Question

1. What is the impact of globalization and liberalization on India?

Answer 1

We have seen landmark shift in Indian Economy since the adoption of new economic policy in 1991. This had far reaching impacts on all spheres of life in India. There can be no concrete conclusions about their impact on Indian people. This turns out to be more of an ideological debate like capitalism vs Socialism. But there is no doubt in the fact that those reforms were unavoidable and very compelling. There was in fact, similar wave all across the globe after disintegration of USSR and end of the Cold War. Many Post-colonial democratic regimes, which were earlier sheltered by USSR, lost their umbrella. They had no option, but to fall in line to new unipolar world order dictated by USA. Even China in late 1980’s adopted ‘Open Door Policy’ through which it liberalized its economy by shedding communist mentality completely. South East Asian economies also reformed their economy and started engaging more with global economy. These along with China, pursued export led growth whereas Indian economy still relies almost wholly on domestic consumption.

 


Note changing Sectoral composition of India economy since independence

Composition – Services – Steady significant Increase (was more marked after reforms), Industry – Less marked increase (stagnated after reforms) , Agriculture Significant Decline

Patterns in the above graph explain inequity of Indian growth story. As per principle of economics, when a particular sector performs disproportionately higher than average growth rate, economic wealth starts concentrating into that sector. In this case that sector is Service sector. Within this sector, highest growth is marked by sectors such as financial services, Real estate services etc. , which are least employment elastic. Consequently, Growth of past decade was limited to upscale areas of the countries as almost whole service industry, operates from these areas. Majority of India got spillover or trickle down growth from here. This accelerated migration to urban areas. This in turned created array of social problems associated with urbanization. It fundamentally changed pattern of Indian Society.

Answer 2

Explanation:

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