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4 The Management Accountant - October 2020 www.icmai.in
www.icmai.in October 2020 - The Management Accountant 5
CMA Biswarup Basu
CMA Biswarup Basu has been elected as President of Committees of the Institute for the year 2019 -
the Institute for the period 2020-2021. 2020 such as Executive Committee, Examination
~~ CMA Biswarup Basu is a Fellow Member of Committee, Finance Committee, Disciplinary
the Institute of Cost Accountants of India and an Committee, Coordination Committee of ICAI, ICSI
alumnus of South Point High School, Kolkata. and ICAI and Director of ICMAI RVO, IPA ICAI,
~~ He started his Professional career in 1985 as a
Management Trainee in a Multinational Company ~~ He served the profession as the Chairman of
of repute and thereafter joined Bharat Coking Coal Members’ Services & Facilities Committee (2015-
Limited in 1988 as Finance Officer. Subsequently he 16 & 2016-17), Journal & Publications Committee
joined a wholly owned company of the Government (2017-18) & Members in Industry Committee
of West Bengal in a Senior Position where he served (2018-19). During his tenure he has taken several
for 29 years. He has a total stint of 34 years of initiatives that would increase the scope and
Industrial exposure. development of the profession.
~~ He was elected to the Central Council of the Institute ~~ Additionally, he was a member of the Finance
for the terms 2015 – 2019 and 2019 - 2023 as a Committee in the year 2015-16 and member of the
Central Council Member. Examination Committee for the year 2016-17, 2017-
18 and 2018-19.
~~ He was elected as the Vice President of the Institute
for the year 2019 - 2020. ~~ He had the privilege of serving the profession as
a Member of the Eastern India Regional Council
~~ He was the Chairman of Training & Educational
(EIRC) for 3 terms viz.1995-98, 1998-2001, 2004-
Facilities and Placement Committee (2019 - 2020)
2007 in various capacities as Treasurer (1995-96 &
and Members in Industry Committee (2019 - 2020).
1996-97), Secretary (1996-97 & 1997-98) and Vice
~~ He was also a member of various important Chairman during the period 2000-01.

6 The Management Accountant - October 2020 www.icmai.in


CMA P. Raju Iyer has been elected

as Vice President of the Institute for the
period 2020-2021.
~~ He is a Fellow Member of the
Institute of Cost Accountants of
India and is in practice since 2000.
~~ He is also Associate Member CMA P. Raju Iyer
of the Institute of Company
Secretaries of India [ICSI] and the
Chartered Institute of Management
Accountants (CIMA), UK. Circle, SIRC of ICSI.
~~ He has a rich experience over a period 4 decades with ~~ Treasurer, Consultancy Development Centre (DSIR,
increasing and progressive responsibilities covering wide Ministry of Science & Technology), Chennai Chapter.
areas of organisational development, wealth creation & ~~ Has been Convener for Online Taxations Forum,
value addition process to the profession. Confederation of Indian Industry [CII] Chennai during
~~ He has been the Member of the Council of the Institute 2010 - 12.
(Term 2015-2019) and Elected consecutively for the ~~ Associated with Professional Bodies and management
Second Time to the Council of the Institute (Term 2019- association for the networking of members.
2023). ~~ Visiting Faculty for professional courses at various
~~ He has been Chairman and member of various reputed Institutions, Colleges and Universities, ACCA-
Committees and Boards of the Institute of Cost UK & CIMA-UK, MMA, CII and other Associations.
Accountants of India such as Professional Development ~~ Has been prolific and motivating speaker, mentored
& CPD Committee, Cost Auditing & Assurance Standards youth and professionals with wide network in India and
Board, Cost Accounting Standards Board and other Abroad. He has addressed in national and international
important committees of the Institute. conferences, seminars, symposium for students and
~~ The Internal Auditing & Assurance Standards Board professionals.
established by the Institute for the first time in 2019 was ~~ Received Par Excellence President Award from His
nurtured under his Chairmanship. Excellency Shri. Rossaiah, then Governor of Tamil Nadu
~~ Being a professional with strong desire towards inclusive ~~ Prestigious Melvin Jones Fellow (PMJF Lion). As a
growth of the profession, he was elected as the Chairman President of the Club during 2012-13 planted 1,000’s
of SIRC of the Institute of Cost Accountants of India for of trees and career Guidance to Reach the Unreached,
the year 2013-14, (Performed at various capacities as mentoring youth and grooming professionals.
RCM from 2007).
~~ Treasurer, Samskar Bharathi, Tamil Nadu (Organisation
~~ Founder and Convener 2012-13, Chennai West Study
dedicated to promote Culture and Arts) Tamil Nadu.

www.icmai.in October 2020 - The Management Accountant 7

Greetings!!! manufacturing, market, and supply One of the most crucial factors

chains. All our demands during the for Indian products, for Atmanirbhar
on’ble Prime Minister of crisis were met locally. Now, it is time Bharat to succeed, is the competitive
India on May 12 in his to be vocal about local products and and sustainable price for which CMAs
speech to the nation help them become global. will have to play a crucial role. CMAs
announced ‘Rs 20 lakh   with their professional expertise can
Self-Reliant India: Pathway to a Robust Economy

crore package’, which would be In spite of financial difficulties suitably analyze SWOT positions
equivalent to 10% of the country’s owing to COVID-19, the government and frame innovative governance
GDP, as a part of COVID-19 relief is determined to strengthen the mechanisms to really improve the
measure. Named ‘Atmanirbhar MSMEs to contribute their full competitive edge of the organization.
Bharat Abhiyaan’, which translates potential for the overall development Self-Reliant India holds immense
to “Self Reliant India Campaign”, of the country. Like, Rs 3 lakh crore potential for emerging roles like
and said this package would collateral-free loans; the government cost rationalization and commercial
emphasize on Land, Labor, Liquidity, will facilitate the provision of Rs aspects of Agriculture, consultancy
and Laws. Atmanirbhar Bharat 20,000 crore as subordinate debt to and guidance for MSMEs etc. where
Abhiyaan would encompass cottage functioning MSMEs declared NPAs CMAs can contribute with their
industries, home industries, small- or stressed; Rs 50,000 in equity in expert knowledge in costing and
scale industries and MSMEs whilst MSMEs through a Fund of Funds; productivity.
also lending a shoulder to labourers, revised the definition of MSMEs; to  
farmers, middle class and also for protect from unfair competition from This issue presents a good number
Indian industries. In his speech, he foreign companies, global tenders will of articles on the cover story “Self-
also said that the upcoming reforms not be allowed by government upto Reliant India: Pathway to a Robust
would have a broadened impact. Rs. 200 crores, etc. Now, it is for the Economy” written by distinguished
These reforms will be for, rational MSMEs to make use of these benefits experts. We look forward to
tax system, simple and clear rules- and contribute their best to enable the constructive feedback from our
of-law, good infrastructure, capable country to realise its ambitious goals readers on the articles and overall
and competent human resources, and of ‘Make in India’ and ‘Self-Reliant development of the Journal. Please
building a strong financial system to India’ through the development of send your emails at editor@icmai.in.
encourage business, attract investment goods and services to substitute the We thank all the contributors to this
and strengthen the ‘Make in India’ imported goods and services, and also important issue and hope our readers
programme. to improve its export performance. would enjoy the articles.
Self-reliance is very important in the
There are five pillars to becoming field of defence too. A country that
self-reliant: economy, infrastructure, depends on imports for its defence
system, demography, and demand equipment will never be strong and
that will bring a quantum jump in the self-respecting. Therefore, being
Indian economy. Infrastructure should self-sufficient in the defence sector
become the identity of India; System is linked to the ‘self-respect’ and
should be based on 21st-century ‘sovereignty’ of our country. New
technology-driven arrangements; Education Policy (NEP) announced
Vibrant Demography is our source by the government will also play a
of energy for a self-reliant India; and key role in creating a self-reliant India
Demand, whereby the strength of our and open up the education sector for
demand and supply chain should be facilitating greater global exposure
utilized to full capacity. The pandemic for Indian students.
has taught us the importance of local  

8 The Management Accountant - October 2020 www.icmai.in

Global ideas and insights. Latest trends, opinion, and practices. Innovative thinking from
international gurus. In-depth case studies and more. Backed by the prestigious All India
Management Association, it’s what leaders in India read to succeed.

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www.icmai.in October 2020 - The Management Accountant 9

Cover Stories on the topics given below are invited for ‘The Management Accountant’
for the four forthcoming months
• Agricultural Pricing Policy in India: Opportunities and Challenges
• Global Agro Pricing Policy v/s Indian Agro Pricing Policy
November 2020

• Minimum Support Prices(MSP): Key to protect farmers


• Direct Benefit Transfer for Agri Input Subsidy


Agricultural Costing • Transformation of Agriculture to Achieve the Sustainable Development Goals (SDGs)
• Direct Benefit Transfer (DBT) for Agri Input Subsidy
& Pricing • Doubling Farmer’s Income by 2022: Ease of doing Agri Business
• Government policies and Governance Reforms in Agricultural Marketing
• Advancement in digital technology: Farming gets smart and frugal
• Nanotechnology in Agriculture
• Agricultural Costing - Role of CMAs

• Significant role of MSMEs towards attainment of visionary Atmanirbhar Bharat

• Revision of definition of MSMEs: A step to boost investment and Ease of Doing Business
December 2020

• COVID-19 and its impact on Indian MSMEs


• Innovation and Digitalization: Changing the MSME landscape

Indian MSMEs:

• RestartIndia: an Advisory Platform for MSMEs

Key to Economic • Equity Infusion in MSME
Restart • e-Market linkage for MSMEs
• Government Packages to cater MSMEs in the new Normal
• Subordinate Debt for Stressed MSMEs
• Potential for MSMEs in the Defence Sector
• Exploring opportunities for MSMEs in India post COVID-19: Role of CMAs

• Inclusion of Startups in Priority Sector Lending: a welcome move towards inclusive development of
the nation
• Loan Restructuring Scheme for COVID-19 hit stressed borrowers
January 2021

• Future of Banking post-Covid 19 pandemic

Catalytic role of the

• Credit guarantee to MSMEs in support of Atmanirbhar Bharat Abhiyaan


Banking Sector for • Loan Moratorium: an Aid to Ease Financial Stress

India’s Economic • Door Step Banking: a Revolutionary Initiative
Revival • The Digital imperative for Banking in the New Normal
• Emerging Cyber Security Threats in the Banking Sector
• Artificial Intelligence (AI): A major game-changer in the Bank Risk Management
• EASE 3.0 — Smart, Tech-enabled Banking for Aspiring India: Exploring professional scope for CMAs

• Cost Benefit Analysis (CBA) in Healthcare Industry

• Time-driven Activity Based Cost Model for improved Healthcare Resource Mapping
• Balanced Scorecard: A Powerful Organizational Tool for Strategic Planning and Driving Performance
in Healthcare Industry
February 2021

• Impact of Artificial Intelligence for Cost-Effective Clinical Trials in the New Normal

Healthcare Cost

• Price-Transparency in the age of COVID-19: The growing importance of Cost Accounting

Management in India: • Health Insurance: Demystify New Challenges, Products, and Opportunities during COVID-19 and
The Way forward beyond
• Wellness Programmes: A remedy for reducing Healthcare Costs
• Frugal Innovation, Digital Health and Data Sciences: the Way forward for India to attain Trillion Dollar
• Government Policies to curb Healthcare Cost and provide affordable Healthcare Services for the mass
• Value Addition to Healthcare: Role of CMAs

The Above Subtopics are only suggestive and hence the articles may not be limited to them only.
Articles on the above topics are invited from readers and authors along with scanned copies of their recent passport size photograph
and scanned copy of declaration stating that the articles are their own original and have not been considered for anywhere else.
Please send your articles by e-mail to editor@icmai.in latest by the 1st week of the previous month.


CMA Bhawan, 4th Floor, 84 Harish Mukherjee Road, Kolkata - 700025, India
Board: +91 33 2454 0086 / 87 / 0184 Tel-Fax: +91 33 2454 0063

10 The Management Accountant - October 2020 www.icmai.in

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www.icmai.in October 2020 - The Management Accountant 11

CMA Biswarup Basu
The Institute of Cost Accountants of India

to the near-total closures of schools, universities

and colleges. Online learning has become a critical
lifeline for education, as institutions seek to minimize
the potential for community transmission. The
Institute has taken all the possible measures for the
convenience of its members, students and other
stakeholders in the present scenario. Online classes
for students and online home based examination
for the foundation course are some of the decisions
already implemented successfully. The Institute will
continue to take every possible step in the overall
interest of student community.
“If your actions inspire others to dream more, We have indeed come a long way but the development
learn more, do more and become more, you are a of the CMA profession is a continuous process. My
leader.” mission would be to accelerate this process of growth
despite these challenging times. Today, there is a need
- John Quincy Adams to anticipate the future and create suitable action plans
to stay ahead. I have pledged to work towards growth

My Dear Professional Colleagues, and development of the profession and the Institute.
My action plan includes the following:
t is indeed a great honour to serve as the 63rd President of
the 2nd largest Cost & Management Accounting body in ~~ To implement Online Examination for
the world and the largest in Asia. I am extremely grateful Intermediate and Final Level Students.
to all members and my council colleagues for reposing ~~ To prepare subject wise videos covering
their trust and confidence in me for leading the forward march full syllabus of Intermediate and Final
of CMA profession. I would also like to thank my predecessor, Examination.
CMA Balwinder Singh for his continuous guidance during my ~~ To make practical training compulsory for
tenure as Vice President. This great responsibility that now rests Intermediate and Final Level Students.
on my shoulders is both an opportunity and a challenge. I assure
~~ To increase the efficacy of the cost audit
you that I will leave no stone unturned to ensure that our Institute
mechanism and use this as a tool for better
attains greater heights of professional excellence and recognition
management control especially in view of the
within the country as well as all over the world. I sincerely believe
devastating effect of the pandemic.
that with collective & organised efforts of all stakeholders of the
Institute, we will take the profession to greater heights of glory ~~ To increase automation and provide efficient
and success. services to members and students.
I would like to take this opportunity to congratulate CMA P Raju ~~ To enhance the brand image of the CMA
Iyer, on his election as the Vice-President of the Institute. I am profession.
confident that his rich experience and professional competence ~~ To create more opportunities for the members.
will undoubtedly accelerate our endeavours and would also help ~~ To regularly bring out valuable publications
me in carrying out my responsibilities. for the capacity building of our members in all
The entire world today is reeling under the threat and aftermath professional areas.
of the unprecedented COVID-19 pandemic, which has not only ~~ To publish practical oriented articles in the
impacted human lives, the business activities but also the education Management Accountant Journal.
system as well. This is a crisis that has affected everyone. The
~~ To launch multiple online value added
pandemic has affected educational systems worldwide, leading

12 The Management Accountant - October 2020 www.icmai.in

certificate courses for the members. and training for personnel of the Indian Audit and Accounts
~~ To explore possibilities of establishing more tie ups Department (IA & AD) on 28th September 2020. This MOU
with International professional accounting bodies. provides for establishing academic collaboration between the
Institute and RTI Mumbai in training programmes, including
~~ To extend expert services of CMA profession and
seminars / webinars/ workshops / conferences, in areas of
the Institute to all the regulatory authorities in the
common interest. It also offers to establish collaboration for
exchange of guest faculty for training / research / consultancy
~~ To further augment the network of the Institute by and for offering project / policy research in common areas.
opening new chapters and overseas centres. Both the Institutes may provide material for considering
~~ To revise the CMA Curriculum to meet the growing their inclusion in each other’s newsletters, journals and
needs of government, industry and profession in the other publications and can also identify particular areas of
light of national and international perspectives. research of mutual interest.
~~ To produce world class Cost & Management I along with CMA P. Raju Iyer, Vice President, CMA
Accountants. Balwinder Singh, Immediate Past President, CMA
~~ To substantially enhance students and members’ Chittaranjan Chattopadhyay, Council Member, CMA
strength. Kaushik Banerjee, Secretary and CMA Dr. D.P. Nandy, Sr.
Director of the Institute attended the MOU signing event
~~ To give thrust to quality applied research studies.
and on behalf of RTI Mumbai, Ms. Alka Rehani Bhardwaj,
~~ To substantially enhance visibility of the Institute and Director General, RTI, Mumbai and CMA Mahadevan
CMA profession in the country & abroad. P., Core Faculty/Knowledge Centre & Commercial, RTI,
~~ To document global best practices and practical Mumbai were present. I would also like to place on record
case studies in the domain of cost & management the sincere efforts of CMA Chittaranjan Chattopadhyay,
accounting. Central Council Member to ensure this partnership between
I request all stakeholders to share their views/suggestions the Institute and RTI Mumbai.
to help me implement this action plan. If everyone is moving
forward together, then success takes care of itself. Let us Internal Audit Month by Hyderabad Chapter
work towards achieving our goals together. Hyderabad Chapter of the Institute observed the month of
September as “Internal Audit Month” and organized a series
Meeting with MCA Officials of webinars during the month on “Capacity Building for
I along with CMA P. Raju Iyer, Vice-President and CMA CMAs on Internal Audit”. CMA B.B. Goyal took webinar on
Balwinder Singh, Immediate Past President of the Institute “Scope of Internal Audit for CMAs and Risk Based Internal
extended greetings to Shri Rajesh Verma, Secretary to the Audit” in the inaugural program held on 6th September
Government of India, Smt. Anjali Bhawra, Additional 2020. Later, he also wrote an article on “Internal Audit – A
Secretary to the Government of India and Shri Manoj Pandey, Valuable Tool”. On 27th September 2020, I participated in
Joint Secretary to the Government of India, Ministry of the valedictory session as its Chief Guest and CMA P Raju
Corporate Affairs on 21st September 2020 and discussed the Iyer, Vice President, CMA Dr. K Ch AVSN Murthy, Council
matters related to professional developments and ongoing Member and CMA Jyoti Satish, Chairperson, SIRC of the
activities of the Institute. Institute as its Guests of Honour. I express my gratitude
to all our eminent resource persons who have shared their
Meeting on GST Account Assistant Scheme valuable experience in various aspects of Internal Auditing
and I am sure that these webinars immensely benefitted
I attended a meeting convened by Shri Manoj Pandey, Joint all the participants to enhance their professional skills. I
Secretary, Ministry of Corporate Affairs on 25th September congratulate the Hyderabad Chapter of the Institute for this
2020 to discuss the modified GST Account Assistant Scheme excellent initiative and efforts to organize these Webinars
and submitted the suggestions and comments of the Institute to update the members on various aspects of Internal Audit.
for the consideration of the MCA. On this occasion, Hyderabad Chapter also brought out an
e-Souvenir containing highly valuable articles on Internal
Meeting of the Committee to advise on Valuation Audit.
I attended the 17th meeting of the Committee to advise WEBINT on Faceless Assessment 2020
on valuation matters held by IBBI on 25th September 2020 I am happy to inform that the Institute organized a
through video conferencing. The Committee deliberated on WEBINT on Faceless Assessment 2020 on 28th September
the departures on IVS 410: Development Property. 2020. We are grateful to Shri Rakesh Mishra, Chief
Commissioner of Income Tax (CCIT) Ranchi & Chief of
MOU with RTI Mumbai ReAC Jharkhand & Bihar for kindly agreeing to be the
I am pleased to share that the Institute has signed a MoU Chief Guest and Speaker to address the participants on every
with RTI Mumbai, a Training Institute of the Comptroller details of newly introduced Faceless Assessment Scheme
and Auditor General of India (C&AG), engaged in research by the Government of India. I had the opportunity to share

www.icmai.in October 2020 - The Management Accountant 13

my views on Faceless Assessment. CMA P Raju Iyer, Vice of September 2020, where Cost Accountants are required in
President, CMA Balwinder Singh, Immediate Past President, National Health Mission Chhattisgarh, IFCI Infrastructure
CMA Chittaranjan Chattopadhyay, Council Member, CMA Development Limited (IIDL), Airport Authority of India
Rakesh Kumar Sinha, Practising Cost Accountant also Raipur, West Bengal Minorities’ Development & Finance
delivered their special addresses on the topic. Corporation, West Bengal Power Development Corporation
Limited, Jharkhand Urja Sancharan Nigam Limited, Bharat
WEBINT on National Education Policy 2020 Sanchar Nigam Limited, Compensatory Afforestation
A WEBINT on the National Education Policy 2020 was Fund management and Planning Authority (CAMPA) West
organized by the Institute on 30th September 2020. I along Bengal, NHPC Limited, Bharat Petroleum Corporation
with CMA P Raju Iyer, Vice President of the Institute had Limited, Coal India Limited, Software Technology Parks of
the privilege to address the participants on the major reforms India (STPI), India Government Mint, Ministry of Textile
proposed under New National Educational Policy 2020 to etc.
the overall Indian education system in general and higher During the month around sixty webinars were organised by
education level in particular. CMA H. Padmanabhan, Council the different committees of the Institute, Regional Councils
Member hosted the WEBINT and Dr. Vinayaka Deshpande, and Chapters on the topics of professional relevance and
Professor Department of Business Management, Rashtrasant importance. We are sure our members are immensely
Tukadoji Maharaj Nagpur University (RTMNU), Nagpur benefited with the deliberations in the sessions.
addressed on the topic and explained how the National
Education Policy seeks to strengthen research and innovation TAX RESEARCH DEPARTMENT
in the country to help it progress in a competitive world. NEP The Tax Research Department has been functioning
2020 will give direction to country’s goal of Atamnirbhar efficiently and it has brought out various publications. The
Bharat and help India become more self-reliant in future. department has released 71st and 72nd Tax bulletin. On
The WEBINT was well appreciated by the participants. the Seminar front at present the Tax Research Department
is organizing Online WEBINT on the theme “Faceless
I now present a brief summary of the activities of various Assessment 2020” on a pan India basis from 1st September
Departments of the Institute, in addition to those detailed 2020 through the Institute’s vast network of Regional
above: Councils and Chapters. Eminent speakers like Shri Rakesh
Mishra, Chief Commissioner of Income Tax, Ranchi and
DIRECTORATE OF CAT Chief of ReAC of Jharkhand and Bihar, Dr. G.M. Doss,
� CAT Examination: July 2020 Term Commissioner of Income Tax, Chennai, (Now, Additional
The result of Foundation Course (Entry level) Director General (Vigilance – South Zone), R. Krishna
Part- I July, 2020 Examination of CAT Course was Kumar, Addl. Commissioner of Income Tax, Shri V M
declared after the examination was concluded on Jayadevan, Assistant Commissioner of Income Tax, Anil G
13th September, 2020. I would like to congratulate Niar, ITO addressed these Webinars. Webinars on Practical
all the students who have passed the examination. I Issues in filing GSTR 9 & 9C, Faceless Assessment under
would also like to inform that by virtue of passing Income Tax Act - Recent Amendments, Recent Changes in
CAT examination they are now eligible to take GST - Portal & Law and Taxation of Works Contract were
direct admission in Intermediate Course of Cost also conducted during the month.
and Management Accountancy (CMA). I heartily In the regular ongoing activities, 7th Batch of Certificate
congratulate Team CAT and place on record astute Course on GST, 3rd Batch of Advanced Certificate Course
leadership of CMA H. Padmanabhan for successfully on GST, Certificate Course on Filling and Filing of
conducting the examination, which was held for the Returns and Certificate Course on TDS have been started.
first time online. The admission to the next batch of these multiple courses
� New ROCC would start on 2nd October 2020. Even admission for the
two new courses “Advanced Course on GST Audit and
I congratulate CMA H. Padmanabhan, Chairman CAT
Assessment Procedure” and “Advanced Course on Income
for establishment of yet another ROCC at Varanasi
Tax Assessment and Appeal” will also commence from 2nd
(N-244). The aspirants of CAT course from Varanasi
October 2020. Apart from these, 3rd batch of Crash Course on
and Eastern Uttar Pradesh would be benefitted by this
GST has been started in D.G Vaishnav College of Chennai
new ROCC.
for the benefit of its students. Beside these Taxation portal
is being updated time to time with latest amendments in
DT & IDT departmentally. And lastly, the department has
also submitted its representation to Shri Virender Kumar
I am pleased to inform you that the PD Directorate sent Choudhary, Pr. ADG, GST, Mumbai with reference to
representation letters by mail to various organizations for Video Conference held on 4th September 2020 regarding
inclusion of Cost Accountants for providing professional decriminalization of certain offences under the GST Laws
services. and to CBIC Chairman for extending the date of E-Invoicing
Please visit the PD Portal for Tenders/EOIs during the month in GST.

14 The Management Accountant - October 2020 www.icmai.in

BANKING, FINANCIAL SERVICES AND CMA Dr. Gopal Krishna Raju, eminent resource
INSURANCE COMMITTEE person took webinars on Ind AS 112 - Disclosure
The Institute of Cost Accountants of India and the National of Interests in other entities, CFR - Study Note 3 -
Institute of Securities Markets (an educational Initiative of Illustration 1 to 3, CFR - Study Note 3 - Illustration
SEBI) has jointly launched the 1st batch of certificate course 4 to 11, CFR - Study Note 3 - Illustration 12 to 17
on Investment Management in the genre of Capital Markets. and CFR - Study Note 3 - Illustration 18 to 22. CMA
The members, students and others (minimum graduate) are Shabeer Ali, eminent resource person took webinars
eligible for the course for Level I. The course is designed on Introduction to Profits and Gains from Business
into three levels; Level I on Stock Selection and Trading in and Profession, How to calculate Profits and Gains
Equity, Level II on Technical Analysis and Mutual Funds from Business and Profession and Problem Solving -
and Level III on Basic Derivatives and Derivatives Trading Profits and Gains from Business and Profession.
After qualifying the Level I the candidates are eligible for
admission for Level II. The candidates who are qualifying the I feel privileged to congratulate and welcome all the new
Level II are thereafter eligible for Level III. The course fees 153 Associate members who were granted membership and
for each level is Rs. 3600/- plus GST. The course duration 47 Associate members who were upgraded to Fellowship
for each level is 30 hours each conducted in an online mode during the month of September 2020. To strengthen the
through Webex Platform. profession further, I take this opportunity to call upon all final
passed students who are eligible to apply for membership
The benefits for the course are that it would enhance from
to avail the online application system for application of
working knowledge to expert knowledge in trading, the
Associate membership at the earliest.
course is a hands on Experience in Algo Labs in real market
data. The course is a mix of theoretical and practical Training Members will be happy to note that a new integrated
and technical understanding of capital markets. The classes online platform is being conceptualized wherein the online
would be deliberated by expert faculties of NISM who experience will be smoother and more robust.
have profound experience in teaching in Capital Markets.
The participants would undertake online examination and INSOLVENCY PROFESSIONAL AGENCY (IPA) OF
Certification by NISM and the Institute of Cost Accountants THE INSTITUTE
of India. There is also an option of a bridge course for
I am pleased to inform you that the Insolvency
non-commerce/management graduates. The admission has
Professional Agency of the Institute has organized Online
started and we request all members and students to take
Workshop on Retention of Records, Master Class on
the opportunity for enrolling for the course for their skill
Avoidance Transactions, Online workshop on Draft forms
development and capacity building.
for PG to CD, Master Class on Committee of Creditors and
The BFSI has also started the 2nd batch admission for Online workshop on Corporate Liquidation Process for the
the three courses namely Certificate Course on Concurrent professional development of its members.
Audit of Banks, Certificate Course on Credit Management of
I wish prosperity and happiness to members, students and
Banks and Certificate Course on Treasury and International
their family on the occasion of Gandhi Jayanti, Durga Puja,
Banking. We request all members and students to take
Vijayadashami, Id-e-Miladi, and Maharishi Valmiki Jayanti
admission and benefit. It is conducted with the objectives of
and wish them success in all of their endeavours.
skill development and capacity building.
The BFSI Department has also in the verge of publishing
the Guidance Note on Restructuring of Bank Loans in Stay safe and healthy!
MSME Sector. It would be a unique document and help the
CMAs to audit proposals of restructuring of Bank Loan in With warm regards,
MSME sector.


The committee organised the following WEBINTs and
webinars addressing varied topics for stakeholders: CMA Biswarup Basu
~~ WEBINT: The committee organized WEBINTs in October 1, 2020
association with AAT Board and CAT presented by
eminent resource person CMA Dr. Gopal Krishna
Raju on Ind AS 108 Operating Segments, Ind AS 24
Related Party Disclosures, Ind AS 12 Income Taxes
and Ind AS 23 Borrowing Costs.
~~ Webinar (Students): The committee organized
8 webinars during the month of September 2020.

www.icmai.in October 2020 - The Management Accountant 15

(Statutory body under an Act of Parliament)
Standing & Other Committees for the year 2020-2021
(Quorum indicated is as per regulation 81 (1) of the CWA Regulations, 1959)


1. Executive Committee (Quorum: 3) 4. Board of Discipline u/s 21A (1)

Chairman Presiding Officer

1. CMA Biswarup Basu, President 1. CMA Rakesh Singh

Members 2. CMA Balwinder Singh
2. CMA P Raju Iyer, Vice President
3. CMA Ashwinkumar G. Dalwadi Secretary
4. CMA Debasish Mitra CMA Rajendra Bose, Director (Discipline)
5. CMA Papa Rao Sunkara
6. CMA (Dr.) K Ch A V S N Murthy 5. Disciplinary Committee U/s 21B (1)
7. CMA Vijender Sharma
Presiding Officer
Secretary 1. CMA Biswarup Basu
CMA Kaushik Banerjee, Secretary
2. Examination Committee (Quorum: 2) 2. CMA P Raju Iyer
3. CMA Ashwinkumar G. Dalwadi
4. CA Nalini Padmanabhan, Government Nominee
Chairman 5. Shri G.V. Krishna, Government Nominee
1. CMA Biswarup Basu, President
Members CMA Rajendra Bose, Director (Discipline)
2. CMA P Raju Iyer, Vice President
3. CMA Balwinder Singh 6. Disciplinary Committee U/s 21D
4. CMA Neeraj D. Joshi
5. CMA H. Padmanabhan Presiding Officer
6. Shri Devendra Kumar, Government Nominee 1. CMA Biswarup Basu
7. CS Makarand Lele, Government Nominee
Secretary 2. CMA P Raju Iyer
3. Shri Sushil Behl, Government Nominee
CMA Kaushik Banerjee, Secretary
3. Finance Committee (Quorum: 2) CMA Kaushik Banerjee, Secretary
Chairman 7. Training & Education Facilities and Placement
1. CMA Biswarup Basu, President Committee (Quorum: 3)

Members Chairman
2. CMA P Raju Iyer, Vice President 1. CMA Balwinder Singh
3. CMA Balwinder Singh
4. CMA (Dr.) Ashish P. Thatte Members
5. CMA (Dr.) V. Murali 2. CMA Ashwinkumar G. Dalwadi
6. CMA Chittaranjan Chattopadhyay 3. CMA Debasish Mitra
4. CMA (Dr.) V. Murali
7. CA Mukesh Singh Kushwah, Government Nominee
5. CMA Chittaranjan Chattopadhyay
6. CMA Vijender Sharma
Secretary 7. CMA Pravakar Mohanty (Co-opted)
CMA Arnab Chakraborty, Director (Finance) 8. CMA (Dr.) Paritosh Basu (Co-opted)

CMA (Dr.) Debaprosanna Nandy, Sr. Director

16 The Management Accountant - October 2020 www.icmai.in

8. Journal & Publications Committee (Quorum:3) 11. International Affairs Committee (Quorum:3)

Chairman Chairman
1. CMA (Dr.) K Ch A V S N Murthy 1. CMA Vijender Sharma

Members Members
2. CMA Debasish Mitra 2. CMA Ashwinkumar G. Dalwadi
3. CMA (Dr.) V. Murali 3. CMA (Dr.) Ashish P. Thatte
4. CMA Chittaranjan Chattopadhyay 4. CMA Papa Rao Sunkara
5. CMA Vijender Sharma 5. CMA (Dr.) K Ch A V S N Murthy
6. CMA Rakesh Bhalla 6. CMA Chittaranjan Chattopadhyay
7. CMA Raja Ghosh (Co-opted) 7. CMA Avijit Goswami (Co-opted)
8. CMA Poonam Shah (Co-opted) 8. CMA Sunita Singh (Co-opted)

Secretary Secretary
CMA Sucharita Chakraborty, Joint Director CMA Yogender Pal Singh, Dy. Director

9. Professional Development Committee (Quorum: 3) 12. Indirect Taxation Committee (Quorum: 3)

Chairman Chairman
1. CMA Vijender Sharma 1. CMA Chittaranjan Chattopadhyay

Members Members
2. CMA Ashwinkumar G. Dalwadi 2. CMA Balwinder Singh
3. CMA Neeraj D. Joshi 3. CMA Ashwinkumar G. Dalwadi
4. CMA Papa Rao Sunkara 4. CMA Debasish Mitra
5. CMA Chittaranjan Chattopadhyay 5. CMA H. Padmanabhan
6. Shri Sushil Behl, Government Nominee 6. CMA (Dr.) V. Murali
7. CA Mukesh Singh Kushwah, Government Nominee 7. CMA (Dr.) K Ch A V S N Murthy
8. CMA Mukesh Kumar Gupta (Co-Opted) 8. CMA Vijender Sharma
9. CMA Gr. Cpt. R. K. Joshi (Co-opted) 9. CMA Rakesh Bhalla
10. CMA V.S. Datey (Co-opted)
Secretary 11. CMA Ashok B. Nawal (Co-opted)
CMA Nisha Dewan, Addl. Director 12. CMA Debasis Ghosh (Co-opted)

10. Regional Council & Chapters Coordination Secretary

Committee (Quorum: 3) CMA Rajat Kumar Basu, Addl. Director

Chairman 13. Direct Taxation Committee (Quorum: 3)

1. CMA (Dr.) K Ch A V S N Murthy
Members 1. CMA Rakesh Bhalla
2. CMA Neeraj D. Joshi
3. CMA Debasish Mitra Members
4. CMA H Padmanabhan 2. CMA Balwinder Singh
5. CMA Chittaranjan Chattopadhyay 3. CMA Neeraj D. Joshi
6. CMA Vijender Sharma 4. CMA (Dr.) Ashish P. Thatte
7. CA Mukesh Singh Kushwah, Government Nominee 5. CMA H. Padmanabhan
8. CMA Amal Kumar Das (Co-opted) 6. CMA Papa Rao Sunkara
9. CMA Ajay Deep Wadhwa (Co-opted) 7. CMA Chittaranjan Chattopadhyay
8. CMA Harijiban Banerjee (Co-opted)
Secretary 9. CMA Rakesh Sinha (Co-opted)
CMA Arup Sankar Bagchi, Sr. Director
CMA Rajat Kumar Basu, Addl. Director

www.icmai.in October 2020 - The Management Accountant 17

14. Committee for Accounting Technicians (Quorum: 7. CS Makarand Lele, Government Nominee
3) 8. CMA L.D. Pawar (Co-opted)
9. CMA Archana Gupta (Co-opted)
1. CMA H. Padmanabhan Secretary
Ms. Vibhu Agrawal, Deputy Director
2. CMA Balwinder Singh 18. Information Technology Committee (Quorum:3)
3. CMA Ashwinkumar G. Dalwadi
4. CMA Papa Rao Sunkara Chairman
5. CMA (Dr.) K Ch A V S N Murthy 1. CMA Ashwinkumar G. Dalwadi
6. CMA Chittaranjan Chattopadhyay
7. CMA Rakesh Singh (Co-opted) Members
8. CMA P.V. Bhattad (Co-opted) 2. CMA Balwinder Singh
3. CMA Neeraj D. Joshi
Secretary 4. CMA (Dr.) V. Murali
CMA Rajesh Jain, Deputy Director 5. CMA (Dr.) K Ch A V S N Murthy
6. CS Makarand Lele, Government Nominee
15. Members’ Facilities Committee (Quorum: 3) 7. CMA M.V. Vakil (Co-opted)
8. CMA Sankalp Wadhwa (Co-opted)
1. CMA (Dr.) V. Murali Secretary
Shri Ashish Tewari, Joint Director
2. CMA Ashwinkumar G. Dalwadi 19. Members in Industry Committee (Quorum: 3)
3. CMA Debasish Mitra
4. CMA Vijender Sharma Chairman
5. CMA Rakesh Bhalla 1. CMA Debasish Mitra
6. CA Mukesh Singh Kushwah, Government Nominee
7. CMA Madhu Kejriwal (Co-opted) Members
8. CMA Radha Krishna Gupta (Co-opted) 2. CMA H. Padmanabhan
3. CMA Papa Rao Sunkara
Secretary 4. CMA Chittaranjan Chattopadhyay
CMA Arup Sankar Bagchi, Sr. Director 5. CMA Rakesh Bhalla
6. Shri Devendra Kumar, Government Nominee
16. Infrastructure Committee (Quorum: 3) 7. CMA Debajit Sen (Co-opted)
8. CMA Bhaskar Basu (Co-opted)
1. CMA Biswarup Basu, President Secretary
CMA Arup Sankar Bagchi, Sr. Director
2. CMA Balwinder Singh 20. Banking, Financial Services & Insurance
3. CMA Debasish Mitra Committee (Quorum: 3)
4. CMA Papa Rao Sunkara
5. CMA (Dr.) K Ch A V S N Murthy Chairman
6. CMA Rakesh Bhalla 1. CMA Chittaranjan Chattopadhyay
7. Shri Sushil Behl, Government Nominee
Secretary 2. CMA Balwinder Singh
CMA Kushal Sengupta, Addl. Director 3. CMA (Dr.) Ashish P. Thatte
4. CMA Debasish Mitra
17. Corporate Laws Committee (Quorum: 3) 5. CMA H. Padmanabhan
6. CMA Papa Rao Sunkara
Chairman 7. CMA (Dr.) K Ch A V S N Murthy
1. CMA (Dr.) Ashish P. Thatte 8. Shri Sushil Behl, Government Nominee
9. CMA Tanmaya Pradhan (Co-opted)
Members 10. CMA Sunder Ram Korivi (Co-opted)
2. CMA Papa Rao Sunkara 11. CMA Ramana Rao (Co-opted)
3. CMA (Dr.) K Ch A V S N Murthy
4. CMA Vijender Sharma Secretary
5. CMA Rakesh Bhalla CMA Nisha Dewan, Addl. Director
6. Shri Manmohan Juneja, Government Nominee

18 The Management Accountant - October 2020 www.icmai.in

21. Management Accounting Committee (Quorum: 3) 3. CMA Neeraj D. Joshi
4. CMA Vijender Sharma
Chairman 5. Shri Manmohan Juneja, Government Nominee
1. CMA Neeraj D. Joshi 6. Shri Devendra Kumar, Government Nominee
7. CMA Chandra Wadhwa
Members 8. CMA Kunal Banerjee
2. CMA Ashwinkumar G. Dalwadi 9. CMA (Dr.) K. Narasimha Murthy
3. CMA (Dr.) Ashish P. Thatte 10. CMA M. Gopalakrishnan
4. CMA H. Padmanabhan 11. CMA B.B. Goyal
5. CMA (Dr.) K Ch A V S N Murthy 12. CMA Asim Kumar Mukhopadhyay
6. CS Makarand Lele, Government Nominee 13. CMA Murali Ganesan
7. CMA D.C. Bajaj (Co-opted) 14. CMA (Dr.) Shivani Inder
15. CMA (Dr.) Ashish Bhattacharya
Secretary 16. Nominee of Industry Associations
CMA Rajesh Jain, Deputy Director 17. Nominee of Industry Associations
18. Nominee of Industry Associations
22. Board of Advanced Studies & Research (Quorum: 19. Advisor (Cost), Cost Audit Branch, MCA
3) 20. Nominee of MCA
21. Nominee of CBIC
Chairman 22. Nominee of CBDT
1. CMA Debasish Mitra 23. Nominee of Regulatory bodies
24. Nominee of Regulatory bodies
Members 25. Nominee of Regulatory bodies
2. CMA Balwinder Singh 26. Nominee of Regulatory bodies
3. CMA (Dr.) V. Murali 27. Nominee of ICSI
4. CMA (Dr.) K Ch A V S N Murthy 28. Nominee of ICAI
5. CMA Chittaranjan Chattopadhyay
6. CMA Vijender Sharma Secretary
7. CMA Rajneesh Jain (Co-opted) CMA Tarun Kumar, Addl. Director
8. CMA (Prof.) Jayanta Sil (Co-opted)
25. Cost Auditing and Assurance Standards Board
Secretary (Quorum: 5)
CMA (Dr.) Debaprosanna Nandy, Sr. Director
23. Coordination Committee of ICAI, ICSI and ICAI 1. CMA Ashwinkumar G. Dalwadi
(Quorum: 3)
Chairman 2. CMA Balwinder Singh
1. CMA Biswarup Basu, President 3. CMA (Dr.) Ashish P. Thatte
4. CMA (Dr.) V. Murali
Members 5. CMA Vijender Sharma
2. CMA P Raju Iyer, Vice President 6. CMA I.P. Singh
3. CMA Balwinder Singh 7. CMA M.K. Anand
4. CMA (Dr.) Ashish P. Thatte 8. CMA Sankalp Wadhwa
5. CMA (Dr.) K Ch A V S N Murthy 9. CMA R. Parvathy
6. Shri Manmohan Juneja, Government Nominee 10. CMA Monika Kansal
7. CA Mukesh Singh Kushwah, Government Nominee 11. Advisor (Cost), Cost Audit Branch, MCA
12. Nominee of CAG
Secretary 13. Nominee of Regulatory bodies
CMA Kaushik Banerjee, Secretary 14. Nominee of Industry Associations

24. Cost Accounting Standards Board (Quorum: 8) Secretary

CMA Tarun Kumar, Addl. Director
1. CMA Balwinder Singh

2. CMA Ashwinkumar G. Dalwadi

www.icmai.in October 2020 - The Management Accountant 19

26. Internal Auditing and Assurance Standards Board 6. CMA Asim Kumar Mukhopadhyay
(Quorum: 6) 7. CMA Somnath Mukherjee
8. CMA (Dr.) Ashish Bhattacharya
Chairman 9. CMA T.C.A. Srinivasa Prasad
1. CMA P. Raju Iyer, Vice President 10. Advisor (Cost) or his nominated person

Members Secretary
2. CMA Neeraj D. Joshi CMA Tarun Kumar, Addl. Director
3. CMA Debasish Mitra
4. CMA (Dr.) K Ch A V S N Murthy 29. Quality Review Board (Quorum: 3)
5. CMA Chittaranjan Chattopadhyay
6. Shri Sushil Behl, Government Nominee Chairperson
7. CMA B.M. Sharma 1. CA Jyoti Chouhan, Government Nominee
8. CMA Ranganathan
9. CMA Mrityunjay Acharjee Members
10. CMA Bharat Bhushan Gupta 2. Shri Alok Samantarai, Government Nominee
11. CMA Anoop Kumar Kabra 3. Ms. Mausumi Ray Bhattacharya, Government Nominee
12. CMA Anil Kumar Kaushik 4. CMA Kunal Banerjee, Former President
13. CMA V. Gopalan 5. CMA (Dr.) A.S. Durga Prasad, Former President
14. CMA Rakesh Shankar
15. CMA B.R. Prabhakar Secretary
16. CMA D.L.S. Shreshti CMA Arup Sankar Bagchi, Sr. Director
17. CMA Sunil Chacko
18. CMA Sukirit Mehta
19. CMA Shyam Sunder Sonthalia
20. CMA Prabhakar Mukhopadhyay
21. Nominee of Industry Associations - President is Permanent Invitee to all the committees
22. Nominee of Professional Institute except Disciplinary Committees, Board of Discipline,
23. Nominee of CAG Quality Review Board and committees represented by him
24. Nominee of Bank as Chairman
25. Nominee of Regulatory body
- Vice President is Permanent Invitee to all the committees
Secretary except Disciplinary Committees, Board of Discipline,
CMA Kushal Sengupta, Addl. Director Quality Review Board and committees represented by him
as Chairman
27. Career Counselling Advisory Board (Quorum: 3)

1. CMA Papa Rao Sunkara

2. CMA Neeraj D. Joshi
3. CMA (Dr.) Ashish P. Thatte
4. CMA H. Padmanabhan
5. CMA (Dr.) V. Murali
6. CMA Rakesh Bhalla

CMA (Dr.) Debaprosanna Nandy, Sr. Director

28. Technical Cell (Cost Audit & Statutory

Compliances) (Quorum: 3)

1. CMA Chandra Wadhwa

2. CMA Balwinder Singh
3. CMA Ashwinkumar G. Dalwadi
4. CMA Kunal Banerjee
5. CMA B.B. Goyal

20 The Management Accountant - October 2020 www.icmai.in

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www.icmai.in October 2020 - The Management Accountant 21


CMA Biswarup Basu, President, CMA P.Raju Iyer, Vice-President of the Institute extending greetings to Shri Manoj Pandey,
Joint Secretary to the Government of India, Ministry of Corporate Affairs on 21st September 2020

CMA Biswarup Basu, President, CMA P. Raju Iyer, Vice-President of the Institute extending greetings to Smt. Anjali
Bhawra, Additional Secretary to the Government of India, Ministry of Corporate Affairs on 21st September 2020

CMA Biswarup Basu, President, CMA P. Raju Iyer, Vice-President, CMA Balwinder Singh, Immediate Past President of
the Institute extending greetings to Shri Rajesh Verma, Secretary to the Government of India, Ministry of Corporate Affairs
on 21st September 2020

22 The Management Accountant - October 2020 www.icmai.in


The honour of the President, CMA Biswarup Basu on arrival at Kolkata after being elected president of the Institute

www.icmai.in October 2020 - The Management Accountant 23


24 The Management Accountant - October 2020 www.icmai.in




Maintaining the public health

infrastructure requires easy availability
of medicines at affordable cost, especially
in times of epidemics. This makes the
pharmaceutical industry an important
strategic asset. Over the last two decades
India has made large strides in this sector
and it is now globally recognized for
pharmaceutical manufacturing. In this
article we shall discuss two promotional
programmes announced by the
government to further boost the domestic
CMA Arnab Chatterjee pharmaceutical industry and reduce
Ex-Principal Consultant
Oracle Consulting import dependence for certain critical
Kolkata components in the pharma value-chain.

