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VOLUME - XXXX JULY-SEPTEMBER 2019 ISSUE No. - III

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ORISSA JOURNAL OF COMMERCE U.G.C. CARE listed, A peer Reviewed and Referred Journal

Contents

1. Impact of Board of Directors'on NIFTY 50 Listed Companies in 1 H. K. Singh, Shantanu Saurabh & Veenita Singh 2. An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 13 Brundaban Sahu & Rakesh Chandra Sahoo 3. A Systematic Review of Literatures on Customer Churn Analysis in the Telecommunication Industry 24 Manoj Kumar Dash & Susmita Dash 4. Integrated Reporting for Corporate Sustainability: An Exploratory Study 42 Tulika Bal & Sunil Kumar Dhal 5. Financial Literacy and Its Dimensions: An Empirical Study in Assam 51 Sanjib Das & Santosh Kumar Mahapatra 6. Lifecycle Using Risk Estimation and Contingency Model for Indian Defence Sector 61 Mukesh Kumar Gupta & Gyanesh Kumar Sinha 7. Recent Trends in Entrepreneurship (Start-Ups) Development with Reference to North East-India 75 K.C Biswal & Dhananjoy Narzary 8. Investment Pattern in Coastal Area of : A Special Reference to Bhubaneswar-Cuttack Twin City 90 S.K Baral 9. Opportunities and Challenges in Developing Inland Waterways 97 Pradeepta Kumar Samanta (iv)

EDITORIAL

India Skills Report which is a joint initiative of Wheebox, a Global Talent Assessment Company, PeopleStrong, a leading HR Tech Company and Confederation of Indian Industry (CII) and supported and backed by renowned partners like United Nations Development Programme (UNDP), All India Council for Technical (AICTE) and Association of Indian Universities (AIU), stated that Employability continues in India. Over the last 10 years, the (GOI) has undertaken significant efforts in improving both the scale and quality of skilling, like setting up the National Skills Development Corporation (NSDC) in 2009, launching the Skill India mission in 2015, and the flagship skilling initiative, the Pradhan Mantri Kaushal Vikas Yojana (PMVKY) in 2016. This, in turn, is expected to drive economic gains and social mobility for individuals as well as trigger a productivity dividend for enterprises. As the world moves towards demand-based economy, so should feeder industries, including India’s biggest offering its talent. India skills policies have been plagued historically, unable to channel our demographic dividend towards this demand. In the 1980s and 1990s, private players like NIIT and Aptech built the pipeline for emerging tech jobs. In the Annual Household Survey conducted by the Labour Bureau, it was found that the country’s unemployment rate had risen to a five-year high of 5 per cent in 2015-16. Among those unemployed, female job seekers were the worst hit as unemployment among them had sharply climbed to 8.7 per cent in 2015-16 from 7.7 per cent in 2013-14, according to the Fifth Annual Unemployment Survey. While the Indian government is pressing the accelerator to create more jobs with its , Skill India and Start up India campaigns. Unfortunately, many young people remain unemployed because their skills do not match the emerging industry requirements in the country. Thus poised to provide fresh impetus to global growth. India’s economic growth will be significant in terms of its absolute contribution to global economic activity. But India’s development model is uniquely innovative, frugal, and green. Today there is a strong institutional structure with the Skill Ministry at the helm, supported by NSDC. According to the latest India Skill Report (2019), only 45.6% of the youth graduating from educational institutions are employable. To address this mismatch, it is imperative to understand the ‘return on skill’ (ROS) concept. (Managing Editor) Impact of Board of Directors’on NIFTY 50 Listed Companies in India

Dr. H. K. Singh*, Dr Shantanu Saurabh & **Dr Veenita Singh***

ABSTRACT Purpose – applying a set of data Nifty 50 listed companies in India; this research paper is an attempt to empirically evaluate the effects financial performance of board of director’s based on their characteristics. Design/ methodology/ approach – a sample size of 50 listed firms have been used, from the year 2008 to 2016. Time series and cross sectional are the basic features on which the entire study is based upon for panel estimation. Beside it, statistical measures like ordinary least squares (OLS) model of regression and robust regression is applied to mitigate the problems related to endogeneity. Findings – The primary results shows that for financial performance measuring by ROA, ROE, ROCE, board of director’s features has positive and relevant effect on financial decision and performance of the firms in our study on Indian Nifty 50 listed firms. The results also points out that in the perspective of nifty 50 listed firms, the leverage and firm size are negatively related with the financial performance of the firms. Limitations and implications of the Research –In accordance with the Indian corporate governance norms and reforms, it is obligatory for the listed companies to appoint independent directors system, by far is successful still, the regulatory and governing authorities should efficiently implement the norms of appointment of independent directors in listed companies to improve corporate governance system in India. Originality/value- Initially, in not similar fashion with the prior studies based on the developing nations, this present study interrogates the impact of features of board of directors on financial performance of Indian Nifty 50 listed firms. Thereafter, while a lot many studies applied a solitary indicator of firm financial performance, this study examines ROA, ROE and ROCE. Using the OLS estimation the present study emphasizes the endogeneity issue between firm performance and board of director’s characteristics, and robust regression for mitigating the exactness of using OLS estimation. Keywords: Board of director’s characteristics, Firm performance, India, Nifty 50I

Introduction The corporate governance composition of boards in terms of structure and size have paid much attention in the media and news in the corporate world in recent times, the failures of large companies

* Professor, Faculty of Commerce, Banaras Hindu University, Varanasi, Ex - Vice Chancellor (Managing Editor,The Indian Journal of Commerce) Maharishi University of Information Technology,lucknow. E-mail ID: [email protected], ** Assistant Professor (Commerce), KIIT, Bhubaneshwar, Email: [email protected] *** Assistant Professor, School of Management Science, Varanasi 2 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III was felt and observed many scams such as Enron, WorldCom and Parma- lat. The basic and primary idea is that, there is abundance of national and international guidelines for good corporate governance practices that affect matters related to board of director’s characteristics (Bennedsen et al., 2008). Composition of company’s board of director is one of the most valuable and significant mechanism of good corporate governance. The focal point in academic section is the effectiveness and efficiency of board of director’s characteristics. Firm financial performance has often been employed as a proxy for deciding the governance potential efficiency of a company in many previous studies review such as. Ghosh, (2006), revealed that firm’s performance either in terms of accounting concept or in marketing measures, particularly large size firm is affected by size of board of director’s that tends to have dampening impact. The one of the most integral part of internal corporate governance mechanism is the board of directors. According to(Akhtaruddin et al.,2009; Haji & Mubaraq, 2015) the vital institution in the internal governance structure of a company includes board of directors, which facilitates a primary monitoring function for agency problems. Definition of effectiveness means an extent to which problems are solved and objectives have been achieved (Wadhwa, 2014). Previous studies showed that board of director’s effectiveness essentially depend on board of director’s attributes, as disclosure of more relevant information to external parties is an important characteristics that define the effectiveness of boards. Following(Bennedsen et al., 2008; Green & Homroy, 2018; Merendino & Melville, 2019) studies, board of director’s effectiveness is defined in this study by its characteristics. In other way it can be said that, the improvement of the board of directors with reference to its integral elements such as independence, size, shareholding, nationality, multiple directorship, meeting and board committees can improve the effectiveness and capacity of the board to manage and monitor management and thus by increasing the scope and probability of providing more relevant information to external investors relevantly. All those financial shows that assess and fulfil the firm’s economic objective is a key matter of interest in management and other areas of researches. Firm financial performance concern with the a variety of subjective measures of how well a firm can apply its available assets from primary mode of operation to earn profit(Peters & Bagshaw, 2014). “The NIFTY 50 is the flagship index on the National of India Ltd. (NSE). The Index measures the behavior of a portfolio investment of blue chip companies through different domains, the largest and most liquid Indian securities. It includes 50 of the approximately 1600 companies listed on the NSE, captures approximately 65% of its float-adjusted market capitalization and is a true reflection of the Indian stock market”. NIFTY 50 includes major economic sectors of India. It issues declaration to offers an investment to managers’ publicity in one efficient portfolio in the Indian market. Indexing has been done since April 1996 and is appropriate for establishing parameter, index funds and index-based derivatives (NSI, 2019)1. Figure 1 shows that there was an increase in Nifty market at a CAGR of 11.7% in last 20 years (since 1996) and 7.5% in last 10 years (since 2006). In terms of yearly returns, since 1996, NIFTY 50 has given more than 50% return in (1999,2003,2007,2009,2018) 5 calendar years and more than 30% return in (1999,2003,2005,2006,2007,2009,2014,2017) 8 calendar years. NIFTY 50 has fallen by over 20% only in (2008, 2011) 2 calendar years, giving positive returns in 16 out of 23 years. Impact of Board of Directors’on NIFTY 50 Listed Companies in India 3 Figure 1: Performance of NIFTY 50

Data for 2019 is as on March 29, 2019. Source: NSE From the above context, research problem is clear and that objective is to study the impact of board effectiveness policy on the financial performance of the firm financial performance of NIFTY 50 traded companies, therefore, necessary steps will be taken to provide a clear picture for indexing board of directors. It is significant to enquire the relevant question the impact of composition of boards of directors on NIFTY 50 firm’s financial performance? Recent research work has answered this question by showing the impact of board of directors in different countries. Further, with a shortage of empirical studies on the impact of board of directors on many aspects of the Indian economy; academic research has not yet studied the impact of composition of board effectiveness on the financial appraisal of NIFTY 50 listed firms in India. A lot was said about financial performance of NIFTY 50 traded firms based on the board of directors characteristics in different countries, through many pieces of writing. The present study aims to study the effect of board of directors on the financial performance of NIFTY listed firms, and determine whether it was affected positively or negatively. The rest part of this paper organized as follows. Second section deals with the formulation of hypotheses and review of different literatures. The next and the third part constitute the research methodology section. Section four focuses on the descriptive statistics and results of the empirical tests. Lat and the fifth section includes the concluding remarks of the study. Section six reveals the implications and drawback of the study.

Literature Review and Hypothesis Development The important mechanism of internal corporate governance is constituent of board of directors. Board of directors and business organizations occupies a unique position in corporate governance. Both big and small organisations are governed by corporate governance. It is mandatory for the corporate entities to have board of directors by statue. Many studies have been done on various aspects of characteristics of board of directors and their impact on the financial performance. Some of the previous studies argued that the board size provides board effectiveness to improve firm performance. Guest(2008) argued the demerit that larger board size may face lack of coordination and decrease the board’s ability to oppose and find loopholes the control of top managers due to 4 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III lack of opportunities of discussion of management problems. In the other hand, Guner et al., (2008) argued that constitution of large board size may facilitate firms in offering suitable advice that comes from directors’ external link and due to expertise knowledge and experience in their respective fields. Jermias & Gani(2014) interrogated the association between board of directors’ dependence, managerial ownership and firms performance based on board capital. The outcomes are consistent with the view that firms advantage from board capital in terms of outside directors’ capability to check managers performance and provide advice and counsel to managers. Wang (2013) argued and concluded that different firms have different requirements based on complicated and simple firms performance-improvements board structure. Although large boards faces communication distortion and decision-making problems, they facilitates firms via making available more advisory functions. Guest (2009) studied the impact of board size on firm performance for a large sample of 2,746 UK listed firms over 1981-2002.They concluded that board size has a strong negative impact on financial performance.In addition, Ranasinghe (2010) found that board size had a negative association with Return on Assets and market book value, which was applied as proxies for firm performance. Many prior studies have been done to know the relationship between board size and firm performance has produced varied outcomes. It is discovered in most of the studies that the affiliation between board size and firm performance is negative (Bennedsen et al., 2008; Guest, 2009; Lin, 2011).on the contrary, Conheady et al.,(2015) find a significant positive relationship between the firm’s measure of board effectiveness and the firm’s contemporaneous and future market measure of performance. Furthermore, Bonn et al.,(2004) study and compared the sound effects of board size, proportion of female directors, proportion of outside directors and average age of directors on firm performance in Japanese and Australian firms. We found that board size and age of directors were negatively associated with the performance of Japanese firms. For Australian firms, outsider ratio and female director ratio were positively related with performance. Mohd Nor et al., (2014) analysed the trend of board characteristics and try to explore the association of board characteristics and Malaysian firm performance. The data were collected from the analysis of companies’ annual report for a sample size of 169 companies for period of 2009 and 2010. Study shows that there is a significant relationship between board size and firm performance. In addition, there are no association between proportions of independent non-executive directors to firm performance. Lin (2011) investigated the impact of duality and board structure on corporate performance. The finding of small and medium-sized companies advocate that the supervisory directors, outside independent and inside directors had positive impacts on financial performance, ROA and ROE. Prior studies conducted in India have not yet studied and appraised the impact of board characteristics on the financial performance. So, this study try to put in literature by introducing the following conceptual framework as shown in the Figure 2 to examine the impact of board characteristics on the financial performance of the firms. Impact of Board of Directors’on NIFTY 50 Listed Companies in India 5 Figure 2: Conceptual Framework

Performance Board Characteristics  ROA  ROE Control variable  ROCE

 Firm size

Leverage Based on the above literatures review and objectives of the study demonstrated above, the hypotheses of the present study are:

H01: There is positive associated between board characteristics and return on assets of Nifty 50 listed firms.

H02: There is positive associated between board characteristics and return on equity of Nifty 50 listed firms.

H03: There is positive associated between board characteristics and return on capital employee of Nifty 50 listed firms.

Research Methodology  Date The Research paper is based on pure secondary data which has been adopted from Prowess IQ a database of Indian companies, Money control website2, books and journal. Whereas board of directors and ownership structures, data were retrieved from the corporate governance reports section from the annual reports of the selected sample companies. Data which we need to justify objectives, collected for 8 years from 2008–2009 to 2015-2016. The purpose of the index is to compute the performance of large market capitalization companies.  Sample Size Companies constituting the S&P CNX Nifty 50 firms which are registered on the National Stock Exchange of India have been considered to fulfil the purpose of this study. (NSE), is a leading stock. The Nifty companies were classified into four eleven-samples classification as showing in the Table 1:

Table 1: Number and Percentage of sample firms by industry S.no. Industry Number Proportion 1 Automobiles 8 16% 2 Cement 3 6% 3 Construction 1 2% 4 Consumer Goods 3 6% 5 Energy 8 16% 6 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III 6 10 20% 7 IT 5 10% 8 Media and entertainment 1 2% 9 Metals 4 8% 10 pharma 5 10% 11 Telecom 2 4%

Total 50 100%  Variables There are three variables in this Research; the independent variable is board of director’s attributes and the dependent variable and control variable are as follow: • Return on assets measures by net income over total assets at the end of the financial year. • Return on equity is measured by profit after tax divided by total equity shares in issue. • Return on capital employee is measured by net profit after tax /capital employed. • Firm size is measured by the natural logarithm of total assets. • Leverage measures by total debt percentage are divided by total assets.  Statistical tools and Methods The study comprises descriptive statistics such as mean, median, mode, correlation and multicollinearity diagnostic, ordinary least squares and robust regression eviews 10 using review of literature to study the impact of board of director’s characteristics on financial performance of Nifty 50 listed firms.Therefore, the following model is developed:

ROAit =  +1 BDCit +2LEVit + 3FSIZEit+åit

ROEit =  +1 BDCit +2LEVit + 3FSIZEit+åit

ROCEit =  +1 BDCit +2LEVit + 3FSIZEit+åit Where,  is the intercept in this study, å is defined as an error term for the model, i and t correspond to firm and year, ROA is return on assets, ROE is return on equity, ROCE is return on capital employee, BDC is board of director’s characteristics, LEV is the short form of leverage, and FSIZE is the firm size.

Data Analysis and Findings: Descriptive Statistics Table 2 describes descriptive statistics for the variables applied in this research paper. It gives details information in the form of descriptive statistics, skewness, kurtosis and number of observations for the dependent variable and its causal and control variables. The output shows that skewness and kurtosis are in the range of ±1 and ±3 respectively. The results demonstrate the trend of financial performance measurements; ROA, ROE, and ROCE over the period 2008–2016. Similarly, the results show the descriptive statistics for board of director’s characteristics, leverage, firm size variables for Impact of Board of Directors’on NIFTY 50 Listed Companies in India 7 the same period. The results reveal that ROA, ROE, and ROCE each range between minimum values of -5.08,-18.18and -45.36and maximum values of 38.71, 86.91and 72.75with a mean of 11.98, 23.13 and 17.09 respectively. Moreover, board of director’s characteristics ranges between a minimum of 0.44, a maximum of 0.94 with a mean value of 0.74, and standard deviation of 0.10.Controls variables have an average value of 11.95, 5.20, a minimum of.01,3.75 with standard deviation of 22.8,0,90 respectively.

Table 2: Descriptive Statistics

Stat. ROA ROE ROCE BDC LEV FSIZE Mean 11.98 23.13 17.09 .74 11.95 5.20 Maximum 38.71 86.91 72.75 .94 87.61 10.14 Minimum -5.08 -18.18 -45.36 .44 .01 3.75 Std. Dev. 7.44 16.12 12.42 .10 22.8 .90 Skewness 0.65 1.61 0.72 -0.16 1.8 0.12 Kurtosis .247 1.73 2.47 -.61 2.27 2.09 observations 400 400 400 400 400 400

Correlation and Multicollinearity Diagnostic Table 3 explains the Pearson correlation matrix and multicollinearity diagnostics for different dependent and causal variables. The coefficients are based on the data from 50 Nifty Indian listed firms with 400 observations for the period 2008/09–2015/16. Results reveal the positive relationship of board of director’s characteristicswith financial performance. This indicates that if the companies follow the rules of board of director’s characteristics, the financial performance of the companies are going to increase. Similarly, the result also shows a positive relationship between firm leverage and financial performance measured by ROA, ROE, and ROCE, which means that if there is increase in leverage it leads to an increase in profitability. The result also shows a positive relationship of board of director’s characteristicswith leverage and firm size. This reveals that board of director’s characteristicsleads to increase in leverage and firm size whereas board of director’s characteristicshas a negative associations with financial performance measured by ROA, ROE, and ROCE.

Table 3: Correlation Matrix and Multicollinearity Diagnostics

Variables ROA ROE ROCE BDC LEV FSIZE Correlation matrix (Panel A) ROA 1

ROE .85** 1

ROCE .56** .52** 1

BDC .17** .06 .052 1

LEV .012 .04 .03 .02 1

FSIZE -.234** -.25** -.18** .04 -.15** 1

VIF 1.84 1.26 1.37 **. Correlation is significant at the 0.01 level (2-tailed). 8 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Results of Model Estimation Table 4 draws conclusion of regression estimation of firm financial performance on board characteristics, and control variables. The regression results in Columns 1, 2 and 3 depend upon accounting measures for ROA, ROE and ROCE, respectively. The board characteristics variables, the coefficient of BDC is positively and statistically significant at the 1% significance level for ROA, ROE and ROCE. The conclusion favors the hypotheses of the study (H01, H02, H03) and are similar with those of (Kao et al., 2019; Mohd Nor et al., 2014; Wang, 2013), suggesting that board characteristics variables does enhance firm financial and overall performance. The hypotheses have been accepted as the coefficient of TIER is associated positively and significantly with ROA, ROE and ROCE at the 1 % level. Table 4 depicts that the coefficient value of leverage is negative and insignificant for all ROA, ROE and RCOE. The result is consistent with (Doan & Nguyen, 2018). Moreover, the coefficient of Firm size is also negative and significant at the 1% level for both ROE and ROCE, These results are consistent with those of (Guest, 2009; Wang, 2013).

Table 4: Regression Results Estimation

Models ROA ROE ROCE Variable / Type Coeff. Prob. Coeff. Prob. Coeff. Prob. C 16.07 0.0 -42.53 0.0 29.32384 0.0003 BDC 14.64 0.0 20.86 0.006 31.46188 0.0001 LEV -0.02 0.16 -0.057 0.13 -0.01536 0.6963 FSIZE 0.004 0.017 -6.39 0.0 -6.07634 0.0000 R-squared 0.13 0.11 0.11 F-statistic 20.29 17.15 17.70 Prob. 0.0 0.0 0.0

Robust Regression The panel regression outcome may face the issues related to endogeneity. In this research study, endogeneity of board of director’s characteristics through firm financial performance would entail that the panel regression estimates, are significantly biased and incoherent, and so it cannot applied to draw conclusions about the causality of the association. So, we go for applying the robust regression to tackle the endogeneity issue. The equation is applied to carry out the robust regression is the same as equation (1). However, robust regression estimation may not convey better estimates in comparison to panel estimation. Table 5 demonstrates the results of the robust regression model. The results show that there is a slight change in the values of coefficients, standard errors and t-statistic from the values of OLS regression model in table 4. The coefficient estimates in case of robust regression are not inflated, deflated or highly deviated from the coefficient estimates of OLS regression. Further, the standard error of both; robust regression and OLS regression are about similar which indicates a proper estimating of the results. With view to the outcome of robust regression model, the second-stage firm performance equations are presented in Columns 1-3 of Table 4. The coefficients signs on the causal and control variables in each and every equation are g enerally as predicted. In general terms, the robust estimates are larger than those of panel regression estimation in Table 4. Impact of Board of Directors’on NIFTY 50 Listed Companies in India 9 Table 5: Robust Regression

Models ROA ROE ROCE Variable / Type Coeff. Prob. Coeff. Prob. Coeff. Prob. C 29.8911 0.0000 48.0912 0.0 34.2806 0.000 BDC 12.3953 0.0001 7.10256 0.1697 13.3755 0.0091 LEV -0.0337 0.0345 -0.0677 0.0084 -0.01432 0.5745 FSIZE -5.2475 0.0000 -6.1913 0.0 -5.19885 0.0000 R-squared 0.16 0.07 0.07

Prob. 0.0 0.0 0.0

Conclusion This Research paper investigates the impact of board of director’s features on firm performance. In compare to previous evidence for developing nations that reveals no connection between independent directors composition and firm performance, our results shows that for financial performance measuring by ROA, ROE, ROCE, board of director’s characteristics has a statistical significant and positive impact on firm performance in our work study on Indian Nifty 50 listed firms. It also points out that firm size and the leverage are negatively associated with firm performance in the context of nifty 50 listed firms. These findings can be concluded in association to the several institutional theory that portrays these mechanisms are resultant of practices or regulations emerge from coercion by legislators who impose certain good practices in order to improve organizational effectiveness, or as a result of imitation. In other words, the findings may be referred to this theory which suggests that companies might adopt practices or regulations as a result of coercion from a legislator who imposes some practices in order to improve organizational effectiveness. However, there is no prediction that the adoption of these regulations will improve organizational effectiveness and performance efficiency.

APPENDIX A

Table 5: Variables Definition

Variable Measurement References Dependent variables (Guest, 2009; Guner et al., 2008; Return of Assets (ROA) ROA = Profit after Tax / Total Asset Villanueva-Villar et al.,2016) ( Hassan et al., 2017; Kao et al., 2019; Return on Equity(ROE) ROE = Profit after Tax / Total Equity Singh et al., 2018) Return on capital employee ROCE= Net profit after tax /capital (Vishwakarma & Kumar, 2015) (ROCE) employed Independent variables 1. Size of board of directors is at least 5 but not more than 16 members. 2. The qualifications of the board members are revealed. 3. All members attended at least 75% of board meetings. 4. The number of board meetings held in (Contd...) 10 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

4. The number of board meetings held in the year and the attended physically, and/or attended via electronic media is disclosed for every board member. 5. The firms has implemented a procedure for a regular assessment of the board. 6. Public disclosure of offices held by any independent director in other companies 7. Separation of chairman and CEO 8. Firm has annual board meeting only for (Abdallah & Ismail, 2017; Al-Malkawi Board of Director’s non-executives et al., 2014; Ararat et al., 2017; Srairi, Characteristics 9. Board performance is periodically 2015; Wahab et al., 2007) evaluated 10. Company has a designated “lead” or senior non-executive board member Chairman of board independent director 11. The governance/nomination committee is composed of independent board members 12. No former CEO of the company serves on the board Time gap between the two meetings does not exceed 4 months 13. Governance/nomination committee has a written charter or terms of reference 14. Board is controlled by more than 50% of independent outside directors

Control variable Firm size Natural logarithm of total assets. (Arora & Sharma, 2016; Ullah, 2017) (Abdallah & Ismail, 2017; Hassan et al, Leverage It measured by total debt to total assets 2016)

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(Footnotes) 1 NSE is the brief name of the National Stock Exchange of India. Available in https://www.nseindia.com 2 Moneycontrol is India’s leading financial information source. See https://www.moneyworks4me.com An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market

Dr. Brundaban Sahu* & Rakesh Chandra Sahoo**

ABSTRACT Purpose: The purpose of this paper is to find out the impact of firm specific and macroeconomic variables on Indian stock market return. The paper also aims at analysing the behavioural aspect of stock return. Design/Methodology/Approach: The paper uses hausman test and Breusch-Pagan Lagrange multiplier(BPLM)testtofindouttheappropriatemodelforpaneldata.PooledOLSmethod is used to analyse the impact of firm specific, macroeconomic variables and behavioural variable on stockreturn. Findings: The results of the analysis indicate that price to book value ratio and firm sizes in terms of total assets are two important firm specific determinants of Indian stock return. Macroeconomic variables- Gross domestic products, money supply and 364 days U.S. Treasury bill rate have significant impact on stock return. India volatility index, a proxy for investors’ sentiment has significant negative impact on stock return. Originality/ value: The paper considers both fundamental and behavioural aspects of Indian stock market return. Keywords: Stock market, macroeconomic variables, firm specific variables, India volatility index

Introduction Stock market, as an important component of financial system, plays a vital role in the economic development of a country. It helps in transferring surplus fund from investors to the corporates, which can be used for productive purposes. The market exists only due to the fact that investors get sufficient return from their investment in various financial instruments. As per arbitrage pricing theory (APT) of finance stock return is affected by various macroeconomic (Gan et al., 2006) and firm specific variables (Shaikh et al., 2017). Other factors such as- legal, political environment, investors’ behaviour, risk return relationship in stock market can also affect stock return. Over the years, a multitude of empirical studies have explored the relationship between stock market return and macroeconomic and firm specific factors with most of the literature suggesting that basic macroeconomic factors are influential in explaining stock return (Fama, 1981). Macroeconomic variables

* Assistant Professor, N.C Autonomous College, Jajpur, Odisha, Mobile- 9437315355, Email – [email protected] ** Lecturer in Commerce, Model Degree College, Deogarh, Odisha. Mobile – 7873801335, Email- [email protected] 14 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III play an important role in deciding stock market return. Benjamin A. Abugri (2006) states that both domestic (exchange rates, interest rates, industrial production and money supply) as well as global variables (The Morgan Stanley Capital International (MSCI) world index and the U.S. 3-month T-bill yield) have a significant impact on Argentina, Brazil, Chile and Mexico stock market return. When the economic condition of a country gets better, this impacts the stock market in a positive manner. Economic variables can affect the amount of investment, demand supply factors, investors’ preference etc. A particular economic factor can have impact on a particular stock market but may not affect other markets. Peiró (2015) Amado proved that production and interest rate have significant impact on stock return in France, Germany and the United Kingdom but United States stock market return is affected only by productionrate. Stock return is also impacted by firm specific factors such as- size, price book value ratio, price earnings ratio, dividend yield. Current market value of firm can changes due to change in discount rate/ cost of capital, keeping future cash flow constant. Firm specific ratios- price book value, price earningsratio; dividend yield can affect the discount rate, there by the future return on stock [Pontiff and Schall (1997)]. Size of firm in terms of total assets can affect the stock return. Stock market is also affected by investors’ sentiment. If investors’ perception about the market trend is negative, it can affect their investment decision, thereby affecting stock return. Risk return relationship ofstocks can have impact on investment flow tostocks. Whether higher risk is being rewarded with higher return or not affects the investment decision in a stock within a particular risk class (N. Pettengill et al.,1995). As India is an emerging economy, stock market development can help the country a lot in the direction of economic growth. Indian stock market is known for its high volatility. Excessive volatility in the market discourages investment. One of the major challenges in the emerging markets is the predictability of stock returns (Fama and French, 2004). So, research is to be done to understand the impact of various factors on stock market return, which will help investors in taking confident investment decisions and policy makers in designing suitable policies for market and economic growth. Not many studies have considered of both fundamentals and behavioural aspects of Indian stock market return. Our research objective in this direction is to find out the impact of both domestic, global macroeconomic factors and company specific variables on Indian stock market return. Other objective of the study is to analyse the behavioural aspect of Indian stock market return, which can motivate and help investors in taking investment decision. The novelty of the study is that it considers both fundamental and behavioural aspects of stockreturn. Findings of the analysis indicates that price book value ratio, total assets affect stock return as two major firm specific variables. Domestic macroeconomic variables- Gross domestic product has a positive impact on stock return and money supply has negative impact on stock return. Global macroeconomic variable 364 days U.S. T bill rate positively affects Indian stock market return. The study reveals that behavioural factor can play a vital role in determination of stock return. The paper is organised as follows. Section 2 gives a brief review of literature. Section 3 discusses the data and methodology of the study. Section 4 is devoted to discussion of empirical results and section 5 concludes the paper.

