PRATIBIMB The Reflection of Management FINANCE | GENERAL MANAGEMENT | HUMAN RESOURCE | MARKETING | HEALTHCARE | OPERATIONS | SYSTEMS
In this issue….
KidZania
Jet– Etihad
Rajiv Gandhi Equity Savings Scheme
BitCoin
Tourism in India
Global Debt
A Students’ Initiative
Volume II, Issue XXII
August 2013
A Monthly e-Magazine
T. A. Pai Management Institute Manipal, Karnataka
About TAPMI T. A. Pai Management Institute (TAPMI) is a premier management institute situated in Manipal and is well known for its academic rigor & faculty-student interaction. The Institute has been recently ranked amongst top 1 per cent of B-schools in India & 4th in the South Zone by The Week Magazine. Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much needed impetus to the task of building professional management capability in the country. In the process, it has also played a role in strengthening the existing educational and health infrastructure of Manipal.
Our Mission “To excel in post-graduate management education, research and practice�. Means: 1. By nurturing and developing global wealth creators and leaders. 2. By continually benchmarking ourselves against best in class institutions. 3. By fostering continuous learning and reflection, achievement orientation, creative interdependence and respect for diversity. Value Bounds: 1. Holistic concern for ethics, environment and society.
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PRATIBIMB TAPMI’S MONTHLY e-MAGAZINE
VOLUME 2, ISSUE XXI
AUGUST, 2013
TAPMI’s e-Magazine - is the conglomeration of the various specializations in MBA (Marketing, Finance, HR, Systems and Operations). It is primarily intended to provide insights into the plethora of knowledge that relate to the various departments of Management and to give an opportunity to the students of TAPMI and the best brains across country to exhibit their creative cells. The magazine also strives to bring expert inputs from industries, thereby bringing the academia and industry together. Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The issue comprised of an interview of well known writer Ms. Rashmi Bansal along with a series of articles by students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first rank globally for learning & development . It also included a hugely successful and engrossing game for finance geeks called “Beat the Market” to bring out the application based knowledge of students by providing them the platform where they were expected to predict the stock prices of two selected stocks on a future date. The magazine is primarily intended for the development of all around management knowledge by providing unbiased critical insights into the modern developments. TAPMI believes that learning is a continuous process and is not limited to the four walls of the classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and contribute to create a refreshing learning environment outside the classrooms which eventually leads to a holistic development process. The magazine provides a competitive platform and opportunity to the students where they can compete with the best brains in the B-Schools of the country. The magazine also provides a platform for prominent industry stalwarts to communicate their views and learning about and from the recent developments from their respective fields of business which in turn helps to create a collaborative learning base for its readers. Pratibimb is committed in continuing this initiative by bringing in continuous improvement in the magazine by including quality articles related to various management issues and eventually creating a more engaging relationship with its readers by providing them a platform to showcase their talent. We invite all the best brains across country to be part of this initiative and help us take this to the next level. Pratibimb | August 2013 | 3
Director’s Message
It is always a pleasure to see research activities in TAPMI. The research activities are the expressions of knowledge levels of our student community. Knowledge is the most important factor for individual fulfilment and success in society. Education and research play a very crucial role in the creation, development and use of knowledge. This leads to innovation at all levels, which in turn drives the economic, social and cultural development of a country. Pratibimb is an apt platform for the student and faculty members to showcase their research activities to the external world. I wish all the very best for the team and the magazine. R C Natarajan Director, TAPMI
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Editor’s corner Editor in Chief
Dear Readers, We thank all the participants and readers for their contributions and feedback. In this issue of Pratibimb, Mr. Nitin Singh of SIMS discusses about the changes in Aviation Industry in India. Further, Ms. NM Manchu and Vinothini S of GRG School talk about the government scheme “RGESS” in their article. In the article, “Is Bitcoins the Currency for Future” Mr. S Abhishek, from SCMHRD, explains the advantages of using a digital currency in India. He also talks about what India should do in the current economic turmoil. An article by Mr. Souvik Dhar and Ms. Priyanka Hazarika of NIT Silchar talks about the potential of tourism industry and how India can benefit out of this. Going further, we have Mr. Akshay Gupta of IBS explaining the problems associated with the soaring global debt. In her article “KidZania in India”, Ms. Kavitha Dinesh from KJ Somaiya talks about the impact of KidZania in entertainment business sector. How neuroscience can bring in changes in HR domain? This novel idea is explained in the article “Mind Matters” by Ms Pushpa Gopalkrishnan from TISS.
Arun Stephen Marketing & Advertising Abhineet Rastogi Bhavnita Nareshkumar Creative & Cover Design Devi Kailas Communications Kannan Venkat Shubha Prabhu Operations Aditya Bhat Publishing Lloyd George Faculty Advisors Prof. Chowdari Prasad
As always, stay safe, celebrate life and keep reading Pratibimb. Stay updated and like our page to hear more from us at :http://www.facebook.com/pratibimb.reflecting.management
We would like to thank all our faculty members who have provided their valuable feedback in order to help us maintain the standards we have strived to achieve.
Enjoy Reading! Arun Stephen
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Dean (PR) & Chairman-Admissions
Prof. Aparna Bhat
Contents Commotion in Air
7
by Nitin Singh, SIMS
Rajiv Gandhi Equity Savings Scheme: A New Avenue for Investment in Financial Markets
11
by N M Manchu, Vinothini S, GRG School of Management Studies
Is Bitcoin the Currency for future?
13
by S Abhishek, SCMHRD
Tourism Industry and India’s Economic Revival
17
by Souvik Dhar, Priyanka Hazarika, NIT Silchar
Wish You a Merry Crisis: The Bubble Bomb
21
by Akshay Gupta, IBS Hyderabad
KidZania in India
24
by Kavita Dinesh Peddinti, K J Somaiya
Mind Matters; Maximum Workplace Potential with Neuroscience by Pushpa Gopalakrishnan ,TISS
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Commotion in Air Nitin Singh, SIMS Pune
Big Ticket Marquee Deal April 24, 2013 was a historic day for Indian aviation story. Remarkable investment in dud aviation sector was astonishing as well as indispensable. A whopping $379 million of mammoth equity investment by Etihad Airways to hold 24% stakes in enlarged share capital of Jet airways was a much needed breather for Jet Airways, which was beset with intricacies. The UAE national carrier has agreed to subscribe for 27,263,372 new shares in Jet Airways at a price of INR754.74 per share. Etihad Airways' wider overall commitment to Jet Airways includes the injection of $220m to create and strengthen a wide-ranging partnership between the two carriers.
As part of this Etihad Airways paid $70 million to purchase Jet Airways' three pairs of Heathrow slots through the sale and lease back agreement announced on 27 February 2013. Jet Airways continues to operate flights to London utilising these slots. An amount of $150 million will be invested by Etihad Airways by way of a majority equity investment in Jet Airways' frequent flyer program "Jet Privilege", subject to appropriate regulatory and corporate approvals and final commercial agreements which are expected to be completed within the next six months.
