Editor-in-Chief: Pinnacle des Academia Journal

Goel Group of Institutions,

Prof. (Dr.) Syed Haider Ali Goel Campus, Faizabad Road, Lucknow-227105,
Uttar Pradesh, India
Phone no.: 0522-6568697, 6568699, 8874205310
Fax. no.: 0522-4077041
E mail ID: syedhaideraliabidi@gmail.com
www.goel.edu.in
From the Desk of Editor-in-Chief
Goel Group of Institutions has come out with the second issue of its biannual journal
"Pinnacle Des Academia" which provide contribution to new organizational development
practices and reconsideration of business practices, emerging technologies and
methodologies.
The Pinnacle Des Academia is a research journal which aims to promote the links between
engineering and management. Its primary focus is to present interdisciplinary high level
scientific work related to both, technical details from the engineering field, as well as
managerial and business concepts & principles applied to real world.
The main goal of this issue is to present new conceptual and empirical research approaches at topic of special
interest of contemporary management and technology as - women empowerment, global recession, rural
banking, online banking, transfer pricing etc.
A brief description of several papers included in this issue -
Dr. Ramesh Kumar Chaturvedi & Mr. Bibek Roy Chaudhary discuss that the business success is impacted by the
design and processes of organization's structure and its alignment to business strategy.
Mr. Sandeep Kumar & Ms. Kavita examined in their paper the total factor productivity growth in Indian
manufacturing sector for Nothern region and comparison betwen pre and post reform period.
Dr. Rachna Chaturvedi made a modest attempt in her paper "An Emperial Study on Online Banking Trends of
Consumers in Kanpur city" to examine the behavior of the respondents towards the online banking and also
highlight the future research directions in this area for Indian marketing managers and academicians.
Ms. Mehnaz Tasavvur focuses through her paper the various aspects of women enterpreneurship, and its,
impact on the psychology of women economic empowerment of women and problems faced b them.
An insight to transfer pricing : A conceptual approval is the topic of next paper submitted by Prof. R.P. Gupta &
Dr. Himanshu Rastogi explained the need to introduce a uniform and internationally occupied mechanism for
determining reasonable profits and tax in India in case of such multinational enterprises.
The economy has touched its lowest for its survival in the recent past. The new cult of the survival for the third
nations is at stake in this scenario the paper written by Dr. S.M. Tariq Zafar, Mr. Ranjan Upadhyay & Dr. Adeel
Maqbool assessed the consequence and the toll of the Financial Global recession for the face lift and new
avenues for the corporate.
Retailing is one of the largest industries in India. The paper by Mr. Saurabh Bajpai explained the challenges for
this industry like low margins & consumer dissatisfaction faced bothe by organized & unorganized sector etc.
Mr. Dwivedi Prabhat Kumar & Uddin Moin in his paper "Rural Marketing Opportunity & challenge in India"
have assessed the potential & opportunities, problems & challenges of rural markets & also discuss the need to
address these challenges for succeeding in rural marketing.
The last paper written by Praveen Kumar Shukla & Tanvir Tahir discuss and review the flexible querying in
different databases and the concepts of PTV, EPTV & fuzzy Bags.
Finally I would like to extend my sincere thanks to all the contributing authors who have shared their
exceptional work in this issue of Pinnacle des Academia.
Prof. (Dr.) S. H. Ali
M.B.A. Ph.D.
Director
GIHS, Lucknow
 Pinnacle des Academia Journal
Vol. I, Issue II ISSN-2231-282x www.goel.edu.in July 2011

Patrons
Mr. Ashok Goel
Chairman – GGI
Mr. Murari Lal Agarwal
Vice Chairman – GGI
Er. Mahesh Agarwal
MD – GGI
Editor – in – Chief
Prof. (Dr.) Syed Haider Ali
Director – GIHS

Editorial Board
Dr. R. S. Lal Srivastava
Prof. Devendra Agarwal
Dr. Alok Jain
Dr. Amresh Gupta
Dr. Shishir Srivastava
Prof. (Dr.) Prashant Pandey
Dr. Stuti Tripathi
Dr. Mamta Pathak
Dr. Shashikant Trivedi

Members
Ms. Mamta Kumar
Ms. Manisha Gupta
Ms. Ratna Gupta
Mr. Sandeep Shrivastava
Mr. Dayanand Tiwari
Mr. Chandra Singh Karki
Mr. Rohit Dwivedi
Technical Support
Ms. Akanksha Gupta
Mr. Anil Srivastava
Ms. Prachi Agarwal
 PINNACLE
DES
ACADEMIA
PDAJ JOURNAL
Volume I, Issue II, July 2011
ISSN-2231-282X

TABLE OF CONTENTS
Editorial
Prof. (Dr.) Syed Haider Ali, Director GIHS
Original Articles

Design Coherence For Strategic Success 1

Dr. Ramesh Kumar Chaturvedi Associate Prof., IEM, Lko,
Bibek Roy Chaudhary, Assistant Prof. IEM, Lko

Economic Reforms and Productivity Growth in Indian Manufacturing Sector : 5

An Analysis of Northern Region States
Sandeep Kumar, Research Associate, Division of Agricultural, Economics,
Pusa IARI, New Delhi
Kavita, Senior Research Fellow, NCAP, Pusa IARI, New Delhi-12

An Empirical Study on Online Banking Trends of Consumers in Kanpur City 15

Dr. Rachna Chaturvedi, Faculty, MBA Department, Science Technology Entrepreneur's Park-H.B.T.I,

Role of Women Entrepreneurship in Women Empowerment 21

Mehnaz Tasavvur

An Insight to Transfer Pricing : A Conceptual Approach 30

Dr. Himanshu Rastogi, Asstt. Prof. Amity B-School, AMITY University, Lko.
Prof. R. P. Gupta, Prof. Amity B - School, AMITY University, Lko,
Hitesh Keserwani , Lecturer, Amity B - School, AMITY University, Lko.

Indian Corporate Dogma and Global Recessions 36

Dr. S.M.Tariq Zafar, Director, Roorkee Collage of Management & Computer Application Roorkee.
Mr. Ranjan Upadhyay, FMS, WISDOM, Banasthali University, Bansathali, Rajasthan
Dr Adeel Maqbool, Director, Narvadeshwar Management College, Lucknow

Retail Marketing - Challenges For Organized and Unorganized Sectors 43

Mr. Saurabh Bajpai, Asst.Prof, Sitapur Shiksha Sansthan, Sitapur
Ms. Chavi Agnihotri, Research Scholar, Sitapur
Mr.Shubhendu Shekhar Shukla, Lecturer, Sitapur Shiksha Sansthan, Sitapur

Rural Marketing: Opportunities & Challenges in India 52

Prabhat Kumar Dwivedi, Assistant Prof. STEP- HBTI, Nawabganj, Kanpur,
Moin Uddin, Assistant Prof. STEP- HBTI, Nawabganj, Kanpur

Flexible Querying in Grey Databases 60

Pravin Kumar Shukla,Dept. of IT & E, NIEC, Lucknow
Tanvir Tahir, Registrar, IET, Lucknow
 Design Coherence For Strategic Success
* Dr. Ramesh Kumar Chaturvedi
**Bibek Roy Chaudhary,
Abstract
Strategic management has gained incremental importance since 1960's and today it has assumed one of the most
prominent roles in organization management. Yet this discipline of study is more frequently studied in isolation of
other functional areas of management. It is important to understand that strategic issues are more often organization
wide pervasive and its study demands integrated approach. This paper focuses unearthing the strategy and structure
linkage in contemporary form. It is emphasized here that organizations need to realign their design to support the
strategic intent of the organization and there is plausible need to have coherence between them.
Introduction
It is has been well discussed that organization structure is required to follow the strategy and not vice versa. It is known
that business success is strongly impacted by the design and processes of an organization's structure and its alignment
to business strategy. It is also known that environmental forces are responsible for shaping the success of a company
and influence it to make significant changes. To succeed in a hyper-competitive environment, it may not always be
enough for companies to acquire the best assets and talent rather the extent they operate in coordinated and integrated
manner. It is not how good the assets are in isolation but the pattern in which they all come together as moving parts of
the organizational engine that drives successful business outcomes.
Companies will have to work harder and restructure themselves far more effectively harness and leverage growth
opportunities. The workforce composition of any organization is finite, and their performance depends highly on the
level of uncertainty in the external environment. This dynamics and complexity demand to develop or change
accordingly. This is particularly true for large Indian companies which are currently witnessing unprecedented levels
of growth, both organic and inorganic. This environment will therefore create a dilemma for many organizations. On
the one hand, they will need to face critical issues such as strategic redesign, the retention, motivation and
development of talent and so on.
On the other hand, bottom line pressures are likely to pinch and achieving cost efficiency will continue to
bother. Organizations must start looking change as something that offers unique opportunities to organizations. It is to
believe that, organizations that make wise investments in human capital now are more likely to build a sustainable
competitive advantage.
Human Resource and Business Strategy
Can human resource help organizations to respond and capitalize the available opportunities? The answer
'yes' and human resource is now in driver seat with copilots from other departments. Yet aligning organizational
design to support business strategy while keeping the talent pool intact as well as motivated is one of the most
significant challenges that human resource department has to face. A robust structure is fundamentally pre-requisite to
the creation and sustenance of strong HR systems and processes. People make a powerful difference when an
organization's business and HR strategy come together to create a focused, integrated system. In terms of HR
capabilities, this could be herculean task as supporting organizational strategy that demands complete renewal of an
organization's design are painful and historically rare, making experience and expertise in this area limited.
HR needs to work closely with the organization's leadership to chart out a clear path to business success. It
also requires a proactive approach to balancing headcount through right sizing, responding to cost pressures while
improving productivity, creating an architectural framework based on business strategy, and making it alive and
responsive to evolving requirements. It is recommended that one to one and half year planning horizon is usually the
best balance between immediate pressure and long-term development.

*Associate Professor, IEM, Lucknow

**Assistant Professor, IEM, Lucknow 1
Organizations need to be customer focused
Organizations have been impacted differently by the slowdown. For instance, pharmaceuticals and FMCG
are less impacted than real estate and financial services' therefore, the strategic plans for these sectors will necessarily
be different. The key to effective management and business results lies in the balance between the focus of individual
department in an organization and the ensure the efforts of departments are working toward the organization's goals.
Years of growth have turned the attention of organizations to external/ inorganic growth opportunities. Clearly, for
most of these organizations, it is time for introspection. Let us take a few examples to explain.
l The first case is the growth of the single-product category organization with a significant market share to a
multiple-product company. The tremendous growth opportunities propelled the company to leverage its distribution
and retail network to sell associated products. All the additional product categories showed strong demand growth. On
introduction, initial response to these products was good and some market share accrued within a year. However, off
late as sales were gaining momentum, signs of s slowdown in market growth emerged. Revenue fell and the
organization started losing market share as other competitors introduced upgrades to their products. Unable to
respond swiftly, problems in product commercialization and product launch coordination became evident. Here there
is a clear mismatch between the competitive strategy and the functional structure of the organization. Competing and
conflicting product priorities within each functional area of the company and lack of a coherent response to a product
across functions drove up costs, and different units worked at cross- purposes so that no one seemed to be in charge for
any of the product lines. The organization finally restructured itself as strategic business unit. This brought about a
clear profit and loss focus around each product and, over a period of time, it improved the organization's capability to
manage multiple product lines.
l The second case is of an organization that took exactly the opposite route. If focused on significantly
expanding its geographic divisions. The intent was to capture the growing demand and the fast growth in revenue
potential. For a couple of years, they made good progress, but as the downturn set in, competition started dropping
prices to gain market share and the organizations found its product becoming increasingly uncompetitive. The
fundamental issue was an expensive and unproductive duplication of resources and lack of standardization of
products and processes.
These examples demonstrate the single reality that the business strategy for many organizations has outpaced
the initial organization design. Therefore two of the major challenges that emerge for many organizations are:
1. Realignment of the organizational structure with the strategy.
2. Improving internal efficiencies to manage emerging cost pressures.
Cost reduction
The strategies an organization deploys to reduce costs depends a lot on how senior management views the company
and the depth of understanding and knowledge of the actual processes that deliver value. Typically, there are three
different kinds of cost reduction strategies associated with human resources:
1. Across the board reduction of headcount. The underlying thought process is usually based purely on financial
analysis, may be effective as curative action of a strategic mistake but this point of view, in isolation, is myopic
and therefore rarely effective.
2. A tendency of setting targets based on operational cost benefit analysis of the business. This includes operational
measures of performance such as capacity utilization, revenue-employee ratios and total process cost etc. Here a
good macro-level understanding of the processes drives the focused cost reduction strategy, but the internal
dynamics of processes are sometimes too complex and integrated to get a full view, it is rarely possible to get the
desired results.
3. A third method that could be adopted focuses on process analysis based on how they can be modified to deliver
better productivity at reduced cost. Such a strategy demands a much deeper understanding of the processes and
the dynamics by which they are governed. More importantly, companies must learn to understand the
relationship between headcount and process performance. These organizations are the most likely to capture the

2
full potential of productivity improvement.
Hence what is expected is organizations must transform their HR based cost cutting initiatives from a headcount
driven approach to a process driven approach, companies need to go through two stages of evaluation. In the first
stage, they need to examine the processes and how they are driven; and in the second, they must understand the
linkage between jobs and processes. The results from such an exercise can significantly improve the operational
abilities of an organization.
Aligning structure to strategy
Organizational structure must closely support the choices that are made around the customer-value proposition. This
will provides clarity on the direction that the structure must take. But in today's complex world, companies are bound
not to rely on a single organizational axis. To maintain an optimal level of performance on other parameters, they must
also consider secondary alignments. For instance, even if organization focuses on product innovation (divisional
structure), it will still need to centralize some of the key business processes into a functional structure. This would
ensure that the costs remain under control through economies of scale and standardization. This has become
especially important in today's economic scenario because organizations are looking to deliver promised customer
value for which they have to focus on multiple, competing priorities. The art of designing complex organizations often
deals with:
1. Opting a flexible organization structure and balancing the different axis around which structure must be built
2. Creating systems and organizational processes which keeps them connected to maintain coherence of direction.
Lets us take an example of an automobile company which manufactures both light and heavy commercial vehicles to
understand this concept better. The clear direction that this organization could take is towards product innovation,
which would make the product based divisional structure the most natural choice. However, the organization needs to
balance this with a number of other operating factors and a slow manufacturing process, which exert pressure on its
operating cost and capital investments. This means that while the organizations wants to drive product superiority and
speed to market, it also needs to deal with a number of constraints to check costs. Some of the key constraints were:
l Develop common parts across its range of vehicles, to reduce development cost and improve bargaining power
with vendors.
l Flexible manufacturing process to share same facility for multiple products, mainly because deployment of new
capital is difficult.
l The company has newly launched products with low volumes that do not justify separate sales and service
networks.
Eventually, the organization designed a structure that balanced these competing forces. It created a product-
functional hybrid structure that tried to balance the pressure for cost optimization while defending the underlying
value proposition of each product. To make sure that the product organization worked in tandem with the functional
organization, the organization redesigned its planning process and created a matrix structure to ensure coordination
that is people with similar skills were pooled for work assignments.
Even before structures are redesigned, organization needs to rethink business models and competitive
strategies. Clarity on the value proposition can lead to analyzing what characteristics are critical to the value chain and
how processes need to be structured around these. Design of the organizational architecture is highly dependent on
definition of the process axis such as top-level roles, teams/works group and planning methods etc. The organization
design must take care of individual roles, accountabilities and should support the entire structure. It should allow the
people across the board to work toward the unified goal of ensuring successful business result.

3
 Product performance / Product /divisional
Produce variety
Product change

Functional /
Product innovation Product innovation Customer
Process
Product

Customer Customer
intimacy

Operational Operational
excellence excellence
Customer Customer /
relationships/ geographic
Standard products/ product Functional structure
low margin customization
customers product Customer - Functional
hybrid
Customer value proposition
Strategy to determine structure

Figure 1: Structures suitable for different strategies and value proposition

Figure 1 gives a pictorial representation that how an organization could design structure to support the business
strategy and value proposition it offers.
Conclusion:
It is deliberated that organizational designs have a dominant role to play in shaping the success of strategies perused by
a firm. Organizational structure should be flexible enough to accommodate the unprecedented environmental changes
and improve responsiveness. Structure must be developed with more than one axis to support conflicting
requirements of the critical business processes. The cost cutting initiatives should not be based on headcount rather it
should be based on reengineering the processes and rightsizing the workforce accordingly. Most importantly
organization structure and design must confer and should have coherence with intended business strategy.

Reference:
1. Jauch R Lawrence, Gupta Rajiv, Glueck F William, Business Policy and Strategic Management 6e, Frank Bros. and Co
Publication Ltd., New Delhi, 2008
2. Johneson Gerry and Scholes Kevan, Exploring Corporate strategy – Text and cases 5e, Pearson Education Ltd, New
Delhi India, 2005
3. Jones and Hill, Strategic Management – Text and Cases 6e, Biztantra Publications, New Delhi, 2008
4. Koontz Harold and Weihrich Heinz, Essential of Management 5e, Tata McGraw Hill Publishing Co., New Delhi, 2000.
5. Prasad LM, Strategic Management, Sultan Chand and Co., New Delhi, 2008
6. Rao VSP, Strategic Management, Pustak Mahal Publication, Meerut, 2006
7. Thompson A Arthur and Strictland A J, Strategic Management – Concept and cases 13e, Tata Mcgrow Hill Publication,
New Delhi, 2003

4
 Economic Reforms and Productivity Growth in Indian Manufacturing Sector: An
Analysis of Northern Region States
*Sandeep Kumar
**Kavita
Abstract
This paper examines the Northern region state-wise trend of total factor productivity (TFP) growth in Indian
manufacturing sector for the periods 1984-85 to 2004-05. Kendrick index is used to compute total factor productivity
index. The resulting information is used to examine whether the post-reform period shows any improvement in
productivity in comparison to the pre-reform one. Findings of the present study indicate that total factor productivity
growth of Indian manufacturing sector for all states combined and selected Northern region states have declined
during the post-reforms period as compared to the pre-reforms period. Further, growth of gross value added (GVA) in
India and most of the states in the study reveal that there has been decline in growth of GVA during the latter period as
compared to the earlier one. It's implying that industrial sector failed to sustain the growth momentum in output during
the period after 1991. It is also found that there is a tendency of convergence in terms of TFP growth rate among
Northern region states during the post-reform years and only the states that were technically efficient at the beginning
of the reform remain innovative.
SECTION I.
Introduction
The resources available to a nation for economic development are not unlimited. Hence it has to economics in
the use of the resources and determines priorities for developmental effort. Economy is the use of scarce resources in
vital to any developmental effort whether in industry or output of goods and services output of the available input of
resources. In modern terminology this concept is known as “Productivity”. According to “International Encyclopedia
of Social Sciences” (1968) productivity refers to a class of empirical output input ratio that is widely used in economic
history, economic analysis and economic policy. Economic reforms introduced in India since 1991 are aimed at the
Indian economy and Indian industry more efficient and competitive. The Indian economy continues to be
progressively liberalized leading to its greater integration into the global economy. Liberalization and globalization
have provided unprecedented opportunity for the growth and expansion of the industry and the manufacturing sector
in particular. The manufacturing sector in India, for all these reasons, grew annually only at an average of 6.3 % during
1991 to 2004.
The structure of the Indian economy has achieved a remarkable change after independence. It has been
transformed from an agriculture-based economy which relied heavily on primary commodities production for exports
to a manufacturing sector based economy. The share of the agriculture sector in the gross domestic product (GDP)
dropped from 56 percent in 1950-51 to 40 per cent in 1980-81 and further to 19 per cent in 2006-07. On the other hand,
the share of the manufacturing sector increased from 13 percent in 1950-51 to 17 per cent in 1990-91 and further to 24
per cent in 2006-07 (Central Statistical Organization, 2007). A high rate of industrial development characterized by an
increasing share of industrial output in gross domestic product (GDP) of an economy is an essential condition to
achieving a sustained rise in rate of growth (UNIDO, 1997).
Productivity increases in an economy have also been viewed as a dynamic feedback process. Hulten (1979)
pointed out the dynamic implications of productivity growth by stating that the increase in output on account of
productivity improvements during a given period leads to additional saving and capital formation in the future. The
trend of productivity growth guides the planners to formulate a rational policy of resource allocation at both national
and regional levels. The productivity growth influences the decisions of policy-makers regarding policy of balanced
regional development, location policy of industries and the level of diversification of industries in particular region.
Productivity is a measure of efficiency with which resources, both human and material, are converted into
goods and services. Faster rate of economic growth can be ensured through accelerated production and higher
productivity in, all branches of economic activity. Human resources being an important input, their productivity play a
significant role in determining the overall economic growth of a nation. (Productivity Statistics)

