Impact of globalisation on indian economy

2. Globalisation is the new buzzword that has
come to dominate the world since the nineties
of the last century with the end of the cold war
and the break-up of the former Soviet Union
and the global trend towards the rolling ball.

3. •There is increased reliance on the market
economy
• renewed faith in the private capital and
resources,
•a process of structural adjustment spurred by
the studies and influences of the World Bank
and other International organisations
• Globalisation has brought in new
opportunities to developing countries.

4. The process of globalisation
includes opening up of world trade,
internationalisation of financial markets,
 population migrations
 more generally increased mobility of
persons, goods, capital, data and ideas

5. •India opened up the economy in the early
nineties following a major crisis that led by a
foreign exchange crunch that dragged the
economy close to defaulting on loans.
•The response was a number of Domestic and
external sector policy measures partly
prompted by the immediate needs and partly
by the demand of the multilateral
organisations.
•The new policy regime radically pushed
forward in favour of a more open and market
oriented economy.

6. Major measures initiated as a part of the
liberalisation and globalisation strategy in the
early nineties included:
•scrapping of the industrial licensing regime
•reduction in the number of areas reserved for
the public sector
• amendment of the monopolies and the
restrictive trade practices act
• start of the privatisation programme
• reduction in tariff rates and change over to
market determined exchange rates.

7. The rich countries of Europe have seen the
greatest decline in global GDP share by 4.9
percentage points, followed by the US and
Japan with a decline of about 1 percentage
point each.
Within Asia, the rising share of China and
India has more than made up the declining
global share of Japan since 1990.
During the seventies and the eighties, East
Asian countries and during the eighties South
Korea, along with China and India, contributed
to the rising share of Asia in world GDP

8. •One heartening feature of the evolution of the
world economy during the last two to three
decades has been the outstanding economic
success of China and India – two of the
world’s most populous and hitherto
extremely poor countries.
•Starting out with the world’s largest absolute
numbers of people living in poverty, in
narrow economic terms the two countries
have achieved impressive growth

9. •The liberalisation of the domestic economy and
the increasing integration of India with the
global economy have helped step up GDP growth
rates.
•India’s average annual growth rate almost
doubled in the eighties to 5.9%. Indian Economy
experienced a GDP growth of 9.0 percent during
2005-06 to 9.4 percent during 2006-07.
•Over the past decade FDI flows into India have
increased Technology advancement

10.  By 2025 the India's economy is projected to be
about 60 per cent the size of the US economy.
The transformation into a tri-polar economy
will be complete by 2035, with the Indian
economy only a little smaller than the US
economy but larger than that of Western
Europe.

11. By 2035, India is likely to be a larger growth
driver than the six largest countries in the EU,
though its impact will be a little over half that
of the US.
India, which is now the fourth largest
economy in terms of purchasing power
parity, will overtake Japan and become third
major economic power within 10 years

12. •India’s share of world merchandise exports
increased
•Exports have reached a record figure of US $
102.7 billions during the financial year
2005-06. India’s exports grew by 22.5 per
cent in August 2010 to 16 billion US Dollars.
•Significant liberalisation of external trade has
taken place smoothly, which has imparted
competitive efficiency to the domestic sector
almost upto the global best standards in many
of the sectors

13. The commodities which experienced higher
growth cutting across diverse sectors and
destinations during 2010 are:
The sectors registering healthy exports growth
include:
 cotton yarn, gems and jewellery, iron ore,
engineering and petroleum, oil and lubricants.
 However, the readymade garments,
handicrafts, handlooms and carpets sectors are
still in bad shape.

14. Impact on India
Over the years more and more sectors
opened up:
• foreign direct investments
• portfolio investments
facilitating entry of foreign investors
in telecom, roads, ports, airports,
insurance and other major sectors

15. Adoption of Globalization and liberalization
principles has widened the horizon of Indian
Consumers worldwide. Consumers in India
have become more conscious. Market
information in India has become clear.
Liberalized policies have led the industrial
sector to grow at a faster pace. BPO, IT, ITES,
Retail and Insurance sector have performed
well. Both male and female have got equal
opportunity in that sector. The success for
India is the reduction in gender inequality in
India.

16. The BRIC report reflects considerable
confidence in the future of the Indian
economy, though it is necessary to see the fine
print to realise that while India would be a
super power in 2050, "if development
proceeds successfully", the per capita income
would still not be at a high end.
 What is important to recognise is that the
report leans on the demographic strength that
India derives from its huge young workforce.

17. In order to harness the demographic
advantages, the quality of labour force, (in
terms of relevant skills which need to be
sustained, reoriented and upgraded in a
globally competitive era) and the physical
health of the workforce become crucial.
Education and health, therefore, provide the
link between supply and demand for labour
through increases in productivity.

18. •This issue is particularly important for the
Indian economy, where services have grown
faster than manufacturing in the last ten
years.
•Services have grown at an annual rate of 8
per cent while manufacturing has grown by 6
per cent.
•The faster growth of services is largely due to
the fast growth of the use of IT in domestic
and foreign industry and services.

19. •But fast growth overall has been jobless, that
is, in both the formal manufacturing as
already noted above, and also in the formal
services sector.
•Many Indian economists have argued that this
pattern of growth is lopsided and
unsustainable.
•They suggest that India will need to have fast
growth of low-skill manufactured exports to
remedy the situation and avoid social unrest.

20. Sustaining the growth momentum and achieving
an annual average growth of 7-8 % in the next five
years.
Simplifying procedures and relaxing entry barriers
for business activities.
Checking the growth of population; India is the
second highest populated country in the world
after China. However in terms of density India
exceeds China as India's land area is almost half of
China's total land. Due to a high population
growth, GNI per capita remains very poor.
Boosting agricultural growth through
diversification and development of agro
processing.

21. Expanding industry fast, by at least 10% per
year to integrate not only the surplus labour
in agriculture but also the unprecedented
number of women and teenagers joining the
labour force every year.
Developing world-class infrastructure for
sustaining growth in all the sectors of the
economy.
Allowing foreign investment in more areas
Empowering the population through universal
education and health care. India needs to
improve its HDI rank, as at 127 it is way
below many other developing countries'
performance.