Literature Review There exist a considerable amount of literature that supports the nexus between macroeconomic variables and Stock market return, largely in the context of developed markets. However, Emerging An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 15 Stock markets stand out to that of developed markets owing to the huge amount of risk and a greater return compared to the latter (Errunza, 1983; Claessens et al., 1993; Harvey, 1995a.). Both Global and Local macroeconomic factors have an impact on the market return and Harvey (1995a) examined the relationship between the stock market return in emerging markets and a number of global factors like that of world GDP, world oil prices, world inflation and trade weighted world exchange rate and found a limited impact of these factors on ESM return. Studies have also taken place considering the impact of local macroeconomic factors on stock return (Chen et al., 1986). Hence,the integration of the markets determines the selection of global (perfectly integrated) or local macroeconomic variables (perfectly segmented) or a combination of both (if the market is partiallyintegrated) (Bekaert and Harvey, 1995). As the assumption of perfect integration or perfect segmentation is not realistic, both global and local macroeconomic variables may play a vital role in the stock market returns of the country. Bilson et al., (2001) makes use of four domestic and one global factor to test the impact of these variables on ESM return. The four domestic variables are money supply, goods prices, real activity, exchange rate and value-weighted world market index proxying the global factor. In their study they find exchange rate and the world market index are the two influential macroeconomic variable on ESM return with other factors performing relatively poorly. Abugri, B. A. (2008) investigates the impact of local macroeconomic variables like exchange rate, interest rates, industrial productivity and money supply along with two global factors namely Morgan Stanley Capital International (MSCI) world index and U.S 3-month T-bill yields on stock market return for four Latin American countries; Argentina, Brazil, Chile, Mexico. Abugri finds a consistent impact of Global macroeconomic factors on return across these four markets and impact of local factors vary across the countries. Exploring these variables in particular, Appreciation of a country’s currency lowers the cost of importing goods including inputs, which makes up a major part of production in developing countries. This reduction in the cost of capital leads to an increase in local return. (Abugri, 2008; Pebbles and Wilson, 1996; Bilson et al. (2001) finds a positive relationship between the appreciation of domestic currency and stockreturn. In terms of money supply, the literature on the relationship of money supply with stock return gives mixed results, with several studies finding a positive impact of money supply on stock return (Bilson et al. 2001) and certain concluding a negative impact of money supply on stock return (Abugri, 2008; Gan et al., 2006). The channel through which money supply impacts stock return varies. Changes in Money supply have an impact on the real activity of the economy thereby affecting the future cash flow and hence return (Rogalski and Vinso, 1977). However, changes in money supply have an effect on inflation, which may lead to a negative impact on stock return. (Abugri, 2008; Gan et al., 2006) GDP represents the economic conditions of the market and the current stock level is positively related to GDP, as real economic activity has an impact on the future levels of cash flow thereby influencing stock market returns (Bilson et al. 2001; Fama, 1990; Ferson& Harvey, 1998; Peiró, 2016). Bekaert, Harvey, and Lumsdaine (2002) expected U.S. interest rates to have a significant impact on that Latin American markets given the high U.S. equity ownership in the destination market. On the same line, the Indian equity market have high share of U.S. equity ownership and hence one would expect the U.S. interest rates to have a significant impact on the Indian stock marketreturn. 16 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Firm specific variables such as dividend yield ratio, price to book value ratio, price earnings ratio also affect stock return. Current market value of firm is calculated by discounting future cash flows at cost of capital. Keeping the cash flow constant, if the discount rate decreases, market value increases (over pricing of shares) (Pontiff and Schall, 1997). This can lead to lower future return. Discount rate changes due to change in risk or liquidity. In this sense, firm specific ratios cause either increase or decrease in discount rate affecting the stock return. They predict return because they capture information about risk (Lewellen, 2004). Literature provides evidence of impact of these ratios on stock return. Pontif and Schall (1997) showed aggregate measure of the book-to-market ratio of Dow index forecasts future market returns. Combination of these ratios can have impact that is more significant on stock return compared to individual variable impact (Shaikh et al., (2017); Jiang and Soo Lee, 2006). During crisis period, higher risk stocks (lower price book value ratio) can generate lower return. Here the price-book value ratio and return will have a positive relation (Serra and Martelanc, 2014). Cakici and Topyan (2013) proved price book value ratio as an important and consistent predictor of stock return. Size of firm in terms of total assets can also affect the stock return. Companies with more assets tend to involve in more risky business, which can lead to future loss. Assets of a company sometimes increases because of acquisition of other firm, but this may not lead to higher future profit due to conflict of interest between managers and shareholders. Managers may go for such types of acquisitions, which will benefit them. This may not maximize shareholders wealth in long term. Stock prices falls due to these acquisitions (Constantinouet al.,2017). Loughranand Vijh(1997) proved disappointing return of acquiring firms in takeovers. Another reason for lower return of large firms is overvaluation of stocks. If stock is currently overvalued due to investors’ expectation that company will earn more profits in future, this may lead to lower future return on stocks (Constantinou et al., 2017). Jensen’s (1986) argued that excessive assets accumulation is a consequence of agency cost of delegated management. Managers can go for such investment, which serves their own interest. When shareholders realise this fact, stock price moves downward. This study considers dividend yield, price to book value ratio, price earnings ratio, size in terms of total assets of Indian companies to understand their impact on stock return in manufacturing and services sector. This also focuses on analysing global crisisimpact on stockreturn. Stock market is also affected investors’ sentiment. If investors’ perception about the market trend is negative, it can affect their investment decision. Total investment flow to the stock market can get lower if the fluctuation in the stock prices (volatility) is high. Thus, volatility can negatively affect stock demand and price. Cakici and Topyan (2013) proved a negative correlation between total volatility of stock and return. As per volatility feedback hypothesis, volatility leads to negative return (Pati et al., 2017). High volatility index indicates fear, anxiety, and pessimistic expectation of investors about the stock market, where as low volatility index reflect an optimistic attitude about the market. The sentiment of overall market can be judged with volatility index. The major source of stock market volatility is behavioural finance, which states that investors are perfectly rational and their irrational and sentiment based investment decisions can affect stock price movement (Daniel et al., 2002). Giot (2005a) reported that high volatility indicates an oversold market, which leads to lower return. Volatility index can also be used as risk management tool for deciding the investment in derivative products as a protection against portfolio risk (Chandra and Thenmozhi,2015). An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 17 As investors’ behaviour or sentiment plays a vital role in determination of stock return, this study focuses on the behavioural aspect by considering the impact of volatility index on stock marketreturn.

Methodology

Data Source The study considers S&P BSE () 200 index stocks for the period 1999- 2017. BSE stocks are selected as BSE is the oldest stock exchange of India. The data for 100 companies out of 200 listed companies at BSE is considered for the period of 1999-2017, due to inconsistency in the availability of data. Only 100 companies reported values consistently for the period. To analyse the behavioural aspect, data on India Volatility Index for 2009-2017. Annual Stock return (dependent variable) data is taken from Prowess IQ maintained by Centre for Monitoring Indian Economy (CMIE). Price-earnings ratio, Price-book value ratio, dividend yield data is extracted from the same database. The missing values were replaced with an average value. Gross Domestic Products (GDP), narrow money supply data is collected from Reserve database. 364 days US Treasury bill rate is taken from Federal Reserve Bank of St. Louis. India volatility index is taken from Prowess IQ database for the period 2009-2017. The general finance theory is the main input use in the process of selection of variables. The variables found to be having an influence on the stock return in the past studies and the availability of data are other guiding factors in the variable selectionprocess.

Variables

Table 1: Definition and source ofvariables Dependent Variable Definition Annual Stock return (closing price-Opening price)/opening price Price-earnings ratio (P/E) Market price of share/ Earning of share Price-book value ratio (P/B) Market price of share/ book value of share Dividend yield ratio (yield) Dividend per share/ market price per share Size Ln Total assets GDP Gross Domestic Products M1 Narrow money supply 364 US Treasury bill rate Coupon rate India Volatility Index Index value Industry D1 Dummy to distinguish the sectoral Impact on return D = 1, If Manufacturing= 0, Otherwise (service) GFC D2 Dummy to incorporate the impact of Global financial crisis D = 1, Post 2008 = 0,Otherwise

Descriptive Statistics Table 2 reports the summary statistics for all the variables included in the model. The average annual return is 0.82%. Standard deviation is 2.22, which indicates that there is a wide variation in stock return of companies. Average of P/E, P/B, Yield ratios are 2.98, 1.06,.29 respectively. Indian 18 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III volatility index for average period is 17.13, which is very high. Size of the companies in terms of total assets shows an average figure of 10.85 million rupees. The standard deviation of size indicates that all the companies are quite similar insize.

Table 2: Descriptive Statistics Variable Mean Std. Dev. ReturnPrice-earnings ratio (P/E) 0.82323072.98255 2.2232150.8867693 Price-book value ratio (P/B) 1.065959 1.007783 Dividend yield ratio (yield) 0.2921827 0.9289635 Size 10.8517 1.76889 GDP 0.0679322 0.0187121 M1 0.120875 0.0498502 364 US Treasury bill rate -4755002 1.714372 India Volatility Index* 17.13444 4.53333 * - number of observation = 900

Model Specification To investigate the relationship between macroeconomic, firm specific and behavioural aspects on annual stock return in India, Panel data regression procedures are implied. Hausman test is applied to select the appropriate model for panel data set. If the test failsto reject the null hypothesis, Breusch-Pagan Lagrange multiplier test is used to select between random effect and pooled OLS. The results of the specification test are reported in table 3.

Return 1 lnP/ E  B 2 lnP/ B   3 lnyield   4 lnTA   5 dlnGDP   6 dlnM 1   7 lnUSTbil ThestudythenanalysesthebehaviouralaspectofstockreturnbyincorporatingIndiaVolatilityindexinthemodel

Return 1 lnP/ E  B 2 lnP/ B   3 ln yield   4 lnTA   5 dlnGDP   6 dlnM 1   7 lnUSTbilate   8 lndiaVIX

Results and Discussion To examine the impact of macroeconomic and firm specific factors on stock return and to evaluate the impact of inclusion of VIX as a behavioural aspect, the study makes use of a 19 years micro panel data for the first objective and 9 years data for the second objective. Specification tests are employed for selecting among Pooled OLS, Fixed Effect and Random Effect model. The results of the specification tests are reported in Table 3. The hausman test fails to reject the null Hypothesis of no significant relationship between variable and unobserved heterogeneity, hence we proceed with the BPLM test for the significance of unobserved heterogeneity. The BPLM test fails to reject the null hypothesis of insignificance of unobserved heterogeneity. Therefore Pooled OLS is the preferred choice. An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 19 Table 3: Specification tests Model 1 – Firm Specific and Macroeconomic factors Specification test Statistic P-Value Tested Selection Hausman -0.00 0.5807 Fixed/Random&pooled OLS* Random* Breusch-Pagan 0.09 0.3790 Pooled OLS/Random Pooled OLS Model 2 – Firm Specific, Macroeconomic factors and behavioural Factor Specification test Statistic P-Value Tested Selection Hausman 6.72 0.5670 Fixed/Random& Random* pooled OLS* Breusch-Pagan 0.00 1.0000 Pooled OLS/Random Pooled OLS *- Failing to reject the null of Hausman test, we accept Random effect model provisionally and test for the significance of unobserved heterogeneity The result of the first regression model is reported in table 4.

Table 4: RegressionEstimates Dependent Variable Return Model Pooled OLS Independent Variable Coefficient Ln(pe) 0.0322 (0.0775) Ln(pb) -0.156** (0.0691) Ln(yield) -0.0589 (0.0652) Dln(gdp) 0.1089*** (3.668) Dln(m1) -0.4123*** (1.491) Ln(ust) 0.233*** (0.0621) Ln(ta) -0.0760** (0.0336) Industry dummy -0.0821 (0.114) Gfc dummy 0.195 (0.239) Constant 1.598*** (0.474) Observations 1,799 R-squared 0.025 Standard errors inparentheses *** p<0.01, ** p<0.05, * p<0.1 20 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III The result of the first regression model indicates that price to book value ratio has a significant negative impact on stock return, which means if P/B increases by 1%, return decreases by 15%.Increase in P/B indicates reduction in discount rate, which can lead to current overvaluation of stocks and ultimately lower future return. This is similar to the study by Cakici and Topyan (2013), which proved book to market ratio as a significant predictor of stock return. Size (ln total assets) indicates a significant negative impact on return. This may be due to long-run underperformance by acquirer, over expansion by managers as a consequence of agency cost [Chan et al. (2008)]. If total assets of firm increases by 1 unit, stock return of that company decreases by 7%. GDP has a significant positive impact on stock return. Growth in GDP, growth rate of money supply and U.S. T-bill perform verywell {Bilson et al. (2001); Abugri,(2008)} with a growth in GDP by 1% leading to increase in stock return by 11%. Money supply growth by 1% has a negative impact on stock return by 41%. Increase in US T bill rate can have a positive impact on S&P BSE stock return by 23%. After getting the results of first regression model, the study considers 2008 crisis dummy, sectoral dummy to understand whether S&P BSE 200 index stock return is affected due to global financial crisis and whether there is a significant difference in stock return in manufacturing and services sector. Pooled OLS again is applied after considering hausman and BPLM test results. As per the results of pooled OLS model, 2008 crisis has not brought any significant change in stock return of S&P BSE 200 index companies. There is also no significant difference in returns of manufacturing and services sector stocks.

Table 5: Regression Estimates Dependent Variable Return Model Pooled OLS Independent Variable Coefficient Ln(pe) -0.0417 (0.0917) Ln(pb) -0.0249 (0.0829) Ln(yield) 0.00729 (0.0789) Dln(gdp) 0.09123** (4.589) Dln(m1) -0.06905*** (2.424) Ln(ust) 0.0455 (0.0662) Ln(ta) -0.151*** (0.0424) Indiavix -0.0597*** (0.0165) Constant 0.03628*** (0.829) Observations 799 R-squared 0.041

Standard errors inparentheses *** p<0.01, ** p<0.05, * p<0.1 An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 21 Table 5 indicates the pooled OLS results of firm specific, macroeconomic, behavioural variables on stock return. When behavioural aspect is considered all firm specific financial variables are becoming insignificant. This shows that behavioural aspect plays a vital role in determination of stock return of S&P BSE 200 index socks. Volatility index has a negative impact on stock return [Cakici and Topyan (2013)]. Kumar (2012) also proved a negative relation between India VIX and Indian stock market return. When volatility index increase by 1 unit, return decreases by 6%. Total assets have a significant negative impact on stock return. Macroeconomic variable, GDP growth indicates 9% increase in stock return. If money supply increases by 1%, return decease by6.9%.

Conclusion This paper analysed the impact of various firm specific and macroeconomic variables on Indian stock market return considering S&P BSE 200 index stocks. Making a departure from previous studies, this study considers both kinds of variables for analysing Indian stock market return. Hausman and BPLM tests are used to find out the appropriate model for panel data set consisting 100 companies for 19 years. Pooled OLS results indicate that firm specific variables- price to book value ratio, total assets and macroeconomic variables- GDP, money supply and U.S. T bill rate significantly affect S&P BSE 200 index stocks. In the second model, India volatility index is considered and the result shows that behavioural aspect plays even more important role in determination of stock return compared to firm specific variables. High volatility in the market can discourage investors from investing in stock market, which can affect stock return. Volatility index has a negative impact on stockreturn. The study can help investors in taking investment decisions. Factors significantly affecting stock return have been discussed in the paper, which can be taken as one guideline for investment decision. Policy makers can consider impact of different firm specific and macroeconomic variables on stock market return, while designing policies for economic development of the country. Future studies can consider stocks from other indices to generalise the findings of the paper. Other firm specific and macroeconomic variables can be studied to find out their impact on Indian stock market performance. Different behavioural indicators can be developed to proxy for investors’ sentiment, which can help in understanding the behavioural aspect of Indian stock market return in a bettermanner.

References 1. Abugri, B.A., 2008. Empirical relationship between macroeconomic volatility and stock returns: Evidence from Latin American markets. International Review of Financial Analysis, 17(2), pp.396-410. 2. Azeez, A.A. and Yonezawa, Y., 2006. Macroeconomic factors and the empirical content of the Arbitrage Pricing Theory in the Japanese stock market.Japan and the world economy, 18(4), pp.568- 591. 3. Bekaert, G., Harvey, C.R. and Lumsdaine, R.L., 2002. The dynamics of emerging market equity flows. 4. Journal of International money and Finance, 21(3), pp.295-350. 5. Bekaert, G. and Harvey, C.R., 1995. Time varying world market integration.The Journal of Finance, 50(2), pp.403-444. 6. Bhargava, A., 2014. Firms’ fundamentals, macroeconomic variables and quarterly stock prices in the US.Journal of Econometrics, 183(2), pp.241-250. 22 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III 7. Bilson, C.M., Brailsford, T.J. and Hooper, V.J., 2001. 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Return behavior in emerging stock markets. The World Bank Economic Review, 9(1), pp.131-151. 15. Constantinou, G., Karali, A. and Papanastasopoulos, G., 2017. Asset growth and the cross-section of stock returns: evidence from Greek listed firms. Management Decision, 55(5), pp.826-841. 16. Cooper, R.V., 1974. Efficient capital markets and the quantity theory of money.The Journal of Finance, 29(3), pp.887-908. 17. Daniel, K., Hirshleifer, D. and Teoh, S.H., 2002. Investor psychology in capital markets: Evidence and policy implications. Journal of monetary economics, 49(1), pp.139-209. 18. Errunza, V.R., 1983. Emerging markets: a new opportunity for improving global portfolio performance. 19. Financial Analysts Journal, 39(5), pp.51-58. 20. Fama, E.F., 1981. Stock returns, real activity, inflation, and money. The American economic review, 71(4), pp.545-565. 21. Fama, E.F., 1990. Stock returns, expected returns, and real activity. The Journal of Finance, 45(4), pp.1089- 1108. 22. Fama, E.F. and MacBeth, J.D., 1973. Risk, return, and equilibrium: Empirical tests. Journal of political economy, 81(3), pp.607-636. 23. Ferson, W.E. and Harvey, C.R., 1997. Fundamental determinants of national equity market returns: A perspective on conditional asset pricing. Journal of Banking & Finance, 21(11-12), pp.1625-1665. 24. Gan, C., Lee, M., Yong, H.H.A. and Zhang, J., 2006. Macroeconomic variables and stock market interactions: New Zealand evidence. Investment Management and Financial Innovations, 3(4), pp.89- 101. 25. Giot, P., 2005. Implied volatility indexes and daily Value at Risk models.Journal of Derivatives, 12(4), p.54. 26. Hsing, Y., Phillips, A.S. and Phillips, C., 2013. Effects of Macroeconomic and Global Variables on Stock Market Performance in Mexico and Policy Implications.Research in Applied Economics, 5(4), p.107. 27. Jensen, M.C., 1986. Agency costs of free cash flow, corporate finance, and takeovers. The American economic review, 76(2), pp.323-329. 28. Jiang, X. and Lee, B.S., 2007. Stock returns, dividend yield, and book-to-market ratio. Journal of Banking & Finance, 31(2), pp.455-475. 29. Kumar, S.S.S., 2012. A first look at the properties of India’s volatility index.International Journal of Emerging Markets, 7(2), pp.160-176. 30. Lewellen, J., 2004. Predicting returns with financial ratios. Journal of Financial Economics, 74(2), pp.209- 235. An Impact of Macroeconomic Variables on the Functioning of Indian Stock Market 23 31. Loughran, T. and Vijh, A.M., 1997. Do long term shareholders benefit from corporate acquisitions?.The Journal of Finance, 52(5), pp.1765-1790. 32. Menike, L.M.C.S., Dunusinghe, P.M. and Ranasinghe, A., 2015. Macroeconomic and Firm Specific Determinants of Stock Returns: A Comparative Analysis of Stock Markets in Sri Lanka and in the United Kingdom. Journal of Finance and Accounting, 3(4), pp.86-96. 33. Pati, P.C., Rajib, P. and Barai, P., 2017. A behavioural explanation to the asymmetric volatility phenomenon: Evidence from market volatility index. Review of Financial Economics, 35, pp.66-81. 34. Peiró, A., 2016. Stock prices and macroeconomic factors: some European evidence. International Review of Economics & Finance, 41, pp.287-294. 35. Pettengill, G.N., Sundaram, S. and Mathur, I., 1995. The conditional relation between beta and returns.Journal of Financial and quantitative Analysis, 30(1),pp.101-116. 36. Pontiff, J. and Schall, L.D., 1998. Book-to-market ratios as predictors of market returns 1. Journal of Financial Economics, 49(2),pp.141-160. 37. Rogalski, R.J. and Vinso, J.D., 1977. Stock returns, money supply and the direction of causality. The Journal of finance, 32(4),pp.1017-1030. 38. Samontaray, D.P., Nugali, S. and Sasidhar, B., 2014. A study of the effect of macroeconomic variables on stock market: Saudi Perspective. International Journal of Financial Research, 5(4), p.120. 39. Serra, R.G. and Martelanc, R., 2014. Hierarchical Determinants of Brazilian Stock Returns During the 2008 Financial Crisis. Emerging Markets Finance and Trade, 50(sup5), pp.51-67. 40. Shaikh, A.S., Kashif, M. and Shaikh, S., 2017. Measuring Stock Market Predictability with Implications of Financial Ratios: An Empirical Investigation of Pakistan Stock Market. Journal of Business Strategies, 11(1), p.41. 41. Theriou, N.G., Aggelidis, V.P., Maditinos, D.I. and Ševiæ, Ž., 2010. Testing the relation between beta and returns in the Athens stock exchange.Managerial Finance, 36(12), pp.1043-1056. 42. Verma, R., 2011. Testing forecasting power of the conditional relationship between beta and return. 43. The Journal of Risk Finance, 12(1), pp.69-77. 24 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

A Systematic Review of Literatures on Customer Churn Analysis in the Telecommunication Industry

Dr. Manoj Kumar Dash* & Dr. Susmita Dash**

ABSTRACT Purpose - This paper aims to comprehensively and systematically review the existing literature on customer churn analysis in a telecommunication industry context and critically analyze the research pattern, developments, and propose future research agenda and/or directions. Design/Methodology/Approach- All relevant articles between 1985 and 2018 were systematically collected. The retrieved articles were then analyzed using bibliometric meta-analysis technique. Findings- Customer Churn Analysis is the telecommunication industry is limited to mostly quantitative techniques. Therefore, the advantage of qualitative research methods is not seen in the work. It is seen that there is a methodology bias in the telecom customer churn research. It is seen that the majority of the researchers in the area of customer churn analysis are involved in theory verification than in theory generation. Further, the methodologies used in the research, developed and tested, are suitable for confirming propositions or hypothesis rather than discovering new propositions or hypothesis. The existing literature reflects the dominance of a positivist view. The basic reflection from this study is that the researchers have too long ignored the metatheoretical implications of reliance on a single logical positivism paradigm. Such dominance of one theoretical in customer churn research is unfortunate and soon need to be addressed. It is also seen that most of the research are from the USA, China,and some other countries. Customer churn in many emerging economies like India needs to be more research. Even it is seen that most of the researchers suggested a generalized set of reasons and model for the whole telecom industry of a particular country. Originality/Value This study contributes to the existing research through its insights from the bibliometric analysis of existing research and critical assessment of existing customer churn literature. This critical review provides both academia and practicing world insights about the current developments and possible future directions of research in customer churn analysis in the telecommunication industry. Keywords: telecommunication, customer churn analysis, prediction, bibliometric analysis,Customer retention, Mobile phone services.

* Associate Professor, Berhampur (Odisha) ** Lecturer, Khallikote Autonomous College, Berhampur A Systematic Review of Literatures on Customer Churn Analysis in the... 25 Introduction Today, most of the markets face severe competition and are getting increasingly saturated. Therefore, companies have recognized that they should focus on identifying possible churning customers and device their retention strategy or business strategy at large (Hadden et al., 2005). On the one hand, acquiring new customers is important for business growth and on the other hand retaining a customer is important for sustaining in the business and earn long term profitability. This is primarily because of the fact that the net return on investments from retention strategies is much higher than that for acquisitions as it’s relatively less costly to retain a customer than accruing new ones. Companies across the world leverage social insight and intelligence to prevent customer churn and particularly those operating in the competitive sector like the Telecommunication sector. The situation is more alarming in emerging economies like India where 96% of mobile subscribers are constantly shifting their service providers in search of a better offer (Kapoor, 2017)! Whereas in a developed economy like the USA, the average monthly churn rate for top wireless companies may vary in single digits. Verizon Wireless had 1.22 percent average monthly churn rate in the third quarter of 2018 and AT&T’s in the fourth quarter of 2016 had 1.71 percent churn rate. Sprint Nextel had the highest churn rate in the U.S. in 2016 at 2.8 percent (FierceWireless). Though this percentage figures look small, when we see it in numbers it’s a huge customer base.But in the case of Germany, the churn rate of Vodafone in the mobile communications segment was in the second quarter of 2018/2019, the prepaid churn of 38.3 percent! In 2018, there were roughly 18.62 million Germans aged 14 years, and older who were very interested in telecommunications (IfdAllensbach) and consumer behaviour was different in the economy. In an emerging economy like India, Airtel said the percentage of users leaving the network is 3.6% due to competitive pressures (Sengupta, 2017). In the same economy, Reliance Jio reported that they have a churn rate of 0.30 percent per month, which it claims to be the lowest churn rate in the industry (Jain, 2018). Bersen et al. (2000) also estimated that the average churn rate at 2.2% per month. Customers are not independent, and the behavior of a customer depends on the behavior of those who are around them (Zhang et al., 2012). Customer churn rate and reasons vary from economy to economy. Therefore, for any company to survive in the challenging environment of telecommunication industry, the company must recognize and analyze customer attitudes and/or behavior. As a result in the past two decades both academia and corporate world have devised multiple solutions to make companies competitive by recognizing and forecasting customer preferences and behaviors in order to minimize customer churn.This paper collects, filters, shortlist, and then analyze the existing literature from the selected databases and demonstrates the development of customer churn analysis area and various methods and models that are devised to predict customer churn in the telecommunication industry.