*Research Associate, Division of Agricultural Economics, Pusa IARI, New Delhi-12

**Senior Research Fellow, NCAP, Pusa IARI, New Delhi-12

5
 Today focuses on the growing importance of productivity in the Indian economy. It is well known the economic
growth, as a means to enhancing the welfare of people, depends both on the use of factors of production such as capital
and labour and the efficiency in resource use, other referred to as productivity. Recent development indicates the
growing importance of productivity, particularly for our economy at its present stage of development. (Papola, T. S)
Over the past three decades, several studies have attempted to study the productivity performance of the
Indian manufacturing sector (Brahmananda, 1982; Ahluwalia, 1991; Balakrishnan and Pushpangadhan, 1994;
Dholakia and Dholakia, 1994; Rao, 1996; Srivastava, 1996; Goldar, 2002; Goldar, 2004). Majority of these studies
have focused on the measurement of productivity or the methodological aspects associated with it. Some of these
studies have also examined the relationship between policy changes and movement of industrial productivity.
Especially, the turnaround in productivity growth in the 1980s became a highly debated issue (Trivedi, 2004). The
literature on productivity in India has also made an attempt to examine the relationship between economic reforms and
manufacturing productivity. Some studies have showed that the total factor productivity growth has improved in the
reforms period (Krishna and Mitra, 1998; Pattnayak et. al, 2003; Unel, 2003) whereas the studies by Goldar and
Kumari (2003) and Balakrishnan, Pushpangadan, and Suresh Babu (2000) have found that economic reforms have
adversely affected industrial productivity. These studies have examined manufacturing productivity either at the
sectoral or industry levels. There is quite a good number of industry specific studies in this regard but a very few
studies attempt to make an inter-state comprehensive and detailed analysis of total factor productivity of the industrial
sector. The obvious limitation of these studies is that as the time period covered by studies is relatively small, they are
not able to capture the effect of shift in policy regime on the productivity.
It is in this context that the present paper attempts to undertake a detailed state level analysis of the
performance of the Indian manufacturing sector from the point of view of determining the relative importance of
various factors explaining variation in productivity in the face of changing policy environment. Further, our focus is
on the dynamics of the efficiency rankings of the states over a time period that includes the pre-reform and post-reform
years. In addition, our study period includes more recent years of data as compared to the studies mentioned above. In
order to examine the impact of economic reform on productivity over the time period, the analysis has been carried out
at two sub-periods; pre-reform period i. e., 1984-85 to 1994-95 and post-reform period i.e., 1995-96 to 2004-05.
Objective of the Study:
In the proposed study, the overall aim is to estimate efficiency and its different measures as well as total factor
productivity growth of regional wise states in India. There are two main objective of the study:
(1) To estimate the industrial TFPI of Indian manufacturing sector in North region state of India since 1984-85 to
2004-05.
(2) To estimate the industrial CAGR of Indian manufacturing sector in North region state of India since 1984-85
to 2004-05.
Besides introduction, this paper has been organized as follows: Section II discusses the methodological
framework and database of the study. Section III presents the main findings of empirical analysis and the section IV
presents the suggestions for policy.
SECTION II:
Methodology and Data Sources
Productivity growth is recognized as a key feature of economic dynamism today. Fabricant (1964) defined
productivity as the power to produce economic goods and services. According to Kuznets (1966), an essential element
in the development and structural transformation of the developed economies was the fast growth in industrial
productivity (Duraisamy, 2000).
Productivity is “what you get out for what you put in”. It expresses the relationship between output of goods
and services or real output and the various inputs required for production. Total factor productivity measures the
increase in total output which is not accounted for by increases in total inputs. The TFP index is computed as the ratio
of an index of aggregated output to an index of aggregate inputs. Growth in TFP is, therefore, the growth rate in total
output less the growth rate in total inputs.
There are three approaches to the measurement of TFP, namely, parametric approach, accounting approach
and non-parametric approach. Most studies on productivity of India have relied on the growth accounting

6
approach. This approach is popular because computations involved are simpler and it does not require any
econometric estimation. As such, the data requirements are minimal. It has also several useful properties [Diewert
(1976), Christensen (1975), Capalbo and Vo (1988)]. Thus, the Kendrick index is used in the present paper for
estimating Northern region state-wise total factor productivity indices for Indian manufacturing sector. The general
formula of Kendrick index is given below;
Kendrick Index:
Kendrick index (1961) of total factor productivity is an arithmetic measure of rate of technological change,
which was developed by Kendrick. This is based on liner production function, which assumes infinite elasticity of
substitution between the factors of production. The index is defined as the ratio of value added in production to a
weighted average (arithmetic mean) of the two factors of production.
The total factor productivity index of Kendrick is based on a production function is homogeneous or liner of the
from-
Y= a Lb K
Where,
Y = Value of output in real terns.
L = Labor in real terns
K = Capital in real terns
a &b =are +ve constants
The India is the ratio of output to weighted average of the two factors of production, where base year rates of reward
are taken as weight.
TFP index of Kendrick is given by – Yt
A=
W0 Lt Gr0 K6
Where,
At = productivity index at time t
yt = actual output at time t.
Lt = Labour used at time t.
Kt = Capital stock used at time it.
W0 = share of labor in the base year
r0 = share of capital in the base year.
The Kendrick index compares the actual output (yt) with the output that would have resulted from resources,
working at their base year efficiency.
The expression W0Lt + r0Kt imply that the application labour and capital in different years are weighted by their
factor rewards in the base year. These base year factor rewards i.e. W0 + r0 represent the efficiency with which factors
operated in the base year.
Under the assumption of constant returns to scale-perfect computation and payment to factors according to their
marginal product, the total learning of labour and capital in the base year exactly equal to the output of that year and
therefore At is equal to unity in the base year.
Compound Annual Growth Rate (CAGR):
In the present study, we have estimated compound annual growth rate of total factor productivity,
labour productivity and capital productivity. For this purpose, exponential function has been used to
estimate compared annual growth rate (CAGR) symbolically it is as follower:

7
 Y = abt
Where,
Y = is the dependent variable (i.e. total factor productivity, labor & capital productivity.
t = is the independent variable (i.e. time period)
a & b are the parameters. After getting b (coefficient) the following method is being used to estimate CAGR:
CAGR = [Antilog p – 1] x 100.
Measurement of Variables:
Output (Q):–The Annual Survey of Industries provides data on both the output and the value added at the current
prices. But our production, which is the basis of total factor productivity estimation, assumes output to be the function
of labour and capital only. It is; therefore, appropriate to take value added as representative of output instead of the
value of output. Out of the two measures of value added provided by the ASI namely, net value added and gross value
added, we have used the latter. In this paper, the Wholesale Price Index (WPI) for manufactured products has been
used to deflate the nominal values of gross value added.
Labour (L):- Total number of persons engaged is taken as the measure of labour input. As both workers, working
proprietors and supervisory/managerial staff can affect productivity, so number of persons engaged is preferred to
number of workers.
Capital (K):- Gross fixed capital stock at constant a (1993-94) price is taken as a measure of capital input. ASI
provides data on fixed capital stock at historical cost. It consists of land, buildings, plant and machinery, capital work
in progress, furniture, fixtures and office equipments and others. For constructing the capital stock for the sector,
CSO's data on fixed capital stock for 1973-74 has been considered as the benchmark year of capital stock. Capital
stock series is then constructed by using perpetual inventory accumulation method.
Capital stock for the industrial sector in the subsequent years has been arrived at by adding the real investment
figures to the stock of capital of the previous year. The relationship between gross fixed capital stock in year t, denoted
by Kt, the benchmark capital stock, Ko. Following Goldar (1986) we have uniformly applied 2% rate of obsolescence
for each year. For year t, the estimate of capital stock (K) is obtained by using the following equation
Kt = Kt -1 - 0.02 K t -1 + I t
This means that

K1 = K0 + I1 - 0.02 K0
K2 = K1 - 0.02 K1 + I2 and so on
The investment figures were obtained using the formula:

- +
It = FC t FC t -1 D t ´100
WPIC t

Where 'FC' is the book value of fixed capital, 'D' is the depreciation, and 'WPIC' is an appropriate deflator for fixed
capital. For 'WPIC', we have used the wholesale price index of machines and machine tools published by the CSO. The
base of this index series has been converted to 1993-94 year to retain the consistency of single base year for all the price
indices.
Emoluments: - Total emoluments primarily constitute wages to workers, provident fund (PF) and other benefits and
so on. To estimate real emoluments, the nominal value has been deflated by Consumer Price Index. In the present
study, the share of emoluments in total value added is taken as the share of labour. Assuming constant returns to scale,
the share of capital is one minus the share of labour.
The above equation (1) provides the total factor productivity index for the specified periods. In this study, TFP

8
 is measured for Northern region states of India for the period 198-85 to 2004-05. For analytical convenience
this period has been divided into two sub periods, namely, 1984-85 to 1994-95 (Pre-Reforms) and 1995-96 to 2004-05
(Post-Reforms). For analysis of performance of manufacturing sector, the study covers Northern region states. For the
estimation of state-wise TFP index of Indian manufacturing sector, state-wise data on relevant variables are collected
from various issues of “Annual Survey of Industries”, a publication of Central Statistical Organization (CSO),
Government of India, New Delhi., Reports of Currency and Finance, RBI, Economic Survey, Hand Book of Statistics
on Indian Economy, RBI and National Account Statistics.
SECTION III: Results and Discussion
(A) Total Factor Productivity and Partial Factor Productivity Measures of Northern Region States in
Indian Manufacturing Sector
The present study aims to analyze inter temporal and Northern region states comparisons of Total actor
Productivity (TFP) and Partial Factor Productivity (PFP) in Indian manufacturing sector by using an integrated
growth accounting framework. In the present analysis labour productivity has been define as gross real value-added
per employee, and capital productivity has been measured as the ratio of gross real value-added to gross fixed capital
stock at constant price. The section presents an analysis of inter temporal comparisons of PFP and TFP growth in
manufacturing sector of Northern region states in India during the period (1984-85) to (2004-05). Besides this, an
attempt is also made to evaluate the impact of industrial liberalization and deregulatory policies on productivity
growth in terms of the variations in TFP growth rates during two distinct sub-periods, the whole study period has been
divided into two distinct sub-period: (1) Pre-reforms period (1984-85 to1994-95) and (2) Post-reforms period (1995-
96 to 2004-05).
Table1.1: Annual Partial Factor Productivity of Northern Region States in Indian Manufacturing
Sector

States Madhya
Haryana Punjab Uttar Pradesh All States
Pradesh
Years
LP KP LP KP KP LP LP KP LP KP

1985-86 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

1986-87 100.73 97.95 95.50 76.31 92.99 99.30 165.15 130.43 110.87 96.33

1987-88 108.14 92.75 121.02 88.89 100.58 128.43 172.66 127.46 118.43 91.58

1988-89 116.42 92.06 112.17 99.51 88.45 98.41 169.16 124.01 125.24 91.84

1989-90 125.34 88.22 161.69 90.43 131.26 165.20 216.52 141.78 141.25 92.13

1990-91 146.35 99.88 144.37 93.80 100.47 128.08 207.88 126.78 145.51 87.88

1991-92 136.99 90.20 116.85 75.68 85.45 127.41 238.71 127.84 139.98 78.05

1992-93 112.83 72.33 165.36 83.34 99.30 165.66 249.91 117.48 164.08 81.12

1993-94 134.53 77.11 163.98 90.10 87.90 143.36 271.17 119.04 174.35 83.59

1994-95 160.02 91.36 174.97 83.19 88.15 148.53 309.93 118.08 187.02 79.94

1995-96 209.75 112.01 247.73 103.38 81.75 154.41 319.44 113.63 213.55 83.56

9
 1996-97 216.88 114.96 174.91 84.62 94.13 177.70 365.99 122.93 196.34 78.89

1997-98 187.47 93.37 201.99 91.72 82.45 160.79 364.99 115.68 215.85 77.40

1998-99 216.32 94.35 181.69 73.71 96.20 164.60 292.41 78.28 186.72 68.60

1999-00 211.69 98.68 219.67 72.17 99.41 261.46 323.09 83.37 225.94 68.83

2000-01 235.33 81.16 173.51 61.77 76.34 187.73 343.65 80.11 214.83 60.63

2001-02 265.03 87.20 325.00 68.21 89.30 212.55 356.24 80.99 226.62 57.79

2002-03 310.07 93.85 285.92 70.94 82.05 221.81 934.47 141.25 289.97 66.65

2003-04 334.16 98.31 318.59 75.80 75.94 199.85 141.94 86.22 247.54 65.53

2004-05 368.17 106.66 375.99 83.08 73.58 214.09 427.77 88.99 336.79 72.57

*LP- Labour Productivity & *KP- Capital Productivity.

Table 1.1 &1.2 showing the Annual partial factor productivity (APFP) & Total factor productivity (TFP) of
Northern region of pre-reform & post-reform periods. Northern region includes four states Haryana, Madhya
Pradesh, Punjab and Uttar Pradesh. Trends of TFP in pre-reform and post-reform periods i.e. show more fluctuation.
Similes condition to prevail with labour productivity and capital productivity in both the state in both periods.
In Haryana shows less fluctuation in labour productivity and capital productivity in pre-reform period but
more fluctuation in TFP. While in post-reform period capital productivity shows more fluctuation in compare to
labour productivity, but trends of TFP remain same.
Table 1.2: Annual Total Factor Productivity of Northern Region States in Indian Manufacturing

States Madhya Uttar

Haryana Punjab All States
Pradesh Pradesh
Years
1985-86 100.00 100.00 100.00 100.00 100.00

1986-87 105.53 79.64 98.57 140.28 101.98

1987-88 103.20 96.59 103.30 137.65 101.36

1988-89 113.22 110.39 96.16 141.23 108.20

1989-90 109.87 102.56 146.54 168.20 113.02

1990-91 128.15 114.75 118.59 165.00 117.39

1991-92 118.48 96.67 115.65 188.04 109.99

1992-93 99.52 111.72 131.93 178.38 119.41

1993-94 108.57 126.00 120.08 198.04 131.54

1994-95 130.40 130.51 125.85 221.30 132.79

10
 1995-96 162.77 156.51 120.78 212.77 141.76

1996-97 180.24 138.14 144.07 244.71 145.42

1997-98 163.49 152.28 136.97 258.43 148.72

1998-99 150.43 145.77 179.62 212.43 146.96

1999-00 205.52 159.80 191.38 225.08 159.80

2000-01 177.27 158.05 138.57 224.02 146.89

2001-02 206.11 181.89 168.83 233.19 150.06

2002-03 220.84 185.00 166.95 221.40 162.64

2003-04 233.43 198.48 157.32 248.44 182.95

2004-05 246.43 232.98 141.93 255.99 200.66

Trend of labour productivity and capital productivity in Madhya Pradesh in both the periods was more fluctuating.
While TFP shows less fluctuation in pre-reform period and more fluctuation in post-reform periods In Haryana,
Madhya Pradesh and Uttar Pradesh show the higher trend of TFP as compare to all major states TFP, while in
Punjab the trend of TFP is les then the all-major states TFP.
The trends of Total Factor Productivity (TFP) of Northern region and at aggregate level in Indian
manufacturing sector, also has been shows in the pre-reform period (1984-85 to 1994-95) and post-reform period
(1995-96 to 2004-05) by the figure 1.2.
Figure 1.2: Annual Total Factor Productivity of Northern Region Stats in Indian Manufacturing
Sector

It has been observed that there are wide variations in TFPI growth rates across the manufacturing sector of Indian
states. On the whole, it has been observed that no impressive encasement in labour productivity, capital productivity

11
and Total factor productivity. Total factor productivity growth has been taken place in Indian manufacturing sector
from national and regional perspectives on account of augmented intensity of macro economic reforms in general and
industrial reforms in particular under the thrust of most recent programmer of 'Liberalization, Privatization and
Globalization' (LPG) since1991 which is the reform period.
(A) CAGR of Total Output, Total Input & Total Factor Productivity of Northern region states in
Indian Manufacturing Sector
This section presents an analysis and explaining of inter temporal comparison of compound annual growth
rates (CAGR) of total factor productivity index (TFPI), total output index (TOI) and total input index (TII) measures
in the manufacturing sector of Northern region states in India during 1984-85 to 2004-05. Besides this, an attempt is
also made to evaluate the impact of regime o industrial liberalization on growth rates of TFPI, TOI and TII measures
during two distinct sub-periods. The whole study period has been divided into two distinct sub-periods; (1) Pre-reform
period (1984-85 to 1994-95); and (2) Post-reform period (1995-96 to 2004-05). The growth of output (i.e. value-
added, in case of two input framework) can be decomposed into: (I) the share-weighted growth of labour, (II) the
share-weighted growth of capital, and (III) total factor productivity growth. In has been observed that there are wide
variations in TFPI growth rates across the manufacturing sector of Indian states. In this context, an interesting
question arises spontaneously that what are the factors/ forces that may contribute the productivity growth
differentials in manufacturing across states within the same country.
Table 1.3: CAGR of Total Output, Total Input & Total Factor Productivity Index of Northern Region States
in Indian Manufacturing Sector
States Indies All Period Pre-Period Post-Period

(1984-85to2004-05) (1984-85to1994-95) (1995-96to2004-05)

Haryana TOI 9.200 6.990 6.019

TII 3.973 5.256 1.097

TFPI 5.028 1.648 4.868

Madhya Pradesh TOI 5.520 9.316 0.047

TII 0.832 5.380 -4.540

TFPI 4.650 3.734 4.805

Punjab TOI 4.506 9.182 -0.595

TII 1.671 5.912 -2.119

TFPI 2.789 3.087 1.557

Uttar Pradesh TOI 5.766 11.806 1.131

TII 1.827 4.153 0.354

TFPI 3.868 7.347 0.774

All States TOI 5.980 8.501 2.222

TII 2.558 5.108 -0.926

TFPI 3.337 3.227 3.177

12
CAGR- Compound Annual Growth Rate, TOI- Total Output Index,
TII- Total Input Index & TFPI- Total Factor Productivity Index.
Table 1.3, shows the annual growth rate of TOI, TII and TFPI in Northern region states in Indian
manufacturing sector during the period 1984-85 to 2004-05. The growth rate of TFPI during the period 1984-85 to
2004-95 has been 3.33 per cent. Which has been during all period the growth rate of TFPI of Haryana, Madhya
Pradesh and Uttar Pradesh 5.02 %, 4.65 % and 3.86%? Respectively which has been higher than national level?
In the pre-reform period (1984-85 to 1994-95) the growth rates of TII has been 5.10 per cent which in post-
reform period (1995-96 to 2004-05) it has been negative (-0.92 per cent). Madhya Pradesh and Punjab have followed
the same trends. In Haryana and Madhya Pradesh for TII has been positive (5.25 %, 5.38% respectively) but shows
decaling trends post-reform period.
In the growth rate of TFPI in Madhya Pradesh and Haryana has been higher in post-reform period as against
pre-reform period. While in Punjab and Uttar Pradesh the growth rate of TFPI has been decline. Reforms of growth
rate of TFPI in post-reform period shows that the often 1991, inflow of FDI has in these states. Besides it there has been
a positive effect of open trade policy and eternal reforms. The trends of Compound Annual Growth Rate (CAGR) of
total factor productivity index (TFPI), total output index (TOI) and total input index (TII) of Northern region sates and
at aggregate level in Indian manufacturing sector, also has been shows in the all period (1984-85 to 2004-05), pre-
reform period (1984-85 to 1994-95) and post-reform period (1995-96 to 2004-05) by the figure 1.2.
Figure 1.2 CAGR of Total Output, Total Input & Total Factor Productivity Index of Northern
Region States in Indian Manufacturing Sector

