Book - 3

Contemporary
Issues in Business
and Management
Pavnesh Kumar
Assistant Professor, IGNTU,
Amarkantak (MP).
MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW

AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI
Author
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Preface
The fast changing volatile and dynamic financial landscape is creating a new set of environment
for the companies and forcing the practioners and researchers to develop new insights adopt the
changes at a fast pace than before. This book discusses some of the Contemporary Issues in Business
and Management.
This current book entitled Contemporary Issues in Business and Management discusses various
emerging trends in finance and banking. The book contains eighteen articles and is divided into three
parts.
The first part is Contemporary Issues General Management contains six chapters covering the
discussions on Indian Economy sustainable development, Corporate Social responsibility,
Globalization, and Project Management
The second part of the book Contemporary Issues Human Resource Management contains five
chapters covering the discussion on Emotional Intelligence, Ethics and Values, Social Media, Issues of
HR in Banking.
The third part of the book contains seven chapters on Contemporary Issues in Financial
Management covering the discussion on Financial Inclusion, Micro Credit, Role of post office in
Financial Inclusion and Economic Development .
All the chapters contained in the book are application oriented and therefore will provide useful
guidance to the practitioners as much as thy will to the researchers
(Pavnesh Kumar)
Department of Business Management
Indira Gandhi National Tribal University
Amarkantak(MP)
Acknowledgement
Like others ,I owe much to many. I am particularly grateful to Prof Y.P. Singh and Pof S .K.
Singh (FMS-BHU) (the latter being the Ex-Professor Delhi School of Economics) of University of
Delhi. They are my source of inspiration and strength. I am also grateful to Prof G S Rathore my
Research Supervisor who helped me in several waysall the time.
Editing this book has been an enriching experience in itself.I express my sincere thanks and
gratitude to all those who extend a helping hand in the completion of this book .My main motivator
is ,of course, the publishers Himalya Publishing House (P)Ltd .
I am also grateful to my seniors, colleagues and friends for being a continuous motivator during
editing of this book.
Coming to my home, my wife Pooja Singh have continuously helped me to meet my minor
errands .I am grateful to her.
Pavnesh Kumar
Contents
S. No.
Name of the Chapter
Author
Pg. No.
General Management
1.
Innovative Techniques for Indian Economy in Global Shantanu Saurabh & H.

Slowdown Restraints: A Managerial Perspective
K. Singh
1 13
2.
Impact of Development Mechanism on Sustainable SathyaNarayanan.SR&

Developments A review on issues and challengesr
KPV.Ramanakumar,
14 23
3.
Corporate Social Responsibilty In India: Status & Tripti Barthwal &

Expectations
Nupur Krishna
24 - 34
4.
Sustainable Development in Women Entrepreneurship in Vivekanand Pandey

India (With special reference to Capital region of Uttar
Pradesh)
35 49
5.
A Study of Globalization to Glocalization of India and its Arvind Kumar Singh,

Future outlook
Nancy Sharma & Karan
Veer Singh
50 59
6.
Project Management Systematic Approach from Planning Sharad Chaturvedi

to Handover of the project
60 72
Human Resource Management

7.
A Study of Responsible Management Education: An Ajit Dhar Dubey

Emerging Tool for Sustainability
73 80
8.
Emotional Intelligence-A
Resource Management
81 90
9.
Role Of Ethics And Values In Developing Human Narendra Narottam

Resources
91 103
10.
Social Media and HR Practices
Muzna Zafar & Nupur

Rastogi
104 113
11.
Issues In Human Resource Development In Indian Banks
A.Raghu
114 126
Key To Effective
Human Sheetal Sharma
(An Empirical Evaluation)
Financial Management
12.
Profitable Models for Financial Inclusion
Atul Bansal
127 134
13.
Role Of Capital Market Development In The Economic P K Mishra

Growth Of India
135 145
14.
Financial Inclusion and the role of the post office
15.
Micro-Credit development in India with special reference to Harnam Singh

BASIX
151 158
16.
Taking Banking services to Common Man
159 164
17.
Role Of Financial Inclusion in The Economic Growth Of P K Mishra

Odisha
18.
A Theoretical Assesment Of Financial Inclusion In India
Authors Affiliation
Bhawana Rewadikar
Pushpa Suryavanshi
146 150
165 170
Shobhit
Goel, 171 183
Himanshu Rastogi &
Sana Moid
184 186
CHAPTER
1
Shantanu Saurabh
M.B.A Allahabad University,
Allahabad (U.P.), 211002.
E-mail: shantanu014@yahoo.com
Innovative Techniques for Indian

Economy in Global Slowdown
Restraints: A Managerial
Perspective
Dr. H. K. Singh
Faculty of Commerce, Banaras Hindu
University, Varanasi (U.P.) 221 005.
E-mail: hksinghmeera@yahoo.co.in
ABSTRACT
The global economy is suffering from serious financial crisis in the II decade of 21st century. This type
of crisis was prevalent only in 1929. The timing of the Great Depression varied across nations, but in
most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the
longest, most widespread, and deepest depression of the 20th century, and is used in the 21st century
as an example of how far the worlds economy can decline. The depression originated in the United
States, starting with the stock market crash of October 29, 1929 (known as Black Tuesday), but quickly
spread to almost every country in the world. The Government of India initiated new economic policy
in 1991 and globalisation was the important ingredient of it. But, the global recession is the byproduct and serious side effect of globalisation. This global financial crisis is the turning point for
Indian economy to acquire the shape of developed nation. The current crisis also originated with subprime crisis in the United States of America.
A decline in the seasonally and calendar adjusted real gross domestic product (GDP) in at least
two successive quarters, as defined by Julius Siskin in the year 1974, is widely accepted definition of a
recession. However, this definition holds good for defining any countrys phase of recession; using it
for defining a global recession is somehow, not correct. Recession is a significant decline in the
economic activity spread across the country, lasting more than a few months, normally visible in real
GDP growth, real personal income, employment, industrial production, and wholesale-retail sales. It
is a contraction phase of the business cycle. In order to understand what is now happening in the
world economy, we need to go a little back in past and understand what was happening in the housing
sector of America for past many years. In US, a boom in the housing sector was driving the economy
to the new level. The following were the three major factors that have resulted into this financial crisis:
Sub-prime US households that had borrowed heavily from banks & financial Institutions to
buy house property were defaulting rampantly on their debt obligations.
Size of Sub prime Housing Loan Market was huge at about $1.4 trillion.
The financial experts of US backed these loans into very complicated financial instruments
popularly known as CDOs (Collateralized Debt Obligations)
Contemporary Issues in Business and Management
A combination of low interest rates and large inflows of foreign funds helped to create easy credit
conditions where it became quite easy for people to take home loans. As more and more people took
home loans, the demands for property increased and fuelled the home prices further. As there was
enough money to lend to potential borrowers, the loan agencies started to widen their loan
disbursement reach and relaxed the loan conditions. The current global economic crisis has affected
almost every country. Even the economies considered strong in the world, have felt shocks and bolts
of this crisis. Economies of Western countries are facing liquidity and credit problem. The primary
reason of it that in todays globalised world, all economies are knitted together and hence, tremor for
one economy is felt everywhere though, the intensity might be variable. The Indian economy is not
insulated from the global economic crisis that is looming over. Documents show that the industrial
growth has attained a mere 1.3% hike as compared to the same period in 2007. 1.3% is the lowest IIP
(Index of Industrial Production) that has ever been registered in last ten years. This is a major issue of
concern for the policy generations and industries.
Current Economic Scenario

After a promising start to the decade in 2010-11 with achievement like GDP growth of 8.4 per
cent, bringing down fiscal deficit to 4.7 per cent from 6.4 of GDP in 2009-10, as well as containing
current account deficit to 2.6 per cent from 2.8 per cent in 2009-10. GDP growth decelerated sharply
to a nine year low of 6.5 per cent during 2011-12. The slowdown was reflected in all sectors of the
economy but the industrial sector suffered the sharpest deceleration which decelerated to 2.9 per cent
during 2011-12 from 8.2 per cent in 2010-11. The centres finances for 2011-12 experienced
considerable slippage as key deficit indicators turned out to be much higher than budgeted due to
shortfall in tax revenues and overshooting of expenditure. The gross fiscal deficit (GFD)-GDP ratio
moved up to 5.8 per cent in 2011-12 compared to the budgeted ratio of 4.6 per cent. The substantial
increase in subsidies during 2011-12 on account of high crude oil prices further impacted the deficit of
the Government.
The year 2011-12, especially the second half, was characterised by a burgeoning current account
deficit (CAD), subdued equity inflows, depletion of foreign exchange reserves, rising external debt
and deteriorating international investment position1. Inflation remained elevated at over 9 per cent in
the first eight months of 2011-12, before softening moderately in December and remained sticky in the
range of 6.9-7.7 per cent.
Economy in 2012-13
GDP Growth Profile: According to the first advance estimates of national income for the year
2012-13 of the Central Statistics Office (CSO), the Indian economy is expected to grow at its slowest
pace in a decade at a mere 5 per cent in 2012-13, on the back of dismal performance by the farm,
manufacturing and services sectors, The estimate is lower than the 6.2 per cent growth clocked in
2011-12 and is the lowest since 2002-03, when the economy grew by 4 per cent only. According to the
CSO s advance estimates, the growth in agriculture and allied activities are likely to lower to 1.8 per
cent in 2012-13, compared to 3.6 per cent in 2011-12 and manufacturing growth is also expected to
drop to 1.9 per cent in this fiscal, from 2.7 per cent achieved during the last year. Services sector,
including finance, insurance, real estate and business services are likely to grow by 8.6 per cent during
this fiscal, against 11.7 per cent in the last fiscal. Meanwhile, mining and quarrying is likely to be
slightly better at 0.4 per cent, compared to a negative growth of 0.6 per cent a year ago. Growth in
construction is also likely to be 5.9 per cent in 2012-13, against 5.6 per cent last year.
Innovative Techniques for Indian Economy in Global Slowdown Restraints: A Managerial ...
Key Economic Indicators October, 2013

Table 1: Growth Rate of GDP at Factor Cost (at 2004-05) (prices in %)
Industry
2007-08
2008-09
2010-11@
2011-12*
2012-13 (PE)
0.8
7.9
3.6
1.9
I. Agriculture
5.8
II. Industry:
9.7
4.4
9.2
9.2
3.5
2.1
Mining and
quarrying
3.7
2.1
5.9
4.9
-0.6
-0.6
Manufacturing
10.3
4.3
11.3
9.7
2.7
1.0
Electricity, gas and

water Supply
8.3
4.6
6.2
5.2
6.5
4.2
Construction
10.8
5.3
6.7
10.2
5.6
4.3
10.3
10.0
10.5
9.8
8.2
7.1
9.3
6.7
8.6
9.3
6.2
5.0
III. Services
GDP at factor cost
0.1
2009-10^
^:Third revised estimate, @: Second revised estimate,*:First revised estimate, PE: Provisional
Estimate
Source: Central Statistics Office.
Table 2: Sectoral Share in GDP at Constant (2004-05) (Prices in %)

Industry
2007-08
2008-09
2009-10^
2010-11@
2011-12*
2012-13 (PE)
I. Agriculture
16.8
15.8
14.6
14.5
14.1
13.7
II. Industry:
28.7
28.1
28.3
28.2
27.5
26.7
Mining and
quarrying
2.5
2.4
2.3
2.2
2.1
2.0
Manufacturing
16.1
15.8
16.2
16.2
15.7
15.1
Electricity, gas and

water supply
2.0
2.0
2.0
1.9
1.9
1.9
Construction
8.1
8.0
7.8
7.9
7.9
7.8
III. Services
54.4
56.1
57.1
57.3
58.4
59.6
GDP at factor cost
100
100
100
100
100
100
^:Third revised estimate, @: Second revised estimate,*:First revised estimate, PE: Provisional
Estimate
Source: Central Statistics Office.
Though, several sectors of Indian economy are likely to face severe jolts as an effect of the global
economic recession, real estate sector will be prime among them. What I feel, this recession is not a
threat to Indian economy, and it is actually an opportunity. Management students should think about
SWOT Analysis and for that purpose the strategy should be such that we can convert weakness into
strength and threat into opportunity. The vision 2020 of our ex-president Dr. A.P.J. Abdul Kalam is
that Indian economy will get the shape of developed nation but, for that purpose improvement of work
culture is needed. With the use of proper and latest modules of management thinking like,
Management by Objective (MBO), Corporate Social Responsibility (CSR), Time Management and
Knowledge Management, India can make a greater role in the era of 21st century. The pioneer position
of India in Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO) and of
Information Technology sector all across the world has put our country at a respectable position. The
other sector can also achieve a similar growth path and can become an emerging area for the nation. I
am going to explore these dimensions of modern business management before you.
Management by Objectives (MBO)

MBO is a process of agreeing upon objectives within an organization so that management and
employees agree to the objectives and understand what they are in the organization. This great theory
was propounded by Peter F. Drucker. The essence of MBO is participative goal setting, choosing
course of actions and decision making. An important part of the MBO is the measurement and the
comparison of the employees actual performance with the standards set. Ideally, when employees
themselves have been involved with the goal setting and the choosing the course of action to be
followed by them, they are more likely to fulfil their responsibilities.
The principle behind Management by Objectives is to create empowered employees who have
clarity of the roles and responsibilities expected from them, understand their objectives to be achieved
and thus help in the achievement of organizational as well as personal goals. Some of the important
features and advantages of MBO are:
1. Motivation: Involving employees in the whole process of goal setting and increasing
employee empowerment increases employee job satisfaction and commitment.
2. Better Communication and Coordination: Frequent reviews and interactions between
superiors and subordinates helps to maintain harmonious relationships within the enterprise
and also solve many problems faced during the period.
3. Clarity of goals: MBO creates a link between top managements strategic thinking and the
strategys implementation lower down. Responsibility for objectives is passed from the
organization to its individual members. It is especially important for knowledge-based
organizations where all members have to be able to control their own work by feeding back
from their results to their objectives.
Management by objectives is achieved through self-control, the tool of effectiveness. Today the
worker is a self-manager, whose decisions are of decisive importance for results. In such an
organization, management has to ask each employee three questions:
1. What should we hold you accountable for?
2. What information do you need?
3. What information do you owe the rest of us?
In this recessionary period, Management need to retain those employees who have greater
responsibility for objectives which lead to the development of both the organisation and of individual.
With this tool, Management can observer a more coordinated work culture in the organisational
structure and can bring economies in terms of flexible approach in this difficult time.
Corporate Social Responsibility (CSR)

Enterprises dont exist in a vacuum. They exist in a milieu with which they are in a dynamic
interaction. Naturally they cannot wish away the society at large. It is against this backdrop that the
role of business in society is being revisited and the triple bottom line concept has emerged. Thus, it is
no longer only profit but the triple P of Planet, People and Profit, in the same order that has become
the concern of a business enterprise. An enterprise today is accountable for its impact on all relevant
stakeholders and this realization has prompted leading corporations to engage in efforts for enhancing
social well-being and environmental protection. While such efforts in the earlier times had taken the
form of corporate philanthropy, a more proactive approach is being taken today balancing economic
efficiency and social and environmental protection. This concept has taken the form of Corporate
Social Responsibility (CSR).
CSR is the continuing commitment by business to behave fairly and responsibly and contribute to
economic development while improving the quality of life of the workforce and their families as well
as local community and society at large. It is a collection of policies, programs and practices adopted,
followed and recognized by a company. CSR is based on certain values including respect for people,
communities (in which the company operates) and the environment.
In the below mentioned diagram, we see the bearable, equitable, viable and ultimately the
sustainable approach by a judicious mix of economic, social and environmental component of
Corporate Social Responsibility. A sustainable mix can only be obtained by giving right and adequate
inputs of CSR components. A product or service can only be bearable when it is for the use of society
without hampering the environment. It will be equitable when it is available to the society in
economical way. Any product or service can only be viable when it is economic is use without
adversely affecting the environment. Finally, sustainability can be achieved when a corporation rightly
blends the bearable, equitable and viable options of its activity.
In this recessionary period, this is the time for executives to undertake a CSR audit and classify
the programs according to their ability to enhance, and in some cases transform, the firms business
practices. Effective programs that serve the community in a compelling way, and that also demonstrate
a strong potential to influence the business, must be retained and grown. This is also the best time to
be pruning initiatives that have lost their relevance and leverage. CSR should be viewed as a business
discipline and practiced with the same rigor as other aspects of a firms strategy. It should, however,
be remembered that rigor does not always equate to short-term financial profits. It means that a
company should aim to manage the broader environment for the business to be engaged to its
stakeholders in creating value for itself and the community in which it operates. This recession has
brought this opportunity before businesses to refine and focus their objectives from short-run big profit
to long-run average profit as the latter approach is beneficial for both the businesses and for the socioeconomic environment.
Social
Equitable
Bearable
Sustainable
Economic
Environment
Viable
Human Resource Accounting (HRA)

In the preset age of knowledge driven economy, the most important asset of an organisation are
its human resources. Human resources are the key players in the process of production. An
organisation having vast physical and financial resources may find itself unable to achieve
organisational objectives if it is not utilising its human resources effectively and efficiently. For this
purpose, it is necessary to keep proper record and information about human resources. Financial
statements are the main source of information about the performance and the position of the resources
held by an organisation. Traditional accounting system provides this information about the physical
and financial resources only and not about the human elements of an organisation, which resulted into
the false and unfair presentation of financial statements. This serious limitation of traditional
accounting system was noticed in the late 1950s by behavioural scientists, economists and various
scholars in the area of accountancy. The collective efforts of these scholars have evolved a new branch
of accounting popularly known as human resource accounting (HRA). HRA involves measuring the
cost incurred by business firms and other organisations to recruit, select, hire, train and develop human
assets. It also involves measuring the economic value of people to organisations. In brief, it involves
accounting for people as organisational resources for managerial as well as financial accounting
purposes.
Of late the problem of unemployment has hit the globe like never before. With the global
downturn and economic slowdown suddenly within a couple of months the organisations throughout
the world started looking at their employees as liabilities and not assets. In this context, the concept of
HR Accounting has greater applicability to the various problems which are arising as a result of
economic recession. It is the time when organisations have to realise that the knowledge of the
workforce (or, more precisely human capital) is their prime assets and not liabilities.
Still, the present scenario is that, despite the global change, human resource has always been
considered as a soft issue whose contribution could not be measured in tangible monetary terms. It
was thus but natural that conventional method of financial accounting neither formally recorded
investment in employees, nor did they deal with issues relating to measurement, valuation and
accounting human resource.
Time Management
Todays world is rapid action world. Every second of its precious and the value of time have been
increased in this financial slowdown. Delay in appropriate action will lead to further shrinkage in the
funds in this tight financial condition. A proper time management can avoid this problem for an
organisation. Time management refers to a range of skills, tools, and techniques used to manage time
when accomplishing specific tasks, projects and goals. This set encompasses a wide scope of activities,
and these include planning, allocating, setting goals, delegation, analysis of time spent, monitoring,
organising, scheduling and prioritizing. Initially, time management referred to just business or work
activities, but eventually the term broadened to include personal activities as well. A time management
system is a designed combination of processes, tools and techniques.
As per the given table, the time of crisis is both the most urgent and important to act on. These
days, a recessionary phase, requires an extra care, consciousness and preparedness by all the global
organisations to face the challenges of low profit, low sales, and low savings. Time management offers
great deal of understanding to work differently for different kind of works.
Urgent
Not Urgent
II
Crisis
Preparation
Pressing Issues
Planning
Deadlines
Prevention
Meetings
Relationship building
IV
III
Interruptions
Trivia
some mail
some phone calls
Many popular activities
Excesive TV/Games
Time wasters
Source:http://www.cpexecutive.com/cpn/content_display/business-management/managementstrategies/e3i4818debd94b6160da61e0d665dd94c97)
Above diagram shows 4 distinct areas of work which are classified on the parameters of urgency
and importance. Assignments which are both important and urgent should be devoted with the
maximum attention. Crisis management, deadlines, meetings are some of such important and urgent
work which have to be taken timely and wisely. Second order works are those which are though
important but not urgent and hence falls second in the to do list. Planning, relationship building and
personal development are some of the areas fall in this category. Sometimes some mail, e-mail arrives
all at a sudden and supposed to be urgent but most of them have time frame to complete the task and
hence, should be considered less important. The time for leisure which is both unimportant and not
urgent comes in the last category. In this recessionary phase, corporations have to devote more time in
planning to clear the mess and be immune to future short-falls. Because of less other important activity,
at this time, organisation may find suitable to rebuild its vision and mission in the changing dimension
of business.
In time management, the concept of Just-in-time (JIT) comes. Just-in-time is an inventory

strategy that strives to improve a businesss return on investment by reducing in-process inventory and
associated carrying costs. To meet JIT objectives, the process relies on signals between different
points in the process, which tell production when to make the next part. JIT can dramatically improve
a manufacturing organisations return on investment, quality and efficiency. The technique was first
used by the Ford Motor Company.
The philosophy of JIT is simple: inventory is waste. JIT inventory systems expose hidden causes
of inventory keeping, and are therefore not a simple solution for a company to adopt. The company
must follow an array of new methods to manage the consequences of the change. The ideas in this way
of working come from many different disciplines including statistics, industrial engineering,
production management, and behavioural science. The JIT inventory philosophy defines how
inventory is viewed and how it relates to management. The just-in-time philosophy was also applied to
other segments of the supply chain in several types of industries. In the commercial sector, it meant
eliminating one or all of the warehouses in the link between a factory and a retail establishment.
Examples in sales, marketing, and customer service involve applying information systems and mobile
hardware to deliver customer information as needed, and reducing waste by video conferencing to cut
travel time.
Advantages of JIT
1. Lower stock holding means a reduction in storage space which saves rent and insurance costs.
2. As stock is only obtained when it is needed, less working capital is tied up in stock.
3. There is less likelihood of stock perishing, becoming obsolete or out of date.
4. Avoids the build-up of unsold finished product that can occur with sudden changes in demand.
5. Less time is spent on checking and re-working the product of others as the emphasis is on
getting the work right first time.
Disadvantages of JIT
1. There is little room for mistakes as minimal stock is kept for re-working faulty product.
2. Production is very reliant on suppliers and if stock is not delivered on time, the whole
production schedule can be delayed.
3. There is no spare finished product available to meet unexpected orders, because all products
are made to meet actual orders however, JIT is a very responsive method of production.
Knowledge Management (KM)

Knowledge has become the key asset for the 21st Century and for every organization that values
knowledge it must invest in developing the best strategy for identifying, developing and applying the
knowledge assets it needs, to succeed. Every organization needs to invest in creating and
implementing the best knowledge networks, processes, methods, tools and technologies. This will
enable them to learn, create new knowledge, and apply the best knowledge much faster. Every
individual who wishes to successfully participate in the rapidly growing global knowledge economy
must now consider the development of their personal knowledge management competencies as an
essential life skill for the 21st Century. It has been said many times, knowledge will radically and
fundamentally transform economies. One thing is absolutely certain in this rapidly changing world.
The best knowledge will always be in demand. In, say, fifty years time you can be certain of one thing.
Leaders of economies, industries and organizations will always be very interested in finding new and
better ways to create and apply knowledge.
Knowledge management (KM) comprises a range of strategies and practices used in an
organisation to identify, create, represent, distribute, and enable adoption of insights and experiences.
Such insights and experiences comprise knowledge, either embodied in individuals or embedded in
organisational processes or practice. An established discipline since 1991 (see Nonaka 1991), KM
includes courses taught in the fields of business administration, information systems, management,
and library and information sciences (Alavi & Leidner 1999). More recently, other fields have started
contributing to KM research; these include information and media, computer science, public health,
and public policy.
A broad range of thoughts on the KM discipline exists with no unanimous agreement; approaches
vary by author and school. As the discipline matures, academic debates have increased regarding both
the theory and practice of KM, to include the following perspectives:
Techno-centric with a focus on technology, ideally those that enhance knowledge sharing and
creation.
Organisational with a focus on how an organisation can be designed to facilitate knowledge
processes best.
Ecological with a focus on the interaction of people, identity, knowledge, and environmental
factors as a complex adaptive system akin to a natural ecosystem.
Decision Making
Synthesizing
Knowledge
Analyzing
Information
Summarizing
Organizing
Data
Collecting
Source: http://www.nickfinck.com/presentations/bbs2005/03.html
The strategies, methods and tools will undoubtedly change, but timeless principles will, of course,
remain unchanged, and to survive and succeed in the new global knowledge economy, we must
become far more effective and more productive. We must always strive for the best relations and
highest quality. To do that, the successful organizations and individuals will not allow themselves to
keep re-inventing the wheel or repeating the same mistakes. This is so costly and, we suggest that
good leaders will simply not tolerate, nor be able to afford, such cost inefficiencies caused by
10
knowledge gaps and bad knowledge flows. Finally, those individuals and organizations that can best
sense, become quickly alerted to, find, organize, and apply knowledge, with a much faster response
time, will simply leave the competition far behind. All of this can only be achieved through good
knowledge leadership that understands the unchanging timeless principles for knowledge that
transforms individuals and organisations to become far more responsive and effective players in a
growing knowledge economy. Then there needs to be proper implementation of the very best
strategies, networks, processes, methods and tools for very effective knowledge working.
Conclusion
With the ways and means of new and innovative tools and techniques of Commerce and
Management, organisations can work in a better way to beat the blues of global recession. A proper
use of Management by Objective (MBO) techniques, Corporate Social Responsibility (CSR), Human
Resource Accounting (HRA), techniques of Time Management (TM) and the tool of Just-in-Time
(JIT), and an appropriate understanding of Knowledge Management (KM) will lead any of the modern
organisations afloat in this financial storm. Uses of these tools are further explained in following
points:
1. Through MBO, organisations can set those minimal objectives which can be adhered even
this tough time; objectives which do not change the function of the organisation, but the way
of performing them in more economical and more coherent manner.
2. Remaining socially responsible for all its activities in one major and key area which will lead
todays organisation to a new heights. A concern for pollution, excessive use of natural
resources and that of global warming will exhibit that organisation is not only looking for the
profits but also for a sustainable environment for itself and for the Earth. Recent less paper
usage campaign of Idea Cellular Services is one of the good examples of promoting
companys product with social concerns even in this difficult marketing time.
3. There is need of a kind of revolution in making Human Resource Accounting aspects in all
business organisations. This is one such laggard field which should now be given more
emphasis to get the real picture of the use of all resources of the organisation and to get the
real benefit to all the factors of production.
4. Time Management is one such aspect which should be taken with more importance these days.
Use of proper time-managing devices will lead to economies of scale and security from the
seepage and drainage of funds over its optimal allocation. With the properties of Just-intime tool, manufacturing concerns may obtain a justifiable use of time-bound production
which will lead to sound financial practices.
5. Knowledge Management is going to be the driving force for the 21st century. No organisation
can lead without innovation and timely action in this competitive world and for this a group of
great thinkers and administrators are the most important factor for the organisation. We can
see that due to great knowledge explorations (which are but naturally due to more innovative
persons available with the organisation) Google Inc., Dell Inc., Infosys Technologies, Tata
group of companies and Laxmi Niwas Mittal-led Arcelor-Mittal group are driving their
financial sturdiness in this financial crisis. Had such knowledgeable persons available be with
Lehman Brothers, Fannie Mae, Freddie Mac, and other group of organisations, these
organisation should not have to shut their business and probably this financial crisis could not
have this extreme effect on the global economy.
11
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Principles to Shatter Uncertainty, Drive Innovation, and Maximize Profits, AMACOM (American
Management Association)
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2. http://blogs.siliconindia.com/guru_raghavan/Global_recession_and_Indian_economy-bidrhF4230a99890968.html
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13
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21. Central Statistics Office
____
CHAPTER
2
Impact of Development Mechanism

on Sustainable Developments A
Review on Issues and Challenges
Sathya Narayanan.SR
Faculty of Management Studies
Sri Chandrasekarendra Saraswathi Viswa Maha
Vidhyalaya (SCSVMV University)
Enathur, Kancheepuram
E-mail: sathyanarayanansr@ymail.com
Dr. KPV.Ramanakumar,
Professor and Dean,
Faculty of Management Studies
Sri Chandrasekarendra Saraswathi Viswa Maha
Vidhyalaya (SCSVMV University)
Enathur, Kancheepuram
E-mail: meherramana@yahoo.com
Dr. KPV.Ramanakumar,
Plot No:20, Door No:12, First Main Road, Kurinji Nagar,
Old Perungalathur, Chennai 600063
ABSTRACT
The Challenges of how to respond to climate change and ensure sustainable development are
currently high on the political agenda among the worlds leading nations. The Clean Development
Mechanism (CDM) is part of the global carbon market developing rapidly as part of the Kyoto
Protocol response towards mitigation of global warming. The operational mechanism of CDMs
involves an investment by a legal entity from a country that has adopted binding emissions targets
according to the Kyoto Protocol in a project of a country which does not have that limits of
binding emissions, which results in emission reductions. The CDM is part of the emerging carbon
market and aims to achieve both sustainable developments in developing countries and costeffective reduction of greenhouse gases in developed countries. However the distribution of CDM
projects has been extremely uneven across countries and regions, and a few technologies and
sectors have dominated the early stages of CDM experience. This has caused some to question
whether the CDM has fallen short of its potential in contributing to sustainable development. This
paper reviews the difficulties and challenges that are faced by developing countries in
implementing CDM projects and achieving sustainable development.
Key Words: Kyoto Protocol, Emission reduction, Greenhouse gases, Sustainable development,
CDM Project.
Introduction
The Clean Development Mechanism (CDM) is one of the three flexibility mechanism of the
Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). The
goal of the UNFCCC and Kyoto Protocol is to reduce the emission of GHG emissions into the
Impact of Development Mechanism on Sustainable Developments A Review on Issues ...
15
atmosphere, in order to mitigate human-induced climate change. The CDM was created to promote the
hosting of GHG reduction projects by developing country parties to the Kyoto Protocol, using finance
provided by developed country parties in order to make these projects possible. By enabling the
implementation of GHG reduction projects in developing countries, the CDM contributes to the
sustainable development of those countries, while also allowing them to contribute to the GHG
reduction objectives of the UNFCCC and Kyoto Protocol. At the same time, CDM projects assist
developed country parties to finance such projects to meet their legally binding GHG reduction
obligations, by generating Certified Emission Reductions (CERs) that can be used to meet their
emission reduction obligations under Kyoto Protocol or the European Union Emission Trading Scheme.
The CDM was established under Article 12 of the Kyoto Protocol, which was agreed upon in
1992. The detailed rules and modalities for the CDM were subsequently agreed upon by Kyoto
Protocol parties in 2001, as part of the so-called Marrakesh Accords, in the same year, the CDM
Executive Board was formed and began building the structure and process of the international CDM
system. The first CDM projects were officially registered with the Executive Board in 2004, and since
then the number of projects in the pipeline has continued to grow steadily.
Clean Development Mechanism (CDM)

Article 12 of the Kyoto Protocol establishes the CDM, and defines its purpose as being:
To assist Parties not included in Annex I (To the UNFCCC) in achieving sustainable
development and in contributing to the ultimate objective of the Convention, and to assist Parties
included in Annex I in achieving compliance with their quantified emission limitation and reduction
commitments under Article 3(of the Kyoto Protocol).
Sustainable Development
The protocol specifies that the purpose of the CDM is to assist non-Annex I Parties in achieving
sustainable development. There are no common guidelines for the sustainable development criterion
and it is up to developing host countries to determine their own criteria and assessment process.
Criteria for Sustainable Development

Social Criteria: The project improves the quality of life, alleviates poverty and improves
equity.
Economic Criteria: The project provides financial returns to local entities, results in positive
impact on balance of payments, and transfers new technology.
Environmental Criteria: The project reduces greenhouse gas emissions and the use of fossil
fuels, conserves local resources, reduces pressure on the local environments, provides health
and other environmental benefits and meets energy and environmental policies.
Objectives of the Study

The paper reviews literature in the area of issues and challenges in implementation and execution
of Clean Development Mechanism projects and their impacts on sustainable development of
developing countries. This review of the literature serves to assess the state of knowledge on how the
CDM contributes to sustainable development (SD). The main finding of the review is that, left to
market forces, the CDM does not significantly contribute to sustainable development. The paper
provides the researchers examined views and studies that have been conducted in CDM.
16
Methodology
The paper aims to review on selected studies from the wider analytical literature on the CDM.
The literature was accessed and reviewed between 1998 and 2009 using sources like Articles on the
CDM, Thesis on CDM and in addition, the grey literature on CDM searched via the Internet using
Google that is ReNED web site which provides an overview of the CDM resource base including
research institutions, NGOs, development agencies, Government Institutions, newsletters, etc.
Review of Literature
The Clean Development Mechanism
The CDM is a project-based mechanism established by Article 12 of the Protocol (J. Wersksman,
1998). Under the CDM, project activities can generate emission reduction credits through activities
implemented in developing countries that result in less GHG emissions than would otherwise have
been produced. To be registered as a CDM project, a project must show that it would result in
emission reductions that are additional to any that would occur in the absence of the project (Kyoto
Protocol, Article 12.5(c)). Credits, known as Certified Emission Reductions (CERs) (Decision
3/CMP.1, Annex, Paragraph 1), are issued for the additional emission reductions generated by the
projects and these can then be used by developed countries in part-compliance with their emission
reduction or limitation targets under the Protocol (Kyoto Protocol, Article 12.3(b)). The CDM has
three objectives. In relation to developing countries, the objectives of the CDM are: to assist
developing countries to achieve sustainable development and to help them to contribute to the ultimate
objective of the Convention5 through the reduction in their GHG emissions achieved by the CDM
projects. In relation to developed countries, the objective is to provide them with cost-effective
opportunities to comply with their emission reduction commitments (Kyoto Protocol, Article 12.2).
The legal regime governing the CDM lays down certain participation requirements and only those
countries that fulfill these requirements can participate in the CDM. There are 3 basic requirements
that must be fulfilled by both developed and developing countries to make them eligible to participate
in the CDM. These are: ratification of the Kyoto Protocol; establishment of a Designated National
Authority; and confirmation of voluntary participation.
Eligibility Requirements of CDM

Participant Eligibility
The participant eligibility requirement for CDM project implementation stipulates that both
countries (developed countries and developing countries) should have ratified the Kyoto protocol, that
participation in CDM project should be voluntary, and that the government should designate a
National Authority for the CDM (paragraphs 28 -30 of the annex of Decision of theCOP-7 (Clean
Development Mechanism Modalities and Procedures)). Developed countries are also required to
transfer and acquire CERs generated by CDM project.
Project Eligibility
The CDM rules do not define what a CDM project is; instead the rules only require that
(Decision 17 of the COP-7):
CDM projects must promote sustainable development in the countries in which they are
located.
17
The emissions reductions from CDM projects must be real, measurable, long-term, and
additional to reductions that would have occurred without the project.
Funding for CDM projects must not divert funding from existing official development
assistance.
The requirements also include that the project has to generate CERs compared to the baseline
emission, the methodology applied by the project has to be approved and if the project has a great
environmental impact, a solution has to be made to minimize that impact.
Crediting Period
A key issue in balancing environmental additionality and cost-effectiveness is establishing how
many emission credits are generated by a particular CDM activity, and over what time frame the
credits are being created. Establishing these characteristics of the flow of CERs requires a
counterfactual baseline, as well as an estimate of the emissions change relative to that baseline.
Monitoring
The modalities and procedures for the CDM requires that the monitoring plan for a CDM project
activity provides for the collection and archiving of all relevant data necessary for estimating
greenhouse gas emissions and determination of baselines. Monitoring is a basic requirement for
CDM project and as an important part of the whole risk management strategy. A framework to
ensure appropriate monitoring is thus necessary, this framework should include monitoring of the
amount of CO2 injected to the reservoir and the relevant data from the injection project, and
identification of all potential sources of increased emissions outside the project boundary that are
significant and attributable to the project activity during the crediting period.
Equitable Distribution of CDM Projects

Parties have repeatedly called for equitable distribution of projects, making it apparent that
equitable distribution of projects is, in fact, important to them. In 2001, when establishing the rules to
govern the CDM, the Conference of the Parties (COP) recognized the need to promote equitable
distribution of projects (Decision 17/CP.7, Preamble, paragraph 6). Subsequently, at its first meeting
in December 2005, the Conference of the Parties serving as the Meeting of the Parties to the Protocol
(Kyoto Protocol, Article 13) (COP/MOP 1) identified addressing the issue of equitable distribution of
CDM projects as one of its roles, with a focus on the regional and sub-regional distribution of projects.
All subsequent decisions in relation to the CDM acknowledge the need to ensure an equitable
distribution of CDM projects, and various actions have been taken, all aimed at achieving this goal.
(Silayan, 2005) However, the goal has proven elusive, and the distribution of CDM projects, both
nationally and regionally, is still inequitable, and it is important to determine why in order to help
fulfill both objectives of the mechanism, as well as to ensure equity among developing countries.
Barriers to Equitable Distribution

This section reviews relevant literature and identifies the barriers to equitable distribution of
projects. These barriers are: lack of capacity and local expertise; finance and other cost-related issues;
the size of projects; the market-based nature of the CDM; and the unilateral CDM structure. Some of
these barriers, such as some of the cost-related issues and lack of capacity, are being addressed within
the regime through various initiatives like payment exemptions and capacity building initiatives, such
18
as the Nairobi Framework. The aim is to identify the reasons for the inequitable distribution of
projects and determine whether enough is being done to address this problem.
(a) Lack of Capacity and Local Expertise

There are two different elements to hosting CDM projects which may impact on the equitable
distribution of projects: the CDM-specific element and the general investment/project element. Lack of
capacity in these two areas (that is, lack of CDM specific and general investment capacity) has been
identified as one of the barriers to CDM hosting and equitable distribution of projects (Ellis and Kamel,
2007).
The Nairobi Framework was launched at COP/MOP 2 in November 2006, with the aim of
helping developing countries, especially those in sub-Saharan Africa, to improve their participation in
the CDM. The objectives of the Nairobi Framework are to: build and enhance DNA capacity; build
capacity to develop CDM projects; promote investment opportunities for projects; improve
information sharing, outreach and exchange of views on activities, as well as education and training;
and enhance inter-agency coordination (UNFCCC, 26/01/2010).
(b) Finance and Cost-Related Barriers
Lack of funding has been identified as a major barrier to the equitable distribution of CDM
projects. The funding required for CDM projects can be divided into: funding for the project
transaction costs and funding for the underlying project (Roskilde: UNEP, 2007).
(i) Transaction costs:Transaction costs are those costs that accrue in the process of making an
economic exchange or affecting a transfer of goods from seller to buyer (D.W. Carlton, 2005).
Under the CDM, transaction costs are incurred in the creation, alteration, protection or
enforcement of CERs and have been described as additional costs beyond the cost of
production.
(ii) Implementation costs: These refer to the actual or direct cost of producing the goods, as
opposed to the transaction costs, which are the costs associated with organizing production.
Under the CDM, the implementation costs would include the project construction costs (such
as purchasing the plant and equipment) and the project operating costs (such as the cost of
maintenance and other running costs). CDM implementation costs include the costs of the
underlying project which either removes a GHG from the atmosphere or prevents the
emission of the GHG to the atmosphere (Chadwick, 2006).
(iii) Size of projects: The size of CDM projects has been identified as a barrier to the distribution
of projects. Specifically, this has been discussed as investors preference to invest in projects
that will generate a specified minimum quantity of CERs. This is partly in order to ensure that
considering the transaction costs of the project, the quantity of CERs generated is enough to
make the project worthwhile (Ellis and Kamel, 2007). Investors prefer to invest in large
projects in order to maximise the economics of scale. The smaller the size of the project, the
less the amount of CERs such projects will generate (K. Capoor and C. Ambrosi, 2008).
(iv) The Market-Based Nature of the CDM: Although the CDM was created as a mechanism
that would both generate cost effective emission reductions and contribute to sustainable
development,( Prouty, 2009) the very nature of the CDM as a market-based instrument is
preventing it from achieving these objectives equitably among developing countries. Added to
the problem is the fact that the sustainable development element of the CDM, unlike its GHG
19
emission reduction element, has no monetary value put on it, and is therefore not factored into
the cost or profit of the CDM (K. Capoor and C. Ambrosi, 2009). There is no market
incentive to promote sustainable development and no particular benefit to investors of
investing in projects with high sustainable development contributions (Ellis et al., 2007)
(v) The Unilateral CDM Structure: One of the major barriers to equitable distribution of CDM
projects is the predominance of unilateral CDM projects in the CDM market. This is a barrier
mainly because unilateral projects require the developing country hosts to have sufficient
financial and technical capacity to undertake such projects, and those that lack such capacity
are unable to undertake unilateral projects. They are consequently sidelined in the CDM
market that is dominated by unilateral projects.
Contribution to Sustainable Development

The contribution of the CDM to sustainable development needs to be seen in term of host country
development, as expressed as one of the CDM goals. Given the reference to the objective of the
convention and the role that climate change mitigation itself plays in sustainable development, (IPCC,
Fourth Assessment Report, 2007) any assessment of the CDM's contribution must also recognize the
wider role projects and the mechanism itself can play as catalysts for sustainable development of host
states (Wissenschaftlicher Verlag 2003).
CDMs contribution to sustainable development was subject to considerable debate during the
negotiations of the Kyoto protocol and the Marrakesh accords and is under improvement still
(UNFCCC, 2007). In particular, host countries have been concerned about their sovereignty and
largely unwilling to accept externally determined sustainable development priorities imposed on them
(Supra note 19, at 2). This led to only marginal references to sustainable development in the
Marrakesh accords, which leave the meaning of sustainable development undefined. Rather under
the climate regime, it remains the host countrys sovereign prerogative to determine whether a
particular CDM project helps it achieve this goal. Thus, relatively little is achieved in terms of
affecting the growth pattern of developing countries.
A project is, in the absence of any alternative, considered to contribute to sustainable
development if it is congruent with existing national development policies (IDB, ICIEDCCC, 2004).
This subjective approach to sustainable development translates into curtailing and challenging the
potential of the CDM. Though, there are a few concerns.
First, designing the CDM and meeting CDM project eligibility requirements present significant
challenges because host countries have different economic conditions, natural resources, and
development priorities. Thus, they have different perceptions about what is required to achieve
sustainable development. Selecting sustainable development criteria and assessing the sustainable
development impact can therefore differ significantly from one host country to another.
Despite several ideas about quality standards or indicators of sustainable development which
provide some guidance on what should be taken into account, in the end, it is currently the host
countrys sovereign decision to ascertain whether a CDM project activity promotes its sustainable
development target (Steve Thorne & Emilio Lebre la Rovere, Oct. 1999). Therefore, the designated
national authorities (DNAS) in developing countries are tasked with issuing a letter of approval
attesting to the projects contribution to their countries sustainable development. A CDM project can
only be registered if such affirmation is provided to the CDM executive board. This leads to
uncertainty and creates a disincentive for investment decisions.
20
Second, while there is, without doubt, a strong potential for synergies between addressing
environmental problems and national development goals, (Cathleen Kelly & Ned Helme, 2000) there
is also the danger that accepting congruency with existing development policies may not lead to a
change of benefits to sustainable development since most existing national development policies lead
to increasing GHG emissions (WCED, 1987) thus, the congruency requirement is not a high threshold,
if any at all, in terms of sustainable development.
Legal Issues and Challenges

Legal and regulatory issues have been identified in the area as:
(a) Injection and Storage stage: This include concerns on storage, site selection criteria, leakage
and permanence, assessment of project boundaries.
(b) Crediting period: This include issues of monitoring, validation, verification and additionality
issues, and
(c) Post crediting period: This include issues of monitoring long term leakage, need for
supervision unit, post injection liabilities amongst others.
The CDM is unique among the flexibility mechanisms of the Kyoto Protocol in that it allows
Annex I Parties to increase their accumulated caps by obtaining emission credits generated by
investments in a CDM project in an uncapped, developing (non-Annex I) Party. Each CER is an
additional carbon tonne which will entitle an Annex I, investor, Party to an equivalent increase in
emissions from its territory, while remaining in compliance (Dr. Christina Voigt, 2007).
However, the lack of quantitative mitigation commitments in CDM host countries and an interest
in a maximal number of CERs resulting from a CDM project create incentives for both sides, CERbuyers/investors and host states, involved in a CDM project to inflate the amount of CERs claimed
(Axel Michaelowa,2005). Therefore, the more successful the CDM is at generating CERs, the more an
Annex I Party can use those CERs to increase its territorial emissions above its cap, and the more
important it is that each CER corresponds to real, long-term, measureable emission reduction.
Apparently, with increasing volumes of CERs, the environmental performance of the entire Kyoto
System depends upon the environmental performance of the CDM. Environmental performance of the
CDM depends on the demonstrated ability of the CDM system to support the objective of the
UNFCCC: to stabilize greenhouse gas concentration in the atmosphere at safe levels. This ability of
the CDM, coupled with avoiding other environmental damages is usually referred to as
environmental integrity (UNFCCC art.2, May 9, 1992)
Reality (ISSUES)
The reality of CDM projects has so far been quite different from their initial conception. Has
been noted, almost all proposed and approved projects to date have primarily focused on maximizing
the generation of CERs instead of focusing on the sustainable development. Thus, three contentious
issues related to carbon dioxide capture and storage (CCS), HFC23 projects, and forest conservation,
arose (Bettina Wittneben, 2006).
First: Including CCS projects aimed at capturing CO2 emissions from industrial sources and
subsequently storing the gas underground or in the sub-seabed of the oceans in the scope of the CDM
raises not only complicated technological questions with regard to ensuring permanence and monitoring,
but also legal questions as to whether the injection of CO2 in geological formations should count as a
21
non-emission, emission reduction, or carbon sequestration (IPCC, Carbon Dioxide Capture and Storage:
Summary for Policymakers, Sept 2005). It also raises more fundamental points as to the contribution to
sustainable development of such projects. Critics allege that this kind of technological advance channels
substantial research and development into end of pipe technological fixes without contributing to longterm benefits to low-carbon intensive technological development. Though in fact, it might actually
delay the transition from fossil fuels to more sustainable energy systems.
However, it was also recognized that there remain a number of unresolved technical,
methodological, legal and policy issues relating to carbon dioxide capture and storage activities under
the clean development mechanism and that there is a need for capacity building on carbon dioxide
capture and storage technologies and their applications. It is therefore timely and necessary to place a
wider assessment of CCS and sustainable development on the research agendas.
Second, another challenge to the promotion of sustainable development by the CDM concerns the
proposed inclusion of HFC-23 projects. HFC-23, a greenhouse gas listed in Annex A of the Kyoto
Protocol, is a by-product in the production of Hydrochlorofluorocarbons (HCFC-22), an ozonedepleting gas regulated under the Montreal Protocol.
Third, one of the major omissions of the current design of the climate regime is a plan for
reducing emissions from deforestation in developing countries and accounting forest conservation
activities. A proposal by Papua New Guinea and Costa Rica submitted to the 11th Conference of
Parties (COP)/MOP1 in 2005 seeks to include forest conservation activities under the CDM or,
alternatively, suggests elaborating an optional Protocol to the Climate Convention.
Some of the current CDM projects in the India relate to (Anuradha Sen, 2007):
Fuel switching technologies to be adopted by the Transport sector in India

