KES’s

IEMS Journal of
Management Research
VOL. : 9 No. 1 January - June 2020 ISSN : 2249-569X

A theoretical study on Major Possibilities and likely constraints of Good

Governance in South Asia
Chief Patron : Jayashree Annigeri, Senior Lecturer, KLE's MSR, BVB Campus, Hubli -580031.
Naveen Kammar, Assistant Librarian, KLE's MSR, BVB Campus, Hubli -580031.
Dr. Charantimath N. A.
A Theoretical Study on signification Challenges, Current Trends in Management
Education as well as major issues in Indian context
Editor in Chief :
* Jayadatta S, ** Sangamesh Shivalingappa Yalligutti
Dr. Shrinivas R. Patil *** Pramod S Gadigeppagoudar, **** Shruti Modak S

A theoretical study on Impact of COVID-19 pandemic on Indian Economy and

Associate Editor : Labour Migration with special reference to Indian MSME Sector
Prof. Suvarna Hiremath * Rajahussain Nadaf, Full time research scholar, Kousali Institute of management studies, KUD.
** Dr. A M Kadakol, Professor, Kousali Institute of management studies, KUD.

The impact of the renegotiation of USCM on the agricultural exports of Sinaloa

* José G. Vargas-Hernández, M.B.A.; PhD

** Icela Flores Osuna
*** M.S.C. Omar Cristian Vargas González

Impact of Bank Mergers on their stock prices in India.

* Anupama Angadi, Student,
MBA department, IEMS B-SCHOOL HUBLI

Marketing through Coronavirus: How to Pivot Your E-commerce Marketing

Plan in Times of Crisis
* Jayadatta S, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031.
* Shrikanth Ganapati Naik, Assistant Professor& HOD, Department of Commerce, GFGC, Kumta
* Vishwanath S Naik, Assistant Professor & HOD, Department of Management Studies, GFGC,Honnavar.

Role and growth of MSME's for entrepreneurship and sustainable development

in India
* Gangadhar Sheeri, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031
** Nitin Bhasker, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031

ಣದ ಮಹತ ೕಹ ಜ ೕ ತ
MBA

INSTITUTE OF EXCELLENCE IN MANAGEMENT SCIENCE

www.iemsbschool.org
 IEMS Journal of

Management Research
Peer reviewed bi-annual journal
Vol.9 No.1 January - June 2020 ISSN 2249-569X

Chief Patron Dr. Charantimath N. A.

Advisory Board Dr. Ashok Chachadi, Former Dean and Director,
Kousali Institute of Management Studies,Dharwad
Dr.R.R Kulkarni, Dean and Director
Kousali Institute of Management studies, Dharwad
Dr. L S Ganesh, Professor,Department of Management Studies,
Indian Institute of Technology -Madras
Dr.V Padmaja, Associate Professor & Head Training/ MDP’s/ FDP’s,
Ramaiah Institute of Management ,Bangalore
Dr. M.R. Patil, Professor, Goa.
Dr.Aditya.Jadhav. Professor. TAPMI Manipal
Dr.Narasimha.Chary. Professor IBS Hyderabad

Editor in Chief Dr. Shrinivas R. Patil

Associate Editor Prof. Suvarna Hiremath

Editorial Team Prof. Bhartesh. Y. D

Prof. Pushparaj Kodaganur
Prof. V. R. Hiremath
Prof. Alok Gaddi
Prof. Preeti Goudar
Prof. Smitha Jadhav
Prof. Archana Gadag
Prof. Kirankumar Balagi
Prof. Vinayak Uparate
Prof. Jagadish Pattar
Prof. Jagath V Gouda

Publisher Director, IEMS, B.School, Plot No.129-132,Tarihal Industrial Area, Opp.Tarihal Telephone Exchange,
Airport Road, Tarihal, Hubli - 580026. Karanataka, INDIA. Ph.No:0836-2310491/94
Email:[email protected] Website : www.iemsbschool.org

Disclaimer:
The views expressed in this journal are individual author's contribution and the Journal does not
necessarily endorse agree with authors' view. All the disputes are subject to Dharwad jurisdiction only.
 Hon. Chairman’s Message
I congratulate all the research scholars and faculties of various institutions
who have shown keen interest in contributing an article for IEMS Journal of
Management Research. There are lot of challenges which the growing
economies encounter in the world today.
Kaizen Eduplus Society’s IEMS , takes all necessary efforts to enlighten the
individual students and help in grooming their personality by undertaking
various activities. IEMS has achieved a remarkable mile stone in imparting
quality management education by articulating proper blend of theory and
practice. IEMS through its CDC (Career Development Center) activity
continuously harness individual students varied potential and helps them to
nurture it. These unique activities of the institution has led us in carving a
significant niche for our self in the field of Management Education.
In our progressive Endeavour college brings out biannual IEMS journal of
Management Research for Research Scholars , faculties and student
community in general. Beside conducting various personality development
and soft skill training sessions from professional trainers the college also
organizes various workshops and seminars for faculty and students were other
colleges are also invite to take the benefit.
I sincerely appreciate the good effort of all the
Researchers, Faculties who have contributed articles
to the journal. Director IEMS and Other faculty
associated in bringing out this unique management
journal, deserves rich commendation.

Dr. Charantimath N. A
Hon. Chairman – KES & IEMS, Hubli

1
 Editorial
One of the Objectives of Research should be its application and usability. This journal
attempts to document and initiate a thought process focused on research in context of
emerging sectors in societal, industrial or consumer context.

Skilled employees can tackle the difficulties anytime. Some of the important skills of a
successful manager include analytical skill, decision making skill and coordination skills to
stand strong in today’s competitive market. Most of the organizations are making it
compulsory for their higher officials to have a MBA degree and some of the organizations
are even easy to partially or fully sponsor the MBA degrees. Though it adds cost to the
company but, it is “Less loss-More gain” situation as they become better skilled and are
more effective saving both time and available resources to the organization.

MBA is seen as one of the best options for betterment of career. MBA candidates are not
only paid high- they are valued highly by the society, professionally and personally. 40% of
India’s top CEOs have an MBA degree.

In today’s fast changing economic scenario the role of corporate sector is vital and of
immense importance. The situation has wide opened the need of more MBA graduates and
their importance.

I sincerely appreciate the action taken by various researchers and faculties who have
contributed articles to this journal. We look forward for your continuous involvement in
harnessing the interest in the field of “Research and Development”

There are over 4000 business schools in India and more are expected to come up in next few
years. The B-schools situated in metros or tier –II cities have lots of advantages in terms of
practical exposure, especially those who are in the industrial area.
However students are advised to a take a wise decision in choosing the
colleges. They should get practical exposure with capacity of handling
all situations.

Dr. Shrinivas R. Patil

Editor in Chief

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Vol.9 No.1 January - June 2020 ISSN 2249-569X

Index
A theoretical study on Major Possibilities and likely constraints of Good
Governance in South Asia
07-19
Jayashree Annigeri, Senior Lecturer, KLE's MSR, BVB Campus, Hubli -580031.
Naveen Kammar, Assistant Librarian, KLE's MSR, BVB Campus, Hubli -580031.

A Theoretical Study on signification Challenges, Current Trends in Management

Education as well as major issues in Indian context
20-38
* Jayadatta S, ** Sangamesh Shivalingappa Yalligutti
*** Pramod S Gadigeppagoudar, **** Shruti Modak S

A theoretical study on Impact of COVID-19 pandemic on Indian Economy and

Labour Migration with special reference to Indian MSME Sector
39-51
* Rajahussain Nadaf, Full time research scholar, Kousali Institute of management studies, KUD.
** Dr. A M Kadakol, Professor, Kousali Institute of management studies, KUD.

The impact of the renegotiation of USCM on the agricultural exports of Sinaloa

* José G. Vargas-Hernández, M.B.A.; PhD 52-70

** Icela Flores Osuna
*** M.S.C. Omar Cristian Vargas González

Impact of Bank Mergers on their stock prices in India.

* Anupama Angadi, Student, 71-84
MBA department, IEMS B-SCHOOL HUBLI

Marketing through Coronavirus: How to Pivot Your E-commerce Marketing

Plan in Times of Crisis
* Jayadatta S, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031. 85-97
* Shrikanth Ganapati Naik, Assistant Professor& HOD, Department of Commerce, GFGC, Kumta
* Vishwanath S Naik, Assistant Professor & HOD, Department of Management Studies, GFGC,Honnavar.

Role and growth of MSME's for entrepreneurship and sustainable development

in India
98-110
* Gangadhar Sheeri, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031
** Nitin Bhasker, Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031

ಣದ ಮಹತ ೕಹ ಜ ೕ ತ
MBA 111-113

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Vol.9 No.1 January - June 2020 ISSN 2249-569X

A THEORETICAL STUDY ON MAJOR POSSIBILITIES AND

LIKELY CONSTRAINTS OF GOOD GOVERNANCE
IN SOUTH ASIA
1
* Jayashree Annigeri
** Naveen Kammar2

Abstract:
Major transparency, accountability and active participation are possibly the central
themes of good governance. Good governance can certainly mean different things to
different countries. Since each country and region has quite different context of good
governance, which generally faces unique governance challenges. Therefore, it is
quite important that the major concept “good governance” is understood in the
context of each country and region to find pragmatic and indigenous solutions to
problems of governance. The application of concept of good governance to certain
developing nations that which are at different development stages have unintended
and serious consequences for the citizens, especially for the poor people. The issue of
transferability of the major notion of good governance to developing countries is not
being adequately attended to, while formulating a reform agenda mostly backed by
international donors, especially in the case of heavily indebted countries. Developing
countries are being asked to do everything which works in developed countries and,
consequently, the good governance agenda in the developing world has grown long
over the years. South Asia is a region rich in culture and tradition and poor in
governance and human development. This paper is an attempt to examine the
possibility of South Asian model(s) of governance to capture and address the
complexities and challenges of governance in this particular region.

Keywords: Constraints and possibilities, good governance, transferability,

complexities and challenges, reform agenda
Introduction:
Since the significance of good governance for development initiatives is by now
universally recognized, it certainly stands at the core of governance and

* 1 Senior Lecturer, KLE's MSR, BVB Campus, Vidyanagar, Hubli -580031. Email: [email protected]
** 2 Assistant Librarian, KLE's MSR, BVB Campus, Vidyanagar, Hubli -580031. Email: [email protected]

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Vol.9 No.1 January - June 2020 ISSN 2249-569X

administrative reforms undertaken in most of the developing and developed

countries including those of transitional economies. Transparency, accountability
and active participation are probably some of the central themes. However, good
governance can mean different things to different countries and can also have
different implications when it is used as a major guiding framework for policy and
other administrative reforms. Since each country or region has a way different
context of governance as it faces unique governance challenges. Hence it is very
much important that the context of good governance is quite understood in the
context of each country and other region to find indigenous and various pragmatic
solutions to its unique problems of good governance within the ambit and framework
of universally accepted values and notions.
As seen the paradigm of governance has basically been evolved in developed
countries with stable democratic political systems and viable competitive markets,
the general application of the concept of good governance to developing countries
that which are at different development stages may have unintended and some
serious consequences for the citizens, especially poor. Prince Claus has expressed the
same concern for transferability of a major developmental model to the third world. It
however appears that the issue of transferability of the notion of good governance to
developing countries in generally not being adequately attended to, while just
formulating a reform agenda mostly backed by international donors, more likely in
case of heavily indebted countries. Also the good governance agenda of international
development agencies tend to be imitative, generic and quite ambitious and it largely
fails to take account of the developmental and institutional context of developing
countries across the globe. Developing countries are by far asked to do everything
which works in developed countries and consequently the agenda of good
governance in the developing world has grown long over the years.
Thus highlighting and recognizing this problem, Merilee Grindle
(2004) has argued for good enough governance for poverty reduction measures and
also reforms in developing countries. The concept of “good enough governance”,
though still in its infancy, representsa strong case for contextualizing or indigenizing
the notion of good governancein the developing world to set realistic and achievable
reform objectives for eachcountry.South Asia is a region rich in culture and tradition;

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Vol.9 No.1 January - June 2020 ISSN 2249-569X

and poor in governanceand human development. The paper is structured around

some fundamentalquestions: What are the constraints on good governance in South
Asian countries?What are the possibilities of good governance in this region? After
addressingthese questions, this paper would like to examine the possibility of South
Asianmodel(s) of governance to capture and address the complexities and challenges
ofgovernance in this particular region.

Possible Constraints to Good Governance in South Asia- A study

First, Rule of Law: The term refers to the extent rules are abided by and
implemented to all citizens of a state on an equal basis. The rule of law is a basic tenet
of the modern democratic state and a basic condition for good governance.
Unfortunately, a weak tradition of the rule of law is a major impediment to good
governance in South Asia. The rule of law requires a fair political system, including
independent legislatures, a strong executive and a free judiciary that has yet to evolve
in South Asia. In the wake of such a fair system rules mean different things to
different people and so does their implementation. Equality before the law and one
law for everyone is a norm not very well appreciated in this part of the world (Islam,
2004). One can get away with violation of laws ranging from traffic violation to
murder through money, social networks, and family connections. Mistrust between
police and people are a major obstruction to the rule of law. The police are often used
as an instrument against opponents, feudal lords, and other elites, even by politicians.
Violation of rules is a fact of daily life and can be seen on streets, in public offices, and
even among the law-makers themselves.
In one of those incidents which triggered in 1998 wherein the attack on
the Supreme Court by parliamentarians in Pakistan in 1998 is quite shocking and also
a glaring example of disrespect to the rule of law (Hussain, 2004). Similarly, the
findings of the survey to assess governance in India reported public dissatisfaction
with the Indian bureaucracy and justice system. Apparently a weak system of
accountability that which is coupled with political interference has quite deteriorated
meritocracy and equality of law exists merely in theory, while in practice only those
with money can buy justice (Court, 2001). In Bangladesh, the rule of law was pointed
at as one of the major hurdles in the way of governance reforms due to which an

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enormous increase was found in unlawful killings and also political murders
(Shelley, 2004 and Sobhan, 2004). Similar kind of situations persists in Nepal,
Srilanka, Bhutan and the Maldives.
Second is Poverty: Poverty is a major obstacle to good governance in South
Asia.According to the HDC (Human Development Centre) in 1999, nearly half of
thepopulation in the region suffers from poverty with little or no access to
adequatefood, clean water, sanitation, health, education, and employment. The
reportreveals that in South Asia: one in two people is illiterate, one in five does not
haveaccess to clean water, over three in five do not have sanitation facilities, one in
fivechildren is malnourished, and four out of five suffer access to financial
resources.The average income of the richest 10 percent is nearly 6 times the average
incomeof the poorest 10 percent which means that there is big gulf between the rich
andthe poor.The poverty profile of South Asia shows that both in terms of income
andopportunities poverty has increased in the entire region with an exception for
India,showing slight progress in terms of poverty reduction (HDC, 1999). A gender
andinter-regional analysis of South Asia highlights more acute forms of poverty
denyingwomen, minorities, and some rural states equal access to opportunities.
Culturalnorms in South Asia, further, put women at a disadvantageous position and
theyreceive a differential treatment than men when it comes to gender
developmentand empowerment.
Third, Corruption and Nepotism: Corruption has been defined as unfair use
ofpublic resources for personal gains is viewed as a major hindrance towards
goodgovernance in South Asia. Irrespective of the various forms of corruption, it
ispervasive at individual, organizational, and state levels. The most common forms
ofcorruption at the individual level include bribery, fraud, nepotism, undue
influenceand misuse of public funds and utilities to name a few. At the organizational
andstate level kickbacks, speed money, illegal industrial licensing and contracts,
taxevasion, money laundering, and abuse of power are the most pervasive forms
ofcorruption in South Asia.A. Sarker (2006) pointed to the interconnected web of
exchanges among politicalelites, bureaucracy, and business elites in abuse of
political powers and misuse ofpublic resources in Bangladesh. While the business
community offers politicalsupport to politicians, they in return receive illegal, formal

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and informal politicaland economic concessions in the form of subsidies and tax
evasion. Corruptionin one way, or the other, is a universal phenomenon but its extent
and forms mayvary across countries (World Bank, 1999; and UNDP, 2005).
The unique aspect of corruption in the context of South Asia is that it is morerampant
at the state level and its magnitude has increased over the years despitevarious anti
corruption measures (Khan, 2000; Zafarullah & Akhter, 2001; andUNDP, 2005).
Empirical evidence suggests that in Bangladesh, most of the stateenterprises were
sold to private parties on throw away prices under market reformsusing the patron-
clientage relationship (Chowdhury, 2002; and Azmat & Coghill,
2005).In India, paying bribes for obtaining legal or illegal, formal or informal
licensesand certificates is a common phenomenon. The findings of a survey on
governancein India quoted comments of Indian elite that, “Right from birth to death
nothinghappens without bribery and corruption. People can neither live nor die with
dignity”(Court, 2001). The Bofors scandal in India involved two former Prime
Ministersin corruption (HDC, 1999). According to the Human Development Report
1999,the magnitude of corruption exceeded INR (Rupee India) 100 billion in a
yearin Pakistan; where public financial institutions provided huge loans to
politicalleaders, industrialists, and friends who later declared defaulter. Also, the
famousSwiss money scandal involved one of Pakistan's former Prime Ministers and
herhusband (Islam, 2001 and 2004). In Sri Lanka, due to lower salaries of civil
servantsonly those who are willing to accept bribes join the civil service.
Nepotism in politics, public organizations, private sector, and civil
societyorganizations is a common occurrence in South Asia. Family, and sectarian,
ethnic,and regional connections are often the bases for appointments; while
principlesof merit and equality of opportunity are being ignored. The devastating
effects of entrenched corruption and nepotism in the South Asian region can be seen
in everyfabric of social life in the form of rising poverty, reduced efficiency, setting
wrongpriorities, social isolation, disorder and distrust between the governing bodies,
andthe general public contributing to the vicious cycle of poor governance
(Khan,2000; and Islam, 2001). The lack of control of corruption in South Asia,
therefore,has serious implications for implementing the concept of good governance
in theregion.

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Fourth, Divided Society: Society in South Asian countries is deeply dividedon the
basis of ethnicity, religion, caste, class, and gender. These divisionstranscend state,
civil society and private sector, and pose a serious challenge forgood governance.
Fueled by extremism, these divisions have produced a cultureof violence and
terrorism in the region. Political, sectarian, ethnic, and communalviolence in India,
Pakistan, Bangladesh, and Sri Lanka often makes headlines ininternational media.
Poor and defenceless people are victims of violence most ofthe time. According to
the data exhibited in the Human Development Report 1999,by HDC (1999), around
500,000 people lost their lives in Hindu-Muslim riots atthe time of Indo-Pak
partition; 55,000 people were killed in Sri Lanka in the civilwar with LTTE
(Liberation Tigers of Tamil Eelam); while more than one millionpeople were
displaced. In India, Jammu, Kashmir, and North East atrocities tookmore than
83,000 lives since 1995. In Pakistan, large scale Shia-Sunni sectarianviolence
claimed more than 4,000 lives since 1995. Thousands of innocent livesare threatened
everyday due to the rising street violence in South Asia.
Discrimination as such in employment on the basis of sect, socio-economic
background,gender, and ethnicity is also grounded in these sharp social divisions.
Evenconstitutional democracy and secularism in India has failed to mediate
thesedivisions. Ethnic minority groups are not only excluded from the political
process,they even become victims of political violence. In Pakistan, for instance,
regionbaseddivisions are deeply rooted and reflected in all positions of power in
theform of provincial quota in politics and civil service. Similarly in India, class
baseddivisions are so adherent and strong that bringing North and South and upper
and lowercasts together in development has become a major challenge. Religious
militantsdespite using religion as a binding forceoften employ it for creating
fragmentationand seclusion which ultimately result in violence. A gender based
analysis of theregion points to the patriarchal nature of gender relations with women
in general,finding less representation and little participation in all economic, social,
andpolitical activities. Any coalition on the basis of above divisions is bound to
leadto conflicts, violence, undue influence, exclusion, mistrust, and ultimately
poorgovernance.
Fifth, Militarism: South Asia is a highly militarized, volatile, and vulnerableregion

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of the world. A substantial part of the scarce resources, which shouldotherwise be

spent on economic development, is allocated to military expenditure.Both India and
Pakistan, two large countries of the region, are nuclear powers thatcontinually spend
on building nuclear weapons to maintain deterrence for each other. India took the
lead in building nuclear weapons and Pakistan chased Indiain this non-conventional
arms race. India demonstrated its nuclear capability in1998 with three nuclear tests in
one week; and in fifteen days, Pakistan counteredwith six nuclear blasts.In 1997,
Pakistan announced to reduce its military spending by 10 percentbut immediately
after nuclear tests, when India increased its military budget by14 percent, Pakistan
did the same. Moreover, regular armed forces South Asiancountries also maintain
costly paramilitary forces and heavily spend on purchaseof military weapons and hi-
tech military hardware from abroad, which furtheradds to security costs. Militarism
in South Asia is a hard but complex reality. Sinceindependence, India and Pakistan
have fought three wars, one immediately afterindependence in 1947, the second one
in 1965, and the third in 1971, which led tothe creation of Bangladesh out of Pakistan.
Kashmir, a territorial dispute betweenIndia and Pakistan, is a continuous source of
hostilities between these two nuclearpowers. People of these countries on both sides
are finally the victim of this welldemonstrated and flashed militarism in the region.
Besides the negative impact ofmilitarism on economic development, it has seriously
affected the state capacity ofboth India and Pakistan to address the issues behind
governance such as povertyand the rule of law
Sixth, major entity is Capacity of State and Non-State Institutions: The quality of
governance in a country depends on the capacity of the state, the private sector, and
civil society organizations. In developing countries, including those of South Asia,
that capacity of state and non-state actors is a constraint to good governance. The
state's capacity to perform effectively its role in governance includes a capacity for
policy formulation and coordination; monitoring and evaluation; performance
management and accountability for results; budget and expenditure management; a
capability to innovate; and transparency, accountability and possibilities of fighting
corruption. Thus, state capacity goes beyond public administration and management
and includes all state institutions like parliament, the executive, and the judiciary.
In South Asia it is believed that capacity of state institutions and public

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organizationsis constrained by a number of factors that include weak management

and aweak control system, corruption and nepotism, low wages and incentives,
andpoliticization of the bureaucracy and the judiciary. Wages in the public sector as
such arenot comparable with those in the private sector. Over the last few decades,
due toinflation, salaries of public servants have drastically gone down. For example,
inBangladesh, salaries of top civil servants are seven times lower than in the
privatesector. In Pakistan, public sector salaries are 60% lower than in the private
sectoreven excluding non-wage benefits. In India, entry level salaries of civil
servants areless than two thirds of comparable wages in the private sector and this
differentialincreases at higher levels (HDC, 1999).
The lower salaries of civil servants diminish their motivation, inhibit efficiency,
decline effectiveness, and encourage corruption. These problems are not only limited
to the bureaucracy; inefficiency and lack of discipline are also a problem in
parliament, the cabinet, and the judiciary. Parliamentary proceedings are poorly
attended since there is no mechanism for internal accountability in parliaments.
Access to justice is also a problem due to incapacity of courts to handle increased
caseloads resulting from population increase in South Asian countries (Khan, 1998).
According to the findings of the Human Development Report of 1999, there are about
24 cases pending in courts for every one thousand cases and there are about ten
judges for every million people in South Asia (HDC, 1999). Capacity is also an issue
in the case of non-state partners in governance, civil society, and the private sector.
Civil society in South Asia is small and fragmented, while facing financial
constraints. Civil society organizations are also constrained by weak management
and control systems. Transparency and accountability which civil society
organizations demand from government is rarely practiced by these organizations.
Similar problems are faced by the private sector which is small in size besides being
non-competitive.
Good governance demands new managerial skills from both state and non-state
actors to perform effectively as partners in governance. Traditional boundaries
between the public and private sector are increasingly getting blurred today. The new
tools of governance such as public-private partnership, contracting out,
decentralization, and devolution assume good management in public, private, and

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civil society organizations beyond traditional management skills. Networking,

contract management, mobilization, negotiations, and regulation are the new
management skills required by the civil servants accustomed to command and
control. They are now assumed to fully understand the dynamics of the private sector
as well as civil society. Similarly, the private sector and civil society need to know
how the government works and they should fully understand the complexity and
sensitivity of public goods besides being responsive. These governance skills are not
only scarce in South Asia, but they have not yet been recognized as a capacity issue.
Good governance also requires good local knowledge, both explicit and tacit. The
capacity to produce local knowledge through research is also a constraint to good
governance in South Asia. One of the major reasons for the concept-reality gap and
the implementation deficit highlighted in the development literature is heavy
reliance of developing countries on international agencies and international precepts
in policy-making and reform initiatives such as good governance. Generic policy
prescriptions by the international lending institutions, such as the World Bank, are
injected into policies and reform programs of loan recipient countries often without
having a complete understanding of the local contingencies. The countries in South
Asia do not yet possess a capacity to produce local knowledge through research to be
utilized in policy-making. Among South Asian countries, India performs slightly
better in terms of indigenous research since it had established research institutions
and universities much earlier.