Introduction The pharmaceutical industry in India is the third largest in
ndia is sometimes called ‘Pharmacy to the world’, the world by volumes and fourteenth largest by value. The
and not without good reason. Today, India provides total value of pharma products exported in the just concluded
a majority of the developing countries with vaccines financial year was more than USD 20 billion. Yet, inspite of
and medicines for killer diseases such as small pox, these statistics India relies heavily on imports for the basic
polio, HIV, tuberculosis and malaria, at affordable prices. It raw materials for pharmaceuticals, namely APIs (Active
is also one of the largest exporters of generic drugs to the pharmaceutical ingredient), KSMs (Key starting materials)
developed world, especially the US and countries of Europe. and DIs (Drug Intermediates).

www.icmai.in October 2020 - The Management Accountant 25

What are APIs, KSMs and DIs Indian Scenario
API stands for Active Pharmaceutical Ingredient, and In the last few decades the Indian pharmaceutical industry
is commonly known as ‘bulk drug’. Any medicine, be it for has grown manifolds to cater to both the domestic and export
a simple headache or for a complex disease like cancer, is markets. For the year 2019-20 pharma exports amounted to
made up of several ingredients, such as the API, binders, over USD 20 billion making India the top supplier of generic
preservatives, filling agents, stabilizers, colouring agents drugs accounting for 20% of world exports. Yet most of the
and so on. Among all these, API is the only material that growth has happened in the formulations business and the
has any therapeutic effect. Naturally, it is the most important bulk drugs segment has largely remained under-developed.
component of a medicine that is responsible for the cure, There are several large Indian pharma companies that sell
mitigation, treatment or prevention of a disease or disorder. domestically as well as export their formulations to the
The other ingredients like binders, preservatives, filling world, but only a handful of them also manufacture APIs.
agents etc. are together known as excipients. The whole of Some of the leading pharma majors such as Sun Pharma,
the medicine, the API and excipients together, is known as Cipla, IPCA, Lupin, Cadila, DRL, Torrent, and Intas are
a ‘formulation’. Tablets, capsules, syrups & suspensions, also API manufacturers, but have a small portfolio that is
injections are the different types of formulations. The same inadequate to fully meet the domestic requirement. So, the
formulation manufactured by different producers is sold majority of Indian pharma products rely on imports for their
under different names called ‘brands’. Medicines for which bulk drugs. As per government published data bulk drugs
patents have expired can be copied by other manufacturers accounted for 63% of the total pharma imports in the country
and these are known as ‘generics’. during 2018-19. For some critical life-saving drugs the
APIs are used by different pharmaceutical companies to dependence on imports is 80% or more.
manufacture their branded version of a formulation. The Such import dependence can have a severe impact
API itself may be sourced from the same supplier that on domestic availability of medicines in the event of
specializes in manufacturing bulk drugs only. Although disruptions in international trade, which makes it a matter
there are companies that manufacture their own APIs and of strategic interest. This was evident during the initial
sell branded medicines too, they are far fewer in number. stages of the ongoing coronavirus pandemic when normal
Most pharma companies use the bulk drugs produced trade relations and movement of materials were suspended
by others and only sell their own formulations. Take the to arrest the spread of the virus. This has emphasised the
example of ‘Paracetamol’ (also known as Acetaminophen), importance of self-reliance in the pharmaceutical API sector
which is the API in Crocin, Calpol, P500, Paracip etc., and consequently hassled to the formulation of several
which are the different brands sold by different companies promotional schemes to boost their domestic manufacture.
in formulations such as tablets and syrups. Here, the bulk
drug (API), which is ‘paracetamol’ is mostly obtained from Highlights of the incentive scheme for domestic
a handful of manufacturers. manufacture of critical pharmaceutical materials
APIs in turn are made from KSMs or Key Starting In March 2020 the government notified a new scheme
Materials, a general term used to signify chemical called the ‘Production Linked Incentive (PLI) Scheme
compounds, as well as biochemical materials, that are used for promotion of domestic manufacturing of critical Key
as the base to produce APIs. They can be raw materials, Starting Materials (KSMs)/ Drug Intermediates (DIs) and
intermediates or even other APIs, and are used as significant Active Pharmaceutical Ingredients (APIs) In India’. The
components to be incorporated in an API. On the other scheme shall provide financial incentives on domestic sales
hand, Drug Intermediates are materials produced in the of eligible products by the selected manufacturers. The
intermediate steps of API synthesis from KSMs and other scheme shall be applicable from the FY 2020-21 through
raw materials. There are also drug intermediates that are FY 2029-30 for a cumulative financial outlay of Rs. 6,940
procured from other producers and directly added at some crores.
stage of the API manufacturing process. The final product, The aim is to reduce the country’s dependence on imports
after undergoing processing and purification is known as the of key pharmaceutical materials by providing incentives for
API. A simple block diagram (image 1) shows the relation their domestic manufacturing. To attract new investment in
between these various components. this sector the scheme allows only greenfield projects with
specific minimum investments to be eligible for the incentives.
As part of the vocal-for-local drive, manufacturers registered
only in India are eligible for this scheme. Moreover, a list
of four target segments consisting of 41 products involving
53 key APIs that have been identified as import-dependent,
has been specified as part of the eligibility criteria. The four
target segments are:
(Image 1: Relation between KSM, DI and API)
(Source: Author) 1. Key Fermentation based KSMs/DIs;
2. Fermentation based Niche APIs/KSMs/DIs;

26 The Management Accountant - October 2020 www.icmai.in

3. Key Chemical Synthesis based KSMs/DIs; of strategic significance. These have been named ‘preferred
4. Other Chemical Synthesis based APIs/KSMs/DIs. products’ and companies proposing to manufacture them
shall be accorded priority in allocation of resources in
The target segments shall also determine the investment the parks. The list is almost 500 items long and includes
threshold and quantum of incentives available to the antibiotics, antivirals and other anti-infective drugs,
manufacturers. nutritional supplements, anti-diabetics, chemotherapeutics,
anti-hypertensives and drugs for many major ailments. The
For fermentation based products, incentive for FY 2023-24
ultimate objective is to make the country self sufficient in
to FY 2026-27 would be 20%, followed by 15% for the FY
the production of these key materials and reduce production
2027-28, and 5% for 2028-29. No incentives are applicable
costs of most major medicines.
for the period 2020-2023. Moreover, producers in the key
fermentation based segment shall be provided the maximum
incentive to the tune of Rs. 3,600 crores for the total duration Conclusion
of the scheme. India has an outstanding global reputation besides the right
For chemical synthesis based products the incentive for mix of R&D expertise, skilled personnel and established
the period 2022-23 to 2027-28 would be 10%. No incentives business processes in the pharma sector. Being a low-cost
will be available for the years 2020-21 and 2021-22. producer of medical products is another advantage that has
worked in its favour. Some of the biggest pharmaceutical
Highlights of the ‘Promotion of Bulk Drugs Parks’ producers in India also have their own API production lines,
scheme albeit at a smaller scale. With the new incentive schemes the
government has provided the required support to this industry
Another scheme approved by the government called
to rid India of import dependence for pharmaceuticals and
‘Promotion of Bulk Drugs Parks’ scheme will be valid
realize the localization vision of the principle of ‘Vocal for
from the financial year 2020-21 to 2024-25. The scheme
Local’. It is expected that within the next decade India shall
envisages providing one-time financial assistance for setting
achieve self-sufficiency in the production of these critical
up of common infrastructure facilities in three bulk drug
parks across the country. The sites of these parks shall be
proposed by state governments and a steering committee of
the central government shall provide the final approvals.
1. Dept. of Pharmaceuticals, GoI: https://
Financial assistance will be provided under the scheme to
the limit of 70% of the project cost for setting up of common
infrastructure. For the North Eastern states, the hilly states 2. India Brand Equity Foundation: https://www.ibef.
of Himachal Pradesh, Uttarakhand and Union Territories of org/industry/pharmaceutical-india/showcase
Jammu & Kashmir and Ladakh the limit applicable shall be 3. Pharma Industry magazine: https://www.
90% of the project cost. A maximum financial assistance of expresspharma.in/
Rs. 1000 crores will be available under this scheme for each 4. Pharma Export Promotion Council of India https://
of the bulk drug parks. The total financial assistance for all pharmexcil.com/
the three parks put together is Rs. 3000 crores.
The scheme has identified specific APIs/KSMs/DIs for
which there is a high dependence on imports but that are

Kind Attention !!!

UGC Approved List of Journals has been revisited by UGC-CARE (University Grants Commission - Consortium for
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www.icmai.in October 2020 - The Management Accountant 27




Avishek Roy
Assistant Professor
Department of Business Administration
Dinabandhu Andrews Institute of Technology and Management, Kolkata


This paper explores China’s efforts to modernise and indigenise its military hardware by
using technology or components imported from Russia. The objective is to derive lessons and
directions that India can utilize for attaining self reliance in defence production. Relevant
literature on Russian weapons sales to China as well as patterns and trends of China’s defence
production since the early 1990s was analysed. The paper found that India should focus on
judicious selection of foreign weapon systems for indigenous production, rapid development of
initial prototype for incremental upgrades and maintaining alternative sources for obtaining
critical components.

28 The Management Accountant - October 2020 www.icmai.in

“Know thy self, know thy enemy. specialists from China Gerson HARDWARE AND LESSONS
A thousand battles, a thousand (2010)). Due to abrupt withdrawal FOR INDIA
victories.” of Soviet technical support and In the immediate aftermath of
military experts China faced the the Sino-Soviet split, Chinese tried
— Sun Tzu
very real danger of obsolescence in modifying and improving its aging
military hardware. This exposed the

INTRODUCTION military hardware through “reverse
flaws of overdependence on Soviet engineering”. However, besides
ndia and China are often technology and underscored the being time consuming, reverse
referred to as the Asian giants. urgent need for modernisation and engineering requires huge amounts
Their armed forces are among indigenisation (Gill&Kim (1995)). of capital and labour. Also it is not
the largest in the world.
This paper analyses various effective in improving on any such
Naturally, keeping the armed forces
approaches that China took for technology which is not already
well armed and well equipped is a
modernising its military hardware present in the weapon system being
mammoth enterprise for both nations.
and for achieving self-reliance in reverse engineered. Moreover,
Yet a curious difference may be noted.
defence production after the Sino- modern weapon systems are far less
While China has already acquired a
Soviet split. The objective is to susceptible to reverse engineering.
significant degree of self reliance in
derive lessons that India can employ Heavy reliance on reverse engineering
domestically manufacturing military
for ending its dependence on foreign kept China deficient in electronics,
hardware, India is still significantly
weapon suppliers. communication and radar technology
dependent on imported weapons.
Gill&Kim (1995)).
In August 2020, India decided to
OBJECTIVES In the 1970s and 1980s, Chinese
stop importing several items of
high technology military hardware. This paper has the following efforts to assimilate Western
The list included artillery guns and objectives: military technology produced mixed
ammunition, simulators, radars, results due to the after effects of the
bulletproof jackets, ballistic helmets, i. To analyse China’s approach Cultural Revolution and also due to
several types of smaller naval crafts for modernizing and technical deficiencies and budgetary
and Close in Weapons Systems indigenizing its military constraints. After the Tiananmen
Bhalla(2020)). The objective is to hardware after the Sino-Soviet Square incident of 1989, US
boost local manufacturing of these split cancelled several deals for supplying
items and ending India’s dependence ii. To derive lessons and frame sophisticated defence technology to
on foreign suppliers. policies that India can utilise China. However, efforts to upgrade
in its own quest for achieving Chinese combat jets with British or
Throughout the 1950s, the USSR
self reliance in defence Italian avionics or battle tanks with
had provided China with prototypes,
production. Israeli help was relatively more
blueprints, knowhow, training,
technical experts as well as assisted
in setting up factories and assembly DATA AND METHODS By the late 1980s, China’s relations
lines for producing defence hardware. Research papers on China’s with USSR started improving. After
Soviet military aid enabled China armament industry, supply of Russian the USSR collapsed in the early
to produce its first indigenous battle weapons to China and efforts made 1990s, strong military ties were
tank – the Type-59 MBT, as well as by China to develop indigenous forged between China and Russia.
licensed copies of the MiG fighter jets weapon systems and the issues faced It involved transfer of technology,
and Tupolev and Ilyushin bombers. in the process was analysed in detail. technical know-how and production
With unbridled Soviet assistance, rights for a host of cutting edge
The analysis presented in this paper
China started operating submarines weapon systems from Russia to
proceeds in two sections. In the first
and domestically producing various China. While the Chinese military
section, the paper seeks to identify
naval crafts almost a decade before leadership acknowledged the need
various aspects of China’s approach
India. for “selectively importing” foreign
for modernising its defence hardware
technology for modernisation, it has
Although Sino-Soviet relations and to achieve the capability for its
also stressed the need for self reliance.
appeared strong on the surface, indigenous production. Based on
In the last two decades, thanks
there was an undercurrent of deep findings made in the first phase,
to Russian willingness to supply
misgivings and mistrust between the final phase, attempts to draw
sophisticated military technology
their senior leadership. Due to out potential lessons that India can
and its own robust economic growth,
certain international events and employ in its own quest for achieving
China has been able to indigenously
ideological differences, their self reliance in defence production.
design and develop a plethora of new
relations deteriorated drastically in
weapon systems.
the late 1950s and early 1960s. In July CHINA’S EFFORTS
1960, the Soviets recalled its civilian FOR MODERNISING AND China’s approach towards
and military advisors and technical INDIGENIZING MILITARY modernization and indigenization

www.icmai.in October 2020 - The Management Accountant 29

of its military hardware by using available. For example, early versions due to the 1989 Tiananmen Square
imported Russian technology and of China’s J10 fighter – the J10A – incident, the Chinese continued its
components contains important used Russian AL-31engines, radar development with the Ivchenko
guidelines that India can use for and missiles derived from Russian AI-25 engine and the project did
achieving self reliance in defence models and an airframe inspired by not stagnate. More recently, it may
production. For China, defence the cancelled Israeli “Lavi” fighter be seen that the Chinese have had
modernization in the real sense had jet (Fisher (2002), Adelman (2002)). multiple alternatives for engines and
started only after Russia allowed Later models like the J-10B featured radars for its FC1 (or JF17) and J10
the transfer of sophisticated military divertless supersonic intakes and fighter jets.
technology. India too should be open electronic counter-measures pod.
to accepting key foreign military The J-10C was upgraded with REFERENCES
technology for force modernisation. Active Electronically Scanned Array 1. Adelman, Jonathan (2002)
However, given the size of India’s (AESA) radar. Swift transformation The Phalcon sale to China:
armed forces and its defence needs, from planning to deployment stage The lessons for Israel,
self reliance cannot be achieved enables the developer to obtain a Retrieved from: http://www.
by imported weapons only. Every working model very early. While jcpa.org/jl/vp473.htm
effort should be made to reproduce upgrading and working with the
2. Bhalla,A (2020, August9)
them indigenously. Due to lower unit prototype, engineers and technicians
Defence Ministry bans 101
costs of indigenous weapon systems, gain significant experience and
import items in push for
India can procure these in greater knowledge. This can be leveraged
Atmanirbhar Bharat, India
numbers. Ready supply of spares and in the later stages of the weapon
Today, Retrieved from:
services and simplified maintenance system’s development or during its
procedures can lower maintenance combat deployment. It also prevents
costs and improve availability rate of time and cost overruns in defence
the weapon system enabling India to projects. India can gainfully utilise
thwart security threats from Pakistan this approach for preventing time
and China. and cost overruns being faced by
In the 1990s, importing Russian the LCA Tejas and the Arjun MBT
programmes. 3. Fisher, Richard,Jr.
weapon systems was the only option
(2002): Military Sales to
China had for modernising its armed China has also been able to integrate
China: Going to Pieces,
forces. However, the danger of Russian (R-77), Israeli (Python3)
Retrieved from: http://www.
depending on imported technology or French (MagicR.550) origin
was not lost on the Chinese leadership. missiles in its fighter jets. However,
As a solution, China sought to develop India’s efforts to incorporate the
indigenous weapon systems based on Meteor missile in the LCA Tejas 4. Gerson, Michael S. (2010)
foreign designs or by using imported aircraft is facing issues as the French Sino-Soviet Border Conflict:
components. Fisher (2002) gives a missile is incompatible with the jet’s Deterrence, Escalation,
detailed list of such weapon systems. Israeli radar. Compatibility can be and the Threat of Nuclear
India is one of the topmost weapons achieved if Indian or European radar War in 1969, Retrieved
importers of the world. Learning is used. These points towards the from: https://www.hsdl.
from the Chinese experience, India importance of having alternatives org/?view&did=716009
should judiciously select suitable source for obtaining supply of 5. Gill, Bates and Kim, Taeho
weapon systems of foreign origin critical components for military (1995): China’s Arms
and produce indigenous versions of indigenisation efforts to succeed. Acquisitions from Abroad A
these. Also wherever appropriate, Lack of alternatives for critical Quest for ‘Superb and Secret
components from imported weapons components has led to slowdown or Weapons’ SIPRI Research
should be reused in producing cancellation of defence projects in Report No. 11
domestic systems. This simplifies many countries. In the 1960s, the
product development and prevents Indian HF-24 Marut aircraft could not
project overruns. reach its full potential as the Western
countries did not supply suitable avishekroyonline@gmail.com
From the 1990s, China’s approach
for developing new weapons aircraft engines. US sanctions on
platforms was to rapidly construct supplying spares and service for the
an initial model using currently GE F-404 engines after the 1998
available components – indigenous PokhranII nuclear tests had delayed
or imported. This initial model is India’s LCA Tejas fighter program.
then incrementally upgraded as However, when USA embargoed the
more updated technology or more export of AlliedSignal Garrett731
indigenous components became engines for China’s JL-8 jet trainer

30 The Management Accountant - October 2020 www.icmai.in



For overhauling of machine for better

life and better production, in the same
way Overhaul to education structure to
be self-reliant is also very important.
As per MHRD dash board data in India,
the Government schools are more. The
government schools playing major role in
Chandrakant S Arakeri providing the education to rural students.
Assistant Professor So, in this paper we discuss what are basic
Department of Commerce facilities required from the government
Government First Grade Women’s College Bailhongal
for overhaul the education structure to be
self-reliant. The basic facility like physical
and digital infrastructure for education is
discussed in this paper.

verhaul has a nice connotation. My father used
to tell to do overhauling of bicycle whenever Total number of schools in India 15,50,006
it’s given problem in riding. In the same way
when people say that a system has become so Particulars Numbers
bad that it needs an overhaul, they actually believe that such Government School 10,83,678
a thing is possible, that someone can do it. An overhaul also Aided school 84,614
carries an association with radical improvement. Machines Private school 3,25,760
improve quite radically after an overhaul. So, the education Others 55,954
also needs some overhauling for a self -reliant.
The paper will discuss the role of physical and digital
infrastructure in education system. Before discussing this
concept, it is necessary to know the meaning of overhaul
and self-reliant.
Overhaul: The act of completely  changing a system so
that it works more effectively.
Self -reliant synonyms are self-sufficient, self- supporting,
self-sustaining, self-standing: Having confidence in and
exercising one’s own powers or judgment.
The education institutions need good infrastructure to
provide the good education to the students. Some Statistics
of Indian School education mentioned below as per 2018-
19 data available in MHRD are as follows:
Source: http://dashboard.udiseplus.gov.in/#!/sedashboard

www.icmai.in October 2020 - The Management Accountant 31

Total number of teachers in India 94,16,895 along with equipments essential for imparting education.

Particulars Numbers We must have the following physical infrastructure for a

Government School 49,45,827 good school.
Aided school 8,15,212 1. School building:
Private school 33,00,449 The school building is very important to provide the
Others 3,55,407 good education. Without a proper building conducting
of class is very difficult. Many government schools
are not having their own building or if they have the
conditions of the buildings are not good. The rural
students are depending on government schools in rural
area. So, government should provide good school
building with the facility of good library, science labs,
office room, principal chambers, staff room etc. The
many owned buildings of government schools are in
bad condition, so the government should provide the
fund for maintenance of the building.
2. Class rooms:
Many government schools are not having sufficient
classrooms to conduct the classes. In many places the
primary, high school and colleges are running in same
Source: http://dashboard.udiseplus.gov.in/#!/sedashboard premises in different shift because of the colleges are
not having their own building. This was affecting the
Total Number of students in India 24,78,53,688 time to conduct the classes. The government should
think to provide the sufficient classrooms with good
Particulars Numbers facility to run the classes.
Government School 12,84,97,792 The class rooms should have good black board, good
Aided school 2,75,25,717 ventilation, sufficient fans, sufficient lights with
Private school 8,39,50,592 electricity facility. To be a self- reliant in education
Others 78,79,587 the class room environment is very important.
3. Library:
The library is the main pillar for good education. The
way kitchen is very important for house, the library
is important for education. The library should contain
sufficient books for study. The library should be
situated in such a place where there is no noise and
the library should have good ventilation and lighting
facility. Based on the strength of the students the
space should be provided in the library.
A library is a repository of books and should have
textbooks, workbooks, reference books, fiction, non-
fiction books at various reading levels, reference books
oil special topics and interests and related pamphlets,
clippings, pictures, maps, charts, periodicals, etc. are
placed in proper shelf.
4. Laboratories:
The laboratories are very important for conducting
The role of government school is very important because
science classes. The government should provide the
of above mentioned statistics shows that the Government
sufficient labs to school with all the equipments.
schools, teachers and students are more compare to aided,
The old instrument should be replaced with new
private and others. The main task of school is to provide
instruments. Again the lab should be on the basis of
education which involves a series of programmes and
student strength.
activities. The successful conduct of these programmes
and activities depends mainly upon the availability of 5. Office room:
proper infrastructure in the school. The term ‘Physical The office room is also very important to run the good
Infrastructure’ stands for the physical facilities of the school. school. The school office should be centrally located
It is referred to buildings, grounds, furniture and apparatus so as to serve as a good coordination center, easily

32 The Management Accountant - October 2020 www.icmai.in

accessible to visitors, teachers and students. 4. Digital Podium
6. Staff room: A digital podium is a modern-day lecture stand that
The staff room is the main room for sharing the comes equipped with various media components/
knowledge between the teachers. The teachers are devices that enable an uninterrupted learning session.
interacting with each other in staff rooms. The school Some of its sub-components are a public addressing
should provide lockers to teachers for keeping their system fitted with amplifier, speaker and microphone
books and own belongings. etc.
7. School grounds: 5. Digital Library and Automation of Libraries
For overall development of the students, the students Digital libraries and e-books have facilitated access
need other activity like sports, cultural activities. to a wealth of knowledge available online that can
Sound mind exists in sound body. Many government now be accessed with the help of a mobile phone,
schools don’t have the play grounds. Without the tablet or laptop, anywhere, anytime, with an Internet
play grounds the students cannot involve in sports. connection.
So, the government should take care to provide the After the Covid-19 pandemic the Central and State
play ground with all sports material. With learning, governments have taken the initiation to support the
the sports are also important. To keep the students fit development of digital infrastructure in the schools to
physically and mentally the sport activity is must. So, conduct the online classes.
play ground plays a major role in overall development In New Education Policy also the government has
of the students. thought to introduce coding in primary education.
8. Other Facilities: Many teachers are not having the awareness of
Among the above facilities there is another one conducting online classes to students. So, government
which is most important for a school. These are, Art should provide the training to teachers for conducting
and Craft Room, Music Room, Drama Room, Dance the online classes of their students.
Room, Sports Room, SUPW Room etc
After the Covid-19 pandemic the digital infrastructure is The government is playing the major role in providing the
also playing important role in education. To be self- reliant good education to students. The basic facilities of physical
in education we should consider the digital infrastructure infrastructure like school building, class rooms library,
with physical infrastructure. The online classes are playing laboratories, office rooms, staff rooms and school grounds
very important role in present condition. So, the government and digital infrastructure like computer lab, internet and Wi-
should think on this also. The below mentioned digital Fi connection, projector, digital podium and digital library
infrastructure is required for overhauling the education are required for good education. Education structure will
system in present pandemic condition and also in future. become self-reliant if basic facility will be provided.

1. Computer lab: References:

The computer lab is very important for the school 1. http://dashboard.udiseplus.gov.in/#!/sedashboard
to develop the e-contents of the subjects. Now, the 2. ps://dictionary.cambridge.org/dictionary/english/
education has changed. More technology is used in overhaul (4/9/2020 09:27 pm)
education. So, computer lab should have sufficient
3. https://www.preservearticles.com/education/
computers with education related software. The
government schools are not having the sufficient
computers. The government should provide the
funds to school to buy the computer to go for digital
in%20a%20suitable%20atmosphere.(6.9.2020 7:13
2. Internet and WI-FI facility:
4. https://digitallearning.eletsonline.com/2018/12/
Only computer without internet and WI-FI facility is schools-digital-infrastructure-speeding-up-learning/
no use. The internet is playing very important role (6.9.2020 9:26 pm)
in present situation. The government should provide
good bandwidth internet to school to give access the
digital learning to their students.
3. Projector to classrooms: ved7810@gmail.com
To run or show the e-content the classrooms need
the good projector. The students can understand the
class in better way if the teachers use the projector to
show the PPT, images and videos related to class. The
government should provide the funds to government
schools to install the projector in government schools.

www.icmai.in October 2020 - The Management Accountant 33



The Hon’ble Prime Minister of India

Narendra Damodardas Modi has
announced a stimulus economic package
worth INR 20 lakh 97 thousand 53
crores on 12th May, 2020 known as
Sourav Prasad ‘Atmanirbhar Bharat Abhiyaan’ or Self-
Post Graduate Student
The University of Burdwan Reliant India Movement in order to
Budrwan convert the tremendous challenges faced
by the nation in the ongoing COVID-19
pandemic into opportunities and make
the country self-reliant.The present paper
highlights the major issues addressed in
the package and their implementation
and also identifies the implications
which are expected to be derived from the
package. The paper concludes with some
Dr. Debasish Sur suggestions for proper implementation of
Professor of Commerce the economic package for making India
The University of Burdwan self-reliant in near future.

I. Backdrop Undoubtedly, the COVID-19 has put much as possible because the prime
t the time when the world the global economy at a major risk and concern of any government is to save
is facing tremendous the Indian economy has also been hit lives. Secondly, the country has been
challenges emanated hard by this pandemic-driven global engaging itself to take appropriate
from the outbreak of crisis. In fact, presently India has steps to save its economy from the
COVID-19 pandemic, India plans been encountering two major odds. economic uncertainty stemmed
to convert this immense threat into First, the country has been trying to from the outbreak of coronavirus
an opportunity and strengthen adopt suitable measures to control the and subsequent global as well as
its fight against such odds by spread of COVID-19 and to provide national lockdowns. India’s business
becoming Atmanirbhar or self-reliant. healthcare facilities to the people as environment has been severely

34 The Management Accountant - October 2020 www.icmai.in

affected. The operations of different issue of retrieving operations in all special permission has been granted
business units belonging to various businesses especially MSMEs. In by the GOI to them for issuing debt
sectors have been disrupted. People this part the scope of widening the securities where the Government
have been facing a sudden loss in operations of non-banking financial would act as guarantor.The GOI
their incomes resulting in a massive companies (NBFCs), housing has also planned to provide liquidity
decline in personal consumption finance companies (HFCs) and firms injection to the sick DISCOMs
expenditure. As a result, a major drop belonging to the micro finance Sector through PFC-REC. So, it would bring
in demand has been noticed. In order as well as power sector in India is a chance to those DISCOMs to revive
to rescue the economy, on 12th May, also taken into consideration. Part their financial health. The West Bengal
2020 the Prime Minister Narendra 2 deals with the matters relating State Electricity Distribution Co. Ltd.
Damodardas Modi has announced a to poor people including migrant facing major financial crisis due to
special economic and comprehensive workers and farmers. Part3 covers more than `2000 crores shortfall in
package worth `20 lakh 97 thousand the agriculture sector and other allied collection in April and May, 2020
53 crores equivalent to 10 per cent of activities. Part 4 concentrates on has availed this chance by taking
India’s GDP which would act as an the issues associated with private `1,022 crores loan from the Central
instrumental in achieving the goals participation in selected sectors, such Government.
of the ‘Atmanirbhar Bharat Abhiyan’ as coal and other minerals, defence,
(ANBA) or ‘Self-Reliant India aviation, space, power etc. Part 5 Part 2
Movement’ (SRIM).In this backdrop, focuses on the issues relating to ease The GOI has taken some measures
the present paper seeks to analyse the of doing business, reforms in health relating to refinance and concessional
ANBA scheme and its implementation sector and education sector, support credit support to the weaker section
and also attempts to identify possible to state governments etc. Let us now of the society especially migrant
implications which may be derived analyse the implementation process workers, small and marginal farmers,
from the scheme. of the ANBA scheme and its possible fishermen and people associated with
implications. animal husbandry farms which would
II. Atmanirbhar Bharat make a path their economic upliftment.
Abhiyaan: Its Implementation and Part 1 The arrangement of affordable rental
Possible Implications The Pradhan Mantri Garib Kalyan housing complexes for the poor
In his address to the nation on Package (PMGK) introduced by people including migrant workers and
12th May, 2020 the PM has made an the GOI would provide relief students under the PPP model would
emotional appeal to the people to to the underprivileged people in provide their social security and
use local made in India products for India including deprived workers, quality life. Credit schemes related
implementing his vision of ‘Vocal members of self-help groups and to interest subsidy, working capital
for Local with Global outreach’.It family members of deceased health finance, housing finance etc. launched
would promote the ‘Make in India’ workers and also to help them to by the GOI would play a vital role in
initiative taken by the Government combat the threats gleaned from enhancing the economic development
of India (GOI) and ultimately help the COVID pandemic. The GOI has and livelihoods of small businessmen
India to establish itself as the global already constituted a Task Force on including urban vendors as well as
manufacturing hub by replacing ‘Bank Finance, Credit Revival and rural vendors doing business in the
China. The ANBA scheme is based Growth’ on 13th June,2020 for the adjoining urban areas. Some positive
on five pillars, such as Economy implementation of the initiatives, steps taken under the Compensatory
which would bring in a massive schemes and relief measures under Afforestation Fund Management and
change, Infrastructure which would ANBA in the Union territory of J&K. Planning Authoritywould protect
disclose the identity of India, System The GOI has changed the definition environment and step up employment
which would represent 21st century of MSME sector by enhancing the opportunities among tribals and
technology driven arrangements, investment limits and incorporating an adivasis.
Vibrant Demography which would act additional criterion of annual turnover.
as the source of energy and Demand This would extend the coverage of Part 3
which would ensure to utilize cent per the sector significantly resulting Various schemes like MSP
cent capacity. Though a preliminary in inclusion of greater number of purchases, PM KISAN FUND
announcement on the scheme has enterprises including firms belonging transfer, PM Fasal Bima Yojana
been made by the PM, Finance to the service sector which would be claim etc. would help the farmers
Minister, Ms. Nirmala Sitaraman highly benefited by a considerable to carry out their activities smoothly
in her five press conferences on five number of measures adopted by the during this pandemic situation.
consecutive days from 13th to 17th GOI to provide necessary weapons to In order to provide credit facility ,
May, 2020 has elaborated the entire them to fight the battle against the the GOI has sanctioned 70.32 lakh
scheme. Accordingly, the scheme coronavirus pandemic. A liquidity Kisan credit cards with credit limit
can be divided into five parts.Part advantage would be enjoyed by the of `62,870 crores out of `2 lakh
1of the SRIM is concerned with the NBFCs, HFCs and MFIs because a crores concessional credit under the

www.icmai.in October 2020 - The Management Accountant 35

ANBA package. Similarly, providing losses arising out of pandemic and and the resources utilized including
funds to the people engaged in marine, revive their economic conditions. audit report. This would eradicate
inland fisheries and aquaculture for the practice of misuse of scarce
developing infrastructure would III. Concluding Remarks resources. It is to be kept in mind that
result in expansion in the scale of The first outbreak of COVID-19 in the progress of an economy like India
operations. The GOI has also shown China has certainly hurt its reputation is largely dependent on the efficiency
its keen interest in developing animal in the world market. In fact, the and effectiveness of managing its local
husbandry infrastructure, herbal world’s mistrust of China has resulted bodies. So, ANBA can be successfully
cultivation and bee keeping and also in a disruption in the supply chain. implemented in India if the local
in popularizing fruits and vegetables Many countries have become wary of bodies actively engage themselves in
in the market by adopting suitable procuring goods from China and have need-mapping, choosing development
storage and marketing strategies. started to incentivize their companies schemes as per their requirements
for shifting manufacturing out of and also in the implementation
Part 4 China. The GOI has also adopted process. The benefits of delegation
The GOI has adopted suitable suitable measures to incentivize its of authority and accountability can be
measures, such as incentives, companies to grab the opportunity of reaped by strengthening the district
liberalized legislations to encourage this, both for design and production. regulatory authorities. However,
private participation in the sectors of In response to it the Uttar Pradesh the system prevailed in India has
coal, minerals, social infrastructure Government has invited 100 US certain severe defects. Presently in
and space activities which would based firms to move out of China and India there are 739 districts while the
result in the economies of scale and relocate to the state by offering certain number of parliamentary constitutions
improvement in efficiency. Policy benefits such as presenting stable is 543 only. So, one district is not
reforms regarding FDI and import government in the state, creation of a represented by one parliamentarian.
embargo in defence sector, consumer robust support infrastructure in terms Similarly, one particular block in a
rights, air base and health sector of roads, water supply, irrigation district cannot represent a legislative
would strengthen safety and security, capacity, 24×7 power supply etc. assembly constituency. However,
stimulate economic activities and and providing some incentives, tax resources are generally allocated to
mitigate the level of corruption. The reliefs and policy reforms. However, the districts and blocks which are
GOI has put ban on 101 items to boost a smooth transition is not an easy task considered as units of development.
indigenous production. The initiative for India in the short run while in the So, it is next to impossible to judge the
launched by the Central Government long run if China is not able to take performance of the parliamentarians
regarding the construction of a prominent part of the supply chain, and the members of the legislative
Technology Development cum this would be a huge opportunity for assemblies. It is really a very hard task
Incubation Centres would certainly India to establish itself in the global of ensuring accountability of elected
provide necessary inputs to the market. In this context it can be representatives who should act as torch
country to establish itself in the suggested that the GOI should initiate bearer in the implementation process
global market by surrogating synergy some more policy reforms and offer of SRIM. The adequate information
between research facilities and tech- very attractive incentive package to relating to different indicators of
entrepreneurs. the firms moving out of china which human development at district, block
would result in an increase in economic and panchayat levels are not available.
activities and help India to become This is another lacuna present in India
Part 5
self-reliant. The main drawback of which may hamper the implementation
The reform measures relating to process of ANBA. In order to create
this stimulus package is its proper
the Companies Act, 2013, property a favourable environment in India
implementation at the ground level.
and taxation initiated by the GOI for adopting the scheme in toto,
Lack of awareness among the officials
would help the corporates to sustain the district administration should
and inability to make optimum
in the long run by combating all be proactive and should rely on the
utilization of available resources might
odds.Similarly, the New Education District Planning Committees (DPCs).
be the leading problems associated
Policy , 2020 would encourage the All the local bodies should develop
with the implementation process.
students in adapting themselves to the habit of incorporating their
These problems can be minimized
the environment of e-learning which developmental plans relating to the
by the introduction of a web-based
would result in formation of dynamic major sectors like agriculture, housing,
platform on which the amount of
human capital. The help provided to healthcare, education, energy etc. The
fund utilized and the purpose of such
migrant labourers through MNREGA development of public living has to
utilization are disclosed. Each official
would lead to creation of large number be ensured irrespective of party-line
unit which is authorized to carry out
of durable and livelihood assets and and ideological affiliation. Moreover,
developmental projects and use the
boost the rural economy through the local bodies should enjoy such
resources shall be liable to upload the
higher production. The increase in authority to maintain good liaison
necessary information with supportive
borrowing limits to states would help with the local business community
documents regarding the work done
the state governments to get rid of the and to engage them in carrying out

36 The Management Accountant - October 2020 www.icmai.in

different activities relating to the base, enhancing liquidity in corporate Transparent Taxation platform
development of economy as well as bond market etc.India enjoys certain to benefit honest taxpayers,
society which can ultimately bring competitive advantages, such as The Economic Times, E-Paper,
success in this mega project. A notable demographic advantage, abundant August 14, 2020
initiative has been taken very recently skilled IT personnel, political stability, 5. Seven task forces set up for
by the GOI towards strengthening reforms in infrastructure etc. So, the efficient implementation of
the process of achieving the goals country can convert the challenges ‘Atmanirbhar Bharat Abhiyan’
of the ANBA. The Prime Minister faced by it in the ongoing pandemic in J&K, Financial Express,
has launched a platform entitled into great opportunities and establish E-Paper, June 10, 2020.
‘Transparent Taxation Honoring the itself in the global value chains.
6. Union Minister NitinGadkari
Honest’ on 13th August, 2020 for Especially, in the production of
Assures All Help to Investors
strengthening the efforts of reforming engineering goods the MSME sector
for Moving Investment from
and simplifying the Indian tax system. in India has the capability of providing
China, News18, E-News, June
This is an attempt to transform the higher productivity leading to great
2, 2020.
India’s existing tax system from a prospects for employment and growth
power centric approach to a people in the economy. 7. West Bengal Takes Rs 1,022
centric one. It is no doubt, an effective Crore Loan from Centre to
way to ease the compliance burden References Iron OutDiscom Liquidity
and reward the honest taxpayers, Stress- News18, E-Paper,
1. Atmanirbhar Bharat: PSBs
which would ultimately help the August 2, 2020.
asked to implement measures
nation to rebuild its pandemic-hit for each sector, The Indian 8. 100 US firms may shift base
economy. Another important issue Express, E-Paper, May 23, to Uttar Pradesh from China,
to be mentioned in the context of 2020. Financial Express, E-Paper,
implementation of the ANBA is that April 30, 2020.
2. Economy suffers
without making capital markets self- 9. https://www.india.gov.
‘unprecedented collapse’ due
reliant, it is very difficult for India in/spotlight/building-
to COVID-19: Survey ,The
to reach its target. So, for achieving atmanirbhar-bharat-
Economic Times, E-Paper,
the goals of ANBA, the GOI should overcoming-covid-19
April 21, 2020.
take some reform measures relating to
capital markets, such as bringing more 3. NirmalaSitharaman Reviews
flexibility in regulations, introduction Progress Of Atmanirbhar
of more technology based operations Bharat Initiatives, NDTV, emailsouravprasad@gmail.com
and quick dispute resolution E-News, July 12, 2020.
mechanism, broadening the investors 4. PM Modi launches

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The article takes brief look at Indian

Manufacturing sector. It talks about the
present scenarios, constraints, areas of
improvement and future outlook of the
sector. It also looks into steps that are
taken and efforts that would be required
to build Indian Manufacturing Industry
so that it can deliver US$ 1 Trillion
products domestically and internationally
catapulting India as a manufacturing
powerhouse. Overall the endeavor is to put
Deepak Kumar Mehto
across a rationale that India can produce Senior Buyer - IT
world class products domestically for Jaguar Landrover India
international markets. Pune

Introduction current literacy is over 75% for current 1.35 billion population
n the year 2020, India celebrated its 74th Independence which is significantly better from 12% literacy at time of
Day, nearing three fourth of century of freedom. independence. High literacy rate with proven manufacturing
At the onset of our first free decade in 1950, Indian prowess make us ideal candidate to become even a bigger
economy was worth mere $ 30 billion which now is manufacturing giant of world. World became over reliant on
nearing 3 trillion mark. Industrial foundation laid in 1950s China because of its inexpensive labor and manufacturing
and liberalization measures of 1990s and now Make in capability. US – China trade war and subsequent coronavirus
India initiative that was incorporated in 2014 are guiding pandemic have shown that this over-reliance has been
and accelerating our economy in the right direction. India’s proven costly with major supply chain disruptions. Also

38 The Management Accountant - October 2020 www.icmai.in

there have been many stories of multi-national companies India exports by continents
facing intellectual property losses. With companies looking
to diversify geographic manufacturing footprint, India
needs to take this opportunity with appropriate measures to
show to world that it can make best in class products for
the world and be a reliable manufacturing and exporting
hub.The manufacturing sector in India has matured from
its development stage of mechanization to its present stage
of international attractiveness which is not saturated with
international business.

Current situation
India exports to the world stood at US$322.8 billion in
the year 2019. Below table show the top categories which
contributed to roughly sixty percent of goods in value worth In contrast to India’s exports, India imports are at over
circa US$195 billion.Top three countries that were USA, US$ 600 billion for 2019. There is trade deficit of roughly
UAE and China. Nearly half of the exports are to Asian US$ 300 billion. Electrical machinery & equipment, nuclear
countries while close to 20% being purchased by European reactors, boilers, machinery and mechanical appliances
and North American countries each by continent. contribute nearly 20 percent of imports valuing over US$70
India is fulfilling nearly half of the world’s vaccines billion. Five countries contribute to almost 40% of imports.
requirement. The United States of America and the United
Kingdom fulfill forty percent and a quarter of generic drugs
demand from India. Clothing sector,which is majorly driven
by healthy raw material production capacity like cotton, is
one of the fastest growing exports and was forecasted to
double by 2021 before the pandemic disrupted the world.
Though we have manufacturing expertise but exports are
dominated by raw materials and we need to push on exports
of manufactured goods.

Indian exports by category

% of total
Description Bn. USD Indian Manufacturing Sector
Manufacturing plays a pivotal role in the monetary
Mineral fuels including oil 44.1 13.7 development and progress of any nation. A country with
Gems, precious metals 36.7 11.4 abundant natural resource, suitable weather conditions and
skilled workforce could definitely rely on industrialization
Machinery including for its economic progress. Manufacturing sector inculcates
21.2 6.6
research and development, innovates technology, leads to
Organic chemicals 18.3 5.7 creation of new cities and creates millions of jobs. Indian
states like Maharashtra, Tamil Nadu, and Karnataka have
Vehicles 17.2 5.3
witnessed the growth and development manufacturing sector
Clothing (non-knit & knit) 16.5 5.2 brought. Satellite town became cosmopolitan cities based
on the manufacturing set ups and ancillaries environment
Pharmaceuticals 16.1 5 around it. Manufacturing sector contributes over 18% percent
Electrical equipment 14.7 4.5 to India’s GDP. It is the sector that provides better spread
of wealth among its workforce thus it is alleviates people
Iron & steel 9.7 3 from poverty. Manufacturing sector in fast growing Asian
economies like China, Indonesia, Taiwan, Korea, Thailand
India exports by country and Philippines contributes 30 to 50 percent to their GDP.
India needs to significantly improve Manufacturing.
Indian manufacturing sector has grown because of its
ever increasing domestic market which is increasing with
its middle class population. In last few years there has been
an inflow of steady foreign and domestic investment (Gross
Fixed Capital formation was US$ 614.85 billion in FY20).
Make in India, Skill India and National Manufacturing Policy
are major initiatives that shows the resolve of government to

www.icmai.in October 2020 - The Management Accountant 39

provide required boost to the sector. Opportunity
Major products manufactured and products imported
Key highlights of Government Initiatives by India are integrated circuits, broadcasting equipment,
telephones, computers, aircrafts and components, batteries,
• 14,602 Industrial Training Institutes are in India. vehicle parts, capex machinery, medical equipment
(March, 2020). cumulating to roughly US$ 100 Bn (source – OEC.World)
• Through Pradhan Mantri Kaushal Vikas Yojana by value. Research by McKinsey strongly indicates that
(PMKVY) approx. 2 Mn applicants were trained basis for increasing domestic demand combined with
• With PMKVY 2.0 (2016-2020) over 5 Mn. People the international corporation’s intent to branch out their
were trained manufacturing capacities geographically so that they reduce
dependencies on China can benefit India’s manufacturing
• National Policy on Electronics was created in
sector to increase by six times by 2025 in size and $1 trillion
2019 which targeted to take Indian electronics
by value resulting in job creation in domestic market to
manufacturing industry to US$ 400 billion industry
magnitude of 90 Million. World is moving toward automation
by 2025.
in manufacturing and use of Artificial Intelligence or
• By Make in India initiative, Government plans to Augmented Intelligence in process improvement. Thus if
boost manufacturing’s contribution to country’s GDP required impetus is given to IT sector then it could benefit
to 25% by 2025. the Indian manufacturer to build reputation for their
production processes and attract foreign MNCs to see India
India is blessed with huge working population which is as one stop technology driven manufacturing center. By
skilled and young which means that they are flexible to adapt 2025 India can aspire to become leader in auto components,
to technological trends.Another big advantage that India pharmaceuticals, power transmission and distribution
youth possess is the soft skill of English language which equipment, Leather and Apparel manufacturing. It also
acts as bridge to all nationalities and is business attractor. can become competitive source for Commercial Heating
Cost of labor is one of the lowest in the world. Table below and ventilation & air conditioning equipment, computer
highlights the cost of factory workers in many competitive hardware, consumer electronics, telecom equipment, plastic
manufacturing countries. products, footwear, domestic appliance, storage media etc.

