Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Introduction:
Chewing tobacco, more commonly known as Gutka in India, is a social concern in India; specifically in the northern states of India. Due to gutka being a social concern the state governments in India have begun to place a ban against the production and consumption of gutka. A ban is an official order that prohibits something, in this case it prohibits the production and selling of gutka. Gutka is a sweetened mixture of chewing tobacco combined with a mixture of two types of nuts, betel and palm nut. State governments have imposed a ban on the consumption and production of gutka; however it has not been implemented by the central government of India.
According to the following table smokeless tobacco (such as gutka) is consumed by 25.9% of the population which would be approximately 329 million people. As gutka is sold at nominal prices it’s easier to obtain than the other forms of tobacco. This allows the lower income groups to purchase and consume gutka rather than other forms of tobacco such as cigarettes, pan masala etc. This is supported by Table 1.
Table 1

Current Population of India 2013

1.27 Billion1

Population Consuming Gutka

329 Million

Rural Population Consuming Gutka

29.3%

Urban Population Consuming Gutka

17.7%

People in rural areas tend to be from an economically backward society and thus do not possess the same amount of money as people living in the urban areas. Individuals in urban areas also consume gutka, though, usually as a cheaper alternative to cigarettes and pan masala.

Gutka is a product that, through its consumption, adversely affects a third party: society, without harming the producers. This is a social cost towards society and is defined as a negative externality in consumption, as consumers are suffering more than the producers. An externality is a consequence of an economic activity that is experienced by unrelated third parties. The cost consumers have to pay is their deteriorating health. The reason behind this cost is that gutka

1

http://www.dnaindia.com/bangalore/report-oral-cancer-may-kill-more-young-gutka-users-in-karnataka-1789933

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

contains nearly 4000 chemical compounds2 which can cause various diseases (chiefly oral cancer) that can lead to a person’s death.

Due to the presence of concepts such as: market failure, government intervention and theory of the firm led me to investigate why and how the gutka producing firms and society were being affected by the ban and consumption of gutka respectively. This led me to my research question:
“How has ban on the production and selling of gutka (smokeless tobacco) affected the gutka industry in the northern states of India?” Stakeholders are individuals or groups of people who have an interest about in the functioning of a business/industry, as they can affect or get affected by the achievements of a business.
This essay focuses on the impact of government intervention in the northern states of India as these states are the major producers and sellers of gutka. The purpose of the essay is to gain an insight into how the firms are combating the ban and the strategies that they are adopting to cope with government intervention;3 while also, learning about the effects of towards society.

2
3

http://www.thehindu.com/news/national/karnataka/gutka-more-harmful-than-other-forms-of-tobacco/article4769653.ece
Appendix A

2

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Method of Data Collection:
Primary Data
A questionnaire was prepared to collect data from the gutka producing firms in the northern states of India. This data was used to compare the revenue, gross profit and market share earned by the firms before and after the ban.

A face to face interview was conducted with the chairman and a concerned individual from the 6 major firms – in the gutka industry – to investigate the coping strategies that were used. The same questionnaire is attached in the appendix. It was also used, due to its broad nature, to understand the extent to which the ban has really been implemented. A survey was conducted in the local markets of Kanpur to gain knowledge about the presence of a parallel market and the difference between the price of gutka in the general and black market.
Secondary Data
Secondary sources of data on the health effects were taken from online newspapers: DNA, Times of India and The Hindu, Deccan Chronicle, Business Standard and The Indian Express. For insights into the economic concepts: websites and economic textbooks were consulted.

3

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Data analysis:
To answer the research question data on: revenue, profit and market share of each of the firms mentioned below will be studied and analyzed. This data will also demonstrate the methods the firms utilized to cope with the ban. The firms investigated can be seen below:
1.

Manikchand Group

2.

Madhu Group

3.

Kothari Group

4.

DS Group

5.

Trimurti Group

6.