The empirical results suggest that it is imperative to fine turn the ongoing programme of macro-economic
reforms in general, and industrial reforms in particular, for pervasive diffusion of technology in Indian manufacturing
sector. To foster the TFPI growth in manufacturing sector of industrially developing and backward states, it is essential
to speed up the flow of fiscal and financial incentives and resources towards these states.
Besides this, the restructuring of 'Liberalization, Privatization and Globalization (LPG) program become
indispensable in the light of poor performance and slow down of TFPI growth of Indian manufacturing sector at
national an state levels during Intensive-liberalization phase.
SECTION IV: Conclusion and Suggestion
The special features of social overhead capital formed some of the building block of the development
strategy. The strategy called for a 'Big push' towards 'balanced growth' among various sectors of the economy. For a
predominantly agricultural country like India, development of industries is a must. In recent times, beginning from the

13
early 1990's the Indian economy is opening up to the world in a big way. An important feature of the new economic
policy is to reorient the working of the public sector along the principles of the private sector or free market while
growth is on or output is increasing, it is essential to ensure efficiency in the use of resources. A comparative analysis
of total factor productivity growth in India and most of the states reveals that there has been decline in total factor
productivity growth during the latter period as compared to the earlier one.
The Liberalization, Privatization and Globalization (LPG) policies that started in early 1980s in India, and
strengthened in the 1990s, opened the Indian manufacturing sector to greater competition from within as well as from
outside. One of the major components of the economic reforms package has been the deregulation and relicensing in
the manufacturing sector. The justification provided for this often centers on the reason of encouraging competition,
which, in turn, is expected to enhance the efficiency and productivity performance of the manufacturing sector. Given
that the main objective of reforming the manufacturing sector was to improve industrial productivity, it would be
appropriate to probe how far the reforms have contributed to the productivity performance of the Indian
manufacturing sector.
In order to step up the rate of productivity growth further so as to catch up with fast growing economies, it is
required that India develops indigenous technological capabilities which can match the international standards. For
this it is suggested that firms should be encouraged to invest more in Research & Development. In view of the positive
impact of trade openness on total factor productivity growth of the manufacturing sector, it is recommended that India
needs more opening up of the economy through further trade reforms aiming at further reductions in import duties so
that these are par with the fastest growing economies of Asia. It will lead to more imports of capital goods and hence
increased productivity and improved competitiveness of the firms.

Bibliography
Beri, G.C. (1962), “Measurement of Production and productivity in Indian Industry”, Asian Publishing House, New Delhi, P. 90
Kuznet, S. (1966), “Modern Economic Growth”, New Haven: Yale University Press
Prdmanabhan, N. (1983), “Productivity Based Incentive Schemes-Some Aspects”, Productivity, vol. XXIV, P. 15-19
Srivastave, J.P. (1982), “Labour Productivity Socio-Economic Dimensions”, New Delhi: Oxford & IBH Publishing Co. P.44-45
Ahluwalia, M.S. (1988), “India's Economic Performance, Polices and Prospects” in Robert E.B. Lucas and Gustav F Papanek
(eds)” The Indian Economy: Recent Development and Future Prospects” Oxford University Press, Delhi
Rangrajan, C. (1982), “Industrial Growth: Another Look”, Economic and Political weekly, vol. xvII No-14, 15&16, Annual
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Rangarajan, C. (2004), “Select Essays an Indian Economy (a set of two volumes)”, Academic Foundation, New Delhi
Industry Economy Survey (2005-06), website: http;/indiabudget.nic.in
Papola, T.S. (2005), “Importance of Productivity in India”, working paper, ISID, New Delhi
Nagaraj, R. (2006), “Aspects of Indian Economic Growth and Reforms”(eds), Academic Foundation, New Delhi
Adhikary, M. and mazumdes, R. (2006), “Manufacturing Sector Productivity in West Bengal across Phases of Liberalization
During 1981-97”, Journal of Social and Economic Development, vol-8, No-1, pp 1-13
Goldar, B. and Anita Kumari, (2002), “Import Liberalization and Productivity Growth in Indian Manufacturing Industries in the
1990s”, Working Paper no E/219/2002; Institution of Economic Growth, New Delhi
Anita Kumari (2005), “Growth of Capital in Indian Manufacturing Industries During Post-Reform period- A Comparative
Analysis of Firms in High Tech, Medium-Tech and Low-Tech Industries”, Working Paper- 2005, Institution of Economic
Growth, New Delhi
Seshaiah, S.V. and Sarma, I.R.S. (2005), “Production Structure in the Indian Manufacturing: A Translog Approach”, Productivity,
No-46 (2&3), Jul-Dec, pp 290-296.
Krishna, K.L. (1987), “Industrial Growth and Productivity in India”, Brahmaanda, P.R. and Panchamukhi, V.R. (eds), The
Development Process of the Indian Economy, Himalayan Publishing House, Bombay.
Nagaraj, R. (1990), “Growth Rate of Indian's GDP 1950-51to1987-88: Examination of Alternative Hypotheses”, Economic and
Political Weekly, vol-25, No-26, June.
Solow, R.M., minhas, B.S., Arrow, K.L. and Chenery, H.B. (1961), “Capital-Labour Substitution and Economic Efficiency”,
Review of Economics and Statistics, August.
Risk, J.M.S. (1970), 'Measurement in a competitive Planned Economy”, Management Accountancy, July 1970, p. 259

14
 An Empirical Study on Online Banking Trends of Consumers in Kanpur City
*Dr. Rachna Chaturvedi
Abstract
With the advent of technology there are waves of changes in the society. With the kind of the lifestyle people
are used to, gives them no time for themselves. This is finally making them to spend more time on the Internet. Thus,
this has given the marketers a wonderful opportunity and a new media to tap the market as well to promote their
products and services by advertising on the Internet. Banking Sector is no exception. Banks are using Internet
technology as a strategic weapon to revolutionize the way they operate, deliver, and compete against each other. As a
result Online Banking is growing at a fast pace. Online banking has become the hottest new customer service trend for
financial institutions. Therefore it becomes necessary to analyse why banking consumers will like to go online and
why they show (if any) their resistance to change to online banking system. The paper highlights the relevance of
online banking in today's scenario having major focus on its working and conceptual framework.
The paper is a modest attempt to examine the behaviour of the respondents toward the online banking. This
research paper has implications for both academicians and the different practitioners which includes the Marketers
specially who are practicing bank marketing. The paper also highlights the future research directions in this area for
Indian marketing managers and academicians.
Introduction
The process of globalization, economic refund and deregulation of banking sector has changed the concept of Bank
marketing. Earlier the customer had a choice of banks to choose but now scenario has changed. As a result, banks have
started exploring new approaches for satisfying the needs of customers. Therefore customers are now choice-
empowered and marketing strategy of the banks should such to be able to differentiate the key areas. Given the vast
number of products and providers available to clients, financial services marketers are challenged to differentiate
themselves from the competition.
Increased emphasis also will be placed on ways to enhance the customer experience and relationship via new
products and emerging banking channels, such as the bank's new mobile phone banking, on-line account opening and
remote capture services. Banks are using savvy marketing strategies to attract consumer interest in their products and
services. Many financial institutions are giving customers a little extra something along with their monthly statements
and other financial documents, personalized advertisements and promotions tailored just for that customer and
delivered either online or in print. This type of customization is similar to traditional direct marketing, except that with
this type of communication, generation of customization, banks are not typically looking for new customers, but
communicating in new ways with their existing customers.
Becoming Online is one of the key tool used by the Banks not only in India but around the world. Banks used
the Internet technology as a strategic weapon to revolutionize the way they operate, deliver, and compete against each
other. As a result Online Banking was introduced as a channel where bank customers could perform their financial
transactions electronically via their banks web sites or by using emails. From a bank's perspective, using the Internet is
more efficient than using other distribution mediums because banks are looking for an increased customer base. Using
multiple distribution channels increases effective market coverage by enabling different products to be targeted at
different demographic segments. Mass customization happens effectively through Online Banking. It reduces cost
and replaces time spent on routine errands with spending time on business errands.
Online Banking means less staff members, smaller infrastructure demands, compared with other banking
channels. From the customers' perspective, Online Banking provides a convenient and effective way to manage
finances that is easily accessible 24 hours a day, seven days a week. In addition to this information is also up to date.
Banking in India
Banking business is one of the oldest service businesses in India. It was 1786, when the first Indian bank i.e., The
General Bank of India was set up. During the years various banks like Bank of Bengal (1809), Bank of Bombay (1840)
and Bank of Madras (1843) came into existence. With establishments of more banks, it had become necessary to
streamline the functioning and activities of commercial banks. Therefore the Government of India came up with The
Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965

*Faculty, MBA Department, Science Technology Entrepreneur's Park-H.B.T.I

15
(Act No. 23 of 1965). Eventually it was the formation ground for Reserve Bank of India. RBI was vested with
extensive powers for the supervision of banking in India as the Central Banking Authority. (www.rbi.org.in).
Over the years banking sector had undergone many changes including nationalization, use of technology,
and liberalization. Banking sector has been going through constant changes during the last decade. These changes
were caused by establishment and insolvency of new commercial banks; the changes of monetary policy;
establishment of foreign capital banks, bank mergers and acquisitions. Over the years banking market has been
undergoing a constant change with intense competition in growing demand for banking services and products.
Banking sector is an increasingly competitive industry where the differentiation level of banking products and
services is still very low. The financial products and services have become available over the Internet, which has thus
become an important distribution channel for a number of banks. Banks boost technology investment spending
strongly to address revenue, cost and competitiveness concerns
Table 1: Report on Trend and Progress of Banking in India (March, 2009)
POPULATION GROUP TOTAL
BANK GROUP RURAL SEMI-URBAN URBAN METROPOLITAN BRANCHES
1 2 3 4 5 6
SBI & Its Associates 5560 4835 3043 2624 16062
Nationalised Banks 13381 8669 8951 8375 39376
Foreign Banks 4 4 52 233 293
Regional Rural Banks 11626 2746 667 88 15127
Other Scheduled Commercial
Banks 1113 2638 2715 2411 8877
ALL-SCHEDULED
COMMERCIAL BANKS 31684 18892 15428 13731 79735
Source: www.rbi.org.in
Online Banking in India
Modernization has changed the way of life for the people in different parts of the world. Technological development
has brought with its new ideas and modern ways of living life. Introduction of the Internet has revolutionized the
whole world. The case is similar for banking system. Online banking has become the hottest new customer service
trend for financial institutions. New proposals for consumer privacy regulations have put the heat on an issue that has
simmered for banks ever since landmark legislation last fall changed the way banks and other financial institutions
can operate. Now a days banker are facing an increasingly competitive market, and are looking to tap into podcasts,
social networking sites and other channels as part of a non-traditional marketing strategy. Online banking (or Internet
banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual
bank, credit union. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have"
service. Internet banking is the term used for new age banking system. Internet banking is also called as online
banking and it is an outgrowth of PC banking. Internet banking involves consumers using the Internet to access their
bank account and to undertake banking transactions. At the basic level, Internet banking can mean the setting up of a
Web page by a bank to give information about its product and services. At an advance level, it involves provision of
facilities such as accessing accounts, funds transfer, and buying financial products or services online. This is called
“transactional” online banking.
There are two ways to offer Internet banking. First, an existing bank with physical offices can establish a web site
and offer Internet banking in addition to its traditional delivery channels. Second, a bank may be established as a
branchless, Internet only or virtual bank without any physical branch. Broadly, the levels of banking services offered
through Internet can be categorized in three types:
(i) The Basic Level Services use the banks websites which disseminate information on different products and
services offered to customers and members of public in general. It may receive and reply to customers
queries through e-mail,
(ii) In the next level are Simple Transactional Websites which allow customers to submit their instructions,
applications for different services, queries on their account balances, etc, but do not permit any fund-based
transactions on their accounts,
(iii) The third level of Internet banking services are offered by Fully Transactional Websites which allow the
customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other
products of the bank and to transact purchase and sale of securities, etc. (RBI, 2001)
16
Most of the banks providing Internet banking products and services offer, to a large extent, an identical and standard
package of banking services and transactional capabilities. In general, Internet banking products are offered in a two-
tiered structure. A basic tier of Internet banking products includes customer account inquiry, funds transfer and
electronic bill payment. A second or premium tier includes basic services plus one or more additional services. The list
of Internet banking products and services is not inclusive.
Basic: 1) Account inquiry. 2) Funds transfer. 3) Electronic bill presentment and payment.
Literature Review
Technology has a definitive role in fascinating transactions in the banking sector. The impact of the technology
implementation had resulted into the introduction of new series by various banks in India. Internet banking, Tele-
banking and mobile banking have created a win-win situation as they offer convenience, information and knowledge
to customers and cost advantages to the banks. According to Joseph5 (1999), internet has a major influence on
banking. According to him, there are six underlying dimensions of e-banking service quality such as convenience and
accuracy, feedback and complaint management, efficiency, queue management, accessibility and customization.
According to Mr. Birenjan Digal, a thriving and vibrant banking system requires a well developed financial
structure with multiple intermediaries operating in markets with different risk profiles. Taking the banking industry to
the heights of international excellence will require a combination of new technologies, better processes of credit and
risk appraisal, treasury management, product diversification, internal control and external regulations and not the
least, human resources.
According to Rakesh Mohan, Cross-border flows and entry of new products, particularly derivative
instruments, have impacted significantly on the domestic banking sector, forcing banks to adjust the product mix, as
also to effect rapid changes in their processes and operations in order to remain competitive to the globalised
environment. These developments have facilitated greater choice for consumers, who have become more discerning
and demanding compelling banks to offer a broader range of products through diverse distribution channels.
According to Sudeep S, Banks could increase internet banking adoption by making their customer aware
about the usefulness of the service. As a result internet banking acceptance would increase when customers find it
more useful. Also Banks should plan their marketing campaign taking into consideration this factor. Proper marketing
communication would increase consumer awareness and would result in better acceptance of internet banking.
Objectives of the Study
The objectives for the study are as follows:
l To analyse the usage of online banking by the banking customers
l To evaluate the usage of online banking among different profiles of consumer
l To ascertain the relationship between age and online banking usage
l To find out the reasons of using online banking
Research Methodology
There are lakhs of consumers having concern for online banking. Out of the population in the city only, 240 consumers
were randomly selected from the sample area of Kanpur City. Convenience sampling method was used. The reasons
of using this sampling type are twofold. Firstly, it offered an easy way to obtain the raw data for further analysis.
Secondly, it saved time and cost since the respondents could be randomly selected.Sampling fundamentals of the
population were conceptualized on the basis of “Consumers” as the sampling unit. The sampling study had provided
sufficient flexibility to have data on the various aspects including demographics and other such qualitative features
under the proposed study. The respondents were surveyed through non disguised, structured survey, which was
personally administered by the researcher. The profiles of the consumers included in it are professionals, house wives,
students and government employees divided equally. The response rate was an average. As the researcher had visited
nearly 360 potential respondents, out of which only 240 gave proper responses. Hence the
Response Rate was = 240/360
= 66.6%

17
Findings and Analysis
v Usage of Online Banking Services
Table 2: The Usage Of Online Banking Among The Respondents
Fact File No. Of respondents Percentage

Online Banking Users 208 86.6%

Non online Banking Users (Offline Users) 32 13.4%

Total 240 100

It can be interpreted that majority of the respondents were using online banking services provided by the
banks. As banks are now focusing on providing more services through online, masses are supposed to be
positive in adoption of these services by the online channel.

v Usage of Online Banking among Profile of consumers

For testing the H0 that the usage of online Banking is evenly distributed among the different profiles of consumers for
which the chi-square test has been applied. The value of chi-square is tested at 10% level of significance.

Table 3: The Usage Of Online Banking Among Different Profile Of Consumers

Consumers Profile No. Of Online Banking Users Online Banking Non Users

Professionals 56 4

Students 53 7

Govt Employees 50 10

Housewives 49 11
2 2
The calculated value of chi-square (x ) is 4.32 with degree of freedom as 3. The table value of chi-square (x ) is
6.25 at 10% level of significance. Thus the null hypothesis has been accepted which proves that there is no
significant difference in the usage of online Banking among the different profiles of consumers.
v Usage of Online Banking across Age Factor
For testing the H0 that the usage of Online Banking is not affected by Age, for which the chi-square test has been
applied. The value of chi-square is tested at 10% level of significance.

1. Ho = Null Hypothesis that the Profile of the customer does not have any impact on online banking users.
2. The chi square test was used in this study because the researcher wanted to prove that the discrepancy between theory and
observations can be attributed to chance or not. If the calculated value of x2 is greater than the table value than difference in
theory and expected value cannot have arisen due to fluctuations of simple random sampling, If the calculated value of x2 is
less than table value than the difference between theory and observation is not considered significant i.e it could have arisen
due to fluctuations of sampling.
3. The formula for chi square is (x2)= ∑(O-E)2 / E, where E= expected frequencies, O= observed frequencies.

18
 Table 4: The Usage of Online Banking Across Age

Age No. Of Online Banking No. Of Online Banking Non

Users Users (Offline users)

Less than 25 years 29 11

25-35 years 31 7

35-45 years 92 4

45-60 years 38 4

Above 60 years 18 6
2 2
The calculated value of chi-square (x ) is 20.16 with degree of freedom as 4. The table value of chi-square (x )
is 7.78 at 10% level of significance. Thus the null hypothesis has been rejected which proves that there is a
significant difference in the usage of Online Banking and Age of the consumers.
l Reasons for Usage of Online Banking Services
Table 5: Reasons for usage of Online Banking

Reasons No. of Respondents

5
Transactional 83
6
Non Transactional 51

Thus it can be seen from the Table 5, that majority of the respondent are using online banking for transactional
reasons i.e balance checking and making online payments of utility bills and others.
Conclusion
Banks are providing free internet banking services also so that the customers can be attracted. It can be well concluded
that maximum numbers of internet bank account holders are customers who are using banking services for
transactional reasons. Further it can be concluded that banks should offer their customers more options, giving more
flexibility and choice for all customers who are ready to use online banking services.
Therefore banks must constantly and continually be involve in researches and development to determine the
likely trend in bank marketing using online banking and other technologies, so that they will be in forefront in
acquiring, upgrading and implementing result oriented systems that will assist them to remain efficient and cost
effective. This study has its own limitations and there is a further scope of analysis and reasoning by researcher for a
better and conclusive remark for support of situations.

4. Degree of freedom= (c-1)(r-1)= (2-1)(5-1)=4

5. Account to Account transfer, Payment of bills, fund transfer, Investment purchase or sale, Loan payments
6. Online statements, cheque links, Co browsing
7. This features allows the financial institution to manage the online experience of their end users
8. Support multiple users having very level of authority, transaction approval process, wire transfer.

