PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES

INDIA’S TACTICSTOFIGHTPAKTERRORISTS
CHANGESEMERGEDININDIAAFTER25YEARSOFREFORMS
IMPACTOFCOMMUNITYPOLICINGONSOCIETY:ACASESTUDY
IMPACTOFTERRORISMONFOREIGNINVESTMENTINPAKISTAN
BREXITANDITSIMPACT
ANEMPIRICALSTUDYONWORKLIFEBALANCEPRACTICESIN'IT'SECTOR
CONSUMERSBUYINGBEHAVIOURTOWARDS MOBILEPHONES
SERVICE QUALITY DIMENSIONS IN SELECT PRIVATE BANKS WITH SPECIAL
REFERENCETOCHENNAIREGION
STRESS AND PERFORMANCE OF EMPLOYEES IN MANUFACTURING
INDUSTRIESANANALYTICALSTUDY
PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP
CATEGORIES
TEST MANAGEMENT AND CHALLENGES & MITIGATIONS IN AGILE SCRUM
METHODOLOGY
E-ACCOUNTING AS A WAY TO MAINTAIN FINANCIAL DATA WITH SPECIAL
REFERENCETOINDIANSTOCKMARKET
-MithileshKumarSinha
-Jitender,ProfessorAnilK.Saxena,Dr.A.R.Aryasri
- NadirShah
-Dr.SujataPandey
-Dr.K.Sreekanth,Dr.A.R.Aryasri
-Dr.DebansuRay
-Dr.G.Sankaranarayanan
-A.Kavya
-S.Rajaram
-KotiReddyBhavanam,Dr.P.PrasadaRao
-Dr.AditiR.Khandelwal
2
13
19
38
57
71
3
28
31
45
66
77
Contents
Economic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 1
Indexed at Websco
Online version available at joomag.com

India chose to undertake surgical strikes on September
28 night killing some 50 terrorists and destroying Seven
launching pads of terrorists across the LOC. This
became necessary to give a befitting reply to various
terror groups operating inside the POK in the wake of
terrorist attack on Army Camp in URI killing 18 soldiers
on September 18. In a flurry of counter tactics various
moves are being discussed in the country which the
government thinks will be taken up as and when
situationdemands.
Taking first step the government of India chose to
apprise the world leaders about the terrorism being
st
spread in the neighborhood. Addressing the 71 UN
th
General Assembly (UNGA) on 26 September, India's
External Affairs Minister Sushma Swaraj said, “In our
midst there are nations that still speak the language of
terrorism, that nurture it, peddle it. To shelter terrorists
has become their calling card.” She emphasized that
such countries should have no place in the comity of
nations. This 20-minute speech was hailed by many
countries present in the UNGA including the USA, UK,
France and Germany. The US State Department advised
Pakistan to target all terror groups that intend to harm
Pakistan'sneighbour'India'.
India’s decision to pull out of 19th SAARC summit to be
held on 9th-10th November, 2016 in Islamabad has
brought good results with other saarc nations like
Afghanistan, Bangladesh, Bhutan, Maldives & Sri Lanka
boycottingthesummit.Thesummithadtobepostponed
indefinitely by the chair nation Nepal. This has gives
good message to international community against the
terrorattacksonneighbors.
IndusWaterTreaty
AnotherstepcouldbeabrogatingtheIndusWaterTreaty
(IWT)signedbythetwocountriesinSeptember19,1960
The Treaty distributes rights for using water of six rivers
whereby India has cent percent rights of three eastern
rivers – Beas, Ravi and Sutlej and Pakistan is given 80%
rights of Three western flowing rivers – Indus, Chenab
and Jhelum. India can use only 20% of water of Indus
which flows through it first for irrigation, transport and
power generation. The treaty has continued
undisturbed even during the 1965, 1971 and 1999 War
turmoils. An International agency 'World Bank' had
brokered the “IWT” between the two countries. Now if
India unilaterally chooses to stop the Indus Water it will
give wrong message to other nations on the globe who
have always supported India. Moreover, India is an
upper reparian state and cannot take moves to stop
wateroflowerreparianstatewhichisPakistan.Because
India stands in the same shoes with China on
Economic Challenger// ISSN 0975-1351/ Oct.-Dec. 20162
INDIA'S
TACTICS TO FIGHT PAK TERRORISTS
EDITOR’S DESK
Brahmaputra river water where we are lower reparian
country and China an upper reparian country. If we take
any step to stop Indus Water, Pakistan might go to
International court ofJusticein Hagueforprotecting its
rights and might approach the World Bank for
persuasionstoIndianottobreachthe'IWT'.
100%waterscannotbestoppedbyIndiaaspresentlywe
do not have that much capacity to hold and use the
water. It will take years to create infrastructure for this
purpose. Only partially we can tweak the treaty. We can
go head with the 'Tulbul Projet' which was conceived in
1980s. Work wasstartedin 1984 and stoppedin 1987 on
Pakistan'sobjections.
J & K state is always in fabvour of dilution of Indus
WatersTreatyasitwillincreaseutilisationofwaterfrom
western rivers for irrigation and power generation.
However, abrogation of IWT even for a shorter period
might strengthen Lashkar-e-Taiba (LeT) having a strong
hold in Pakistan's Punjab province which is most
prosperous provincedue touse ofIndus Waters. It might
affectIndia's reputation as a model state having respect
for international law and might hurt our effort to get a
UNSecurityCouncilberth.
Review'MFN'Status
The unilateral grant of most favoured nation (MFN)
status to Pakistan in 1996 should be reviewed and
withdrawn. Islamabad has not yet granted MFN status
toIndia.RevokingMFNstatusinPakistanwillalsogivea
strong signal in the wake of Uri attack. However, the
impact will be largely symbolic as bilateral trade
represents only a fraction of India's overall goods trade.
It was $ 2.67 billion against India's $ 641 billion in FY
2016.India'sexportstoPakaccountedfor0.83%intotal
exportsandIndia'simportsfromPakwereonly0.11%in
total import bill. Moreover, both countries also have
preferential trading agreement under the South Asia
Free Trade Area (SAFTA) under which two countries are
giving concessions to each other. Withdrawing MFN
status will not impact Pakistan much. Already a number
of items of Indian merchandise being imported by
Pakistan via Dubai. It is just possible that other
countriestoomightjoinassupplierstoPakistan.
Declare‘PAK’aTerrorState
Political Parties are demanding that the government
should declare Pakistan a 'Terror State' by convening a
special session of Parliament besides strapping the
MFN status, imposing economic sanctions, scaling
down of strength in the two high commissions and
granting immediately political asylum to Baloch leader
Brahandagh Bugti. A calibrated action on Indus Water
Treatyshouldalsobetakenbythegovernment.

Mithilesh Kumar Sinha | Professor In Economics, Department Of Economics, Nagaland University,
Lumami-798627,E-mail:mithileshkumarsinha5@gmail.com
CHANGES EMERGED IN INDIA AFTER
25 YEARS OF REFORMS
PROLOGUE
his year India is commemorating the 25th
year of the 1991 true economic reforms.
TItwasinJulyof1991thatthefirstphaseof
reforms kick-started under the then Prime
Minister P V Narasimha Rao at a time when Dr.
Manmohan Singh was his government's Finance
Minister. These reforms led to the opening of
India's doors to the outside world to bring in the
much-needed growth in the economy with an
aim to reduce poverty, increase exports,
allowing the private sector to have a larger role
and in particular a restructuring of the role of
government.
India in 1991 was a poor, misgoverned country,
derided as a bottomless pit for foreign aid. Today
it is called a potential economic superpower,
backed for UN Security Council membership by
the US and set to overtake China to become a
fastest growing country in the world. Now India
has become a miracle economy; social, and
welfare spending is at record levels; and Indian
businesses not only hold their own position but
have become multinational themselves (Aiyar:
2011). Real economic growth in the first three
decades of Independence was a miserly 3.5 per
centayearwhichshowsthattheIndianeconomy
reverted to the old "Hindu rate of growth”.
India's GDP growth was around 3-4 percent till
liberalization of the economy and financial
sector reforms were introduced in the early
nineties. The Indian economy witnessed dismal
scenario with a chaotic fiscal deficit, a difficult
balance of payments situation, spiraling prices,
a fall in industrial production and bearish stock
market. Till 1990, both Pakistan and Sri Lanka
performed better than India. Pakistan's average
annual economic growth rate between 1965 and
1980 was 5.8 percent compared with India's 3.2
per cent. The ratio of exports to GDP for Pakistan
in 1990 was 15.5 percent against India's 7.1 per
cent.
Thus, India's economic opening up in 1991
created the basis for India's re-integration with
not just the global economy but also with its
wider Asian neighborhood. While India's
political freedom is 60 years old, its economic
freedom dates to 1991 when the government
abandoned the planned economy in favor of the
free market. Since then it has become one of the
fastest growing economies in the world (7%-9%
annually with moderate inflation except 2008)
compared to the earlier 'Hindu rate of growth'
(3.5%.orless).
As India approaches the 25th year of that
epochal moment, the objective of the paper is to
examine through the lens of key indicators what
difference took place in India after 25 years of
reforms period, what changes India witnessed
andwhatchallengesemergedtobeaddressed.
Keeping this in view, the paper is divided into
three sections. Section I explores changes and
differences that India registered in 25 years of
reforms. Section II investigates what challenges
emergedduringthereformsperiod,andthefinal
section contains some recommendations to
cope up the challenges, emerged during two
decadesofreformswithconcludingremarks.
Changes emerged in IndiaEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 3

I
India's Growth Story from 1991 to
2016:
WhatChanged:Thereformsstartedin1991have
brought changes and differences. End of
licensingtookplace.Companieswerefreedfrom
quantitative restrictions. Import of plant and
machinery, as well as consumer goods, became
easier. Foreign companies were allowed to enter
JVs with domestic companies. The beginning of
disinvestment of profitable public sector
undertakings occurred. But the revival of sick
PSUs did not gain much traction. SEBI became
the sole market regulator. Indian software
companies were given the concession, and this
grant enabled Indian software companies to
become more cost effective. Peak income tax
rate came down over the years to 30% and some
slabs to three. Tax-GDP ratio has improved, but
stillshortoftheratesseenindevelopednations.
How the Economy Changed: 1971 was Socialist
India. 2014 is India, with flourishing market
economy. India is today the world's 7th largest
economy. India is now among the world's top
exporting countries. Rupee found a realistic
level against the dollar in a liberalized economy.
The reforms changed the lives of not just India's
84 crore citizens then but those of another 36
crore citizens who have been born since. How
much has India changed since then? Since 1991,
India's GDP has quadrupled its FOREX reserves
surging from $9,220 million to $355,560 million,
and exports from $17,865 million to $262,031
million.
It is clear that the country registered
nearly fivefold increase in the GDP,
nearly fourfold in Per Capita Income,
twelvefold in household savings, two
hundred thirty-three fold in FDI, forty-
seven fold in forex reserves, thirteen-fold
in export and almost threefold in the
exchangerate.
India has become a world leader in frugal
engineering, a concept that did not exist a
decadeago.Frugalengineeringcutscostsbynot
just 10-15% under Western levels but by 50-
90%. Innovation has improved productivity so
dramatically that merchandise exports are
growing faster than 30 percent annually. GDP
growth has doubled or tripled since 2004 in six
large, poor states- Uttar Pradesh, Bihar, Orissa,
Chhattisgarh, Jharkhand and Madhya Pradesh.
But for this, the national GDP rate could never
have risen to 8 per cent. Fast growth has trickled
upfromthepoorstatestothenationallevel.
How We Changed: But these are just numbers.
The difference in our lives and lifestyles is a lot
more fascinating. Back in 1991, owning a Maruti
800 (`1.48 lakh in Delhi) was a middle-class
status symbol. Scooters like Bajaj Chetak and
Lambretta accounted for more than half of the
two-wheelers sold in the country. A bottle of soft
drinks, be it desi versions like Gold Spot or
ThumsUp,costjust`4.50.
Today we are one of the consumption engines of
the world as we are guzzling colas, downloading
music on our iPads and zipping around in our
sedans. The cola market is worth about `10,000
crores, up from just `200 crores in 1991 (Table:
1).

