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Volume III, Issue No. 3 Page No.


Anmol Tushar Raykar, Apeksha Guru, T. A. Pai Management Institute, Manipal



Bikash Pratap Singh, International Management Institute, New Delhi



Shefali Sharma T. A. Pai Management Institute, Manipal



Established in 1980, TAPMI is one among the few institutes in India and worldwide to have been accredited with the illustrious Association to Advance Collegiate Schools of Business (AACSB) accreditation, as well as, with the Association of MBAs (AMBA), United Kingdom. The double-crown accreditation of AMBA and AACSB has propelled TAPMI to an elite club of five eminent business schools of India and brings it a step closer to its Vision 2022. The TAPMI campus provides an ideal setting for serious academic study and creativity, combined with entertainment and relaxation. Named after our founder, Shri. T.A. Pai, TAPMI was established with a vision of creating responsible business leaders, leaders who dream and achieve but with a resolve to make a difference. TAPMI is not just a B-school, it is a center of business excellence with over 30 years of experience in academics, research and Executive Education. The institute seeks to promote and raise the standard of finance and management research in the country with our Banking and Finance Center and the Ph.D. program.



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hirty years ago, the possible impact of emissions from burning fossil fuels on the global environment became front page news. In 1988, vast fires in the Amazon Rain forest and Yellowstone national park brought greenhouse effect into the forum for discussion. The Intergovernmental Panel on Climate Change formed under the United Nations to protect the environment pushed nations to take steps to curb the negative consequences of their economic activity on the environment. Since then, many research studies have been conducted by various scientists and economists to study the impact of climate change on the global economy. In 2018, William Nordhaus and Paul Romer were conferred with Nobel Prize for Economics for their study on integrating climate change into the long-run macroeconomic analysis. If the current scenario prevails, it will lead to a fall of GDP by 1-2% per annum. Climate change will lead to an increase in supply chain costs, increase in demand for energy to tackle scorching summers and harsh winters and a surge in insurance claims. In COP24 at Katowice, nearly 23000 delegates attended and pledged to take more active steps towards climate change and reduce the carbon footprint. Climate change is expected to have a severe impact on emerging economies. Meanwhile, India is heading for Lok Sabha elections this year, in April-May, and the ruling government has presented its interim budget on February 01st, 2019. Along with all these trends, industry 4.0 is proving to be an opportunity and threat for businesses. There has been a change in top management in many firms in recent times and this has had an impact on the growth of the organization. In the wake of all these, we need agile leadership and decisions to come up with inclusive and sustaining growth globally. In this context, we present a few research papers in this issue of TJEF. We hope that you will benefit from reading the research papers published in this journal.

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Managing Editior Prasun Banerjee Editors ANIMESH GUPTA ATHIMC K Junitha Johnson K A BhARADWAJ KRITI SINHA Laxmi Mishra


ADVISORY EDITORS Tamal Bandyopadhyay Joel Pannikot Mint, Bandhan Bank Ltd Bloomberg Yangyang Chen Hong Kong Polytechnic University

Prabhakar Reddy Patil Securities and Exchange Board of India

Michael E. Drew Drew, Walk & Co.

Peter Kien Pham University of New South Wales, Sydney

Ravi Gautham Northern Trust Anil Ghelani DSP BlackRock Anjan Ghosh ICRA Limited Viswanathan Iyer National Australia Bank

Kok Fai Phoon Singapore Management University Edward Podolski La Trobe University, Melbourne Arati Porwal CFA Institute

Madhu Veeraraghavan T. A. Pai Management Institute

Sridhar Seshadri Development Credit Bank

Madhav Nair Mashreq Bank

Cameron Truong Monash University, Melbourne

Suman Neupane Griffith University, Brisbane Jayaraman. K. Vishwanath DCB Bank Limited

C. Vasudevan Bombay Stock Exchange Limited

PRODUCTION Nirmal Krishna




n the last few months, the world has experienced various geopolitical issues which has had a direct impact on the global GDP and growth rate. International Monetary Fund projected the global growth rate at 3.5% in 2019 and 3.6% in 2020, 0.2% and 0.1% less than earlier predictions. While the growth rate is close to post-crisis highs, the global growth rate is expected to see a downfall. China’s slowdown will be quicker than expected if trade tensions prevail. The Brexit and sovereign risks in Italy pose a threat to Europe. The US Federal government’s frequent shutdown will only add to the risk of a global slowdown. In the midst of all these, the climate itself is posing a challenge to the human race. By 2100, climate change will lead to a 92% fall in the per capita GDP of India as per Burke, Hsiang, and Miguel. In the coming times, climate change will have a drastic effect on the global economy. India is also highly vulnerable to such global headwinds. Hence, in this third issue of the third volume of TAPMI Journal of Economics & Finance, we have tried to delve deeper into the impact of climate change on the Indian economy. While politics and economy are always intertwined, we felt it’s good to explore this area. We tried to analyze the consequence of the latest budget presented by the ruling government on upcoming polls. The top management of the companies has an impact on the growth and how their sudden change can affect future growth prospects. TJEF has always tried to narrate the stories that facts and scenarios don’t by themselves. I would like to appreciate the sincere efforts put in by all the students to write for us. We are publishing a few of the research papers in this edition of the journal. Happy Reading! Prasun Banerjee Managing Editor


IMPACT OF CLIMATE CHANGE ON THE INDIAN ECONOMY The Paris Agreement and the recently concluded 24th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24) took various decisions on greenhouse gas emissions mitigation, adaptation and finance. Certain governments such as the Donald Trump administration is not keen on continuing the agreement, however, many reports show that climate change is surely affecting the nation’s economy. Climate change’s main damage can be seen affecting the primary sector, mainly the agricultural sector. This negative externality of global warming will erode the future GDP of a country and thus adversely affect the nations who are still dependent on their primary sector.


