Effective Management Workout : A Case Study 9781642875782, 9789350245224

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EFFECTIVE MANAGEMENT WORKOUT A Case Study

Dr. V.K. Singh Senior Lecturer and Incharge Faculty of Management Studies (FMS) Gurukul Kangri University, Haridwar

Dr. Sudhanshu Joshi Lecturer

VivekKumar Senior Sales Manager ICICI Bank Ltd., Nagpur

K4)JI GJlimalaya G"PublishingGJIouse

MUMBAI-OELHI-NAGPUR-BANGALORE-HYOERABAO

© Publishers [No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the author and the publisher. Breach of this will be liable for legal action.]

ISBN

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Revised Edition : 2010

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CONTENTS 1.

Banking Sector Reforms in India

1

2.

Lakshmi N. Mittal - Morgan of 21 st Century

5

3.

Merger and Acquisition (M&A) by Indian Companies over their Foreign Counterparts

10

4.

Relience Infocomm-Future Oriented Strategy

14

5.

Relevance of ERP in the Organisational Resource Integration (ORI)

20

6.

Future of Indian Insurance Market- The Changing Scenario

24

7.

Corporate Social Responsibility (CSR)- The Jet Airways Way

29

8.

Khajane - A New Definition to Treasury Management System

34

9.

Civil Society and ICT - Initiatives in Kerala

39

10.

UT! Stretegy to Retain its Lost Status

48

11.

E-Governance Projects in India - A Comparative Study

57

12.

Implementating it Policies f~r Effective E-Governance Framework (Case-'Swama' Andhra Pradesh)

67

National Policy on Information Technology (IT)Need of the Hour

90

14.

Infosys Foundation's Corporate Social Responsibility (CSR)

98

15.

The Emerging Indian Banking Industry - IBA Initiatives

102

16.

ERP-Potential Software for Resource Integration

113

17.

ERP Challenges: The Indian Scenario Case -SAP bnplementation at Bharat Petroleum

120

The Future of Financial Set:tor in India - A Case Study

127

13.

18.

19. 20. 21.

SEI-CMM Implementation at Infosys for More Effective Management Practices

141

Knowledge Management (KM): Present and Future Impact on Business Organisational Framework

145

Management of Information Challenges in the Century

152

BANKING SECTOR REFORMS IN INDIA

INTRODUCTION Financial sector plays an important role in the development of an economy. Financial institutioty', instruments and markets that form the financial sector which act as medium for the transfer of resources from the net savers to the net borrowers. The process of financial intermediation supports increasing capital accumulation through the institutionalization of savings and investments. The gains to the real economy, thus depends upon how efficiently this sector performs the basic function of financial intermediation.

THE LIBERALIZATION ERA - AN OVERVIEW OF THE INDIAN FINANCIAL INDUSTRY The Indian economy considered to be one of the largest consumer market that form the Asian Tiger Economies, entered the liberalization era with the introduction of liberalization reforms in 1991 undertaken by the government. The major building blocks of the financial sector reforms in India have been • Removing or relaxing external constraints. • Introduction of prudential norms. • Institutional strengthening. The chief merit of India's reform process has been the cautious sequencing of reforms and the consistent and mutually reinforcing character of various measures taken. With the introduction of new prudential norms, the capital base of the banks has been strengthened and organization improvements are being put in place. The Indian financial sector reforms aims at improving the productivity and efficiency of the economy. It maintained its stability even when other markets in Asian region were fac!ng a crisis. The opening of the Indian financial market to foreign and private Indian players has resulted in increased competition and better product offerings to consumers. The financial sector has kept pace with the growing needs of corporate and other borrowers. Banks, capital market participants and insurers have developed a wide range of products and service~ to suit various customer reqUirements. A trend towards mergers and acquisitions is expected in the neat future due to compulsions c.f size and limitations of \ growth of business on its own vis-a.-vis growth through acquisitions. The recent favorable government poliCies for enhancing limits of foreign investments in the banking sector have attracted global banking majors.

Effective Management Workout - A .Case Study ...

REFORMS IN THE BANKING SECTOR To facilitate .the process of resource mobilization, the development of geographically wide and functionally diverse infrastructure is the pre- requisite. Also, such a system would support the growth of the economy. India has 277 commercial banks with over 61000 branches (one branch/ 12000 people) spread across the country to achieve a balanced spatial distribution of credits. Banks' deposits account for 35% of GDP and advances for 31 % indicating the extent to which banking system is inter- related with the growth of economy. Today there are over 300 million deposit accounts with the banks, and public sector banks account for 87% of deposits and loans. In addition to banks, which essentially meet working capital needs of the industry, there are. specialized development fi~ancial institutions (DFIs) to meet medium term and long term finance needs of the industry. The network of DEs includes three all India development banks (IDBI, IClCI, IFCl), 18 State Finance Corporations and 26 State Industrial Finance Corporations. Over the years, the banking sector had to operate under several constraints and limitations due to social banking objectives and controlled regime on both income and expenditure side. Some of the controls on the banking sector were in the form of: • Directed investments in the form of Statutory Liquidity Ratio (SLR)-under, which a bank is required to invest a certain specified percentage (38.5% in 1991) of Net Demand and Time Liabilities (NDTL) in government and other specified securities. • Directed Credit Programs- In the form of priority sector lending whereby a bank is required to lend almost 40% of advances to specified sectors, including agriculture at specified rates. • Cash Reserve Ratio (CRR)- Banks are required to keep a minimum CRR, whereby a certain percentage (15% in 1991) of NDTL is to be maintained as cash with Reserve Bank of India (RBI). • As a result, CRR and SLR together accounted for pre-emption of over half of total resources mobilized by the banking system. This ultimately left the banks with no other option but to resort to high interest lending to -wmmercial sector making India a high cost and a non-competitive economy.

REFORM MEASURES In the changing scenario of liberalization, it was realized that the banking sector would have to playa key role ,in ,the ecOMmic reforms process. Thus, the Narsimhan Commi~ was formed to recommend reforms in the banking sector with the objective of graining autonomy and flexibility to the banking and financial services industry and improving the sector's efficiency and profitability. The important reform measures recommended by the committee were:

REDUCTION IN STATUTORY LIQUIDITY RATIO (SLR) The funds of banks were invested in SLR government approved secUrities, wmch earned

Banking Sector Reforms in India a lower rate of interest as compared to other investments. This adversely affected their profitability. The government to finance budgetary deficits used these funds. The committee recommended that since SLR was originally introduced as a Prudential requirement for banks and not as a mode of financing public deficits, it should be reduced to the ratio of 25% as against ratio of 38.5% existent in FY- 91. On these lines SLR has been reduced to about 28.2% till FY-96. SLR requirement of 10% of deposit was extended to' Non Banking Finance Companies as a prudential norm in 1993.

REDUCTION IN CRR CRR funds virtually earn no interest. Thus, every reduction in CRR would improve the profitability of the banks, as more lendable funds would be available to them. Thereby, CRR has been progressively reduced to 13% of domestic deposits and CRR requirements on various NRI and foreign currency deposits was eliminated.

PRIORITY SECTOR LENDING Banks are required to direct 40% (32% for Foreign Banks)" of their advances towards priority sector lenqing. Narsimhan Committee has recommended reduction of priority sector lending to 10% and also suggested concessional refinance facility from RBI for such advances. However, this recommendation has not been implemented so far because of its being politically sensitive issue.

FREEING OF INTEREST RATES ON DEPOSITS AND ADVANCES: The Committee has recommended a gradual and cautious approach to deregulation of interest rates offered by banks. This was also to promote competition among the banks. Interest rates on advances above Rs. 0.2 million were decontrolled in FY-95, whereas interest rates on domestic deposits over 2 years duration and on NR and NRE accounts were deregulated in FY-96. This measure will promote competition in the financial sector and interest rates would be governed by the market forces. It will also attract foreign funds into the country.

CAPITAL ADEQUACY NORM The Narsimhan Committee has recommended that all banks, financial institutions and non banking finance companies operating in India have to attain 8% Capital Adequacy Ratio by end of FY-96, in line with international banking norms. This recommendation has been implemented in full.

ACCESS TO CAPITAL MARKETS Banks originally were not allowed to access capital markets. But once the Capital Adequacy Stipulation was specified it became imperative to allow banks and financial institutions to raise money from the public. State Bank of India went public in December 1993 followed by

Effective Management Workout - A Case Study Oriental Bank of Commerce in October 1994. IPC! was converted into a c'ompany and !DBI Act was amended to allow these institutions to raise money through public issue.

PRUDENTIAL ACCOUNTING NORMS Prudential norms for income recognition, asset classification and provisioning for bad debts were introduced in order to cleanse the bank balance sheet. The norms provided for uniform accounting practices for banks and financial institutions.

COMPETITION THROUGH PERMISSION TO PRIVATE SECTOR BANKS In order to encourage competition and promote efficiency, the committee recommended entry of private sector banks.

FUTURE OUTLOOK In the years do come, there is no doubt that the Indian system will grow in size and complexity. Different segments of the market will become closely linked. Banks will begin to function increasingly under co-operative pressures. These pressures may emanate from within the banking system, as well as from non-banking financial institutions. With the increaSing participation of private shareholders, even in public sector banks, there will be greater accountability to shareholders, including the Government. Competitive pressures can also result in some degree of consolidation.

BOTTOM LINE The financial sector reforms have brought about significant improvements in the financial strength and the competitiveness of the Indian banking system. The prudential norms, accounting and disclosure standards, risk management practices, etc. are keeping pace with global standards making the banking system resilient to global shocks. The consolidation and convergence of banks in India has, however, not kept pace with global phenomena. The efforts on the part of Reserve Bank of India to adopt and refine regulatory and supervisory standards at a par with international best practices in banks.

POINTS TO DISCUSS 1. How the nourished Financial Sector contribute to the sustainability and robustness of the economy. Explain this fact in Indian context. 2. "Banking Sector plays a key role in economic reform process". justify the Statement in context to recommendation of Narsimhan Committee.

3. How the regulatory body affects the entire workout of an economy?

[iJ LAKSHMI N. MITTAL - MORGAN OF 21 sT CENTURY "In five years, 1 definitely see more consolidation, more globalization. And I think some companies will adapt. Others will be left behind. Of course, in any race, there are only one or huo winners. 1/

- L. N. Mittal, CEO Ispat International "L N Mittal is the Andrew Camegie of a brave new world in the global steel illdustnf.

- The Wall Street Journal

INRODUCTION One hundred years ago, Morgan created an industrial colossus, combining Andrew Carnegie's steel operations with his own to form U.s. Steel Corporation. It was the world's biggest steel maker and would lead the indu~h'y for decades. Today, a steel-company executive named Lakshmi N. Mittal wants to restage this drama with himself in the starring role- Morgan of the 21st century. Rise of the billion-dollar knight in shining amour Lakshmi Mittal owns a company bigger than British Steel and is the UK's wealthiest Asian. Mittal and the company he founded, Ispat - steel in Sanskrit - would no doubt be as famous as Shell or Virgin. He made no stone unturned in the way of his proclaimed ambition of creating the "world's largest and best-managed steel producer" . Mittal began his empire by building a single plant in Indonesia in 1976. Today, Ispat has mills in eight countries, including the U.s., and sales of nearly $4.7 billion. Add in the other steel properties of Ispat's privately held parent, LNM Group, and Mittal's enterprises span three continents, employ more than 74,000 and rank sixth in world steel output, at 20 million tons in 1999.

BACKGROUND NOTE Unlike the Scottish steel baron of a century ago, Mittal came from very different surroundings. Born in a villag"e that did not have electricity until the Sixties, his family moved to Calcutta; where he studied accounting and business at the city's prestigious St Xavierl-s college. He attended class from 6.30 am till 9.30 am, and then worked for his father, Mohan Lal, who ran a small family-owned steel mill. After graduating top of his class, Mittal went to work full-time for his father as a 21-year old trainee. The business used to knock out 20,000 tonnes of steel a year, equivalent to only a few hours' output from Mittal's empire. /

Effective Management Workout - A Case Study

DYNAMIC MANAGEMENT STYLE Mittal's secret is a combination of technological vision and managerial good sense. He was among the first to spot two trends in steel-making technology. One was a shift from traditional blast furnaces to more efficient mini-mills, which were championed by America's N ucor. Except for the giant Kazakh blast furnace, nearly all of LNM 's plants are mini-mills. In the industry as a whole, mini-mills' share of world output has climbed from 14% in 1970 to 35% now, and analysts believe that it will grow further. Mittal also realized that the price of the raw material for mini-mills steel scrap would rise as more mini-mills were constructed. He therefore invested in a substitute for scrap known as Direct-Reduced Iron (DRI), and now produces more of it than anyone else. DRI cost about $95 a tonne in 1996, compared with $155 a tonne for the high-quality scrap that mini-mills mostly use, and $125 a tonne for the pig-iron used to make steel in blast furnaces. DRI is not a proprietary technology, but it is complicated and hard to copy that promise virtually insurmountable for the foreseeable future. Managerially, Mittal has been no less astute. Rather than build mills from scratch, he has added capacity by scouring the world for under performing mills that process DRI . He bought state-owned mills in such .places as Ireland and Trinidad, and qivisions of distressed steel makers such as Germany's Thyssen. Although he has expanded rapidly, he has not been spendthrift. Jeremy Fletcher of CS First Boston reckons that, by buying poorly run plant, Ispat has invested less for each tonne of steel-making capacity than any other firm in the worldhalf of what has been spent by Nucor or Steel Dynamics, another American mini-mill firm that is reckoned to be the world's lowest-cost builder of new steel plants. Of course, simply buying flop firms is not enough. Ispat has had to rescue them too. The firm cuts purchasing costs and lays off workers. More interestingly, it is also prepared to invest when others are reluctant. Separate teams of American consultants and G.erman managers had failed to turn around a steel works in Trinidad, which was losing $lm a day when Ispat took control in 1988. Ispat immediately spent $10m fitting the equipment needed to unblock bottlenecks. Three months later production had doubled and, within the year, the plant was profitable. Similarly, Ispat said on January 7th that it will spend $40m modernizing the mills it bought from Thyssen in October 2000. Other results have been just as dramatic. At its Mexican plant, for example, Ispat has lifted production from a quarter of its original capacity to well over 100%, and is now boosting it further. In Kazakhstan, a loss-making $450m venture that many judged risky even by Mittal's own standards, productivity has improved by a quarter and output by more still. Mittal estimates that the Kazakh works made a profit of $90m in 1997; double what it made the previous year Mittal's first as the works' owner.

THE STRATEGIST By the end of this year, Mittal's LNM Group - Lakshmi Niwas Mittal- which controls steel mills in Indonesia and Kazakhstan, as well as his 84 per cent stake in Ispat, will produce 19

Lakshmi N. Mittal- Morgan of 21 st Century million tonnes of steel- 2 million more than British Steel. His wife Usha runs the Indonesian business and his 22-year-old son is a director of Ispat. Mittal and his family have lived outside the country since 1976, when he moved to Indonesia after setting up his first overseas steel venture. Since then his success mantra has largely been built on buying up loss-making stateowned mills and quickly turning them around. His first taste of such success came in 1989 when he bought into Trinidad and Tobago's steel facility, which was losing $lm a day. Teams of US consultants and German experts had previously failed to find a solution. Within a year, Mittal had doubled output and made the business profitable. He went to Mexico in 1992, to weave his magic in the country's third-largest steel producer, Sicartsa, which he bought for $220m. The Mexican government had built it for $2bn less than a decade earlier, and it had been losing money for years. The Global strategy followed by Mittal has three aspects - Global Acquisition Global Operations, Global Presence. I

PEOPLE MANAGEMENT Recent figures show that Mittal has increased output per employee fivefold, and Sicartsa is now the jewel in the company's crown, accounting for 63 per cent of group profits. Mittal has performed similar tricks in the former Soviet republic of Kazakhstan, having taken over the state-owned steel mills in 1995. It was a risky proposition even by MittaI's standards workers had not been paid for six months. Within a year it was profitable; production has now doubled from 120,000 tonnes a month to 250,000. Mittal is planning an $800m expansion with help from the European Bank of Reconstruction and Development. Work in progress includes Irish Steel, which he bought in 1996 for a token one Irish pound - although he had to payoff millions in back debts. His ability to turn loss-making businesses round stems from a number of factors. He immediately gets to work squeezing costs and slashing jobs, which has caused trouble with unions. But a key plank in MittaI's success has been the spotting of two trends in steel making technology. Instead of using traditional blast furnaces, he has championed the use of the more efficient and smaller steel making facilities known as mini-mills. Perhaps More important, Mittal also realized that as these mini-mills grew in popularity, the price of the raw material that feeds them scrap steel would rise. While Mittal is still majority owner of Ispat, his need to raise capital to fund worldconquering ambitions forced him to float 16 per cent of the company in 1997 on the New York and Amsterdam Stock Exchanges. The company's headquarters may be next to Annabel's nightclub in London's Berkeley Square, but Ispat is registered in Rotterdam. Last August, more than 260 investors crammed into a New York luncheon meeting to hear about buying a slice of a company predicting a 25 per cent increase in earnings over each of the next five years. Ispat's shares, which floated at $27, fell to about $18 during the Far East

Effective Management Workout - A Case Study crisis, but are now trading above $29.