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Under the strategic partnership, which will be subject to full regulatory and shareholder approval, the airlines will gradually expand existing operations and introduce new routes between India and Abu Dhabi, providing an ever wider choice to the travelling public. They will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways' growing global network. Passengers from 23 cities in India will benefit from direct connections to international destinations. New flights from Jet Airways' home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways' vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions. Bone of Contention The much controversial clause of ‘effective control’ is giving tantrums to Government of India (GOI), Jet Airways and Etihad Airways. Marquee deal has sent jitters to the alleys of Foreign Institutional Promotional Board (FIPB), Department of Industrial Policy and Promotion (DIPP), Ministry of Civil Aviation, Directorate General of Civil Aviation (DGCA) and RBI. There are grave concerns over ownership rights. According to experts, ownership rights and effective control is tacitly passed to Etihad Airways, which is National carrier of United Arab Emirates. Out of the blue increment of 40000 seats per week under provision of bilateral air service agreement has raised eyebrows of many pundits. Especially, abrupt augmentation in bilateral just at the eleventh hour of pre-deal moment was not coincidental. Post deal all the hell broke loose over the nouveau issue of legal definition of FDI and FII. RBI, Ministry of Finance and DIPP are still in the fray to clear the air over demarcation between FDI and FII. Many experts believe that under the clauses of deal, effective control resides in the foreign hands i.e. Etihad Airways. That in turn insinuates that the Jet – Etihad deal violates the basic tenet of FDI. If Abu Dhabi is at the helm of Jet – Etihad deal then fledgling Indian aviation industry would have to face catastrophic outcomes. If we glance through history of Indian civil aviation, it will be evident that our aviation sector is not readied with such brownfield consequences. Nascent juvenile structure of aviation needs the verve of infrastructure and development. It would be ill-afforded to budge under the pressure and to permeate Etihad holding the reins. According to numbers, Jet Airways is holding sway over market share of international flights. In a recent report published by Traveller, it said that Jet Airways is the leader in outbound air traffic. Hence, renouncing India’s lion share of aviation is untenable for Indian growth story.
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Contractual provisions granting Etihad special rights, including the right to nominate directors, unilateral termination rights and casting vote in board matters may need to be removed or modified. It remains to be seen whether the deal will remain attractive for Etihad after dilution of rights through regulatory interference. Needless to say, Etihad's investment approval is subject to Directorate General of Civil Aviation (DGCA) guidelines. As per its guidelines, a scheduled operator's permit can be granted only to a company where the chairman and at least two-thirds of the directors are Indian citizens and substantial ownership and effective control is vested with Indian nationals. If the Jet-Etihad deal is approved, many of approved seats would become available to Etihad, which many feel would make Abu Dhabi the hub for all outbound journeys from India, especially to Europe and North America and hurt commercial interests of private airports developed in various Indian cities like New Delhi. GMR, GVK and many other airlines have clearly shown their concerns over the ticklish issue. Many academia fraternities avow that contentious deal at the centre of controversy will hurt the interests of our national carrier- Air India. At this juncture of time, when Air India is not in pink of its health, it would be a double whammy for national carrier. Over the years, its balance sheet remains in red. Indian aviation industry is already grappling with astronomical prices of imported aviation jet fuel and persistent high interest costs. Airport Authority of India (AAI) is planning to infuse much needed reforms in the aviation sector. Rejuvenation of airports, streamlining of maintenance, repair and overhaul (MRO) process are on the anvil. Creation of world class competitive amenities at Indian airports is the prime concern for AAI. This will drive up business and revenue of cash-strapped aviation industry, which needs to catapult its business model. According to DGCA’s 2008 guidelines, any domestic airline under any financial arrangement cannot lease-hire and hirepurchase with an overseas airline. So keeping in view of that, Jet needs to reframe its tack. Under the acquisition, Etihad would nominate three directors to Jet’s sevenmember board, while concerns have also been raised by the Indian government over fears Etihad could move significant parts of Jet’s operations from India to Abu Dhabi. Once Etihad takes 24 percent of Goyal’s stake, the combined foreign ownership of Jet by Etihad and Tailwinds will exceed the 49 percent permitted by the FDI law. Jet – Etihad deal is handing over benefits to Abu Dhabi on a platter. The deal between India's Jet Airways and Abu Dhabibased Etihad Airways has several angles. However, one
point that stands out is how the deal was ‘facilitated’ to provide benefit to both the private parties at the cost of India. Especially, signing of the bilateral for enhancing weekly seat entitlement to 40,000 seats between India and Abu Dhabi is turning out to be more beneficial to Etihad than anyone else. The Indian government has literally given Jet and Etihad the right to pick up passengers from any domestic airport to Abu Dhabi. From here, the passengers would be flown to destinations beyond United Arab Emirates (UAE) like London and New York. In February 2013, the Indian government decided to scrap international flying rights and domestic slots of Vijay Mallya-led Kingfisher due to nonutilization. The cancellation of rights of Kingfisher to fly overseas alone created 25,000 seats per week for use to eight countries, including Dubai, UAE, UK, Hong Kong, Singapore, Nepal, Sri Lanka and Thailand.
the potential to cause premature death of several Indian carriers. The Fifth Freedom allows an airline to carry revenue traffic between foreign countries as a part of services connecting the airline's own country. The unofficial Sixth Freedom combines the Third Freedom and Fourth Freedoms and is the right to carry passengers or cargo from a second country to a third country by stopping in one's own country. Etihad has proposed buying 24 per cent equity in Jet. Although this is less than the 25 per cent limit for a mandatory open offer to minority shareholders, it is perceived that control will be with the Abu Dhabi-based airline. In a recent news, market regulator SEBI has told Jet and Etihad that the right to appoint board members should be proportionate to shareholding and that the foreign investor should not enjoy powers such as right to appoint a vicechairman and automatic representation on the audit committee. Indian rules define control as the right to appoint majority of directors on a company’s board or have a say in the management either directly or along with persons acting in concert by virtue of their shareholding or voting agreements.
Ideally, this should have benefitted domestic carriers like Air India. However, these vacated slots were adjusted to several destinations beyond Abu Dhabi to be used by Etihad, thus violating the Chicago Convention. Indian carriers are not in a position to use increased seat capacity due to fleet constraints. In such a situation, the foreign airline may try to catch up passenger traffic headed to destinations in North America, Europe, Africa and Middle East resulting in huge losses to Air India and various airports of India. Emirates Airlines has already established Dubai as its hub point by operating more flights and carrying more passengers to and from India. A staggering 70% of the passengers carried by Emirates Airlines, travel to points beyond Dubai. Etihad is trying to emulate the same for Abu Dhabi with help from the Indian government. et Airways Source: theeconomictimes.com selling three of its slots at London’s Heathrow Airport to Etihad, which was confirmed by the secretary of MCA. This was done without taking any permission from the Indian Panacea for deal in jeopardy - Rework and dilution government. Carriers have no right to sell the bilateral alA number of roadblocks are there in the way of historic deal. lotted to them to other airlines that too a foreign airline. But the silver lining for Jet – Etihad is either rework or diluIndia and UAE have signed an agreement for only Third and tion of clauses in the deal. Jet and Etihad must turnaround Fourth Freedom Rights, which allows bilateral flights on re- or change the present tack to fructify humongous deal in ciprocal basis between two countries. However, the deal aviation sector. Jet-Etihad can extricate them out of present between Jet and Etihad is completely based on Fifth and quagmire by making a few necessary amendments to satiate Sixth Freedom. This is really a cause for concern, as it has bureaucracy and national interests of India.
