Campus Blog Category

COVID – Ray of Light amid Darkness

Faculty, IILM University

World’s economic growth will be severely impacted amidst the coronavirus lockdown causing enormous disruption across multiple sectors. According to Dun & Bradstreet’s latest Economy Forecast, the probability of countries entering into recession and companies going bankrupt has increased and India is not likely to remain decoupled from the global meltdown. Industries’ worst-hit shall be among Financial, Textile, Electronics, Tourism and Aviation and all those sectors (Pharma, Chemicals, Shipping) where the supply chain has been disrupted due to worldwide lock-downs. The crisis continues unabated and there are simply too many variables to control for.

However, I am trying to find a silver lining in the dark grey tunnel. There are a few sectors that have seen an unprecedented hike in customer queries, product demand, and usage. Being home quarantined the general public at large is getting hands-on experience for digital services and the majority of corporates are working from home using digital platforms. Interestingly enough, once these businesses have begun their journey towards a digital/app-based business model and environment, it is highly unlikely they will go into reverse. This might just be the beginning of an altogether different business world with newer models gaining momentum. The coronavirus shut-down in China unfolds a big opportunity for India in those sectors where China is a major exporter. The epidemic has also underlined the importance of over-reliance on Chinese products in the Indian market and it is high time that the government encourages Indian manufactures to step up local production, which can be used to India’s advantage.

Telecom, Broadcast Services

As the number of Covid-19 cases mounts, the nation urged its citizens to stay at home and practice social distancing. This move shall aid the telecom sector as Indians consume more and more data. Consumers are expecting the internet to work round the clock to enable them to function seamlessly. In January and February, when China—the epicenter of the virus outbreak—was under lockdown, the revenue of telecommunication services rose 1.5 percent compared to last year, according to the data released. The fact that people are keen to entertain themselves, working from home or accessing educational resources and online courses; has thrust the telco industry into the limelight. The success of almost every element and facet of society is dependent on the success of the telecommunication industry and authorities are putting in a lot of measures to cater to their customers not only for daily life needs but also for emergency services. Vodafone Idea Limited (VIL), Bharti Airtel and Reliance Jio Infocomm have deployed senior technical staff and smart hands at their network management war rooms to closely monitor critical operations and ensure uninterrupted mobile and broadband services amid the 21-day nationwide lockdown with temporary food and stay arrangements at their data centers. Other than Telcos, Broadcast Service Providers like Cable Operators and DTH Industry are also in for a favorable time with consumers gaining on the Watching TV time. Globally the TV viewership has increased by approx. 12% if compared pre and Post Lockdown.

Cloud Computing

For the cloud companies, the coronavirus outbreak is effectively forcing some organizations through a very rapid digital transformation project, to embrace the cloud and mobility trends. The cloud computing segment has been on the rise for years, as more employees find themselves restricted to their homes more workloads will have to be migrated to the cloud to ensure the business can function without disruptions. Amazon Web Services, Microsoft Azure and Google Cloud are the obvious beneficiaries as market leaders while other traditional players might have to reinvent their business models. This could act as a catalyst for accelerating the already fast-blossoming cloud segments.

Video conferencing and collaboration

Although there is no substitute for a face-to-face meeting, alternatives have to be sought today amidst the quarantine. Businesses are encouraging meetings to be conducted via video links rather than email to ensure effective communication and ensure the well-being of employees. Contact with colleagues via video link is not perfect by any chance, but it might be an alternative to get the job going and aid remote working. Microsoft is an obvious beneficiary here, it announced last week the number of daily active users for its Teams collaboration suite increased by 12 million. Zoom Video Communications, a remote conferencing service company headquartered in San Jose, has seen share price increase by 130% since the beginning of the year. More corporates are turning to companies like ON24 to purchase webcasting and webinar services to ensure lead generation projects can continue. Some companies are being forced to adopt a digital transformation and some of the remote working capabilities might be retained in the long-term looking at the costs and benefits.

Electronic payments

Physical cash is already becoming a thing of the past with electronic payments in vogue, and the COVID-19 outbreak has accelerated this. Merchants like Visa, Mastercard, and AMEX are already benefitting from these trends. Some retailers and vendors are now accepting only digital payments and this in the long-term could force the majority of customers into adopting digital payments. While some from the traditional generations still resist the use of digital currency but the refusal to accept physical payments by some shops, will force consumers to adopt digital payments and encourage the use of digital currency.

Online Grocery and Food delivery

With the rush on supermarkets persisting as the days turn into weeks, online grocery delivery companies are seeing a surge in popularity. Online shopping delivery service Ocado suspended its website last week, telling customer demand exceeded its capacity to deliver. The share price for Ocado has surged this month, though it did decline once it announced it would temporarily stop taking orders. Buying of everyday grocery and other necessities are being routed to online sellers like Amazon, Big Basket and Grofers encouraging the trend of contactless grocery delivery at doorstep. Food delivery by Apps like Zomato and Swiggy has also witnessed an upward trend amidst the lockdown.

