Do Bato

"Big Bang"

2008-04-02T10:24:00.000+05:30

Here is one great piece of idea which is designed to increase links. This one is called the Big Bang and the author, Mel over at Monday Morning Power wants to see if we can set a record and get to 1000 sites. Anyone can take part

If you would like to join in please do, even if you haven’t been tagged! Just follow the instructions below.

*Start Copy Here*

You do not have to be tagged to play along. This game is simple and so are the rules.

1. Copy from *Start Copy Here* through *End Copy Here*

2. Add your site(s) to the list. Just be sure to post the "Big Bang" at each site you add.

3. Tag or don’t tag, your choice, however, the more tags you create the longer the list will grow.

4. Let me know your blog’s name and url by leaving me a comment HERE. I will add you to the master list. (If you would like a scroll box code, leave me your email address and I will email it to you.) Scroll Box Example. (I decided not to use the box for the Big Bang for ease of copying.)

5. Come back and copy the master list back to your site, often. This process will allow late-comers to get as much link benefit as the first ones in. Once you are on the master list people who have participated earlier will update their bookmarks and help everyone lower than them out on the list.

1-Attitude, the Ultimate Power 2-Juliana's Site 3-Rusin Roundup 4-Grow Rich Along With Me 5-Comedy Plus 6-lynda's loft 7-Amel's Realm 8-MAX 9-Speedcat Hollydale 10-Mariuca 11-Complain Complain Complain 12-Mariuca's Perfume Gallery 13-Life Is A Roller Coaster 14-Sugar Queen's Dream 15-First Time Dad 16-Life 17-My Life 18-The Painted Veil 19-My Thoughts 20-DatCurious.com 21-Little Aussie Cynic 22-A Nice Place in the Sun 23-DatMoney.com 24-The Down Side OF Up 25-Ladyjava's Lounge 26-Cat Tales 27-moms.....check nyo 28-Colorado Baby 29-It's a Woman's World 30-ENLIGHTENED BITS 31-My View of "It" 32-My Reviews and Finds Along the Way 33-Our Hep Chat 34-Rantings of a Woman 35-The Callalily Space 36-Mom Knows Everything 37-Hazel 38-Chronicles and Tales Unlimited (RED) 39-From the Mouth of Jabber Jaws 40-Sunny Side Up Foodie & Lifestyle 41-Carmel Corn 42-Daily Stock Picks 43-The Whole New World 44-Wifespeak 45-Slavery Bliss 46-Rooms of My Heart 47-Unpredictable Life 48-My Life, My World 49-At Your Service 50-All About Ebay 51-Everything Amazon 52-Turn On, Tune In, Drop Out 53-My So-Called Site 54-New Wife Blog 55-Tendre Poison 323 56-Nick's Bytes 57-My Scratch Pad 58-Choc Mint Girl 59-Life Is Just Around the Corner... 60-Amori, poseia, art... virtuali by Hanna 61-Maryannaville 62-monaco - monaco's 63-Nyumix's Blog 64-read my mind - my keyboard monologues 65-Shower You Children With Love - The Right Way 66-Secret Agent Mama 67-Pinaymama's Diary 68-Answers to the Questions 69-Work of the Poet 70-A Total Blog 71-My life, my hope, my future 72-NORTE 73-A Window to Our World 74-Life as a Mom 75-FIELD OF DREAMS 76-lisgold 77-See Me for What You 78-Caught in The Stream 79-Pinay Mommy Online - My Home 80-foster me up 81-CRUEL VIRGIN 82-Garden of Moments in Blog 83-So Cute 84-Love Everlasting 85-WeLcOmE To My CriB 86-WELCOM TO PINAYSMILE'S JOURNEY 87-Ice's Icelog 88-Jenny's Wandering Thoughts 89-Hobbies and Such 90-Sweet Paradise 91-Mommy's Gibble Gabbles 92-Rusin Review's 93-My Small World 94-Little Peanut 95-Online Ramblings 96-My Mood My Feeling 97-BLOG it with ALLEN 98-Entertainment World 99-Let's Go Singapore 100-Firelynx 101-Catsy Carpe Diem 102-Every Beat Of My Heart 103-Always Da Fresh Princess 104-Listening.. 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*End Copy Here*

Enjoy :)

Water - The Crisis of 21st Century

2007-01-31T10:20:00.000+05:30

"Water is life, Water is death"

Water is one of the most precious elements of life on the planet. It is critical for satisfying the basic human needs, health, food production, energy and maintenance of regional and global ecosystems.

Over 70% of the human body is made up of water. A human being may survive without food for several days but water deprivation can kill a person within a matter of hours.

Life is, therefore, tied to water, as it is tied to air and food. And food is indeed tied to water.

Water could well be the only natural resource to touch all aspects of human civilization.

"No single measure would do more to reduce disease and save lives in the developing world than bringing safe water and adequate sanitation" (Kofi Annan).

Issues of food or health or sanitation, environment or cities or energy production, the 21st century has to deal with water quality and management.

Yet, while water sustains life, it can also cause deaths if contaminated. Some of the deadliest diseases, which kill millions around the world every year, are carried in unclean water. In fact, unsafe water and sanitation cause an estimated 80% of all diseases in the developing world, where as much as 90% of waste water is discharged without treatment. An estimated 50 to 100 lakhs people die every year-including one child every 15 second from diseases caused by poor water quality; 25,000 people are dying every day from malnutrition.

"Sold Out of Water"

The Crisis

Let us look at some of the different dimensions of this crisis.

About 120 crores of people (20% of the global population) spread across 40 countries do not have access to safe water; 240 crores of people lack adequate sanitation services.

There is no more fresh water on earth today than there was 2000 years ago when population was 3% of its current size! In the past 100 years, the world population was tripled but water use by humans has multiplied sixfold. Women in Africa and Asia walk an average distance of 6 km a day to collect water.

Fresh water fishing, a key livelihood activity around the world, is under threat. More than 20% of the world's known - 10,000 - fresh water fish species have become extinct, been threatened or endangered in recent decades.

Daily water use per person is about 600 litres in residential areas of North America and Japan and 250-350 litres in Europe whereas per capita water use per day in sub Sahara region is a mere 10 litres. (Per capita use of water in India is about 50 litres per day).

It is reckoned that one flush of a western toilet uses as much water as the average person in the developing world uses for a whole day's washing, drinking, cleaning and cooking!

"The battle for life"

Water, the Cause of the Third World War!

Over the next 20 years, the world's population will increase from the present 6.4 billion to an estimated 7.2 billion whereas the average supply of water per person is expected to fall by one-third. The hardest hit will be the poorest.

According to UN, by 2025 as many as 500 crores of people will be facing water shortage; as many as 270 crores will face severe water shortages, if the world continues consuming water at the present rate.

Water scarcity is estimated to cause annual global losses of 350 million tonnes of food production by 2025.

Save every drop of water today, because water shortage could well lead to the next world war. Unless appropriate measures are taken immediately, the world would soon face threats to global good supply; further environmental damage and ongoing health risks for the hundreds of millions of people lacking access to clean water.

"Fierce national competition over water resources has prompted fears that water issues contain the seeds of violent conflict" (Kofi Annan).

There are 215 trans-boundary rivers whose basins cover 50 percent of all land areas; 32% of the national boundaries are formed by water. Consequently, UN has identified 300 potential water conflict zones.

"Crisis of the Century"

Why the Crisis?

Water covers 70% of the planet but more than 97.5% of the surface water is ocean which, obviously, is not usable in industry, agriculture or as drinking water. (Desalination is far too expensive to be for widespread adoption).

The fresh water on which the world depends represents a mere 2.5% of available water. But then, three-quarters of this fresh water is trapped in the form of snow and ice. That is, all that is available for human use (and, of course, for animals as well) is 0.6% of the surface water!

Population growth, climate change, overuse/ misuse of water and pollution of available water are the principal causes of the crisis.

Irrigation accounts for two-thirds of global use of fresh water. Farmers use water less efficiently and withdraw more water to compensate for water losses. In developing countries 60% is wasted or used inefficiently.

Major sources of water pollution are human wastes, industrial wastes and chemicals and pesticides and fertilizers used for farming.

We have been pumping groundwater faster than aquifers can recharge.

Most of the water reservoirs are suffering reductions in storage capacity as a result of sedimentation caused by deforestation; on an average 1 % of the water storing capacity of the storage reservoirs is being lost annually.

Much of the municipal water supply is lost before it reaches consumers, leaking out of water mains, pipes or faucets or disappearing through illegal taps.

In plain terms, as far as fresh water is concerned, the world has been living way beyond its means.

"So Far So Good"

Not Too Late Yet!

Of all the planet's renewable resources, fresh water may well be the most unforgiving;difficult to purify, expensive to transport and impossible to substitute.

"Water is not like oil. There is no substitute. If we continue to take it for granted, much of the earth is going to run short of water or food - or both."

"A scarier prognosis is indeed difficult to conjure up."

Source :

Water World Council

Wikipedia

The Leadership (R)evolution

2007-01-25T12:21:00.000+05:30

The role of vision and values in organisational leadership ...

The levels of business consciousness in today’s corporate world have increased manifold and hence many business practices have undergone a dramatic change. It is now time for the survival of the wisest as against the survival of the fittest. Wisdom being in short supply, organisations are forced to resort to a vision-values approach in order to stay ahead of competition.

With corporate scandals happening on a large scale, people have identified a scarcity for the right models these days. Not every CEO is a perfect leader. The corporate world has woken up to the realisation that survival is possible only when it moulds itself to the demands of a constantly transforming world in a universally acceptable way.

This is the era of leadership (r)evolution, characterised by change and nerve-racking challenges. In such times, leaders must be able to navigate their organisations through all the complexities and competition that has given rise to a sense of misplaced hurry. As many leaders have rightly observed, the only way to survive is to handle challenges when values are threatened and vision is hazy.

The basics revisited

Vision and values guide organisations comfortably through unchartered territories. Says Dr. Sampath, “Vision is the ability to think or plan the future powerfully, with great imagination or wisdom, while values are the beliefs we hold within ourselves that governs our behaviour in any given context”. Maintaining focus on vision and understanding values in order to achieve vision are the key determinants of good leadership and therefore organisational success. It is highly essential to match individual values to organisational values. It needs to be emphasised however, that there is a fundamental discrepancy between the individual’s ‘cherished’ values and ‘lived’ values that must be bridged.

“Vision without values is risky and values without vision leads to nowhere, and vision with values is evolution”. Organisation decision-making rests to a large extent on clarity of vision and values. If a leader finds making an important decision difficult, then it is certain that either the vision, or values, or both were unclear.

Though a comfortable blend of vision and values is not always realistic, every leader must instil a vision in the organisation and values that drive their followers to achieve the vision. Like the unity of purpose is void without a vision, there is no meaningful progress in the lack of values.

The chasms

George Bernard Shaw has said, “A reasonable man adapts himself to the conditions that surround him while an unreasonable man adapts the surrounding conditions to himself”. Therefore, an individual’s success is dependent on whether he is a ‘Master of Circumstances’ or ‘Victim of Circumstances’. Comprehension of interdependency of values helps one understand the behaviour of an individual.

There is a dire need for the integration of the ‘being’ and ‘knowing’ stages of an individual. Organisational evolution is possible only with an efficient integration of the two. The larger the gap at the top level, the hazier the leadership direction becomes. The three gaps give rise to values conflict. Fundamentally, the common denominator in all levels of gaps is the difference between ‘what I perceive’ and ‘what is’. However, every organisation almost witnesses all these three chasms between:

‘Who I want to be’ and ‘Who I am’
‘Who I am’ and ‘How I want people around to experience me’
‘How I want people around to experience me’ and ‘What is expected of me’
These gaps begin to close when there is a deep understanding that the root of conflicts lies in a commitment not honoured, an idea unrealised and an opportunity lost.

Conflict experienced

What should change in an organisation and what should not? This is a question that has been bothering organisations ever since the change bug has affected it. The need of the hour is to distinguish between the timeless core values and demonstrating them in a contemporary way with a flexibility level that retains the essence of values in the organisation.

Even organisations that claim to be visionary restrict their vision to certain functions and aspects only. Also, conflicts that seem obvious at a later date would have been unapparent to the leadership earlier. For instance, in Enron’s case, as management experts say, “Enron failed to realise that its core values should never change while its operating practices should never cease to change”. Simply stated, organisations must never compromise their values to achieve their vision. The missing factor here is the alignment of the vision and values as also the misalignment between individual values and organisational values. Leaders must encourage their followers to develop loyalty and commitment two virtues absolutely essential to adopt organisational vision as their own and make efforts to achieve that with value-driven objectives.

Misalignment between vision and values is often one of the main reasons for the downfall of organisations. It could also lead to complications and give rise to conflicts. The primary role and most onerous task of effective leadership is to “reassemble the vision and reconstruct the value structure so that they are in agreement”.

Charity among us

2007-01-03T12:13:00.000+05:30

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One of the better things expatriates bring home with them is the appreciation of charity, if not the act of giving itself. Or to rephrase it in our context, getting involved in charitable endeavor is not one of our better traits. Being one of the poorest nations doesn't help much in this regard either. There is this onerous question - "How can one think of giving to charity when one is practically living off one?" True - we, as a nation, are on the receiving end when it comes to charity. But, that's exactly where I stop agreeing with this logic - the keyword being "as a nation".

If you are reading these lines, there is no question in my mind that you do not fit the mold of a typical Nepali. You obviously can read and write in English, have access to the Internet and further than that, found this post in the blog universe. That should put you in the top few of the Nepali populace, economically speaking. Come to think of it, you most probably had a city schooling in a private school where you had harder time writing in Nepali than in English; if you are about or beyond your college going age, you probably don't bother writing in Nepali anymore; if you are of the working age, you probably work in Kathmandu or abroad; or if you are a retired person you probably retired as a very senior government officer or a professor or a professional in some sector. I can make those claims with so much certainty because of one factor alone - your English skills. Add to that your access to the blog and the rest is left for your guesswork.

Regardless, I can make another claim very quickly. At least 90% of you have never given to charity. And no, I don't mean about the times when you handed out 10-15 bucks just to get rid of the bunch that came to your doorstep with a "chanda" pad. It is not to say that you never intend to or you do not want to. Reasons for your not giving are plenty and reasonable - lack of information, lack of credibility of the fund raisers, lack of proper/convenient means, no visible gains of giving, no apparent results of your contributions, skepticism over the proper utilization of your contribution are, but, few reasons that come to mind.

Winter is upon us now. And each day when you complain about your car a/c not warming up quick enough, your gloves not blocking enough wind-chill as you ride that bike, your heaters not warming farther corner of your living room or your tea getting cold quicker, think of one person. This could be anyone who you see everyday on your way to work, temple, gym or bazaar. This person is someone you see and fail or choose not to notice. This kid who works in the teashop; this little girl who is scurries along in bitter cold of Kathmandu mornings to buy milk for her "sahibs" still asleep in their cozy beds; a homeless boy in Pashupati area who gets the warmth for winter from the pyre's heat. Those are few examples that we Kathmandu-baasi are more familiar with. What about the tens of thousands of children that we never hear of - in villages. Can you withstand the same conditions for one day that these people do everyday? Can you live as a homeless for one day? Can you work cleaning glasses in a teashop for just 3 hours? Easier said than done, my friend. Try it out and I'd like to hear from you.

I still remember a conversation I had with a friend of mine while I was in college. In the span of this discussion, he said "....whereas, people in villages get to eat fresh vegetables, milk, ghee, yogurt and meat." The context of our conversation is not even relevant here. The point is that we city dwellers have become oblivious to the state of our country. Yes, you get closer to the source of food as you go to villages but who actually gets to reap the harvest is another question worth writing about altogether. My point, for now, simply is that we don't know anything about the state of our country. May be we do, but it has not hit us home yet. We know there is dire need, we know there is hunger, we know there is no school out there and yet we have not really felt the pain. At least, not like we would feel if those condition were our own !

I don't have to cite any references to say that most of our help should be directed towards the people we do not mostly talk about. Three centuries of Shah dynasty combined with one century of Rana oppression as a "change" has established an unproductive culture among us. Along with infrastructure, education and healthcare, moral attitude of the citizens has suffered a great deal. Three hundred years of continued rip-off didn't leave much time for looking back when the window of opportunity opened up during the 90s when our leaders showed us exactly how hungry we are. Believe it or not, I don't blame them. What do you expect when you place a plateful of delicacy in front of a hungry street kid? Do you expect the kid to go and look for a place to take a shower and then go find his street buddy to share his food with while it is warm? No way! Our leaders did what was natural. (Only, it never stopped was what made matters worse!!). We all are takers, opportunity provided. Bluntly put, we don't give. We take, and more often than not, snatch when we have the opportunity.

I have observed quite a remarkable phenomenon in the western world when it comes to charity. It is not only praiseworthy, but of late has become a fashionable trend. Angelina Jo Lee seems to have inspired sizeable few to follow her path of philanthropy. While the intention of the Hollywood superstars are beyond anybody's contemplation, here are few USA facts that are interesting. Approximately 1,20,000 children are adopted each year in the United States. Some adopt for love, others for religion and yet others for human cause. More than 83% of adults have been donating to some chairty every year since the last decade and a typical contribution amount is 3% of the individual income. Besides, numerous studies have shown that middle class families struggling to make ends meet are the biggest contributors of all the charity. In addition, those who receive charitable contributions are known to be many times more likely to return favors later in future. And, how can any one not feel the warmth of human compassion at the magnanimity of the likes of the Gates, Buffets and Rockefellers just to name the few mega-philanthropists.

How do we fare? It's hard to sallow - we suck!!! If we ask even the smartest and well informed among us to name a few charitable organizations in the country, they will probably come up with at most 2 or 3 names - most very obvious like Red Cross. I am very interested in a survey that asks people to list 5 things they would do if they won a lottery of one corer. By the way, has anyone noticed what are the responses in the game shows in TV channels where they give away prize money? I wonder how many in Nepal say "some part of the winnings for charity!"

You don't have to earn big, you don't have to give big and you don't have to have big objectives to give for charity. An amount of 10 bucks a month is not too much to ask for, is it?* It is 3% of 4000 bucks. Now, don't tell me you don't earn 4000 buck in a year !! (If you don't, don't waste your time reading blogs, you fool. Go and make money!) Being the minimalist that I am, I think it is enough to start the habit of giving. It is not the intent of giving that we lack but the habit and means. Is it not true that you have more than once felt the need, if not the urge, to give? Would you not give more or more regularly if it were easy, transactions honest, organizations transparent and dedicated? Would you not give if you could SEE with your own eyes that your money is being put to good use, to take children off the street or build school? Would you not give if you knew that if you don't, the kid of the same age as your kid will remain hungry today, and probably the days after too? Would you not give if you knew that without your giving, a little girl will never be able to read and will spend her days beating the rocks to gravels?

We can achieve tremendous results with very little individual efforts, if we do it collectively. It is a simple logic and power behind numbers. The inexplicable phenomenon of "If 1 horse can pull 100 kg, then 2 horses can pull 500Kg" also applies here. There is much more to human spirit than we give credit for. Once a giver, always a giver - I experienced it myself. An friend of mine tried to instill the habit of giving to charity in me. I used to hate him during his this obvious solicitation of advice without my asking for it. I did not give a penny when he asked - mostly because I didn't like him enforcing his idea on me, but also because of his choice of charities. He didn't gain anything from those - far from it; he gave even when he could least afford to.

Yet, for all his nagging and irritation, I thank him. He has made me a giver without his knowing it. (That reminds me - I must write him soon thanking about it - he will be pleasantly surprised!!) Nothing has satisfied me more than when I give – sometimes, as little as 25 bucks. I give when I can and when I want. I don't give merely because someone asks. I give if I feel the organization or individual deserves a helping hand. And I give where there are more visible results - sometimes loans without interest and sometimes just a helping hand. I give to expect nothing in return. I don't have any other pattern of giving than that I give whenever I see more personal attachment to the one receiving it. Giving to help Ram dai buy a cow, or to help Kaali go to school is more meaningful to me than giving to Red Cross. You may feel otherwise. It is all personal choice just like fashion and food choices. The bottom line is, I give. Do you?

Yes, the last statement was intentional. I intend to arouse that anger, irritation or ego in you with that question. I give to charity - do you? (A T-shirt campaign comes to mind!!) I hope one day, you will. When you do, I am sure you will do it again. Be it your shame of having too much, or the anger of not having more, or the ego of not being the one who didn't give, or the irritation of being constantly asked to give, or the compassion towards your fellow being or the love of an innocent child's desperation - the fact that you helped when it was needed outweighs all the reasons in the world. We go out in the world with a pauper’s begging bowl and yet fail to sound the SOS alarm among ourselves. Are we so hopeless that we are not even asked to help? I don't believe it.

I give when i know how, when and what to give.
I give when what I give, gets to the needy.
I give when I see my contribution is making a difference.
I give because it makes me feel that I am better than others.
I give because it changes someone's course of life.
I give because it is a matter of life and death for someone.
I give because I dare you to try it out and brag about it.

Any takers? No puns intended ! :-)

(Have you read Small is Beautiful by E.F. Schumacher? If you are 30+ and have not read it already, shame on you. And yes, you can restore all your shame by reading it!)

Note:
* @Rs 10/- a month = Rs 120/year. If you get one lakh persons to do that, it is Rs 1.2 corer/ year. One lakh is less than 4 out of every 1000 of us. How many kids could you feed and send school for that amount? Now, that is a question worth finding an answer for.

-Saral Nepal

Twelve tips to climb the corporate ladder

2006-12-26T11:19:00.000+05:30

Being over-dedicated to your job may actually dim your chances of a promotion

If you talk to any successful entrepreneur, he will tell you that one of the ingredients of his achievements is hard work. But there are situations where hard work is counterproductive. The gadflies and drones of the company actually overtake you.

There are several reasons why this happens. There are people who work hard — much harder than their colleagues — because deep down they suffer from an inferiority complex. Often, they don’t realise it. They sacrifice family life to devote themselves to the corporate cause. You will find a lot of them in foreign banks. They run from meeting to meeting: from power breakfast to deal-making dinner.

Americans are particularly good at creating work for each other. The British have learnt to enjoy themselves behind the facade of hard work. Remember the five investment bankers from Barclays Capital who totted up a bill of £44,000 on one meal. (That’s what the wine cost; the £400 food bill was waived by the astounded restaurant owner.) Incidentally, Barclays was at that time cutting 1,800 jobs.

Away from the executive suites, why are people penalised for working too hard? The inferiority complex encourages some people to make themselves irreplaceable. An executive secretary with a top CEO says that she is the right hand person of her boss. So much so, each time he changed jobs, she moved with him. The money is not an issue; within limitations, she has been taken care of. But she recollects that she joined the job in the secretarial pool along a certain Ramona. The latter didn’t try to reach the big league by latching her wagon to a smart young executive. She was relatively lazy and was sent for training courses. Today, Ramona is sales manager in a rival concern and could even make CEO some day.

It’s not just secretaries who get wedded to their bosses. Some individuals get wedded to their jobs. They make themselves so valuable that they are impossible to move out or replace. If you are ever in such a position, you can bid goodbye to your chances of promotion. The other reason, of course, is that because of your insecurity, you take good care not to groom a successor. Remember the first IT types in companies when computerisation was a new, new thing. They made everything seem so esoteric. One of the few good things Bill Gates has done is reduce them to jargon-mouthing non-essentials.

Hard work also implies a lot of devotion to the immediate job content. The end result is that you don’t have the time to see what others are doing. If you want to rise to the top, you have to be a generalist. This is why industry puts a greater premium on MBAs than engineers.

But engineers and MBAs alike can fall into the hard work trap. And they have some evidence to prove that they are doing the right thing. According to a study by the Gothenburg University in Sweden, people who work hard tend to be happier. But the researchers add that the important point is to have a goal. Unfortunately for some, the work itself becomes an all-consuming goal.

Other researchers have pointed out that working yourself into a dead end happens more to women than to men. Some of the reasons are: overcompensation because of the need to handle multiple priorities; a greater sense of loyalty to the organisation and the individual; and a more responsible attitude to life. It may also be that job opportunities for women are limited even today. However, you won’t find HR people talking about this, as it’s politically incorrect.

The ultimate result of unstinted hard work is that you get taken for granted. The worker who expects to get rewarded for devotion ends up as the dogsbody around the office.

Pushing for promotion

Twelve tips to climb the corporate ladder

• Master your current job.

• Volunteer to take on (valuable) extra tasks.

• Make your boss look good.

• Stay in close contact with the HR department.

• Maintain positive relationships with the staff.

• Let your leadership skills shine.

• Groom a successor.

• Get a mentor.

• Take additional training.

• Look presentable at all times.

• Perfect your elevator pitch.

• Watch your timing.

Source: The Telegraph

Good advice often comes like gentle drops of fine rain

2006-12-13T20:28:00.000+05:30

Now days I'm reading articles of Mr R Gopalakrishnan who is the executive Director of TATA Sons , so here is another one-

All endings are also beginnings. It is just that we don't know it at that time. In a delightful book, 'The Five People You Meet In Heaven', Mitch Albom narrates the story of an 83 year old war veteran, who discovers people who affected his life without anyone knowing about it.

This is true for managers also. Views from casual acquaintances who are not formally assigned the role of being a well-wisher can be extremely valuable. Their ideas come like gentle drops of rain that fall around you without making their presence felt too strongly, nor being intrusive.

When I grew up in Calcutta, it was a premier mercantile city, still maintaining the famous boxwallah tradition. Any young person walking around the office areas like Fairlie Place and Brabourne Road would yearn for a management trainee job in those business firms-Andrew Yule, Balmer Lawrie, Bird and Company, and Martin Burn, names that have now virtually vanished.

I was completing my final year BSc course, resident at the college hostel. Father de Bonhome, the principal of St Xavier's College, asked me whether I would like to be recommended for a trainee's job at McKinnon McKenzie. It was a fine firm, he could suggest only two from the whole college, and the salary would be Rs 450 per month. I calmly said that I was honoured to be recommended; in reality, I was thrilled. I did not consult my father, who had by then moved to Bombay.

With a borrowed suit and soaring dreams, I interviewed at the McKinnon office. After being seen by two managers, I saw one Mohi Das, the managing director. He asked me several thoughtful questions. As I was getting convinced that I had done well and might actually get the job, he drew up close to me and asked, "Son, may I call you that way? Don't get me wrong, but you are just past eighteen. You can have the job; we can train you quite well. But, tell me, do you need the job? How is the family situation?"

I was a bit offended, what did my family situation have to do with the job? He clarified, "Well, I have spent my career in one set of circumstances, but you will spend your career in an entirely different set of circumstances. I feel you should get a professional degree. You can always get this kind of job, son-unless the family situation requires you to get a job right now".

How could he dangle one of the most prized jobs in front of me and then say what he did? I just did not want to listen to him. And I was quite clear about my future (or so I thought) without asking too many people!

Reluctantly, I decided after some further thought that I should mention to my father that I wish to accept the job. He was furious that I could even think of taking a job. My dream job ended like a collapsed balloon. I went on to study further and joined Hindustan Lever subsequently.

I never met Mohi Das after that encounter. He retired in due course. A few years ago, I learned that he had died in Coonoor. He would not recognize this story even if I had the chance to remind him. He influenced and counseled me about my career in a valuable way, but unknowingly.

Like gentle drops of fine rain that touch you but do not interfere with you, casual advice comes your way. You need to listen to and reflect on them. Then take your own decision. Particularly for a generation that is as blessed as young people are in today's India, this would be wise.

- Mr R Gopalakrishnan

Success is about direction more than distance

2006-12-04T14:20:00.000+05:30

Many managers spend a lot of their working time, thinking about how to accelerate their promotions, how to impress the boss more than their colleagues, and how to earn money faster. The management world is indeed very competitive. So you feel that time must be spent thinking through such matters and taking appropriate actions--quite correct, but only in part.

The question to ask is whether it is the aim of a career to go far or in the right direction. Ideally, of course, you should achieve both, but that is not easy.

If you watch club level golfers, you will see the point. Some stand on the tee box with the longest club, and whack the ball with the might of an ox. They are the ones who want to see the ball soar away with an accelerating speed. A few seconds later, when they observe where the ball has landed, they curse and crib. The ball has perhaps been lost or has landed in a difficult spot from which it would be difficult to play the next shot. Other golfers take a measured approach of landing the ball on the fairway at a spot where they want to land. For them, the next stroke is as important as this first tee shot. Both are valid ways to play the game. If you are very talented, you may learn to do both i.e. go far as well as land where you want. Many club level golfers never achieve this.

The purpose of a career is to utilize your potential fully because that alone can give you satisfaction and a sense of self-esteem. This is so whether you are a chairman or an assistant. It becomes possible to achieve such satisfaction when you are surrounded by friendship and trust, which are essential for accomplishment in managerial tasks. Nobody can do a management job all by himself, this is a well accepted fact. It is the web of relationships and friendship that enables a manager to navigate the choppy waters that the ship of his career will constantly encounter.

There was a fine movie made by Frank Capra which I recall seeing when I was young. It starred James Stewart and Donna Reed and was named It's a wonderful life. The story is about a man, who thinks he is a failure. So he prepares to commit suicide.

An angel is sent to prevent his act and to rescue him. The angel finds that the man lacks self esteem and hence he thinks that his friends and relations do not much care for him. The angel takes him in an invisible form to overhear what his friends and relations think of him in reality. He is surprised that he seemed to be loved by them all and that he mattered to them. His own perception of his failures in his career and his business activities bothered them little, and their love for him was overwhelming. He feels blessed.

The moral of the film is that no man is a failure who has friends.

Well, it is the same with your career. You take your own successes too seriously, and your failures in the same way. Other people do not think about either with the same intensity, they have better things to do!

Philosophers say that a good question to ponder about is when you die, who will come to your funeral? When a loved man dies, lots of people come for his funeral out of choice. When a rich or powerful man dies, lots of people may come, but for the reason that they want to be seen to have been there.

If you aim in the right direction, the best possible distance will come automatically. That is a simple truth.

- Mr R Gopalakrishnan

WHAT THEY DON`T TEACH YOU AT B-SCHOOL

2006-11-18T08:51:00.000+05:30

Lamenting the lack of a work ethic
WHAT THEY DON`T TEACH YOU AT B-SCHOOL
Meenakshi Radhakrishnan-Swami

You can learn about management from an MBA course, but it can’t teach what kind of manager you should be.

You need to discover your leadership style on your own: Are you a delegator or a hands-on manager? Should you lean more towards vision or action? Do you need to be task-driven or would it be better to build relationships? These are concepts you learn through 360-degree feedback and real-life interaction, not in B-school.

A B-school can never teach you people skills. Managing teams is often about building emotional bank accounts with them; that’s something you can’t learn in an institution. Nor can an MBA course teach you to identify and recruit senior leaders for your organisation.

Also, there isn’t enough emphasis on execution. Regular process reviews to ensure strategic initiatives get converted to day-to-day operations is a critical part of running a business, but B-schools tend to overlook its importance.

Management education in India comes up short in dealing with global businesses. Not much attention is paid to the intricacies of dealing with international customers and colleagues.