Areas of improvement
Four major areas of concern of Indian manufacturing are
below par manufacturing processes, low labor productivity,
low capital productivity and labor & skill gap. It is forecasted
that to seize the opportunity producers in India would
exhibit an improvement up to 500% from the current level
depending on goods.
Areas to improve:
• Strengthen operations
• Improve labor productivity
• Improve capital productivity
Current Achievements • targeted Skill development
India’s automotive sector has shown the way for
manufacturing sector. It has established that we can produce Past data from year 2006- 10, that for top 1000
world class goods. India attained the sixth standing in manufacturing companies across 11 sub sectors in India
automotive industry manufacturing in world which is led only 46% were able to higher return on invested capital than
by Japan, Germany & China as leaders. Brands like Ford, weighted average cost of capital. Sectors like chemicals,
Suzuki, Toyota, Honda, Hyundai, Volkswagen, BMW, capital goods, pharmaceuticals and construction materials
General Motors, Mercedes Benz, Mitsubishi, Renault, Audi, were the ones which saw more than 50% companies with
Nissan, and Skoda have a manufacturing footprint in the better return on invested capital. Durables and textiles,
county. Two wheeler giants Hero MotoCorp, Royal Enfield utilities and paper products were the key industries with
and Bajaj are dominant names in international markets. The companies lagging staggeringly behind on return on capital
Indian textile manufacturing is behind China. More than half invested.
of India’s textile exports are cotton based however products McKinsey’s benchmarking studies on 75 Indian companies
made of synthetic materials, wool and silk are produced and highlighted comparison with global companies on technical
exported. Electronics industry has thrived as India is now systems – resource deployment to meet customer target at
home to third largest technically equipped workforce that lowest price, management infrastructure – processes and
has expertise in R&D and upcoming technology. structure managing technical systems and capabilities &
mindset. Indian companies were lagging in production

40 The Management Accountant - October 2020 www.icmai.in

planning, supply chain management, Quality & maintenance was bettered by 14 places in an years’ time – 77 to 63 (2018
systems, talent management and continuous improvement to 2019). Online education is now a big trend and would be
initiatives when compared to their global counterparts. These crucial in providing skills which were constrained by location
were the areas where global companies were advanced stage and thus upskilling the work force would become easier and
where as Indians were either at intermediate or developing economically specifically in areas of engineering, research
stage. and development. So I would agree that there are challenges
One of the major important consideration that needs to of traditional manufacturing but India is equipped to take
work by government is to increase the ease of doing business. appropriate steps to realize the coveted dream of becoming
Ease of doing business is assessed on factors like how easy is the biggest manufacturing powerhouse.
to get permits, pay taxes, set up business, get credit etc. India
is at 63rd rank in ease of doing business among 190 nations References
whereas for comparison competitors like Korea and Taiwan 1. http://www.worldstopexports.com
are ranked 5th and 15threspectively. A higher ranked economy 2. https://en.wikipedia.org
would obviously get more foreign direct investment. 3. https://commerceapp.gov.in
Positive & Optimistic outlook 4. https://economictimes.in
5. https://tradingeconomics.com
Nonetheless, even though there are hard issues to address
we can be optimistic and positive. Example like Tata Steel 6. https://www.businesstoday.in
improving its worker output by 8 times in 2011 over a period 7. https://www.ibef.org
of 12 years shows that Indian companies are working on 8. https://www.doingbusiness.org
improving productivity and flexible to accept changes in 9. https://www.makeinindia.com/eodb
management and operation practices. Geo political tensions
between India and China have also ricocheted domestic 10. https://www.financialexpress.com
consumers preference towards locally produced goods which 11. https://www.livemint.com
has encouraged Indian entrepreneurs and manufacturers set 12. https://www.mckinsey.com
up shop in country and forced companies to look for either 13. https://wits.worldbank.org/CountryProfile/en/IND
directly or indirectly manufacturing in India. Covid crisis
14. https://www.manufacturingtodayindia.com/7349-the-
disrupted supply chain across globe and thus companies
which are already producing in India can be invited to
expand their capacities and their best cases can be used to
attract companies looking to geographically diversify their dmehto@jaguarlandrover.com
production. Though the current ease of doing business Deepak.mehto88@gmail.com
standing may seem high but we need to keep in mind that it


Issue: September - 2020 [Vol. 55 No. IX]
Issue Page
Name of The Article Name of Author/s Volume Issue DOI Numbers
No. No.
BUSINESS AND SURVIVING THE POST CMA Abhisek Bhowmik Vol.55 Sep-20 9 24-25 10.33516/maj.v55i9.24-25p
Vol.55 Sep-20 9 26-30 10.33516/maj.v55i9.26-30p
Avishek Roy Vol.55 Sep-20 9 31-34 10.33516/maj.v55i9.31-34p
TO RETAIN CUSTOMER IN LIFE Dr. Furquan Uddin Vol.55 Sep-20 9 35-37 10.33516/maj.v55i9.35-37p
Dr. Kushal De
INSURANCE AMONG THE YOUTH DUE Vol.55 Sep-20 9 38-41 10.33516/maj.v55i9.38-41p
Rishav Sarkar
Vol.55 Sep-20 9 42-44 10.33516/maj.v55i9.42-44p
To be Contd to page 63 ......

www.icmai.in October 2020 - The Management Accountant 41




In the post-independent India, MSME

Sector has emerged as a highly vibrant and
dynamic sector of Indian economy with its
multifarious contributions. However, this
Dr. Inchara P M Gowda
Sector has not been able to contribute its ICSSR Post-Doctoral Fellow
full potential owing to many problems it Sahyadri Commerce and Management College
is facing. Recent efforts of the GoI, RBI, Shivamogga
etc., aim at addressing these problems on
the one hand, and reinvigorating the ailing
MSME Sector on the other to enable it
to contribute further to make the country
realize its ambitious goal of ‘Self-Reliant
India’.In this backdrop, the present paper
analyses the recent initiatives of the GoI,
RBI, etc., to make MSMEs crucial to self-
reliant India. Dr. K. S. Sarala
Associate Professor and MBA Programme Coordinator
Sahyadri Commerce and Management College

ll sectors of the economy are devastated Governments, etc., are striving hard to bring back the
by the havoc inflicted by the unanticipated economy into the path of progress and prosperity by injecting
and uninvited COVID-19. Therefore, the right medicine in the form of appropriate policy measures
authorities such as the Government of India and their proper implementation. This is true even in the
(GoI), the Reserve Bank of India (RBI, apex bank), State case of Micro, Small and Medium Enterprises (MSMEs).

42 The Management Accountant - October 2020 www.icmai.in

The MSME sector is contributing immensely for the overall to the fore that MSMEs are contributing immensely for
development of the economy in many ways.Generation of the industrial development including in rural area aiming
employment opportunities, production of diverse range of at balanced development of rural and urban areas, women
products and services to cater to the requirements of domestic empowerment through entrepreneurship, and social justice.
and global markets, profitable utilization of locally available Besides, the MSME sector is generating comparatively a
resources, exports besides strengthening domestic market, large number of employment opportunities addressing one of
contribution to the gross domestic product (GDP), removal the major problems of the country viz., unemployment and
of regional imbalances and contributing towards balanced under-employment. These enterprises have created 1,109.89
regional development, etc., are some of the contributions of lakh jobs out of which 360.42 lakh jobs are in Manufacturing
MSMEs. Sector, 387.18 lakh jobs in Trade, 362.22 lakh jobs in Other
Services Sector and the remaining 0.07 lakh jobs are in
MSME Sector – A Brief Profile and Performance Non-captive Electricity Generation and Transmission.Out
As per the National Sample Survey (NSS) 73rd Round of the total jobs provided by this sector, 497.78 lakh jobs
conducted by the NSS Office, there are 633.88 lakh (44.85%) are created in rural area and 612.11 lakh jobs
unincorporated non-agriculture MSMEs in the country. (55.15%) in urban area. Again, out of total job opportunities
These units include 230.35 lakh enterprises engaged in generated by MSME Sector, 1,076.19 lakh jobs accounting
Trade (108.71 lakh enterprises in rural area and 121.64 for 96.96% of total employment opportunities are provided
lakh enterprises in urban area), 196.65 lakh enterprises in by micro enterprises sector. Of the remaining, 31.95 lakh
Manufacturing Sector (114.14 lakh enterprises in rural area jobs are created in small enterprises sector and 1.75 lakh
and 82.51 lakh units in urban area), 206.85 lakh enterprises jobs in medium enterprises sector. Most importantly, of the
engaged in other Services (102 lakh enterprises in rural area total employment opportunities generated by the MSME
and 104.85 lakh units in urban area), and the remaining sector, 264.93 lakh employees accounting for 23.88% are
0.03 lakh enterprises (mostly in rural area) in non-captive women and the remaining 844.96 lakh employees working
electricity generation and transmission. Number of enterprises out to 76.12% of total employees in MSME sector are male-
is, more or less, equally distributed among three major employees. During the last 10 years (i.e., between 2006-07
activity groups viz., trade (36.34%), other services (32.63%) and 2015-16), number of jobs created increased by 304.65
and manufacturing (31.02%). It is evident that about 324.88 lakh jobs or by 37.83% working out to a CAGR of 3.63%.
lakh enterprises accounting for 51.25%are in rural area and This Sector is producing over 6,000 products ranging from
the remaining 309 lakh enterprises working out to 48.75% traditional to high-tech items. The broader categories are,
are in urban area. Out of the total number of enterprises in food products and beverages, wearing apparel, fabricated
MSME sector, about 99.47% (630.52 lakh enterprises) are metal products, repairs and maintenance of personal and
micro enterprises, 3.31 lakh enterprises are small enterprises household goods and retail trade, textile, furniture, machinery
(0.52%) and 0.05 lakh enterprises are medium enterprises and equipment, rubber and plastic products, electrical and
(0.01%). Further, out of 630.52 lakh micro enterprises, machinery parts, chemical and chemical products, other
324.09 lakh enterprises accounting for 51.40% are in rural non-metallic mineral products, etc.
area. Again, 608.41 lakh enterprises accounting for 95.98%
Mostly importantly, the contribution of MSME Sector
of total number of MSMEs are proprietary enterprises which
to the country’s Gross Value Added (GVA)1 and Gross
are still dominated by male owners (79.63%) and only about
Domestic Product (GDP)2 is substantial. For example, for
20.37% of enterprises are owned by women. Further analysis
the year 2016-17, the MSMEs have contributed `44,057.53
shows that about 66.27% of MSMEs are owned by socially
billion to GVA (out of total GVA of `1,38,415.91 bn)
backward groups comprising OBCs owning 49.72%, SCs
working to 31.83%. Further, this MSME’s GVA works out
12.45% and STs 4.10% of MSMEs. During the last 10 years
28.88% of total GDP of the country (of Rs. 1,52,537.14 bn
(i.e., between the Fourth All India Census of MSMEs, 2006-
for 2016-17 at current prices).A few more details presented
07 and NSS 73rd Round, 2015-16), the number the MSMEs
below (Table – 1) which are self-explanatory provide
increased by 272.12 lakh enterprises or by 75.22% with an
greater insight about the contribution of MSME sector to
annual compound growth rate (CAGR) of 6.43%. Moreover,
the country’s GVA and GDP. This also brings the point to
another 68.25 lakh MSMEs have registered under Udyog
the fore that to achieve the self-reliant India objective, it is
Aadhar Memorandum (UAM) between September 2015
necessary for the government/country to strengthen MSMEs
and May 2019. All these statistics clearly bring the point
which have a vital role to play.

Table – 1: Contribution of MSMEs to Country’s Economy at Current Prices

Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

MSME’s GVA (Rs. Bn) 26,225.74 30,205.28 33,899.22 37,049.56 40,255.95 44,057.53

Total GVA (Rs. Bn) 81,069.46 92,026.92 1,03,631.53 1,15,042.79 1,25,666.46 1,38,415.91

www.icmai.in October 2020 - The Management Accountant 43


Total GDP (Rs. Bn) 87,363.29 99,440.13 1,12,335.22 1,24,679.59 1,37,640.37 1,52,537.14

Share of MSME in GVA

32.35 32.82 32.71 32.21 32.03 31.83
Share of MSME in GDP
30.02 30.38 30.18 29.72 29.25 28.88

Source: Compiled the table based on data from, Annual Report, 2018-19, Ministry of MSMEs, Government of India,
New Delhi, p. 27.

Problems of MSMEs objective of this ambitious scheme is to provide loans up

On the lines of the above, the MSMEs are contributing to Rs. 10 lakhs to non-corporate and non-farm micro and
substantially for inclusive growth of the economy. And they small enterprises in manufacturing, trading and services.
have the potential to contribute more but not contributing Within the framework and overall objective of development
their full potential owing to certain problems.These and growth of micro enterprises sector, MUDRA loans are
problems, as noted by the Prime Minister’s Task Force designed in such a way so as to meet the fund requirements
(2010), are summarised below. of different sectors and entrepreneurs in their business/
entrepreneurial activities. Accordingly, three types of loan/
Non-availability of adequate and timely credit, high cost
credit schemes are designed for micro and small enterprises
of credit, collateral security requirements, limited access to
depending upon their stage of growth/development, and
equity capital, etc., are the major financial hurdles. Problems
funding requirements of micro enterprises/entrepreneurs.
associated with the supplies to government departments,
The three types of credit schemes are, (i) Shishu – loans
non-availability of raw-materialsand/or their procurement
up to Rs. 50,000; (ii) Kishor – loans between Rs. 50,000
at competitive prices, problems of changing business
and Rs. 5 lakhs and (iii) Tarun – loans between Rs. 5
environment, inadequate demand, managerial deficiencies,
lakhs and Rs. 10 lakhs. Out of total loan disbursal by the
lack of access to global markets,etc., are other major problems
lending institution, at least 60% should be under ‘Shishu’
of MSMEs.Besides, inadequate infrastructural facilities
category and the remaining portion of loan is for the other
such as power, water, road network, etc., obsolete and/or low
two categories viz., Kishor and Tarun. One of the unique
technology levels, absence of suitable mechanism for quick
features of this Scheme is that the government fixes the
revival of viable sick units and for closing down unviable
yearly targets for each of participating bankers, non-banking
enterprises, stiff competition not only from domestic large
finance companies (NBFCs), etc.What is important is that
scale enterprises but also from foreign players, etc., are other
the participating banks/institutions have not only achieved
major and common problems of MSMEs. Consequently,
the targets but also exceeded as evident from the following
they have not been able to contribute their full potential to
details (Table – 2) which are self-explanatory.
the economic development of the country including to the
Table – 2: PMMY – Targets Vs Achievements
Measures of GoI and RBI
Number of Loan Amount (Rs. lakh crores)
With the objective of addressing the problems of MSMEs Year PMMY Loans
and to support them to contribute more for the overall Sanctioned Target Sanctioned Disbursed
economic development of the country, the authorities
including the GoI and the RBI have been taking steps 2015-
3,48,80,924 1.22 1.37 1.33
in the form of schemes, packages, policy measures, etc. 16
For example, based on the policy decisions of the GoI
and keeping in mind negligence of certain sectors of the 3,97,01,047 1.80 1.80 1.75
economy/country, the apex bank has identified eight sectors
(including MSMEs, export credit, renewable energy, etc) as 2017-
priority sectors for lending by scheduled commercial banks 4,81,30,593 2.44 2.53 2.46
(SCBs), regional rural banks (RRBs) and cooperative banks.
Further, it has directed the lender-bankers to earmark 40% of 2018-
their fund for lending to priority sectors including 7.5% for 5,98,70,318 3.00 3.21 3.12
micro enterprises.
Realising the importance of micro and small enterprises Total 18,25,82,882 8.46 8.91 8.66
in the economic development of the country and also the
problems faced by these enterprises, the GoI designed and Source: Compiled the table based on the data collected from,
introduced a new scheme called, Pradhan Mantri MUDRA Annual Report, 2018-19, MUDRA Ltd.
(Micro Units Development and Refinance Agency) Yojana
(PMMY) with effect from 8 April 2015. The primary However, in the light of economic slowdown followed

44 The Management Accountant - October 2020 www.icmai.in

by the devastating ill effects of COVID-19, the government enterprises and service enterprises. Again, each of these two
announced a package on 13 May 2020 for the revival of categories was divided into three sub-categories as micro
ailing economy including the MSME sector. Further, the enterprises, small enterprises and medium enterprises. But
government has made a few significant changes in the now, the initial classification is removed clubbing both
definitions of MSMEs. All these aspects of the package for manufacturing enterprises and service enterprises into
MSME Sector are summarised below under six heads. one as, ‘manufacturing and service enterprises’. Another
important change is the increase in monetary ceiling for
Changes in Classification and Definition classification of enterprises as micro, small and medium
Till now, for definition purpose, the MSMEs were enterprises as tabulated below (Table – 3).
classified initially into two categories as manufacturing

Table – 3: Definition of MSMEs – Pre-revised and Revised

Amount (Rs. crores)

Particulars Micro Small Medium
Enterprises Enterprises Enterprises
Pre-revised Definition and Classification:
Manufacturing– Investment3 < 0.25 ≥ 0.25 < 5 ≥ 5 < 10
Service – Investment 3
< 0.10 ≥ 0.10 < 2 ≥2<5
Revised Definition and Classification:
Manufacturing and Service:
Investment3 <1 ≥ 1 < 10 ≥ 10 < 20
Turnover <5 ≥ 5 < 50 ≥ 50 < 100

Consequent to the above upward revision in the investment be given debt by banking companies which will then be
ceilings by 2 – 10 times, a large number of enterprises infused by the promoters as equity in their enterprises. It is
(which were till now outside MSME sector) will now fall expected that about2 lakh MSMEs will be benefited from
into the category of MSMEs and become eligible for the this Scheme.
benefits, subsidy, etc., made available to the MSME sector.
As there will be a substantial increase in the number of micro Equity Infusion through Fund of Funds
enterprises (besides the increase in the number of small and Another integral part of the package for MSMEs unveiled
medium enterprises), it is expected to provide the necessary by the GoI on 13 May 2020 is the setting up of ‘Fund of
boost to MSME sector which in turn is expected to spur the Funds’ with corpus of Rs. 10,000 crore. The Fund of Funds
economic growth. (i.e., a pooled investment fund that invests in other types of
funds) will be operated through a Mother Fund and a few
Collateral-free Automatic Loans Daughter Funds. And this Fund structure is expected to
The second part of the package for MSMEs is Rs. 3 lakh help leverage Rs. 50,000 crore of funds at Daughter Funds
crores of collateral-free automatic loans for businesses level. This Scheme is proposed to provide equity funding
including MSMEs. Under this Scheme, the MSMEs will for the MSMEs with growth potential and viability which
be given emergency credit line by the banking companies is expected to expand both size and capacity of MSMEs,
and NBFCs up to 20% of their outstanding credit as on 29 and to encourage them to get listed on main board of Stock
February 2020.The loans under this Scheme can be availed Exchanges.
by MSMEs up to 31 October 2020 without fresh collaterals.
These loans will have four-year tenor with moratorium of 12 Prohibition of Global Tenders
months on principal repayment. And the interest is proposed Realising the fact that the domestic MSMEs (and other
to be capped. All MSMEs (and businesses) with up to Rs. 25 enterprises) have often faced unfair competition from foreign
crore outstanding and Rs. 100 crore of turnover are eligible to bidders,the GoI proposes to disallow global tenders for
avail this loan facility. This is expected to help 45 lakh units government procurement tenders up to Rs. 200 crore. And
to resume their business activities and to safeguard the jobs this is going to be a step towards ‘Make in India’ supporting
which are under threat on account of fallout of COVID-19. the government’s flagship vision of ‘Self-Reliant India’.
This is a good move enabling many domestic MSMEs to bid
Subordinate Debt for Stressed MSMEs for government contracts/work which in turn enable them to
The government has also proposed to facilitate the improve their business substantially.
provision of subordinate debt4to the tune of Rs. 20,000 crore.
The MSMEs which are functioning and stressed are eligible Other Interventions for MSMEs
for loans under this Scheme. The promoters of MSMEs will Some of the MSMEs are supplying a portion or whole

www.icmai.in October 2020 - The Management Accountant 45

of their goods and services to the governments and their other loans with respect to claims on assets and
public sector undertakings (PSUs) on credit basis. It is the earnings.
experience of MSMEs that there is an inordinate delay in
receiving the payments from the governments and their References
departments for the goods and services supplied to them. This 1. Inchara P M Gowda. (June 2020). Revival Package
has put them (i.e., MSMEs) into lot of difficulties. Therefore, for ailing MSMEs. Money Wise (special edition,
the government has promised to release all amounts due to digital 2). pp. 18-20.
MSMEs from government and central PSUs within 45 days.
2. Ministry of Micro, Small and Medium Enterprises,
This will be a big relief for cash/fund starving MSMEs.
Annual Report, 2018-19, Government of India, New
Concluding Remarks
3. Micro Units Development and Refinance Agency
In spite of financial difficulties owing to COVID-19, the
Ltd., Annual Report, 2018-19, Mumbai.
government is determined to strengthen the MSMEs to
contribute their full potential for the overall development 4. Prime Minister’s Task Force. (2010). Report of
of the country. Now, it is for the MSMEs to make use of Prime Minister’s Task Force on Micro, Small and
these benefits and contribute their best to enable the country Medium Enterprises. Ministry of MSMEs, GoI, p. 7
to realise its ambitious goals of ‘Make in India’ and ‘Self- retrieved from http://msme.gov.in/
Reliant India’ through the development of goods and 5. Shaktikanta Das, Micro, Small and Medium
services to substitute the imported goods and services, and Enterprises – Challenges and Way Forward,
also to improve its export performance. Speech delivered at the 15th ASSOCHAM Annual
Banking Summit at Mumbai on 6 March 2020.
1. GVA (by Production Approach) = (Output ‒
Material Inputs) and GVA (by Income Approach) =
(Compensation of Employees + Operating Surplus + incharapmgowda@gmail.com
2. GDP = (GVA at basic prices + Taxes on products net
of subsidies on products)
Acknowledgement: The first author of this paper acknowledges the
3. Investment in equipment support provided by the Indian Council of Social Science Research,
4. Subordinate debt is an unsecured debt ranking below Ministry of Education, Government of India, New Delhi by awarding
her the Post-Doctoral Fellowship.


Our heartiest congratulations to CMA Suparas

Jain, a Fellow Member of the Institute on being
elevated to the position of Vice President-
Corporate Finance in Deepak Fertilisers and
Petrochemicals Corporation Limited.

We wish CMA Suparas Jain the very best for

all his future endeavours.

46 The Management Accountant - October 2020 www.icmai.in



Covid-19 pandemic and an appeal made

by Honourable PM Modiji on Go Local for
Vocal has made us realized to substitute
foreign brands with Indian Brands to
make Indian Economy a self-reliant Dr. Meenu Maheshwari
economy. This pandemic has affected the Assistant Professor
customers’ perception towards Swadeshi Deptt. of Commerce and Management
products and has also provided different University of Kota, Kota
opportunities to MSMEs to fill the gap
created by global disruption. This research
Paper is an initiative in this regard and
reveals that Indian MSMEs should focus
on providing high quality customized
products with right pricing and their easy
availability as Indians are ready to switch
to Swadeshi products. Measures taken by
Government for revival of MSMEs and Dr. Ashok Kumar Gupta
changed perception of customers will Associate Professor (ABST)
Govt. Commerce College, Kota
definitely work for upliftment of MSMEs
and will flow a wave of fulfilment of dream

1.1 Introduction:
he appeal made by Honourable PM Narendra
Modiji on “Vocal for Local” has brought up
the importance of manufacturing in India and
consumption of locally produced goods by
the citizens. “Vocal for Local” means recognizing and Sudarshana Sharma
promoting the intrinsic strength of Indian entrepreneurship Assistant Professor - Finance
to get it released from the chain of complicated tangles of Amity Global Business School
land, labour, liquidity and laws. Seshadri Chari (2020) Ahmedabad
said that to be “Swadeshi” means to bridge a gap between
robust localisation and inevitable globalisation which
are complementary and are not diametrically opposed. be competitive and gain a competitive advantage over other
Substitution of foreign brands from Indian brands is the countries and make India, “AatmaNirbhar Bharat”. These
need of the hour after the pandemic covid-19 but at the same sectors primarily include food processing, iron, organic
time it is not an easy and a few days task. Many sectors in farming, aluminium and copper, electronics, agrochemicals,
India are highly dependents on imports in which India can industrial machinery, furniture, leather and shoes, auto parts,

www.icmai.in October 2020 - The Management Accountant 47

textiles, medical equipment etc. India can become a global E. Limitations of the Study: The study covers a small
supplier for them.”(Financial Express, May 21, 2020). sample of 150 respondents only. The study is confined
to Kota City Only. Only few aspects for customers’
1.2 Review of Literature perception on Swadeshi products have been covered.
Few online articles have been reviewed to identify the
impact of Covid-19 on MSMEs and the opportunities 1.4 Analysis and Interpretation
available for the growth of MSMEs. An article in The Hindu This part of research paper presents the major findings and
Business Line (April 22, 2020) highlighted that 79 % small inferences drawn from the responses received from different
and medium sized enterprises have been negatively impacted consumers.
by coronavirus pandemic. A survey by Kantar Consultancy
Companyfound that micro, small and medium enterprises are Table 1: Demographic Profile of the Respondents
operating at less than 50% capacity. Restricted movement,
less demand from customers, financial and workforce
distresses have led to many challenges to MSMEs.
Businesses are looking for leveraging opportunities. Neha
Diwan in an article in Economic Times Online (May 01,
2020) quoted Suresh Prabhu and stated that size, scale of
operations, limited financial and managerial resources make
small industries weak ones as it is difficult for them to
survive in normal times, they don’t have enough capacity to
covenant with unexpected crises of lockdown.
Shradha Mishra quoted Anirben Sen in an article in
bestmediainfo.com (May 06, 2020) and asserted that “a
change will take place in customers’ sentiment and they Interpretation: Table 1 shows the demographic
will focus on origin of brand as a mark of trust than fancy characteristics of the respondents which primarily depicts
designs. that in this survey 55.1 % respondents were male. The
People will now seek to help in developing the Indian highest no. of respondents 46.9 % belong to the age group
Economy through purchasing and consuming Indian Brands of 30-40 years. 38.8 % respondents belong to employed
with the feeling of “BE INDIAN, PURCHASE INDIAN”. category and 40.6% respondents belong to income level of
below 5 lakhs.
1.3 Research Methodology
A. Objectives of the Study: -This study aims Table 2: Customers’ Preferences in Buying Products
1. to explore the scope for developing MSMEs to
make India a self-reliant economy.
2. to identify the perception of Indian customers
towards Foreign Products and Swadeshi
3. toprovide suggestions for making India a self- Interpretation: Table 2 shows that majority of respondents
reliant economy and popularize Swadeshi 70.4 % prefer to buy products of mixed of Indian as well
Brands. as foreign brands.Indian customers do not rely neither
B. Sample Design:-The respondents consist of completely on foreign brands nor on Indian Brands.
the individuals from Kota City.A sample of 150
respondents have been taken as a sample size. Table 3: Products Preferences in Foreign Brands
C. Data Collection: Data have been collected through
both primary and secondary sources. Primary
data have been collected through questionnaire
using Google form and secondary data have been
compiled through online resources. A pilot survey
with structured questionnaire with 20 respondents
has been conducted. After the feedback received, a
structured questionnaire has been framed with the
required changes and circulated to 250 respondents, Interpretation: Table 3 presents that Indian customers
out of which 150 responses were received. mostly preferred to buy electronics products of foreign brands
D. Data Analysis Tools and Techniques: The data as they have been ranked on1stposition. Clothes are ranked a
have been analysed and interpreted through tables, 2nd preference followed by beauty & personal use products
percentages, personal observations on responses and automobiles on 3rd position.Industries like electronics,
received etc.

48 The Management Accountant - October 2020 www.icmai.in

beauty and health care products, and automobiles have more 73.5% followed by value for money and physical appearance
scope to grow. with 44.9% and 25.5 % respectively. If local manufacturers
provide superior quality products with value for money then
Table 4: Awareness Level Regarding Substitute Indian demand of Indian products can be increased.
Brands of Foreign Brands
Table 8: Experience of Respondents using the
Swadeshi Products manufactured by MSME’s in India

Interpretation: Table 4 shows that 75.5 % are aware of

the substitute Indian brands of products of Foreign Brands.
Substitute Indian Brands are not preferred by respondents
may be due to poor quality.
Interpretation: Table 8 shows that 77.6% respondents are
Table 5: Awareness level regarding the Origin satisfied with the usage of Swadeshi products so MSMEs
Country of the Products before Buying have more scope to grow.
No. of % of
Response Table 9: Perception on Demand for Swadeshi
Respondents Respondents
Yes 60 39.8 products Increased during Covid-19 or will increase
No 21 14.3
Post Covid-19
Sometimes 69 45.9
Interpretation: Table 5 shows that before buying any
product, 45.9% respondents check the manufacturing country
details sometimes only.39.8% respondent’s confirmly check
the country details whereas 14.3 % respondents never check Interpretation: Table 9 shows that 68.4 % respondents
it.Companies in India should focus on marketing of products believe that demand for Swadeshi products have increased
through promoting “Made in India”. and will increase during the Covid-19 pandemic. This is
an opportunity for Indian MSME’s to avail the benefits of
Table 6: Preferences to Products generally Notices increased demand.
by Customers for the Manufacturing Country Details
((More than 1 response was accepted) Table 10: Perception on Whether Appeal made by
Our Honourable PM Modiji for Local and Vocal will
Influence Buying Behaviour of Respondents Towards
Swadeshi Brands

Interpretation: Table 6 shows that maximum number

of respondents 56.1% notice country details on electronics Interpretation: Table 10 shows that maximum number of
products followed by food and beverages, beauty, personal respondents 72.4% agrees on the fact that appeal made by
use or health care products and clothes with 26.5%, 25.5 % Honourable PM Modiji for local and vocal will influence the
and 22.4% respondents. buying behaviour towards the Swadeshi products and will
increase their demand.
Table 7: Motivation Criteria to Purchase Products of
Foreign Brands (More than 1 Response was Accepted) Table 11: Rating Given to Preferences for Purchasing
the Category of Products of Indian Brands (More than
1 Response was Accepted)

Interpretation: Table 7 shows that superior quality of

foreign brands attracts maximum number of respondents

www.icmai.in October 2020 - The Management Accountant 49

Interpretation:Table 11 reveals that customers mostly
prefers to buy clothes, foods and beverages, pharmaceutical
and health care products of Swadeshi brands as they are
ranked as 1st, 2nd and 3rd respectively. Electronics products
andautomobiles are the least preferences in Swadeshi brands
Interpretation: Table 15 shows that 98% respondents
so these industries have more scope to grow.
would like to promote the local products manufactured by
MSMEs based on their usage experiences.
Table 12: Likely Features for Purchasing the
Swadeshi Products (More than 1 Response was
Suggestions for Make India a Self -Reliant Economy
and to Popularize Swadeshi Products
1. Indian MSMEs should try to provide innovative,
technologically upgraded, high quality and variety of
customized Swadeshi products and make them easily
available through proper supply chain management.
2. Reducing Globalisation, providing supporting
business environment for MSME’s, imposing trade
Interpretation: Table 12 shows that 84.7% respondents barriers on foreign products and raw materials, more
would like to buy Indian Products if they are of good quality strategic plans to boost up product manufacturing in
followed by pricing of the products with 53.1% respondents. India, making available different incentive schemes
High quality products with right pricing, effective for MSMEs can lead to development of MSME’s in
advertisements campaigns and publicity strategies and easily India.
availability of local Products can capture the Indian Market. 3. Govt. should make more schemes to encourage the
entrepreneurial spirit of the youths which should be
Table 13: Perception of Respondents on whether built at college/university level only.
Purchase of Indian Brands will Help in Uplifting the
Indian MSMEs or Not 4. To fulfil the demand supply gap, more production
units with enhanced capacity should be established.
5. Govt. should try to attract investment by NRIs in
Indian Economy and promote exports of Swadeshi
6. Government should take initiatives to solve financial
Interpretation: Table 13 shows that 86.7 % respondents problems like fund availability, liquidity, higher
are in favour of the fact that if customers start purchasing interest on loans etc.
Swadeshi products instead of foreign brands, it will definitely 7. Investment in technology and innovations and
help in uplifting of the Indian MSMEs. More demand, eradicating corruption can provide needed stimulus
more industries, more production, more employment, more for Indian MSMEs.
availability of Swadeshi products will definitely help in
8. More advertisement /promotional activities through
uplifting Indian MSMEs. More employment opportunities
creating separate e-commerce platforms for local
locally will help to resolve the problems of migrant workers
products are needed to create awareness and attract
Table 14: Perception on Measures taken by Indian 9. Differentiation of Products should be created through
Govt. Recently for the Revival of Indian MSMEs will Labelling and Branding of Swadeshi Products.
Help in Promoting Indian Brands 10. Famous stars, cricketers, well known personalities
should be engaged to advertise Swadeshi products as
Indians follow them blindly.
11. Government aided stores should be opened to sale
Swadeshi Products and more emphasis should be
given on selling through online platforms.
Interpretation: As shown in Table 14 that maximum
94.9 % respondents perceive that measures taken by Indian 12. Relaxation in statutory compliances should be
Government recently for the revival of Indian MSMEs will given to MSMEs such as low tax rates on products
help in promoting Indian Brands. manufactured by MSMEs, tax benefits, relaxation in
time for filing returns, etc.
Table 15: Perception of Respondentsto Promote the
Measures Taken by Government of India for
Products of MSMEs Based on Your Personal Usage
the Revival of Indian MSMEs and to make them
To make India’s vast MSME sector back to life, following

50 The Management Accountant - October 2020 www.icmai.in

6 measures out of 15 relief measures under the mega package subordinate debt to functioning MSMEs declared
of Rs. 20 Lakh Crores announced by Finance Minister NPAs or stressed and then will be then infused by
Nirmala Sitaraman are aimed for MSMEs particularly: promoters of MSMEs as equity in the business unit.
3. Rs 50,000 crore equity infusion: The government
1. Rs 3 lakh crore collateral-free loans:- To meet will infuse Rs 50,000 in equity in MSMEs through a
the additional funds requirements of MSMEs, Fund of Funds that will be operated through a Mother
Banks and NBFCs will offer up to 20 per cent of fund andfew daughter funds.
entire outstanding credit as on February 29, 2020, to
4. Revised MSME definition: To address MSMEs fear
of outgrowing in size to receive benefits given by
2. Rs 20,000 crore subordinate debt: The government the government to businesses, Nirmala Sitharaman
will facilitate the provision of Rs 20,000 crore as revised the definition of MSMEs as follows:

Table: 16 Revised Definition of MSMEs

Composite Criteria: Investment and Annual Turnover
Classification Micro Small Medium
Investment<Rs.1 Cr. Investment < Rs.10 Cr. Investment <Rs. 20 Cr.
Manufacturing & Services And And And
Turnover<Rs. 5 Cr. Turnover<Rs. 50 Cr. Turnover <Rs. 100 Cr.

Source: msme.gov.in
5. Global tenders disallowed: To address MSMEs’ the economic-revival/
issue of unfair competition from foreign companies, 5. https://msme.gov.in/whatsnew/atmanirbhar-presentation-part-1-
global tenders will not be allowed by government
6. https://qrius.com/the-impact-of-swadeshi-products-on-the-indian-
upto Rs. 200 crore.
6. Clearing MSME Dues: The government and central 7. https://taxguru.in/corporate-law/impact-msmes-covid-19.html
public sector enterprises will release all pending 8. https://theprint.in/opinion/modis-idea-of-self-reliant-india-same-as-
MSME receivables in 45 days. gandhis/421820/
9. https://www.ciiblog.in/industry/covid-19-cii-policy-recommendations-
Conclusion for-msme-sector/https://indianexpress.com/article/explained/self-
Pandemic Covid- 19 has brought many challenges for not-6408407/
MSMEs with ample number of opportunities too. To catch 10. https://www.entrepreneur.com/article/349635
the domestic market with parallel export opportunities, 11. https://www.facebook.com/MadeInIndiaUseIndianProducts/photos/
Indian MSMEs have to prove their worth themselves by list-of-swadeshi-companies-and-productsbe-indian-buy-indian-given-
playing on volume with the high quality. Extensive product below-is-a-lis/304564323055870/

promotion, brand awareness programs, advertisement on 12. https://www.financialexpress.com/economy/aatmanirbhar-bharat-

different platforms, maintaining efficiency in cost, up- supplier/1966773/
gradation of products with the changing needs of customers 13. https://www.financialexpress.com/industry/sme/msme-fin-finance-
are the key parameters for the success of Swadeshi Brands. minister-nirmala-sithraman-6-relief-measures-for-msmes-small-
Indians have to change their perception towards Swadeshi businesses-to-survive-covid-19/1958150/
Brands and switch their preferences to local products and 14. https://www.jagranjosh.com/articles/cbse-2020-21-75-percent-
promote them as well. Measures taken by government and
changes in perception of Indian towards Swadeshi product medium=CRE&itm_campaign=1
will definitely work for the upliftment of MSMEs. A sound 15. https://www.outlookindia.com/outlookmoney/talking-money/covid-19-
industrial policy and a new Innovation policy is required, and-its-impact-on-msme-in-india-4683
and policies on making Industrial infrastructure are also 16. https://www.republicworld.com/business-news/india-business/
required. These all will lead to the fulfilment of dream of swadeshi-goods-can-transform-indian-economy-says-goyal.html
“AATMANIRBHAR BHARAT”. 17. https://www.thehillstimes.in/featured/covid-19-effects-on-msmes/
18. https://www.thehindu.com/opinion/op-ed/how-india-can-become-self-
19. https://www.thehindubusinessline.com/blchangemakers/switching-over-
1. https://bestmediainfo.com/2020/05/being-indian-how-swadeshi-brands-
2. https://brandequity.economictimes.indiatimes.com/news/business-
20. https://www.thehindubusinessline.com/economy/covid-19-crushes-
ones/71610559 micro-and-small-enterprises/article31406781.ece
3. https://economictimes.indiatimes.com/small-biz/sme-sector/
covid-19-pandemic-to-hit-msme-exporters-more-trade-experts/ drmeenumaheshwari@gmail.com
4. https://kredx.com/blog/covid-19-impact-on-msmes-its-significance-on-

www.icmai.in October 2020 - The Management Accountant 51




CMA Padmanabhan Satyes Kumar

Ex. Dy General Manager
BHEL- Haridwar


PM’s clarion call for Aatma-NirbharBharat depends on preferences of domestic consumers

as well as India’s potential for greater exports. Seeing the current status and challenges it calls
for intensive policy reforms and their urgent implementation. For this CMAs would be required
to play a challenging and multidimensional role to ensure competitive and affordable products/
services and ensure that better corporate governance leads to sustainable development of
company & economy requiring best of ethical, creative and innovative abilities.

n an article on leadership abilities of M S Dhoni, These traits are also visible in our Prime Minister, whose
Infosys founder Narayanamurthy notes that grand vision of Aatma-Nirbhar Bharat (ANB) has immense
“responsibility of a leader is to craft a grand vision, potential to motivate Indian towards a self reliant Indian
articulate it and raise the aspiration, confidence, economy capable for building a new and better India.
pride and enthusiasm of his people.”(Ref#1)

A. Current Status – following status review (Refer Table 1) of relative economic indicators will help us to understand the
challenges and prospects on the way to ANB:
Table 1 – World Bank data for 2019 (Ref#2):
GDP (Trillion $) 21.58 14.55 5.27 4.03 2.91
Per capita GDP ($) 65,760 10,410 41,690 48,520 2,130
Growth Rate 2.33% 6.11% 0.65% 0.56% 5.02%
Inflation Rate 1.74% 1.58% 0.59% 2.14% 2.31%

52 The Management Accountant - October 2020 www.icmai.in

Exports/GDP 12% 18% 19% 47% 19%
Imports/GDP 15% 17% 18% 41% 21%
Agri./GDP 10% 7% 1% 1% 16%
Mfg./GDP 18% 39% 29% 27% 25%
Revenue/GDP 17% 16% 13% 29% 13%
Capital Formation 21% 44% 24% 22% 30%
Market cap /GDP 148% 60% 122% 55% 76%
Startup process for business 6 nos. 4 nos. 8 nos. 9 nos. 10 nos.
Population (million) 328 1397 126 83 1366

Main Observations: B) Policy Initiatives & Some digital divide between the
Emerging Ideas for ANB haves and have-nots.(Ref#7)
a) In-spite of being the 5th largest 1. “Vocal for local”and“Made in 7. The Production Linked
economy,the per capita GDP India for global” sums up the Incentive (PLI) scheme
of India still remains very low focus under ANB. In October for electronic sector has
even compared to the second 2018 at the Investors Summit induced proposals worth
best (China) in this count. of Uttarakhand PM had given Rs12 lakh crore from all
b) Exports of China, Japan & similar ideas of localized major mobile manufacturers.
India, is around 20% of their Potential, Policy&Progress Similar schemes in Pharma,
respective GDP. like (a) Spiritual Eco Zone and Automobiles, Textiles and
c) Balance of Trade is negative (b) One World, One Sun & One Food processing may also
only for USA and India. Grid for solar power. expand Manufacturing sector.
2. UNDP chief hails the Indian (ref#8)
d) Manufacturing sector of China
is almost 25% of the world government’s plan to provide 8. President of CII applauds the
total. internet connectivity to 600 ANB and insists that Enabling
thousand villages in the policies, Execution urgency
e) India’s GDP contribution from
next 3 years as a very big and Exports growth should be
Agriculture is highest @18%
generational project for the cornerstone of all efforts
but 45% of its total population
financial inclusionfor all now to counter manipulative
are dependent on it resulting in
citizens (Ref# 3) global trade practices (Ref #9).
low per capita GDP.
3. Commerce Minister says ANB 9. Anotherarticle (Ref# 10)
f) Revenue to/GDP ratio is very
to promote the export potential suggestways to improve
high in Germany while lowest
based on competitive price India’s global share by:
in India and Japan.
&quality and not on subsidies a. All factors, e.g. land
g) Capital formation of India is & incentives. (Ref#4) acquisition delays, delay
much lower than China’swhich
4. He further says that ANB is not in refund of taxes etc.
may be one of the main reasons
meant for isolation of country lead to avoidable cost and
for exponential growth of
from global trade but meant to hence needs reforms for
China in last 20 years.
advocate for level playing field corrections;
h) Number of startup process for by working for equal, fair and b. Make in India for
new business in India is still reciprocal arrangement with its Global markets needs
very high compared to China global trade partners.(Ref#5). an upgraded quality
& USA and hence needs to be
5. Defense ministry declared a control through improved
further improved.
list of imported itemswhich in standards for evaluation;
i) Market cap to GDP ratio future will be solely procured c. Ensure that the FDI
shows the dominance of from domestic companies as being implemented also
private sector in USA and part of ANB policy. (Ref #6) integrates the supply
Japan and their economic
6. Mission Director of the Atal chain from within the
growth as a mixed economy.
Innovation Mission mentions country for greater
j) India’s Interest, inflation and the 5 pillars i.e. Demographic domestic value addition;
growth rateis well balanced dividend, Infrastructure, d. Imports needs to be
but high interest rate is one of Demand, Technology and rationalized to reduce
the impediments for global Socio Economic growth, on dependence on country
competitiveness of its industry. which the PM’s vision stands specific source of critical
to bridge the economical and materials like APIs for

www.icmai.in October 2020 - The Management Accountant 53

medicines. ratio and make governments of its management.The real
Incidentally Japan, India and Aatmanirbharfrom deficit net worth of organization is
Australia (JAI) have already initiated finance for overall ANB. determined by neutrality and
new supply chain plans to identify 5. Export potential of traditional integrity of the Accountants
alternatives. (Ref #11) Indian products as well as and independence and
values like yoga and AYUSH objectivity of the Auditors at
10. Agro exports grew from 9.4% to
etc. should be adequately its ethical best.
9.9% of GDP from Agriculture
while the imports reduced from encouraged. However this faith and
5.7% to 4.9% from 2017-18 6. Increasing capital formation virtue is sometimes misused
to 2018-19. Potential exist through reduction in normal by company management
for greater exports including revenue expenditure and through “FINANCIAL
horticultural products. focused arrest of project cost ENGINEERING”to window
(Ref#12) and time overruns. dress the results or the financial
status on a reporting datefor
11. Agile demand sensing & 7. Mega PSUs to improve
which the Accountants are
diversification for resilience qualitative factors and delivery
forced to compromise with
and growth including timelines to have greater local
the ethical standards and
decentralization of markets to and global market share.
exploit the loopholes of the
semi urban & rural areas are the 8. Policy of level playing field for Accounting standards.
long term learning of Indian public and private sector would
cos.from the pandemic.(Ref# It also leads to corporate frauds
also be long term enhancer of
13) including the delicate issue of
Indian ability to be globally
profit sharing bonus.Being a
12. Immense potential of India’s IT competitive.
part of the beneficiary group
sector will be more expansive 9. Emulate Japan’s work culture it is all the more imperative
with the exponential growth and South Korean&German that the accountants do take a
expected by NASSCOM in technological excellence conservative and ethical stand
Artificial Intelligence and through increased investments against window dressing.
DATA business in next 5 in applied R&D and
years.. (Ref #14) It is my sincere opinion, that
technology startups.
such financial engineering
13. GOI has identified 24 focus 10. Our demographic dividend seriously derails the
manufacturing sector which should lead the world with organization from its long
has the potential for growth minimum carbon footprint term targets of achieving true
for better market share in apart from increased use business excellence, impairs
Global trade.(ref#15) of renewable energy for its financial health and violates
14. CII code on corporate sustainable growth. the immense trust being
governance feels that risk imposed by the stakeholders.
capital and building the trust D) Role of CMAs in making of It is also imperative on the
bridge for same is the core to ANB auditors of such companies
India’s future ( ref#16) One of the most crucial factors for to adopt the highest degree of
Indian products, for ANB to succeed, ethical integrity and refrain
C) Prospects - Opportunities & is the competitive and sustainable from such practices.
Challenges price for which CMAs will have to
1. Low per capita income and its play a vital role. This can be broadly 2) Budgetary & Cost Control
regional disparity still remains categorized in five parts: Role
one of the crucial challenges in Budgetary controls and
the way of regional ANB. a. Part 1 & 4 detailed below consistent cost reviews forms
2. ANB policies should promote linked to ethical role. part of the routine functions
a culture of competition b. Part 2,3, and 5 linked to of a CMA but when the
& excellence rather than innovative and creative role. organization is facing the
depend on dominance of a few challenges of survival and
domestic monopolies. 1) Recognition/ Accounting - severe competition this
3. Doubling agricultural income True & Fair becomes very crucial.
should be supplemented The reporting role of For competitive price in the
with focused development of accountants is very crucial and domestic marketand greater
nearby industrial clusters and critical as it is the basic source share of global market,CMA
skill development. for the stakeholders to judge the will be required to be part
4. Better fiscal management state of affairs of the business of the Root Cause Analysis
to reduce the debt to GDP as well as the performance (RCA) for meaningful cost

