pratibimb-august

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

The Reflection of Management

Volume II, Issue XXII August 2013 A Monthly e-Magazine

A Students’ Initiative

KidZania

Jet– Etihad

Rajiv Gandhi Equity Savings

Scheme

BitCoin

Tourism in India

Global Debt

In this issue….

Pratibimb | August 2013 | 2

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

and is well known for its academic rigor & faculty-student interaction. The Institute has been

recently ranked amongst top 1 per cent of B-schools in India & 4th in the South Zone by The

Week Magazine.

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

impetus to the task of building professional management capability in the country. In the

process, it has also played a role in strengthening the existing educational and health

infrastructure of Manipal.

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

Means:

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.

T. A. Pai Management Institute

Manipal, Karnataka

About TAPMI

Our Mission


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

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

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

plethora of knowledge that relate to the various departments of

Management and to give an opportunity to the students of TAPMI

and the best brains across country to exhibit their creative cells. The

magazine also strives to bring expert inputs from industries, thereby

bringing the academia and industry together.

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

2010. The issue comprised of an interview of well known writer Ms.

Rashmi Bansal along with a series of articles by students and industry

experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed Cohen who is a global leader

and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first

rank globally for learning & development . It also included a hugely successful and engrossing game

for finance geeks called “Beat the Market” to bring out the application based knowledge of

students by providing them the platform where they were expected to predict the stock prices of

two selected stocks on a future date. The magazine is primarily intended for the development of all

around management knowledge by providing unbiased critical insights into the modern

developments.

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

classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and

contribute to create a refreshing learning environment outside the classrooms which eventually

leads to a holistic development process. The magazine provides a competitive platform and

opportunity to the students where they can compete with the best brains in the B-Schools of the

country. The magazine also provides a platform for prominent industry stalwarts to communicate

their views and learning about and from the recent developments from their respective fields of

business which in turn helps to create a collaborative learning base for its readers.

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

magazine by including quality articles related to various management issues and eventually creating

a more engaging relationship with its readers by providing them a platform to showcase their

talent.

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

next level.

PRATIBIMB TAPMI’S MONTHLY e-MAGAZINE VOLUME 2, ISSUE XXI AUGUST, 2013


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

Director’s

Message


Editor’s corner

Arun Stephen

Abhineet Rastogi

Bhavnita Nareshkumar

Devi Kailas

Kannan Venkat

Shubha Prabhu

Aditya Bhat

Lloyd George

Prof. Chowdari Prasad Dean (PR) & Chairman-Admissions

Prof. Aparna Bhat

Editor in Chief

Marketing & Advertising

Creative & Cover Design

Communications

Operations

Publishing

Faculty Advisors

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. 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


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 26 by Pushpa Gopalakrishnan ,TISS


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.

Commotion in Air

Nitin Singh, SIMS Pune


Under the strategic partnership, which will be subject to full

regulatory and shareholder approval, the airlines will gradu-

ally 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 net-

work 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 Mum-

bai 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 Eti-

had 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. Ac-

cording 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 agree-

ment has raised eyebrows of many pundits. Especially, ab-

rupt 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 – Eti-

had deal violates the basic tenet of FDI. If Abu Dhabi is at the

helm of Jet – Etihad deal then fledgling Indian aviation in-

dustry would have to face catastrophic outcomes. If we

glance through history of Indian civil aviation, it will be evi-

dent that our aviation sector is not readied with such brown-

field 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 Air-

ways is the leader in outbound air traffic. Hence, renouncing

India’s lion share of aviation is untenable for Indian growth

story.

Contractual provisions granting Etihad special rights, includ-

ing 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 sched-

uled 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 com-

mercial interests of private airports developed in various

Indian cities like New Delhi. GMR, GVK and many other air-

lines have clearly shown their concerns over the ticklish is-

sue. 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 wham-

my for national carrier. Over the years, its balance sheet

remains in red.

Indian aviation industry is already grappling with astronomi-

cal 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. Rejuve-

nation 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 hire-

purchase 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 seven-

member 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 Eti-

had 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 Dhabi-

based Etihad Airways has several angles. However, one


point that stands out is how the deal was ‘facilitated’ to pro-

vide 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 Eti-

had the right to pick up passengers from any domestic air-

port 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 gov-

ernment decided to scrap international flying rights and do-

mestic slots of Vijay Mallya-led Kingfisher due to non-

utilization. The cancellation of rights of Kingfisher to fly over-

seas alone created 25,000 seats per week for use to eight

countries, including Dubai, UAE, UK, Hong Kong, Singapore,

Nepal, Sri Lanka and Thailand.

