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Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi

RURALENTREPRENEU~DEVELOPMENT:ASTUDY

ON INDIAN HANDMADE PAPER INDUSTRY

Dr. Amit Kumar Dwivedi Academic Associate (Finance & Accounting Area)

Indian Institute of Management (11M-A) Vastrapur, Ahmedabad (Gujarat) India Mr. Punit Kumar Dwivedi

Ass!. Professor (Finance) Bankatlal Badruka College of Information Technology

Hyderabad, (Andhra Pradesh), India

ABSTRACT

The gloomiest facet of recession is large scale employee sacking by multinational companies throughout the world. As loss of employment opportunities and mass scale firing often leads an economy into a vicious circle of unemployment, poverty and severe recession. Thus to rescue economy from this vicious circle, it becomes indispensable for an economy to identify prospective employment opportunities and, to stabilize and strengthen its traditional root sector.

Although MUlti-National companies are pi/lars of both developed and developing countries in current era; but global impact ofsub - prime crises have substantially shaken these pillars, so when pillars become weak it becomes essential for a country to bolster its roots. Traditional small scale manufacturing sector although trivial in supporting economy,

, however is the root of manufacturing sector of the country, and being labor intensive and less investment demanding can be identified as a savior of current economic crises.

This paper is a contribution to study the big potential of traditional small scale handmade paper industry in India over more than a decade, hence to make world economies, to realize the prowess ofsmall when large corporate sector is showing plunge.

Introduction urban areas ofthe country. (Indian Economic Survey 2005-06). Popular for its art and craft small scale

industrial sector is an integral part of Indian I The Handmade Papermaking industry

economy since medieval times. Today also (HMPI) is one among the recognized small scale enterprises hold a vital position traditional small scale industrial sector of the

_~ . ~an economic scenario contributing country. In 1953 this industrial sector was --~- around 39 percent of the country's having 35 -40 units for production but today

manufacturing output and 34 per cent of its after half century Handmade paper industry exports in 2004-05. It provides employment is having more than 3000 production units, to around 29.5 million people in the rural and providing employment to nearly 37000

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people in rural and unorganized sector of the country (KVIC India).

The magnificent growth of Indian Small Scale Industrial sector and with it Growth of Indian HMPI since 1990-91 is shown in Table- I of appendix. The handmade paper units are scattered throughout the country with concentration most in the Kalapi (Jhansi, Uttar Pradesh), Sanganer (Rajasthan), Pune (Maharastra), Kurukshetra (Haryana), Mahaboobnagar (AndhraPradesh) and some clusters are in West Bengal.(KVIC, India) Today over the years, the handmade paper industry has its own reputation for craft paper as well as its converted products. Some HMPI products are recognized and are generally demanded in the market like carry bags, albums, stationery items, gift items, packaging items, drawing papers, greeting cards, invitation cards, business cards, miscellaneous fancy and decorative items etc.

With their prominent benefit of being environmental friendly, handmade paper and

o~

Handmade paper value added products enjoy exclusive demand among the elite customer segment of both national and international markets, thus providing, a strong impetus to investors in the country to ripe the fruits of this exclusive market of Traditional Handmade paper and its value added products. Further HMPI sector being less C'apital demanding {Project cost starting from 3,26,000 (KVIC, India)} and more labor intensive clearly signifies its scope as a potential employer ~and income generator, especially in rural and unorganized sector of the country. This paper is a contribution to recognize the growth trajectory of Indian handmade paper ind~stry, considering it as a paradigm for many other traditional small scale ind which could successfully

country at tough times of recession.

January - June 2009

Thus this paper emphasife on big wonders of the small in the country.

Literature Review

Small-scale industries occupy a place of strategic importance in Indian economy in view of its considerable contribution to employment, production and exports (Subrahmanya M.H. Bala, 2004). According to Indian planners, the principle of self employment was considered as important to a successful democracy as that of self government. In modern era of global competition, small scale industries try to become investment driven in addition to being labor intensive (Thangavel N, Elangovan R. 2008). Above all in a thickly populated country like India the small scale industry has been approached positively with the purpose of generating employment (Dutt, ' 2005). In India, the manufacture of handmade paper is a fairly well-established industry at the village or small-scale-industry level. It is an interesting technology simply because it uses only waste materials, including rags, tailor shop cloth cuttings and agro-wastes, in the process of making extremely high quality paper, paper products and card. For this reason, the industry has been described as "eco-friendly" and one of the outstanding examples of sustainable development. In addition, the technology is fairly simple to operate and requires no special training or certi'fication. The technology is also available in ready-made form and can be ordered on a tumkey basis. The making of handmade paper is a fairly 'old process in India going back several centuries. Paper-making was largely dominated by Muslim Kagzis.( PART I II: COMMUNITY.;.BASED SUSTAINABLE LIVELIHOODS) Although there have been \ many studies exploring the potential of small scale industries in the country, this paper is