54 The Management Accountant - October 2020 www.icmai.in

cutting requiring diligence determine the ultimate long learn from leadership of M S
&creative instincts of CMAs to term sustainable growth of Dhoni” by K R Narayanamurthy,
Founder of Infosys
challenge status quo and truly such corporations.
achieve zero base budget . 2. Ref#2- World Bank web- country
CMAs can effectively wise data on development
demonstrate that good indicators for the year 2019.
Cost Reduction & governance can really 3. Ref#3-Economic Times of 27/8/20-
Rationalization improve the competitive UNDP Administrator’s comments
This role is perhaps the most edge of the organization, titled “ India has generational
projects required to build country
critical and relevant for ANB while the thin margin from better post Covid-19”
which determines the ability of greater competition makes
4. Ref#4-Commerce minister
the organization to survive any better corporate governance PiyushGoyal speaking on ANB in
competition and will challenge inevitable to further safeguard the India @75 conclave dt.8/8/20
the depth of understanding by the net worth. 5. Ref#5-Economic Times dt. 10/8/20
the CMAs on the organization Also equally important is “Trade Agreements should be Fair
SWOT position and innovative and Reciprocal”
the ethical standards and
mechanisms to tone up the diligence in performing 6. Ref#6- PIB release dated 9/8/20
marginal cost elements titled “MOD’s Big Push to
various oversight and Atmanirbhar Bharat Initiative”
for a quantum jump in the certification jobs like cost 7. Ref#7- NitiAyog web- article
competitive abilities. audit, internal audit, tax audit, dated 27/7/20 titled “ Powering
For example BHEL was facing statutory audit etc. which will AatmaNirbhar Bharat Through
price war from international enable formal economy to Innovation and Entrepreneurship”
realize its true potential. The by M Ramanan, MD, Atal
suppliers of power sector Innovation Mission
equipments which necessitated non- compromising manner in
8. Ref#8-ET dt. 18/8/20-“Received
adoption of “Design To which this role will be fulfilled proposal worth---under PLI
Cost” (DTC) involving will greatly determinethe Scheme”
threadbare review of design degree of corruption free India 9. Ref#9- ET dated 17/8/20 in article
elements so that reduced and ANB. tiltled “UdayKotak deconstructs
target cost was attempted the story behind China’s slow,
5) Consultancy in niche areas systematic capture of India’s
to survive the competition.
ANB holds immense potentials markets.’
Repeated iterations also
for emerging roles like cost 10. Ref#10- ET article dated 21/8/20
called for Cost Accountant to titled “View- How India can
rationalization and commercial
activelybrainstorm with the Return To Its Past As a Great
aspects of Agriculture,
technical groups for: Trading Power” by Ajay
consultancy and guidance for Srivastava-an Indian Trade
a) Input quantity reductions/ MSMEs etc. where CMAs can Service officer.
Material substitution; contribute with their costing 11. Ref#11- ET dated 19/8/20-“India-
b) Material Rate reductions and productivity ideas for Japan-Australia supply chain in
through expansion of ANB. works “
vendor base/ better price 12. Ref #12- ET dt. 18/8/20 “India’s
negotiation; Concluding Remarks farm exports grow by over 23% in
March-June 2020”
c) Other modalities of The real success of the ANB efforts 13. Ref#13- PwC report titled “
factory /process / energy depends on ajan-andolan(mass Organizations needs to Focus
cost reductions; movement)wherein the pride & on agile demand sensing,
preference in domestic consumption decentralized for growth “
d) Waste reductions and cost published in ET of 18/8/20
rationalization. on one hand and self-confidence &
qualitative effort of every Indian 14. Ref#14-ET dated 18/5/20-
Nasscom : “ AI could add
4) Regulatory, Corporate on the productive front,will further $450-$500Billion to GDP by
Governance& Oversight upgrade India as a better economic 2025”
roles power in the global value chain. 15. Ref #15- ET dated 5/9/20-
It should be backed by all round “Exports & Imports doing well-
This by far is the most PiyushGoyal”
challenging but most improvements in the competitive edge
for which the innovative, creative and 16. Ref #16- CII Code 2020-Integirty,
important role of any Transparency, Governance and
professional accountant. The ethical contributions of CMAs will
Responsible Code of Conduct
degree of their success in be very crucial to determine HOW
implementing governance SOON we attain the real ANB.
and regulatory compliance satyeskumar@yahoo.com
in the true spirit of the law as References
part of the management team 1. Ref #1- Economic Times of
within the organization will 17/8/20-“Corporate India can

www.icmai.in October 2020 - The Management Accountant 55




Covid-19 has plunged the building

blocks of Indian economy. None of the
CMA (Dr.) Debdas Rakshit nations were prepared for this sort of a
Professor fatal contagion and economic downturn
Department of Commerce
The University of Burdwan, Burdwan
rolled into one. Besides, fighting with
covid-19, India plans to transform the
plight into opportunity by becoming self-
reliant to reinforce Indian economy to
emerge strongly in the post-covid-19
world. Therefore, the paper highlights the
pathway towards building a self-reliant
economy with special focus on the MSME
sector in India.
Ananya Paul
Research Scholar
Department of Commerce
The University of Burdwan, Burdwan

Background restoring the economy and fostering strengthen every sector, pave the
n the past few months, economic growth has turned towards way for technological advancement,
Covid-19 has taken the entire building internal economic strength of and reinforce domestic firms and
globe in its grip. It has severely the country with a new mantra ‘Vocal their standing on the global market.
affected the growth prospects for local to make it global’. Therefore, this paper spotlights the
of the major economies of the world Covid-19 has sparked massive pathway towards building a self-
and India is no exception. To ease dislocation in economic activities, reliant economy with special focus on
out the negative repercussions of especially in the global supply-chain the MSME sector in India.
covid-19 on Indian economy, the networks, trade and tourism.When
honorable Prime Minister of India the situation will return to normal is Pathway towards building a self-
has announced a financial package unknown. Hence, the urge to become reliant economy
of Rs. 20 lakh crore on 12th March self-reliant has gain importance. The Indian sectors that are
2020 which underlined the vision Developing a self-reliant economy highly dependent on imports have
‘Self-reliant India’. This approach of will augment the employment level, faced the biggest hurdle in terms

56 The Management Accountant - October 2020 www.icmai.in

of supply chain breakdown due industries uncompetitive concerning not be directly benefited from the
to the restrictions imposed by the the foreign players. loans provided by the government as
government at the onset of covid-19. It is vital to identify the key sectors in remote villages there is a lack of
This has brought up the significance where India has the capability and proper banking facilities, many poor
of local manufacturing, local supply- potentiality to scale up domestic people don’t have bank accounts and
chain network, and consumption of production and be globally are unable to pay interest amount
locally produced goods. The products competitive. The entire value chain timely. Also, many are unaware of
and services of local manufacturers of these sectors should be build-up these benefits and lack sufficient
have helped the country to survive and greater control should be ensured knowledge to properly understand
in the hours of crisis. Therefore, it over the domestic and global supply it. They need proper education and
is important to harness their ability chain networks. Also, exports should infrastructure so that they can develop
by supporting them to promote be promoted in these sectors.India is their ability to earn money through
local products and skills. This will highly dependent on other countries their skill, education, handicraft, etc.
develop their business and enable for import of several goods. While and enhance their desire to become
them to compete at the global stage. import of certain items like petroleum self-reliant.
Depending on other nations for critical products are inevitable, several other India should focus on leveraging its
items will eventually put the Indian products across consumer goods that existing innovation base, build human
business at their mercy. Hence, to are not technology-driven can be capital through skill development,
avoid such adversities it is vital to substituted by Indian manufacturers. education and healthcare facilities
reduce dependency on other nations As per the estimates of India China and carry out infrastructural and
by becoming self-reliant. Ramping up Economic and Cultural Council, nearly technological development to make
domestic production will ultimately 30% of imports from China which India an attractive destination for
strengthen the base of economic are mainly low-tech in nature can be foreign investment to create jobs and
system, develop the economic replaced by Indian manufacturers stimulate economic growth.Due to
infrastructure and its resilience if they are provided with the right covid-19, most of the multinational
capability. opportunity. companies are anxious about the risk
The outlook of this agenda is not just Along with boosting production, of doing business in China. So, Indian
about focusing on import substitution ‘infrastructure, technology, and can grab this opportunity by attracting
but is geared towards a quantum leap innovation’ should be focused foreign investments as India has the
to the economic growth potential on. The development of common advantage of huge domestic demand
of the nation by using modern infrastructural facilities is important and availability of skilled and cheap
technology, reinforcing infrastructure, to create a business-friendly workforce. The areas where India can
developing robust supply-chain environment. It is critical to implement differentiate itself and attract both
networks, and enriching human technologies like artificial intelligence, global and domestic investors need to
resources. To achieve this goal, certain IoT, cloud-based services, etc. to be stressed upon to be a leader in that
issues need to be considered. Firstly, attract innovations in a broad spectrum domain globally. This will fast track
full freedom needs to be ensured in of business activities. This will help to the creation of ‘resilient India’.
the market model. Though the nation alleviate the nation’s infrastructural
has unlocked itself to the global deficiencies and empower the How MSMEs can become self-
market through LPG policy in 1991, economic sectors to thrive. In India, reliant:
there are certain restrictive policies mostly the people reside in rural areas In India, MSME is the largest
and market-distorting subsidies and rely on agriculture. So, rural and employment providing sector
especially in agricultural aspects that agricultural infrastructure should be after agriculture. It is the most
need to be looked into. Secondly, the upgraded to assure basic amenities dynamic sector employing more
contribution of the manufacturing to rural people, improve quality of than 110 million people in over 63
sector in the Indian GDP should agricultural production and reduce million establishments. Due to its
be increased. Currently, this sector crop wastage. The government should significant contribution to Indian
contributes about 16.83% of Indian focus on agro-technology to enhance GDP, employment generation,
GDP which is far behind the intended agricultural productivity and curtail productionand exports, MSME sector
target of ‘Make in India’ initiative i.e. down the costs related to traditional can be regarded as the bedrock for
25% of GDP. Thirdly, India depends farming practices and climatic regrowth of Indian economic system.
on China for a variety of products like uncertainties. Reinforcing this sector would have
electronics, chemicals, auto parts, etc. multifarious impetuses boosting
An effort should be made to fortify
Hence, without building up domestic employment and economic growth
the bottom-of-pyramid economy. It
manufacturing capacity for these along with mitigating issues related
is momentous to reinforce the lower
goods, breaking away from reliance to the migration of laborers. This will
pyramid population by bringing
on China will not be easy. Lastly, to ultimately advance towards making
them more income through creating
push up the domestic competitiveness self-reliant India.
employment or entrepreneurial
of Indian industries, the government
opportunities. The lion’s share of the To empower MSMEs, certain
should identify and correct those
population lives in poverty. They may critical areas should be stressed.
pricing factors that render Indian

www.icmai.in October 2020 - The Management Accountant 57

Firstly,financial stability is very adapt to the changing market scenarios tax refunds, a specific product
important for the MSME sector. The and improve market competitiveness quality standard to adhere to quality
financial package announced by the to give a competitive edge to the local requirements and increase global
government for MSMEs which is players and compete in the global acceptability of their products, and
nearly 3% of Indian GDP has paved marketplace. a separate cost auditing standard to
the way to ensure financial stability of Fourthly, the MSMEs should enhance the reliability of cost accounts
the MSME sector. But these measures turn their attention on technological and reduce production cost by keeping
are inadequate for the micro and changes to develop resiliency to a check on all wastages.
informal enterprises that form the grapple with future uncertainties. Data If these steps are taken properly, the
major part of the MSME sector. Based analytics, cloud-based services, digital MSME sector would be immensely
on the former definition of MSMEs, marketing, digital communication, benefitted and could turn out to be
there are around 5000 medium, 0.33 etc. is imperative at this moment. The quite progressive in developing and
million small, and 63.05 million digital trade platform is indispensable contributing to the Indian economy
micro-enterprises in India. These for MSMEs to expand their local more brightly. MSME sector is
micro-enterprises mainly rely on market, tap export market, and connect the pillar of the Indian economy.
self-financing as they are generally with rest of the world to operate in the Therefore, to make India self-reliant,
family-run businesses. According to global market. India should build up it is crucial to strengthen this sector
the economic census data (2013), only an environment for facilitating MSME so that the Indian economic engine
7% of MSMEs depend on financing joint ventures so that the Indian can restart in a big way after the crisis
from government sources and formal MSMEs can collaborate with their fades away and can head towards
institutions. However, collateral-free global businesses to unfold to global making self-reliance.
loans may benefit the MSME sector levels on adopting new technology,
since many of them are not capable of innovating, and focusing on quality Conclusion
providing collateral to banks. It is also aspects.
essential to include the unorganized Nationwide lockdown sparked by
Fifthly, an inadequate infrastructural covid-19 has dealt a crippling blow
and informal MSMEs into the formal
facility is a roadblock for the MSMEs to the Indian economy. This has
economy so that they can get better
to expand their business. Around 51% proved that there is a critical need
access to finance.
of MSMEs are located in rural areas for a self-reliant economy. Therefore,
Secondly, a big challenge faced where the state of infrastructural the government and industrial
by MSMEs is the availability of facilities is poor and unreliable. organizations should work collectively
skilled workforce, especially around Therefore, rural infrastructure should to build up a self-reliant economy
urban centers. Moreover,the reverse be developed that acts as a hindrance with a special focus on the MSME
migration of laborers has painted a for MSMEs to progress and innovate. sector which plays a significant
grim picture. Developing the skill and role in escalating India’s economic
Lastly, in India, clusters hold the key
competence of the local workforce or growth story. However, this is much
to building a self-reliant environment
building up a lucrative environment dependent on the gravity of execution
premised on regional skill and
for the migrant laborers to return is and monitoring of the steps taken
expertise. It helps to identify synergies
vital for the growth of MSMEs. by all the organizations including
between several stressed MSMEs that
Thirdly, it is important to enhance can be used to form combined firms. coordination and cooperation from
the market competitiveness of the Under this approach, resources can state machinery. If the measures are
products of MSMEs so that they can be combined through focused efforts taken and implemented in true spirits,
achieve import substitution along with for tracking demand requirements and India can make swift progress towards
competing globally. Mainly MSMEs the latest trends throughout the globe building ‘Self-reliant India’.
face problems of storage, packaging, and produce market-based products
designing, and display of their to quickly respond to the changes in References
products. Further, a lack of product customer preferences. Developing 1. https://economictimes.
selling outlets is a grave constraint MSMEs through a collaborative indiatimes.com
for them. These issues should be approach while embracing a robust 2. https://knnindia.co.in
properly addressed to enhance their market-oriented strategy will provide
competitiveness. MSMEs should 3. http://www.businessworld.in
a strong boost to economic growth
focus on product quality, branding, including employment. 4. http://www.dcmsme.gov.in
innovation, and designing products as 5. https://www.india.gov.in
It is pivotal to make the MSMEs
per customers’ requirements to capture
a part of the formal sector. This will 6. https://www.india-briefing.com
local as well as global markets. The
not only help them to get better access 7. https://www.
MSMEs must link with the demand-
to finance but also to technology, thehindubusinessline.com
driven market scenario where their
subsidies from government and
business processes and strategies are
exports.Also, the MSMEs need a
aligned to the varying market forces debdas_rakshit@yahoo.co.in
separate accounting standard which
through a comprehensive market-
will enable them to prepare complied ananyapaul95@gmail.com
oriented strategy. This will aid them to
accounts, get access to export and

58 The Management Accountant - October 2020 www.icmai.in



CMA (Dr.) Paritosh Basu

Senior Professor
NMIMS School of Business Management

Introduction before clearance for the next flight is no longer a farfetched
eronautical engineers of the next destination imagination. Industrial internet of things (IIoT) embedded
airport getting information, even before with sensors and signal emitting capability can provide
landing, about which parts of a flying aircraft’s online real time information about the engine’s health to those
engine are to be examined and repaired ground engineers and manufacturer of the aircraft. Similarly,

www.icmai.in October 2020 - The Management Accountant 59

it is no longer a matter of imagination that a refrigerator can The first level of automations of manufacturing process
send information to the owner’s smart phone about depletion started in 1970s with the advent of electronics and
of stored food materials, average consumptions, and new computerised methods for controlling and monitoring
orders to be placed. If permitted, it can directly place orders of operations to a greater degree. In this third industrial
to the vendor, like Siri and Alexa of smart phones can play revolution only information technology, i. e., IT started
music as you wish to listen and order them to play. collaborating with OT. However, two-way communication
Aircraft and refrigerator buyers in these examples as between machine and IT remained elusive. Therefore, the
prosumers1 can help manufacturers to customise product huge mass of data generated by machines at various stages
design and pre-feed the IoTs with the required metadata and of production operations could not be leveraged for data
other relevant information as they would prefer when such analytics results of which could have helped in studying
IoTs are made artificially intelligent. These examples of behaviour of man and machines, innovation, and strategic
end-products are smarter than their previous versions. Many decision making for initiating corrective actions in time.
more such smart products will soon be available in markets.
If a product can be made smarter why not its manufacturing Digital Transformation of Manufacturing
processes. The present era of Industry 4.0 is more about communication
In a lay man’s perception smart manufacturing means and networking to ensure complete collaboration between
application of robots. Use of robots is just one of many more information and communication technology and operational
that are required for digital transformation of manufacturing technologies for manufacturing of products and generation
operations in a smart factory. In the emerging business of utilities and services. Manufacturing processes are
ecosystem end to end effectiveness of entire plant operations made smarter by enabling M2M, i.e., machine to machine
will be the critical most factor for sustaining with competitive communication for end to end automated actuation,
advantages beyond labour productivity and efficiency in sequencing, integration, collaboration, and cooperation.
capital asset utilisations. Robotic devices can also communicate with each other
and machines. This enables higher degree of interactions
Objective and collaboration between robot, machines, and men in
Gartner2 pre-alerted IT leaders in 2011 to achieve a a hybrid factory. Such robots are also called as Cobots or
state of readiness for evolution of their organizations by Collaborative Robots. Hybrid factories provide shared space
converging, aligning, and integrating IT and operational where human beings, robots and other machines are in close
technology (OT) environments. In Indian manufacturing proximity for working in tandem.
ecosystem successful integration of IT with OT is yet to be a All these are possible due to extensive applications of
widely accepted and soon to be implemented phenomenon, IIoTs which help networking for M2M communication. In
particularly in medium and small-scale manufacturing units. factories where physical robots are used Internet of Robotic
This paper aims at promoting this concept of converging IT Things (IoRTs) are used for robot to robot and machine
to OT with innovative applications of smart devices called (R2R and R2M) communication. Such online real time two-
IIoTs. way M2M, R2R and R2M communication help gathering
Digital transformation of manufacturing processes is a and leveraging of useful data for quicker analyses and
large subject and can hardly be covered in such a monthly initiating actions with minimum loss of time and resources.
column. Accordingly, the author has taken up IIoTs and Simultaneous applications IIoTs and robotic process
IoRTs, which can be fitted to machines and robots with automations (RPA) help deriving maximum benefits from
relative ease for deriving many benefits, as the main subject modern OTs and scaling up operations with a quantum leap.
for discussion. According to Capgemini Research Institute3 “A Smart
Factory leverages digital platforms and technologies to gain
significant improvements in productivity, quality, flexibility
Mechanisation of Manufacturing and services…. The main characteristic of a smart factory
Mankind had witnessed the first industrial revolution in is “closed loop, data-driven optimization of end-to-end
1780s when human and animal power was replaced by the operations. Advanced analytics are first used for decision
power of water and steam engine for moving wheels and support, but the ultimate goal is to reach “self-optimizing
other devices. It took another hundred years for electricity operations” where the factory constantly adapts to demand,
to be invented. In 1870s electrical power helped large scale variations in supply and process deviations.”
mechanisation of production process. During this second It is axiomatically said that a picture explains more than
industrial revolution the concept of mass scale component what thousand words can describe. The author is, therefore,
manufacturing was introduced. Separate assembly lines tempted to present the following graphics from the report of
facilitated voluminous production of goods. However, Capgemini Research Institute. Readers will observe that the
monitoring and controlling of such mechanised technologies nerve centre for a smart factory is the plant’s control tower
continued to remain dependent on human interventions. which relates to machines and equipment through IIoTs for
Obviously, the axiom of ‘To err is human’ did have its gathering information.
impacts through value destructions in many ways.

60 The Management Accountant - October 2020 www.icmai.in


Source: Capgemini Research Institute’s Report on Smart Factory3

Industrial Internet of Things IIoTs function in a network of intelligent devices. Those

IoTs make all things at our home, cars, cities, and are kept connected to a computing system that functions
industries smart. These are physical devices fitted with tiny as the supervisor to monitor and control their functioning,
wires and sensors and have wireless transmission capacity collect, exchange, and analyse data. IIoTs can also participate
in varying degrees of mega-bits. According to published in M2M communication beyond a factory environment. The
survey results, by 2030 an average human being will use author is of the view that IIoTs are constrained resources and
five IoTs and be under indirect influence of ~ twenty more by themselves are not secured and safe. Therefore, for safety,
IoTs. The given example of the aircraft could be one of those security, and effective usage of IIoTs, a Blockchain Platform
indirect influences. would be useful in a larger Network of such IIoTs within
and beyond the factory. Each IIoT would be an individual
The above definition of a smart factory from Capgemini
participant as a node, for which records are to be kept in
lays down emphasis on real time information management.
the memory segment of the IIoT with or without the help of
For this every information related to operation of each
edge computing. Even if the concerned entity’s ERP system
equipment is critically important because orchestration of
is hacked, the Blockchain Platform cannot be hacked.
every single equipment in production line is essential. For
this, enabling machines with IIoTs is critically important.
Impacts from Application of IIoTs and RPA
Coming to the specific of definition of an IIoT it would
The above narratives identify IIoTs and IoRTs only as
be appropriate to quote Margaret Rouse4, : “ …… IIoT
participants in a network for communications and help in
is the use of smart sensors and actuators to enhance
ensuring smart usage of a machine and transmitting data to
manufacturing and industrial processes…… IIoT leverages
the control centre. However, impacts of using such IIoTs
the power of smart machines and real-time analytics to take
and RPAs are far reaching. According to Phill Catwright5,
advantage of the data that ‹dumb machines› have produced
Executive Chairman of Raconteur’s Centre for Modelling
in industrial settings for years. …. Connected sensors and
and Simulation, “Industry 4.0 is the bringing together
actuators enable companies to pick up on inefficiencies
of robots, interconnected devices and fast networks of
and problems sooner and save time and money in addition
data within a factory environment, basically to make the
to supporting business intelligence (BI) efforts ……. In an
factory more productive and to execute the routine tasks that
industrial setting, IIoT is key to processes such as predictive
are best done by robots and not best done by humans.” These
maintenance (PdM), enhanced field service, energy
impacts can be briefly narrated in the following points:
management and asset tracking.”

Source of picture: Supertek GMBH6

www.icmai.in October 2020 - The Management Accountant 61

1. Communicate and collaborate to be more efficient and of those entities which have implemented smart factories
effective as an orchestrated system of manufacturing reveals the following action steps:
including synchronization of individual machine’s ~~ Revisit the vision and mission statement of the entity
and robot’s functions in a pre-programmed manner. and redefine those to the extent required.
2. Minimise variations and lapses in production ~~ Introduce policy statements and guidelines for
processes due to reduced scope for human governance of digitally transformed manufacturing
interventions and inadvertent errors. operations in compliance with related legal and
regulatory provisions.
3. Sustain what has been achieved and innovate for
more through data analytics and remain in search of ~~ Develop a time-bound plan for deploying and
excellence despite handling voluminous productions. integrating digital platforms for end to end
orchestration of manufacturing operations and
4. Strike the optimum balance between physical and convergence of OT with ICT.
cyber systems for deriving best of benefits from
~~ Introduce SOPs for operating a smart factory with
both operating and information technologies, and
definite statements of people’s roles, responsibilities,
optimization of operating processes.
and authorities.
5. Achieve a state of readiness for prosumers by ~~ Introduce metrics and methodologies for periodical
predicting his / her needs and meeting those. For giant assessment of progress and financial impacts, without
products like an aircraft or household equipment like forgetting that allowing innovators to make mistakes
a refrigerator IIoTs can be used for interactive product will accentuate the process of innovation.
designing and monitoring health and performance of
~~ Articulate a plan for change management to migrate
the product while in use by the customer / end user.
from and work towards developing a culture of data-
6. Function with ‘stragility’ by attaining capabilities to driven operations in a manufacturing space shared by
plan and work with agile strategies. These are possible man, machine, and robots.
in matters of management of individual machines and ~~ Retrain and reskill people who have sufficient
the entire plant, including generation of utilities like insight of the legacy systems and complement their
electricity, steam etc., and auxiliary support functions contributions by recruiting people to fill the perceived
like maintenance. gaps of human resources.
7. Enable factory operations being autopiloted and self- ~~ Implement all these with unwavering commitment
disciplined for functioning in a pre-planned manner, and needful allocation of financial and human
and thus turning the plant to be a smart factory. resources, including incentivization for innovative
~~ Share benefits from digital transformation with all
Form the above narrative it is evident that “The driving
internal and external stakeholders
philosophy behind IIoT is that smart machines are not only
better than humans at capturing and analysing data in real
time, they are better at communicating important information For successful implementation of all the above one of the
that can be used to drive business decisions faster and more most important requirements is alignment of thoughts and
accurately.”7. According to the result of a survey conducted objectives of board of directors with those of leadership
Capgemini in 2019 covering 1,348 manufacturers, as team and ground level officials. The Board must perform
published by i-Scoop7, USD 2.2 Bln. will be the estimated oversight functions with the needful insights.
value addition by manufacturing industry due to productivity
gains achieved through smarter factory initiatives. Readers
Industry 5.0
will agree that IIoTs will have a significant role in achieving
this feat. While Industry 4.0 era is very much on, flying the kite of
imagination never stops for foreseeing the shape of things that
may come in the next era of industrial revolution. Ascension
More Actions for Smart Factories research papers on Industry 5.0 predict that next industrial
Only digital transformation of operations with monitoring revolution would be based on the concept of personalisation
systems and converging to digitally operated control tower of designs with the unique assumption that each end user’s
is not enough for establishing a smart factor. The first requirement is unique and should not be met with a one size
and foremost need is to change the mindset of people and fit all kind of a solution. Readers are familiar with various
make them to unlearn before relearning and reskilling. The Apps they use on smartphones. A user will have to do what
author’s study reveals that experience of implementors so the App directs him / her to do without any variation that
far is that more of change in mindset of people and their may be required to meet his / her unique purpose. This is
training / reskilling are needed across hierarchical levels of even true regarding Apps for mobile banking operations.
officials than investment in capital assets. Gestation period The present author is of the view that the idea for such
for implementation of such a digital transformation project personalised design will be drawn from a kitchen. Everyday
is also not that long and RoI is also quite high. Experience a homemaker uniquely decides what he / she wants to cook

62 The Management Accountant - October 2020 www.icmai.in

in what style of recipe and what variations she / he wants collaboration to bring imaginations to reality for benefits of
from the similar food that was cooked last time. On entering mankind.
the kitchen, she / he finds all cereals, lentils, raw food items,
spices, utensils, burners, ovens, etc. All these will enable her Webliography
/ him to cook exactly what is desired. Thus, in industry 5.0 1. Prosumer: Digitally savvy professional customer,
era products will be uniquely designed in a similar manner to who is proactive and can also help manufacturers to
meet specific requirements of individual end users. They can design products and its process for performing. https://
also have their say in prescribing specifications, design, and dictionary.cambridge.org/dictionary/english/prosumer
process of manufacturing the product as per their sweet will. 2. https://www.i-scoop.eu/internet-of-things-guide/
Manufacturing system will have to be flexible enough to meet industrial-internet-things-it-ot/
such requirements. In that upcoming era the manufacturing
3. https://www.capgemini.com/be-en/wp-content/
space will be shared by men and robots, in which men will uploads/sites/17/2019/11/Report-%E2%80%93-Smart-
take up cerebral jobs of innovators and ‘innoventors while Factories.pdf
robots will do the rest. Such pairing of human and machine
4. https://internetofthingsagenda.techtarget.com/
workers would open vistas for innumerable opportunities in
manufacturing with due flexibilities.
5. https://www.raconteur.net/manufacturing/
Conclusion manufacturing-gets-personal-industry-5-0/
This much is in no way even a summary of the features of 6. https://en.supertek.de/products-and-services/machine-
a smart factory with digital transformation of manufacturing and-plant-engineering/industry-4.0
processes using IIoTs and IoRTs. The author must hard stop 7. https://www.i-scoop.eu/industry-4-0/smart-factory-
here as this paper is being written by way of a monthly scaling/
contribution. Interested readers may continue reading other
literature on the subject and imagine about the shape things Paritosh.Basu@sbm.nmims.edu
to emerge more in a smart factory. Rest can be left for

Contd from page 41 ......


Issue: September - 2020 [Vol. 55 No. IX]
Issue Page
Name of The Article Name of Author/s Volume Issue DOI Numbers
No. No.
Dr. Pooja Vol.55 Sep-20 9 45-49 10.33516/maj.v55i9.45-49p
INSURANCE SECTOR: A PATH TOWARDS Dr. Rohan P. Dahivale Vol.55 Sep-20 9 50-52 10.33516/maj.v55i9.50-52p
Vol.55 Sep-20 9 53-56 10.33516/maj.v55i9.53-56p
Dr. Sankar Paul Vol.55 Sep-20 9 57-61 10.33516/maj.v55i9.57-61p
HEALTHCARE SERVICES - RECENT CMA (Dr.) Paritosh Basu Vol.55 Sep-20 9 63-67 10.33516/maj.v55i9.63-67p
Vol.55 Sep-20 9 68-73 10.33516/maj.v55i9.68-73p
OF TECHNOLOGY ENABLED FLEXIBLE Dr. Anirban Ghosh Vol.55 Sep-20 9 74-76 10.33516/maj.v55i9.74-76p
CMA Apoorva Vyas Vol.55 Sep-20 9 77-79 10.33516/maj.v55i9.77-79p

To be Contd to page 89 ......

www.icmai.in October 2020 - The Management Accountant 63



In the context of shifting back dividend

tax incidence from distributing company to
the shareholders in the Finance Act 2020,
the author examines the disadvantages
that retail investors would face because
CMA (Dr.) T. P. Ghosh
Professor of Accounting and Finance of clubbing dividend income with non-
Institute of Management Technology dividend income which is detrimental to
Dubai encouraging long term retail participation
in the equity market. By analysing classical
dividend theories and dividend tax system

1. Reminiscing Dividend theory
inance Act 2020 shifted back dividend tax to in US and UK, the author suggests a
traditional system of taxing dividend in the hands progressive dividend tax system.
of shareholders abolishing dividend distribution
tax introduced in 1997. So far the debate on the
progressive dividend tax system was subsided because tax dividend irrelevance with ‘bird in hand’ proposition citing
incidence was passed on to the company distributing the surrounding economic and business risk and uncertainty,
dividend to the benefit of retail investors. In the changed practically often high dividend payout is a motivation for
dividend tax regime, retail investors would pay tax depending stock investment and many investors including Warren
on their tax slab not based on the quantum of dividend Buffet like dividend although no one likes unduly high
earned. Salaried class and other retail investors falling in dividend tax. The best motivation for ‘dividend irrelevance’
the higher tax bracket have to encounter higher dividend is the taxation impact on retail investors who actually is not
tax burden although they endeavor to channelize a small a driving force in designing dividend policy of companies.
portion of their savings in equity. However, to encourage Excluding the corporate houses who manage dividend using
long term investment in the stock market it is an imperative a stock holding company wherein incidence of dividend is
to distinguish dividend taxation from regular income as is virtually neutral whether taxed on the distributing company
the case of capital gains taxation. or receiving company, quantum of dividend tax surely
Modigliani and Miller are still popular for their dividend influences retail investors’ investment choice. Paying tax
irrelevance theory in strategizing stock investment. Should on virtually risk-free bank deposits should always remain a
an investor cares for dividend or allows the company to grow better choice than stock dividend and uncertain capital gain.
ploughing back surplus operating cash flow remains a long Here tax differentiation could be an important motivator to
standing debate. Google, Facebook and Amazon so far did channelize a fraction of retail saving to equity market.
not pay any dividend but offered impressive shareholders’ This article advocates the need for introducing a concept
value addition. While Gordon and Linter contrasted of ‘Qualified dividend’ in the line of United States for

64 The Management Accountant - October 2020 www.icmai.in

taxing dividend at special lower rate than merging with the was diminished. Preferred dividends attributable to
other income of the individual investor. In effect, dividend periods totaling less than 367 days are subject to the
on long term stock holding is no different from long term 61-day holding period rule above.
capital gains or simply taxing dividend at a special rate like ~~ Dividends that relate to payments that the recipient
United Kingdom. If an investor sells a portion of his long is obligated to make with respect to short sales or
term holdings to create ‘home made dividend (as explained positions in substantially similar or related property.
by Modigliani and Miller), it is after all called capital gains
~~ Dividends paid by a regulated investment company
not dividend. It is at the end only debate of terminology.
(RIC) that are not treated as qualified dividend
Dividend on long term stock holding should be taxed at
income under section 854.
special progressive rates to encourage long term investment.
~~ Dividends paid by a real estate investment trust
2. Qualified dividend concept of United States (REIT) that are not treated as qualified dividend
income under section 857(c).
US taxation system may provide further motivation
to enlarge the idea of classifying dividend into dividend ~~ Deductible dividends paid on employer securities.
on short term stock holding and long term stock holding. [ S o u r c e : h t t p s : / / w w w. i r s . g o v / i n s t r u c t i o n s /
One year holding period criteria which India follows for i1099div#idm139851458152048]
distinguishing between long term and short term stock
holding is further shortened in the United States to define Qualified dividend is taxed at differential rates. The rate
‘qualified dividend’ which is taxed at different rates as on qualified dividends for investors with ordinary income
opposed to ordinary dividend which are taxed at normal taxed at 10% or 12% is 0%. Those paying income-tax rates
income tax rates. greater than 12% and up to 35% (for ordinary incomes of up
to $434,550) have a 15% tax rate on qualified dividends. The
Qualified dividends are taxed in the US at the long term
rate is capped at 20% for individuals in the 35% or 37% tax
capital gains tax rate which ranges between 15% - 20%
brackets and with ordinary income exceeding $434,550.
which is a bit higher than Indian long term capital tax rate of
10%. US investors at the 15% income-tax rate or below pay Importing qualified dividend tax concept has many
no taxes on qualified dividends. Investors at the 25% rate or benefits:
higher save the most on qualified-dividend taxes. i. It does not impact the tax bracket of the investor;
Qualified dividend concept is not restricted to dividend ii. Long term equity investment which can provide
paid by the US corporations only. It extends to dividend stability in the equity market is encouraged.
paid by foreign corporations that trade on major US stock iii. Investors would remain tax neutral to long term
exchanges. Except as provided below, qualified dividends capital gains and dividend and thus high dividend
are dividends paid during the tax year from domestic paying Government company will find better number
corporations and qualified foreign corporations (stated of investors and thus subdued valuation of PSU stock
exceptions are not qualified dividend) would improve and fair value of those stocks could
~~ Dividends the recipient received on any share of stock be discovered.
held for less than 61 days during the 121-day period iv. Low dividend tax would compensate higher risk of
that began 60 days before the ex-dividend date. When equity investments. As such dividend yield of Indian
determining the number of days the recipient held the companies are not attractive.
stock, you cannot count certain days during which
As an alternative to qualified dividend approach, UK
the recipient’s risk of loss was diminished. The ex-
dividend tax system is explained in Paragraph 4 that can
dividend date is the first date following the declaration
outweigh the deficiency of disruption in tax slab which
of a dividend on which the purchaser of a stock is not
the present dividend tax system causes as explained in the
entitled to receive the next dividend payment. When
Paragraph 3.
counting the number of days the recipient held the
stock, include the day the recipient disposed of the
3. Dividend pushes up the tax bracket
stock but not the day the recipient acquired it.
Dividend impact is analysed using five cases applying
~~ Dividends attributable to periods totaling more than
tax rate under the new system. Each case assumes that
366 days that the recipient received on any share
the investor’s income other than dividend is at the top of
of preferred stock held for less than 91 days during
a particular slap beginning tax slab of Rs. 5-7.5 lacs. See
the 181-day period that began 90 days before the
Table 1 that reflects that the investor will pay tax on dividend
ex-dividend date. When determining the number of
which will be included in his/her income and thus dividend
days the recipient held the stock, you cannot count
will be taxed applying higher slab rate.
certain days during which the recipient’s risk of loss
Table 1 Dividend tax at Slab top income level
Income Rs. Tax excluding dividend Rs. Dividend Tax Rs. Total Tax Rs.
Case 1 Non-dividend income at top of
third slab Rs. 5,00,001-7,50,000

www.icmai.in October 2020 - The Management Accountant 65

Other income 750000
Dividend 35000
785000 39000 5460 44460
Applicable highest tax slab 10%
Dividend is taxed at 15%
Case 2Non-dividend income at top of
fourth slab Rs. 7,50,001-10,00,000
Other income 100000
Dividend 35000
135000 78000 7280 85280
Applicable highest tax slab 15%
Dividend is taxed at 20%
Case 3Non-dividend income at top of fifth
slab Rs. 10,00,001-Rs. 12,50,001
Other income 1250000
Dividend 35000
1285000 130000 9100 139100
Applicable highest tax slab 20%
Dividend is taxed at 25%
Case -4 Non-dividend income at top of
sixth slab Rs. 12,50,001-Rs. 15,00,000
Other income 1500000
Dividend 35000
1535000 195000 10920 205920
Applicable highest tax slab 25%
Dividend is taxed at 30%
Case 5 Non-dividend income above
Rs. 15,00,000
Other income 160000
Dividend 35000
195000 226200 10920 237120
Applicable highest tax slab 30%
Dividend is taxed at 30%
*Taxes are worked out including 4% cess
Under the new dividend tax regime, an investor will pay investor into higher tax bracket through dividend income
tax as per his tax bracket. Here the same dividend amount could be resolved using separate dividend income slab
is taxed differently as per the tax bracket of the individual system what is followed in the United Kingdom.
investor and the investor may have to pay tax at higher rate.
Size of dividend income (i.e. equity investment) is irrelevant. 4. Dividend Tax System in the United Kingdom
See Figure 1 that depicts variable incidence of dividend tax In UK, differential dividend tax has been designed that
while the long term capital gains are taxed at a fixed rate. charges lower dividend tax to basic tax payers but higher
dividend tax to higher rate and additional rate tax payers.
Tax payers are classified into three bands depending income
level. See Table 2 that shows UK tax brackets for 2020/21.

Table 2 UK Tax Bands

Tax band Taxable income Rate
Tax Rate
up to £12,500 0%
But dividend by nature is different from other regular
income. Dividend on long term stock holding is no different Basic rate £12,501 to £50,000 20% 7.5%
from long term capital gains. The problem of pushing up

66 The Management Accountant - October 2020 www.icmai.in

5. Separate dividend rate merged into Indian Tax slab
£50,001 to
Higher rate 40% 32.5% Taking clue from UK tax system and its underlying
incentive for stock investments or the US system putting
Additional a cut off holding period for qualified dividend , the Indian
over £150,000 45% 38.1% dividend tax could be designed in a way that offers incentive
for equity investments. Designed below a dividend tax
structure based on the principles followed in the US and UK:
Unlike US dividend tax, dividend income does affect the
tax slab in UK but dividend income is taxed at a lower than
Table 4 : Design of an investor friendly dividend tax
normal rate. Differential dividend tax rates are applicable
based on tax slab already determined. It is more liberal than
US qualified dividend approach as it is applicable to all Tax
dividends irrespective of time frame of stock holding by the Tax Rate
Taxable Rate Dividend
(Existing Dividend
investors. income (New Band
Scheme) Tax rate

Upto Rs.
Nil Nil

Rs. 2,50,001 to
5% 5% 5%
Rs. 5,00,000
Rs. 5,00,001 to
20% 10% 5%
Rs. 7,50,000

Rs. 7,50,001 to
The basic rate is allowed over the personal allowance to 20% 15% 10%
Rs. 10,00,000
£ 37,500. A £2,000 dividend allowance is also provided,
which means the first £2,000 of dividends is not taxable. Tax Moderate
Rs. 10,00,001 rate
rate applicable to non-dividend income does not impact the to Rs. 30% 20% 10%
dividend tax rate. Progressive dividend tax rate in the UK 12,50,000
and the US is essentially linked to the size of the investment
and not on the size of the non-dividend income. Of course,
Rs. 12,50,001
in the US only non-qualified dividend is taxed at applicable to Rs. 30% 25% 15%
normal rates. 15,00,000
Dividend taxation in the UK is explained by two examples Higher
in Table 3: rate
Above Rs.
30% 30% 15%
Table 3 : UK Dividend Tax Examples
Example 1 Only Dividend Example 1 Dividend and Dividend allowance of Rs. 10,000 should be granted in
Income salary income the line of UK dividend allowance. Dividend on long term
Mr. A is entitled to the shareholding i.e. dividend on stock with holding period of
standard personal allowance more than 1 year should be subjected to special rates under
Mr. A has a gross salary three bands stated in Table 4, namely, basic 5%, average
of £12,500 in the 2020/21
of £20,000 and dividend 10% and higher 15% such that equity investors.
tax year. He receives
income of £20,000.
dividends of £40,000 and Reverting back to classical dividend tax incidence on
has no other income. shareholders shifting from the dividend paying company
The dividends would be The dividends would be should be moderated by the income level of the investor and
taxed in the following way: taxed in the following way: also bya differential rates which is lower than regular tax
The first £12,500 is covered rate.
by the personal allowance. As the personal allowance
The remaining £27,500 is of £12,500 is covered by
within the basic rate tax the salary, the full dividends tpghosh@imt.ac.ae
band of £37,500. falls to be taxed in the basic
The first £2,000 of this rate band.  Out of which
being covered by the the first £2,000 is covered
dividend allowance. by the dividend allowance.
The balance of £25,500 is So £18,000 of dividends is
taxed at 7.5% subject to tax at 7.5%.  

www.icmai.in October 2020 - The Management Accountant 67




Biplab Chakraborty
General Manager (Ret.)
Department of Banking Supervision
Reserve Bank of India, Kolkata


Stress Test is forward looking simulation exercise to assess resilience of financial institutions
in the midst of sever but plausible adverse scenario.Liquidity Stress testing is an important
means for sketching out acomprehensive picture of liquidity risk profile of an institution.
Stress testing is a powerful tool in the hands of Liquidty risk managers.Liquidity stress testing
involves weighing potential net liquidity outflow exposures under stressed scenarios vis a vis
the available counterbalancing capacity. Varying behaviour of fund providers and users in
different stress situations based on their market and solvency perception of the concerned
institutions necessitates measurement and management of liquidity risk scenario specific.
Identification of cash-flow drivers is perhaps the most crucial step in defining and structuring
the scenario parameters. Deterministic stress test pivots on assumptions and methods. The set
of assumptions have to be as realistic as possible ensuring proper alignment in an internally
consistent way. The stress test outcomes help in identification of severe vulnerabilities. The
method however involves subjectivity throwing ideas about loss severity without any estimate
of associated chance and probability of occurrence thereof. Stress Tests based on hypothetical
data and assumptions are useful but not accurate. Stress testing provides where withal
for formulation of the plan to tackle effectively liquidity problems as when arising. Stress
testing work as effective tool provided its outcomes and findings are properly evaluated and
incorporated in the strategic plan. Stress testing is not the ultimate! Instead it forms only a
component of dynamic and integrated liquidity risk management process. However, stress
testing is definitely an effective tool providing valuable inputs to risk management decisions
provided it is sufficiently embedded and aligned to risk management frameworks and senior
management decision making frameworks.

