ISSN 0975-1211

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 ISSN 0975-1211

REVELATION

The Research Journal

Of
K.P.B.Hinduja College

Volume III
June 2010

K.P.B.Hinduja College of Commerce

315, New Charni Road, Mumbai -400 004.

i
 ISSN 0975-1211

Editorial Board

Chief Editor: Dr. T.A.Shiware

Managing Editor: Dr. (Ms.) Chitra Natarajan
Executive Editor: Dr. (Ms.) Rajeshwary G.
Advisors:
1. Dr. J.F.Patil
2. Dr. S.K.G. Sundaram
3. Dr. L. M. Dani
4. Dr. G.M.Talhar
5. Dr. R.R.Khan
6. Dr. Madhu Nair
7. Dr S. Kaptan
Place of Publication: K.P.B.Hinduja College of Commerce
315, New Charni Road
Mumbai 400 004.

Views expressed in the articles are those of the authors and do not necessarily represent
those of the editor of the Journal. All rights are reserved. No part of this publication may
be reproduced or copied in any form by any means without prior written permission.

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 ISSN 0975-1211

Vol. No. 3 June 2010

Contents Page No
1. Foreword from the Chief Editor
2. From the Executive Editor’s Desk
3. Challenges and Strategies for SMEs in India: Case Studies of 1
Selected Sectors
Dr. Preeti Yadav
Dr. Jeet Singh
4. Role of ICT in the Education of Marginalised Sections of Indian 18
Society
Dr. Vasudev Iyer
Dr. Raju Chandnani
5. Role of ‘IT’ in Governance: Lessons from Cases in India 29
Dr Yasser Mahfooz
6. Breakdowns and Accidents in State Transport Corporations 39
Dr. S. Mohan
7. Management Practices of Small Businesses during Turbulent 49
Time: A Case Study of North Karnataka, India
Dr. N Maruti Rao
8. Poverty Alleviation through Financial Inclusion: An Analytical 60
Study with Special Reference to India
Mr. Krishna Murari
Dr. Manish Didwania
9. Grading of IPOs: A Futile Exercise 72
Dr. Snehalkumar H Mistry
Mr. Giridhari Mohanta
10. Investors’ Behaviour towards Investments 83
Mr. E. Hari Prasad Sharma

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11. Perceptions of Superiors and Subordinates on Women 100
Executives Effectiveness in Public and Private Banks
Dr. C. Anuradha
12. Emerging Promotional Strategies for Recession Survival 111
(A Study of Delhi and NCR Region)
Mr. Saroj K. Dash
Dr. Arun K. Panda

13. Demographic Changes in 21st Century - Its Effect on FMCG 126

Product Consumption
Ms. Sunitha Ratnakaram
Ms. Venkama R. Chakravaram
14. A Study of Women Entrepreneurship in Mumbai 139
Principal Dr. T. Shiware
Dr. Rajeshwary G.
15. Quality of Work Life among Nursing Professionals in Mumbai 151
Dr. T P Madhu Nair
Dr. Shobha A. Menon

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From the Editor’s Desk

The Research Journal Revelation is being brought out by K.P.B.Hinduja College of

Commerce, with a view to assist academicians, professionals and researchers to share
information on topics related to Growth and Development of Business in India. The aim of
this Journal is to encourage researchers to contribute research articles based on
Industry Studies or on findings of Research Projects executed. Issues relevant to the
growth and development of Indian Economy, in the streams of Arts, Science, Social
Sciences, Economics, Commerce and Management are welcome.

Original research articles based on an upto date review of literature and supportive
primary/secondary data are invited.

Frequency of Publication: Biannual

Contact Address:
K.P.B.Hinduja College of Commerce, 315, New Charni Road, Mumbai.400 004
Phone 022 4098 90 00 Fax : 2385 93 97.

Email : hindujacollege@gmail.com

Executive Editor’s E mail address: rajeshwaryhinduja@gmail.com

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Foreword from the Chief Editor
In the fast changing scenario of the global world, there is a need to create a learning
society to face the challenges of education. Knowledge explosion, emergence of
Information Technology, globalisation of trade and economy and rise in social
aspirations have given rise to a demand for new professional knowledge skills.
Universities and colleges need to gear themselves to meet such challenges. The urgent
need is to consciously and decisively invest in enhancing the quality standards of
education by providing training to teachers to equip them with capabilities to meet the
challenges of change. The aim should be to excel the teacher body at all levels, as
valuable resources. Building a vibrant and innovative education system is crucial in a
country such as India, which must address the daunting challenges posed by democracy,
disparity, and development.

India sends the largest number of students to study abroad after China. It was hence
natural that in the last few years academic institutes designed various arrangements
under which an Indian student could earn an international degree. Foreign education
providers interested in tapping the large Indian student base, mostly collaborated with
existing Indian institutes to offer a host of degrees. According to U.G.C. data, there are 156
foreign providers, including 90 universities and 20 colleges, who are keen about
collaborations with Indian institutions. Opening Indian higher education to foreign
competition will strengthen the educational system in India.

India is seen as a huge market with immense potential. The issue of permitting foreign
institutions to operate in India has been fiercely debated for over a decade. Many foreign
institutions are keeping a watch on educational developments in India. University
presidential delegations from Harvard, Yale, Stanford, and Mellon have come to India in
the past few years to learn more about and from the country. On March 15, 2010 the
Union Cabinet cleared the Foreign Educational Institutions (regulation of entry and
operation) Bill, which aims to allow foreign universities to set up campuses in India.
HRD minister Kapil Sibal said that the approval of the bill is “a milestone which will

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enhance choices, increase competition and benchmark quality.” It appears to be a bright
horizon and a clear sky !

Dr.T.A.Shiware
Chief Editor

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From the Executive Editor’s Desk…

In February 2010, the Greek fiscal crisis sent Indian markets crashing. This was the
beginning of a European crisis. If the downward trend continues the international
financial system could re-freeze again, causing a short-term recession. Under such
circumstances the government will salvage all large financial banks but on the flip side such
a rescue step on the part of government will keep bankrupt institutions alive, but at the cost of
huge losses for shareholders and creditors. When credit dealing freezes, all business freezes
and the economy can well slip into coma because the economy machinery cannot work
without financial sustenance.

Greece showed in February 2010, that even a hitherto credible European government
could become incompetent of honouring debts. As panic spread, Greece, and other
European countries lost their AAA rating. European banks that had invested in AAA gilt
suddenly found themselves holding devalued securities. This fall in assets threatened to
wipe out many top banks. To prevent this, the European government initiated a rescue
package of 750 billion Euros covering Greece and all European nations. The symptoms
of meltdown will eventually have a killing global effect because such disturbing melt-
down, hiccups or a decadal stagnation forebodes ill for the global economy and such on-
going incidents of financial crisis in the West indicate a shift in power blocs.

The pendulum of global economic power started swinging back from West to East
during the latter half of the20th Century. The emergence of the ‘miracle economies’ of East
and South East Asia, followed by the rise in China and the growth acceleration in India in
the final year of the 20th Century indicates a shift in economic power towards Asian
countries.

Increasingly, Indians as individuals are moulding national discourse. Everywhere, there

are signs of this momentous shift. State monopolies are bowing to market forces.
Middle-class India’s outward looking entrepreneurship has introduced highly innovative
products; voters are rejecting sectarian agendas; with growing empowerment of women,

viii
a feminization of society has made its inroads in the economy; youth of today
has emerged as a potent force and Indians are charting their own course and have driven
the economy to a growth rate of more than 7.5 per cent. Faced with an aware and
activist civil society, the government has played the role of an agent of unifying diverse
forces. Today the government has undergone a sea change. It thinks in terms of
transparency, ensures people’s right to information and has introduced a series of
reforms to provide security to the common man while policy-makers are pitching health
and education as the key to progress. For a fast developing country like India, there is a
need to introduce need-based reforms both in the industrial and financial sectors. There
is also a need to safeguard our country from terrorist strikes.

In India, prevention of terrorist attacks calls for sweeping and radical changes in
all aspect of administration. Since terrorism penetrates all aspects of everyday civil life
and comes without warning, tackling it, is not a specific isolable task, but requires the
entire administration machinery to be streamlined and to be functioning efficiently at all
times.

The government should create an enabling environment that will facilitate the growth
of the industrial sector, encourage sunrise industries, strengthen infrastructure and boost
agricultural business. The government should financially strengthen the economy, in a
manner that our stock exchange should grow indifferent to the international
financial crisis. Our country has to achieve sustainable economic growth and an increase
in the income of citizens on the basis of a diversified economy, modernized
technologies and an innovative development model. If these measures are
implemented one can be optimist that India will be much quicker than the West in
regaining its tempo of growth.

Dr. (Ms.) Rajeshwary

Executive Editor

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 Challenges and Strategies for SMEs in India: Case Studies of Selected
Sectors
∗
Dr. Preeti Yadav
∗
Dr. Jeet Singh

Abstract

The role played by SMEs in any society is undoubtedly important. Nowadays,

entrepreneurship and firm creation is mostly related to small and micro firms, which
lead us to look at them as an important development agent in any society. A special
role for SMEs was earmarked in the Indian economy with the advent of planned
economy from 1951 and the subsequent industrial policy followed by government. By
and large, SMEs developed in a manner, which made it possible for them to achieve the
objectives of high contribution to domestic production, significant export earnings, low
investment requirements, operational flexibility, low intensive imports, capacity to
develop appropriate indigenous technology, import substitution, technology-oriented
industries, competitiveness in domestic and export markets, etc.

However, as a result of globalization and liberalization, coupled with WTO regime,

SMEs have been passing through a transitional period. With enhanced competition
from China and a few low cost centers of production from abroad many units have of
late been facing a tough time. However, those SMEs who had a strong technological
base, international business outlook, competitive spirit and willingness to restructure
themselves withstood the current challenges and came out successful to make their own
contribution to the Indian economy.

The paper throws light on the challenges faced by SMEs and presents strategies to
come out from the tough times. The paper takes into account the role played by SMEs

∗
Assistant Professor, Faculty of Management Studies, Institute of Rural Management, Jaipur-302018.
∗
Assistant Professor, Department of Business Administration, Faculty of Management, Moradabad
Institute of Technology, Moradabad-244001.

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in the economic development of the country. The paper brings the recent reforms made
by government in enhancing the competitiveness of SMEs in India.
Key words: Entrepreneurship, self reliance, technology, small and medium enterprises.

An Overview
Today Small and Medium Enterprises (SMEs) represent one of the fastest growing
industrial sectors in the country. Liberalization and globalization have now created both
opportunities and challenges for the industry as a whole and more so for SMEs. On one
hand they are capable enough to market their products in any corner of the world; on
the other hand they face cut throat competition in the domestic markets from cheap
imports. Moreover, with more than a year of recession, it has become very important
for SMEs to reorient their focus according to the emerging market trends and thus
endeavor to become internationally competitive.

The SME sector constitutes a vibrant and dynamic sector of the Industrial Economy of
India. This sector has recorded consistently good growth in terms of production,
creation of employment and phenomenal growth in exports over the years. The post
liberalization era in the Indian Economy has enhanced the opportunities and challenges
for the SME sector. With their dynamism, flexibility and innovative drive they are
increasingly focusing on improved production methods, penetrative marketing
strategies and management capabilities to sustain and strengthen their operations. They
are thus poised for global partnership to absorb and more importantly to impart latest
technologies in diverse fields. Currently, the sector accounts for around 95 percent of
the industrial units in the country contributing to 40 per cent of the manufacturing
sector output and 35% of the nation’s exports.
Number of SME units (In Million)
Financial Year Registered Unregistered Total
2003 1.6 9.30 10.9
0 0
2004 1.7 9.70 11.4
0 0
2005 1.8 10. 11.9
0 0 0
2006 1.9 10. 12.3
0 4 0
2007 2.0 10. 12.8
8 0
Source: Office of the Development Commissioner (MSME)

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Research Methodology
The present study has been undertaken to examine the issues and challenges faced by
small and medium enterprises in our country.
The present paper aims to achieve the following objectives:

• To highlight various challenges faced by Indian SMEs

• To present certain strategies for efficient working of SMEs
• To assess the different sectors of SMEs

Area of Study
The paper is not confined to any particular area; on the other hand it is applicable to
whole India. However, opinion of officers/managers of various companies in Jaipur and
Moradabad district of Rajasthan and Uttar Pradesh respectively, has been taken about
the growth, roadblocks and challenges of SMEs. Their views have been incorporated in
this paper. The paper also takes the references of various articles written by various
experts on SMEs.

We have used qualitative research techniques as focus group discussion with respect to
problems faced by SMEs. Our focus group discussion was based on some companies in
region of Jaipur and Moradabad district. And we had covered people from different
types of industries such as chemicals, electronics, casting, fabrication, bottling plants,
machining and processing industry. The discussions were based on the problems of
SWOT, challenges faced by SMEs and what strategies can be followed to enhance the
growth of SMEs in our country.

Review of the Literature

1. Caloghirou et al. (2004) presented a work contrasting the relative impact of
industry and firm specific factors on the profitability of Greek manufacturing
enterprises in both SMEs2 and large-sized firms. The results “reveal that the impact
of individual industry and firm variables on profitability are different between
SMEs and large firms. At the industry level, the findings indicate a positive, albeit
weak impact of concentration on the performance of small and medium-sized
firms. In the case of large enterprises, only industry growth was found positive
and significant. Results at the firm level indicate that financial and marketing
competencies, together with

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 transformation capability are the factors significantly affecting the performance of
SMEs”.
2. The size of the firms seems to be an important factor on their success, because it
allows some flexibility, which is difficult to find on the large firms. “Through their
flexibility and their potential for employment creation, SMEs can play a major role
in regional development” (Inforegio, 2000).
3. Even playing an important role in some Economies, SMEs not always have a
representative share of economic activity as presented by Audretsch (2000) and this
role can be theoretically explained by the static and the dynamic role of SMEs.
“One of the most striking findings emerging in static view of industrial organization
is that small firms generally operate at a level of output that is too small to
sufficiently exhaust scale economies, even when the standard definition of a small
firm employing fewer than 500 employees is applied. A large number of studies
found that because the minimum efficient scale (MES) of output or the lowest level
of output where the minimum average cost is attained, large-scale production is
typically required to exhaust scale economies in manufacturing. Any enterprise or
establishment that was smaller than requires by the MES was branded as being sub
optimal or inefficient, in that it produced at average costs in excess of more
efficient larger firm” Audretsch (2000).
4. All over the world SMEs have a very representative weight for economies and for
local development. Helmsing (2003) presented the new generation of actors policies
and instruments for Africa, on what concerns to local economic development. Here
he presents a distinction between three main categories of local economic
development initiatives (cf. Blakely, 1994 accordingly to Helmsing, 2003)
(a) Community economic development; (b) Enterprises development; and (c)
Locality development.
5. The well-known futurist, John Naisbit long predicted the growing importance of the
concept: ‘small is beautiful’. As an economist observes small business in the US
and Europe finds an increasing trend in their importance since the nineteen-eighties.
Liargovas suggests that small firms are considered the ‘back-bone’ of local
economies in Europe. In the Asian financial crisis, small and medium scaled
enterprises were depicted as ‘an army of ants’ for Taiwan to fight the crisis” (Hu,
2003).

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Role of SMEs
SMEs play an important role in the economic development of any country. The role of
SMEs can better describe in the following paragraphs:
1. In the SME sector India is the fastest growing region worldwide. Their role in
terms of employment creation, upholding the entrepreneurial spirit and
innovation has been crucial in fostering competitiveness in the economy.
Towards meeting the National developmental objective of a growth rate of over
8% on a sustained basis, it is imperative for the industrial sector to grow at a
faster pace supported by a vibrant SME sector.
2. The SME sector acts as a catalyst in upholding and encouraging the creation of the
innovative spirit and entrepreneurship in the economy, thereby helping in laying the
foundation for rapid industrial development.
3. SMEs have also contributed to creativity, innovation and dynamism in the industrial
sector. They have led to the spread of industrial development across the country and
have therefore strengthened the foundations of industrial capitalism.
4. SMEs have been playing a pivotal role in country’s overall economic growth, and
have achieved steady progress over the last couple of years. From the point of view
of industrial development in India, and hence the growth of the overall economy,
SMEs have to play a prominent role, given that their labour intensiveness generates
employment. They also lead to an equitable distribution of income due to the
nature of business. Moreover, SMEs in countries such as India help in efficient
allocation of resources by implementing labour intensive production processes,
given the abundant supply of labour in these countries, wherein capital is scarce.
5. The enactment of the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 was a landmark initiative taken by the Government of India to
enable the SMEs’ competitive strength, address the issues and challenges and reap
the benefits of the global market. SME policy initiatives at the national and state
level are aimed at strengthening the role of SMEs at the base as well as at the higher
level.

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SWOT ANALYSIS OF SMES IN INDIA
STRENGTHS WEAKNESSES
Self Reliance Highly fragmented
Design Expertise Lower Productivity
Availability of Cheap Labour Outdated Technology
Growing Economy & Lack of Innovation
Domestic Market Non Participants in Trade
Abundance of Raw Material Agreements
Manufacturing Flexibility Lack of Funds
Progressive Reforms Lack of Managerial
Capabilities
OPPORTUNITIES THREATS
End of Quota Regime Stiff competition from
Shift in domestic market to developing countries especially
branded products China
Increased disposable income Pricing pressure Location
Emerging mall culture and disadvantages International
retail expansion labour and
environmental laws

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 INDIAN SMES – MAJOR SECTORS

Agro & Food Automobiles Building

Processing Materials

Electrical & Engineering Furniture &

Electronics Furnishings

Gems & Handicrafts IT & ITES

Jewellery

Leather Goods Machinery, Paper Plastics

Equipments & & Packaging
Tools

Pharmaceuticals Textile &

& Chemicals Garments

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Emerging Trends
The emerging trends in the SME sector are mentioned herein below:
1. More and more women are taking up entrepreneurial career, contrary to
the scenario in earlier years.
2. The economic crisis has not impacted the SMEs in India very badly. Therefore they
are willing to make investments in the IT infrastructure by purchasing and
implementing ERP solutions.
3. With large players adopting different models of business that include involvement
of their traditional partners, suppliers or distributors at a different level, SMEs now
are experiencing a new model of functioning in the value chain.
4. SMEs are actively investing in building energy-efficient IT infrastructure and are
ahead of their foreign counterparts. Even in difficult economic times, Indian SMEs
are eager to invest in technologies for reducing environmental impact.

Challenges Faced by SMEs

The challenges being faced by the small and medium scale sector may be briefly set out
as follows:
1. Access to Capital: The greatest challenge facing the SMEs today was access to
capital. It is felt that capital was the single-most important factor that was holding
back the growth of the SMEs in India. Fundamentally, the SMEs had been shut out
of the capital market. They still do not have access to the kind of terms and
conditions that big corporations had.
2. Understand WTO Agreements: The single most important challenge before
SMEs today is to understand WTO agreements and their implications.
3. Matured Market: The market had matured and most business areas were now
being serviced by large companies. Only few business verticals and niche areas are
open for small corporations. However, they are faced with challenges of tough
business environment, difficult times to generate resources required for marketing.
This meant smaller corporations would have to merge with large corporations and
explore business opportunities
4. Inadequate Finance: SME particularly the tiny segment of the small enterprises
have inadequate access to finance due to lack of financial information and non-
formal business practices. SMEs also lack access to private equity and venture
capital and have a very limited access to secondary market instruments.

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5. Market is Fragmented: SMEs face fragmented markets in respect of their inputs
as well as products and are vulnerable to market fluctuations.
6. Difficulty to Access Market: SMEs lack easy access to inter-state and international
markets.
7. Outdated Technology: The access of SMEs to technology and product innovations
is also limited. There is lack of awareness of global best practices.
8. Delay in Settlement of Bills: SMEs face considerable delays in the settlement of
dues/payment of bills by the large scale buyers.
9. Differing Character: The character of the SME sector itself made it difficult to
aspire to greater levels of efficiency. There are areas of organized and unorganized
industries, listed and unlisted companies and these differing levels make policy
implementation difficult.
Strategies to Reinforce the Capabilities of SMEs
SMEs now need to recognize their strengths and also develop strategies to reinforce
their capabilities in their identified sectors.
1. IT Strategy: It is important for the SMEs to have an IT strategy as part of its long-
term business plan. This would also help SMEs manage costs better. IT can
definitely help a low-cost company ramp-up the level of a large organisation
because IT brings to the table tremendous amount of integration, tremendous
simplification of business processes, scalability and standardization.
2. Leverage Collective Strength: The entire approach to business generation would
have to change given the new competitive environment in the global market place.
This called for new strategies, wherein SMEs could possibly leverage collective
strengths and jointly bid for projects and execute them based on their expertise.
3. Upgradation of Skills: Competition is going to get tougher and the SME sector has
to look at ways to increase production through up gradation of technology and
labour skills. For promoting entrepreneurship besides the traditional approach new
approach would have to be adopted and new programmes designed in the context of
the emerging entrepreneurial trend and opportunities.
4. Optimization of Operations: SMEs also have to undertake substantial efforts to
optimize its operations in areas like consumption of raw materials, energy, safety at
workplace and so on. They also have to change their outlook and closely adhere to
responsible business practices

1
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5. Entrepreneurship Education: Entrepreneurship education needs to form part of
the academic curriculum ultimately for creating an environment for
entrepreneurship to grow from the grass root level for growth and development of
the SME sector.
6. Identify the Right Market: SMEs do not readily understand their markets.
Although they are ready to do business with a particular market, they are unaware
of the realities of that market. After spending huge sums they realise that they were
knocking at the wrong door. So SMEs need to carry out extensive research to
identify the right market for their products
7. Business Development Services: In addition to ensuring easy access to finance – a
very major concern, SMEs need a host of non-financial supports, called business
development services (BDS), which can improve their overall performance, access
to markets, and their ability to compete effectively in the highly charged business
environment. These services include educating about and training on new
international trade and investment regime and other related aspects, use of IT as a
business tool and Intellectual Property Rights; product-oriented supports (e.g.
identification; proto-type development; modification, etc.); technical services,
comprising also skill and technology up-gradation and incubators for start-ups;
marketing support, information; guarantees; networking; consultancy; counselling;
and advocacy.
8. Update and Develop Skills: SMEs will not only have to update skills of employees
but also have to develop new skills to suit the requirements of the emerging sectors
in SMEs. It is a fact that products of SMEs are subjected to widespread
discrimination on the export front on account of a number of non-tariff related trade
barriers in the name of quality, patent rights, technical standards, and licensing,
amongst others. So SMEs need to be well-informed on policy changes and should
take extra care to confirm to the global standards meticulously
9. Become Strong in Every Respect: Several SMEs, no doubt, do recognize that
protection no longer is an answer to their problems, but want an effective support in
becoming strong in every respect: understanding complications and implications of
WTO agreements and other developments; technology up-gradation; product
development/innovations; marketing; modern enterprise management skills; etc.
10. Counter the Slump: Meanwhile SMEs should also look at introduction of new
products, product designs, energy efficient and cost effective manufacturing

1
0
 techniques, minimization of waste, optimum use of improved raw materials and
packaging, upgrading quality parameters and specifications to counter the slump in
demand for older product lines
Strategies in Different Functional Areas of Management
Besides the above strategies, there are different functional areas in management of
SMEs which requires proper consideration. The important ones are:
(1) Human Resource
A competent workforce is perhaps the most important asset for any organisation. Thus,
it is in the interest of any company irrespective of its size to positively focus on human
resource (HR) development & management. However, it is rather sad that the HR
activities are often neglected by many Indian SMEs. As per a survey conducted by the
Confederation of Indian Industries (CII), around 80% from the small enterprises and
about 20% of the medium enterprises respondents indicated having no formal HR
department. Indian SMEs can turn the tables around by learning from the big players as
well as from their global counterparts and address the challenges that they face on their
HR front.
(2) Technology
Technology is yet another aspect that can no longer be overlooked. However, merely
implementing a software solution is not enough. Technology delivers only when it is
associated with the right processes driven by the right people. Setting up proper
systems and management processes in place are some of the areas of concern. The use
of new and advanced technology can take the Indian SMEs one step further but it has to
be user friendly, efficient and uncomplicated.
(3) Intellectual Property Rights
Indian SMEs need to understand the significance of Intellectual Property Rights (IPR),
which can make them more competitive and add value to their businesses. There is still
a widespread lack of awareness in SMEs about IPR as a means of creating a
competitive edge in the trade and technology market and for value addition to the
business. The Indian SMEs need more information, orientation and facilities for
protecting their intellectual powers. It is essential that the SMEs in India should show a
positive approach towards creation, protection and management of IPR, so as to enable
them to compete in the global market and achieve growth in their business.

1
1
(4) Finance
A look at the success story of any corporate shows that best practices are built into the
business process in the key functional area of finance through consistent accounting
practices, transparent reporting on performance, providing relevant cost information for
managerial planning, decision making and operational control, sound internal control
systems, compliance on tax remittances, and a consistent credit policy as part of
treasury management.
(5) Marketing
To be successful in marketing, the SMEs should discover customer pains and priorities,
and align their products and services accordingly. Contrary to popular practice, SMEs
would do well to focus their business development efforts towards faster growing
customers than on larger ones. SMEs should nurture themselves and their differentiated
value proposition and not fall into the trap of benchmarking themselves against larger
firms. SMEs should adopt the Whole Product approach - the offerings are always a
basket of products and services - make this basket as complete as possible for the
customer.

Recent Policy Reforms for SME Sector in India

Some of the recent policy reforms for SME sector in India are mentioned herein below:
1. A single comprehensive legislation for the promotion, development
and enhancement of the competitiveness of the MSME sector- Micro, Small &
Medium Enterprises Development (MSMED) Act, 2006 which came into
effect from October, 2006.
2. National Manufacturing Competitiveness Council (NMCC) is set up to energize and
sustain the growth of the manufacturing industry. New promotional packages for
MSMEs and focus on development of clusters.
3. Revised strategy of lending including establishment of Small Enterprises Financial
Centres for strategic alliance between branches of banks and SIDBI located in 388
clusters.
4. SME Fund of US $ 2.27 operationalised and proposal to double the credit flow to
MSMEs in the next five years.
5. Promotion and financial support for credit-cum-performance rating in the MSME
sector in India, to facilitate greater and easier flow of credit from banking sector to
SMEs.

1
2
6. The National Commission for Enterprises in the Unorganized Sector (NCEUS) has
been set up as an advisory body and a watchdog for the informal sector to bring
about improvement in the productivity of these enterprises.
7. Facilitation of technology transfer through Technology Bureau for Small
Enterprises (TSBE).
8. Accelerating initiatives to address various developmental needs for the MSMEs in
the 11th Five Year Plan.
9. Scheme of Fund for Regeneration of Traditional Industries (SFURTI).
10. Guarantee coverage under credit guarantee for Small Enterprises
expanded substantially.
11. Limited Liability Partnerships Act on the
anvil.

Different Sectors of SMES

There are different sectors in the Indian economy in which SMEs have their presence.
The important ones are mentioned herein below:
(1) Textile: Expectations are high, prospects are bright, but capitalizing on the new
emerging opportunities will be a challenge for textile companies. The Indian textiles
industry has established its supremacy in cotton based products, especially in the
readymade garments and home furnishings segment. These two segments will be the
key drivers of growth for Indian textiles. Readymade garment exports were worth US$
8 billion in FY06 and will cross US$ 16 billion by the end of 2010, assuming
a conservative growth of 15% per annum. According to estimates, investments in
textiles are expected to touch US$ 31 billion by 2010.
(2) Pharma: The ability of Indian drug companies to command higher margins in
regulatory markets is helping small and medium players sustain their business.
However, the relatively small size of these companies is acting as an entry barrier since
they need to invest more in terms of meeting the global quality standards as well as
marketing themselves to enter regulatory markets. The goodwill built by big
Hyderabad-based pharma companies is helping the small and medium players, which
are predominantly into bulk drug manufacturing, withstand the current Chinese
invasion into the Indian pharma sector.
(3) Food Processing: India offers a huge growth opportunity for SMEs operating in the
Food Processing segment due to the positive impact of demographic trends,
government regulations like development of agri-zones, mega food parks, vast pool of
1
3
natural resources and growing technical knowledge base which also offers a
comparative advantage to the industry.
(4) Information Technology: IT SMEs have affordable as well as accessible
technologies, applications as well as processes. The need of the hour is for them to use
all of that to their benefit. IT SMEs must adopt to open standards so everyone can
access them and also develop the ability to innovate because innovation is the key to
growth. The various cause of concerns for the IT SMEs in India, are attrition, need for
taxation based on company turnover as well as wage inflation that needed early
solutions.
(5) Electrical: The Indian Electrical Industry has a history of more than 100
years advancing through technical collaborations, joint ventures and indigenous
research and development. Today, the industry has a capacity of manufacturing
most of the equipment. The industry largely depends on the power
programme, industrial requirements, urban and rural demand. Maharashtra enjoys a
competitive advantage in electrical sector viz. electrical home appliances,
electrical motors, transformers, industrial equipment, switch-gears, circuit breakers,
pollution control equipment, Power Capacitors, Lighting fixtures and lamps, etc.
(6) Engineering: The engineering industry has been titled the ‘engines of growth’. The
tremendous impact and influence it has on industrialization and consequently the
economy can be clearly seen from the economic scenario the world over. It has
catapulted many nations like Japan, Germany, USA, UK, etc into frontline industrial
nations within a very short time. India too has found this industry very responsive and
eager to take up any stimulus to growth. Importance of engineering industry in India
can be gauged from the fact that it employs over 3 million people and accounts for
nearly one-third each of productive capital, value added and output in the organized
sector that contributes substantially to both the production and exports of engineering
goods.
(7) Chemicals: A Chemicals industry comprises Agro Chemicals, Fertilizes, Pesticides,
Pharmaceuticals, Dyes, Plastic Processing specially chemicals and paints. Chemical
Industry will continue to remain a large and a crucial industry segment catering to vital
needs of agriculture, household consumption, industrial uses and other strategic and
defense requirements. This means that chemicals are inevitable in many respects, but at
the same time chemicals are hazardous also in many respects.

1
4
Recommendations
After looking at various challenges and problems confronting the SMEs, the following
recommendations are noteworthy:
1. In a competitive world like today, one needs to be always open to new ideas and
be ready to bank upon new opportunities to ride the wave of success. One
such untapped potential lies at the level where one least expect it: at the bottom
of the pyramid
2. Expectations are high, prospects are bright, but capitalizing on the new emerging
opportunities will be a challenge for SMEs. Some prerequisites to be included in the
globally competing environment are:
• Imbibing global best practices

• Adopting rapidly changing technologies and efficient processes

• Innovation
• Networking and better supply chain management
• Ability to link up to global value chains
3. SMEs now need to identify their strengths and also evolve strategies to strengthen
their capabilities in their identified sectors.
4. Recession or difficult time always brings new opportunities for forward looking
marketers, businessmen and entrepreneurs to optimize their market share take over
competitors’ customers and add more value to current customers. The time is to
chalk out a detailed marketing plan for developing existing business with an eye to
future. Make the business a winner and not just a survivor. Invest the time and
talent now for future and stay ahead for a long time. SMEs have to learn and imbibe
the process of innovation, in their day to day working, to remain competitive.
Instead of looking for support from other agencies, they have to find their own
ways of overcoming barriers.
5. While SMEs have responded to competition reasonably satisfactorily, there is scope
for increasing their export potential, domestic market share and developing them as
serious players in the global value chain.

Conclusion
There is a strong need to find ways to manage modern technology and labour market
constraints, which impede the productivity of SMEs. Policy makers and research

1
5
institutions have repeatedly pointed out to the need for extensive research on the SME
sector. What these SMEs primarily need today is knowledge and access to new
technology, adequate financial aid, high levels of R&D and adaptability to the changing
trends in their respective industries.

With the increasing competition, globalisation and the uncertainty due to the global
downturn, SMEs will have to continuously incorporate the latest technology into their
production processes as well as in their marketing and management functions, to cut
costs, gain efficiency and consistency. This will help them become successful and
contribute to the Indian economy in the long run.