Table 1: Changes in Economy and Life Styles
How the Economy Changed
1970-71 1990-91 2010-11 2015-16
GDP (` lakh crore) 4.7 48.8 135.7
Per Capita Income (at constant
Prices) (in `)
8,091 11,535 41,129 93231
Household Savings (`crore) 4,371 1,04,789 12,61,332 12,35622
FDI ($ billion) 0.13 30.3 62
Forex Reserves ($billion) 0.97 5.8 274 355.560
Exports ($ billion) 2.1 18 245 243.68
Exchange Rate (`/$) 7.5 17.9 45.6 67.26
How We Changed
Telephone Subscribers (Million) 0.5 862 979.2
Number of Passenger cars (million) 0.18 2.9 2.7
Air Passengers (Million) 0.48 8.9 57 100
Source: Government Reports, Company Database and Consultancy Firms
SENSEX
SENSEX has shown a twenty fold surge in 25 years of reforms. It was 1,307.34 in 1991 that spurted to
28,000plusinSeptember2016.BSEMarketCapalsowitnessedanincreasingtrend.Itwas`90,836crore
in 1991 that surged to `94, 75,328 crore in 2016. The number of listed firms on BSE also registered more
thanatwofoldsurgeinthesameperiod(Table2).Therupeehasbecomeweakagainstthedollar(Table3).
1991 2016
SENSEX 1,307.34 26,667.96
BSE MARKET CAP (`crore) 90,836 94,75,328
No. Of Listed Firms on BSE 2,861*
5,835
*1992-93
Table 3: Exchange Rate (Rupee vs. dollar (inverted scale)
May 31, 1991 May 31, 2016
20.77 67.26

MACROECONOMY
India's economic performance in the post-reforms period had many positives. It can be gauged from the
fact that the average growth rate in the first ten year period from 1992-93 to 2001-02 was around 6 per
cent. This put India among the fastest growing developing countries in the 1990s. But this growth was
onlyslightlybetterthantheannualaverageof5.7percentinthe1980s.Theten-yeargrowthof6percent
hid the fact that while the economy grew at an impressive 6.7 percent in the first five years of post
reforms,it slowed down to5.4 percent in the next five years- much below the targetof 7.5 per cent which
the government had set for the period. This had led to some questioning about the effectiveness of the
reforms.
It is heartening that in spite of global negative indicators in the economy; India achieved an annual
growth rate of 7.6 percent in 2015-16 and surpassed the annual growth rate of the other growing
economieslikeChina.
The Credit-Deposit growth surged in 25 years. Bank credit in 1991-92 was 9.40 percent that witnessed
morethanthetwofoldspurtin2015-16(20.30percent).Bankdeposit,registeredadecliningtrend.Itwas
11.10percentin1991-92thatdeclinedto9.70percentin2015-16(Table4).
Table 4: GDP and Credit-Deposit Growth
GDP Growth (%, at factor cost) Credit and Deposit Growth (%, y-o-y)
1991-92 2015-16 1991-92 2015-16
1.40 7.6 Bank Credit Bank Deposit Bank Credit Bank Deposit
9.40 11.10 20.30 9.70
Note: Data from 1991-92 to 2011-12 is at 2004-05 base year; 2012-13 onwards, base year is 2011-12
Source:ReserveBankofIndia
The structure of the Indian economy has changed. The share of services as a component of GDP has gone
up considerably since 1991-92 (43.9 percent) to 53.4 percent in 2015-16. Agriculture now contributes
around 14 per cent to GDP, down from 30 percent since the liberalization process began. Today, India is
one of the biggest exporters of rice, cotton, beef and milk products and the world's third largest
producers of farm goods, behind China and the US. The share of manufacturing has remained nearly the
same(Table5).
Table 5: Sector-wise Share of GDP
1991-92 2015
Agriculture & Allied
Activities
Industry Services Agriculture & Allied
Activities
28.5 27.3 43.9 15.4
-16
Industry Services
31.2 53.4
Note: Data from 1991-92 GDP is at 2004-05 Base; 2015-16 GDP is at 2011-12 base
Source: Planning Commission reports, MoSPI
IIP witnessed between the period of 1991-92 and 2015-16 an increasing trend. It was only 0.6 per cent in
1991-92 that surgedto2.4 percentin 2015-16. Wholesale PriceIndex registered a declining trend. It was
13.70percentin1991-92thatdeclinedandbecamenegativein2015-16(-2.50percent)(Table6).

Table 6: IIP and Wholesale Price Index
IIP (%, y-o-y)
1991-92 2015-16 1991-92 2015-16
0.6 2.4 13.70 -2.50
Wholesale Price Index (%, y-o-y)
Note: Data from 1991-92 to 1993-94 is at 1980-81 base year; from 1994-95 to 2004-05 base year is
1993-94;from2005-06,baseyearis2004-05
Source:MoSPI
Theyieldon10-yearGovernmentBondhasregisteredadecliningtrend.Itwas12.23percentin1998that
declinedto7.47percentin2016.FOREXReserveshaveshownatremendoussurgein25yearsofreforms.
FOREXReserveswere$9,220millionin1991-92thatincreasedto$355,560millionin2015-16(Table7).
Table 7: Yield on 10-Year Government Bond and FOREX Reserves
Yield on 10-Year Government Bond (%) FOREX Reserves ($mn)
Nov 30, 1998 May 31, 2016 1991-92 2015-16
12.23 7.47 9,220 355,560
Source: RBI
PovertyRatio
Poverty ratio has declined in the same period of reforms. It was 45.3 percent in 1993-94 that fell to 21.9
percentin2011-12(Table8).
Table 8: Table Population below Poverty Line (%)
1993-94 2004-05 2009-10 2011-12
45.3 37.2 29.8 21.9
Source: Tendulkar Committee report
PUBLICFINANCE
Tax revenue of Central Government from Direct tax as % of GDP was 10.00 percent in 1991-92 that
remained almost stagnant in 2015-16 (10.24 percent). The share of indirect tax in the revenue of Central
governmenthasdeclinedinthesameyear(Table9).
Table 9: Tax Revenue of Central Government and Direct Tax
Tax Revenue of Central Government (as % of GDP) Direct Tax (as % of GDP)
Direct Tax Indirect Tax Gross Tax Corporate Tax Personal Income
Tax
1991-92 2015-
16
1991-
92
2015-
16
1991-
92
2015-
16
1991-92 2015-16 1991-92 2015-
16
10.00 10.24 7.74 4.58 2.26 5.66 1.2 3.3 1.0 2.2

A bigger cause for alarm was the fall in the government's capital expenditure- from 4.32 per cent of GDP
in 1991-92 to 1.71 percent in 2015-16. Ideally, the government's expenditure should be boosted
particularly when its revenue spending has been rising rapidly. While its economic logic is recognized at
a time when public investments have acquired greater criticality in reviving growth, even the present
governmenthasmanagedtoincreasecapitalexpenditureonlybyasmallmargin(Table10).
Table 10: Indirect Tax and Expenditure of Central Government
Indirect Tax (as % of GDP) Expenditure of Central Government
(as % of GDP)
Customs Excise Service Tax Revenue Capital
1991-
92
2015-
16
1991-
92
2015-
16
1991-
92
2015-
16
1991-
92
2015-
16
1991-
92
2015-16
4.3 2.1 4.3 2.1 0.0 1.5 12.21 10.89 4.32 1.71
Source:RBI,BudgetDocuments,PayCommissionreports
The government's expenditure on subsidies also suggests that its yearly success has been nullified by
subsequent years of neglect. Subsidies expenditure declined from 1.8 percent of GDP to about one per
cent by 1995-96. In spite of many schemes, including the launch of the direct benefit transfer program
and price reforms to keep a check on subsidies, the expenditure under this head has inched back to 1.7
percentofGDP(Table11).
Table 11: Foreign Trade and Expenditure on Subsidies
As a consequence of fiscal prudence and a falling share of debt, interest payments too declined from
closetofourpercentofGDPin1991-92around3.2percentin2015-16.Defenceexpenditureas%ofGDP
hasdecreased(Table12).
Table 12: Defence Expenditure and Interest Payments
The success has been registered in the area ofgovernment debt. The government's debt was estimatedat
over63percentofGDPin1991-92.Lastyearitdippedtoabout50percent(Table13).
Foreign Trade ($mn) Expenditure on Subsidies
(as % of GDP)Exports Imports
1991-92 1915-16 1991-92 1915-16 1991-92 1915-16
17,865 262,031 19,411 380,665 1.82 1.73
Defence Expenditure (as % of GDP) Interest Payments (as % of GDP)
1991-92 2015-16 1991-92 2015-16
2.43 1.75 3.95 3.23

Table 13: Government Staff & Pay and Central Government Debt
Total Government Staff Pay of Government Employees
(as % of GDP)
Central Government Debt
1991-92 2014-15 1991-92 2014-15 1991-92 2015-16
4,139,256 3,302,000 1.82 1.12 63.42 50.33
The government's fiscal deficit has been kept under reasonable control. It is important to note that two
yearsafterthelaunchofreforms,thegovernment'sfiscaldeficitin1992-93rosetothehighest-everlevel
of 6.8 per cent of gross domestic product or GDP in the post-reform era. After that, there was steady
compression of the fiscal deficit. Though there were years of slippages and recovery, the direction of
fiscal deficit was southward and by 2007-08 it reached a record low of 2.5 percent of GDP. After that
recovery, however, thanks to the global financial meltdown and the government's attempt to reduce tax
rates to provide more money for the people, the fiscal deficit kept rising to reach 6.5 per cent in 2009-10.
Since then, government re-imposed fiscal discipline and brought the deficit down steadily to reach 3.9
percentofGDPin2015-16(Table14).
Table 14: Revenue Deficit and Gross Fiscal Deficit
Revenue Deficit (as% of GDP) Gross Fiscal Deficit (as % of GDP)
1991-92 2015-16 1991-92 2015-16
2.41 2.80 5.4 3.9
With Goods and Services Tax or GST soon to
become a reality in India- the biggest tax reform
after 1991- policymakers are hoping for an
upheavalintheeconomy.
India's telecom Industry is one of the finest
examples of the boom in a sector post the
economic liberalization through 1991 reforms.
Post the 1991 economic liberalization; the
industry emerged as one of the fastest growing
sectors India has ever witnessed. The country's
telecom subscriber base was less than a 10
million in the mid of 1990s. It soared to more
than 100 times in the past two decades to over a
billionin2015-16.
II
Challenges: The economic reforms of 1991 have
changedIndiaunrecognizably.Nodoubt,Indiais
emerging as an important driver of growth in the
Asian region. Indian economy has shown great
resilience and has been on a sustainable growth
path. However, there is still a large unfinished
agenda. Challenges have emerged during two
decadesofreformsthatshouldbeaddressed.
Jobless Growth: Despite the rapid recovery, the
unemployment rate in India remains high. Very
little is reliably known whether the growth of
India has generated adequate employment
opportunities or has remained jobless in nature.
According to the Economist, India is not too far
behind with a joblessness rate of 10.7 per cent in
2009. But this is clearly only a guestimate as the
latest official number on the rate of
unemployment is eight per cent on a daily status
basis in 2007-08. However, according to the
government, the unemployment rate fell to 2
percent in 2009-10 (July-June period) from 2.3
per cent in 2004-05; debunking the theory the
high economic growth is not generating jobs.
However, the fall in the unemployment rate has