Evaluation of the CDM mechanism for Coal bed Methane Projects
Techniques involving Energy Efficiency and Renewable energy
Projects involve technology Transfer to developing countries
Exploring rural energy efficiency programmes
Mitigation of emission of GHG in India in industrial as well as transport sectors
Promoting the scope and usage of Bio-fuels in the country
Exploring the afforestation /reforestation programme in enhancing carbon mitigation
Challenges (Findings)
Defining sustainable development
Lowering transaction cost
Managing the market (the biggest challenge)
Access to finance and use of overseas development assistance (ODA)
Negotiating the CDM post 2012
These challenges summarise the key issues of concern around how the CDM is failing to achieve
sustainable development as mandated in the Kyoto Protocol. Aid strategies must respond to the main
challenge, as identified that the CDM left to the market forces does not significantly contribute to
sustainable developments in developing countries. An important implication is that CDM projects with
22
high development benefits are often the ones that find access to finance the most difficult. ODA can be
considered as a source of finance for the projects that produce the CERs.
Conceptual Clarification
Theoretically different approaches and definitions of sustainable development exist, but going
into this field will lead too far from the operational and practical use of the concept, which is the focus
of this review. When it comes to practical and concrete assessments of sustainability impacts of CDM
projects there is no single, authoritative and universally accepted approach or methodology applicable
to any CDM project regardless of project type and location. Mandated in the Kyoto Protocol it has
been decided that it is within the prerogative of National Authorities (DNAs) designated by nonAnnex I countries to confirm whether a CDM project assists in achieving sustainable development or
not. This means that actual definitions of what constitutes sustainable development very according to
what different host countries consider as their development priorities.
Several problems with this pragmatic approach to defining sustainable development are identified.
One problem is the fact that different stakeholders prioritise different aspects of SD (Brown and
Corbera, 2003 and Kim 2003). As power relations among stakeholders are unequal it is often the
resource-strong stakeholders who are able to define the terms for the carbon trade (Nelson and de
Jong 2003). A second problem is the tendency of competition among non-Annex I countries to attract
CDM investments and create an incentive to set low sustainability standards, which can lead to the
early identified problem known as a race to bottom (Sutter 2003). Recently it has been found that
sustainability development criteria are not clearly defined by DNAs (Brown, Adger et al. 2004), which
reopens the questions of who should assure the sustainability of CDM. None of the studies conclude
with certainty the questions raised. Findings however, tend to be positive about the prospects for SD
and point to the possible, significant co-benefits CDM projects can bring to developing countries such
as investments, technology transfer, addressing local and regional environmental problems and
advancing social goals. The conclusions also raise and discuss problematic aspects of how and how
much the CDM can contribute to SD.
References
Journal articles
1. Brown K and E Corbera, 2003 Exploring equity and sustainable development in the new carbon
economy. Climate Policy 3, Supplement 1: S41-S56
2. Brown K, W.N. Adger, E. Boyd, E. Corbera-Elizalde and S. Shackley. 2004. How do CDM projects
contribute to sustainable development? Tyndall Centre for Climate Change Research: 1-53.
3. Cathleen Kelly & Ned Helme, Ctr. For Clean Air Policy, Ensuring Cdm Project Compatibility With
Sustainable Development Goals (2000)
4. Christoph Sutter, Sustainability Check -Up For Cdm Projects - How To Assess The Sustainability Of
International Projects Under The Kyoto Protocol 3 (Wissenschaftlicher Verlag 2003)
5. Chung, supra, note 6, at p. 174.
6. D.W. Carlton, Transaction costs, externalities, and two-sided payment markets (2005) 2005
7. Columbia Business Law Review 617, 618-619; and P. Schlag, The problem of transaction costs (1988)
62 Southern California Law Review 1661, 1674-1676.
23
8. Ellis et al., (2007), 10 and 12; and C. Sutter and J.C. Parreno, Does the current clean development
mechanism (CDM) deliver its sustainable development claim? An analysis of officially registered CDM
projects (2007) 84 Climatic Change 75, 89.
9. Ellis and Kamel, (2007), The Clean Development: A Users Guide; Silayan, (2005)
10. Ernstein Meijer & Jacob Werksman, Keeping it CleanSafeguarding the Integrity of the CDM, in
Legal Aspects Of Implementing The Kyoto Protocol mechanisms Making Kyoto Work 192 (David
Freestone & Charlotte Streck eds. 2005)
11. K. Capoor and C. Ambrosi, State and Trends of the Carbon Market 2008 (Washington: World
Bank, 2008),
12. K. Capoor and C. Ambrosi, State and Trends of the Carbon Market 2009 (Washington: World Bank,
2009), 50.
13. Karen Holm Olsen, The Clean Development Mechanisms Contribution to Sustainable Development:
A Review of the Literature, 84 Climatic Change (2007), at p. 67
14. Nelson, K.C. and B.H.J. de Jong 2003. Making global initiatives local realities: carbon mitigation
projects in Chiapas, Mexico. Global Environmental Change 13, 1: 19-30.
15. Olsen (2007) left to market forces, the CDM does not significantly contribute to sustainable
development.
16. Steve Thorne & Emilio Lbre La Rovere, Helio International, Criteria and Indicators for Appraising
Clean Development Mechanism (CDM) Projects (Oct. 1999)
17. Sutter, C. 2003. Sustainability Check-Up for CDM projects. Berlin, Wissenschaftlicher Verlag.
Government publications
1. Intergovernmental Panel on Climate Change [IPCC], Fourth Assessment Report, Climate
2. Change 2007: Mitigation of Climate Change, Chapter 12, Sustainable Development and Mitigation
(2007),
3. Christina Figueres, Interamerican Development Bank, Institutional Capacity To Integrate Economic
Development And Climate Change Considerations: An Assessment Of DNAs In Latin America And
The Caribbean (2004).
4. World Commission on Environment and Development (WCED), Our Common Future 201 (Oxford
Univ. Press 1987) [Hereinafter Our Common Future].
Web sites
1. http://www.un.org/apps/sg/sgstats.asp?nid=2303
2. http://cdm.unfccc.int/Nairobi_Framew ork/Nai_framework_possible_elements.pdf (UNFCCC, 26/01/20 10)
3. http://cdm.unfccc.int/EB/026/eb26annagan4.pdf (UNFCCC, 11/02/2010)
4. http://www.ipcc.ch/ipccreports/ar4-wg3.htm
5. http://cdm.unfccc.int/EB/026/eb26annagan4.pdf (CDM Website, 11/02/2010)
____
CHAPTER
3
Corporate Social Responsibility in

India: Status and Expectations
Dr. Tripti Barthwal,

Professor, Lal Bahadur Shastri Institute of
Management and Development Studies,Lucknow
Nupur Krishna,
Assistant Professor, Lal Bahadur Shastri
Institute of Management & Development
Studies, Lucknow
ABSTRACT
Changes to society and the business environment at the beginning of the 21st century brings
Corporate Social Responsibility (CSR) under the spotlight with ever-increasing levels of
shareholder, public and governmental scrutiny. CSR is quickly becoming watchwords for every
boardroom, major investors and all other organizational stakeholders. The paper explores the
concept of CSR, its benefits to the organization & what organizations in India are doing as part of
their corporate social responsibility on four parameters Ecological, Economic, Health & Social.
It also presents an evaluation of the performance of these companies in light of the provisions of
the recently passed Companies Act, 2013.
Introduction
A business organization is a social system. Instead of being considered a standalone venture it
should be seen as an inextricable link in the society. It receives inputs from the society in the form of
raw material, land, man hours, technology, etc. & generates output in the form of goods/services,
pollution, employment, development, etc. which go back to the society. Thus, a business entity
simultaneously generates both functional and dysfunctional results for both the environment and the
society, and the relationship can be considered as a mutually beneficial ecosystem. As a result of this,
organizations focus not only on maximizing the positive effects of functional results but also on
minimizing the negative effects of the dysfunctional results.
The focus on society and business linkage has become sharper now because expectations of the
society towards businesses have grown tremendously during the past few decades & the stress is upon
a socially, environmentally and legally responsible business. Organizations have responded to this
expectation by indulging in a set of activities which are termed as Corporate Social Responsibility.
Meaning
Corporate social responsibility is not about Philanthropy. The under lying theme of corporate
social responsibility is that business and society are interwoven rather that distinct entities (Wood,
1991). Corporate social responsibility is about how companies manage the business processes to
Corporate Social Responsibility in India: Status and Expectations
25
produce an overall positive impact on the society (Baker, 2008). The Commission of the European
Communities, 2001 defined CSR as a concept whereby companies integrate social and environmental
concerns in their business operations and in their interaction with their stakeholders on a voluntary
basis.
In general responsibilities of an organization have to include all the four bottom lines:
Ecological
Economic
Health
Social
The Origin
Different researches at different points of time and classical Indian literature have emphasized on
the CSR practices of corporate entities in India. Long back Kautilya in his Arthasastra mentions
traders responsibilities to the local society. In ancient India, such responsibilities were voluntary and
not mandatory.
After Independence, JRD Tata who always laid a great deal of emphasis to go beyond conducting
themselves as honest citizens pointed out that there were many ways in which industrial and business
enterprises can contribute to public welfare beyond the scope of their normal activities. He advised
that apart from the obvious one of donating funds to good causes which has been their normal practice
for years; they could have used their own financial, managerial and human resources to provide task
forces for undertaking direct relief and reconstruction measures. Slowly, it began to be accepted, at
least in theory that business had to share a part of the social overhead costs. Traditionally, it had
discharged its responsibility to society through benefactions for education, medical facilities, and
scientific research among other objects. The important change at that time was that industry accepted
social responsibility as part of the management of the enterprise itself. The community development
and social welfare program of the premier Tata Company Tata Iron and Steel Company started the
concept of "Social Responsibility."
Literature Review
Several researches have been conducted to explore the various aspects of CSR. Khan and
Atkinson (1987) conducted a comparative study on the managerial attitudes to social responsibility in
India and Britain. The study shows that most of the Indian executives agreed CSR as relevant to
business and felt that business has responsibilities not only to the shareholders and employees but also
to customers, suppliers, society and to the state.
A survey by TERI Europe and ORG-MARG (2001) in several cities in India revealed that more
than 60% of the people felt that the companies should be held responsible for bringing down the gap
between rich and poor, reducing human rights abuses, solving social problems and increasing
economic stabilities.
Arora and Puranik (2004) reviewed contemporary CSR trends in India concluding that the
corporate sector in India benefitted immensely from liberalization and privatisation process, its
transition from philanthropic mindsets to CSR has been lagging behind its impressive financial growth.
26
Another study by Dutta and Durgamohan (2009) found that education takes the first place
followed by health and social cause. Similarly,a survey conducted by CSM (2001), the perception of
companies towards various parameters of CSR has been brought forward. The various dimensions of
CSR valued by companies are national wealth, employment, environment and social programme
including health and literacy
A study conducted by Arevalo & Aravind (2011) finds that the CSR approach that is most
favored by Indian firms is the stakeholder approach and that the caring or the moral motive, followed
by the strategic or profit motive, are important drivers for Indian firms to pursue CSR. Further, the
results indicate that the most significant obstacles to CSR implementation are those related to lack of
resources, followed by those related to the complexity and difficulty of implementing CSR.
Porter and Kramer (2006) stated that strategically corporate social responsibility (CSR) can
become source of tremendous social progress, as the business applies its communication and
considerable resources, expertise and insight to the activities that benefit society, surveys shows that
companies should operate in ways that secure long-term economic performance by avoiding shortterm behavior that is socially detrimental or environmentally wasteful.
Objective and Methodology

The paper tries to explore concept of CSR & understand the CSR practices adopted by various
companies within the Ecological, Economic, Health & Social context in India. It also focuses on how
the Indian companies are doing in the light of the requirements of the Companies Act, 2013. The
methodology of the present study relied on the web based research, review of print literature to study
the objectives.
CSR Initiatives by Different Companies in India

Corporate Social Responsibility (CSR) is expected to be integral to business today. It has also
become the password to not only overcome competition but to ensure sustainable growth. It has been
supported by the shareholders and stakeholders, by and large, encompassing the whole community.
We try to take a look at what CSR activities companies in India are undertaking under the broad
heads of Ecological, Economic, Health & Social
1. Ecological: Indian Tobacco Company which prides itself of being the only company in the
world to be carbon positive, water positive & solid waste recycling positive procures wood pulp for its
Paper and Paperboards business from renewable plantations cultivated by tribals and farmers on their
private wastelands. ITC invested in extensive R&D to create clonal saplings which apart from being
disease resistant, grow much faster and in harsher conditions. A large number of tribals and marginal
farmers have benefited by growing these pulpwood saplings on their private wastelands. ITCs
paperboards business is a willing buyer of their produce, whilst the growers are free to sell to the
highest bidder in the open market. ITC could have taken the easier route by importing pulp, rather than
a more difficult route of mobilizing tribals and marginal farmers which involved long gestation and
substantial investment exposure. However, the adoption of this more challenging route has not only
created a source of sustainable livelihoods for a large number of disadvantaged sections of society, but
has also brought a multiplicity of benefits by creating a large green cover that contributes significantly
to groundwater recharge, soil conservation and carbon sequestration.
As part of its environment-protection initiatives, Indian Oil has invested close to Rs. 7,000 crore
in state-of-the-art technologies at its refineries for production of green fuels meeting global standards.
27
To further reduce dependence on precious petroleum products and secure the nations energy security,
the Corporation is now in the process of commercializing various options in alternative fuels such as
ethanol-blended petrol, biodiesel, and Hydrogen and Hydrogen-CNG. With safety, health and
environment protection high on its corporate agenda, Indian Oil is committed to conducting business
with a strong environment conscience, so as to ensure sustainable development, safe work places and
enrichment of the quality of life of its employees, customers and the community.
Infosys is assisting the World Business Council for Sustainable Development (WBCSD) in
customizing software and integrating India-specific data into its India Water Tool (IWT). IWT uses
data from a number of sources to assist companies in developing a more holistic planning approach
towards combating water shortage issues. The Company is incorporating more granular, India-specific
water data sets into the tool, which will yield improved analytics. Its Energy Information Management
solution automates energy data collection and analysis, helping enterprises gain real-time insights into
ways of reducing energy consumption, costs and carbon dioxide emissions. The Company has
successfully implemented this solution at its campuses in India. The solution helps it to monitor its
own energy consumption across its facilities, buildings and energy assets, thereby optimizing
operations and improving efficiency.
Tata Motors has undertaken various initiatives within the broad frame of Environment and
Climate Change to address the conservation of natural resources and energy, minimize waste
generation, enhance recovery and recycling of material and develop eco-friendly process and systems.
The Company has been continuously working towards reducing its various environmental footprints,
which is evidenced by the decrease in the Companys specific consumption levels. It recycles close to
69% of wood packaging, eliminating the use of fresh wood. A 200 litre engine oil barrel can now be
used to test 170 engines instead of 85 engines. At Jamshedpur and Lucknow, the wet garbage from the
canteens is converted to usable organic manure to sustain greenery in the plants.
2. Economic and Employment: ONGCs Hathkargha Prashikshan project aims at economically
empowering the women tribal handloom artisans in Assam to facilitate cluster development for
economically marginalized tribal populations. In 2011-12, around 100 tribal handloom artisans were
provided on-the-job training in the improvised looms by master craftsmen that included training in
intricate designs for catering to wider markets.
In one of the most far reaching skill development initiatives, Tata Motors has been working with
135 Industrial Training Institutes (ITI) spread over 19 states. The scope of this initiative includes
upgrade of training facilities, teacher training programs, youth training in automotive trades and other
such programs. Other skill development initiatives include training in agriculture and allied activities
and driver training program.
Costa is a British coffeehouse chain that has branched out to Europe, the Middle East and Asia.
Costa Coffee in India is taking big steps in their approach to employees. Since 2008, the companys
CSR program hires differently-abled employees, including the speech and hearing impaired. For
example training programs have been adapted to sign language and all store managers, irrespective of
who their employees are, are required to undergo sign language training. Costas CSR initiative
benefits those whose opportunities may have otherwise been limited. This program has been so
successful that speech and hearing impaired employees account for 15% of companys overall
employee ratio, a number that the Costa plans to increase over the coming year.
At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the
purpose of promoting education. Its vision is to renovate the lives of people in India through education
28
and financial assistance across age groups and across income strata. The K. C. Mahindra Education
Trust undertakes a number of education plans, which make a difference to the lives of worthy students.
The Trust has provided more than Rs. 7.5 crore in the form of grants, scholarships and loans. It
promotes education mostly by the way of scholarships. The Nanhi Kali (children) project has over
3,300 children under it and the company aims to increase the number to 10,000 in the next two years
by reaching out to the underprivileged children, especially in rural areas.
ITCs initiatives provide sustainable economic opportunities to poor women in rural areas by
assisting them to form micro-credit self-help groups that enable them to build up small savings &
finance self-employment & micro-enterprises. A large number of women earn income as selfemployed workers or as partners in micro-enterprises. The programme has demonstrated that extra
income in the hands of women leads to significant and positive changes in human development since it
is spent largely on childrens education, health and nutrition, and is a catalyst for gendering
development.
3. Health: GlaxoSmithKline India undertakes a number of health initiatives through its trust
GRAMIN AAROGYA VIKAS SANSTHA (GAVS), a Rural Health Development Organization. The
project runs on an objective of providing primary level curative and preventive health services in this
tribal area. The project also lays emphasis on health seeking behaviour in the areas of Tobacco deaddiction, Nutrition, common illnesses with a special emphasis on different types of fevers and
diseases of joints, HIV/AIDS infections, skin diseases, Tuberculosis, water-borne diseases and
Respiratory Tract Infections, etc. Mobile clinics with doctor and trained health facilitator visit 150
villages every week to provide curatives services. Multi-specialty health camps are also organized to
cater to special needs like cataract operations, administering Tetanus injections, gynecology related
issues, hemoglobin check- up camps etc. Training and awareness sessions are conducted in villages to
mobilize people towards health and hygiene.
Wipro ASSURE Health platform is a holistic solution for remote health monitoring & diagnosis.
This platform addresses the growing healthcare needs in cardiac and fetal monitoring by providing a
technology platform that enables physicians, paramedical staff and healthcare providers to monitor
and take timely action for high risk patients both in the hospital and at home using a unique
combination of remote monitoring and personal health care delivery.
ACC provides various forms of medical assistance to the families of its employees and also to all
those living in surrounding villages. Each factory has a medical center with full-fledged doctors and
the latest of basic equipment. Mobile medical services are provided in the vicinity and regular medical
camps are held to eradicate diseases, offers medical help, treatment and preventive care. ACC has
come out to provide support to the State and National health initiatives such as the eradication of
malaria, dengue fever and the dreaded HIV.
Tata Motors actively promotes healthcare both at the national and plant levels. A partnership with
Smile Train empowers surgeons to provide free corrective surgery for children with cleft lip and
palette deformities. Further, AIDS awareness campaigns are conducted for truck drivers. Preventive
and curative healthcare facilities are provided through small Mobile Health Clinics, awareness camps,
hospitals and clinics. Besides, rural health workers are trained to act as foot doctors to cure minor
ailments in their allocated areas.
4. Social and Community Development: ITCs globally awarded e-Choupal initiative is a
powerful illustration of a unique business model that delivers large societal value by co-creating rural
markets with local communities. The e-Choupal digital infrastructure enables even small and
29
marginalised farmers in rural India, who are de-linked from the formal market, to access relevant
knowledge, market prices, weather information and quality inputs to enhance farm productivity,
quality and command better prices making them more competitive in the national and global markets.
Customised agri-extension services and farmer training schools through a focused programme
Choupal Pradarshan Khet enable farmers to access best practices in agriculture and improve
productivity. Together, the digital-physical-human infrastructure has led to the creation of an efficient
two-way channel raising farmer incomes and productivity, transforming rural communities into
vibrant markets.
The concept of the Rasoi Ghar is a strategic component of the Hindustan Petroleum
Corporation Limited effort to extend LPG use throughout rural households in India. The Rasoi Ghar is
a community kitchen shared by several households of one village- a modern version of the traditional
sanjha chulla. Centrally located in a target cluster of a selected village, the Rasoi Ghar is a ready
kitchen set up in a pucca house, allowing several villagers at a time to cook their daily meals
comfortably, safely and quickly. Each rasoi ghar is equipped with an adequate water supply; a cooking
slab; basic cooking utensils and a minimum of 2 stoves connected to replaceable LPG cylinders. The
costs of setting up each Rasoi Ghar is covered by HPCL, with users being charged an average of
Rs.4/hour to meet the refill costs of a cylinder- a cheaper daily alternative to having an individual LPG
connection installed in ones home. The modern cooking fuel of LPG represents a welcome alternative
to traditional fuels still used by the vast majority of rural Indian households today. These traditional
fuels pose a number of disadvantages, burning inefficiently and in a manner that is difficult to control.
Collection of traditional fuel is also arduous and time-consuming, with the average villager spending a
significant portion of time and income in securing daily energy requirements.
One of the unique initiatives of the Aditya Birla Group is to develop model villages, by working
towards the total transformation of a number of villages in proximity to their plants. Making of a
model village entails ensuring self-reliance in all aspects viz., education, health care and family
welfare, infrastructure, agriculture and watershed management, and working towards sustainable
livelihood patterns.
The CSR unit of Madura Fashion & Lifestyle also helps the Mother Teresa Old Age Home,
providing blankets and other necessities. Other institutions that receive its support include a school for
the visually challenged and an SOS Childrens village.
The Community Development Programme of IOC adopts a multi-disciplinary approach
incorporating health, family welfare, education, drinking water and sanitation, empowerment of
women and other marginalized groups in the vicinity of our major installations. While utilising the
Community Development Funds, more emphasis is laid on the projects for providing Clean Drinking
Water, Health & Medical Care and Education.
The activities undertaken under the above three thrust areas are as under:
Providing Clean Drinking Water: Installation of hand pumps/bore well/tube
wells/submersible pumps, construction of elevated water tanks, providing water tap
connection, rainwater harvesting projects/kits, aquaguard water purifiers/water coolers to
schools/community center etc.
Health and Medical Care: Organising Medical/Health Camps on Family Planning,
Immunization, AIDS awareness, Pulse Polio, Eye, Blood Donation, Pre and Post-natal Care,
Homeopathic Medicine etc., distribution of free condoms, providing anti-mosquito fogging
treatment, toilets, medicines to primary health centres, mosquito nets, ambulances to Medical
30
Centres/Hospitals/NGOs, hearing aids/wheel chairs to physically challenged, financial

assistance to hospitals, medical equipments etc.
Benefits to the Companies

Today, corporate social responsibility has become an integral part of not just how business
establishments operate but even multinationals, private and public players engage with the
communities. CSR does not come free. As is obvious from the discussions above, companies need to
spend on their CSR activities. But these expenses are not a waste. The benefits far outweigh the
investments organizations need to make for corporate social responsibility. In 2013, Reputation
Institute, a private global consulting firm based in New York, invited about 47,000 consumers across
15 markets to participate in a study that ranked the worlds 100 most reputable companies--all
multinational businesses with a global presence. The study found that 42% of how people feel about a
company is based on their perceptions of the firms corporate social responsibility (CSR).
According to Reputation Institutes 2012 study of consumers in 15 countries the 2012 Global
CSR RepTrak 100, of the 7 dimensions that drive reputation, 3 fall in the CSR category. The study
results show that 73% of the 55,000 consumers surveyed are willing to recommend companies
perceived to be delivering on Corporate Social Responsibility. The high level of support is contrasted
sharply by companies on the other end of the spectrum. Only 17% of consumers are willing to
recommend a company perceived as poorly delivering on its CSR.
Many of the leading corporations across India had realized the importance of being associated
with socially relevant causes as a means of promoting their brands. Cause-related marketing and
corporate social responsibility has provided companies with a new tool to compete in the market.
Nothing builds brand loyalty among the very-difficult-to-please consumers, like a company's proven
commitment to a worthy cause. Other things being equal, many consumers would do business with a
company that stands for something beyond profits Retaining staff is viewed as a challenge and many
organizations view corporate social responsibility as a tool to retain people. The opportunities to
demonstrate leadership skills beyond work, the ability to interact with multiple stakeholders and the
power of making a tangible difference to society are some of the ways in which organizations position
CSR initiatives at work.
An Evaluation of CSR Initiatives

Although the CSR initiatives by various companies mentioned above appear quite impressive, yet
it needs to be analysed whether this is enough or not specifically in the light of the new Companies
Act. Under the new Companies Act, 2013, which has replaced nearly six-decade old Companies Act,
1956 governing the way corporates function and are regulated in India, all profitable companies with a
sizeable business would have to spend every year at least 2 per cent of three-year average profit on
CSR works. Specically, the CSR Clause applies to any company, during any scal year, with
1. a net worth of rupees 500 crore (about U.S. $90 million) or more;
2. a turnover of rupees 1,000 crore (about U.S. $180 million) or more; or
3. a net prot of rupees 5 crore (about U.S. $900,000) or more.
The CSR Clause will only apply to some of the over 800,000 companies in India, including over
8,000 publicly listed companies and multinational companies. The accounting rm Ernst & Young
31
estimates that the law would cover over 2,500 companies in India and generate over U.S. $2 billion of
CSR spending in local communities.
The term CSR itself is not dened in the Companies Bill. However, Schedule VII of the
Companies Bill, quoted below, requires the CSR policy created by the CSR Committee to involve at
least one of the following focus areas:
Eradicating extreme hunger and poverty;
Promotion of education;
Promoting gender equality and empowering women;
Reducing child mortality and improving maternal health;
Combating HIV, AIDS, malaria and other diseases;
Ensuring environmental sustainability;
Employment-enhancing vocational skills;
Social business projects;
Contribution to the Prime Ministers National Relief Fund or any other fund set up by the
Central Government or the state governments for socioeconomic development, and relief and
funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes,
minorities and women; and
Such other matters as may be prescribed.
Lets take a look at how companies in India are faring as per the requirements of the new Act.
CSRidentity.com, together with Forbes India has prepared the CSR Report Card: Where Companies
Stand, compiled by has ranked Indias companies 1-100 based on Net Sales for the Financial Year
2012. It shows how much these companies are spending on CSR activities vis--vis the new statutory
requirement of 2% of PAT. We have considered only the top 20 companies in the report card
Table 1: Spending on CSR Activities

S. No.
Company
Revenue
Avg. PAT
2% OF PAT
Actual Spent
Indian Oil Corporation
442,459
7783
156
83
2.
Reliance Industries
Bharat Petroleum
Corporation
Hindustan Petroleum
Corporation
368,571
21,138
423
288
223,315
1,438
29
195,891
1,118
22
27
5.
Tata Motors
170,678
8,437
169
15
6.
Oil and Natural Gas

Corporation
151,121
23,660
473
121
7.
State Bank of India
47,197
13,056
261
8.
Tata Steel
135,976
3,895
78
71
146
9.
PNB Gilts
104,628
29
N.A.
3.
4.
32

10.
Hindalco Industries
82,549
3,597
72
28
11.
Coal India
78,410
11,759
235
119
12.
Bharti Airtel
71,506
6,511
130
33
13.
MMTC
67,023
129
14.
NTPC
66,366
9,334
187
49
15.
Larsen and Toubro
64,960
4,818
96
70
16.
Essar Oil
63,428
-201
NA
NA
17.
Mahindra & Mahindra
63,030
2,948
59
22
18.
Mangalore Refinery &

Petrochemicals
57,214
1,066
21
NA
48,894
8,935
179
51
50,654
5,823
116
37
19.
20.
Tata Consultancy
Services
Bharat Heavy
Electricals
All figures are in Rs Crore and have been rounded off to the nearest decimal point
Avg PAT refers to the average of profit after tax recorded by a company in the last three
financial years (FY10, FY11 and FY12)
NA stands for data not available for companies which do not disclose their CSR spends in
their annual reports
Revenue figures are indicative of the companys financial performance in financial year 201112 (FY12) only 2% of PAT refers to the amount that a company needs to spend in CSR
activities as per the government mandate
N/A implies not applicable; according to government policy, loss-making firms dont need to
invest in CSR
Data Sources Ace Equity; CSRidentity.com; company annual reports; company responses via
email
It is evident from Table 1 that the though companies are spending a reasonable amount it is much
lower than the stipulated target of 2%. Although some corporations like Tata Steel, Hindustan
Petroleum and MMTC emerge as star performers in a constellation of others that fail to even measure
upto the mandated CSR expenditure. An analysis by Forbes India of CSR spend of the top 500 listed
companies in India shows most do not spend even 1% of their PAT on CSR.
Wipro Chairman Azim Premji who has personally donated 8.7 per cent from his personal stock
holding in Wipro as endowment for the Azim Premji Foundation and has gone on to pledge more
opposes the mandated spending of 2 per cent of a company's profits on corporate social responsibility
related activities, as envisaged in the new Companies Bill.
Speaking at the All-India Management Association's (AIMA) 40th Management Convention in
New Delhi on December 11, 2013, he said: "My worry is the stipulation should not become a tax at a
later stage ... Spending two per cent on CSR is a lot, especially for companies that are trying to scale
33
up in these difficult times. It must not be imposed." Premji also felt that a distinction should be made
between personal philanthropy and CSR, which is a company activity. However, he added that
companies should wholeheartedly participate in CSR activities. They must also take care in choosing
their focus areas. He believed that social good was not merely the government's responsibility and
companies needed to step forward to become co-sharers of that goal.
It remains an open secret that while endorsing social philanthropy on one hand, the Corporations
show very little enthusiasm and initiative in implementing CSR activities and processes in real life.
The prohibitive infrastructure at ground level, and lack of focus remains the primary hurdle in
undertaking CSR activities at a large scale. Although, in a study conducted by the Canadian
government on business corporations, it was revealed that companies that invest in CSR initiatives
show improved relations with the investment community and find it easier to get credit. They have
better employee morale as employees take pride in being associated with an organization that is
socially responsible. CSR initiatives have also been shown to increase the innovative spirit, a case in
point being NOKIAs low cost and durable handsets crafted specially for rural India. CSR also brings
about a stronger bonding with the community through stakeholder involvement, and finally it remains
a propitious tool in product promotions and building the corporate brand.
Conclusion
Integrating corporate social responsibility initiatives in business is one of the great challenges
facing firms today. Governments, activists, and the media have become adept at holding companies to
account for the social consequences of their activities. As a result, CSR has emerged as an
inescapable priority for business leaders in every country. More and more organizations are showing
their commitments towards CSR either for enhancing their corporate image or to be in competition.
But organisations should not go for CSR initiatives merely for the sake of it. Businesses cannot
resolve social and environmental problems of the society unless they know where to focus and how to
utilize its resources in the most effective manner which leads to a win-win situation for them as well as
the society.
References
1. Arora, B. and Puranik. (2004), A Review of Corporate Social Responsibility in India, Development,
47 (3), pp.93-100.
2. Dutta, K. and Durgamohan, M. (2009), Corporate Social Strategy: Relevance and pertinence in the
European Commission Indian Context retrveied on 6th December, 2013 from
www.iitk.ac.in/infocell/announce/conversion/papers.
3. Khan, A.F.and Atkinson, A. (1987), Managerial attitudes to social responsibility: A comparative study
in India and Britain,Journal of Business Ethics,6,pp 419-431.
4. Teri (2001) Understanding and Encouraging Corporate Social Responsibility in South Asia, Altered
Images the 2001 state of corporate responsibility in India poll,p.11,retrived on 9th December,2009 from
http://www.terieurope.org/docs/CSR-India.pdf
5. Wood, D. J.: 1991, Corporate Social Performance Revisited, Academy of Management Review 16(4),
691718.
6. Jorge A. Arevalo, Deepa Aravind, (2011) "Corporate social responsibility practices in India: approach,
drivers, and barriers", Corporate Governance, Vol. 11 Iss: 4, pp.399 - 414
34
Websites
1. http://businesstoday.intoday.in/story/azim-premji-aima-convention-corporate-social =
responsibility/1/198960.html
2. http://businesstoday.intoday.in/story/corporate-social-responsibility companies/1/185597.html
3. http://tatamotors.com/investors/financials/67-ar-html/csr.html
4. http://www.adityabirla.com/csr/overview
5. http://www.ey.com/Publication/vwLUAssets/Understanding_companies_Bill_2012.pdf/$FIL
erstanding_companies_Bill_2012.pdf
E/Und
6. http://www.forbes.com/pictures/efkk45mmlm/the-10-companies-with-the-best-csr-reputations/
7. http://www.hindustanpetroleum.com/En/ui/CorporateSocialResponsibility.aspx
8. http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/h_rs00100.html
9. http://www.iocl.com/Aboutus/corporatesocialresponsibility.aspx
10. http://www.itcportal.com/sustainability/images/ITC-CSR-Booklet-PDF.pdf
11. http://www.kordant.com/assets/2-Percent-India-CSR-Report.pdf
____
CHAPTER
4
Sustainable Development in
Women Entrepreneurship in India
(With special reference to Capital region of
Uttar Pradesh)
Dr. Vivekanand Pandey

Professor, Sherwood College of Management,
Uttar Pradesh Technical University,
Lucknow. Uttar Pradesh, India
Email: dr.vivekanandpandey@gmail.com
ABSTRACT
The field of entrepreneurship is characterized by competition, financial gain & independence and
the socio-economic setting provides a base for individuals to venture into entrepreneurship. Women
constitute the family, which leads to society and nation. Social and economic development of women is
necessary for overall economic development of any society or a country. Entrepreneurship is the state
of mind in which every woman has in her but has not been capitalized in India in way in which it
should be.
This paper on women entrepreneurship covers recent developments and the role of governments
at the State to act as catalysts, with a wide support system to encourage women entrepreneurs
individually, and through associations. The paper consists of four main objectives viz. study of
perspective of women entrepreneurship, characteristics; factors motivate women entrepreneurship
and challenges faced by them in the state Uttar Pradesh in India. The study also makes a foray into the
personality traits of entrepreneurs with the help of the survey methodology, using the famous Big Five
model as the basis for the description of personality traits.
Key Words: Women Entrepreneurship, Characteristics, Motivational Factors, Challenges.
Introduction
Entrepreneurship has been in existence for centuries. Time and again, attempts have been made
to understand the concept of entrepreneurship. Theorists and practitioners have tried to explain this
phenomenon from different aspects. Economists, sociologists and psychologists have described
entrepreneurship in their own ways. The available literature is full of numerous empirical and
theoretical studies, which manifests the interest created by the concept. Entrepreneurship also draws
the attention of young, ambitious and creative minds to venture into profit-making activities, which in
turn, act as a source of employment for many, thereby enhancing their economic activity and social
status.
36
Entrepreneurs exhibit determination to make their business dream a reality, which is fueled by a
passion for success. The pursuit of an entrepreneurial opportunity is an evolutionary process in which
entrepreneurs select out many steps along the way, make decisions to positively evaluate opportunities,
to pursue resources and to design the mechanism of exploitation. In this whole entrepreneurial game,
the willingness or motivation of the entrepreneurs to play constitutes an important aspect of
entrepreneurial development. The motivation of an entrepreneur is a combination of financial gains, a
strong desire to do something new, an urge to control her future and an I can do it attitude.
In the recent years, entrepreneurship in India has been a new impetus for economic development.
Micro-entrepreneurial ventures are considered to be the most critical factors that would help both
urban and rural population through the creation of jobs, rescue out of unemployment and poverty and
thereby impact upon developing skills, self-esteem and self-sufficiency. With the changing global
scenario, women entrepreneurship has emerged in the forefront. Women business owners are
continuing to demonstrate economic prowess worldwide. According to the Global Entrepreneurship
Monitor (GEM), one in eleven (8.9%) women is involved in entrepreneurship across the globe and
India occupies the second position among the 22 countries where 14.1 percent of women have
ventured into entrepreneurship (GEM, 2002). The increase in the level of entrepreneurial activity
among women increases as levels of education rise especially among those who go beyond secondary
education. Women, especially those belonging to the low-income strata and who have no other option
for employment, are taking to entrepreneurship not only to meet the survival needs of the family but
also due to low barriers of entry and flexibility.
Woman entrepreneur is a person who has shown enterprise, with an eye for opportunity,
willingness to take risks, a commercial acumen, and through her enterprising skills and innovativeness
can generate employment for others, can create wealth and who has set a new trend in the country in
the efforts directed at entrepreneurship development in varied walks of life, particularly in industry,
service and business (Small and Medium Enterprise (SME) sector). The year 2000 was declared as the
Women Empowerment Year and the National Policy for Empowerment of Women was formally
announced in 2001. The definition of a woman entrepreneur-promoted enterprise announced in 1978
was modified in the Small and Tiny Enterprises Policy of 1991.
It was the Industrial Policy Resolution of 1978, which recognized women entrepreneurs as a
special group, needing assistance and support, as a sequel to the Declaration of International Decade
for Women between 1976 and 1985, and the International Conference on Women Entrepreneurs held
at New Delhi in 1984.
A women entrepreneur-promoted enterprise is defined as a Micro. Small or Medium (MSM)
Manufacturing or Service Enterprise, managed by one or more women entrepreneurs in proprietary
concerns or other forms of organization, and in which she/they individually or jointly have a share
capital of not less than 51% as partners/shareholders/directors of a private limited company/members
of a cooperative society. Percentage of women employed in the enterprise stipulated earlier, has since
been dropped. The components of this definition can be extended to other sectors as well where
women participation is significant. In about two decades time, women entrepreneurs not only entered
into business in a small way but also ventured into starting and managing large enterprises on
professional lines, and have been able to sustain and survive in the competitive environment. Among
the numerous areas of operation that women have entered through self-employment are education and
training, information technology sector, healthcare service sector, real estate development sector,
travel and tourism sector, services sector, housekeeping, services, organizing conventions and trade
fairs, and consultancy services.
Sustainable Development in Women Entrepreneurship in India (With special reference ...)
37
There has not been adequate research on the entrepreneurial role of women, though a number of
studies have been conducted in recent years on a few aspects. Some of the aspects on which studies
have been conducted so far relate to:
1. Socio-demographic attributes of entrepreneurs;
2. Factors influencing the motivation of women to become entrepreneurs and experiences of
conflict at home and work place; and
3. Selection of enterprises in industry, service, and business.
In the early 1990s, a few institutional studies were conducted, and in subsequent years, major part
of the studies conducted on women entrepreneurship was based on doctoral research studies in
different regions. The coverage of doctoral studies is, however, limited, both in terms of sample size,
regions covered, and objectives/foci of the study. Hence, there is a need for more representative broadbased institutional studies or projects covering a larger sample of women entrepreneurs in different
regions, including specialized areas of coverage that need to be pursued.
In the light of the typical problems being faced by women entrepreneurs the question whether
they can tackle the work-home role conflict adequately with the cooperation and support of the family
members, institution and society, and emerge as successful entrepreneurs has been amply answered in
a number of studies. The proposition is whether women can become successful entrepreneurs after
overcoming the initial problems in the socioeconomic environment. The empirical studies present the
evidence that they can succeed, provided preparatory effort is made by them on the lines of the
conclusions evolved from the studies reviewed in the article. It is important to create conducive
business environment to provide opportunities to women to be treated equally in industrial, business,
and service enterprises, as well as in other sectors, Bringing about gender equality and minimizing
gender discrimination through specific steps by institutions, the society, and the fellow male
entrepreneurs is one of the important directions for facilitating women entrepreneurship. All Central
and state level bodies, and institutions directly involved in promoting entrepreneurship among women
in various sectors should take initiative in this direction.
According to the Global Entrepreneurship Monitor (GEM) report (2002) women basically
represent a largely untapped pool of entrepreneurial talent, and their level of involvement in
entrepreneurial activities in comparison to men is substantially less. Participation of women in
entrepreneurial activities can only be triggered by the initiatives taken by their countrys governments
as well as through an increase of normative support for women entrepreneurship. This in turn is
positively related to the countrys level of gender equality, and general support extended for
entrepreneurship at institutional and societal level (Madhuri, 2007).
Various institutions apart from financial institutions and research and development organizations,
at state and national level, have been making special provisions to assist women entering SMEs.
National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development
Bank of India (SIDBI), as apex refinancing institutions, Commissionerate of Industries at the state
level, and a number of other institutions provide opportunities and incentives to women entrepreneurs.
Union Ministries of Micro, Small, and Medium Enterprises, and Agro and Rural Enterprises have
released in February 2007, a comprehensive package of promotional measures for micro and small
manufacturing and service enterprises, in continuation of the facilities already offered to this sector.
One of the aspects covered in this policy is entrepreneurial and managerial development, and
empowerment of women-owned enterprises. The focus is on providing counseling and escort services,
organizing training on entrepreneurial and managerial aspects exclusively for women entrepreneurs,
38
apart from general programs where women can participate; and encouraging women entrepreneurs
associations to play a greater proactive role in guiding, and moulding prospective and existing women
entrepreneur to be benefited from the conducive environment by extending a helping hand in shaping
their dream of becoming successful entrepreneurs, a reality.

The present study inter-alia focuses on the following dimensions of the women entrepreneurship
in the capital region of Uttar Pradesh.
1. Characteristics of Women Entrepreneurship.
2. Factors Motivate Women Entrepreneurship
3. Challenges Faced by Women Entrepreneurs
Literature Review
The word entrepreneur was introduced by Cantillon (1755). He considered entrepreneurship as
an important economic function. According to him, there were three important agents in the economy:
capitalists, who owned lands; hirelings, who were wageworkers; and entrepreneurs, who were
arbitragers or middlemen. Entrepreneurs enjoyed an important position in the economy, as they made
all the exchanges and transactions possible.
Say (1803) defined the term entrepreneur in his own way. He categorized the industry, which
creates value, into three types: agricultural industry, the manufacturing industry, and the commercial
industry. The working of each of these industries consists of three distinct operations that are rarely
performed by one person: theoretical knowledge construction, the application of knowledge, and
execution. Within this division, the application of knowledge to the creation of a product for human
consumption is the entrepreneurs role or occupation. Entrepreneurship was considered to be a
superior kind of labor. Say also considered the entrepreneur as a coordinator, leader and manager.
Marshall (1920) considered entrepreneurs as leaders and managers of the business firms. He
called entrepreneurs cost minimizers and innovators. He regarded them as the agents of progress.
He also considered entrepreneurship qualities as something which is not common in the society.
Marshalls contemporary, Schumpter, emphasized that the entrepreneur is necessarily an innovator.
According to him, an entrepreneur is not necessarily the director and the independent owner of a
business; the entrepreneur is a person who carries out new combinations of inputs available to him in
the form of raw materials and other resources.
Knight (1921), considered the entrepreneur as the one who contributes to the society in the form
of savings, by bearing all the uncertainty. He is responsible for the decisions be makes. He guarantees
the factors of production their corresponding returns. Entrepreneurship requires the ability to bear
uncertainty as well as the availability of enough capital to pay the remuneration which have been
guaranteed. Entrepreneurial services are not only remunerated by profit or a residual payment, but also
by prestige and job satisfaction.
Krizner (1973) described the entrepreneurs as the persons in the economy who are alert to
discover and exploit the opportunities of profit. They are important contributors to the market process.
Presently, many definitions are in use that describes entrepreneurship as a combination of selfemployment, creation and innovation.
39
In recent years, entrepreneurship research has focused on what motivates women to venture as
entrepreneurs. In trying to answer this question, research studies have identified various types of
entrepreneurial motivation. Some researches describe it as a social-psychological drive among people
that leads to economic development of a country.
McClelland and Winter (1969) assert that a high need for achievement is positively related to
entrepreneurship and is based on assumptions like the existence of an open social structure, relative
freedom of occupational choice and perception of moderate chance of success where individual efforts
can directly effect success and failure.
Kets De Vries (1977) state that the need for prestige, power and self-confidence are used as
reassuring weapons to deal with low self-esteem and related feelings of anxiety by the entrepreneur.
Entrepreneurs are driven by power motivation and are concerned mainly with influencing the
environment, individuals and institutions to achieve their goals. It is necessary for entrepreneurs to
develop motivational needs complementary to the need for affiliation in proportionate manner.
Bhattachrayas study (1979) identified self-actualization as an important motive. Singh (1992), in
her study on women entrepreneurs, found that the entrepreneurs power, self-actualization and
achievement motivation are significantly higher in entrepreneurs compared to ecpnomic and affiliation
motivation.
Further, Ray and Ramachandran (1996) found that entrepreneurs unfulfilled personal needs
trigger off reaction to pertinent external and internal stimuli, which leads to recognition of a business
opportunity by an entrepreneur. Hornaday and Abound (1971), report that the need for achievement
support, independence and leadership are the most significant entrepreneurial characteristics.
Cox and Jenning (1990) argued that money is rarely the primary driving force for women
entrepreneurs from the upper income group. It is found that they are driven by the objective of
providing services to mankind.
Holmquist and Sundin (1988) observed that women entrepreneurs frequently pursue social goals
like customer satisfaction together with economic goals. Liebow (1991) reveals that social issues and
problems act as impetus for women to start a business. Another important business motivation for
women is the need to provide security to the family (Cole, 1959). According to Holmquist and Sundin
(1990) women entrepreneurs are often motivated by the desire to have flekibility in their work and
family.
A study done by Azad (1982) reveals that the main motivating factors for women entrepreneurs
are economic compulsion, the presence of knowledge and skills, need for achievement, inspiration
gathered from the success of others and frustration in the present occupation. Ranis (1986) study
ranks the desire to do something independently as the most important, followed by the desire to keep
oneself busy and to earn money. The research by Asghari (1983) concludes that women take up
entrepreneurship to fulfill economic needs like power and achievement and to gain a novel experience.
Women entrepreneurs are observed to demonstrate psychological characteristics like achievementmotivation, risk-taking preference, problem-solving tendency, initiative, tenacity and perseverance
ail of these motivate women into starting business ventures (Singh and Sengupta, 1991).
Taking into consideration the characteristics that motivate individuals in taking up an
entrepreneurial career, the present study explores what motivates women entrepreneurs from the lowincome strata. We would lay to cover the basic factors that have a potential to influence the decision to
engage in entrepreneurial activity in the context of Uttar Pradesh.
40
Shahina Begum (2006) in her study on Women Entrepreneurship in Rayalaseema region at

Andhra Pradesh, referred to as Rayalaseema Study, presented the fact-file of women entrepreneurs in
industry, service and business, which is based on the coverage of 80 entrepreneurs as middle-aged,
married, middle-income group, educated, many with business background, through own family
business or husband being in business, or in own business on their own. Many made efforts to acquire
experience or at least exposure to the product line/activity they would like to pursue, before promoting
the venture. Ambition while starting the enterprise was to he self-employed, followed by, to provide
employment to others.
Lalitha Rani (1996) in her study of 100 women entrepreneurs in manufacturing, trading,
Visakhapatnam city of Andhra Pradesh, referred to as Visakhapatnam Study, analyzed the
socioeconomic background of women entrepreneurs. The respondents were either from families which
were already in business or having highly educated husbands or fathers. Women preferred to start
enterprises based on their educational background. Service sector enterprises had entrepreneurs with
higher level of education, and trading with comparatively lower education level.
In manufacturing, nearly half of them had technical education. Majority of entrepreneurs in the
service sector were employed prior to start the enterprise. The socioeconomic profile of women
entrepreneurs in Visakhapatnam is largely Telugu-speaking, forward community, Hindu, in the 30-39
year age group at the time of starting the enterprise, coming from a nuclear, middle class family, and
with well-educated husbands settled in business. Many of the respondents migrated to Visakhapatnam
owing to husbands or fathers business or job.
Dhameja (2004) in the study of 175 women entrepreneurs from seven districts of Punjab,
Haryana, and Chandigarh, referred as Northwestern India Study, examined the opportunities,
performance, and problems of women-promoted enterprises. Analysis of the socio-demographic
profile of women entrepreneurs covers the following aspects. Maximum number of respondents
started their units in the age group of 25-40 years, i.e., after completing their education, marriage and
in some cases after acquiring a few years of work experience. Majority of them (8 1.1%) had good
educational background (graduation or above that). Among them 45.7% had experience in
manufacturing/ trading/service or a combination of these ranging from six months to more than five
years, prior to the launch of their enterprises. A significant percentage of respondents (35.4%) had
undergone training of a duration ranging from less than three months to more than two years before
starting their ventures. Among them 42.3% were earning quite well before venturing into their own
businesses. Majority of them (84%) were married at the time of starting their enterprises, and 78.9%
had urban background. Some of the families belonged to business/professional background,
strengthening the belief that business family background facilitates ones entry into the entrepreneurial
world.
Conclusion from the above three studies on socio-demographic aspects can be stated as follows:
Service enterprises can be taken up in 20-25 years of age, businesses at 25-35 years, and industry at
30-45 years of age. The occupation and background of the husband and father provide the basis in
many cases to select the entrepreneurial activity. Apart from education and training, experience goes a
long way in enabling a woman to become a successful entrepreneur. They should have a clear
understanding of how they would realize their dream into a reality. They need to aim high, and expand
their markets beyond the traditional boundaries. Networking through women associations, and also
mixed associations will enable them to proceed faster, and work vigorously to pursue their goal.
Constraints and problems faced by women entrepreneurs need to be overcome through creation of a
more conducive entrepreneur-friendly support system, including banks.
41
Knight (1971), while describing his entrepreneur, considers that an entrepreneur is a person with
a high degree of self-confidence, and the power to judge his own personal qualities as compared to
those of other individuals competitors, suppliers, buyers, and employees; a person with a disposition to
act on his own opinion; a person with a venturesome nature and foresight which helps him handle
uncertainty effectively. Some describe entrepreneurs as lovers of knowledge.
Attempts to understand or describe personality have been an area of great interest to
psychologists. Krauss, Frese, Friedrich and Unger (2005) studied the relationships of the
psychological constructs like Entrepreneurial Orientation (EO) with business success. EQ
questionnaire measure, developed by Covin and Slevin (1986), focuses on risk-taking, innovation, and
pro-activeness. But, EO is basically an attitude measure, not a pure personality characteristic measure.
Another study by Ames and Runco (2005) emphasized on the Cognitive measures like ideation
original insights and ideas, to find out the reasons for the success of the entrepreneurs. But, these
recent studies are not focused on personality characteristics which are established as predictive and
studies like these are parallel to the techniques used in the creativity literature (e.g., Davis, Keegan and
Gruber, 1988). In addition, recent studies are focused on success factors of entrepreneurship without
giving the exact definition of what is success.
Research Methodology
Lucknow the State Capital region was selected as the locale for the present study by using
purposive sampling. A mixed research i.e. exploratory and descriptive was formulated to achieve the
objectives of the research. A structured questionnaire was prepared and implemented on the 325
women entrepreneurs of Lucknow district of Uttar Pradesh in India. SPSS was used to analyze the
data. Reliability of the scale data was checked using alpha coefficient and content validity has been
checked. Scale reliability of the data for all items individually was above acceptable limits i.e. 0.65
and cumulative reliability was 0.7. Coefficient of concordance was also calculated to the reliability of
ranking variables. Non-homogeneity, no auto correlation and non multi co-linearity of the data was
checked while performing regression analysis.
Result and Discussion

The results have been discussed in this part of the research paper:
Characteristics of Women Entrepreneurs