But perhaps this is an area where practical experience counts more: Real life makes you better global citizens than any course in an insulated institution can ever hope to. Another area where B-schools can never hope to replicate real-life experience relates to the strategic insights and discoveries around new market developments.

The ability to recognise underserved or unserved markets, and act upon that information, comes only when you are fully engaged in the real world. New business ideas usually spring from your operating environment, not from reading about business strategy.

Finally, B-schools don’t build in their students an ability to move out of their comfort zones, whether it is behavioural (the discipline point made above), or about switching jobs or businesses.

Of course, I don’t know how much of this is a trainable attribute, but it is a big part of big successes and needs to be recognised as such.

-Sanjeev Aggarwal

Sanjeev Aggarwal is managing director, Helion Venture Partners. He graduated from Punjab University in 1984.

Wanted leaders with vision

2006-11-15T11:16:00.000+05:30

Contrary to popular opinion, the collapse of the Soviet Union and the end of the Cold War with the signing of the Paris Agreement on November 19, 1990, did not transform the world from a bipolar to a unipolar system. As was argued by Dr Henry Kissinger in his book Diplomacy that unprecedented event led to the emergence of a polycentric world with the US, a Germany-dominated European Union, China, Japan and Russia as players in a balance of power system. He speculated at that stage whether India could become a probable sixth centre of power.

Today there is no doubt that India is one of the six members in the global balance of power. This came about with the nuclear and missile tests in 1998, rising foreign exchange reserves, increasing foreign trade and economic growth and the global perception of the political stability of the world’s largest democracy.

The demonstrated capabilities of Indians in the field of information technology and the achievements of the non-resident Indians in the US and elsewhere also helped to project to the world the potential of India as a knowledge power. These led to India, along with China, being identified as a rising power.

Growth potential
International recognition of India’s potential was underscored in March 2005 when the US publicly announced that it will be helping India in its efforts to move towards the status of a global power in the 21st century. Prime Minister Manmohan Singh acknowledged that never before has the external world been as supportive of India’s development as it is now.

In his speech from the ramparts of the Red Fort on August 15, Dr Manmohan Singh exhorted India to seize this opportunity to grow. Both these expressions are somewhat different from what Indians are used to hearing. The Indian elite is used to the assumption that the US is not a friendly factor in India’s development and that the international environment has not been conducive to India’s fast economic growth. Therefore, the above pronouncements have left the Indian political class, bureaucracy, media and academia somewhat bewildered.

Dr Manmohan Singh, though a towering intellectual, is not a communicator like Jawaharlal Nehru. Nor is he a very assertive leader. He believes in gentle persuasion through intellectual dialogue. Consequently, he has a major problem on his hands in making his political colleagues as well as the bureaucracy adapt to the fast-changing international environment and act effectively to maximise Indian national interests. It is easier for people to remember a catalogue of events of the last 58 years and carry out a linear extrapolation of those trends than to foresee developments ahead and devise policies and strategies to maximise gains and limit damages.

We have lived through a period of history when unprecedented changes have taken place. Since continuity is more easily understood, and favoured, by our elite than change, they have failed to grasp the enormity of the change we are now undergoing. Therefore, there is a lot of scepticism about unfamiliar developments and the benefits flowing from these for the country. For instance, there is not adequate appreciation of the end of the Cold War when two blocs of nations — armed to the teeth, with enough nuclear weapons and missiles to destroy our civilisation several times over, in confrontation for 40 years — finally concluded a peace treaty and agreed to cut back on their armaments. There is no precedent for this in history.

Positive approach

Similarly, the phenomenon of globalisation and its impact on the future of international relations, too have no precedent. Dr Manmohan Singh has been repeatedly stressing that globalisation is an irreversible phenomenon and, therefore, instead of resisting it we should attempt to adjust ourselves to it and reshape it to suit our interests. It is a waste of time to compare it to obsolete imperialism.

Not only is such comparison inapt but also actions in pursuance of such comparisons will be futile. The phenomenon has many adverse effects, but there have to be new remedies for it. Time-worn shibboleths would not help in mitigating the negative effects of globalisation, which is an inevitable outcome of the revolutions in transportation, communication and knowledge.

While denouncing the harsh aspects of globalisation, the positive aspects tend to be overlooked. Globalisation has reduced the chance of war among major powers, and has made the major nations interdependent. It has increased the possibilities of outsourcing; improved the prospects for economic growth of countries like China and India; compelled nations to take a global view of issues like energy, diseases, pollution etc; and, create conditions for likely migration of populations from developing to developed countries.

Powerful player

A world of six balancing powers and balance of power politics among them is altogether a new experience for the Indian political class, bureaucracy, media and academia. Over the last 60 years, this nation has been conditioned, to denigrate the politics of balance of power. It never occurred to our politicians that non-alignment was balance of power in a bipolar world where the two powers that constituted the opposing poles could not go to war because of nuclear deterrence. Already, India is fast learning to play the balance of power politics.

There are strategic partnerships between India on the one side and Russia, the US, EU, China and Japan on the other side as individual partners. The balance of power relationship is a dynamic one that needs continuous adjustment in the relationships to ensure an equilibrium. Unfortunately, without understanding this need for an overall balance there is talk of containment of a single power like China. In fact, balance of power and containment are antithetical concepts.

In the 21st century, nuclear weapons and missiles are not likely to be the currency of power as there is little probability of war between the major powers. While wars between a major power and a medium or small power cannot be ruled out, the prospect of a war involving nuclear-weapon powers is very remote. Conflicts in the future will be over intellectual assets. It is knowledge that would drive inventiveness, and competitiveness, which will be the currency of power. Hence the global focus on intellectual property rights.

In this context, it should be noted that China has a strategy for rising to global power peacefully. The US sees China as a potential rival, not a military one but an economic one, in terms of global competitiveness and inventiveness.

In his address to the US Congress, Dr Manmohan Singh referred to the need for Indo-US cooperation if the US were to sustain its competitiveness. Secretary of State Condoleezza Rice has also referred to India as a natural friend of the US in dealing with its long-term economic problems. Since the US perception, of India as a much-needed partner in the future, is not recognised in India, there is a lot of skepticism about American overtures and a tendency to think of US moves in Cold War terms.

Therefore, to effectively tackle the foreign policy and defence problems of the 21st century, India needs to replace the old, Cold War mindset, develop a new understanding of the emerging world and come to terms with both balance of power politics and globalisation. Some of the shibboleths of the last 50 years such as non-alignment, unipolar world, the public sector at the commanding heights of economy, autarchic economics and technology etc. have to be shed. This is not an easy task.

It is difficult to educate our politicians, bureaucracy, media and academia as could be done in China, for the very concept of such education or re-education is anathema in our democratic culture. The kind of complete change in mindset as has been carried out by countries like China cannot be accomplished in India. Here, it has to be a slow process and the initiative has to be taken by the government.

Security strategy

On the subject of government initiatives, it would be pertinent to dwell on the role of the National Security Council. The concept underlying the setting up of a National Security Council was that it should be the engine of long-term assessments and follow-up strategies. Unfortunately, though the NSC was set up in 1999, it did not make much headway in its role during the NDA regime. As it happens, some of the radical changes on the international scene such as the US declaration of its intention to help India in its moves to become a world power in the 21st century came about only this year. So did the Prime Minister’s acknowledgement that the external environment is conducive to Indian development.

Thus, the task is clearly cut out for the NSC staff to prepare strategic assessments and submit them to the Council to enable it to direct the ministries concerned towards the long-term objectives for India in the 21st century. Since Prime Minister Manmohan Singh has been in the forefront of the new thinking, the initiative to energise the NSC on such a course will also logically be his. The necessary intellectual resources for the task may not be available within the government, and, therefore, to begin with, it may have to consider setting up task forces of experts drawn from outside the administration.

Attention needs to be paid to the generalist approach inherited from British Raj to the very complex issues of today — especially in areas of international relations and national security. The bureaucracy tends to be guided by precedents and is not in a position to take the initiative to adjust Indian policies to the fast-changing international climate. Further, the compulsions of coalition politics, in which partners are either ideologically mired in early 20th century thinking or more interested in promoting their own parochial interests than national interests cannot be avoided. That is an inevitable price of democracy, which makes it all the more necessary for the NSC to be the driving force of change in terms of political thinking on national security and international relations.

Given the constraints he has had to deal with, Dr Manmohan Singh has done well on the foreign policy front and reasonably so in the economic sphere. As he himself acknowledges, this has been mainly due to the conducive external environment. While that favourable factor will continue to prevail, the possibilities of India growing faster and achieving effective governance (a vital pre-requisite for India’s further progress) depends largely on our domestic politics. And that happens to be this nation’s Achilles’ heel. With the exception of Dr Manmohan Singh, who is not strictly a politician, one does not see a visionary leader equipped to deal with the 21st century either in the UPA, the NDA or in any of the regional parties.

Nevertheless, our democracy, our private sector, our increasing integration with the rest of the world and our brain power are likely to move India forward, even though not at the speed of which it is capable.

-K. Subrahmanyam

— The writer is an expert on strategic affairs.

Fight Against Corruption

2006-10-12T10:02:00.000+05:30

A World Bank defines corruption as use of public office for private profit. When the world was divided between the two superpowers and the Cold War was on, the World Bank did not focus on the issue of corruption as a significant issue. The reason is obvious. So long as the Cold War prevailed, what mattered was the ideological orientation of the country receiving the aid. It used to be said by the superpowers, "We know that so and so is a son of a bitch, but he is our son of a bitch".

This approach underwent a massive change when the Cold War ended. The taxpayers in the aid-giving countries started questioning whether the aid given was reaching the beneficiaries in the recipient countries. That the issue of checking corruption and thereby ensuring good governance was an important pre-requisite for development and removal of poverty in developing countries is now widely recognised. Corruption, therefore, has become an issue of global concern.

It is not only in the area of public governance that fighting corruption became a central issue. Even in the area of global business, thanks to the scams in the year 2000, when Fortune 500 companies like Enron and universally reputed companies like Arthur Anderson were exposed as having indulged in financial engineering and window-dressing of accounts misleading the market and the investors, the issue of corporate governance assumed equal importance. Honesty is the best policy, is a discovery the world made once again in the 1990s. Stringent legal steps, like the Sorbonne Oxley Act in the United States, were taken.

Matter of concern

For us in India, corruption has been an age-old phenomenon. Chanakya is supposed to have said in the Arthashastra that there are 40 different methods by which public officials can indulge in corruption. "The Mahamatras are like fish. Does one know, when the fish is drinking water?" he is supposed to have said. Indira Gandhi, when asked a question about corruption, passed it off with a comment that it was a global phenomenon.

But here is the rub. It is true that corruption is a global phenomenon, but the degree of corruption is not the same. The non-governmental organisation called Transparency International, in Berlin, publishes every year the Corruption Perception Index (CPI), and ranks the countries in their order of corruption. The least corrupt country, according to the CPI 2004, is Finland and the most corrupt is Bangladesh. Out of the 146 countries listed, India ranks a poor 91. Fiftyfive countries are more corrupt than India but 90 countries are less corrupt than India. India certainly belongs to the more corrupt countries of the world.

Corruption becomes a matter of concern because of its negative consequences. Corruption is anti-national. The hawala scam of the 1990s exposed how anti-national forces like the Kashmiri terrorists were getting funds through the hawala route, and it is the same route by which the corrupt bureaucrats, politicians and businessmen also were getting and laundering their funds. The 1999 UNDP report on Human Development pointed out that if India’s corruption level can be brought down to that of the Scandinavian countries, India’s GDP will grow by 1.5 per cent and FDI increase by 12.5 per cent. Corruption is, therefore, anti-economic development. The PHD Chamber of Commerce also made a study in 2001 which pointed out that if there was a 15 per cent reduction in corruption, then there would be 300 per cent enhancement of investment.

As we look ahead, the question before us is will corruption continue to plague the country?

Corruption is anti-poor. In a country, where 26 per cent of the population is below the poverty line, corruption hits the poor very badly. Many of the development schemes meant for the weaker sections do not benefit them at all. Rajiv Gandhi remarked that only 15 paise out of every rupee meant for the anti-poverty programme reaches the beneficiaries. In fact, the major point of criticism about the Government of India’s Employment Guarantee Act, which visualises a Rs 1,50,000-crore scheme — to ensure that all citizens in the rural areas are assured of a minimum 100 days of work with a daily wage of Rs 60 — is seen as a tremendous opportunity for corrupt elements among the bureaucracy and politicians to siphon off huge funds.

Even the Maharashtra Employment Guarantee Scheme on which the Central Government’s scheme has been modeled, also offers no hope. Even in that scheme, there are false muster rolls. Aruna Roy through her Mazdoor Kisan Sangharsh Samiti brought home in Rajasthan the extent of leakage in development funds.

As we look ahead to the next 10 to 15 years, what is it that we can hope for on the corruption front? It is very easy to be pessimistic. The pessimist can always argue that corruption has always been with us like the poor and it is a global phenomenon.

Nevertheless, the fact is that while corruption is a global phenomenon, we have seen countries which were corrupt, reforming themselves and getting the benefits of corruption-free, good governance in our own lifetime. Singapore is a classic example.

Botswana has also been quoted by the World Bank as a good African country, which has done well on the issue of fighting corruption. If we look at history, thanks to the highly ethical William Gladstone, four times Prime Minister of Britain, the UK which was a corrupt country in the 19th century became a well-governed country by the beginning of the 20th century.

Right attitude

As we look at the future, we should not take a pessimistic and negative attitude. As Central Vigilance Commissioner for four years, from September 1998 to September 2002, day in and day out, I was dealing with this issue of corruption. I had an opportunity to reflect and talk on this issue extensively all over the country. At the end of my tenure, I felt that one can be optimistic that India can also come out of the perennial trap of corruption and move ahead. There are silver linings in the dark clouds of corruption haunting us today. I will list three of them. The first is the Supreme Court judgment which forced candidates in elections to declare their criminal records, educational qualification and wealth while filing their nomination. It is still true that our politics has become criminalised and tainted ministers are sticking on to their chair in the Union Government, thanks to the legal fig-leaf that everybody is innocent under our law till proved guilty. The degree of transparency sought to be brought about by the Supreme Court is the first step in our long journey to fight political corruption.

The second positive development is the application of information technology in the railway reservation system in the past few decades and the enormous relief and benefit it has brought to the one crore travelling public every day in India.

The third positive development is the use of electronic voting machines in the General Election which has reduced significantly the scope for corruption and malpractices in the election process.

The passing of the Right to Information Act itself is a healthy development, thanks to the initiative taken by the Mazdoor Kisan Sangharh Samiti (MKSS) in Rajasthan. Aruna Roy of the MKSS has gone on record to say that in the rural development projects of Rajasthan, where the muster rolls are in the open and could be effectively monitored by the villagers, the scope for corruption has been reduced drastically.

These developments give us hope that we can move systematically towards a cleaner environment in public life. This calls for an understanding, first, of the dynamics of corruption and, also, what have been the effective tools for fighting corruption. If we have succeeded, in certain areas, in fighting corruption, perhaps the same technique can be replicated elsewhere.

Societal values

The degree of corruption in any organisation or society depends on three factors. The first is the individual sense of values. The second is the value cherished by society and the third, of course, is the system of governance. So far as the first issue is concerned, today our society is in a flux.

Thanks to modernisation and the tremendous impact of satellite television and the media and the policy of liberalisation, we are seeing the vigorous growth of the consumer culture.

In India, traditionally, the ascetic who gives up things was honoured. Today, the models before the younger generation are those who earn money by means fair or foul and have tons of it to splurge. Lifestyle has become very important. This consumerist culture is probably strengthening the philosophy of "get on, get honour and get honest". Can we afford to give up our consumerist culture? I am afraid not. What we can do is to at least see that certain basic values like integrity, honesty are inculcated in the educational system. In any society, values, by and large, are inculcated by the parents. They, in turn, are influenced by tradition and religion. After all, religion is nothing but crystallised tradition that upholds the ethical codes of conduct which is in the interest of society.

Begin with schools

In India, this whole concept of good behaviour got crystallised in dharma, or the set of duties every person has to perform. In the Bhagvadagita, Lord Krishna says in Chapter 3 "swadharme nidhanamshreya paradharmo bhayapaha". Doing one’s own duty is the most desirable and if one cannot perform duty, death is a better option. This inculcation of values in the educational system is possible. This, in turn, would mean referring to the sources of tradition which will involve a reference to some religion.

Today, for example, these values of good conduct, based on Hindu traditions, are taught in the DAV and the Ramakrishna Mission schools. In Christian missionary schools, the moral lessons are drawn on the basis of Christian teachings.

But our government having been secular, it has been remarkably successful in totally eliminating any induction of values in our educational system. We have, therefore, a whole lot of students coming through the schools where they do not learn any values. This big defect has to be rectified. I am happy that this seems to have been realised especially after the scams of 1997 and 2000 in global business. In the institutions like Anna University, engineering ethics has been introduced as a separate subject. But what about other streams of education? If we want India to become less corrupt, if not corruption-free, we must start with the educational system and ensure that moral values are inducted.

Role models

The second factor which decides the level of corruption is a set of social values. Here, opinion makers in society have to become role models.

Unfortunately, our politics has become criminalised. Law-breakers are lawmakers today. The only people the youth probably look upon as role models are politicians and media stars who collectively represent what is called the Page Three culture. So far as professions are concerned, every professional association can uphold ethics and codes of conduct, and thereby build role models and benchmarks for guiding society.

The third important factor is the system. In any society, from the ethics point of view, 10 per cent may, by nature, be ethical and 10 per cent will, by nature, be corrupt, and 80 per cent will modify their behaviour depending on the system. One simple example of this is how, while an Indian may throw rubbish on the streets without batting an eyelid, the same Indian, when he reaches Singapore, is on guard and may not commit nuisance or throw rubbish on the streets.

We must redesign our system of governance to check corruption. Corruption today is a game in which five major players are involved. They are the corrupt neta, the babu, lala, jhola and dada—the corrupt politicians, the corrupt bureaucrats, the corrupt businessmen, the corrupt NGOs and criminals. For tackling each of them, I would suggest the following:

Political corruption is at the root of all corruption in our country. Our politics is corrupt because it is based on black money. Every political party collects cash, which is black money. Black money is oxygen for corruption and corruption is oxygen for black money. Therefore, we must focus on electoral reform and reducing black money.

Simultaneously, we must also bring greater transparency in the raising of funds by the political parties. Some steps have been taken for removing restrictions on political contributions. We should try to create a situation similar to that of the United States or Britain in so far as fund-raising is concerned. This would provide an opportunity to reduce corruption.

Dr Jayaprakash Narayan, a very committed IAS officer who resigned and set up an NGO, Lok Satta, in Andhra Pradesh, has highlighted the need for changing our electoral system itself. Instead of the British system of first past the post, which only nine out of 47 countries have adopted, we should opt for a system of proportional representation. He also suggests direct elections for the post of chief minister, who can then appoint a cabinet of talent. It is an interesting idea and worth trying. To begin with, it is necessary to build a consensus in the country on this idea.

A simple reform that can be implemented immediately to check corruption and criminalisation of politics is to disqualify any candidate against whom charges have been framed in court. The police may be pliable but the courts apply their mind and frame charges, and hence, they are likely to be more objective.

Today, the criminal politicians take advantage of the principle that they are innocent till proved guilty and also the delays in our judicial system. Corruption has become a low- risk, high-profit business in India because our judiciary is so slow and the conviction rate is only six per cent.

There is need to change the judicial system in so far as corruption cases are concerned, so that like election cases, corruption cases, too, are required to be decided within one year. For this, the system of summary trial procedure can be introduced and the appeal limited to one court. Today, at any given point of time, around 4,000 CBI cases are pending. CBI cases, by their very nature, are supposed to be very serious and yet some of them are pending for more than 25 years. The speeding up of the cases and effective punishment will go a long way in improving the situation.

Winning formula

So far as bureaucratic corruption is concerned, the following three-point formula must be adopted.

—Simplification of rules and procedures to reduce the scope of corruption;

—Transparency and empowering of public, and

—Effective punishment.

There is an urgent need to bring a sense of accountability in bureaucracy. Article 311 provides so much protection to the public servant that it is very difficult to take action effectively and in time against corrupt officials.

Fighting corruption is a hard task. There cannot be a single-point approach to the task. We have to adopt a multi-point approach, some of which I have indicated above.

We then come to the basic question. The powers that be, whether in politics or bureaucracy or business, are benefiting from the corrupt system. Can there be a situation where these beneficiaries of corruption will initiate action to check corruption? That may amount to causing hara-kiri. My perception is that as far as our politicians are concerned, they act only under two circumstances: One, where the TINA (There is no alternative) factor prevails; and two, where there is a vote bank advantage. The TINA factor can be created in our country by broadly two methods. One is by using the route of the public interest litigation and activating the Supreme Court so that the persons concerned have no alternative but to implement it. The enactment of the CVC Act and the practice of the candidates declaring their criminal record while filing nominations are examples of this type.

However, there are also limits to judicial intervention. The second instrument that can create the TINA factor is technology, particularly information technology. We have seen how in the railway reservation system, the use of IT has brought down corruption. I understand that even in the issue of passport, computerisation has helped in bringing down corruption. So greater use of IT and reforming and simplifying the procedures can be the second broad strategy to help create the TINA factor.

Finally, we have to practice the advice given in the Taitreya Upanishad to arrive at constructive solutions to our problem:

Sahana vavatu Sahanau

bhunaktu

Saha Viryam kara va vahai

Tejas vina maditha vastu

Ma vidh visha vahai

Om Shanti! Shanti! Shanti

(Let us come together. Let us enjoy together. Let our strengths come together. Let us move from darkness to light. Let us avoid the poison of misunderstanding and hatred. That way lies progress.)

Adopting this strategy, we can definitely see India becoming a less corrupt, progressive and developed country in the next 10 to 15 years.

N. Vittal

— The writer is a former Central Vigilance Commissioner

Happy Independence Day !!

2006-08-15T11:53:00.000+05:30

Happy Independence Day to everyone! Enjoy this Great Day!

India. the world’s largest democracy, turns 59 today!

In this great day I think of our heroes b'coz of whom we are here and we all are proud of them. They have shaped India before 1947 and Independent India through 59 long years.

Where the mind is without fear
and the head is held high;
Where knowledge is free;
Where the world has not been
broken up into fragments by
narrow domestic walls;
Where words come out from
the depth of truth;
Where tireless striving stretches
its arms towards perfection;
Where the clear stream of reason
has not lost its way into the dreary
desert sand of dead habit;
Where the mind is lead forward by thee
into ever-widening thought and action-
Into that heaven of freedom, my Father,
let my country awake."

"GEETANJALI"
-Rabindranath Tagore

Great companies with great names

2006-06-11T09:19:00.000+05:30

This is how certain company names came into being........

Mercedes : This was actually the financier's daughter's name.

Adobe : This came from name of the river Adobe Creek that ran behind the house of founder John Warnock.

Apple Computers : It was the favorite fruit of founder Steve Jobs.He was three months Late in filing a name for the business, and he threatened to call his company Apple Computers if the other colleagues didn't suggest a better name by 5 O'clock.

CISCO : It is not an acronym as popularly believed. It is short for San Francisco.

Compaq :This name was formed by using COMp, for computer, and PAQ to denote a Small integral object.

Corel : The name was derived from the founder's name Dr.Michael Cowpland. It stands for COwpland REsearch Laboratory.

Google :The name started as a joke boa! sting about the amount of information .The search-engine would be able to search. It was originally named 'Googol', a word for the number represented by 1 followed by 100 zeros. After founders - Stanford graduate students Sergey Brin and Larry Page presented their project to an angel investor, they received a cheque made out to 'Google'

Intel : Bob Noyce and Gordon Moore wanted to name their new company 'Moore Noyce' but that was already trademarked by a hotel chain so they had to settle for an acronym of INTegrated ELectronics.

Lotus (Notes) : Mitch Kapor got the name for his company from 'The Lotus Position' or Padmasana'. Kapor used to be a teacher of Transcendental Meditation of Maharishi Mahesh Yogi.

Microsoft : Coined by Bill Gates to represent the company that was devoted to MICROcomputer SOFTware. Originally christened Micro-Soft, the '-' was removed later on.

Motorola : Founder Paul Galvin came up with this name when his company started manufacturing radios for cars. The popular radio company at the time was called Victrola.

ORACLE : Larry Ellison and Bob Oats were working on a consulting project for the CIA (Central Intelligence Agency). The codename for the project was called Oracle (the CIA saw this as the system to give answers to all questions or something such). The project was designed to help use the newly written SQL code by IBM. The project eventually was terminated but Larry and Bob decided to finish what they started and bring it to the world. They kept the name Oracle and created the RDBMS engine. Later they kept the same name for the company.

Sony : It originated from the Latin word 'sonus' meaning sound, and 'sonny' a slang used by Americans to refer to a bright youngster.

SUN : Founded by 4 Stanford University buddies, SUN is the acronym for Stanford University Network. Andreas Bechtolsheim built a microcomputer; Vinod Khosla recruited him and Scott McNealy to manufacture computers based on it, And Bill Joy to develop a UNIX-based OS for the computer.

Yahoo! :The word was invented by Jonathan Swift and used in his book 'Gulliver's Travels'. It represents a person who is repulsive in appearance and action and is barely human. Yahoo! Founders Jerry Yang and David Filo selected the name because they considered themselves yahoos.

Understanding Introversion and Extroversion

2006-06-11T08:53:00.000+05:30

Dear all here is a good article by naomi karten. Hope you would enjoy it.

--------------------------------------------
Understanding Introversion and Extroversion
--------------------------------------------
By Naomi Karten

Summary: Personality differences often pose challenges for people who need to work together. One such difference is that which separates introverts and extroverts. Just by being themselves, introverts and extroverts can drive each other crazy. But they can also benefit from each other's strengths. In this column, Naomi Karten explains this personality difference and helps introverts and extroverts better understand and appreciate each other.
== ==== =-=

During lunch with several teammates, Margie vented about a coworker, Kevin. "He's so quiet. I never know what he's thinking," she said. "Sometimes, I think he's judging me. I wish he was more of a team player, but he's too aloof. He never even comes to lunch with us."

Meanwhile, in the meeting room to which Kevin often sneaks away for a few minutes of cherished silence, he mused, "Being with Margie is so draining. She never stops talking and never wants to know my ideas. Everything she says seems to lead to something else, and she keeps changing her mind as she yakety-yaks."

Many factors could account for the frustrations people experience as a result of others' behaviors, but a key factor in this case is that Margie is an extrovert and Kevin is an introvert. This is not to say that extroverts always talk non-stop or that introverts are invariably reserved. In fact, both introverts and extroverts can talk your head off. And both need down time to recharge. But what, when, and how each communicates can at times annoy or confuse the other; and as in Margie and Kevin's case, this leads to misinterpretations of the other's intentions.

Both introversion and extroversion concern where people get their energy, and that's the key to understanding the difference. Extroverts are oriented to the outer world of people and things. As a result, they thrive on interaction, generally enjoy being with lots of other people, and tend to be animated and expressive.

Introverts tend to be oriented to the inner world of ideas and thoughts. As a result, they generally thrive on quiet time, prefer interacting one-on-one and in small groups, and tend to be reserved and reflective.

Notice that I'm deliberately using terms like "tend to," "usually," and "generally." It would be seriously misleading to claim that all introverts and extroverts always behave a certain way in a given situation.

Extroverts also tend to think aloud, hearing their thoughts for the first time when they express them to others. It's understandable, therefore, that they sometimes appear to be changing their minds as they speak, because that's exactly what's happening--they're working through their ideas. Introverts tend to process thoughts internally. It's often only after they've done internally what extroverts do externally that they speak their thoughts--if even then. Though it may take only moments for introverts to organize their thoughts, the conversation may have moved on by then, so they don't chime in.

An especially important difference is that extroverts tend to gain energy from interacting with others. As a result, they may seek opportunities to talk with others, and they are more likely than introverts to look forward to an after-work outing after a people-intensive day. By contrast, introverts tend to lose energy from interacting with others. They tend to find constant interaction fatiguing, even when they like the people they're with and the things they're talking about.

Though it may at times seem otherwise, the behaviors associated with introversion and extroversion are neither motivated nor premeditated--and aren't meant to drive others crazy. Brain research demonstrates that introverts and extroverts differ in the quantity and pathways of blood flow to the brain and in sensitivity to certain neurotransmitters. For example, a research study led by Debra Johnson and reported in The American Journal of Psychiatry (February 1999) found that extroverts require a large amount of the neurotransmitter dopamine; the more active the extrovert is, the more dopamine is increased. By contrast, introverts are highly sensitive to dopamine; getting too much of it feels like an overload.

The research is much more complex than any brief description can convey. But once you consider the differences in how the brain functions, the behavioral differences between introverts and extroverts are exactly what you'd predict. Fortunately, both approaches are just fine; what's important is that coworkers respect each other and draw from everyone's strengths to create a better outcome for all concerned.

Remember, though, that it's not always obvious from someoneï¿½s behavior whether that person is an introvert or an extrovert. Some introverts are talkative; some extroverts are reserved. Just as there are differences in behavior between extroverts and introverts, there are
differences between any two introverts and any two extroverts. We are multi-dimensional beings, and our introversion or extroversion is just one small aspect of who we are.

If the introvert/extrovert dynamic has posed challenges for your team, I suggest you get together and discuss these differences. Help each other understand what your introversion or extroversion is like for you. Discuss the strengths you bring to the team by virtue of your introversion or extroversion. Ask each other questions to deepen your understanding. Describe what you need from each other in order to do your best work. I guarantee you'll learn some things in the process. I've seen teams make striking improvements in the way they work together through discussions of this kind.

In a future article, I'll elaborate on the positive and negative perceptions introverts and extroverts have of each other, and I'll offer additional ideas on how they can work together effectively.

Further Reading
Debora Johnson, Ph.D., et al., "Cerebral Blood Flow and Personality: A
Positron Emission Tomography Study"

About the Author
Naomi Karten is the author of
1.How to Survive, Excel and Advance as an Introvert: A Guide For
Introverts--and Extroverts Who Want to Understand Them Better.
Her books,
2.Communication Gaps and How to Close Them and Managing Expectations,
offer practical tools and advice for carrying out projects, delivering
superior service, implementing change, and building strong relationships.
Her newsletter,
Perceptions & Realities, has been highly acclaimed as practical,
informative, and a breath of fresh air.
Contact her at naomi@nkarten.com.

Web 2.0 - The Basics and what it is?

2006-04-10T02:24:00.000+05:30

Today I was surfing through wordpress blogs and I found extreamely good article on web 2.0 by Shreyas a.k.a Chrono Cracker

Web 2.0 is everywhere around us, simply everywhere. Whether it is the latest news about the World Wide Web, or a review on any blog, or the latest website buzz, Web 2.0 is ruling the world today. Web 2.0 is the most powerful force in the web today, a force that relies purely on innovation than invention and a force that is growing every single second. Yet, Web 2.0 had it’s humble beginnings.