68 The Management Accountant - October 2020 www.icmai.in


Introduction World Bank as a component of their commitments also tend to respond
he main objective of financial sector assessment exercises. to varying needs of fund arising
liquidity risk management Since then it emerged as an important indifferent business and market
framework isto ensure policy tool in use by banks and the scenarios. Thus, the volumes and
that the bank continues regulators all over the world. Stress timings of emanating liquidity
to remain in a position to meet its testing is used as an effective toolfor demandsand consequently liquidity
liabilities as and when devolving on drawing, interalia, a panorama of risk tends to vary according to
it and endure with high degree of an institution’s (mostly banks) risks specific banking and macroeconomic
confidence,periods of idiosyncratic profile under stressed conditions scenarios. It may be pointed out
and systemic liquidity stress upsetting and assess institution’s resilience in that funding strategies which might
both secured and unsecured funding. the midst of both endogenous and work in some situations might not
Although the importance of managing exogenous shocks. in some other scenarios. Therefore,
and measuring liquidity risk was not However, there is no unanimity as measurement and management of
unknown to the bankers the same to what would constitute a good and liquidity risk need be scenario specific.
did not receive deserving attention idealstress. The Bank of International Settlements
of regulators inBasel I and Basel II opined that “A bank should analyse
Different banks design their
frameworks likecapital adequacy. liquidity utilising a variety of’ What If
Stress Tests in different ways. A
Rapid evolution of Financial market ‘scenarios”.
Stress Test when designed in
in the past decades has made alignment with policy objectives The objective of liquidity stress
liquidity risk and its management of the concerned institution would testing is to assess adequacy of
process increasingly complex with be most effective in sub serving its funding sources to meet unforeseen
the emergence of new business underlying objectives and purposes. obligations arising in the midst of
models and new species of complex A bank wide stress testing design to be unexpected idiosyncratic and /or
financial instruments and market complete, meaningful and useful need market disruptions given its asset
players. Liquidity risk used to be necessarily include liquiditystress liability maturity pattern, funding
dealt with separately and without testing. profile, and business strategy. Design
considering other risks; thus,omitting and implementation of a stress testing
the effect of its interplay with other Liquidity Stress Testing system adequately sub-serving this
kind of risks facing the entity leading mechanics goal is none too simple, with several
to underestimation of its impact parameters to be factored in.
Liquidity stress testing involves
on the entity’s solvency profiles. At the outset we need define
weighing potential net liquidity outflow
Importance of proactive management, scenarios and chose appropriate
exposures under stressed scenarios vis
measurement and monitoring of scenarios for what if analysis in both
a vis the available counterbalancing
liquidity risk received serious idiosyncratic and systemic context in
capacity.Liquidity stress testing may
attention of both the regulators and the so far as Liquidty Risk is concerned.
be viewed as an ‘assessment of the
banks in the aftermath of 2007 global Risk Managers are seen choosing
impact of certain developments,
financial crisis. The crisis brought to with in two categories of scenarios
including macro or microeconomic
the focusthat the interconnectedness viz., Deterministic and Stochastic.
scenarios, from a funding and
of liquidity risk with both other Scenario testing subjects thescenario
liquidity perspective and shocks on
financial risks and non-financial risks to plausible adverse large movements
the overall liquidity position of an
facing an entity and its significant with a view to assessing the resilience
institution, including on its minimum
impact on its solvency profile and of the bank in facing the adversities of
or additional requirements’(EBA
prolonged liquidity disruptions are no that nature and scale.
guidelines on stress testing). Liquidity
longer unlikely events.The crisis made
stress tests attempt identification Scenario, a postulated sequence or
it amply clear that easy availability of
and quantification of exposures to development of events, is described
cheap liquidity in abundance all the
possible future liquidity stresses based by its distinctive attributes and
time cannot be assumed any longer as
on estimates of the possible impacts parameters. When the scenario is
a matter of course but need be ensured
thereof on the institution’s cash flows, defined by parameter and attributes
through relentlessly active and
liquidity position, profitability and (viz., GDP, interest rate, exchange
focused management of liquidity. The
solvency. rate, inflation rate, unemployment,
revelations of the crisis emphasised
Depositors exhibit different credit quality, liability stickiness
the necessity of proactive management
behavioural patterns and stances etc.) which are assigned fixed values
and monitoring of bank solvency at an
in withdrawal of option embedded and donot meander in indeterminate
enterprise level.
deposits and deposits having course in the stress test frame work
Stress Test is forward looking is classified as deterministic scenario.
indeterminate maturity in indifferent
simulation exercise to assess resilience Stressed scenarios enableto visualise
markets and macroeconomic
of financial institutions in the midst of the plausible adversities and their
scenarios. The borrowers’ behavioural
sever but plausible adverse scenario. severities and durations. Analysis of
pattern of drawls of funds under loan
Stress test was first used by IMF &

www.icmai.in October 2020 - The Management Accountant 69

plausible stressed scenarios can help and emerging contextual trends and interpolation of historical events with
banks in a good stead to be in readiness developments. required modifications to customise
to minimise the adverse impact of Liquidity holdings entails cost. the stress scenario. The stress test
any eventual crisis in a cost-effective Therefore, holding of enough liquidity outcomes help in identification of
manner and enhance counterparty for all probable eventualities would severe vulnerabilities. The method
confidence. not be feasible for any bank sustaining however involves subjectivity
Liquidity stress testing attempts to its business model. The level of throwing ideas about loss severity
see how the liquidity issues unfold liquidity inventory and size of capital without any estimate of associated
in different scenarios and assess the determine the time a bank would get to chance and probability of occurrence
adequacy or otherwise of resources restore the disorder in its house in the thereof.
and strategies in the armour to douse midst of unfavourable liquidity events Stress Tests attempting estimation of
the liquidity fire posing potential to depending upon idiosyncratic and / contingent liquidity risk by evaluating
engulf the solvency of the bank. In or systemic severity thereof. In stress the outcomes in deterministic
scenario building to cover the entire testing attempt is made to understand test scenarios,both historical and
gamut of the possibility universe when, how badly and how long what hypothetical, at varying stress intensity
two approaches may be adopted might go wrong and how possibly the levels, appropriately customised
viz., normal course of business bank can tide over such eventualities for the institution concerned is the
bank specific funding crisis as also if and when arising given the fact that standard industry practice.
systemic crisis like capital market banks do not hold enough liquidity Liquidity risk being a consequential
disruptions and sever recessions. In during normal time for meeting risk,while delineating stress scenarios
ordinary course of business scenario, worst liquidity events. Stress testing the expected sequence of events
the seasonal fluctuations and changes outcomes provide opportunity to the following the triggering event need
in behaviour of liquidity suppliers and risk management to evaluate the also be factored in. The level of
users need be incorporated.Scenarios adequacy and reliability of liquidity liquidity risk generally observed
need be based on both short- and long- stock and contingency funding to remain mild to start with and
term perspectives of liquidity of the arrangements in place in tackling escalates gradually in steps if curative
bank concerned. There are precedence the liquidity issues that would have measures are not taken or effective.
of banks failing in few days and emanated had the system been made High intensity instantaneous shocks if
also in many months. Evaluation of to operate in specific stress scenarios. factored in the scenarios the outcomes
deterministic scenarios at varying It might be intent of the Risk might be misleading. However, to
stress levels/ severity may be used for managers to know the extent of steer clear of the ‘disaster myopia’
quantification of contingent liquidity contribution made by the individual the worst-case scenario should be
risk. dependent or independent risk factors worse than the worst encountered
Scenarios must be appropriately to the projected risk exposures. historically.
aligned to the concern bank’s Sensitivity Analysis is done get the Identification of cash-flow drivers
asset liability structure, exposure desired estimates. In an idiosyncratic is perhaps the most crucial step in
profile, business model and business context sensitivity analysis might be defining and structuring the scenario
strategies.Banks having greater undertaken with respect to deposit loss parameters. Two most important
exposures to some specific sectors/ assumptions, funding requirement drivers are interest rate risk and credit
segments need build up test scenarios assumptions for off balancesheet risk. Variation of market interest
to capture the vulnerabilities in the items, assumptions on rollover of rates have discernible impacts on the
event of disruptions in the relative capital market funding,availability of cash flow needs of a bank. The term
market. Seemingly mild events may new capital market borrowings etc. structure of assets-liabilities might
have potential to trigger worldwide In a systematic context sensitivity get reconfigured due to change in the
disruptions with spill over effects analysis may be done with reference stance/behaviours of the economic
extended to commodity, debt, equity to interest rate changes, credit spread, agents engaged with the banks as
and exchange markets. Incidents like market access, widening of bid-ask liquidity provider or user.In low
LCTM failure and melting down of spread etc. Although in extreme interest rate scenario, a FD holder
Russian rouble when Russia was eventualities various kinds of risk may not be inclined to renew the
a small economy, may be referred factors viz., credit risk, market risk fund Instead he may park the fund
to. Effects of oil price volatility change and their interplay tend to to SB or other shorter term deposits
ripples through international borders complicate and aggravate the risks, in quest of higher yields. Although
impacting business and finance in they are held constant in scenario- bank’s available funds don’t change
both oil exporting and importing based stress testing framework. immediately, bank’s term liabilities
countries. Therefore, scenarios may be Stress Tests based on hypothetical would decline escalating potential
constructed incorporating sequences data and assumptions are useful but not liquidity risk in the eventuality of
of the past historical developments accurate. Hypothetical assumptions future withdrawal of funds. Similarly,
and hypothetical sequence of events may be decided upon by extrapolation/ when interest rates fall prepayment
relevant to the entity concerned

70 The Management Accountant - October 2020 www.icmai.in

of loans are more augmenting the than being precisely wrong.Stress estimate the behavioural cashflows the
cash flow. Cash-flows emanating out testing is one of the components of causative drivers thereof are required
of option embedded deposits and the overall framework of liquidity risk to be identified. Interest rate is one
advances also change in response management. While scenario stress important driver of behavioural cash
to the changes in the interest rates testing enables us to appreciate the flow. Besides, in extreme stress level
impacting bank’s liquidity position. plausible risk exposures in the given the lenders and depositors tend to
For non-funded loans drawals would scenarios a bank can be impacted by exhibit aversion to providing funding.
tend to be more when interest rates possible infinite number of different The estimated behavioural cashflows
rise compared to that in a lowering combinations of adverse scenarios. also need be bucketed in the same
interest rate scenario. When interest The findings of stress testing facilitate time slots. Cashflows emanating out of
rates rule low the flight of funds evolving effective and efficient Contractual maturities of investments
from banks occur in quest of greater contingency funding plans and to and borrowings have to be assessed
yield elsewhere outside the banking build up optimum liquidity inventory and allocated in respective defined
sector. In recessionary phase business for maximising the counterbalancing time buckets. The total of these
volumes contract and demand for loans power in the eventuality of mild to items broadly comprise the liquidity
declines. Depositos tends to withdraw severe stress build up. A contingency need in each time period in every
more funds for settling transactional funding plan (CFP) is a response scenario at each stress level. Now
needs. Continued recession often action plan for responding, in a timely the quantity of liquidity need in each
triggers higher loan delinquency rates and cost-effective manner, to severe time bucket can be compared with
reducing flow of funds by way of loan disruptions to funding ability of the liquidity available. This gives rise to
repayments. bank governed by well set out policies assessment of adequacy or otherwise
Inadequate liquidity has triggered and procedures by the top management. of the counterbalancing power in the
many a bank failure but often credit CFP need to be meaningfully linked to given scenario at give stress level. The
problems have been the villain in the stress test results taking into reckoning sources of stand by liquidity available
wings! Credit exposures and changes the potential closure of some funding in each stress scenario at every stress
therein have ramified implication on sources in the midst of the stressed level need be determined. This would
liquidity position of a bank. The cost scenario. involve forecasting of how much time
of funds for a bank is directly linked would be involved in converting the
to market perception of credit quality Stress Test Work Flow same to cash and determination of
of the bank. Besides credit ratings, if The stress testing work flow starts extent of cash that might be availed
available, loan growth rate, level of with selection of test scenarios. considering haircuts of marketable
toxic / nonperforming assets, level Degree of severity in each test scenario securities in period of stress and its
of provisions for bad loans are credit viz., mild, medium and severe is also variations due to change in interest
quality indicators available in public defined. Mild stress level may be rates and credit spread etc.
domain which go into reckoning while characterised as publication of higher
judging the credit quality of a bank. provision figure, curtailed unsecured Conclusion
Sudden drying up of availability of borrowing capacity but unimpaired In the midst of sudden unexpected
unsecured funding for a bank may secured borrowing capacity and triggering of bank funding crisis bank
mostly be traced to market perception likes. Medium stress level may be liquidity mangers have very little to
of persisting credit problems of the mapped to no unsecured borrowing do. Neither they can quickly elongate
concerned bank. Escalation of credit capacity, impaired secured borrowing the terms of maturities of liabilities nor
risk followed by credit loss and if ability , inclusion in credit rating added to the inventory of liquid assets.
remains unrectified, the funding crisis watch list etc., while sever stress But if one had planned well ex ante
would lead ultimately to bank failure. level may corresponds to situations can manage better the sudden hit by
Liquidity risk is inherent in wherein for want of collateral, liquidity crisis. Liquidity management
banking business involving the secured borrowing power tends to tools available for crisis management,
maturity intermediation. Liquidity vanish. Stress test exercise has a time point at doing things ex ante not ex
risk scenarios are contingent in horizon for possible events to occur post the crisis. Stress testing provides
nature. It gives rise to unexpected for assessment of impacts thereof. wherewithal for formulation of the
cash requirements and therefore to In the next step of the process for plan to tackle effectively liquidity
gauge the likely issues concerning every scenario, at each stress level, problems as when arising. Stress
liquidity it would be wiser to simulate the contractual cash inflows and testing work as effective tool provided
cashflow projections in various sever outflows expected to occur in the its outcomes and findings are properly
but plausible scenarios to identify time horizon are to be estimated and evaluated and incorporated in the
inherent weaknesses, if any. This bucketed in well-defined time slots. strategic plan. It may be noted that
is done notwithstanding lack of The behavioural cash flows by changing scenarios one can make
precise knowledge of how plausible attributable to the behavioural it appear consistent with the extant
or probable the event might be, idiosyncrasies of fund provider/ liquidity position as also the existing
preferring to be vaguely right rather users need also to be reckoned. To underlying strategy obviating the need

www.icmai.in October 2020 - The Management Accountant 71

for any change. Therefore, prudence internally consistent way. One can etc) cannot supplant the utilities of
and circumspection need be exercised identify the significant assumptions suitably designed and implemented
while using scenario stress testing substantially contributing to stress tests generating bouquet of
so as to avoid the eventuality of any significant variation of forecasted cash valuable information on a bank’s
possible underestimation of liquidity flow in given scenarios. Sensitivity liquidity profile.However,stress testing
risk exposure and feel deceptively testing wherein all assumptions except is not the ultimate! Instead it forms
secure and confident. one are kept constant, may be used as only a component of dynamic and
Deterministic stress test pivots on a tool in identification of most critical integrated liquidity risk management
assumptions and methods. As Banks assumptions. process. Stress testing is definitely
generally lack the data needed to Calibrated variation of assumptions an effective tool providing valuable
calibrate a liquidity stress test, they in synchronisation with the nature inputs to risk management decisions
often employ diverse assumptions and severity of scenario under review provided it is sufficiently embedded
and scenarios.The behaviour of need be ensured. Identification of and aligned to risk management
depositors and funds providers of change drivers and deciding upon the frameworks and senior management
specific institution are governed by appropriate methods to obtain precise decision making.
a set of factors.Theextent to which estimates of possible impacts thereof
these factors will trigger withdrawal would be crucial. Weaving of adverse References
or withholding or use of funds tend scenarios is ticklish exercise. Deciding
1. Principles for Sound
to be associated with their sensitivities upon the set of variables to be
Liquidity Risk Management
to the perception of solvency of the stretched, set of adverse assumptions
and Supervision:Basel
institution. Core deposits impart to be made and what severity of
Committee on Banking
greater funding stability mitigating stress should be applied while the
Supervision:September 2008
the impairment of lending activities future is unknown, is not simple. The
during stress periods.Long lasting “right worst-case scenario” perhaps 2. Liquidity stress testing: a
Bank-depositor relationships have does not exist. In scenario testing survey of theory, empirics
a significant bearing on stickiness absence of information about assigned and current industry and
of deposit during stress period with probability of occurrence of the stress supervisory practices
lower outflow. The actual behaviours impact reduces the practical use and 3. October 2013-BIS
of both fund providers and fund users interpretation of test results. It is 4. FINAL REPORT ON
during stress period may be widely difficult to act on the loss numbers, the GUIDELINES ON
different from that generally exhibited outcome of the stress test exercise, in INSTITUTIONS’ STRESS
during normal business environment. the absence of associated probabilities. TESTING: European Banking
Therefore, Exercise of Liquidity Bank designed stress tests are Authority
projections in stress scenarios are generally built up on assumption that
5. Liquidity Risk Measurement
greatly assumption dependent. bank’s actions and stances are market
and Management: Basel III
Stress test outcomes are assumption neutral.
and Beyond:Leonard Maz
contingent. The set of assumptions However, a set of standardised
have to be as realistic as possible liquidity metrics(viz., Liquidity
ensuring proper alignment in an Coverage Ratio,Stable Funding Ratio biplabchakraborty@yahoo.com

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72 The Management Accountant - October 2020 www.icmai.in



CS Subrata Kumar Ray

Professor, School of Management Sciences
MAKAUT, West Bengal &
Former GM, MSTC Ltd.


A substantial part of the profit generated by Indian corporates are being spent and shall
be spent in future on CSR activities as it has become mandatory. Corporates should take a
cautious approach, conduct due diligence and ensure that every rupee is used for the purpose.
It should go to the ultimate beneficiary in the most ideal way. Compliance and satisfying the
auditor and the regulator should not be the only target of the corporates. The article suggests
few thoughts on ethical spending of the CSR budget.

thical funding and fiscal prudence go together. money on CSR is mandatory for some categories of
Theoretically, money being a scarce resource, companies. The portion of profit which is to be spent
should always be spent ethically. In practice, on CSR is a hard earned money, given the fact with
it does not happen, whether in case of public competition, earning marginal profit also is a challenge
finance, corporate finance or personalexpenditure. for the non branded products and services. Inspite of
Use of money is diminished if the purpose for spending few road blocks India Inc. is mostly profit making and
is not achieved. With the New Companies Act, spending are spending a lot in CSR. The following information is
worth referring.

www.icmai.in October 2020 - The Management Accountant 73

Contribution of CPSUs and non govt. companies in Decide the budget early
CSR The minimum budget is already decided by the
The contribution of Govt. vs non Govt. companies are Companies Act itself, i. e 2 % of the average net profit
mentioned below. of previous three years of the company, Companies can
spend more or spend even when profit are less or spending
Year PSU Non PSU Total is not mandatory under the law.
It is advised to fix the budget early based on provisional
15-16 financial figures. Waiting for an audited accounts and
getting the accounts approved in AGM would eat away
No. of companies 532 17,758 18,290 half of the year. Fixing early budget will enable the
company to identify project or start implementation early
Amount spent 4201.26 10,302.39 14,503.65 in the year.

16-17 Decide the thrust area and geographical area

Normal prudence suggests that company should
No. of companies 545 18,987 19,532 take up projects which are geographically near and
easily approachable for better monitoring. The area
Amount spent 3285.4 11,026.63 14,312.03 like healthcare, education, sanitation etc. has also to be
Designated finance officer
No. of companies 523 20,814 21.337 In many companies, CSR job remains to be a causal job
for the Finance Deptt and the finance officer who is free
Amount spent 2539.19 10787.5 13,326.69 for the time being is associated the job. Suggestion here
is to identify a person or persons to look after financial
Source: MCA annual report, 2017-18 (MCA website) issues for a considerable time, exclusively for CST
related finance and accounts job. This will enhance his
The above table shows that the corporates have ably skills, knowledge which would benefit the company in
supplemented social welfare and upliftment projects of ethical CSR spending.
the Govt.
Given the population size, CSR spending by corporates Take benefits allowed under income Tax law
cannot be and should not be compared to the Govt. Contributions to organisations having 80G, 35AC
expenditure on social welfare, which is a Govt. function. should be taken to reduce tax liability of the company.
Whereas Govt’s primary target is social development, the
purpose of corporate is to enhance shareholders’ value. Parallelfinancing
However, with broader definition of stakeholder, society It is very common for NGOs / implementing agencies to
also is included. Primary target of the company is to make try for funds from multiple sources for the same project.
sustained profit to exist and grow. This is neither wrong This needs to be checked. To start with, an affidavit be
nor unethical. taken that no fund for the project has been taken /shall be
The question often arise, are the CSR funds really taken from any other source.
used for the purpose it has been allotted. Here we talk of
ethical spending. Corporates need to examine, deliberate Joint Financing
and decide on CSR spending considering few issues, There are projects which are big and one company
which are discussed in the article. alone may not be in position to finance. Here the project
Due diligence, though very common nowadays, has can be taken jointly by the sponsorsand the modalities
a good amount of ethics embedded in it. Taking an can be mutually agreed. If company pays and the other
expenditure decision not based on facts and proper do not, then the money, even kept in the bank with honest
analysis is always unethical. Financial prudence is more intention, will not be of any use or the project may be
relevant to operational managers than finance managers half done. Suggestion here is in such case, all financing
as it is the former who takes operational decisions, companies should sit together and decide the modalities.
implements and monitors.
To my mind and with the experience of dealing with Start implementation early
CSR activities for 12 years, I would list out few issues It has been observed that in the last quarter , companies
which corporate need to follow for ethical CSR spending, are in a hurry to fulfil the budget target of CSR. This
gives lesser time for proper due diligence, evaluation
and monitoring. Focus shifts to spending money within
the year end than to see the proper use of money.So start

74 The Management Accountant - October 2020 www.icmai.in

early in the year. lapses and suggested solutions for ethical CSR spending.

Follow systemsand procedure

This is regardless of the size of the company. Having a Lapses Suggestion to counter the lapses
standard Operational Procedure (SOP) in CSR would help
to be ethical in selecting. Evaluating and implementing
effective projects. This would promote good governance Decide late on Fix tentative budget based on
and transparency, which gain is basics of ethical financial budget provisional profit figures

Evaluation of projects Making ad hoc

2 Make project based spending.
Most important of all, it would help to decide to take up
or not to tale up. There are various evaluation parameters
which may be taken. Positive Evaluation of that the
Collect one / two thrust area,
project should ensure that it is viable. i.e. possible to 3 Diversify areas
education, health care etc.
implement, can be monitored, accruing benefits to the
society etc.
No specific
Designate a fixed person for some
Project implementation monitoring 4 accounts/ finance
If the expenditure is substantial, the project should
be monitored while the work is in progress.Deviation is
common feature in CSR projects, money should strictly 5
No proper due Make proper due diligence of the
be spent for the purpose for which it is given. This diligence project
has to be done both by visiting the site and examining
documents. No monitoring
6 during Proper monitoring
Day to day Maintenance of the project implementation
There are instances where huge infrastructure have
been funded by some company, or any individual Never Make impact assessment
philanthropist but it is either not maintained or not in 7 monitoring the study for ultimate effect on
use. Sometimes there is nobody to take care or there is no ultimate impact beneficiaries
money to maintain. These issues should be clarified with
the agency/ beneficiary, otherwise, the whole expenditure Suspendingdo not end on
Satisfy the
shall be blocked without any use. 8 auditor and be
satisfaction of auditor. It should
address the issue for which
Project impact monitoring money has been spent.
The ultimate of all expenses under CSR should have
impact on the targeted beneficiary. In most of the cases, Conclusion
companies don’t bother for impact analysis. The reason
behind may be that by the time projects of one year CSR expenditure is highly critical and controversial.
reaches the beneficiaries or are complete, company is Criticism starts at the level of the person sitting next to
looking for new projects to fulfil target of the current the dealing officer on CSR and ends with CAG.In between
year. Other valid reason is poor manpower in CSR wing are operational managers, rival NGOS and implementing
or cell or department, where people are more bothered of agencies, the beneficiaries etc. There may be truth in any
the present issues problem than the effectiveness of past or all the allegations.None the less, the dealing officer
projects. will not have any problem if above issues are addressed
Satisfying the Auditor
Few of the above thoughts, if addressed, would go a
long way for better governance, ethical spending and subrataoffice@rediffmail.com
audit satisfaction. Documentation would be necessary at
every step.However, CSR activities do not end with the
satisfaction of Auditors. It is something more. It is giving
to society more than what is taken from the society.

Role of CSR committee, Audit Committee and The

Board of Directors.
To recapitulate, the following table highlights common

www.icmai.in October 2020 - The Management Accountant 75



The pandemic “COVID- 19” the acronym

for coronavirus disease of 2019 brought
about severe repercussions to human
health and economic activity globally.
It posed threat to life, people’s jobs and
Leenapriya De
Assistant Professor
livelihood. The social distancing measure
Department of Commerce and complete lockdown of economic
Heramba Chandra College, Kolkata activities, necessary to combat COVID-19
caused dramatic changes in businesses
environment and major shifts in behavioral

Introduction pattern of human being. It is important for
strange and new type of pneumonia of unknown marketing leaders to understand the impact
causebroke out in Wuhan, China in late 2019
and soon spread across the globe and was
of business interruption due to COVID and
named “novel” Coronavirus.The World shift in consumer behavior during COVID
Health Organization declared the novel Coronavirus-19, a crisis.
pandemicon 11 March 2020.The pandemic “COVID- 19” the
acronym for coronavirus disease of 2019, became a global
In this paper the behavioral pattern of
threat and brought about severe repercussions to human consumer during the COVID-19 pandemic
health,life and living of people and global economic activity. and impact of pandemic on marketing
The measures like social distancing and complete lockdown environment is studied. Here attempt is
of economy, necessarily undertaken to control the spread of
virus and to prevent loss of life due to COVID-19; hindered made to analyze how the marketers manage
economic activities. Pandemic led to slow down of trade and 4Ps –product, price, place and promotion
commerce, forced closure of many businesses,unprecedented strategically to ensure sustainability and
disruption of commercial activities in several sectors survival during and post COVID-19 crisis.
like hospitality, transportation,tourism, entertainment,
automobile, white goods, clothing, personal services like
gym, salon as demand for these ceased to exist.Several well
known brands in many industries experienced enormous operate their business prudently in the time of crisis, so as to
financial pressure. Although internet based businesses keep their business moving during the lockdown period and
like online entertainment, online shopping, food delivery post COVID period. In this paper attempt is made to analyse
experienced unprecedented growth in this pandemic. the changing behavioral pattern of consumerin COVID-
The COVID-19 pandemic outbreak had severe economic 19crisis and the strategies adopted by the marketer to ensure
consequences across the globe and led to dramatic changes sustainability in the COVID-19 crisis.
in businesses environment, business operation and behavior
of consumers. During the pandemic, retailers and brands Objective of Study
faced challenges, like reduced consumer demand, low sales The main objectives of the study are:
and profitability, uncertain cash flow, staggered supply chain 1. To study behavioral pattern of consumer during the
and so on. All business enterprises no matter how established COVID-19 pandemic and impact of pandemic on
they are need to reassess their business plan to manage and marketing environment.

76 The Management Accountant - October 2020 www.icmai.in

2. To analyze the marketing of disease. Such unforeseen sectors like clothing, hotel, tourism,
strategies adopted by lockdown caused stress and entertainment although demand for
the marketer to ensure panic amongst people. People essential goods did not undergo any
sustainability and survival all over the world are exposed kind of reductions. Studies conducted
during and post COVID-19 to mental stress, loss of job by the OECD indicate that consumer
crisis. and financial distress due expenditure declined by one third
to the pandemic. Locked (OECD, 14 April 2020).
Methodology indoors the only priority of Marketers need to understand the
This paper is an explanatory life was to secure life against new behavior of the consumers, and
and commentary type, based on pandemic; browsing shopping the circumstances that influence their
information collected from various sites, comparing goods and behavior and brand choice; whether
secondary sources like journals, services and shopping lost the brand choices are made from a narrow
websites and newspapers. priority. The businesses other set of preferred brands, or choices are
than essentials were financially driven by either a strong emotional
In this paper the nature of marketing
threatened, lost sales and relationship with brands or by short-
environment during pandemic is
profitability. term in-market tactics (price cuts,
studied inthree phases and how the
marketers manage 4Ps –product, price, 3. Unlock Phase promotions, new range/formats,
place and promotion strategically to As COVID cases declined and renovations, etc).
overcome COVID crisis. spread of disease were under In the light of COVID crisis
control, lockdown was lifted marketers need to re-categorise
Pandemic and Marketing in phased manner. Consumers customers into relevant segments
Strategies – A Study resumed normal life with using key drivers like profitability,
Pandemic Phase several restrictions. Brands loyalty, sales potential, risk profile
experienced slow growth and region so as to focus their efforts
The marketing environment during
of sales and profitability. towards the customers who adds
pandemic is studied in three phases-
Despite unlock, as the fear of value to the business. During COVID
pre-lockdown, lockdown and unlock
contagion remained, several phase, it is expected that consumer’s
service sectors like transport, preference for brand will remain
1. Pre-lockdown Phase tourism, restaurants & hotels, same unless competitors come up
This is the period prior to entertainment continued to with radical innovations or grabs
lockdown; when many people suffer. attention with creative marketing
across the globe got infected campaigns. Marketers should focus on
by an unknown disease that Different phases of pandemic do not strengthening the customer’s loyalty
caused death. Pandemic was reveal distinct difference in consumer by increasing payment flexibility,
suspected and lockdown was behavior or change of market situation. enhancing service delivery, ensuring
apprehended. This created clear communication and provide
panic among the people. People Consumer Behaviour uninterrupted availability. During
were uncertain regarding the Coronavirus posed threat not only the current uncertainty, fear and
continuous availability of staple to life but also to people’s jobs and worry, building emotional closeness
foods, beverages, medicines, livelihood. A sense of insecurity, and identifying with the personal
household products and anxiety, worry, fear for loved ones goals, values and circumstances of
necessities ,started stockpiling falling ill and several repercussions consumers, demonstrating empathy
everything while the brands of the pandemic became increasingly towards customers, recognizing
of consumer products and the common among people. The call hardship of customers will play a
retailers, drug stores, were for social distancing led to people prominent role in influencing brand
struggling to keep up with spending more time at home with choice and will help brands to be
demand during lockdown. families, instead of social interaction successful at the time of crisis and post
2. Lockdown Phase with friends and colleagues. Pandemic crisis.Marketers need to frequently
caused major shifts in behavioral track human behavioral trends by
The increased number of
trends; some of these behavior changes maintaining close relationship with
COVID cases and uncontrolled
may be temporary, while many may customers across social-media
number of death due to COVID
be permanent; like post COVID, it is platforms, community sites, and
prompted Government all over
unlikely that people’s digital adoption e-commerce product pages to gain
the world to initiate complete
will reverse. Consumer behavior took better insights of consumer’s sentiment
lockdown of all economic and
a new shape, influencing brand choice and consumption trends, look for
business activities excepting
and purchases.The consumer spending opportunities and identify looming
the production and distribution
declined drastically especially crisis more quickly so as to initiate
of food, medicine and
discretionary types of spending in right decision making and adopt better
essentials to control the spread
marketing strategies.

www.icmai.in October 2020 - The Management Accountant 77

Product Strategies are several instances of price rise of services in the hour of crisis. Although
During COVID crisis customers’ essential items and complaints of price in some cases price-reduction can
needs have changed significantly with gouging during pandemic as supply definitely help a company to achieve
a surge in demand for basic necessities, chain took a hit due to panic buying, its goals, but brands should consider
hand sanitizer and mask and stockpiling of essentials; leading the possible adverse impact on overall
healthcare product and services.Hence to shortages; although marketers brand equity and perceived value
marketers need to re-evaluate their cite the reason of increased cost of upon short term benefit of temporary
current product and service portfolio labour employment, increased cost price reductions. Marketers can offer
and repurpose their capacity to fight for providing protective equipment to cheaper substitutes, offer unbundled
the COVID crisis. Several companies staff, restriction on labour movement product and services, can provide
dealing in non essential brands and high transportation cost for discounts in kind (e.g. buy 2 get 1
have shifted to delivering essential price increase. While some brands free, free samples, additional advice,
products and services like Ford, that speciallydeal in non essentials etc.), can go low for the initial bid
GE, and 3M partnered to repurpose and severely affected by pandemic and then try to upsell, or introduce
manufacturing capacity and put people like travel, retail store, transport, more advanced pricing models (e.g.
back to work to make respirators automobile, clothing, hospitality pay-for-performance, subscription-
and ventilators to fight coronavirus; sector, are reported to have taken based pricing, etc.), may offer flexible
Diageo, AB InBev, repurposed their a profiteering approach by raising payment terms; so that customers are
alcohol-manufacturing capabilities the prices above competitive relievedand brand’s are able to recover
to make hand sanitizer. As said, level,cancelling discounts or offers the financial crisis during pandemic.
necessity is the mother of invention, and extracting high profit from those
innovation and improved margin can who need the most. The Government Distribution Strategies
emerge out of current discomfort has taken several steps to stop price During pandemic marketers and
and crisis, if marketers redefine gouging to protect the interest of retailers are facing the challenges
and revamp its brand in the hour of customers although economists of lockdown of shops, retail outlets
crisis. During pandemic consumers pose objection against anti-price and shortened trading hours. As
faced the problem of shortage of gouging laws as such laws prevent social distancing is most important to
supply of several products ranging price signalling. It is also difficult to minimize the spread of COVID-19,
from household stock, FMCGs, food establish which price increase is illegal marketers must adopt direct-to-
essentials to medicine. Long queues and which are legitimate responses to consumer (DTC) strategies and
at store or online product ordering the economic disruption and market invest in a variety of sales channels
with considerable long lead time for changes caused by the pandemic. As specially e-commerce platform,
deliveries created panic among the a result of price increase, buyers who online shopping virtual showrooms,
customers, that they may not be able value the good most, the rich and less conversational commerce through
replenish their supply. This scarcity of price sensitive would be willing to chatbots, video call to enable easy
product of the marketer’s brand posed pay a higher price than those who do access for customers to order goods
risk for the marketer that counterfeit not value the good, thus raising the or services, enable interaction with
products might besold as increase prices of all similar products beyond customers to address customers’
in the demand for essential products the reach of those with less disposable issuesand ensure to provide affordable
remains high and supplies remainlow. income. However brushing aside the goods or services along with quick
Hence brands need to respond to view of economist and perceived delivery to customers’ homes.
these risks by monitoring the sale and value pricing approach, it can be
availability of their products through said that price gouging exploits the Promotion Strategies
advertising platform by informing economically vulnerable section.
Although people’s priorities have
customers’ regarding availability Marketer should be able to justify that
shifted drastically during the pandemic
or non availability. Marketers of price increase is essential to maintain
and may be consumer’s behavior can
consumer goods should have the the increased cost due to pandemic; so
least be influenced by advertisement
ability to meet growing demand for as to maintain sales. Marketers should
and promotion during pandemic,
bulk packaging and longer-life items. be socially responsible in setting
‘above-the-line’ communication
prices and their pricing strategy
does not become irrelevant and
Pricing Strategies should be transparent reflecting the
brands cannot remain silent even
temporary nature of the market and
Lockdown of economies created in the hour of crisis. In the time of
careful documentation of increases
a range of economic problems like crisis too, brands must review how
in cost of making and supplying
job loss which led to tighter budget they can retain their prominence and
products, the wholesale prices
constraints for consumers.Therefore attract people’s attention. Marketer’s
charged.Many companies on the other
during pandemic, price has become promotional strategies should aim not
hand have used pricing as a key driver
an important criterion of brand choice only to drive demand and building
for demand by proactively lowering
and consumers are more inclined to emotional closeness but also to deliver
the prices of their products and
buy lower priced alternatives. There a mix of sound short term promotional

78 The Management Accountant - October 2020 www.icmai.in

activities that can maximize brand for their acts of good in a time of crisis. digital media channels along with
selection during the current market Marketers should avoid traditional media like TV or radioto
circumstances, characterized opportunistic marketing tactics; and maintain presence across multiple
by panic and uncertainty.In this messages should truly reflect the channel and make an impression of
alarming environment, marketersneed brand’s unique values, identity and their brand on their audiences.
to maintain a balance between positioning, or else relationships In times of crisis, public relations
responding to the current health with consumers will deteriorate, have become a vital communications
crisis and managing their business. and along with it, the brand’s ability tool for brands. Brands can maintain
Therefore apart from highlighting to succeed post-crisis. The society connection with customers through
product’s and service’s utility, safety is striving for authenticity, support emails or posts about products
and value, it is important for the and assurance and hence marketers or service,may participate in
marketers to disseminate brands’ are expected to provide useful conversations, campaigns on
corporate social responsibility efforts content in advertising and refrain pandemic. Brands public relation
towards COVID crisis, their effort from misleading advertisement and messages should be in consistent with
towards spreading COVID awareness; delivering forbidden or harmful their actions likebrand’s message
which will be remembered by the content in advertisement, making to consumers regarding extra
consumers in future and will help to inaccurate claims about their products’ precautionary measures to sanitize
add brand value. Brands response ability to prevent or cure COVID-19, store spaces, makinghand sanitizers
towards consumers in the COVID false and fake campaigns regarding readily available throughout the store,
situation, provision of goods through COVID- 19. taking care of their employees – but
home delivery, liberalization of return actually not following the same may
Channel planning is also crucial
policies, discounts, or simply the adversely affect the brand’s image.
to successfully create, refresh and
exchange of ideas initiates positivity Brandsresponsibility towards its
reinforce a consistent customer’s
among consumers in building brand employees during the time of crisis
mental associations with brands.As
loyalty. Brands initiative of donating along with helping customers adds
peopleare spending more time these
to food banks, providing free products goodwill to the brand.
days across multiple internetmedia,
for medical personnel, or continuing to
specially on social media A Snapshot of Pandemic Phases and
pay employees while the company’s
platforms,marketers must integrate Marketing Objectives and Strategies
doors are closed enhances the brand’s
versatile digital platforms like online adopted by the marketer are presented
image and it is likely that consumers
social media platforms and its owned in Table 1.
will appreciate and remember brands
Table 1 Snapshot of Pandemic Phase and Marketing Objectives and Strategies
Characteristics (apprehensive of Lockdown Unlock phase
Sales Normal Low sales Gradually rising sales
Profits Normal Declining profits Slow growth of Profits
Optimized spending, Stockpiling Adapting new normal
Consumer Behaviour Panic buying
essentials Stockpiling essentials
Maintaining market share Maintaining market share and profit, Regaining the market share and
Marketing Objectives
and profit. and the trust of consumers profit.
Healthcare, medicine, Demand for all kind of product
Essential products have high demand.
Product cleaning products have resumes. Innovation of
Repurposing capacity.
high demand. products.
Cost plus pricing approach and
Price Cost plus pricing approach Discounted Pricing
Reduced pricing approach
Intensive distribution Intensive distribution
Distribution Intensive distribution Emphasis on Online distribution Emphasis on Online distribution
channel and home delivery channel and home delivery
Intensive promotion
Promotion Intensive promotion Intensive promotion
Short term sales promotion tactics.
Attract new customers
Maintaining market share Retain consumer’s loyalty,
Advertising objective and retain hard core loyal
and profit maintaining market share and profit

www.icmai.in October 2020 - The Management Accountant 79

Conclusion frequently updated information can Guide: The Impact of COVID-19 on
help to forecast different scenarios Brand Advertising and Marketing
The unprecedented disruption 2nded.
of life and livelihood caused by and in decision making. Once the
4. Dumouchel. L, Kahn. Z, Burton. C,
the novel Corona virus posed world gets through this pandemic, a
and Hupp. O. (2020).Brand Growth
several challenges for marketers. new and different world and business in Times Of Crisis: Revisiting brand-
The consequences of lockdown of environment will emerge compared building during the COVID-19
business activities to contain the to the one before the outbreak. It is pandemic.
disease are incomprehensible and important how innovatively marketer
navigates the situation and uses Websites
complex. Marketing leaders have to
understand the impact of business conventional marketing levers to align 1. https://www.financialexpress.
with consumer changing desire and com/brandwagon/writers-alley/
interruption due to COVID and shift why-brands-must-revamp-their-
in consumer behavior during COVID stand out from competitors. marketing-strategies-to-stay-
crisis. Re-evaluation of marketing competitive-post-covid-19/1961088/
strategies with respect to product, References 2. https://brandequity.economictimes.
price, promotion and distribution 1. Effects of COVID-19 on business indiatimes.com/news/marketing/
and research (2020).Journal of effectively-managing-brand-
is essential for survival and growth Business Research, 117, 284–289. communication-amidst-covid-19-
of businesses amid pandemic. pandemic/74978011
2. https://doi.org/10.1016/j.
Hence strong data and information jbusres.2020.06.008
technology based analytical 3. An ANA and Reed Smith Legal
capabilities, predictive models, leenapriyade@gmail.com

The Institute of Cost Accountants of India

(Statutory Body under an Act of Parliament)

Research Bulletin, Vol. 46 No. III October 2020 (ISSN 2230 9241)
Call for Research Papers/Articles

We invite you to contribute research paper/article for “Research Bulletin”, a peer-reviewed Quarterly Journal of The Institute of Cost
Accountants of India. The aim of this bulletin is to share innovative achievements and practical experiences from diverse domains of
management, from researchers, practitioners, academicians and professionals. This bulletin is dedicated to publish high quality research
papers providing meaningful insights into the management content both in Indian as well as global context.

Guidelines to submit full Paper

~~ Soft Copy of the full paper should be submitted in double space, 12 font size, Times New Roman, keeping a margin of 1 inch in
four sides, MS Word (.doc) format.
~~ Each paper should be preferably within 5000 words including all.
~~ An abstract of not more than 150 words should be attached.
~~ The cover page should contain the title of the paper, author’s name, designation, official address, contact phone numbers, e-mail

Papers are invited on the following topics, but not limited to:

~~ Professional Skepticism: A critical element of Covid era Audit

~~ Outbreak of COVID-19 pandemic and its impact on Securities Markets in India
~~ The changing face of Indian Banking and Insurance sectors
~~ Healthcare Startups
~~ Navigating Cyber Challenges in the New Normal
~~ Farm Bill 2020: Pros and Cons
~~ Concrete steps to gain self-reliance in the Indian Defence sector
~~ Role of MSME Boost towards achievement of visionary Atmanirbhar Bharat
~~ Corporate Governance
~~ GST- Recent developments and challenges
~~ Skilling and Education: Key aspects to reap Demographic Dividend in India
~~ CMAs are key to leveraging Self-reliant India
~~ Future of Real Estate in India
~~ Vocal for Local: With special emphasis to Pharmaceutical industry
~~ Performance Management
~~ Climate change Accounting and Reporting

Papers must be received within 16th November, 2020 in the following email id:

80 The Management Accountant - October 2020 www.icmai.in


COVID - 19

The present research paper is done to study

the stress the women are undergoing due to
Pandemic COVID – 19. In this researcher
had framed a structured questionnaire
to find what stress women are facing and
Hardita Dhamelia what may help them to reduce stress. The
Research Scholar researchers found that due to occupation
Saurashtra University
women faced physical stress and mental
stress both because of absence of helpers
and even as they had to manage both the
work office as well as home. The researcher
concluded that mental stress is was much
faced by the women due to many factors
and can be overcome by the combination
of different remedies suggested by the

Dr. Manish B. Raval

Assistant Professor

SDRB Mahila Home Sci., Lt. M.J.Kundaliya Eng. Med.
Mahila Commerce College, Rajkot he whole world is facing the many difficulties
because of Pandemic COVID – 19. Due to this
the world has become still and many activities
have been stopped, people are not allowed to
come out of the houses and there is great effect on the human
life due to this pandemic. The people are undergoing stress
due to many reasons. Stress is a natural feeling which comes
when the person is not ready to cope up with current events
or demands. The person might be suffering mental, financial,
or physical stress or some might be undergoing through all.
Due to stress person may undergo many difficulties. Stress
is that phenomena which can take a chronic condition which
Dr. Ashish B. Gorvadiya results very adversely in person’s life. Due to Pandemic
Supervisor Instructor: Employability Skill many might be undergoing stress, specially women’s may
Government ITI have much stress as they have to manage many things of
Rajkot each and every family member present at home, to fulfill all

www.icmai.in October 2020 - The Management Accountant 81

the demands of the family can make her feel stressed. Gujarat via various Social Media Platforms. Total
363 responses were received. So, the sample size for
Review of Literature this research work is 353 Women Respondents.
Limcacoca, R., Mateos, E., Fernandez, J. and Roncero,
C. (2020) have researched on Anxiety, worry and perceived • Methods of Data Collection
stress in the world due to COVID – 19 pandemic, March The present study is based on primary data. In order
2020. The researchers have researched with seeing the to analyze the level of stress among women during
condition of pandemic, lockdown and quarantine situation COVID – 19 Pandemic, The researchers have
that people are going through. The researchers had collected prepared an Online Structured Questionnaire using
the data through web survey and the responses were received Google Forms. The Questionnaire was spread in the
from 41 countries. The main aim of the researchers was how whole Gujarat using various Social Media Platforms.
this pandemic is progressing and what changes have been in Out of the total spread of the Google Forms, the
the general public and they even wanted to find out which Researchers have received 363 responses. The
group level was facing more stress and what mental health analysis is made on the basis of these 363 responses.
care might be needed in the future. The researcher found that
pandemic is increasing the anxiety levels. The researchers Table – 1
also concluded saying that mental health care will be needed A Table showing summary of the responses received
in the future. based on Selected Demographic Variables
Peter, E., Styra, R. and Wayne, L. (2020) have
researched on Mitigating the psychological effects of 20-30 236
COVID -19 on health care workers. The researchers have 30-40 76
taken the responses of nurses and physicians taking care Age
40-50 39
of the patients. The researchers found that health workers
may experience psychological distress due to COVID – More than 50 12 363
19. The researchers suggested that strong leadership and Working Women 230
communication can help to offset the fears and stress among Occupation
Home Maker 133 363
From Rural Area 45
Objectives of the study Location From Semi-urban Area 263
The main objectives of the study are: From Urban Area 55 363
¾¾ To know what type of stress women are facing during
this lockdown period • Tools and Techniques
¾¾ To know which factor plays a major role in increasing In order to justify the objectives of this research work
their stress- Physical factor or Mental Factor Statistical Analysis is required. The researcher has
¾¾ To know what may help them to reduce the stress used Descriptive Statistics, Pearson Chi-Square and
level. Cross Tabulation method to analyze the data. As the
limitation of the length of the paper was to be taken
Research Methodology care, the researcher has directly summarized the
result in the table.
In order to accomplish the objectives of this research
work, and to complete it properly and systematically, it is • Limitations of Present Research Paper
necessary to prepare a research methodology first. In present
research paper, following research methodology is used. - The study is based on primary data collected
through responses of different class of employees
• Title of the Study of different sectors through questionnaire, so
there are chances of human bias, prejudices and
The title of study is as under. human error.
“An Analytical Study of Stress among the women of - The study is based on situation of India and not
Gujarat during COVID – 19” whole world, so outcomes are not applicable to
the mass of whole world.
• Population and Sample size
- The study has only considered the responses of
We wanted to analyze the level of Stress among the the women of Gujarat state so the conclusions
women of Gujarat during the COVID – 19 Pandemic. drawn from this research work may not be
Our Research work has focused on both the working applicable to the whole of India.
women and the Home Makers of Gujarat Region.
So, all the Working Women and Home Makers of - As this research work is based on the Primary
Gujarat are the Population for this research work. An Data collected using Google Forms, all the
Online Structured Questionnaire was prepared using limitations of Primary Data are also there in this
Google Forms and the same was spread in the whole research.