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 con-

straints. 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. Emir-

ates Airlines has already estab-

lished 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

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

government. Carriers have no right to sell the bilateral al-

lotted to them to other airlines that too a foreign airline.

India and UAE have signed an agreement for only Third and

Fourth Freedom Rights, which allows bilateral flights on re-

ciprocal basis between two countries. However, the deal

between Jet and Etihad is completely based on Fifth and

Sixth Freedom. This is really a cause for concern, as it has

the potential to cause premature death of several Indian

carriers. The Fifth Freedom allows an airline to carry reve-

nue 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. Alt-

hough this is less than the 25 per cent limit for a mandatory

open offer to minority shareholders, it is perceived that con-

trol will be with the Abu Dhabi-based airline.

In a recent news, market regulator SEBI has told Jet and Eti-

had that the right to appoint board members should be pro-

portionate to shareholding and that the foreign investor

should not enjoy powers such as right to appoint a vice-

chairman and automatic representation on the audit com-

mittee. 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 agree-

ments.

Panacea for deal in jeopardy - Rework and dilution

A number of roadblocks are there in the way of historic deal.

But the silver lining for Jet – Etihad is either rework or dilu-

tion of clauses in the deal. Jet and Etihad must turnaround

or change the present tack to fructify humongous deal in

aviation sector. Jet-Etihad can extricate them out of present

quagmire by making a few necessary amendments to satiate

bureaucracy and national interests of India.

Source: theeconomictimes.com


In a recent happening, Indian authorities have sought assur-

ance from Jet airways that the airline will follow all laws,

rules and regulations of the country before its decision to

sell 24% equity to UAE-based carrier Etihad is approved.

A thaw in the clauses of deal is the need of hour. Infusion of

such a colossal investment in Indian aviation industry, which

is mired deep in the paucity and dearth of moolah green-

back. This deal has vital significance and connotation for

Indian economy. Stalling the deal is no-brainer. Instead it

would tarnish the imagery of India as an investment desti-

nation. Trade-off between Indian officialdom and Jet-Etihad

management can drive the scuttled deal to fruition. It is just

a fag-end of Indian growth story. Apparently, this gargantu-

an investment will germinate employment, facilitate sharing

of best technologies and management practices and reve-

nue for our economy, which is haunted and battered by

spook of twin deficit. Jet – Etihad deal will clear present

bleak and gloomy outlook.

In a nutshell, a business is done by apt and terse strategy to

disseminate shared prosperity. Henceforth, a minutiae

change in modus operandi of Jet-Etihad will inch us towards

elusive and covetous goal of shared prosperity. And it

should be done expeditiously to clear the turbulence in air.

References:

www.theeconomictimes.com

www.gartner.com

www.thehindu.com

www.businessstandard.com

www.economist.com

www.hindustantimes.com

http://www.theeconomictimes.com

http://www.gartner.com

http://www.thehindu.com

http://www.businessstandard.com

http://www.economist.com

http://www.hindustantimes.com


Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity scheme which is intro-

duced 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 do-

mestic capital markets, to promote an 'equity culture' in India. This scheme is exclusive-

ly 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 invest-

ed 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:

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 deposi-

tory mechanism.

4. Follow on Public Offer of eligible securities.

Rajiv Gandhi Equity Savings Scheme:

A New Investment Avenue in

Financial Market N M Manchu, Vinothini S, GRG School of Management Studies

Figure-1: RGESS Eligibility


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 thou-

sand 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 de-

pository’s data, it showed that RGESS has managed to mo-

bilize 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 ex-

perts, when it was introduced in the budget. There are posi-

tive and negative impacts of having RGESS. Many fund man-

agers 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 dis-

advantages with close-ended schemes is that they have to

be launched every year under the RGESS banner. So, ex-

isting investors who want to invest Rs 50,000 in the first,

second and third years will have to invest in three different

schemes.