ISPAT - GLOBAL PRESENCE Lakshmi Mittal built a subsidiary of an Indian family firm into the world's most promising steel maker. It was just the sort of acquisition that has transformed his steel business from a division of an obscure family metals firm in Calcutta into one of the world's largest. He is the man who makes no secret of his aim to build the world's largest and best-managed steel maker. Having split his businesses from the family firm a few years ago, Mittal has built Ispat into a company with a market capitalization of roughly $3 billion and net sales of $2.7 billion in 1996. His LNM Group, which bundles publicly traded Ispat International with private operations in such places as Kazakhstan, has capacity of 15m tonnes and a geographical spread from Mexico to Germany and Indonesia that is unmatched in the industry.

MITTAL'S MmLE THE CORE COMPETENCY Mittal is characteristically unbowed. "Emerged, emerging or submerging markets, they all represent opportunity to me," he says. In the developed markets Mittal points to his successes, such as Hamburger Stahlwerke, once a municipal works, which he turned around. He also thinks that the United States' steel industry is ripe for restructuring. He may be right, Bethlehem Steel announced a bid for Lukens and the pressure will intensify if Nucor and Canada's Ipsco proceed with plans to add capacity. Ispat has strength to add to the quality of its technology and management. This is geographical spread. As soon as Mittal acquires a firm, he redirects sales and purchasing internationally in order to fetch the best prices. In Kazakhstan, this meant shifting four-fifths of sales from barter to hard-currency exports. His Mexican operations shipped 62% of its output to Asia in 1992, but when prices there fell in 1994, it diverted that steel to the booming American market. With so much of the world to conquer, seeking better access to capital markets, he moved his headquarters to Rotterdam in 1995. Ispat's first !PO was eight times oyersubscribed. Analysts adorn Ispat with lavish praise like Arguably the best steel company on the planet," and "The most dynamic major steel company in the world." II

ADDED ADVANTAGE OVER JAPANESE IN INDONESIA Mittals established a small company called PI Ispat Indo with an initial investment of $15 million in 1976. The Indonesian venture started in a small way with a wire-rod mill of 65,000 tons per year (tpy) based on Italian t~chnology. (All tons in this article are metric.) It was not easy in the beginning. There was intense competition from some Japanese mills already established in Indonesia. The best way to beat them was to adopt their own methods and excel in them. "My colleagues and I visited Japanese minimills and tried to understand the merits of their systems and operational technology," Mittal recalled in a recent speech in Djakarta at the 18th annual Heads of Asia/Pacific Operations roundtable. "Our aim was to attain superior quality at a lower cost

Lakshmi N. Mittal- Morgan of 21 st Century of production. I thought we could overcome the problem by seconding [transferring] our engineers and executives to similar plants in Japan." Mittal's strategy succeeded The Indonesian plant is now an integrated steel complex of 650,000 tpy. After the oil crunch of the early 1980s, most of the Japanese mills in Indonesia had to close down. Cost-cutting and quality improvement made PI' Ispat Indo internationally competitive by 1985. Now there was no stopping the Mittal juggernaut. In 1988, the Mittal took over the ailing Iron & Steel Co. of Trinidad & Tobago, which was managed by internationally renowned European firms and losing $50 to $80 million per year. Deploying Indian technicians and managers, .the Mittal turned the plant around. This was followed by an acquisition of Siderurgica del Balsas SA at Lazaro Cardenas in Mexico and then more companies in Canada, Germany, and Ireland.

BACK TO TH E ROOTS While the Mittals were globalizing their empire, a sea change was occurring back home in India as the government jettisoned its bias against the private sector. The steel industry in particular was being progressively decontrolled. With demand for steel in India projected to zoom to 34 million tons per year (mtpy) by the year 2000 and production capadty 'tagging far beIUJ:t? at 15 mtpy, India represented a massive opportunity. Mittal choose to start small in a niche market but had big plans for the future. When he realized that no one in India was making thin-gage gafvanized sheet for use as roofing material, Mittals started a galvanizing and corrugating unit called Nippon Demo Ispat Ltd. (NDIL) at Nagpur (central India) in 1985 todays Ispat Industries. Mittal joined that company's name with Ispat to give NDIL its rather misleading name. But a cold-rolling mill was only the first phase of the Mittals' game plan. Their ambition ' was to establish the whole chain in steel making, from ore to rolled material. Since, in those days, blast-furnace-based steelworks were reserved for the public sector, Mittals decided to put up an EAF-based unit. Since steel scrap in India was scarce and expensive to import, the Mittals chose Direct-Reduced Iron (DRI) as a raw material. They already had experience using it in the Indonesian steel plant. In todays date the Ispat Group has three more steel-related companies in India namely Ispat Profiles, Ispat Alloys, and Gontermann-Peipers.

BOTTOM LINE . Ispat International directly gets the benefit of having its global pr.ese~c:, the company is becoming much more efficient, much more productive with have the mabllIty to reduce c~sts on a global basis Like purchasing. The company use to buy products through central purcha~m.g system, in Europe with stronger work force. On the operation side, as a global company, It 15 able to exchange knowledge and experience at different companies around the world.

POINTS OF DISCUSSION 1. How Mittals functioning of work affects the other steel barons for merger or selling of their entire stock? 2. What do you smell about the future prospects of Ispat International and LN Mittal? 3. Elaborate the strategic aspect of LN Mittal and his added advantage over others,

MERGER AND ACQUISITION (M&A) BY INDIAN COMPANIES OVER THEIR FOREIGN COUNTERPARTS

INRODUCTION Merger & Acqubition as New Buzz Word of Nowdays Industry In the long run, successful mergers and acquisitions occur when both sides are open to new possibilities. With cooperation, flexibility and accurate information, the planning and assessment process has the best opportunity to progress smoothly. Open channels of communication, which help, minimize confusions and build confidence in employees. Top management is receptive holds a clear-cut vision, knows how to generate consensus and convince people about organizational goals. The M&A synergies, if managed correctly, could lead to an organization with greater employee participation, flexibility and risk-taking and, where necessary, a higher degree of structure.

MAJOR INTERNATIONAL ACQUISITIONS DONE BY INDIAN COMPANIES IN THE PAST TWO YEARS AND THEIR EFFECTS. Tata Motors acquisition ~f Daewoo Commerdal Vehicle Corporation This acquisition gave Tata Motors a great truck manufacturer at a great price ($118rnn), but also acted as a gateway for the Indian auto major's into China, the worlds most lucrative automobile market and perhaps to other South'-East Asian markets.

OrbiTech's merger with Polaris Citigroup being the largest client of OrbiTech became the client of Polaris after the merger. This merger also benefited OrbiTech as Citigroup being the largest client restricted the company's exposure to other banks for selling products and solutions. After the merger, OrbiTech is able to sell its products to non-Citigroup banks through Polaris marketing network. After the merger Polaris emerged as a banking, financial services and insurance powerhouse. These software services and solutions account for around 20% of the global IT services market.

Merger and Acquisition (M&A) by Indian Companies ...

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The merger has helped Polaris emerge as a global player in a short span of time with an enhanced platform to deliver its high quality products and solutions into the market place.

Cognizant's acquisition of the Netherlands Based Infopulse The acquisition of Infopulse for a consideration of $5mn,has helped cognizant in expanding its reach and presence in continental Europe Cognizant is perhaps among the handful of companies that have a truly multicultural workforce and because of this unique and not to easily replicable differentiation that its acquisitions have been extremely successful and well integrated.

Wipro's acquisition of NerveWire Inc. The acquisition has turned more clients towards Wipro's part. Also helps the company to develop a perfect fit for its growing financial services business. Open the related aspects in deep domain knowledge and strong customer relationships for Wipro.

Mascot's acquisition of e-Jiva and AquaRegia These acquisitions have been aimed at enhancing client profile, expand depth and range of services and to strengthen sales and marketing and increase its potential to compete for larger business engagements. Mascot's financial performance in the final quarter of financial year 2003 improved after the acquisition of e-Jiva and this is likely to lead to earnings and business growth for the financial year 2004.

Hindalco's acquisition of Mt Gordon Operations and Straits in Australia These acquisitions were aimed to become globally competitive, integrated copper player and to entrench ownership in upstream mines. Even the pharmaceutical companies are trying to expand their reach in overseas markets. In the past, Indian pharma firms took advantage of their low cost but now with the product patents on the horizon the old strategy would no longer work and more over thy will have to face the competition from the global companies. As the local companies are becoming confident and competent, they are expanding their presence abroad to gain new customers by using Mergers and Acquisitions as a vehicle.

Tata's acquisition of Tetley One of the biggest-ever deals in Indian corporate history; Tata Tea signed a 271 million pounds (Rs l,870-crore) deal to buyout all the brands of Tetley of UK.' The deal structure involved the creation of a 100 per cent Tata Tea subsidiary, which acts as a Special Purpose Vehicle (SPV) to hold all Tetley properties. It was a momentous occasion for the Tatas as this was the largest-ever acquisition by an Indian company abroad in terms of acquiring an international brand. The acquisition of Tetley, which had sales of Rs 1,900 crore, was financed with 70 million pounds of equity of which 60 million pounds were from Tata Tea Ltd. (TIL) and 10 million pounds from its New York-based subsidiary, Tata Tea Inc. Tetley clocked a worldwide turnover of Rs 2,240 crore and profits of about Rs 182 crore in 1998. Tata Tea and Tetley's business has, as an aggregate, instantly become Rs 3,141-crore business. The acquisition

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Effective Management Workout - A Case Study

also gives Tata Tea, the second position globally in the tea market. Tetley sells tea bags in 44 countries, has a presence in India (it has a Kochi-based, export-oriented joint venture with Tata Tea), Canada, the US, Australia and Europe, and is the world's second largest tea brand (Lipton is the largest). It's also one of the UK's top tea bag brands. In a survey of 50 top British brands in the 52 weeks ending April 1998, AC Nielsen, the market research agency, ranked Tetley 17thj well ahead of tea bag rival Unilever's PG Tips (26th). The acquisition is all the more important because of the looming prospect of free imports following the imposition of World Trade Organization norms. In less than four or five years, tea from Sri Lanka and anywhere in the world will come in. As a result, local market players can buy and import good quality lower-priced tea. Kenyan crush, tear and curl (CTC, or non-premium) tea, for instance, costs at least Rs 10 a kg less than comparable Indian CTC teasj the price gap is Rs 20 a kg for premium tea. So, Tata Tea can draw on Tetley's expertise and infrastructure in sourcing teas worldwide for the Indian market. Tetley's strength in packet tea is amazingly synergist?-c with the direction Tata Tea has consistently followed, along with other Indian tea companies, of shifting from selling loose tea, the exception being high-quality teas that are still hawked in auctions for heavy prices to branding and packaging teas. The packet tea business is highly profitable. Companies make a minimum profit of Rs 4-6 per kg.

Wockhardt's acquisition of CP Pharmaceuticals in UKAcquisition has given Wockhardt, immediate access to a large base of customers in the UK, including hospitals and the National Health Service (NHS). The acquisition has made Wockhardt the largest Indian pharmaceutical company in the UK and one amongst the top 10 generic companies in the country. After acquisition, Wockhardt can put its research and methodology division and cost effective manufacturing strengths to drive CP's European business. CP pharmaceuticals have over 200 marketing authorizationsj most of them underutilized because of high manufacturing cost in UK. Wockhardt could make most of these products work by leveraging India's manufacturing advantages.

Other major acquisitions Ranbaxy's acquired a French pharma company RPG Aventis. Dr.Reddy's Labs acquired a US based firm BMS Labs.

CHALLENGES BEFORE INDIA INC 1. Retaining the talent to manage Quality people. 2. To merge different cultures and to generate an intercultural working environment. 3. To integrate aspects like technological and people infrastructure. 4. To understand and deal with legal complexities in foreign countries. 5. To ensure customer faith and sustainable business growth.

Merger and Acquisition (M&A) by Indian Companies ...

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BOTTOMLINE Companies should make emphasis on the fact that mergers is a means to achieve the greater aim of growth and competitive advantage. An important prerequisite to fulfill this goal is to have a comprehensive strategy for the new entity, which outlines its future direction. The strategy should take into account the changes taking place in the industry as well as expectations of employees, customers and shareholders. Thus, successful post-merger integration will lead to a competitive advantage in the new market scenario.

POINTS TO DISCUSS 1. How M&A facilitate the mutual benefits to both parties in present as well Future business scenario? 2. Elaborate the international Acquisition performed by Indian Companies. 3. How a proper M&A strategy influence positively the factors like people Management and Technological aspect of the company?

RELIENCE INFOCOMM-FUTURE ORIENTED STRATEGY

INTRODUCTION INDIA- THE IIEMERGING" WIRELESS MARKET With the smooth fiscal growth of 8.1 % this year and the economy robustness with the growth in promising industries like Wireless Telecommunications, India's wireless Market is intend towards "next China". This Case Study deals with the factors positively influence the Indian Wireless Market.

THE REGULATORS The four main regulators of wireless include: • Telecom Regulatory Authority of India (TRAI): Regulates policies of Deptt. of Technology (DoT) , and monitors licensees. • Department of Telecommunications (DoT) : Sets policy and controls licenses for both fixed and wireless telephone operators • Telecom Dispute Settlement Appellate Tribunal brought by licensees or consumers

(TDSAT~:

Resolves disputes

• Wireless Planning and Coordination Wing (WPC): Manages spectrum allocation

Key Decisions Undertaken These regulators have issued numerous decisions over the years. Some of the more relevant' moves by regulators include: • Enhancing comp2tition and lowering phone and voice tariffs through its New Telecom Policy (NTP-99). • Allowing for intra-circle (telecom regions) mergers.

• Calling Parhj Pays (CPP) went into effect last year. • Lowering handset tariffs to 5% this year. • Introducing a Unified Access License (UAL) regime, which enables any operator to offer any type of service. -

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This last controversial move (UAL) has expands the operational workout to an operator like Reliance Infocomm, which offers a CDMA version of Wireless Local Loop Mobile (WLLM) that has proven to be very populal. The full "unification" process is ongoing, and issues remain to be resolved.

Mobile Operators Some two-dozen companies provide cellular service in India in 19 telecom "circles" (or regions), and four metro areas. These operators cover apprOXimately 1,500 towns across the country. Roughly 80% of the country's cellular subscribers are pre-paid. This is likely to remain The case given that most people prefer paying with cash instead of credit.

