandal area alone, 12 murders are reported to have taken place since 1997 all of which are related to land disputes. The murder of Ramana Murthy of Jana Harsha company is the recent example of the entry of murder politics in real estate. After the floods during the previous monsoon in many parts of the state, now it is the turn of City On the plus side, it is creating never-before Property Management Ser vices is a sun-rise surroundings to available opportunities for the people to take up professional activity which experience a flood of new avocations or migrate to other villages and has good scope but which black money. take up farming and adopt better standard of life. has not yet taken roots in Every village now sports On the other side those who are not prudent may India. NRIs and property a mushroom of real end up in penury very soon. Not only the life-style owners living away from estate dealers. One can of the landowners is changing but their psyche the places where their see more such shops and attitudes are changing as well. The windfall properties are situated, than pan dabbas or wealth is creating fissures and litigations within need such services. The STD booths. In fact, the families. After the floods during the previous Property Management right from the STD Ser vice providers can booth operator to the monsoon in many parts of the state, now it is the attend to clearing statutory barber to the kirana turn of City surroundings to experience a flood dues, helping in the shop owner, all are of black money. fixation of municipal and doubling up as real estate agents. rapid growth. Recognising this other taxes, rent collection and How long it takes for the actual need, the NICMAR, a constituent deposits, leasing the property on conversion and development of of National Academy of behalf of the owners, remittances, these farm-lands into urban Constr uction, Hyderabad, negotiations, furnishing information, entities is any bodys guess, but in introduced a diploma course in maintenance, etc. A few enterprising the meanwhile thousands of acres Real Estate Development and persons are putting up property will be left fallow and the landless Management. From its institute protecting agencies who claim to labourers will be the hard hit. situated in Kondapur, Hyderabad, protect the site, land, and plots According to Agriculture it offers the course as a distance within a 50km radius from the City. Department officials in Ranga learning programme suitable to Others are offering services to reddy district, cultivation has come builders, developers, contractors, investigate and trace the title to the down by 50 percent in the fringe consultants, estate and facility lands proposed to be purchased. areas that fall in HUDA limits. managers and those wanting to Some are offering their services to Where the sleepy acres used to take real estate business as a career. identify the plots and demacrate resonate with the tinkle of cow The National Real Estate them by conducting surveys where bells, the suburbs are now Developers Council and the the owners are in a quandary to find resounding to the sound of earth Human Settlement Management their plots. Some are publishing movers! According to a survey Institute (HSMI) of Housing and books on real estate business conducted by Realty & Leisure in Urban Development Corporation typically containing model forms, February-March, 2004, the real (HUDCO) are combinedly agreements, deeds, GPAS, revenue estate activity at Medchal road has
SURVEY caused closure of many industries offering a certificate course for real and fruit gardens which resulted in estate agents to provide specialized large-scale un-employment. knowledge and skills in real estate, property laws, financial appraisal, STREAMLINING THE brokerage and professional conduct. BUSINESS As per an estimate of Reality & Some private institutes also started Leisure, there are about 20 courses in real estate field. It is not thousand persons engaged in real known whether they have any estate business consisting of recognition from the concerned or owners, developers, marketing and relevant authority. One such institute administrative personnel. Most of is the Institute of Real Estate these are untrained people. Hence Research and Urban Development, the real estate industry badly needs situated in Musheerabad trained professionals to manage its (Hyderabad).