We acknowledge the helpful comments and suggestions of the editors. Editor’s note: Accepted by Yogi Naik & Shomit Sengupta 6 TAPMI JOURNAL OF ECONOMICS AND FINANCE VOL 3 ISSUE 3

SSsSubmitted on:23-03-2019 Accepted on: 27-03-2019 Published on: 14-03-2019


arth’s climate is varying at a rate unpredictable to anyone. Climate change which includes phenomenon like global warming, sea level rise, variation in plant/flower blooming patterns and other extreme weather occurrences are a major source. The major impact of climate change is global warming which has resulted due to a number of anthropogenic activities. One of the major contributors to global warming is the Anthropogenic greenhouse gas (GHG) emissions which have seen a continuous increase after the industrial revolution and is attributed to the increasing global population. GHG includes carbon dioxide, methane, and nitrous oxide. The steady rise of GHG due to human activities can be seen in Figure 1.

around two million people; the Philippines in 2013 experienced Typhon Haiyan (Yolanda) that killed more than 6000; In the east coast of USA, Hurricane Sandy caused huge property and infrastructure damage. ECONOMICS OF CLIMATE CHANGE

It is important to note that climate change impact is not a household matter, or country matter but a worldwide matter. The reason why climate change is global is that GHG emission occurs due to activities of all humans and cannot be pinpointed to one household, city or state. People/group of people who produce emissions do not pay for that privilege, and those who are harmed are not compensated.

(source: AR5 Synthesis Report) IPCC)

Fig. 1 GHG emissions 1970-2010

Natural ecosystems of the earth are the ones that are most severely impacted by climate change. This has been observed in the shift in seasonal activities and migration patterns of wildlife and marine organisms. Impact of climate change on human systems is easily recognizable in the various national disasters across the world. For example, the climate events in Chennai, India, in 2015 caused unprecedented flooding displacing

Therefore, climate change or more specifically global warming is a negative externality. Markets do not automatically solve the problems they generate. Global warming which is majorly due to CO2 production is a highly unregulated market. The price on the external damages from CO2 emissions is set incorrectly and hence economic policies are required to control this externality. This circular flow of global warming as given by William Nordhaus VOL 3 ISSUE 3 TAPMI JOURNAL OF ECONOMICS AND FINANCE 7

Fig. 2 Circular flow of global warming


Economic vulnerability represents the degree of danger experienced by an economy due to economic shocks like changes in the supply of commodities, fluctuations in prices of commodities, etc. Climate change is considered as one of the sources of economic shocks. Economic vulnerability due to climate change is associated with sectors that are climate-sensitive like agriculture, fishery. The Germanwatch Global Climate Risk Index (CRI) is an index which provides the level of exposure and vulnerability to extreme weather events. This helps countries to be prepared for future severe events. Table 1 shows the list of top vulnerable countries in 2016. It can be observed that India falls at the sixth position in terms of vulnerability to climate change. In this paper, we discuss the economic impact of climate change in India. IMPACT ON THE INDIAN ECONOMY

India has a mixed economy where both the public and private sectors coexist. According to PwC’s Global Economy Watch, India is likely to be superior to the United Kingdom in the list of the world’s largest economy rankings. While various sources peg India’s GDP, for 8 TAPMI JOURNAL OF ECONOMICS AND FINANCE VOL 3 ISSUE 3

example, IMF forecasts India’s GDP growth to 7.5% in FY20 and to 7.7% in FY21, India’s Central Statistics predicts GDP at 7.2% in FY19 compared to 6.7% in 2018 and RBI anticipates the growth at 7.4%. Mint’s macroeconomic tracker indicates 8 out of 16 macroeconomic indicators in the danger zone. According to a report from the Ministry of Statistics and Program Implementation (published on February 8th, 2019), agriculture and allied sectors in India share 15.87% of GVA at the current price. This contribution by the agricultural sector in India is way higher than the world average of 6.4% and India is the second largest producer of agricultural product which accounts for 7.39% of the total agricultural output of the world. Climate change which includes changing weather patterns, rising sea level, and extreme weather events have disrupted national economies, with poor and developing countries most vulnerable to it. Climate change is one of the emerging threats to the growth of the Indian economy. As per report titled “South Asia’s Hotspots: The Impact of Temperature and Precipitation Changes on Living Standards’ by World Bank, it is predicted that 2.8% of the country’s GDP would be eroded by 2050 due to change in temperature and precipitation pattern.


Table 1: CRI for top vulnerable countries


According to the economic survey 2018, climate change is affecting India’s agricultural productivity and farmer’s income. In a country where around 42% of the population is employed in the agricultural sector (according to world bank data 2018), climate change takes a heavy toll on the livelihood of the farmers. The world bank report identifies Chhattisgarh and Madhya Pradesh as the two most prominent climate hotspot by 2050 which are likely to be

impacted the most by climate change followed by Rajasthan, Uttar Pradesh, and Maharashtra. Out of 10 districts identified as the most impacted regions of climate change, 7 are in the Vidarbha region of Maharashtra. These hotspots are the regions which do not necessarily have a high temperature but the socio-economic capacity of these regions to cope up with climatic changes is low.

