Pratibimb | March 2014 | 1

PRATIBIMB FINANCE | GENERAL MANAGEMENT | HUMAN RESOURCE | MARKETING | HEALTHCARE | SYSTEMS |OPERATIONS

The Reflection of Management

March 2014

Neuromarketing – The Next Big Thing In Market Research

Imagining Analytics: A Framework for Implementing

Organization Wide Analytics Roadmap

Future Lies in the Paradigm Shift from Exclusive to Inclusive

Banking

Is Gamification the Future of Marketing

MH370– How to Handle Public Relations During a Crisis

Will Growth be a Casualty in a Battle Against Fiscal Deficit

and CAD

A Students’ Initiative

Pratibimb | March 2014 | 2

T. A. Pai Management Institute (TAPMI) is a premier management institute situated in

Manipal and is well known for its academic rigor & faculty-student interaction. The

Institute has been recently ranked amongst top 1 per cent of B-schools in India & 4th

in the South Zone by The Week Magazine.

Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much

needed impetus to the task of building professional management capability in the

country. In the process, it has also played a role in strengthening the existing

educational and health infrastructure of Manipal.

“To excel in post-graduate management education, research and practice”.

Means:

By nurturing and developing global wealth creators and leaders.

By continually benchmarking ourselves against best in class institutions.

By fostering continuous learning and reflection, achievement orientation,

creative

interdependence and respect for diversity.

Value Bounds:

Holistic concern for ethics, environment and society.

T. A. Pai Management Institute

Manipal, Karnataka

About TAPMI

Our Mission

Pratibimb | March 2014 | 3

TAPMI’s e-Magazine - is the conglomeration of the various

specializations in MBA (Marketing, Finance, HR, Systems and

Operations). It is primarily intended to provide insights into the

plethora of knowledge that relate to the various departments of

Management and to give an opportunity to the students of

TAPMI and the best brains across country to exhibit their

creative cells. The magazine also strives to bring expert inputs

from industries, thereby bringing the academia and industry

together.

Pratibimb the e-Magazine of TAPMI had its first issue in

December 2010. The issue comprised of an interview of well

known writer Ms. Rashmi Bansal along with a series of articles

by students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) &

Ed Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton &

Satyam Computer Services to the first rank globally for learning & development . It also

included a hugely successful and engrossing game for finance geeks called “Beat the Market”

to bring out the application based knowledge of students by providing them the platform

where they were expected to predict the stock prices of two selected stocks on a future date.

The magazine is primarily intended for the development of all around management

knowledge by providing unbiased critical insights into the modern developments.

TAPMI believes that learning is a continuous process and is not limited to the four walls of

the classroom. This viewpoint is further enhanced through Pratibimb wherein students

manage and contribute to create a refreshing learning environment outside the classrooms

which eventually leads to a holistic development process. The magazine provides a

competitive platform and opportunity to the students where they can compete with the best

brains in the B-Schools of the country. The magazine also provides a platform for prominent

industry stalwarts to communicate their views and learning about and from the recent

developments from their respective fields of business which in turn helps to create a

collaborative learning base for its readers.

Pratibimb is committed in continuing this initiative by bringing in continuous improvement in

the magazine by including quality articles related to various management issues and

eventually creating a more engaging relationship with its readers by providing them a

platform to showcase their talent.

We invite all the best brains across country to be part of this initiative and help us take this to

the next level.

PRATIBIMB TAPMI’S MONTHLY e-MAGAZINE VOLUME 2, ISSUE XXV MARCH, 2014

Pratibimb | March 2014 | 4

It is a matter of great pleasure to witness yet another publication of Pratibimb. Knowledge has to be improved, challenged, and increased constantly, or it vanishes. The articles published are the reflections of knowledge of management students across India. As Pratibimb continues with the fulfillment of its role of serving as a platform for the sharing of thoughts, insights and expressions, its readership continues to grow and flourish. The Pratibimb team has been doing a admirable job in bringing in ideas and insights from its counterparts in other prominent institutions, to the TAPMI community, while also sharing the same with the rest of the world.

I wish the magazine the very best and look forward to it achieving even greater excellence in the times to come.

Dr. R C Natarajan

Director, TAPMI

Director’s

Message

Pratibimb | March 2014 | 5

From the Editor’s Desk

Debayan Bhattacharjee

Pallavi Prasad

Debidatta Satapathy

Ayon Kumar

Debayan Bhattacharjee

Pallavi Prasad

Ayon Kumar

Akash Gupta

Amal Roy Amruth C

Prof. Aparna Bhat Prof. Chowdari Prasad

Prof. Vidya Pratap

Prof. Vinod Madhavan

Editor in Chief

Design

Cover Design

Communications

Operations

Dear Readers,

Greetings from Pratibimb!

In this month of March, let us remember the words of Howard Schultz

“Any business today that embraces the status quo as an operating

principle is going to be on a death march”, and thus begin our journey

into the world of business insights by students such you and us. The

main purpose of Pratibimb is, and has always been, to prevent the

settling in of this very status quo, and to this end we bring you fresh

views and ideas to enliven your thinking and instill the desire of

continuously striving towards your targets more strongly than ever.

First, we have an article that views recent events in a different light,

“MH370 – How to handle Public Relations during a Crisis” by Mr

Abhimanyu Roy from IMT Ghaziabad, followed by another article “Will

growth be a casualty in a battle against fiscal deficit and CAD?” by Ms S.

Divya Shree, also from IMT Ghaziabad, who scrutinizes and analyses

fiscal deficit and CAD in order to provide an insight into the challenges

faced due to them in economic growth as well as possible solutions for

the same.

Next we have a set of articles dedicated to, albeit differently, Marketing

and its future. We have “Neuromarketing” by Ms Shruti Farmania and

Ms Sudipta S from IMI Delhi, that delves deep into the analysis of

Neuromarketing as the next big thing in Market research and

substantiates the same through various cases and examples. We also

have “Gamification – Is Gamification the future of Marketing?” by Ms

Mudita Bhandari, which talks about how companies may use this

phenomenon in moderation to keep their employees interested and

motivated. Further, there is “Future lies in the Paradigm shift from

Exclusive to Inclusive Banking” by Mr Hrishikesh Rahatal from SIMSREE,

which explores the concept of including all the sections of society while

designing and providing financial products and services, and the

probable future scenario for the same.

Finally, we have a couple of articles different from the usual set, first

being “Imagining Analytics” by Mr Vijay Krishnan from SJMSOM IIT

Bombay, that focuses on providing a framework for implementing an

organization wide analytical roadmap and the various steps involved in

the process, and last, we have “Fashion and Communication” by Ms

Pankhuri Kumari from IIM Kashipur, which talks about the importance

of Fashion in terms of our non-verbal communication in today’s world

and what would be the best choice for us.