What exactly is Web 2.0? Is it some kind of new software? Is it AJAX enabled websites or is it just innovative services? Nope, Web 2.0 is just a buzzword, a catch-phrase, however you like to call it. Infact after the initial dot cot bust the WWW was suffering as people had seriously no real interest in it and it was starting to get lame. It was then that the concept of “Web 2.0″ really began in a conference brainstorming session between O’Reilly and MediaLive International. Dale Dougherty, web pioneer and O’Reilly VP, noted that far from having “crashed”, the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What’s more, the companies that had survived the collapse seemed to have some things in common. The dot-com collapse marked that the web was not about just websites, it was a turning point for the whole of the web. The people agreed to call it Web 2.0, spicing it up and making it sound all-important in the first Web 2.0 conference and thus was born Web 2.0.

So let us come back to our original question. What is Web 2.0? The World Wide Web is continously evolving, 24/7. It is not a new technology which fuels this evolution but instead interaction and attitude. Simply said, Web 2.0 is the collective term for the evolution of the web from simply websites to interaction and innovation. It is the 2nd generation of services available on the world wide web. That’s all!

Tim O’Reilly defines Web 2.0 as such‘Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an “architecture of participation,” and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.’ If you don’t understand it, don’t try to! These guys are known to confuse the heck out of normal people, so stick with what I have said above.

There are tons and tons of elements and characteristics that are part and parcel of Web 2.0 and at the same time help it to further evolve - AJAX, Tags, Blogs, Podcasts, Wikis, Feeds, social networking, social bookmarking, Memes, social news, etc. A few best examples of Web 2.0 services/websites are Digg, Del.icio.us, Flickr, Netvibes, Gmail, etc. The original web dubbed Web 1.0 used to be just websites and surfing. Web 2.0 is different, it’s very base is interaction and communication. Democracy and Public Participation are what Web 2.0 is really about. Web 2.0 is about the individual and not the group, it aims to serve benefit to every single person surfing the web, the person with different thinking and not just the mid-section. Web 2.0 also depends on Hyperlinks more than content and flash more than static images.

Web 1.0 is nothing but just static HTML pages without the option to comment. What about Web 2.0? Take a look around, it’s just about everywhere, even this very blog is an example of Web 2.0. The main purpose of Web 2.0 is that the web must change to something that really enhances our life. Web 2.0 aims at developing the whole web into an enormous brain, a true democracy that is run by the people and people alone and so far it is succeeded. One factor that really has fuelled Web 2.0 is broadband. With unlimited broadband penetrating a large portion of the world, the use of the internet increased drastically and with it the interest in Web 2.0.

Today most of the things that we do offline can be done online as well thanks to 2.0 - Documents, Spreadsheets, Images, Animation, Designing, Formatting, storage, music, videos, your own desktop and whatever that you can think of. Infact the need for a Web based Operating system based on Web 2.0 has been chorused by many groups.

Web 2.0 has definitely redefined the Web that we live in. Infact, it is the one of the main reasons for the re-growth of the Web from around 2003. Though the term may have been coined just as a buzzword, Web 2.0 is best exemplified by it’s services. Web 2.0 will probably never be complete, change is the only thing constant in this world… Web 2.0 will continue and and continue and in the end the people will be the winners!

Tagz:: Web, 2.0, Web2.0, AJAX,

Impact of Dematerialisation and Depository

2006-03-18T12:28:00.000+05:30

Abstract

Dematerialisation of shares is an important milestone in the annals of Indian Capital Markets. Understanding and measuring the impact of it on various segments is necessary since it stirred the microstructure of Indian capital markets in general and stock exchanges in particular. Demand and Supply forces determine prices of a product. Liquidity plays an important role in the interplay of demand and supply forces. The impact of dematerialisation on liquidity in the Indian stock exchanges is quantified and analysed. Quality of shares changed for better owing to dematerialisation and thus investors are expected to earn higher returns as a natural step, albeit, for sometime only. Changes in quality of shares are expected to cause changes in demand and supply for shares, which in turn, influences the levels in share prices (volatility). All these three issues are studied in the present paper. Liquidity and returns improved substantially in the post-demat period while volatility was very much below the daily changes permitted.

Introduction

Dematerialised securities trading, settlement and custody has changed considerably the market microstructure of Indian stock exchanges. Dematerialisation is the process by which "physical certificates of an investor are converted to an equivalent number of securities in electronic form". The converted securities are owned, traded and utilised like physical securities. Order routing, trading and settlement, that is delivery and payment in demat form, changed the way markets started functioning. These changes have brought tremendous impact on the behaviour of investors, stock exchanges, depository participants and custodians.

Generally, an investor would look for more liquidity to less liquidity in a stock. Higher liquidity means lower transaction costs and easy entry and exit options. Therefore, higher liquidity is preferred. Ownership transfer of demat shares is quite fast. Investors would be able to churn their portfolio many a times over, contributing to the increase in turnover and liquidity. This paper attempts to measure post-demat increased level of activity (liquidity). Whenever a new product is made available, there will be an additional demand for that particular product. Dematerialised shares are definitely superior to physical (paper) form of shares. Physical form of shares are fraught with fake, forgery, stolen and duplicate problems. Logically speaking, higher demand should emanate for demat shares, which is expected to push up (pull down to a lesser extent) shares prices resulting in higher returns (lesser losses) to the investors compared to pre-demat period.

This higher demand will continue for sometime (adjustment period lasting, sometimes, a few months) only. Once all investors understand the merits and value of demat shares or when all shares of all stocks are demated, then the superior or higher returns will disappear or will not be there. Some markets are quite quick enough to discount the new information while some other markets take longer time (a few weeks to a few months) to discount the new information. In this period, investors can make abnormal profits. In terms of abnormal returns, dematerialised shares produced positive returns which are significant.

What is Dematerialisation?

Dematerialisation (“Demat” in short form) signifies conversion of a share certificate from its physical form to electronic form for the same number of holding which is credited to your demat account which you open with a Depository Participant (DP).

Dematerialisation is a process by which the physical share certificates of an investor are taken back by the Company and an equivalent number of securities are credited in electronic form at the request of the investor. An investor will have to first open an account with a Depository Participant and then request for the dematerialisation of his share certificates through the Depository Participant so that the dematerialised holdings can be credited into that account. This is very similar to opening a Bank Account.

Dematerialisation of shares is optional and an investor can still hold shares in physical form. However, he / she has to demat the shares if he / she wishes to sell the same through the Stock Exchanges. Similarly, if an investor purchases shares, he / she will get delivery of the shares in demat form.

What is a Depository?

A Depository (NSDL & CDSL) is an organisation like a Central Bank where the securities of a shareholder are held in the electronic form at the request of the shareholder through the medium of a Depository Participant.

If an investor wants to utilise the services offered by a Depository, the investor has to open an account with the Depository through a Depository Participant.

Depository Participant

Similar to the brokers who trade on your behalf in and outside the Stock Exchange; a Depository Participant (DP) is your representative (agent) in the depository system providing the link between the Company and you through the Depository. Your Depository Participant will maintain your securities account balances and intimate to you the status of your holding from time to time. According to SEBI guidelines, Financial Institutions like banks, custodians, stockbrokers etc. can become participants in the depository. A DP is one with whom you need to open an account to deal in electronic form. While the Depository can be compared to a Bank, DP is like a branch of your bank with whom you can have an account.

Impact

1. Institutional Structure
There are quite a few institutions that are directly and/or indirectly connected with dematerialised operations of securities. Understanding the inter-linkages and functional responsibilities of these institutions will help us to have correct and holistic perspective about functioning of dematerialisation. The institutions connected with demat operations include; a) Depositories, b) Stock Exchanges (SEs), c) Clearing Corporations (CCs) / Clearing Houses (CHs), d) Depository Participants (DPs), e) Registrars and Transfer Agents (RTAs). Both the depositories NSDL and CDSL are primarily promoted by the two leading stock exchanges viz., National Stock Exchange of India Ltd (NSE) and The Stock Exchange, Mumbai (BSE) respectively. Besides, there are many other institutional promoters in both the depositories. Both are registered as organisations-for-profit and professionally managed. Inter-connectivity between these two depositories has been established, thus DPs and investors can transfer smoothly their shares from one account to another between the depositories. Most of the stock exchanges are connected with the depositories to provide trading in dematerialization segment. Eventually, all the exchanges will be connected to either of or both the depositories. Resultantly, functioning of exchanges altered with the commencement of depositories; shorter trade cycles, negligible bad-deliveries, immediate transfer of beneficial ownership and lower transaction costs. An in-depth study on transaction cost for equity shares in India by Raju (2000) revealed substantial decrease in transaction costs and observed that the dematerialisation as one of the important factor for this trend.

Functioning of clearing corporations / clearing houses materially changed after the entry of depositories; reduced manpower requirements and faster clearing operations. It also helped them to diversify into related businesses such as on-line stock lending. Depository participants are the new commercial intermediaries that sprang up. They interpose between investor and depository. It can be stated that they are the back-bone for the success of dematerialisation. RTAs facilitate dematerialisation and rematerialisation of shares.

2. Market Microstructure
Trading in dematerialised shares brought in many changes to the entire structure of the capital market functioning. With the introduction of demat, stock exchanges switched over (with a choice) from five day accounting period to T + 5 trading and settlement for demat stocks. Even for demat stocks dual settlement is in operation: fixed account period as well as rolling settlement. This partial change to T + 5 rolling settlement system is a major shift in the market. Thus dematerialisation smoothly paved the way for rolling settlement and India joined other developed markets that are following T+ settlement system. In the physical segment there is a long gap between delivery and payment. This gap narrowed down, and it is almost on Delivery Versus Payment basis (DVP). This near real time DVP reduced market risks considerably. Clearing corporations / clearing houses and stock exchanges are able to smoothly coordinate and settle the trades effectively and timely. Clearing corporations / Clearing houses are electronically directly connected to depositories that make settlements faster and easier. Trading in dematerialised shares attracts lesser brokerage and custodial charges, as a result. Reduced transaction costs prompts investors to trade more frequently resulting in higher volumes.

This also makes bid-ask-spreads narrower, which reduces implicit transaction costs.

3. Review of Literature
The usefulness of an event study comes from the fact that, given rationality in the market place, the effect of an event will be reflected immediately in asset prices. Thus the event’s economic impact can be measured using asset prices observed over a relatively short time period. In the academic finance field, event study methodology has been applied to variety of firm specific and economy wide events. The event studies are also used in the field of law and economics by Schwert (1981) to measure the impact on the value of a firm of a change in the regulatory environment. The first published event study is by Dolley (1933) which examined the price effects of stock splits, studying nominal price changes at the time of the split. Over the decades from the early 1930s until the late 1960s the level of sophistication of event studies increased. Mayer and Bakay (1948), Baker (1956, 1957, 1958) and Ashley (1962) are examples of studies during this time period. The improvements include removing general stock market price movements and separating out confounding events. In the late 1960s seminal studies by Ball and Brown(1968) and Fama, Fisher, Jensen, and Roll (1969) introduced the methodology that is essentially still in use today. Ball and Brown considered the information content of earnings, and Fama, Fisher, Jensen, and Roll studied the effects of stock splits after removing the effects of simultaneous dividend increases.

4. Methodology
The event of importance in the present study is the start-date of compulsory dematerialised trading in equity shares. Therefore, task of conducting an event study and identifying the period over which the event started having its impact on various variables are of interest to. In order to measure impact of the event (demat) on the behaviour of various identified variables (liquidity, returns and volatility), there is a need to consider equal lengths of time periods, as much as possible, before and after the event. Therefore, data on various variables before and after the compulsory trading in dematerialised shares are obtained for various lengths. Trading and settlement in shares, for all classes of investors, is made compulsory starting from January 4, 1999 in select group of companies. Thereafter, gradually, more number of companies are added to the list of compulsory demat trading and settlement.

4.1 Data and Sample Characteristics
Demat was introduced in phased manner in India. For different classes (institutional and retail) of investors varying levels (compulsory and optional) of dematerialisation has been introduced at different points of time. Compulsory dematerialisation is one where all classes of investors (institutional as well as retail) need to trade and settle only in demat form with an exception that a small investor has been permitted to deliver in physical form who has 500 or fewer shares. Second category of dematerialisation is only for institutional investors who are required to trade only in demat form but not the small investors. Yet, another class where almost all the investors by their own volition trade in demat form. The study considered the first style of demat (compulsory) for the analysis because in this category all investors are required to trade and settle in the demat form while in other categories exceptions are granted to some classes of investors. If exceptions are granted, then certain classes of investors have options. These investors trade and settle in physical segment also. Trading and settling in physical form, however, distorts the full impact of demat. Owing to this reason, the study did not consider non-compulsory demat trading and settling segments. In order to measure the full impact of demat, it should be applicable to all classes of investors.

4.1.1 Demat Companies
Compulsory trading in the demat form for all classes of investors was introduced starting from January 4, 1999 in a phased manner. In each phase, a number of companies were added to compulsory demat category. In the first phase 12 companies on January 4, 1999, in the second phase 19 companies from February 15, in the third phase 33 more companies from April 5, and in the fourth phase 40 scrips were included with effect from May 31, 1999. Study considered first three phases only starting from January 4, 1999 till April 5, 1999. Further, it is intended to have minimum of six months of post-demat period which will give reasonable number of data points for statistical and econometric analysis. Selection of the companies for the study is made by using random sampling technique.

4.1.2 Control Group of Companies
Another matching sample group of companies is considered for the study. Matching is, generally, done on the basis of relevant parameters. Parameters considered consist of size of company, market capitalisation, paid-up capital/number of shares outstanding, number of shares traded, sales and others. In this study, the most relevant parameter is number of shares outstanding. In order to measure liquidity, returns and volatility, control group of companies on the basis of paid-up capital of the companies is selected. Paid-up capital has direct bearing on the number of shares issued and traded. Thus, it rightly represents liquidity. Paid-up capital is also a size parameter so that it can be used to measure returns and volatilities. Similar econometric analysis is carried out on control group to examine the impact of a non-occurrence of the event on this group. Results of control group and study group are compared and analysed. Analysis throws up impact (in this case demat) or no-impact on sample companies. Control group of companies that are not subjected to the proposed change (in this case dematerialisation). Matching of companies has been done first on the basis of industry classification and then paid-up capital. Companies from demat group and non-demat group are matched on the basis of industry classification and paid-up capital in that order. In many instances, it was always not possible to get two companies having similar paid-up capital (one from demat and another from non-demat group). Then, nearest company in terms of paid-up capital which is closer to demat company, is considered. In some instances, there was no company having paid-up capital closer to demat company's paid-up capital, therefore, for these companies where there is no matching company available. Thus, fewer number of companies are considered in control group for the analysis. Inequality in both the groups in terms of number of companies will not pose any methodological problem since the study is not a cross-sectional comparison.

For the control group also, computation of liquidity, abnormal returns and volatility by using the same methodology as is explained below. Since control group is not exposed to dematerialisation, the companies are free from demat influence. Ceterus paribus, changes in liquidity, returns and volatility should be equal in both the sets. If changes in liquidity, returns and volatility are more in non-control group, than that is recorded in controlled group, then the difference can be attributed to the demat. The hypothesis is that demat has no impact on liquidity, returns and decrease volatility. Absence of positive growth in all the three parameters in controlled group and presence of growth in these parameters in the demat groups clearly indicates that demat does affirmatively influence liquidity, returns and volatility.

Event studies pose certain research methodological challenges as to whether the changes in the behaviour of variables studied are due to, entirely, the impact of the event or there are any other exogenous factors responsible for the change. One way of overcoming of this problem is to construct and observe the behaviour of control group.

4.2 Data and Period
For each company and index, daily closing prices are taken from the National Stock Exchange of India Ltd (NSE) before and after dematerialisation period till October 8, 1999. The study considered a six months pre- and post-demat period for the analysis. The benchmark index considered for the purpose of research analysis is the S&P CNX Nifty. It is quite logical to take S&P CNX Nifty as the reference benchmark since all other relevant data are considered from NSE.

Number of shares traded for each company in pre- and post-demat period are also collected for the same length of the time. Three groups of companies consisting of seven, ten and eleven are selected from the first, second and third groups where compulsory demat trading started form January 4, 1999, February 15, 1999 and April 5, 1999 respectively. Names of the companies are given in Annexure AI. The daily closing stock prices of these companies are collected from National Stock Exchange of India Ltd starting from July 1, 1998 to July 7, 1999 for group 1, from August 17, 1998 to August 10, 1999 for group 2 stocks and for Group 3 stocks the data is collected from October 5, 1998 to October 8, 1999. The benchmark index S&P CNX Nifty data are also collected for the respective corresponding periods. Besides, information on daily trading volumes in quantity and value terms and number of daily trades also obtained for the same periods for all the stocks.

4.3 Liquidity
The data on trading volumes in both value and quantity terms and number of trades are also analyzed to see the impact of dematerialisation. In order to observe whether there is any growth (lack of it) in the number of shares traded in the post-demat period compared to pre-demat period, growth rates are calculated over the pre-demat period.

4.4 Returns
Returns from a company before and after demat should be the same, if demat has no influence on returns. If demat influences them (returns) then there should be abnormal returns. In the following paragraphs, explained methodology, adopted to measure returns, abnormal returns, significance of abnormal returns both for demat and control group of companies. These procedures are advocated by Campbell, Lo and Makinlay(1997) in their seminal work.

4.5. Volatility
Volatility has become a topic of enormous importance to almost anyone who is involved in the financial markets even as a spectator. To many among the general public, the term is simply synonymous with risk. High volatility is to be deplored, because it means that security values are not dependable and the capital markets are not functioning as well as they should. While investor protection and solvency of financial institutions are paramount concerns underlying public regulation of securities markets, it is also evident that the regulatory framework is to a considerable extent based on the premise that unregulated securities markets are fragile and prone to inefficiencies and systemic crises.

The absolute values of closing stock prices are converted into continuously compounded returns. The returns data is analyzed to compute standard deviation for each month starting from the event day for both pre- and post demat periods covering a maximum of six months period. Besides, cumulative standard deviation from the event day for pre- and post-period is also computed. In order to avoid the swings of extreme values three per cent of return observations are eliminated form both the sides of the data.

5. Abnormal Returns
It is well recorded in the literature of financial economics that earning abnormal returns consistently is impossible. There could be some occasions; short periods, during which one can obtain abnormal positive or negative returns. The occasions include macro or micro-economic as well as non-economic shocks. Dematerialisation of shares is one such a micro-economic event. In the present research study makes an attempt to study the possibility of investors earning abnormal returns. Demat stocks are better quality products compared to non-demat stocks of the same company for the reasons mentioned elsewhere.

Therefore, there will be a greater demand for these stocks. Higher demand naturally pushes up share prices resulting in higher positive returns. This is what exactly the study has tried to measure and find out whether there is any positive impact of dematerialisation on returns if so what is the extent of it. Abnormal
returns are measured for the first three months and six months in the case of group I, group II and for group III shares. Since these are expressed in terms of percentages there will not be any problem in interpretation.

References
1. www.utiicm.com/
2. www.indiainfoline.com

Tips for GD and PI from IIMC mentorship programme

2006-03-08T18:24:00.000+05:30

Some tips for GDs and Interviews
By Jayanti Dutta (IIMC 2005 Batch)

General

Body Language
# Sit straight backed, feet close together and not crossed.
# While speaking, pointing fingers, pencils/pens, should be avoided.
# While it is OK to gesture with your hands while making a point, avoid waving wildly.
# Good eye contact should be maintained.
# Try to appear formal and polite, but not too rigid. Try to relax.
# Smile :) [not too much!]

Preparations
# Prepare your subjects thoroughly. While it is not essential to answer every question, you should show a reasonable grasp of your main subjects.
# Read the newspapers regularly so that you are up-to-date with current happenings
# Read at least one business newspaper/magazine. They are not really very difficult to understand. While detailed knowledge may not be required, a grasp of the basics helps.
# For the time being, practice speaking smoothly in English. We tend to mix up other languages when speaking, and don't realize how difficult it is to find the right words when needed.

Appearance
# Dress in formals.
- Men should dress in formal shirt & trouser and may or may not wear a tie/blazer. Wear sensible shoes, not ones with studs and decorations.
- Ladies can wear Salwar Kameez or Western Formals, wear a saree only if you are very comfortable in it. Try to make your outfit formal looking in terms of colour as well as material. Wear sensible shoes(Even if open they should have straps - no chappals).
# Avoid heavy jewellery as far as possible.
# Hair should be neatly and formally arranged. Men should have facial hair neatly clipped if they have any.
# Carry a folder with multiple flaps. Keep your certificates, photocopies, admit card etc. well ordered, so that you don't have to search for them when asked. Carry a few white sheets and a pen with enough ink, and maybe a spare one...just in case.

Group Discussions

The crucial point to remember here is that a group discussion is not a debate. Hence, aggression is very negative. The main idea behind a GD is to exchange ideas, and listening is as important as speaking.

Content:
The topic may be general, abstract or technical. There may also be a case study. Content would differ accordingly.

For technical topics (WTO, GATT, etc), a basic understanding of the issue is sacrosanct. This needs to be supplemented by opinions, observations and speculations.

In case of a general topic, it helps to think laterally. Different dimensions may be introduced when the GD begins to stagnate.

Creative topics are the most interesting and hence the ones candidates are generally uncomfortable with. Here again, lateral thinking helps.

For a case discussion, the best way to start is to identify the problem and state it at the beginning of the GD. As different points of the case are analyzed, conjecture should be avoided. While reasonable guesses may be made, all analysis should be based on data or information contained in the case itself.

Remember that you are allotted points for your contribution to the topic. Avoid statements like "You know, what I feel about the topic in question is that we should take a balanced view"...Long statement, but it means nothing. It may indicate that you don't know what to say, and someone else will take over.

Presentation:
The optimum number of entries in the GD depends on duration and the number of candidates. However, there is no need to monopolize the discussion. It is far more important to be a team person and allow everyone a chance to speak. Basic courtesy does not cease to apply in a GD. It is not essential to contradict another person to prove one's own point. If you don't agree, say what you feel. Never say "You are wrong".

There is no need for the group to come to a conclusion unless specifically directed by the person conducting the GD. Each person must direct his speech to the other members and never to the moderator. It is important to be interested in the proceedings and not sit back when one feels his quota of entries is done with. While making a point, one must be brief and not meander.

This creates an opening for the other candidates to enter the GD. It also makes an impact if one tries to restore order in an otherwise chaotic GD. This illustrates leadership abilities. By a similar logic, taking initiative helps. But while acting as facilitator(only in case the GD become chaotic), make sure that you do not keep talking about maintaining order etc. Get on with the GD. In case the moderator specifically asks someone to act as facilitator( rarely happens) don't take the advantage you have to make your points!

Style of speaking varies from person to person and there is no need to adopt an artificial manner. A relaxed, polite and formal way of speaking makes a good impact. Over animation and excessive rigidity are both to be avoided - try and strike a balance.

Strategies:
1. Some people prefer opening the GD. It's a good bet, but it is also a lot of risk. If you make a good opening, you win the respect of the group for the rest of the GD .Ideally, the opening should give a structured introduction of the topic, substantiated with at the most one example. It should be brief and should never carry a conclusive remark. In a case study, the introduction should strictly be the problem definition and must not include the analysis of the case.

2. Most panels give you a minute or two to think. Use it to write down your points. Don't bother with sentences, note down some keywords.

3. It does not pay to save good points for the end. The GD might end abruptly or there may be too much commotion to make a good impact at the end. Some other candidate may also speak the point before you do. Candidates who have low lung power need to time their entries so that they can get in when there is a trough in the GD. Irrespective of style, shouting should be avoided at all costs. It creates an extremely bad impact on the panel.

4. For candidates who have difficulty speaking - it is important to be heard. Try to get in when the previous speaker stops for breath. A good way to start off is to mention a keyword - which sums up your point - in a raised voice, then to come back to your ordinary voice when everyone is listening. Make it a point to frame your point in your mind before you start, so that you don't dry up in between. Also try to speak in 4-5 sentences. If you say only one sentence, half of it will be lost before people start listening. Also try to start off as soon as you can, but don't appear desperate or uninterested.

5. Summarizing helps. While making a summary, do not include new points. This is also an opportunity to prove your listening skills if you have not spoken much throughout the GD. Panelists tend to ask the not so strong speakers to summarize, which should be fully utilized. A good way to keep track is to keep noting keywords on points that others are making. Start off with "(The group)/(We) agreed..." or "(The group)/(We) (has) discussed..."

6. At the interview, you may be asked about your performance in the GD. If you had dropped technical terms, these may be followed up. In case discussions, you may be asked to further elaborate on a point you made during the GD. One must be prepared for these situations.

Interview

Preparation:
There are three aspects to this: Personals, academics and General awareness. The stress on each varies from one institute to another, and sometimes, from one panel to another for the same institute. Ideally, you should give the same weightage to all three.

For personals, everything mentioned in the form is important. Keep photocopies of everything you submit and remember the answers you have written to questions asked about your personal life. Everything has to be substantiated with examples, for instance - qualities you possess, incidents that have made a deep impact on you, and so on. Role model, hobbies, extra curricular activities, motto in life, ethics and values, career goals are also analyzed. The most important thing to remember here is that the panel evaluating you is highly experienced, and trying to be someone you are not will never work.

Think about and frame your career goals(long and short term), beliefs and values, strengths and weaknesses etc. Try not to say anything controversial unless you can justify it. Be sincere.(It helps to write this down and study it, not so that it sounds learned by rote, but to be comfortable with what you want to say). Don't disguise strengths as weaknesses( I am a perfectionist, I am sensitive etc.)

Questions on academics have to be prepared well in advance. The level is typically graduation and after. For people who have been working, a basic understanding of their subject matter is tested and more emphasis is given to their professional career. However, for foreshores, its is very important to know your core subjects thoroughly. While you might not be equally proficient in all your subjects, your principal area of interest cannot be compromised upon.

General Awareness is tested at a very basic level, especially about the corporate world. Since this is where most of you are aspiring to be in, you must reflect an interest to know more about what is happening in corporate India and also globally. Reading a national daily and a business daily is a good way to go about this. Magazines help you to form opinions which you may be asked to share. You must also know about the institute itself and be clear about why you want to be a part of it.

D-day:
Reaching the venue well on time is important. You should be dressed in formals and carry a portfolio or folder with all certificates and other necessary documents for verification. Also carry a pen and some papers just to be prepared Try and make a note of the headlines of the day. Ease nervousness by talking to other candidates.

During The Interview:
# Be relaxed and confident.
# Don't be too rigid
# It's not important to answer all questions
# Attitude and the way you behave when caught on the wrong foot helps
# Sometimes the panel will try to stress u out, don't get unnerved if the interview seems to be going badly. Panelists may spring a surprise and behave in an unexpected manner (walk round the room), show displeasure and act like they are not interested in whatever you are saying, even remark that you don't know much etc. Don't get affected by all this, these are mostly pressure tactics.
# It is OK to say 'I don't know' sometimes. In fact it is better than bluffing outright.

Typical Questions
# Tell us about yourself. Say the basics of your background in a sentence or two, then move on to something not on your CV/form
# Why MBA. Work out the answer to this one beforehand. Be sincere, don't be flippant
# Why this institute? Find out about the institute. Go through the website/talk to alumni.
# What are your short and long term career goals? Think this one through. Even if the answer is not very technically sound, the panel is basically checking that you have thought about it.
# What are your hobbies? One or two things you are really interested in. The panel may go into details, so try to make it something you know about.
#Have you any questions for us?Have a question ready(should not be about your performance/whether u are selected)

At the end of the day, you are one of the few people to have it made this far. Remember that, believe in yourself and know that you can do it. That's all it takes. All the best!!

Jayanti Dutta is a student of the batch of 2005 at IIM Calcutta. She had final calls from IIMs A, B, C, I ,K ,L, XLRI, IIFT, MDI, XIMB, Symbiosis (all India Top rank)
She did her summer internship at HSBC, London

IAS i.e. UPSC Exam 1998 Interview Question

2006-03-03T16:49:00.000+05:30

IAS i.e. UPSC Exam 1998 Interview Question and there Answer given by candidates

..........oh sorry!! IAS Officers now

Q. How can you drop a raw egg onto a concrete floor without cracking it?

A. Concrete floors are very hard to crack! (UPSC Topper)

Q. If it took eight men ten hours to build a wall, how long would it take four men to build it?

A. No time at all it is already built. (UPSC 23 Rank Opted for IFS)

Q. If you had three apples and four oranges in one hand and four apples and three oranges in the other hand, what would you have?

A. Very large hands.(Good one) (UPSC 11 Rank Opted for IPS)

Q. How can you lift an elephant with one hand?

A. It is not a problem, since you will never find an elephant with one hand.
(UPSC Rank 14 Opted for IES)

Q. How can a man go eight days without sleep?

A. No Probs, He sleeps at night. (UPSC IAS Rank 98)

Q. If you throw a red stone into the blue sea what it will become?

A. It will Wet or Sink as simple as that. (UPSC IAS Rank 2)

Q. What looks like half apple?

A: The other half. (UPSC - IAS Topper)

Q. What can you never eat for breakfast?

A: Dinner.

Q. What happened when wheel was invented?

A: It caused a revolution.

Q. Bay of Bengal is in which state?

A: Liquid (UPSC 33Rank)

Q: what is the opposite of Nag panchmi?

A: Nag did not punch me.

Transparency & active participation of the citizen

2006-03-02T18:43:00.000+05:30

Transparency & active participation of the citizen is the core concept of public system

Objective of Transparency & active participation of the citizen

1. Help cities to work on the simplification of laws, rules and procedures within their purview that are easily intelligible to an average person.
2. Assist cities in the development of transparent public procurement processes.
3. Assist cities in holding wide consultations on city budgeting and planning including social and gender budgeting and auditing.
4. Prepare school textbooks that include and promote good civic sense in real terms.
5. Ensure regular audit of the accounts of local bodies.
6. Encourage public-private partnership through legislative and regulatory framework, public education, resource mobilization, good leadership and transparent processes-apply in municipal finance and development work.
7. Reducing municipality of authorities and roles by coordinating city development, integrated city development plans, development activities to involve local bodies.
8. The local bodies need to make public commitments of what services it will provide to the citizen’s as per entitlements, with clear stated information about standards and quality.
9. If the services are not provided there must be clear-cut grievance redressal process.
10. There should be right to information on all matters pertaining to local government.
11. Electoral reforms should be introduced at the local level
12. Transparent engagement of private sector
13. Citizen’s charter should be brought out by all local bodies. Standards of service should be specified.
14. Replication of good practices.

Formation of Local Area Citizens' Committees-

Citizens' participation through the involvement of Community Based Organisations and NGOs in improving the delivery of civic services and improving the urban environment has been encouraged by the M.C.G.M through the various mechanisms and schemes such as Advanced Locality Management (ALM); Dattak Vasti Yojana; Online Complaint Management System (OCMS); adoption of garden and footpaths; construction, operation and maintenance of toilets etc.

Under the ALM set-up local citizens' groups called ALMs interact with M.C.G.M officials once a month in the Ward office. The meetings are normally chaired by Asst. Municipal Commissioner of the concerned Ward and are attended by all Sectional Heads of the Ward. In order to ensure delivery and proper monitoring of quality civic services with the full participation of community, it has been found necessary to further decentralize the monitoring mechanism.