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In a recent happening, Indian authorities have sought assur- a fag-end of Indian growth story. Apparently, this gargantuance from Jet airways that the airline will follow all laws, an investment will germinate employment, facilitate sharing rules and regulations of the country before its decision to of best technologies and management practices and revesell 24% equity to UAE-based carrier Etihad is approved. nue for our economy, which is haunted and battered by A thaw in the clauses of deal is the need of hour. Infusion of spook of twin deficit. Jet – Etihad deal will clear present such a colossal investment in Indian aviation industry, which bleak and gloomy outlook. is mired deep in the paucity and dearth of moolah greenIn a nutshell, a business is done by apt and terse strategy to back. This deal has vital significance and connotation for disseminate shared prosperity. Henceforth, a minutiae Indian economy. Stalling the deal is no-brainer. Instead it change in modus operandi of Jet-Etihad will inch us towards would tarnish the imagery of India as an investment destielusive and covetous goal of shared prosperity. And it nation. Trade-off between Indian officialdom and Jet-Etihad should be done expeditiously to clear the turbulence in air. management can drive the scuttled deal to fruition. It is just References:
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www.theeconomictimes.com
www.gartner.com
www.thehindu.com
www.businessstandard.com
www.economist.com
www.hindustantimes.com
Rajiv Gandhi Equity Savings Scheme: A New Investment Avenue in Financial Market N M Manchu, Vinothini S, GRG School of Management Studies
Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity scheme which is introduced in India by the Union Finance Minister, Shri. P. Chidambaram on September 21, 2012. RGESS is all about a new equity tax benefit savings scheme for equity investors in India. Aim of this Scheme is of encouraging the savings of the small investors in the domestic capital markets, to promote an 'equity culture' in India. This scheme is exclusively opened for small retail investors. The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year with the conditions of new retail investors’ annual income is below Rs. 10lakhs. ELIGIBILITY As a New retail investor he/she should fulfill the conditions of the Scheme. There are three categories of new retail investors can invest in this Scheme. There are:
Figure-1: RGESS Eligibility
ELIGIBLE SECURITIES
1. Equity shares falling in the list of securities declared as "BSE-100" or "CNX-100". 2. Equity shares of public sector enterprises which are categorized as Maharatna, Navratna or Miniratna by the Central Government.
3. Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible under Rajiv Gandhi Equity Savings Scheme (RGESS) as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.
4. Follow on Public Offer of eligible securities. Pratibimb | August 2013 | 11
5. New Fund Offers (NFOs) of eligible ETF's and mutual funds. 6. Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years. HOW FAR IT REACHES PEOPLE: According to National Securities Depository Limited (NSDL) and Central Depository Service (India) ltd (CDSL) share depository’s data, it showed that RGESS has managed to mobilize investments only over Rs.50 crores at the end of March 2012. Before November 2012, the total of demat accounts were opened up to 20,800. After 23rd November 2012, demat accounts were increased to 7,14,129. Valuation of RGESS Many discussions were happened among analysts and experts, when it was introduced in the budget. There are positive and negative impacts of having RGESS. Many fund managers and experts criticized that it is little bit complex and risky proposition for first time investors, as they possess a very little or no knowledge about equity Market. So they will not be interested in this scheme. The tax benefit can be availed only once at the time of investment. One of the disadvantages with close-ended schemes is that they have to be launched every year under the RGESS banner. So, existing investors who want to invest Rs 50,000 in the first, second and third years will have to invest in three different schemes.
tax deduction of Rs.25, 000. In RGESS, there are opportunities for investors to invest in variety of equity products like ETFs, Equities and Mutual Funds compliant with its norms. Gains, arising of investments in RGESS, can be realized after a year. This is in contrast to all other tax saving instruments. Retail Investors can invest their investment in installments of the year in which the tax claims are filed. Dividend payments are announced to be tax free. This scheme has a long run benefit of educating the retail investment segment and thereby moving towards financial inclusivity in the country. Success of this scheme can lead to transfer of assets from traditional savings instruments such as Bank Deposits, Provident Funds, Gold and Insurance to the capital markets, leading to diversification in retail investor portfolio and also leading to more productive "capital formation" assets. Suggestions to improve RGESS Scheme From our study, we suggest that
Restrictions regarding RGESS can be minimized through which more investors can be obtained, so that fund mobilization can be high.
Increasing the investors’ investment level from Rs 50,000 to Rs 1, 00,000 may result in result of their income level.
RGESS Scheme can also enhance the investors income level which as per today within 10 lakhs, to 15 lakhs and even more. This may attract more number of investors.
Investors’ tax benefit from Rs 2,500 to Rs 5,000 can also be increased. The Government has taken many initiatives to create awareness about saving their hard-earned money in safe investments. RGESS is an innovative initiative taken by the government to safeguard investors from fraudulent investment companies. This encourages the investors to explore equity market. Thereby it results in increase in equity market players, rather than investing in traditional saving instruments. Finally it fulfills the aim of financial inclusivity in India.
This scheme will have complications at the time of sales. Because the share holder has to reinvest the initial amount back for buying the same selected list of shares. Fixed and flexible lock in period is also complicated. Investors’ income limit is 10lakhs when this RGESS is announced. Then, it increased its investors’ income level from 10lakhs to 12lakhs. But it will not help widen the investor base significantly. But, the investment limit is only up to Rs. 50000. It will be costly and difficult to tap into these millions of small and often skeptical investors, many of whom live in small towns References and rural areas and don't trust big city stock market. On the other hand experts suggest that REGSS is good in- vestment for retail investors because the maximum Invest- ment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year subject to maximum
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www.timesofindia.indiatimes.com/ www.bseindia.com/rgess/ www.firstpost.com/fwire/ www.getmoneyrich.com/rajiv-gandhi-equity-savingsscheme/
Is Bitcoin the Currency for Future? S Abhishek, SCMHRD
They say that desperate times call for desperate measures. India as a nation is reeling today as the Rupee is in a free fall, the global economy is down and due to the Indian love for Gold, the Current Account Deficit or the difference between imports and exports has burgeoned to unsustainable levels. Quantitative Easing in the US and Abenomics in Japan are two unconventional methods which have been employed by the respective governments to revitalise the economy? Can the Indian government look towards a radical new currency i.e Bitcoins instead of the weakened Rupee to revive investor confidence and script 'The Great Indian Revival'? But first. . . WHAT ARE BITCOINS: Heard of Bitcoin? Chances are you probably don't know what it is and neither that it even existed! But even more realistic is the possibility that this could be Dollar of the future! Now, what is Bitcoin and why is it such a big deal? Bitcoin is an experimental, decentralized digital currency that enables instant payments to anyone, anywhere in the world. Interestingly, unlike fiat currency which derives value from government regulation or law, Bitcoin derives value from computer processing power. Simply put, if user A can calculate complex puzzles using his computer faster
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than user B, user A gets 50 Bitcoins whereas user B gets nothing. Bitcoin, the brainchild of Japanese IT whiz Satoshi Nakamoto, is generated by the following 'process': Complex cryptographic puzzles are randomly generated by a predefined computer program at a fixed rate, and transmitted to a network of volunteer Bitcoin 'miners'. Using opensource software freely available and insanely high speed processors, miners crunch data to solve these puzzles. Naturally, the first miner to solve it gets 50 Bitcoins. The program has been preset to generate puzzles till 2140, when it will stop after generating 21 million Bitcoins. The number of new Bitcoins generated is halved every four years until 2140 when this number is rounded out to zero. At that time, no more bitcoins will be added and to accommodate the limit, each bitcoin is subdivided down to eight decimal places, forming smaller units called satoshis which will number 100 million per Bitcoin. Since the puzzles are insanely complex and require ultrafast processors, mining is the sole purview of IT professionals and the rich who mine Bitcoins and then trade them online. Why Bitcoins?
needing to trust any third party. 7. Bitcoins can be transferred extremely fast as in instantly with almost zero time lag! Bitcoin solves many problems which have plagued paper money since centuries. They can't be created by banks, individuals (counterfeiting) or governments (printing). They are a form of 'virtual gold', made for the internet era. Bitcoins around the world: Bitcoin is quickly gaining acceptance across the world as more and more online retailers start accepting digital money. Wikileaks and other major organisations across the US and Europe have started accepting Bitcoin as payment and certain companies in the US have also started paying their employees a certain percentage of the salaries in Bitcoins. As online commerce increases exponentially and the world shifts online, Bitcoins are truly going to become the most common and preferred choice of currency. Though introduced only in late 2009, Bitcoins have quickly gained traction and the Bitcoin economy is now worth more than 1.1 billion dollars. There are around 11.5 million Bitcoins in circulation worldwide and more than 70,000 trades happening daily. It is estimated that investors trading in Bitcoins generate an average daily profit of around $681,000 which is increasing steadily.