The study of personality characteristics has always been fundamental in understanding the nature
of entrepreneurs and therefore, the present study relied on the literature on personality that suggests
that the Five Factor model (McCare and Costa, 1992) can describe the personality traits with the help
of five fundamental dimensions, which are:
1. Extroversion (E): It corresponds to the traits such as outgoing nature, gregariousness, and
sociability.
2. Neuroticism (N): It corresponds to emotional instability, inability to feel relaxed under
periods of depression.
3. Agreeableness (A): It corresponds to the amiable traits present in the individuals. Such people
listen to the other people.
4. Conscientiousness (C): It corresponds to the personalities which are reliable and hardworking.
These people stick to the rules and regulations.
42
5. Openness to Experience (O): It corresponds to the traits of innovation and creativity. Such
people tend to find out new ways to solve the problems
The analysis is based on the responses of the questionnaire, which contained both open and closeended questions. All the dimensions have been analyzed.
Extroversion
This particular dimension is generally high in the people who are outgoing, gregarious, sociable
and who express their feelings. The average score for this dimension is 3.5, which shows low
extrovertness amongst women entrepreneurs. The highest being 4 and the lowest was 1.9. A low
value of standard deviation on the agreement of this dimension shows the consistency of thought
among the respondents. As per dictionary, extroversion is an extroverted disposition; concern with
what is outside the self. Extroversion is a phenomenon, which is quite common in the entrepreneurs.
Almost all agreed that extroversion was something which was always present in them since childhood:
A trait of personality which is something inborn. Most of the respondents have a large circle of friends
across several fields. Extroverts have the opportunity to learn lessons from the lives of the persons
they come across. One respondent emphasized that extroversion is the hallmark of entrepreneurship as
it leads to free expression of views among their friends which help them in generating ideas.
Extroversion is something that gives them the spice of variety. The rationale of this can be explained
by the fact that extrovert behavior leads to the intensive development of effective networks. One
respondent owes his extrovert nature for his connections with the government officials and other
management bodies. Some of the respondents also mentioned that the quality of extroversion helped
them to obtain vital information from their friends, which helped them in growing their businesses. An
entrepreneur is someone who is not only self-employed but who is also able to employ other people. If
she is an introvert, she cannot manage and lead people and carry her pursuits in the competitive world.
Neuroticism
Neuroticism is a mental or personality disturbance not attributable to any neurological or organic
dysfunction. The average score is 6.5 with a standard deviation of 2.5. The response has large
variation with highest score of 4. It means most of the respondents do agree that they are prone to
neuroticism. One of the reasons could be the inability to cope with during the periods of stress. Many
respondents know how to apply the techniques of relieving stress, such as meditation or yoga, but fail
to implement though some admit they have faced stress-related problems during their careers.
Generally, an entrepreneur is almost always subject to risks. A fear of failure is always associated
with such kind of a career. The entrepreneur is responsible for the decisions she makes and is
accountable for the results she obtains. One of the respondents nearly became bankrupt at one point of
time and she decided to quit the business. However, this particular trait is not at all dominant when
compared to the other dimensions, but still its presence cant be denied. As one respondent puts it,
entrepreneurship is not a game for the people with a weak heart.
Agreeableness
Agreeableness is the ability to get along easily with the views of other people. People with this
trait are widely accepted. This particular trait receives the third rank among the five dimensions. It has
an average score of 5.6 with highest going up to 7. However, the deviation among the responses is
quite high with a value of 2.6. Agreeableness has been considered as an important trait in an
entrepreneurs personality. It allows the entrepreneur to encourage people to come up with ideas anti
43
in accepting them. This trait is necessary to keep up the creative pool alive within the enterprise.
This particular trait is helpful in managing and leading, as felt by almost all the respondents.
Respondents agreed that likeability is required in all the spheres in which an entrepreneur operates.
Likeability comes from agreeableness. Also this very trait acts as a complementary trait to the trait
of extroversion. Sometimes agreeableness has led respondents not to go too far with their ambition
or passion, which could otherwise lead to failure. As one respondent puts it, My colleagues saved
me at times when I had taken decisions to make large investments, in the ventures which have
ultimately failed. I was lucky that to some extent I possess the trait of agreeableness. This trait
saves the entrepreneur from being headstrong or steadfast.
Conscientiousness
Conscientiousness is the trait of being painstaking and careful and the quality of being in
accord with the dictates of conscience. Most of the respondents agreed with the presence of the
trait with an average score of 5.5 and deviation of 2.4. Again the highest score went up to 7. The
trait is reflected in the statements which prove that entrepreneurs consider their business as their
own babies. One cant be unfair to ones children. Though morality was not a part of propositions
made for this dimension, many respondents showed a degree of sentimental attachment to their
business enterprises. Sticking to conscience is made necessary by the natural uncertainty, which
demands sincere behavior. Almost all the respondents attributed luck or fortune to be one of the
factors for the success of their enterprise. A majority of respondents held the belief that to be
successful one needs fortune and Gods mercy, and to avail this, they need to work according to
their conscience. However, the respondents who scored low on this, particular dimension said that
being practical was more important than getting sentimental. Some even said that the business of
business is doing business only. A high value of standard deviation justifies these two opposite views.
Openness to Experience
This is the most important dimension or the dominant dimension as the survey reveals. An
average score of 6.8, along with a small standard deviation of 0.9, reflects the importance and
consistency of thought for this particular dimension among the respondents. Entrepreneurship is all
about being open to experience. An entrepreneur needs to be resilient all the time owing to the
risky nature of the profile of his career. She is dead if she is not open to experience. Some
respondents state that the basic reason of being an entrepreneur is this trait only. Being open to
new and varied kind of experience helps them to venture into new profit-making opportunities.
Being open to experience enhances their learning capacities and building a knowledge base. Most
respondents admit that their entrepreneurial knowledge comes from their experience only. One
respondent said that every situation is associated with some sort of experience and being open to it
is the only way to stay ahead of the competitors. Some respondents described the trait as openness
of mind or eyes wide open. Some entrepreneurs said that they keep on experimenting to get
experiences. One of the respondents keeps on shifting his supplier to experience every supplier
available in the town and then choose the best. One respondent said that being open to experience
means that one is alert and sense the changes in the environment that may affect his business.
Some respondents said that their fathers were more successful as they experienced a variety of life
experiences, which they couldnt. Also in the community of entrepreneurs, the person with huge
experience wins regards and admiration and enjoys leverage over others.
44
Factors Motivating Women Entrepreneurs

The factors, which motivate women entrepreneurs to start an enterprise can vary depending on
the nature of activityindustry, service and business. Common considerations which can motivate
persons to start a new venture are considered to pinpoint the factors relevant to various groups of
women entrepreneurs. Similarly, discouraging factors in starting and managing the enterprise, and
locational aspects influencing the choice of location are also considered.
The Study brought out the following factors as motivational aspects in order of importance for
starting an enterprise:
1. In respect of industryto be self-employed is the dominant motivation, followed by
achieving higher income, utilizing professional expertise; for serviceproviding employment
to others, followed by prestige status, and profit motive; and for businessto achieve higher
income, followed by to be self employed, and profit motive. Discouraging factors in starting
and managing the enterprise in the descending order of importance are: for industry
discouragement from the family, competition, and labor problem: for serviceinadequacy of
credit, discouragement from the family, and difficulty in getting technical know-how; for
businessinadequacy of credit, labor problem, and discouragement from the family.
Discouragement from the family is, thus, one significant factor standing in the way of
accelerating woman entrepreneurship.
2. Locational factors influencing the setting up of the enterprise in the descending order of
importance are as follows: for industrypower supply, industrial environment, and credit
facilities; for serviceraw material availability, skilled manpower, and credit facilities for
businessmarket facilities, availability of raw material, and skilled manpower.
3. The Study examined the motivational and facilitating factors, and workhome role conflict.
The study revealed that the major aspirations of women entrepreneurs before setting up the
enterprise were to pursue an activity independently, followed by utilizing their skills, talents
and professional expertise. After setting up the enterprise, their aspiration was to run it
successfully; followed by expansion of the enterprise in case of manufacturing and service
sectors; and to set up another enterprise in the trading sector.
4. Women were motivated towards entrepreneurial activity by their education; and educational,
occupational and economic status of husband/father. At the same time, entrepreneurial
activities of women were conditioned by factors such as choice of location of the enterprise,
and line of activity. Size and type of activity were limited by internal factors such as skills,
occupation and economic status of the entrepreneur and her husband/father rather than
opportunities available in the environment.
5. On work-home role conflict, the experiences were as follows: Women entrepreneurs defined
their priorities according to the availability of time, and duties they plan to perform, by giving
due recognition to domestic and enterprise responsibilities. Trading sectors profitability was
affected to a greater extent due to the role conflict of women entrepreneurs than the other two
sectors. The entrepreneurs expressed that the role conflict existed, and they had managed to
overcome it with the cooperation of other members of the family. The women entrepreneurs
did not aspire to improve the business and profitability to very high levels, as they gave
priority to their families including childrens education, and were content with a certain
desirable level of growth of the enterprise.
45
6. The study revealed that push and pull factors operated in relation to the entry of respondents
in business. A large number of younger women had high level of motivation not only by the
desire to become economically independent, and do something creative, but also to achieve
job satisfaction by accomplishing some challenging tasks, and to compete with others, As a
contrast, the elder age groups of women of 40 years and above were motivated mainly by
pecuniary considerations. The respondents exhibited entrepreneurial performance by way of
generating more employment, influencing growth and diversification modernization,
improvements and innovations in their enterprises. The entrepreneurial mobility or Sociopersonal problems faced by maximum number of respondents were: resistance from the
husband/family at the time of starting the enterprise, dual duties, indifferent attitude of society,
non-cooperation from family members male dominance, and limited liberty given to women.
7. The factors which compelled women to enter business ventures. The entrepreneurs were
asked to rank the three options proposed, viz. to achieve the goal through a successful career,
to make fruitful use of free time, and compulsion of family circumstances. The study reveals
that women have started participating in economic activities not due to family compulsions
but mainly to achieve a goal in life by making a successful career, and secondarily to make
fruitful use of free time. It indicates high growth in the economy, and positive development of
the society. Women entrepreneurs, who have given first preference to achieve the goal, are of
a higher level of income as compared to other respondents. This shows that these two features
are positively correlated. Next is to make use of free time by starting a small enterprise. Only
15.07% of women respondents gave the first rank to family compulsion to start their business,
and 47.07% assigned the third rank. Family compulsion is found to be more in the case of
respondents with low level of education.
8. The study revealed that the respondents were motivated to entrepreneurship primarily to
satisfy their socio-economic needs. Satisfying psychological needs of becoming economically
independent, increasing self-confidence, and ability to take risks were considered the
motivating factors for venturing into entrepreneurship. A large majority of them (91.07%)
were motivated to support the family earnings, and by a sense of responsibility and obligation
towards the family. To gain recognition in the family and society also emerged as a
motivating factor (76.92%). The need 10 establish themselves in the society is, thus,
considered an important factor in this study, compared to a few other studies where monetary
attraction was considered the main factor for venturing into entrepreneurship. A sizeable
percentage of entrepreneurs (58.15%) also cited the desire to keep busy, to pursue specific
interests, to be independent, confident, and do something new (48%), as motivating factors.
9. The study reveals that the decision to start a business can not be solely explained by the
entrepreneurial psychological factors alone. It is likely to be based on a combination of
personal, environmental, and social factors, together with triggering events. Further,
education either up to class 12th or above, or vocational training played an important role in
sustaining motivation. Family and business management techniques also contributed towards
sustaining motivation among entrepreneurs. The study advocates a holistic multi-pronged and
multi-agency strategy to sustain and motivate women entrepreneurs.
Challenges Faced by Women Entrepreneurs

The study suggests that in spite of the social support provided to women entrepreneurs, their
share in the total economic activity is minimal. The women entrepreneurs have to face innumerable
46
difficulties and constraints from which their male counterparts are saved. The various challenges faced
by women entrepreneurs are:
1. Socio-Cultural and Psychological Barriers: The traditional role of women, gender identity
with submissiveness, dependence, and obedience do not go very well with the competencies required
for development of entrepreneurship such as assertiveness, independence, risk taking and organizing.
The women are submissive and incapable of independent thinking and decision making due to the ageold discrimination and deprivation, and fragmented education. As a result women cannot and do not
take up entrepreneurship as a whole time job.
2. Financial Constraints: Women entrepreneurs generally face a great difficulty in obtaining
credit for a number of reasons. Firstly, they do not have adequate saving of their own which is
required as equity payment to get loan. Secondly they do not usually have any assets or property to
show as collateral for loans as most of them are involved in domestic activities. They also lack
marketing skills to put forward a viable business plan. It is most likely that a typical woman
entrepreneur generally starts her venture late after she is 35 years, and her biggest business startup
problems are finance, credit and lack of business training. Her greatest operational problem is lack of
experience in financial planning. The female entrepreneurs experience varying business problems,
particularly problems with weak collateral positions, obtaining credit and overcoming societys belief
that women are not as serious as men about business.
Though financial assistance provided by banks is sufficient, procedures and
formalities
are
barring many women entrepreneurs to obtain the finance from organized sector. Though guideline for
banks to sanction loan are gender-blind, they are not gender neutral. The most of the local banks have
to see the capacity of the organization, which is based on the prior experience of the entrepreneur,
collateral, market demand beyond local market, and credit lending history. To succeed in securing a
business loan, the woman must be beyond child- rearing age, have sufficient presence with business
community, have considerable experience in management or relevant technical skills with her own
collateral and have access to start a business that is needed within the local context.
3. Lack of Access to Technology: Lack of adequate training also acts as a barrier to access the
latest and cost-effective technology, which makes their enterprises less competitive. In the low income
group, more than 82% of women became entrepreneurs due to economic needs and of them, more than
50% were not even graduates, as a result of which they could not avail the advantages of the latest
technology.
4. Managerial Constraints: The poor location of the unit, tough competition from large and
established units, lack of transport facility and difficulty to afford own vehicle are some of the
common problems faced by women entrepreneurs. Family responsibilities, lack of mobility, limited
choice of ideas, and low level of production, all together lead to managerial constraints. It is stated that
lack of business training and low level of experience in general management positions affect the future
growth of the organization, especially if the business is labor-intensive.
5. Lack of Access to Information Dissemination: All these mentioned problems also lead to lack
of adequate information about market trends, latest technology, various schemes of assistance, etc.
6. Lack of Marketing Facilities: It is found that generally the enterprises run by women are of
local nature catering to the local market without any proper market research of the profitability of the
venture, which constraints the marketing of their products. Because of lack of market exposure,
insufficient industrial awareness and low mobility, a majority of women entrepreneurs grow at a very
low pace.
47
Marketing of products is considered to be one of the weakest links of the entire production activity undertaken by women entrepreneurs. Marketing essentially requires research about potential
markets, to identify customers and implement different business strategies such as market survey,
product launching and advertising, to tap them. Marketing of any product mainly requires mobility,
confidence, and competency, which were traditionally confined to men. Women entrepreneurs mainly
suffer from this lacuna while marketing their products. Secondly, as most of the women enterprises are
small-scale enterprises; their market reach is small consisting mainly of local markets. They face the
difficulty in finding potential market and identifying customers. Due to paucity of funds and lack of
technical knowledge they cannot invest in packaging, printing, labeling and advertisement of their
products. They also face the problems of interacting with customers due to social barriers.
7. Growth Constraints: The growth rate of the ventures started by women is slower than those
owned by men. It is stated that compared to men, women entrepreneurs tend to set lower business size,
a threshold beyond which they prefer not to expand as they are more concerned about the risks
involved in the fast growth. The women entrepreneurs who are pulled by recognition and opportunities
for higher growth and prospects show higher growth as compared to the women who are pushed into
entrepreneurship due to economic necessity. Women-owned ventures are especially affected by
conflict between home and family demands and these have inadvertent implications on growth.
The growth expectancies for men are significantly and positively associated with outside advice
through networking whereas growth expectancy for women entrepreneurs is significantly associated
with prior experience. As fallout of all these constraints, women entrepreneurs suffer from Low scale
of operations, poor quality of products, higher vulnerability to sickness and poor implementation of
proper strategies.
Conclusion
In this paper, entrepreneurship is presented as a concept as per contemporary and classical views.
Attempt has been made to define entrepreneurship. Based on the study, an entrepreneur can be
understood as someone who is employed under nobody and starts or buys a business unit and
nourishes it by his/her own mental energies like ambition, love for risk and creativity. Personality of a
women entrepreneur has been analyzed through the Big Five model and the two traits, extrovertness
and openness to experience, which have been found dominant in the women entrepreneurs. However,
the presence of other traits such as agreeableness, neuroticism and conscientiousness cant be
neglected. Developing on these two dominant traits can help entrepreneurs build successful carriers.
Socio-cultural, psychological, Financial Constraints, Lack of Access to Technology, Managerial
Constraints, Lack of Access to Information Dissemination, Lack of Marketing Facilities, Growth
Constraints are the factors which a women entrepreneur generally faces and she has to any how
overcome aforesaid constraints.
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____
A Study of Globalization to
Glocalization of India and its
Future Outlook
CHAPTER
5
Dr. Arvind Kumar Singh

Ph.D, M.B.A., M.Com., (UGC) NET
Associate Prof. Amity University Lucknow Campus,
Lucknow, INDIA
Email: aksingh12@lko.amity.edu
Ms. Nancy Sharma,

M.B.A, (UGC) NET
Research Scholar, Shri Mata Vaishno Devi
University, Katra Jammu, INDIA
Email: nancysharma_2009@rediffmail.com,
Mr. Karan Veer Singh

M.B.A, (UGC) NET
Assistant Prof.
Rameshwram Institute of Technology and Management,
Lucknow, INDIA
Email: karanveersingh011@gmail.com
INTRODUCTION
The vision of glocalization is focused on a brighter future, while remaining firmly rooted in
current realities. Glocalization is the notion that removes the fear from many that globalization is like
a tidal wave erasing all the differences. A number of books and articles on the subject of globalization
give the impression that it is a force that creates a uniform world, a world where barriers disappear and
cultures become amalgamated into a global whole. The tensions and conflicts between cultures are
nothing but the problems of a transitory phase. Ironically, the phase of transition has been around for a
long period of time. And as we have entered the third millennia many of the age-old problems of
differences of cultures and religion remain. Glocalizaton does not promise a world free from conflicts
and tensions but a more historically grounded understanding of the complicated yet, pragmatic view
of the world.
Glocalization is business jargon for the adaptation of a product or service specifically to each
locality or culture in which it is sold. The term first appeared in the late 1980s in articles by Japanese
economists in the Harvard Business Review.
According to the sociologist Roland Robertson, who is credited with popularizing the term,
glocalization describes the tempering effects of local conditions on global pressures. At a 1997
conference on "Globalization and Indigenous Culture," Robertson said that glocalization "means the
simultaneity the co-presence of both universalizing and particularizing tendencies."
A combination of the words "globalization" and "localization" used to describe a product or
service that is developed and distributed globally, but is also fashioned to accommodate the user or
A Study of Globalization to Glocalization of India and its Future Outlook
51
consumer in a local market. This means that the product or service may be tailored to conform with
local laws, customs or consumer preferences.
"Glocalization" is an historical process whereby localities develop direct economic and cultural
relationships to the global system through information technologies, bypassing and subverting
traditional power hierarchies like national governments and markets.

The world urgently needs a more comprehensive approach to international stability one which
contends with both the effects and the nature of globalization, which addresses socio-economic
imbalances and cultural differences. By creating a new socio-economic balance, glocalization will
have far-reaching benefits for both developed and developing countries, ensuring a more secure and
stable global environment to bring about peace.
The research pursued the objectives to examine the glocalization concepts in Indian aspects; to
confer the prerequisites, core value and policy matter for glocalization and to identify the principles of
globalization in the light of business challenges.
To study the phase of India- Moving from Globalization to Glocalization
To examine the challenges and opportunities prevailing in India due to the presence of
Glocalization
To analyse the strategies of MNCs who entered in India with the objective of Go Glocal
Need of the Study

Globalization marked its appearance with the objective of creating open economies, the world
that will be free from trade and commerce barriers and the one that will reflect global network of
communication. Globalization often reflects increased connectivity and thus increased
interdependence of the global markets. When businesses expand their operations into different
cultures or countries, the people that make up their audience changes based on culture, language, and
the political-judicial landscape that they find themselves operating in.
Now the people require much more comprehensive approach to international stability one
which contends with both the effects and the nature of globalization, and which addresses socioeconomic imbalances and cultural differences. Now the question is what next after globalization and
how the same will be implemented to give the customers a personal touch. At a 1997 conference on
Globalization and Indigenous Culture, Robertson explained that glocalization means the
simultaneity- the co-presence of -both universalizing and particularizing tendencies. There are
plenty of popular examples for successful Glocal enterprises; among the best-known are
McDonalds and KFC. The reasons of mine taking this research area is:
Diversity is the essence of social life.
Globalization does not erase all differences.
Glocalization is the notion that removes the fear from many that globalization is like a tidal
wave erasing all the differences.
The people of India still think that India is a Globalized nation not Glocalized one.
India is one of the fastest growing economies of world and still there are many sectors which
are new to Glocal concept.
52
The pace with which Glocalization is marking its entry in India is very slow.
Glocalization does not promise a world free from conflicts and tensions but a more
historically grounded understanding of the complicated yet, pragmatic view of the world.
Literature Review
In an attempt to bridge the global vs. local debate that rages across many disciplines, some
academics and practitioners have been promoting an integrated internationalization strategy.
Promoted as the ideal, an integration strategy helps both generate efficiencies through product and
process innovations and respond to particular markets (e.g. Bartlett & Ghoshal, 1998; Begley & Boyd,
2003; Belanger, Berggren, Bjorkman, & Kohler, 1999). According to Robertson (1995), this
integration of global consistency and local flexibility can be captured in the concept of glocal, and
is utilized at multiple levels such as within networks, companies, and individual managers (e.g.
Ghoshal & Bartlett, 1990; Onsager, Isaksen, Fraas, & Johnstad, 2007; Ritzer, 2003; Robertson, 1995).
While many companies have been employing the glocal or local worldwide strategy for the past
few decades with varying success (Bartlett & Ghoshal, 1998; Immelt, Govindarajan, & Trimble,
2009), there is little evidence to suggest whether this ideal strategy is also used for CSR and whether
it is in fact ideal.
Glocalization (a neologism of globalization and localization) has emerged as the new standard
in reinforcing positive aspects of worldwide interaction, be it in textual translations, localized
marketing communication, socio -political considerations, etc. Its decorum is to serve a negotiated
process whereby local customer considerations are coalesced from the onset into market offerings via
bottom -up collaborative efforts. Cultural, lingual, political, religious and ethnic affiliations are
simultaneously researched and integrated into a unified holistic solution. In this manner, the intended
market is given a stake in the overall process and not just the mere end result (Sassen, 2000).
Robertson conceptualized globalization in the twentieth century as the interpenetration of the
universalization of particularization and the particularization of universalism (Robertson, 1992:100
emphasis in the original). Khondker (1994) building on Robertsons framework argued that
globalization or glocalization should be seen as an interdependent process. The problem of
simultaneous globalization of the local and the localization of globality can be expressed as the twin
processes of macro-localization and micro-globalization. The author Thomas Friedman defines
glocalization as the ability of a culture, when it encounters other strong cultures, to absorb
influences that naturally fit into and can enrich the culture, to resist those things that are truly alien,
and to compartmentalize those things that, while different, can nevertheless be enjoyed and
celebrated as different (Friedman, 1999). According to Coca-Colas former chair Douglas Daft The
world had changed, and we had not. The world was demanding greater flexibility, responsiveness and
local sensitivity, while we were further consolidating decision making and standardizing our
practices. The next big evolutionary step of going global now has to be going local (Ball, 2003).
Ritzer in discussing glocalization has convoluted term grobalization to refer to what he calls
growth imperatives [pushing] organizations and nations to expand globally and to impose
themselves on the local (2004:xiii). For Ritzer, globalization is the sum total of glocalization and
grobalization. In this context, the term Grobalization can be explored further by the researchers
as a new buzz in world economy.
53
The study has covered various literatures on globalization, localization, glocalization with respect
to India. A Library research method (Archive) has been used in this study. Different books, journals,
periodicals and online papers have been observed by the researcher to find out different issues in
global business dimensions in this connection. Mostly secondary data has been compiled in this study
and this data has been collected from focused countries literatures, textbooks, e -journals, government
publications etc.
Conceptual Framework
The term Glocalization has emerged recently to observe the impact of globalization on the local
economies. This has affected the development and growth of economic activities and opportunities
across the regions of India. There have been quantitative and qualitative shifts in the employment and
self-employment opportunities and quality of life across the regions of the country. At the same time,
the volatility and disparities in socio-economic performance of regions of India has also increased.
Further, global financial crisis has also adversely affected the regional and overall performance of
the nation and regions of the world at large. Without understanding local cultures, traditions, and
lifestyles, multinational companies will not be able to compete in different markets. Glocalization
empowers local communities, linking them to global resources and facilitating initiatives of peace and
development, while providing opportunities for the local communities to direct positive social change
in the areas that most directly affect them.
Glocalization is a strategic route adopted by organizations determined to lead and conquer
markets beyond their cultural and geographical boundaries. Organizations that have managed to
efficiently align and synergize their core global vision vis--vis their cross border market specific
visions and mission have achieved leadership not just locally but globally. Getting the feel for
glocalization in India is now seen as an efficient approach to build brand image and a way to generate
long-term brand loyalty.
Characteristics of Glocalization
Utilizing global experiences or a global brand name, and differentiating the offer in order to
appeal to local markets.
Operates within a global market and local market niches.
Integrating both globalism and localism
Integrating quality and values in a product, that gets sold in large quantities.
High notoriety of the brand.
A glocal product / service can face competition from both local and international brands in a
better way because it meets certain local needs or preferences, at lower costs due to the global
edge of the company
Strategies of Glocalization
The following table presents a framework that focuses on five marketing strategies available to a
firm contemplating doing business on a global basis. A firm might decide to either standardize or
localize its products, either standardize or localize its communications programs, or combine the two.
The decision framework range from a company incorporating a global strategy (standardizing both
54
product and communication program) to developing a completely local strategy (customizing both
the product and communication program) for each unique market (Schiffman, Lazar Kanuk, 2009)
PRODUCT STRATEGY
Standardized Product
Localized Product
In Indian Scenario:
COMMUNICATION STRATGY
Standardized communications
Localized communications
Global Strategy:
Glocal Strategy:
Uniform Product
Uniform Product
Uniform Message
Customized Message
Global Strategy:
Glocal Strategy:
Uniform Product
Uniform Product
Uniform Message
Customized Message
Glocal Strategy: Uniform Product/Customized Message
In other words, successful corporations must develop a glocal strategy, by utilizing their global
experiences and then customizing and tailoring their services and products in such a way that would
appeal to local markets. This should not apply just for product design or communications, as presented
above; it has to incorporate branding and all of the seven variables from the marketing mix, whenever
possible.
Approach to Glocalization
A primary example of the glocal approach is the We Are the Future program, which aims to
secure a better future for children and youth in conflict and post-conflict areas. The initiative,
officially launched on 16 May 2004, is a joint-vision of the Glocal Forum and the Quincy Jones Listen
up Foundation, with the support of the World Bank, many United Nations agencies and private and
public sector companies.
Programs carried out utilizing a glocalization approach require human resources with specific
skills and technical capacities, primarily at the local level. To spread glocalization, it is therefore
fundamental to promote training, skill creation and actual empowerment of actors, including local
administrations, youth, NGOs and CBOs.
Best suited examples in India

Beverages (CocaCola): USA (1886), India (1993): Number 1 in Beverages, 70th rank (Fortune
500, 2011): Coca-Cola entered into India in 1993 after a 16 year absence since 1977 and continued to
struggle and crack the Indian market in terms of profit until 2006 16. It recognized that a one stop
solution or a single global strategy wont serve the purpose and hence local executions were the
elements thought off by Coke. Its brand localization strategy was with reference to the two Indias.
India A: Life ho to aisi This segment represented metropolitan and larger towns which
account for 4% of the countrys population. This audience gave priority to their social bonding and
aspirations and hence Coca-Colas tag line Life ho to aisi suited their needs and aspirations.
India B: Thanda Matlab Coca-Cola - includes small towns and rural segment which account
for 96% of Indias population which needed out-of-thirst quenching ability to be fulfilled. Local
language and idioms appropriately used by Coca-Cola in its advertising campaigns added the flavor to
the marketing plan. Thanda means cool which also signifies cold beverages and on translation
Coke means refreshment suited the needs of the target segment.
55
Local employment and corporate social responsibility with focus on community and environment
related was another manner in which Coca-Cola managed its foray into the Indian market and made
India accept this global giant.
Food Services (McDonalds): USA (1940), India (1996): Number 1 in the food services, 111th
rank (Fortune 500, 2011):The wide range of economic reforms in 1990 s and Indian government
liberalizing policies in India and the huge consumer market (300 million consumers) facilitated
McDonalds to venture into India. The first Indian outlet by McDonalds was opened in October 1996
in Vasant Vihar which is an affluent residential colony in New Delhi focusing on the target segment of
young people, children and young parents. And as of November 2004 the total outlets have been 58
mostly in the eastern and the northern part of India with plans of opening more than 90 in the coming
three years span. The lesson to be imbibed by other food service companies from McDonalds is that
how could they successfully sold their hamburger chain in the cultural zone of India which is
dominated by non-beef, no pork, fully vegetarian and regional food tastes and moreover in a market
where cow is sacred. Thus the idea of replacing its core product which is beef based Big Mac into
mutton based Maharaja Mac in India was conceptualized which again caused a serious concern in
terms of marketing a burger which is made other than beef. But the mutton burger did show
tremendous hit and the company now markets other products to its growing Hindu clientele. Thus
building brands in India was not an easy go for McDonalds Success Mantras in India with specific
focus on cultural sensitivity:
Emphasis on Local Management: set up joint ventures with two local entrepreneurs in
Mumbai and Delhi on 50:50 basis.
Politically correct strategy: Right from beginning beef and pork was a complete no-no
considering Indian population to be 80% Hindus who consider cow as sacred and 150 million
of Muslim population who do not eat pork.
Employment Opportunity: Every expansion of McDonalds in India is well accepted by the
Indian government.
Green Sensitivity: McDonalds have constituted a special fund to support green initiatives
which is addressed by India prominently.
Corporate citizenship: social responsibility and giving back to Society has been promisingly
undertaken by McDonalds through various charitable and community programs.
In a nutshell, the premier American fast food culture as indicated by McDonalds fits well with
the Indian socio-cultural landscape.
General Merchandisers (Wal-Mart): Arkansas (1962), India (2007): Number 1 in general
merchandisers, 1st rank (Fortune 500, 2011): Wal-Marts positioning strategy Always low prices
targets middle-class and lower-middle class customers (300 million approx.). Localization of the
product mix being one of the prime corporate values Wal-Mart holds, discount retailing has been a
multi-local business agenda of the company with a local partner - Bharti Enterprises, local government,
local purchasing power, local economies of scale and local logistics. This local game logic was the
driving force for Wal-Marts success. Wal-Mart opened its first store in 2007 in India and as per the
company; their policy has always been At Wal-Mart, we go to great lengths to ensure our
international stores reflect the local needs and wants of our customers. Hence local retailing always
requires a multi-local business environment which Wal-Mart has encashed on in India after getting a
success hit into Mexico market and by committing mistakes into its non-US market foray like Brazil,
Hong Kong, Korea etc.
56
Food Consumer product (Kellogg): Michigan (1906), India (1994): Number 5 in Food
consumer product, 199th rank (Fortune 500, 2011): Kellogg Company ventured into India in
September 1994 with cornflakes, wheat flakes and Basmati rice flakes as its initial offering. Its
products failed in the Indian market despite continuous support in terms of managerial, financial and
technical. This concept of eating cornflakes as a breakfast cereal was an unimaginative proposition for
the Indian market that would prefer some hot vegetables as their breakfast menu. Indians have the
habit of having hot or lukewarm milk which makes the flakes soggy as opposed to the West. Indian
women were used to the breakfast palate of being hot, fresh and savory. This made Kelloggs change
their strategy and began to innovate with the new product development of wheat and rice cereals with
flavors appealing to the Indian local cultural habits. The launch of Chocos wheat scoops coated with
chocolate and Frosties with sugar frosting made Kellogg realize the importance of indianizing its
products. Thus studying the local tastes closely is the only mantra while going global which Kelloggs
missed studying specifically the anthropology and the cultural expectations. Now with the breakfast
routine change with the invention of new products, cornflakes appetite too started growing.
Furthermore Kelloggs realized that the American culture would never be accepted by Indians and
hence they started adapting, modifying and sculpting its business proposition in India.
Motor Vehicles (Toyota): Japan (1945), India (1997): Japanese auto giant Toyota foray into
India was worth appreciably. It clearly understood the means to enter the Indian market which was
focus on the middle and upper class segment as the economy and small car segments were already
crowded with less opportunity to do business. Also with the economy booming and the rise of
purchasing power, consumers were willing to upgrade their models and hence wouldnt mind paying
extra for a better and premium product. With this organizational mission and goal, Toyota launched
Camry and Corolla which are the middle and higher car segments which have been a great success for
the company. Thus affordability was the driving success factor for Toyota which was understood
well pertaining to the Indian customers. Toyota focused on minivans which had very little competition
and targeted large and bigger families. This move facilitated Toyota to have the control over the top
share of automobiles.
Music TV Network (MTV): USA (1981), India (1996): India is a great venue to conduct
business in Television because of the countrys vast middle class segment in the tantalizing market.
MTV s passage into India is a lesson well learnt considering the population of 1 billion with
majority in the poor segment and the middle class growing exponentially. With the economical growth,
advertising also grows rapidly as a result the first time purchasing and consumption of credit cards,
TV sets, mobile phones, CD players, and automobiles are also on rise. India enjoys and celebrates its
democracy in the television and print media with its flamboyant film and music industry unlike China
where-in the central-government tightly controls television and print. Hence in search of growth, we
have the global entertainment giants who are maturing in the US venturing into India and Asia. The
streets of Mumbai being the nation s entertainment capital and India having a very chaotic, noisy and
overcrowded media landscape, it was very difficult for media to navigate freely. MTV India was well
known for two main reasons:
Its existence in doing business since 1991, much before any of its competitors arrived.
MTV being the best global TV network (building original channels) having performed better than
CNN, [V] or any other channel in terms of spreading its brand and conducting local programs with
local staff in every nook and corner of the world.
57
Cultural fit: MTV is programmed differently in different countries. China reflects upon
family values, nurturing and a lot of romantic songs; Indonesia consisting of Islamic population
calls on conducting prayer 5 times a day on the MTV channel; Brazil follows with a sexy feel;
Italy depicts style, elegance and food shows; Japan being tech savvy; and MTV India focuses on
color, self-efficacy, full of humor and huge street culture. The fact remains that of the entire
employee strength working for MTV International, only around 10% would be Americans. MTV
being a national music channel now also competes with regional music channels showing music in
Tamil, Telegu and Punjabi 5.
Electronics & Telecommunications (LG Electronics): Korea (1958), India (1993): Extensive
market research, product localization and aggressive and large scale advertising campaigns has been
the key drivers for Korea s LG Electronics in India to be successful even during its early phase on
entering into the Indian market. Specifically speaking of the aggressive advertising campaigns, the
cost was borne by its headquarters in Seoul and not by increasing the price of the product which gave
LG huge dividends. Great deal of support from its corporate office to its local subsidiary in India was
the advantage LG had to run its operations into the Indian market. Another strategy that worked well
for LG was that its Korean firm provided huge comfort for Korean expatriate employees/Managers
living in India. Korean Villages were created and Korean speaking cook/maid was arranged from
Korea which helped them to adapt more flexibly into the Indian market thereby increasing their
productivity and motivation 13.
This clearly indicates that Investing in one s brand is very important which every Head
Quarters should understand before foraying into any other market which Korea s LG Electronics has
fully acknowledged and practiced 16. LG focuses on customizing its products based on the customer
lifestyle. For e.g. Since in many Indian families, washing machine is operated by house maids who are
either illiterate or can t read in English, LG's alternate strategy was to incorporate speech technology
that allows the instructions in the various local languages. Such innovations that fit every customer s
lifestyle helped LG India to connect to its customers
Tools of Glocalization in Indian Economy

Information and Communication Technology (ICT) is a glocal tool of particular importance,
when one considers the capacity of ICT to connect local realities through worldwide communication
to global resources.
ICT can foster relations and contacts between cultures through creating a virtual proximity that
promotes mutual understanding and a culture for development that provides an opportunity for
individuals to sustain a more peaceful reality. A less costly alternative technology that allow for more
technological independence and autonomy is envisaged. In this way, a kind of digital equity can be
created, based on simpler and less expensive hardware and on the free (non-proprietary) use of
software.
Prerequisites for glocalization in India

Every concept has some fundamental prerequisites that assure its follower who follow this
concept for his own interest. According to glocal forum , the prerequisites for glocalization are as
follows:1. Reform of traditional diplomacy
2. Peace and development
58
3. Centrality of cultural issues

4. Municipal governance
5. Resource management
6. Civil society and democratization
7. Public funds
8. Private resources
9. Financial mechanisms
10. Innovative sectors
11. Capacity building
Benefits of Glocalization
Phillip Kotler elaborated certain advantages of glocal marketing (Kotler, 2009), as follows:
Consumers feel that the brand is relevant to them and is tailored to their needs and wants.
There is harmony and balance between the different levels of marketing activity: strategic,
tactical and operative.
Brands gain greater market share
Shrink production cycles with near-simultaneous deployment in multiple languages and
regions.
Achieve higher acceptability among diverse learners.
Gain clear competitive cost advantages from outsourcing.
The benefit of single point contact and accountability with 24/7 monitoring access.
Attracts more consumers in the market as it is flexible, therefore higher profits.
Adapts to different countries and avoids ethical issues. Avoids ethical costs.
Limitation of Glocalization
However not everyone is happy with these changes. Sociologists in India are closely scrutinizing
these changes that are taking place with globalization. Glocalization is slowly but steadily eating away
treasured indigenous industries such as the hand woven and other prized local cottage industry which
were bread and butter to most Indian families till recently. Glocalization spend more time researching
other markets. And If not successful, it is waste of money for the firm.
Conclusion
In this paper we discussed how global brands are rethinking their one-size fits all strategy, by
approaching glocalization strategies. The glocalization policy is unique in that it takes a city-to-city
approach by which local actors act as magnets for the resources generated at a global level and utilize
these resources to create opportunities and positive change in the local community.
59
References
1. Ball, D.A. et al, (2003), International Business: The Challenge of Global Competition ninth edition,
Boston: McGraw-Hill/Irwin, p. 478
2. Friedman, T.L., (1999), The Lexus and the Olive Tree, NY: Farraar, Straus and Giroux, p. 236
3. Arrighi G. (2000), Globalization and Historical Macrosociology, in J. Abu-Lughod (ed.) Sociology for
the Twenty-First Century: Continuities and Cutting Edges, Chicago University Press, Chicago
4. Boyer R. and D. Drache (1996), States Against Markets: The Limits of Globalization,
Routledge,London.
5. Foglio, A. And Stanevicius, V., (2007), Scenario of glocal marketing as an answer to the market
globalization
and
localization.
Vadyba/Management,
available
online
at:
http://www.leidykla.vu.lt/fileadmin/Vadyba/16-17/40-55.pdf
6. Glocalization: research study and policy recommendations, Edited by cerfe incooperation with the
glocal forum and the think tank on glocalization, Rome 2003, www.Glocal forum.org
7. Harold J. (2001), The End of Globalization: Lessons from the Great Depression, Harvard University
Press, Cambridge, Mass.
8. Holt, D.B., Quelch, J.A., Taylor, E.L., (2004), How Global Brands Compete, Boston: Harvard Business
Review, September Issue
9. Jeannet, J-P. and Hennessey, H.D. (1992), Global Marketing Strategies, Houghton Mifflin Company,
Boston, MA.
10. Khondker H.H. (2004), Glocalization as Globalization: Evolution of a Sociological Concept,
Bangladesh e-Journal of Sociology, V.1, No.2, [12-20].
11. Khondker, Habibul (1994) Globalization Theory: A Critical Analysis Department of Sociology
Working Paper, National University of Singapore.
12. Kotler, Ph. et al., (2009), Marketing Management European Edition. Harlow, England: Pearson
Prentice Hall Publishing, pp. 467 - 468
13. Levitt, T. (1983), ``The globalization of markets, Harvard Business Review, Vol. 61 No. 3,May/June,
pp. 92-102.
14. Quelch, J.A., (2003), The Return of the Global Brand, Boston: Harvard Business Review, August Issue
15. Ritzer, G (2000) The McDonaldization of Society, Thousand Oaks, California: Pine Forge
____
CHAPTER
6
Project Management Systematic

Approach from Planning to
Handover of the Project
Dr Sharad Chaturvedi
PhD, MBA, B. Tech
Associate Professor - Operations
Fortune Institute of International Business, New Delhi
Plot no 5, Rao Tula Ram Marg, Opp R R Hospital
Vasant Vihar, New Delhi 110057
E-mail: Sharad.chaturvedi@fiib.edu.in, sharad2311@gmail.com
INTRODUCTION
Project management best practices have been captured, explained and evangelized for more
than 20 years. The first formalized methodology came in 1983 through the Project Management
Institute (PMI), with its Project Management Book of Knowledge (PMBOK), as a white paper, in an
attempt to document and standardize generally accepted project management information and
practices.
The first edition was published in 1996 followed by the second edition in 2000.[1] In 2004, the
PMBOK Guide Third Edition was published with major changes from the previous editions. The
latest English-language PMBOK Guide Fifth Edition was released in 2013.
Guide to the Project Management Body of Knowledge Fifth Edition provides guidelines for
managing individual projects and defines project management related concepts. It also describes the
project management life cycle and its related processes, as well as the project life cycle.[2]
The Guide recognizes 47 processes that fall into five basic process groups and ten knowledge
areas that are typical of almost all projects.
The Five Process Groups Are

1. Initiating: Setting up the project for success by identifying the right team and scope, as well
as determining the relationship between the project and its alignment with the organizations
overall charter.
2. Planning: Developing the relevant resources, timelines and milestones, and mapping project
delivery to business priorities (i.e., risk management, communications, quality, cost/budgeting,
duration and sequencing, external dependencies).
3. Executing: Assigning the project team and distributing information to ensure the proper
activities are undertaken. This process also includes ensuring quality assurance methods are in
place to address change management, organizational updates, possible changes to the plan, etc.
Project Management Systematic Approach from Planning to Handover of the Project
61
4. Monitoring and Controlling: Ensuring the resulting product maps back to the original plan,
and risk from uncontrolled external actions is mitigated. CA Clarity PPM can have a
significant impact by setting up a secure infrastructure to:
(a) Monitor quality, costs and schedule
(b) Manage stakeholder relationships, risk and contract monitoring
(c) Identify discrepancies (or variations) within the project schedule
(d) Provide the PMO more control
5. Closing: Making sure you have delivered everything expected of the project. Once you close,
you need to review the project vis--vis the plan and likewise ensure contract closure.
The ten knowledge areas are

1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
10. Project Stakeholders Management (added in 5th edition)
Each of the ten knowledge areas contains the processes that need to be accomplished within its
discipline in order to achieve an effective project management program. Each of these processes also
falls into one of the five basic process groups, creating a matrix structure such that every process can
be related to one knowledge area and one process group.
Project Definition(s)
As per the definition of PMBOK Guide, fifth edition, Project is defined as a temporary endeavor
undertaken to create a unique product, service of result.
Thus, one can further elaborate about project as :
A project has a set of objectives.
A project has an organization structure.
A project has resources used to create the deliverables or products.
These products may be tangible or intangible.
The end-product all deliverables, must have the potential, or capability to realize business
benefits.
Each project is unique in some way.
62
Project Management Defined

As per PMBOK, Project Management is application of Knowledge, Skill, tools and techniques to
project activities to meet the project requirements.
Project Management is accomplished through the appropriate application and integration of the
47 logically grouped together project management processes, spread across the five Process Groups.
Proven Benefits of Project Management

Provides clear roles, responsibilities, activities and schedules for team efforts
Includes a method for considering the consequences of decreasing or increasing funds,
resources, time, or quality
Specifies a detailed plan of how to achieve our objectives
Assists in the realistic assignments of tasks and responsibilities to team members according to
the skills and resources available
Gives structure to communicating the progress of projects
Allows teams to identify potential problems and take preventive action early
Keeps management officers and project stakeholders well-informed and supportive
Helps manage pressure for expanding the scope of projects without proper decision criteria
and analysis of changes
Important Characteristics of Real Life Projects

Accomplish with shared resources often only available on part-time basis
Require cross-functional team work
Involve uncertainty and are subject to change during execution
Subject to specific deadlines and time and resource constraints
Project manager often lacks functional authority over team members
Diverse Skills Needed for Project Management

Planning skills: the ability to plan the use or organizational resources of time, personnel,
budget, facilities, equipment, and supplies to achieve organizational objectives.
Technical skills:the specific professional technical skills needed for a project.
People skills: the ability to manage and motivate people who will implement the project
activities, communicate effectively with stakeholders, and resolve conflicts and interpersonal
problems.
Execution of Project Management

To successfully deliver the project following steps are required to be carried out :
1. Define the Project: The first step is project planning, defining the project scope is the most
critical step. If the project manager starts the project without knowing about what is supposed to be
delivered at the end to the client and what are the boundaries of the project, there is a little chance to
63
success. In most of such instances, the project manager actually does not have any chance to success
with this unorganized approach.
As project manager, if you do not do good job in project scope definition, execution of project
management successfully is almost impossible.
The main purpose of the scope definition is to clearly describe the boundaries of the project.
Clearly describing the boundaries is not enough when it comes to project. You need to get the client's
agreement as well.
Therefore, the defined scope of the project usually included into the contractual agreements
between the client and the service provider. SOW, or in other words, Statement of Work, is one such
document.
In the project scope definition, the elements within the scope and out of the scope are well
defined in order to clearly understand what will be the area under the project control. Therefore, you
should identify more elements in detailed manner and divide them among the scope and out of scope.
How to Define the Project Scope

When the project is about to be funded, deliveries and objectives for the project should be clearly
spelled out and documented. There can be a high level-scope statement prepared at this level.
This high-level scope statement can be taken from the initial documents such as SOW.
In case, if you feel that you do not have enough information to come up with a high-level scope
statement, you should then work closely with the client in order gather necessary information.
Project objectives can be used for defining the project scope. As a matter of fact, there should be
one or more deliveries addressing each project objective in the project. By looking at the deliverables,
you can actually gauge the project scope.
Scope allows defining what is inside the work boundaries; the other important aspect is
identifying and clearly defining the out of scope. When you go on defining the out of scope, you will
automatically get an idea of the real project scope. In order to follow this method, you need to have a
defined scope up to a certain level.
Whenever you identify an item for the scope or out-of-scope, make sure you document it then
and there. Later, you can revisit these items and elaborate more on those.
Once you have successfully defined the scope of the project, you need to get the sign-off from the
related and applicable parties.
2. Planning:Project Management plan: Solid project planning is a prerequisite for project
success. Poor planning, meanwhile, can lead to missed deadlines, budget overruns, poor quality
deliverables, frustrated project teams and even project failure.
"Project Management Plan" is one of the key planning documents that fosters project success.
A project management plan is the planning document, capturing the entire project end-to-end,
covering all project phases, from initiation through planning, execution and closure.
A comprehensive plan covers at least the followings areas and components:
1. Overview: Why the project is being conducted and its primary objectives
2. Scope: Business needs, requirements, deliverables, constraints and work breakdown structure
3. Schedule: Activities schedule and project milestones
64
4. Costs: Project budget and its funding approach

5. Quality: Quality measurement and control approach
6. Project team: The people working on the project, their roles and responsibilities
7. Communication: Communication type, channels and the reporting approach
8. Risks: Risk index, methods to identify and evaluate risks, risk mitigation and contingency
planning
9. Procurements: Required procurements and purchase processes
10. Closure: Closure approach, including the deliverables hand-off protocol
11. Changes: Procedures used to track changes in the project
12. Baselines: Scope, schedule and budget baselines
When writing a project management plan, the approach depends again on the project's size and
context.
3. Planning and Scheduling: Task Identification and Work Breakdown Structure (WBS):
A work breakdown structure (WBS), in project management and systems engineering, is a
deliverable oriented decomposition of a project into smaller components.
A work breakdown structure element may be a product, data, service, or any combination
thereof. A WBS also provides the necessary framework for detailed cost estimating and control
along with providing guidance for schedule development and control(3).
A key to successful project scheduling is to identify all the work of the project before you
consider delivery dates and resource constraints. This helps a team objectively identify everything
that needs to be done without subconsciously leaving out real work in order to fit pre-determined
dates.
The WBS step helps accomplish the following key objectives:
Develops an objective, rational view of the amount of work required
Helps team grasp the skills required and amount of resources required for the project
Provides a clear framework for assigning to individuals a clear task definition and delegate
the responsibility for completion
Lays a foundation for analyzing the task dependencies and for isolating and managing
risks
Lays a foundation for developing a bottom-up estimate for the Project Plan
How to Create a Work Breakdown Structure