Table 1: CRI for top vulnerable countries


(Source: Climate Change Impacts on Agriculture in India)

2.5°C to 30°C and both the hot and cold extremes climatic conditions are challenging for the humankind. Increasing average temperature and changes in the precipitation has affected the Indian neighbors such as Bangladesh and Maldives are flood and cyclone prone.

(source:: World Bank Report)

Figure 3: Impact of climate change on agriculture in India

Map 2 shows the changes in temperature in different parts of South Asia. The data obtained from the source is calculated on the basis of trend analysis from 1990 – 2010. The map above shows the uneven changes in temperature in different parts of the Asian subcontinent. The temperature change in most parts of India is between 0.5°C – 1.0°C.

The impact of this temperature change is analyzed on household consumption expenditure which is used Map 1: Significant portion of South Asia covered by severe hotspots by 2050 as a proxy to determine the impact on living standards. As mentioned Map 1 identifies the regions in India which earlier, the increase in temperature has affected are carbon-intensive climate scenario. Such a agricultural productivity, health, migration scenario is expected to impact 800 million of of laborers and other factors that impact the the population in South Asia out of which 200 economic growth of the society. Ill health due million are in India. to the spread of infectious diseases and days of extreme heat is a direct correlation to lesser work IMPACT OF TEMPERATURE productivity. As one part suggests the negative Indian subcontinent temperature ranges from


(Source: Mani et al. 2018; data from Harris

consequence of increased temperature, on the other hand, an increase in temperature in extremely cold areas will increase the productivity of those regions. Using a reduced-form model which is used to determine the relationship between average weather and living standards, it is found out that there is an optimal temperature range which is correlated to higher consumption expenditure relative to hotter or colder locations. This analysis also brings out the fact that different countries have different abilities to adapt to long term changes in temperature. Figure 5 shows that temperature and consumption have an inverted U shape relationship for countries. Here the blue shaded region in each graph shows a 90% confidence interval. From the graph, it can be inferred that countries like Bangladesh, India,

Map 2: Increase in temperature in South Asia


India’s primary crops, rice and wheat are examples of Kharif and Rabi crops respectively. The effect of climate change can be seen on crop yields and the crop types that can be grown in certain areas. Climate impact on the growth of these primary crops can be analyzed using crop growth models developed by Figure 4: Link between temperature and precipitation on living standards Indian Agricultural Research Institute like: Pakistan and Sri Lanka have reached their • INFOCROP: generic crop growth model optimum temperature and anything above this for optimum resource and agronomic options level will have a negative impact of climatic • INFOCANE: Sugarcane growth model change. for increasing cane yield. The model used several variables like temperature, CO2 levels, precipitation, and solar VOL 3 ISSUE 3 TAPMI JOURNAL OF ECONOMICS AND FINANCE 11

Figure 5: Inverted U-shape relationship between temperature and consumption expenditure (Source: Mani et al. 2018)

radiation. The impact of the interdependence of these variables on crop growth yield was studied. For example, increase in temperature can reduce the yield while an increase in solar radiation can offset the reduced yield. The models developed in this study used past weather dataset as a 12 TAPMI JOURNAL OF ECONOMICS AND FINANCE VOL 3 ISSUE 3

baseline. This data on the weather was correlated to growth and crop yield to find out the climatic variability on various locations. Key findings in wheat production: • Increase in temperature by 2°C reduced the

(Source: Climate Change Impacts on Agriculture in India)

Map 3: Boundary changes impact on the productivity of irrigated wheat

crop yield in most places while anomaly to this result was certain locations in north India with high potential productivity were relatively less impacted. • Resulted in boundary change for growing certain crops with climate change. Impact of climate change is more pronounced on rain-fed crops than irrigated crops as there is no alternative mechanism of water supply for rainfed crops. • Crop yield difference also influenced by baseline climate. The decrease in crop yield in sub-tropical climate ranges from 1.5% to 5.8% compared to tropical regions where the decrease is much higher. Map 3 shows the boundary change for the productivity of irrigated wheat under the impact of 425ppm CO2 concentration and temperature

rise of 2°C. Key findings in rice production: • Increase in temperature of 2-4°C is predicted to reduce the rice yield. • Eastern India would be impacted the most according to the study with increased temperature and decreased radiation. The consequences of this are a shorter grain filling duration and less grain production. • The result of the study for North India is predicted as increased temperature offset by higher radiation. Hence the impact on climate change is minimal. • Increased temperature nullified the effect of additional CO2, which should in other way have benefitted the crop.


Figure 7 shows the plot of average precipitation

Figure 6: Average Temperature by cropping season


by cropping season. On average, Kharif rainfall has declined by 26 millimeters and Rabi rainfall by 33 millimeters.

Figure 6 shows the plot of average temperature by cropping seasons. The average increase in temperature between 1970 and 2015 is 0.45 degrees and 0.63 degrees in Kharif and Rabi season respectively.

Analysis of Figure 8 and Figure 9: • The impact of temperature and rainfall on yield is highly non-linear and the major impact is felt only when temperature increases and rainfall shortfalls are extreme.