Each Bitcoin buyer gets a digital wallet to which only he retains a encrypted private key. Each user transaction can only be initiated by the user using his digital key for authentication. As of July 2013, 1 bitcoin equals a whopping 90 Dollars! Pricing, as stated by general economics is always driven The growing clout of Bitcoins can be seen through some of by demand which has been steadily rising for Bitcoin due to the recent developments around the world. Argentina, the following factors: where inflation has been increasing at highly unsustainable 1. General perception that the world economic system is levels, making life increasingly tough for the middle class inherently unstable and headed for collapse leaving all pa- Argentinian, has seen a 30-40% surge in the value of Bitcoins. The growth of Bitcoins in Argentina has zoomed per money, well, just that- paper! with Bitcoin downloads rising exponentially. In an economy 2. Users who want to remain anonymous since the digital where the people are slowly but surely losing faith in govdomain offers secrecy: Illegal arms traders, drug dealers and ernment economic measures, Bitcoin is being dangled as a safe haven. A similar effect can also be seen in neighbouring the likes. Uruguay where again inflation is on the rise and paper mon3. Speculators and millennials who feel the Internet will ey is seen losing value. soon take over the real world. Another example is Kenya, where already mobile SIM card 4. Advantages of Bitcoin since there are no financial institu- powered M-Pesa (digital currency) is popular. But for the tions to mediate between buyers and sellers and also the huge number of Kenyans who work abroad, remitting monabsence of regulation by banks and governments, whose ey back home is an onerous, time-consuming and costly 'bad' financial sense is being seen as the main factor for the affair. Bitcoin, with little to no extra charge and extremely collapse of world markets. fast transfer is again the saviour here with more Kenyans looking to take advantage of it. 5. Since the currency is electronically encrypted, they are impossible to counterfeit. Icelandic currency expert Sveinn Valfells has a radical suggestion for the Icelandic government: that Iceland should 6. Bitcoins can be easily sent through the internet, without adopt Bitcoins as the national currency so that people can
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weather the brutal economic climate destroying Europe. Iceland is facing double-digit inflation. History is proof that an alternative form of currency can help the country emerge stronger from a recession as Iceland itself has seen. In the 1970s, Valfells Senior introduced vouchers as an alternative form of currency in Iceland which eventually the Icelandic government accepted as payment for taxes and helped Iceland survive the tough economic climate then. When the Cyprus banking system collapsed earlier this year, people who had invested in Bitcoins became instant millionaires as the value of Bitcoins surged to $265! Bitcoin is also seen as a threat to Gold, which till now didn't have a proper competitor as an alternative to paper money! Bitcoin mimics Gold in the sense that it has limited supply but while more gold may yet be found, Bitcoins has a predefined limit, hence enhancing it's value over the long term. Also Bitcoins are hard to steal and don't require armed men or vaults to guard them, unlike Gold. Last but not least, digital currency is least likely to be manipulated by the government and financial institutions since Bitcoins don't have any central authority controlling them. Gold is expected to face a strong threat from Bitcoins in the near to distant future since other than as an alternative form of money, Gold is just a decorative metal and not much else.
which include IT professionals, web developers, venture capitalists, and investment bankers have joined in to market, standardise and promote Bitcoin in India and their tribe is growing furiously! What makes Bitcoin so interesting and alluring is the fact that the entire Bitcoin economy is based on principles of liberalisation, democracy, transparency and absolute simplicity! Money may instantly be transferred from any point on the planet to another instantly and at little to no cost. Such a currency is the absolute need of the hour: Money whose value cannot be manipulated by governments and financial institutions, who work for their own selfish interests since at the end of the Bitcoin is just a piece of code! At the moment there are around 3000 traders trading in Bitcoins in India and with average gains of around 300% , Bitcoins sure are booming. Also, since Bitcoins are nontaxable and do not attract VAT, it is paradise for Bitcoin investors. What India should do? India must first introduce a slew of comprehensive measures including:
Why Bitcoins in India? Now why would bitcoin be relevant to India? Primarily seen, four reasons are plain obvious: 1. After petroleum, Gold is India's biggest weakness which has led to India's today having an unhealthy Current Account Deficit. India imports massive amounts of Gold lead ing to a monstrous gap between imports and exports. 2. The Rupee which has an unhealthy dependency on global factors is on a free-fall and requires intervention by the Government of India and the Reserve bank of India. The central Bank has had to raise interest rates and The government's borrowing costs have also gone up whilst defending the Rupee. The defence of the Rupee has also tied up the government's hands in implementing key economic reforms aimed at kick-starting India's growth back to where it belongs. 3. India is home to more programmers/ IT professionals than the rest of the world. 4. A vast majority of the country has no access to Banking services. Free-thinking optimists believe that Bitcoins may just be best thing to happen to the unpredictable world of modern day finance and those who gain the first-mover advantage now will stand to make millions hereafter. These supporters
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Payment through Bitcoins:
India should start ac-
cepting payments through Bitcoins for tax payments, fees, custom duties and the like. Incentivize Bitcoin-based Businesses so that all companies start accepting payments in Bitcoins and use Bitcoins to pay salaries to employees and in other transactions. The Government can invest money saved in national pension schemes in the Bitcoin market, start setting up digital financial institutions which promote,scale and standardise Bitcoins and which may convert ordinary cash into Bitcoins. Also, Bitcoin-based bonds maybe issued by the government. Introduce Digital Finance courses across the various educational institutions across the country so as to position India as the Digital Financial Hub of the future. It can also offer expertise to other countries which may want to follow India into the future of finance when they realise their present economic model is unstable and unviable. India can thus accelerate it's ascension as a world superpower.
What India Stands to gain? The smartphone market is exploding in India and Bitcoin banking may be offered to more than 40% of India's population which don't have access to the banking system.
accepting Bitcoins since they drastically cut down transactional costs which account for nearly 10-12% of the total costs in any business. Bitcoins would reduce Indian dependency on the Rupee and would free up the Reserve bank of India and the government to focus on other vital areas to speed up the growth of the Indian economy.