Conclusion:
Last but not the least, countries in South Asia cannot have good governancepurely on
the basis of borrowed models and ideas without adapting them to theirown
institutional contexts while looking into their short and long term nationalinterests
which are indeed very much essential nowadays. It can happen only if the role of
donors is redefined, local knowledgeis created through research, and policies and
reform agenda are debated. Resultswill be slow but sustainable and promising. In this
respect, research collaborationamong academics and researchers in the region is the
need of the hour as a firststep towards to this direction.It is good that each country
should learn from experiences of other countries;however, there is no substitute for

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local knowledge, critical discourse, and citizenparticipation in the process of

governance as advocated by Prince Claus. It is a question of enabling people to direct
their energies within theirown cultural context to bring about change, in the belief
that it is in their owninterest. We are not using democracy here in the formal Western
sense, but in itsmore basic meaning of “by the people for the people”.
Governance is a concept that has been included in the economic analysis during
recent decades. However, it is a concept that remains controversial and
misunderstoodbecause there is no single definition of governance and it is sometimes
relatedto concepts such as democracy, corruption and institutions. There is also
someliterature that analyzes the controversy of market versus government. The
choicebetween them will depend on the efficiency terms and their efficacy in
achievingeconomic goals.
It is also necessary to take into account that the policies designed to promote
economic growth have important implications that must be considered when the
justice issue is analyzed. As governments are judged by the economic growth rates
they achieve, they are interested in promoting this economic policy objective.
Government shows individuals that there is a higher welfare, that they can satisfy
their necessities using more goods and services. If the economic process does not
stop, it is very difficult to note the existing problems that are also being created. In
crisis, all the problems appear strongly (inequality, unemployment and reducing
social benefits), and it is very difficult to avoid them. This is the main reason, it is
necessary to ask what type of society that we wish to create and that we can maintain.

References:
1. Alberitton, Robert B. (2009). “Are Democracy And Good Governance
Always Compatible?” in AsianBarometer, pp.1-22.
2. Azmat, F. & K. Coghill. (2005). “Good Governance and Market Based
Reforms: A Study of Bangladesh”in International Review of Administrative
Sciences, 71(4), pp.625-638.
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in developing Countries. Bloomfield, USA: Kumarian Press.

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8. Grindle, Merilee. (2004). ”Good Enough Governance: Poverty Reduction
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Vol.XXV, No.2 [December], pp.1-18.

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and Sector.'' International Entrepreneurship and Management Journal7 (3):

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A THEORETICAL STUDY ON SIGNIFICANT CHALLENGES,

CURRENT TRENDS IN MANAGEMENT EDUCATION
AS WELL AS MAJOR ISSUES IN INDIAN CONTEXT
* Jayadatta S
** Sangamesh Shivalingappa Yalligutti
*** Pramod S Gadigeppagoudar
**** Shruti Modak S

ABSTRACT:
Today across the globe management education is facing a unique crisis of relevance
in the contemporary scenario. All the major aspects of Business education such as
quality of MBA aspirants, quality of research publications, business research,
curriculum, industry-institute interface, faculty development programmes,
placements, management development programmes, compensation packages of B-
school graduates, diversity among the faculty as well as the students, career
development trajectory of alumni, governance and accountability etc are under
critical scanner as of now. In the international arena Indian B-schools are not
untouched by the contextual expulsions of the management education. Also
concerned over the lack of high quality, context specific management research in
India and also the predilection of Indian researchers to follow western models of
research and publication blindly some of the relevant issues should be discussed.
Multiple issues are indeed faced by B-schools in India such as proliferation of B-
schools, faculty shortage, quality of education, governance and accountability as
well as poor regulatory mechanism. The business and management education could
also play a pivotal role in social uplift and also triggering the entrepreneurial spirit in
a society. In terms of imparting quality education the business schools face several
challenges. Stakeholders and external environmental forces continuously put
pressure on the business schools to adapt to the changes happening in the business
world. Recent technological changes and the rapid trend of globalization have made
difficult for organizations to excel and survive in the competitive world. As a
consequence and result the importance of management education has increased
many folds. Due to sudden changes in the external environment business executive
need to update their skills. Also in order to meet the issues and challenges of the
future, the reform of the higher education could be unavoidable. The education

* Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031, Email:[email protected]
** Banker, Educationalist and Freelance Writer, Navanagar, Bagalkot, Email: [email protected]
*** Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031, Email:[email protected]
**** Lecturer, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031, Karnataka State, Email: [email protected]

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institutions need to strive to achieve the balance between the education cost and the
quality. The gap between theory and practice is one of the major criticisms of MBA
schools. The present paper analyses the issues and challenges of management
education in India in the emerging scenario and also provides remarkable insights
into revitalizing B-schools that may benefit all the stakeholders.

KEYWORDS: Management education, stakeholders, governance, accountability,

compensation packages

INTRODUCTION:
Business education has been liberalized in 1990's by the government of India which
has surely resulted in the rapid growth of business schools offering the programmes
both at the graduate and undergraduate levels. Particularly in the area of pedagogy,
industry interface, curricula and academic research models Indian B-schools are
almost a replica of US business education. But quite often it is also observed that
Indian B-schools are struggling hard to introduce several adaptations because of
differences observed in the work culture system which has made Indian business
education to face several issues and challenges in the area of academics, financial
support and development of infrastructure. Today management education is also
considered as elitist as it attracts young men and women who are usually motivated
by the positive consequences associated with management educationto take up
challenging corporate jobs. Due to rapid and increasingly complex nature of
organization and businesses, there is a need that that the business schools impart
relevant current and cutting edge knowledge to the students. This research also
identifies some of the major emerging areas in management and business education.
Learning process also depends on teaching aids like library facilities, academic
activities such as field work, classroom seminar as well as study tours and
nonacademic activities of the college. To meet the growing needs of the business
society, there is a greater need for sound development of management education.
Present paper studies the trends prevailing in management education in India and
also tries to find out implication of management education in India to industry and
individuals. Further it also tries to study emerging issues of management education
and to find implementation of possible direction as well as policy towards
improvement of management education in India. Moreover, after globalization and
liberalization in 1990s, India saw a change in theform of new policy being adopted

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which gave rise to private corporate houses in varioussectors including education

and the MNCs of the world started to invest in Indiabecause of its huge consumer
base. The advent of global companies and the growthof national corporate houses
brought a sea change in the educational scenario of thenation, with more
management institutions or B-Schools blooming up to producequality managers to
run the companies, as quality workforce were much required tomanage and expand
the business. With all these changes taking place, a new industrygrew up and that is
the industry of management education, which was initially started to supply human
resources to the other industries, but then itself became a huge marketfor investment
and returns. However, this mushrooming of B-Schools in India hasled to an intense
competition among the B-Schools themselves giving rise to manyother
contemporary issues and challenges in the changing scenario.Keeping in mind the
significance of management education in the process of
a nation's development and the mushrooming of B-Schools in India, this study
isundertaken to discuss the growth of B-Schools and the resultant existing and
emergentcompetitive scenarios and also to highlight the key issues and challenges
ofmanagement education in India.

IMPORTANCE OF THE THEME:

Management and business education could play a pivotal role in social uplift and also
triggering the entrepreneurial spirit in a society. In terms of imparting quality
education the business schools face several challenges. To adapt themselves to the
changes happening the business world external environmental forces and
stakeholders continuously put pressure on the business schools to adapt to the
changes happening in the business world. The reforms of the higher education could
be unavoidable in order to meet the challenges of the future. The education
institutions need to certainly strive to achieve a balance between education quality
and cost. The business schools also need to maintain their standards of excellence by
paying attention to performance measurement. It is very much pertinent for business
schools to remain in close contact with the industry in order to maintain the quality
education. The major gap between theory and practice is one of the major criticisms
of MBA schools. According to Sydney Harris the whole purpose of education is to
turn mirrors into windows.
Trained managers are certainly playing a vital role in the current economy.
To develop the organization their multi-dimensional skills are very much helpful. It is

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said and believed that 20th century belonged to the western while 21st century is set to
belong to Asia. Education is the crucial investment in development of a country and
development of a country necessarily depends upon the quality of human resources.
In the efficient functioning of the markets management education can play a statutory
role? The arrival of the global village and international interdependence has brought
both opportunities and challenges before the Indian economy. Today the biggest
challenge before us is how to protect the interests of retail business on which millions
of families depend directly or indirectly. It is surely a pleasant experience and fact
that India is able to achieve self-sufficiency in food production despite the fact that
productivity levels in the agricultural sector still continues to be very low.

MANAGEMENT EDUCATION IN INDIA:

The only challenge to qualitatively make a prosperous global economy is
strengthening one's education. Due to various efforts and initiatives taken during the
various successive five year plans and in particular towards the changing policies in
the eighties to allow both the private organizations and the private to set up
management institutes across the Indian territory, the growth of these management
institutes have been tremendous and very much phenomenal. As on today, in
converting the human resources in human capital by creating skilled manpower,
improving quality of work life and enhancing industrial productivity we find that
there are several management institutions in India playing a crucial role. Recently a
significant growth of management institutions in India has made the country to
proudly possess 19 IIM's at present and 21 IIT's as the most premier institutions
offering education in the field of management and technical education respectively.
Whereas number of universities existing in India as on date have department of
management studies as mandatorily without fail. Across the length and breadth of the
country the significant growth of management institutions in India has also made the
significant growth in the number of available seats for management education.
Hence the quality of management needs to be judged by relevant factors that would
necessarily contribute towards the growth of these institutions alike.

Courses and specializations offered by the management institutions in India:

The course offered by the B-Schools at undergraduate level is commonly known

asBachelor of Business Administration (BBA) which is a three-year course offered

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to thestudents having 10 + 2 degree. The courses provided at postgraduate level are

known byvarious names like Master of Business Administration (MBA), Post
Graduate Diplomain Business Management (PGDBM), Post Graduate Diploma in
Management (PGDM),Post Graduate Program in Management (PGPM), Executive
Post Graduate Program inManagement (EPGPM), Post Graduate Program in
Enterprise Management (PGPEM)and the like. The postgraduate courses are of two-
year duration, and the admissionto these courses is made based on the academic
scores as well as performance in theentrance test. The students with minimum 50%
marks in graduation need to score wellin the test like CAT, GMAT, MAT, XAT, etc.,
to get admission in these courses. The course offered at doctoral level by the
universities is termed as PhD program,whereas the course offered by the autonomous
B-Schools at doctoral level is known asFellow Program in Management. Apart from
these, the B-Schools offer a number ofshort-term management programs.The
courses offer specializations in various fields like human resource
management,marketing management, information technology management,
financial management,event management, infrastructure management,
entrepreneurship development andmany more. There are many B-Schools which
provide dual specializations as well.

OBJECTIVES OF THE PRESENT STUDY:

1. To study the importance of commerce and management education
2. To study the evolution of management education in India
3. To analyze the new dimension for management education
4. To study the new trends and issues in business and management education
5. To know the strategies to incorporate competitiveness in Indian business
6. To study the major challenges and drawbacks in management education

IMPORTANCE OF COMMERCE AND MANAGEMENT EDUCATION

IN INDIA
Most of the major industries of the world at present are controlled and owned by the
developed western countries. It is certainly imperative for us to promote advanced
commercial education in our country to overcome the lack of entrepreneurship.
Modern business and commerce education do cover diversified fields of education

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and research in finance, management, accounting, marketing, commercial and

business law. In some of the industrialized countries, commercial education is
organized on dynamic and systematic lines. Their experts are able to plan and design
finances, operate and establish big factories in months while it takes years to do so.
Unfortunately in our country commerce was not given a fair chance like education or
also as a profession. In past, in every respect we treated it inferior to medicine and
engineering.
Certainly management education adds value to the existing qualifications. It helps
students irrespective of their domains in their graduation level as it widens their
knowledge base and also encourages them to think differently. Management
education enhances leadership and managerial skills by sharing of ideas, insights
through healthy, meaningful and through case study discussions. Having students
with cross cultural backgrounds really adds value to management education as there
is probability of generating multiple ideas. Apart from providing requisite abilities
and skills to get going smoothly at the corporate world, management education
provides an opportunity to network with others and also promotes cross-cultural
diversities. It helps in equipping the executives with capabilities and competencies to
take on the corporate challenges with confidence. Nowadays we certainly find that
there is a growing demand for the programs in the domain of strategy and leadership
development in MBA education.

EVOLUTION OF MANAGEMENT EDUCATION IN INDIA

Till independence, the management education wasnot a part of education system in
India. Business wasconfined to certain castes and skills and knowledgewas passed on
hereditarily. Sydenham College inBombay was the first college to set up in 1913
toimpart basic business knowledge at graduation level.Shri Ram College of
Commerce was set up later inDelhi in 1920. The emphasis was on trade and
commerce; not management. Immediately afterindependence in 1947, most of the
newly establisheduniversities and colleges included commerce asgraduation and
post-graduation courses. Thechallenge before the independent nation was
thentransforming an agrarian economy to an industrialone to drive the economic
growth in the country. Themain thrust in the Second Five Year Plan was toachieve
rapid industrialization in the country. Thiswarranted building domestic capability to
managedevelopment in crucial manufacturing sector. Though Delhi, Madras and
Bombay universitiesexperimented two-year full-time MBA programme in1955, the

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emphasis on professional managementeducation occurred for the first time only with
theGovernment of India setting up Indian Institutes ofManagement (IIMs) as centres
of excellence inmanagement education in early 1960s. The first IIMwas set up in
Kolkata in 1961 and second in Ahmadabadin 1962. In1970s, four more IIMs were
added in
Bangalore, Lucknow, Kozhikode and Indore. Currently,there are 12 IIMs in the
country. The mission of theIIMs was to professionalize Indian managementthrough
teaching, research, training, consultancy andinstitution building. As the management
educationgained prominence with the changing Indian economicscenario, the major
universities started separatedepartments to offer post-graduation degrees
inmanagement in 1970s and 1980s. The liberalization of the economy in 1991 and
resultantprivatization and entry of multi-national companies,in fact, gave real boost
to management education inIndia. The demand for professional managers alsogot
boost with Indian economy moving away fromthe lower Hindu growth rate
trajectory to highergrowth trajectory. Because of rising demand fortrained
management graduates, the managementeducation has become one of the most
sought aftereducation. In response to this growing demand forprofessional
managers, the private sector entered themanagement education domain in 1990s. In
1991,the number of approved management educationinstitutions in India was only
130 with an annual MBAintake of about 12000. In 2009, there were 1608institutes
offering MBA programmes and 391 institutes offering PGDM programmes in the
country. Now thenumber of B-Schools is said to be about 4000 withannual intake of
about 150000. India thus witnessedphenomenal growth in management institutions
duringthe last two decades. With the economic slow-downduring recession and
resultant slide in demand formanagement graduates, the growth of
managementinstitutes almost came into stand still.

ANALYSIS OF THE NEW DIMENSION FOR MANAGEMENT

EDUCATION
The emergence of such a new dimension for management education has already
begun. To benchmark human resources companies are feeling the need for global
standards and academics are encouraging the need and use of merit- based candidate
selection systems. For talent selection India's position as a lead contributor to the
global IT human resources pool will need to be supported by the adoption of global
standards. Indian economy was developing at the time of independence; hence we

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required bureaucratic management skills. However 50 years after independence,

Indian economy has become more mature and hence we now require entrepreneurial
management skills. In this regard our management schools have failed to meet this
challenge. Therefore there is an urgent need to revamp our management education.
Keeping in view the above facts as well as demand of the time, prospects of
commerce and management as education and profession seems very bright. To avail
the advantage of this particular requirement, a lot of people have opened educational
institutions to educate the students in the field.
Growth of management education: Department of Commerce of the Andhra
University in 1950 started the first MBA programme in India. In the year 1963,
Indian Institute of management, Ahmedabad was set up in collaboration with the
Harward Business School. Year 1950's and 1960's witnessed the growth of
commerce education and 1970's and 1980's witnessed the growth of management
education in India. In our society there has been a tremendous growth since then.
Every year about more than 14,000 students pass out of management schools.
Keeping in mind the demand, supply is very meager. Management courses have
become 'Academic courses' rather than 'Professional one'. Management institutes,
barring a few exceptions have reduced to commerce colleges. To meet the new
challenges of the 21st century there is a urgent need to structure management
education. India has in recent times adopted institutions and domestic policies that
have enabled people to take advantage of global markets and also have thus sharply
increased the share in their GDP. India has been catching up with the rich ones- our
annual growth rates increased from 1 percent in the 1960's to 5 percent in the 1990's.
As of now it is above 8% percent. Indians saw their wages rise and the number of
people in poverty declined.

NEW TRENDS & ISSUES IN BUSINESS AND MANAGEMENT

EDUCATION
Some of the recent major trends and issues in business and management education
are as follows:
1. Role of B-Schools: Business schools should focus on nitty-gritty of general
management and also about a functional specialization so that the students
can become nothing but Jack of all trades and master of management. With
changing times the Indian business schools should reinvent themselves and
also redesign their academic curriculum for facing the current challenges in

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the business environment. Also the course curriculum should be designed to

suit new perspectives for building leadership and managerial skills. More
importantly the responsibility lies with business schools to do the needful in
this particular regard.
2. Role to be played by faculties: Faculties should be from excellent academic
background with an industry exposure. They should be a special breed of
people driven more by passion rather than money. Through right
communication skills they need to motivate and inspire students. They
should preferably have industry experience in a much reputed organization.
Along with the consultancy and teaching experience it is desirable to have
research experience in management. To business managers and leaders
across the world the present economic meltdown has thrown several issues
and challenges. Everyone started blaming business schools for the present
mess. Is it justified to blame them? If not, then who else is responsible for the
current global mess? Is it the business schools or faculties and students or
parents or all to be blamed?
3. Reforms and the corporate Sector: A dominant part of the industry constitutes
the corporate sector. Today the structure of corporate financing is changed by
the financial sector reforms along with the development of the capital market.
This has certainly led to a separation of ownership and the management and
also has given rise to the issue of corporate governance among others.
Corporate governance essentially deals with the ways of governing the
corporations so as to improve their financial performance.

MANAGEMENT EDUCATION AT CROSS ROADS

As of now management education is becoming increasingly important and
also most sought after post-graduate degree. Any developing country for its
social and economic development requires well qualified managers and
administrators. Also, industry requires competent managers all the times in
times of recession to revive the economy and in the time of growth to frog-
leap the competition. Hence management education is ever green with job
opportunities. However, to what extent our management graduates are getting
the right type of management education? According to a recent survey, Indian
industry survey reports that only 15% of management graduates are
employable and 85% unemployable. It is also found that management

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programs offered by many of the colleges and universities suffer from serious
drawbacks and criticism. More importantly in business process management
changes are needed and will be initiated concurrently. In the present scenario
the business sector in India is highly promising. Newer opportunities and
newer challenges are day by day in front of Indian industries, which are
profitable and prospective. The fundamental scope of doing business in India
is certainly lying with its people. The huge population of India has created a
large unsaturated market of consumers. This is one of the important reasons as
to why global companies are very much interested in doing business in India.

Some of the few situations that have arisen in India post liberalization are as
follows:
Export import boom and opening of trade market
People are shifting from rural to urban areas, hence resulting in urbanization
Major shift of agriculture workers to industry sector
Big open saturated market for various category of products
A growing and booming market for high quality and low price product
Gradual increase of organized retail chains
Steady and growing number of mergers and acquisitions
Lucid and lucrative license policies for overseas multinational corporations
High growth rate showing the economic prosperity in India
Indian market leaders going global

MAJOR STRATEGIES TO INCORPORATE COMPETITIVENESS IN

INDIAN CONTEXT
Some of the major strategies to incorporate competitiveness in Indian business are
as follows:
Ø Infrastructure improvements up to global standards
Ø Development of latest transportation facilities so that least time is required to
move from one place to another; it also reduces the carrying cost
Ø Government initiatives to advertise opportunities in different field to attract
both Foreign Portfolio Investment (FPI) and Foreign Direct Investment
(FDI)

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Ø For saving cost and time with a look to improve supply chain for linkage
effect-adaptation of backward integration
Ø Unbalanced growth strategy to facilitate growth and development
Ø To provide direct industry interference in large scale with practical
approach to students making direct link among educational institutes and
business firms is very much necessary
Ø Guild formation by the firms of specific industries necessarily to discuss,
analyze about advantages and disadvantages, opportunities etc. Different
dimensions of that particular sector standing on a common platform
Ø To explore new opportunities in several fields of operations co-operation
among domestic and foreign companies is essential
Ø Technological up gradation in industries
Ø Application of Just in time (JIT) technique in business

SOME OF THE MAJOR GOVERNMENT INITIATIVES TO SUPPORT

COMPETITIVENESS
Modification and renew of Exim policy
A more comprehensive competitive policy
Removal of red tape barriers
Increasing number of SEZ giving ultimate priority and also increasing
facilities in Special Economic Zones (SEZ)
Inauguration of free information bureau especially to provide important up
to date information regarding different fields of operations in all the states
in India
Advertising challenges and opportunities(e.g., tourism) in various sectors
Prohibition of free riders
Facilitating mergers and acquisitions
Finding alternative strategies for further development and subsidizing
areas of scarcity
MAJOR CHALLENGESAND DRAWBACKS IN MANAGEMENT
EDUCATION
Some of the major challenges and drawbacks in management education are as

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follows:
Major challenges:
1. The current curriculum in management and commerce education does not
teach students in facing the challenges in the business environment
2. Also how to manage complexity and uncertainty are not taught in business
schools
3. It merely teaches the concepts and ideas with case studies
4. It surely does not focus on the challenges and issues arising out of rapid
growing technology and also the challenges involved in running an enterprise
5. Unfortunately, today the best talent is going to industries where salaries are
lucrative
6. Especially today those who come to academic area are the ones who could not
be absorbed in the industry or those who come to this profession by mere
chance or those who choose this career out of passion.
Major drawbacks:
1. Insufficient availability of specialized experts and qualified faculty in
management arena
2. Lack of industry based specializations
3. Low infrastructure facilities available

OVERCOMING CHALLENGES IN MANAGEMENT EDUCATION:

Re-engineering and revamping of management education must be surely
done
Providing decent salaries and professional ambience to faculties should be
done
Faculties should be regularly sent for training programs to update their
skills and also their abilities
Developing right mindset and attitude towards management education is
very much essential and also focus on quality of education not quantity is
important
Rather than mere preaching what is mentioned in the books there has to be
interactive sessions for the students

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The project work assigned to students should be relevant, contextual and

also should focus on the current scenarios
As MBA is a professional degree it should certainly groom and train the
students to be true professionals to take on the challenges being faced in
the business environment
Accreditation should be made mandatory to ensure quality of education in
all institutes
Take strict and stringent action against the unauthorized and illegal MBA
colleges
Use online courses and other e-learning methods especially to increase
training opportunities for field and local stuff
Provide training in other languages besides English
Ensure that training skills are provided even in emergency situations

IMPORTANT SUGGESTIONS FOR UNIVERSITIES

Some of the important suggestions for universities can be shown below as
follows:
1. Universities should go ahead with restructuring the syllabi at UG and PG
skills. Apart from the subject knowledge, major soft skills like good
writing skills, listening skills, presentation skills, interpersonal skills,
leadership crisis management skills, problem solving skills etc must be
made very much compulsory in view of its importance in the contemporary
job market
2. Arrange guest lecturers from expert academicians and industry
experienced people as well as provide facilities for industrial visits
3. A detailed industry visit report which is based on the field visits should be
made an integral part of the course
4. Redesigning the teaching methods, as a deviation from the traditional
teaching methods should be done
5. The management colleges as well as schools are able to use practical and
innovative teaching methods like management games, seminars and
workshops and seminars, mock interviews, individual assignments, proper

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presentations, field surveys and case studies etc

6. Controlling and having a hold on the study centers, UGC will take care of
these centers, in some areas these center’s also follow malpractices in
examinations which should be restricted
7. To work with agencies necessarily to design educational and training
programs that which meets the needs of the agencies
8. To prepare students for careers in humanitarian work develop
multidisciplinary curricula
9. Encourage students and faculty exchanges to motivate them
10. Consider establishing a strong academic association of humanitarian
studies or bringing up a dedicated journal

Keeping in mind all the above discussed facts our future global manager would
require new skills like information management skills, information
technology management skills, decision making in very dynamic
environment, Human resource development skills, Innovation/credibility,
service sector management skills, time and stress management skills,
environment management skills, entrepreneurship, customer service
management skills.

