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RURALENTREPRENEU~DEVELOPMENT:ASTUDY ON INDIAN HANDMADE PAPER INDUSTRY

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Dr. Amit Kumar Dwivedi …

Dr. Amit Kumar Dwivedi
Academic Associate (Finance & Accounting Area) Indian Institute of Management (11M-A) Vastrapur, Ahmedabad (Gujarat) India
Mr. Punit Kumar Dwivedi
Ass!. Professor (Finance) Bankatlal Badruka College ofInformation Technology
Hyderabad, (Andhra Pradesh), India

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  • 1. Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi RURALENTREPRENEU~DEVELOPMENT:ASTUDY ON INDIAN HANDMADE PAPER INDUSTRY Dr. Amit Kumar Dwivedi Academic Associate (Finance & Accounting Area) Indian Institute of Management (11M-A) Vastrapur, Ahmedabad (Gujarat) India Mr. Punit Kumar Dwivedi Ass!. Professor (Finance) Bankatlal Badruka College of Information Technology Hyderabad, (Andhra Pradesh), India ABSTRACT Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 The gloomiest facet of recession is large scale employee sacking by multinational companies throughout the world. As loss of employment opportunities and mass scale Members Copy, Not for Commercial Salewww.IndianJournals.com firing often leads an economy into a vicious circle of unemployment, poverty and severe recession. Thus to rescue economy from this vicious circle, it becomes indispensable for an economy to identify prospective employment opportunities and, to stabilize and strengthen its traditional root sector. Although MUlti-National companies are pi/lars of both developed and developing countries in current era; but global impact of sub - prime crises have substantially shaken these pillars, so when pillars become weak it becomes essential for a country to bolster its roots. Traditional small scale manufacturing sector although trivial in supporting economy, , however is the root of manufacturing sector of the country, and being labor intensive and less investment demanding can be identified as a savior of current economic crises. This paper is a contribution to study the big potential of traditional small scale handmade paper industry in India over more than a decade, hence to make world economies, to realize the prowess of small when large corporate sector is showing plunge. Introduction urban areas ofthe country. (Indian Economic Popular for its art and craft small scale Survey 2005-06). industrial sector is an integral part of Indian IThe Handmade Papermaking industry economy since medieval times. Today also (HMPI) is one among the recognized small scale enterprises hold a vital position traditional small scale industrial sector of the _~ . ~an economic scenario contributing country. In 1953 this industrial sector was --~- around 39 percent of the countrys having 35 -40 units for production but today manufacturing output and 34 per cent of its after half century Handmade paper industry exports in 2004-05. It provides employment is having more than 3000 production units, to around 29.5 million people in the rural and providing employment to nearly 37000 66
  • 2. Osmania Journal of International Business Studies January - June 2009 people in rural and unorganized sector of the Thus this paper emphasife on big wonders country (KVIC India). of the small in the country. The magnificent growth of Indian Small Literature Review Scale Industrial sector and with it Growth of Small-scale industries occupy a place of Indian HMPI since 1990-91 is shown in strategic importance in Indian economy in Table- I of appendix. The handmade paper view of its considerable contribution to units are scattered throughout the country employment, production and exports with concentration most in the Kalapi (Jhansi, (Subrahmanya M.H. Bala, 2004). According Uttar Pradesh), Sanganer (Rajasthan), Pune to Indian planners, the principle of self (Maharastra), Kurukshetra (Haryana), employment was considered as important Mahaboobnagar (AndhraPradesh) and to a successful democracy as that of self some clusters are in West Bengal.