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an effort to look exclusively at one of its inconsequential part which have a consequential importance especially in rural,I and unorganized sector of the country. Thus identifying the progress and prospects of Traditional small.scale HMPI sector of the country, and hence recognizing power of small at bad economic times.

Objectives of the Study

• To study the growth of Indian HMPI sector in terms of handmade paper and handmade paper value added products in India since 1990

• To study the growth of Indian Handmade· paper and Indian handmade paper value added product Industrial units since 1990

• To study the growth of employment in Indian HMPI sector since 1990

Research Methodology:

In this paper, a time series model is exploited to fit data. The technique consists of filtering out autocorrelation by an autoregressive integrated moving average (ARIMA) model, following the techniques of Box et at. (1994).Autoregressive integrated

Xl = VdV~r; is a starionarysenes, and

moving average (ARIMA) modeling is specific subset of univariate modeling, in which a time series is expressed in terms of past values of itself (the autoregressive component) plus current and lagged values of a 'white noise' error term (the moving average component). The main advantage of ARIMA forecasting is that it requires data on the time series in question only. First, this feature is advantageous if one is forecasting a large number of time series. Second, this avoids a problem that occurs sometimes with multivariate Models. (AIDAN MEYLER*, GEOFF KENNY AND TERRY QUINN).

The integrated component of an ARIMA model represents the number of times a time Series must be differenced to induce stationarity. A general notation for ARIMA Models is ARIMA (p,d,q)(P,D,Q), where p denotes the number of autoregressive Terms, q denotes the number of moving average terms and d denotes the number of times a series must be differenced to induce stationarity. P denotes the number of seasonal autoregressive components, Q denotes the number of seasonal moving average terms and D denotes the number

. of seasonal differences required to induce stationarity.

V" =(1~B)4 represents the number of regular differences and V~ =(1-B1t

represents the number of seasonal differences requtted to induce stationarity in Yt.