India is the world's leading receiver of remittances, receiving more than 15% of the world's total reTaxing the Bitcoin trade in India would open up a mittances. Bitcoins offer an extremely quick and new revenue stream for the Indian government. cheap way to send remittances back to India, enabling easy flow of money to India and increasing Bitcoin does have it's shortcomings, among which is it's growth of India's GDP. The internet industry, which research has found to price volatility, inspired by it's limited supply and investor constitute around 20% of the GDP in developed speculation. But in an increasingly uncertain world, where countries would enjoy unprecedented growth once fiat currencies are increasingly becoming volatile and the governments and premier financial institutions can no longBitcoins are standardised and introduced. While Gold is just a 'refuge' from the ever rotting er be trusted to do the 'right' thing, Bitcoins are becoming world financial system, Bitcoins offer a real 'solution' an increasingly attractive option. and history has observed that in the long term, it is Decades of research has shown that the strength of an the solutions which get well and truly rewarded. economy lies in the trust that exists in it's currency. If Once Indians realise that Bitcoins are more valuable Bitcoin can become a trusted form of economic transaction, than Gold, they would start investing more in then there's no stopping it from becoming a safe haven for Bitcoins since Gold is just an alternative to paper those living in volatile economies: which funnily enough, is a broad enough definition covering the entire world going money at the end of the day. Over the past 4 years, the value of fiat currencies through turbulent times today. Old just may not be Gold around the world has fallen relative to Gold but the anymore! biggest surprise has been the fact that Bitcoins have History has shown that the pioneers who embrace change wholeheartedly and before anyone else, stand to reap unabsolutely crushed gold in terms of value! If you paid told benefits and riches. The future ahead is clear since a gram of gold to buy Bitcoins 3 years back, today Bitcoins are going to take over the world of finance sooner you will receive 4 grams of Gold in return for those rather than later but the million dollar question or should I Bitcoins. now say: The million Bitcoin question remains: Is India ready Bitcoins eliminate dependency on 'too big to fail' to say 'Goodbye gold, silver and paper money; Hello banks and are the precursor to a new era of digital Bitcoin!' finance. Paypal which is the Big Daddy in the world of online, digital payments has blocked access to it's features in more than 60 countries due to security issues, including India. Bitcoin having no central authority cannot be so blocked and would allow transactions to take place between businesses around the world, in the digital domain allowing growth of business in today's internet era. Bitcoin ushers in a new age of digital economy, offering everyone equal access and opportunity, truly flattening out and ironing out the world economy's inherent problems in a very literal sense. In this age of cost-cutting, small businesses and start ups, which are the engines of growth in any developing economy, can save huge amounts of money by
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References
Bitcoindia.com
The Economic Times
Forbes Magazine
Wall Street Journal
Bitcoin.org
Tourism Industry and India’s Economic Revival Souvik Dhar, Priyanka Hazarika, NIT Silchar
The Tourism Industry in India has great prospect but due to lack of strategy and coordinated efforts from all the stakeholders it didn’t prospered to the extent of its potential. Thus as India is facing economic crunch with rising fiscal and current account deficit and adding to the woes with a steady fall of our currency against the dollars more alternatives are searched to balance the whole scenario. Thus in these crisis situation Tourism Industry can be one of the better alternatives for reviving the economic growth story of India. Overview of Tourism Industry: In these passing decades Tourism Industry experienced continued expansion and diversification and thus eventually becoming one of the largest and fastest-growing economic sectors in the world. Thus leaving aside few occasional slowdowns the facts and figures suggests that International tourist arrivals has registered a virtually uninterrupted growth story – from 25 million arrivals in the year 1950, to 278 million in 1980, 528 million in 1995, and finally touching 1,035 million in the year 2012. The year 2012 became significant for Tourism Industry as in spite of economic slowdown, International Tourist Arrivals worldwide exceeded the 1 billion mark for the first time. And the growth in Tourism receipt too matched with the growth of arrival as International Tourism Receipts worldwide reached to its new record at US $ 1075 billion.
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Figure-1 : Forecast of international tourist arrivals
UNWTO in its new study i.e., “TOURISM TOWARDS 2030” forecasted that international tourist’s arrivals worldwide will increase by an average 3.3% a year over the period from 2010 to 2030. And with these projected pace of growth tourist influx will touch 1.8 billion by the year 2030.
and low waiting period are the boosting factors for the rise of medical tourism in India. The Tourism Industry must be utilized as a vehicle for economic development of our country. It is a noted fact that International tourism is an invisible export that creates a flow of foreign currency into the economy of a destination country and there by contributing directly to the current account of the balance of payments. Thus in these current scenario where India is facing a huge current account deficit Tourism Industry might play a crucial role in reducing it and bringing back India’s economy in the right track.
Indian Tourism Industry and its impact on its economy: Tourism Industry is the most attractive and fastest growing service industry in India. The tourism industry in India is substantial and vibrant, and the country is fast becoming a major global destination. India’s travel and tourism industry is one of the most profitable industries in the counTourism industry is one of the major foreign extry, and also credited with contributing a substantial amount of foreign exchange. This is illustrated by the fact that during change earners in India. This sector of the economy is found 2012, 6.58 million tourists visited India and spent US $17.74 effective in generating the foreign exchange reserve. Thus the contribution by earning foreign exchange is one of the Billion. most beneficial factors of Tourism Industry for the economic Tourism industry has become an integral part of growth of our country. Also the revenue generated by this the Indian economy. Its contribution to the GDP and to the sector has been found successful in minimizing the foreign employment in the country is very significant. The World exchange crisis of India. Travel and Tourism Council (WTTC) calculated that tourism generated $121 billion or 6.4% of the nation's GDP. And also it provided 393 million jobs i.e., 7.9% of its total employment. The GDP of the tourism sector has expanded 229% between 1990 and 2011. The sector is predicted to grow at an average annual rate of 7.7% in the next decade. This gave India the fifth rank among countries with the fastest growing tourism industry. According to the ASSOCHAM report India has huge potential for the growth of medical tourism. As ASSOCHAM predicted in its report that Medical Tourism Sector is expected to grow at an estimated rate of 30% annually. And by the end of the year 2015 it would reach to about 9,500 Figure-2: Foreign tourist arrivals in India crore. Low cost, World class service, language compatibility,
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The tourism sector is also linked to various allied sectors of the economy and thus affecting the growth and employment of those sectors too. It is a multi-segment in- dustry comprising of hotels and restaurants, transportation services, tourist resorts, amusement parks, entertainment centres, sales outlets of handicrafts and jewelleries etc.
specially in creating new employment avenues in rural India. The focus on Tourism Industries will include developing various tourists’ destinations and thus the infrastructure in and around those destinations would be improved.
The business of allied industries of Tourism like hoThus Tourism Industry can be considered to be an tels, traveling agencies etc. will also boom up with economic bonanza due to the fact that it includes various the growth of Tourism sector. positive economic effects like generation of national inThe Tourism Industry can be a potential source for revecome, expansion of employment opportunities, rising of tax nue earning of any country as visitors expenditure on acrevenue, generation of foreign exchange and transforcommodation, food and drink, local transport, entertainmation of regional economy. ment and shopping, is an important contributor to the economy of many countries, creating much needed employment and opportunities for development. Thus India can invest in developing tourist destinations to attract international as well as domestic tourist thus turning tourism sector into a key driver of socio-economic progress through export revenues, creating new jobs and enterprises and infrastructure development. Accelerating the Tourism Industry in India:
Figure-3: Forex earnings from tourism
Tourism Industry can it be a potential driver for reviving India’s economic downturn? As India has embraced globalization and reaped its benefits thus with changing times it has to face its hazards too. Thus any slight changes in global market shows its neg- ative impact in Indian economic front. Thus a strategic shift or restructure is required so that we should not be dependent on global market totally but should give stress to new avenues and sectors to make our economy more or less near to self-reliant. Thus if we analyse the existing market scenario we can perfectly judge that Tourism Industry has the brightest prospect to offset the current crisis. There are several factors which supports the idea that Tourism Industry can be a potential source for India’s restructuring efforts.
In spite of global economic recession the growth of Tourism Industries showed that it has the potential to become one of the major sources of revenue earning for any country.
India vast pool of diversified resources can be showcased in front of the world in a more presentable way to attract foreign tourists which would really boost the exchequer.