SURVEY forms and HUDA/ HADA/ CDA Estates. As on today APREDA has government. Soon, with the initiative in Vijayawada, of Col. M. Ranga Rao, a National regulations. Even a colourful branches monthly has sprung up exclusively Visakhapatnam, Kakinada and Real Estate Development Council dealing with real estate matters and Tirupathi with about 150 (NAREDCO) was formed at the leisure: The Realty & leisure members. Mr. P.S. Reddy, MD of national level. published by Kishor Media, Shilpa Homes is the current There is another national body by Impressed by name Confederation of Real Estate Hyderabad. It started in August, President. 2003, is a useful guide to those APREDAs drive and professional Developers Associations of India, who want to established in LAND TITLES ARE NOT THOROUGHLY CHECKED invest in real 1999, with local e s t a t e . K. Jaswant Rao, after dabbling in different kinds of businesses, finally settled chapters in H o w e v e r , down in real estate field in the year 2000. He wants to tread carefully and different states. Mr. t h e deliver quality service to his customers. He has two layouts- KJR Meadows Shekhar Reddy, m a g a z i n e in Shamirpet area and Murali Krishna Estates near Kompally. To the builder who is has to do a prospective purchasers he gives a computer disc containing all the papers representing A.P. is lot to firm and documents showing the ownership of the land of the layout. He had one of the Viceup its put both the layouts on the web and updates Presidents of c o n t e n t s , them every fortnight showing the progress of CREDAI. Both distinguish work in the layout development. This novel NAREDCO and t h e approach is getting him fast recognition as a CREDAI regularly advertisements sincere and qualityconscious realtor. organize national from the Business Vision in conversation with him: conventions and e d i t o r i a l Q. What do you think has created this deliberate upon matter and artificial boom in real estate prices? important issues be specific A. It is not one mans or a groups or a sections connected with in its advice. creation. It spread through print media and real estate business. R e a l i z i n g word of mouth. Hudas Master the need for Q. Do you envisage any crash of the boom, Plan - 2003 s e l f - if so when? regulation A. First of all we have to note that the price-rise is not uniform throughout The Hyderabad and practice the HUDA areas. You can say that there is a boom in Shamshabad and U r b a n of code of Maheswaram areas, there is high growth in Cyberabad and Medchal areas D e v e l o p e m n t e t h i c s , and normal growth in other areas. Wherever there is a boom, it may taper Agency (HUDA) consists of taking up off within 6 to 12 months. 1905.o4sq km area t h e Q. What happens to the investors if the boom busts? development A. If the investor, whether a realtor or middle-class investor of a plot, happens as per its Master in a to have borrowed at heavy rate of interest then that person will loose heavily. Plan released in 2003, which systematic Q. What peculiarity do you see in the present boom? however is being way, to A. As per my information, there are hundreds of middle players who are revised at present. represent to literally buying today and selling after a week, if not tomorrow . The same 1526 sq Kms of government for removal property is changing hands even 2 to 5 times before registration. It took me RR district and 166 o f nearly nine months to buy 100 acres to ensure that the lands have perfect sq Kms of Medak bottlenecks title. I guess that necessary care is not being bestowed on the ownership district, MCH, and and grant of aspect in the present land deals. And ultimately the last purchaser will be the t w e l v e surrounding concessions, sufferer. municipalities and 125 gram many realtors came together and formed in 1995 the Andhra conduct under the presidentship panchayats come under HUDAs Pradesh Real Estate Developers of Mr. M. Murali Mohan, a jurisdiction. Area-wise, HUDA is the Association (APREDA) under the delegation of realtors and builders largest Urban Development leadership of Col. N. Ranga Rao, visited Sri Lanka in August, 2003 Authority (UDA) in the country: ( MD of the pioneering Narne on the invitation of Sri Lankan excluding the NCR of Delhi)
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Geographical areas of Urban Development Authorities Population Approximate jurisdiction (2001) in sq.Kms. Kolkata Delhi Chennai Bangalore Hyderabad 1.32 crore 1.27 cr 0.64 cr 0.575 cr 0.638 cr 1425 1483 1167 1279 1905
Parameter
Housing shortage and demand in 2020 in HUDA area Housing data 1981-1991-Huda area 1981 1991 Rate of Change 4,91,713 51,727 29.93 lakhs 6.09 6.79 8,21,508 8,39,421 46.66 lakhs 5.68 5.56 + 67% + 55.86% 0.41 0.23
Occupied residential houses Households Population Persons per house Persons per household
By 2021 the population is expected to be 136.43 lakhs, in Hyderbad. Based on this projection, over the next 20 years the demand for the houses will be approximately 80 thousand houses per year. Within HUDAs limits, there are three separate authorities namely, Hyderabad Airport Development Authority (HADA) Cyberabad Development Authority (CDA) and Buddha Purnima Project. There is a proposal to upgrade HUDA to Hyderabad Metropolitan Development Authority covering a total of 4655 sqkm in 54 mandals of five districts.
Assessment of Real Estate Prices

