CONTENTS Strategic Management and growth economy under the Hammer of Recession and pressures - An Attempt for Understanding a Complex Situation Dr. Muhammad Ali EL-Hajji

Seasonality in Stock Markets-Causes and Trends Mohamed Kamara & Mr. Rohit Bahai

Causes and Consequences of Global Warming Dr. Urvashi Sharma

Micro Finance and Women Empowerment: A Critical Overview Dr. D. Raja Jebasingh

Constraints that encounter Strategic Sourcing: A Qualitative Assessment Prof. Ramagopal I & Prof. Lalit Prasad

Structure of VAT in Federal Economy of Brazil Dr. Ummed Singh

Significant Issues in Cyber Technology Mr. JPS Sirohi & Ms. Rajni Sirohi

Lord Krishna Theory of Management in Hospitality Ms. Anju Chaudhary & Ms. Divya Thakur iNTi

Green Marketing: Making Sense of the Situation t Ms. Deepmala Jain

XGroup'of Institutions '%.:i'5'AT;£VVAY^^T6 KNOWLEDGE I. ' V C'hWderpllflfu^IlifCoTlege of Higher Studies & School of Law Chanderprabhu Jain College of Higher Studies & School of Law, Narela, Delhi - 110040 (Recognized by Govt of NCT of Delhi, Affiliated to Guru Gobind Singh Indraprastha University, Delhi)

V ision About the College “Consistently improving the Chanderprabhu Jain College of Higher Studies (CPJ-CHS) institutional perseverance, & School of Law, has been promoted by the Rishi Aurobindo persistence and patience for Educational Society to start market focused professional ensuring continually rich, programmes in the emerging areas of higher education in value-based and globalize those disciplines which have high growing job potential. careers and lifestyles for all students who enroll themselves The College aims to impart high quality professional for studies in the academic education in a vibrant academic ambience with a faculty of programmes conducted at this distinguished lecturers and resource persons from industry. c o lle g e .” Besides their intensive involvement in stimulating academic work, students will also have ample time for sports, cultural M ission and other enriching activities. To introduce market focused

professional programmes in The permanent campus of CPJ-CHS & School of Law is emerging areas of higher located in a beautifiil area within the sprawling Narela education in all such disciplines Campus and is affiliated to Guru Gobind Singh Indraprastha which have high job potential, University. It is presently having 1000 students, 70 faculty namely, management, members and a similar number of support staff. We have a computer applications and legal state-of-the-art infrastructure including laboratories, library studies. and computer facilities.

Maintaining close liaison with Delhi, the capital of the country, is known for its multi­ the different growth sectors of cultural milieu, dynamism and rich academic legacy. the economy in order to discern Students joining CPJ-CHS & school of Law will be nurtured the sets of knowledge and skills within this rich cultural and educative environment. that are included in the job profiles of different levels of human resources and keep a Sh. Subhash Chand .Jain, a well-known name in the constant watch on the emerging educational world, is the Chairman of the Institute. The changes in order to supplement Institute runs the 3 year full time BBA, BBA (CAM), BCA the regular instructional system programmes and 5 years integrated programme in by value added academic BA.LLB.(H) course affiliated to G.G.S.I.P. University, programmes also in order to Delhi. The credibility of education at the Institute is meet the requirement of the increasingly being realized and recognized by the corporate m arket. w o rld . Chairman’s Message

t is matter of great pleasure that July 2011, issue of “CPJ Global Review” an International Journal is published well in time. I am sure it will be a source of I inspiration for everyone, and will direct faculties’ creativity to new dimensions of mature expression

Education has been the fountainhead of every human endeavor. Its quality has been the driving force for an eternal quest of wisdom through the corridors of human experience. It is this quality alone which in its true manifestation becomes the inspiration for transcendence from the mundane to the higher realm of life.

The vigorous youth of today who are staying away from the righteous path, need a strong hand to guide them in the right direction. Today’s generation is no doubt straying because of a lack of direction and is losing out on their precious years of fulfilling life. We believe that nothing is impossible for a person with an indomitable will. This perseverance is best encapsulated by our modem system of teaching.

We are well aware of the fact that the environment today is more competitive than ever before. Keeping this in mind, we at CPJ-CHS & School of law train the students to face the challenges beyond the walls of the campus.

With Best Wishes

Sh. Subhash Chand Jain Director’s Message

t the outset, I wish to thank all the contributors and readers of our previous issues of CPJ Global Review for making it a success. CPJ-CHS & A School of Law is an educational institution of distinction, combining excellence with innovation. The College places a high value on providing its students with a fulfilling educational experience in their chosen discipline. It offers a wide range of academic courses to students giving them a solid academic foundation and enabling them to achieve their individual goals. Extensive applied research ensures that the best and latest developments in industry, commerce and the public sectors are incorporated into our courses.

We at CPJ-CHS & School of Law aim to work for equipping our students with best of skill sets, knowledge and a winning attitude to avail all opportunities locally as well as worldwide and build a great future for our country and the world at large. At the same time they need to fulfill their dreams by shaping their own destiny.

We are committed to create pathways that connect human potential to reality, promise to performance and ambition to achievement, in order to bridge the gap between demand and supply of skilled manpower, in terms of quality and quantity, to ensure incessant economic growth.

We are happy to launch the third issue of our academic journal. It incorporates research papers, articles, study reports etc. On the following series like Strategic Management and Growth Economy under the Hammer of Recession and Pressures, Seasonality in Stock Market - Causes and Trends etc.

Warm Regards,

Prof. J.P. Mohia n

CHAIRMAN Sh. Subhash Chand Jain Editor’s Desk

SECRETARY

Mr.AbhishekJain Dear Readers, CPJ Global Review is playing a crucial role in developing the research activities EDITORIAL BOARD among researchers.

Editor-in-chief Excelling in advancement and transfer of knowledge is only possible through maintaining a strong research culture. An academic instimtion can achieve a Prof.J.P.Mohla competitive status if and only if it has a significant presence in the research community. The aim of CPJ Joumal wiU be to keep its readers widely interested in basic and applied research and to promote interaction and collaboration Editor among researchers from different fields. We are seeking to move away from formal and structured presentation of research activities; instead, we would Dr. Urvashi Sharma like to provide the researchers an opportunity to actively contribute to the Joumal.

Members As we come to the end of another year, I would like to take a moment to thank everyone who has helped us in bringing out this annual International Ms. Sakshi Chhabra Joumal. There have definitely been challenges along the way, but it’s been fun too. First, 1 would like to thank all those who were able to contribute their Ms. Sonia Goswami articles and columns this year, for taking the time to share some of your knowledge and passion with the rest of us. I would also like to thank the Ms. Rajni Sirohi members of the editorial board for their assistance and other members of our college who helped me along the way. Mr. Amresh Kumar Singh I hope you will enjoy reading this issue and we welcome your feedback on any aspect of the Joumal.

With best regards.

Dr. Urvashi Sharma

STRATEGIC MANAGEMENT AND GROWTH ECONOMY UNDER THE HAMMER OF RECESSION AND PRESSURES - AN ATTEMPT FOR UNDERSTANDING A COMPLEX SITUATION

*Dr. Muhammad Ali E L -H ^i Abstract This research paper highlights the information related to the strategic management and recession. In the starting this study describes how recession has marked the transformation of UK economy. This study also highlights that how the recession impacts the strategies of management, and what are the expected strategies by management in order to face the current recession. In the middle o f the paper, there is a much evidence available to support the facts o f management responses to recession. Study also describes strategies o f management that can be differ from public organisations to business corporations in the bigger context. In the end strong conclusion gives us a clear idea that recession affects the supposed impact of pricing and support decision of leaders in various sectors. Keywords Strategic management.Recession„investment,Productivity,growthopportunity,unemployment, consumer sentiments,economic indicators. Strategic Management under the Hanmier of Recession

he UK economy has suffered through two deep by falling demand help to weed out weak firms, while recessions over the last decade and, as stronger firms are induced to bring forward productivity- T a consequence, its productive structure has increasing investments to help maintain their competitive undergone a major transformation. The most visible position. The result is that those firms who survive a consequences of these events include two waves of large recession, it is thought, ‘leaner and fitter’, and more able scale job shedding (with profoundly different regional to take advantage of new growth opportunities. Those impacts) accompanied by persistently high unemployment who find this view persuasive often attribute the well throughout the 1980s and early-1990s. (Bohman, Lindfors known pro-cyclicality of productivity to the 1998, 57-70)''“' This time period has also seen steeply reorganisation of firms and markets brought about by rising small and large firm failure rates, a major severe adversity, and they are, as a consequence, inclined reshuffling in the ownership of many businesses, severe to view recession as an integral part of the process by imbalances between the supply of and demand for certain which economies grow and develop. The question of types of skills exacerbated by regional immobilities in whether recessions have a Strategic Management And labour, a crisis of consumer confidence coupled with a Growth Economy positive impact on an economy’s long­ reluctance by consumers to take on (or add to) their term growth potential is difficult to answer with any long-term debt, and a general decline in the authority confidence, and it will take some time before a consensus and confidence with which demand management policies emerges about whether the two recent recessions in the have been pursued. UK have been, on balance, beneficial.

Some observers have, however, argued that the longer- It is, however, possible to begin forming an opinion on run consequences of recessions may be positive, (shama these issues by examining what has happened to firms 1978,43-52)'^“' In particular, selection pressures created during the current recession, and how they have

Former Lecturer in Liverpool, John Moores University, U.K. He can be reached at maethaiii&hotmail.com responded to recession-induced pressures. Those who responsive. This generally means adapting the marketing see the recession as having had the effect of ‘cutting mix and/or changing the target markets. out the fat’ will expect to find that the most able firms have weathered its storm% with relative ease, and that However, the response of marketing managers to such firms have been able to increase their control over recession depends on how they perceive its meaning and costs and bring forward major investments in plant and impact on their businesses. (Hussey, Hussey 1994, 14- equipment, training and R&D. By contrast, those who 24) As a result, it is possible that a recession on the fear that the recession has ‘cut into muscle’ expect to national level may affect different companies differently observe firms making short-sighted decisions to control and may, in fact, indicate different economic costs, and postponing or abandoning major strategic environments, including those of growth and inflation. investments in technological, human and physical capital Specifically, an objectively measured and determined which promote long-run competitiveness. (Bohman, recession on the national level may affect companies of Lindfors 1998, 57-70) different size and different sectors and regions differently, hence requiring that marketing managers take Objectives of Study different tactical and/or strategic measures to adjust to The main objective of this study is to describe the or even exploit changes in the economic environment. information that strategic management is really under (Bohman, Lindfors 1998, 57-70) the hammer of recession. This study seeks to determine management perception Management Responses to the recession of and response to economic recession by measuring If UK industry is to emerge from the current recession the following and contrasting the results by sector and ‘leaner and fitter’, then it will, in part, be due to the by company size: ways in which firms have chosen to respond to recession. (1) The meaning of the 1991 economic recession to To emerge ‘leaner and fitter’, firms must be able to prune marketing managers slack in their current operations in a way which raises (2) The impact of this recession on marketing the average quality of their stocks of technological, decisions, and human and physical capital. By contrast, the concern of (3) The resulting adjustments in marketing strategies those who worry that the recession may ‘cut into muscle’ and actions. is that recessionary pressures may lead firms to make short sighted cuts in their rate of technological, human Strategic Management and Recession and physical capital accumulation, sacrificing longer- Recession has been defined in the marketing literature run competitive ability for the alleviation of current as a “process of decreasing demand for raw materials, distress. products and services, including labor” (Shama 1978, 43-52) or as a “state in which the demand for a Recession is a phenomenon of decreasing demand for product is less than its former level” (Kotler 1973, 42- raw materials, products and services. Technically, its 49) Recession calls for marketing managers to use beginning, progress, and ending depend on the strategies to stimulate consumer demand, such strategies operational measures used by different researchers and often require a redefinition of the target customers and federal agencies. For example, in the United states a the marketing mix. They may include narrowing the recession is said to exist when the gross national product product line, offering cheaper products and quantity (GNP) declines for two consecutive quarters, or when discounts, lowering prices, increasing promotion, and the leading economic indicators (LEIs) decline for three offering products directly to consumers. straight months, or when the index of the Association of F^irchasing Managers dips below 50 points. Whichever To weather the recession,-Bonoma (1991) advises the case, recession requires business and marketing practicing marketing managers to: (1) “Avoid empty managers to modify their marketing strategies and middle’ marketing,” (2) “Don’t mistake expansiveness actions in order to stay both profitable and consumer- for empire,” (3) “Do more for less,” and (4) “Remember what winter is like when summer again comes” (Bonoma 1991, 10) In a related study, Goerne It is important, however, to note that not only are these (1991) reports that marketing managers have been statistics different, but their use on a company level may using significantly more coupons in the promotional mix be misleading. The GNP is an aggregate of the monetary in order to fight the negative impact of the recession on value of all products and services produced and consumed sales. In view of this, it is critically important that in a country plus the value of exports minus the value of marketing managers make sure that the economic imports. The LEIs include indicators such as orders for environment facing their company is indeed one of plant and equipment and claims on unemployment recession. (Bohman, Lindfors 1998, 57-70) )''**' insurance. Surveys of consumer sentiments measure consumer economic outlook as well as plans to buy However, the existence of a recession is often determined specific products such as cars and houses. Therefore, it on a national level by federal agencies and business and is possible that these indicators are irrelevant to many economic research organisations. Thus, the U.S. small and large companies or even regions. For example, Department of Commerce gathers and publishes two it is possible that a manufacturing-led recession in the highly watched statistical data: the GNP and the LEIs. GNP will have little or no impact on a company in the The GNP is the total monetary value of the “goods and service sector, or that a recession as measured by GNP services produced and consumed in the private, public, may be the result of an economic slowdown in one region domestic and international sectors of the economy” and of the country and have no impact on another region. is therefore “the broadest indicator of economic output and growth” (Guide to Economic Indicators 1990)'’'. The Furthermore, recession often means growth to many LEIs index is a composite of 11 variables said to indicate companies, such as the trade promotion companies which the overall trend of the U.S. economy. Customarily, an have been thriving since 1990. According to Miller economic recession exists when the GNP declines for (1991, p.6), “spending for trade promotions reached two consecutive quarters and/or when the LEIs decline a record level last year (1990) as marketers adjusted their for three consecutive months. budgets because of recession.” Another example is Electronic Data systems, the computing service of which Similarly, the survey Research Centre of the University has been growing rapidly because of the recession of Michigan and the Conference Board publish monthly (Hayes 1991)''®'. indices based on household surveys that indicate the perceived overall health of the U.S. economy, (http:// When it comes to small business, the relationship www.src.isr.umich.edu/)'®“' The survey Research between the economic environment and business strategy Centre’s consumer sentiment index iCVil) “reflects is even more significant. Since the very nature of many consumer attitudes toward the economy, their own small companies is to market niche, even smMl changes financial condition, and perceptions about buying big- in the economic environment and the market niche tend ticket durable goods.” (http://www.src.isr.umich.edu/)'**’') to have far-reaching effects. This discussion suggests The Conference Board’s consumer confidence index the importance and relevance to marketing managers of (CCI) “reflects consumers’ attitudes toward the economy, economic indicators on a regional level, economic sector local job markets, and their own financial conditions.” level, and company-size level. (http://www.src.isr.umich.edu)'®''' When each of these turns negative in comparison to past months, consumer Company size level - Different sized companies may spending accounting for two-thirds of the GNP declines, be facing different economic environments depending and a recessionary climate result. on their target markets and market power. Larger companies usually have more market power, which often Other statistics often cited to indicate the economic can help them weather the impact of a weak economy. climate in the U.S. include the results of monthly surveys On the other hand, a small business might have a of the Association of Purchasing Managers and the Blue protected market niche which can help it in a Chip Indicators, as well as numerous reports by the recessionary climate while other small businesses, unable economic departments of major banks. to borrow needed cash, may be squeezed out of business. Feder (1991, p. 21) reports that small businesses financial services industry as an example of recessionary are especially affected by the recessionary economic pressure in the service sector. On the other hand, while environment, and Bowers (1991, p. B2) reports how many manufacturing industries have been experiencing small businesses are reducing expenses. However, a recession, the textile industry has been growing Graven (1990, p. C15) reports that mid-size (Oswald 1990, D4) companies, especially those in manufacturing, are facing the hardest times. Conclusion There are certain recession investment strategies, such Regional level - The theory behind regional statistics is as cutting output capacity and outsourcing that may that different regions constitute different economic contribute positively or negatively to business entities which might be experiencing different economic performance during market recovery. This is because climates with different marketing needs. Yet, because their eventual impact depends on the strategic position the different regions may also be interdependent, a of a specific business. These findings suggest that, at recession may “roll” from one region to another, making least in the short term, recession affects the perceived the timing of adjustments to such a climate on the part impact of pricing and promotion decisions of managers of the marketing especially important. Also, it may “roll” in different sectors and in different size companies in a from one industry. Thus, sebastian (1989, p. A2) statistically significant manner, with large service reports that a “rolling recession” is behind regional companies reporting the greyest impact. On the other economic differences in the U.S., while Clark (1990, p. hand, no significant differences were found in the A8) reports the existence of recessionary conditions reported impacts on competitive strategies, marketing in 34 states of the United states. Consistent with this, strategies, consumer credit policies, selection of target Rex (1990, p. 4) reports that while the economy of customers, new product introduction, public relations, Arizona continues to grow, the “entire New England research and development budget, and distribution. As region has slipped into recession.” a result, these findings provide a partial support of this study, especially regarding promotion and pricing Sector Level - The underlying theory behind sector-level decisions. statistics is that different economic sectors may be experiencing different, even opposite, economic climates It is recommended especially to managers of small at the same time. For example, since the 1980s health companies that they begin with such national statistics care services have had continued growth while as change in GNP, LEIs, interest rates, unemployment, manufacturing has experienced two recessions (one in and productivity. International companies will need 1981 -82 and another in 1990-91). Also, service industries country-by-country statistics and perhaps consider in general have been regarded as growth industries for changes in currency exchange rates and world economic many years. Recently, however, Nasar (1991, p. Al) outlook. Industry statistics like market growth, sales and and stout (1990, p. A2) report that the service profit should then be considered, followed by company industries are in recession. Nasar reports: “The United statistics such as market share, revenues, profits, and states service sector, once heralded as a powerful engine interest rates, as well as trends and regional differences for new jobs, is undergoing a broad retrenchment, much in these figures. Based on this, marketing managers can as the manufacturing sector did in the past decade.” develop a set of indicators of the economic environment facing their companies, making it possible to formulate According to Nasar, such a retrenchment characterizes advantageous marketing strategy and action. service companies in retailing, financial services, accounting, real estate, and temporary help. This is Equally important are the implications of the findings consistent with Mandel (1991, pp. 60-61) who of this study to management strategy. Since the perceived differentiates among different service industries, impact of the strategic environment and the resulting reporting growth in some and decline in others, and with management behaviour depend on company size and Pearlstein (1991, Cl)'^°^ who views the recession in the economic sector, a single policy cannot help all companies recover from a recession. Instead, a policy 11 Feder, Barnaby J. (1991), “For Small mix geared to help recovery in different sectors and Concerns, a Tougher Row: Hard Times for different sized companies may be necessary. Small Businesses,” New York Times (18 References February), 21.