Based on the feedback about the urgent need to strengthen Citizens' participation with greater involvement of elected representatives and voluntary citizens' groups in the improvement of the urban environment and delivery of civic services at the local level, it has now been decided to create a de-centralized mechanism for regular interaction between Voluntary Citizens' Groups, representing a Beat of 3 -5 roads, elected Councilors and Municipal officials by forming Local Area Citizens' Committees taking each Councilor Ward as a unit. This will help to develop proper understanding and co-ordination between Voluntary Citizens' Groups, elected Councilors and Municipal Officials for achieving timely and efficient delivery of municipal services and bringing about a better physical environment at the local level by creating awareness among citizens about their civic rights and responsibilities.

A Local Area Citizens' Committee can be formed at each local level to deal with the following subjects:
1. Cleanliness and Garbage Collection
2. Water Supply and Sanitation
3. Regulation of hawking
4. Safety of pedestrians and parking of vehicles
5. Maintenance of Roads, Footpath and Storm Water Drains, including installation and maintenance of street furniture and bus stops and proper regulation of digging and re-instatement of trenches excavated by utilities
6. Road side and public gardens
7. Disaster Management
8. Any other matter relating to public safety, public health and public amenities and decided by the Committee.

Example: Transparency & Active participation of the citizen

Civic Services And Alms (Advanced Locality Management)
AGNI started out by tackling civic services with the MCGM (Municipal Corporation of Greater Mumbai) and citizen groups. Soon it was facilitating formation of Advanced Locality Management (ALM) groups. An ALM is the MCGM's own framework for citizen participation in civic work. It is meant to provide single window access to all services managed by the Ward Office.

Success stories are numerous eg drains in Kurla left open and uncleared for 30 years which were cleaned; encroachments in Wadala and elsewhere and bad traffic routing. Garbage clearance, water supply, the condition of roads and pavements and illegal building have also been addressed by AGNI JAAGs.

Clean & Green Mumbai
Concerned with the alarming rise in pollution levels, lack of cleanliness and the rapid disappearance of trees and open spaces in the city, AGNI collaborated with college and school students and the Times of India Group to take up Cleaning and Greening Mumbai.

The project began with a two-day workshop at Lonavala involving 150 College students and programme officers besides AGNI volunteers. A "Clean and Green Mumbai" week was conceived and launched at a mass meeting. Volunteer groups were set up in 11 Wards to spread awareness before a cleaning, greening and vermi-composting operation in and around Mumbai.

Swachchha Mumbai Abhiyaan
AGNI has been actively involved in formulating and implementating this ongoing program of the MCGM, launched on 15th August 2002.

A core group of senior MCGM officers and AGNI members formulated an action plan based on data about waste generation, collection and disposal. AGNI-JAAGs promoted community participation and media notice. AGNI and MCGM organised a sensitization workshop for civic staff and AGNI. Volunteers were mobilised by AGNI at Ward level to join MCGM 'Nuisance Detector' teams and monitor clearing of garbage. Information on garbage clearance timings, control room numbers etc was spread by AGNI volunteers, who also found sponsors for litterbins and security guards.

Girgaum Chowpatty Beach Project
AGNI - JAAG in D Ward helped evolve a plan to accommodate bhelpuri stall owners on Girgaum-Chowpatty beach after courts had held the area to be recreational and for citizens. Where were stall owners to go? AGNI participated in site visits, court hearings and numerous discussions with civic authorities. Architect and urban planner Rahul Mahrotra designed a solution. It has been implemented by a court-appointed committee on which AGNI is represented.

Air Transport

2006-03-02T18:32:00.000+05:30

Meaning

Transport of men, mail and materials through a vehicle in the air from one place to another is referred to as Air transport. The vehicle in case of air transport is termed as Aircraft. Aircraft is a vehicle operating primarily in the earth's atmosphere but at appreciable distances above the ground.

The growth of air transport has modified the travel habits of million of people and has influenced socio-political and economic life of the people in many countries. These effects have been made possible not only by the rapid technological development of the aircraft but also by the introduction of uniform navigational and communication facilities throughout the world by steady advance in air flight safety. The progressive evolution of international air agreements, regulation, rules of flight, conduct and regulatory agencies together provide a worldwide code of civil aircraft operation.

Characteristic of Air Transport

1. Air transport by nature provides the speediest mode of transport service. The aircraft need to fly above a certain limit of speed due to the basic aerodynamic principle. Speed is the greatest merit of air transport over land or sea transport. Air transport has brought the World closer and in fact the people can reach the other parts of the World within the shortest possible time. Air Transport is used as a very efficient means for speedy transport of men, mail and goods.

2. This mode of transport does not encounter the geographical barriers of earth's surface like mountains, hills, deserts, rivers, etc. and this allows the air transport to provide gradually faster services. It has also the advantages of linking remote and inaccessible areas across the mountains, oceans, deserts and dense forests.

3. Aircraft usually follow Great Circle routes. Great circle routes are the shortest routes between two points. But at times due to political restrictions great circle routes are not followed. Availability of full load traffic is also essential for the aircraft to follow great circle route. If traffic is not available then a longer route is followed by the airlines. On account of security reasons of various countries the aircraft has to change their routes.

4. Weather conditions playa vital rol~ in air transportation. The meteorological elements have significant impact on aviation. The sub-tropical belts of high pressure are the most favorable and in most places, almost ideal areas for aviation. Development of air transport requires better landing equipment in the airports for safe landing of aircraft. Technological improvements and aids like radar, de-icing device, beacons for night flying and many other help in developing the air transport.

5. The rate of depreciation and obsolescence of aircraft is high. The price has to be paid for the rapid technological change in the aircraft manufacturing industries. A major check is also required after twenty thousand air-borne hours, after which the aircraft is said to be in a mint condition. The cost of this check is very high. Moreover, Digital Flight Recorder readout is mandatory every month.

6. The nature of air transport operation required that a major portion of work force acquire job or industry specific skills, through experience or training.

Socio Economic significance:

(a) It facilitates links to inaccessible areas. The air transport aids the land transport in the economic development of areas where other means of transport is practically absent. In regions where road cannot be constructed or land transportation links cannot be established, this mode of transport is to be pressed into service because of necessity. Settlement in various mining areas or in the snow-fed areas is only possible because of air transportation links.

(b) Helps to expand geographical market. Air transport has prompted a number of industries to expand their geographical markets and introduce "just-in-time" innovative distribution technique. The globalization of production market has contributed significantly the growth of air transport. Now the supply of international market is provided by some three hundred airlines.

(c) It creates consumer market. Despite the fact that air transportation has been expensive, all the nations have. utilized every opportunity in developing this mode of transport. The development of civil aviation has been due to the desire to have well-organized air-routes to reach the consumer market. Air cargo has created new markets and has contributed notably to the development of international trade in certain high cost commodities.

(d) It helps to increase military importance. Aircraft are not merely the carrier of goods or passenger or mail but they are also used as the weapons of war. They maintain a system of high-speed transportation requirement of the government and of essential industry in war as well as in peace. The most important advantage military aviation derives from civil aviation is in the development of airways, air navigational aids and ground organization. The military importance of air transport generally prompts the governments to attach more importance for the development of this sector. Air transport serves the boarder areas to strengthen national security.

(e) It creates employment. Air transport industries also create employment opportunities. Development of civil aviation offers jobs in its different segments of operation. Skilled and unskilled persons can be employed in a larger scale with better co-ordination of road and air transport.

if) It provides faster relief operations during flood, cyclone, drought and other natural calamities. When all the land routes of a particular place is cut-off due to natural and other calamities, air transport is the only means to connect that area. Air surveys can also be undertaken to know the topography of a region by using helicopters. At the time of draught, artificial rain can also be affected by air-crafts.

(g) It assists to increase foreign exchange reserve. A national airline can help in saving foreign exchange. Receipts from foreign travelers, export freight and airport expenditure by foreign airlines provide revenues of great value in terms of foreign exchange for many airliners. The wide-ranging opportunities offered by long-haul aircraft attract tourists. Its related economic benefits are enjoyed by smaller and less developed. countries. Economic gains are achieved by the use of air transport, as a stimulant to trade, tourism and industry and the location of one or more international airport terminals in the vicinity of a capital city is a factor critical to national growth.

(h) It assists in developing international tourism by offering attractive travel package to the travelers. The hotel industry can grow with the development of better airport facilities and frequencies of air services. The growth of floriculture industries is possible because of fast transportation facilities thorough air services. Speedy deli very of these types of products is required because of its perishable nature and air-transport fulfills this condition.

(i) Air transport reduces the transit time of transportation, which is vital to boost economic activities. Trading, commercial and official activities can be done at the quickest possible time because of availability air transport. Better international understanding is essential for the welfare of the human race. This requires frequent visit of top dignitaries of a country to the other country to assemble in an international summit and this is possible because of availability of air transport. Air transport offers substantial savings in time over long distances and plays an important role in areas where surface transport is not adequate.

Limitation of Air Transport Services

(i) Air services are affected by adverse weather conditions. Weather condition of a region plays an important part in setting up an airport. In earlier days of air transport, this natural factor played an important role. However, with the development of air flight technology, the airplane can fly at a higher level, thus avoid the weather hazard. Further, development of radio technology, introduction of modern technical equipment for night flying, considerably reduced the weather hazards. However other Weather hazards such as cloud, fog, smoke, dust storm, which either interfere with visibility or affect performance of the air transport service.

(ii) Obsolescence in case of aircraft is high. The rate of obsolescence and depreciation in respect of aircraft is very high. Cost of replacing the outdated aircraft requires appropriation from profit each year to reduce burden on the management of the airlines.

(iii) Not popular for bulk freight transport. As regards freight, it is a popular means of transport, except for commodities of high value per unit of weight, like costly medicines, perishable product and electronic products, etc. The commodities, which can withstand high transport cost, are generally transported by air. It also cannot provide doorstep services or direct connectivity to consumption points.

(iv) It is not economical over short distance. Air transportation is unable to be advantageous or economical over short distances. It is because of this unavoidable limitation that all domestic airlines run for short distances have either been abandoned or are heavily subsidized by Governments.

(v) Air transport is capital intensive. Air transport development requires huge capital investment. Modem traffic control building has to be constructed for safe landing of aircraft. Provisions for ground facilities like air traffic control, radio and meteorological services with modem technical equipment is essential for air transport development. A large area is required for the construction of aerodrome to accommodate large sized aircraft and this requires sizable investment. An aircraft is costly to manufacture, costly to operate and costly to maintain. It needs very high consumption of energy per unit of weight carried.

(vi) Legal restrictions. Many countries imposed several legal restrictions on the foreign airliners in the interest of their own national unity and peace.

(vii) High freight cost. Air transport can only be availed by rich and affluent class of the society because of its high freight cost. This means only the privileged class of the society can avail this opportunity. Air transport, presently is a luxury in the developing countries. Only a small fraction of the total population uses this service.

(viii) Small carrying capacity. Its cargo and passenger carrying capacity is low as compared to road, rail and water transport.

(ix) Air travel is risky. The chances of breakdown due to various factors are high and the chances of survival in case of any accident during the journey are very remote.

Element of Air Transport
There are three elements in air transport i.e
(i) Airway
(ii) Aircraft service
(iii) Airport.

AIRWAY

All aircraft's follow chartered routes marked by modern mechanical devices such as beacons and radio beams. They are controlled by control towers that know the speed, altitude and location of the planes at all times. Air flights are undertaken on carefully undertaken routes as per predetermined timetable and controlled from the air terminals.

AIR CRAFT SERVICE

Commercial air transport is divided into:

(a) Scheduled airlines, and
(b) Non-scheduled airlines.

(a) Scheduled airlines. These provide transport facilities between a given number of points according to a pre-determined routes and time. Scheduled airlines facilities can further be classified into three principal services:

(i) Long distance or intercontinental services.
(ii) Medium distance or regional service.
(iii) Local or inter urban services.

For scheduled air services, the privilege of operating commercial services through or into a foreign country can be divided into:

(i) privilege of flying across a country non-stop,
(ii) privilege of flying across with a stop for technical purposes only,
(iii) privilege of bringing in a discharging traffic from the home state of aircraft or airline,
(iv) privilege of picking up of traffic for the home state of aircraft with privilege of picking up traffic for or discharging traffic from third states in the territory of the state granting the privilege.

(a) Non-scheduled airlines. This offer transport facilities under charter contracts or according to the demands of traffic i.e., they can be hired for special journeys. In many advanced countries, private companies offer Charter flights to passengers during the holiday season.

AIR PORT
Meaning
Without airports there can be no aeronautics as both are inter-dependant. An airport is any space, strip or ground adopted and used primarily for the purpose of take off and landing of an aircraft. An airport can be defined as one or more runways for aircraft together with associated terminals and buildings where passengers and freight are transported and processed, domestic and International Airports are considered to be large complex industrial enterprises (Airstrips or Aerodromes do not meet this definition).

Airports act as a forum for different functions and related activities that combine to facilitate air transport traffic and the interchange between air and surface transport. An aerodrome is described by the International Civil Aviation Organization as a defined area on land or water (including any building, installation and equipment) intended to be used either wholly or in part for the arrival, departure and movement of aircraft. Airfield is used in reference to small aerodromes, generally without hard runways or facilities of handling large transport aircraft or their passenger or cargo.

Elements of an Airport

Following are the four principal elements of a major airport:

(i) Airport management and control. The airport management and control function embraces the day-to-day operation and long-term planning of the airport, the terminal, runway and taxiway system, local air-traffic control, the lighting, navigational and aircraft approach guidance system, as well as fire-fighting, fuel supply and all ancillary services including custom facilities.

(ij) Passenger and cargo terminals. The passenger and cargo terminals provide for handling passengers, baggage and cargo and the related activities.

(iii) Runway, taxiway and apron system. The runway, taxiway and apron system are required to meet the needs of the aircraft for landing and take off, for positioning correctly for these maneuvers, for aircraft location to receive and discharge loads and for the operating and servicing crews to work.

(iv) Airport services. Airport services related services related to the airport comprise the apron (the part of the airport surface adjacent to the terminal, the handling of aircraft, passenger baggage, cargo, aircraft fuel supply, aircraft catering and engineering services.) Ground related services include passenger terminal catering and the concessionaire facilities within the terminal and the car parking and the garage arrangement in the airport terminal area for the travelling public and the airport staff.

Functions of Air Port
For historical, legal and commercial reasons the activities performed within an airport vary among countries and often among airports within the same country. In many developing countries, the airport functions are owned and operated by a government entity; whereas in many industrialized country ownership functions are privatized. Thus, airport services and facilities can be classified into following categories:

(a) Essential operational services and facilities. Such services are primarily concerned with ensuring safety of aircraft and airport users. This includes air traffic control (ATC) services to facilitate the approach and landing of aircraft, meteorological services, telecommunications, police and securities, fire and ambulance services (Including search and rescue) and runway and building maintenance. These facilities or services are generally provided by the airports themselves or by local or central government departments. The cost of such services differs among airports.

(b) Traffic Handling Services. Numerous services relating to traffic handling have to done at airport. These are commonly termed as ground handling activities. These include cleaning, provision of power, fuel and processing baggage and freight. Other ground handling facilities are more specifically traffic related and cover the various stages of processing Passengers, baggage and freight through terminals and unto aircraft.

Economies of Air Transport

The operating result in an airline is the difference between the operating revenue and operating expenses. The operating cost per unit capacity, i.e., available Ton Kilometres (A TKM) is called 'Unit Cost' and operating revenue per unit capacity utilized, i.e., one revenue ton kilometer (RTKM) is called 'yield'. The total operating cost, hence, is a product of capacity and unit cost and the total revenue is a product of capacity utilized and the yield. These relationships are expressed as under:

Operating expenses = A TKM x Unit cost
Operating Revenue = RTKM x Yield
= (ATKM x Load Factor) xYield.

The expenses of air transport industry can be grouped as under;

(i) General Expenses -These expenses include maintenance of airport building and space, maintenance of air-terminal facilities, advertisement expenses, establishment expenses of general maintenance staff. These are generally fixed in nature.

(ii) Flying Expenses -These expenses includes cost of aircraft, fuel expenses, salary cost of operating crew. These are generally variable in nature.

Documents of Carriage

Passenger Ticket. For the carriage of passengers, the carrier must deliver a passenger ticket, which must contain the following particulars:
(i) The place and date of issue.
(ii) The place of departure and of destination.
(iii) The agreed stopping places.
(iv) The name and address of the carrier or the carriers.
(v) A statement that the carriage is subject to the rules relating to liability contained in the First Schedule to the Convention.

Luggage Ticket. A luggage ticket must be made out in duplicate, one part for the passenger and the other part for the carrier.

It must contain the following particulars:
(i) The place and date of issue.
(ii) The place of departure and of destination.
(iii) The name and address of the carrier or carriers.
(iv) The number of the passenger ticket.
(v) A statement that the delivery of luggage will be made to the bearer of the luggage ticket.
(vi) The number and weight of the packages.
(vii) The amount of the value declared in accordance with the Rule 22(2).
(viii) A statement that the carriage is subject to the rules relating to liabilities.

Air Consignment Note. The consignor has to prepare Air Consignment Note and hand over the goods to the carrier in three parts. The first part shall be marked 'for the carrier' and shall be signed by the consignor. The second part shall be marked 'for the consignee' and shall be signed by the consignor and by the carrier and hall accompanies the goods. The third part shall be signed by the carrier and handed by him to the consignor after the goods have been accepted.

The Air Consignment Note shall contain the following particulars:-

(a) The place and date of its execution.
(b) The place of departure and of destination.
(c) The agreed stopping place subject to change by the carrier if necessary.
(d) The name and address of the consignor.
(e) The name and address of the consignee,
(f) The name and address of the first carrier.
(g) The nature of goods.
(h) The number of packages the method of packing and the particular marks or numbers upon them.
(i) The weight, the quantity, the volume and dimensions of goods.
(j) Apparent conditions of goods and of the packing.
(k) The agreed freight, the date and place of payment and the person who is to pay it.
(l) If the goods are sent for payment on delivery, the price of the goods and if the case so requires, the amount of expense incurred.
(m) The amount of the value declared in accordance with the rule 22(2).
(n) The number of parts of the air consignment note.
(0) The time fixed for the completion of the carriage and a brief note of the route to be followed, if these matters have been agreed upon.
(P) A statement that the carriage is subject to the rules relating to liability contained in the scheduled.

Liability of the Carrier. According to Rule 17, the carrier is liable for damage sustained in the event of death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in course of any of the operations of embarking. According to rule 18(1), the carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during a carriage by air. As per Rule 19 and Rule 20(1), the carrier is also liable for damage occasioned by the delay in carriage by air of passengers, luggage or goods. BQt this liability seizes if the carrier proves that he has taken all necessary measures to avoid the damage. If the carrier proves that the damage was caused by or contributed to by the negligence of the injured person, the court may exonerate the carrier wholly or partly from his liability.

History of Civil Aviation

The history of civil aviation in India began in December 1912. This was with the opening of the first domestic air route between Karachi and Delhi by the Indian state Air services in collaboration with the imperial Airways, UK, though it was a mere extension of London-Karachi flight of the latter airline. Three years later, the first Indian airline, Tata Sons Ltd., started a regular airmail service between Karachi and Madras without any patronage from the government.

At the time of independence, the number of air transport companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine. It was reduced to eight, with Orient Airways shifting to Pakistan. These airlines were: Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways.

In early 1948, a joint sector company, Air India International Ltd., was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)-London air route. At the time of its nationalization in 1953, it was operating four weekly services between Mumbai-London and two weekly services between Mumbai and Nairobi. The joint venture was headed by J.R.D. Tata, a visionary who had founded the first India airline in 1932 and had himself piloted its inaugural flight.

Significance of Air Transport
Air transport is the most modern, the quickest and the latest addition to the modes of transport. Because of speed with which aeroplanes can fly, travel by air is becoming increasingly popular. As far as the world trade is concerned it is still dominated by sea transport because air transport is very expensive and is also unsuitable for carrying heavy, bulky goods. However, transportation of high value light goods and perishable goods is increasingly being done by air transport.

Nationalization of Airlines
The soaring prices of aviation fuel, mounting salary bills and disproportionately large fleets took a heavy toll of the then airlines. The financial health of companies declined despite liberal Government patronage, particularly from 1949, and an upward trend in air cargo and passenger traffic. The trend, however, was not in keeping with the expectations of these airlines which had gone on an expansion spree during the post-World War II period, acquiring aircraft ad spares.
The Government set up the Air Traffic Enquiry Committee in 1950 to look into the problems of the airline. Though the Committee found no justification for nationalization of airlines, it favored their voluntary merger. Such a merger, however, was not welcomed by the airlines.

Foreign Airlines
Foreign airlines carrying international passenger traffic to and from India existed long before Independence. Their operations are governed by bilateral agreements signed from time to time between the Government of India and the governments of respective countries. In 1980-81, the number of such airlines was 35. It rose to 49 in 1996-97.

The share of foreign airlines in India's scheduled international traffic has increased. In 1971, their share was 55.58 per cent which went up to 65 per cent and declined to 58 per cent during 1972-75. It fell to 55.72 per cent in 1976 and further to 55.02 per cent in 1977. Between 1978 and 1990 it gradually increased and rose to 75.93 per cent. In 1996, the share was nearly 72 per cent.

Open-Sky Policy
The Open-sky policy came in April 1990. The policy allowed air taxi- operators to operate flights from any airport, both on a charter and a non charter basis and to decide their own flight schedules, cargo and passenger fares. The operators were, however, required to use aircraft with a minimum of 15 seats and conform to the prescribed rules. In 1990, the private air taxi-operators carried 15,000 passengers. This number increased to 4.1 lakh in 1992, 29.2 lakh in 1993, 36 lakh in 1994 and 48.9 lakh in 1995.

The 1996, private air taxi operators carried 49.08 lakh passengers which amounted to a 41.14 per cent share in the domestic air passenger traffic. Seven operators viz NEPC Airlines, Skyline NEPC, Jet Air, Archana Airways, Sahara India Airlines, Modiluft and East West Airlines have since acquired the status of scheduled airlines. Besides this there were 22 nonscheduled private operators and 34 private operators holding no-objection certificate in 1996. The number of plus 120 category aircraft in the private sector was 34 and the total fleet strength was 75 in June, 1996. Two out of seven scheduled air taxi operators suspended their operations in 1996 because of the non-availability of aircraft.

Development of Civil Aviation

The repeal of the Air Corporation Act from 1 March 1994 enabled private operators to provide air transport services.

Six operators were given the status of scheduled operators on 1 February 1995.

Currently there are five international airports and 87 domestic airport in the country with 28 civilian enclaves for defence purposes.

The Airport Authority of India plans to invest Rs 35,000 million for the construction and up gradation of airports.

Budgetary support of Rs 485.50 million was allocated to AAI in 1996-97.

In august 1996, in a major policy decision, the government allowed the private sector to set up air cargo complexes in a bid to ensure smooth movement of export cargo.

Domestic and foreign investors including NRIs have been invited to participate in the development of infrastructure support at select airports.
With a market share of 43% Indian airlines is the biggest player in aviation.
Rs 24,710 million have been marked for development of the civil aviation sector in the annual plan for 1997-98.

The Indian Air cargo Market

The growth of air cargo in India has also been manifold though it might not have kept pace with the progress made all over the world. Table 1 shows how both international and domestic air cargo traffic has increased, reflecting an overall year on year growth.

Table 1: Trends in cargo traffic at five international airports in India.
(Figures in '000 tonnes)
Period - International Cargo - Domestic Cargo - Total - Percentage Increase
1972-73 - 47.4 - 33.6 - 81 -
1982-83 - 165.4 - 84.6 - 250 - 209%
1992-93 - 300.5 9- 0.9 391.4 - 56.56%
1999-2000 - 494.2 - 183.0 - 677.2 73%
(Source - Transport India 2000)

Future Outlook of the Industry

Future projections reflect that the air cargo industry both in the domestic sector and the international sector will continue in its upward trend of growth. Fig.1 reflects that the domestic air cargo will continue at a somewhat steady rate of growth whereas the international air cargo movement as illustrated in Fig.2 shows a steeper rate of growth indicating that international air cargo trade will flourish at a higher rate of growth.

Good governance is all about simplifying life

2006-03-02T18:27:00.000+05:30

Introduction

Recently the terms "governance" and "good governance" are being increasingly used in development literature. Bad governance is being increasingly regarded as one of the root causes of all evil within our societies. Major donors and international financial institutions are increasingly basing their aid and loans on the condition that reforms that ensure "good governance" are undertaken.

Governance

The concept of "governance" is not new. It is as old as human civilization. Simply put "governance" means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.

Government is one of the actors in governance. Other actors involved in governance vary depending on the level of government that is under discussion. In rural areas, for example, other actors may include influential land lords, associations of peasant farmers, cooperatives, NGOs, research institutes, religious leaders, finance institutions political parties, the military etc. The situation in urban areas is much more complex. Figure 1 provides the interconnections between actors involved in urban governance. At the national level, in addition to the above actors, media, lobbyists, international donors, multi-national corporations, etc. may play a role in decision-making or in influencing the decision-making process.

Good Governance

Good governance has 8 major characteristics-

It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society. Good governance is an ideal which is difficult to achieve in its totality. Very few countries and societies have come close to achieving good governance in its totality. However, to ensure sustainable human development, actions must be taken to work towards this ideal with the aim of making it a reality.

India needs today is good governance, which is possible if sensitive human beings hold the reins of power. Good governance will only help the nation achieve progress in every field. India's a lone bronze at Athens Olympics was the result of bad governance. Is it not a national shame to win one bronze from the population of one billion? There are a number of examples like this where we have failed. Amidst globalization, good governance will only propel us towards success. The nation can still pin its hope on the large section of middle class for its development.

Globalization as a phenomenon has touched India in very limited ways.

The Government's unwillingness to de-bureaucratize is partly responsible for this. If some sectors of the economy have made progress then it is in spite of the government rather than because of it.

The levels of portfolio investment have remained nearly the same between 1992-93 and 1996-97. Portfolio investment by foreign institutional investors has not increased from the levels achieved in 1993-94. The positive effect of opening up the economy to FDI has been negated by India's apprehensions about foreign ownership, even partial ones. Bureaucratic factors and a crippling lack of infrastructural facilities make India unattractive for FDI. A World Bank survey in 1998 placed India at the bottom in a group of 53 emerging economies, in terms of quality of overall infrastructure facilities. Therefore, relative to its position in the world economy and financial markets, India has regressed from its position in 1990-91!

India has roughly 25 per cent of the developing countries population and it receives merely 2.17 per cent of FDI. While China, with roughly the same population and a Communist regime to boot, receives 16 times more FDI than India. Clearly, India is neither connected to global capital markets nor is it considered a potential home by global capital in search of higher value in emerging country markets. Policy announcements, in late 1998 and early 1999, that the Government would enlarge the automatic approval list of FDI, simplifying procedures have been entangled in bureaucratic lengthy procedure. The proposed change of Foreign Exchange Regulation Act into Foreign Exchange Management Act may help in reducing controls.

Example - Good governance is all about simplifying life

What Wipro has generated in a single day, through exports, was more than what India does in one month. It can cover India's fiscal deficit in 22 days to a month. It was regretted that it was not a public sector company. If it was so, it would have added enough to its market cap to not only wipe out India's fiscal deficit, but to turn it into a decent surplus.

The market cap of the top two stocks Wipro and Infosys which stands at $62 bn (Rs 2,69,370) is much more than the GDP of Pakistan at $55 bn for the current year. The combined m-cap of the BSE ($ 275 bn) now stands at almost 62 percent of India's projected GDP for the current year ($443). The combined market cap of BSE is on its way to matching India's GDP. The top five stocks in terms of m-cap account for more than 20 percent of India's GDP and 35 per cent of BSI's m-cap. In the US, Microsoft with the highest m-cap of $495 bn, accounts for just four percent of NYSE's capitalisation and less than six per cent of the US GDP. The combined m-cap of three other stocks Zee, HLL and HCL Tech at almost $ 34 bn (Rs 1,46,716 crore) is just a shade off India's total forex reserves of $ 34.9 bn. The market cap of the BSE, $ 275 bn, is much more than the total time and demand deposits lying with the banks, $204 bn. The market cap of Wipro ($46.8 bn) alone is much more than the total currency (notes and coins in circulation) with the public ($44 bn) in India.

The chief reason for this quick progress on the info technology sector is that there are no inspectors monitoring info technology (at present anything between 60-65 Inspectors visit any manufacturing industry ostensibly to ensure compliance to various norms, rules, regulations and laws, but actually to collect bribe). Had the bureaucracy had come to know earlier about the progress, they would have put the brakes on it straightaway. The rationale of bureaucracy is that how can any sector of the economy claim progress, without being obstructed by it. Info technology companies have progressed because there were no inspectors or their superiors to be pandered to. He also said that the government had created IT Department. The bureaucrats are likely to create a mess of it. This sector progressed without bribing anybody because no licenses and permits had to be taken. One may not totally agree, with the assessment. But the fact remains, that in many areas, the Government instead of becoming catalytic agent to the progress was doing actually the opposite, through its cutting edge levels functionaries. The biggest danger faced by the economy is from within. The danger is in the form of sabotage by graft, self-defeating leaks, which need to be plugged in. It is more so in the case of export promotion schemes. In the case of duty draw back, the duties are expected to be refunded to the exporters by the customs. Corrupt officials conniving with the exporters for over invoicing the value of the export, costs the Government heavily. This way, the value increases, and the Government shells out, several times the actual sum due. The passing of the export bills is a gold mine.

Unfortunately, in the present scenario, corruption is not a stigma. A decade ago, a corrupt official would have been looked down on by all. It was a kind of an informal disapproval, which was more effective than any punishment. At present, corruption is accepted as a part of life and no disapproval of any kind is attached to it. Apart from this, the procedures for complaining and taking action are tardy and lengthy, that the affected persons find it to be a waste of time. In any case, the businessmen pass on the increased cost to the customers or realize it from the Government by either not paying duties or taxes. There is a need to have a valuation list of exports and exporters, so that the black sheep, thriving in the liberalized regime are exposed and dealt with strictly. Another suggestion is that only officers of proven integrity and honesty should be appointed to head sensitive divisions. The Heads of this Divisions should be at the public counters, where public come in contact with the Department, themselves by surprise at least twice or thrice a month. This way, they will become aware of the problems not only of the public but also their own. They will know a; first hand, where the bottle necks lie and what can be done to rectify the situation.