Streaming, gaming and video content platforms

This is perhaps the most obvious example of a beneficial segment. Video streaming will see a boom as parents will need to occupy children, while adults will also need entertaining as pubs, clubs, theatres, parks, beaches, holidays and gigs all disappear. OTT players like Netflix and Amazon Prime are already popular among the young generation and there has been an enormous surge in the number of newly added subscribers. All streaming platforms could benefit, while Disney+ is launching at a good time to capture the attention of European consumers. In terms of video platforms outside of streaming, YouTube is enjoying particular success. Not only are there those who are trying to entertain themselves, but there is also millions of hours of information (some much more accurate than others) on the pandemic itself. From a gaming perspective, with the usual entertainment venues shut down, consumers will need more options to be entertained at home. Microsoft Xbox, Google Stadia and PlayStation are likely securing additional subscriptions as well as in-game purchases.

Savvy corporates

For those corporations in a more fortunate cash position than others, the shock to the financial markets could be viewed as an opportunity. Softbank is a perfect example. On March 23rd, Softbank announced it was selling off certain unnamed assets to fund a second share buyback program. Combined with the first announced on March 13, Softbank will be able to retire 45% of Softbank shares which are currently on the open market. Share buyback programs could be viewed as a way to protect a corporate strategy from short-term influences and aggressive investors.

Environmental Healing

A large amount of air pollution we breathe comes from traffic. With many countries on lockdown, the levels of traffic pollution have plummeted. Satellites have picked up very large decreases in levels of NO2 (primary from diesel) in all industrial regions of the world and the ozone layer has finally begun healing. We expect the fine particulate matter (PM) has similarly reduced. Big reductions in pollutants will also come because people are no longer traveling. It is too early to say whether these improvements will offset any of the mortality from Covid-19, or other health problems due to being confined indoors.

Such a tiny silver lining can hardly make up for the devastation of the COVID-19 pandemic. But these preliminary numbers demonstrate that this global health disaster gives us time to re-think and an opportunity to assess –
i. which aspects of modern life are absolutely necessary
ii. what positive changes we need to adopt in our daily lives and
iii. the amount of restructuring required by mankind on a global scale.
I leave you with these questions to ponder for the rest of the lockdown while we are in a fight for survival and existence.
Every situation teaches us what we haven’t learned until now and having experienced this global pandemic in our lifetimes we all need to take big-time learning from hereon!

CHANGING PARADIGMS IN ACCOUNTING

Faculty, General Blog, IILM University, ,

Consеquеnt to financial crisis of 2008, wе arе witnеssing significant changеs in thе accounting systеms across all businеss sеctors in thе world. Thе quеstion comеs in what is thеrе at ‘bottom of thе hеart’ of this changе. Is it thе crisis pеr sе or thе еffеct of crisis on thе еxpеctеd rеsponsibility of accountants? In Junе 2010, a largе onlinе survеy was conductеd by thе Chartеrеd Institutе of Managеmеnt Accountants (CIMA) and by thе UK´s Univеrsity of Bath, whеrе 5,426 sеnior financе and sеnior non-financе profеssionals around thе World participatеd [5]. CIMA study showеd that thе latеst most important trеnd in accounting profеssionals is thе shift of accountants’ rеsponsibilitiеs from traditional accounting opеrations to stratеgic managеmеnt guidancе and support. This trеnd, a consеquеncе of thе 2008 financial crisis, rеprеsеnts an incrеasе of thе valuе addеd to thе organization and thе contribution pеrformеd by accountants. Now, thе accountant’s rolе is not limitеd to book-kееping, financial-rеcord kееping, prеparing and publishing financial statеmеnts and еnsuring rеgulatory compliancеs. Thе accountant’s rolе has shiftеd to support, guidancе and activе participation in stratеgy formulation. Now, wе sее accountants activеly participating in dеcision making. Thеy arе gеnеrating usеful information to hеlp businеssеs dеcidе about еffеctivе rеsourcе allocation.

To gеnеratе timеly, еrror-frее, rеliablе and accuratе information, businеssеs havе shiftеd to complеtе Accounting Information Systеm (AIS). Not only this, accounting information systеm and managеmеnt information systеm arе now intеgratеd to havе еfficiеnt dissеmination and еffеctivе utilization of thе accounting information. Hеrе, thе rеfеrеncе is not limitеd to thе financial accounting data only; rathеr is pointing out to non-financial, managеrial accounting data as wеll. Now, thе quеstion comеs in what is AIS? AIS is a collеction of rеsourcеs such as pеoplе and еquipmеnt dеsignеd to transform financial data into information. Thе information thus gеnеratеd is communicatеd to a widе variеty of dеcision makеrs. An Accounting Information Systеm (AIS) is gеnеrally a computеr-basеd mеthod for tracking accounting activity in conjunction with information tеchnology rеsourcеs [1].  AIS gеnеrally consists of six primary componеnts: Pеoplе; Procеdurеs and Instructions; Data; Softwarе; Information Tеchnology Infrastructurе and Intеrnal Controls. Thus, this is thе amalgamation of thеsе six variablе, which makеs an accounting information systеm work. AIS is rеsponsiblе for thе collеction, storagе and procеssing of financial and accounting data that is usеd for intеrnal managеmеnt dеcision making, including nonfinancial transactions that dirеctly affеct thе procеssing of financial transactions.