Creating a work breakdown structure (WBS) helps you be both comprehensive and specific
when managing a project: Thinking in detail is critical when planning your project, but you also
need to consider the big picture. If you fail to identify a major part of your projects work, you
wont have the chance to detail it. A work breakdown structure is key.
Suppose youre responsible for creating and presenting a new training program for your
organization. To get started, youd develop a WBS for this project as follows:
Determine the major deliverables or products to be produced.
65
Ask yourself, What major intermediate or final products or deliverables must be produced to
achieve the projects objectives?
You may identify the following items:
Training program needs statement
Training program design
Participant notebooks
Trained instructor
Program testing
Training program presentation
Divide each of these major deliverables into its component deliverables in the same manner.
Choose any one of these deliverables to begin with. Suppose you choose Training program needs
statement.
Ask, What intermediate deliverables must I have so I can create the needs statement?
You may determine that you require the following:
Interviews of potential participants
A review of materials discussing the needs for the program
A report summarizing the needs this program will address
Divide each of these work pieces into its component parts.
Suppose you choose to start with Interviews of potential participants.
Ask, What deliverables must I have to complete these interviews?
You may decide that you have to produce the following deliverables:
Selected interviewees
Interview questionnaire
Interview schedule
Completed interviews
Report of interview findings
4. Create Network Diagram or Analyze Critical Path Diagram: Critical path is the sequential
activities from start to the end of a project. Although many projects have only one critical path, some
projects may have more than one critical paths depending on the flow logic used in the project.(4)
If there is a delay in any of the activities under the critical path, there will be a delay of the
project deliverables.
Most of the times, if such delay is occurred, project acceleration or re-sequencing is done in order
to achieve the deadlines.
Critical path method is based on mathematical calculations and it is used for scheduling project
activities. This method was first introduced in 1950s as a joint venture between Remington Rand
Corporation and DuPont Corporation.
66
The initial critical path method was used for managing plant maintenance projects. Although the
original method was developed for construction work, this method can be used for any project where
there are interdependent activities.
In the critical path method, the critical activities of a program or a project are identified. These
are the activities that have a direct impact on the completion date of the project.
Task 1
Task 3
4
Start
Task 5
6
8 8
B
Task 2
6 6
Task 9
19
10
4 6
A
D
2
C
8 8
Earliest Completion Time
Task 6
4
Task 10
Task 8 8
5
E
13 13
5
Task 4
End
19
19
6
Task 7
C
13
13
Latest Completion Time
Key Steps in Critical Path Method

Let's have a look at how critical path method is used in practice. The process of using critical
path method in project planning phase has six steps.
Step 1: Activity specification: You can use the Work Breakdown Structure (WBS) to identify
the activities involved in the project. This is the main input for the critical path method.
In activity specification, only the higher-level activities are selected for critical path method.
When detailed activities are used, the critical path method may become too complex to
manage and maintain.
Step 2: Activity sequence establishment: In this step, the correct activity sequence is
established. For that, you need to ask three questions for each task of your list.
Which tasks should take place before this task happens.
Which tasks should be completed at the same time as this task.
Which tasks should happen immediately after this task.
Step 3: Network diagram: Once the activity sequence is correctly identified, the network
diagram can be drawn (refer to the sample diagram above).
Although the early diagrams were drawn on paper, there are a number of computer softwares,
such as Primavera, for this purpose nowadays.
Step 4: Estimates for each activity: This could be a direct input from the WBS based
estimation sheet. Most of the companies use 3-point estimation method or COCOMO based
(function points based) estimation methods for tasks estimation.
67
You can use such estimation information for this step of the process.
Step 5: Identification of the critical path: For this, you need to determine four parameters of
each activity of the network.
Earliest start time (ES) - The earliest time an activity can start once the previous dependent
activities are over.
Earliest finish time (EF) - ES + activity duration.
Latest finish time (LF) - The latest time an activity can finish without delaying the project.
Latest start time (LS) - LF - activity duration.
The float time for an activity is the time between the earliest (ES) and the latest (LS) start
time or between the earliest (EF) and latest (LF) finish times.
During the float time, an activity can be delayed without delaying the project finish date.
The critical path is the longest path of the network diagram. The activities in the critical path
have an effect on the deadline of the project. If an activity of this path is delayed, the project
will be delayed.
In case if the project management needs to accelerate the project, the times for critical path
activities should be reduced.
Step 6: Critical path diagram to show project progresses: Critical path diagram is a live
artefact. Therefore, this diagram should be updated with actual values once the task is
completed.
This gives more realistic figure for the deadline and the project management can know
whether they are on track regarding the deliverables.
Advantages of Critical Path Method

Following are advantages of critical path methods:
Offers a visual representation of the project activities.
Presents the time to complete the tasks and the overall project.
Tracking of critical activities.
5. Crashing & Fast Tracking: Crashing and fast tracking are techniques used in schedule
compression. Schedule compression is used when the desired result is to create output faster than
indicated in the original project, without having to change the project scope. This is particularly
beneficial if a competitor is working on the same type of project and you need to finish first. It may
also be a company decision to complete a project more quickly than originally scheduled based on
various factors.
The two techniques used for this process are referred to as crashing or fast tracking.
Crashing: When the crashing approach is used, any additional costs associated with rushing the
project are reviewed against the possible benefits of completing the project on a faster
timeline. Additional items to consider when using the crashing approach include adding more
resources for the project, allowing additional overtime, paying extra to receive delivery of critical
components more quickly, etc. Crashing only works, when adding more resources will lead to a faster
completion of a project. For instance crashing will not work by adding more resources to "the concrete
in the foundation has to dry for 3 days".
68
Fast Tracking: Fast tracking is applied by re-scheduling various activities within the project to
be worked on simultaneously instead of waiting for each piece to be completed separately. This
method is best used when activities can be overlapped. The risk involved is that problems can occur if
parallel aspects of the project include dependencies. So if you work on design and production at the
same time your risk is that you need to rework production if the design is change half way through the
process.(5)
6. Resource Planning: The project resource/budget plan is a description of how the business
resources will be applied to the project activities. It includes the identification and deployment of the
team's human resources and the planned financial impact of the project on the financial accounts and
reports of the business. Resource/budget planning links with schedule planning and scope planning
since the resources are required to perform the project activities (scope) at a particular time (schedule).
Many organizations have customized tools or templates to assist the project team with
resource/budget planning that are linked to the organization's human resources or financial systems.
Following six resource/budget planning tools or techniques are helpful, depending upon
the uncertainty and complexity of the project. These are the Team List, the Responsibility Matrix, and
the Staffing Management Plan, all of which apply to assigning and managing human resources on the
project. For budgeting, the Spend Plan, the Project Budget, and the Appropriations Request.
Team List
The Team List is a very simple, yet vital, project management tool. This is a list of all the project
team members and appropriate contact information. This is normally the only human resource
planning tool for Simple and Focused projects required
Responsibility Matrix
A responsibility assignment matrix (RAM)(6), also known as RACI matrix(7), describes the
participation by various roles in completing tasks or deliverables for a project or business process. It
is especially useful in clarifying roles and responsibilities in cross-functional/departmental projects
and processes.(8)
The Staffing Management Plan

The Staffing Management Plan is a document or spreadsheet that indicates how the pool of
available program human resources will be deployed across the sub-projects associated with
a Complex program. A Complex program is normally managed by dividing the work into a set of
inter-related Focused and Full-Scale projects. Key individuals and resource pools are likely to be
supporting several of those sub-projects. The Staffing Management Plan indicates how that individual
or pool should allocate their time, for instance 50% to Sub-project A, 30% to Sub-project B, and 20%
to Sub-project C. Also, the Staffing Management Plan indicates how many individuals from the pool
are allocated to each of the Sub-projects.
7. Project Risk Analysis and Management: The PMBOK has defined Risk as, "an uncertain
event or condition that, if it occurs, has an effect on at least one project objective." The objectives are
identified during project initiation and include the major elements of scope or deliverables, key
milestones, budget constraints, or any other aspect of the project identified as key success criteria by
the stakeholders.
69
Project Risk Management is the process or activities associated with identifying risks, analyzing
risks, developing appropriate responses to risks, and monitoring risk triggers. Risk management is a
primary role of the project manager. While other project team members will be involved in all of the
Project Risk Management processes. It is the responsibility of the project manager to ensure that risk
management is done and that risk triggers are being monitored.
Managers can plan their strategy based on four steps of risk management which prevails in an
organization. Following are the steps to manage risks effectively in an organization:
Risk Identification
Risk Quantification
Risk Response
Risk Monitoring and Control
8. Project Monitoring, Evaluation and Control: Even projects that are well designed,
comprehensively planned, fully resourced and meticulously executed will face challenges. These
challenges can take place at any point in the life of the project and the project team must work to
continually revisit the design, planning and implementation of the project to confirm they are valid and
to determine whether corrective actions need to be taken when the projects performance deviates
significantly from its design and its plan. This is the purpose of the Project Monitoring, Evaluation and
Control Phase.
Not surprisingly, the three principle categories of activities taking place during the Monitoring,
Evaluation and Control Phase are:
Project Monitoring
Project Evaluation
Project Control
These activities are intended to occur continuously and continually, taking place through the
entire life of the project (hence the design of the PMD Pro Project Phase Model includes the
Monitoring, Evaluation and Control Phase as a background that extends from the earliest tasks of
Project Identification and Design, all the way through the last tasks of the End of Project Transition
Phase.
Progress Monitoring tracks the operational work of the project. It answers questions like Have
activities been completed as planned? Have outputs been produced as anticipated? Is the work of
the project progressing as projected? At a fundamental level it is a passive process, it changes nothing.
Instead, it tells the project manager where the project performance is in terms of money, time, risk,
quality, and other areas of project progress
Project Evaluation Approaches

When planning for project evaluation activities to include in the Project Monitoring and
Evaluation Plan, organizations should choose their evaluation approach based on their learning
objectives. Three evaluation approaches that are extensively used in the development sector are the
final evaluations, mid-term evaluation, and ex-post evaluations.
Final evaluations are often mandated by a funding agency or required by a development
organizations own policy, would be conducted towards the end of project. Common questions might
include:
70
Did the project succeed at accomplishing the outcomes, goals and impact desired?
Was the project relevant, effective and efficient?
Does the project have the potential to be sustainable in its operations and impact?
Is the theory expressed in the logical framework upheld?
Mid-term evaluations offer the advantage of answering many of the same questions posed
through final evaluations, but also provide the opportunity to supply suggestions to improve the
project efficiency and impact while the activities are still underway.
Ex-post evaluations examine project impact at a defined period of time after project completion,
sometimes a year after the official close of the project. Sometimes called a sustainable impact
evaluation, an ex-post evaluation measures the extent to which project outcomes and impacts have
been realized through participant ownership. Ex-post evaluation findings can be an especially useful
way of using evidence to advocate an improved development approach. For example, an ex-post report
was used by one development organization to help convince a donor to support numeracy and literacy
training within a microfinance program.
Project Control
When reflecting on evolution, Charles Darwin observed that it is not the strongest of the species
that survive, nor the most intelligent, but the ones most responsive to change. Similarly, project
managers must also acknowledge that change will frequently, or nearly always, be required for their
projects to succeed.
These changes are normal, acceptable and (at times) even desirable. Project plans are not
intended to be static documents and care must be taken to ensure they are not considered to be static,
or excessively difficult to change. Project teams need to remember that an implementation plan is a
means to an end, it is not an end in itself! More specifically, the team needs to recognize the pitfalls
that exist when project plans are treated as static documents, including:
A failure to recognize that the original plans are flawed;
A fear of acknowledging to external (and internal) donors that the original plan is no longer
workable;
An unwillingness to revisit the original documents to develop a new and more appropriate
plan; and
A lack of clarity with regard to what process needs to be followed to update project
documents.
9. Project Management Closeout: Project Closeout is the process or activities associated with
finalizing the hand off of the project deliverables to the business team and completing the
administrative aspects of closing the project. Most of the project management activities at this time are
administrative and are unique to the organization. They involve gaining stakeholder acceptance of the
project deliverables, integrating project resources back into the organizations pool of resources, and
capturing any lessons learned from the project for use on future projects.
There are four techniques that have found useful when managing the Project Closeout. This first
technique, Closeout Approach, is an organizing principle for guiding the administrative closeout
activities. The second technique is a Stakeholder Acceptance meeting. The third technique is the
71
development of a Punch List to drive project closure and prevent scope creep. The final technique is
the conduct of a Lessons Learned assessment on the project.
Closeout Approach
The Closeout Approach considers the method that the project deliverables are being hand off to
stakeholders and changes the administrative activity accordingly. In all cases, any supplier contracts
must be closed with the procurement department. However, the internal closeout process of ohter
activities will vary.
Stakeholder Acceptance
A Stakeholder Acceptance is exactly what the name implies. The project team meets with project
stakeholders to review the deliverables of the project and ensure that the deliverables are acceptable to
the stakeholders.
Project Punch List

The Punch List is a technique borrowed from construction projects. When conducting
Stakeholder Meetings, gaps are often identified between what the stakeholders wanted from the
deliverables and what is being supplied by the project team. The Punch List is used to manage the
closure of those gaps. As a deliverables is presented - whether in a Stakeholder Meeting, pilot run, or
Beta test - any gaps or deviations are listed and placed upon the Punch List. The project team then
identifies the cost and schedule impact of completing the Punch List items and they come to an
agreement with the stakeholders concerning which items they must complete and the end point of
those new tasks. Both the stakeholders and the project team manage the effort to the Punch List.
Stakeholders cannot continue to add items and the Project Team must complete all the items on the list.
This technique will quickly drive the project to closure.
Lessons Learned
The Lessons Learned process is usually tailored to the organization. If the organization has
a PMO the Lessons Learned process is normally a formal part of project closeout. When there is no
PMO, often any Lessons Learned activities are done informally if at all. When I conduct Lessons
Learned sessions, I follow a four step process.
Evaluate the Business Case: The first question I ask is whether the project created the
business benefit that was used to justify approving the project. This question is less about how
well the project team did and is much more focused on senior management and the project
selection and approval process. The lessons learned at this point improve the ability of the
organization to select projects and to establish realistic project charters.
Evaluate the Project Plan: This question addresses how well the project manager and project
management team planned the project. It concerns topics like: a) identification of required
activities, b) cost and schedule estimates, c) risk factors, and d) team integration and
communication.
Evaluate the Project Management Methodology: This question addresses whether the
organization's procedures and systems were beneficial for the project or not. It includes asking
questions like:
(a) Are procedures current and relevant?
72
(b) Are checklists and templates current and relevant?

(c) Are the mandated reviews and control points appropriate? and d) Is the PMIS useful?
Evaluate Team and Personal Performance: The team then considers how well they executed
the plan and followed the methodology. This is normally a self-assessment by the team and
can be aided with techniques such as 360 reviews.
Reference
1. A Guide to the Project Management Body of Knowledge, copyright page, edition 2 ISBN 1-880410-125, and edition 3 2004 ISBN 978-1-930699-45-8, and edition 4 2008 ISBN 1-933890-51-7
2. PMI (2012), A Guide to the Project Management Body of Knowledge, 5th Ed.
3. Booz, Allen & Hamilton Earned Value Management Tutorial Module 2: Work Breakdown
Structure, Office of Science, Tools & Resources for Project Management, science.energy.gov. Accessed
27. Dec 2011.
4. http://www.tutorialspoint.com/management_concepts/critical_path_method.htm
5. http://www.project-management-prepcast.com/index.php/freetry-it/free-pmp-tips/pmp-exam-tips/318pmp-exam-tip-crashing-fast-tracking-explained
6. A Guide to the Project Management Body of Knowledge (PMBOK Guide). PMI Standards
Committee, Project Management Institute. 2010. ISBN 1-933890-66-5
7. Jacka, Mike; Keller, Paulette (2009). Business Process
Satisfaction. John Wiley and Sons. p. 257. ISBN 0-470-44458-4.
Mapping:
Improving
Customer
8. Brennan, Kevin (2009). A Guide to the Business Analysis Body of Knowledge (BABOK
Guide). International Institute of Business Analysis. p. 29. ISBN 0-9811292-1-8
____
CHAPTER
7
A Study of Responsible
Management Education: An
Emerging Tool for Sustainability
Ajit Dhar Dubey

Research Scholar,
Department of Business Administration, DDU
Gorakhpur University Gorakhpur India
E-mail: dr.ajit90@gmail.com
ABSTRACT
In a dynamic global business environment, it becomes essential to know basics of correlation
between business, environment, and society. The roles and responsibilities of business at the global
platform are becoming more sensitive and complex. In this context, business management has
widened its scope to incorporate the concepts related to social responsibility and societal
sustainability. New approaches are required to identify solutions towards increasing complexity
and rising interdependence. Organizations have to integrate different tools of management to
synchronize environmental, social, ethical and governance obligations into their strategic designs
and day to day operations. The responsibility and sustainability related issues are embedded into
core business practices. The continuous dialogue with stakeholders has to be planned
systematically. Enterprises require both talented and ethical leaders to tackle the situations for
advancement of organizational goals and fulfillment of legal and ethical obligations towards
shareholders. In addition they are required to be prepared to deal with the total impact and
potential of business as an effective global force in the society. The educational institutions are
involved in this stage of business for creating a meaningful and long lasting change in the conduct
of corporations toward social responsibility and societal sustainability. Academic institutions act
as drivers of business behavior and help in shaping the attitudes of leaders through business
education, research, management development programs, training, and other relevant activities.
This education is useful for value addition. The present paper is an outcome of the survey
conducted to determine opinions of academia and business organizers. These organizations and
academic institutions are located at Sangli District of South Maharashtra. Respondents views
were collected through structured questionnaire specially prepared for the study purpose. It was
deduced from this study that, academic institutions have the potential to generate an environment
for sustainable development of both organizations and society.
Key words: Responsible Management Education, Social Responsibility, Sustainability, Ethics.
74
Introduction
Almost every day media discloses the new corruption scandal and a financial crisis, which
became an easy situation for questioning the goals, methods, and curricula of business schools. These
incidents are happening may be due to ethical disorientation of many businesses and business people.
The educational institutions have always been focussing their mission, vision and policy in leading
individuals to better lives. In fact, it is included in the mission regarding attmpts for the discovery and
enactment of truth and knowledge. Their aluminies are expected to have places as educated citizens
who can help in improving their societies. However, over the last few years the educational system in
general and business education in particular have been criticized for their failure in inculcating moral
values into students. In addition, the entire system has been held responsible for deteriorating the
moral character of students. Obviously, education of ethics in business has become essential for
bridging the gap between ethical business practices and need of developing honest and responsible
businesspersons. In spite of some initiatives committed to the improvement of business education
processes like the Principles for Responsible Management Education (PRME), there remain certain
doubts about business ethics education in the background of n number of corruption scandals. It is
highly required to devote all efforts not only to address lessons learned from the most recent business
corruption scandals and financial crises, but also to introspect the ways of teaching and learning for
future business leaders to best prepare them in coping with the challenges of global environment.
Literature Review
In the last few years we have seen that the world is changing at a fast rate. This is happening
because of globalisation, advancement of technology, wide awareness through social media and the
rise in consumers alertness in favour of certain actions for change. Unethical behaviour by
organizations has led to disasters resulting into the recent global financial crisis. Some of these
changes initiate an on going discussion on the role of consumers, governments and firms. Gardiner
and Lacy (2005) argued that business interest in social and environmental responsibility has received
greater importance because of continuous corporate scandals along with heavy pressure from NGOs,
policy-makers, consumers, and the media. Porter and Kramer (2011) viewed that capitalism is under
attack and the business sector must undergo some radical changes. The business sector is presently
switching over from the narrow view of business purpose regarding maximising value for shareholders
to a broader view, which is more socially responsible. Consequently, if the business sector is changing
and consumers awareness is on the rise, the need has arisen to strengthen the role of business schools.
Business schools have a responsibility to provide practitioners with training in the basics of
ethics, which would ideally act as a catalyst to stimulate socially and ethically managed business
organisations (Cornelius Wallace, & Tassabehji, 2007). But this is not always possibe. According to
some researchers, business schools are no more than brain washing institutions educating their
graduates only in relatively narrow shareholder value ideology, unless they change fundamentally.
(Matten & Moon, 2004).
Several studies were conducted to examine the question of social responsibility education, and its
components, especially ethics. Business students need training in ethics and moral reasoning more
than most other students, as they face ethical challenges and dilemmas in managing businesses. They
do not always receive such education and if they do it is usually not mandatory.
As per the observations of Wallace and Tassabehji, (2007), the provision of social responsibility
education needs to be proactive, with fundamental ethics programmes to be taught by committed and
A Study of Responsible Management Education: An Emerging Tool for Sustainability
75
engaged business schools so that organisations would serious about ethically and socially responsible
thinking. According to Gardiner and Lacy (2005), it is not the question whether CSR should have a
place in the business curricula, but how it should be incorporated and what role business schools play
within the wider business in society is a debatable issue. Students, the marketplace, the community,
government and civil society are increasingly demanding that business schools rethink their traditional
role. The focus has shifted from value preservation to value creation. There is a clear demand from
business and students for research, education and training on responsible management issues.
Some initiatives have emerged in the last two decades to bridge this gap. In 2007, United
Nations-supported Principles for Responsible Management Education (PRME) was launched to
encourage and champion responsible management education, thought leadership and corresponding
research through out the globe.
Business management students are the relevant and significant group of stakeholders for
responsible management education. On the basis of literature review, it is clear that there is lack of
studies on perspectives and attitudes towards responsible management of this very important
stakeholder group. The few studies which have focused on this group have derived mixed results with
some showing students are indifferent to responsible management, while other studies demonstrate a
growing interest in CSR and etics, especially among women students.
About the Study

The study was aimed to following objectives.
1. To examine perceptions about responsible management education.
2. To understant views of respondents about sustainabilty.
3. To examine role of responsible management education for sustainable development.
Methodology
The data was collected through survey method. Sample of respondents from academic institutes
and business organizations were selected randomly. Academic institutes views were represented by
60 respondents from institutes imparting professional courses. Additional 40 respondents were
selected randomly from different business organizations. These respondents were employees on and
above manager level at manufacturing and service organizations.
A questionairre was prepared and requested to respond in the five point Likert scale as (5) for
strongly agree or essential to (1) as strongly disagree or absolutely not important. The hypothesis
about correlation between sustainability and responsible management education was tested using
Sprarmans Rank Correlation method.
Hypotheses
1. Null Hypthesis (H0): Rsponsible Management Education does not significantly ensure the
Sustainability.
2. Alternate Hypthesis (H1): Rsponsible Management Education does significantly ensure the
Sustainability.
76
Data Analysis
Opinions about values
Table 1: Opinion about Values
Sr. No.
1
2
3
4
5
6
Values
Making Money
Faithfulness
Helping Society
Being Successful
Work is Worship
Living Happily
Very
Important
24
34
29
20
17
24
Essential
11
23
18
52
43
61
Not
Important
39
22
37
16
25
08
Important
18
16
12
09
10
05
Absolutely Not
Important
08
05
04
03
05
02
Source: Field Study
As per the opinions of respondents, living happily (61 %), to be successful (52 %) and
involvement in the work (43 %) are most essential values. Making money (39 %) and helping the
society (37 %) falls in important values category, while, faithfulness (34 %) seems to be very
important.
Components of Responsible Management Education

Table 2: Components of RME
Opnions
Sr.
No.
1
2
3
4
5
6
Component
Corporate Social
Responsibility
Business Ethics
Moral Aspects
Legal Aspects
Chang Management
Global Citizenship
Total
Academicians
Students
08
Faculty
04
Professionals
Total
05
17
05
06
12
06
03
40
03
03
07
02
01
20
03
03
08
07
04
40
11
12
37
15
08
100
Source: Field Study
The respondents felt that a legal aspect of the business (37 %) has been the most significant
component of RME. It was followed by CSR (17 %), change management (15%), moral aspects (12 %)
and business ethics (11 %). Global citizenship received only 8 % response.
77
Changes in Curricula and Learning System

Table 3: Curricula and Learning
Sr.
No.
1
2
3
4
5
6
7
Changes in Curricula and Learning

More Expert Lectures
Live Case Studies
Pro-sustainability Recruitment
Inclusion of Social Themes
Corporate Internship
More RME based Electives
Practicing of Ethics
Total
Student
Academician
Professional
Total
05
04
08
09
06
05
03
40
02
02
03
05
03
03
02
20
07
04
05
09
04
03
04
40
14
10
16
23
17
12
08
100
Source: Field Study
As far as changes in curricula and learning process are concerned, 23 % respondents stressed on
inclusion of social themes, 17 % recommended inclusion of corporate internship, while, 16 % opinions
required changes in recruitment style in favour of sustainability. Participants under study demanded
more number of expert lectureas, additional specializations derived from the principles of RME,
maximum numbers of live cases and opportunities for experiencing ethical practices in the business.
Business Responsibilities in Changing Scenario

Table 4: Business Responsibilities
Sr.
No.
Business Responsibilities
Essential
Very Imp.
Imp.
Not Imp.
1
2
3
4
5
6
7
8
Customer Satisfaction
Shareholders Profits
Community Development
Optimum Resource Utilization
Environmental Awareness
Ethical Transactions
Employee Welfare
Philonthropic Attitude
19
15
13
41
27
10
17
10
43
29
25
30
28
23
24
12
33
44
50
16
25
47
39
53
05
07
09
07
15
13
12
10
Absolutely Not
Imp.
00
05
03
06
05
07
08
15
Source: Field Study
The respondents viewed that optimum utilization of resources is highly essential (41 %).
Customer satisfaction and environmental awareness are very important (43 % and 28 % respectively).
Philanthropic attitude, ethical transactions, attempts for community development, profit of
shareholders and welfare of employees were seems to be importnt business responsibilities.
78
Sustainability Factors
Table 5: Sustainability Factors
Sr.
No.
1
2
3
4
5
6
7
8
Responses
Factor
Responsible Public Image
Competitve Advantage
Shareholders Interests
Commitment in Work
Social Obligations
Ethical Practices
Economical Sustenance
Co-existance
Total
Academics
Professionals
Total (%)
10
09
06
07
05
02
13
08
60
07
06
03
04
05
02
08
05
40
17
15
09
11
10
04
21
13
100
Source: Field Study
As per academicians and professionals opinions, economical sustenance is the most significant
factor of sustainability. It was followed by public image, competitive advantage and co- existance.
Further sustainabilty could be strengthened through commitment to work, social obligations,
maintaining shareholders interests and ethical business practices.
Sustainability and Responsible Management Education Correlation (Hypothesis

Testing)
Table 6: RME & Sustainability Corelatio
Respondents Opinions
Sr. No.
Factor
Responsible Public
Image
Competitve Advantage
Shareholders Interests
Commitment in Work
Social Obligations
Ethical Practices
Economical Sustenance
Co-existance
Total
2
3
4
5
6
7
8
Source: Field Study
Academics
Professionals
Responses Rank (X) Responses Rank (Y)
(X-Y)
10
07
09
06
07
05
02
13
08
60
3
6
5
7
8
1
4
06
04
03
05
02
08
05
40
3
6
7
4.5
8
1
4.5
0
0
-2
2.5
0
0
-0.5
0
0
4
6.25
0
0
0.25
10.50
79
Spearmans r
= {1 [(6(X Y) 2) / (n (n2 1))]}
= {1 [(6 10.50) / (8 (64 1))]}
= {1 [(6 10.50) / (8 63)]}
= {1 0.125}
= 0.875
At 5 % level of significance, for n = 8, table value of Spearmans r is 0.7143. Since calculated
value of Spearmans r is greater than table value; the null hypothesis is to be rejected. Hence the
alternate hypothesis has been accepted which states that, Responsible Management Education
significantly ensures the Sustainability.
Findings
This study reflects a growing awareness among business schools about the need for sustainable
development and responsible leadership. Business schools, their associations, and other stakeholders
need to develop new ways and means to contribute to a better world.
A large number of challenges are there in providing opportunities to study sustainability and
related issues. Business schools are finding ways to overcome these challenges by developing new
courses, either under the banner of CSR and responsible management, or as various interdisciplinary
courses on Bottom of the Pyramid issues, business and poverty, social entrepreneurship, social impact,
etc. In the existing stage of the over full curriculum, this is possible by embeding sustaiability with
responsible management through live business cases. Invited speakers, along with the government and
non government organizations, conferences and events, learning opportunities, project work, studentled campaigns, events and volunteering activities, including those co-organized with the local
communities and bodies provide opportunities to enrich the concept of RME for sustaianability.
Financial limitations, the lack of time, the interdisciplinary nature of the topic, the lack of faculty
competence and confidence are some of the causes for limitations in the relevant research. for
inclusive growth of society through RME.
Collaborations with businesses, social entrepreneurs, business incubators and cooperatives, local
and international NGOs, governmental agencies and local community provide solutions for many
challenges observed in the study. This will create opportunities for bringing real-life experience and
business practice into the classroom.
Challenges, solutions and opportunities in this area indicate the need for a wider and more
intensive communication among all stakeholders, interest groups and social agencies on the role that
businesses as well as management education could and should play in acquiring total sustainable
enhancement of the society.
Further research
Though the findings of this study can contribute to the understanding of responsible
management education and its implication for sustainability of the society, it has some limitations. The
sample size is very small; hence it seems to be difficult to generalize any sound conclusion. The
existing study has focused on comparatively smaller geographical location. So it might be possible
80
that different environmental, locational and demographic issues remain untouched. So the study is to
be conducted for broader area and with larger samples.
Conclusion
It has been observed that both academia and professionals are aware about the needs and benefits
of corporate contributions to social problems. In this regard business schools should maintain and
increase coverage for business ethics and corporate social responsibility. This could be possible
through following measures.
1. In response to growing awareness and demand of the stakeholders, Business schools should
take a proactive role in responsible management education, in terms of both teaching and
research.
2. CSR and ethics could be embedded in core units, In addition they should be taught as a
separate core subject. Further, business schools can enhance research on CSR and CSR
education through different research initiatives.
3. There is a wide and strong support of the business sector to business schools all over the
world. Business schools provide managers with skill and knowledge while the business sector
supports, and sponsors the schools. The shift occurring in the business sector towards CSR
demand graduates with wide ethical knowledge. Definitely corporates would expect paradigm
shift in conventional management education systm.
4. The students with their positive attitudes towards social responsibility would demand from the
management education to include social and ethical management issues and courses. They
would work on their attitudes and values by searching for schools that teach responsible
management.
References
1. Bhagwati, J.; Panagariya, A.; and Srinivasan, T. N. (2004) The Muddles Over Outsourcing. Journal
of Economic Perspectives, Vol. 18 (4), pp. 93-114.
2. Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business
and Society, 38, pp. 268295.
3. Feldman, H. D., & Thompson, R. C. (1990). Teaching business ethics: A challenge for business
educators in the 1990s. Journal of Marketing Education, 12, pp.10-22.
4. Manimala, M. (2006) Management Education in India: A Perspective on Quality Improvement.
Journal of Management and Entrepreneurship pp.1, 3.
5. Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, January 2011,
pp.62-77.
6. Post J.E. (2009), Never Waste a Crisis: Corporate Governance Reform after Satyam, Vikalpa, Vol. 34
(1), IIM, Ahmedabad.
7. www.gfme.org
8. www.unprme.org
____
CHAPTER
8
Emotional Intelligence - A Key to

Effective Human Resource
Management
Dr. Sheetal Sharma

Associate Professor and Dean-Academics,
IILM Academy of Higher Learning
1-Viraj khand, GomtiNagar
Lucknow U.P, India
E-mail: ishvasheet_1234@rediffmail.com
ABSTRACT
Emotions represent a critical part of mental process and human emotions are merely one
particular manifestation of a more general phenomenon which must be manifested in some way
in any mind. The available literature and researches have also established the need and
importance of emotional intelligence as an important determinant in maximizing individuals
performance and productivity. The human resource professionals have also realized that dynamic
people HR practices with a mix of emotional intelligence are a key to individual success and
effective management for building dynamic and growth oriented organizations.
This chapter helps in understanding the physiology of human emotions, its association to
cognition and focus on understanding how emotions are mediated by hormones and affect the
physiological functions of human body. It further provides insights on the conceptual
understanding of human emotions as an important predictor of the workplace success and
discusses various HR implications of emotional intelligence (EI) and provides suggestions for
improvement, continued growth and development of the individuals and organization as a whole.
Introduction
Emotion is a positive or negative mental state that combines physiological input with cognitive
appraisal (Thagard 1999). Although not traditionally considered an aspect of cognitive science, it has
recently been attributed to be effective on rational decision-making. Predominant theories about
emotion explain it as either making judgments, or having bodily reactions, or a combination of the two.
Judgments are made, (such as satisfaction from the outcome of hard work,) and / or bodily reactions
(such as sweating from fear of a task, or nervousness) take place based on a persons interactions or
disposition. Emotion should not be mistaken as mood, which can be described as prolonged, but not
necessarily directed emotion. Rather, emotion is usually characterized as affective, short lived,
relatively intense, and thought process (Grandey, 1998). It can also be said that emotions are tied to
82
how their stimuli are represented. A concept presented with a positive association can cause different
emotion than if presented with a negative association. There is a strong realization of the gravity of a
very crucial component emotional intelligence (EI) in the human beings which is a key to success. It is
increasingly believed that IQ may account for only20% of a persons success in life and the remaining
80% largely depends on the persons emotional intelligence. It is well accepted that in the corporate
world a person is recruited on the basis of his IQ, but is retained and promoted on the grounds of his or
her EQ.
Emotional intelligence is defined as a persons self-awareness, self-confidence, self-control,
commitment and integrity, and a persons ability to communicate, influence, initiate change and accept
change (Goleman, 1998). The academic definition of emotional intelligence, on the other hand, is
much more limited to the specific interaction between emotion and thought. Here are the four branches
of academic definitions, based on the work of Mayer and Salovey:
Emotional Perception and Expression: the ability to accurately perceive, appraise, and
express emotion
Emotional Facilitation of Thought: the ability to access, generate and use feelings to
facilitate, inform, and guide thinking
Emotional Understanding: the ability to understand the meanings of emotions, their likely
transitions, blends and progressions
Emotional Management: the ability to manage emotions for personal and social growth.
Several researches conducted so far have been able to provide us an understanding of the
psychological dimensions of human emotions and its related theories. However less work has been
carried out to understand the physiological dimensions of human emotions and this study becomes
relevant as it attempt to specify the interrelationships among components, causes, sources, and
functions of emotional responses for effective human resource management in the organizations.
The emotional awareness and emotional management skills provide the ability to balance
emotion and reason so as to maximize our long-term happiness. Earlier researches have proved that IQ
(Intelligence Quotient) measures our intellectual ability and predicts performance. However, the idea
of Emotional Intelligence or Emotional Quotient (EQ) is not as well known or understood.
EI influences individual success in all areas of life, performance or productivity. Emotional
intelligence is a combination of competencies. These skills contribute to a persons ability to manage
and monitor his or her own emotions; too correctly gauge the emotional state of others and to
influence opinions (Caudron, 1999; Goleman, 1998).Negative emotions or distress erodes the mental
abilities and decreases EI. The percentage of time individuals feel negative emotions at work is one of
the strongest predictors of dissatisfaction and how likely they are to quit, in addition to this dissonance
or lack of harmony in an environment lowers productivity and achievement.
"When it comes to improving organizational effectiveness, management scholars and
practitioners are beginning to emphasize the importance of a managers emotional intelligence" (Sosik,
Megerian, 1999, p. 367). What influence does emotional intelligence has on the management
effectiveness can be answered by having an understanding of both the physiological and psychological
understanding of emotions. Emotional intelligence improves individual and organizational
Emotional Intelligence A Key to Effective Human Resource Management
83
performance. It plays a significant role in the kind of work an employee produces, and the relationship
he or she enjoys in the organization (Goleman, 1997; Cooper & Sawaf, 1997).
Emotional Intelligence - EQ - is a relatively recent behavioral model, gives rise to prominence
with Daniel Goleman's 1995 Book called 'Emotional Intelligence'. The early Emotional Intelligence
theory was originally developed during the 1970's and 80's by the work and writings of psychologists
Howard Gardner (Harvard), Peter Salovey (Yale) and John Mayer (New Hampshire). Mike Millers
(1999) opinion is that many managers fail because they are too rigid and have poor relationships. As a
consequence they are unable to adapt to changes in the business environment, organization, culture,
work processes, and technology. Managers unable to receive or respond to feedback are unable to
determine how they need to change their approach to leading others.
Dimensions of Emotions
Although Psychologists have described and explained emotions differently, all of them generally
agree that emotion refers to a response with its distinctive thoughts psychological and biological states
and ranges of propensities to act. Generally there are two dimensions of emotions as discussed below:
Physiological dimensions refer to the complex state of human minds, involving bodily changes
of widespread nature such as breathing, pounding heart, sweating palm, flushed face, glandular
secretions etc.
The psychological dimensions refer to the feelings which one experiences as the result of
having emotions. There are hundred of emotions along with their blends, variations, mutations and
nuances.
Some of the main emotions with there blends are anger, depression, anxiety, happiness, love,
surprise, disgust, sadness and contempt as described by Paul Ekman,across various cultures are
depicted in Figure1
Face and Emotion

Seven Universal Facial Expressions of Emotion
Anger, happiness, fear, surprise, disgust, sadness, and contempt
Fig. 1: The percentage of Ekman et al.s subjects in each culture who correctly identified the predicted emotion.
84
Table1
Nation
Estonia
Germany
Greece
Hong Kong
Italy
Japan
Scotland
Sumatra
Turkey
United States
Happiness
90
93
93
92
97
90
98
69
87
95
Surprise
94
87
91
91
92
91
88
78
90
92
Sadness
86
83
80
91
81
87
86
91
76
92
Fear
91
86
74
84
82
65
86
70
76
81
Disgust
71
61
77
65
89
60
79
70
71
86
Anger
67
71
77
73
72
67
84
70
79
81
Source: Ekman et al., 1987, p. 714. Copyright @ 1987 by the American Psychological Association. Reprinted with
permission of the author and the publisher
The Physiology of Emotions
Fig. 2: The Limbic System
Intensity of pleasure and arousal are ways to differentiate emotion. Human bodies reactions
correlate with emotions, e.g. sad, contended, happy, or upset. Stronger feelings, such as anger, are
dependent on the realization and grasping of extremities of situations. Thagard explains emotions
association to cognition: representations involving a pattern of activation across neurons that are
connected to brain areas that control cognitive judgments and bodily states. These areas are prefrontal
cortex and amygdale (Refer Figure3).
Today, biochemists are on the verge of understanding how emotions, mediated by hormones,
affect the physiological function of our bodies. The human brain stores and generates emotions in its
85
limbic system, which is the most primitive portion of the brain. The limbic system also contains two
other structures called the hypothalamus and the hippocampus. The hippocampus stores dry,
unemotional facts for recall, such as where you live and your spouses work number. The
hypothalamus acts as the commander-in-chief of your hormonal communication system, determine
which gland should release what amounts of hormones at a particular time. The central processing
facilitate our emotional memories is called the amygdala.
Physiological reactions results from the hormone flow are initiated by the hypothalamus as a
result of emotional distress perceived by the limbic system. This is an extremely simplified
explanation of whats really happening in the brain. So, it can be imagined how much more complex
the emotional system really is.
Specifically, the "emotion center" of our brain, the limbic system, is comprised of sub cortical
structures such as the amygdala, septal area, and hippocampus, and cortical structures such as the
hippocampus and the cingulate gyrus. The limbic system is further connected to the orbital-frontal
area of the cerebral cortex, Wernicke's area, the inferior parietal region, and the lateral prefrontal
cortex. These cortical areas process language comprehension and planning (Armstrong, 1999). These
cortical areas impart their symbolic, semiotic, and cognitive functions to the limbic system. The limbic
system is thus not specifically devoted to feelings per se; it actually appraises the meaning or value of
stimuli (including social information and autobiographical consciousness), coordinates perceptions
with memory and behavior, activates arousal, learns and stores information, and coordinates body
responses and higher cognitive procession. The limbic system thus does not produce feelings as a
specialized function. Feelings which are mediated by the limbic system are integrated within its
function of information processing (Siegel, 1999, pp. 122, 131-132; Armstrong, 1999). As the limbic
system regulates autonomic system, hormones, arousal, posture, and facial expression -- which are all
vital to emotions -- it does on the basis of symbolic understandings and interpretations that derives
from the cortex (Schore, 1994, p. 35, 41-42). As Schore explains, The internal working models that
guide interpersonal behavior and regulate affect are stored in the orbit frontal cortex of the right
hemisphere" (ibid., p. 191). It "determines which particular modular hypothalamic motivational
system and thereby which emotion-specific action tendency is activated by the external, environmental
socio affective stimulus change" (ibid., p. 190). Lower brain centers reciprocally send information that
stimulates the cortex; however, the cortex is dominant in this interaction. For instance, interpretation
of a stimulus as fearful causes the cortex to activate the amygdala, however activating the amygdala
alone does not generate fear (Whalen, 1998, p. 178). However lower brain centers can sometimes be
inoperative but emotions still occur. They block the sympathetic nervous system chemically, produces
no reduction in reported anxiety (Reizenzein, 1983, p. 246).
Physiological consequents of emotions are equally nonspecific. For example, there is no relation
between the degree of embarrassment a person feels and the amount of dilation of facial blood vessels
when blushes (Kagan, 1998, p. 41). (Kagan, 1998, p. 41).
A large body of research indicates that testosterone secretion follows a wide range of experiences
and emotions. Testosterone levels change as chess players win or lose a match and as a spectator sees
his favorite team wins or loses a sporting event. Testosterone also rises in men who have legal
problems, extramarital affairs, tattoos, and alcohol and drug abuse (Brody, 1999, p. 110). Interestingly,
it is the person's attitude toward an experience, not the experience itself that causes variation in
testosterone level. Athletes who win a competition but do not regard the win as important manifest
little or no elevation in testosterone level (Mazur & Booth, 1998, p. 358).
86
Epinephrine is secreted in response to both pleasant-amusing and aggressive films. ACTH release
similarly occurs in a wide variety of charged situations and emotional arousals.
In the latest review of the field, Davidson, Jackson, & Kalin (2000) draw a similar conclusion
that, "the same emotion may lead to different [autonomic] profiles, depend on the situational variables
within which the emotion is induced, and different emotions may be associated with the same
[autonomic] profiles in some instances" (p. 892). Specifically, "The data certainly cannot support a
primary role for autonomic patterning in determination of emotional experience because reported
emotional experience is far more differentiated than the autonomic changes that have been observed"
(ibid., p. 892). "Of particular note in the literature on autonomic which correlates emotion is the fact
that no systematic, replicable differences can distinguish between positive and negative affect that
have been reported, despite the fact that this valence dimension is an extremely salient one and arises
in every major conceptual scheme for the structure of emotion" (ibid., p. 892).
Candland explained that this relation between physiology and emotions enhances human
adaptability and creativity: "It may be that this increased availability of energy is the most important
function of hormonal changes following or during exposure to emotional situations, since this increase
in energy would aid the individual's adaptation to the stresses of 'being emotional'" (Candland, 1977, p.
127). Humans can creatively adapt to their environment because they are unconstrained by biological
mechanisms which dictate fixed responses. Animals are less creative because their biology determines
fixed action patterns. The volitional, creative, cognitively-socially mediated character of human
responsiveness is only possible if emotions have a variable, indeterminate, functionally autonomous
relationship with physiological mechanisms and are not rigidly tied to them. Human biology is
distinctive in acting as a substratum which allows the human mind to decide how to act. As Kagan
(1998, pp. 34-35) said, "The events of the individual's past and the context of the present can produce
different psychological experiences, thoughts, and actions in individuals who are, for a period of
several seconds, in the same brain state."
Development Phases of EQ
It is well understood that unlike IQ, EQ is not fixed at birth. EQ can be developed by a step by
step process.
1. Early life experience: Emotional development starts early in life and is closely related to the
development of a child. Childhood is a unique window on the time when a childs mental
frame can actually be sculptured by parents. It is needed to be nurtured by parents with the
academic intelligence.
2. EQ development with maturity: In the normal course of life time, emotional intelligence
tends to increase as we learn to be more aware of our emotions. EI develops with the
increasing age and experience as a person moves from childhood to adulthood. The
researchers have proved that if given the motivation as desired the older workers are as good
as the younger ones in mastering new levels of EI .The gender and EI can be understood as
men and women are equal in their ability to increase emotional intelligence. While women
tend to be a stronger in competencies based on empathy and social skills and men do better
where self regulation is required.
It is observed that various aspects of emotional intelligence affect a leaders ability to make
good decisions and how emotional intelligence is integral component of effective
management. Below discussed are a few HR implications of emotional intelligence:
87
HR Implications of Emotional Intelligence

Effective management of organizations and human resources is facing enormous challenges.
Organizations are downsizing, reengineering themselves to compete in the global market. They also
face an explosion of available information (Luthans, 1998). EQ helps organizations in achieving
greater success. The organizations realize that encouraging emotional intelligence skills are vital
components of management philosophy. The HR practitioners and mangers need to develop EQ in
their organizations. Emotional Intelligence is important in human resources planning, job profiling,
recruitment interviewing and selection, management development, customer relations and customer
service, and more. The process and outcomes of Emotional Intelligence development also contain
many elements known to reduce stress for individuals and organizations, by decreasing conflict,
improving relationships and understanding, and increasing stability, continuity and harmony.The HR
implications of emotional intelligence are as follows:
(a) Hiring and EI: The need of emotionally intelligent individual increases as the peculiarity of
hiring strategies is increased. The corporate are now taking aggressive and strategic posture in hiring
talents. The increasing cross border hiring, getting teams to work together from different geographic,
Return on Investment Analysis(ROI) related to hiring practice etc does associate with itself many
challenges on the retention of the individuals. Thus these challenges of hiring can become more
effective if recruiter is emotionally mature. Competencies are required for a position to avoid hiring
missteps. It is the ability to handle difficult people and to use diplomacy to defuse conflict essential-then looking for someone with good emotional awareness that is skillful in managing emotions in him
or herself and others. Most managers and HR professional who have been involved in observing or
selecting individuals in leadership positions have experiential understanding of certain points.
Selection for top positions has tremendous financial implications and personality/emotional IQ,
Emotional Intelligence factors, often make or break a candidate organizations success or failure. Often,
individuals with a strong resume, high motivation, and excellent knowledge of an industry, fail when
brought into a new situation. This is often becomes the results because their EI competencies do not
match well with the specific demands of the position.
(b) Training and Emotional Intelligence: Managing growth and change, continuing to offer
world class services the demand rises, has continued to enhance the need and relevance of effective
training. Growing the people faster than the competition is the key strategy for success, continued
growth and profitability. This is where the emotional intelligence helps in the real time learning (RTL)
which is the future learning today. It brings learning when it matters most of the job. RTL is possible
only if the manager is emotionally intelligent as it involves direct observation, real-time feedback,
experiential learning. There is a crucial evolution as far as Technical skills are concerned, what is
interesting is that, to a large extent, it has been the software and information technology industries that
have focused on the issue of EQ. Because of the intense competition for qualified workers, these
industries are not only having problems finding people with good technical skills, but it is also
becoming increasingly difficult to promote these workers to levels that require management skills.
As computers continue to take over technical, left-brain functions, the value of the right-brain
emotional functions will assume ever-greater importance.
(c) Relationship management and EI: There are quite a few challenges that are encountered on
the way by the organizations like strengthening the internal communication process, making people
comfortable with the organization culture, developing the interpersonal skills, strengthening the group
dynamics, designing and rolling out the leadership initiatives. Thus emotional sensitivity and maturity
does help the HR manager in facing the challenge and contributing in building a strong relationship
88
among people. Emotionally intelligent HR Manager ensures that the relationship with the various
stakeholders (including the boss, peers and subordinate) is maintained sensitively and to evolve the
meaningful processes that allow interactions, sharing participation feedback and culture of democracy.
Conflicts among individuals are managed by creating a bond and not be appeasing the mind of the
individuals, protecting the self-esteem. Studies have demonstrated that leaders who consistently
outperform their peers not only have the technical skills required, but more importantly, have mastered
most of the aspects of Emotional Intelligence. The four main areas of Emotional Intelligence are:
Self-Awareness, Self-Management, Social Awareness, and Relationship Management
(d) Stress management and EI: Matthew & Zeidner (2001) suggest that successful coping with
stressful encounters is central to emotional intelligence. Firstly, it suggests EQ can be developed and
makes a difference to the experience of stress. Secondly increase our experience of coping with stress
within the broader context of emotions offers real prospects for HR managers and stress management
practitioners to develop interventions that make a real difference to the quality of working life and
emotional well-being of individuals. It also offers a real possibility of re-humanizing organizations, fit
to house the human spirit (Chapman, 2002).The various possible initiatives could be organizing the
integrated stress management programmes in order to develop the various skills.
(e) Succession planning and EI: The various succession related activities which are triggered
and handled by HR Managers which include departure/promotion of existing employees, competitive
shifts in market places etc. Planning for Successful Leadership Transition, involves emotional
intelligence as the control of ones emotions to fit a new situation. When a leader has a high EQ, that
person will react in a proper manner to the situation, as well as the situation itself. A person reacts
with their IQ would simply react to the facts of the situation and negate the total picture, which
includes the irrationality of human behavior.
The leadership succession issue doesnt have to be painful and difficult. It can be a win-win.
Preparing for the process of transition involves a plan for succession, including the incoming and
outgoing leaders in the process, but most importantly above all, it involved how to handle this
potentially emotionally charged transition.
The most successful leadership transitions result when those involved have improved their
emotional intelligence (EI) skills.
Employee performance management and EI

Employee performance management is the application of performance feedback and other
behavior modification techniques to shape behavior in desired directions. It includes coaching,
mentoring, and feedback, positive reinforcement, role modeling, and counseling,
recognition/rewards for top performance, incentives and performance appraisal. Unlike
performance appraisal, however, which is episodic, effective performance management is ongoing
and continuous. Effective performance management requires adequate emotional intelligence on
the part of the managers as leading edge companies/firms dont just train and develop to meet
present needs they anticipate what skills will be needed in the future and begin to develop them
now. It helps the HR manager to ensure clear and timely feedback of the performance, clarifying
the expectations so that expectations communicated should be high enough to be motivating but
not so high as to be demoralizing, EI also helps in employee trust and confidence building for
improving the employee performance.
89
Leadership effectiveness and EI

A leader is described those who uses the words integrity, self-knowledge, enthusiasm, vision,
purpose, pursue goals, and honesty. These are the same words use to describe various facets of
emotional intelligence. A leader has to be emotionally intelligent to align personal and subordinate
goals to accomplish company goals. EI helps leader to focus on a few great performance factors of
individuals; develop each persons desire to be responsible for his or her act; aligning organization
systems and structures to send a clear message as to what is necessary for great performance; engaging
each individuals heart, mind and hands in the business of the business; and energizing people around
the business focus. Develop individual capability and competence and also create conditions in the
organization that challenge every person to continually learn, including him or herself. These four
principals align personal and company goals through emotional intelligence.
Results of the various research provided empirical support for emotional intelligence being the
foundation of other aspects of leadership. Leaders who underestimate their leadership link to social
self-confidence while leaders who overestimated their abilities were negatively related to sensitivity.
Managers who maintain accurate self-awareness have more attributes of emotional intelligence and
appear to be more effective to their superiors and subordinates.
Conclusion
It is evident that emotional Intelligence provides us a framework to consider thinking about
competencies that can play a critical role in an individual success. Based on personal experience and
literature, it is clear that emotional intelligence has a far greater impact on a person's personal and
career success than their IQ or particular skill. Our emotions are greatly related to our work
performance and we need to improve upon our emotional quotient for professional effectiveness. The
physiological dimensions of human emotions show that, our emotions and our immune system are
intertwined in a complex system. As we begin to understand how emotions stem from hormonal
communication, we will certainly have a starting point to develop dietary strategies to improve
emotional control. The only thing we need to feel better is validation. It is understood that when
employees do not feel validated, a whole slew of bad things happen, including communication
breakdown, defensiveness, evasiveness, fear, and a loss of productivity. The negative emotions of a
former employee are contagious and they spill over not only into our workplaces but also to our
families and deep into our own minds.
Understanding on the physiological dimensions can provide useful information on the types of
competencies that are most essential in our business or different sectors of organization .Implications
of EI for human resource development and organizational change discussed in the paper ensures that
EI is a key component for effective and collaborative management ,it helps the HR manager to
understand how emotions can influence thoughts, behaviour, goals, decisionmaking, and work /
personal relationships, to build motivation and constructive thinking into the work and establish a
strong link between emotional intelligence and leadership effectiveness.
References
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spouses and families, Stress Medicine, October 12(4), 239-246.
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90

3. Bulach, C. R., Michael, P., & Boothe, D. (1999). Analyzing the leadership behaviors of school
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Intelligence, Vol. 10 (1), Autumn.
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meeting of the Society for Industrial Organizational Psychology. Rutgers University, Graduate School
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7. Chun-Sheng Yu, Ron, M. Ron, Sardessai, June, Lu, & Jing-Hua. Relationship of emotional intelligence
with conflict management styles: an empirical study in China. International Journal of Management and
Enterprise Development 2006 - Vol. 3, No.1/2 pp. 19-29.
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accounts of police officers using a stress counselling service, Work & Stress, Vol 14 (3), pages 226-244.
10. Essentials of Medical Physiology-By Mahapatra.
11. Goleman, D., Boyatzis, R. & McKee, A. (2002). Primal leadership: Realizing the power of emotional
intelligence. Boston, Mass.: Harvard Business School Press.
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Psychology, Vol. 5, pages 9-16.
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Outcomes, In Bar-On, R. & Parker, J.D.A. The Handbook of Emotional Intelligence, Jossey-Bass.
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Emotional Intelligence and Conflict Management Strategies: A Study in Seven Countries. International
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____
CHAPTER
9
Role of Ethics and Values in

Developing Human Resources
Dr. Narendra Narottam

Assistant Professor
National University of Study and Research in Law,
Ranchi
ABSTRACT
Development of human resources is essential for any organisation that would like to be
dynamic and growth-oriented. Unlike other resources, human resources have rather unlimited
potential capabilities. The potential can be used only by creating a climate that can continuously
identify, bring to surface, nurture and use the capabilities of people. Human Resource
Development (HRD) system aims at creating such a climate. A number of HRD techniques have
been developed in recent years to perform the above task based on certain principles. This article
provides an understanding of the concept of HRD system, related mechanisms and the changing
boundaries of HRD. Further, The field of Human Resource Management has evolved into a
strategic, technical, and measurement-oriented area in the past decade. The field will continue to
grow in sophistication and complexity as a reflection of the world in the 21st century, presenting
difficult ethical dilemmas.
A Human Resource practitioner, or any professional serving in a managerial position within
an organization, is often faced with ethical dilemma regarding the handling and coping mechanism
vis-a-vis the challenges inherent inside the organisational system. However, determining the right
choice when people are involved can be challenging. A complicating issue is the fact that the
concept of ethics means different things to different people. Individuals within an organization can
hold and practice core values; however, that doesn't mean that the organization as a whole is
ethical. To build an ethical organization, its leadership must establish, publish, and model the
company's core values.
In this article the author has tried to describe the characteristics features of Human Resource
Development and its linkage and relationship vis-a-vis an ethical organization. An attempt has
also been made to identiy the indicators of a weak as well as healthy ethical organisation system;
and the methods and means of enhancing Human Resource professional's potential and inclination
to contribute to the development of an ethical organization.
92
Introduction
Development of human resources is essential for any organisation that would like to be dynamic
and growth-oriented. Unlike other resources, human resources have rather unlimited potential
capabilities. The potential can be used only by creating a climate that can continuously identify, bring
to surface, nurture and use the capabilities of people. Human Resource Development (HRD) system
aims at creating such a climate. A number of HRD techniques have been developed in recent years to
perform the above task based on certain principles. This article provides an understanding of the
concept of HRD system, related mechanisms and the changing boundaries of HRD.
Gilley and Maycunich (1998) state that HRDs primary purpose is to provide interventions and
initiatives that
(a) improve employee skills and competencies,
(b)
improve performance, and
(c) enhance organizational effectiveness.

