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This is to certify that the

thesis entitled

Business News coverage of India, before and after India's
economic liberalization, by The Wall Street Journal, The
New York Times and two Indian newspapers - Financial
Express and The Economic Times

presented by

ARVIND DIDDI

has been accepted towards fulfillment
of the requirements for

Maurie—degree in Journalism

(T?f\g 2%7“\\V/

        

 

Major professor

Date May 8. 2003

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BUSINESS NEWS COVERAGE OF INDIA, BEFORE AND AFTER INDIA’S
ECONOMIC LIBERALIZATION, BY THE WALL STREET JOURNAL, THE
NEW YORK TIMES AND TWO INDIAN NEWSPAPERS — FINANCIAL
EXPRESS AND THE ECONOMIC TIMES
By

Arvind Diddi

A THESIS
Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of
MASTER OF ARTS

School of Journalism

2003

ABSTRACT
BUSINESS NEWS COVERAGE OF INDIA, BEFORE AND AFTER INDIA’S
ECONOMIC LIBERALIZATION, BY THE WALL STREET JOURNAL, THE
NEW YORK TIMES AND TWO INDIAN NEWSPAPERS — FINANCIAL
EXPRESS AND THE ECONOMIC TIMES
By
Arvind Diddi

This study examines business news coverage of India, before and after India’s
economic liberalization between 1988 and 1994 to find out how the media in developed
and developing nations cover the process of economic reforms in this era of
globalization. The study analyzes news stories from four newspapers - The Wall Street
Journal and The New York Times from the United States, and Financial Express and The
Economic Times from India.

The results of the study point that mean story length and prominence in the
American newspapers decreased after the liberalization, whereas in Indian newspapers
story length and prominence remained almost same in both the periods. This finding was
in accordance with earlier studies that although number of international stories increased
in the American newspapers the space devoted to them remained constant.

With regard to sources, American and Indian newspapers used Indian government

oflicials as major news source.

Dedicated to My Parents

iii

ACKNOWLEDGEMENTS

Completion of my master’s degree would not have been possible without the
guidance and encouragement of Professor Frederick Fico, chairperson of my thesis
committee, and Professor Folu Ogundimu and Professor Stephen Lacy, my thesis
committee members. Thank you, Professor Fico, for your patience, advice and direction
throughout the project. Your expertise helped me to turn a flood of information into a
manageable effort. Professor Ogundimu and Professor Lacy, your practical advice and
direction were immensely helpful. Without your individual and collective support and
guidance this project would have been much more difficult to manage. For your time and
efforts on my behalf, I thank you.

Additionally, this project would not have been possible without the love, support
and encouragement of my family. I thank my mother, father, sister and brother for all
they have done to enable me to continue my journey, and for their constant love and
support. I also thank my friends, Vijay Chitla, Bhavani Gangavarapu, and Kuang-Kuo

Chang for their help with the project.

iv

TABLE OF CONTENTS

TABLE OF CONTENTS
List of Tables ................................................................................... vii
Chapter 1 ........................................................................................ l
1.1 Introduction .................................................................................. 1
1.2 Significance of the Problem ............................................................... 4
1.3 Indian Politico-Economy, Past and Present ............................................. 8
1.3.1 First Period, 1947-65 ................................................................ 9
1.3.2 Second Period, 1966-74 ............................................................ 10
1.3.3 Third Period, 1975-May 1991 ..................................................... 12
1.3.4 Fourth Period, July 1991 and Beyond ............................................ 15
1.4 Effect of Reforms ........................................................................ 18
Chapter 2 ......................................................................................... 20
2.1 Theoretical Framework .................................................................... 20
2.2 Importance of Reporting Business News ............................................... 22
2.3 Previous Studies on Reporting Business News ......................................... 27
Chapter 3 ........................................................................................ 35
3.1 Hypothesis and Research Question ...................................................... 35
Chapter 4 ........................................................................................ 39
4.1 Method ....................................................................................... 39
4.2 Research Population and Sample ......................................................... 40
4.3 Scope of the Study .......................................................................... 42

Chapter 5 ......................................................................................... 45

5.1 Data Collection ............................................................................. 45
5.2 Categories of Content ..................................................................... 45
Chapter 6 ........................................................................................ 53
6.1 Results ....................................................................................... 53
Chapter 7 ....................................................................................... 71
7.1 Discussion and Conclusion ................................................................ 71
APPENDIX ...................................................................................... 77
BIBLIOGRAPHY .............................................................................. 88

vi

Table 6.1

Table 6.2

Table 6.3

Table 6.4

Table 6.5

LIST OF TABLES

Mean Story Length and Prominence ........................................ 55
Primary Story Topic ........................................................... 57
Primary Story Theme ......................................................... 61
Primary Story Tone ............................................................ 66
Primary Story Source ......................................................... 69

vii

Chapter 1

1.1 Introduction

On July 24, 1991 the Indian government liberalized its economy in a big way. Among
other changes made to the economic policies, the Indian government abolished licensing
requirements for most sectors of the economy, revamped trade policy to encourage
exports, and to increase the flow of foreign investment it relaxed the limit on foreign
ownership of business in joint ventures.

Commenting on the economic liberalization, India Today, the country’s most
influential magazine, described the ideas of the then Prime Minister P.V. Narasimha Rao
and Finance Minister Manmohan Singh as “explosive.” They (Mr. Rao and Mr. Singh),
the magazine wrote, “took the country by the scruff of the neck and said move, or we all
die.”'

The Indian economy was liberalized at a critical juncture when the country was on the
verge of defaulting on its foreign debts. The crisis was averted by borrowings from
International Monetary Fund (IMF) and World Bank on the condition to free Indian
market.2

The steps initiated to free Indian economy in July 1991 were considered to be a
turning point in the nation’s economic history as it was a big departure from more than

four-decade-old state—controlled economy.

 

I Sudoep Chakravarti and R. J agganathan, “New Economic Policy: Ending the Licence Raj,” India Today
August 15, 1991, 10.

2 Nagesh Kumar, Indian economy under reforms: an assessment of economic and social impact, (New
Delhi : Bookwell, 2000). 8.

As written in The New York Times on July 25, 1991:

“Finance Minister Manmohan Singh set into motion today a range of changes

intended to turn India’s back on decades of insularity and government controls and to

attract foreign money. Politicians and economists said the changes marked a turning point

in the nation’s economic history.”3

Among others, the main components of economic liberalization included:

Industrial policy reform: Adoption of new industrial policy by dismantling the
industrial licensing (or approval) system that regulated the industrial investment
in India. Opening new industries and services to private, including foreign private
sector.

Trade policy reform: It involved dismantling of import licensing system and
liberalizing trade regime under World Trade Organization (WT O) agreement.
Devaluation of rupee to make exports more competitive and imports more
expensive, and exchange rate floated to market-determined rate.

Public Sector reform: Government ownership diluted in public sector enterprise
through sale of government equity as well as through fresh issue of capital to the
public. And allowing the closure and restructuring of unviable firms.

Financial Sector reform: Reforms in the financial sectors aimed at strengthening
banks and at deregulating capital markets. The complex structure of differential
interest rates charged and paid by commercial banks was simplified. New private

sector banks were licensed to increase competition in banking sector. Reform of

 

3 Sanjoy Hazarika, “India Retreats From Socialist Past,” The New York Times, July 25, 1991, D1.

capital markets involved financing investment in private sector and attracting
foreign portfolio capital.

0 Tax reform: It involved broadening of the tax base and a reduction in exemptions
was introduced to make up for revenue loss through tariff reductions. Further

simplification of domestic taxes.4

Under a free market system and with a vast middle class of 200 million people, India
was hard to ignore by the multinational companies and business media. Quoting a
Western diplomat on India’s liberalized market The Wall Street Journal on May 4, 1992
wrote, “You’ve got an economic miracle in the making.” 5

During 1991 there was a sharp rise in foreign investment in India. The new norms
enabled speedy clearance of foreign investment proposals worth $80 million, which had
been pending at the time of announcement of reforms. Another $130 million worth
proposals came between September and December 1991.6

For deftly handling its balance of payment crisis and initiating major economic
reforms, India did draw world’s attention.

As reported in The Economic Times on October 11, 1991:

“Surprising everyone here on the eve of the annual meetings of International
Monetary Fund and the World Bank, India appears all set to hog the world’s attention for
the next one week. The credit should largely go to the Managing Director of the IMF, Mr.

Michel Camdessus.

 

‘ Farida C. Khan & Roby Rajan, “International Monetary Fund & World Bank Involvement in India’s
Economic Reforms,” The India Handbook by C. Steven LaRue et al., (Chicago : Fitzroy Dearbom
Publishers, 1997) 271-273.

5 Claudia Rosett, “India Races Toward the Free Market,” The Wall Street Journal, May 4, 1992, A16.
6 AK. Bhattacharya. “New strategy to woo more foreign investment on anvil,” The Economic Times.
January 30, 1992, 1.

Mr. Camdessus, when asked at Thursday’s news conference as to which of the
countries behaved well during an economic crisis and deserved special support, gave a
one-word reply: India. That set the ball rolling. India soon became the talking point of the
IMF and the World Bank as also among the media persons of most international
newspapers.”7

This study will examine such business news coverage of India, before and after
India’s economic liberalization, as reported in four major newspapers from two key
financial markets. Quantitative content analysis will be used to analyze differences in
news coverage of the Indian economy, before and after India’s economic liberalization, in
The Wall Street Journal, The New York Times, Financial Express and The Economic
Times.

Comparing coverage of the Indian economy, before and after India’s liberalization,
will allow for a variety of possibilities in understanding media behavior with respect to
different financial markets in this era of globalization and in terms of agenda setting

CODIBXI.

1.2 Significance of the Problem

A study of business news coverage of India, before and after India’s economic
liberalization, by The Wall Street Joumal, The New York Times and two Indian
newspapers -— Financial Express and The Economic Times and— between 1988 and 1994
is important for several reasons. First, although Indian economic liberalization began

more than a decade ago, it is still an ongoing process as reforms are being introduced in a

 

7 A.K. Bhattacharya, “India recommended for special IMF support,” The Economic Times, October 11,
1991, 16.

phased manner. The Indian economic reform has been discussed and covered extensively
by the business media throughout the world. And this study will focus on understanding
how media reported Indian economy, before and after India’s economic liberalization.

Second, a comparison of business news coverage of India, before and after India’s
economic liberalization, by the four publications will demonstrate how media outlets in
two key financial markets reported on the Indian economy and its reforms (i.e., what each
publication focused on its reports, and why) in this increasingly borderless business
world and what kind of sources set the agenda for business news coverage.

In the globalized business world more and more business news organizations are
opening their bureaus in international centers, Richard Lambert, editor of The Financial
Times wrote in an article in the Media Studies Journal.8 Commenting on the transforming
nature of business news he wrote, like political changes, even economic changes can
have big impact on the world and cited the example of 1997 Asian economic crisis.

This study is based on the assumption that most of the multinationals based in the
US. would be looking at liberalized Indian market to expand their business. On the other
hand, with its liberalized economic policies India would try to attract foreign investment
to strengthen its economy. While highlighting the business aspect of Indian economic
liberalization, the study will analyze the media component dealing with this event.

Third, analyzing how differences in news sources may have affected the nature of
news coverage will provide a clear understanding of the agenda setting function of the
sources. That is, while covering Indian economy and its reforms reporters relied on what

kind of sources — government, business or others.

 

8 Richard Lambert, “Business News and International Reporting,” Media Studies Journal, 13 (Spring-
Summer 1999):78-81.

The time frame of 1988 to 1994 was chosen, as this seven-year period would
cover various phases of Indian economy necessary for the study. The first three and a half
years, 1988 to May 1991, would cover Indian economy before liberalization and the
remaining years from July 1991 to 1994 would cover the initial phase of economic
reforms.

The starting point of study is chosen as 1988 as it marked a stalled period of some
economic reforms initiated in mid 808. In 1985 Prime Minister Rajiv Gandhi started a
period of Indian economic liberalization. Trade and foreign investment were made a little
easy, especially in high-technology areas. Ceilings on firms’ capital and output were
lifted. But, the govemment’s economic liberalization policies were not enough to
eliminate state ownership and control over capital investment, prices, wages and other
economic factors.9

Further, the collapse of communism in Eastem Europe in 1989 and disintegration
of Soviet Union in 1991 has signaled a new framework for international news coverage,
one that has begun to replace the outdated East versus West, bi-polar perspectives.lo

As Lambert wrote in Media Studies Journal:

“One of the most important business stories of the last 20 years was the collapse
of the Soviet Union. What seemed at the time like an event primarily of political and

strategic importance turned out to have profound consequences for financial markets and

business everywhere.

 

9 Janardan Prasad Singh & Rosemary Gibson, “Rajiv’s India Goes Begging for Reform,” The Wall Street
Journal April 11, 1988, 27.

'0 H. Denis Wu, “Systemic determinants of International News Coverage: A Comparision of 38 Countries,”
Journal of Communication, 50 (Spring 2000): 110-130.

...Directly or indirectly, it opened the doors of countries around the world that
had previously been closed to foreign trade and international companies. It turned the
United States into unchallenged global superpower and marked the start of a period in
which the American brand of capitalism swept across the world.

...Even the United States, for all its economic and strategic power, has become
less immune to economic events outside its borders. International trade is accounting for
an increasing share of its economy, and intemational trade conflicts have become a
growing source of aggravation for its policy-makers. US. businesses have greatly
increased their level of investment outside their own borders, and foreign companies have
done the same within the United States.

...All this is transforming the nature of business news reporting.”ll
This requires examining the nature of the US. news coverage of international affairs like
the liberalization of Indian economy. At the same time, it is an opportunity to study
business news coverage in India, which had to initiate economic reforms and other policy
changes in order to adjust to the new world order emerging after the collapse of its long-
time ally, Soviet Union.

India, with its liberalized economic policies tried to attract foreign investment
from other countries, including the United States and this was likely to be reflected in its
media coverage. But, business apart, why should India matter to the United States? This
question seems to be answered by AM. Rosenthal, a long time New York Times’
correspondent to India.

Rosenthal wrote in The New York Times on January 1, 1988:

 

n Lambert, “Business News,” 78-79.

“For Americans what counts about India is not whether Mr. Gandhi (Rajiv
Gandhi, the then prime minister of India) stays or goes but that India remains a free
society, the only large, poverty-stricken country that did not make independence the road
to Communism, right-wing authoritarianism, militarism. That is India’s medal.

If political freedom is important to Americans, individually or as a nation, then
India is important to the US. That was true when India first raised its flag in freedom in
1947. It strikes me that it was never more important than now, when America is trying to
remind the world that it really does care for political freedom and is willing now and

. again to stand up and take some risks for it.”12

1.3 Indian Politico-Economy, Past and Present

As background to this study it is necessary to know and understand the Indian
politico-economic situation and the circumstances that led to economic reforms in India.

The present state of ’ Indian economy is deeply rooted in the long colonial
experience it had under the British. India was exploited for more than 200 years. This not
only provoked nationalism in its leaders and people, but also led them to questioning of
free trade and capitalism as a policy, for it was the mechanism used to drain out India’s
resources.