Typically an AIS is composеd of thrее major subsystеms: Transaction Procеssing Systеm (TPS) that supports daily businеss opеrations; Gеnеral Lеdgеr Systеm and Financial Rеporting Systеm (GLS/FRS) and; Thе Managеmеnt Rеporting Systеm (MRS). Litеraturе shows that, AIS lеads to a bеttеr coordination in an organization which, in turn, incrеasеs thе quality of dеcision-making. Somе studiеs in accounting show that thе еffеctivеnеss of AIS dеpеnds upon thе quality of thе output of thе information systеm that can satisfy usеrs’ nееds. TPS is rеsponsiblе for supporting daily businеss opеrations or transactions. Thеsе transactions can bе groupеd togеthеr in thrее transaction cyclеs: thе rеvеnuе cyclе, thе еxpеnditurе cyclе, and thе convеrsion cyclе. Thе purposе of thе first information systеms was to automatе businеss procеssеs, which shows that thе accounting domain was onе of thе vеry first to usе information systеms to support its activitiеs [2]. Usually sееn as a singlе intеgratеd sеrvicе, thе GLS/FRS arе two closеly rеlatеd systеms, with thе first onе dеdicatеd to the summarization of transaction cyclе activity and thе sеcond onе to thе mеasurеmеnt and rеporting of thе status of financial rеsourcеs, gеnеrally outputtеd in thе form of financial statеmеnts or tax rеturns to еxtеrnal еntitiеs [2]. MRS, usually in thе scopе of Managеmеnt Information Systеms (MIS), offеrs intеrnal managеmеnt with spеcial purposе financial rеports and information nееdеd for dеcision-making such as budgеts, variancе rеports, and rеsponsibility rеports. For almost all profеssionals from thе accounting domain, thе main idеa about thе information systеm of an organization and particularly an AIS is еmbracеd by thе Еntеrprisе Rеsourcе Planning (ЕRP), which еncompassеs all thе еssеntial functions to support an organization and is implеmеntеd in almost all largе organizations [4]. Not only this, but currеnt litеraturе is also moving away from this еstablishеd viеw about AIS domain, considеring now a morе modular approach to an AIS whеrе nеw tеchnologiеs likе Businеss Intеlligеncе (BI) or Balancеd Scorеcard (BSC) systеms play an incrеasingly important rolе [4]. In fact, studiеs provе that thеrе is a hugе sеt of nеw tеchnologiеs that can complеmеnt or intеgratе currеnt AIS and its prеsеnt availablе facilitiеs. So, thе world would soon bе sееing cloud computing, machinе lеarning, dееp lеarning and artificial intеlligеncе bеing usеd in accounting.

Rеfеrеncеs:

[1] A. Fontinеllе. (2011, 2013, Apr 5). Introduction to Accounting Information Systеms. Availablе:

http://www.invеstopеdia.com/articlеs/profеssionalеducation/11/accounting-information-systеms.asp

[2] A. Rom and C. Rohdе, “Managеmеnt accounting and intеgratеd information systеms: A litеraturе rеviеw,” Intеrnational Journal of Accounting Information Systеms, vol. 8, pp. 40-68, 3// 2007.

[3] Bеlfo F and Trigo A, “Accounting Information Systеms: Traditional and Futurе Dirеctions”, Sciеncе Dirеct, Procеdia Tеchnology 9 (2013) pp. 536-546

[4] J. A. Hall, Accounting Information Systеms: South Wеstеrn Еducational Publishing, 2010.

[5] W. Van dеr Stеdе and R. Malonе, “Accounting trеnds in a bordеrlеss world,” Chartеrеd Institutе of Managеmеnt Accountants

1859716903, 2010.

 

Being a Reflective Designer

Faculty, IILM University, , , , ,

A typical design project mentoring session begins with the professor pointing out to the visuals presented by the student and enquiring

  • What more options do you have?
  • Did you think through the problem solutions we discussed, to improve on your design solutions?
  • Find the challenges in your design solutions.

 DID YOU REFLECT ON YOUR SOLUTIONS……….??? ARE YOU BEING A REFLECTIVE DESIGNER

By now the student is in a state of flux ready to throw in the line, topple the table, or shrug the shoulders and walk off….

thinkbook.org

 

…..all the while thinking under the breadth, ‘Who wants to go over again the discussion on finding more gaps in the designed product’? Didn’t I stay awake the whole night, forego the movie I’ve been dying to see, working on my design? Ask my parents, how I’ve put all my energy in this design, made lovingly, passionately, they’ll vouch for it.

No doubt these are some very genuine thoughts of the design student but before the frustration tips over into demotivation of the learner and extreme steps such abandonment of the project, this experience can be flipped into a positive methodology in learning.

The process of reflection during design development can form the foundation of exploration at every step allowing the design to progress only when the reflective process has satisfied the many questions raised.

In many instances, such as in an exam situation, very often students are heard wishing, that if only they were given a second chance they would have tweaked the solution differently or they would have considered the answer differently.

It seemed, given the opportunity of a second chance, they would have collected their thoughts, stepped back, taken a wider view, considered the context deeply, looked back at possible gaps, how it could have been resolved and after having carefully reflected on the possibilities, suggest solutions to the design problem differently……… now.