Research Methodology The study follows a systematic approach in reviewing the relevant research papers in the area of customer churn analysis in the telecommunication industry. Theliterature review followed the PRISMA 26 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III guidelines (Moher et al., 2009).The study was conducted in the year 2018 to identify 211 articles related to different approaches in dealing with customer churn issues in telecommunication industry worldwide and relevant other works of literature. The study includes the literature published between the years 1985 and 2018. All the papers were searched, filtered, and collected from the databases (subscribed by ABV IIITM Gwalior, India) like EBSCO Host, Emerald, Science Direct, Scopus, and Web of Science. A comprehensive set of search terms were identified like a customer, churn, analysis, and telecommunication based on the author’s judgment and experience on the subject matter. The use of question marks symbol in the database during search ensured that both the British and American way of spelling the selected words are identified and included in the preliminary analysis. In the study, only those papers were considered that are written in English and a full text is available for download. The study includes only online publications. The search was matched for similarity in abstracts, paper titles, and keywords with the identified search terms. This resulted in a collection of 211 different articles.All the collected papers were managed using Mendeleysoftware,and the authors ensured no duplicate papers though manual screening. The study might have missed a few papers that are not indexed in the chosen databases and/or are available in offline mode only in the systematic approach of the literaturereview. Two researchers (authors) independently screened the selected literature and based on consensus the final list of papers were included. All form of disagreements related to the selection of papers were resolved through detailed discussion and reasoning. The criteria of the sectionwerea citation, journal ranking/indexing, relevance, and body of literature.

Table 4: Literature search and analysis

Type of Research Paper Conference papers, Journal Papers, Book Chapters The medium of paper collection (Online/Offline) Online Selection technique Systematic bibliometric analysis Databases used Web of Science (Primarily for analysis) Scopus, EBSCO-Host, Emerald, Science Direct Tools used for analysis VOS viewer and Web of Science online analysis facility Duration of collection Between 1985 and 2018 Total Number of Papers Selected for Analysis 211

A literature review can be seen as a means to identify the conceptual content of a focused area and may be used as a base for further research (Raghuram et al., 2010).The study further conducts a bibliometric meta-analysis and generates new insights on the existing published research.The concept of bibliometrics was first introduced by Allan Pritchard in 1969 in his popular work that was titled “Statistical Bibliography or Bibliometrics.” Bibliometric analysis helps us understand the existing literature in a holistic way.The traditional literature reviews were limited by the capacity of manual data processing and analysis of researchers. The result of such reviewis often limited to the prior knowledge, experience, opinions, and expertize of the researchers. In the bibliometric approach, the study uses quantitative methods to examine the research Metadata and comes up with new insights that create new knowledge about the focused area of study. A Systematic Review of Literatures on Customer Churn Analysis in the... 27 Figure 5: a Literature search and shortlisting process

The bibliometric analysis uses some software/tools (in this study we have used VOSviewer1) to conduct a comprehensive search of relevant articles in the selected databases and quantitative methods to present thescientific results(Pritchard, 1969).The bibliometric analysis approach may provide more objective and comprehensive results as compared with the traditional review approach (Ramos-Rodriguez et al., 2004).

Literatureand Analysis

A Working Definition To Customer churn is defined as the movement of customers from one service provider to another service provider in the telecom industry and churn management refers to the service provider’s process to retain itself profitable by retaining profitable customers (Berson et al., 2000).

Customer Churn in the Telecommunication Industry To quote Professor Clayton Christensen, Harvard Business School, he says that disruptive innovations have changed the way the businesses used to be run. These innovations are Social networks, cloud computing, and big data,etc. It seems that the telecommunication industry has witnessed these changes more than many other industries. Unlike many industries, telecommunication industry hasa very minimum or negligible switching costs,and this is detrimental for the industry. Telecom customers who want to switch their service provider for various reasons are free to do so. 28 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Among many challenges that any telecom company face, the challenge of managing customer churn and maintain a healthy customer base is of utmost importance. Customer churn means the periodic loss of clients or customers for various reasons in a business organization. Customers are free to choose their service providers among the pool of similar or different service providers and thus exercise their rights of choice and right to switch from one operator to another. When a customer churn, it is very costly for a company. First, the company loses the prospect of future earnings from this churn customer. Secondly, the resources that were invested in acquiring this churn customer in terms of manpower investment, the cost incurred in publicity, public relations, time invested, promotions and other operations cost. Churn customer is simply the one who joins another company (competing company) leaving the existing service provider. Churn management, management that determinethe customer turnover or attrition. (Haddenet al, 2007). Churn rate measures the number of customer who decides to leave the company or join the company during a specific period and the term is used in business to present the number of customers leaving the company or staying in. The retention of the customer is possible through improvement in the company’s services and offerings for the churn customers and this is possible only by knowing the reason for customer churn. In the fiercely competitive telecommunication market like the Indian telecom market, customers demand tailored products and expect better services but at a budget rate or fewer prices. The telecom companies extensively engage themselves and invest in various studies, campaigns, and almost everything that they may do in order to find the reasons of customers churn, measuring customer loyalty and ways to regain the lost customers. They focus on avoiding losing their customers because it is more costly and difficult to acquire new ones. Attracting new customers’ costs multiple times more than retaining the old customers,Therefore, the developments of new, effective, and efficient analysis methods and use of proper tools have become necessary.

Bibliometric Analysis of Customer Churn Literature (in Telecommunication) A detailed bibliometric analysis of the available literature on customer churn in the telecommunication industry (in a web of science core collection between 1985 and 2018) reviled the importance of the problem. Fig. 1 shows the increase in interest in customer churn related research in the telecom industry, in terms of a number of publications and citations of the selected 211 documents, from 2000 to 2018 on the Web of Science database. It is seen that citations have been increasing over the period of time and increasing significantly. It is seen that the publication citation reached a maximum number in 2017. In the year 2017, there was 317 publication citation related to customer churn in the telecommunication industry (as on 4thMarch 2018; 15:00 pm). The first article appeared in an issue in the year 2000. One of the early stage publications on customer churn is Mozer et al. (2000). The work of Mozer et al. (2000) have been cited for 137 times (as on 4thMarch 2018; 15:00 pm). Mozer et al. (2000) used various techniques like logit regression, neural network, decision trees, and boosting. Based on this technique, the authors’ predicted churn and tried to find out answers to questions like what incentives should be offered to the subscribed customers in order to increase retention rate in order to maximize company’s profitability? Until 2008, there were not even 100 publication citation in the area of study, annually. But, with time there is an increase in the annual citation count,and this signifies that there are an increasing research interest and importance in telecom churn. Telecom customer churn literature has been cited for 2,275 times in total (Sum of times cited),and without self-citations, the A Systematic Review of Literatures on Customer Churn Analysis in the... 29 count stands at 1,754 (as on 4thMarch 2018; 15:00 pm). Fig. 1 reflects that customer churn in telecom is well researched in recent years. The top 5 cited articles are listed in Table 2. It is seen that telecom churn is more researched in countries like the USA, People Republic of China, Pakistan, and South Korea. It is seen that at large customer churn falls in the research areas of computer science, engineering, operation research management science, business economics, and telecommunication. The highly contributing organizations are University College Dublin, Beijing University of Posts Telecommunications, and KU Leuven. One of the highest contributing authors is Bingquan Huang. Some of his contributions are Huang et al. (2016), Huang et al. (2012), Huang et al. (2011), and Huang et al. (2010). Huang et al. (2016) discusses on rule-based learning algorithms used in churn prediction. He discuss the concern that most of these algorithms are designed with the assumption of having a well-balanced dataset. He suggests that this may result in an unacceptable prediction results. Thus, he introduces a Fuzzy Association Rule-based Classification Learning Algorithm that may be used for churn prediction. The proposed approach can achieve better and acceptable accuracy in customer churn prediction and may be used for efficient customer churn prediction.

Fig.1: Citation report for 211 results on Customer Churn Literature (in telecommunication) from Web of Science Core Collection between 1985 and 2018 A detailed co-authorship analysis of author, who have a minimum of 2 documents and a minimum 50 citation, reflects that there is a high degree of collaborative work among authors like E. Johnson, R. Wolniewicz, H. Kaushansky, M. Mozer, and D. Grimes as seen in Fig. 2. Further, a more detailed co- authorship analysis of author, who have a minimum of 2 documents and irrespective of citation, reflects that there are two clusters of the author working collaboratively in the areas of telecom customer churn as seen in Fig. 3(red and green are two different clusters). It is seen that B. Baesens have more research contribution among all the authors. As seen in Fig. 4, the USA and China have more contribution to literature among all countries. Authors from the USA have been working more collaboratively with authors from countries like Pakistan, Sweden, Taiwan, China, South Korea, and Australia,etc. on telecom customer churn. Fig. 5 reflects that KatholiekeUniversiteit Leuven and the University of Southampton have more co-authorship in telecom churn literature, have been working collaboratively compared to other organizations, with significant literature contribution.

34 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Table 3: Techniques used by various authors for churn prediction

Author/s

-

Rotation Forest Regression CART Rough Set Theory Cluster Analysis Markov Model DecisionTree Genetic Algorithms Neural network Ethnography/ Netnography RotBoost Hybrid Models KNN Random Forest Rotation Forest Discriminant analysis fuzzy logic Bayesian network Support Vector Machines Classification Voted Perceptron

Ahmed et al. 2017

Sharma et al. 2013

Kang 2008

Gursoy 2010

Verbeke 2012

Burez 2009

Brandusoiu 2013

Qureshi 2013

Hung 2006

Kirui 2013

Kamalraj 2013

Backiel 2015

Olle 2014

Idris 2013

Idris 2014

Yabas 2012

Amin 2014

Bose 2009

Ahn 2006

A Systematic Review of Literatures on Customer Churn Analysis in the... 35 Table 4: Recent papers of telecom churn prediction, as on 4th March 2018 -

prediction

Keywords

networksMultivariate time cationTariff cationTariff

Call detailCall recordsChurn Dynamic seriesSocial networksTimeseries classification BroadbandInternetChurn predictionsCustomerchurnsData preprocessingImbalanced datasetRandomunder samplingsSampling techniqueTelecommunication companies activeusagechurncontinuance intentionMobilemoneymobile telecommunicationsatisfactionthird partymediatortrust Contractcancellation announcementCustomer churnGermanyMobile communi switchTerminationnotice churn predictioncustomerlifetime valuemaximumprofit measuremodel evaluation

Yearof Publication 2018 2018 2018 2018 2018

frican

Journal

ExpertSystems with Applications JournalofPhysics: ConferenceSeries JournalofA Business Telecommunications Policy BigData

Author Asiamah, E., - karsdóttir,Baesens,M.,

Óskarsdóttir,VanM., Calster,T., Baesens,B., Lemahieu, Vanthienen,W., J. Hartati, Adiwijaya, E.P., Bijaksana,M.A. Yeboah Narteh,B., Mahmoud, M.A. Gerpott,T.J., Meinert, P. Ós Vanthienen, B., J.

bagging the

ionfor Customer

Title classification for dynamicnetworks

Customer Churnin Mobilethe

based -

BasedModel Select - Time seriesTime for earlychurn detection: Using similarity Handlingimbalance data churnin prediction using combinedSMOTEand RUS with method Preventing TelecommunicationIndustry: Is MoneyMobile UsageMissingLink?the Terminationnotice ofmobile network operator customersswitch: aafter tariff empiricalAn study of postpaidsubscribers Germanyin Profit Retention UsingIndividual CustomerLifetime Values

Sl. Sl. 1 2 3 4 5 No.

36 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Conclusion Customer Churn Analysis is the telecommunication industry limited to data mining, machine learning, and Statistical techniques, mostly quantitative techniques, and few researchuses social media networks to understand the reason for churn. There seems to be no research that tried to understand the reason of customer churn in telecommunication industry using the qualitative technique, either ethnography or Netnography technique, and recommend solution accordingly in the form of Models and Strategies. Therefore, the advantage of qualitative research methods like Netnography/ Ethnography is not seen in the works, thus missing naturalistic consumer insights and the advantage of the researcher’s participant observation. It is seen that there is a methodology bias in the telecom customer churn research. One of the established and followed psychologists, Charles Reichardt and Thomas Cookcommented in the context of quantitative and qualitative research methods. It was suggested that the basic difference between the quantitative and qualitative paradigms is based on verifications versus discovery. The quantitative methods are developed for the purpose of verification or confirmation of theories,and such verifications are believed to lead towards the development of enduring theoretical structures that will erect “theoretical palaces” on the foundation being laid. Whereas, qualitative approacheswere developed for the task of discovering or generating theories (Deshpande, 1983). It is seen that the majority of the researchers in the area of customer churn analysis are involved in theory verification than in theory generation. Further, the methodologies used in the research, developed and tested, are suitable for confirming propositions or hypothesis rather than discovering new propositions or hypothesis.The existing literature reflects the dominance of a positivist view asReichardt and Cook stated that we sometimes use methods of theory verification even in situations where theory discovery may be more relevant. So, it is our intention to recommend that the qualitative paradigm has a strong hold in marketing discipline and sub areas like customer churn and we should also consider qualitative methods in our problem-solving approach and new theory building relevant to customer churn, as we believe that theory verification is as important as theory generations. The basic reflection from this study is that the researchers have long ignored the metatheoretical implications of reliance on a single logical positivism paradigm. Such dominance of one theoretical philosophy in customer churn research may not be encouraged and soon need to be addressed. Robert Chia in his article “The production of management Knowledge: Philosophical Underpinnings of Research Design” says that legitimate and acceptable knowledge is determined by the philosophical attitude of a community of scholars and that it changes from time to time,i.e. knowledge creation and legitimation is never static and continues to renew itself. It is also seen that most of the research are from the USA, China,and some other countries. Customer churn (telecommunication context) in many emerging economies like India needs to be more research, as there are very few high-quality papers available in Indian context (Considering Web of Science Core Collection database) and similar emerging economies. Even it is seen that most of the researchers suggested a generalized set of reasons and model for the whole telecom industry of a particular country. Today, the reasonfor churn not only vary from economy to economy but also from company to company. So, we are required to consider the individual company in a particular economy for churn analysis. Further, researchers may explore and consider new sources of data for the purpose of analysis. In the can world, the relevant data doesn’t exist. Since the future hasn’t happened yet, we actually have no relevant data to do the analysis on! (Martin and Golsby-Smith, 2017). We may try to find a new source of data that A Systematic Review of Literatures on Customer Churn Analysis in the... 37 may better help us in predicting churn behavior like say we may create data by prototyping (Say, we offer customers with new services or offers and observe their reactions for insights and yield possible relation with churn). What we want to bring out is that scientific analysis of data has helped in better decision making and the world a better place,but it doesn’t mean that every business decision should follow the same path! Because things indeed can be different from what we see! But we need to remember that “variety of approaches to management theory has led to a kind of confusion and destructive jungle warfare” (Koontz, 1980) and we should be cautious and justifiable in pursuing any approach leading to knowledge creation. The study by no mean tries to delegitimizing existing research approaches and only ask the researches to ensure that bad management theories don’t destroy good management practices (Ghosal, 2005).

Limitation of study and Future Research In this piece of work, only mobile telecommunication related literaturewas taken into consideration. In the whole work, only mobile telecommunication service is discussed exclusively. The research papers that are listed in the Web of Science and Scopus database are widely used in this work. This has ensured a certain degree of quality. But, this has resulted in the exclusion of a number of works that are published in journals not indexed in Web of Science or Scopus databases. The insights from the study may not be generalized and are particular to time, place (database), and keywords chosen in the study. There is huge scope to extend the study to a larger scale and apply comprehensive meta-analysis.The telecommunications sector is known for its heavy marketing practice,and they apply various marketing strategies toreduce churn and counteracts the negative effect related to various customer dissatisfaction. However, not all, service operators are successful in this respect and even all the discussed churn analysis methods and models are not equally promising. This begs the question of which of the discussed churn prediction methods and models are high performing solutions? In which situations are these methods and models more suitable? Which of the above methods and models are more reliable and exhaustive in their insights? These questions may be seen as an important subarea for furtherresearch.

Acknowledgment It is our brilliant supposition to put on record my best admirations, most thoughtful feeling of appreciation to Prof. (Dr.) Rajendra Sahu, Dr. Gourav Agarwal, and Prof. (Dr.) S.G Deshmukh of ABV- Indian Institute of Information Technology and Management, Gwalior (India) for their continuous support and guidance in accomplishing this piece of work. We would like to take the opportunity to thank Prof. (Dr.) Russell W. Belk, Professor of Marketing; Kraft Foods Canada Chair in Marketing, from Schulich School of Business, Canada for his online support and advice.

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(Footnotes) 1 VOS viewer employs a mapping technique and is an open source software and is available at www.vosviewer.com with tutorials and relevant papers. It can be used to create visualizations using databases like Scopus and web of science etc. The software is used in many research papers that are published by reputed peer review journals. A few relevant papers are freely available at www.vosviewer.com. 42 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

Integrated Reporting for Corporate Sustainability: An Exploratory Study

Tulika Bal* & Dr. Sunil Kumar Dhal**

ABSTRACT Corporate reporting over the years has witnessed paradigm shift to meet the information needs of the stakeholders. It continues to evolve from traditional financial reporting to sustainability reporting to more recently, integrated reporting (IR). IR is a concise communication about how an organization’s strategy, governance, performance and prospects lead to creation of value over short, medium and long-term. It is an integrated representation of a company’s performance in terms of a company’s financial and other value relevant information, which helps stakeholders in their decision-making. IR is expected to bring greater transparency on corporate commitment to sustainability.It shows the links between financial and sustainability performance in a single document. IR is emerging as an innovative reporting tool during last five years in India.This paper has examined the recent literature in the area of integrated reporting (IR) and its practices in India and abroad. Keywords: Financial Reporting, Integrated Reporting, Corporate Sustainability, Stakeholders.

Introduction Corporate reporting, over the years,is evolving continuouslyto meet the information needs of the stakeholders of business. Corporate reporting practices are changing from traditional financial reporting to sustainability reporting to more recently, integrated reporting (IR). “The accounting profession has challenged the traditional financial reporting model, arguing that it does not adequately satisfy the information needs of stakeholders for assessing a company’s past and future performance” (Flower, 2015). “Organisations are increasingly disclosing financial and nonfinancial performance as they are encouraged to become more accountable and transparent to the providers of capital, and toward other interested parties (Camilleri, 2018). “Initially, the idea of managing, measuring and reporting the three elements of an organisation’s social, environmental and economic impacts gained prominence during the late 1990s and early 2000s (Dumay et al., 2016). However, these reports, known as sustainability reports, often suffer weaknesses as they appear disconnected from the organisation’s financial reports and fail to make a link between sustainability issues and the organisations core strategy (Clayton et al., 2015). IR, the latest development in corporate reporting reform, promises to address criticisms and shortcomings of sustainability reporting (Stubbs & Higgins, 2018).

* Research Scholar, Sri Sri University, Cuttack ** School of Management, Sri Sri University, Cuttack Integrated Reporting for Corporate Sustainability: An Exploratory Study 43 IR is a concise communication about how an organization’s strategy, governance, performance and prospects lead to creation of value over short, medium and long-term(Wikipedia). It is an integrated representation of a company’s performance in terms of a company’s financial and other value relevant information, which helps stakeholders in their decision-making. IR aims at connecting different functions to form a holistic view of the business, recognizing the value, risks, and opportunities. IR is emerging as an innovative reporting tool for companies for integrating environmental and social thinking into their business decision making, which leads to sustainability of the organisation.

Background An annual report of a company contains two types of information, i.e., ‘backward-looking information’ and ‘forward-looking information’ (Kilic and Kuzey, 2018). The past financial results and their disclosure are considered as ‘backward-looking information. On the other hand, the current plans, future forecasts and future prospects are considered as ‘forward-looking information’. The stakeholders are interested in both types of information which are relevant for their decision making.Inlate 1990s and early 2000s, sustainability reporting, containing both financial and non-financial information,became an increasingly relevant topic in business and academia (Hahn and Kuhnen, 2013).Thus, a firm focused on sustainability and was held responsible for the society at large. Moreover, the stakeholders, whether internal or external, have started to look into the non-financial performances of the firms along with its financial performance. But the global financial crisis in 2007-08 brought into focus that a wide range of factors determine the value and sustainability of the organization.Sustainability was not fully embedded with business model and corporate reporting. The tangible or financial factors are easy to account for in the financial statements. Intangible factors like intellectual capital, competition, energy security, employee engagement, reputation and stakeholder relationships are very complex phenomena and also very difficult to report in specific terms. Taking into consideration the importance of integrated reporting, the Prince of Wales convened a high level meeting in 2009, and invited investors, standard setters, companies, academic bodies, UN representatives, representatives of IFAC and GRI to establish International Integrated Reporting Council (IIRC), a body to oversee the creation of a globally accepted integrated reporting framework. On December 9, 2013, the draft of the internationally recognized integrated reporting framework was released after incorporating the inputs collected from various stakeholders.The IR Framework of IIRC aims to simplify company reporting and improve its effectiveness by focusing on value creation “as the next step in the evolution of corporate reporting” (IIRC, 2015). IIRC has prescribed guiding principles for preparation of an IR, specifying the contents and presentation of the report. The objective of merging conventional financial reports and reports on environmental, social and corporate governance (ESG) into one integrated report is to provide quality information to stakeholders and promote sustainability.

Objectives and Methodology The specific objectives of this article areas follows: • To examine the IR researchand IR practices in India and abroad • To identify future research opportunities 44 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III The study is mainly dependent on secondary data. A number of recent research articles have been reviewed to find out the progress in IR research and opportunities for future research. Content analysis of annual reports of Sensex 30 companies has been undertaken in this research study to know the IR practices in India.

Literature Review A structured review of literature in the area of IR has been undertaken to develop understanding into how research is progressing in this area.The research papers have been critically examinedto find out the opportunities for future research. Eccles and Serafeim (2014) of Harvard Business School in their research paper on “Corporate and Integrated reporting: A Functional Perspective” presented two primary functions of corporate reporting (information and transformation) and described why IR could be a superior mechanism to perform these functions. They have also explained, through a series of case studies, the contents of an effective integrated report. Clayton, et al. (2015) made a comparative study on integrated reporting and sustainability reporting for corporate responsibility in South Africa. The content analysis of the corporate reports revealed that the key drivers of sustainability and integrated reporting were regulatory requirements, industry of the company, the environmental and social impact of the company, and stockholder perceptions and pressure. Adams (2015) analysed the integrated thinking required to develop an IR. The paper discussed the integration of sustainability actions and impacts into corporate strategic planning and decision making. It suggested areas of further research to facilitate this. Lai et al. (2016) studied whether the decision to adopt IR stems from the need to repair legitimacy threats. They found out that legitimacy pressures did not play a role in explaining IR adoption. Overall, their evidence suggested that corporate engagement in IR was not a matter of strategic legitimation. Humphrey et al. (2016) studied the emergence of International Integrated Reporting Council (IIRC) and its attempts to institutionalize IR.They observed that IR, as a practice, is critical to the relevance and value of corporate reporting. They observed that the IIRC has been swift in establishing itself as a globally recognised body. Dumay, et al. (2016) reviewed the field of integrated reporting to develop insights into IR research and outline future research opportunities. They observed that there is little research examining IR practice. They argued that the ‘eco-system approach’ to researching IR is important because the IIRC (2013, p. 2) advocates leveraging “financial, manufactured, intellectual, human, social and relationship, and natural” capital as part of creating value. Faria (2016) analysed the evolution of IR and discussed arguments in favour or against IR. It was concluded that there are several advantages above the disadvantages that need to be improved to disseminate the form of doing IR all over the world. Perego, et al. (2016) studied IR and observed that IR has fast emerged as a new accounting practice to help firms understand how they create value and be able to effectively communicate this to external stakeholders. The study has contributed to this field by reframing the existing implementation challenges of IR into promising and inclusive research opportunities that align the priorities of both academia and business. Integrated Reporting for Corporate Sustainability: An Exploratory Study 45 Maniora (2017) examined the impact of IR on the integration of environmental, social and governance (ESG) issues into the business model and the related economic and ESG performance changes. The research paper provided empirical evidence using three matched samples of companies from around the world for the sample period 2002-2011, that contradicts the general notion of IR as a superior reporting mechanism, as the benefits of IR are driven by several factors. Mervelskemper and Streit, (2017) studied the effectiveness of a firm’s strategy to report on its ESG (environmental, social and governance) activities, and whether following the current IR trend is worth the effort. They observed that IR is associated with superior outcomes compared with a standalone report for composite ESG and corporate governance performance. Stubbs and Higgins, (2018), in their exploratory study of the preferences of users of non-financial reporting for regulatory or voluntary approaches to IR, found more support for voluntary approaches to IR. They suggested that IR will become the reporting norm over time if left to market forces as more and more companies adopt the IR practice. However, half of the investors supported mandatory IR because, in their experience, voluntary sustainability reporting has not led to more substantive disclosures or increased the quality of reporting. Camilleri (2018), in his research on the integrated reporting of financial, social and sustainability capitals, found out that organisations are increasingly disclosing financial and non-financial performance as they are encouraged to become more accountable and transparent to the providers of capital, and toward other interested parties. It is inferred that there is both costs and benefits for using IR framework. Bal and Bal (2019), in their research study on corporate integrated reporting, examined the progress of research in IR area and undertook the content analysis of the annual reports of selected companies in India to study the IR practices.They cocluded that there is need for significant transformation in approach and thinking, leading to innovative reporting and IR movement in India. From the study of the above research articles, it can be inferred that the researchers can undertake future research studies to study the relationship of firm value, firm size, capital market, sustainability and stakeholder decision making with IR. Content analysis of annual reports can also be undertaken to evaluate the quality of IR. IR practices of companies in other countries can be studied for providing cross-country comparison.

IR: A Conceptual Study IR is an integrated representation of a company’s performance in terms of both financial and other value relevant information.It provides a holistic view of the business by connecting different functions.It recognizes the value, risks and opportunities of the organisation.It is a transition from sustainability reporting to IR.It links the sustainability of a company’s activities and company’s financial performance.It takes a wider view of six ‘capitals’ used by the organisation, which are as follows (Bal and Bal, 2019): • Financial Capital: The pool of funds available to the organization. • Manufactured Capital: Manufactured physical objects as distinct from natural physical objects. • Intellectual Capital: Intangibles that provide competitive advantages. • Human Capital: The skill and experiences of people and their motivations to innovate. 46 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III • Social and Relationship Capital: Community, stake holders and other networks to enhance individual and collective well-being. • Natural Capital: Water, land, minerals, forests, bio-diversity and ecosystem health.

Fig. 1: Value Creation

Source:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2388716 on 22.05.2019 The following are the guiding principles of IR (Morros, 2016, 345-346): • Strategic Focus and Future Orientation: • Connectivity of Information • Stakeholder Relationships • Materiality and Conciseness • Reliability and Completeness • Consistency and Comparability The process of producing an IR requires companies to actively measure environmental, social and other non-financial impacts.These factors are to be integrated into corporate decision making through a process referred to as ‘integrated thinking’. (www.accountingforsustainability.org). The key aspect of integrated thinking is that companies must measure and report on all of the various “capitals” a company uses to create value, rather than focusing solely on financial capital. IR also includes information about future prospects and uncertainties. This report should include all material facts, both favourable and unfavourable for the company. Common reporting format for companies following IR has the following elements: • Organizational Overview Integrated Reporting for Corporate Sustainability: An Exploratory Study 47 • Governance • Business Model • Risk and Opportunity • Strategy and Resource Allocation • Performance • Outlook • Basis of Presentation

IR: Practices in India and Abroad SEBI, in consultation with industry bodies and stock exchanges, asked top 500 listed companies to voluntarily adopt IR framework from the financial year 2017-18. After this declaration, IR in India is gaining momentum. This move by the market regulator is aimed at providing stakeholders relevant information that is useful for making investment and other decisions. SEBI said that information related to integrated reporting should be provided in the annual report separately or by incorporating in ‘management discussion and analysis’ or by preparing a separate report. The companies can also host the IR on their website and provide appropriate reference to the same in their annual report. To avoid duplication of information, if the firm has already provided the relevant information in any other report prepared it should provide appropriate reference to the same in its IR. Kirlosker Bothers Ltd. is one of the first companies in India to prepare IR since 2013-14. At present, many large companies in India have already adopted IR. , Ltd, , HDFC Bank, , HDFC Ltd. and Induslnd Bank have prepared integrated reports in the current financial year, 2018-19. RIL aligned the sustainability report content to principles of International Integrated Reporting Framework laid down by IIRC and prepared its IR. HDFC Ltd. has prepared IR which gives holistic view of the long-term strategy and financial performance of the company along with benchmark standard with respect to CSR, human rights, environment, society, governance and sustainability. is the first bank to release the IR in line with IIRC since 2015-16. The report explains bank’s dependence and impact on the various forms of capital that are fundamental to its ability to create long-term value.Tata steel is preparing IR since 2014-15. The IR for financial year 2016-17 has been recognized as Asia’s best integrated report by Asia Sustainability Reporting Awards. Wipro is also preparing IR for last three years providing information on six types of capitals and their interdependence. Many countries and their regulators (Japan, India, South Africa, UK and many European countries) have taken initiatives to implement integrated reporting. South Africa is the only country which made IR mandatory for all listed companies in the Johannesburg Stock Exchange. Many large multinational companies operating in advanced countries and emerging economies are preparing IR to meet the emerging needs of the stakeholders even though it is voluntary.