Three philosophical orientations emerge:
(a) organizational learning,
(b) organizational performance, and
(c) organizational change.
Swanson and Holton, conclude that HRD is critical to individuals, organizations, and society so
that there will be an ongoing struggle globally and locally as to the ownership and purposes of HRD.
The focus of all aspects of Human Resource Development is on developing the most superior
workforce so that the organization and individual employees can accomplish their work goals in
service to customers.
Human Resource Development can be formal such as in classroom training, a college course, or
an organizational planned change effort. Or, Human Resource Development can be informal as in
employee coaching by a manager. Healthy organizations believe in Human Resource for its overall
success both inside and outside the organisation.
The Concept of Human Resource Development

Human Resource Development (HRD) is the part of human resource management that
specifically deals with training and development of the employees in the organization. Human
Resource Development is the framework for helping employees develop their personal and
organizational skills, knowledge, and abilities. Human Resource Development includes such
opportunities as employee training, employee career development, performance management and
development, coaching, mentoring, succession planning, key employee identification and organization
development.
The part of human resource management that specifically deals with training and development of
the employees is basically referred as Human resource development. It includes training a person after
he or she is first hired, providing opportunities to learn new skills, distributing resources that are
beneficial for the employee's tasks, and any other developmental activities.
HRD (Human Resources Development) has been defined by various scholars in various ways.
Some of the important definitions of HRD (Human Resources Development) are as follows:
Role of Ethics and Values in Developing Human Resources
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According to Leonard Nadler, "Human resource development is a series of organised activities,

conducted within a specialised time and designed to produce behavioural changes."
Gilley and Maycunich (2000), suggest that the purpose of HRD is to promote an individuals
personal growth, lifelong learning, and expertise, and the organizations productivity, profits, survival,
and effectiveness.
In the words of Prof. T.V. Rao, "HRD is a process by which the employees of an organisation are
helped in a continuous and planned way to (i) acquire or sharpen capabilities required to perform
various functions associated with their present or expected future roles; (ii) develop their general
capabilities as individual and discover and exploit their own inner potential for their own and /or
organisational development purposes; (iii) develop an organisational culture in which superiorsubordinate relationship, team work and collaboration among sub-units are strong and contribute to the
professional well being, motivation and pride of employees." .
According to M.M. Khan, "Human resource development is the across of increasing knowledge,
capabilities and positive work attitudes of all people working at all levels in a business undertaking."
Dilworth (2003) ascertains the core components of HRD as strategic change management,
integration of learning processes, knowledge management, career development, healthy and
productive workplaces, insourcing and outsourcing of training, team building, leadership development,
application of technologies to HRD and socio- technical fit.
Grieves and Redman (1999) look at the central characteristics of HRD and what HRD is designed
to achieve: firstly, they argue that HRD is a strategic intervention which facilitates competitive
advantage by helping the organization cope with change processes, competitive markets and turbulent
business environments. Second, they maintain that HRD involves a devolvement of responsibility to
line management. Third, they argue that HRD involves a renewed motivation towards training and
adult education. These characteristics involve a transition from dependence to independence, from
passive reactive learning to active and proactive learning and from single event learning to continual
lifelong learning. Finally, they argue that HRD proscribes a greater emphasis on the workplace rather
than the classroom as the center for learning.
Human resources development (HRD), as part of corporate culture, is a systematic and
continuous process allowing to identify, maintain and promote the individual performance and
learning potential of any staff member at any level. From the organisational point of view, HRD
should meet the qualitative and quantitative demand for human resources in a sustainable way. From
the employee point of view, the task of human resources development is to enhance and sharpen their
skills and interests. The goal is to reconcile these two target components to permit the best possible
fulfillment of the tasks of the organisation.
McGoldrick et al. (2002) identify four themes, that they argue are likely to influence future
research in the field of HRD. First, they argue that HRD has an important role to play in management
and leadership development. They also suggest that the notion of management competencies and the
development of models predicting future skills needs is especially relevant. Second, they maintain that
the links between HRD strategies and business strategies and the performance need to be clearly
elucidated in the context of increasing globalization and change. Third, they posit that HRD has a
pertinent role in the design and organization of work and work processes at the level of the enterprise.
Finally, they argue that HRD should focus on individually-based topics, such as employment
strategies, career development, work-identity and gender differences.
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These definitions more or less contain the main goals of HRD. Any other goals can be derived
from there as sub-goals, while any effort here is subordinate to the principle that employees must be
provided for the best possible fulfillment of tasks in the organisation. This is why HRD starts with
recruitment, involves all staff members and accompanies processes of change such as those triggered
by the Statistical Quality Offensive. It is important to maintain and develop the qualification of the
staff members. This is the only way to meet future challenges for official statistics.
HRD is thus a process, and not merely a set of mechanisms and techniques. The mechanisms and
techniques such as performance appraisal, counselling, training, and organization development
interventions are used to initiate, facilitate, and promote this process in a continuous way. Because the
process has no limit, the mechanisms may need to be examined periodically to see whether they are
promoting or hindering the process. Organisations can facilitate this process of development by
planning for it, by allocating organisational resources for the purpose, and by exemplifying an HRD
philosophy that values human beings and promotes their development.
Comparison Between HRD and HRM

Both are very important concepts of management specifically related with human resources of
organisation. Human resource management and human resource development can be differentiated on
the following grounds:
The human resource management is mainly maintenance oriented whereas human resource
development is development oriented.
Organization structure in case of human resources management is independent whereas
human resource development creates a structure, which is inter-dependent and inter-related.
Human resource management mainly aims to improve the efficiency of the employees
whereas aims at the development of the employees as well as organisation as a whole.
Responsibility of human resource development is given to the personnel/human resource
management department and specifically to personnel manager whereas responsibility of
HRD is given to all managers at various levels of the organisation.
HRM motivates the employees by giving them monetary incentives or rewards whereas
human resource development stresses on motivating people by satisfying higher-order needs.
The Requirement for HRD

HRD is required by any organisation that wants to be dynamic and growth-oriented or to succeed
in a fast-changing and fast-growing environment. Organisations can become dynamic and grow only
through the efforts and competencies of their human resources. Personnel policies can keep the morale
and motivation of employees high, but these efforts are not enough to make the organisation dynamic
and take it in new directions. Employee capabilities must continuously be acquired, sharpened, and
used. For this purpose, an enabling organisational culture is essential. When employees use their
initiative, take risks, experiment, innovate, and make things happen, the organisation may be said to
have an enabling culture. Even an organisation that has reached its limit of growth, needs to adapt to
the changing environment. No organisation is immune to the need for processes that help to acquire
and increase its capabilities for stability and renewal.
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HRD Functions
The core of the concept of HRD is that of development of human beings which should cover not
only the individual but also other units in the organisation. In addition to developing the individual,
attention needs to be given to the development of stronger dyads, or the relationship between twopersons, groups of the employee and his boss. Such dyads are the basic units of working in the
organisation. Besides several groups like committees, task groups, etc. also require attention.
Development of such groups should be from the point of view of increasing collaboration amongst
people working in the organisation, thus making for an effective decision-making. Finally, the entire
department and the entire organisation also should be covered by development. Their development
would involve developing a climate conducive for their effectiveness, developing self-renewing
mechanisms in the organisations so that they are able to adjust and pro-act, and developing relevant
processes which contribute to their effectiveness.
Brinkerhoff and Gill (1994) assert that HRD practitioners are expected to provide interventions,
initiatives, activities, and services that help organizations achieve their strategic business goals and
objectives. Performance interventions and change initiatives to the organizations strategic business
goals and objectives are critical to the success of HRD. When HRD goals are compatible with and
responsive to the organizations strategic goals and objectives, HRDs credibility increases.
Conversely, when they are not aligned, HRD is diminished. Therefore, HRD practitioners should
focus their attention on those areas of importance that will enhance the organization credibility rather
than diminish it.
Hence, the goals of the HRD systems are to develop:
The capabilities of each employee as an individual.
The capabilities of each individual in relation to his or her present role.
The capabilities of each employee in relation to his or her expected future role(s).
The dyadic relationship between each employee and his or her supervisor.
The team spirit and functioning in every organisational unit (department, group, etc.).
Collaboration among different units of the organisation.
The organisations overall health and self-renewing capabilities which, in turn, increases the
enabling capabilities of individuals, dyads, teams, and the entire organisation.
Features of Human Resource Development

The essential features of human resource development can be listed as follows:
Human resource development is a process in which employees of the organisations are
recognized as its human resource. It believes that human resource is most valuable asset of the
organisation.
It stresses on development of human resources of the organisation. It helps the employees of
the organisation to develop their general capabilities in relation to their present jobs and
expected future role.
It emphasise on the development and best utilization of the capabilities of individuals in the
interest of the employees and organisation.
It helps is establishing/developing better inter-personal relations. It stresses on developing
relationship based on help, trust and confidence.
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It promotes team spirit among employees.

It tries to develop competencies at the organisation level. It stresses on providing healthy
climate for development in the organisation.
HRD is a system. It has several sub-systems. All these sub-systems are inter-related and
interwoven. It stresses on collaboration among all the sub-systems.
It aims to develop an organisational culture in which there is good senior-subordinate
relations, motivation, quality and sense of belonging.
It tries to develop competence at individual, inter-personal, group and organisational level to
meet organisational goal.
It is an inter-disciplinary concept. It is based on the concepts, ideas and principles of
sociology, psychology, economics etc.
It form on employee welfare and quality of work life. It tries to examine/identify employee
needs and meeting them to the best possible extent.
It is a continuous and systematic learning process. Development is a life long process, which
never ends.
Benefits of Human Resource Development

Human resource development now a day is considered as the key to higher productivity, better
relations and greater profitability for any organisation. Appropriate HRD provides unlimited benefits
to the concerned organisation. Some of the important benefits are being given here:
HRD (Human Resource Development) makes people more competent. HRD develops new
skill, knowledge and attitude of the people in the concerned organisations.
With appropriate HRD programme, people become more committed to their jobs. People are
assessed on the basis of their performance by having a set of acceptable performance
appraisal system.
An environment of trust and respect can be created with the help of human resource
development.
Acceptability toward change can be created with the help of HRD. With the help of training
modules employees may be better equipped with problem-solving capabilities.
It improves the all round growth of the employees. HRD also improves team spirit in the
organisation. They become more open in their behaviour. Thus, new values can be generated.
It also helps to increase the efficiency level and culture within the organisation. It leads to
greater organisational effectiveness. Resources are properly utilised and goals are achieved in
a desired way.
It increases the participation of workers in the organisation. This improves the role of worker
and workers feel a sense of pride and achievement while performing their jobs.
It also helps to collect useful and objective data on employees programmes and policies,
which further facilitate better human resource planning.
Hence, it can be concluded that HRD provides a lot of benefits in every organisation. So, the
importance of concept of HRD should be recognised and given a place of eminence, to meet the
present and future challenges in the organisation.
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As discussed, human resource development is set of planned and systematic activities designed
by an organization to provide opportunities to its members to learn skills necessary for the present and
future job requirements. The process of HRD involves the development of expertise in the employee
through organizational development and training and development. The aim of HRD is to improve the
performance of the employees.
Gilley and Eggland (1989) state that the mission of HRD, that is, what it does, is (a) to provide
individual development through adult learning to improve performance related to a current job; (b) to
provide career development focused on performance improvement related to future job assignments;
and (c) to provide organizational development that results in both optimal utilization of human
potential and improved human performance, which together improves the efficiency of the
organization.
The main functions of HRD are
1. Training and development: Training and development is aimed at improving or changing the
knowledge skills and attitudes of the employees. While training involves providing the knowledge and
skills required for doing a particular job to the employees, developmental activities focus on preparing
the employees for future job responsibilities by increasing the capabilities of an employee which also
helps him perform his present job in a better way. These activities start when an employee joins an
organization in the form of orientation and skills training. After the employee becomes proficient, the
HR activities focus on the development of the employee through methods like coaching and
counseling.
2. Organization development: Bradford and Burke (2006), state that the development of models
and planned change is facilitated by the development of OD. OD is one form of organization change.
Based on
(a) a set of values, largely humanistic,
(b) application of the behavioral sciences, and
(c) open system theory,
OD is a system wide process of planned change aimed toward improving overall organization
effectiveness by way of enhanced congruence of such key organizat ional dimensions as external
environment, mission, strategy, leadership, culture, structure, information and reward systems, and
work policies and procedures.
OD is the process of increasing the effectiveness of an organization along with the well being of
its members with the help of planned interventions that use the concepts of behavioral science. Both
micro and macro changes are implemented to achieve organization development. While the macro
changes are intended to improve the overall effectiveness of the organization the micro changes are
aimed at individuals of small groups. Employee involvement programmes requiring fundamental
changes in work expectation, reporting, procedures and reward systems are aimed at improving the
effectiveness of the organization. The human resource development professional involved in the
organization development intervention acts as an agent of change. He often consults and advising the
line manager in strategies that can be adopted to implement the required changes and sometimes
becomes directly involve in implementing these strategies.
Gilley and Maycunich (2000) conclude that HRD consists of three professional practice domains:
organizational learning, performance, and planned change or OD. As with definitions of HRD, French
and Bennis (1969) defines OD as a response to change, a complex educational strategy intended to
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change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new
technologies, markets, and the dizzying rate of change itself. Burke (2002) defines OD as a planned
process of change in an organization's culture through the utilization of behavioral science
technologies, research, and theory. Cummings and Worley (2001) define OD as a systematic
application of behavioral science knowledge to the planned development and reinforcement of
organizational strategies, structures, and processes for improving organizational effectiveness.
3. Career development: It is a continuous process in which an individual progresses through
different stages of career each having a relatively unique set of issues and tasks. Career development
comprises of two distinct processes. Career Planning and career management. Whereas career
planning involves activities to be performed by the employee, often with the help of counselor and
others, to assess his capabilities and skills in order to frame realistic career plan. Career management
involves the necessary steps that need to be taken to achieve that plan. Career management generally
focus more on the steps that an organization that can take to foster the career development of the
employees.
Bates and Chen (2004) point out at least three distinct paradigms on the role and function of
HRD in work systems:
(a) the learning outcome, that emphasizes increases in short and long-term learning, work-related
learning capacity of individuals, groups, and organizations through development and
application of learning-based interventions for the purpose of optimizing human and
organizational growth and effectiveness;
(b) the performance outcome, whose focus is on those elements of work behavior that directly
advance the mission of the work system in which those activities are embedded; and
(c) the meaning of work outcome that emphasizes the creation of work systems that are capable
of fulfilling important cognitive, emotional, and social needs of the individuals contributing to
long-term societal and human development. The learning outcome is concerned with fostering
learning at the individual, group, and organizational levels. Although there is not agreement
about the role of adult learning
Ethical Issues and Human Resource Development

Relevance in a discussion of ethical issues and Human Resource Development can pin point the
link between ethics and policy at a organisational level. Professionals working in the field of human
resources usually do not have a deciding voice or role when pursuing such matters. However, this
should not diminish responsibility of the professionals when it comes to preparing policy advice for
consideration by those who are in-charge of the organisational affairs. However, it should be ensured
that the professional's knowledge and skill is taken into consideration when it comes to determining
the means to secure the desired end.
Discussion about the relationship about means and ends goes beyond issues of policy. One of the
fundamental insights in ethics is that human beings always ought to be considered as ends and never
as means.
Ruona et al. (2003) identifies five challenges facing HRD in the future. First, they argue that
HRD needs to adopt a more high-profile presence in organizations and be recognized for its
contribution to the bottom line. They maintain that HRD is poorly represented and suffers from
inadequate resources fuelling its undervalued status in organizations. Second, they argue that there is a
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strong need for the profession to demonstrate return on investment. They posit that this inability to
evaluate training effectiveness is inhibiting the growth of HRD in organizations and the profession in
general. Third, HRD needs to identify its core competencies and competitive advantage. This will
allow the profession to define and differentiate itself and create it s own unique identity. Fourth, they
maintain that there exists a need to rigorously define the communities served by HRD and examine the
role of HRD in the broader community. Finally, they suggest that HRD needs to move towards
professionalization and embrace standards of practice and a certification policy. They insist that a
failure to move in this direction will result in a loss of identity with the profession and future failure to
attract intelligent, skilled personnel to the field.
The point is that such an ethical principle has great bearing on the way in which one
conceptualises the place of training and education in society. Allegiance to this principle even gives
grounds for misgivings concerning the term 'Human Resources'. Use of the word 'resource' implies
that people are some sort of stockpile to be ordered up and deployed in the interests of others. Perhaps
a better term might be 'Human Relations'. This would surely leave scope for all the traditional
functions engaged in by the professional.
If people are ends and not means and if they are to be recognised as being of equal importance
then what are the ethical implications for those who would deploy expertise in the management of
human relations?
As such, it becomes necessary to avoid a temptation to be 'parentalistic' in the evolution of policy
and practice. For the time being there is a fortunate congruence between management policy and a
broad ethical principle that recognises the autonomy of employees.
Current best practice in management recognises the need for employee involvement in decisionmaking. The training environment is beginning to reflect this understanding that the success of
programmes in multi-skilling, quality circles etc. all depend on there being a pool of competent,
flexible employees. One reason for the blurring of distinctions between education and training has
been the realisation that modern industrial practice requires a workforce possessing many of the
attributes developed under the principles of liberal education. These include a healthy respect for the
autonomy of individuals.
In an environment in which the importance of 'corporate culture' has been recognised, the HRD
professional is faced with a whole range of ethical issues that relate to the nature and role of
socialisation in the workplace.
Strategies Needed for Augmenting Corporate Ethics

Since HRD professionals have an important role to play in the formation of a more ethical society,
and education becomes better recognised as a lifetime process, it is necessary that employment related
training concentrates on both the cognitive and affective domains with equal attention.
So it is that training and education would include workshops designed to promote 'company
values'. Part of this process might include a process of socialisation designed to undermine those
customs and practices that lead to inefficient or unethical behaviour. Whilst it is certainly possible to
proceed in such a fashion, it is open to serious reservation on the grounds of ethics and efficacy.
Training and education should be designed to take account of the practice and experiences of
employees. HRD professionals will need to do more than look at the nature of codes, training etc.
There is a need to examine the structure of work organisations and practices. What is the aim of this
organisation? How can this best be achieved using the resources and people at hand?
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Does the organisation require forms of behaviour or the application of techniques that frustrate
the achievement of all aims (explicit and implicit)? Do patterns of remuneration and evaluation reflect
the organisation's stated objectives.
From the point of view of efficient and effective functioning in an organisation, a healthy
environment essentially motivates the employees so that they become more likely to strive to support
the activities of the unit to which they belong. People will even develop attachments sufficient to
encourage them to be proactive in support of an organisation that treats them with the dignity reserved
for ultimate ends.
Need for an Ethical HRD Professional

Whilst much of the above has been concerned with issues to do with the way employees might be
treated, it is as well to note that the list of stakeholders includes: management, shareholders, customers,
suppliers, professional advisers, the wider public and so on. In contributing to the development and
maintenance of an organisation's ethos, the HRD professional will need to be aware of the interests of
each; not least because they intersect with the interests of parties more immediately affected.
HR practitioners can be a motivator for building a strong ethical foundation, although one person or
one department can not single-handedly change a culture, which has the indicators of a system having
weak ethical values. As such it is suggested that all the employees within the organisation should act as a
cohesive unit in order to augment its efficiency and efficacy.
An organization's core values are manifested by its culture; that is, in the basic ways that business is
handled, such as how decisions are made and how rewards are distributed. Employees learn these ways of
doing business through observing coworkers and leaders.
A written Code of Ethics cannot be institutionalized unless organization leaders show their respect
for individuals and the organization by engaging in legal and moral behaviors. Employees will learn to
trust and respect each other and managers only if they observe characteristics that merit that trust and
respect.
Putting a Code of Ethics in place and encouraging leaders to model desired behaviors are important
steps toward creating an ethical organization. Each employee must understand his or her role in carrying
out the organization's values, as well. Expectations around standards of behavior in everyday situations
must be established and enforced.
After expectations are initially established, ongoing and open communication systems must be in
place to ensure a forum for discussion exists regarding ethical issues. Informal meetings and accessibility
are two ways that supervisors and HR practitioners can keep the channels of communication flowing.
In order to achieve its predetermined goals HR professionals must commit to the following:
Professional Responsibility
HR professionals must shoulder responsibility for adding value to the organizations and
contributing to the ethical success of those organizations. Acceptance of professional responsibility
adds to ones individual decisions and actions. HR professionals engage in activities that enhance its
credibility and value. A HR professional must:
1. Adhere to the highest standards of ethical and professional behavior.
2. Measure the effectiveness of HR in contributing to or achieving organizational goals.
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3. Comply with the law.

4. Work consistently within the values of the profession.
5. Strive to achieve the highest levels of service, performance and social responsibility.
6. Advocate for the appropriate use and appreciation of human beings as employees.
7. Advocate openly and within the established forums for debate in order to influence decision
making and results.
Professional Enrichment and Development

HR professionals must strive to meet the highest standards of competence and commit to
strengthen competencies on a continuous basis. They must:
1. Commit to continuous learning, skill development and application of new knowledge related
to both human resource management and the organization.
2. Contribute to the body of knowledge, the evolution of the profession and the growth of
individuals through teaching, research and dissemination of knowledge.
Ethical Leadership
HR professionals must exhibit individual leadership as a role model for maintaining the highest
standards of ethical conduct. They shall:
1. Be ethical and act ethically in every professional interaction.
2. Question pending individual and group actions whenever necessary to ensure that decisions
are ethical and are implemented in an ethical manner.
3. Seek expert guidance if ever in doubt about the ethical propriety of a situation.
4. Through teaching and mentoring, champion the development of others as ethical leaders in
the profession and in organizations.
Faiencess, Equity and Justice

HR professionals must be ethically responsible for promoting and fostering fairness, equity and
justice for all employees in the organizations. They should:
1. Respect the uniqueness and intrinsic worth of every individual.
2. Treat people with dignity, respect and compassion to foster a trusting work environment free
of harassment, intimidation and unlawful discrimination.
3. Ensure that everyone has the opportunity to develop their skills and new competencies.
4. Assure an environment of inclusiveness and a commitment to diversity in the organizations.
5. Develop, administer and advocate policies and procedures that foster fair, consistent and
equitable treatment for all.
6. Support both ethical and legal decisions made by the organizations without any personal
interest.
7. Act in a responsible manner and practice sound management in the organizations.
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Use of Information
HR professionals should protect the rights of individuals, especially in the acquisition and
dissemination of information while ensuring truthful communications and facilitating informed
decision making. They shall:
1. Acquire and disseminate information through ethical and responsible means.
2. Ensure only appropriate information is used in decisions affecting the employment
relationship.
3. Investigate the accuracy and source of information before allowing it to be used in
employment-related decisions.
4. Maintain current and accurate HR information.
5. Safeguard restricted or confidential information.
6. Take appropriate steps to ensure the accuracy and completeness of all communicated
information about HR policies and practices.
7. Take appropriate steps to ensure the accuracy and completeness of all communicated
information used in HR-related training.
While each organization is free to establish its own ethical framework, suggestion for two fold
ways in order to build an ethical organization may be mutual trust and respect. Among the Human
Resource practitioners across the Globe, these two characteristics surfaced time and again as critical
components of ethical organizations. Given the conjunction of these two facts it is not surprising that
there are so many issues confronting the HRD professional.
In an organization where trust is prevalent, information is accurate, timely, and complete.
Coworkers share their ideas and concerns. People at all levels accept suggestions for ways to improve
the work. Alternatives are discussed freely, and clear and concrete goals are developed and shared
across the organization.
In today's rapidly changing marketplace, companies must be highly flexible to meet customer
demands. The result is that employees must be prepared to shift gears and learn new skills or serve on
various work teams to complete projects.
Human Resource professionals are likely to be challenged daily with issues that present ethical
dilemmas. The choices that HR professionals make, or guide others to make, may affect the
productivity, profitability, and the public image of their organization.
Conclusion
Finally, it remains to be said that ethics is about the relationships between people. Being
comfortable in the ethical landscape is of immense practical importance. The organization's leadership
fosters initiative and creativity. In an organization in which respect is a demonstrated value, employees
and managers treat each other with dignity and make it known that they care about the work they
perform. Individual differences and perspectives are appreciated and promoted. All employees,
regardless of their position, are recognized and rewarded for their contributions. Human Resource
professionals are in a unique position to observe the organization's ethics and serve as a catalyst for
change if the ethics system is weak. Human Resource professionals can, and should, serve as role
models for the organization's core values.
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References
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CHAPTER
10
Muzna Zafar
HR Consultant and Trainer
Manipal University and VGT Institute,
Bangalore
Nupur Rastogi
Process Lead
Robert Bosch Engineering and Business
Solutions (RBEI),
Bangalore
ABSTRACT
Social Media, this is the buzzword these days everywhere. It is becoming a significant
platform for interaction, both for the Individuals as well as organizations. Few years ago, social
media was considered only as a new means of networking. In the recent years, it is becoming an
important part of the organizational practices as well. It is now being used to add value to the
business as well as working environment. Some of the popular social media platforms are
Facebook, Linkedin, Twitter and the list is adding up each day with new social media platforms to
suit the corporate and individual needs. The organizations are also looking at developing the
internal social media platforms as well as integrating the external social media platforms to suit to
their business needs.This paper aims at exploring the evolution of Social Media, its usage for HR
Practices and branding for organizations.
Key Words: Social Media, Human Resource, Talent management Collaboration, Networking
Introduction
The Information technology revolution has brought with it new boons for the corporate social
environment. Social media is one of the popular and effective tools amongst them. Organizations
whether directly or indirectly are present on social networking sites. Social networking is shifting the
way we interact, communicate, organize and form opinion. Growing rapidly, companies, large and
small, can no longer ignore or try to block social networking in their environment. Today customers,
partners, and employees, alike are engaging with social media. Social media is providing a platform to
help customers, build the brand, attract talent, and give a personal face to the company. It is also
making it presence felt in HR practices by providing an opportunity to stay connected, gather feedback,
recruit, and collaborate. As a result, companies are exploring social media in their environment to
enable the innovation, increase productivity, and accelerate growth that will drive business. But, with
the new opportunities there are increased privacy and compliance concerns that need to be addressed
through strategic evaluation and implementation. Planned integratiion of strategy and governance with
the social media tools can bring great benefits for the organizations.
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Social Media
Social media refers to the means of interactions among people and organizations in the virtual
communities and networks. These networks are used to create, share, and exchange information and
ideas. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based
applications that build on the ideological and technological foundations of Web 2.0. Social media
depends on mobile and web-based technologies to create highly interactive platforms through which
individuals and communities share, co-create , discuss, and modify user-generated content.
Social networking refers to the use of online social networks such as Facebook, twitter, Hi5 and
Google+ to communicate with other people. A social network can include blogs and ways to share text
and ideas, groups, private messaging, a chat 1facility and file- or photo-sharing functions2 .iIt is a Webbased tools and technologies used to share information and turn communication into interactive
dialogues with internal or external audiences 3.
It is the technology that allows users to share their thoughts, work and multimedia, and comment
on others content. Social media enables you to become part of different networks of people with
similar interests4.
To an individual, social media is anything which allows information to be published, shared and
commented on online without the influence of editors, organizations or the state.
To organisations, social media is a selection of online platforms which allow information to be published,
shared and commented on online and enable organizations to communicate with individual stakeholders.5
At the beginning of 2004 most of the major networking sites such as Facebook, Twitter, Flickr and
YouTube were nonexistent. By May 2011 Facebook had over 1 billion active users; in 2011 YouTube
had received more than 1 trillion views.
These social networking sites have seen an increase in usage over the past few years .A research
statistics showed that Seventy-five percent of individuals between the ages of eighteen to twenty-four
have a profile on these social networking sites. One-third of individuals between the ages of thirty-five
to 6forty-four have an active account posted online. Additionally, nearly twenty percent of individuals
between the ages of forty-five and fifty-four have a profile posted on a social network.
The popular social media platforms are well known: Twitter, YouTube, Facebook, Instagram and
WordPress, to name but a few. But these are just a few of the hundreds of social media platforms
available. There are many social media platforms used for different purposes some of these are:
Professional Sharing: Linkedin

Social Sharing: facebook
Video Sharing:Youtube and Vimeo
Picture Sharing:Flickr and Instagram
Blogging: Worpress,Tumblr
Microblogging: Twitter
1 http://blog.oureducation.in/merits-and-demerits-of-social-networking-sites/
2 http://blog.oureducation.in/merits-and-demerits-of-social-networking-sites/
3 (Source: SHRM Research Spotlight: Social Mediain the Workplace (November 2011 www.shrm.org/)
4 http://www.nhsemployers.org/Aboutus/Publications/Pages/HR-social-media-NHS.aspx
5 http://www.nhsemployers.org/Aboutus/Publications/Pages/HR-social-media-NHS.aspx
6 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2020790
106
In 2004, Facebook was launched, and then it was designed for use by college students only. In
2006 everyone was allowed to access to Facebook, now it evolved and has also providing a
professional platform to users. Twitter is one popular micro-blogging site. It is being used in different
ways including sharing brief information with users and providing support for ones peers. BIG G
Google+, Although It has not been able to create proper niche in social sites up till now but business
class is pushing it just to help its pages to get upper ranking in Google search.
Evolution of sites from personal to professional

Since the time of inception social media platforms have evolve from being used for personal
purposes to professional.SixDegrees.com was the first recognizable social media platform launched in
1997 since then the use of social media has expanded tremendously. Between 1997 and 2001, users were
able to set up professional, personal, and dating profiles on various social networking sites, such as
Friends, Asian Avenue, Black Planet, and MiGente.Friendster was launched in 2002 to provide friendsof-friends since 2003, new networking sites have continuously launched7.
Social networking is still the fastest growing active social media behavior online, increasing from 36
percent of global Internet users to 59 percent managing their profile on a monthly basis by the end of 2011.
Social Media Usage: Some Facts

76 percent of U.S. companies used LinkedIns 100 million registered users for recruiting. 84
percent of job seekers have a Facebook profile, and 48 percent of them have done at least one
job-hunting activity on Facebook in the past year.
80 percent of companies use social media for recruitment... And 95 percent of them use
LinkedIn (searchenginejournal.com, February 2012).
84 percent of the Fortune Global 100 uses at least one social media platform (BursonMarsteller, February 15, 2011).
IBM has 21 YouTubeTM channels, GE 12 and Ford 10:40 percent of corporate Twitter users
engage in customer services (Burson-Marsteller, February 15, 2011)
Social Media for Business

Social media is well-established as a consumer and brand oriented set of tools. Increasingly, social
media is being offered as an innovative solution for internal effectiveness. These social networking sites
also provide huge number of target customers at a time, so it can be used to promote business.
The key point is that social media enables to share questions, answers, ideas and knowledge with a
broad group of fellow professionals, independent of geography and hierarchy Innovative companies are
mining connections on key social networking sites, maintaining organizations reputation online, and
watching how their own talent is interacting online. They are also leveraging social media to create
talent communities that engage passive candidates and promote their brand. Corporates are having
different approaches towards social media access as per a report it was found that most companies
allow some type of access to social media at work in varying degrees such as 43% of employees work in
organizations in which social media access is completely open. 24% reported that their access was
monitored. Only 16% of companies completely block their employees access to social media at work.
107
Commenting on the role of social media in an interview to the Harvard Business Review,
Howard Schlutz (CEO Starbucks) mentioned .Whether you are creating a brand, building one,
or running a big one, you d better understand social media, because there is a seismic shift in how
people are gaining access to information and, as a result, how they are behaving.8
Social media in Human Resource Management

The use of social media in human resource is in early stage. There are certain areas were social media
has already made roads and few areas still need exploration. Few organizations are exploring the avenues
and few are being apprehensive to use it. But, the fact remains that social media is providing a platform that
needs to be tapped appropriately. The major areas are hiring, collaboration and communication, talent
management and internal branding. A research was conducted by Wipro Consulting Services to study the
impact and relevance of social media in four major HR areas within five industries with the special focus on
Indian market. The findings reflects that three areas Internal Branding, Collaboration and Communication
and Hiring were considered almost equally suited for use of social media, with Internal Branding favored
the most. Talent Management was deemed least suited among these for using social media9 and there was
difference in opinion in the use of social media in different industries.
Table below presents the finding and give an overview of readiness by industry, enterprise size
and respondent type in using social media platforms in all four areas of HR10.
Table 1: Industry Readiness for Using Social Media

Process Area
Hiring
Collaboration and
Communication
Talent Management
Internal
Branding
Parameters
Usage
Openness
Capability
Openness
Capability
Openness
Capability
Openness
Capability
Overall
Yes
Yes
Yes
Yes
Not Sure
No
No
Not Sure
Not Sure
Not Sure
Yes
Not Sure
Yes
Not Sure
No
No
IT and ITES
Yes
Yes
Yes
Yes
Not Sure
yes
Manufacturing
Yes
Yes
Yes
Yes
Not Sure
No
Not Sure
Yes
Not Sure
Yes
No
Yes
Yes
Yes
No
No
Status by Industry
BFSI
Retail
Telecom
Not Sure
Not Sure
Not Sure
Yes
Not Sure
No
Not Sure
Not Sure
NA
No
Not Sure
No
No
No
Not Sure
Yes
Status by Enterprise Size

Large
Yes
Yes
Yes
Yes
Not Sure
No
No
Not Sure
Not Sure
Medium
Yes
Yes
Yes
Yes
Not Sure
No
No
Not Sure
Not Sure
Small
Yes
Yes
Yes
Yes
Not Sure
No
No
Not Sure
Not Sure
Yes
Yes
Yes
Not Sure
Not Sure
No
No
Not Sure
Not Sure
Not Sure
No
No
Yes
Not Sure
Status by Respondent Type

Decision
Makers
Influencers
Implementers
Yes
Yes
Yes
Yes
Not Sure
Yes
Yes
Yes
No
No
No
Not Sure
No
Yes
Not Sure
Yes
Not Sure
Not Sure
No
No
Not Sure
Not Sure
Source: http://www.wipro.com/Documents/Social_Media_Report_Feb_2012.pdf
8 http://www.wipro.com/Documents/Social_Media_Report_Feb_2012.pdf
108
Talent Acquisition and Talent Management

Recruitment practices are changing with time, the conventional methods of recruitment are no
longer the only methods to hire candidates .Talent acquisitions is the first areas within many
companies to embrace the social media opportunity. As these social media are providing platform to
look for new avenues to hire employees and bring them on board. It has accelerated the entire
recruitment process of job posting to sourcing candidates, reviewing rsums, making an offer, and
onboarding.
Hiring through the networking sites are considered as cost effective compared to traditional
methods through advertisement, consultancy, and agencies. As recruitment is not only about hiring a
candidate against a job vacancy, it is about creating a talent pool in the Organisation to gain
competitive advantage. Candidates who are looking for a job change are considered as active
candidates for the job opening but there are certain prospective candidates who are not actually
looking for a job but may accept a lucrative offer they are considered as passive candidates.
Organizations are using several methods to mine external passive candidates LinkedIn and face book
provide opportunity to reach those passive candidate before they are approached by the competitor.
Screening and Background Check

Employers are also visiting social media such as Facebook and Twitter to look into the profile of
potential candidates before making hiring decisions sometimes as part of an official screening process
but, more often than not, the act of Googling is simply second nature and is done without any advance
planning or thought. As per the recent survey reported by the Wall Street Journal, employers do screen
out candidates for unlawful reasons, such as race, religion, or pregnancy. The study results reflect,
one-third of employers search for a job applicants online activity early in their hiring process.11
The New York Times reports that seventy-5% of companies require job recruiters to conduct
research on job candidates. Additionally, 70% of recruiters denied candidates employment because of
information found online.
Though, the question has been raised on validity of screening through these networking sites as it
raises both legal and ethical issue. There are legal ramifications of social media background checks.
Many people believe social media background checks are todays weapon in the murder of privacy.
These background checks are a one-stop shop for anyone eager to dig up incriminating evidence on
another person.12
An Example of Social Media Recruiting: LOreal

The LOreal Group is the worlds largest cosmetics and beauty company, with an annual turnover
of 20.3 billion, a presence in 130 countries, 27 global brands, 68,900 employees and 19 Research &
Innovation centres with brands such as Garnier, Maybelline New York and the Body Shop. They
widely use social recruitment in various countries worldwide (such as India and the Philippines),
however it is especially prominent in the United Kingdom and the United States. LOreal used
LinkedIn to solve 3 new challenges in their social recruiting process. The company recruit 6,000 new
managers a year (including internships), using all the regular techniques, but wanted to solve these
challenges: sourcing difficult-to-hire candidates, reaching passive candidates and online reputation.
11 http://www.delawareemploymentlawblog.com/social-media-in-the-workplace/
109
LOreal have a uniform branding on all the websites for the countries in which they operate. The
jobs section of each website lists available positions in that country and only a few link to the relevant
social networks. The UK LOreal.Jobs website links to the LOreal Talent Recruitment Facebook
page, the LOreal LinkedIn page, the LOreal Luxe TalenTube Facebook page and the
@LOrealCareers Twitter feed. LOreal have careers based Twitter accounts for the UK
(@LOrealGradJobs) with over 1,100 followers, and a general account (@LOrealCareers) with
almost 3,500 followers. 13
Recruiting Trends
HR Managers from divers industries were interviewed to identify the commonly used sources for
hiring. The results of the report are provided in table 2 ( Yearly comparison of sources used for hiring)
While employee referral programs still remain the most important channel to find quality hires, Social
professional networks are gaining popularity at a fast pace .
Table 2: Yearly Comparison of Sources Used for Hiring 14

S.No.
1
2
3
4
Sources of Quality
Hires
Employee Referral Programs
Recruitment Agencies
Social Professional Networks
Internal Resume Database
Percentage
2011
Percentage
2012
Percentage
2013
61
45
21
32
57
35
25
29
65
42
41
27
Increase(+)
Decrease(-)
+4
-3
+20
+12
Source: http://trak.in/career/linkedin-indian-recruitment-trends-2013/
Benefits of Social Media Recruiting

1. Diversity: Social Media channels offer diverse results that recruiters can filter by a wide
range of demographics and career level to match their needs.
2. Referral Improvement: Power of an employee referral enables the hiring manager to
access additional resources prior to bringing on the referred candidate. By applying this
method to social media tools, social media recruiting can help hiring managers can review
a candidates resume, co-worker recommendation, review skills, previous job profiles and
professional references for credibility to ensure that the hire is a good move.
3. Large Reach: Social media tools help recruiters engage with large audiences to get a
comprehensive sense of characteristics, culture, experience and personality.
4. Increases Visibility: Recruiting through social media enables companies and job seekers
to build their own community or forum with career opportunities and sift through multiple
channels for relevant results. Most social platforms offer options to filter and match job
opportunities depending on location, skill level, titles, years of experience, and salary
range.15
13 http://linkhumans.com/case-study/how-loreal-use-social-media-for-recruitment
14 http://trak.in/career/linkedin-indian-recruitment-trends-2013/
15 http://www.socialstrategy1.com/4-benefits-of-social-media-recruiting-and-creating-an-overall-strategy/
110
Collaboration and communication

The use of social media for collaboration and communication is promising as it is used in the
areas as Organizational or policy communication, virtual meetings, technical discussions and
employee recognition. One more area where employers are consistently keen on using social media is
in the area of employee recognition, while this is not common in the current day, however, we expect
to active employee engagement activities on this platform. While LinkedIn s recommendation had
initiated this trend many years back in some form, however, Facebook and Twitter have taken this to
the next level. If one were to observe the linking of social media tools like Facebook, LinkedIn or
Twitter, it becomes evident that today employers have an option to recognize their employees on
multiple platforms using simple and flexible techniques. Will gen Z embrace this form of recognition
or are will they look forward to recognition elements like their predecessors is something Human
Resource professionals need to think now. 16
Beside this when it comes to collaboration and communication the availability of new technology
and mobile devices pose a significant challenge for Organisation. The availability of on demand tools
could be a double edged sword as the information is easily accessible, but organisation may not be
prepared to deal with data security and privacy issues if a device is lost. To fix this many advanced
companies use internal, secure versions of instant messaging, YouTube, Twitter, and virtual
classrooms to collaborate.
Social Media Risks and Opportunities

Effectively managing the risks and rewards of social media is one of the biggest challenges faced
by HR professionals and recruiters today. Many organizations have found novel ways to use social
media to recruit outstanding talent, engage their in-house and virtual workforces, as well as manage
their global brands. Still it remains a tight rope walk for the organizations because of its sensitive
nature any negligence and mishandling of information can lead to a significant organizational liability.
HR and recruiting professionals must stay up to date and in the know about social media.
Sites like LinkedIn are a great resource for business owners to find new talent or even partners
for a new venture. Facebook, Twitter, LinkedIn, Google+ and many others are great forums to talk
about the business, services and even exhibit industry expertise that gives opportunity for business
promotion. Few networking sites also provide a business owner with the opportunity to advertise to a
very specific demographic for very little money to save advertising costs. Organisation or individual
can build trust and credibility amongst their audience by consistently interacting and posting which in
turn can lead to better business, but, the biggest advantage of these networking sites is the ease of
communication as most of them are free and fast resource.
The one of the major concern associated with the social networking sites are the privacy and data
security issues. Most of these sites open for everyone who wants to participate. Users have expressed
their genuine concern about privacy of their personal information, but do not care about safeguarding
it. Although a lot of the information individuals supply on social-networking sites is elective, users
are progressively more comfortable with displaying a great deal of personal information online.
There are no proven results which show that the social media has shown positive results in terms
of operational benefits. It is also considered as these sites are time consuming and the amount of time
spent by individuals has risen to great extent but there are no records to prove that it has generated
111
tangible results for the company. The use of social media in hiring and screening may also raise ethical
and legal questions and in rest of the HR field it is in early stage. Many companies that use social
media struggle to successfully integrate it into their daily business routines. The challenge is
frequently found within the creation, execution, and enforcement of social media policies. Many
companies do not establish policies to govern social media usage or can find their policy difficult to
enforce due to lack of employee engagement and training on the topic 17.
Given these challenges associated with multimedia, but the fact is that this multigenerational
workforce cannot stay away from networking sites so forming the right strategy and implementing is
essential for organizations to develop effective communication plans that allow for ongoing dialogue
and feedback. Communication serves as a strategic change lever by facilitating the transition from
awareness to the actual ownership and adoption of social media guidelines and integration of social
media tools .Effective communication helps put into practice the internal and external guidelines
required to govern its use. Help to tap the opportunities it brings18.
Conclusion
Social media is providing a new platform to various HR functions. Hiring and screening of
candidates are the areas where social media is making its presence felt. For recruitment organisation
can target candidates, source passive and active applicants, consistent with the organizations brand
and strategy. So collaborating with the right candidates will give organisation an edge over its
competitors. Beside this, these sites are good for collaboration and creating a brand image. Individual
or company can showcase their worth by regularly updating and projecting themselves by reinforcing
identification with the organization and promoting the brand. These sites also help in creating and
generating information and awareness .Companies can also use this platform to share the policies.
Though, with the several opportunities there are certain challenges associated with the use of this
medium. Organisation needs to know that employees are skilled in dealing with abundance of
information and the organizational internal policies are up to date related to reimbursement for data
plans and devices. To deal with this organisation need to strategically frame policies and create
awareness about the use of social media, train managers on the companys social media policy.
Document all policies, procedures and, practices. In this scenario it is not viable for any progressive
organization to restrict or avoid the networking sites. Hence, the need is to skillfully adapt and define
the rules for usage of social media in organizations.
References
1. Merits and Demerits of Social Networking sites (Retreived on: November 10,2013) http://blog.oured
uc ation.in/merits-and-de merits-of-social-networking-sites/ (Retrieved on 29 November,2013)
2. SHRM Research Spotlight: Social Media in the Workplace (November 2011 ):(Retreived on 25
November,2013) www.shrm.org (Retrieved on 25 November,2013)
3. HR and social Media in the NHS http://ww w.nhsem ployer s.org/Aboutus/ Publications/Pages/HRsocial-media-NHS.aspx (Retrieved on 29 November,2013)
4. "Privacy is Dead: The Birth of Social Media Background Checks" by Sherry Denise Sanders (March
2012) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2020790 (Retrieved on 25 November,2013)
17 http://www.kpmg.at/fileadmin/KPMG/Publikationen/Broschueren_und_Studien/Human_Resources_and_Social_Media.pdf
18 http://www.kpmg.at/fileadmin/KPMG/Publikationen/Broschueren_und_Studien/Human_Resources_and_Social_Media.pdf
112