19
Bibliography
1. Barnatt, C. (1998) “Virtual communities and financial services – online business potentials and strategic choice”,
International Journal of Bank Marketing, Vol.16 Iss. 4 pp. 161-169
2. Bose,J,” E- Banking in India: The Paradigm Shift”,ICFAI, ISBN 8131404722
3. Digal,B,“Technological Change & Financial Innovation in Banking” www.indianmba.com/Faculty_Column/FC11[
assessed on Feb, 25th ,2011]
4. Hagel, J. Iii, Hewlin, T. and Hutchings, T. (1997) “Retail banking: caught in a web?” The Mckinsey Quarterly, Vol. Iss.
2, pp. 42-54.
5. Joseph, M., McClure, C. And Joseph, B. (1999) “Service quality in the Banking sector: The impact of technology on
service delivery”. International Journal of Bank Marketing, Vol. 17,Iss 4, pp 182-193
6. Jun, M. and Cai, S. (2001) “The key determinants of Internet banking service quality: a content analysis”, The
International Journal of Bank Marketing, Vol. 19 Iss: 7, pp.276 – 291
7. Mohan,R, "Transforming Indian Banking: In search of Better Tommorow” www.rakeshmohan.com/ [assessed on
13th March, 2011]
8. Sudeep S and Sankaranarayanan.K.C ,” Internet Banking and customer Acceptance : The Indian Scenario”
(http://dyuthi.cusat.ac.in/xmlui/bitstream/handle/purl/2011/Abstract.pdf?sequence=1), [assessed on 04th March,
2011]
9. Osarekhoe, A. and Bennani, A. (2007) “An exploratory study of implementation of customer relationship
management”, Journal of Business Process Management, Vol. 13 No. 1, pp. 139-164
10. Wang, Y. S, Wang, Y. M., Lin, H. H. and Tang, T. I. (2003) “Determinants of user acceptance of Internet banking: an
empirical study”, International Journal of Service Industry Management, Vol. 14 Iss. 5, pp. 501-519
11. http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Handbook of Statistics on Indian Economy [assessed
on 15th March, 2011]

20
 Role of Women Entrepreneurship in Women Empowerment
Mehnaz Tasavvur
Abstract
Empowerment of women has emerged as an important issue in recent times. The economic Empowerment of women
is being regarded these days as a Sine-quo-non of progress for Country; hence, the issue of economic empowerment of
women is of paramount importance to Political thinkers, social scientists and reformers. Women entrepreneurs are
becoming economically independent and providing employment opportunities to others.
Women entrepreneurship development is an essential part of human resource development. The development of
women entrepreneurship is very low in India. Entrepreneurship amongst women has been a recent concern. Women
have become aware of their existence their rights and their work situation. However, women of middle class are not
too eager to alter their role in fear of social backlash and the progress is more
This paper focuses on various aspects of women entrepreneurship, and its impact on psychology of women,
economic empowerment of women, problems faced by them.
Objectives:
1. To analyze the factors of social, psychological & economical advantages of entrepreneurship for women.
2. To analyze the social advantages of entrepreneurship for women.
3. To analyze the psychological advantages of entrepreneurship for women.
4. To analyze the economic advantages of entrepreneurship for women.
5. To analyze the degree of inclination towards entrepreneurship among women of different class & age.
6. To study the impact of entrepreneurship on the managerial effectiveness of, otherwise, normal women.
Research Methodology
Primary Data: This is an exploratory research based on the primary data and secondary data, primaray data which is
primary in nature. And secondary data is collected from internet .we collected the primary data through a Survey of
different women entrepreneurs through questionnaire. We collect the data ourselves including surveys, interviews
and observations.
Sampling technique- Simple random sampling - Universe- (Lucknow) - Sample size- 100
Literature Review:
To understand the change women undergo in becoming empowered we look at two sets of literature: behavior
change and women's empowerment. In the first set of literature we review what leads to successful change, and in the
second set of literature we review what is understood as empowerment for women.
Behavior change: We first start with a review of the self-efficacy literature and focus on the criteria for
successful behavior change. Bandura (1986) suggests that a person's self-expectations determine whether or not
certain behavior will be undertaken, the extent of effort expended by the individual, and whether the individual can
persist in the face of challenges encountered. This notion of self-efficacy is mediated by a person's beliefs or
expectations about his/her ability to achieve certain tasks effectively or exhibit certain behaviors (Hackett and Betz
1981). For example, individuals with low self-efficacy regarding their behavior limit their participation when making
difficult behavior changes and are more likely to give up when faced with obstacles. Their efficacy beliefs about
themselves serve as barriers to change, and in this case, their own empowerment (Hackett and Betz 1981).
Furthermore, these authors state that self-efficacy is not necessarily an in-born trait and can be acquired and nurtured.
This fact makes these concepts particularly relevant to our study. Bandura (1986) identifies four ways in
which self-efficacy and self-efficacy expectations are acquired: performance accomplishments, vicarious learning,
verbal persuasion and physical/affective status

Introduction
Concept of Entrepreneur- The word 'entrepreneur' derives from the French "Entreprendre" (to undertake)
th
.in the early 16 Century it was applied to persons engaged in military expeditions, and extend to cover construction

21
and civil engineering activities in the 17th century, but during the 18th century , the word 'entrepreneur' was used to refer
to economic activities. Many authors have defined 'entrepreneur' differently. Generally, an entrepreneur is a person
who combines capital and labour for production. According to Cantillion "entrepreneur is the agent who buys means
of production at certain prices, in order to sell at prices that are certain at the moment at which he commits himself to
his cost".
In this dynamic world, women entrepreneurs are an important part of the global quest for sustained economic
development and social progress. In India, though women have played a key role in the society, their entrepreneurial
ability has not been properly tapped due to the lower status of women in the society. It is only from the Fifth Five Year
Plan (1974-78) onwards that their role has been explicitly recognized with a marked shift in the approach from women
welfare to women development and empowerment. The development of women entrepreneurship has become an
important aspect of our plan priorities. Several policies and programmes are being implemented for the development
of women entrepreneurship in India.
There is a need for changing the mindset towards women so as to give equal rights as enshrined in the
constitution. The progress towards gender equality is slow and is partly due to the failure to attach money to policy
commitments. In the words of president APJ Abdul Kalam "empowering women is a prerequisite for creating a good
nation, when women are empowered, society with stability is assured. Empowerment of women is essential as their
thoughts and their value systems lead to the development of a good family, good society and ultimately a good nation."
When a woman is empowered it does not mean that another individual becomes powerless or is having less
power. On the contrary, if a women is empowered her competencies towards decision- making will surely influence
her family's behavior.
Concept of women Entrepreneur Enterprise-" A small scale industrial unit or industry –related service or
business enterprise, managed by one or more women entrepreneurs in a concern, in which they will individually or
jointly have a share capital of not less than 51% as shareholders of the private limited company, members of co-
operative society
Definition: Women Empowerment
Empowerment refers to increasing the spiritual, political, social or economic strength of individuals and
communities. It often involves the empowered developing confidence in their own capacities.
Empowerment is probably the totality of the following or similar capabilities:
v Having decision-making power of their own
v Having access to information and resources for taking proper decision
v Having a range of options from which you can make choices (not just yes/no, either/or.)
v Ability to exercise assertiveness in collective decision making
v Having positive thinking on the ability to make change
v Ability to learn skills for improving one's personal or group power.
v Ability to change others' perceptions by democratic means.
v Involving in the growth process and changes that is never ending and self-initiated
v Increasing one's positive self-image and overcoming stigma
Categories of Women Entrepreneurs
v Women in organized & unorganized sector
v Women in traditional & modern industries
v Women in urban & rural areas
v Women in large scale and small scale industries.
v Single women and joint venture.
Categories of Women Entrepreneurs in Practice in India
First Category -
– Established in big cities
22
 – Having higher level technical & professional qualifications
– Non-traditional Items
– Sound financial positions
Second Category
– Established in cities and towns
– Having sufficient education
– Both traditional and non-traditional items
– Undertaking women services-kindergarten, crèches, beauty parlors, health clinic etc
Third Category
– Illiterate women
– Financially week
– Involved in family business such as Agriculture, Horticulture, Animal Husbandry, Dairy, Fisheries,
Agro Forestry, Handloom, Power loom etc. (2) responds to it (3) exploits it as an opportunity.
Women and Decision-Making
In terms of decision-making NFHS II had reported in the rural areas women take 71% decisions regarding "what
items to cook" 26% decisions regarding obtaining health care for herself 10% in purchasing jewelry or other major
household items. 12% decisions were taken by women with reference to staying with their parents or siblings and
37% about how to spend money, which they had earned. In the urban areas these figures were 71%, 35%,13%, 18%
and 57% respectively. Women between ages 15 to 19 nearly 24% are not involved in any kind of decision-making
only. 14% do not ask permission to go to the market. In rural sector 10% are involved with any decision-making and
74% need permission forgoing to the market. In urban sector however only 7% are not involved with any decision
making and 53% need permission for going to the market. Survey reports that of the 52% illiterate women 74% of
urban resident and 55% of rural resident have access to money.
Small studies on elected Panchayat leaders show episodic increase of their decision-making in personal, social and
political spaces. Studies of the NFHS scale are necessary to retrieve such data especially in PACs programme areas.
This could be done with reference to internal lending of SHG's as well as leveraging through other agencies in terms of
both economic status enhancement and their decision- making. Interestingly some studies reflect that women's
working outside home in paid job does not always translate into appreciably greater autonomy within the household
for most women. In a sample study at Sonepat and Noida 66% need to consult somebody and take permission before
changing jobs 27.6% women in Noida and 35.3% in Sonepat said they are allowed to buy nothing at all. Working
outside home women do believe that they have more experience (91.6%), enlarged social networks (48.3%) and
stronger personality (32.2%) and an increased self esteem 985.3%) besides their decision-making power (62.2%).
The researchers however observe that objective state of affairs do not bear this out and women's decision-making is
concentrated to making small purchases. In buying and selling assets they have no say.
Methodologically here there is a dilemma about privileging of perspective – that of the respondent or that of the urban
middle class educated researcher. This is particularly pertinent as the sense of being empowered is also importantly
about "feeling empowered".
Self Help Groups
PACS program has largely utilized SHG's as an empowering instrument. More than 80% of these are exclusively for
women. The fifth national synthesis report (Draft) reports that official perception has changed as SHG's are firmly
raising voices and SHG's are being used to achieve RTI awareness:
Women members are elected as PRI representatives.
SHG/PRIs are regularly organizing Gram Sabha as a forum for public appraisal. Anecdotal accounts suggest that
women are economically empowered those suffering domestic violence are given legal reference and awareness to
prevent child marriage promote girls education and prevent dowry marriage and alcoholism. Self-help groups have
emerges as an important strategy for empowering women and alleviating poverty. SHG's are based on idea of dialogic
small groups, which shall function at developing collective consciousness. Linked with micro credit these groups are
able to access credit and subsidy to meet crisis needs as well as developmental needs reducing their dependence on
money lenders. There is fair amount of evidence to suggest that PACS SHG's have successfully ensured people's
entitlements including women.

23
Statistically PAC's initiatives in realizing entitlements show that – In Balika Samriddhi Yojana 189 females have been
benefitted realizing 2572400 Rs. in Employment Guarantee Scheme 55397 women have been provided, 1271 girls
enrolled and 9524 women provided Indira Awas Yojna. Kanya Vidya Dhan has been availed by 131 girls while Mahila
Samridhi Yojana has benefitted 7 women. Maternity benefits have reached 2943 women and NFE educated 862
women. Old age pension went to 7774 women while no woman benefitted from the Pradhan Mantri Awas Yojna. Sam
Vikas Yojna benefitted 975 women compared to 467 men Bridge courses benefitted 740 girls. Widow pension was
ensured to 2948 women and 217 women get yellow cards.
The realization of entitlements has been primarily through RTI, NREGS and the women further train communities. in
Jharkhand a large number of women were trained in social audit. In total number of beneficiaries of entitlement 13342
women in Bihar 156217 in Jharkhand 19906 women in Maharashtra 18762 in M.P. and Chhattisgarh and 55114 in U.P.
were reached. Men have however benefitted more except in Bihar.
Violence
The questions regarding crimes against women are most entrenched, as most of them are committed within the family
NCRB records that the highest percentage of crime against women is torture (37.7%) followed by Moleslation
(22.4%), Rape (11.8%), Kidnapping (8.8%) and immoral traffic (3.7%). 4.6 Dowry Death and 6.5% eve teasing were
recorded. the further details report that in victims of rape 532 were below 10 and 1090 below 14. 3189 within ages of
30-50. No age is safe for women. In U.P. nearly 32% crimes against women were committed within the family by
husbands and relatives. This figure when compounded with 12% dowry deaths makes 45% of crimes domestically
located. Incidents of honour killings and battery through not large are often threats to women's functioning and their
emotional development is severely blighted. In caste ridden society women's caste membership increase her
vulnerability. Small efforts to train police by UN agencies and state initiatives are encouraging but very small in scale.
They require follow-ups and support monitoring.

Women and social role interface

Community

Wife Membership

Self
Role

Parent Daughter

Mother

24
 A. Psychological impact of entrepreneurship B. Social impact of entrepreneurship
on women on women

1. Self Confidence - 97 % Yes, 03% No. 1. Increased Social Interaction - 90% Yes and 10% No

2. Increase in Self-Esteem - 85% Yes and 15% No 2. Increased Stay at Home - 31% Yes and 69% No.

3. Sense of achievement - 88% Yes and 12% No 3. Less Time for Family and Family Affairs-
83% Yes and 17% No

25
 C. Economic Empowerment

4. Decrease in Family Violence- 50% Yes and 50% No 1. Improved Standard of Living- 86% Yes and 14% No

5. Enhanced Awareness's- 91% yes and 9% No. 2. Less Financial Dependence – 86 Yes and 14% No

6. Chance to Develop and Maintain Relationship 3. Managerial Effectiveness of Women

78% Yes and 22% No 86% Yes and 14% No

26
4. Improvement in Leadership Qualities 7. Increased Ability to Negotiate
86% Yes and 14% No 77% Yes and 23% No

5. Improved Power to Make Decision 1. Increase Access To and Ability Together

88% Yes and 12% No Information 70% Yes and 30% No

6. .Demanding Participation
88% Yes and 12% No

27
 Conclusion
Women's entrepreneurship is both about women's position in society and about the role of entrepreneurship in the
same society. Women entrepreneurs faced many obstacles specifically in market their product (including family
responsibilities) that have to be overcome in order to give them access to the same opportunities as men. In addition, in
some countries, women may experience obstacles with respect to holding property and entering contracts. Increased
participation of women in the labour force is a prerequisite for improving the position of women in society and self-
employed women. Particularly the entry of rural women in micro enterprises will be encouraged and aggravated.
Rural women can do wonders by their effectual and competent involvement in entrepreneurial activities. The rural
women are having basic indigenous knowledge, skill, potential and resources to establish and manage enterprise.
Now, what is the need is knowledge regarding accessibility to loans, various funding agencies procedure regarding
certification, awareness on government welfare programs, motivation, technical skill and support from family,
government and other organization. More over formation and strengthening of rural women Entrepreneurs network
must be encouraged. Women entrepreneur networks are major sources of knowledge about women's entrepreneurship
and they are increasingly recognized as a valuable tool for its development and promotion. This network helps to give
lectures, printed material imparting first hand technical knowledge in production, processing, procurement,
management and marketing among the other women. This will motivate other rural women to engage in micro
entrepreneurship with the right assistance and they can strengthen their capacities besides adding to the family income
and national productivity.
Women can do Wonders
Table I Empowerment Measures
Personal Autonomy Index:
 Generally(1) Occasionally (1/2) Never (0)
 Visiting respondents' parental home
 Visiting Hospital
 Visiting village market
 Helping a relative with money
 Setting money aside for respondent's use
Family Decision Making Index:
 Wife Alone (1) Joint Decision (1/2) Husband Alone (0)
 Children's education in school
 Family planning
 Family day-to-day expenditures
 Going outside of home
 Medical treatment
 Entertaining guests
 Buying respondent's traditionally
 Favorite things
Economic Domestic Consultation Index:
 Generally(1) Occasionally (1/2) Never (0)
 Buying household furniture and utensils
 Purchase of land
 Education/expense of children
 Purchasing Medical treatment of family
 Purchasing women's clothes
 Purchasing children's clothes
 Purchasing daily food
Political autonomy index:
 Generally(1) Occasionally (1/2) Never (0)
 Voting according to own decision
 Awareness of any political issue

28
  Participating in any public protest
 Campaigning politically
 Standing for elections

Findings:
According to the Third All India Census of Small Scale Industries conducted in 2009 and subsequent
estimates made, only 10.11% of the Micro and Small Enterprises in India are owned by women while 9.46% of the
MSE enterprises are managed by women. As per the latest available estimates, the number of women owned and
women managed enterprises is 12.99 lakh and 12.15 lakh respectively.
In order to encourage more and more women enterprises in the MSE sector, several schemes have been
formulated by this Ministry and some more are in the process of being finalized, targeted only at the development of
women enterprises in India.
Support For Entrepreneurial And Managerial Development
MSME DIs regularly conducts EDPs/MDPs for existing and prospective entrepreneurs and charge fee for
such courses. To encourage more entrepreneurs from among the SC/ST, women and physically challenged groups, it
is proposed that such beneficiaries will not be charged any fees but instead paid a stipend of Rs.500/- per capita per
month. 50,000 entrepreneurs will be trained in IT, Fashion Technology, Catering, Agro & Food Processing,
Pharmaceutical, biotechnology etc. through specialized courses run by MSME Discount. 20% of courses conducted
by these Institutions shall be exclusively for women.
BIBLIOGRAPHY
1) Abbott-Chapman, J., & C.O. Denholm. “Adolescents' Risk Activities, Risk Hierarchies and the Influence of Religiosity
religiosity.” Journal of Youth Studies, 2001:4, 3, 279-297.
2) Ahmed, M. Nijera Kori in Retrospect: In Search of an Organization of the Rural Poor. Dhaka, Bangladesh, Nijera Kori, 1982).
3) Amin Rahul, Becker Stan and Byes Abdul, “NGO-Promoted Micro credit Programs
4) Women's Empowerment in Rural Bangladesh: Quantitative and Qualitative Evidence,” The Journal of Developing Areas,
winter, 1998: 221-236.
5) Asian Development Bank Reports, 1997-2000.
6 ) Balk, Deborah, “Individual and Community Aspects of Women's Status and Fertility in Rural Bangladesh,” Population
Studies 48 March 1994: 21-45.
7) Bandura, A. (1986). Social foundations of thought and action: A social-cognitive theory. Upper Saddle River, NJ: Prentice-
Hall.
8) Batliwala, Srilatha. 1994. “The meaning of Women's Empowerment: New Concepts from Action.” Pp. 127-138 in Population
Policies Reconsidered: Health, Empowerment and Rights. G. Sen, A. Germain, and L.C. Chen, eds. Cambridge, MA: Harvard
University Press.
9) Bisnath, Savitri and Diane Elson. 1999. Women's Empowerment Revisited. Background Paper, Progress of the World's Women.
UNIFEM
10) Bratton, M., “The Politics of Government NGO Relations in Africa,” World Development, 1989, 17 (4): 569-587.