A Case Study Tata Steel, formerly Tata Iron and Steel Company Limited, is an Indian multinational steel making company and one of the respected companies in the world. It has global presence in steel industry 48 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III across five continents and is one of the largest steel manufacturers in the world. It’s a member of , founded by Jamsetji Tata. Tata steel is preparing IR for the last four years. It provides quantitative and qualitative disclosures to meet the requirements of various stakeholders. The present case study analyses the IR, which it has presented under the required six capitals in its annual report for the period April1, 2018 to March 31, 2019. As regards Tata Steel’s financial capital, its endeavour is to optimise returns for providers of financial capital and invest the surplus in attractive growth opportunities. It has focused on deleveraging and enhancing cash generation through efficiency and productivity. During the current year, it focussed towards strengthening its operations in India through the acquisition of Bhushan Steel and investing the expansion of the Kalinganagar plant in Odisha. The board has recommended higher dividend as compared to previous years. Its key financial input isRs. 3,677 crorein FY19 towards capital expenditure. During the year under review, the key financial capital outputs are improved turnover, which is 16.7% higher than the previous year, increased EBITDA by 31% and improved EPS. Regarding manufactured capital of Tata Steel, it is an integrated steel company with backward and forward linkages. During the year under study, it strengthened its operations through a combination of organic and inorganic growth initiatives which helped it to maintain cost-competitiveness and derive production efficiencies. The goal is to achieve production capacity of 30 MnTPA in India by 2025 and to maintain cost leadership position. It is building production facilities and supply chain efficiency. As regards intellectual capital, Tata steel aspires to be a pioneer in leading the fourth industrial revolution and is committed to developing cutting-edge technologies that help to improve efficiencies. Amidst changing customer needs, competition and regulatory risks, it strives continuously to innovate and adapt to change. It is focused on leveraging its R&D capabilities through new products, advanced materials, process improvement and digitalisation across value chain to make it future-ready. It has a two-pronged approach towards innovation, supported by robust resource allocation and organisational commitment. It also leads industry efforts in supporting knowledge transfer and capacity buildingacross and beyond its sector.It regularly supports industry bodies in sharing best practices, training, research, and ideas that enhance the overall performance. Total Quality Management (TQM) initiatives like Shikhar25, are undertaken to achieve excellence in many areas. To enrich human capital, Tata Steel has industry-leading employee welfare practices and a culture of working together. It is a pioneer in progressive people practices. Its occupational health and safety practices help in developing a culture of safety and care. There is 26% reduction in high potential incidents.It is able to maintain zero fatalities inside plant premises for the last four years. It continues to focus on employee engagement, diversity and inclusion. In the current year, it implemented an Employee Productivity Framework to sensitise employees on productivity improvement. It has a Workforce Capability and Capacity Framework to assess capability needs for skill and competency building. Regarding natural capital, Tata Steel continuously strives to protect the environment, minimise environmental impact and promote resource efficiency. Its goal is to achieve zero affluent discharge by 2025. It has partnered with the International Union for Conservation of Nature (IUCN) at its raw material locations in and Odisha for the implementation of biodiversity management plans. Water management and water conservation strategies are followed to save water. Integrated Reporting for Corporate Sustainability: An Exploratory Study 49 To enrich social and relationship capital, Tata Steel has taken several initiatives to establish long- term relationships with customers, suppliers and communities. In 2018-19, many initiatives were taken to enhance value for customers of automotive, construction and engineering segments. It has value creating partnership with more than 5,000 suppliers. It has undertaken a number of interventions for local communities in improving access to and quality of education and healthcare. It received many awards and recognitions for its good work for the society. The Tata Steel has prepared a separate integrated report with the details regarding six capitals. The report contains the both quantitative and qualitative parameters. Even though the report has been prepared nicely, but the key inputs, outputs and the resulting outcomes of six capitals have not been specifically explained. The report has not clearly specified the information on strategy and governance of six capitals.

Observations and Conclusion In this LPG era, there is need for anIR movement in India to comply with international best practices.There is also need for significant transformation in approach and thinking leading to innovative reporting practices. All stakeholders have to play their role in enriching integrated corporate reporting for their benefit.The main challenge of preparing IR is value identification, its creation, measurement, preservation and reporting.There is need for harmonization of IR standards and regulations.Technology enabled integrated reporting system is essential for the corporates. Audit and assurance services are requiredfor the reported data inIR to check reliability, materiality and completeness. The current system of voluntary disclosers in India has created an uneven playing field, with some companies clearly informing investors and others under-reporting or over-reporting. Many companies do not disclose ‘forward-looking information’, due to fear of its use by the competitors. IR should be comprehensible, credible and comparable. IR is a radical transformative change in the field of corporate reporting. It has significant potential for future research.The SEBI, ICAI and Ministry of Corporate Affairs have to playproactive roles for the promotion of IR. The guidelines for IR in India, based on best practices, would be the most constructive way forward for corporate reporting and sustainablity.

References 1. Adams, carol A. (2015). The International Integrated Reporting Council: A Call to Action. Critical Perspectives on Accounting, 27, 23-28. 2. Bal, R.K. and Bal, T. (2019). A Study on Corporate Integrated Reporting.Indian Accounting Review, 23, 1-15. 3. Camilleri, M.A. (2018). The Integrated Reporting of Financial, Social and Sustaionability Capitals: A Critical Review and Appraisal.International Journal of Sustainable Society. 4. Faria, Maria Jose da Silva. (2016). A New Form of Reporting for Companies: The Integrated Reporting. International Journal of Management and Economics Invention, November, 2-11. 5. Clayton, Alexandra F., Rogerson, Jayne M. and Rampedi, Isaac.Integrated Reporting vs. Sustanability Reporting for Corporate Responsibility in South Africa.Bulletin of Geography. Socio-Economic Series, 29, 7-17. 6. Dumay, John, Bernardi, Cristianna, Guthrie, James and Demartini, Paola. (2016) Integrated Reporting: A Structured Literature Review. Accounting Forum. 7. Eccles, Robert, and Serafeim, George. (2014). Corporate and Integrated Reporting: A Functional Perspective. (https://www.researchgate.net). 50 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III 8. Flower, J. (2015). The International Integrated Reporting Council: A Story of Failure. Critical Perspectives on Accounting, 27, 1-17. 9. Hahn, Rudiger and Kuhnen, Michael. (2013). Determinants of Sustainability Reporting: A Review of Results, Trends, Theory, and Opportunities in an Expanding Field of Research. Journal of Cleaner Production, 59, 5- 21. 10. Humphrey, Christopher, O’Dwyer, Brendan and Unerman, Jeffrey.(2016). Retheorising the Configuration of Organizational Fields: IIRC and the Pursuit of ‘Enlightened’ Corporate Reporting. Accounting and Business Research, 47-1. 11. Kilik, Merve and Kuzey, Cemil. (2018). Determinants of Forward-looking Disclosures in Integrated Reporting.Managerial Auditing Journal,33, 115-144. 12. Lai, Alessandro, Melloni, Gaia and Stacchezzini.(2014). Corporate Sustainable Development: Is ‘Integrated Reporting’ a Legitimation Strategy? Business Strategy and the Environment. 25, 165-177. 13. Maniora, Janine. (2017). Is Integrated Reporting Really the Superior Mechanism for the Integration of Ethics into the Core Business Model? An Empirical Analysis.Journal of Business Ethics, 140: 755-786. 14. Mervelskemper, Laura and Streit, Daniel. (2017). Enhancing Market Valuation of ESG Performance: Is Integrated Reporting Keeping its Promise? Business Strategy and the Environment. 26, 536-549. 15. Morros, J. (2016). The Integrated Reporting: A Presentation of the Current State of Art and Aspects of Integrated Reporting that Need Further Development. Intangible Capital, North America, 12. In: http:// www.oecd.org/cfe/smes/46404350.pdf. 16. Perego, Paolo, Kennedy, Steve and Whiteman, Gail.(2016). A Lot of Icing But Little Cake? Taking Integrated Reporting Forward. Journal of Cleaner Production, 1-12. 17. Stubbs, Wendy and Higgins, Colin.(2018). Stakeholders’ Perspectives on the Role of Regulatory Reform in Integrated Reporting.Journal of Business Ethics, 147: 489-508. Financial Literacy and Its Dimensions: An Empirical Study in Assam 51

Financial Literacy and Its Dimensions: An Empirical Study in Assam

Sanjib Das* & Dr. Santosh Kumar Mahapatra**

ABSTRACT Financial literacy has assumed greater importance in the recent years, as financial markets have become increasingly complex and as there is information asymmetry between markets and the common people, leading to the difficulty in making informed decisions. India, a country with low level of literacy and a high rate of financial exclusion, has greater need for financial literacy so as to ensure financial wellbeing to the wider section of the society. Very few studies address on all the key dimensions i.e. financial knowledge, financial behaviour and financial attitude and their association with financial literacy. The present study is a moderate attempt to measure the level of financial literacy and its association with financial knowledge, financial behaviour and financial attitude among the people of Assam. The study found a strong association of financial literacy with financial knowledge and financial behaviour and weak association with financial attitude Keywords: Financial Literacy, Financial Dimensions, Financial Knowledge, Financial Behaviour and Financial Attitude.

Introduction Financial literacy is considered to be an important life skill in the modern society. Financial literacy refers to the ability to use knowledge and skills to manage financial resources effectively for lifetime financial wellbeing (PACFEL-USA, 2008). Financial literacy is a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing (Atkinson, 2012). Financial literacy is a major concern among both the developed and developing nations. The level of financial literacy among the people varies from region to region. Worldwide, 35 percent of men and 30 percent women are financially literate (Klapper, L. et al. 2014). In India financial literacy level is 20 percent (NCFE, 2014). Financial literacy has assumed greater importance in the recent years, as financial markets have become increasingly complex and as there is information asymmetry between markets and the common

* Research Scholar, Department of Commerce, Gauhati University, Guwahati-781014, Assam, India, E-mail: [email protected] ** Associate Professor, Department of Commerce, Gauhati University, Guwahati-781014, Assam, India, E-mail: [email protected] 52 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III people, leading to the difficulty in making informed decisions. Both developed and developing countries, therefore, are focusing on promotion of financial literacy among the citizens. In India, the need for financial literacy is even greater, considering the low level of general literacy and financial inclusion.

Review of Literature Some of the research works in the field of financial literacy have been reviewed to identify the research gap. The summary of the selected reviews are presented here in brief. Chen, H. and Volpe, P. (2002) examined the personal financial literacy of college students of different Colleges of Ohio in the U.S.A. and analysed the impact of financial literacy on their financial opinions and decisions. The results of the study showed that the mean score of participants is 52.80 percent which means that they have an average knowledge on financial matters. The major findings of the study is non-business major students, women students and students in lower classes and with little work experience possessed lower level of financial knowledge. People with less knowledge tend to hold wrong opinions and make incorrect decisions. Lusardi, A. and Mitchell, O.S. (2007) studied how workers in America make saving decisions, how they collect the information for making these decisions, and most importantly, whether they possess the financial literacy needed to make informed decisions. The analysis showed that only half of respondents surveyed could answer two simple questions regarding compounding interest and inflation correctly. Furthermore, only one-third could correctly answer those two questions as well as an additional one on risk diversification. It is also found that financial illiteracy was particularly acute for Blacks and Hispanics, women, and those with low educational attainment. Ibrahim, D. (2009) measured financial literacy of degree students of UiTM, Kedah, Malaysia. In his study no significant difference was found in financial literacy level between male and female groups. Differences were found in financial knowledge based on mother’s education level. A correlation was found between financial literacy and financial attitude. Degree students who had higher financial attitude had higher level of financial literacy. There was a significant relationship between financial literacy and university courses. Students from business, economics and finance honours were found financially more literate as compared to others and the overall financial literacy of the student was poor. Taft, M.K. et al. (2013) evaluated the relation between financial literacy, financial wellbeing and financial concerns. Also the roles of demographic characteristics including age, sex, marital status and education level in influencing financial literacy, financial well being and financial concern were investigated. The study found that age and education are positively correlated with financial literacy and financial wellbeing. Again, a link has been established with marital status and financial literacy. Married people and men were found to be more financially literate. The study concluded that higher financial literacy leads to greater financial well-being and less financial concerns. Shaari, N.A. (2013) examined the level of financial literacy among the students of the University of Malaysia. The study revealed that five factors- age, gender, spending habits, faculty and year of study significantly affect the financial literacy levels. It was also found that the overall financial literacy of University students was moderate as 65.7 percent of students scored 5-8 out of 12 marks. Besides that, some managerial implications are being described. Financial Literacy and Its Dimensions: An Empirical Study in Assam 53 Aggarwal, N. et al. (2014) measured the level of financial literacy among the farmers of Punjab State. They found that 37 percent of the farmers have sound financial literacy, 47 percent have fair financial literacy and 2 percent have poor financial literacy. Financial literacy in terms of interest rate and inflation is found good i.e. more than 50 percent have sound financial literacy. But in terms of time value of money and financial principles only 40 percent have shown sound financial literacy. Mathivathani, V. and Velumani, M. (2014) assessed the level of financial literacy among the marginalised women in Tamilnadu. The researchers have found that the financial literacy of rural women is very low. They also observed some barriers to the financial literacy. Majority of the rural women are not earning person in a family. They can’t independently take decision on financial matters of the family. Further, they can’t afford financial education through paid institution to get knowledge. Thapa, B. and Nepal, S.R. (2015) measured financial literacy of university students of Nepal and the impact of demographic, educational and personality characteristics on financial literacy. The study result showed that most of the students had basic level of financial knowledge but they lack in understanding credit, taxes, share market, financial statement and insurance. The study identified income, age, stream of education, types of college, and attitude of students as key determinants of financial knowledge; whereas financial knowledge remained unaffected by gender, university affiliation, financial behavior and influence. Zulfiqar, et al. (2016) studied the importance of financial literacy and impact of financial literacy and financial attitude on the financial wellbeing of the working women in Pakistan. The result of the study showed that financial literacy is an essential element for the wellbeing. Financial literacy is significantly and positively related to financial wellbeing. Higher the level of financial literacy, greater will be the financial wellbeing. Similarity, financial attitude has also positive and significant relationship with financial wellbeing. Devi, A. (2016) measured financial literacy level among women in Kamrup district of Assam and found low level of financial literacy among the women of the district. The mean score for rural women is 19.22 and for urban it is 22.40 and there exists a mean difference of 3.18. It indicates that financial literacy for urban women is considerably higher than that of rural women. It is also observed that financial literacy among working women is higher as compared to the non-working women. On review of literature, it comes to the light that financial literacy is a major concern for both the developed and developing nations. Now-a-days studies on financial literacy have been carried out in many countries in the world viz. U.S.A., Malaysia, Iran, Pakistan, and Nepal and also in different parts of India. But only a few studies have been conducted among the people of Assam. The target population in the majority of the studies is either college students, teachers, working women, young or adult people, although financial literacy is equally important for every one’s wellbeing. Only a few studies have targeted general people (all the segments of the population). Furthermore, most of the studies have focused only on specific aspects of the financial literacy and not on all the key dimensions - financial knowledge, financial behaviour and financial attitude. Considering these facts, the idea of conducting the present study is generated and is expected to fill up the gaps and create new stock of knowledge. 54 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Objectives of the Study The main objective of the present study is to examine the robustness of the relationship between financial literacy and its components- financial knowledge, financial behaviour and financial attitude among the people of Assam.

Research Hypotheses Keeping the objective in mind, the following null hypotheses vis-à-vis alternative hypotheses have been framed for the testing purpose:

Hypothesis-1

H0: There is a strong relationship between financial literacy and financial knowledge of the people of Assam.

H1: There is no strong relationship between financial literacy and financial knowledge of the people of Assam.

Hypothesis-2

H0: There is a relationship between financial literacy and financial behaviour of the people of Assam.

H1: There is no relationship between financial literacy and financial behaviour of the people of Assam.

Hypothesis-3

H0: There is a relationship between financial literacy and financial attitude of the people of Assam.

H1: There is no relationship between financial literacy and financial attitude of the people of Assam. Methodology Population and Sample size: The population of the study is household families of Assam. The sample size is 384, which is determined on model suggested by Krejcie & Morgan (1970). Sampling Technique: Multi-stage random sampling technique has been used for selecting the respondents for the present study. At the first stage, out of the 27 districts (old) in Assam, three districts - Kamrup (M), Nagaon and Dhubri have been selected purposively on the basis of prevailing literacy rate in order to make the samples more representative. These selected districts were further divided into urban and rural areas. From urban area Municipal corporation/board and from rural area Gram panchayats have been selected. In the second stage, one municipal corporation/board was selected comprising of the district head quarter (urban area) and two gram-panchayats were selected (rural area) from each district. In the third stage, minimum 30 percent of wards (50 out of the total 165 wards) were selected randomly from the respective municipal corporations/boards and gram-panchayats. And finally, the sample respondents were selected randomly in equal proportion i.e. 7 to 8 respondents from all the selected wards. Data Collection & Analysis: Data for the study have been collected through self constructed questionnaire containing 30 multiple choice questions, 20 questions on financial literacy. Primary data Financial Literacy and Its Dimensions: An Empirical Study in Assam 55 collected for the study have been analysed using Statistical Package for Social Sciences (SPSS) version 16.0. Statistical techniques such as Chronbach’s alpha and Pearson’s correlation analysis have been used.

Results and Discussion Demographic and Socio-economic Profile of the Respondents: Data relating to demographic and socio economic status of the respondents have been presented in the Table 1.

Table 1: Profile of the Respondents Variables Category Frequency Percentage Place of Residence Rural 138 36 Urban 246 64 Gender Male 192 50 Female 192 50 Marital status Married 221 58 Unmarried 163 42 Hindu 275 71 Religion Muslim 96 25 Christian 13 04 General 154 40 Social Category SC 132 34 ST 30 08 OBC 61 16 MOBC 07 02 18 – 30 168 44 Age ( Years) 31 – 43 115 30 44 – 56 62 16 57 – 69 29 07 70 and above 10 03 Illiterate 34 09 Primary school 72 19 Education High school 95 25

Graduate 118 30 PG and above 65 17 Agriculture 52 13 Business 105 27

Service 101 26 Occupation House wife 33 09 Student 80 21 Others 13 04 Below Rs.5000 67 13 Rs.5001-15000 97 25 Income (monthly) Rs.15001-25000 72 19 Rs.25001-35000 51 18 Above Rs. 35000 97 25

56 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III The above table gives the summary of the demographic and socio-economic characteristics of the respondents. A look at the demographic and socio-economic detail shows that percentage of rural respondents is 36 percent and urban respondents is 64 percent. Gender wise 50 percent in each male and female category. Majority of the respondents belong to the Hindu religion i.e.71 percent and rest of them are Muslim and Christian. More than the average of the respondents are from General and SC category and lowest percentage of the respondents are from ST and MOBC category. 44 percent of the respondents fall in the age group of 18-30 years and 30 percent fall in the age group of 31-43 years. Majority of the respondents i.e. 55 percent in our samples are High school passed out and graduates. Only a few of them are illiterate i.e. 9 percent and 17 percent are post graduates. Respondents from the profession of business are 27 percent, service 26 percent, agriculture 13 percent, house wife 9 percent, student and others 25 percent. The highest percentage of the respondents i.e. 25 percent is having monthly income from Rs.5001-15000. Lowest of the respondents i.e. 13 percent is having monthly income below Rs.5000. Reliability and Normality of data: Reliability is an assessment of the degree of consistency between multiple measurements of a variable. It has to do with the accuracy and precision of a measurement procedure. The internal consistency is typically measured by using Chronbach’s alpha () test, the value of which ranges from 0 to 1, the higher value indicates the greater internal consistency (and ultimately reliability). The internal consistency of the questionnaire has been checked by performing Chronbach’s alpha () test on 100 sample units and the Chronbach’s alpha score is shown in the Table 2.

Table 2: Chronbach’s alpha Score Test Score No. of Items Case Number Chronbach’s alpha 0.767 30 100

Reliability of the scale assessed by Chronbach’s alpha gives acceptable result of 0.767 for the whole questionnaire which is over the recommended reliability coefficient of 0.70 (Croasmun & Ostrom, 2011). Measurement of the Level of Financial Literacy: The level of financial literacy of the respondents has been measured by combining the individual scores in financial knowledge, financial behaviour and financial attitude. The total score can have minimum value of 1 and maximum value of 22. In order to derive the financial literacy level a cut off has been fixed at 15 out of maximum aggregate value of 22. The respondent who scores more than 15 points on aggregate basis has been technically considered as financially literate. However, we can further segregate financially literate segment into two categories- moderately literate and highly literate. The respondent who scores more than 15 points on aggregate basis but less or equal to 20 points on aggregate basis has been considered moderately literate. The respondent who scores more than 20 points on aggregate basis would be considered highly literate. Table 3 below, shows the minimum and maximum scores required for financial literacy and for each dimensions. Financial Literacy and Its Dimensions: An Empirical Study in Assam 57 Table 3: Financial Literacy Score Matrix

Dimensions Minimum Score Maximum Score Financial Knowledge 6 8 Financial Behaviour 6 9 Financial Attitude 3 5 Financial Literacy: Moderate 15 20 High 20 22

The category and component wise data on the level of financial literacy among the people of Assam has been presented in the Table 4 which shows that financial literacy among the people is at a satisfactory level of 35 percent against the All India average of 20 percent. Out of this, 28 percent have moderate financial literacy and 7 percent have high financial literacy. People from urban areas are having more financial literacy as compared to rural areas. Male are more financially literate than female. Financial literacy is more for the married respondents. In the case of religion, respondents belonging to the Hindu religion have the highest level of financial literacy i.e. 38 percent followed by the Muslims and Christian religion. Respondents of General and SC category have better financial literacy which is 44 percent and 38 percent respectively. Age group of 44-56 years and 31-43 years also exhibits better financial literacy which is 44 percent and 40 percent respectively. In the case of age of the respondents, financial literacy is the lowest for the age group of 70 and above which is 27 percent only. So far as education is concerned post graduates have the highest level of financial literacy of 52 percent followed by the graduates at 48 percent and the illiterates have the lowest level of financial literacy which is 16 percent only. Service and business professionals have the highest level of financial literacy among all the groups i.e. 58 percent and 50 percent respectively. Students and other professionals have the lowest financial literacy which stands at 18 percent to 25 percent. Financial literacy is more for the respondents belonging to the highest income group and vice-versa.

Table 4: Category and Component wise Financial Literacy [In percentage]

Financial Moderate High Financial Financial Financial Category Literacy Financial Financial Knowledge Behaviour Attitude Literacy Literacy Assam 51 63 80 35 28 7 Rural 49 59 78 33 27 6 Place of Residence Urban 53 67 82 37 29 8

Male 55 70 83 42 31 11 Gender Female 47 56 77 28 25 3 Married 49 70 79 38 29 9 Marital status Unmarried 53 52 81 32 27 5

(Contd...) 58 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

Hindu 58 69 86 38 30 8

Muslim 54 66 81 36 28 8 Religion Christian 38 50 73 31 26 5 General 60 82 88 44 34 10

SC 56 65 82 38 30 8 ST 47 58 76 31 25 6 Social Category OBC 49 56 79 35 30 5 MOBC 43 54 75 27 21 6 18 – 30 34 51 75 35 26 9

31 – 43 67 68 79 40 33 7 44 – 56 55 65 84 44 34 10 Age ( Years) 57 – 69 56 75 82 29 24 5 70 and above 43 56 80 27 23 4 Illiterate 26 48 65 16 14 2 Primary 32 63 72 25 21 4 school Education High school 45 67 77 34 27 7 Graduate 74 71 88 48 38 10 PG and above 78 66 98 52 40 12 Agriculture 31 54 67 24 20 4 Business 68 72 89 50 41 9 Service 84 76 98 58 46 12

Student 43 52 86 25 19 6 Occupation Others 24 61 60 18 14 4 (informal) Below 28 46 71 16 12 4 Rs.5000 Rs.5001- 30 54 76 18 13 5 15000 Rs.15001- 56 65 82 40 33 7 Income 25000 (monthly) Rs.25001- 68 72 83 49 40 9 35000 Above Rs. 73 78 88 52 42 10 35000

To analyse the relationship of financial literacy with its dimensions such as financial knowledge, financial behaviour and financial attitude the Pearson Correlation Analysis has been conducted and the result of the same has been presented in the Table 5. Financial Literacy and Its Dimensions: An Empirical Study in Assam 59 Table 5: Pearson Correlation Coefficient

Variables Correlation coefficient (r ) Sig(2 tailed) Financial Literacy and Financial Knowledge 0.812* 0.000 * Financial Literacy and Financial Behaviour 0.840 0.000 * Financial Literacy and Financial Attitude 0.459 0.000

* Significant at the 0.01 level (2-tailed). The Pearson correlation (r) may take a range of values from +1 to -1. A value of 0 indicates that there is no association between two variables. A value greater than 0 indicates a positive association, i.e., if the value of one variable increases, so does the value of the other variable. A value less than 0 indicates a negative association, i.e., if the value of one variable increases, the value of the other variable decreases. Value of the correlation coefficient(r):1 indicates perfect correlation, 0.7 - 0.9 indicates strong correlation, 0.4 - 0.6 indicates moderate correlation and 0.1 - 0.3 indicates weak correlations (Dancey, C. & Reidy, J., 2011). Financial Literacy and Financial Knowledge: The results as shown in the Table 5 shows that correlation between financial literacy and financial knowledge is 0.812. This is statistically significant at 1 percent significance level. From this it is evident that there is a strong and positive relationship between financial literacy and financial knowledge of the people and we accept the null hypothesis. Financial Literacy with Financial Behaviour: The a correlation coefficient between financial literacy and financial behaviour, as computed and shown in Table 5 is 0.84 and statistically significant at 1 percent level of significance. In other words, there is a strong and positive relationship between two variables, viz. financial literacy and financial behaviour among the people of Assam. This led to the acceptance of our second null hypothesis that there is a strong relationship between financial literacy and financial behaviour of the people of Assam. Financial Literacy with Financial Attitude: Results of the correlation analysis shows that association between financial literacy and financial attitude is moderately positive as ‘r’ value is 0.459. This is also statistically significant at 1 percent level of significance. It depicts a positive and moderate relationship between financial literacy and financial attitude of the people and we accept our third hypothesis that there is a relationship between financial literacy and financial attitude of the people of Assam. However, no strong relationship could be established and a moderate relationship is observed. This may be due to the fact that people of Assam lack a strong financial attitude though they are financial literate.

