Statistics, anyone ???
“Give me a one-handed lawyer.”
Statistics is not very different from judgment. One man’s understanding of a set of data might be completely different from another. Our group has chosen two topics to understand the sanctity of the use of data for analysis in business and economy.
The first article chosen by us is on the usage of mobile phones in India. Written by a Business India correspondent, it talks about the rise in the usage of mobile phones in India. The author has used data from Cellular Operators Association of India to support his case. We have tried to question the background of the survey in question and the understanding of the mobile phone market in general.
Our second article questions whether Foreign Direct Investment in the Retail Sector in India will turn out to be a boon or not. This article comes from an academician from Aligarh Muslim University and explores many facets of the Retail sector with regard to investments. We have made a genuine attempt to compare his point of view with the exact opposite ideology that differs from the author from Aligarh.
There has been a genuine attempt made to cross check every piece of data that has been mentioned in the articles. Sources like COAI and the AT Kearney survey have been searched to determine the genuineness of the figures presented in front of the reader.
Alternatively, a lot of other supporting data was also found to either support the case or question its viability in the new scenario. The exhaustiveness of the data was questioned and it was found that in a lot of cases many interest groups in the survey conducted were not actually included for the analysis. This might lead to a biased analysis and we have made an attempt to question the same. It is quite obvious that the conclusion gained from such an analysis would not be a true reflection of the intentions of the author. Thus, a completely opposite point of view might also stand a chance in such a scenario!
“DIAL AWAY”
Aditya Kundalkar, Business India, June 4, 2006
“Dial Away”, an article by the Business India Correspondent, Aditya Kundalkar, talks about the rise in the usage of mobile phones in India. He attributes the reduction in prices as a reason for such a phenomenon.
Aditya has structured the article by splitting the mobile phone market into two – GSM (Global System for Mobile) and CDMA (Code Division Multiple Access). The GSM mobile phone market has been in India since 1995 and forms 78% of the market share. CDMA technology, on the other hand, was introduced in 2001 and is yet to catch up pace with its competitor.
Before discussing the data given in the article and five charts given to support to same, it is important to question the first fact that has been stated in the article.
“A connection today, including the price of the handset, costs as little as Rs 2,000.”
To begin his argument about low cost and reduced rate, Aditya talks about the availability of cheap mobile phones in the market. It is important to question him here about the amount he has mentioned. According to him, Rs 2,000 is the combined cost of the cell phone connection, the handset and the initial activation charges. This seems to be an exaggerated statement! It is because one might be assuming that this is the dealer price or the grey market price of the mobile phone with the new connection & such prices might be available only during discount seasons, which may have other hidden costs to be paid later by the owner. Secondly, such a low price might only be possible with an EMI (Equated Monthly Installments) option for payment. This effectively increases the actual cost of the mobile phone due to the addition of the interest in the price of the product. Thirdly, it has not been specified whether this price is for a GSM mobile handset or a CDMA handset. Both the handsets have different activation charges, initial deposits and prices.
Aditya also makes strong statements, as the availability of “lifetime validity at virtually no cost and zero roaming charges”. The current lifetime validity offers in the market have hidden clauses as compulsory recharge every six months, and differential call rates to various service providers, which might turn out to be more expensive in the long run. He supports the volume of mobile phone users with the figure released by Cellular Operators Association Of India (COAI), stating that India had over 72 million GSM subscribers in April 2006. Does that mean that he is including only GSM subscribers as mobile phone users? Also, are all subscribers’ mobile phone users and does every mobile phone user use only one subscription?
“In the GSM mobile market, the top three service providers are Bharti, BSNL and Hutchinson ESSAR.”
The author has not mentioned the source of this ranking. We do not know whether each and every regional and national mobile phone service provider, has been included in this survey or not. He goes on to talk about Bharti having experienced “robust growth” in the period between January 2005 and April 2006, without giving any comparative data for other service providers. The significance of the word “robust” is lost here.