An underdeveloped Indian economy was marked by many major crises, which
often served as a reason for policy change, whether of liberalizing or centralizing kind.
India has the most heterogeneous society in the world, and therefore national policy
makers at times had to sacrifice high growth rates for the sake of satisfying regional and

group aspirations to ensure national integrity. In addition, the centuries-old caste system

 

'2 A.M. Rosenthal, “On My Mind: New Year In New Delhi,” The New York Times, January 1, 1988, 31.

and a large section of population living below poverty line made socialism look a natural
choice for the country. '3

Although economic history is a continuous process, for the sake of better
understanding the years since Indian independence in 1947 can be broadly broken down

to four major periods.

1.3.1 First Period, I947-65

In 1947, the nationalist elite took over the leadership in India after more than five
decades of struggle against colonial rule. Soon after independence the task was to survive
politically, check famine through food import and to stabilize the economy.
Experimentation with removing rationing and controls led to situation of shortages, so the
controls were reintroduced.

In 1950 a Planning Commission was established to develop the basically
agricultural economy with perhaps lowest per capita income in the world. Prime Minister
Jawaharlal Nehru was the political hero of the era, while the Congress Party was a natural
choice as it inherited popularity from the independence movement. As single largest
party enjoying massive electoral support it could implement the strategy, even if it was
ideologically driven.”

During this period Nehru’s ideology of Socialism combined with his economic
adviser, P.C. Mahalanobis’ concepts drawn from forced-draft industrialization effort of
Soviet Union under Stalin, tried to create a third way between capitalism and

communism.

 

'3 Baldev Raj Nayar, “The Political Economy of India’s Economic Performance since 1947," The India
Handbook by C. Steven LaRue et al., (Chicago : Fitzroy Dearbom Publishers, 1997.) 37-40.
'4 Nayar, “The Political Economy," 41-42.

Although the regime’s agenda was ideologically driven, it was consistent with
mainstream economic thinking of the time that import-substitution-industrialization was
fine as export prospects were poor for the developing countries. The Soviet Union’s help
in building heavy industry and food aid from the United States enabled the regime to

carry out a strategy that otherwise belonged to an authoritarian system.15

1.3.2 Second Period, 1966- 74

The second economic period in independent India was marked with natural
shocks like unprecedented droughts in 1965 and 1966, which led to 20% reduction in
food production. And to worsen the situation there were wars with China in 1962 and
Pakistan in 1965, which prompted India to hurriedly build hitherto neglected defenses.

In addition to drought and war, India’s political system suffered a jolt with the
death of Nehru in 1964 and the country entered a period intense uncertainty and
instability. Lalbahadur Shastri, who succeeded Nehru, died within 20 months in office.
This brought in the era of Nehru’s daughter, Indira Gandhi. She took over power in midst
of enormous food and economic crises. At the same time Congress party split due to
internal problems.

Mrs. Gandhi pushed Shastri’s improved policies on agriculture, which eventually
developed into the Green Revolution. The attempt to push some liberalization measures
initiated by Shastri fell victim to internal political conflict. The growing rivalry between
the United States and Soviet Union after the Cuban missile crisis led to a decrease in

competition to provide aid.‘6

 

'5 Nayar, “The Political Economy,” 40-44.
'6 Nayar, “The Political Economy, 44-47.

10

Mrs. Gandhi’s regime was faced with the task of mobilizing food supplies from
around the world and controlling high inflation triggered by the droughts. The policy
adopted to check inflation led to cuts in public investment, which in turn adversely
affected the infrastructure. At the same time the balance of payment came under crisis
due to lack of foreign exchange. With fall in imports India lagged behind technologically.
And during this period the economy entered a deep recession.

The economic and social problems led to political instability and as a divided
Congress Party took a beating at the national elections, Mrs. Gandhi remained in power
with the support of Communist Party of India and some regional parties. Populism now
came to dominate the political process. This was the time when severe attack was
mounted against the private sector; big business was subjected to controls through MRTP
(Monopolies and Restrictive Trade Practices Act) regime while licensing regime was
made even more restrictive.17

Her massive victory in 1971 elections marked even more radical leftward shift.
Supported by former communists in her party, she nationalized the coal industry, the
copper industry, a large part if the textile industry and general insurance; this was the
period when the public sector rapidly expanded. Further, foreign corporations were made
subject to stricter controls under FERA (Foreign Exchange Regulation Act) regime,
which required most to hold no more than 40% of equity in local ventures.

Later, a new wave of shocks stemmed from another war with Pakistan in 1971.
Some 10 million refugees moved to India from Eastern Pakistan (now Bangladesh), the

United States suspended food aid and other economic assistance, and oil prices increased

 

'7 Nayar, “The Political Economy,” 44-47.

11

in 1973. All these served another blow to the nation’s balance of payments and faltering
of Green Revolution due to failure in rains that increased the inflation. At this juncture,
India changed economic course by adopting the first severe deflationary package to cope
with inflation and partially relaxed licensing guidelines to increase production in some
industrial sectors. 18

1.3.3 Third Period, 1975-May 1991

To start with, in 1975 Indira Gandhi declared a national emergency, as she feared
a threat to her government by the socialist trade union movement. In her view, the
emergency was declared to protect against external imperialist threats and internal
capitalist ones. Amidst political and economic chaos average annual per capita income in
1975 stood only at about US$600.l9 The emergency marked an initiative to dismantle a
heavily regulated economy.

The government started permitting industries to expand capacity and produce in
related areas (a practice called broad banding) and lifted the ceilings of the Monopolies
and Restrictive Trade Practices (MRTP) Act. The elections, which followed 20-month
emergency rule, led to defeat of Indira Gandhi by a coalition of political parties known as
Janata Party. The new coalition government led by Morarji Desai continued to deregulate
the economy while encouraging the rural development. But the coalition broke down in
1979 while India was reeling under impact of another drought and a second oil price
shock.

Indira Gandhi returned to power in the following elections. This time she not only

had to tackle the economic crisis from the oil price shock and the drought but also the

 

" Nayar, “The Political Economy,” 44-47.
'9 Chirstopher Candland, “Mid-19705 to the Present," The India Handbook by C. Steven LaRue et al.,
(Chicago : Fitzroy Dearbom Publishers, 1997) 21.

12

burden of higher defense spending in response to the renewal of the US. military aid to
Pakistan in wake of Soviet intervention in Afghanistan.

To solve the balance-of-payment crisis caused by oil price increases, she had to
negotiate US$58 billion loan from IMF in 1981. The loan came with some conditions.
The government did not agree to a currency devaluation in 1981, but did initiate some
changes in financial and import policies. Some anti-inflation measures were also taken in
the form of dropping the bank lending rates and raising minimum reserve requirements.
The problem of national unity in Punjab and Assam, which troubled Indira Gandhi for
some time led to her assassination in 1984.20

Rajiv Gandhi, son of Indira Gandhi, won the ensuing elections on a sympathy
wave for his mother’s martyrdom. In 1985, he began promoting market-oriented reforms.
Import tariffs were lowered on the grounds to acquire higher technology and new items
were made available for import.

During this time India borrowed heavily from abroad. Most of the borrowing was
from commercial banks and a major part was in the form of Non-Resident Indian (NR1)
deposits, which were short-term and high interest loans. As a result the debt service
burden rose sharply.21 Amidst a growing economic crisis and the allegations of accepting
huge pay-offs in the Bofors arms scandal, a politically inexperienced Rajiv Gandhi and
his Congress party lost in 1989 elections.

A new coalition government headed by the Janata Dal leader, V.P. Singh held the
office until Bharatiya Janata Party (BJP) withdrew its support in October 1990, which led

to fall of the government. And a new breakaway faction of the coalition headed by

 

2° Nayar, “The Political Economy,” 44-47.
2' Jeffrey D. Sachs, Ashutosh Varshney and Nirupam Bajpai, India in the Era of Economic Reforms
(Oxford University Press, 1999), 2.

l3

Chandra Shekhar took over power. This government attempted to shift attention to
agriculture. But even the Chandra Shekhar led government lost the outside support of

Congress (I) and collapsed amidst an economic crisis.22

As The New York Times reported on April 16, 1991:

“Although it is staggering under a foreign debt burden of more than $70 billion,
India will not default on its loans or seek a debt rescheduling, the country’s top financial
official said on Sunday.

...A political crisis, in which two Governments have fallen in the last 16 months,
has led to the suspension of talks with the International Monetary Fund for second loan
and to the down grading of country’s credit rating. It also ruined possibilities for further
commercial borrowings from foreign banks.

IMF talks about a $2 billion loan will resume after elections at the end of May and

when the new Government approves the budget.”23

The prevailing economic crisis was aggravated by an earlier outbreak of the
international conflict over Iraq’s invasion of Kuwait. The Gulf War in 1990 had caused
oil prices to shoot up, which in turn put severe strain on India’s balance-of-payments
already made frail by years of large fiscal deficits and increasing internal debt. Even
though oil prices were quickly normalized by early 1991, at this critical time of internal
political instability the balance-of—payments problem quickly ballooned into a crisis of

confidence. There was a fast depletion in the capital due to heavy withdrawal of non-

 

” Nayar, “The Political Economy,” 47-52.
23 “India Vows Not to Default,” The New York Times, April 16, 1991, D18.

14

resident deposits from banking system and reluctance of international banks to extend
new loans.24

Meanwhile, in the elections that followed in May-June 1991, Congress (I)25
suffered a major blow with the assassination of Rajiv Gandhi during the electoral

campaign; although Congress (I) won the elections it didn’t get an absolute majority. It

had to face a grave economic crisis as a minority government.

1.3.4 Fourth Period, July 1991 and Beyond

The new Congress (1) government led by Prime Minister P.V. Narasimha Rao and
Finance Minister Manmohan Singh found itself in a grave fiscal situation when it took
office in June 1991. At this point India’s foreign exchange reserves dropped to $1.2
billion, barely sufficient for two weeks of imports and a default on external payments
appeared imminent.

An excerpt from the Finance Minister Manmohan Singh’s budget day speech on
July 24, 1991 when he also announced historic economic reforms sums up the nature of
economic crisis faced by India:

“The new government, which assumed office barely a month ago, inherited an
economy in deep crisis. The balance of payments situation is precarious. International
confidence in our economy was strong until November 1989 when the party was in
office. However, due to the combined impact of political instability witnessed thereafter,
the accentuation of fiscal imbalances and the Gulf crisis, there was great weakening of

international confidence. There has been a sharp decline in deposits.

 

2‘ Montek S. Ahluwalia, in India in the Era of Economic Reforms, by Jeffrey D. Sachs and et al. (Oxford
University Press, 1999), 28.

25 In Congress (I), “1” stands for Indira Gandhi. Congress party of India had split into two groups due to
differences within the party and the majority group was called Congress (I).

15

As a result, despite large borrowings from the International Monetary Fund in
July 1990 and January 1991, there was sharp reduction in our foreign exchange reserves.
We have been at the edge of a precipice since December 1990 and more so since April
1991. The foreign exchange crisis constitutes a serious threat to the sustainability of
growth process and orderly implementation of our development programs.

Due to a combination of internal and external factors, the inflationary pressures
on the price level have increased very substantially since mid 1991. The people of India
have to face double-digit inflation, which hurts most of the poorer sections of our society.
In sum, the crisis in the economy is both acute and deep. We have not experienced
anything similar in the history of independent India.”26

The speech was followed by announcement of 1991-92 budget and the historic
fiscal policy reform to open up Indian market and integrate it with global economy. The
following morning some of the newspaper headlines read: “Radical changes announced

”28

in new industrial policy.”27 “India Retreats from Socialist Past. “Licensing goes;

foreign equity up to 51%.”29
Among others main components of economic liberalization included:

0 Industrial Policy Reform: Radical changes were brought in the industrial policy

by virtual dismantling of the system of industrial licensing. License requirements

for entry of new firms and for the growth of existing firms were abolished, except

for a few strategic and hazardous industries and some reserved for small-scale

sector. The law regulating monopolies was greatly amended to facilitate the

 

2‘ “Finance Minister’s Speech — Part A,” The Economic Times, July 25, 1991.
27 Economic Times, July 25, 1991, l.

1’ The New York Times, July 25, 1991, D1.

29 Financial Express, July 25, 1991, 1.

16

growth of firms through mergers and acquisitions. Portfolio investments (shares,
debentures etc.) were opened for foreign institutional investors. The limit of
foreign equity holding was raised from 40% to 51%.30
0 Trade Policy Reform: Import restrictions were dismantled, allowing free import of
machinery and other inputs. Tariff levels were reduced significantly. The rupee
was devalued significantly to make exports more competitive and imports more
expensive and exchange rate was floated to a market-determined rate. Except for
some services, like import of some consumer goods, travel and purchase of
insurance abroad, all current account transactions were permitted without
government approval.31
0 Public Sector Reform: India did not undertake a massive privatization of public
sector enterprises. The government ownership was reduced through sale of
government equity as well as through fresh issue of capital to the public. Areas
earlier reserved for public sector, such as telecommunication, civil aviation,
petroleum exploration and refining were opened for private sector. A policy was
made to allow the closure and restructuring of unviable firms.32
0 Financial Sector Reform: These reforms were aimed at strengthening of banks
and deregulation of capital markets. To ensure resources available in the form of

bank deposits are released for the private sector and not preempted by the

government, both statutory liquidity ratio (the minimum percentage of deposits

 

3° Farida C. Khan & Roby Ranjan, “International Monetary Fund and World Bank Involvement in India’s
Economic Reforms,” The India Handbook by C. Steven LaRue et al., (Chicago : Fitzroy Dearbom
Publishers, 1997) 271.

3' Ibid 272.

32 Khan & Ranjan, “lntemational Monetary Fund and World Bank Involvement in India’s Economic
Reforms,” 272.

17

that banks must hold in government securities) and cash reserve ration (the
minimum proportion of deposits that banks must hold in cash) were reduced. The
complex structure of differential interest rates was simplified and rationalized.
Accounting practice and prudential norms were conformed to the international
standards. New private sector banks were licensed to increase competition.
Financing investment in private sector and attracting foreign portfolio capital
were a part of the capital markets’ reform. Foreign institutional investors were
allowed to invest in the capital market. Indian company shares were also issued
abroad to get foreign portfolio investment. Securities and Exchange Board of
India was set up to oversee deregulated Indian capital market. Foreign
institutional investors were now welcome to invest in all types of securities traded
on primary and secondary market without restrictions on either volume of trading
or lock-in-period.33

Tax Reform: Broadening of the tax base and a reduction in exemptions were
introduced as a part of far reaching tax reforms. Main features of tax reform
include reduction in the maximum marginal rate of personal income tax,
exemption of all financial assets from the wealth tax, reduction of corporate
income tax, reduction in custom duties and rationalizing a bulk of taxes. Further

simplification and rationalization of domestic indirect taxes.34

1.4 Effect of Reforms

The opening up of Indian economy with more than 200 million middle-class

population was hard to ignore by the multinational corporations. As a result the Foreign

 

3’ Ibid 272-273.
3‘ Ibid 273.