References
Articles
1. Audretsch David B. (2000) “The economic role of Small-and Medium-
Sized
Enterprises” the United States. Institute for Development Strategies.
2. Bhatia, G.R: “Small & Medium Enterprises (SMEs) & The Role of the Competition
Commission of India (CCI)”
3. Caloghirou Yiannis, Aimilia Protogerou, Yiannis Spanos, Lefteris Papagiannakis
(2004): “Industry-Versus Firm-specific Effects on Performance: Contrasting SMEs
and Large-sized Firm” European Management Journal Vol.22, No.2 pp.231-
243,
2004
4. Duarte, Nelson (2004): “The Role Of Smes For Development: A Literature
Review”Paper submitted to ERSA 2004 CONGRESS
5. Helmsing A. H. J. Bert (2003): “Local Economic Development: New Generations
of Actors, Policies and Instruments for Africa” Public Administration and
Development, 23, pp. 67-76. Published online in Wiley Interscience.
6. Hu Ming-Wen (2003): “Many small antelopes make a dragon” Pergamon, Elsevier
Science Ltd.
7. Inforegio (2000): “Documents – Official Texts. Sixth periodic report on the social
and economic situation and development of regions in the European Union:
8. Kalra, S. C.: “SMEs in India: The Challenges Ahead”.
9. Khosla, Bikky (2009): “SMEs need to make adjustments to stay healthy”
10. Merchant, Ashwin (2009): “SME - Ignore Marketing at Your Own
1
6
Risk”
11. Prasad, V. N.: “SME Associations Need to Recast Their Service
Menu.”

1
7
12. Sharma, R. T. (2009): “IPO Ready? But What Abut Real Issues”
13. Shikarpur, Deepak: “IT strategies for SMEs”.
14. Subbramanian M (2009): “SMEs need to make adjustments to stay healthy:
Other articles

• IBM (2009): “Indian SMEs lead in energy-efficient IT investments”.

• “SMEs have to pool skills to survive” The Hindu Business Line2009
• “Indian IT SMEs poised for rapid growth”2008.
Newspaper
The Economic Times Internet
Sources
www.economictimes.indiatimes.com
www.smetimes.tradeindia.com
www.expresscomputeronline.com
www. samadhanfoundation.com
www. boloji.com
www.smechamberofindia.com
www.sme.moneycontrol.com
www.thehindubusinessline.com
www.iba.org.
www.businessworld.in

1
8
 Role of ICT in the Education of Marginalised Sections of Indian
Society
*
Dr. Vasudev Iyer
**
Dr. Raju Chandnani

Abstract
ICT has a special role to play in the education of marginalised sections. It can become
an equaliser of abilities and assist the integration of marginalised sections with the
mainstream society. In countries like India, where there is a yawning education gap
between the mainstream and the marginalised sections, ICT can be an effective tool to
bridge this gap. This research paper is an attempt to understand the issues related to
the use of ICT to bridge the education gap between the mainstream and marginalised
sections.

Introduction
In recent times, Information and Communication Technology (ICT) has come to be
regarded as a catalyst in harnessing the benefits of the knowledge economy. ICT covers
any product that will store, retrieve, manipulate, transmit or receive information
electronically in a digital form. Among other areas, ICT has more than a rudimentary
role to play in education. It can deliver a variety of learning at lower cost and with
higher quality than allowed by traditional teaching methods. The Indian Constitution
recognises socially marginalised communities based on caste, religion and gender.
Accordingly based on caste, Scheduled Castes (SCs), Scheduled Tribes (STs) and
Other Backward Classes (OBCs), based on the religious minorities’, educationally
backward minority community i.e. Muslims and women are included as marginalised in
the field of education.

In countries like India, where there is a yawning education gap between the mainstream
and the marginalised sections, ICT can be an effective tool to bridge this gap. This

*
Head, Department of B.Economics, Tolani College of Commerce, Mumbai.
**
Mr. Raju Chandnani, Head, Department of Commerce, Tolani College of Commerce, Mumbai.

1
9
article is an attempt to understand the issues related to the use of ICT to bridge the
education gap between the mainstream and marginalised sections.

Right to Education Bill

Since independence, the theme of Government of India’s education policy has been that
all children irrespective of caste, creed, gender or religion should have access to
education of a comparable quality (Government of India, 1968, 1986, 1992, 2004
and
2007). In August 2009, the Lok Sabha passed the Right of Children to Free and
Compulsory Education Bill, 2008. This has been hailed as a “historic effort” to make
free education a fundamental right for children. The Bill to provide free and
compulsory education to children aged between 6 to 14 years also aims to reserve
25 per cent seats to weaker sections in private schools. However, education as
an instrument of social mobility remains a distant dream. Studies made by
independent researchers and Government committees show the lack of inclusiveness
in access to education at all levels especially for the marginalised sections. The
landmark Report of the Commission of SC/ST of 1986-87 showed that educational
progress till the mid
80’s was slow and uneven (Kamat, 1985, Govt. of India, 1990; Velaskar, 1986,
Govt. of India, 1998). Thorat (2006) has shown the lack of access to higher education
among the marginalised sections in India. Kingdon- Gandhi (2007) in her study of
progress of school education in India points out the disparity in access to school
education despite government intervention. Govinda and Bandyopadhyay (2008) have
found disparity in access to elementary level of schooling especially among girls.

Disparities and Inequalities in Education of Marginalised

Despite the fact that there has been an increase in the literacy rates of marginalised
sections, the present position is still far from satisfactory. We first look at the overall
literacy profile of the marginalised sections.

Scheduled Castes/ Scheduled Tribes/Other Backward Classes

The overall increase in literacy rate in the country during the period 1961 to 2001
was
36.54 per cent against which increase in literacy rate for SCs and STs during the same
period was 44.42 per cent and 38.57 per cent respectively. The female literacy rates
2
0
among STs continue to remain a serious cause of concern, as it is only 34.76 per cent as

2
1
against the total female literacy rate of 53.67 per cent. Census data about the literacy
profile of OBCs is not available. However, according to the data made available by the
55th (July 1999- June 2000) Round of National Sample Survey (NSS) the
overall
literacy rate of OBCs was 65.05 per cent marginally above the national average of 64.8
per cent.

Educationally Backward Minority Community (Muslims)

As per the 2001 Census, literacy rate among Muslims was 59.1 per cent which
was below the national average of 64.8 per cent. The literacy rate among Muslim
females was 50.1 per cent, below the national average of 53.67 per cent.

Women
The female literacy rate has increased since independence. In 1951 it was only 8.86
per cent. The literacy rate of females was 53.67 per cent as compared to 75.26 per
cent among males in 2001. The female literacy rate had risen by 14.38 per cent
compared to a corresponding increase of 11.13 per cent in the case of male literacy
during the period
1991 to2001, which indicates a meaningful narrowing of the gender gap in
education.

The literacy profile of the marginalised sections indicates reduction in the education
gap between the general population and marginalised sections. Despite these
improvements, there continues to be inter-state differences in gross enrolment rate
especially for the SC and ST categories (See Table 1). Variations between states
are also quite deceptive if one compares the Gross Enrolment Ratio (GER) with the
literacy rates among SCs and STs (See Table 1). For instance, in Bihar, the GER for
STs was
79.2 per cent whereas the literacy rate was only 28.2 per cent. The same was the case
for STs in Orissa, Andhra Pradesh, Jammu & Kashmir, and Uttar Pradesh where the
literacy rate is below 40 per cent. In general, literacy rates for SCs were better than
those for STs (Sedwal and Kamat, 2008).

Although the dropout rates among the SCs and STs have been decreasing over a
number of years they continue to remain significantly high. For instance, in 2004-05,
the dropout for SC students at the primary level (both boys and girls taken together)
20
was 34 per cent and the same for ST students (both boys and girls taken together) was
40 per cent. At the elementary level it was much higher at 55 per cent and 63 per cent

21
for SC and ST students (Government of India, 2008). There are a number of factors for
relatively high dropout rates among the marginalised students. This includes economic
pressures, humiliation, poor quality of education, badly equipped government schools
in terms of number of teachers, infrastructure and school environment.

Singh (2009) in his study of six most backward states (Andhra Pradesh, Bihar, Madhya
Pradesh, Orissa, Rajasthan and Uttar Pradesh) of India in terms of socio-economic
indicators had tried to identify the underlying causes of disadvantages in primary
education for SC children between the age group of 5-18 years. Using the data from
the Third National Family Health Survey (NFHS-3), 2005-06, he concluded that
although there were multiple reasons, cost of education was the single most important
variable for the significantly high percentage of SC children dropping out from
schooling (See Table 2).

22
 Table 1: Literacy Rates and Gross Enrolment Rates for SCs and STs

Source: Sedwal and Kamat (2008) Note: @- Few districts have been excluded

23
 Table 2: Reasons for dropping out from schooling
(Percentage of Children between age of 5-18, based on NFHS-3)

Source: Singh (2009)

Use of ICT to Bridge the Education Gap: Few Success Stories

At the outset it must be made clear that the role of ICT is to complement the formal
structure of education. In this regard the major advantages of ICT based education are -
it is quicker and cheaper (important in the context of bridging the education gap among
the marginalised sections in India), users can proceed through a training programme at
their own pace and at their own place, it provides collaborative and exploratory
learning environments, it makes learning a fun, the content can be updated easily and
provides a direct access to many other training resources.

Although the use of ICT in education in India is limited, few enterprising organisations
and forward looking state governments have taken initiatives in harnessing the benefits
of the ICT in reaching the marginalised sections. A few success stories in form of mini
case studies are discussed below.

24
1) Butterflies Broadcasting Children Project
(http://www.comminit.com/en/node/118455) (Accessed 3rd November,
2009)
It was set up in March 2000 to enable poor and impoverished street children in New
Delhi to raise awareness of their needs and gain education. The children were taught in
team work, accuracy of communication, time management and the use of mini-discs in
broadcasting a radio programme. Training programmes were conducted by PressWise,
a United Kingdom-based media ethics charity. These children were between the ages of
7 and 18; however due to their poverty many were missing out on any form
of education. After completion of their training, the child reporters (with the help of
an adult facilitator) began exploring the possibility of securing air time from All
India Radio and F.M. radio channels. They also considered transmitting their
programmes through a cable network. None of these avenues proved fruitful. Thus,
participants began to broadcast their productions on public address systems.

2) Life Skill and Sexuality Education for Adolescent Girls

(http://www.apdip.net/resources/case/rnd17/view) (Accessed 4th November,
2009)
The objective of this project was to use of ICT tools to provide comprehensive
sexuality and life skills education that empower adolescent women in Chennai. Under
the overall supervision of the Centre for Women’s Development and Research the
project was started in August 2004 targeting adolescent women, including Dalits from
Othiyur village of Eddaikazhinadu town, Kancheepuram District, and from the slums of
Thiruvanmiyur, Chennai. The project began by holding focus group meetings with
adolescent women to assess general knowledge and beliefs about sexuality, and sexual
health, as well as to understand the socio-cultural context that contributes to these
beliefs. Based on the results, the project developed modules for sexuality education
curriculum. The strategy employed was to gradually build rapport with the young
women through training in computer technology skill including program applications
and use of the Internet.

At the interim point in the project, it surveyed 98 out of 109 girls using the centre.
Of the respondents 71 percent were introduced to computers at the centre and began
using them there for the first time. 78 percent of the girls reported coming to the
centre several times a week to use the computers, 65 percent reported they came every

25
day. 98 percent reported feeling comfortable using the computer at the time of the
survey. At

26
the six-month point, the project reported that the following had been completed: a
growing database of family and community profiles, a portion of the sexuality
curriculum, data on adolescent women’s proficiency and comfort with computer use,
and the formation of women’s club, or “Snehidhi”, with a corresponding newsletter and
website. (http://www.snehidhi.org).

3) Empowering the Underprivileged Women through the use of ICT

(http://theultimatecreation.com/GKC/sector/Datamation%20Foundation.pdf.)
(Accessed 5th November, 2009)
Datamation Foundation is a non-profit, apolitical, non-partisan registered Charitable
Trust started in 2001 with its head office at Delhi. The Foundation has been
actively engaged in advocating, designing and implementing innovative
Information and Communication Technology enabled initiatives to help meet the
United Nations Millennium Development Goals (MDGs). The
Foundation targets women, economically and socially
disadvantaged communities and youth in India and other developing countries.

The UNESCO supported, Datamation Foundation programme on ‘Empowering the

Under privileged through the use of ICT’s’ was set up as a Community Multi-Media
Centre (CMC) in Babul-ulm-Madarasa located in extremely impoverished and
backward Seelampur- Zaffrabad predominantly Muslim neighbourhood in the fringes
of North-East Delhi in March 2003. The locality where the centre is situated is
economically backward. The local people of the area mostly work in small factories on
casual basis or are involved in small informal jobs. The school dropout out rate
amongst the girls was over 60 per cent.

Keeping in mind local ground realities, Datamation Foundation started the centre in
collaboration with madarsa to provide basic knowledge of ICT to the people which
would be otherwise out of their reach. The centre offers counselling, multi-media
training and learning opportunities on computer to compensate for missed primary and
secondary education where empowering girls to return to school is not a feasible
option. Hindi and Urdu are used along with English to facilitate learning. Some
computer based learning programs in the form of Vocational CDs have been developed
with voice over and content in Hindi as well as English. The project is a step forward in

27
the direction of empowering women from the poor community. It provides a strong
example of using local religious community to modernise and empower women folk.

Challenges in Using ICT in Education of Marginalised Sections

Effectiveness, cost, equity, and sustainability are four broad interlinked issues which
must be addressed when considering the overall impact of the use of ICT in education
of the marginalised sections. It is not easy to quantify the degree to which ICTs have
helped expand access to basic education since most of the interventions for this purpose
have been small-scale and under-reported. As far as the cost of providing ICT is
concerned it is imperative that fixed and variable costs are clearly distinguished. In
many cases the fixed costs of a technology project are high and its variable costs are
low. In such a scenario it will be cost advantages to scale up the operations.

There exists a wide disparity in access to ICTs between rich and poor countries and
between different groups within countries. In this regard it is worth mentioning the
study made by Wolcott and Goodman (2002) regarding the diffusion of internet in
India. According to this study, internet access was largely restricted to universities and
rural areas were neglected. Therefore, equal attention must be paid to ensure that the
technology is actually being used by the target learners and it truly serves their interest.
For this relevant software in the local language must be produced keeping the cultural
aspects into consideration.

The use of ICT would be a successful if and only if it is economically, socially,

politically and technologically sustainable. Economic sustainability requires long-term
commitments of financial resources with cost management as its central pillar. Only
when ICT enabled programmes serve the needs of the community it can be socially
sustainable. For political sustainability, feasible policies and change in teacher’s
mindset are necessary conditions. Achieving technological sustainability is tricky given
the dynamic nature of technology. However, it must be kept in mind that learning
objectives should drive the choice of technology and not vice a versa. Thus, the
introduction of ICT in education, when done without careful deliberation, can result in
the further marginalisation of those who are already marginalised.

28
Suggestions to Strengthen ICT in Education of Marginalised
Historically, India’s marginalised section has been more or less devoid of benefits
enjoyed by the rest of the population. This is true as far as the quality of education is
concerned. ICT in education would go a long way in empowering the marginalised and
also help in bridging the education gap. We make that following suggestions with the
aim of strengthening ICT in education of the marginalised.
> There is a need to review and develop curriculum and content for effective use of
ICT to support curriculum delivery and improve learning outcomes. Curricula must
be developed for ICT as a tool across the curriculum, ICT literacy, ICT as a subject
and an e-learning centre must be established to develop and distribute relevant
content.
> Appropriate training models for educators and teachers must be developed to enable
them to access the necessary skills, competencies and understanding in the use and
application of ICT in learning environments.
> An effective ICT services strategy must be in place to acquire, deploy and support
the technology infrastructure in educational institutions.
> Long-term financial commitment from the government would be required to
support ICT enabled educational projects
> Clear and detailed monitoring and evaluation mechanisms and frameworks must be
at place to track development and progress, and support the ICT in education
initiative.

References
• Bhattacharya, S. (2002) “Introduction: An Approach to Education and
Inequality”, in Bhattacharya, S. (ed.), Education and the Disprivileged:
Nineteenth and Twentieth Century India, Hyderabad: Orient Longman.
• Government of India (1968): National Policy on Education, New Delhi, 1968.
• Government of India (1986): National Policy on Education, New Delhi, 1986.
• Government of India (1990): The Report of the Commissioner for Scheduled
Castes and Scheduled Tribes, 29th Report 1987-89, New Delhi, 1990.
• Government of India (1992): National Policy on Education 1986 as modified in
1992, New Delhi, 1992.
• Government of India (1998):National Commission for Scheduled Castes and
Scheduled Tribes, Fourth Report (1996-97 & 1997-98) Volume I, New Delhi,
1998.
• Government of India (2004): National Common Minimum Programme of the
UPA Government, New Delhi, May 2004, extracts relating to Education.

29
• Government of India (2006): Report of the Working Group on “Development of
Education of SC/ST/Minorities/Girls and Other Disadvantaged Groups” For
11th Five Year Plan (2007-12), Government of India, Ministry of
Human Resource Development, Department of Higher Education, New
Delhi, December, 2006.
• Government of India (2008): Selected Educational Statistics, 2005-2006,
Abstract. New Delhi: Ministry of Human Resource Development, Department
of Education, Planning, Monitoring and Statistics Division, New Delhi, 2008.
• Govinda, R and Madhumita Bandyopadhyay (2008): “Access to Elementary
Education in India: Country Analytical Review”, Create Pathways to Access,
Research Paper, July 2008.
• Kamat, A.R. (1985): Education and Social Change in India, Bombay: Somaiya
Publications,
1985.
• Kingdon-Gandhi, Geeta (2007): “The Progress of School Education in India”,
GPRG-WPS-071, Global Poverty Research Group, March 2007.
• Sedwal, Mona and Sangeeta Kamat (2008): “Education and Social Equity with
a Special Focus on Scheduled Castes and Scheduled Tribes in Elementary
Education”, Create Pathways to Access, Research Monograph No. 19,
May
2008.
• Singh, Lakhan (2009): ““Deprivation of India’s Scheduled Caste Children from
Primary Education” paper presented at the XXVI IUSSP International
Population Conference, Marrakech, September 27- October 02, 2009.
• Thorat, Sukhdeo (2006): “Higher Education in India Emerging Issues Related to
Access, Inclusiveness and Quality”, Nehru Memorial Lecture, University of
Mumbai, Mumbai November 24, 2006.
• Velaskar, Padma (1986): “Inequality in Higher Education: A Study
of Scheduled Caste Students in Medical Colleges of Bombay”, Mumbai:
Tata Institute of Social Sciences, (Unpublished Ph.D. Thesis.).
• Wolcott, P. and Goodman, S. (2002) “Is The Elephant Learning To Dance? The
Diffusion of the Internet in the Republic of India”, Georgia Institute of
Technology.

30
 Role of ‘IT’ in Governance: Lessons from Cases in India
*
Dr Yasser Mahfooz

Abstract

E-Governance involves the use of Information and Communication Technologies

(ICTs) to transact the business of government. E-Governance is about a process of
reform in the way governments work, share information and deliver services to external
and internal clients for the benefit of government, citizens and businesses they serve. E-
Governance initiatives are common in most countries around the globe, including
industrialized, emerging, and developing economies.

The study reviews various projects undertaken by the government involving application
of Information Technology; and the impact of these initiatives. The scope of this paper
is limited to the e-government project implementations in India, although various issues
from the rest of the world have also been considered.

Introduction
Kei Ho (2002) claims that the early 1990s was the starting point of the concept of
e- government. The reason for this was the use of electronic mail, list-servers and
the World Wide Web to deliver services and information to its citizens. By the end of
the
1990s, governments worldwide were pursuing e-government projects to
provide information and services to citizens and businesses electronically (Backus,
2001).

At the level of service, e-governance promises a full service available twenty four hours
a day and seven days a week, greater accessibility, the capability to obtain government
services without visiting government offices, and reduced service cost. At the level of
basic factors, e-governance contributes to the functioning of democracy by online

*
Assistant Professor, Department of Business Administration, Aligarh Muslim University, Aligarh.

31
provision of government information which would otherwise be difficult to obtain or
unavailable (Teicher et. al., 2002).

E-Government harnesses information technologies such as Wide Area Networks

(WAN), Internet, World Wide Web, and mobile computing by government agencies to
reach out to citizens, business, and other arms of the government for the purpose of
improving delivery of services to citizens, improving interface with business and
industry, empowering citizens through access to knowledge and information and
making the working of government more efficient and effective. The European Union
(Commission of the European Communities, 2003) has defined “e-government” as the
use of Information and Communication Technologies (ICTs) in public administration
combined with organizational change and new skills in order to improve public services
and democratic processes and strengthen support to public policies.

The Waseda University Institute of e-Government released the results of its World e-
Government ranking in 2008 based on the monitoring and evaluation of e-governments.
This ranking contains comprehensive benchmarking indicators to obtain an accurate
and precise outcome for the latest development of e-governments in the world. The
results showed that India has still a lot to achieve in terms of IT usage in government
sector.

E- Government in India
With globalization, there is cut-throat competition in trade and enterprise; so today a
country’s administrative system is far more important as a competitive tool than it used
to be (Tripathi, 2007). An administration that has the capacity to act quickly, instantly,
vigorously and which is accessible and open can play an important role in attracting
foreign investment. Besides this, citizens today are more aware; they demand rapid
online services from the government as they do from the corporate sector. In order to
meet these challenges, e-governance can play a pivotal role.

According to Keohane and Nye (2000), governance means the processes and
institutions, both formal and informal, that guide and restrain the collective activities of
a group. Government is the subset that acts with authority and creates formal
obligations. Governance need not necessarily be conducted exclusively by

30
governments. Private firms, associations of firms, non-governmental organizations
(NGOs), and associations of NGOs all engage in it, often in association with
governmental bodies, to create governance; sometimes without governmental authority.

The governments, both at the center and at the states, in India have taken the e-
governance seriously and have been continuously endeavoring to provide citizen
services in a better manner (Mahapatra and Perumal, 2006). Projects in diverse places
such as in the slums of New Delhi, in the fishermen’s’ communities of Pondicherry and
in the villages of Madhya Pradesh, have demonstrated the efficacy of IT in enlivening
the living by improving the means of livelihood for the people on the other side of
digital divide (poor and semi-literate people) who are normally excluded from such
projects (Sood, 2004).

The Government of India started the use of IT in the government by launching a

number of initiatives. First the government of India approved the National e-
Governance Action Plan to be implemented during 2003-2007. The plan laid the
foundation and provided impetus for long-term growth of e-governance within the
country. The plan further seeks to create the right e-governance and institutional
mechanism, set up the core infrastructure and policies and implement a number of
mission mode projects at the center, state levels to create a citizen centric and business
centric environment for e-governance. The different components of this program are as
follows (Dwivedi & Sahu, 2008):

1) Awareness and Communication: The success of e-government plan highly

depends on the awareness about the program. Therefore the Government of India
disseminates the information about the e-government plans.
2) Assessment: The Government of India is investing significant part of its scare
resource in e-government projects. Therefore it is necessary that a robust assessment
strategy is devised for the existing e-government projects.
3) Capacity Building: The capacity building guidelines take into account of the fact
that different states are at different levels of readiness for e-governance and have
different levels of aspiration. The role of the capacity building team is at the program
level to provide leadership and vision including policy formulation, preparing

31
roadmaps, prioritization, preparing frameworks and guidelines, monitoring progress &
capacity management.
4) Common Services Centre: Common Services Centre (CSC) scheme is the most
prominent face of National e-Government Program. Specific support is being provided
for this scheme. The scope of support includes Identification of core components of
CSC Scheme; Frame problem agendas related with application software, legal
instruments, and essential backend for CSC etc.
5) Infrastructural and Technical: This cell provides support to the Department of
Information Technology in implementing those projects and components of e-
Government.
6) Monitoring and Evaluation: The Program Management, Monitoring and
Evaluation Unit of the Program Management Unit for National e-government program
develop a comprehensive MIS at program level and track the physical and financial
progress of various projects.
7) Project and Financial Appraisal: The cell identifies resources to provide assistance
in project conceptualization, development and implementation to various implementing
agencies.
8) Research and Development: The e-Governance R&D team provides consultancy
and research inputs in the areas of e Governance Technical Standards including
interoperability standards e-Government Enterprise architecture frameworks,
Information Security etc.

Apart from the action plan, the following measures have also been introduced (Monga,
2008):
1) Adoption of Information Technology (IT) Act, 2000 by the Government of India
to provide legal framework to facilitate electronic transactions. The major aims of this
act are to: recognize electronic contracts, prevents computer crimes, and make
electronic filing possible. The Act came into force on 17 October, 2000.
2) Establishment of the National Taskforce of Information Technology and Software
Development in May,
1998.
3) Creation of Centre for e-governance to disseminate the best practices in the area of
e- governance for the use by the Central and State Governments and act as a nodal
center to provide general information on e-governance, national and international
initiatives, and IT policies of the government(s).
32
4) Developing e-office solutions to enable various ministries and departments to do
their work electronically. Modules such as Workflow for Drafts for Approvals, e-file,
e-notings, submission of reports, integrated personal information and financial
accounting systems have been developed.
5) Setting up of a High Powered Committee (HPC) with Cabinet Secretary as its
Chairman to improve administrative efficiency by using Information Technology in
Government.
6) Designating a Joint Secretary level officer as IT manager in every Ministry/
Department.
7) Instituting websites by almost all Ministries and Departments and providing
information on aspects such as their objectives, policies and decisions, contact persons,
etc. Some of them have started their electronic newsletter for giving publicity to their
activities on wider scale; and identifying departments, which have frequent inter-face
with the citizens, and computerizing them on priority basis.

A number of state governments have also initiated measures to introduce IT and its
tools in the governance process. Most of these states are using these applications for
improving service delivery to their citizens. They are moving from manual processes to
on-line delivery by using conveniently located service centers in public places. Some of
the e-governance schemes launched by Indian government in different states are shown
in Table 1.

Select E-Government Projects in India

1) Project: Bhoomi
The Department of Revenue in Karnataka State has computerized 20 million records of
land ownership of 6.7 million farmers in the State. Previously, farmers had to seek out
the Village Accountant to get a copy of Record of Rights, Tenancy and Crops (RTC)- a
document needed for many tasks such as obtaining bank loans. There were delays and
harassment. Bribes had to be paid. Today, for a fee of Rs. 15, a printed copy of
the RTC can be obtained online at computerized land record kiosks (Bhoomi centers)
in
177 taluka offices. This system works with the software called “BHOOMI”
designed fully in-house by National Informatics Center, Bangalore.

33
2)Project: e-Seva
Launched on the 25th of August 2001, electronic seva (e-Seva) is the improved
version of the TWINS project launched in 1999, in the twin cities of
Hyderabad and Secunderabad in Andhra Pradesh. eSeva centres offer 118
different services like payment of utility bills/taxes, registration of births/deaths,
registration of applications for passports, issue of births/deaths certificates, filing of
Sales Tax returns, Trade licenses of MCH, B2C services like payments of Tata
Teleservices, Reliance, sale of Airtel Magic cards. The government has rolled out the
project to other parts of the state, including rural areas like the West Godavari district.

3) Project: CARD
The Computer-aided Administration of Registration Department- CARD in Andhra
Pradesh is designed to eliminate the maladies affecting the conventional registration
system by introducing electronic delivery of all registration services. CARD was
initiated to meet objectives to demystify the registration process, bring speed,
efficiency, consistency and reliability, substantially improve the citizen interface etc.
Since 60 percent of the documents, Encumbrance Certificates (ECs) and certified
copies relate to agricultural properties, the success of the CARD project has great
benefit for the rural farming community.

4) Project: FRIENDS
Fast, Reliable, Instant, Efficient Network for the Disbursement of Services is part of the
Kerala State IT Mission. FRIENDS counters handle 1,000 types of payment
bills originating out of various PSUs. The payments that citizens can make include
utility payments for electricity and water, revenue taxes, license fees, motor vehicle
taxes, university fees, etc. Firewalls safeguard data from manipulation. The
application has provisions for adding more modules and for rolling back incorrect
entries without affecting the database even at the user level.

5) Project: Gyandoot
The Gyandoot project was initiated in January 2000 by a committed group of civil
servants in consultation with various gram panchayats in the Dhar district of Madhya
Pradesh. Gyandoot is a low cost, self-sustainable, and community-owned rural Intranet
system (Soochnalaya) that caters to the specific needs of village communities in the

34
district. Wide range of services that include agricultural information, market
information, health, education, women’s issues, and applications for services delivered
by the district administration related to land ownership, affirmative action, and poverty
alleviation are provided. Kiosks are connected to the Intranet through dial-up lines and
the user interface is menu based with information presented in the local Hindi language
and the features of the Gyandoot software are continuously being updated.

6) Project: MUDRA
MUDRA (Municipal corporation towards Digital Revenue Administration) system will
be useful for the Holding owners, Tax collectors, officials at headquarter levels and
Circle levels. They will have total picture of tax collection that will help the decision
makers to take suitable decision for further improvement. It is designed to computerize
the over all functions of tax collection system of Patna Municipal Corporation.
Revenue management is the key to economic stability and development of urban
infrastructure. The basic objectives of this software, developed and implemented by
NIC Bihar State Unit includes bringing improvement to the quality of service being
offered to the citizens and at the same time, it will also become possible for the first
time to track all kinds of defaulters on payment of taxes due.

7) Project: DRISHTEE-Connecting India Village by Village

Drishtee's software platform enables e-governance and provides information about and
access to education and health services, market-related information, and private
information exchanges and transactions. Drishtee offers its network platform to any
service provider who wishes to market its range of services to rural India by plugging
their application in with Drishtee's software offered directly at the village level.
Drishtee is an organizational platform for developing IT enabled services to rural and
semi-urban populations through the usage of state-of-the-art software. This software
facilitates communication and information interchange within a localized intranet
between villages and a district center.

8) Project: FAST
The ‘Fully Automated Services of Transport’ is another e-governance project
implemented in the cities of Andhra Pradesh. The objective of FAST is to build
comprehensive database and provide on-line services to the public covering all gamut

35
of services of Transport Department like Issue of Driving Licenses, Registration of
Motor Vehicles, Issue Permits, Collection of Motor Vehicle Taxes, etc.

Conclusions
A country like India needs e-governance to provide the facilities to its citizens. The
multi-dimensionality and complexity of e-government initiatives implies the existence
of a wide variety of challenges and barriers to its implementation and management
(Grover, 2006). IT infrastructure is the backbone of e-governance. Interoperability with
existing software and hardware platforms is a key success factor. It is unlikely that
available resources can support a full replacement of existing application. Hardware
should be fully compatible with future technologies as well. Finally, some legal aspect,
like security and privacy, must be considered, as personal data are processed and
stored, and financial transitions must be executed. To cope with such requirements
appropriate technical changes must be done (Shah, 2007).

The ICT facilities need to be developed and should be available to one and all citizenry.
Internet connection through satellite, phone lines or through cable or Television should
be accessible for all specially to the people in rural areas. Service should be accessible
by anybody from anywhere at anytime. Further, the maintenance of ICT is a key
success factor for long living systems in rapidly changing technical regularity
environment. A well skilled labor force and strong will is need of the hour for timely
and regular maintenance.

With the introduction of e-government applications, the service delivery mechanisms in

India have made clear departure from the past- cramped spaces, shabby ambience, long
queues, delaying tendencies of officials, procedural complexities, direct and indirect
demands for bribe, and inefficiency in work. Thus, it can be inferred from the above
that a good beginning has been made to make e-government a reality in India, but still a
lot needs to be done. Sincere efforts are required on sustained basis in future also to
maintain the momentum.
E-governance is an evolutionary phenomenon, and requires a change in the mindset of
citizens, executives or the government. With the support of the Internet, the
government processes defined by specializations can be made efficient, effective, and
citizen friendly. A developing country like India needs e-governance to provide the

36
facilities to its citizens. Most of the projects are fulfilling limited needs properly, but
they need a holistic approach to progress this to make it self-sustainable in the long-
term.
Table 1: Statewise E-Government Schemes in India
State/ Union Territory E Government Schemes
Andhra Pradesh E Seva, CARD, VOICE, FAST, e COPS
Assam ASHA
Bihar E Khazana
Chhattisgarh E Linking Project
Delhi Automatic Vehicle Tracking System
Goa Dharani Project
Gujarat Census Online, Mahiti Shakti, DISK
Haryana Nai Disha
Himachal Pradesh E Pension, Lok Mitra
Jharkhand Vahan
Karnataka Kaveri, Bhoomi
Kerala E Srinkhla, FRIENDS
Madhya Pradesh Gyandoot
Maharashtra SETU
Orissa E Shishu
Punjab SUWIDHA, AGMARKNET
Rajasthan Lokmitra
Tamil Nadu Tender notice
Uttar Pradesh Lokvani, Bhulekh
Uttarakhand KSKs, VICs
West Bengal Land Record, Employment Exchange

References
1. Backus, M. (2001),“E-governance in Developing Countries”,
www.ftpiicd.org/files/research/.
2. Deloitte and Touche (2001), “The citizen as customer”, CMA Management, Vol.
74, No. 10, p. 58.