1 (a,b,c & d). Bohman, H., Lindfors, M. (1998), 12 Bowers, Brent (1991), “New Business Owners “Management for change: on strategic chang Are Pinching Pennies This Year,” Wall Street duringrecession”. Journal of Business Research, Journal (25 April), B2. Vol. 14 No.l, pp.57-70. 13 Graven, Kathryn (1990), “For Midsize Firms, 2 (a & b). Shama, Avraham (1978), “Management Manufacturers Face the Hardest Times, ” Wall and Consumers in an Era of Stagflation, ” Journal Street Journal (4 December), C l5. o f Marketing (July), 43-52. 14 Sebastian, Pamela (1989), “Rolling Recession Is 3 Hussey, J., Hussey, R. (1994), How Companies Behind Regional Differences, ” Wall Street Journal Succeeded in the Recession, Kingston Smith, (17 February), A2. London. 15 Clark, Lindley H., Jn (1990), “The Nation’s Most 4 Kotler, Philip (1973), “The Major Tasks of Anticipated Recession, ” Wall Street Journal (27 Marketing Management, ” Journal of Marketing, December) A8. 37 (October), 42-49. 16 Rex, Tom (1990), “A rizona Again Among Leaders 5 (a & b). Bonoma, Thomas (1991), “Heed Five in Job Growth, ” Arizona Business 37 (11), 4. Commandments to Weather a Recession, ” Marketing News (18 March), 10. 17 Nasar, Sylvia (1991), “Unexplored Territory: A Recession in Services,” New York Times (3 6 Goerne, Carrie (1991), “Marketers Using More February), Al. Coupons to Fight Recession, ” Marketing News (18 March), 6. 18 Stout, Hibary (1990), “Slowdown Spreads to the Service Sector,” Wall Street Journal (19 7 Guide to Economic Indicators (1990). Armohk, September), A2. NY: M.E. Sharpe 19 Mandel, Michael J. (1991), “There’s a Silver 8 (a„b &c). Survey Research Center. Retrievedfrom Lining in the Service Sector, ” Business Week http://www. src. isr. umich. edu/ n3202 (Industrial/Technology Edition) (4 March), 60-61. 9 Miller, Cindee (1991), “Trade Promotion in 1990 Hits Record Level, ” Marketing News (18 March), 20 Pearlstein, Steven (1991), “Service Industries Face Hard Times Am id\Corrections, ” Washington 6- Post (13 August), Cl. 10 Hayes, C. Thomas (1991), “Why E.D.S. Loves a Recession,” New York Times, (20 October) Sect. 21 Oswald, Johnston (1990), “Economic Worries? 3, 1. “Inc. 500” (December 1990), Inc. Expect \Rolling Recessions, ’ ” Los Angeles Times (4 March), D4. SEASONALITY IN STOCK MARKETS-CAUSES AND TRENDS

* Mohamed Kamara ** Rohit Bahai Abstract Stock markets are subject to fluctuations due to the effect of seasonality. The first section of this article investigates the nature of seasonality in stock returns and acknowledges it as one of the most common and significant anomaly in finance. It discusses the effects of seasonality on the stock market and suggests the way to reduce or eliminate it. Seasonal trend observation till date suggests that the low trading season is considered better for buying stock and the positive trading season is better for selling stock. Though the seasonal stock market trends have been widely researched but still the stock market hypothesis is not yet fully confirmed true artd is a subject of debate in the investing world. The second section of the article also explains the concept of efficient capital market and discusses whether stock markets behave in the way postulated by the theorists. It discusses the theories developed by the researchers in favour of efficient market hypothesis (EHM). Keywords Stock markets, Seasonality, Efficient capital markets. Introduction

umerous studies have been done on the price returns and acknowledging it as one of the most common system and its efficiency of future payoffs. and significant anomaly in finance. Many researches have been done to examine stock market seasonality and its N Some of the strongest evidences challenging possible causes. (Khalid et. al, 2(X)5) the hypothesis of stock market come from ‘anomalies’ which have been discovered from the patterns in the Literature review behaviour of the stock returns. (French, 1980), (Gibbons Most of the researchers have acknowledged the and Hess, 1981). acceptance of stock market seasonality by market participants showing high return in January and possibly Studies in late seventies provided efficient evidence that in mid-summer. The trend of the stock market is to rise the informational efficiency of the stock markets between the last day of December and the end of the consistently generate abnormal returns. However, later first week of January known as ‘January effect’ (Roll, studies identified some possible anomalies in the efficient 1983) market postulate. One major anomaly highlighted was the seasonal related abnormal rates of return. (Sarma, Wachtel (1942) was the first to discover seasonality in 2004).Sarma (2004) suggested that various studies the Dow Jones Industrial average from 1927 to 1942. demonstrated, through ‘parametric and non-parametric’ He noticed frequent bullish (rise in share prices) trends tests on the stock returns data, that turn of the year, from December to January. Pointing to certain factors month, week, and holidays have consistently generated considered he suggested that the cause of higher return abnormal equity returns in both the developed and in January is year-end tax-loss selling. (Khalid et. al, emerging markets unrelated to the risks involved. 2(X)5) also confirmed that many researches said that this is due to many investors choose to sell some of their The study investigates the nature of seasonality in stock *Professor, Leeds Metropolitan University, Leeds. England, U.K. **Student, Leeds Metropolitan University, Leeds, England,U.K.He can be reached at rohithah® ^mail.com stocks right before the end of the year in order to claim Pattel and Wolfson (1982) said that organisations release capital loss for tax purposes resulting to stock prices bad news over the weekend, affecting the prices on dipping at the near to the end of the year, and back up in Mondays. Lakonishok and Maberly (1990) observed that January when investors buy back the stocks they sold individuals sell more stocks on Monday as compared to earlier. (Khalid et. al, 2005)Keim (1983) said that the other days as weekend gives individual investors time approximately 50% of the average magnitude of the size to analyse the information and make investment anomaly, agreed by Banz (1981) and Reinganum (1983), decisions. Additionally, Miller (1988) and Lakonishok and is due to January abnormal returns. The January effect Maberly (1990) also confirmed that stock brokers use to has been studied abroad as well. encourage selling but as they are inactive over the weekend resulting to more selling on Mondays. Whereas, Using data from 17 industrialized countries, Gultekin and on the other hand US markets were opposed the research Gultekin (1983) find a much higher return in January by demonstrating positive trading on Mondays as than in non-January months for all 17 countries.This compared to other weekdays. US market showed a January seasonality is one of the strong observed significant change as compared to the behaviour 2 anomalies/ inconsistencies with market efficiency since decades ago. (Kamara, 1997) / if the markets are efficient. It was also suggested that investors should exclude the predictable abnormal returns After examining the article on Standard and Poor’s(S & in January while making investment portfolios. (Kim, P) and small-cap index, Kamara (1997) suggested that 2006) S & P returns didn’t not show any significant Monday seasonal affect after ‘April 1982’ (when S & P futures However this was question by Chan (1986) who proved contracts began trading). The decline in the Monday that this explanation is not consistent illustrating the end seasonal affect resulted to a positive increase in the ratio of tax year UK is April, and in spite of the January of institutional trading volume on Mondays over the seasonal tax selling pattern stock market had a best week. period. But, on the other hand small-cap Monday Hillier and Marshall (2002) also said that seasonality is seasonal does not decline and was unaffected by the not confined to US markets either and this has been institutional versus individual trading. At last he concluded observed in several other international markets as well. the Friday-Monday seasonal affect saying that on Fridays Many authors tried to obtain evidence for the tax-loss- are significantly negative as compared to the other days selling hypothesis by examining stock returns pattern on whereas, Mondays showed a really positive response on markets in countries with different tax codes and tax- the returns. year-ends, but it was not persistent through time in many markets, providing mixed evidence on the tax-loss-selling The result suggests that the ability to eliminate the hypothesis. seasonal impact depends on transaction and information costs. Reduced transaction cost also improves Further on Brown et al. (1983) concluded that the relation information availability reducing the risk of weekend between the US tax year and the January seasonal is a surprises. Lower transaction and information cost correlation instead of a cause. On the other hand encourage the brokers to respond actively and avoid the Constantinides (1984) argued that tax-loss-selling only Monday seasonal effect. Investors use relevant in December is not an optimal investment strategy. Jones information to analyse the trends of the stock market et al. (1987) provided some useful and efficient evidences returns particularly upward or downward trend during indicating that the January effect in stocks existed before different seasons. This has given rise to the theory of the imposition of income tax.Another seasonal anomaly “seasonal stock market trend.” The trends in the market is the Monday seasonal in equity returns. Equity returns refer to the general upward or downward momentum of on Monday are significantly negative and lower as the market which is advantageous for making optimum compared to other weekdays. (French, 1980), (Gibbons investment decisions. and Hess, 1981). available information”.

Section 1 According to efficient market hypothesis (EMH), stocks Seasonal stock market refers to the seasonal trends should always be traded at their fair value in the stock observed in the stock market historically. Though these market. So it is impossible for the investors to make trends are not definitive, they give the investors an abnormal profits by buying the stock at lower prices and inference about the general direction the market may seUing them at higher prices, the only way to earn profits take based on the historical data. depends on the appetite of risk taken. The core motive of the EMH is to eliminate the expert stock selection Some of the seasonal trends discussed above include and marketing timing effect from the market. This helps statistical observations such as Mondays have low trading firms to make appropriate production and investment historically, January and October statistics have been decisions. If markets are efficient then the asset prices historically positive whereas September and December provide the best estimate of value, and the theory of have been months with low trade. valuation is justified but if markets are not efficient, the market price may deviate from the true value, and the The observations are made in order to support efficient whole process of valuation is directed towards obtaining investment decisions. Seasonal trend observation till date a reasonable estimate of this value. The sufficient suggests that the low trading season is considered better assumptions made by Fama regarding the market for buying stock and the positive trading season is better conditions: (Fama, 1965 and Malkie, 2003). for selling stock. • No transaction costs Though the seasonal stock market trends have been • Free of cost information. widely researched but still the stock market hypothesis • All agree on the implications of current price is not yet fully confirmed true and is a subject of debate information and the future price distribution. in the investing world. After doing wide and detailed (Fama, 1965) research on seasonal market trends there is still a gap to be filled, it is recommended that trading decisions should FAMA (1970) has introduced 3 different levels of not fully rely on the historical seasonal observations but efficiency according to the type of the information which should take some experts advice as well. Lastly, seasonal is reflected in prices. This three-level grading system is stock market hypotheses are still highly contested as all to define efficient market hypothesis. They are: (a) Weak the seasonal affects vanish when something major occurs Form (b) Semi-Strong form (c) Strong form. affecting stock market. (See Appendix 1 for the definitions of the levels). Section 2 The concept of market efficiency is central to finance EHM is based on market models/theories which and is used to describe a market in which relevant contribute in evaluating the efficient prices (See appendix information is gathered in order to assess the prices of 2 for details). Further study will discuss if stock market financial assets. (Dimson and Mussavian, 2000) behaves in the way postulated by the theorists. EMH Market efficiency had been discovered at the beginning was completely accepted by the financial market of the century in the dissertation submitted by Bacheher researchers during seventies and eighties. It provides (1900) where he stated concept of market efficiency as the relevant basis for the financial market. Random walk the market where “past, present and even discounted model was used often in predicting the security prices future events are reflected in market price, but often which fully reflected the available information. Most of show no apparent relation to price changes”. According the price prediction in the seventies and eighties were to Fama (1970) in efficient capital market, security prices based on the past prices (FAMA, 1988). But in the reflect the accurate signals for all the available nineties EMH model testing began to fail in the real stock information i.e. stock market prices “fully reflect all market. (Mills, 1999) The most controversial issue in finance is possibly becoming difficult to find consistencies. Efficient-market whether the financial market is efficient in allocating or hypothesis has more been challenged by economists who using economic resources and information or not. Many stress on “psychological and behavioural elements “ of issues such as volatility, predictability, speculation and stock-price determination, and came to believe that future anomalies related to market efficiency have been raised stock prices are somewhat predictable on the basis of and empirical evidences have been provided supporting past stock price patterns as well as certain “fundamental” or rejecting efficiency in the financial market (Mills, 1999 valuation metrics (Malkiel, 2003 and Keynes, 1936). and Cuthbertson,1996). Moreover, many of these economists were even making According to Buffett (1995), prices of the shares are the far more controversial claim that these predictable usually wrong. When the prices are wrong investors will patterns enable investors to earn excess risk-adjusted commit some errors in spotting the share prices and equity rates of return. Market cannot be perfectly efficient will perform poorly. By the start of the twenty-first otherwise there would be no incentive for professionals century, the concept of the efficient market hypothesis to uncover the information that gets so quickly reflected had become far less universal. Many financial economists in market prices (Grossman and Stiglitz, 1980). and statisticians began to beheve that stock prices are at least partially predictable. Appendix 1 Following are the 3 different levels of efficiency Following are the empirical evidences against the according to the type of the information which is reflected efficient markets theories:- in prices. Weak form efficiency: is the study of the past 1. January effect histograms are of no use and the work done implies that 2. Within the month effects share prices support the random walk (Fama, 1970). 3. Agency effects (See appendix 3 for the details of the above evidences) Semi-strong efficiency: According to this level the share prices are expected to reflect past, present and the future Following questions were also raised against the pubhcly available information i.e. stock, financial state relevance of the hypothesis: or reports and the further issue results prices and then predicting future current prices considering the model of 1. Can the movement in prices be fially attributed to “fair game” and “random walk”. Technical analysis or the announcement of events? drawing graphs are of equity. But it is impossible to 2. Do public announcements affect prices all? analyse the info about the mispriced securities. Stock 3. What could be some of the other factors affecting market can easily be fooled by manipulating company price movements? financial statements and graphs (Fama, 1970). Strong (Philip and Violet, 2002) form efficiency: Security prices reflect complete information whether it is public or internal. Stock market Summers (1986) after analysing aggregate stock, argued can’t be fooled and nobody can make abnormal profits that most of the price movements for individual stocks as public and private both the information is available cannot be traced from public information. He also stated easily. Though, this level can’t exist completely in the that “if any, correlation between the greatest aggregate real stock market as there are many contradictions market movement and public release of important available against it (Fama, 1970). information”.Jensen (1978) found consistency within the data in most of the share markets e.g. New York and Appendix 2 American stock exchange, Australian, English, germen EHM is based on market models which contribute in stock market etc. But later on he mentioned that now evaluating the efficient prices. They are as follows-: we are getting to the point where things seem to be going inconsistent with the hypothesis. As more compUcated • Expected return or fair game models: is based on data and econometric sophistication increases, it is the process of price formation which should be specified in details i.e. it should fiilly reflect. It 1976) supported this fact after considering the works on the assumption where market equilibrium NYSE Stocks for the period 1904-1974. They is being defined in terms of expected returns. And found that the average returns for the month of risk involved is being estimated from the January were 3.48 which were 8 times the returns “equilibrium expected return” (Fama, 1970). in the other months. (Philip S. Russel and Violet M. Torbey, 2002) • Sub martingale model: According to Sub martingale model, current price of the security is equal or less b) The weekend Effect (or Monday Effect): After than the next period’s price as being forecasted analysing the market trend for the period 1953- on the basis of the information available. It follows 1977, (French, 1980) analysed that there is a a set of rules “one security & cash”, which defines tendency for returns to be negative on Mondays the condition that investor should hold the security as compared to the other weekdays. He pointed or sell it (Fama, 1970). out that these negative returns are caused only by the weekend effect and not by a general closed • Random walk model: The theory of random walk market effect. (Philip S. Russel and Violet M. involves two different hypothesis:- (Fama,1970) Torbey, 2002) (Fama, 1965) c) Other Seasonal effects: Also called the Holiday a) Successive price changes are independent: effect, have been well documented over time and It states that there is no correlation between across countries. (Lakonishok and Smidt, 1988) the past price and the successive share price. analysed that US stock returns are usually higher So knowledge of the past prices won’t be at the end of the month. [Ariel, 1987, p.161-174] helpful in analysing the future prices of the also supported them by showing that returns tend securities :- (Fama,1970) (Fama,1965). to be higher on the last day of the month. (Philip S. Russel and Violet M. Torbey, 2002) b) The price changes conform to some probability distribution: price distribution is d) Small Firm Effect: (B anz, 1981) published one of dependent on the risk factor in the common the earliest articles on the ‘small-firm effect’ which stocks. is also termed as ‘size effect’. He analysed that excess returns would have been earned by buying E.g. there are 2 different distributions for the price, but the securities of small sized firms. Supporting this according to the risk involved in it, the probability of very theory, (Reinganum, 1981) said that the risk large changes may vary. So this implies that random walk allocated with the returns of small scale firms is fails to form a useful base in the real market and it can greater than 20 percent (Philip S. Russel and Violet also be said that random walk model is an extended M. Torbey, 2002). version of expected return model which was based on the expected return equilibrium (Fama, 1970) BIBLIOGRAPHY (Fama, 1965). Section 1 Appendix 3 7. Brown, P, Keim, D., Kleidon, A. and Marsh, T. Empirical evidences against the Efficient Market Theory (1983) Stock returns seasonalities and tax-loss are as follows - selling hypothesis - analysis of the arguments and Australian evidence. Journal of Financial a) The January Effect: After considering all the Economics, 12, pp. 105-27. market trends and the journals, it can be concluded that there has been higher returns as compared to 2. Banz, R. W (1981) The relationship between the other following months. (Rozeff and Kinney, return and market value of common stocks. Journal of Financial Economics, 9, pp.3-18. Section 2: 1. Bachelier, L. (1900) trans. Boness, J., Theory Chan, K. C. (1986) Can tax loss selling explains of Speculation, in Cootner, pp. 17-78 the January seasonal in stock returns. Journal of finance,41, pp. 15 - 28. 2. Banz, R. [1981] ‘‘The relationship between return and market value of common stocks, ” Constantinides, G. M. (1984) Optional stock Journal of Financial Economics, 9, pp.3-18. trading with personal taxes: implications for prices and the abnormal January returns. 3. Fama, E.F. (1990) Stock Returns, Expected Journal of Financial Economics, 13, pp.33- Returns, and Real Activity. Journal of Finance, 56 4, pp. 1089 - 1092.

5. French, K.R. (1980) Stock returns and the 4. French, K.R. (1980) Stock returns and the weekend effect. Journal of Financial weekend effect, Journal of Financial Economics, pp. 55 - 69. Economics, 8, pp. 55-69

6. Gibbons, M.R. and Hess, P. (1981) Day of the 5. Grossman, J.S. and Joseph, S.E (1980) On the week effect and asset returns. Journal of Impossibility of Informational Efficient business, pp. 579 -596 Markets. American Economic Review, 70, pp. 393-408 7. Saad, K. Al. and Moosa, I. A. (2005), Seasonality in stock returns evidence from an 6. Jensen, M. (1978) Some Anomalous Evidence emerging market. Applied Financial Economics, Regarding Market Efficiency, pp.95-101 pp. 63-71 7. Keynes, J.M. (1936) The General Theory of 8. Kim, D. (2006). On the Information Uncertainty Employment, Interest, and Money. Cambridge Risk and the January Effect, Journal of University Press. Business, 79, pp.4 8. Malkiel, B.G. (2003) The Efficient Market 9. Lakonishok, J. and Maberly. (1990), The Hypothesis and Its Critics. Princeton Weekend effect: Trading patterns of individual University. and institutional investors. Journal of Finance, pp. 231-243. 9. Mills, T.C. (1999) The econometric modelling of financial time series. Cambridge University 10. Miller, E.M. (1988) Why a weekend effect. Press, Cambridge. Journal of portfolio Management, pp. 43 - 48. 10. Reinganum, R.M. (1981) Misspecification of 11. Pattel, J M., and Wolf son, M. A. (1982). Good the capital asset pricing: Empirical anomalies news, bad news, and the intraday timing of based on earnings yields and market values. corporate disclosures. Accounting Review , Journal of Financial Economics, 12, pp. 89- pp.509 -527. 104.

Priestley R. (1997) Seasonality, stock returns 11. Rozejf, M.S., and W.R. Kinney (1976) Capital and the macro economy, The Economic Journal, market seasonality: The case of stock returns. USA. Journal of Financial Economics,3, pp.379- 402. CAUSES AND CONSEQUENCES OF GLOBAL WARMING

Dr. Urvashi Sharma Abstract “Global warming, green house effect, climate change. Undoubtedly these words sum up the single biggest threat to humanity.”

Global warming refers to an average increase in the Earth’s temperature of the lower atmosphere, which in turn causes changes in climate. Climate change'is any substantial change in Earth’s climate that lasts for an extended period of time. A warmer Earth may lead to changes in rainfall patterns, a rise in sea level, and a wide range of impacts on plants, wildlife, and humans.

“We have not inherited the earth from our ancestors; we have only borrowed it for our children.”