Figure 7: Average Precipitation by cropping season

Figure 8: Effect of temperature on yield


Figure 9: Effect of rainfall on yield

(Source: Survey calculations from IMD & ICRISAT data)

Table 3: Impact of weather shocks on agricultural

Table 3 provides a detailed split-up of the effects of temperature and rainfall for irrigated and unirrigated areas in the Kharif and Rabi seasons. This is derived from figures 8 and 9, the impact

of extreme shocks on yields and revenues is estimated. Table 4 shows the impact of shocks on farmer incomes, measured by the value of production. POLICY IMPLICATIONS OF THESE PREDICTIONS

With the changes in crop yields and productivity of grain due to climate changes, the result will have an effect on certain policies: • Food security policy: According to Food and Agricultural Organization of India, food security aims at physical and economic access to sufficient and nutritious food to meet dietary and food preferences to all people at all times. Changes in the crop yields, both positive and

Table 4: Impact of weather shocks on farm revenue

(Source: Survey calculations from IMD & ICRISAT)

These extreme shocks have a varying effect on unirrigated and irrigated areas with impact twice as high in the former than the latter. • In Figure 8 and Figure 9, the x-axis depicts deciles of temperature and rainfall, with the 5th being the middle category (normal temperature and rainfall). • High-temperature shocks matter and these are represented by the red line in Figure 8 which is close to x-axis for nearly entire distribution except the right corner. • In the same way, only extreme rainfall shortages matter and these are reflected as the red line in the rainfall graphs in Figure 9 which is close to the x-axis except towards the left extreme.

negative shift in crop boundary can have a direct impact on food supply. • Trade policy: India’s foreign trade policy aims at developing export potential of India. VOL 3 ISSUE 3 TAPMI JOURNAL OF ECONOMICS AND FINANCE 15

Figure 10: Effect of extreme temperature on crop yields of different crops

Figure 11: Effect of extreme rainfall decrease on crop yields of different crops

Changes in crop production pattern can impact the import and export of crops (particularly for cash crops like chilies). • Loss of livelihood: With about 41% of the population employed in the agricultural sector, it is important that policy addresses the loss of livelihood and migration with a change in crop production and shift to new regions. • Water policy: Because of the varying impact on rain-fed crops and irrigated crops, water policy needs to consider the water demand for different crops due to climate change. • Adaptive measures: Policymakers need to consider the varying agriculture pattern in India due to climate changes and incorporate new innovative measures in irrigation and cropping pattern.



With complex interactions between climate change and different factors like irrigation techniques and regional factors, there is more scope to the research currently conducted for the interactions. Some of which include: • Database on climate change and its impact on agriculture • Precise prediction of climate change and linking it with agricultural production system by using high-resolution temporal scales and modeling. • Model development for pest population dynamics.


This paper aims to analyze the impact of climate change on the economy of a developing country like India. According to the Paris agreement at the global level, a consensus was obtained for the rise in temperature level below 2°C for pre-industrial levels. Developing countries are

looking forward to financial assistance and technological support to abide by the agreement. Though Donald Trump administration in the US is not keen on continuing with the agreement, India will surely prepare itself for the challenge. ©

REFERENCES 1. Mani Muthukumara, Bandyopadhyay Sushenjit, Chonabayashi Shun, Markandya Anil, Mosier Thomas (2018). South Asia’s Hotspots 2. Economic Times (2019). IMF forecasts India GDP at 7.5% in FY20 and 7.7% in FY21 3. Nordhaus William. The Climate Casino 4. Dr. Naveen Kalra, Dr. Subodh Sharma. Climate Change Impacts on Agriculture in India 5. Economic Survey. Climate, climate change, Agriculture 6. Statisticstimes. Sector-wise contribution of GDP in India 7. Leichenko Robin (2018). Vulnerable Regions in a Changing Climate 8. Eckstein David, Künzel Vera, Schäfer Laura (2018). Global Climate Risk Index


BUDGET 2019 – AN INITIATIVE FOR A BETTER FUTURE? The objective of this paper is to critically analyse the most recent interim budget that was announced on Feb 1 2019. Furthermore, it attempts to study the secondary agendas of the budget that are implicit in nature. The various announcements and relaxations are studied and a comparison is made with the previous taxation laws. This paper aims to adopt a contrarian view to the Budget and presents evidence to support the view that it could negatively impact the Indian economy. It inspects this stance by picking out individual proposals from the budget and throwing light on how it could actually have ulterior motives with the 2019 elections round the corner. What are the possible impacts of the interim budget on the upcoming polls?


We acknowledge the helpful comments and suggestions of the editors. Editor’s note: Accepted by Yogi Naik & Shomit Sengupta 18 TAPMI JOURNAL OF ECONOMICS AND FINANCE VOL 3 ISSUE 3

Submitted on:23-02-2019 Accepted on: 04-03-2019 Published on: 14-03-2019


nterim budget is something which had been talked about a lot lately. While we see that this new budget has been highly successful in instilling hopes in the minds of the Indian citizen, but only an economist can decipher the populist motives hidden underneath the so-called budget of the current government. Although the entire scene appears to be quite congenial and a huge majority of the Indian population have already started holding the government in high regards; there are a couple of hidden consequences attached to the relaxations provided in this budget, which will be borne by our financial system in the upcoming future, the immediate impact of which will fall on the entire Indian civilization who are currently rejoicing the announcement of the most favourable budget that could have been ever made in the past decades. HIDDEN CONSEQUENCES OF THE RELAXATIONS ANNOUNCED IN THE BUDGET

