Essay on “Globalization and India” Complete Essay for Class 10, Class 12 and Graduation and other classes.

Globalization and India

Globalization is the new buzzword that has come to dominate the world since the nineties of the last century. Till the nineties the process of globalization of the Indian economy was    constrained by the barriers to trade and investment liberalization of trade, investment and financial flows initiated in the nineties has progressively lowered the barriers to competition and hastened the pace of globalization.

India has the distinction of being the world’s largest economy in the beginning of the Christian era, as it accounted for about 32.9% share of world GDP and about 32.5% of the world population. The goods produced in India had long been exported to far off destinations across the world. Therefore, the concept of globalization is hardly new to India.

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 slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilateral organizations. The new policy regime radically pushed forward in favour of a more open and market oriented economy.

Major measures initiated as a part of the liberalization and globalization 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 privatization programme, reduction in tariff rates and change over to market determined exchange rates.

Over the years there has been a steady liberalization of the current account transactions, more and more sectors opened up for foreign direct investments and portfolio investments facilitating entry of foreign investors in  telecom, roads ports, airports, insurance and other major sectors.

The Indian tariff rates reduced sharply  over the decade form a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97. Tough tariff rates went up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to  the minimum with a peak rate of 20% m in another 2 years most non- tariff barriers have been dismantled by March 2002, including almost all quantitative restrictions.

 The Global India

The liberalization of the domestic economy and the increasing integration of India with the global economy have helped step up GDP growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have slowed down since the country has still be able to achieve 5-6% growth rate in three of the last six years. Though growth rates has slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts in two decades the growth rates are expected to go up close to 70% in 2003-04. A global comparison shows that India is now   the fastest growing just after china.

This is major improvements given that India is growth rate in the 1970’s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though India’s average  annual growth rate almost double in the eighties to 5.9% it was still lower than the growth rate in China, Korea and Indonesia. The pickup in GDP  growth has helped improve India’s global position. Consequently India’s position in the global economy has improved form the 8^th position in 1991 to 4^th place in 2001. When GDP is calculated on a purchasing power parity basis.

Globalization and Poverty

Globalization in the form of increased integration though trade and investment is an important reason why much progress has been made in reducing poverty and global inequality over recent decades. But it is not the only reason for this often unrecognized progress, good national polices, sound institutions and domestic political stability also  matter.

Despite this progress, poverty remain one of the most serious international challenges we face up to 1.2 billion of the developing world 4.8 billion people still live in extreme poverty.

But the proportion of the world population living in poverty has been steadily declining and since 1980 the absolute number of poor people has stopped rising and appears to have fallen in recent years despite strong population   growth in poor countries. If the proportion living In poverty had not fallen since 1987 alone a further 215 million people would be living In extreme poverty today.

India has to concentrate on five important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business openings for small and medium enterprises, importance of quality management, new prospects in rural areas and privatization of financial institutions. The manufacturing of technology and management of technology are two different significant areas in the country.

There will be new prospects in rural India. The growth of Indian economy very much depends upon rural participation in the global race. After implementing the new economic policy the role of villages got its own significance because of its unique outlook and branding methods. For example food processing and packaging are the one of the area where new entrepreneurs can enter into a big way. It may be organized in a collective way with the help of co-operatives to meet the global demand.

Understanding the current status of globalization is necessary for setting course for future. For all nations to reap the full benefits of globalization it is essential to create a level playing field. President Bush’s recent proposal to eliminate all tariffs on all manufactured goods by 2015 will do it. In fact it may exacerbate the prevalent inequalities. According to this proposal, tariffs of 5% or less on all manufactured goods will be eliminated by 2005 and higher than 5% will be lowered to 8 %. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by 2015.

GDP Growth rate

The Indian economy is passing through a difficult phase caused by several unfavorable domestic and external developments; Domestic output and Demand conditions were adversely affected by poor performance in agriculture in the past two years. The global economy experienced an overall deceleration and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in 200-01. The performance in the first quarter of the financial year is 5.8 and second quarter is 6.1%.

Export and Import

India’s Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million respectively. Many Indian companies have started becoming respectable players in the International scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In 2001-01 Agricultural products valued at more than US $ 6 million were exported from the country. 23% of which was contributed by the marine products alone. Marine products in recent years have emerged as the single largest contributor to the total agricultural export form the country accounting for over one fifth of the non-basmati rice), oil seeds, tea and coffee are the other prominent products each of which accounts for nearly 5 to 10% of the country’s total agricultural exports.

India’s Position in Global Integration

Indian clearly lags in globalization. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Let’s look at a few indicator how much we lag.

• Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4 billion in the case of India.
• Consider global trade – India’s share of world merchandise exports increased from 0.5% to 0.07% over the past 20 years. Over the same period China’s share has tripled to almost 4%.
• India’s share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and labour cost advantages.
• It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI. Despite all the talk, we are now where ever close being globalized in terms of any commonly used indicator of globalization. In fact of any commonly used indicator of globalization. In fact we are one of the least globalized among the major countries- however we look at it.
• As Amartya sen and many other have pointed out that India, as a geographical, politico- cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalized world which is   distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.

Consequences

The implications of globalization for a national economy are many. Globalization has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalizing economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government decision-making at the national level.