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 in-

creased 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

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

tax deduction of Rs.25, 000. In RGESS, there are opportuni-

ties 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 pay-

ments 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, Prov-

ident 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 in-

come 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 invest-

ment companies. This encourages the investors to explore

equity market. Thereby it results in increase in equity mar-

ket players, rather than investing in traditional saving in-

struments. Finally it fulfills the aim of financial inclusivity in

India.

References

www.timesofindia.indiatimes.com/

www.bseindia.com/rgess/

www.firstpost.com/fwire/

www.getmoneyrich.com/rajiv-gandhi-equity-savings-

scheme/

http://timesofindia.indiatimes.com/business/india-business/Despite-November-launch-Rajiv-Gandhi-Equity-Savings-Scheme-fails-to-woo-investors/articleshow/19470400.cms

http://www.bseindia.com/rgess/

http://www.firstpost.com/fwire/chit-fund-fraud-saradha-executive-one-more-arrested-in-tripura-949431.html?utm_source=fwire&utm_medium=hp

http://www.getmoneyrich.com/rajiv-gandhi-equity-savings-scheme/

http://www.getmoneyrich.com/rajiv-gandhi-equity-savings-scheme/


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 ex-

ports has burgeoned to unsustainable levels. Quantitative Easing in the US and Abe-

nomics 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 val-

ue 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

Is Bitcoin the Currency for Future?

S Abhishek, SCMHRD


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 pre-

defined computer program at a fixed rate, and transmitted

to a network of volunteer Bitcoin 'miners'. Using open-

source software freely available and insanely high speed

processors, miners crunch data to solve these puzzles. Natu-

rally, 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?

Each Bitcoin buyer gets a digital wallet to which only he re-

tains a encrypted private key. Each user transaction can only

be initiated by the user using his digital key for authentica-

tion. As of July 2013, 1 bitcoin equals a whopping 90 Dol-

lars! Pricing, as stated by general economics is always driven

by demand which has been steadily rising for Bitcoin due to

the following factors:

1. General perception that the world economic system is

inherently unstable and headed for collapse leaving all pa-

per money, well, just that- paper!

2. Users who want to remain anonymous since the digital

domain offers secrecy: Illegal arms traders, drug dealers and

the likes.

3. Speculators and millennials who feel the Internet will

soon take over the real world.

4. Advantages of Bitcoin since there are no financial institu-

tions to mediate between buyers and sellers and also the

absence of regulation by banks and governments, whose

'bad' financial sense is being seen as the main factor for the

collapse of world markets.

5. Since the currency is electronically encrypted, they are

impossible to counterfeit.

6. Bitcoins can be easily sent through the internet, without

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, indi-

viduals (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 mon-

ey. 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.

The growing clout of Bitcoins can be seen through some of

the recent developments around the world. Argentina,

where inflation has been increasing at highly unsustainable

levels, making life increasingly tough for the middle class

Argentinian, has seen a 30-40% surge in the value of

Bitcoins. The growth of Bitcoins in Argentina has zoomed

with Bitcoin downloads rising exponentially. In an economy

where the people are slowly but surely losing faith in gov-

ernment economic measures, Bitcoin is being dangled as a

safe haven. A similar effect can also be seen in neighbouring

Uruguay where again inflation is on the rise and paper mon-

ey is seen losing value.

Another example is Kenya, where already mobile SIM card

powered M-Pesa (digital currency) is popular. But for the

huge number of Kenyans who work abroad, remitting mon-

ey back home is an onerous, time-consuming and costly

affair. Bitcoin, with little to no extra charge and extremely

fast transfer is again the saviour here with more Kenyans

looking to take advantage of it.

Icelandic currency expert Sveinn Valfells has a radical sug-

gestion for the Icelandic government: that Iceland should

adopt Bitcoins as the national currency so that people can


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 Ice-

land survive the tough economic climate then.

When the Cyprus banking system collapsed earlier this year,

people who had invested in Bitcoins became instant million-

aires 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 mim-

ics 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 fi-

nancial 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 decora-

tive metal and not much else.

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 Ac-

count 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 Gov-

ernment 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 gov-

ernment's hands in implementing key economic reforms

aimed at kick-starting India's growth back to where it be-

longs.

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

which include IT professionals, web developers, venture

capitalists, and investment bankers have joined in to mar-

ket, 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 sim-

plicity! 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 inter-

ests 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 non-

taxable and do not attract VAT, it is paradise for Bitcoin in-

vestors.

What India should do?