We now discuss the articles from the following perspectives –
Source of Data
The source of data mentioned is COAI and Auspi. The five charts given in the article talk about the total number of subscribers, projections of the number of subscribers in the GSM and total mobile market, difference in the number of subscribers between India and China in the past decade, Handset sales in 2003 - 2005 & FDI Inflow into Telecom from 1993 to 2005.The article does not mention the sample taken for the survey and the definition of the word “subscriber”. We also do not know if COAI and Auspi have either used the same data or different ones. The chart on total number of Subscribers from January 2005 to March 2006 compares only Bharti, Reliance, BSNL, HUTCH, TATA TELE and IDEA (where the first two are combined subscribers of CDMA and GSM and TATA TELE is the only CDMA service provider). Two questions come to our mind at this point in time- the absence of other service providers questions the exhaustiveness of the data and is it right to club CDMA and GSM for some providers and not for the rest?
Authenticity of the Data
Our source of information is the Telecom Regulatory Authority of India website. The site has all the performance reports and details of all the service providers for years in the past and the first quarter of 2006 as well. After cross checking all the data with the TRAI database, we have found no inconsistencies with the COAI data. However the projection figures did not figure in the TRAI website, and hence could not be validated.
One should realize at this point in time that TRAI and COAI are both genuine sources of data for the mobile phone industry. It is practically impossible to question the sample size as far as the number of respondents is concerned because even TRAI and COAI would be getting the original data from the service providers. Keeping this in mind, we can proceed with the analysis and take the charts as a genuine source, though not complete!
Comparative Analysis of Data
It has been an unraveling experience to compare the data obtained from TRAI and COAI. We have come up with the following points –
COAI puts the number of mobile subscribers at 72 million for the first quarter of 2006. However, this includes only the GSM subscribers. A corresponding figure for the same period from the TRAI website reveals the number of mobile subscribers at 90.14 million, including both the GSM and CDMA subscribers. Though this information cannot be termed incorrect, but it can certainly be called subjective and incomplete.
The handset sales figures is only indicative of the brand new hand sets sold across the shop counter with bills and proper documentation. However it does not take into account a large number of handsets that are sold in the grey market and the second hand cell phone market has been excluded as well.
Effectiveness of the Sample Size
Notwithstanding the fact that the author has made quite an exhaustive study, his sample size is not all encompassing in itself. The author does not mention some of the key service providers and there is no information about their subscribers. For example, the author does not mention smaller cellular operators such as SPICE TELECOM in Karnataka and Punjab, AIRCEL in Tamil Nadu and North-Eastern states, FASCEL in Gujarat, ADIL in Punjab, Haryana and Uttar Pradesh. The exclusion of the above mentioned service providers, who also do find a mention on COAI’s “Final report on ARPU/REVENUE analysis for private GSM cellular operators”, gives the study an air of generalization rather than comprehensiveness.
The subscriber base in China is also in question. It is mentioned that “Subscriber numbers in China are way ahead at 388 million today”. However, on comparing the Indian market with that of China, the author does not highlight the fact that the Chinese market was opened up for private cellular operators in 1988 as compared to 1995 for India (Source: TRAI website). This gives the Chinese a head start of seven years and such a comparison is totally unwarranted.
The graph showing the “FDI Inflow in Telecom” is not correlated with the topic. One does not come to know from the word “Telecom”, which set of companies has the money flowed into. Was it for the development of hardware, software or connection lines? Also, there is no demarcation between landline phones and mobile phones mentioned in the chart. This helps us to conclude that this chart was just given to make the case stronger but with no effect.
Aditya Kundalkar has tried to prove his point with many charts and words, but he has failed to bring home the point that the rise in the mobile phone subscribers might not only be due to the reduction in prices. Also, there is no mention of data to compare the prices of handsets and connections in the past and now. One is not able to judge whether the reduction in price has , actually let to the increase in usage of cell phones.
Statistics is not very different from judgment. One man’s understanding of a set of data might be completely different from another. Our group has chosen two topics to understand the sanctity of the use of data for analysis in business and economy.
The first article chosen by us is on the usage of mobile phones in India. Written by a Business India correspondent, it talks about the rise in the usage of mobile phones in India. The author has used data from Cellular Operators Association of India to support his case. We have tried to question the background of the survey in question and the understanding of the mobile phone market in general.