Analysis & Discussion

Model I (Production in Rs Lakhs) of Graph- , in appendix, clearly explicates the

~~~__ growth pattern of HMPI in India since 1990, ~gh till 1999 growth observed was at

decreasing rate, but after 1999 production

. of HMPI sector in country is observing an increase at increasing rate. This clearly indicates that more investment and high innovation in Indian HMPI will not only aid its production, but will also increase the demand of HMPI and HMPI value added products in national and international markets.

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This implicates that although less investment demanding, the production prospects of the sector are promising. (Further details of HMPI production model can be captured from Table II, III, IV, V, and VI of the appendix)

Graph: 1

40 EmploymentlnThollSB lld . __

30 MOclel_3 . /

:!o /'

10 ~ 0

~ ,ooo orkin Units.Model_2

... 3,000 .....------­CII

I ~ .c

E ~ooo :J Z

, .000

60 ~-';=:====================:::::: Produ ioninRsLakhs·

50,000 Model 1

40.000

30.000

:0.000

10000

D~~~~~~~~~~~~

-Ollserlled

Abbreviations Used ARIMA stands for Auto-Regressive

integrated Moving Average HI'vlPI stands for Handmade paper

Industry

Model II (Working units) of Graph- I in appendix, signifies the growth trajectory of HMPI working units since 1990, although as per ARIMA outcome the growth patterns of working units were mixed before beginning of year 2000, however after year 2000 the growth of HMPI units in India has been accelerating. This clearly indicates with strong investment impetus such units can be easily set up to boost the economic framework of Indian rural and unorganized sector. (Further details of HMPI working

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January - June 2009

units' model can be captured from Table II, III, IV, V, and VI of the appendix)

Model III (Employment in Thousand) of Graph- I in appendix shows great employment potential of Indian HMPI since 1990. This shows vast employment scope in Indian Traditional Small Scale Industrial Sector. ((Further details of HMPI Employment model can be captured from Table II, III, IV, V, and VI of the appendix)

Conclusion

India has a vast rural and unorganized economic sector. This sector is life blood of the country, providing income, employment and investment prospects to many in the country. Being less in lime light with large Multi National Sector this traditional small scale industrial sector is Recession­Resistant , as the products of this sector enjoy exclusive national and international demand.

The Indian HMPI sector clearly signifies the overall potential of traditional small scale industrial sector of the country. This sector not only have capability to stop the wealth drain from rural to urban areas, to establish strong industrial base of rural employment and rural growth, to reduce rural-urban disparity in the country but also ability to bolster the roots of the economy hence rescuing it from the economic hardships that are more volatile in organized sector of the country.

References

1. Ansley, C.F., R. Kohn. (1985): A structu red state space approach to computing the

a. Likelihood of an ARIMA process and its derivatives, Journal of Statistical Computation and Simulation. 21: 135-169.

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Dr. Amit Kumar Dwivedi, Mr. Punit Kumar Dwivedi

2. Box G.E.P., Jenkins G.M., Reinsel G.C. (1994): Time series analysis: Forecasting

a. and control Englewood Cliffs, NJ: Prentice-Hall.

3. Biggs Stephen and Messerschmitt Don, (2005): 'Social Responsibility on Growing

a. Handmade paper industry in Nepal', (University of EastANGLlA, Norwich, UK), Journal- World Development, 33, Issue-11, 1821-43

4.. Dutt, R. (2005). Indian Economy. S Chand and Company Ltd, New Delhi 694-695

. 5. Khistova. P., Kordsachia 0., Patt R., Karar I. and KhiderT (2006),

a. 'Environmentally Friendly Pulping and Bleaching', Journal- Industrial Crops and Products, 23, 02, March-131-139

Appendix

6. Meyler A, Kenny G, Quinn T (1998): Forecasting Irish Inflation UsingARIMA

a. Models 3/RT198

7. Subrahamanyam M H Bala (2004): Small Industry and Globalisation Implications,

a. Performance and Prospects Economic and Political Weekly, May 1,2004,1826-1833

8. Thangavel N, Elangovan (2008): Employment in Indian Small Scale Industry: Some

a. Issues, Medwell Journals, the Social Sciences 3(7): 484-487

9. (UNDP) & United Nations Industrial Development Organization (UNDIO), 30th