Computerization, with the facility, to access the files, only by the next senior officer, at any time, will help in curbing malpractices. But success of the system will depend upon entering the information in the computer. Computer, by itself, cannot abolish corruption or increase efficiency. It is only an aid and a tool to efficiency. If tire entry itself is not made properly or only made after accepting a bribe, the position will not improve. More important than the computer is the man behind it. Man behind the machine wilt work better, faster and efficiently only, if he knows that quick retribution will follow, if he is found working only for speed money and not for speed. The best safeguard for the public will be, not to put up with injustice and corrupt practices but to protest against it. Unless the citizen's work for a Government that works transparently and honestly, the situation will not alter. There is a price tag on everything and nothing comes cheap in life. There are no free lunches. More than anything the Government should learn a few lessons from the IT sector, where without any licenses, quotas, permits or permissions; it has progressed beyond the wildest expectations. It is time to simplify laws rules and regulations to the utmost point of transparency, so that people work for the progress of the country

Water Transport

2006-03-02T18:13:00.001+05:30

Nature-and Significance

Water transport is considered as a portent of modem civilization, a source of employment and an active agent of progress and the development. Water transport is the oldest and cheapest form for moving goods from one place to another place. It operates on natural tracks and hence does not require huge capital investments in the construction and maintenance of waterways. The path is provided by nature and less investment is required in laying down the track and its maintenance. This mode of transport has the largest carrying capacity and suitable for transport of bulk goods over long distance.

The landmass in the world is connected with various waterways through ocean. Due to thais connectivity the water transport is considered as the best means for transport of bulk commodities. This form of transport is extensively used for the international trade. Ocean transport is favorable because of geographical fact that the oceans and seas are interconnected. British Empire could establish several colonies all over the world due to its well-developed, well-equipped overseas water transport system. Water transport can easily carry goods and commodities of low values and high volume. After discovery of various ocean routes, the economic importance of these routes has been increased significantly. Oceans are considered to be the cheapest and the safest highway to carry passenger and cargo. Water transport can be classified into Inland water transport and Ocean transport.

Inland Water Transport

Transport by rivers, canals and lakes are referred to as 'Inland Water Transport'. Inland Waterways have greatly expanded during 20th century in many countries of the world. It is playing an important role in internal trade and commerce in many countries. Inland waterways may be natural such as navigable rivers or lakes or maybe artificial such as canals. Many rivers provide natural waterways, which can be used for providing transport services through small boats as well as big barges. River transport was one of the oldest modes of transport. It played a very important role prior to the development of modern means of land transport. It provides transport facilities to inaccessible forest areas and other natural regions not connected by roads.

Canals are artificial waterways basically made for irrigation or 'navigation or for the both. Canals can be used as waterways for inland water transport, but huge amount of capital investment is required in the construction and maintenance of such man made artificial waterway. The cost of canal transport is higher than that of the river transport. Apart from this, providing adequate water in the canal to facilitate movement of big boats is considered as a big problem for this mode of transport. Natural lakes provide transport facilities to its coastal areas. Although, the distance covered by lake-transport is less, it provides low cost transport facilities to the areas connected by the lakes.

Advantages of Inland Water Transport

1. Inland water transport is the cheapest mode for certain kind of traffic both for long and short hauls provided the points of origin and destination are located on waterfront and no trans-shipment of goods is involved.

2. It is also one of the most efficient modes of transport from the point of view of energy consumption.

3. It can provide immediate access wherever water exists without requiring investment in line haul capacities as in other mode of transport.

4. Inland water transport is a labor-intensive mode and generates more employment per rupee of investment than any other mode and so particularly benefits weaker section of society.

5. It provides transport for heavy, bulky, non-perishable and low-grade traffic with a low price relative to weight where speed is not an important factor.

6: It provides economical means of transportation of minerals and other bulky dry and liquid raw materials for industries.

7. Being gift of nature, the waterways require no investment for its maintenance.

8. In mountain areas, inland water transport provides excellent service for downhill movement of goods and passengers.

Limitations of Inland Water Transport

(i) This form of transport is slow as compared to other forms of land transport.
(ii) Navigable waterways are not perennial in nature in many areas.
(iii) Transport activity becomes very much-limited in polar region because freezing of water may cause hindrance.
(iv) Heavy capital investment is also required in construction maintenance and dredging operation of canals.
(v) Climatic factors exercise greater influence in case of inland water transport than in any other mode of transport i.e., the routes are often blocked by ice in winter.
(vi) This form of transport can be used where speed and time are not important. Perishable products cannot generally be transported by inland water transport for a longer distance.

National Waterways, The Government of India has so far identified ten important waterways for declaring them as 'National Waterways'. Three out of these ten waterways have already been declared as National Waterways.

The details National waterways are as follows:

(a) National Waterway No.l-(Allahabad and Haldia 0,620 km) stretch of the Ganga-Bhagirathi-Hoogly river system). Cargo Transportation in the stretch Haldia- Farakka- Patna are being carried out by the Central Inland Water Transport Corporation (CIWDC) and by Goa Barge Owners' Association.

(b) National Waterway No.2 (891 km. The Sadiya-Dhubri stretch of the river Brahmaputra). The CIWTC is operating cargo services between Calcutta and Guwahati. ' .

(c) National Waterway No.3 The Kollam-Kottapuram stretch of West Coast Canal (168 km) along with Champakara Canal (14 km in Kerala). Keral Shipping and Inland Navigation Corporation, ABC and Sons and Hindustan Petroleum Corporation Limited operate cargo services in this waterway.

The responsibility of development and maintenance of National Waterways rests with the Inland Waterways Authority of India.

Charter of Functions of Inland Waterways Authority of India (164)

(i) To carry out economic surveys to assess future traffic potential on main rivers, feeders and creek routes.
(ii) To draw program of river canal conservancy works, including river training works and provision of navigational aids.
(iii) To draw programs of dredging requirements and priorities for efficient maintenance of existing navigable waterways and for revival of dead and dying rivers, channels or canals for navigation.
(iv) To develop, maintain and operate inland river ports landing ghats and terminal facilities in such ports or ghats. .
(v) To maintain pilotage and hydrographic survey services.
(vi) To disseminate navigational and meteorological information including publication of river charts. ,
(vii) To carry out removal of wrecks and obstructions in navigable waterways.
(viii) To fix maximum and minimum fares and freight rates for inland water transport on behalf of the government.
(ix) To approve timetables for passenger services.
(x) To ensure coordination of inland water transport with other forms of transport, with major sea ports and with industries, trade and agriculture interests for optimum utilization of the available transport capacity.
(xi) To conduct research in matter relating to inland water transport including development of : (a) craft design, (b) techniques of towage and (c) landing and terminal facilities.
(xii) To arrange program of technical training for inland water transport personnel.
(xiii) To maintain liaison with the shipyards and ship repairing industries to meet the requirements of the inland water transport fleets, repairs and new constructions.
(xiv) To register country boats and mechanized crafts and issue of certificate of fitness for vessels plying on waterways.
(xv) To issue permit for license for right of operations.
(xvi) To issue certificate/license for various categories of crew of inland vassals.
(xvii) To perform any other functions related to IWT assigned by the government.

Ocean Transport

Navigation through the open sea is known as ocean or sea transportation. Navigation along indented or broken coastline is known as coastal shipping. Coastal shipping is synonymous with domestic shipping by sea between two points in the same country. Ocean transportation is in fact an extension of coastal shipping to wider expanses of water. So, as far as the transportation of goods is concerned inland water transportation and the coastal shipping are of national and intra-regional importance. Ocean transportation is very significant and vital for the growth of international trade. Ocean transport has its origin in the beginning of human civilization. It is considered as an indispensable means for development of foreign trades. It has brought different parts of the world closer for developing one big world market. On account of its operation in natural ocean tracks, this form of transport generally requires no infrastructure investment for providing transport facility.

Coastal Shipping

Coastal shipping is the most energy efficient and comparatively cheaper mode of transport for carriage of bulk traffics over long hauls, particularly when the origin and destination of a traffic stream is located along the coast. It is ideally suited to carry long distance bulk cargo and passenger traffic, especially for destinations located on the waterfront. Coastal shipping can, play an important role in integrated transport network of the country, particularly when inland modes are strained.

Factors determining Ocean routes

Generally ocean going ships follow well-defined routes. They in general follow Great Circle Route i.e. the shortest distance between two points. However at times they have to choose different routes because of physical and economic considerations. The factors responsible for such deviation are as follows:

(a) Suitable weather conditions. The route should be free from storm and fog. Although strong against wind is not a problem for smooth sailing of the ships, it is desirable to sail the ship with wind from economical point of view as it saves fuel cost. Foggy and stormy and icy coast area should be avoided as far as practicable for undertaking commercial shipping.

(b) Deep Waters. Shipping in shallower water should be avoided. Deepness of the water is a pre-requisite feature for smooth sailing of the ship. While choosing a route dangerous shoals and other perils which may endanger the safety of the ship and carrying cargo should be avoided in this route.

(c) Availability of Harbors and Ports. The presence of good ports and harbors with quick loading and unloading facilities are also responsible for choosing a particular route by the transporters.

(d) Availability of full load of traffic. The economies of shipping transport deals with Ship carrying large volume of traffic. Unless full load of traffic is guaranteed, the shipping companies may face loss. Hence they always try to choose a particular route when full load of traffic is guaranteed not only on out-ward journey but also during the return journey.

(e) Availability of cheaper route and fuel supplies. Ships generally use those canal routes where dues are comparatively less. Further availability of fuel supplies and ship maintenance facilities at different ports encourages the shipping companies to choose a particular route.

(f) Shipping Services. The shipping services are organized according to the nature and requirements of goods traffic in International trade, which provides the demand for such services. World trade can be classified in to two broad categories, bulk and non-bulk depending on the type of cargo. Bulk Cargoes include liquid bulk like petroleum and dry bulk like ores, fertilizers, food grains, etc. Traffic in non-bulk category is composed of manufactured, semi-manufactured, process and semi-processed goods and materials moving in cases, packages, parcels, bales etc. These items are generally referred to as “general merchandise” in shipping parlance. So availability of both types of cargo makes a route commercially viable.

Basic Type of Ships (176)

(a) Single Deck Vessels
Such vessels have one continuous deck, which means easy access with one hatch for each hold. The hatch is an opening in a ship's deck. Hatches are used for lowering and taking out large object into and out of the cargo hold of a ship. Many single desk vessels have large hatches and some are known as “self trimmers" because of the provision for the cargo to flow into all corners of the held. These types of vessels are suitable only for heavy bulk cargoes like grain, iron ore, coal etc.

(b) Twin Deck Vessels
Such vessels have additional decks (twin deck) below the main deck, running the full length of the vessel. These vessels are suitable for general cargo. The space is divided into separate tiers and the decks eliminate the risk of cargo damage by preventing too much weight to be put on the cargo at the bottom.

(c) Shelter Deck Vessels
These vessels have additional deck above the main deck's shelter deck, which provides more under deck- space for carrying light cargoes. The shelter deck vessels may be a close type or open type. The difference relates to the measurement of a ship.

(d) Other Types of Vessels
(i) Unitized cargo ships and specialized vessels. These type of vessels include pallet vessels, barge carriers, container ships, RO/LO ships, OBOs, gas carriers, wood carriers, car carriers, oil tankers, refrigerator ships etc.

(ii) Roll-on-Roll-off ships (Ro-Ro). Ferries are now employed on a multitude trade routes based on Roll-on-Roll-off concept. This facilitates loading and unloading of all types of cargoes which can be rolled on horizontally including cars, lorries, and other wheeled type of cargoes. Most large Ro-Ro vessels carry their own specially designed cargo handling facilities. This type of cargo handling facilities helps to load and unload a host of non-wheeled commodities such as pallets bundled goods, pre-slung bags and containers. The cargo operations in a RO-RO ship are extremely speedier and are independent of special shore facilities.

(iii) Barge ships. Barge ships are standard sized ships, which can be towed or pushed by tugs into ports and island water ways and which can be hoisted abroad special Barge carriers with adopted equipment for the Sea voyage. Barges are not internationally standardized. Main advantage of the Barge system over other transport system is its reduced dependence on the infrastructure facilities in the ports and on land. Like containers barges can also be prepared specially for transporting various commodities assists for quick turnaround of publisized ships. Various types of barges are Lash, Sea-bee, Bacat, Super sea-bee.

(iv) Cellular ships. Such ships have holds designed to form a series of cells into which the containers are placed.

(iii) Panamax. The bulk carriers with a breadth which can pass through the panama canal ( 106 ft wide) are described as the panamax type. Such bulk carriers carry upto 80,000 tonnes of cargo and are popular as the handi sized bulkers with 10,000 dwt.

(iv) Bulker container carrier. The container or bulker is a recent development. Such ships are also known as "Conbulkers" .

(v) Very large crude carriers (VLCC) Ultra large crude carriers (ULCCs). VLCCs are very large crude carriers with a capacity ranging between 2,00,000 to 3,00,000 dwt., while ULCCs are ultra large crude carriers in the size range of over 3,00,000 dwt.

(e) Multi-purpose Vessels
In recent year's multi-purpose vessels have been developed to cater the need of transporting different variety of cargo. These vessels charge more for transporting than liner vessels, but cheaper than container ships, Ro-Ro vessels and barge ships. These vessels can be classified into four main categories;

(i) Combination General Cargo Liner and Containers. These vessels are designed to accommodate not only containerized cargo but also general cargo.

(ii) Combination Bulk Carriers and Container Vessels. The open hatch nature of many modern bulk carriers also carry containerized cargo. The flexibility of vessels of this type facilitates their use on different route. The hatch is an opening in a ship's deck. hatches are used for lowering and taking out large objects into and out of the cargo hold of a ship.

(iii) BO-RO vessels. There are ships, which can carry RO-RO cargo and containers on the one leg of the voyage and bulk cargo on the return trip.,

(iv) Combination Container and RO-RO Vessel. With the advent of multimodal transport, these vessels are very important. They generally carry container on deck and in the front holds, while rolling cargoes are loaded through Ramps often located in the stern. Ramps are slopping passages connecting two different levels. These are used for movement between decks in RO-RO ships.

Type of Shipping Services

Basically there are three types of shipping viz.
(I) Tramp Shipping or chartering,
(II) Liner shipping, and
(III) Tankers shipping.

I. TRAMP SHIPPING
According to Rojer Comoy "the tramp is a freight vessel that does not run in any regular line but takes cargo wherever the shippers desire". Tramps are generally chartered for a full and complete cargo. Its main purpose is the carrying of full shipload of cargo of wide variety from many shippers to many receivers. Such ships offer services basically on induction. There is no commitment to provide the service at a fixed rate and according to the schedule. When a tramp ship is engaged for carriage of cargo, it is said to be under charter as either the whole of the bulk or one charterer hires its space. The rates in the tramp market are determined purely by the free interplay of forces of demand and supply.

Nature of Tramp Trade
(a) The market for supply and demand for shipping services of bulk commodities has been traditionally known as the "tramp markets" or "chartered market". Tramp trade refers to the business of hiring out the bulk carriers to carry cargoes of homogeneous variety in large quantities from one port to another. A tramp ship means a ship, which is not committed to any discipline in terms of rates, for its service. Tramps are cargo vessels suitable for movement of bulky goods.

(b) Tramp trade does not have any fixed ports of loading the discharge. There is no periodicity of shipments and tramps are engaged on terms and conditions including freight rates/ hire charges, which is mutually agreed between ship owners and the charters.

(c) Tramp owners are always looking for ports, where profitable cargo is likely to be found. Charters are looking for tramps, which are available for hiring at competitive rates. Freight rate/ hire-charge in tramp trade is generally decided by the loss of supply and demand of tonnage/cargoes and various other technical and commercial factors. Thus, tramp engagement is accomplished without any given set of conditions and rules.

II. LINER SHIPPING

The market for shipping services to transport general merchandise is known as Liner shipping. Liners ships follow certain routes and ply on the advertised dates irrespective of the quantity of cargo they receive for transportation. But, the need to achieve economies in operation, availability of full load of cargo is a necessity. Manufactured and semi-manufactured goods require such shipping services as these goods can be forwarded from one point to another in such a way that the marketing requirements are met at regular intervals. They render speedier shipping services to different markets, at reasonable rates of freight for different items and on a regular basis according to a schedule. There are two types of liner shipping.

(a) Passenger Liners
These liners primarily carry passengers and mails, but may also carry comparatively small cargo. These liners have a fast speed and provide a comfortable service. In order to make better use of capacity; passenger liners employ their vessels for cruises, particularly in the off-seasons.

(b) Cargo Liners
These liners are the ships meant primarily for carrying cargo and at the same time also they carry a few passengers. They also have a rapid speed but are not as spacious as passenger liners. This type of steamer really performs the function of both tramp as well as a liner as it carries large quantities of cargo and limited number of passengers. Some of the ships are specially built and contain facilities of cold storage and refrigeration. These liners are specialised in transporting particular cargo. These liners are equipped with loading and unloading equipment to and from quays or lighters using their own gear exclusively. "'In order to minimize manual handling cost, goods are categorized and classified to meet the requirements of mechanical handling. This can be done by containerization. Palettes or containers provide great ease in handling cargo loads. Both passenger and cargo liners have regular fixed routes, time and rate schedules.

III. TANKER SHIPPING
Tankers are the vessels, which are specially designed to carry oil, petrol and such other liquids. Large sized super tankers are now being built to carry petroleum products and other liquid products from the producing area to the area of consumption.

Chartering of Ships
There are various types of chartering of ships for carriage of bulk cargoes.
(a) Voyage charter. In case of a voyage charter:-
(i) A ship is chartered for the shipment of an agreed quantity of cargo from a port to another agreed port or ports.
(ii) The charterer agrees to pay a certain amount known as freight which can be computed either on a lump-sum basis or per ton basis.
(iii) In a voyage charter the owner is not only to meet the running expenses of the ship like officers/crew wages, stores, provisions, insurance etc, but also operating expenses like port charges, light dues, bunker cost etc.
(iv) In voyage charter, normally the cargo expenses are borne by the charter/shipper/receiver and hence the freight rate is expressed on FIO i.e. "Free in and out". In some instances, the loading expenses are to be borne by the ship owner in which case the freight is quoted on "gross load" basis. Sometimes freight is quoted on FIOT i.e. "free in and out trimmed" or FIOST "free in and out spout and trimmed".
(v) The ship owner acts as the carrier and responsible for all expenses in the running and operation of the ship. The charterer pays only the thread charges as agreed upon.
(vi) In a voyage charter a ship is engaged for either a single voyage or for consecutive/round voyages for shipment of an agreed quantity of cargo. The ship owner undertakes to provide the vessel to the charterers for carriage of agreed cargoes from one of the two agreed ports to be discharged at the named port or ports within a certain range at rates and conditions mutually agreed in advance. The ship may be put at the charterer's disposal by letting out its full capacity or part of it. Some times, the ship's capacity may be let out to more than one charterer, in which case the ship owner enters into different agreements with the individual charterer.
(vii) The ship owner under the voyage charter are to direct the master of the vessel to report of the named port for the first loading within a specified time period after the signing of the agreement or at or before an agreed date as stipulated in the agreement. If the vessel does not report for loading accordingly the chatterer may cancel the contract or can claim damage for any consequential loss.

Computation of Freight. For engaging a tramp on voyage basis the chatterer has to pay certain freight. Freight can be computed either on a lump-sum basis or per-ton basis. Thus, where freight payable is on the actual quantity of cargo loaded, freight is calculated on per-ton basis or on dead weight capacity put on a charterer’s disposal. Alternatively lump-sum freight may also be charged.

Ports
India’s coastline of about 6,000 km is dotted with 13 major and 185 other ports. Nearly 95 per cent of the country’s foreign cargo (by volume) moves by sea and, therefore, ports/and their development assume an important place in policy making. Development and maintenance of India’s major ports are the responsibility of the Central Government, while Other Ports are in the Concurrent list.

Major Ports

India’s major ports are governed by the Indian ports Act 1908 and the Major Port Trusts Act 1963. The former allow the Statutory to declare any port a major port, define port limit, levy charges etc. while the formation of Port trust Boards and vests the administration control and management of major ports in these Boards.

Development of port after the independence, the development of major ports was taken up in a planned manner. Mechanization and modernizations of cargo-handling facilities at Ports have been a thrust area in recent years, with emphasis on development of dedicated infrastructure. Deepening of ports to receive lager vessels has been another priority area. Vishakhapatnam and Chennai ports have already been deepened.

Name of the 13 major ports

Calcutta, Haldia, Paradeep, Mumbai, Chennai, Cochin, Tuticorin, Jawaharlal Nehru Port at Nhava Sheva, Kandla, Vishakhapatnam, New Mangalore, Marmugao and Ennore Port Trust.
All these major ports are equipped with latest material handling equipment. The capacity of India Ports increased from 20 million tonnes of cargo handling in 1951 to 390 million tonnes as on March 2004. The number of cargo vessels handled at major ports is about 16,000 per annum. Containerization of major ports is increasing rapidly.

Consequent upon adoption of open market economy, Port sector has been opened for private investment. Various areas of Port Functioning such as leasing out existing assets of the port, creation of additional assets, leasing of equipment for port handling and leasing of floating craft from private sector, pilotage and captive facilities for port based industries have been identified for participation/investment by the private sector.

Rail Transportation

2006-03-02T18:13:00.000+05:30

Rail Transportation

Rail and roads links are lifelines for economic and trade growth. The players in this segment are increasingly reorganizing to meet a demanding and dynamic environment. With advancements in technology, we now have faster, safer and more reliable vehicles, both on rail and on road.

In an industry that is rapidly consolidating and expanding globally, proper information analysis, information dissemination and management systems become critical business differentiators. To support such rapid changes in technology, while reducing costs and increasing safety, operators in the road and rail sectors need to implement suitable and intelligent IT systems.

India is the country with the largest railway network in Asia. This is the most convenient mode of transport for large-scale goods movement as well as for long distance travel. Based on the spacing between rails, railways are classified into broad gauge (1.69 m), metre gauge (1.0m) and narrow gauge (0.762 m).

Meaning of Railway

A railroad (or railway) is a mode of land transportation in which freight goods and passenger carrying vehicles or cars with flanged wheels move over two parallel steel rails. The guideway or track consists of the parallel rail laid on sleepers and anchored in a bed of crushed rock or other ballast. The car usually is pushed or pulled by a locomotive, although it may be self-propelled. The track guauge (the distance between inside faces of the rail) varies from country to country and sometimes among within the same country. The standard gauge in the railroad is 4 ft 8.5 inches (1.435 metres).

The flanges on the inside of the wheels guide the locomotive and cars, causing them .to follow the line of the rails. The rolling friction of the wheels on the rail is extremely low. Because of this low rolling friction, a locomotive of relatively modest horsepower can a pull a long train of cars. This, basically, is the reason for economy of railroad transportation.

Nature and Importance of Railway Transport

 Railways are the most important means of land transportation because of its speed and safety. It is a useful mean of transport for carrying cheap, bulky and heavy articles over long distances.

 The use of Railways, as a mode of transport, dependents on physical factors like topography and climatic condition of a region. The cost of providing railway service in plain region is less as compared to hilly areas because of the high cost involved in digging tunnels. The development of railways is also difficult in areas of heavy rainfall and snowfall through out the year.

 Railways assist to accelerate the process of industrialization in many countries. The stage of economic and industrial development of a country can be judged from the adequacy of the rail network in it. Railways prove to be one of the most vital links in the chain of industrialization and agricultural development by providing the basic infrastructure facility.

 The railways are large-scale surface transport industry with heavy capital investment. The capacity of railways to carry passenger and goods is much larger than road transport. It can transport full wagonload goods over long distances at lower cost. The greater the volume of traffic on the railways, the lower is the unit cost.

 Railways transport is an economic mode for transportation of bulk commodities and passengers. With a high degree of operating efficiency, the railways are considered as a vehicle of economic growth.

 Railways transport is an important and inexpensive mode for economic exploration of natural resources in a large country like India.

 Railways constitute the main artery of surface transportation, to which other mode of road transport is linked as feeder systems. Its carrying capacity is much larger as compared to road transport vehicles.

 Railways have their own separate track and wagons to carry passengers and goods. The movement from one track to another or in the reverse direction can only be made where facilities for switching or crossing loops have been provided. The movement of goods and passengers in railway transport takes place at fixed points provided for the purpose, i.e., at terminal stations or in the sidings, where they have to be brought by road or other modes.

 Door-to-door delivery cannot be arranged by rail unless complimentary road services are made available. The movement takes place in train loads resulting in haulage of large quantity of goods at a time, but this also needs marshalling of wagons en route for switching individual wagons to proper destination which results in detention of goods as well as additional cost of marshalling. Large movement of empty wagons take place either due to unbalanced traffic for return journey or the wagons a re required to be supplied in large numbers to the points of production of goods according to the priority schedules.

 Railways transport increases the competitiveness of products in the market by reducing transportation cost. The industrially developed countries have developed well-planned railway network in their countries to optimize the utilization of their resources by cutting down the transportation cost. This mode of transport offers an excellent opportunity to do so.

Public Service Obligations of the Railways

Besides their role in fulfilling economic and plan objectives, the railways have to undertake a number of obligations to the public. They have to do so because they are being managed by welfare Government. These obligations are stated below:

 According to Section 27 of the Indian Railways Act 1890, railways have the obligation to provide reasonable facilities for receiving and forwarding the traffic offered to them without any undue preference. Thus, the railways cannot normally refused to carry any goods offered to them or discriminate between what to carry and what not to carry. Such obligations are not there for other modes of transport.

 Until January 1962, the responsibility of the Indian Railways, as a carrier was limited to that of a bailee only. But, now the railways have assumed greater responsibility for the loss, destruction, damage, deterioration, etc., of animals or goods delivered to them for carriage.

 Under Section 27(a) of the Indian Railways Act, the central government may direct any railway administration, in the public interest, to give preference to the transport of such goods or class of goods as may be specified. Such directions are generally given in respect of low rated commodity like coal, mineral ores for export, raw materials for iron and steel industries. manure. food-grain. etc. When such a direction is given, the railways have to provide transport facilities for the designated items of traffic, not withstanding high rated traffic waiting to be moved.

 Indian railways have to undertake to construct new railway lines, for the socio-economic development of a particular region without adhering to commercial viability of the project, e.g., sub-urban passenger services, which carry large numbers of daily passengers on concessional season tickets, are generally not remunerative. The railways have to offer services in their uneconomic branch lines.

 The railways have to grant freight concession on a number of commodities to increase export. Social obligations of Indian Railways force it to provide certain services below the cost of operation. Essential commodities of mass consumption like sugar cane, salt, edible oil etc are carried at low rates below cost. Fares of the short distance second ordinary class and season’s tickets are much below their costs. In addition special concessions are extended to certain categories of people.

Major Problems of Indian Railways

 Railways share in total traffic. The railways are energy efficient and eminently suited mode for movement of freight traffic over medium and long distance. However, a good share of the total traffic is carried by road in India. Fifteen thousand kms of the total railways system constitute heavily used routes, over which average traffic density exceeds 20 million gross-ton kilometres per route per year. Bulk of the freight and passenger traffic is concentrated on the quadrilateral formed by the four metropolitan cities and their diagonals. Moreover, expansion of railway line has been taken place mainly on these sections during plan periods. Railways are also facing road competition on long distance routes particularly where break-of-gauge transshipment poses a problem.

 Capacity requirements. The capacity assessment of the system necessarily has to contend with certain inherent characteristics of the railways as a mode of transport. Common physical assets are created to provide different types of transport services like freight and passenger movement and any change in the mix alters the output of the system. A considerable portion of the railway asset is location specific and cannot be adjusted to the changes in the demand for services. The important rail corridors connecting major centers of activities, which handle massive volume of, traffic has reached a saturation level. When comparing investments for augmenting capacity either in Railways or road services, it should be borne in mind that the Railways, as a common carrier cannot refuse any particular commodity, whereas individual truck owners can pick and choose, which places the railways in a disadvantageous position. If, therefore, traffic increases and rail facilities remain inadequate, the high rated commodities, which are more susceptible to diversion, will go to the roads and this will weaken the financial position of the railways.

 Energy conservation. The railways are a major user of liquid fuels and must contribute to energy conservation. Due to paucity of fund energy inefficient obsolete steam engines and rolling stocks are yet to be replaced.

 On line performance. The incidence of 'on-line failures' of fleet and equipment is fairly high. Such failure in crowded traffic corridor brings a quasi-paralysis of the corridor. The maintenance of infrastructure is still inadequate in relation to the rolling stock. The rolling stock designs are out dated and maintenance practices in-several areas are based on obsolete technology. The percentage of ineffective rolling stock far exceeds prescribed levels. The railways have to suffer because of its un-remunerative branch lines for public service obligations.

 Manpower planning. The -manpower cost in the working expenses of the railways form a sizable portion due to absence of substantial efforts for technological up-gradation of operational system of the railways. The system is beset with excess manpower and manpower development has not kept pace with technology upgradation.

 Containerization. Containerization transport has been favoured because of its inherent characteristics in different parts of the world but the process of development has been slow in Indian railways. Due to slow growth of containerization practice by the railways, it is difficult to improve wagon-turnaround and material handling cost.

 Own resource generation. The railways ability to generate its own resources for growth and replacement has not shown any improvement. In fact, rate of return on the capital investment has been low in Indian railways.

 Traction policy. Steam traction is inefficient, both from the point of view of operation and energy consumption. Most of the steam locomotives are now relegated to inferior services and are, thus, a drag on the system. Due to non-availability of electric traction in many important railways sections lead to delay in movement of traffic. The shortage of capacities in railways and very high traffic density on major routes are also responsible for creating problems for railways to increase the flow of goods and passenger traffic.

 Railway rates have been based on the value of service principle and the relatively high rates charged by the railways for the more highly priced goods have tended to enhance the scope for competition from road transport.

Economies of Railways: The pattern of investment on the railways involves heavy outlays on railway tracks, signaling equipment as well as on the regular maintenance of these assets. Investment is required towards provision of terminal and transshipment facilities, locomotives, various types of coaches and Electric Multiple Unit stock, ordinary as well as special types of wagons. The track as well as other fixed facilities are generally used both for coaching (passenger and parcels) and goods traffic, which are the main constituents of rail transport.

The railway is executing certain unproductive work such as transport of workmen to the site of work, movement of stores for operational purposes, movement of empty wagons to be made available at the loading points where traffic is offered, shunting in yards and at terminals. The cost of these services are included in public traffic cost and termed as 'Revenue Earning Traffic', and these expenses are included in cost of various functional groups/ constituent elements of rail transport. The railway transport cost can be classified as fully distributed cost, which represents the total expenditure in transport service, which can be quantified.

Variable costs (long term), which are also termed as direct cost or out-of pocket cost, are the expenses, which actually vary along with the quantum of traffic moved. These generally represent the cost of provision, maintenance and operation of rolling stock including loco-crew, wages of train staff. These also include such portions of fixed cost like expenses on maintenance of tracks and signaling. The long-term variable cost is very important for working out the economics of movements of additional traffic. Variable cost (short term) or marginal cost relates to the direct additional cost required to be incurred for occasional movement of traffic. These cost include terminal, marshalling yard, and transshipment, line haul-traction expenses.

Rail transport cost is the unit cost of each of its functions plus the cost of movement of a given commodity. In .the railway freight structure, the following factors are taken into account while fixing the freight rate for a commodity.