37
3. Dwivedi, P. & Sahu, G.P. (2008), “Challenges of E-government Implementation in
India”, Special Interest Group, SIGeGov Publication, pp. 210-215,
www.csi- sigegov.org/.
4. European Commission (2002), “eEurope Action Plan”, http://Europe.eu.int/.
5. Grover, D. (2006), “A new agenda beyond Governance”, Indian Management, Vol.
45, Issue 11, p.
73.
6. ITAC (2002), “Electronic government- The government of Canada as a model
knowledge-based Enterprise”, www.itac.ca/Library/PolicyandAdvocacy.
7. Kei Ho, A. (2002), “Reinventing Local Governments and the E-Government
Initiative”, Public Administration Review, Vol. 62, No. 4, pp. 434-444.
8. Keohane, R.O. & Nye, J.S. (2000), “Introduction”, in Nye, J.S. and Donahue, J.D.
(Eds), Governance in a Globalization World, Brookings Institution Press, Washington,
DC.
9. Mahapatra, R. & Perumal, S. (2006), “E-governance in India: A Strategic
Framework”, International Journal for Infonomics, Special Issue: Measuring e-business
for Development, January, pp. 1-12.
10. Monga, A. (2008), “E-government in India: Opportunities and
challenges”, JOAAG, Vol. 3, No. 2, pp. 52-61.
11.Shah, M. (2007), “E-governance in India: Dream or Reality”, International
Journal of Education and Development using Information and Communication
Technology (IJEDICT), Vol. 3, Issue 2, pp. 125-137.
12. Sood, A.D. (2004), “Background & Perspective”, InfoChange India,
www.infochangeindia.org.
13. Teicher, J.; Hughes, O. & Dow, N. (2002), “E-government: a new route to
public sector quality”, Managing Service Quality, Vol. 12, No. 6, pp. 384-393.
14. Tripathi, M. (2007), “Lokvani (Voice of the masses): A case study of e-governance in
rural
India”, The International Information & Library Review, Vol. 39, pp. 194-
202.
15. World Market Research Centre (2001), “Global e-government survey”,
www. worldmarketsanalysis.com/e_gov_report.html.

38
 Breakdowns and Accidents in State Transport Corporations
*
Dr. S. Mohan

Abstract

The main objectives of establishing State Transport Undertakings are to provide better
transport services at reasonable tariff and to provide employment to the public. In
spite of their achievements, the STUs over the years have been subjected to severe
criticism on their operational performance. The operational performance of the STUs
can be evaluated in terms of the number of breakdowns and which is inversely related
to the productivity. In spite of adequate maintenance system, there are cases of
breakdowns. Another indicator of the quality of service is the number of accidents
occurred during a given period. The steep growth of traffic on the Indian roads in
recent years has caused a sharp increase in traffic accidents. This is due to increased
vehicular population, poor vehicle maintenance, drivers’ reckless attitude, bumpy
roads, lack of awareness, etc. Concerning the above it has been felt that a detailed
study of the breakdowns, accidents and loss kilometers of the TNSTCs would help to
identify the causes of such problems. Therefore a Tamil Nadu State Transport
Corporation has been chosen for the present study.

Introduction
Performance evaluation of a transport undertaking is to be made not only on the basis
of its financial performance but also on its operational performance such as
breakdowns, accidents and loss of kilometers. In the selected TNSTC the daily
maintenance, running repairs and work relating to periodical road worthiness,
inspection to meet statutory requirements are attended to in the depot workshops where
vehicles are garaged and operated from. Reconditioning of all assemblies and units and
major body work on accidented vehicles are attended to in the central workshop. The
jobs executed in a central workshop involve relatively high-level technology and the
use of sophisticated equipment. The central workshop has been provided with engineers
and men of specialised skills. Efforts are taken to improve both the quality of its
*
Associate Professor, Department of Commerce, SKSS Arts College, Tiruppanandal – 612 504.
TN.

39
performance and its output by designing proper work systems backed by Industrial
Engineering Studies. The depot workshops attend primarily to day-to-day maintenance
and running repairs. The important function of the depot workshops is preventive
maintenance. Preventive maintenance is intended to reduce or eliminate breakdowns
and accidents due to mechanical failures.
Breakdown
One variable with which the performance of a transport undertaking can be evaluated is
the number of breakdowns suffered by the fleet of the undertaking during a period and
this is inversely related to productivity. In spite of the fact that there is an adequate
maintenance system, there are cases of breakdowns. A breakdown is defined as
“stoppage of vehicle on road due to mechanical defects or electrical defects or other
failures rendering the vehicle immobile or unfit for continuation of the revenue earning
trip without attention to it, irrespective of the time involved.” Other failures include all
breakdowns due to non-mechanical causes like fuel shortage, engine oil shortage, tyre
puncture or burst, etc., rendering the vehicle immobile. Stoppage of vehicles due to
accidents is not considered as breakdowns. Prevention of vehicle breakdown is the
matter which deserves the greatest attention of the corporation’s objectives of providing
punctual and reliable transport service to the traveling public.

Breakdown leads to passenger’s discomfort and therefore, both must be prevented or at

least minimized at all cost.Number of breakdowns in the selected TNSTC and the
causes are exhibited in table-1. It is observed from the table that the number
of breakdowns registered a declining trend from 15814 in 1993-94 to 303 in 2002-
03. The TNSTC has taken measures to reduce the number of breakdowns
since their establishment. Due to their efforts and effective measures, the breakdowns
have been reduced gradually and it may be said that breakdowns were reduced to a
meager level i.e., in the last year of the study period the breakdowns were only 1.4 per
cent of what it was in the first year. The linear fit is found to be Y = 12746.65 +
(-1662.5)t. The expected values using the linear equation are also obtained and given in
the table-1. It is observed that there is a sharp decrease in breakdown in the
successive years and the trend shows that for the years 2000-01 and 2001-02
there were practically no breakdowns anticipated. This proves the increasing
efficiency of the system and also preventive steps taken by the TNSTC, to avoid
possible breakdowns.

40
To account for taking effective measures, the TNSTC has classified breakdowns into
two categories, viz., avoidable and unavoidable breakdowns. Driver’s fault, material
fault, premature failure and mechanical failures come under the category of avoidable
breakdowns. The TNSTC has spared separate departments to look after the failures
individually. The buses and mechanics are grouped into a small mass. Each group of
buses are taken care or looked after by the allotted group of mechanics. The mechanics
are later classified into small sub-groups, eg. mechanical, electrical, tyres and springs.
The faults are attended by the concerned mechanics respectively. Grease, lubricants,
and radiator coolant are being checked daily. Besides, major faults in buses are cleared
bi-monthly.

Table-2 illustrates briefly the reasons for breakdowns. There is a decline in the number
of breakdowns due to all failures. While comparing defects, the failures caused by
electrical and others are less than 9 per cent in the study period. Mechanical and tyres
and tubes failures play a major role in breakdowns. Tyres and tubes while compared to
mechanical defects chiefly caused the defects. But in the first year of the study
(1993-
94) and during the period from 1997-98 to 2002-03 the mechanical defects were
higher than tyres and tubes. Though mechanical defects occupy the first place in
breakdowns, it has been gradually decreased from 8,715 in 1993-94 to 207 in 2002-
03. The decrease in mechanical failures is mainly due to immense measures taken
by the TNSTC as previously explained. This is the main cause for breakdowns during
the period 1994-95 to 1996-97 which was mainly. It is found that retread of tyres at
proper intervals can reduce the failures with regard to tyres and tubes.

Accidents
With rapid industrialization, transportation burden on heavy vehicles has increased
manifold in recent years. Today, we have about 3 crores vehicles in India and about 25
lakhs are added every year, while the road length has not proportionally increased, with
ever-increasing traffic congestion, the serious problem is that of road accidents. The
CIRT defines an accident as “an occurrence during and in the course of the travel
resulting in injury or death of a person or animal and /or damage to property”. One of
the qualities of transport services is safety of travel and this mainly depends on the
incidence of accidents. The steep growth of traffic on the Indian roads in recent years
has caused a sharp increase in the incidence of traffic accidents. Accidents cause
41
considerable economic loss to the nation. Unfortunately, the monetary evaluation of the
accident cost is rather a difficult and controversial subject. The relationship of accidents
with efficiency is inversed. Therefore, only avoiding or reducing the number of
accidents can ensure safe travel.

Table-3 presents the accident levels of the selected TNSTC. The percentage of accident
during the first five years has increased to 143.3 per cent. In 1997-98, and in the
later period the percentage of accident has gradually reduced to 48.3 per cent as in
2001-02. There are number of reasons for accidents, such as breakdowns, improper
roads, the carelessness of opponent driver, unfavorable situations, etc., The TNSTC
has taken different steps to reduce breakdowns. But the TNSTC has not given much
importance to the other factors. That is why the number of accidents has increased to a
high during the first five years. After taking into account the other factors, the TNSTC
has come out with two types of remedies. They are i. Giving proper instruction
and training to drivers, and ii. Imposing punishment in terms of suspension,
increment cut etc. These measures have reduced the number of accidents in the last
five years of the study period. Accidents can be reduced through establishing road
signs, signals, guide posts, traffic control line, road lights, and sufficient space for
pedestrians and cyclists, enforcing strict traffic rules for passengers, arranging
adequate training programmes, and awards to crew members for accident free
service. It is sine-que-non that the drivers should not be given double duty because
too much of exertion on the part of the driver would also lead to accidents.

A curve is fitted to the data to depict the nature of trend in the number of accidents over
the study period. Before fitting up the trend equation, a data plot is obtained and it
suggests that is initially the number of accidents has been low and it slowly increasing
up to a point of time and afterwards showing a decline. Hence, it would be appropriate
to fit a second-degree curve or a parabolic curve of the form Y = a + bt + ct2 for the
data regarding the accident levels given in table-3. The equation is given in the form Y
= 734.15 + 135.24t + (-19.31) t2. The theoretical value is obtained using the
model. It also suggests that the parabolic curve is fit for the data and from this, it can
be inferred that the accident levels would be negligible and even zero after a few
years from the study period.

42
Fatal Accident
The spectacular increase in the number of motor vehicles on the road has created a
major social problem i.e. the loss of lives through road accidents. It is estimated that in
the U.S.A, about 44,000 persons were killed and 3 million injured in the year
1982. This figure is really alarming. The accident situation is more serious in India
because of the rapid growth of motor vehicles in the past few years and the inadequacy
of many of our roads to cope up with traffic. The mixed traffic conditions prevailing
on the roads in India make the matters much worse.

Breakdown promotes accidents and these two are the major causes for casualties. If a
person dies due to accident, then it is considered as fatal accident. It is noted from the
table-4 that the percentages of casualties are in a fluctuating manner. The percentage of
casualties has increased from 100 per cent to 131 per cent in the respective years
from
1993-94 to 1996-97. Since 1996-97, the percentage of casualties has decreased to
96 per cent in 1999-00. And again due to unavoidable circumstances the
percentage of casualties has rose up to 121 per cent in the year of 2001-02 and
ended with 91 per cent in the last year of the study period. It is good for unit
performance. It is also observed from the table that the percentage of death was
increasing up to 1996-97 and then declining except in the years 2000-01 and
2001-02. The year 2002-03 has less percentage of both in the number of fatal
accidents and the number of persons dead. The main reasons for fatal accidents are
situations, over speed / rash driving and breakdowns.

Proportion of fatal accidents to total accidents

It is interesting to examine whether the proportion of fatal accidents to total number of
accidents over the successive years is the same or not. If the proportion remains the
same then it is suggested that suitable strategy should be initiated. Table-5 states the
proportion of fatal accidents to total accidents and discusses the uniformity in the

proportion. Since calculated χ2 value (79.06) is much greater than the table χ2 value
(16.92), it is concluded that the proportion of fatal accident is not the same for
the
successive years. However, it is found that the ratio of fatal accidents to total accidents
is slightly increasing and hence suitable strategy must be adopted to reduce the number
of fatal accidents.

43
Loss of Kms
Breakdown promotes accident and these two result in monetary loss also, i.e., loss of
kms. Scheduled kms, which are not operated due to cancellation of scheduled service
for various reasons are called loss of kms. There are some other reasons for loss of kms
like strikes, want of crew, bundh, road blocks, etc. The reasons for loss of kms are
classified into two kinds, i.e., mechanical defects and social problems. Bus failures and
repairs and accidents come under mechanical defects while bundh, roadblocks, strike
and scarcity of drivers come under social problems. It is observed from the table-6 that
bus failure and repairs occupy the first place during the years 1994-95 and 2000-
01 respectively. Strike and want of crew take the first place in the year 2001-02. It is
also found that bundh and road blocks are the chief causes for loss of kms, during
the remaining years of the study period. From the beginning to the end of the study
period, the percentage of accidents is found to be fluctuating from 1.2 per cent to 9.8
per cent. Apart from these, other factors like want of spares too generate loss of kms.
Though it was 14.2 per cent in 1993-94, it had gradually declined and reached 1.57
per cent in the last year of the study period. Though the total loss of kms was very
high in the first year, due to severe steps and measures it has been controlled and it is
found fluctuating at lower level during the remaining period of study. And it was the
minimum of 13.98 lakhs during the final year of the study. However, the loss of kms
was 40.56 lakhs in
2001-02 due to strike and want of crew. Though mechanical defects occupy the
first place for two years during the study period, it has been brought under control
due to various efforts and implementation of several regulations made by the
TNSTC. To bring the loss of kms (due to repair, accident, strike) under control, the
TNSTC has to maintain the vehicles at good condition and pay better wages and
bonus to the crew. Further, the problems like bundh and roadblocks are beyond
the control of the management of the TNSTC. So, the public can be educated through
mass media.

Conclusion
Foregoing analysis reveals that the breakdowns have been reduced gradually.
Breakdown occurs mainly due to mechanical defects, electrical defects and defective
tyres and tubes. Moreover, it could be seen that there was a steady decrease in the
breakdowns due to rectification of every one of the causes. An analysis of the linear
trend indicates that the accident levels would be negligible and even zero after a few
44
years from the study period. The ratio of fatal accidents to total accidents is slightly

45
increasing. The bus failure and repairs as the causes for loss of kms occupy the first
place during the years from 1994-95 to 2000-01. Strikes and want of crew take the
first place during the year 2001-02. Bundh and roadblocks are the chief causes for
loss of kms during the remaining years of the study period. Therefore suitable
strategy must be adopted to reduce the number of fatal accidents and loss of kilometers.

References
1. Arora, S.K., Economics of Management in Road Transport Industry, Deep and
Deep Publication, Delhi, 1987, P.20.
2. Compendium of Transport Terms, Central institute of Road Transport, Pune,
1989, p.24.
3. Kadiyali, L.R., Traffic Engineering and Transport Planning, Khanna
Publishers, Delhi, 2002, p.411.
4. Nadaf, A.M., Accidents and Drivers, Journal of Transport Management, Vol.
23, Pune, June 1999, p.361.
5. Rao, P.C., Road Safety, Journal of Transport Management, Pune, April
1999, p.483.
6. Satyanarayana Rao, Does Privatisation of Passenger Transport Serve the Public
interest, Journal of Transport Management, Pune, May 1992, pp.5-11.

Table – 1
Breakdowns in the Selected TNSTC

Year Number of breakdowns % of changes Y = a + bt

1993-94 15,81 10 12,746.65
1994-95 4
11,66 0
68 11,084.15
1995-96 7
8,22 45 9,421.65
1996-97 1
7,12 38 7,759.15
1997-98 8
4,679 24 6,096.65
1998-99 2,13 1 4,434.15
1999-00 8
1,25 16. 2,771.65
2000-01 5
962 1
4.7 1,109.15
2001-02 487 2.7 (-553.35)
2002-03 303 1. (-2215.85)
4

46
Table - 2
Reasons for Breakdowns
(In number)*
Mechanical Electrical Tyres &
Year Others Total
defects defects Tubes
8,71 607 5,61 877 15,8
1993-94
5 (3.8) 5 (5.6) 14
(55.1
5,068 482 (35.5)
5,327 790 (100)
11,6
1994-95
)
(43.4) (4.13 (45.67) (6.8) 67
3,078 ) 306 4,51 320 (100)
8,22
1995-96
(37.5) (3.7) 7 (3.9) 1
2,895 324 (54.9)
3,668 24 (100
7,12
1996-97
(40.6) (4.59) (51.5 1 8)
2,523 228 )1,70 (3.4)
223 (100
4,679
1997-98
(53.9) (4.9) 5 (4.8) )
(100
944 11 (36.4)
997 54 )
2,13
1998-99
(46.5) 3 (45.7) (2.5) 8
646 (5.3)
49 532 28 (100
1,25
1999-00
(51.5 (3.9) (42.4) (2.2) 5)
) 568 79 267 48 (100
962
2000-01
(59) (8.2) (27.8) (4.9) )
(100
327 32 10 27 )487
2001-02
(67.1 (6.6) 1 (5.5) (100
) 207 26 (20.8)
55 15 )303
2002-03
(68.3) (8.7) (18. (4.9) (100
*Figures in parentheses are common size percentages. 1) )

Table – 3

Accident Levels

Total number % of changes

Year Y = a + bt Y = a+bt+ct2
of accidents in accident
1993-94 644 10 965.78 734.15
0
1994-95 82 118. 927.25 850
1995-96 1
91 3
121.67 888.72 927
1996-97 7
1,06 14 850.19 966
1997-98 9
1,14 0
143. 811.66 966.15
1998-99 7
946 3
11 773.13 927.6
1999-00 742 5
88.3 734.60 850.45
2000-01 644 78.3 696.07 734.64
2001-02 607 76.7 657.54 580.23
2002-03 387 48.3 619.01 387.20

47
 Table - 4
Fatal Accidents
Number of
% change in fatal Persons % change in
Year fatal
accidents dead persons dead
accidents
1993-1994 87 10 10 10
1994-1995 10 110 0
10 0
10
1995-1996 113 8
127. 7
11 7
11
1996-1997 1
12 5
13 9
13 5
13
1997-1998 1
11 9
127. 1
12 1
12
1998-1999 1
97 116 4
10 4
10
1999-2000 87 1.5
10 7
96 7
96
2000-2001 98 0
112. 10 10
2001-2002 11 6
13 9
12 9
12
2002-2003 4
80 1
91. 19 19
9 1 1

Table - 5
Fatal Accidents To Total Accidents
Year ni xi pI n i pi 2
1 644 87 0.13 11.73
2 82 10 5
0.12 12.83
3 1
91 3
11 5
0.12 13.43
4 1067 1
12 1
0.11 13.65
5 1149 1
11 3
0.097 10.79
6 7
946 1
97 0.10 10.04
7 742 87 3
0.11 10.16
8 644 98 7
0.15 14.88
9 607 11 2
0.18 21.45
1 387 4
80 8
0.207 16.58
0 7924 100 135.54
ni - Total accidents 9
xi - Fatal accidents
x 1009 2 2
P= = = 0.127; p = 0.0163; np = 126.78
n 7924
∑ (nipi 2 ) - np 2 (135.54 - 8.76 8.76
χ2 = = 126.78) = = = 79.06
p(1 - 0.127(0.873 0.1108
p) 0.127(1 - )
0.127)

48
 Table - 6
Reasons for Loss of Kms
(Kms in lakhs)*
Bus Strike & Bundh &
Year failure Accident want of Road Others Total
& repair crew blocks
19.0 0.97 11. 36.89 11. 79.55
1993-94 9 (1.2 28 (46.4) 32 (100
(24) ) (14.2 (14.2 )
13. 0.99 0.69 13.0 7.88 35.77
1994-95 ) )
16 (2.8) (1.9 5 (22) (100
(36.8)
8.89 1.0 )0.69 (36.5)
11. 8.83 )
30.90
1995-96 (28.7) 9 (2.3) 40 (28.6) (100
(3.5) (36.9) )
9.29 1. 0.98 15.0 9.06 35.55
1996-97 (26.1 19 (2.8) 3 (25.5) (100
) (3.3) (42.3) )
8.45 1. 1.4 18. 7.06 37.05
1997-98 (22.8) 18 6 9 (19. (100
(3.2) (3.9) (51 1) )
5.13 1. 1.2 9.75 4.35 21.6
1998-99 )
(23.7) 16 5 (45) (20.1 4
3.88 (5.4)
0.99 (5.8)
1.4 7.1 )2.67 (100
16.
1999-00 (24) (6) 6 (9) 5 (17 )15
(44) ) (100
3.58 1. 2.08 2.35 2.18 11.
2000-01 )
(31.7 10 (18.4 (20.8) (19.3 29
)2.57 (9.8)
1.0 )31.7 2.63 )2.55 (100
40.56
2001-02 )
(6.3) 4 7 (6.5) (6.3) (100
1.6 (2.6)
1.0 (78.3)
2.93 8.14 0.22 )
13.9
2002-03
8 1 (21 (58.2) (1.57 8
(12
*The figures in parentheses (7.22)common size
denote ) percentages. ) (100
) )

49
 Management Practices of Small Businesses during Turbulent Time:
A Case Study of North Karnataka, India
∗
Dr. N Maruti Rao

Abstract

There is hue and cry around the world due to GFM which has left its adverse impact on
business performances of small businesses across the globe in general and India in
particular. In order to neutralise the impact of GFM and face it effectively, some of the
Indian small businesses have adopted various management practices. These
management practices adopted by few of the Indian small business firms have helped
them not only in bringing down adverse impact on their business performance but also
in surviving during tough time. From the study carried out through this research paper
it was found that the awareness regarding causes for the GFM is very little among
majority of the owner- managers. As the large number of small business units are
ancillaries hence they are dependant on single buyer (principal) for sales, since
principal buyer is suffering due to GFM hence small business units are also in trouble.
However it was noteworthy that some of the small business firms have taken the GFM
into their stride by turning towards management practices such as generating new
business and relying very little on existing customers, focusing on sales by improving
revenue and cost ratio and increasing sales revenue per customer. Cost cutting seems
to be one of the crucial area of focus for owner-managers of small business firms.
Key Words: Small businesses, Global Financial Meltdown, Economic Downturn,
Business Performance, Management practices, Owner- mangers.

Introduction
Today world economy is more concerned about a disease which is much dangerous
than swine flu, know as Global Financial Meltdown. The impact of GFM is
experienced by financial and economic systems around the world. The industries
around the world have hit hard especially the small businesses in India. The impact was
so severe that it brought about new challenges for small businesses around the world

∗
Assistant Professor, Kousali Institute of Management Studies, Karnataka University, Dharwad..

50
and were forced to initiate measures which resulted in large-scale job losses and
prospects of small scale units turning dark. In other words, the global financial
meltdown has led to the closure of large number of small business firms which have
been affected by the acute financial crisis. The small business firms which exhibited
courage to face the competition and challenges posed by liberalization and
globalization are on the brink of extinction due to the global financial meltdown. The
measures like wage cut; layoff became tools to tackle GFM. In the absence of
appropriate measures by small business firms and government, there is risk of large
number of small business firms being forced to down their shutters. However, some
small business firms were exceptionally candid in their approach to tackle this
economic monster by resorting to healthy management practices such as generating
new businesses and relying little on existing customers, focusing on sales by improving
revenue and cost ratio and increasing sales revenue per customer, reducing cost etc.
They converted problem into opportunity. This has given them new dimensions to
manage their businesses effectively in turbulent time.

Objectives
The present study was undertaken with the following objectives:
1.To measure awareness level about Global Financial Meltdown (GFM) among
small business owner-managers.
2.To find out impact of GFM on small businesses.
3.To study impact of GFM on small businesses towards fund mobilization.
4. To study the perception of small business owner-managers towards measures taken
by Government of India & RBI to mitigate impact of GFM.
5. To study management practices do adopted by small businesses to mitigate impact of
GFM.
6. To offer suggestions which enable small businesses to manage GFM effectively

Methodology
The research was carried out in the industrial clusters namely Bellur industrial area,
Gokul industrial estate, Tarihal industrial area , Machhe industrial estate Belguam
located in north Karnataka, India and at distance of 425 km north-West of Bangalore,
the state capital of Karnataka. For the purpose of the study, small businesses which are
existing for more than 4 years were selected. The questionnaires were administered to

50
the owner-mangers of the firm (as mainly they are small businesses hence managed by
owners or promoters) or people heading overall operations of the firm. The 100
small business firms were selected for the purpose of the study. The
questionnaire was administered at the location of firm. It was also possible for the
researchers to collect additional data by means of personal interaction with
respondents and observations. The selection of the firms for the purpose of data
collection was random. The information for the study also has been collected from
secondary sources. The study is descriptive in nature. The period of study has been
confined to July 2008 to May 2009.

The Small Businesses in Troubled Waters

The Indian small businesses are one among many sectors who are worst affected by the
GFM. As a result of this small business firms are facing problems such as severe
contraction of orders, non-availability of credit, working capital shortage, piled up
inventories, slow recovery of receivables, pressure on profitability, etc. The number of
small businesses are on the verge of shutdown.

Those small business firms that relied heavily on export orders, for instance textile
units, have been particularly hit hard. The majority of the auto-component
manufacturers are the ancillary units who are largely depend on single buyer; they have
been hit badly as their principal buyers are facing the burnt of the GFM. The way small
businesses are facing the uphill task of survival due to GFM is a matter of serious
concern because small business firms do contribute significantly (around 8 per cent) to
the GDP and employ more than 40 million. Non-availability of funds for this vital
sector can strain not just the labour market but also leaves its impact on the ancillary
sector.

As small businesses are keys components of Indian economy in general and Karnataka
in particular, are under tremendous pressure in meeting their sales targets and forced to
adopt measures such as lay-off, closure of units, wage & salary cuts postponement or
cancellation of expansion and modernization plans etc. which are uncalled for and
detrimental to various stakeholders.

However some small businesses shown extremely creative approach by way of

adopting management practices to tackle this economic ‘swine flu’. The various
51
management practices do adopted by the Indian small businesses have saved them from
situation going out of control and resulting in closure of firms. So, GFM proved as a
good opportunity to learn the lessons of effective management practices for Indian
small businesses.

In the backdrop of this development a study was conducted to highlight some of the
management practices do adopted by small businesses located in North Karnataka,
India to manage economic downturn effectively.

Management Practices of Small Businesses during Economic Downturn

The small businesses in India are struggling hard to sail through the economic Tsunami
known as GFM. In order to fight the business crisis the most of the small business firms
had resorted to unhealthy measures such as lay-off, closure of units, wage & salary cuts
postponement or cancellation of expansion and modernization plans etc. However, it
was pleasure to note that some of the Indian small business firms resorted to various
management practices to counter the impact of GFM on their businesses. The measures
were such that they were in the interest of business and absolutely harmless to the other
stakeholders like employees. These practices proved extremely handy in mitigating the
impact of the GFM. These ‘anti-GFM’ management practices were also useful for
small business firms as they do provide them an opportunity to enhance profitability by
improving their top-line.

Data Analysis
Awareness about GFM
From the analysis it was found that out of 100 respondents 91 of them are aware
of GFM, whereas 09 of them are unaware of GFM. It was also found that the
awareness regarding causes for the GFM is very low among respondents as only 19
of them are aware of the reasons for GFM which are as given in the Table-1.

Weightage Assigned to Factors Responsible for GFM

From the table-2 we can conclude that the factors such as real estate bubble and
liberalized credit policy are the primarily responsible for GFM according owner-
managers of small business firms.

52
Whether Small Business Firm is Victim of GFM?
It was observed from the Table-3 that majority of the respondents felt that their firm is
victim of GFM. As 84% of the owner-managers believe that their firm is victim of
GFM.

Reasons for Impact of GFM on Indian Small Businesses.

The Table-4 reveals that the fundamental reasons for impact of GFM on Indian small
businesses is due to Demand Fall (81%), Dependency On single Buyer
(24%), Dependency on Exports (19%) and WTO (16%). Majority of the owner-
mangers are of the opinion that there is over all demand fall hence they are victim of
this menace. As large number of small business units are ancillaries hence they do rely
on single buyer (principal) for sales, as principal buyer is suffering due to GFM hence
small units are also in trouble. It was also found that most of the small businesses
do manufacture products which meet need of single industry as a result of that if
the said industry suffers the same will be reflected on small business firms as they do
lack flexibility in production facilities. In the same way the small businesses who
heavily depend on overseas markets for business are also victim as and when their
foreign buyers do face difficulty.

Consequences of GFM on Small Businesses

From the table-5 it is visible that the impact of GFM is severe in the areas of
profitability, sales and working capital. As it is evident from the table-13 that more
than
84% of the small business firms suffered from decline in profitability followed by sales
decline in case of 81% of them. Also 79% of owner-managers expressed their
difficulty in raising working today this can be attributed to poor response from the
financial institutions. The Table-13 also reveals that 19% of the respondents
expressed that their exports have came down due to GFM; this could be due to the fact
that 81% of sample units do not export. It was also found that large number of
owner-managers have mentioned that they don’t want to go for modernization /
expansion or technology up- gradation at the time of economic crisis. Whereas
those who were planning for modernization / expansion or technology up-gradation
have expressed that they have difficulty in raising long term capital. These are the
consequences of GFM.

53
Perception of Small Businesses towards Fund Mobilization
The Table-6 indicates that there is severe impact of GFM on small businesses in North
Karnataka as 87% of the owner–managers felt that the financial institutions are not
extending there helping hand in the time of crisis. Whereas very small percentage of the
respondents were of view that there is no change in attitude of financial institutions
when it comes to lending to small businesses.

Awareness Level towards Measures taken by Government of India and RBI to

Mitigate Impact of GFM among Small Business Owner-Managers
Table-7 reflects awareness about various measures taken by Government of India &
RBI to mitigate impact of GFM among small business owner-managers. Majority of the
owner-mangers are unaware of measures taken by Government of India & RBI to
mitigate impact of GFM.

Knowledge about Various Measures taken by Government of India and RBI to

Mitigate Impact of GFM among Small Business Owner-Managers
From the Table-8 we can conclude that the knowledge about various measures taken by
Government of India & RBI is low among owner-mangers of small business firms in
North Karnataka. There is no knowledge regarding measures such as reduction in
margin money, increase in guarantee cover for loan for small businesses, reduction in
lock-in period, excise duty had been cut by 4 percent, Increase in post shipment credit
for exporter from 180 days to 365 days, duty exemption pass book scheme
is reintroduced and duty drawback rate increased by 3 percent, cut in interest rate
for export finance etc which are very vital steps for fuelling the growth of small
businesses during economic recession.

Management Practices Adopted by Small Businesses to Mitigate Impact of GFM.

From the table-9 above it is evident that in order to mitigate the impact of GFM small
businesses turned towards management practices such as new business development i.e
prospecting new customers to enhance customer base and rely little on existing
customers, resorting to sales focus making sales process more efficient and effective by
enhancing revenue and cost ratio and thereby increasing sales revenue per customer.
Cost cutting seems the one of the crucial area of focus for owner-managers of small
business firms. The various areas identified for cost cutting include reducing wastage,

54
administrative cost etc. The Table-18 also reveals that few of the owner managers
have initiated better management practices in domains like inventory management,
quality control, diversification and technology upgradation. However 30% of the
respondents don’t have initiated any measures to counter impact of GFM. This could
be attributed to their inability to tackle the menace of GFM or they feel they are
unaffected by GFM hence there is no need to initiate any measures.