This study report completely focuses on the Global Warming as a whole. Global warming is one of the current and most common topics these days with everyone. Various measures are taken to reduce global warming problem by each and every country and individual as the Earth is for all. Keywords Green House Effect, Deforestation, Temperature, Kyoto Protocol, Glacier Global Warming: Introduction

lobal warming is the worldwide rise of air and in the 20th century. The prevailing scientific opinion on water temperatures as observed for the past climate change is that “most of the warming observed G over the last 50 years is attributable to human activities. 20 years. Global wanning is most Ukely relatedThe increased amounts of carbon dioxide and other to the rise of carbon dioxide levels in the earth’s greenhouse gases are the primary causes of the human atmosphere as caused by the burning of coal and oil. induced component of warming. They are released by Global warming is thought to be the initiator of a the burning of fossil fuels, land clearing and agriculture, worldwide climate change that has started a couple of etc. and lead to an increase in the greenhouse effect. years ago and thought to continue for the next decades. The exact effects of global warming can not be predicted. The Earth’s climate has changed many times during the However, the resuUs of global warming can be described planet’s history, with events ranging from ice ages to in scenarios that will depend on many uncertain aspects. long periods of warmth. Historically, natural factors such One of the most spoken of effects of global warming is as volcanic eruptions, changes in the Earth’s orbit, and a worldwide rise of sea levels. Depending on the scenario, the amount of energy released from sea levels will rise from 2 to no less than 200 feet for the the Sun have affected the Earth’s climate. Beginning next 100 years. Global warming is the observed increase late in the 18th century, human activities associated with in the average temperature of the Earth’s atmosphere the Industrial Revolution have also changed the and oceans in recent decades. The Earth’s average near­ composition of the atmosphere and therefore likely are surface atmospheric temperature rose 0.6 ± 0.2 “Celsius Reader in Management, Chanderprabhu Jain College o f Higher Studies & School o f Law, Affiliated to GGSIP University, Delhi. She can be reached at urvashil 3@gmail. com influencing the Earth’s climate. ranging wildly from 225°F during the day to negative 243°F at night. Obviously, this would not be an OBJECTIVES QF THE STUDY environment conducive for life. But due to greenhouse • To know about the Concept and phenomenon of gases, the earth’s average temperature is a hospitable Global Wanning. 60°F.Estimating how much of these gases will be emitted • The Causes or reasons underlying Global warming in the future is difficult, as it depends on demographic, • To study the Effects of Global Warming economic, technological, policy and institutional Effects on nature developments. Based on differing projections of these Effects on human life principal factors, several scenarios have been • To know about the major Consequences of Global developed.With excessive greenhouse gas buildup, the Warming in terms of various sectors, climatic earth’s atmosphere warms to unnatural temperatures conditions, human health, etc. which causes, among other things, sea level to rise also • To know about the Measures taken as well as to causes sea surface temperatures to raise, precipitation be taken to solve the problem. patterns to change, etc. Thus Greenhouse gases make the Earth warmer by trapping energy inside the Global Wanning and The Greenhouse Effect atmosphere. What Is Green House Effect? The earth’s climate and weather is driven by energy from Causes of Global Warming the. When sunlight reaches Earth’s surface some is 1. Green House Gases absorbed and warms the earth and most of the rest is 1.1. Carbon dioxide variation. radiated back to the atmosphere at a longer wavelength Carbon dioxide emission during the last 400,000 than the sun light. Some of these longer wavelengths are years and is rapid rise since the Industrial absorbed by greenhouse gases in the atmosphere before Revolution because of human activity. This they are lost to space. The absorption of this long wave attribution is clearest for the most recent 50 years, radiant energy warms the atmosphere. These greenhouse for which the most detailed data areavailable. gases act like a mirror and reflect back to the Earth Carbon Dioxide Variations some of the heat energy which would otherwise be lost 400 to space. The reflecting back of heat energy by the > The Industrial Revolution Has atmosphere is called the “greenhouse effect”. Without Caused A Dramatic Rise in COj Q.I 35O such gases contributing to this natural greenhouse effect, oC 2600 1800 1600 1400 1200 1000 life as we know it would not exist. g 300 Year (AD) c iM Ice Age ‘‘f P Cycles , The major natural greenhouse gases which cause green 250 house effect are: water vapor (not including clouds) 200 carbon dioxide (CO^) / L,/ 100 200 300 400 methane ozone Thousands of Years Ago nitrous oxide chlorofluorocarbons The concentration of carbon dioxide in the atmosphere, hydro fluorocarbons currently 380 ppm, might be naively taken to be too low sulphur hexafluoride to have much effect. But the importance of carbon dioxide arises from the fact that a little of the long-term It is not possible to state that a certain gas causes a carbon dioxide injected into the atmosphere causes a certain percentage of the greenhouse effect, because little warming, if more of it is injected than what will be the influences of the various gases are not addictive. the result?

Green house is a natural phenomenon without this the 1.2. Methane Temperatures would be similar to our airless moon. While carbon dioxide is the principal greenhouse gas, methane is second most important. Methane Solar variations are changes in the amount of is more than 20 times as effective as C02 at radiant energy emitted by our Sun. There are trapping heat in the atmosphere. periodic components, the principal one being Most of the world’s rice is grown on flooded fields. described as the 11 year Solar Cycle or Sunspot When fields are flooded, anaerobic conditions Cycle, and Aperiodic fluctuations. Small variations develop and the organic matter in the soil have been measured from satellites during recent decomposes, releasing CH4 to the atmosphere, decades. primarily through the rice plants. 4. Population Growth 1.3. Nitrous oxide The intellectual powers that we enjoy has enabled Another greenhouse gas is Nitrous oxide (N20), us to make effective use of technology and thereby a colour less, non-flammable gas with a sweetish changed the environment. Technology is partly odour, commonly known as “laughing gas”, and responsible for explosive population growth and sometimes used as an anesthetic. Nitrous oxide is responsible for the resulting damage to Earth’s broken down in the atmosphere by chemical resources. The industrial revolution caused a rapid reactions that involve sunlight. increase in the Population growth, as oil and gas fuels were exploited for our use. There is a clear 2. Deforestation link between the problems of global warming and After carbon emissions caused by humans, overpopulation, as increases in C02 levels follows deforestation is the second principle cause of growth in population. atmospheric carbon dioxide. Deforestation is the Presently, we have too many people on Earth, who conversion of forested areas to non-forest land are using technologies that are destructive for the use such as arable land, pasture, urban use, logged Earth. A theory about the relationship between area or wasteland. Deforestation results from population growth and the environment suggests removal of trees without sufficient reforestation. that as populations grow, they will strip their We are losing millions of acres of rainforests each resources leading to famine, hunger and year. Thus Deforestation broadly include not only environmental degradation. conversion to non-forest, but also degradation that reduces forest quality - the density and structure Consequences of Global Warming of the trees, the ecological services supplied, the 1. Economic biomass of plants and animals, the species diversity Many estimates of aggregate net economic costs and the genetic diversity. By Narrow definition of of damages from climate change across the globe, deforestation is the removal of forest cover to an the social cost of carbon, expressed in terms of extent that allows for alternative land use. future net benefits and costs that are discounted to the present. The climate change could affect 3. Solar Variation growth which could be cut by one-fifth unless drastic action is taken. The one percent of global GDP is required to be invested in order to mitigate the effects of climate change, and that failure to do so could risk a recession worth up to twenty percent of global GDP. The climate change threatens to be the greatest and widest-ranging market failure ever seen.

1.1. Decline of Agriculture For some time it was hoped that a positive effect of global warming would be increased agricultural 1960 1970 1980 1990 2000 yields, because of the role of carbon dioxide in the world’s largest and most prosperous cities are photosynthesis, especially in preventing on the coast, and the cost of building better coastal photorespiration, which is responsible for significant defenses (due to the rising sea level) is likely to be destruction of several crops. In Iceland, rising considerable. temperatures have made possible the widespread sowing of barley. 1.5. Migration Some Pacific Ocean island nations are concerned While local benefits may be felt in some regions, about the possibility of an eventual evacuation, as recent evidence is that global yields will be flood defense may become economically unviable negatively affected. Rising atmospheric for them. In the 1990s a variety of estimates placed temperatures, longer droughts and side-effects of the number of environmental refugees at around both, such as higher levels of ground-level ozone 25 million. (Environmental refugees are not gas, are likely to bring about a substantial reduction included in the official definition of refugees) The in crop yields in the coming decades, large-scale Intergovernmental Panel on Climate Change experiments have shown. Climate change poses (IPCC), which advises the world’s governments threat to food supply. under the auspices of the UN, estimated that 150 miUion environmental refugees will exist in the year 1.2. Insurance 2050, due mainly to the effects of coastal flooding, An industry very directly affected by the risks is shoreline erosion and agricultural disruption. the insurance industry; the number of major natural disasters has trebled since the 1960s, and insured 1.6. Northwest Passage losses increased fifteen-fold in real terms. Ice thicknesses changes. Melting Arctic ice may According to one study, 35-40% of the worst open the Northwest Passage in summer, which catastrophes have been climate change related. would cut 5,000 nautical miles (9,000 km) from shipping routes between Europe and Asia. This According to a limiting carbon emissions could would be of particular relevance for supertankers avoid 80% of the projected additional annual cost which are too big to fit through the Panama Canal of tropical cyclones by the 2080s. It should be and currently have to go around the tip of South noted that weather risks for households and America. According to the Canadian Ice Service, property were already increasing by 2-4 % per the amount of ice in Canada’s eastern Arctic year due to changing weather, and that claims for Archipelago decreased by 15% between 1969 and storm and flood damages increased, compared to 2004. the previous five years. While the reduction of summer ice in the Arctic 1.3. Transport may be a boon to shipping, this same phenomenon Roads, airport runways, railway Unes and pipelines threatens the Arctic ecosystem, most notably polar including oil pipelines, sewers, water mains etc, bears which depend on ice floes. Subsistence may require increased maintenance and renewal hunters will find their livelihoods and cultures as they become subject to greater temperature increasingly threatened as the ecosystem changes variation. Regions already adversely affected due to global warming. include areas of permafrost, which are subject to high levels of subsidence, resulting in buckling 1.7. Development roads, sunken foundations, and severely cracked The combined effects of global warming may runways. impact particularly harshly on people and countries without the resources to mitigate those effects. 1.4. Flood Defense This may slow economic development and poverty For historical reasons to do with trade, many of reduction, and make it harder to achieve the Millennium Development Goals. In October 2004 the Working Group on Climate Change and 2.2. Mountains Development, a coalition of development and Mountains cover approximately 25 percent of environment NGOs, issued a report Up in Smoke earth’s surface and provide a home to more than on the effects of climate change on development one-tenth of global human population. Changes in predicted increased hunger and disease due to global climate poses a number of potential risks to decreased rainfall and severe weather events. mountain habitats. Researchers expect that over These are likely to have severe impacts on time, climate change will affect mountain and development for those affected. lowland ecosystems, the frequency and intensity of forest fires, the diversity of wildlife, and the Solar Cyde Variations distribution of water. Changes in climate will also affect the depth of the mountains snow packs and glaciers.

3. Health 3.1. Direct Effects of Temperature Rise The most direct effect of climate change would Irradianoe (isi >/annual) S©i#r F!»fe Inehsx Surv&pol OtMNWvatsofas 10,7 R »sj» Fhnt be the impacts of hotter temperatures themselves. 1«W l«(0 «M» 1««0 l«W iW» 200» Extreme high temperatures increase the number 2. Environmental of people who die on a given day for many reasons: Secondary evidence of global warming - - reduced people with heart problems are vulnerable because snow cover, rising sea levels, weather changes - - one’s cardiovascular system must work harder to provides examples of consequences of global keep the body cool during hot weather, heat warming that may influence not only human exhaustion, and some respiratory problems activities but also ecosystems. Few of the terrestrial increase. Higher air temperature also increase the eco-regions on Earth could expect to be unaffected. concentration of ozone at ground level and In the lower atmosphere ozone is a harmful pollutant. It Increasing carbon dioxide may increase damages lung tissues and causes problems for ecosystems’ productivity to a point but people with asthmas other lung diseases, higher Ecosystems’ unpredictable interactions with other temperatures in summer increase heat-related aspects of climate change makes the possible deaths. environmental impact of this is unclear, though, biodiversity can still decrease even though a 3.2. Spread of Disease relatively small number of species are flourishing. Global warming is expected to extend the favorable zones for vectors conveying infectious disease 2.1. Water Scarcity such as malaria and west Nile virus. In poorer Contaminated groundwater for drinking and countries, this may simply lead to higher incidence agriculture in coastal zones is available. Increased of such diseases. In richer countries, where such evaporation will reduce the effectiveness of diseases have been eliminated or kept in check by reservoirs. Increased extreme weather means vaccination, draining swamps and using pesticides, more water falls on hardened ground unable to the consequences may be felt more in economic absorb it, leading to flash floods instead of a than health terms, if greater spending on replenishment of soil moisture or groundwater preventative measures is required. levels. In some areas, shrinking glaciers threaten the water supply. Higher temperatures will also 4. Impacts of Glacier Retreat increase the demand for water for the purposes The continued retreat of glaciers will have a number of cooling and hydration. of different impacts. In areas that are heavily dependent on water runoff from glaciers that melt of light as normal bulbs, but use about a quarter of during the warmer summer months, a continuation the electricity and last ten times as long. Each of the current retreat will eventually deplete the switch you make helps clean the air today, curb glacial ice and substantially reduce or eliminate global warming, and save you money on your runoff; a reduction in runoff will affect the ability electricity bill. to irrigate crops and will reduce summer stream flows necessary to keep dams and reservoirs Saving Energy at Home is good for the replenished. This situation is particularly acute for Environment and for Wallet irrigation in places where numerous artificial lakes Start saving energy at home by not wasting the are filled almost exclusively by glacial melt. Central electricity in day to day life. Switch of the Asian countries have also been historically appliances when not in use etc. dependent on the seasonal glacier melt water for irrigation and drinking supplies. Become a Smart Water Consumer. Install low flow shower heads and faucets and Ten things you can do to curb global warming you’ll use half the water without decreasing The choices we make and the products we buy test our performance. Then turn your hot water heater commitment to maintain a healthy planet. When we bum down to 120°F and see hot-water costs go down fossil fuels such as oil, coal, and natural gas to run our by as much as 50 percent. cars and light our homes, we pump carbon dioxide (C02) into the air. Choosing modem technology can reduce our Buy Energy Efficient Electronics and use of fossil fuels and help protect the planet. These ten Appliances. steps will help curb global warming, save you money, Replacing an old refrigerator or an air conditioner and create a safer envirormient for the future. with an energy- efficient model will save you money on your electricity bOl and cut global warming • Drive Smart pollution. Look for the most energy-efficient A well-tuned car with properly inflated tires bums products less gasoline cutting pollution and saving you money at the pump. If you have two cars, drive the one Plant a Tree, Protect a Forest. with better gas mileage whenever possible. Better Protecting forests is a big step on the road to yet, skip the drive and take public transit, walk, or curbing global warming. Trees “breathe in” carbon bicycle when you can. dioxide and release oxygen. And you can take action in your own backyard planting shade trees • Urge to Raise Fuel Economy Standards around your house will absorb C02, and slash your Modem technology can make our cars and tmcks summer air-conditioning bills. go farther on a gallon of gas. It’s the biggest single step we can take to curb global warming. Reduce! Reuse! Recycle! The less gasoline we bum, the less C02 we put Producing new paper, glass, and metal products into the air. from recycled materials saves 70 to 90 percent of the energy and pollution, including C02 that would • Support Clean, Renewable Energy. result if the product came from virgin materials. Renewable energy solutions, such as wind and Recycling a stack of newspapers only 4 feet high solar power, can reduce our reliance on coal- will save a good-sized tree. buming power plants. Buy recycled products • Replace Incandescent Light Bulbs with Mount a Local Campaign Against Global Warming. Compact Fluorescent Bulbs. Educate your community about how it can cut Compact fluorescents produce the same amount global warming problem. Support measures at the national, state, and local level that. Air-drying, if you have the time, can also reduce energy use. Tips on Cutting Energy Use • In your clothes washer, set the appropriate water When replacing home appliances, use energy level for the size of the load; wash in cold water efficient models. For example, replacing an old when practical, and always rinse in cold. refrigerator using 320 watts with a new one using • Don’t forget to flick the switch when you leave a 85 watts could make a big difference. room. Choose a company that offers for homes electricity • Turn out or dim the lights in unused conference generated by renewable energy sources. rooms, and when you step out for lunch. Work by Help promote community carpooling. daylight when possible. A typical commercial Place an insulating cover around water heater. building uses more energy for lighting than anything Insulate walls and ceilings, and lower heating bills. else. When replacing windows, choose those that are the best energy saving models, such as double pane Conclusion windows. Global warming, green house effect, climate A car needs only about 2 minutes to warm up. change. Undoubtedly these words are sum up the Taking more time only wastes fuel and contributes single biggest threat to humanity. to global warming. Take public transit whenever possible. This won’t be the first time that human prapulations have When shopping for groceries, bring your own cloth faced global warming, but their new responses will be bag to the market. Not using paper grocery bags quite different to anything that has occurred before. help saves trees that absorb carbon dioxide. Unplug seldom-used appliances, like an extra • Fossil fuel based industrialization & making refrigerator in the basement or garage that contains degenerative life style based on over exploitation just a few items. of resources like coal, oil & gases which take Unplug your chargers when you’re not charging. generations to regenerate has resulted in an Every house is full of litde plastic power supplies unprecedented rise in the concentration of green to charge cell phones, PDA’s, digital cameras, house gases like carbon dioxide, methane, cordless tools and other personal gadgets. Keep chloroform carbons, ozone and water vapour. them unplugged until you need them. • Global Warming is the most common threat facing Enable the “sleep mode” feature on your computer, by the world today. With increasing development allowing it to use less power during periods of in world the phenomenon of global warming is also inactivity. In Windows, the power management increasing. settings are found on your control panel. • Records show that the last 12 years were among Configure your computer to “hibernate” warmest on record worldwide. automatically when it is inactive. The “hibernate • Over last few decades scientists intensified their mode” turns the computer off in a way that doesn’t study of the human effects on climate and the require you to reload everything when you switch effects of climate change on human. it back on. Allowing your computer to hibernate • The problem of global warming is due to the saves energy and is more time-efficient than development in developed countries. Thus efforts shutting down and restarting your computer from should be made by them to curb this problem rather scratch. than penalizing and blaming developing countries Don’t preheat or “peek” inside the oven more than for the problem. necessary. • The effects of global warming includes overall Wash only full loads in your dishwasher, using short slowing down of economy, the hit on primary cycles for all but the dirtiest dishes. This saves product market (agriculture) and environmental water and the energy used to pump and heat it. upheaval may have a severe effect on raw material sources with various changes in eco systems and Countries that ratify the Kyoto Protocol must take atmospheric threats. efforts to reduce their emissions of green house gases or engage in emission trading if they are not Alarm bells are ringing and the world must wake able to bring down their emission to acceptable up to the threat posed by global wanning. levels. Suggestions It has been suggested that countries ought to adopt ^ Shifting to renewable sources of energy rather than strategies to mitigate Global Warming. These strategies carbon fuels and thus reduces emission of carbon can be: dioxide and other gases. * Developing new guidelines and strategies for floods prone areas which are affected by global wanning. Developed countries should take efforts to reduce The strategies like use of fossil fuels in developing countries by • Introducing insurance for those who Uve in transferring their technologies and funds towards exposed places. developing countries for the same problem. • Building higher dikes • Exploring ways for farmer to adapt to new Energy conservation by each an every country and agricultural landscape. by each an every individual.

Various policies and to be set by the countries itself Bibliography to curb global warming. Books ^ Creating awareness among common people about • Environmental engineering & the problem of global warming and also telling them M anagement the ways to reduce global wanning. This can be o Suresh K. dhameja (2004) done by: o N.K.Uberoi • Introducing global warming as a subject in schools and colleges so that our younger Websites generation understands their responsibility • www.eoo^le.com towards reducing this problem. • WH'W. Wikipedia, com • Creating hype in media about the Global www.msn.com warming so that more and more people • www.ecobrid^e.com came to know about this. And thus making simple efforts to reduce or even not * TIMES OF INDIA increasing the problem. Articles on GLOBAL WARMING MICRO FINANCE AND WOMEN EMPOWERMENT: A CRITICAL OVERVIEW

Dr. D. Raja Jebasingh Abstract Microfinance, or micro-credit, has been described as the world’s most powerful weapon against poverty. It provides people in the developing world with small loans that give them the chance to build busi-nesses and therefore generate income. Currently, two billion people worldwide have no access to basic finan-cial services, which includes bank accounts, insurance and pension schemes as well as loans. Microfinance is a way to promote enterprise among people who would otherwise be dependent on aid. Keywords Microfinance, loans, financial services money lending Institutions, Empowerment. Introduction

ccording to Mary Coyle, Director of the Meaning of Empowerment International Institute at St. Francis Xavier This difference in facts and expectations underlines the University, Nova Scotia, Canada, who has lack of clarity surrounding the term ‘empowerment’. As studiedA the history of micro-credit, these savings clubs one study comments; can be traced to all parts of the world: “They have operated for centuries probably since the intro-duction Empowerment is the democracy of the 1990s. No one is of currency”. In most Western or developed countries, sure what the term means but we all know that it is it is relatively easy to obtain credit from large banks something good and worthy, and so consequently we nod or money-lending institutions. In the developing world, sagely when the term is presented in managerial and however, where many people lack steady employment, academic discourses. (Davies and Mills 1999:170). a credit history or collateral, there is often no way for legitimate small businesses to obtain a loan. In many The verb ‘empower’ has two major usages. First, it ways, microfinance has changed all this. Generally refers to investing someone, legally or officially, with defined as small lending to the rural poor in developing power or authority; second, it signifies imparting or countries, microfinance has made great strides in the bestowing power on someone to a particular end or latter half of the 20''' century. purpose. The noun ‘empowerment’ means either the action of empowering or the state of being empowered. Although the award of the 2006 Nobel Peace Prize to Thus ‘empowerment’ denotes authorizing someone Dr. Muhammad Yunus, one of the founders of modern already holding an office to exercise some specific power, microfinance, has helped to push the in-dustry even or offering someone certain means to achieve a given further into the spotlight, the idea of microfinance has end. Empowerment is formal in the first case and informal existed for hundreds of years in many regions and in in the second. However, in both usages, there is one many forms. common denominator-a higher authority exists that empowers.

