big summary on globalisation and the Indian economy
Answers
Answer:
Imagine a small village market where all are free to come and sell their products at whatever price they desire. There are no limitations on control of their products or the prices. This is a globalised trade. Anyone, in general context referring to any country, that can participate to set up, acquire, merge industries, invest in equity and shares, sell their products and services in India. But how does globalisation work? What are its effects on the Indian economy? Let us study in-depth about it below.
Imagine a small village market where all are free to come and sell their products at whatever price they desire. There are no limitations on control of their products or the prices. This is a globalised trade. Anyone, in general context referring to any country, that can participate to set up, acquire, merge industries, invest in equity and shares, sell their products and services in India. But how does globalisation work? What are its effects on the Indian economy? Let us study in-depth about it below.
What is Globalization?
Globalization is the free movement of people, goods, and services across boundaries. This movement is managed in a unified and integrated manner. Further, it can be seen as a scheme to open the global economy as well as the associated growth in trade (global). Hence, when the countries that were previously shut to foreign investment and trade have now burned down barriers.
Considering a precise definition, countries that abide by the rules and regulations set by WTO (World Trade Organization) are part of globalization. These procedures include oversees trade conditions among countries. Apart from this, there are other organizations such as the UN and different arbitration bodies available for supervision. Under this, non-discriminatory policies of trade are also enclosed.
Indian Economy Reacts to Globalization
When we talk about globalization and the Indian economy, one name strikes our mind, that is, Dr. Manmohan Singh. He was the finance minister in the 1990s when globalization was fully implemented and experienced in India. He was the front man who framed the economic liberalization proposal. Since then, the nation has gradually moved ahead to become one of the supreme economic leaders in the world.
Below mentioned are some of the quick reactions which were felt after the introduction of globalization:
After 1991, the rise in GDP that dropped to 13% in 1991 -92 extended momentum in the following five years (1992-2001). Moreover, the annual average rate of growth in GDP was recorded to be 6.1%.
Furthermore, export growth skyrocketed to 20% in 1993-94. For 1994-95, the figures were recorded to be 18.4 per cent. Export growth statistics in recent years have been very impressive.
Benefits of Globalization Impacting India
Rise in Employment: With the opening of SEZs or Special Economic Zones, the availability of new jobs has been quite effective. Furthermore, Export Processing Zones or EPZs are also established employing thousands of people. Another factor is cheap labour in India. This has motivated big firms in the west to outsource work to companies present in this region. All these factors are causing more employment.
Surge in Compensation: After the outburst of globalization, the compensation levels have stayed higher. These figures are impressive as compared to what domestic companies might have presented. Why? The level of knowledge and skill brought by foreign companies is obviously advanced. This has ultimately resulted in modification of the management structure.
Improved Standard of Living and Better Purchasing Power: Wealth generation across Indian cities has enhanced since globalization has fully hit the nation. You can notice an improvement in the purchasing power for individuals, especially those working under foreign organizations. Further, domestic organizations are motivated to present higher rewards to their employees. Therefore, a number of cities are experiencing better standards of living together with business development.
Disadvantages of Globalization in India
If we are discussing globalization and the Indian economy, then talking about the negative effects is also important. The informal sector is purposely not listed in the labor legislation. For example, informal workers aren’t the subject considering the 1948 Factories Act. This scheme covers vital factors such as common working conditions, safety, and health, the ban on child labor, working hours etc. Also, globalization has caused poor health, disgraceful working conditions, as well as bondage, happening in different parts of the country.
Answer:
Skip to main content
Skip to primary sidebar
Skip to footer
MENU
CBSE Tuts
CBSE Maths notes, CBSE physics notes, CBSE chemistry notes
Globalisation and the Indian Economy – Summary
November 17, 2016 by Bhagya 1 Comment
Summary
Globalisation is the integration between countries through foreign trade and foreign investments by MNCs.
The Multinational Companies (MNCs) are the major force in globalisation process connecting distant regions of the world.
Globalisation has been facilitated by rapid improvements in technology, liberalisation of trade and investment policies and pressure from the international organisations such as WTO.
Due to globalisation, today’s consumers have a wide range of choice of goods and services.
MNCs are the companies that own or control production in more than one nation.
To reduce their cost of production and maximise profit earnings, MNCs set up offices and factories for production in regions of cheap labour and other resources.
Major factor governing MNCs to set up production are—closeness to market, availability of low cost skilled and unskilled manpower, and favourable government policies.
The investment made by MNCs to buy lands, buildings, machines and other equipments in called Foreign Investment.
In case of joint production, local companies got benefitted from MNCs in the form of money for additional investment on buying new machines for faster production and availing latest technology for production.
MNCs influence the interlinkage of production in widely dispersed and distant location by setting up partnerships with local companies, by using the local companies for supplies, by closely competing with the local companies or buying them up.
Foreign trade creates an opportunity for producers to reach beyond the domestic markets.
Developing countries are asking developed countries for free and fair trade practice.
World Trade Organisation (WTO) is the initiative of developed countries to liberalise international trade.
process of removing barriers or restrictions set by the government is called as Liberalisation.
Since 1991, to improve the performance of domestic producers, government has removed the barriers on foreign trade and foreign investment.
During 1950s and 1960s, India allowed import of only essential items like machinery, fertilisers, petroleum etc.
After independence, government had put barriers to foreign trade and investment to protect the producer within the country from foreign competition.
Government can use trade barriers like tax on imports, to regulate foreign trade.
Information and communication technology has played a major role in spreading out production of services across the countries.
MNCs are playing a major role in globalisation by making greater movement of goods and services, investments and technology between the countries. Besides, migration also plays an important role in interlinking process between countries.
As a result of greater foreign investment and greater foreign trade, there has been greater integration of production and markets across countries.
In India, MNCs are investing in industries like cell phones, automobiles, electronics, soft drinks, fast food and services.
For attracting foreign companies to invest in India, government has set up Special Economic Zones (SEZs)
Tata Motors, Infosys, Ranbaxy, Asian Paints, etc are some Indian companies with global presence.
In order to make globalisation more fair, it should ensure that the benefits of globalisation are shared better and government policies must protect the interests of all the people in a country.