Conclusion
From the data analysis it can be concluded that knowledge regarding causes for the
GFM is very low among respondents as only 19% of the owner-managers are aware
of the reasons for the GFM. 84% of the respondents are aware of the fact that their firm
is victim of GFM. As the large number of small business units are ancillary units
hence they are dependant on single buyer (principal) for business, since principal
buyer is suffering due to GFM hence small units are also in trouble. Most of the small
business firms taken for the purpose of the study do manufacture products which meet
the need of the single industry. Since the most of the industries viz. automobile, petro-
chemicals, chemicals, water-Treatment Plants etc in India are under the influence of
GFM and the impact of the same has been reflected on small business firms
as they do lack flexibility in production facilities and do serve single industry. It can
also be concluded from the data obtained that small businesses who heavily depend on
overseas markets for business are also victim as and when their foreign buyers do face
difficulty. 87% of the owner –managers felt that the financial institutions are not
extending there helping hand in the time of crisis. From the study we can also
conclude that there is no knowledge regarding measures taken by Government of
India and RBI, such as reduction in margin money, increase in guarantee cover for
loan for small businesses, reduction in lock-in period etc which are very vital steps
for fuelling the growth of small businesses during economic recession. It was
noteworthy that some small business firms turned towards management
practices such as new business development and relying little on existing
customers, focusing on sales by improving revenue and cost ratio and increasing sales
revenue per customer. Cost cutting seems to be the one of the crucial area of focus for
owner-managers of small business firms.

55
Suggestions
> Reduce rework and rejection as majority of Small business firms are having high
rate of rejection and rework. This can be achieved thru technology upgradation and
enhancing skills of employees thru training on regular basis. They can also be
rewarded for efficiency and effectiveness which may be motivating for them.
> Enhance sales productivity by increasing efficiency of sales people thru training on
sales management, building customer relationship, generating new businesses
which may help in increasing sales revenue per customer.
> There is need to reduce cost on areas which do not directly contribute to the
productivity such as office furnishings, stationery etc.
> There is need to mange financial resource effectively. As most of the small
businesses are facing financial crisis, the large industries who are their buyers can
be convinced to make payments in advances along with orders or make payments
within shortest possible time. This will reduce working capital related issues of
small businesses.
> New product development which may reduce cost and added value to the customers
can be another critical area for small business firms.
> Diversification strategy can also be of immense help for small business firms in
managing GFM. They can look for related diversification by producing products
which meet the need of industry which they are not serving at present. For example
the majority of small business firms studied are catering the need of automobile and
engineering industries. They can produce components for other related industries
such as lathe machines, Drill machines, machines for pharmaceutical industry
which they do it irregularly.
Appendices
Table Number-1: Awareness about GFM
Reasons %
Sub-Prime Lending 1
Liberalized Credit Policy 35
Real Estate Bubble 1
Complex Derivatives Products 26
Source: Field work

56
 Table Number-2: Weightage Assigned to Factors Responsible
For GFM

Complex
Real Estate Liberalized Sub-Prime
Derivatives Any Other
Bubble Credit Policy Lending
Products
32.1 30. 19.9 17.4 0.2
5 work
Source: Field 1 1 4

Table Number-3: Whether Small Business Firm Is Victim Of GFM?

Response %
Yes 84
No 1
Source: Field work 6

Table Number-4: Reasons for Impact of GFM on Indian Small Businesses

Reasons %
Dependency On single Buyer 24
Dependency on Single Industry 1
Dependency on Exports 0
1
Demand Fall 98
WTO 1
Can’t Say 16
Source: Field work 3

Table Number-5: Impact / Consequences of GFM

on Small Businesses
Response Problem In Problem In Decrease In Problem In Fall In Fall In
Raising Raising Profitability Technology Sales Exports
Long Term Working Up-
Capital Capital Gradation

Yes 3 79 84 25 8 1
No 1
69 2 1 75 1 89
Source: Field work 1 6 9 1
Table Number-6: Perception of Small Businesses
towards Fund Mobilization
Response %
Support 05
No change in Lending attitude 08
No Support 87
Source: Field work

57
 Table Number-7: Awareness Level towards Measures Taken
Response %
Yes 47
No 53
Source: Field work

Table Number-8: Knowledge about Government and RBI Measures Taken

Measures taken by Government of India & RBI %
CRR Cut 35
SLR Cut 1
REPO Cut 3
1
Reduction In Rate of Interest 0
09
Reduction in Excise duty 06
Tax Reduction 03
Source: Field work

Table Number-9: Management Practices Do Adopted By Small Businesses

Cost Cutting New Business Sales Better Quality Technology Diversif No
Development Focus Inventory Focus ication Measu
Management res
Taken
1 1 1 06 08 0 06 30
1 6 2 1
Source: Field work

Reference
1) American Express. (2009) “The Financial Crisis Impact on Small Business”, 10th
June 2009. www.insightcommunity.com
2) Gupta Anil K.(2009) “Innovation for Reviving Small Scale Industries”, Working
Paper, No.2009-03-03, March.
3) Jagga Rakkhi.(2009) “Small Scale Industries hit hard by Global Slump” 10th June
2009.www.indianexpress.com
4) Narayanan R Yegya. (2009) “Small Units seeks slew of measures to beat
slowdown” 2nd January, The Hindu Business Line.
5) Raul Shamik & Kulkarni Vishwanath. (2009) “Small, Mid-size IT companies face
greater pricing pressure” 6th February, The Hindu Business Line.
rd
6) The Bureau. (2009) “CII sees need for special additional measures for SMEs” 3
January, The Hindu Business Line.
7) The Bureau. (2009) “FIFO Seeks Debt Revamp for Small, Medium Exporters” 10th
April, The Hindu Business Line.

58
8) The Bureau. (2009) “Karnataka Small Units Seeks Relief Package” 9th January, The
Hindu Business Line.

59
 Poverty Alleviation through Financial Inclusion: An Analytical Study
with Special Reference to India
*
Mr. Krishna Murari
**
Dr. Manish Didwania

Abstract

At the beginning of the new millennium, 260 million people in the country did not have
incomes to access a consumption basket which defines the poverty line. Of these, 75 per
cent were in the rural areas. India is home to 22 per cent of the world’s poor. Such a
high incidence of poverty is a matter of concern in view of the fact that poverty
alleviation has been one of the major objectives in the 21st century. Financial inclusion
can serve the purpose to a greater extent. Increasing access of financial services to
deprived section of society is the main motto of Financial Inclusion in India. A major
section of Indian rural population is deprived of financial access in the form of bank
accounts, financial advice, financial services etc. The main problem in India is the
provision of financial services to those living in poverty and excluded from the
financial system. These people do not have income nor own a property and therefore,
are unable to provide Bank guarantees, as a result of which they are generally
forgotten by financial Institutions and Banks. The concept of Financial Inclusion has
gained a lot of importance and momentum in this regard in the last decade.

In this paper we have made an attempt to highlight the poverty situation in India in
comparison with the rest of the world since its independence. The Indian government
has been serious about the poverty alleviation at the ‘Bottom of pyramids’ (BOP) and
continuously designing the strategies and practices for the same. Further, the various
attempts made by the government in this regard have been explored and their
effectiveness is analyzed. Finally the financial inclusion as the poverty alleviation
mechanism to maintain living standards of poor people and providing them
entrepreneurial environment for their upliftment and need of financial inclusion has
been explored, followed by the analytical study with reference to India, for alleviating
the poverty from the grass root level is assessed.

*
Asst. Professor (Business Administration), MITS University, Laxmangarh, Sikar, Rajasthan.
**
Asst .Professor (ABST,) MITS University, Laxmangarh, Sikar, Rajasthan.

60
Keywords- Poverty Line, Poverty Alleviation, Financial Inclusion, Financial Services,
Financial System, BOP.

Introduction
After the period of economic reforms in India, so many attempts have been made to
reduce the poverty, but the outcome was not observed up to the mark. Meaning thereby,
rich became richer and the poor became poorer. This post-economic reform period
evidenced both setbacks and progress. Rural income poverty increased from 34% in
1989-90 to 43% in 1992 and then fell to 37% in 1993-94. Urban income poverty
went up from 33.4% in 1989-90 to 33.7% in 1992 and declined to 32% in 1993-
94 Also, NSS data for 1994-95 to 1998 show little or no poverty reduction, so that
the evidence till 1999-2000 was that poverty, particularly rural poverty, had
increased post-reform. However, the official estimate of poverty for 1999-2000 was
26.1%, a dramatic decline that led to much debate and analysis. This was because
for this year the NSS had adopted a new survey methodology that led to both higher
estimated mean consumption and also an estimated distribution that was more equal
than in past NSS surveys. The latest NSS survey for 2004-05 is fully comparable to
the surveys before 1999-2000 and shows poverty at 28.3% in rural areas, 25.7% in
urban areas and 27.5% for the country as a whole, using Uniform Recall Period
Consumption. The corresponding figures using the Mixed Recall Period
Consumption method was 21.8%, 21.7% and 21.8% respectively. Thus, poverty
has declined after 1998, although it is still being debated whether there was any
significant poverty reduction between 1989-90 and 1999-00. The latest NSS survey
was so designed as to also give estimates roughly, but not fully, comparable to the
1999-2000 survey. These suggest that most of the decline in rural poverty over the
period during 1993-94 to 2004-05 actually occurred after 1999-
2000.Access to finance by the poor and vulnerable groups is a prerequisite for poverty
reduction and social cohesion.

World Bank’s New Poverty Estimates and India

The World Bank has redefined the poverty line to $1.25 per day from the initial
poverty line of $1 per day in view of the fact that the cost of living has gone up in
developing countries. This revision has also increased the estimated poverty ratio
for India.The World Bank has readjusted the international poverty line from $1 a day
61
to $1.25 a day.

62
This estimate of the poverty line is based on the average poverty line of the poorest 10-
20 countries. The cost of living in the poorest countries has increased resulting in a
revision of the international poverty line.

Table 1 –Poverty reduction in India as per World Bank

GAINS IN POVERTY REDUCTION
(Figures in %) 1990 1993 1996 1999 2002 2005
BELOW $1 A DAY
India 33.3 31.1 28.6 27.0 26.3 24.3
World 29.9 26.9 23.5 22.8 20.8 16.1
BELOW $1.25 A DAY
India 51. 49.4 46.6 44.8 43.9 41.6
3
World 41. 39 34.7 33.7 31.1 25.7
7
BELOW $2 A DAY
India 82.6 81.7 79.8 78.4 77.5 75.6
World 63. 61.4 58.3 57.0 53.6 47.6
1

As is seen from the above table, for the world, the proportion of people who live below
$1 per day was 16.1% in 2005, while that for India was 24.3%. However, if
we consider $1.25 as the poverty line then it is seen that for 2005, the poverty ratio
for the world is 25.7%, while that of India is 41.6%. In case of $1 as the poverty
line, the poverty ratio for the world declined from 20.8% in 2002 to 16.1% in
2005, while it declined from 31.1% to 25.7% between these two years, if $1.25 is
considered as the poverty line. For India, the poverty ratio declined from 26.3% to
24.3% between 2002 and 2005 if $1 is considered as the poverty line, while it
declined from 43.9% to 41.6% in the same period if $1.25 is considered the poverty
line.

Poverty Alleviation through Financial Inclusion

Providing access to finance is a form of empowerment of the vulnerable groups.
Financial inclusion denotes delivery of financial services at an affordable cost to the
vast sections of the disadvantaged and low-income groups. The various financial
services include credit, savings, insurance and payments and remittance facilities. The
objective of financial inclusion is to extend the scope of activities of the organized
financial system to the needy people of low incomes.

63
 Chart 1- Dimensions of financial inclusion

Savings

Financial advice Insurance

Financial Inclusion

Repayments and
Affordable credit Remittances

Bank Accounts

Financial Inclusion is the delivery of services at affordable cost to the vast section of
disadvantaged and low-income groups. Access to financial services such as loans,
savings, deposits, health insurance etc. by the population living in the rural and deep-
rural segments has been limited and been the major deterrent of growth in these
segments. Access to such services will help in improving the standard of living, health
and hygiene through empowering the under privileged, thereby helping in social,
political and economic stability. Delivering banking services in an affordable manner to
the rural areas requires a secure transaction processing platform that can be deployed
cost-effectively. Financial inclusion is aimed at providing banking / financial services
to all people in a fair, transparent and equitable manner at affordable cost.

Households with low income often lack access to bank account and have to spend time
and money for multiple visits to avail the banking services, be it opening a savings
bank account or availing a loan. These families find it more difficult to save and to plan
financially for the future. Thus, the unbanked public is largely cut off from the Banking
products/services.

Level of Non-Indebtedness: Across Regions

The farm households not accessing credit from formal sources as a proportion to total
farm households is especially high at 95.91%, 81.26% and 77.59% in the
North Eastern, Eastern and Central Regions respectively. In terms of absolute numbers
these regions taken together account for 64% of farm households not accessing credit
from formal sources as detailed below:

64
 Table 2- Level of Non-Indebtedness: Across Regions
No. of Farmer Households (HH) in
Lakh
Region Total Indebted % to Non % to Indebted % to Excluded % to
HHs HHs total indebted total to total by total
HHs HHs HHs formal HHs formal HHs
sources sauces
Northern 109.46 56.26 51.40 53.2 48.60 27.423 25.05 82.04 74.95

North 35.40 7.04 19.90 28.36 80.10 1.448 4.09 33.95 95.91
Eastern
Eastern 210.6 84.22 40.00 126.39 60.00 39.467 18.74 171.14 81.26
1

Central 271.33 113.04 41.60 158.29 58.40 60.814 22.41 210.52 77.59

Western 103.66 55.74 53.70 47.92 46.30 45.586 43.98 58.07 56.02

Southern 161.5 117.45 72.70 44.11 27.30 69.072 42.75 92.49 57.25
6

All India 893.50 434.24 48.60 459.26 51.40 243.96 27.30 649.54 72.70

Share to 57.90 47.05 68.16 41.70 63.99

all India
(%)
Source: Report of RBI on financial inclusion, Jan 2008
The Southern Region, on the other end, exhibits relatively better levels of access to formal /
non-formal sources (72.7%) mainly on account of spread of banking habits and a more
robust infrastructure.

Level of Non-indebtedness: Across Social Groups

The highest levels of non-indebtedness to both formal and non-formal sources is observed
among Scheduled Tribes (ST) with 63.7%, followed by Scheduled Castes (SC) with 49.8%
as detailed below :

65
 Table 3- Level of Non-Indebtedness: Across Social Groups
Households Scheduled Scheduled Other Others All
Tribes Castes Back
ward
Classes
Total no. of 119.24 155.93 370.43 247.90 893.50
farmer HHs
(lakh)

Non-indebted 75.94 77.60 125.76 125.76 459.26

farmer HHs
(lakh)

Proportion of 63.69 49.77 48.58 50.73 51.40

non-indebted
Farmer HHs (%)

Source: Report of RBI on financial inclusion, Jan 2008

The Changing Environment for Poverty Alleviation and Financial Inclusion

Policies and Practice in India
What is required now is not creating new institutions for extending their outreach but
finding ways and means to effect improvements within the existing formal credit
delivery mechanism and evolve new models for extending out-reach. In a broad sense,
we need to address issues on the supply side as well as demand side. The formal
banking system, the rural cooperatives and non-governmental organizations must be
strengthened organizationally to extend their out-reach. The financially excluded
sections require products which are customized to meet their needs. Financial exclusion
is also caused by demand side issues. Unless steps are taken on the demand side that is
in the “real sectors” mere supply side solutions from the financial sector will not work.
Credit is necessary for this, but not sufficient. Credit has to be an integral part of an
overall programme aimed at improving the productivity and income of small farmers
and other poor households. Putting in place an appropriate credit delivery system to
meet the needs of marginal and sub-marginal farmers must go hand in hand with efforts
to improve the productivity of such farm households.

Role of Government in Poverty Alleviation

Post-independent India aimed at establishing a ‘socialist pattern of society’. Socialist goal
of a society was advanced through various measures in different stages. After 1970s
the

66
Indian government focused on providing government subsidy and preferential credit to the
poor to enable them to increase their income. Since 1970 various programmes were
in operation in our country following such strategy of poverty alleviation. The Small
Farmers’ Development Agency (SFDA) programme (1971-79), the Integrated Rural
Development Programme (IRDP) (1979-99), the Swarnjayanti Gram Swarozgar Yojana
(SGSY) (1999 to present and continuing), the Sampoorna Grameen Rozgar Yojna
(SGRY) (2001to present and continuing), the National Rural Employment Guarantee
Act 2005 (NREGA) are examples of such strategy. In this section I shall briefly
review the experience of the programmes which were initiated by Indian
government as a strategy for poverty alleviation.

The Small Farmers’ Development Agency (SFDA) Programme

The SFDA programme was in operation during 1970s. Under this programme
attempts were made to assist small farmers, marginal farmers and agricultural labourers to
increase their income. An administrative mechanism was devised so that these vulnerable
groups, who failed to benefit from the process of development, get benefited. The main
cause of poverty among the small and marginal farmers was that they were unable to
use modern technology due to resource constrains. Thus, the major challenge before the
SFDA was to enable small and marginal farmers to use modern technology. In its effort
to enable small farmers and marginal farmers to use modern technology, it was realized
that the scale of available modern agricultural technology was such that it was not possible
for farmers with small and fragmented holdings to use modern technology fruitfully in
their individual capacity.

The Integrated Rural Development Programme (IRDP)

The SFDA programme was in operation during 1970s in some selected districts
throughout the country as a pilot project. It was felt that such programme should be
expanded also to
nd
cover non-agricultural poor like rural artisans, fishermen and others. Thus, on 2 October
1979 the SFDA was merged with the IRDP. As the conceived programme was extended
to cover non-agricultural poor also, ‘poverty line’, instead of landholding (as was done
under the SFDA) became the criterion for identifying the target group of the programme
and was conceived as a programme covering the entire population living below poverty
line. The programme was extended to all the blocks of the country. Due to the failure
of group centered approach under the SFDA, the IRDP emphasized more on individual
beneficiary
67
based schemes. It did not confine its focus only on agriculture and emphasized on non-
agricultural income generating activities as a measure for poverty alleviation.

Apart from the problem of misappropriation of assistance by the non-poor, the main
problem faced by the IRDP was that even when it was possible to deliver assistance to the
poor, its scope of work ended there. The IRDP operated mainly up to the point of providing
assistance to the poor. After that, the assisted household was expected to utilize the
assistance to increase its income by operating in the market. Not every assisted household
could be expected to have the required entrepreneurial competencies, and the market
generally favoured those who were more resourceful (Mandal, 2004). Thus the IRDP
assistance failed to benefit the poor who were needier.

The Swarna Jayanti Grameen Swarojgar Yojona (SGSY)

The IRDP was in operation till 1999. In the new millennium it was replaced by the
SGSY. It was observed that under the IRDP the poor people often were not able to
succeed in income generating activities because of their week socio-economic
position. Thus, to overcome this problem again going back to group approach was
resorted to. It was thought that if poor people form group to undertake income generating
activities, they may be able to overcome the disadvantages they face in undertaking
income generating activities. The Grameen Bank experience of Bangladesh, several
similar experiments in our country and the success of micro-finance approach world
over, prompted policy makers to emphasize on group approach under SGSY.

The most important aspect of the SGSY programme is that it emphasizes on a group
centered approach. Under the SGSY, Self Help Groups are formed for mobilizing assisted
poor families (Swarojgaries) for poverty alleviation. These Self Help Groups go through
stages of evolution such group formation, group stabilization followed by micro enterprise
development

Sampoorna Grameen Rozgar Yojna (SGRY)

In the beginning of 21st century, the need was felt that the different programmes
for wage-employment in the rural areas be merged and one ambitious programme
be introduced which would take care of food security, additional wage employment
and village infrastructure at the same time. With this noble idea, a new Wage-
Employment Programme namely the Sampoorna Grameen Rozgar Yojana (SGRY)
was announced
68
by the Honorable Prime Minister on 15th August 2001. The new programme
was launched on 25th September 2001 with an annual out lay of Rs.10, 000 crores.
Under the Scheme, 50 lakh tonnes of food grains amounting to Rs.5, 000 crores (at
economic cost) will be provided every year free of cost to the State Governments
and Union Territory Administrations. The remaining funds will be utilized to
meet the cash component of wages and the material cost. Under the Scheme, about
100 crores man days of wage-employment are envisaged to be generated every year.

National Rural Employment Guarantee Act 2005(NREGA)

Another important step taken by Indian government towards the reduction of poverty
was the proposition of NREG scheme. Later on it was implemented as National Rural
Employment Guarantee Act 2005(NREGA). The motto of this act was to provide for
the enhancement of livelihood security of the households in rural areas of the country
by providing at least one hundred days of guaranteed wage employment in every
financial year to every household whose adult members volunteer to do unskilled
manual work. As per the latest data released by Indian government, it can be seen that
employment has been provided to the all castes, keeping in view the overall social
empowerment as shown in the table below:
Table 4-Employment provided to households
Person days [in Crore] 3.88
Total 175.24
SCs 53.6 [30.59%]
STs 37.26 [21.26%]
Women 86.8 [49.53%]
Others 84.38 [48.15%]
Total works taken up 30.56 Lakhs.
Works completed 11.16 Lakhs.
Works in progress 19.4 Lakhs.
Source: http://nrega.nic.in/netnrega/home.aspx (Dec 12,
2009)

Poverty Woes in Indian Scenario: Remaining Concerns

Poverty in India is reducing but it is still a major issue. Rural Indians depend on
unpredictable agriculture incomes, while urban Indians rely on jobs that are, at best,
scarce. Since its independence, the issue of poverty within India has remained a
prevalent concern. According to the common definition of poverty, when a person finds
it difficult to meet the minimum requirement of acceptable living standards, he or she is

69
considered poor. Millions of people in India are unable to meet these basic standards,
and according to government estimates, in 2007 there were nearly 220.1 million
people living below the poverty line. Nearly 21.1% of the entire rural population
and 15% of the urban population of India exists in this difficult physical and financial
predicament. The following chart presents the poverty situation in India:

Chart 2: Poverty Situation in India

The division of resources, as well as wealth, is very uneven in India – this disparity
creates different poverty ratios for different states. For instance, states such as Delhi
and Punjab have very low poverty ratios. On the other hand, 40-50% of the populations
in Bihar and Orissa live below the poverty line. The poverty ratios illustrated here are
divided in two types: urban and rural. Specific reasons for poverty vary in the urban
and rural settings. A number of factors are responsible for poverty in the rural areas of
India. Rural populations primarily depend on agriculture, which is highly dependant on
rain patterns and the monsoon season. Inadequate rain and improper irrigation facilities
can obviously cause low, or in some cases, no production of crops.

Conclusion
There are over 24 crore people below the poverty line in our country. Now days,
creating self employment opportunities is one way of attacking poverty and solving the
problems of unemployment .It is becoming increasingly important that financial
inclusion requires a lot of attention of the financial system for creating awareness about
financial products, education, and advice on money management, debt counseling,

70
savings and affordable credit among rural people. The Scheme of financial inclusion
along with Micro-finance has been found as an effective instrument for lifting the poor
above the level of poverty by providing them increased self-employment opportunities
and making them credit worthy. The programmes and strategies adopted by Indian
government after 1970s have been effective in reduction of poverty to a great
extent, but still it is a big concern. There is a need of Designing financially sustainable
models and increase outreach and scale up operations for poor in India. People
belong to villages are still unaware about banking policies and credit system.

Finally, the Indian financial system has to redesign their business strategies to
incorporate specific plans to promote financial inclusion of low income group treating
it both a business opportunity as well as a corporate social responsibility. They have to
make use of all available resources including technology and expertise available with
them as well as the MFIs and NGOs. It may appear in the first instance that taking
banking to the sections constituting “the bottom of the pyramid”, may not be profitable
but it should always be remembered that even the relatively low margins on high
volumes can be a very profitable proposition. Financial inclusion can emerge as
commercial profitable business. Only the banks should be prepared to think outside the
box.

Notes-
* see for further details “Cost of Living Higher in Developing World than is Perceived:
WB”, The Financial Express, 27 August 2008).
** Dr.K.G.Karmakar, ‘Poverty Alleviation or Financial Inclusion?’ Managing
Director, NABARD, 16 July
2008.

Reference:
1. Asian Development Bank, 2008. “Comparing poverty across Countries: The rise
of
Purchasing Power Parities.” Key indicators for Asia and the Pacific, Manila
2. Brainard, Lael and LaFleur (2006) ‘The Private Sector in the Fight against Global
Poverty’, in Laet Brainard (ed.) Transforming the Development Landscape: The
Role of the Private Sector, Washington, D.C: Brookings Institution Press.
3. Financial inclusion: reaching the unreached, Business Line (As on August 10,
2007)
70
4. http://nrega.nic.in/netnrega/home.aspx

71
5. http://rural.nic.in/anual0203/chap-2.pdf
6. Microfinance: an investment opportunity, Research Report of Deustche bank Dec
19, 2007
7. Purushothan, P. (2006) National Study on SGSY: A Process Study, Hyderabad:
National Institute of Rural Development
8. R Srinivasan and M S Sriram ‘Microfinance: An Introduction’ IIMB Management
Review, June 2003
9. Rajesh Chakrabarti, The Indian Microfinance Experience – Accomplishments and
Challenges
10. Report on financial inclusion 2008, RBI
11. Report on scaling up financial inclusion by ‘debt on our door step’
12. Shubhanil Chowdury, “India has Fewer Poor People: World Bank”, Business
Standard, 27 August 2008.
13. Special issue of Yojna on microfinance, Jan 2008
14. Tapan S. Parikh, “Rural Microfinance Service Delivery: Gaps, Inefficiencies and
Emerging Solutions” Washington.
15. www.rbi.gov.in

72
 Grading of IPOs: A Futile Exercise
*
Dr. Snehalkumar H Mistry
**
Mr. Giridhari Mohanta

Abstract
In May 2007, SEBI ruled that all IPOs entering the capital market go in for
compulsory grading to allow only bona fide companies to tap the markets and
prevent fly-by-night operators from accessing the capital market. This article
analyses the response of issuers to this norm. The extent of usefulness of the
grades for the investors and performance of the IPOs vis-à-vis their grades are
also discussed. The biggest argument against IPO grading is since it does not
comment on pricing aspect; prospective investors are unable to decide if it makes
sense to subscribe to the issue at that price.

Introduction
Credit rating is considered to provide worthwhile information to the prospective
investors, as brokers and underwriters may have a vested interest in an issue and are
likely to hold biased opinion. A credit rating agency on the other hand has a greater
capability to evaluate the relationship between risk and reward due to its accessibility to
resources and professional approach and its proficiency in screening information,
which may not be publicly available. The objectives of credit rating are, to help
companies mobilize funds at competitive rates and investor protection. In advanced
countries like USA, Japan, UK, Germany etc. the primary objective is investor
protection and to enable companies to mobilize savings from individuals is a second
objective. But it is astonishing to note that in India enabling companies to mobilize
savings is a primary objective, while investor protection is a secondary objective.
Issuers are not interested in getting the issues rated voluntarily, under such
circumstances they may not be interested in providing the necessary information and
clarifications. The analytical skill of rating of an issue is of high order. Magazines,
journals, newspapers engaged in rating the equity issues do not make thorough research

*
Asst. Professor, C.K.Pithawalla Institute of Management, Surat.
**
Lecturer, Finance, Rajdhani College of Engineering & Management, Bhubaneswar, Orissa.

73
of the issues. There was a lack for equity rating by professional organizations till the
1990s (Agarwal K.K,
1997).

The key finding, of a survey of 150 CEOs in 2008 by Assocham, were that
65% felt that besides lead managers, it is credit rating agencies that share the blame
for the recent IPO debacle because rating assigned by these institutions
becomes a decisive factor in formulating investor sentiment about an issue
(The Economic Times, 2008). This study attempted to understand the utility of
IPO grades for the retail investors in evaluating an IPO.

The main objectives of the study were: i) To know the response of the issuers
to the grading exercise when SEBI introduced optional grading of IPOs, ii) To
analyze the relation between the IPO grades and their stock prices after listing, iii) To
know the response of the retail investors as to the extent of the usefulness of the
IPO grades in judging IPOs, iv) To give recommendations for improving the
present system of grading to make it more useful.

Background and Rationale

In the year 2006 SEBI introduced optional grading of IPOs for unlisted companies and
framed guidelines relating to disclosure of the IPO by issuer companies who may want
to opt for grading of their IPOs by the rating agencies. If the issuer companies
opt for grading, then they are required to disclose the grades, including the
unaccepted ones, in the prospectus (Financial Express, 2005)

SEBI made grading of initial public offering (IPO) mandatory for all companies
planning to tap the capital market. The recent correction in the market, resulting in
many new scrips dipping below their offer price, triggered the SEBI move to
make IPO grading mandatory. SEBI believes grading will act as an investment
information tool for investors. However grading will not provide any valuation of
the equity offering, view about the issue price or any kind of price
recommendation. According to SEBI IPO grading is based on the premise that
a security with strong fundamentals would command a higher market price. The
grading process will not comment on whether to subscribe or not. Thus, investors

74
would get unbiased opinion on company fundamental and may further seek opinion of
the research community whether it is good buy or not (Damania, 2007)

Research Methodology
Data was collected from the website of SEBI regarding the present position of
the companies which have been graded. Correlation was done to know the relation
between the current price and grades assigned.

Grading/Credit rating- Meaning and Importance

It can be defined as an act of assigning values to credit instruments by
estimating or assessing the solvency, i.e., the ability of the borrower to repay
debt, and expressing them through pre-determined symbols. It is an assessment
of the credit quality or investment quality of a particular credit instrument issued
by a given business unit. Credit rating is designed exclusively for the purpose of
grading bond according to their investment quality (Bhole, 2004)

Various authors have defined the term ‘Credit rating’ differently. Credit rating is an
expression of an opinion through symbols, about credit quality of the issuer of
securities or company with reference to a particular instrument. Credit rating thus
provides a relative ranking of the credit quality of debt instruments (Tripathy,
2007)

Credit ratings guide the investors, but they may also serve to misguide them, which
depend on both the expertise and honesty of CRAs. Credit rating is a science as well as
an art. It has been rightly pointed out that rating is not and never will be a precise
science; there are simply too many variables or a tremendous variety and
combination of business conditions to be judged. Therefore there is no magic formula
for arriving at CR; it involves matters of judgment, not merely an analysis of statistics.
Subject to this, the usefulness of CR depends upon the quality of CRA, its
independence from industrial concerns, absence of its vested interest in or linkages
with the issuer of securities, its objectivity, the quality of its staff, and so on
(Khan, 2004)

75
Credit rating not only helps the investor to take on ‘accept-reject’ decision or
‘ranking decision in respect of available investment options but also helps him in
establishment of a linkage between the risk and the return. It enables an investor to
compare the offered rate of return with his expected rate of return for the particular
level of risks. There are a large number of advantages arriving out of credit rating to
investors, companies and other users. These are enumerated below:

A. Advantages to Investors

• Risk recognition — credit rating provides symbols which represent degree of risk
involved.

• Assessment of issuer’s credibility — Absence of any link between the issuer

and rating agency ensures fair assessment of credibility of issuer company.

• Information about financial strength of issuer — It tells the investor about safety
and risks involved.

• It saves time and thus, relieves investor from the burden of getting first hand correct
information about the instrument and the issuer.

• Quick decisions and easy understanding of investment opportunities.

• It provides better choice among available investment proposals.
• Periodic review of rating keeps investor updated on the instrument.

B. Advantages to the Issuer Company

• Wider investor base is exposed.

• Rating acts as a marketing tool.
• It reduces the cost of borrowing — A highly rated instrument may carry lesser
returns or interest.

• Favourable impact on capital market (Aquadi,

1996)
• Self-control by companies.
• Cost reduction in public issues.
• Enhancement in company’s reputation and goodwill.
• Rated company has an enhanced value and recognition in investors eye.

76
C. Advantages to Others

• Lesser efforts required by mobilizing agents and brokers.

• Easy grading of debt instruments rating identifies clearly the strength and
weakness of the instrument,

• Easy liquidity of debt securities.

• Favourable impact on capital market.