18

Direct Investment inflows from the US. alone went up from $650 million in 1991 to
about $700 million in 1992. In 1993 it went to a level of $900 million.35

Commenting on the initial results of new economic policy Ahluwalia, member of
Indian Planning Commission wrote, “This may not appear impressive compared to the
volumes attracted by many other countries, but it represents a dramatic increase from
earlier levels and it is growing.”36

According to Ahluwalia, the change in the foreign investment environment in India
is reflected in he fact that a large number of Indian companies have sought foreign joint
venture partners while major foreign investors have focused on India for the first time.

The new investors included several Fortune 500 companies such as General

Motors, Ford, Merck, Sony, Honda Motor, Hewlett Packard, Texas Instruments, LG

International, Fanuc, Samsung, Du Pont, AT&T, BT, Enron, Shell and a host of others?7

 

35 The Economic Times, July 27, 1993, 6.
:: Montek S. Ahluwalia, in “India in the Era of Economic Reforms,” by Sachs & et al, 54.
Ibid 54.

19

Chapter 2

2.1 Theoretical Framework

The purpose of this study is to analyze and compare the news coverage of the
Indian economy, before and after India’s economic liberalization, in two American
newspapers and two Indian newspapers — to investigate coverage of business in an
agenda-setting context. A natural time block divides the study into two periods - before
economic liberalization (before June 1991) and after economic liberalization (after July
1991). Accordingly, this allowed the research to investigate the issue with a longitudinal
basis and approach -- between period one and two.

Shoemaker and Reese consider that media coverage in any system is shaped by
unique combination of features operating at a variety of levels. Among others, these
features include extra-media forces such as sources of information and revenue,
government, various powerful social institutions, the utilization of technology, and the
economic environment. 38

The economic relationship between countries is an important determinant of
international news and information flow. The economic association involves international
trade, the amount of foreign aid given or received, and the amount of business
investments between nations. Transnational information flow is a reflection and a
constituent of the larger global system, which in turn is latently structured by the world’s

politics, economy, and culture.39

 

38 Pamela J. Shoemaker & Stephen D. Reese, “Mediating the messageztheories of influences on mass media
content,” (White Plains, NY. : Longman, 1996).
39 See Harry B. Ellis, “Reporting on International Economic Affairs,” in Kohlmeier et al. 245.

20

While investigating the influences of systematic determinants on international
news coverage Wu concluded that; “Evidence from the post-Cold War era seems to
signal a new framework for international news coverage. Now, it appears to be economic
interests, rather than ideological antagonism, that play the central role in determining
news about other nations.” 40

According to Wu, there is the level of daily economic interaction between nations.
Those countries that are trading partners are particularly important to the governments,
corporations, business people, and even average citizens. Wu explained that; “When
countries are without the constant threat of nuclear missiles from an opposing bloc,
economic issues become the single overseas topic cared about by the audience and
focused on by news professionals.”

To support his point that international economic issues have gained prominence in
news media, Wu cited the example of extensive coverage of the Asian economic crisis by
the global media. Wu stressed that economic interest leads not only to coverage about
economic activities, but also about many other topics about foreign countries.

In the growing global economy it is clear that American companies would look
beyond Europe to invest in any number of developing countries."1 For instance,
considering the liberalized economy and vast middle-class population of India, the

multinational companies of the US. might want to learn more about the Indian market

and consumer behavior to expand their business.

 

‘0 H. Denis Wu, “Systemic determinants of International News Coverage: A Comparision of 38 Countries,”
Journal of Communication 50 (Spring 2000): 110-130.
“ John Maxwell Hamilton, “Foreign Affairs at Home,” Nieman Reports, 25 (fall 1991): 10.

21

On the other hand, the Indian government with its liberalized economic policies
would try to attract foreign investment to increase employment and strengthen its
economy.

Richard Lambert, Editor of the Financial Times wrote in the Media Studies
Joumal that the global integration of economy necessitated news about all the important
financial exchanges of the world because investors own shares in those markets, and
interest rate moves there would influence trading in their own domestic centers."2

Lambert explained that; “Business readers are looking for a context to help them
understand events in their own marketplace.” According to Lambert, this emphasis on

business as opposed to general news reporting is reconfiguring the landscape of

international news.

2.2 Importance of Reportng Business News

Bill Saporito, business editor of Time magazine, wrote in the Columbia
Journalism Review that the most notable aspect of business and financial journalism
today is how much we all need it.43 According to Saporito, newspapers have poured
resources into expanded business sections. He explained that; “Business had become war.
Accurate intelligence was becoming essential.”44

From 19803, American newspapers have greatly expanded their coverage of
business news, and have sharpened the purposes and objectives of their business reporters

because the American people have become increasingly inquisitive in the workings of

their national economy. As economic forces continue to squeeze Americans into more

 

‘2 Richard Lambert, “Business News and International Reporting," Media Studies Journal, 13 (1999): 80.
’3 Bill Saporito , “The Business century,” Columbia Journalism Review. Web resource available at
<http:l/www.cir.org/year/99/2/business.aJsp, March/April 1999)
44 .

Ibid.

22

restricted and unaccustomed lifestyles, the public is no longer satisfied to leave the
nation’s economic problems to the experts. They want to know what’s wrong, and who is
to blame.45

There are studies which pointed out importance of business news to journalists,
people, and executives. Journalists are interested in business news because of increasing
prominence of economic issues, people want to know about the market so as to invest
money at right places, and executives want latest economic news updates to do well in
business.

For instance, Chris Welles gave several reasons for the new flowering of business
journalism. First, the increased prominence of business and economic issues, such as
energy, inflation, and the dollar. Second, there is a growing realization, stemming in part
from the uncertain economic environment of the 1970s, that the activities of corporations,
which touch people in many important ways, are matters of interest and concern not just
to businessmen but also to the entire society. Perhaps most important, there has been a
realization by newspaper and magazine editors that readers do not necessarily find
business coverage tedious and boring.46 Welles concluded, “In the view of many
businessmen, the most serious deficiency of the business press these days is an
ideological antibusiness bias.”47

Welles points that much of the business community’s dissatisfaction with

business news coverage today can be attributed to a new approach in handling the

business story. Welles argues that business news journalists often raise questions which

 

‘5 William McPhatter, The Business Beat: Its Impact and Its Problems (Indianapolis: Bobbs-Merrill
Educational Publishing, 1980), vii.

’6 Chirs Welles, in The Business beat: Its Impact and Its Problems, by William McPhatter(1ndianapolis:
Bobbs-Merrill Educational Publishing, 1980), 24.

‘7 Ibid., 27.

23

corporate executives do not like to answer. According to Welles, “these new inquiries air
criticisms of corporate practices, and that information which companies would like to
keep private is now becoming public.”48
Isadore Barmash observed that people are interested in business and financial
news because of the significance of economic matters on the country’s well being.49 He
cited examples like the risk of runaway inflation, unemployment, the energy crisis,
business mergers, consumerism, and, of course, the infinitely frustrating stock market.
Lewis H. Young contends that business executives believe news coverage of
business is “unfair, distorted, ignorant, slanted and conspiratorial.”50 Interestingly, Young
writes that he knows many reporters and editors who have similar feelings about
business. Several members of this group specialize in business coverage, and view
corporate executives as “dishonest, greedy, antisocial, powerful, and caring only about
corporate earnings and their own salaries.”5 I
According to Michael J. J ablonski, business reporters have come to grant business
its due. More experienced reporters are covering beats for which they were specifically
trained, like economics, law and finance beats. While they are more skeptical of what
they are told, they are still less biased against businesss2

Isadore Barmash observed that a business story should relate the pertinent facts

and give at least some interpretation about a particular business, financial or economic

 

‘8 McPhatter, The Business Beat: Its Impact and Its Problems, by William McPhatter, xiv-xv.

‘9 Isadore Barmash, in The Business Beat: Its Impact and Its Problems, by William McPhatter
(Indianapolis: Bobbs-Merrill Educational Publishing, 1980), 86-87.

50 McPhatter, The Business Beat: Its Impact and Its Problems, xiii—xiv.

5' McPhatter, The Business Beat: Its Impact and Its Problems, by William McPhatter, xiv.

52 Michael J. Jablonski, in The Business Beat: Its Impact and Its Problems, by William McPhatter
(Indianapolis: Bobbs-Merrill Educational Publishing, 1980), 72.

24

situation, company or industry.53 While trying to answer for whom is the business story
for, Barmash suggested that “the real goal of business story is that it should serve the
knowledge needs of as many people as possible, including everyone who works for,
serves or competes with the company or works in the industry you have written about?“

Barmash main concern is that the business story should be written for the public
in general, not just for the professional, i.e., “Business journalism should be a public
service, not just a business service. And besides, pursued with conviction, gusto, and
some vision, business reporting can be very exciting indeed.”SS

Young concluded that the free enterprise system, which has done so much to raise
the standard of living for Americans and assure them more freedom than any other, needs
both a strong free press and a strong business community. Moreover, both need to be
respected by the public and each other. “The open warfare the media and business are
approaching could destroy them both.”56

And commenting on Indian business journalism Swaminathan Aiyar,
correspondent of The Economic Times wrote, economic liberalization since 1991 has led
to an explosive growth of the media, and of business and economic journalism in

particular. 57 Aiyar pointed out that the Indian stock market has soared and international

portfolio investment in the markets increased to almost $10 billion. Further, Indian

 

’3 Isadore Barmash, in The Business Beat: Its Impact and Its Problems, by William McPhatter
(Indianapolis: Bobbs-Merrill Educational Publishing, 1980), 72.

5‘ Ibid., 73.

55 Barmash, The Business Beat: Its Impact and Its Problems, 73.

5” Lewis H. Young, in The Business Beat: Its Impact and Its Problems, by William McPhatter
(Indianapolis: Bobbs—Merrill Educational Publishing, 1980), 2.

57 Swaminathan Aiyar, India Country Assistance Evaluation: World Bank’s Image and Outreach
Effectiveness in the 19905, 3. Retrieved from the World Wide Web on August 9, 2002.

<httD://wbln001 8.worldb&_1nk.orQ/06d/oeddoclib.nsf/ae4928c9568130628525680800680027/5505c
w7de§0585256b26007e402dl§FlLE/Outregch.pdf.>

25

companies have increasingly listed equity abroad in the form of Global Depository
Receipts and American Depository Receipts.

Aiyar writes that; “This (opening of Indian economy) has induced considerable
foreign interest, so the foreign media have greatly increased their staff and coverage in
India.” According to Aiyar, the local business press also expanded fast. Example being,
The Economic Times, India’s prominent financial daily, increased its circulation from
around 100,000 in 1990 to 400,000 in 2000.58

In view of escalating prominence of global economy, the agenda-setting
hypothesis -- broadly analyzed in numerous domestic and foreign policies -- has also
been applied to a few studies on international trade issues and commercial policies. In
line with earlier studies it would be interesting to examine how media from two different
financial markets report on Indian economy, before and after India’s economic
liberalization? And who sets agenda for business news coverage in a changing global
economy?

Previous research59 clearly indicated that there are number of sources for the
media agenda. In increasingly globalized economy the news media are potentially highly
susceptible to external forces, including international financial issues and multinational
corporations. This research can therefore provide insights in future studies of association

between economic liberalization and the press.

 

5‘ Ibid.

59 For instance, Kuang-Kuo Chang found that auto elite set the agenda for the New York Times and the
Detroit News (Kuang-Kuo Chang, “Auto trade Policy and the Press: Auto elite as a source of the media
agenda,” Journalism and Mass Communication Quarterly 76 [Summer 1999]: 312-324). Likewise,
Congress, public officials, and private sectors were major sources of agenda (David Weaver and Swanzy

N imley Elliott, “Who Sets the Agenda for the Media? A Study of Local Agenda-Building,” Journalism
Quarterly 62 [Spring 1985]: 91). Wanata and some other scholars find the US. president can set the media
agenda (Wayne Wanta, “Presidential Approval Ratings as a Variable in the Agenda-Building Process,"
Journalism Quarterly 68 [Winter 1991]: 672-79).

26

2.3 Previous Studies on Reporting Business News

Previous studies on business news coverage and agenda-setting, related to the
present research topic, were reviewed. Some of the major topics studied include how
magazine coverage of international business has changed, international news coverage
agenda setting, and coverage of the international financial debt crisis.

Mayo and Pasadeos’ content analysis of Business Week, Forbes and Fortune
revealed that about one out of every six business stories focused on international news,
increasingly with a global emphasis. 6° The sample of 1964-1968, 1974-1978 and 1984-
1988 stories found that although there were more stories in the later than earlier period,
they were shorter. So the amount of the total space devoted to international stories
remained constant, reflecting trends in other US. print media.“

Their study found that the Americans first saw the concept of global economic
interdependence in 1970s in the form of oil crisis, gains of Japanese automobile
manufactures in the US. market, and the transfer of low-level manufacturing tasks to
cheap-labor in developing countries, among other things.

Mayo and Pasadeos’ study also found that in 1984-88 despite setting in of
glasnost/perestroika process there was a little coverage of Soviet Union and Eastern
Europe, and the market potential of a liberalized Eastern Bloc got little coverage. Even
China’s economic liberalization in the 1970’s did not receive increased coverage in the

business magazines.62

 

6° Charles Mayo and Yorgo Pasadeos, “Changes in the International Focus of US. Business Magazines,
1964-1988,” Journalism Quarterly, 68 (Fall 1991): 509-514.

6' See, for example, Michael Emery, “An Endangered Species: The International Newshole," Gannett
Center Journal 3(4): 151-164 (1989).

‘2 Mayo and Pasadeos, “Changes in the International Focus,” 513-514.

27

In this background the present study while analyzing and comparing the business
news coverage of India would examine how the coverage changed after India’s economic
liberalization in July 1991 i.e., whether there was an increase in the news coverage, both
in American and Indian newspapers.

Another study, which did not specifically focus on business news coverage, but
examined effect of U.S.-India relations on the New York Times coverage” found that
changes in mean length and prominence scores of items on India in the New York Times
over the four foreign policy periods (between 1973 and 1980) were not significant and
did not parallel US. foreign policy toward India during the time.

In order to find out how newspapers from different financial markets covered the
Asian economic crisis, Emcharoen did content analysis of three newspapers - The Wall
Street Journal, Bangkok Post and Financial Times.64 Emcharoen’s study found that
among the three newspapers, The Wall Street Journal while providing balanced coverage
of the Asian crisis, focused on the impact of the crisis on Asian Pacific Rim countries, as
also on world at large. Of the three publications, The Wall Street Journal was found to be
the most effective, influential “watchdog.”

The Bangkok Post gave complete coverage of the impact of the crisis on
Thailand’s economy, and on resolution of the crisis. It also gave best local perspective of
the crisis. The coverage of Financial Times was not as balanced as the other two
publications. Financial Times started covering the crisis only after it appeared to become

a global crisis. The emphasis of Financial Times reports was on the effect of Asian crisis

 

‘3 J yotika Ramaprasad and Daniel Riffe, Effect of U.S.-India Relations on New York Times Coverage,
Journalism Quarterly (Summer-Autumn 1987), 537-542.

6‘ Sathathip Emcharoen, “News Coverage of the Asian Economic Crisis in The Wall Street Journal,
Bangkok Post and Financial Times, 1997-1999,” M.A Thesis, California State University, Northridge,
2000, viii.