Shivaraj Group

Market Share:
Market share can be defined as a portion of a market that is controlled by a single firm.
From the firms mentioned above a detailed pie chart (before and after the ban) has been drawn up. All data has been calculated with reference to Table 2 (page 09)

Market Share Prior to the Ban:

Market Share Prior to the Ban:

Value of the lobby prior to the ban – Rs 2,428Cr (Small firms revenue – 78Cr)
Value of the lobby after the ban – Rs 1,698Cr (Small firms revenue – 48Cr)

Market Share Prior to the Ban
12.35% 3%

Shivaraj Group

14%
10%

33%

Kothari Group

Madhu group

19%

DS Group

8.23%

Manikchand group Trimurti Group
Other small firms

Figure 1 Market Share prior to the ban on gutka

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

From the above pie chart we can see that 5 firms (Kothari, Shivaraj, Madhu, Manikchand and DS
Groups) - whose market share is around 88.35% - dominate the market. The remaining market share belongs to the smaller firms. Since the implementation of the ban on gutka the market share has changed greatly for a few of the large firms in the market such as: Madhu,
Manikchand, Kothari and Trimurti Groups – refer to figure 2. This change has occurred due to a fall in revenues and profits for the firms (Table 2).

Market Share after the ban
12%

3%

Kothari Group
18%
Manikchand
Group

24%

Madhu Group
44%

Trimurti Group
Other small firms

Figure 2 - Market Share after the ban on gutka

From the above figure we can see that the market share in the gutka industry hasn’t been eliminated; this is because the firms are producing and selling gutka. The ideal situation - for the government - would’ve been for the industry to be entirely eliminated. This would have shown that the ban has had its desired and required effect on the industry. However though there are still firms that selling and producing and gutka albeit without two firms (Shivaraj and DS group).
This gives us an idea about the inefficiency of the implementation of the ban; this is further discussed in the subsequent analysis.

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Revenue and Profit Analysis
Revenue is defined as the income a company receives through its normal business activities. A company earns a profit when its revenue exceeds the expenditure – in the form of production costs and taxes – of a company.
The following table shows us how each firm has fared – in terms of revenues and profits –prior to the ban and since the implementation of the ban.
Table 2: Revenue and Profit
Year -

2010-2011

2010-2011

2012-2013

2012-2013

Name of the firm

‘R’ prior to the

GP prior to the

‘R’ after the ban

GP after the ban

ban

ban

Shivaraj Group

Rs 250 Cr

Rs 10 Cr

Rs 180 Cr

Rs 6 Cr

Kothari Group

Rs 350 Cr

Rs 25 Cr

Rs 300 Cr

Rs 18 Cr

DS Group

Rs 200 Cr

Rs 8 Cr

Rs 120 Cr

Rs 2 Cr

Madhu (gutka) Group

Rs 450 Cr

Rs 45 Cr

Rs 400 Cr

Rs 37 Cr

Trimurti Group

Rs 300 Cr

Rs 20 Cr

Rs 200 Cr

Rs 10 Cr

Manikchand Group

Rs 800 Cr

Rs 80 Cr

Rs 750 Cr

Rs 60 Cr4

Key –
1. GP – Gross Profit
2. ‘R’ - Revenue

4

Note: all figures are given in 1. Rs – Indian Rupees
2. Cr – Crores (10million)

Gathered through the questionnaire and interview: questionnaire is attached in Appendix A

6

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

800
700
600
500
400

Revenue prior to the ban (2010 - 2011)

300

Revenue after the ban (2012 -2013)

200
100
0

Figure 3– Revenue Chart for Table 1. All values are given in Crores (equivalent of ten million)

Table 3: Decrease in Revenue from 2010 to 2013
Name of the firm

% Decrease in revenue -

Shivaraj Group

28

Kothari Group

16.7

DS Group

40

Madhu Group

11.1

Trimurti Group

33.3

Manikchand Group

6.25

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

80
70
60
50
40

Gross Profit Prior to the ban
(2010 - 2011)

30
20

Gross Profit after the ban
(2012 -2013)

10
0

Figure 4 – Gross Profit Chart for Table 1 – All values are given in Crores (equivalent to ten million)

Table 4: Decrease in Gross Profit from 2010 to 2013
Name of the firm

% Decrease in Gross Profit

Shivaraj Group

40

Kothari Group

28

DS Group

75

Madhu Group

17.7

Trimurti Group

50

Manikchand Group

25

From tables 3 and 4 it can be inferred that Madhu and Manikchand group are the two least affected firms. Madhu group has suffered a decrease of, only, 11.1% in revenue earned and
17.7% in gross profit while Manikchand group has suffered a 6.25% decrease in the revenue and a 25% decrease in their gross profits. This is a relatively low decrease as these firms diversified prior to the ban (this is seen in detail in Table 5).
When this is compared to firms such as Shivaraj and Kothari group the losses for these firms are on the higher side. Shivaraj group lost around 28% of their revenue and suffered a 40% decrease in their gross profit while Kothari group suffered a decrease of around 16.7% and 28% respectively. 8

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Through Tables 2, 3 and 4 it can be inferred that each firm in the gutka industry has suffered due to the ban; this is seen in the decrease in their profits and revenues.