The Realty & leisure has assessed road wise positive and negative factors for the development of real estate in the HUDA area. This assessment is probably based on the information gathered in August - October, 2005 and it has to be updated based on the latest developments. However the following table is useful as a guideline for those who want to purchase a plot or two.
VIJAYAWADA ROAD Positive factors Limited. Development projects are almost non existentexcept the extensions like ORR & 4 track Road Limiting factors Many. Drinking water problems & unauthorized layouts. Apart from this, huge ventures like RFC, Sanghi township & Mount Opera that are spread over thousands of acres are creating vacuum. Projected growth Standard 5-10% p.a. For land rates in outer areas. However lands along ORR will get better rates. Scope for investing Certain new layouts along Kuntlur Hayat Nagar Torrur (ORR) belt will be promoted in the coming months. These can offer better prospects for investments.
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SAGAR ROAD Positive factors Many including the HADA factor as the part of this road falls under High Rise zone ear marked for residential activity. ORR factor. Projected growth Std 5-10% p.a. for retail land rates (per sq.yd) 15-25% p.a. for bulk land rates (per Acre) Scope for investors & Because of Telangana factor, many layouts were sold in bulk (per Acre) due to less projects demand in retail. There is good scope for layouts now. ECIL ZONE Positive factors Limiting factors Scope for investment IT park in the vicinity of Singapore Township will bring up new residential areas along Kushaiguda Rampally Zone. Disputed lands around Nagaram. Dry areas towards Keesara. Good for retail (per sq.yd) as new projects are coming up. Better for bulk (in acres) as land rates are going up.
WARANGAL ROAD Positive factors Road & Infrastructure development, APHB Township, Rahejas IT park & ORR Limiting factors Drinking water problem & reluctance of upper middle class to move to this area. Scope for investment Good on retail front (sq.yd) near to all residential areas upto Singapore Township, good for bulk purchase (acres) at certain locations after Ghatkesar like NFC, Ankushapur, Kepal upto Bibi nagar. MEDCHAL ROAD Positive factors Limiting factors Scope for investment MUMBAI ROAD Positive factors Limiting factors Scope for investment Green environment & good residential projects, ORR & upper middle class living areas. -NILGood for upper middle class upto Medchal Town Good for middle class after Kalakal Town. Migration rate & population growth rate, ORR & standard development activity. Heavy traffic & pollution, many disputed lands & patta / jagir lands, ground water pollution around IDA Patancheru. Good for bulk (Acres) around Isnapur, Tellapur & Kollur, better for retail (Sq. Yds) around Chanda Nagar.
SHAMEERPET ROAD Positive factors ORR & development activity around Genome Valley Limiting factors Long stretch of defence area & limited residential colonies Scope for investment Good for bulk as well as retail, as this road is considered as a recreation zone. This is complemented with development activity like Genome Valley & ORR. However there is little scope for speculation activity. MOINABAD ROAD Positive factors Green & unpolluted environment, ORR &IT related developments in the proximity. Limiting factors Reserve forest area & majority of the suburban area (up to Moinabad) is under catchment area. High construction activity & residential development is not possible. Scope for investment There are good investment options for farm plots & resort projects. If you are looking for a place of living in an unpolluted & green environment, this road provides such environment upto Chevella.
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OLD MUMBAI ROAD Positive factors IT related developments, proposed new IT parks, ORR work, proximity to prime localities like Banjara Hills & Jubilee Hills. Limiting factors Non-availability of clear titled private lands; most of the area is controlled by government.
SHANKARAPALLY ZONE (SUBURBAN AREA) This is a new addition to the city real estate map. Because of the proposed IT corridor at Vattinagulapally, land rates have zoomed up by late 2004. The rates may further go up, if proper development takes place or ORR work progresses at better pace. BANGALORE HIGHWAY (AIRPORT ZONE) Positive factors Many. International Airport, HUDA & APHB Townships, upcoming commercial projects, new IT corridor as the current government is planning to develop a new hub between Shamshabad Shadnagar, upcoming layouts & housing projects. ORR & expressway, Hardware park in the vicinity. Limiting factors Catchment area around Shamshabd, HADA regulations for development (NonResidential zone around Shamshabad)
SRISAILAM ROAD
This is also a new entrant on to the city real estate map. The positive factors include upcoming airport in the vicinity, second entry gate to the airport will be connecting Srisailam Road at Tukku guda, upcoming hardware park &ORR.
PRIME CITY AREA
At places like Banjara Hills, land was sold at a record price of Rs. 63,000 per sq.yd during September 2005. Suddenly there is an unimaginable money flow into real estate.
The Boom - How long will it sustain itself?