These valuable creations should provide food for thought for you for the

month of March, and we shall be back again next month to engage your

intellect with even better articles. Till then,

“Keep reading, keep reflecting”

Faculty Advisors

Sub-Editors

Marketing & Advertising

Pratibimb | March 2014 | 6

Contents

Neuromarketing– The next Big Thing

In Market Research 7

Shruti Farmania and Sudipta S, IMI, New Delhi

Imagining Analytics: A Framework for Implementing

an Organization wide Analytics Roadmap 10

Vijay Krishnan, SJMSOM, IIT Bombay

MH370– How to Handle Public Relations

During a Crisis 13

Abhimanyu Roy, IMT, Ghaziabad

Future Lies in the Paradigm Shift from Exclusive to

Inclusive Banking 19

Hrishikesh Rahatal, SIMSREE

Is Gamification the Future of Marketing? 22

Mudita Bhandari, Great Lakes, Chennai

Will Growth be a Casualty in a Battle Against

Fiscal Deficit and CAD 24

S. Divya Shree, IMT, Ghaziabad

Pratibimb | March 2014 | 7

Did you ever wonder?

What makes sex sell? Did bringing Hugh Jackman really increase the brand visibility of

Micromax over Samsung? Why does Pantaloons have more footfalls than Shoppers Stop?

Why do all soft drink brands have celebrity endorser? Why Garnier has Deepika

Padukone as the face of its brand and Loreal Sonam Kapoor? There are trivial questions

which we may never be able to crack.

The maze to the customer’s brain looks puzzling and it doesn’t look feasible to

understand actions taken by every customer. But the future is changing, researchers

believe that they may be able to find the answers and unlock the mystery of ‘why do we

buy what we buy’. The lock to the buy button inside our brain lies in the futuristic

technology in marketing research- Neuromarketing.

Hard to digest? Let’s dive deep into it..

Martin Lindstorm in his famous book Buyology comments that, “Neuromarketing is about

uncovering what’s already inside our heads— our Buyology.” Neuromarketing describes

how our brain responds to advertisements or any other brand promotion messages

conveyed by the marketers. It is the tool which has the power to change the whole

advertising platform. The concept of neuromarketing was developed by psychologists of

Harvard University in 1990.Neuromarketing researches were conducted in the United

States since 1991. Initially they emerged as the outcomes of experiments in research labs

which dealt with neurosciences. Later, the term “neuromarketing” was coined by Prof.

Dr. Ale Smidts, Erasmus University of Rotterdam in 2002. And now it has started

emerging as a phenomenon of which companies like Google, Facebook, and Microsoft

make use of.

What’s the need of Neuromarketing?

The qualitative and quantitative research techniques are inadequate to analyse the

customer behaviour. For instance, it is believed that the statutory warnings on cigarette

packs will deter smokers from purchasing cigarette packs. While conducting traditional

survey method, most of the smokers responded that they were affected by these

warning and it hampered their interest in smoking. Traditional marketing research tests

have endorsed the same belief. So the sales should have deteriorated right? But it didn’t!

Neuromarketing explains this unexpected result. Through neuromarketing analysis, it

was found that these cigarette warnings actually stimulated the “craving spot” area of

the brain and in turn, encouraged the smokers to take higher doses and buy more

cigarette packs. It’s difficult for customers to explain their own behaviours. So, advantage

of neuromarketing lies in its physical basis as data is gathered by carefully calibrated

scientific instruments which don’t lie. It removes the marketer dependency on surveys,

expert opinions and focus groups.

Neuromarketing– The Next Big Thing in

Marketing Research Shruti Farmania, Sudipta S

IMI, New Delhi

Pratibimb | March 2014 | 8

Neuromarketing Tools & Techniques

Neuromarketing basically make use of several tools and

techniques for measuring consumer responses and behav-

iour. The techniques range from simple, and economical

approaches like eyetracking (measures eye gaze patterns),

analysing facial expressions and observational research

methods like how positioning of food court at top floor in-

creases sales, to more complex, sensor based approaches

like EEG (measures electrical activity of brain), fMRI

(measures blood flow in the brain), EMG (measures facial

muscle movement) and biometrics(measures body signals).

Cases and Examples

The Pepsi Challenge TV ads of 1970s which featured blind

sip testing of both the drinks showed that during the chal-

lenge majority of the users preferred Pepsi over coke. But

still Coke was ahead in terms of market share. In 2003, Dr.

Read Montague, Director of the Human Neuroimaging Lab

at Baylor College of Medicine, Houston again conducted

Pepsi vs Coke test in two segments. The first segment was

similar to the former Pepsi challenge. In the second seg-

ment, the consumers were made aware of the brand before

conducting the test. The outcome of second segment pre-

sented a stark contrast to the former. Through fMRI scan-

ning, he found that brand name Coke "lit up" the medial

prefrontal cortex – the section of brain that controls higher

thinking. Thus, customers preferred Coke, not solely based

on taste but because on the basis of brand connection they

had with Coke.

One study found that customer stayed longer in a bookshop

if there was the smell of chocolate in the air. It won’t be so

strong that they will detect it but its aroma will make them

stay little longer.

Also, another study discovered the customer perception

about the quality of soup depending on the menu on the

font. The findings revealed that italicised font made a good

impression about its quality and freshness on customers

mind and increases their chances of buying it.

Brands like Campbell’s Soups, Microsoft, Google, Yahoo,

Mercedes, Frito-Lay etc have been using neuromarketing to

test the effect of their commercials, products and packaging

on the minds of consumers. For example, Frito Lay, with the

help of neuromarketing found that shiny bags with potato

chips on them activated negative response whereas matte

bags featuring potatoes didn’t. So they scrapped the shiny

ones and ordered the new matte bags to be designed.

Neuromarketing not only helps in designing of packaging/

product but also in identifying its competitive edge. It can

help brands save millions of money. For instance, earlier

eBay through its online payment company Paypal, used to

promote information security as a differentiator. But after

neuromarketing research it was found that promoting speed

in use of their service is more appealing to people than safe-

ty and security. So, later they started promoting ads based

on speed and convenience.

Pratibimb | March 2014 | 9

Future of Neuromarketing

Like any other technology neuromarketing has its own pros

and cons. It can be both good and bad depending on the

extent to which it is used. Critics have raised concerns that it

might be used unethically to brainwash customers’ brains.