82 The Management Accountant - October 2020 www.icmai.in

Analysis and Interpretation
Table – 2
A Table showing the results of test performed to check association between Occupation and Stress
Association between Occupation and Stress
Significant Status of Null Hypothesis (H0)
Null Hypothesis
Value @ 5% Level of Significance
Physical Factor:
There is no significant association between physical stress due to
0.124 Accepted
gatherings of all family members and occupation of the respondent.
There is no significant association between physical stress in
maintaining the health and hygiene of the family members of the 0.364 Accepted
There is no significant association between physical stress and
0.034 Rejected
increase in the workload of the respondent due to absence of helpers.
There is no significant association between physical stress and
0.131 Accepted
demand done by the respondent’s family related to food.
Mental Factor:
There is no association between mental Stress and managing of the
0.327 Accepted
There is no association between mental Stress and kids of the
0.269 Accepted
respondents are at home whole day.
There is no association between mental Stress and managing of
0.449 Accepted
finance during the lockdown period.
There is no association between mental Stress and the respondent not
0.677 Accepted
getting enough time to do what she likes.
There is no association between mental Stress and need to manage
0.000 Rejected
office as well as work of home.
There is no association between mental Stress and handling of the
0.476 Accepted
mood swings of the respondent’s family.
There is no significant association between physical stress due to
0.124 Accepted
gatherings of all family members and occupation of the respondent.

Table – 3
A Table showing the results of test performed to check association between Age and Stress
Association between Age and Stress
Significant Status of Null Hypothesis (H0)
Null Hypothesis
Value @ 5% Level of Significance
Physical Factor:
There is no significant association between physical stress due to
0.999 Accepted
gatherings of all family members and occupation of the respondent.
There is no significant association between physical stress in
maintaining the health and hygiene of the family members of the 0.828 Accepted

There is no significant association between physical stress and

0.849 Accepted
increase in the workload of the respondent due to absence of helpers.

There is no significant association between physical stress and

0.398 Accepted
demand done by the respondent’s family related to food.

www.icmai.in October 2020 - The Management Accountant 83

Mental Factor:
There is no association between mental Stress and managing of the
0.931 Accepted

There is no association between mental Stress and kids of the

0.601 Accepted
respondents are at home whole day.

There is no association between mental Stress and managing of

0.062 Accepted
finance during the lockdown period.

There is no association between mental Stress and the respondent not

0.376 Accepted
getting enough time to do what she likes.

There is no association between mental Stress and need to manage

0.418 Accepted
office as well as work of home.

There is no association between mental Stress and handling of the

0.843 Accepted
mood swings of the respondent’s family.

Table – 4
A Table showing the results of test performed to check association between Location of the Respondents and Stress

Association between Location of the Respondents and Stress

Significant Status of Null Hypothesis (H0)

Null Hypothesis
Value @ 5% Level of Significance
Physical Factor:

There is no significant association between physical stress due to

0.465 Accepted
gatherings of all family members and location of the respondent.

There is no significant association between physical stress in

maintaining the health and hygiene of the family members of the 0.195 Accepted
There is no significant association between physical stress and
increase in the workload of the respondent due to absence of 0.102 Accepted
There is no significant association between physical stress and
0.110 Accepted
demand done by the respondent’s family related to food.
Mental Factor:
There is no association between mental Stress and kids of the
0.366 Accepted
respondents are at home whole day.

There is no association between mental Stress and managing of

0.140 Accepted
finance during the lockdown period.

There is no association between mental Stress and the respondent

0.451 Accepted
not getting enough time to do what she likes.

There is no association between mental Stress and need to manage

0.678 Accepted
office as well as work of home.

There is no association between mental Stress and handling of the

0.377 Accepted
mood swings of the respondent’s family.

There is no association between mental Stress and kids of the

0.366 Accepted
respondents are at home whole day.

84 The Management Accountant - October 2020 www.icmai.in

Major Findings women’s stress was reduced by the combination
The major findings of the present research are as follows: of yoga pranayama and meditation, by sharing
responsibilities with the family members and because
¾¾ It can be found that the Age of the Respondents is not
of time management. 13.1% responses from the
the factor causing Physical Stress due to maintaining
total respondents found that sharing responsibilities
the health and hygiene of the family members of
with family members helped them to reduce the
the respondents increase in the workload of the
stress, 13.2% believed that time management could
respondent due to absence of helpers and demand
help them to reduce stress, 7.2% considered Yoga,
done by the respondent’s family related to food.
Meditation and pranayama best way to reduce stress
¾¾ It can be concluded that the Age of the Respondents is and 8.3% of the total respondents are using remedies
not the factor causing Mental Stress due to managing other than that suggested by the researcher to reduce
of the time, having kid whole day at home, managing stress.
of finance during the lockdown period, the respondent
¾¾ The researchers concluded that if the responsibilities
not getting enough time to do what she likes, need
are shared, stress can be reduced in women and can
to manage office work as well as work of home and
even help her to reduce the mental pressure or stress
handling of the mood swings of the respondent’s
that she is undergoing.
¾¾ It can be found that the Residential Location of the Conclusion
Respondents is not the factor causing Physical Stress
From the present research p, we can conclude that majority
due to maintaining the health and hygiene of the
women are facing mental stress and some steps should be
family members of the respondent increase in the
taken to reduce the mental stress of the women. It can also
workload of the respondent due to absence of helpers
be concluded that the occupation of the respondents, Age
and demand done by the respondent’s family related
of the Respondents and the Residential Location of the
to food.
Respondents are no the major causes of the Physical as well
¾¾ It can be concluded that the Residential Location as Mental Stress for the respondents. The occupation of the
of the Respondents is not the factor causing Mental respondent has caused stress for them when it demands to
Stress due to managing of the time, having kid manage between office work and house hold work. Sharing
whole day at home, managing of finance during the of the responsibilities among the family members is the ideal
lockdown period, the respondent not getting enough remedy to reduce such stress.
time to do what she likes, need to manage office work
as well as work of home and handling of the mood References
swings of the respondent’s family.
1. Chaudhary, C.M. (2009), ‘Research Methodology’,
¾¾ It is found that the Occupation of the Respondents RBSA Publishers, Jaipur (ISBN- 978-81-7611-437-
is not the factor causing Physical Stress due to 0)
gatherings of all family members, maintaining
2. Kothari, C.R. (2004), ‘Research Methodology:
the health and hygiene of the family members and
Methods and Techniques’ (Second Edition), New Age
demand done by the respondent’s family related to
International (P) Limited (ISBN (13): 978-81-224-
food during the COVID – 19 Pandemic.
¾¾ It is found that the Occupation of the Respondents is
3. Limcacoca, R., Mateos, E., Fernandez, J. and
a factor causing Physical Stress due to absence of the
Roncero, C. (2020) “Anxiety, worry and perceived
helpers during COVID – 19 Pandemic.
stress in the world due to COVID – 19 pandemic,
¾¾ It can be concluded that the Occupation of the March 2020. Preliminary Results., BMJ Yale, April
Respondents is not the factor causing Mental Stress 6, 2020, pp.1-11.
due to managing of the time, having kid whole day
4. Peter, E., Styra, R. and Wayne, L. (2020) “Mitigating
at home, managing of finance during the lockdown
the psychological effects of COVID -19 on health
period, the respondent not getting enough time to do
care workers”, CMAJ, Vol.192, Issue-7, April 27,
what she likes and handling of the mood swings of
2020, pp.E459-460.
the respondent’s family.
¾¾ It can be concluded that the Occupation of the
respondents is a factor causing Mental Stress due to
need to manage office work as well as work of home.
¾¾ The researchers have found that 47% women were harditadhamelia@gmail.com
undergoing mental stress, 21.15% women were facing mbr19770810@gmail.com
physical stress and 19.1% of the women were having
financial stress. The researchers found that majority
of the women were undergoing Mental Stress. ashish91.gorvadiya@gmail.com
¾¾ The researchers have found that 54.3% of the

www.icmai.in October 2020 - The Management Accountant 85



Good Corporate governance is a key factor

in ensuring sound financial reporting and
deterring misappropriations of capital and
resources. Internal control and corporate
governance go hand in hand. Many SME
Dr. TR Madan Mohan
Managing Partner have an ambitious goal of reaching a
Browne and Mohan Management Consultants reliable, continuous and integrated internal
Bangalore control state. However, many SME’s are
still grappling to build a comprehensive
control process. In this paper, we present an
internal maturity framework that SME can
use to benchmark and know how they can
discourage frauds, improve compliance and
adoption of standards.

Sharadha V Introduction
Junior Consultant (Strategy & Finance) umerous corporate scandals have brought in
Browne and Mohan Management Consultants more awareness and significant attention from
Bangalore regulators, whistle-blowers and the public on
internal controls and corporate governance.
While corporate governance sets the standards and
recommends procedures; internal controls make sure those
procedures are being followed. The Financial reporting
review board (FRRB) of the Institute of the Chartered
Accounts of India (ICAI, 2018) cites lack of significant
disclosures in accounting policies covering revenue
recognition, borrowing costs, inventories, impairment of
assets, goodwill subsidies granted by the government. Many
companies were found to be inadequate in reporting gain
Mukund Mohan K on outstanding derivative contracts being recognised in the
Junior Consultant (Marketing) profit and loss which is against the principle of prudence
Browne and Mohan Management Consultants as given under accounting standard 1. The Institute of
Bangalore Cost and Works Accountants of India (ICWAI, 2009) has

86 The Management Accountant - October 2020 www.icmai.in

released a guidance note to help and role based that adopt a checker assurance and improvement program
organizations accomplish systematic and approve approach. Separation based on accounting standards. Data
and objective approach to operations, of making purchases and approving capture refers to the quality and
evaluation and monitoring of risk payments; receiving bills and depth of data collected for auditing
management, reporting and control approving payments; and authorizing and improvement. Documentation
practices. Misappropriation of Assets, returns and issuing refunds are refers to information storage and
corruption, and financial statement some good examples of preventive retrieval for audit trial and follow
are common woes SME face due to controls. Detective controls are ups. Planning refers to defining the
weak internal controls. Companies internal controls designed to identify operational, financial and strategic
with a focus on effective governance problems that already exist. Audits aspects of audit process and outcomes
have an ambitious goal of reaching a including statutory audits can be seen including scope, time and quality of
credible, continuous risk assessment as form of a detective control. Timely resources. People refers to the extent
and integrated audit process. For reconciliation and verification of bank to which the audit staff are trained
many senior management and internal accounts, review and verification as appropriate, are aware of their
control teams the goal is to attain a of refunds/payments, reconciliation responsibilities related to assurance
repeatable, reliable and data-driven of petty cash accounts, audits of and endowed with enough expertise
process (Omalayeand Jacob, 2018). payroll disbursements, conducting and experience to conduct the required
Many companies are still grappling to physical inventory checks etc are activities. System refers to extent of
build a comprehensive audit process some examples of detective controls. standardized information flows and
and many of their existing activities Corrective controls are internal reliability of captured document for
are in “rudimentary” stage (Sohand controls that are taken to mend any assessment process. Risk refers to the
Martinov-Bennie, 2011). We believe, impairment or bring back resources depth of risk assessments (operational
the use of a maturity model can provide and capabilities to their earlier state and strategic) and mitigation plans.
a clear direction to achieve a reliable that was due to an unapproved activity. Review covers the depth of financial
and evolved assessment and assurance Maturity of internal controls and non-financial areas the quality
process. In this paper, we present an depends on formal mechanisms used assurance and assessment will address.
internal maturity framework that SME for preventive, detective and corrective Ownership and responsibility indicate
can use to benchmark and know how actions, but also the responsiveness whether audit is silo function with
they can discourage frauds, improve of the management to the outcomes little control and ownership across
compliance and adoption of standards. of assessment and quality of follow the company or a process led activity
up actions. Based on COSO’s ERM owned by process leaders and owners.
Internal controls maturity Model framework (COSO, 2017), we Table 1 presents the elements that
Broadly speaking there are three identify nine fundamental parameters make up key areas of internal audit
types of controls namely preventive, of internal controls. Methodology is and their maturity and phases at each
detective and corrective (IIA, 2015). what is core to auditing. It reflects level.
Preventive controls are mostly process the approach to assessment, quality

Table 1 Internal controls Maturity stages

Level 1 Level 2 Level 3 Level 4 Level 5

All factors in level

Limited to four along with
mandatory guidance, code of ethics,
Mandated and Focus on mandated,
informal audit All factors in level standards, extensive
recommended recommended and
engagement plan, three along with audit engagement
guidance, limited supplementary
largely top-down, implementation plans, top-down
annual audit plan guidance, plan with
Methodology focus on meeting guidance, reports, and bottom-
focusing on reports, periodic reporting,
management risk assessment, and down integration,
and monitoring of risk reporting and
and regulatory detailed review of extensive reporting,
recommendation. monitoring of
requirements, annual recommendations risk assessment
audit plan with basic and continuous
reports monitoring of

Descriptive data
Descriptive data, All of level All of level three Extensive
along with some
longitudinal data two along with along with some prescriptive data and
analytical data
Data Capture not captured for somewhat predictive prescriptive data predictive analysis
for trend analysis,
analysis; lack of data and some lead and reasonable lead along with extensive
extensive lag of
indications indicators indicators lead indicators

www.icmai.in October 2020 - The Management Accountant 87


Manual documents, Good documentation documented along
Ad hoc, not clearly Well documented
Documentation not monitored and monitoring of with detailed
documented but not monitored
regularly reports monitoring

Increase in depth and

extent of planning Plans supports
Plans are based on where along with corporate
standard operating Plans are made revenue drivers, Strategies terms of
procedures for recognising cost industry benchmarks customer growth,
No planning an audit and and revenue drivers, and possible profits and business
involved. are executed by supported with data leakages are sought fulfilment.
mid-senior level captured through out before delving
members with tools. into the audit. Plans Overseen, revised
financial knowledge. are over seen by the and monitored by
top management top management.
before being

Great mix of
Limited to Audit Experienced auditors
Audit staff with Reasonable mix of auditing skills, and
staff with traditional with reasonable
limited business traditional auditing industry expertise
People auditing skills experience of
knowledge and and business complemented by
and no industry business and
resources expertise overall business
knowledge industry expertise
knowledge, and
critical thinking

Leading technology
Use of basic
Reasonable systems (data mining,
Only Manual technology and Real time systems
to data capture and analytics, etc) and
System systems system to capture for data capture and
sharing, with some real-time auditing
record and store auditing
real time auditing accessible from

Extensive, and
Broader risk
Comprehensive, Comprehensive,
Limited risk Focused risk assessment (both
holistic risk holistic risk
assessment, no assessment, one at micro and macro
Risk management assessment (both assessment (both
formal identification, a time approach, levels), formal
micro and macro micro and macro
mitigation plans limited plans identification and
levels) levels), extensive
mitigation methods
risk management
Extensive review
Focus is mainly
Focus is mainly of financial,
Focus is mainly on on financial,
on financial compliance,
Focus is mainly on financial, compliance compliance,
and compliance operational
financial transactions and operational operational
Review transactions, it is transactions and
and ad hoc review transactions with transactions and IT
reasonably formal, IT systems, trailed
process formal and periodic systems with formal
with limited follow by a formal and
follow up reporting and periodic follow
up reporting continuous follow up
up reporting

Well defined Integration at all

Limited to a
Broadly defined Ownership and levels right from
department, few All of level two
responsibilities responsibility at process owner,
Ownership and resources, mostly along with minor
at business level, levels of process leader, management
responsibility post-hoc analysis, proactive responses
and ownership at owners, process and board, along
prone to execution at field level
Business leader level leader, management with detailed risk
and board controls

At level 1, the firm’s reviews of done by the same person manually, been recognized; At this level, reviews
activities are informal and disordered. with a lack of planning and is highly and the audit undertakings are much
Therefore, success of the reviews prone to errors and manipulation. more controlled than at level, mainly
and audits depends on the expertise At level 2 is where basic standards focusing on financial and compliance
and ability of the people conducting of procedures are adhered to, data is transactions with limited follow up
the reviews & audits. It is highly captured and used for trend analysis; reporting. At level 3 of maturity,
likely that the audit and checks are plans and basic risk assessments have audit activities are automated and

88 The Management Accountant - October 2020 www.icmai.in

completely standardized, plans and goals of the company, nature of its 2. OmalayeKE, O. and Jacob
are made recognising financial, business, regulatory requirements and RB, J., 2018. The Role
operational and business risks. At regimen of audit teams. In the second of Internal Auditing In
level 4 the focus of audits shifts to stage, define standardized process, Enhancing Good Corporate
proactive risk identification to ensure create and configure appropriate Governance Practice in an
quality and maturity. Data captured process changes based on the proposed Organization. International
consist of good lead indicators and internal controls framework. People Journal of Accounting
are analysed. This is followed by capability gaps need to be addressed Research, 06(01), 1-8.
measuring performance and along with through extensive training and on the 3. Soh, D. and Martinov-Bennie,
efficient documentation and consistent job learning. Focus on process flows N., 2011. The internal audit
monitoring. Level 5 is an optimised and technology adoption. In the 3rd function. Managerial Auditing
state with evolved code of ethics, stage, deploy company-wide process Journal, 26(7), 605-622.
standards, extensive audit engagement and system changes with common
4. The Institute of Cost and
plans, extensive reporting, risk objectives across different units and
Works Accountants of India
assessment and continuous monitoring measures. The end goal would be to
(ICWAI), 2009. Guidance note
of recommendations. continuously assess and refine at all
on Internal Audit.
levels. The proposed internal control
Conclusion maturity matrix serves as comparison 5. The Institute of Chartered
tools to help SME identify the desired Accountants of India (ICAI),
The maturity model detailed here
maturity level that is right for it. 2018, Study on Compliance
guide companies from traditional
Moreover, the maturity matrix serves of Financial Reporting
siloed process towards more mature
as a mechanism to measure progress Requirements, Volume III.
continuous data-driven reliable
organizational wide process. The along the way as this is a continuous 6. The Institute of Internal
first step in transformation of internal journey. Auditors (IIA) Research
controls involves conducting a Foundation, 2015, Combined
comprehensive “as-is” audit. This References Assurance: One Language,
helps to identify the current processes, 1. Committee of Sponsoring One Voice, One View.
gaps and areas to improve quality Organizations of the Treadway
assurance and improvements. Please Commission (COSO), 2017, mmohan@browneandmohan.com
note, not every SME requires the Enterprise Risk Management
same level of maturity in their internal Integrating with Strategy and
controls. SME must choose the “to- Performance. mukundk@browneandmohan.com
be” maturity stage based on the needs

Contd from page 63 ......


Issue: September - 2020 [Vol. 55 No. IX]
Issue Page
Name of The Article Name of Author/s Volume Issue DOI Numbers
No. No.
ENTERPRISES DUE TO COVID-19: AN Deb Vol.55 Sep-20 9 80-86 10.33516/maj.v55i9.80-86p
ANALYTICAL STUDY Dr. Nikhil Bhusan Dey
Dilip S.Patil Vol.55 Sep-20 9 87-89 10.33516/maj.v55i9.87-89p
Dr. Radhanath Pyne
DECADE STUDY OF ITS IMPACT AND Vol.55 Sep-20 9 90-93 10.33516/maj.v55i9.90-93p
Prof. Mitasi Das
AND ITS EFFECT ON THE INEQUAL Dr. Shuvashish Roy Vol.55 Sep-20 9 94-99 10.33516/maj.v55i9.94-99p
Prof V. Usha Kiran
Dr. M.V. Karunasree Vol.55 Sep-20 9 10.33516/maj.v55i9.100-103p
Dr. Harsha Burgula

www.icmai.in October 2020 - The Management Accountant 89



SAP S/4HANA Management Accounting

component offers the tools that can be used
to prepare operating data for business
analysis and management decisions.
Dr. Ravi Surya Subrahmanyam
Management Accounting contains all
Director, SAP Practice - The Hackett Group India Ltd the functions necessary for effective cost
Visiting Instructor - SAP Education - SAP India & SAP APJ and revenue reporting oriented to the
Hyderabad specific requirements of an enterprise.
It covers all aspects of Management

Accounting regarding different work
ll Financial Accounting and Costing areas like overhead management, product
transactions will be stored in SAP S/4HANA
in one database table ACDOCA. This is known costing and profitability analysis. While
as Universal Journal Entry table. It brings reporting in Financial Accounting follows
Financial Accounting and Cost Accounting together. This is accounting principles that are applied
single source of truth that collects all FI and CO relevant
transactions and makes them available for reporting. As
in the respective locations, reporting in
the FI and CO data available in one table (ACDOCA), Management Accounting is designed on the
Finance and Costing team don’t need to spend time and basis of the chosen enterprise accounting
reconciliation of Financial and Cost books. This ensures system, such as flexible planned costing or
automatic reconciliation.
direct costing.
Introduction on SAP S/4HANA Management
SAP S/4HANA Management Accounting Subcomponents
Classified according to their purpose. The Sub modules are The source of Revenue postings are Sales orders from
Cost Center Accounting, Cost Center Accounting, Internal Sales and Distribution module. It posts Billing documents
Orders, ABC costing, Product Costing, Profitability Analysis to Management Accounting module to track revenues and
etc.. evaluate Profitability of Profit Center.

Logistics Integrations with Management Accounting: How Costs and Revenues flow to Management
Materials Management has coherent integration with Accounting??
S/4HANA’s Management Accounting Component. Example. When user posts Expense transaction in Financial
Goods Issue posts Cost Posting in Management Accounting Accounting using expense GL account for which primary
by specifying cost object in Goods Issue transaction. (Goods cost element is created, system does not allow user to
issue to Cost Center, Production order or Internal Order, post transaction unless user specifies cost object like Cost
Process Order). When user creating a Purchase order in Center or Internal order … etc. by that way, this cost flow
Materials Management, it creates Commitment postings in to Costing. Similarly, Revenue elements will be posted to
Costing Module. Management Accounting while user Posting Sales revenues
in Sales & Distribution module.

90 The Management Accountant - October 2020 www.icmai.in

How SAP S/4HANA Overhead Accounting – GL planning and Cost created with category 43 (Internal
Cost Controlling enable companies Center Planning. Management can activity allocation) will be used. Not
to track, Monitor and allocate also to bottom-up and top-down Primary cost element (GL). This can
Overhead Costs?? planning. SAP S/4HANA BPC comes also happen automatically using time
Usually, Cost Responsibility with delivered BW content. BW is sheet by proper configuration in SAP
areas are defined as Cost Centers in the tool that has planning content and S/4HANA. This save lot of manual
S/4HANA. We assign Cost Center to layouts. SAP provides dedicated XLS efforts during month end.
the profit centers during configuration. workbooks to copy plan data. We can
Accounting will be useful to track copy SAP to XLS ( IBP workbook) How Data flows from other
cost within the organization. When and XLS to SAP. (Extraction and Applications?
cost incurred, we assign the cost to Retraction). Example: make changes Financial Accounting to Costing:
cost center. All overhead costs are for plan data on XLS and write back
When user posts to an expense or
assigned to the Cost Centers for which to SAP.
Revenue Using Primary Cost Element
they incurred. If cost is assigned to ( Primary Cost Element is a General
service cost center, distribution of How data flows to Management
Ledger Account – ( Account Type
cost will be performed during month. Accounting in SAP S/4HANA?
P in SAP) ), Two documents will be
This distribution process post cost to Broadly, two types of data flows to created. (1). Accounting Document,
Product Cost Centers. We can plan Management Accounting. Postings (2), Costing Document. At this time, if
and budget the cost centers in SAP that originate within Management we display Costing report, user can see
S/4HANA to check the efficiency of Accounting and Posting that originate Debit or Credit to Cost Object based
cost centers. from other applications. Cost on Expense Debit or Revenue Credit
movements within Cost Accounting in FI transaction. Interestingly, in
Can I do Cost Center Planning in are postings within Management SAP S/4HANA, Costing information
SAP S/4HANA? Accounting. These entries are and Accounting information ( Both
The SAP S/4HANA offers wide balanced entries. Example: Cost documents can be seen in one
options that we can use for planning to moved from one cost center to another Database table : ACDOCA. This table
meet different planning requirements. cost center or “Internal Order to Cost contains all the line items of Financial
Cost Center Planning can be done Center” or one “cost object to other Accounting and Cost Accounting. It is
manually or thru excel file upload or cost object”. This type of postings known as “Single Source of Truth” in
transfer from external feeder systems. debits the Receiving cost object and SAP S/4HANA. We can also have link
We can also have different plan credit the sender cost object by the between these two document Numbers
versions with different plan values. same amount.
We can also copy actual figures as These posting may also generate Do we need to do Reconciliation
plan figures of the upcoming year. We while correcting wrong postings to between Financial Accounting
can also recalculate plan figures using a cost object. Instead of reversing and Cost Accounting in SAP
a percentage. SAP S/4HANA has very Financial Accounting entry to correct S/4HANA??
extensive planning layouts. Customers the cost object, we can correct When user posts a business
can also create their own layouts using the records only in Management Transaction in Financial Accounting,
Report Painter/ Report Writer or any accounting by reposting Cost corresponding Costing data will
other tools that are designed for it. Manually or Reposting the line items. also be transferred to Costing in real
Customers can create a new planning When reposting cost, the original cost time. So we don’t need to execute
profile and assign all the planning element is retained. By this way, users reconciliations in SAP S/4HANA.
layouts to the newly created planning responsible for this correction can This simplifies Closing Activities and
profile. SAP provides planner profile to make corrections only to cost objects. helps as “Continuous Close” in SAP
meet different planning requirements. As wrong posting only impacts S/4HANA.
Management Accountants have an Costing, we can use this function in
efficient way to compare actuals with SAP S/4HANA to correct only in Materials Management to
planned figures in SAP S/4HANA. Costing and other applications like Costing:
Financial Accounting does not impact.
Is there an easy way for planning Various Categories of goods
“Internal Activity allocation” also Movement triggers Financial
in SAP S/4HANA?? generate postings within Management Accounting documents, Material
Predefined planning Layouts Accounting. Example Repairs Management documents and also
provided to customers as planning and Maintenance cost centers may Management Accounting Documents
templates in SAP S/4HANA. SAP perform services for other cost in SAP S/4HANA. Example: Goods
Reinvented planning capabilities centers. This cost will be allocated issue to Cost Center. This will be
in SAP S/4HANA to plan fast. based on number of units of activities recorded as Material Consumption.
Planning thru “planning application performed. In this example. Only This update stock Account in
Kit” process planning data in SAP one sender cost center (Credit) and Inventory Management. It also creates
system. Well integrated Planning receivers may be many (Debits). a Financial Accounting Document
capabilities and layouts for Financial For this, the secondary cost element by Debiting Material Consumption

www.icmai.in October 2020 - The Management Accountant 91

Account and Crediting Material Stock Cost Center Heads can monitor cost standards to measure performance,
Account. During this process, Cost for an internal order or cost center by helps in Variance analysis, helps
Center is debited along with Material budgeting them in SAP S/4HANA. management to get Reports for
Consumption Account GL account We can also ensure that actual cost individual plants, product groups,
as this GL account is a Primary cost does not exceed Budgeted cost. products, or orders also Supports
element. SAP S/4HANA System They can prevent excess cost than strategic decision-making.
ensures to transfer cost data to the budgeted cost by configuring an
Management Accounting thru proper error messages to availability control. Can I execute profitability
Integration. Proper Configuration / We can also configure a warning reporting at various levels of detail
Integrations ensure to run without message if that reaches 90% or so. using SAP S/4HANA??
additional reconciliations for FI&MM. we can also add contingencies to the We can execute Profitability
existing budget to allow up to certain reporting at various levels of
Can I post Commitments to Cost percentage, Example 105%. If needs, organization. We can get the detailed
Centers?? we can also supplement to existing product cost information to analyze
To display budget consumption, budget of a cost element. We can also profitability. We can also get the
commits can be charged to Cost configure an email notification when it breakdown of total cost into fixed and
Centers. Example: When I post a reaches certain level of Budget. It can variable. We can analyze contribution
Purchase Order in SAP S/4HANA also goes to designated persons. We margins. You may also analyze
System, each line item in PO can need to maintain this matrix inform contribution margin based on the
be assigned to a cost object ( Cost of a table in the configuration. If you periodic actual cost, which can be
Center / Internal Order… Etc).. Once have a project that runs for multiple recorded in the material ledger.
Purchase order saved, Cost center years , you can also specify Sum total
tracks commitments. We can also and also control annually budgeted Can I get Profit Center wise
display outstanding commitments amount. reports for Internal use in SAP
for a specific cost center in SAP S/4HANA?
S/4HANA. When goods received Can we do Product Cost Planning
Organizations can use Profit Center
Commitments will be cleared and in SAP S/4HANA?
Accounting Module to analyze
actual cost is recorded for Cost Center. Product Cost Planning will provide internal profit and loss for each profit
initial cost projections. Product Cost centers, as well as the balance sheet
Can User posts to Multiple Cost Planning component in the SAP for each profit Center. Management
Objects for a single Line Item?? S/4HANA helps this functionality. can analyze profit and profitability.
Sometimes, User may need to post Using this, we can get Cost of goods
to two or three cost objects for an manufactured, cost of goods sold, Conclusions
expense posting. Calculation of the break-even price
SAP S/4HANA inherits power of
for the product. Production cost
Example: Posting to Repairs and HANA. It has capability of Predictive
breakdown, Production cost by
Maintenance. User can give Cost Analysis, advanced text mining,
organizational unit, Manufacturing
Center and Internal order. Both are simulations, and real time decision
cost by plant, effect of primary costs
cost objects. The reason to post to two support based on real time data. It
etc. Materials will be valuated with
cost objects might be, The internal delivers very delightful experience to
a standard price, which can be set
order is real cost object and Cost the users that improves satisfaction
by a standard cost estimate in SAP
Center is only for information as Cost and productivity of end users. The
Center head monitors cost of repairs Newly built SAP S/4HANA has
of “Internal Order”. In this case, If we have complete master data simplified architecture, process
Internal order is a real cost object and like BOM and routing, we can create improvement in all core areas
Cost Center is a statistical cost object. material cost estimate with a quantity like Accounts Receivable, Asset
This cost center would be updated structure. This calculates the cost of Accounting, Accounts Payable, Cost
statistically just information purpose. goods manufactured and the cost of Center Accounting, Profit Center
goods sold from existing Master data Accounting etc...
Can user Posts Revenues to Cost in logistics, such as BOM and routing.
Center? Reference
Can we get Product Cost by
Users can post revenues to Cost 1. https://help.sap.com/viewer/
Order, Product Cost by Period, and
Center after proper configuration in product/SAP_S4HANA_ON-
Product Cost by Sales Order in SAP
the SAP S/4HANA system. These PREMISE/
postings are statistical
A well configured Costing Module
Can we monitor Expense (cost) allows to get preliminary costing, sravi@answerthink.com
posted to a cost Center or for an simultaneous costing, and final costing
Internal Oder by using Budget on production order or process order.
Availability Control in SAP It helps to optimize manufacturing
S/4HANA?? efficiency, helps to Set relevant

92 The Management Accountant - October 2020 www.icmai.in



CMA Santosh S. Korade

Dy. Manager (F & A)
Maharashtra State Electricity Distribution Company Ltd - MAHADISCOM


In this competitive era, the strongest ERP is part of a successful business. Production Planning,
Budgetary controls, Cost estimations and Cost Control, Stock valuations and controls are the
essential task in business and it’s not possible to do this without strong ERP. When we used
word strongest and powerful ERP, Only name we can visualise is “SAP”. SAP is worldwide
standard ERP. SAP is used in all types of industries like as manufacturing, service, Trading etc.
Numbers of PSU has adopted SAP ERP recently. The energy sector is also not far behind in the
implementation of SAP.MSEDCL-Mahadiscom is one of them. MSEDCL is large services sector
organisation having business of distribution of electricity. So the impact of implementation of
SAP ERP on MSEDCL working/operation is analysed through this article.

nterprise Resource Planning (ERP) that allows software towards structured work and data management in
an enterprise to manage databases for different organizations.
processes from a single unified system. ERP Systems Analysis and Program Development (SAP) was
system was developed initially for inventory founded on June 1972 and since then, many SAP ERP
control; however, over the years; different software was operations modules have emerged that are designed focusing
developed for different processes in an enterprise for better on various different processes including SAP ERP sales and
data management and workflow. In today’s world, there are service, sales and distribution, projects systems, customer
many leading market providers of ERP system, and SAP is relationship, financial management, business intelligence
one of the market and technology leaders in building business and more. Some SAP modules are as below–

www.icmai.in October 2020 - The Management Accountant 93

SAP Financial Accounting (FI) SAP Controlling (CO)
SAP Projects System (PS) SAP Plant Maintenance (PM)
SAP Sales and Distribution (SD) SAP Production Planning (PP)
SAP Materials Management (MM) SAP Quality Management (QM)
SAP Human Capital Management (HCM)

The erstwhile Maharashtra State Electricity Board was possible only because of SAP.
looking after Generation, Transmission & Distribution of AUTO WCR is one of the important developments in
Electricity in the State of Maharashtra barring Mumbai. SAP. Before this development, FI user has to settle all WCR
After the enactment of Electricity Act 2003, MSEB was manually using various t-codes, It’s getting delay to settle
restructured into 4 Companies viz. MSEB Holding Co. assets from WCR due to this time consuming process of
Ltd.,  Maharashtra State Electricity Distribution Co. Ltd. assets capitalisation. This is resulting in lower depreciation
(Mahavitaran),  Maharashtra State Power Generation cost. So avoid this problem also creation/settlement assets
Co. Ltd. (Mahagenco) and Maharashtra State Electricity timely manner, AUTO WCR process is introduced by
Transmission Co. Ltd. (Mahatransco) on 6th June 2005. MSEDCL. Due to this process, FI WCR will be settled and
Mahavitaran distributes electricity to consumers across the assets capitalize immediately after RABill get processed.
State except Mumbai.
Apart from this various customized t-codes (Z’ T code)
MSEDCL has reported revenue from business of has developed for PS and FICO module as per requirement
distribution of electricity more than Rs. 85,000 crs in FY of user according tender condition. Of course SAP has save
2018-19. Its largest electricity company having consumers lot of manpower efforts also cost as well as speedy process
base of 2.73 Crs categorized as residential, Commercial, reduced time lag of settlement of project vendors claim.
Industrials, Agriculture, Public Water works etc.Company Projects vendor’s claim get settled on time, so they are
has implemented SAP ERP by replacing previous oracle getting working capital timely, its result in speedy execution
base ERP and its currently working on SAP FI CO Module, of projects. So finally MSEDCL will be able to complete
SAP MM Module, SAP PS and SAP PM module. SAP it’s scheme as per predefined milestone and its making grid
HR module not yet implemented, because company has strong. Accurate valuation of WIP becomes easily possible
developed in house customised HR module and its interface in SAP.
is given to SAP FICO module.
Centralized Payment system (CPS)
Impact of SAP on MSEDCL
Before SAP and CPS, funds disbursed from Head office
Projects Systems-SAP PS to various filed offices according to their requirement
After implantation of SAP ERP, All on going/running for payment to numbers of vendors for purpose of meter
infrastructure Schemes/ projects incorporated in SAP. Now reading agency payment, Collection agency commission,
MSEDCL has successfully run its projects/schemes from maintenance work payment, LCP payments, Scheme
starts of preparation of DPR till close of projects through payment, Statutory payment like TDS, Labour Cess, Taxes,
SAP. Preparation of estimates, Capital Budget Controlling, Employee claims like as salaries, retirement claims, Bonus,
awarding of LOAs, Controlling of Projects through POs, Ex-gratia, etc, Office Expenses like as stationery, printing,
Tender Freezing, Processing of RA Bill claims, JMC security, vehicles hire charges etc. Fund is flowing from
incorporation, Preparation of Handing over certificate for head office to field office, again field office to vendor, it’s
completed Assets, Assets valuation,Assets measurement & took time to disbursement up to final vendor. MSEDCL
recognition through Location mapping, WCR settlement and has created centralised payment section to pay all vendors
capitalisationsare all processes carried out in PS module in and employees payment from one place only i.e. from
coordination with FI Module. HO. All field offices booked claim from their profit centre
MSEDCL has recently adopted / implemented and send requirement of claim as per standard profarma.
PAPERLESS BILLING for processing of claims of projects Accordingly claims will be settled from CPS. Salary is also
vendors. According this, Field offices will submit necessary successfully released through CPS. Working capital cycle
documentsto MSEDCL HO through SAP by attaching it’s to is reduce due to reduction in pre-SAP time lag (Fund flow
ERP Invocie/RAbill. Same will be scrutinised from technical from HO to vendor ) which results in reduction of finance
section in SAP, it will forward to audit vai SAP Mail, Audit cost, and working capital management becomes easy as
will process claim by auditing submitted documents through clear picture of expected payable in front of management.
SAP, after auditing and accounting of claim it will forward CPS has successfully settled all claims during the lockdown
to payments section to release payment. This process has without fail. This is significant impact of SAP ERP may
reduced time lag in processing of settlement claims, also view positively.
all records kept in SAP so can be verified any time. Due to
paperless billing process, MSEDCL has successfully settled Budgetary control- Revenue & Capital
claims ofprojects vendors in COVID-19 lockdown without MSEDCL has various field offices, operations are carried
delay.So Wecan say that work from home may become out at each stage. Controlling of expenses at each level is

94 The Management Accountant - October 2020 www.icmai.in

crucial as well as difficult task for management due to its offices before implementation of SAP. RE cost booking has
large scope. So each division/Circle is treated as profit/ started centrally at HO after adoption of SAP. SAP interface
Fund centre in SAP, and budget is allocated to each profit provided to RE vendors, so they can enter energy input daily
centre for each expenses item, so it’s become so easier to basis, then Invoices is auto generated from SAP without
control cost expense head wise. User is not able to book human intervention which results in avoidance of human
expenses if budget fully utilised, also booking of previous errors in critical manual calculations also saving time of
period expenses will result it shortfall of budget for current processing RE claims and manpower cost. Daily real time
year, so its created habit to book expenses on time , also energy purchase MIS from SAP is getting to management
make provision for previous year expenses in previous year for decision making. MSEDCL has exercised control on
itself .If budget is consumed fully, additional budget will RE cost through centralized Invoicing and automation in
be approved only after submission of satisfactory reasons Invoicing.
of budget fully utilisation by responsible person. Capital
Budget is provided as per fund flow available for the year Conclusion
to particular scheme, so how much cost to be incurred for MSEDCL is big discom having wide scope of operation
particular scheme can be control through Capex Budget. all over Maharashtra state. SAP is really going to help for
Budgetary control is possible with help of SAP only. its smooth functioning by centralisation and automation .
Projects Systems, CPS, MM , FICO module are becoming too
Accounting Controls through SAP useful in current competitive era to enhance its intellectual
User has to be given some power/authorisation to do level compare to others discom. Also We cannot say that
accounting entries as per GO-delegation of power. Such work from Home concept is restricted to IT Only, SAP enable
control can be set in SAP as per designation of user according to work from anywhere, MSEDCL employee has done it
with General Order-GO power/authorisation assign with during Covid-19 pandemic lockdown , And no doubt that
designation. Apart from this allow or restrict user from using MSEDCL has taken efforts for successful implementation of
some T-codes, restrict from operating GL, restrict for manual SAP, now it’s become fruitful in all aspect. Development of
entries are the control can be set through SAP to avoid customised T-code (Z-T codes) using with Standard T-codes
wrong entries, malpractices. Accurate booking/charging of in MSEDCL are indicating that SAP can be implemented in
GST through sap leads to help in accurate GST payments any sector successfully and it really increase standards of
centrally. Accounting controls pertains to statutory liabilities operation post implementation of SAP , same MSEDCL has
like taxes is able to set through SAP, e.g. user should restrict actually done even though its service sector.
to book TDS liability of previous period or after payment
date is over , don’t allow to book expenses in closed period References
having statutory liabilities etc. Inventory accounting and 1. https://www.mahadiscom.in/#
valuation become more realistic in SAP. 2. https://www.simplilearn.com
3. https://www.guru99.com/sap-modules.html
Automation & Centralisation in RE Invoicing 4. https://www.sapbwconsulting.com
MSEDCL is incurred almost 70 to 75% power purchase
cost out of total cost of operation. Cost of renewable energy santoshkorde77@gmail.com
(RE)like wind, solar etc was booked from various field

Source: https://www.mohfw.gov.in/pdf/OfficesGuidelines11thJune.pdf

www.icmai.in October 2020 - The Management Accountant 95



In India agricultural insurance has been

operating in India for a very long period
of time, but it faced two major challenges.
Firstly, low level of participation from the
farmers and secondly continuous loss in
operation for the implementing agency.
Debisree Banerjee These two limitations caused too much
Assistant Professor of experimentation with agricultural
Naba Ballygunge Mahavidyalaya insurance in India. This paper attempts
Kolkata to study majorly these two aspects of
agricultural insurance in India.