Operator Network(s)

Total Subscribers

Reliance Infocomm (private)

CDMA 7,557,041

Bharti Televentures (private)

GSM 6,758,704

BSNL (state-owned)

GSMj CDMA 5,355,690

Hutchison Essar (private)

GSM 3,661,631

Idea (private)

GSM 2,814,941

BPL (private)

GSM 2,017,780

Tata Teleservices (private)

CDMA 619,463

MTNL (state-owned)

GSMjCDMA 377,919

Source: Companies, TRAI

Illustration (A) India's Leading Mobile Operators PLANS FOR GROWTH Some of the leading mobile operators in India have some aggressive expansion plans, according to published reports: Reliance Infocomm: Expand from 1,100 cities and towns to 5,000 by March 2005. Bharti Televentures: Expand from 1,100 cities and towns to 2,300 by year's end. Hutchison Essar: Expand from 578 cities and towns to. 800 by year's end in existing circles; also intends to cover over 658 cities in three new circles: Punjab, UP West, and West Bengal Tata Teleservices: Expand from 50 cities and towns to 1,000 cities and towns by March 2005.

SUBSCRIBERS The total number of wireless subscribers in India now stands at about 34 million as of the end of April 2004.

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The long-range forecast calls for more than 150 million subscribers by 2009.

Key drivers to subscriber growth include: • Affordable handsets (as low as U5$11) • Infrastructure in place (and expanding) • Competitive operators • Pent-up demand

ARPU Monthly Average Revenue Per User (ARPU) stands at around U5$11, with a declining prospect over the next several years as growth among less affluent subscribers is expected to take hold. Toward the end of the forecast, ARPU should rise slightly as newer data services become more widely used, and expected economic growth can sustain higher rates in a more mature marketplace.

INFRASTRUCTURE Ericsson has dominated India's wireless infrastructure market. But other vendors have made inroads. Nokia just won a $275-million, three-year order for building and upgrading Bharti's network.Earlier in the year, Ericsson was awarded a $400 million contract to build and manage Bharti's networks. The near term looks bright for base station vendors, with deployments growing this year and next (see figure below). But toward the end of the forecast, growth will slow dramatically as mature networks become capable of handling the increased volume.

HANDSETS With a booming subscriber base, handset shipments will likewise show strong growth as well. Over the next five years, compound annual growth will exceed 9%, with the peak year in shipments coming in 2006. Replacement cycles will remain relatively constant at 24 to 36 months, especially since many new subscribers will be from rural areas, and these are not likely to upgrade as quickly as their more wealthy urban counterparts. Nokia is the leading manufacturer at this point. Other major brands include 5amsung, Motorola, and LG. However, as the market expands into more rural areas, lower-cost brands will compete for market share. Indeed, Chinese manufacturers Bird and TCL entered the market last year, as did the Taiwanese manufacturers BenQ and DBTEL. Handset shipments are set to explode this year, up more that 175% year over year. But as the market matures, the growth will slow. Replacement rates shbuld average between 24 and 36 months.

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A once flourishing handset "Gray" market is on the wane in India, due to a reduction in duties and taxes. A customs tariff was lowered in January from 10% to 5%, and a Special Additional Duty (SAD) of 4% was abolished at the same time.

RELIANCE INFOCOMM - THE SUCCESS SAGA One of the most interesting wireless players in India is Reliance Infocomm. Company officials have been the most aggressive at pushing cellular service through a CDMA version of Wireless Local Loop Mobile (WLL-M). The Reliance story is worth noting, especially as the company has gone from nearly no subscribers to the leader in the span of about one year. One of its biggest advantages is that Reliance Infocomm is part of India's largest conglomerate: Reliance Group, a petro-chemical giant that has deep pockets. The company has leveraged its skil,is in these other markets and applied them to wireless telecommunication. Employees 28,000 Subscribers 7,557,041 Backbone 60,000 km. fiber optic cable throughout India Rate 1 cent per minute anywhere in India (purportedly lowest in world) Data 40 million hits per day to R World Market share 21.9% Goal 60% market share by 2009 The company's stated goal is to make a cell phone call as common as sending a postcard in India. With its one-cent-a-minute calling rate (apparently the lowest in the world), Reliance's goal may become a reality. Company officials have said they will be profitable in the first year. Recently, it reported a cash profit position as of March 31, 2004, the end of its fiscal year, although a net loss was accounted for by parent Reliance Industries. Still, the company will no longer need funding from its parent, and its financial position appears solid.

AGGRESSIVE PLANS Reliance officials expect the wireless penetration in India to be about 15% in 2009 (approximately 150 million). They aim to capture 60% market share by that time, or about 90 million subscribers. Already, the company boasts 7.5 million subscribers. And company officials have already made plans for upping capacity to 40 million in the coming months.

DATA Reliance has not only pushed voice services, but has been aggressive on the data side as well. Its mobile Internet service, called R- World, has generated nearly 40 million hits per day. The service has been free up until now. Starting in July, new fees will take effect. Some of the more popular data downloads relate to cricket, ring tones, and movies.

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Later this year, officials expect to launch CDMA2000 1X EV-DO technology. No other details were given, but such a move will surely enhance Reliance's mobile data capabilities.

FUTURE At this point, Reliance is setting the pace among wireless carriers in India. It has taken some hits (mainly from rivals) for its aggressive moves, and its controversial technology. But in the end, the market has given its approval to Reliance, and its future appears to be bright.

INDIA'S WIRELESS FUTURE Present Potential of Market itself reflects Growing Prospects. The number of wireless subscribers will likely reach about 150 million, roughly the size of the US market today. Sustaining a profitable business will be a challenge, given that ARPU is relatively low by world standards. However, companies with enough volume (such as Bharti or Reliance) should be able to thrive in India, especially with a growing overall economy. The political landscape, though altered recently, does not appear to be a large threat to growth at this time.

VITAL SIGNS OF FUTURE MARKET • Consolidation of operators - only the largest ones will survive • Intense competition, especially as operators try to match Reliance's growth rate. • Push-ta-talk enters the market this year (Tata plans to roll out Qualcomm's BREW Chat platform) • 3G deployments later this year and in subsequent years will help boost data usage, and increase voice capacity

R1SI(5 There are risks to India's growth story. These include: • Regulators putting the brakes on growth. • Political turmoil with Pakistan disrupting the region. • Foreign investment in the sector getting stymied by regulators.

BOTTOMLINE The Indian wireless market is much more advanced than most Westerners might imagine. The leading operators have ambitious plans. The overall economy is booming and Indians sense that a cell phone is a must-have 21st Century tool. In general, this market is not looking back, and anyone contemplating an investment in India has solid evidence of sustainable growth. The opportunity is there.

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One caution: It remains to be seen whether the new government will be able to keep its hands off a flourishing wireless market. Historically, more liberal regimes like to control a market. In this case, it's likely that the free market forces in place will prove to be too great, even for those with a liking for regulation. We shall see what's next.

POINTS TO DISCUSS 1. How regulatory bodies prevent the wireless market from unordered Competition. 2. What sort of strategy Reliance Infocomm underwent to trap its enhanc:e Customer base and what are added advantage that it have over its Telecom rivals

RELEVANCE OF ERP IN THE ORGANISATIONAL RESOURCE INTEGRATION (ORI)

.. INTRODumON ERP is an acronym that stands for Enterprise Resource Planning. ERP is package software solution that addresses the enterprise needs of an organization by tightly integrating the various functions of an organization using a process view of the organization. It is package software and not custom made software for a specific firm. It understands the needs of any organization within a specific industry segment. Many of the processes implemented in an ERP software are core processes such as order processing, order fulfillment, shipping, invoicing, B.O.M processing, purchase order processing, preparation of Balance Sheet, Profit and Loss statement etc., that are common to all industry segments. That is the reason why the package software solution works so well. The firm specific needs are met through a process of customization. ERP addresses not merely the needs of a single function such as finance, marketing, production or HR. Rather it addresses the entire needs of an enterprise that cuts across these functions to meaningfully execute any of the core processes. ERP integrates the functional modules tightly. It is not merely the import an~ export of data across the functional modules. The integration ensures that the logic of a process that cuts across the function is captured genuinely. This in turn implies that data once entered in any of the functional modules (whichever of the module owns the data) is made available to every other module that needs this data. This leads to significant improvements by way of improved consistency and integrity of data. ERP uses the process view of the organization in the place of function view, which dominated the enterprise software before the advent of ERP. The process view provides a much better insight into the organizational systems and procedures and also breaks the "kingdoms" that work at cross-purposes in many organizations. To implement such a demanding software one needs high performance computing, high availability systems, large, high speed high availabilIty online storage and high speed, high reliable networks, all at affordable cost. Though many ERP software vendors have been around for more than two decades, ERP software started to make major inroads into the corporate world only in the last couple of years. Interestingly Indian corporate houses are taking the ERP route exceptionally fast, even by world standards in the past two years. The investments on a complete ERP implementation for a Rs. 100+ core corporation

Relevance of ERP in the Organisation Resource Integration (ORI)

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would easily run into Rs 10+ crores. ERP is the only software whose deployment decisions are made in the corporate boardrooms and not by EDP / MIS departments. ERP software today represents possibly the single most expensive piece of general-purpose software.

ERP - AS SOLUTION TOWARDS ENTERPRISE NEEDS Corporations go for ERP either to solve the existing problems or to explore new opportunities, using two approaches as negative & positive approach respectively. One aspect of the negative approach forces some corporations to go for ERP to solve their Y2K problem. This is particularly true of those corporations that are heavily dependent on legacy systems running on old main frames. The second aspect of the negative approach is to get over the problems of islands of heterogeneous and incompatible information systems that were developed over the past several years in many organizations. Functional IS modules representing areas such as Finance, Marketing, HR, and Production in these organizations would be running on diverse hardware and software platforms leading to nearly impossible problems of reconciling data locked up among the diverse systems. From a positive perspective many organization look at the great opportunity provided by ERP software that lead to almost instant access of transactional information across the corporation. Such an information rich scenario permits organization to reduce inventory across multiple units/ departments/ plants; reduce cycle times from weeks to hours; and improve customer satisfaction by orders of magnitude. All these translate to increased profitability or increase in market share and in turn much larger market capitalization. ERP provides an opportunity for a corporation to operate as a responsive entity to improve production / operation, customer service and customer satisfaction. The creative ingenuity of an organization to drive towards these corporate goals determines the extent of success an ERP implementation can deliver.

ERP PACKAGED SOFTWARE VIS BUSINESS NEEDS Many IS professionals perceive ERP as a paradox by asking this common question, "How can a software company located in Germany, Netherlands or U.s.A understand the needs of my organization operating in Noida?". Many of them feel that custom software should work far better than packaged software. For many of them holding this view, the success of ERP is a paradox. What they miss out is the point that the core processes of most organizations are by and large, the same. Thanks to globalization, there has been a significant amount of uniformity, standardization and simplification of the core processes across the industry. Some of the technologies such as EDI have even standardized the contents of critical documents, such as shipping and purchase orders. Standard processes and procedures, for example, Letter of Credit, have seen a great level of standardization to suit International Trade. These developments permit companies in Germany and Netherlands to develop the world-class software that can be profitably used by a corporation in Noida also. By pumping in billions of dollars in understanding the business processed used by thousands of corporations worldwide, the ERP software vendors also bring in world-class practices to any company that implements the ERP software. In a similar vein, large ERP software vendors such as SAP & BaaN are also able to employ and retain thousands of software professionals

Effective Management Workout - A Case Study who can continuously improve their ERP software product. No individual end user company can afford such large pool of software professionals. This is the secret of success of ERP. A possible analogy may drive home the point better. An average Indian has already realized the fact that a ready-made garment made using sophisticated technology can indeed fit him/her better than a street corner tailor. The highly sophisticated technology of Computer Aided Design to model human anatomy and Computer Aided Manufacturing tools to cut complex contours effortlessly at high speed, explain the better fit. Similar is the case of packaged software.

COMMITEMENT TOWARDS BEST BUSINESS PRACTICES ERP software like SAP R/3 or RAMCO Marshal has the benefit of understanding the best practices followed in thousands of corporations worldwide, where the particular ERP software has been implemented. In a sense, ERP software embeds these best practices inside their software. The embedded business processes inside provide the real value to the ERP software. So, ERP can bring "best value added " practices to any organization. For core Business Processes it may be the best to follow the best business practices of the ERP vendor, but there is always a percentage of customization required for any ERP implementation. The ability of the ERP to extend easily is a critical factor to evaluate.

ERP VIS BPR

(BUSINESS PROCESS REENGINEERING )

An organization can go for standalone BPR or they can choose ERP. Since ERP anyway comes bundled with several of the best practiCeS, a well implemented ERP exercise leads to some amount of BPR, though the reengineering effort may not be full-blown. However, reengineering through ERP, generally termed Package-Enabled Process Reengineering (PEPR) leads to less drastic change in an organization. Such package enabled reengineering through ERP has been received much better by the end users rather than stand alone BPR in many Companies around the world. A BPR exercise preceding the ERP implementation can help the organization significantly. It may also increase a combined time of implementing BPR and ERP significantly. There is also a risk that particular ERP software selected later may not be able to implement the reengineered processes. A simultaneous BPR and ERP exercise saves time and also minimizes the risk of sequential implementation of BPR followed by ERP.

CORE MODULES OF ERP Core Modules of ERP include Sales (sales forecasting, customer prospecting, customer follow-up, support for telemarketing, database marketing), Order processing (inquiry handling, order taking) shipping, Transportation, invoicing, finance (G/L, AR, AP), Asset Management, Cost Accounting, and Financial Accounting(FI), Manufacturing and Materials Management(MM). Optionally quality project, warehouse, continuous production and other modules are also present in different ERP software. Industry specific modules to accommodate hospitals, retail, banking, insurance, oiL shipping and transportation are also available from some vendors.

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THE MANAGERIAL ASPECT ERP will ultimately affect everyone in the organization. An ERP implementation represents a major organizational intervention. The process view of ERP would remove underlying complexity in the organization. This would lead to a shift in power centers. Managing change of such high order cannot be done without top management commitment. ERP exercise is also a major exercise and can cost anyway from several lakhs to several crores of rupees. Such large resource requirements also demand commitment from top management. Last, but not the least, ERP implementation is a long process, generally running into several months. Keeping an activity alive for such long duration would be nearly impossible without top management commitment.

FUTURE OUTLOOK ERP promise a bright and effective workout by leveraging IT applications to deliver business. The ERP projects facilitate the whole industry by adopting the new innovative techniques and support the business networks. The upcoming ERP trends reflects a new automated Resource Management System that are free from the size and nature of business and having platform independency.

POINTS TO DISCUSS 1. How the ERP software meets with every need of an enterprise? 2. " ERP integrates the functional modules tightly", Explain 'integrity' and 'consistency' factor in terms of ERP implementation.

3. 'Globalization brings technological advantage to the companies by simplification and standardization ' - How international trading in context of resource planning software facilitated from globalization?

FUTURE OF INDIAN INSURANCE MARKET~THE CHANGING SCENARIO ·

INRODUCTION The insurance scenario in India is undergoing drastic C'hanges. Closed to foreign competition since nationalization in 1956, the life insurance industry had been protected from competitive pressures. Now, with the re-opening of the sector, several new players have entered the scene. And today's market becomes an open battlefield. The old game has the new rules. Ensconced in a monopoly run from the nationalization days beginning in 1956, the insurance industry has indeed awakened towards a deregulated environment in which several private players have partnered with multinational insurance giants. However, despite having strong base of prospect potential customer of one billion populations, India still has a low insurance penetration of 1.95 per cent, ranked 51"1 in the world. Despite the fact that India boasts a saving rate of around 25 per cent, less than 5 percent is spent on insurance.

CHANGING SCENARIO - STEPS UNDERTAKEN CHANGE IN FOCUS The changing emphasis on building an upsurge in consumer awareness, putting immense and unavoidable pressure on the insurance industry. Instead of categorizing insurance by class, the focus shift more to the period for which the cover was offered and the risk underwritten. There is demand for permitting the industry to underwrite pure risk and leaving investment decisions to policyholders.