And the return on investment attached to this technique is

low. But despite few shortcomings, the field of neuromar-

keting is set to become the future of research. The major

advantage in using neuromarketing is undisputedly the

unique proposition of being able to reach unconscious mind

of the customer. It helps in creating compelling commercials

and is more reliable and efficient than traditional Marketing

research techniques. It is considered to be more insightful

and efficient than the traditional research methods like sur-

vey, observational and behavioural techniques because our

unconscious mind and emotions account for nearly 95% of

the way we process advertising, branding and media com-

munications. So it is certainly here to stay and will be the

next big thing in marketing research.

Reference

Buyology: Truth and Lies About Why We Buy (published in 2008), Book by Martin Lindstorm

www.trueimpact.ca

http://www.mediapost.com/publications/article/166128/ad-industry-releases-final-neuromarketing-

report.html

http://www.forbes.com/forbes/2009/1116/marketing-hyundai-neurofocus-brain-waves-battle-for-the-

brain.html

http://neurorelay.com/2012/12/27/companies-that-publicly-turned-to-neuromarketing-research/

Pratibimb | March 2014 | 10

Analytics has been around for about 2 decades and now that the dust and hype around

it has settled it is time for us to analyse the effectiveness of the this tool in bringing

about lasting organizational change. For a major part of its life analytics was confined to

providing functional support to different departments within the organization. But as

businesses mature it is time to analyse how it can be transformed to a key driver that

helps in business success.

Many companies have already started using analytics in multiple cross functional de-

partments to become more proactive in data driven decision making. Many have out-

sourced their analytics creation capabilities to companies like Fractal Analytics, Abso-

lute Data etc.

One company that has successfully used analytics to drive a turnaround is Jet Airways.

Jet airways is one of India’s biggest airline company with a 28% share in domestic mar-

ket. Even with more than 400 flights every day to around 76 locations worldwide it was

struggling to make profits. An opportunity for differentiation came when the European

Union included commercial airlines in EU Emissions Trading Scheme aimed towards

reducing global warming. Airliners who did not comply with the scheme faced huge

fines and even a ban from operating in the region. By using analytics Jet Airways was

able to automatically measure its emissions and resulting carbon foot print. Using pre-

dictive analytics it was even able to predict accurately the future emissions allowing it

to take better decisions in buying carbon credits/ allowances. Use of powerful analytics

for statistical checks for emissions helps it analyse its calculations at an aircraft level

instead of fleet wide calculations and even exclude the jet fuel consumed while per-

forming maintenance activities. (Jet Airways India)

Thus we can see a definite trend in organizations adopting analytics for effective deci-

sions making. Slowly but steadily the focus is now shifting to more creative ways of con-

suming analytics.

A roadmap for using analytics

Modern organizations generate massive amounts of data. Exponential growth in tech-

nology has made data collection practices faster, easier and ubiquitous. To stay ahead

of the curve companies are forced to adopt sophisticated analytics tools to make sense

of all the unstructured data that is pouring in. In this context shorter lead times, re-

duced product life cycles and demanding consumers can be viewed as opportunities if

good quality analytics can enable these companies to adapt themselves in real time.

To operationalize such decision driven decision making behaviours in companies the

development of an analytical roadmap can be very useful. There are 2 ways to develop

this road map. One way is the top down approach and other is the bottom up approach.

Imagining Analytics: A Framework for

Implementing an Organization Wide

Analytical Roadmap

Vijay Krishnan, SJMSOM, IIT Bombay

Pratibimb | March 2014 | 11

1. Mapping the organization: Identify different functions are sub functions of the organization. List the

objectives and goals of each functions and map it to the activities undertaken by them.

2. Mobilize information: Prepare detailed mapping of the current state and desired states of different

stakeholders identified in the previous step.

Answering these questions will help in completing this stage

I. How are bellwethers of the industry employing analytics?

II. What processes are currently adopted for performing routine business functions?

III. Are there any difficulties/ roadblocks in the above processes?

IV. What is the conceived future state for the organization? Is it an ideal state? If not, why?

3. Evaluating and summarizing progress: Identify how different business functions must ad-

vance in order to reach the desired state. All functions are made of different elements namely

Current state Desired State

Quality of Data Reliable with in functions, but

useless outside its confines

System wide integration with

data hierarchy and accounta-

bility in usage

Standards of Reporting Regulated, with manual inter-

ventions

Automated reporting capabil-

ities

Analysis of data Use of simple and localized tools

developed internally/ by SME’s

High quality effective statisti-

cal tools and techniques used

Processes employed Processes are ad hoc and reactive Standard processes with

alerts and warnings

People Static workforce which supports

old processes

High quality talent with ana-

lytical capabilities who can

act as change leaders

In the top down approach an organization evaluates the overall goals/ objectives of the organization and how distinct

functional units contribute in achieving these goals. The focus here is on using analytics for cross functional integration.

The other way is a bottom up approach which focuses on how individual challenges between functions are addressed

by different analytic tools.

Different stages in building the road map

Pratibimb | March 2014 | 12

Recommendations/ path ahead:

After identifying the elements of the functional units these

elements should be integrated into the core of the business

keeping in mind these 3 factors

1. Priority to the organization: Urgency

2. Organizational impact: Importance

3. Barriers to Implementation: Adjacency

Challenges to implementation of roadmap: There

are many challenges that organizations have to overcome to

implement the road map successfully. After identifying the

activities of different functions the focus should move on to

tackling these challenges. A few challenges that an organiza-

tion might have to tackle are listed below

Buy in from Stakeholders: As the analytical road map

is very broad and resource intensive it requires significant

investment of resources of many senior managers. Also

shifting focus to better use of the analytical road map means

losing focus from some other areas. This will lead to shift in

priorities. Thus such changes can face resistance from senior

level managers

Choice between urgent and important: Many a

time the line between what is urgent and what is important

is very dicey. It is very important to balance the focus of the

organization between impact of an action on the business

and the urge to execute it immediately.

Investments required vs Budgetary allotments:

Any investment in analytics is confined by the budgetary

allocations set apart for experimentation, for, after all till the

results come out, analytics is just a planned experiment.

Budgetary constraints can delay investments and make

them untenable.

It is very important to identify possible challenges that may

crop up so that adequate counter measures can be put in

place. Also showcasing success at each stage of implementa-

tion of analytics can help bring confidence and support from

management and make the process sustainable.

Changes in organizational Culture: Organization

culture is a very important for the efficient and successful

implementation of the analytical roadmap. A few key factors

that can be isolated are

a) Growth Mind set: All the stake holders in the

organization should be trained to have a growth mind

set and thrive in an environment of constant change.