As Confucius philosophized, ‘Learning without reflection is a waste. Reflection without learning is dangerous’.

REFLECTION IS INTEGRAL TO DESIGN PROCESS

Reflection is a process of thinking again about the subject matter, now with a renewed sense of security, having undertaken and finished a task, the first time experiencing unsurety, insecurity and hesitancy.

When designers start with initial concepts, whether it be a simple project of developing a form or a complex project developing the corporate identity of a brand, the apprehensions remains the same as the excitement and anticipation. When reflective practice is adopted at all stages of development, it enables deeper exploration and fitment of the solution to the required brief.

Reflection at stages ensures better choices of pathways, more aligned progress and ultimately leads to more appropriate solutions.

REFLECTIVE PRACTICE & ITS EFFECTIVENESS

During the process of design development, maintain a documentation and categorization of the data, the explorations and its context throughout the process

Repeated self questioning can lead to clarity of problem brief which is already half the problem solved.

Provide room for open critique and a healthy adaptation of aligning it to the design problem.

Like all design students are encouraged to keep a Design Diary, so should a project have its Design Diary earmarked to note reflections of important issues and to note landmarks.

As noted by Richard Carlson, American Motivation Trainer and Psychotherapist stated truly,

“Reflection is one of the most underused yet powerful tools for success.”

Reflections are not just thinking of experiences, over the time they turn into insights, which in the long run build up student’s Design philosophy and Design values.

 

 

 

 

Youth Power

Campus Blog Category, Conferences, IILM University

“Youth is the most precious thing in life; it is too bad it has to be wasted on young folks” -George Bernard Shaw

I liked the definition of “Youth” given in Collins dictionary which is “Youth is the quality or state of being young.”  When you are a youth you are full of energy, excitement, hope and dreams.  In India 65% of the population is youth. Imagine the reservoir of youthful power India holds. The Youth is contributing   into different areas whether it is Agriculture, Art, Science and Technology, Environment Protection, Power sector, Health, Business and building the Nation into a powerful country.

Today’s youth is well informed, aware, questions dogmatic ideas and ready to initiate.

Garvita Gulhati and Pooja Tanawade were in school when a presentation from Reap Benefits, NGO brought in the attention of water wastage in Restaurants. They took initiative and started addressing restaurants and brought attention of water wastage. Many a times they were discouraged but they did not give up. Garvita Gulhati’s efforts has been recognized and has received the title of “Global Changemaker.”

Unfortunately, today’s Youth also experiences many fears which were not there earlier like cyber bullying, fear of not getting employment due to economic instability, fear of violence, discrimination, fear of conflict, War.  It is important to address your fears and voice it otherwise it can pull you down.  You become your own advocate, make efforts to resolve your fear/fears and conquer it. Speak up, have dialogue and seek support.  Don’t live in fear!!

Augustine “Og” Mandino, an American Author and write of the bestselling book, “The Greatest Salesman in the World” said, “Obstacles are necessary for success because in selling, as in all careers of importance, victory comes only after many struggles and countless defeats. “

Recognize your fears, recognize your dreams, recognize your potential and take action now. Your life is precious and you have lot to offer to the World.

The World is waiting for you to “Rise”

Explore Life within You-

Alumni, Campus Life, General Blog, IILM Graduate School of Management, IILM Stories, IILM Undergraduate Business School, IILM University, Uncategorized, , , , , , , , , ,

” I have always believed  success, in life, is most easily measured by the number of days you are truly happy.”  Our mindset and optimistic attitude towards life decides everything we come across.

Standing at the edge of human existence, a realization dawns on us that how temporary and uncertain our lives can be. To make our lives more fulfilling we need to create the right mindset which encompasses positive thinking. Think positive and positive things will happen.

Unfortunately we block our energy fields with negative thoughts. You don’t need to know the future as it is in your own hands. There comes a time when you need to have absolute faith in oneself and be sure, destiny will unfold your true path and purpose in this lifetime.

It is therefore extremely important that we channelize our energies to create positivity around us to make our work and life more fulfilling and motivating.

The present environment if has put restrictions, it has also opened up our inner doors of self reflection ,where we need to reflect upon ourselves in ways that we can decide what can be the path of our lives, which manifests in our well- being that would impact our personal and professional relationships as we are spending maximum time these days with ourselves and our family.

When we are going through a difficult situation and feel like running away from it, all we need to think and do is to replace that thought of ‘running away’ with the thought of ‘finding a way’. Let us use this difficult situation as a platform to take an extra step of faith in our lives. Let us take off and face the situation and move towards creating a positive change.

Let’s talk about a handful of simple practices that can be helpful in being more decisive and give direction to positive thinking.

  1. Create Realistic Expectations for Yourself

The problem lies when we expect from others and somewhere hold others responsible for what we desire in life. When you set realistic expectations from yourself and fulfill them it gives you strength to be self reliant in life. Eg. Develop a skill for which you are responsible, create happiness for yourself. Don’t wait for someone to make you happy.

  1. Never compromise on Values

There should be at least one strong value that you possess that you have never compromised on. End of the day it gives you inner strength and satisfaction.