As one would delve deep into analysing the various consequences of the budget 2019, one would realize the extent of turmoil and clashes that awaits in the future. The following are some of the controversial highlights of the budget have been discussed below: • Providing ₹6000 per annum to small farmers From the perspective of an ordinary citizen, if one looks at this relaxation, it would appear to be a great incentive that the government is providing support to our farmers. But if one tries to analyse the same situation with an intention Income Slabs

Rs 2,50,001 - Rs 5,00,000 Rs 5,00,001 - Rs 10,00,000 Total Tax borne by an individual earning Rs 10 Lakhs per annum

to figure out the consequences of this move on our economic and financial system, one would realize the extent of blunder that a country like India cannot afford. Considering the latest tussle between RBI and government, where the government was pressurizing RBI to release its surplus reserves to fill up its fiscal deficits, this move appears to be highly controversial. On one hand, the government is being generous enough to provide such kind of relaxations whereas on the other side it is stressing the other components of the financial system to cover up for consequences of such a move. • Increase in the pay of Central Police Force Considering the level of service provided by the police force it appears to be a great move so as to appreciate the services and the level of commitment exhibited by them. But considering the current position of fiscal deficit and revenue deficit, it appears to be a big-time blunder on the government’s part to provide such a great hike in their pay, nevertheless the hike could have been in a range of 10%, however, the government went completely out of its way and announced a hike of around 33.5% as compared to the financial year 2018. • Air India Fiasco This airline which happens to be the flagship carrier of our country is left completely ignored from the budget, its current liability stands at ₹35,000 crore and its fate is completely left on the expectation that it can be supported by selling its stakes to the companies like LIC and other public sector companies with government’s equity support being merely ₹1 lakh. The point is not

Tax as per 2018

= 2,49,999*0.05 = Rs 12,500

Tax as per 2019


=4,99,999*.1= Rs 50,000

=4,99,999*0.2081= Rs 1,04,050

Rs 62,500

Rs 1,04,050


Figure 3


that this carrier was meant to be supported by the government and it did not receive the desired aid. The fact which underlies this negligence that supporting Air India as of now is in no way going to help the current government to serve its political motives, the government currently has other agendas to focus on so as to achieve its underlying motives. • Recapitalization of Public Sector Banks Here, once again as compared to the previous financial year the government this year has just infused ₹2 lakhs for the recapitalization of public sector banks. All these years, we have seen that the focus of the government had always been on strengthening of the public sector banks, a considerable amount of money out of the budget was being allocated towards recapitalization of these banks, but this year we see that from lakh crores this amount has plummeted down to mere ₹2 lakh. It is a known fact to all that ₹2 lakh is not an amount that is going to meet the purpose of recapitalization of these banks, it appears like a formality that has been done by our government, knowing that this meagre amount is hardly going to meet its designated purpose.


• Relaxation in taxation Laws The current taxation slabs appear to be quite relaxing for the people who have their yearly income within 5 lakhs. But imagine the case of people who are earning above 5 lakhs per annum, let’s contrast the taxation laws for payment slabs, ₹2,50,000 - ₹5,00,000 per annum and ₹5,00,001 - ₹10,00,000 per annum for the years 2018 and 2019: Table 1 displays the other side of the coin, now one might wonder how nicely the government has given relaxation to a class of people at the expense of another. The government had relaxed tax amount of ₹12,500 per annum of an individual at the expense of increasing the tax burden of another class of people by ₹41,550. The crux of the matter is that at the end of the day it’s the common man who suffers while the government decides how to play its cards. If a person sees the taxation laws, it would appear that the government had done a great favour for the middle class but what about other class of people? Was this a kind of relaxation for them as well?

• Diversion of Revenues It is clear from the proposed budgets that the government is diverting the incoming revenue from capital gains to giveaways. It has come to the notice that the government doesn’t even have enough reserves to meet its own obligations in the upcoming year, it is relying on market forces to fall in its favour. The current estimations state that the government is likely to spend slightly more than half of its loans in the year 2019-2020 which somewhere comes near to 68%. For the next financial year, the government is expecting its expenses to go down on an assumption that the interest rates are likely to remain low. Now one can imagine the current position of the government where it is estimating to meet its obligation based on the expectation that the market forces will fall in its favour. FUTURE IMPACT OF BUDGET 2019 ON INDIAN ECONOMY

The future impact of the currently proposed budget seems to be adversely negatively. Starting with the very fact that the government decides to give ₹6,000 per annum to small farmers appears to be immensely dicey when facts such as government’s clash with RBI over the release of surplus funds are taken into consideration. One is very well aware that the financial budget is something which is framed taking into account the financial capacity of the government, but when such instances where government, facing a fiscal deficit comes under the limelight; it actually puts a big question mark on the government’s intention. Again, if we consider the government’s proposal of injecting only ₹2 lakh for the recapitalization of PSB’s considering the fact the in the past years this amount had never been in a denomination lower than ‘lakh crore’ especially when one takes into account the current status of PSBs. Recently three PSBs had been merged which in itself highlights the performance statistics of PSBs.

