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First Edition: 2017 Pimpri Chinchwad Education Trust’s S. B. Patil Institute of Management Sector-26, Pradhikaran, Nigdi, Pune-411044 National Conference: 2017 ‘WORLD ECONOMIC TURMOIL – CHALLENGES AND OPPORTUNITIES FOR INDIA’ Conference Proceedings ISBN: 978-81-922746-6-9 Copy Rights © 2017, by S. B. Patil Institute of Management, Nigdi, Pune All right reserved with the publisher including the right to translate, reproduce this book or parts thereof except for brief quotations in critical articles or review. Disclaimer The views expressed in the paper or article are the individual authors , neither S. B. Patil Institute of Management nor the editor accepts any responsibility for the errors, or views expressed in the paper or article . Errors, if any, are purely unintentional and readers are expressed to communicate such errors to avoid discrepancies in future. Published by Pimpri Chinchwad Education Trust’s S. B. Patil Institute of Management Sector-26, Pradhikaran, Nigdi, Pune-411044 Chief Editor Dr. Hansraj Thorat Editors: Dr. Bhushan Paradeshi Prof. Anishkumar Karia Printed by: Nirali Prakashan Abhyudaya Pragati, 1312, Shivaji Nagar, Off. J. M. Road, Pune-411005 Chairman’s Message It gives me an immense pleasure to publish the Conference Proceeding of our Fifth National Conference on the theme ( World Economic Turmoil – Challenges and Opportunities for India’). An economic and financial crisis has engulfed the world. Banks have collapsed, stock prices have slumped and there has been an unprecedented decline in economic activity. The crisis began in 2007, in the wake of financial and real estate speculation in the United States, but it came after a long period of international financial instability, trade imbalances and several local or regional crises. By late 2008, the crisis had spread to many countries. Governments responded with massive emergency measures, but the crisis continued to spread and large number of workers has been laid off all over the world. Many see the crisis as an opportunity for renewed regulation and democratic re-structuring of the global economy. But solutions are complicated by the depth of the crisis, by the lack of strong global institutions, and by overlapping crises in the environment, natural resources and global trade. The global economic activity has remained subdued and shaky in 2015 with global growth forecast revised down to 3.4% from 3.6% in 2016 and 3.6% from 3.8% in 2017. Growth in emerging markets and developing economies which account for over 70% of global growth, declined for the fifth consecutive year, while a modest recovery continued in advanced economies. It has been pointed out that there are some key transitions which continue to influence the global outlook. Oil prices have further declined steeply, reflecting subdued global demand and expectations of sustained increases in production by OPEC members. With revised declines in major commodity prices and weakness in global manufacturing, headline inflation is set to be controlled again in most countries. Core inflation rates remain generally stable and well below inflation objectives in advanced economies. Financial market volatility has risen amid declining asset prices. Persistent financial market turbulence and the associated asset price declines could perpetuate tighter financial conditions in advanced economies, increasing the cost of capital as well as risk premiums and interest rates. Developments in financial markets in advanced economies, a more significant and lasting rise in global risk aversion accompanied by a stronger pullback of capital flows to emerging markets may generate even tighter financial conditions in these economies. Various international organizations have pointed that achieving strong growth in the global economy remains elusive, with only a modest recovery in advanced economies and slower activity in emerging markets. Further, there is need to deploy broad-based reform plans that incorporate monetary, fiscal, and structural policies to stimulate persistently weak demand, re-launch productivity growth, create jobs and build a more inclusive global economy. The fifth National Conference is the excellent ground to meet the industry experts and management professionals. My sincere thanks to the various faculty members, students and industry experts who irrespective of their busy schedule took the time out to contribute their thoughts and research papers for this National Conference. I hope this publication will motivate to pursue research extensively in the various sub-themes. My heartfelt gratitude to all the trustees of Pimpri Chinchwad Education Trust for their constant support and encouragement. My sincere thanks are due to teaching and non-teaching faculties of SBPIM, who have taken a lot of efforts to make the National Conference a grand success. Dr. Daniel Penkar Director, S. B. Patil Institute of Management, Nigdi, Pune. Chief Conveners Message In 2015, global economic activity remained subdued. Growth in emerging market and developing economies— while still accounting for over 70 percent of global growth—declined for the fifth consecutive year, while a modest recovery continued in advanced economies. Three key transitions continue to influence the global outlook: (1) the gradual slowdown and rebalancing of economic activity in China away from investment and manufacturing toward consumption and services, (2) lower prices for energy and other commodities, and (3) a gradual tightening in monetary policy in the United States in the context of a resilient U.S. recovery as several other major advanced economy central banks continue to ease monetary policy. Overall growth in China is evolving broadly as envisaged, but with a faster-than-expected slowdown in imports and exports, in part reflecting weaker investment and manufacturing activity. These developments, together with market concerns about the future performance of the Chinese economy, are having spillovers to other economies through trade channels and weaker commodity prices, as well as through diminishing confidence and increasing volatility in financial markets. Manufacturing activity and trade remain weak globally, reflecting not only developments in China, but also subdued global demand and investment more broadly—notably a decline in investment in extractive industries. In addition, the dramatic decline in imports in a number of emerging market and developing economies in economic distress is also weighing heavily on global trade. Oil prices have declined markedly since September 2015, reflecting expectations of sustained increases in production by Organization of the Petroleum Exporting Countries (OPEC) members amid continued global oil production in excess of oil consumption.1 Futures markets are currently suggesting only modest increases in prices in 2016 and 2017. Prices of other commodities, especially metals, have fallen as well. Lower oil prices strain the fiscal positions of fuel exporters and weigh on their growth prospects, while supporting household demand and lowering business energy costs in importers, especially in advanced economies, where price declines are fully passed on to end users. Though a decline in oil prices driven by higher oil supply should support global demand given a higher propensity to spend in oil importers relative to oil exporters, in current circumstances several factors have dampened the positive impact of lower oil prices. First and foremost, financial strains in many oil exporters reduce their ability to smooth the shock, entailing a sizable reduction in their domestic demand. The oil price decline has had a notable impact on investment in oil and gas extraction, also subtracting from global aggregate demand. Finally, the pickup in consumption in oil importers has so far been somewhat weaker than evidence from past episodes of oil price declines would have suggested, possibly reflecting continued deleveraging in some of these economies. Limited pass-through of price declines to consumers may also have been decreased. Oil prices have fallen further since early December, when the assumptions about commodity prices used in this WEO Update were finalized factor in several emerging market and developing economies. Monetary easing in the euro area and Japan is proceeding broadly as previously envisaged, while in December 2015 the U.S. Federal Reserve lifted the federal funds rate from the zero lower bound. Overall, financial conditions within advanced economies remain very accommodative. Prospects of a gradual increase in policy interest rates in the United States as well as bouts of financial volatility amid concerns about emerging market growth prospects have contributed to tighter external financial conditions, declining capital flows, and further currency depreciations in many emerging market economies. The Fifth National Conference is a sincere and humble attempt towards creating an environment to study the impact of world economic turmoil on Indian Economy. My heartfelt gratitude to Savitribai Phule Pune University, who provided us the financial assistance and expertise required to conduct the National Conference Smoothly. I thank all my SBPIM team members for their help and cooperation. I am grateful to our Trustees for their continuous support and motivation. I also take this opportunity to sincerely thank Dr. Kirti Dharwadkar, Convener of this conference and Dr. Daniel Penkar, Director, SBPIM, for their continuous and support to the SBPIM team which made this conference a grand success.