The term globalization refers to the integration of the economy of the nation with the world economy. In recent years, globalization has increased due to improvements in transportation and information technology. With the improved global synergies, comes the growth of global trade, doctrines, and culture.
Globalization of Indian economy
Indian society is changing drastically after urbanisation and globalisation. The economic policies have had a direct influence in forming the basic framework of the economy.
Economic policies established and administered by the government also performed an essential role in planning levels of savings, employment, income, and investments in the society. Cross country culture is one of the critical impacts of globalization on Indian society. It has significantly changed several aspects of the country, including cultural, social, political, and economical.
However, economic unification is the main factor that contributes maximum to a country’s economy into an international economy.
Advantages of Globalization in India
More Employment Opportunities: The introduction of globalisation brought an influx of foreign investments and the favourable policies of the Indian government also helped companies to set up units in this country. This has resulted in new employment opportunities. Also, access to low-cost labour prompted foreign businesses to outsource work to companies operating here.
In a nutshell, the employment opportunities in this country rapidly progressed after globalization.
Increase in employment: With the opportunity of special economic zones (SEZ), there is an increase in the number of new jobs available. Including the export processing zones (EPZ) center in India is very useful in employing thousands of people.
Another additional factor in India is cheap labour. This feature motivates the big companies in the west to outsource employees from other regions and cause more employment.
Increase in compensation: After globalization, the level of compensation has increased as compared to the domestic companies due to the skill and knowledge a foreign company offers. This opportunity also emerged as an alteration of the management structure.
High standard of living: With the outbreak of globalization, the Indian economy and the standard of living of an individual has increased. This change is notified with the purchasing behavior of a person, especially with those who are associated with foreign companies. Hence, many cities are undergoing a better standard of living along with business development.
Increase in per-capita Income: As a direct effect of more employment opportunities, the per-capita income of Indian households also increased after globalization.
Resultantly, it altered their standard of living and improved the purchasing power of an average Indian. This gave birth to a new middle-class and recorded an increase in demand for consumer products in this country.
More Choices for Consumers: Globalization and the Indian economy provided Indian consumers with a plethora of choices. Indian, as well as foreign manufacturers, brought various products of the same kind, and consumers got a chance to select their preferred one.
This increase in competition prompted manufacturers to create better products at a much lower price point.
Access to Untapped Markets: A noticeable benefit of globalisation is that it provides access to many untapped markets with huge potential. The globalisation of Indian economy means it allowed foreign companies to operate in the Indian market. Also, Indian businesses got an opportunity to operate on a global scale. As a result, the import-export sector in Indian saw an astonishing rise after 1991.
Impact of Globalization
During this discussion of globalisation and Indian economy, a name that deserves special mention is former Finance Minister of India Dr. Manmohan Singh. He was at the forefront of this movement and ensured a successful implementation of it. He also drafted the economic liberalisation proposal. Here are some quick statistics that will reflect the immediate effect of globalisation on the Indian economy –
After 1992, the average annual growth rate of GDP was 6.1%.
In 1993-94, the export of India recorded an exponential growth of 20%. Also, in the following financial year, it was at a healthy 18.4%.
In 1995, the total export value of computer services was about ＄11 billion, and in 2015 it recorded around ＄110 billion.
These statistics prove globalisation and the Indian economy brought positive changes and fast-tracked India’s economic growth.
Outsourcing: This is one of the principal results of the globalization method. In outsourcing, a company recruits regular service from the outside sources, often from other nations, that was earlier implemented internally or from within the nation (like computer service, legal advice, security, each presented by individual departments of the corporation, and advertisement).
As a kind of economic venture, outsourcing has increased, in recent times, because of the increase in quick methods of communication, especially the growth of information technology (IT).
Many of the services such as voice-based business processes (commonly known as BPS, BPO, or call centres), accountancy, record keeping, music recording, banking services, book transcription, film editing, clinical advice, or teachers are being outsourced by the companies from the advanced countries to India.
Indian companies gained from successful collaborations with foreign companies. Ex: Tata Motors, Infosys.
With big Indian MNCs contributing to world trade, India can raise its voice for fairer trade rules at WTO.
Consumers have an option to choose from a wide range of products- they can have cheapest, best thing.
We can export what we produce in excess. So, less wastage and we can import what we produce in deficient. In agricultural sphere, Globalization promotes contract farming which increases the earning capacities of farmers.
Trade deficit (as in case of India) which hurt most in case of under-developed and developing economies and widen the gap between the developed & not so developed economies.
Outsourcing of jobs from developed countries to developing countries. It has led to loss of jobs in developed countries and subsequent protectionist measures as recently in USA and Saudi Arabia.
As the economies are interlinked any financial crisis in one country, especially developed countries will result in slow down in developing economies. Eg-crisis in COVID 19 times
Agriculture sector not improved as much as services and manufacturing sector
Neo-colonialism in smaller developing countries .
MNC’s ruling the globe and exercising a great political control all over the world & wider economic inequalities.
Not sustainable growth, development on growing negligence of environment, forests, wildlife etc.
Destruction of traditional service providers. For example, old restaurants, parathas and lassi are replaced by Mc. Donald’s, Chinese restaurants, etc.
Advent of a consumer credit society. A person can now buy goods and services even if he does not have sufficient purchasing power at his disposal.