Usually behemoths in the industry lag behind in

‘effective’ implementation of analytics because they

are tied to frameworks already in place. The organi-

zation should be ready to shatter the existing setups

and move forward.

b) Capacity: Before executing the roadmap the organ-

ization should ensure that it has enough resources

that can be diverted to implanting the roadmap

seamlessly. Otherwise it may have to drop the plans

in between which will result in deep resentment in

the mind of the people towards analytics.

c) Skilled workforce: All employees who are part of

the change or affected by the change must be

equipped to face it. This can be done through skill up-

gradation workshops or recruitment of key staff who

can guide others. In some cases external support may

be needed to assist in adopting to changes.

Frameworks for measuring success in analytics

To create a sustained roll out of analytics it is very important

to have frameworks in place that measure and report the

process in different stages of implementation of analytical

tools in different functional units and the benefits generated

thereof.

Two possible frameworks can be

1. Modifying business key performance indicators

( KPI’s ): The metrics that is used by the business to

monitor operational efficiency of execution of activi-

ties can be extended to incorporate changes that

result from implementation of analytics. This involves

least changes to the existing organizational setup and

can be an easier transition to implement.

2. Defining separate score to measure effects: An or-

ganization that is implementing the roadmap can

define its own separate scoring system that can

measure progress and set inter-functional bench-

marks. This can create a sense of competency among

various departments in roll out of analytical road

map.

Reference

Jet Airways India. (n.d.). Retrieved from IBM: http://public.dhe.ibm.com/common/ssi/ecm/en/ytc03528usen/

Pratibimb | March 2014 | 13

On March 8th 2014, Malaysia Airlines Flight 370 took off from Kuala Lumpur en route to

Beijing. It had 239 people on board and was expected to have a flight time of roughly 6

hours. However, MH370 never got to Beijing and disappeared mid-flight.[1]

Theories abound about what happened to it. Everything from extreme turbulence to

alien abduction has been put forth as a possible explanation for what transpired. What-

ever the case might be, it is safe to say that the disappearance of an aircraft is not good

for the image of an airline operator. So how does Malaysia Airlines come through this

with as little damage as possible? Or indeed how does any organization manage a crisis

in the eyes of the public? To find the answer let’s take a look at some of the basic ten-

ets of public relations and crisis management.

Tell the Truth

2011 was a bad year for Toyota. The Japanese car manufacturer recalled over 2million

vehicles because of a fault with the acceleration pedal that could endanger public safe-

ty. In the wake of the unprecedented recalls, Shinichi Sasaki, an executive vice presi-

dent who had been with the company for nearly 40years sent out a company-wide

email that urged managers to tell the truth about the issue.[2] It was a bold move for a

company which is known for the reliability of its products to admit to a quality concern.

Most importantly though, it worked! Customers admired Toyota for their honesty and

forthrightness and the company recaptured the title of the world’s largest automaker in

2012.[3]

Telling the truth during a crisis may seem self-evident but it is amazing how many times

organizations mess it up. The US government’s mishandling of the roll-out of their

Healthcare website, India’s travails with the Aakash tablet and the seemingly unending

scams that global investment banks are involved in are all situations that could have

been handled better by just telling the truth and admitting a mistake up front. Instead

organizations try to cover up their missteps which in today’s ever-connected world are

nearly impossible. The truth will come out eventually and it’s best the customers hear it

from the company and not from a hysterical TV anchor.

Malaysia Airlines for their part have handled this well. They issued a statement about

the flight being missing within less than 1 hour of its scheduled arrival at Beijing Capital

International Airport. They released all pertinent details relating to the incident – exact

time that the flight lost contact, no indications of bad weather or technical faults and no

communications being received from the crew. Finally, they reassured the public that

search and rescue operations had begun.[4] It was as close to perfect as is possible.

MH370– How to Handle Public

Relations During a Crisis

Abhimanyu Roy , IMT, Ghaziabad

Pratibimb | March 2014 | 14

Do NOT release

Last year India’s favorite sport experienced an upheaval of

massive proportions. The Indian Premier League was rocked

by a spot-fixing scandal that put into question its legitimacy

and credibility. A number of players were indicted and a

nexus between players, officials and book-makers started to

be revealed. What made things even worse was the callous

handling of the situation by the Delhi and Mumbai police.

Identities of all under investigation were revealed despite

there being no definitive proof of their guilt. This led to the

very public scrutiny of parties unrelated to the matter and

further maligning of the IPL’s reputation.[5]

The decision to not release all the information about an inci-

dent may seem at odds with the first principle of telling the

truth but it is just as important. Often time’s things are

made worse by releasing excessive information. The inept

management of the Aarushi murder case, the speculation

that arose over the entire US financial system in the wake of

Lehmann Brothers’ fall and needless profiling of people of

middle-eastern origin after the Boston bombings could have

all been avoided if superfluous details breeding speculation

had not been released. Organizations need to be careful

about where to draw the line between full disclosure and

over-exposure.

Unlike the first step, Malaysia Airlines have not handled this

well at all. Identities of those on board should be released to

their friends and family and not to the public under any cir-

cumstances. The news regarding 2 passengers boarding the

plane using stolen passports should only have been put out

once their role in the disappearance of the flight was con-

firmed. By now authorities have already discounted their

involvement and the incident being a terrorist attack but not

before causing a pointless bout of mass-confusion.[6] The

right balance between what information to release and

what to conceal for the time being is very important in crisis

management.

Speak like the people

In 2012, the United States was rocked by protests against

income inequality in multiple cities. Stressing the elements

of participatory democracy and non-violence, the Occupy

movement stirred public debate about the growing income

gap in the corporate US. The usual method the protestors

used to get their point across was to stage a sit-in (or occu-

py) in an area where the city’s commercial big-wigs would

be able to see them and their message prominently (such as

Zuccotti Park beside Wall Street in New York). Although, it

was a non-violent demonstration it did violate several city

laws such as fire safety. For that reason, police had to break

up the demonstrations periodically.[7] But what should have

stopped the protests in its tracks gave it greater support

because of one solitary reason – the protestors spoke from

the point of view of the people. Everything from their mes-

sage to the peaceful nature of their protests and even the

visuals of riot-gear sporting law enforcement officials

beating up ordinary young men and women captured the

public’s imagination. Occupy protests didn’t end in the Unit-

ed States but started up in cities as varied as London, Istan-

bul and Kathmandu.

At times, organizations forget the public aspect of public

relations. As with developing any productive relationship it

involves looking at the situation from the viewpoint of the

other party – understanding their concerns and apprehen-

siveness and addressing the same. Successful negotiation of

this step can lead to public sympathy as was the case with

the Fukushima nuclear disaster. However, unsuccessful im-

plementation would lead to large scale public denounce-

ment like British Petroleum’s Gulf of Mexico oil spill.