  1. Don’t accept fear as a part of life

Conquer any one fear of yours. The more you run away the stronger the fear gets. Face it and kill it.

  1. Practice mindfulness

Enjoy every moment of your existence. The way you speak to each person, what you eat, what you smell, every breath of yours enjoy it. Imagine if there was no tomorrow. Live each day as if it is your only day to give to the cosmos. You will realize a sense of enthusiasm gushing in pushing you to do so much in life.

  1. Value Relationships

This is what you have earnt in life so value your personal relationships and nurture your professional relationships. Honesty in work and loyalty in relationships take you a long way.

   “Optimism is a happiness magnet”

 See what kind of people & situations draw

      Towards you. This will be a clear indicator of how you view yourself.

“  “Be the change you wish to see in others”

Leverage: The Double-Edged Sword and Covid-19

Blog Catgeory, Campus Blog Category, Faculty, General Blog, IILM University

The financial term for using others’ money is known as “leverage”. Leverage is the use of borrowed funds to increase one’s trading position beyond what would be available from the equity or personal funds alone. Leveraging is when you borrow a certain amount of money in order to expand the potential return of an investment you are intending to make. In a rising market, leverage can amplify your returns, leading to enormous gains and can make you very wealthy. However, it comes with a catch. In a flat or falling market leverage can do the opposite, by magnifying your losses. That’s the tricky bet when it comes to borrowing to invest. However, the concept will work only when the markets are bombing, businesses are producing and selling enough and are rising. Thus, leveraging involves a high level of risk. The greater the amount of leverage on the capital you apply, the higher the risk that you will assume.  You got it right! That is why we call it as a double-edged sword because it increases winning and losing positions equally. If an investor decides to rely on leverage in order to invest and the investment moves against the investor, his/her losses may appear to be far larger than they would have been, if the investment had not been leveraged. Therefore, it is convenient to say that leverage amplifies both profits and losses.

Let us go into little more details. On one hand, when financial cost of ‘fixed bearing securities’ is less than the return on investment, the financial leverage will help to increase return on equity and earning per share for investors. That is where the condition of ‘Trading on Equity’ will emerge. The firm will also benefit from the saving of tax on interest on debts etc. We’ve all heard the rags to riches property investment stories that make it all sound so easy. These tales usually have two vital ingredients, lots of leverage and a strongly rising market. Toyota, General Electronics, Walmart, CNN, British Airways, Sony, and others all displaced competitors with stronger reputations and deeper pockets. Their secret? Of course, in each case, the winner had greater ambition than its well-endowed rivals. Winners also find less resource-intensive ways of achieving their ambitious goals. This is where leverage complements the strategic allocation of resources. However, when the cost of debt will be more than the average returns for even a very successful company, it will affect the return of equity and earnings per shares unfavorably and as a result, a firm can be under financial distress. This is why this “double-edged sword” can be very difficult to handle during times of crisis as the whole world is facing today.

Can you imagine the impact of this so-called sharp weapon “leverage” would have on businesses amid the Covid-19 outbreak? Be it a small business or a large one, if they are using some borrowed funds; they are actually relying on leverage. They all need to service these debts by paying interest and principal installment. Imagine, what will happen if they do not have enough revenue to serve these debts? They will try to refinance debt, if they are unable to get refinance then they would fail in meeting up the fixed financial costs of these debt funds and then they face legal actions against them and which might lead to bankruptcy even. Yesterday, RBI Governor Shaktikanta Das said all commercial banks, regional rural banks, small finance banks, cooperative banks, and non-banking financial companies are permitted to allow a three-month on EMI payments for term loans outstanding on March 1, 2020. This elucidates the understanding of the central banks against the expected adverse effect of leverage on companies using debt funds. It goes without saying that many factors including the nature of the product or service the business deals in, the Firm’s age and ownership structure also decide the survival or fall of a firm during the time of crisis.

Well, the Central Bank of India understands the functioning, power and possible threats of this so-called sword very well.  That is why, The Governor of Reserve of Bank (RBI) of India, Shaktikanta Das on March 27’ 2020 cut repo rates by 75 basis points and allowed lending institutions to provide a three-month moratorium on EMI repayment on all term loans. This is expected to ease the pressure of EMIs on retail loan borrowers as the country fights the deadly COVID-19.  This means that no penal action will be taken against borrowers of home loans, personal loans, car loans, credit card EMIs, among others for not repaying EMIs for three months for the period March to May and thus, borrowers could get three months times to service the debt without any penalty.  Though the macroeconomic fundamentals of the Indian economy are sound, and in fact stronger than what they were in the aftermath of the global financial crisis of 2008-09. Even then Leverage, the double-sided sword remains a significant determinant of a firm’s performance amid Covid-19.

Leveraging is like dynamite- a powerful weapon in good time but deadly during a crisis like Covid-19.

Role of financial inclusion in achieving sustainable development goals…

Blog Catgeory, General Blog, IILM University, , , ,

What is financial inclusion?
According to world bank, Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
Financial inclusion does not only include the access to and usage of financial services by individuals and businesses but also includes the dimension of quality of the products and the service delivery. It is also a key to prudent financial development and well being, both- at the individual level and for the economy as a whole. An all-inclusive approach which considers both demand side and supply side needs to be adopted to reach global goal of Universal Financial Access (UFA) by 2020, says World bank.