Assistant Professor, Research & PG Dept of Commerce, St. Joseph’s College of Commerce (Autonomous. He can be reached at [email protected]. Women belonging to poor families are deprived of their Source: Policy and Regulatory Framework for legitimate economic and social rights, and the NGOs Microfinance (NABARD 1999) aspire to help them retrieve these rights by empowering them through various microfinance programme. Microfinance and Women’s Empowerment Participation in microfinance worldwide is Legal Outline of MFIs in India predomi-nantly by women. This fact underscores its potential to promote gender equity and empower women. Microfinance institutions aim to provide credit to the poor Many microfinance institutions consider women to be who have no access to commercial banks. In general, a better credit risk than men and loans made to women these institutions receive financial support from donors, have been found to have wider household-level NGOs or commercial banks, who lend to microfinance ben-efits than those given to men. Despite concerns institutions, often against below market interest rates. over the potential for a double burden being placed on The microfinance institutions in turn, lend this money to women as both caregivers and new entrepreneurs, domestic small companies and poor agents. evidence supports a positive association between micro­ finance and the enhanced health and social status of According to the accepted definition, microfinance women. institutions (MFIs) are those which provide thrift, credit and other financial services and products of very small Loan repayment amounts, mainly to the poor in rural, semi-urban and urban As well as a lack of knowledge about how to use the areas for enabling them to raise their income level and credit wisely, non-repayment can also be attributed to improve living standards. In addition to loans, the high level of interest charged and to unfair microfinance institutions also provide a wider range of repayment periods. The repayment period has a direct financial services, such as savings funds and insurance bearing on the kind of intervention that can be taken services. Moreover, they also play an important role in on, but this is rarely taken into account. Interest rates, apart training potential borrowers how to run a firm, and deal from being high, also present a challenge in that most with health provision women who access credit through these schemes are illiterate, and therefore have no idea how they are Table No 1: calculated. In this regard, women should be given the Legal Outline of MFIs in India opportunity to learn how to read and write. Reading and writing skills would also enable recipients to keep Type of MFIs Legal Acts under which Number better records, reducing the possibility of being cheated Registered and allowing them to monitor their income and expenditure and determine their profits. 1. Not for profit MFIs Societies Registration Act, 1860 Access to Micro-Credit (a) NGO-MFIs or Similar Provincial Acts Indian Lack of access to credit is often seen as a major prob-lem Trust Act, 1882 for poor women, especially in the rural areas. The problem b) Non-Profit Companies Section 25 of the is not only lack of availability, but also that most Companies, Act, 1956 women do not have enough infor-mation about where, how and when to access credit facilities. They have all 2. Mutual benefit MFIsMutually Aided sorts of beliefs about the opera-tions of the service Mutually Aided Cooperative Socieries Acts providers, some generated from their own experiences Cooperative Societies (MACS) and Enacted By and others from gossip. This often leads them to believe State Governments, similarly set up institutions that they are better off without credit, especially if it might lead to the loss of the little property they have. 3. For Profit MFIs Companies Act, 1956 Non- The fear of being a debtor is especially pronounced in Banking Financial Companies Reserve Bank of the rural areas. Therefore, providing women with India Act, 1934 (NBFCs) relevant informa-tion about where* and how micro­ credit operates is of paramount importance when Women have been able to achieve the following addressing the issue of access. Micro-credit is often through interference by various Officials like NGOs, seen as a standalone venture with no integration into Government etc... education projects. This means that even when women do gain access, they are unable to use the scheme to To attain more ides and knowledge about their advantage. utilization and availability of investment opportunities Control over the credit To identify about mar-keting options - micro­ The level of empowerment generated during the credit is not an end in itself pro-cess is central to determining whether women Equipping women with reading, writing, have control over their credit. Stories of men taking numer-acy and record keeping skills, which they the money that woman get ftom either a group or micro­ continue to practice finance institutions are very common. This presents a Improved access to and control over credit by challenge that must be addressed. Microfinance women institutions have increased women’s access to credit Provision of opportunities for acquisition of but in a number of cases have not followed up to assess pro-ductive assets, such as land, by women; the extent to which these women have main-tained Experiences can be used, in other develop-ment control over the resources received. This sce-nario interventions can further burden women because, as the assumed Facilitate women through the various discussion beneficiaries, they remain responsible for repayment. processes to critical mass which help them advocate for their rights. Loan utilization Women need support to ensure that the loan improves their Challenges - Accessing Micro-Credit - Interventions economic situation rather than worsening it. The narrow involvement of men in their activities Supplementary technical and other related training leads them to either take over the process or should be provided. Such training could examine some under- extract it potential projects to be undertaken by recipients of credit. The height of funding extended to the groups is very limited Achievements of Microfinance Low levels of literacy make it difficult for the Microfinance programmes not only give women and women to keep records; men access to savings and credit, but also reach Some women have turn out to be overburdened mil-lions of people worldwide by bringing them as a re-sult of their contact with micro-credit together regularly in organized groups. These There are cases reported of men neglecting their programmes can contribute to gender equality and responsibilities as a result of their women women’s empower-ment. Microfinance programmes acquir-ing credit increase the capac-ity of women to earn an income, There is the possibility of the process being hijacked initiating a “virtuous spiral” of economic empowerment, by other people who have been attracted by the increased well-being for women and their families, credit, like the middle poor and wider social and political empowerment. Microfinance services and groups involving men also Innovations in Microfinance have the potential to question and significantly change The following are the innovative projects in microfinance men’s attitudes and behavior as an essen-tial which have been supported by NABARD. Major among component of achieving gender equality. Gender them are: equality and women’s empowerment in turn are • SHG-Post Office Programme inte-gral components of pro-poor development and the • Social Security System for SHG Members strengthiening of civil society. • Financial Assistance for Developing Software • Processor Cards and Branch Automation 3. Khandakar Qudrat-I Elahi Source: • Alternative Mechanisms for Bookkeeping and Microfinance, Empowerment, and Sudra Accounting in SHGs Women in India • Grain Banks and SHGs 4. Development in Practice, Vol. 13, No. 5 (Nov., Suggestions 2003), pp. 570-572 • Institute family loans, where a husband and wife are directly responsible and accountable for the 5. National Bank for Agriculture and Rural loan issued to them Development, Mumbai. - (1999) 'Task Force • Incorporate technical and other related training on Supportive Policy and Regulatory to ensure effective credit exploitation Framework for Microfmance ’, National Bank • Permit for flexibility; for instance, repayment for Agriculture and Rural Development, in-tervals to the investment opportunities Mumbai. available in that community or seasonal variations 6. Naila Kabeer - Is Microfinance a ‘Magic • Ensure timely issue of credit depending on what Bullet’for Women’s Empowerment? Analysis the beneficiaries want to use the credit for. of Findings from South Asia, Economic and • Loans should have a reasonable grace period to Political Weekly, October, 29, 2005 enable them to repay the loan 7. Rajaram Dasgupta Microfinance in India Conclusion Empirical Evidence, Alternative Models and Microfmance has enormous potential in the country. For Policy Imperatives Economic and Political the development of the sector the focus should be on Weekly March 19, 2005 pp- 1229 -1236 developing a diverse microfinance sector where different types of organ-ization-NGOs, microfinance 8. Rao, K Dinker (2004): Swaranjayanti Gram institutions and the formal banking sector-all have Swarozgar Yojana, Working Paper, NIBM, gender policies adapted to the needs of their particular Pune. target groups and their institutional responsibility and competence. These types of organizations must work 9. Working Group on Development o f Competitive collaboratively as part of an inclusive financial sector Micro-Credit Market, Working Paper, in order to make significant contributions to gender Development Policy Division-Eleventh Five equality and pro-poor development. These initiatives Year Plan. Government of India Planning need to be nurtured and strengthened. Also, specific steps Commission, New Delhi. towards Investment opportunities and mapping out mar-keting strategies have to be taken to improve the excellence of Microfmance.

Bibliography

1. Elisabeth Rhyne (1994): The New World of Microfinance, Intermediate Technology Publications, London.

2. Improving Access of Rural Poor to Banking: Role of SHGs’, Reserve Bank of India, Bombay. 'All India Debt and Investment Survey ’, Reserve Bank of India, Mumbai. CONSTRAINTS THAT ENCOUNTER STRATEGIC SOURCING: A QUALITATIVE ASSESSMENT

*Prof. Ramagopal **Prof. Lalit Prasad

Abstract Competitiveness is also about cost leadership in all purchases. Purchasing is traditionally considered as spending department. To remain competitive purchase also should contribute to the profitability of an organization. Organization must complete with anyone, anywhere, anytime and to this effect it must adopt various game plans (strategies) to win over the others and remain competitive. Strategic sourcing is one such game plan which links purchase to corporate objectives.

Creating world class supply base and worldwide sourcing, evaluation of sources/suppliers is some of the components of strategic sourcing. Longtime fitness for survival is the basis of strategic sourcing. Supplier management and supply chain and demand chain management are some of the cost management initiatives. This paper will examine the supplier base rationalization, in sourcing/out sourcing, direct online supply system, global sourcing, establishing relationship with suppliers, focus on sourcing sub-assemblies and system instead of loose part (Components) and supplier evaluation process. Keywords Strategic sourcing, Supply chain management, global sourcing. Introduction

1 or years, sourcing has been just another word tocost effective business function, strategic sourcing has procurement. In the beginning most organizations the other side of the coin also. F manufactured the goods completely in house. The focus was more on reducing only manufacturing costs. Strategy The trend is now shifted towards the total cost The games that organizations play to remain in the market management due to the expectations of the customers and the ideas that works to win over the rivals and build that the prices to remain flat or drop and the investors a sustainable competitive advantage. Strategies are built expect Eamipgs/share to increase while prices remain on the foundation of the organizations Vision. At each flat. and every activity of the key business processes from the original supplier to end user, organizations have to Pursuing Strategic sourcing means that the organization play their games to improve the business performance, is looking to improve its buying process. It is a process analyze the cost component-and find ways to reduce to identify which function of the organization needed to that extra cost. be owned and protected, which can be best performed by what kind of partners and which could be turned into Sourcing new business opportunities. It is analyzing where money It is a process aiming to get the maximum on cost, is being spent and with whom. Strategic sourcing is in a technology, process and quality of product & service. It big way an investment. Besides the nature Of its high is no longer an instant cost gratification. It is a strategic

*Prof. Ramagopal, Asstt.Professor, Dr. D. Y. Patil Institute ofMgt Studies, Pune. He can be reached at ir **Prof. Lalit Prasad, Lecturer, Dr. D. Y. Patil Institute ofMgt Studies, Pune. He can be reached at onlylalitprasad® gmail.com component. Sourcing is used as synonym for outsourcing. • Information technology Outsourcing has grown so sophisticated that even • Worldwide sourcing/Global sourcing engineering, R&D and marketing functions are also • Logistic challenges moving outside of the organization. Strategic Sourcing Evaluation Strategic sourcing Supplier evaluation has become a major strategic decision Strategic sourcing has particular importance with for OEMs (Original Equipment Manufacturers) as firms manufacturing firms. First, these firms use a greater are increasingly getting into outsourcing. The main portion of their revenue on purchasing than any others. objective of any supplier evaluation is to reduce risks Sometimes as much as 75% of company budgets are while improve the overall value of business. It also devoted to purchasing raw materials and other goods/ provides a base line for identify, monitor and measure services required creating their products. Another reason supplier performance initiatives. is that with most manufacturers there are some goods that manufacturers cannot go without for any period of Vendor Evaluation examples time. Otherwise, the production lines will have to be shut down. These are called bottleneck items since if a Application Possible Possible company is unable to obtain them, there will be a costly questionnaire criteria bottleneck in the manufacturing process. These are items that are usually only provided by a Confirmation Evaluation of Delivery on time? relatively small number of suppliers, so the costs can be goods Condition of driven higher by the laws of supply and demand. Plus, packaging? shortages of the product can cause delays and problems widi the company’s production cycle. Because of these Confirmation Evaluation of Was the service two reasons, manufacturers can benefit from strategic services performed in sourcing. One benefit is that by having a stable a timely fashion? relationship with key suppliers, the business can ensure that they have a steady supply of both bottleneck items Quality of service and other necessary goods. Additionally, by negotiating performed? with the supplier and finalizing a purchasing arrangement, the company can secure a lower price on those items Invoice Evaluation of Invoice quantity = because the vendor is assured of a buyer for their invoice confirmed products. quantity? Was the invoice Character Traditional Strategic clearly presented? sourcing sourcing Number of Numerous Few Vendor List Evaluation of ReliabiUty of vendor? supphers vendor Price transparency Risk Individual Shared of vendor? Motive Cost Strategic Approach With individual supplier Network Buyer- supplier relationship Relationship Contract Trust The ultimate in buyer-supplier relationships is the supply Playing field National Global alliance. In the past the majority of business transactions were done at arm’s length. In place of this, companies Elements are now embracing each other and working together, Supplier architecture/supplier base reduction almost as one entity, to a mutually beneficial goal. The Supplier life cycle management key to this kind of relationship working is institutional Supplier relationship/partnership trust. The communication between the two sides is completely open and both parties’ best interests are looked ^ Strategic sourcing is often a problem filled process. after. The level of trust is so high that the suppliers are During bad economic times suppliers usually behave willing to make investments in equipment and technology desperately and will do anything to earn business. that are specific to their customers need. However in good times they are not willing to participate in the sourcing process. The primary requirement in strategic sourcing is that the buyer and the seller should

d u a lly Types of Customers understand each other commitments and expectations. The contract should accurately address and document ProdudAtlitbules Product the critical issues and business realities. In the absence lifnuiMnniA------Vokinie/Scale Target Markets of such disciplined documents it becomes a source of contention between the parties.Negotiations become Design/Packaging Enviraimiit more meaningful if the demand estimates are accurate. Suppliers usually quote based on the demand estimates. C ounty Costs TimetoMafkel When demand is significantly higher than the forecast Access to Finance the buyer may lose the opportunity cost to negotiate. S m ic e Sourcing is characterized as strategic. But many a time Cost for Buyer Services it is tactical only. The contract is between two parties for a set volume, price and length of period. Total cost LoolVaueCtiaii paid to acquire one unit (direct and indirect costs) due to Standanls wild market fluctuations is complex procedure to work Labour TradeAgieenienIs CompanyWues out. True picture may not be acquired.

Enviroimwit Supplier development is an important activity in the strategic sourcing function. Many a time the incapacity

H « a h and Safety on the part of buyer to invest on the supplier becomes a bottleneck. It becomes a barrier to success if the implemented award does not adhere to capacity, high quality standards etc; Strategic sourcing decisions get Aignment of Incentives (Buyer, Supplier, Donor) deviated. It can lead to increased costs. Strategic

Transparent Infomatkm Fto* (Productori, DistrHxitiori, Market) sourcing is sourcing for value not lowest cost. Sometimes value is gained by selecting a lower cost producer and Regular Planning and Reporting |Voice and F a c e 4 o f ace) sometimes by a higher cost producer. Producing poor quality products or failing to meet demand affects the further sales. Lack of strong leadership affects the strategic sourcing process. Strong leadership which can set priorities and align priorities with the company through Source: JE Austria Associates, 2007 goals and objectives is the need of the hour to implement successfully the strategic sourcing. Constraints Outsourcing is purchasing from someone else a product Untrained supplier exclusively in the areas like network or service that have been previously manufactured operations may hesitate to come forward to tap the internally. The key to outsourcing is purchase only those opportunity available in the front. Organizing proper activities that are not vital to the company’s core training to supplier also is a Himalayan task in order to competence. The outcome of this decision is considerably maintain better relationships. In practice, most influenced by the soundness of the assumptions. The organizations pick up vendor based exclusively on price cost data. Suppliers capability study, Suppliers market which is totally against the principles of strategic sourcing. standing etc, play a vital role in such assumptions. In reality loyalty in both buyer and seller is missing. Usually suppliers are short listed randomly as supplier violently. Due to this Product cost forecasting becomes evaluation based on expertise, quality, reliability, reputation unpredictable. This has resulted in to shifting of sourcing and price is logically a non feasible process. strategy into financial strategy. It was initially a shift from manufacturing strategy to sourcing strategy. In the case of Global sourcing, close proximity of a country is given more preference and may make it more With respect to India, the tax structure is so complex, attractive source. Pakistan is a case in point- to India for that it plays significant impact on the supplies. Products Onions. Bilateral relations and trade restrictions between are typically taxed twice by the central government and the countries may affect the decision of sourcing. In state government. Excise duty is exempted in selective another reference to Global sourcing, the communication regions and makes it more complicated in logistics design between the buyer and seller is imperative. Missing or which is a major component of strategic sourcing. inaccurate documents can cause enormous delay at customs clearance and may result in not meeting the Supplier base reduction based on various parameters is target delivery dates. With reference to logistics part of a challenging task when the company is switching the Global sourcing, the great supply chain concept is suddenly its philosophy from traditional purchasing to Zero if the goods and services are not brought to the strategic sourcing. Too many part suppliers leads to an market. After all the goods have to be transported up to ever increasing price per unit. Large supplier base means the seaport/airport by local road way or railway. Local enormous hidden costs. Supplier’s incapacity to adhere disturbance, infrastructure, weather any seasonal to the quality and delivery schedules has a direct impact fluctuations make the SCM concept a big Zero. on the product launches. Customer order fulfillment is key to the sustained competitiveness. The quality While language fluency is very important, the matching requirements and global standards may be on the rise, day and night working during the business hours has long supplier’s inability to meet the challenges directly affects been a point for consideration in the sourcing process. the companies’ competitiveness. Developing the vendor Social customs and culture of different countries is technically and managerially and financially becomes the another point of contention. Most of the European onerous responsibility of the buyer to meet the challenges. countries observe long vacations during Christmas, Arabic countries on all Fridays and Saturdays and in India After all the success of strategic sourcing is the result of it is during Deepawali. Material deliveries are usually good networking of all the suppliers and the software affected. Human effort is required to work with overseas support available at the supplier and buyer. A great deal suppliers. Time away from their families is a substantial of investment is seldom necessary to cf iate this experience in their own right. In an approach to reduce infrastructure. The processes, product, the procedures the cost of sourcing, companies often squeeze the and the project designs require a great deal of secrecy suppliers who in turn reduce the quality of the material and protection. Countries where the patents and delivered to achieve low cost. As long as strong copyrights are not recognized there is an every element independent business groups are doing their best, the of risk for both supplier and buyer. Fittest only will corporate interest does not take any involvement in the survive. Surprisingly hacking is internationally accepted process. This results into strong resistance from all other and practiced. functional groups for any new ideas and concepts. Conclusion National level trade imbalances between the trading While business profitability and sustainable partners will adversely affect the strategic sourcing competitiveness are one side of the coin, the other side activity. Because of huge trade deficit between US and is the social responsibility. Whatever is earned is all from china and rising unemployment in US, Extra duties/taxes the society. It has to go back to the society in one or the are imposed to discourage the Chinese products and to other fonn. The social binding on the part of supplier, the make the product uncompetitive. Of late because of buyer and the customer can ever and never be erased. Global financial turmoil currency markets are fluctuating This is being realized by all corporate worlds besides the completely open and both parties’ best interests are looked ^ Strategic sourcing is often a problem filled process. after. The level of trust is so high that the suppliers are During bad economic times suppliers usually behave willing to make investments in equipment and technology desperately and will do anything to earn business. that are specific to their customers need. However in good times they are not willing to participate in the sourcing process. The primary requirement in strategic sourcing is that the buyer and the seller should Types of Customers understand each other commitments and expectations. The contract should accurately address and document ConsisleKy PrafuctAMes Product the critical issues and business realities. In the absence SpeclflMlions MmlSak Target Markets of such disciplined documents it becomes a source of SutaM contention between the parties.Negotiations become Designftekaging EiwiraMiiwI more meaningful if the demand estimates are accurate. Suppliers usually quote based on the demand estimates. ■County Costs When demand is significantly higher than the forecast •Access Id F iia m the buyer may lose the opportunity cost to negotiate. •Access to S i n a t Sourcing is characterized as strategic. But many a time Sm ices it is tactical only. The contract is between two parties • R e g M n s for a set volume, price and length of period. Total cost paid to acquire one unit (direct and indirect costs) due to •Standanls wild market fluctuations is complex procedure to work •Trade Agnenerfe out. True picture may not be acquired.