a. 1997: 'Strengthening the Hand Made Paper Industry in India' a Project Report by United Nations Development Programme

Table - I Large potential of small scale industries and HMPI in India

Performance of Small Scale Industrial !

ij Performance of Handmade paper and sector India valued added industries in India

I Produc I

I Year

Units tion Employment Production Employment I (No. In (Rs (No. In Working (In Rs . (In . Lakhs) Crore) Lakhs) Units Lakhs) . Thousand) i

. 1990-91 67.9 . 78802 158.3 325 852.61 6 1991-92 70.6 80615 166 344 1210.39 7 1992-93 73.5 84413 174.8 350 . 1532.12 7.5 1993-94 76.5 98796 182.6 1246 2213.92 . 10

1994-95 79.6 122154 191.4 1911 3027.45 12 1995-96 82.8 147712 197.9 2293 3511.25 15 1996-97 86.2 167805 205.9 2794 4312.97 15 1997-98 89.7 187217 213.2 2794 4886.12 '17 1998-99 93.4 210454 220.6 2975 5456 18 1999-00 97.2 233760 229.1 2883 . 7000.32 20 2000-01 101.1 261297 238.7 2519 12100.89 . 25 2001-02 105.2 282270· 249.3 2641 22325.06 ' 28

2002-03 109.5 311993 260.2 2811 36695.01 32.5 2003-04 114 357733 271.4 2956 44731 34 2004-05 118.6 418263 282.6 3129 48595.9 35.25 2005-06 123.4 476201 294.91 3260 53455.5 37

Source: SIDBI, KVIC (Annual Report 2006)

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----------- " ----- - - ---

Osmania Journal of International Business Studies January - June 2009

ARIMA model Results HMPllndia (Time of analysis 1990-2005) Model Description Table-II

TModelTypeI . . -odell~Production (in Rs Lakhs) Model- 1 ARIMA(O,O,O)

-

! Working Units Model 2 ARIMA(O,O,O)

I_EmPloyment (In Thousand) -=--r...-.---------------­

ModeL3 ARIMA(O,O,O)

Fit Statistic

Stationary R·squared R-squared

RMSE

MAPE

MaxAPE

MAE

MaxAE

Normalized BIC

Mean - I

.832

,832

3318.986

91,662

534.019

Model Summary Model Fit Table-III

SE Minimum Maximum .,,''-''''''''',:

5 10 !

25 50 75 90

,122 .755 .972 .755 .755 ,755 .770 .972 ,972

,122 ,755 .972 ,755 .755 ,755 .770 .972 ,972

5289.609 1,837 9419.109 1.837 1,837 1.837 536,013 9419.109 9419.109

111,836 9,328 218,987 9.328 9,328 9,328 46.673 218.987 218,987

694.370 43,964 1328,622 43.964 43.964 43,964 229.470 1328,622 1328.622

2788,604 4446.624 1,349 7916,649 1.349 1,349 1.349 447,814 7916.649 7916,649

4956.369 7833.618 3.271 13987,740 3.271 3.271 3.271 878,097 13987.740 13987.740

11.042 8,695 1.562 18.648 1.562 1,562 1.562 i 12,915 18.648 18,648 !

Residual ACF Summary Table-IV

; Mean SE Maxi Percentile

Lag 5 10 25 50 75 90

1 Lag 1 .740 1.087 .640 :790 .640 .640 .640 I .790 .790 .790

I Lag2 .388 .105 .268 .463 .268 .268 .268 .434 i .463 .463

1 Lag3 .008 .094 i -.094 .091 -.094 .027 .091 .091

Lag 4 -.286 .044 -.313 -.235 -.313 -.311 1-.235 -.235

5 -.406 .099. -.495 -.299 -.495 -.424 -.299 -.299

-.487 .106 . -.589 -.377 -.589 -.494 -.377 -.377

-.419 .124 -.493 -.276 -.493 -.488 -.276 -.276

-.342 .073 -.426 -.295 -.426 -.305 -.295 -.295

Lag 9 -.215 .096 -.312 -.121 -.312 -.212 -.121 -.121

Lag 1 -.051 .090 -.148 .028 -.148 -.032 .028 .028

, .031 . .036 .095 .036 .082 .095 .095

Lag 1 .171 i .026 .144 .196 .144 .144 .173 .196 .196

Lag 1 .162 .037 ' .130 .202 .130 .130 .130 .155 .202 .202

Lag 1 , .053 i .065 .168 .065 .065 .065 .092 .168 .168

Lag 1 i .042 1

.025 .105 .025 .025 .025 .041 .105 .105

71

95

.972

.972

9419.109

218.987

1328,822

7916.649

13987,740

18.648

95

.790

.463

~091

-.235

-.299

-.3n -.276

-.295

-.121

.028

.095

.196

.202

.168

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Model Statistics Table V

Number of

Model Predictors Model Fit statistics Stationary I I R­ R- I I

squared RMSE MAPE MAE i MaxAPE MaxAE Production

squared i

(in Rs 1.770 9419.109 218.987 7916.B49 i1328.622 13987.7401 '77fJLakhs)­ModeL1 Working I

.755 I .755 536.013 . 46.673 447.814 229.470 878.097 ModeL2 Employment

1Units­

I (In

.972 t~.972 1.837 9.328 1.349 43.964 3.2711Thousand)­ i Model 3 i

ARIMA Model Parameters Table VI

Estimate 8E it 8ig. Production {in Rs Lakhs)­ModeL1

Working Units­Model_2

Employment (In Thousand)­ModeL3

Production (in Rs Lakhs} YEAR, not periodic Working Units YEAR, not periodic Employment (In Thousand} YEAR, not periodic

No Transformation

No Transformation No Transformation No Transformation No Transformation

No Transformation

Constant

Numerator

Constant

Numerator

Constant

Numerator

Lag 0

Lag 0

Lag 0

-6967386.210

3495.935

-378700.750

190.690

-4398.781

2.212

1020373.018 i -6.828

510.823 6.844

58066.266 -6.522

29.069 6.560

-198.967 22.108

.100 22.208

.000

.000

.000

.000

.000

.000

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