Budget estimates for 2016-17. What about the
key fiscal policy concerns then and now? In
1991-92, the big task for Manmohan Singh was
to reform taxes and reprioritize the
government's expenditure program to make it
more clean, efficient and effective. Over the
years, the Budgets have streamlined the fiscal
policy and made it more stable and reasonably
low, even though little progress has been made
in plugging leakages or removing exemptions.
The significant change has been the lack of
surprise element in Budgets over the tax rates.
Once the direct tax regime is in place, hopefully
in the next couple of years, whatever surprise
element that remains in the government's tax
rateswoulddisappear.
That, however, cannot be said of the
government's expenditure program. The
concerns that prevailed then dog the
government of today, like subsidies for a host of
commoditiesincludingfertilizersandpetroleum
products.
Income Inequality: Inequality in India has
reached epic proportions. Income inequality in
India is so high that including India in a global
study of inequality it scores by about five per
cent. Unsurprisingly, the study labels India a
"high-inequality-driver. But nothing makes this
more apparent than evidence that the average
per capita income of 90 per cent of India is half
the national average of ` 5050 per month. This
implies that the top 10 percent earn more than
54 percent of total national income, worse than
the US (50.4 percent in 2012) where inequality
has already been designated as a "defining
challenge" by the current administration. Also,
despite being at the bottom of global median per
capita wealth rankings (113th of 140), India is
ranked near the top (13th of 140) of the global
inequality rankings. This combination of low
wealth and high inequality places us in the
questionable company of countries such as
not been commensurate with economic growth.
The puzzling aspect of the latest data published
by NSSO for 2009-10 is that it not only shows
niggardlyemploymentgrowthbutalsodeclining
rates of unemployment, according to all the
three status measures between 2004-05 and
2009-10. On a daily status basis, this declined
from 8.2 per cent to 6.6 per cent over this period.
Onalongertermbasistoo,thisdeclinedfrom2.3
percentto2percent.
Another worrying area is that the female labor
force per 1,000 populations declined to 233
during2009-10from294during2004-05.
There is considerable divergence between states
in the quality of the investment environment-
the states of southern and western India are in a
different league compared to their northern and
easterncounterparts.
Subsidy: In sharp contrast, however, is the
government's poor performance on the subsidy
front. In 1991-92, Manmohan Singh had brought
the government's subsidy expenditure down to
1.8 percent of GDP, from 2.14 percent a year ago.
In 2008-09, subsidies went up to a record level of
2.44 per cent of GDP and declined marginally to
1.73percentin2015-16.
The budget estimate for 2016-17 is a little lower
at around 1.68 percent, but what it shows is that
successive governments have failed to make a
significantimpactonsubsidies.
Government Expenditure: An even bigger
problem affects the government's expenditure
pattern in this period. Pranab Mukherjee took
pride in announcing how the central
government's total expenditure had crossed the
`10 lakh crore-mark in 2009-10. However within
that rising expenditure, the share of the
government's capital expenses has fallen
steadily- it is down from 4.46 per cent of GDP in
1991-92tolessthantwopercentin2009-10.The
trend has not changed significantly even in the

Russia, Ukraine, Kazakhstan and Zimbabwe
(Shastri,Rajiv:2014).
High Food Inflation: Food inflation has tended
to be on the higher side that is a challenge for
India. The CPI-IW food inflation average for the
period 1971-72 to 2015-16 is 8.3 per cent. The
cost of food in India increased 7.55 percent in
May of2016 over the same month in the previous
year compared to 6.32 percent in the last month.
It is the highest food inflation rate since August
2014. The price of pulses increased the most
(31.57 percent from 34.13 percent in the
previous month), followed by sugar (13.96
percent from 11.18 percent) and vegetables
(10.77 percent from 4.82 percent). Prices of
fruits also grew at a faster pace (2.64 percent
from 1.66 percent). Food Inflation in India
averaged 8.52 percent from 2012 until 2016,
reaching an all-time high of 14.72 percent in
November of 2013 and a record low of 2.15
percentinJulyof2015.
Nutrition indicators remain terrible. Investment
inagricultureislagging.
III
Now the question arises how a growth rate of 10
percent can be maintained with an inflation rate
of 5 percent. This can be done if three issues,
namely energy, reforms, and governance, are
addressed.
It is true that one of the greatest impediments to
India's growth is its growing budget deficit. A
recent report by Standard & Poor's pointed out
that the Indian government should pay specific
attention towards reducing its deficit in public
sector spending. It is, indeed, imperative that
government should reduce subsidies in sectors
such as fuels that would go a long way towards
decreasingthebudgetdeficit.
One core reality remains that although the
country imports 80 percent of its crude oil
requirement, it continues to maintain price
controls on three sensitive petroleum products:
diesel, liquefied petroleum gas (LPG) and
kerosene. The government aims to insulate
consumers against high global crude oil prices.
And, although petrol prices were deregulated in
June 2010, the current prices continue to cause
under-recoveries to oil companies, especially
the public sector undertakings. RBS Asia
Securities, Singapore, estimates that "with
every $10 increase in crude oil price, India's
current account deficit increases by 50 basis
points, and the fiscal deficit rises by 20-30 basis
points (because of the current subsidy on LPG,
kerosene,anddiesel)…"India'sGDPfor2010-11
isestimatedat$850billionwithourfiscaldeficit
estimatedat4.8percentofGDP.
Considering the above, the primary agenda of
the Indian government must be to address the
country's requirement for energy through
renewable and internal sources, thereby
reducing dependence on imports and reducing
the impact on current account deficit
(Haribhakti:2011).
In a recent study by BMI, massive energy
investment is required to achieve targeted
economic expansion. To deliver sustained GDP
growth of8 per centtill 2031-32, primary energy
supplyneedstogrowuptofourtimesthecurrent
consumption, installed electricity generating
capacity needs to increase six or seven-fold, and
the coal requirement needs to triple. Total
funding from the government for the 30-year
period will be about `850-1,050 billion that
includes an investment of `50-60 billion during
11th Five- Year Plan and an investment of `150
billionduringthe12thPlanperiod.
However, India's growth is driven by
consumption. Besides its investment in
renewable energy, India will also have to build
the required infrastructure to use its internal

resourcestomeetenergyrequirements.
The second thing India needs to do is to get
reforms back on track and speed up
disinvestments- not just of public sector
undertakings but also of departments of
ministries. Instead of investing in fixed deposits,
Indians should be given an avenue to invest
directlyintoitscorepublicservices.Thisrouteof
investment will ensure that India is owned by
Indians, not by the government or its
institutions, and neither by foreigners through
FDI.
The third and final thing India needs to ensure is
transparency and accountability in all its
economic activities and keeping corruption in
check. Crony capitalism rather than free
competition prevails in many sectors, especially
real estate, natural resources and government
contracts, making politicians millionaires on an
unprecedented scale. Government services-
subsidized food, employment programs,
education, health-care are dogged by massive
absenteeism, corruption, and leakages. So India
needspoliticalreformsalso.
Incorporating the concept of public-private
partnership will also necessitate corporate
governance implementation that will go a long
way towards fighting corruption and
inefficiency.
EPILOGUE:
We can conclude that reforms have made India
one of the biggest and fastest growing
economies in the world. This has opened up new
opportunities on a global scale for millions of
educated Indians as skilled workers,
professionals and entrepreneurs, improved
living standards across the board, brought down
poverty, raised literacy and generated resources
never imagined before the redistribution to the
poorthroughofficialschemes.
Clearly, India has much to celebrate by
the way to go in making this growth
process more socially, economically and
regionallyinclusive.
Seizing the opportunities for reforms today- to
create jobs, improve access to quality education
and health, develop infrastructure, and ensure a
cleaner environment- will make it possible to
harness globalization and realize India's
potential in the decades ahead. After all,
economic reforms have sufficed to create
miracle growth. Governance still needs a
miracle.
REFERENCES:
qAiyar, Swaminathan S Anklesaria (2011): “20 Years to
anEconomicMiracle”,TheEconomicTimes,22June
qCommerceMinistryofIndia
qEconomicOutlookofdifferentyears
qEconomic Survey for 2010-11 and 13th Finance
Commission
qGovernment Reports, Company Database, and
ConsultancyFirms
qShastri, Rajiv (2014): "Inequality is a Taxing
Business," The Business Standard, March 28.

Jitender | Research Scholar, School of Management Studies, JNTU Hyderabad, Kukatpally,
Hyderabad–500085.Email:jitenderips@gmail.com
ProfessorAnilK.Saxena|SVPnationalpoliceacademy,Shivarampally,Hyderabad.
Email:anilsaxena1977@gmail.com
Dr.A.R.Aryasri | Professor, CBIT and Former Professor & Director, School ofManagementStudies, JNTU
Hyderabad,Kukatpally,Hyderabad–500085.Email:aryasri9@gmail.com
ABSTRACT
Purpose:TheobjectiveofthepaperistostudycommunitypolicingwithreferencetoHyderabad.
Approach: Data was collected from 60 citizens based on convenience and snowball sampling from
different colonies located in Hyderabad in Greater Hyderabad Municipal Corporation limits. The
hypothesis has been formulated and tested using SPSS software, and the results have been arrived
at.
Findings: The results from statistical analysis of the data indicates that the citizens feel happy that
police maintains close contact with them through Police – Public interaction programs such as
maithri.
Practical implications: It enables the police department to understand that the citizens wish to
cooperate with police to do a better job in providing protection and security to the society. It also
indicates the community policing has impacted positively and created confidence and trust in
publictowardsPoliceDepartment.
Originality/value: Although there does exist literature on community policing, limited literature
could be found focusing on public opinion. This study may serve as a point of reference for future
research in this area of concern.
IMPACT OF COMMUNITY POLICING ON SOCIETY:
A CASE STUDY
Index Terms - Community, police, public, service, society
INTRODUCTION
ccording to U.S. Department of Justice
Washington, DC Community policing is '
Aphilosophythatpromotesorganizational
strategies that support the systematic use of
partnerships and problem-solving techniques to
proactively address the immediate conditions
that give rise to public safety issues such as
crime, social disorder, and fear of crime.'
Community Policing is a new concept that shows
the collaboration between the police and the
community that identifies and solves
community problems. In this concept, all
members of the community become active and
work with co-operation of police to enhance the
safety and quality of the community. The
neighborhood patrol officers, backed by the
police organization, help community members
mobilize support and resources to solve
Impact of Community PolicingEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 13