29
 An Insight to Transfer Pricing: A Conceptual Approach
*Dr. Himanshu Rastogi
**Prof. R. P. Gupta
*** Hitesh Keserwani
Abstract
Increasing participation of multi-national groups in economic activities in India has given rise to new and
complex issues emerging from transactions entered into between two or more enterprises belonging to the same
group. Hence, there was a need to introduce a uniform and internationally accepted mechanism of determining
reasonable, fair and equitable profits and tax in India in the case of such multinational enterprises.
Transfer pricing is one such practice which refers to prices used for `internal' sales of goods, services and
technology between divisions and/or associated companies of a business enterprise. The concept relates not only to
trade operations proper, but also to other intra-firm transactions, such as those relating to transfer of technology,
dividend remittances, royalties and technical fees payments. In keeping with this definition of transfer pricing, in this
paper we tried to outline the variety of forces which influence the inception, use, regulation, control and estimation of
such pricing practices. In doing so we attempt to move towards a framework within which to analyze and check
transfer pricing by large international corporations in developing countries.
The creation of foreign subsidiaries and basis of operation for cross-border flow of products, services,
trademarks, funding, and technology is having a significant impact on the issue of transfer pricing in today's
international business scenario. Transfer-pricing is a way of exploiting transnational and/or transcorporate accounting
loopholes to minimize tax liabilities. The increasing concern of international taxation, especially in terms of a
transfer-pricing mechanism, is certain to become a part of the economic life of all developing countries as major
international transactions are tossed into the world of global taxation. Since the achievement and maintenance of
equitable economic growth is an integral part of the development strategies of these countries, the impact of transfer-
pricing, both positive and negative, is a key policy issue. Developing countries need to understand, assess, assimilate
and analyze critically this issue, while protecting their basic interests.
Introduction
Transfer pricing is a price used to measure the value of goods and services provided by a profit centre to other sub units
within a company. In other words transfer pricing is a practice which refers to prices charged for internal sales of
goods, services and technology between divisions and/or associated companies of same business enterprises. The
concept relates not only to trade operations, but also to other intra-firm transactions, such as those relating to transfer
of technology, dividend remittances royalties and technical fees payment from one country to the other country. A key
element of transfer pricing is the presence of a buyer-seller relationship between units of a single company.
Objective
The determination of an appropriate transfer price is one of the major problems of profit centre. The implication of the
transfer price is that for the selling division it is the source of revenue where as for the buying division it is an element
of cost. Therefore the estimation of correct transfer prices is a complicated problem because of wide variety of
alternative methods used.
This article aims to provide a brief overview on the applicability of transfer pricing, and methods of determining the
transfer price documentation procedures and regulations in India. The objective of this paper is to analyse transfer
pricing concepts from economic, accounting and taxing point of view.
Classification of transfer price
1. Inter-divisional transfer price involves transactions among divisions within the trans- national
corporations with in the same tax jurisdictions.
2. Intra-corporate transfer price involves transactions among affiliates that are based across national borders
and located in different tax jurisdictions.

*Assistant Professor, Amity Business School, AMITY University, Lucknow.

**Professor, Amity Business School, AMITY University, Lucknow.
***Lecturer, Amity Business School, AMITY University, Lucknow.

30
Economic approach to transfer pricing
The problem of transfer pricing occurs in a situation characterized by following:
D A firm is organized into two or more separate divisions.
D Each of the divisions work as independent profit centre
D The product of one division serves as an intermediate product for other divisions.
The problem arises on how to price the product of first division i.e. at what price should the intermediate
product be available to end user?
An incorrect price set of and intermediate product can affect the total profit earned by the firm. Specifically, if
the decision makers in each division attempt to maximize profits for their unit, the total profit of the firm might be
reduced. Thus it is important that prices of intermediate products be fixed so as to maximize over all profits rather than
divisional profits.
Suppose that Rehmann spinning and weaving mill produces thread and converts it into cloth through its
weaving sections the question arises how should the prices of thread be fixed?
We can think of two alternative situations the first situation can be characterized by following –
D thread can be sold to outside buyers
D weaving section can procure intermediate thread from outside sources
The second situation has the following features
D Thread can be sold only to the other division of the firm
D Thread for making cloth can be procured only from within the firm
In the first situation the pricing of thread will follow a simple profit maximization of setting the price and
quantity at a level where MR=MC
In the second situation a conflict may arise regarding the proper price to be charged for thread. The thread
manufacturing unit may benefit from a higher price while the division that makes cloths may benefit from lower price.
However the aim should be to determine a price for thread that results in maximum profit for the combine firm. This
can be explained with the help of following figure:
The AR and MR curve for fabric cloth are AR f and MR f respectively the MC t is the marginal cost of producing thread
,while MCc is the marginal cost of converting thread into cloth. Hence from the perspective of the firm, the marginal

MC f
MC t
Pf
PRICE

MCc

Pt
AR f

X
Qf MR f

QUANTITY

31
cost of each cloth is the sum of MC t and MC c, this is designated as MC f.
For the combine firm the profit maximizing choice is to produce where MR f = MC f or at output rate OQ f. The
corresponding price would be OP f.
Since OQ f is profit maximizing output of cloth for the combined firm, the price set for the thread must cause the
weaving section to weave OQ f quantity and the spinning section to supply an amount of thread consistent with
producing OQ f quantity of cloth.
The solution is for the firm to require the spinning division to set its price equal to the marginal cost of weaving cloth.
This will cause the fabric cloth division to view
MC f= MC t+ MC c as its marginal cost curve and select OQ f as the profit maximizing quantity and OP f as the price. At
the same time by setting the price of OP t for thread the spinning division will supply the exact amount of thread
necessary to produce OQ f cloth.
Application of the Arm's Length Principle
Although there are discrepancies in the specifics of each country's laws concerning the application of the arm's length
principle, the fact that they are primarily based in the OECD Guidelines means that, although such a strategy carries a
greater taxation risk than solutions tailored to each country, global transfer pricing policies can be effectively used to
determine an appropriate range representing the arm's length price for transactions carried out across the global
enterprise.
However different countries may accept different methods of calculating the transfer price (i.e. Japan requires that the
three "traditional" methods, outlined below, be systematically discounted before allowing the use of alternative
methods, while the United States accepts the most appropriate method regardless), so care must be taken in such
circumstances. In addition, some countries may have immature transfer pricing regimes or apply the arm's length
principle in different ways—Brazil, for example, does not apply the arm's length principle despite the existence of
transfer pricing legislations.
Methods of Determining Transfer Prices
Cost Plus Normal Mark-up Method
The transfer price is a certain function of selling the division. It may or may not include a fixed cost component. There
are several variations of this approach such as cost plus fixed fee, cost plus a fixed percentage of the cost, full cost plus
mark up, variable cost, marginal cost. There are two ways in which the normal mark-up/profit is determined. First, the
management of the firm may set a target profit. Alternatively, the normal mark-up may be equivalent to the second
basis is adopted; the transfer price will approximate a market value. Depending upon its closeness to the real market
value, it may be useful for profit centre analysis.
Market Price Method
If there is a market for the intermediate goods, then the market price is used as the base of determining transfer pricing.
Transfer price is the market price minus the selling expenses. There are three way to arrive at the market price.
First, through the prevailing market price if there is an active market for the goods /services transferred between
divisions. The prevailing price would require adjustment for discounts as well as for certain selling costs that are not
involved in inter-divisional exchange. The merits of this basis of transfer price are:
D Market prices represent the alternatives to the division that is if the selling division sells the goods to outside
customers, or if the buying division purchases the goods from outside suppliers, the market price will be the
basis.
D They are neither arbitrary not artificial, rather they reflect the collective values of several buyers/sellers
Dual Price Method
The price that the selling division receives is not equal to the price that the buying division pays- and is usually higher.
This mechanism generates a deficit, which is set off by central management, because the central management sets the
optimal transfer price, and, hence, sets the transaction volume to be optimal; this mechanism yields higher
performance than other methods. However, it is not commonly used because it requires central management to be
involved in the complex process of price setting.
According to this method of transfer pricing for segment performance evaluation, the transferring division is credited
with one price but the acquiring division is charged at different price the Merritt of this method is that it eliminate the

32
possibility of conflict caused by a single transfer price, in which case one segment receive relatively less contribution
of profit because the price setting process entitle the segment to receive the relatively more.
Negotiated Transfer Price Method
The transfer price is reached by negotiation between the relevant manager divisions. The advantage of the method is
that it preserves the division's autonomy and it leads to a price which is mutually advantageous to both the division as
well as the entire organization. The problem of this method is the, sensitivity of the outcomes to the managers'
negotiation skills.
Regulations for Transfer Pricing
The Finance Act, 2001 introduced law of transfer pricing in India through sections 92A to 92F of the Indian Income-
tax Act, 1961 which guides computation of the transfer price and suggests detailed documentation procedures.
Transfer Pricing Regulations ("TPR") are applicable to the all enterprises that enter into an 'International Transaction'
with an 'Associated Enterprise'. Therefore, generally it applies to all cross border transactions entered into between
associated enterprises. It even applies to transactions involving a mere book entry having no apparent financial
impact. The aim is to arrive at the comparable price as available to any unrelated party in open market conditions and
is known as the Arm's Length Price ('ALP').
Identification of Associated Enterprises
The basic criterion to determine an AE is the participation in management, control or capital (ownership) of one
enterprise by another enterprise. The participation may be direct or indirect or through one or more
intermediaries. The concept of control adopted in the legislation extends not only to control through holding shares
or voting power or the power to appoint the management of an enterprise, but also through debt, blood relationships,
and control over various components of the business activity performed by the taxpayer such as control over raw
materials, sales and intangibles. It appears that one may go to any layer of management, control or ownership in order
to find out association:
(a) Direct Control,
(b) Through Intermediary.
For instance, if enterprise B is managed, controlled or owned either directly or through an intermediary, then
Enterprise B is said to be an AE of enterprise A.
Further, if Mr. A and Mr. B control both Enterprise A and Enterprise B then both Enterprise A and Enterprise B are
AEs.
International Transaction
An international transaction is essentially a cross border transaction between AEs in any sort of property, whether
tangible or intangible, or in the provision of services, lending of money etc. At least one of the parties to the transaction
must be a non-resident entering into one or more of the following transactions:
(a) Purchase, sale or lease of Tangible or Intangible Property
(b) Provision of services
(c) Lending or borrowing of money
(d) Any transaction having a bearing on profits, income, losses or assets
(e) Mutual agreement between AEs for allocation/apportionment of any cost, contribution or expense.
An illustration of a distant 'International Transaction' could be where a resident enterprise exports goods to an
unrelated person abroad, and there is a separate arrangement or agreement between the unrelated person and an AE
which influences the price at which the goods are exported. In such a case the transaction with the unrelated enterprise
will also be subject to TPR.
Methods of Determining The ALP
In accordance with internationally accepted principles, the TPR have provided that any income arising from an
international transaction between AEs shall be computed having regard to the ALP, which is the price that would be
charged in the transaction if it had been entered into by unrelated parties in similar conditions. The ALP is to be
determined by any one or more of the prescribed methods. The taxpayer can select the most appropriate method to be
applied to any given transaction, but such selection has to be made taking into account the factors prescribed in the

33
TPR. With a view to allow a degree of flexibility in adopting the ALP, a variance allowance of 5 percent has been
provided under the TPR. The prescribed methods have been listed below:
(a) Comparable Uncontrolled Price Method ('CUPM')
(b) Resale Price Method ("RPM')
(c) Cost plus method ('CPM')
(d) Profit Split Method ('PSM')
(e) Transactional Net Margin Method ('TNMM')
Required Documentation
The provisions contained in the TPR are exhaustive as far as the maintenance of documentation is concerned. This
includes background information on the commercial environment in which the transaction has been entered into,
information regarding the international transaction entered into, the analysis carried out to select the most appropriate
method and to identify comparable transactions, and the actual working out of the ALP of the transaction.
This also includes report of an accountant certifying that the ALP has been determined in accordance with the TPR
and that prescribed documentation has been maintained. This documentation should be retained for a minimum
period of 8 years. However, it may be noted that in case the value of the international transaction is below INR 10
million, it would be sufficient for the taxpayer to maintain documentation and information which substantiates his
claim for the ALP adopted by him. In effect, they need not maintain the prescribed documentation.
Burden of Proof
The primary onus is on the taxpayer to determine an ALP in accordance with the TPR and to substantiate the same with
the prescribed documentation. Where such onus is discharged by the taxpayer and the data used for determining the
ALP is reliable and correct there can be no intervention by the tax officer. In other cases, where the tax officer is of the
view that the
(a) price charged in the international transaction has not been determined
in accordance with the methods prescribed, or
(b) information and documents relating to the international transaction have not been kept and maintained by
theassessee in accordance with the TPR,
(c) the information or data used in computation of the ALP is not reliable Or correct,
(d) the assessee has failed to furnish any information or document which he was required to furnish under the TPR.
The tax officer may reject the ALP adopted by the assessee and determine the ALP in accordance with the TPR. For
this purpose, he would then refer the matter to a Transfer Pricing Officer ('TPO') (a special post created for valuation
of ALP) who would determine the ALP after hearing the arguments of the taxpayer.
Effects Of Adjustment To The ALP
In case the ALP determined by the TPO indicates understatement of income by the taxpayer, it could result into
thefollowing:
(a) Adjustment to reported income of the taxpayer
(b) Levy of penalty
Adjustment to the Reported Income
The tax officer is bound to adjust the reported income of the taxpayer with the amount of adjustment proposed by the
TPO. This would have an effect of increasing the assessed income or alternatively decreasing the assessed loss.
Furthermore, the eligible deductions available to the taxpayer under section 80 could not be availed on the enhanced
income. However, those taxpayers who are eligible for deductions under section 10A and 10B remain unaffected as
these deductions remain available on the enhanced income.

34
Penalties
Penalties have been provided as a disincentive for non-compliance with procedural requirements is as follows.
(a) Penalty for Concealment of Income - 100 to 300 percent on tax evaded
(b) Failure to Maintain/Furnish Prescribed Documentation - 2 percent of the value of the international
transaction
(c) Penalty for non-furnishing of accountants report - INR 100,000 (fixed)
The above penalties can be avoided if the taxpayer proves that there was reasonable cause for such failures.
Conclusion
An attempt has been made to present all the issues related to transfer pricing may it be economic approach, fixation of
transfer pricing or it's much abused use in beating the tax in the host country having a heavy tax structure. The paper
also reflects the role of transfer pricing in determining the performance of various divisions through economic
analysis.
Since the creation of foreign subsidiaries and bases of operation for cross-border flow of products, services,
trademarks, funding, and technology is having a significant impact on the issue of transfer pricing in today's
international business scenario. Transfer-pricing is a way of exploiting transnational and/or transcorporate
accounting loopholes to minimize tax liabilities. The increasing concern of international taxation, especially in terms
of a transfer-pricing mechanism, is certain to become a part of the economic life of all developing countries as major
international transactions are tossed into the world of global taxation. Since the achievement and maintenance of
equitable economic growth is an integral part of the development strategies of these countries, the impact of transfer-
pricing, both positive and negative, is a key policy issue. Developing countries need to understand, assess, assimilate
and analyze critically this issue, while protecting their basic interests.
References:
i) Dhingra, I .C.(2005), Fundamentals of Business Economics, Sultan Chand, New Delhi
ii) Kaplan, S. Robert and Atkinson, A. Anthony (2005), Advanced Management Accounting, Prentice-Hall of India, New
Delhi.
iii) Khan, M.Y. and Jain, P.K.(2000),Cost Accounting, Tata McGraw-Hill Publishing, New Delhi
iv) Mithani, D.M. (2006) Managerial Economics Theory and Applications, Himalaya Publishing House, Mumbai
v) Shrinivasan, N.P. and Murugan, M. Sakthivel(2007),Accounting for Management, S.Chand and Company, New Delhi
vi) Singhania, V.K. and Singhania, Kapil(2007-08)Direct Taxes Law and Practice Taxmann Publication New Delhi
vii) Dmocuentation, Consulting And Arms-Length Price Determination www.decosimo.com

35
 Indian Corporate Dogma and Global Recessions

*Dr S.M.Tariq Zafar

**Mr. Ranjan Upadhyay
***Dr Adeel Maqbool

Abstract
The world economy has touched its lowest for its survival in the recent past. The new cult of the survival for the third
nations is at stake. The miracle of the finance in the corporate sector with global recessions is the upheaval task. No
nations have been untouched and are furious to overcome with the dogma of the Financial Global Recessions. The job
cuts and lay off are in the corporate are the talks of today. The new pinnacles of world trade centre have been used in
this Financial Global Recession to fry the chickens with both the hands to suppress the developing nation's financial
economies. The corporate are waiting for more duty cuts and new avenues to dogmatism their finance corporate
culture to unearth the Financial Global Recession pot of unrealistic loss of the past glory of profitable treasures.
Introduction
“The Growth is everlasting, Unstoppable and Unchangllenable” The things for the growth with respect to the
corporate is the segmentation of their survival in the Financial Global Recession. Market has sunk to minimum and
customer's demands are lowest. Growth in this condition is at saturation level. The Global Recession has brought the
dogma of new cult of the financial growth, which is:
q Growth is Jobless
q Growth is Ruthless
q Growth is Aimless
Jobless

Growth

Ruthless Aimless

(Source: Entrepreneurship Development, K. Ramachandran, TMH, 2009-10)

Objectives
To understand the consequence and the toll of the Financial Global Recession for the facelift and new avenues for the
corporate
Methodology
The research paper study is the product of the secondary sources of the information collected by the researcher from
different sources including the print and non – print media. The personal visits and interaction of the researcher is the
highlighting factors of the research methodology which has been scrutinized by the researcher and results have been
drawn with the previous corporate experiences.

*Director, Roorkee College of Management & Computer Application Roorkee.

**FMS, WISDOM, Banasthali University, Bansathali, Rajasthan
***Director, Narvadeshwar Management College, Lucknow

36
The Principal Tasks of the Financial Global Recession for the Corporate

Production

Inventories Mgmt New Avatar Resource Utilities

Sales & Distribution

(Source: Financial Management, Chandra Prasanna, TMH, 2007-8)

The above diagram depicts the new role of the corporate for their financial facelift in order to sabotage the Global
Recession to overcome the profit. The mantra for the new avenues for the facelift for corporate are:
(a) Good corporate governance
(b) More ethics in the corporate
(c) More development & training
(d) Unattainable goods & demarcation of the new role to the employees.
Corporate at a Glance
Corporate Governance is to understand the need and importance of corporate governance for stabiles and strengthen
global capital market and protect investors. An effective board of director is key to good governance. A board can have
both executive and non-executive directors. Disclosure and transparency increase confidence among investor and
help them to take business decisions. There is now an increasing realization among all developed and developing
countries like USA, UK, Japan, about corporate governance some of the major efforts in the direction of codes of
governance resulted in the setting up of Teadway Commission (USA) Cadbury Committee (UK), King Committee
(South Africa), Naresh Candra Committee (India). In India, SEBI prescribe the code of conduct for board of director.
In India there is growing importance of corporate governance because of economic reforms that allowed. The growth
of free enterprise and free private investment opportunities. Some of Indian organizations like TATA, Infosys and
Wipro have sound corporate governance practices.
To Understand the Concept of Financial Corporate Governance:
i) Corporate Governance is a system by which companies are run.
ii) Corporate governance is the means by which they are responsive to their shareholders, employees and
society.
iii) Corporate governance enables corporations to realize their corporate objectives, protect shareholders right,
meet legal requirements and demonstrate to a wider public, how they are conducting their business.
Best practices in Financial Corporate Governance.
v Corporate Boards and Directors
v Operational Management and Control
v Reporting and Disclosure
v Shareholder Democracy and Protection of Minority Interests.