5. "Human resources and social media" by Karen Isaacson and Sarah Peacey (2012)
http://www.kpmg.at/fileadmin/KPMG/Publikationen/Broschueren_und_Studien/Human_Resources_an
d_Social_Media.pdf Retrieved on 25 November,2013)
6. Social Media: Impact and Relevance in Managing Human Resources in India by Anupam Pareek, Pratik
Rajiv Jindal, Santhi Nair, Shiv Kumar Muthyala ( Feb 2012) http://www.wipro.com/Documents/Social_Me
dia_Repo rt _Feb_2012.p df (Ret rieved on 28 November,2013)
7. How LOreal Use Social Media for Recruitment [CASE STUDY] by Laurence Hebberd
http://linkhumans.com/case-study/how-loreal-use-social-media-for-recruitment
(Retrieved on 25
November,2013)
8. "The 4 Biggest Social Media Trends in HR Right Now" by Steve Miranda (May 7,2013)
http://www.ere.net/2013/05/07/the-4-biggest-social-media-trends-in-hr-right-now/ \(Retreived on 25
November,2013)
9. 4 Benefits of Social Media Recruiting and Creating an Overall Strategy by Jeanine Nelson
http://www.socialstrategy1.com/4-benefits-of-social-media-recruiting-and-creating-an- overall-strategy/
(Retrieved on 25 November,2013)
10. Social Media for Trainers:Techniques for Enhancing and Extending Learning by Bozarth, Jane
(Publication: Wiley,2010)
Annexure
Table 1: Industry Readiness for Using Social Media
Process Area
Collaboration and
Communication
Hiring
Talent Management
Internal Branding
Parameters
Usage
Openness
Capabality
Openness
Capability
Openness
Capability
Openness
Capability
Overall
Yes
Yes
Yes
Yes
Not Sure
No
No
Not Sure
Not Sure
Status By Industry
BFSI
Not Sure
Yes
Not sure
Yes
Not sure
No
No
Not sure
Not sure
IT and ITES
Yes
Yes
Yes
Yes
Not sure
Yes
Not sure
Yes
Not sure
Manufacturing
Yes
Yes
Yes
Yes
Not sure
No
No
Not sure
Not sure
Not sure
Yes
Not sure
Yes
No
NA
No
Not sure
No
Telecom
Yes
Yes
Yes
No
No
No
No
Not sure
Yes
Large
Yes
Yes
Yes
Yes
Not sure
No
No
Not sure
Not sure
Medium
Yes
Yes
Yes
Yes
Not sure
No
No
Not sure
Not sure
Small
Yes
Yes
Yes
Yes
Not sure
No
No
Not sure
Not sure
Yes
Yes
Yes
Not sure
Not sure
No
No
Not sure
Not sure
Not sure
Retail
Status Enterprise Size
Status By Respondent Type

Decision
Makers
Yes
Influence
Implementers
Yes
Yes
Not sure
Yes
Yes
Yes
Not sure
Yes
Yes
Not sure
No
No
Yes
Yes
No
No
No
Not sure
No
Not sure
Not sure
No
No
Not sure
Not sure
113
Table 2: Yeary comparison of Sources used for Hiring

S. No.
1
2
3
4
Sources of
quality Hires
Percentage
2011
Percentage
2012
Percentage
2013
61
45
21
32
57
35
25
29
65
42
41
27
Employee Referral
Recruitment Agencies
Social Professional Networks
Internal Resume Database
Increase (+)
Decrease (-)
+4
-3
+20
+12
Declareation
This is to acknowledge that the paper titled Social Media and HR Practices, is an original piece
of work. It is a conceptual paper, which is written by gathering and analysing information from
different electronic and bibliogical sources. All the sources are accordingly cited in the refrences. This
has not been sent for publication elsewhere.
Author Profile
Ms. Muzna Zafar (MBAHR and IT)
Ms. Muzna Zafar has experience of over six years in the area of academics, research,consulting
and training. She has earlier worked with ICFAI University and Sikkim Manipal University. Currently
she is working as Consultant and Trainer for Manipal University and VGT Institute at Bangalore.
Ms.Nupur Rastogi (MHRDM)

Ms.Nupur Rastogi has experience of over ten years in the area of academics,research,training and
elearning. She has earlier worked with U.P. Technical University, Indian Institute of Management
Ahmedabad (IIMA), Sikkim Manipal University. Currently she is working as Process Lead with
Robert Bosch Engineering and Business Solutions (RBEI), Bangalore. Her current role involves
designing elearning modules and training.
____
CHAPTER
11
Issues in Human Resources

Development in Indian Banks
(An Empirical Evaluation)
Dr.A.Raghu
Assistant Professor
Indira Gandhi National Tribal University
Amarkantak, Madhya Pradesh
ABSTRACT
This study was undertaken from Jan`13 to March `13 on a sample of 100 respondents who
were bank staff to understand their perceptions about HR policies of Indian Banks. Data was
collected using a structured questionnaire. The collected data was analyzed using graphical
representations to avoid the bias and errors normally fraught with the statistical tools. Analysis
showed that the HR policy in Banks is yet to evolve to a higher level because it is still in the stages
of what can be called I.R. or PERSONNEL stage where as the private sector has reached the
level of HRM where employee and his productivity are the centre of all corporate policies today.
Hence suitable recommendations have been made to evolve HRM in the Banks to the next level.
Key Words: HR Policy, Bank HR vision, Staff Motivation, I.R. & Personnel stage, HRM Era
Introduction
Banking industry in India is one of the most diversified and heterogeneous in terms of ownership;
co-existence of private and public sector. It is one of the best examples of peaceful co-existence of two
entirely different cultural systems in the services sector. Coupled with that, the country has a large
number of foreign banks with altogether a different work culture and climate. The simultaneous
existence of so many types of work ethos, systems and processes are truly symbolic of the great Indian
unity amongst diversity. Notwithstanding the fact that lots of efforts have gone into bringing
technological & process congruence, it is really unfortunate that very little has been done on the
human resource front in this regard.
Unfortunately, public sector banking has been the biggest victim, being governed by outdated &
prohibitive sets of government guidelines. The Management often complains lack of adequate power
and flexibility; the Trade Unions often look at any directional change with a sense of suspicion;
majority of the workforce remains in dream-world of the pre-liberalized scenario of work security.
The result is that public sector banks are least concerned about human resource management and
reforms thereto and consequently remain under-productive.
Issues in Human Resources Development in Indian Banks (An Empirical Evaluation)
115
Though renaming of Personnel departments to HR departments took place quite a few years ago
in some of the public sector banks, the work processes & culture in many of them till today remain
outdated and are not in a position to meet changing expectations of the human talent within. The
scope of this paper is limited to address some of the fundamental issues in areas of human resource
management front in the public sector banking in India.
There is a need for introduction of new technology, skill building and intellectual capital
formation. The most important need in this service industry is naturally the HRD. During the early
phase of banking development in India after independence, opportunities for employment of the
educated man-power were relatively limited. This sector was the preferred employer for the educated
persons in the country in addition to civil services. In recent years, this position has changed
dramatically. Certain rigidities have also developed in HRD within the banking system as this system
is public sector. Its hierarchical structure gives preference to seniority over performance, and it is not
the best environment for attracting the best talent from among the young.
Objectives
1. To review the HR policies and practices followed by banks in India .
2. To identify the problems faced by the banks in respect of HR policies and practices..
3. To make recommendations for HR framework for banks in India.
4. To identify developmental aspects for future of HR in banks.
Methodology
The study includes primary and secondary data collection, analysis and report..
Secondary data: from books, periodicals, internet, reports of the banking industry, industry
association reports, bank records and other data which is readily available.
Primary data: Collected through a questionnaire administered to the respondents in the
sample selected.
Delphi Method: The data collected has been verified with field experts such as retired
bankers and senior faculty.
Sampling
Primary data was collected from 100 employees of the banks as under using a structured
questionnaire:
Bank Managers:
50
Bank staff:
10
Field experts:
10
Retired senior employees of banks:
10
RBI staff:
10
Others:
10
Sampling was based on stratified convenient sampling method.
116
Scope and Limitations of the Study

Data collected is based on a short interview taken the research exercise was conducted within a
limited duration. So a detailed study could not be made. The findings and conclusions are based on
knowledge and of the respondent. Lack of support from the management side while data collection
due to their policy of maintaining secrecy.
The sample consisted of 100 respondents from Hyderabad only and may not represent all India
data. However the fundamental issues identified in this small study may be extended to all India level
based on a large scale study.
The literature has emphasized the important role played by the human component in the
competitiveness and response capacity of organizations, and this is reflected in numerous publications
and research studies that have appeared in recent years (Barney, 1991; Barney and Wright, 1998;
Wright et al., 1994). According to this view, human capital is proposed as one of the key resources on
which companies build their competitive advantage (Becker and Gerhart, 1996; Boxall, 1996; Tyson,
1995). Without doubt, Human Resource Management (HRM) is one of the company functions that
have experienced significant changes over the last few decades. Since the beginning of the 1980s, a
vast literature has been developed calling for a more strategic role for human resources (Guest, 1987;
Miller, 1987; Armstrong, 1991).
The increasing interest in human resources is due to the assumption that employees and the way
they are managed is critical to the success of organization and can be a source of sustainable
competitive advantage (Itami, 1991; Lado and Wilson, 1994; Wright et al., 1994; Kamoche, 1996;
Mueller, 1996; Barney and Wright, 1998). Although HRM is currently considered to be critical,
researchers and professionals agree that its importance will grow further in the future (Clark, 1993;
Sparrow et al., 1994; Becker and Gerhart, 1996; Anderson, 1997; Ulrich, 1998).
Data Analysis
The following questionnaire and data analysis is abridged from the original research work.
1. VISION of human resource management in Banks
(a) Retraining
(b) Learning
(c) Unlearning
(d) Separating
Options
No of
respondents
50
25
10
15
2.MISSION of human resource management in banks

(a) Legal compliance
(b) Competitive edge
(c) Work force adaptability
(d) Productivity
A
10
Options
No of
respondents
B
15
C
25
D
50
3.To achieve goals organizations require employees in banks

(a) Control
(b) Direction
(c) Commitment
(d) Cooperation
Options
No of
respondents
A
55
B
20
C
15
D
10
4.Human resource management helps improve ____________ in banks

(a) Production
(b) Productivity
(c) Profits
(d) Power
Options
No of
respondents
A
25
B
50
C
10
D
15
5. The amount of quality output for amount of input means

(a) Productivity
(b) Production
(c) Sales increase
(d) Increase in profits
117
118
Options
No of
respondents
A
15
B
10
C
50
D
25
6.Responding to employees and involving them in decision making is referred to as

(a) Quality of work life
(b) Autonomy
(c) Empowerment
(d) Preaction
Options
No of
respondents
A
70
B
10
C
15
D
5
7.Which one of the following becomes a creative factor in production?

(a) Land
(b) Capital
(c) Consumers
(d) Human Resources
Options
No of
respondents
A
15
B
20
C
10
D
55
8. People cast in the role of contributors to production are called

(a) Capitalist
(b) Land owners
(c) Human Resources
(d) Consumers
Options
No of
respondents
A
10
B
15
C
55
D
20
9.Wide range of abilities and attributes possessed by people are called as

(a) Management
(b) Human Resources
(c) Entrepreneur
(d) Intreprenuer
Options
No of
respondents
A
25
B
50
C
10
D
15
10. Deployment of which resource is difficult to master

(a) Human
(b) Land
(c) Capital
(d) Natural
Options
No of
respondents
A
50
B
10
C
25
D
15
11. The focus of Human Resource Management revolves around __________ in banks
(a) Machine
(b) Motivation
(c) Money
(d) Men
119
120
Options
No of
respondents
A
10
B
15
C
5
D
70
12. Quality- oriented banking organization primary concern centers around

(a) Coordination
(b) Communication
(c) Human Resources
(d) Discipline
Options
No of
respondents
A
10
B
20
C
55
D
15
13. Quality goals require alignment with __________ in banks

(a) Production
(b) Human Resources
(c) Finance
(d) Purchase
Options
No of
respondents
A
15
B
50
C
25
D
10
14. Demand for human resources and management in banks is created by

(a) Expansion of industry
(b) Shortage of labor
(c) Abundance of capital
(d) Consumer preferences
Options
No of
respondents
A
50
B
15
C
25
D
10
15. Management function in banks arises as a result of

(a) Consumer preferences
(b) Abundance of capital
(c) Expansion of industry
(d) Shortage of labor
Options
No of
respondents
A
15
B
25
C
10
D
50
16. Union function arises as a result of employees ____________ in banks

(a) Problem of communication
(b) Longing for belonging
(c) Dissatisfaction
(d) Change in technology
Options
No of
respondents
A
25
B
10
C
50
D
15
17. Human Resource Management is primarily concerned with _____________ in banks

(a) Sales
(b) Dimensions of people
(c) External environment
(d) Cost discipline
121
122
Options
No of
respondents
A
15
B
50
C
25
D
10
18. Human Resource Management aims to maximize employees as well as bank`s

(a) Effectiveness
(b) Economy
(c) Efficiency
(d) Performativity
Options
No of
respondents
A
55
B
10
C
20
D
15
19. The difference between human resource management and personnel management is
(a) Insignificant
(b) Marginal
(c) Narrow
(d) Wide
Options
No of
respondents
A
15
B
10
C
20
D
55
20. Human Resource Management function does not involve----in banks

(a) Recruitment
(b) Selection
(c) Cost control
(d) Training
Options
No of
respondents
A
10
B
15
C
55
D
20
21. Which one is not the specific goal of human resource management in banks ?
(a) Attracting applicants
(b) Separating employees
(c) Retaining employees
(d) Motivating employees
Options
No of
respondents
A
20
B
55
C
10
D
15
22. Identify which one is an added specific goal of human resource management in banks
(a) Retraining
(b) Learning
(c) Unlearning
(d) Separating
Options
No of
respondents
A
55
B
10
C
15
D
20
23. Identify the top most goal of human resource management in banks
(a) Legal compliance
(b) Competitive edge
(c) Work force adaptability
(d) Productivity
123
124
Options
No of
respondents
A
20
B
15
C
10
D
55
24. To achieve goals organizations require employees

(a) Control
(b) Direction
(c) Commitment
(d) Cooperation
Options
No of
respondents
A
10
B
15
C
55
D
20
25. Human resource management helps improve __________ in banks

(a) Production
(b) Productivity
(c) Profits
(d) Power
Options
No of
respondents
26.
A
15
B
50
C
20
D
10
The amount of quality output for amount of input means __________ in banks
(a) Productivity
(b) Production
(c) Sales increase
(d) Increase in profits
Options
No of
respondents
A
55
B
15
C
10
125
D
20
Conclusions
Base on the above graphical analysis on feedback of the respondents, it is noted that the issues
related to human resources (HR) management in public sector banks and implementation of the New
Pension Scheme (NPS) will top the agenda. With a lot of senior people in the banks retiring or going
to and many more quitting for greener pastures, banks are faced with an acute shortage of staff. High
attrition and retirements have created a vacuum at the top and middle levels in the system. Bankers are
seeing personnel issues as a new risk factor in the sector. The issue will be highlighted in the meeting.
As the NPS has not picked up, despite the governments efforts, Mukherjee is likely to ask banks to
make more of their branches NPS-enabled. A majority of public sector banks had been registered as
points of presence (PoPs) for its implementation. However, only a few branches of these banks are
NPS-enabled. The banking division has already written to the banks in this regard.
Credit flow to various sectors like housing, agriculture, infrastructure, small and medium
enterprises, education and minority communities, as well as implementation of the interest subsidy
scheme on housing for the urban poor and the financial inclusion plan for 2010-12 will be discussed.
The issues were initially planned to be taken up at the four zonal meetings in Patna, Mumbai,
Chandigarh and Hyderabad in the past two months. However, the items could not fuelling speculation
of a rise in interest rates.
HRM practices are found to show a considerable positive impact in affecting performance.
Five critical HR issues in banking were identified for policy attention as under
1. Performance management,
2. Equal pay demands for comparable worth,
3. Training and development,
4. How to best motivate individuals, and
5. Providing competitive compensation beyond the bounds of ones own industry.
Although the compensation area is a dominant concern, very few banks have developed effective
compensation plans.
The study also found that the bank with high disciplinary action were not able to reap a sustained
performance advantage, as indicated by the significantly negative association with employee
productivity. Overall, the results suggest that HR configurations that are more difficult for competitors
to imitate generally had positive relationships with bank performance. On the other hand, because
these findings are relatively novel and exploratory, the attempt should be viewed simply as an attempt
126
that requires further explication and refinement in future studies. The significant relationships shown
by this study between HR practices and firm performance (employee productivity) are consistent with
institutional theory and the resource-based view of the Banks.
References
1. Arora, K. (2003). Indian Banking: Managing Transformation through IT. IBA Bulletin, 25(3): 134-138.
2. Bakshi, S. (2003). Corporate Governance in Transformation Times. IBA Bulletin, 25(3): 4161.Bhattacharya, A. (1997). The Impact of Liberalization on the Productive Efficiency of Indian
Commercial Banks. European Journal of Operational Research, 98(5): 332-345.
3. Das, A. (1999). Profitability of Public Sector Banks: A Decomposition Model. RBI Occasional Paper,
20(1): 45-56.
4. Das, M. S. (2003). An Objective Method for Ranking Nationalized Banks, Prajnan, 31(2): 111-136.
5. Garg, M. (1994). Profitability of Indian and Foreign Banks in India: Comparative Analysis, M. Phil.
dissertation, Dept. of Economics, Delhi School of Economics, Uni. of Delhi, Delhi.IBA, Bulletin (2003).
25(3), Special Issue, 2003.
6. Jalan, B. (2003). Strengthening Indian Banking and Finance: Progress and Prospectus, IBA Bulletin,
25(3): 5-14.
7. Kohli, S. S. (2001). Indian Banking Industry: Emerging Challenge. IBA Bulletin, 23(3): 48-54.
8. Mohan, R. (2003). Transforming Indian Banking: In Search of a Better Tomorrow. IBA Bulletin, 25(3):
33-40.
9. Ram, T.T. (2002). Deregulation and Performance of Public Sector Banks. EPW, 37(5): 393-408.
10. Sarkar, P.C. & Das, A. (1997): Development of Composite Index of Banking Efficiency: The Indian
Case, RBI Occasional Papers, 18(1): 67-75.
11. Satyamurthy, B. (1994). A Study on Interest Spread in Commercial Banks in India. NIBM, Working
Paper.
12. Singh, I. & Kumar, P. (2006). Liberalization and Efficiency: The Case of Indian Banking. Indian
Management Studies Journal, 10(4): 77-93.
____
CHAPTER
12
Profitable Models for Financial

Inclusion
Dr. Atul Bansal,

Professor
Department of Management & Research
INTEGRAL University,
Lucknow- 226026. Uttar Pradesh
E-mail:dr.atulbansal@gmail.com/dratul@iul.ac.in
ABSTRACT
Rural India presents a remarkable opportunity for banks and financial institutions to seek
their fortunes and bring prosperity to the aspiring poor through financial inclusion. In a fast
growing economy like India the poor are the middle class of tomorrow and banks could, therefore,
ill-afford to ignore this segment. Banks, however, argue that while the benefits of financial
inclusion can be easily understood, the costs of serving the poor can be significant in the shortterm, thereby impacting profitability. Banks, therefore, need to take bold decisions and reach out
to rural India with strategies and business models which are beyond the realm of conventional
thinking. This paper looks at some of the business models and the essential elements of profitable
models for financial inclusion.
Introduction
India must make bold decisions to complete the financial inclusion plan in the quickest possible
time and follow it up with a more ambitious plan for economic inclusion to uplift the poor.
Shri M Narendra, CMD, Indian Overseas Bank
The Committee on Financial Inclusion (Chairman: Dr C Rangarajan, 2008) has defined Financial
Inclusion as the process of ensuring access to appropriate financial products and services needed by
vulnerable groups such as weaker sections and low-income groups, at an affordable cost, in a fair and
transparent manner by mainstream institutional players. Financial inclusion is important for the poor
as it provides them opportunities to build savings, avail credit, make investments and equips them to
meet emergencies. The development process so far has not brought balanced economic growth across
the country.
The need of the hour for public policy and banks, therefore, is to focus on inclusive growth ie
growth with equity and make financial inclusion the uppermost policy priority. The high dependence
of rural India on the informal financial system is a wakeup call for banks to put in greater efforts
128
towards financial inclusion. Financial inclusion will positively impact the lives of rural Indians and
pull millions of them out of the clutches of poverty.
It will also provide them with a formal identity, access to banking products/services, payment and
settlement system and a safety net in the form of deposit insurance, etc.
The Reserve Banks broad approach to financial inclusion aims at integrating the financial
inclusion plans of banks with their business plans and the overarching aim of policymakers is to make
financial inclusion a business opportunity rather than an obligation. On the back of a favorable
regulatory framework the past four years have witnessed a significant build-up of momentum in the
financial inclusion space. During this period banks have been experimenting with various models to
effectively deliver on their financial inclusion plans. To support banks in their endeavors, RBI has also
deregulated the interest rate on small value loans to encourage greater lending to the poor. Recent
advances in technology such as handheld devices, mobile telephones, point-of-sale devices, kiosks,
low-cost ATMs, etc have also opened up several delivery channels for providing financial services to
the poor. The current decade could, therefore, see the emergence of successful business models as
banks begin to view financial inclusion as a viable business opportunity. The need of the hour for
banks, therefore, is to develop business models that enable financial inclusion and are also profitable
over the medium to long-term.
Financial Inclusion as a Business Opportunity

Some banks argue that while the benefits of financial inclusion can be easily understood the costs
of serving the poor can be significant in the short-term, thereby, impacting profitability. This reflects a
very narrow approach to tackling the problem of financial inclusion.
Banks would, therefore, do well to draw inspiration from the following illustration given by Dr D
Subbarao, Governor, Reserve Bank of India in the context of financial inclusion:
A business executive of a shoe company was sent to a large developing country to assess the
market potential there. What he saw was millions of people going without shoes. He came back and
reported to the management that there was no business potential there because no one wore shoes. A
few months later, the strategist of a rival company went and saw the same picture. He came back and
reported to his management that there is tremendous business potential in that country because of the
number of shoes they can sell. Ultimately, it is a question of mindset, and it is only the change in
mindset of all concerned stakeholders that can make financial inclusion a reality Bankers should,
therefore, change their mindsets, view financial inclusion as a viable business proposition and adopt
innovative methods and low-cost delivery models to reach out to the poor. They should study the
different markets across India thoroughly and offer region-wise customized products and services
riding on the higher levels of trust enjoyed by them over the other financial service providers in rural
India.
Benefits of Financial Inclusion

There are several benefits for banks from pursuing financial inclusion. Financial inclusion
initiatives would provide banks with a low-cost and stable source of funds, helping them improve their
asset-liability management (ALM). The potential to tap the rural areas for raising low-cost and stable
deposits is high. In urban areas whenever interest rates start rising banks are faced with a higher
interest outgo on account of migration of deposits from savings to term deposits. This type of churn,
however, would be far lower in rural India as financial literacy levels there are far lower. Therefore,
129
ensuring a good mix of rural and urban deposits becomes strategically important for banks. Rural India
can also help banks significantly increase their low-cost current account-savings account (CASA)
deposits, thereby, helping protect margins and spreading the business risks.
The fast growing activity in the rural credit markets also offers banks excellent opportunities for
boosting their retail loans and ensuring a balanced mix of retail and corporate loan exposures.
Opening savings accounts for rural Indians can be a win-win proposition for banks, customers
and governments.
Once the bank accounts are opened customers can receive payments in these accounts directly
from governments towards subsidies through direct cash transfers, social security transfers and
Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGA) wages into their
bank accounts of beneficiaries through the Electronic Benefit Transfer.
This will minimize both transaction costs and leakages and banks can gain from the float income
in these accounts as several hundred million bank accounts are opened. Further, the savings of the
rural poor would be brought into the formal financial system and channelized into investment. Banks
would also be able to reduce their dependence on bulk deposits ie purchased liquidity and effectively
manage liquidity risks and asset liability mismatches.

Several models have been tried across the world, namely, no-frills accounts banking, branchless
banking (business correspondent model), banking without a bank (using mobiles as conduits for
financial transactions), micro lending, etc for pursuing financial inclusion. Global experience has,
however, revealed that there is no one size fits all type of solution to the problem of financial
inclusion and the above models have succeeded differently across the world. The Reserve Bank has,
therefore, studied various models for financial inclusion before deciding upon the business
correspondent (BC) model for India. Banks have been advised to leverage the benefits of low-cost
technology solutions and appoint BCs ie agents of banks who would serve as the Doorstep Bankers
and provide the last mile connectivity and reach out to millions of rural Indians. The BC model has
been a major success in Brazil, which has a similar demographic profile to India. According to an
article Financial inclusion models from around the world, (Forbes India, November 2010), the major
reason why the BC model has worked there is that the authorities established a strong business case
for BCs. For example, the payment of bills of any kind is required to be done through the banking
system using a standard form called Boletos. Bill payments comprised 75 percent of volume (1.6
billion) and 70 percent of value ($105 billion) transacted through Brazilian correspondents in 2008
alone and have been growing.
Further, according to a Wharton School study, the average cost per transaction in India at a BC is
the lowest at INR 4.50 ($1 = INR 45 approx.) per transaction as compared to an ATM (INR 18) and a
bank branch (about INR 45). Finally, Indians are already familiar in dealing with individuals as agents
for transacting in financial products especially for insurance, postal savings, etc.
The Reserve Bank has made a commitment to a bank-led model of financial inclusion through
BCs and has stated that it will support banks in their financial inclusion initiatives by way of
information dissemination, sharing of best practices and also through regulatory incentives.
RBI has also advised that under their financial inclusion plans, banks at a minimum should offer
four products:
130
A savings-cum-overdraft account
A remittance product
A Kisan Credit Card / General Credit Card and
Entrepreneurial credit.
Banks may additionally offer micro-insurance and micro pension products. It is important to note,
however, that the Reserve Bank has refrained from deliberately imposing a uniform business model on
the banks as it wanted each bank to build its own strategy in line with its business model and
comparative advantage. This approach is also expected to ensure better ownership of the business
model. Banks would, therefore, need to pursue both conventional and unconventional measures to
reach out to the rural masses. They also need to understand life in rural India before they design
products/services and low-cost sustainable business models for rural India. According to the
consulting giant Boston Consulting Groups (BCG) report The Next Billion Consumers (November
2007), profitable business models would lead to a reduction in the cost of manpower, usage of
technology for distribution reach and collaboration across industry models.
Further, Aadhaar, Indias unique identification system will play an important role in helping the
poor establish their identity to meet the banks KYC norms and is, therefore, seen as a game changer
in the quest for financial inclusion and harnessing technology for the benefit of the poor.
The successful endeavors of some banks are helping gradually shed the notion that financial
inclusion is not a viable business proposition. The success story of financial inclusion in Dharavi,
Asias largest industrial slum spread over an area of 1.75 sq km and producing goods and services
worth several million dollars and home to a million plus people is cited as a case in point.
Even though Dharavi covers such a large area and is situated in the heart of Mumbai, it
surprisingly did not have a commercial bank branch for a long time. Things, however, changed when
Indian Bank in a bold initiative became the first commercial bank to open a branch in Dharavi in
February 2007 which went on to register good business. The Union Bank of India too which has taken
to financial inclusion initiatives a few years ago calls the rural poor, the new bankable class, is
offering a combination of banking products such as a no-frills savings account, microcredit, microinsurance, remittance facilities and an overdraft facility. The bank also proudly claims that some
segments of its remittance facilities for the migrant laborers as also those for the milk and fruit
vendors, under the financial inclusion project are already profitable. The RBI has allotted the bank
3,159 villages and as of March 31, 2011, it has already covered 2,511 villages and intends to cover 10
million customers by March 2013 under the inclusion plan. Likewise, south based banks like the
Indian Overseas Bank, Corporation Bank, Indian Bank, etc have also taken up the implementation of
their financial inclusion plans both in letter and spirit. Of the 1273 villages given to the Indian
Overseas Bank under the financial inclusion plan the bank has already covered more than 800 villages
and it expects that the remaining 400+ villages will be covered before December 2011, well ahead of
the deadline of March 31,2012.
Post-Office Banking and Insurance - Of late, Post Offices, are being remodeled to undertake last
mile connectivity in banking and insurance. Such experiments have proved very successful in
countries like Japan. So, when stabilized, it would indeed be a real breakthrough in financial inclusion
in our country.
131
While designing their business models, banks would do well to assess whether they are robust
and aligned with the banks goals. A successful model should also represent a better way than existing
alternatives and also answer management guru Peter Druckers age-old questions:
Who is your customer?
What does the customer value?
How do you deliver value at an appropriate cost?
According to Ramon Casadesus-Masanell and Joan E.Ricart, authors of How to design a Winning
Business Model? (Harvard Business Review, January 2011 edition) a profitable business model
should consist of four elements:
a customer value proposition
a profit formula
key resources
key processes
The article adds that a good business model should be able to sustain its effectiveness over time
by fending off four threats, identified by renowned Harvard Business School Professor Pankaj
Ghemawat. They are:
Imitation (can competitors replicate your business model?)
Holdup (can customers, suppliers or other players capture the value you create by flexing
their bargaining power?)
Slack (organisational complacency) and
Substitution (can new products decrease the value customers perceive in your products or
services?).
Profitable models for financial inclusion could, therefore, have the following features:
1. Offering a clear customer proposition and customized bouquet of products: To succeed in
their financial inclusion initiatives, banks would need to offer customers a clear proposition and a
customized bouquet of product offerings. According to the BCG Report quoted earlier, banks need to
offer the following services at a minimum: government payments, savings accounts, credit,
remittances and insurance as part of an overall package to attract customers. Each of these offer
significant value to customer and enable banks to generate value through transaction fees.
2. Transaction-driven pay-per-use features: To enhance revenues from the financial inclusion
drive, BCG has recommended that banks should offer credit products in addition to deposits and
remittances and shift their transaction model from the conventional rich man's float-based model to an
unconventional yet poor-friendly, transparent pay-per-use model, where customers are charged a small
fee for every withdrawal.
3. Scalable business model with simple, user-friendly low-cost technologies: Profitable business
models would need to be scalable and incorporate simple, user-friendly and low-cost technologies so
that investments would be recouped and profits begin showing up as the number of people serviced by
a particular branch or outlet increases over time.
4. Collaborate with local agents and for-profit companies: According to consulting giant
McKinseys report A new idea in banking for the poor by Alberto Chaia, Robert Schiff and Esteban
Silva (November 2010), the basic problem of last mile access can be solved if banks can team up
132
with retail outlets (business correspondents) in low-income, often hard-to-reach areas to offer financial
services to rural masses, thereby, creating value both for themselves and their customers. These retail
outlets could be kirana stores, grocery stores, petrol bunks, post offices, etc.
Villagers know the owners/managers of these outlets because they frequent them for other
purposes, speak their language and are aware of the local customs and culture. Banks would also do
well to take advantage of regulatory relaxations and engage even for-profit entities as BCs as done
by Axis Bank, SBI, ICICI Bank, etc for offering financial services / products such as remittance,
savings, credit, micro insurance, micro SIP and micro pension by tying up with thousands of retail
outlets of Idea Cellular, Airtel, Vodafone and Aircel across the country, thereby, making the benefits
of banking available to the Indian rural masses and building a more inclusive society.
5. Banks need to learn from both corporate India and the informal sector: The rural markets
are coming alive and many corporate are now concentrating on the rural areas. Fast moving consumer
goods (FMCG) companies, for instance, have unveiled specific strategies that target villages with a
population of less than 5,000, known as micro-markets.
Late Prof. C K Prahalads work on profit at the bottom of the pyramid (BoP) has helped and
encouraged corporates to build sustainable and profitable rural business models. Banks can, therefore,
follow their clients to their markets by opening branches/banking outlets in villages as inclusive
banking goes beyond the conventional notions of commercial banking. According to the BCG, the
informal sector has been a major success in the rural areas. The formal sector must, therefore, learn
from the informal sector. It must also innovate and improve service levels in order to provide the same
level of accessibility as the local money lender, friend or relative.
6. Subsidiary model to drive down costs: According to the BCG, Indian banks should explore the
subsidiary route to drive down distribution costs in their financial inclusion drive. Given that the
average distribution cost of banks, at INR 5.5 lac per employee, is prohibitive, BCG is, urging banks
to consider floating subsidiaries to bring down their human resource costs. These subsidiaries could
harness local talent (at a substantially lower average distribution cost of INR 1 lac or less per
employee) in rural and semi-urban areas for reaching basic banking services to the un-banked. It is
also urging policymakers allow banks to set up low-cost subsidiaries only for the financial inclusion
drive. BCG has also assessed that in the traditional model for pushing financial inclusion, the costincome ratio was about 1000 percent ie the cost of rendering service (at about INR 600) per account
exceeds income earned from the account (INR 60). Ideally, this ratio should be around 50percent.
Studies also suggest that a bulk of the borrowing by rural poor is for consumption-related purposes
followed by income generation activities and education respectively and the dependence of rural India
on the informal channel (money lenders/ friends and family) for credit to smoothen income gaps is still
very high.
7. Educate them and take them on board: RBI has been advising banks to focus on financial
literacy to boost the demand for financial products. Banks should, therefore, make boosting financial
literacy in rural India an essential component of their business model for financial inclusion.
8. Ride on government payments: In August 2011, the GOI has amended its landmark
MGNREGA scheme to ensure that beneficiaries receive wage entitlements under the Act within 15
days through institutionalized channels like banks and post offices. The amendments now make it
mandatory under the law for state governments to ensure that every beneficiary has a bank/post office
account and the disbursements are made exclusively through these channels. The GOI is also
133
considering shifting to a direct cash transfer programme instead of subsidy for the Public Distribution
Schemes.
This will also involve banks and positively benefit financial inclusion initiatives. Again,
according to the BCG, successful models of financial inclusion would, therefore, ride on government
payments as an important source of a recurring float providing them another strong reason to push
financial inclusion.
9. Innovate and test-market pilot products/services: Banks need to realise that the poor find it
difficult to save on a regular basis and may also resort to consumption loans to supplement their
savings whenever required from a variety of sources to meet emergencies. Banks, therefore, need to
keep such realities in mind while designing their products/services for the poor. With some
understanding and innovation, over a period of time, banks can also capture a bulk of the rural
remittances market, a significant chunk of which currently happens through informal channels.
McKinseys report cited above also suggests that financial service providers should test-market lowcost pilots to see which products/services are found acceptable before large-scale introduction.
Conclusion
Traditional and conventional banking solutions may not be the answer to address the problem of
financial inclusion in India. Banks, therefore, need to innovate and think out-of-the-box for solutions
to overcome the problem of financial exclusion in India. They need to walk the talk, go the extra mile,
deploy new technologies and create financially viable models to take forward the process of financial
inclusion in an effective manner. The problem of financial exclusion needs to be tackled with urgency
if we want our country to grow in an equitable and sustainable manner. This way banks in India would
be doing a great service to the cause of financial inclusion and make their name in history.
Banks which are laggards in financial inclusion would do well to speed up because if history is
any indication the window of opportunity to capture market share through financial inclusion would be
available only for a short period. In a fast growing economy like India the poor are the middle class of
tomorrow and banks could, therefore, ill-afford to ignore this segment. Select public sector banks in
India have played a pioneering role in financial inclusion and their success should encourage the rest
of the banks to put their financial inclusion efforts too on the fast track. As Dr D Subbarao, Governor,
RBI, advised in his remarks at the Bankers Club in Kolkata on December 9, 2009, financial inclusion
is a win-win opportunity for the poor, for the banks and for the nation. Because of improving
awareness levels aspirations of the poor are on the rise and banks will not be forgiven if they do not
rise up to meet these aspirations. It is for the banks to convert what they see as a dead-weight
obligation into an exciting opportunity and move on aggressively on financial inclusion that banking
on the poor can actually be a rich banking proposition. Banks would also do well to remember the
advice given by Late Prof. C K Prahalad in his epic book, Fortune at the Bottom of the Pyramid
What is needed is a better approach to help the poor, an approach that involves partnering with
them to innovate and achieve sustainable winwin scenarios where the poor are actively engaged and,
at the same time, the companies providing products and services to them are profitable.
Financial inclusion may be a social responsibility for the banks in the short-run but will turn out
to be a business opportunity in the long-term. As Dr C Rangarajan has stated, Financial Inclusion is
no longer an option; it is a compulsion. The entire world is looking at this experiment in India and it
is important that banks rise up to this challenge and meet it successfully.
134
References
1. A new idea in banking for the poor by Alberto Chaia, Robert Schiff and Esteban Silva, McKinsey
Quarterly, November 2012
2. Social Development Perspectives, M. P. Vasimalai, Executive Director, DHAN Foundation
3. BCG Report, The Next Billion Consumers - A roadmap for expanding financial inclusion in India, by
Janmejaya Sinha and Arvind Subramanian
4. Financial inclusion models from around the world, Forbes India Magazine, November 2013 edition
5. Financial Inclusion: Challenges and Opportunities (Remarks by Dr. D.Subbarao, Governor, Reserve
Bank of India at the Bankers Club in Kolkata on December 9, 2009)
6. How to design a Winning Business Model? by Ramon Casadesus-Masanell and Joan E. Ricart ,
Harvard Business Review, January 2011 edition
____
CHAPTER
13
Role of Capital Market

Development of in the Economic
Growth of India
P K Mishra
Assistant Professor in Economics
Central University of Jharkhand,Ranchi
Ratu-Lohardaga Road, Brambe, Ranchi, India-835205
E-mail: pkmishra1974@gmail.com
ABSTRACT
The rising importance of capital markets in emerging market economies around the world
over the last few decades has shifted the focus of researchers to explore the relationship between
capital market development and economic growth. It is with this rationale, this paper is an attempt
to investigate the dynamics of the causal relationship between capital market development and
economic growth in India for the period 1991:Q1 to 2012:Q4 using popular time series modelling
techniques. The use of ADF unit root test suggests that the time series under the study are all
integrated of order one. The application of Johansens cointegration test provides the evidence of
the existence of long-run equilibrium relationship between the variables of the study. Thus, the
VECM has been formed and estimated which suggests the existence of unidirectional long-run
causal relationship between variables running from the indicators of capital market to economic
growth. However, Granger causality test refutes the existence of such unidirectional causality in
the short-run. The policy implication of this result is that the capital market development in India
can be considered as a policy instrument for the sustainable economic growth of the country.
Keywords: Capital Market, Economic Growth, India, Vector Error Correction Model,
Granger Causality.
Introduction
It is a long standing view that capital market development constitutes a potentially important
mechanism for long-run economic growth of any country, developed and developing. There are a
significant amount of literature, both theoretical and empirical, that examines the relationship between
capital market development and economic growth. A countrys economic growth is largely associated
with the changing dynamics of its capital market. Capital market supports resource allocation and
spurs growth through various channels. First, by reducing transactions costs and liquidity costs, capital
markets positively affect the average productivity of capital (Levine, 1991). Second, by pooling
resources on larger projects which would otherwise have difficulty accessing finance, capital markets
mobilise savings and spurs the rate of investment (Greenwood and Smith, 1997). Third, by promoting
136
the acquisition of information about firms, capital market promotes and improves resource allocation
and the average productivity of capital (Grossman and Stiglitz, 1980; Allen, 1993). Fourth, by exerting
a continuous and strict control over the management of firms, capital market positively affects firms
investment decisions and the average return on investments (Jensen and Murphy, 1990). Fifth, by
improving risk diversification through internationally integrated capital markets and increasing the
array of possible investments, capital market augments the rate of savings and the rate of investments
(Devereux and Smith, 1994).
Capital market contributes to the mobilization of domestic savings by enhancing the set of
financial instruments available to savers to diversify portfolios. And, in this process capital market
provides an important source of investible capital at relatively low cost (Demirguc and Levine, 1996;
Levine and Zervos, 1998). Efficient capital market provides guidelines as a mean to keep appropriate
monetary policy through the issuance and repurchase of government securities in the liquid market,
which is an important step towards financial liberalization. Similarly, well organised and active capital
market could modify the pattern of demand for money and would help create liquidity that eventually
enhances economic growth (Caporale et al, 2005).
Capital market improves the efficiency of firms by eliminating the premature liquidation of
capital, enhancing the quality of investments and therefore, enhances economic growth (Levine, 1991;
Bencivenga, Smith and Starr, 1996; Saint-Paul, 1992).
Thus, realising the importance of capital market development in the sustainable economic growth
of a country, many researchers have empirically investigated the causal relationship between capital
market development and economic growth at different times. The study of the causal relation is
nothing but the empirical investigation to know whether capital market development leads to
economic growth or economic growth leads to capital market development. Demetriades and Hussein
(1996) find that the financial development is caused by long-run economic growth when real growth
has been taken place so that the expansion of financial institutions is only a result of the need of the
expansion of the real economic activities. Vazakidis and Adamopoulos (2009) find that economic
growth has a positive effect on stock market development in France over the sample period 1965 to
2007. Similar inference is also suggested by Vazakidis and Adamopoulos (2010) for United Kingdom.
On the contrary, Levine (1997), Neusser and Kugler (1998), Beck et al (2000), Xu (2000) and
Levine et al (2000) provide the evidence that the expansion of financial institutions can foster
economic growth by increasing savings and borrowing options and reallocation of capital. Deb and
Mukherjee (2008) find the results that are in line with the supply leading hypothesis of Patric (1966)
in the sense that there is strong causal flow from the stock market development to economic growth.
Pradhan (2009) provides the evidence of unidirectional causality from market capitalization in Indian
capital markets and economic growth of the country. Yay and Oktayer (2009) investigate the
relationship between financial development and economic growth for developed and developing
countries comparatively. The impacts of both stock markets and banks on economic growth are
examined by using a panel data set of 21 developing (including India) and 16 developed economies for
the period 1975-2006. While the results of the econometric evidence relevant to developing economies
indicate that both stock markets and banks positively influence the economic growth, the results of
econometric evidence relevant to developed economies indicate that only stock markets positively
influences the economic growth.
Azarmi et al (2005) finds no support for the hypothesis that the Indian stock market development
is associated with the economic growth in that country during the entire event study period of 1981 to
Role of Capital Market Development of in the Economic Growth of India
137
2001. However, the study finds support for relevance of stock market to economic development during
the pre-liberalization sub-period. And, it also finds a negative correlation between stock market
development and economic growth for the post-liberalization period.
Thus, the existing empirical evidence regarding the relationship between capital market
development and economic growth is rather mixed. It is also clear that the existing empirical literature
is very thin in the sense that only a few studies include the case of India. Furthermore, there are almost
no studies that include the period of recent global financial recession in the sample set. At this juncture,
it is worthwhile to investigate the dynamics of causal relationship between capital market development
and economic growth.
Data and Methodology

The objective of this paper is to investigate the causal relationship between capital market
development and economic growth in India for the period 1991:Q1 to 2012:Q4. The study uses the
quarterly data for the variables representing the economic growth of India and the capital market
development in the country. The Stock exchange, Mumbai is taken as the representative of the Indian
capital market. The variable Economic Growth (EG) is measured by the real Gross Domestic Product
(GDP) at constant prices (1999-2000). The data on this variable have been obtained from the
Handbook of Statistics on Indian Economy published by Reserve Bank of India. On the other hand,
the variable Capital Market Development is measured by three proxies: Real Market Capitalization
Ratio (RMC) defined by the ratio of market capitalization to real GDP the proxy for the size of
Indian capital market; Real Value Traded Ratio (RVT) defined as the ratio of trading value to real
GDP the proxy for capital market activities; and Sensex, the barometer of Indian capital market is
also used as an indicator of capital market development given its undoubted popularity amongst
investors, researchers, and market practitioners across the board. The data on BSE market
capitalization, Trading Value and Sensex are obtained from the database on Indian economy
maintained by Reserve Bank of India and website of the Stock Exchange, Mumbai. All the variables
are expressed in their natural logarithms in order to avoid the problems of heteroscedasticity and
include the proliferative effect of time series.
The estimation methodology employed in this study is the cointegration and vector error
correction modelling technique. The entire estimation procedure consists of three steps: first, unit root
test; second, cointegration test; third, the vector error correction estimation. The present study uses
Augmented Dickey-Fuller (ADF) unit root test to examine the stationarity of the data series. Once a
unit root has been confirmed for a data series, the next step is to examine whether there exists a longrun equilibrium relationship among variables. This is called cointegration analysis which is very
significant to avoid the risk of spurious regression. Cointegration analysis is important because if two
non-stationary variables are cointegrated, a VAR model in the first difference is misspecified due to
the effects of a common trend. If cointegration relationship is identified, the model should include
residuals from the vectors (lagged one period) in the dynamic VECM system. In this study, Johansens
cointegration test is used to identify cointegrating relationship among the variables. Then the third step
requires the construction of error correction mechanism to model dynamic relationship. The purpose
of the error correction model is to indicate the speed of adjustment from the short-run equilibrium to
the long-run equilibrium state. In this study the error correction model as suggested by Hendry (1986)
has been used. At last, the impulse response function is used to produce the time path of the dependent
variables in the VAR to shocks from all the explanatory variables. If the system of equations is stable
138
any shock should decline to zero, an unstable system would produce an explosive time path. The
dynamics of a VAR model can be visualized by impulse response diagrams.
Empirical Analysis
The descriptive statistics of the time series are presented in Table-1. And, the Pearsons
correlation coefficient matrix between variables has been calculated over the sample period and its
significance has been tested by the t-test. The results are presented in Table-2. The correlation matrix
reports positive correlation between real market capitalization and economic growth, real value traded
and economic growth, and Sensex and economic growth. The correlation between Sensex and
economic growth is relatively high. Furthermore, such positive correlations are significant at 5% level.
The scatter diagrams for all possible pairs of time series are presented in Figure-1. Correlations,
however, do not say anything about causal relationship and thus, leaves unsettled the debate
concerning the causal relationship between capital market development and economic growth in India.
In the first step of the causality analysis, it is required to determine the order of integration for each of
the two variables used in the analysis. The Augmented Dickey-Fuller unit root test has been used for
this purpose. And, the results of such test are reported in Table -3. It is quite clear that the hull
hypothesis of no unit roots for all the time series are rejected at their first differences since the ADF
test statistic values are less than the critical values at 5% levels of significances. Thus, the variables
are stationary and integrated of same order, i.e., I(1).
In the next step, the cointegration between the stationary variables has been tested by the
Johansens Trace and Maximum Eigenvalue tests. The results of these tests are shown in Table-4. The
Trace test indicates the existence of two cointegrating equations at 5% level of significance. And, the
maximum eigenvalue test suggests the existence of one cointegrating equation at 5% level. Johansen
and Juselius (1990) suggested that the trace test may lack power relative to the maximal eigenvalue
test. Thus, we accept the existence of one cointegrating equation. Thus, the variables of the study have
long-run equilibrium relationship between them. Precisely, the results support the existence of longrun equilibrium relationship between the capital market development, represented by market
capitalization, value of shares traded, and Sensex and economic growth, measured by real GDP. But in
the short-run there may be deviations from this equilibrium and we have to verify whether such
disequilibrium converges to the long-run equilibrium or not. And, Vector Error Correction Model can
be used to generate this short-run dynamics. Error correction mechanism provides a means whereby a
proportion of the disequilibrium is corrected in the next period. Thus, error correction mechanism is a
means to reconcile the short-run and long-run behaviour.
The Granger representation theorem states that a system of cointegrated variables has an error
correction and that combines the short run dynamics of the variables with their long run properties as
implied by the cointegrating relationships. Hence, the Vector Error Correction Model (VECM) has
been formed and estimated to determine the direction of causality between capital market development,
represented by market capitalization, value of shares traded and Sensex, and economic growth,
represented by real GDP.
The estimation of a Vector Error Correction Model (VECM) requires selection of an appropriate
lag length. The number of lags in the model has been determined according to Akaike Information
Criterion (AIC). The optimum lag length selected is 2. Then an error correction model with the
computed t-values of the regression coefficients is estimated and the results are reported in Table-5.
139
The estimated coefficient of error-correction term in the LEG equation is statistically significant
and has a negative sign, which confirms that there is not only any problem in the long-run equilibrium
relation between the independent and dependent variables at 5% level of significance, but its relative
value (-0.026921) for India shows the rate of convergence to the equilibrium state per year. Precisely,
the speed of adjustment of any disequilibrium towards a long-run equilibrium is that about 2.69% of
the disequilibrium in economic growth as measured by real GDP is corrected each year. Furthermore,
the negative and statistically significant value of error correction coefficient indicates the existence of
a long-run causality between the variables of the study. And, this causality is unidirectional in our
model being running from the indicators of capital market development to the indicator of economic
growth. In other words, the changes in the indicator of the economic growth can be explained by the
measures of capital market development.
The existence of Cointegration implies the existence of Granger causality at least in one direction
(Granger, 1988). The long-run causality test from the VECM indicates that causality runs from the
indicators of capital market development to the economic growth, since the coefficient of the error
term in LEG equation is statistically significant and negative based on standard t-test which means that
the error term contributes in explaining the changes in real GDP. However, the coefficients of the error
correction terms in other equations are statistically insignificant which means that the error terms do
not contribute in explaining the changes in LRMC, LRVT and LSEN. Therefore, there is
unidirectional causality running from the indicators of capital market development to the indicator of
economic growth.
The coefficients of the first difference of LRMC, LRVT and LSEN lagged one period in LEG
equation in Table-5 are statistically insignificant which indicate the absence of short-run causality
from based on VECM estimates. In order to confirm this result of short-run causality based on VECM
estimates, a standard Granger causality test has been performed based on F-statistics. The result in
Table-6 indicates that the indicators of capital market development does not Granger cause the
indicator of economic growth at 5% level of significance. This result supports the previous result
obtained from VECM that there is no short-run causality at the 5% level of significance. Based on this
causality tests, changes in the indicators of capital market, viz., market capitalization, value of shares
traded and Sensex cause changes in the indicator of economic growth, i.e., real GDP in the long-run,
but not in the short-run.
This is also verified by generalized impulse response functions which indicate the causal
properties of the system. The objective of generalized impulse response function is to treat all the
variables jointly determined and to avoid the possibility of specification bias. The estimated
generalized impulse response functions are reported in Figure-2. It provides a support to the Granger
causality results. That means the response of capital market development indicators to economic
growth is very positive and indicates the existence of causality between them.
Conclusion
In this paper, the relationship between capital market development and economic growth in an
emerging market economy like India has been investigated using popular time series methodologies.
The issue assumes much relevance in the context of the existence of conflicting literature about this
issue and in the context of the recent impact of global financial crisis in India. The data properties are
analyzed to determine the stationarity of time series using the Augmented Dickey-Fuller unit root test
which indicates that all the time series are I(1) over the sample period. The results of the Cointegration
test based on Johansens procedure indicate the existence of the Cointegration between these variables.
140
Therefore, these variables have a long-run equilibrium relationship exists between them, although they
may be in disequilibrium in the short-run. The Vector Error Correction Model indicates that about
2.69% of disequilibrium is corrected each year. In addition, the negative and significant error
correction term in LEG equation supports the existence of a long-run equilibrium relationship between
the indicators of capital market development and the indicator of economic growth. Furthermore, the
estimates of the VECM indicate the existence of a unidirectional causality running from the indicators
of capital market development to the indicator of economic growth. The Granger causality test
indicates that there is a causal relationship running from the indicators of capital market development
to the indicator of economic growth in the long-run, but not in the short-run. The Generalised Impulse
Response Function also supports such findings. The policy implication of such empirical evidence is
that the capital market development of a developing country like India can be considered as the policy
instrument to accelerate the pace of economic growth of the country. Hence, to maintain sustainable
economic growth, the Government of India should deepen the capital market, and undertake necessary
measures to strengthen the long-run relationship between capital market development and economic
growth. These measures may include more capital market integration, minimum government
intervention in the capital market activities, increasing the status of financial institutions, and more
importantly empower the regulators, credit rating agencies and so on. These are very fundamental and
useful for strengthening the long-run relationship between capital market development and economic
growth of the country. The government has to take initiatives with prudence so that the basic
objectives of socio-economic development of a country are not disturbed.
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142
Table 1: Descriptive Statistics