because in spite of efforts by various police
organizations there has been no reduction in
crimes across different countries. The concept
of community policing has gained momentum,
and there is a vast source of studies available in
the literature. Community policing comprises
t h re e key co m p o n e n t s : Co m m u n it y
Partnerships, organizational transformation,
andproblem-solving.
Community Partnerships refer to collaborative
partnerships between the law enforcement
agency and the individuals and organizations,
they serve to develop solutions to problems and
increase trust in police. Organizational
Transformation involves the alignment of
organizational management, structure,
personnel, and information systems to support
community partnerships and proactive problem
solving. Problem Solving includes engaging in
the proactive and systematic examination of
identified problems to develop and evaluate
effectiveresponses.
Linkages : To understand a problem, it is useful
tovisualizelinksamongthevictim,offender,and
location and those factors that could have an
impact on capable guardians forvictims (such as
security guards, teachers, and neighbors),
handlers for offenders (e.g., parents, friends,
and probation officers), and managers for
locations (viz., business merchants, park
employees, and motel clerks). Instead of
focusingprimarilyonaddressing therootcauses
ofaproblem,thepolicemustfocusonthefactors
that are within their reach, such as limiting
criminal opportunities and access to victims,
increasing guardianship, and associating risk
withunwantedbehavior.
Community Policing Vs Problem Oriented
Policing: Community policing does not
supplement problem-oriented policing.
Problem-oriented Policing strongly encourages
inputs from community preserving ultimate
problems and enhance their quality of life.
Community members voice their concerns,
contribute advice, and take action to address
these concerns. Creating an effective
partnership will require the energy, creativity,
understanding, and patience of all those
involved.
Community policing started when police
decided to become more involved in local
communities so as to reduce crime activities. It
requires a partnership between police and
individual citizens, colonies, businesses, non-
profit groups where altogether work towards
enhancing peace and collaborate in the
formationofcrimelesssociety.
APPM has described concept of community
policingbyforgingarelationshipbetweenpolice
and public through mythri committees in each
unitofpolicefunctioninginAndhraPradesh.
COMMUNITYPOLICING
Community policing became a buzz word in
policing terminology replacing the old police
terms such as police – public relations, police
teams, etc. From early 1960's till date,
community policing is still an elusive term for
police department meaning different ways of
approachesofpolicing.
Friedmann (1992:4) offered the following
community policing definition in the whole
perspective.
Community policing is a policy and a strategy
aimed at achieving more effective and efficient
crime control, reduced fear of crime, improved
quality of life, improved police services and
police legitimacy, through a proactive reliance
on community resources that seeks to change
crimecausingconditions.
From time to time, there has been a discussion
about involving the public in decision-making
for the issues related to their safety and security

decision-making authority to police, community
policing encourages expansive role for police to
achieveambitioussocialobjectives.
It is held that police cannot claim a monopoly
over fighting crime and police and public are co-
producers of safety and security of people.
Skogen (2003 &2004), Carlos, Ramesh
Devsaran, Goris have described the community
policing approach in the US, Hongkong,
Carribean, and Belgium. They have discussed
forging of a strategic partnership between
police and public to promote a secure and
harmoniousenvironment.
Re-engineer other components of the
organization for the department-wide adoption
of community policing by integration of
philosophy into mission statements, training,
crime analysis, departmental policies,
procedures, and performance measurement
systems.
·Modify organizational structures to support
decentralized decision making and
responsibilityandaccountability.
·Support from the top while practices and
concepts should be developed/evolved at
thecuttingedge.
·Involvemiddle-levelmanager.
·Focus on culture change within the
organization.
·Encourage research and planning to modify
and improvise the implementation of
communitypolicing.
·Draw on local experiences and practice in
termsofwhatworksandwhatdoesnot.
·Focus on public ownership of policing, not
stateorpolicecontrol.
·Build broad public and political support;
community policing must be the City's
programtoidentifythechangeagents.
MAITHRI,THYNAMEISSUCCESS!
Maithri, the Police-Public partnership program
is the name given to Community Policing in
Andhra Pradesh. It orients the way the police
should think and act. It broadens the police
mandate beyond the narrow focus of fighting
crime to include efforts to combat fear of crime
and disorder as well. It outlines an overarching
philosophy that provides an organizational
strategy to motivate the police officers to solve
community problems in new and innovative
ways. It envisages that the police and citizens in
the community should work hands in glove by
allowing average citizens a say in the policy
process, in exchange for their support and
participation.
Maithri rests on the premise that contemporary
community problems require a decentralized
and personalized police approach which
involves citizens in the process of policing
themselves. It is a paradigm shift in the role of
thepolicefrom“workingagainstthebadpeople”
to “working with the good people” in the society.
Consequently, the police take the role of
facilitators and mentors to the society rather
thanremainlawenforcers.
The program became a great grand success, as
people started appreciating police-public
partnership in making the society safer. With
Maithri orientation from gross root level to the
top level, the police emerged stronger in
rendering courteous, compassionate and caring
response and increasing public confidence in
police on maintenance of peace and order and
feelingsafetyfromcrime.
Studies revealed that both public and police
believe that the following programs will build a
strongrelationshipbetweenthemforthebenefit
ofthesociety:
·Liaisonprogramswiththepublic

·Fairnessindealings
·Humilityinpoliceofficers
·Commendationstopublicontheirhelp
·Mutual understanding of concern of each
other
ANDHRAPRADESHPOLICEMANUAL
APPM also prescribes the guidelines for Police-
Public relations, Community Policing (Maithri)
and Community Relations. It prescribes that in a
democratic polity, Police can discharge its
duties effectively only with the cooperation of
people. Public assistance is needed for
prevention and detection, investigation,
prosecution of cases and also for maintaining
peaceduringallmajorsocial,cultural,economic
andpolitical events. Forelicitingandsustaining
such cooperation, constant interaction with the
members of public needs to be organized, by
professional public relations, set up within the
organization.
Police are expected to give an impression in the
mindsofpublicthatthePolicearetheir"friends"
and are meant to help them in the case of need.
The spirit to serve, the need to understand the
problem of others, inherent tendency to
remember one’s job requirement has brought
laurelsforindividualPoliceOfficersandthrough
him entire Police organization. This will help
build good public relation leading to Police-
Public relations. The Manual also prescribes the
agenda and Do's and Don'ts for Police Officers
and Police personnel to maintain constant
publicrelations.
The APPM provides the concept of Community
Police (Maithri) introduced in this State during
theyear2001withfollowingobjectives:
·To meet the felt and expressed needs of
small and varied groups of people in the
community by actively involving them in the
process.
·To organize pro-active measures for
preventionanddetectionofcrime.
·To provide high-quality personalized service
tothepeopleatthedecentralizedlevel.
The size and composition of maithri,
qualification of its members, tenure, issue of
Identification Cards, areas of operation, the
conduct of meetings, keeping records,
preparation of reports, the role of various Police
Officers, rewards and recognition to maithri
members, etc. have been clearly prescribed in
theAPPM.
HYPOTHESISTESTING
Ho: Community policing has no significant
effectoncrimepreventionanddetection.
Serial
no
Dimensions Mean Median Mode
Std.
Deviation
1 Close contact with the public. 4.49 5.00 5 .660
2 Police service to public 4.50 5.00 5 .584
3 Police – Public interaction programm 4.32 4.00 4 .699
4 Necessity of forum for police- public co-operation. 4.01 4.00 4 .932
5 Representatives from political groups 2.98 3.00 3 1.309
6 Family counseling centers 3.99 4.00 4 .842
7 Maithri Committees 3.98 4.00 4 .939
8 Community policing importance 2.69 2.00 2 1.298
9 Ready to volunteer 4.16 4.00 4 .873
Table 1: Community Policing

From Table-1, it is evident that the public feels that police has to maintain close contacts with them for
providing better service to the society with their help and police – public interaction programs. They
expressed that a forum like Mythri committee is essential where both can co-operate with each other
anddonotadvocateforpublicrepresentativestobepartoftheforum.
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 77.701a
24 .000
Likelihood Ratio 73.054 24 .000
Linear-by-Linear Association .349 1 .555
N of Valid Cases 54
a. 20 cells (57.1%) have expected count less than 5. The minimum expected count is.18.
From the Table 2, it is evident that the Pearson
Chi-Square sig. Value is less than 0.05, so it is
concluded that community policing has a
significantimpactonsociety.
The analysis of results clearly indicates that the
respondents strongly feel that formation of
institutional mechanism in community policing
isnecessarytoinvolvethecommunityinpolicing
efforts with the required training to public as
well as police to make it more useful. The
analysis also reveals that family counseling
centers are helpful in the prevention of crime
againstwomen.
The analysis of results also indicates that the
public feels that police has to maintain close
contact with them for providing better service to
the society with their help and Police – Public
interaction programs are helpful. They express
that a forumlike Mythri Committeeis necessary
where both can co-operate with each other. It is
heartening to note that public has given an
excellentresponsetovolunteeringtheirservices
tohelpthepoliceintheirefforts.
This clearly indicates willingness and desire of
larger public in maintaining close interaction
with police and with the intention to help police
do a better job in providing protection and
security to the society. If crime is prevented and
criminals are brought to book, the community
feels safe and secure. It can conclude that if
police and community feel that by mere
introduction and continuity of such community
policingprogram,thecommunitycanfeelsafe.
Select Strategies of Maithri is already in place,
and it has been a point of reference across the
country and abroad. It is time to reinvent the
organizational culture, step up the efficiency
level of the police force, educate them with the
changing expectations of the citizens, empower
them with necessary inputs for behavioural
modification, provide the citizen's confidence
and safety with new workable models for better
community policing. It is time to endeavor for
people's delight through disruptive initiatives.
With the traditional ways of thinking and
incremental improvements, one cannot
continue to meet the different expectations of
thecitizens. Thetopleadershipshouldgetready
to adopt new business models, make greater use
of analytics, and change in other fundamental
ways so that you get prepared for disruptive
innovations. However, the following strategies
need to be continuously addressed to keep the
communitypolicingmoremeaningful:
Continue to evolve the police philosophy
around community policing: It is not a set of
programs around patrolling, bike patrols, or
police substations. Ensure that there is an
overarching philosophy in place that informs all
aspectsofpolicebusiness.
Continuetopromoteorganizationalstrategies:
Let there be changes in organizational