What are the key indicators of financial inclusion?
First and the foremost step towards broader financial inclusion is to have access to a transaction account allowing people to exchange and save money. Thus, ensuring that people have a transaction account is the most crucial dimension of financial inclusion (Universal Financial Access 2020 initiative). Financial access opens the doorway to various financial services such as managing daily monetary requirements, long term planning and even planning for future unforeseen circumstances. However, by merely having an account, the objective of financial inclusiveness cannot be achieved. It is therefore imperative that the focus should equally be levied on the usage of these financial services, which forms the second dimension of financial inclusion.
(https://databank.worldbank.org/data/download/g20fidata/G20_Financial_Inclusion_Indicators.pdf)

The current status: According to Global Findex database, 2017; about 515 million adults worldwide opened an account at a financial institution or through a mobile money provider between 2014 and 2017.
• About 69 percent of adults now have an account, Up from 62 percent in 2014 and 51 percent in 2011.
• About 65% of the women adults now have an account.
• About 52% of adults either receive or make payments.
• About 87% of SME’S have an account with a formal financial institution.
• About 30% of people worldwide have Received wages or government transfer payments directly to an account.

(https://globalfindex.worldbank.org/basic-page-overview)

The above facts reveal that the economy’s worldwide are progressing towards the goal of financial inclusion by staying committed to G20 High-Level Principles for Digital Financial Inclusion, Universal Financial Access (UFA) by 2020, Sustainable Development Goals, National financial inclusion strategies, financial consumer protection and literacy and many more initiatives taken so far in this direction.

What are Sustainable Development Goals?
A new set of development goals adopted by the United Nations General Assembly in Sept 2015, are collectively called as Sustainable Development Goals (SDGs),2030. After years of deliberation and negotiation, the agenda for these goals was put in place and has been endorsed by around 193 member nations of the General Assembly including booth developed and developing countries. The SDGs cover a set of 17 goals.(https://sustainabledevelopment.un.org/sdgs)

How does financial inclusion help in achieving sustainable development goals?
Financial inclusion offers wide range of benefits such as Improving earning potential, enhanced women empowerment by encouraging women entrepreneurs, reduction in the costs of transactions, easy accumulation of funds, increased use of digital platforms etc. While financial inclusion does not explicitly targets achieving the SDG’s, greater access to financial services has paved the way for achieving a number of sustainable development goals. Financial inclusion has been identified as an enabler for 7 out of the 17 Sustainable Development Goals, says World Bank.

The following SDG’s can be achieved via increased financial inclusion:
A better access to financial services enables the people even in the rural segments of any country to have better access to funds and other related financial services. This enables people to come out of poverty and thereby enabling the first SDG i.e Eliminating extreme poverty (SDG 1). Better and improved access to avenues for raising funds, access to crop agricultural insurance and improved credit facilities also enables the people working in the primary sector to mange their finances in the season for plantation and thereby generate higher yields. It not only improves food production in the country but also generates food security in the economy, which is the second SDG i.e. Reducing hunger and promoting food security (SDG 2).When people are able to come out of the poverty line, are ensured of their food security ,have access to various insurance facilities; achieving the third SDG i.e. Achieving good health and well-being (SDG 3), is bound to fall in place. Increased availability of funding options has removed the barrier of monetary constraints which stop people from getting educated. People are encouraged to invest in educating their children and this enables the achievement of the fourth SDG i.e. Fostering quality education (SDG 4). Financial inclusion has also encouraged women entrepreneurs to take up ventures which earlier were impossible for them. Enhanced women empowerment is the key to promoting gender equality (SDG 5), the fifth SDG. Financial exclusivity weakens up the thread between smaller goals and larger socio-economic goals. These five SDG’s acts as a strong base for achieving broader socio-economic goals such as Promoting shared economic growth (SDG 8) and Promoting innovation and sustainable industrialization (SDG 9).

Given the fact that there exists an association between Financial inclusion and overall economic development, it can be concluded that greater emphasis should be laid on financial inclusiveness.

References:
https://www.worldbank.org/en/topic/financialinclusion/overview
https://databank.worldbank.org/data/download/g20fidata/G20_Financial_Inclusion_Indicators.pdf
https://globalfindex.worldbank.org/basic-page-overview
https://sustainabledevelopment.un.org/sdgs
https://www.microinsurancenetwork.org/sites/default/files/CGAP_Working-Paper-Achieving-Sustainable-Development-Goals.pdf

Working Women during Lock down

Campus Blog Category, IILM University, Uncategorized

 

                                                 THE IMAGES I HAVE POSTED ARE PUBLIC DOMAIN TO THE BEST OF MY ...               

This blog is meant for those working women who are struggling to find a balance between work and home responsibilities when working from home during the lock down.

Working women are used to managing personal and professional commitments and maintain a balance between the two. Then why things are getting difficult for them when they have got an opportunity to work from home?  Earlier, most working women depended on day care and household helpers to shoulder the responsibility of children and household chores. At this time that support is gone. Now they have to take care of washing dishes, cleaning the house, cooking and maintaining an order at home and spend time with family members and also take care of their work commitments. Each front has to be managed during the same time.

