SECTION-I

1“There is one and only one valid definition of business purpose: to create customers”
Discuss

2 “Higher profit margins need not necessarily lead to thehigher rate of return on investments”
Elucidate

3 “Inspite of more than 100 years of experience, Indian trade union remain underdeveloped”
Elucidate

4 “Too often discipline is thought of only in the negative sense. In reality, +ve discipline
is more effective and plays larger role in business management” Discuss

5. “Accounting ratios are mere guides and complete reliance on them in decision making is suicidal”
Elucidate

(5*5=25 scores)

SECTION –II

The section consists of 15 questions. Answer all questions.
Each question carries 5 scores.
Paper III (Part –A- 10 Units) (30 words)

6. How brand is beneficial to customers?

7. Discuss the major functions of packaging

8. State and explain the various components of communication mix.

9. Illustrate the effect of angle of incidence [High/Low] on margin of safety, and BEP

10. Illustrate with an example the utility of marginal costing in deciding
appropriate sales mix

11. Distinguish between lease financing and hire purchase system

12. What is the significance of β [Beta] in calculating return of a security?
Illustrate with example

13. Discuss the modes of financing adopted by multinational organizations.

14. When shall a firm fix its price below Marginal cost?.

15. Critically evaluate the Narasimham committee report –ii (1998).

16. Who are the constituents of depository System?

17. How does GATT differ from WTO?

18. Define the correlation coefficient. How do you interpret it
and what are its uses?

19. Explain different methods of calculation of goodwill

20. How does the physical and technological environment
influence the functioning business?

(15*5=75 scores)

SECTION-III

The section consists of 5 questions from each elective Paper III (Part-B).
Answer all 5 questions from any of the 5 electives.
Each question carries 12 scores. (200 words)

ELECTIVE –I ACCOUNTING AND FINANCE

21. Comment on the importance of Responsibility accounting.

22. Explain the regulatory and developmental role of SEBI.

23. Explain various types and functions of factoring.

24. Evaluate the implications of venture capital financing.

25. Elucidate the steps in risk measurement process

ELECTIVE-II MARKETING

21. What are the benefits of market segmentation?

22. What are the various of Market positioning as given by Philip Kotler?

23. Explain the elements of social marketing.

24. Explain the importance of product life cycle concept

25. What are the different stages in the development of new product?
Why product failure does happen?

ELECTIVE-III HUMAN RESOURCE MANAGEMENT

21. Explain the concept of QWL. What are its dimensions?

22. Discuss the techniques used for improving human relations

23. Explain the factors influencing job satisfaction. How does job satisfaction
influence work behaviour.

24. Comment on the Hot Stove Rule in maintaining discipline

25. How shall you measure labour turnover? What are its effects on
organization’s efficiency?

ELECTIVE-IV INTERNATIONAL BUSINESS

21. Examine the basic features of LERMS.

22. How shall the capital account convertibility adversely affectIndia?

23. How does TRIPS agreement affect in Indian economy?

24. Discuss the various forms of derivative financial products

25. How far FDI investment is favourable to FII investment in a country?

ELECTIVE-V INCOME TAX LAW AND PLANNING

21. Discuss the provisions of law relating to advance tax

22. What deductions are admissible to an individual for making certain payments out of GTI?

23. State the circumstances in which the income of minor child and wife of an assessee
are included in the assessee’s income?

24. Define transfer. Under what circumstances a transaction is not regarded as transfer u/s 47?

25. Briefly explain the provisions of law relating to claim of expenditure on scientific research?

(5*12=60 scores)

SECTION-IV

Answer any 1 question. It carries 40 scores. (Words 1000)

26. Do you feel that Indian economy is over regulated. Comment on the need and implications
of a regulatory mechanism over presently existing regulatory institutions.

OR

Evaluate the implications of opening up of banking sector to private sector inIndia.

OR

How far do you agree with full convertibility of INR? Evaluate its pros and cons.

(1*40=40 scores)

prepared by Madhusoodanan Kartha

NOUFAL PALATHINGAL

The regime of economic planning began with a glorious vision of a resurgent India marching firmly on the path of progress while ensuring an equitable distribution of the nation’s wealth. Though the macroeconomic policy achieved many of its objectives, over the past five and a half decades, the economy was caught in the vice of the twin deficits – fiscal deficit and the current account deficit in BOPs. The major factors responsible for such a grave situation could be identified as follows

• excess of consumption and expenditure over revenue, resulting in heavy government borrowing,
• growing inefficiency in the use of resources,
• over protection,
• mismanagement of the firms and the economy,
• various distortions like poor technological development and a shortage of foreign exchange, and
• imprudent borrowing from abroad and the mishandling and mismanagement of foreign exchange reserves.