India must first introduce a slew of comprehensive

measures including:

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 com-

panies 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 ordi-

nary 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 fu-

ture. 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 accel-

erate 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.

India is the world's leading receiver of remittances,

receiving more than 15% of the world's total re-

mittances. Bitcoins offer an extremely quick and

cheap way to send remittances back to India, ena-

bling easy flow of money to India and increasing

growth of India's GDP.

The internet industry, which research has found to

constitute around 20% of the GDP in developed

countries would enjoy unprecedented growth once

Bitcoins are standardised and introduced.

While Gold is just a 'refuge' from the ever rotting

world financial system, Bitcoins offer a real 'solution'

and history has observed that in the long term, it is

the solutions which get well and truly rewarded.

Once Indians realise that Bitcoins are more valuable

than Gold, they would start investing more in

Bitcoins since Gold is just an alternative to paper

money at the end of the day.

Over the past 4 years, the value of fiat currencies

around the world has fallen relative to Gold but the

biggest surprise has been the fact that Bitcoins have

absolutely crushed gold in terms of value! If you paid

a gram of gold to buy Bitcoins 3 years back, today

you will receive 4 grams of Gold in return for those

Bitcoins.

Bitcoins eliminate dependency on 'too big to fail'

banks and are the precursor to a new era of digital

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, in-

cluding 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 develop-

ing economy, can save huge amounts of money by

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.

Taxing the Bitcoin trade in India would open up a

new revenue stream for the Indian government.

Bitcoin does have it's shortcomings, among which is it's

price volatility, inspired by it's limited supply and investor

speculation. But in an increasingly uncertain world, where

fiat currencies are increasingly becoming volatile and the

governments and premier financial institutions can no long-

er be trusted to do the 'right' thing, Bitcoins are becoming

an increasingly attractive option.

Decades of research has shown that the strength of an

economy lies in the trust that exists in it's currency. If

Bitcoin can become a trusted form of economic transaction,

then there's no stopping it from becoming a safe haven for

those living in volatile economies: which funnily enough, is a

broad enough definition covering the entire world going

through turbulent times today. Old just may not be Gold

anymore!

History has shown that the pioneers who embrace change

wholeheartedly and before anyone else, stand to reap un-

told benefits and riches. The future ahead is clear since

Bitcoins are going to take over the world of finance sooner

rather than later but the million dollar question or should I

now say: The million Bitcoin question remains: Is India ready

to say 'Goodbye gold, silver and paper money; Hello

Bitcoin!'

References

Bitcoindia.com

The Economic Times

Forbes Magazine

Wall Street Journal

Bitcoin.org


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 po-

tential. 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 diver-

sification and thus eventually becoming one of the largest and fastest-growing econom-

ic sectors in the world. Thus leaving aside few occasional slowdowns the facts and fig-

ures 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 mil-

lion 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 bil-

lion.

Tourism Industry and India’s

Economic Revival

Souvik Dhar, Priyanka Hazarika, NIT Silchar


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.

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 be-

coming a major global destination. India’s travel and tourism

industry is one of the most profitable industries in the coun-

try, and also credited with contributing a substantial amount

of foreign exchange. This is illustrated by the fact that during

2012, 6.58 million tourists visited India and spent US $17.74

Billion.

Tourism industry has become an integral part of

the Indian economy. Its contribution to the GDP and to the

employment in the country is very significant. The World

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 employ-

ment. 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 ex-

pected to grow at an estimated rate of 30% annually. And by

the end of the year 2015 it would reach to about 9,500

crore. Low cost, World class service, language compatibility,

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 contrib-

uting directly to the current account of the balance of pay-

ments. 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.

Tourism industry is one of the major foreign ex-

change earners in India. This sector of the economy is found

effective in generating the foreign exchange reserve. Thus

the contribution by earning foreign exchange is one of the

most beneficial factors of Tourism Industry for the economic

growth of our country. Also the revenue generated by this

sector has been found successful in minimizing the foreign

exchange crisis of India.

Figure-1 : Forecast of international tourist arrivals

Figure-2: Foreign tourist arrivals in India


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.

Thus Tourism Industry can be considered to be an

economic bonanza due to the fact that it includes various

positive economic effects like generation of national in-

come, expansion of employment opportunities, rising of tax

revenue, generation of foreign exchange and transfor-

mation of regional economy.