EtM onm eit Supplier development is an important activity in the strategic sourcing function. Many a time the incapacity

M m l Safety Health and Safely on the part of buyer to invest on the supplier becomes a bottleneck. It becomes a barrier to success if the implemented award does not adhere to capacity, high quality standards etc; Strategic sourcing decisions get A ig r m n t of Incentives (Buyer, Supplier, Doner) deviated. It can lead to increased costs. Strategic TranspamtinloinialionFlw(Pradiida^ sourcing is sourcing for value not lowest cost. Sometimes value is gained by selecting a lower cost producer and l«egiilar P la n iii« and Sporting (W o e and F a o » 4 » F m sometimes by a higher cost producer. Producing poor RjseMan^Medanm quality products or failing to meet demand affects the further sales. Lack of strong leadership affects the Tia n iig and I M n c a l Assistance strategic sourcing process. Strong leadership which can set priorities and align priorities with the company through Source; JE Austria Associates, 2007 goals and objectives is the need of the hour to implement successfully the strategic sourcing. Constraints Outsourcing is purchasing from someone else a product Untrained supplier exclusively in the areas like network or service that have been previously manufactured operations may hesitate to come forward to tap the internally. The key to outsourcing is purchase only those opportunity available in the front. Organizing proper activities that are not vital to the company’s core training to supplier also is a Himalayan task in order to competence. The outcome of this decision is considerably maintain better relationships. In practice, most influenced by the soundness of the assumptions. The organizations pick up vendor based exclusively on price cost data. Suppliers capability study. Suppliers market which is totally against the principles of strategic sourcing. standing etc, play a vital role in such assumptions. In reality loyalty in both buyer and seller is missing. Usually suppliers are short listed randomly as supplier violently. Due to this Product cost forecasting becomes evaluation based on expertise, quality, reliability, reputation unpredictable. This has resulted in to shifting of sourcing and price is logically a non feasible process. strategy into financial strategy. It was initially a shift from manufacturing strategy to sourcing strategy. In the case of Global sourcing, close proximity of a country is given more preference and may make it more With respect to India, the tax structure is so complex, attractive source. Pakistan is a case in point- to India for that it plays significant impact on the supplies. Products Onions. Bilateral relations and trade restrictions between are typically taxed twice by the central government and the countries may affect the decision of sourcing. In state government. Excise duty is exempted in selective another reference to Global sourcing, the communication regions and makes it more complicated in logistics design between the buyer and seller is imperative. Missing or which is a major component of strategic sourcing. inaccurate documents can cause enormous delay at customs clearance and may result in not meeting the Supplier base reduction based on various parameters is target delivery dates. With reference to logistics part of a challenging task when the company is switching the Global sourcing, the great supply chain concept is suddenly its philosophy from traditional purchasing to Zero if the goods and services are not brought to the strategic sourcing. Too many part suppliers leads to an market. After all the goods have to be transported up to ever increasing price per unit. Large supplier base means the seaport/airport by local road way or railway. Local enormous hidden costs. Supplier’s incapacity to adhere disturbance, infrastructure, weather any seasonal to the quality and dehvery schedules has a direct impact fluctuations make the SCM concept a big Zero. on the product launches. Customer order fulfillment is key to the sustained competitiveness. The quality While language fluency is very important, the matching requirements and global standards may be on the rise, day and night working during the business hours has long supplier’s inability to meet the challenges directly affects been a point for consideration in the sourcing process. the companies’ competitiveness. Developing the vendor Social customs and culture of different countries is technically and managerially and financially becomes the another point of contention. Most of the European onerous responsibility of the buyer to meet the challenges. countries observe long vacations during Christmas, Arabic countries on all Fridays and Saturdays and in India After all the success of strategic sourcing is the result of it is during Deepawali. Material deliveries are usually good networking of all the suppliers and the software affected. Human effort is required to work with overseas support available at the supplier and buyer. A great deal suppliers. Time away from their families is a substantial of investment is seldom necessary to <^>ate this experience in their own right. In an approach to reduce infrastructure. The processes, product, the procedures the cost of sourcing, companies often squeeze the and the project designs require a great deal of secrecy suppliers who in turn reduce the quality of the material and protection. Countries where the patents and delivered to achieve low cost. As long as strong copyrights are not recognized there is an every element independent business groups are doing their best, the of risk for both supplier and buyer. Fittest only will corporate interest does not take any involvement in the survive. Surprisingly hacking is internationally accepted process. This results into strong resistance from all other and practiced. functional groups for any new ideas and concepts. Conclusion National level trade imbalances between the trading While business profitability and sustainable partners will adversely affect the strategic sourcing competitiveness are one side of the coin, the other side activity. Because of huge trade deficit between US and is the social responsibility. Whatever is earned is all from china and rising unemployment in US, Extra duties/taxes the society. It has to go back to the society in one or the are imposed to discourage the Chinese products and to other form. The social binding on the part of supplier, the make the product uncompetitive. Of late because of buyer and the customer can ever and never be erased. Global financial turmoil currency markets are fluctuating This is being realized by all corporate worlds besides the existence of all constraints and issues. Promoting Women entrepreneurs, special reservations to SC & ST entrepreneurs as suppliers are some of the examples undertaken by the organizations addressing the national level economic development.

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6. Normann, R. & Ramirez, R. (1993) from value chain to value constellation. Designing interactive strategy, Harvard business review, July-August, 66.

7. Penrose, E. G. (1959) The theory of the growth of the firm, in: Housing studies (New York: Wiley). Priemus, H. (2003) Dutch Housing Associations: Current Developments and Debates, Housing studies. STRUCTURE OF VAT IN FEDERAL ECONOMY OF BRAZIL

Dr. Ummed Singh Abstract The present paper is an attempt for analyzing the structure of VAT in a large federal economy of Brazil. It is also a typical example of successful experiment with destination principle being implemented over a large number of independent countries forming something like a Fiscal Federation. This paper illustrates the structure adopted by both national and the sub-national governments and offers some insight into the problems of VAT in federal countries. Their experience provides a useful backdrop to the problems facing India Keywords Value added Tax, Federal state. Taxes and tariffs. Inter-state Transactions Introduction

ntil the mid-thirties, major taxes were virtually important source of income, 80 percent of total revenue. non-existent in Brazil. Federal and State States had for a long time absolute freedom to legislate Government collected the bulk of their revenue over their own base and rate. Thus, tax rates differed U from a variety of limited taxes and tariffs imposed underfrom one state to another according to local conditions different names on trade and business. Tax provisions and needs. National Tax revenue excluding social security contained in the 1934 Constitution were a first effort to as a percentage of GDP dropped from about 17 to 12 put together scattered levies to reach the basis of larger percent in last three years. This abrupt reduction came scope. As a result, an incipient personal income tax was about largely because expenditures with traditional public assigned to the federal government; a turnover sales tax sector activities (education, defense, health, law and order was attributed to the states and an urban property tax to etc.) gave way to the expansion of public services local government. These taxes, however, did not become financed with specific contributions or own revenues relevant source of revenue. Major contributions to the social security and government enterprises. Allowing for federal budget then were import tariffs and excises on inter-govemmental transfers, the federal government liquor and tobacco. While, states depended heavily for disposes of 46 percent, states 36 percent and revenue on their export and import taxes. municipalities 17 percent. However, in the last 20 years, the federal government and municipalities’ share of total In 1966, income tax and various single-stage wholesale revenue increased at the expense of the states, highly consumption taxes (cigarettes, liquor and luxuries) centralized tax legislation and pressing needs of local accounted for about 75 percent of total revenue at the government urged by accelerated urbanization explain federal level excluding social security at the state level. to a great extent, this redistribution effect. In 1966, income tax and various single-stage wholesale consumption taxes (cigarettes, liquor and luxuries) The 1965 tax reform was enacted by the administration accounted for about 75 percent of total revenue at the though constitutional amendment, later utilized-with federal level excluding social security at the state level. neghgible changes, in writing the National Tax Code (law Taxes on trade gradually gave way to the highly 5172/1966). productive turnover sales tax which became their most

Dr. Umeed Singh, Assistant Professor, Department of Economics, Punjab University. He can be reached at Sinehumeed @ yahoo, co. in Existing taxes were then grouped in four categories The structure of IPI shows multiplicity of rates with according to their economic base i.e. external trade, considerable variations across commodities. There are income and weahh, production and ‘special’ taxes and nine rate categories ranging from a low of 4% on cement assigned to specific levels of government. This reform to the highest of 365% on cigarettes, and 200% on beer, abolished numerous taxes applied on specific activities, 77% on perfume, 40 to 50% on automobiles, 8 to 10% licenses and stamp taxes and approximated the cascade on chemical inputs, 4 to 10% on electrical machinery & turnover taxes to its real economic base. In 1967 VAT equipment and 4 to 6% on metal etc. It is obvious from was introduced with the Federal VAT (IPI) replacing above that on equity grounds, the essential items are taxed the whole-sale sales tax and the state VAT (ICM) at low rates and luxurious and items injurious to health replacing the state turnover tax. Taxes on commodities are taxed at high rates. Actually, it is an attempt to impose and services are levied by the three tiers of government the tax burden according to the nature of product but federal, state and municipal governments. such treatment becomes very cumbersome at the level of manufacturing, it could be better implemented at the Federal VAT in Brazil is called IPI {Imposto Sobre consumption level. Productos Industrializados). The tax base is the value added in manufacturing sector. State VAT is known as Most of the revenue of the IPI is generated fi-om a few ICM S {Imposto Sobre Operacoes Relativas A commodities. These include vehicles (16.2%), tobacco circulacao De Mercadorisas E Servicos). The tax base product (13.2%), beverage (10.1%), chemical product is sale of goods at all stages of production and distribution (8.1%) and the products of the metal and mechanical process including the retail stage, agriculture and cattle- industry (7.0%). About one half of the federal revenue raising. An important tax group is ISS {Imposto Sobre in mid-nineteen-eighties is collected for three final Servicos) - a tax on services which is not included in product categories-vehicles, tobacco and beverages. the ICMS. It is a cascade type tax levied by municipalities Invoice-credit mechanism is used in which a and covers services under industrial, commercial and manufacturer is allowed set-off for VAT paid on his professional sectors with rates varying from 0.5% to inputs. In this respect, Brazilian federal VAT is similar to 10.0% in different municipalities. Indian CENVAT. Both are imposed on manufactured goods and use the credit method. Imports are subject to Federal VAT federal VAT but on deferred basis. Exports are exempted, not zero rated. But in order to reduce the burden of VAT VAT levied at the federal level in Brazil is called IPI. It entering the export goods, cash rebates are generally is confined to the manufacturing sector. The tax base granted. includes industrial value added, defined as sales minus purchase, keeping capital goods outside the creditable State VAT base. Agricultural and mineral products are excluded from the purview of IPI. Also, retail and wholesale trade The state VAT is known as ICMS {Imposto Circulacao as well as services are excluded from its scope. The De Mercadoris E Servicos). It replaced the sales/ input duty paid on capital goods are not fiilly creuited turnover taxes. The tax base is sale of goods at all stages except for the machinery and equipment manufactured of production and distribution process including the retail in Brazil. IPI levied on raw materials, intermediary stage, agriculture and cattle raising. ICMS revenue products and packing materials entering into industrial accounted for approximately 7.5 percent of GDP in 2000- establishments get credit against the tax liability of final 01 or nearly two-thirds of overall state revenue (including goods, provided the final goods are not exempt from tax. mandated revenue sharing with the federal government) However, credit is available with respect to exports and production of certain exempt articles specified by law. The state VAT coverage fall short of a comprehensive Imported goods are subject to IPI but the products exempt base in many respects. The service sector is excluded from imported duties are automatically exempt from IPI from its scope along with a number of activities such as applicable on imports. electricity, fuel and mining taxed at the federal level. A large number of capital goods produced in Brazil are or taxed at 7%. Because several states use the ICMS exempt. For instance, agricultural machinery and as an industrial policy instrument, many sectors are taxed equipment were exempted in 1969 followed by exemption in 12-18 percent range, such as motor industry, whereas in 1971 for a wide range of equipment for the industrial utiHties and oil/fuels are taxed at 25%. The ICMS colleted sector intended for the northern and north-eastern in these sectors accounted for 40% of total ICMS revenue regions. Many exemptions that do exist have been granted in 2001, up from nearly 27% in 1997. Luxury goods are by the constitution, which is on books, newspapers and well as typical excisable such as tobacco and beverages printing papers as well as export of manufactures. A tends to be taxed at a higher rate of 30-35%. The states limited number of unprocessed and agricultural produced with fiscal consolidation needs often levy this higher rate goods are also exempt. Exemptions also include on some more price-inelastic goods and utilities as a intermediate imports, imports exempted from import tax, means of raising revenue. This is fiercer in the case of fertihzers and pesticides, vegetable in the north-eastern goods and service for which demand is more inelastic. states. Sales of a broad list of capital equipment were As in the case of federal indirect taxes, many states exempt but credits were not allowed in the purchase of collect ICMS at the production rather than the retail, the permanent assets. Thus, office machines, furnishings, retail stage on the basis of the estimated tax liability for transport equipment and similar items were included in an average production chain in different sectors. the tax base, since they were not explicitly exempt. Liabilities are calculated on a tax-inclusive basis.

At the state level, VAT exemptions and exclusions The tax base of ICMS is inclusive of tax. It means that including the system of zero-rating follow no uniform the effective rate of tax on the basis price is higher than practice. Generally speaking, there are few cases of zero- what indicated in the tax law. For example, the rate of rated goods except for exports. The sale of some tax is 25% for luxury consumption items; the tax liability agricultural goods like vegetables, fruits and dairy is computed as below- products are exempt if sold unprocessed. However, most s^cultural products and this includes raw foods like rice, 0.25 X {retail price (including tax) that is, for price of beans, com etc. are taxed even when sold unprocessed. $100, the tax is 25, the retail price excluding tax is $75. Tax collection may be deferred if these products are If the tax is related to the base price i.e. $75, the tax rate sold as inputs for industrial goods. Agriculture is largely workout as spared of tax collection as an administrative device. However, as pointed out, it is not exempt since tax X 100 = 33 73% revenue from their value added is mostly collected down 25 the line in the industrial or trade sector. To avoid double 75 taxation, the sale of many agricultural inputs such as fertilizers, seeds are exempt. To enforce zero-rated on The effective tax rate could still be higher in some cases vegetables, fruits and dairy products and a limited number where the base of ICMS is inflated by inclusion of the of items, and retailers such as restaurants and cafes are estimated value added of later stages of processing (such allowed, ‘presumptive’ credit on the purchase of these as retailer). This system of inflating the base is referred products. to as “Subtituicao Tributario"

Under ICMS there are five rate categories : 7% on rice, Local Taxes (Municipal Service Tax) beans, bread, salt, meat and food items; 8.8% on capital goods, 12% on supply of electricity, 18% standard rate The constitutional reforms of 1965 and the tax law (most other items are taxed at this rate), and 25-35% for amendments of 1966 also converted several local taxes luxury consumption items, such as liquor, cigarettes, on specific business and trades into general municipal tobacco, electronic goods, video-games, sports, service tax. This tax is applied with different rates on communications, gas and alcohol. Basic necessities are the gross revenue from various local activities, ranging typically exempt, zero-rated (which generates a credit) from advertisement, construction, entertainment. professional services and maintenance etc. A service Efforts to curb predatory tax competition have been by list containing 66 activities on which municipalities may and large unsuccessful. According to current legislation raise revenue is shown in the National Tax Code. By (Complementary Law no. 25 of 1975), tax benefits can financial law, services taxed by municipalities are only be granted by unanimous decision within the excluded from the state VAT. The municipal tax on Conselho Nacional de Politico Fazendaria services (ISS) is not creditable against state or federal (CONFAZ) - a forum for discussion of tax policy matters tax Uabilities. The ISS paid on inputs is not creditable among the state finance secretaries. In the absence, either. however, of institutional instances for monitoring compliance with CONFAZ resolutions, as well as Inter-state IVansactions enforcing them, there is limited scope for credible horizontal cooperation in this area. Also, despite several The principle followed in Brazil for inter-state trade is attempts and a general agreement over the detrimental the origin principle. So, the state VAT (ICMS) is levied impact of predatory tax competition on public finance on the transactions by the exporting state (where the and on the allocation of investment, it has been difficult goods or service is produced). However, the tax levied for the federal government to secure congressional by the exporting states varies depending on the destination approval for legislation to harmonize ICMS rates and state. The general rate of tax is 12% but if the goods are bases among the states. The option of shifting collection sent from south-eastern states (more developed) to north­ to the destination, for example, would simplify the taxation eastern states or central-western states (less-developed) of inter-state trade but faces particular opposition from the rate is 7%. There are nine states in the north-east, net exporters, which would face the largest potential four in the central-west and seven in the north. These revenue losses in the absence of compensatory states are regarded as less developed states. In all, six measures. states are considered to be developed states. To neutralize the impact of tax on these transactions, the The rate of tax on inter-state transaction is prescribed importing state give credit of the tax paid against the tax by the National Public Finance Council (CONFAZ). The to be paid by them on resale or manufacture. In effect CONFAZ consists of all states’ representatives with 27 by having a higher rate of 12% on exports from the south­ councilors. Unanimity is required for any resolution to eastern states (other than to the north-eastern and go through. The 1988 constitution strengthened the central-western states) and, the lower rate of 7% on legislative role of the CONFAZ. It now promotes treaties imports into that region and allowing rebate of both these on tax benefits and harmonizes rate. CONFAZ taxes, the ICMS redistributes tax revenue between the determines the exemptions to some notified products such states. as vegetables, eggs and domestic fish. Exemptions also include the sale of agricultural equipment to the north­ Registered traders in an importing state are allowed to east and to Para, Amapa and Rondonia states. Likewise, credit their taxes paid on interstate imports against their agricultural exports including specified vegetables and ICMS liabilities in the importing state. As a result, the fruits are exempts. Small business are exempted on lower rate levied on trade with the less prosperous states administrative considerations, sales to Manaus Free Zone allows them to collect more revenue by levying their own - ZFM {Zona Franca de Manaus) area are zero-rated. interstate rates on shipments from more prosperous states and refunding registered traders for the ICMS paid on The origin principle is foUowed in case of inter-state trade; these transactions at a lower rate. Although these in the case of case of export it is the destination principle, differentiated rates for inter state trade result in some which is followed. Exports are zero-rated and imports horizontal revenue sharing between net importers and are taxed, so far so international trade is concerned. But exporters while keeping collection at origin, they have the ICMS applies a hybrid destination / origin principle encouraged ‘invoice sightseeing’ and, to a lesser extent, to the international trade by exempting some, but not all, cross-border shopping, increasing costs and hindering tax exports and by being selective as to taxation of imports. harmonization. It is clear from above features of Brazilian VAT that Structure is one of dual VAT. The federal VAT and the 1974 28.83 41.62 na. 10.14 13.64 5.77 aa. state VAT run parallel with different tax bases. The 1975 3825 35ii6 iia. 952 1157 4.80 na federal VAT is on industrial manufacturing sector and 1976 36.72 31.93 la 9.13 17.93 4.29 aa the state VAT is on agriculture and industry. 1977 39.72 3022 357 6,95 15.13 4.41 aa. 1978 4054 29.91 3.77 639 1426 428 0.85 ‘The revenue collections from federal, state and municipal 1979 42.62 28.92 425 6.41 12.75 4.20 0.85 sources as well as the revenue collections from other 1980 40.03 25.97 10.18 9.33 7.34 621 0.W sources are given in the following tables 5.1 and 5.2. 1981 4101 26.09 1115 6.60 6.04 556 0.95 1982 43.% 27.72 11.67 5.06 6.60 4.93 0.86 Table 1 1983 5336 25i)2 7.09 638 5.06 332 0.77 Percentage of Federal, State & Municipal revenue 1984 56.78 21.45 820 5.49 4.86 150 0.72 to Total VAT revenue 1985 58.97 20.91 5.48 658 411 1.83 1.99