MARKET COMPETITIVENESS With the entry of competition, the rules of the game are set to change. The market is already beginning to witness a wide array of products from players whose number is set to grow. In such a scenario, the differentiators among the different players are the products, pricing, and service. Meanwhile, the profile of the Indian consumer is also evolving. Consu~ers are increasingly more aware and are actively managing their financial affairs.

Future of Indian Insurance Market-The Changing Scenario

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Today, while boundaries between various financial products are blurring, people are increasingly looking not just at products, but also at integrated financial solutions that can offer stability of returns along with total protection.

CUSTOMER ORIENTATION To satisfy these myriad needs of customers, insurance products will need to be customized. Insurance today has emerged as an attractive and stable investment alternative that offers total protection - Life, Health and Wealth. In terms of returns, insurance products today offer competitive returns with the integrated benefit of life protection from insurance products along with health cover benefits. Products are offered with flexible options, including the customization feature to meet customer's need.

DEMAND FULFILLMENT There occur some drastic changes to meet the new breed of customer's demand apart of sales of traditional life insurance products like individual, whole life and term will remain popular, sales of new products like single premium, investment linked, retirement products, variable life and annuity products are also set to rise. Due to competitiveness the Companies need constant innovate in terms of product development to meet ever-changing consumer needs.

PITFALLS IN THE PRESENT DISTRIBUTION CHANNEL In order to enhance the customer base Life Insurance Corporation Of India (LIC) depute the network of around 800,000 agents under leadership of Development Officers in each branch. The cost-effectiveness factor of this channel of distribution has thereby suffered, with LIC paying bonuses and commissions twice to agents as well to Development Officers for every new policy and every subsequent renewal of premiums. After a few years of agent recruitment, Development Officers actually collect a large revenue stream in commissions almost effortlessly. Efforts by LIC to impose stricter incentive schemes have been defeated by the powerful Union of Development Officers. And a halfhearted attempt to introduce" career agent" -type distribution also failed. So new players must recognize these limitations of their rival and decide upon the right mix of distribution channels in their business.

INSURANCE INTERMEDIARIES AND DISTRIBUTION CHANNELS - THE REAL BACKBONE OF INDIAN INSURANCE SECTOR The most thriving force behind the development and growth of Insurance sector are intermediaries and their distribution channels. Multi-channel distribution and marketing of insurance products will be the smart strategy for the Indian market. While tied agents will continue to play an important role in distribution, alternative channels like corporate agents, brokers, and bancassurance will playa greater role in distribution. Companies will need to

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build relationships with the partners for strategic advantage. They need to have strong partner relationship management. For example, local partners may have strong distribution channel in their line of business. That can be used to sell insurance also in a cost-effective manner.

THE EVOLVING TIME The time has come for the industry to gradually move from traditional individual agents towards new distribution channels, with a paradigm shift in creating awareness and not just selling products. Qualitative selection of agents by companies by examinations is imperative to gain the cutting edge. Work-site marketing, relatively inexpensive and easy to launch, is one potential distribution channel. In this scenario, the sale of financial products and other services to employees is through workplace-participation and is entirely on a voluntary basis, where the employee pays for the products generally through a payroll deduction. Products must match the need of the customers. Moreover, protection of policyholders must be paramount. Companies must constantly explore avenues to increase the number of distribution channels through a variety of distribution patterns, particularly given the rapidly changing customer profile. Traditional intermediaries have played a very important role as a distribution outlet for insurance services and products. The Internet based Customer Services and telemarketing will play an increasingly critical role in customer relationship. The movement is more likely to be led by those who adapt. Banks moving towards cutting edge technology would have an upper edge in selling insurance products. At present, 12 per cent of the world's insurance products are sold through the Internet, a figure likely to grow exponentially with a likely increase in customer usage of the Internet for their own research and product comparisons.

RURAL FRAMEWORK As India is the predominantly rural country and will continue to be so in the near future. New players have to devote equi-attention to the urban as well rural customer base, 'LIC is still the market king, by grasping the roots of India' as the Market "King" LIC have a strong large fragment of business share from rural and semi rural market. In a country of 1 billion people, mass marketing is always a profitable and cost-effective option for gaining market share. The rural sector is a perfect case for mass marketing. Various smaller policies should be specially designed for rural customers that are meant for high potential rural areas. Rural insurance should be looked upon as an opportunity and not an obligation. A smaller bundle of innovative products in sync with rural needs and perception and an efficient delivery system are the two aspects that have to be developed in order to penetrate the rural markets.

Future of Indian Insurance Market-The Changing Scenario

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OTHER IMPENDING REFORMS HEALTH INSURANCE The government plans to review the capital requirements for standalone health insurers in March 2003. The government assumes an 18-24-month timeframe after the issue of the first license for changeover issues to be resolved. This is one area where India does not have much progress to date. A lot needs to be done to lure foreign investment.

PENSION REFORMS The two issues that urgently need to be addressed are the escalating burden of the unfunded government pension and the coverage for building retirement income for the non-salaried workforce. The new pension authority would fix the minimum capital requirement for new entrants including mutual funds and banks. The regulator also seems to favor permitting insurance players into the pension business without forming separate companies for the purpose. Players would need to convince potential of their long-term commitment and responsibility and make known all components of options they intend to offer in pension products. As the Hindu/Indian joint family concept tended to disintegrate, the social security cover it had thus far provided was no longer available to a population increasingly adding numbers to the older generation. The view that Pension Funds should be centralized is by no means unanimous. Some feel that in order to maximize pension fund efficacy, management should be given over to insurance carriers, banks, and mutual funds. They also recommend against auctioning the management of Pension Funds, proposing instead that entities with impeccable reputations, experience, and financial strengths should be entrusted with this important task.

BOTTOM LINE Competition will surely cause the market to grow beyond current rates, create a bigger "pie," and offer additional consumer choices through the introduction of new products, services, and price options. Yet, at the same time, public and private sector companies will be working together to ensure healthy growth and development of the sector. Challenges such as developing a common industry code of conduct, contributing to a common catastrophe reserve fund, and chalking out agreements between insurers to settle claims to the benefit of the consumer will require concerted effort from both sectors. The market is now in an evolving phase where one can expect a lot of actions in coming days. The current impediments for foreign participation - like 26% equity cap on foreign partner, ill defined regulatory role of IRDA (Insurance Regulatory development Authoritythe watchdog of the industry) in pension business etc.-are expected to be removed in near future. The early-adopters will then have a clear advantage compared to laggards in gaining the market share and market leadership. The will need to make sure right now that all their infrastructure is in place so that they can reap the benefit of an "unlimited potential."

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POINTS TO DISCUSS 1. Emergence of new players in Indian insurance market open new prospects for their customers, justify the fact. 2~

What pitfalls does India has in its insurance market before permitting entry to foreign players.

3. "LlC is still the market king by grasping the roots of India." Correlate the statement with rural and semi urban market potential of LlC.

CORPORATE SOCIAL RESPONSIBILTY (CSR) - THE JET AIRWAYS WAY

INTRODUCTION JET AIRLINES - THE EVOLVING FACE Within a short span of over nine years since its inception in May 1993, Jet Airways has established itself as a market leader in India in service, quality and facilities offered to passengers by providing the finest flying experience. Jet Airways, currently operating to 41 destinations within India with over 245 flights daily and flying almost 17,000 passengers everyday. An airline that with an average fleet age of 2.9 years operates the youngest fleet of Boeing 737 and ATR 72-500 aircraft in South Asia. An airline that has pioneered concepts like .Through-Check-in, City Check-in, automated tickets at travel agency locations, Jet Mobile and the unique three-tier frequent flier programmed Jet Privilege in the country. And now an in-flight shopping catalogue programmed Jet Mall . Jet Airways has flown over 26.6 million passengers since the airline's inception in May 1993 until end September 2001. Jet Airways is India's "World Class Domestic Airline" . Jet Airways operates over 230 flights daily to 44 destinations across the country. Jet Airways has earned the prestigious Air Transport World Award 2001 for Market Development. Jet Airways was the first Indian airline to receive the World Travel Market Global Award, the world's premier global travel event in tcmdon.

SOCIAL ACTIVITIES THE YELLOW ROSE CaMPAIGN As an Indian Corporate Body, Jet Airways also recognizes its responsibility to the society and nation. And So a couple of years ago Jet Airways launched its 'Yellow Rose' campaign. The core concept is that as. People like roses, and like the flower they need friendship, warmth and caring. Jet Airways has striven to not only extend these qualities to its passengers, but also to the country in times of crisis or calamities.

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Effective Management Workout - A Case Study

THE SUCCESS OF 'MAGIC BOX' COMPAIGN Jet Airways launched its inflight collection programme the ' Magic Box' in association with the NGO Save The Children India (STCI) on January 7, 1997. This unique in-flight charity collection has contributed over RS.25 million till end April 2002. This fund has been utilized in developmental activities in remote Kargil, improvement of education and health care facilities in quake affected Osmanabad district in Maharashtra and in the fight against trafficking of women and child prostitution in the Indian Subcontinent. Among the notable achievements of the Magic Box of Jet Airways is SPARSH (Sastur Project of Action Research Services through Hospital), which came into being at Sastur Village in Osmanabad district in Maharashtra after the terrible earthquake there. This is being run by the funds generated through Magic Box and extends advanced medical care to the inhabitants of almost 257 villages. Jet Airways' inflight collection has contributed significantly in running of the SPARSH, which makes available integrated, preventive, curative and rehabilitative health services to the earthquake victims of Latur and Sastur villages in Osmanabad District. Jet Airways, carried more than 2,000 kilograms of relief material including blankets, milk powder and clothes for the use of affected people of Kaksar village in Ladakh, one of the worst affected regions on the border of the State of Jammu and Kashmir during the Kargil conflict. Kaksar along with the \Tillages of Latur and Hunderma have been adopted by Save the Children programme under the activity titled K3 (Kaksar-Kargil-Kashmir) programme to rehabilitate the affected populace.

OTHER INmATIVES Other significant projects run by Jet Airways in association of Save The Children India (STCI), include pre-schools for the urban slum children in Mumbai and a special care centre for the mentally retarded and hearing impaired. Another unique project of Save the Children is to respond and build confidence among pregnant women who are HIV positive with a view to decreasing the infant mortality rate. As a continuing effort through February and March 2001 all contributions by passengers to Jet Airways' unique inflight Magic B"ox col!ection were directed through Save the Children organization to the benefit of children rendered homeless and orphaned by the Gujarat quake.

RELIEF EFFORTS AFTERMATH OF THE GUJARAT EARTHQUAKE - THE HEART HEALING TOUCH CORE CONCEPT The January 2000 earthquake in Gujarat was a catastrophe of enormous size. The devastation besides leaving thousands dead or injured also uprooted many. Jet Airways recently completed

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setting up of 750 temporary shelters for over 700 families of Ramvav village in Rapar Taluka of Kutch district in the quake devastated Gujarat as part of a massive rehabilitation programme. Ramvav, located 350 km northwest to the State capital Ahmedabad and a further 115 km from Bhuj Airport, has a total population 5,000; the severely affected village reported over 50 calamities during the January 26 earthquake.

SUPPORT FRAMEWORK This ambitious relief and rehabilitation effort was undertaken with active support from the French aircraft manufacturer Avions de Transport Regionale (ATR) and the NGO Nivara Hakk Suraksha Samiti (NHSS). Jet Airways and ATR together committed nearly Rs.5 million for this project. A joint team comprising of experts from Jet Airways and NHSS toured several villages in the state in the immediate aftermath of the quake before finally deciding on Ramvav - a remote village along the Rann of Kutch - for rehabilitation. Subsequently, a detailed social survey was organized to establish a close relationship with the quake-affected populace as well as to involve its participation in the project.

THE WORKOUT Nearly 50 volunteers from Mumbai worked together with the villagers for ten weeks to set up temporary, quake-resistant accommodation for Ramvav and tented hostels for staff and students of three schools in the nearby Nilpar, also in Kutch district. Ramvav is part of Jet Airways' commitment to enhance relief efforts in beleaguered Gujarat since January 27, 2001 when it became the first private airline to land in ravaged Bhuj the very next day after the devastating earthquake with doctors, paramedics, and medical and relief supplies. A Crisis Coordination Committee headed by Jet Airways Vice President - Support Services was constituted in the wake of one of post-independent India's unprecedented calamities to monitor operation of special flights. The 15-ft X 10-ft tents comprise of a pre-fabricated steel structure that can be assembled in a matter of an hour and a half. The roofing is double layered with the inner layer made of bamboo mats and the top covered with mud-coated tarpaulin. This combination provides insulation against the extreme temperatures of the Kutch region. A door has been provided in the front part with provision for ventilation in the rear. Designed to provide shelter till the villagers are able to reconstruct their homes, these tents will also serve as emergency shelters during any future calamity. In brief, this also constitutes building up of a bank of emergency shelters in a region prone to cyclones and earthquakes. Jet Airways, therefore, considers this as an investment for the future too. Alternatively the tents can also be used as storage or cattle sheds once the villagers have moved to their reconstructed homes. Between January 27 and February 4, 2001 the airline, apart from the daily MumbaiBhuj-Mumbai flights, operated seven additional flights to facilitate transportation of relatives

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Effective Management Workout - A Case Study

of victims and representatives from relief organizations to reach Bhuj, and also carried over 60 tormes of relief cargo including foodstuffs, blankets, medicines and rescue equipment. All flights operated with a full complement of passengers and cargo. Jet Airways cargo offices through its route network were instructed to accept all relief material from recognized governmental and non-governmental agencies for urgent dispatch to Gujarat. The relatives of the victims carried relief material and no excess baggage was charged towards the same. Also, the over 4,000 employees of Jet Airways voluntarily contributed a days' salary for the month of February for rehabilitation of Gujarat victims. After the earthquake in Latur & Osmanabad in Maharashtra in 1995, SPARSH (Sastur Project of Action Research-Services through Hospital) came into being at Sastur village in Osmanabad. The finances for the SPARSH hospital have been generated exclusively through the Jet Airways in-flight program - an initiative of goodwill that now supports the inhabitants of almost 267 villages with advanced medical services. The Jet Airways Magic Box has consistently generated upwards of Rs. 4 lakh eve:y month in the year 2000, a figure that rose to almost RS 6 lakh in July. Jet Airways is harpy to help Save the Children of goodwill that now supports the inhabitants of almost 267 villages with advanced medical services.

JET AIRWAYS· THE SUCCESS SAGA FEW REFLECTIONS Jet Airways is the biggest success story in the Indian aviation industry and one of the fastest growing airlines in the world. Jet Airways began operations with the mission of becoming the most preferred domestic airline in the country and an airline providing world-class standards of service. Since its commencement, Jet Airways has also achieved the status of the largest private domestic airline in India. The figures speak for themselves - from 4 aircraft in 1993-94 to 36 aircraft in October ·2001; from 12 destinations in 1993-94 to 44 destinations in October 2001; from 24 daih flights in 1993-94 to over 230 flights in October 2001. Jet Airways' emphasis on technology and customer consciousness is one of the key factors of its spectacular success.

BOTTOMLINE Being a business organization Jet Airways had emerge its market share as the most affordable and highly' promising' one, by enhancing its operation in Domestic market as well abroad. But on the front of its Commitment towards fulfillment of social responsibility, the initiative undertaken by the organization is really remarkable. It is the 'people driven and people serving' organization. With the great signs of expansions in terms of Business as well the Social activities undertaken.

Corporate Social Responsibility (CSR) - The Jet Airways Way

+33 +

POINTS TO DISCUSS 1. Figure out the necessity of any business organization to pay its social debt. How this factor affects its goodwill? 2. How corporate social responsibility (CSR) facilitates an organization like JetAirways in terms of Business expansion? 3. "JetAirways is the world class domestic airlines", with the reference to different social workout and business plan done by JetAirways, elaborate the statement.

KHAJANE -- A NEW DEFINITION TO TREASURY MANAGEMENT SYSTEM

INTRODUCTION E-Governance is being successfully run in India in states like Andra Pradesh and Karnatka. This case study deals with Computer Maintenance Corp. (CMC), CMC's turnkey project that has banished a mountain of paper as it computerizes all the treasuries in Karnataka state.