It is in this context, there emerged the need for some ‘structural adjustment programmes’ crafted along the following lines

• to overcome the concealed deficiencies in our development process with a well coordinated structural reforms,
• attainment of a growth-oriented adjustment where growth cannot be sacrificed at the altar of adjustment, and
• restoration of fiscal balance to contain inflation and to relieve the current account deficit in BOPs.

In appreciation of these considerations, the first wave of economic reforms, as a part of the New Economic Policy (NEP) 1991 aimed to impart a new element of dynamism to the growth process of the economy. There has been a judicious blending of real sector policies designed to step up the momentum of growth with financial policies that ensure macroeconomic and financial stability.

The major trust of the NEP will be “to increase the efficiency and international competitiveness of industrial production, to utilize foreign investment and technology to a much greater degree than in the past, to improve the performance and rationalize the scope of the public sector and to reform and modernize the financial sector so that it can more efficiently serve the needs of the economy.” The NEP focused its attention to dismantling the edifice of controls and a large number of stabilisation measures were designed to restore internal and external confidence.

► the structural adjustment programmes (saps):

The Structural Adjustment Programmes (SAPs) envisages rapid industrialisation with modernization for attaining faster growth of GDP by satisfying the following conditions

• substitution of market and of private enterprise for planning and public sector leadership,
• orientation towards export production in place of import substitution, and
• removing the capital goods industries bias in resource allocation and letting the market do the allocation.

The SAPs find their origin in the growth of neo-liberalism during the decades of 1980s and the 1990s. The neo-liberalism affirms the role of market in economic decision making and correspondingly limits the role of the state to rule-setting and contract upholding. This type of growth aims at establishing a global market-based system. It is often nicknamed as the “Washington Consensus” as it has the approval of the ‘Brettonwoods Twins’ – IMF and the World Bank.

For the sake of brevity, India’s model of economic reforms as compared with the pre-reform approach to development can be summarised as follows

Thus, in the new economic environment, the vocabulary itself has undergone a change. Earlier, the key words or phrases were control of commanding heights, nationlisation, employment generation, protection of domestic industry, indigenization of technology and public monopoly. But, today, the key words or phrases are international competitiveness, efficiency, profitability, technology upgradation, foreign capital, liberalisation, privatisation, globalization and golden handshake.

A PRE-REFORM/POST-REFORM COMPARISON

NOUFAL PALATHINGAL

The first wave of economic reforms, as a part of the New Economic Policy (NEP) 1991 aimed to impart a new element of dynamism to the growth process of the economy. There has been a judicious blending of real sector policies designed to step up the momentum of growth with financial policies that ensure macroeconomic and financial stability. The major trust of the NEP will be “to increase the efficiency and international competitiveness of industrial production, to utilize foreign investment and technology to a much greater degree than in the past, to improve the performance and rationalize the scope of the public sector and to reform and modernize the financial sector so that it can more efficiently serve the needs of the economy.” The NEP focused its attention to dismantling the edifice of controls and a large number of stabilisation measures were designed to restore internal and external confidence.

The SAPs find their origin in the growth of neo-liberalism during the decades of 1980s and the 1990s. The neo-liberalism affirms the role of market in economic decision making and correspondingly limits the role of the state to rule-setting and contract upholding. This type of growth aims at establishing a global market-based system. It is often nicknamed as the “Washington Consensus” as it has the approval of the ‘Brettonwoods Twins’ – IMF and the World Bank.

Thus, in the new economic environment, the vocabulary itself has undergone a change. Earlier, the key words or phrases were control of commanding heights, nationalisation, employment generation, protection of domestic industry, indigenization of technology and public monopoly. But, today, the key words or phrases are international competitiveness, efficiency, profitability, technology upgradation, foreign capital, liberalisation, privatisation, globalization and golden handshake.

