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Real Options Analysis in Valuation
of Commercial Project: A Case Study
--Ketty Vijay Parthasarathy,
--R Madhumathi
Case study analysis is used to examine the application of real options in valuing a commercial real estate
mall project. Comparison of valuations using traditional discounted cash flow model with Black-Scholes, Binomial
and Samuelson-McKean option models brings out the relevance of real option analysis in project decisions. Real
options analysis is pertinent when market prices increase the strategic value of real estate development projects
by incorporating fluctuations in volatility and providing project flexibility in its operations. The developers with
varied project alternatives are able to execute the most desirable alternative using real options analysis. In real
estate, land held by the developer tends to have a perpetuity value and it is at the discretion of the developer to
execute possible options based on prevalent market conditions. Samuelson-McKean model that values the project as
a perpetual American call option has computed the premium value of the commercial project as Rs. 154.08
mn, thus giving a strategic return of 85% to the developers.
© 2010 IUP. All Rights Reserved.
Urban Infrastructure Development in India:
Resource Requirements and Mobilization Methods
--Ramakrishna Nallathiga
The development pressure on cities is increasing in India, as elsewhere in the world, with the rising
urban population and growth of urban areas. The development of cities in itself is dependent upon the
public infrastructure services. The creation of urban infrastructure is expensive and time consuming. Therefore
it requires the Government to play a major role in making lumpy investments. This paper reviews the
current patterns and trends of urbanization in India and the resource requirements of sustaining urban
development through infrastructure creation and maintenance. Given the local and national importance of cities, it is
argued that the Urban Local Bodies (ULBs) need to play a major role in mobilizing resources for
infrastructure development in cities. However, as most of the cities have low revenue base for spending on provision
of basic infrastructure services, it is suggested that the cities have to exploit the potential non-conventional
means of resource mobilization, apart from reforming and strengthening the conventional means of
resource mobilization. The avenues of such hitherto underutilized methods of resource mobilization have
been discussed.
© 2010 IUP. All Rights Reserved.
An Evaluation of Infrastructure Development in the
Hilly Areas
--Vijay Kumar Sharma,
--Roshan Lal Vashist
Infrastructure provides industry with the basic services necessary for the production process. The
provisions of adequate and efficient infrastructural facilities constitute the core of development strategy and efforts
for the development of any region. The present paper has been designed to study the trends in the growth
of socioeconomic infrastructural facilities and interdistricts infrastructural disparity in Himachal Pradesh for
the period 1993-94 to 2007-08. For the purpose of the present study, a set of 15 indicators related to
economic and social infrastructure have been selected. On the basis of this study it can be concluded that
the socioeconomic infrastructural facilities in Himachal Pradesh have achieved remarkable progress during
the period of study, however these facilities have witnessed uneven growth and development in various
districts of the state.
© 2010 IUP. All Rights Reserved.
Modeling the Nexus Between Energy Consumption
and Economic Growth in India
--Rudra Prakash Pradhan
The link between economic growth and energy consumption is very crucial in the implementation of
energy and environmental policies in the economy. The linkage is also equally important with regard to the real
threat of global warming and climatic change. Empirical investigation on the direction of causality between
energy consumption and economic growth is very vital. This issue is whether increase in economic growth
causes increase in energy consumption or whether increase in energy consumption actually propels the
increased economic growth. This paper explores the nexus between energy consumption (oil and electricity) and
economic growth in India over the period 1970-2006. Using Cointegration and Error Correction Model, it finds
a unidirectional short-run and long-run causality from economic growth to per capita oil consumption
and electricity consumption. This paper suggests that suitable energy policy should be designed to boost
economic growth and to maintain sustainable economic development in the
country.
© 2010 IUP. All Rights Reserved.
Labor Productivity
of Tamil Nadu State Transport Corporation
--S Mohan
Transport industry is highly labor intensive. The success and failure of an enterprise largely depends
upon the people who man the organization. The importance of people in an organization as a source of
productivity was by and large ignored. But now, human resource plays a significant role in organizations.
Accordingly, the present day transport industry is characterized by the employment of sophisticated technology and a
great deal of reliance on human resources. The investment streams are directed in a logical proportion
towards both technology and human resources. Sophistication in physical resources alone is meaningless if
the competence of human resources is not increased to a desirable extent. The achievement of organizational
goals is the result of interaction between physical resources and human resources. Without human resources,
nothing can be achieved. Each and every activity calls for the interaction of human force, but the productivity of
that factor alone in isolation in total productivity cannot be ascertained. The productivity of human
resources, though cannot be accurately measured, cannot be ignored. So, the measurement of productivity is done
on the basis of overall productivity. In this paper, the labor productivity of Tamil Nadu State Transport
Corporation (TNSTC) has been evaluated.
© 2010 IUP. All Rights Reserved.
Telecom Growth and the Emerging Challenges: A
Critical Analysis
--Vijay Kumar Mishra
The economy of India has grown leaps and bounds during the last few years. The growth is eminent and
is a motivation for targeting growth despite the challenges of global economic environment. The
phenomenal growth of the industrial and services sector has been the real thrust creator in the aspiring Indian
economy. Against this background, to give a further fillip and to sustain the past performance, infrastructure
bottlenecks are posing challenges. There is a substantial lacuna between the desired and the actual availability of
the infrastructural facilities in the country. Besides inadequacy, the other emerging challenge is unequal
availability of the facilities across the country. One such vital area of physical infrastructure is the
telecommunication services. The telecom sector has grown at a furious pace over the last decade but still there are
constraints. The rising inequality in the availability of services in urban and rural areas is also a matter of concern,
as it is creating a digital divide. This paper analyzes the growth and inequality in the availability
of telecommunication services in the country and the role of Eleventh Five Year Plan in providing the
required thrust to the sector's future growth and bridging the digital divide.
© 2010 IUP. All Rights Reserved.
Fair-Based Rural Tourism:
A Potential Growth Engine
for Rural Economy in Gujarat
--Mohit A Parekh
The current global recession warrants emerging economies to figure out ways to decouple from the
US economy. The need of the hour for emerging economies is to figure out self-sustaining growth engines,
driven by domestic demand. Tourism has proved to be a growth engine for many Asian economies, but in most
of the cases it is largely driven by foreign tourists. Rural tourism, targeted towards the urban population of
the same country, could prove to be a growth engine driven by domestic demand. The rich tradition of the
rural areas can become a source of attraction for the urban population. This paper throws some light on one
aspect of rural tourism, i.e., fair and festival-based rural tourism. The attractiveness of fair and festival-based
rural tourism is explained in the paper with the case study of Gujarat state. Some major rural fairs and
festivals in the state of Gujarat are described and how they can play a major role in stimulating rural economy
has been discussed.
© 2010 IUP. All Rights Reserved.
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