Our second article questions whether Foreign Direct Investment in the Retail Sector in India will turn out to be a boon or not. This article comes from an academician from Aligarh Muslim University and explores many facets of the Retail sector with regard to investments. We have made a genuine attempt to compare his point of view with the exact opposite ideology that differs from the author from Aligarh.
There has been a genuine attempt made to cross check every piece of data that has been mentioned in the articles. Sources like COAI and the AT Kearney survey have been searched to determine the genuineness of the figures presented in front of the reader.
Alternatively, a lot of other supporting data was also found to either support the case or question its viability in the new scenario. The exhaustiveness of the data was questioned and it was found that in a lot of cases many interest groups in the survey conducted were not actually included for the analysis. This might lead to a biased analysis and we have made an attempt to question the same. It is quite obvious that the conclusion gained from such an analysis would not be a true reflection of the intentions of the author. Thus, a completely opposite point of view might also stand a chance in such a scenario!
“DIAL AWAY”
Aditya Kundalkar, Business India, June 4, 2006
“Dial Away”, an article by the Business India Correspondent, Aditya Kundalkar, talks about the rise in the usage of mobile phones in India. He attributes the reduction in prices as a reason for such a phenomenon.
Aditya has structured the article by splitting the mobile phone market into two – GSM (Global System for Mobile) and CDMA (Code Division Multiple Access). The GSM mobile phone market has been in India since 1995 and forms 78% of the market share. CDMA technology, on the other hand, was introduced in 2001 and is yet to catch up pace with its competitor.
Before discussing the data given in the article and five charts given to support to same, it is important to question the first fact that has been stated in the article.
“A connection today, including the price of the handset, costs as little as Rs 2,000.”
To begin his argument about low cost and reduced rate, Aditya talks about the availability of cheap mobile phones in the market. It is important to question him here about the amount he has mentioned. According to him, Rs 2,000 is the combined cost of the cell phone connection, the handset and the initial activation charges. This seems to be an exaggerated statement! It is because one might be assuming that this is the dealer price or the grey market price of the mobile phone with the new connection & such prices might be available only during discount seasons, which may have other hidden costs to be paid later by the owner. Secondly, such a low price might only be possible with an EMI (Equated Monthly Installments) option for payment. This effectively increases the actual cost of the mobile phone due to the addition of the interest in the price of the product. Thirdly, it has not been specified whether this price is for a GSM mobile handset or a CDMA handset. Both the handsets have different activation charges, initial deposits and prices.
Aditya also makes strong statements, as the availability of “lifetime validity at virtually no cost and zero roaming charges”. The current lifetime validity offers in the market have hidden clauses as compulsory recharge every six months, and differential call rates to various service providers, which might turn out to be more expensive in the long run. He supports the volume of mobile phone users with the figure released by Cellular Operators Association Of India (COAI), stating that India had over 72 million GSM subscribers in April 2006. Does that mean that he is including only GSM subscribers as mobile phone users? Also, are all subscribers’ mobile phone users and does every mobile phone user use only one subscription?
“In the GSM mobile market, the top three service providers are Bharti, BSNL and Hutchinson ESSAR.”
The author has not mentioned the source of this ranking. We do not know whether each and every regional and national mobile phone service provider, has been included in this survey or not. He goes on to talk about Bharti having experienced “robust growth” in the period between January 2005 and April 2006, without giving any comparative data for other service providers. The significance of the word “robust” is lost here.
We now discuss the articles from the following perspectives –
Source of Data
The source of data mentioned is COAI and Auspi. The five charts given in the article talk about the total number of subscribers, projections of the number of subscribers in the GSM and total mobile market, difference in the number of subscribers between India and China in the past decade, Handset sales in 2003 - 2005 & FDI Inflow into Telecom from 1993 to 2005.The article does not mention the sample taken for the survey and the definition of the word “subscriber”. We also do not know if COAI and Auspi have either used the same data or different ones. The chart on total number of Subscribers from January 2005 to March 2006 compares only Bharti, Reliance, BSNL, HUTCH, TATA TELE and IDEA (where the first two are combined subscribers of CDMA and GSM and TATA TELE is the only CDMA service provider). Two questions come to our mind at this point in time- the absence of other service providers questions the exhaustiveness of the data and is it right to club CDMA and GSM for some providers and not for the rest?
