Globalisation and Indian economy
Updated: May 5, 2022
'Globalisation' refers to a country's economic integration with the global economy. It depicts the interdependence of various countries' economies and cultures. As a result, it boosts cross-border trade and investment and the exchange of ideas, technologies, and information. Although the term "globalisation" is new, countries have been building economic relationships with one another for centuries. This term has become increasingly popular in recent years, owing to technological advancements.
The introduction of globalisation had a significant impact on Indian society. Globalisation and the Indian economy became intertwined, and subsequent economic policies reflected this shift. The government also used it to shape administrative policies. The goal was to increase business opportunities, create jobs, and attract international investment. The Indian economy's globalisation had an impact on its culture as well. The introduction of other societies and their norms influenced the culture of this country in various ways. In addition, India is one of the countries that has experienced economic success due to implementing this concept. The introduction and growth of foreign investment in critical sectors of the Indian economy fuelled the country's economic growth even more.
Dr. Manmohan Singh, India's former Finance Minister, deserves a special mention in this discussion of globalisation and the Indian economy. He was at the forefront of this movement and ensured it was carried out successfully. He also drafted the proposal for economic liberalisation. Here are some quick statistics that show the impact of globalisation on the Indian economy right now: The average annual GDP growth rate after 1992 was 6.1 percent. In 1993-94, India's exports grew at a 20 percent yearly rate. It was also at a healthy 18.4 percent in the following financial year. The total export value of computer services was around $11 billion in 1995 and around $110 billion in 2015. These figures demonstrate that globalisation and the Indian economy have positively changed and accelerated India's economic growth.
In India, the concept of globalisation yielded the following benefits, which aided in the transformation of the Indian economy and the country as a whole:
1. Increased Job Opportunities:
The introduction of globalisation resulted in an influx of foreign investments, and the Indian government's favourable policies aided companies in establishing operations in the country. As a result, new job opportunities have arisen. In addition, the availability of low-cost labour prompted foreign businesses to outsource work to local firms. In a nutshell, after globalisation and Indian trade merged, employment opportunities in this country skyrocketed.
2. A rise in per-capita income:
Incomes increased due to more job opportunities, and Indian households' per-capita income increased as well. As a result, their standard of living changed, and the average Indian's purchasing power increased. This resulted in the emergence of a new middle class in the country and an increase in consumer demand.
3. Consumers have more options:
Consumers in India have many options thanks to globalisation and the Indian economy. Consumers had the opportunity to choose from various similar products brought by both Indian and foreign manufacturers. As a result of the increased competition, manufacturers were compelled to create better products at lower prices. Access to Untapped Markets One of the most noticeable benefits of globalisation is that it gives people access to many previously untapped markets with enormous potential. The Indian economy has become more globalised, allowing foreign companies to enter the Indian market. Indian businesses have also been allowed to operate on a global scale. As a result, India's import-export sector grew dramatically after 1991. The relationship between globalisation and the Indian economy is a crucial aspect of economics. It explains how this concept changed India and paints a clear picture of globalisation and the Indian economy's future.
When we think of globalisation and the Indian economy, one name comes to mind: Dr. Manmohan Singh. He served as India's finance minister during the 1990s when globalisation was fully implemented and felt. He was the driving force behind the proposal for economic liberalisation. Since then, the country has steadily progressed to become one of the world's foremost financial leaders.
Following are some of the immediate reactions that occurred following the introduction of globalisation:
Following 1991, the rise in GDP, which had slowed to 13% in 1991-92, accelerated over the next five years (1992-2001). Furthermore, the annual average GDP growth rate was recorded at 6.1 percent.
Furthermore, in 1993-94, export growth accelerated to 20%. The figures for 1994-95 were reported to be 18.4 percent. Statistics on export growth have been awe-inspiring in recent years.
Globalization's Advantages for India
Increased Employment: The availability of new jobs has been quite adequate since the opening of SEZs, or Special Economic Zones. Export Processing Zones, or EPZs, are also being established, with tens of thousands of people employed. Another factor is India's low-cost labour. This has prompted large corporations in the west to outsource work to companies in the region. All of these factors are leading to an increase in employment.
Compensation Has Increased: Compensation levels have remained higher since the outburst of globalisation. Compared to what domestic companies might have presented, these figures are impressive. Why? Foreign companies bring a high level of knowledge and skill to the table. The management structure was eventually changed as a result of this.
Improved Living Standards and Purchasing Power:
Since the country's full integration into the global economy, wealth generation in Indian cities has increased. Individuals' purchasing power has improved, particularly for those employed by international organisations. Furthermore, domestic businesses are compelled to provide higher pay to their workers. As a result, several cities are experiencing improved living standards with business growth.
Globalization's Drawbacks in India
When we talk about globalisation and the Indian economy, we must also consider the negative consequences. The informal sector is intentionally left out of labour legislation. Casual workers, for example, are not covered by the 1948 Factories Act. This scheme addresses critical issues such as common working conditions, safety, health, and the prohibition of child labor and working hours. Globalisation has also resulted in poor health, deplorable working conditions, and bondage in various parts of the country.
Globalisation in India (LPG) was supposed to make India's economy one of the world's fastest-growing. A slew of reforms in the industrial, trade, and social sectors were implemented to make the economy more competitive. The economic changes implemented have had a significant impact on the economy's overall growth. It also marked the beginning of India's economic integration into the global economy. In 1991, the Indian economy was in a major crisis, with foreign currency reserves falling to $1 billion and inflation reaching 17%. The fiscal deficit was also high, and foreign investors were reluctant to invest in India. Then, the following steps were taken to liberalise and globalise the economy.
The world has become more intertwined and interdependent. It has been a forerunner of significant change.
All Fortune 100 companies have a global presence and are reaping substantial profits. Trade barriers have been reduced worldwide, resulting in increased trade, foreign direct investment, technology exchange, and cross-border movement of people. Globalisation has brought both benefits and drawbacks. The importance of it is demonstrated by the comprehensive review presented. It should be evident that globalisation's growing importance cannot be underestimated or ignored. Globalisation is a necessity in more ways than one.
In conclusion, globalisation has had more positive than adverse effects on our country's economy.