(i) Cost of service.
(ii) Social costs of a commodity.
(iii) Ability of a particular commodity to bear the transport cost.
(iv) Loading and unloading characteristics of a commodity

Freight is the backbone of the Indian Railways and contributes more than 66 per cent of this organisation's earnings, even subsidising the losses it makes on passenger operations. The Indian Railways decided to adopt the use of information technology to improve the utilisation and maintenance of its rolling stock, for better capacity utilisation and increased output. This led to CMC's freight operations information system (FOIS), an integrated information and management system for controlling and monitoring the multifarious activities in freight operations.

Rail transport comprises of two categories of traffic:
(a) Coaching (passenger and parcel traffic) and
(b) Goods (Freight traffic).

(a) Coaching
Passenger traffic Service. This includes Electric Multiple Unit transport services (computer services) and rail car service. The total expenditure on coaching service can be grouped as under:

(a) Passenger (Terminal service)-This include expenses relating to facilities provided for booking of passengers, waiting rooms, platforms, shunting/marshalling of trains, provision and maintenance of coaching yards

(b) Catering Service-catering service includes expenses on refreshment rooms, restaurants at stations, dining car services in the running trains.

(c) Special Services-Reservation, enquiries, retiring room facilities,
the expenses of conductor guards, TTEs and coach attendants.

Line Haul Service. This services includes proportionate share of expenditure on traction, cost of train passing staff including guards, provision and maintenance of coaching stock, track and signaling. .

Luggage Parcel Service. These services include booking and delivery of luggage and parcels, loading and unloading from vans, transshipment I repackaging at junction stations, shunting of parcel vans at stations, provision and maintenance of commercial sidings.

(b) Goods
The railway freight transport comprises of the following functional
groups:
(I) Terminal services - This service include booking and delivery of goods, loading into and unloading from wagons and shunting the wagons from and to the marshalling yards.
(ii) Line Haul- This service can be sub-divided into;

(a) marshalling yards for formation and breaking up of trains,

(b) transshipment of all goods at break-of-gauge and that of smalls from one wagon to another on the same gauge termed as repackaging of smalls; and
(iii) Line Haul from originating to destination stations

Classification of Goods, Rates and Fares

The freight traffic moved by the Indian Railways has increased to a considerable extent with the growth of production and trade. The railway Ministry has formulated the general basis of freight and rates, which are as follows.

"Railways are, no doubt, commercial concerns but they are hardly commercial concerns in the conventional sense. As a state undertaking they owe it to the public, to provide transport at the cheapest rate, consistent with the maintenance of their financial solvency and providing means for their development. Unlike ordinary commercial concern, they must not aim to maximize their profit, all the more so because they are a semi monopolistic concern. Consequently, they must aim at charging not necessarily what the traffic can bear but what is justified in relation to their cost of operation and essential development."

According to the Taxation Enquiry Commission (1953) chaired by John Mathai, "Railways are an industry and therefore, is to be run on commercial principle. Railway freights accordingly fixed on such principles with due regard to the interest of agriculture, industry, commerce and the general public." These commercial principles on which freight rates are fixed may be stated inter alia to be as follows.

(a) Reasonableness of rate - This principle is commonly refereed to as "charging what the traffic will bear", i.e., fixing the charge for each variety of goods according to its ability to pay for transportation. This takes into account the value of commodity, the use to which it is put and the stage of its manufacture. In the case of industries, it is also usual to take into account the development aspect.

(b) Consideration regarding potentiality of both long-term and short term traffic.
(c) Avoidance of undue preference to persons, locality or any particular description of traffic.
(d) Competition from other modes of transport.
(e) Operating cost of railways, which also take into account factors, such as the bulk of the commodity in relation to its weight, the risk of damage, wastage in transit and the volume of traffic.

In pursuance with the policy of freight structure as envisaged in the Commission's Report, Indian Railways have framed their freight and rate structure for various categories of goods. The railways have taken responsibility as a public utility concern, to transport high valued goods as well as low valued goods irrespective of its size and weight. It undertakes the task of ensuring safe travel of its passenger's as well safe delivery of goods, i.e., without any damage at a cheaper cost. The rationalized fare and freight structure of Indian railways attracted millions of passengers to use" this mode of transport. While performing the role of the major transport operator in India, the railways fixed their rates for different commodities according to the nature, size, cost and importance and essentiality of the society. Besides, the railways always keep in view the paying ability of the user to use railway system for transporting their goods. In order to facilitate reasonable rate and the demand for transporting variety of goods, the railways have classified nearly three thousand odd types of goods into different classes. The rate prescribed for these classes is known as class rate.

The major factors responsible for such classification of goods are as follows:

(a) The railways for socio-economic-national considerations transport variety of raw materials, semi-finished, finished goods as well as personal appliances. The inherent railways influence the consumers to use this form of transport both for short and long distances. The railways cannot deny transporting the goods, as it is a public utility concern. This makes the work of the railways administration difficult, as it has to carry not only essential commodities but also highly valued goods.

(b) It is very difficult to ascertain the railways transport cost for each and every item of goods to be transported in high dense traffic corridor or in a remunerative branch railway line connected with interior areas. Therefore, various types of goods having same nature, value and size are identified as a single group.

(c) Railway's fare policy is generally based on "what the traffic can bear". The transport cost should not be more than the production cost of an article. The transport cost must be reasonable enough, so that the produced goods can be distributed in a widely spread market. Railways shoulders responsibility of keeping the price of essential commodities at a reasonable rate, be it a liquid or a solid goods, for the benefit of both consumers and producers.

Class Rates
In the existing freight structure some three thousand commodities have been categorized into different classes. The minimum class rate is 60 and the maximum class rate is 300. These class rates are subject to change from time to time proportionately. The class rates for certain commodities are quoted under owners risk (OR) and under railways' risk (RR). The OR rate is approximately 20 percent lower than the RR rates and commodities of low value or perishable commodities are usually quoted at OR rates. The consignor has to opt for sending goods at his own risk or at railways' risk to save freight cost. In case, the goods are damaged or deteriorated during transportation, the owner has to prove the negligence of the railway authority to claim compensation.

Wagon Load Rates
The wagonload rate fluctuates from 60 to 300. The customer can take advantage of this rate by dispatching commodities of full wagonload quantities but the minimum weight condition as specified in the goods' tariff should be complied with.

Recommendations of the Railway Freight Structure Enquiry Committee, 1955
The Railway Freight structure Committee was constituted under the chairmanship of Dr. A. Ramswamy Mudaliar. To review the existing freight structure for transport by goods train in all its aspect in the light of the development of economy. The major recommendations of the committee are as follows:

(a) A regular and progressive increase through a percentage'system from the lowest class to the highest class to from an integrated scale of rates covering both class rates and wagonload scales. For this purpose they re-commended a norm rate called class 100 rate.

(b) All commodities are classified as wagonload and smalls. However for some commodities for which separate smells and wagonload classification gas no significance there the rate would apply on an "AQ" (any quantity) basis.

Small Rates
This rate also ranges from 60 to 300 and there are 16 class rates for smalls. These rates are approximately 15 to 20 percent higher than the wagonload rates.

Train Load Rates
To facilitate smooth flow of essential commodities like greens and pulses, coal, cement, iron and steel etc., this train load rate has been introduced by the Indian Railways. These train load rates are approximately 10 percent cheaper than the wagonload rates.

Special Rates
These rates are charged to defense materials and postal traffic, etc. These are the subsidized rates and mutually agreed upon with the concerned authorities or persons with the Indian railways from time to time.

Station to Station Rate
In order to meet stiff competition from other modes of transport the railway authorities can quote station-to-station rate to increase additional freight traffic.

However, the following factors are taken into account to quote station to station rate:

(i) No reduction is permitted in the rates for commodities chargeable at lower class rates.
(ii) No reduction is permitted in the rates for livestock as well as in the rates for petroleum and other hydrocarbon oils, and dangerous good.
(iii) No reduction is permitted in respect of movements of less than 150kms for wagonload traffic and in respect of movement of less than 300 kms for smalls traffic.

Procedure for Booking and Delivery of Goods

The goods carried by the railways can be categorized into;
(i) Smalls, and (ii) Wagon Load.

If the consignor is sending small quantities of goods which does not require hiring a full wagon then it is referred to as 'smalls traffic'. If the consignor wants to send goods in large quantities requiring exclusive use of a full wagon, it is known as 'wagon load traffic’.The consignor is required to place an indent if he wants use a full wagon and have to deposit wagon registration fee at the prevailing rates.

Generally wagons are supplied on first-come-first-serve basis.

Forwarding Note
It is a note which provides information on the description of goods, place of destination and originating station, selection of route, value of goods, and remarks on the packing conditions, etc The consignor or his agent is required to execute a Forwarding Note with the Station Master, which in fact is the document of contract between the consignor and the railways. This note is used to determine the liability .of the railways on the event of claiming compensation by the consignor for damage, loss or deterioration of goods during transportation. This note also assists the railway officials in accepting and dispatching goods and in preparation of Railway Receipt (RR).

Railway Receipt (RR)

When the consignor books the consignments, it is weighed, marked and loaded and a railway receipt prepared and a copy of it is handed over to the consignor or his agent. Generally, 4 copies of the railway receipt are prepared. One copy is given to the consignor, one is sent to the destination station as an invoice, one is sent to accounts office and the fourth copy is retained in the station for record. The consignee who takes delivery of the goods at the destination station has to submit the railway receipt. It is also a negotiable instrument. and possesses all characteristics of it. However, if the railway receipt is lost, then the consignee to take delivery of the goods at the destination station may execute an indemnity bond.

Marking of Consignments
In respect of wagonload consignments, 10 per cent of the packages are required to be marked. Correct marking of consignments with good packing of goods is highly essential for dispatching the goods. There are prescribed packing conditions for various commodities lay down by the railways in order to ensure safe delivery of goods to the consignee. The packing should withstand the rigidity of the journey and handling of the goods during loading and unloading at the stations. Packages generally carry private marks as well as railway marks. It is also essential that the old markings on consignments be obliterated. Small consignments are weighed on the railways' weighing scale and full wagon load consignments are weighed on wagon weigh-bridges. When the consignor regularly sends goods of uniform size arid weight, the railways accept the sender's weight. Wherever weigh bridges are not available, wagonload consignments are charged on floor area basis for certain commodities.

Wharfage

It is levied, if the consignee could not lift the consignment in the free time allotted by the Railways from the destination station. It is the duty of the consignee to take note of the arrival of the consignment at this station. Wharfage is charged after a free time of two days including the day on which the goods are available for delivery. However the rates of wharfage vary with the importance of goods shed and available warehousing accommodation. The rates of wharfage at goods sheds vary from station to station and from one railway zone to the other.

Laws Relating to Carriage of Goods by Railways

Carriage by rail in India is regulated by Indian Railways Act 1890, which was amended with the enactment of the Indian Railways (Amendment) Act 1961. As per the amended section 73, the railway administration will be liable for the loss, destruction or deterioration in transit or animals or goods received by it for carriage by rail from all causes except losses arising from : (i) act of God, (ii) act of War, (iil) act of Public Enemy, (iv) arrest, restraint or seizure under legal process, (v) orders by or on behalf of the central or state government, (vi) act of commission or negligence of the consignor or the consignee or their legal agent, (vii) natural deterioration due to some inherent vice in the goods, (viii) latent defects, (ix) fire or explosion.

Owner's Risk Rate or Railways Risk Rate. (Section-74), the animal or goods may be carried by a railway administration either at Owner's Risk Rate or Railway Risk Rate. Owner's risk rate is a special rate, where as the railway risk rate is an ordinary tariff rate. Accordingly, the owner's risk rate is somewhat less than the railway risk rate. The onus of proving negligence and misconduct by the railway administration in owner's risk rate rests on the owner. Unless otherwise agreed, all goods are considered to have been delivered to the railway for carriage at owner's risk rate. The sender has to agree in writing if he opts for the railway risk rate to send his goods.

Responsibility of Railway Administration as Carrier of Luggage

(A) Under the following circumstances the railway administration is responsible for the loss, destruction, damage, deterioration or nondelivery of a luggage belonging to a passenger:
(i) If a railway servant has booked the luggage and given a receipt.
(ii) It is proved that the loss etc., are due to negligence or misconduct
by the railway administration.
(B) If the owner can prove that the loss caused is due to delay or detention of luggage in transit, then the railway administration have to make good the loss.
(C) The railway administration would be liable if the goods have been delivered to a wrong person without verifying whether the said person possesses the railway receipt.
(D) Where the good are carried at owner's risk the liability of the railway administration is that of a bailee. But, if the goods are carried at railway risk rate, the liability of the railway administration is that of a common carrier.
(E) The liability of the railway administration after termination of transit and during 30 days after termination of transit is that of a bailee. But the administration is not responsible for any loss of goods after 30 days from the date of termination of transit. .
(F) When any parcel or package contains article of special value to be carried by the railway, then the railway administration is not responsible for the loss, destruction or deterioration of the parcel if the person sending has not declared in writing the contents and the value of the parcel and has not paid the additional charges.
(G) When goods are sent in defective condition/ packing, then the railway administration is responsible for the damage only if, the sender or his agent in the forwarding note has recorded it.

Public Sector Companies
There are nine central public sector companies registered as per Company Act, 1956 under the administrative control of the Ministry of Railways, Government of India.
. Rail India Technical & Economic Services Ltd. (RITES)
. Indian Railway Construction International Ltd. (IRCON)
. Indian Railway Finance Corporation Ltd. (IRFC)
. Container Corporation of India Ltd. (CONCOR)
. Konkan Railway Corporation Ltd. (KRCL)
. Indian Railway Catering & Tourism Corporation Ltd. (IRCTC) . Railtel Corporation of India Ltd. (RAIL TEL)
.Mumbai Rail Vikas Nigam Ltd. (MRVNL)
. Rail Vikas Nigam Ltd. (RVNL)

A recent World Bank report on Indian transport sector called for the privatization of the Indian Railways among other areas in the transport sector. Driven against the wall by a poor financial performance and a severe resource crunch, the railways have decided to allow private sector participation in the use of its tracks and rolling stocks. This is a welcome recognition of the opportunities for growth to be realised through a partnership with the private sector. This partnership will enable the railways to concentrate more on its core traffic which needs to be transported over long distances and currently gets diverted to road transport. The interest shown by the private sector in using railway tracks/ rolling stocks under the own your wagon scheme; will also help in bringing about a multi-modal transport system in the country. Private sector will use the railways for long distance transportation and then link railheads to the customer through road transport. In fact, privatisation can be extended to other rail services as well. This will allow the railways to concentrate on its core activities and improve its operating efficiency.

There is also a massive cross subsidy from freight to passenger operations in Indian railways, according to the World Bank Report. While the passenger traffic constitutes 53 per cent of the Indian railways output, its contribution to revenues is only 29 per cent of the railways total revenue. The report said Indian Railways is primarily passenger in terms of output and freight in terms of revenue. The passenger rates charged by the Indian Railways are the lowest in the world. The Indian Railways charge, says the study, about three times as much to move a tonne one km as they do to move a passenger one km. Existing modal shares between rail and road do not conform to optimal shares as judged by least economic cost. The railways have, therefore, devised a new marketing strategy following economic reforms, to attract freight traffic now going by roads which is more energy intensive and less environment friendly. The features of Railway's new marketing strategy are as follows:

 The Container Corporation of India (Concor), a public sector undertaking will provide door to door service to domestic users, transportation in bulk for small customers and international transport in ISO containers.

 Introducing trains connecting Tughlakabad with Bombay, JNPT and Madras ports for the movement of export containers on scheduled time.

 Leasing out brake van space to customers, so that they can have an assured transportation petween fixed points.

 Introducing long distance special parcel service between Bombay and Delhi, Delhi-Mughalsarai and Wadibunder Shalimar.

 Introduction of Own Your Wagon Scheme to invite private sector investment for the ownership of railway wagons and thereby supplement the resources available with the railways for meeting the transport requirements of various sectors of the economy.

 Simplification of rules in key areas like free acceptance of indents, supply of wagons, single window booking systems and faxing of invoices to the destination.

 Rebate on freight for utilisation of wagons in the empty flow direction.

 Closure of yards to facilitate faster movement.

The shares of budgetary support and internal resources are coming down. The growing dependence on borrowings would help speed up the pace of modernisation, but it would soon cause undue strain on Railway finances due to mounting interest burden. The Railways, therefore, proposed to invite private investments to meet its resource gap. It has also decided to drastically reduce dependence on market borrowings. This was indicated by the government in the expenditure estimates of the Railways for 1996-97. The plan will be funded by internal resources estimated at Rs 4111 crore, budgetary support of Rs 1269 crore, market borrowings Rs 1850 crore and private investment under Build-OwnLease-Transfer (BOLT) and Own- Your-Own- Wagon Scheme, which are expected to be around Rs 900 crore.

The financial commitments of the Railways are high in view of the need for timely track renewal, replacement of over-aged wagons and coaches and additions to rolling stock for meeting the growing freight and passenger demand. The passenger traffic. is growing at the rate of 3.5 to 4 per cent per annum and suburban traffic at the rate of 5 to 6 per cent. The modernisation process is not moving.at the required pace. The Railways have backlog of 12,000 km of track renewal at the start of the Eighth Plan. To this must be added another 11,500 km during the Plan period.

However, development work is continuing. Under the Project Uniguage, the higgest 'Single devevelopment programme of Indian Railways, the Railways completed 5000 kms of guage conversion. Guage conversion done l1.!1Jl\der Project uniguage since 1.4.1992 is 5000 kms (against the target of 4000 kms) as compared to 3100 kms of ,guage conversion done between 1950 to 1992. Coupled with the policy 01 economic reforms, project uniguage is expected to usher in a new era of development and progress in. hitherto less developed areas reducing regional imbalances in economic development.

Since the announcement of the uni-guage programme in 1992, the railways have identified 15,000 km of meter guage line to be converted into broad guage , in which 5000 kms of guage conversion work has already been completed and converted into broad guage.

Project uni-guage,i.e., one uniform guage, converting the. entire metre and narrow guage railway routes of 28,000 km into broad guage, was resorted to, as Indian Railways have three guages of varying width, namely broad guage (1.676 metre), metre guage (1.0 metre) and narrow guage (varying between 0.762 to 0.610 metre). Presently, the route knT on broad guage account for 34,000 (55%), metre guage 23,600 (38%) and narrow guage 4,200 (7%). The uni-guage policy is justified on the grounds of energy conservation,minimising transport bottlenecks and transhipment hazards.

The major programme of country-wide guage oonversion is being mostly financed from internal resources. The guage conversion programme is intended to be the main vehicle of economic liberalisation, besides helping in the removal of regional economic imbalances by redrawing the investments flows to the backward areas. It would facilitate direct linking of mineral sources with industrial and rommercial centres on broad guage and also improve the overall efficiency of the railway system. It is also connecting various ports to the hinterland areas on broad guage which would help in boosting the economy by facilitating movemenf of export and import cargoes. Parlivaijnath via Beed is also being taken up for the benefit of the backward regions of Marathwada in the state of Maharashtra . In Punjab, construction ot the bea&-Goindwal line to link the new industrial township of Goindwal as also the construction of Rajpura-Chandigarh line to fulfill the longstanding demand for a direct link between Ludhiana, Patiala and Chandigarh have been taken up. Kashmir valley is also being brought under the railway network by extending the Jammu-Udhampur line up to Srinagar and Baramulla.

The Indian Railways most ambitious project, the Konkan Railway Project is the largest railway construction project in the Indian subcontinent during the present century. The Konkan Railway has a 760 km of railway line, with 179 major bridges and 1670 minor bridges with 288 grade separators, and 92 tunnels over some of the most difficult terrain in India. 92 tunnels with a total length of 83.6 km out of which 82.7 km of tunnelling is completed. Total waterway is 26 km. It has a tallest viaduct in Asia - 64 metres, and the longest tunnel 65 km. New technologies used for the first.time in India include jet fan ventilation in long tunnels and fully computerised train monitoring system with fibre-optic communications system throughout 760 km length. Designed for modern high speed trains, the project will provide significant savings in both travel time and cost. The project will save the nation Rs.300 aore each year in fuel costs alone.
.
In this era of global economic integration, the railways have identified international trade as a major marketing thrust area. The main objective of the marketing strategy is to capture high rated non-core sector traffic is througp multimodal container services. According to the Economic Survey 1995-96, there has been a rising trend in international trade in recent years. In this sphere, the Container Corporation of India (Concor) is playing a vital role. The bulk of Corncor' s business comes from export-import trade requirements.

As a millennium gift to its freight customers Indian Railways have successfully launched a computerized FOIS covering almost the entire Indian Railways network. The design, development, and implementation of the system is a totally indigenous effort which has been accomplished jointly by CMC and CRIS.

It is most credible that FOIS is a 100 per cent indigenous effort, uses state of the art technology and has ample scope for evolution as a harbinger of IT revolution in railway management systems of a magnitude that has not yet been tried on any of south Asian railway systems. Once all the phases / modules of the planned operating information system (OIS) are integrated and implemented it would catapult Indian railways at par with any other railway system even in the most developed countries of the world.

For any railroad company / organisation continuous cargo visibility is viewed as the most critical component of its physical distribution system. FOIS enables freight customers to have instant access to information regarding the current status of their consignments in transit, allowing them to implement just in time inventory management systems and better logistics management. It is a system for management and control of freight movement that also assists managers to optimize their asset utilization.

Strategic advantages

Freight Operation Information System

The FOIS has been designed to give major strategic advantages to both Indian Railways and its customers, some of them are:

Extension of the current business practice of bulk movement of freight traffic in trainload formations to piecemeal traffic to increase the market share by clubbing and moving together similar type of stock in 'Hub and Spoke' arrangement.
Global tracking of consignments in real-time, whether in rakes or in individual wagons
Facilitate acceptance (customer's orders), billing and cash accountal of freight traffic from identified nodal customer centers which may not necessarily be the handling terminals.
Foundation for a complete logistics management system furnishing real time information on the chain of physical distribution, an essential element in reducing inventory costs, is being laid through FOIS.

The system in use already performs the following functions online:

Live monitoring of all freight trains giving their current position in computerised territory and their expected time of arrival at destination.
Commodity wise flow of freight trains for customers like power houses, refineries, fertilisers and cement plants, steel depots and public freight terminals, enabling the recipients of consignments to have an accurate forecast of cargo arrivals, giving them adequate time to complete preparatory arrangement to handle the cargo.
Monitoring of out bound loaded rakes in the same manner.
Monitoring of detachments from block rakes to track wagons getting detached at a location or missing.
Analysis of total demand for rail transport and its logical matching with incoming rakes to optimise supply of empty rakes for loading.
Generates as many as 163 managerial reports.

With the use of the system there has been a visible reduction in the anxiety levels, mental stress amongst operating staff. The voluminous and repetitive exchange of data on telephones round the clock has now been replaced by minimum data input. The improved work environment has significantly simplified planning and execution of assigned tasks.

The lead taken by some of the zonal railways like northern and western in using the system information to club less than train load consignments into train load has helped them earn additional revenue besides being lauded by the trade. The words of appreciation from bulk customers like FCI and IFFCO who are being advised through e-mail the status of their consignments regularly, is a clear indication that the anticipated benefits from FOIS have already begun to accrue.

The Indian Railways have agreed to participate in the Trans-Asian Railway link between Europe & South -East Asia, via Iran,Pakistan,India,Bangladesh, Myanmar,Thailand & Malaysia. This Trans Asian Railway project is being considered by United Nations Economics & Social Commission for Asia & the Pacific (ESCAP) under the Asian Land Infrastructure development project. The main objective of this project is to identify & evaluate the development & operation of a network of routes between South Asia & Europe, south China & Europe, Thailand & Europe. These routes are supposed to run thru Bangladesh, Myanmar, India, Pakistan, Iran & Turkey.

Road Transportation

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Efficient road construction & transportation system is a pre requisite for the development of every aspect of society, be it education, health or economic development. Road transportation caters to the need of medium and short distance movements and is one of the important elements for national development. The road transport sector plays a major role in the economic development of the country. The profitability of transport operations depends to a large extent on fuel efficiency of the vehicles.

Indian Scenario

India is one of the countries of the world having the largest road network. We have an extensive road network that links the different parts of the country. The influence of topography in road construction is noticeable. The regions with the largest road network include:

• The Gangetic plains
• The Damodar valley
• The Punjab-Haryana plains
• The south Indian states such as Tamil
• Nadu, Karnataka and Kerala

Today the Indian customer's standard and the level of expectation have gone up dramatically. They have become world-class customers and thus expect world-class services. Hence it is customer service, which is going to give the competitive edge to any industry in the future.

The domestic express cargo industry is meeting the customer satisfaction needs by providing speedy and safe delivery of cargo like documents, packages, samples, exhibition material etc. Domestic market for door-to-door express cargo market is more than Rs.400 crore and the current rate of growth is in a region of a healthy 35% per annum. The industry has been making an increasingly important contribution to the economic growth of the country by providing logistics to the cargo movement.

The road transport industry consists of three defined sectors:
• Manufacturers, suppliers and repairers of commercial vehicles including coaches and buses, and their components
• Transport operators engaged in the movement of freight
• Public and private operators involved in the movement of passengers.

The road transport industry also supports the freight logistics task and has sophisticated freight management systems that provide the logistics and materials handling solutions from production line to consumer. Organisations which need road freight transport services may use either in-house or outsourced road freight services with the outsourced freight services (freight forwarders or freight operators) showing an increase in use. Outsourced freight forwarders may either provide a transport service nationally or concentrate on moving goods on specific routes. Freight forwarders may operate their own truck fleet and employ their own drivers, but more commonly they engage independent sub-contractors to provide haulage services. However, there has been a recent trend for freight forwarders to increase the sizes of their own fleets.

Freight operators may be either fleet or independent operators. They secure consignments on a contractual basis, either directly from consigners or from freight forwarders. Depending on contractual arrangements, these independent operators may be:

In order to identify inefficiencies that could reduce the benefits to be derived from the large investments now being made by the Government in the nation’s highway infrastructure, various studies have been considered to improve the functioning of road transport, in particular long-distance road transport, and, enhance its already enormous contribution (3.9 percent of GDP) to the workings of the Indian economy. While the road transport sector encompasses a wide variety of activities, this study has focused on three aspects which were considered the most relevant to the investments in highway infrastructure - the trucking industry, inter-city buses, and in view of its very important, but largely unfulfilled role in enhancing road safety, the motor insurance industry.

The key findings and recommendations of the study are summarized below. India has achieved a highly competitive, low-cost road freight transport industry for basic services, with highway freight rates among the lowest in the world. In fact, trucking freight rates are so low that the industry is suffering an intense period of low profits, or rather, even losses. In this context, actions by the Government that increase costs, or reduce the efficiency of operators, will soon find their way into higher freight rates. Introduction of tractor-trailer, multi-axle vehicles would reduce not only transport costs, but also road damage caused by the higher axle-loadings of 2- and 3-axle rigid trucks, and, incentives proposed for introduction of multi-axle trucks include reduced tax and highway toll rates. Regarding inter-city bus services, the private sector has won back a rapidly increasing share of the inter-city road passenger market, and now about 80 percent of the bus fleet is privately operated. The report stipulates the appropriate focus of regulatory policy, in the case of road passenger transport, should be qualitative standards related to the safety of services, and the minimization of negative environmental impacts. As per the motor insurance industry, removing tariff controls and allowing a free market to develop will enable the industry to turn into a viable business, to invest in the kinds of enhancements needed, e.g., a system to maintain, and access driver records in order to properly assess risk, and charge premiums that reflect the risk profile of individual drivers.

Private Sector Participation
• With a view to attract private investment in road development, maintenance and operation, National Highways Act (NH Act) 1956 was amended in June 1995.

• In terms of these amendments, the private persons can invest in the NH projects, levy, collect and retain fee from users and is empowered to regulate traffic on such highways in terms of provisions of Motor Vehicle Act, 1988
The Trucking Industry

India has achieved a highly competitive. low-cost road freight transport industry for basic services, with highway freight rates among the lowest in the world. The industry is deregulated and, as in many countries, highly fragmented with many small operators. The industry’s structure, comprising transporters, broker agents and small operators, i s market driven and appears to be serving the market reasonably well. Given the very low freight rates, one has to conclude it is an effective industry structure.

Despite many remaining impediments, mainly concerning the existing infrastructure, it is the constant pressure of a highly competitive market that delivers to India’s shippers some of the world’s lowest freight rates. In such a competitive market, one would expect freight rates to vary little from costs, in fact, trucking freight - rates are so low that the industry is suffering an intense period of low profits or even losses.

In this context, actions by government that increase costs or reduce the efficiency of operators, will soon find their way into higher freight rates.

Reliability and transit times nearly double that of developed countries. This low quality o f service, may be adequate for much o f the present traffic comprising low-value bulk products - much of which would normally be served more economically by railway or coastal shipping. However, it is not adequate for higher-value manufactures or the time-sensitive export trade which comprise a growing share of the Indian economy.

While the industry delivers very low freight rates, service quality is poor, with low utilization rates that are caused by long delays at checkpoints enroute, excess trucking capacity which results in idle trucks, slow speeds on most roads, especially in congested areas, and lack of tractor trailer units that enable the tractor to keep operating while loading and unloading are carried out on the trailers.

Road Safety is a major concern for India; with fatality rates about ten times those in the developed economies, and trucks are responsible for a disproportionate share of these accidents. The annual economic loss from road accidents has been estimated to exceed Rs.550 billion, with a majority attributable to the truck fleet. To improve the safety record, driver training, licensing, the working conditions of drivers, and enforcement o f safety regulations must become a priority for the Government.

To encourage use of multi-axle vehicles and tractor-trailer combinations, To reduce delays at border crossings, particularly for high value or time-sensitive goods, thereby reducing transport costs and road pavement damage, it is recommended that incentives be put in place such as tax rates favoring such vehicles and reduced tolls on highways to reward their reduced impact on pavements.

Since a significant portion of the driver population is illiterate, it is recommended that audio-visual driver training materials should be developed.

Truck Delays

The greatest uncertainty in estimating the economic impact of truck delays is due to the lack of information about the incidence, length and nature of the delays. Only one formal survey has been carried out in recent years, and it is clear that the occurrence of delay varies considerably between one state to another because the sales tax controls at inter-state borders differ in accordance with the prevailing sales tax rates in adjoining states. Furthermore although no such difficulties were observed on the four trips described above it is clear that some long delays do occur from time to time and this would add significantly to the overall average. For example it was observed during the survey that the particular drivers being observed knew the likely locations of mobile enforcement officers and had already established close relations with the officials on their routes. It has been observed that the range of delay time experienced at check points on the main highways is usually between 0.0015 and 0.0040 h o u r s /km. .The associated delay with getting the paperwork sorted out is similarly estimated to be between 1.6 and 3.0 hours per trip (equivalent to between 0.0010 and 0.0020 per km for typical long distance trips).

User Costs

Two types of user costs are affected by truck delays:

• Vehicle operating costs that are fixed rather than vary with distance
operated
• Cargo time-related costs, which are mainly cargo holding time costs caused
by increased inventories.

There are two main issues in estimating these user costs: fixed v/s variable costs and the extent to which time savings can be used in practice.