(KVIC, government. In modern era of global India) Today over the years, the handmade competition, small scale industries try to paper industry has its own reputation for craft become investment driven in addition to paper as well as its converted products. being labor intensive (Thangavel N, Some HMPI products are recognized and Elangovan R. 2008). Above all in a thickly are generally demanded in the market like populated country like India the small scale Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 carry bags, albums, stationery items, gift industry has been approached positively with items, packaging items, drawing papers, Members Copy, Not for Commercial Sale the purpose of generating employment (Dutt, greeting cards, invitation cards, businesswww.IndianJournals.com 2005). In India, the manufacture of cards, miscellaneous fancy and decorative handmade paper is a fairly well-established items etc. industry at the village or small-scale-industry With their prominent benefit of being level. It is an interesting technology simply environmental friendly, handmade paper and o~ because it uses only waste materials, Handmade paper value added products including rags, tailor shop cloth cuttings and enjoy exclusive demand among the elite agro-wastes, in the process of making customer segment of both national and extremely high quality paper, paper products international markets, thus providing, a and card. For this reason, the industry has strong impetus to investors in the country to been described as "eco-friendly" and one of ripe the fruits of this exclusive market of the outstanding examples of sustainable Traditional Handmade paper and its value development. In addition, the technology is added products. Further HMPI sector being fairly simple to operate and requires no less Capital demanding {Project cost starting special training or certification. The from 3,26,000 (KVIC, India)} and more labor technology is also available in ready-made intensive clearly signifies its scope as a form and can be ordered on a tumkey basis. potential employer ~and income generator, The making of handmade paper is a fairly especially in rural and unorganized sector old process in India going back several of the country. This paper is a contribution to centuries. Paper-making was largely recognize the growth trajectory of Indian dominated by Muslim Kagzis.( PART I II: handmade paper ind~stry, considering it as COMMUNITY.;.BASED SUSTAINABLE a paradigm for many other traditional small LIVELIHOODS) Although there have been scale ind which could successfully many studies exploring the potential of small country at tough times of recession. scale industries in the country, this paper is 67
  • 3. Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi an effort to look exclusively at one of its moving average (ARIMA) modeling is inconsequential part which have a specific subset of univariate modeling, in consequential importance especially in rural which a time series is expressed in terms of,I and unorganized sector of the country. Thus past values of itself (the autoregressive identifying the progress and prospects of component) plus current and lagged values Traditional small.scale HMPI sector of the of a white noise error term (the moving country, and hence recognizing power of average component). The main advantage small at bad economic times. of ARIMA forecasting is that it requires data on the time series in question only. First, this Objectives of the StudyI • To study the growth of Indian HMPI feature is advantageous if one is forecasting a large number of time series. Second, this sector in terms of handmade paper avoids a problem that occurs sometimes with and handmade paper value added multivariate Models. (AIDAN MEYLER*, products in India since 1990 GEOFF KENNY AND TERRY QUINN). • To study the growth of Indian The integrated component of an ARIMA Handmade· paper and Indian model represents the number of times a time handmade paper value added Series must be differenced to induce Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 product Industrial units since 1990 stationarity. A general notation for ARIMA Models is ARIMA (p,d,q)(P,D,Q), where p Members Copy, Not for Commercial Sale • To study the growth of employment in www.IndianJournals.com denotes the number of autoregressive Indian HMPI sector since 1990 Terms, q denotes the number of moving Research Methodology: average terms and d denotes the number of times a series must be differenced to induce In this paper, a time series model is stationarity. P denotes the number of exploited to fit data. The technique consists seasonal autoregressive components, Q of filtering out autocorrelation by an denotes the number of seasonal moving autoregressive integrated moving average average terms and D denotes the number (ARIMA) model, following the techniques of . of seasonal differences required to induce Box et at. (1994).Autoregressive integrated stationarity. Xl = VdV~r; is a starionarysenes, and V" =(1~B)4 represents the number of regular differences and V~ =(1-B1t represents the number of seasonal differences requtted to induce stationarity in Yt . Analysis & Discussion . of HMPI sector in country is observing an increase at increasing rate. This clearly Model I (Production in Rs Lakhs) of indicates that more investment and high Graph- , in appendix, clearly explicates the innovation in Indian HMPI will not only aid its ~~~__ growth pattern of HMPI in India since 1990, production, but will also increase the demand ~gh till 1999 growth observed was at of HMPI and HMPI value added products in decreasing rate, but after 1999 production national and international markets. 68