PRE IMPLEMENTATION SCENARIO The state treasury department pays salaries and pensions to govarnment employees and to employees of aiqed educational institutions, statutory boards, various public sector enterprises and bank employees in the Indian state of Karnataka. -Before computerization, all the Karnataka state treasury operations wer-e handled manually. Truckloads of cheques and challans (qeIivery notes) would be sent out for audit every March. A mountain of paper records overburdened the workforce. Every yeal', numerous frauds and overdraws were registered. Government pensioners, freedom fighters and employees had to suffer long delays in payments. With an annual budget of Rupees 27,000 crores, the Government of Karnataka wields considerable P4rchasing power. The state's expenditure covers the budgets for ")pre than 100 departments, salaries for hundreds of thousands of employees, and pensions for millions of residents. The sheer scale of Karnataka's operations and its responsibility to servj3 the public trust calls for high levels of accountability, transparency, and control. The job of ql!)bursing the state's funds falls to Karnataka's Department of Treasuries, Which makes payments through a network of 31 treasury offices and 185 sub treasuries located throughout the state. It was vastly complex operation involving millions of daily transactions and approvals, and requiring constant monitoring of budget allocations to avoid overspending.

KHAJANE- TREASURY MANAGEMENT SYSTEM (KTMS) Computerizes all the treasuries in the state and connects them to a central server at the state secretariat through a satellite-based VSAT system.

Khajane - A New Definition to Treasury Management System

.35.

KHAJANE SYSTEM - THE DEPLOYMENT In an effort to improve the speed and efficiency of its operations, the Directorate embarkec\ on an ambitious project in late 2000 to build a fully automated payment and budget management system based on Oracle technology. Officials called the project Khajane after the Sanskrit Word for treasure, "The efficiency of the treasuries is crucial to maintain the growth momentum in any state", said Dr Bore Gowda, Director of Treasuries for the State of Karnataka. At the same time it has to plug the loopholes in the legacy treasury system leading to fraud and misappropriation. The network of the treasuries is so huge that only a robust and extremely stable technology can ensure accountability and transparency at each level.

IMPLEMENTATION PROCESS The development process for the treasury project started in November 2001 and was rolled out to all locations in November 2002. Currently, the central system runs on two RISC-based SUN servers with each field location Running an Intel server. All the treasury offices are connected through VSAT (very small aperture terminal) technology. The deployment was completed in phases. CMC used its trainer to educate the users in all the locations, including remote areas. The State of Karnataka Directorate Of Treasuries is responsible for all the payments made on the behalf of the State government. It has an annual budget of Rs. 27,000 crores. In Addition, the state serves over a million widows, physically handicapped and old age pensioners.

PROJECT DETAILS The Khajane project has streamlined the entire payment system, and all payments can now be tracked and monitored through the computerised system. The project involved intensive computerizations of the treasury departments all over Karnataka. CMC has also provided the department with facility management services. Khajane is a turnkey project for computerizing all the 220 treasuries in the state of Kamataka. All the treasuries in the state are connected via VSAT to a central database in the state capital, Bangalore, and a disaster recovery centre at Dharwad, a large town in northern Karnataka. All the financial transactions in the state will be computerised on completion of the project. The project includes delivery, installation and commissioning of RISC and Intel servers, PCs, peripherals, networking equipment and UPSs for all the sites. The software study, design, development and implementation has been done by CMC. It also includes facilities management for a period of five years from the date of commissioning. On the successful implementation Dr. Bore Gowda Said," Gaining transparency and efficiency in our operation was essential to keeping up with the pace of growth in the state. A simple and user-friendly application with a strong database back end was what we required to streamline our operations

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Effective Management Workout - A Case Study

The Directorate chooses Oracle Database and application development technology as the basis for the new automated system, which has led to faster processing of payments, increased financial visibility and transparency, and higher staff productivity and cost savings. The directorate worked closely with CMC Limited, an Oracle Certified Partner, to design and implement the system. Developers used Oracle Developer suite, an integrated application development platform with built-in tools for automating complex processes. The Khajane project covered all the activities that take place in treasury units, from capturing expenditures and validating fund allocations to recording payment details on behalf of the state government. The new system has boosted efficiencies across a range of treasury operations, eliminating duplication of data entry and enabling uniform financial reporting.

FASTER INVOICE PAYMENTS, BETTER BUDGET VISIBILITY The finance department sets Karnataka's budget at the beginning of year, based on which different departments release funds generally every quarter. When nearly 100 departments purchase goods and services, they submit the bills to the treasury for payment. Under the old system, it took up to 45 days for the consolidated information to reach the treasury, leading to serious delays in updating the budget and issuing payments. By contrast, the Oracle-based Khajane system is fully automated and integrated with the finance department's budget operations. Now it takes hardly two days for information to reach the finance department and when a bill arrives at the treasury, the system gives it an electronic tracking, stamp and quickly routes the bill to the appropriate managers for approval. Before approving payments, managers can check the online system to view up-to-date budget allocations and how the payment will impact the balances. Such real-time budget visibility has helped the directorate 'completely avoid overspending while shortening the payment-approval process From two to three days before to about 10 minutes today.

MORE EFFICIENT SALARY AND PENSION PAYMENTS Millions of citizens depend on the Directorate of Treasuries for regular salary and pension payments. Every year, the agency disburses salaries to 3,00,000 state employees and issues pension payments to more than one million widows, disabled people and retirees. The treasury offices also serve as bankers to the states 4,500 village administrators known as, panchayats. Disbursements typically spike at the beginning and end of the month. In the past, the uneven cash flow would create bottlenecks and delay payments, but after putting the Oracle-based treasury-automation system in place, the finance department has managed all these financial transactions smoothly and without any delay.

IMPROVED FINANCIAL ACCOUNTING The Directorate supplies details of its financial transactions to the state Accountant General, the government agency responsible for classifying the expenses to various budgets heads and

Khajane - A New Definition to Treasury Management System for preparing financial statements. Under the old system, the agency needed a team of 300 people to handle the classification and consolidation budget-allocation tasks and make related financial calculations. With the Khajane project, the agency has been able to re-deploy most of the team to other tasks. With its automated system, the Treasuries categorize expenses under the correct budget account as soon as it logs bills into the system, practically eliminating errors. "Before the implementation, we rarely had a case of 100% reconciliation at the time we closed the books", explained Dr Gowda, "But now we have yet to miss a Closing without being reconciled 100%".

BETTER FINANCIAL CONTROL AND TRANSPARENCY Since managers can use the online system to check budgets and expenditures, they can make decisions about releasing funds based on real-time data. The potential for misappropriating funds is minimized as well, due to the system controlled budget check. Since the system provides an audit trail for each payment. The system's electronic bill tracking capabilities made it possible for the Directorate to priorities bill payments based on a first-in, first-out rule. "The number of complaints from vendors and other government department has reduced substantially", said Mr. Vijay Krishna Kumar, the state of Karnataka Deputy Director of Treasuries. The reports from all treasuries are accurate, uniform and easy to consolidate.

IMPROVED SERVICE Vendors who receive payments through the new system also benefit. For example, based on token number- a tracking number for each bill, vendors can check on payments by calling the state automated customer service Hotline, which uses IVR (interactive voice response) technology. "People no longer flock to our treasury offices wanting to know the status of their payments", said Mr. Kumar. "They know that it takes two to three days for The payment to come through, and if there is any delay, they use the IVR to find out the status."

BOTTOMLINE The high adoptability of ICT (Information and Communication Technology) by Karnatka government to ovelcome the daily Problem by managing the subsystems like Dealer Processing System (DPS), Returns Processing System (RPS), Dealers Assessment System (DAS), Tax Accounting System (TAS), Arrears Recovery System (ARS), Law and Judicial System (LJS), Management Information System (MIS) that are integrated with KTMS such that a properly updated live system can be build in order to server the Govt. Departments and the General public. That is, KTMS is one more successful IT implementation Practice done by Karnatka govt. that assists the state to fulfill its ambitious dream of 100% E-governance implementation.

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Effective Management Workout - A Case Study

POINTS TO DISCUSS 1. 'A mountain of paper records overburdened the workforce' how 'Khajane' implementation helps the state Treasury Department and related departments to overcome this problem. 2. How the technical configuration of 'Khajane' improve the elementary working style of Treasury department. 3. How customer satisfaction attained by Karnatka government by implementing E-Governance practices like 'Khajane'.

"' , " ""9""" [9] ';.),'

CIVIL SOCIETY AND ICTINITIATIVES IN KERALA INTRODUCTION The increased perceptions of civil Society towards ICT reflect the inability ' of State governments to implement the E-Governance practices in their respective states, E-governance aim to gain competitive advantage by utilizing and creating knowledge and by using the ability of government to meet the needs of the society, It includes managing the Knowledge to extend the provision of on-line services and also to cover the use of IT for strategic planning and reaching development goals of the government The Primary goals of Government behind expanding E-governance Practices is to transforming Potential of E-governance to make citizens to avail the services and also to interact with federal government by improving the efficiency and effectiveness that results in better responsiveness towards citizens. Besides of covering the attributes of E-governance like e-administration-services, e-governance and e-Democracy and there focus on civil society organization basic infrastructure needs like Agriculture, health, Education etc., including there successful implementation in States like Kerala, Karnatka, Punjab and Gujrat, an effective E-Governance initiatives and underline innovation and strategic vision with applied Knowledge Management adorn with ICT(lnformation ,Communication and Technology) framework with cutting edged Technologies help the current and future brand image of the State. Without clear vision, huge investment in the name of e-governance may not really contribute to improve the quality of life of citizens. Kerla is one of the 'pioneer' in E-governance projects initiatives like e-Srinkala, RDNet, Fast, Reliable, Instant, Efficient Network for the Disbursement of Services (FRIENDS). The State has favored interaction with the civil society as well with QUANGOS (Quasi-Autonomous Non-Governmental Organizations). The implications are emerging state-Civ~l society relations in Indian States initiated by Kerla.

ICT AND STATE' PUBLIC ADMINSTRATION CONNECTION The innovative startup taken by the Indian states using ICTs in order to develop administration. The major objective was to design and execute rural development program with a relatively visible ICT content ,The golden era stated from late 1970s, Dharampur Sub-District Infrastructure Planning for Development (1977) is an early example of attempts to use computer applications for cost optimization and deciSion-making. The Karwar Rural Development Information System (1984) was yet another initiative formulated with a focus on reducing delay and curbing corruption through a monitoring program based on computer applications. From localized programs

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Effective Management Workout - A Case Study

the advance to centralized projects for connectivity and regulation was rather quick. By the late 1980s India had developed networks such as NICNET connecting government users', EDUNET for education institutions and INDONET for the benefit of industrial users in major cities). The major objectives in the computerization programs launched by the Indian State were guided by the factors that shape governmentality". Governmentality represents continuity in terms of rule of self, household and the State. whose ruptures will cause and precipitate crises in governance that is, ICTs and government are thoroughly intertwined with each other, and the impact oJ ICT on government and public administration therefore is revolutionary. Public administration uses ICT as an instrument of its internal organization, for its operations, for transactions, for the development and implementation of policies, for monitoring and disciplinary ends, for the provision of information to politicians, citizens and societal groups and organizations. /I

Public administration also addresses ICT as an object of regulation and policy making. ICT based E-governance initiatives thus entail a reinvention of government in terms of the . relocation of artifacts for provision of utilities and services to the point of direct contact with . citizens and lateral integration of official records making them available for users. It also involves redesign of governmental institutions. From a developmenatlist perspective, Egovernance is generally understood as a concept capable of transforming the quality of administration and hence changing people's lives. Its successful implementation is expected RESPONSIVENESS

CORRUPTION

CITIZENORIENTA TION EFFICIENCY

. - E-GOVERNANCE -..

y

TRANSPARANY

EFFECTIVE ADMINSTARTION

ACCOUNTABILITY

PERFORMANCE

Illustration 1: Effective E-Governance Workout

Civil Society and ICT-Initiatives in Kerala

.. 41 ..

to ensure better governmental performance by reducing corruption, increasing efficiency and creating a responsive and transparent administrative environment. Many state governments have responded to the possibilities of improving administrative functions by introducing e-governance at different levels of the administration. Specialized agencies have backed the government to initiate innovative experiments.

BEST E-GOVERANCE PRACTICES SELF-DRIVEN Barriers to the implementation of e-governance can be overcome through a focused and strategic approach aiming specified targets and allowing reasonable time frame for attaining them. Even in situations where the initial conditions for trying out e-governance appear to be non-existent in terms of inadequate skilled personnel or weak infrastructure, a gradual, flexible and reflective approach can bring about drastic positive changes. The fundamental idea that would inform the formulation of such a framework would be the concept of an evolving program with several structural levels. More concretely, the framework thus conceived should comprise of a sustained attempt to develop infrastructure, train human power, initiate policy changes and explore collaborations with private sector as well as Civil Society Organizations (CSOs). Most of the E-Governance initiatives in India have focused on the first three aspects as well as participation of the private sector while showing a growing insensitivity towards integrating Civil Society into its fold. The projects do not, as a rule, genuinely seek Civil Society participation. Closer attention to the E-governance project of Kerala would help to understand the point that irrespective of the initial conditions, including social endowments as well as the presence of a politically active civil society, E-Governance projects fail to be inclusive as regards civil society is concerned.

THE BENCHMARKS Indian states trace the successful initiatives such as GyanDoot. The GyanDoot Project has emerged a~ a benchmark for innovation in the e-governance and in the e-commerce. The local bodies in collaboration with government officials have started ICT kiosks operated by unemployed youth who were selected and trained to run these kiosks. It caters to the ICT requirements of a wide section of rural consumers. The project, which sets its objective as social engineering and development through ICTs, has marked a paradigm shift in the way Government functionaries relate themselves to the needs of the poor. This major ICT project was first launched in a region that is largely tribal and impoverished. It was an administered program with little relationship with the civil society. No major social organization has been made partners in it implementation. The Warana wired project in Maharashtra is perhaps a significant counter example. It covers 70 contiguous villages, providing information and knowledge to increase efficiency and productivity of the Sugar Cooperatives. It aims to support the Cooperatives with agricultural and medical information besides setting up a constellation of facilitating centers for continued skill enhancement and education. The national informatics center (NIC) of Government of India and state's education department

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Effective Management Workout - A Case Study

collaborated with the Cooperatives to launch a strong network of fiber-optic cables, VSATs, PCs, and other ICT equipments.

STATE-LED INITIATIVES IN KERALA - THE CASE STUDY State Government's e-governance initiatives includes 34 Government Departments with high Consumer 2 Government (C2G) interface have been established such that Nodal officers and Total Solution Providers are deputed to oversee the computerization activities Departments under the guidelines issued by Department of IT. Kerala is often credited with the formulation of an innovative information technology policy and is known for a powerful repository of educated human power, NRI presence and high connectivity and overall the remarkable results. In Kerala one finds some attempts to initiate projects with a social content. But these experiments in ICT based social initiatives are far from offering a satisfactory solution to problems that e-governance and e-education are supposed to tackle. The cases of both FRIENDS and IT@5chool would illustrate this point. While the department-centered approach in many states gives less leverage to involve CSOs in its E-Governance program, surprisingly, the socially focused programs in Kerala have also shown an antipathy to CSOs and their views. TABLE 1. STATUS SUMMARY OF COMPUTERIZATION PROJECTS IN KERALA Departments

Objectives

Status

Treasury

Computerization and internet con- All District Treasuries are online nectivity of District and Sub Trea- now. A few Sub-Treasuries are also suries online.

