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2758 items in total found

Working Papers | 1993

Indian Economic Forecast March 1993

Rastogi A B

Although not spelt out by the Finance Minister as preparing ground for the EFF/ESAF loan from the IMF, it is a path-breaking budget with a strong emphasis on restructuring the economy and the augmenting supply side of the economy. The medium-term funding facility from the IMF/WB with concessional loan would act as insurance and paper over the ripples generated in the goods market and financial assets market due to restructuring of the economy. To ameliorate short term consequences on labor, the labor market reforms are being handled in a politically deft manner. The economic strategy in the medium term is quite clear, go for growth and supply side incentives and push for structural reform. Monetary policy of the government is quite tight and as inflation falls rapidly the government should bring down interest rates quickly to maintain the momentum of private sector investment to enhance productive capacity of the economy. The success of the reform programmes hinges on sustained growth of agricultural and non-agricultural sectors which is inexorable linked to productive investment in these sectors.

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Working Papers | 1993

Trappings of Expertise and the Pursuit of Failure

Ramanarayan S

In the past, people learnt about dealing with complex situations through life experiences. With the availability of computer simulations, it seems feasible to supplement 'life' as a teacher to foster learning about the challenges of complex, dynamic, and uncertain realities. This paper describes a computer simulation of a business organization used with 20 groups of participants. Each group had three members and was expected to manage 24 months of the organization in 3 hours of simulation time. The simulation threw up some interesting behavioral patterns, and provided some insights into the typical errors in the planning and decision making behaviors of specialists. For example, it was found that despite a flood of analysts, several specialists seemed hesitant to apply yardsticks, make choices, and take stands. So there was a strong tendency to avoid or postpone action taking. It was also found that each group developed a routine for data collection. Using the metaphor of 'control panel', the paper examines how routinization channelizes the attention of the group in certain directions and away from certain areas. Several implicit assumptions were identified which blocked the learning of groups from experience. The paper discusses the behavioral patterns reflective of the assumptions. For example, there was a strong tendency to shrink when things did not go as planned. They key concern was found to be with minimizing mistakes. The concluding section discusses some of the self-reflective comments of the participants and the role of organizational simulation exercises for management training. An attempt has been made to explore the notion of strategic orientation as heightened awareness of the choice points that one encounters. A strategic mind develops better understanding of the functioning of complex systems, and retains its flexibility with respect to the choice points rather than getting entrenched in set behavioral patterns.

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Working Papers | 1993

Dividend Decision: A Study of Managers Perceptions

Bhat Ramesh and Pandey I M

In finance literature several theoretical constructs have been proposed to explain the dividend policy of a company. Several empirical studies have been conducted to test these theories. Very few attempts have been made to understand the perceptions and attitudes of managers about the factors they think are important in determining dividend policy. It is with this objective that the present study purports to present the survey results. The study attempts to answer the following questions: 1. What factors do managers consider important in deciding their companies' dividend policy? 2. Do managers perceive a relationship between their companies' dividend policy and the value of the share? 3. Do managers consider last year's dividend policy relevant in deciding the current dividend policy? 4. Do managers think tax status of their shareholders as an important determinant of dividend policy? 5. Do managers use dividend policy as a signal for indicating the company's future prospects to shareholders? 6. Do managers consider dividend payment merely as a residue? This study used questionnaire to seek answers to above questions. The questionnaire was divided into two parts. Part I focused on determinants which managers consider important (on a seven point scale) in deciding their dividend policy. Part II of the questionnaire was devoted to managers' views (strong disagreement to strong agreement scale) on different issues which have implications for dividend policy. The questionnaire was sent to the Economic Times 250 top companies and was addressed to finance directors of these companies. This study reveals a number of interesting conclusions. First, it is shown that payment of dividend depends on current and expected earnings as well as the pattern of past dividends. This vindicates Lintner's findings in U.S.A. about forty years ago. Similar results are reported by Baker et. al. for U.S.A. companies in 1985. It is also pertinent to note that managers of companies in India would like their companies to continuously maintain payment of dividend. They do not consider liquidity to be a significant consideration in dividend policy. Second, managers consider that there s a positive relationship between payment of dividends and share price. However, it is surprising to find that they do not consider the purpose of dividend policy as maintaining or increasing share price. They strongly believe that companies should strive to maintain an uninterrupted record of dividend payments, and they should avoid making changes in dividend policy that might have to be reversed. Third, respondents in our survey do not seem to fully understand the clientele hypothesis. They, of course, do not deny the existence of high-payout clientele. Managers do consider dividend policy as a signaling device. Fourth, managers seem to prefer payment of dividend even if companies have profitable investment opportunities. Thus, they do not provide any support to dividend residual hypothesis. This is in tone with their perception that the dividend must be paid consistently and continuously.