Tourism Industry growth can be beneficial for India
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Government of India should encourage the big Corporates giants and key private sector players to invest specially for improving the required facilities to boost up the Tourism Industry in India. Thus this joint venture between the Governments and Private players would really enhance the facilities at the ground level and be a catalyst in accelerating the Tourism in India. Enhancing the coordination between the different stakeholder groups involved in Tourism Sectors directly or indirectly so that the plans can be effective at the ground level. The Visa on Arrival program should be improved by Government of India so that International tourist can easily visit India without any hassle. The raising of FDI cap on Hotels , Aviation’s and other allied sectors of tourism will influx foreign investment and will definitely boost up the competitiveness as well as growth of the sector. Focussing on promotion of Tourism Industry in India should be more effective as more similar campaign like that of “INCREDIBLE INDIA” and “PARADISE UNEXPLORED” should be carried out to highlight the prospect of Indian Tourism Sector. Developing a wide range of product portfolio to target various segments of tourists to increase the influx of international as well as domestic tourist. Thus developing various sub segments which includes
Domestic Tourism
Education Tourism
Eco-Tourism
Medical Tourism
Golf tourism
Luxury Trains
Tea Tourism
Sports Tourism
Tourism Industry seems to be more effective than References: other industries in generating employment and income at a bulk pace. Thus we should give more focus on developing  UNWTO Tourism Highlight 2013 the tourism sector of India as it has the tremendous poten-  Indian Tourism Statistics at a Glance 2012 tial to uplift the economic growth story of India back to the track.
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Wish You a Merry Crisis : The Bubble Bomb Akshay Gupta, IBS Hyderabad
East is “East”, all the action lies in the West. Some might say this phrase is a thing of the past now, others might say the G4 economies are bouncing back. The truth is, in long term, we are all in debt. Look closer, you will see the elephant in the room – Soaring Global Debt. From the tiny state of Cyprus racing to secure a bailout to stave off bankruptcy which looks like a dot in the larger financial picture to Detroit bankruptcy to the emerging markets losing their mojo. We are all part of it now. Banks, government and consumers, we are moving money around in circles. The deficit crisis and the financial bubble busts are sweeping the economies away. With Total World Debt $190 trillion, even all the World Bank Deposits can’t pay it off. Conclusion – Financial Bubbles are good for economy’s health? Think about it - It’s a TRAP!
Figure-1 : National Debt of various countries
What is a bubble? When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals. However, in today’s era , the term bubble for me, is a situation in which asset prices appear to be based on implausible or inconsistent views about the future that carries the potential to desolate the financial structure of the world. It all began in 1637, speculation of Dutch Tulip Bulbs popularly known as the “Tulip Mania” peaked at today’s equivalent of more than $1000 per bulb and the market col-
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collapsed under its own weight, presenting financially wrenching crisis speculators and their backers. The South Sea Bubble of 1720 This was a time of lavishness and opulence in Britain, with many wealthy speculators desperate to invest in a company that wildly promised astronomical returns, trading wool and fleece for piles of jewels and gold. Shares in the company quickly reached 10 times their value, but when the bubble burst, many of the country’s elite were left destitute. Railway Mania, another British phenomenon, grew throughout the early 1840s, peaking in 1846 when a staggering 9,500 miles of new railway lines were authorized, around a third of which were never actually built. As the price of railway shares increased, more money poured in, largely from the new, affluent middle classes that had arisen from the smoke of the industrial revolution. As few had predicted, it ultimately became clear that building railway lines was not as lucrative and easy as investors had been told by wily entrepreneurs. The collapse was unavoidable, and many middle-class families lost their life savings as a result. The predominant factor of the USA’s Great Depression known as “The Black Tuesday” of 1930 was over-indebtedness and deflation. Loose credit to over-indebtedness, which fuelled speculation and asset bubbles. Talking about bubbles, how can one forget the “The Dot-Com Bubble “ of 1997, one of the historic ‘speculative’ bubbles of all time left behind many vacant buildings and many more failed dreams. Low interest rates by the Fed’s, availability of cheap credit lead to over investment which was the main cause of the downfall. This was the time when growth was preferred over profits and the market collapsed yet again. A classic example of low interest rates demolition is of the Housing Bubble Crisis (Sub-Prime Mortgage Crisis) where the US Fed’s made more mistakes than yogi bear reciting Shakespeare. This bubble also led to the Eurozone Debt Crisis - a complex network of financial derivative products (Which are nothing but WMD’s - Weapons of Mass Destruction) held globally, however this was just the tip of the iceberg. The solvency of some EU banks was strained by significant exposures to domestic sovereign debt. The market value drop of government bonds led to liquidity strains, as these bonds were widely used as collat-
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eral in interbank markets and in some instances, EU governments had to provide funding to vulnerable domestic banks, at the expense of their countries’ debt. It seems like everyone is on a suicide mission with an option of blaming their kill on someone else but the beauty of deal is that no one is responsible, because everyone is drinking the same cool-aid. The Federal Reserve Quantitative Easing (QE) measures (a fancy term for easy money policy!) are responsible for blowing these bubbles. However, the reality is that a pin lies in wait for every bubble and when the two eventually meet, a new wave of investors learn some very old lessons: First, many in Wall Street (a community in which quality control is not prized) will sell investors anything they will buy. Second, Speculation- “The Mother of all Evil” is most dangerous when it looks easiest. So are we doomed to be in financial bubbles forever? There’s a lot of bubble talk out there right now. Much of it is about an alleged Bond Bubble that is supposedly keeping bond prices unrealistically high and interest rates – which move in the opposite direction from bond prices – unrealistically low. Ever since the market mayhem after US Federal Reserve chairman Ben Bernanke introduced QE measures, global investors have been pulling money out of the emerging markets. What these measures do is that it overheats the emerging markets (BRICS) causing protectionism and competitive devaluation as the currency of these economies are pegged by dollar. Brazil’s GDP grew by only 1% and may not grow by more than 2% this year, with its potential growth barely above 3%. Same is the case with Russia, despite oil prices being around $100 a barrel. South Africa, a developed market wrapped around an emerging market, grew by only 2.5% and with currency depreciation it would not grow faster than 2% this year. When it comes to India, the economy seems to be in denial. The GDP is at a 10 year
low (Around 5%) but the government still is optimistic to achieve breakthrough results by the next quarter. The Rupee is at an all-time low - 1$=Rs. 61.12 which clearly states how vulnerable the economy is to any sort of policy measure. We need to focus on Commerce, and not only on Finance. People get all hunky dory when it comes to investing in China, however the best way to approach the growth figures of China is by ignoring their GDP rate. Even if we take into account the 7.5% growth rate at face value, its components suggest a more ominous scenario. What’s really the issue in the country is this unhealthy obsession with GDP numbers. Even in the best of times, China’s data can be about as accurate as tossing a dart at a chart on the wall. It’s a structurally imbalanced economy distorted by top down policies and considerable “gray” activities that are hard to measure, not at least which is the sprawling shadow banking sector which is suffering from the predicament of over investment , seeds of which were planted way back in the housing bubble crisis of 2008, where China appeared to dodge the global financial meltdown by implementing a huge half a trillion dollar stimulus misdirected towards wasteful projects such as unneeded steel and aluminium plants. So the sudden rush for the exits quite conclusively proves that rising asset prices across the world were being supported by easy liquidity. QE measures coupled with huge dollar holdings transcend the financial strength and it is about time that emerging market devised an escape. Why not dollar holdings? Loading up on dollars helps Asia’s exporters by holding down local currencies, but it causes economic control problems. When central bank buys dollars, they need to sell local currency, increasing its availability and boosting the money supply and inflation, so they sell bonds to mop up excess money. It’s an imprecise science made more complicated by the US Fed’s QE policies which could sink the emerging markets. So does one get a déjà vu of the Asian Financial Crisis 1997? We should not forget the example of Japan, where bets against government bonds (Similar to today’s QE policies) ended in grief so often that the whole
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trade came to be known as the “widowmaker” which was a catalyst in the ’97 crisis. However, every crisis contains within itself the seeds of success and the roots of failure. Finding, cultivating and harvesting that potential success is the essence of crisis management but it seems insurmountable in today’s era of greed, where banks, investors are going bonkers over cheap credit and are ready to repeat the same mistakes again. From the Tulip Mania to Great Depression, to the stagflation of the seventies, to the economic crisis caused by the housing bubble and Eurozone and now the bond bubble, every economic downturn suffered by the developed and the emerging markets can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial so called 'boom' followed by a recession or depression. What’s the definition of insanity, it means doing the same thing over and over and expecting a different result every time, but can nature endure more and more people going insane at the same time, it becomes as Buffet says “systemic” like cancer , it’s global and malignant. Greed is good, but not God. We take a buck we shoot it full of steroids and we have a bubble, which are nothing but an in diffusible time bomb. The months ahead will be choppy. There will be moments of panic when the markets will have to be calmed. Most of us don’t know it yet but we are the ninja generation, no jobs, no incomes, no assets, we got a lot to look forward to! So brace yourselves ladies and gentleman, I wish you a merry crisis.