These tables support the essential theory of the effects of a typical ban. A typical ban is one that causes a decrease in the profits and revenues for a firm as it reduces the supply of the product thus decreasing its availability for the consumers. However as seen previously, the ban hasn’t been implemented as efficiently as it should have been. This is supported by the data present in table 2 and can also be inferred from figures 1 and 2.

9

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Market Structure
Through figures 1 and 2 it is possible to understand the market structure that the gutka industry operates in. At a first glance, it seems like a monopolistic market that has moved towards an oligopoly. The following analysis will attempt to substantiate the preceding claim.

Monopolistic competition is a market situation that lies midway between the extremes of perfect competition and a monopoly. Such a market is characterized by having low or no barriers to entry or exit; the firms are fairly large in number and are relative to the size of the industry.
This is as firms are free to enter a highly competitive market where several competitors offer products that are close substitutes for the original good.5

Before the ban was placed, the gutka industries market share was fairly spread across 5 firms who held 63.58% with the exception of Manikchand Group who, independently, held 33% of the market. Thus 6 firms held approximately 96.58% of the market; this fulfilled one of the features of a monopolistic market: the firms are relative to the size of industry. In addition to this, due to each firm selling homogenous products the market is said to be in monopolistic competition.
However the market cannot be considered to be wholly monopolistic as there is a clear dominance – in terms of revenues and profits – by Manikchand Group.

Once the ban was imposed, there was a decrease in revenues and profits for many of the firms
(refer to Table 3 and 4). Not all the firms were able to cope with the loss in revenues, thus withdrawing from the market altogether (specifically Shivaraj and DS Group). This resulted in the size of the remaining firms increasing, chiefly Madhu and Manikchand group. Manikchand group augmented their market share by 11% while Madhu group increased their market share by
5%. The other firms didn’t sit tight though; every remaining firm managed to seize some part of the market share made available. This led the industry into oligopolistic completion.
Oligopolistic competition can be defined as a situation where a handful of large firms account for a relatively large market share6.This is as there are two firms controlling a majority of the market
(68%, compared to 5 firms holding 63.58%). Although, not only, Manikchand group holds nearly 50% of the market, the other 3 firms (Kothari, Madhu and Trimurti Group) hold the other
50% the market. This feature coupled with the sale of gutka by each of these firms fulfills another feature of an oligopolistic market: homogenous products or slightly differentiated
5
6

http://www.businessdictionary.com/definition/monopolistic-competition.html#ixzz2mQm4UqgN http://www.businessdictionary.com/definition/oligopolistic-competition.html#ixzz2mQmDHL5y 10

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

products. This leads to the assumption that the present structure of the market is inclined towards an oligopolistic market structure, even though there is a possibility that the market is a monopoly, due to the dominance of Manikchand Group.
From the above analysis it can be concluded that the gutka market has changed its market structure from an imperfect monopolistic market to an imperfect oligopolistic market structure.
By imperfect, what is meant is that not each criterion that has been postulated as a feature of an oligopoly and monopolistic market has been met by the industry; however, there are strong implications of the market functioning in a similar structure. The change in market structure has occurred due to the implementation of the ban on gutka. To cope with the ban the owners of the gutka producing firms have utilized one of either the black market or diversification into the general market.

Diversification
The primary and only legal way to abate the impact of a ban is through diversification.
Diversification is a risk reducing strategy that involves adding different products and services from different markets to the firms original portfolio 7
The primary advantage of diversification is that it provides an outlet that allows a firm to expand their market and bring in larger revenues and profits. This is considered as a risk reducing strategy as the firms entire investment would not be based in one market but rather in 3 to 4 markets. This allows some room for error and increases the risk taking ability for firms, as they have a sense of security regarding their revenues and profits.

Table 5
Name of the firm

Diversified into after

Diversified into prior to

Income
Manikchand Group

Primary source of

the ban

the ban

Gutka

N/A

Pan Masala, Mouth
Freshener, Packaged
Water etc.

