An Empirical Investigation on Iron-Ore Price volatility with special reference to Dindigul Lock makers

Dr. S. Gurusamy, Professor and Head; Ms. P. Hemavathy, Senior Research Fellow; Ms. V. Leelavathy, Project Fellow

Dr. S. Gurusamy, Professor and Head Department of Commerce University of Madras, Chepauk, Chennai
Ms. P. Hemavathy, Senior Research Fellow Department of Commerce University of Madras, Chepauk, Chennai
Ms. V. Leelavathy, Project Fellow Department of Commerce, University of Madras Chepauk, Chennai

Keywords: GARCH, Iron Ore Price, Lock Makers, Rural artisans, Raw Material

Abstract

Iron-ore is the staple raw material required for manufacturing locks. Iron ore price contributes to the cost of
raw material for Dindigul lock makers. High volatility has been widely observed in the prices of Indian iron
ore market. Irrefutably, the Lock maker's optimism has been battered by volatility and thus critically has an
effect on their economic growth. This study develops and examines the conditional volatility model in an
attempt to confine the prominent features of volatility in iron ore prices prevailing in Indian market
confining to the benefit of Dindigul Lock makers. Results of the study exhibit that the high volatility of iron
ore price is expected when the negative shocks are present. The Centre and State government are
accountable in steering rural development through adequate disbursement of credit in the form of incentives
to the lock makers to buy raw materials at an affordable cost.