Elements of transportation: - The very first basic element of any transportation system is the way. Way means a track or path along or over which passes, progresses or travels. The ways include a path, route, road or passage of any kind. The way on the ground surface of earth is commonly known as road. Longer cross-country roads are however known as ways. Narrower and shorter roads in the urban areas are however termed as streets and lanes.

Types of roads: Depending upon usability the roads can be classified into two categories: -

1) All weather roads
2) Fair weather roads

The all weather roads are those, which can be, used all through the year under all weather conditions, rain and sun, summer and winter.

Fair weather roads are those which are interrupted during the monsoon season or gets submerged under water where streams and rivers overflows. Further, based on the carriageway or pavement, the roads are classified as: -

a) Paved roads and unpaved roads: The paved roads are provided with a hard pavement course, which should be atleast water bound layer. These roads are also known as surface roads. The surface is provided with bitumen, which is otherwise known as black top, or with cement concrete. The unpaved or unsurfaced roads are those not having any hard top made of betumin and cement. They are simply earth and gravel roads.
However the common and accepted classification of roads are made on the basis of their location and function. In terms of Nagpur plan the Indian roads have been classified into the following five categories:-

1) Nationals Highways (N.H)
2) State highways (S.H)
3) Major District Roads (MDR)
4) Other District Roads (ODR)
5) Village Roads (VR)

The National Highways are the roads running through the length and breadth of the country, connecting the state capitals, major ports, large industrial and tourist centers. This includes the roads used for strategic movements for defense purposes. They provide the basic framework for the entire road network of the country. All the national highways are assigned the respective numbers e.g the highway connecting Delhi-Ambala-Amitsar is denoted as NH-1, and connecting Bombay and Agra is numbered as NH-3 and so on.

The State Highways are the arterial roads of a state connecting the National Highways running through the vicinity, the district head quarters and important cities and towns of the concerned state. They are considered as the main commercial arteries of the state.

The Major District Roads (MDR) are the important roads generated within the district serving the areas of production and market connecting each other as well as the District Highways. They are normally low speed roads.

The Other District Roads which mainly serve the market centers as well as connection to other main roads.

The Village Roads connect the villages or group of villages with each other and with the nearest road of higher category.

NHAI

Set up in 1989, it started functioning only in February 1995. It is an autonomous body entrusted with the responsibility of development, maintenance and operation of the National Highways and other associated facilities vested in the Government of India.

Maintenance:

The maintenance and improvement of roads, though an ongoing programme, has not produced the desired results due to meager allocations. The country’s road network generates large revenues. But the country spends merely 35-40 per cent of this revenue on the improvement and maintenance of roads whereas Japan spends 128 per cent, USA 97 per cent and Germany 82 per cent annually. The National Highways too are facing a similar situation.

The allocations in respect of highways have declined from. 1.5 per cent in the First Plan to 0.57 in the Eighth Plan. External aided projects for improvement of highways started in 1985 with the World Bank assistance and later on with assistance from the Asian Development Bank and the Overseas Economic Cooperation Fund.

The increasing road traffic, as the expected freight movement of 28 lakh TEUs on the roads annually during the Eighth Plan period would suggest, and the heavy backlog of maintenance and improvement, have brought the road network to a breaking point. An investment of Rs 52,200 crore is needed to restore the National Highway network alone.

A study in 1994 estimated the annual vehicle operating cost on Indian roads as Rs 100,000 crore (Rs 40,000 crore for National Highways and Rs 60,000 crore for State Roads). The study further revealed that a good road network can reduce this cost by Rs 15,000 crore (National Highways - Rs 6,000 crore and State Roads Rs 9,000 crore). Since the fuel component comprises nearly 15 per cent of this cost, the resultant saving in fuel consumption would be about Rs 2,250 crore per annum (Rs 900 crore on the National Highways and Rs 1,350 crore on State Roads).

Growth Trends

Growth of Road Freight Industry

During the period 1951 to 1994, the average yearly growth of traffic has been of the order of 8 to 10%. (Source: Transport India 2000 Conference Paper)
The freight traffic has increased from 6 billion tones kilometers (BTK) in 1951 to 800 BTK in 1999. Such a rapid growth has occurred mainly owing to the flexibility and accessibility offered by road transportation.

Growth of Vehicular Traffic

Since Independence, the number of motor vehicles in the country has been increasing rapidly. The number of goods vehicles increased from 82,000 in 1950-51 to 17.96 lakh in 1994-95. During the same period, the number of buses increased from 34,000 to 4.25 lakh. The total vehicle population swelled from 3.06 lakh in 1950-51 to nearly 302.87 lakh in 1994-95.

The private sector, mostly unorganized and comprising individual operators, has had a dominant presence in the field of road transportation. It runs almost the entire goods-carrier industry and also owns nearly 73.75 per cent of the buses at present. After the Road Transport Corporation Act 1950 became operational, almost all states and union territories have nationalized passenger transport in varying degrees by setting up corporations. In other cases, these services are operated by municipal corporations or registered companies. At present, the number of such bodies stands at 69 with a fleet strength- of 1,11,538 buses carrying 6.88 crore passengers every day. The Motor Vehicles Act 1988 replaced the Motor Vehicles Act 1939 and introduced far-reaching changes in the road transport sector.

The rapid growth in the number of goods vehicles is indicative of the increased volume of freight handled by road.

The no. of goods vehicles has been steadily increasing; however it is still not sufficient to meet the high demand.

Indian Road Freight Industry (Organized Vs. Unorganized Sector)

Organized - 14%

Unorganized - 86%

The road freight industry stands out unique with the majority of the market share held by the unorganized sector. Out of the entire market size of approximately Rs. 38,000 crores, Rs 6000 crores is with the organized sector and the remaining with the unorganized sector indicating that organized sector has only a miniscule 14%share of the total road freight transportation industry.

Indian Road Network
Length(In Km)

National Highways = 65,569*
State Highways = 1,31,899
Major District Roads = 4,67,763
Village and Other Roads = 26,50,000
Total Length 33 Lakhs Kms (Approx)
*National Highways are less than 2 % of network but carry 40% of total traffic

Modal Shift
There has been a major shift in transportation mode from Railways towards the Road sector.
• Primary Network - Only 2 to 3 % 4 - Laned,15% single laned
• Primary/Secondary Network - Severe capacity constraint and lack of mobility
• Tertiary Network

- Connectivity an issue
-40 % habitations not connected by all weather roads

Current Status:
Road
Passenger 85%, Freight 70%

Railways

Passenger 15%, Freight30%

Golden Quadrilateral Project...

The National Highways Authority of India (NHAI) have awarded/proposed to award contracts for private investment in the development of Golden Quadrilateral of National Highways Development Project on Build Operate and Transfer (BOT)/Annuity basis.

The specifications for quality are prescribed in the contract itself. For ensuring quality control, the entrepreneur is required to appoint qualified personnel as Supervision Consultants. The NHAI and the concessionaire for BOT Project also to appoint Independent Consultants to oversee the quality control measures and maintain the requisite standards.

The estimated cost of Rs250.55bn (at 2000 prices) has been approved for the implementation of Golden Quadrilateral of National Highways Development Project. The allocations are not made state-wise.

Transportation Network

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The movement of goods from the point of production to the point of consumption is done through various modes of transportation. Depending on the transportation load, a number of delivery points, existing distribution centers, product value, frequency of delivery, urgency and cost economics, the different types of networks in use are:

Point to point network: This type of network is quite common for long distance hauls on national highways. The point of origin and destination are fixed. Full truck loading is assured on both runs.

Point to point network

Multiple delivery points: This network is used for round trip operations, with multiple pickup and delivery points. For example, the delivery of filled bottles and pick up of empty bottle of soft drinks at multiple points (retailers) on a fixed route (i.e staring and ending at the bottling plant) is quite common.

Multiple Delivery Points

Trans-shipment points: Two local area networks (Across national and state highways) having a common point where the loading and unloading takes place for freight consolidation or break bulk. Most national transporters maintain two types of fleet, i.e. vehicles dedicated to national long distance haulage and others for catering to the local area network. The consignment from the long distance fleet is trans-shipped to local vehicles for distribution across the local area.

Trans-shipment points

Nodal Network: These networks are used for a multi modal transportation system and include multiple trans-shipment, pick up and delivery points. For example, a box container truck may have predetermined multi point pick up stations for freight consolidation on its way to the rail terminal from where it may be taken to the port terminal for loading onto a ship.

Nodal Network

Hub and Spoke Network: This network arrangement is like a hub with the spokes of a wheel. The hub acts like a central feeder point to distribution centers that are at strategic locations spread across a particular geographical area. High volume and high-speed shipments take place from the hub to the distribution centers through predetermined short routes called spokes. Trans-shipment of the consignment is done at the distribution centres for distribution across the local area.

This arrangement optimizes the number of distribution centres in the network and ensures reduction in inventory and improvement in customer service.

Hub and Spoke network

AFL, an integrated logistics service provider has commissioned a state-of-art Trans-shipment Logistics Hub at Nagpur to develop Nagpur as a global air cargo hub. Nagpur has a strategic advantage in supply chain management since it is located at the geographical center of India which is logical and ideal location for a cargo hub. The government of Maharastra is developing a multimodal International Hub Airport at Nagpur to cater to the needs of global and domestic cargo movements.

Transport economics

 Derived demand
 d = f (p, y, pr, t)
 government regulation
 supply of service is heterogeneous
 capacity of service is indivisible

Pricing of transportation service

 Under perfect competition
 Monopoly
 Monopolistic market
 Differentiated oligopoly

Business scenario – post liberalisation

Reduction in the role of government in managing economy – disinvestment of public sector holdings.
Opening up several sectors to private companies
•Telecom
•Air lines
•Power
•Insurance
Encouraging fdi in most sectors to expedite economic growth.
Reduction in import tariffs progressively to force local companies to compete against international players

Classification of Transport

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Classification of Transport:- The modes of transportation is classified into following categories:-

(1) Land Transport:-

• Human portage
• Animal Transport
• Motor and truck Transport
• Railway Transport
• Pipeline Transport

(2) Air Transport:-

(3) Water Transport:-
• Inland Water Transport
• Ocean Transport

Elements of transport

The movement of goods or passenger traffic, through rail, sea, air or road transport requires adequate infrastructure facilities for the free flow from the place of origin to the place of destination. Irrespective of modes, every transport system has some common elements

a) Vehicle or carrier to carry passenger or goods
b) Route or path for movement of carriers
c) Terminal facilities for loading and unloading of goods and passengers from carriers
d) Prime Mover
e) Transit time and cost
f) Cargo

These elements influence the effectiveness of different modes of transport and their utility to users.

• Vehicles: The dimension of vehicles, its capacity and type are some of the factors, which influence the selection of a transport system for movement of goods from one place to the other. In sea transport, the size, speed and type of ship to be used are very important. For road transport, capacity, moving dimensions, and speed of the vehicle are of great significance. In case of rail transport the existing railway line capacity, type and general availability of wagons are to be considered. The capacity of vehicles and their sectional speed determine the throughput on a particular section. With saturated sectional capacity, introduction of vehicles tends to reduce their speed and therefore the total through put. Preference of vehicles depends on factors like cost, speed and time of travel. The cost of a vehicle is the resultant of many different internal and external factors, which are highly inter-related. The advantage of vehicle over the other is measured in terms of safety, speed and time of travel.

• Routes: Routes play an important role in movement of carriers from one point to another point. It may be surface roads, navigable waterways and roadways. Availability of well-designed and planned routes without any obstacle for movement of transport vehicles in specific routes, is a vital necessity for smooth flow of traffic. The routes for water and air transport are basically gifts of the nature whereas it’s not true for land transport. Route is an important determinant of effectiveness of various modes of transport. It determines the speed, cost, and capacity of transportation. The routes must have adequate capacity to absorb traffic demand. Over congestion of routes may lead to higher maintenance cost, accident and ultimately lead to delay in transportation. Unless the existing capacity is increased, there may be adverse effect on the movement of various mode of traffic.

• Terminal Facilities: - The objective of transportation cant be fulfilled unless proper facilities are available for loading and unloading of goods or entry and exit of passengers from carrier. Terminal facilities are to be provided for loading and unloading of trucks, wagons etc on a continuous basis. Transportation of heavy and bulk cargoes depends on the loading and unloading facilities available at terminals. These facilities also affect the cost of transportation. If these facilities are provided then the cost of transportation can be minimized. Beside these things adequate storage space, loading and unloading facilities, sufficient number of marshalling yards and weighing equipment must be available in these terminals.

• Prime Mover: - the power utilized for moving of vehicles for transportation of cargo from one place to another is another important aspect of the total movement system. In railways, diesel engines are required for shunt and marshalling of wagons within the marshalling yards. Suitable designing of conveyors and mechanical loaders can reduce the manual labour in case of coal, cement, aluminum and other goods etc.

• Transit time and cost: - Transportation involve time and cost. The time element is a valid factor for determining the effectiveness of a particular mode of transport. The transit time of available system of transportation largely determines production and consumption pattern of perishable goods in an economy. The relative locations of a plant and the customers or suppliers determine largely the transit time for the raw materials, spare parts and finished goods. The transit time of transportation could be viewed from the following angles:

1. Normal transit time under normal conditions.
2. --------------------------------Abnormal conditions.
3. Optimal transit time.
4. Desirable transit time.

Considering the time element, the air transport has been proved as a superior mode of transport as compared to road and water transport. To avoid delays the customers often choose air transport as a means of transport, which is definitely costly for them. Further, cost is an essential element of transporting goods from one place to another. Cost is influenced by other elements like capacity of carriers, terminal facilities, time etc.

• Cargo: - Transportation basically involves movement of cargo from one place to another. Hence, nature and size of cargo constitute the basis of any goods transport system. The nature of product handled, their packing and other specialized requirements influence transport.

Present Scenario

The programmes of transport development occupy a significance place in our five-year plans. Transport has been seen as the basic infrastructure, which is crucial for the success of a developmental plan. The second Plan was more forthright in stressing the need for transport development when it stated: "An efficient and well developed system of transport and communication is vital to the success of a plan of economic development which lays stress on rapid industrializations." The theme has run throughout all the plans development.

In the movement of raw materials products from their place of production to their place of consumption transportation is the most important component of the logistics system. It serves two purposes:-

1) product movement
2) In-transit product storage

The movement can be achieved through various modes such as road, rail, air and sea subject to the availability of and access to infrastructure. The guiding principle for choosing a mode of transportation is the least cost per unit weight / volume of the product moved over a unit distance. However selection of a particular mode is dependent on the availability of transportation infrastructure in the region.

In India 39 percent of the total cargo movement is by road, followed by rail, which contributes to the extent of 35%, the balance is shared by inland water, air and sea.

Cargo Movements – Modal Comparison

Mode of Transport = Cargo handled ( billion km-ton) = Cargo handled million tonnes)
Road = 800 = 580
Rail = 334 = 510
Sea = - = 287
Air = 5.33 = 0.90
Pipelines = - = 30.5

Road:

It is the most promising means of agricultural and industrial advancement of a country. It is suitable for short and medium distances where other means are unable to reach. It provides door-to-door service, which is not possible with other means. It provides the basic infrastructure to bring trade and commerce from the remote rural areas to urban areas and vice-versa and brings far-off villages into the mainstream of national life, ensuring connectivity. Today road transportation occupies a predominant position in the transport network in the country. It offers a number of advantages:-

• Door-to-door service
• Flexibility
• Reliability
• Reach to remote places.
• Speed.

As regards the trucking industry in the country it is predominantly in the unorganized private sector and the bulk of truck operators are single truck owners. Currently 25 million trucks are plying on Indian roads. Indian road conditions not being good, the average distance traveled by a truck is 250-300 kms per day. The average operating cost of an Indian truck is Rs 15 per km.

Railways

Railways are the principle carriers of man and material and play a major role in the country’s trade and commerce activities. It is the main source of supply of essential commodities. The Indian Railways operate through a network of 6,896 railway stations across 62800 kms of route length with a route destiny of 138 km per 1000 sq mt of area. Goods movement is done through 2,53,186 wagons with a total carrying capacity of 10.6 million tonnes. 96% of IR’s cargo consists of bulk items such as coal, iron ore, cement, fertilizers, raw materials for steel plants, finished steel products and petroleum. Bulk cargo is transported through railways because of cost advantage over other modes.

To take care of increased domestic and international trade, Indian Railways introduced container service and goods trains to carry the box containers in 1967. Today IR handles 2 million ( tonnes equivalent to a 20-foot container) of box container traffic. To increase the share of rail traffic, IR is tying up with national road carriers to provide door-to-door service to their strategic clients. The Konkan Railways have introduced a unique system of transporting trucks loaded with cargo to the customer’s destination. The saves precious fuel which would otherwise have been used by a number of trucks carrying the trainload of cargo. Road traffic may be relieved to some extent and air pollution by these trucks will be eliminated.

Water Transport: -

Sea Transport

The shipping industry is divided into several parts such as
• Liner service
• Tramp Shipping
• Industrial services
• Tanker operations.

The shipping fleet across the world comprises of tankers, dry bulk carriers, container ships and special vessels. In India tankers account for 33% of the total fleet while dry bulk carrier contribute 32% of the total GRT (Gross Registered Tonnage) of the shipping fleet.

India has 55 shipping companies, of which 19 are exclusively involved in coastal trade, 29 in overseas trade and remaining engaged in both. Indian shipping is highly dependent on international trade with 95% of the total cargo being volume overseas cargo and 77% of the value moving by sea. Crude oil, oil products, iron ore, coal, food grain and steel are some major products transported through sea.

Inland Water Transport: (IWT)

This is an eco-friendly transportation mode. It plays a significant role in augmenting the country’s transportation infrastructure. India has 1,45,000 kms of inland water transportation infrastructure comprising of rivers, lakes and channels and this sector has recently started receiving attention from the government. In many western countries IWT has already emerged as an alternative mode of transportation
With the globalization of Indian economy and implementation of WTO directives in India, there will be greater to and fro movement of goods. This will add to the pressure on the already burdened transportation system of rail and road in India. The expansion of road is limited due to non-availability of land, high costs and environmental considerations. IWT is cost effective when compared to the infrastructural investments made in roads and railways. Moreover some hazardous commodities should not be transported by road, for this IWT is the best option. In view of the above constraints and advantages, the development of IWT has become relevant in today’s context. The major advantage of IWT is doubling of load capacities for a small increase in depth, thereby providing flexibility and cost elasticity, which doesnot exit in other modes of transportation. Besides lower fuel consumption and construction cost, IWT has the advantage of ensuring minimum human loss as opposed to frequent road and rail accidents.

Pipelines:

The basic advantage of pipelines is that they reduce operational costs, though the initial investment is high. In India pipelines are used for oil transportation by all public and private sector petroleum refineries, for iron ore transportation it is used by the Kudremukh Iron Ore Project to transport iron ore over a distance of 67 kms, along the hilly terrain of the Western Ghats. Pipelines are eco-friendly transportation mode. The cost of moving oil by rail or road continues to rise every year, however, with pipelines this is just the opposite. The transportation cost of moving oil is Rs 1.15 per tonne per kilometre on a new pipeline, while it is Rs 0.87 on a depreciated pipeline. At the current rate, transportation of oil by road costs Rs 2.50 per tonne per km and Rs 2.00 per tonne per km by rail.

Currently 27% of the petroleum products (petrol, kerosene and diesel) ar moved by pipelines over a distance of 6,350 kms in India. Today, in India, pipelines move 30 million tonnes of oil per annum and this is expected to rise to 80 million tonnes by the year 2010.

Ropeways:-

In India more than 16% of the geographical area is hilly. Transportation in such areas is a problem because of the long circuitous routes. The transportation of goods and essential commodities to the hilly areas is sometimes crucial because of their strategic importance in the country’s defense programme. In view of oil shortages, ropeways can prove more economical and faster than road transport particularly in hilly area. Ropeways have the following advantages: -
• They cause least damage to the ecology
• Inaccessible hilly areas can be reached using the shortest routes
• Other modes of transportation are uneconomical.
• Bulk materials can be moved faster over short distances.

This mode of transport is used in hilly areas in Sikkim, Meghalaya, Mizoram, Himachal Pradesh. Currently 175 kms of ropeways are in use in the above territory for transportation of both materials and human beings.

Selection of transportation modes: -

For the transportation managers, cost, speed and reliability are the most important factors while selecting from amongst the available transportation options. The operating characteristics of different transportation modes are shown in the following table.

RELATIVE OPERATING CHARACTERISTICS BY TRANSPORTATION MODES'
Operating
Characteristics = Rail = Truck = Water = Pipeline = Air
Speed = 3 = 2 = 4 = 5 = 1
Availability = 2 = 1 = 4 = 5 = 3
Dependability = 3 = 2 = 4 = 1 = 5
Capability = 2 = 3 = 1 = 5 = 4
Frequency = 4 = 2 = 5 = 1 = 3
Composite score = 14 = 10 = 18 = 17 = 16
'Lowest rank is best.

Speed and Reliability of Service: The speed of service, or the time elapsed in moving products from one facility to another and finally to the customer, is often more important than the cost of the service. Slower modes of transportation involve lower transportation cost; they also result in lower service levels. Their availability depends on the existing transportation infrastructure and the ability of the mode of transport to serve the given pair of locations. This sometimes becomes a major constraint in speedy delivery and necessitates the usage of inter-modal transportation.

Reliability: This means the ability of the carrier to deliver the shipment in good condition, within the stipulated delivery timeframe, to the customer.

Capability: It is the ability of the carrier to accommodate the cargo in terms of size, weight and quantity for transportation to its destination. This is very important for transporting odd sized and heavy products over long distances. Along with the mode of transportation, the other consideration is the availability of special material handling equipment.

Frequency: This refers to the number of schedules movements of the carrier between a pair of locations. Pipelines are preferred for the movement of liquid products because of their continuous availability. However, for solid products road carriers are the best option.
Transportation decisions are dependent on a number of others factors like the unit value of the product, predictability of demand, saving in transit time, cost of transport mode, its impact on inventory cost and the desired level of customer service. The selection of mode and the particular carrier is done on the basis of delivery time, delivery reliability, freight rate etc.

Characteristics of Alternative Transport Modes

• Size and Weight Restrictions

Air: Little or no flexibility
Sea: Virtually Limited
Rail: Some dimensions restrictions (height)
Road: Height and Weight restrictions

• Safety

Air: Highly regulated
Sea: Less regulated than air
Rail: Few Restrictions
Road: Less regulated than air

• Fragility

Air: Reliable product handling
Sea: Variable reliability
Rail: Transport vehicles have vibration and shunting problems
Road: Handling problems can occur often

• Temperature

Air: Temperature controlled containers are available
Sea: Controlled
Rail: Controlled
Road: Controlled

• Cost per unit

Air: High
Sea: Low
Rail: Low
Road: Moderate

• Transit Time and reliability

Air: Fast and reliable
Sea: Slow, reliability varies by port, full container loads are more reliable.
Rail: Reliable
Road: Versatile and usually offer good transit times; reliability varies with the service policy of each company.

Cost Structure for each mode

• Rail. High fixed cost in equipment, terminals, tracks, etc. Low variable cost.

• Highway. Low fixed cost (highways in place and provided by public support). Medium variable cost (fuel, maintenance, etc.).

• Water. Medium fixed cost (ships and equipment). Low variable cost (capability to transport large amount of tonnage.)

• Pipeline. Highest fixed cost (rights-of-way, construction, requirements for control stations and pumping capacity). Lowest variable cost (no labor cost of any significance).

• Air. Low fixed cost (aircraft and handling and cargo systems). High variable cost (fuel, labour maintenance, etc.).

Characteristics of Transport Services

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Characteristics of Transport Services

 Creation of Transport infrastructure requires time: - it is necessary to anticipate the demand on the transport system ahead of socio -economic changes. Some of the transport infrastructure requires more than one plan for its completion. Often the capabilities created in expanding transport network during one plan period are the results of the investments of made in earlier plans. Therefore two issues emerged out of it such as

(1) the need to complete all ongoing works to derive the maximum benefits from the earlier investments

(2) to make investments in transport sector keeping in view the long time frame perspective.

 Transport infrastructure is capital intensive: - in view of the long gestation involved, transport development requires heavy investment. Massive investment is required is required for quality road construction, laying the railway lines and creation of rolling stocks, creation port facilities and ship building industry and terminal facilities. As social return is involved in the development of these facilities, private initiation is practically absent. For this purpose government initially develops most of the transport services.

 Effective use of energy is a critically aspect of transport sector. :- Different modes of transport use different forms of energy with varying degree of efficiency and intensity. In this connection due weightage is being given while considering the choice among available alternatives. Development of transport largely depends on the availability of various forms of energy.

 Development of transport is connected with the scientific and technological progress:- During past two hundred years the economic development in various regions of the world was possible only because of growth of transport network. The process of technological up-gradation has been very uneven in many areas, as a result some mode of transport has been advanced and frequently used by consumers while they don’t use at all some other modes of transport due to several; constraints.

 Freight structure and cost of transportation influence transport services:-The transport pricing policy and subsidization of freight structure by and large influences the consumers decisions for choosing a particular transport mode. Often the transport demands are influenced by factors not necessarily confirming to patterns suggested by comparative cost considerations.

 Security and speedier movement of goods is an important aspect of transport:- Security in travel and safe delivery of goods is the important considerations, which influences the user preference to various modes of transport. Timeliness in the movement of goods and door-to-door service influences the customers to pay more for utilising a particular transport service.

Significance of Transportation

Effective transportation is indispensable to economic progress. Mining, manufacturing, trade and banking and agriculture are also necessary, but these activities, like many others, depend upon transportation Without adequate facilities for moving goods and people from place to place, economic and social activities can be carried on in a limited way only. Using a mobility index that combines available data on transport facilities and movement of passengers and freight, Wilfred Owen finds out that immobility and poverty go together. The countries with low per capita had a mobility index for freight and passenger transport in single digits, whereas this index was significantly high in countries with high per capita income. Indeed, a more recent study finds out that every one-percentage growth in the Indian economy presumes a growth of 1.2 to 1.4 per cent in the transport sector.

Transport Infrastructure in India

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Introduction:

It is needless to say that to overcome the constraints of a less developed country, the state must play a positive role. The need for basic services like railways, road transport, telecommunication, gas electricity, water is inevitable for future development. Economic development is not possible without these basic services.

Organization which provides services to the citizens of a country to satisfy the basic needs like Health, Education, transportation, Communication, Electricity, Water etc against the cost of services with subsidies are called public systems. Usually these organizations are owned and managed by the government with large-scale employment of labour and capital.

Since last 14 years after opening of the economy in 1991, the government has welcomed private investment for development of infrastructural facilities all over the country for restructuring and reform in infrastructural sector, its modernization, upgradation and additional capacity creation. The principle objective is to accelerate the rate of economic activities.

According to economic survey 2002-2003, govt of India, industry has experienced a significant revival with growth of 5.3%, which is also reflected in freight traffic movements in major ports, airports and railways. The drivers of change are a) technology b) global competitiveness c) Benchmarking to the best international practices and India is taking full advantage of all the three factors. The industrialized countries have appreciated the IT revolution in India.

Growth Sector: - The country is passing through a phase of saturation in manufacturing sector. The future growth can be in health services, hospitality business, technical education, telecommunication, IT and financial services. There is a tremendous scope of growth of hospitality business like hotel and tourism.

Contribution of Transport: -

With the changing economic scenario, factors such as globalization of markets, international economic integration, removal of barriers to business and trade and increased competition have enhanced the need of transportation. It is one of the most important infrastructure requirement which is essential for the expansion of opportunities and plays an important role in making or breaking the competitive positioning.

Transport volumes in India remain much less than those in the developed countries. India has still to go a long way in strengthening its transportation network. The countries transportation network suffers from several inadequacies and, in particular it has little resilience to deal with unforeseen demands.

Transportation, like all industries is largely influenced by information and communication technologies with the focus being on knowledge of customer needs and value added services. Surface transport is provided by the Road and the Indian Railways (primarily for carrying low value bulk commodity, mostly for the government sector). Cargo Road Transport is entirely in the hands of the private sector. An estimated 1.2 million trucks (9 tons capacity) crisscross the country covering more than 80,000 kilometers of roads. In India road transportation is preferred for cargo movement, where flexibility of routing assumes importance. It facilitates door-to-door delivery, overcoming unnecessary delays which normally take place in the other modes of transportation.

In today's business big or small, domestic or global, the value of time is clearly immense. Business today is focusing on how it can deliver goods and services to global markets in a timely and reliable manner. Besides efficiency in pick up, timely delivery , timely information and availability of other infrastructural facilities for efficient handling of cargo transportation have become the need of the day. In other words prompt customer service is what gives competitive edge to the players of the cargo transportation industry in today's rapidly changing environment. It was this need which stimulated the growth of the express cargo industry worldwide.

The link between transport infrastructure and economic development is like giving water to a tree. The key factor, which largely influences the economic growth process, is the transportation infrastructure. According to the World Development Report 1994, the infrastructure capacity grows in concert with economic output. An 1% increase in the stock of infrastructure is associated with a 1% increase in GDP across countries. India is a country where most of the people reside in rural area. And depend mostly on agricultural activity. In order to get remunerative price on their products, they have to transport the products to the marketing area. For these purpose there must be well road links to the market area and the nearest railway station.

The railway, on the other hand, provides the service between the area of production and the consumers at a distant place and between manufacture in the town and the agriculturist in the village. With the globalisation of economic process, the role of shipping transport has been crucial for national economic growth. The Indian economy is passing through an interesting phase. The growth in GDP is ranging between 7% - 8% and the rate is likely to be sustained over the next five years and the growth drivers are clearly shifting from agriculture to services.

The importance of transport in national economy has been enumerated below.