Credit rating is only a risk evaluation which is one of the factors in investment decision
making. It does not indicate market risk or forecast future market price. It is always
specific evaluation and is done for a particular instrument (Agarwal, 2000).Credit
rating seeks to establish a link between risk and return. An investor uses rating to
assess the risk level of the instrument, and compares the offered rate of return
with his expected rate of return for the particular level of risk to optimize his
risk-return preference. It is an information service to communicate to the investors the
relative ranking of the default loss probability for a given fixed income investment in
comparison with other rated instruments (Khedekar, 2007)

Extent of Usefulness of Grading of IPOs

SEBIs recent guideline making IPO grading compulsory is not going to be of much
help to the investors. While one can understand SEBIs anxiety with the primary
market as many of the issues are quoting below their offer price after listing,
grading would be of no great help. In the investment world no company is good or bad,
but its pricing makes it good or bad and that’s something grading will not be able
to take into consideration. On the other hand there could be a possibility that the
grading of the IPO is high, but the pricing is so aggressive that it leaves nothing on the
table for the investors. At the max, grading would help the investors understand
the fundamentals of the company i.e. whether the fundamentals are strong or
otherwise. Today, with the amount of checks put up by SEBI on promoters who
wish to come out with IPOs makes it unlikely for the company to come out with
IPO only to vanish later, something that we saw happening last decade. Further the
business dynamics are changing so fast that one is not sure what would happen to
grading if there is delay by company in tapping the market. So grading would not be of
much help and hence it is felt that it is a futile exercise (Financial Express).

77
The critics of IPO grading have a very valid question. What value addition wills IPO
grading offer compared with recommendation of equity analysts? Research houses
that comes out with ‘buy’, ‘hold’ or ‘sell’ recommendations also look into lots of
issues that the IPO grading process focuses on (Nesil & Ashwin, 2008) The biggest
argument against IPO grading is since it does not comment on the pricing
aspect, prospective buyers are unable to decide if it makes sense to subscribe to the
issue at that price. Grading is done at the draft prospectus stage and as such has no
connection with the price of the issue. Grading without price comparison is irrelevant
and makes no sense.

Findings and Analysis

Response of the Issuer’s to the grading exercise
Table 1 shows that during the year 2007-08, 26 IPOs were graded by various
credit rating agencies. It is not a big number considering the number of IPOs (85)
made during the same period. It shows that not too many companies are opting for
grading. Some investment bankers feel the norms are too rigid for smaller companies.
They are of the view that the current parameters are very rigid and needs overhauling.

Analysis of IPO grades and Stock Prices

Table 2 shows that some companies despite being graded 4/5 and 3/5 by the rating
agencies, are trading much below their offer price. Other than a few companies like
Titagarh Wagons, Religare Enterprises and Consolidated Construction consortium
which are trading much above their offer price, others like Evinix Accessories,
Reliance Power, Empee Distilleries, Edelweiss Capital, Cords Cable,
Brigade Enterprises, Precision Pipes and profiles are trading much below their offer
price. It can also be observed that companies with a low grade of 1/5 and 2/5
like Aishwarya Telecom, Kiri Dyes and Chemicals, Sita Shree Food, Allied
Computers, Varun Industries, Bang Overseas are trading at premium from their offer
price.

SPSS Output above provides a matrix of correlation coefficients for the three
variables. It also displays a matrix of r = 1 significance values for these coefficients.
Each variable is perfectly correlated with itself (obviously) and so Grade is
positively related to issue price with a correlation coefficient of r =0.515
78
which

79
is significant at p = 0.001 (as indicated by the ** after the coefficient).
This significance value tells us that the probability of this correlation being a
‘wrong rate’ is very low (close to zero in fact). Hence, we can
have confidence that this relationship is genuine and not a
chance result. Usually, social scientists accept any probability value below 0.05 as
being statistically meaningful and so any probability value
below 0.05 is regarded as indicative of genuine effect. The output also shows
that grade is positively related to the current price, with a coefficient of r = 0.607,
which is also significant at p = 0.001. But in both the cases it has been found
that though the grades are positively correlated but they are not strongly
correlated as the Pearson’s value is very near to 0.5 (moderately
correlated). Hence, we can conclude that the grades are not very helpful in judging the
worth of an IPO. The investors who bought shares on the basis of grading must
have been shocked with the performance of the IPOs which have no relation with
their respective grades.

Conclusion
The process of grading of IPOs has so far not turned out to be successful. There are
questions like are the rating agencies rating the issue, strength of company, market
sentiment or the business project for which the money is raised. If they are rating the
company, its fundamentals are going to change over a period of time and this will raise
the need for grading review like debt rating. If they are rating the project for which
the money is raised, it has to be relative to the price (Shankar, 2007).

There could be some cases of aggressive pricing in future and retail investors may
want to know if they should invest at an offer price, since at a high price even a good
company is a bad investment. Pricing, however is outside the domain of credit
rating agencies (CRAs) who will assign a grade based on various parameters
except the issue pricing. That is a key drawback. But even key parameters like
promoters, business prospects, etc. are hazardous (Haldea, 2006)

Moreover, what is of real concern can’t and won’t be assessed by the CRAs-
companies misusing issue funds and promoter’s acting against minority shareholder’s
interests. The evaluation of a company at the closely held level can’t capture this.

80
Grading is not an academic exercise. It has to give a comfort level about the post-
listing performance.

According to Prithvi Haldea, MD Prime Database, equity investment is a science and

an art. It is subjective, and market-driven. Equity cannot and should not be rated and no
wonder, no model exists worldwide for this. IPO grades can lull small investors about
the risks and rewards of equity investing. They may apply solely on the basis of grades.
Grading does not promote informed decision-making. Expertise of CRAs can surely be
used. For example, for doing a crisp summary of the offer documents, as these are
now becoming too voluminous and tend to conceal critical information in the
maze. Or meeting promoters/visiting plants and disclosing findings. Or why not singly
vetting documents, thereby saving huge duplication of efforts (Agarwal, 1997)

HT Media or Jet Airways have received very high grades, however investors
have lost money in these issues, despite a very bullish market. On the other
hand, unknown companies like Crew BOS or Bharati Shipyard would not have
earned high grades, but have delivered over 500% returns, even one year later.
Therefore, SEBI should consider making improvements in the present system of
grading so as to make it more useful for the retail investors.

References
1. Agarwal, K.K. (1997). New Issue Market Operations in India. New
Delhi, Kanishka Publishers
2. Agarwal Sanjiv, (2000). Guide to Indian Capital Market. New Delhi Bharat
Publishing House
3. Aquadi. R.B. (1996).Need for equity rating by professional organizations.
The
Management Accouintant.
4. Bhole, L.M. (2004). Financial Institutions and Markets. New Delhi, Tata MCGraw
Hill Publication
5. Dipesh Kumar Dipu. (2005). Equity Grading in Kuwait- A Fuzzy Logic
Approach. Journal of Business Research. Vol 39.
6. Haldea Prithvi. (2006). Some questions about IPO grading. Financial Express.

81
7. Khan, M.Y. (2004). Indian Financial System. New Delhi, Tata MCGraw Hill
Publication
8. Khedekar Sachin. (2007). IPO grading, focusing on the current fundamentals of
the issuer will not be a recommendation. Capital Markets
9. Pathak, A.T. Bharati,V. (2008). The Indian Financial System. New Delhi,
Pearson Education
10. Paul A. Griffin and Antonio Z. Sanvicente. (1982). Common Stock
Returns and Rating Change:A methodological comparison. (1982).
Journal of finance.Retrieved from http//www.jstor.org.
11. Raghunathan and Verma. (1992). Credit Rating: When does AAA mean?
Vikalpa. Vol 17.
12. Richard Followill, A. and Martell Terrence. (1997). Bond Review and
rating Change Announcements: An Examination of Informational Value and
Market Efficiency. Journal of Economics and Finance. Vol 21
13. Shankar Sidharth. (2007). Does grade guide investors. Capital Markets
14. Sucheta Dalal. (2005). IPO ratings worth a trial in India. New Delhi, Financial
Express.
15. Stanley Nesil and Ramarathinam Ashwin. (2008). Retrieved from http//
www.livewmint.com
16. Tripathy Prava Nalini. (2007). Financial services. New Delhi, Prentice Hall of
India.
17. IPO grading is fine, but with conditions, say marketmen.(2007) New
Delhi, The Economic Times
18. IPO grading is mandatory. (2007). New Delhi, The Economic Times.
19. Judging IPOs: Rating firms tread cautiously. (2007). New Delhi, The Economic
Times
20. The Rate Card. (2007). New Delhi, Financial Express.
21. IPO rating: A non-success. (2007). Financial Express

80
Table : 1

81
Table 2 : Company rating and Issue price detail

Table 3: SPSS Output of Correlation

82
 Investors’ Behaviour towards Investments
(A Study on Investors of Khammam Town)

*
E. Hari Prasad Sharma
Abstract
Liberalization policy 1991 has witnessed significant changes in the Indian financial
environment. The introduction of reforms in industrial, financial and economic
policies, which were started 10-15 years back are now giving the fruits and one of the
witness is present growth of stock market. Since bank interest rates on deposits are
falling, the question is raised that what investment should a small investor has to select
either traditional or modern investment. Changes in the financial and economic
environment have been changed the perceptions of individual investor towards the
modern investment avenues. Now, individual investor started investing in the stock
market, because keeping the amount in traditional savings is not profitable. Investors
hold different perception to invest in various investment avenues. The behavior of
investor in this juncture, set priorities in their minds. Taking into consideration, the
behavior of the individual an attempt is made to study a) the perceptions of individual
towards various investment avenues and trying to help investors in finding out an
accurate perception towards those investment avenues.

Introduction
An efficient stock market in the country plays key role in economic and financial
system in mobilizing scarce funds from surplus areas and channelizing them into
demand areas leading to provide employment to resources. Since 1991,
liberalization policy, Indian stock market has been witnessed immensely changed and
progressed as an energetic system of flow of funds. The Indian capital market have
been showing tremendous growth with the introduction of industrial, economic and
financial sector reforms and changes in liberalization, deregulation and restructuring
policies. All these lead to promote saving from small investors and channel them
to productive use through financial intermediaries like securities, deposits, mutual
funds, insurance
schemes etc. With this phenomenon, financial institutions are introducing innovative

*
Faculty Member and Campus Academic Coordinator, ICFAI National College - Khammam.

83
financial instruments into the market with providing pioneering services to muster
savings from the all types of investors.

Behaviour of Investor
Generally, investors are risk averse. However, return on investment in the financial
market is closely associates with the risk. Investors always prefer safe investments.
This does not mean that investor is accepting low return. A small investor generally
The above table reveals that the percentage of saving in GDP has increased from 8.6%
in 1950-51 to 34.8% in 2006-07. Out of total, the highest contribution from the
household sector. This proves that the household sector playing an important role in
capital formation through savings. The investment by household sector in various
investment avenues is presented in the following table.

Investment of House Hold Sector in Various Avenues

Particulars % of Investment
Bank Deposits 44.26
Provident Fund Schemes 20.66
Govt. Securities 13.1
3
Insurance Funds 12.8
5
Corporate Investments 2.73
Others 6.37
Source: Report of Center for Monitoring Indian Economy (CMIE) 2003

The above depicts that the investments made by the household sector among various
investment avenues. Most of the savings were invested by the household sector in bank
deposits that provide constant return and high security. It is very sad indication that the
investment in corporate investments i.e. securities and debentures, were showing a very
small portion of investment. This indicates that people are giving high priority to the
traditional investments than modern investments.

Savings and Investment

In the investment, analysis savings play a significant role. Savings means the deference
between the income earned and income spent by the individual. During the
1950s, people spent most of their incomes on household expenses and very small
amount of
84
income was saved. This was resulted very low rate of savings and investment ratio.
Increase in savings leads to increase in investment and increased investment constitutes
the economic growth of the country. Several studies proved that the fast development
of western countries was the result of an increasing rate of savings and investment
ratio. Higher the ratio higher the development. This will be possible by way of a
proportionate rise in the savings.

In India, savings originate from three sectors namely household sector that contains
individuals, educational institutions, charitable trusts, temple, and non-corporate
business houses. Secondly, private sector includes corporate houses, joint stock
companies, industrial corporations, and cooperative organizations. Finally, Government
sector comprises central and state government, various government undertakings, and
local authorities etc. The following table shows that the contribution made by these
three sectors during 1950 – 51 and 2006 – 07.

Percentage of Savings in the GDP

Particulars 1950 – 51 2007 - 07
House Hold Sector 5.7% 23.8%
Private Sector 0.9% 7.8%
Govt. Sector 2.0% 3.2%
Total Savings 8.6% 34.8%
Source: Reports of CSO 2006-07

Investment means, “Sacrificing the certain present amount for the uncertain future
benefit. The term "investment” or “investing” like value is a word of many
interpretations. It has different meanings in economics and in finance. In economics
investment means to a real investment i.e. net additions to the capital stock of the
society which meant factors of production (such as a land equipment, machine or a
building, inventories etc.,), while in finance it refer to a financial asset, such as amount
that is put into saving instruments like bank deposits or the security market, which may
later be used to buy a real asset. It means exchange of financial instruments like stocks
and bonds collectively called as securities.

85
Again, investor to differentiate the pseudo investment of a consumer and real
investment of businessperson often uses the term financial investment. There is
difference between an investment in a lottery ticket and the establishing a new business
firm. The former one is the financial investment and later is the real investment that
adds the society.

Investors often used to invest their savings through intermediaries like banks, insurance
companies, mutual funds, pension funds etc. Generally an agent motivates potential
investors and collects money from them and invests in various profitable investments
on behalf of them and fulfills the legal formalities makes benefits to the investors. For
this he claims from each of investors on the intermediary.

Normally in personal finance individuals invest regularly their money on monthly basis
or in predetermined installment way to purchase of assets where there is element of
capital risk is deemed in investments or to meet their future requirements like children
education, marriage etc.The behavior of investor in this juncture, set priorities in their
minds. Investors hold different perception to invest in various investment avenues.
Individual perceptions are most significant in the investment process which will
become basis for actions and practices of potential investors.

Generally, individual investors do not have complete knowledge about investment due
to lack of information, rural background. With this, they fix their own priorities effect
the formation of perceptions. These perceptions influence the investment process. The
behavior of investor in this juncture, set priorities in their minds. Taking into
consideration, the behavior of the individual an attempt is made to study a) the
perceptions of individual towards various investment avenues and trying to help
investors in finding out an accurate perception towards those investment avenues.

Review of Literature
A few studies have been examined that related to investors’ perceptions towards
investment. According to John Tippet (2000) the most essential influencing factors are
investor demographic variables, gender, age, education and wealth. Ethical issues like
professional and good business practice, the promotion of Australian made, and
encouragement of youth employment also play dominant role in selecting the

86
investment1. Rajarajan (2000) had exposed the relationship between investment related
characteristics and lifestyle clusters2. Singh and Vanitha (2002) carried out a study on
mutual fund investors’ perception and preferences3. Shu, Yeh, and Yamada (2002)
found different investment patterns of investments towards mutual fund investments4.
Qamar (2003) conducted a survey and identified the factors influencing saving
behavior and investment preferences. Kiran D and Rao studied the group segments of
investor using the demographic and psychographic characteristics of investors6. Jaspal
Singh and Subhash Chander studied the investors’ preferences for investment in mutual
funds7. Aman Srivastava conducted a survey and revealed that investors have associate
with respect to the past performance of the stocks over the other universal investing
instruments8. Manish Mittal and R.K. Vyas studied the demographic variables that
affect the investment choice9. M.R. Shollapur and A.B.Kuchanur conducted a study on
the behavior of investors and identified the investors’ perceptions relating to investment
schemes offered popular institutions10.

Objectives
The main objectives of the present study are follows:
a. To identify important perceptions of investors at the investment.
b. To judge the agreeableness of investors’ perceptions in different selected
investment opportunities.
c. To suggest managing the unrealistic hesitations.

Methodology
The present study concentrates on some of the investment opportunities of which are
offering by banks, post offices, life insurance companies, corporate entities, and
government agencies. The study mainly focused on the personal perceptions of
investors like risk, security, regular income tax benefits, pre maturity facility etc.

The data so required collected mainly from the primary source. A structured
questionnaire is prepared, for this purpose, and supplied to the 200 respondents in the
Khammam town, which is one of the major district head quarter in the State of Andhra
Pradesh. So collected data analyzed with the help of statistical techniques like tables,
averages, percentages. The technique Co-efficient of Variance was used to arrive the

87
logical conclusions form the perceptions with higher mean values. Having higher mean
value and lower CV signals that the agreeableness of investors as particular hypothesis.

The present study has been divided in four heads namely

1). Investments Decisions.
2). Investment Avenues
3). Profile of Investors and
4). Perceptions of Investors.

Investment Decisions
Investment has been an activity confined to the rich, business, and business class in the
past. This can be attributed to the fact that availability of investible funds is a pre-
requisite to deployment of funds. However, today, we find that investment has become
a household word and is very popular with people from all occupations. The “higher
the saving rates higher the investment activities”.

The basic motive to save money is to use it as a backyard for future consumption.
Investment means putting money/savings in stocks/bonds/gold/silver/assets for period
with an expectation to earn additional benefits.

An investment is the present commitment of money for a specific period in order to

derive suture payments that will compensate for i). The time the funds are committed
ii). The expected rate of inflation and iii). The uncertainty of the future payments.

An investor either can invest directly in securities in his own name or can invest
through an investment company referred as Asset Management Company (AMC). An
investment company plays intermediary role that collects money from the potential
investors and invests in various corporate securities on their behalf. The investor gets
relief form the investment decision making.

In the other hand, direct investment, an investor himself has to identify and select the
suitable investment avenues and manage the investment at most appropriable way,
which requires constant observation on the stock market movements. With the direct
investment, investor can avoid payment charges to the financial intermediaries.

88
Investment Avenues
Investments are Risk free investments and Risky investments. Bank deposits, Post
office deposits, government, as well as corporate bonds come under the categorized as
risk free investments. Investment in securities are treated as risky investments as their
value attached with market fluctuations. Banks are offering deposits in the form of
saving, recurring, current and fixed deposits. These are high liquid in nature and allow
premature facility. At present, most banks are offering insurance coverage along with
deposits. Like bank deposits, post office also offering saving account, recurring
account, time deposits (National Saving Certificates – NSC, Kisan Vikas Patras) and
monthly income scheme. Central and State governments issue bonds and bearer
securities. Companies issue debentures and bonds. All these are treated as secured and
risk less investments. Investments in insurance like Unit Linked Insurance Policies
(ULIP) provide protection against the risk of life to the investor and generate returns.
The above-mentioned investments high lightened with tax-benefits. Corporate
securities are two equity and preference shares.

Preference shares holders are the share holders who enjoy the right of preference in
payment of dividend and redemption at time of winding up. This also treated as
secured investment that provide constant and guaranteed dividend. Finally, equity
shares are high risky investment that the value fluctuates in accordance with the market
variations. However, equity shareholders enjoy the voting rights at the time of making
managerial decisions. At present, the investment market is high competitive market.
Therefore, the success of an investment product greatly depends on favorableness that
investment earns for investors. Hence, this study focused on the perceptions of the
investors.

Profile of Investors in Khammam Town

Many factors, personal as well as environmental, like age, education, size of the family,
income, and expenditure of the family etc. are powerful factors that influence the
investment decisions of an investor. An investment by literate person is differs an
investment made by an illiterate person. Aged and high family responsibility person
favors risk free and secured investments where as young and less family responsibility
person (unmarried) prefers risky investments. Hence, an attempt is made to study the
profile of the investors as to lead up to interpret the investors of perceptions.

89
 Table No. 1 – Profile of Investors
Observed
Sl.No. Distribution Number Percentage
Factor
Bellow 25 20 10.0
0
26-30 24 12.0
0
31-40 48 24.00
1 Age
41-50 56 28.00
51-60 28 14.0
0
60 and above 24 12.0
0
TOTAL 200 100.00
Male 14 70.00
2 Gender 0
Female 60 30.00
TOTAL 200 100.00
Martial Married 35 17.5
3 0
Status Unmarried 16 82.50
5
TOTAL 200 100.00
Agriculture 35 17.
5
Job 10 50.0
4 Occupation 0
Business 45 22.5
Others 20 10.
0
TOTAL 200 100.00
Two 25 12.5
0
Three 37 18.5
No. of 0
Four 60 30.00
5 Family
Five 46 23.00
Members
Six 20 10.0
0
Above Six 1 6.00
2
TOTAL 200 100.00
Bellow SSC 22 11.0
0
Inter 30 15.0
0
Degree 45 22.50
6 Education
P.G. 60 30.00
Technical 32 16.0
0
Others 1 5.50
1
TOTAL 200 100.00
Urban 10 50.00
0
7 Residence Semi-Urban 40 20.00
Rural 60 30.00
TOTAL 200 100.00
Source: Primary observation

The above table presents details of personal profile investors. The highest number of
investors lied between the age group of 31 – 50. Out of total 200 respondents, 104
that represent 52 percent are in between this age group. The majority of
investors are
90
 having P.G. qualification and residing at urban areas, which turns key factor in
assessing the habit of saving and investment. The size family is minimum that having
four members in the family in the case of most of the investors. It observed that most
of the investors are jobholders who receive fixed income on monthly basis that
becomes one of the considerable factors for investments.

Interpretation of Investors’ Perceptions

Having discussed the personal details of investors, an attempt is made to analyze the
various perceptions of investors. Perceptions like affordability of amount, study
income, liquidity, tax benefits, risk, pre maturity facility, security, appreciation of
amount invested, collateral facility to adopt loans and Time of investment are studied
and analyzed with suitable statistical techniques to reach logical conclusions.

Affordability
The minimum amount on investment tendering by the institute should be favorable and
affordable to the investors. Investors give the priority to investment those, which are
available at reasonable amount. Therefore, it is necessitate to study whether selected
investments avenues are available to invest with minimum and reasonable amount. For
this, a hypothesis is formed and tested.
Hypothesis: The investment limit is minimum and affordable.
Table 1 – Affordability of Investment Limit
Life
Investment/P Postal Bank Government Mutual Corporate
Sl.No. Insurance
erception Deposits Deposits Securities Funds Securities
Schemes
Highly
1 57 70 50 30 55 45
Acceptable
2 Acceptable 55 50 50 30 55 55
3 Neutral 40 36 20 10 20 30
Partially Not
4 35 28 45 25 40 50
Acceptable
Non
5 1 1 35 105 30 20
Acceptable 3 6
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 5.32 7.53 8.6 22.23 8.36 5.83
C.V. 13.3 18.825 21.5 55.575 20.9 14.575
Source: Primary observation

91
The above table furnishes the details relating to the affordability of investment limit.
The highest numbers of investors are accepting that bank and postal deposits are
affordable for investment. An in depth analysis is made to study with help of
Coefficient of Variation which proves that postal deposits and corporate securities have
lowest C.V. (13.3 and 14.5) respectively are affordable. The establishment of
SEBI (1992) has enabled the free pricing of corporate securities. With this, a
corporate can fix even one rupee to the face value of the securities. This is the
most and most affordable to any group of investors. The highest C.V. in the
case of LIC Policies shows that the opinion of investors is highly variable because the
high premium amount of policies. Thus, so made hypothesis is providing evidence in
the case of postal and corporate securities and controvert in the case of LIC policies.

Regular and Study Income

Investment is for income. Investors always prefer investments, which earn regular
income. Hence, the hypothesis “the investment yields study and regular income to the
investors” is made to study the whether the investment is earning regular income to
investors.

Table: 2 Investors’ Perception against Study and Regular Income

Life
Sl. Investment/ Postal Bank Government Mutual Corporate
Insurance
No. Perception Deposits Deposits Securities Funds Securities
Schemes
Highly
1 1 58 60 20 50 60
Acceptable 9
2 Acceptable 60 46 35 35 55 65
3 Neutral 28 36 25 1 20 1
5 5
Partially Not
4 23 30 50 35 40 45
Acceptable
Non
5 70 30 30 95 35 1
Acceptable 5
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 9.1 7.41 8.1 20.09 5.47 8.7
5 2 1
C.V. 22.875 18.525 20.3 50.225 13.68 21.775
Source: Primary observation

92
In the above table investors highly accept that mutual funds and bank deposits provide
study and regular income. The coefficient of variation also proves that these avenues
have lowest variation (13.88 and 18.52) in the minds of investors. The hypothesis is
not proved in the case of LIC policies.

Liquidity and Marketability

An Investment would come into sight striking when it can be convertible in to cash
without monetary loss within the short period. This marketability feature positively
influences the investors. So, the hypothesis is constructed to study the perception about
the liquidity and marketability of the investment.

Hypothesis: “The Investments are highly liquid and marketable”.

Table – 3 Acceptableness of Perception - Liquidity
Life
Postal Bank Government Mutual Corporate
S.No. Investment/Perception Insurance
Deposits Deposits Securities Funds Securities
Schemes
1 Highly Acceptable 1 55 50 20 50 60
5
2 Acceptable 62 46 45 30 50 60
3 Neutral 26 39 30 20 20 1
8
4 Partially Not Acceptable 1 3 50 30 45 40
7 1
5 Non Acceptable 80 29 25 10 35 22
0
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 9.1 6.88 6.16 13.56 5.09 8.45
5
C.V. 22.875 17.2 15.4 33.9 12.73 21.125
Source: Primary observation

The above table reveals that the liquidity perception of investors. Highest number of
investors accepts Mutual Funds and Bank Deposits are high liquid as comparing to
other investment avenues. The hypothesis confirms that MFs and Bank deposits have
very low variation (C.V, of MFs – 12.3 and BDs – 17.2) and challenges in the case
of LIC Policies and Postal Deposits.
Tax Benefits
Generally, investors invest more in the various avenues to get the tax benefits. The
Investors like better investment avenues that provide tax benefits. So hypothesis titled
“Investments offer tax benefits to investors” is framed.

93
 Table – 4 Acceptableness of Perception - Tax Benefits
Life
Postal Bank Government Mutual Corporate
Sl.No. Investment/Perception Insurance
Deposits Deposits Securities Funds Securities
Schemes
1 Highly Acceptable 45 67 50 48 49 57
2 Acceptable 55 5 45 50 5 6
1 1 1
3 Neutral 28 42 35 30 23 20

4 Partially Not Acceptable 27 24 50 28 42 36

5 Non Acceptable 45 1 20 44 35 26
6
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 4.85 8.2 5.09 4.1 4.56 8.54
1 1
C.V. 12.125 20.525 12.725 10.275 11.4 21.35
Source: Primary observation

Mutual Funds, LIC Policies, Postal Deposits, and Government Securities are the
investments that provide 100% tax benefits to the investors. The same is proved by
the hypothesis in the above table with lowest C.V. in the case of MFs, PDs, and
LIC Policies.
Risk
A rational investor always hunts for less risk in his investment assets. Disparity in
expected return is natural and such deviation to be smallest amount and manageable.
Therefore, hypothesis “Investments that have less risk” is framed and tested.
Table – 5 Acceptableness of Perception - Risk
Life
Investment/P Postal Bank Government Mutual Corporate
Sl.No. Insurance
erception Deposits Deposits Securities Funds Securities
Schemes
Highly
1
Acceptable 50 55 48 54 23 52
2 Acceptable 50 5 45 48 28 59
1
3 Neutral 30 42 36 2 24 20
1
Partially Not
4
Acceptable 25 26 49 1 58 36
2
Non
5
Acceptable 45 26 22 65 67 33
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 4.85 5.44 5.18 9.01 8.34 8.54
C.V. 12.125 13.6 12.95 22.525 20.85 21.35
Source: Primary observation

94
 The above table shows the details of investors’ perception against risk . PDs, BDs GSs
are traditional and less risky avenues as comparing to the modern investments such as
MFs, LIC Policies etc. Hypothesis proves that there is very less variation among
investors in regarding the traditional investments. Mutual funds and LIC Policies (Unit
Linked Policies) are the high variation investments (C.V.of LIC - 22.52 and MFs –
20.85) respectively. This is because the value of modern investments fluctuates in
accordance to the market changes.
Pre-Maturity Facility
The investors expect choice of prior withdrawal of their amount from the investments
they made to meet unexpected obligations if raised. This is also one motivating factor
for their investment conclusion. Hence, a hypothesis is established to test the variation
in their opinion among selected avenues.
Table – 6 Acceptableness of Perception – Pre-Maturity Facility
Life
Sl.N Postal Bank Government Mutual Corporate
Investment/Perception Insurance
o. Deposits Deposits Securities Funds Securities
Schemes
1 Highly Acceptable 33 53 47 32 39 28
2 Acceptable 30 5 46 4 42 36
1 1
3 Neutral 28 43 36 2 24 1
1 9
4 Partially Not Acceptable 23 27 46 23 5 59
1
5 Non Acceptable 86 26 25 83 44 58
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 10.39 5.1 5.52 10.13 3.99 13.15
5
C.V. 25.975 12.875 13.8 25.325 9.975 32.875
Source: Primary observation

In the above table reveals that among the alternative avenues highest number of
investors accepts that the mutual funds are having attractive facility of premature
withdrawal followed by bank deposits and government securities. These three have
very least variation (C.V. - MFs-9.97, BDs-12.87 and GSs-13.8) respectively.
Security
Security is another most important factor, which influence investors’ decision.
Relevant statutory bodies such as IRDA, SEBI Banking Act, govern all selected
avenues. etc. Investors desire to invest in those investments that are fully protected.
Therefore, “investments are fully protected by statutory bodies” is taken as a
hypothesis.

95
 Table – 7 Acceptableness of Perception – Security
Life
Sl. Postal Bank Government Mutual Corporate
Investment/Perception Insurance
No. Deposits Deposits Securities Funds Securities
Schemes
1 Highly Acceptable 54 5 46 39 32 23
1
2 Acceptable 52 53 46 36 4 34
1
3 Neutral 33 26 38 20 2 1
1 9
4 Partially Not Acceptable 3 43 37 50 23 6
1 1
5 Non Acceptable 30 27 33 55 83 63
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 4.78 5.1 5.85 5.4 10.13 14.38
5
C.V. 11.95 12.875 14.625 13.5 25.33 35.95
Source: Primary observation

In the table, no. 7 details of perceptions of investors against security of investment

avenues are presented. Investors recognize that post office deposits have greater
protection followed by bank deposits and LIC policies than others do. This proves with
the lowest C.V, 11.95 as against other avenues.
Appreciation in Value of Investment:
Increase in the value of an asset is another good factor to be considered while investing.
Investors go through the investment that have a high prospective for value appreciation.
To study the investors’ opinion on this aspect “high scope of capital appreciation” is
framed.
Table – 8 Acceptableness of Perception – Appreciation in Investment
Life
Sl. Postal Bank Government Mutual Corporate
Investment/Perception Insurance
No. Deposits Deposits Securities Funds Securities
Schemes

1 Highly Acceptable
22 26 2 53 52 34
1
2 Acceptable 28 25 28 52 48 23
3 Neutral 26 23 38 20 23 1
9
4 Partially Not Acceptable
57 54 50 39 28 62

5 Non Acceptable
67 72 63 36 49 62
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 8.2 8.8 13.53 5.4 5.37 14.27
C.V. 20.5 22 33.825 13.5 13.43 35.675
Source: Primary observation

96
In the above table investors highly accept that the LIC Policies and Mutual Funds that
have high prosperity for growth i.e. appreciation in value an asset. The investors’
perception in this regard is least variance 13.5. Therefore, the hypothesis is positive
in regarding to MFs and LIC Policies and negative against other avenues.

Collateral Security
In addition to above factors, another significant motive that the mostly influence the
investment decision of investors. The investment must buttress in obtaining the
financial help in emergency. To meet unexpected financial emergency, investors could
have the facility to take the loans by pledging these assets. That is the reason why
investment should serve as collateral security. For this purpose the following
hypothesis is formed.

Hypothesis: “Investments have good quality of collateral”.

Table – 9 Acceptableness of Perception – Collateral Security
Life
Sl. Investment/ Postal Bank Government Mutual Corporate
Insurance
No. Perception Deposits Deposits Securities Funds Securities
Schemes
1 Highly Acceptable 55 60 57 54 57 5
1
2 Acceptable 50 5 55 5 55 48
1 1
3 Neutral 28 30 38 26 38 20
Partially Not
4 43 28 2 33 2 46
Acceptable 1 1
5 Non Acceptable 24 3 29 36 35
1 29
Total 200 200 200 200 200 200
Mean 40 40 40 40 40 40
S.D. 5.42 5.8 8.3 4.8 5.37 14.27
C.V. 13.55 14.5 20.75 12 13.43 35.675
Source: Primary observation

Investors’ perception against collateral security is presented in the above table. Highest
number of Investors prefers all the selected investment avenues have good quality of
collateral security. So framed hypothesis is proved in the case of LIC Policies, PDs,
MFs and BDs. But this invalidated in the case of corporate securities (c.v. 35.67) that
indicates that these are not have the good quality of collateral feature.