Based on my experiences and observations I have found that women stretch themselves to manage both front even if it means neglecting their own need of personal time. The best part is that they love taking care of others need before their own.

Think of a situation where you are on an office call and suddenly your child needs help or you are in the middle of meeting a deadline and you also are responsible for cooking for the Family.  What do you do at such times? Every person will respond to these situations in the best possible way but the point I am making is that this kind of situation can create pressure on you to manage both front.

I have tried to put down few tips that may help you during this time  

  1. Self-Care: It is important to first take care of yourself mentally, physically, last but not the least spiritually as well. So, maintain a healthy diet, sleep properly, take breaks between work, do some breathing exercise, practice mindfulness and find some time to relax. You can use app like Calm for guided meditation.
  2. Organize yourself and your time better and create a routine. Pen down the work that you need to complete
  3. You have to learn to prioritize and work in smart ways. Don’t build pressure on yourself by trying to attain “perfection” at this time
  4. If you are beginning to feel that there is too much on your plate then try to delegate work at home to other family members
  5. Don’t hesitate to take help and support from your colleagues at work when required.
  6. Pursue your own interests and hobbies and give some time to yourself
  7. In case you are getting stressed out then it is normal, don’t beat yourself down as you are doing the best you can
  8. Talk to family member or friend you trust
  9. Give credit to your self for managing both!

Hope these tips help you at this time!

Take Care & Stay Blessed!

 

Classroom equity: Creating educational equality

Career Development (Placement), Faculty, General Blog, IILM University, , , , , , ,

Everything that happens in the society is a consequence of human actions. Even though it may seem like a roundabout route, any effort to build a brighter future must begin with a change within human beings themselves.

The way we distinguish our own lives is also the way we distinguish the lives of others. When we have a sense of our own dignity, we recognize the dignity of others and value their lives too. The most fundamental way to achieve peace and happiness is to help people around the world to the greatest extent to reveal the treasure of inherent dignity in their lives.

No epidemic or any other cause is worth depriving students of their right to education. Teachers should not be masters who offer themselves as paragons, but enablers who guide students towards achieving their goals.

It is important that we afford students the highest respect as individuals in their own right. Helping students grow requires total commitment on our part. There is a fine adult inside every child. We need to direct our voices to that inner adult. We must never treat children in a dismissive or condescending manner, assuming they won’t understand and thinking its okay not to fully explain things.

We must believe in students’ immense potential, and strive to develop their innate capacities as well as our own. The more we broaden our own minds, the more we can inspire and foster the students. That is why our growth is indispensable to our efforts to help others grow.

We, at IILM University, Gurugram believe in our students, trust them unconditionally and encourage them to grow and excel professionally as well as personally. We believe in providing immeasurable source of support and encouragement to them. Our effort to provide Liberal Education gives our students the flexibility, knowledge and wisdom to pursue their passion.

Fostering students contributes to our own growth. Teaching students makes us wiser. Learning together with our students and advancing together with them is a path of lifelong youthfulness, giving us fresh perspectives and vitality.

How Much Insurance Do You Need

General Blog, IILM University, Uncategorized

 

There is always a question as to how much of Life Insurance is enough. An amount which would take care of one’s loved ones. The concept of Human Life Value provides the answer to this question . How much Life insurance do I need?

Moment Of Truth
It was in cold winter of December in Delhi in the year 2017,I received a call from my very close friend .It was  to help the family of his close relative with insurance claim payment . Sadly, it was a Death Claim payment. The father aged 52 years had died after protracted illness at the hospital. The son was in front of me ,a lad of not more than 20 years.He was carrying all the documents related to the life insurance of his late father. Depressed and almost teary eyed, he pleaded to help him with the claim amount . An early payment would help him to settle certain loan and liabilities.I could make out that the family is under debt and certain liabilities. While leaving ,he did ask me about the likely amount of the claim payment!

I went through the papers and was curious to know how much insurance does the deceased had. I was shocked to find he almost had no insurance. Merely Rs. 5 lakh for a person who was making Rs.30 lakh a year. Also , he had no pension policy. I called the insurance consultant and asked him about the highly inadequate amount of insurance on the life of the deceased . He was defensive and told me that it was with lot of persuasion he could persuade the deceased to insure himself for even this paltry amount. He informed me that the deceased believed investing in real estate and stock market and considered insurance to be bad investment with no sizable returns. Even the wife of the deceased was not very open to insurance.

One fine evening while returning from my office I got a call from the son and during conversation at his own he revealed that the majority of the investment of his late father was in property and a good amount in stock market and presently both are under stress. Though equity would give them cash apart from taking hit on mark to market losses on a few securities, the paper work would delay the process. Further, investment in properties would take good amount of time to realize and would not serve the purpose . He requested that since the family needs immediate cash, the timely payment under life insurance policies would be quite helpful.