Statistics
Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis
Jarque-Bera
Probability
LEG
12.83657
12.66478
13.76085
11.96416
0.568116
0.102288
1.477863
7.567660
0.022735
LRMC
0.652445
0.702350
2.075721
-1.427243
0.815063
-0.691490
3.423987
6.713109
0.034855
LRVT
-2.701565
-2.633157
-0.540303
-4.766854
0.834017
-0.065451
2.751046
0.253824
0.880811
LSEN
8.482499
8.264706
9.862442
6.996352
0.648514
0.563388
2.684051
4.393651
0.111155
Note: 1. LEG: Natural Log of Economic Growth measured by Natural Log of GDP; LRMC: Natural Log of Real
Market Capitalization; LRVT: Natural Log of Real Value Traded; LSEN: Natural Log of Sensex.
Table 2: Correlation Matrix

Variables
LEG
LRMC
LRVT
LSEN
LEG
1
0.6728
0.5738
0.8186
LRMC
LRVT
LSEN
1
0.6174
0.8436
1
0.6085
Table 3: Results of Unit Root Test

Variables in their First
Differences with
intercept
ADF
Statistic
LEG
-3.52
LRMC
-6.12
LRVT
-11.76
LSEN
-7.06
Critical Values
Decision
At 1% : -3.52
At 5% : -2.90
At 10% : -2.58
At 1% : -3.52
At 5% : -2.90
At 10% : -2.58
At 1% : -3.52
At 5% : -2.90
At 10% : -2.58
At 1% : -3.52
At 5% : -2.90
At 10% : -2.58
Reject Null hypothesis of no unit root
143
Table 4: Results of Johansens Cointegration Test

Hypothesized Number
of Cointegrating
Equations
Eigen
Value
Trace
Statistics
None
At Most 1
At Most 2
At Most 3
0.528
0.228
0.156
0.050
90.146
35.200
16.221
3.781
Critical Value
at 5%
(p-value)
54.079(0.000)*
35.192(0.049)*
20.261(0.164)
9.164(0.445)
Maximum
Eigen
statistics
54.945
18.978
12.440
3.781
Critical Value
at 5%
(p-value)
28.588( 0.000)*
22.299(0.136)
15.892(0.161)
9.164(0.445)
* denotes rejection of the hypothesis at the 0.05 level
Table 5: Results of VECM Estimation

Variables
D(LEG)
D(LRMC)
D(LRVT)
D(LSEN)
ECt-1
[t-statistic]
(p-value)
-0.026921
0.006432
0.029401
-0.002081
[-4.63110]
[ 0.49025]
[ 1.08662]
[-0.22756]
(0.000014)
(0.625388)
(0.280685)
(0.820608)
-0.294679
0.555536
1.149876
0.207463
[-2.56570]
[ 2.14297]
[ 2.15092]
[ 1.14837]
(0.0122927)
(0.0353592)
(0.0347037)
(0.254465)
-0.554488
0.750493
-0.237340
0.019037
[-4.81385]
[ 2.88665]
[-0.44268]
[ 0.10507]
(0.0000074)
(0.00508)
(0.659271)
(0.916601)
-0.083287
0.502669
0.619361
0.038085
[-1.28278]
[ 3.43009]
[ 2.04945]
[ 0.37292]
(0.203519)
(0.000984)
(0.043915)
(0.71026)
0.083872
0.044823
0.175235
0.113029
[ 1.25147]
[ 0.29632]
[ 0.56175]
[ 1.07221]
(0.21465)
(0.767805)
(0.575961)
(0.287064)
0.014991
-0.150951
-0.461881
-0.024784
[ 0.51699]
[-2.30649]
[-3.42227]
[-0.54341]
(0.606684)
(0.0238468)
(0.001008)
(0.588459)
0.014404
-0.071016
-0.163866
-0.048167
D(LEGt-1)
[t-statistic]
(p-value)
D(LEGt-2)
[t-statistic]
(p-value)
D(LRMCt-1)
[t-statistic]
(p-value)
D(LRMCt-2)
[t-statistic]
(p-value)
D(LRVTt-1)
[t-statistic]
(p-value)
D(LRVTt-2)
144

[t-statistic]
(p-value)
D(LSENt-1)
[t-statistic]
(p-value)
D(LSENt-2)
[t-statistic]
(p-value)
[ 0.50903]
[-1.11190]
[-1.24413]
[-1.08216]
(0.612226)
(0.269733)
(0.217326)
(0.282649)
-0.003507
0.085411
0.488580
0.214263
[-0.04074]
[ 0.43962]
[ 1.21947]
[ 1.58253]
(0.967611)
(0.661477)
(0.226487)
(0.117737)
-0.196587
-0.178667
-0.402868
-0.031741
[-2.37906]
[-0.95795]
[-1.04744]
[-0.24421]
(0.0199017)
(0.341166)
(0.298261)
(0.807735)
Note: 2. D: Difference Operator; EC: Error Correction
Table 6: Results of Granger Causality Test

Null Hypothesis
LRMC does not Granger Cause LEG
LRVT does not Granger Cause LEG
LSEN does not Granger Cause LEG
F-Statistic
0.85900
0.27152
1.06968
Probability
0.42807
0.76303
0.34874
14. 0
14.0
14. 0
13. 6
13.6
13. 6
13. 2
13.2
13. 2
12.8
12. 8
12. 8
12.4
12. 4
12. 4
12.0
12. 0
12. 0
11.6
11. 6
11. 6
3 3-
LSEN
LRVT
LRMC
LGDP
(Number of lags = 2)
4.0
14. 0
3.6
13. 6
3.2
13. 2
2.8
12. 8
2.4
12. 4
2.0
12. 0
1.6
11. 6
33-
33-
3 3-
2 2-
22-
22-
2 2-
1 1-
11-
11-
1 1-
0 0-
00-
00-
0 0-
-1-1-
-1 -
-1 -
-1 -
-1
-1
-2 -
-2 -
4.0
1 4.0
3.6
1 3.6
3.2
1 3.2
2.8
1 2.8
2.4
1 2.4
2.0
1 2.0
1.6
1 1.6
-1
4.0
3.6
3.2
2.8
2.4
2.0
1.6
-2 -
-2 -
-2
-2
-2
-2
0 0-
00-
00-
0 0-
-1-1-
-1-1-
-1-1-
-1-1-
-2
-2 -
-2
-2 -
-2
-2 -
-2-2-
-3-3-
-3-3-
-3-3-
-3-3-
-4-4-
-4-4-
-4-4-
-4-4-
-5-5-
-5-5 -
-5 -5
10. 0
10.0
9.6
9.6
9.29.2
8.88.8
8.48.4
8.08.0
7.67.6
7.27.2
6.86.8
LGDP
10. 0
10.0
9.6
9.6
9.2
9.2
8.8
8.8
8.4
8.4 8.0 8.0
7.6 7.6
7.2 7.2
6.8 6.8
-
LRMC
1 0.0
10.0
9 .6 9.6
9 .2 9.2
8 .8 8.8
8 .4 8.4
8 .0 8.0
7 .6 7.6
7 .2 7.2
6 .8 6.8
-
-5-510. 0
10.0
9. 6
9.6
9. 2 9.2
8. 8 8.8
8. 4 8.4
8. 0 8.0
7. 6 7.6
7. 2 7.2
6. 8 6.8
LRVT
Fig.1: Scatter Plot
LSEN
Decision
Accept
Accept
Accept
145
Response to Generalized One S.D. Innovations 2 S.E.

Response of LGDP to LRMC
.3
.2
.1
.0
-.1
-.2
-.3
5
10
15
20
25
30
Response of LGDP to LRVT

.3
.2
.1
.0
-.1
-.2
-.3
5
10
15
20
25
30
Response of LGDP to LSEN

.3
.2
.1
.0
-.1
-.2
-.3
5
10
15
20
25
30
Fig. 2: Generalised Impulse Response Analysis
____
CHAPTER
14
Financial Inclusion
and the Role of the Post office
Dr Bhawana Rewadikar
Assistant Professor of Commerce
Dr .H.S.Gour V.V .Sagar (M.P)
ABSTRACT
India is having the most widely distributed post office system in the world. With 1,55,333 post
offices, the India post comes under the Department of Posts which is a part of the Ministry of
Communications and Information Technology under the Government of India. The wide
distribution network of India post is one important factor that favours, India post as a channel for
financial inclusion in India. The search of financial inclusion appears to be a tough task. Sustained
growth of the nation and its continued prosperity depend critically on universal financial services
covering all people. Further, empirical evidence shows that inclusive financial system significantly
raises growth, alleviate poverty and expand economic opportunity. In India, the India post when
linked to banks in a gradual way initially through saving and later through loan product is
considered to be an effective strategy to ensure financial inclusion in this backdrop.
Introduction
The Post Office has been providing affordable banking services to all sections of the society
since 1882, making it the pioneer in facilitating financial inclusion in the country. India Post was a
banker to small savers much before financial inclusion became a buzzword, or had even been coined
as a phrase.
The financial services offered through the Post Office include micro and retail savings,
remittances (both domestic and cross border), insurance, social security payments such as MGNREGA
wages and Pension disbursements. Many third party financial products such as mutual funds and
pension funds have also become accessible to the public thanks to the neighborhood post office
starting to retail them.
Out of the 155 000 post offices which provide retail financial services across India, 139 000 are
in rural areas. In comparison, the scheduled commercial banks and Regional Rural Banks of the
country together have about 85 000 branches, of which only about 34 000 are in rural areas. Another
indicator of financial inclusion is the density of the banking network measured against population. The
financial network is more inclusive when each branch of the bank has a lesser number of people to
serve. In this regard, on an average, banks in India serve 14 000 persons per branch (16 000 in rural
Financial Inclusion and the Role of the Post office
147
areas) whereas the average population served by each postal financial services outlet is only 7,175 (5
683 in rural areas). Further, the average number of India Post financial outlets per lakh persons is
13.93 as compared to 6.33 in the case of banks. It is also worth mentioning that our Post Office
Savings Bank holds 24 crore accounts, more than entire populations of most countries.
The Post Office is now all set to enhance its role in financial inclusion thanks to a modernization
project which it has taken up. A Core Banking platform is being set up for the financial services, and
new services such as instant money orders have been introduced. Further, services such as the prepaid
cards are in the pipeline. These measures will substantially augment India Posts capabilities as a
multi-faceted financial services provider.
One of the major issues of financial inclusion in India relates to the complexity of cash
Management at the grass roots level. Support infrastructure for financial services is inadequate in
many parts of the country, particularly in the small towns and villages. It is against this background
that India Posts network, with its transparent, accountable and centrally managed network assumes
relevance. This is a ready-made network, where cash management and infrastructure issues have
already been taken care of. Significantly, it is also a trusted and familiar network with roots in local
communities where the village postmaster knows his customers personally.
Post Office,Commercial Banks and Financial Inclusion in India

Despite taking various initiative from the part of government, RBI and commercial banks the
banking sector in India has so far not been able to provide complete coverage in the country especially
in the rural areas.
There are 171 commercial banks in the country. Out of the 93,080 Commercial Banks
branches only 36.10%are in rural areas and 24.76% in semi-urban areas. All India average population
served by per branch is 13,503.
On the other hand, out of 1.55 lakhs Post offices, 89.8% i.e. 1.39 lakhs are in rural areas covering
an population of 5,682 per Post office in rural areas and 20,346 in urban areas, on an average 7,176
people are served by one post office as on March 2011. On an average, a post office serves an area of
21.23 sq. k.m. Further, only 5% of6 lakhs villages have bank branches. Two hundred ninety six (296)
districts in states are under banked, i.e. they have below-par banking services.
The Indian post office offering a plethora of financial services through out its all branches. This
includes various post office savings schemes, postal life insurance, mutual fund, money remittance,
forex
services etc. As on March 31, 2011, there are nearly 25 crore postal savings bank account under
various post office savings bank schemes. The Department of Posts has taken the responsibility to
disburse the MGNREGA wages through Post Offices by opening savings bank accounts in the names
of MGNREGA beneficiaries. Starting with Andhra Pradesh Postal Circle in 2005, the Scheme of
disbursement of MGNREGA wages through Post Offices accounts is currently operational in the
entire country excepting Delhi, Jammu & Kashmir and Tamil Nadu Postal Circles (Tamil Nadu and
Pondicherry). The Department is also contributing to the efforts in financial inclusion by payment of
benefits under various social security pension schemes viz. IGNOAPS (Indira Gandhi National Old
Age Pension Scheme), IGNWPS (Indira Gandhi National Disability Pension Scheme)and Indira
Gandhi Matritva Sahyog Yojana (IGMSY Scheme), a Conditional Cash Transfer (CCT) Maternity
Benefit Scheme. Such payments are being effected either through money orders or Post Office Saving
Bank accounts.
148
The Governments financial inclusion plan aims to provide banking services to 73,000 villages
each having a population of 2000. This could be effectively and adequately provided by the PBI
operating through postal network and thereby help to spread the savings habit. In this regard setting up
of a Postal Bank will assist the Government in its plan for financial inclusion besides mobilizing
deposits, especially in the under- served rural and semi-urban areas of the country.
Different Saving Product of Indian Post Office

(a) Saving account scheme: Post office saving bank account (POSB) is the oldest and most
popular postal saving instrument. Any individual can open a POSB A/C with a minimum
balance of ` 50. A pass book is provided to the A/C holder and Cheque facility is also
available for POSB A/C. Currently the rate of interest offered against POSB A/C is 4%. This
Account is regulated by The Government Savings Bank Act of 1873.
(b) Recurring deposit scheme: Post office offers recurring deposit facility with a maturity period
of five years. The minimum deposit is ` 10 and multiples of ` 5 thereafter and there is no
limit of maximum deposit. The present rate of interest offered against this A/C is 8.4%.
Premature closer is allowed after three year and part withdrawal is also allowed. Four defaults
are allowed, more than four default lead to closer of the account. Depositors are provided with
one passbook.
(c) Time deposit account: Post office offers time deposit for one year, two year, three year and
five year. The rate of interest allowed is 8.2%, 8.3%, 8.4%, and 8.5% for one year, two year,
three year and five years term deposit respectively. The minimum amount required to deposit
is Rs 200/ with no maximum limit. Premature withdrawal is allowed after expiry of six month.
(d) Monthly Income Scheme: under this scheme the severs make a lump-sum deposit, which
gives him a monthly interest. The minimum deposit in case of single depositor is ` 1000 and
in case of joint depositor it is ` 1500. Maturity period is five years and rate of interest allowed
is 8.5%. Depositors are provided with one passbook.
(e) National Savings Certificate: This is a tax exempted certificate sold by post office with a
minimum investment of ` 100 and having no maximum limit. Certificates are available in the
denomination of ` 100, ` 500, ` 1000, ` 5000 and ` 10,000. Rate of interest is allowed at
8.9%. Trust and HUF are not allowed to invest in NSC.
(f) Public provident fund scheme: This is a tax advantage 15 years scheme with a minimum
deposit of `500 in a financial year and a maximum of ` 70,000 per year. Withdrawal is
allowed after expiry of five years from the date of initial deposit. Interest is allowed at 8.8%
per annum. Depositors are provided with one pass book.
(g) Postal Life Insurance: besides above mention saving schemes the Indian post offering life
insurance services since 1884. Initially the service was limited only to the employee of post &
telegram department but due to its popularity the service was later on extended to the employees
of some other departments and banks also. It was opened for all people in the year 1995.
(h) Rural Postal Life Insurance: To extend the life insurance service to the rural public the post
office extended the service to rural areas in 1995. The prime objective of the scheme is to
provide insurance cover to the rural public in general and to benefit weaker sections and
women workers of rural areas in particular and also to spread insurance awareness among the
rural population.
Financial Inclusion and the Role of the Post office
149
Problems and Challenges

There is no doubt of the fact that Indian post is playing a very important role in financial
inclusion but it can play a much better role if it can overcome from the following problems:
(a) Lack of basic infrastructure: The post offices in India, especially post offices in rural areas
which playing an important role in providing financial services in rural areas are not equipped
with basic infrastructure. Inmost of the post offices even proper sitting arrangement for staff
is not available.
(b) Less numbers of staff: There is a crunch of manpower in the post offices. It is observed that
most of the post offices are run by one or two persons and need to do all sorts of work which
has a very adverse effect on performance and output.
(c) Lack of coordination: There are many examples in the foreign countries where post offices
are doing tremendous work for financial inclusion in coordination with other departments.
But, till today Indian post keep itself away from other sister organization or other organization
also not seeking coordination of Indian post in providing financial services.
(e) Slow progress of innovation: To cope with the fast changing environment Indian post also
need to be catching the new invention and technology timely. The Indian post still following
the age old practices of working, though it bringing some innovation recently but in a very
slow speed. Out of total post offices only25464 post offices are computerized till 2011-12.
(e) Abstain from landing: Providing loan is one of the major aspects of financial inclusion but
Indian post is not till today taking it as a part of its business which has narrowed down its
operation. Despite having these problems it has some other difficulties too in expanding its
area of operation. From the verbal discussion with the officials it is observed that being a
government department they cannot take a decision independently.
Conclusion
The expert committee on Harnessing the India Post Network for Financial Inclusion is of the
opinion that succeeding with universal access to financial services will require a considerable role for
post offices. In parallel, and as some traditional functions of the postal network are being supplanted
by new technologies such as email, India Post is also in the process of carving out a larger role for
itself. Therefore, there is a remarkable coincidence of needs between the twin problems of (a) charting
the future for India Post, and (b) resolving India's challenges of financial inclusion.
In terms of number of branches and customer the Post Office Savings Bank is all ready the
largest bank in the country. There is no doubt of the fact that the Indian Post can lead the way in
financial inclusion with its given network and reach. It can increase its importance and profit provided
it can bring together all the stakeholders in to a single platform, bring the necessary reforms, adopt the
innovation and take some policy appropriate with the situation. The Indian post has all ready adopt
certain reform measures for innovation and technological upgradation. Government had approved IT
modernization project for computerization of all then on computerized post offices, establishment of
required IT infrastructure and development of software. A pilot project on core banking solution and
Information and Communication Technology (ICT) is going on in six circle. The project is supposed
to be completed by 2014. Indian post also take decision to establish 1000 ATMs throughout the
country.
150
I strongly believe if Indian post can make coordination with other stakeholders, infuse necessary
human resource with proper training and technology, bring innovation and other appropriate measures
the Indian post can reap the benefits of its huge network, extensive outreach and lower cost and at the
same time it will able to contribute towards the national objective of financial inclusion. Establishment
of Post Bank of India may be another strong decision to associate Indian post in financial inclusion.
Indian post has already applied to the RBI for a banking license; if the license is given it will be a
great achievement for Indian post which will enable post offices to perform full banking activities.
Indian post can give a new dimension to the process of financial inclusion and can reach an extra
mileage in the field of financial inclusion. Indian post can start the journey where Indian banking
system stops.
References
1. A Profile of Banks,2010-11,RBI
2. Annual Administrative Report, 2010-2011, Assam Postal Circle
3. Annual Report, 2010-2011, Indian Post
4. Branch Banking Statistics, RBI, 2009
5. Chakrabarty K.C., Deputy Governor, Reserve Bank of India, keynote address at BIS- BNM Workshop
on Financial InclusionIndicators at Kuala Lumpur on November 5, 2012
6. HM Treasury, 2004, Promoting Financial Inclusion, London, available at www.hm- treasury.gov.uk.
7. Priya Basu (2005). A Financial System for IndiasPoor. Economic and Political Weekly, No37.
8. Report of the Committee on Financial Inclusion, 2008, Government of India.
9. Report of the expert committee on Harnessing the India Post Network for Financial Inclusion, 2010,
New Delhi.
10. Ross Levine (1997). Financial Developmentand Economic Growth: Views and Agenda. Journal of
Economic Literature, Vol. XXXV.
____
CHAPTER
15
Micro-Credit Development in India

with Special Reference to BASIX
Dr. Harnam Singh

Assistant Professor,
Faculty of Commerce, Kalicharan P G College,
Lucknow. Uttar Pradesh, (INDIA)
E-mail: drharnams@gmail.com
ABSTRACT
While the country is experiencing faster growth in its Gross Domestic Product (GDP), a
major concern for economic planners is the balanced growth in order to bridge the gap between
the rich and the poor. Micro-credit, in this line, has now become an important source of financing
the small businesses and other activities especially in rural India. It provides financial services to
mostly low-income people. In this context, need to appreciate the role played by microfinance
institutions (MFIs), in collaboration with government, NGOs, social-organizations etc, in povertyalleviation, employment-generation, improvement of health and nutritional status, empowerment of
women and over all human development. BASIX is a livelihood promotion institution established in
1996, working with over a million and a half customers, over 90 per cent being rural poor
households and about 10 per cent urban slum dwellers. Micro-credit work as the provision of
financial services to those who are excluded from conventional commercial financial services since
most are too poor to offer much or anything - in the way of collateral. It presents a series of
exciting possibilities for extending markets, raising standard of living and fostering socioeconomic development.
Current study presents the impact of Basix on development of micro-credit in India. There is
also an attempt to trace out the problems related to smooth performance as well as managing of
micro-credit companies and how to cope up with those problems. This study is based on secondary
data.
Key Words: Micro-credit, BASIX, MFIs, Socio-economic development.
Introduction
The term microfinance refers to a particular sub-set of financial services which provides small
loans to very poor families, most often without any collateral. The loan can be for consumption,
production activities or for small businesses. Of late, a range of financial services other than credit
such as savings, micro-insurance etc. are also included under microfinance. The characteristics of
152
microfinance are that the financial services is small in magnitude and those who avail the services are
poor or very poor.
The importance of microfinance lies in the fact that the formal/institutional banking sector has
not lived up to its social responsibility of meeting the financial needs of the poor due to various
reasons such as
(a) lack of adequate branch network in the rural area
(b) lack of inability of the poor to offer satisfactory collaterals for the loans and
(c) lack of education and awareness among the poor.
This is in spite of the fact that India today has an extensive banking infrastructure. The credit
requirement of poor in India has been estimated to be around ` 50,000 crore per annum. Against this
requirement, the credit outstanding of the poor with the formal banking sector is stand to be ` 5000
crore or ten percent of the total demand. According to a sample survey conducted by the World Bank
and NCEAR in 2003, in Andhra Pradesh and Uttar Pradesh, around 87 per cent of marginal farmers /
landless laborers do not assess credit from the formal banking sector. Most of the benefits of the so
called extensive banking infrastructure have gone to the relatively better-off people.
Access to social security is a fundamental human right. While the country is experiencing faster
growth in its Gross Domestic Product (GDP), a major concern is the balanced growth to bridge the gap
between the rich and the poor. According to RBI, over 40% of Indians do not even have bank accounts.
The National Sample Survey 59th Round (2003) estimates ravels a disappointing fact that of the total
cultivator households, only 27% have received credit from formal source, and 22% from informal
sources. The remaining 51% mostly marginal farmers- have virtually no access to credit.
It is in this context that one need to appreciate the role played by microfinance institutions (MFIs),
in collaboration with government, NGOs, social organizations etc, in poverty alleviation, employment
generation, improvement of health and nutritional status, empowerment of women and their human
development. Microfinance is seen as provision of financial service to mostly low-income people,
especially the poor and very poor who are without any tangible assets.
There are various studies related to Microfinance. It was found that the numerous numbers of
literatures is available on agriculture insurance and its various aspects. Few reviews are discussed here
under:
Yunus,Muhammad (1999) says that Micro-credit is something which is not going to disappear...
because this is a need of the people, whatever name you give it, you have to have those financial
facilities coming to them because it is totally unfair... to deny half the population of the world financial
services.
Singh, Lakshmeshwar Pd (2008) state that Micro finance services are designed to help the
underprivileged to increase their earning, consolidate their properties and even gain a decent financial
stability in life. The advantage of availing the micro finance credit over the more traditional means is
the unwillingness of the later to serve the underprivileged people
Taneja Kanika (2009) found that the key problem areas visualized in rural financial markets
includes- lack of credit in rural areas, absence of modern technology in agriculture, low savings
capacity in rural areas and prevalence of usurious moneylenders.
Micro-Credit Development in India with Special Reference to BASIX
153
Patil et al, (2008) says that a significant amount of the underprivileged people in India is
somehow able to tailor their financial resources in a way that they can realize their ambitions vis--vis
their houses or other plans. However with the introduction of micro finance in India, the standard of
living of the poor section of the population is expected to improve.
Khandker, Shahid (2009) found that micro-credit has tremendous potential as an instrument for
poverty reduction.
Former World Bank President James Wolfensohn said that Microfinance fits straight into the
Banks overall strategy. The Banks mission is to reduce poverty and improve living standards by
promoting sustainable growth and investment in people through loans, technical assistance, and policy
guidance. Microfinance contributes honestly to this purpose.
After an intense review of literature (as above) and going through various existing secondary data
it can safely asserted that this new paradigm of unsecured small scale financial service provision helps
poor people take advantage of economic opportunities, expand their income, smoothen their
consumption requirement. Reduce vulnerability and also empowers them if the developing and
industrialized countries take action immediately by implementing plans and projects, in which micro
credit could play a major role.
The present work is mainly based on the secondary data collected from the various sources. The
data will be collected with the help of Journals, Reports published by the Microfinance Companies,
RBI, etc. The major source of data collection will be from the reports of RBI. The Annual Report of
BASIXs also benefits in this work. Descriptive research methodology is carried out in this study.
Different research articles reports have been reviewed to make this study more relevant.
Objectives
The aim of the study is to improve knowledge about role of microfinance in rural life and
examine the role and the functioning of BASIX in the Microfinance sector towards Livelihood
Security. How Microfinance helps for rural development and Impact of Microfinance and Financial
inclusion. This study reviews the emerging opportunities for Microfinance sector in development of
Indian economy with ongoing market development. The study will help in getting the knowledge of
Issues and Strategies for Microfinance.
Importance of Study
Microfinance is the key mantra for a continuous and long-term economic growth in India. The
same is in the sharper focus today with the government taking keen interest to insure a comprehensive
and visible uplift of rural people through effective implementation of various schemes. Therefore, it is
clear that the Micro-credit is most important factor to attain sustainable rural development. The
customers include rickshaw pullers, hawkers and vendors, rag pickers, scrap collectors, auto drivers,
illiterate and poor women. The customers include both those directly engaged in low-grade economic
activities, and those who have a need to save, regardless of any direct income earning activity.
There is a need for substantial scaling up of microfinance which includes credit, savings and
insurance. As the banking sector is not able to meet the entire credit needs of the poor, it is necessary
encourage the growth of MFIs, subject to appropriate regulation which should not be too restrictive.
As the money lenders are still dominant in the rural credit sector, is it pragmatic to institutionalize
154
them with adequate safeguards to prevent exploitation of the poor. There is also a need to shift the
focus from the quantity of credit to the quality of credit. In order to achieve this, emphasis should be
given to creation of adequate infrastructure, efficient extension services, processing and marketing
facilities etc. Emphasis should also be given to SHG formation and group leading rather than
individual lending. Micro-finance Ombudsmen may be set up at district level to decide on complaints
regarding exploitative and illegal practices by the lenders.
Model in Microfinance
The modern microfinance movement was born in Bangladesh in the 1970s as a response to the
prevailing poverty condition among its vast rural population. Astonishing growth rates in Bangladesh,
particularly during the 1990s, created a new dimension for microfinance worldwide as microfinance
institutions grew to include millions of clients. For the first time, a substantial proportion of the lowincome families of major developing country were served by the activity. The start of twenty first
century reinforced this trend as the Bangladesh numbers continued to grow impressively. In India, a
substantial microfinance system based on self-help groups (SHGs) developed. Other countries of the
region made slower and later starts but have since established active microfinance sector. There are 41
microfinance programmes in operation in 17 countries, including Grameen Bank in Bangladesh.
Independent studies have shown that these MFIs have been instrumental in reducing poverty. The
microfinance programme in India has been under implementation since 1993. However, concrete
evidence of poverty alleviation has been debated. In the case of SEWA, participants in such
programmes have reported higher income, and this is especially so for women. The task of awareness
on the human development aspects needs to be undertaken. There is a need for evaluation of existing
microfinance programmes by independent researchers. Panchayati Raj institutions shall be involved
right from village to district levels to implement these programmes.
The last 15 years saw the entry of various types of Microfinance institutions in the rural credit
sector. Most of these MFIs are based on the Grammen Bank Model of Bangladesh. This model has the
solidarity groups at the base, each of which comprising five browers. Eight solidarity groups constitute
a center. Ten Centers from a Cluster and seven clusters from a branch. Several such branches
constitute an MFI. MFIs in India register themselves either as Societies, Trusts, Non Banking
Financial Companies (NBFCs) or as Local Area Banks (LABs), and are governed by their respective
rules and regulations. Microcredit works as the provision of financial services to those who are
excluded from conventional commercial financial services since most are too poor to offer much - or
anything - in the way of collateral. It presents a series of exciting possibilities for extending markets,
reducing poverty and fostering social change.
BASIX an Overview
The Holding Company of the BASIX Group is called Bhartiya Samruddhi Investments and
Consulting Services (BASICS Ltd.) which started operations in 1996 as Indias first new generation
livelihood promotion institution. It set up two fund based companies Bhartiya Samruddhi Finance
Ltd, a micro-finance NBFC in 1997 and Krishna Bhima Samruddhi Local Area Bank Ltd in 2001.
Both were among the first in class. BASICS Ltd also started providing fee-based business right from
the outset by offering consulting services in microfinance and livelihood promotion, training, HRD
and institutional development (ID) and information technology (IT) applications for microfinance
and livelihoods. Indian Grameen Services, Section 25 not for profit company forms the research and
development arm of BASIX. Besides carrying out research and development in the area of livelihood
155
promotion, it also designs and develops financial products for extending credit, evolving distribution
channels for delivery of its services and developing necessary systems for service delivery such as
accounting and MIS.
The fund-based, fee-based and social businesses of the BASIX group have a tremendous synergy
and contribute to each others growth and prosperity. The credit business enables customer acquisition,
while the insurance business mitigates customer and credit risk, and the AGBIDS business enables
customer retention by enhancing their incomes. The consulting and IT business allows BASIX to earn
revenues from offering services that it needs for itself anyway. The social businesses enable research
and development and knowledge building.
BASIXs Structure
BASIX works in 16 states - Andhra Pradesh, Karnataka, Orissa, Jharkhand, Maharashtra,
Madhya Pradesh, Tamilnadu, Rajasthan, Bihar, Chattisgarh, West Bengal, Delhi, Uttarakhand, Sikkim,
Meghalaya and Assam, 205 districts and over 25,300 villages. It has a staff of over 6,260 of which 80
percent are based in small towns and villages. BASIX mission is to promote a large number of
sustainable livelihoods, including for the rural poor and women, through the provision of financial
services and technical assistance in an integrated manner. BASIX will strive to yield a competitive rate
of return to its investors so as to be able to access mainstream capital and human resources on a
continuous basis. Its motto, Equity for Equity means that BASIX attempts to use capital (financial,
human, social and natural capital) to work towards bringing equality of opportunity and social justice
in society, globally To maintain its distance from direct operations while retaining reasonable control
the Board has set up some special Committees to look at specific functions like audit, HR, Operations
and Investments.
The Board of Bhartiya Samruddhi Finance Limited has constituted The Executive Committee to
approve and recommend to the Board inter alia the Operations Policy, the Annual Budget, Capital
Expenditures, the Finance Policy. The Audit Committee looks at Risk Management & Assurance
Policies, recommend to the Board the quarterly accounts for approval, interact with the Statutory
Auditors and discuss in detail any areas of concern. The Human Resources Development Committee
comprehensively review the HR Policy of the company which shall describe how the HR requirements
for the Operational Policy will be addressed, in terms of recruitment, induction, training, and also
detail out the policy for remuneration, performance incentives, promotions and procedures for
disciplinary action and grievances redressal. The Nomination Committee meets to review the structure,
size and composition of the Board, identify and nominate suitable candidates to fill Board vacancies
and undertake an annual performance evaluation of the Board. The Risk Management Committee is
responsible for reviewing and approving the risk management policies of the Company,
assessment and monitoring of all risks associated with the operations of the Company and
development and implementation of internal compliance and control systems and
procedures to manage risk. The Committee meets every quarter. The Asset Liability Management
Committee meets every half year to develop, review and maintain a long term funding strategy, review
short term funding plans, determine liquidity portfolio risk profile, Assess the risks in the balance
sheet and Monitor structure of the Companys Assets and Liabilities. Appropriate powers and
responsibilities have been delegated and guidelines laid down for constitution, attendance and quorum,
powers and duties of the Committees. The Committees constitute a balanced mix of independent and
executive directors. In addition to circulating the minutes of the Committee meetings to the Board, the
156
Chairman of each of the Committees also informs the Board about important issues discussed or any
areas of concern that need to be brought to the attention of the Board.
Similarly, other companies in the BASIX Group have constituted Committees of the Board:
Indian Grameen Services has an Audit Committee, Bhartiya Samruddhi Investments and Finance
Limited has an Executive Committee while the Krishna Bhima Samruddhi Local Area Bank Limited
which is governed by the Banking Regulation Act and the RBI Regulations has constituted the Audit
Committee, the Executive Committee the Credit Committee, the Risk Committee and the Asset
Liability Management Committee
The rationale behind the Livelihood Triad strategy is as follows: Micro-credit by itself is helpful
for the more enterprising poor people in economically dynamic areas. Less enterprising poor
households need to start with savings and insurance before they can benefit from micro-credit, because
they need to cope with risk. However, in backward regions, poor people, in addition to microfinance,
need a whole range of Agricultural/ Business Development Services (productivity enhancement, risk
mitigation, local value addition, and market linkages) need to be provided. To offer these services in a
cost-effective manner, it is not possible to work with poor households individually and they need to be
organized into groups, informal associations and sometimes cooperatives or producer companies. The
formation of such groups and making them function effectively, requires institutional development
services. Hence, BASIX adopted the Livelihood Triad strategy
Human Resource
As a pioneering institution in the field of Livelihood Promotion, BASIX has been conscious of its
key role in building human resources both for itself and for the sector. A team of professionals from
diverse backgrounds are brought together to work towards a common goal of Livelihood Promotion.
BASIX inherently a reflective organization emphasizes on key values - fairness, integrity,
transparency and accountability, ethical operating practices and professional management. The work
environment encourages innovation and learning where employees enjoy and value their work
Issues and Challenges

The phenomenal growth of Indian microfinance sector and its potential for further expansion
attracts everyone. The Self Help Group-Bank Linkage Programme (SBLP), pioneered by
NABARD in 1992, has emerged as the largest and the fastest growing community based
microfinance programme in the world. The Microfinance Institutions (MFIs) too have emerged as
strong players in supplementing the role of formal financial institutions in providing microfinance
services to the poor. However, despite various policy interventions aimed at upscaling the efforts
to bring in the excluded families, particularly the weak and vulnerable members of society, within
its fold, financial exclusion continues to deprive millions of people living below a sustainable level
of income.
The microfinance sector across the globe, over the past few years, has shown tremendous
growth in terms of its efficiency and outreach which was made possible due to various experiments
done by diverse stakeholders in different parts of the world. However, in spite of best efforts of the
Rural Financial Institutions (RFIs) and the MFI sector, the magnitude of financial exclusion is
truly staggering. Further, one of the key challenges facing the policy makers today is how to make
the growth process more inclusive. If investments for upliftment of poor needs to be sustained the
chain of lending and repaying must not be broken. The loan waivers have negative impact on
157
microfinance. Bankers and other lenders will always think on how much to lend and how much
will come back
Microfinance and Agriculture

He indicated that lack of interest of financial institutions for agriculture financing is due to
remoteness of the areas, illiteracy of the agricultural population and high climatic risk involved in the
sector. Nonetheless, the service providers who are mainly urban based are having inadequate
knowledge of rural financing and also the agriculture sector is different from other sectors of economy
in a number of ways. It should be tried to identify the role micro-finance can play in enhancing credit
flow to agriculture.
Impact of Self-help Credit Programme

Women's role improved significantly in enterprise and household decision making and in their
access to assets and their control over self earnings among client than non-client group. Self Help
credit-based activities facilitated to take decision for their personal needs, availing treatment and
recreational facilities independently. It was felt that there is a need to critically examine issues to
enhance women empowerment irrespective of their duration of participation in the programme, types
of economic activities and marital status. Also there is need to build capacity of Self-Help credit
groups organizational, technical and management skills of Income Generating Activities (IGAs),
training for grass root organizations formation and structure of Self-Help credit groups, their roles and
responsibilities, account-keeping and financial management. Again technical training on a range of
activities is necessary to build institutions to make economic activities sustainable. Monitoring and
review of progress to identify scope for skill enhancement in relation to specific groups and make
necessary modifications in content and methodologies of the training is important. Training extension
agents projecting various aspects of enterprises, such as institutional, technical, financial, participatory,
social development etc. are also desirable.
Conclusion
There is a need for BASIXs to creation of more sustainable Self-Help credit groups motivated to
create revolving funds and accounts for sustainable development and future management of economic
activities. It should be encouraged to formulate their own rules and regulations for loaning and
dictated how funds will be used, otherwise it may destroy their sense of local ownership. Exposure
visits and training programmes also are organized at regular intervals to give targeted groups
opportunities to learn and express themselves so as to improve their self-confidence. Where
confidence is increased, leadership will emerge. There is a need to transform Self-Help credit
programme into a genuine livelihood diversification and gender strategy for womens empowerment.
Such a 'gender policy for empowerment would make Self-Help credit more empowering for more
women. Micro credit to serve its mandate of empowerment and poverty reduction, has to be bundled
with business development services such as financial literacy, skill building, advisory services,
building of marketing capabilities etc. So it is a need to have a special institutional setup for
microfinance in the country.
Suggestions
In India, there is food security at national and state levels. However, there is need to develop the
food security at the individual household level also. The services of Postal Department can be used
158
effectively to reach out to the people in the context of financial inclusion. The Government may think
of introducing crop insurance linked microfinance module for farmers. The poverty alleviation
through self-employment must give way to poverty alleviation through employment generation,
through any means, including enhancing the participation in the wage market. In order to transform
self-help credit programme into a genuine livelihood diversification and gender amendment strategy,
the recognition of women needs to be widened beyond her identity as a wage earner and consultation
with her in limited areas of enterprise and household decision-making. To maximize the contribution
of self-help credit programme to women empowerment, it not only requires equality in access to all
credit services but also an adequate and non-discriminatory regulatory framework.
References
1. Yunus Muhammad (1999) Founder Bangladesh Grameen Bank, in March 2002 (http://news.bbc.co.uk)
2. Singh, Lakshmeshwar Pd. (2008), Micro Finance-The Emerging Horizons for Poor and weaker Section,
The Indian Journal of Commerce, Vol.61, No.4, p.173.
3. Taneja Kanika (2009), Microfinance- The new mantra of Rural Finance to reduce Poverty, Delhi
Business Review, Vol. 10, No.2(July-December 2009)
4. Patil, Ganesh, Govind, P.S. and Bhamare, Priyanka D. (2008), .Micro Finance- A Combat Against
Poverty., The Indian Journal of Commerce, Vol.61, No.4, p.169
5. Khandker, Shahid (2009), Senior Economist, World Bank, in 1999 (www.reliefweb.int)
6. Yojana various issues (A development monthly) Publication division, Ministry of I&B, Govt. of India
7. Kurukhsetra various issues (A journal on rural development) Publication division, Ministry of I&B,
Govt. of India.
8. Annual Reports of RBI
9. Economic Survey of different years.
10. Annual Report BASIX.
____
CHAPTER
16
Taking Banking Services to a

Common Men
Smt Pushpa Suryavanshi

Assistant Prifessor
Commerce
Dr.Hari Singh Gour v.v.Sagar
Madhya Pradesh
E-mail: www.surya.nregs@gmail.com
INTRODUCTION
Present time is a modern time, everyone go fastly. The banking industry has shown tremendous
growth in volume and Complesity during the last few declare despite making significant
improvements in all the areas relating to financial viability, profitability and competitiveness, there are
concerns that banks have not been able to include vast segment of the population, especially. The
under privileged sections of the society, into the fold of basic banking services or a bank in a financial
instuations that provides banking and other financial services to their Customers. As banking services
are in the nature of public good, it is the prime objective of the public policy.
Defination of Banking
Banking regulation act-1949 defines banking as Accepting for the prepare of lending and
investment of Deposits of money from the public, Repayable on Demand or otherwise by Cheque,
Draft, Order or otherwise.
What is Banking System

Banking system there has been a rapid development in the banking instuations in various
countries, with development, various systems of banking have come into existence. Bank can be
classified on the basis of volume of operator business pattern is areas of operations.
Need of the Bank

Before the establishment of banks the financial activities were handled by money lenders and
individuals. At the time the rates were very high. Again there were no security of public saving and no
uniformity regarding loans. So as to over come such problems the organized banking sections were
established which was regulated by the government.
160
The following function of the bank explains the need of the bank and its
importance.
To provide the security to the savings of customers.
To control the supply of money and credit.
To encourage public confidence in he working of the financial systems, increase saving
speedily and efficiently.
To avoid focus of financial power in the hands of a few individuals and instruction.
To set equal norms and conditions to all types of customers.
Banking Services in India

Banking services in India are now going through a phase of improvement with globalization and
liberalization, money of the big names in banking industry have started their operations in India
banking market. The banking services are now for better and quicker with the prevalences of services
like internet banking one can access the account at any point of time from any location. Indian banking
sectors is divided into two major section government owned bank. and private banks. The major share
of the banking market is been hold by the government owned banks. The Private banking sectors have
really improved the banking services in India. Private banking provides better and proactive
information about banking products, which helps the customer to have better understanding of their
accounts and investments.
Function of Banks
The functions if the banks are briefly highlighted in following Diagram or Chart:
Functions of a Bank
Primary Functions
Secondary Functions
Granting Advances
Agency Function
Overdraft
Transfer of Funds
Draft
Fixed Deposits
Cash Credit
Periodic payments
Lockers
Current Deposit
Loans
Collection of Cheques
Discount Loans
Portfolio Management
Accepting Deposits
Savings Deposits
Recurring Deposit
General ability Function
Under writing
Project report
Periodic collection
Social Welfare Programme
Other agency of function
Other Utility Function
Taking Banking Services to a Common Men
161
Need and Importance of the Study

Financial inclusions will vary depending on the nature and intent services denied. Banking services
make necessity for every person. When any person suffer from financial problems or other problems or
other necessity take this banking services. When the small business may suffer due to loss of access to
middle class and higher income consumer, hinges Cash handling costs, delays in remittances of money.
According to certain researches, financial inclusion can lead to social inclusion, banking sector has
become very large and important sector. There are several tender and procurements notice floated banks,
banking system also regarded as a system provided by the bank which offer cash management services for
customers, reporting the transition of there account and portfolio, through out the day.