Madhu Group

Gutka

Exporting of Sesame
Seeds, construction of
Religious buildings

7

http://www.entrepreneur.com/encyclopedia/diversification

11

N/A

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143
Shivaraj Group

Herbal Mouth

Session: May 2014
N/A

Freshener

Gutka, Exporting of belts and shoes

This can be attributed to the aforementioned firms – as seen in Table 5 – who have diversified8 into various other auxiliary markets or markets that aren’t related to their primary business.

Assuming that a firm diversified into various different markets during the earlier stage of their business life; the firm would have suffered with a decrease in their profits and revenues as their variable costs9and fixed costs10 increased. However this short term loss would have abetted them in the long run, as in the long run the firm would gain higher revenues and profits while at the same time the variable costs would decrease and fixed costs would remain the same. This exact scenario has taken place for Manikchand group (inferred from tables 3 and 4) in the long run.
Thus, it can be concluded that due to the process of diversification Manikchand group has received the softest blow by the ban on gutka.

The ban has not only engendered the gutka producing firms to diversify, but also look at other alternative ways in which they can survive in the industry. One of these alternative is the utilization of the parallel market.

Appendix A
Variable costs can be defined as a periodic cost that varies in step with the output or the sales revenue of a company 10 Fixed costs can be defined as a periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries, and wages - http://www.businessdictionary.com/definition/fixedcost.html#ixzz2mQisaHD5
8
9

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Emergence of a Parallel Market
A Black market is an illegal free market that flourishes in economies where consumer goods are scarce or heavily taxed.11 In the black market, prices are either higher than the 'official' or controlled prices or the prices are lower than the 'legitimate’ or taxed prices, due to tax evasion.
From the survey conducted it was observed that gutka was still being sold in small outlets in
Kanpur, Uttar Pradesh. An important point that should be noted is that the selling of gutka takes place in the black market12 where it becomes tough for the law enforcement agencies to monitor the selling of gutka.
This demonstrated that the ban on gutka has not thwarted the consumption and selling of gutka.
The black market has given access to gutka and it has been observed that the price has been increasing, at an increasing rate. This behavior suggests that due to the addictive nature of gutka consumers are willing to purchase it at a higher price. This can be observed from the sales of gutka in Jharkhand (inferred from secondary sources) and from the survey conducted in Kanpur.
A total of 47 shopkeepers were interviewed in Kanpur, India13. This data can be seen in figure 5.
Figure 5

Shopkeepers selling
Gutka in Kanpur

From the interview it was inferred that gutka – even though banned – is being sold in the black market at a higher price

17%

than usual. The price quoted by the various shopkeepers is between Rs 2 – Rs
Yes
No

8. This is a higher price than the price quoted before the ban, thus showcasing the inelastic demand14 for gutka (figure

83%

6). Consumers are willing to pay a higher price due to their addiction. Gutka has become a need, rather than a want, for them, thus preventing the government ban from having its desired and necessary effect. From the interview it was confirmed that gutka, to an extent, is an inelastic good.

11http://www.businessdictionary.com/definition/black-market.html#ixzz2lONhEdWl
12 Appendix

A
B
An inelastic good is one for which the demand for the product does not increase or decrease correspondingly with a change in price.

13 Appendix
14

13

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Figure 6: Gutka as an inelastic good

The inelasticity of gutka is engendered by the addictive nature of gutka, as consuming gutka is considered to be habit forming. However, this is not the only manner through which the conclusion that gutka is sold in a parallel market for a higher price was reached.
Through the use of secondary sources it was found that, in Jharkhand, within a week of the ban being imposed, 'gutka' manufacturers and traders explored the loopholes and now the 'gutka' market in Jharkhand is being revived with many manufacturers selling plain pan masala in one sachet and tobacco (zarda) in another, free of cost. The constant demand for gutka has led to prices increasing (in the black market) to around Rs 5 – 8 per sachet15 with this new two-sachet scheme. 15

http://articles.timesofindia.indiatimes.com/2012-08-19/ranchi/33272627_1_pan-masala-and-gutka-tobacco-or-nicotine-sachet

14

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Social Cost and Benefit
The ban on gutka was meant to prohibit the production and selling of gutka and thus reduce the social cost, in terms of the health effects, towards society. Market failure is defined as a misallocation of resources in terms of either over-or-under provision of certain goods16. It is usually caused because of the existence of externalities or asymmetric information. In this case there is a negative externality of consumption. This has arisen due to the health issues created by the production and consumption of gutka.
Figure 7