Ø Transport is the basic service for increasing national income:- As national income rises, infrastructure adopts to support changing patterns of demand, with the shares of power, transport and communication. Transport is one of the most pervasive services within the country. It can be described as a vital sector of growth.
Ø Transport helps to create new economic activity. :- economic development in a country requires adequate and effective transport services. The degree to which transport creates new activity may depend upon equally necessary condition within the economy. Transport is one of the essential elements of an integrated plan for area development.
Ø Transport system is the indicator of development in a country:- One of the major indicator of development of a country is the existence of high quality transport network, availability of number of mechanized motor transport, adequate number of railway, air and shipping services as per the demand of the users. So transport development is synonymous with economic growth. To overcome the deficiencies in various modes of transport, emphasis is laid on improvement of transport infrastructure. Effective transportation systems have been playing a vital role in the economic prosperity of a country.
Ø Transport enlarge the trading activities of a country:- The industrially developed countries lay more emphasis on the development of this sector to enlarge not only their trade but also to increase the frequency of the passenger service. The search for an integrated system combines the merits of the individual transportation modes and eliminates the uneconomic and unproductive activities.
Ø Transport influence daily life of the people: - It influences economic development, population distribution, energy consumption, access to markets, and materials and pace. On the international scene, transportation is the connecting link, which permits the exchange of goods and the people among the nations of the world. It contribute substantially to GDP, provides employment for millions of people.
Ø Transport system is a catalyst of the socio-economic development:- transportation plays an important role in rapid economic development of a country. Improved and effective transportation is indispensable to economic progress. Transport sector bears a close and complex relationship with all other sectors of the economy. Transport acts as an acceleration and catalyst for faster, higher and quicker economic growth.
Ø Transport promotes industrialization:- It increases wealth, promotes industrialization and transforms the organization of industry and transforms the organization of industry, creates urban conglomeration, raises the standard of living of the people and promotes culture. Transport infrastructure services can have significant effects in improving quality of life of the people.
Ø Transport provides access to the rural area: - Good networks of railway and roadways, navigable rivers and canals, coastal waterways and airways turn the liability of far regions into assets by uniting them into a single self-contained economy. Transport system is thus, the nerves of an economy, which stimulates its developments and activities.
Ø Transport system provides the vital linkage between production and consumption:- Development of transport infrastructure helps the globalization of production process. Transport is essential in an economy because the demand and supply of goods don’t reach equilibrium at any particular area or point of time. The need for dispatching the goods arises as they are often produced in one place to be sold and consumed in another place. Transport provides the vital link between the production and consumption point and the objective of production is not fulfilled till the commodity reaches the consumer. Transport, thus, form an integral part of the broader systems of production, distribution and marketing. Transport Infrastructure services is critical for diversification and modernisation of production and distribution process.
Ø Transport is the key factor to link dispersed (scattered) areas:- As a sector of the national economy, transport is characterized by long range investment much of which is devoted for creation of basis facilities such as rail tracks, roads, ports, air terminals, ship building and repairing yards.
Ø Transport increases the economic efficiency of resources. The economic efficiency of resources of various countries is increased with the growth of different mode of transportation over the years. Transport reduces the cost of production and distribution by effective, planned, integrated and co-ordinated network. All nations of the world, whether developed or developing, has to depend largely on transport development for better utilization of resources.
Ø Transport provides mobility of labour and boost tourism industry:-The transport system removes the in-equilibrium in labour market by providing means for mobility of labour from surplus area to deficient areas. The tourism industry also can grow with the transport network to places of tourist importance. Connectivity of transport links help the people to move from one place to the other not only for commercial purpose but also to keep social link with each other.
Ø Transport creates competitive environment: - The adequacy of transport infrastructure is a key factor in the ability of countries to compete in international trade. Competition for new exports and location of global industries largely depends on the quality of transport infrastructure. Increased globalization of world trade in many countries arouses not only from the liberalization of trade policies but also from advances in transportation.
Ø Transport promote social welfare:- The economic characteristics of modern transport infrastructure are the supply of services through a network of delivery systems designed to serve a variety of users. The network in most cases is to achieve the social welfare. Transport services is essential to spread education, extends health services, provide faster distribution of mail and effective public distribution system, which are considered as the basic ingredients to promote social growth.
Ø Transport helps to stabilize prices:- Goods can be transported to places, where there is scarcity for it. By this the consumers can get their desired products or commodities at a reasonable price. Similarly, by transporting goods to the market, the producer gets fair price on their products.
Ø Transport curbs monopoly of the trader:- Facilities for quick transport of commodities from one place to another, restricts the traders to charge high price to the consumers. The demand for a product increases because of non-availability of a product in the market. But availability of adequate and continuous transport facilities fulfills the need of the people.
Ø Discovery of new market:- Invention of new sea routes helped in discovering new lands in various parts of the globe. Similarly discovery of new land routes increases the mobility of goods and passenger traffic and decreases the cost of transportation. To achieve highest international economic order transport plays an important role. Even waste land, forest land, icy land, isolated island can be put to economic use with the expansion of transport network.
Ø Transport provides large employment opportunities.:- growth of various modes of transport provided employment to millions. People can be employed in road construction activities, port development activities, railways construction and service activities, in shipping trade and other related transport activities.
Ø Adequate transport facilities in a country help to combat the natural calamities:- Quick relief work can be initiated after the occurrence of natural calamities such as flood, drought, famine, earthquake and tsunami in a better way with the existence of fast transportation network. Transport is helpful in funding revenue to the govt:- Transport operators pay tax for plying their vehicles. Increase in transportation system facilitates movements of goods and thereby the revenue of the government increases by way of sales tax, outcry, custom duty etc.

TOP 10 REASONS TO OUTSOURCE

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1. Accelerate Reengineering Benefits
Reengineering aims for dramatic improvements in critical measures of performance such as cost, quality, service and speed. But the need to increase efficiency can come into direct conflict with the need to invest in core business. As non-core internal functions are continually put on the back burner, systems become less efficient and less productive. By outsourcing a non-core function to a world class provider, the organization can begin to see the benefits of reengineering.

2. Access to World Class Capabilities
World class providers make extensive investments in technology, methodologies, and people. They gain expertise by working with many clients facing similar challenges. This combination of specialization and expertise gives customers a competitive advantage and helps them avoid the cost of chasing technology and training. In addition, there are better career opportunities for personnel who transition to the outsourcing provider.

3. Cash Infusion
Outsourcing often involves the transfer of assets from the customer to the provider. Equipment, facilities, vehicles and licenses used in the current operations have value and are sold to the vendor. The vendor then uses these assets to provide services back to the client. Depending on the value of the assets involved, this sale may result in
a significant cash payment to the customer. When these assets are sold to the vendor, they are typically sold at book value. The book value can be higher than the market value. In these cases, the difference between the two actually represents a loan from the vendor to the client which is repaid in the price of the services over the life of the contract.

4. Free Resources for Other Purposes
Every organization has limits on the resources available to it. Outsourcing permits an organization to redirect its resources, most often people resources, from non core activities toward activities which serve the customer. The organization can redirect these people or at least the staff slots they represent onto greater value adding activities. People whose energies are currently focused internally can now be focused externally -- on the customer.

5. Function Difficult to Manage or Out of Control
Outsourcing is certainly one option for addressing this problem. It is critical to remember that outsourcing doesn't mean abdication of management responsibility nor does it work well as a knee jerk reaction by a company in trouble. When a function is viewed as difficult to manage or out of control, the organization needs to examine the underlying causes. If the requirements expectations or needed resources are not clearly understood, then outsourcing won't improve the situation; it may in fact exacerbate it. If the organization doesn't understand its own requirements, it won't be able to communicate them to an outside provider.

6. Improve Company Focus
Outsourcing lets a company focus on its core business by having operational functions assumed by an outside expert. Freed from devoting energy to areas that are not in its expertise, the company can focus its resources on meeting its customers' needs.

7. Make Capital Funds Available
There is tremendous competition within most organizations for capital funds. Deciding where to invest these funds is one of the most important decisions that senior management makes. It is often hard to justify non-core capital investments when areas more directly related to producing a product or providing a service compete for the same money. Outsourcing can reduce the need to invest capital funds in non-core business functions. Instead of acquiring the resources through capital expenditures, they are contracted for on an "as used" operational expense basis. Outsourcing can also improve certain financial measurements of the firm by eliminating the need to show return on equity from capital investments in non core areas.

8. Reduce Operating Costs
Companies that try to do everything themselves may incur vastly higher research, development, marketing and deployment expenses, all of which are passed on to the customer. An outside provider's lower cost structure, which may be the result of a greater economy of scale or other advantage based on specialization, reduces a company's operating costs and increases its competitive advantage.

9. Reduce Risk
Tremendous risks are associated with the investments an organization makes. Markets, competition, government regulations, financial conditions and technologies all change extremely quickly. Keeping up with these changes, especially those in which the next generation requires a significant investment, is very risky. Outsourcing providers make investments on behalf of many clients, not just one. Shared investment spreads risk, and significantly reduces the risk born by a single company.

10. Resources not Available Internally
Companies outsource because they do not have access to the required resources within the company. Outsourcing is a viable alternative to building the needed capability from the ground. New organizations, spin-offs, or companies expanding into new geography or new technology should consider the benefits of outsourcing from the very start.

Entrepreneurship Development: Concept and Context

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Many developing countries including India are in a state of transition. They are striving to move from a subsistence-oriented, tightly integrated, inward looking local economy to a surplus seeking, market led, outward looking economy. Such a move is possible only with the emergences of a multitude of a small-scale and rural enterprise in all works of life. This requires building up of a wider base of population capable of entrepreneurial behaviour. If we take India as an example in the context of development, we find that the initial build up of entrepreneurial activity took place in urban center. This was followed by a trickle down effect in rural communities over time. Development strategy today, however, seeks a more proactive and immediate change in India. While much of policy making in this regard treats enterprise creation as a function of appropriate economic conditions(made possible through institutional and economic interventions), others have emphasized training and attitude change as vital elements in the process. But it needs systematic observations and research into the process through which entrepreneurship emerges and sustains itself.

Enterprises and entrepreneurs have been in the center stage of modernization since the days of Industrial Revolution. Economists, sociologists, psychologists and anthropologists have studied this concept, usually within the frontiers of their respective disciplines.

Models of entrepreneurship and research associated with them have identified several major issues such vagueness in definition, conceptualizing entrepreneurship as a trait, significance of innovation in entrepreneurship, meaning of activities in the post-enterprise creation stage, validity of measures of entrepreneurial propensity and significance of demographic factors.

Evolution, Frontiers, divergence & Stagnation

For a long time there was no equivalent for the term ‘entrepreneur’ in the English language. Three words were commonly used to connote the sense the French term carried: adventurer, undertaker and projector; these were used interchangeably and lacked the precision and characteristics of a scientific expression (Gopakumar, 1995).

Richard Cantillon (1680-1734), gave the concept some analytical treatment and assigned the entrepreneur an economic role by emphasizing on ‘risk’ as a prominent entrepreneurial function (Gopakumar, 1995).

J.B say and J.H. von Thunen. Jean Baptiste say (1767-1832), the French political economist assigned the entrepreneur with a crucial role-‘coordination’ and made a distinction between the entrepreneur and capitalist (Say,1967).

A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and thereby initiates and sustains the process of development. Embarking upon ‘new combinations’ of the factors of production-which he succinctly terms innovation-the entrepreneur activates the economy to a new level of development. The concept of innovation and its corollary development embraces five functions: 1) introduction of a new good, 2) introduction of a new method of production, 3) opening of a new market, 4) conquest of a new source of supply of raw materials and 5) carrying out of a new organization of any industry. Schumpeter represents a synthesis of different notions of entrepreneurship. His concept of innovation included the elements of risk taking, superintendence and coordination. However, Schumpeter stressed the fact that these attributes unaccompanied by the ability to innovate would not be sufficient to account for entrepreneurship (Gopakumar, 1995).

According to the Havard School (Cole,1949) entrepreneurship comprises any purposeful activity that initiate, maintain or develop a profit-oriented business in interaction with internal situation of the business or with the economic, political and social circumstances surrounding the business. This approach emphasized two types of activities: the organization or coordination activity, and the sensitivity to the environmental characteristics that effect decision making.

Despite its stress on the human factor in the production system, the Havard tradition never explicitly challenged the equilibrium – obsessed orthodox economic theory. This was challenged by the neo-Austrian School who argued that disequilibrium, rather than equilibrium, was the likely scenario and as such, entrepreneurs operate under fairly uncertain circumstances. The essence of entrepreneurship consists in the alertness of market participants to profit opportunities. A typical entrepreneur, according to Kirzner (1979) is the arbitrageur, the person who discovers opportunity at low prices and sells the same items at high prices because of intertemporal and interspatial demands.

To sum up, major theories and expositions from Cantillon to Kirzner view the entrepreneur as performing various functional roles as risk taker, decision maker, organizer or coordinator, innovator, employer of factors of production, gap seeker and input completer, arbitrageur, etc. The most appropriate definition of entrepreneurship that would fit into the rural development context, argued here, is the broader one, the one which defines entrepreneurship as: “a force that mobilizes other resources to meet unmet market demands”, “the ability to create and build something from practically nothing”, “the process of creating value by pulling together a unique package of resources to exploit an opportunity”.

Alternative Approaches

Socio-Cultural Approaches

Some scholars have stressed the importance of socio-cultural milieu in entrepreneurship development. They suggested that the socio-cultural history accounts for the performance of entrepreneurial functions by a considerable number of individuals.

Several writers have used a comparative framework to highlight the ways in which different societies, with differing interests, attitudes, systems of stratification and the like, operate to produce different kinds of businessmen and different patterns of entrepreneurial behaviour (Swayer,1952).

Psychological Approaches

The focus in entrepreneurship shifted from the act to the actors (Shacer & Scott,1991) in the work of McClelland(1961). According to McClelland and Winter(1969) need for achievement (n-Ach) is responsible for economic development. Greater the development of n-Ach, during early socialization of people, the more likely the economic development will be achieved. A society with a generally high level of n-Ach will produce more rapid economic growth. Achievement motivation could be included through training in self reliance, rewarding hard work and persistence in goal achievement, and creating interest in excellence. In spite of being criticized (Schatz,1971; Smelser,1976), McClelland’s(1987) analysis has triggered off the ‘traits approach’ to comprehended entrepreneurial behaviour.

In another psycho-social theory Hagen(1962) relegates economic variables to a relatively minor role and has put an emphasis on certain aspects of the personality. More recently, several other psychological approaches to entrepreneurship have been suggested. Hisrich(1990) identifies several characteristics of entrepreneurs in terms of (a) conditions that make entrepreneurship desirable and possible,(b) the childhood family background, (c) the education level, personal values and motivations and (d) role modeling effects and other support systems. Bird(1989) has also examined entrepreneurial behaviour by focusing on work and the family background, personal values and motivations.

Contemporary Focus

The two most common approaches used in researching the characteristics of entrepreneurs have been the trait approach and the demographic approach (Robinson et al.,1991). In the trait approach, the entrepreneur is assumed to be a particular personality type whose characteristics are key to explaining entrepreneurship as a phenomenon (Gartner,1988;1989). Following McClelland(1961,1987), many other researchers have explored areas such as achievement motive, locus of control, risk taking, innovation etc.

In demographic approach, demographic information is used to arrive at a profile of a typical entrepreneur assuming that people with similar background posses similar underlying stable characteristics. The approach presumes that by identifying demographic characteristics of known entrepreneurs it will be possible to predict entrepreneurship in unknown populations (Robinson et al.,1991). The demographic variables found most examined are family background, birth order, role model, marital status, age, education level of parents and self, socio-economic status, previous work experience and work habits.

First, the approach assumes that human behaviour is strongly influenced by demographic characteristics such as sex, race, or birth order.

Second, the practice of using demographic characteristics as surrogates for personality characteristics is not appropriate. There is also a lack of adequate empirical evidence in this regard.

Third, the approach does not help predict who will or will not be an entrepreneur on the basis of knowledge of one’s birth order, level of education or parental heritage. Besides, demographic characteristics being static in nature cannot explain a dynamic multifaceted phenomenon like entrepreneurship.

Hannan and Freeman(1977) have used the population-ecology model (PEM), to analyze the concept of entrepreneurship. The PEM seeks to predict the probability of births and deaths within a population of firms within a given industry niche, conferring the environment rather than the person with the status of the key entity in determining organizational survival. Recent research following this approach are focused on the presence, characteristics and change in a population or organization in an ecological context provided by the host society (Reynolds, 1991). Deficiencies of this model have been pointed out by Bygrave and Hoffer(1991). These models, while making statistical predictions at the population level, fail to predict the fate of specific firms.

Entrepreneurship: An Integrative Behavioural Framework

The key elements identified are Personal Resourcefulness, Achievement Orientation, Strategic Vision, Opportunity Seeking and Innovativeness.

Personal Resourcefulness

The root of the entrepreneurial process can be traced to the initiative taken by some individuals to go beyond the existing way of life. The emphasis is on initiative rather than reaction, although events in the environment may have provided the trigger for the person to express initiative. This aspect seems to have been subsumed within ‘innovation’ which has been studied more as the ‘change’ or ‘newness’ associated with the term rather ‘proactiveness’.

‘Personal resourcefulness’ in the belief in one’s own capability for initiating actions directed towards creation and growth of enterprises. Such initiating process requires cognitively mediated self regulations of internal feelings and emotions, thoughts and actions as suggested by Kanungo and Misra(1992).

Achievement-Orientation

While personal initiative and purposeful behaviour can be view as a good starting point of an entrepreneurial effort, many such initiatives fail. The archetype successful entrepreneur is supposed to epitomize achievement motivation (McClelland,1961) which facilitates the creation and development of enterprises in competitive environments. While critics have raised serious questions regarding the unique or overarching significance of n-Ach in the emergence of entrepreneurship (Smelser,1976), this element of personality has continued in the mainstream of entrepreneurship theory (Shaver & Scott,1991). People with high n-Ach are known to seek and assume high degree of personal responsibility, set challenging but realistic goals, work with concrete feedback, research their environment and choose partners with expertise in their work (Kanungo & Bhatnagar, 1978). Such characteristics of high n-Ach people contribute to successful completion of tasks that they venture to take up. Hence, we see achievement orientation as a set of cognitive and behavioural tendencies that are oriented towards ensuring that outcomes such as enterprise creation, survival and growth are realized.

Opportunity-Seeking

The context in which an individual brings to bear his/her initiative, achievement orientation and visioning have a strong bearing on what it produces; when these forces are directed towards realizing surplus or value in a market environment, over a period of time, we see the creation of enterprises. This perspective of the entrepreneur as a merchant adventurer, who in Cantillon’s view balances out imperfections in the market (Gopakumar,1995) in pursuit of what Bentham terms wealth, provided the historical basis for the development of entrepreneurship. The wealth is seen as the reward the entrepreneurial individual gains for the risk taken or exercise of judgment where there is greater possibility for error; this distinguishes between certain return from wage labour, and return from risk-oriented production for the market. Hence ‘opportunity seeking’ would include one’s ability to see situations in terms of unmet needs, identifying markets or gaps for which product concepts are to be evolved, and the search for creating and maintaining a competitive advantage to derive benefits on a sustained basis.

Innovativeness

Schumpeter(1949) went on to conceptualize entrepreneurs as persons who are not necessarily capitalists or those having command over resources, but as ones who create new combinations of the factors of production and the market to derive profit. Innovativeness refers to creation of new products, markets, product-market combinations, methods of production and organization, and the like that enable the enterprise to gain competitive advantage in the market.

It is evident that each of the dispositions referred to may be found in all types of individuals (entrepreneurs and non- entrepreneurs). Then how can we relate these dispositions to entrepreneurship? We propose that when these five elements converge at high intensities, in non-restrictive environments, it is likely to give rise to enterprise formation. Therefore, one may find individuals who had created enterprises in the past now turning weak because they may no longer be proactive enterprise creators; instead they may be content to play the role of managers in their stable business, or turn to community leadership, and the like. Hence, this perspective lends to a process view of entrepreneurship.

Peter Drucker on Entrepreneurship

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Systematic Entrepreneurship

“The husband and wife who open another delicatessen store or another Mexican restaurant in the American suburb surely take a risk. But are they entrepreneurs? All they do is what has been done many times before.”

Purposeful Innovation
“Systematic innovation means monitoring seven sources for innovative opportunity.”

The Unexpected
“The unexpected success is not just an opportunity for innovation; it demands innovation.”

Process Innovation
“We may understand a process and still not have the knowledge to do the job.”

When Industry Structure Changes
“Four near-certain, highly visible indicators of impending change in industry structure can be pin pointed.”

Demographic Changes
“Static populations staying in one place for long periods of time have been the exceptions historically rather than the rule.”

Knowledge-Based Innovation
“Knowledge-based innovation has the longest lead time of all innovations.”

Bright Ideas
“Bright ideas are the riskiest and least successful source of innovative opportunities.”

Principles of Innovation
“Purposeful, systematic innovation begins with the analysis of the opportunity”

Entrepreneurial Policies
“How can overcome the resistance to innovation in the existing organization?”

Entrepreneurial Practices
“In business that want to create receptivity to entrepreneurships, special care is therefore taken that the opportunities are also attended to.”

Measuring Innovative Performance
“For a business to be receptive to entrepreneurship, innovative performance must be included among the measures by which that business controls itself.”

Structures
“To be an entrepreneur on the side rarely works.”

Where Can I Contribute?
“As a new venture develops and grows, the roles and relationships of the original entrepreneurs inexorably change. If the founders refuse to accept this, they will stunt the business and may even destroy it.”

The Insurance Sector In India: Its Potential Attractiveness to US Insurance Companies

2006-02-28T00:38:00.000+05:30

India at a glance

Population:1 Billion

Economy: 5th largest in the world in terms of Purchasing Power Parity (PPP)

GDP growth Rate: Over 6% per year on an average for the last decade

Savings Rate: Around 26% of GDP Estimated middle class

population: 300 Million

Insured population: 70 million only

The Life Insurance Scenario in India

Since 1956, with the nationalization of insurance industry, the state-run Life Insurance Corporation of India (LIC) has held the monopoly in that country's life insurance sector. General Insurance Corporation of India (GIC), with its four subsidiaries, was its counterpart in the casualty sector. Over time, taking advantage of its monopoly and virtual prerogative in establishing premiums, LIC has evolved into a monolith. With around 600,000 agents in every nook and corner of the vast country, it has created an enviable brand name, particularly among the rural population of the country. It has around $40 billion as its life fund and is a strong player in the financial sector. However, on the qualitative side, it has very little to take pride in. And there lies the potential for foreign players to challenge this behemoth.

As is typical with monopolies, the premium rates charged by LIC are among the highest in the world, and its track record in customer service can, at best, be called shabby. With a huge unionized, rigid workforce mostly in the clerical category, LIC runs the risk of high fixed cost, which will be the deciding factor in productivity in the competitive scenario. While boasting full-scale automation of its operation, the truth is that its technology is outdated. The new players, with the state-of-the-art technology under their belt, will be in an advantageous position. 80% of LIC's business is procured by 20% of its ill-trained agent force. The foreign player, with the domestic partner's strong brand value, can test the unconventional distribution channels like brokers, the Internet, the banking distribution system, etc. Although foreign players may be tempted to keep their operation in the big cities for the 'creamy layer' of the society, the real market lies in rural India, which accounts for the lion's share of LIC's present business. The foreign player must learn to adapt to Indian realities. The well-publicized failures of world famous consumer goods companies like Electrolux, Whirlpool, Reebok, Nike etc. to gauge the Indian psyche and sentiments demonstrate the concept. They failed in the areas of realistic pricing, product promotion and reaching to the consumer. The foreign companies need to know the "ground realities" to the details.

Political Scenario

Until recently, India continued to be one of the few remaining countries of the world to remain insulated from the direct foreign investment in its insurance sector. However, things are changing now with the passage of Insurance Regulatory Development Act (IRDA) through Indian Parliament in late 1999. A much awaited and much debated act, it met with strong resistance from the political institutions of India and took almost six years to see daylight. Though first recommended by Malhotra Committee on Insurance Reforms in 1994, what emerges is a diluted form of the original recommendations. However in the long awaited period of its passage, the issue was nationally debated and was finally 'de-politicized,' meaning that the reform path is 'irreversible.'

IRDA, for the time being, prohibits 100% foreign equity in insurance. It requires the Indian promoter to invest either wholly in an insurance venture or team up with a foreign insurer, with a cap of 26% of equity for a foreign partner. The Indian promoter is permitted to divest only after 10 years to the Indian public, through a public offering of shares, at which time the equity structure will provide for equal participation between the Indian and foreign partner with a share of 26% each in the share capital. The underlying tone of the 26% cap for the foreign insurer is to ensure that financial interest substantially vests with the Indian promoter, permitting the foreign co-promoter a definite say in direction and management (By Indian Company Law, 26% is the minimum equity to move a resolution or vetoing a resolution in Board of Directors' Meeting). It is important to note that the 26% level is the bargained solution by the privatization proponents (read Government) in the face of stiff political resistance. The main two political poles of Indian politics – the Congress Party and the Bharatiya Janata Party (BJP)- are both in favor of the reform. Only the extent of the reform and who-will-bell-the-cat-and-get-the-(dis)credit factor bar them in reaching a consensus for more sweeping reforms. The populist out-of-fashioned socialistic jingoism, masking these parties' rightist ideology, is fast losing its appeal to the masses. This will only hasten the reform process.

Comparison with China

Currently India and China are the most lucrative insurance markets in the world. India and China constitute the home of half of the population of the world and their recent rapid economic development makes them attractive for foreign investment. Though India's economic development is not as rapid as China's, it enjoys comparative strength in the socio-political front. India is the world's largest democracy and democracy is deep- rooted in its social and political institutions. The executive and the judiciary system are the continuation of British legacy, which ruled India for 200 years. English, the unofficial language of correspondence and instruction, is well spoken by the educated. Another strength is its abundant highly educated skilled workforce. India's stride in the fields of software and logical ability is well known in the world. The savings rate is quite high in US standards. All this makes India an attractive destination of US insurance companies.

Insurance sector reforms have been slow to take shape, taking nearly a decade. Thanks to the proposed reforms, quite a few global insurance majors are streaming into the country. A burgeoning middle class, high per capita savings, and low penetration of insurance are some of the key factors responsible for the tremendous interest foreign insurance companies are showing in the Indian insurance industry. An insurance survey by LIC and KPMG reveals interesting facets of the emerging trends in the Indian insurance industry. The annual growth in the average insurance premium in India has been 8.2 per cent compared with the global average of 3-4 per cent. Insurance density in the country, based on per capita premium, was $5 in the life insurance segment and $2 in the general segment. Compared with the Indian life insurance standard, insurance density stood at $3,236 in Japan, $1,079 in the US, $18 in Brazil and $14 in Mexico.

The share of life insurance premium to GDP was 1.29 per cent in India, which is abysmal in the global standard. Despite these opportunities, however, there is also a rough ride ahead for the new players in India. This is because, unlike in the West, insurance is sold more as an instrument of savings in India than as a product offering protection and security. LIC's 1996 insurance survey reveals that more than 40 per cent of insurance-buyers look at insurance products as a means of savings. Risk coverage is only a secondary objective. Nearly 26 per cent of the insurance policies sold are on considerations of old age security. Only 18 per cent of insurance policies are sold on death risk considerations. Between expectation and reality, of course, there is a bridge. Will the average citizen reach out to private players and invest his lifetime's earnings with them? Here, the new companies probably will be fighting a mindset. The Life Insurance Corporation and General Insurance Corporation, by virtue of their monopoly status, are so deeply entrenched in the popular psyche that it would likely reqiuire Herculean effort to sell the idea of private insurance products. They have to educate the people, and integrate the sector with its world counterpart by shifting its leaning from savings to risk hedging.

The economic reform process in India is 'irreversible' and is producing a strong efficient financial system in the model of its US counterpart. The insurance companies will only hasten the process. From a socio-economic development point of view, the huge amount of funds that will be at the disposal of players will be directed in desired avenues like infrastructure, housing, safe drinking water, electricity and primary education. The growth of the debt market, which hitherto had been a neglected child of the capital market, will also get a boost as the funds from insurance companies start flowing into the kitty of the corporate sector. Once again this will boost demand and growth by raising employment levels. Similarly, stock market investments will further aid the growth of the capital market and equity cult. The multiplier effect will be enormous. Policyholders will get better pricing of products from insurance majors. Permission to invest more in corporate equity and debt instruments would also enhance returns on policy funds. Once the benefit of opening the sector becomes noticed in the society, the misplaced concern regarding 'flight of money outside the country' will be removed from the mindset of people, which should aid in garnering popular support for the free, competitive liberalized economy.

Summary

Facing the reality of a saturated home market, the US insurance companies must look outward and concentrate on the real growth economies like India and China. Since the gestation period of the typical insurance business is around ten years, it is high time to make their presence felt in India. The new players will have to prove their creditworthiness. It will be a time consuming and difficult task to win customers away from LIC and gain their trust. Their track record and brand value in overseas market will not help them much in getting immediate brand recognition in India. Though they may piggyback on the brand names of their local partner, in the long run, it is their persistent track record and creditworthiness, which will matter. So, being among the first will be a deciding factor in the success in this business. Already several companies have entered into the market and a dozen companies have joined with foreign partners (see table). The real growth in twenty-first century will come from the countries like India and China. Delay may doom future efforts to stake a claim in these high potential markets.

What EU has to offer the world marketer?

2006-02-28T00:07:00.000+05:30

European union is a very good example of the merits of unification among countries. Through this article the history of formation of the European Union has not been elaborated, rather the focus is on the lucrative ness of the European union as a market for the rest of the world.

European Union was formed in 1957 and since then has evolved to form a conglomeration of large number of countries. European Union (EU) name was accepted by 25 member states in 1992. Key activity of the EU is the establishment and administration of single market consisting of a custom union, a single currency (which has been adopted by 12 member states till now), a common agriculture policy, trade policies and fisheries policy.

If we look from the international market perspective, EU seems to be a very lucrative market. This is the major reason that is encouraging more and more countries to join the union. The EU now contains 454 million consumers and accounts for 23 percent of the world’s export.

Policies of the EU encourage the development and maintenance of and effective single market. As far as international marketers are concerned, to sell a product in EU it is important for them to conform to the standards laid down by the EU. It is seen that once a nonmember countries factories, farmers and merchants conform to EU standards, much of the cost of joining the union has already been sunk.

If we consider EU as a single unit, it has the largest economy in the world with the 2004 GDP of $11,723,816 million, it is expected to grow further as more countries are expected to join the union. The formation of single market has resulted in wiping out the inefficient firms. This encourages the world marketer to be more efficient, hence the formation of the EU has led to the feeling among the international market that in order to survive in the new market the firms must show efficiency and good quality standards.

For the formation of the single market, four barriers of freedom were removed namely:

People, Goods, Service, Capital.

Formation has led to labour mobilization, the various resources are properly mobilized in the union hence the quality of goods has risen to new levels, also the goods are available everywhere in the union. The prices have also decreased. the EU businesses have reached new economies of scale which is worrying many leaders in the world market who are not the part of the EU, a very good example is the competition between the Europe’s Aircraft consortium and Boeing in United states, Perhaps an even bigger concern is that lower barriers inside will create thicker wall outside, as some observers vision European Union as the ‘fortress Europe’ that favours firms on the inside but hinders outsiders by imposing obstacles such as stiffer import quotas , local content requirements , and other nontariff barriers.

Another problem that the international marketer faces in the European Union is that on the outside the union has been created and it has been declared that there is a common currency and other aspects, but still the marketing environment is heterogeneous, the companies marketing in EU are facing 14 different languages, 2000 years of historical and cultural differences and a daunting mass of local rules.

Another major area of evaluation here is that who will benefit maximum from the formation of the union. In this consumer driven economy if we look at the current scenario in EU, it is the people who will benefit most. The open barriers, increased competition and increased economies of scale will lead to low priced products, greater choice for customers of goods as well as services, great job opportunity with the European Union.

It still remains a question ‘what EU has to offer the world marketer?’

World is open now, all firms are beginning to understand that they have to go global else they cannot survive. European Union seems to be one of the biggest markets in the world with unlimited opportunities. It is true that the barriers inside EU have been removed which will certainly benefit the firms inside, but then this fact has already been realized by most companies and they are ready to invade the markets with products which can give European union companies a tough time for survival. Its not that the companies of the rest of the world will win, but they will give the union companies a stiff competition all the time. This will benefit the customers, who will certainly be the winners in the end.