28

on banks and crisis resolution. The study concluded that the differences in geography and
culture had affected the nature of coverage.

Emcharoen applied cultural theory to her study, but the present study examining
the coverage of the Indian economy, before and after India’s economic liberalization, will
be conducting the research in the agenda-setting context. Here the focus of research will
be on finding who sets the agenda for business news coverage of global economic issues.

Since the first agenda-setting research was published,65 this hypothesis was
broadly examined, developed and extended in theories, methodology and application.
The agenda-setting hypothesis basically states that media content affects how the public
perceives the salience of today’s issues or events.‘56 Its broad application has reached over
to a variety of international issues. For instance, Zucker’s concept of issue
obtrusiveness67 argues that international activities are more likely than local or national
issues to have a strong agenda-setting effect because the public’s personal involvement is
trivial and has to depend mostly on the news media for the information.

At the same time international business issues may be perceived to be of less
prominence because of their abstractness. Yagade and Dozier indicate that news coverage
of concrete issues, which can be identified and experienced by individuals, has a greater
agenda-setting influence than does that of abstract ones.68 Likewise, Wanta and flu offer

similar evidence that the international trade issues are “abstract” and “stories... involving

 

‘5 Maxwell McCombs and Donald Shaw, “The Agenda-Setting Function of the Mass Media," Public
Opinion Quarterly, 36 (Summer 1972): 176-87.

66 Maxwell E. McCombs, “Explorers a Surveys: Expanding Strategies for Agenda-Setting Research,”
Journalism Quarterly, 69 (Winter 1992): 813-24.

‘7 Harold G. Zucker, “The Variable Nature of News Media Influence,” in Communication Yearbook 2, ed.
B.D. Ruben (New Brunswick, NJ: New Transaction, 1978, 225-40.

‘8 Aileen Yagade and David Dozier, "The Media Agenda-Setting Effect of Concrete Versus Abstract
Issue," Journalism Quarterly, 67 (spring 1990): 310.

29

a trade agreement should produce weaker agenda-setting effects,” because the people
“cannot picture in their minds billions of dollars of (the trade) debt.”69

Although previous studies have shed some light on overall agenda-setting effect
of the international trade issues, most of these studies revealed loopholes in wake of the
diverse nature of world trade activities and accompanying problems. For instance, for
American multinational companies opening of Indian economy could mean cheap-labor
and huge potential consumer market. This may be welcome news for Indian market, but
that may sound alarm for American job market. The point here is that personal
experience of gaining more profits or facing threat of unemployment can transform such
global economic issues into concrete and notable ones.

Furthermore, most of the times researchers seem to overlook or fail to discuss the
potential contradictions between the concepts of issue obtrusiveness and concreteness,
which are negatively correlated — the more obtrusive, the less powerful, while the more
concrete, the more powerful the agenda-setting effect of media coverage. Personal
involvement or experience can be regarded as the key for both concepts to the intensity of
the agenda-setting effect by the news media. The basic problem is, however, that for an
event or issue to be concrete, it is also very likely to be personal for media consumers. In
other words, a concrete issue can also be a local issue, vice versa. For instance, in the
U.S.-India Information Technology trade issue, the increase of IT business in Silicon
Valley could mean more employment for Indian software professionals, but increased

competition for jobs in Silicon Valley. Accordingly, personal experience would make this

trade issue both concrete and obtrusive.

 

‘9 Wayne Wanta and Yu-Wei Hu, "The Agenda-Setting Effects of International News Coverage: An
Examination of Differing News Frames," International Journal of Public Opinion Research, 3 (autumn
1993): 253.

30

Thus logically, an international business issue can be both obtrusive with weaker
agenda-setting effects (when converted into a local issue), and concrete with strong
effects (when more people personally face the threat of layoff). Accordingly, the
reasoning by Zucker and some researchers can be mistaken because they seem to see the
international business issues and problems possessing only the characteristic of
concreteness, not obtrusiveness.

This contradiction, however, has been recognized and explained by some
scholars. Lasorsa and Wanta claim that “personal experience was a positive influence on
media agenda conformity: the more a person was personally involved in an issue, the

”70

more likely he or she was to conform to the news media agenda, and thus agenda-

1 as well as Erbring and

setting effect is stronger. Furthermore, Iyengar and Kinder,7
associates,72 also find similar ties between personal involvement and the agenda setting
effect.

Who sets the Media Agenda? According to Zhu, interest groups are effective in
setting the agenda for press. Zhu explains, “Interest groups initially identify, define and
raise social issues. Therefore, their agenda is the source of the public agenda. The media

select, redefine and amplify some of the interest group issues, with both ordinary citizens

and policymakers as the target. In this sense, the media are instrumental.”73

 

7° Dominic L. Lasorsa and Wayne Wanta, “Effects of Personal, Interpersonal and Media Experience on
Issue Salience,” Journalism Quarterly, 67 (Summer 1990): 812.

7' S. Iyengar and D. Kinder, “More Than Meets the Eye: Television News, Priming, and Public Evaluation
of the President,” in Public Communication and Behavior, ed. G. Comstock (New York: Acadenic Press,
1985).

72 L. Erbring, E. Goldenberg and A. Miller, “Front-page news and realworld cues: A new look at agenda-
setting by the media,” American Journal of Political Science, 24 (February 1980): 16-49.

73 Jian-Hua Zhu, Issue Competition and Attention Distraction: A Zero - Sum Theory of Agenda-Setting,”
Journalism Quarterly, 69 (Winter 1992): 826.

31

The relationship of the news media and sources has also been examined by Sigal,
Shoemaker and Reese, and Turk. In his study, Sigal claims that the news media over-
relied on governmental officials through routine channels-official proceedings, press
releases, press conferences, and speeches.74 In a content analysis of the New York Times
and Washington Post, Sigal found that US. (federal) government officials, particularly at
the executive branch, accounted for almost half the news sources in his sampled front-
page stories.75 Sigal also argues that while public officials predominated as the prime
sources for the news media, the US. Congressmen had gained an increasing role as news
sources over the past decades.76

Shoemaker and Reese further define sources as "external suppliers of raw
material, whether speeches, interviews, corporate reports, or government hearings."77
They pinpoint that "sources have a tremendous effect on mass media content, because
journalists can't include in their news reports what they don't know."78 They also argue
that the media's over reliance on government officials is due to officials ' availability,
authority, and credibility. More important, powerful and resourceful interest groups tend
to directly influence or control media's content by ways of routine conduits.79

Furthermore, at the local level, Weaver and Elliott find that local newspapers tend

to serve as a "transmitter" rather than a "filter," or agenda setter, as they fundamentally

follow and reflect "the priorities of the city council on major items."80 And such a role by

 

7" Leon V. Sigal, “Channels and Sources of News,” in Reports and Officials: The Organization and Politics
ostewsmaking (Lexington, MA: D.C. Heath and Company, 1973), 119-30.

7 Sigal, “Channels and Sources of News,”l 19-30.

7‘ Sigal, “Channels and Sources of News,” 119-30.

77 PJ. Shoemaker and SD. Reese, “Influences of Media Routines,” Mediating The Messages: Theories of
Influences on Mass Media Content (NY: Longman, 1991): 105.

73 Shoemaker and Reese, “Influences on Content from Outside of Media Organizations,” 178.

79 Shoemaker and Reese, “Influences on Content from Outside of Media Organizations,” 175-220.

8° Weaver and Elliot, “Who Sets the Agenda for the for the Media?” 91.

32

the press is more prominent on economic topics that are considered by journalists to be
policy matters and require political decisions.“ Similarly, Turk, who examines the impact
of public information officials as news sources upon the local papers' news content,
points out that: "... the [local government officials as] sources of the raw material of
information upon which journalists rely may ultimately have as much to do with the
media's agenda."82

In another study Chang found that auto elite set the agenda for the New York
Times and the Detroit News.83 And in the coverage of auto trade conflicts between the
US. and Japan, both the newspapers were biased towards fair trade and not free trade.
The study concluded that the newspapers also depended on government sources serving
in the US. or overseas for information of the trade negotiations.

The present research while analyzing and comparing the coverage of Indian
business news would look at the story sources to identify what kind of sources were
setting the agenda for the business news coverage, i.e., whether the reporters were relying
more on business or government sources.

As in another study Menon’s research revealed that in developing countries
international financial institutions were used as sources about 41 percent of the time,

compared to only 29 percent of the developed countries. 8" Developing nations were

found to be heavily reliant on government sources for information, suggesting that in the

 

8‘ Weaver and Elliot, “Who Sets the Agenda for the for the Media?” 87-94.

82 Judy VanSlyke Turk, “Public Relations’ Influence on the News,” Newspaper Research Journal, 7
(Summer 1986) 15.

83 Kuang-Kuo Chang, “Auto trade policy and the press: Auto elite as a source of the media agenda,”
Journalism and Mass Communication Quarterly, 76 (Summer 1999): 312-324.

8‘ Vinod Menon, “Media Coverage of International Financial Institutions During the Debt Crisis: A
Comparative Analysis," M.A. thesis, Ohio State University, 1996 v.

33

absence of other authoritative and reliable sources of information, the media relies on
government sources.

Menon’s findings suggest that the press in developing countries tend to focus a lot
on the reasons behind the economic crisis, and attempts to interpret it in both economic
and political terms. Menon’s study indicates that the media tends to focus more on
economic and political solutions to economic problems. They also try to interpret the
outcome of current policies in terms of economic effects, discussing currency values and
market trends.

All the studies on business news coverage indicated that financial or business
journalism has been influenced by the changing global economy. And that various kinds
of sources play a role in shaping the business news. The studies also revealed that
international economic issues are affecting personal lives as they have a direct impact on

the local business issues.

34

Chapter 3
3.1 Hypothesis and Research Questions

In an earlier study, Ramaprasad and Riffe85 examined the effect of U.S.-India
relations on the New York Times coverage. Their operational question was whether news
coverage given to India by the New York Times between 1973 and 1980 relate to trends in
the US. foreign policy towards India in those years? Were any changes purely
quantitative (i.e., were there increases or decreases in sheer volume total inches of
coverage), or were there parallel qualitative trends in coverage (i.e., were there changes
in the emphasis on certain types of “positive” or “negative” news?).

According to Ramaprasad and Riffe, the distinction between quantity and quality
of coverage is important because changes in sheer volume of coverage may simply point
to presence and mobility of Western correspondents, or accessibility of news sources.
Beyond these structural factors, however, there remains a question of news judgment.
Was pro-India policy paralleled by an increase in sheer quantity of coverage of India?
...Or in times of anti-India policy, were negative news items over-represented?86

On similar lines, the operational question examined in this study was: did
business news coverage of India by the American and Indian newspapers between 1988
and 1994 relate to trends in Indian economic policies, given the fact that Indian economy
was liberalized in a big way in July 1991.

Were any changes only quantitative? In other words, were there increases or

decreases in sheer volume or total number of paragraphs, or were there parallel

 

85 Jyotika Ramaprasad and Daniel Riffe, “Effect of US. - India Relations on New York Times Coverage,”
{oournalism Quarterly (Summer-Autumn 1987):537-542.
Ibid.

35

qualitative trends in coverage in terms of “positive” or “negative” story tones. Based on
this following hypothesis was proposed:

Hypothesis: The mean length and prorrrinence of items on Indian economy in The
Wall Street Journal, The New York Times, Financial Express and The Economic Times
will increase after the economic liberalization of India.

To examine the similarity and difference between the nature of coverage of
American and Indian newspapers following research was posed:

Research Question 1: What were the major topics, themes and tones of the
coverage, and how did they shift over time, if at all?

The examination of sources is vital to this study as they are not only important in
news gathering process, but also play an important role in setting the agenda for news
coverage. Ericson offers a concise description of what news sources do — they explain
deviant occurrences, offer unique understandings of situation, and evaluate current policy
strategies or recommend new ones.87

Research Question 2: What kind of sources set the business news agenda for the
coverage of Indian economy and how did they shift over time, if at all?

The proposed hypothesis and research questions were aimed at investigating
business news coverage in an integrating global economy. In an increasingly borderless
business world it can be assumed that the US. multinational companies would be

interested to invest and expand their business in free Indian market. As earlier research

 

”7 Richard V. Ericson, Patricia M. Baranek, Janet B.L. Chan, Negotiating control : a study of news sources.
(Toronto : University of Toronto Press, 1989),.

36

by Mayo and Pasadeos has indicated that the focus of the US. business magazines has
changed in tune with changing global economy.88

Mayo and Pasadeo’s study also found that China’s opening to the West and
market potential of liberalized Eastern Bloc did not receive increased coverage in the
US. business magazines. Thus, the present hypothesis and first two research questions
would be helpful in finding whether Indian economy received any increased coverage
after the economic reforms were initiated.

The hypothesis and first research question also aim at examining how business
publications from two different financial markets report a same global economic event,
i.e., Indian economic liberalization. This is in line with Emcharoen’s study on coverage
of Asian economic crisis.89 She examined three newspapers from three different financial
markets and concluded each publication had its own perspective on the Asian economic
crisis.

The second research question is aimed at finding what kind of sources set the
business news agenda in the global economy i.e., what kind of sources set the agenda for
American and Indian newspapers in covering business news of India, before and after
India’s economic liberalization. This is in line with earlier studies on agenda-setting. For
instance, Chang analyzed the content of the New York Times and the Detroit News and
concluded that auto elite set the agenda for both the newspapers in coverage of auto trade

conflicts between the US. and Japan.90 In another study Vinod Menon’s research reveals

 

88 Mayo and Pasadeos, “Changes in the International Focus," 509.
89 Emcharoen, “News Coverage of Asian Economic Crisis,”, 111.
9° Chang, “Auto trade policy,” 312.

37

that developing nations rely heavily on government sources for information, compared to
developed nations.“

In the given hypothesis Indian economic liberalization is an independent variable
and business news coverage is a dependent variable.

Conceptually, economic liberalization means opening of market for allowing free
trade. For India it meant a departure for its socialist economy to a market-oriented
economy. In other words, allowing private/foreign investment in domestic market and
minimizing government interference.

Operationally, economic liberalization can be measured by assessing actual
Foreign Direct Investment Flows (FDI), foreign institutional investment and joint
ventures etc. Coverage of economic liberalization varies from being general to explicit.
For instance, the coverage may be about general benefits of an open economy or it may
be case-by-case analysis of trade and industry.

On the other hand, business news coverage of India conceptually means reportage
of Indian economy, its Gross Domestic Product (GDP) and its position in the map of
global economy.

The business coverage varies from low to high. For instance, before liberalization
the business news about India in the US. media may have focused more on agriculture.
But with liberalization the number of stories about Indian economy, industries and length

of these stories may go up. The news coverage, agriculture apart, may focus more on

Information Technology and other hi-tech sectors.

 

9' Vinod Menon, “Media Coverage of International Financial Institutions,” v.

38

Chapter 4

4.1 Method

This study used quantitative content analysis to “investigate manifest content” of the
news coverage of the Indian economy, before and after India’s economic liberalization,
between 1988 and 1994 by The Wall Street Journal, The New York Times, Financial
Express and The Economic Times.