Our economy is slowly shifting from ‘investment led’ to ‘consumption led’ which means that in the prevailing economic conditions, people are being encouraged to consume more than to save or invest. This is not at all recommended for any economy, especially for countries like India which is still in its developing state. An economy which is developing needs to incentivize its citizens to save more so as to ensure availability of sufficient loanable funds, an economy which is more of consumption-led is highly susceptible to the increased inflation rate. Now let us take into consideration the current revenue deficit, ideally it should be zero or somewhere close to zero but however, the reports suggest that the current revenue deficit stands somewhere close to 2.2% of GDP. Also, the country’s fiscal deficit stands at 3.4% of GDP while we have been trying to adjust this value to 3% since 2008. So, if we try to relate these instances with the proposed budget for this year, it gives rise to a lot of questions, especially in terms of financial planning. On one hand, we are seeing instances where the government is trying to provide relaxations to citizens, but on the other side when we see the situations, the only question that arises is can our system really afford to make such provisions? Also, if we look at the dividend figure that the government is expecting RBI to release is a little too high, considering the fact that the excess reserves of RBI help it to maintain its autonomy especially on financial grounds in times of economic crises. But over the past few months even before the budget was released, there had been a tussle between the two bodies over this as well. This gives rise to another question that if the government was really running short on funds and was not able to meet its current obligation, how can it afford to fulfil the current promises as stated in the proposed budget?



The announcement of budget does have a serious impact on the polls. It appears to be as if the proposals made in the budget are the final goalkeeper factors to decide upon the fact whether the existing government would continue to run the system or there might be a call for change. Definitely, the highlights such as cutting the taxation slab to nil for income up to ₹5 lakhs per annum would have an adverse impact on the polls, since approximately 30 million Indian population have their earnings in this range and this proposal is something similar to what this particular class of people has been looking forward to for years. Again, increasing TDS from ₹40,000 to ₹50,000 adds another incentive for the salaried individuals, since the scope to save on taxes increase further. Also, the announcement of providing ₹6,000 per month to each of the small farmer family will further adversely affect the election polls. It appears that the government is trying to make up for the blunders made during the announcement of demonetization. The level of discomfort caused to common people especially the ones in the lower tier city have now started appreciating the government post declaration of the budget 2019. Definitely the overall impact of the budget on the election polls appear to be positive, as the government left no stone unturned in order to please the Indian citizens. Maybe we can say that the government understood the requirements of the citizens and took a decision taking into considering the various aspects. However, if one sees from a long-term perspective, the various inclusions made in the budget is definitely going to have an adverse impact on the economy of


our country. Although it might help the current government to save itself from the upcoming elections, it cannot save the government from the fate of the future economic state of the country due to this budget. CONCLUSION

Although we can see that the proposed budget had been successful in pleasing the citizens and would definitely have a positive impact on the upcoming elections, but it would take a huge toll on our economic system. As we see a lot of provisions made by the government to provide relief to the Indian citizens but at the same instance, if we consider the prevailing situations, it appears to be highly dicey as the government lacks sufficient resources so as to meet these obligations. Also, the government has claimed that digitalization has resulted in an increase in tax collection by 18% and 10.6 million increase in taxpayers. Despite this fact, the government is facing a fiscal deficit and is demanding RBI to release its surplus reserves. This gives rise to two possibilities; either the maker of the budget was reckless enough to make proposals without checking the available resources or these proposals were meant to be accommodated irrespective of the available resources. Summing up all of these together raises a plethora of questions not only on future growth but also on the intentions of the government. Since in the past, there have been very rare instances when people have received such a high degree of unconditional support from the government. The ulterior motives of the government would only be known as the time passes; till then one can only speculate and wait, only to see those speculations turning true. ©

REFERENCES 1. (2019, February 02). Budget 2019: Nine things you need to know about personal tax - The Economic Times. Retrieved from 2. (2019, February 04). Budget 2019: Some other items in Budget 2019 - The Economic Times. Retrieved from articleshow/67825797.cms?adcode=101 3. Narayan, D. (2019, February 04). Govt’s risky bet on high-cost funds may fuel price rise - The EconomicTimes. Retrieved from 4. (2019, February 02). How much money this Budget can help you save - The Economic Times. Retrieved from articleshow/67804020.cms?adcode=101 5. Aiyar, S. (2019, February 02). Budget analysis: Budget 2019 is the mother of all election budgets, but rates and inflation may rise. Retrieved from



This paper aims to study how a change in the top management of a firm impacts its revenue. In order to achieve this objective, it adopts a case-study based approach wherein it draws evidences from 4 different scenarios. How have the revenues of Facebook, Apple, SBI and Infosys been influenced by changes in top management? Let’s have a closer look.


We acknowledge the helpful comments and suggestions of the editors. Editor’s note: Accepted by Yogi Naik & Shomit Sengupta 24 TAPMI JOURNAL OF ECONOMICS AND FINANCE VOL 3 ISSUE 3

Submitted on:03-03-2019 Accepted on: 04-03-2019 Published on: 14-03-2019


ntries of top management team members can result in changes in various aspects of the composition of the team and hence, have a significant impact on subsequent firm performance. Revenue fluctuations can be seen to be related with the judgments made by the top management; it can be said that it isn’t directly correlated with senior management rather it is related to the strategies chosen by them. Two factors by which the strategies of new entrants in top management are mainly influenced by – previous experience and risk-taking capability - are examined here in more detail. Results indicate that changes in top management indeed have performance implications even in the years following the change. This paper explains with evidence from several stories of different corporate leaders how changes in top management affected the revenue of the firm. PREVIOUS EXPERIENCE