Registration

Computerization of land records 54 Sub Registrar Offices (SROs) have been identified for computand provision of citizen services erization. The pilot project has been completed in 4 Offices. In 37 out of the remaining 50 SROs, PEARL has been installed*. The computerization of an additional 113 SROs is now contemplated

Motor Vehicles Department

Computerization and provision of The State Government and NIC citizen services have signed a MoU for customization of CORE software for implementation of back-end computerization. Regional Transport Office Thiruvananthapuram has been selected for the pilot project for back-end computerization. Software for conducting online testing for Learner's License is ready. They have been installed

+ 43 +

Civil Society and ICT-Initiatives in Kerala

in a few RTOs on experimental basis. Rural development

Computerization of Development RDNet - the project for networking all the 152 Blocks in the State has Blocks been completed.

Local Self Government

Computerization of local bodies

Kerala water Authority

Computerization and provision of The computerization of 13 offices citizen services of the Kerala Water Authority and computerization of billing and collection at 9 centers have been completed. Centralized web-enabled billing and collection at Trivandrum is under consideration

Civil Supplies

Computerized delivery of citizen The project for automation of Ration Cards has been completed. services Smart Cards are being issued in 4 Taluk Supply Offices in Trivandrum on a pilot basis.

IT Mission's FRIENDS

Computerized payment utility bills, Functioning in 14 District Has, taxes and fees pertaining to the Replication at sub district level is participating departments considered.

IT Department's Sevana

To provide information on various government schemes, programmes, general information on 10cal bodies, links to important sites and other facts relevant to the rural populace.

Information Kerala Mission - The project for networking all the 1157 local bodies is considered. Software testing and purchase of hardware completed in some panchayats.

State Library Council has launched the first computerized rural information centre at Kallara Gram Panchayat Library in Trivandrum District. 14 Rural Information Centers, one in each district of the State, have also been established.

* Package For Effective Administration Of Registration Laws

Source: Compiled from http://www.kerala.gov.inl·

THE 'FRIENDS' AND 'IT@SCHOOL' PROJECT IN KERALA: 'FRIENDS' PROJECT FRIENDS is coined as an acronym for Fast, Reliable, Instant, Efficient, Network for Disbursement of Services. Local bodies and seven Government Departments/ Agencies such

+44+

Effecti'oe Management Workout - A Case Study

as 'Kerala State Electricity Board, Kerala Water Authority, BSNL, Revenue Department, Civil Supplies Department, Motor Vehicles Department, and Universities have collaborated to form this integrated Services center with a view to "enable a smooth and transparent C2G interface". These centers accept utility bills, taxes and fees pertaining to the participating departments. It has been launched in 14 district headquarters in the State. According to the implementing agencies "It is a "Single Window Scheme" in which the consun:ter is given the option of paying for the common services rendered to him under a single roof. The major aspect of this concept is to treat the citizen who is paying for the services rendered to him as a valued customer who must be given all the respect that he richly deserves." As a multiple agency bill collection system, the project facilitating the collection of various payments within a corporation or municipality at a single centre. The major feature of the project is its software that is specifically programmed to accept payments due to different agencies by incorporating the specific rules and regulations regarding remittances pertaining to each agency.

LOOPHOLES The performance of the operating centers reveals a picture of stagnation and official The apathy of the participating Departments has been pointed out as major reason for the inertia. It can easy observed that the project may be heading towards failure due to attitudinal problems of bureaucrats. The Central Vigilance Commissioner after a visit to the FRIENDS centre in Thiruvananthapuram notes that liThe first shocking thing I learnt was that none of the Secretaries to the government of these seven organizations had visited FRIENDS! It is saddening and disheartening that the Secretaries of the concerned departments are indifferent to the initiatives being taken by the Chief Minister's vision of an LT based Kerala .... Indifference perhaps can be tolerated but what was more damaging is destructive negativism. I was told that the secretaries hold the view that the whole experiment must be scrapped" negligenc~.

This observation is validated by the poor financial performance of the 14 centers in the first year of their establishment. Figure 1 provides the trends in the monthly collection in the FRIENDS centers in 2001. In most of the centers the collection levels have stagnated Jl1rough out the period where as in a few centers it has been extremely erratic. Collection in most cases has stayed within the range of 10 to 40 lakhs in most Districts. In some cases the lack of coordination and obstinacy of the staff has resulted in creating additional burden for customers. For example some departments insist that for certificates the charges should be paid in the FRIENDS centers while previously the facility was available in the same office that gives the certificate. The customer now has to go first to the FRIENDS Centre and then visit the concerned department.

PROJECT lIT @ SCHOOL' The objective launching of the scheme by state government was to set up a high-end Information and Communication Center, focusing on E-Iearning and to provide "Virtual University" interface for Shldents in production and training. It was envisaged that about

.45.

Civil Society and ICT-Initiatives in Kerala Monthly Collection from FRIENDS District Centres 2001

20000000

18000000

1 ;.

16000000

-

,

~.: ,... 1-

-if

14000000

....

~

c: 12000000

::l

0

~

10000000

,.

8000000 6000000

1-Apr

1-May

1-Jun

1-Jul

1-Aug

1-Sep

1-0ct

1-Nov

1-Dec

Months .-.

=+-T'RIVANDRUM

-'-KOLLAM

--*- KOTT AYAM

-*- ERNAKULAM

r

I

- . - MALAPPURAM

KOZHIKODE

__._------_ .. _--_. ------ -- ------- ._ --------, PATHANAMTHITTA ,, " " ALAPPUZHA I -+- THRISSUR WAYANAD

-PALAKKAD KANNUR

~KASAR_G_O_D______

.Source: Based on collection figures provided at www.kerla.in

100 centers of distance learning would be established in the state over a period of three years. The government entered into a contract with the Microsoft for a project to introduce computer and IT enabled education covering all the 2500 High Schools in the state. The project later named as IT@School was expected to cover all the 65-lakh students from Class I to Class X. It was officially announced that Microsoft had already trained 1,000 teachers in the first phase. Two proposals for the introduction of computer training in government schools, one with the involvement of the private sector and the other as a total government program have been launched by the Government.

PRIMARY LOOPHOLES The project has almost become a non-starter and has been criticized for its collaboration with Microsoft. CSOs for Free Software are active in the state and have protested the official indifference to the causes of the Movement. The activists of the movement question the rationale of the program: "The Kerala IT©School syllabus does mention about free software. But is the use of the free software encouraged at school? The approach paper on IT@SCHOOL prepared by the Govt. does insist that, the computers bought by the school should have pre-installed Windows9x as operating system!!. So what is the point in telling the school children about philosophy of Free Software and asking them to work on proprietary Software?"

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Effective Management Workout - A Case Study

QUANGOS AND CIVIL SOCIETY Civil Society and its representatives have been kept at large in most of these programs. Even in cases where such participation is sought, the linkages are either week or notional. In Kerala, in the controversy over the options of choosing Microsoft or Linux-based free software for government's IT initiatives, technocrats influential with the government have taken a stand in favor of the software giant. They doubt the expertise and support the State can expect from advocates of free software. They even argue that multinational companies led by IBM, Oracle and Sun are orchestrating the controversy. Some experts argue that "The State should bargain with the companies based on the Microsoft and the Linux after ensuring that there are enough experts in Linux. Advocates of Free Software are silent when it comes to contentious issues like system support. It is important that a system should not collapse midway once it is set up. It is foolish to believe that Free Software users group will solve all your problems free of cost." While the State-led projects in E-Governance show a relative reluctance to work with CSOs, it has attempted to follow the Quango Model wherever relevant and possible. Quangos like GyanDoot Samiti and Information Kerala Mission form the backbone of the projects launched by several state governments. Quangos are defined as organizations, which, essentially undertake the responsibility of implementing State sponsored programs or public policies, funded by the State but operating at arms length of the executive without an immediate hierarchical relation with it. The formation of Quangos is part of the general strategy adopted by the States, informed by the logic of Civil Society mediation. RESPONSIVENESS

CSOS CITIZENORIENTATION

INITIATIVES

EFFECTIVE ADMINSTARTION EFFIC IEI"C Y

PUBLIC PARTICIPATION

. - E-GOVERNANCE ' •

TRAN SP A RA NY

y ACCO UNTABILITY

PERFORMANCE

tIIustration 2: Emerging Model of E-Governance

Civil Society and ICT-Initiatives in Kerala

.. 47"

Quangos are created since lithe work is more effectively carried out by a single purpose organization rather than by a government department with a wide range of functions; in order to involve people from outside of government in the direction of the organization; in order to place the performance of a function outside the party political arena" . Quangos are not real substitutes for CSOs and most often degenerate into behemoth bureaucratic entities. Further, this leads to the incorporation of individuals and organizations, not accountable to any constituency even notionally, into the governing structures of developmental and e-governance programs. Figure 2 tries to provide a conceptual model of the emerging e-Governance programs being carried out in India. This is a complex institutional model where sustain ability issues are embedded in the policy prerogatives that mould the State's interest in the program. A wide range of organizational innovations and Information and Communication innovations has emerged in the context of E-governance projects. A continuing process of incremental innovations in the design, content and delivery of services mark their project strategy.

BOTTOMLINE Without clear vision, huge investments in the name of e-governance may not really contribute to improve the quality of life of citizens, despite there being huge potential in this. Also, Quangos have to play a real 'live' role in the process of e-governance projects implementation The QoS (Quality of Service) should be considered as key element while placing e-governance projects into implementation.

POINTS TO DISCUSS 1. "State-led projects in e-governance show a relative reluctance to work with CSOs, it has attempted to follow the Quango Model wherever relevant and possible." How Quango contribute to the e-governance projects. 2. Despite of being pioneer in ICT application, why the e-governance projects stated in Kerela faced problem? 3. With the 'active' contribution from civil institution and Quango, how the state led e-projects get maximum benefits?

UTI STRETEGY TO RETAIN ITS LOST STATUS

INTRODUCTION MUTUAL FUNDS - THE INDIAN SCENARIO Mutual funds (as popularly known in America) or Unit Trusts/Investment Trusts (as Known in Europe in general or the U.K in particular) are managed investment funds that deploy the money of their investors in a wide variety of stocks, shares and money market instruments such as government or corporate bonds. They provide the investor by providing 'portfolio planning' with professional management of funds and diversification of investments among various securities offered by companies, governments and other entities.

HISORY OF MUTUAL FUNDS IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four dist:il\ct phases

FIRST PHASE - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (lOBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India Oun 90), Bank of Baroda Mutual Fund

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(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.

THIRD PHASE - 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.

FOURTH PHASE - SINCE FEBRUARY 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIe. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at .the end of October 31, 2003, there were 31 funds, which manage assets of Rs.126726 crores under 386 schemes. .

UTI - PIONEER IN MUTUAL FUND INDUSTRY Since the mutual fund industry in India is about four decades old. The Unit Trust of India was the lone player in the country for 26 years. Therefore, a major part of the mutual fund canvas is occupied by UTI. In 1963 the Indian economy ravaged by the china war needed stimulants to grow. The government was trying its best to attract investments for the growth of industry. There was an acute dearth of institutional finance for the industry and commerce. Capital markets were almost non-existent. 1he world over, stock markets and other related vehicles were proving to be a major source of finance for industry and commerce. Common investors were lending

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selective support to the stock markets but.had limited capacity to face the attendant risks of equity investment. Therefore, unit trust and mutual funds gained popularity in these developed economies by spreading the risks. Realizing the importance of mutual funds to orderly development of the capital market and to continue the habit of saving through capital market instruments, the Government decided to launch a mutual fund in India. In 1963, while introducing the UTI Act, 1963 in Parliament T.T. Krishnamachari, then Finance Minister, said "The preamble to the UTI Act, 1963 articulates the vision and the role of UTI in these words, " ... provide for the establishment of a corporation with a view to encouraging saving and investment and participation in the income, profits and gains accruing to the corporation from the acquisition, holding, management and disposal of securities". The subsequent years and the growth UTI achieved amply justify its creation and role in the growth of the economy. Mutual funds have a significant economic function. First, as professional fund managers they allow the prosperity of the share and securities markets to reach the ('ommon investors who otherwise find the stock market too complex. Second, MFs allow diversification of risk as the money mobilized is spread across the shares/ debentures of various companies of diversified industries. Third, being larger players they can manage the funds at much lower cost than an individual investor can do. Fourth, apart from participating in primary issues themselves in a big way, MFs provide the investors and stockbrokers in primary issues an opportunity to sell their shares (of course, only if the shares are attractive enough) so that these primary issues investors can use the liquidity to pursue other upcoming stocks (particularly primary issues). Sixth, as large institutional players they also ensure orderly development of the capital market.

19905 - THE DECADE OF PRIVATE ENTRIES Until 1990 the UTI was the only MF in the country, whereas the U.S had more than 8,000 MFs investing in units of mutual funds spread among Indian investors in a large way only in the 1990s. The UTI had grown in strength by this time and had arrested sizable investments from the masses. When the Government cautiously opened the door for more players seven MFs floated by public sector banks and insurance companies came into being during the early nineties. In 1990-91, there were eight MFs including the UTI and all were under government ownership. A study by L.C gupta shows that between 1990-1992 the most outstanding change occurred in house hold saving behavior by way of investment in units of the UTI and other MF schemes. In 1990,38 percent of the household surveyed by the study owned UTI products. By mid-92 the percentage had risen to 58. In the case of other funds, this percentage rose from 14 percentages to 39 percentages. For all MFs, the percentage increased from 37 percentages in 1990 to 65 percentage in mid-1992. After UTI and other mutual funds the next popular instrument was shares and debentures. Forty percent of the households surveyed invested in shares and debentures in 1990. This increased to 52 percentages in 1992. These developments show the growing popularity of capital market related instruments during this period. The shift to these instruments came from government instruments such as NSCs

UTI Stretegy to Retain its Lost Status

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and postal deposits, bank deposits as well as from currency. Another important observation of the survey was that merely 50 percent of the investors in UTI were first timers. The survey also revealed that 33 percent of the investors would have the UTI as their first preference if they had savings to invest. About 8.3 per cent gave other mutual funds as their first preference. In all over 70 percent of investors gave their first choice as capital market related instruments. This showed that the Indian saver had become investors in the Nineties, and started realizing that mutual funds could provide higher returns with a reasonable degree of safety.

BROAD HIEARACHY OF RISK PERCEPTION OF INVESTOR HOUSEHOLDS Instruments

Risk Perception

Bank Fixed Deposits

Very Safe

UTI and other Mutual Funds

Reasonable safe

Convertible & non-Convertible debentures

Somewhat safe

Equity Shares, fixed deposits with non-government

Somewhat safe to risky

companies and chit funds. Fixed deposits of NBFCs

Risky

Source: SEBI NCAER Survey of Indian Investors

IMPACT OF PRIVATE ENRIES Private sector mutual funds made their entry in 1993 and have slo~ly increased their presence. All the MFs raised record resources in 1994-95.The domestic mutual funds emerged as significant operators on the capital market and an important provider of primary capital to industry, in addition to the popularizing shares and debentures as an investment option. The share of the UTI and other MFs in the financial assets of the household sector increased significantly during the nineties. During the late nineties the role of retail investors in share markets decreased progressively while institutional investors, including foreign investors, increased their equity holdings. The private sector MFs have, however, taken the lead over public sector MFs. The UTI continued its dominance and accounted for around 85 percent of the resource mobilization by all MFs until 1998. In 1999, the Securities and Exchange Board of India (SEBI) commissioned a survey of Indian investors through the National Council of Applied Economic Research. The survey revealed that the UTI and other MFs were reasonably safe, next to bank fixed deposits in the board hierarchy of risk perception. (TABLE I) The survey revealed the growth of the UTI and other MFs in the nineties. Table II shows the distribution of household investment s across different instruments. The survey also revealed that the UTI and other MF had a share of 1.32 per cent in the total investments of all households (table III), though the urban bias for MFs continued. The survey further showed that investors in the higher income group had a higher proclivity to invest in MFs. Investors

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in the UTI include adults, children, working professionals, women, retired individuals, institutions and companies. II. DISTRIBUTION OF INVESTMENT BY TYPE OF INSTRUMENTS

Household Particulars

UTI Mutual FOS Sche- Funds mes

URBAN

19.52 12.02 83.89 11.56 40.24 57.31

9.51

40.77 35.98

6.59

11.85

RURAL

4.05

2.84

73.18

4.08

13.24 32.01

4.52

46.30 24.07

1.06

7.52

ALL INDIA

8.45

5.45

76.23

6.21

20.02 39.21

5.94

44.73 27.46

2.63

8.75

Bonds EPFI

LlC

Chit Funds

PO RO

IVPsl Pref- Others NSS erence NSC

Note: Since one household may invest in more than one instrument, percentage distributions of households will add. Source: SEBI NCAER Survey of India Investors

III. DISTRIBUTION OF INVESTMENT OF ALL HOUSEHOLDS HOUSEHOLD PATICULAR

EQUITY SHARES

DEBENTURES BONDS

UTI & OTHER FUNDS

OTHERS

TOTAL

ALL INDIA

1,15

0.35

1.32

97.18

100

URBAN

2.93

0.96

2.97

93.14

100

RURAL

0.44

0.10

0.67

98.79

100

Source: SEBI NCAER Survey of Indian Investors

This period was one of learning for the MFs. Most of them were not able to provide returns higher than the risk free instruments on their growth schemes, eroding investor's faith in most MFs. The failure of some public sector MFs to earn enough to honor their guaranteed commitments on returns also lowered their image in the eyes of investors during the period. However, from 1998 onward, the private MFs grew in a big way. With a marked increase in the assets under their management. A notable feature of this growth was that the private MFs were concentrating mainly on institutional and high net worth. Only the UTI was working for the small and common investors.