CONCLUSION:
Today training for management extends beyond the frontiers of formal education in
scientific, humanities and engineering disciplines and also is of quite recent
awareness in India. Training for management aims at augmenting and
bringing the nation’s management resources through programmes of study,
research, extension work and training. In addition to contributing to the
traditional areas of management, it specifically lays emphasis on the
management needs of the public sector and those socially relevant sectors of
activity which do have not as yet had systematic exposure to modern
management inputs. There is no need to reach high for the stars. They are
already within you-just reach deep into you. There is failure in management
education which is also evident with the current economic downturn. The

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educational system failed to forecast the recession and failed to check the
overheated economy. The four pillars for effective management education are
consultancy experience, research experience, teaching experience and
industry experience. When faculties possess these four areas of expertise and
experience, then it ensures qualitative management education. The present
business education is broken and need to be reinvented with the changing
times. It is rather unfortunate that India with a billion plus population could
not produce global leaders like Jack Welch, Bill Gates, Sam Walton, Steve
Jobs, Peter F Drucker, Michael Dell, and Jeff Bezos. It is time for India to
relook at the methodology for management education. It is also the time
Indian B-Schools took stock of the situation and also set their houses in order.
Today the silver lining in the dark cloud of management education in India is
the Indian school of business (ISB) which is ranked as the 15th best B school
in the world surpassing other premier management institutions like that of
IIM’s. As of now there is a strong need to focus management education
glocally (i.e., think globally but act locally). When the course content is
customized based on the market needs then students will surely not face
unemployability problem. To make Indian MBA on par with the global
standards we need to get out of the mindsets of being copycats. We certainly
need to reinvest ourselves as leaders from being followers. To sum up, it is
very much vital to have holistic and integrated. The major problem with us is
to imitate the western management education blindly. By the time we could
take the best out of them, the curriculum and content gets outdated thus
resulting into obsolescence. Let us be much more creative and innovative in
preparation of curriculum and methodology of teaching. Management
colleges may also improve their services through various quality programs.
The developing the holistic framework formanagement education should be
based on contextualempirical research. The need for close
collaborationbetween industry and management academia isessential to
make the management educationrelevant. Similarly, ethics and values should
occupyplace in the emerging management pedagogy. Thereare at present
many bottlenecks in this direction butthey are not insurmountable.

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14. Ghemawat, P. (2008). The globalization of business education: Through the

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Pradesh. IJMBS, 2(3), 90–94.

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37. Trehan, A., & Khushwaha, P. (2012). The implementation of knowledge
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Multidisciplinary Management Studies, 2(2), 252–260.
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15. https ://www.aima.in

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A THEORETICAL STUDY ON IMPACT OF COVID-19

PANDEMIC ON INDIAN ECONOMY AND LABOUR MIGRATION
WITH SPECIAL REFERENCE TO INDIAN MSME SECTOR

* Rajahussain Nadaf
** Dr. A M Kadakol
Abstract
Today the entire world is undergoing through a tough times. A virus named Covid-19
has taken the entire world into its grip and as a result people's life and global economy
have been disheveled. Covid-19 is a one of the giant disaster in the year 2020. No any
country is left from the trap of Covid-19. It is impacting the global economy
devastatingly whose outcome is totally uncertain and unpredictable. The purpose of
this research paper is to study that how Covid-19 will impact on Indian economy in
different sectors specially Indian MSME sectors which are life blood of Indian
economy. We have also tried to illuminate what will be the revival strategies of
Indian MSME after the end of epidemic period and expected changes in business
operation. What are the different measures that are taken by the Government of India
in MSME sectors to achieve the dream of Self- Reliant India or Atmanirbhar Bharat.
After studying the devastating impact and various revival strategies, we found that
business practices of Indian MSMEs will be totally changed. Digital practices,
innovation, accessing of finance, focus on cash flows rather than profit will be
essential after this epidemic. Rupees 3 lakh crore credit guarantee announcement for
MSMEs will keep their heads above the water even as the economy slow down.

Key Words: Indian Economy, MSMEs, Pandemic, Covid-19, Revival

Strategies

1. Introduction
Corona virus (Covid19) is one the giant disaster in the year 2020. Pneumonia of
unknown cause was detected first time in Wuhan city Hubei province of China on
31.12.19. From 31.12.2019 to 3.01.2020 total number of 44 people affected with
pneumonia of unknown cause was found. China immediately intimate this event to
WHO by national authority in china. After analyze the data by WHO, the

* Full time research scholar, Kousali Institute of management studies, Karnatak University, Dharwad
** Professor, Kousali Institute of management studies, Karnatak University, Dharwad
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phenomenon was declared a public health emergency of international concern on

30.01.2020. On 11.02.2020 WHO announced a name for the new Corona virus
disease Covid-19. Corona virus disease (Covid-19) is an infectious disease caused by
a newly discovered corona virus. The Covid-19 virus spread primarily through
droplets discharge from nose when person cough or sneezes. Corona virus is a virus
from the family of flu viruses. It is now known as the Severe Acute Respiratory
Syndrome Corona virus 2 (SARS- Cov2). WHO has been assessed the outbreak day
after day and concerned by the level of spread and severity and by the level of
inaction and eventually WHO declare COVID-19 is a pandemic. The Coronavirus
Covid-19 pandemic is global health crisis. It is a greatest challenge we have faced
since world war two. The virus has spread to every continent except Antarctica.
Cases are rising daily in Africa, America and Europe. All the countries are racing to
slow the spread of virus by testing and treating patients carrying out contact tracing,
limiting travel, quarantining citizens and avoiding large gathering such as sporting
event, concert, school and universities. In some developed countries like America,
Italy, Spain the situation have been uncontrollable. The pandemic is moving like a
wave. Almost all the countries in the world focusing on social distancing. Social
distancing is one of the methods to contain the spread of virus. Nearly 162 countries
have steadily into lockdown. Almost 210 countries and territories around the world
have reported a total of 44,42,414 confirmed cases of corona virus and a death toll of
2,98,322 (www.worldometer.info/coronavirus/countries-where-coronavirus-has-spread/
last updated: May 14, 2020). Across the world shops, theatres, restaurants are
closing. Every day people are losing jobs and nobody knows when the normal life
style will began. The International Labour Organisations estimates that 195 million
jobs could be lost. Today most of the powerful developed countries are helpless
because they have become too late to implement the decision of social distancing.
Italy the world top health service facility has been collapsed. Beds have been
shortage to admit affected person with virus. It is a too horrible situation.
2. Impact on Indian MSME Sector:
This pandemic has shaken and deteriorates the global economy. In this article we will
try to overview the probable impact of Covid19 on Indian MSME. It is too early to
estimate how deeply the pandemic will affect MSME. Covid-19 has moved from a
health crisis to an economic crisis. This pandemic destroyed the business cycle all
over the world. Around 100 countries have closed national border. During the past
month global supply chain has been collapsed. Global economy could shrink by
almost 1% in 2020 due to Covid19 pandemic.

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India is a developing country. The position of India's Micro, Small and medium
enterprises (MSME) is the largest in world after china. MSME plays a significant
role to accelerate the growth of Indian economy. But the position of MSME will be
very unimaginable and unpredictable after this epidemic. The state of Uttar Pradesh
has the largest number of estimated MSME with share of 14.20% of total MSME's in
the country. West Bengal comes as close second with a share of 14% followed by
Tamil Nadu and Maharashtra at 8%. Indian economy that desperately needs
immediate assistance, it is Micro, Small and Medium enterprises to survive. In India
there are over 63 million MSME units in India. The Indian MSME will be impacted
significantly due to the outbreak of Covid19 in near future. Visualization of future
existence of Indian MSME is completely impossible and uncertain at this moment.
To contain Covid19 spread India has declare 21 days complete lockdown in each
state which may be extend according to the situation. Normal business activities are
being completely stopped for all type of business organization. This standstill for
couple of month will be a very crucial for Indian MSME. However if the pandemic
proliferates and prolonged lockdown would exacerbate economic trouble. India's
growth may fall below 3% in financial year 2021 under this scenario (KPMG report).
Coronavirus outbreak is having a stark effect on small business businesses as the
situation drags on (National Federation of Independent Business). There will be
unemployment situation rises around 8000 to 10000 in the coming couple of months,
since people displaced from their jobs for maintaining social distancing guidelines.
But for some businesses the impact may be positive. Those businesses which deal
with essential items which is required for livelihood experiencing stronger sales due
to Sharpe rise in demand for product. Consumers are buying essential commodity
more than necessary which ultimately leads to exponential growth in sales. The
stutter buying in huge quantity of essential commodity leads to increase the price of
commodity due to lower supply and high demand. For packaged food business this
critical situation has some opportunity to expand their business. Every family have
been quarantine in their home. They are not allowed to move from one place to
another. In this time business who deals with packaged food can grab the opportunity
by making home delivery and create a healthy relationship with society. SMEs who
deals with export, there will be slow down of export business. Service sector is also
slowing down since more people opting social isolation like salon shop. MSME
sector in India will face the problem like low liquidity or cash flow and lack of
workforce since daily-wagers have gone to their villages. Lack of workforce will
have to be a negative impact on production. Lower production means lower supply

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and lower supply will create the inflation environment. But government has started
taking some initiative to keep the MSME segment afloat. The RBI recently
introduced long term repo operation (LTRO) worth 100000 crore, as a result bank
can increase lending at cheaper interest rate. Such type of initiative will give some
help to MSME sector. Those SME's which are listed in BSESME exchange there is a
possibility to decline the share price. People will hesitate to invest in SMEs stock
after this epidemic as a result supply will be greater than demand which leads to
decline the share value. The impact of lockdown will be very discomfort for Indian
MSME because in India most of the small business transactions are done in cash and
payment to the workers and laborers are also made in cash. Small businesses are not
very much comfortable to adopt digital practices in its business. Due to this crisis
small businesses will try to adopt digital practices in its business. There are chances
to arise the problem of liquidity crunch and without adequate liquidity the small
business might be close down in coming future. As a result workers will face layoff
and unemployment in near future. Workers are moving towards native house from
work place. There is a very fragile situation for workers during this time. 19% to 43%
of the MSME may disappear if epidemic persist 4 or 8 weeks. MSMEs have gone
through most difficult time in the last 3 years (All India Manufacturing
Organization). They faced one setback after another. Sign of red alert are already
visible. MSME will have to face huge financial burden of unpaid salaries which lead
to loss of employment, unpaid EMI whose negative impact will be reflected in the
balance sheet of small firm. Due to lockdown, movement of goods from one country
to another country has been stopped. One of the positive thing due to this crisis is that
those enterprises who deal with import and export business, they can be self reliant
and will try to produce goods within India instead of import which will improve
balance of payment situation to some extent. There is a great opportunity for SME
which belongs to chemical sector. They can extend its product line by making hand
sanitizer product whose demand is to increase in right now. Apparel sector can also
grab the opportunity by making face mask. Poultry firm is facing lots of problem due
to shutdown. Demand of chickens has been decrease with falling rate 20 per kg from
prevailing market price 90 per kg. To alive the poultry, the owner of firm will have to
maintain fixed cost as a feed for poultry even there is no sale. Haats in some rural area
are main source of revenue of rural people like Odisha, West Bengal and
Chhattisgarh. Haats are being closed down. Starvation situation will arise if
lockdown continue to around 8 weeks. If we go to the agriculture business, harvest
season will begin and there is a shortage of worker for harvesting wheat which could

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lead to rotting of crop in the fields. As a result price of flour may be increase after this
epidemic due to lower supply. This will be crucial for keeping the supply chain of
food grains alive. The major concern for MSME will be liquidity crunch due to the
covid-19 outbreak. Lack of liquidity will disrupt supply chain and labour availability.
Many units have paid their workers' wages for March in full and are prepared for
April payment while there is no revenue now. In addition there are bills like
electricity bill, water bill that also have to be paid but without revenue or substantial
government support, there is no way they can carry on in May and beyond. Major big
concern of MSME units are delay in launch of new product, inability to meet demand
from essential industries, tough social distancing. State bank of India has set a target
to distribute 700 crore to MSME in Mumbai. The government is working on 1 trillion
packages. There is a possibility to change the definition of MSME. The proposal is
still to be approved. The Indian government will also need to increase insolvency
limit for SMEs and MSME to 1 crore from 1 lakh.

3. Impact on Indian Economy:

There will be devastating impact on Indian economy due to the pandemic of Covid-
19. Every economic activity which reflects GDP of a country has been stopped. This
standstill will decline the speed of growth of Indian economy. Cross border
economic activity has been stopped. We can expect sluggishness in the developing
country like India. The pandemic and consequent lockdown have hit various sector
of Indian economy.
Raw material and spare parts: In India around 55% of electronic component
import from China. Imports have been decreased to 40% due to the outbreak of
coronavirus and prolong lockdown. To tackle this problem India is considering the
promotion of home production to reduce the dependency on China. In addition China
is India's third largest export partner for export of raw material like organic chemical,
mineral fuel, cotton etc and due to complete lockdown export has been stopped
which leads to a substantial trade deficit for India.
Agriculture: The nationwide lockdown will have significant impact on agriculture
sector. Farmers are worry about government procurement and their ability to sell
their agricultural product. Even markets are still closed, order from the home
ministry to exempt all farming activities from shutdown. Unless the government acts
soon, farmers in India will face bleak future leading to bankruptcies and they will
suicide.
Automotive: Automotive sector was already witnessing a sluggish demand for last

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one year. The present situation has further aggravated the problem and compounded
the situation with an acute liquidity crunch. China account for 27% of India's
automotive part import. Wuhan is the major auto hub the supply chain of automotive
sector has been hit significantly.
Hotels, restaurants and tourism: demand has decline substantially due to complete
lockdown. Owners are struggling to recover fixed cost. There will be no demand of
hotels around 5 to 6 month, people will try to avoid travelling which leads to lower
demand to hotels. India is a beautiful cultural and historical tourism attract domestic
and foreign national throughout the year. The entire tourism value chain, which
includes hotels, restaurants, and agents have been stopped. Tourism industry is likely
take a massive hit and people will generally avoid movement for tourist purposes in
foreseeable future. In India the service sector account for 55% of GDP. It is estimated
that the loss to tourism and hospitality industry will be $2.1 billion for March and
April alone.
Apparel and Textile: This sector contributes 2% of GDP. China is the production
hub of cotton. India is totally dependence on china for textile raw material includes
synthetic yarn, synthetic fabric, buttons, zippers and hangers. India also exports
cotton yarn to china in bulk quantity. Now due to the outbreak there is poor demand in
china as result price to come down in India. Garment manufacturer can look at local
sourcing opportunities. Textile and apparel sector production is expected to decline
by 10-12 percent in April- June quarter. This sector is one of the largest employers in
the country, employing over 45 million (direct jobs) as well as large number of daily
pay workers. Temporary closures of factories and lay-off have already begun among
low-wage worker.
FMCG: After the lockdown announcement, demand for essential FMCG product
has been increased owing to panic buying. Groceries items milk, bread and hygiene
products etc have a huge demand, as a result supply has been shortage which leads to
increase in price.
E-commerce: Several e-commerce players Flipcart, Amazon, Mintra etc are unable
to fulfillment customer requirement due to absence of delivery man. They are not
accepting new orders however companies are trying to service essential items on
priority basis. But the story is not end here, consumer buying habit is going to be
change after this event, consumer will avoid large gathering as in traditional shop.
Most of the consumer will prefer online shopping. Hence there is lots of opportunity
to expand business in near future.
Building and Construction: construction work in different sites has been stopped.

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Estimated job loss of 30% in real estate sector. Fresh equity investments into the
country's real estate sector would slow down.
Chemicals and Petrochemicals: India is 6th largest chemical and petrochemicals
producer in world, contribute 3.5% of global chemical industry (2018-19). Raw
material price for petrochemicals are falling primarily driven by crude price. Imports
are expected to fall as major import sources, Middle East and China are highly
impacted by Covid-19. Majority of the chemical producing units are SMEs and they
do not sudden increase working capital requirement. Extension of credit to customers
and suppliers alongside falling revenue in the short to medium term is expected to
adversely affect cash flows.
Education and Skilling: all the education institution is closed to avoid large
gathering. In India there are 39931 colleges and 933 universities (2018-19). Schools
around the country have been impacted by Covid-19, closures of schools last several
weeks during the crucial period of academic year ending. Low-fee private schools
especially are likely face larger impact on teaching and learning. In higher education,
most higher education institute are not fully geared to implement online learning.
As per the World Bank's latest assessment India is expected to grow 1.5% to 2.8%.
The IMF projected a GDP growth of 1.9% for India in 2020 because the global
economy hits the worst recession since the greatest depression in 1930. 1.70 lakh
crore rupee relief package announced by finance minister on 26 March. Under
Pradhan Mantri Garib Kalyan Yojana around 39 crore poor people have received
financial assistance of rupees 34800 crore as direct benefit transfer till 5 May 2020,
12810 crore has been distributed in two installments to 25.62 crore account holder,
1405 crore distributed to around 2.82 crore old age persons, widows and disabled
person, 2.20 crore workers received financial assistance to 3493 crore. Under
Pradhan Mantri Garib Kalyan Ann Yojana 67.65 lakh tons of food grains lifted by 36
states and union territory, 4.82 crore free cooking gas cylinders has been delivered
under Pradhan Mantri Ujjwala Yojna. The Indian government has extended the
ongoing nationwide lockdown till 3 May. It will cover various sectors of the
vulnerable segment from farmer, women, and small businesses to organized worker.
The Indian stock market on March 23suffered its worst single-day rout in history. The
NSE Nifty 50 index sank 12.98%, while S&P BSE Sensex fell 13.15% to 25981.24.
The rupee hit low records of 76.16 against the U.S dollar. Impact of covid-19 might to
prove fatal for many of India MSME unit. Standard operating procedure ( SOP) for
MSMEs at work place will be strictly followed where premises shall be disinfected
on regular basis, provision for hand wash & sanitizer, mandatory thermal scanning of

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everyone entering and exit the work place. Medical insurance for worker will be
mandatory. Ministry of Corporate Affair clarify that annual general meeting should
be conducted through video conferencing for avoiding large gathering , which is little
bit difficult for listed SMEs. MCA also clarify that contribution to PM CARE
FUND will qualify as CSR expenditure. On 30.03.2020 MCA introduced a new
scheme Companies Fresh Start Scheme, 2020 (CFSS 2020). Maximum interval
between two board meetings shall be extended by 60 days for the next two quarters.
SIDBI will provide emergency working capital up to Rs 1 crore to MSMEs. SIDBI
has made arrangement for providing loans at 5% within 48 hours for MSMEs
manufacturing any product to fight against corona virus like hand sanitizers, masks,
bodysuits, ventilators, testing lab etc. Andhra bank is setting up short-term credit
facility for small businesses.
Rural-urban and interstate development gaps forced people from populous states to
move to urban areas and more industrialized, developed states for employment.
Comprising 20% of the workforce, migrant labour became vital to every economic
sector, especially the informal sector and MSMEs, constituting nearly 50% of India's
GDP. The Covid-19 triggered exodus is a sudden reversal of this cumulative
migration of seven decades. The resulting churning is an opportunity for India's
socioeconomic situation. Privations undergone by our migrant workers have
awakened us to urgently address underlying poverty and inequity and create
supportive ecosystems that are disaster-proof. Moved by their predicament and amid
concerns about the Covid-19 contagion and the sheer logistical challenge of doing
this during lockdown, the government transported millions of returnees.
How MSMEs can survive during post epidemic: The business environment
during post pandemic will be totally different from today's business environment
specially MSMEs. The following changes we can expect in field of MSMEs sector.
1. Digital practice: India has 63 million MSMEs but only 32% of them are
digitally engaged and 68% are too far to adopt digital practices. The untapped
portion of MSMEs must change their strategy and digitize their business
processes to survive in long run. To adopt digital practice is really difficult for
some MSMEs but without adopting digital practice it will be very difficult to
survive during post epidemic as people will continue to avoid meeting and
social gathering.
2. High credit support and available of working capital.
3. Adopting more sustainability practice which leads to environment conscious.
4. MSMEs should given more emphasis on innovation. Of course innovation in

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MSMEs business is amazed but innovation will be indispensible for MSMEs

after this epidemic, other they cannot exist.
5. Cross train staff practice will be helpful to some extent in the business
premises, so that they will be able to perform variety of roles in business.
6. Giving more emphasis on working capital management. Quick collection
from receivable will be helpful to meet wage and salary expenses.
Relief measure taken by Government of India (GOI) for MSMEs: Government
of India announces 20 lakh crore economic packages on 12.05.2020. It is around 10%
of country GDP which will help India to become Self Reliant and boost Make in
India initiative. It's time to “Be Vocal for the Local”. There will be five pillars of Self
Reliant India.
Economy: An economy that will bring quantum jump rather than incremental
changes.
Infrastructure: that will become modern India's identity.
System: A system that will be based on technology driven which can help us to
realize 21st century.
Demography: our vibrant demography will be our strength.
Demand: the cycle of demand and supply which require each stakeholders of the
supply chain to be active.
Indian MSMEs will play a significant to become Self Reliant India. To become
“from local to global” of MSMEs are major emphasis of India. Indian MSMEs will
be badly affected by Covid-19 pandemic. It plays vital role in employment
generation in India. To strong the foundation of Indian MSMEs and to achieve the
dream of Self Reliant India, Government of India has taken different type of
measures.
1: Changing MSME definition: low threshold limit in MSME definition have
created a fear and they did not expand its business and they think that if we
expand our business, we shall be out of the scope to avail benefits of MSME.
After a long waiting Government has revised MSME definition.