Organizations need not be defensive during a disaster as

inquisitions only occur after immediate relief. Rather what

they need to do is win over public opinion.

Malaysia Airlines have struggled in this sphere. The at times

conflicting statements issued by officials have only served to

further stress the friends and family members of the passen-

gers.[8] More importantly they have been reflective of a

company that is on defensive and have damaged their repu-

tation in the eyes of the people. Speaking the right things in

the right tone is critical during a disaster and failure to do so

results in tainting of the company’s image.

Monitor reactions and respond appropriately

Three years ago an ordinary old man in a topi led a revolu-

tion against the established order in India. India Against Cor-

ruption went from a movement to root out corruption in

public institutions to an uprising that mobilized the nearly

400 million strong Indian middle class like never before. A

core strategy of this revolt was gauging public sentiment

and tailoring the rhetoric accordingly. The tempered speech-

es of Arvind Kejriwal in response to the police action for the

protests at Ramlila maidan, the seething anger at Anna Haz-

are’s incarceration and the compromising tone in the face of

the watered down Lokpal bill were all instances of the

movement’s message connecting with the public sentiment

of the time.[9] This connection especially during times of

strife led to the enhancement of the central context of IAC

in the eyes of the public.

Whereas the first three tenets deal with an organization’s

initial reaction to a crisis, this refers to what should be done

after the message has been sent out. Sending out the right

message in the right tone and at the right time would

amount to no more than an exercise in futility without gaug-

ing the public reaction to that message and coming up with

the appropriate responses.

Pratibimb | March 2014 | 15

After an initial spell of public support for its war in Afghani-

stan, the Bush administration lost a tremendous amount of

approval because they failed to customize their message

with the changing opinions of the people. Organizations

must understand how people have viewed its moves thus

far and through that what modifications are necessary in

their speech to have continued support for their actions.

It would be unfair to judge Malaysia Airlines on this parame-

ter at this stage. One can only fully evaluate a company’s

performance on this metric once some months have passed

since the incident. However, what we can do is lay out ele-

ments of an ideal reaction by them. If the incidence does

turn out to be a technical fault, they would have to profuse-

ly apologize and publicly reprimand some of their own peo-

ple followed by repeated assurances of something like this

never happening again. On the other hand, if there were

some external elements involved, Malaysia Airlines’ reaction

must be the outlet for people’s anger. It must include a clear

and consistent indictment for the parties engaged and a

pledge to help authorities with their investigation. Through

these actions they can significantly mitigate the damage

caused to their standing.

Conclusion

Communications with the public are hard under normal cir-

cumstances. It becomes even harder when lives are involved

and the event casts doubt over a core competency. But such

is the situation faced by Malaysia Airlines at this time. It is

not a good position to be in. Effective management of their

messages would go a long way towards reducing the impact

this incident would have on their reputation.

They have already released the news in a timely manner.

Their handling of the content and the tone of the news

leaves a lot to be desired. However if their responses to the

public sentiment turns out to be correct they may still sal-

vage the situation. Only time will tell, if they are able to

come through this unscathed. For now all we can do is like

Einstein once said – learn from yesterday to live for today.

Reference

1. Pasztor, A.. (March 13, 2014). U.S. Investigators Suspect Missing Malaysia Airlines Plane Flew On for Hours. In Wall Street

Journal. Retrieved March 16, 2014, from http://online.wsj.com/news/articles/

SB10001424052702304914904579434653903086282.

2. Carty, S.S.. (January 27, 2012). Toyota 'Avoided Direct Confrontation Of Truth' During Sudden Acceleration Crisis, Internal

Email Reveals . In Huffington Post. Retrieved March 16, 2014, from http://www.huffingtonpost.com/2012/01/27/toyota-

sudden-acceleration-internal-email_n_1232279.html.

3. Isidore, C. (January 28, 2013). Toyota reclaims global auto sales crown. In CNN Money. Retrieved March 16, 2014, from

http://money.cnn.com/2013/01/28/news/companies/toyota-global-sales/.

4. Tsang, E. (March 15, 2014). Chronological events of Malaysia Airlines flight MH370. In South China Morning Post. Re-

trieved March 16, 2014, from http://www.scmp.com/news/asia/article/1449209/chronological-events-malaysia-airlines-flight

-mh370.

5. ESPNCricinfo Staff. (February 20, 2014). Corruption in the IPL: Full coverage of the IPL spot-fixing allegations. In

ESPNCricinfo. Retrieved March 16, 2014, from http://www.espncricinfo.com/indian-premier-league-2013/content/

story/636375.html.

6. Fuller, T. (March 11, 2014). Stolen Passports on Plane Not Seen as Terror Link. In New York Times. Retrieved March 16,

2014, from http://www.nytimes.com/2014/03/12/world/asia/malaysia-flight.html.

7. Silva, C. (March 13, 2014). "Occupy Love" examines 2011 Wall Street protests. In Arizona Daily Wildcat. Retrieved March 16,

2014, from http://www.wildcat.arizona.edu/article/2014/03/occupy-love-examines-2011-wall-street-protests.

8. Denyer, S. (March 12, 2014). Contradictory statements from Malaysia over missing airliner perplex, infuriate. In Washing-

ton Post. Retrieved March 16, 2014, from http://www.washingtonpost.com/blogs/worldviews/wp/2014/03/12/contradictory-

statements-from-malaysia-over-missing-airliner-perplex-infuriate/.

9. Tharoor, I. (December 7, 2011). Anna Hazare's Hunger Fasts Rock India. In Time Magazine. Retrieved March 16, 2014, from

http://content.time.com/time/specials/packages/article/0,28804,2101344_2101368_2101650,00.html.

Pratibimb | March 2014 | 16

Financial Inclusion (FI) is the process of ensuring access to appropriate financial prod-

ucts and services to all sections of society including the low income groups at an afford-

able cost in a fair and transparent manner by mainstream institutional players.RBI is

currently using the technology driven model to bring in financial inclusion. The Reserve

Bank had granted permission to banks to utilise the services of non-governmental or-

ganizations (NGOs), micro-finance institutions (other than Non-Banking Financial Com-

panies) and other civil society organisations as intermediaries in providing financial and

banking services through the use of business facilitator and business correspondent

(BC) models in January 2000. The BC model allows banks to perform transactions at a

location closer to the rural population, addressing the last mile problem. A BC network

of 3.08 lakh outlets from the existing banks provide financial inclusion. The committee

for financial inclusion proposes to raise priority sector lending by banks and perceives

to open a full-service, individual and safe electronic bank account for every adult Indian

citizen by January 2016. A timeline 2 years is an over-ambitious target but we have

some points to ponder upon. SBI, the largest PSB in the country managed to open 200

million bank accounts in the past 2-3 years with increase in deposits from Rs 1,000

crore to Rs 1,700 crore. SBI was able to achieve this not through its branches but by

using its widespread agent network.