37
 v Corporate Boards and Directors: Corporate board at the center stage of the governance system, which is
described as one by which companies, are directed and governed.
v Operational Management and Control: Create and protect wealth and wealth. Creating assets and
resources.
v Reporting and Disclosure: Provide an annual report and required information to the shareholders and
society.
v Shareholder Democracy and Protection of Minority Interest: Protect shareholders rights and interests.
(Source: Banking Law & Practices, Varshney, Macmillan, 2006-7)
The Importance of Financial Corporate Governance in Facelift.
v Board of Directors: Generally Comprise Promoters, Directors, Professional Directors and Institutionally
Nominated Directors.
v Board should consist independent directors in substantial number.
v Board Responsibility:
v Monitor, evaluate and review corporate performance.
v Monitor, evaluate corporate strategy.
v Evaluate senior management performance.
v Communicate with shareholders.
v Determine executive compensation.
v Need of Transparency and Disclosure.
v Increase confidence of shareholders and society as whole.
v Help to take investment decisions.
v Help to understand company's activities, policies and performance.
v Help to avoid fund and corruption.
v Enhance stock market liquidity.
v What information is to disclose
v Company's Financial and Operating Results.
v Foreseeable Risk Factors
v Governance Structure
v Managerial Compensation
v Managerial Issue.
(Source: Banking Law & Practices, Varshney, Macmillan, 2006-7)
The Development of Corporate Governance in Financial Global Recession:
v USA: Corporate governance in USA is the Anglo-Saxon system, which is based on the individual and short-
term orientation.
v UK: The corporate governance system in UK is also based on individualism, competition, short term and a
belief in market-oriented capitalism. The key players in this model are the institutional investors.
v Germany: The German system of corporate governance is based on a two-tier management structure,
comprising the vorstrand, or management board and the Aufrichtrat or supervisory board.
v Japan: Corporate governance is heavily relies on trust and a relationship oriented approach.
v Teadway Commission (USA): Great emphasis was on the composition and functioning of boards and fairness
in financial reporting.
v Cadbury Committee (UK): Need for and the role of audit committees was highlighted.
v King Committee (South Africa): Developed a code of ethics for business enterprises.

38
v National Task Force (India): Developed code for desirable corporate governance.
v Naresh Chandra Committee (India): Made recommendation on the representation of independent directors
on company boards and the composition of audit committee.
v Narayan Murthy Committee (India): Recommendation for further improvement in corporate governance like
disclosure, independent directors and governance code.
v Code of Conduct: SEBI Prescribes that there should be a code of conduct for board of directors.
v Ethical Values
v Ensure Transparency
v Discipline
v Avoid Conflict of Interests
v Confidentiality
v Requisite Incentives
v Respect.
v Measures to improve corporate conduct.
v Improve Financial Disclosure
v Formation of audit Committee
v Involvement of Institutional Investors
v Responsible Towards Society
v Proper Proposition of Non-Executive Directors.
v Change Management.
(Source: www. financialtimes.com, 2009-10)
Challenges in Financial Global Recession
Challenges for Manager: Maintain sound Financial corporate Governance for that he has to create lasting value
for business, stakeholders and society at large. Required stronger leadership and speedier decisions. The retail
concept has facelift for any corporate in the Global recession. The concept hinders the nail touching story of many
avenues for the corporate.
I) TATA Chemicals:
a) Foundation of corporate governance of TATA is transparent disclosure norms.
b) Constituted three board committees.
i) Audit Committee
ii) Remuneration Committee
iii) Shareholder/ Investor Grievance Committee.
II) Infosys
a) Foundation is social responsibility of company by supporting and encouraging the
underprivileged sections.
b) String corporate governance code.
III) Wipro
a) Composition of board of directors with independent directors forming the majority.
b) Active Involvement of the board in strategic issues.
c) Transparency and disclosure standards
d) Emphasis on ethical practices.
(Source: www. financialtimes.com, 2009-10)
39
 Model for New Financial Avatar for Corporate
Time Value

Strategies Commitment

Dogma Savings

Quality Longititvity

(Source: Research Own Study, 2007-8)

The octagon signifies the facelift and more avenues for the corporate without undergoing dogma sizing of:
(a) Job cuts (b) Layoffs
The Phenomenal touch of Financial finishing edge in the corporate can be avalanche with the:
(a) New product launch
(b) More manpower edging with more innovations
(c) Overcoming stiff competition through techno-up surgeons in the corporate at line mgmt
(d) Fruitful effort to overcome the pre-mind set of corporate esteem members about the nailing down story of
the corporate in Global Recession
(e) Self declining status of the corporate in social corporate Responsibilities
(f) Less support in Nation Development initiatives
(g) Mool mantras for Individual employees in the corporate are missing
(h) Less funds for Research & Development
(i) Less funding for the tech-innovative entrepreneurial efforts by the corporate
(j) Less & lack of awareness of the Global happening events and its aftermath
(k) No or less inventories control mechanism swamp
(l) Broadening of the work style
(m) Less harmonious interactions with other corporate.
(Source: www. financialexpresss.com, 2009-10)
Sensitization of Indian Corporate with Global Recessions
The budding Indian Corporate arte safe in Financial Global Recession due to various factors: -
(i) Strong base in our nation
(ii) Good work done along with the social corporate Responsibilities
(iii) Maximum mileages due to work-words effectiveness from the customs
(iv) Legiztimization of the corporate policies with the impact of Global Recession era towards corporates
(v) Legistimization of the corporate policies with the impact of Global recession
(vi) Pseudo Global Recession myopia to overcome the dogma.
(vii) Manipulation for the betterment of new corporate culture.
(viii) The Neo – political development to give all sorts of relief the Indian corporates
(ix) Reduction and control of impact of Global Recession to Indian Corporate by closing of the off shore
units.
(Source: Company Law, N. D. Kapoor,Excel, 2006-7)

40
Indian Corporate at Glance
The Global Financial Recession has brought the Indian corporate to Munch their financial corporate policies. The
Indian corporate had the think tank either based on the western door or the person headed by the western concept. The
olden heritage of Indian culture has boosted the Indian corporate either by Kautaly or Noorjee financial economics
and business gimmicks.
Serigraphic Task
Indian cooperate should work upon on the following yardsticks measures
l Invite the employees for the vacation holidays
l Facilitate more fringe benefits
l Reduce cost of the production
l Increase the low question periods in the company
l Motivate the employees to overcome the global recession and reduce their cost of the livings etc.
Conclusion
The reservation on Global Financial Recession in information era is wonder by the corporate. The Indian corporate are
looking on & off the save their face in the Financial Global Recession by “Push Pull” of the market strategies. Global
Financial Recession has brought down the Indian corporate to bring, by not having new avenues. The overlooking of
the Indian corporate at the stand still of the Global Financial Recession is no new truth for the Indian corporate. The
ongoing trends of the Indian corporate to get merge or acquire new avenues of new concerns is still hallmark for the
Indian corporate. To tell the truth of the less profit is the past story in Global Financial Recession. If Indian corporate
has saved their face they have to undergo sea changes in their Financial New Avatars.
Bibliography & References:
Different books & journals:
1. IMF Survey, Volume 33 February 16, 2004
2. Report on Trends and Progress of India 2002-03, R.B.I. –Dec.2003
3. R.B.I. Bulletin, March 2004
4. UN Secretary Report (1993) consumer protection; secretary general of UN; journal of consumer policy 16; 97-121.
5. Smith A.: “Wealth of Nation” (Rawdon House, N.Y., 1937)
6. Drucker P.F.: Managing for Results. “Harper & Row, N.Y. 1964
7. Fred J. Burch: The Marketing Philosophy As A way of Business Life; in the Marketing concept, its Meaning To
Management” Marketing series 99
8. Geoff Lancaster & Lester Massinghan: “Essential of Marketing.” (The Mac Graw Hill, U.K., 1988)
9. Abba P. Lerner. “The Economics of control”; The Macmillan-1944
10. Geoff Lancaster & Lester Massinghan:” Essential of Marketing” The Mac Graw-Hill, U.K.1988
11. Olive Hazard Perry: After Battle of Lake Erie, 1813
12. Dholakia N (1995) 'The marketing development & the role of culture; In Kazuo Usuiled), proceeding of an international
seminar on Marketing & Development, saitma university, Japan.
13. Gupta D (1997) Consumerism: Emerging challenges &
14. Opportunities; Vikalapa.
15. Decision – Indian institute of Management Calcutta January – December 1997.
16. Indian Journal of Marketing-April 04, Volume XXXIV
17. Indian Journal of Marketing-July 04, Volume XXXIV
18. Southern Economist – Consumer attitude towards blurred market- Feb 1,2004 Indian Journal of Marketing – Consumer
Preferences in Purchase of Ready to consumer- September 2004
19. Indian Journal of Marketing – Consumer Protection in A.P. July 2004
20. Indian Journal of Marketing – Awareness & Perception of Educated
21. Consumer about Consumer Protection Law- April 2004

41
Websites:
a. www.strategy - business.com/press/article
b. www.amdisa.org
c. www.imi.edu
d. www.mcu.ac.in
e. www.nim.ac.in
f. www.mckinsey.com
g. www.harley-davidson.com
h. www.salt.org
i. www.iasted.com
j. www.comphkbu.edu
k. www.irma-international.org
l. www.westga.edu
m. www.2nl.edu/conf
n. www.agnou.ac.in

42
 Retail Marketing- Challenges for Organized And Unorganized Sectors

*Mr.Saurabh Bajpai
**Ms. Chavi Agnihotri
***Mr.Shubhendu Shekhar Shukla

Abstract
The essence of the whole article is that, Retailing is of one the largest Industry in India and one of the biggest
sources of employment in the country. The present value of Indian Retail market is U$ 180 billion approx.
Organized Retailing is spreading and making its presence left in different parts of the country. To be
successful in retailing in India essentially means to draw away shopkeepers from the roadside Hawkers and Kirana
Stores to supermarkets. This transaction can be achieved, to some extent through pricing and other promotional
activities. The other major factor is that of convenience shopping which the super market has the edge over
unorganized retail shops.
Though with excellent potential, India possess a complex situation for retailers both in organized and
unorganized sectors, as this is a country where each state and region has its own, culture. In retail Industry the gestation
period, are long, funding is difficult and there is little government support. Retailing is a tough business in India and
there are many challenges like Low margins and consumer dis-satisfactions are faced both by organized as well as
unorganized sector.
Introduction
The term “Retailing” refers to any activity that involves a sale to an individual customer. Retailing is the
interface between the producer and the individual consumer buying for personal consumption. This excludes direct
interface between the manufacturer and institutional buyers such as government and other bulk customers. The retail
industry is of late often being hailed as one of the sunrise sectors in the economy. AT Kearny, the well known
international management consultancy, recently identified India as the “second most attractive destination” globally
from among thirty emergent markets. In India, the unorganized retailing sector comprises of 96.5% while that of
organized sector is just 3.5% that is mainly in major metropolitan and urban areas. Indian retailing traditionally was
dominated by a small family run “Kirana” store. Retailing in India is the second largest untapped market after China.
Professional management and strong customer focus characterize organized retailing. Despite the huge size of the
industry, only 8% of the country's population is engaged in retailing while that in United States of America. it is 20%
The positive factor such as increased purchasing power, rise in number of double income families and demanding
customers, due to change in life style and paucity of time, customers are increasingly looking for convenience. To woo
the customers to the store, retailers are providing a wide product range, quality and value for money, apart from
creating a memorable shopping experience.
Retailing in India is slowly on the rise, with changing consumer Preferences and tastes and Edition of global
structure. Money is no longer a constraint. A Gradual change in the retailing scenario is noticeable with regular shops
making way to high end market malls and stores in urban area.
The particularity in the Indian Retail scene lies in the Co-existence of innumerable small informal sectors
retail stores alongside with modern chain stores and malls. The poor and the middle class constituting a major part of
the population patronize. the smaller stores as they are more comfortable with them. The poor especially, who never
dream of shopping in the modern stores as they perceive high risk of receiving discriminatory service from store staff.
On the other hand unorganized retailing i.e. small local stores still find patronage from a substantial number of
customers belonging to the middle class and above because of their convenient location in residential areas. All
emergency needs.

*Asst.Prof, Sitapur Shiksha Sansthan, Sitapur

**Research Scholar, Sitapur
***Lecturer, Sitapur Shiksha Sansthan, Sitapur
43
Size of Organized Retailing in India.
Type 2006-2007 2008-2009 % Growth

Large segment 13,880 28,109 21%

Other segment 12050 18,169 15%

Non stor Retailing 2000 2839 12%

Total organized 27930 49117 48.8%

Retailing

Source Indian Journal of Marketing, Volume 37 July 2009

Major Players in India

v Pantaloon retail India limited (PRIL) of Future Retail *RPG Group * Tata Group
v K. Raheja Corp. Group of Companies * RRL (Reliance Retail Limited)
v A.B. Birla Group * Gati * Calvin Klein, Murjani Group
v Disney Artist Stores * Vishal Group ( Vishal megamart)
Foreign Players In Retailing
v Wall-Mart Stores * Carrefour * Tesco *Rosy Blue Group * LVMH Group * Metro
Categorization Of Retail Industry
The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading
activities undertaken by licensed retailers that are those who are registered for sales tax, income tax etc. This includes
the big hypermarkets, retail chains and privately owned large retail businesses. The retail trade in India & south East
Asia is shown in table I below.
RETAIL TRADE IN INDIA & SOUTH EAST ASIA/NORTH ASIA

Countries Organized Un- Organized

India 2 93

China 20 40

South Korea 15 35

Indonesia 25 75

Philippines 35 65

Thailand 40 60

Malaysia 50 50

Source Crisil
Unorganized retailing refers to traditional formats of low cost retailing like local kirana shops, owner manned general
stores, pan shops, and convenience stores etc. The size of Indian organized retail market is shown in table II below:
44
 Table II
Size of Organized Retail Market (In Rs Crores)

2004-06 2008

Large Segments 8,850 23,109

Other Segments 6,050 12,159

Non-Store Retailing 1,100 1,939

Total Organized Retail 16,000 37,216

The 4 Large Segments

FOOD

Chain Stores 1,500 6,726

Single Large Stores & others 300 746

1,800 7,473

CLOTHING

Manufacturing Retailers 1,350 2,715

Chain Stores 1,450 3,919

Single large Stores 2,150 3,789

4,950 10,423

CONSUMER DURABLES

Manufacturing Retailers 650 1,307

Chain Stores 450 1,373

Single large stores 550 1,106

1,650 3,789

BOOKS & MUSIC

Chain Stores 250 928

Single Large Stores 200 498

450 1,426

Source "Changing Gears-Retailing in India", The Economic times

45
Existing Retailing Formats In India
The retail industry in India consists of the following types:
Format Description The Value Proposition

Branded Stores Exclusive showrooms either owned or franchised Complete range available for a
given brand, certified product
out by a manufacturer. quality

Speciality Stores Focus on a specific consumer need; carry most of
the brands available. Examples includes Bangalore
based Kids Kemp, the Mumbai books retails
Crossword, RPG's Music World and the Times
Group's music chain Planet M
Greater choice to the consumer,
comparison between brands is
possible

Department Stores Large stores having a wide variety of products, One stop shop catering to
organized into different department such as clothing varied/consumer needs.
house wares, furniture, appliances, toys, etc.

Supermarkets Extremely large self-service retail outlets One stop shop catering to varied
consumer needs.

Discount Stores Stores offering discounts on the retail price through Low Prices
selling high volumes and reaping economies of
scale

Hyper mart Larger than a supermarket, sometimes with a Low prices, vast choice available
warehouse appearance, generally located in quieter including services such as
parts of the city cafeterias.

Convenience stores Small self-service formats located in crowded urban Convenient location and extended
areas. operating hours.

Shopping Malls An enclosure having different formats of in-store Variety of shops available to each
retailers, all under one roof. Examples include other.
Shoppers Stop, Pyramid, and Pantaloon.

Some Recent Happenings In Retail Sector

r Sunil Mittal's Bharti signed a pact with Wall-Mart
r One of Asia's top retailers and the world's largest in the health and beauty segment-AS. Watson Ltd, part of
Hutchison Whampoa, has zeroed in on Dubai-based Landmark for an India entry:

46
India journal of marketing April, 2008
r It is also believed that Hutch will exit telecom as it is eyeing retail sector in India.
r Reliance's Mukesh Ambani also has set investment of Rs 25000- once in retail sector.
r Kumar Manglam Birla's also has plans of investing Rs 15,000-crore in retailing.
r Adi Godrej also has initiated talks with four leading global retailers, including Carrefour and Tesco, for
tapping $7-billion organized retail business.
r Trent, the Tata group's retail venture, is negotiating with international biggies for a tie-up in its hypermarket
format.
r Star Bazaar India which is currently present only in Ahmedabad has booked 15 lakh sq ft of space across the
country, mostly with real estate developer DLF. It plans to scale up to 45 hypermarkets by 2009
r Reliance Fresh which has already started its operations with Jaipur is expected to open a hypermarket in
Ahmedabad this year.
r The Tata's are separately using another group company to talk with Woolworth for entering the grocery
segment. Tata Sons has a tie-up with Australia-based Woolworth's under the Infinity brand for setting up a
chain of retail consumer electronics stores.
r New York-based high-end fashion retailer Says Fifth Avenue has tied up with DLF Properties to set up shop in
a mall in New Delhi.
Recent Trends
The opening up of retail sector in India has its credit to the boom in the service sector. The service sector has
really grown manifold in the past few years. Companies such as infosys, Tatas, Reliance, Wipro etc have really helped
India to be recognized at the international level. It is no secret that the future lies in services. This service boom has
really pushed retailing to the forefront. The following table III shows the growth of service of service sector among
other prominent sectors in India.
Table III- Indian Economy: Sectoral Sources of Growth
(Percentage contribution in increase in GDP)
1996-97 to1997-98 2003-04 to 2007-2008

Agriculture & allied sectors 20.3 13

Manufacturing & Construction 30.9 23.1

Services 48.8 63.9

Source: Bhanoji Rao- "Industry Ugly Duckling”, The Economic Times

India's retail sector is wearing new clothes and with a three-year compounded annual growth rate of 46.64 per
cent, retail is the fastest growing sector in the Indian economy, Traditional markets way for new formats such as
department stores, hypermarkets, supermarkets and speciality stores, Western-style malls have began appearing in
metros and second-run cities alike, introducing the Indian consumer to an unparalleled shopping experience. India's
vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter
newer markets.
Challenges Ahead
Government Restrictions On FDI
Organized retailing in India is yet to get an industry status. Foreign Direct Investment to the extent of 100 per
cent is allowed in Cash and Carry Wholesale formats. Franchisee arrangements are also permitted in retail trade. FDI
upto 51 per cent is permissible in the retail trade of single brand products subject to the following conditions. Products
to be sold should be of a 'Single Brand' only, Products, which are branded during manufacturing.
100% Foreign Direct Investment (FDI) is not permitted in retailing in India. The fear that the small-scale retailers will

47
be displaced is delaying the FDI approvals. On the other hand, without the FDI, the sector is deprived of access to
foreign technologies that is imperative for faster growth. The Government has allowed FDI in direct marketing, but
has reservations about extending it to the retail sector. Retailing is a 'technology- intensive' industry. Under the
liberalized regime of the WTO, the 'Protected nature' of an industry may do more harm than good. In the short-run, the
Government may succeed in protecting the domestic industry, but in the long run we would be losing too many
opportunities and technological innovations. This, in addition would also block any attempt by the domestic industry
to become competitive internationally.
Lack Of A Uniform Tax
The country requires a uniform tax system for the organized retailing. The lack of this stands as an obstruction
to the setting up of a truly national chain. The present chains, in spite of claiming to be national chains are restricted to
certain regions of the country. Players are confined to state barriers. Since retailing is essentially a business of
supplying commodities to locations far from production units, a differential tax system in different states is surely
turning to be a hindrance to faster development of this industry. A central tax system becomes more imperative in a
country like India where, the regional disparity in production of commodities is high.
Lack Of Adequate Infrastructure
Players are forced to set up their own infrastructure, as there are few independent logistics solution providers.
Entrepreneurs to invest in infrastructure development for different stages of the supply.
Dominance Of The Unorganized Sector
The unorganized sector has dominance over the organized sector in India, especially because of the low
investment needs. In India, organized retailing is only 2% of total retailing of worth US$ 180 billion. This is playing at
multiple levels. For instance, the reason for low number of discount stores in India is an effect of the dominance of the
unorganized sector.
52 Indian Journal of Marketing April, 2008
The manufacturers have high organizing power in the pricing of products as a result of operation of retailers.
The Lobbying by the unorganized sector is also the main season for the Governments of India's restrictions on 100%
FDI in retailing in the country.
Low Operational Size
The number of retail outlets in India is more than the number of outlets in most of the other countries small
size retail outlets dominate the India scene. 96% of the outlets are lesser than 500 sq ft. The retail chains of India are
also smaller than those in the developed countries. For instance, the superstore food chain, food World is having only
52 outlets whereas 'Carrefour- Promodes' has 8800 stores in 26 countries. The volume of sales in Indian retailing is
very low, which is only $180 billion. Even the largest players have a turnover of only US$ 140 million, which is very
small by the global standards. India with second largest population in the World and a fast growing economy has huge
untapped potential of organized retailing, which is not given its due weight age by the government.
Government Initiatives For Improvement Of The Sector
Apart from allowing FDI into the industry, Government should consider providing incentives and
ammending labour laws etc. Shortage and high cost of real estate, tenancy legislation and high property tax etc. are
other areas to be concentrated by the Government. Government should relax such laws and make available property at
reasonable prices; Government should introduce a Single Window System at the local Government level to clear the
multiple, number of licenses and complex regulations. Government should also introduce uniform taxation all over
the country to relax the laws that are restricting the inter-state flow of goods.
Labour Employment Problems
Organized retailing is a 24 x 7 active business. However, this is much restricted currently in India because of
the labour rules and regulation. The sector is unable to employ retail staff on contract basis. This makes it difficult to
efficient manage employee schedules especially for 365-day operations. The industry has to take special clearance for
extended working hours and even seven days working from the Labour department. However, in the recent budget
government have relaxed norms on employment of contract labour, which is expected to benefit the industry. As
retailers explore their market options, they must also examine each country's labor pool. Success is unlikely without a