The four newspapers selected for the purpose of the study as they represent coverage
from two different financial markets -- US. and India. Other reasons for selecting these
newspapers are:

With circulation of about 1.8 million, The Wall Street Journal has a high reputation
because of its status as the premier newspaper of the financial community.92 As reported
in the Columbia Journalism Review, “The Wall Street Journal, progenitor of the Dow
Jones Industrial Average, probably the most printed and broadcast statistical measure in
the world, in many ways mirrors the economy and industry it covers.”93 Further, Chris
Welles wrote that The Wall Street Journal is the “best, most effective, most influential,
and some would argue, the only independent watchdog the business world has.”94

The New York Times with a circulation of about 1.2 million, is known for its role as a
“reference index” for other papers.95 It is one of the most studied newspapers in the world

and is still considered to have the most complete coverage on international issues. The

New York Times is also considered as one of the foremost opinion makers in the US.

 

’2 John c. Merrill, Global Journalism (University of Missouri: Longman, 1995), 381.

93 Bill Saporito, “The Business Century,” Columbia Journalism Review (March/April 1999), 4.

9’ Chris Welles, The Business Beat: Its Impact and Its Problems, by William McPhatter (Indianapolis:
Bobbs-Merrill Educational Publishing, 1980), 20.

95 See John Dimmick, “The Gate-Keeper: An Uncertainty Theory,” Journalism Monographs, No. 37
(November 1974).

39

The two Indian newspapers —- Financial Express and The Economic Times are the two
largest circulated business dailies of India. These two newspapers not only have large
circulation, but also have a reputation for comprehensive coverage of national and
international business news.

The rationale of selecting these two newspapers is supported by Raghavan’s
statement:

“The dualism in Indian society is illustrated by the growth of the economic and
financial dailies and periodicals which serve the privileged upper layer. The Economic
Times, Bombay, established in 1961, sold 37,743 copies at 40 paise in 1985, and in 1990
when its price had gone up to Rs. 3 it sold some 2,000 copies more?“5

These two Indian business newspapers with their large circulation and comprehensive

coverage of international and national business news make a right match for a

comparative study with the two US. newspapers selected for this study.

4.2 Research Population and Sample

This study examined news coverage of the Indian economy, before and after India’s
economic liberalization, as reported in the major daily newspapers from two key financial
markets. The population of the study consisted of the news coverage of the Indian
economy, before and after India’s economic liberalization, reported by The Wall Street
Joumal, The New York Times, Financial Express and The Economic Times. An analysis
of the differences in coverage as reported by the four subject newspapers allowed for a
variety of possibilities in understanding media behavior with respect to reporting business

in an agenda-setting context.

 

9‘ Raghavan G.N.S., The press in India, a new history (New Delhi : Gyan Pub. House, 1994), 230.

40

The Indian economic liberalization was announced in July 1991. For the purpose of
study the researcher limited the time period to three and a half years before economic
liberalization i.e., starting 1988, and three and a half years after economic liberalization
i.e., ending 1994, which marked initial phase of the economic liberalization.

The period marking pro-liberalization was chosen from 1988 onwards as this
signified the phase of stalled economic reforms which the earlier government tried to
initiate in 1985. Moreover, the period from January 1988 to June 1991 will represent the
general economic scenario of India before the major economic liberalization was
announced in July 1991.

On the other hand, the timeframe from July 1991 to December 1994 marks the initial
phase of economic liberalization. The seven-year period between 1988 and 1994 will
comprise both the periods before and after economic liberalization and serves the purpose
of the study.

For drawing samples from The Wall Street Journal and The New York Times,
researcher went through the index books of both these newspapers between 1988 and
1994 to get a precise information about the reports published on Indian economy. The
researcher found 102 stories in The Wall Street Journal and 124 stories in The New York
Times. As the number of stories in both the American newspapers was not very high the
whole population was taken into account for analysis.

On the other hand, the seven-year period for two Indian newspapers means huge
number of stories. Practically it will be difficult to look into each newspaper for a seven-

year period. Thus, two constructed weeks sampling technique” was used, with two

 

’7 Guido H. Stempel 111, “Sample Size for Classifying Subject Matter in Dailies,” Journalism Quarterly, 29
(Summer 1952): 333-34.

41

sample weeks for each year in the seven-year period creating a total sample of 98 issues
each for both the Indian newspapers.

In the Indian newspapers only front-page news was considered for drawing a close
comparison with the American newspapers. Further, among all the front-page stories,
only business stories covering main components of the economic liberalization were
considered for analysis. The logic here is that the American newspapers mentioned here
will be covering only main events/issues about Indian economy, similarly the front pages
of the Indian economic newspapers will cover the most important issues of that day. In
this way it will be easier to draw a parallel between the American and the Indian
newspapers to examine their perception and selection of important news.

All the news stories drawn from the population of the two US. newspapers and two
constructed weeks’ sample comprising front pages of Indian newspaper represent
coverage of Indian economy, before and after India’s economic liberalization. By
analyzing these news stories the nature of coverage by the four publications will be
known and also looking at the sources of the news stories will indicate what kind of

sources set the agenda for the coverage of Indian economy.

4.3 Scope of the Study

Since the Indian economic liberalization is still an ongoing event, and there is no
way to know how far the liberalization process will be taken, the first limitation of the
study is that not all coverage since the liberalization began in 1991 until present will be
analyzed. Similarly, only a few years marking the period before economic liberalization

will be analyzed.

42

A delimitation of the study is time frame. To utilize a workable scope of material,
the study will examine a fairly limited period. The study will analyze coverage of the
Indian economy between 1988 and 1994, which means three and a half years each for the
period before and after economic liberalization.

The Indian economy, before and after India’s economic liberalization, has been
covered by media outlets throughout the world. Another limitation of the study is that not
all coverage from these media outlets will be analyzed. Consequently, another
delimitation is that this study will ignore coverage from major newsmagazines such as
Business Week, Fortune, Forbes and The Economist, and electronic media. Instead, the
researcher will examine coverage only from four leading newspapers, two each from the
United States and India. By studying the more complete coverage of daily newspapers
rather than weekly news magazines, this study will more accurately measure how the
media in different financial markets cover the same economic issue and what kinds of
sources set the agenda for this coverage.

Many aspects of Indian economy, before and after India’s economic
liberalization, will be reported by the media. Another limitation will be the researcher
will only examine Indian economic reports pertaining to five major components of
economic liberalization — Industrial policy reform, Trade policy reform, Public Sector
reform, Financial Sector reform and Tax reform. Only news stories and accompanying
analysis on Indian economy will be examined. Consequently, another delimitation will be
the examination and comparison of news stories and news analysis, which will provide

precise nature of coverage of Indian economy.

43

Finally, a researcher’s possible bias in the choice and interpretation of data is an
additional consideration, which will be controlled by adherence to a systematic method,

say randomization.

Chapter 5
5.1 Data Collection

For the purpose of this study all the news stories and news analysis on “Indian”
business and economy were analyzed and compared from The Wall Street Journal, The
New York Times, Financial Express and The Economic Times.

A news story was selected as “Indian” if (1) its headline indicated that the news
story discussed business event of India (2) a majority of its paragraphs discussed events
of India.

To complete the research, microfilm resources from the Michigan State University
Main Library and Center for Research Libraries, Chicago were used. A total of 102
articles from The Wall Street Journal were copied from microfilm, and each article was
filed into folders designated for appropriate years. A total of 124 articles from The New
York Times were also copied from microfilm, and each article was filed into folders
designated for appropriate years.

A total of 98 front pages of The Economic Times were also copied from the
microfilm, and each issue was filed into folders designated for appropriate years. A total
of 98 front pages of Financial Express were also copied from the microfilm, and each
issue was filed into folders designated for appropriate years.

5.2 Categories of Content
The Indian business stories were broadly categorized into the following topics,

Industrial Policy reforms: Dismantling of the system of industrial licensing that

had characterized earlier policy. License requirements for entry of new firms and for the

growth of existing firms were abolished, except for some industries including small-scale

45

sector. The law regulating monopolies amended to facilitate the growth of firms through
mergers and acquisitions.

The earlier policy of encouraging selective foreign investment in high technology
areas was changed, with many consumer goods thrown open to foreign direct investment.
The limit of foreign equity holding was raised from 40% to 51%.

Under the earlier policy, the Foreign Exchange Regulation Act (FERA) prevented
companies with more than 40% foreign equity (FERA companies) from borrowing or
raising deposits in India, from taking over any business interest from an Indian resident,
from acquiring or disposing of any physical assets (including land within in India), and
from appointing managers or using trade marks without central bank clearance.

The 1993 amendment to FERA eliminated differential treatment of FERA
companies and, except for restrictions in the agriculture and plantation sectors, FERA
companies are now treated on par with domestic investors and permitted to remit
dividends abroad without limitations or restrictions.

Trade Policy reforms: Prior to reform, India’s trade regime was characterized by
a complex licensing system with pervasive quantitative restrictions on imports and high
import tariffs. As a part of the reforms, import restrictions have been dismantled,
allowing free import of machinery and other inputs. Tariff levels, which were among the
highest in the world, have been reduced significantly.

The rupee was devalued significantly to make exports more competitive and
imports expensive, and the exchange rate was floated to a market-determined rate.

Foreign exchange dealers are free to maintain balances in convertible currencies, both

46

domestically and abroad, and deal in spot and forward markets in all major currencies.
Almost all current account transactions are permitted with out government approval.

Public Sector Reforms: Government ownership diluted in public sector enterprise
through sale of government equity as well as through fresh issue of capital to the public.
The induction of private shareholders and the trading of stock in stock markets are
intended to make these enterprises profitable and increase managerial accountability.
Budgetary support to loss-making public enterprises was phased out, and areas formerly
reserved for the public sector, such as civil aviation, petroleum exploration and refining,
and parts of telecommunication, were opened for private sector to compete with the
public sector.

The sale of government equity in the public sector also resulted in considerable
capital receipts, which were used to reduce the borrowing needs of the company and
narrowing the fiscal deficit.

An exit policy, allowing the closure and restructuring of unviable firms, was put
into place, and a World Bank-assisted National Renewal Fund, to provide compensation
and retraining for displaced public sector workers, was established.

Financial sector reforms: Reforms in the financial sectors aimed at strengthening
banks and at deregulating capital markets. India’s banking system was dominated by
several large public sector banks and characterized by heavy mandatory reserve
requirements designed to support government borrowing at low administered interest
rates. Both the statutory liquidity ratio (the minimum percentage of deposits that bank
must hold in government securities) and the cash reserve ratio (the minimum proportion

of deposits that banks must hold in cash) have been reduced to ensure that resources

47

available in the form of bank deposits released for the private sector and not preempted
by the government.

The complex structure of differential interest rates charged and paid by
commercial banks was simplified and rationalized to make them more profitable.
Regulated interest rates were replaced by maximum deposit rates and minimum lending
rates.

Interest rates on long-term government securities were also raised close to market
levels to reduce the burden on commercial banks imposed by preemptive government
borrowing.

Accounting practices and prudential norms now conform to the international
standards of the Basle Accord. New private sector banks were being licensed to inject
competition into the banking sector to improve performance and accountability in public
sector banks.

Apart from the banking system, financial sector reform also encompasses the
reform of capital markets aimed at financing investment in the private sector and
attracting foreign portfolio capital.

Foreign institutional investors such as mutual and pension funds were allowed to
invest in the capital market. A second route of foreign portfolio investment has been the
issue of shares abroad by Indian companies. Interest rates in the domestic capital market
have been deregulated. Securities and Exchange Board of India was setup to oversee the
deregulated capital market. This appears to have helped the market recover from a major

securities scandal in which bank funds were illegally siphoned off into the stock market.

48

A new National Stock Exchange with computerized screen trading commenced
operation, and other stock exchanges were computerized and modernized.

Tax Reforms: Far-reaching tax reforms involving a broadening of the tax base
and a reduction in exemptions were introduced to compensate for revenue loss through
tariff reductions.

Important features of tax reform include reduction in the maximum marginal rate
of personal income tax, exemption of all financial assets (including shares and other
corporate securities) from the wealth tax, reduction of corporate income taxes, reduction
of customs duties to bring them in line with other developing countries, and shifting the
bulk of taxes to an ad valorem basis.

The ad valorem tax replaces the specific excise duties on many domestic
manufactured goods that were charged at varying rates on different goods. The tax
reforms taken together are intended to avoid macroeconomic distortions and to attain
macroeconomic buoyancy of tax revenues. .

Source: A source is a person, or organization, which gives information to news reporters.
Sources are explicitly identified as such when news reporters quote or paraphrase
information from them in stories.
The different kinds of sources are:
1. Indian business personnel/experts: Indian corporate executives, businessmen,
economists and company president, CEO (chief executive officer) etc.
2. American business personnel/experts: American corporate executives,
businessmen, economists and company president, CEO (chief executive officer)

BIC.

49

3. Indian Government officials: Indian ministers and bureaucrats etc.

4. American Government officials: American bureaucrats.

5. Indian Business organizations: Indian companies like Tata, Birla, and trade
associations etc.

6. American Business organizations: American corporations like Coca Cola, Ford,
Microsoft and IBM etc.

7. Government press release: Government communiqué issued to the media for
publication.

8. Business press release: Business communique issued to the media by the
corporate houses or business organizations for publication.

9. Government meeting: Official meeting on a trade issue or business.

10. Business meeting: Meeting of business association or business organizations.

11. Document: Set of directions, guidelines, official rules or amendment to rules
issued by the government.

12. IMF/World Bank: International Monetary Fund and World Bank —two
international finance institutes.

13. Other: Source not falling in any of the above mentioned categories.

Story Theme: Story theme is the subject being discussed in the story. For instance,

before India’s economic liberalization the story themes are like the need for economic

liberalization, bureaucratic controls in trade and business and corruption.

50

After the economic liberalization the Indian economic story themes will have
something like causes of economic liberalization; future economic forecasts; and impact
of the liberalization and lessons from the liberalization.

1. Bureaucratic controls on free business/trade: Regulation of business by rigid
bureaucracy and strict government norms.

2. Need for economic liberalization: Advocate or suggest easing of strict
government regulations on economy/business/trade.

3. Efforts to liberalize economy: Attempts made towards easing government
controls on economy/business/trade.

4. Corruption: Giving bribes to government officials/bureaucrats to bypass rules in
setting up or carrying out business/trade.

5. Future economic forecasts: Predicting business/trade scenario in future based on
current trend or performance of economy.

6. IMF/World Bank assistance: Monetary assistance given by these two international
financial institutes to improve a country’s economy or tide over some economic
crisis.

7. Causes of economic liberalization: Reasons leading to the opening of a closed or
protect economy. For instance, balance-of-payment crisis was one of the reasons
that led India to liberalize its economy and allow free trade.

8. Impact of the liberalization: How liberalization shaped Indian economy or what
were the overall changes brought in by the reforms process.

9. Lessons from the liberalization: What lessons were the initial lessons learnt from
the liberalization process.

10. Other themes: Any theme that doesn’t fit in to the above mentioned categories.

Story Tone: Story tone means the attitude of the story i.e., whether the story reflects

positive or negative image about the subject or topic that is being discussed.