It is a matter of concern that that more than half of the country’s population is un-

banked even after four decades of nationalization of banks. Only 35% of the Indian pop-

ulation has formal bank accounts even after 20 years of banking sector privatisation,

compared to an average of 41% in developing economies. There is a prevalence of the

borrowing of money from local unregulated financers in Bharat which charge exorbi-

tantly high interest rates. A significant proportion of about 6,50,000 villages do not

have a single bank branch in India where nearly 70% of the population lives in villages.

Private Banks have realised that providing the world's poorest with access to financial

products has an unmatched growth opportunity as the market for more affluent and

business clients is getting saturated. We have examples of Madhya Pradesh effectively

implementing its inclusion model-‘Samriddhi’, by which benefits of various Government

schemes are transferred to the weaker sections of the society through Ultra Small

Banks (USBs).

About 3000 Ultra Small Banks have been opened so far in 14,667 un-serviced villages.

Earlier the villagers had to travel 60-90 km for availing the banking service, which has

now been made accessible with the help of USBs. These USBs have now transacted

funds over 8000 cr.

Public Private Partnerships (PPP) can be adopted to ensure Financial Inclusion and as-

sisting the unbanked population to open bank accounts. There is a reason for the pri-

vate players to be interested in the venture.

Future Lies in the Paradigm Shift from Exclusive to In-exclusive Banking

Hrishikesh Rahatal, SIMREE

Pratibimb | March 2014 | 17

Accion's Center for Financial Inclusion has recently stated

that the world's poorest 40 percent will nearly double their

spending power to $5.8 trillion from $3 trillion between

2010 and 2020.According to a statistic from World Bank, half

the population of world’s adults which is approximately 2.5

billion do not have a bank account. Telecommunication ser-

vices providers have managed to penetrate deep into the

country with 900 million users. Payment banks such as M-

Pesa could prove useful to leverage the database of such a

huge population and provide banking services. M-Pesa was

quite a success in Kenya with 17 million subscribed users by

2011.There are some regulations proposed by Mr. Nachiket

Mor ,Central Board member, RBI. The payment banks have

to comply with all the RBI norms such as maintaining the

Cash Reserve Ratio (CRR) and Statutory liquidity ratio (SLR).

The payment banking space is at a nascent stage in India

with Airtel money and m-pesa with Vodafone just entering

the market. They have been growing at a small pace but

they have tasted success internationally.

Digital inclusion is one of the major prerequisites to achieve

financial inclusion. Madhya Pradesh has a database of 75

million of its population which was effectively used to per-

form e-transactions worth Rs 40 crores, making it the third

largest state in transfer of funds. A significant portion of

these transfers was through Direct Benefit Transfer (DBT).

This includes the LPG subsidies, MGNREGA wages, re-

mittances and entrepreneurial credit. We have the e-KYC

and the Adhaar. 70 crore people of the country have been

enrolled under Adhaar, which plans to cover the entire pop-

ulation by 2015.This will help us to achieve an 100% cover-

age in terms of the bank accounts.

So piggybacking on Adhaar can help achieve 1 billion bank

accounts by 2015.

There is also a great scope for branchless banking and Bank-

ing Correspondent models (BCs). Private banks have to fore-

see these models as revenue generating, and not mere cor-

porate social responsibility activities. They can serve as a

profitable Business Model. The Feedback received from the

industry suggests that many banks are still pursuing Finan-

cial Inclusion as a mandate rather than treating it as a busi-

ness model. It is high time the banks realise that the banka-

bility of the poor has greater opportunities in developing a

stable retail deposit base and curbing volatility in earnings

with the help of a diversified asset portfolio. There is more

risk in lending to a corporate player than in hundred CASA

deposits .The global crisis of 2008 has emphasized the need

to reduce the banks’ reliance on wholesale deposits and

borrowed funds and accentuate a retail portfolio of assets

and liabilities for financial stability. Financial Inclusion pro-

grammes should be implemented on commercial lines and

not on a charity basis. While poor need not be subsidized,

care should be taken to ensure that they are not exploited.

It is important that poor people who deserve credit are pro-

vided access to timely and adequate credit in a non-

exploitative manner. There was little or no pressure felt by

the incumbent banks to reach out the unbanked areas and

people with their services. This was necessitated by a man-

date-driven approach to financial inclusion

The RBI had invited new players for new bank licences.

Many conglomerates pulled out their applications due to

stringent screening, rural branching, capital ,and compliance

requirement. The committee for financial inclusion made

some recommendations such as issuing licences to consum-

er goods companies, mobile phone need not be subsidized,

care should be taken to ensure that they are not exploited.

It is important that poor people who deserve credit are pro-

vided access to timely and adequate credit in a non-

exploitative manner. There was little or no pressure felt by

the incumbent banks to reach out the unbanked areas and

people with their services. This was necessitated by a man-

date-driven approach to financial inclusion

The RBI had invited new players for new bank licences.

Many conglomerates pulled out their applications due to

stringent screening, rural branching, capital ,and compliance

requirement. The committee for financial inclusion made

some recommendations such as issuing licences to consum-

er goods companies, mobile phone companies and corpo-

rate BCs to act as payment banks. The capital requirement

has been brought down to Rs 50 crore from the earlier norm

of Rs 500 crores.

These banks are not obliged to provide financial aid to the

priority sector. The committee has also recommended for

the removal of distance criteria for setting up of BC outlets.

Currently they operate on a hub and spoke model with one

BC outlet providing financial services for an area not greater

than 30 km for rural BC and 5 km for an urban BC from the

nearest branch of the sponsor bank which would lead to less

branches being operated in less lucrative centres depriving

them from availing financial services. The committee has

recommends the removal of the fixed ceiling rate of 8 per-

cent-plus base interest rate on loans to make them available

to the financially excluded. The committee has further rec-

ommended transforming the currently operating NBFCs into

wholesale consumer banks or investment banks. It is not

that the issuing new bank licences would bring financial in-

clusion .His would fail if there is lack of innovation. The last

decade was a witness to a restructuring and automation in

the banking sector with high degree automation products

for the middle class and upper middle class society. There is

a need for such innovation that does not ignore the un-

banked Indian.