MSC = Marginal Social Cost
MPB = Marginal Private Benefit
MSB = Marginal Social Benefit
Gutka is sold in a free market17, thus allowing consumers to maximise their private benefits18 by consuming at MSC = MPB. Due to gutka’s addictive nature it can be considered to be an inelastic good (with reference to figure 6). This results in a gutka being consumed at Q1 and
P1.However, the socially efficient output level is Q* and P*. This shows that there is an overconsumption of gutka; due to MPB being greater than MSB it can be said that there is a welfare loss to society and a market failure.19

Glanville (2011)
A market economy that is based on supply and demand with little or no government control http://www.investopedia.com/terms/f/freemarket.asp
18
A benefit that directly affects an individual or a firm
19 Jocelyn Blink and Ian Dorton 2012 – Economics Course Companion for the International Baccalaureate
16
17

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

However due to the inelastic demand of gutka and the existence of the black market the ban has been unable to completely prohibit the demand and supply of gutka. Instead, it has reduced the demand from Q* to Q1 - due to an increase in price (from P* to P2). This wouldn’t increase the revenues for the government, as the gutka being sold is found in the black market and not the general market. Thus being conjectured that gutka is being sold using illegal means, which is true, to a certain extent. This represents a loss of potential revenue for the government, as this wouldn’t allow the government to utilise any extra capital that they could’ve received to reduce this negative externality.

To abate the consumption of gutka the government can advertise about the ill effects of consuming gutka, as this would spread awareness and could reduce the consumption of gutka.
This would shift the MPB curve to the left, thus reducing the private benefit gained by the producers and also reducing the welfare loss towards society. To reduce the consumption of gutka the government could also place indirect taxes on the consumption of gutka; however, due to a ban already being in place the effects of the tax would be negated.
Although in the short run there is a plethora of evidence pertaining to a decrease in health issues caused by the consumption of gutka; in the long run, the ban on gutka would reduce government expenditure on the health cases that arise from the consumption of gutka. Data from secondary sources state that the Indian government spent around $5billion in 2002 – 2003 for the treatment of tobacco related diseases. This coupled with the fact that there are largely 80,000 20 new cases of oral cancer every year (through the same source) since 2002 results in a high chance that government expenditure would be very high, as it has been ten years since these values were published. And the number of new oral cancer cases would have increased greatly.
Assuming that 80,000 new cases of oral cancer didn’t occur because the ban was placed efficiently; the government would have had (according to the data above) $5Billion dollars to spend on services other than health care it would most probably abet the society in a positive manner. This is as the money could be used for the betterment of the general populace by spending on public and merit goods21 such as: of public transport, government education, government health care facilities etc.

http://www.dawn.com/news/747475/indias-gutka-ban-will-save-millions-but-may-anger-more
Goods or services that are regarded by society or the government as deserving public finance because they would have been underprovided if left to market forces - http://www.businessdictionary.com/definition/merit-goods.html
20
21

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

However though, the nominal price of gutka (it is usually sold at Re 1) is a hindrance towards the effective implementation of the ban on gutka due to it being readily available to the general populace. This allows individuals from low socio-economic backgrounds to purchase gutka at the nominal price, but at an exorbitant price in terms of the money that they would be spend on treating any health issue engendered by the consumption of gutka.

The ban on gutka can be deemed as a short term success in terms of the steady losses in the revenues and profits that each of the firms has experienced. These losses culminated in two firms leaving the gutka industry completely. This showcases the positive impact of the ban so as to reduce the supply of gutka in the market. But, due to gutka being an inelastic good (Figure 5) the demand did not waver, thus offering the gutka producing firms an incentive to stay in the general market and also sell gutka in the black market. In the long run the ban can be deemed inapt due to the presence of the black market; however this could be negated if the ban is placed more strictly than before.