Right now the lands in HADA area into a speculative phase and more gain in one year, he will be able to and its surroundings are glittering or less reached a peak. The bubble realize in 5 years which is not a bad like gold. But the big question is can burst any time. The land proposition at all compared to other how long they will continue to prices which we expected after ten available options. shine. Most of the Most of the middle-class investors who have Many analysts agree that middle-class investors contributed to the creation and continuation of Hyderabad is a happening who have contributed to the boom expect to reap at least 2-3 times returns city and that its real estate the creation and growth can be higher than continuation of the in a time-frame of 2 years though many big that of other metros boom expect to reap at players, middlemen and realtors have already because of cheaper land least 2-3 times returns in reaped the windfall. For a vast majority of middle- costs and rapid a time-frame of 2 years class investors it is simply a wishful thinking. infrastructure development though many big apart from other factors like IT. players, middlemen and realtors years are prevailing now says Mr. However, the sudden and skyhave already reaped the windfall. V.R. Prasad, MD of Goodwill rocketing boom has become an For a vast majority of middle-class Homes. Mr. Ravinder Rao, another enigma for them. If land is scarce investors it is simply a wishful realtor says, the small investor will like in Mumbai and Chennai, such thinking. The boom has entered not be a looser; what he expects to demand can perhaps be justified but
of infrastructure for Hi-tech city has taken equally long time. If these are any indicators, the realization of hardware park, SEZ, and other projects may take any The Negative Factors where between 4 to 6 years and The present boom hinges on the above. progress of the following projects: HUDA is planning to develop * International Airport 22 satellite townships to * Outer Ring Road accommodate a million people . * Hardware Park Very soon it is starting with a * Biotech Park township at Koheda. HUDA will * Others naturally provide all civic amenities The international airport is likely to such townships, but who is to be commissioned as per going to provide them to the schedule. But what is the hundreds of scattered layouts in a permanent job-potential it is going 1-3 years time-frame? And how to create? Some may require nearby can the land-rates further housing facility. There is no appreciate without these facilities? estimate of this. However the As per HUDAs Master Plan, Rs. APHB has plans to construct more 30 thousand crores are required to than 2000 houses in the nearby develop the 500 sq km by 2020, i.e. Raviryal village in association with an average of 2000 crores per year a Malaysian Company, HO Hup. from now onwards. Where are the Spread over 125 acres, the project funds? will take 4 to 5 years to be HUDA found that sizeable completed and it will cater to a portion of the areas which have population of 10,000 people. been added during the last 20 years HUDA, which has taken up the are loosely built and thinly first phase of construction of the populated. In other words the ORR is finding it difficult to raise urban fringe has low density and the necessary funds. For the scattered development. Among remaining part of the ORR, the the new areas the built-up plots and executing parties have yet to be investment plots are in the found. HUDA chairman Mr. D. proportion of 1:1. When so much Sudheer Reddy declared that 160 area is available can the new acres of layout developed by ventures sustain interest for a long HUDA in Shamshabad would be time? auctioned shortly to generate funds In Tamil Nadu, Karnataka and for the ORR. some other states plots in layouts Except broadly identifying the without amenities can not be area for the hardware park, nothing registered on sale. As on date this has yet started like acquisition of is not so in Andhra Pradesh. This land, allotment to the companies, gives scope for mushrooming of putting up infrastructure, etc., new and scattered layouts making Land acquisition is going to be a it much difficult for providing civic serious bottle-neck keeping in view amenities and thus hindering the present market rates. The land building activity and this will have acquisition for the airport has a bearing on price appreciation of taken nearly four years and creation the plots.