Existing MSME classification

Criteria: Investment in plant & machinery or equipment
Classification Micro Small Medium

Manufacturing Investment <25 lakh Investment <5 crore Investment <10

enterprises crore

Service enterprises Investment <10 lakh Investment <2 crore Investment <5 crore

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Revised MSME classification

Composite Criteria: Investment and Annual Turnover
Classification Micro Small Medium

Manufacturing & Investment <1 crore Investment <10 Investment <20

service enterprises and turnover < 5 crore and turnover < crore and turnover <
crore 50 crore 100 crore

Source: Financial express

2: Collateral-free Automatic Loans: The government has announced 3 lakh crores

collateral-free loans to meet operational liability and buy raw material and restart
business till 31st October 2020. 45 lakh units will resume business activity and
safeguard jobs. MSMEs whose outstanding up to Rs 25 crore and turnover 100 crore
are eligible to avail such benefit.
3: Subordinate Debt for stressed MSMEs: For stressed MSMEs, provision of
20000 crore as subordinate debt has been created. Around 2 lakh MSMEs are likely
to benefit. Those MSME which are NPA or are stressed will be eligible to avail this
benefit.
4: Equity infusion through Fund of Fund: Accessing of finance is always being a
big hurdle for MSME. To overcome this problem Rs 50000 crore equity infusion for
MSME has been arranged through fund of fund. Fund of Fund with corpus of Rs
10000 crores will be set up. It will help to expand MSME size as well as capacity and
will encourage MSMEs to get listed on main board of stock exchange.
5: Global tenders to be disallowed upto 200 crore to overcome unfair competition
from foreign companies. This will be great move towards Self-Reliant India and
support Make in India
6: Marketing and Liquidity help: e-market linkage for MSMEs has been promoted
to act as a replacement for trade fairs and exhibitions. Fintech will be used to enhance
transaction based lending using the data generated by the e-marketplace. MSME
receivables will be released within 45 days.
7: 2500 crore EPF support for business & workers for 3 more month: Under Pradhan
Mantri Garib Kalyan Package (PMGKP), payment of 12% of employer and 12%
employee contributions was made into EPF accounts earlier for salary months of
March, April and May 2020. This support will be extended by another 3 months to
salary months of June, July and August 2020
8: Reduction in EPF contribution: to enhance production over the next quarter,
statutory PF contribution of both employer and employee has been reduced to 10%
each from existing 12% for next three months. This scheme will be applicable for
workers who are not eligible for 24% EPF support under PM Garib Kalyan Package.
This will provide liquidity of 6750 crore to employers and employee over 3 months.
9: Liquidity through TDS/TCS rate reduction: In order to provide more funds at

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the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-
salaried specified payments made to residents and rates of Tax Collection at Source
(TCS) for the specified receipts shall be reduced by 25% of the existing rates. This
will release liquidity of Rs 50000 crore.
10: Direct tax measure: All pending refunds to charitable trusts and non-corporate
businesses & professions including proprietorship, partnership, LLP and Co-
operatives shall be issued immediately. Due date of all income-tax return for FY
2019-20 will be extended from 31st July, 2020 & 31st October, 2020 to 30th
November, 2020 and Tax audit from 30th September, 2020 to 31st October,2020.
Whether India can avoid a large economic slump or not the path back to growth will
depend on three broad scenarios of recovery, V shaped, U shaped and L shaped
recovery. The RBI governor expects that India could recover in a V shaped as
projected by IMF in 2021-2022. The public & private sector in India should plan for
the best and prepare for the worst scenario, keeping in mind that a V shaped recovery
is not guarantee .However the extent of actual impact would depends on the severity
and duration of the outbreak which is still unknown. The Covid-19 lockdown may
cost the Indian economy INR 8.76 lakh crore. Former RBI governor Raghuram
Ragan says that recovery will vary from industry to industry, it can be a U shaped
(slow comeback) or V shaped (Sharpe rapid growth). Recovery curve will depend on
how organization reforms their work practice and the change in consumption pattern
of consumer after lockdown period. India management of Covid-19 outbreak is
being observe closely and appreciated by WHO, UN, IMF, ADB and also the
advanced economies like the US, UK, Italy, Germany, Spain and Japan.

4. Conclusion:
Almost every country in the world is being affected from devastating outbreak of
Covid-19. The most powerful economies countries have become helpless, situation
has become uncontrollable. But the bounce back by taking quick and timely decision
by India is really appreciable. we cannot overlook the devastating impact of covid-19
but if we compare India with some developed countries like USA or Italy whose
comparison obviously is not justified but if we analyze, India is in too much better
position. This is just because of quick lockdown of country, giving more attention
towards social distancing. To great extent India has to contain the spread of virus till
now. If India did not take quick decision, then impact of the pandemic is being more
and more dangerous and visualization of its impact will be really shocking in coming
future. Every sector is being affected due to the pandemic. But whether India will
tolerate the consequence of the Covid-19 pandemic in near future. How much it will
take time to come back in the track of growth is unanswered. India has already
suffered from unemployment and this will be further extended. From every incident
of life we learn something new it may be positive or negative or both. This positive

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thing is that, from this pandemic India can analyze its potential. India is too much
dependent on other countries for importing goods, how India has tackled this
situation by home sourcing arrangement instead of import from other country. This
will improve BOP situation of India to some extent. Work from home concept is
going to being new culture of India. As a result use of digital practice will be increase
in near future. Make in India and Digital India will be encouraging more. There will
be a big shock for new entrepreneur and start up, they might be shut down. Some
small businesses will be vanished.

References:
This article is prepared based various reports and data published in different
newspapers and online publications. Their details are given below.
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has-addressed-the-china-factor-well/article31216773.ece
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Affairs
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17887.html/
4. https://theprint.in/opinion/covid-19-crisis-is-choking-indias-msme-sector-business-wont-
pick-up-even-after-lockdown/395849/
5. https://economictimes.indiatimes.com/news/economy/indicators/indias-growth-may-slip-
below-3-in-fy21-if-covid-19-proliferates-kpmg/articleshow/75014975.cms
6. https://talkbusiness.net/2020/03/small-businesses-see-profound-impact-from-covid-19/
7. https://www.bankrate.com/finance/credit-cards/how-you-can-help-small-businesses-
impacted-by-covid19/
8. https://economictimes.indiatimes.com/small-biz/sme-sector/measures-that-can-boost-
msmes-during-covid-19-lockdown/articleshow/74945278.cms?from=mdr
9. https://www.lendingkart.com/blog/coronavirus-impact-on-indian-business-economy/
10. https://economictimes.indiatimes.com/small-biz/sme-sector/a-quarter-of-msmes-may-
shut-shop-if-the-lockdown-persists/articleshow/74880940.cms
11. https://idronline.org/the-implications-of-covid-19-for-rural-india/
12. https://www.aljazeera.com/news/2020/04/india-covid-19-lockdown-means-food-work-
rural-poor-200402052048439.html
13. https://www.deccanherald.com/bus iness/covid-19-outbreak-rural-india-s tares-at-a-larger-
crisis-821866.html
14. https://www.mayoclinic.org/diseases-conditions/coronavirus/symptoms-causes/syc-
20479963
15. https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-
media-briefing-on-covid-19---11-march-2020
16. https://www.who.int/csr/don/05-january-2020-pneumonia-of-unkown-cause-china/en/
17. https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-

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happen
18. https://www.undp.org/content/undp/en/home/coronavirus.html
19. http://www.intracen.org/covid19/Blogs/How-can-we-help-small-business-affected-by-
the-COVID-19-crisis/
20. https://bfsi.eletsonline.com/covid-19-and-its-impact-on-indian-economy/
21. https://economictimes.indiatimes.com/news/economy/indicators/rbi-governor-hopes-
india-will-stage-sharp-v-shaped-recovery-in-2021-22/articleshow/75196698.cms
22. https://www.brinknews.com/will-covid-19-devastate-the-indian-economy-recession-
modi-coronavirus/
23. https://economictimes.indiatimes.com/news/economy/finance/imf-says-it-strongly-
s u p p o r t s - i n d i a s - p o l i c y - r e s p o n s e - t o - c o v i d - 1 9 -
pandemic/articleshow/75176271.cms?from=mdr
24. https://home.kpmg/content/dam/kpmg/in/pdf/2020/04/potential-impact-of-covid-19-on-
the-Indian-economy.pdf
25. https://www.india-briefing.com/news/social-economic-impact-covid-19-india-recovery-
potential-20202.html/
26. https://economictimes.indiatimes.com/small-biz/sme-sector/small-biz-big-trouble-covid-
19-disruption-might-prove-fatal-for-many-of-indias-msme-
units/articleshow/75380922.cms?from=mdr
27. https://www.indiatoday.in/business/story/coronavirus-5-indian-sectors-that-need-urgent-
help-as-virus-ravages-economy-1670099-2020-04-23
28. https://indianexpress.com/article/explained/nirmala-sitharaman-credit-guarantees-to-
msmes-6408533/
29. https://timesofindia.indiatimes.com/business/india-business/govt-revised-definition-of-
msmes-additional-criteria-of-turnover-introduced/articleshow/75716872.cms
30. https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-relief-government-
announces-rs-3-lakh-crore-collateral-free-automatic-loans-for-
msmes/articleshow/75710137.cms
31. https://indianexpress.com/article/india/fm-nirmala-sitharaman-press-conference-live-
updates-covid-relief-6407734/
32. https://economictimes.indiatimes.com/news/economy/policy/view-india-should-use-
migrant-labour-crisis-to-transform-economy-society/articleshow/76184723.cms
33. https://economictimes.indiatimes.com/news/economy/policy/coronavirus-would-reset-
distances-labour-market-experts/articleshow/74965143.cms
34. https://www.business-standard.com/article/economy-policy/7-ways-to-revive-india-s-
labour-market-and-livelihoods-in-post-covid-world-120041800399_1.html
35. https://www.mondaq.com/india/operational-impacts-and-strategy/921742/pandemic-
legal-intelligence--impact-on-msmes-amidst-covid-19
36. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7301775/

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THE IMPACT OF THE RENEGOTIATION OF USCM

ON THE AGRICULTURAL EXPORTS OF SINALOA
* José G. Vargas-Hernández, M.B.A.; PhD
** Icela Flores Osuna
*** M.S.C. Omar Cristian Vargas González
Abstract

Mexico, like other countries, invested in measures to attract foreign direct

investment to their territories. I therefore signed USCM in 1994, a treaty that
imposed Mexico as the largest direct exporter of the United States, a country that is
likely to leave the treaty by renegotiating USMC. Therefore, this research is carried
out to determine the advantages and disadvantages of renegotiation based on
Sinaloa's agricultural exports, with the question of whether it would negatively
impact the USMC renegotiation of Sinaloa's agricultural exports, with the
hypothesis that renegotiation of USMC has a negative effect on Sinaloa agricultural
exports. The purpose of this paper will be with results in favor of the hypothesis
employed.

Keywords: Renegotiation, NAFTA, Sinaloa Exports.

El impacto de la renegociación del TMEC en las exportaciones agrícolas de

Sinaloa

Resumen
México, al igual que otros países invirtió en medidas para atraer inversión extranjera
directa a sus territorios. Por consiguiente, firmo en 1994 El TMEC, Tratado que
impuso a México como mayor exportador directo de EUA, país que posiblemente
saldrá del tratado mediante la renegociación del TMEC. Por lo tanto, se realiza esta
investigación para determinar las ventajas y desventajas de la renegociación en
función de las exportaciones agrícolas de Sinaloa con la incógnita de si impactara de
manera negativa la renegociación del TMEC a las exportaciones agrícolas
sinaloenses, teniendo la hipótesis de que la renegociación del TMEC tiene un efecto
negativo en las exportaciones agrícolas Sinaloenses. La cual se pretende será con
resultados a favor de la hipótesis empleada.

Palabras clave: Renegociación, TMEC, Exportaciones Sinaloenses.

* Research professor of the Administration Department, University Center for Economic and Managerial Sciences,
University of Guadalajara , Periférico Norte 799 Edif. G207-7 Núcleo Universitario Los Belenes, Zapopan Jalisco
[email protected], [email protected], [email protected]
** Facultad de Ciencias Sociales, Universidad Autónoma de Sinaloa, Av. Ejército Mexicano Esq. Con Universidad S/N,
Av. de los Deportes, Tellería, Mazatlán, Sinaloa, 82017 México, Tel. 6691525970 [email protected]
*** Master in Computer Systems, Tecnológico Nacional de México - Instituto Tecnológico de Ciudad Guzmán
Av. Tecnológico 100, Ciudad Guzmán, Jalisco, 49000, México, Tel. +52 341 5752050 Ext. 141, [email protected],mx
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1. Introduction

In Eduardo Galeano's book The Open Veins of Latin America stipulates the phrase:
The people who buy rule, the people who sell served; trade must be balanced to
ensure freedom; the people who want to die sell to only one people, and the people
who want to save sell to more than one (Galeano, 1970).

The regional agreement called the Mexico, North American Free Trade Agreements
(NAFTA) signed between the governments of Mexico, Canada and the United States
in 1992 that entered into force in 1994, to create a free trade area, at a reduced cost for
the exchange of goods between the three countries. It has been recently renegotiated
as United States and Canada Treaty (TMEC). President Donald Trump is in a
renegotiation crisis due to the entry into power of the government of the United
States, who proposed to rearrange the rules established in the treaty with faithful
benefits in his favor and if not, announced the departure from your agreement
country. This has not yet been finalized, but there is in Mexico a wave of uncertainty
about what would happen to its exports, since it is the main supplier of raw materials
and a variety of merchandise to the United States.

Therefore, it is of utmost importance to investigate and determine the impact of the

renegotiation of the TMEC on Sinaloan agricultural exports, a state called "the
granary of Mexico" for its wealth in agricultural crops and which has earned the first
place of exploitation of these raw materials to be exported to the neighboring country,
the United States.

That is why this research work is aimed at determining the advantages and
disadvantages in production, trade and distribution network that will prevail after the
renegotiation. Taking as indicators, the possible departure from the United States,
Mexico's exports and trade, the gross domestic product (GDP), GDP per capita, and
transportation logistics for export shipments. Which concludes that the general
hypothesis has a negative result.

1.1. Background of the problem

In 1994 the North American Free Trade Agreement (NAFTA, now TMEC) entered
into force, an innovative treaty aimed at opening and expanding the North American
market. Since then, the NAFTA has systematically removed most of the tariff and
non-tariff barriers to trade and investment between Canada, the United States and
Mexico, leading to the establishment of a stability and confidence framework for
long-term investments. The TMEC was preceded by the Canada-United States Free
Trade Agreement (EXPANSION, 2017, p. S.p).
Currently, a series of changes have emerged in the decisions of the governments
involved in the TMEC, mainly the United States, therefore it is of utmost importance
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to research a viable investigation about the impact of the renegotiation on Sinaloa

exports, since the state Sinaloa has earned the nickname of being the breadbasket of
Mexico for the large amount of raw materials that the state produces. It is the number
one state in supplying its agricultural products to the neighboring country (United
States). That is why the present project is delimited in a spatial way to firmly base
ourselves on determining the advantages and disadvantages that by the renegotiation
of the TMEC were implemented in agricultural exports Sinaloans.
Analyze the renegotiation of the TMEC
Determine the advantages of Sinaloan exports
Determine the disadvantages of Sinaloan exports
Analyze the productions of agriculture in Sinaloa
Analyze Sinaloa's trade in relation to the USA
1.2 Research questions
General question
Will the renegotiation of the TMEC negatively impact Sinaloa agricultural exports?

a) What would be the production in Sinaloa's agricultural exports based on the

renegotiation of the TMEC?
b) How would trade in agricultural exports in Sinaloa be based on the
renegotiation advantages of the TMEC?
c) What would the distribution network in Sinaloa's agricultural exports look
like depending on the disadvantages of renegotiating the TMEC?
1.3 Justification
Mexico, like other countries, invested in measures to attract foreign direct
investment to its territories. Consequently, in 1994 it signed the NAFTA (North
American Free Trade Agreement), with the United States of America and Canada, a
treaty that imposed Mexico as the largest direct exporter to the United States, a
country that will possibly exit the treaty by renegotiating the TMEC. Therefore, it is
important to carry out this research to determine the advantages and disadvantages
that for the above mentioned were implemented in Sinaloenses agricultural exports,
which is one of the main export productions and source of employment for many
Sinaloenses, it is expected that, if the renegotiation was not feasible for our country
Mexico, it would have to abandon said treaty.

1.4 Research objectives

Main objective: To determine the advantages and disadvantages of renegotiating the
TMEC based on Sinaloa's agricultural exports
Specific objectives:
a) Determine production in Sinaloa's agricultural exports based on the
renegotiation of the TMEC

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b) Determine trade in agricultural exports from Sinaloa based on the

renegotiation advantages of the TMEC
c) Determine the distribution network in Sinaloa's agricultural exports based on
the disadvantages of renegotiation of the TMEC

2. Theoretical-empirical review of the literature.

According to the classic free trade theory developed by David Ricardo, all countries
win when they participate in a free trade zone. Theoretically, the idea that each
country should specialize according to its comparative advantages has some logic
(Dillon, 1991). The TMEC drives economic growth and dynamic trade, stimulates
investment and at the same time creates productive alliances, adapts to small and
medium-sized companies in a framework of fairness and certainty. TMEC partners
promote environmental protection and offer greater job opportunities in North
America. (Audley, Demetrios, Papademetriou, Polaski, and Vaughan, 2003).
After the declarations of Wilbur Ross, Secretary of Commerce of the United States,
on "a sensible negotiation" of the North American Free Trade Agreement, experts see
measure in the position of that country. The Secretary of Commerce of the United
States, Wilbur Ross, seems to have given the TMEC a breather, after having said in
an interview with the NBC network that a "sensible" renegotiation of the treaty
would strengthen the weight, experts agreed (El Financiero, 2017).

"(This statement) indicates that not only (Trump) is taking a negotiating stance, it
indicates that this stance, this softness, reflects the broad consensus that exists in the
US, at least among companies, that there are great benefits for both countries (with
the TMEC),”said David Shirk of the University of San Diego. On this side of the
border, the analysis is similar; For Jessica de Alba, a researcher at the Anahuac
University, this first warning from Ross is positive. It is a positive and encouraging
reaction in terms of investments and free trade in North America (El Financiero,
2017).
For Ernesto O 'Farrill, president of Bursamétrica, Ross's comments indicate that in
the US they are willing to modernize the trade agreement and not abandon it. "The
statements are far from the initial position that Mexico was going to bend in the
TMEC negotiation, and threatened to leave unilaterally. The statements are showing
that the TMEC is alive and can undergo a modernization process, "he assured. The
decision to strengthen the Mexican peso may have the objective of preventing
Mexico from having an unfair advantage, in order to reduce its currency
appreciation. Which, in turn, means that the United States wants to continue trading
with the country, added O'Farril. He explained that the third line of actions focuses on
discovering ways to raise wages and improve the living conditions of Mexican
workers (El Financiero, 2017).
With this it is understood that it can be a measure to discourage migration to the
northern country. For ranchers, the situation shows an opening gesture.

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"(Washington) has made it clear that they are clear today of negotiating the treaty and
that this is convenient for us. In this situation that we have a sensible dialogue on
foreign trade, we applaud and congratulate it because it is what our countries
require", said Rogelio Pérez, director of Mexican Beef, the exporting branch of the
Mexican Association of Livestock Fattening (AMEG) (El Financiero, 2017).
However, Shrik warned that while it may be perceived that the balance is now tilting
more on the side that the TMEC will be maintained, it should not be thought that what
a cabinet member says is precisely the same as Trump thinks, because a constant in
the little more than 40 days that Trump had been in office is the uncertainty in his
relationship with Mexico. "We don't know who we're going to wake up with
tomorrow," Shrik said, referring to Trump's fickleness. In contrast, Arturo Pérez
Behr, president of the National Association of Importers and Exporters of the
Mexican Republic, expressed caution before Trump's comments (El Financiero,
2017).

“The fact that there is talk of renegotiation, and no longer a cancellation of the
TMEC, is a positive issue, the threat issues are decreasing, it is a good way, but that
does not mean that we no longer have to be on the lookout for statements that
President Donald Trump makes, hopefully that is already the speech of the
government in general, "he said. He explained that Asian countries such as China
have taken advantage of what the TMEC establishes legally, so it cannot be
considered as abuse. "We have to advocate for our country, whatever suits
Mexicans," he added. (El Financiero, 2017)
2.1. Agricultural free trade: theory and reality
In a bilateral FTA it is not feasible to negotiate internal aid because it is impossible in
practice to identify which products enter a country with aid and which do not.
Therefore, domestic aid will not be negotiated in this treaty with the United States
( M y p i m e s , 2 0 1 7 ) .
Today there is a general consensus regarding the benefits of the economic integration
of nations. Free trade is good because it allows access to a greater number of goods
and at lower prices, which should increase social welfare. It allows access to cheaper
inputs and capital goods, which should increase the competitiveness of the
productive sectors that add value.

Free trade promotes the efficient allocation of resources because price signals are not
distorted: when there is a shortage of a good, its price rises and producers receive the
signal to increase supply (and consumers to reduce demand); when there is
abundance of a good, its price falls and producers receive the signal to reduce supply
(and consumers to increase demand) (Mypimes, 2017).
Finally, from a macroeconomic point of view, opening the current account of the
economy is equivalent to opening the economy to the savings of the rest of the world.
However, the reality of international trade, in the specific case of the agricultural
sector, is far from that first best theoretician called free trade. Why? To resolve this

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question, it is necessary to understand that the agricultural sector is special and

different from the other sectors of the economy and that the conservation of
agricultural activities translates into a benefit for all of society. When a product is
purchased from a peasant, not only the product itself is received, but also the lawful
and peaceful occupation of the national rural territory (Mypimes, 2017).

In other words, in addition to a product, peace and tranquility is also received from
the peasant in the countryside and, therefore, peace and tranquility in the cities. Of
course, this positive externality for society would never be reflected in the free
market price of agricultural products. But since societies value this positive
externality, we then accept distortions in the price of some products in the agricultural
sector in order to make them economically viable and profitable for farmers
(Mypimes, 2017).
In practice, international trade in the agricultural sector suffers from four types of
distortions or barriers.

First, there are the tariff barriers. These include ad-valorem tariffs (percentage of the
price of the good), specific tariffs (a certain value on the price of the good), quotas
(import quotas).
Second, there are the non-tariff barriers, whose restrictive effects on trade are in
many cases greater than the tariff barriers. Among these types of distortions, the
sanitary technical and phyto / zoo standards that are imposed for the importation of
products stand out.
Third, we have export subsidies. Given their fiscal capacity, developed countries
prefer to protect the rural sector with domestic aid and export subsidies.
Developing countries have to resort to tariff barriers to protect our rural producers. It
is very important to keep in mind that what is negotiated in an FTA is border support
(tariffs). The reason is simple. In a bilateral FTA it is not feasible to negotiate internal
aid because it is impossible in practice to identify which products enter a country with
aid and which do not. Therefore, domestic aid will not be negotiated in this treaty
with the United States (Mypimes, 2017).
First, because, just as the United States cannot negotiate in this treaty the internal aid
that its producers receive.
Second, because as the Democratic Security policy progresses successfully and the
defeat of the narco-terrorist threat becomes more evident, there will be considerable
and increasing increases in employment and in national agricultural production.
Third, because E.U., it is the main commercial partner of Colombia. In effect, it
receives 40 percent of our agricultural exports and our trade balance with said
country has a surplus of 500 million dollars (approximately 1,100 million dollars of
exports against 600 million dollars of imports).
Fourth, because the United States is the richest market in the world. It is made up of
300 million consumers with an average annual income of $ 30,000 per person.
Fifth, because the United States is a protected market, and therefore a high-price

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market for many agricultural products.