References:
Ruchir Sharma (2010) - Breakout Nations
Harvard Business Review (2000) – Crisis Management
Harvard Business Review (2006) – Emerging Markets
William Pouchek (2013) - Article on “China’s Misconception”
Preeti Gupta(2013) - Beware Emerging Markets of QE Measures
Bejamin Graham (2011) - Intelligent Investor
KidZania in India Kavita Dinesh Peddinti, K J Somaiya
“I would rather entertain and hope that people learned something than educate people and hope they were entertained”. This famous quote by Walt Disney rings true for KidZania. One such business venture that is going to change the complete psyche of not only the entertainment business but also of the people is the world famous KidZania. And what better place to start this other than the Heart of India, also known as the Financial capital, Mumbai. The idea of KidZania was the brainchild of Mexican entrepreneur Xavier Lopez Ancona who is also the CEO of the company. The uniqueness of KidZania is proved by the term “edutainment”, which means a mixture of education and pure entertainment. A perfect multi-branded theme park exclusively for kids, it allows children to work in adult jobs and earn money. The first KidZania opened in Mexico City and was literally named as “The City of Children”. The idea of it was admired by the general public and the corporate world as well. Thus 55% of initial investment was funded by corporate sponsors. What is KidZania? KidZania is no regular theme park. KidZania is a country by itself. It is a replica of any city, with buildings, roads, vehicles, pedestrians, shops, offices, theatres, hospitals , fire stations, etc. Children in the age range of 4-16 work in various branded activities like bottling Coca-Cola to working in McDonalds restaurant. Each activity is designed to boost the traits of a child that build qualities like leadership and socialization among kids and gives them the self-confidence to enhance these qualities in the future. And to add to the economic part of it, the children also earn some money known as KidZos, which is the official currency of the land of KidZania. This is mainly to generate a sense of responsibility among kids to save money and spend it smartly, which is not taught in the classrooms. KidZania believes in personal experience as a powerful tool. The activities are completely hands-on, thus providing a great experience. There are trained adults known as ‘Zupervisors’ who help and assist in all the activities. Hence the kids can be independent as well as be safe and have fun, all at the same time.
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Also one of the best parts of KidZania is that it so well understands the psyche of children. It broadly caters to the most favourite game of children, and that is Role Playing. This concept develops creativity and decision making skills among the kids as well as mixes reality with entertainment thus making a perfect edutainment experience for the children.
group and Yes Bank have already tied up for the venture. And also the star value is added by none other than Shah Rukh Khan, who is said to own a 26% stake in KidZania India. This proves the brand’s reputation and value among some bigwigs in the business.
Tarun Chauhan, managing partner, JWT Mumbai adds that, “ It will make children play differently and pull them away Hence KidZania is a country with strong values which in- from the television sets and the play stations.” spires the kids to create a better world where rights are deAlso, parents are enthusiastic and extremely supportive of fined, history being created at every step and culture and this concept. They may not get to be a part of this adventure the identity of the nation protected. but they will be able to keep track of their kids with the help of the electronic bracelets the children would be wearing when in KidZania. Parents will get to see their children working for big brands like P&G, travelling by air and saving money in the bank, but most importantly they will see their children turning responsible and becoming leaders and successful team players, which would make them the Future Managers of the world. References
www.afaqs.com
en.wikipedia.org
www.facebook.com
mumbai.kidzania.com
With its national seal saying “GET READY FOR A BETTER WORLD”, to its vibrant National Flag to the Fountain of Independence, KidZania proves to be the most unique nation for kids to prove their mettle and carve a niche for themselves in a nation which is created by them.
www.kidzania.com
www.business-standard.com
www.exchange4media.com
www.futuregroup.in
articles.economictimes.indiatimes.com
KidZania in India
www.google.co.in
KidZania in Mumbai, is expected to be launched in the near future. It will be located in R City mall, Ghatkopar. It will be launched by ImagiNation Edutainment India, which holds the franchise for the India operations. In India, a series of KidZania theme parks will be launched in other metros like Delhi, Bengaluru in the coming future. JWT Mumbai will be handling the creative duties like branding, advertising etc. for KidZania. Campaigning has already started on social networking sites like Facebook, with the KidZania Mumbai page boasting of over 4000+ likes and counting. Adding to the brand value, the first one in Mumbai will be launched with a minimum of 20 brands on board. Future
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Mind Matters: Maximizing Workplace Potential with Neuroscience Pushpa Gopalakrishnan, TISS
“I am a brain, Watson. The rest of me is a mere appendix.” ― Arthur Conan Doyle, The Adventure of the Mazarin Stone As HR professionals, we are concerned about the people we work with in our organizations. The ideas they create and the physical labor that they exert produce the tangible and intangible assets that oil the engines of our organizations. The policies we follow flow from certain beliefs about the nature of humankind. We know how an individual or a group of individuals would behave in a certain context and what can we do to maximize their performance. However, we don’t have answers as to why do humans behave in a certain way. The trick is to understand their brain so as to understand their minds. Neuroscience attempts to do precisely that. Increased complexity, rapid change and more interconnectedness exists in the workplace today. Work today does not the deep discontinuities that made Taylorian specialization possible. As organizations turn flatter, collaboration is becoming increasingly important. We need to improve that way people work together- behaviorism does not tell us what the true drivers of human social behavior are. This is where neuroscience- a study of the brain, right from its basic unit, neuron (nerve cells), to its neural networkssteps in. The first neuro scientific experiment was conducted in the 1970s when functional magnetic resonance imaging was used to study the brain response of subjects to various stimuli. Several branches of neuroscience exist today but social, cognitive and affective neurosciences particularly have wide implications for the modern day workplace. Particularly, the following discoveries have the potential to change the way we look at our workplaces: For the brain, social needs are as important as primary needs. ‘Rewards/Threats’ drive the ‘Approach/avoid’ instinct in all human beings .The brain is a continually growing organ, with a capacity to form new connections between the nerve cells To understand what these implications mean, we need to understand the structure of the brain. The brain is made up of neurons, which are surrounded by dendrites which communicate with other neurons, and a primary axon for transmission of data out of the cell. We have 100 billion such neurons in the brain. The brain is divided into two hemispheres- the right and the left (which control the functions associated with the left and right side of the human body respectively), both of which are connected by the corpus callosum. The outer ends of the hemispheres have the cerebral cortex. At the center of the brain is the thalamus which acts as a relay station as all sensory information passes through it before it reaches the cortical regions, which perform the higher order functions.