51

Coder Training: The researcher briefed the coder about the project and its purpose. He
explained all the terms and content categories to the coder. Having made sure that the
coder gained complete understanding of coding procedure, the coding protocol sheet with
explicit definitions of content categories was given to read and later use as a guide while
coding the news stories.

To determine coder reliability coders coded seven randomly selected stories each
from the four newspapers. Agreement for article selection, source selection, theme
selection and tone selection were tested and subjected to Scott’s Pi. In all the cases the
value of Scott’s Pi came out to be 0.80 and above. Agreement on news story size

measurement was subjected to Pearson’s Correlation and its value turned out to be 0.95.

52

Chapter 6
6.1 Results

Between 1988 and 1994, a total of 918 news stories were analyzed, 102 (11.1%)
from The Wall Street Journal, 124 (13.5%) from The New York Times, 367 (40%) from
Financial Express, Bombay, and 325 (35.4%) from The Economic Times, Bombay.

The period between January 1988 and June 1991 marked India’s business
coverage before its economic liberalization. A total of 492 news stories were analyzed
during this period, 37 (7.5%) from The Wall Street Journal, 58 (11.8%) from The New
York Times, 226 (45.9%) from Financial Express, and 171 (34.8%) from The Economic
Times.

The coverage between July 1991 and December 1994 represented reportage on
India’s business scenario after its economic liberalization. A total of 426 news stories
were analyzed during this period, 65 (15.3%) from The Wall Street Journal, 66 (15.5%)
from The New York Times, 141 (33.1) from Financial Express, and 154 (36.2%) from
The Economic Times.

The basic hypothesis was the mean length and prominence of items on Indian
economy in all the four newspapers will increase after the economic liberalization of
India. The research questions were to study the major topics, themes and tones of the
coverage, and examine what kind of sources set the business news agenda for the
coverage of Indian economy?

To verify if the results were significant Chi Square and difference of proportions

tests were administered.

53

Hypothesis: The mean length and prominence of items on Indian economy in The Wall
Street Journal, The New York Times, Financial Express and The Economic Times will
increase after the economic liberalization of India.

Here the unit of analysis for measuring story length was number of paragraphs in
a news story. Counting total number of paragraphs may not be an accurate way to
measure the story length, however, it does give a close estimation of overall length of the
story. Story prominence was decided by a story’s placement in the newspaper. A story
scored two points if it appeared on the upper half of the front page, and one point if
appeared in the bottom part of the front page. Stories appearing in the inside page were
assigned a zero.

Story length and prominence: As shown in Table 6.1, the hypothesis using length
and prominence as criterion measures was not supported (i.e., statistical null was retained
for the hypothesis).98 Thus, no post hoc comparison of means was done. Still, discussion
of the observed data may be worthwhile.

From period one (before India’s economic liberalization) to period two (after
India’s economic liberalization), the means shifted contrary to expectations. Within the
American newspapers mean story length decreased in period two (after economic
liberalization) to 5.3 from 10.7. For instance, before liberalization American newspapers
carried 13 one paragraph stories, but after liberalization number of one paragraph stories

increased to 59.

 

98 Because of the potpourri of different topics and themes occurring before and after economic
liberalization and the tendency of length to vary widely depending on topic/theme, use of length as the
criterion measure resulted in a large within group variance.

54

Table 6.1: Mean Stay Length and Prominence

 

 

 

 

 

American Newspapers Indian Newspapers F P value
12:12:11 Before eco lib After eco lib Before eco lib After eco lib
Prominence (Jan 1988- (July199l- (Jan 1988- (July1991-
June1991) Dec 1994) June 1991) Dec 1994)
Mean Length 10.7 5.3 10.9 10.8 35.06 p>.05
Mean 0.05 0.02 1.69 1.69 899.3 p>.05
prominence
18%? 33:7; 100% 100% 918
Total (397) (295)

 

 

 

 

 

 

 

 

 

Similarly, before liberalization the lengthiest story published in the American
newspapers contained 34 paragraphs,99 but after liberalization the lengthiest story
contained only 31 paragraphs,loo whereas within the Indian newspapers the mean story
length between period 1 and 2 almost remained same at 10.9 and 10.8.

In American newspapers the mean story prominence between period one and two
decreased to 0.02 from 0.05. The American newspapers canied four front page stories
about India before the economic liberalization, and after the economic reforms only two
stories appeared on the front page, whereas inside stories went up from 91 to 129. On the
other hand, in Indian newspapers the mean story prominence remained same for both the

periods at 1.69.

 

99 Steven R. Weisman, “U.S. Role in India: Shrinking Aid, Less Influence,” The New York Times, April 21,
1988, p. A6.

'00 Marcus W. Brauchli, “Political Setback: India's violence fuels doubt about course of economic reform,”
The Wall Street Journal, December 15, 1992, p. A1.

55

The findings noted as running counter to expectation cause one to consider often
expressed view that even with evidence of greater interdependence, US. business
newspapers/sections kept their international newshole small, reflecting trends in other

101

US. print media. As far as Indian media is concerned, liberalized economic policies

did get greater press attention, but the result of that attention is simply an exponential

increase in the press’s documentation of ‘happening news.’ ‘02

Research Question I: What were the major topics, themes and tones of the coverage, and
how did they shift over time, if at all?

Among others, the major compOnents of India’s economic liberalization were
industrial policy reforms, trade policy reforms, public sector reforms, financial sector
reforms and tax reforms. Within the scope of this study, the extent to which each of these
components was covered by all the four newspapers was examined.

Story Topics: The American and Indian newspapers showed a difference in
overall coverage of topics before and after India’s economic liberalization (see Table
6.2). In American newspapers, before liberalization coverage of general economy was
high at 35.8% (34) stories in a total of 95, followed by trade policy 22.1% (21) and
industrial policy 24.2% (23). Financial sector with 1.1% (1) story in a total of 95, tax
sector 2.1% (2) and public sector 2.1% (2) received low coverage.

And after liberalization coverage of general economy continued to get high
coverage with 30.5% (40) stories in a total of 131, followed by industrial policy 22.9%

(30), financial sector 18.3% (24), and public sector 12.2% (16). Here the notable feature

 

'0' One study demonstrating changes in International focus of US. business magazines, but space devoted
to international stories remaining constant is, Mayo and Pasadeos, “Changes in International focus."

'02 See, for example, Jyotika Ramaprasad, “Effect of U.S.-India Relations on New York Times Coverage,”
Journalism Quarterly :542.

56

is that after liberalization the coverage showed dramatic increase in financial sector and

public sector news, while coverage of trade policy news decreased.

Table 6.2: Primary Story Topic

 

 

 

 

 

 

 

 

 

 

American Newspapers Indian Newspapers
jPrimary story topic Before eco lib After eco lib Before eco lib After eco lib
(l988-Junel991)I(July199l-l994)I(1988-June1991)I(Julyl991-1994)
Industrial olic 24.2% 22.9% 18.6% 19.3%
p y (23) (30) (74) (57)
Trade olic 22.1% 9.2% 29.2% 9.5%
p y (21) (12) (116) (28)
. 2.1% 12.2% 17.4% 18%
Public Sector (2) (16) (69) (53)
Financial Sector 1.1% 18.3% 15.4% 33.9%
(1) (24) (61) (100)
Tax Sector 2.1% 2.3% 6% 4.4%
(2) (3) (24) (13)
General econom 35.8% 30.5% 11.3% 14.6%
y (34) (40) (45) (43)
Other 12.6% 4.6% 2% 0.3%
(12) (6) (3) (1)
Total 18%? £7; 100% 100%
(397) (295)

 

 

 

 

 

 

 

2 = 192.37 (p < .05, df= 18)
N = 918
This provides the interpretation that before liberalization of the Indian economy
the American newspapers, in addition to reporting on general Indian business, focused
more on industrial and trade policy of India. For example, in September 1988, within the
existing industrial policy Pepsi-Cola was allowed to be a minority partner in a joint

venture with an Indian government organization, and a multinational subsidiary of an

57

Indian conglomerate.103 Similarly, the US. government considered Indian trade practices
unfair for its prohibition of foreign insurance companies, and discouragement of foreign
investors such as Coke and Du Pont in early 1989.104

But after the economic liberalization -- in addition to the general economy and
industrial sector -- deregulated financial, and public sectors attracted increased coverage.
However, trade coverage went down as this sector still had some restrictions on free
trade. For instance, Indian central bank eliminated the minimum of 15% interest rate on
loans and advances exceeding $6,425, and cut rates to 13.5% on smaller loans in an effort
to free India’s banking system and stimulate financial sector reform.105 India also
approved private carriers to operate as scheduled airlines, ending the domestic monopoly
of state owned Indian Airlines.106

On the other hand, before liberalization Indian newspapers focused more on trade
policy with 29.2% (116) stories in a total of 397, followed by industrial policy 18.6%
(74), public sector 17.3% (69), financial sector 15.3% (61). Tax sector received a low
coverage of 6% (24) stories in a total of 397. For example, the US. industry was more
interested in having a higher equity participation in Indian ventures, but the existing
stipulation of 40% equity in 1988 was proving to be major disincentive for most of US.
companies.107

After liberalization the Indian newspapers gave maximum coverage to financial

sector with 33.8% (100) stories in a total of 295, followed by industrial policy 19.3%

 

'03 Barbara Crossette, “India allows Pepsi in after 2-year debate,” The New York Times, Sept. 20, 1988, p.
D5.

'04 Anthony Spaeth & Ajay Singh, “Coca-Cola and Du Pont test attitude of India toward foreign
investment,” The Wall Street Journal, May 26, 1989, p. A8.

"’5 World Wire, “India ends some loan curbs,” The Wall Street Journal, Oct. 18, 1994, p. A14.

'06 World Wire, “India ends airline monopoly,” The Wall Street Journal, Nov. 1, 1994, p.A16.

'07 Shubhrangshu Roy, “US keen on higher equity tie-up in Indian ventures,” Financial Express, Nov. 5,
1988.

58

(57), and public sector 17.9% (53). Coverage of trade policy reduced to 9.4% (28) stories
in a total of 295. Tax sector continued to receive low coverage with just 4.4% (13)
stories. This can be explained by the fact that the Indian newspapers viewed a
deregulated vast Indian financial market as an opportunity to boost national economy.
Industrial, and public sectors’ coverage registered a marginal increase as reforms in these
sectors were slow. Coverage of trade came down because reforms in this sector were still
hinged in bureaucratic controls.

In sum, before economic liberalization the American and Indian newspapers were
similar in their coverage of topics like Industrial Policy and Tax Sector. Coverage of
Industrial Policy ranked second in both, American and Indian newspapers. Similarly,
Tax Sector didn’t get much coverage in these newspapers.

This means that Industrial Policy issues like industrial investments and joint
ventures did get more priority as they provided a business opportunity, whereas Tax
Sector didn’t because with rigid rules and structure there was not much happening in this
sector to draw media’s attention.

During the same period, the American and Indian newspapers differed in covering
Trade Policy, Financial Sector and Public Sector. This provides the interpretation that
with strict government control on Public Sector and restricted investment in Financial
Sector American newspapers’ didn’t find any reason to give much coverage to these two
sectors. But for the Indian newspapers these two sectors meant debate over diluting
government ownership in public sector enterprise and deregulating capital markets.

On the other hand, after economic liberalization American and Indian newspapers

showed an increase in the coverage of Financial Sector and decrease in the coverage of

59

Trade Policy. This provides an interpretation that the coverage of Financial Sector
increased because of deregulation of the capital market and strengthening of banking
system. Allowing investment in Indian capital market by foreign institutional investors
and issuing shares abroad by Indian companies attracted more news coverage. But the
coverage of Trade Policy came down because despite the announcement of reforms
foreign and Indian companies still found some bureaucratic obstacles restricting the free
trade.

After liberalization American newspapers’ coverage of Public Sector showed a
dramatic increase. This can be explained by the fact that opening some public sectors like
Airlines, Oil Exploration and Telecommunications caught the American media attention,
whereas the Indian newspapers appeared as if they would wait for more reforms in this
area before increasing its coverage. General Economic coverage was more in American
newspapers as most of the times the business stories would be a combined coverage of
two or more components of Indian economy. For instance, one story may report about
industrial, trade and financial sectors.

Despite radical changes to Indian Industrial Policy the American and Indian
newspapers didn’t show much change in the coverage of this sector. The interpretation
for this is that most of the foreign investors were still skeptical of Industrial reforms and
adding to it were some bureaucratic controls, which were still in place. At this point one
thing should be made clear that although the Indian economic liberalization announced
on July 1991 was a historic one, the government didn’t go for a total market oriented
reform. The government still had control over the economy and the intention here was to

liberalize the economy in a phased manner.

60

In the overall business news coverage of India, before liberalization the American
and Indian newspapers showed a similarity in the coverage of Industrial Policy and Tax
Sector and differed in the coverage of Trade Policy, Financial Sector and Public Sector.

After liberalization American and Indian newspapers showed a similarity in
coverage of Financial Sector and Trade Policy. They differed in coverage of General
Economy. The American newspapers increased coverage of Public Sector. The coverage
of Tax Sector in all the four newspapers remained almost the same. And reports about
miscellaneous business issues of India were categorized under Other and there were not
many stories under this section.

Story Theme: Table 6.3 identifies the major themes of coverage, as well as how
these shifted between period one (before economic liberalization) and period two (after
economic liberalization). The table shows the percentage of American and Indian
newspapers’ coverage devoted to various themes of the Indian economy and its
liberalization. For the purpose of this study story theme was defined as the subject being
discussed in the story. While a story focuses on a particular topic, in the subject matter it
discusses a specific subject matter, which is its theme.

For example, an article in The Wall Street Journal in May 1989 stated “...the
bureaucracy remains sluggish, turf-conscious and ambivalent toward foreign investment.
Getting a project approved is easier...but it remains a rigorous exercise: In the early
19808, approvals could take five years; now they take three.”108 Within the framework of

this study, this news article is considered to have a theme of bureaucratic control.

 

'08 Anthony Spaeth & Ajay Singh, “Coca-Cola and Du Pont test attitude of India toward foreign
investment,” The Wall Street Journal, May 26, 1989, p. A8.

61

Table 6.3: PrimaryStory Theme

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary American Newspaper Indian Newspapers
Story theme Before eco lib After eco lib Before eco lib After eco lib
(1988- (July199l- (1988- (Julyl991-
Junel99l) 1994) Junel991) 1994)
Bureaucratic controls on free 24.2% 0.8% 17.9% 4.7%
business/ trade (23) ( 1) (71) (14)
Need for economic 12.6% 1.5% 20.7% 8.1%
liberalization (12) (2) (82) (24)
. . 18.9% 3.1% 41.8% 45.8%
Efforts to liberalize economy (18) (4) (166) (135)
Corruption 8.4% 15.3% 3% 5.8%
(8) (20) (12) (17)
Future economic forecasts 20% 61% 111% 85%
(19) (8) (48) (25)
IMF and World Bank 8.4% 6.9% 2% 3.1%
assistance (8) (9) (8) (9)
Causes of economic 0% 0.8% 0% 0%
liberalization (0) (1) (0) (0)
Liberalization analysis (:3; 633° (:3: 283%
. . . 0% 42.7% 0% 18.3%
Impact of liberalization (0) (56) (0) (54)
. . . . 0% 5.3% 1% 1%
Protest against liberalization (0) (7) (4) (3)
Other 7.4% 10.7% 1.5% 2.4%
(7) (l4) (6) (7)
Total 18%? if??? 100% 100%
(397) (295)

 

 

 

 

 

 

 

x2 = 445.83 (p < .05, df = 30)
N = 918
Similarly, a story covering the topic of trade policy and discussing the efforts being

made to liberalize the policy indicates that ‘efforts to liberalize economy’ is its theme.