Community policing, the major reform changed
the way of police think and act towards the
community. The community policing concept
provided a direction to police officers to solve
community problems in different ways. Under
community policing, police must serve the
society with the partnership of public.
Community policing makes the citizens involve
intotheprocessofpolicingthemselves.
REFERENCES
·John E. Eck, "Police Problems: The Complexity of
Problem Theory, Research, and Evaluation," in
Problem-Oriented Policing: From Innovation to
Mainstream, ed. Johannes Knutsson, vol. 15 of Crime
Prevention Studies (Monsey, NY: Criminal Justice
Press,2003),79–114.
·AndhraPradeshManual,2015
·Ansari, Sami, and Bruell, Christopher. "Community
Policing and Social Capital: An Interactional Model"
Paper presented at the annual meeting of the ASC
Annual Meeting, Philadelphia Marriott Downtown,
Philadelphia,PA,Nov04,2009.
·Fridell, L. (2004). The results of three national surveys
on community policing. In L. Fridell & M. A. Wycoff
(Eds), Community Policing: Past, present, and future
(pp. 39-58). Washington, DC: Police Executive
ResearchForum,TheAnnieE.CaseyFoundation.
·Kumar, Pramod (1999) Community policing in India;
Finding of citizen's survey, Available online at
th
www.idcindia.orgaccessedon16 October2005.
·Nicholl,C.G.(2000),“CommunityPolicing, Community
Justice and Restorative Justice: Exploring the Links for
the Delivery of a Balanced Approach to Public Safety,”
Washington, DC, United States Department of Justice,
OfficeofCommunityOrientedPolicingServices
·Skogam, W.G., and Steiner, L. (2004) Community
Policing in Chicago, Year 2010, Chicago: Illinois
CriminalJusticeInformationAuthority.
·Skogan W.G. (2006), "Community Policing: the Past,
Present, and Future," The Annie E.Casey Foundation
and the Police Executive Research Forum; Washington,
D.C.;pp.159-168.
·N Tiley, MS Scott –(2012), 'The past, present and future
ofPOP,'policingoxfordjournals.org
·Saran Ghatak (2008), ' The whole extent of evil': Origin
of crime statistics in the United States, 1880 -1930.,
JournalofHistoricalSociology.
·Friedman, Robert R.1992. Community Policing:
Comparative Perspectives and prospects. Newyork:
St.Martin'sPress.
·T.K.Vinod Kumar, IPS, Impact of community policing on
publicsatisfactionandperceptionofpolice,2012.
·Brettchapman (2016), Ideas&Insights: Community
policingrevisited,www.policechiefmagazine.org.
structures to institutionalize its adoption. Get
the implementing agencies aligned to support
partnerships and proactive problem solving in
areas such as training, hiring, reward and
authority structures, technology, and
deployment.
Keep Supporting and strengthening the
systematic use of partnerships: Public safety
problems can be solved better if interactive
partnerships with relevant stakeholders are
encouraged. There could be a broad range of
potential partners including other government
agencies, businesses, nonprofit NGOs,
individual community members, and the media.
Use these partnerships to accomplish the two
interrelated goals of developing solutions
through collaborative problem solving and
improvingpublictrust.
Simplify and structure the problem-solving
techniques: Many problems can be addressed in
a structured, systematic and routine way. Infuse
the problem-solving spirit into all the police
operations and guide decision-making efforts.
Ensure that the collaborating agencies think
innovatively about their responses and view
making arrests as only one of a broad range of
potentialresponses.
Focus on Public Safety Issues : Proactively
address the immediate conditions that give rise
to public safety issues. Encourage agencies to
work proactively develop solutions to the
immediate underlying conditions contributing
to public security problems. While addressing
root causes are important, ensure that focus on
how best the criminal opportunities are kept
limited, access to victims is improved,
guardianship is increased, and associated risks
withunwantedbehaviorareminimized.
Prioritize on social order and public safety :
Policeneedtoaddresssocial disorderandfearof
crime on a priority basis as these significantly
influencethequalityoflifeandhavebeenshown
to be significant contributors to crime. Involve
the public in shaping the role of the police and
theprioritizationofpublicsafetyproblems.

Impact of Terrorism on Foreign Investment in PakistanEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 19
Nadir Shah | Head of Dept. of Management Sciences, Bakhtar University Karte – Char, Opposite of
Ministry of Higher Education, Kabul, Afghanistan, E-mail : muslimj2010@yahoo.com, Cell : + 93
7868276802
IMPACT OF TERRORISM ON FOREIGN
INVESTMENT IN PAKISTAN
ABSTRACT
This study has inspected and checked the effect of terrorism, consumer price index, exchange rate,
and the interest rate on overseas investment inflows as a whole in the country. The overseas
investment includes both Foreign Direct Investment and Foreign Portfolio Investment inflows in
Pakistan. The study used 12 years' time series quarterly data from 2003 to 2014, which has been
obtained from the central bank’s website of the country, South Asian Terrorism Portal and
International Monterey Fund. The OLS model and multiple regression analysis have been applied
through Events Software to examine the relationship of the above-mentioned variables. The
Breusch-Godfrey Serial Correlation LM Test and Normality Test are applied to examine the serial
correlation, auto correlation and residuals are normally distributed in the data. All the variables
terrorism, CPI, exchange rate and interest rate are significant at 5% level and have a positive
relationship with foreign investment. Results indicate that there is no serial correlation, auto
correlationandresidualsarenormallydistributed.
INTRODUCTION
Terrorism means any activity that creates fear
and harassment among the people of a country
and the doers who createthat problem are called
terrorists. (Shahbaz et al, 2013). Terrorism is
implemented as a plan to gain specific
achievements through fright (Laqueru. W,
2015). Terrorism that exists in Pakistan has
threatened its sovereignty and has crippled its
economy. It has brought the cost of wealth and
savers,aswellassightseeingtradeisdecreasing
and government requires spending on avoiding
of terrorist activities. (World Times, 2015).
Terrorist activities are negatively affecting the
FDI of the country. Terrorism activities decrease
the foreign investors’ confidence, which
decreases the FDI. (Kinyanjui. S, 2014). This
study explains that the main source of universal
economy is FDI and enhancing extremist
activities diminishes FDI. It mentions the few
sectors that are vulnerable to violence. Such
kind of situations increases demand for exterior
wealth and projects which develop economy’s
growth.(Haider.M&Anwar.A,2014)
Overseas investment is the portion of properties
and plants abroad.Improving investment abroad
is a degree of universal economic growth.
(Masood, 2015). Overseas investment is
essential for a country's development, for
enhancing industrial development, using
resources in effective and efficient ways,
attracting investors, enhancing innovation,
increasing demand of raw material and capital
goods. Pakistan must attract foreign investors,
find new international markets in the world and
this is the way for its development. Pakistan
should create better relations with a developed

country.(Hussainetal,2014).
Foreign portfolio investment and FDI can
improve the financial development of a nation.
Every country must attract foreign investments
because these bring lots of benefits to the host
country such as technology, knowledge, and
skills. Sharif et al. (2014) explain in their study
by using Auto regressive Model that FDI has a
negative impact on Net portfolio investment
(NPI) while all other variables are positively
related to NPI. The study suggested that extra
protection should be given to foreign investors
by the government of Pakistan. Terrorism should
be eradicated to flourish market capitalization
as well as to improve financial institutions in
Pakistan. The government of Pakistan may
provide a welcoming atmosphere to the foreign
investors. This study explains that interest rate
on deposit in Pakistan may also be increased for
attractingFPI.
Overseas investment has a direct relation with
local production, occupation, and trade but the
indirect relation with new introductions
(Tasneem et al, 2011). It is due to the
merchandises that are made in the host nation
by abroad savers. The findings showed that
overseas investment can balance domestic
initiatives and skills during improvement of the
economy. CPI is a degree of a fraction of charges
over time. It amounts variations of commodities
and services which is devoured by the people,
the variations have an effect on the financial
ability of people's salaries, when values of
various commodities and services are constant
at the similar period, so the price index
reproduces regular crusade. It is also a degree of
variousvaluestagesamidvariouscapitals,areas
and nations at a similar point in the period. It is
practiced straightly and circuitously by home-
holdstogratifytheirbasic needs.Itisadegreeof
the inflation rate and counted for the cleared
group of client goods. Consumer Price Index is
followed by many experts. CPI is assigned to
find times of rising and devaluation. (CPI
Manual, 2015).CPI has a positive relation with
FDI in Pakistan. (Saleem et al 2013). When
consumption of electric power is increased so
inflow of FDI increases and deficit is decreased
inthebalanceofpayment(Ahmadetal,2014).
Amna et al. (2012) mentions that FDI and GDP
are significant and positive but inflation and
GDP have a significant negative relationship.
The study further suggests that overseas
investment can enhance the economy in Asian
nations. FDI increases employment and profits
in the host country. The interest rateis a network
movement of reserves between financial
institutions. Equilibrium hits amid willingness
for reserves by debtors and delivery of reserves
from depositors by balancing of the stage of
interest rates. The variations in the volume of
reserves can support expenditure strategies of
mortgagers and vice versa disturb the phases of
clients, corporate expenditure, profit,
macroeconomic and stages of values (Richard
D.C. Trainer, 2015). Ahmed et al. (2013)
explains that country development rate and also
interest rate are positive but CPI and exchange
rate have irrelevant relation with overseas
investment arrivals in the nation. The exchange
rate is the conversation rate between two
moneys and facilitates foreign firms with
attractive packages and encourages export-
oriented FDI which promotes human capital,
skills, and latest technology. Policy makers
should not ignore business related problems like
inflation, infrastructure, interest rate and
power. Some aspects can affect the exchange
rate like economic indicators and economic
conditions of the nation (Business Dictionary,
2015).

RESEARCH OBJECTIVES
The key objective of this study is to check and
evaluate advantages and disadvantages in
relation to terrorism, CPI, exchange rate and
interest rate which has ultimately affected the
growth of the Pakistan economy. This has been
achieved through analyzing foreign investment
in Pakistan for the period (2003 – 2014). There
are research aims to achieve the following
objectives;
·To identify the effect of terrorism on
ForeignInvestmentinPakistan.
·To identify the effect of CPI on FI in
Pakistan.
·To identify the effect of exchange rate
onFIinPakistan.
·To identify the effect of interest rate on
FIinPakistan.
LITERATURE REVIEW
Johnston. R. & Needless. M (2005) explained
the impact of terrorism on financial markets
between September 17 and September 21 and
found proof that U.S. capital markets
maintained quicker than other markets in the
world following the September 11 attacks than
in earlier periods when surprise terrorist attacks
shocked global markets. The authors said that
one possible reason for the most limited impact
oftheterroristattacksontheU.S.marketsstems
from the Federal Reserve's accommodative
policy, which was able to calm and stabilize the
economy through the U.S. banking and financial
sector. Acharya. A (2006) explained in his study
that the Bali bombings had an adverse effect on
the domestic economies and on tourism. The
study further clarified that certain scholars said
Bali bombings were insignificant and only 4-6
percent of tourism had an influence on GDP of
Indonesia.
Anaraki. N (2012) elaborates that terrorism has
a negative effect on FDI flows and the levels of
GDP per capita in the Middle East and North
Africa. It is concluded that terrorism has
statistically adverse effects on the flow of FDI
and GDP per capita in most countries in the
region, except in a few outliers like Iran and
Syria. The study suggests that countries having
higher levels of terrorism issue are likely to have
ahigherelasticityofGDPpercapitatoterrorism,
whereas countries with lower levels of terrorism
issue experience smaller elasticity of GDP per
capitatoterrorism. Like the elasticity ofGDP per
capita to terrorism is much higher in Libya,
Lebanon, Jordan, and Syria. Use. E & Polat. O
(2013) have explained in the study that
terrorism events in Turkey decreased production
in new firms in affected provinces after three
years and no effect on closed companies. The
study suggested that control of terrorism effects
on business operations which minimize
scarinessofbusinessholdersandcustomersand
provide incentives to them. The government
persuades new investments facilities. These
policies will finish effects of terrorism events on
domesticbusinessoperations.
Lynch et al. (2013) studied Dow Jones, the Ibex,
and the FTSE, the CAC40, the MIB, the DAX and
the Nikkei stock markets. The results indicated
that all markets were abnormal and were
meaningfully dissimilar from the mean earlier
month performance. The attack was decreasing
with the passage of time so the terrorist attack
had a small effect on stock markets and risk of it
would affect share prices. Mushtaq. N (2013)
explained that most of the impacts of terrorism
on Pakistan were negative but there were
positive effects that could accrue from the war
against terrorism. These included the basic
realization forgreaterself-sufficiency, reformin