To study the banking services to a commercial.
To study the scope of standing services for person.
Present situation financial inclusion an analysis.
To study banking services benefits in all areas.
Methodology
The study is based on secondary data collection from
National Rural financial inclusion plan.
Business standard newspaper.
www.indiabanl .in/ services.php.
Full report of the committee on financial inclusions NABARD-Jan.2008
RBI.Guidelines on financial inclusion.
www.indiabankingsystem.
Present Situation Financial Inclusion on Analysis
Financial inclusion in India seems to be far from inclusion. A study showed that out of a total of
5165 new banks opened in 2011, only 21.86% are rural banks out of a total of 5,165 new branches
opened in 2011, only 21.86% are rural bankers Rural out reach seems to be entirely dependent on BC s
with inadequate focus on brick and mortar.
Table 1: Branches in rural and urban areas in 2010 and 2011.
S. No.
1
2
3
4
5
6
Particular
Total No of Branches
Total Rural Branches
Total Urban
Total New Branches
Total New rural Branches
New urban
Source: RBI
RBI
March 2010
69995
21554
48441
March 2011
75160
22683
52477
5165
1129
4036
162
Banking Service
Bank give many services for persons and other areas for help
Table 2: Name of Banking services

Net Banking
e-payment of indirections
NEFT
Swarna Mudra
Jeevan Kalyan
Arogyareksha
Janashree Bhima yojna
Griha jeevan
New room
Learning rates
Education loans
Info- Basel-IIDisclosures
Best practices Cource
Mobile Banking
MCA payment
CMS Plux
Credit Cards
Varishtha
Jeevan vidya
Universal healthcare
Xpress money
Notification
Services Charges
Swarna Mudra Scheme
Right to Information Act
Phone Banking
RTGs (Jet renit)
Multicity cheque facility
ATM
Chhatra
Money Gram
Home surakhsha
Yatra surekhasha old services
Depostrates
Products palelle
Urgent Management services
Customer Centre Services
Table 3: Banking Services Coverage (Ratio of Demand Deposit Accounts to the adult
population)
Region /State/
Union Territory
Current
Account
Saving
Account
Total
Population
Adult
Population
(Above 19
Years)
Total
No.of
Accounts
No.of acc. per No. of acc. Per

100 of
100 of adilt
Population
pop.
NORTHERN
REGION
4215701
52416125
132676462
67822312
56631826
43
84
Haryana
572660
8031472
21082989
11308025
8604132
41
76
Himachal Pradesh
134285
2433595
6077248
3566886
2567880
42
72
Jammu & Kasmir
277529
3094790
10069917
5379594
3372319
33
63
Punjab
1156137
13742201
24289296
14185190
14898338
61
105
Rajshthan
689657
12139302
56473122
28473743
12828959
23
45
Chandigarh
80607
1126696
900914
545171
1207303
134
221
Delhi
1304826
11848069
13782976
7929589
13152895
95
166
NORTH-EASTERN
REGION
476603
6891081
38495089
19708952
7367684
19
37
Arunachal Pradesh
10538
209073
1091117
544582
219611
20
40
Assam
378729
5071058
26638407
14074393
5449787
20
39
Manipur
12514
200593
2388634
1222107
213107
17
Meghalaya
24305
458779
2306069
1088165
483084
21
44
Mizoram
3441
117885
891058
476205
121326
14
25
Taking Banking Services to a Common Men

Nagaland
13819
Tripura
195452
1988636
163
995523
209271
11
21
33257
638241
3191168
1784212
671498
21
38
EASTERN REGION
1814219
47876140
227613073
122136133
499690359
22
41
Bihar
464511
13225242
82878796
40934170
13689753
17
33
Jahakhand
166007
5834341
26909428
13737485
6000348
22
44
Orissa
228160
7030004
36706920
21065404
7258164
20
34
Sikkam
4097
125365
540493
288500
129462
24
45
942733
21544753
80221171
45896914
22487486
28
49
8711
116435
356265
213660
125146
35
59
CENTRAL REGION
2202217
64254189
255713495
129316677
66456406
26
51
Chhattigarh
192067
3346898
20795956
11209425
3538965
17
32
Madhya Pradesh
553381
11731918
60385118
31404990
12285299
20
39
Uttar Pradesh
1324509
45804350
166052859
82229748
47128859
28
57
Uttaranchal
132260
3371023
8479562
4472514
3503283
41
78
WESTERN REGION
WestBengal
Andaman
Islands
&
Nicobar
3178102
49525101
149071747
86182206
52703203
35
61
Goa
81551
1584177
1343998
891411
1665728
124
187
Gujarat
955964
16220262
50596992
28863095
17176226
34
60
Dadra & Nagar Haveli
6076
69308
220451
122765
75384
34
61
Daman & Diu
7271
83170
158059
97331
90441
57
93
SOUTHERN REGION
4666014
83386898
223445381
135574225
88052912
39
65
Andhra Pradesh
1156405
23974580
75727541
44231918
25130985
33
57
Karnataka
1086662
19147879
52733958
30623289
20234481
38
66
Kerela
600065
17669723
31838619
20560323
18269788
57
89
Tamil Nadu
1786514
22052812
62110839
39511038
23839326
38
60
491
22997
60595
33686
23488
39
70
35877
518967
973829
613971
554844
57
90
541031553
320902390
31
59
Lakshadweep
Pondicherry
All-INDIA
16552856 304349534 1027015247
Limitation of the Study

The study has the following limitations:
Different banks may offers different services and charge different fees and it can be different to
compare the services.
Timely opened account and more confusion for fill new bank accounts.
Bank officers not stay in village for the Banking jobs minimum officers do up down for the
Job.
Conclusion
Present time is this time every person wish money saving. So he choose banks financial
inclusion will require a holistic approach on the part of the banks in creating awareness about
financial products, education and advice on money management, debt counseling, Saving and
refundable credit. The banks should also consider giving no frill accounts to those interested by
164
leaving the application forms at currency stores, general stores, pan shops bigger shops and super
markets. These have to be a gendered, Weakens section and geographically challenged new of
inclusion. Focus has to come back to poverty alleviation as financial inclusion without poverty
alleviation is meaningless. The banks are prepared to think outside the bon then financial inclusion
can emerge as commercially profitable business.
References
1. Report on trend and progress of banking in India 2008-09 (Mumbai reserve bank of India),2009
2. Report on trend and progress of banking in India 2007-08 (Mumbai reserve bank of India),2008
3. Business standard News Paper.
4. www. Indiabank.in/services.php
5. RBI Guidelines a financial inclusion.
6. National Rural financial inclusion Plan.
7. www. india banking system.
____
CHAPTER
17
Role of Financial Inclusion in the

Economic Growth of Odisha
P K Mishra
Assistant Professor in Economics
Central University of Jharkhand,Ranchi
Ratu-Lohardaga Road, Brambe, Ranchi, India-835205
E-mail: pkmishra1974@gmail.com
ABSTRACT
Financial inclusion in India and it s states has been a priority area for the Union and State
governments in propelling inclusive growth. Plans, policies and programs are undertaken at
different levels to drive the agenda of financial inclusion, and integrate every common citizen of
India in the fold of formal financial system of the country. The RBI approach is driven by a bank
led model supported with ICT and BCs. RBI has also taken steps in opening No-frills accounts,
relaxing KYC norms, deregulation of pricing, promoting SHG bank linkage model, and many more.
However, there are issues and challenges that remain with every noble initiative. Demographic
spread to low population and remote locations, financial literacy, technological solutions, viability
of business models, etc., remain key concerns. Although microfinance institutions and the
community based models are considered pioneering in the direction of achieving the important
objectives of financial inclusion, prudent programs, policies and approaches need to be designed
accordingly. This chapter is an attempt to examine the role of financial inclusion in contributing to
the inclusive growth of Odisha. In spite of the sluggish rate of financial inclusion in Odisha, the
creation of basic infrastructure, and adoption of appropriate technology coupled with dedicated
human resource can make a dent in achieving total financial inclusion. A proper banking policy,
financial literacy plans, and pilot projects on micro pension and micro finance can go a long way
in achieving financial inclusion targets in the Odisha thereby making it a stable, industrialized and
developed State in India.
Key words: Financial Inclusion, Inclusive Growth, Odisha
Introduction
Financial inclusion is the process of making the basic financial services available to the vast
sections of the disadvantaged and the low-income groups at an affordable cost. Financial inclusion
symbolizes the important role of financial sector in the overall objective of inclusive growth.
Achieving the inclusive growth through financial inclusion, particularly in a country of the size and
inherent diversification of India, is a stupendous task and requires full commitment to its tenets. The
166
various financial services include savings, loans, insurance, payments, remittance facilities and
financial counseling/advisory services by the formal financial system. An open and efficient society is
always characterized by the unrestrained access to public goods and services. As banking services are
in the nature of public goods, financial inclusion should, therefore, be viewed as availability of
banking and payment services to the entire population without discrimination of any type.
The concept of financial inclusion is nothing new in India. It has been in practice since a long
time in an unstructured manner. But the 2005 witnesses the beginning of a systematic and structured
approach towards financial inclusion as a strategy for inclusive growth and poverty alleviation. The
objective of financial inclusion is to extend financial services to the large hitherto un-served
population of the country to unlock its growth potential. In addition, it strives towards a more
inclusive growth by making financing available to the poor in particular. In this direction several
policy initiative have been taken by GoI and RBI including spreading of bank branches in unbanked
areas, simplification of KYC norms, opening of no-frills accounts, issuing of debit and credit cards,
introduction of electronic fund transfer and core banking, initiation of business correspondents model,
initiation of financial literacy programmes, and so on. Despite there remain many barriers in the
progress of financial inclusion in India such as lack of regular income, poverty, illiteracy, lack of reach,
higher cost of transactions and time taken in providing those services. Thus, the governments and
regulators have to play a pro-active role to reduce the intensity of financial exclusion.
The Eleventh Plan period of India, emphasized on the importance of faster, sustainable and more
inclusive growth of the country thereby reducing poverty, creating employment opportunities,
enhancing access to health and education, and providing for environmental sustainability. All these
called for including people from all the strata of the society in the mainstream of the financial and
hence, economic system of the nation. Access to a well-functioning financial system, by creating equal
opportunities, enables economically and socially excluded people to integrate better into the economy
and actively contribute to development and protects themselves against economic shocks. Access to
finance by the poor and vulnerable groups is a prerequisite for poverty reduction and social cohesion.
This has to become an integral part of our efforts to promote inclusive growth. In fact, providing
access to finance is a form of empowerment of the vulnerable groups. Financial Inclusion denotes
delivery of financial services at an affordable cost to the vast sections of the disadvantaged and lowincome groups.
Financial inclusion is thus, a strategy to achieve the inclusive growth provided it is supported by
various factors like real initiatives from banks and financial institutions, technological development,
financial literacy and so on. In order to address this issue, there can be three approaches:
1. the strategies of financial inclusion should be such that savings, including small savings, are
effectively mobilized and channelized through a formal financial system and converted to
investments for sustainable and inclusive growth;
2. easier and safer access to various financial services such as accumulating savings, availing
credit facilities, making investments, and other financial transactions, provide some economic
opportunities to vulnerable populace of the nation thereby alleviating the menace of poverty;
and
3. financial inclusion can contribute to inclusive growth of the country by facilitating the
transfer of funds directly to the accounts of the beneficiaries of flagship programs of GoI such
as National Rural Employment Guarantee Programme, Social Security Programme, etc.
thereby permanently solving the problems of procedural complexity of cash payments,
Role of Financial Inclusion in the Economic Growth of Odisha
167
unnecessary delay, leakages of money before reaching the hands of the beneficiaries, high
transaction costs, etc.
It is with this backdrop, this chapter proceeds to examine the role of financial inclusion for
inclusive growth of Odisha. Section 2 examines the role of financial inclusion; Section 3 focuses on
the financial inclusion in Odisha; and section 4 concludes.
Role of Financial Inclusion

Financial inclusion is imperative for inclusive growth of India. Providing access to financial
services has significant potential to help lift the poor out of the vicious circle of poverty. Financial
inclusion promotes thrift, and develops culture of saving and also enables efficient payment
mechanism strengthening the resource base of the financial institution which benefits the economy as
resources become available for efficient payment mechanism and allocation. Poor people are typically
more vulnerable to financial exclusion this is simply because their major problems arise from the need
for finances. The formal banking services, by exploiting economies of scale and making judicious use
of targeted subsidies may reduce or remove market imperfections and facilitate financial inclusion of
the poor, ultimately leading to higher incomes. The access to financial services by poor people would
lead to their consumption smoothing and investments in health, education and income generating
activities, thus expanding growth opportunities for them. Inclusive growth if targeted systematically
may lead to financial stability, asset building and economic mobility and empowerment of the low
income group people.
There can be a three dimensional approach which is required for the success of financial
inclusion in Odisha first, there should be the availability of transparent, fair and affordable products
and services which enable households to save, borrow and invest; second, there should be a responsive
policy framework which promotes fair products and services and eliminates harmful ones; and third,
there should be a broad-based delivery system which connects low-income households with highquality services.
Inclusive growth attainment depends a great deal on equitable distribution of growth
opportunities and benefits. And financial inclusion is one of the most crucial opportunities which need
to be equitably distributed in the state in order to attain comprehensive growth. It needs to be
understood by the state that in order to bring orderly growth, order needs to be developed with regard
to inclusive finance.
Financial Inclusion in Odisha

Odishas economy is predominantly agrarian and rural-oriented. Prevalence of acute and
persistent poverty had characterized the economy of Odisha in the past. The recurrent events of natural
calamities have further exacerbated the distress of the people, particularly the weaker sections of the
society such as small and marginal farmers and landless labourers. A large number of rural
communities are physically excluded for want of connectivity and other infrastructural support. The
rural people depend mostly on agriculture to eke out their subsistence. However, agricultural growth in
Orissa is virtually stagnant and employment opportunities are rather limited. The state has a fairly well
spread structure of banks with one branch of commercial bank for around 17 thousand persons on an
average. In spite of this, many people in the rural areas do not have access to the banking system and
lack proper awareness of the banking products. The bank branches also face the problems in
expanding their outreach to include this chunk of the rural population. The ground level scenario is,
therefore, perfectly conducive to introduction of local intermediaries by the banks in the form of
168
the Business Facilitators/ Correspondents. Some banks have taken this opportunity and appointed
such intermediaries. This process started after issue of the RBI circular in January 2006 and these
banks operationalised their Business Correspondents (BCs) sometime in the second half of the year
2006-07.
In Odisha, there are several reasons for financial exclusion. In remote, hilly and scarcely
populated areas with poor infrastructure, physical access itself acts as a deterrent. Lack of awareness
and low incomes, are the causes of social exclusion. Illiteracy acts as barrier for financial inclusion.
Distance from the branch, the stipulated timings, cumbersome documentation and procedures,
unsuitable products, language, staff attitudes are the common reason of exclusion. It also make it
difficult to arrange the independent documentary proof of identity and address for transacting through
a bank account especially for a poor migrants and slum dwellers. The Most needed services for
exclusion are accesses to small loans are over draft, Check-in-account, Small savings products, Health
insurance products, insurance against the failure of activity financial asset, credit card,
entrepreneurship credit.
The highlights of the progress of financial inclusion plan in Odisha are as follows. The banks in
Odisha have made provision for banking facilities in 1877 unbanked villages having population of
more than 2000 by March 2012. Of these, 54 villages are covered through bricks and mortar branches,
7 villages through ultra small branches, 1740 villages through appointment of Business
Correspondents and 83 through mobile vans. In addition, 1502 villages with population between 1600
and 2000 have been identified for banking facilities by 2013. Similarly, by March 2012, over 6 lakh
No-frill accounts have been opened and 24 financial literacy counseling centres have been established.
During 2011-12, over 10 lakh Kissan credit cards were issued. Moreover, over 8000 Swarozgar credit
cards and over 1000 Artisan credit cards were issued. During 2011-12, over 58000 SHGs were creditlinked.
The State Bank of India which has been allotted 467 villages by the State Level Bankers'
Committee under financial inclusion plan, the bank has achieved headway in 262 villages where it has
extended banking facilities through banking correspondents. UCO Bank, which has the lead bank
responsibility in the state, has made progress in only three out of 174 villages allotted to it. While
Andhra Bank has opened branch in only one out of 69 villages allotted to it, Syndicate Bank has
achieved progress in four out of its quota of 23 villages. The other PSU banks and the five regional
rural banks operating in the state- Kalinga Gramya Bank, Rushikulya Gramya Bank, Neelachal
Gramya Bank, Baitarani Gramya Bank and Utkal Gramya Bank have been almost non-starters in
opening branches in the unbanked villages for extending banking facilities. Union Bank of India
which was allotted 30 villages is yet to make progress in any of them. The bank, however, proposes to
cover 18 villages in the current financial year. Indian Overseas Bank which was allotted 59 villages
has not informed anything regarding the progress made by it under financial inclusion plan. United
Bank of India has informed that it has appointed 52 banking correspondents and allotted 26 biometric
machines. The bank which was allotted 79 villages has planned to cover 24 villages during the current
financial year. Punjab National Bank (PNB) was allotted 31 villages and it is yet to cover any village
so far. Central Bank of India, given the responsibility of 35 villages, proposes to cover 16 villages by
March 31 this year. Bank of Baroda has identified a service provider for extending banking services in
unbanked villages but is yet to cover even a single village out of its quota of 22 villages.
In Odisha, there are several challenges in achieving total financial inclusion in the state. These
challenges are of structural, social and regulatory in nature. The structural challenges are the branch
expansion in rural unbanked areas. Human resource operation in remote area is not profitable for bank
Role of Financial Inclusion in the Economic Growth of Odisha
169
that is nearly adjusting 600 million new customers. Offering a simple load product without proper
security is the risk for bank management. Processing capacity of the banks is also limited. To
overcome this some central processing centers are required to open. Regulatory Challenges are to see
the followings :
1 viability
2. security
3. capacity
4. cash handling
5. setting of local service points
6. enrolment process time consuming and identity problems
7. issue of personalization cards
8. connectivity problems
9. reconciliation of transaction with BC and CBS
10. bank staff not confidant at operating level
11. BC cum technology vendor is an ideal combination
12. prospective BCs are sitting on the fence and watching others. Similarly the Social challenges
are
(i) rural populace having inhibition to approach bank branches
(ii) illiteracy of lower economy status so inhibition
(ii) lack of active customer education campaign.
Conclusion
It has been observed from the above discussion that the financial inclusion plan in Odisha is
progressing at a sluggish rate. However, RBI believes that the financial inclusion will lead to an
inclusive growth in the state. In this direction, the creation of basic infrastructure is essential for
expansion and diversification of banking services in the state. Adoption of appropriate technology
coupled with dedicated human resource can make a dent in achieving total financial inclusion. Here,
emphasis can be given on five As Availability, Affordability, Accessibility, Awareness, and
Acceptability for financial inclusion. Further, four Ps are also significant. These are proper banking
policy which helps to create business opportunities; a good process is also important; the introduction
of innovative products will also encourage people to be part of the banking process; and people with
dedication and business acumen are the greatest asset to expedite the process of financial inclusion. In
harnessing the process of financial inclusion, the financial literacy and technology play an important
role. Some people emphasize on the role of media in addressing the critical aspects of financial
literacy and financial awareness in achieving total financial inclusion. In Odisha, five areas are very
crucial as far as financial inclusion is concerned. First, the right to have a bank account; second,
availability of affordable credit in rural areas; third, efficient remittance facilities from one place to
another; fourth, availability of insurance services; and fifth, the availability of pension services. In
order to achieve inclusive growth through financial inclusion, all these five areas should to given
primary importance.
170
References
1. Ali, Ifzai and Hyun Hwa Son. 2007. Measuring Inclusive Growth. Asian Development Review, 24(1),
11-31.
2. Bandgar, P.K. 2012. Financial Inclusion. The Management Accountant. 47(1), 22-25.
3. Dev, Mahendra S. 2006. Financial Inclusion: Issues and Challenges. Economic and Political Weekly.
October 14.
4. Kamath, R. 2007. Financial Inclusion vis--vis Social Banking. Economic and Political Weekly, XLII
(15), 1334-1335.
5. Kuppan, S. 2012. Financial Inclusion. The Management Accountant. 47(1), 12-14.
6. Mohanty, P.K. 2013. Development through Financial Inclusion- A Study. Odisha Review. September,
121-124
7. Mohapatra, S.P and Kamilla, U. 2013. Economic Measurement and Analysis of Financial Inclusion in
Odisha. Asian Journal of Research in Business Economics and Management, 3(9), 177-190
8. Rao, C H Hanumantha. 2009. Inclusive Growth: Recent Experience and Challenges Ahead. Economic
and Political Weekly. 44(13). March 28.
9. Reserve Bank of India. 2011. Financial Inclusion and Banks: Issues and Perspectives, RBI Monthly
Bulletin, November.
10. Srinivasan, L. 2012. Financial Inclusion- Not just a CSR but a viable business model for Banks. The
Management Accountant, 47(1), 10-11
11. Srinivasan, N. 2007. Policy Issues and Role of Banking System in Financial Inclusion. Economic and
Political Weekly. XLII (30), 3091-3095.
____
CHAPTER
18
A Theoretical Assessment of
Heoretical of Financial Inclusion in
India
Dr. Shobhit Goel

Faculty, Amity Business School
Amity University Uttar Pradesh, Lucknow
Dr. Himanshu Rastogi

Ms. Sana Moid

FINANCIAL INCLUSION: AN OVERVIEW

Poverty is not just a state of insufficient income, but rather its the absence of wide range of
capabilities, including security and ability to participate in economic and political systems. The large
numbers from rural and semi urban are required to be provided with much needed financial assistance
in order to sail them out of their conditions of poverty. Accordingly, there is a felt need for policy
support in channeling the financial resources towards the economic upliftment of resource poor in any
developing economy. Access to finance, especially by the poor and vulnerable group is a prerequisite
for employment, economic growth, poverty reduction and social cohesion.
The banking Industry in India has recognized this imperative and has undergone certain
fundamental changes over the last two decades. Reforms since the early nineties in the banking sector
have facilitated increasing competition, the development of new generation private sector banks as
well as technological breakthrough in diverse financial products, services and delivery channels. With
the recent technological development, access to financial services have transformed banking from
traditional Brick and Mortar infrastructure to system supplemented by other channels like Automated
Teller System(ATM), Credit /Debit Cards, Internet banking, online money transfers etc. The banking
system in India today has perhaps the largest outreach for delivery of financial services. Apart from
the old fashioned financial products viz. deposits, loans and money transfers, bank branches are also
serving an important conduit for delivery of mutual funds, other capital market and insurance products.
Financial inclusion refers to a process that ensures the ease of access, availability and usage of
the formal financial system for all members of an economy. An inclusive financial system has several
merits. It facilitates efficient allocation of productive resources and thus can potentially reduce the cost
of capital. In addition, access to appropriate financial services can significantly improve the day to
day management of finances. An inclusive financial system can help in reducing the growth of
informal sources of credit (such as money lenders), which are often found to be exploitative.
172
Thus, an all inclusive financial system enhances efficiency and welfare by providing avenues
for secure and safe saving practices and by facilitating a whole range of efficient financial services.
The importance of an inclusive financial system is widely recognized in the policy circle and
recently financial inclusion has become a policy priority in many countries. Initiatives for financial
inclusion have come from the financial regulators, the governments and the banking industry.
The banking sector has taken a lead role in promoting financial inclusion. RBI initiated several
measures to achieve greater financial inclusion such as facilitating no frills accounts and General
Credit Cards for low deposits and credit. The German Bankers Association introduced a voluntary
code in 1996 providing for an everyman current banking account that facilitates basic banking
transaction. Alternate financial institutions such as micro-finance institutions and Self-Help Groups
have also been promoted in some countries in order to reach financial services to the excluded.
Financial inclusion needs to be interpreted in a relative dimension. Depending on the stage of
development, the degree of financial inclusion differs among countries. For example, in a developed
country, non payment of utility bills through banks may be considered as a case of financial
exclusion, however, the same may not ( and need not) be considered as financial exclusion in an
underdeveloped nation as the financial system is not yet developed to provide sophisticated services.
Hence, while making any cross country comparisons due care needs to be taken.
According to the reports of the World Bank, Financial inclusion, or broad access to financial
services, is defined as an absence of price or non price barriers in the use of financial services. It
recognizes the fact that financial inclusion does not imply that all the households and firms should be
able to borrow unlimited amounts or transmit funds across the world for some fee. It makes the point
that creditworthiness of the customer is critical in providing financial services. The report also
stresses the distinction between access to and use of financial services as it has implications for
policy makers. Access essentially refers to the supply of services, whereas use is determined by
demand as well as supply. Among the non users of formal financial services a clear distinction needs
to be made between voluntary and involuntary exclusion. The problem of financial inclusion
addresses the involuntarily excluded as they are the ones who, despite demanding financial services,
do not have access to them.
The access to finance could be divided into four segments:
The proportion of the population that uses a bank or bank like institution.
Population which uses services from non bank other formal financial institutions, but does not
use bank services.
The population which only uses services from information financial service providers.
Percentage of population transacting regularly through formal financial instrument and
The population which uses no financial services.
The issues of financial exclusion have been of interest to scholars for some time now. Of the
issues raised in academic debates, an important question is whether economic development leads to an
all inclusive financial system. It has been observed that even well developed financial systems such as
those in US and UK have not succeeded to be an all inclusive and certain segments of the population
remain outside the formal financial system. Another issue of interest is whether low level of financial
inclusion is associated with high income inequality (Kempson et al., 2004).
A Theoretical Assessment of Heoretical of Financial Inclusion in India
173
Financial Inclusion in India

A financial inclusion survey was conducted in India between April- June 2011by World Bank
team which included face to face interviews of 2518 respondents. The sample excluded the northern
eastern states and remote islands representing approximately 10% of the total adult population.
The results of the survey suggest that India lags behind developing countries in opening bank
accounts, but is much closer to the global average when it comes to borrowing from financial
institutions. In India, around 35% of people had formal accounts versus the global average of 50% and
the average of 41% in developing economies. Based on the announcement made in the Budget speech
of the Finance Minister for 2012-13, banks have been advised. The results of the survey suggest that
India lags behind developing countries in opening bank accounts, but is much closer to the global
average when it comes to borrowing from formal institutions. In India, 35% of people have formal
accounts versus the global average of 50 per cent and the average of 41 per cent in developing
economies. Based on the announcement made in the Budget Speech of the Finance Minister for 201213 as well as the Annual Monetary Policy of RBI for the year 2013-13, banks have been advised that
they may set up intermediate brick and mortar structures (in rural centres) between the present base
branch and BC locations, so as to provide support to a cluster of BCs (about 8-10 BCs) units at a
reasonable distance of about 3-4 kilometres. Such branches should have minimum infrastructure, such
as core banking solution terminals linked to pass book, printer and a safe for cash retention for
operating large customer transaction and would have to be managed full time by banks own officers/
employees. It is expected that such an arrangement would lead to efficiency in cash management,
documentation, redressal of customer grievances and close supervision of BC operation.
The policy makers have been focusing on financial inclusion of Indian rural and semi rural areas
primarily for three most important pressing needs:
Creating a Platform for Inculcating the Habit to save money

The lower income category has been living under the constant shadow of financial distress
mainly because of the absence of savings which makes them a vulnerable lot. Presence of banking
services and products aims to provide a critical tool to inculcate the habit to save. Capital formation in
the country is also expected to be boosted once financial inclusion measures materialize, as people
move away from traditional modes of parking their savings in land, buildings, bullion, etc.
Providing Formal Credit Avenues
So far the unbanked population has been vulnerably dependent of informal channels of credit like
family, friends and money lenders. Availability of adequate and transparent credit from formal
banking channels shall allow the entrepreneurial spirit of the masses to increase outputs and prosperity
in the countryside. A classic example of what easy and affordable availability of credit can do for the
poor is the micro finance sector.
Plug Gaps and Leaks in Public Subsidies and Welfare Programmes
A considerable sum of money that is meant for the poorest of poor does not actually reach them.
Government is therefore , pushing for direct cash transfers to beneficiaries through their bank accounts
rather than subsidising products and making cash payments. This laudable effort is expected to reduce
governments subsidy bill (as it shall save that part of the subsidy that is leaked) and provide relief
only to the real beneficiaries. All these efforts require an efficient and affordable banking system that
can reach out to all. Therefore, there has been a push for financial inclusion.
174
Steps Taken by RBI to Support Financial Inclusion

Financial inclusion is a flagship programme of RBI whose objective is to bring people, hitherto
excluded, under the ambit of formal financial institutions. To push towards universal financial
inclusion, RBI has taken several initiatives. These include advising banks on devising their Financial
Inclusion Plan and constituting a Financial Inclusion Advisory Committee (FIAC).The committee
(Chairman: Dr. K.C. Chakrabarty) is helping banks develop a viable and sustainable model of banking
services that focuses on accessible and affordable financial services. To sensitise financially illiterate
people, financial literacy programs have been initiated by RBI in collaboration with commercial banks.
Opening multiple channels of credit delivery is expected to improve access to institutional credit for
excluded people, which in turn, may help bring them within the ambit of the growth process.
RBI set up the Khan Commission in 2004 to look into financial inclusion and the
recommendations of the commission were incorporated into the mid term review policy (20/05/06)
and urged banks to review their existing practices to align them with the objective of financial
inclusion.RBI also exhorted the banks and stressed the need to make available a basic banking no frills
account either with NIL or very minimum balances as well as charges that would make such accounts
accessible to vast sections of the population.
Of the many programmes pushed forward by RBI, the following need special mention
(a) Initiation of no-frills account: These accounts provide basic facilities of deposit and
withdrawal to accountholders makes banking affordable by cutting down on extra frills that
are of no use for the lower section of the society. These accounts are expected to provide a
low cost mode to access bank accounts. RBI also eased KYC norms for opening of such
accounts.
(b) Banking service reaches homes through business correspondents: The banking systems
have started to adopt the business correspondent mechanism to facilitate banking services in
those areas where banks are unable to open brick and mortar branches for cost consideration.
Business correspondents provide affordability and easy accessibility to this unbanked
population. Armed with suitable technology, the business correspondent help in taking the
banks to the doorsteps of rural households.
(c) C.EBT Electronic Benefits Transfer: To plug the leakages that are present in transfer of
payments through the various levels of bureaucracy, government has begun the procedure of
transferring payment directly to accounts of the beneficiaries. This human less transfer of
payment is expected to provide better benefits and relief to the beneficiaries while reducing
governments cost of transfer and monitoring. Once the benefits starts to accrue to the masses,
those who remain unbanked shall start looking to enter the formal financial sector.
High Level Financial Inclusion Advisory Committee

Given the high priority of the agenda for financial inclusion, moving towards universal financial
inclusion has been a national commitment as well as a policy priority for the Reserve Bank. In order to
spearhead efforts towards greater financial inclusion, RBI has constituted a Financial Inclusion
Advisory Committee (FIAC) chaired by Deputy Governor. FIAC has a few Directors from the Central
Board of the Reserve Bank, experts drawn from NGOs and civil society representative as members
will be leveraged: to develop viable and sustainable banking service models that provide accessible
and affordable financial services; to develop products and processes for rural as well as urban
175
consumers who are currently outside the banking network; and to create an appropriate regulatory
framework to ensure that financial inclusion and financial stability move together.
Few policy initiatives that RBI has taken are as follows

Reach
(i) Branch expansion in rural areas: Branch authorization has been relaxed to the extent that
banks do not require prior permission to open branches in centres with population less than 1
lakhs which is subjected to reporting. To further step up the opening of branches in rural areas,
banks have been mandated to open at least 25% of their new branches in unbanked rural
centres.
In the Annual Policy Statement for 2013-14, banks have been advised to consider prioritizing
the opening of branches in unbanked rural centres which will facilitate branch expansion.
(ii) Agent Banking: Business Correspondent/ Business Facilitator Model In January 2006, RBI
permitted banks to utilize the services of intermediaries in providing banking services through
the use of business facilitators and business correspondents. BC model allows banks to do
cash in cash out transaction at a location much closer to the rural population, thus addressing
the last mile problem.
(iii) Combination of Branch and BC structure to deliver Financial Inclusion: The idea is to
have a combination of physical branch network and BCs for extending financial inclusion,
especially in geographically dispersed areas. To ensure increased banking penetration and
control over operations of BC, banks have been advised to establish low cost branches in the
form of intermediate brick and mortar structures in rural centres between the present base
branch and BC locations, so as to provide support to a cluster of BCs at a reasonable distance
of about 3-4 kilometres.
Access
(i) Relaxed KYC norms: KYC norms have been simplified to such an extent that small accounts
can be opened with self certification in the presence of bank officials. RBI allowed Aadhar to
be used as one of the eligible documents for meeting the KYC requirement for opening a bank
account.
(ii) Direct Benefit Transfer: The recent introduction of direct benefit transfer, leveraging the
Aadhar platform, will help facilitate delivery of social welfare benefits by direct credit to the
bank accounts of beneficiaries. The government, in future, has plans to route all social
security payments through the banking network, using Aadhar based platform as a unique
identifier of beneficaires.
(iii) Financial Inclusion Plan 2010-13: Banks have been encouraged to adopt a structured and
planned approach to financial inclusion with commitment at the highest levels, through
preparation of Board approved Financial Inclusion Plans. The first phase of FIP was
implemented over the period 2010-13. RBI has sought to use the FIP as the basis for FI
initiatives at the bank level. RBI has put in place a structured, comprehensive monitoring
mechanism for evaluating banks performance against their FIP plans. Annual review
meetings are behind held with CMDs of banks to ensure top management support and
commitment to the FI process
176
Achievements so Far
Nearly 2,68,000 banking outlets have been set up in villages s on March 2013 against 67,694
banking outlets in villages in March 2010
About 7400 rural branches opened during this period
Nearly 109 million Basic Savings Bank Deposits Accounts (BSBDAs) have been added,
taking the total no. of BSBDAs to 182 million. Share of ICT based accounts have increased
substantially- Percentage of ICT accounts to total BSBDAs has increased from from 25% in
March 2010 to 45% in March 2013
With the addition of nearly 9.48 million farm sector households during this period, 33.8
million households have been provided with small entreprenueurial credit as at the end of
March 2013.
About 4904 lakh transaction have been carried out in ICT based accounts through BC during
the three year period.
It is important to analyse this progress against trends that were noticed in the run up to the
structured Financial Inclusion initiatives that the banks launched since 2010 onwards. First, the
number of banked centres in the country between 1991 and 2007 had actually come down (from 35236
to 34471). Second, the number of rural branches during the same period had also declined
significantly (from 35206 to 30409). Against this backdrop, the progress made during 2010-13 is
certainly remarkable.
Financial Inclusion Plan 2013-16

In order to continue with the process of ensuring access to banking services to the excluded,
banks have now been advised to draw up a fresh 3 year Financial Inclusion Plan for the period 201316. Banks have also been advised that the FIPs prepared by them are disaggregated and percolated
down up to the branch level. The disaggregation of the plans is being done with a view to ensure
involvement of bank staff across the hierarchy, in the FI efforts and also to ensure uniformity in the
reporting structure under the Financial Inclusion Plan. The focus is also now more on the volume of
transactions in new accounts opened as a part of the financial inclusion drive.
Challenges and Way Forward

The current policy objective of inclusive growth with financial stability cannot be achieved
without ensuring universal financial inclusion. Our experience suggests that the banks alone will not
be able to achieve this unless an entire support system partners them in this mission. Only the support
of policymakers, regulators, governments, IT solution providers, media and the public at large can
bring about a decisive metamorphosis in our journey towards universal financial inclusion.
Financial Inclusion of the unbanked masses is expected to unleash the hugely untapped potential
of the sections of the society that constitute the bottom of the pyramid. However, in pursuing the FI
mission, the normal banking model has been found wanting in terms of cost, scalability, convenience,
reliability, flexibility and continuity. To ensure that the banks give adequate attention to financial
inclusion, they must view this as a viable business proposition rather than as a corporate social
responsibility or a regulatory obligation. For the business to remain viable it would be important to
focus on increasing usage of existing banking infrastructure which would happen only if the banks can
177
offer an entire bouquet of products and services to the holders of the large number of basic bank
accounts opened during the last three years as also to the new customers that the banks acquire.
Past experience and FIP review meetings with the banks have highlighted that if the dream of
universal and a meaningful financial inclusion has to be turned into reality, then going forward, we
would need to focus on the following issues:
(a) Increasing Reach
Ensuring coverage of all unbanked villages in next 3 years
Emphasis on increasing rural branches
Opening of bank accounts for all eligible individuals
(b) Increasing transactions
Leveraging on DBT
Delivery of credit products through BCs
Hassle free Emergency credit (In built OD)
(c) HR Structure
Banks to review HR policy in view of FI requirements
Examining appointing of a separate cadre of staff for cost optimization
(d) Fine-tuning the BC Model
Stabilizing the BC delivery model
Encouraging innovations in remittances model
Review of Cash Management for BC operations
(e) Spreading Financial Literacy
Implementing National Strategy for Financial Education
Creating Dedicated Website- Inclusion in School Curriculum
Organizing Financial Literacy Camps
Financial Inclusion Initiatives in Other Countries

Country
Legislation instrument / Policy Scheme
Objectives
United
Kingdom
Social Exclusion Unit (SEU), 1997
Financial Inclusion Fund
Policy Action Teams (PATs)
To look in an integrated way at

the
problems
of
poor
neighborhoods
Financial Inclusion Task Force
1. Access to banking, access

to affordable credit.
2. Access to face-to-face
money advice
Financial Inclusion Fund
1. Access
to
banking
services
2. Access to affordable credit
3. Access to money advice
178
United
States of
America

The Community Reinvestment Act, 1977
1. Prohibits
discrimination
by banks against low and
moderate income neighborhoods
2. To make mortgage loans
to lower-income households
3. Banks are rated every
three years on their efforts
in meeting community
credit needs
Matched Savings Scheme (MSS) 1997
1.
2.
France
Banking Act, 1984
Prohibits discrmina-tion
by banks against low and
moderate
income
neighborhoods
Matching money has to be
spent on one of a range of
prescribed usessuch as
education, business or
home purchase
1. Any person with French

nationality has the right to
open an account with any
bank
2. If refused the aggrieved
person can apply to the
Banque de France to
designate a bank that
should open an account
French Bankers Association (Basic Banking Service 1. Committed to providing;

Charter of 1992)
Affordable account, Cash
Card, Free access to a cash
machine,
Distance
payment facilities, Bank
Statement and Negotiable
number of cheques.
Australia
Australian Bankers Association (ABA) Code of 1. Generic

Account
was
Practice, 1995
introduced in 2002
2. Staff to give information
about suitable accounts to
low income customers
3. Face-to-face
banking
services even after branch
179
closure through alternative

means such as franchising
4. Three
months
written
notice to customers before
closing any Branch
Belgium
Canada
Rural Transformation Centre Programme (RTCP)
1. To provide banking and

other transaction services
to communities without
banking facilities
2. Using existing stores and
post offices or stand-alone
centres.
3. Install Electric Point of Sale
(EPOS) equipment in post
offices
Charter of Basic Banking Services, 1996
1. Provide a basic bank

account with no minimum
balance
and
without
overdraft facilities
2. Credit transfers, direct
debits, and deposit and
withdrawal facilities.
3. If refused, customer must
be informed the reasons,
i.e., laundering, bad credit
history, etc.
Basic Banking Act, 2003
1. Sanctions if principles of
Charter on Basic Banking
Services, 1996 are not
applied
Access to Basic Banking Services Regulations, 2003
1. Personal bank accounts to

all Canadians regardless of
employment
or
credit
history and with minimum
identification requirements.
2. Banks/FIs
to
encash
government cheques at no
charge
Source: Role of Financial Inclusion for Inclusive Growth in India- Issues & Challenges
180
Socio-Economic Welfare and Financial Inclusion

The socio economic welfare programmes like NREGA, Direct Cash Transfer, National Old Age
Pension Schemes are focused on implementing financial inclusion. This is primarily because it helps
to ensure electronic transfers
The beneficiaries of these socio welfare programmes are in lose lose situation as neither banks
are interested in covering them nor they are interested to have a bank account, posing a bigger
challenge for the Government. While the reason for the unwillingness on part of the beneficiaries can
be attributed to lack of financial literacy and lack of services in the vicinity, the aversion of the banks
to include these people needs proper understanding.
Few advantages can be summarized as
1. The payment process gets more simplified and convenient.
2. It reduces the cost of making the payment to the beneficiaries.
3. The process gets more transparent by checking the occurrence of fraud in the money or
duplicate and fictitious beneficiaries.
Despite the efforts, the truth is that the performance was miniscule to what was expected. The
predominant factors which affect the financial inclusion in the aspect of Socio- Economic welfare is
No Frill Accounts (NFA)

The major challenge for the banks was that the villagers could not provide the minimum cash
balance which was otherwise required to open a bank account. To address this bottleneck, the NFA
were provided with a minimum balance of Rs. 67 and also had provision of overdraft.
Electronic Benefit Transfer (EBT)
This was a mandatory part of NREGA and Pension Scheme programme. This was also a measure
to check pilferage of money. Under this, EBT accounts were provided that were used by State to
directly transfer the amount into the beneficiaries account.NBT unlike NFA had just the function of
cash withdrawal available for account holders. Issue here was that of flat fee. The banks were not paid
enough by State government (2% of amount transferred) and the effect was further cascaded with
banks paying lesser to BCs (generally 1.75%). So the margins left with the banks were very small.
Non BC Model: Mobile Payments forums of India (MPFI)
RBI has appointed the Working Group on Mobile Banking to study the feasibility of mobile
banking in India focusing on parameters like technology, regulation, supervision, security etc. This
model simply removes the BC from the system and the role is implemented by the customer himself
with the aid of the mobile phone. In January 2011 the number of mobile phone users in India was
nearly 771.18 million. Also, nearly 9 million mobile users are added annually.(Source: Telecom
Regulatory Authority of India (TRAI).Leveraging this data, the Near Field Communication (NFC)
technology enabled mobile phones can enable its users to carry out banking transactions. These
include
1. Transferring of funds
2. Money Transfer
3. Ticketing (IRCTC, bus, taxi, air etc)
181
4. Payments like insurance premiums, credit cards or utility bills

5. Other transactions like mobile top ups, merchant payments, DTC recharge etc.
Conclusion
Importance of financial inclusion arises from the problem of financial exclusion of nearly 3
billion people from the formal financial services across the world. With only 34% of population
engaged in formal banking, India has, 135 million financially excluded households, the second
highest number after China.
Further, the real rate of financial inclusion in India is also very low and about 40% of the
bank account holders use their accounts not even once a month. Financial Inclusion has far
reaching consequences, which can help many people come out of abject poverty conditions.
Financial inclusion provides formal identity, access to payments system & deposit insurance. The
objective of financial inclusion is to extend the scope of activities of the organized financial system
to include within its ambit people with low incomes. Through graduated credit, the attempt must be
to lift the poor from one level to another so that they come out of poverty. There is a need for
coordinated action between the banks, the Government and others to facilitate access to bank
accounts amongst the financially excluded.
Access to financial services such as savings, insurance and remittances are extremely
importance for poverty alleviation and development. In order to achieve the goal of total financial
inclusion, policy makers, MFIs, NGOs and regulators have to work together. The issue of financial
inclusion has received large importance in India during the recent years. India had invested
considerable amount of resources in expanding its banking network with the objective of reaching
to the people. During the last 40 years huge infrastructure has been created in the banking sector.
However, this large infrastructure that has penetrated even remote rural areas has been able to
serve only a small part of the potential customers.
While India is on a very high growth path, almost at the two-digit level, majority of the
people are out of the growth process. This is neither desirable nor sustainable for the nation. We
also know that one of most important driving forces of growth is institutional finance. Therefore, it
is now realized that unless all the people of the society are brought under the ambit of institutional
finance, the benefit of high growth will not percolate down and by that process majority of the
population will be deprived of the benefits of high growth. Thus financial inclusion is not only
socio-political imperative but also an economic one.
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CircularNo.
RBI/2005-06/233
RPCD.RF.BC.54/07.38.01/2005-06
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Washington
____
Authors Affiliation
S. No.
1.
Name of the Paper
Name of the Author and Affiliation
Innovative Techniques for

Indian Economy in Global
Slowdown Restraints: A
Managerial Perspective
Sahntanu Saurabh has completed M.B.A. from Allahabad

University, Allahabad (U.P.), 211002. He can be reached at
shantanu014@yahoo.com
Dr. H. K. Singh is Professor at Faculty of Commerce, Banaras
Hindu University, Varanasi (U.P.) 221 005. He can be reached
at hksinghmeera@yahoo.co.in
Impact of Development
Mechanism on Sustainable
Developments A review
on issues and challenges
Sathya Narayanan.SR, Research Scholar, Faculty of

Management Studies, Sri Chandrasekarendra Saraswathi Viswa
Maha
Vidhyalaya
(SCSVMV
University);
Enathur,
Kancheepuram;
Mob:
+91
9840487857;
Email:
sathyanarayanansr@ymail.com
Prof. Dr. KPV.Ramanakumar, Professor and Dean, Faculty of
Management Studies; Sri Chandrasekarendra Saraswathi Viswa
Maha
Vidhyalaya
(SCSVMV
University);
Enathur,
Kancheepuram;
Mob:
+91
9443708720;
Email:
meherramana@yahoo.com; Contact Address: Plot No:20, Door
No:12, First Main Road, Kurinji Nagar, Old Perungalathur,
Chennai 600063
2.
3.
4.
5.
Corporate Social Respo- Tripti Barthwal, Professor, Lal Bahadur Shastri Institute of
nsibiliity in India Status and Management & Development Studies, Lucknow Nupur
Expectations
Krishna, Assistant Professor, Lal Bahadur Shastri Institute of
Management & Development Studies, Lucknow
Sustainable Development in
Women Entrepreneurship in
India
(With
special
reference to Capital region
of Uttar Pradesh)
Dr. Vivekanand Pandey Professor, Sherwood College of

Management, Uttar Pradesh Technical University, Lucknow.
Uttar Pradesh, India Email ID: dr.vivekanandp andey@gmail.
com
A Study of Responsible
Management Education: An
Emerging
Tool
for
Sustainability
Ajit Dhar Dubey, Research Scholar, Department of Business

Administration, DDU Gorakhpur University Gorakhpur India;
E-mail:dr.ajit90@gmail.com; Mobile Number: 07275738701
6.
7.
8.
9.
10.
11.
12.
13.
14.
185
A Study of Globalization to Dr. Arvind Kumar Singh, Ph.D, M.B.A., M.Com., (UGC) NET;
Glocalization of India and Associate Prof. Amity University Lucknow Campus, Lucknow,
its Future outlook
INDIA; Email: aksingh12@lko.amity.edu, Mob no: (+91)
9473662323
Ms. Nancy Sharma, M.B.A, (UGC) NET; Research Scholar,
Shri Mata Vaishno Devi University, Katra Jammu, INDIA;
Email: nancysharma_2009@rediffmail.com, Mob no: (+91)
9018310711;
Mr. Karan veer Singh, M.B.A, (UGC) NET; Assistant Prof.
Rameshwram Institute of Technology and Management,
Lucknow, INDIA; Email: karanveersingh011@gmail.com, Mob
no: (+91) 9026447923
Project Management
Dr Sharad Chaturvedi; PhD, MBA, B. Tech; Associate
Systematic Approach from Professor Operations; Sharad.chaturvedi@fiib.edu.in,
Planning to Handover of the sharad2311@gmail.com; Fortune Institute of International
project
Business, New Delhi; Plot no 5, Rao Tula Ram Marg, Opp R R
Hospital; Vasant Vihar, New Delhi 110057; Phone : +91
47285000, Mobile : +91 9818656007
Emotional Intelligence -A Dr. Sheetal Sharma, Associate Professor & Dean-Academics,
Key to Effective Human IILM Academy of Higher Learning, 1-Viraj khand,
Resource Management
GomtiNagar,
Lucknow
U.P,
India;
Email:ishvasheet_1234@rediffmail.com;
Contact
no:
9335843590,
Role of Ethics and Values in Dr. Narendra Narottam, Assistant Professor, National
Developing
Human University of Study and Research in Law, Ranchi
Resources
Social Media and HR Muzna Zafar: HR Consultant and Trainer (Manipal University
Practices
and VGT Institute, Bangalore)
Nupur Rastogi: Process Lead (Robert Bosch Engineering and
Business Solutions (RBEI), Bangalore)
Issues in Human Resource Dr.A.Raghu, Assistant Professor, Indira Gandhi National Tribal
Development in Indian University, Amarkantak, Madhya Pradesh
Banks
(An
Empirical
Evaluation)
Profitable
Models
for Dr. Atul Bansal, Professor, Department of Management &
Financial Inclusion
Research, INTEGRAL University, Lucknow- 226026. Uttar
Pradesh, Mobile No. : 7706981161, Phone No. : 0522-2890730
/ 2890812 / 3296117; e.mail. : dr.atulbansal@gmail.com /
dratul@iul.ac.in
Role of Capital Market P K Mishra, Assistant Professor in Economics, Central
Development
in
the University of Jharkhand,Ranchi, Ratu-Lohardaga Road,
Economic Growth of India
Brambe,
Ranchi,
India-835205,
E-mail:
pkmishra1974@gmail.com.
Financial
Inclusion Dr. Bhawana Rewadikar
and the role of the post Assistant Professor of Commerce Dr. H.S.Gour V.V. Sagar
office
(M.P)
186
15.
Micro-Credit development
in India with special
reference to BASIX
16.
Service
Quality
MeasurementA
Comparative
Study
of
Public
Sector and Public Sector in
Banks of U.P
17.
18.
Dr. Harnam Singh, Assistant Professor, Faculty of Commerce,

Kalicharan P G College, Lucknow. Uttar Pradesh, (INDIA) Email: drharnams@gmail.com Mob.07379727999
Dr. Mhd. Anees, Assistant Professor, Department of Business

Administration, university of Lucknow, Lucknow
Dr.Ashish Sonker, Faculty, Center of Retail, FDDI, Ministry of
Commerce, Government of India, Raebareli
Ms.Rakhi Sonker, Research Scholar, Department of Business
Administration, university of Lucknow,Lucknow
Role of Financial Inclusion P K Mishra, Assistant Professor in Economics, Central
in the Economic Growth of University of Jharkhand,Ranchi, Ratu-Lohardaga Road,
Odisha
Brambe,
Ranchi,
India-835205,
E-mail:
pkmishra1974@gmail.com
A Theoretical Assessment Dr. Shobhit Goel, Faculty, Amity Business School, Amity
of Financial of Inclusion in University Uttar Pradesh, Lucknow
India
Dr. Himanshu Rastogi, Faculty, Amity Business School, Amity
University Uttar Pradesh, Lucknow
Ms. Sana Moid, Faculty, Amity Business School, Amity
University Uttar Pradesh, Lucknow

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Contemporary

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW

First Edition : 2014

: Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd.,

: Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 018.

: No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham, Kachiguda,

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Kochi 682011. Phone: 0484-2378012, 2378016; Mobile: 09387122121

Name of the Chapter

Innovative Techniques for Indian Economy in Global Shantanu Saurabh & H.

Impact of Development Mechanism on Sustainable SathyaNarayanan.SR&

Corporate Social Responsibilty In India: Status & Tripti Barthwal &

Sustainable Development in Women Entrepreneurship in Vivekanand Pandey

A Study of Globalization to Glocalization of India and its Arvind Kumar Singh,

Project Management Systematic Approach from Planning Sharad Chaturvedi

Human Resource Management

A Study of Responsible Management Education: An Ajit Dhar Dubey

Role Of Ethics And Values In Developing Human Narendra Narottam

Social Media and HR Practices

Muzna Zafar & Nupur

Issues In Human Resource Development In Indian Banks

Human Sheetal Sharma

(An Empirical Evaluation)

Profitable Models for Financial Inclusion

Role Of Capital Market Development In The Economic P K Mishra

Financial Inclusion and the role of the post office

Micro-Credit development in India with special reference to Harnam Singh

Taking Banking services to Common Man

Role Of Financial Inclusion in The Economic Growth Of P K Mishra

A Theoretical Assesment Of Financial Inclusion In India

Innovative Techniques for Indian

Contemporary Issues in Business and Management

Current Economic Scenario

Key Economic Indicators October, 2013

Electricity, gas and

Table 2: Sectoral Share in GDP at Constant (2004-05) (Prices in %)

Electricity, gas and

GDP at factor cost

Contemporary Issues in Business and Management

Management by Objectives (MBO)

Corporate Social Responsibility (CSR)

Contemporary Issues in Business and Management

Human Resource Accounting (HRA)

some phone calls

Many popular activities

Contemporary Issues in Business and Management

In time management, the concept of Just-in-time (JIT) comes. Just-in-time is an inventory

Knowledge Management (KM)

Contemporary Issues in Business and Management

Contemporary Issues in Business and Management

Impact of Development Mechanism

Impact of Development Mechanism on Sustainable Developments A Review on Issues ...

Clean Development Mechanism (CDM)

Criteria for Sustainable Development

Objectives of the Study

Contemporary Issues in Business and Management

Eligibility Requirements of CDM

Impact of Development Mechanism on Sustainable Developments A Review on Issues ...

Equitable Distribution of CDM Projects

Barriers to Equitable Distribution

Contemporary Issues in Business and Management