Year Federal State Municipal Source: Carlos Longo- The VAT in Brazil in Value Before Intergovernmental transfer Added Tax in developing countries edited by Malcolm 1965 51.0 43.0 6.0 Gillis, Carl S. Shoup and Gerado O. Sicat, World 1970 54.0 42.0 4.0 Bank, 1990. 1975 58.0 37.0 5.0 1980 58.0 36.0 6.0 It is obvious from the above table 5.1 that in 1965 revenue 1983 57.0 37.0 6.0 collection from federal VAT was 51% and it increased 1984 56.0 38.0 6.0 to 56% in 1985. But state collection correspondingly fell 1985 56.0 38.0 6.0 from 43% to 38%. The total VAT revenue from federal and state tax as a percentage of total revenue fell between After Intergovernmental transfer 1968 and 1985, from 51.3% to 21% (approximately) 1965 39.0 48.0 13.0 during the same time period. While the proportion of 1970 46.0 39.0 15.0 income tax on the total revenue increased from 21 to 1975 50.0 36.0 14.0 59% (as shown in Table 5.2). This indicates improvement 1980 49.0 35.0 16.0 in federal tax revenue collection and decline in the state 1983 48.0 35.0 17.0 finances. This also shows the importance of VAT as a 1984 46.0 36.0 18.0 contributor to the total revenue has gone down from more 1985 46.0 36.0 18.0 than half the revenue to less than one-fourth. VAT performance has been poor due to following reasons- Source: Carlos Longo - The VAT in Brazil it Added Tax in developing countries edited by Malcolm 1. States’ tax base was very narrow, and it was made Gillis, Carl S. Shoup and Gerado O. Sicat, World further lower by tax exemptions given by centre. Bank, 1990. 2. The Central Government had control over income Table 2 and foreign trade taxes and also the ability to Percentage I.T., VAT etc. to Total Tax Revenue impose VAT on industrial products and excises on 1968-85 a number of consumption items. Most of the productive and elastic sources of tax revenue have Year Income VAT Tax on Customs Excises Chi been allotted to the federal. It can be seen from Tax Finance TarifTs the above figure that while the income tax and the 1968 21.85 51.03 aa. 8.20 18.00 0.92 aa receipt from the central VAT improved highly 1969' 26.15 46.89 aa 7.49 17.83 1.M aa between 1970 and 1985, but during the same 1970 2655 46.11 aa 721 1828 1.85 aa period the tax revenue of states declined. The 1971 2655 45.97 aa 728 17.67 1.85 aa buoyancy of federal taxes is higher then that of 1972 29.03 4329 aa 7.67 17.09 192 aa states taxes. 1973 2750 42.65 nA 8.20 15,97 5.67 aa 3. The states lost autonomy to create new taxes and and major economic issues such as currency, coinage, a rigid system of uniform VAT. regulation of inter-state commerce and communications. States may like to possess more powers on the ground 4. The federal and state VAT overlaps and as the of retaining some financial autonomy. The conflict can two systems are under separate jurisdiction, it be resolved through a compromise. The basis of complicates tax administration. The design of VAT compromise may be convenience, efficiency, adequacy has got complex and technical and administrative and administrative suitability but on the same ground it is problems relating to how to apply different VAT in desirable that the federal government jurisdiction should different states in addition to federal VAT have to include rational allocation of national resources, equitable face. distribution of income and wealth and stable growth of output and employment. Be it noted, however, that no All the states do not depend to the same extent on compromise, however rational, would satisfy all layers revenue from state VAT. The poorer states in the North of government and so some friction will always be and North-East count heavily on the transfer of revenue present in the relationship between federal, state and to them from the federal value added and excise taxes local units. to pay for as much as half of the expenditures. For example in 1985 the seven so called economically The 1965 tax reform was a great step forward in the backward states in the north colleted only about 33% of direction of rationality especially at the state level where their tax revenue from their own taxes and the balance a multiple stage turnover tax was replaced by a VAT as of 67% was made up from revenue sharing. While states their major source of revenue. But in the process state in more prosperous southern and southern-eastern region base and administrative capabilities were crippled by collected 86% and 90% respectively of their tax revenue numerous exclusions and rigidities. Their freedom in from their own sources and received only 14.3% and setting rates and exemptions across goods and 9.06% respectively of their tax revenue from the federal jurisdictions is now severely limited. In Brazil, inter- government under revenue sharing formula. The rate of jurisdictional tax disputes became a serious problem as state VAT in January 1993 was reported to be 17% on a result of a lack of inter-jurisdictional tax co-ordination. sales within a state but only 12% on inter-state sales. Producer states benefited and consumer states lost The inter-state VAT rates varied indifferent regions. It revenue due to follow of original principle for domestic was 9% on goods sold by the southern and south-eastern trade. Further more, states that were net exporters lost region states to the poorer states in the north and north­ revenue and net importers gained. Since an approximation eastern region. of destination principle prevails for international trade. It redistributes revenue arbitrarily among states but also is The revenue sharing formula in Brazil is rather unfair since the poorer states are usually net importers complicated. There is general dissatisfaction among the domestically and net exporters abroad. Some of the states and local bodies in Brazil who feel that they do redistributive effect has been attenuated through the not get enough, that some get unduly more than others application of lower rates to inter state exports at the and their own powers of taxation have been reduced state or origin with the difference between the lower because of over whelming role and powers of taxation rate and the internal rate being collected by the importing of the federal government. But all issues are not decided state. on purely economic basis. Administrative and political considerations may, at times, have an over riding say To conclude, the existing structure of VAT in Brazil is over economic ones. Hence, actual result is the outcome characterized by a variety of taxes. IPI is levied at the of a possible compromise among administrative, political federal level and the ICMS at the state levied. Second, and economic criteria. Politically, for instance, the federal both IPI and ICMS have multiplicity of rates. Also, due government, because of its national character should to differences in the stage of development of states it have powers to take decisions affecting the nation as a has given rise to mal-practice by rich states (e.g. offering whole. These powers relate to defense, foreign affairs of special tax deferrals). Such practices have attained increasing dimension in recent years. Notwithstanding various limitations with the VAT at two levels in Brazil, it is useful to leam that as is the case with the European Union where VAT is levied by each member state according to its own levels with a floor level of tax rates, the state-VAT of Brazil also be a model for other federations.

Bibliography

/. Alan, Tait, (1974): "VAT- Relevance of India and Other Developing Countries”,

2. A Bagchi, Amaresh (1991), “Tax Reforms in Developing Countries, Agenda for 1990s” NIPFP, Working Paper No. 10, New Delhi.

3. Bird, Richard M. (1998): “Dual VAT and Cross- Border Trade: Two Problems, One Solution”, International Tax and Public Finance, 5(3) July. pp. 429-442

4. Mukhopadhayay S. (2005): “The Economics o f Value Added Tax, Theory and Practice ” Centax Publications, New Delhi. 5. Purohit, Mahesh C (2001): “Value Added Tax: Experiences in India and Other Countries”, Gayatri Publications, New Delhi. 6. Rao, M. Govinda (2003): “Reform in CST in the Context of VAT”, Economic and Political Weekly, 15-21 February, pp.627-636.

7. Rao, R. Kavita (2004): “Impact of VAT on Central and State Finances”, Economic and Political Weekly, 26 June-2July, pp.2773-77.

8. Satapathy, C. (2003): “VAT and Service Tax on Imported Goods and Services”, Economic and Political Weekly, 3-14 March, pp. 931-32. SIGNIFICANT ISSUES IN CYBER TECHNOLOGY

*JPSSirohi **Rajni Sirohi

Abstract

The keynote of this Article is to scrutinize the growth of dissemination of information through computer network, computer designs, computer resource, etc This is analyzed with a view to secure and protect the transmission of information through encryption and decryption. Thus, one angle is that there is an inherent quest of human beings to maintain their secrets and privacy. Another aspect is that the State in the garb of integrity, security, sovereignty, public interest, among others is hesitant to give absolute rights to individuals with regard to secret communication. State, therefore, enacted Information Technology Act, in 2000 to deal with emerging complex issues in this global field. After the Mumbai Terror Attack of 26.11.2008, the I.T. Act was drastically amended by Act 10 of 2009 dated. 5.2.2009 to protect and secure the public interests and security and integrity of the Stale and its citizens and various groups and classes. Keywords: Software piracy, viruses, Cryptography. Encryption, Decryption, Cyber terrorism, e-mails frauds. Cyber space. Espionage, Intellectual property. Introduction

1 In real world, a societal system is administered was an important system. and controlled by four methods generally. These Tare: l.Law 2.Social norms 3.Market conditions With the aid of this information technology, information and 4.Nature of the system. However, such factors are of all forms was digitalized, and all the operations on any not entirely effective as far as issues concerning kind of information could be accomplished in this form. development of information technology are concerned. This brought the revolutionary change, but also started It is an accepted fact that legislation process lags behind to pose threat to the hitherto existing modes of control of technology. As far as information technology is information. Thus, the growth of information technology concerned, due to its advancement and growth, law is can be seen as unparalleled. The information technology not getting evolved but is being generated. has expanded vertically and horizontally and has created a scenario whereby a part of the working of the society There are many issues with regard to information is exclusively residing in communication channel. A technology, such as hacking, theft, fraud, privacy, piracy, scrutiny of societal fimctioning will show that there exists misrepresentation, defamation, denial of service etc. basically only movement of man and material, and These issues are surrounded by the main single concern, transmission of information. The latter part has been taken i.e. “information”. The scope of information and its over completely by information technology. To condense corresponding importance has increased a lot due to the multilateral impact of this branch of technology is wholesome effect of information technology. From time nothing but tremendous in infiltrations, advancement and immemorial, the value of information was identified. spread. Creation, storing, transmission and retrieval of information

*Advocate, High court of Delhi; Visiting Faculty, National Institute of Criminology & Forensic Science] Ministry of Home Affairs, GOI, New Delhi and Former faculty. Law Department, University of Delhi. He can be reached at sirohilaw® email, com. **Lecturer, CPJ-CHS, Delhi. She can be reached at rainisir Commenting on this, Erric Ellen has predicted that of identification of properties.Thus minimum need of information technology is not only reshaping to mode of demarcating is the simple form of protecting and securing corporate functioning and emerging new business information through the use of computer system etc. But strategies, but, it is dramatically increasing the number in the field of information technology, such demarcation of cyber criminals. According to him, there is bound to is very complex and comphcated.. Whether it is a simple be simultaneous increase in the incidence of cyber crimes demarcation or protecting and securing of the most with the new internet sites and users which currently complex kind, tool for this purpose is cryptography. total around 35 million world-wide. Any sort of alteration in the information so as to make Information technology has created yet another system the perception more difficult can be qualified as the use which is processing information, hitherto a task carried of cryptographic technique. Cryptography is the art and/ out by man. This uniqueness and the pervasive nature of or science of covert inscription. This practice is known the technology is not leaving any field untouched and to persons for maintaining secrecy of information. thus, unlike other technologies, this advancement is Cryptography may be stated as a shift of alphabets. For making its presence felt in all fields. Further internet is a instance, ‘CAT’ can be written as ‘ECV’, where E is free way for dissemination of information. used of the sender in as much as the key as instead of C, C is used instead of ‘A’ and ‘V’ in place of ‘T’ This Protecting and Securing the Flow of Information technique of shifting of alphabets can be cited as the The advancement of information technology has made algorithm and the number of shifting of position as the sure that all activities of professionals and other members key. As the shifting is the changing of two positions, the of society are linked and aided by the product of key is two. A key can also be some other number, for information technology through out the globe. The flow example, three. of information should be protected and be with in the knowledge of the concerned parties. For instance, when Then ‘CAT’ will be written as ‘FDW’ instead of ‘CAT’ one is pasting the envelope, he is securing the contents when he is using the shift of positions as three. The of letter even though the envelope may be sent through receiver will reduce the shift of alphabets by the same postal authorities or through courier service, among key and will read the message as ‘CAT’. In this method, others. In case of process of information through the process of converting the message into its coded information technology such a task is required to be form is called as encryption and the process of getting accomplished so as to ensure that information sent and back the message is known as decryption. The original received is not leaked to strangers and is passed to message is known as plain text whereas the Code addressee in the form of a sealed envelope. message is known as cipher text. As the same key is used for encryption as well as decryption, this type of CRYPTOGRAPHY - To Protect and Secure cryptography is called as single key cryptography. It is Information the simplest method. The relevancy of protecting and securing of information is at the highest realm when it comes to internet which is There are other complicated techniques which are used spread globally in its inherent freeway manner. The for securing information in cryptography. In this, a predators of disseminated information are busy to condition may be made in which the key is dynamic intercept the said information and thus, it is the important through out the message. To illustrate, suppose the task of the information owners and receivers to protect condition prescribed is shifting of one position for the and secure such information. Information in the first alphabet and then to linearly increase it, then for communication channel or in internet is spread in all ‘C’, the key will be one, for’A’ the key will be two, and places or at no place. In case of tangible or immovable for ‘T’ it will be three. Thus ‘CAT’ will be written as property like plots of land, fencing or demarcating the ‘DCW’. Even though the technique is remaining as property is a normal course in protecting and securing shifting the position of alphabets, key is coming with the same. Putting a sign board is also a common mode certain conditions. The security of cryptographic technique is directly proportional to the complicity of scenario detailed above with respect to synunetric key method as well as key. More the chances of deciphering cryptography here Y can not pretend himself as and the key and/or the method less were the security element resend the message to Z. Because the private key of X of cryptographic technique. is exclusively with him and only X can create or encrypt messages that can be encrypted using his public key. Since identical key is used for encryption as well as Thus it may be stated that unlike symmetric key decryption, these types are secret writings also known cryptography asynmietric cryptography is having certain as symmetric key cryptographic. Using of pictures, definite advantages. symbols, complex mathematical equations etc. are also examples of asymmetric crypto system. The practice of There are further enhanced uses of asymmetric using the same key for encrypting and decrypting had cryptography. If X wanted to send message to Y and X many defects. The receiver is always getting the chance wanted to make sure that only Y reads it and also Y is to of imposing as the sender because the receiver is getting be sure of the sender of the message. Here X will the capability of the sender in as much as the key as encrypt the message by using his public key and will well as the method used for encryption and decryption further encrypt the already encrypted message using are one and the same. Suppose X is the sender of ‘Y’ public key Now, even if any one is getting the information and Y the receiver, and it is previously agreed message only Y can decrypt it since Y’s private key is that, so and so symmetric cryptographic method with a required for decrypting. After the decryption using Y’s specific key will be used for encrypting the message. private key what he is getting is an encrypted message On receiving the message, Y will be using the same key done with X’s private key. Now Y will have to further or decrypting the message. Suppose in their group, there decrypt the message using X’s public key. A successful is another person Z who is also using the same key as completion of this will ensure that X is actual sender. well as method for writing messages between them. Now Y will be able to make changes to the message received Information Technology vis-a-vis Security of State from X and he can very well send the same to Z using Cryptography has come out into limelight as a great tool the same key as well as the method. Suppose Y is in electronic form of communication. Citizens want pretending as X in the message, there is no mechanism cryptography for secret communication. On the other for Z for knowing who has sent it. hand, the State is interested to know what is transpiring between the citizens and those who are violators of law Concept of Asymmetric Cryptography causing security of state in danger. The state takes the The concept of asymmetric cryptography emerged in plea of larger interest of society while interfering in the this scenario as opposed to symmetric key cryptography, information dissemination. Thus the citizens want to the key for encryption and decryption are different and deploy cryptography techniques without intervention of hence the terminology asymmetric. The same is also the state to enhance the freedom of citizens. Whereas known as private key, public key cryptography. Here, the state curtails rights of citizens for extracting for encryption, a particular key is used whereas for information transpiring in the society. The state became decryption another key is used. This key pair is related handicapped by the use of cryptography by individuals. in such a complex form, thus the knowledge of one is not Even if the state knows that the information contained in at all making any one to know the other key. Each person computer system is against the security and sovereignty will be having his own unique key pair; private key and of the state, state was unable to take any legal action. public key. Thus for the interest of the security of the state and its Private Key will be known only to the owner whereas citizens , as a result of fast development of scope of the public key will be made available to every one. For information technology, state attempted to evolve the need example, X can encrypt a message using his private key for controlling cryptographic techniques. The issue of and send the ciphered message to Y. Y on receipt of the use of cryptographic techniques in Blackberry phones message can decrypt it using public key of X. Unlike the and the attempt of the central government to contain it is an example even though it is an isolated one. The state State. Thus, a conflict about the violation of rights of intervention in the flow of information and communication privacy by the State in the interest of security and the is a world wide phenomenon. Telephone tapping, citizens whose privacy is violated and the Media continues interception of postal contents, employing of spies are to arise for the right balance and the decisions by the some tactics employed by state to encroach the private courts lives of citizens in the name of security of state. Thus the issue becomes debatable between privacy of citizens In the US this issue has been in active consideration vis-a-vis state security. There is a usual fight in this since long time, and cryptographic techniques were respect treated as dangerous to the security and sovereignty of the state and it imposed controls on its dissemination. It In a recent Public Interest Litigation filed in the Supreme was opposed by the citizens effected by the state Court by the leading industrialist Ratan Tata relating to intervention. The state was interested to know the state taping of Nira Radia conversation by the State/Central secrets leaked to potential enemies. In these government, came out in public domain after the exposure circumstances, the state brought in the concept of ‘clipper of 2-G Spectrum through another PIL filed in the Supreme chip’ as a compromise formula for protecting both parties. Court by Subramaniam Swammy. The Supreme Court Clipper chip was a hardware built into communication on 13.12. 2010 directed Attorney General of India to devices which encrypts the message at its inception and produce in a sealed cover a copy of the complaint, as decrypts at its reception. In this process, the information alleged by the Central government, received against will be in an encrypted form to protect information of corporate lobbyist Nira Radia. individuals, but the state also will be in a position to Usten to any information that is disseminated through computer. In an affidavit filed in the Supreme Court it was said that a complaint was received by the Finance Minister This system was also opposed by right thinking citizens on November 16,2009, interalia, alleging that Ms Radia as the state authorities were in a position to access to all had, with in a short span of nine years, built up a business these encryption algorithms embedded in the clipper empire worth Rs. 900 crores, that she was an agent of chips. foreign intelligence agencies; and that she was indulging in anti-national activities. On this complaint, it was Thereafter, the concept of ‘Trusted Third Party’ was directed that the matter should be examined, and established. People were free to communicate using conversations were tapped. The counsel for Ratan Tata encryption but a middleman will be there who will be on the other hand, said that he was not questioning the having a copy of clipper chips and when needed, he will right of statutory authorities to record private be disclosing it to States limited to that of security and conversations or the use of transcripts by probe agencies other related issues in pubic domain. for investigative purposes. He took the plea that his concern is that the audio content of personal conversation, Role of Certifying and Other Authorities and which has no bearing on the investigation, should not be Controller put in the public domain. The role of certifying authorities in authentication process using digital signature is one example. The Controller On the other hand, the media agencies took the plea that may, by order, direct a certified authority or any employee Tapes disclosure are essential for meaningful debate by of such authority to take such measures or cease Indian citizen and also stated before the Supreme Court carrying on such activities as specified in the order if that intercepted material not likely to be secrets of the those are necessary to ensure compliance with the states and they can be released by the press and the provisions of the Information Technology Act, 2000, state in public interest and all tapes can be brought into amended in 2009, rule or any regulations made there public domain. They may have right to privacy in relation under'^’. According to section 68(2) of the IT. Act, which to their private lives, but not in relation to activities which was amended in 2009, issued any person who are widely political or related to the public affairs of the intentionally or knowingly fails to comply with any order under subsection (1) shall be guilty of an offence and also liable to fine. shall be liable on conviction to imprisonment for a term not exceeding two years or a fine not exceeding one Power of the State to Block Public Access of Any lakh rupees or with both. Information It may be noted that after Mumbai Terror Attack of The power to issue directions for interception or 26.11.2008, the Information Technology Act, 2000 was monitoring or decryption of any information through any drastically amended in 2009 and came into effect from computer resource are vested with central government 27.10.2009. Even thereafter many blasts occurred in or a state government according to section 69, which is which many persons were killed such as German backery amended by Information Technology Act, in 2009. Section case Pune, Jama Masjid shoot out before Common 69(1) states that where the central government or a Wealth games, in September, 2010 and blast in Vranasi state government or any of its officers specially temple on 7.12.2010 The Indian Mujahideen used to authorized by the central government or the state have members like computer engineer Mansoor government, as the case may be, in this behalf may, if Peerbhoy, and computer graduate Asaif Bashiruddin satisfied that it is necessary or expedient so to do, in the Shaikh and Mubin alias Salman Kadar Sheikh in the interest of the sovereignty or integrity of India, defense team entrusted with drafting and sending e-mails of India, security of state, friendly relations with foreign claiming credit for terror attacks through hacked Wi-Fi states or public order or for preventing incitement to pools. In the early interactions itself, Riyaz had asked the commission of any cognizable offence relating to the team to learn internet chatting and how to send above or for investigation of any offence, it may subject encrypted messages, with the Bhatkals also sending to the provisions of sub-section (2) for reasons to be Perbhoy and Salman Seikh for a wireless hacking course recorded in writing, by order, direct any agency of the in Hyderabad. The content was always decided by Iqbal appropriate government to intercept, monitor or decrypt and keyed by Salman Kadar Sheikh. Now, of the team, or cause to be interpreted or monitored or decrypted all, except Mohsin and the unidentified person, are in any information generated , transmitted, received, or custody restored in computer resource. In view of the spread of cyber crime, the Information According to sub-section (2) the procedure and Technology Act was enacted and drastically changed in safeguards subject to which such interception or 2009 to combat cyber crime though it has been against monitoring or decryption may be carried out, shall be the freedom of information in the dissemination, such as may be prescribed. Sub-section (3) further transmission, storage etc. Now with the amendment in provides that the subscriber or intermediary or any person 2009, section 69A empowers the Central government in-charge of computer resource shall, when called upon or any of its officers specially authorized by it in this any agency referred to in sub-section ( 1), extend all behalf, if is satisfied that it is necessary or expedient facilities and technical assistance to- so to do, in the interest of sovereignty and integrity of India, defence of India, security of the state, friendly (a) Provide access to or secure access to the relations with foreign states or public order or for computer resource generating, transmitting, preventing incitement to the commission of any receiving or storing such information; or cognizable offence relating to writing, by order, direct (b) Intercept, monitor or decrypt the information, as any agency of the government or intermediary to block the case may be the access by the public or caused to be blocked for (c) Provide information stored in computer resource access by the public any information generated, transmitted, received, stored or hosted in any computer Subsection (4) further states that the subscriber or resource. Punishment is also provided for non-compliance intermediary who fails to assist the agency referred to of such directions in subsection (3) of this section. There in subsection (3) shall be punished with imprisonment are certain other provisions also which interfere in free for a term which may extend to seven years and shall flow of information in the interest of security of state etc., but are not discussed here for the sake of space. terrorism is provided under subsection (2) of section 66 F of the amended Act. It reads; Computer Related Offences Computer related offences are, interalia, related to “Whoever commits or conspires to commit cyber damage to the computer, computer system etc. The terrorism shall be punishable with imprisonment which computer and its system is protected by Information may extend to imprisonment for life.” Technology Act. The Act became necessary to deter criminals committing cyber crimes and its abetment and The ingredient of the offence of cyber terrorism is attempt as well. If any person without permission of the included in section 66F. It is in two parts. Parts A and B. owner or any other person who is incharge of the Part A deals with such offences of cyber use which computer, computer system or computer network, access intended to threaten the unity, integrity, security or or secures access to such computer, computer system sovereignty of India or to strike terror in the people or or computer network(computer resource) and/or any section of the people by denying or cause the denial downloads, copies or extracts any data, computer data of access to any person authorized to access computer base or information including information or data held or resource; or attempting to act in the said manner; or stored in any removable storage medium, and/or introducing or causing to introduce any computer introduces or causes to be introduced any computer contaminant, and by means of such conduct causes or contaminant or computer virus into any computer, is likely to cause death or injuries to persons or damage computer system or computer network; and or damages to or destruction of property or disrupts or knowing that or cause to be damaged any computer etc. or any other it is likely to cause damage or destruction or supplies or programs residing in such computer, computer system services essential to the life of community or adversely or computer network; and/or disrupts or causes disruption affect the critical information infrastructure specified of any computer, computer system or computer network; under section 70. and/or denies or causes the denial of access to any person authorized to access to a computer, computer Part B of section 66F(l) deals, interalia, any restricted system or computer network in contravention of the information, data or computer data base so obtained may provisions of this Act, rules or regulations made be used to cause or likely to cause injury to the interest thereunder; and/or charges the services availed of by a of the sovereignty and integrity of India, the security of person to the account of any other person by tampering the state, friendly relations with foreign states , public with or manipulating any computer, computer system, order, decency or morality, or in relation to contempt of or computer network; and/or destroys, deletes or alters court, defamation or incitement to an offence, to the or causes any person to steal, conceal, destroy or alter advantage of any foreign nation, group of individuals or any computer source code used for a computer resource otherwise, commits the offence of terrorism. with an intention to cause damage, shall be liable to pay damages by way of compensation to the person so Publishing or transmitting obscene material in electronic affected as mentioned in section 43 of the IT. Act. form is punishable under section 67 of the I.T.Act., whereas section 66E provides punishment for violation But, however, if any person, dishonestly or fraudulently, of privacy. It states that whoever, intentionally or does any act referred to in section 43, mentioned above, knowingly captures, publishes or transmits the images of he shall be punishable with imprisonment for a term a private area of any person without his or her consent, which may extend to three years or with fine which may under circumstances violating the privacy of that person extend to five lakh rupees or with both as so provided in is guilty of commission of offence Punishment may section 66 of the I.T. Act. It is most crucial to mention extend to three years or with fine not exceeding two that after Mumbai Terror attack of 26.11.2008, new lakh rupees, or with both. Section 66E is added in provision as section 66 F was inserted by amendment in amending IT. Act in 2009. A new provision as section the Principal I.T. Act, in 2009, which came into effect 67A provides punishment for publishing or transmitting from 27.10,2009. By this provision punishment for cyber of material containing sexually explicit act, etc., in electronic form. Section 67B is also a new addition and company. Even the student of the public school who was it provides punishment for publishing or transmitting of a minor/juvenile and who was dealt with by the Juvenile material depicting children in sexually explicit act etc., in Justice Board, Delhi was sent to juvenile observation electronic form. The intermediary is duty bound to home and was granted bail after some days, though grant preserve and retain such information as may be specified of bail under section 12 of the Juvenile Justice Act, 2000 for such duration and in such manner and format as the is very liberal and the student belonged to a well Central government may prescribe. If the intermediary estabhshed family. It, however, raised many questions intentionally or knowingly contravenes the above and controversies in this area in India and abroad, provisions, he shall be punished with imprisonment for a particularly in USA. term which may extend to three years and also be liable to fine. US authorities concerned were aggrieved by the arrest of the CEO. Baazi.Com as it is a multinational company It may be added that privacy is an inherent right of human related with U.S. Co. Such arrests are highly sensitive beings. Privacy rights are legally protected by all civilized and may adversely affect on our foreign investment nations. The Supreme Court of India in R.Rajgopal vs. culture for which our country is making all efforts to State of T.N '^'., held that right to privacy is guaranteed multiply it. It is in this scenario perhaps that the then under Article 21 of the Constitution It observed that a Minister of Industry and Commerce of India felt the need citizen has a right to safeguard the privacy of his own, to change the law and opined that the law needs to be his family, marriage, procreation, motherhood, child changed and arrest be made only of the wrong doers bearing and education among other matters. None can i.e. content providers and service providers should be publish anything concerning the above matters without spared in some respects. It is added that thereafter the the consent of the person affected whether truthful or IT. Act was amended in 2009 by substituting the existing otherwise. Right to privacy has now become a more section 79 of the IT Act, 2000 and interalia, provided: significant value of all respects than before due to expanding dimension of cybernetics with application of “S. 79. Notwithstanding anything contained in law for sophisticated tools and advancement of highly complex the time being in force, but subject to provisions of sub­ information technology. This technology when used to section 2 and 3, an intermediary shall not be liable for commit cyber crime is most disastrous. any third party information, data, or communication link made available or hasted by him. In MMS scandal case committed in November, 2004 in Delhi using computer technology, a student of Delhi (2) the provisions of sub-sections (1) shall apply , (a) if Public School, another student of IIT, Kharagpur and a the function of the intermediary is limited to providing CEO of Baazee.com (service provider) and some other access to a communication system over which person violated privacy of a girl student of the public information made available by third party is transmitted School. A criminal case under section 67 of IT. Act, 2000 or temporarily stored or hasted, or (b) the intermediary and section 294 of the IPC was registered by the Crime does not, (i) initiate the transmission, (ii) select the Branch of Delhi police. Even the service provider receiver of the transmission and (iii) select or modify remained in judicial custody for a number of days and the information contained in the transmission... could be released on bail by the Order of the High Court The Law Commission of India has stressed the need for of Delhi. The rejection of the bail by the lower judiciary enactment of more cyber laws and for establishment of to the service provider who was the CEO of Baazi.com, electronic courts to deal with cyber crimes. Scope of a multinational company related to a U.S. Company was the existing law may be extended to cover variety of due to the sensitivity of the alleged offence of a matter cyber activities, but enforcement aspect should not be against a girl student of Public school and wide media ignored. publicity further made the case more sensational. Even the U.S. Authorities felt aggrieved by the arrest of the References said CEO of the Co. which was connected to a U.S. /. International Chamber of Commerce [ICC], the world’s leading private business grouping has established an anti-cyber crime unit on September 30, 1998 which seeks the co­ operation of INTERPOL in combating cyber cr4ime.