97
Conclusion and Suggestions
Having studied the various perceptions of investors in Khammam town, it is observed
that the most of the investors do not have complete knowledge about the modern
investment avenues. Investors still prefer traditional investments. This is because of
most of the investors who under study are having rural background. It is required to
take initiate steps to educate the investors. The following is the list of suggestions is
made to alert the investors.

Educating the investors to accept the risk that include in investment. Technical training
is provided to use the computers while investing. Providing the facility pre mature
withdrawal from investment. Conducting awareness programs to inculcate investments
knowledge.

The study mark out some of the perception of investors in relating to selected
investment avenues that are offering by well-liked institutions. The study found that
most of the investors are risk averse and prefer traditional investments like Post office
deposits. The trend should be changed. It is required to push the investor into modern
avenues where stock market is key player. In the global scenario, each investor must
have thorough knowledge about market changes to avoid the risk. It is needed to help
the investor to develop right kind perception against the investment.

Reference:
1 John Tippet: “Investors' Perceptions of the Relative Importance of Investment
Issue”, Accounting Forum Vol.24, No. 3, September 2000.
2 V. Rajarajn, “Investors’ Life Style and Investment Characteristics”, Finance India,
Vol. XIV, No.2, 2000.
3 Singh and Vanita, “Mutual Fund Investors’ Perceptions and Preference – A survey”
Indian Journal of Commerce, July-September 2002.
4 Shu, Yeh and Yamada,” The Behavior of Taiwan Mutual Fund Investors –
Performance and Fund Flows”, The Pacific Basin Finance Journal, Vol.10,
5. Qamar, “Saving Behavior and Investment Preferences among Average Urban
Households” Indian journal of Commerce, Jan – March 2003.

98
6 Kiran D and Rao U.S., “Identifying Investor Group Segments Based on
Demographic and Psychographic Characteristics”, MBA Project Report, Sri Sathya Sai
Institute of Higher Learning, 2004.
7 Jaspal Singh and Subhash Chander, Investors’ Preferences for Investment in Mutual
Funds”, the ICFAI Journal of Behavioral Finance, Vol.III, No.1, March 2006, pp 7 -
17
8 Aman Srivastava, “An Analysis of Behavior of Investors in India”, the ICFAI
Journal of Behavioral Finance Vol. IV, No. 2, June 2007, pp 43 - 52.
9 Manish Mittal and R.K. Vyas, “Demographics and Investment Choice Among
Indian Investors”, the ICFAI Journal of Behavioral Finance, Vol.IV No. 4, December
2007, pp 51 -
63.
10 M.R. Shollapur and A.B. Kuchanur, “Identifying Perceptions and Perceptual
Gaps: A Study on Individual Investors in Selected Investment Avenues”, the ICFAI
Journal of Behavioral Finance, Vol. V, No. 2 June 2008, pp. 47 – 64.

99
Perceptions of Superiors and Subordinates on Women Executives Effectiveness in
Public and Private Banks

*
Dr.C.Anuradha
Abstract

Globalisation has brought a wave of change in the organizational dynamics all over the
world. A noteworthy development during this period has been the growth of a new
generation of business and corporate women leaders. Women are gradually occupying
leadership positions in the corporate world. In a competitive business scenario, the role
of superiors as well as subordinates in any service industry, particularly the banking
sector, will have to play a vital role to understand the leadership role. In the light of the
above, the present study tries to understand the perceptions of both the superiors and
subordinates about their women executives in both the banks. The objective of the
study is to find out whether there is any significant difference between the perceptions
of superiors and subordinates about their women executives in both the banks with
respect to a set of variables considered as measurable factors for the present study.

Introduction
The success of an executive team depends heavily on the relationships the boss has
with his or her direct reports. The leadership literature has had little to say about what is
1
expected in those relationships-on either side. Larry Bossidy details the behaviors a
leader should look for in subordinates and what they should be able to expect in return.
He says the best subordinates know when a situation calls for them to get involved.

According to social-exchange theory, leaders invest in their subordinates by providing

them with support for self worth, freedom to make decisions or to change or modify
their job and subordinates reciprocate by performing in accordance with the leaders’
preferences.2

*
Dr.C.Anuradha ,HOD(HR), VVISM, Thumkunta, Boston House, HYD.

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The literature described ways in which managers influence subordinates, including role
modeling, goal definition, reward allocation, resource distribution, communication of
organizational norms and values, structuring of work group interactions, coordinating
subordinates’ perceptions of the work environment, and influence over processes and
procedures used (James and
James,1989;Yukl,1994).3

This has also been found to be related to job attitudes, leader attention, superiors’
support, participation in decision-making, and the amount of time and energy invested
in the job(Crouch and Yetton,1988;4Dansereau,Graen and Haga,19755).

Recent organizational theories have stressed the importance of self management and
self-leadership (Manz and Sims,1987)6 of subordinates in teams. Superiors play
an important role in structuring the work environment and providing information
and feedback to employees. As a consequence, a superior’s behaviour has an impact on
the affective reactions of the team members.

Research has shown that superior-subordinate relationship is negatively related to

turnover (Graen, Liden and Hoel,1982)7 and positively related to
performance evaluations(Wayne and Ferris,1990), and frequency of promotions
(Wakabayashi, et. al., 1988). This has also been found to be related to job
attitudes, leader attention, superior’s support, participation in decision-making, and the
amount of time and energy invested in the job (Crouch and Yetton,1988; Dansereau,
Graen and Haga,1975).

Hundreds of experimental studies (Honig and Stadden,19778; Ulrich9,) have

shown substantial improvements in performance when desired performance was
clarified and when contingent, frequent consequences were provided. The superior’s
behaviour is fundamental in determining the level of interpersonal trust in a work
unit (Likert and Willits, 1940)10.

The degree of work centrality of public and private sector banks is worth to be
11.
understood Sekaran and Trafton (1978)12 in their study on Indian bank
employees found that the measures developed in the Job Diagnostic
Survey(JDS) do not empirically establish five distinct core dimensions as
theorized by Hackman and Oldham (1975) 13.

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1
Methodology
In this study, a sample of 80 women executives (40 women executives from each bank)
and 40 superiors (Superiors of women executives) (20 superiors from each bank) and
120 subordinates(Subordinates of women executives) (60 subordinates from each
bank) were selected. The sample of superiors of these banks includes managerial
personnel of chief manager cadre and subordinates include clerical cadre from both the
banks. The sample of women executives from both the banks includes women
executives of Assistant Manager Cadre, Manager Cadre and Deputy Manager Cadre
(only in SBI).

The study is based mainly on primary data. Two types of structured questionnaires
were administered- one for appraisers and the other for appraises. Survey was made in
the Zonal office, Head office and various branches of State Bank of India and ICICI
bank situated in the twin cities of Hyderabad and Secunderabad. The relevant data so
collected for examining perceptions of superiors and subordinates has been statistically
analyzed by applying t-test.

In this study superior’s perception about women executives working under them are
collected through a well-designed questionnaire seeking response about the women
executives (in terms of strongly disagree, Disagree, neither disagree or agree, Agree, or
strongly agree) and are accurately verified. Similarly the subordinates were
administered with a questionnaire to understand their perceptions on the role of women
executives (in terms of ‘Always’, ‘Often’, ‘Sometimes, ‘Rarely’ or ‘Never’.) and are
accurately verified. The significance of the sample is tested through ‘t’ value. The
factors considered by superiors of women executives include: Job desirability of
women, Business objectivity, assuming leadership roles, competing for top positions,
emotional stability, ambitious, assertiveness, and competitive spirit.

To study the role of women executives as perceived by the subordinates, the indicators
of job performance of women executives in executive positions included the following
dimensions as Job Guidance, Support and Encouragement, Performance Emphasis,
Personal Interaction, Business Acumen, Housekeeping Maintenance, Public Relations
Skill, Cooperation, Job Knowledge, Representation etc. The significance of the sample
is tested through ‘t’ value.

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2
A comparison of the superior’s and subordinates perceptions of women executives of
both the banks on each dimension is also studied.

Results and Discussion

The objective of the study is to find out whether there is any significant difference
between the perceptions of superiors and subordinates of both the banks about their
women executives effectiveness with respect to the following variables considered as
measurable factors for the present study. The study is hypothesized as that there is no
significant difference between the perceptions of the superiors and subordinates about
their women executives in SBI and ICICI banks. Tables No.1 and 2 reveals the
profile of superiors and subordinates of both the banks.
Table No.1
Superior’s Respondent’s Profile
No. of Respondents
Variables Total
SBI ICICI
Gender
Male 15 (75) 13 (65) 28 (70)
Female 5 (25) 7 (35) 12 (30)
Total 20 20 40
Age Group
20-30 Yrs 0 (0) 2 (10) 2 (5)
31-40yrs 1 (5) 17 (85) 18 (45)
Above 40yrs 19 (95) 1 (5) 20 (50)
Total 20 20 40
Marital Status
Married 18 (90) 18 (90) 36 (90)
Unmarried 2 (10) 2 (10) 4 (10)
Total 20 20 40
Service
0-10yrs 0 (0) 13 (65) 13 (32.5)
11-20yrs 4 (20) 6 (30) 10 (25)
Above 20yrs 16 (80) 1 (5) 17 (42.5)
Total 20 20 40
Source: Primary Data (Compiled From the Tabulated Responses)
Note: Figures in the parentheses represent the percentage to the total (40)

Analysis of Table No.1 indicates from among the total respondents (40), 70% are
male and 30% female.5% of the respondents belong to the age group of 20-30 yrs and
45% belong to the age group of 31-40 years. However it is quite interesting to
observe that in ICICI the percentage of respondents belonging to the age group of 40
and above is

10
3
only 5% while in SBI it is sweeping 95% which shows that the private sector banks are
keen in recruiting younger generation. The marital status of the respondents reveals that
90% are married. The total service of the respondents is high (80%) in case of SBI
(Above 20 Years) while it is high (65%) in case of ICICI (between 0-
10years).Table No.2 reveals the profile of subordinates of both the banks.

Table No.2 Subordinates Respondents Profile

No. of Respondents
Variables Total
SBI ICICI
Gender
Male 33(55) 34(56.7) 67(55.8)
Female 27(45) 26(43.3) 53(44.2)
Total 60 60 120
Age Group
20-30 Yrs NIL NIL NIL
31-40yrs 20(33.3) 20(33.3) 40(33.3)
Above 40yrs 40(66.7) 40(66.7) 80(66.7)
Total 60 60 120
Marital Status
Married 58(96.7) 57(95) 115(95.8)
Unmarried 2(3.3) 3(5) 5(4.2)
Total 60 60 120
Service
0-10yrs 2(3.3) 4(6.7) 6(5)
11-20yrs 35(58.3) 35(58.3) 70(58.3)
Above 20yrs 23(38.3) 21(35) 44(36.3)
Total 60 60 120
Source: Primary data (Compiled from the tabulated responses)
Note: Figures in the parentheses represent the percentage to the total (120)

Analysis of Table No.2 indicates from among the total respondents (120), 55.8%
are male and 44.2% female. From the aggregate sample it can be observed that there are
nil respondents belonging to the age group of 20-30 yrs. 33.3 % of the respondents
belong to the age group of 31-40 yrs and 66.7% belonging to the age group of 40 and
above in both the banks. The marital status of the respondents reveals that 95.8% are
married. The total service of the respondents is high (58.3%) in case of SBI & ICICI
(between
11-20
years).

A comparison of the superior’s perceptions of women executives on each dimension is

tested separately. The responses are analysed in terms of the mean, S.D., and t-test and
are tabulated and presented in Table No.3
10
4
Table No.3
Mean, SD ‘t’-Values of superiors with respect to selected variables

Std. Std. Error

Bank N Mean
Deviation Mean

It is desirable for women to have a ICICI 20 3.8000 1.00525 0.22478

job that requires responsibility SBI 20 3.9500 1.39454 0.31183
Women managers have the ICICI 20 4.3000 0.86450 0.19331
objectivity required to evaluate
business situations properly SBI 20 3.6500 0.81273 0.18173

It is not acceptable for women ICICI 20 1.4500 0.51042 0.11413

managers to assume leadership
roles quite often SBI 20 2.4000 1.39170 0.31119

Women should compete for top ICICI 20 4.5000 0.94591 0.21151

executive positions SB I 20 4.1000 0.91191 0.20391
Women managers allow their ICICI 20 2.4500 0.88704 0.19835
emotions to influence their
managerial behaviour SBI 20 2.8500 1.08942 0.24360

Women managers are not ICICI 20 11.5000 29.94117 6.69505

ambitious enough to be successful
in the working world SBI 20 2.5000 1.23544 0.27625

Women managers are less ICICI 20 1.5500 0.60481 0.13524

assertive in business situations that
demand it SBI 20 2.2500 1.16416 0.26031

Women managers are not ICICI 20 1.3500 0.48936 0.10942

competitive enough to be
successful SBI 20 1.9500 1.05006 0.23480

Source: Primary data (Compiled from the tabulated responses)

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5
Independent Samples Test

t-test for Equality of Means

Sig.
t df
(2-tailed)
It is desirable for women to have Equal variances
- .390 38 .699
a job that requires responsibility assumed
Women managers have the Equal variances
objectivity required to evaluate assumed 2.450 38 .019
business situations properly
It is not acceptable for women Equal variances
managers to assume leadership assumed - 2.866 38 .007
roles quite often
Women should compete for top Equal variances
1.361 38 .181
executive positions assumed
Women managers allow their Equal variances
emotions to influence their assumed -1.273 38 .211
managerial behaviour
Women managers are not Equal variances
ambitious enough to be assumed 1.343 38 .187
successful in the working world
Women managers are less Equal variances
assertive in business situations assumed - 2.386 38 .022
that demand it
Women managers are not Equal variances
competitive enough to be assumed - 2.316 38 .026
successful
Source: Primary data (Compiled from the tabulated responses)

An analysis of the Table No.3 indicates that there is a significant difference between
the perceptions of superiors of SBI and ICICI on selected variables. The table indicates
that the ICICI superiors have high mean score in relation to their perceptions about
women executives on Business objectivity (4.3) and, Job ambitious (11.5) compared
to SBI superiors’ perceptions. While in SBI the superiors have high mean score in
relation to assuming leadership roles (2.4) and assertiveness (2.2) compared to ICICI
superior’s perceptions. The table reveals that other than the desirability of job
responsibility for women executives, all other factors are statistically significant at 0.05
level. This means that the sample size is the true representation of the population (p-
value is less than
0.05 in all cases).It can be concluded that there is significant difference between the
perceptions of superiors towards women executives on the selected variables.

10
6
Table No.4
Comparison of Subordinates’ Perceptions of Six Dimensions of Job Performance
of Women Executives

Std. Std. Error

Bank N Mean
Deviation Mean
Do you talk about your personal ICICI 60 4.0500 .99873 .12894
life to your manager? SBI 60 3.8667 .89190 .11514
When you want to discuss ICICI 60 2.4167 1.31860 .17023
anything, is your manager
SBI 60 1.8000 1.24601 .16086
available?
Are you encouraged to ICICI 60 2.8500 1.17639 .15187
experiment with new ideas? SBI 60 3.0500 .90993 .11747
Does your manager focus on ICICI 60 3.2667 1.50555 .19437
your mistakes or lets it go? SB I 60 3.4000 1.50929 .19485
Does your manager use a ICICI 60 2.3500 1.29961 .16778
personal example to emphasize
SBI 60 1.8000 1.1319 .14614
the importance of key actions?
7
Do you find your manager ICICI 60 2.1500 1.02221 .13197
evaluating, supervising and
controlling your efforts to SBI 60 1.5667 .76727 .09905
ensure desired results?
Does our manager disseminate ICICI 60 2.5500 1.41930 .18323
information about conditions
SBI 60 1.8000 1.1016 .14222
affecting your job?
2
Are you consulted and allowed ICICI 60 2.5333 1.35880 .17542
to participate in taking
SBI 60 1.9667 1.20685 .15580
decisions?
The manager possesses the ICICI 60 1.6167 .97584 .12598
requisite job knowledge and
awareness in performing the job SBI 60 1.2000 .57637 .07441
responsibilities?
Do you find the manager taking ICICI 60 1.6000 1.07672 .13900
active participation or being
involved in the developmental
schemes of the bank? To put it
SBI 60 1.4333 1.01458 .13098
the other way, how far the
manager represents the bank for
developmental activities?
Source: Primary data (Compiled from the tabulated responses)

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7
Independent Samples Test

t-test for Equality of Means

Sig.
t df
(2-tailed)
Do you talk about your personal Equal variances
1.061 118 .291
life to your manager? assumed
When you want to discuss Equal variances
anything, is yourmanager assumed 2.633 118 .010
available?
Are you encouraged to Equal variances
-1.042 118 .300
experiment with new ideas? assumed
Does your manager focus on Equal variances
-.484 118 .629
your mistakes or lets it go? assumed
Does your manager use a Equal variances
personal example to emphasize assumed 2.472 118 .015
the importance of key actions?
Do you find your manager Equal variances
evaluating, supervising and assumed
3.535 118 .001
controlling your efforts to ensure
desired results?
Does your manager disseminate Equal variances
information about conditions assumed 3.233 118 .002
affecting your job?
Are you consulted and allowed to Equal variances
2.415 118 .017
participate in taking decisions? assumed
The manager possesses the Equal variances
requisite job knowledge and assumed
2.848 118 .005
awareness in performing the job
responsibilities?
Do you find the manager taking Equal variances
active participation or being assumed
involved in the developmental
schemes of the bank? To put it .873 118 .385
the other way, how far the
manager represents the bank for
developmental activities?
Source: Primary data (Compiled from the tabulated responses)

A comparison of the subordinate’s perceptions of women executives on each dimension

is tested separately. It is noted that perceptions of subordinates on ‘Job Guidance’, ‘
personal Interaction’ , ‘Job Knowledge’ , and ‘Representation’ are different in both
banks .In all the above cases the ‘p’ value (0.291, 0.010, 0.001, 0.002, 0.017, 0.005
and
0.385) is less than the 0.05). However in other cases (dimensions) such as ‘support and
encouragement’ and ‘performance emphasis’, the perceptions of subordinates does not
seem to be significantly different in both the banks.

10
8
Conclusion
Results reveal that there is significant difference between the perceptions of superiors
of SBI and ICICI of women executives on selected variables. The ICICI superiors have
high mean score in relation to their perceptions about women executives on Business
objectivity and, Job ambitious compared to SBI superiors’ perceptions. While in SBI
the superiors have high mean score in relation to assuming leadership roles and
assertiveness compared to ICICI superior’s perceptions.
It can be concluded that there is significant difference between the perceptions of
superiors towards women executives on the selected variables. The responses of
superiors of ICICI bank were positively higher than the responses of SBI superiors
which clearly reveal the truth that, the SBI needs to reformulate its objectives and goals
and put in place strategies, systems and structures that are appropriate to the emerging
environment for developing women leaders. The need of the day however is an
organisational transformation exercise which should address these issues.

Relatively, ICICI bank’s subordinates perceptions were evaluated significantly higher

than SBI bank’s subordinate’s perceptions on four dimensions of job performance i.e.
Personal interaction, Job guidance, Job knowledge, Representation. These results
indicate that ICICI’s women executives to be exhibiting significantly higher job
performance behaviours relating to the above mentioned dimensions than SBI women
executives.

References

1. Larry Bossody, What your leader expects of you and what you should expect in
return, Harvard Business Review, April 2007, pp. 58-65.

2. Sumi Jha, Determinants of Delegation: A study on Five Star Hotels, Vikalpa, Vol.
29, No 4, Oct-Dec 2004.

3. James,L.R and James, L.A (1989),” Integrating Work Environment

Perceptions; Explorations into the Measurement of
Meaning,” Journal of Applied Psychology,74(5),739-
751.

4. Crouch, A and Yetton, P (1988), “Manager Subordinate Dyads:

Relationships among Task and Social Contact, Manager Friendliness and
Subordinate

10
9
 Performance in Management Groups,” Organizational Behaviour and Human
Decision Processes, 41(1), 65-82.

5. Dansereau, F, Graen, G and Haga, W, “A vertical Dyad Linkage Approach to

Leadership within Formal Organizations, “Organizational Behaviour and Human
Performance, 13(1), 46-78, 1975.

6. Manz, C C and Sims, H P (1987),”Leading Workers to Lead Themselves:

The External Leadership of Self Managed Working Teams,” Administrative
Science Quarterly,32(1), 106-128.

7. Graen, G, Liden, RC and Hoel, W (1982),”Role of Leadership in the

Employee
Withdrawal Process,” Journal of Applied Psychology,67(6),868-872.

8. Honig, W K and Stadden, J E R (1977), Handbook of Operant

Behaviour, Englewood Cliffs, NJ: Prentice Hall.

9. Ulrich, R, Stachnik, T and Mabry, J (eds) (1966), Control of Human

Behaviour,
1, Glenview, IL: Scott, Foresman.

10. Likert, R and Willits, J M (1940), Morale and Agency Management,

Hartford, CT:Life Insurance Agency Management Association.

11. Naval Bajpai and Deepak Srivastava, Role of Work Centrality in Indian Banks: A
comparative Study in Public and Private Sector Banks, ICFAI Journal of
Organizational Behaviour, Vol.II.No.4,October,2003.

12. Sekaran, U and Trafton, R S (1978),”The Dimensionality of Jobs: Back to Square

One,” Twenty First Midwest Academy of Management Proceedings, 249-262.

13. Hackman, J R and Oldham, G R (1975), “Development of the Job

Diagnostic
Survey,” Journal of Applied Psychology, 60(2),159-170.

11
0
 Emerging Promotional Strategies for Recession Survival
(A Study of Delhi and NCR Region)
*
Mr. Saroj K. Dash
**
Dr. Arun K. Panda
Abstract
Recession is the result of reduction in the demand of products in the global market.
Recession can also be associated with falling prices known as deflation due to lack of
demand of products. As we know that recession is going on from the last few months so
the result of it is companies are cutting the jobs day by day and employee are losing
their jobs & definitely per capita income is going down, that’s why people’s purchasing
power goes down day by day. So demand of products are decreasing it resulted that
each and every industry is facing the same problem of less demand of its product .In
the present scenario companies are adopting new promotional strategies so that
maintain their demand . When the demand of the products goes down then companies
taking the help of promotion strategies to pump up the sales.

Introduction
Recession
First of all we should know what Recession is. Recession is ……A general slowdown
in economic activity over a long period of time, or a business cycle contraction. It may
be simply understood as “A period of general economic decline; typically defined as a
decline in GDP for two or more consecutive quarters. A recession is typically
accompanied by a drop in the stock market, an increase in unemployment, and a decline
in the housing market. A recession is generally considered less severe than a depression,
and if a recession continues long enough it is often then classified as a depression. As
an informal shorthand, economists sometimes refer to different recession shapes, such
as V-shaped, U-shaped, L-shaped and W-shaped recessions. In the US, V-shaped, or
short-and-sharp contractions followed by rapid and sustained recovery, occurred in
1954 and 1990-91; U-shaped (prolonged slump) in 1974-75, and W-shaped, or
double- dip recessions in 1949 and 1980-82. Japan’s 1993-94 recessions was U-
shaped and its
8-out-of-9 quarters of contraction in 1997-99 can be described as L-shaped.
Korea,

*
Faculty, Department of Management Studies, Skyline Institute of Engineering and Technology, Greater
Noida, Uttar Pradesh
11
1
**
Senior Faculty, Department of Business Administration, Berhampur University, Orissa

11
2
Hong Kong and South-east Asia experienced U-shaped recessions in 1997-98,
although
Thailand’s eight consecutive quarters of decline should be termed L-shaped.

Predictors of a Recession
Although there are no completely reliable predictors, the following are regarded to be
possible predictors.
In the US a significant stock market drop has often preceded the beginning of a
recession. However about half of the declines of 10% or more since
1946 have not been followed by recessions. In about 50% of the cases a
significant stock market decline came only after the recessions had already begun.

Inverted yield curve, the model developed by economist Jonathan H. Wright, uses
yields on 10-year and three-month Treasury securities as well as the Fed's
overnight funds rate. Another model developed by Federal Reserve Bank of
New York economists uses only the 10-year/three-month spread. It is, however,
not a definite indicator; it is sometimes followed by a recession 6 to 18 months
later
The three-month change in the unemployment rate and initial jobless claims.
Index of Leading (Economic) Indicators (includes some of the above indicators).

Literature Review
Recession has been defined in the marketing literature as a "process of decreasing
demand for raw materials, products and services, including labor" (Shama 1978) or as
a "state in which the demand for a product is less than its former level" (Kotler
1973). Recession calls for marketing managers to use strategies to stimulate consumer
demand. Such strategies often require a redefinition of the target customers and the
marketing mix. They may include narrowing the product line, offering cheaper
products and quantity discounts, increasing promotion, and offering products directly to
consumers.

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3
Origin of Recession

What Causes Recession

An economy which grows over a period of time tends to slow down the growth as a
part of the normal economic cycle. A recession normally takes place when consumers
lose confidence in the growth of the economy. This leads to a decreased demand for
goods and services, which in turn leads to a decrease in production, lay-offs and a sharp
rise in unemployment.

Today in India, service sector alone contributes more than half of its GDP. According to
financial year 2007-08, share of service sector is about 55.1 % i.e. more than
industry sector (26.4%) and agriculture sector (18.5%). The service sector now
accounts for more than half the GDP marks a turning point in the evolution of the
Indian economy and takes it closer to the essentials of a developed economy.
There was marked increase in rate of services sector’s growth in the eighties and
nineties. While the share of services in India's GDP increased by 21 per cent points
in the 50 years between 1950 and 2000, nearly 40 per cent of that increase
was concentrated in the nineties. One of the reasons for the sudden growth in the
services sector in India in the nineties was the liberalization and globalization in the
regulatory framework that gave rise to innovation and higher exports from the
services sector. According to official data, industrial growth in august has
plummeted to mere 1.3% compared to the same month in 2007. That definitely is
cause of concern for policy
11
4
makers and industries. This data also raised fear of low GDP growth of India. It is being
suspected that, our country will face huge problems in achieving even 7.5% growth rate
in this fiscal.1.3 percent industrial growth is the lowest IIP (index of
industrial production) data ever registered since last ten years. April-august industrial
growth rate is 4.9% which is also the lowest for the first five months of a financial
year in 14-year period except 1998 and 2001. To make matters worse, a member of
the PM’s economic advisory council and director of the National Institute of Public
Finance and Policy have confessed that India is going through industrial recession.
Several crucial sectors of Indian economy are likely to face serious problems in coming
months. Foremost among them is real estate sector. The demand for houses have
reduced significantly and property prices across India has registered 15-20%
fall. Things are likely to get worst as another 20 percent drop in prices is quite
possible in coming six months. The woes of real estate have spread to construction
industry as well. Because of less demand for houses, construction companies are going
to suffer big time. Financial services segment is also likely to be a major victim
of economic slowdown because of less demand for credit and reduced liquidity in
market.
These three segments account for almost one third of services GDP and because of their
current and impending plight, attaining 7.5% GDP growth in this current year is quite
improbable. Industrial slowdown will also affect transport services. Transport
companies are likely to witness drastic fall in their business and profits. Global
recession will also lead to less tourists coming to India. That will negatively affect tours
and travels industry.

Impact of Recession on the Indian Market

In the age of globalization, no country can remains isolated from the fluctuations of
world economy. Heavy losses suffered by major International Banks is going to affect
all countries of the world as these financial institutes have their investment interest in
almost all countries.

As of now India is facing heat on three grounds:

(1) Our Share Markets are falling every day.

(2) Rupee is weakening against dollars.

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5
(3) Our banks are facing severe crash crunch resulting in shortage of liquidity in the
market.

Actually all the above three problems are interconnected and have their roots in the
above-mentioned global crisis. For the last two years, our stock market was touching
new heights thanks to heavy investments by Foreign Institutional Investors (FIIs).
However, when the parent companies of these investors (based mainly in US and
Europe) found themselves in a severe credit crunch as a result of sub-prime mess, the
only option left with these investors was to withdraw their money from Indian Stock
Markets to meet liabilities at home.

Since, the money, which FIIs get after selling their stocks, needs to be converted into
dollars before they can sent it home, the demands for dollars has suddenly increased. As
more and more FIIs are buying dollars, the rupee is losing its strength against dollar. As
long as demands for dollars remain high, the rupee will keep losing its strength against
dollar.

The current financial crisis has also started directly affecting Indian Industries. For the
past few years, the two most preferred method of raising money by the companies were
Stock Markets and external borrowings on low interest rates.
In the last fiscal year alone, India borrowed $29 billion from foreign lenders and got
$34 billion of foreign direct investment. A global recession has hurt external demand.
International lenders who have become extremely risk aversive can limit access to
international capital. If that happens, both India’s financial markets and the real
economy will be hurt in the process.

However, one positive point in favor of India is the fact that Indian Banks are more or
less secured from the ill-effects of sub-prime mess. A glance at Indian banks’ balance
sheets would show that their exposure to complex instruments like CDOs is almost nil.
In India, still the major banking operations are in the hands of Public Sector Banks who
exercise extreme cautions in disbursing loans to needy people/companies. As a result,
we are not likely to see a repeat of sub-prime crisis in India. However, a global
depression is likely to result in a fall in demand of all types of consumer goods. In
2007-08, India sold 13.5% of its goods to foreign buyers. A fall in demand is likely
to affect the growth rate this year. Our export may get affected badly.

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6
A negative atmosphere, shortage of cash, fall in demands, reducing growth rate and
uncertainties in the market are some of the most visible aspects of an economic
depression. What started as a small matter of sub-prime loan defaulters has now become
a subject of global discussion and has engulfed the global economy scenario.
Impact of Recession on Companies
Many Indian companies faced low demand as well as the raising raw material cost due
to increasing crude oil prices, so the margin was goes down and companies facing crisis
of money. Global companies says the impact of the recession on supply chains has been
massive and hard-hitting, which illustrates how organizations are addressing the
economic crisis in the context of their supply chains, contrasting results with those from
a similar study released by the firm prior to the credit market collapse.
Research Methodology
The objective of our study is:
i. To find out the impact of recession on the market.
ii. To find out the impact of recession on the companies.
iii. To find out the impact of recession on customer as well as employee.
iv. To find out promotional strategies that is adopted by companies to overcome
impact of recession.
v. To find out the impact of various promotional strategies adopted by the
companies on the consumer.
vi. To find out factors which are most affected & least affected?

This study will explain each component of attitude towards green products and try to
give the solution for the research objective .this research is a descriptive investigation
where the data has been collected of respondents of rural, semi urban and urban (NCR
and DELHI) through questionnaire. We had taken Likert scale to know about effective
component of attitude .the respondent were selected randomly (from the malls, villages,
college).
The demographic segmentation of respondents are summarized in Table 1.
The questionnaire are divided by two parts .The first part design to cover the
information of demographic variables of respondents ( area, gender, age, education,
occupation & income ) and the second part cover the question to obtain data required
to measure the components of attitudes.

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 Demographic Profile Of Respondent (Table 1)

Demographic variables of respondents Percentage

Area Urban 59
Semi urban 29
Rural 12

Gender Male 60
Female 40

Age Age group

20-30 years 75
30-40 years 13
40-50 years 05
Above 50 years 04
Education Post graduate 52
Graduate 22
Intermediate 13
Others 13

Occupation Service 56
Self employed 32
Agriculture 04
Student 08

Income (per month in Rs) Income group

NILL 12
5000-10000 16
10000-20000 37
30000 above 35

This study is conducted in a small sample size of 214 respondents in which

few respondents were known about the impact of recession and they easily
filled questionnaire but on the other hand few of them do not know about recession. For
those people we explained about recession and after that they filled. But few
people, who belong to rural India, were unable to fill the questionnaire.

Data Collection
Data was collected through questionnaire method. Questionnaire were distributed
individually to the respondents. 301 questionnaires were distributed but only 214
filled questionnaires were received.

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Data Analysis and Result

Fig . 1 Table shows about job cutting during recession.

70

60

50

Percent
40

30

20

10

0
Can't say Agree Strongly Agree
Companies are cutting jobs.

Above figure shows that 98% peoples agree with that companies are cutting jobs during
recession and 2% people are not in a position to say anything.

Fig . 2 Table shows that peoples are losing jobs during recession.
60

50

40
Percent

30

20

10

0
Can't say Agree Strongly agree
Peoples are losing jobs.

Above figure shows that 96% peoples agree with that peoples are losing jobs during
recession and 4% people are not in a position to say anything.