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Working Papers | 1993

Expected Inflation and Forecast of Growth Rate in India

Ravindra H. Dholakia

Under rapidly changing economic environment in India, economic decision makers at various levels are likely to consider reliable short term forecast of the growth rate of the economy as an important input. It is argued that a simple model with a few variables is likely to be more relevant and reliable for the purpose than elaborate complicated models with hundreds of equations and variables. Expected inflation rate and internal supply-shock are hypothesized to be crucial variables. Numerous alternative methods are tried to measure the expected inflation in India and final choice is made on the bases of certain criteria discussed in the paper. The growth forecasting performance of the model suggested in the paper is compared to the official estimates for the last two years The exploratory exercise carried out in the paper shows promise and potential.

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Working Papers | 1993

Energy-Environment Dynamics in a Medium Sized Town

P. R. Shukla, Prem Pangotra, and Khandelwal Bharat

Conservation of energy and protection of the environmental resources are two of the biggest challenges in planning for a higher quality of life in our communities and sustainable economic development for the society at large. This study models the pattern of energy consumption in all sectors of the community in a medium-sized town in north India. The environmental impacts of energy consumption in human activities-domestic, commercial and industrial-have been assessed. Public systems for providing municipal services have been evaluated both in terms of energy requirements and their effectiveness in providing desired levels of service. Policy options for strategic interventions in each major sector have been identified and the capacity of the local government to mobilize resources for implementing some of the recommended strategies has been assessed. Overall the study evolves a general methodology for addressing issues at the energy-environment interface in other similar communities.

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Working Papers | 1993

Management of Large IT Projects: The Passenger Reservation System of Indian Railways

Rekha Jain and G. Raghuram

The Passenger Reservation System of Indian Railways is a major computer application in a visible, consumer sensitive area. The involves a distributed database, spread over five host computers located in five metropolitan cities in India, and terminals located in more than 22 cities. The objective was to improve the service level to the customer and the exercise may be viewed as an example of a successful application in a developing country. This paper examines this application and draws lessons for management of large Information Technology projects.

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Working Papers | 1993

Policy and the Problems of Policy Change: Some Issues

Sebastian Morris

During the eighties there have been stop-start attempts at liberalization and at policy change to give new direction to the economy which had been drifting ever since serious planning had been given up in the mid-sixties with the onset of the recession then. The period since then right up to 1979 was one of slow growth. The eighties with some what better growth provided the confidence for change. In 1991 and 1992 the attempt by the Government to make a radical shift from the past in the direction of liberalization has no doubt been informed by the experience of the fast growing NICs of east and south-east Asia. The debate, that has followed the policy pronouncements, has been at cross purposes, and the ideological predilections of both parties, but particularly of the left has not helped the conduct of the debate. In this paper we examine some of the issues that have thus far been raised- possibility of India going the Latin American way, export pessimism, employment implications of liberalization, trade liberalization and the promotion of efficiency- and attempt to cast them in a way so that one could work towards conceptual clarity and possibly even empirical answers. We also raise other issues for further discussion. One of the fresh insights we offer is the notion of 'high speed growth' and following from it of 'transformation' rates, which we argue has become the only way out of the current crisis of the Indian nation and polity, Land reforms (which gives the land to the actual tiller) becomes vitally necessary for the capitalist transformation of society. The immediate history of the very same NICs, besides the logic of industrial transformation in densely populated economies ensures this. We also conjecture that the long period of slow growth in India has bred not only a growth pessimism among its elite, but many among them see it as hurting the poor. The exhilatory as aspects of high speed growth in the east and south-east Asian case have to be recognized and appreciated With China having grown very fast for over a decade, there is little excuse for India to not actively pursue high speed growth. The current reforms do not recognize the constraint that the slow growth of the home market would place unless agricultural growth itself can be stepped up above the paltry 3.0% that we have all along been content with.