Sixth, because if we do not negotiate and sign the FTA, we lose preferential access to
the United States market at the hands of our competitors who have already signed an
FTA with that country (Central America, Chile, Australia, etc.).
Seventh, because the signing of the treaty is the way to perpetuate beyond 2006 the
benefits and job creation attributable to the preferences that the United States grants
u s w i t h t h e A t p d e a .
And eighth: because as security, technological development and advances in
infrastructure (irrigation and roads) generate increases in the productivity of the
agricultural sector, the profitability of agricultural activities will increase (Mypimes,
2017).
2.2. Empirical review of the literature

In 1994, the North American Free Trade Agreement (TMEC) enters into force,
creating one of the largest free trade zones in the world and establishing the basis for
strong economic growth and greater prosperity for Canada, the United States and
Mexico. For 15 years, the TMEC has demonstrated how free trade contributes to
increased wealth and competitiveness by providing true benefits to families, farmers,
workers, manufacturers and consumers. (NAFTA de hoy, 2017).
The North American Free Trade Agreement (TMEC) is a regional agreement
between the Government of Canada, the Government of the United Mexican States
and the Government of the United States of America to create a free trade zone
( S e c r e t a r i a d o d e l T L C A N , 2 0 1 4 )
The North American Free Trade Agreement (NAFTA) or United States, Canada and
Mexico Agreement (TMEC) is the set of rules that Mexico, the United States and
Canada agree to sell and buy products and services (Castro, 2008).

Export is tosend national or nationalized goods for use or consumption abroad"

(Minister of Foreign Affairs and Cooperation, 2017). Exports are sent abroad to
obtain plant products through knowledge developed by man, destined to cultivate the
land.Production sent abroad from the primary sector that uses cultivation as its main
activity obtains raw materials.

2.3 Contextual framework of exports in Sinaloa

According to data from the SEDECO COFOCE information system, in Sinaloa at
the end of 2015, the agro-food and agriculture sectors contributed 62 percent of total
exports in the State. According to this source, the main exporting company in Sinaloa
is Sukarne SA de CV Grupo VIZ, with a participation of almost 28 percent of total
exports. Followed by the auto parts company located in the city of Los Mochis,
Deplhi de México SA de CV, and Envases Universales de México which is in
Mazatlán and the agro-industrial sector Citrofrut and Conservas La Costeña, with
operations in Rosario and Guasave. The existing companies at the end of 2015
registered in this system was 607 exporting companies (CODESIN, 2017). See table

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1 below.

Table 1: Of the total of existing companies at the end of 2015 registered in this
Sinaloan export system.

Source: CODESIN Sinaloa Council for Economic Development (2015).

2.3.1 14 countries opened their market to Mexican products in 2016
In 2016, 14 countries opened their markets to receive, some for the first time, others
after certain limitations, animal products from Mexico.As a result of the negotiations
of sanitary protocols carried out by SAGARPA with the authorities of 14 countries
and the European Union, the opening of markets was achieved in 2016 for 18
Mexican products, nine of animal origin and nine vegetables, explained the federal
agency. Due to the negotiations that were carried out through the National Service of
Health, Safety and Agro-Food Quality (Senasica) with various nationals, the
prohibition to export pathogen-free eggs and egg products to the European Union
was lifted and the market for Mexican honey reopened in Saudi Arabia (Torres,
2017).
Agro will have a privileged place in any negotiation: SAGARPA Regarding
products of plant origin, since last year, Mexico has exported blueberry to China;
table grape from Sonora to Australia; tomato seedlings to the United States and sugar
cane (in vitro or hardened) to Peru. In addition to sorghum brushes to Chile; stevia
plants to Guatemala; corn seed to Ecuador; Chili seed to Portugal and amaranth grain
for consumption in the neighboring northern country, Turkey and the European
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Union (Torres, 2017).

According to information from SAGARPA, this year it is expected to expand the
offer of Mexican products abroad, for which talks have already started with health
services from more than 15 nations. About 13 Mexican products of Mexican origin
are expected to “step on” the land of countries such as Russia, China, Indonesia, Iran,
Singapore, Vietnam, Taiwan and Japan for the first time (Torres, 2017).

1. Materials and methods

3.1 Type of research
It is an exploratory investigation, it has the primary objective is to facilitate a greater
penetration and understanding of the problem that is faced. It is analytical because it
is descriptive and is more linked to statistical and control data, in order to generate a
hypothesis about what happened, or to occur, predict failures or events. And of an
empirical type since it is based on experimentation or observation (evidence).
3.2 Research design

Table 2: Research design

Variable Description Dimensions Indicators Research Operacionalizati Statistical

instrumen on of variables analysis
ts
X0 "The North US exit Bibliogra Review of
TMEC American Free from the phic practical case
Trade Renegotiati treaty. analysis Analytical
Agreement or on Bibliographic Study
NAFTA is a Exports analysis
trade agreement Advantage Hemerogr Explorat
between the Commerc aphic ory study
three countries Disadvanta e Analysis
in North ges
America: Empirical
Canada, the study
United States of
America and
Mexico."
(TMEC, 2016:
s.p.).
(NAFTA, 2016:
s.p.).

Y0 Product of the Production GDP Bibliogra Review of Analytical

primary sector distributio phic practical case Study
Agricult that you dare Commerce n network analysis
ural from cultivation GDP per Hemerographic
Exports as a production Red de capita in Hemerogr Analysis Explorat
activity obtains distribution Sinaloa aphic ory study
raw materials analysis
Opening
to new Empirical
markets study
Logistics
Source: self-made
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3.3 Research construct

Figure 1: Research construct

Source: self-made
3.4 Research instrument
The instrument used in this research project is bibliographic analysis and
hemerographic analysis because it focuses on the renegotiation of the NAFTA
(North American Free Trade Agreement) for which this research is based mainly on
agricultural exports of the state of Sinaloa was proposed with indicators such as the
US exit from the TMEC, Exports-Trade, GDP and GDP Per capita of Mexico,
opening to new markets, logistics. Materials and methods should be described in
sufficient detail to allow others to replicate and build on published results.

3.5 Data analysis

3.5.1 Quarterly GDP growth annual rate

Figure 2: Quarterly GDP growth annual rate

Source: El Financiero (2017).

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The Mexican economy grew 2.9 percent at an annual rate in the first quarter of 2016,
according to preliminary figures from the National Institute of Statistics and
Geography (INEGI). This advance represents the best first quarter for Mexico since
2013, and the highest quarterly growth since the second quarter of 2014.

3.5.2 Growth of the primary sector

Figure 3: Growth of the primary sector

Source: El financiero, (2017)

While the primary activities, that is, those related to agriculture, advanced 3 percent
at the annual rate, surpassing the 2.9 percent advance that occurred last year.

3.5.3 Depreciation impact on wealth of Mexicans

Figure 4: Depreciation impact on wealth of Mexicans

Source: The Economist (2017).
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GDP per inhabitant represents the economic value of the goods and services
generated by a nation that would correspond to each inhabitant if wealth were
distributed equitably (BANXICO, 2017) (CONAPO, 2017). The Gross Domestic
Product (GDP) is the value of the final goods and services produced by a country
during an established period. GDP per capita or per capita is this same measure, but
divided by the population of a country. In 2014, the GDP per capita for Mexico
reached its highest level in history, but only two years later, this measure registered a
drop of more than 20 percent.

The GDP per capita represents the economic value of the goods and services
generated by a nation that would correspond to each inhabitant if wealth were
distributed equitably. This implies that, if a country's Gross Domestic Product
increases while its population remains stable, then the GDP per capita increases; but
if the population increases while the GDP remains constant or decreases, then the
GDP per capita will also decrease.

3.5.2 Export logistics

The success of international trade in any country or region is essential without an
access door that allows the proper transit of goods and services. In Mexico, the port of
Veracruz is an example of the country's commercial and industrial development since
the 16th century. Today, its importance is indisputable and its challenges are
increasingly complex, as the evolution of industrial processes and the type of goods
test any logistics system.The logistics chain begins with the production of the raw
material and ends at consumption centers. In this sense, seaports are nodes in the
physical network of maritime transport; and their competitiveness depends on the
fact that those they offer are fast, flexible and safe for international trade and shipping
lines.

According to a study by the Inter-American Development Bank (IDB, 2017) (IDB)

on cargo logistics in Latin America and the Caribbean, there are at least three
perspectives to consider to understand the importance of the logistics process in an
economy: the generator cargo (industry), cargo operator (services) and the public
policy environment. It is the orderly interaction of these three elements that allows
logistics operation costs to be consistently reduced over time.
In the first stage of the expansion, 16,000 million pesos will be invested by the
Federal Government and by the end of the project in 2030, they will have invested
70,000 million pesos, of which 42,000 would be private and 28,000 publics. The
World Bank (Banco Mundial, 2010) (WB) ranked Mexico, in 2010, in 50th place out
of 155 countries with a performance of 3,051. Some consultancies have estimated
that logistics costs in Mexico represent 15.3% of the Gross Domestic Product (GDP).
The logistics costs of Mexican companies are 10.3% of sales, of which 40%
correspond to transportation costs and 60% to inventories, order processing, storage
and planning of transportation operations management (Market, Real Estate, 2017).

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Recently, the federal government and the IDB carried out a study on the National
System of Logistics Platforms (SNPL) (National System of Logistics Platforms,
2017), which defined that the system would be made up of 85 logistics platforms,
highlighting the investment of infrastructure and services, to increase the efficiency
of supply chains. In this context, it can be observed the performance of Mexican ports
in recent years. For example, in 2010, commercial imports by sea were 75.2 million
tons and 122.2 million tons were exported to all regions of the world. In 2013, 81.1
million tons were imported and 129.1 million were exported (Market, Real Estate,
2017).This increase was possible because Mexico traded this way, both on the Gulf
and Caribbean coast (15 ports) and in the Pacific Ocean (20 ports), the port of
Veracruz being the most representative for the manufacturing industry.

According to the Economic Commission for Latin America and the Caribbean
(ECLAC, 20) (CEPAL, 2014), in the ranking of containerized port movements in
the 2010 region, the port of Veracruz ranked 18th; and for the first semester of 2013 it
was ranked 16. On the other hand, in 2014, according to the study of port technical
efficiency, prepared by the IDB, the port of Veracruz occupies the 22nd efficiency
site of a total of 63 ports in Latin America and the Caribbean (Market, Real Estate,
2017).The port of Veracruz is the most important commercial port in the country.
Through it, 100% of purely commercial cargo transits and the only one that
significantly operates the six most important cargo segments nationwide:

Exports registered a decrease of 10.7% when moving 4,730, 856 tons. Trade has as a
priority to carry out the expansion of the port because this will promote employment
and will boost the economy of the region and the state. The entities where most of
these vehicles come from are: Puebla, Estado de México, Aguascalientes, Coahuila,
Tamaulipas, Nuevo León and Veracruz. This port is the most representative for the
export and import of motor vehicles. According to the following table, the port of
Veracruz moves 66% of total vehicle exports by sea (Market, Real Estate, 2017).
In addition, the port of Veracruz, with respect to the movement of vehicles in roll on /
roll-off, has a performance of 128.8 UHBO (unit of hour ship in operation).
Currently, the port of Veracruz has 48 companies that offer related services in terms
of:For the Mexican State, the development of the maritime-port subsector is key to
the economic growth of the country; therefore, the interaction of the private sector
and the government is important, and the latter has the task of carrying out public
policies in order to strengthen and make it more efficient as well as modernizing it.
In the coming decades, the port of Veracruz will be one of the most important
logistical-maritime enclaves in the country and on the Atlantic coast to communicate
the central region of Mexico with the markets of the United States and Europe.
Likewise, it will connect the national industry with global supply chains, which will
allow it to be more competitive and face the challenges of global trade and
manufacturing (Market, Real Estate, 2017).

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3.6 Export movements by system, Mexico 2013

Figure 5: Export movements by system, Mexico 2013

Source: Market, Real Estate 2017

In this pie chart it is made clear that the most used transportation in Mexico for 2013
is by land, followed by sea.
The three products with the highest export of Sinaloa are Tomato, Corn and wheat.
Sinaloan Exports Of the total Sinaloan exports to other countries, 82.5 percent
corresponds to sales to the United States market. In income, this represents 8.9
percent of the State Gross Domestic Product. During 2014, Sinaloa exported
products for about 770 million dollars, which represented 0.2 percent nationally. The
main shipments were tomato, chickpea, beef, fish oil and flour, shrimp, squid and
tuna. The North American Free Trade Agreement (TMEC), which the United States
intends to renegotiate, has represented a 339 percent growth in the value of Mexican
exports to the United States since its implementation.
Nationally, more than 80 percent of exports go to the United States. This represents a
high dependency of the country's productive sectors with the neighbor to the north.
And the larger a state's trade with the United States, the greater its vulnerability.
Vegetables were the main product in the period from January to June 2010. In the
same period, the 10 main imports from the North American market to our country
were corn, soy, soy residues, wheat, pork ham, other foods, boneless meat, powdered
milk and cream, fructose and starch waste.
Twenty-two states in Mexico export vegetables to the United States. These exports
represented about 583 thousand 795 million dollars, Guanajuato being the leading
state. 21 other states imported vegetables from the United States for 23 million 139
thousand dollars. That 2014, Sinaloa exported vegetables to the northern neighbor
for a value of 12 million 139 thousand 433 dollars. In turn, it imported American
vegetables for $ 84,628. Thus, the value of the exports of vegetables from 22 states to
the United States exceeds their imports.

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The bilateral relationship is key If the United States market is important to Mexico,
the same thing happens in reverse. According to the United States Department of
Commerce, Mexico is the second destination for exports from that country with 15.7
percent of the total, preceded by Canada with 18.6 percent and is the third largest
provider, with 13.1 percent of imports, after China, which accounts for 21.5 percent,
and Canada, which accounts for 13.2 percent. For example, Mexico is the second
commercial partner of the state of Michigan (our country receives 31.03 percent of
the total exports of that North American entity). In the case of California, the
Mexican market imports 12.53 of the products that that entity sends abroad. For
Nebraska this is 14.53 percent.

3.7. Vegetable exports and imports, Mexico-EU

It is noteworthy that the US content of Mexican exports to the American market is
almost 40 percent of the components of these products, according to the National
Bureau of Economic Research. Renegotiation, under the magnifying glass The
announced revision of the Free Trade Agreement draws the attention of the economic
sectors of our country. Achieving maintenance and expansion of the agreements is an
urgent need for many states highly dependent on the United States market for their
exports.
In the case of Sinaloa, this commercial relationship represents 8.9 percent of the state
GDP and this is mainly for food. There are other more vulnerable entities. Examples
of this are Chihuahua, Baja California, Coahuila and Tamaulipas. For all these states,
exports to the United States represent more than 50 percent of its Gross Domestic
Product and, for the most part, are from the manufacturing sector (El debate, 2017).

3.8 Research limitations

During the preparation of this research, there were time limitations since it was
carried out during a seven-week stay, and the research period could not be exceeded,
the money limitation was found since the necessary financial resources were not
available to carry out a field research, data collection since the variable “Y” which is
agricultural exports made it difficult to extract information, and reliability due to the
information collected.

1. Results
As an analysis of the results of this research, Mexico has quarterly GDP growth at an
annual rate in the last three years with a constant 2%, GDP per capita has been
increasing until 2014, where from that year it has been decreasing, it has a behavior of
the primary sector that has been in constant change for 2015, down to minus 1 but for
2016 it has increased up to 6% according to the financier, Mexico's exports to the US
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have grown by 339% in terms real since the implementation of the NAFTA with less
quantity are imports by Mexico from the US with 151%.

Mexico-US trade has been in constant change, it is currently at 81%, in 2014 the
Mexican states exported to the United States for a total value of 583 million 794
thousand 468 dollars, Sinaloa with the amount of 12, 139, 4443 dollars of which the
three exported vegetables are tomato, corn and wheat, Mexico imported a smaller
quantity of US vegetables for a total value of 23 million 139 thousand 098 dollars,
Sinaloa exports to the US 82.5%.Of the Sinaloan exporting companies in first place
is Graneros United with 34, 893, 112.75 (USD) with participation of 1.35 and in the
general ranking of exporting companies is in 12th place. In second place,
Agroindustrias de Andar de Delicias SA de CV with 28, 883, 344.53 with
participation of 1.13 in the general position 14, and in third place Agroexportadora
del Noroeste SA de CV with 24, 127, 318.57 participation 0.94 according to
CODESIN.
In 2010, the World Bank places Mexico in 55th place out of 155 countries with
transportation performance 15th in port technical efficiency according to the
economic commission for Latin America. According to Yuridia Torres, the financier
Mexico can expand and open its market to new countries such as China, Australia,
Peru, Chile, Guatemala, Portugal, Turkey, Russia, Indonesia, Iran, Singapore,
Vietnam, Taiwan, Japan, and the European Union. It would be a greater advantage if
the renegotiation of the TMEC were not to be satisfactory for Mexico.

4.1 Hypothesis testing

The general hypothesis stipulates that the renegotiation of the TMEC has a negative
effect on Sinaloan agricultural exports, with the in-depth investigation that was
carried out, it is concluded that possibly if the United States decides to exit the treaty,
it would greatly affect Sinaloa. As the main export destination to that country with
82.5 percent sales to its market, but this is no longer a fact with greater probability
since President Donald Trump is considering renegotiation after the new elections in
Mexico in 2018 to further facilitate the procedures that they are necessary and not the
final solution, which leads us to conclude that the hypothesis is negative.
Renegotiation together with the advantages and disadvantages has a direct
relationship with agricultural production in Sinaloa, with a serious negative effect,
since overproduction would be created if the new destination for exporting from
Sinaloa was not quickly available.

Renegotiating together with the advantages and disadvantages has a direct

relationship with agricultural trade in Sinaloa, it would negatively affect since
Sinaloa would be left without its main export destination, but it would have the
alternative of opening up to send its products to new countries like China, Peru,
Chile, Guatemala, Portugal, Turkey, Russia, Indonesia, Iran, Singapore, Vietnam,
Taiwan, Japan and the European Union, which are countries that in 2016 opened their

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market to Mexico.
The renegotiation together with the advantages and disadvantages has a direct
relationship with the agricultural distribution network in Sinaloa, it would greatly
affect the sea and land ports since they are the most popular transportation routes in
Mexico, being used more frequently auto transport and later the seaports, the most
used being the one in Veracruz.
4.2 Contributions
Mexico is a very capable country, with sufficient resources to stand out before other
countries in Latin America and the world, it is only a matter of having an efficient
president who knows how to take advantage of and exploit the riches of this country,
who focuses on being persevering and growing every day more to become a
developed country, increasing the quality of life of its inhabitants. Mexico should not
be so dependent on the United States since it can maintain its economy even without
its support. It must eliminate prejudices and uncertainties and export its productions
to new markets, risking out of their comfort zone to obtain even more favorable
results for the Mexican economy.
4.3 Implications
This research can be of great help to the main agricultural exporting companies in
Sinaloa, to different secretaries such as, secretary of economy, SAGARPA,
SEDECO, SENASICA, PROMEXICO, Chambers of Commerce, students of the
Autonomous University of Sinaloa (UAS) to the degrees of Economy and
International Commerce.
4.4 Possible line of investigation
In this context, the expansion of the Veracruz port complex, which is expected to be
completed in 2025, is an indicator of public policy aimed at strengthening the port
network. With a total investment of 60,000 million pesos, and 23,933 million pesos
between 2013 and 2018, the port will achieve the highest number of maritime entries
and freight mobility in accordance with the National Infrastructure Program 2014-
2018. With this, an expansion of the port in the north is expected in: breakwater,
navigation channel, piers and specialized terminals, specialized equipment, new
yards and storage area.
4.5 Research limitations

In this research, there were different limitations due to the difficulty of obtaining
specific information when compiling the concepts that defined the variable "Y",
which is called agricultural exports, and the reduced amount of time that it had to
carry out the research project.

2. Conclusions
As a general conclusion of this research project, it is obtained that the renegotiation of
the TMEC does not have to put Mexico in a wave of uncertainty regarding its exports
since, if President Donald Trump accepted the renegotiation and not the immediate
departure from his country of treaty indicates that a fair agreement was reached for
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the three countries included in this, which have different clauses that protect them
from any unfair act that is intended to be done, this made us investigate new
possibilities for export growth for Mexico since Countries like Chin, Australia,
Singapore have opened their markets for Mexico to export to them, we obtained very
satisfactory results since we found that it is one of the countries with the best logistics
since it is in place 50 out of 155 countries.

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de-origen-en-renegociacion-del-TMEC
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industria-mexicana: www.realestatemarket.com.mx
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Ministro de asuntos exteriores y de cooperación., México, recuperado 20/07/2017 en
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Torres Y. (20 de 02 de 2017). 14-paises-abrieron-su-mercado-a-productos-mexicanos-en-2016. México, El
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Vol.9 No.1 January - June 2020 ISSN 2249-569X

IMPACT OF BANK MERGERS ON THEIR

STOCK PRICES IN INDIA
* Anupama Angadi

Abstract:
Banking sector plays very important role in every economy & is one of the fastest growing
sectors in India. Mergers & Acquisitions encourage banks to gain global reach, better
synergy, compete with global banks & allow banks to acquire the Non-performing assets of
weaker banks. Through Mergers & Acquisitions, banks will get brand names, new
geographies, and correspondent product offerings but also opportunities to cross sell to new
accounts acquired by the other banks. The main objective of this paper is to assess the impact
of merger and acquisition on their stock prices and on the performance of the bank. This
study is based on the secondary data collected from Magazines, News Paper, Journals, Bank
websites etc.

Keywords: Bank Merger, Banking Sector, Announcement date, Stock price variations.

I. INTRODUCTION
Banking system is the bloodline of any economy and banks are trustees of public money.
Mergers and acquisitions (M&A) have been a popular strategy of business expansion
worldwide. The primarily, concepts involved in mergers are the intention of combining two
firms in order to create synergy and shareholders' value. Banking sector is one of the fastest
growing areas in the developing economies like India. Merger and acquisition in banking
sector has provided evidences that it is the useful tool for survival of weak banks by merging
into large bank. It is found that small and local banks face difficulty in bearing the impact of
global economy therefore, they need support and it is one of the reasons for merger. A merger
is a combination of two companies combines to form a single company. A merger is similar
like an acquisition or takeover the only difference is in merger existing shareholders of both
companies involved retain a shared interest in the new corporation while in acquisition one
company purchases a bulk of second company's stock by willingness or unwillingness of
another company. The largest ever merger in the public sector banking space in India has
taken place on Wednesday April 1, 2020 when six Public Sector Banks were merged into four
large banks in a bid to make them globally competitive. Without stable & effective banking
system, no country can grow. India is a world's largest economic giant.

* Student, MBA department, IEMS B-SCHOOL HUBLI

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Bank of Baroda merged with Dena Bank and Vijaya Bank

A. Definition
A Merger is an agreement that unites two existing companies into one new company.
Mergers are commonly done to expand a company's reach, expand into new segments, or
gain market share. All of these are done to please shareholders and create value.

B. Objectives of the study

1) To understand the reasons of Bank Merger.
2) To understand the impact of bank mergers on customers.
3) To find out the effect of Mergers and Acquisition on the profitability of selected
banks(i.e. Bank of Baroda).
4) To study the benefits of BOB merger with Dena Bank and Vijaya Bank.

C. Scope of the study

1) The present study covers impact of merger of Bank of Baroda, Vijaya Bank and Dena
Bank (2019-20).
st
2) In terms of coverage recent mergers as on 1 April 2020 have been covered.