62

Based on different subject matters discussed in the stories various themes mentioned in
the table (see Table 6.3) were identified.

Before liberalization the American newspapers’ main story theme was bureaucratic
controls on flee business/trade in 24.2% (23) stories in a total of 95, which was followed
by future economic forecasts 20% (19), efforts to liberalize economy 18.9% (18), and
need for economic liberalization 12.6% (12). This can be explained by the fact that before
liberalization, a centrally controlled Indian economy had many bureaucratic regulations,
and the American newspapers focused in this aspect. The news stories also had the
themes Offitture economic forecasts of Indian economy.

After economic liberalization American newspapers’ major theme was the impact of
liberalization in 42.7% (56) stories in a total of 131, followed by corruption 15.2 % (20).
This provides the interpretation that after the liberalization the American newspapers
assessed the changes brought in by the economic reforms, at the same time closely
monitored the corruption issues.

On the other hand, the Indian newspapers before the economic liberalization had the
theme of efforts to liberalize economy in 41.8% (166) stories in a total of 397, followed
by need for economic liberalization 20.7% (82), and bureaucratic controls on free
business/trade 17.9 (71). This can be explained by the fact that the Indian newspapers
were focusing on the efforts being made by the government to liberalize economy, at the
same time the urgency to implement reforms to integrate with the growing global
economy. The stories also had the themes of bureaucratic controls, which were proving

as impediments to a free economy.

63

After economic liberalization the Indian newspapers increased their focus on efforts
to liberalize economy with 45.7% (135) stories in a total of 295, followed by impact of
liberalization 18.3% (54), and future economic forecasts 8.4% (25). This can be
explained by the fact that the historic economic reforms announced in a phased manner
required a continued push and the Indian newspapers focused on the efforts being made
to reform the Indian business.

Further, before economic liberalization the American and Indian differed in their
story themes. The American newspapers focused more on the theme of bureaucratic
controls on free business and trade, whereas the Indian newspapers focused on efforts to
liberalize Indian economy. This provides the interpretation that while American
newspapers were critical of bureaucratic controls on Indian economy, the Indian
newspapers emphasized on efforts being made to liberalize the Indian economy.

The American newspapers, in view of deteriorating economic situation of India
had more stories with the themes of future economic forecasts, corruption, and IMF and
World Bank assistance. Indian newspapers too had these themes in their coverage, but
their primary focus was on the efforts being made to solve the impending economic crisis
due to a precarious balance of payment situation.

After economic liberalization the American newspapers focused on impact of
liberalization, while the Indian newspapers continued to emphasize on efforts to
liberalize economy. This means that American newspapers were trying to assess the
effect of liberalization, while Indian newspapers were still focusing on efforts being made
to further the economic liberalization, which was being introduced in a phased manner.

Impact of liberalization for Indian newspapers was next in the list.

64

Even in post-liberalization period American newspapers continued to focus more
on corruption, which may be attributed to the big security scam of 1992 and other
corruption cases involving senior government officials. IMF/World Bank assistance and
liberalization analysis were next in the list for American newspapers. But, for Indian
newspapers future economic forecasts and need for economic liberalization were next in
the list. This could be interpreted as American newspapers trying to monitor the Indian
govemment’s sincerity in implementing economic reforms and international assistance to
the economic reform program. On the other hand, Indian newspapers tried to predict the
future of economic reforms and stressed the need to continue with the reforms.

In the overall coverage, before economic liberalization the American and Indian
newspapers focused on different story themes. During this period the American
newspapers focused more on bureaucratic controls on free business and trade, while
Indian newspapers’ primary theme was efforts to liberalize economy. After liberalization
the American newspapers focused more on impact of liberalization, while Indian
newspapers continued to focus on the theme of efiorts to liberalize economy.

Story Tone: As shown in Table 6.4, before liberalization a large number of
American newspaper stories 41.1% (39) in a total of 95 were coded neutral, followed by
36.8% (35) negative tone stories, and 22.1% (21) positive tone stories. This provides the
interpretation that most of the stories were neutral, and at the same time there were
sizeable number of stories that were critical of Indian economic policies.

An example of a story with negative tone will be something like U.S. criticizing

Indian trade practices for creating high barriers for foreign investment and discouraging

65

investors like Coke and Du Pont, which also prompted the then Bush administration to

include India on its “hit list."'°"

On the other hand, a positive tone story is something like this excerpt from
August 1991 New York Times, “...with remarkable swiftness, Mr. Rao (India’s then
prime minister) has called for freeing private enterprise from the shackles of state
regulation, for a dramatic increase in foreign investment, and for economy less dependent
..110

on state coddling and more on market forces.

Table 6.4: Primary Story Tone

 

 

 

 

 

 

 

 

 

 

 

American Newspapers Indian Newspapers
Story Tone
Before eco lib After eco lib Before eco lib After eco lib
(1988-June1991)I(July1991-l994)l(l988-June1991)l(Julyl991-1994)

36.8% 16.8% 23.9% 9.5%

Negative (35) (22) (95) (28)
41.1% 47.3% 43.3% 53.6%

Neutral (39) (62) (172) (158)
22.1% 35.9% 32.7% 36.9%
Positive story (21) (47) (130) (109)
13;? 31(5):]; 100% 100%
Total (397) (295)

 

x2 = 43.68 (p < .05, df= 6)

N=9l8

 

'09 Anthony Spaeth & Ajay Singh, “Coca-Cola and Du Pont test attitude of India toward foreign

 

investment," The Wall Street Journal, May 26, 1989, p. A8.

110 Edward A. Gargan, “India’s new premier challenges the system, and the reaction is predictable,” The
New York Times, August 6, 1991, p. A6.

66

An example of news story with story is something like this excerpt from June
1988 Financial Express, “...under no circumstances would India compromise its
economic policies to attract foreign investment and high technology.”l ”

After liberalization, the American newspapers’ positive tone news stories
increased to 35.8% (47) in a total of 131. There was also an increase in neutral stories to
47.3% (62). Negative tone stories decreased to 16.7% (22). This can be explained by the
fact that the American newspapers recognized the efforts being made to liberalize Indian
economy and were supportive of the move.

On the other hand, before liberalization Indian newspapers had more neutral
stories with 43.3% (172) in a total of 397, which was followed by 32.7% (130) positive
tone stories, and 23.9% (95) negative tone stories. This means that the Indian
newspapers’ coverage of national economy was largely neutral.

After liberalization, Indian newspapers’ neutral stories increased to 53.5% (158)
in a total of 295, and negative tone stories came down to 9.4% (28), whereas positive
stories went up by 36.9% (109). This provides the interpretation that the Indian
newspapers were either largely neutral or supportive of the economic reforms.

In the overall coverage, the American and Indian newspapers largely showed
similar trend in story tones. All the four newspapers had more number of neutral stories
before and after economic liberalization. And after liberalization there was an increase in
neutral and positive story tones, while the total number of stories having negative tone

decreased. The only difference between the American and Indian newspapers was that

before liberalization American newspapers had more negative tone stories than the

 

”' United News of India, “No compromise on economic policies: PM,” Financial Express, June 13, 1988,
p.1.

67

positive tone stories. And in case of the Indian newspapers during both the periods
positive tone stories were more than the negative tone stories.

Research Question 2: What kind of sources set the business news agenda for the
coverage of Indian economy?

One of the purposes of this study was to identify what kind of sources set the
business agenda for the coverage of Indian economy.

As indicated by Table 6.5, before liberalization American newspapers in 40%
(38) stories in a total of 95, used Indian Government Officials as source. For example, in
a March 1991 news story The Wall Street Journal citing a central bank official from India
wrote about India’s request to its major creditors U.S., Germany and Japan to
rescheduling of loans to avoid defaulting.l '2

The second most cited source was Indian business personnel/experts 28.4% (27),
followed by American sources, and other at 15.8% (15) stories each.

After liberalization American newspapers used other sources in 37.4% (49)
stories. A significant increase in other sources was due to the stories appearing in the
world wire section of The Wall Street Journal where no sources were specified. Apart
from the aberration caused by the world wire stories, the American newspapers continued
to use Indian government officials as major source in 35.8% (47) stories in a total of
131.But, number of American sources almost remained the same at 15.2% (20) stories in

atotal of 131.

 

“2 World Wire, “India sharply limits imports," The wall Street Journal, March 22, 1991, p. A6.

68

Table 6.5: Primary Story Source

 

 

 

 

 

 

 

American Newspapers Indian Newspapers
Primary story source Before eco lib After eco lib Before eco lib After eco lib
(1988- (July1991- (1988- (July1991-
June1991) 1994) June199l) 1994)
Ind‘afsgr‘l’sgl'fss 28.4% 11.4% 21.4% 19.6%
13pm, (27) (15) (85) (58)
. . 40% 35.8% 68.5% 65%
**
Indian Govt. officrals (38) (47) (272) (192)
American sources*** 15.8% 15.2% 1% 3%
(15) (20) (4) (9)
15.8% 37.4% 9% 12.2%
***
Other" (15) (49) (36) (36)
Total 18%? 89:7; 100% 100%
(397 ) (295)

 

 

 

 

 

 

 

x2 = 239.13 (p < .05, df = 36)

N = 918
*Sources such as Indian business organizations, business press release, and business
meetings were collapsed with Indian business personnel/experts.
a"*Sources such as government press release, government meeting, and document were
collapsed with Indian government officials.
***Sources such as American government officials, American business personnel, and
American business organizations were collapsed to form American sources.
****Sources apart from those mentioned above were included under other and no source

cited was collapsed with it.

On the other hand, before economic liberalization Indian newspapers too used
Indian government officials as major source of news with 68.5% (272) stories in a total of
397, followed by Indian business personnel/experts 21.4% (85).

After economic liberalization Indian newspapers continued to use Indian
government officials as major source of news with 65.3% (192) stories in a total of 295,

followed by Indian business personnel/experts 19.6% (58).

69

Thus, before liberalization, American newspapers and Indian newspapers used
Indian government officials as major news source. For American newspapers Indian
business personnel/experts were next major news source.

This provides the interpretation that for a state-controlled economy like India,
both Indian and American newspapers had to rely more Indian government officials for
information.

After economic liberalization Indian government officials still remained major
source of information for Indian newspapers. However, the other category emerged as
major news source for American newspapers because most of The Wall Street Journal
stories on Indian business appeared in the world wire section and they did not specify any
source. For the American and Indian newspapers Indian business personnel/experts were

next on the source list.

70

Chapter 7
7.1 Discussion and Conclusion

This study sought to define the nature of the coverage given to Indian economy
before and after India’s economic liberalization. Before discussing the results and
findings it is important to mention that the Indian economic liberalization announced on
July 24, 1991 was heavily influenced by politico-econorrric events like security scam of
June 1992,1 '3 demolition of a mosque in December 1992”" and communal clashes in the
India’s commercial capital, Bombay in early 1993.

Further, during this period India was still on special 301 list of the US. as the
latter wanted India to change its intellectual property laws and practices. In other words,
in early 1993, the Clinton administration criticized certain trade practices of India,
including its weak patent protection, raising the possibility of subjecting India to the
retaliatory sanctions under the US. trade law Special 301. Despite initiating economic
liberalization, India’s ban on consumer goods imports, quantitative restrictions under the
negative imports list and high tariff were proving to be impediments to the United States
trade.115

The result of the study did not support the hypothesis that the mean length and

prominence of items on Indian economy in The Wall Street Journal, The New York

 

”3 For instance, Sneh Lara Bhatia wrote in an article titled, “Scam jeopardizes annual plan,” in The
Economic Times on June 12, 1992: “The annual plan of 1992-93 is heading for a financial disaster with the
security scam assuming serious proportions. The worst crisis in the security market history will have
serious ramifications on the 1992-93 annual plan,” p.1.

114 For instance, Marcus W. Brauchli wrote in an article titled, “India’s violence fuels doubt about course of
economic reform,” in The Wall Street Journal on Dec. 15, 1992: . .Only 16 months after Prime Minister
P.V. Narasimha Rao proposed far-reaching economic change, fundamentalist Hindus — egged on by
opposition politicians - brought the economy to a near halt last week when they razed a mosque in the town
of Ayodhya. . .For Indians weary of being on the periphery of East Asia’s economic dynamo, the riots were
dismaying evidence of how far India has to go to catch up,” p. Al.

"5 United News of India, “Indian trade practices flayed: US may clamp special 301,” the Financial
Express, April 2, 1993, p. l.

71

Times, Financial Express and The Economic Times will increase after the economic
liberalization of India. For instance, before liberalization American newspapers carried
13 one paragraph stories, but after liberalization number of one paragraph stories
increased to 59.

The findings noted as running counter to expectation cause one to consider often
expressed view that even with evidence of greater interdependence, US. business
newspapers/sections kept their international newshole small, reflecting trends in other
US. print media.1 16As far as Indian media is concerned, liberalized economic policies did
get greater press attention, but the result of that attention is simply an exponential
increase in the press’s documentation of ‘happening news.’ 1 17

This was in accordance with Mayo and Pasadeo’s observation that in 1984-88
despite setting in of glasnost/perestroika process there was a little coverage of Soviet
Union and Eastern Europe, and the market potential of a liberalized Eastern Bloc got
little coverage. Even china’s economic liberalization in the 1970’s did not receive

increased coverage in the business magazines.118

Topics, themes and tones

With regard to major topics, themes and tones of the coverage it was found that in
the overall business news coverage of India, the Indian and American newspapers
reflected a similarity in coverage of most of the topics. Indian and American newspapers

registered an increase in coverage of financial sector and public sector whereas coverage

 

”6 One study demonstrating changes in International focus of US. business magazines, but space devoted
to international stories remaining constant is, Mayo and Pasadeos, “Changes in International focus.”

117 See, for example, Jyotika Ramaprasad and Daniel Riffe, “Effect of U.S.-India Relations on New York
Times Coverage," Journalism Quarterly 64 (Summer-Autumn 1987):537-542.

”8 Mayo and Pasadeos, “Changes in International focus.”

72

decreased in trade policy and others. They differed in covering industrial policy, tax
sector and general economy.

As far as themes were concerned, before Indian economic liberalization American
newspapers focused more on the theme of bureaucratic controls on free business and
trade, whereas Indian newspapers focused more on efforts to liberalize economy. This
provides the interpretation that while American newspapers were critical of bureaucratic
controls on Indian economy, the Indian newspapers emphasized on efforts being made to
liberalize the Indian economy.

Further, American and Indian newspapers showed similarity in covering the
theme of need for economic liberalization. Corruption as a theme received more attention
of American newspapers.