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Working Papers | 1993

Strengthening Primary Health Care Services: Insights from Qualitative Research in West India

Dileep Mavalankar, Satia J K, and Sharma Bharati

Objectives: To understand reasons for nonuse of Government health services and identify ways to address them. Design and Setting: Indepth interviews of 371 married women of reproductive age were conducted in village of two Primary Health Centres (PHC), of north Gujarat. Five focus group interviews in each of the PHC areas were also conducted. Results and Implications: 1. Acceptance of immunization is high, but needs institutionalization, through community preparation. Women are aware of vaccines(90%), but unaware of diseases, dosage, schedule(69%), therefore do not know the importance of completing vaccine schedule(32%). Vaccines are given at home, but there is substantial dropout in coverage, as women report irregularity of worker(26%), and lack of time(15%). 2. Distributing Iron & Folic Acid tablets may not reduce anemia because, of 60% women served, only 12% consumed for more than 3 months due to side effects and treatment form private sources. 3. There was low demand for antenatal care (46% use) as women do not perceive any benefit unless there is a problem. Delivery care needs improvement, as majority are at home(81%), attended by traditional birth attendants (46%), relatives(18%), private practitioners(24%) and only 3% by ANMs. 4. Sterilization is well accepted but fears remain. Tubectomy was perceived to have least side effects but laparoscopy was preferred as less post operative rest required. Major fears were; laparoscopy causes burning of blood(41%), and vasectomy causes weakness(56%). 5. Low knowledge, demand and use of spacing methods was observed. Knowledge of IUD, condoms and pills was 71%, 63% and 51%. Most women felt that since the natural interval between their children was 2 to 3 yrs, no spacing method was required. Trend was to accept sterilization after the desired family size. 6. People used and preferred private care for major and minor illnesses because private care was thought to be more effective(50%), quick(35%), and more accessible(95). The extension work was restricted to three programs: family planning, immunisation and malaria and the working pattern of the workers does not allow time for counselling and education. The role of primary health care in rural areas and the servering of link between preventive and curative care are discussed.

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Working Papers | 1993

Affine Cost Share Equilibria for Economics with Public Goods

Lahiri Somdeb

In this paper we propose the concept of an affine cost share equilibrium and show that under natural assumptions any optimal allocation corresponds to an affine cost share equilibrium. With linear cost functions and under mild regularity assumptions we show that an optimal allocation is a ratio equilibrium with redistribution. In an appendix to the paper we propose a new proof of the existence of a ratio equilibrium when the preferences of the agents are representable by strictly quasi-concave, continuous and strictly monotonically increasing utility functions.

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Working Papers | 1993

Prospects of Foreign Direct Investments into India in the Nineties

Sebastian Morris

The eighties have witnessed major changes in the phenomenon of foreign direct investments (FDI). There have been major shifts their sources and destinations. Japan became an important source, the US the largest host for inward FDI both of Japanese and Western European based FDI. The important underlying reason has been the declining competitive position of US firms in relation to German and Japanese firms, and the assemetry in growth between the three advanced regions-the USA, Japan and Western Europe. An important development has been the emergence, and now dominance, of services related FDI, although these flows have as yet to affect the LDCs significantly. The host countries within the LDCs too have changed as growth in Latin America has collapsed or declined in the eighties. The fast growing economies of East and South East Asia, have became important hosts, since non resource seeking FDI typically seeks to follow growth. There have been changes too within the Indian economy. The eighties witnessed good growth after a near recessionary period of nearly a decade and a half. It is argued that while the FDI inflow into India is likely to increase in the nineties, such increase is contingent on the maintenance of the industrial growth of the eighties in this decade too. Inflows anywhere near the Chinese level is quite out of question, except in the remote chance that India achieves the 'high speed' growth of China. FDI into India is more likely to take the form of joint-ventures and other so called 'non-equity' forms. As indigenous businesses have gathered strength over the period of sheltered growth in the eighties (and even earlier), FDI entry into India would rarely be without an active Indian collaborator. FDI has had little role to play in the manufactured exports growth from most of the NICs, and their role in India is likely to be even less significant. Yet other foreign firms (like retail chain stores in the West, the Shogo Shosho of Japan) and transnationals too, have, to the great benefit of LDC firms sourced manufactured items from them, the LDC firms having acted as subcontractors or as OEM suppliers. Given the wide diversification of the economy, the low cost of manpower, availability of a wide variety of skills, and large excess capacities, subcontracting and OEM relationship in manufacturing can provide the crucial economies of scale, and steady market to segments of Indian manufacturing which are most competitive, even if at low margins, so that a significant contribution to the extensification of growth can be made.

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IIMA