48
 talented work force to support expansion into a new market. Each market presents different challenges and
opportunities for companies as they develop a strong work force, from laborers and support staff to middle managers
and executive leaders. For example, retailers considering the peaking Indian market must worry about the availability
of experienced senior managers. Those looking at China will have to focus more on finding the right infrastructure to
train and develop their people.
To help companies evaluate different labour market, the retail labour index plays an important role. The Retail
Labor Index ranks 15 emerging countries on a 100- point scale. A high ranking indicates that a country has a stronger
labor Index ranks. Scores are calculated on the basis of 20 human resources and capital variable. Country were
selected on the basis of their prominence on the GRDI and ranked using three weighted factors namely talent
available, talent development and labour economics. The 2006 Labour retail Index is depicted in table V below:
Table V: 2008 Retail Labor Index
2008 Retail 2008 GRDI Country Talent Talent Labour Retail labour
Labour Rank Rank Availability Development Economics Index Score
Index
Weight 50% 30% 20%

1 19 Slovakia 100 79 77 100

2 14 Malaysia 56 96 100 75

3 8 Slovenia 69 62 65 66

4 7 Latvia 61 65 82 65

5 23 Hungary 61 64 86 65

6 26 Lithuania 62 64 78 64

7 22 Romania 50 50 81 50

8 1 India 43 100 28 50

9 4 Ukraine 55 49 59 49

10 5 China 48 55 70 48

11 9 Croatia 56 29 58 43

12 27 Brazil 34 80 45 40

13 2 Russia 54 6 83 39

14 15 Macedonia 61 10 44 37

15 18 Bulgaria 54 0 69 34

Legend 0=low talent availability 0=low talent development 0=high labor cost

100=high talent availability 100=high talent availability 100=low labor cost

Indian Journal of Marketing April, 2009

49
 Safeguard Interest Of Unorganized Retailers
The prospect of international retail chains like Wall-mart, Carrefour and aroid entering the country has
inverse many suppliers and consumers who are looking for wider choice and finer prices. But there remains some
opposition to allowing FDI in retail. The biggest of them is that with such global players opening shop in India, several
thousands of jobs in traditional kirana shops and small retailers would close down as has happened in the west. What
would be the future of these small time kirana players is not known to anyone. So its up to the government as to how
they will safeguard the interest of these small unorganized players.
The Road Ahead
Retailing in India is witnessing a huge revamping exercise. Retailing Industry is termed as a goldmine
wherein major domestic and lot of international players have turned their attention towards it. The road ahead in this
sector looks very attractive and full of opportunities to prosper Listed below are few facts that underline its value.
l AT Kearney has estimated India's total retail market at US$ 202.6 billion which is expected to grow at a
compounded 30 per cent over the next five years.
l With the organized retail segment growing at the rate of 25-30 per cent per annum, revenues from the sector
are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.
l The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade.
l Wal-Mart has huge plans for India. It is moving a senior official from its headquarters in Bentoville, Arkansas,
to head its market research and business development functions pertaining to its retail plans in India.
l Over next two years India will see several Indian retail businesses attaining a critical mass as growth in the
industry picks up momentum driven by two key factors:
l Availability of quality real estate and mall management practices
l Consumer preference for shopping in new environments
l
nd
India is 2 fastest growing economy in the world.
Conclusion
Retailing is one of the fundamental building blocks of the Indian economy. Indian retail markets have
undergone an immense transformation in the post liberalization period & are witnessing a tremendous growth. Indian
Retail Industry is ranked among the ten largest retail markets in the world. The attitudinal shift of the Indian consumer
in terms of “Choice Preference” “Value for Money” and the emergence of organized retail formats have transformed
the face of Retailing in India. India's vast middle class and its almost untapped retail industry are key attractions for
global retail giants wanting to enter newer markets. While organized retail in India is only two per cent of the total US$
215 billion retail industry, it is expected to grow 25 per cent annually driven by changing lifestyles, strong income
growth and favorable demographic patterns.
India's retail war has just begun. International players like Wal-Mart. Tesco, Carrefour have decided to enter
this goldmine industry. The entry of Wal-Mart into India will benefit consumers by providing access to a huge variety
of products. Given Wal-Mart size and ability to source a variety of products, it will offer Indian consumers access to
goods sourced from around the world, all at extremely competitive prices. India's infrastructure will develop faster to
match the sophisticated supply chain by re-structuring and eliminating multiple layers of intermediaries.
Organized retail faces innumerable opportunities and challenges. Organized retail faces various challenges in
terms of competition, government restriction on FDI, tax restrictions, lack of infrastructure and dominance of
unorganized sector.
Bibliography
Books
1. Indian Retail: on fast tract bridging the capability gaps, www.kpmg.com.2006
2. Vedamani; G.G.Retail Management- Functional Principles and Practices Delhi: Jaisco Publishing House Jaisco
3. Spicing up food retailing, www.deccanheral.com.may 03.2004
4. Deccan chronicle, 29 nov, 2006, page 13

50
5 Indian Retail: on fast tract bridging the capability gaps, www.kpmg.com, 2006
6 Pradhan, Swapna(2004) “ Retailing Management” –Text and Cases; Tata McGraw Hill Publishing Company Limited-
Delhi
7 Kotler, Philip, "Marketing Management", Prentice Hall India, 2005
Journals
1 Indiatimes News Network, Friday, January 19,2007
2 Economic Times, Dec 5,2006 R.Tamlarasam- Indian Journal of Marketing July 2007: “ A Study on Retail Service
Quality Dimensions and Retail Stores”
3 Indian Journal of Marketing September-2008, Volume 39
4 Indian journal of marketing April, 2008 Volume 37
Websites
1 www.euromonitor.com
2 www.indiainbusiness.nic.in
3 http://commerce.nic.in

51
 Rural Marketing: Opportunities & Challenges in India
*Prabhat Kumar Dwivedi
**Moin Uddin

Abstract:
As nearly two-thirds of all middle-income households in the country are in rural India, and around half of India's
buying potential lies in rural areas, the Indian rural market offers great opportunities to marketers. Therefore, for
marketers in India, reaching rural is fast becoming the most promising route to growth. With substantially increasing
buying power, changing consumption pattern, increasing brand consciousness and rapidly broadening
communication network, rural India offers enormous opportunities, however the marketers lack adequate knowledge
of the rural psyche, strong distribution channels and awareness which are the prerequisites for excelling in the rural
market. Thus, it is clear that companies will need to design rural market development program and marketing
strategies to achieve success in rural India.
Present paper throws light upon the potential opportunities, problems & challenges of rural markets, and also
discusses the need to address these challenges for succeeding in rural marketing.
1. Introduction
2. Some Facts about Rural India
70 % of India's and 12% of global population lives in rural areas and contributes 50% of the country's Gross Domestic
Production (GDP). Their population of 75 crore is more than that of United States, United Kingdom, France, Japan,
Italy and Germany put together. Government of India statistics reveals that even with the increasing urbanization and
migration, 63% of India's population would still be living in rural areas in 2025. Thus, rural market has been, is, and
will continue to be vitally important to the Indian economy (McKinsey & Company-2007).
2.1. Definition of Rural Market
Typically a rural market represents a community in rural area. Wikipedia defines Rural Markets as those segments
of overall market of any economy, which are distinct from the other types of markets like stock market, commodity
markets or Labor economics. Rural Markets constitute an important segment of overall economy, especially in
countries like India.
2.2. Features of Indian Rural Markets
2.2.1. Low standard of living: Consumers in villages do have a low standard of living because of low
literacy, low per capita income, social backwardness, low savings, etc.

2.2.2. Traditional Outlook: The rural consumer values old customs and tradition. They do not prefer
changes.
2.2.3. Diverse socio-economic backwardness: Rural consumers have diverse socio-economic
backwardness. This is different in different parts of the country.
2.2.4. Large and Scattered market: The rural market of India is large and scattered in the sense that it
consists of over 63 crore consumers from 6.3 lakh villages spread throughout the country.
2.2.5. Major income from agriculture: Nearly 60 % of the rural income is from agriculture. Hence rural
prosperity is tied with agricultural prosperity.
2.2.6. Infrastructure Facilities: Though under the Pradhan Mantri Gram Sadak Yojana, a road building
project, about 32000 habitations have been connected by constructing 85,405 km of roads, taking the
road network into new areas, however is insufficient. The Infrastructure Facilities like roads,
warehouses, communication system, financial facilities are inadequate in rural areas. Hence physical
distribution becomes costly due to inadequate Infrastructure facilities.

*Assistant Professor, STEP- HBTI, Nawabganj, Kanpur

** Assistant Professor, STEP- HBTI, Nawabganj, Kanpur

52
 3. Rural Marketing
Conceptually speaking, rural marketing is now a full- fledged and challenging function with an emphasis on
marketing research to understand the rural market, segmentation, targeting and positioning for designing the
marketing mix of 4P's (Product, Price, Place and Promotion) and evolving and implementing marketing strategies.
Broadly speaking, rural marketing involves delivering manufactured or processed goods or services to rural
producers or consumers. In India, Rural marketing involves addressing around 700 million potential consumers, over
40 per cent of the Indian middle-class, and about half the country's disposable income.
3.1. Rural Products: Rural products of India are unique, innovative and have good utility and values. Large
number of these rural products sustains a significant segment of the population in the rural areas. Several attributes of
rural products can be identified, for which, it has a demand in the market. Out of the lots, 'ethnic origin' and
'indigenous design & appearance' are two traits of rural products, attracting a premium in the market. There is an
emergent need for building sustainable market linkages for rural products, so that, it can be connected to larger
markets and farmers can get a sustainable livelihood.
2.2. Market linkages for rural products: Broadly speaking, there are three ways in which rural products can be
connected to the markets. At stage one, producers themselves can do it on their own efforts through cooperatives. Or,
at stage two, the state can do it for them through its procurement engines. Stages- one and two, are in a manner of
speaking, however today, developmental thinking on market linkages has reached stage three — linkages through
companies or industries. Rural markets are regarded as organizations for marketing of non-farm products in a
traditional setting. Developing rural markets is one of the major concerns of government and Non-governmental
organization in India.
4. Scope & Opportunities in Indian Rural Market
The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of
countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that
rural markets form an important part of the total market of India. According to a National Council for Applied
Economic Research (NCAER) study the consuming class households in rural equals the number in urban. The recent
NCAER publication "The Great Indian Middle Class" further reveals that the Indian middle class consisted of 10.7
million households or 57 million individuals of which 36 per cent lived in rural areas. There are almost twice as many
'lower middle income' households in rural areas as in the urban areas. At the highest income level there are 2.3 million
urban households as against 1.6 million households in rural areas. Middle and high-income households in rural India
were expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to grow from 46
million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India.
Our nation is classified in around 450 districts, and approximately 6,30,000 villages, which can be sorted in different
parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc. These
figures are a clear indication that the rural markets offer the great potential to help the India Inc which has reached the
plateau of their business curve in urban India to bank upon the volume-driven growth. The Indian rural market with its
vast size and demand base offers a huge opportunity that multinational Companies (MNCs) cannot afford to ignore.
With 128 million households, the rural population is nearly three times the urban.
As a result of the growing affluence, rural India has a large consuming class with 41 per cent of India's middle-class
and 58 per cent of the total disposable income. Disposable income of rural India is also being increased by increasing
Government expenditure in rural areas.
As of now, the Government expenditure, of course, has played large in the resurgence as Rs 53,500 crore was
allocated for rural development in 2009-10. Mahatma Gandhi National Rural Employment Guarantee Act
(MNREGA) Scheme is also contributing a lot in increasing income of rural poor.
5. Go Rural Decision
The factors influencing the decision to enter rural market can be divided into three categories given below:
i. Urban push factors include saturation stage in urban markets, cut-throat competition, changing life styles
etc.
ii. Rural pull factors include large population, rising affordability, growing acceptance, increasing availability
needs, improving accessibility, success stories of corporations etc.

53
 iii. Rural inhibiting factors include uneven development, fragmented market, diversity in occupations,
heterogeneity in lifestyles, low- income streams, lack of steady and sustainable consumption, access
difficulty, low level of education, limited awareness and acceptance, low budget for promotion, intensifying
competition, failure of some companies etc.
The first two factors have a positive influence whereas the third one has the negative impact on the 'go rural'
decision. This paper tries to discuss almost all of these factors in brief.

6. Problems in the Booming Rural Marketing

Though, there is a vast untapped potential in rural market, it should also be recognized that it is not that easy to operate
in rural market because of several problems. Rural marketing is thus a time consuming affair and requires
considerable investments in terms of evolving appropriate marketing strategies to tackle the problems.
The major problems faced are:
6.1. Lack of Proper Physical Communication Facilities:
Nearly 50% of the villages in the country do not have all weather roads. Physical communication of
these villages is highly expensive. Even today most villages in the eastern parts of the country are
inaccessible during the monsoon.
6.2. Dispersed Rural Market:
Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the
country. Seven Indian states account for 76% of the country's rural retail outlets, the total number of
which is placed at around 3.7 million. Advertising in such a highly heterogeneous market, which is
widely spread, is very expensive.
6.3. Media for Rural Communication:
Among the mass media at some point of time in the late 50's and 60's radio was considered to be a
potential medium for communication to the rural people. Another mass media is television and
cinemas. Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which
is far less when compared to the number of villages.
6.4. Too Many Languages and Dialects:
The number of languages and dialects vary widely from state to state, region to region and probably
from district to district. The messages have to be delivered in the local languages and dialects. Even
though the number of recognized languages is only 16, the dialects are estimated to be around 850.
6.5. Underdeveloped Markets & People:
The number of people below poverty line has not decreased in any appreciable manner. Thus
underdeveloped people and consequently underdeveloped market by and large characterize the rural
markets. Vast majorities of the rural people are tradition bound, fatalistic and believe in old customs,
traditions, habits, taboos and practices.
6.6. Low Income:
Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74%
of the population. Hence the per capita incomes are low compared to the urban areas.
6.7. Low Literacy Rate:
The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of
communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant
in rural areas since its reach is poor and so is the level of literacy.
6.8. Prevalence of duplicate brands and seasonal demand:
For any branded product there are a multitude of 'local variants', which are cheaper, and, therefore, more
desirable to villagers.

54
 6.9. Different lifestyles &way of thinking:
Rural India has vast difference in the lifestyles of the people. The kind of choices of brands that an urban
customer enjoys is different from the choices available to the rural customer. The rural customer usually
has only 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also
in the way of thinking. The thinking of rural customers is fairly simple as compared to that of urban
customers.
7. Indian Experience of Rural Marketing .
7.1. FMCG Sector:
The importance of the rural market for some Fast Moving Consumer Goods (FMCG) products and consumer
durables, marketers are underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users
and 38 per cent of all two-wheeler purchased. The rural market accounts for half the total market for Television (TV)
sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market
for FMCG products is growing much faster than the urban counterpart. The rural market for FMCG products is
outpacing urban growth and is likely to account for about half of the FMCG market by 2020, from about one-third
now.

Source: Business Today, December, 26, 2010, p24.

The above table shows that from Financial Year (FY) 2001 to FY2005, there was +6% annual growth of
FMCG industry while the GDP growth during the same period was approx. 5%. From FY 2005 to FY 2010 can be said
golden years of FMCG industry as there was burgeoning +17% annual growth of FMCG industry while the GDP
growth during the same period was approx. 8%. Thanks to the rural markets opened up.
As per the report titled “The Rise of Rural India” released on April 07, 2009 by The Associated Chambers of
Commerce and Industry of India (Assocham), “Companies in the FMCG sector have recorded higher growth in
rural market, which has contributed substantially to their bottom lines. Majority of FMCG firms such as DCM, ITC
have been recording higher growth rate and sales of their product in rural areas as compared to urban markets.
India's FMCG industry is currently estimated at Rs.200, 000 crore. Of this, domestic consumption accounts for
Rs.17, 189 crore”.
“FMCG sector in rural areas is expected to grow by 40 percent as against 25 percent in urban areas,” said Assocham
president Sajjan Jindal.
“Rising rural incomes, healthy agriculture growth, boost in demand, rising consumerism across India, better
penetration of FMCG products in the rural market are contributing to high growth and rapid expansion of the FMCG
industry in rural India,” he added.

55
 1.1.1. Experience of Hindustan Lever Limited:
Several companies were taking rural marketing seriously, one of them being Hindustan Lever Ltd (HLL), Unilever's
Indian subsidiary. In 2004, HLL was India's largest FMCG company, with turnover of over Rs. 10,000 crores and
40,000 employees. HLL derived around 50% of its sales from rural areas. HLL's rural marketing initiatives began way
back in 1988, when the company had launched 'Wheel' for the rural and lower income urban consumer. These efforts
had intensified since the late 1990s when HLL like many other companies faced flat growth in the urban markets. In
early 2004, as it reviewed its past performance, HLL realized that bulk of its future growth was likely to come from
rural areas. The challenge for HLL was to exploit this opportunity in a profitable manner. HLL had signalled its
commitment to the rural market in various ways. Management trainees had to begin their career with the company by
spending a month or two in a rural village. Senior managers continued to emphasize the importance of rural markets.
Various innovations in the marketing mix had been introduced as per the requirements of the rural markets.
1.1.2. Experience of Coca-Cola
The two major Cola brands Coca-Cola and Pepsi apart from their usual battle over market share have been trying hard
to enter into rural markets. They have come up with many marketing strategies such as pricing, distribution strategies
etc, like providing ice boxes, refrigerators, credit facilities etc. Winning the rural market has been the toughest job for
both the brands. Though they are largely popular in urban market, the brand image will not get them loyal customers in
rural market. Both Coke and Pepsi have made huge efforts to penetrate deep into the rural markets by substantially
increasing their retailer and distribution network and with innovative marketing strategies.
As distribution is one of the major challenges in rural markets, both Coke and Pepsi have chosen 'Hub and Spoke'*
distribution format. For the distribution of the products these company's use all means of transport that range from
trucks, auto rickshaws and hand carts.
Another major challenge in rural markets is pricing strategies. Soft drinks companies have to make sure that their
pricing should be economical to the rural population. It was the major reason that companies introduced 200ml packs
costing Rs 5. Because of the pricing, both Coke and Pepsi had to restructure the pack size to suit for 200ml and it
helped them to increase their share and presence in the market.
But attractive pricing and convenient packaging is not enough to sell the brand in these markets. The greatest
challenge is to convince the consumer the need to buy this product. While marketing the product, both the companies
have highly relied upon TV Ads. Apart from advertising there were many outdoor campaigns conducted by these
companies to promote the product. The chhota bottle campaign mainly targets the rural masses.
Therefore, it's not just right pricing and packaging, but it is the ability to establish the right connectivity with the
consumers which helps a brand to make it big in rural India.
1.2. Automobile Sector
Traditionally, for the auto industry, the rural market has been largely restricted to tractors and two-wheelers, though
the penetration of scooters and motorcycles in villages is only 10 percent, as compared to 25 percent in urban areas.
The reason for low penetration in the countryside: the high investment involved, poor conditions of rural roads, lack
of finance facility and shortage lack of service network.
However, the report said, auto firms have of late begun tapping the countryside. For instance, Maruti Suzuki generates
10 percent of its sales from rural sales, amounting to 32,000 cars. Maruti has even launched a rural India-specific
marketing campaign, the “Ghar Ghar Mein Maruti (Maruti in every household)”.
Similarly, Hero Honda, the world's largest manufacturer of two wheelers, generates over 40% of sales from rural
areas. It is planning to cover 100,000 of the estimated 600,000 villages in India by the end of this financial year under a
campaign called “Har Gaon, Har Aangan (Every village, every household)”.
Mahindra and Mahindra, which manufactures passenger cars, now plans to foray into the two-wheeler segment
targeting India's hinterland with an initial investment of Rs.110 crore, Assocham observed.
It also noted Hyundai's interest in the rural areas, where the auto manufacturer feels almost 50 percent of the 220
million households are potential car buyers.
Like Maruti and Hero Honda, Hyundai too has launched a promotional scheme, targeted at rural India, under which it
will offer special schemes for government employees and members of village administrations to sell its compact car
Santro.