Sheryl Sandberg In 2008, Facebook was a startup. Zuckerberg met Sheryl Sandberg, back then the Vice President global sales and operations at Google, and he decided that she is perfect for the role of COO at Facebook. After Sheryl joined, Facebook’s net income jumped from 56 million USD loss to 229 milllion USD gain the very next year in 2009. Facebook, since then grew its business, successfully launched an IPO and handled several allegations for user privacy. Sheryl is credited for bringing the company’s focus to develop a platform for advertisement and hence, increased the advertisement revenue by 57%.

manage and grow a company. She started with Google as a manager when there was nothing much to accomplish, she said. She hired four people for her team at Google, and in 5 years the team size increased to 4000. Sheryl got intrigued by the idea that a leader should hire big. Hiring big means hiring people who have vast experience, or who are overqualified, or the ones just out of school who intend to overachieve in the work they do. These people would be a great help when the company grows and eventually reaches the potential where their experience, attitude, and qualification will help. Sheryl Sandberg is said to have a great relationship with Mark Zuckerberg, CEO Facebook. She introduced the idea of weekly feedback to Mark, which helped develop the bond they share. This system slowly was ingrained in the firm and helped it improve and grow. Vishal Sikka Vishal Sikka became the first non-founder CEO of Infosys in 2014. In 2017, when Sikka stepped down, he took home 658 times of MRE (Median Employee Remuneration). Why? In his tenure, Infosys saw 14.1 percent growth and the company’s stock rose around 9.8 percent. He laid down the Vision 2020, restored the organizational structure and increased the impact of artificial intelligence.

Sheryl gave shape to the developing startup Facebook. She has been with Facebook for 11 years, and the company relies on her.

Sikka held a Ph.D. in Artificial Intelligence from Stanford University and worked in SAP for 12 years. Five years in SAP, he became its CTO, and by 2010 he was managing 8 billion USD of its revenue. He is credited as the brain behind HANA. It possibly positioned SAP in the key developer platform for real-time analytics. It is known to generate around 1 billion USD in revenue for SAP.

With her experience in Google as VP of global sales and operations, Sandberg learned how to

As opposed to what other CEOs of the IT sector believed, Sikka didn’t agree with cost-effective VOL 3 ISSUE 3 TAPMI JOURNAL OF ECONOMICS AND FINANCE 25

Source: Bloomberg

solutions, mass hiring, and economizing. He launched more than 25 new services which rose the revenue. Under his leadership, Infosys developed and launched its artificial intelligence (AI) platform, Nia. Nia has 160 AI platforms and over 70 clients deployed. Vishal focused on innovating, using design thinking, and leveraging


Figure 1

the use of automation tools in Infosys. He also managed to decrease the attrition rate of Infosys by making the work environment more fun and healthier.


Arundhati Bhattacharya The first woman to head the largest bank in the country, Arundhati Bhattacharya had totake several tough decisions with undesired or unknown outputs in her professional as well as personal life. Arundhati started at an early age of 22 as a Probationary Officer in SBI. Early on in her career, she moved to New York office of SBI, leaving her newborn in India, where she faced new challenges with a sudden change in culture, stricter regulations, and regulators. After she came back, she became part of the treasury.

Figure 2

Later, she moved to eastern UP to curb

Figure 5

Source: Bloomberg

As a Literature Graduate, Arundhati had to learn banking from the very beginning. Her verbal and written skills in communication helped her in reaching where she did. As a woman, she agrees to have faced challenges in her career with society, but she appreciated her support structure at home as well as at the office. She conducted a study in SBI to find out during which phases of their life

Figure 4

Source: Bloomberg

the NPAs and improve the bottom line of its branches. With the abysmal economic situation, she had to stay on the streets working till 2 AM. Driving several new projects, she became the Chief General Manager (CGM) for New Businesses in SBI. She faced several challenges and had to make risk-prone hard decisions working as CGM. In her tenure, she headed several initiatives by SBI including some of the major Joint Ventures with Macquarie, IAG (Insurance Australia Group), Societe General and more. She learned with every decision and owes much of her entrepreneurial experience to these years as a leader.

Source: Yahoo Finance | Every 1st March of corresponding year

Figure 3


women tend to fall out in their banking careers. Eventually, SBI, under her supervision, came with the sabbatical that can be taken thrice, which includes women as well as single men. This initiative has been highly valued and has been adopted by many organizations. Arundhati had good exposure in many areas such as HR, corporate banking, retail, investment banking, treasury. She came with the “Super Six” for SBI, viz. improve asset quality, cost rationalization, risk management, go digital, customer delivery and repositioning human resources. She is said to have laid out a strong base for SBI to merge and acquire PSBs. She has developed good working relationships both with RBI and the finance ministry. A firm believer she is in curing the disease by the roots. She took bold steps against bad loans and hired consultants to warn against bad projects, created a review team to study the stressed assets and sold bad loans. SBI, the largest bank of the country, was the best performer in all the Public Sector Banks. Motilal Oswal, chairman of Motilal Oswal Financial Services, said that SBI is the only PSB with double-digit growth in return on equity. She is known to take a participative approach in the major decision making and believes in a less stressful work environment. She was ranked 26th by Forbes 2017 among the world’s 50 greatest leaders who are transforming the world and inspiring others to do the same. Steve Jobs On December 12, 1980, when Steve Jobs was 25 years old, Apple launched its IPO. Apple almost sold out, 4.6 million shares at 22 USD per share. The IPO generated more capital than an IPO since Ford Motor in 1956. Apple created 300 millionaires, Apple employees, and investors.