Introduction development. However, declining Participation Rate (LFPR) declined
ural India comprises of share of employment opportunities and from 45 to 41 percentage (NITI
a major portion of our constrained financial resources have Aayog). Agriculture forms a major
working population. raised major concerns. In between portion of rural employment. Risk
Rural economy plays a 2004- 05 and 2011- 12 where rural in agriculture is multi- dimensional,
definite role towards our economic population increased from 780 million which itself is a challenge for the
to 842 million, the Labour Force sector (Table 1)

Table 1: Classification of Risks in Agriculture

Broad Examples
Narrow Classification
Fluctuation in weather conditions such as excess/ deficit rainfall, storm, rise/ fall
Weather Risks
Production in temperature etc.
Risks Pest and diseases, degradation of natural resources like water level, harmful
Environmental Risks
mineral contaminated water etc.
Political changes causing changes in agricultural policies, fiscal or tax policies,
Production Man- Made Risks Technological changes, degradation of soil fertility from excess use of pesticides,
+ human contamination or illness, labour disputes etc.
Price Poor decision making in input use, sowing/ harvesting, inefficient logistics,
Risks Management and
breakdown of farm equipment, lack of storage facilities, lack of finance, unable
operational risks
to adapt to changing situations etc.
Changes in demand and/or supply situation of inputs or outputs, changes
Market Related Risks in quantity/ quality features of product demanded etc. affecting domestic/
international prices.
Source: Adapted from the Report on Agricultural Insurance in Asia and in Pacific Region, FAO, 2011, pp- 16

96 The Management Accountant - October 2020 www.icmai.in

Farmers adapt several tools and 16 covered 27,12,54,000 farmers insurance schemes the then UPA
techniques to cope with the varied and 39,17,17,550 hectares of area government introduced National
risks involved in agriculture, both at cumulatively. However, it has also Crop Insurance Programme (NCIP)
individual and at farm level, but those been observed that in aggregate all combining MNAIS (a modified
trivial efforts at individual or farm over India about three hundred and version of the NAIS), WBCIS, and
level could just bring in some short- forty six percent more claims were Coconut Plum Insurance (CPIS). The
term relief. As against the objective being paid than what premium had scheme continued till it was replaced
of sustainable development in India, been collected.The scheme was the by ‘PradhanMantriFasalBimaYojana’
a long- term planning and formal longest running scheme in India, (PMFBY). With the change in
institutional arrangement in agrarian however it suffered huge losses. Even Government at the Centre the scheme
sector is essential. Here comes, in its prolonged years of operation was further re- modified. NAIS and
agricultural insurance as an important the scheme has been characterized by MNAIS were replaced with PMFBY
institutional arrangement for risk low rate of participation (Banerjee and WBCIS was replaced with
management. 20202). Restructured WBCIS (RWBCIS) in
Year 2003 marked a remarkable 2016.
Objectives of the study change in the area of agricultural Pradhan Mantri Fasal Bima
In the backdrop this paper tries insurance in India with the introduction Yojana (PMFBY) launched in April
to look into the following twin of Weather Based Crop Insurance 2016 after discontinuation of NAIS
objectives: Scheme (WBCIS) on an experimental and MNAIS is considered to be a big
basis. It was formally implemented on step in sustaining agricultural growth
1. Study the reach of agricultural
a mass scale from 2007 onwards. The and development through providing
insurance in India among the
WBCIS was innovative in the sense financial support to the farmers during
that from Indian perspective it was occurrence of natural calamities/
2. Study the value gained/ lost disasters, pest stacks, diseases etc. Yet
the first time the nation went beyond
by the government over the another forward move is allowance
age- old area indexed yield based
years in providing agricultural to the private sector to go hand in
scheme to weather indexed one. In
insurance to farmers. hand with the government agency in
its almost a decade of operation the
With the above two objectives scheme covered 3,65,67,000 farmers, providing crop insurance.
we would also try to talk about of which 2,32,58,000 farmers were In its four seasons of operation the
the problems associated with benefitted. The claim to premium ratio scheme covered 3,96,41,000 farmers
implementation of agricultural was just about 50 percent indicating and covered 3,95,16,000 hectares of
insurance in India and provide a few that 50 percent of premium collected land. According to Gulatiet. al. 2018
policy recommendations. is paid as claim. Still there has been no in the first season of its implementation
significant increase in farmers covered PMFBY was a leap forward as area
Methodology or area insured. insured increased by 6.5 percent,
The study is completely based The reason for this dwarf growth of number of farmers insured increased
on analysis of data and information the WBCIS instead of the benefit it has by 20.4 percent and sum insured by
collected from secondary sources. been delivering and profit in operation 74 percent in between 2015- 16 and
The analyses include use simple it being generated are difficult to 2016-17. However, PMFBY has also
mathematical tools. We study the be pointed. A few researchers have been criticized on several grounds.
reach of the scheme through the identified few limitations of the Firstly, the scheme is again primarily
amount of land or/and number of WBCIS which might be responsible covering the loanee farmers ignoring
farmers covered and the value gained for lack of government initiative in stake of share-croppers and tenants.
or lost through claim- premium ratio. making it a mass scheme. Availability The actuarial premium rates (though
of at least 25 years historical weather subsidized) were quite high1 due to
Agricultural Insurance Schemes related data is a basic pre- condition for expansion of foreign reinsurance
in India: Its Reach and Spectrum applicability of WBCIS, but at regional companies like Swiss Re, Munich Re
Agricultural Insurance crossed level it is difficult to obtain, and etc.
several phases before the place where collecting it is quite expensive. Then 1
Insurance companies charged high
we see it today. Thought of, for the the design of the insurance scheme actuarial premium rates during kharif 2016
first time in India in 1947, it took is quite difficult and cumbersome, – the all-India rate was approximately 12.6
more than forty years to implement which requires local knowledge. Then per cent, which was highest ever. Much
agricultural insurance in India on the scheme would also vary under higher rates were charged in some states
a large scale. It became possible different conditions, which makes it and regions. The average actuarial rate in
with the introduction of National further difficult to implement in Indian Gujarat was 20.5 per cent, in Rajasthan
conditions (Swain, 2014). 19.9 per cent, and in Maharashtra 18.9 per
Agricultural Insurance Scheme in
India (NAIS). The NAIS, also known In 2013 considering the limitations pradhan-mantri-fasal-bima-yojana-is-a-
as ‘RashtriyaKrishiBimaYojna’,since of the previously held agricultural good-scheme-with-flawed-executive-says-
its inception in 1999 till Rabi 2015- cse-58330.- Accessed in 2019

www.icmai.in October 2020 - The Management Accountant 97

Though, the newly designed scheme with application of actuarial premium enabled the company not to suffer from loss
of operation for the first time. The claim premium ratio is just about 29 percent indicating that just 29 percent of claims are
being paid out of the premium collected. Again, a profit in operation is also indicated as the difference between claim to sum
insured and premium to sum insured is also positive. In aggregate premium to sum insured is four times higher than claim
to sum insured. This also makes the scheme attractive for the private participants and international reinsurance agencies as
stated earlier (Table 2).

Table 2: Performance of the PMFBY, Kharif 2016 to Rabi 2017-18

No. of No. of Total

Percentage Sum Claims Claim to Premium
State / Farmers Farmers Premium Claim to Sum
of Farmers Insured (Rs (Rs in Premium to Sum
UT Insured benefitted (Rs. In Insured (%)
Benefitted in crore) crore) (%) Insured (%)
(000’) (000’)  crore)
Total 39641​​ 7792​ 19.66 28128 139041 8130 28.90 20.23 5.85

Source: Calculations based on Data from AICL, December 2019

Similarly WBCIS was re-modified as Restructured WBCIS (RWBCIS). The RWBCIS was launched on 18th February
2016 by Hon’ble Prime Minister 12 states implemented the scheme in Kharif 2016 whereas 9 states have implemented the
scheme in Rabi 2016-17. Approximately 15 lakhs farmers were insured in the Kharif 2016 for 16.95 lakh of land at premium
of Rs983.96 crore for a sum insured of Rs8536.53 crore as per figures available on 31.03.20172.
On analysing further the combined data of both PMFBY and RWBCIS it could be observed that there has been no increase
in area covered under the schemes combined. The claim settlement ratio was quite high and the claim premium ratio was
below hundred indicating a profit in operation. The most positive aspect has been continuous increase in benefits being
delivered by the schemes (see Table 3).

Table 3: Combined Data of PMFBY and RWBCIS

Year Beneficiary Ratio Claim- Premium Ratio Claim Settlement Ratio Area Insured to Gross Cropped Area
2016-17 26.68 77.29 99.84 28.58
2017-18 31.85 89.31 100 25.58
2018-19 35.22 85.61 89.57 26.43

Source: Calculations based on data from pmfby.gov.in as on July 2020 and Agricultural Statistics at a Glance 2016

Thus, from the above analysis it can be surely said that agricultural insurance has been surely taking new twists and turns.
The problem of reaching out though remains constant, but the move of welcoming the private participants can help in sorting
out this deficient aspect of agricultural insurance in India. Further, we could also see that the introduction of better technology
and management; with sharing of responsibility with the private sector has already created some impact on the operational
losses of the agricultural insurance system.

Summary and Concluding Observations

M. S. Swaminathan (one of pioneers of green revolution in India) once said, “If agriculture goes wrong, nothing else will
have a chance to go right in the country”3. The inherent risks involved in agriculture have often made it difficult for the
farmers. Government of India has formulated and implemented several policies in the agrarian sector in order to sustain the
growth of agriculture. Agricultural Insurance is considered to be a risk reducing mechanism that connects two of the most
important sectors of our economy: agricultural sector and service (banking and insurance) sector.
The study revealed that different experimental schemes were launched from time to time, but their performances were below
expectation and most of the government sponsored schemes suffered loss. The major schemes that are identified and are analyzed
are the NAIS and the WBCIS. Those are the schemes that continued to operate in the Indian agrarian sector for a long period
of time. These schemes are still in operation with some modifications and reformations. PNFBY has included all the features
of NAIS. The WBCIS is today called the Restructured WBCIS. The analyses pointed out that there are two major deficiencies.
First, the coverage was below the requisite coverage and second, the schemes suffered considerable losses in operations.
Indian agricultural scientist and geneticist and international administrator, renowned for his leading role in India’s “Green Revolution,” a
program under which high-yield varieties of wheat and rice seedlings were planted in the fields of poor farmers.- https://todayinsci.com/S/
Swaminathan_MS/SwaminathanMS-Quotations.htm (Accessed on 10.6.2020)

98 The Management Accountant - October 2020 www.icmai.in

Comparatively weather based scheme to be made for implementation Indian Journal of Agricultural
was found to be a better performing and maintenance of weather Economics, Vol. 66, No. 3, July-
scheme than the yield based schemes. stations. So that weather based Sept, 2011, pp 457- 471.
However, the weather based scheme insurance schemes can be 3. Banerjee D. (2020), ‘Agricultural
has not been implemented on a mass implemented hand- in- hand Insurance Schemes in West
scale as the yield based schemes due with yield based schemes. Bengal: Assessment and
Entrepreneurship Opportunities’,
to data related limitations and financial ~~ Private participation with ‘Enterprising Agriculture Market
constraint. The introduction of newer proper monitoring from the Awareness Farm Innovation
versions of agricultural insurance government (in order to keep and Value Addition’, ISBN:
schemes with full- fledged private the premium rates reasonable) 978-93-89130-45-4, Nipa India
participation and infusion of new should be encouraged as it will Publishing Agency, New Delhi, pp
technology could bring about certain 81-100.
help in increasing the periphery
definite changes to the agricultural of Agricultural Insurance. 4. Dandekar, V.M. (1985) ‘Crop
insurance scenario of India. Insurance in India: A Review,
~~ Re-insurance could help in 1976-77 to 1984- 85’, Economic
Now, based on our analyses, we balancing the losses suffered and Political weekly, June,
might put forward certain policy by the implementing agency. ppA46-A59.
recommendations and suggestions. This would in turn enable the 5. FAO, Report on Agricultural
Those are as follows: government to make further Insurance in Asia and in Pacific
~~ To increase farmers’ investments in the Agricultural Region, RAP Publications 2011-
knowledge the schemes should Insurance sector. 12, Thailand, 2011, pp- 16.
be publicized through media. The study of Agricultural Insurance 6. Ministry of Finance, Government
Different institutions such of India, Economic Survey (2018-
in our country has a lot of scope. The
as Self Help Groups or Non- 19) New Delhi.
economy is still majorly dependent
Government Organizations that 7. Swain M. (2014), “Crop
upon agriculture and is a major source
work at ground level should Insurance for Adaptation to
employment. In the changing scenario, Climate Change in India”, Asia
also be utilized for spreading the Union Government has taken a Research Centre, Working Paper
knowledge among the farmers. massive step by enhancing the private 61. London ,UK.
~~ A few rural agents may also be participants’ stake in Agricultural 8. Leblois A., Quirion P. and
recruited to explain the farmers Insurance sector. Further, inclusion of Sultan (2013), ‘Weather Index
about the scheme. technology in the orthodox schemes Based insurance for cash crop
~~ The insurance unit should be makes the schemes more situational production : ex- ante evaluation
and it has increased hopes for a better for cotton producers in Cameron’,
reduced to village panchayat
outcome in future. http://antoine.leblois.free.fr/
level so that the farmers are CottonCam_2013_v02.pdf,
benefited without much delay We understand that Agricultural January 2013, pp 1-40.
even in case of localized Insurance itself cannot be a sole 9. Gulati, A., Terway, P. and
calamities. instrument that would help in Hussain, S. (2018), “Crop
~~ The yield based crop insurance improvising the agrarian situation Insurance in India: Key Issues and
scheme is not always efficient for the farming community of India. Way Forward”, Working paper no.
in Indian scenario where However, it has a definite role to 352, Indian Council for Research
play. Region- specific research works on International Economic
different factors affect Relations.
agricultural production. The and considering changes under
scheme should also cover pre- post- covid situation would always Sites consulted
sowing and post-harvesting be helpful for further improvisation
1. Agriculture Insurance Company of
losses, crop loss occurring due and implementation of Agricultural India Ltd., www.aicofindia.org.
to poor quality of agricultural Insurance policy in the country.
2. Agricultural Census, www.
inputs, crop loss due to insect agcensus.nic.in.
attacks and also the risks References
3. Planning Commission, http://
associated with introduction of 1. Abdulmalik, R.O., Oyinbo O. and planningcommission.gov.in/.
new technology. Sami R.A. (2013), ‘Determinants
of crop farmers participation in 4. Indiastat.,https://www.indiastat.
~~ Inclusion of technology in the Agricultural Insurance in the com/.
yield based schemes in order Federal Capital Territory, Abuja, 5. Food and Agriculture
to eradicate the limitations Nigeria’, Greener Journal of Organization of United Nations.,
associated with manually done Agricultural Sciences, vol 2(3), http://www.fao.org
crop cutting experiments, may January 2013, pp 021-026. 6. PradhanMantriFasalBimaYojana.,
reverse farmers perception 2. Banerjee, D. and Bhattacharya, https://pmfby.gov.in/
of yield based schemes to a U. (2011), ‘Innovations in
positive one. Agricultural Insurance in India:
Retrospect and Prospect’, debisreeb3@gmail.com
~~ More investments are required

www.icmai.in October 2020 - The Management Accountant 99



Manjunatha H R Dr. Mahesha V

Research Scholar Chairman
Department of Commerce Department of Commerce
Karnataka State Open University, Mysore Karnataka State Open University, Mysore


Passenger road transport plays a pivotal role by providing passenger road transport service
to every nook and corner of the country. The present paper aims to analyse the implication of
man-power productivity on profitability and evaluate the performance of Karnataka State Road
Transport Corporation by taking a parameter of man-power productivity. Few parameters are
used to evaluate the man-power productivity. The parameters are staff ratio, kilometre per
employee per day, Kilometreage total cost, revenue labour cost, number of schedules and
number of employee’s hires, etc.

Introduction role in transporting short and medium overall socio-economic rebuilding of
ransportation plays an distance passenger interchange. the country. The STUs own a sizeable
important role in the The State Transport Undertakings portion of passenger vehicles in the
overall development of (STUs) operate in the public sector country engaged in the provision of
economies. This is more segment. As a major player of transport service.
so in the case of passenger transport country’s transport infrastructure, the
more specifically, passenger road STUs are catering to transport needs Passenger Road Transport in
transport. It (i.e., road transport) is of people/passengers. STUs provide Karnataka – An Overview
indispensable for the development of transport services in not only in urban Passenger road transport services
the economy of a country. It remains area but also in mofussil areas besides in Karnataka are provided by both the
the primary choice for mobility providing inter-state services to private vehicle operators and also by
of people and for the transport of different sections of the society. They four STUs. Earlier, the private vehicle
goods due to its dexterity in utility, carry people and goods of household operators dominated the passenger
efficiency and inimitable litheness from far off locations, thus improving road transport sector. However, due to
enhanced by a flawless link to other mobility and minimizing regional many reasons including their inability
transport means. It also plays a major disparities. They also contribute to the to expand to cater to the increased

100 The Management Accountant - October 2020 www.icmai.in

demand for passenger road transport attributed to the inefficiency of human of the SRTCs are loss making and their
service, the state government entered resources alone. performance is going downwards.
into this segment. Karnataka State Mahalingu and Madegowda Hence, government should provide
Government (earlier, it was named, (2012) made a study of performance adequate financial incentives and
Mysore State) started offering evaluation of SRTCs in the country. allow STUs to decide its service price
passenger road transport service on a The study considered both operating as per market conditions – suggests
small scale by its transport department and non-operating cost to find out the author.
by establishing Mysore Government whether the corporations have been Objectives of the Study
Road Transport Department able to manage them properly. For In the light of the above the
(MGRTD) on 12 September 1948 with the purpose of the study, the authors present study makes an endeavour
just 120 passenger vehicles. considered 19 STUs in the country. to analyse the implication of man-
The State Transport The analysis of operating and non- power productivity on profitability
which was being administered as a operating cost gives a strong basis of the corporation. Besides the
Department of the Government of for taking appropriate decisions primary objective it aims to evaluate
Mysore was subsequently converted relating to cost reduction and control. the performance of man-power in
into an independent Corporation in And they concluded that there are Karnataka State Road Transport
accordance with the Provisions of many avenues available for the Corporation.
Road Transport Corporations Act, corporations to cut down their costs
1950 (Section 3) on 1August 1961. without compromising on the quality Research Methodology
The assets and liabilities of MGRTD, of transport services. This enables
The study covers only man-
except those of Bangalore Transport the corporations to improve their
power productivity to analyse the
Service (BTS) unit, were transferred productivity and also to improve their
performance of the corporation. Few
to the new Corporation on 1 August profitability.
yardsticks are used for performance
1961and the new corporation was After a study, Prabhu and Sateesh evaluation purpose. Further, study
named as Mysore State Road Transport (2011) found that organizational covers both cost and benefit side of
Corporation (MSRTC). The assets and control system must be used to human resource. Statistical data for
liabilities of the residual MGRTD design performance parameters the present study about ten-year period
viz., of BTS Unit were subsequently and measurement. They analysed from 2009-10 to 2018-19.Research
transferred to the Corporation on 1 the management control system in design used to carry out this study is
October 1961. Thus, a Corporation KSRTC by focusing on boundary descriptive research. The necessary
was ultimately established for the system, diagnostic control system, data are collected from secondary
entire State of Mysore. interactive control system and implicit source. The major secondary sources
hierarchy. Based on the study, they are annual administrative reports,
Literature Review observed that core belief of KSRTC is reports published by Central Institute
Many researchers have worked on customer centric service and employee of Road Transport, Pune, research
different dimensions of passenger centric administration. papers, websites, etc.
road transport in the country including Vijay Kumar (1979) analysed
on STUs. A summary of some of the the operating cost of public sector Data Analysis and Interpretation
studies is presented below. transport undertakings in India. The The performance evaluation is done
Madegowda (1996) examined author examined the relative share by taking few parameters such as staff
the man-power productivity in of each item of operating cost in ratio, kilometre per employee per
state transport undertakings. The the total cost. He concluded that day, traffic revenue per employee per
study considered the performance when kilometres run increase, cost day, kilometreage total cost, revenue
of employees of state transport also increases except depreciation, labour cost and number of schedule.
undertakings in India for a period ten personnel costs and interest on capital. The study finds if these variables
years. The author examined both cost Deepal K Kothia (2012) made having any positive implication on
and benefit side of human resources. an attempt to analyse performance the profitability of Karnataka SRTCs.
Based on the factual evaluation, he of STUs. The study considered The statistical data about ten years
infers that the employees of STUs performance variables such as fleet from 2009-10 to 2018-19 are taken to
are not that inefficient as generally utilisation, fare revision, bus staff evaluate the performance.
painted by the general public. The ratio, fuel efficiency, etc., for two
poor performance of STUs cannot be years. The researcher opined that most

Table-1: Composition of Cost, 2018-19

Percentage of Each Item to
Elements of Cost Total Cost (Rs. Lakh) Cost Per Effective Km (paise)
Total Cost
Cost of personnel 157956.80 1490.36 40.93

www.icmai.in October 2020 - The Management Accountant 101

Material Cost 165177.61 1558.48 42.80
Motor Vehicle &
17534.83 165.45 04.54
other taxes
Depreciation 21908.23 206.71 05.68
Interest 2218.46 20.93 00.57
Others 21132.53 199.39 05.48
Total 3,85,928.46 3,641.32 100

Source: Administrative report of KSRTC. 2018-19

From the Table -1 it is evidenced that the labour cost having major proportion in the total cost which accounts for 40.93%
of the total cost. On an average, the corporation incurred 1490.36 paise on labour cost per effective kilometre (EKm) during
the year 2018-19. The employees are eligible to get monthly remuneration as the scale set in advance, this salary is to be paid
irrespective of work extracted from them. It is necessary for the corporation to evoke maximum work from their employees
as the salary is not affected by the quantum of work. Keeping this reality a number of parameters are used for this study to
assess the man-power productivity. Further, few parameters are used to assess the employees of the corporation are working
efficiently or not.

Table-2: Kilometreage Total Cost, Labour Cost and Revenue

Year Revenue Per EKm Total Cost Per EKm Labour Cost Per EKm Profit/Loss Per EKm
2009-10 2,072.09 2,014.07 585.93 58.02
2010-11 2,387.09 2,315.92 720.80 71.17
2011-12 2,508.54 2,487.64 761.11 20.9
2012-13 2,753.11 2,751.37 923.66 1.74
2013-14 3,002.35 3,078.73 1044.71 -76.38
2014-15 3,243.28 3,287.41 1152.57 -44.13
2015-16 3,282.51 3,230.05 1357.11 52.46
2016-17 3,223.15 3,402.03 1468.51 -178.88
2017-18 3,325.98 3,321.83 1407.14 4.11
2018-19 3,513.87 3,641.32 1490.36 -127.45

Source: Administrative report of KSRTC. 2009-10 to 2018-19

Table-2 covers the details of Kilometreage total cost, (1) The fairs are not regularly and adequately revised by the
labour cost and revenue. The labour cost per effective corporation. (2) The continuous increase in the price of input
kilometre is computed by dividing total labour cost incurred factor such as fuel, labour, tyre and tube, etc.
during the year by the total number of effective kilometres It also clear that the kilometreage labour cost has been
operated. The same procedure is being followed to determine increased year after year. In the year 2009-10, it was 585.93
the Kilometreage total cost, revenue and profit/loss. paise per kilometre which increased to 1490.36 paise
From the above table it is obvious that the revenue earned during 2009-10 thus shows an increase of 154.36% during
per effective kilometre has increased from 2,072.09 paise the above period of ten years. However the increase in the
in 209-10 to 3,513.87 paise in 2018-19 accounting for an kilometreage labour cost is due to increase in the wages,
increase of 1,441.78 paise per effective kilometre which salary and increase in the number of employees hired.
works out to 69.58% which means the kilometreage revenue
has increased at 6.96% annually. The kilometreage total Table-3: Kilometres Per Employee Per Day and
cost has also increased by 1,627.25paise (from 2,014.07 Traffic Revenue Per Employee Per Day
paise to 3,641.32) during this 10 year period representing
an increase of 80.79%. This comes to an annual average KMs Per Employee Traffic Revenue Per
increase of 8.08%. Except the year 2013-15 and 2016-17 it is Per Day Employee Per Day
obvious that the rate of increase in the kilometreage revenue 2009-10 69.3 1,247
is higher than the cost. This clearly shows that the KSRTC
2010-11 70.1 1,425
has increased the revenue over cost. The effort of human
resource is to be appreciated due to two important reasons. 2011-12 69.3 1,584

102 The Management Accountant - October 2020 www.icmai.in

2012-13 71.2 1,751 labour cost comes to 40.92% of the total cost in KSRTC. If
the KSRTC is not able to achieve this improvement, perhaps
2013-14 69.8 1,843 the labour cost would be increases during the year 2018-
2014-15 72.5 2,085 19 by 14,911.12 lakh. Hence, there is an improvement in
2015-16 71.3 2,045 the employees per schedule and profit/loss having positive
and negative swing during 2009-10 to 2018-19. Whereas
2016-17 71.6 1,991
continuous downwards in the staff ratio increases the
2017-18 74.7 2,120 profitability.
2018-19 75.2 2,223
Concluding Remarks
Source: Administrative report of KSRTC. 2018-19 The analysis in the foregoing paragraphs has substantiated
that, the human resource have been functioning efficiently.
From the Table-3 it is obvious that the man-power There has been a continuous increase in kilometre per
productivity in terms of kilometres operated per employee employee per day, traffic revenue per employee per day and
per day has increased continuously during the study period. staff ratio per schedule (evidenced in the tables). Hence,
However, in between the study period there was a slight there has a positive implication on the profitability of the
reduction in man-power productivity. From this analysis, it corporation. Whereas kilometreage labour cost registered
can be said that the increase in the kilometres per employee continuous increase, this increase was not due to the
per day increases the man-power productivity and also inefficiency of employee but due to increase in salary and
which leads to increase the profitability of the corporation. wage. The overall poor performance of corporation cannot
Traffic revenue per employee per day has also increased be attributed to the inefficiency of employees but delay in
year after year except 2015-16 and 2016-17 there is a slighter fares, inadequate fare revision and continuous increase in the
down fall in traffic revenue per employee per day. On an price of inputs.
average traffic revenue has increased to 976 which accounts
for 78.27%. Increase in the traffic revenue per employee References
leads to increase the gross revenue of the corporation which 1. Dipal K. Kothia. (November 2012). Performance of
helps the corporation to increase their profitability. State Road Transport Undertakings of India.
As a result of the study increase in the KMs per employee Journal of Social Science. 1(3):1-5.
per day will increases the traffic revenue per employee per 2. https://ksrtc.in/oprs-web/guest/home.do
day which evident from the above table-3. 3. Madegowda J. (1996). Productivity and State Road
Transport Corporations – An Appraisal. Southern
Table-4: Staff Ratio Per Schedule Economist. pp. 11-13.
Year No. of Employees Per Schedule 4. Madegowda J. (June 1996). Man-Power Productivity in
State Transport Undertakings – An Appraisal.
2009-10 5.19 Indian Journal of Transport Management. pp. 397-400.
2010-11 5.08 5. Mahalingu and Madegowda J. (March 2012).
Performance Evaluation of SRTCs with Special
2011-12 5.11
reference to Cost Management. Indian Journal of
2012-13 4.90 Transport Management. 36(1): pp. 4- 23.
2013-14 4.98 6. PrabhuD.B and Sateesh Hedge. (March 2011).
2014-15 4.85 Management Control System in Public Transport:
An Objective Study of KSRTC. Indian Journal of
2015-16 4.87 Transport Management. pp. 4-23.
2016-17 4.79 7. Shilpa Trivedi. (September 2012). Performance Review
2017-18 4.69 of Gujarat State Road Transport
Corporation. International Journal of Social Science &
2018-19 4.70 Interdisciplinary Research. 1(9): pp. 33-48.
8. Sreeraj K R and Jayasree N (December 2014). Kerala
Source: Administrative report of KSRTC. 2018-19
State Road Corporation Performance Analysis and
Ranking of Depots. Journal of Science Engineering and
From Table-4 it is obvious that except during 2011-12, Technology. 1(4): pp. 810-818.
2013-14 2015-16 and 2018-19, the staff ratio significantly
declining continuously from one year to another. That means 9. Vijay Kumar K.C. (August 1979). Operating Cost of
it has been a decreasing trend in the number of employees Public Sector Transport Undertaking in India‖, Lok
Udyog. pp. 29-32.
working in the KSRTC per vehicle on road. The statistics
evidenced that the staff ratio reduced from 5.19 employees
per schedule on March 31, 2010 to 4.70 by March 31, 2019 manjugowda.ry@gmail.com
registering a reduction of 0.49 employee per schedule which maheshmcom69@gmail.com
works out to 9.44%. This is not an insignificant since, the

www.icmai.in October 2020 - The Management Accountant 103



In order to remove China’s monopoly

on tea production the British introduced
tea to the Indians and undoubtedly the
introduction marked the beginning of a new
era in the Indian industrial sector (MSME).
Sumi Karmakar But with opportunities come threats and
State Aided College Teacher - Category 1 accordingly Indian tea Industries started
Department of Commerce, Vivekananda College, Thakurpukur
facing several problems that resulted
in failure to grab the upcoming future
prospects. The study is based on the minute
areas of innovations that need to be focused
on to remove the weakness and grab the
probable opportunities for the betterment
of tea industries in India (with special
reference to West Bengal).

Aditya Sarkar
UG Student, School of Economics and Commerce
Department of Commerce, ADAMAS University
West Bengal

hough the introduction of tea was an attempt
by the British to break China’s monopoly but
the flavor and aroma of the tea leaves got so
engraved into the minds and souls of millions Shounak Das
all over the world that Indian tea became the most wanted State Aided College Teacher - Category 1
energy drink in the world. The demand resulted in the Department of Commerce, Vivekananda College, Thakurpukur
flourishment of tea industries all over the Nation. But with Kolkata

104 The Management Accountant - October 2020 www.icmai.in

time the industries started facing several issues that resulted been collected by interviewing workers and management
in massive failure to grab every probable opportunity that personals of 3 tea estates of Darjeeling district of West
could have led the industry to a height beyond reach in the Bengal. The data are in nominal and ordinal in nature.
international context. So the major researches concerning Research is based on 10 questions, 8 questions are in 5
the identification of the areas where loopholes exist in the point ordinal Scale (Strongly agree- Agree- To some extent
industry is of prime importance now, for rectifying faults agree- Disagree - Strongly disagree) and 2 questions are
through area specific innovations. dichotomous in nature (Yes/No). The study is objectified to
view the operational areas where innovative strategies need
Literature Review: to be incorporated for brightening of the industry prospect.
� Islam, G. M. R. (2005). This study is based on the The researchers used Spearman Rank Correlation and Man-
numerous problems such as unexpected calamities , Whitney Test for identification of the operational areas where
political influence , high cost of production , demand innovations are required and Ordinal Logistic Regression is
supply non-equilibrium etc. faced by tea industries of being used to identify how much future prospect in terms of
Bangladesh and focuses mainly on the future needs in percentage is being decided by the areas where innovations
terms of demand supply equilibrium, decrease in cost are required, collectively. Primarily 10 operational areas
of production etc. to minimize the several issues. have been considered for judging whether they require
innovations. The test results were interpreted, analyzed and
� Kumar, P (2008). This study concentrates on
conclusions are drawn by the researchers. All the analysis
the several requirements in terms of efforts by
was done using jamovi 1.2.25 statistical software and SPSS
stakeholders to increase tea productivity, new
20 software.
organizational and ownership structure, market
diversification, aggressive generic promotion etc. to
Data Presentation and Analysis:
make Indian tea sectors more strong and buoyant.
For first research objective (jamovi 1.2.25 statistical
� Roy, S. (2011). This study analyses the historical
software used):
growth of tea industries in India by taking into
consideration the measures taken by British The following 8 hypothesis were tested using Spearman
Government and mentions the several requirements rank correlation, considering H0: There is no significant
such as more investments, infrastructural relationship between Future Prospect (dependent variable)
developments, enhancement of managerial efficiency, and Operational Robustness in a particular operational
lowering of cost of production etc. for gaining section (independent variable), against HA: There is
prosperity in the tea Industries of India. significant positive relationship between Future Prospect
(dependent variable) and Operational Robustness in a
� Mohan, E. (2016).This study highlights the socio
particular operational section (independent variable). The
economic condition as well as several problems such
result is judged at 5% level of significance.
as monthly price fluctuations of tea leaves, increase
in wage rate demand etc. faced by small tea growers
1. There lies no significant positive correlation (at 5%
of Sivsagar district of Assam.
level of significance) between Future Prospect and
From the above review of literature the researchers’ use of most modern Production Technologies;with
opines that several studies have been conducted by P= .320 (P>.050).
primarily focusing on the problems and prospects
2. There lies no significant positive correlation (at 5%
of the tea industries of India, Bangladesh. But to
level of significance) between Future Prospect and
eradicate such problems and to grab the opportunities,
use of most modern Farming Technologies; with P=
the minute innovations that are required the most is an
.070 (P>.050).
area that needs to be focused on by the researchers’. So
the researchers’ study revolves around the innovative 3. There lies significant positive correlation (at 5%
areas that may impact the prospects of tea industries level of significance) between Future Prospect and
of India (with special reference to West Bengal) by good Wage Structure; with P= .002 (P<.050).
eradicating several problems that are faced by such 4. There lies significant positive correlation (at 5%
industries. level of significance) between Future Prospect and
Work Related Benefits; with P= .019 (P<.050).
Objectives of the Study: 5. There lies no significant positive correlation (at 5%
1. To identify the operational areas where innovations level of significance) between Future Prospect and
are required. efficient Marketing channels; with P= .988 (P>.050).
2. To identify the extent to which future prospect isbeing 6. There lies significant positive correlation (at 5%
decided by the areas where innovations are required, level of significance) between Future Prospect and
collectively. well defined, well implemented and efficient Legal
Mechanisms applicable to the industry; with P= .018
Research Methodology: (P<.050).
The study is based on primary survey. 170 samples have 7. There lies no significant positive correlation (at 5%

www.icmai.in October 2020 - The Management Accountant 105

level of significance) between Future Prospect and It is decipherable from the above table 2 that both the
good internal Personnel Management system; with null hypothesis has been accepted with P= .244(P<.05) and
P= .187 (P>.050). P= 1.000(P<.05) for Pearson and Deviance respectively. It
8. There lies significant positive correlation (at 5% means the data has been fitted excellently in the model and
level of significance) between Future Prospect there is insignificant deviation between observed values and
and required Training and Orientation activities predicted values, predicted by the model.
undertaken for employees and workers; with P= .007
(P<.050). Table 3: Pseudo R-Square

Cox and Snell .190

The following 2 hypothesis has been tested using Mann-
Whitney U Test, considering H0: There is no significant Nagelkerke .209
change inFuture Prospect in case of existence or non
existence of advantageous position in the operational areas, McFadden .088
against HA: The Future Prospect is more better in case of Link function: Logit.
existence of advantageous position in the operational areas. Source: Computed Through SPSS 20 Software.
The result is judged at 5% level of significance.
The above table 3 reveals that 20.9% of the variation in
1. The Future Prospect remains same in case of the Future Prospect of the Tea industry can be explained
existence or non existence of advantageous position collectively by 4 operational areas, where robustness ensures
in respect to availability of Cheap and Adequate brightening of the industry prospect.
Finance, corresponding to a P value of .055 (P>.050).
2. The Future Prospect remains same in case of Test of Parallel Linesa
existence or non existence of advantageous position
in respect to Quality and Cost Competitiveness -2 Log
Model Chi-Square df Sig.
of industry products in national and international Likelihood
markets, corresponding to a P value of .985 (P>.050). Null
For second research objective (SPSS 20 Softwareused): General 230.608b 87.542c 48 .000
Now the 4 operational areas, where robustness ensures
brightening of the industry prospect will be considered in The null hypothesis states that the location parameters
running Ordinal Logistic Regression to fulfill the second (slope coefficients) are the same across response categories.
research objective.
a. Link function: Logit.
Table 1: Model Fitting Information b. The log-likelihood value cannot be further increased
after maximum number of step-halving.
-2 Log
Model Chi-Square df Sig. c. The Chi-Square statistic is computed based on the
log-likelihood value of the last iteration of the general
Intercept model. Validity of the test is uncertain.
Source: Computed Through SPSS 20 Software.
Final 318.150 35.812 16 .003
Here the null hypothesis got rejected with a high P value of
Link function: Logit. .000 (P<.050) hence slope coefficients are not equal across
Source: Computed Through SPSS 20 Software. all the response categories. This is impacting negatively the
overall excellency of the model. Still the overall model is
It is visible from above the table 1 that statistically satisfactory.
significant Chi-Square statistic has been obtained or null
hypothesis got rejected with P=.003 (P<.05). It tells that the Discussions, Conclusions and Recommendations:
model is very good in predicting the outcomes or dependent Based on the above study researchers decrypts that
variable, based on independent variables included in the innovations in the four areas namely Wage Structure,Work
model. Related Benefits,Legal Mechanisms ,Training and
Orientation is crucial for brightening of the future tea
Table 2: Goodness-of-Fit
industry prospects. As per the study the researchers exhorted
Chi-Square df Sig. a good Wage Structure in terms of timely as well as adequate
Pearson 443.870 424 .244 wage payment to workers, Work Related Benefits in terms of
enhanced bonus, free quarters , education , health facilities
Deviance 274.853 424 1.000 etc. to workers and their families,Legal Mechanisms in
Link function: Logit. terms of proper implementation of efficient and easily
Source: Computed Through SPSS 20 Software. understandable rules and regulations focusing primarily

106 The Management Accountant - October 2020 www.icmai.in

on budget estimates, permission for more tea plantation 2. Islam, G. M. R., Iqbal, M., Quddus, K. G. & Ali,
and export, enhancement of borrowing power, labour M. Y. (2005). Present status and future needs of tea
protection, environmental issues, etc. and Training and industry in Bangladesh. PROCEEDINGS-PAKISTAN
Orientation activities to new workers regarding plantation ACADEMY OF SCIENCES. 42(4), 305-314.
and maintenance of the seeds, processing technologies 3. Kumar, P., Badal, P. S., Singh, N. P. & Singh,
and further if required the basic education also needs to R. P. (2008). Tea industry in India: Problems
be delivered to the uneducated ones so that the training and prospects. Indian Journal of Agricultural
procedures becomes more fruitful to the workers. Economics. 63 (1), 84-96.
It has further been observed that 20.9% variationin the 4. Kumar, S. &Pou, K. J. (2016). Assessment of bio-
Future Prospect of the Tea industry can be explained only. energy potential in tea industries of India. Asian
Which is definitely not so high and researchers opine that Journal of Agriculture and Rural Development. 6(5),
this low variation is due to the lack of non consideration of 83-89.
many other operational areas where innovations are needed
5. Mohan, E. (2016). Problems of Small Tea
and are indispensable for the development of Tea industry.
Growers (STGs) in Sivasagar District of Assam:
A sociological study. International Journal of
Advanced Research. 4(7), 2264-2269.
The study is primarily based on data collected from small
6. Roy, S. (2011). Historical review of growth of
number of tea estates and variables considered here are
tea industries in India: A study of Assam Tea.
also limited in numbers. Larger amount of samples can be
In International Conference on Social Science and
collected from much wider area and more variables can be
Humanity (Vol. 1, pp. 116-170).
considered to get for exhaustive results by applying more
sophisticated tools like factor analysis, cluster analysis,
Website Consulted:
etc. Moreover for more concrete study broad operational
area based set of sub-operational areas can be undertaken 1. https://wbmsme.gov.in/
for identification of areas of innovation and separate 2. https://msme.gov.in/
questionnaire can be used for collecting data from workers
and managers/owners.

1. Gupta, R. &Dey, S. K. (2010). Development sumikarmakar1993@gmail.com
of a productivity measurement model for tea meet.aditya65@gmail.com
industry. ARPN Journal of Engineering and Applied shounakdascu1994@gmail.com
Sciences. 5(12), 16-25.


CMA R. RANGARAJAN, Membership No.2959, past Chairman for the year 2002-2006 of our
Tiruchirappalli Chapter of Cost Accountants, demised on 28/08/2020. Tiruchirappalli Chapter Members’
heart felt condolence to the bereaved family. God let his soul rest in peace.

www.icmai.in October 2020 - The Management Accountant 107


been sold to a new buyer? Are we staring at another round of
CIRP for these remaining dues?
The Corporate Debtor in liquidation is already one which
has gone through the process of insolvency and has failed
to find a resolution. If the Corporate Debtor is left again in
the economic playing field with 93% of its liabilities, it is
highly unlikely that it’ll survive and won’t fall into the trap of
insolvency again.
Our view is that once the liquidation process is initiated and
Vishal Gupta completed, either by sale of assets or sale of business or sale as
Registered Valuer, Kolkata going concern, and the proceeds have been distributed to the
claimants as per Section 53 of the IBC, the Liquidator cannot
take responsibility for any pending claims. The liabilities of
Abstract the Corporate Debtor are already converted to claims under the
CIRP and Liquidation processes. The liabilities, if unclaimed
IBBI vide notification dt. 25 Jul 2019 inserted or unsettled, cannot turn live again because their claims had
not been submitted in the insolvency or liquidation processes.
Regulation 32A in the Liquidation Regulations
But more important than that, the sale of liabilities under
whereby the Liquidator may sell the Corporate liquidation as a going concern is in complete violence to
Debtor, or the business thereof, as a going Section 53 itself, which speaks of settlement of claims under
concern. This was supposed to be a welcome liquidation. If the liabilities were to come live once again even
move, as it is generally known that the economic after receiving proceeds from liquidation, then the liquidation
value of a going concern business is higher than process itself is deemed to have been failed.However, one
may still argue that in case of liquidation as a going concern,
the value of assets. Hence, this move was supposed Section 53 of the IBC does not apply and the proceeds of
to increase the economic worth of national assets liquidation shall simply be used to reduce the liabilities rather
under Liquidation. However, the business will be than to settle them completely.
sold as a going concern opens a Pandora ’s Box It should also be understood that at certain times, the assets
for the buyers under such a scheme. are inherently linked to certain liabilities and their separation
is not possible for a going concern. Examples include long-

term supply contracts where the goods are to be called off
BBI vide notification dt. 25 Jul 2019 inserted over a period as required, certain infrastructure contracts
Regulation 32A in the Liquidation Regulations which require submission of performance guarantees,
whereby the Liquidator may sell the Corporate Debtor, indemnification obligations etc. These are pecuniary liabilities
or the business thereof, as a going concern. This was which are essential for the operations of the going concern.
supposed to be a welcome move, as it is generally known that Such liabilities cannot be settled under Section 53 of the IBC
the economic value of a going concern business is higher than if the Corporate Debtor is to be sold as a going concern.
the value of assets. Hence, this move was supposed to increase
In conclusion, the transfer of liabilities in liquidation as
the economic worth of national assets under Liquidation.
a going concern does not do justice to the spirit of the IBC.
However, it has been repeatedly mentioned in the Regulation However, there is a need of clarity from the IBBI whether
that under such a mechanism, the “assets andliabilities” of the liabilities are necessary to be required to be transferred
the business will be sold as a going concern, which opens a during sale as a going concern. Meanwhile, all eyes will be
Pandora ’s Box for the buyers under such a scheme. on the future course of legal proceedings on this issue. The
As per the data published by IBBI , as of 30 Jun 2020, Adjudicating Authority may take a view that is contrary to
957 cases had resulted in liquidation with a total liquidation ours, which it has the right to do and settle the matter. However,
value of Rs. 40 kCr. Against this, the total claims were Rs. the same Adjudicating Authority may make use of its generic
5.46 lac Cr, i.e. the total liquidation value of the 957 cases in powers under Section 60(5) of the IBC to clear the matter and
liquidation was a mere 7% of the total claim amount. If these bring a unique opportunity of liquidation as going concern
companies were to be sold as going concerns, what would giving a real resolution to the strained Corporate Debtor.
happen to the remaining 93% of the claims being Rs. 5.07
lac Cr? Does the company as a going concern get sold with Reference
all those liabilities? Assuming the proceeds of this liquidation 1. https://www.ibbi.gov.in/uploads/whatsnew/
value are distributed among the creditors in the Waterfall a98a313021b1250be5ca3b9301626f25.pdf
mechanism of Section 53 of the IBC, what action would the
creditors take to recover these remaining dues, which have vishal@intelligentgroup.org.in

108 The Management Accountant - October 2020 www.icmai.in

Down The Memory Lane
October 2010

Seen from left to right: Dr. I. Ashok, Chairman, SIRC

of ICWAI; Shri B.M. Sharma, President, ICWAI;
Shri M. Gopalakrishnan, Vice President, ICWAI;
Shri Karumuthu T Kannan, Chairman & Managing
Director, Thiagarajar College Madurai; Shri G V
Subrahmanyam, Secretary, SIRC of ICWAI; Shri A
Om Prakash, RCM, SIRC of ICWAI & Dr. A Mayil
Murugan, Chairman, Madurai, Chapter on occasion of
Two Day Regional Cost Covention held at Madurai on
29th & 30th October, 2010

From Left to Right: S/shri A.V.N.S. Nageswara Rao,

Immediate Past Chairman- SIRC of ICWAI; D.K.
Astik, Chartered Accountant (Speaker); G. Narayana
Rao, Chairman and M. Kameswara Rao, Chairman-
Corporate Training during the meeting on “IFRS’s
Overview and Differences with Indian Accounting
Standards” on 20th October, 2010 at Hyderabad
Chapter Premises.

October 2000
MoU among ICWAI, ICAI & ICSI on 20 October, 2000 at Delhi to establish synergistic relationship among themselves with
a view to further strengthening their collective competencies

Arun Jaitley, Union Minister of State for Law, Justice

& Company Affairs, releasing the MOU. Seen with him
from left to right are: Dr. P.L. Sanjeeva Reddy, Secretary,
Department of Company Affairs, Govt.of India; J. Sridhar,
President, ICSI; G.Seetharaman, President, ICAI;
D.C.Bajaj, President, ICWAI; A. Ramaswamy (IAS, Jt.
Secretary); N.J. Krishna, Principal Information Officer,
Govt. of India.

www.icmai.in October 2020 - The Management Accountant 109

Down The Memory Lane
Presenting the MoU. (from L to R): Dr. S.P. Narang, Secretary,
ICSI; D.C. Bajaj, President, ICWAI; A. Ramaswamy, IAS, Jt.
Secretary; J. Sridhar, President, ICSI; S.P. Mathur, Consultant,
DCA, presenting the MoU

Joint Seminar of ICWAI and ICAI on ‘Reshaping the

Indian Accountant - Challenges and Opportunities in
Mumbai’ dated 05th October, 2000. G. Seetharaman,
President, ICAI, delivering the inaugural address. Others
seen in the picture from left V.V. Deodhar, Vice-President,
ICWAI; M.M. Chitale, Past President, ICAI; Dr. G.P.
Jakhotia and S.S. Herwadkar.

October 1990

A Professional Development Meet was organised at the

Bangalore Chapter Premises on 16 October, 1990, Shri D.P.
S. Rathore, Dy. Controller, RBI, Bangalore was the Chief
Guest, who spoke on “FERA” Matters.

October 1980

A special meeting was held on 25th October, 1980 in

the Govt. Nutan Girls College Bhopal presided over by
Shri R.S. Sugadev, Chairman of the Chapter. Shri K.K.
Khurana, Secretary, Bhopal Chapter introduced to the
audience Shri N.S. Venkatakrishnan, Cost Adviser for the
Agricultural Economic Research in Tea Plantation, Jorhat,
Assam who was the speaker for the evening.