Authenticity of the Data
Our source of information is the Telecom Regulatory Authority of India website. The site has all the performance reports and details of all the service providers for years in the past and the first quarter of 2006 as well. After cross checking all the data with the TRAI database, we have found no inconsistencies with the COAI data. However the projection figures did not figure in the TRAI website, and hence could not be validated.
One should realize at this point in time that TRAI and COAI are both genuine sources of data for the mobile phone industry. It is practically impossible to question the sample size as far as the number of respondents is concerned because even TRAI and COAI would be getting the original data from the service providers. Keeping this in mind, we can proceed with the analysis and take the charts as a genuine source, though not complete!
Comparative Analysis of Data
It has been an unraveling experience to compare the data obtained from TRAI and COAI. We have come up with the following points –
COAI puts the number of mobile subscribers at 72 million for the first quarter of 2006. However, this includes only the GSM subscribers. A corresponding figure for the same period from the TRAI website reveals the number of mobile subscribers at 90.14 million, including both the GSM and CDMA subscribers. Though this information cannot be termed incorrect, but it can certainly be called subjective and incomplete.
The handset sales figures is only indicative of the brand new hand sets sold across the shop counter with bills and proper documentation. However it does not take into account a large number of handsets that are sold in the grey market and the second hand cell phone market has been excluded as well.
Effectiveness of the Sample Size
Notwithstanding the fact that the author has made quite an exhaustive study, his sample size is not all encompassing in itself. The author does not mention some of the key service providers and there is no information about their subscribers. For example, the author does not mention smaller cellular operators such as SPICE TELECOM in Karnataka and Punjab, AIRCEL in Tamil Nadu and North-Eastern states, FASCEL in Gujarat, ADIL in Punjab, Haryana and Uttar Pradesh. The exclusion of the above mentioned service providers, who also do find a mention on COAI’s “Final report on ARPU/REVENUE analysis for private GSM cellular operators”, gives the study an air of generalization rather than comprehensiveness.
The subscriber base in China is also in question. It is mentioned that “Subscriber numbers in China are way ahead at 388 million today”. However, on comparing the Indian market with that of China, the author does not highlight the fact that the Chinese market was opened up for private cellular operators in 1988 as compared to 1995 for India (Source: TRAI website). This gives the Chinese a head start of seven years and such a comparison is totally unwarranted.
The graph showing the “FDI Inflow in Telecom” is not correlated with the topic. One does not come to know from the word “Telecom”, which set of companies has the money flowed into. Was it for the development of hardware, software or connection lines? Also, there is no demarcation between landline phones and mobile phones mentioned in the chart. This helps us to conclude that this chart was just given to make the case stronger but with no effect.
Aditya Kundalkar has tried to prove his point with many charts and words, but he has failed to bring home the point that the rise in the mobile phone subscribers might not only be due to the reduction in prices. Also, there is no mention of data to compare the prices of handsets and connections in the past and now. One is not able to judge whether the reduction in price has , actually let to the increase in usage of cell phones.
FDI in Retail Sector - Cure or Curse?
Dr S.V Farooqui
Department of Commerce, AMU, Aligarh.
Foreign Direct Investment in India has been one of the most controversial topics for sometime in the business circle. No wonder, it has gained importance to be picked up by one of the academicians of the Aligarh Muslim University. FDI in India has been one of the major contributors to the upward climb of the Indian economy. Since the days of the “Licence Raj”, a common understanding was that the entry of the foreign players in the Indian Economy would be no less than a silent invasion. All the small & medium scale enterprises would perish and we, as a nation, would be at the mercy of the rich countries.
A visionary named Dr Manmohan Singh took the bold step in the early Nineties and brought the country out of the economic doldrums. With investors gaining confidence in the Indian economy, money started flowing in from all sources. Indian companies took up the gauntlet and upped their performance bar. Innovations started happening and soon our economy was on the fast track. Mr Rahul Bajaj commented that “Indian companies needed a level playing field to survive”, on hindsight did not hold any ground. Today, investors from all parts of the world are making a beeline to invest in India. However, there are certain impediments that stand in the way as well - the prime among them, being the lack of political will.