and integration of FATA, strengthening
democratic institutions, weaponisation of the
society, revamping of foreign policy, regional
cooperation by trading and energy pipelines,
normalization with India and greater
cooperation with Iran and managing relations
with the US. After all, politics and war against
terrorism are correlated and nations have
learned some lessons from economic and
politicalstressfultimes.
Krishna et al. (2003) discuss that there is a
relationship between FDI, GDP and market
capitalization and also between FPI, GDP and
market capitalization and both FDI and FPI are
not related to each other in long term
relationship and they are independent. FDI has
more spillover than FPI and has Grangercause in
the short term. The study suggests that FDI and
FPI should be considered independently to
encourage investment as the study considers
only inflow capital of FDI and FPI so to make
paradigm of inflow and outflow capital for both
FDI and FPI investment. Taylor & Sarno (1997)
elaborated that Global and country-specific
factors could play an important role in
explaining more inflow of FPI in Latin America
and Asia. The global factors were causing
fluctuation in the world economy and financial
markets. The country-specific factors sent back
profit taking opportunity and perceived
investmentriskofthehostcountrylikedomestic
labor, raw materials, openness, the rate of
return,country'screditrating…etc.
Shumaila et al. (2012) argued that FDI,
remittances, export and inflation had positive
and long run relationship. The study further
suggested that policy makers for high inflation
should follow capital inflows such as
remittances which not only increased the
consumption but also enhanced the investment
for economic growth. Haider et al. (2012)
mentionthatPakistanhasanemergingeconomy
which is in need of foreign investment to
enhance the local economy, job opportunities,
knowledge, and technology. The study shows
that when Pakistani currency depreciates, FDI
increases by 0.61 units due to 1 unit increase in
the exchange rate and volatility complicates FDI
in Pakistan. Inflation has a positive effect on FDI
and by 1 unit Trade openness increases and FDI
increases by 4.632 units. The study suggested
that policy makers should control exchange rate
volatility and avoid exchange rate fluctuations
by proper planning and manipulate foreign
exchange market and enhance consistency of
exchangeratetoattractnewFDI.
Faiza et al. (2013) explain that FDI has a positive
relation with GDP and inflation which means
that when GDP rate and inflation rate increase
so FDI also increases. The study suggested that
to provide opportunities to persuade foreign
investors, FDI indirectly brings productivity gain
by spillovers, focuses on enhancing of the
economy to promote GDP rate, minimize indirect
taxes and develop cottage industry. Kun et al.
(2005)saythatexchangerateuncertaintyhasan
adverse effect on a company's outward FDI
regardless of whether the company is market-
oriented or cost-oriented. But currency
depreciation of cost-oriented improves the
outward FDI and not of market-oriented
companies. The study concluded that exchange
rate level and volatility had a significant effect
on Taiwanese companies' outward FDI into
China. The relationship of the exchange rate and
FDI was depending on investing companies'
motives.
Emmanuel. A & Oteng. E (2014) argued that
consistent exchange rate and interest rate could
enhance FDI and interest rate had an indirect
effect on FDI. The study suggested that policy
makers should control exchange rate and

interest rate fluctuations. Exportation policies
needed improvement to minimize government
borrowings. Chingarande et al. (2012) mention
that interest rates have no significant effect on
FDI inflows and therefore don't consider them
for policy decisions. The study further suggests
that policy makers should decrease country risk
levels and persuade campaigns to improve
peace, anti-corruption, and transparency for
longruninflowsofFDI.
DATA & METHODOLOGY
One of the important and key reasons of
motivation for the study was to determine the
impact of terrorism on Foreign Investment. As
terrorism increases the risk also increases and it
affects the investment decisions and policies,
the higher risk may be indicative ofhigher payoff
in foreign investment. It permits us to find the
impact of terrorism on foreign investment in
Pakistan. Foreign investment is measured in
terms of both FDI and FPI, they are components
of Balance of Payments under the account of
Capital and Financial accounts. The time series
secondary data on foreign investment have been
acquired from the website of State Bank of
Pakistan. The time series secondary data of CPI,
exchange rate, and the interest rate have been
obtained from International Monetary Fund’s
website. Terrorism is measured in terms of total
fatalities and the time series secondary data of
terrorism has been taken from the South Asian
Terrorism Portal website. Foreign investment is
used as a dependent variable and terrorism, CPI,
exchange rate, and interest rate are considered
as independent variables in this study. Quarterly
time series secondary data of dependent and
independent variables have been considered in
thisstudy(2003-2014).
The OLS model that is ordinary least square or
least square errors regression or just least
squares is one of the most basic and most
commonly used prediction techniques among
people and researchers in statistics, finance,
medicine, economics, and psychology. It
measures the accuracy which differentiates it
from other forms of regression. OLS model is
used in this study which previous researchers
also applied in their papers. (Qaiser. I, Dr. Sohail.
N, Liaqat. M & Mumtaz 2012, Tasneem. A & Aziz.
B 2011, Shahbaz. A Javed. A, Dar. A Sattar. T
2013,Bibi.S,Akram.U&Bibi.2012)
This study applied log to normalize the data and
analyzed the impact of terrorism, CPI, exchange
rate and the interest rate on foreign investment
in Pakistan by using multiple regression. For the
purpose of empirical analysis through OLS
methodology the following equation is
estimated;
EQUATION:
Log(FI )= â + â log(T ) + â log(IR ) +t 0 1 t 2 t
â log(Ex ) + â log(CPI )+et3 t 4 t
â = Intercept0
Â = Effect of independent variablesn
FI = Dependent variable foreign
investment in Pakistan
T = Independent variable terrorism
IR = Interest Rate
EX = Exchange Rate
CPI = Consumer Price Index
E = Error term
RESULTS & ANALYSIS
Here are the outcomes of variables and applied
multi-regression through OLS model. Multi
regression has been used to check the
relationship of the impact of terrorism, CPI,
exchange rate and the interest rate on foreign
investment in Pakistan. The analysis is based on
resultsofthevariables.

Pre-Regression Analysis Tests:
Serial Correlation
Probability
Heteroscedasticity
Probability
Normality
Probability
Durbin-Watson
Value
F-test
Probability
0.146535 0.821856 0.178478 1.600509 0.000095
The probability of Serial Correlation LM Test is 0.146535 percent which is greater than 5% and it shows
that there is no serial correlation in the data. The probability of Heteroskedasticity Test is 0.821856
percent which is greater than 5% and it shows that there is no Heteroskedasticity. The probability of
normality test is 0.178478 percent which is greater than 5% and it indicates that residuals are normally
distributed. The Durbin-Watson shows that there is no issue of multicollinearity in the data. The F-
statisticisalsoshowingthatoverallmodelisagoodfit(Dr.Hussain,2015).
RegressionAnalysis:
It is used to find numerical results of the data and interpret them accordingly to the outcomes of
variables.Aswerunmulti-regressionthroughOLSmodelsotheresultsareshowninthefollowingtables
with interpretation. The coefficient is used to show a change of each independent variable in the
dependent variable. T-statistic will be compared with theoretical value 1.96 and P-value will show the
significanceofeachindependentvariable.
Table. 2
Table. 1
Variables Name Coefficient
Total Fatalities 0.387476
CPI 5.082247
Exchange Rate 10.42170
Interest Rate 2.137062
R-Square 0.423273
Adjusted-R square 0.368346
t-statistic P-value
0.0257
0.0247
0.0037
0.0100
2.312899
2.329864
3.072605
Independent Variables: Total Fatalities, CPI, Exchange Rate and Interest Rate
In table 2 coefficient oftotal fatalities shows that 0.3874 percentvariation is explained in the dependent
variable (foreign investment) by total fatalities. Therefore, the results suggest that total fatalities
significantly affect FI at 95 percent confidence level. The coefficient shows that it has a positive
relationship with foreign investment and it is statistically significant at less than 0.05. T-value is more
than 1.96 theoretical value so it means that there is a relationship between total fatalities and foreign
investment. If total fatalities are increased by one percent so foreign investment will be increased by
0.3874 percent on average quarterly. The coefficient of consumer price index shows that 5.082247
percent variation is explained in the dependent variable (FI) by CPI. Therefore, the results suggest that
CPI significantly affects FI at 95 percent confidence level. The coefficient shows that it has a positive
relationship with foreign investment and it is statistically significant at less than 0.05. T-value is more
2.697397

than 1.96 theoretical value so it means that
there is a relationship between CPI and foreign
investment. If consumer price index is increased
by one percent so foreign investment will
increase by 5.082247 percent on an average
quarterly.
In table 2 coefficient of exchange rate shows
that 10.4217 percent variation is explained in
the dependent variable (FI) by Exchange Rate.
Therefore, the results suggest that Exchange
rate significantly affects FI at 95 percent
confidence level. The coefficient shows that it
has a positive relationship with foreign
investment and it is statistically significant at
less than 0.05. T-value is more than 1.96
theoretical value so it means that there is a
relationship between exchange rate and foreign
investment. If the exchange rate is increased by
one percent so foreign investment will increase
by 10.4217 percent on an average quarterly. The
coefficient of interest rate shows that 2.13706
percent variation is explained in the dependent
variable (FI) by the interest rate. Therefore, the
results suggest that interest rate significantly
affects foreign investment at 95 percent
confidence level. The coefficient shows that it
has a positive relationship with FI and it is
statistically significant at less than 0.05. T-value
is more than 1.96 theoretical value so it means
that there is a relationship between interest rate
and foreign investment. If the interest rate is
increased by one percent so foreign investment
will increase by 2.137062 percent on an average
quarterly.
The results are shown in above table by using of
OLS model in Eviews software. R-square is
showing that 42.3273 % variation of foreign
investment is explained by total fatalities, CPI,
exchange rate and interest rate. Adjusted R-
squareisusedtocorrectRsquaretomoreclosely
reflect the goodness of fit the model. Although
the model is weak but all the variables are
significant and have a positive relationship with
foreigninvestment.
CONCLUSION
Foreign investment is the backbone of economic
growth in emerging countries. Portfolio
investment is increasing nowadays than FDI in
Pakistan (Board of Investment of Pakistan,
2015). The results indicate that terrorism, CPI,
exchange rate and interest rate have a positive
relationship with foreign investment. The above
discussion proves that Null hypothesis is
rejected that terrorism has no effect on foreign
investment in Pakistan. The other Null
hypotheses are also rejected that CPI, exchange
rate, and interest rate have no effect on foreign
investmentinPakistan.AccordingtoDawnNews
2015 FDI increased to 615 million dollars from
Feb-2014-15. Therefore, all the variables have a
positive relationship with foreign investment in
Pakistan. It is also found in the trend analysis
that terrorist events increased in the third
quarter of 2009 and that decreased the foreign
investment at the same time to 67 million
dollars. As the terrorism events were of short
term so the foreign investment increased again
from 2009 to 2014.The study concludes that
terrorist events have a negative impact on FDI
but positive impact on FPI in Pakistan. As both
investments are combined and have a
relationship with terrorism as the economy was
in distress so investors invested in FPI so FPI
increased. The other variables like CPI,
exchange rate, and interest rate also had an
impact on foreign investment. One of the
reasons behind this is that the investors have
diversified their portfolio in stock markets and
also diversified their investment instead of
direct investment and the terrorist events were
for short-term. Those investors who invested