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 depend-

ent 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 fac-

tors 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 earn-

ing for any country.

India vast pool of diversified resources can be show-

cased 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

specially in creating new employment avenues in

rural India.

The focus on Tourism Industries will include develop-

ing various tourists’ destinations and thus the infra-

structure in and around those destinations would be

improved.

The business of allied industries of Tourism like ho-

tels, traveling agencies etc. will also boom up with

the growth of Tourism sector.

The Tourism Industry can be a potential source for reve-

nue earning of any country as visitors expenditure on ac-

commodation, food and drink, local transport, entertain-

ment and shopping, is an important contributor to the econ-

omy 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 reve-

nues, creating new jobs and enterprises and infrastructure

development.

Accelerating the Tourism Industry in India:

Government of India should encourage the big Cor-

porates giants and key private sector players to in-

vest specially for improving the required facilities to

boost up the Tourism Industry in India. Thus this joint

venture between the Governments and Private play-

ers 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 di-

rectly 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 invest-

ment and will definitely boost up the competitive-

ness 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 UN-

EXPLORED” should be carried out to highlight the

prospect of Indian Tourism Sector.

Developing a wide range of product portfolio to tar-

get various segments of tourists to increase the influx

of international as well as domestic tourist.

Thus developing various sub segments which includes

Figure-3: Forex earnings from tourism


Tourism Industry seems to be more effective than

other industries in generating employment and income at a

bulk pace. Thus we should give more focus on developing

the tourism sector of India as it has the tremendous poten-

tial to uplift the economic growth story of India back to the

track.

References:

UNWTO Tourism Highlight 2013

Indian Tourism Statistics at a Glance 2012

Domestic Tourism Education Tourism Eco-Tourism Medical Tourism

Golf tourism Luxury Trains Tea Tourism Sports Tourism


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 econo-

mies 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!

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 Ma-

nia” peaked at today’s equivalent of more than $1000 per bulb and the market col-

Wish You a Merry Crisis : The Bubble Bomb

Akshay Gupta, IBS Hyderabad

Figure-1 : National Debt of various countries


collapsed under

its own weight,

presenting finan-

cially wrenching

crisis speculators

and their backers.

The South Sea

Bubble of 1720 -

This was a time of

lavishness and

opulence in Brit-

ain, with many

wealthy specula-

tors desperate to

invest in a compa-

ny 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 Ma-

nia, another British phenomenon, grew throughout the ear-

ly 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 in-

creased, more money poured in, largely from the new, afflu-

ent 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 fami-

lies lost their life savings as a result. The predominant factor

of the USA’s Great Depression known as “The Black Tues-

day” 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 invest-

ment 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 - Weap-

ons 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-

eral in interbank markets and in some instances, EU govern-

ments 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 any-

thing 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 – unrealis-

tically 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 emerg-

ing 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, de-

spite 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 Ru-

pee is at an all-time low - 1$=Rs. 61.12 which clearly states

how vulnerable the economy is to any sort of policy meas-

ure. We need to focus on Commerce, and not only on Fi-

nance. People get all hunky dory when it comes to investing

in China, however the best way to approach the growth fig-

ures of China is by ignoring their GDP rate. Even if we take

into account the 7.5% growth rate at face value, its compo-

nents 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 in-

vestment , 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 support-

ed 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 dol-

lar holdings? Loading up on dollars helps Asia’s exporters by

holding down local currencies, but it causes economic con-

trol 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 com-

plicated 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

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 suc-

cess and the roots of failure. Finding, cultivating and har-

vesting that potential success is the essence of crisis man-

agement 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 hous-

ing 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 ster-

oids 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 gen-

tleman, 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 Misconcep-tion”

Preeti Gupta(2013) - Beware Emerging Markets of QE Measures

Bejamin Graham (2011) - Intelligent Investor


“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 per-

fect 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 Chil-

dren”. 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 com-

pletely 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 independ-

ent as well as be safe and have fun, all at the same time.

KidZania in India

Kavita Dinesh Peddinti, K J Somaiya


Also one of the best parts of KidZania is that it so well un-

derstands 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 chil-

dren.

Hence KidZania is a country with strong values which in-

spires the kids to create a better world where rights are de-

fined, history being created at every step and culture and

the identity of the nation protected.