Pratibimb | March 2014 | 18

The country needs innovation like the BC model which

made the rural Indian accessible to financial services . The

Finance Minister recently stated that the success of the

new banks would depend on the innovations they provide

rather than addition of clones in the already stressed bank-

ing space grappling with high NPAs. The leading private sec-

tor lender, ICICI has been able to achieve this quite well with

its initiatives such as having more people on the ground,

mobile ATMS and vans . The very recent initiative of Tab

Banking takes banking at a new level with the ability to fill in

the details of the account electronically, taking and upload-

ing the picture, keying in the Adhaar number for online vali-

dation. All these activities take place real time.

Microfinance Institutions, brainchild of Nobel Prize Winner

Mohammad Yunus who along with Grameen bank pio-

neered the idea of providing small loans to the lower strata

of the society three decades ago. Today the microfinance

industry has become global with a loan portfolio of $78 bil-

lion in 2011.The MFIs are in stress at the moment, but we

cannot deny the fact that they are an integral part of the

financial inclusion. There are practises followed like charging

high interest rates, practising aggressive loan recovery and

overextended borrowers, which has severely curtailed the

activities of MFIs in Andhra Pradesh. The Andhra Pradesh

ordinance took effect in October 2010 to address these con-

cerns. The Ordinance made it mandatory for the MFIs to

register with the state government giving the state govern-

ment the power to shut down MFI activity if any malpractic-

es are followed. The MFI industry had about USD 4.6 billion

of loans outstanding in the country in 2010.

Financial Inclusion is possible when all the forces come to-

gether and help India achieve the common goal of providing

banking services to the deprived section of the society. Fi-

nancial literacy is needed to be inculcated among the peo-

ple to help them understand the importance of having a

bank account.

Reference

http://in.reuters.com/article/2010/12/07/idINIndia-53400320101207

http://articles.economictimes.indiatimes.com/2014-02-13/news/47305092_1_mobile-banking-banking-

system-virtual-currencies

http://in.reuters.com/article/2013/12/09/financial-inclusion-idINL6N0JO1L220131209

http://in.finance.yahoo.com/news/partnership-model-needed-financial-inclusion-085003495.html

http://indianexpress.com/article/opinion/columns/same-old-banking/

http://articles.economictimes.indiatimes.com/2014-01-22/news/46462726_1_financial-inclusion-

priority-sector-sponsor-bank

http://forbesindia.com/article/real-issue/any-inclusion-strategy-must-be-granular-comprehensive-

chanda-kochhar/37011/1

http://www.thehindubusinessline.com/opinion/columns/s-s-tarapore/nuts-and-bolts-of-financial-

inclusion/article5620559.ece

Pratibimb | March 2014 | 19

To start with gamification is not the same as game theory. A business can survive only

when it is not monotonous and offers an element of variety to its customers as well as

the employees. 3M, for example is known for its innovation driven products. So what is

gratification? It’s exactly what it sounds like – as simple as converting something into

a game.

Though the term was coined in 2002 but it didn’t gain popularity until 2010. It has be-

come one of the most talked about trends in Silicon Valley. It equally applies to all the

fields whether finance, education, marketing, consumers, B2B services , Travel etc.

Games attract audiences of different ages and are not restricted to a particular age seg-

ment. That is the beauty of games, irrespective of the age; the person gets involved in

it. So what does a game do? Different levels are created with different targets and as-

cending order of difficulty. A person starts with a direction and gives his 100 percent to

achieve the given target. The curiosity to make it to the next level by achieving the giv-

en target is the driving force.

Companies have adapted this concept in their working processes to make it interesting

which ultimately will result in better results because of the improved effectiveness

caused due to more involvement in the process. The tasks are shown as games under

gamification.

It is a reward for players who achieve the desired target within the stipulated time.

Types of rewards include achievement badges or points, assigning more projects, or the

most important giving rewards in the form of monetary units. Another aspect of games

that play an important role in the process of a business is competition. It is the very

core of survival and sustenance.

Is Gamification the Future of Marketing?

Mudita Bhandari, Great Lakes, Chennai

Pratibimb | March 2014 | 20

Rewards and targets encourage and inculcate the spirit of

competition among the players. It helps in improving

productivity.

I would like to state few examples to support my points.

Nesquik’s use of games is one of the early example of gami-

fication. Around 2006 they started the use of games to pro-

mote their chocolate milk line. They named their game as

Nesquik Quest. It was a small, adventure based charming

game. The target of course was to achieve the most perfect

glass of nesquik chocolate drink by collecting the various

ingredients while crossing the various hindrances. The peo-

ple especially the kids found it interesting without realising

the fact that it is an promotion technique.

Gamification plays a very pivotal role in the field of mar-

keting. It was used by 70% of the Forbes Global 2000 for the

purpose of customer retention and marketing. Gamification

has also been applied to maintain authentication. The exam-

ple is possibility of using a game like guitar hero can help in

the better memorization of the password. Gamification for

sure can be assumed to be the future of Indian marketing. It

deals with the psychological aspect of human nature. It

tends to represent work as a game. We seek pleasure in

accomplishing the levels instead of feeling work pressure.

Earlier the importance of human capital was not realised

and only technological aspect was given due importance.

But later the importance of human capital came into the

scenario. It is due to the importance of human aspect

that Human Resource Departments are created. Gamifica-

tion tries to make a perfect blend of both these constitu-

ents. This is the most appropriate way to attain efficiency

along with satisfaction and realisation of the efforts put in

there.

Research has brought about another important aspect relat-

ed to this as well. The risk lies in compelling people to play

game. It would not be fun anymore. This is because a sense

of agency is reduced with usage of force. A research on gam-

ification out this week from UPenn’s Wharton Business

School throws light on this crucial question, looking at the

efficacy of gamification when it’s compulsory vs optional

through a primary research project at a start up. The results

shows that gamification do succeed at improving employee

satisfaction, but if its mandatory it may actually bring down

their overall affect. Ethan Mollick and Nancy Rothbard, the

two researchers, found that the research work earlier done

by them proves that games in the workplace improve per-

formance and satisfaction, but also observed a strong in-

verse relationship between happiness and consent.

If Gamification is applied by more and more companies with

some creativity as not to make the employees feel it as a

burden, and more technologies like gamification are thought

of, the future of business in India is guaranteed to shoot up

with more involvement, better results and efficiency.

Pratibimb | March 2014 | 21

Background

“Everything in the world is endured except continued prosperity”-

Johann Von Goethe.

This quote seems to be apt if we look at incidents like the financial crisis in 2008 and its

huge impact of crippling the economies of various countries. Other common problems

like unmanageable debts, high inflation and so on also bothers the government of vari-

ous countries. But, governments always try to fight against these odds to foster growth.

Continuous prosperity is achieved through various initiatives or policy changes done in

an economy.