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To put it simplistically, there are three aspects to the brainthe reptilian brain, the emotional brain and the thinking brain. The reptilian brain is concerned with eating, sleeping and procreation. The emotional brain consists of the limbic system. This brain has the thalamus, basal ganglia, hippocampus and the amygdala (among others). The thinking brain consists of the Pre-Frontal Cortex and other systems that are concerned with higher functions such as helping us ‘think’. The reptilian brain is something we possess in common with animal-kind. The emotional brain is a part of the ancient survival mechanism that our bodies developed during evolution. It responds to ‘Reward/Threats”. The amygdala, particularly, plays an important role in remembering emotions associated with various stimuli we receive from our environment and instinctively responds. The amygdala response determines our response to stimuli and our response, which is ‘approach/avoid’2. All this has one implication- the emotional brain modulates our response to sensory information before the thinking brain acts upon it. We like to think we are rational thinking beings but this information proves this to be false. When the amygdala recognizes a stimulus as ‘approach’, the neurochemical transmitter ‘dopamine’ is released. When the amygdala picks up a ‘avoid’ signal, cortisol and adrenaline are released as our ‘fight/flight’ responses are activated. Though approach/avoid responses are instinctive, the avoid response is much stronger. The thinking brain consists of the pre-frontal cortex (PFC) which does all of our ‘rational’ thinking. The PFC is the meeting place of the emotional and the thinking brain. It has limited working memory and can work for a maximum of 2-3 hours a day. Thinking is not instinctive and hence requires additional fuel like oxygen, glucose and dopamine. When under stress (under the ‘avoid’ condition), the supply of glucose and oxygen to the PFC reduces, leading to constrained thinking abilities. Under an approach stimulus, PFC works better due to increased surge in dopamine. All this has implications for us because it means that we need to identify drivers that minimize threat and maximize rewards in our workplaces. The emotional brain has to be in sync with the thinking brain to maximize performance. In light of this information, we need to determine the levers that maximize employee performance in the workplace.
ness and Fairness (SCARF) are the drivers which can trigger an approach/avoid response. So improvements in one’s learning (improvement over oneself), public acknowledgement (better performance than others) are certain status triggers than release dopamine and enable better performance. Similarly, giving more control to people over their projects (autonomy) feels rewarding and enables better performance. One of the biggest discoveries in neuroscience has been the fact that social needs are as important as other basic needs- being left out from a group (lack of relatedness) can cause as much pain as a physical fall. Similarly, perceptions of unfairness generate strong threat response and people may even feel a sense of reward when unfairness is punished. Perhaps the Manesar incident can be better understood in light of this information. There are other factors that modulate our performance in the workplace. Sleep deprivation causes a loss in ability to read social cues accurately. Diet too plays a role. The brain demands 20% of the body’s resources and hence we are unproductive when we are hungry. Similarly, exercise improves the cognitive performance of the brain. Like-wise, multi-tasking can also be an impediment to performance as the PFC has only limited working capacity. Stress too plays an important role. Up to a certain point, stress improves performance on cognitive tasks (Yerkes Dodson Curve) but beyond the ‘optimal arousal point’, the PFC shuts down and the limbic system takes over- i.e. we stop thinking.
Other interesting theories in neuroscience abound. When we are born, we are born with connections made between each and every one of our 100 billion neurons. It is these neural connections that determine how we embed data and store our ‘learning’. As we grow older, due to disuse, a large number of these connections are lost and the cells die off. However recent research has shown that we can grow new cells (neurogenesis) to forge new connections (neuroplasticity). This is something that would tickle the interest of L&D practitioners. The AGES (Attention, Generation, Emotion, Spacing) model, developed by Lila Davachi offers us some insights into how we can effectively use neuroscientific insights for learning and incorporate them in our training programs. Attention is critical to learning. The prefrontal cortex has limited working capacity and hence human beings are pretty bad at multi-tasking, resulting in poor quality output. In fact no learning happens when you multitask and so it is best suited for routine, non-cognitive activiThere are several models that suggest what these levers ties. Similarly, adults (Generation) prefer a problem-solving could be. The SCARF model, proposed by David Rock, sugapproach and prefer self-directed learning as opposed to gest that changes in Status, Certainty, Autonomy, Relatedchildren. When positive feedback is released during the
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learning process, dopamine is released as a reward in the References: brain. That is why positive emotional cues (Emotion) must Vilayanur. S. Ramachandran, The Emerging Mind: The BBC be a part of the learning experience. The Spacing aspect of Reith Lectures 2003 (Paperback), Profile Books (2006) the model says that there must be sufficient intervals during training sessions in order to make sure that new learning is David Rock (2008), SCARF: a Brain-based model for collabdigested. orating with and influencing others All these insights are just the tip of the iceberg. It is evident these insights have the ability to change the workplace as we know it. As neuroscience gives us more insights on the workings of the brain, we would be in a better position to apply these findings and (literally) open our minds to peak performances at the workplace. After all, the key to an em ployee’s mind is his brain!
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Neuroscience of Learning and Development, White paper, PageUp People Neuroscience of performance, White Paper, PageUp People Neuroscience of talent management, White paper, PageUp People Sue Langley, The Emotionally Intelligent Brain, Mind and its potential 2012- YouTube 7
Donald O. Clifton, Marcus Buckingham, Now, Discover Your Strengths New Edition, Simon & Schuster (2005) Vilayanur. S. Ramachandran, Phantoms in the Brain: Human Nature and the Architecture of the Mind (Reissue) Edition, Harper Collins UK (2006)
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Introduction `Does the stock market overreact?' De Bondt and Thaler in 1985 gave start to a new wave of thinking known as behavioural finance. Weak form inefficiency of the stock market was discovered by them after analysing how people are systematically overreacting to unexpected and dramatic news events which were surprising and profound. The Efficient Market Hypothesis as proposed by Fama (1970) asserts that the stock prices reflect the relevant information. The asset prices follow a random walk path i.e. they are merely random numbers. The study conducted by Caginalp G. and H. Laurent (1998) by the predictive power of price patterns finds patterns and confirms that they are statistically significant even in out-ofsample testing and report. The pattern of the stock index might help in predicting some of the effects of the various events. The calendar anomalies tends to exist which goes against the efficient market hypothesis. The researchers have used Gregorian calendar to investigate the calendar anomalies. There are various countries and societies which follow their own calendar on the basis of their religion. For example, the Hebrew calendar is followed by the Jewish society, which is strictly based on luni-solar, the Christian society follows the Gregorian, which is based on solar, and similarly Hindu and Chinese follow their own. The Hindu calendar is called “Panchanga” and it is based on both movements of the sun and the moon. The festival of “Diwali” is typically occurs at the end of October and beginning of November. The special ritual called “Mahurat Trading” can be observed on major stock exchanges like NSE, BSE, NCDEX to name a few lasts for about an hour. It is performed as a symbolic ritual since many years. It marks a link with the rich past and brokers look at it on a positive note. It marks an auspicious beginning to the Hindu New Year. The investors place token orders and buy stocks for their children, which are sometimes never sold and intraday profits are booked, however small they may be. Thus, it is widely believed that trading on this day will bring wealth and prosperity throughout the year. It is interesting to observe the behaviour of trading activities during the period preceding and succeeding Mahurat Trading. The purpose of this study is to know the effect of the festival prior and post diwali on the the returns.
Econometric methodology us on: compounded daily percentage change in the share price I have measured stock return as theJoin continuously index (S&P CNX NIFTY) as shown below: pratibimb@tapmi.edu.in Rt = (lnPt – lnPt-1) xVisit: 100 …………………… (1) http://www.tapmi.edu.in/student-life/pratibimb/overview/ Where, Rt = return at time t Pt, Pt-1 = closing value of the stock price index at time t, t-1. Team Pratibimb I have used S&P CNX Nifty as it has got the most liquid stocks in its portfolio. Further, the National TAPMI Stock Pratibimb Exchange | August is 2013 largest | 30 in terms of Market capitalisation and Volume. I have used the data of the P. B. No: 9, Manipal - 576104, Karnataka