Fig. 3 Table shows that recession affects all sectors.

Above figure shows that 60% peoples agree with that recession affects all sectors but
13% people are disagree they are saying that it did not affected all the sectors and 27%
people are not in a position to say anything.

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Fig . 4 Table shows that there is less job opportunity during recession.

30

Percent
20

10

0
Strongly Disagree Can't say Agree Strongly agree
disagree
There is less job opportunity

Above figure shows that 59% peoples agree with that there is less job opportunity
during recession but 35% people are disagree they are saying that there is also job
opportunities in the market and 06% people are not in a position to say anything.

Fig . 5 Table shows that there is slump in personal income.

60

50

40
Percent

30

20

10

0
Disagree Can't say Agree Strongly agree
There is slump in income.

Above figure shows that 85% peoples agree with that there is slump in personal
income during recession but 03% people are disagree they are saying that there is no
slump in personal income and 12% people are not in a position to say anything.

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Fig . 6 Table shows that there is less purchasing power during recession.
60

50

40

Percent
30

20

10

0
Disagree Can't say Agree Strongly agree
There is less purchasing power.

Above figure shows that 83% peoples agree with that there is less purchasing poour
during recession but 07% people are disagree they are saying that there is also
purchasing poour and 10% people are not in a position to say anything.

Fig . 7 Table shows that TV & Print media advertisement encourage we to buy
products during recession.
30

25

20
Percent

15

10

0
Strongly Disagree Can't say Agree Strongly agree
disagree
TV&Print media advertisement encourage you to buy
products during recession.

Above figure shows that 35% peoples agree with that TV & print media encourage
them to buy products during recession but 47% people are disagree they are saying that
TV &Pprintmedia does not encourage them to buy products they buy because of
necessity and 18% people are not in a position to say anything.

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Fig . 8 Table shows that companies are increasing value added services during
recession.
70

60

50

Percent
40

30

20

10

0
Disagree Can't say Agree Strongly agree
Companies are increasing value added services after
recession.

Above figure shows that 82% peoples agree with that company are increasing value
added services during recession. but 08% people are disagree they are saying that
companies are not increasing value added services during recession and 10% people
are not in a position to say anything.

Fig. 9 Table shows that people buy products because companies more focus on
celebrity endorsement during recession.

30
Percent

20

10

0
Strongly Disagree Can't say Agree Strongly agree
disagree
Celebrity endorcement encourage you to buy products during
recession.

Above figure shows that 33% people buy products because companies more focus on
celebrity endorsement during recession, but 45% people are disagree they are saying
that companies are not focusing more on celibrity endorcement during recession and
22% people are not in a position to say anything.

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1
Fig . 10 Table shows that people buy products due to lucrative offer during recession.

60

50

40

Percent 30

20

10

0
Strongly Disagree Can't say Agree Strongly agree
disagree
Companies lucurative offer influence you to buy during
recession.

Above figure shows that 86% people buy products due to lucrative offer during
recession, 05% people are disagree they are saying that they do not buy products due to
lucrative offer but they buy due to necessity and 09% people are not in a position to say
anything.

Data Analysis and Results of Factors: - In our study we had taken 10 variables out
of these variables we found 4 components.
Results of 10 Variables.
Out of 10 variables we found 4
components
Component Matrix(s)

Component
1 2 3 4
There is slump in income. .779 .118 -.079 -.393
There is less purchasing power. .699 .058 .484 .010
There is less job opportunity .685 .306 -.194 .172
Companies are cutting jobs. .542 -.111 .016 -.336
Celebrity endorsement encourages us to buy
-.205 .793 -.286 .062
products during recession.
TV & Print media advertisement encourage us
-.272 .790 .034 -.288
to buy products during recession.
Companies are increasing value added services
after recession. -.089 .549 .224 .301
Companies’ lucrative offer influences us to
.204 .275 .753 -.134
buy during recession.
It affect all sectors .619 .141 -.621 .036
Peoples are losing jobs. .431 .001 .113 .765

Extraction Method: Principal Component Analysis. 4 components extracted.

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2
 Graphical Representation Of Above Component Matrix

Scree Plot

3.0

2.5

2.0

Eigenvalue
1.5

1.0

0.5

0.0

1 2 3 4 5 6 7 8 9 10
Component Number

Analysis Of Component Matrix

Above component matrix consist 4 component out of 10
variables.
> First component consist slump in personal income, less purchasing poour, less job
opportunity and job cutting out of these four variables slump in personal income is
most affected and job cutting is least affected.
> Second component consist celibrity endorcement, TV & Print media and vlue added
services. out of these variables celibrity endorcement affected most and value added
services affected least.
> Third component consist lucurative offer and all sector affected. out of these
variable lucurative offer affect most and sector affected is least.
> Fourth component consist only one variable that is losing jobs.

Findings
> There is a huge slump in personal income.
> Celebrity endorsement encourages people to buy products during recession so
companies should increase Celebrity endorsement during recession so that maintain
revenue.
> During recession lucrative offer encourages people to buy products so companies
should give lucrative offer during recession.
> Peoples are losing jobs during recession because of less demand and corporate
saving money from cutting the jobs.

Conclusion
We can say that during recession each and every company is cutting jobs but on the
same time companies are using different – 2 promotional strategies like exhibition,
celebrity endorsement, and value added services etc. so that companies can maintain its
revenue but doing all doing all these promotional strategies companies are facing a lots
of problems and sales are decreasing day by day .On the other hand for increasing the
sales companies are more focusing on lucrative offers like buy 1 get 6 , 80%
flat
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discount , special passes etc .but all these are worthless during recession .Now the
some condition is under controllable but not all because RBI has changed its monetary
policy like CRR , REPO RATE , interest rate . so that we can say that in recession
period companies should adopt some effective promotional strategies .

References
1. Ang, S.H. (2001a), "Crisis marketing: a comparison across
economic scenarios", International Business Review, Vol. 10 pp.263-
84.
2. Beaver, G., Ross, C. (1999), "Recessionary consequences on small
business management and business development: the abondonment of strategy",
Strategic Change, Vol. 8 No.5, pp.251-61.
3. Bennett, R. (2005), "Marketing policies of companies in a cyclical sector: an
empirical study of the construction industry in the United Kingdom", Journal of
Business & Industrial Marketing, Vol. 20 No.3, pp.118-26.
4. De Dee, K.J., Vorhies, D.W. (1998), "Retrenchment activities of small firms
during economic downturn: an empirical
investigation", Journal of Small Business
Management, Vol. 36 No.3, pp.46-61.
5. Goad, G.P. (1999), "Playing by new rules", Far Eastern Economic Review,
May, pp.38-9.
Gorvett, J. (2001), "Turkish economic crisis", The Middle East, February, Vol.
309 pp.30-2.
6. Kim, P. (1992), "Does advertising work: a review of the evidence", Journal
of
Consumer Marketing, Vol. 9 pp.5-
21.
7. Kotler, P., Armstrong, G. (2006), Principles of Marketing, 11th ed., Pearson-
Prentice
Hall, Englewood Cliffs, NJ
8. Laitinen, E.K. (2000), "Long-term success of adaptation strategies: evidence from
Finnish companies", Long Range Planning, Vol. 33 pp.805-30.
9. Morbey, G.K., Dugal, S. (1992), "Corporate R&D spending during
recession", Research Technology Management, Vol. 35 No.4, pp.42-5.
10. Pearce, J.A., Michael, S.C. (1997), "Marketing strategies that make
entrepreneurial firms recession resistant", Journal of Business Venturing, Vol. 12
12
4
pp.301-14.
11. Rao, C.P., Erramilli, M.K., Ganesh, G.K. (1988), "Impact of domestic recession
on export marketing behavior", International Marketing Review, Vol. 7 No.2, pp.54-65.

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5
12. Shama, A. (1993), "Marketing strategies during recession: a comparison of
small and large firms", Journal of Small Business Management, Vol. 31 pp.62-73.

Websites:
• http://prtm.com/NewsItem.aspx?id=3245&langtype=1033

• www.purchasing.com/.../354446-
Recession_could_impact_long_term_consumer_behavior.php

• www.emailwire.com/.../20128-The-Most-Costeffective-Promotional-
Strategy- during-Recession-Promotional-gifts-from-SourcePromocom

• www.morebusiness.com/running_our.../d994622698.brc
• Kotler, Philip. & Armstrong, Gary, (2001): Principles of Marketing, New
Delhi: PHI.

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6
 Demographic Changes in 21st Century - Its Effect on FMCG Product

Consumption
*
Sunitha Ratnakaram
**
Venkama Raju Chakravaram

1. Introduction

The scientific study of human population characteristics like, their size, their structure,
and their development is regarded as Demography. The back drop of the present study
is the “Theory of Demographic Transition” which describes the three stage sequence of
fertility and mortality, which eventually affects the demographic pattern in a country.
The three stages are as under, in the first stage, the proportion of young people in the
population rises. In the second stage, the proportion of young people declines, while
that of the old increases modestly, and that of adults of working age increases
significantly. In the third stage, the proportion of working-age adults falls while that of
old people rises.

India is in the final stage of first phase or otherwise early stage of second phase. This
stage needs to be studied in the light of various demographic factors like income levels,
literacy levels, size and structure of family, occupation, age, gender composition, which
are constantly changing in the globalized economy. This demographic opportunity is
created by the transition from high to low rates of fertility and mortality. India’s share
of the working age population is expected to increase until 2035 and beyond. Now, this
factor is the very basis for the proposed research.

Demographic variables reveal ongoing trends, such as shifts in age, sex and income
distributions that signal business opportunities. For example demographic studies
consistently show that the mature adult market has a much greater proportion of
disposable income than its younger counter part. This factor alone makes consumers
over age 50 critical market for products & services that they might buy for themselves

*
Associate Professor, Vishwa Vishwani Institute of Systems and Management, Secunderabad.
**
Associate Professor and HOD, Narsimha Reddy P G College, Secunderabad.

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7
or for their adult children. As the illustration gives it clearly that there is an impact of
demographics on consumption patterns. The proposed research would like to
investigate into factors like the effect of demographic changes on consumption related
to fast moving consumer goods.

The study concentrates on consumption related to fast moving consumer goods only,
the reason being any change in demographical factors will bring instantaneous change
in the said goods. This can be further illustrated like this. When the literacy level of
consumers is low, their awareness of products also is and they have limited options to
select from. Whereas increase in literacy levels gives them a wider choice to choose
from and the same will influence the purchase decision of a consumer. In a similar way,
change in family size i.e. shift from a joint family, to a nuclear family also gives rise to
increased spending on fast moving consumer goods. The other factor under study is
occupation which also has an effect on consumption. What a student consumes is
different from that of an employee, and what he consumes is different from a business
man. Finally, income level is the other major factor under study. The higher the
income, the higher the spending and lower the income, lower the spending. The
proposed research will throw light in all the above said areas which can give
meaningful findings for the world of business.

The entire discussion given in the introduction is concentrated in discussing various

dynamics of demographics and its effect in general on the purchasing and consumption
patterns of different consumer groups. Even though studies are conducted in this area
of consumer studies, there is lot of scope for further research and demand for the same
from the industry which would like to know the basic relationship between
demographic factors and buying behavior related to fast moving consumer goods. That
is why; the proposed research would like to know the relationship between the changes
in demographic factors in consumption patterns with regard to fast moving consumer
goods. At the end the research would throw light on the effect in demographic factors
attributable to changes in psychographics of consumers which impact their
consumption pattern. This study is very significant for today’s businesses as their
success totally depends on the positioning of appropriate products relevant for the day
according to ever - changing consumer preferences, which mostly depend on their
psychographic attributes.

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2. Objectives:
1. To understand basic relationship between demographic factors and
buying behavior.
2. To understand the relationship between the changes in demographic factors in
consumption patterns with regards to fast moving consumer goods.
3. To understand the effect in demographic factors attributable to changes in
psychographics of consumers which impact their consumption patterns.

3. Methodology
The present study used exploratory research method to identify the problem, and then
used descriptive research to arrive at solutions for the problem identified. This research
is a stage wise process. The problem identified here is to understand the relationship
between the changes in demographic factors in consumption patterns with regards to
fast moving consumer goods. Then, the research moved on to find the effect of change
in demographics on consumption of fast moving consumer goods, using constructive
closed end questionnaire, for a given sample size of 100 respondents. Here the
sample is 100 consumers chosen from various demographic profiles which are
determined through different factors like income, family size, education and
occupation like consumer groups. The said consumers are investigated for the purpose
of knowing the changes in the consumption of fast moving consumer goods
depending on their demographic profile. The present research used quota sampling
technique of judgment sampling. The said method of sampling is more useful for
research as the data needs to be collected from different demographic sets of
consumers depending on their income, family size, occupation and education. The
present study used primary and secondary data for its purpose. Primary data is
collected from consumers in the form of personal interviews using a questionnaire.
Secondary data is from earlier researches, statistical surveys, census data and other
relevant sources. Later the data is tabulated in the form of frequency distribution
tables, and then the data is graphically represented in the form of bar graphs.

4. Scope of Study
The present research covered the state of Andhra Pradesh and a few other metros of
India with regard to geographical scope of the research. The results of the research are
useful for the period of research when it is actually conducted i.e. year of 2009.

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5. Limitations of the Study
1. The major limitation of the study is the scope of the research; the research is
limited only to know the effect of changes in demographics on consumption with
relation to fast moving consumer goods.
2. The other limitation of the study is the findings of the research stands true only for
the period of research; it does include the effect of future changes.
3. Geographical area is the other limitation of the proposed research, the sample is
drawn from Andhra Pradesh and a few other metros in India, and this may not give a
true picture of the entire market.
4. Sample size of 100 consumers is the other limitation of the research which may
not represent population in total.

6. Results of Research
6.1 Income Level and View on Lifestyle
Present study reveals the fact that the income of the respondent and his view on
lifestyle are positively correlated. Increase in income results in increase of modernistic
outlook in lifestyle and vice versa. This fact can be supported with the following
details. Here, 21% of 25000 and above group are traditional, where as 27% from
15000
– 25000 and 8000 – 15000 are traditional. In similar manner, 12% of 25000 and
above category are modern while only 6% of their counterparts i.e. 15000 – 25000,
and 0 % from 8000 -15000 are modern. This graph clearly indicates that
people become modernistic while their income grows.

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6.2 Income level and Brand Loyalty
When it comes to the aspect of brand loyalty majority of the customers from middle
income group are brand loyal. It was observed that 75% of the respondents are brand
loyal as they use the same brand either regularly or most of the times. Rs. 15000 to
Rs.
25000 category respondents are extremely brand loyal, where as 9% of 25000 & above
income group, 8000 – 15000 groups together are
switchers.

6.3 Income Level and Buyer

It was observed from the study that the combined decision of husband and wife is much
higher in lower middle income category compared to others. Individual decision
making is the common characteristic for the other two categories. But, they also
account for combined decision in majority of cases which can be proved through the
given data. 33% of the respondents purchase fast moving consumer goods with the
consent of their spouse. Research observed that only 6% of buying is affected by
children while making decisions.

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6.4 Income vs. Expenditure
Results of the research showed that, 21% of the respondents from 25000 and
above income group spend Rs.15000 – Rs. 25000 a month. 21% of 15000 –
25000 income group and 18% of 8000 to 15000 income group spend 8000 - 15000
a month. Rs. 3000
to Rs. 8000 and below 3000 is spent by very minimal number of respondents.

6.5 Frequency of Buying

From the survey conducted it can be concluded that 46% of the respondents buy FMCG
products once in a month, 37% of the respondents buy them as and when they feel they
need them and the rest i.e. 17% of the respondents buy them once in 15 days.

6.6 Time Spent Per Occasion

From the research conducted it can be concluded that 57% of the respondents surveyed
spend 30 minutes to one hour per occasion on buying FMCG products. 29% of them
spend one to two hours and the rest of them which equals 14% will spend more
than two hours per occasion on buying FMCG products.

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6.7 Location of Buying
As per the results of the research, it can be concluded that majority of respondents i.e.
51% buy FMCG products in super markets, 34% from Kirana stores and the rest
15%
from hyper markets, shopping malls and weekly haats.

6.8 Mode of Payment

Results of research showed that majority of respondents accounting for 74% use “cash”
as the mode of payment. 14% of the respondents use “cash” and “credit card”
together as mode of payment. 3% of the respondents use either only “credit card”
or only “Debit card” to make a payment.

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6.9 Eating Outside with Family
From the respondents surveyed, 49% didn’t eat out side or go only once in a while with
their families to eat outside.

6.10 Eating Outside with Friends

Research conducted also observed that, 66% of the respondents don’t eat out side or go
only once in a while with their friends to eat outside. 29% eat 2 to 4 times where as 6%
eat out side with friends more than 5 times a month.

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6.11 Top Spent FMCG Item
When the respondents are asked to rank the top spent item from FMCG products,
31% ranked bathing soaps as the top spent item, 16% each ranked packed food,
oral care products, and pharmacy. 9% of respondents ranked cosmetics as the top
spent while
3% of the respondents regarded items like hair care, shaving products, and light bulbs
etc. as top spent items.

6.12 Percentage of Savings

Results of research concluded that, the tendency to save income is much higher in
middle middle income groups who earn Rs. 15000 to Rs. 25000 per month as they
save nearly 19% of their monthly earnings. In comparison, the other two income
groups i.e.
25000 and above income group and Rs. 8000 to Rs. 15000 group saved just 12%
and

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4
15%
respectively.

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5
6.13 Item of Major Spending
From the respondents surveyed, majority of them i.e. 64% spend on food, 12% on
rent,
6% on education while 3% spent on clothing. 15% spend on other expenses
like pharmaceuticals, electricity, FMCG etc.

6.14 Percentage of income spent on FMCG

Results of research showed that, lower middle income group people who earn Rs. 8000
to Rs. 15000 spend 16% of their income on FMCG products, while their
counterparts from upper middle income group and middle middle income group
spend 13% and
12% respectively on FMCG
products.

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Implications to Marketers
• As per the results of the research, modernism is positively correlated with the
income of the respondents. With income increasing, families are describing
themselves as modern and vice versa. The Marketer needs to concentrate on
providing lifestyle and luxurious products to the higher income category to grab the
opportunity.
• Research concludes that 75% of the respondents are brand loyal from the entire
middle income group. This shows that excessive marketing communications may
not add greater mileage to the sales of FMCG products in this category. Due to this,
marketing dollars of the marketer needs to be diversified towards other income
groups for better results.
• In 33% of the families, joint decision is made by the husband and wife in case of
buying FMCG products. To get along with this fact, the marketer needs to design
such communication which can attract both the genders instead of concentrating on
one category.
• Frequency of buying, if analyzed, shows that majority of respondents buy FMCG
products once in a month. In this context, the marketer should see that the proper
logistics are ensured in the beginning of every month as regular replenishment of
inventories is required in this period.
• 57% of the respondents spend less than one hour in buying FMCG products. So,
marketer needs to take utmost care about the product placement in the retail place

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7
 so as to attract the customer. He needs to ensure that the customer need not search
for locating the product.
• As 51% of the respondents buy FMCG products in super markets this
channel
needs to be concentrated on well by the marketers. Another important location is
the kirana store. The above said locations are of strategic importance in case of
inventory replenishment.
• Middle category within middle income group savings is greater in comparison to
other two categories. Thus there shows the scope for the marketer to tap this
category as their spending is low when compared to their income.
• Lower middle income group spends 16% of their income on FMCG where as
other
groups spend 12% to 13% on the same. Here the marketer need not go by
these figures as the absolute figures will be much different as the income levels
vary. As per this classification also higher middle income group is of great
significance to a marketer.
• Bathing soap is the product from FMCG on which most of the respondents spend
large portions of their total spending. This fact may give the marketer few
implications on factors like pricing and distribution.
• Majority of respondents spend Rs. 8000 to Rs. 15000 per month on
various
expenses irrespective of their income. This fact needs to be carefully observed
while making a decision on pricing a product.
References
Journals and Magazines
1. Hubacek, Klaus; Guan, Dabo; Barua, Anamika, Changing lifestyles
and Consumption Patterns in Developing Countries: A Scenario Analysis for China
and India, Futures Publication 01-NOV-07
2. Christophe Jaffrelot and Peter Van Der Veer, Middle Class Consumption Patterns in
India and China, Sage Publications
3. S. Ramachander, The Indian Consumer: What Do We Know? Business line
4. “Why the Indian Consumer is Different”, February 20, 2007, Business Standard
5. Meenakshi Radhakrishnan-Swami, Who is the real Indian Consumer? Business
Standard, February 14,
2007

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6. Household Consumption of Various Goods and Services in India, 2004-05, 30th
April, 2007

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Websites:
1. www.censusindia.net
2. www.wikipedia.org
3. www.english.purdue.edu
4. www.google.com

Books
1. VS Rama Swamy, S Nama Kumarai, 2002, “Marketing Management – Planning,
Implementation & Control”, Mac MIllan business books.
2. Ruddardutt, KPM Sundaram, 2008, Indian Economy, S. Chand
3. Donald R Cooper, Pamela S Schindler, 2006, Business Research Methods, Tata Mc
Graw Hill
4. Leon. G. Schiffman & Leslie Lazar Kanuk, Consumer Behavior, 2003, Prentice
Hall.

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 A Study of Women Entrepreneurship in Mumbai
*
Principal Dr. T.Shiware
**
Dr. Rajeshwary G.

Abstract

India has made serious and determined efforts for rapid economic development. It is
therefore essential to undertake a detailed and searching analysis of different aspects of
entrepreneurial role in harnessing the physical and human resources to generate forces
of economic development. The factors which determine the supply of entrepreneurs,
the rewards which assume for entrepreneurs a sense of success, the factors which
nurture innovative zeal, the socio-economic factors which stimulate and not stifle
entrepreneurial drive and the capacity to adopt the technological changes are some of
the aspects which deserve close scrutiny in order to understand the present state of
development and predict the possible course of future development of our country. In
the recent decades the role of an entrepreneur has been considered of great significance
in accelerating the pace of growth and economic development in both the developed
and underdeveloped countries.

Introduction
The social changes that India has experienced for the last sixty years has affected
practically its entire population. Among the middle class urban educated population
these changes have affected women much more then men. The changed socio-
economic conditions, particularly after independence, have increasingly widened
opportunities for women’s education and employment and have provided them with
new avenues to express and assert their equality.

Human resources thus constitute a valuable national wealth. Any neglect, under-
utilization, non-utilization of human resources is a callous waste of vital resources. It is
thus essential to harness womanpower if substantial economic advancement and
development need to be achieved. Entrepreneurial competence makes all the difference
in the rate of economic growth. (Desai Vasant 2004). Development and growth of

*
Principal, K.P.B.Hinduja College of Commerce, Mumbai.
**
Head, Department of Management, K.P.B.Hinduja College of Commerce, Mumbai.

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1
entrepreneurship is directly related to the economic development of particular region.
(Bisht 1991).

Women entrepreneurs are gaining momentum all over the country. They have achieved
recognition and are making valuable contribution to the national economy. It is an
accepted fact that the role of women in national development is a crucial one.
Entrepreneurship means the function of creating something new, organizing and
coordinating and undertaking risk and handling economic uncertainty.(Desai Vasant
2004).

Review of Literature
1. Vinze (1987) in her research study on ‘Women Entrepreneurs in India- A
Socio Economic Study of Delhi’ undertook a study on 50 women entrepreneurs of
Delhi. Primary and secondary data were used to collect information about their
socio- economic background, problems faced by them, their involvement in the
enterprise and its effect on family life.
2. Srivastava and Chaudary (1991) in their work on Women Entrepreneurs:
Problems, Perspectives and Role Expectations from Banks’ revealed that women faced
problems mainly in the areas of marketing of their products and approaching the banks
for getting loans. The study also points out that joint family is not an obstacle
for women entrepreneurs but in fact a facilitating factor.
3. D. Lalitha Rani (1996) studied educational background social and
economic background motivating and facilitating factors of
women entrepreneurs in Vishakapatanam. According to her,
women entrepreneurs had to encounter criticism, family opposition and social
constraints. However they possess keen sense of motivational qualities such as
high drive, innovation creativity and a sense of achievement.

Objectives of the Study

1. To study the socio-economic background of women entrepreneurs in Mumbai
city.
2. To analyse motivational factors facilitating women entrepreneurship in Mumbai.
3. To examine the level of achievement experienced by women entrepreneurs in
Mumbai.

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0
Methodology
For the study, the data has been collected from primary as well as secondary sources.
The primary data are collected through questionnaires and personal interviews. The
secondary sources include reference to number off books, journals, magazines,
newspapers and government circulars. A detailed schedule was prepared and served on
120 sample women
entrepreneurs.

Brief Sketch of Mumbai

Mumbai is one of the largest and most densely populated cities in the world. Situated
on the western coast of Maharashtra, Mumbai lies between 18º 53’ north to 19º
16’ north latitude and 72º 46’ east to 70º 59’east longitude. Its geographical area is
38,000 hectares with a total population of 1,19,14,398 according to 2001
census. Sharma, K.K. (2004). The word ‘Bombay’ is directly derived from
Goddess Mumba, the
patron deity of the pre-Christian Kolis, who were perhaps, the earliest inhabitants of
the island. (Bhatt, S. C., 1997).

Year of Establishment
The study of profile of the enterprise starts with an analysis on the year of
establishment.
Table 1 indicates the period of establishment, of women entrepreneurs in various
lines of activities in Mumbai. Year of establishment of units is symbolic as it
denotes and signifies the time and level of entrepreneurial activity among women.
Table 1
Year of Establishment
Year of Establishment Total
No. Per cent
Before 1988 1 13.33
6
1989-1993 28 23.33
1994-1998 27 22.50
1999-2009 49 40.84
Total 120 100.00
Source: Compiled from Primary Data

14
1
Table 1 indicates that before 1988, enterprises run by women entrepreneurs
were negligible. It was in congruity with the general impression that managing an
enterprise was the domain of only men upto about two decades ago. However, the
trend has changed during the period of 1989-1993 where it can be seen that
twenty-eight units (23.33 per cent) were started.

The awareness of women, the desire to start the enterprises and to be independent seem
to have increased in the period from 1999-2003, as was evident from the fact that
forty- nine units (40.83 per cent) were started during the period. This trend may be
attributed to the fact that women are increasingly becoming conscious of their
existence, their rights and the promotional activities undertaken by various
organisations to encourage women entrepreneurship. It is hoped that the participation
of women will usher in an era of clean business ethics.

Types of Organisations
Type of organisation plays a decisive and pivotal role as it has a sway on all the aspects
of an enterprise. Managing an enterprise depends on whether it is a sole proprietorship
or partnership, or any other form of organisation.
Table 2
Types of Organisation
Types of Organisation Total
No. Per cent
Sole Proprietorship 95 79.17
Partnership 2 17.50
1
Joint Family 1 0.83
Others 3 2.50
Total 120 100.00
Source: Compiled from Primary Data
A majority of the sample respondents 79.17 per cent were owned and managed by
sole proprietors, followed by 17.50 per cent with a partnership form of organisation.
Only one unit (0.83 per cent) was a joint family organisation and three units (2.50 per
cent) had ‘others’ form of organisation. Out of the total one hundred and twenty
units, ninety-five units were sole proprietorship concerns.

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2
Reasons for Choosing the Current Line of Business Activity
Choosing an appropriate line of business activity is a crucial decision for any
enterprise. It is a formidable task and prospective women entrepreneurs are expected to
be extremely cautious and must foresee all possible eventualities before deciding the
line of activity.

Analysis of the data revealed that familiarity with the industry influenced the
entrepreneurs in their choice of the present line of activity. About 25.86 per cent of the
sample women entrepreneurs had listed this reason as one of the factors to have
influenced them in undertaking entrepreneurial activity. About 22 per cent of the
sample women entrepreneurs stated easy and simple to start as the second main reason
to have influenced them. It is evident that familiarity with the industry, easy and simple
to start enterprises were the main reasons cited by the sample women entrepreneurs as
the reasons to have influenced them to choose the current line of business enterprise.
Table 3
Reasons for Choosing the Current Line of Business Activity
Reasons For Choosing The Current Total
Line Of Business Activity
No. No. No. Wgtd. Rating
1 2 3 Scr. %
1. Familiarity with the industry 37 25 20 181 25.86
2. Availability of help from friends 15 18 1 9 13.00
0 1
and relatives
3. Expectations of high profits 7 11 1 56 8.00
3
4. Lack of gainful employment 13 19 1 93 13.29
6
opportunities
5. Related to the profession 6 9 9 45 6.43
pursued so far
6. Easy and simple to start 26 29 1 154 22.00
8
7. Dissatisfaction with the earlier 5 3 2 23 3.29
job
Total 120 11 102 700 100.00
9
Wgtd.Scr. indicates weighted score.
Source: Compiled from Primary Data

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3
Other reasons cited by the sample women entrepreneurs were lack of gainful
employment opportunities 13.29 per cent, followed by availability of help from
friends and relatives 13 per cent, ‘others’ 8.13 per cent, expectations of high profits
8.00 per cent, related to the profession pursued so far 6.43 per cent and dissatisfaction
with the earlier job 3.29 per cent. Hence, the sample women entrepreneurs listed a
number of reasons for choosing the current line of business enterprise. However, one
can easily infer that familiarity with the industry and easy and simple to start
enterprises were the main reasons cited by sample women entrepreneurs as the
reasons to have influenced them in their choice of the current line of business activity.

Motivational Factors to Start the Enterprise

Motives are the driving force of human action. No action is possible without a motive.
Once an entrepreneur endeavors to undertake entrepreneurial activity, her decision
needs to be assuaged, fostered and promoted by some well wishers. Such motivators
are parents, husbands’ friends, relatives, in-laws and others. It is assumed that parents
play the role of prime motivators in inducing their daughters to undertake
entrepreneurial activities.
Table 4
Motivational Factors to Start the Enterprise
Motivators No. Per cent
1. Self 59 49.17
2. Husband 26 21.67
3. Parents 1 12.50
5
4. Friends 9 7.50
5. In-laws 2 1.67
6. Relatives 4 3.33
7. Others 5 4.17
Total 120 100.00
Source: Compiled from Primary Data

The analysis indicates that 49.17 per cent of sample women entrepreneurs are
self- motivated, while 21.67 per cent of the sample women entrepreneurs were
induced by their husbands. Parents had induced their daughters only to the extent of
12.5 0 per
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4
cent. Friends, in-laws, and relatives constituted a negligible 7.50 per cent, 1.67 per
cent, and 3.33 per cent respectively.

The findings indicate that parents are not the prime motivators but they do play a
passive role as inducers to entrepreneurship. The prime motivator of the present study
is the self-decision on the part of the entrepreneurs. This is a new dimension in the
process of women development stage. The reason attributed maybe that the parents
want their daughters to be married and well settled in life or they maybe doubtful of
their daughter’s competencies in entering a male dominated field of managing business.
The risk of laws in business may also have acted as a ‘deterrent’ to the parents in
supporting the decision of their daughters in venturing into entrepreneurship.

Level of Self -Confidence

An entrepreneur with relevant knowledge, skill and information and having ample
experience possesses a greater degree of self-confidence. Self-confident individuals
possess clear thoughts and have well-defined goals to be achieved in life. An
entrepreneur who enters into business with a high level of self-confidence is able to
evaluate his/ her competencies and capabilities in a realistic manner and can set
realistic, challenging and achievable goals. They possess a sense of effectiveness,
which ultimately contributes towards the success of their entrepreneurial venture.

Table 5 depicts the level of self-confidence possessed by the respondents in order to run
the enterprise. The respondents were grouped into four categories on the basis of their
relative level of self-confidence namely ‘very high’, ‘high’, ‘somewhat high’ and ‘very
low’ level of self-confidence. It also needs to be pointed out that the term self-
confidence has been understood as and measured in terms of the respondent’s own
rating of her own ability to establish and run an enterprise.

An analysis indicates that a large majority, 65.00 per cent of the sample women
entrepreneurs possessed a ‘very high’ level of self-confidence whereas 32.50 per cent
of the sample women entrepreneurs possessed a ‘high’ level of self-confidence. Only
2.50 per cent had a ‘somewhat high’ level of self-confidence.