Conclusion Our study and analysis concluded that the level of financial literacy among the people of Assam is at a satisfactory level as compared to the national average, but a march towards development is always desired. The study found a strong and positive relationship between financial literacy and two of its dimensions – financial knowledge and behaviour. The relationship between financial literacy and financial attitude is not very strong and indicates that people of Assam lack a strong financial attitude. This may be due to the fact that people are culturally rich and inclined towards simple living. To be a front runner, all these three dimensions need to be managed in future. 60 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III References 1. Aggarwal, N., et al. (2014). Financial Literacy among Farmers: Empirical Evidence from Punjab. Pacific Business Review International, 6 (7), pp.36-42. 2. Atkinson, A. (2012). Measuring Financial Literacy: Results of the OECD / International Network on Financial Education (INFE) Pilot Study. OECD Working Paper No. 15, pp. 01-73. 3. CFPB (2015). Measuring financial well-being: A guide to using the CFPB Financial Well-Being Scale. Consumer Financial Protection Bureau, December. 4. Chen, H. and Volpe, P. (2002). Analysis of personal finance literacy among college students. Financial Services Review, 7(2), pp. 107-128. 5. Croasmun, J. T., & Ostrom, L. (2011).Using Likert-Type Scales in the Social Sciences. Journal of Adult Education, 40 (1), pp.19-22. 6. Dancey, C., & Reidy, J. (2011). Statistics without Maths for Psychology. Prentice Hall: London. 5th edition. 7. Devi, A. (2016). Financial literacy among the women: A sample study in the Kamrup District of Assam. EPRA International Journal of Economic and Business Review, 4(2), pp.144-147. 8. Klapper, L., et al. (2014). Financial Literacy around the World, S & P Global Financial Survey Report, pp. 04-28. 9. Krejcie and Morgan (1970). Determination of Sample Size for Research Activities. Education and Psychological Measurement, 30, pp. 607-610. 10. Lusardi, A. and Mitchell O. S. (2007). Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education. Business Economics, 42(1), pp. 35-44. 11. Mathivathani, V. and Velumani, M. (2014). A study on financial literacy among rural women in Tamilnadu, Indian Journals of Applied Research, 4(12), pp. 556-557. 12. NCFE (2014). NISM -Financial literacy and Inclusion survey, 2014. 13. PACFEL (2008). President Advisory Council on Financial Literacy-Annual Report, 2008. 14. Shaari, N. A. (2013). Financial Literacy: A study among the University students. International Journal of Contemporary Research in Business, 5(2), pp. 279-198. 15. Taft, M. K. et al. (2013). The relationship between financial literacy financial wellbeing and financial concerns, International Journal of Business and Management, p 8(11), pp.63-75. 16. Thapa, B. and Nepal, S.R.(2015). Financial literacy in Nepal: A Survey Analysis from College students. NRB Economic Review, 27(1), pp. 49-74. 17. Zulfiqar, M. and Bilal, M. (2016). Financial Wellbeing is the Goal of Financial Literacy. Research Journal of Finance and Accounting, 7(11), pp.94-103. Lifecycle Management Using Risk Estimation and Contingency Model for... 61

Lifecycle Management Using Risk Estimation and Contingency Model for Indian Defence Sector

Mukesh Kumar Gupta* & Dr. Gyanesh Kumar Sinha**

ABSTRACT Mitigating a risk refers to acting to either reduce the likelihood that a risk will happen and/or to reduce its impact on the defence project. Risk contingency management on other hand is defined as creating an appropriate provision during life cycle of a project to ensure delivery of equipment sought by armed forces are in the required timeframe and with the best value for money. Indian defence industry has been historically a domain of Public Sector Undertakings (PSUs), direct import from overseas and regulatory controlled by the government. Therefore, standard risk measurement process and mitigation parameters are not available for private sector, those are entering the industry for the first time. This study focuses on Management and Technical Contingency component of Project Risk life cycle and its calculations using three-point estimation approach those are most suited to Indian Defence Industry. The proposed model compares single and three-point approach qualitatively in detail. Further mathematical illustrations are used to explain various scenarios of risk approach and its possible solutions on the proposed model. It is suggested that the Single point estimates tend to represent a conservative, or ‘safe’, position Whereas 3-point estimates, the middle value represents a more optimistic and pessimistic view, respectively and most advisable for defence Industry and its related risk environment. Keywords: life cycle management, risk management, contingency planning, Indian defence industry.

Indian Defence Industry The defence industry of India is among its strategic industries as it relates to the security of the country. India holds the advantage of having the second largest numbers in armed forces in the world by active military personnel in 2018(Dilinger, 2018). In 2016, India’s share in global military expenditure was 3.3% and the focus of the government on promoting defence related manufacturing in India led to increase its budget allocation for defence from US$ 41 billion in 2017-18 to US$ 62.8 billion in 2018- 19(J. Singh, 2018). However, the defence manufacturing sector in the country is still heavily dependent on arms imports, making Indiathe largestimporter of conventional defenceequipment’s.This is equivalent

* Research Scholar, GD Goenka University Sohna Road Gurgaon India. Email: [email protected] ** Associate Professor, School of Management, GD Goenka University Sohan Road Gurgaon India. Email: [email protected] 62 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III to 13% share in world’s import of arms. In the period 2008 to2017, total amount spent on arms import was more than US$100 billion(R. Singh, 2018). Additionally, weapon imports in the five-year period, 2013-17 climbed 24% compared to 2008-12 with largest supplies of arms coming from Russia, followed by USA, Israel and France(Pandit, 2018).In a report byIndia Today published in 2017, the importof military hardware by the Indian government was found to constitute 60% of the defence requirement(Unnithan, 2017). The report mentioned that such huge dependence on imports is due to the gap between capability and capacity. To reverse this import trend, the government identified defence as one of the sectors which need a manufacturing boost. For this purpose,make in India is the most exhaustive plan that has been undertaken so far in this regard.The plan includes several measures to encourage domestic manufacture such as opening the defence industry for 49% foreign direct investment (FDI) from the pre-existing 26%. Until 2014, theIndian economy faced a dearth in funding options directed to research and development (R&D) in the public sector. Additionally, it lacked an effective ecosystem for encouraging foreign direct investment (FDI) or the private sector involvement. These factors constrained the growth of defencecapabilities of the nation. However, since 2014 several progressive reforms in the industry have been made to ensure faster absorption of technologies, efficacious procurement,reduce the entry barriers, increase competition and enhance ease of business(India Brand Equity Foundation, 2018). Among the recent initiatives, Defence Procurement Procedure (DPP) 2016 was designed for expedited and efficient procurement of defenceequipment and technology. The policy initiative aimed to promote the ‘Make in India’ by fostering growth of the defence industry within the nation’s boundaries(Narayanaswamy, Sai Sireesha, Rajababu, Varalakshmi, & Ulla, 2016). DPP 2016 introduced procurement of defence goods under Indian Buy and Make model and stressed on Buy Indian Indigenously Designed (BIID), Developed and Manufactured (-IDDM) categoryto reduce import dependency of the industry (Press Information Bureau, 2017). To provide the required boost to the Make in India movement, government funding to indigenous projects have increased to 90% committed for the purpose of prototype development(Panneerselvam, 2016). Defence industry of a country has a number of inherent uncertainties as a result of the complex industrial ecosystem it operates in (Heidenkamp, Louth, & Taylor, 2011). The ecosystem involves policy makers, industrialists, military operators, employees, citizens and taxpayers among the multiple stakeholders. In such dynamism, a risk management policy is required to minimize the effect of various external and internal risks that may have an impact on financial as well as non-financial outcomes in the industry(BEL, 2016). Additionally, in their study, Gaidow and Boey (2005) highlighted that risk management policy symbolizes disciplined management. It is a vehicle for recognizing positive business opportunities for the firms in the industry. Policy further helps in creation of a transparent environment in the defence industry allowing firms to sustain their business growth and profitability through structured risk taking and mitigation processes (HAL, 2018). Even today, the technical and commercial framework for defence products manufacturing is mandated by the government at the proposal stage(Ministry of Defence, 2006). The government promotes the application of best practices and facilitates constant improvement in the operational process. Moreover, the government is actively pushing domestic manufacturers to have competitive advantages in bidding, winning, executing, maintaining and ensuring all time performance of defence Lifecycle Management Using Risk Estimation and Contingency Model for... 63 equipment.Considering the significance of an effective risk management policy this paper having following objectives.

Objective This paper has following objectives. (i) To discuss importance of risk estimation in life cycle management of Defence products. (ii) To Study single & 3-point risk contingency estimation models under various scenarios. (iii) To propose most appropriate risk contingency estimation model combined with probability value for Indian Defence Industry.

Literature Review Considering the importance of life cycle management in defence, this section begins with the theoretical background and its elements, challenges associated with risk management, and the popular strategies used by international defence organisations to manage and mitigate the risks.

Risk Management In generic terms, risk management refers to the activities of identifying, evaluating and selecting among alternative regulatory actions. It is influenced by many social, economic, ethical and political factors and includes evaluation of risk-benefit, cost-benefit, and trade-offs among different options (Barnthouse, Wayne R. Munns, & Sorensen, 2008). With respect to the defines industry, several authors in the past have studied the key risks associated with different departments of the organisation involved in production of defence equipment. The table below represents some of these risks.

Table 1: Risks Associated with the Defence Industry

Author (Year) Aim of the Study Findings Risks Identified (Oudot, 2010) To evaluate the risks emerging Contractual risks are the most Direct financial risk, during implementation and adverse, while technological risks industrial risk, contractual enforcement stages of defence are the second most significant risk, technological risk. procurement (Groom & Gray, To explain risk assessment The risk assessment methodology Development risk, production 1995) methodology developed by the has helped create a pro-active risk- risk, subcontrac-ting risk Dynamics Division of British management culture. Aerospace Defence Company. (Perlekar & To analyse the critical issues Development of a ten-point risk Delivery risk, production Thakkar, 2018) faced in outsourcing management plan to counter risk, financial risk, material by an organisation in Indian various risks in the outsourcing control risk, other external Defence Sector and suggest process. risks risk mitigation practices. (Cover & Mustafa, To determine the role of The risk areas display enough Political risk, financial risk, 2014) corruption in different areas of internal coherence for its key risk personnel risk, operations risks in the defence sector area and helps in reducing risk, procurement risk. corruption. (Pavel & Tzimas, To identify the risks associated There are significant risks when a Risk of dependence on a 2016) with supply chain management country is completely dependent on single country for of defence industry imports of raw material crucial for procurement, risk of limited development of defence equipment. availability, risk of increase in demand and price

64 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III From the table above, it can be implied that there are critical risks associated with different functions in the defence industry, most of them being focused on Financial, personnel, production, purchase, political and demand-related factors also play a role in the risk management framework of organisations.

Challenges in Risk Management Defence firms have to operate in a dynamic environment. Moore et al., (2015) stated that organizational mission, operations, as well as their support requirements, keep evolving, which makes it difficult for the firms to operate. Additionally, the defence firms also must operate in conditions of regional conflicts which make risk management process difficult for the firms. Further, Arena et al., (2008)are suggestive that rising costs of sophisticated new technologies also pose a challenge to risk management for defence organizations. New age technologies are required to counter new defence threats that are ever evolving. These technologies are not easy to acquire and can become outdated in a very short time.

Strategies and Models in Present Use Defence companies operate in a paradoxical situation which requires them to manage their long-term planning in short-term dynamic environmental change. Another study further highlighted the strategy of pre-emptive planning for risk mitigation as well as their management in the defence industry (Bellais, 2013). Pre-emptive planning refers to those strategies that refrain potential entrants to invest in the defence technology. The study pointed out that the new age technologies can help promoting risk central repository that presents the view of formal risk management process in standard situations.

Risk Management in Indian Defence Industry Singh, and Stevens (2011) in their study highlighted that the risk management is applied by the firms to ensure that their ventures are potentially rewarding. Firms apply risk management to counter core challenges and risks in the procurement process in Indian defence industry. Iyer, Pandit, and Mehta (2018)stressed the application of risk management function in creating a holistic risk landscape that includes intelligence on industry trends, geopolitical shifts, emerging risks, and compliance requirements. The study highlighted that risk management prioritizes development of risk portfolio by the firms in their optimization plans. In India, the core problem of risks in the defence industry involve threat analysis, competence in manufacturing, the support system that is in use, ability to meet cost and schedules of delivery (Suman, 2013). In a study Thomas (2006) highlighted that risk management in Indiandefence industry is applied to the process of evaluating, analysing, and controlling of risks. The management process is applied to reducing of the probability of unwanted events and their impact during either production or use of produced military equipment’s. Risk management allows the firms to understand the challenges posed by Indian defence markets and especially for foreign firms trying to penetrate Indian markets, in the light of economic dynamism related with the sector and Defence Procurement Policy (DPP) doctrines of indigenization (Dutta, 2016). Lifecycle Management Using Risk Estimation and Contingency Model for... 65 Risk Contingency Model Risk contingency is a plan for handling a risk if it occurs. This doesn’t reduce the probability of the risk occurring but reduce the impact should it occur.

Risk Contingency Management and Its Responsibility Management of a Defence Project budget is a continuous activity throughout the Lifecycle, and the risk element of the budget is subject to varying degrees of review in the mandated LCM reviews and in the Quarterly Business Review. The emphasis of contingency management evolves over the Lifecycle; the most notable change is from the focus on setting the risk element of the Project budget and to its utilization from next phase onward. Overall management of the Defence Project budget is the responsibility of the Project Manager. Risk Contingency Management lies within these responsibilities, working with the Finance Manager to plan Margin Trading.

What is Contingency? Collins dictionary defines that “A contingency plan or measure is one that is intended to be used if possible, situation actually occurs”. Within Lifecycle Management of defence products, contingency comprises two main elements, these are defined as:

Technical Contingency National Institute of Standard and Technology define technical contingency as funds set aside or kept available to cover identifiable and specific risks that are outside of the normal Project performance. Changes are authorized by the appropriate authority in accordance with local procedures. The assumptions and estimates in compiling Technical Contingency recommended to be documented in the defence project risk register.

Deriving Technical Contingencies Outputs from the Risk Management process are used to determine the “Contract Acceptance” Technical Contingency and to monitor and report status against this amount as the Project progresses through its Lifecycle. To form a view on Technical Contingency, Risk Fallback Plan costs (i.e. impact costs) are coupled with the risk probability data taken from the Risk Register. The Risk Register provides a list of all the risks identified for a Project. It explains the nature of each risk and records information relevant to its assessment and management. Fallback Plans recorded in the Register provide an alternative course of action, should the agreed Mitigation Actions prove ineffective and the risk occurs.

Single- and 3-Point Approaches Two distinct, alternative approaches to deriving the Technical Contingency are possible, as follows. The first, and historically the most common, is the single point approach, where one value or estimate of Fallback Plan cost is combined with the risk probability value to calculate a ‘factored’ cost for each 66 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III risk. These factored costs are summed to determine the total Technical Contingency. Confidence in this figure depends on qualitative judgements made in setting the individual risk assessments. Nonetheless, the approach is transparent and requires no special tools. The second approach utilizes 3-point estimates, where three values are estimated to reflect the spread of the potential Fallback Plan cost. These ‘Minimum’, ‘Most Likely’ and ‘Maximum’ figures - which characterize uncertainty in the risk cost - are then combined with the risk probability value to inform Technical Contingency evaluations and indicate risk cost confidence in a computer model. The 3-point approach requires specialist analysis tools and the skillset to carry out a simulation. Use a 3- point approachis to: (i) Meet customer requirements that include a mandate that 3-point estimates are conducted for all activities undertaken, including for those covered by risk costs. (ii) Improve assurance that ‘worst-case’ scenarios have been identified and covered adequately, when the accuracy of risk estimates is a concern (higher levels of uncertainty in risk effects). (iii) Enable drivers of risk cost outturn variance to be identified, using the model for the analysis. (iv) Improve dependability in outturn predictions by forecasting based on collective risk effects. Projects should decide which approach is to be taken early in the Lifecycle. A result of using the three-point approach is that the simple arithmetic link between the Technical Contingency and individual risk estimates and their probabilities is replaced by a different relationship, which depends on an analysis of the collective effects of the identified risks. In turn, this significantly affects the presentation of risk in the Contract Review, as a single contingency figure is extracted from a simulated outturn model of overall risk cost range. However, by using this method, Technical Contingency is determined at a known, numerical confidence level, in a systematic manner.

Single- and 3-Point Risk Estimating Whichever of the two approaches is taken, the discipline of determining the costs of individual risk impacts is fundamental. The features of single and 3-point risk estimating are contrasted below. In both cases, the assessment of individual risk costs entails making an estimate of the Work (plus materials, expenses, etc.) required to implement the risk’s planned Fallback action. (i) Single point estimates tend to represent a conservative, or ‘safe’, position with good inbuilt confidence in recovering from the risk’s occurrence. However, the estimate may not cover the worst conceivable outcome. (ii) In 3-point estimates, the middle value represents the likely cost of recovering, with the minimum and maximum values estimated by considering a more optimistic and pessimistic view, respectively. Note that whichever method is used, the quality of the risk data is paramount and should be validated wherever possible by considering historical data. The relationship between Single- and 3-point estimate approaches is illustrated in Figure 1. Lifecycle Management Using Risk Estimation and Contingency Model for... 67 Figure1: Single versus 3-point Estimates Single - point Min. ML Max

(Source: number line representation of variables) From this, a simple summation of factored Most Likely (ML) values selected from within a 3 Point range would be lower than for summed Single Point factored risk estimates. As such, it would tend to understate the overall value compared with the Single Point calculation. However, greater correspondence between the Single and 3-point approaches is seen when all three values in the latter are combined in a collective assessment. Such an evaluation is effectively ‘weighted’ by the Maximum values, which thereby increases the resulting risk cost assessment, compared with summing the ML values. The attributes of the 3-point estimates (their ranges and distribution types) affect the characteristics of the collective model of risk cost and, thereby, the level of confidence assigned to a Technical Contingency figure derived in this way. Note that the estimation of risk costs should account for all financial consequences, even where schedule and/or performance impacts appear to be the dominant feature.

The Single Point Technical Contingency Calculation In principle, a factored cost is calculated for each risk by multiplying the estimated Fallback Plan cost by the probability of occurrence. However, factoring should be applied with care as it may not always be appropriate to apply a rigid formula - there are instances where it is appropriate to use a percentage higher than the probability figure. This is particularly important to ensure adequate coverage of: • High probability risks where the expectation is the risk will occur and the cost will become real. • Low probability, high impact risks where factoring by probability may provide inadequate cover. In these cases, the un-weighted overall contingency budget may prove inadequate. Judgement should always be used to ensure that the contingency budget provides appropriate risk cost coverage in the prevailing Project conditions. Worked examples are provided below to illustrate how probabilities may be weighted to achieve appropriate coverage.

Worked, Illustrative Examples of Single Point Technical Contingency Calculations

Scenario 1 - Reasonable Balance A set of risks with similar impact values and mid-range probabilities are likely to ‘balance each other out’ successfully when their probabilities are used for factoring. Consider the following simple example in which, by inspection: any single risk occurrence is affordable within the Total Contingency, 68 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III the dual occurrences of risks A + C or C + D can be covered and the worst dual occurrence (B & A or B & D) would exceed the allocated contingency by $ 8k. In these circumstances there would be a reasonable chance of containment within the Total Contingency, if the Impacts proved to have been conservatively estimated.

Impact Estimate Probability of Factored Value Estimate Risk Factoring Percentage (%) ($ k) Occurrence (%) ($ k) A 30 60 60 18 B 35 30 30 10.5 C 25 60 60 15 D 30 40 40 12 Total 120 Total Contingency 57

Scenario 2a - High Probability Risk Problem If one of the populations has a very high probability, then the balance is distorted as shown in the modification to Scenario 1, below. In this case, the occurrence of B is all-but certain, but only fractional coverage has been allowed, amounting to a 10% cost shortfall, effectively. Total Contingency appears to provide good coverage for the occurrence of risks A, C and D, but B is irrelevant to the averaging process. In fact, the effective available Contingency 76.5 - 35 = 41.5, which is marginal cover for anything but a single risk occurrence.

Impact Estimate Probability of Factoring Percentage Factored Value Estimate Risk ($ k) Occurrence (%) (%) ($ k) A 30 60 60 18 B 35 90 90 31.5 C 25 60 60 15 D 30 40 40 12 Tota 120 Total Contingency 76.5 l

Scenario 2b - High Probability Risk Solutions Here, the occurrence of B is assumed, and the Fall-back action has therefore been added into the Performance Measurement Baseline at full value - effectively valuing the risk at 100% and taking it out of the risk assessment. Total Contingency coverage for risks A, C and D, has been improved by minor increases to their factoring percentages, enough that the dual occurrence of A & C or C & D would Exceed the allocated contingency by £/$ 4.75k. In these circumstances there would be a reasonable chance of containment within the Total Contingency, if the Impacts proved to have been conservatively estimated. [A project in this position, particularly with a few similar risks, could consider adding a balancing opportunity to the Opportunity Register, indicating a 10% probability of recovering the risk impact, should it not occur. Lifecycle Management Using Risk Estimation and Contingency Model for... 69 Note: it is not permissible to ‘net off’ risk on the CSR in this way - the opportunity must be realised before it can be accounted for].

Impact Estimate Probability of Factoring Percentage Factored Value Estimate Risk ($ k) Occurrence (%) (%) ($ k) A 30 60 65 19.5 B 100 C 25 60 65 16.25 D 30 40 45 13.5 Total 85 Total Contingency 49.25

Scenario 3a - High Impact / Low Probability Problem If one of the populations has a relatively large impact but a very low probability, then the balance is lost as shown in the modification to the table, below. In this case, the Total Contingency still provides ‘comfortable’ coverage for risks A, C and D but the occurrence of B would be catastrophic to the budget.

Impact Estimate Probability of Factored Value Estimate Risk Factoring Percentage ($ k) Occurrence (%) ($ k) A 30 60 60 18 B 105 10 10 10.5 C 25 60 60 15 D 30 40 40 12 Total 190 Total Contingency 57

Scenario 3b - High Impact / Low Probability Solution If the Impact value of B cannot be mitigated to a lower value (or the risk transferred), a potential solution to cover this ‘killer risk’ is to adjust the Factoring percentage significantly to increase the overall Contingency cover, as below. In this way, the occurrence of B and of any one of the others would be covered.

Impact Estimate Probability of Factoring Factored Value Estimate Risk ($ k) Occurrence (%) Percentage ($ k) A 30 60 60 18 B 105 10 85 89.25 C 25 60 60 15 D 30 40 40 12 Total 190 Total Contingency 134.25

70 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III The 3 Point Technical Contingency Calculation

The Model: Simulating the Range of the Possible Risk Cost Outturn The 3-point approach involves a different method of calculation than the single point approach and produces additional information about Project status. The 3-point approach utilizes three values to represent a spread in estimating the cost of each Fallback Plan. The 3 points are judgments of the: • Minimum (Min.) Value: The lowest value expected • Most Likely (ML) Value: The middle value expected • Maximum (Max.) Value: The highest value expected

Example of 3-point Estimate Distribution Probability

Estimated Min. ML Max. Risk Cost

Source: Normal Probability Distribution For each risk, the spread and likelihood of 3-point values are represented in a distribution. This input data is then combined with the probability of risk occurrence in a collective simulation model, utilizing a Monte Carlo type of sampling technique. The resulting simulation effectively merges the separate assessments of the likelihoods and effects of individual risks by modelling the many possible combinations of risk values to predict an overall risk cost range. A typical output distribution from the simulation is illustrated in below figure. • The vertical axis indicates the likelihood of the collective outturn risk cost on the horizontal axis. • The maximum width of the (blue) distribution curve shows the full modelled range of possible risk cost outturn values; the lower limit being if risks materialised at their minimum estimated cost, and the upper limit if risks materialised at their maximum estimated cost. If risk estimating is realistic, both possibilities are very unlikely. • It is more likely that the collective risk cost lies somewhere in the intermediate region - and the projected likelihood of a risk cost outturn value is indicated by the height of the distribution at the point in question. The Most Likely outturn value is indicated by the highest point on the distribution.

Figure 1 The Risk Cost Analysis Simulation Distribution The statistical term “Most Likely” is applied in the context of both inputs to, and the output from, the simulation here. In the former case it represents the best estimate of an individual risk cost. In the latter it represents a feature of the collective model’s simulated outturn distribution. Lifecycle Management Using Risk Estimation and Contingency Model for... 71

Number of times The Most Likely outcome is the simulation comes up with a represented by the tallest ‘stack’ – particular risk cost i.e. the most commonly occurring outcome risk cost result as calculated in the simulation ≡ Relative Likelihood

ML £/$ Predicted Risk Cost

Source: Normal probability distribution and probabilities relative to standard deviations from the average. It can be useful to translate these confidence figures back into the scenario that is being modelled. The simulation is conducted by randomly sampling the individual risk distributions to predict the possible combinations. This amounts to imitating many Project scenarios in which different permutations of risks occur through the Lifecycle. Consider the example where a risk cost - i.e. contingency - is at the 90% confidence point to underpin a fixed price contract. The model characterizes the prospect of achieving the expected outturn margin on the theoretical basis that the same Project could be run many times over and the results measured. So, if the Project ran, say, 100 times, then: • in 10 instances there would be margin erosion, but • in 90 instances there would be margin improvement

Management Contingency At any point in time, Management Contingency covers risks additional to those that underpin the Technical Contingency. This is because they are risks not yet understood at enough level of detail to meet the requirements for detailed Technical Contingency evaluation. Management Contingency covers possible events that cannot be accurately estimated at the level of their impact on defined Work Packages. However, Management Contingency is not determined specifically and solely from the Project risk management process; it is generated from judgement informed by supporting evidence from the risk register and the planning & estimating processes. Consequently, it is often an expression of confidence in the estimated Project costs, also taking account of schedule effects on cost. Management Contingency should take account of experience and knowledge of the constraints on a Project. As for Technical Contingency, data quality is paramount. Management Contingency is determined and set as part of the Request for Bid Approval process. The rationale and assumptions for Management Contingency risks should be documented in the register. Conclusion This paper description of the three-point approach and its applicability in the defence industry suggest that, there is a need to have an active risk contingency management process which can support 72 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III to take calculated decision in the defence industry based on the risk appetite and risk tolerance limit of organizations. In this respect, the contingency builds up with three-point risk estimates will be an improvement over the generally used single point risk estimates. As the main difference between the two approaches, the simple mathematical link between individual risk estimates and the technical contingency in the single point approach will be replaced by a range estimation by the three-point approach which depends on the analysis of collective assessment of identified risk costs. Therefore, there is huge scope for future research about the current study and improve the methodology of risk assessment in defence products during life cycle management.