directly in stock markets and diversified their
investments so their returns increased and thus
foreign investment inflows also increased in
Pakistan.
This is a good sign of foreign investment growth
which will boost the economy and development
in Pakistan. This study suggests that
government may persuade FPI than FDI. There is
a requirement for the making of a community
that talks directly with security officers, army
officers, customs officers, and immigration
officersandmembersofthecommunitiesforthe
betterment of the security and peace. The
Federal Government may provide work and job
opportunities for unemployed and uneducated
people in order to prevent them from terrorist
activities. Antiterrorism squad may be created
from the Pakistan Army, Air Force, Navy, Police
and State Security Service and law enforcement
shouldbestrictlyimplemented.
POLICYRECOMMENDATIONS
The policy makers have very important role in
decisions about investment and strategies. They
may make policy which is easy to implement
quickly at the right time and to obtain their
objectivesandgoals.Thisstudyrecommendsthe
following points to be considered during the
makingoftheirpolicies:
·The government may control and detect
bank accounts of terrorists, websites, and
investmentactivities.
·Policy makers may manage and provide
facilities toIDPs (InternalDisplacedPeople)
and implement educational programs that
provideawarenessaboutIslam.
·Short term and long term strategies are
necessary to implement against terror wars
that analyze all types of terrorist events,
recognize their objectives, social and
economic causes of terrorists. DDR
(Disarmament, Demobilization, and
Reintegration) may be applied against
terrorist groups and political groups and
negotiate with them about ceasefire and
attacks(Mesa.L2008).
·The government persuades more towards
FPI during distress economy than FDI and
makes itcompulsory that uses domestic raw
materials also in production to enhance
economicactivities.
·Policy makers and foreign investors may
follow investment decision threshold that
whether to attract investment or avoid
foreigninvestment.
·Policy makers may encourage investors
towards a mix of FDI and FPI because of
impact of terrorism events on foreign
investorsandliquidityproblems.
·This study provides managerial and policy
implications in various areas of economics
and in foreign investment, insurance
planning,andnationalsecurity.
LIMITATION
This study includes quarterly data on foreign
investment from first quarter 2003 to fourth
quarter of 2014. The foreign investment data is
taken as a whole under the current account and
financial account from the balance of payments.
Due to the shortage of data, our study has
included 48 observations for each variable of
foreign investment, total fatalities, CPI,
exchangerateandinterestrate.
REFERENCES
qAmar. A Iqbal & Yasin.M (2013)(2013).Foreign
Financial Flows and Terrorism in Developing Countries.
Peter J Buckley1 and M Casson2,Journal of
InternationalBusinessStudies.

q
Direct Investment in Pakistan. Archives of Business
Research 1.1(2013).
qAmna. M, Imran.U &Salman.A (2012).The impact of
Foreign Direct Investment on Economic Growth:A Case
StudyofPakistan.
qAfza. T & Zeshan. A (2013). Foreign Direct Investment in
Pakistan. Measuring Impact of Cost of War against
Terrorism, Political Instability, and Electricity
Generation.
qAqeel. A Nishat.M & Bilquees. F (2004).The
Determinants of Foreign Direct Investment in Pakistan.
ThePakistanDevelopmentReviews (2004):651-664.
qAgrawal. S (2011). The Impact of Terrorism on Foreign
Direct Investment: Which Sectors are More
Vulnerable?
qArshad K.M & Ali K. S (2011) Foreign Direct Investment
and Economic Growth: The Role of Domestic Financial
Sector.
qAlam. S & Iqbal.A (2014) Determinants of FDI Inflows in
Pakistan:AnEmpiricalStudy1991-2012
qAhmad. Z, Samia Kanwal & Hussian. J (2014).
Relationship among Electricity Consumption,
Economic Growth, Consumer Price Index and Foreign
Direct Investment in Pakistan: A Time Series Modeling
Approach.
qAzhar. U, Ahmad. M & Atique (2004). The Impact of FDI
on Economic Growth under Foreign Trade Regimes: A
CaseStudyofPakistan
qAnaraki.N(2012).Chapter4,Corruption andTerrorism:
WillTheyUnderminetheArabSpring?
qArshad. K (2007). Foreign Direct Investment and
Economic Growth:The Role of Domestic Financial
Sector
qAlie. F & Hongliang. S (2015). Impact of Interest Rates
on Foreign Direct Investment:Case Study Sierra Leone
Economy
qAcharya. A (2006). The Bali Bombings: Impact on
IndonesiaandSoutheastAsia.
qAslam. F & Kang. H (2011-2012). The Impact of
TerrorismonFinancialMarkets:EvidencefromAsia
qAhmad. N, Ahmed. R, Khoso.I,Palwishah.R &Raza.U
(2014).The impact of Exchange Rate on Balance of
Payment:AnInvestigationfromPakistan.
qBandyo.P&Younas.J(2014).Terrorism:AthreattoFDI.
TheRegionalEconomistwww.stlouisfed.org
qBilawal.M, Ibrahim. M, Abbas. A Shuaib.M,Ahmed.M,
Hussain.I & Tehreem Fatima (2014).The impact of
Exchange Rate on Foreign Direct Investment in
Pakistan.
qBarth. J, Mccarthy. D, Phumiwasana. T &Yago. G (2006).
Economic Impacts of Global Terrorism: from Munich to
Bali
qBanga. R (2003) Impact of Government Policies and
InvestmentAgreementsonFDIInflows.
Awais. M (2013). The impact of Terrorism on Foreign q
Afghanistan and Ensuing Terrorism on Pakistan's
Economy Company Commander in Low-Intensity
Conflict.Lancerpublishers.
qChingarande. A Roseline.T,Denhere. W,Tafirei.F,
Onias.Z,Muchingami.L & Victoria.M (2012). The
impact of interest rates on foreign direct investment: A
case study of the Zimbabwean economy (February
2009-June2011)
qDeutsche Bundes Bank Monthly Report (September
2006). German foreign direct investment (FDI)
relationships: recent trends and macroeconomic
effects.
qDenisia.V (2010).Foreign Direct Investment Theories:
An Overview of the Main FDI Theories. Academy of
EconomicStudies,Bucharest,
qDenisia. V (2010). Foreign Direct Investment Theories:
AnOverviewoftheMainFDITheories
qDr. A & Tasfoura. D (2012) Impact of Terrorism on Stock
returns:EvidencefromPakistan
qEbobor Osaretin. F (2014). The impact of Terrorism and
ViolenceonEntrepreneursinNigeria.www.kiecon.org.
qEnders. W, Sachsida. A & Sandler. T (2011). Impact
Transnational Terrorism on U.S. Foreign Direct
Investment.
qEmmanuel. A & Oteng.E (2014).The effect of exchange
ratevolatilityonforeigndirectinvestmentinGhana
qEcnomyWatch(June2015).RetrievedfromtheWebsite.
www.economywatch.com
qFDI in Pakistan, M & M Services. Retrieved from the
websiteMay,2015.www.masoodandmasood.com
qFayyaz. A. Impact Of Terrorism on Foreign Direct.
Retr ieved f rom the Website June 2015.
www.businessteacher.org.uk
qFarooq. M, Akram. W, Azim. P & Iqbal. A (2013).The
impact of Foreign Direct Investment and Exports on the
EconomicGrowth:ACaseStudyofPakistan.
qFaroh.A &Shen.H (2015).The impact of Interest Rates
on Foreign Direct Investment:Case Study Sierra Leone
Economy.
qFernandez-Aris E. and Montiel P. J., 1996, The Surge in
Capital Inflows to Developing Countries: An Analytical
Overview,TheWorldBankEconomicReview,10,51-77.
qGaibulloev, Khusrav & Sandler. T (2008). The impact of
Terrorism and Conflicts on Growth in Asia.(1970–
2004). Abdi Discussion Paper 113. Tokyo: Asian
DevelopmentBank
qThe government ofPakistan(2006).Pakistaneconomic
survey 2005-06.Economic Adviser's Wing, Finance
Division,GovernmentofPakistan,Islamabad.
qGoogle (May 2015).Retrieved from the Website.
whatisSuicideAttack?
Chadha & Vivek. (1997).The impact of War in
denamv20@yahoo.com
Www.google.com.pk

Dr.SujataPandey|AssociateProf.,AtharvaInstituteofManagementStudies,Mumbai,
E-mail:sujata.mamt@gmail.com,Cell:+91-9769404073
ABSTRACT
rd
Brexit is a term coined for Britain's referendum to exit the European Union. On June 23 , 2016 the
referendum went in favor of Britain leaving the European Union. This paper is an attempt to
understand the background of this development and its impact on global economy in terms of trade
relationship, currency valuation, investment and the political relationships between countries and
various trade groups. India will also feelthe impact, therefore, an analysis with special reference to
Indiahastobediscussed.
BREXIT AND ITS IMPACT
BACKGROUND
he United Kingdom was not a signatory to
the treaty of Rome which created the
TEuropean Economic Community in 1957.
The country subsequently applied to join the
organization in 1963 and again in 1967, but both
applications were vetoed by the then President
of France. Finally, on January 1, 1973, Britain
joinedtheEuropeanEconomicCommunity.
The community grew in size by the accession of
new member states and was converted into the
European Union through Maastricht Treaty in
1993.European citizenship was introduced at
thesametime.ThisEuropeanUnionisapolitico-
economic union of 28 member states that are
locatedprimarily in Europe. The European Union
has developed an internal single market through
a standardized system of laws that apply in all
memberstates.TheEuropeanUnionpoliciesaim
at ensuring free movement of people, goods,
services and capital within the internal market
and common policies on trade. Within the
European Union, Euro Zone was created in 1999
which became operational in 2002. The
countries within the Euro zone have one central
bank –the European Central Bank and have one
currency-Euro. Many countries of European
Union opted to stay independent and remained
outsidetheEurozone.Thesecountrieshavetheir
owncentralbanksandowncurrency.
The official name of United Kingdom is the
United Kingdom of Great Britain and Northern
Ireland. It includes England, capital London:
Scotland, capital Edinburgh; Wales, capital
Cardiff and Northern Ireland, capital Belfast.
People of United Kingdom are known as British
thoughtheyhaveadifferentnationality.
WhatisSchengenarea?
Schengen is the area that includes 26 European
countries that have abolished passport and any
other type of border control at their mutual
borders. It mostly functions as a single country
for international travel purposes with a common
visapolicy.TheareaisnamedaftertheSchengen
agreement.
Twenty-two out of twenty-eight European Union
members participate in Schengen area .Of the
six members that do not form part of Schengen
area are four-Bulgaria, Croatia, Cyprus, and