2. Times of India, 14.12.2010.

3. S. 68 of the IT. Act amended in 2009.

4. Times of India, 25.11.2010.

5. (1994)6 s e e 632. LORD KRISHNA THEORY OF MANAGEMENT IN HOSPITALITY

*Anju Chaudhary **Divya Thakur Abstract Management has become a challenging task in today’s world. Present global business scenario is distinguished by high levels of turbulent changes, uncertainty, and keen competition. As we have entered into 21st century, we are involved in the most crucial and difficult of all the transitions so far, relating to the transition to the global society. Moreover, management as applied science is also advancing very fast in its every aspect. New concepts, theories and new techniques are emerging every other day all over the world. There were several theories generated related to management till date, several writers created modern management theories on the basis of business and organizational activities, but Lord Krishna Theory of Management emerged as a part of modern management theory. Modern management concepts are vision, leadership, motivation, excellence in work, achieving goals, giving work meaning, decision making and planning, which are all discussed in the Bhagavad-Gita. The study of this research paper contributes that how Lord Krishna theory of management links with hospitality industry as Lord Krishna Theory of Management, now become a part and parcel of an organizational structure. The methodology of this paper is descriptive and case study method. Discussing about Hospitality Industry, it requires, interacting with people, addressing their needs and skill of tact, combined with knowledge and flexibility. Therefore, management in Hospitality looks for challenges with positive attitude in employees. Keywords: Decision making and planning, Bhagavad Gita, Hospitability Industry, Management theory, leadership, teamwork, motivation. Introduction “Yada Yada Hi Dharmasya, Glanirva Bhavathi Bharatha, Abhyuthanam Adharmaysya, Tadatmanam Srijami Aham’

his is a very renowned “Shloka” we all are Gurus. We have heard various stories of Lord Krishna’s listening from our child-hood days. That time bravery, confidence, decision making, enthusiasm, T when we ask our parents what this actually intelligence, leadership and communication which leave means, they told us that whenever there is decay of a message behind. All of them are used to deliver the righteousness and a rise of unrighteousness, then Lord appropriate concept to management. Krishna came into existence. Lord Krishna is one of the greatest Management Gurus, whom we can emulate What is Management? without a second thought. He was great in knowledge, What do we mean by Management? The conclusion from emotion, and action; altogether, he is the Mentor of various studies came that, “Management in all business Mentors, Coach of Coaches and Guru of all Motivational and organizational activities is the act of getting people

*Ms. Anju Chaudhary,Assistant Professor, Banarsidas Chandiwala Institute of Hotel Management. She can be reached at [email protected] **Ms. Divya Thakur, Assistant professor, Banarsidas Chandiwala Institute of Hotel Management. She can be reached at together to accomplish desired goals and objectives, employees. Employees in Hospitality Industry need to efficiently and effectively. It comprises planning, possess managerial skills, and supposed to be innovative, organizing, staffing, leading or directing and controlling good planner, manipulative, confident, good decision an organization or effort for the purpose of accomplishing makers, excellent communication skills and a good a goal”. There were several theories generated related leadership. to management till date, but several writers that created modem management theories, include Chanakya’s Artha Management guidelines from the Bhagavad-Gita Shastra,, Adam Smith’s The Wealth of Nation, Niccolo There is an important distinction between effectiveness Machiavelli’s The Prince. and efficiency in managing; • Effectiveness is doing the right things. The modem management concepts of vision, leadership, • Efficiency is doing things right. motivation, excellence in work, achieving goals, giving work meaning, decision making and planning, are all The general principles of effective management can be discussed in the Bhagavad Gita. However, if we talk applied in every field, the differences being more in about American style of business management, it is more application than in principle. The Manager’s functions or less dependent on empirical studies, scientific can be summed up as: approaches and mathematical derivations. The Japanese • Forming a vision form of management is based on the art form of • Planning the strategy to realize the vision. management, whereas the Indian style is based on wisdom • Cultivating the art of leadership. and knowledge. The Indian form concentrates more on • Establishing institutional excellence. the content (knowledge) rather than on the ‘form’ or • Building an innovative organization. outward appearance. • Developing human resources. • Building teams and teamwork. Although we never heard Lord Krishna Theory of • Delegation, motivation, and communication. Management as a part of modem management theories, • Reviewing performance and taking corrective yet, western universities have introduced a subject “Lord steps when called for. Krishna Theory of Management” to teach the concept to dieir students and also training department of various Thus, management is a process of aligning people and enterprises, conduct their training sessions by giving getting them committed to work for a common goal to examples of Lx)rd Krishna skills. The Bhagavad Gita, the maximum social benefit - in search of excellence.The written thousands of years ago, enlighten us on all critical question in all managers’ minds is how to be managerial techniques leading us towards a harmonious effective in their job. The answer to this fundamental state of affairs in place of the conflict, tension, poor question is found in the Bhagavad-Gita; Gita repeatedly productivity, absence of motivation and so on. The Gita proclaims that “you must try to manage yourself.” The recognizes no real differences in their teachings. Its reason is that unless a manager reaches a level of teaching is universal whatever may have been its origins. excellence and effectiveness, he or she will be merely a face in the crowd. Lord Krishna theory of management has become a part and parcel of an organizational stmcture. He had made Old truths in a new context two concepts on which whole management is based i.e. The modem (Westem) management concepts of vision, How to dance and how to make others dance. As he leadership, motivation, excellence in work, achieving knows, how to be effective and whatever situation will goals, giving work meaning, decision making and planning, be, how to be a winner. Whereas when we talk about are all discussed in the Bhagavad-Gita. There is one Hospitality Industry, it requires, interacting with people, major difference. While Westem management thought addressing their needs and skill of tact, combined with too often deals with problems at material, extemal and knowledge and flexibility. Therefore management in peripheral levels, the Bhagavad-Gita tackles the issues Hospitality looks for challenges with positive attitude in from the grass roots level of human thinking. Once the basic thinking of man is improved, it will automatically Hence, arises the important role of a manager to enhance the quality of his actions and their results. coordinate the above functions and activities in order to Objectives achieve a company’s organizational goals and targets in 1. To comprehend “lord Krishna Theory of tune with its business strategy. The degree to which the Management” and apply them to the Hospitality functions of management are implemented and the Industry. combination in which they are used will depend on the 2. To identify the role played by Lord Krishna in Gita level and position of the manager or supervisor within and apply them in today’s business arena. the hotel. 3. To understand the relevance of these teachings in hospitality industry in today’s scenario. When the Harvard Business Review (HBR) came out with a survey of 188 MNCs worldwide, in one of its Literature Review recent editions, on personal capabilities that contribute “Karmanye Vadhikaraste, Ma phaleshou kada chana, Ma in the making of a successful leader, conducted by Karma Biala Hetur Bhurmatey Sangostva Akarmani” Goldman, it was found that leaders by their very nature are of six types: This verse is from the Bhagawad Gita. And it’s really something that we have always tried to follow in a) Coercive— meaning ones who compel team hospitaUty industry: members to follow their decisions. b) Authoritative—the ‘come with me’ type; Karmanve Vadhikaraste. Ma phaleshou kada chana c) Affiliating—ones who work through close - You have a right to perform your prescribed duty, but association. you are not entitled to the fruits of actions d) Democratic—those who believe in building consensus Ma Karma Phala Hetur Bhurmatey Sangostva e) Pace-Setting—the ‘I will jump and you will Akarmani - Never consider yourself the cause of the follow’ type; and results of your activities, and never be attached to not f) Coaching—the ones who believe in mentoring. doing your duty.In simple terms it means: Keep on performing your duties without expecting for any reward The survey found out that for a successful leader, there in return, leading a selfless life - this is what it is all are three primary skills, which are laid about. We can also conclude it in the way that actions a) Technical skills which is both efficient and effective, focused mind, self a) Cognitive And Analytical Skills, effort without expectation are few of the points incurred b) Emotional Intelligence (El). by Bhagavad Gita in management. Few of the practices it implies are: According to Ramnath Narayanaswamy, professor at IIM-B, management students are looking at Krishna as Hotel Management is a people-centered service business. the CEO, Yudhishtir who binds together values, Therefore, it is incumbent on a general manager lo be a Bhima(outcomes),Aijun(leaming), Kama (legitimacy), leader as well as a manager. Management is defined as Nakul (process) and Shadev(purpose). getting things done through other people. While a manager is one who arranges resources, a leader is the Ansdysis by Henri Fayol divided management into five one who motivates people to get the task done. The elements: plan, organize, command, coordinate, and principal functions of management of a hotel are: control. According to Peter Drucker, a manager does 1. Plan his work by getting other people to do theirs. Debate 2. Organize continues on whether a manager needs to be leader in 3. Direct order to be efficient or effective, including the balance 4. Control between IQ (intelligence quotient) and EQ (emotional quotient). But ultimately, all endeavors should prepare a manager for decision-making and implementation involve discipline, detachment, devotion and reinforcing whenever a business opportunity strikes to bridge the the commitment to sustain an on-going concern for gap between profit-centric and purpose-centric business. management. Hospitality industry centers around making the employees Management is a process of ahgning people and getting (and the manager) more efficient and more productive. them committed to work for a common goal to the Hotels offer employees to work more, produce more, maximum social benefit - in search of excellence. The and sell more and to stick to the organization. The sole critical question in all managers’ minds is how to be aim of extracting better and more work from the effective in their job. The answer to this fundamental employees is to improve the bottom-line of the question is found in the Bhagavad-Gita which repeatedly organization. proclaims that “you must try to manage yourself.” The reason is that unless a manager reaches a level of Impelled by science and technology, all aspects in an excellence and effectiveness, he or she will be merely a organization are undergoing a process of globalization face in the crowd. and constant change. Today’s manager has to keep pace not only with the changing environment but also to be in Gita 111:35 “Nothing is ever lost in following one’s own touch with expanding horizons of knowledge in his dharma, but competition in another’s dharma breeds fear respective managerial area. This is a demanding task. and insecurity” (Easwaran, 1998). Therefore, realizing He has to accomplish so many things in target time and one’s own contribution towards the entire cluster/industry to deal with so many people within and outside the is vital in unifying/justifying one’s existence. Core organization. This creates stress and tension which competencies, intellectual properties and niche expertise sometimes becomes difficult to manage and expresses are intangible capital. Gita 11:47 “You have the right to itself work, but never to the fruit of work” (Easwaran, 1998). Gita 11:50 “When consciousness is unified, however, all One of Lord Krishna’s famous saying: vain anxiety is left behind. There is no cause for worry, whether things go well or ill” (Easwaran, 1998). So, “A leader is not the one who walks but the one who managing and owning capital are forms of stewardship leads walking ahead of others” from the Gita perspective. Lord Krishna was Perfect host and had great hospitality Holistic Approach skills. To unveil this statement, every one had heard the While the management grid consohdates the business storyline about his childhood friend, Sudama, who was perspective by focusing on evidence-based, profit centric hungry, impoverished and in rags, arrived at his palace. approach, “Self Control” as promoted by the Bhagavad Lord Krishna personally washed his feet and fed him Gita completes the experienced-based, purpose-centric with his own hands. The Bhagavad Gita was delivered aspect of management capital can be delegated when by Sri Krishna to boost Arjuna’s declining morale, there is a transparent structure in an organization (for motivation, confidence and to increase its effectiveness example, licensing, franchising). Capability can be interpersonal conflict which was to fight against not to empowered when the overall strategy is clear (for fight the war at kurukshetra, he played the role of teacher, example, agencies, subcontractors. Original equipment HR trainer, guide developer, to revive Aijuna’s motivation. manufacturers). For connections, the expanded networking would today include blogs and portals with His communication skills are evident in every word. real time push mails via Blackberry or similar Lord Krishna during his negotiations, to avoid war technologies. The vital link between business and between Kauravas and Pandavas demonstrated perfect management is the leader. This person relies on communication skills. As he didn’t want to avoid war communication to bond an enterprise together. From the between them, he manipulated his words and tried to wisdom of Bhagavad Gita, this process can, in summary. instigate fear motivation in Duryodhana by way of illustrating the greatness of Pandavas on and off the field communication is to communicate with honesty and with of war. respect toward others. Lord Krishna gave not only spiritual enlightenment but Setting Organizational Culture also the art of self inanagement, conflict management, Manager should be good in directing and controlling. stress anger management, transformational leadership, Controlling an army of 1.53 million soldiers and warriors motivation, goal setting and many other aspects of to fight against a bigger army was not an easy task for management which can be used as a guide to increase anyone. This was all made possible with the help of Lord HRM effectiveness. Unlike the western approach to Krishna’s great managing and controlling skills. A sermon HRM, which focuses on exploring the external world of from the Gita says: matter and energy the bhagavad gita recommends a HRM approach which focuses on exploring the inner In the chariot of the body, th^ five hors^_reB.resent world of self. the five senses (tongue, eves, ears, nose and skin), the reins, the driving instrument, symbolize the Krishna as a CEO of the World Organization mind, the driver is the intelligence, and the In current world, Krishna’s leadership is a most passenger is the self. fascinating and useful. He had demonstrated leadership of a very high quality, which had made him significant Managers should use their intelligence to control their leader, that’s why he is followed by millions of disciple mind; they should not let the mind to be controlled by the still today. Bhagavad Gita contains many leadership senses. lessons that are similar to contemporary leadership theories and practices. Consider some of these lessons Motivation- Satisfying lower order needs of workers embedded within the Gita as a sermon are as; Leaders adequate food, clothing and shelter, etc. are key factors should embrace rather than avoid challenges in motivation. However, it is a common experience that because they bring out the leaders’ greatest strengths. the dissatisfaction of the top and of the lower is identical They should be resilient in their actions and should only their scales and composition vary. It should be true not be weakened by pain and pleasure. Effective that once the lower order needs are more than satisfied, leaders do not lead by fear or anger. Character is the top should have little problem in optimizing its core to effective leadership they need to be aware of contribution to the organization and society. This situation the self and the surroundings. is explained by the theory of self transcendence Other sermon says: propounded in the Gita.