D. Need for the study

The present study is an attempt to find out the reasons for merging BOB, Dena Bank and
Vijaya Bank and its impact on customers and on their stock prices.
E. Methodology of the study

1) Data Collection: The study is based on secondary data and it is taken from different
sources as follows.
a) Websites, Magazines, Books, Articles & Journals.
b) 10 years values of net profits and EPS have been used to measure the trend
analysis of Bank of Baroda, Vijaya Bank and Dena Bank.
c) Data analysis was done with the help of graphical representation.
2) Graphical Representation: To represent the processing data, following graphs are
used:
a) Line charts
b) Tables

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F. Limitations of the study

1) The major limitation of the present study is selection of one sector such
as banking.
2) The study is based on the secondary data collected from Magazines,
Newspaper, journals and various websites; hence the data available is
not recent.
3) The study is restricted to the impact of merger of Bank of Baroda,
Vijaya Bank and Dena Bank.

I. THE REASONS OF BOB MERGER WITH DENA BANK AND VIJAYA

BANK

1) The number of Public Sector Banks will come down: Before 2014 the number of
public sector banks were 27 and presently the number has been dragged down to 21 and with
this particular merger of BOB this further came down to 19and with the recent mega merger
now Public Sector Banks are 12 with effect from 1st April 2020.The problem with the present
structure of the public sector banks is these public sector banks account for more than 90% of
the total NPA's in the banking sector and this is the very huge disadvantage or huge burden on
the public sector banks. As the NPA's keeps increasing the financials of the banking sector
will be affected.

2) Recapitalization need will come down: The requirement in terms of

recapitalization for Government of India is also increasing. In the year 2014 the Government
of India announced that they will provide a recapitalization of around 70,000 cr but in a span
of 5 years, that is through budgetary allocation. In the first two years they allocated 25,000 cr
and in the next two years they allocated 10,000 cr. So basically Government of India said they
will provide recapitalization till 2019. But over a period of time the Government of India is
realised that this amount of 70,000 cr is not sufficient for the banking sector. As a result of this
last year itself the government of India has extended this particular idea of recapitalization
from 70,000 cr to more than 2.1 lakh cr.

3) Regulatory burden will come down: It is becoming burden for RBI to regulate all
the participants in the banking sector. On one side RBI has to regulate differentiated banks,
RBI has to regulate regional rural banks, RBI has to regulate scheduled commercial banks
which are private sector banks as well as public sector banks. Since the number of banking
units have kept on increasing the burden to regulate also has increased on the shoulders of
RBI. So What if the number of banks under the public sector banks are reduced the burden on
the shoulders of RBI will also come down. So regulatory burden on RBI also will come
down.
4) The NPA's are very high: The most important concern for the banking sector
presently is non-performing assets. The burden of non-performing assets are very high. The
NPA's as already mentioned will continue to increase even in this particular financial year
and when the NPA's increases the burden on RBI the burden on the government of India as

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well as the pressure on banks themselves will also increase. So basically, if the public sector
banks are reduced by the concept of either privatisation or mergers. The banks can use
economies of scale but essentially the banks will able to use economies of scale the assets
will be pulled in NPA's to certain extent can be controlled.
5) The Penetration/ Reach of These Banks will Increase: The three banks Vijaya
bank is more dominant or more present in southern India whereas Dena bank and Bank of
Baroda are more present in the western India. When merging these three entries the
penetration of the new entity is going to increase across India. And more importantly Bank of
Baroda is considered to be more dominant in terms of FOREX earnings as well astechnology
driven tools. These tools as well as the earnings in FOREX will benefit the new entity. So
basically, this type of merger will promote penetration or reach of these banks.
6) Dena Bank Will Be Pulled Out of Problem: As Dena bank is a weak bank. The
NPA's of Dena bank very recently reported were 22% of total loans given by bank and it was
put in prompt corrective action and RBI has basically stated that Dena bank will not be
allowed to lend in the market. So, Dena bank merger with the strong banks such as Vijaya
bank and Bank of Baroda has made. As a result of this Dena bank will be pulled out of this
particular problem of very high NPA's. The NPA's of Dena bank were the 5th largest in terms
of the banking sector.

II. THE BENEFITS OF BOB WITH DENA BANK AND VIJAYA BANK:

1) The merger of Dena Bank and Vijaya bank with Bank of Baroda will make BOB the
third largest lender in India with a total business of over Rs 14.82 trillion.
2) The consolidated bank would have wider geographical reach with 9,500 plus
branches, more than 13,400 ATMs, above 85,000 employees to serve over 120 million
customers.
3) The 120 + million customers will experience superior banking services and benefits
from wider product range including cash management solution, supply chain financing,
financial planning, wealth management.
4) The merger will also provide benefits to corporate customers of the Dena Bank
because they were facing restrictions on borrowings from the bank. (Limitations imposed by
RBI under Prompt Corrective Action).
5) Bank of Baroda will take benefit from some unique projects from other two-banks
(Plantation financing from Vijaya Bank).

III. THE IMPACT OF MERGER OF BANKS ON THEIR CUSTOMERS

In merger there is an anchor bank and an amalgamating bank or banks. For instance, in the
consolidation that happened in April of 2019, Vijaya Bank and Dena Bank (Amalgamating
banks) were merged into bank of Baroda (Anchor Bank). In effect, the operations of Vijaya
Bank and Dena Bank were handed over to Bank of Baroda.

1) After merger of banks, the accountholders of amalgamating banks will become the
accountholders of anchor banks. For instance, here customers of Dena Bank and Vijaya Bank

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are now accountholders of Bank of Baroda.

2) All accounts of customers will be tagged to a single Customer ID. For instance, if
customer has an account with Vijaya Bank, one with Dena Bank and one with Bank of
Baroda; all three accounts will be allotted to a single customer ID.
3) Customer can also access to a larger number of ATMs and like that of larger branch
network. Bank of Baroda has stated that, “you can use the ATMs of any of the three banks
(Bank of Baroda, Vijaya Bank and Dena Bank), no ATM transaction charges will be levied
4) So, a plus point is that hopefully the branch network would become larger so access to
bank branches will become easier for customers provided the merged entity does not shut
down all branches of merging banks.
5) Impact on existing Borrowers: Virendra Kumar sethi, Head of Assets & Mortgages,
Bank of Baroda explains, “All MCLR linked retail loans are migrated to the MCLR of the
amalgamated bank. In the case of Dena and Vijaya bank, MCLR linked retail loan customers
have migrated automatically to the bank of Baroda MCLR.
6) So, suppose amalgamating banks' (for ex: Vijaya bank (8.75%) and Dena bank
(8.80%)) MCLR rate is higher than the anchor bank (BOB 8.65%), then customers of
amalgamating bank will be benefited from lower MCLR of anchor bank. Means customers
will have positive impact by a reduction in MCLR and vice versa. But for customers of
anchor bank (BOB) there was no impact.
7) Paperwork: paperwork and keeping financial trail of fixed deposits made will
increase a bit as these will be transferred into the merged bank.
8) Shareholders: shareholders of all publicly listed banks involved in the mergers will
be impacted. Shareholders of amalgamating banks will be allotted shares of the anchor bank
in a pre-decided ratio.

IV. OVERVIEW OF RECENT MERGERS & ALL 12 PUBLIC SECTOR

BANKS IN INDIA
(1st April 2020)

Government of India has consolidated 10 Public Sector Banks into 4 banks. The
announcement of this mega Merger was made by union Finance Minister Nirmala
Sitharaman in 2019. However, RBI notified it in the late March through its circular to merge
ST
banks in the new financial year (1 April2020). As per finance minister, the merger would
help to manage the capital more efficiently. After this merger the country is having a total of
12 Public Sector banks, including State Bank of India (SBI) and Bank of Baroda (BOB).
This will result in seven large public sector banks and five smaller ones. There were as many
as 27 PSBs in 2017. The government move to reduce the number of Public Sector Banks
from the existing 21 to 12 is for creating 3-4 global sized banks.

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Recent merger of Banks with effect from 1st April 2020

SL. Anchor Banks Amalgamating Banks
No
1. Punjab National Bank (PNB) Oriental Bank of Commerce and United Bank of
India

2. Indian Bank Allahabad Bank

3. Canara Bank Syndicate Bank

4. Union Bank of India Andhra Bank and Corporation Bank

Public Sector Banks (Government Shareholding %, as of April 2020)

1. State Bank of India (61.00 %)

2. Bank of Baroda (63.74 %)
3. Union Bank of India (67.43 %)
4. Punjab National Bank (70.22%)
5. Canara Bank (72.55 %)
6. Punjab & Sind Bank (79.62 %)
7. Indian Bank (81.73 %)
8. Bank of Maharashtra (87.01 %)
9. Bank of India (87.0535 %)
10. Central Bank of India (88.02 %)
11. Indian Overseas Bank (91 %)
12. UCO Bank (93.29 %)

VI. MERGER OF BANK OF BARODA WITH VIJAYA BANK AND DENA

BANK

Continuing its merger plan for public sector banks, the government has finally completed the
mega-merger of one weaker lender Dena Bank and anchor lender Vijaya Bank with a 111-
year-old Bank of Baroda (BOB).The government on 17th September 2018 said state owned
Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country's third
largest bank in India.The merger was approved by the Union Cabinet and the boards of the
banks on 2 January 2019. Under the terms of the merger, Dena Bank and Vijaya Bank
shareholders received 110 and 402 equity shares of the Bank of Baroda, respectively, of face
value Rs 2 for every 1,000 shares they held. The merger came into effect on 1 April 2019. All
these banks are different from each other, have different business operations, hold different
positions and have different experiences. This mega entity has the ability to do more and
reach further to fulfil customers with world-class offerings backed by robust
processes.While there won't be much material change in BOB considering it is the acquirer,
but customers of Vijaya Bank and Dena Bank will see changes in their way of carrying a
financial transaction.

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VII. DATA ANALYSIS

A. Bank of Baroda
Table No: 1 Calculation of financial performance of BOB

2016 2017 2018 2019

Net Profit (in cr) -5,395.54 1,383.14 -2,431.81 433.52

EPS -23.89 6 -10.53 1.64

Total Assets/ 671,376.48 694,875.42 719,999.77 780,987.40
Liabilities (in cr)

Source: BOB
Fig No: 1 Graphical representation of financial performance of BOB

Source: Computed
Interpretation
1) In the above table the net profit in 2016 was negative i.e. Rs -5,395.54 cr. later it
increased to 1,383.14 cr. In 2018 again decreased to -2,431.81 cr. and again slightly
increased to 433.52 cr. in 2019.
2) EPS was negative in 2016 i.e. -23.89 then slightly increased to 6 in 2017 and again
decreased to -10.53 in 2018 and again slightly increased to 1.64 in 2019.
3) Total assets or liabilities were low in 2016 i.e. 671,376.48 cr. Later it slowly
increased to 694,875.42 cr. and later it increased to 719,999.77 cr. in 2018 and then
increased to 780,987.40 cr. in 2019.

B. Dena Bank

Table No: 2 Calculation of financial performance of Dena Bank

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2016 2017 2018

Net Profit (in cr) -935.32 -863.62 -1,923.15

EPS -15.50 -11.89 -18.06

Total Assets/ 133,441.64 129,530.51 120,859.80

Liabilities (in cr)

Source: Dena Bank

Fig No: 2 Graphical representation of financial performance of Dena Bank

Source: Computed
Interpretation
1) In the above table the net profit of Dena Bank was negative in 2016 i.e. Rs -935.32 cr.
again it slightly decreased to Rs -863.62 cr. in 2017 and further also decreased to Rs -
1,923.15 cr. in 2018.
2) EPS was also negative in 2016 i.e. Rs -15.50 later it decreased to Rs -11.89 in 2017
and then decreased to Rs -18.06 in 2018 also.
3) Total assets or liabilities were high in 2016 and later it slowly decreased to Rs
129,530.51 cr.in 2017 and further decreased to Rs 120,859.80 cr. in 2018.
C. Vijaya Bank

Table No: 3 Calculation of financial performance of Vijaya Bank

2016 2017 2018
Net Profit (in cr) 381.80 750.49 727.02

EPS 4.44 7.57 6.83

Total Assets/ 145,408.74 154,881.58 177,632.05

Liabilities (in cr)

Source: Vijaya Bank

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Fig No: 3 Graphical representation of financial performance of Vijaya Bank

Source: Computed
Interpretation
1) In the above table the net profit was low in 2016 i.e. Rs 381.80 cr. later it increased to
Rs 750.49 cr. in 2017 then slightly decreased to Rs 727.02 cr. in 2018.
2) EPS was low in 2016 i.e. Rs 4.44 then it slightly increased to Rs 7.57 in 2017 then
later it decreased to Rs 6.83 in 2018.
3) Total assets or liabilities were low in 2016 i.e. Rs 145,408.74 cr. and later it was
increased to Rs 154,881.58 cr. in 2017 and then again slightly increased to Rs
177,632.05 cr. in 2018.

D. Trend Analysis for 10 Years

Table No: 4 Calculation of Net Profits of BOB for 10 years
Trend Analysis
Net profits of Bank of Baroda

Years Net profits

2010 3,179.00
2011 4,241.68

2012 5,006.96
2013 4,480.72

2014 4,541.08
2015 3,398.44

2016 -5,395.54
2017 1,383.14

2018 -2,431.81
2019 433.52

Source: BOB 79
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Fig No: 4 Graphical representation of Net profits of Bank of Baroda for 10 years

Source: Computed
Interpretation
1) In the above graph it represents the trend analysis of BOB bank for 10 years.
2) In the above graph X axis represents no of years and Y axis represents net profit
values.
3) In the above graph dark line represents net profits and dotted line represent liner
trend line.
4) In 2010 the net profits were 3,179.00 and in 2011-2012 it started increasing,
slowly it started decreasing from 2013 to 2018 and in 2019 slightly increased to
433.52

E. Stock Performance of Bank of Baroda

Historical Share price data of Bank of Baroda (2019-2020)

Date Closing Price
April – 2019 116.4

May - 2019 133.25

June – 2019 121.85

July – 2019 106.65

Aug – 2019 92.6

Sept – 2019 93.05

Oct – 2019 97.2

Nov – 2019 104.9

Dec – 2019 101.9

Jan – 2020 92.65

Feb- 2020 76.5

Mar – 2020 53.55

Apr – 2020 49.2

Source: www.moneycontrol.com
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Chart showing the stock movement since from 1st April 2019(merger w.e.f)

Source: Computed
Stock performance of BOB (Anchor Bank) and amalgamated banks
The merger of Bank of Baroda with Dena Bank and Vijaya Bank was announced by the
government in September 17, 2018. But merger came effective from April 2019. The share
price of BOB before announcement of merger was Rs 133.05. In the quarter ended
September 2018, the government owned 68.77% in Vijaya Bank, 80.74% in Dena Bank and
63.74% in Bank of Baroda. The government will own 65.74% in the merged entity.
1) On January 2, 2019 Wednesday BOB announced share swap ratio for Dena bank and
Vijaya bank shareholders. BOB said shareholders of Vijaya Bank and Dena Bank
could get 402 and 110 equity shares of BOB for every 1000 shares they held.
2) As per January 2 closing price, Vijaya Bank's 1,000 equity shares amounted to Rs
51,050 against 402 equity shares of BoB worth Rs 47,939, translating into a loss of 6
per cent. Likewise, the market value of 1000 shares of Dena Bank, stood at Rs
17,900 against BoB's 110 equity shares worth Rs 13,118, translating into a loss of 27
per cent.
3) Dena Bank share price was worst hit. On Thursday, Dena Bank shares fell 20% to Rs
14.40 a share, while Vijaya Bank ended at Rs 47.35, down 7.25%. BOB reacted
positively, gaining 3.3% to Rs 123.35.
4) Based on the price on the day of the merger announcement, the proposed share swap
ratios imply a discount of 30% and 11% to Dena Bank and Vijaya Bank, respectively.
While the swap ratio appears fair in respect to Dena Bank owing to the multiple
challenges faced by the bank, we believe Vijaya Bank shareholders have nothing to
gain from this merger," Motilal Oswal said in a note on 2 January.
5) “The favourable swap ratios have resulted in 8.2% and 2.2% increase in book value
and adjusted book value for BOB” Motilal Oswal said.
6) The total number of shares post-merger comes to 3,425 million, while net worth of
combined entity stands at Rs 55,600 crore.
7) As merger was with effect from April 2019, from 1st April (132.70) to 28th June
(121.60) there was -8.36% loss in the first quarter.
st th
8) From 1 July (121.25) to 30 September (93.05) there was decrease of -23.26%

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decrease i.e. loss in Second quarter of 2019.

9) From 1st October (91.30) to 31st December (101.90) there was 11.61% increase i.e.
gain in the third quarter of 2019.
10) In the last fourth quarter of 2019 20, from 1st January 101.90 to 31st March (53.55)
there was -41.35% decrease i.e. loss in 2020.
11) As per the information in money control app, as on 22nd may 2020, 52 week low price
was 36.00 and 52 week high price was 144.00 and 1 year return was -70.31%.

F. Pre-merger and Post-merger financial performance of Bank of Baroda

The above table shows the comparative profitability situation of Bank of Baroda. The
average earning per share (EPS) before the merger had been Rs. 20.04 which increased to Rs.
34.90 after the merger.so it reveals that after the merger the EPS enhanced significantly. The
yield from advances decreased from 18.89% to 11.79% after the merger. The yield on
advances decreased due to underutilisation of advance in post-merger period. The yield on
investment also decreases from 11.13% to 8.37%.
The yield on investment decreases due to non-utilising the investments in optimum level in
the post-merger period.
Return on assets does not change with respect to the merger. The reason is proper utilisation
of assets in both pre and post-merger period. Return on equity witnessed minor change in
post-merger period (14.10%) as compared to the pre-merger period (15.81%). The net-profit
ratio decreased from 27.88% to 22.26% shows significant impact of merger. Profit per
employee increases three times after the merger shows significant impact. The business per
employee rose 2.81 times after the merger.
The increase in business per employee and profit per employee shows better utilisation of
human resources. Overall the merger has negative impact on Return on Equity (%), Net
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Profit ratio, Yield on Advances (%) and yield on Investments (%) and positive impact on
Return on assets, Earning per share, Profit per employee and business per employee.

VIII. FINDINGS
1) The merger of Dena Bank and Vijaya bank with Bank of Baroda will make BOB the
third largest lender in India by with a total business of over Rs 14.82 trillion.
2) The total number of shares post- merger comes to 3,425 million, while net worth of
combined entity stands Rs 556 billion.
3) The merged bank will have an advances base of Rs. 6.4 lakh crore. And deposit base
of Rs. 8.41 lakh crore.The combined entity will have 85,000 plus employees, over
9500 branches and 13,400 ATMs.
4) After merger, the government will own 65.74% in the merged entity i.e. BOB. That
comes to 2,251.59 million shares.
5) Dena Bank has gross NPA ratio of 22% among the highest across the industry.
Vijaya bank, on the contrary, with a gross NPA ratio of 6.9%. Bank of Baroda, the
largest of the three, has a bad loan ratio of 12.4%.
6) Reacting to the announcement, Dena Bank share price slipped as much as 19.77% to
Rs 14.40 on BSE, while Vijaya Bank share price slipped over 7% to hit its intraday
low of Rs 47.25. Bank of Baroda reacted positively, gaining 3.3% to 123.35.
7) As per the agreement i.e. share swap ratio, Vijaya Bank shareholders will get 402
BOB shares and Dena Bank shareholders will get 110 BOB shares for every 1000
shares held by them in respective banks.
8) As per January 2, 2019 closing price, shareholders of Dena Bank are at maximum
loss.as they stand to lose Rs 4.80 per share because of merger, followed by Vijaya
Bank shareholders who will lose Rs 3 per share.
9) In the first quarter of 2019-20, there was -8.36% decrease in share price, in second
quarter -23.26% has been decreased , in third quarter there was gain of 11.61% and in
the last quarter there was again decrease in share price of -41.35%.

IX. SUGGESTIONS
In short term period the benefit of merger we may not get as investors but for sure if acquiring
company is strong as Bank of Baroda is third largest lender in India, then investors will
benefit in the long term. Moreover based on the today's market situation, as because of
COVID 19 the share market is highly impacted. Because of this COVID- 19 impact also the
real benefit of merger was not actually reflected in the share price. Once the market becomes
normal that is out of this dangerous Virus the market will start reacting positively. As the
share market is coming down, I think it will be the best time for the investors to make an
investment in the stock market
X. CONCLUSION
With regard to reactions to the announcement of merger, the market has initially tried to react
negatively to the most of the banks' acquisition announcement but overall there was either

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destruction or creation in shareholder wealth of investors of public and private sector banks.
The tripartite amalgamation reflects the government's focus towards consolidation and
strengthening of public-sector banking and also to deal with the raising problematic issues
like non-performing assets (NPAs) and default of loans.. And the main reason for merger was
the merged entity or the new entity the total business will be around 1,482,325 Lakh Cr and as
the result of this merger this particular bank or the new entity which will be created will be the
3rd largest bank in India. Merger is useful strategy, through this Banks can expand their
operations, serve large customer base, increases profitability, liquidity and efficiency but
overall growth and financial illness cannot be solved from mergers.