NOUFAL PALATHINGAL

The first wave of economic reforms, as a part of the New Economic Policy (NEP) 1991 aimed to impart a new element of dynamism to the growth process of the economy. The trust will be “to increase the efficiency and international competitiveness of industrial production, to utilize foreign investment and technology to a much greater degree than in the past, to improve the performance and rationalize the scope of the public sector and to reform and modernize the financial sector so that it can more efficiently serve the needs of the economy.” The NEP focused its attention to dismantling the edifice of controls and a large number of stabilisation measures were designed to restore internal and external confidence.

After completing one and a half decades, we can say that the ‘first generation reforms’ were “crisis-driven.” An appraisal of the achievements and shortcomings of the reforms necessitated the need to reform the reform process undertaken during the nineties. The need for a changing growth strategy paved the way for ‘second generation reforms’ based on the motto of the attainment of “growth with social justice.”

The philosophy of second generation reforms observes that “growth is not just an end in itself. It is the critical vehicle for increasing employment and raising the living standards of the people, especially of the poorest. Sustained and broad-based growth, combined with the programmes for accelerating rural development, building roads, promoting housing, boosting knowledge-based industries and enhancing the quality of human resources will impart a strong impetus to employment expansion. There can be no better cure for poverty than this in our country.”

Although lip sympathy has been paid to a policy of ‘pro-poor growth’, very little effective action programme has been undertaken so far. It is in this context, the ‘second generation reforms’ seriously aim at taking programmes of enlarging employment, reducing poverty and building capabilities of the poor sections of the society.

► the 2 stages of economic reforms:

A comparison between the 2 stages of economic reforms on various socio-economic counts may be summarised as follows

Thus, we can say that the second generation reforms target issues of equity, regional and sectoral allocation, good governance, institutional changes and hard decisions on competition policy, labour policy, disinvestment and privatization.

► BASIC OBJECTIVES:

There are 3 basic objectives for the second generation reforms. They are as follows

1. attainment of 8 to 9 per cent rate of growth of GDP,
2. Considerable emphasis on human development such that there is at least 20 per cent point improvement in social indices such as rate of literacy, rate of infant mortality, expectancy of life at birth, extent of malnutrition and incidence of infectious diseases, and
3. Reversing the trend of worsening regional disparities by initiating a trend of reduction in the gap between per capita SDP of the poorest states and the highest per capita SDP, and also reducing the disparities in the state of infrastructural development.

The successful implementation of the second generation reforms requires the following parameters as

• Strengthen the foundations of growth of our rural economy, especially agriculture and allied activities
• Nurture the revolutionary potential of the new knowledge-based industries such as infotech, biotechnology and pharmaceuticals
• Strengthen and modernize traditional industries such as textiles. Leather, agro processing and the SSI sector
• Mount a sustained attack on infrastructure bottlenecks in power, roads, ports, telecom, railways and airways
• According the highest priority to human resource development and other social programmes and policies in education, health and other social services, with special emphasis on the poorest and weakest sections of the society
• Strengthen our role in the world economy through rapid growth of exports, higher foreign investment and prudent external debt management and
• Establish a credible framework of fiscal discipline.

► ANALYSIS & OBSERVATIONS:

As Nobel Laureate Amartya Sen opines India should reset its economic priorities to make them ‘people-oriented’ rather than ‘commodity-oriented.’ Economic reforms and social development have to go hand in hand. We must have a “consensus-driven second generation reforms” as against the “crisis-driven first generation reforms.” We will need to improve the quality of our reforms which requires a good analysis to identify the critical bottlenecks to higher growth and poverty reduction, innovative design of policy, taking account of socio-political constraints and supportive institutional changes, all of these will improve the efficiency and sustainability of reforms. Thus, we can say that any development strategy should lead us to the following ends as

• Attainment of a higher rate of growth of GDP,
• An enlargement of the employment potential leading to full employment,
• Reduction of population living below poverty line,
• Reduction of regional disparities, and
• Promotion of equity leading to better opportunities of development for the poor and less well off sections of the society by providing education, training in skill formation and better health facilities.

The second generation reforms are systemic and conceived as a package of coordinated action in several areas. The pace of second generation reforms has been described as the ‘homoeopathic rate of reforms’, implying thereby that while reforms are happening slowly, they are addressing the ills of the economy in a more fundamental manner.

While it is true that India’s programme of economic reforms has been a mixed bag of success and failures, a final judgement on it has to wait. Given the global environment and the hardships that have badly afflicted the ‘Asian Tigers’ of the yesterday, India’s programme of economic reforms is already being touted as the ‘role model of successful reforms.’