Fiscal Deficit & Current Account Deficit are also among those common problems which

carry with them a baggage of serious concerns for an economy, hampering growth. To

what extent is growth a causality in the process of curtailing Fiscal deficit (Fiscal Consol-

idation) and CAD and the way ahead, would be discussed in detail later.

Fiscal Deficit refers to the difference between total government’s expenditure and total

non-debt receipts. And, Current Account Deficit refers to the difference of total export

of goods, services & transfers from the total import of goods, services & transfers. In-

dia currently (2013-14) has a fiscal and current account deficit of 4.6% (“State’s fiscal”,

2014) & 0.9% (CAD for the current quarter but expected to be 2.5% for the entire fiscal

year) (“Q3 CAD”, 2014) of the country’s GDP, respectively. Though these figures were

lowered compared to the previous years, India still has a threat of a possible down-

grade from the credit rating agencies like Moody, S&P to junk status from its current

Baa3 sovereign rating. So, to cope up with the current situation certain measures like

lowering government expenditure, increasing revenue and capital receipts, decreasing

imports and so on are to be taken into consideration.

Will Growth be a Casualty in a Battle Against Fiscal Deficit and CAD?

S. Divya Shree, IMT, Ghaziabad

Pratibimb | March 2014 | 22

These corrective actions would certainly have an impact on

growth of the economy. So, let us now discuss how adverse-

ly/positively does growth gets affected.

Scrutinising Fiscal deficit

Mathematically, Fiscal deficit can be written as

FD = G-T+TR

Where,

G- Government expenditure

T- Tax receipts

TR- Transfer payments or Subsidies

Going with the simple mathematics, fiscal deficit can be re-

duced in the following 2 ways

1. Decreasing the spending/subsidies by the Govern-

ment or

2. Increasing the collection of tax receipts

Implementing the first option can adversely affect the

growth of an economy. As, there would be less contribution

from the government side, be it in the development of pro-

jects or in cutting of certain benefits to the weaker sections

of the society. So, let us now check the viability of the sec-

ond alternative which is increasing the taxes. It can also

affect the growth, as the demand for goods decreases lead-

ing to decrease in production output, called the multiplier

effect. It can also have an effect on employment, which is

undesirable.

Pitfalls of Fiscal deficit

Fiscal deficit shows the total debt taken by government to

finance the total budget expenditure. The debt taken is justi-

fied (to a certain limit) until the money is spent on creation

of national assets. But higher fiscal debts have many worse

consequences to be borne, like:

Negative impact on employment and income genera-

tion. This can be explained by the increased demand

from government side to take loans leading to rise in

interest rates and thus crowding out private invest-

ments from various projects.

Higher trade deficit, a situation called Ceteris Paribus.

This occurs due to the increased tendency to borrow

from foreign countries, which is followed by huge

dollar inflows, resulting in the appreciation of our

Rupee. This makes imports cheaper and thus widen-

ing the trade deficit.

Bankruptcy of the government

Inspecting CAD

Mathematically,

B=X-M(Y)

Where,

B=Balance of payments

X=Exports of goods & services

M= Imports of goods & services

M(Y) = Imports as a function of domestic output

As per the current situation (negative balance of payments

because of our imports exceeding exports) the above equa-

tion can be re-written as,

-B= M(Y)-X

Again from the basic understanding of mathematics, there

are two possibilities to reduce the magnitude of negative ‘B’.

Decrease imports of goods and services or

Pratibimb | March 2014 | 23

Restricting imports is an important task at hand as imports

are being costlier due to rupee depreciation. Recently, gold

imports have been reduced, which played a significant role

in reducing the deficit. But, the major imports of India are oil

and coal. Due to their higher prices, cost of production in all

industries which uses them as a source of energy, increases.

This leads to supply shock and further shortage results in

cost push inflation. The lower demand, in this situation ad-

versely affects the employment and output. On the other

hand, the current scenario is encouraging for the exporters

as the dollar value is appreciating. Recent rise in exports, a

major contributor of it was from IT services, helped in reduc-

ing the deficit. But exports cannot be raised indiscriminately

as it may lead to the shortage of supply in our own country

leading to inflation.

A General Growth Trend

From the above graph it can be observed that GDP growth

and debt taken are on the decreasing trend and also BOP,

but on the negative side. The imports and exports are in an

increasing trend, with imports growing at a faster pace than

the exports, thus creating deficits.

Big Challenge

The major challenge present on table is handling growth vis-

à-vis managing the deficits. Is the situation out of control?

As our country is crumbling under the pressures of likely

decline in sovereign rating, (“India’s fiscal”, 2014) making

India not an investor friendly place, policy paralysis, high

inflation, rupee depreciation, high deficits and so on.

Way Ahead!

Sustainable development in India can be achieved by mov-

ing ahead in the following direction:

Government taking care that the money spent by it

will ultimately lead to creation of assets. Taking the

example of MNREGA programme, jobs provided

should though it should lead to creation of assets like

roads, dams etc., which can be leveraged later. Oth-

erwise it would just increase liquidity in the market

arousing greater demand for a given amount of sup-

ply, creating an imbalance.

Programmes should not be initiated for gaining short

term benefits like gaining votes etc., as done in the

case of subsidies. The huge money spent on subsidies

adds fuel to the fire of inflation by increasing the Pur-

chasing Power Parity of people.

Demand pull inflation, created most often, can be

reduced by improving the storage conditions of

grains, proper transportation, decreasing middle-men

in the entire supply chain etc.

Pratibimb | March 2014 | 24

Another possible way of improving productivity

would be to reduce the tax rates, which are consider-

ably higher in our country. Though increase in tax

receipts is a way to reduce the fiscal deficit, this issue

has to be looked upon because without increase in

the base income (depends on the overall growth) of

people increased taxes can have a negative impact on

employment.

Finally to conclude, a doctor’s immediate concern when a

child is ill would be to make the patient recover from illness.

At this stage no one would think of person losing weight or

other growth aspects of the body and give food that may

improve growth but delays recovery. Similarly, Indian econo-

my should first try to get away with the concerns of deficits

and inflation (illness) even if that slows down growth for a

short while. Because, once recovery is ensured (after curing

ill-

ness), attaining growth could be focused upon and its

achievement would be much easier. Thus, portraying India

in a better picture.

Reference

Q3 CAD narrows to 0.9% of GDP at $4.2 billion. (Mar 5, 2014), Economic Times

States' fiscal deficit to widen on decline in nominal GDP growth: India Ratings report. (Mar 7, 2014), Business Standard

India’s fiscal position remains weak: Moody’s. (February 19, 2014), The Hindu

Pratibimb | March 2014 | 25

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