17

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Conclusion:
To answer the research question: “How has ban on the production and selling of gutka
(smokeless tobacco) affected the gutka industry in the northern states of India?” the subsequent conclusions were arrived at.
The loss of market share for many firms – figures 1 and 2 – shows the positive effect of the ban in the short run, The ban is slowly taking its toll on the firms; as seen by the decrease in revenue and profits for the gutka producing firms (can be seen in Table 2). This is one of the desired effects of the ban as, in theory, a firm suffering losses in revenue and profit would pull out of the industry; however, this showcases the ineffectiveness of the ban as well. Since the ban hasn’t eliminated the gutka industry entirely.
The change in market structure stems from the formation of the black market and the implementation of the ban. The black market offers a new avenue into the gutka market – albeit illegally – and the ban has reduced the size of the general market - inferred from the comparison between Figure 1 and 2. Thus it was concluded that the gutka industry changed its market structure from a monopolistic to an oligopolistic market.
The process of diversification allows firms to cope with the ban through fair and legal means, unlike the black market. A few of the firms have understood this and have been looking towards diversification as a long term option; since diversification requires large amounts of capital
(inferred from table 4).
If the sale of gutka in the black market continues it will be detrimental to government as the ban would become even more ineffectual than it already is. However, the ban has had a positive impact in the short time it’s been implemented in. This is seen by the decrease in the value of the lobby from Rs 2,428Cr to Rs 1,698Cr. This decrease in the value of gutka lobby proves that the ban is having an effect on the gutka industry, even though the effects are only being felt slowly.

Limitations of the Research
The size of the parallel market (black market) was one of the major problems when collecting data as it didn’t allow the data collected to be as accurate as possible. Data regarding each firm’s revenue and profit was one of the major problems due the confidential line of work. This was also because of the presence of the black market. In addition to this, the information shared by
18

Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

each firm – with regards to the black market – could have been undermined so as to avoid any legal complications that could have arisen. The 3 year gap between the data collection of revenues and profits could have hindered the analysis and collection of values. The majority of the limitations of this research stem from the presence of the parallel market.

Further Research Question
To what extent has the implementation of the government ban on the selling and production of gutka affected employment levels in the gutka industry, in the northern states of India?

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Appendices
Appendix A: Questionnaire 1
Interviewer: Yashraj Shukla

Name of the firm –
Name of the representative:
Number of years in the business -

Gutka produced -

1. What was the revenue earned by your firm prior to the ban?

2. What was the gross profit earned by your firm prior to the ban?

3. What is the revenue earned after the ban? In the gutka side of your company?

4. What is the gross profit earned after the ban? In the gutka side of your company?

5. How has the ban affected the affected your long term goals for the business by forcing you to diversify or did you already have a plan to diversify in place?

6. If you have diversified, then, what have your new ventures been? Was gutka always your primary source of income or did you diversify into the gutka industry?

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

7. Are the profits earned after the ban on gutka higher than before or lower? As selling products in the black market – from what I have learnt – seem to be a profitable venture.

8. Once the government started banning gutka what was your reaction? Did you start to supply more and maximise profits until the ban was placed or did you start planning to diversify? Why?

9. Has the ban on gutka resulted in your firm becoming more successful in the long run or has it adversely affected you? If so how?

10. Is the black market a feasible long term solution to cope with the ban? Or will diversification have to take place at some point in the future?

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Appendix B: Survey 1 (Questionnaire 2)

Kanpur Shopkeeper Survey
Interviewer: Yashraj Shukla
Name:

Age:

Answer Yes or No unless mentioned otherwise.
1. Has the ban on gutka affected you?
No

Yes

2. If yes, how? If now, why not? Give a short explanation

3. Has the ban stopped you from selling gutka?
Yes

No

4. If yes, why not?

5. Has the ban led to an increase in the price of gutka? What’s the new price of your gutka?
Yes

No

6. If the answer to question 5 is yes then explain.

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

7. To what extent has the demand for gutka decreased?

8. Do you plan to stop selling gutka?
Yes

No

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

Bibliography
Websites
"Black Market." BusinessDictionary.com. N.p., n.d. Web. 19 Nov. 2013.
.

"Dawn News." Dawn.com. N.p., n.d. Web. 07 Dec. 2013.
.

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Candidate Name: Yashraj Shukla
Candidate Number: 002272-0143

Session: May 2014

"Oral Cancer May Kill More Young Gutka Users in Karnataka." Webmaster. N.p., n.d. Web. 17
July 2013. .

YASMEEN, AFSHAN. "Gutka More Harmful than Other Forms of Tobacco." The Hindu. N.p.,
1 June 2013. Web. 23 Aug. 2013. .

Books
Blink, Jocelyn, and Ian Dorton. Economics: Course Companion. Oxford: Oxford UP, 2012.
Print.

Glanville, Alan, and Jacob Glanville. Economics from a Global Perspective: A Text Book for
Use with the IB Diploma Economics Programme. Dolton: Glanville, 2011. Print.

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