130
SURVEY not in a place like Hyderabad where about 500 sq km of residential area is available for development.
According to Realty & Leisure, the following number of plots were marketed between 1990-2003: Jana Chaitanya Housing Ltd completed 32 ventures and has a customer base of 10,000 people (or plots, so to say). Happy Homes completed 20 ventures, including far m house projects in 1100 acres and has 7000 purchasers. Narne Estates so far developed 3000 acres in its East City Project. The Realty & Leisure estimated that there are about 3000 big and small developers in the city (including drop outs since 1990) who might have sold plots to 2.50 lakh investors. It is quite probable that more than 50 percent of such plots are still lying vacant and without development. The Andhra Pradesh Government has not yet repealed the Urban Land Ceiling Act, which the Centre is insisting upon for assisting through sanction of funds from the National Urban Renewal Mission which the state is expecting to be about Rs. 100 crores. If the Act is repealed the land rates are most likely to come down drastically. In Hyderabad, if the land rates equal or exceed compared to those prevailing, for example in Bangalore or Mumbai, the investments may be diverted to tier-II cities like Pune, Jaipur, Kochi or even Vizag. Fortunes in real estate business also fluctuate, like in any other business. The Cyberabad region has seen a slump during 2001-03. Before and after general elections of 2004, stagnation and slump was noticed in the real estate prices in the City. As per one estimate, the stagnation was to the extent of Rs. 300-400 crores. Similar development or any unforeseen incident may bust the boom.
SURVEY
Already the Press has started looking at the unusual increase in the land prices in the City. While a few papers are crying hoarse that even a middle-class man can not afford a house now let alone a poor man, the Hindu went so far as inviting for suggestions from the readers to curtail the real estate prices! And there is no dearth of weird suggestions from readers! However, there is a silver lining. As per the United Nations forecast, Mumbai, Kolkata, Delhi and Hyderabad are going to have more than 10 million population by 2010. If this comes true, the aspirations of many investors may be fulfilled, though it will lead to more pollution and slums. The State Government has decided to merge 12 surrounding municipalities and 8 villages into Municipal Corporation of Hyderabad which will be renamed as the Greater MCH. This may enable diversion of funds generated in MCH area for the development of the fringe areas. Reacting to the Governments decision about greater Hyderabad, Mrs. P. Anuradha Reddy, President of the Society for Preservation of Environment and Quality of life (SPEQL) says: The management of the City will go from bad to worse. Over centralization will lead to lesser control and more irregular development of the City. In the final analysis it seems that the boom may prove to be a boon for some and disappointment for others, if not a doom. Sources Office of the Hyderabad Urban Developemnt Authority (HUDA) Hyderabad 2020- draft of HUDA Master Plan. % The Director, Town and Country Planning (DTCP) % Andhra Pradesh Housing Board (APHB) % Municipal Corporation of Hyderabad % Commissioner & Registrar of Cooperative Societies % The Real Estate Developers Association (APREDA) Eenadu, Times of India, Andhra Jyothi, Hindu, Realty & Leisure, Outlook, Outlook Money, Dalal Street, Indian Real Estate: 20042005. Brochures of NAREDCO & CREDAI Conversations and interviews with developers, sales persons, land owners, plot purchasers.
Women are more in BPOs