UTI - THE KEY PLAYER AND CONTRIBUTOR OF INDIAN CAPIAL MARKET The UTI has also played an active role in the development and growth of the Indian Economy and the capital markets. It has helped promote/Co-promote many institution s to aid healthy development of the financial sector in particular and the economy in general. Some of the prominent ones are the Infrastructure Leasing & Financial Services (IL&FS), Credit rating and Informational Services (CRISIL), Stock Holding Corporation of India

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(SCHCIL), Technology Development & Information Company Ltd. (TDICI), and Over the Counter Exchange of India Ltd. (OTCEI), national Securities Depository Ltd(NSDL) and North Eastern Development Finance Corporation Ltd. (NEDFCL). Not only with in the country but also beyond the shores the UTI has extended support for creating mutual funds or unit trusts. It provided technical/ advisory services for the development of unit trusts in Sri Lanka and Egypt. Rapid macro and micro changes in the country's economic environment during the last 4-5 years have impacted all financial institutions. In this context, the UTI also suffered a setback. Some erroneous decisions or errors of judgment jolted some of its schemes The most notable difficulty was in the case of its flagship scheme Unit Scheme 1964 and a couple of monthly income schemes. As soon as the crises broke out and became known in July 2001, the Government acted decisively and swiftly to contain the rot contain the rot and save the investors, particularly the smaller ones, from any serious loss. Government quickly decided to stand by the mutual funds to honor all its commitments (of assured return s or capital protection) to its investors and also initiates steps to prevent recurrence of such catastrophic situations. The government announced a package for financial support to the schemes that had suffered. In addition to this it used this as an opportunity to effect several measures to ensure that the organization is run and manages on healthy principles of business.

un - RElAlNING STRETEGY ERSTWHILE UTI AND UTI MF BASIS ERSTWHILE UTI

un MUT-UAL FUNDS ERSTWHILE UTI AND UTI MF BASIS

ERSTWHILE UTI

UTI MUTUAL FUNDS

Creation

Created out of UTI Act 1963

Creation in accordance with the SEBI(Mutual Fund) Regulation 1996.

Tiers of Structure

Single Tier structure with absence of sponsors or asset management company Under government control Like any other public sector organization. Available in many products

Three tier structure with sponsors at the top, trust company as the mutual fund and asset management company as the investment manager. Completely out of govt. control. Market driven like any otherworld class organization.

Govt. Control

Assurance of capital or returns on the products.

Comparisons with other players Distinct MF or a quasi MF, No such protection enjoying certain privileges At par with other players in all respects.

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It was decided that the UTI would be divided into two distinct entities. "The purpose of carving out UTI MF from UTI was to ensure that these schemes were not adversely affected by negative association" explain Damodaran, chairman of UTI. It would also allow the government to distance itself from the ownership of a formidable player in the capital market as also to allow professional management of a mutual fund on the best global practices. Accordingly the UTI was divided into two distinct entities, namely, UTI I or Specified Undertaking of Unit Trust of India (SUUTI); and, UTI II or UTI Mutual Fund (UTIMF). While SUUTI manages pure savings schemes under the ownership of the Government, UTI MF mangers the pure mutual fund schemes/ products in line with the best global practices.

The changes brought about at UTI have evoked great satisfaction across sections. " I think what has happened at UTI has surprised us and we are greatly impressed by the pace of change." notes Dhrendra Kumar, noted Mutual Fund Analyst and Editor, Mutual Fund Insight. The new UTI MF has started on February 2, 2003 with a vision" to be the most preferred Mutual Fund", which reinforce the aspirations reflected in various surveyed mentioned. UTI MF is truly a mix of tradition and modernity. While it has a legacy of problems it has the comfort of strong brand equity as well. The new entity makes optimal use of stat-of-thE' -art technology in each of its key operational areas for delivering consistently better performance. The latest technology and the best global practices are used in the areas of product designing and competitive analysis, disseminating of information, portfolio management, fund accounting, transaction processing, investor servicing and communication.

OPERATIONS UNDERTAKEN FUND MANAGEMENT Three strong pillars of UTI MF are fund management, investor services and large di!.tribution reach. The UTI MF has a highly qualified and professional fund management team to take care of the unit holders' investments. The various imitative taken in the recent past and strong technological foundation allow it to meet the challenges and maintain its leadership position. Some of the notable practices are: • Higher empowerment to the fund managers for the effetely and accountability. • Creation of a risk management department to ensure better management of risks. • Vigorous and regular investment monitoring. • Complete integration of fund management activities including equity/debt dealing and back office activities by introducing a robust software platform called front office systems. • Benchmarking of the fund with suitable and well-accepted indices to ensure objective assessment. • Greater transparency through monthly disclosure of portfolio, daily Net Asset Values (NAY) and well-documented monthly fact sheets (namely Bulletin Plus).

UTI Stretegy to Retain its Lost Status

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The UTI MF is the only mutual fund in India to have a 17-member strong research and evaluate macro economic indicators, capital markets, financial sectors and Mutual Funds. The in-house research team has gained expertise in research of equities as well as debt.

INVESTOR SERVICES The UTI MF's commitment to offer the "Best" flows into the function of investor services as well. Optimal use of technology is the "mantra" to deliver better services to its valued investors. Some of the important initiatives in this direction are: • State-of -the art high tech central processing center has been established to offer faster and efficient services to more a million investors. • All UTI MF branches and UFes' are well connected through a robust IT networks to ensure quicker and efficient transaction processing. • A feature and content rich website (www and) and interactive kiosks are used for dissemination of information and delivery of services. • Automatic trigger option for automatic repurchase/redemption to allow investors to identify desired levels of exit to book profits. • Systematic investment plans to help build a large corpus of funds at a lower cost due to rupee cost averaging.

DISRIBunON NETWORK The UTI MF has a large distribution network to meet the varied investment needs of its investors. This distribution channel helps mobilization of funds from across the country, in addition to rendering timely service and help in financial planning to the millions. It also has its representative offices in London and Dubai to tap funds from the non-resident Indians (NRI s). With a network of 55 financial centers, 246 district chief representive and more than 6,000 AMFI(Association of Mutual Funds of India) certified and professionally trained canvassing sales agents/ advisors. UTI MF is a formidable force poised to serve the investors in every nook and corner of the country. The UTI MF is the largest mutual fund house in India with total assts under management of around Rs. 16,100 crores as on August 11,2003, which is more than 15 per cent of the total MF industry. These funds are deployed in various instruments in the market. Diagram No.1 shows the pattern of deployment of these funds. In fact the share of UTI MF in the equity assets of the entire MF Industry is the highest. More than 10 million investors have invested in various funds of UTI MF making it the largest mutual fund in terms of the number of investors; in fact, in terms of head count, the UTI MF has around 85 per cent of the total investors of the industry. The UTI MF also boasts 42 domestic schemes and four offshore funds. It has a large array of funds suiting the diverse needs of people from all walks of life.

FUTURE OUTLOOK With increasing deregulation in the economy, falling interest rates, opening up of the insurance and pension sectors for private players, increasing and participation of foreign

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majors in the Indian Financial sector, the outlook appears only bright for UTI MF. The management is sharply focused to its core business and expects to delve deep into the large untapped savings of the community to maintain its leadership in the industry.

BOTTOMLINE In order to stay ahead to its competitors the UTI MF have to recapitalize its core business plan and have to go with the strategy like creating sort term venture. Since, the added advantage of others can be utilized in the forthcoming scenario.

POINTS TO DISCUSS 1. How the entries of private player "break" the market monopoly of UTI? 2. "Investing in a MF scheme was find to be reasonably 'safe' investment in early 90's", How UTI is benefited from this state of mind of investor? 3. Dividing UTI into two distinct entities was a move to satisfy the UTI's vision ''to be the most preferred Mutual Fund", justify the fact.

E-GOVERNANCE PROJECTS IN INDIA A CO·MPARATIVE STUDY

INTRODUCTION E-GOVERNANCE - ORIGIN IN INDIA E-governance originated in India during the seventies with a focus on in-house government applications in the areas of defence, economic monitoring, planning and the deployment of leT to manage data intensive functions related to administrative tasks like elections, census, tax administration etc. The efforts of the National Informatics Center (NIC) to connect all the district headquarters during the eighties were a watershed. From the early nineties, egovernance has seen the use of IT for wider sectoral applications with policy emphasis for reaching out to rural areas and taking in greater inputs from NGOs and private sector as well. There has been an increasing involvement of international donor agencies DflD, G-8, UNDP,WB under the framework of e-governance for development. .

While the emphasis has been primarily on automation and computerization, state endeavors to use IT include forays into connectivity, networking, setting up systems for processing information and delivering services. At a micro level, this has ranged from IT automation in individual departments, electronic file handling, access to entitlements, public grievance systems, service delivery for high volume routine transactions such as payment of bills, tax dues to meeting poverty alleviation goals through the promotion of entrepreneurial models and provision of market information. The thrust has varied across initiatives, with some focusing on enabling the citizen-state interface for variC~IS government services, and others focusing on bettering livelihoods.

THE E-GOVERNANCE MARKET The government in India is emerging as the forth-largest vertical spender on IT after the telecom, manufacturing and banking and finance industries. The Indian government has spent around 1.8 billion USD on information technology in 2004.This includes the expenditure of the Central and state governments on hardware, software, telecommunication services and IT .services but excluded salary costs of IT staff. E-governance is still in its infancy; over 20 states/union territories already have an IT policy. In terms of basic computerization,

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police departments, treasury, land records, irrigation and justice are seen as having the maximum potential. Nasscom estimates that in the next five years, state governments in India will spend close to Rs.lS, 000 crores on computerizing their operations. The pressure to be IT-savvy is not only to keep with times, but comes from a more pragmatis dimensions; loans to governments from multilaterals have now become more or less contingent upon a proper treasury management system which translates into a computerized system that will tell lending institutions what has happened to the money that is has lent. Currently, India's manual treasury systems don't permit this with the kind of transparency required. For governments, the more obvious motivation to shift from manual processes to ITenable processes is the increased efficiently in administration and service delivery, but this shift can be conceived as a worthwhile investment with potential for returns. As is evident in the celebrated case of Saukaryam (Vishakapatnam, AP), computerization and more efficient back-end processes can actually imply revenues for the governments. Saukaryam is selfsustaining and does not require government funding. More importantly, the real spin-off is in the enhanced image of the government as being citizen-friendly.

OTHER ISSUES . Even as e-governance signifies a business opportunity for industry and a strategy for the government, from a citizen perspective, there exists an overarching concern. Not how much can be spent, but what could be achieved is really the moot point. Setting up MIS may be important and necessary exercise but very often cost-benefits analysis is not done and public money is used up in avenues that are not meaningful. There are larger implications of the absence of visioning, without a clear vision; huge investment in the name of e-governance may not really contribute to improve the quality of life of citizens despite huge potential. MIS systems like DACNET of the Ministry of Agriculture have received flak for being· no more than tools to control agricultural development activities rather than act as a facilitative platform for informing multiple stakeholders about how agriculture can developed in India and supporting them in improving productivity and participating in markets, including global markets.

BENCHMARKING FOR EFFECTIVE E":GOVERNANCE - KEY FRAMEWORK INVOLVED E-governance has become the buzzword for political success and the key enabler to facilitate reforms. However, a cursory glance at the e-governance map reveals a highly skewed profile. In the benchmarking state initiatives, three frameworks of analysis seem possible. These frameworks have been presented as possible ways to look at governments' progress and are exploratory. • Assessing the e-readiness of states • Assessing the stated commitment through IT policy and aC,t ual application by governments of IT tools to wards reaching de""' 'I pment "'A~ l r.

E-Governance Projects in India - A Comparative Study

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• Applying the lens of effective governance - the cornerstones of equity, accountability, transparency, participation, responsiveness, strategic vision, and rule of law- to what is happening on the ground.

E- READINESS

E-GOYERNANCE

IT POLICY AND TOOLS

EFFECTIVE IMPLEMENTATION

Illustration: Integration of E-Governance Components

E-READINESS The deployment of IT for furthering the priorities and goals of governance is dependent on many factors. There are many constraints on realizing the presumed potential uses of IT and these reflect the readiness of governments to appropriate IT for pursuing development. Among the most obvious and critical is the connectivity factor. Parameters constituting e-readiness: • Network acce~s included indicators such as tele-density, percentage of household with phones and cable TV, cellular phones, numbers of PCs and Internet connectivity. • Network learning was monitored in terms of percentage of colleges and schools with internet access and computer labs, universities offering InfoTech courses, number of websites of schools and college, number of registered training centers, number of registered training centers, percentage of student passing out from ICT courses, percentage of IT-qualified teachers, and percentage of government employees covered under online training programmes. • Network policy was evaluated on the governments' effort to address issues related . to telecom, e-commerce taxation, presence of IT policy, and cyber law.

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Effective Management Workout - A Case s.tudy

• Under e-governance, the study monitoring rural connectivity; IT application in agriculture, education, and health services; and computerization of land records. • Network society and economy were measured by the number of online companies, local language websites, and nu mber of households having access to Internet. The number of IT parks, employment in the II parks, and sales turnover of the . companies in the II parks were also taken into consideration.

IT POLICY AND TOOLS Includes the connectivity issues between the two remote centers. Such that the growth in connectivity reflects the deployment of Telecom policy using ICT in more effective way. Most of the states are having there own IT policies that include IT literacy and learning Tools, References to the use of IT for health.

EFFECTIVE IMPLEMENTATION Very few initiative in India seem to have ventured into the more complex area that transcend the efficiency and management concerns of governments and put in place programmes addressing quality of life issues. Tremendous possibilities exist in these domains. for example, states can use it for: Service that increase productivity and income of communities. Like DISK, Gujrat. Agriculture extension/Better returns for produce - like Krishi Marata Vahini, Karnatka. U Service delivery in health - like the Telemedicine Projects in Maharastra and

Andra Pradesh. ~-]

Service delivery in Education- like Head Start, Madhya Pradesh; Community Learning Centre, Karnatka; Akshaya, Kerala.

, Disaster management -like flood management,Bihar;Earthquakes Management, Maharasthra. Use of IT based tools for Planning and decision making- like the India Health Care Project, Rajasthan.