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Recent Trends in Entrepreneurship (Start-Ups) Development with Reference to North East-India

Dr. K.C Biswal* & Mr. Dhananjoy Narzary**

ABSTRACT Several schemes and projects have been formulated and implemented for entrepreneurship development specially for women in particular as the Government has recognised entrepreneurship is an important instrument in development of societies in several ways. Micro, Small and Medium Enterprises (MSME) has emerged as a highly vibrant and dynamic agent for industrialization of rural & backward areas in India. Khadi is the proud legacy of our national freedom movement and the Father of the nation. Khadi and Village Industries (KVI) are two national heritages of India. One of the most significant aspects of KVI in Indian economy is that it creates employment at a very low per capita investment. NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts. North East-India is endowed with abundant natural resources which can promote a huge entrepreneurial development in the region. The NER region has tremendous potential for generating revenue from the primary, secondary, as well as the tertiary sectors. This study highlights the important factors which can enhance entrepreneurial growth and opportunities in the region. Also it examines about the contributions of development agencies/ organizations in development of village industries. Key words: Entrepreneurship trends, Start-ups, KVI, MSME, NABARD

Introduction Entrepreneurship has been described as the “capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. Demographic trends in India, the second most populous country in the world, suggest that a million people join the labour force every month. This amounts to 12 million Indians joining the labour force every year, which is more than the entire population of Sweden. With millions of young people joining the labour market every month, the question on their minds is if there will be enough jobs for them. India produces too few entrepreneurs for its stage of development. The pace of creation of new businesses and new start- ups in India is low compared to the rest of the world (World Bank Report, 2017). A slow pace of entrepreneurship is associated with a slow pace of job creation. An examination of millions of enterprises

* Professor, Department of Management, NEHU. Tura Campus Email: [email protected] ** Research Scholar, Department of Management, NEHU Tura Campus. 76 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III in India and the US has shown a very strong link between new start-ups and subsequent job growth in both countries. A detailed examination of enterprise in 600 districts in India confirms the strong relationship between new start-ups and subsequent job growth. Districts in India that embraced entrepreneurship have experienced faster job growth. The Micro, Small and Medium Enterprises – Development Organisation (MSME-DO) (earlier known as SIDO), headed by the Additional Secretary & Development Commissioner (MSME), being an apex body for formulating and overseeing implementation of the policies for the development of MSMEs in the country, is playing a very positive and constructive role for strengthening this vital sector. It functions through a network of MSME-DIs, Regional Testing Centres, Footwear Training Institutes, Production Centres, Field Testing Stations and specialized institutes Khadi & Village Industries Commission (KVIC) established under the Khadi and Village Industries Commission Act, 1956 (61 of 1956), is a statutory organization under the aegis of the Ministry of MSME, engaged in promoting and developing khadi and village industries for providing employment opportunities in the rural areas, thereby strengthening the rural economy. KVIC has been identified as one of the major organisations in the decentralised sector for generating sustainable non-farm employment opportunities in rural areas at a low per capita investment. North- comprises the contiguous Seven Sister States such as Arunachal Pradesh, Assam, , , Mizoram, , and Tripura, and the Himalayan state of . Although the mountainous scenery is arresting, streams, rivers and falls nonchalantly melancholy, the tribal population being nature worshipper and humble the northeast region remains one of the least visited but fastest developing part of India and investments started following since Indian Chamber of Commerce (ICC) setup its North east Regional Office in Guwahati way back in 2000 after organizing 1st North East Business Summit in New Delhi graced by all chief ministers of NE states to attract investors. The then Hon’ble Shree Atal Bihari Vajpayee had graced the 1st NEBS as Chief Guest and promoted North east India not only as tourist destination but also as an ideal investment destination with unlimited opportunities. constitutes about 8% of India’s size; roughly three quarters the size of the state of . Its population is approximately 40 million (2011 census), 3.1% of the total Indian population; roughly equal to that of Odisha. The Siliguri Corridor in West Bengal, with a width of 21 to 40 kilometres (13 to 25 mi), connects the North Eastern region with the main part of India. The region shares more than 4,500 kilometres (2,800 mi) of international border (about 90 per cent of its entire border area) with China (southern Tibet) in the north, Myanmar in the east, Bangladesh in the southwest, and Bhutan to the northwest. The states are officially recognised under the North Eastern Council (NEC), constituted in 1971 as the acting agency for the development of the eight states. The North Eastern Development Finance Corporation Ltd (NEDFi) was incorporated on 9 August 1995 and the Ministry of Development of North Eastern Region (DoNER) was set up in September 2001. The Ministry of Development of North Eastern Region (MDONER) is a Government of India ministry, established in September 2001, which functions as the nodal Department of the Central Government to deal with matters related to the socio-economic development of the eight States of Northeast India. It acts as a facilitator between the Central Ministries/ Departments and the State Governments of the North Eastern Region including Sikkim in the economic development including removal of infrastructural bottlenecks, provision of basic minimum services, creating an environment Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 77 for private investment and to remove impediments to lasting peace and security in the North Eastern Region including, Sikkim. The National Bank for Agriculture and Rural Development (NABARD) took this idea and started the concept of micro-finance in India. Under this mechanism, there exists a link between SHGs (Self- help groups), NGOs and banks. SHGs are formed and nurtured by NGOs and only after accomplishing a certain level of maturity in terms of their internal thrift and credit operations are they entitled to seek credit from the banks. There is an involvement from the concerned NGO before and even after the SHG-Bank linkage. The SHG-Bank linkage programme, which has been in place since 1992 in India, has provided about 22.4 lakh for SHG finance by 2006. It involves commercial banks, regional rural banks (RRBs) and cooperative banks in its operations.

Review of Literature Many recent research studies have shown that the population dependency and engagement in agricultural sector in India has been decreasing since last few years. In North Eastern Region (NER) of India, thousands of small households industries are operating in rural areas. These are all traditional households industries and operating by some communities and caste. According to a report (MSME foundation 2007), India have around 6000 micro enterprise clusters. Another database of UNIDO shows that there are more than 4000 artisanal and about 363 non- artisanal clusters in India. There is a very less literature that we have on cluster base poverty reduction. Among this few UNIDO’s study in 2004 ‘Industrial Cluster and Poverty Reduction’, which says cluster and poverty are related in three distinct ways namely through cluster features, cluster process and cluster dynamics. According to Bird (1995), entrepreneurial competencies are carried by individuals – the entrepreneurs who begin or transform organisations and who add value through their organising of resources and opportunities. She suggests that the competencies necessary to launch a new venture or to plan a new venture may be conceived as “baseline”. Man et al. (2002) defined entrepreneurial competencies as the total ability of the entrepreneur to perform a job role successfully. The study also suggested that the characteristics of entrepreneurs such opportunity, relationship, analytical, innovative, operational, human, strategic, commitment, learning and personal strength competencies were demonstrated to have either direct or indirect impacts on the entrepreneurial performance. Sarri & Trihopoulou, (2005) examined the personal characteristics and motivations of women entrepreneurs in Greece. The study revealed that the education level of the respondents was high; mostly women were married and had children. There was also a tendency to enter in to business in old age. The women in Greece were mostly motivated by pull factors like self- fulfilment, need for creativity and independence. Kaippachery (2005) analysed the impact of economic reforms structure schedule on the 82 rural small scale enterprises (RSSEs) located in Kannur district of Kerala. The results found negligible impact of the reforms on employment, earning capacity and availability of raw material whereas output, productivity, market access, diversification, safety of labour and capital were found to be more vulnerable to unsustainably. To support economically unsustainable RSSEs, the study suggested development of rural financial markets, trades fares, advertisement, displays etc. Ram Krishna Mandal (2007) in his paper encompasses the present scenario of Khadi and Village Industries in the North Eastern States, particularly Arunachal Pradesh, in relation to growth, development, problems and 78 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III solutions. The author opined that top priority should be given to those small scale industries like KVIs which need light machine tools and other equipments in order to produce qualitative products because today, a state’s progress is measured by the quality of goods it produces. Srivastava and Syngkon (2008) study makes an in depth analysis of the development of small scale industrial (SSI) sector in the rural areas of the states of NER of India. The study also focuses specifically on the role and profile of entrepreneurs. It is observed that in most of the North Eastern states, concentration and growth of SSI activities is higher in rural areas than in urban areas. The study also brings to light about the rising number of women and tribal entrepreneurs in the region. Khanka (2009) conducted a survey of 248 first generation entrepreneurs in Assam in NE India to understand their entrepreneurial motivation. The study clearly showed that the entrepreneurs were primarily motivated by the need for economic achievement, personal growth, autonomy and recognition. The desire to contribute to the community was not found to be an important reason to become an entrepreneur. The study did not reveal any significant difference in the motivations of men and women entrepreneurs. Gangadhar Banerjee and Srijeet banerji (2011) conducted a study on rural entrepreneurship development programme - an impact assessment in seven states of India namely Andhra Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Odisha, Uttar Pradesh and west Bengal. The programmes were conducted through Entrepreneurship Development Institute, Voluntary associations, Non- Governmental organisations for providing sustainable employment and income opportunities in rural areas. The study reveals that REDPs is an efficient instrument in creating income and employment opportunities for the rural youth, especially the women in rural and semi-urban areas. The study recommends that there is a need to adopt a comprehensive strategy to cover adequate number of potential entrepreneurs under REDP through EDIs/RUDSET type institutes and select capable VAs/NGOs to operate the strategy. Jyoti kumar and Lalhunthara (2012), in their study on socio-economic background of Micro entrepreneurs in Aizawl district, Mizoram found that Education, experience, age and family play an important role in shaping the entrepreneurial ambition of the aspirant. It was found that nearly one-fourth of entrepreneurs were females. Their study also reveals that entrepreneurs were engaged in different lines of business activities ranging from tailoring to food processing, involving complex technologies and different skills sets.

Statement of the Problem Though many rural development agencies had been involved for rural entrepreneurship for decades, the change in economic scenario in North East Region has been very steady. There is a need for many more mobilization and awareness programs on the entrepreneurship opportunities and its importance in the region for the young generation. North East Region is diversified in respect of geographical location, social, cultural, religion, political and economic conditions. There is also need to throw light on the factors that motivate the rural micro entrepreneurs to establish their units, recognizing their limitations and interests. This observation is more relevant in the context of educated young generation who need direction, motivation and to build confidence to start entrepreneurial activities. It has been continuing trend in the region that young graduates aspire to be employed in government sector. And those uneducated unemployed youngsters are diverted towards activities that are socially not desirable. Also the tribals of North East Region are reluctant to relocate from their birthplaces which would otherwise expose them to greater opportunities in the outside world. In spite of huge available natural resources Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 79 in the region for instances, Bodos in Assam, Garos in Meghalaya, Kashis in Meghalaya the young graduates opt for working under someone but not to self employment.

Significance of the Study Self-employment is often perceived to be a desperate effort of workers who have been laid off and unable to find work again; it is viewed as low-paying, and as providing little or no benefit for the local economy. But policy and educational programs directed at improving the productivity and earnings of the self-employed could have high payoffs in terms of local economic growth and opportunity. As the population is growing, increasing number of literate people, the unemployment rate in North Eastern states is on the rise. It is a high time to take up entrepreneurial activities to utilize abundant local resources. The findings of different studies about the North Eastern region can convey important message about various entrepreneurial opportunities and its significance in the modern times.

Objectives of the Study The proposed study will focus on the objective as follows- 1. To study the trends in entrepreneurship (Start-Ups) development in North East- India.

Research Methodology Data collection: This study is based on the secondary data from the reports published by NABARD, annual reports of MSME, Government of India, government publications, official website of Assam, Meghalaya and other north eastern states. The researcher has referred to the published and unpublished research papers, dissertations, books, articles and journals for collecting secondary data for the study. The data has been analysed using simple statistical tables and graphs. Findings and Discussion The NER region has tremendous potential for generating revenue from the primary, secondary, as well as the tertiary sectors. The opportunities in the primary sector exist in cultivation of plantation crops and commercial exploitation of forest resources. The secondary sector has immense opportunities in the form of rich mineral and crude petroleum reserves and also from the tourism sector. Most of the states have structured IT policies with attractive incentive packages, which may translate into major revenue generating avenues.

Entrepreneurial opportunities in North East-India: The factors driving lucrative business opportunities in the NER are: • Exclusive incentives for NER states – Both the central and state governments have set out enormous subsidies to support power, transportation, land and infrastructure development for setting up business in NER. • Enormous reserves of natural resources – The NER is endowed with considerable natural resources and hosts about 37 per cent of the country’s river waters, 20 per cent of the total hydrocarbon potential, large quantities of low ash coal resources, limestone and dolomite deposits as well as a few other unexplored minerals. 80 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III • Favourable climate for lucrative plantation crops – The NER states have ideal climatic conditions for growing tea and rubber hurbal. There is immense potential for further commercial exploitation of resources, with increasing support from the central and state governments. • Potential for forest-based industries – The NER has 46 per cent of its land under forest cover and thus vast amount of forest resources are available including bamboo, medicinal herbs and wood, which may be utilised for setting up of forest-based industries. Tea production: The tea industry has contributed substantially to the , with 17 per cent of the workers employed in the industry. Tea from Assam has great demand in western countries. In Assam, tea is grown both in the Brahmaputra and Barak plains. The state is home to one of the world’s oldest and largest Tea Research Centres, started in 1911 at Toklai in Jorhat. It also has the world’s second largest Tea Auction Centre, established in 1970 at Guwahati, for better marketing of the tea produced in the NER states. The tea produced in Mizoram has a distinct quality and flavour similar to tea grown in high altitudes like the Nilgiris and Darjeeling. There is a proposal for setting up of a tea processing plant at Biate in collaboration with the local cooperatives. Temi Tea estate is located in south Sikkim and is one of the best tea producing estates in the country. Tripura is the 5th largest tea producer, among the 14 tea-producing states, after Assam, West Bengal, Tamil Nadu and Kerala. Tea plantation is also found in the states like Meghalaya, Manipur etc. Rubber Plantation: The Rubber Board adopted an integrated approach for rubber development in the NER during the 10th plan period. In Tripura about 1,000 sq km of area in the state can be brought under rubber plantation. Tripura is estimated to have around 26,500 hectares under rubber cultivation at present, which is the second largest after Kerala. The Rubber Board now considers Tripura the second rubber capital of India. Rubber plantations are also found in other states of North East.

Bamboo Policy for North East: Table 1.

Category Central Government Arunachal Pradesh Assam Manipur Meghalaya Insurance Reimbursement of 100% Scheme insurance premium; Risk coverage includes fire, lightning, landslides, cyclones, riots, strikes, malicious/terrorist damages Income Tax 100% for 10 years Exemption

Power Subsidy 50% on cost of laying power @50% for power lines 30-50% of power tariff 100% to SSI for 5 @30-50% on total lines subject to a ceiling of for 5 years; 20% for years; 50% of the expenditure on power USD 1,242; subsidy on drawing power lines cost incurred on consumption for 5 yrs, power supply for 3 linking of power up to USD 497 – 17,391 Years lines

Excise Duty 100% for 10 years 100% for 10 years Exemption

Sales Tax 100% for 7 years 4% exemption on 100% exemption for 7 value of raw years materials for 10 years Price Preference @7.5-17% and @ 20% for SSI exemption of EMD Units

Others Certain tax exemptions for IT Quality Control, Cost of Incentives for Cost of Feasibility Cost of Feasibility and Concessions units, Bio-technology & Power Feasibility and Project Feasibility Study Cost, and Project Reports, Project Reports, Generating industries, Export Reports, Manpower Quality Certifi cation, Training of Tribals, Training of Tribals, Oriented Units Development, Technical Marketing Technical Know- Technical Know-How, Know- How Assistances, for How, Stamp Duty, Stamp Duty, specific industries, and Quality Up Development FDIs gradation Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 81

Category Mizoram Nagaland Tripura Insurance Scheme Income Tax Exemption @ 25 – 30% for 5 years subject @30-60% on total expenditure Additional 30% of outside Power Subsidy to a ceiling of USD 4,969 on power consumption peak hours annually Excise Duty Exemption 100 % for 10 years 100% exemption for 7-10 100% reimbursement for first Sales Tax 100% exemption for 7 years years 5 years @ 100% subject to a ceiling of @ 10% on purchases by the Price Preference @15% and exemption of EMD USD 497 Govt Reimbursement of Standard Cost of Feasibility and Project Cost of Feasibility and Project Certification Charge; Reports, Training of Local Reports, Training of Local Others Concessions Concession for industries people, Factory Rent, Export people, Export Oriented Units, using natural gas as Oriented Units, Stamp Duty Quality Control, Stamp Duty feedstock; grant and loan

Source: IBEF Publications (2015) The NER has the maximum concentration of bamboo in India owing to its topography and climatic conditions. At present bamboo is put only to traditional use – handicrafts and papermaking. It is true that importance of bamboo has been increased from edible bamboo shoots to construction, medicine, and bamboos fabric or bio fuel. For the past years, bamboos experts have been experimenting with the multiple uses of bamboo and are still discovering new applications every day. Bamboo fiber for the garment and automotive industries, flooring boards, veneers as thin as 0.2 mm, are just some of many examples of its usefulness. Bamboo panels, especially floors, are more and more in demand all over the world, because they have the texture of marble and the elegance of wood; in addition, they are strong, durable, smooth, clean, non-sliding and resistant to humidity. Recently, the Government of India announced a bamboo mission for promoting bamboo-based industries in the NER. The states of Arunachal Pradesh, Assam, Mizoram, Sikkim and Tripura have policies specific to bamboo production and related activities. Tripura is one of the highest CVP (climate, vegetation, precipitation) index zones (a measure of potential productivity) for bamboo in the country. Thus, more number of people can be engaged in non-farm activities like bamboo plantation which will then promote bamboo handcraft. Handicrafts and handloom: The NER has a rich heritage of artistic craftsmanship, with unique crafts and abundant availability of skilled labour. The crafts of this region are almost entirely oriented to locally available raw materials. The principal handicrafts of this region include basketwork, cane furniture, mats, woodcarvings, terra cotta, artistic textiles, bell metal artwork, brass metal craft, dolls and toys. With various incentives on export oriented units, lucrative business may be set up for export of the NER handicrafts. Handlooms are a hereditary occupation in the region. Some of the handloom products, known for their excellent craftsmanship, are carpets of Arunachal Pradesh, Muga silk products of Assam, lashingphee of Manipur and shawls of Nagaland and Mizoram. With locally available raw materials, large resource of skilled labour and incentives for export oriented units, units may be set up for export of NER handloom products. 82 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Medicinal and Aromatic Plants Industries: North East India is one of the richest repositories of medicinal and aromatic plants (MAP) in the world. The list of commercially important medicinal plants has already crossed 150 species. NER possesses tremendous scope to be a good business centre for MAP products in the near future. Scientific approach for their exploration, conservation and value addition may be the key points for entrepreneurship development by exploiting the indigenous technology knowledge. Post harvest processing of MAP crops is another important new area for NE India in entrepreneurship development for the sector. Around 300 types of medicinal herbs and plants are known to exist in abundance in Assam. The Brahmaputra valley itself has 150 varieties of herbs and plants of commercial value. It is estimated that only around five to 10 per cent of the plants and herbs are currently utilised. Mineral-based industries: The availability of superior quality natural gas at concessional price offers opportunity to prospective investors for setting up gas-based industrial units. Besides this, natural gas can also be utilised as a cheaper source of energy for various energy intensive industrial projects. Forty-eight per cent of the on-land oil reserves and more than 50 per cent of the in-place gas reserves in India lie in the north eastern states and Assam has one of the biggest pool of professional and skilled manpower engaged in the oil and petroleum industry. The wells at Digboi, Duliajan and Sivasagar also produce natural gas (reserve of 156 billion cu m) accounting for about 50 per cent of India’s total onshore production. This could be used as feedstock for production of fertiliser, electricity and petrochemicals industries and also as fuel in the tea sector. Limestone with reserves of about 500 million tonnes is another important resource and is available in various grades. The China clay available in the Karbi-Anglong district is a vital input for the ceramics industry. Meghalaya with its wealth of mineral deposits has tremendous industrial potential. There are extensive deposits of coal, limestone, granite, clay and other minerals. The total estimated reserve of coal in the region is around 640 million MT. Limestone is another mineral that occurs in an extensive, 200- km-long belt along the southern border of Meghalaya. The total inferred reserve limestone within the state is around 5,000 million MT. Nagaland offers investment potential in terms of exploration as well as exploitation in development of mineral-based industries, which have high export potential. The Office of DC (MSME) has MSME-DIs at Gangtok (Sikkim); Guwahati (Assam); Imphal (Manipur); Agartala (Tripura) and also branch MSME-DIs at Aizwal (Mizoram); Dimapur (Nagaland); Itanagar (Arunachal Pradesh); Diphu (Assam); Silchar (Assam); Tezpur (Assam); Shillong (Meghalaya) and Tura (Meghalaya). A Technology Centre has been set up at Guwahati to cater to tooling and training need of industries in the North East region. The Technology Centre is equipped with hi-tech machinery for providing common facility services to the industry; conducting various skill development modular courses, long term and short term programmes in the area of Machinist, Welding, Machine Tool Operation, Manufacturing Technology, Mould Design with CAD/CAM, Electrical Maintenance, Plastic Processing & IT Application etc. The State Government of Nagaland has also been assisted to set up a Mini Tool Room & Training Centre at Dimapur, Nagaland. Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 83 Table 2: Category-wise own contribution and rate of subsidy

Categories of beneficiaries under PMEGP Beneficiary’s own contribution (on project Rate of Subsidy (on project cost) cost) Area (Location of Project/unit) Urban Rural General Category 10% 15% 25% Special Category (including SC/ST/OBC/ Minorities/women/ex-servicemen/PWD/NER, Hills 05% 25% 35% and border areas, etc.

Note: (1) The maximum cost of the project/unit admissible under manufacturing sector is `25 lakh. (2) The maximum cost of the project/unit admissible under business/service sector is `10 lakh. (3) The balance amount of the total project cost will be provided by Banks as term loan

Table 3: Performance of Khadi in India

Performance 2011-12 2012-13 2013-14 2014-15 Production of Khadi (Rs. in Cr) 716.98 761.93 811.08 879.98 Retail Sales of Khadi (Rs. in Cr) 967.87 1021.56 1081.04 1170.38 Employment (in lakh persons) 10.45 10.71 10.98 11.06

KVIC-annual reports It is clear from the table above that the performance of khadi industries in terms of total production, total sales and employment generation in the country is progressing but the growth has been slow.

Activities of Office of the Development Commissioner (MSME) in North Eastern Region: As per the budgetary policy of the Government of India, 10 per cent of total plan budget is earmarked for NER for implementation of various Plan schemes in khadi, village industries and coir sectors. The details of the funds released by the Ministry to KVIC and Coir Board for the NER during the last three years and 2015-16 are given in the Table below:

Table 4: Release of Funds for North East Region (Value: in lakh)

Funds Released Year KVIC COIR BOARD TOTAL 2013-14 133.46 1.45 134.91 2014-15 126.47 0.65 127.12 2015-16 99.55 1.85 101.40 2016-17 91.24 0.30 91.54

Source: MSME Annual Reports 84 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Table 05: State-wise KVI Productions in North East Region (Value: in lakh) State 2013-14 2014-15 2015-16 2016-17 Arunachal Pradesh 5188.60 5642.5 5956.62 4765.29 Assam 64350.74** 69940.57** 73780.33** 59024.26** Manipur 11152.66 12121.76 12784.37 10227.49 Meghalaya 13194.08 14352.91 15142.58 12114.06 Mizoram 25187.43* 27391.38* 28898.20* 23118.56* Nagaland 13761.33 15043.20 15871.77 12697.41 Sikkim 4534.83 4931.67 5202.91 4162.32 Tripura 11907.82 12949.94 13662.25 10929.80 Total 149277.49 162373.93 171299.03 137039.19

Among all the North Eastern states, the state of Assam leads in the production and employment generation of khadi and village industries, followed by Mizoram. The total of state-wise production of KVI in per cent from 2013-2017 is shown in the diagram below. Figure.1

Table 6: KVI Employment in North East Region (In lakh persons)

State 2013-14 2014-15 2015-16 2016-17 Arunachal Pradesh 0.09 0.15 0.15 0.15 Assam 2.89 4.54 4.69 4.69 Manipur 0.53 0.85 0.87 0.87 Meghalaya 0.33 0.52 0.54 0.54 Mizoram 0.66 1.05 1.08 1.08 Nagaland 0.43 0.68 0.70 0.70 Sikkim 0.18 0.26 0.26 0.26 Tripura 0.49 0.79 0.81 0.81 Total 8.45 8.84 9.10 9.10

Source: MSME Annual Reports Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 85 The tables above show that the production of khadi industries and their employment generation in North Easter Region of the country is very meagre as compared to the national average. The production is on the rise, but employment generation has been almost stagnant since the year 2012 till date. To cater to the needs of skill development in NER, Multi-Disciplinary Training Centres at Kumarikata (Assam) and Doimukh, (Arunachal Pradesh) are being run by the institutions with the financial assistance of KVIC. In addition, training centers are being run by State KVIBs at Roha, Marigaon (Assam); Zamabank (Mizoram) and Dimapur (Nagaland). Besides, 4 agencies have been accredited for conducting training in NE States. The beneficiaries from NE Region are provided rail fare for attending training programmes and also daily allowance during the training period. The total of KVI employment during this three year from 2013 to 2017 is represented by the following diagram. Figure.2 : KVI Employment in North East Region (In lakh persons from 2013-2017)

The table below depicts the percentage of MSME Establishments in North East Region in comparison to rest of India. Figure.3

Source: MSME AR 2016-17 86 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Schemes/Programmes of NABARD: An Analysis and Evaluation

Commercial Banks RRBs Cooperative Banks Total Sl. Region No No. of Amount of No. of Amount of No. of Amount of No. of Amount of SHGs Savings SHGs Savings SHGs Savings SHGs Savings Northern 48297.94 1 20356 33419.27 7465 6531.88 10285 8346.79 38106 Region (1.29%) North Eastern 21,968.70 2 8793 6250.09 15058 13950.98 2186 1767.63 26,037 Region (0.59%) Eastern 3,49,489.07 3 170407 134380.43 136334 146461.13 105835 68647.51 4,12,576 Region (9.38%) Central 119066.73 4 61869 86933.81 19638 12879.75 2775 19253.17 84,282 Region (3.19%) Western 188632.21 5 81868 161209.14 13507 14536.97 17150 12886.10 112525 Region (5.06%) Southern 30,01,235.44 6 788988 2096304.49 278397 722132.17 91412 182798.78 11,58,797 Region (80.49%) 7 Grand Total 1132281 2518497.23 470399 916492.88 229643 293699.98 1832323 3728690.09

Source: Report on the Status of Microfinance, NABARD (2015-16) Figure.4: Region-wise Status of Bank Loan Disbursed to SHGs during 2015-16

Table.8: Region-wise Status of Bank Loan Disbursed to SHGs during 2015-16 (Total Loan Disbursed in Rs. Lakh; Average Loan Disbursed in / SHG)

2013-14 2014-15 2015-16 Sl. Total Average Total Average Total Average Regions No. of No. of No. of No Loans loan Loans Loan Loans Loan SHGs SHGs SHGs Disbursed Disbursed Disbursed Disbursed Disbursed Disbursed 1 Northern Region 23918 28048 117269 43848 42873 97777 38106 48298 126746 2 North Eastern Region 16201 12819 79125 18791 15795 84056 26037 21969 84375 3 Eastern Region 297478 151067 50783 351800 329602 93690 412576 349489 84709 4 Central Region 66393 61807 93092 109231 110909 101536 84282 119067 141272 5 Western Region 87846 86444 98404 97341 117080 120279 112525 188632 167636

6 Southern Region 874585 2061551 235718 1005227 2141972 213083 1158797 3001235 258996

All India 1366421 2401736 175768 1626238 2758231 169608 1832323 3728690 203495

Source: Report on the Status of Microfinance, NABARD (2015-16) Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 87 The overall amount of bank loan disbursed to SHGs over the years has increased in the country. In North -Eastern region the average amount of bank loan disbursed to SHGs during the financial years 2013-14 to 2015-16 has increased from Rs. 79,125 to Rs. 84,375 (i.e., 6.6%); and the total number of SHGs increased from 16,201SHGs to 26,037 SHGs (i.e., 60.7%) during the same period. On the other hand, in Southern region, there was 32.50% increase in number of SHGs; and the average bank loan disbursed to SHGs showed an increase of 9.87% during the same period. Thus, the bank loans disbursed to SHGs in North-Eastern region is not as per the percentage increase in the number of SHGs.

Figure.5: Region-wise Non-performing Assets in per cent

Source: NABARD Annual Reports The diagram above shows the region-wise non-performing assets in percentage and it can be seen that in North-Eastern region the percentage is high but better than that of Northern region in the year 20015-16, and that of Central region in the year 2014-15. The all India average is 7.4% in the year 2014-15 and 6.45% in the year 2015-16. The NPA level in the Southern region is very less as compared to other regions in spite of having highest number of SHGs, highest loan amount disbursed to SHGs, and highest loan amount outstanding.