REFERENCE

1) https://www.livemint.com/Money/JLD4vejfvElt0ESkclmZJI/Dena-Bank-Vijaya-
Bank-shares-fall-as-BoB-merger-deal-seen-a.html"
2) http://www.moneycontrol.com
3) http://www.bankofbaroda-be.com/
4) https://en.wikipedia.org/wiki/Bank_of_Baroda
5) https://en.wikipedia.org/wiki/Vijaya_Bank
6) https://economictimes.indiatimes.com/wealth/personal-finance-news/psu-bank-
m e rg e r s - c u s t o m e r s - o f - w h i c h - b a n k s - a r e - l i k e l y - t o - b e - i m p a c t e d - a n d -
how/articleshow/71020548.cms?from=mdr
7) https://www.financialexpress.com/market/bank-of-baroda-shares-rally-vijaya-
bank-dena-bank-stocks-plunge-after-merger-swap-ratio-announcement/1432151/

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MARKETING THROUGH CORONAVIRUS: HOW TO PIVOT

YOUR ECOMMERCE MARKETING PLAN IN TIMES OF CRISIS
* Jayadatta S
** Shrikanth Ganapati Naik
*** Vishwanath S Naik

Abstract:
Good marketing, at its core, has to include a deep understanding of your target market
— their day-to-day lives, their challenges, their joys, their perspective on the world
around them. Once you understand that, you can figure out how your brand fits into
that story. You probably had that down pat. And then the coronavirus outbreak shut
down schools and businesses, imposed social distancing, and completely upended
almost everything we thought of as typical daily life. Many of those things you knew
about your target audienceare different now. People are feeling communal anxiety
and grief; their daily routines have likely changed completely, and some have either
lost their jobs or are risking their health to keep essential services functioning. We
have to accept that there's probably not a right answer to the question of how to do all
of this — but there are a couple of wrong answers. The keys will be to err on the side
of humanity and transparency, and to avoid the big no-numbers and faux pas like a
tone-deaf ad campaign or insensitive post on social media.COVID-19 has certainly
made an impact on ecommerce over the past couple of weeks now that isolation and
social distancing measures have been put in place.Workers in many infected
countries have been asked to work from home, countries including the UK, Italy,
India and France have been placed under lockdown and schools have been shut
down.Unsurprisingly, many stores have since taken the decision out of consumers'
hands by shutting up shop, forcing traditional consumers to adopt ecommerce as an
alternative.
Keywords: Covid 19, Target Market, essential services functioning, social
distancing, e-commerce, ad campaign
Introduction:
E-commerce includes buying and selling of raw material, products, services or any
kind of goods and services through an electronic medium (internet) by the consumer,
retailer, and business. Whereas, e-commerce retail is the exchange of goods and
services between an online retail company and consumers (generally end-users). The
e-commerce transaction can be of different types such as business to Business or B2B
(Cisco, Alibaba), Business to Consumer or B2C (Amazon, Walmart) and Consumer
* Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031. Email:[email protected]
** Assistant Professor& HOD, Department of Commerce, Government First Grade College Kumta- 581343,
Karnataka State. Email: [email protected]
*** Assistant Professor & HOD, Department of Management Studies, Government First Grade College
Honnavar- 581334, Karnataka State, Email: [email protected]
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to Consumer or C2C (eBay).The factors which drive the growth of the e-commerce
market before the COVID-19 pandemic include strong and steady growth of internet
users and rising awareness related to online shopping, increasing online launching of
products, low price due to bulk purchase and so on. In addition, an increasing number
of exclusive products in the market and lower prices of goods due to the direct
distribution channel and economies of scale further contribute to the growth of the
global e-commerce market.Moreover, after the COVID-19 pandemic, social
distancing and staying home is further expected to push the consumers towards
online shopping. However, uncertain consumer demand and supply chain issues can
affect the e-commerce industry. The COVID-19 pandemic issue can also affect big
merchants such as Walmart, which are experiencing a drop in casual shopping,
supply chain disruption, and an increase in purchases of essential toiletries,
groceries, and other products.The global e-commerce industry report is segmented
based products including electronics, healthcare beauty & personal care and others.
The outbreak of COVID-19 had an impact on these segments due to the uncertainty
in the supply chain and consumer demand across the globe. E-commerce supply
chains are mainly strained by COVID-19 as well as factory closures in China, the
US, and other countries. The most affected industry segment due to the COVID-19
outbreak is the electronics products as China accounted for most cases of COVID-19
and as per the International Trade Union Federation (ITUF), the country is the largest
producer of the electronic and its parts globally. A considerable amount of China's
imports is encompassed of electronic parts that are assembled into finished products,
such as consumer electronic products and computers, and then exported. However,
due to the factory shut down electronics products supply chain are now close that
further impacts the electronics e-commerce industry.The e-commerce in various
regions such as North America, Europe, Asia-Pacific and the Rest of the world are
impacted by the novel COVID-19 pandemic. The countries in which most of the
cases recorded include Italy, Spain, France, and Germany in Europe and China in
Asia-Pacific. China's giant e-commerce service provider Alibaba has struggled to
sustain growth rates during an economic slowdown in its domestic market and faced
with the uncertainty of the coronavirus outbreak. Key companies getting affected in
the market include Alibaba Group Holding Ltd., Amazon.com, JD.com, Walmart
Inc., Shopify, Rakuten Group, and eBay Inc., and others. For instance, Amazon made
some heavy investments in one-day shipping that aren't compensating off quite yet.
In 2019, its net income fell by 26% and shipping costs rose by 46%. The coronavirus
pandemic affects Amazon's profits throughout the first half of 2020.The coronavirus
pandemic is a health crisis like we've never seen before, so it's no surprise that it came
with disruptions to the supply chain, hoarding of toilet paper and hand sanitizer,
empty shelves at grocery stores, and stress on Amazon's warehouses.In times like
these, you need to be able to respond to change in real time. For the first few weeks
after the U.S. began taking serious measures to combat the spread of coronavirus, the

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situation seemed to change daily — having ripple effects on people's feelings and
behaviors.Dramatic and/or widespread events like the COVID-19 pandemic should
always trigger a marketer to first step back and say, “OK — what do I have in market
right now?”

Major objectives of the present study:

1. To reanalyze your marketing plan with covid 19 in mind
2. To understand how digital marketers can adopt themselves in marketing
products and services during Covid-19
3. To study ways to pivot your e-commerce marketing strategy during Covid
19
4. To know various digital marketing ideas to be considered during the
corona virus
5. To study how e-commerce brands should approach financial planning
during Covid-19

Reanalyze your marketing plan with covid 19 in mind

Below mentioned are some steps you can take to reevaluate your plans, recenter
your thinking, and focus on what's next.
1. Stop, relax, and don't panic
Seriously, sit down — not in front of your computer — and take a few deep
breaths. This is not a time to panic, but to gain perspective. People's lives are
at risk, but not from your marketing campaigns. Your business is so
important, but you have to keep your mind first and foremost on your
health.The second part of not panicking is to not immediately pull back on all
your digital marketing efforts. It may seem like a prudent option to cut
marketing budgets to preserve cash flow, but consider what's known as the
“mere exposure effect or the phenomenon that being exposed to something
more will make you like or appreciate it more.Keeping your business in front
of consumers could help improve their perception of your brand even if
they're not buying right now.
2. Evaluate your current images, language, and tone of voice:
Assess everything you currently have in market, starting with the channel that
gets the most eyes. Evaluate those assets and messages from a new point of
view: one that is living in a world with record-high unemployment rates,
economic uncertainty, and general anxiety.Your messages (both copy and

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imagery) should take into account the impact of cultural events on your
customers. They may be in a sensitive emotional state and possibly not in the
mindset to make a purchase from your business.As the crisis progresses, the
level of sensitivity required will likely go down a bit, and at some point some
light humor might even be appropriate in certain situations. But you have to
follow the organic lead of the community — this is not a place to lead the front
lines.
3. Adjust marketing campaigns and timelines
Let's face it: your well-laid marketing campaign plans might have to be
pushed back. And that's ok. Don't nix them altogether, but take a little time out
to focus on the situation at hand (and part of that means to get your own house
in order — take care of your family and employees, keep them safe, and do
the best you can).And now it's time to pivot. Craft a message that is sensitive
to the current situation, takes into account your customers' new situations and
concerns, and is honest, transparent, and human.A gold standard for this kind
of messaging pivot is what Nike did shortly after Americans were asked to
stay home if at all possible.It's human. It's inspiring. It aligns with the
zeitgeist. And the simple, black-and-white creative adds to the gravitas of the
message without pulling it into dreary gloom. Instead, it has an underlying
tone of hope.
4. Have a positive mindset, but don't be insensitive:
Try your best to keep an upbeat attitude and show your customers that you
are there for them in these uncertain times and also still hopeful for the
future. That said; watch that you don't cross the line into possibly being
seen as insensitive by minimizing the scale of the pandemic or its impact
on human life.
To understand how digital marketers can adopt themselves in
marketing products and services during Covid-19
There is certainly a need to work smarter under the current circumstances, but
it's a crucial time for marketers to adopt strategies for long-term profitability.
1. Manage PPC Budget efficiency:
Statements around switching off PPC campaigns entirely, one of the
primary sources of new business for many companies, could clearly be
hugely damaging.
Instead, look to manage efficiencies across accounts where possible.
ü Cut back on any non-essential upper-funnel keywords with lower
conversion rates where search-demand may be waning.

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ü Save potentially reduced budgets for keywords with a higher

likelihood of generating conversions.
2. Retain Organic Visibility:
When it comes to organic activity, SEO is clearly a longer-term strategy and
the tap can't (and shouldn't) be switched off as with PPC.Google will be
tweaking their algorithms now more than ever to ensure that the public gets
the most accurate information, so to ignore the basics would risk reducing
organic visibility in the long term.Organic search is one of the most viable
channels in any scenario.People will always be searching, perhaps more
now than ever before.Businesses with online selling capabilities are in a
better position than any to continue to do business in what is a difficult
period for many.
3. Share experiences through Digital Public Relations:
Yes, the news is awash with COVID-19 stories, but digital PR activity
shouldn't stop during coronavirus.Now is a great opportunity to get in touch
with journalists with interesting news stories that are a distraction from the
wider news.People still want to read good news stories and want escapism
from the pandemic currently dominating mainstream media.
4. Be useful on social media:
There will be a lot more people logging in to and spending time on social
platforms as professionals start to adapt to the working from home
lifestyle.This is a great time to re-imagine your social media strategy, or if
you don't have one, it's a great time to start.Below are some general tips for
brands looking to revamp their social strategy and messaging based on
current trends.
Ways to pivot your e-commerce marketing strategy during Covid 19
Although consumers may be increasingly guarding their wallets during the
coronavirus outbreak, they are also spending more time online than ever.
Currently, there is a huge opportunity for digital marketers to thrive, by
meeting their audience where they are online and building a strong
foundation for long-lasting customer-brand relationships.
1. Communicate about COVID-19 transparently with your customers:
Sending an email to your base about how your business plans to operate
during COVID-19 is a great way to start. Remember: transparency is key.
Explain how your production cycle will handle (or, has always handled!)
sanitary guidelines. Be upfront about any expected changes in your supply
chain or in delivery time, and offer solutions to customers that might be

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impacted by delays. If your company is doing anything extra to help

hospitals, charities, or businesses in the wake of the virus, feel free to share
that as well.
2. Engage your community in a new way, and become more responsive to
your base:
Thanks to new work-from-home policies and many listless hours spent social
distancing, consumers are now online more than ever. Instagram Live usage
alone has doubleduring the coronavirus. As a result, marketers should find
ways to engage more frequently with consumers where they are, from
following relevant hashtags to starting discussions in online communities.

3. Start or further invest in a blog:

It's a fact that people love good content. It's also a fact that, thanks to social
distancing, time spent online, on social media, and generally on screens has
gone way, way up. Writing content that your audience cares about at a time
when they are more likely to consume it (and derive value from it, even if it's
just entertainment) is a great way to build brand trust and awareness. A blog
can also be repurposed in numerous ways your marketing strategy.In addition
to building your site's SEO value and online search discoverability, a blog
post can be used across all of your channels to engage with your audience.
4. Reevaluate your ad spend
When struck with a cultural shift as massive as that caused by the COVID-19
outbreak, you should take a hard look at where you are spending advertising
dollars. If you were previously relying solely on bottom-of-the-funnel
product ads, this tactic may no longer be suitable in a period when consumers
are guarding their wallets, especially if you are selling products that are not
suitable for the consumer at this time–products related to travel or non-virtual
group activities, for example.
5. Audit your ad copy
The whole world is talking about the coronavirus right now. It is important to
take a hyper-sensitive look at your ad copy, because online consumers are
definitely doing that. Though your ad from last month that promoted
“exploring the world” or “gathering with friends” performed exceedingly
well, it is likely to get a hugely negative response if consumers come across it
today.
6. Shake up your email marketing strategy:
Have you put off creating a welcome series or abandon cart series? Have you

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been slacking on email marketing generally while leaning on Facebook ad

conversions? Now is the perfect time to dive in and try things you have never
done before! Instead of focusing solely on product or sales promotions in
your email marketing, fill your email communications with content to
entertain your audience and keep their mind off the constant slew of COVID-
19 news.Create a welcome drip and abandon cart series that focuses not just
on sales, but also on introducing your potential customer to your brand. Test
new subject lines, call to actions, segmentation tactics, and templates too!
What you do now will not only provide your brand with a valuable lifeline to
your base, but it will also set your business up for success when consumers
shift back into a buying mood.

7. Change things up in your sales strategy (without excessive discounting.)

Many large businesses have turned to mass discountingto levels similar to
Black Friday in an effort to sell off excess inventory from their closed retail
stores. This is not a recommended tactic for online businesses, as this could
impact your brand perception over time, cheapen your product, and make it
harder to sell at full-price later.There are many ways to more gently nudge
your audience into making a sale while also building and maintaining your
brand identity and keeping your margin relatively stable.
8. Learn new skills from free resources on offer during COVID-19
A number of B2B companiesare practicing some of the same tactics outlined
here, making software and educational resources available for free to
businessesduring the coronavirus outbreak. If you find yourself about to
queue up yet another Netflix series on your tenth evening stuck at home, you
might consider taking some time to learn new marketing skills and
technologies to bolster your business.Learning more about video editing and
production, paid ad strategy, and SEO best practices are all great educational
time investments for growing your business in the long term. These skills you
develop can also further enable you to provide extra value to your own
customers during this time.

Various digital marketing ideas to be considered during the corona

virus
Some of the major digital marketing ideas to be considered during the corona
virus:
1. Connect With Your Customers on Social Media during a Critical
Moment

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We're all dealing with the impact the coronavirus outbreak has had on our
lives whether you've tested positive or not. We're all taking precautions.
We're locked in our homes and our kids aren't in school. We can't visit our
friends. We can't eat at our favorite restaurants or go out to the movies. Sure,
all minor conveniences but jarring nonetheless. This is a time to really show
empathy to others and help out where you can. This is a time we all need to be
sensitive — and not too sales or pushy — but it's a great opportunity for your
brand to stand out during a difficult time. More people are on social media
now while stuck at home, scanning for updates and trying to stay connected in
a suddenly isolated nation.
2. Make Sure Your Business Can Be Found Online
In case you haven't noticed, more people are online right now than in their
cars or walking the sidewalks. Search traffic has increased significantly over
the past week and will continue to climb as we hunker down. We're all glued
to our computers and phones looking for updates within our community.
We're also looking for entertainment and ways to pass the time. For many,
that includes shopping online.
Anything online right now will be consumed more than ever before. This is
not the time to be hidden online. You should be using search engine
optimization (SEO) strategies to climb to the top of Google's search engine
results pages (SERPs) so your business can be easily found. This is not a time
for a business to go into a shell and poke out your head every few days to see if
the sun has come out.
3. Pay-Per-Click (PPC) Advertising is a Smart Move Right Now
With more people at home in front of their screens, it's a great opportunity for
businesses to use PPC marketing to connect with their customers and gain a
competitive advantage. Oh, and it's a great chance to save some money within
your digital marketing budget. On average, cost-per-clicks have decreased by
6 percent across all verticals since last week, according to Thrive senior PPC
manager Jacob Wulff. And CPC is likely to continue to decrease in the
coming week, reducing the amount of money an advertiser pays a publisher
for every ad click. That gives your business another opportunity to scoop up
that lost market share from others pulling back during this time.
4. Stay Ahead or Jump In Front of Your Competition
SEO helps your business increase organic traffic to your website and move
past your competition. You want to be on the front page of the Google SERPs

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— and at the top of the list — so that when your customers search for certain
keywords you're the company they end up calling. To climb to the top of the
SERPs takes time and strategic optimization strategies. If you don't continue
to optimize your website and content daily, you lose valuable ground in the
search results and your freefall could cost your business thousands of dollars
in lost revenue.
5. Prepare Your Business for the Bounce-Back Surge
The coronavirus outbreak should fade (just as it has in China) after a few
months. That's when normalcy returns and consumers' spending habits
stabilize. You have to remember that SEO is more of a long-term strategy.
What you do today for your SEO campaign will affect your organic search
traffic two months from now. Pausing your SEO campaign now could have a
detrimental impact on your revenue potential two months from now when the
coronavirus starts to become a distant memory.
6. Unique Circumstances Provide Opportunities for a Special Offer
During this uncertain time period, you have the opportunity to show support
for your customer base by offering special discounts that will keep your
revenue flowing. Identify your product-market fit and create a special offer.
Many people are at home browsing, looking for discounts to save money
during a time of unrest. It's a great way to engage with your customers and
keep a steady stream of revenue that will keep your doors open. You can push
out your special offers through pay-per-click (PPC) advertising and social
media.
7. Local SEO is now More Relevant; So Are Your Online Reviews
In the rare times when we do leave our house, we're looking for nearby
destinations for services and supplies. So you want to make sure your
business is using local SEO strategiesto optimize your website for “near me”
searches. You want customers in your geo region to be able to easily find you
online so they turn to you first. At a time when we're all looking for more
convenience, this gives your business a chance to provide assistance during a
critical time for families.Another way to boost your local SEO during this
time is to not forget about the importance of adding positive reviews. During
the coronavirus, online reputation management is as important as ever
because this is a great time to really connect with your target audience during
a chaotic time. To provide the right service or product for people during a
stressful time like this — when they need it most during this COVID-19
pandemic — is likely to be rewarded with a glowing review.

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8. Be Prepared to Pivot as a Business and Inform Your Customers:

In a fluid situation, your business should also be fluid. This is a time that you
should find ways to connect with your customers like never before. It shows
empathy and keeps you relevant at a time when your business may have been
impacted by people staying at home. For instance, restaurants are shutting
down right now because customers aren't dining in. You should make sure
you're offering free delivery services. Just the other day, a local Dallas
restaurant emailed offering three ways to get their food into their customers'
hands: delivery, curbside ordering and parking lot pickup. Also, let your
customers know you've increased your sanitary practices and how you're
doing that specifically.
9. Don't Fall Victim to the Panic Move
How much toilet paper do you have at your house right now? If your answer is
a closet full, you're likely one of the people who flocked to the store when the
coronavirus hysteria started to accelerate over the weekend. That's not how
you want to react if you want to implement a smart digital marketing strategy.
You never want to make a panic move. You always want to use metrics and
analyze all of the data you have available before making a decision.Knee-jerk
reactions usually don't end well in digital marketing. Take caution when
quickly reacting to a sudden shift in the economy or market.
10. Use this down Time to Finish Your Digital To-Do Lists
Perhaps your website needs a fresh look with a redesign. Thrive's website
design professionals can overhaul your website in two months all while
working remotely. This is also a great time to have a conversion rate
optimization specialist perform a CRO audit of your website to ensure your
call-to-actions (CTAs) are turning leads into customers. Also, it's an ideal
time to do an SEO audit of your website to ensure you're maximizing your
optimization strategies.

How e-commerce brands should approach financial planning during

Covid-19
Three key areas when it comes to financial planning during the COVID-19
pandemic:
1. Improve cash flow where you can
Organizations should focus on making sure they have enough liquidity to
keep operations going. They've explored how they can be more efficient from

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an accounts receivable standpoint. This is more important for their B2B

orders to receive payments quicker by offering discounts.
2. Understand where you have access to capital
Small businesses don't always have access to lending facilities. Even if you
don't need it now, know how to apply for a loan, research paycheck protection
programs, and have everything ready and be prepared in case you need it
someday.
3. Project out different scenarios
Brands should go ahead and do financial projections, which has been key in
decision making for Open Water. It allows you to change assumptions made
in the business. In the worst case scenario, how much can you produce? How
much can you spend on marketing? Understand how much cash you can burn
in different outcomes.
Conclusion:
In these challenging times, digital marketing is often the last thing on people's minds.
But as marketers, we still have to pay attention. And our jobs change with the seasons,
in that we have to respond to the world as it is, as it changes — not the world we wish
it was, or the world it used to be.For those businesses seeing lower sales during the
crisis, take advantage of that downtime and be ready to come back strong. Focus on
building up your SEO, improving your website design, and optimizing your site's UX
for better conversion rates.Marketing in the conditions imposed on us by the coronavirus
must lean on community, brand building, and relationships with existing customers. If you
can strike the right tone in your messaging to speak to these people as they are, and that
message resonates, your business will be in a good position to retain market share (or even
gain it) as economic activity. What these COVID-19 marketing ideas show us are business
owners that refuse to bury their heads despite the trying times. Hopefully you, too, can glean
some insight from these smart marketing tips during the coronavirus and use them for your
business.Just be sure to adjust your strategies and marketing. Meet your customers
where they are now (and that's mostly at home and online). Find a way to pivot and
give your business the best chance to stay

afloat by making your website easily found online through a strategic SEO
strategy.Yes, these are challenging times for everyone. But your business can still
flourish if you're willing to try a new approach and not pull back on your marketing
during a critical time for your company to show compassion and empathy. Now is the
time to connect with your customers like never before and not separate from them.

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References:
Websites and blog links referred:
1. https://www.searchenginejournal.com/amazon-ecommerce-sales-cannibalization/299827/
2. https://www.researchandmarkets.com/reports/5013567/impact-of-covid-19-on-the-e-
commerce-market
3. https://www.bigcommerce.com/blog/covid-19-marketing/#optimize-your-ecommerce-
store
4. https://papers.ssrn.com/sol3/Data_Integrity_Notice.cfm?abid=3621166
5. https://getmatcha.com/blog/ecommerce-marketing-strategy-covid-19/
6. https://thriveagency.com/news/10-digital-marketing-ideas-to-consider-during-the-
coronavirus/
7. https://divante.com/blog/what-ecommerce-managers-and-directors-should-know-in-the-
time-of-coronavirus/
8. https://www.shipbob.com/blog/ecommerce-covid-19/
9. https://www.forbes.com/sites/paultalbot/2020/03/19/how-the-coronavirus-pandemic-
impacts-marketing-strategy/#4d8a41554dc2
10. What coronavirus could mean for the global economy hbr.org/2020/03/what-coronavirus-
c o u l d - m e a n - f o r - t h e - g l o b a l -
economy?cid=HBR_Coronavirus_Business_Leaders_03122020
11. How Chinese companies have responded to Coronavirus hbr.org/2020/03/how-chinese-
c o m p a n i e s - h a v e - r e s p o n d e d - t o -
coronavirus?cid=HBR_Coronavirus_Business_Leaders_03122020
12. The coronavirus budget may be the way to reset retail internetretailing.net/views/editorial-
the-corona-virus-budget-may-be-the-way-to-reset-retail
13. C O V I D-19 concerns may boost ecommerce as consumers avoid stores
www.emarketer.com/content/coronavirus-covid19-boost-ecommerce-stores-amazon-retail
14. Coronavirus cuts smartphone sales 55% in China. But ecommerce and delivery businesses
are booming, www.forbes.com/sites/johnkoetsier/2020/03/09/china-smartphone-sales-
drop-55-thanks-to-coronavirus-but-e-commerce-and-delivery-businesses-are-
booming/#681c7d404bb9
15. Will the coronavirus crisis, like SARS, give birth to the next big thing in China tech?
www.scmp.com/tech/big-tech/article/3073961/will-coronavirus-crisis-sars-give-birth-next-big-
thing-china-tech
16. Some Chinese tech companies see a surge in customers amid coronavirus outbreak

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www.scmp.com/tech/apps-social/article/3049520/some-chinese-tech-companies-see-surge-
customers-amid-coronavirus
17. With sales slowing, China’s ecommerce giants pivot to coronavirus assistance
www.adweek.com/digital/with-sales-slowing-chinas-ecommerce-giants-pivot-to-coronavirus-
assistance/
18. The impact of the coronavirus on retail
www.retaildive.com/news/the-impact-of-the-coronavirus-on-retail/573522/
19. How forward-thinking ecommerce marketers are handling the coronavirus outbreak
www.klaviyo.com/blog/coronavirus-impact-on-ecommerce
20. Coronavirus fears may drive U.S. ecommerce sales beyond 2020 projections
www.forbes.com/sites/shelleykohan/2020/03/06/a-change-in-consumer-behavior-from-
coronavirus-fears-may-drive-us-e-commerce-sales-beyond-projections-of-12-of-total-
retail-sales-in-2020/#5a4658e47f54
21. Here’s how designers are fighting the impact of the coronavirus inside Italy’s lockdown zone
footwearnews.com/2020/focus/designers/italy-lockdown-shoe-designers-fightring-covid-19-
business-disruptions-1202944781/
22. Other voices: What coronavirus means for e-commerce
www.mmh.com/article/other_voices_what_coronavirus_means_for_e_commerce

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ROLE AND GROWTH OF MSME'S FOR ENTREPRENEURSHIP

AND SUSTAINABLE DEVELOPMENT IN INDIA

* Gangadhar Sheeri1
2
** Nitin Bhasker

Abstract:
Today certainly micro, small and medium enterprises (MSME's) have emerged as an
important and also vibrant segment in Indian economy. Besides this sector is also
playing an important role in the economic development of India as it employs large
number of population after agriculture sector. The sector also creates one third of
overall exports revenue contributing about 8% of overall GDP and also helps in
achieving various objectives such as promotion of exports, higher growth of
employment output, fostering entrepreneurship opportunities etc. The main
advantage and role played by this sector is employment potential low capital,
MSME's sector do contribute to the overall development of the country but they also
face a number of challenges like high cost of raw materials, collateral requirements,
increased fuel prices, competition from domestic and foreign markets, lack of credit
facilities from financial institutions etc. Due to financing problems every day around
79 MSME's are falling in sickness, the government has taken many initiatives for this
sector in this regard but problem still persists. The present paper investigates the
performance indices of MSME's and also future role played by MSME's in the
economy and other various steps taken by different parties in promoting MSME's in
India.
Keywords: Micro small and medium enterprises, entrepreneurship, economic
development, employment potential, exports revenue

Introduction:
MSME's certainly is an integral part of Indian industrial sector. The distinctive
feature of Micro, small and medium enterprises are less capital investment and high
labor absorption which has certainly created unprecedented importance to this sector.
The sector however plays an important role to alleviate poverty and also propel

*Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031, Email: [email protected]
** Assistant Professor, KLE's IMSR, BVB Campus, Vidyanagar, Hubli -580031, Email: [email protected]
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sustainable growth as well as equitable distribution of income in India. By

implementing labor intensive production processes MSME's do play an important
role in effectively allocating enormous labor supply and scarce capital. In responding
quickly to changing market demand and supply conditions MSME triggers private
ownership, boost entrepreneurial skills. Besides the importance of Micro, small and
medium enterprises are well understood by national economies. All over the world
over half to two-thirds of all businesses are MSME's and in many regions this
proportion is quite much higher. MSME's are capable of creating jobs with least
amount of capital and also in dispersed locations which necessarily makes it
attractive to policy makers. Economic as well as social sectors of a country are very
much dependent on micro, small and medium enterprises. Besides the role played by
MSME's is very much crucial for the growth and development of any economy and
also the importance of this sector is well organized all over the world owing to its
significant contributions in fulfilling various socio-economic objectives such as
employment generation, contribution to national outputs and exports, fostering new
entrepreneurship and also to provide depth to the industrial base of the economy. It
can certainly also help achieve a more equitable distribution of benefits of economic
growth and also thereby help alleviate some of the major problems associated with
uneven income distribution. Once considered remnants of traditional sectors,
MSME's and their development have now become focus of initiatives which are
aimed at creating growth and employment in many developing countries. Economic
and social; sectors are very much dependent on MSME's; also their contribution
makes sense in current context. Again, promotional agencies certainly play a vital
role in developmental aspects of entrepreneurship in India. Starting from the initial
stage of finding out various entrepreneurial opportunities there indeed exists need for
such promotional agencies. MSME's in the developing countries emerged in
industries thus ranging from hi-tech and tiny enterprises making use of rural
craftsmanship generally producing for domestic and international markets.