I went through the documents again. I found that in all there were 5 policies ,the earliest was of the year 1990 and the latest being 2004 with sum assured ranging from Rs.50,000 to 1 lakh. Finally , I told the son that at the best ,the total payment would be Rs. 7-10 lakh. His face fell and he murmured that it is highly insufficient even to settle the loans taken. Frankly, I do not come across such situation so often and that is very helpful. The son asked me how much insurance does one need. I told him that it is usually 10 to 20 times of the annual income. He was silent for a moment and I knew very well that he was doing some numbers in his mind!

Human Capital

May be 20 times can be treated something very much theoretical, but it does give a sense of how inadequately most of the people are insured. Now, the question is how does one determine the value of insurance cover to be taken.Life Insurance is about securing economic value only. No amount can compensate for the emotional and other losses the family undergoes.This economic value is rooted in the concept of Human capital.What it indicates is the innate production capacity within each individual and their earning potential.The core of the concept is that investments are made in oneself with the expectation of future benefits.Perhaps it is the reason why parents and even working adults invest money and time in good education in India to land up in good colleges and ultimately good companies with decent pay package.

How does life insurance figures out in all this? It was Peter L. Bernstein in his famous book on risk mentioned that despite the world’s enormous wealth, the human capital by far the largest income producing assets for the great majority of the people. Further,Bernstein connects life insurance with human capital by his refrain:”Why else would so many breadwinners spend their hard-earned money on life-insurance premiums?”

Human Life Value(HLV)

Historically, reference is found in Code of Hammurabi which gives semblance of determining the value-Human Life Value. This code was used to determine the compensation allowed to the relative of an individual killed by a third party. The semblance of the concept is also observed in Kautiliya Arthasastra, Manusmriti,Koran, Bible and early Anglo-Saxon law.

The first application of HLV concept to life insurance happened in the year 1880s.Human Life Value is a measure of the future earnings less self maintenance costs such as food, clothing and shelter. If one looks from the view point of one’s dependents, the breadwinner’s HLV is the value of the benefits that the dependent can expect.An organization would look at the value added by the employee to the enterprise as an employee’s Human Life Value to it. In other words, a person may have more than one HLV.

Five Percepts of Human Life Value

In the year 1927,Solomon S.Huebner published a volume titled The Economics of Life Insurance which dealt exclusively with the HLV concept.His five percepts or admonitions regarding HLV which are relevant even today after a century are reproduced as under:
1.The human life value should be carefully appraised and capitalized.The HLV is based on the fact that persons who earn more than is necessary for their self maintenance have a monetary value to those who are dependent upon them. Thus, it is the present value of that part of the earnings of individuals devoted to family dependents and others who benefit from these individual’s earning capacity. Whenever, continuance of a life is economically valuable to others, an economic basis for life and health insurance exists.
2.The human life value should be recognized as creator of property value. HLV is key to turning property into productive force.In other words, the HLV is the cause and property values are the effect.
3.The family is an economic unit organized around the human life values of its members. The family should be organized and managed, and its economic value finally liquidated, in the same manner that other enterprises are organized, operated , and liquidated.
4.The human life value and its protection should be regarded as constituting the principal link between the present and succeeding generations.The realization of the potential net earnings of the breadwinner constitutes the economic foundation for the proper education and development of the children in the event of the breadwinner’s premature death or incapacity and the protection of children against the burden of parent financial support.
5. In view of the significance of human life values relative to property values, principles of business management utilized in connection with property values should be applied to life values.Principles such as appraisal, conservation, indemnity, and depreciation should be applied to the organization, management , and liquidation of human life value. These principles are applied to property values for decades.

One’s HLV is subject to loss through (1) premature death;( 2) illness, injury ,or incapacity; (3) retirement; and (4) unemployment. Any event affecting an individual’s earning capacity has a corresponding impact on her HLV.The probability of loss from death and incapacity is significantly greater than from the other commonly insured perils. In contrast to the loss due to other perils, death peril results in a total loss to the potential estate.The same is true of some health events.
Life Insurance and health insurance make possible the preservation of an individual’s HLV in the face of an uncertain time. The HLV concept provides the philosophical basis for systemizing the insurance purchase decision.

 HUMAN LIFE VALUE COMPUTATION

Let us now calculate the economic value of an individual in a simple manner based upon the income of an individual devoted to the family step wise step as follows:
1.Make a good estimate of average annual earning

Determine the percentage of future raise expected.Based upon the percentage of raise expected .calculate the average salary for the working years.. One may also factor in income from investments as well.
2. Out of 1 deduct cost of self maintenance, life insurance premium, income tax and other expenses , etc.
3. Determine the working period of the individual
Deduct the retirement age from the present age..

4.Selection of discounting rate
This rate would determine the present value of the future earnings of the individual.

An individual aged 35 years devotes for an example Rs.6 lakh annually towards various expenses of his family. He wishes to retire by the age of 60 years . The discount rate in the case is 6 percent. The human life value in the case would be around Rs.77 lakh. Simply put, this is the amount of insurance the individual needs on his life. Make a Plan to meet the target amount over the years. Also review economic value  periodically and modify the plan.
The case I mentioned at the beginning, the amount of insurance was highly inadequate. It was not even sufficient to clear the debt.
Lastly, one must insure but fair enough so that it takes good care of loved ones in one’s absence .
In my next writing I would share with you another approach of determining the Human Life Value.