Source: Extracted from the various issues of The Management Accountant Journal

110 The Management Accountant - October 2020 www.icmai.in

Scenario is a very hot topic of the Day, during and Post
Covide-19 period. Problems before the Industry particularly
before MSME Sector are numerous and Industry is suffering
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA both ways on demand & Supply pathetic conditions, the
GUWAHATI CHAPTER existing buyers are not able to pay bills on due dates, the
suppliers are not able to bear burden of due amount of
The Chapter has donated Rupees Two Lakh One Thousand receivables, the producers are suffering problems on labour
only to Assam Arogya Nidhi, a fund specially set up to fight front, on receivables front, on demand front and supply
Covid-19 by the State of Assam. The cheque representing front also because of this alarming situation. The meeting
the donation was personally handed over to the Hon’ble was conducted through Video Conferencing, chaired by Shri
Health Minister of Assam, Dr. Himanta Biswa Sarma by the Gaurav Jain, President MMA, vote of thanks was proposed
Chairman of the Chapter, CMA Rana Bose and the Vice- by CMA Dinesh Kumar Sharma, chairman of the chapter.
Chairman of the Chapter, CMA Parmeswar Lal Kanoi on 7th
of June, 2020. Out of the amount donated, Rupees One Lakh THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
only was received from the Eastern India Regional Council JAIPUR CHAPTER
and the balance Rupees One Lakh One Thousand only was
donated from the fund available with Guwahati Chapter. The Chapter organised Webinar on 5th September 2020
on the Topic. “Key Issues in GST Annual Returns & Audit
and Recent Developments in GST.” In the beginning of
the Seminar, CMA Tanuj Agrawal, Chairman, Professional
Development Committee of the Chapter gave opening
remarks. Thereafter CMA Swapnil Bhandari, Chairman of
the Chapter welcomed the Key Speaker and participants.
Key Speaker of the Webinar was CA Chitresh Gupta,
Leading Tax Practitioner from Delhi NCR. He explained in
detail the key issues in GST Annual Returns & Audit and
also recent developments in GST. Thereafter Questions &
Answers Sessions was also there in which CA Shilpi Gupta
and CA Chitresh Gupta replied the queries of participants.
At the end of the program CMA Sudarshan Nahar, Secretary
of the Chapter thanked all he participants. The program
was conducted by CMA Tanuj Agrawal. The Chapter
organised a Webinar on 12th September 2020 on the topic
“MILE (Maximum Impact Little Effort)” - workshop on
professional growth and development. In the beginning of
the Seminar, CMA Tanuj Agrawal, Chairman, Professional
Development Committee of Jaipur Chapter gave opening
remarks. There after CMA Swapnil Bhandari, Chairman of
the Chapter welcomed the Key Speaker and participants.
Key Speaker of the Webinar was CA Gaurav Kedia, Eminent
Entrepreneur, he explained in detail how the maximum
impact can be created with little efforts. After his speech,
there was Question Answer Session in which Shri Kedia
replied to the queries of the participants to their satisfaction.
At the end of the program Secretary of the Chapter CMA
Sudarshan Nahar thanked all the participants. The program
was conducted by CMA Tanuj Agrawal.


The 74th Independence Day was celebrated at the premises

NORTHERN INDIA REGIONAL COUNCIL of SIRC on 15th August,. 2020. CMA (Mrs.) Jyothi Satish,
Chairperson – SIRC hoisted the National Flag with CMAs
H. Padmanabhan, Council Member – ICAI and Rajesh
MEERUT CHAPTER Sai Iyer, Regional Council Member – SIRC and rendered
Independence Day Address. Staff Members of SIRC
Senior CMA Shri Chandra Wadhawa, Past President of participated in the Celebrations. CMAs H. Padmanabhan –
the Institute delivered the Talk on How to Run Industry Council Member, ICAI and Rajesh Sai Iyer – RCM – SIRC
in Present Scenario on September 12, 2020 on the request also spoke on the occasion. SIRC of the Institute organised
of the chapter. The topic How to Run Industry in Present its Oral Coaching Inaugural Event through online, on 14th

www.icmai.in October 2020 - The Management Accountant 111

August, 2020, at 4.00 p.m. CMA (Mrs.) Jyothi Satish,
Chairperson – SIRC, in her opening remarks welcomed the
Oral Coaching Students for their Coaching to be conducted
through online mode and informed that due to COVID-19
pandemic situations, student community has been affected
very badly and hence they have to prepare themselves to
meet the challenges ahead in their professional career. She
also briefed on the global opportunities available for the
CMA qualified students and said that CMA Professionals
are occupying very senior positions in many Companies.
Due to Corona Pandemic alerts, from April 2020 itself
Online Revision Classes were conducted by SIRC to the
students who are preparing for the June Term Examinations
and the feedback received from the students are excellent &
encouraging. While concluding, Chairperson – SIRC made
a mention about the good number of students so far enrolled
for this Course, even during the COVID – 19 pandemic
situations and appreciated the parents for taking an apt THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
decision for their children to pursue this CMA Course for HYDERABAD CHAPTER
their bright future. CMA H. Padmanabhan, Council Member
– ICAI in his address informed that all the Regional Council Cost Accountants play a key role in the development of
Members of the entire Southern Region are always ready MSME Sector. The Hyderabad Chapter formed MSME
to help and guide the student community in completing subcommittee with 6 members to educate on various schemes
the CMA Course. He advised the students to focus more of MSMEs, to give plenty opportunities to Cost Accountants
on studies which is very important to pass in the Institute and to render their services in MSME sector. MSME sub-
Examinations. He also briefed on the global recognition of committee’s 1st programme is on “All about MSMEs”.
CMA Course and the abundant opportunities available for Shri Karumuri Srinivas, Zonal Head (South-2),National
the CMA Graduates throughout India and abroad. While Industries Corp Ltd informed that as per the revised criteria,
concluding he advised the students to love their parents and a unit with Rs 50 crore of investment and Rs 250 crore of
faculties who shape the bright career of the professional turnover will fall under the ‘medium’ enterprise category.
students. CMA Balwinder Singh, President – ICAI who Besides, a manufacturing and services unit with Rs 1 crore of
has inaugurated the Online Oral Coaching Classes, in his investment and Rs 5 crore of turnovers will be classified as
Inaugural Speech, briefed on the effective measures to be ‘micro’ whereas a unit involving Rs 10 crore of investment
taken by the students during this COVID – 19 pandemic and Rs 50 crore of turnovers will be categorised as a ‘small’
situations to complete their CMA Course by attending the enterprise. CMA P. Udaya Shanker discussed various points
Classes through online mode which is the only alternative. which are very informative under the topic ‘Ease of doing
He also advised the students to refer the Institute Website business. He detailed about Procedures, time, cost factors
for the updated information on all matters and to utilize to understand which project to suggest, Starting business
‘E – Services’ & ‘E – Library’ while pursuing their CMA with minimum capital, financials, dealing with construction
Courses. CMA Sankar P Panicker, Vice Chairman – SIRC permits, procedures, Getting electricity-alternate source of
in his address highlighted the need on ‘ Adaptability to the power, Registering property-legal issues, Getting credit-
Change’ in the prevailing scenario of COVID – 19. He also funding option, Protecting investors, paying taxes, Trading
advised that for getting good placements, proper training across borders, Enforcing contracts-legal process, Resolving
in the respective field is very much necessary and students Insolvency etc on August 5, 2020. CMA M. Kameswara Rao,
should have basic fundamental knowledge in their working PCMA and Insolvency Professional discussed about planning
area to enhance their professional career. an audit of Cost statements, Cost Audit Documentation,
Overall Objectives of the Independent Cost Auditor, e-
Signatures and UDIN, Relevance of Cost Auditing Standards
etc on August 15, 2020. CMA A.V.N.S. Nageswara Rao garu
briefed the topics ‘Technical Cell (Cost Audit & Statutory
Compliance, Comment on the Physical Visit to the plants,
Document/Records/Statements & Assurance about the
accuracy and authenticity, Physical Inventory Count on a date
other than the date of the Financial Statements, Formation/
Expression of Opinion etc. CMA Himavidya, Secretary-
HCCA welcomed the dignitaries to the online programme.
CMA M. Venkateshwarlu – Chairman, HCCA has given
inaugural address and CMA Khaja Jalal Uddin – Vice-
President, HCCA introduced the Panelists and Moderator
to the delegates on August 16, 2020. CMA Mallikharjuna
Gupta played the role of moderator for the technical session.

112 The Management Accountant - October 2020 www.icmai.in

He started the technical session, with a brief explanation the students to adapt to online classes and prepare well for
about MSMEs, importance of MSMEs, MSMEs role in the examination. The Chapter entered into an MoU with
Economy etc. Shri Prajit Chandra Sekhar garu explained Suguna College of Arts & Science, Coimbatore on 17th
about Receivables Exchange of India –TreDs, Government August, 2020, for Foundation Course Satellite Centre. The
Efforts taken to ease the problems, Background & Evolution MoU was signed by our Chairman as party of First Part and
of TReDs, About RXIL, Reverse Factoring Process Flow College Chairman as Party of Second Part.
Interest Borne by Buyer, Buyer – Seller link, TReDS On August 27, 2020, the Chairman conducted an
Workflow, Benefits for MSME Sellers, Benefits or Buyers, online Career Counselling Program to the students of Sri
benefits for Financiers, Digital on boarding & Registration Ramakrishna College of Arts & Science, Coimbatore.
Process. Practicing Forum’s Sub-committee has discussed CMA Course Awareness Program was conducted on
about the empowerment of New practicing Cost Accountants line on August 26, 2020 by Chairman to the Students of
in their sub-committee meeting on August 20, 2020. They Hindustan College of Arts & Science, Coimbatore. Around
have designed a course covering all the avenues for the 790 students participated in this online program. Faculty
benefit of Practicing Cost and Management Accountants. Development Program on “Opportunities for CMA aspirants
They have planned first session on Company Law Works. – Way to Success” was conducted online by Chairman
CMA P. Chandra Sekhara Reddy has discussed about course on 13.08.2020. This program was organised jointly with
coverage, Change of Name and Objectives of the Company Department of Commerce, Hindustan College of Arts &
in his first session. On August 23, 2020 a programme on Role Science, Coimbatore.
of CMA & CS in MSME was conducted. CS Amit Gupta,
Practicing Company Secretary had detailed about Role of
Professional in MSME, MSME Framework, Overview of
MSMED Act, 2006, Classification under MSMED ACT,
2006, who is eligible to register under MSME, Registration
Process, Benefits etc. Md. Riazuddin has discussed about
CMA and CSs’ Mission, Vision and Technology towards
Global Capacity Building – He explained how to prepare
Project Reports, Index/contents. On August 27, 2020, CMA
B. Mallikarjuna Reddy elaborated the topics like Work
Areas for CMAs, Technology, Model to Adapt, Cloud Based
Applications, Cloud considerations, Basic Tools, Website,
E-mail, Social Media, Meetings, Customer Relationship
Management, ASP Solutions etc. On August 28, 2020 the
chapter conducted a programme on Personal Investment
Planning during a Pandamic and this programme is started
with the welcome address by CMA Lavanya Kanduri,
Chairperson-Members’ Services sub-Committee. CMA M.
Venkateshwarlu, Chairman complimented the efforts of
Lavanya Kanduri, Chairperson-Members’ Services Sub-
Committee for organizing this type of programme. CMA
U. Bhanu prakash introduced the speaker to the delegates.
Shri Suresh K.P. mentioned two key mantras that everyone
has to follow while investing money. First mantra is about
protecting one’s Savings and the second mantra is about
growing Savings. On August 30, 2020 the chapter conducted
a programme on Today’s MSMEs- Tomorrow’s MNCs and
CMA Balwinder Singh- President of ICAI was invited as
the Chief guest and CMA Biswarup Basu-Vice President
of ICAI, CMA (Dr) K.Ch. A.V.S.N. Murty- CCM of ICAI,
CS(Dr) Ashalada Rao, CCM of ICSI as guests of honour. Shri
Ajay Thakur, Head BSE SME at BSE Ltd was invited as the
keynote speaker for the technical session. An E-souvenir was
released on this occasion from the hand of CMA Balwinder
Singh, President of The Institute.



The Chapter commenced the 90th Session of Oral coaching

for December,2020 batch Foundation , Intermediate and
Final from 31st July, 2020 on online mode in view of
COVID 2019 situation. The classes were inaugurated by
our Chairman. In his inaugural address Chairman advised

www.icmai.in October 2020 - The Management Accountant 113

at 6:00pm to 8:30pm through Google Digital platform. CMA
Pradeep Deshpande, Secretary – PCA Chapter has welcomed
Past President CMA Brij Mohan Sharma, Speakers CMA
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA Dhananjay Kumar Vatsyayan, CMA Sagar Malpure and
NAVI MUMBAI CHAPTER all the audience participated in the webinar. CMA Jayant
Hampiholi, Chairman of PCA Chapter has introduced
The Chapter conducted a Webinar CEP programme the eminent speaker CMA Dhananjay Kumar Vatsyayan,
on “MSME – Survival & Growth through Strategic Cost Practicing Cost Accountant & Vice-Chairman, PCA Chapter.
Management” on 20th September, 2020 via Google Meet CMA Pradeep Deshpande introduced the speaker CMA Sagar
app monitored by Secretary CMA Ajay Mohan. The speaker Malpure, Member of the Managing Committee. The Chapter
for this event was Dr Bhavesh Patel Retired Professor of conducted the webinar on “How to Ace the Stock Market”
Finance XLRI, Meyers USA. CMA Sirish Mohite, Chairman on Saturday, August 8, 2020 at 6:00pm to 8:30 pm through
of the Chapter, introduced the speaker and the importance of Google Digital platform. CMA Jayant Hampiholi, Chairman
the topic in today’s COVID 19 economic situations, to the of PCA Chapter has introduced the eminent speaker CMA
audience. The speaker elaborated on the following by giving CS Hanif Shaikh, Advocate – Bombay High Court. CMA
practical examples and real life case studies while deliberating Hanif Shaikh in his speech focused on Stock Market and
on Importance and Vulnerability of MSMEs + Strategies for its Functions such as Secondary Market, Liquidity, Price
MSMEs --Do we need a Costing System-True and Fair Cost- Discovery, Capital Formation, Cost Effective, Transparent,
-How to get True (Accurate) Cost Data--Care one must take Well Regulated, and Valuation etc. He further explained on
in determining it --Costing for Decision-Making--Marginal Misconceptions and Myths in the market. He has shared
costing--Relevant Costing---Budgeting Cost control-- the beautiful words of the famous economist Mr. Warren
Efficient Cost Management vs. Strategic Cost Management- Buffet. Mr. Buffet said, “Be greedy when others are fearful,
-Strategic Cost Management and Other Current Topics— and fearful when others are greedy. The Chapter conducted
Pricing Strategies—Value Chain Analysis--Corporate Posture inaugural function of 19th Batch of Online Coaching classes
and Strategic Position Analysis – Executional Cost Drivers on 15th July 2020 through Google Digital Platform. CMA
–Target Costing & Quality Cost Analysis. The audience Jayant Hampiholi, Chairman of PCA Chapter has welcomed
not only consisted of Cost Accountants in Employment and and introduced the Chief Guest CMA Sanjay Kushvaha,
Practice but it was nice to see Retired Costing Professional Assistant General Manager, Polycab Cooper Standards Pvt.
form Industry viz . CMA Shankar Chaudhari Ex- Director Ltd. The Chapter has celebrated Flag Hoisting Ceremony on
of Airport Authority of India, CMA Shyamal Bhattacharya the occasion of the 74th Independence Day of India on 15th
Retired Ex- Director BPCL, and a host of other such August 2020 at CMA Bhawan by keeping social distancing.
members listened with attention and were deeply enlightened On this occasion CMA L D Pawar, Past Chairman of WIRC
with the facts. The CEP was blessed by the presence of G. hoisted the flag. CMA Pradeep Deshpande – Secretary of
Ramakrishnan Executive Director of Galaxy Surfactants PCA Chapter has said, today on 15th August 2020 India is
Ltd and he very nicely summarised the talk and highlighted celebrating its 74th Independence Day and we are proud
the importance of cost of missed opportunity. The lucid to say that we earned our freedom 73 years back. CMA L
presentation & the interactive workshop came to an end with D Pawar has shared his thoughts before the students. The
the speaker being felicitated by CMA Vivek Bhalerao, PD Chapter conducted the webinar on “Role of Rating Agencies
Committee Chairman of the Chapter and the vote of thanks in Project Funding and Type of Rating Agencies in India”
being proposed by CMA M K Narayanaswamy, Ex Vice on Friday, August 21, 2020 at 6:00pm to 8:30 pm through
Chairman of the Chapter. Google Digital platform. CMA Jayant Hampiholi, Chairman
– PCA Chapter has welcomed all the participants and
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA introduced the Chief Guest CMA Saikat Roy, Director - Care
NASIK OJHAR CHAPTER Ratings Ltd. CMA Abhijeet Deshmukh, Jt. Secretary – PCA
Chapter introduced the speaker CMA Mahendra Bhombe,
The Chapter organized a live session for members and Member – WIRC of ICAI. CMA Saikat Roy in his inaugural
other stakeholders on 9th Sept. 2020 on “Data Analytics”. speech talked about significant share in Public and Private
Chairman of chapter, CMA Kailash Shinde welcomed the Placements for FY 2021.
speakers and the participants. The speaker for the session
CMA Abhijeet Deshmukh proposed vote of thanks. The
was Dr. CMA Shilpa Parkhi, a Practicing Cost Accountant
Chapter conducted the webinar on “Blockchain Insights” on
and Past Chairman of the Chapter. She explained the types
Saturday, August 29, 2020 at 6:00 pm to 8:30 pm through
of data analytics to improve the decision making process,
Google Digital platform. CMA Ashish Deshmukh, Past
how to choose the most appropriate data analytic tools etc.
Chairman – PCA Chapter welcomed all the participants and
All Committee members took an active participation for this
introduced the speaker CMA Sagar Malpure, Senior Engineer
session. The session ended with a vote of thanks given by
– Eaton Technologies Pvt. Ltd. and Managing Committee
CMA Nikhil S.Pawar.
Member of PCA Chapter. CMA Sagar Malpure in his speech
focused on what is Blockchain. He said there are two part of
PIMPRI CHINCHWAD AKURDI CHAPTER Blockchain. First is Centralised and second is Decentralised.
He briefly gave some examples on it. He also shown some
The Chapter conducted the webinar on “Soft Skills. The video clips related to topic. The webinar ended with vote of
Power of Subconscious Mind” on Saturday, August 1, 2020 thanks.

114 The Management Accountant - October 2020 www.icmai.in

on the 1st day of April, 1997 and ending on the 31st
DIRECT TAXES day of March, 2006.
M/s Softzone Tech Park Ltd. situated at Survey
� Circular No 17/2020 dated 29th Sep 2020: No.80/1, 81/1, 81/2, Bellandur village, Varthur Hobli,
Guidelines under section 194-O(4) and section Bangalore – 560037 is developing an Industrial Park
206C (1-1) of the Income-tax Act, 1961.Finance at Survey No.80/1, 81/1, 81/2, Bellandur village,
Act, 2020 inserted a new section 194-0 in the Income- Varthur Hobli, Bangalore – 560037. The Central
tax Act 1961 (hereinafter referred to as “the Act”) Government has approved the said Industrial Park
which mandates that with effect from 1 st day of vide Ministry of Commerce and Industry letter
October, 2020, an e-commerce operator shall deduct No.15/23/2006-IP&ID dated 25th July, 2006. Now,
income-tax at the rate of one per cent (subject to the therefore, in exercise of the powers conferred by
provisions of proposed section 197B of the Act) of the clause (iii) of sub-section (4) of section 80-IA of the
gross amount of sale of goods or provision of service said Act, the Central Government hereby notifies the
or both, facilitated through its digital or electronic undertaking, being developed and being maintained
facility or platform. However, exemption from the and operated by M/s Softzone Tech Park Ltd, as an
said deduction has been provided in case of certain industrial park for the purposes of the said clause (iii)
individuals or Hindu undivided family fulfilling subject to the terms and conditions mentioned in the
specified conditions. This deduction is required to annexure of the notification.
be made at the time of credit of amount of such sale
or service or both to the account of an e-commerce
participant or at the time of payment thereof to such � Notification No 73/2020 dated 10th Sep 2020:
e-commerce participant, whichever is earlier. In exercise of the powers conferred by clause (46)
of section 10 of the Income-tax Act, 1961 (43 of
Finance Act, 2020 also inserted sub-section (1 H) 1961), the Central Government hereby notifies for
in section 206C of the Act which mandates that the purposes of the said clause, ‘District Mineral
with effect from 1 st day of October, 2020 a seller Foundation Trust’ as specified in the schedule to this
receiving an amount as consideration for sale of notification, constituted by Government in exercise of
any goods of the value or aggregate of such value powers conferred under section 9(B) of the Mines and
exceeding fifty lakh rupees in any previous year to Minerals (Development and Regulation) Amendment
collect tax from the buyer a sum equal to 0.1 per cent Act, 2015 (10 of 2015) as a ‘class of Authority’, in
(subject to the provisions of proposed sub-section respect of the following specified income arising to
(lOA) of the section 206C of the Act) of the sale that Authority.
consideration exceeding fifty lakh rupees as income-
tax. The collection is required to be made at the time (a) Contribution by lease Holder to DMF as per the
of receipt of amount of sales consideration. Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015;
Sub-section (4) of section 194-0 and sub-section (I-I)
of section 206C of the Act empowers the Board (with (b) Interest received from lease holders for late
the approval of the Central Government) to issue payment;
guidelines for the purpose of removing difficulties. (c) Any Penalty charged to lease holder;
Various representations have been received by the (d) Income from Interest on fund available under
Board for issuing guidelines for removing certain DMF;
difficulties. In exercise of power contained under
(e) Interest received on Saving Bank Accounts; and
sub-section (4) of section 194-0 of the Act and sub-
section (I-I) of section 206C of the Act, the Board, (f) Interest received on Excess Fund invested in Term
with the approval of the Central Government, hereby Deposit.
issues the guidelines.
This notification shall be effective subject to
� Notification No 72/2020 dated 8th Sep 2020: the conditions that each of the District Mineral
Whereas the Central Government in exercise of the Foundation Trust-
powers conferred by clause (iii) of sub-section(4) (a) shall not engage in any commercial activity;
of section 80-IA of the Income-tax Act, 1961 (43 of (b) activities and the nature of the specified income
1961) (hereinafter referred to as the said Act), has shall remain unchanged throughout the financial
framed and notified a scheme for industrial park, vide years; and
notification of the Government of India in the Ministry
(c) shall file return of income in accordance with the
of Commerce and Industry (Department of Industrial
provision of clause (g) of sub-section (4C) of section
Policy and Promotion), number S.O.354(E), dated
139 of the Income-tax Act, 1961.
the 1st day of April, 2002, for the period beginning

www.icmai.in October 2020 - The Management Accountant 115

(d) shall file the Audit report along with the Return, territorial area or persons or class of persons or
duly verified by the accountant as provided in incomes or class of incomes or cases or class of
explanation to section 288(2) of the Income-tax cases, as may be specified by the Board. For the
Act, 1961 along with a certificate from the chartered purposes of this Scheme, the Board may set up- (i)
accountant that the above conditions are satisfied. a National Faceless Appeal Centre to facilitate the
This notification shall be deemed to have been applied conduct of e-appeal proceedings in a centralised
for the assessment year 2018-2019 and 2019-2020 manner, which shall be vested with the jurisdiction
and shall apply with respect to the assessment years to dispose appeal in accordance with the provisions
2020-2021, 2021-2022 and 2022-2023 in respect of of this Scheme (ii) Regional Faceless Appeal Centres
Trusts mentioned in the notification. as it may deem necessary to facilitate the conduct of
e-appeal proceedings, which shall be vested with the
jurisdiction to dispose appeal in accordance with the
� Notification No 74/2020 dated 11th Sep 2020: provisions of this Scheme. (iii) Appeal units, as it may
In exercise of the powers conferred by clause (47) deem necessary to facilitate the conduct of e-appeal
of section 10 of the Income-tax Act, 1961 (43 of proceedings, to perform the function of disposing
1961), the Central Government hereby notifies the appeal, which includes admitting additional grounds
Infrastructure Debt Fund namely, the ‘L&T Infra of appeal, making such further inquiry as thinks fit,
Debt Fund (PAN: AACCL4493R)’ for the purposes directing the National e-Assessment Centre or the
of the said clause, for the assessment year 2018- Assessing Officer, as the case may be, for making
2019 and subsequent years subject to the following further inquiry, seeking information or clarification
conditions, namely:- on admitted grounds of appeal, providing opportunity
(i) that the Infrastructure debt fund shall conform to of being heard to the appellant, analysis of the
and comply with the provisions of the Income-tax material furnished by the appellant, review of draft
Act, 1961, rule 2F of the Income-tax Rules, 1962 and order, and such other functions as may be required for
the conditions provided by the Reserve Bank of India the purposes of this Scheme.
in this regard, and
(ii) that the Infrastructure debt fund shall file its return � Notification No 77/2020 dated 25th Sep 2020: In
of income as required by sub-section (4C) of section exercise of the powers conferred by sub-section (6C)
139 of the Income-tax Act, 1961 on or before the due of section 250 of the Income-tax Act, 1961 (43 of
date. 1961), for the purposes of giving effect to the Faceless
Appeal Scheme, 2020 made under sub-section (6B)
� Notification No 75/2020 dated 22nd Sep 2020: In of section 250 of the Act, the Central Government
exercise of the powers conferred by section 295 read hereby makes the following directions, namely:-
with section 195 and rule 5 of the First Schedule to
the Income- tax Act, 1961 (43 of 1961), the Central The provisions of clause (16A) of section 2, section
Board of Direct Taxes, hereby, makes the following 120, section 129, section 131, section 133, section
rules further to amend the Income-tax Rules, 1962. 134, section 136 and Chapter XX of the Act shall
In the Income-tax Rules, 1962 (hereinafter referred to apply to the procedure in appeal in accordance with
as the principal rules), in rule 29B the said Scheme subject to the various exceptions,
(a) for the words “banking company”, wherever they modifications and adaptations.
occur, the words “banking company or an insurer”
shall be substituted; � Notification No 78/2020 dated 25th Sep 2020: In
(b) after sub-rule (5), the following explanation shall exercise of the powers conferred under section 118
be inserted, namely “Explanation for the purposes of and sub- section (1) and (2) of section 120 of the
this rule, “insurer” shall have the same meaning as Income-tax Act, 1961 (43 of 1961), the Central Board
assigned to it in sub-clause (d) of clause (9) of section of Direct Taxes hereby makes the amendments in the
2 of the Insurance Act, 1939 (4 of 1938).” notification of the Government of India, Ministry
In the principal rules, for Form 15C, the same shall be of Finance, published in the Gazette of India,
substituted. Extraordinary, Part II, section 3, sub-section (ii) vide
no. S.O. 2753 (E) dated the 22nd October, 2014.

� Notification No 76/2020 dated 25th Sep 2020: In
exercise of the powers conferred by sub-section � Notification No. 79/2020 dated 25th Sep 2020: In
(6B) of section 250 of the Income-tax Act, 1961 exercise of powers conferred under sub-section (2)
(43 of 1961), the Central Government hereby of section 143 of Income-tax Act, 1961 (43 of 1961)
makes the Scheme, this Scheme may be called the (the Act) read with Rule 12E of the Income-tax Rules,
Faceless Appeal Scheme, 2020. The appeal under 1962, the Central Board of Direct Taxes hereby
this Scheme shall be disposed of in respect of such authorises the Assistant Commissioner/Deputy

116 The Management Accountant - October 2020 www.icmai.in

Commissioner of Income-tax (National e-Assessment 3297(E), dated the 25th September, 2020 in the
Centre) having his headquarters at Delhi, to act as the Gazette of India, Extraordinary, Part II, Section 3,
Prescribed Income-tax Authority for the purpose of Sub-section (ii), the Central Board of Direct Taxes
sub-section (2) of section 143 of the Act, in respect (hereinafter referred to as the Board) hereby directs
of returns furnished under section 139 or in response that the Income-tax authorities of the Regional
to a notice issued under subsection (1) of section 142 Faceless Appeal Centres (hereinafter referred to as
of the said Act, for the purpose of issuance of notice the RFAC) specified in column (2) of the Schedule
under sub section (2) of section 143 of the said Act. below, having their headquarters at the places
mentioned in column (3) of the said Schedule, shall
exercise the powers and perform functions, in order to
� Notification No 80/2020 dated 25th Sep 2020: In
facilitate the conduct of Faceless Appeal Proceedings,
exercise of powers conferred by sub-sections (1)
in respect of such territorial areas or persons or class
and (2) of section 120 of the Income-tax Act, 1961
of persons or incomes or class of incomes or cases
(43 of 1961) (hereinafter referred to as the Act)
or class of cases as specified by the Board in para
and to give effect to the Faceless Appeal Scheme,
3 of the Scheme, with respect to appeals filed under
2020 (hereinafter referred to as the Scheme) made
section 246A or 248 of the Act, pending or instituted
under sub-section (6B) of section 250 of the Act
on or after 25.09.2020.
and published vide notification No. 76 of 2020 of
Government of India in the Ministry of Finance,
Department of Revenue, number S.O. 3296(E), dated INDIRECT TAXES
the 25th September, 2020 in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (ii)
read with notification issued under sub-section (6C)
of section 250 of the Act and published vide number
77 of 2020 of Government of India in the Ministry � Notification No. 33/2020–Customs dated 7th Sep
of Finance, Department of Revenue, number S.O. 2020: In exercise of the powers conferred by sub-
3297(E), dated the 25th September, 2020 in the section (1) of section 25 of the Customs Act, 1962
Gazette of India, Extraordinary, Part II, Section 3, (52 of 1962) and sub-section (12) of section 3 of the
Sub-section (ii), the Central Board of Direct Taxes Customs Tariff Act, 1975 (51 of 1975), the Central
(hereinafter referred to as the Board) hereby directs Government, on being satisfied that it is necessary
that the Income-tax authorities of the National in the public interest so to do, hereby makes the
Faceless Appeal Centre (hereinafter referred to as the following further amendments in the notification of
NFAC) specified in column (2) of the Schedule below, the Government of India, in the Ministry of Finance
having its headquarter at Delhi, shall exercise the (Department of Revenue), No. 50/2017-Customs,
powers and perform functions, in order to facilitate dated the 30th June, 2017, published in the Gazette of
the conduct of Faceless Appeal Proceedings, in India, Extraordinary, Part II, Section 3, Sub-section
respect of such territorial areas or persons or class (i), vide number G.S.R. 785(E), dated the 30th June,
of persons or incomes or class of incomes or cases 2017.
or class of cases as specified by the Board in para In the said notification, in the Table, against S. No.
3 of the Scheme, with respect to appeals filed under 258, in column (3), for the word “M-feature”, the
section 246A or 248 of the Act, pending or instituted words “Paper Based Taggant, including M-feature,”
on or after 25.09.2020. shall be substituted.

� Notification No. 81/2020 dated dated 25th Sep � Notification No. 34/2020-Customs dated 17th
2020: In exercise of powers conferred by sub- Sep 2020: Seeks to further amend notification No.
sections (1) and (2) of section 120 of the Income- 50/2017-Customs dated 30.06.2017 so as to reduce
tax Act, 1961 (43 of 1961) (hereinafter referred to the Basic Customs Duty on Lentils (Mosur) for the
as the Act) and to give effect to the Faceless Appeal period from 18th September, 2020 to 31st October,
Scheme, 2020 (hereinafter referred to as the Scheme) 2020 In exercise of the powers conferred by sub-
made under sub-section (6B) of section 250 of the section (1) of section 25 of the Customs Act, 1962
Act and published vide notification No. 76 of 2020 (52 of 1962) and sub-section (12) of section 3 of the
of Government of India in the Ministry of Finance, Customs Tariff Act, 1975 (51 of 1975), the Central
Department of Revenue, number S.O. 3296(E), dated Government, on being satisfied that it is necessary
the 25th September, 2020 in the Gazette of India, in the public interest so to do, hereby makes the
Extraordinary, Part II, Section 3, Sub-section (ii) following further amendments in the notification of
read with notification issued under sub-section (6C) the Government of India, in the Ministry of Finance
of section 250 of the Act and published vide number (Department of Revenue), No. 50/2017- Customs,
77 of 2020 of Government of India in the Ministry dated the 30th June, 2017, published in the Gazette of
of Finance, Department of Revenue, number S.O. India, Extraordinary, Part II, Section 3, Sub-section

www.icmai.in October 2020 - The Management Accountant 117

(i), vide number G.S.R. 785(E), dated the 30th June, of Auto Let Export Order under the Export Cargo
2017. Clearance System.
In the said notification
(a) in the first proviso, for clause (e), the following � Circular No. 42/2020 – Customs dated 29th Sep
clause shall be substituted namely: - 2020: Amending Circular 38/2016-Customs on
“(e) the goods specified against serial numbers 21E Guidelines for Provisional Assessment under Section
and 21F of the said table, 18 of the Customs Act 1962.
(i) during the period 1st September, 2020 to 17th
September, 2020” � Circular No.43/2020-Customs dated 30th Sep
(ii) after the 31st day of October, 2020.” 2020: Implementation of the Sea Cargo Manifest and
Transshipment Regulations.
(b) in the second proviso, after the figure and letter
“21D,”, the figure and letter “21E,”, shall be inserted.
� Notification No. 35/2020-Customs dated 30th
Sep 2020: Seeks to further amend notification No. � Notification No. 65/2020 – Central Tax date 1st Sep
50/2017-Customs dated 30th June, 2017 so as to 2020: In exercise of the powers conferred by section
prescribe 5% BCD on Open Cell for LED/LCD TV 168A of the Central Goods and Services Tax Act, 2017
Panels..In exercise of the powers conferred by sub- (12 of 2017), read with section 20 of the Integrated
section (1) of section 25 of the Customs Act, 1962 Goods and Services Tax Act, 2017 (13 of 2017), and
(52 of 1962) and sub-section (12) of section 3 of the section 21 of the Union Territory Goods and Services
Customs Tariff Act, 1975 (51 of 1975), the Central Tax Act, 2017 (14 of 2017), the Government, on the
Government, on being satisfied that it is necessary recommendations of the Council, hereby makes the
in the public interest so to do, hereby makes the following further amendment in the notification of
following further amendments in the notification of the Government of India in the Ministry of Finance
the Government of India, in the Ministry of Finance (Department of Revenue), No. 35/2020-Central Tax,
(Department of Revenue), No. 50/2017- Customs, dated the 3rd April, 2020. In the said notification, in
dated the 30th June, 2017, published in the Gazette of the first paragraph, in clause (i), the following proviso
India, Extraordinary, Part II, Section 3, Sub-section shall be inserted,
(i), vide number G.S.R. 785(E), dated the 30th June, Provided that where, any time limit for completion
2017. or compliance of any action, by any authority, has
In the said notification, - (i) in the Table, against S. been specified in, or prescribed or notified under
No. 515A, for the entry in column (4), the entry “5%” section 171 of the said Act, which falls during the
shall be substituted; (ii) in the first proviso, clause (d) period from the 20th day of March, 2020 to the 29th
shall be omitted. day of November, 2020, and where completion or
This notification shall come into force with effect compliance of such action has not been made within
from the 1st day of October, 2020. such time, then, the time limit for completion or
compliance of such action, shall be extended upto the

30th day of November, 2020.
� Circular No. 39/2020 – Customs dated 4th Sep

2020: Customs procedure for export of cargo in
containers and closed bodied trucks from ICDs/CFSs � Notification No. 66/2020 – Central Tax dated 21st
through Land Customs Stations (LCSs). Sep 2020: In exercise of the powers conferred by
section 168A of the Central Goods and Services

Tax Act, 2017 (12 of 2017), read with section 20 of
� Circular No.40/2020-Customs dated 4th Sep the Integrated Goods and Services Tax Act, 2017
2020: All India roll-out of Faceless Assessment. (13 of 2017), and section 21 of the Union Territory
Circulars No.28/2020-Customs, dated 05.06.2020 and Goods and Services Tax Act, 2017 (14 of 2017), the
No. 34/2020-Customs, dated 30.07.2020, launching Government, on the recommendations of the Council,
Phases I and II of Faceless Assessment, respectively, hereby makes the following further amendment in
under the umbrella of the next generational Turant the notification of the Government of India in the
Customs programme. Ministry of Finance (Department of Revenue), No.
35/2020-Central Tax, dated the 3rd April, 2020. In the
� Circular No.41/2020-Customs dated 7th Sep 2020: said notification, in the first paragraph, in clause (i),
Auto Let Export Order under Express Cargo Clearance after the first proviso, the following proviso shall be
System (ECCS). In order to facilitate export by inserted,
courier and to enhance global competitiveness of Provided further that where, any time limit for
Indian exporters Board has decided to allow facility completion or compliance of any action, by any

118 The Management Accountant - October 2020 www.icmai.in

person, has been specified in, or prescribed or notified In the said notification, in the first paragraph,
under sub-section (7) of section 31 of the said Act (i) for the words “a financial year”, the words and
in respect of goods being sent or taken out of India figures “any preceding financial year from 2017-18
on approval for sale or return, which falls during onwards” shall be substituted
the period from the 20th day of March, 2020 to the
30th day of October, 2020, and where completion or (ii) after the words “goods or services or both to a
compliance of such action has not been made within registered person”, the words “or for exports” shall
such time, then, the time limit for completion or be inserted.
compliance of such action, shall stand extended upto
the 31st day of October, 2020. � Notification No. 71/2020 – Central Tax dated 30th
Sep 2020: Seeks to amend notification 14/2020-
� Notification No. 67/2020 – Central Tax dated 21st Central Tax to extend the date of implementation
Sep 2020: Seeks to grant waiver / reduction in late of the Dynamic QR Code for B2C invoices till
fee for not furnishing FORM GSTR-4 for 2017-18 01.12.2020.
and 2018-19, subject to the condition that the returns
are filled between 22.09.2020 to 31.10.2020. � Notification No. 72/2020 – Central Tax dated 30th
Sep 2020: Seeks to make the Eleventh amendment
� Notification No. 68/2020 – Central Tax dated 21st (2020) to the CGST Rules. In the Central Goods
Sep 2020: In exercise of the powers conferred by and Services Tax Rules, 2017 (hereinafter referred
section 128 of the Central Goods and Services Tax to as the said rules), in rule 46, after clause (q), the
Act, 2017 (12 of 2017) (hereafter in this notification following clause shall be inserted, namely:- “(r)
referred to as the said Act), the Government, on the Quick Reference code, having embedded Invoice
recommendations of the Council, hereby waives the Reference Number (IRN) in it, in case invoice has
amount of late fee payable under section 47 of the been issued in the manner prescribed under sub-rule
said Act which is in excess of two hundred and fifty (4) of rule 48.”.
rupees, for the registered persons who fail to furnish In the said rules, in rule 48, in sub-rule (4), the
the return in FORM GSTR-10 by the due date but following proviso shall be inserted: “Provided that
furnishes the said return between the period from 22 the Commissioner may, on the recommendations of
th day of September, 2020 to 31st day of December, the Council, by notification, exempt a person or a
2020.” class of registered persons from issuance of invoice
under this sub-rule for a specified period, subject to
such conditions and restrictions as may be specified
� Notification No. 69/2020 – Central Tax dated in the said notification.
30th Sep 2020: Seeks to amend notification no.
41/2020-Central Tax dt. 05.05.2020 to extend due In the said rules, in rule 138A, for sub-rule (2),
date of return under Section 44 till 31.10.2020. the following sub-rule shall be substituted: “(2)
In case, invoice is issued in the manner prescribed
under sub-rule (4) of rule 48, the Quick Reference
� Notification No. 70/2020 – Central Tax dated (QR) code having an embedded Invoice Reference
30th Sep 2020: In exercise of the powers conferred Number (IRN) in it, may be produced electronically,
by sub-rule (4) of rule 48 of the Central Goods and for verification by the proper officer in lieu of the
Services Tax Rules, 2017, the Government, on the physical copy of such tax invoice.”
recommendations of the Council, hereby makes the
following further amendments in the notification of
the Government of India in the Ministry of Finance
(Department of Revenue), No. 13/2020 – Central Sources:
Tax, dated the 21st March, 2020. incometax.gov.in, cbic portal

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Day & Date (Time: 10.00 A.M. to 1.00 P.M.) (Time: 2.00 P.M. to 5.00 P.M.)
(Group – I) (Group – II) (Group – III) (Group – IV)
Financial Accounting (P-05) ------------------- Corporate Laws & Compliance (P-13) -------------------
10th December, 2020
Friday, Operations Management & Strategic
------------------- ------------------- Corporate Financial Reporting (P-17)
11th December, 2020 Management (P-09)
Laws & Ethics (P-06) ------------------- Strategic Financial Management (P-14) -------------------
12th December, 2020
Sunday, Cost & Management Accounting and
------------------- ------------------- Indirect Tax Laws & Practice (P-18)
13th December, 2020 Financial Management (P-10)
Direct Taxation (P-07) ------------------- Strategic Cost Management – Decision Making (P-15) -------------------
14th December, 2020
------------------- Indirect Taxation (P-11) ------------------- Cost & Management Audit (P-19)
15th December, 2020
Cost Accounting (P-08) ------------------- Direct Tax Laws and International Taxation (P-16) -------------------
16th December, 2020
Thursday, Strategic Performance Management and Business
------------------- Company Accounts & Audit (P-12) -------------------
17th December, 2020 Valuation (P-20)
Group (s) Final Examination Intermediate Examination
One Group (Inland Centres) `1400/- `1200/-
(Overseas Centres) US $ 100 US $ 90
Two Groups (Inland Centres) `2800/- `2400/-
(Overseas Centres) US $ 100 US $ 90
1. Application Forms for Intermediate and Final Examination has to be filled up through online only and fees will be accepted through online mode only (including Payfee Module of IDBI Bank). No Offline form and DD
payment will be accepted for domestic candidate.
3. (a) Students can login to the website www.icmai.in and apply online through payment gateway by using Credit/Debit card or Net banking.
(b) Students can also pay their requisite fee through pay-fee module of IDBI Bank.
4. Examination form already submitted by the students for the Intermediate and Final Examinations, June, 2020 session will remain same for the Intermediate and Final Examinations to be held in December, 2020. Students
need not apply again.
5. Students who have submitted examination form for the Intermediate and Final Examinations, June, 2020 session are allowed to add their Group with payment of differential examination fee for appearing in the
Intermediate and Final Examinations to be held in December, 2020.
6. The students who have not enrolled for the Intermediate and Final Examinations, June, 2020 session may enroll afresh by submitting online examination form for December, 2020 term of examination.
7. Last date for receipt of Examination Application Forms is 10 th October, 2020.
8. The provisions of Direct Tax Laws and Indirect Tax Laws, as amended by the Finance Act, 2019, including notifications and circulars issued up to 31 st May, 2020, are applicable for December, 2020 term of examination for
the Subjects Direct Taxation, Indirect Taxation (Intermediate), Direct Tax laws and International Taxation and Indirect Tax Laws & Practice (Final) under Syllabus 2016. The relevant assessment year is 2020-21. For
statutory updates and amendments please refer to: https://icmai.in/studentswebsite/Syl-2016.php
9. Companies (Cost Records and Audit) Rules, 2014 as amended till 31st May, 2020 is applicable for December, 2020 examination for Paper 12- Company Accounts and Audit (Intermediate) and Paper 19 - Cost and
Management Audit (Final) under Syllabus 2016. For updates and amendments please refer to the link: https://icmai.in/studentswebsite/Syl-2016.php
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up to 31st May, 2020 are applicable for December, 2020 term of examination. Additionally, for applicability of ICDR, 2018 for Paper-13 - Corporate Laws & Compliance (Final) under Syllabus 2016 refer to relevant circular
in website for December, 2020 term examination by following link: https://icmai.in/studentswebsite/Syl-2016.php
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notifications in website for December, 2020 term examination in the given link: https://icmai.in/studentswebsite/Syl-2016.php
12. Pension Fund Regulatory and Development Authority Act, 2013 is being included in Paper 6-Laws and Ethics (Intermediate) and Insolvency and Bankruptcy Code 2016 is being included in Paper 13 - Corporate Laws and
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13. Examination Centres: Adipur-Kachchh (Gujarat), Agartala, Agra, Ahmedabad, Akurdi, Allahabad, Asansol, Aurangabad, Bangalore, Baroda, Berhampur (Ganjam), Bhilai, Bhilwara, Bhopal, Bewar City(Rajasthan),
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Gurgaon, Guwahati, Haridwar, Hazaribagh, Howrah, Hyderabad, Indore, Jaipur, Jabalpur, Jalandhar, Jammu, Jamshedpur, Jodhpur, Kalyan, Kannur, Kanpur, Kolhapur, Kolkata, Kollam, Kota, Kottakkal
(Malappuram), Kottayam, Lucknow, Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, Naihati, Nasik, Nellore, Neyveli, Noida, Palakkad, Panaji (Goa), Patiala, Patna, Pondicherry, Port Blair, Pune, Raipur,
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15. Probable date of publication of result: To be announced in due course.
* For any examination related query, please contact exam.helpdesk@icmai.in
CMA Kaushik Banerjee

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Full Page 210 x 267 SM.indd 1 October 2020 - The Management Accountant 1/17/2020
123 11:35:20 AM
RNI NO. 12032/1966 Postal Registration No.: KOL RMS /139 /2019 – 2021
‘D’ Number MH/MR/TECH/47/10/2020-21
License to post without prepayment, WPP License No.: MR/TECH/WPP/KOL RMS/354/2019-21
Posted at Mumbai Patrika Channel Sorting Office, Mumbai - 400 001
Posting Dates: 10th, 11th & 12th day of each English month only
Date of Publication: 10th of every month

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F-141, Azad Marg, C-Scheme, Jaipur 302001

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