Jobs took a colossal risk when he decided to launch Macintosh with a mouse. He convinced John Sculley to head Apple operations in 1983. He missioned to bring PC to normal humans from the hands of businessmen. He was so determined that he burned huge cash with the decision. Eventually, John convinced the board to fire Steve. Jobs started working for Pixar and also founded NeXT, Inc. NeXT was best known for its influential Operating System. In 1997, Apple bought NeXT for 400 million USD. In the deal, Apple was asked to integrate the Apple hardware with NeXT OS and Steve Jobs was appointed as an advisor. By September 1997, Steve convinced the board to name him as the interim Chief Executive Officer. A genius man with a vision, Steve Jobs decreased Apple’s product line. He appointed Jonathan Ive, the head of the design team for a new product, iMac. In 1998, iMac was launched, and it changed the fortune of Apple. On May 2001, Apple launched the Apple store. Steve made sure that the experience people had inside the Apple store stays with them. A few months later, the iPod was launched. iPod changed the music industry, but iTunes was the real gem created by Steve. It helped major music industry players fight the internet piracy. With iTunes, downloading and enjoying music was mobile and gave consumers instant gratification. Later in 2007, iPhone was launched that could connect to the internet, could help text and call, and had online music to listen to. Steve had seen ups and downs in life, but he was so determined with a clear vision for Apple. His designs, ideas and clear vision have made Apple one of the companies with the largest market capitalization.   Changes in top management affect the revenue of the firm. The increase or decrease in

Source: Bloomberg

Figure 6

Source: Bloomberg

Figure 7

revenue of the firm depends on several factors, such as the business they are venturing in, product quality, company’s target market, and other strategies. These strategies come from within the organization. The top executives make the decision and guide the path the company will take in the future. A company has a legacy set by its founders which is then either changed or followed. Here, four examples were discussed above. All of them

created a substantial change in the company, they held a significant position in. The results imply that the narrative of the company is affected. In the case of Vishal Sikka and Steve Jobs, the people in the organization and especially outside had a definite perception which helped shape the company and hence, affect the revenue. Steve Jobs created a public image when he founded Apple and with the success of Pixar and NeXt. Likewise, Arundhati Bhattacharya had a strong network where she was well respected VOL 3 ISSUE 3 TAPMI JOURNAL OF ECONOMICS AND FINANCE 29

Figure 8

for her dedication and work ethics. Both the executives took difficult decisions for the companies and showed immense risk appetite. Their capabilities have helped their respective firms grow. Sherly Sandberg and Vishal Sikka, both graduated from elite schools and successfully established credibility in the previous firms they worked for. Both worked hard towards learning and helping their previous firms. Later, both of them left it and held a critical role in the company. This role needed them to create a system which will set a path to lead. Sheryl joined Facebook when it was a startup. She set a direction for Facebook, and now it has the highest number of users. Vishal Sikka joined Infosys in the time of crisis. He was expected to be the light and bring Infosys back to life. Both, Sheryl and


Sikka, the executives brought a new light in the company. Their experience in the industry was the thing much needed by the companies. Š

REFERENCES 1. Rosoff, M. (2016, March 24). Look at how much Sheryl Sandberg has done for Facebook. Retrieved from cms 2. Sheryl Sandberg. (2019, March 01). Retrieved from 3. Sheryl Sandberg. (2019, March 01). Retrieved from 4. Adhikari, A. (2017, October 08). Arundhati Bhattacharya will be remembered for taking some bold steps at SBI. Retrieved from 5. Saha, M. (2015, August 17). How SBI’s ‘Super Six’ put its house in order. Retrieved from 6. Sikka brings product muscle to Infosys: Nasscom, Forrester. (2014, June 12). Retrieved from https://www. 7. Balachandran, M. (2017, August 18). A timeline of Vishal Sikka at Infosys: From high-profile outsider to a dejected leader. Retrieved from 8. Hammett, G. (2018, June 08). Steve Jobs Said Goodbye to Micromanagement. Now His Company Could Be Worth a Trillion. Retrieved from 9. Arun, M. (2015, July 10). Taking on the Bad Guys. Retrieved from story/20150720-arundhati-bhattacharya-state-bank-of-india-sbi-vijay-mallya-820076-2015-07-10 10. BCC. (2014, April 01). STEVE JOBS - BILLION DOLLAR HIPPY - BBC Documentary (HD) - Finance/Money/Biography video Dailymotion. Retrieved from 11. Reisinger, D. (n.d.). Steve Jobs Sold NeXT to Apple 20 Years Ago. Retrieved from http://fortune. com/2016/12/20/apple-next-anniversary/


THINK FINANCE DESTINATION TAPMI TAPMI aims to offer a mix of knowledge, skills, and attitude that a professional manager needs to possess to deliver results in varying scenarios of business. At TAPMI, the finance area tries to make sure that all the students, no matter with what background they come, develop a deep understanding of the finance industry before they step out into the real world. The PGDM curriculum is designed by bringing in subjects to be studied in different trimesters in a progressive manner. The pedagogy for each course for the finance enthusiasts is chosen appropriately to cater to the varied and growing needs of the financial industry. Each course is designed with an objective of meeting or achieving specific learning outcomes. Unlike the regular PGDM program, the PGDM-BKFS program puts a special focus on Banking and Capital Markets,

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