Conclusion On September 16, 2015, awarded the “In-principle approval” to set up Small Finance Bank (SFB) to 10 Financial Institutions, including RGVN (North East) Micro Finance Limited. The main objective behind setting up small finance bank by RBI was to drive the objective of financial inclusion by making provision of savings and to provide credit to small business units, small and marginal farmers, micro and small industries and other unorganized sector entities, through high-end technology, low cost operations. The NER is blessed with enormous natural resources including oil, natural gas, abundant reserves of minerals, forest resources such as bamboo and other medicinal plants. The region has favourable climatic conditions for tea and rubber plantations and holds immense potential for business 88 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III opportunities involving usage of natural resources. The central and state governments have provided for attractive incentives and subsidies on power, transportation, land and capital investment for organisations setting up business in the NER. Incentives are proposed for thrust sectors and export oriented industries such as food processing. All the NER states have high literacy rates, with an average literacy rate of 68 per cent, which is higher than the national average. English, the most accepted language of business, is widely spoken in the NER. But majority take up the general studies in college degrees and very few of the young generation go for professional studies outside the region. There may be many reasons for this environment among students of the region. Encouragement to students, carrier guidance, more and easy scholarships, setting up of more professional institutes and other facilities are utmost urgency to enhance entrepreneurship in the region. Transport linkages are undergoing a facelift in the region with substantial investments coming in from government and IFIs for the development of roads, railways, airways and waterways. This, coupled with the proposed EPZs coming up in some states, would enhance the logistics infrastructure available in the region. Significant infrastructure is being developed in Assam, Manipur, Meghalaya, Nagaland and Tripura, including STPs, EPIPs, IIDCs, EPZs and dedicated industrial growth centres and a food processing park in Assam. Opportunities for investment in the industrial and urban sector, particularly under the PPP model, are vast due to its recent reforms. Significant infrastructure improvements would catalyse the growth of industries and provide an ideal business climate for upcoming industries. The geographic location of the NER provides immense opportunities for international trade with the neighbouring countries of Bangladesh, Myanmar, Bhutan, China and Nepal. Specific initiatives are being undertaken by the government for promotion of cross – border trade with these countries. The estimated contribution of Micro, Small and Medium Enterprises (MSME) sector, including service segment, to the country’s GDP during 2012-13 as per the Union Minister of MSME was 37.54 per cent; while the total employment in the sector is 805.24 lakh; and the share of MSMEs in India’s total export for the year 2014-15 was 44.70 per cent. Under the PMEGP Programme, which generates income and employment, 5851 projects were assisted during the year 2014-15, and the estimated employment generated was 40, 915 while the Margin Money Subsidy released and utilized was Rs 1,01,900 lakh and Rs 14,474.87 lakh respectively. NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas. In discharging its role as a facilitator for rural prosperity, NABARD is entrusted with providing refinance to lending institutions in rural areas, bringing about or promoting institutional development and evaluating, monitoring and inspecting the client banks. NABARD has effectively brought in a number of innovations in the rural credit domains. Some of these innovations are: Formation and linkage of SHGs, Farmers Club, Rural Infrastructure Development Fund, Watershed Development, Kisan Credit Card, and District Rural Industries Project. RRBs in India are an integral part of the rural credit structure of the country. The Government of India set up Regional Rural Banks (RRBs) on October 2, 1975. Initially, 5 RRBs were set up on October 2, 1975, which were sponsored by Syndicate Bank, SBI, , United Commercial Bank, and United Bank of India. They have been playing a significant role in financing the weaker section of the community in the rural areas and also in inculcating banking habits among the rural masses. Recent Trends in Entrepreneurship (Start-Ups) Development with Reference... 89 References 1. Bird, B. (1995). “Towards a theory of entrepreneurial competency”, Advances in Entrepreneurship, Firm Emergence and Growth, Vol. 2, pp. 51-72. Bonnstetter, B.J. (1999), 2. Stuart, R. and Lindsay, P. (1997). “Beyond the frame of management competences: towards a contextually embedded framework of managerial competence in organizations”, Journal of European Industrial Training, Vol. 21 No. 1, pp. 26-34. 3. Johnson, S. and Winterton, J. (1999). Management Skills, Skills Task Force Research Paper 3,Department for Education and Employment, London 4. Man, T., Lau, T. and Chan, K.F. (2002). “The competitiveness of small and medium enterprises. A conceptualisation with focus on entrepreneurial competencies”, Journal of Business Venturing, Vol. 17 No. 2, pp. 123-42. 5. Dr. Gangadhar Banerjee (2010). Rural Entrepreneurship Development Programme—An impact Assessment”, Bengal Economic Association, 30th Annual Conference (2010) Number. 6. UNIDO (2004). ‘Industrial Cluster and Poverty Reduction: Towards a methodology for Poverty and Social Impact Assessment of Cluster Development Initiatives’. Vienna. 7. Thangasamy, E. (2014, February). Financial Inclusion in North East India: An Analytical Study. IRACST – International Journal of Commerce, Business and Management (IJCBM), 3(1), 183-185. doi: ISSN: 2319– 2828 8. NABARD. (2016). Status of Microfinance in India. Micro Credit Innovation Department, National Bank for Agriculture and Rural Development, Mumbai 9. Annual report (2010). ‘Foundation of MSME Cluster’. New Delhi. 10. Annual reports, MSME, KVIC (2012-13, 2013-14, 2014-15, 2015-16) 90 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

Investment Pattern in Coastal Area of Odisha: A Special Reference to Bhubaneswar-Cuttack Twin City

Prof. S.K. Baral*

ABSTRACT Investment is one of the major issues of the middle class families as their small savings of today are to meet the expenses of tomorrow. This paper examines the investment awareness and pattern in coastal part of Odisha based on investor’s preferences for different investment opportunities like bank deposits, real estate, small savings, life insurance schemes, gold/silver, commercial deposits, corporate security- bonds, mutual funds, and equity and preference shares. This paper finds the impact of awareness/knowledge, occupation and income level of the individuals on their investment behavior. Keywords: Savings, Investment Pattern, Awareness. Introduction Time Value of Money (TVM) is a terminology which has been very familiar from a long time and motivates investors to mobilize their saving. Since value of currency today is more precious than that of tomorrow hence, every individual prefers to maintain the value of currency today with the help of investment in different saving destinations with the help of investment management. Investment management is the professional asset management of various securities (shares, bonds and other securities) and other assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors risk taking ability also influences their investment Portfolio. An individual, who is risk averse, will always prefer to invest in less risky or risk free assets despite of receiving less return. Moreover, an investor who needs to earn more return instead of keeping the savings idle, he may use his saving in more risky assets in order to get more return on it. Apart from risk averseness, investors also consider various factors which affects investors’ portfolio such as annual income, government policy, natural calamities, economical changes etc. Review of Literature An empirical study of “Indian Individual Investors Behavior” by Syed Tabassum Sultana (2010), was an attempt to know the profile of the investors and also to know their characteristics so as to know

* Professor & Head, Department of Commerce, Indira Gandhi National Tribal University, Amarkantak, , Email id: [email protected] Investment Pattern in Coastal Area of Odisha: A Special Reference to... 91 their preference with respect to their investments. The study also tried to unravel the influence of demographic factors like gender and age on risk tolerance level of the investors. Bhardwaj Rajesh, Raheja Rekh and Priyanka (2011), propounded in their study that saving and investment pattern of salaried class school teachers of govt. and private schools has depended upon income and they both get salary but the scale of the salaries are different and saving patterns that’s why is so different. Govt. teachers prefer to invest the money for emergency purposes and private teacher’s emphasis on children marriage and education. Dr. S. Mathivannan and Dr. M. Selvakumar (2011), examined the saving and investment patterns of salaried teachers of Sivakasi Taluk, Tamilnadu and they found that there is great importance of money and money’s worth for them and they are regularly preparing budgets for expenditures and compare it with the actual expenditure and take necessary actions if there are. .Dr. Dhiraj Jain and Parul Jain (2012), concluded that the majority of the teachers the money plays a big role and they initiated to prepare budgets and future forecasting for income and expenditure and there is comparison between future and Standard budgets to find out the deviations to meet certain money constraints It has been evident from the study that most of the school teachers are saving their money for the purpose of their children’s education, marriage and as security after retirement. Dr. Ananthapadhmanabha Achar (2012), studied “Saving and Investment Behavior of Teachers - An empirical study”. In the analysis individual characteristics of teachers such as age, gender, marital status, and lifestyle determined the savings and investment behavior of teaching community in the study region. They considered monthly family income, stage of family life cycle, and upbringing status emerged as determinants of their savings and investment behavior. Dr. Varsha Virani (2012), propounded in her study that In spite of low income the teachers have been saving for future needs. The major impact on savings is due to the level of income of the school teachers. The research shows that majority of the respondents are saving money as Bank deposits for the safety of an unpredictable future. The main avenues of investment are Bank deposits and the main purpose of investment is for children education, marriage, and security after retirement. After critical review, it can be analyzed that money earned by individual carries many dimension for investment point of view. It includes not only behavioral aspect of individual but also the opportunities available for savings, saving instruments, etc.

Objectives of the Study Primary objective of study is to find out trend of saving/investment culture in Coastal Odisha with specific region of Bhubaneswar-Cuttack twin city district. Study basically follows following objectives. 1. To study the saving patterns of the individuals in Bhubaneswar-Cuttack twin city district. 2. To analyze the investment preferences of the individuals of the region. 3. To study the relationship between saving pattern and investment preferences based on variables like social, economic, educational and occupational background of the individuals. 92 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Methodology Study is based on primary data only. The research is analytical and tool used for data collection is structured questionnaire. Sample size is of population is 30. Interview of respondents have been done on 1 to 5 scales. Duration of study was October 2018 to December 2018. Limitations of Study 1. Some people have refused to share the information regarding investment amount, which they thought was personal. 2. The sample size may not represent the entire population of Coastal Odisha to draw a uniform conclusion. Investment Instruments The following investment instruments (used in Questionnaire) are being selected for taking into consideration. Equity: Equity is one of the most risky areas. But, at the same time this is also a place where an investor can earn high rates of returns that will push up the returns of the entire portfolio. There is a need for the investor to separate the speculation from the investment. Investment in equities can be made directly by the purchase of shares from the market or it can be done through the mutual fund route, whereby the investor buys the mutual funds. Mutual Funds: This is an emerging area for investment and there is a large variety of schemes in the market to suit the requirements of a large number of people. In finance, in general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. Corporate Debenture: Corporate debentures are normally backed by the reputation and general creditworthiness of the issuing company. It is a type of debt instrument that is not covered by the security of physical assets or collateral. Debentures are a method of raising credit for the company and although the money thus raised is considered a part of the company’s capital structure, it is not part of the share capital. Fixed Deposits: Fixed Deposits with Banks are also referred to as term deposits. Minimum investment period for bank FDs is 30 days. Deposits in banks are very safe because of the regulations of RBI and the guarantee provided by the deposit insurance corporation. The interest rate on fixed deposits varies with term of the deposits Bank deposits enjoy exceptionally high liquidity. Loans can raise against bank deposits. Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any Post Office The interest rate on deposits is slightly higher than banks. The interest is calculated half yearly and paid yearly. Life Insurance Policies: Insurance companies offer many investment schemes to investors. These schemes promote saving and additionally provide insurance cover. L1C is the largest life insurance company in India. Insurance policies, while catering to the risk compensation to be faced in the future by investor, also have the advantage of earning a reasonable interest on their investment insurance premiums. Gold/Silver: Investing in gold offers many benefits and one is that this is an asset that protects savings from risks such as currency devaluation. In contrast to paper assets, there is no counterparty Investment Pattern in Coastal Area of Odisha: A Special Reference to... 93 risk when investing in silver or gold. Investors who opt for precious metals are protected against monetary risks, including money printing, huge debts, and other actions of governments that result in financial crisis and deflation. Real Estate: Investment in real estate also made when the expected returns are very attractive. Buying property is an equally strenuous investment decisions. Real estate investment is often linked with the future development plans of the location. At present investment in real assets is booming there are various investment source are available for investment which are directly or indirectly investing real estate. In addition to this, the more affluent investors are likely to be interested in other type of real estate, like commercial property, agricultural land, semi urban land, and resorts. The bullion offers investment opportunity in the form of gold, silver, art objects (paintings,antiques), precious stones and other metals (precious objects), specific categories of metals are traded in the metal exchange.

Analysis Following table analyses the response of investors on behalf of the interview conducted with the help of questionnaire.

Weighted Ranking of Preference of Investors (Occupation wise)

Sl. No Type of Investments % Occupation wise Classification

Government Employees, Professional, Agriculture, Private 1 Bank Savings 100% Employees, Others

2 Insurance Policies 34% Government and Private Employees

3 Fixed Deposits 27% Private Employees, Professional

4 Real Estate 10% Professional, Agriculturist

5 Gold/Silver 7% Professional

6 Shares/Mutual Funds 3% Private and government employees

94 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

Source: Primary Data According to the survey, 30 different occupation class people have been selected, out of them, 5 persons have been selected from each class like government employees, working professional, business persons, agriculturist, private employee and further 5 have been selected from category of labor class workers. As per table, preference of investment options has been specified according to occupation. As per investors’ point of view, they have given first preferences of their investment to savings account in banks/PO (100%) however; second preference has been given to insurance policies (34%). Reasons of saving in insurance policies happened mainly because of tax benefits and future safety. Moreover, real estate has been a lucrative choice for agriculturist as it belongs to their occupation, hence almost all agriculturist prefer to purchase land. It is also found that very less number of people (3%) are having their investment in share market/mutual fund. In order to analyze the relationship between annual income and the annual savings, it is found that out the total respondents 6 having annual income of less than 1 lakh per annum, 15 having 1-5 lakh, 5 respondents having annual income of 5-10 lakh and only one respondent is having annual income of more than 10 lakh.

Findings I. Majority of respondents mentioned their investing response in fixed deposits and Savings in banks because; • The fixed deposits in reputed banks and financial institutions regulated by RBI (Reserve Bank of India) are very secure and considered as one of the safest investment methods. • Fixed deposits earn fixed interest rates for their entire tenure, which is usually compounded quarterly. So, those who want an income on a regular basis can invest into fixed deposits and Investment Pattern in Coastal Area of Odisha: A Special Reference to... 95 use the interest rate as their income. This makes a fixed deposit very popular way of investing money for retirees. • Fixed deposits save tax and give high returns on invested money. II. Respondents has given me the following reasons for investing in Gold/Silver: • Apart from wearing it to gain admiration and an increase in social status, gold is considered as a safe investment bet by almost all the respondents. • Many felt that the best way to pass down wealth to their heirs by investing in gold.Many felt that it would act as hedge against a monetary disaster III. Some responses gathered for opting to invest in life insurance was: • Amount invested is secured. • Safe and long term returns. • The main motive behind investing is to fulfill their personal and financial goals. IV. Mutual Funds in terms of long-term care there is uncertainty among investors, but they remain a bit of a mystery to many. Although such products can help individuals to achieve their financial goals, lack of knowledge about these products may impact their ability to achieve these goals later on. V. Shares: Very less have the knowledge about Share/Stock market and its functioning. After the finding, following are the conclusions mentioned below • As 100% respondents are having saving accounts in banks, it indicates that people still believe in bank/po saving regardless of the class they belong to.It reveals that people still have faith in traditional way of saving. Bank/Post Offices are still a favorite saving destination not only for poor section society but also for elite class people. • Second investment preference is insurance sector where 34% people deposit their money as a saving against any future risk. For tax saving purpose, insurance is a top choice among government and private employees. • 10% investors who belong to agriculturist and professional class prefer to choose real estate for their investment. Since,this sector has been shown a regular trend of high return so it has become a hot cake to all the people who are having annual income capacity above 5 lacs. • Return from real estate and mutual fund have changed the idea of investing in gold. Study tells that very less number of people (5%) wish to invest in gold despite of its lower trend in price movement. It has also been found that frequent price changes in price of gold adversely affected the opinion of people regarding investment in this segment of investment. • Only 3% people are having their investment in share market/mutual funds. During study it has been found that either the people are not much aware about share/mutual fund or they are scared about possible hazardous loss in stock market. 96 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III References 1. Bandgar, P.K. (1999), “A Study of Middle Class Investors’ Preferences for Financial Instruments in Greater Bombay”, Finance India, Vol XIV, No.2, June, 2000, Pp. 574-576. 2. Ch. Kirshnudu, B. Krishna reddy and G. Rama Krishna reddy (2005), “Investment behavior and risk management”. 3. Darshana. P (2008) “A Study on Retail Investor’s Preference towards Various Investment Avenues”. 4. Dr. Mathivannan. S& Dr. M. Selvakumar (2011), Indian Journal of Finance-”Savings and Investment Pattern of School Teachers – A Study with Reference to Sivakasi Taluk, Tamil Nadu”, Vol 5, No 4, April 2011, Pp.12- 26. 5. Dutta, Abhijit (2000), “Investors Reaction to Good and Bad News in Secondary Market: A Study Relating to Investor’s Behavior”, Finance India, Vol. XV, No.2, June 2001, Pp. 567-576. 6. Gupta, L.C. (1987), “Shareholders Survey-Geographic Distribution”, ICICI and SCMRD, New Delhi. 7. Indian Household Investors 2005. The Changing Market Environment Investors. Preferences Problems Policy Issues, Society for Capital Market Research & Development Delhi. 8. Jawahar Lal (1995), “Personal Investing”, Wheeler Publishing, New Delhi. 9. Kaboor.A (2010), “Determinants of investor’s financial literacy”. 10. Kasilingam, R&G. Jayabal (2009), southern economist- “Alternative Investment Option to Small Investors”, Vol 48, No 9, September 1, 2009, Pp. 18-20. 11. Manish Sitlani, Geeta Sharma & Bhoomi Sitlani (2011), The IUP Journal of Behavioral Finance-”Investment choice of occupants of financial services industry”, Vol 8, No 1, 2011, Pp. 29-39. 12. Maruthupandian. P (2001), “A Study On Equity Investor’s Awareness” unpublished thesis, Bharathiyar University, Tamilnadu. 13. Mudra-Samir’s (1992), survey on “Working women’s awareness and attitude toward various saving avenues” Economic Times, 2 September. 14. Narayana, D. L. (1976), “Income, Saving and Investment of Household Sector in Chittor District”, S. Chand & Co. Ltd., New Delhi, Pp. 1-187. 15. Rajarajan, V. (2003), “Investors Demographics and Risk Bearing Capacity”, Finance India, Vol. XVII, No.2, June, Pp.565-576. 16. Selvatharangini. P.S (2009), “Post Office Savings Schemes in the Maze of Investment Alternatives”. 17. Sridhar. R (2008). “Investment Practices of Investors in Equity Market”. 18. Sunatankhurana (2008), The ICFAI University Journal of Services Marketing-”Customer Preference in Life Insurance Industry in India”, Vol 4, No 3, Pp. 60-68. 19. Vikram.S (2008), “Investor perception and preferences towards stock market investments”. 97

Opportunities and Challenges in Developing Inland Waterways Transport in India

Dr. Pradeepta Kumar Samanta*

ABSTRACT Inland Waterways Transport (IWT) is a critical mode of transport in any economy mainly due to its three distinctive features: cost effectiveness, high fuel efficiency and environment friendly. While such distinct advantages of IWT over other dominant modes of transport, such as rail and road, are well recognized world over, developing the IWT to its potential has remained an elusive goal for policy makers in India. India’s enormous coastal shipping potential continues to be underutilized compared to most of the emerging and developed countries. Some of the prominent reasons for the low penetration of IWTs in India are: high operating costs, longer time to transport goods, uncertainty about availability of return cargo, deforestation in catchment areas, siltation of rivers, lack of awareness on its benefits and inadequate policy support. Furthermore, environmentalists have been opposing development of IWTs citing insufficient water flow in rivers due to small & large dams, and frequent occurrence of extreme climate change events (such as drought, flood, river erosion etc.) might disrupt the IWTs. On the positive side, the National Waterways Act, 2016 provides light at the end of the tunnel for development of IWTs in India. Against this backdrop, this paper makes an attempt to critically examine the underlying opportunities and challenges of developing IWTs in India and the evolving policy response.

Introduction An efficient transport sector is vital for development of the economy of any country. In a large country like India, efficient transportation becomes pivotal to stimulate competitive business environment. Indian transport system comprises various modes, viz; Railways, Roadways, Inland Waterways, Coastal Shipping and Airways. Globally, Inland Water Transport (IWT) has been recognized as a fuel efficient, environment friendly and cost effective mode of transport having potential to supplement the over burdened rail and congested road transport system (Ref. Table 1 & 2). India has nearly 14,500 km of navigable waterways, of which, about 5,200 km of river and 4,000 km of canals. The logistical costs in India are around 18 per cent, much higher than that of other countries; 8 – 10 per cent in China, 10-12 per cent in EU (Assocham Resurgent India Study 2016). Despite these advantages India’s coastal shipping potential continues to be underutilized compared to most of the emerging and developed countries.

* Sr. Associate Professor in Finance, School of General Management (SoGM), National Institute of Construction Management and Research (NICMAR), Pune. Email: [email protected] 98 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III IWT sector currently has a meager modal share of 0.5 per cent in India compared to 42 per cent in Netherlands, 8.7 per cent in China and over 8 per cent in USA. Water-based transport is especially effective when the source and destination are waterfront locations. The sea ports are gateways for exports and imports of bulk cargo. The evacuation of the imported cargo generally takes place by road and rail as many of the sea ports may not have waterway connectivity to its hinterland. In case the sea port has waterway connectivity to its hinterland, the best and economical way of evacuation of traffic is by IWT mode using barges. Similarly, the inbound traffic to the port, i.e., export oriented cargo can also reach the sea port from its hinterland by barges using waterway mode (Table 3).

Table-1: Advantages of IWT vis-à-vis Rail and Road Transport

Parameters IWT Rail Road 1 HP can move how much cargo (kg.) 4,000 500 150 1 litre of fuel can move how much freight (tkm) 105 85 24 Operating cost (Rs / tkm) 1.1 1.4 2.6 Source: IWAI

Table 2: Inter Modal Comparative Operating Costs Rs / TKM

Mode VOC/Freight (Rs/TKM) Taxes Total Rs/TKm Railways * 1.36 3.71% 1.41 Highways** 2.50 3.09% 2.58 IWT 1.06 NIL 1.06 Source: Railways- Ministry of Railways, Road- TTSS, IWT – IWAI * Service Tax on rail transport is 12.36% abatement is 70%. ** Service Tax on Road transport is 12.36% abatement is 75%.

Table-3: Port Connectivity to National Waterways

National Waterway Connected Sea Port NW-1 Kolkata Port and Haldia Port Kolkata and Haldia Ports through Protocol NW-2 route viz., Sunderbans NW-3 Kochi port NW-4 Kakinada port, Ennore port, Chennai port NW-5 Paradip Port & Dhamra Port Kolkata and Haldia Ports through protocol NW-6 route viz., Sunderbans

Source: IWAI

Literature Review Sriraman (2010) discussed the various issues involved in the IWT sector and the need of proactive role of the Government in promoting the sector. There is a need to increase amount of public sector 99 resources allocated to inland water transport sector to reflect the relative importance of this sector. Further, the study has also suggested encouraging partnership between public and private sectors to improve the overall development, management and operation of inland water transport sector. An integrated approach instead of segmented approach, focusing on multi-modal transport system can be a sustainable model for improved productivity and efficient utilization of IWT sector. Duan, et.al. (2010) described the important role played by IWT in China’s economic development. The authors observed that, although inland water transportation developed steadily, it is still uncoordinated with the development of market economy in some respects. In comparison to the developed countries, China’s inland water transportation resources and its advantages have not yet been fully developed and exploited. The paper comprehensively analyses the development status of China’s inland water transportation, the present problems in shipping capacity, ship type, competition, management, technical equipment and security system etc. and suggests measures to improve the IWT system. Rangaraj and Raghuram (2007) studied the viability of inland water transport in India. The authors have thoroughly discussed the issues related to IWT such as passenger movement, cargo movement, technological and physical viability, commercial potential, operational viability, environmental issues, and policy issues etc. The study suggests policy recommendations and emphasized the pivotal role of government policy instruments and institutions in making the sector viable. Rohcs and Simongti (2007) discussed the role of inland waterway navigation in a sustainable transport system. The paper concludes that inland waterway navigation is still a very environment-friendly, safe, and effective transportation mode as it was known for a long time. For sustainable transport development, the necessity of modal shift is inevitable and if IW can achieve a larger share from the modal split, it could greatly contribute to a more sustainable transport system. Therefore action should be taken to increase its share in the total transport market. Sarkar, et.al. (2007) in their study highlighted the financial and economic benefits of investments from IWT sector in India with reference to NW1 (Ganga-Bhagirathi-Hoogly river system) and NW2 (Brahmaputra river system). The authors have quantified the economic benefits in terms of saving in operating costs, accident cost, Government expenditure, and employment generation. Further, the study also discusses the other socio-economic benefits such as boost for tourism sector, least environmental effects, improved standard of living, better port-hinterland connectivity, opening of land-locked backward areas, limited land acquisitions and re-settlements etc. Awal (2005) studied on the safety aspects of IWT sector in Bangladesh. The study was conducted and analyzed the data of water transport accidents during 1995-2005. A total of 197 cases were considered for the study which primarily included accidents of passenger and cargo vessels. The authors have observed that the number of accidents in the sector increased significantly over the years and most predominant causes of accidents were found to be overloading, cyclone and collision. Finally, the authors have suggested measures to reduce the number of accidents which will lead to saving human life and potential economic losses. Against this, the present study makes an attempt to analyze the present status of the IWT in India and the way forward. 100 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III National Waterways in India Since Independence many expert committees studied the Inland Water Transport area and advocated systematic development of the mode. The National Transport Policy Committee (1980) recom­mended the following principles for declaration of a national waterway. • It should possess capability of navigation by mechanically propelled vessels of a reasonable size. • It should have about 45m wide channel and minimum 1.5m depth. • It should be a continuous stretch of 50 km. The only excep­tion to be made to waterway length is for urban conglomerations and intra-port traffic. • It should pass through and serve the interest of more than one State (or). • It should connect a vast and prosperous hinterland and Major Ports (or). • It should pass through a strategic region where development of navigation is considered necessary to provide logistic support for national security (or). • It should connect places not served by any other modes of transport. As per the recommendations of the National Transport Policy Committee, the Inland Waterways Authority of India (IWAI) was established in 1986 for development, maintenance and regulation of national waterways for shipping and navigation in the country. Table 4 depicts the details of National waterways.