According to a recent survey by NASSCOM, the current ratio of male to female professionals (79:21) in Indian software companies is likely to be 65:35 by the end of 2005. In the ITES-BPO sector, the employee ratio is loaded in favour of women. (31 males: 69 women). More and more Indian female students are opting for computer science rather than traditional subjects like humanities and pure sciences. It is not without reason that the Indian woman is going this way. Elaborates Preeti Desai, president of the Internet and online Association of India, Firstly, since hiring is preceded by stringent aptitude tests, the Indian woman has an aptitude for IT jobs. Secondly, IT jobs require little or no traveling at all, which suits women. Thirdly, women learn faster then men. Besides, IT jobs are proving to be suitable for women because they offer flexible working hours, glamour, and a safer/ cleaner working environment compared to the manufacturing industry.
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BUSINESS VISION

A Quarterly Journal of Management Volume 2 No. 1 Jan. - Mar. 2006

EDITOR Dr. V. Kondal Rao

Sister Nivedita Foundation Associate Editor T. Sudhaker Rao EDITORIAL BOARD

Prof. T. Divakara Rao

Dr. Aminuddin Khan

Krishna Sagar Rao

Dr. G.R. Reddy Dr. P. Purushotham Rao

Dr. Chetan Srivastava

Printed and Published by Dr. V. Kondal Rao

Printed at : Parthasarathi Printers

CHIT FUNDS PVT. LTD., YOUR FRIEND

AND EVERY WHERE !

APSFC goes golden on 1st November,2005 in the presence of Mr. P. Chidambaram

Andhra Pradesh: Gaining momentum

- Compiled by : Nayani Satyavathi

Economy, Banking and Finance

India ranks 88th in corrupt list

Going for Gold

A phenomenon called Peter Drucker

A tribute to the master : Prof. Peter Drucker

Desperately seeking 3,500 animators

Homage to Madhu Dandavate

Our last glimpse of Dandavate

Madhu : A man of many Parts

Humor was his forte

Dandavate was Washing his Clothes

Science and Practical Reason

Management Challenges and Opportunities in a Globalised Environment

Banks have Rs 880-cr unclaimed money

India Needs Second-Generation Reforms

Key Statistics Post 1991 Economic Reform

1991 56 1991 150

1993 40 1997 3,000

1990-1991 8.4 1991 13 1993 6

2000-2001 8,750 2002 2003

Internet Banking in Andhra Pradesh

D a te M a rc h 3 1 , 2 0 0 1 M a rc h 3 1 , 2 0 0 2 M a rc h 3 1 , 2 0 0 3 D ecem ber 31, 2003 D ecem ber 31, 2004 M a rc h 3 1 , 2 0 0 5

NUMBER OF ATM CARD HOLDERS BANKING ONLINE:

Business Vision Vol.2 No.1 Jan. - Mar 2006

Advances in Internet security and

One day seminars should be

Banks have to make every

The implementation of SET,

Evaluation of Employee Training in Andhra Pradesh Paper Mills Limited, Rajahmundry

Human Resource Development

Business Vision Vol.2 No.1 Jan. - Mar 2006

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Source: HRD, The APPML, Rajahmundry.

Source: The HRD, The APPML, Rajahmundry.

Figures in parentheses are percentages.

Business Vision Vol.2 No.1 Jan. - Mar 2006

Nil 132 (100.00)

Figures in parentheses are percentages.

Figures in parentheses are percentages to the vertical totals.

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Source: Annual Report of APPML, 2003-04

Beauty buses are a hit with youth

Business Vision Vol.2 No.1 Jan. - Mar 2006