“Whatever the leader does, the followers will follow The Gita deals with management—not with the and whatever standards or example the leader sets perspective of factors of production, but with a focus on people in general will follow” self: the core of all management. Resources are increasingly becoming scarcer which augments the In the Bhagavad Gita, Krishna defines three specific challenge of managing them. Evaluation of alternatives disciplines that are required for effective leadership: is critical to make decisions; this demands patience, discipline of learning, discipline of speaking properly and wisdom and managerial skills. discipline of equanimity (steadiness of mind under stress). All of these disciplines are important for effective Attitude towards Work leadership. Today’s leadership authorities also agree that Personalities differ with one’s perspectives. The Gita effective leaders have to be effective learners. advocates that everyone should build a visionary Leadership is not only about teaching people to follow a perspective in his or her work. One should see the certain path or to do a certain thing, but it is also about importance of one’s work beyond his/her desk, learning things to be taught. Likewise, without effective organization, and niche markets, because the importance communication skills, leadership cannot become extends to society in general. It is defined in the subtle effective. Krishna says, the most important part of concepts of Swadharma, Vidharma, and Adharma. It suggests that while one does some work, he/she should financial bungling, missed deadlines, and de-motivated not get preoccupied with the outcomes. It advises non­ workers,” adds a senior official of DMRC. Bhagavad attachment to the results of actions performed while Gita is easily the best treatise on management which has remaining accountable for the output of one’s duty. It solution to several practical issues like redesigning the says that by acting without attachment, one can organization, setting directions, developing people. accomplish distant outcomes. An attachment sprouts ego in our work and detachment generates emancipation from In Hospitality industry. Manager should be good in the harmful energies. To excel in the performance of the direction and controlling. Krishna defines three specific work, the best way is to immerse oneself in the work so disciplines that are required for effective leadership: much that it no longer appears as work (karma) but rather, discipline of learning, discipUne of speaking properly and a duty (dharma). This gives rise to a value system in the disciphne of equanimity (steadiness of mind under stress). work of an individual. All of these disciplines are important for effective leadership. It advises non-attachment to the results of Methodology actions performed while remaining accountable for the The study from which this paper is derived is from output of one’s duty. descriptive and case study method. The purpose of choosing these methods is to get deep insight knowledge Conclusions and implications of “Lord Krishna theory of Management in Hospitality Whether it is human behavior, organizational behavior, Industry”. group theory, motivational theory, game theory, management by objectives or line of control, all facets Case study: Delhi Metro Rail Corporation focuses on of modern management can be discovered in Lord “sticking to ethics in the workplace”. Delhi Metro Rail Krishna theory of management. So we can say that an Corporation does not believe in intense vigilance nor does organization should be considered as a hohstic system it rely on hidden cameras to plug leaks and nab undergoing systematic organizational change, whereas wrongdoers. Instead the organization has turned to organizational strategies, technologies, human resources Bhagavad Gita to stem corruption, lethargy and and internal structures required simultaneous negligence. Putting the accent on “sticking to ethics in transformations. the workplace, the organization is attempting to instill the values of honesty, moral virtues of hard work and Today’s Indian management has noticed a remarkable diligence as preached in the Bhagavad Gita, which has change. Now the focus of visionary managers and now emerged as a guidebook for motivating numbers- management consultants is on ageless wisdom-oriented driven managers. So to help enhance the spirimal quotient values and ideologies in the Vedic scriptures like of the employees and to ensure that they steer clear of Bhagavad Gita. Even the renowned institutions are dishonesty and vice, there are frequent talks and lectures focusing to teach management based on Indian values. by motivational gurus and a handbook with relevant More and more renowned organizations, management message .The Managing Director, E. Sreedharan, is a consultants, research scholars are trying to become believer of the values that the Bhagavad Gita preaches.” value-oriented in their approach. They are focused to DMRC officials say Mr. Sreedharan’s messages to his implement those values and ideals which remain eternal employees are peppered with references from the holy and are relevant today. book. Nobody is perfect, even Lord Krishna. He also acted Findings like human being in many situations. To help mankind For the Case Study, the exercise in spirituality has without any selfish motive, one can lie here and there produced tangible results. A senior official of Delhi metro and can manipulate if the situation demands. Krishna says: “The feedback so far has been positive. The took some decisions only to prove this point. That is why workforce has benefited from the sessions and lectures. Lord Krishna is complete man and an apostle of life skills. There is positive energy, team spirit and no instances of And thus, we can call him “The Greatest Manager in the World”. To succeed in professional and personal life, 11. Easwaran, Eknath, 1998. The Bhagavad Cita. one has to learn and try to emulate Lord Krishna. Today Nilgiri Press California. it has found its place as an alternative to the theory of modem management and also as a means to bring back 12. Farrow N, 1987. The Cower Handbook of the right path of peace and prosperity for the human Management, 2nd edition, Gower, Vermont beings. (USA).

Bibliography 13. “Gita according to Gandhi” in http:// 1. Sri Aurobindo Ghose, (1926) Essays on the members.aol.com/ jajnsn/anasa.html gita: Our demand and need from the Gita page (reproductions of text written by Mahatma no 8 Gandhi in 1931)

2. Dhirendranath Pal, (1923) Sri Krishna- His life 14. Hee, Charles Chow Hoi A Holistic Approach and teachings- “The greatest of the great" page to Business Management: Perspectives from the 197. Bhagavad Gita, Singapore Management Review, 2007. 3. http://www.gitaaonline.com/metro-turns-to- bhagavad-gita-for-management-lessons/ 13 Jan 2011

4. Prof Jagmohan Negi, 2009, Hospitality Management, Current trends and practices- The management of a hotel page no 16

5. Bhattathiry, M. P. (2004). Bhagavad Gita and management. Retrieved on September 15, 2009 from http://www. boloji. com/hinduism/073, htm

6. Indian Management: A Holistic Approach from Vedic Perspective Suhas Vasudeo Chavan JJT University, Rajasthan AIMS International Conference on Value-based Management August 11-13, 2010

7. Bhaktivedanta A.C., “Bhagavad Gita As it is’’, Mumbai, 1991.

8. Sherlekar S.A., “Management (Value Oriented Holistic Approach)”, Himalaya Publishing House, New Delhi, 2007.

9. Chakraborty S.K, “Human values for Managers”, Wheeler Publishing, 1995.

10. Drucker, Peter, 1968. The Practice of Management, Pan Books, London. GREEN MARKETING: MAKING SENSE OF THE SITUATION

Ms. Deepmala Jain Abstract This paper reviews some of the literature on green marketing. The article generally addresses market place success and will describe marketing alternatives that may enhance firms” ability to both protect the environment and enhance profitability.

“Progress is possible, No one can stop it, but obstacle is there, we have to face it.” - Amartya Sen

It will also present information on various strands of the green marketing arena. It discuss many issues of importance to the green marketing arena, evolution of green products, a concern about the perceived quality level of many green products, perceived benefits and deceptive green advertising. Our discussion provides the information develops a set of propositions on benefit segmentation and persuasive communication which will guide our future research in this area. Introduction

According to the American Marketing degenerated into a mishmash of ideas, ethics, and Association, green marketing is the marketing confusion about what green products really are. of products that are presumed to be environmentallyA safe. Thus green marketing incorporates Take one product, attempt to make it environmentally a broad range of activities, including product modification, friendly, and then tell everybody about it. That is current changes to the production process, packaging changes, green marketing in a nutshell. With few standards, and as well as modifying advertising. very little labeling of any significance, the right to call a product environmentally friendly is practically limitless. Green marketing emerged as “marketing of products that Authenticity of labeling has further lost creditability as are assumed to be environmentally safe,” a simple enough the pseudo-accepted authority. Energy Star, has recently definition by anyone’s standards. Unfortunately, the very undergone an embarrassment in which some of the more simplicity of the initial definition provided excessive egregious products deemed efficient were exposed - leeway for companies seeking to take advantage of green for example, the approval of a gas-powered alarm clock. marketing, and the marketers creating their campaigns. Although there is spirited debate about the reasoning Green marketing involves developing and promoting behind social accountability, the fact remains that products and services that satisfy customers want and corporations are stepping up to become socially need for Quality, Performance, Affordable Pricing and accountable. Part of accountability involves the effect a Convenience without having a detrimental input on the company’s actions will have on the environment of their environment. consumers. The movement towards social corporate Over the relatively short history of green marketing, a responsibility encompasses accountability for the movement that began as a way to incentivize the environmental impacts of their products, a movement production of environmentally friendly products has that results in both a reduced impact and recognition for

Astt.Professor, Chanderprabhu Jain College of Higher Studies & School of Law, Affiliated to GGSIP University, Delhi. She can be reached at [email protected] sustainable efforts. Although today’s consumers are evidence indicates people are concerned about the balancing complex lifestyle choices, environmental environment and are changing their behavior. As a result awareness is a growing factor in product selection. of this, green marketing has emerged which speaks for growing market for sustainable and socially responsible Some companies have been able to create products with products and services. an emphasis on green initiatives that appeal to consumers. Perhaps one of the best examples is the Beneflts of Green Marketing compact fluorescent light bulb (CFL). With a cost of 2- Companies that develop new and improved products and 3 times that of their incandescent counterparts, CFL sales services with environment inputs in mind give themselves struggled when they were first introduced. Not until access to new markets, increase their profit sustainability, marketing campaigns underscored the sustainability of and enjoy a competitive advantage over the companies CFLs while promoting the energy savings (about $26/yr which are not concerned for the environment. per bulb replaced) did sales outpace those of incandescent bulbs. Adoption of Green Marketing There are basically five reasons for which a marketer What is a green company? should go for the adoption of green marketing. They are- Common characteristics of green companies: * Opportunities or competitive advantage * Use natural gas for boiler fuel. * Corporate social responsibilities (CSR) * Recycle biodegradable waste. * Government pressure * Minimum use of plastic material; use recyclable * Competitive pressure packaging materials. * Cost or profit issues * Use biomass and solar radiation as sources of renewable energy. Greenest companies in India * Generate electricity from hydroelectric plants. A survey conducted by BT- AC Nielsen ORG-MARQ * Reduce toxic emissions, etc. ranked Oil and Natural Gas Company (ONGC) the greenest company followed by Reliance Industries. Evolution of Green Marketing Overall, the oil and petroleum sector was considered the The green marketing has evolved over a period of time. greenest sector in India. BPCL, Castrol India and HPCL According to Peattie (2001), the evolution of green are other companies i marketing has three phases. First phase was termed as “Ecologkal” green marketing, and during this period India’s software companies are also considered green all marketing activities were concerned to help companies. IT companies are allowed to set up their environment problems and provide remedies for offices within the city limits. This is because they do not environmental problems. Second phase was harm the environment. Johnson and Johnson Ltd., “Environmental” green marketing and the focus shifted Chillibreeze, IBM, LG Electronics, PNB, Tata Motors on clean technology that involved designing of innovative and Hero Honda Motors are some of the other green new products, which take care of pollution and waste companies in India. issues. Third phase was ‘‘Sustainable” green marketing. The importance that green business has in India will It came into prominence in the late 1990s and early 2000. directly impact the world and our environment. With a population well over one billion, green business in India Why Green Marketing? could quite literally alter our ecology. India’s economic As resources are limited and human wants are unlimited, growth rate has been incredible, and will continue to be it is important for the marketers to utilize the resources incredible for many years to come. The widening middle efficiently without waste as well as to achieve the class will only fan the flame of this growth. organization’s objective. So green marketing is inevitable. There is growing interest among the consumers all over With increasing Government support and growing public the world regarding protection of environment. Worldwide awareness and interest in eco-friendly products, these companies are poised to grow tremendously. • Ads that* present a corporate image of environmental responsibility Considering future opportunities, these companies indicate a good potential in future and should be Place closely monitored. These companies could really prove The choice of where and when to make a product available to be beneficial for the society. will have significant impact on the customers. Very few Some Cases customers will go out 6f their way to buy green products.

(i) McDonald’s restaurant’s napkins, bags are made Strategies of recycled paper. The marketing strategies for green marketing include: - (ii) Coca-Cola pumped syrup directly from tank Marketing Audit (including internal and external instead of plastic which saved 68 million pound/ situation analysis) year. Develop a marketing plan outlining strategies with (iii) Badarpur Thermal Power station of NTPC in Delhi regard to 4 P’s is devising ways to utilize coal-ash that has been a Implement marketing strategies major source of air and water pollution. Plan results evaluation (iv) Barauni refinery of IOC is taken steps for restricting air and water pollutants. Challenges Ahead Green products require renewable and recyclable Green Marketing Mix material, which is costly Every company has its own favorite marketing mix. Some Requires a technology, which requires huge have 4 P’s and some have 7 P’s of marketing mix. The 4 investment in R & D P’s of green marketing are that of a conventional Water treatment technology, which is too costly marketing but the challenge before marketers is to use 4 Majority of the people are not aware of green P’s in an innovative manner. products and their uses Majority of the consumers are not willing to pay a Product premium for green products The ecological objectives in planning products are to reduce resource consumption and pollution and to A Green Business Starts With Small Steps increase conservation of scarce resources (Keller man, Environmentally friendly actions don’t have to be large 1978). to have an impact. Consistently reducing the amount of energy, water, and paper our businesses use can make a Price huge difference, both to the environment and to our Price is a critical and important factor of green marketing pocketbooks. How much paper would you save over the mix. Most consumers will only be prepared to pay course of a year, for instance, if you always ran double additional value if there is a perception of extra product sided copies? A small easy way to go green - but a big value. This value may be improved performance, function, result! design, visual appeal, or taste. Green marketing should take all these facts into consideration while charging a For green marketing to be effective, you have to do three premium price. things; be genuine, educate your customers, and give them the opportunity to participate. Promotion There are three types of green advertising; - 1) Being genuine means that • Ads that address a relationship between a product/ service and the biophysical environment a) that you are actually doing what you claim to be • Those that promote a green Ufestyle by highhghting doing in your green marketing campaign and a product or service b) that the rest of your business policies are consistent filled with stones (not bricks) in the toilet’s reservoir with whatever you are doing that’s environmentally will displace about 4 litres of water per flush - a friendly. Both these conditions have to be met for huge reduction of water use over the course of a your business to establish the kind of environmental year. credentials that will allow a green marketing campaign to succeed. 7. Finding a supply of paper with maximum available recycled content. 2) Educating your customers isn’t just a matter of letting people know you’re doing whatever you’re 8. Choosing suppliers who take back packaging doing to protect the environment, but also a matter for reuse. of letting them know why it matters. Otherwise, for a significant portion of your target market, it’s 9. Instigating an ongoing search for “greener” a case of “So what?” and your green marketing products and services in the local community. campaign goes nowhere. The further your supplies or service providers have to travel, the more energy will be used to get them 3) Giving your customers an opportunity to to you. participate means personalizing the benefits of your environmentally fnendly actions, normally 10. Before deciding whether you need to purchase through letting the customer take part in positive new office furniture, see if your existing office environmental action. furniture can be refurbished. It’s less expensive than buying new and better for the environment. Go green by: 1. I\iming off equipment when it’s not being used. Deceptive advertising This can reduce the energy used by 25 percent; Environmental marketing claims are often vague and turning off the computers at the end of the day confusing. Many companies tend to exaggerate the can save an additional 50 percent. environmental benefits of using their products. Some companies may also mislead consumers about the 2. Encouraging communications by email, and biodegradabiUty and recyclability of their products. The reading email messages onscreen to determine term “green washing” refers to the deceptive practice whether it’s necessary to print them. If it’s not, of companies’ attempts to make themselves appear more don’t! environmentally friendly than they actually are. Many environmental organizations, such as Resources for Living 3. Reducing fax-related paper waste by using a Green, are also taking action to prevent corporations from fax-modem and by using a fax cover sheet only deceiving consumers about the eco-friendliness of their when necessary. Fax-modems allow documents products. Resources for Living Green, for instance, to be sent directly from a computer, without published a report called “America’s Ten Worst requiring a printed hard copy. Greenwashers,” which accused major companies including Ford, BP, and General Motors of making false 4. Producing double-sided documents whenever environmental claims. Other organizations advocate the possible. boycotting of companies who are not environmentally responsible. (Thegreenlifeonline 2009). 5. Not leaving taps dripping; always close them tightly after use. (One drop wasted per second Conclusion wastes 10,000 litres per year.) There have been attempts to successfully segment the markets for green consumption. These include gender, 6. Installing displacement toilet dams in toilet age, psychographic factors and brands awareness etc. reservoirs. Placing one or two plastic containers Green marketing should not neglect the economic aspect of marketing. Marketers need to understand the 8. Phau, Ian and Denise Ong (2006), “An implications of green marketing. If you think customers investigation of the effects of environmental are not concerned about environmental issues or will not claims in promotional messages for clothing pay a premium for products that are more eco- brands. ” Marketing Intelligence and Planning, responsible, think again. You must find an opportunity to Vol. 25, No. 7 pp.772-788. enhance your product’s performance and strengthen your customer’s loyalty and command a higher price. Green 9. Pickett-Baker, Josephine and Ritzuko Ozaki marketing is still in its infancy and a lot of research is to (2008), “Pro-environmental products: be done on green marketing to fully explore its potfential marketing influence on consumer purchase like distrust on green advertising, most prevailing for decision. “ Journal of Consumer Marketing, young consumers than their older counterparts, Vol. 25 No. 5 pp. 281-293. alternative methodologies to be discovered, persuasion of consumers by a non green benefits message etc. 10. Woody, Todd. “The Green Consumer: Myth or Reality?” 22 Apr. 2008. CNNMoney.com. 13 Bibliography July 2009 . Myopia", Environment, Vol-48, June-2006

2. www.greenmarketing.net/stratergic.html

3. www.epa.qld. ^ov.au/sustainable industries

4. GreenSeal, (July 2009) “2009 National Green Buying Research", http://www.greenseal.org/ resources/green_buying_research.cfm

5. “Guide to the Green Life. ” 1 Apr. 2004. The Green Life: Simple. Healthy. Sustainable. 14 July 2009

6. Manget, Joe. “Capturing the Green Advantage for Consumer Companies. ” Jan. 2009. The Boston Consulting Group. 13 July 2009 .

7. Ottman, Jacquelyn, (1998), Green Marketing: Opportunity for Innovation. New York, NTC- McGraw-Hill. Chanderprabhu Jain College of Higher Studies & School of Law (Recognized by Govt of NCT of Delhi & affiliated to GGS Indraprastha University, Delhi) Plot No. OCF, Sector- A8, Narela, Delhi-110040

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