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 1.3. Telecom Sector
According to a report jointly released by Confederation of Indian Industries (CII) and Ernst & Young, of the next 250
million Indian wireless users, approximately 100 million (40%) are likely to be from rural areas, and by 2012, rural
users will account for over 60% of the total telecom subscriber base. Realizing this huge potential every cell phone
marketing and service provider company is now trying to reach rural with its specifically designed rural marketing
mix (4Ps). For example, Nokia's one of the most successful brand 'Nokia1100' featured with simplicity, affordability,
durability and longer battery backup attracted more rural mobile phone users. Latter on many mobile companies
entered rural market with 7 days or 1 month battery backup keeping in mind electricity problem in rural areas. A step
ahead, Samsung launched a solar chargeable mobile phone 'Samsung Guru' absolutely suitable for rural areas,
however for its success extensive promotion (advertisement) in rural area is required. Similarly, the concept of life
time validity of Simcards and Chhota recharge (Rs 10) has been instrumental for increasing base of rural mobile
users.
1.4. Retail Sector
The report said that the growing liquidity in rural areas was on account of subsidies to farmers and increase in output
of agri-products. The rapid income expansion in small towns and villages is pushing retailers to tap the opportunities.
Rural consumption and expenditure is exploding. Today many consumers in rural India act and behave like their
urban counterparts. According to data from Centre for monitoring Indian Economy (CMIE), while urban India
spends half its income, the spending in the rural economy is 54%.
According to a report of Assocham, the rural retail market is very potential area - currently estimated at $112 billion, or
around 40 percent of the $280 billion retail market.
The industry group said this was expected to double in the next four to five years, though only about 10,000 out of
India's 600,000 villages have access to organised retail services.

Source: Booz & Company, CII

The above diagram reveals that the organized retail penetration is still at introductory stage in India (4.8% only) unlike
the saturation stage has reached in the countries like US (85%) and Taiwan (81%). This shows that around 95% market
is yet to be tapped by the organized retail sector in India.

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The Rural Footprints of Organized Retail Sector
Following are the organized retailers having rural penetration:
Fig.3: RURAL RETAIL STORES IN INDIA
RURAL RETAIL STORES IN INDIA NO. OF STORES
DCM’S Hariyali Kisan Bazar 302
ITC’s Chaupal Saagar 24
ITC’s Chaupal Fresh 5
Tata Kisan Sansar 681
Aadhar 65
Parry’s/ Murugappa Group 36
Guardian Aushadhi 5
3A Bazar 7
IOC’s Kisan Sewa Kendras (Rural petrol/Diesel stations) 2700
Source: Industry Estimates
1. Challenges of Rural Marketing
There are several challenges to the entire process, the most important one is the capacity building of the rural
entrepreneurs. For decades, the entrepreneurs associated with very conventional/traditional knowledge of business,
humiliation with government, so they are likely to look at these initiatives with doubt. Only consistent performance
can convince the skeptics. Therefore, the industries must play a catalytic role to cope with this challenge and should
also train the entrepreneurs to develop their managerial and information technology (IT) skills. On the other hand, the
products of the existing and popular brand also stand as threat to the rural products. These global giants (brand) may
try to suppress the rural products in the markets with its ad campaigns. Therefore, developing alternative and
additional market linkages for these products is an absolute necessity. Moreover, the low volumes of rural products,
high operating costs, high attrition, and absence of local know how and relationships may also create problem in the
process. Henceforth, it is essential to make a way out to cope with these odds.
There are two important challenges faced by the companies while entering rural markets. They are i) Pricing
Strategies, ii) Distribution channels
The companies pioneering in rural marketing had followed Hub and Spoke distribution model which has proved
effective. Pricing should be sensitive to consumers and should be in accordance with the packing. Educate by creating
awareness in the rural population about various products and creating opportunities to them. The process followed is a
mutual benefit to both, the company and people. These methods help in cost reduction to the companies where as to
people it is a great opportunity to run their own business in the case of HLL's Shakti project.
2. Threat
Rural income levels are still largely dependent on agricultural production which largely depends on the vagaries of
monsoon, therefore, there is less stability and assurance of rural income. Hence, the demand is not easy to forecast.
3. Future of Rural Marketing
There is no doubt that Indian rural market is complex but promising. The rural consumers are very value-conscious.
They may or may not have substantial buying power, but they can make a difference to the company's growth if
concentrated. Gone were the days when a rural consumer had to go to a nearby town or city to buy branded products.
The growing power of the rural consumer is an opportunity for the companies to go to the rural markets. The route of
the current trend 'Going Rural Way' lies in Gandhiji's 'Gram Swaraj' philosophy as he always believed that India's
future lies in her villages and rural markets will have a significant part in India's economy. With the technological
innovations, infrastructure development and enrichment of human capital in rural areas, backed by policy support by
the government recognizes agriculture as one of powerful growth engine. The future of rural marketing in India is very
bright as the Government, NGOs, etc. are now very much inclined towards rural development. In addition, thanks to
Television for increasing awareness in rural areas. Now onwards, Corporate World is ready to cash this opportunity.

58
References
1 Velayudhan ,Sanal Kumar – 'Rural Marketing: Targeting the Non-urban Consumer', Edition2, illustrated
2 Ablet, J.; Baijal, A.; Beinhocker, E.; Bose ,A.; Farrell ,D.; Gersch ,U.; Greenberg, E.; Gupta Shishir, Gupta Sumit – 'The
'Bird of Gold': The Rise of India's Consumer Market'. (McKinsey & Company-2007).
3 Krishnamacharyulu C.S.G., Ramakrishnan Lalitha – 'Rural Marketing'
4 Singh, Awadhesh Kumar – 'Rural Marketing: Indian Perspective'
5 Rajagopal – 'Understanding rural marketing'
6 USAID 2009- Rural India Calling
7 Singh, R. N. – 'Rural Marketing: Thrust and Challenges', National Pub. House, (1997)
8 Business Today, December, 26, 2010, p24.
9 http://www.telecomasia.net/article.php?id_article=3867&page=6
10 http://marketingpractice.blogspot.com/
11 http://censusindia.gov.in/Census Data 2001/ India at glance
12 http://www.contentsutra.com/entry/419-going-rural-holds-promises-and-problems-for-cellular-companies/
13 http://www.atimes.com/atimes/South_Asia/ID13Df06.html
14 http://www.equitymaster.com/research-it/sector-info/consprds/
15 http://mynaukri.net/pages/FMCG.html
16 http://www.hindu.com/thehindu/biz/2002/10/14/stories/
17 http://knowledge.wharton.upenn.edu/india/article.cfm?

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 Flexible Querying in Grey Databases
*Praveen Kumar Shukla
**Tanvir Tahir

Abstract :
Modern Information Technology and database applications need to support flexible querying approaches. Such type
of querying may be applied to crisp as well as fuzzy databases, termed as gray databases here because they support
gray (imprecise and uncertain) data and information. These approaches are the integration of fuzzy techniques and
possibility theory concepts in traditional querying to support linguistic variables from natural languages in database
information retrieval. In this paper, flexible querying in different databases is briefly reviewed and concepts of PTV,
EPTV and fuzzy Bags are discussed.
I. INTRODUCTION
The integration of fuzzy preferences in traditional querying system results in the concept of flexible querying or
fuzzy querying. These fuzzy preferences are introduced in queries at two levels: 1. Inside query conditions
(Preference for values), 2. Between query conditions (Preference for conditions). In the first case, a flexible search
criteria is used to add fuzzy preferences inside the queries. In this approach, it is expressed that some values are more
desirable than others in a gradual way. But, in the second case fuzzy preferences are represented by using grades of
importance assigned to a specific query condition showing that the satisfaction of some query conditions are more
desirable than the satisfaction of others.
New age applications of database and information technology, like e-commerce, e-governance, knowledge based
systems, AI based systems etc., need to use flexible querying resulting in a more human friendly environment. The use
of natural language words (modifiers and quantifiers) in the querying extremely promoted the concept of such
querying.
The increasing demand of search engines with excellent quality in terms of performance, precision and flexibility
has raises the importance of flexible query systems.
Flexible queries are able to take user preferences into accounts and results can be differentiated. Several flexible
operators (similar to, near by) and gradual criteria (young, red, old, cool) extremely facilitates the need of user queries.
Next generation information and database applications deals with data, like images, video, temporal and spatial
objects etc. Such type of data and information highly needs such type of concepts in their querying and retrieval.
The requirement of more human friendly interfaces to access data results in the invention of flexible queries.
The answers produced by fuzzy querying are no longer a flat set, but these are in fact discriminated. Several
querying concepts have been extended in relational and object oriented framework to support flexible querying. Many
research issues in flexible querying have been extensively proposed and investigated. Some of these are:
1. Approaches related to hierarchal operators, weighted minimum and maximum, weight means and OWA
operators.
2. Interpretation of linguistic quantifiers.
3. Concept of fuzzy bags.
4. Using EPTV(Extended Possibilistic Truth Values)
Many other recent research issues are also very important in the field of fuzzy querying and information retrieval.
These include: cross language retrieval, text categorization and topic detection, information fusion, web searching,
citation and link analysis, filtering, similarity detection and other applications in bioinformatics, like genomic
retrieval.

*Department of Information Technology & Engineering, Northern India Engineering College, Lucknow
**Registrar, Institute of Engineering & Technology, Lucknow

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 II. Flexible Querying in Crisp Databases
In this category, flexible queries are applied over the crisp relational databases allowing the integration of natural
language terms in their conditions. SQLf [1] and FQUERY (Fuzzy QUERY) [2] are the practical approaches for the
flexible fuzzy querying in crisp databases. Also, FuzzySQL (FSQL) [3] provides the capability of fuzzy querying in
crisp database.
A. FQUERY
It is the extension of Access SQL query language with the support of linguistic terms. Fuzzy values, fuzzy
quantities and fuzzy relations are associated with it. A Query By Example (QBE) type user interface has been provided
by the host environment (Microsoft Environment) for composing a query. Subsequent advancements in FQUERY has
been in two directions: 1. Application in Internet (WWW) Environment [4, 5]. 2. Addition of some data mining
capabilities in already available fuzzy querying interface [6, 7].
B. SQLf
An excellent fuzzy extension of crisp SQL language (SQLf) has been proposed in [8, 9, 10]. In SQLf, linguistic
variables might be represented as fuzzy values, relations and quantifirs, which are associated with aggregation
operators. Different implementations of SQLf are given in [11, 12].
Several other proposals for the extension of fuzzy querying in crisp databases have been given table -1.
Table I. Flexible Querying In Crisp Relational Databases

S. No. Focus References

1 Flexible aggregation operator based [13, 14]
2 Fuzzy Constructs in SQL [15, 16]
3 PRETI platform based [17]
4 EPTV based [18, 19]

III. Fuzzy Querying In Fuzzy Relational Databases

Flexible queries may also be applied to the fuzzy relational databases. Several approaches have been investigated to
support such type of querying in fuzzy databases. These are summarized in Table -2.
Table II. Flexible Queries in Fuzzy Databases

S. No. Focus References

1. Possiblistic model based approach [20, 21, 22, 23, 24, 25]
2. EPTV based [26, 27]
3. Extended Possiblistic Approach (EPTV) based [28]
4. Model based on the integrated approach of Possiblistic and [29]
Similarity based Model: GEFRED (Generalized Fuzzy
Relational Data Base)
5. Extension of GEFRED with Fuzzy Domain Relational Calculus [30]
6. Implementation of GEFRED in commercial Oracle DBMS [3]
7. Proposal of fuzzy quantifiers in FDRC language [31]
Iv. Querying in Fuzzy Object Oriented Approaches
Possibilistic and similarity relation based models are integrated with fuzzy object oriented databases to support
flexible querying systems.

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 Table – III Fuzzy Querying in Fuzzy Object Oriented Databases

S. No. Category Focus Reference

1 Possiblistic model Object centered model [32]

Object oriented model [33]

FOOD model [34, 35]
Fuzzy algebra [36]
UFO model [37]
Fuzzy association [38]
algebra
FIRMS (Fuzzy [39]
Information Retrieval
and Management
System)
FOODM model [40]
2 Similarity relation Generalize equality to [41, 42]
based model similarity

V. Different Techniques For Flexible Querying

A. PTV and EPTV:
PTV and EPTV are the acronym for the Possibilistic Truth Value and Extended Possibilistic Truth Values, gradually. It
is originally the extension of PTV introduced in [43]. PTV allows to reflect knowledge about the actual truth of a
proposition.
If P is the universe of all propositions and δ (I) denotes the set of all fuzzy sets in the universe I = {T ,F} of Boolean
Truth Values, the PTV t~ (p) of a proposition p E P is defined by the mapping
~
t :pÕδ(I).
~
The above expression associates a fuzzy set t :(p) with each p E P. Possibility distributions are used to define the
semantics of these fuzzy sets. Considering the mapping function t : p Õ I, the value T is associated with p if p is true
and associates value F with p, other wise. This means
i.e. where denotes the possibility that the value of t(p) conforms to x and is the membership grade of x within the
fuzzy set .
When the truth value of the proposition p is unknown, it is modeled as This denotes that it is
completely possible that p is True (T) and False (F), both.
A PTV is said to be normalized if at least one of its membership grades and is equal
to one.
In some situations, some parts of the proposition are not defined or not applicable, an empty fuzzy set may be
used to model the inapplicability of regular truth values. But this approach has the disadvantage of having
not to work with normalized PTV and does not allow for the gradual representation of inapplicability. It is
resulted in the extension of I leads to the concepts of EPTV.

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Extended Set
An extra element is added representing undefined truth value that is used to model inapplicability.
TABLE IV. DIFFERENT CASES OF EPTV

S. ~
t * ( p) Meaning
No.
1 {(T,1)} True
2 {(F,1)} False
3 {(T,1),(F,1)} Unknown
4 { ^ ,1} Inapplicable
5 {(T,1),(F,1),( ^ ,1)} No
information

B. Crisp and fuzzy bags

The fuzzy bags can be viewed as a generalization of concepts of set, fuzzy set and bag. Fuzzy bags are
excellent to be used because they manage both quantifiers and preferences.
Bags [44, 45] are considered as the collections with duplicates. These bags are used to handle the number
of occurrences of each element. If A is the set of elements, a bag B can be defined on A, is defined by a
function ΦB: A→N
For each a in A, ΦB (a) is the characteristics value of a in B. It shows the number of times, where the
element a is in bag B. Now, the following representation will be used to define a bag B on the set A= {a1, a2,
a3,…………………., an}, B={b1*a1,……………., b2*a2}, where bi= ΦB (aj)
A fuzzy bag [46, 47] can be defined as a bag, in which each occurrence of an element is associated with a
degree of membership and also multiple occurrences of the elements happened. The concept of fuzzy bag
has been applied with flexible querying concepts in [48]. A link between fuzzy sets and fuzzy bags has been
established by using ω-cuts. These ω-cuts are similar to α-cuts inn fuzzy sets, but related to number of
occurrences.
The ω-cut of a fuzzy bag FB is a fuzzy set FBω such that the degree of membership of the element a in
FBω, is denoted by μFBω(a) defines the extent to which FB contains at least ω (with ω ε N+) occurrences of a:
μFBω(a)=sup { α | μFBα (a) ≥ω}.

63
 V. CONCLUSION
Representation and evaluation of flexible querying in crisp and fuzzy databases is an important research
issue. Several techniques have been integrated in traditional querying systems to support flexibility in
querying. These techniques include: Possibilistic approach (PTV and EPTV), Fuzzy bags, Fuzzy Rational
numbers, etc. These papers introduces different concepts used in flexible querying as well as the brief
description of the related work in crisp and fuzzy relational and object oriented databases.

REFERENCES
[1] P. Bosc, O. Pivert, SQLf: A relational database language for fuzzy querying, IEEE Transactions on Fuzzy Systems, Vol. 3, pp.
1-17, 1995.

[2] J. Kacprzyk, S. Zadrozny, FQUERY for Access: Fuzzy querying for windows based DBMS, in: P. Bosc & J. Kacprzyk (Eds.)
Fuzziness in Database management systems, (pp. 415-433), Heidelberg: Physica – Verlag, 1995.

[3] J. Galindo, J.M. Medina, O. Pons, J.C. Cubero, A server for fuzzy SQL queries, in: T. Andreasen, H. Christiansen, H.L. Larsen
(Eds.), Proc. of 3rd International Conference on Flexible Query Answering System (LNAI1495) pp. 164-174, London: Springer-
Verlag, 1998.

[4] S. Zadrozny, J. Kacprzyk, Implementing fuzzy queries via the Internet/www: Java applets, ActiveX controls and cookies. In
Flexible Query Answering Systems, pp. 382-392, Heidelberg: Springer – Verlag, 1998.

[5] J. Kacprzyk, S. Zadrozny, Using fuzzy querying over the Internet to browse through the information resource. In B. Reusch &
K. H. Temme (Eds.) Computational Intelligence in Theory and Practice, pp. 235-262, Heidelberg: Physica – Verlag, 2001.

[6] J. Kacprzyk, S. Zadrozny, On a fuzzy querying and data mining interface, Kybernetika, Vol. 36, pp. 657-670, 2000.

[7] J. Kacprzyk, S. Zadrozny, On combining intelligent querying and data mining using fuzzy logic concepts, in: G. Bordogna &
G. Pasi (Eds.) Recent research issues on fuzzy databases (pp. 67-81), Heidelberg: Physica – Verlag, 2000.

[8] P. Bosc, O. Pivert, Fuzzy querying in conventional databases, in: L. A. Zadeh & J. Kacprzyk (Eds.), Fuzzy logic for the
management of uncertainty (pp. 645-671). New York: Wiley, 1992.

[9] P. Bosc, O. Pivert,. SQLf: A relational database language for fuzzy querying. IEEE Transactions on Fuzzy Systems, Vol. 3, pp.
1-17, 1995.

[10] P. Bosc, O. Pivert. Fuzzy queries against regular and fuzzy databases. In T. Andreasen, H. Christiansen, & H. L. Larsen
(Eds.), Flexible query answering systems. Dordrecht: Kluwer Academic Publishers, 1997.

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