With its national seal saying “GET READY FOR A BETTER

WORLD”, to its vibrant National Flag to the Fountain of Inde-

pendence, 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.

KidZania in India

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 brand-

ing, 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

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

from the television sets and the play stations.”

Also, parents are enthusiastic and extremely supportive of

this concept. They may not get to be a part of this adventure

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 respon-

sible 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

www.kidzania.com

www.business-standard.com

www.exchange4media.com

www.futuregroup.in

articles.economictimes.indiatimes.com

www.google.co.in

http://www.afaqs.com

http://www.facebook.com

http://www.kidzania.com

http://www.business-standard.com

http://www.exchange4media.com

http://www.futuregroup.in

http://www.google.co.in


“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 organiza-

tions. 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 maxim-

ize 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 work-

place today. Work today does not the deep discontinuities that made Taylorian speciali-

zation possible. As organizations turn flatter, collaboration is becoming increasingly im-

portant. 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 networks-

steps in. The first neuro scientific experiment was conducted in the 1970s when func-

tional 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 work-

place. 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 or-

gan, 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 hemi-

spheres- 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 func-

tions.

Mind Matters: Maximizing Workplace

Potential with Neuroscience

Pushpa Gopalakrishnan, TISS


To put it simplistically, there are three aspects to the brain-

the 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, hippo-

campus 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 evolu-

tion. It responds to ‘Reward/Threats”. The amygdala, par-

ticularly, plays an important role in remembering emotions

associated with various stimuli we receive from our environ-

ment 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 emo-

tional 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 adrena-

line are released as our ‘fight/flight’ responses are activat-

ed. 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 emo-

tional 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 oxy-

gen, 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 deter-

mine the levers that maximize employee performance in the

workplace.

There are several models that suggest what these levers

could be. The SCARF model, proposed by David Rock, sug-

gest that changes in Status, Certainty, Autonomy, Related-

ness and Fairness (SCARF) are the drivers which can trigger

an approach/avoid response. So improvements in one’s

learning (improvement over oneself), public acknowledge-

ment (better performance than others) are certain status

triggers than release dopamine and enable better perfor-

mance. 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 oth-

er basic needs- being left out from a group (lack of related-

ness) 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 unfair-

ness 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 im-

proves 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, Genera-

tion, Emotion, Spacing) model, developed by Lila Davachi

offers us some insights into how we can effectively use neu-

roscientific insights for learning and incorporate them in our

training programs. Attention is critical to learning. The pre-

frontal cortex has limited working capacity and hence hu-

man beings are pretty bad at multi-tasking, resulting in poor

quality output. In fact no learning happens when you multi-

task and so it is best suited for routine, non-cognitive activi-

ties. Similarly, adults (Generation) prefer a problem-solving

approach and prefer self-directed learning as opposed to

children. When positive feedback is released during the


learning process, dopamine is released as a reward in the

brain. That is why positive emotional cues (Emotion) must

be a part of the learning experience. The Spacing aspect of

the model says that there must be sufficient intervals during

training sessions in order to make sure that new learning is

digested.

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!

References:

Vilayanur. S. Ramachandran, The Emerging Mind: The BBC

Reith Lectures 2003 (Paperback), Profile Books (2006)

David Rock (2008), SCARF: a Brain-based model for collab-

orating with and influencing others

Neuroscience of Learning and Development, White paper,

PageUp People

Neuroscience of performance, White Paper, PageUp Peo-

ple

Neuroscience of talent management, White paper, PageUp

People

Sue Langley, The Emotionally Intelligent Brain, Mind and its

potential 2012- YouTube

7Donald O. Clifton, Marcus Buckingham, Now, Discover

Your Strengths New Edition, Simon & Schuster (2005)

Vilayanur. S. Ramachandran, Phantoms in the Brain: Hu-

man Nature and the Architecture of the Mind (Reissue)

Edition, Harper Collins UK (2006)


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-of-

sample 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

I have measured stock return as the continuously compounded daily percentage change in the share price

index (S&P CNX NIFTY) as shown below:

Rt = (lnPt – lnPt-1) x 100 …………………… (1)

Where, Rt = return at time t

Pt, Pt-1 = closing value of the stock price index at time t, t-1.

I have used S&P CNX Nifty as it has got the most liquid stocks in its portfolio. Further, the National

Stock Exchange is largest in terms of Market capitalisation and Volume. I have used the data of the

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