Romania that are legally obliged and wish tojoin
the area while the other two –the Republic of
IrelandandtheUKmaintainopt-outs.
All four European Free Trade Association (EFTA)
member states –Iceland, Liechtenstein, Norway
and Switzerland have signed the agreements of
association with the Schengen agreement even
thoughtheyareoutsidetheEuropeanUnion.
Whathashappened?
In 1975, a referendum was held on the country's
membership of the European Economic
Community – later known as the European
Union. The outcome of the vote was
approximately 67% in favor of the UK's
continued membership of the European
EconomicCommunity.
TheUKelectoratesagainaddressedthequestion
rd
on 23 June 2016 in a referendum on the
country's membership. 51.9% vote went in
support of exit and 48.1% vote in favor of
continuation. Withdrawal from the European
Union has been the right of European Union
memberstatessince2007underthearticle50of
thetreatyofEuropeanUnion.
But the exact process for the UK's withdrawal is
uncertain under the European Union law. It is
generally expected to take longer than two
years.
Whatwillbetheimpact?
A.Impacton Britain:
Membershipfee:
Leaving the European Union would result in
immediate cost saving as the country would no
longercontributetotheEuropeanUnionbudget.
Last year Britain paid in approximately 13 billion
pounds,butitalsoreceived4.5billionpounds,so
theUK'snetcontributionwas8.5billionpounds.
What is harder to determine is whether the
financial advantages of European Union
membership such as free trade and inward
investmentoutweighstheupfrontcosts?
Trade:
The European Union is a single market in which
no tariffs are imposed on imports and exports
between member states. Exit means no say on
trade rules. Apart from that 50% of Britain's
exportgoestoEuropeanUnioncountries.
Britain also benefits from trade deals between
theEuropeanUnionandotherworldpowers.The
European Union is currently negotiating with
the United States to create the world's biggest
free trade area. Britain will risk losing some of
the negotiating power by leaving the European
Union, but it would be free to establish its own
tradeagreement.
ThreattoUK'sunitedstatus:
Brexit could encourage England, Wales,
Scotland or Ireland to appeal for quitting the
UnitedKingdom.
BlowtoUKeconomy:
The UK government estimates say that Brexit
could cause the country's economy to be
between3.8%to7.5%smallerby2030.
B. RippleeffectforGlobaleconomy:
United States will bear the major brunt of a
Brexit being UK's biggest trading partner.
President Obama has warned that it could take
ten years for Britain to negotiate a new trade
dealwiththeUnitedStates.
C.ImpactonIndia:
TheprospectsofBritain'sexitfromtheEuropean
Union have come as a rude shock to Indian
companies as they are likely to face lower sales,
increased cost of operations, immigration
barriers for their employees and a fall in export
earnings.AmongthebiggestloserscouldbeTata
Brexit and its ImpactEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 29

Motors whose subsidiary Jaguar Land Rover
sells 25% of its products in Europe. Tata Steel
Europe and auto part maker Motherson Sumi
systems which sell make in UK products in the
restofEuropemayfacetradebarriers.
Tata Steel earns almost 57.5% of its revenue
from Europe. Shares of TCS, Tata Motors, Tata
Steel and Motherson including other Indian
companies with European exposure fell on
Bombay stock exchange. Overseas investors
pulled out 630 crore rupees from the cash
market.
India's exports to the UK accounted for 0.4% of
GDP in 2015 while exports to EU were at 2.1% of
GDP.
Pharma and IT sectors will be greatly affected.
Aurobindo Pharma gets 22% of revenue from
Europe. Torrent, Dr. Reddy's Lab and NATCO get
10-11% revenue from Europe. IT sector as a
wholereceives20%ofitsrevenuefromEurope.
Apart from that, the remittances that India
receives from Indians living in the UK will go
downasthoseworkingintheUKmayfacehigher
taxes.RemittancesarethemoneythatNRIssend
totheirfamiliesinIndiafortheirmaintenance.
Many IT multinationals which had their
European headquarters in the UK may think of
relocatingtoGermanyorFrance.Itwillbeahuge
additionalcosttothem.
UK has also acted as a gate pass for Indian
companies to access to European companies, its
more because of the access to financial markets
in London and ease of doing business with
Europe from the UK. There was no need to set up
office elsewhere than in London. If they have to
relocate their offices, learning local language
willbeamustaccessingthemarket.
India has a positive trade surplus of$ 3.64 billion
in terms of bilateral trade with Britain. The total
tradestoodat$14.02billioninthefinancial year
2016, out of which $ 8.83 billion was in exports
and$5.19billionwasinimports.
Major exports to the UK are textiles and clothing
followed by machinery and auto ancillaries-all
high-value items. With uncertainty in this
market,tradescenariowillgetaffected.
The world has to wait and watch. The vote just
tells us that British people want to exit the
European Union. It will take minimum two years
to work through exit modalities in which a lot of
things can be brought back to normal, including
traderelations.
(The data collected is purely based on everyday news from
EconomicTimes,BusinessStandardandtheinternet).

Dr. K. Sreekanth | Assistant Professor, Hyderabad Business School, GITAM University, Rudraram,
Hyderabad–500085.Email:dr.k.sreekanth@gmail.com
Dr.A.R.Aryasri|Professor,CBITandFormerProfessor&Director,SchoolofManagementStudies,JNTU
Hyderabad,Kukatpally,Hyderabad–500085.Email:aryasri9@gmail.com,Cell:+918374528696
ABSTRACT
Purpose: a) To study the work life balances on employees in Information Technology (IT) industry.
b)Tosuggestcertainpracticesofworklifebalanceininformationtechnologysector.
Approach : Data was collected from 60 employees based on convenience and snowball sampling
from Information Technology Companieslocatedin Hyderabadwhich hadbeen listedin NASSCOM.
ThehypotheseswerecanbetestedusingSPSSsoftware,andtheresultshavebeenarrivedat.
Findings: The results from statistical analysis of the data indicate that in the IT organizations at all
levels, the hypotheses tested on factors like time to spend with family, hobbies, health care and
impactofjobstress.
Practical implications: It enables one to understand factorial influences on work-life balance
practices. IT Organizations which intend to introduce or improve work-life balance in the
organizationcaninculcatethesepracticesintotheirorganizationalculture.
Originality/value: Although there does exist literature on work-life balance, limited literature
could be found focusing on factors which influence work-life balance in IT industry. This study
may serve as a point of reference for future research in this area of concern.
AN EMPIRICAL STUDY ON
WORK LIFE BALANCE PRACTICES IN 'IT' SECTOR
INTRODUCTION
ork-life balance, as an effort to
achieve a balance between work and
Wpersonal life, has been attracting the
attention of corporate, government and
professionals since long. The employee stress,
increase in attrition levels, lower performance
levels by employees and reduction in
organizational productivity are the results from
the imbalance of the competing roles especially
experienced by the managerial personnel in IT
Index Terms – Work life balance, Organization, Information Technology, Organization Practice
and Employee.
Sector who have to meet strict deadlines,
working for longer hours and in shifts to achieve
the targets and this has an enormous impact on
employeefunctioningbothatworkandhome.
REVIEWOFLITERATURE
The term “work-life balance” was first coined
when men and women began prioritizing job
goals over family, friends, community affairs,
and other activities. According to Hill et al.,
Work–family balance has been 'the degree to
An Empirical Study on Work LifeEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 31

categorizing disincentives into both
household finance factors and market
factors that disrupted the work-life balance
ofindividuals.
ySociological approach - The sociological
approaches to work-life balance include
interviews and questionnaire surveys based
on empirical analysis. The key issue in the
sociological studies of work-life balance is
to develop an argument related to reducing
working hours in light of issues in people's
daily lives. Ikeda (2010) states that it is
important to identify specific problems to
modify how people work by finding
problems other than those related to
housework,childcare,andnursingcare.
yLaw approach - Asakura (2010) has raised
an opinion on work-life balance policies
from the perspective of Labor Law.
According to Asakura (2010), Labor Law
must provide the frameworks of how people
work and specify the rights and obligations
related to work. How workers spend their
personal lives, and the government and
their employers are merely obligated to
establish work styles that do not restrict
individuals' freedom of choice. Work-
balance policy, therefore, consists of
“regulationofwork”and“freedomoflife.”
BENEFITSFOREMPLOYERS
Organizations
The main advantages for companies if they
encouragework-lifebalanceare
yReducesStaffturnover
yReducesrecruitmentcosts
yIncreasesemployeeengagement
yIncreasesproductivity
which an individual can simultaneously balance
the temporal, emotional, and behavioral
demands of both paid work and family
responsibilities'(Hilletal.,2001).
In Human resource management, work-life
balance is gaining more attention from
government, researchers, management, and
employees. (Nord et al., 2002; Pocock et al.,
2001). Work life balance, from an employee
perspective, is the maintenance of a balance
between responsibilities at work and home.
Employees view the benefits or working
conditions that they provide to help employees
balance the family and work domains as
work–lifebenefits(RussellandBowman,2000).
According to Nora et.al, "Academics measure it,
employees feel it, and many organizations talk
about it. Some unions bargain for it, most
managersstrugglewithitandseverallegislators
wrestle with it (Nora Spinks & Celia Moore.,
2002).
Thompson (2002) classified these work-life
initiatives into five (5) categories namely, (1)
Time-based strategies like flex time,
telecommuting andjobsharing;(2)Information-
based strategies like relocation assistance,
eldercareresources,companywork/lifebalance
intranet; (3) Money based strategies like leave
with pay, scholarships for dependents etc; (4)
Direct services like onsite childcare, concierge
services and takeout dinners; and (5) Culture
change strategies like training or focus on
employees'
The approaches to work-life balance can be
mainlyclassifiedasfollows
yEconomic Approach - The study of
economics toward work-life balance is
concentrated in labor economics. Omori
(2010) conducted a study on the
disincentives of work-life balance by

yImprovesbrandperception
yDecreasesAbsenteeism.
OBJECTIVESOFTHESTUDY
yTo study the work-life balance practices
concerningITorganizations.
yTo understand the meaning of work-life
balancefromtheemployeeperspective.
yTo identify and suggest work-life balance
practicesfortheorganization.
RESEARCHMETHODOLOGY
Sources of the Data: As this is investigative
study, the data comprises of both primary and
secondary sources. The Primary data was
collected through a structured questionnaire by
distributing to Software employees who are
having more than two years experience working
in IT organizations in and around Hyderabad.
The secondary data has been collected from
journals,magazines,booksandwebsites.
The sampling method used: Data was collected
from 60 employees based on convenience and
the snowball sampling of Information
Technology Companies located in Hyderabad
whichhasbeenlistedinNASSCOM.
Statistical tools used: The hypotheses have
been formulated and tested using SPSS
software,andtheresultshavebeenarrivedat.
LIMITATIONSOFTHESTUDY
yThe study is limited to IT organizations
locatedinandaroundHyderabadonly.
yThe employees who are having more than 2
years and above experience in IT industry
are only considered for relevant data
collection.
HYPOTHESESTESTING
H : There is no significant association between01
designationandemployeeopinionsonsufficient
timetospendwithfamily.
Crosstab
Time for family
TotalStrongly
Disagree
Disagree Neutral Agree
Strongly
Agree
DESIGNATION
Lower
Level
Count 0 0 1 10 5 16
% within
DESIGNATION
0.0% 0.0% 6.2% 62.5% 31.2% 100.0%
Middle
Level
Count 0 2 2 17 7 28
% within
DESIGNATION
0.0% 7.1% 7.1% 60.7% 25.0% 100.0%
Upper
Level
Count 1 1 1 9 4 16
% within
DESIGNATION
6.2% 6.2% 6.2% 56.2% 25.0% 100.0%
Total
Count 1 3 4 36 16 60
% within
DESIGNATION
1.7% 5.0% 6.7% 60.0% 26.7% 100.0%
An Empirical Study on Work LifeEconomic Challenger// ISSN 0975-1351/ Oct.-Dec. 2016 33

PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES

PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES

Similar to PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES (20)

More from Raja Ram

More from Raja Ram (6)

Recently uploaded

Recently uploaded (20)

PROFILE OF MICRO INSURANCE PRODUCTS - INDIVIDUAL V/S GROUP CATEGORIES