In the period after economic liberalization American newspapers focused more on
impact of liberalization, while the Indian newspapers emphasized on efforts to liberalize
economy. This means that American newspapers were trying to assess the effect of
liberalization, while Indian newspapers were still focusing on efforts being made to
further the economic liberalization, which was being introduced in a phased manner.
Impact of liberalization for Indian newspapers was next in the list with 18.3% (54) stories
in a total of 295.

After Indian economic liberalization American newspapers continued to focus
more on corruption. IMF/World Bank assistance and liberalization analysis were next in
the list for American newspapers. But, for Indian newspapers filture economic forecasts
and need for economic liberalization were next in the list. This could be interpreted as

American newspapers trying to monitor the Indian govemment’s sincerity in

73

implementing economic reforms and international assistance to the economic reform
program. On the other hand, Indian newspapers tried to predict the future of economic
reforms and stressed the need to continue with the reforms.

The stories in most cases in both American and Indian newspapers were neutral in
tone and relatively free of partisan outlook. The treatment of the issues in predominantly
economic terms and use of Indian government sources probably explains the less

presence of negative or positive tones.

Sources

With regard to examining what kind of sources set the agenda for business news
coverage of India, the study found that both, American and Indian newspapers relied
more on Indian government officials. This finding is consistent with Menon’s research
which revealed that developing nations were found to be heavily reliant on government

sources for information, suggesting that in the absence of other authoritative and reliable

sources of information, the media relies on government sources.119 Similarly, in a content

analysis of the New York Times and Washington Post, Sigal found that US. (federal)
government officials, particularly at the executive branch, accounted for almost half the
news sources in his sampled front-page stories.‘20 Sigal also argues that public officials
predominated as the prime sources for the news media over the past decadesm

However, the study’s results are limited in many ways. It looks at the Indian

economy before and after India’s economic liberalization in a limited time frame. This

 

”9 Menon. “Media Coverage of International Financial Institutions."
'20 Sigal, “Channels and Sources of News,"119-30.
’2' Sigal, “Channels and Sources of News,” 119-30.

74

offers a clearly defined period to study the nature of coverage of economic reforms in
increasingly global economy.

The results are rather subjective being open to differing interpretation as the
differences between categories are in many cases marginal. This is particularly true in
case of story topics, themes and tones. As always, despite a defined codebook and
detailed instructions, events and issues pertaining to human society are defined by the
perspective of the observer, and her or his understanding of events. There is therefore a
real possibility for multiple observations and differing thematic representation of a
newsworthy event.

A lack of earlier studies in this area makes it difficult to clearly define a stance on
an issue and find a benchmark against which the results might be compared. The study at
the very best extrapolates from findings in other related studies involving international
media and press systems and applies them to the coverage of economic issues.

In short, the study does not conclusively prove that nature of coverage of Indian
economy changed between the periods of before and after economic liberalization.
Another reason for this could be that the post-liberalization period between July 1991
and1994 was the initial phase of Indian economic reforms and its steady progress was
often interrupted by other politico-economic events taking place in the country.

As for the tone of the stories, a large majority was coded, neutral. This is probably
because the events were reported as economic occurrences and in economic terms,
thereby limiting the possibility of seeing partisan political views in print. As the media
was dealing with phased liberalization of state-controlled economy they had to rely more

on Indian government sources for news and this study did find support in accordance

75

with earlier findings that in developing countries government sources set the agenda of
news coverage.
Future Areas of Research

While this study looked at the initial phase of Indian economic liberalization, the
future research can examine the nature of coverage of later stages of economic reforms.
Examining the coverage of Indian economic reforms from 1995 to 2000 will help
understand media behavior in increasingly globalized world. This time period marked the
stage where the wisdom behind integrating world econorrries was being debated due to
events like 1997 Asian economic crisis and economic crisis in Argentina. The study
would be worthwhile because it will help understand how media coped with increasingly
complex system of world markets.

Some of the questions worth exploring would be to examine whether there was
any change in the use of news sources by the American and Indian newspapers while
covering the second phase of Indian economic liberalization? Was the coverage
consistent with the second phase of Indian economic reforms? And was the coverage

influenced by economic events like the Asian economic crisis of 1997?

76

APPENDIX

Coding Protocol For Coverage of Indian Economy, Before and After India’s
Economic Liberalization, 1988-1994

Introduction
This news story protocol is aimed at assessing coverage of Indian economy, before and
after India’s economic liberalization, by the Wall Street Journal, the New York Times,
Economic Times and Financial Express. It’ll examine how the publications covered the
process of economic liberalization — what were they expected to cover and what exactly
were they covering.
The following definitions are important in selecting and analyzing the content under
study.
Business story: A business story focuses on selecting various economic, trade and
commerce related issues. News stories are defined as all non-advertising matter in a news
product. In a newspaper, this would usually include all staff-produced news stories found
in the business sections, but excluding editorial pages, op ed pages, reader opinions,
sports, society news and similar matter. It may include relevant features produced by
syndicated and wire services relevant to the issue or Indian economic reforms being
analyzed.
Economic Liberalization: Economic liberalization is the process of loosening of
government hold on economy by initiation of fiscal measures, policies with regard to the
industrial sector, trade, exchange rate, capital market, agriculture sector, financial sector
etc.

There are many components of economic liberalization, but this study will be

focusing on the following:

77

1. Industrial policy reforms

2. Trade policy reforms

3. Public Sector reforms

4. Financial Sector reforms

5. Tax reforms

Industrial Policy reforms: Dismantling of the system of industrial licensing that had
characterized earlier policy. License requirements for entry of new firms and for the
growth of existing firms were abolished, except for some industries including small-scale
sector. The law regulating monopolies amended to facilitate the growth of firms through
mergers and acquisitions.

The earlier policy of encouraging selective foreign investment in high technology
areas was changed, with many consumer goods thrown open to foreign direct investment.
The limit of foreign equity holding was raised from 40% to 51%.

Under the earlier policy, the Foreign Exchange Regulation Act (FERA) prevented
companies with more than 40% foreign equity (FERA companies) from borrowing or
raising deposits in India, from taking over any business interest from an Indian resident,
from acquiring or disposing of any physical assets (including land within in India), and
from appointing managers or using trade marks without central bank clearance.

The 1993 amendment to FERA eliminated differential treatment of FERA
companies and, except for restrictions in the agriculture and plantation sectors, FERA
companies are now treated on par with domestic investors and permitted to remit

dividends abroad without limitations or restrictions.

78

Trade Policy reforms: Prior to reform, India’s trade regime was characterized by a
complex licensing system with pervasive quantitative restrictions on imports and high
import tariffs. As a part of the reforms, import restrictions have been dismantled,
allowing free import of machinery and other inputs. Tariff levels, which were among the
highest in the world, have been reduced significantly.

The rupee was devalued significantly to make exports more competitive and
imports expensive, and the exchange rate was floated to a market-determined rate.
Foreign exchange dealers are free to maintain balances in convertible currencies, both
domestically and abroad, and deal in spot and forward markets in all major currencies.

Almost all current account transactions are permitted with out government approval.

Public Sector Reform: Government ownership diluted in public sector enterprise through
sale of government equity as well as through fresh issue of capital to the public. The
induction of private shareholders and the trading of stock in stock markets are intended to
make these enterprises profitable and increase managerial accountability. Budgetary
support to loss-making public enterprises was phased out, and areas formerly reserved for
the public sector, such as civil aviation, petroleum exploration and refining, and parts of
telecommunication, were opened for private sector to compete with the public sector.

The sale of government equity in the public sector also resulted in considerable
capital receipts, which were used to reduce the borrowing needs of the company and

narrowing the fiscal deficit.

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An exit policy, allowing the closure and restructuring of unviable firms, was put
into place, and a World Bank-assisted National Renewal Fund, to provide compensation

and retraining for displaced public sector workers, was established.

Financial sector reforms: Reforms in the financial sectors aimed at strengthening banks
and at deregulating capital markets. India’s banking system was dominated by several
large public sector banks and characterized by heavy mandatory reserve requirements
designed to support government borrowing at low administered interest rates. Both the
statutory liquidity ratio (the minimum percentage of deposits that bank must hold in
government securities) and the cash reserve ratio (the minimum proportion of deposits
that banks must hold in cash) have been reduced to ensure that resources available in the
form of bank deposits released for the private sector and not preempted by the
government.

The complex structure of differential interest rates charged and paid by
commercial banks was simplified and rationalized to make them more profitable.
Regulated interest rates were replaced by maximum deposit rates and minimum lending
rates.

Interest rates on long-term government securities were also raised close to market
levels to reduce the burden on commercial banks imposed by preemptive government
borrowing.

Accounting practices and prudential norms now conform to the international

standards of the Basle Accord. New private sector banks were being licensed to inject

80

competition into the banking sector to improve performance and accountability in public
sector banks.

Apart from the banking system, financial sector reform also encompasses the
reform of capital markets aimed at financing investment in the private sector and
attracting foreign portfolio capital.

Foreign institutional investors such as mutual and pension funds were allowed to
invest in the capital market. A second route of foreign portfolio investment has been the
issue of shares abroad by Indian companies. Interest rates in the domestic capital market
have been deregulated. Securities and Exchange Board of India was setup to oversee the
deregulated capital market. This appears to have helped the market recover from a major
securities scandal in which bank funds were illegally siphoned off into the stock market.
A new National Stock Exchange with computerized screen trading commenced

operation, and other stock exchanges were computerized and modernized.

Tax Reform: Far-reaching tax reforms involving a broadening of the tax base and a
reduction in exemptions were introduced to compensate for revenue loss through tariff
reductions.

Important features of tax reform include reduction in the maximum marginal rate
of personal income tax, exemption of all financial assets (including shares and other
corporate securities) from the wealth tax, reduction of corporate income taxes, reduction
of customs duties to bring them in line with other developing countries, and shifting the

bulk of taxes to an ad valorem basis.

81

The ad valorem tax replaces the specific excise duties on many domestic
manufactured goods that were charged at varying rates on different goods. The tax
reforms taken together are intended to avoid macroeconomic distortions and to attain
macroeconomic buoyancy of tax revenues. .

Source: A source is a person, or organization, which gives information to news reporters.
Sources are explicitly identified as such when news reporters quote or paraphrase
information from them in stories.

The different kinds of sources are:

1. Indian business personnel/experts: Indian corporate executives, businessmen,
economists and company president, CEO (chief executive officer) etc.

2. American business personnel/experts: American corporate executives, businessmen,
economists and company president, CEO (chief executive officer) etc.

3. Indian Government officials: Indian ministers and bureaucrats etc.

4. American Government officials: American bureaucrats.

5. Indian Business organizations: Indian companies like Tata, Birla, and trade
associations etc.

6. American Business organizations: American corporations like Coca Cola, Ford,
Microsoft and IBM etc.

7. Government press release: Government communique issued to the media for
publication.

8. Business press release: Business communique issued to the media by the corporate
houses or business organizations for publication.

9. Government meeting: Official meeting on a trade issue or business.

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10. Business meeting: Meeting of business association or business organizations.

11. Document: Set of directions, guidelines, official rules or amendment to rules issued
by the government.

12. IMF/World Bank: International Monetary Fund and World Bank —two international
finance institutes.

13. Others: Source not falling in any of the above mentioned categories.

Story themes

1.Bureaucratic controls on free business/trade: Regulation of business by rigid
bureaucracy and strict government norms.

2.Need for economic liberalization: Advocate or suggest easing of strict government
regulations on economy/business/trade.

3.Efforts to liberalize economy: Attempts made towards easing government controls on
economy/business/trade.

4.Corruption: Giving bribes to government officials/bureaucrats to bypass rules in setting
up or carrying out business/trade.

5.Comment on Govemment/law: Statement or observations on govemment’s stand on a
business/trade issue or particular law regulating certain aspect of business/trade.

6.Future economic forecasts: Predicting business/trade scenario in future based on current
trend or performance of economy.

7.1MF/World Bank assistance: Monetary assistance given by these two international

financial institutes to improve a country’s economy or tide over some economic crisis.

83

8.Causes of economic liberalization: Reasons leading to the opening of a closed or
protect economy. For instance, balance-of-payment crisis was one of the reasons that led
India to liberalize its economy and allow free trade.
9.Liberalization analysis: Assessment of the liberalization, i.e., how things changed or
what changes occurred after opening of the Indian market.
10.Liberalization progress: Advancement in the process of freeing Indian market/trade.
11.Effects on stocks/bond markets: How was the Indian capital market influenced by the
change in the economic policies.
12.1mpact of the liberalization: How liberalization shaped Indian economy or what were
the overall changes brought in by the reforms process.
13.1.essons from the liberalization: What lessons were the initial lessons learnt from the
liberalization process.
14.Profit from the liberalization: What was gained from the process of liberalization.
15.Liberalization resolution: What future decisions the liberalization process shaped.
16.0ther themes: Any theme that doesn’t fit in to the above mentioned categories.
Procedure

The following steps should be taken in the content analysis coding described
below (v stands for variable): (a) All relevant stories on Indian economy are read to
identify different topics being covered (b) Assertions and focus of those stories are
marked by one coder and checked by another (c) each story is then analyzed for specific
characteristics described below.
v1. Story Identification. Number

v2. Story date (month/date/year)

84

v3. Newspaper name

General Story Characteristics

v4. Story prominence

(FPU = 2; FPD = 1; Inside = 0)

v5. Story length: designated by number of paragraphs

v6. Story Origin: designated by story byline

1: newspaper’s own reporter 2: newspaper’s business bureau
3: Press Trust of India (PT I) 4=United News of India (UNI)
5=Associated Press (AP) 6=Other bureau or newspaper

Story Sources

v7. Indian business personnel/experts
v8. American business personnel/experts
v9. Indian Government officials

v10. American Government officials
v11. Indian Business organizations
v12. American Business organizations
v13. Government press release

v14. Business press release

v15. Government meeting

v16. Business meeting

v17. Document

v18. IMF/World Bank

v 1 9. Others

85

7=Other

V20. Primary Story Source

1=Indian business personnel/experts 2=American business personnel/experts
3=Indian Government officials 4=American Government officials
5=Indian Business organizations 6=American Business organizations
7=Govemment press release 8=Business press release
9=Govemment meeting 10=Business meeting

11=Document 12=IIVHVWorld Bank 13=Others

v21. Primary story topic

1=Industrial Policy 2=Trade Policy 3=Public Sector
4=Financial Sector 5=Tax Sector 6=General Economy 7=Others
Story themes related to Indian economy and its liberalization

v22. Bureaucratic controls on free business/trade

v23. Need for economic liberalization

v24. Efforts to liberalize economy

v25. Corruption

v26. Future economic forecasts

v27. IMF/World Bank assistance

v28. Causes of economic liberalization

v29. Liberalization analysis

v30. Impact of the liberalization

v31. Lessons from the liberalization

v32. Other themes

86

v33. Primary story theme

1=Bureaucratic controls on free business/trade
3=Efforts to liberalize economy

6=Future economic forecasts

8=Causes of economic liberalization
10=Impact of the liberalization

12=Lessons from the liberalization

v34. Story tone

If story is neutral then code “0.”

+1=Positive story; -1=Negative story

87

2=Need for economic liberalization

4=Corruption

7=IMF/World Bank assistance
=Liberalization analysis

11=Protest against liberalization

13=Other themes

 

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