  • 4. Osmania Journal of International Business Studies January - June 2009 This implicates that although less units model can be captured from Table II, investment demanding, the production III, IV, V, and VI of the appendix) prospects of the sector are promising. (Further details of HMPI production model Model III (Employment in Thousand) of can be captured from Table II, III, IV, V, and Graph- I in appendix shows great VI of the appendix) employment potential of Indian HMPI since 1990. This shows vast employment scope Graph: 1 in Indian Traditional Small Scale Industrial Sector. ((Further details of HMPI 40 EmploymentlnThollSB lld . __ Employment model can be captured from 30 MOclel_3 . / Table II, III, IV, V, and VI of the appendix) :!o / Conclusion 10 ~ India has a vast rural and unorganized 0 ~ ,ooo orki n Units.Mode l_2 economic sector. This sector is life blood of ... CII .c 3,000 ~ ....------­ . the country, providing income, employment and investment prospects to many in the I E ~ooo :J Z country. Being less in lime light with large , .000 Multi National Sector this traditional small Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 scale industrial sector is Recession­ 60 ~-;=:====================:::::: Resistant , as the products of this sector Members Copy, Not for Commercial Sale Produ ioninRsLakhs· 50,000 Model 1 www.IndianJournals.com enjoy exclusive national and international 40 .000 30.000 demand. :0.000 The Indian HMPI sector clearly signifies 10000 D~~~~~~~~~~~~ the overall potential of traditional small scale industrial sector of the country. This sector - Ollserlled not only have capability to stop the wealth Abbreviati ons Used drain from rural to urban areas, to establish ARIMA stands for Auto-Regressive strong industrial base of rural employment integrated Moving Average and rural growth, to reduce rural-urban HIvlPI stands for Handmade paper disparity in the country but also ability to Industry bolster the roots of the economy hence Model II (Working units) of Graph- I in rescuing it from the economic hardships that appendix, signifies the growth trajectory of are more volatile in organized sector of the HMPI working units since 1990, although as country. per ARIMA outcome the growth patterns of References working units were mixed before beginning of year 2000 , however after year 2000 the 1. Ansley, C.F., R. Kohn. (1985): A growth of HMPI units in India has been structu red state space approach to accelerating. This clearly indicates with computing the strong investment impetus such units can be a. Likelihood of an ARIMA process and easily set up to boost the economic its derivatives, Journal of Statistical framework of Indian rural and unorganized Computation and Simulation. 21: sector. (Further details of HMPI working 135-169. 691
  • 5. Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi 2. Box G.E.P., Jenkins G.M., Reinsel G.C. 6. Meyler A, Kenny G, Quinn T (1998): (1994): Time series analysis: Forecasting Irish Inflation UsingARIMA Forecasting a. Models 3/RT198 a. and control Englewood Cliffs, NJ: 7. Subrahamanyam M H Bala (2004): Prentice-Hall. Small Industry and Globalisation 3. Biggs Stephen and Messerschmitt Implications, Don, (2005): Social Responsibility on a. Performance and Prospects Growing Economic and Political Weekly, May a. Handmade paper industry in Nepal, 1,2004,1826-1833 (University of EastANGLlA, Norwich, 8. Thangavel N, Elangovan (2008): UK), Journal- World Development, Employment in Indian Small Scale 33, Issue-11, 1821-43 Industry: Some 4.. Dutt, R. (2005). Indian Economy. S a. Issues, Medwell Journals, the Social Chand and Company Ltd, New Delhi Sciences 3(7): 484-487 694-695 . 5. Khistova. P., Kordsachia 0., Patt R., 9. (UNDP) & United Nations Industrial Development Organization (UNDIO), Karar I. and KhiderT (2006), Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 30th a. Environmentally Friendly Pulping and a. 1997: Strengthening the Hand Made Members Copy, Not for Commercial Sale Bleaching, Journal- Industrial Cropswww.IndianJournals.com Paper Industry in India a Project and Products, 23, 02, March-131-139 Report by United Nations Development Programme Appendix Table - I Large potential of small scale industries and HMPI in India ! Performance of Small Scale Industrial j Performance of Handmade paper and I sector India Produc valued added industries in India i I Units tion Employment Production Employment I (No. In (Rs (No. In Working (In Rs . (In . I Year Lakhs) Crore) Lakhs) Units Lakhs) . Thousand) i . 