COMPARSION BETWEEN E-GOVERNANCE PROJECTS PERFORMED BY STATE GOVERNMENTS IN INDIA - WHO IS 'FIRST AMONG EQUALS'? AKSHAYA As the part of Karnataka e-literacy campaign, Akshaya e-Centers are being set up throughout Kerala. These centers will initially provide e-literacy to one member from every household and act as ICT dissemination nodes and lIeS delivery points i~ every village. All Akashaya e-Centers will have Internet connectivity and will be networked with a centralized operating center. Implementation of the first phase of the project is on in Malappuram district. The second Phase involves setting up of over 6,000 e-centers in all districts, expected to be

E-Governance Projects in India - A Comparative Study

.61.

over by December 2004.

ARUNANCHAL PARADESH COMMUNITY INFORMATION CENTER (CIC) Started on 22 August 2002 for the people of the eight Northeastern states new structure of Localized governance called Community Information Centers. Each is well equipped with modem infrastructure, including one server, five client systems, a VSAT, laser Printer, dot matrix printer, modem, LAN hub, TV, web cam and two UPS. Each center has two CIC operators as manager and for providing services to public. Basic services to be provided by CICs include Internet access and e·mail, printing, data entry and word processing and training for the local population. Most CICs charge nominal amount from users for services, which helps them to meet day-to-day running expenses. To ensure future financial sustainability of this enterprise, it is proposed to use the Community Information Centers for E-Entertainment.

BHOOMI Kamataka started Bhoomi in mid 1998 as a major initiative to computerize land records to ensure more secure title deeds and rollback the rampant cases of corruption. The existing registry of the 20 million land records of 6.7 million landowners in 176 taluks of Karnataka have been computerized and organized into a database. The government intends to sustain Bhoomi and replicate it at many more delivery points at sub-district levels, by positioning the land records databases as a 'Killer-application' which will ensure kiosk operators a minimum income of 3,000 a month. Bhoomi is keen on private sector involvement and options are being explored for partnership with the private sector for 'retailing'.

CARD The computer-aided administration of Registration Department in Andhra Pradesh is designed to eliminate the maladies affecting the conventional registration system by introducing electronic delivery of all registration services. CARD was initiated to meet objectives to demystify the registration process, bring speed, efficiency, consistency and reliability, substantially improve the citizen interface etc. Six months following the launch of the CARD projects, about 80% of all land registration transactions in AP were carried out electronically. Since 60% of the documents, Encumbrance Certificates (ECs) and certified copies relate to agricultural properties, the success of the CARD project has great benefit for the rural farming community.

COMMUNITY LEARNING CANTER PROJECT Set up between March and July 2001, the community Learning Center is a joint initiative between the Azim Premji Foundation (APF) and the state government of Karnatka.The government contributes towards hardware and other related expenses per CLC and the Foundation takes care of management and the training of Young India fellows (YIFs) who manage the CLCs. Each CLC is housed in a separate room in school and is equipped with five to eight computers. The CLSs are used to enhance classroom learning during school hours. In the first phase in 2001, 35 CLCs were launched in Bangalore, Kolar and Mandya

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distinct. In the second phase beginning 2002, 55 CLCs were inaugurated across 11 distinct within one month and in the third phase, 135 CLCs were scheduled to being operations in 2003.

DAILY INFORMATION SYSTEM KIOSK (DISK) The DISK application targeted at the booming dairy sector has been tested for two milk collection society by the Indian Institute of Management, Ahmedabad's e-governance center. The project consists of two basic components - an application running at the rural milk collection society that could be provided Internet connectivity and a portal at the district level serving transactional and information needs of all members. DISK has helped in the automation of the milk buying process at 2,500 rural milk collection societies and has been pilot tested in two co-operative villages of Amul dairy in Kheda district. Software called 'Akashganga' has been developed with special features to enable speedier collection of milk faster disbursement of payments to dairy farmers.

e-SEVA Launched on the 25 th of Aug, 2001, electronic seva (e-seva) is the improved version of the TWINS project launched in 1999, in the twin cites of Hyderabad and Secunderabad, operating from 8:00 am to 8:00 pm every day and between 930 am to 3:30 pm on holidays. Citizens can pay utility bills, avail of trade licenses and transaction on government matters at these facilities. Though the e-seva had a very lukewarm response from the citizens, the initiative has picked up tremendous confidence on the way and has so far netted a thumping collection of close to Rs 2,000 crore (February-end 2003) from a meager collection of Rs 43 lakh in August 2001. The government has rolled out the project to other parts of the state, including rural areas like the west Godavari district. Customized services like issuances of certificates and land records, online mandi rates, tele-agriculture, common accounts of SHGs are offered.

FRIENDS Fast, Reliable, Instant, Efficient Network for the Disbursement of Services is part of the Kerela State IT Mission. FRIENDS counters handle 1,000 types of payments bills originating out of various PSUs. The payments that citizens can make include utility payments for electricity and water, revenue taxes, License fees, motor Vehicle taxes, university fees, etc. Firewalls safeguard data from manipulation. The application has provisions for adding more modules and for rolling back incorrect entries without affecting the database even at the user level. One important feature of FRIENDS is provision for adding more modules and a queue management system

GRAMSAMPARK 'Gramsampark' is a flagship ICT product of the state of Madhya Pradesh. A complete reference of available resources, basic amenities, beneficiaries of government programmes and public grieva..'1ces in all the 51,000 villages of Madhya Pradesh is available in the database of KBMS (Knowledge Based Management system).

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Gramsmapark has three sections - Gram Paridrashya (Village scenario), Samasya Nivaran (grievance redress) and Gram Prahari (village Sentinel). An eleven point monitoring system has been put in place whereby programmes are monitored village -wise every month. Four more programmes are under the monitoring system, which includes untouchables-eradication, women's empowerment, water conservation and campaigns for sanitation.

GYANDOOT The Gyandoot project was initiated in January 2000 by committed group of civil servants in consultation with various gram panchayats in the Dhar district of Madhya Pradesh. Gyandoot is a low cost, self-sustainable, and community -owned rural intranet system(Soochnalaya) that caters to the specific needs of village communities in the district. Thirty-five centers has been established since January 2000 and are managed by rural youth selected and trained from amongst the unemployed educated youth of the village. They run the Soochanalayus (organized as Kiosks) as entrepreneur (Soochaks); user charges are levied for a wide range of services that include agricultural information, market information, health, education, women's issues, and applications for services delivered by the district adminstartion related to land ownership, affirmative action, and poverty alleviation. Kiosks are connected to the intranet through dial-up lines, which are soon to be replaced by wireless connections using CorDECf Technology.The Soochanalyas have been equipped with Pentium multimedia colour computer along with dot matrix printers. The user interface is menu based with information presented in the local Hindi language and the features of the Gyandoot software are continuously being updated.

HEADSTART Headstart provides computer-enabled education and basic computer skills for all students in 6000 Jan Shiksha Kendras of Madhya Pradesh. Madhya Pradesh has 6500 Jan Shiksha Kendras (cluster resource centers) located in Middle school premises in 48 districts. Headstart will equip every Jan Shiksha in the state with computer Hardware and multimedia software. It repositions the JSK as a media unit capable of providing computer-aided education for the children of the middle school in which the JSK is located and familiarization to computers to all children in primary schools, EGS school children will come first. For being able to manage this, teachers with a math or science background preferably, will be trained across the state through the decentralization training capabilities of the Bhoj Open University.

LOK MITRA The 10k mitra project was formally dedicated to the people of Hamirpur in Himachal Pradesh as a pilot phase on the 8th of may2001.the services offered include information about vacancies, tenders, market rates, matrimonial services, village e-mail. An interesting feature is that citizens can use the IT enable system as a grievance redress system. The LokMitra INTRANET set up in the district Hamirpur consist of two Pentium-lII based servers (under Windows NT) with four Pentium-III based client systems and a Router, setup in a LAN using HUB, in a separate room at the Deputy Commissioner office, Hamirpur, named as LokMitra Soochnalaya. A total of 25 panchayats have been identified for setting up citizen

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Information Centers. The project will be extended to cover all the districts of Himachal Pradesh.

MAHITI SHAKTI Launched in 2001, the portal www.mahaskayLcom operates like single windows through which the citizens can access information related to all aspects of the government's functioning, various benefits schemes and services ranging from obtaining ration card to getting sanction for old age pension. Anyone who wishes to avail the benefits has to go to his/her nearest designated STD/ISD Kiosk, submit the necessary documents to the info Kiosk owner and fill in the required form online. For the online submission of the application, the info Kiosk owner charges Rs. 10 for the application form and the Rs 20 for submission. The Taluks of Halol, Kalol, Santrampur, Jambughoda, Ghogamba, Kahmpur, Lunawada, Morwa and Shahera have such info -Kiosks.

SAUKARYAM Launched the year 2000, Saukaryam, the pilot project of the Municipal Corporation of Visakhapatnam is now being implemented in other parts of the state of Andhra Pradesh as a model e-governance initiative for local governments. Online payment of Municipal dues has been taken up as its first subprojects and other service include, Online Tracking of Building Plan Status, Online Filling and settlement of complaints & Grievances, Online Registration of Births and Deaths, Instant Issuance of Birth and Death ce::tificates, Online Tracking of garbage Lifting. Every service extended by the city corporation is being extended online. The Saukaryam model has seen the deployment of ICTs in a context where the Municipal Corporation of Visakhapatnam had no reason for computerization.

TAMBARAM MUNICIPALITY The Tambatram Municipality in its official website www.snegham.com Provides information on birth/ death certificates, water charges through an online database of water charge dues and property ta~ through an online database of property tax dues. It also has information on the rainwater harvesting structures in various locations like councilors houses, government offices. The dynamic updated plan approvals. The 'submit your grievance' page provided the user with a form wherein they can fill up their grievance and submit it online. The grievance is immediately recorded into the manipulating database and an alert sent to the municipality" administration. He site also features a comprehensive databank covering a wide variety of information on Tambaram like details of police stations, Ambulance Services, First Aid Services, Blood Banks, Electricity Department, Telegraph Offices, Banks, colleges, Schools, Hospitals, Medical Practitioners, etc. the 'tender' page provides information on current tenders from the municipality.

TELEMEDICINE PROJECT (PUNE) The pune district administration in partnership with a global health portal www.doctoranywhere.com and Tata Council for community initiatives has launched a

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telemedicine service from government primary Healthcare Centers for those living in interior villages. There are currently 88 PHCs in Pune district, each manning five to six sub-centers. The telemedicine projects aims to ultimately connect all the PHCs in the districts. Doctors at the PHCs will refer complicated cases to the specialists in major cities who in tum will give their advice within 24 hours. Ten specialists have been chosen from dermatology, nephrology, neurology, cardiology and gastroenterology. As most PHCs are operational from the premises of district administration run schools and most schools have computers, these could be used to provide the telemedicine service. The TCCI has donated three Pentium computers for the pilot project. The district administration will provide computers to the other PHCs. In the first phase, three PHCs in Wagholi, Chakan and Paud regions would be linked with the " district administration and specialists.

VOICE The Vijayawada Online Information Centre (VOICE) was launched in June 1998 and implementation was completed in December 1999 to deliver municipal services such as building approvals, and birth and death certificates, to the people of Vijayawada. It also handles the collection of property, water and sewage taxes. The VOICE system uses five Kiosks located close to the citizens. These are linked to the back end processes in the municipal offices through a wide area network. The application has helped reduce corruption, made access to services more convenient, and has improved the finances of the local government.

WARANA WIRED VILLAGES The key objective of the project has been to utilize IT to utilize the efficiency and productivity of the existing sugarcane cooperative enterprises by setting up of a state-ofthe-art computer communications network. This provides agricultural, medical and educational information in the local; language to villages around Warana Nagar in the Kolhapur and Sangli Districts of Maharashtra. In the order to maintain long-term sustainability, six months back Warana switches over to the CorDECT technology from the VSAT technology, with 6 or 7 connections already in place. The next three months will witness the deployment . of the corDECT WLL in 60 more villages.

E-GOVERNANCE INITIATIVES· BRIEF VIEW StatelUnion territory

Initiatives covering departmental automation, user charges collection, delivery of policy/programme Information and del/very of entitlements.

AnQhra Pradesh

e-SEVA, CARD, VOICE, MPHS, FAST, e-COPs, AP online-One stopshop on the intemet, Saukaryam, Online Transaction processing.

Bihar

Sales Tax administration Management Information.

Chattisgarh

Chattisgarh Infotech Promotion Society, Treasury Office, e-linking project.

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Delhi

Automatic Vehicle Tracking System, Computerization of website of RCS office, Electronic Clearance System, Management Information System for Education etc.

Goa

Dharani project

Gujrat

Mahiti Shakti, request for Government documents online, Form book Online, G R book online, census online, tender notice.

Haryana

Nai Disha

Himachal Pradesh

Lok Mitra

Karnatka

Bhoomi, Khajane, Kaveri

Kerala

e-Srinkala, RDNet, Fast, Reliable, Instant, Efficient Network for the Disbursement of Services(FRIENDS).

Madhya Pradesh

Gyandoot, GramSampark, Smart Card in Transport Department, Computerization MP state Agricultural Marketing Board (Mandi Board) etc.

Maharashtra

SETU,Online Complaint Management System- Mumbai.

Rajasthan

Jan Mitra, RajSWIFT, Lokmitra, RajNIDHI.

Tamil Nadhu

Rasi Maiyams- Kanchipuram; Application forms related to public utility, tender notices and display.

North-Eastem States Community Information Center. Forms available on the Meghalaya (Arunachal Pradesh, Manipur, website under scheme related to social welfare, food civil supplies Meghalaya, Mizoram & Nagaland) and consumer affairs, housing transport etc.

BOTTOMLINE The e-govemance market in India is a nourishing and show great future sign by reflecting tremendous future opportunities. State led IT implementation e-projects are the prove of the emerging trends that the market is observing. We hope that India Inc. will prove to be having the most effective e-administration in the coming years.

POINTS TO DISCUSS 1. Different initiative taken by state government are mere prove of presence of IT awareness among them, how they are benefited from these workout. 2. How you rate the different e-projects as per their core competency as well there added advantages over each other. 3. 'Benchmarking is to set higher standards'~w benchmarking facilitate States to prove the best they are having as per e-projects initiated by them, justify with examples.

IMPLEMENTING IT POLICIES FOR EFFECTIVE E-GOVERNANCE FRAMEWORK (CASE - JSWARNN ANDHRA PRADESH)

THE VISION The holistic development is the key concept behind the idea of implementing E-governance at Andhra Pradesh that reflected in the form of well-designed cogent blueprints called Vision 2020, which is a well documented framework equipped with strategies and Technically enhance leadership to visualize the growth, and also to constantly inspire to meet the benchmarks set, in order to build an ideal society of the future that will be able to transform itself into a knowledge society, in terms of living standard of civil society by using leverage IT practices. Vision 2020 is the collaborative effort of Government of Andhra Pradesh (GOAP) & Mckinsey & Co. The IT policy for Andhra Pradesh is so formulated as to create the right environment for realizing the above vision.

OBJECTIVES OF IT POLICY Using IT as thriving force, the policy acts as guidelines for the actions taken by several players like legislative, executive and judicial arms, IT entrepreneurs, citizens, businesses, academicians, students, intellect minds, association of professionals etc., for the overall development of the state. The policy contains guidance ior each of these stakeholders. The objectives of the IT policy are enunciated below.

(I) ECONOMIC DEVELOPMENT The first and foremost objective is to use IT as an instrument to foster the economic development.of the State. This translates to specific action in the following areas: !

Growth of IT industry in the state.

• Growth of software exports. • Creation of employment potential. • Attracting investments from outside the state.

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• Providing high quality services in all spheres. • Promoting knowledge as the key resource for economic progress of individuals & institutions. One of the prime policy considerations of a democratic government is the need to ensure that the economic benefits spread evenly and reach to the underprivileged population groups as well. The benefits of citizen services projects reach the rich and the poor equally, IT projects aimed to improve the internal efficiencies benefit the poor indirectly through better planning and targeting of weaker section programs and superior enforcement of law. Apart from this, the Government intends to make serious efforts to see that IT also per