Things have moved on since then and Foreign Direct Investment has been allowed in the Retail Sector. Dr Farooqui takes on this case and discusses the pros and cons of the same.
He, very promptly, introduces Retailing as
“…all activities involved in selling products or services to final consumer for their personal non-business use.”
He goes on to introduce the concept of “non-store retailing” which according to him is
“…selling to final consumers through Direct mail, Catalogues, Television, the Internet, Telephone, Home and Office Parties, Door-to-Door contacts, Vending Machines and other direct selling approaches.”
On the other hand, store retailing has been segregated into Speciality Store, Department Store, Supermarket, Convenience Store, Discount Store, Off-price Retailer and Super Store. The discussion goes on with the assumption that both store and non-store retailing are being affected by the Foreign Direct Investment.
Dr Farooqui supports the case that FDI in Retail Sector is beneficial. He comes with data from various sources, primarily, the AT Kearney Analysis and the Global Retail Development Index, to take the discussion forward. A chart depicting the Retail Sales in India since 1998 to 2008 has also been included in the article.
Source of Data
GRDI or Global Retail Development Index is an index published (since 2001) which helps retailers prioritize their global development strategies. This index was formulated by AT Kearney and it helps its clients gain strategic insight that are highly collaborative. We see that the data is comprehensive and its used is not limited to a few cities but covers the entire country. This helps us to conclude that it is not opinionated.
Comparative Analysis of Data
It is mentioned in the article that “India has well over 5 million retail outlets of all size & style.” However, on cross checking it with CRISIL, it was found that this figure is actually 11 million.
The author points out that just over 8% of India’s population is engaged in Retailing as compared to 20% in United States. This figure when checked with the article “International Experience on Policy Issues” published by FICCI, is only 16% for US.
The unorganized sector in Retail is said to be around Rs 4,00,000 crore and the organized sector accounts for only Rs 20,000 crore. This means that unorganized sector constitutes 96% of the retail market. This data is different from another set of data which pegs this number at 98%. The source of this is an article on “Retail Industry in India” by Ganguly and Saby on the site www.indiaonestop.com.
Authenticity of Data
Certain other figures mentioned in the article are very enlightening. Data like the per-capita retailing space in India calculated at about 2 square feet (as compared to 16 square feet in US) is authenticated and the source has been verified.
The statement “…e.g., 40% of perishables grown in India wrought while being transported due to lack of refrigeration facilities”, is not authenticated anywhere. The source of this data is not mentioned and it is not there in the GRDI as well.
The author tries to correlate the effect of investments in the Insurance sector with that of the Retail sector. It is a big assumption as these two are totally unrelated sectors and the dynamics involved in both these sectors are completely different. It would be unfair to compare them as one has been primarily been a Government controlled sector in the past and the other controlled by the local Kirana shopkeeper.
Another important aspect is that the almost entire retail population in United States is under the organized retail sector, while 98% of the Indian retail sector is unorganized. Would it be right to compare two countries whose sector compositions do not match at all? If one needs to compare, one should compare only the organized sector of both the countries.
The author very judiciously puts forth the arguments for and against FDI in Retail sector, not failing to mention the two most important components of the same – Food and Apparel. He quotes RPG’s former head and mentions the estimates by Cygnus Economic and Business Research to substantiate the fact that these two are the growth sectors in the Retailing arena. However, he fails to give any concrete data for the same and clearly undermines the contribution of sectors like entertainment and recreation in the sectoral growth.
Dr Farooqui concludes in the article by attempting to prove FDI as a boon to the retail sector. We would like to disagree with him at this conclusion as we feel that he has not been able to very strongly give conclusive data for the same. A lot of data is either does not match with that of another survey/sources or it is not enough to prove his point. We thus, think that more comprehensive research is required before any such judgmental statements are passed at the end of the article.
References:
1. A.T. Kearney’s Global Retail Development Index www.atkearney.com
2. Presentation to FICCI by Alan Rosling (Chairman, Jardine Matheson Group) “International Experience on Policy Issues”
3. www.crisil.com
4. www.trai.gov.in
5. www.coai.in
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