1990-91 67.9 . 78802 158.3 325 852.61 6 1991-92 70.6 80615 166 344 1210.39 7 1992-93 73.5 84413 174.8 350 . 1532.12 7.5 1993-94 76.5 98796 182.6 1246 2213.92 . 10 1994-95 79.6 122154 191.4 1911 3027.45 12 1995-96 82.8 147712 197.9 2293 3511.25 15 1996-97 86.2 167805 205.9 2794 4312.97 15 1997-98 89.7 187217 213.2 2794 4886.12 17 1998-99 93.4 210454 220.6 2975 5456 18 1999-00 97.2 233760 229.1 2883 . 7000.32 20 2000-01 101.1 261297 238.7 2519 12100.89 . 25 2001-02 105.2 282270· 249.3 2641 22325.06 28 2002-03 109.5 311993 260.2 2811 36695.01 32.5 2003-04 114 357733 271.4 2956 44731 34 2004-05 118.6 418263 282.6 3129 48595.9 35.25 2005-06 123.4 476201 294.91 3260 53455.5 37 Source: SIDBI, KVIC (Annual Report 2006) 70 I
  • 6. ----------- ----- - - --- " Osmania Journal of International Business Studies January - June 2009 ARIMA model Results HMPllndia (Time of analysis 1990-2005) Model Description Table-II I . . - TModelType odell~ Production (in Rs Lakhs) Model- 1 ARIMA(O,O,O) ! Working Units Model 2 ARIMA(O,O,O) -=-- r...-.---------------­ I_EmPloyment (In Thousand) ModeL3 ARIMA(O,O,O) - Model Summary Model Fit Table-III Mean SE Minimum Maximum .,,-,: - I ! Fit Statistic 5 10 25 50 75 90 95 Stationary .832 ,122 .755 .972 .755 .755 ,755 .770 .972 ,972 .972 R·squared R-squared ,832 ,122 ,755 .972 ,755 .755 ,755 .770 .972 ,972 .972 RMSE 3318.986 5289.609 1,837 9419.109 1.837 1,837 1.837 536,013 9419.109 9419.109 9419.109 MAPE 91,662 111,836 9,328 218,987 9.328 9,328 9,328 46.673 218.987 218,987 218.987 Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 MaxAPE 534.019 694.370 43,964 1328,622 43.964 43.964 43,964 229.470 1328,622 1328.622 1328,822 MAE 2788,604 4446.624 1,349 7916,649 1.349 1,349 1.349 447,814 7916.649 7916,649 7916.649 Members Copy, Not for Commercial Sale MaxAE 4956.369 7833.618 3.271 13987,740 3.271 3.271 3.271 878,097 13987.740 13987.740 13987,740www.IndianJournals.com Normalized BIC 11.042 8,695 1.562 18.648 1.562 1,562 1.562 i 12,915 18.648 18,648 ! 18.648 Residual ACF Summary Table-IV ; Mean SE Maxi Percentile Lag 5 10 25 50 75 90 95 1 Lag 1 .740 1.087 .640 :790 .640 .640 .640 I .790 .790 .790 .790 I Lag2 .388 .105 .268 .463 .268 .268 .268 .434 i .463 .463 .463 1 Lag3 .008 .094 i -.094 .091 -.094 .027 .091 .091 ~091 Lag 4 -.286 .044 -.313 -.235 -.313 -.311 1-. 235 -.235 -.235 5 -.406 .099. -.495 -.299 -.495 -.424 -.299 -.299 -.299 -.487 .106 . -.589 -.377 -.589 -.494 -.377 -.377 -.3n -.419 .124 -.493 -.276 -.493 -.488 -.276 -.276 -.276 -.342 .073 -.426 -.295 -.426 -.305 -.295 -.295 -.295 Lag 9 -.215 .096 -.312 -.121 -.312 -.212 -.121 -.121 -.121 Lag 1 -.051 .090 -.148 .028 -.148 -.032 .028 .028 .028 , .031 . .036 .095 .036 .082 .095 .095 .095 Lag 1 .171 i .026 .144 .196 .144 .144 .173 .196 .196 .196 Lag 1 .162 .037 .130 .202 .130 .130 .130 .155 .202 .202 .202 Lag 1 , .053 i .065 .168 .065 .065 .065 .092 .168 .168 .168 Lag 1 i .042 .025 .105 .025 .025 .025 .041 .105 .105 .105 1 71
  • 7. r Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi Model Statistics Table V Number of Model Predictors Model Fit statistics Stationary I I R­ squared R- I squared RMSE MAPE MAE IMaxAPE i MaxAE Production i (in Rs Lakhs)­ 1 77fJ i 1.770 9419.109 218.987 7916.B49 1328.622 13987.740 ModeL1 Working I Units­ 1 .755 I .755 536.013 . 46.673 447.814 229.470 878.097 ModeL2 Employment I (In Thousand)­ 1 .972 t~.972 1.837 i 9.328 1.349 43.964 3.271 Model 3 i Downloaded From IP - 203.200.225.151 on dated 16-Apr-2012 ARIMA Model Parameters Table VI Members Copy, Not for Commercial Salewww.IndianJournals.com Estimate 8E it 8ig. Production Production No Constant {in Rs (in Rs Transformation - 1020373.018 i -6.828 .000 6967386.210 Lakhs)­ Lakhs} ModeL1 YEAR, not No Numerator Lag 3495.935 510.823 6.844 .000 periodic Transformation 0 Working Working No Constant -378700.750 58066.266 -6.522 .000 Units­ Units Transformation Model_2 YEAR, not No Numerator Lag 190.690 29.069 6.560 .000 periodic Transformation 0 Employment Employment No Constant (In (In Transformation -4398.781 198.967 - .000 22.108 Thousand)­ Thousand} ModeL3 YEAR, not No Numerator Lag 2.212 .100 22.208 .000 periodic Transformation 0 72

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