How Globalization Has Effected On Indian Economy Economics Essay
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Published: Mon, 5 Dec 2016
Due to globalization, in Indian economy it affect not only to agricultural production but also employment opportunities in the rural parts, inequality between urban & rural areas. Globalisation is conceived as a powerful transformative force responsible for a massive shake-out of nations, economies, international institutions & the whole world order. Thus, we can say that the higher the level of international corporations/transactions, the higher will be economic growth, income level & living standards the globalization process would bring. Globalisation has brought many jobs & large sums of investment to India. India’s economy has been growing at exceptional rates for the past several years & many new opportunities have opened up for India. Yet, India does remain quite poor. Most of those who profit from globalization in India are the upper classes, with many in the lower classes being displaced & suffering from miserable labor conditions. Globalization has created a large economic boom for India with largely positive effects. At the present, we can also say about the tale of two Indians. We have the best of times; we have the worst of times. Globalization of financial markets has far outpaced the integration of product markets. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have noting by globalization.
Heymath, a firm in Chennai, provide mathematics homework help to students & lesson plans to teachers, over the net. Its initial target market was schools in Singapore, but after successfully developing & selling its product there, it is now expanding elsewhere, including India. Despite these examples, however, as an economy we are still not still as open to foreign goods and services, labor, or knowledge as we should be. The five major areas where the co-operative global efforts on reform are to be concentrated are:
1. Transparency: The goal is to make timely, reliable data, plus information about economic and financial policies, practices, and decision making, readily available to financial markets and the public.
2. Internationally Accepted Standards: Adherence to international standards and codes of good practices helps ensure that economies function properly at the national level, which is a key prerequisite for a well-functioning international system.
3. Financial Sector Strengthening: Banks and other financial institutions need to improve internal practices, including risk assessment and management, and the official sector needs to upgrade supervision and regulation of the financial sector to keep pace with the modern global economy.
4. Involving the Private Sector: Better involvement of the private sector in crisis prevention and resolution can limit moral hazard; strengthen market discipline by fostering better risk assessment; and improve the prospects for both debtors and creditors
5. Systemic Improvements: Contingent Credit Lines (CCL): The IMF has created a new instrument of crisis prevention with the CCL, after cautionary line of defense readily available to member countries with strong economic policies designed to prevent future balance of payments problems that might arise from international financial contagion.
Advantage of Globalization in Indian Economy:
There are numerous advantages in the shift to a global economy including the possibility to increase benefits from economies of scale. The breaking down of global barriers allows companies to benefit from the largest & cheapest workforces, raw material, & technology. Due to globalization, in many areas of the country tomato growers, potato growers & fruit growers, farmers benefited from tie-up & collaborations with ketchup, potato chips, fruit juices etc. Fishermen in Kerala have increased their incomes using mobile phones to find out the best markets where the prices are highest on each day. Lock outs & strikes have declined to insignificantly low levels because industrial labor is happy. Due to Globalization the business market in the world has no boundaries; they can market their products in any part of the world. This has involved the chances of laying hands on global market & technologies, which would definitely increase our qualities of living standards. Globalization helps Indian Entrepreneur to know more about the competitors, recent trends, Quality of products. Helps in sourcing new technology for improving their Brand Quality. Hiring competent person irrespective of the nationality. Good exposure of Indian brands to overseas market. Due to increase in healthy competition with other brands, Indian brands will be forced to improve their quality and services to the customer. It aims at increasing the production of food and improvements of the economic and social condition of farmers. It would increase efficiency of the workers. Use of seeds and heavy machines has help to increase agricultural productivity. It would improve animal husbandries would be able to import good breed of animals from the other countries. Farmers will get the privilege of the international market through export agricultural products.
Rise in demand for labor & the rise in wage rates leading to increase in costs. Too much competition in the market leading to continuous pressure on raising productivity enhancing consumer service, improving products quality in order to survive. Voluntary retirement for many public sector units. Too many sales person chasing customers. Too many cars on the road & traffic congestion. Growth of consumerism. Shortage power & infrastructure affecting industrial expansion. The farmer got the exposure to global links of markets, technology & investments, beneficial in terms of involving their yields, getting better prices & secured off take. This leads to a major dissatisfaction among under developed/developing countries where they are cut off from the rest of the world. This has also increased the chances of inferiority complex among these nations. There is a fundamental problem with globalization which will cause international tension & trade disputes without arresting the process. It may be difficult to survive for SSI and other industries which are unable to cope up with the changes due to insufficient funds. Indian Talent is being attracted towards other country due to higher salary and emoluments. Due to heavy taxation and levies in India, end products are being costly as compared to imported brands. All the multinational companies MNC’s are examples, such as pepsi , cocacola, ibm, general electric, vodafone, almost all have its business allover the world. for a MNC target market is whole world itself.
Globalization & Its Impact :
The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country. This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced. Since 1991, India has witnessed an explosion of new media. Between 1990 and 1999, access to television grew from 10% of the urban population to 75% of the urban population. Cable television and foreign movies became widely available for the first time.