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5
 Table 5
Level of Self-Confidence
Level of Self Confidence Total
Frequency Per cent
Very High 78 65.00
High 39 32.50
Somewhat High 3 2.50
Very Low - -
Total 12 100.00
0
Source: Compiled from Primary Data
The above analysis indicates that a majority of the sample women entrepreneurs had a
‘very high’ level of self-confidence. Thus it can be inferred that, the women
entrepreneurs by and large had a ‘very high’ level of self-confidence.

Level of Risk Taking Ability

Entrepreneurs take calculated and moderate risks. An entrepreneur always takes a
calculated risk and is not afraid of failure. Table 6 depicts the level of risk-taking
ability. The sample women entrepreneurs were asked to indicate the extent of risk-
taking ability. It needs to be pointed out that the respondents have been grouped in four
categories on the basis of their relative levels of risk-taking ability namely ‘very high’,
‘high’, ‘moderately low’ and ‘very low’ level of risk taking ability. It also needs to be
pointed out that in this section the term risk-taking ability has been understood as and
measured in terms of the respondent’s own rating of their assessment of risk-taking.

It is perceptible from Table 6 that out of the total one hundred and twenty sample
women entrepreneurs, sixty entrepreneurs (50.00 per cent) possessed a ‘very high’ level
of risk-taking ability followed by forty entrepreneurs (33.33 per cent) with a ‘high’
level of risk. Only a negligible five respondents (4.17 per cent) indicated of having
a
‘very low’ risk taking ability whereas fifteen entrepreneurs (12.50 per cent) possessed
a
‘moderately low’ level of risk taking ability.

14
6
 Table 6
Level of Risk -Taking Ability
Level of Risk Taking Ability Total
Frequency Per cent
Very High 60 50.00
High 40 33.33
Moderately Low 1 12.50
5
Very Low 5 4.17
Total 12 100.00
0
Source: Compiled from Primary Data

It is apparent from the above table that the sample women entrepreneurs were potential
risk-takers. Most of them possessed a high risk taking ability.

Achievement Leverage of the Women Entrepreneurs

An important aspect of the study was to undertake the perception of the women
entrepreneurs about the most important achievements arising out of their
entrepreneurial activity. The sample women entrepreneurs were asked to rank the
achievements in order of importance. The opinions of the respondents have been
presented in Table 7

The sample women entrepreneurs assigned the 1st rank to ‘keeping oneself busy’
with an average score of 4.71. The respondents felt that by venturing into
entrepreneurial activities they were quite successful in keeping themselves busy,
thus utilizing their leisure time meaningfully. The sample women entrepreneurs
felt that by pursuing entrepreneurial occupation they got the freedom to take
entrepreneurial decisions
independently. The variable ‘independence’ was assigned the 2nd rank with an average
score for 4.02. The baton of independence given to them to undertake entrepreneurial
activities was greatly cherished by the sample women entrepreneurs.

The sample women entrepreneurs also reported that by pursuing independent

entrepreneurial occupations they were in a position to improve their financial position.
This enabled them to gain social recognition amongst their immediate family members
and peers. ‘Social status’ was ranked 3rd with an average score of 3.74.
14
7
 Table 7
Achievement Leverage of the Women Entrepreneurs
Total
Details Average Score Rank
1. Independence 4.02 2
2. Self - Confidence 1.9 6
5
3. Financial Independence 3.53 4
4. Satisfaction 3.05 5
5. Social Status 3.74 3
6. Keeping Oneself Busy 4.7 1
1
Total 3.50
Source: Compiled from Primary Data
Some of the sample women entrepreneurs opined that due to entrepreneurial activities,
they earned financial independence, which enabled them to take independent decisions
regarding management of financial affairs. Hence ‘financial independence’ was
assigned the 4th rank with an average score of 3.53.

The sample women entrepreneurs were very satisfied with the opportunity to undertake
meaningful entrepreneurial activities. They opined that as they were pursuing
entrepreneurial occupations and contributing to the society, it gave them immense
satisfaction. ‘Satisfaction’ earned the 5th rank with an average score of 3.05.

Sample women entrepreneurs assigned the 6th rank to ‘self-confidence’ with an

average score of 1.95. Self-confidence through undertaking entrepreneurial
occupation was not considered as an important achievement by the respondents. They
opined that in the initial stage of developing an entrepreneurial venture, self-
confidence plays a major role. Without self-confidence they would not have
dared to undertake entrepreneurial occupation. However, once they had
established an enterprise and engaged themselves in productive activity, through
experience and maturity, they were able to steer their enterprise to achieve
organisational goals. Hence, they viewed self- confidence not as an important variable
of achievement, but contrarily as an important element of entrepreneurial
characteristics.

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8
Conclusions
The present study leads to the understanding that entrepreneurship should be looked
upon as a skill that can be developed and cultivated.
1. Educational System: Entrepreneurship development among women cannot be
achieved unless the educational system and policies are directed towards it. The
branches of education, particularly commerce and management should include a
component of entrepreneurship in their syllabus.
2. Acquiring Educational Qualifications: Potential women entrepreneurs must
acquire a reasonable level of educational qualifications of at least graduation before
venturing into entrepreneurial activity, as education acts as a powerful tool in
developing good communication skills, self-confidence and vocational skills.
3. Acquiring Organisational Experience: Potential women entrepreneurs should
preferably acquire some years of experience in the manufacturing, trading or
service sector or more preferably in the line of activity in which they intend to
venture. This would enable them to gain an insight into the functioning of a
business enterprise and will help them to prepare themselves to face the challenges
of uncertainty while establishing their respective enterprises.
4. Acquiring Training: The potential women entrepreneurs must acquire skill
oriented and business oriented training by joining training sessions organised by
Entrepreneurial Development Agencies before starting their enterprises.
5. Entrepreneurial Support Organisations: Such organisations need to tap the huge
reservoir of technical and professionally qualified women by offering them better
schemes of assistance and ensuring their proper implementation.
A mention must be made about women’s organisations. They have been organizing
a number of Entrepreneurial Development Programmes for women and have been
organizing exhibitions of products from women’s enterprises ranging from
handicrafts, fashion accessories, sarees and garments, cosmetics jewellery and to
various other home products.
6. Attitudinal change: At the attitudinal side, the attitudes of men, women and
society towards the position of working women in society, at home and at work,
have to be changed through the socialisation process, educational system and
effective mass media.

14
9
National consciousness has to be aroused with regard to the vital contribution that
women can make to the developmental activities of the nation. It is only then the nation
would be able to effectively harness the womanpower of the country. Women should be
encouraged right from the beginning to take higher and technical education skills, as
this will enhance their economic and social status.

The support provided by the government would enable and encourage more and more
young women to take to higher education and to break the shackles of tradition. It is
only through their achievement that women, specially women entrepreneurs will be
accepted and respected in Indian society.

References
1. Desai, Vasant, 2004 Dynamics of Entrepreneurial Development and
Management, Himalaya Publishing House, p. 14.
2. Bisht, Narendra, S. and Pamila K Sharma, 1991, Entrepreneurship
Expectations and Experience, Himalaya Publishing House, New Delhi, p. 18.
3. Desai, Vasant, op. cit., p. 48.
17.
4. Vinze, Medha Dubashi, 1987 Women Entrepreneurs in India: A Socio-
Economic
Study of Delhi, 1975-85, Mittal Publications, Delhi.
5. Srivastava, A.K. and Chaudary, Sanjay, 1991 Women Entrepreneurs-
Problems, Perspective and Role Expectations from Banks, Punjab University,
Chandigarh.
6. Rani, D. Lalitha, 1996, Women Entrepreneurs, APH Publishing Corporation,
Delhi.
7. Sharma, K.K., 2004 Intellectual’s Sandharb Maharashtra State & Districts at a
Glance, Vol. I, Intellectual Book Bureau.
8. Bhatt, S. C., 1997 The Encyclopaedia District Gazetteers of India,
GyanPublishing
House, New Delhi.
9. Dhameja, S.K., Women Entrepreneurs: Opportunities, Performance and Problems,
Deep & Deep Publications Pvt. Ltd., New Delhi, 2002.
10. Singh Kamla, 1992 Women Entrepreneurs, Ashish Publishing House, New
Delhi.
11. Singh, N.P., Sehgal, P, Tinani, M. and Sengupta, R., 1986, Successful
Women
15
0
Entrepreneurs-Their Identity, Expectations and Problems NIESBUD, New Delhi.

15
1
 Quality of Work Life among Nursing Professionals in Mumbai
*
Dr T P Madhu Nair
**
Dr Shobha A. Menon

The term quality of work life emerged in the early 1970’s and has since been a
major concern for all types of work organizations across the world. The factors
responsible for the growing concern about improvement of quality of work life
are the changing composition of work force, altered attitude towards work,
increasing expectation of employees regarding a larger voice in decisions that are
affecting their work life, increasing employee turnover, absenteeism and declining
productivity.

However, despite the increased concern with quality of work life, it remains an
umbrella term for a host of activities and is defined differently by different people.
There is no consensus on what quality of work life really is and what it really includes.
On the basis of the analysis of various studies, Singh (1982) classified the definitions
of quality of work life take into account the role of work in one’s life including
working life as well as life outside work. Restricted definitions look at quality of work
life as a concept about the job and the physical environment of the organization or the
job alone.

Quality of work life reflects those on and off the job attitudes and behaviors that society
considers to be important and hence quality of work life as a movement emerged from
1979 to 1989. The term quality of work life came to mean more than job security, good
working conditions, and adequate and fair compensation. More importantly, it was
extended to include equal employment opportunities and job enlargement (Edward
1986). Accordingly, quality of work life that equals everything to do with people at work
has emerged. During periods of acute economic stress after the 1990s, employees
became trapped in a vicious circle, with companies steadily increasing their demands. The
new standard for normal job performance for employees required them to work overtime
or often not take their allotted paid vacation days (Meek 1999). The importance of
workers
as the main organisational resource is further reflected in the quality of work life studies
in the later part of the twentieth century.

15
2
*
Principal, Nirmala Memorial Foundation College, Kandivali (E), Mumbai.
**
Dept of Psychology, Cosmopolitan’s Valia College, Andheri, Mumbai.

15
3
Maccoby (1984) identified four factors to measure quality of work
life.
1. Security (right to work and working
conditions)
2. Equity (distributive justice)
3. Democracy (autonomy and opportunity to use abilities)
4. Individuation (perception of uniqueness)

Walton (1973) discusses eight criteria or major conceptual categories, which provide
a framework for analyzing the salient features of quality of working life. These can
be viewed as the factors or components of quality of work life.
The eight criteria given by Walton (1973)
are:
1. Adequate and fair compensation
2. Safe and Healthy environment
3. Development of Human capacities
4. Growth and security
5. Social Integration in the work organization
6. Constitutionalism in the work organization
7. Work and total life space
8. Social relevance of work life

There is complex relationship among the 8 categories. Several pairs of categories tend
to be positively correlated. For example, the quality of the immediate work challenge
not only affects current job satisfaction but also offsets the tendency towards skill
obsolescence. Some pairs contain apparent inconsistencies for e.g. too much emphasis
on the rule of law in work organization may promote impersonality and impede some
forms of social integration. At times work cannot be made flexible and challenging
simply because of emphasis on rules and laws in work organization. High involvement
of employees, which is the result of such job attributes as autonomy, whole task
responsibility and membership in a cohesive face-to-face group may work against a
balance between work and other life roles. How changes in each of these factors of
working life affect the productivity and long run effectiveness of the employing
organization may vary depending on the employees and their needs. White collar and
blue-collar employees have different needs and hence different expectations from their
jobs. So the presence or absence of a given factor may influence each group differently.
15
4
While blue collar workers may give importance to pay, white collar employees may

15
5
want more autonomy or democracy at work. Hence, achievement of quality of work life
involves conscious efforts to be pursued tirelessly by an organization.

Improvement in quality of work life has definite potential and scope in improving
productively (Lawler & Ledford 1982, Levitan & Werneke 1984), overall
organisational effectiveness (Buchanan & Boddy 1982, Cherns 1975)
reducing grievances (Havolovic 1991, Macy 1980), turnover (Macy 1980,),
absenteeism (Goodman 1980,) and industrial accident (Havolovic 1991, Macy
1980,).

Kalra and Ghosh (1984) also found that junior and middle level executives feel
the quality of work life can be improved if organization have a policy of
advancement based on merit and if their jobs provide them opportunities to use their
own capacities. This may also help employees increase on-the-job commitment,
which will further improve quality of work life. Executives also attach importance to
the standing of the organization in society. This may be because organizations of high
standing are likely to provide opportunities for fulfillment of the above-mentioned
factors and improved quality of work life. The executives gave a low rating to the
financial factors Kalra and Ghosh (1984) concluded that in the Indian context,
quality of work life improvement efforts should concentrate more on improving
the working environment of the organization and the relations among various levels
of employees.

In health-care organizations, quality of work life factors have recently been recognized
as significantly influencing the performance of staff members. Quality of work life also
refers to strengths and weakness in the total work environment (Knox and lrving
1997). From related literature and research, Knox and Irving derived eight concepts for
quality of work life promotion; organization structure and function;
individual staff perceptions; scope and complexity of role; career paths;
collaborative communication work environments; nature of the work; and
resources. In nursing, Locke (1991) indicated three factors influencing the
quality of work life; personal factors environmental factors and management
climate. The idea of the personal factor is that nurses, as do other human beings, have
moods, become argumentative, create conflict and become ill. They have expectations
of how they should be treated and rewarded in the work situation. Environmental
15
6
factors include aspects such as the economy (inflation salaries and fringe
benefits), government policies (decentralized compressive

15
7
health systems, emphasis on primary care and the privatization concept) and
community needs (health, education and socio-economic profiles). Locke further states
that in its broadest sense, if the quality of work life is to be productive, a good
management climate is needed. Nurse administrators must plan towards circumventing
constraints and maximizing opportunities in a quality circle concept, improving the
physical working environment and establishing a more cooperative working
environment conducive to high morale.

Nurses are trained to consider patients’ quality of care and life but seldom their own;
they rarely consider that they themselves or others in the profession may need care.
Quality of work life (QWL) is essentially a multidimensional concept and is a way of
reasoning about people, work and its organization (Ansari 1997). It seems that
the relationship between Quality of Work Life and the degree of nurses’
involvement in their work is the critical factor in achieving a higher level of quality of
care delivery.

Quality of work life of nurses is therefore crucial to improving the quality of medical
care made available to patients. However despite its importance there is very little
work, which addresses these issues. It is this gap that this research addresses and aims
at filling.

Method

This study investigated the quality of work life of senior and junior nurses employed in
hospitals in the private sector and hospitals in the private sector. The two independent
variables used in the present study were employment sector and position of nurses. A
2x2 factorial design was employed with 4 cells and 70 subjects in each cell. The
dependent variable studied was the impact of quality of work life of nurses as measured
by the quality of work life questionnaire developed by Saklani, suitably modified by the
researcher

The main hypothesis of this study was:

1. Quality of work life differs significantly between the nurses working in hospitals
in the private sector and nurses working in hospitals in the public sector.
2. Quality of work life differs significantly between nurses working at junior level and
nurses working at senior level.
15
8
Sample

The sample size of the research study is 280 nurses, taken in equal number from the
public sector hospitals and private sector hospitals. These include equal number of
nurses, at junior level as well as senior level, working in different departments of these
hospitals. This makes the sample quite representative. Nurses employed in three large
private multi-specialty hospitals located in central Mumbai and the western suburbs of
Mumbai and nurses employed in three large municipal multi-specialty hospitals located
in central Mumbai and the western suburbs of Mumbai were a part of the study In the
private sector, small and medium-sized nursing homes and charitable hospitals are not
included in the study. In the public sector, government hospitals and smaller health
centers are also not included in the study. This is done to maintain uniformity with
reference to size of the organization. The researcher studied nurses employed in the
position of Staff Nurse at the junior level and nurses employed in the position of Sister-
In-Charge at the senior level.

Tools
Quality of work life Questionnaire developed by Saklani (2003) and modified by the
research student was used to collect data. This questionnaire consists of 52 items
measuring 13 dimensions of Quality of work life. The 13 dimensions and the
items under each dimension are as follows: - Each item had to be rated on a 5-point
scale ranging from Strongly Agree to
Strongly Disagree.

Procedure
In the public sector hospitals, data was gathered from the respondents in small groups
after obtaining permission from the concerned authorities. In the case of some private
sector hospitals, data was gathered after obtaining permission from the concerned
authorities. In other cases, personal contacts were used to collect data. This became
necessary due to non-cooperation of some private hospitals. Interviews were conducted
one at a time so that respondents were more open in their expression. The academic nature
of the research and its purpose was explained to them. To ensure complete confidentiality,
the respondents were not required to mention their names or the names of their
hospitals in the questionnaires.

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9
Results and Discussion:
Total and mean scores were calculated for all the groups for the variables mentioned
above. Analysis of variance (ANOVA) was calculated for total quality of work life and
all the 13 dimensions.

The study findings validated both the hypotheses quality of work life differed
significantly between nurses employed in the private sector and nurses employed in the

public sector F (1,276) = 237. 291, p < 0.000. Quality of work life was
significantly
higher among nurses employed in the private sector (M = 173.614) as compared
to
nurses employed in the public sector (M = 151.987). Quality of work life
differed significantly between nurses at the senior level and nurses at the junior level F
(1,276)
= 157.412 p < 0.000. Quality of work life was significantly higher among
nurses
employed at the senior level (M = 171.608) as compared to nurses employed at
the junior level. (M = 153.993).

Further a significant interaction effect was observed between sector of employment and
level of employment on the quality of work life of nurses F(1,276) = 216.792 p <
0.000. Quality of work life was highest among nurses employed at the junior level in
private
hospitals (M = 175.143) and lowest among nurses employed at the junior level
in public hospitals. (M = 132.843). These findings relate to QWL in general to
get a deeper understanding let us look at the result with reference to each of
the 13 dimensions of QWL.

The Findings with Reference to the Compensation Dimension are as follows

A significant difference was observed between nurses employed in the public sector
and nurses employed in the private sector on the quality of work life dimension of

compensation. F (1,276) = 8.109, p < 0.005. Quality of work life dimension

of
compensation was higher among public sector nurses (M = 13.714) as compared
to
16
0
nurses employed in private sector (M = 13.057). A significant difference was
observed on the QWL dimension of compensation between nurses at the senior level

and nurses at the junior level F(1,276) = 95.669, p < 0.000. Quality of work life
dimension of

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1
compensation was higher among nurses employed at the senior level (M = 14.514)
as compared to nurses at the junior level (M = 12.257).

A significant interaction effect was observed between sector of employment and level
of employment on the quality of work life dimension of compensation F (1,276)
=
141.273, p < 0.000. Quality of work life dimension of compensation was
highest
among nurses employed at senior level in public sector hospitals (M = 16.214) and
the lowest among nurses employed at junior level in public sector hospitals (M =
11.214).

Nurses employed in the Municipal Hospitals viewed their compensation as fair, as

compared to nurses employed in the private sector hospitals. This can be expected
because most private sector hospitals charge their patients heavily while municipal
hospitals give free aid. Thus nurses in private sector hospitals feel that while patients
are charged heavily and hospitals make huge profits they are underpaid. In fact most
nurses in private sector hospitals reported that the compensation given to them was not
commensurate with the capacity of the hospital to pay. Nurses employed at senior
levels receive better compensation packages seem to be more satisfied with their gross
emoluments.

With Reference to Job Security Dimension, the Findings are:

Quality of work life dimension of job security differed significantly between nurses
employed in public sector hospitals and nurses employed in private sector hospitals F

(1,276) = 191.948, p < 0.000. Quality of work life dimension of job security was
higher
among the nurses working in public sector hospitals (M = 8.750) as compared to nurses
working in private sector hospitals (M = 7.171). No significant interaction effect
was observed in the Quality of work life dimension of Job security between
sector of employment and level of employment.

Nurses, employed in municipal hospital report higher level of job security. Municipal
hospitals are in the public sector and like in all public sector undertakings in this
country job security is high. Once a nurse is a permanent employee it is not easy to
16
2
terminate her services. Services of nurses in municipal hospitals cannot be terminated
on flimsy grounds.

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3
With Reference to Physical Environment Dimension, the Findings are

Quality of work life dimension of physical environment was significantly different

between nurses employed in public sector hospitals and nurses employed in private

sector hospitals F (1,276) = 971.630, p < 0.000. Quality of work life dimension
of
physical environment was higher among nurses employed in private sector hospitals (M
= 8.086) as compared to nurses employed in public sector hospitals (M = 3.786).

No significant difference was observed in the Quality of work life dimension of

physical environment between nurses working at senior levels and nurses working at
junior levels.

A significant interaction effect of sector of employment and level of employment was

observed on the Quality of work life dimension of physical environment F (1,276)
=
37.331, p< 0.000. Quality of work life dimension of Physical Environment was
highest
among nurses employed at junior level in private hospitals (M=8.571) and
lowest among nurses working at Junior level in public sector hospitals (M = 3.429).

This was one dimension in which the differences between private sector hospitals and
municipal hospitals were the greatest. While nurses in the private sector hospitals
consider their physical working environment clean and comfortable the same is not true
of nurses in the municipal hospitals. These findings are not altogether unexpected. This
is one area where the differences between these two types of hospitals are most
pronounced. In fact these poor physical environmental conditions are visible even to a
visitor and this is the primary reason why patients from better-off sections of society
avoid taking treatment at municipal hospitals. In fact, patients who can ill afford large
multi specialty private hospitals prefer to go to small private nursing homes rather than
go to municipal hospitals. It is only natural therefore to find that nurses also perceive
the environment as uncomfortable. This difference is most pronounced in the case of
nurses employed at junior levels. This may be because they spend more time in the
ward and in direct patient care and hence are more affected by the unhygienic
conditions.

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4
The Findings with Reference to Opportunity to Use Human Capacity Dimension
are as follows:
Quality of work life dimension of opportunity to use human capacity was not
significantly different between nurses employed in public sector hospitals and nurses
employed in private sector hospitals. Quality of work life dimension of opportunity to
use human capacity was significantly different between nurses working at junior level

and nurses working at senior level F (1,276) = 304.009, p < 0.000. Opportunity to
use
human capacity was higher among nurses employed at senior level (M = 21.657)
as
compared to nurses employed at junior level (M =
16.114).

A significant interaction effect was observed between sector of employment and level
of employment on the Quality of work life dimension of opportunity to use human

capacity F (1,276) = 175.739, p < 0.000. Opportunity to use human capacity

was
highest among the nurses employed at senior level in public sector hospitals (M =
23.557) and lowest among the nurses employed at junior level in public sector hospitals
(M =
13.800)

Nurses employed at senior levels reported greater opportunity to use human capacities.
They are allowed to take independent change of work activities and experience less
interference. This is one finding expected in almost all jobs. As an employee rises to
senior levels he/she is given greater freedom in discharging his day-to-day activities. At
junior levels there is greater supervision and close monitoring of employees work
behavior.

The Findings with Reference to Human Relations Dimension are as follows:

The Quality of work life dimension of human relations was significantly different
between nurses employed in public sector hospitals and nurses employed in private
sector hospitals F(1,276)=20.186,p < 0.000. Human relations were higher among
nurses employed in private hospitals (M=22.436) as compared to nurses in public
sector hospitals (M=20.743). The Quality of work life dimension of human relations
was not significantly different between nurses employed at junior level and nurses

16
5
employed at senior level.A significant interaction effect between sector of employment
and level of employment was observed on the Quality of work life dimension of
human relations F (1,276) = 42.282, p < 0.000. Human relations dimension was
highest among nurses

16
6
employed at junior level in private sector hospitals (M=23.571) and lowest
among nurses employed at junior level in public sector hospitals (M=19.429).Nurses
working in private hospitals seem to enjoy greater and better social relations with
their co- workers irrespective of the level of employment.

The Findings with Reference to Participation in Decision Making Dimension are:

The Quality of work life dimension of participation in decision making was significantly
different between nurses working in private sector hospitals and nurses working in public

sector hospitals F(1,276) = 13.423,p < 0.000. Participation in decision-making was

higher
among the nurses employed in private sector hospitals (M = 13.964) as compared to
nurses
employed in public sector hospitals (M = 12.807). The Quality of work life dimension
of participation in decision-making was significantly different between nurses employed

at junior level and nurses employed at senior level F (1,276) = 11.203 p< 0.001.
Participation
in decision-making was higher among nurses employed at senior level (M = 13.914)
as
compared to nurses employed at the junior level (M =
12.857).

A significant interaction effect between sector of employment and level of employment

was observed on the Quality of work life dimension of participation in decision making

F(1,276) = 51.722, p< 0.000. Participation of decision-making was the highest

among
nurses employed at junior level in private hospitals (M =14.571) and lowest
among
nurses employed in public sector hospitals at junior level (M =
11.143).

Nurses work best when they have a sense of control over their jobs and their lives. That
sense of control can be created by giving nurses more say in patient-care planning,
policy-making and their style. However, public sector is always characterized by
centralized decision-making and a bureaucratic structure. In such a set-up, nurses are
less involved in decision-making at junior levels.

The Findings with Reference to Grievance Handling Dimension are as follows:

16
0
The Quality of work life dimension of grievance handling was significantly different
between the nurses employed in private sector hospitals and nurses employed in public

sector hospitals F(1,276) = 15.893, p< 0.000. Grievance handling was higher among
the

16
1
nurses employed in private sector hospitals (M = 9.293) as compared to nurses
employed in public sector hospitals (M = 8.371).

The Quality of work life dimension of grievance handling was significantly different
between the nurses employed at junior level and nurses employed at senior level

F(1,276) = 7.565,p< 0.006. Grievance handling was higher among nurses employed
at
senior level (M = 9.15) as compared to nurses employed at junior level (M =
8.514).

A significant interaction effect between sector of employment and level of employment

was observed on the Quality of work life dimension of grievance handling F (1,276)
=
104.637,p< 0.000. Grievance handling was the highest among nurses employed
at
junior level in private sector hospitals (M=10.157) and lowest among nurses
employed at junior level in public sector hospitals (M=6.871).

As discussed earlier, public hospitals are characterized by bureaucratic structure.

Hence, though employees can state their grievances, they may not be redressed
immediately. In the private sector, on the other hand, channels of communication being
shorter, prompt response is possible.

The Findings with Reference to Work and Total Life Space Dimension are as follows:
The Quality of work life dimension of work and total life space was significantly
different between nurses employed in private sector hospitals and nurses employed in

public sector hospitals F (1,276) = 39.066, p< 0.000. Work and total life space was
higher
among the nurses employed in private sector hospitals (M=10.629) as compared to
nurses
employed in public sector hospitals (M = 9.479). The Quality of work life dimension of
work and total life space was significantly different between nurses employed at junior
level and nurses employed at senior level F (1,276)=29.963, p< 0.000. Work and total
life space was higher among nurses employed at senior level (M=10.557) as
compared to nurses employed at junior level (M=9.550).

16
2
A significant interaction effect between sector of employment and level of employment
was observed on the Quality of work life dimension of work and total life space F

(1,276) = 39.066, p < 0.000. Work and total life space was highest among the
nurses

16
3
employed at junior level in private sector hospitals (M = 10.700) and lowest among
the nurses employed at junior level in public sector hospitals (M=8.400).

Nurses in private sector have lower workloads. Moreover, most of the nurses at the
senior level are older and hence have fewer responsibilities at home. Hence these two
groups namely nurses in the private sector and nurses at the senior level do not find
their job a hindrance to their home life. Most of the nurses at junior levels in private
hospitals were unmarried and lived in hospital accommodation /hostels. These groups
also do not find their work as a hindrance to their home life.

The Findings with Reference to Image of Organization Dimension are:

The Quality of work life dimension of image of organization was not significantly
different between the nurses employed in private sector hospitals and nurses employed
in public sector hospitals.

The Quality of work life dimension of image of the organization was significantly different
between nurses employed at junior level and nurses employed at senior level F (1,276)
=
14.649, p< 0.000. Image of organization was higher among the nurses employed at
senior
level (M = 18.893) as compared to nurses employed at junior level (M = 17.843).
The interaction effect between sector of employment and level of employment on
the Quality of work life dimension of image of organization was not significant.
Senior nurses are generally more aware of issues connected with the image of the
hospital in the society. Hence they are better equipped to respond to questions
connected with this dimension.

Recommendations
The findings of this study indicate that nurses do not work in the best of conditions and
a lot needs to be done to improve their working conditions. The condition of nurses in
public sector hospitals is worse but this does not imply that there are no problems in
private sector hospitals.

The primary change that is needed must be from the government in terms of increasing
the public sector hospitals. Conditions in hospitals must be improved if the problems of

16
4
nurses are to be alleviated. Our municipal hospitals need a complete make over right

16
5
from the interiors of the hospitals as well as the procedural formalities. But merely
bringing about these changes would create only a cosmetic effect. The employees at all
levels need to be given training in soft skills. A lot of the problems that arise on the job
are due to poor communication skills and interpersonal skills. A chronic problem
reported by nurses in public sector hospitals is the type of patients they have to deal
with. If nurses are trained to handle these patients effectively, the problem can be
considerably lowered. Unfortunately, in public sector hospitals, the view that patients
are customers and their needs are important, is not present. Hence, nurses and other
hospital staff often feel that since medical care is free or cheaper than private medical
care, patients do not have the right to demand the best. This attitude creates a reciprocal
effect with them being intolerant to patients demands and needs, the patients in turn are
rude and inter personal interactions are not smooth. This again contributes to a poor job
satisfaction and job stress.

If government spending on public health increases it would mean more facilities for all
staff and staff and patients both would be benefited. Better infrastructure can be
provided, more staff can be appointed, salaries can be increased and directly or
indirectly this would benefits patients. When patients find that public hospitals are
providing good medical care their need to go to private hospitals will not arise. If need
be, private and public partnerships can be worked out.

In the private sector, nurses reported that their compensation was not commensurate
with the hospital’s ability to pay. This appears to be a grievance which needs to be
addressed immediately. Considering the fact that private hospitals charge patients huge
sums, they need to give nurses especially those at lower levels better compensation.
This will also help because with better compensation labour turnover can be reduced.
Currently we find a situation where junior nurses join private hospitals only to get the
necessary training and as soon as they get an opportunity they migrate abroad. This
would create a situation in future where private hospitals would have very few well-
experienced nurses. This is not an ideal situation. Two areas that is compensation and
job security, if addressed adequately can change the situation.

Another aspect of the nurses’ job that needs to be addressed is the role of the nurse in
the medical setting. Nursing is a highly skilled job but continuous nurse training is

16
6
seldom given importance. In the same way nurses are seldom given any decision
making power in the medical set up. They are simply expected to execute the decisions
made by the hospital administration. This affects their job satisfaction because they feel
their job lacks autonomy. The participation of nurses in public sector hospitals
especially at lower levels is dismal. This is because of the bureaucratic nature of public
sector undertakings. It is high time, public sector hospitals administration is handed
over to professional managers with knowledge and experience in administrative work.
Currently it is left to the senior doctors who are excellent doctors but may be poor
administrators. Another option would be to give training to medical personnel so that
they develop managerial skills. When hospitals are managed professionally they would
provide an excellent work set up for nurses. Application of modern management
practices would definitely enhance the quality of work life as well as job satisfaction of
nurses. This would also lower absenteeism of nurses in public sector hospitals.

This research highlights the problems faced by nurses and stresses the need to improve
their conditions. It is high time that nurses should get their due place as skilled medical
professionals. If this does not happen, talented young people will leave the profession or
simply migrate abroad in search of greener pastures. The profession will not attract new
talent and this is not a situation, which is desirable in a highly populated developing
country like ours. Hospitals both private and public, which do not create quality
environments to attract new recruits and retain experienced nurses, risk shortages that may
endanger patients. A demoralised worker is not a productive worker and nurses have a
sense that they are not valued by the healthcare system for which they work with
dedication. Money is not everything but it is an important measure of worth and
incremental pay, recognising expertise and experience, combined with more opportunities
in management and a clearer voice in running the system, would improve the job
satisfaction and quality of work life of nurses. If better patient outcomes are to be attained,
the governments, employers and nurses must work together to create a healthy nursing
work environment. As the country progresses fast and aiming at double digit GDP growth
in the near future, this often neglected but vital healthcare segment encounters grave
challenges. Greater participation from nursing professionals in all policy decisions and
addressing the areas of concern in a holistic way could be one sure way of making
healthcare a growth engine for the economy.

16
7
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