Table-4: National Waterways (NWs)

National Distance Name of the NW Region States Waterways (km.) NW-1 1620 Ganga Haldia to Allahabad UP, Bihar, Jharkhand, West Bengal Assam, West Bengal, Arunachal NW-2 891 Brahmaputra Dhubri to Sadiya Pradesh, Meghalaya NW-3 205 West Coast Canal Kollam to Kottapuram Kerala Andhra Pradesh, Tamil Nadu, NW-4 1078 Godavari, Krishna and Canals Kakinada to Puducherry Puducherry (UT) Brahmani, Delta Canals, East NW-5 588 Goenkhali to Talcher Odisha, West Bengal Coast Canal NW-6 121 Barak river Lakhipur and Bhanga Assam, Mizoram, Manipur, Tripura

Source: Ministry of Road Transport and Highways (MoRTH) The Composition of cargo movement on national waterways during 2010-11 to 2014-15 is given in Table 5. 101 Table-5: Composition of Cargo Moved on NW-1, NW-2 & NW-3 (in lakh tonnes)

Commodity 2010-11 2011-12 2012-13 2013-14 2014-15 Building material 14.9 15.3 17.3 20.0 20.5 Chemicals 1.0 0.6 0.9 1.2 1.0 Fertilizers 3.4 3.1 3.6 3.0 3.6 Food items 1.5 1.5 4.9 4.1 5.3 Miscellaneous 22.1 24.3 24.4 24.9 25.1 Mix 0.9 21.5 5.6 6.1 5.8 Ore / Minerals 0.6 0.1 3.0 1.4 2.4 POL / POL Products 4.9 4.2 3.4 2.4 2.5 Coal - 0.0 0.8 5.6 17.4 Iron & Steel - - - 0.1 0.3 Total 49.3 70.6 63.8 68.9 83.9

Source: Ministry of Road Transport and Highways (MoRTH)

International Experience There are more than fifty countries around the world which have navigable waterways networks of more than 1,000 kilometers. On most of these waterways, the inland shipping sector is underdeveloped. It experiences many barriers and obstacles not only of technical and technological nature, they sometimes seriously limit smooth access of inland shipping to the transport system and reduce automatically its potential role in the domestic and international trade. China, USA and European Union have the large network of inland waterways. China is having the largest inland waterway transport network in the world with more than 110,000 navigable kilometers. In Europe, the biggest five ports are all connected to inland waterways. The share of IWT in the inland waterways transportation is 47 per cent of the total transport in China. In the European Union it is 44 per cent, Korea 43 per cent, Japan 44 per cent and in Bangladesh, it is about 35 per cent (ADB Report). In India, however, it is a paltry 3 per cent. The number of vessels carrying cargo that ply on inland waterway systems in China and the EU are 2,00,000 and 11,000, respectively, while there are less than 1,000 vessels estimated to be using the Indian inland waterway systems. The depth of river system to support large vessel fleets is less than 1,500 tonnage as compared to 40,000 tonnes of cargo in a single voyage in Chine and EU. For those countries which have vast network of inland waterways, their realized benefits ranges from reduced congestion in rail and road transport modes to employment generation and lower carbon footprint. The IWT can supplement as a viable and sustainable alternative mode of transport to the existing overburdened road and rail network which contributes about 66 per cent and 27 per cent respectively in the freight transport segment. The state-wise potential available to develop the IWTs is given in Table-6. 102 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III Table-6: Total and Navigable Length of Waterways in Different States (2014-15)

State Total Length of Rivers / Navigable Length Share of Navigable Length to Total Canals / Lakes (km.) (km.) Length (%) Andhra Pradesh 3,579 804 23 Assam 5,290 1,682 32 Bihar 2,229 1,391 62 273 248 91 Gujarat 653 102 16 Karnataka 2,862 1,215 43 Kerala 2,779 845 30 Maharashtra 631 462 73 Orissa 1,378 508 37 Nagaland 937 375 40 Mizoram 238 81 34 Tamil Nadu 27 12 44 Uttar Pradesh 2,345 425 18 West Bengal 4,741 4,593 97

Source: Ministry of Road Transport and Highways (MoRTH)

Major benefits of Developing Inland Waterways: • It’s a non-water consumptive transportation project with minimal resource depletion. • It will facilitate reduction of pressure on Railway network and Road Network, relieving congestion, reduced emissions from vehicles and railway engines on non-electrified routes, thereby reducing carbon emission. • Use of modern inland water vessels, with natural gas as fuel will reduce emission of Sulphur Oxide (Sox), Nitrous Oxide (NOx) (70%), particulate matter (95%) and Carbon dioxide (CO2) (25%). Hence will have negligible impact on ambient air quality. • LNG/CNG engines have lower noise level than diesel engines, hence less impact on ambient noise level. • Transportation through waterways does not involve huge land acquisition except in few places where terminals are likely to be constructed. In comparison to other infrastructure projects, it is almost negligible. Due to minimum requirement of land acquisition, there will be insignificant impact on ecology & biodiversity, agricultural activities as well as on the livelihood of the people. • Improved river flow due to improvement / augmentation of navigation facilities will in turn benefit aquatic flora and fauna. • Increase in economic opportunities in the form of employment and business opportunities (both in relation to cargo movement and peripheral petty business activities). 103 • Access to local communities in the form of a mode of transport to conduct activities on both sides of the river. • Better water flow through maintenance of minimum water levels will provide for better fish production and catch, which in turn will directly enable enhanced income for the fishing communities along the river stretch. • The cost of transportation of goods across waterways will be considerably lower compared to rail and road transportation. • Burden on road and rail transportation will come down resulting in less fuel consumption and consequent environmental pollution. • Improved access to trading centers and ancillary infrastructure (cargo handling, etc.) along the rivers and navigation will benefit local, regional and international business. • Tourist spots along the rivers will attract considerable number of tourists. • IWT is best for bulk cargo and over dimensional cargo. • Fairway development does not need land acquisition • Lesser per ton per kilometer rate than Railways and Roadways

Recent Policy Initiatives taken by the Central Government • The National Waterways Act, 2016 which has been enacted since 2017, has declared 106 waterways in 24 states as national waterways. The Enactment of such an Act paved the way for the Central Government to undertake development of inland waterways. Currently there are 111 national waterways in the country out of which 12 are already operational /navigable and are being used for transportation. • In the Budget Speech of Union Finance Minister in 2014-15, it was announced to undertake development of NW-1 under the aegis of the “Jal Marg Vikas” project with technical and financial support from the World Bank at an estimated cost of Rs 4,200 crore to be completed in six years. This project aims for capacity augmentation of NW-1 to enable commercial navigation by at least 1,500 ton vessels. • The Central Government has also announced some incentives for carriage of some portion of cargo by coastal shipping and inland waterways instead of by rail and road with a view to make waterways an integral part of the country’s logistics chain. The scheme proposes to provide monetary incentives to beneficiaries when they transport certain identified commodities, containerized cargo or automobiles, on Indian flag vessels, on trips having either a major port (owned by the Central Government), a designated non-major port (owned by the State Government) or a terminal/jetty owned by the Inland Waterways Authority of India (IWAI) as the point of loading or discharge. It entails compensating the costs incurred in availing the first-mile and last-mile connectivity for goods that have the potential to be moved by waterways. • To ensure pollution level in the river under control due to IWT, the Central Government has decided to set up a River Traffic Control System on the lines of Air Traffic Control system. 104 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III • The draft National Perspective Plan (NPP), prepared under the Sagarmala Programme, has recommended priority development of National Waterways-1, 2, 4 & 5 to enhance port connectivity to the hinterland. This in turn would enable faster and cheaper movement of key cargo types such as coal, iron ore, food grains etc. Opportunities India has 7,551 kilometer coastline and about 14,500 kilometer of navigable inland waterways. This huge potential has by and large has remained unexploited despite the universal acceptance of the fact that waterways transportation is fuel efficient, environment friendly and more economical as compared to rail and road. At present, the share of IWT is abysmally low of the total goods transported within the country through various modes such as rail, road and water as compared to other nations blessed with such a vast river network. The government has announced some ambitious projects for developing the inland waterways which includes developing 2,000 water ports and Roll-on-Roll-off (Ro Ro) services which will be available at five select places to transport goods and vehicles, across the country. Under this scheme, Varanasi, Haldia and Sahibganj will be developed as multimodal hubs with linkages to roadways, waterways and railways. The Varanasi terminal was recently inaugurated by the Prime Minister of India. Similarly, the government has also launched several schemes under the ‘Make in India’ initiative with a view to promote IWT such as, vessel building subsidy in which the Government provides financial assistance of up to 20 per cent for ships build in the country. Equity participation by Govt. in BOT Projects up to 40 per cent, Viability Gap Funding, Tax exemption similar to National Highways, Enhancement in depreciation rate for inland vessels, Joint Venture by IWAI, and Customs Duty concessions. The Government has introduced a new Central Sector Scheme for the development of Inland Water Transport in North Eastern States including Sikkim. The objective of the scheme is to encourage the State Government of North Eastern States namely – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura for taking up various projects for development of Inland Water Transport in North Eastern Region. 100% Grant will be provided by the Central Government for all projects sanctioned under this scheme Further, the government has identified some areas for development under PPP mode in IWT sector. They are: Construction and operation of river terminals or river ports, Ownership and operation of vessels for cargo and passengers, Provision and operation of mechanized cargo handling systems, Fairway development and maintenance, Putting up and maintenance of navigational aids, Provision of Pilotage services, Setting up and running of IWT training institutions etc. To develop the national waterways, the IWAI would require about Rs 35,000 crore in the next two-three years. While part of these funding is expected to be through market borrowings, the IWAI is also expected to tap multilateral agencies and create consortium in consultation with International Finance Corporation to fund the upcoming inland waterways. The Central Government has allocated a sum of Rs 891.13 crore in 2018-19 budget and Rs 757 crore in 2019-20 budgets. Challenges Some of the major challenges for the low penetration of IWTs so far in India are: • Maintaining required depth and flow of water level in the river is a major prerequisite of success of IWT. This requires dredging of the river bed and periodic maintenance of river 105 banks. According to IWAI, a minimum, consistent yearlong water depth (water draft) of 2.5 m to 3.0 m has to be maintained along the national waterways to ensure uninterrupted transport. • Perception of IWT investment as high-risk investment. • Lack of convergence between IWT and other modes of transport • Emphasis on development of rail and road networks. • High cost of development of ancillary facilities. • Lack of proper coordination and support among the different central and state agencies in regulation, operation and sustenance of IWT. • It takes relatively longer time to transport goods, • Uncertainty about availability of return cargo leading to high operating costs, • Lack of awareness on its benefits and inadequate policy support. • Deforestation in catchment areas resulting in siltation of rivers, • Gradual deterioration of waterways due to inadequate river conservancy measures • Diversion of water for irrigation industrial and other needs reduces the flow in the rivers resulting in the reduction of depth. • Inadequate vertical and horizontal clearances for plying vessels of economic size in many traditional waterway routes. • Construction of cross structures such as bridges etc. creates obstacles for movement of vessels. • Lack of investment intervention through PPP in IWT as compared to investment in road networks.

Conclusions IWT is globally recognized as operationally cheaper, fuel efficient and environmentally friendly mode of transportation. India has large number of inland waterways comprising of rivers, canals, backwaters, creeks and lakes etc, which have the potential for development of efficient waterways transport network. IWT needs to be actively promoted for a reasonable share in the inter-modal mix of inland transport. Again, a developed IWT sector will open up other opportunities for private investment such as ship building, terminal construction etc. Large scale private participation should be encouraged through PPP mode for creation of infrastructure and fleet operation. In this context, the Central Government has already asserted its preference for the public-private-partnership (PPP) model to develop several national waterways in the country. Alike the other infrastructure sectors involving PPP model, the terms & conditions set out in the model concession agreement will hold key to effectively develop national waterways on PPP model. Initially, of course, it will be a challenge to draw private investment into the IWT sector in India which has largely remained an uncharted territory for such type of investment. Nevertheless, the necessary infrastructure such as fairway, terminals, channel markings, night navigational aids, including the possible deployment of GPS and river maps and charts for navigation etc. should be facilitated ensuring a wider coverage of national waterways to make IWT sector more competitive and attractive. 106 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III References 1. Awal, Z.I. (2005) A Study on Inland Water Transport Accidents in Bangladesh: Experience of A Decade (1995-2005). Conference Paper, Coastal Ships and Inland Waterways, London, UK, pp. 1-6. 2. Awal, Z.I., Islam, M.R., Hoque, M. (2006) Analysis of Passenger Vessel Accidents in the Inland Waterways of Bngladesh. Conference Paper, MARTEC. 3. Duan, S. Gongzhi, Y.U., XING, H., and Zhanhua W.U. (2010) Inland Waterway Transport in China: Situation and Problems. ICLEM 2010: Logistics for Sustained Economic Development, ASCE, pp. 379-385. 4. Grzelakowski, A. (2010) Inland Water Transport as a Factor Influencing Mega-Ports and Seaport Cities Development (from the European North Sea Perspective). Logistics and Transport No 2(11). 5. Planning Commission, (1980) Report of the National Transport Policy Committee. Government of India, New Delhi. 6. Rangaraj, N. and Raghuram, G (2007) Viability of Inland Water Transport (IWT) in India, India Resident Mission Policy Brief series, Asian Development Bank, pp.1-18. 7. RITES (2013) Preparation of Integrated National Waterways Transportation Grid (Final Report), Inland Waterways Authority of India (IWAI), pp. 1-99. 8. Rohacs, J. and Simongati, G. (2007) The Role of Inland Waterway Navigation in a Sustainable Transport System, TRANSPORT, Taylor & Francis, Vol XXII, No 3, 148–153. 9. Sarkar, P.K., Mathur, V., Maitri, V., and Kalra, K. (2007) Study on Potential for Economic Gains from Inland Water Transport in India, with Special Reference to NW 1 (Gnaga) and NW2 (Brahmaputra). Transport Research Board - Annual Meeting Proceedings, pp.1-19. 10. Sriraman S, (2010) Long Term Perspectives on Inland Water Transport in India, RITES Journal, pp. 18.1- 18.14. 11. Sriraman S, (1998) Inland Water Transport in India: Issues and Prospects, Asian Transport Journal, Asian Institute of Transport Development, New Delhi. 12. Tayal, Praful, (2004) India – 2010 (Inland Water Transport Sector: IWT) - A Vision, Central Inland Water Transport Corporation Ltd, Kolkata. 13. http://www.iwai.nic.in/

ANNEXURE

Recent Developments in IWT • The Government in November, 2016 extended the policy for reimbursement of freight for movement of phosphatic and potassic (P&K) fertilizers under the Nutrient Based Subsidy (NBS) and for movement of Urea by coastal shipping and Inland Water Transportation. • The subsidy that was earlier only applicable to the movement of fertilizers by rail from the plant or the port to various rake points in various districts, will now also apply to the movement of fertilizers through coastal shipping and IWT. • Dalmia Bharat Cement Ltd, on February 5, 2017 transported a consignment of 350 tonnes of cement from Haldia in West Bengal to Patna in Bihar on IWAI vessel MV Zakir Hussain. • On August 12, 2016, the trial run of two cargo vessels was flagged off from Varanasi on National Waterway - 1(NW-1). The first vessel MV VV Giri (300 tons capacity) carried newly assembled cars of India Ltd. from Varanasi to Kolkata. The voyage of this vessel was completed in six days. The second vessel, MV Joy Basudev (1400 tons capacity) carried construction material from Varanasi and offloaded it at Gahzipur and Patna. 107

• PepsiCo India has moved 16 containers – equivalent to 16 truckloads filled with food and snacks in the vessel MV RN Tagore in a period of 9-10 days and making a return journey fertilizers belonging to Indian Farmers Fertiliser Cooperative (IFFCO) procured from its Phulpur plant near Allahabad. • IWAI is planning to start the transportation of fertilizers from IFFCO Paradip to various destinations on NW-1 by integrating coastal movement with IWT. • IWAI has started e-connect measures names as ‘Forum of Cargo Owners and Logistics Operators (FOCAL)’ to enable direct interaction among the vessel operators, shippers and cargo owners. It is expected to facilitate responses from the logistics operators against the requirement raised by cargo owners and vice-versa. • IWAI will be inviting private players for proving their technical qualification and then, they will be given the task of operation and management (O&M) of the terminals. Keeping the base of the Model Concession Agreement of the Government of India, IWAI will offer the terminals to private players for 30 years on royalty per ton of cargo on revenue sharing basis. • Through the World Bank procurement process, IWAI has engaged DST Germany, to design ideal ships for the river Ganga. DST Germany has come up with 13 classes of ships, ideally suited for the river Ganga which includes bulk cargo ships, barge, container ships and car carriers. These require a low draft but have a carrying capacity ranging from 600 to 2,450 tonnes of cargo. 108 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

INCUMBENCY CHART OF OFFICE BEARERS Orissa Commerce Association (OCA) started in 1970 in G. M. College Sambalpur, which was the first College to have B. Com. as an under Graduate course in Orissa. The pioneering founding members of OCA are: 1. Prof. Paresh Chandra Ray 2. Prof. Suryakanta Das 3. Prof. Batakrushna Mohanty 4. Prof. Durga Prasad Nayak

Managing Editor of Sl. Year Venue President Secretary Orissa Journal of No Commerce Sri Harihar Patel, Ministry of Industires, 1. 1970 G.M. College, Sambalpur * * Govt. of Orissa Prof. P.C.Ray, Secretary, 2. 1971 Khalikote College, Berhampur * * Board of Secondary Education, Orissa Prof. P.C.Ray, Secretary, 3. 1973 Ravenshaw College, Cuttack * * Board of Secondary Education, Orissa Prof. Batakrushna Prof. (Dr) Surya Kant Das Dr. Abhaya Kumar, Reader, Mohanty, Prof. of 4. 1974 G.M. College, Sambalpur Professor of Commerce, Utkal Department of Commerce, Commere, G. M. University, Bhubaneswar Utkal University College, Sambalpur Mr. M.P. Modi, I.A.S. * * 5. 1976 Utkal University, Bhubaneswar Managing Director, IDC

Prof. (Dr) Surya Kant Das * * 6. 1977 Bhadrak College, Bhadrak Professor of Commerce, Utkal University, Bhubaneswar Prof. Batakrushna Mohanty, Principal, * * 7. 1978 S.C.S. College, Puri G.M. College, Sambalpur , Bhanja Prof. Batakrushna Mohanty, Principal, * * 8. 1980 Vihar, Berhampur G.M. College, Sambalpur Prof. Ganga Prasad Panda, Principal * * 9. 1981 K.S.U.B. College, Bhanjanagar Lingaraj Law College, Berhampur Shri Durga Prasad Nayak, Principal, Dr. Girija Prasad Dr. Pramod Ku. Sahu, 10. 1982 Dhenkanal College, Dhenkanal Sonepur College, Sonepur. Acharya Berhampur University Prof. Bijay Narayan Pattnaik, Utkal Dr. Girija Prasad * 11. 1983 Ispast College, Rourkela University, Bhubaneswar Acharya Prof. (Dr.) J.J. Rao, Ravenshaw College, Dr. Girija Prasad * 12. 1985 F.M. College, Balasore Cuttack Acharya Prof. (Dr) Ramakanta Jena, Dean, Dr. Girija Prasad Dr. Ghanashyam Panda, 13. 1986 Ganjam College, Ganjam Faculty of Commerce, Utkal University, Acharya Berhampur University Bhubaneswar Prof. (Dr) Pramod Ku. Sahu, Professor , Dr. Ghanashyam Panda, 14. 1987 L.N.College, Jharsuguda * Berhampur University, Berhampur Berhampur University Prof. Sambhu Prasad Mishra, Professor Dr. Ghanashyam Panda, 15. 1988 Dhenkanal College, Dhenkanal * of Commerce, G.M. College, Sambalpur Berhampur University Dr. Gunanidhi Sahoo, Dept. of Commerce, Berhampur Sri S.C. Patro, Head, P.G. Department Dr. Swaroop Ch. 16. 1990 Principal, Khalikote, University of Commerce, Khalikote College Sahoo Berhampur (Contd...) Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III 109

Prof. (Dr) Gunanidhi Sahu, Principal, 17. 1994 Bhadrak College, Bhadrak Dr. Jagannath Panda Dr. Swaroop Ch. Sahoo Khalikote College, Berhampur Prof. (Dr) Girija Prasad Acharya, Dr. Bidhu Bhusan Prof. Pramod Ku. Sahu, 18. 1995 S.C.S. College, Puri Professor of Commerce, Ravenshaw Panigrahi, Berhampur University College, Cuttack Shri Ayodhya P. Nayak, BJB College, Dr. Damodar Biswal, Prof. Pramod Ku. Sahu, 19. 1997 Womens’ College, Jharsuguda Bhubaneswar S.C.S. College, Puri Berhampur University Prof. (Dr.) Pradeep Chandra Tripathy, Prof. Tahalu Sahoo, Prof. Pramod Ku. Sahu, 20. 1998 Prananath College, Khurda Professor , Utkal University, Principal Womens Berhampur University Bhubaneswar College, Jharsugara Malay Kumar Khalikote (Auto) College, Prof. (Dr) R.P. Choudhury, Principal, Mohanty, Prof. Pramod Ku. Sahu, 21. 1999 Berhampur Khalikote College (Auto), Berhampur Ravenshaw College Berhampur University (Auto) Malay Kumar Prof. Minaketan Mohapatra Mohanty, Prof. Pramod Ku. Sahu, 22. 2000 Ispat College, Rourkela Principal, Dehenkanal College Ravenshaw College Berhampur University (Auto) Malay Kumar Maharshi College of Natural Prof. (Dr) Damodar. Biswal, Professor, Mohanty, Prof. Pramod Ku. Sahu, 23. 2001 Law, Bhubaneswar Ravenshaw College (Auto), Cuttack Ravenshaw College Berhampur University (Auto), Cuttack Prof. (Dr) Jagannath Panda Prof. Ranjan Kumar Prof. Pramod Ku. Sahu, 24. 2004 Kendrapara College, Kendrapara Professor Berhampur University, Bal, Utkal University Berhampur University Berhampur Prof. (Dr) Umesh Ch. Pattnaik Prof. Ranjan Kumar Prof. Jagannath Panda, 25. 2005 V.N.College, Jajpur Road Professor Bal, Utkal University Berhampur University Berhampur University, Berhampur Prof. Tahalu Sahu, Principal Prof. Ranjan Kumar Prof. Jagannath Panda, 26. 2006 Rayagada College, Raygada Belpahar College, Belpahar Bal, Utkal University Berhampur University Prof (Dr) Samson Moharana Prof. Kishore Ch. P.G. Department of Commerce Prof. Jagannath Panda, 27. 2007 Professor Rout, Berhampur Utkal University, Bhubaneswar Berhampur University Utkal University, Bhubaneswar University Dr. Arun Kumar Barik, Head, Prof. Kishore Ch. Fakir Mohan Autonomous Prof. Ranjan Kumar Bal, 28. 2008 Department of Commerce, Vyasanagar Rout, Berhampur College, Balasore Utkal University College, Jajpur Road University Maj (Dr.) Abhay Kumar Panda, Prof. Kishore Ch. Govt. Autonomous College, Prof. Ranjan Kumar Bal, 29. 2009 Principal, Fakir Mohan Autonomous Rout, Berhampur Angul Utkal University College, Balasore. University Dr. Kshiti Bhusan Department of Commerce, Shri Baladev Kar, Principal, Govt. Prof. Ranjan Kumar Bal, 30. 2010 Das, Utkal Ravenshaw University College (Auto), Angul Utkal University University Prof. Malay Kumar Mohanty, Former Dr. Kshiti Bhusan P. G. Department of Commerce, Registrar, Ravenshaw University, Prof. Ranjan Kumar Bal, 31. 2011 Das, Utkal Berhampur University Professor G. M. College, Dean Utkal University University Dr. Kshiti Bhusan P. G. Department of Commerce, Prof. P. K. Biswasray, Prof. Ranjan Kumar Bal, 32. 2012 Das, Utkal Utkal University Utkal University Professor , Berhampur University University Prof. Kshiti Bhusan Prof. Prasant Kumar Sahu, Prof. Malay Kumar 33. 2013 Choudwar College, Choudwar Das, Utkal Mohanty Vice- Chancellor, Utkal University University Prof. Kshiti Bhusan Prof. Ranjan Kumar Bal, Prof. Malay Kumar 34. 2014 P. N. (Auto) College, Khurda Das, Utkal Mohanty Professor, Utkal University University Prof. Kshiti Bhusan Das, Prof. Malay Kumar 35. 2014-15 Kendrapada (Auto) College Dr. G. K. Panigrahi Professor, Utkal University Mohanty (Contd...) 110 Orissa Journal of Commerce, Volume XXXX, July-September-2019, Issue No. - III

Prof. Girish Ku. Patra, Prof. Malay Kumar 36. 2016 Belpahar College, Belpahar Dr. G. K. Panigrahi Kendrapada (Auto) College Mohanty Prof. Jayanta Kumar Parida, Prof. Malay Kumar 37. 2017 F. M. University, Balasore Dr. G. K. Panigrahi Professor,Utkal University Mohanty Prof. Bhagaban Das, Major (Dr) S. A. Prof. Malay Kumar 38. 2018 Ravenshaw University, Cuttack Professor, F. M. University Taher Mohanty P. G. Department of Commerce, Prof. Sanjay Kumar Satapathy, Major (Dr) S. A. Prof. Malay Kumar 39. 2019 Utkal University Professor, Ravenshaw University Taher Mohanty KIIT, Deemed to be University, Prof. P. K. Hota, Major (Dr) S. A. Prof. Malay Kumar 40. 2019-20 (Golden Jubilee Year) Professor, Utkal University Taher Mohanty * Information not available: People concerned are requested to provide the above missing information with proper references. If any error has crept in the above incumbency chart inadvertently, persons are requested to intimate the correction with the required documentation. KUNAL BOOKS LiSt EcONOmicS/cOmmErcE/mANAgEmENt 111 Accounting Reform and Ind As Bhagabata Behra 978-81-932322-3-1 2016 `895 Agriculture Economics Manoj Mishra 978-93-86714-14-5 2018 `1195 A Service Marketing View of Customer Delight Shrmistha Sarma 978-93-80752-90-7 2012 `500 Behavioural Finance Principles & Practics Sathya, Debasish, Mallick 978-93-82420-76-7 2015 `950 Capital Structure in Indian Corporate Sector N. Dhal & A.K. Panda 978-93-80752-61-7 2012 `795 Changing Paradigm in Modern Day Management Artta Bandhu Jena 978-93-82420-50-7 2014 `795 in Indian Perspective Compesation Management Practices of Software P. Mahapatra & K.K. Das 978-81-935479-1-5 2018 `495 Industry: An Indian Evidence Consumer Behaviour in FMCG Prospective: Artta Bandhu Jena & 978-81-935461-3-0 2018 `895 Evidence From Indian Context* Snehasis Panda Consumer Retial Store Choice Dynamics: Sangeeta Mohanty & 978-93-80752-60-0 2012 `795 An Empirical Analysis A.K. Panda Consumer Behavoiur in Banking Services A.B. Jena & P. Pati 978-81-933962-5-4 2018 `895 An Indian Prospective Customer Retention Practices in Banking Sector S.K. Mishra & 978-93-86714-88-6 2019 `895 An Indian Evidence Kishore Kumar Das Contemporary Issues and Challenges in Gouri Sankar Lall, 978-93-86714-64-0 2019 `1095 Finance and Taxation (Royal Size) V.R. Bhanotu & S.R. Dash Corporate Disclosure in Developing Countries D.K. Jena 978-81-935479-0-8 2018 `995 With Special Reference to India Mergers and Acquisitions in India A.C. Raul & G. Parhi 978-93-82420-52-1 2014 `1150 Commercial Banks in India: An Appraisal Dey, Panda, Chandra, 978-93-80752-96-9 2012 `895 Comparative Political Economy of Welfare States V.K. Verma 978-93-80752-27-3 2011 `895 Corporate Financing in India: An Indepth Study Sahu, Panda & Das 978-93-80752-97-6 2012 `750 Cost Accounting: Principles and Practices Mallick, Mohanta, Nayak 978-93-82420-72-9 2015 `995 DEBT Finance in Indian Economy: Kishore Kumar Das 978-93-82420-67-5 2014 `1050 A Re-Look into the Corporate Sector Insurance Sector in India: A Way Forword Kishore kumar Das 978-81-932322-1-7 2016 `1150 Displacement & Resuttlement for Deveploment: Alaka Nanda 978-81-933224-9-9 2017 `950 A Case Study of Odisha Econonics of Rural Development in India Manoj Mishra 978-93-86714-16-9 2018 `1195 Insurance Sector in India: A Way Forword Kishore kumar Das 978-81-932322-1-7 2016 `1150 Perception on Stock Market Investment Madhumala Pathy & 978-93-86714-77-0 2018 `895 S.K. Sathapathy