1) Indian Agriculture: Indian farmers are offered no subsidiaries compared to the US Farmers. There has been no encouragement from the government to ensure foreign companies to set up technologies for the farmer’s assistance. The US Farmers has opened the market for textile & China has already set up factories & started production where in India hasn’t woken up. On the other side of the medal, there is along list of the worst of the time, the foremost casualty being the agriculture sector. Agriculture has been & still remains the backbone of the Indian economy. It plays a vital role not only in providing food & nutrition to the people, but also in the supply of raw materials to industries & to export trade. The financial capital of India & the political of India are set to become the topmost slum cities of the world.
2) Gross Domestic Product (GDP) Growth rate: The Indian economy is passing through a difficult phase caused by several unfavorable domestic & external developments, Domestic O/P & DD conditions were adversely affected by poor performance in agriculture in the post two years. The rate of growth of GDP of India has been on the increase from 5.6% to 7% in the 1993-2001 periods. The sectors attracting highest FDI inflows are electrical equipments including Computer software & electronics (18 %), service sector (13%), telecommunication (10%), transportation industry (9%) etc.
3) Export & Import: India’s export & import is increasing many Indian companies have started becoming respectable players in international scenes. There are two alternative causes available. To sell its product in the export market. To produce those type of commodities that the rich in India could consume i.e. luxury consumption goods.
4) Technologies: IT is given special status. The reason for this is because the Indian government wants to promote it-s nation a as a technological advanced nation and in order to do this they must stimulate the IT sector. The “special status- means the sector and investors (willing to invest in the sector) will receive many benefits and incentives from the government to do so.
5) Poverty: The government of India has shown decline in people living in absolute poverty by manipulating statistics. The “decline” happened when large number of industrial units have been closed down, number of days of work available to workers has declined, downsizing of manpower had taken place in most of the industrial undertakings and non-availability of jobs to the new entrant in employment market is witnessed. Besides, there is an all round decline of prices of agricultural products, forcing farmers to suicide. In sectors like plantation and tea, workers are virtually starving. It is just not possible that people living in absolute poverty can decline in the country under these circumstances.
6) Education: The growth of higher education and the impact of the global economies have influenced the Indian education system over the last few years.
India has to concentrate on 5 important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business opening for small & medium enterprises importance of quality management, now prospects in rural areas & privatization of financial institutions. There will be prospect growth of Indian economy very much depends upon rural participation in the global race. The rich and poor, rural and urban, service class and agriculturalists, men and women, the bi polar opposites started troubling the social development.
Benefits of Globalization:
Economies of countries that engage well with the international economy have consistently grown much faster than those countries that try to protect themselves. Well managed open economies have grown at rates that are on average 2 ½ percentage points higher than the rate of growth in economies closed to the forces of globalisation. Countries which have had faster economic growth have then been able to improve living standards and reduce poverty. India has cut its poverty rate in half in the past two decades. China has reduced the number of rural poor from 250 million in 1978 to 34 million in 1999. Cheaper imports also make a wider range of products accessible to more people and, through competition, can help promote efficiency and productivity. Improved wealth through the economic gains of globlisation has led to improved access to health care and clean water which has increased life expectancy. More than 85 percent of the world’s population can expect to live for at least sixty years (that’s twice as long as the average life expectancy 100 years ago!) Improved environmental awareness and accountability has contributed to positive environmental outcomes by encouraging the use of more efficient, less-polluting technologies and facilitating economies’ imports of renewable substitutes for use in place of scarce domestic natural resources.Improved technology has dramatically reduced costs and prices changing the way the world communicates, learns, does business and treats illnesses. Between 1990 and 1999, adult illiteracy rates in developing countries fell from 35 per cent to 29 per cent. Modern communications and the global spread of information have contributed to the toppling of undemocratic regimes and a growth in liberal democracies around the world. International migration has led to greater recognition of diversity and respect for cultural identities which is improving democracy and access to human rights.
Problems of globalization:
There are social and economic costs to globalisation… Trade liberalisation rewards competitive industries and penalises uncompetitive ones, and it requires participating countries to undertake economic restructuring and reform. While this will bring benefits in the long term, there are dislocation costs to grapple with in the immediate term, and the social costs for those affected are high. Increased trade and travel have facilitated the spread of human, animal and plant diseases, like HIV/AIDS, SARS and bird flu, across borders. Globalisation has also enabled the introduction of cigarettes and tobacco to developing countries, with major adverse health and financial costs associated with that. Trade liberalisation and technological improvements change the economy of a country, destroying traditional agricultural communities and allowing cheap imports of manufactured goods. This can lead to unemployment if not carefully managed, as work in the traditional sectors of the economy becomes scarce and people may not have the appropriate skills for the jobs which may be created. Modern communications have spread an awareness of the differences between countries, and increased the demand for migration to richer countries. Richer countries have tightened the barriers against migrant workers, xenophobic fears have increased and people smugglers have exploited vulnerable people. Globalised competition can force a ‘race to the bottom’ in wage rates and labour standards. It can also foster a ‘brain drain’ of skilled workers, where highly educated and qualified professionals, such as doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher wages and greater career and lifestyle prospects. This creates severe skilled labour shortages in developing countries.
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