Definition of Micro, medium and small enterprises:

In accordance with the major provision of micro, small and medium enterprises act

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2006 has classified MSME's into two categories:

a) Manufacturing enterprises: Refers to those enterprises engaged in the
manufacture or production of goods relating to any industry specified in the
first schedule to industries (According to development and regulation act,
1951)
b) Service enterprises: These enterprises are engaged in providing or rendering
of services in terms of investment in equipments

MSME units producing goods and rendering services will be defined in terms of
annual turnover, as mentioned under:

Micro enterprises will be defined as a unit where the annual turnover does not
exceed Rs.5 crore
A small enterprise will be defined as a unit where the annual turnover is more
than Rs. 5 crore but it does not exceed Rs. 75 crore
A medium enterprise will be defined as a unit where the annual turnover is
more than 75 crore but does not exceed Rs. 250 crore
Additionally, central government may by notification vary turnover limits,
which shall not exceed thrice the limits specified in section 7 of the MSMED Act

Manufacturing Sector

Enterprises Investment in Plant and Machinery

Micro Enterprises Less than 25 lakh
Small Enterprises More than 25 lakh but does not exceed 5 crore
Medium Enterprises More than 5 crore but does not exceed 10 crore

Service Sector

Enterprises Investment in Equipments

Micro Enterprises Less than 10 lakh
Small Enterprises More than 10 lakh but does not exceed 2 crore
Medium Enterprises More than 2 crorebut does not exceed 5 crore

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Growth of MSME’s in India:

Today nearly about 8% of the country’s overall GDP is contributed by Micro, small
and medium enterprises (MSME’s). They are widely dispersed across the country
and also produce a diverse range of products and services to meet the needs of local
markets, Global markets and National as well as International value chain. Besides
31.79% of the enterprises in the MSME sector is engaged in manufacturing whereas
68.21% of the enterprises in engaged in service units.
Some of the key MSME statistics is mentioned below as follows:
Number of MSME’s in India: The number of MSME’s in India is estimated
to be at 42.50 million which comprises of registered and unregistered MSME’s
together accounting to a staggering 95% of total industrial units in the country
MSME and employment opportunity: It employs about 106 million out of
which 40% is of India’s workforce itself next only to the agricultural sector
Products of MSME’s: It produces more than 6000 products
GDP Contribution: Currently it contributes around 6.11% of the
manufacturing GDP and 24.63% of the service sector GDP
MSME output: 45% of the total Indian manufacturing output
MSME Exports: 40% of the total exports
Bank Lending rate: MSME’s account for almost 16% of bank lending
Fixed Assets: Current fixed assets is at INR 1,47,1,912.94 Crore
MSME Growth rate: It has maintained an average growth rate of over 10%

Major government initiatives to boost and enhance MSME sector in India:

a. Credit Guarantee Fund trust for Micro and Small Enterprises (CGTMSE):
The major objective of this scheme is to make available collateral free credit facility
to new and existing Micro and Small businesses subject to a sum of Es. 100 lakh per
unit. Also Performance indices during 2016-17 indicate that around 3,142 MSME
units have been benefitted with an overall expenditure of Rs. 203.76 crore. Since
inception of this scheme around 22, 380 units have been benefitted with an
expenditure of Rs. 1349.63 crore
b. Lean Manufacturing (National Manufacturing competitiveness
programme): The major objective is to make accessible the use of various Lean
manufacturing techniques to MSME’s and thus improve their manufacturing

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competitiveness. According to 2016-17 the performance indices indicate that around

670 units have been benefitted with an expenditure of Rs. 11.26 crore. Performance
since inception says that around 3041 units have been benefitted with an expenditure
of Rs. 45.26 crore
c. Intellectual Property Rights: Major objective here is to enhance
competitiveness through increased awareness of IPR. Performance indices during
2016-17 says that around 26 awareness programs were held, around 05 workshops
were conducted and 03 IPR felicitation centres were provided with an overall
expenditure of Rs.1.73 crore
d. Marketing development Assistance (MDA) Scheme: The major objective is
to help and also encourage MSME’s to tap and develop overseas market.
Performance since inception says that around 1476 units have participated in MDA
assistance and expenditure outlay is around Rs. 28.76 crore

Below figure showing the Composition of major sectors in which Indian SME’s
operate (Percentage wise)

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Major challenges faced by Indian SME’s:

Many SME’s are reluctant to grow thus resulting in reduced productivity. Some
others cling firmly to the concept of staying small and comfortable thereby trying to
avoid regulatory and taxation related hurdles. Those of the SME’s which choose to
grow have different set of problems to deal with starting mainly with financing. Due
to high interest rates over 15000 listed and unlisted companies from diverse sectors
such as textile, agriculture, power, IT and ITES a common trend showed that SME’s
exposure to bank credit was drastically falling. Another major reason to shun bank
credit originates mainly due to repayment timelines. While it is observed that most of
the big companies who buy from SME’s get an interest free repayment timeline for
120 days, SME’s get only 60 days to pay back their interest loaded bank loans. This is
one of the major reasons as to why most of the SME’s now have chosen to reduce
their exposure to bank credit. In addition to this, individual sectors do face their own
challenges. Real estate for example has shown a slowdown in the last few years after
a decade of growth. Besides, exports have also seen a quarter on quarters reduction as
demand has been slowing in many European countries and disturbances in Wes Asian
countries have also caused the tables to turn unfavorably for SME’s. As the
companies are not market leaders in their segments, they are quite unable to hold a
bargaining power in price battle. While coping with reducing profit margins they
struggle to maintain quality. Supply chain inefficiencies, global and local
competition as well as insufficient skilled manpower can choke out SME’s that
aren’t ready to take the bull by horns and create their own path for growth.

Exploring financing opportunities for SME’s in India:

One of the key ways to ensure the survival of SME’s is to make sure that they don’t
run out of financing options. Some of the new/alternative funding options for SME’s
are as follows”
Foreign banks: A healthy competition can be win-win situation for most
people, especially for customers. However in this case, bringing down restrictions on
foreign banks on extending number of branches can work in favor of SME’s who
may then see influx of local banks looking out for attention. Currently foreign banks
are opened to allow only 12 branches a year, however changing this to 100 can see the
magic work in favor of SME’s
Debt funding: Stepping away from known banks and also exploring other
debt funding options may work well for SME’s. Also depending on business size, age
factors etc the government has formulated schemes like collateral free loans uptoRs.

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1 Crore
Equity funding: This type of funding has been a great success with startups
and it generally works well especially if one plans to bring in senior management
who can help in significantly improving revenue and market share over relatively
short span of time
Mezzanine debt funding: It is a mix of equity and debt funding which s now
offered by domestic as well as foreign investors
LIBOR for exports: Pre shipment and post shipment credits for exporters are
available in LIBOR based regimes that offer highly competitive interest rates
NBFC Loans: There are currently few NBFC’s which currently offers debt
packed PE funding for SME’s
Grants: India has developed bilateral trade ties with other countries where
trade/ finance associations offer grants to proven sectors to gain advantage from their
growth

SMEs & Technology

SMEs have been accused of living in an obsolete era in terms of technology. Access
to internet, resources, virtual skilled workers and client opportunities can help them
grow by leaps and bounds. They are now waking up to the fact that technology and
culture of innovation can be high potential growth drivers. In a recent global study
with Oxford Economics over 2300 SME executives, over 60% agreed that tech can
be a key differentiator for their SME and over one third agreed that creating a culture
of innovation is a top priority in their strategic growth plan.
Tech can be used in multiple spheres. It can make SMEs agile, improve innovation,
fortify customer relationships and help explore new markets while reducing the cost
of expansion. Specifically speaking, Big Data Analytics and MobiTech were named
as the two biggest drivers of change.
MobiTech: World over, as businesses move from being product-centric to
customer-centric, it has become increasingly important for SMEs to focus on
enterprise mobility as a key driver of innovation. Using mobile tech efficiently, helps
to drive better customer experiences, especially for B2C SMEs in retail. For
example, mobile apps can change the way SMEs do business. They can enable
streamlining order flow, forecasting warehouse inventory & allow for better
communication processes.
Cloud Computing: Using the Cloud to handle a substantial chunk of their IT
related aspects can be a great way for SMEs to save on IT costs, and instead use these

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savings to drive product innovation. This would allow SMEs to scale and gain
expertise from any part in the world without having to invest in infrastructure and
offices. It helps streamlining sales, inventory and financials especially for SMEs
without huge capital reserves.
Big Data & SMEs: Analytics can be a great way to know more about your
customers, and will allow you to gain insights on what your customers are buying,
how they’re buying it (or not) and where exactly in the sales funnel are they dropping
off. All this information can help in creating a better customer experiences and
nurture leads to close sales.
Exclusive Telecom for SMEs: In recent years, many telecom technologies
like VoIP, WiFi and other Compression Technologies have become affordable for
SMEs. Telecom companies did take a bit of time understand the price-sensitive SME
market, and have started offering technology which can implemented relatively
quickly and can be upgraded on demand. One such example is a network service
between branch offices which will enable SMEs to save on call costs.
Tech Improvements for the SME Support Systems: It's not just SMEs that
need a boost in technology, but also those who offer their services to them. Banks, for
example, charge lesser for electronic/ branchless transactions vs. those transactions
which are conducted within branch premises.

Government's Role in Promoting SMEs

A few of the recent initiatives by Government of India have a given a boost to SMEs.
In a direct move to increase the GDP share of SMEs, the Government has allocated
20,000 Cr to this sector through the Micro Units Development Refinance Agency
Bank (MUDRA).

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Similarly, in a move to promote 'Zero-Defect' manufacturing that has 'Zero-Effect' on

the environment, the Government has set up the performance and credit rating
system for SMEs called the ZED rating. SMEs will be classified into bronze, silver,
gold, diamond and platinum categories. The idea is to help SMEs grow bigger, gain
economies of scale and improve the quality of their products. Here are some of the
other popular schemes for SMEs in India.
· Credit Guarantee Fund Scheme: Applicable to both existing and new
enterprises, this scheme provides collateral-free credit to Indian MSMEs.
The ministry in association with SIDBI established the trust that facilitates a
working capital loan of up to Rs. 100 Lakh per borrowing unit
· Credit Linked Capital Subsidy Scheme for Technology Upgradation
(CLCSS): The Ministry of Small Scale Industries (MSSI) created the
CLCSS which provides upfront capital subsidy of 15% (max 15 Lakh) to SSI
units which can be used for plant & machinery modernization.
· Financial Assistance on International Participation: This scheme offers
funding to SMEs for participate at international trade fairs, exhibitions and
also promotes sector specific market studies by industry associations. It also
offers reimbursement of 75% on one-time registration fee and 75% on annual
fees (recurring) paid to GSI by SMEs for the first three years for barcode. It
also facilitates tech upgradation, creation of joint ventures and foreign
collaborations.
· Technology & Quality Upgradation Support to SMEs: This scheme helps
SMEs gain benefit from energy efficient technologies and manufacturing
processes to reduce their carbon footprint. It provides them with 75%
expenditure to buy such technologies.
· Mini Tools Room & Training Center Scheme: The govt. provides grant /
aid that equals to the cost of the machinery/ equipment (max 9 Cr.) to create a
new mini tool room and 75% of the cost if an existing room has to be
upgraded. The scheme aims to create a skilled workforce which would also
benefit the region in the long run.

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With low investment requirements, operational flexibility and the capacity to

develop appropriate indigenous technology, SMEs have the power to propel India to
new heights. Imagine an India that has empowered SMEs to maximize their growth
propulsion, resulting in a significant boost to the growth of India as a whole. Looking
at the current trends, it's seems as if India may one day overtake China in its SME
volume. However, it's crucial for India's SMEs to ramp up the quality of their product
offering and transfer benefits to the end consumer. Starting a business today is a lot
simpler than before. There are accelerators, incubators, investors and mentors
available to handhold a business to ensure they see the light of day. The ever-growing
internet/ mobile penetration have opened up both the international and rural markets
like never before. While the atmosphere is rife with challenges it's also ripe with
opportunities. The time is right for us as a nation to sow the seeds, and build a support
system, which would allow our SMEs to achieve their full potential.
Learning and Policy Implications:
Often, MSMEs producing a range of similar or same products are found to co-exist
intypical geographical locations for decades and even centuries in many
countries.This phenomenon is referred to as clustering of MSMEs. The phenomenon
of enterpriseclustering is prevalent both in economically developed and developing
countries.Geographical proximity of enterprises may give rise to specialized labour,
nurturesubsidiary industries, stimulate innovations, enable technological spill overs
andmake economic & non-economic inter-firm linkages feasible. Most MSMEs
even thoughco-located geographically, are not well versed with the process of
appropriatetechnology identification & its transfer. Consequentially, the
proliferation oftechnology among MSMEs is therefore not automatic and self-
replicating. It isimportant to identify firms with similar needs and create a network of
like-mindedenterprises in line with Rogers Model. This calls for a strong role of
Science &Technology institutions to identify,customize and propagate technologies
among MSMEs.
Not all clusters have equal scope for change: However, the scope for
technologyimprovement varies significantly across different clusters thus requiring
customizedapproach for every cluster even if is in the same sector. Moreover, every

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enterpriserequires customization of solutions suiting to its specific requirements of

the varietiesof raw materials & fuel used, output flow required, quality specifications
of output,size of equipment used, age of existing equipment to be replaced etc.
Cost of improved technology is a significant barrier: Micro and small
businessesneed to be convinced about the return on investment in technology
adoption wherethe payback period should rather be short. We learnt that the
economics of changein the short term is the main driver for the owner. Low
investment options withhigher gains in the short run are preferred and therefore more
readily accepted. Ifit leads to downscaling of best available technology in the market,
let it be.

Conclusion:
India's villages can be developed by encouraging entrepreneurship in rural areas.
Micro enterprises have an important role to play in the generation of employment
opportunities, and also in the promotion of self employment and entrepreneurship
among the youth. In view of this, the Government of India is assigning significant
importance to rural industrialization so that employment can be raised as well as
utilization of local resources can be done to optimum. In fact, if rural development is
to be sustained then rural entrepreneurship is must. Understanding the basic
characteristics of rural areas and eliminating the inherent constraints, rural
entrepreneurs can go a long way in framing proper policies for promoting and
developing rural
Entrepreneurship. Micro and small enterprises can offer much greater service to the
nation than their bigger counterparts. These rural enterprises can do miracle if they
have greater capital inflows at their disposal. This has been the motive behind
MUDRA to ease capital constraints faced by rural micro entrepreneurs and bring
much more money at their disposal to grow themselves and make India grow. Micro
entrepreneurs can contribute to Mr. Modi's Make in India programme through this
scheme by making India a manufacturing hub of millions of small items and things
and marketing them on a larger scale. However, government policies will be of no use

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without the participation of people. A combined effort of government, family

members and total involvement of the people at the grass root level will go a long way
in bringing about planned development of rural microenterprises.
Linkages between localproviders & seekers therefore become important particularly
for the microenterprises as the target segment. Finally, marketing of solutions is a
major challengefor S&T communities where business case for technology gets sold
and not thetechnology. The content of communication and the channels for the same
are bothcritical therefore. If this sounds too challenging, the science & technology
institutionsshould network with institutions that can manage the non-technical parts
of theprocess for diffusion and scaling up.

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make export competitive, Munich Personal RePec Archive. 33(2)

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ಣದ ಮಹತ

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MBA

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ಮ ನತರಹ ಅವರ ಒಂ ಯ ಣದ
ಉ ೕಶ . ಣ ವಲ ಸ ಕದ ನ ಧ ಪ ಶಗ
ದ ಅ ಮಕ ಳ ಸಮಗ ಳವ ಯ ಸ .
ಇಂ ನ ಮಕ ಂ ನ ಪ ಗ ಎ ದ ದ ಂದ
ೕ . ಇಂ ನ ನಗಳ ಮಕ ಂ ತ ಮ
ಆತ ಸ ಂದ ಮ ಅವ ಣವ ೕ ವದ ಂದ
ಮ ಅವರ ಮ ಯ ಸ ದ ನ ಸ ವ
ಲಕ ಷ ಸ ತ ಕ ಉ ೕಜನವ ೕಡ .. ಆದ ಂದ,
ಮಕ ಳ ಣವ ಆದ ಗ ಸ ಏ ಂದ ಅ ನಮ
ಶದ ಷ ಮ ಷ ದಏ ತ . ರತದ ಲ
ಕ ಪದ ಯ ಕ ರ ೕಯ ಣದ ಪ ಖ

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ಕತ ವ ರ . ಏ ಂದ ಣ ಪ ಯದ ಮಕ ಳ ಪ ೕಗ
ಪ ವವ . ಆದ ಂದ ಉ ತ ಣಮಟ ದ ಣವ
ಒದ ಸ . ಇದ ಂದ ಅ ಂ ದ ಶ ಣ ಬಡತನದ
ಟ ಚಕ ವ ವ ಶನ .
ಪ ಮ ಯ ಟ , ಪ , ,
ಇ ಕ ಯ ವ ಆ ಕ ಗದ ಸ ಕಗ ಂಬ ಯ
ಆಸನವ ಪ . ಇಂ ನ ೕ ಯ ಓ ಕ ಣ
ೕ ವಅ ಸ . ನವ ದ ರ ಪ
ಓ ನಮ ಯ ೕ ತ . ಆದ ಂದ ಇಂ ನ ೕ ಯ
ಓ ಯ ಸ .
ಈ ನ ೕ ಯ ಮಕ ಳ ಕರ ರ ತ ವ
ವ ಯ ಪ ಖ ಉ ೕಶ ಗ . ಏ ಂದ
ಯ ಏ ಕರ ನ ರವ ಒಂ ಪ ಖ ಪ ಮ
ೕ ವ ಅಂಶ .

"Education is a jewel in prosperity and a refuge in adversity"

ಅ ಟ "
ಇ ಅ ಟ ಅವ " ಣ ಒಂ ಆಭರಣ ಎಂ ಮ
ಅ ವ ಪ ಯ ಸಹ ಸ ಯ ಬ ತ ". ಅ ಟ
ಅವರ ಈ ಒಂ ರದರ ಯ ಆಗ ಯ ಆಗ
ದ ಆಗ ಅವರ ಸಹ ಸ ವ .

ನಮ ಂ ಂದ ಬ ಮ ದಲ ಠ
ದಲ
ನಮ ಕ ಣ ನಮ ಮ ಂದ ಭ ತ .
ಇಬ ತಮ ಆ ರ ರಗಳ . ತ ಗ ,
ಯ ಗ ೕ , ಯ , ಯರ ಂ ವ ಸ ಂ
ನ . ೕ ಈ ೕ ನಮ ಅ
ದಲ .
ಎರಡ ತದ
ಇ ಕರ ಣ ಮಹತ ದ ತವ ಂ ತ .
ಂ ಆ ಅಧ ದ ಯ ಣ ಗ ಂ
ಕಳ . ಅ ( ಇ ಶಬ ವ ಅ ಳ
ಅಂದ ಯ ಆಜ ಳ ವ ಎಂದಥ ).
ಕ ನವ ೕಗ ಯ ಆ ,ಇ ಸಹ
ಕ ತ ಗ ಗ ತಮ ಮಕ ಂ

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ಎಲ ಸ ನ , ದ ವ ಇರ ೕ . ಕ
ಗಳ ಗ ೕ ಗಮ ೕ ಯ ವ ಂ ನಮ
ಂ ನ ಮಹತ ತವ .
ಆಟ ಂದ ಕ ಣ ಠ ಂದ ನ ಕ ೖಯ ಉಂ ತ .
ಆದ ಂದ ಗಳ ಅಂತಹ ಆಟಗಳ . ಉ ಹರ
ೕ ವ ದ ಕಬ ಈ ಆಟ ಮಕ ಳ ಏ ಗ ಯ ವ
ಆಟ . ೕ ೕ ಆಟ ನಮ ಷ ಯ ವ
ಸ ಯ ತ ಂದ ನಮ ಎ ೕ ಅ ತ ಗ ಇದ
ನಮ ಯ ಡ ರ ಎ ವ ಶ ತ .
ಂ ಆ ಜ ಡ ಆ ,
ದ ದ ಕ ೕ ತ ಅಪ ತ . ಂ ೕ
ಎಲ ನಮ ವ ಎ ವ ವ ಉಂ ತ . ಂ ೕ
ಸ ಸ ಷಯಗಳ ಕ ಯ ಆ .
ದ ತನ ತರ ಯ ಕ ಯ
ಆ .
"ಹಣವ ಗ ದ ದ ೕಚಬ
ಯ ಗ ದ ಂದ ಅಪಹ ಸ ಧ ಲ"
ಆದ ಂದ ಈ ನ ಕದ ಣ ಎಂತಹ ಮಹತ ಎ
ಬ ತ .

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Vol.9 No.1 January - June 2020 ISSN 2249-569X

IEMS Journal of Management Research

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/magazine/ book, edition, volume, page numbers, full website address and
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114
Vol.9 No.1 January - June 2020 ISSN 2249-569X

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