Impact of globalization on Indian economy- An overview

Introduction

Indian economy had experienced major policy changes in early 1990's. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

With the onset of reforms to liberalize the Indian economy in July of 1991, a new chapter has dawned for India and her billion plus population. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the advent of the real integration of the Indian economy into the global economy.

This era of reforms has also ushered in a remarkable change in the Indian mindset, as it deviates from the traditional values held since Independence in 1947, such as self reliance and socialistic policies of economic development, which mainly due to the inward looking restrictive form of governance, resulted in the isolation, overall backwardness and inefficiency of the economy, amongst a host of other problems. This, despite the fact that India has always had the potential to be on the fast track to prosperity.

Now that India is in the process of restructuring her economy, with aspirations of elevating herself from her present desolate position in the world, the need to speed up her economic development is even more imperative. And having witnessed the positive role that Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian countries and most notably China, India has embarked on an ambitious plan to emulate the successes of her neighbors to the east and is trying to sell herself as a safe and profitable destination for FDI.

Globalization has many meanings depending on the context and on the person who is talking about. Though the precise definition of globalization is still unavailable a few definitions are worth viewing, Guy Brainbant: says that the process of globalization not only includes opening up of world trade, development of advanced means of communication, internationalization of financial markets, growing importance of MNCs, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution. The term globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge. Ideally, it also contains free inter-country movement of labor. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.

The Important Reform Measures (Step Towards liberalization privatization and Globalization)

Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capital was flying out of the country and we were close to defaulting on loans. Along with these bottlenecks at home, many unforeseeable changes swept the economies of nations in Western and Eastern Europe, South East Asia, Latin America and elsewhere, around the same time. These were the economic compulsions at home and abroad that called for a complete overhauling of our economic policies and programs. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included the following:

Devaluation: The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against major currencies in the international foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis

Disinvestment-In order to make the process of globalization smooth, privatization and liberalization policies are moving along as well. Under the privatization scheme, most of the public sector undertakings have been/ are being sold to private sector

On Globalization blessing or plague?

Globalization is one of the most controversial issues of modern times; such strong is the spell this phenomenon excerts over us, nearly a century from its dawns, it is still capable of raising passionate debates.

Admitedly one cannot venture to deny its merits which are everything but unimportant. Globalization increased competition, brought it at harsh, better levels. Thus, in order to stay on the market, producers had to develop better goods to be sold at lower prices, all these resulting in a surplus of revenues with the population, surplus converted into better nutrition, medical services, education, leisure, a higher living standard, that is.

Nevertheless, this outstanding progress has its more than evident drawbacks too. First of all, the gap between the rich and the poor has dramatically increased.
Moreover, poor countries have grown into modern colonies of the rich ones, exporting raw materials at low prices and being in turn flooded with manufactured goods.

In conclusion, globalization is like fire. One uses it in order to cook one's meals, heat one's house, but the same fire, left unsurveilled can burn woods, engulf houses or even claim lives.

Globalization is the Key to World Peace

Generally speaking, globalization may be defined in many different ways. It is about integration between organizations, corporations and even states, distributed across various places of the world. The range the term globalization covers is very large, as it includes economical, technological, cultural and political aspects. The newest and most modern area globalization refers to nowadays is the worldwide web, that each and every one of us uses on a rather regular basis.

The unification of the markets, economy and also of the diverse ways of life across the world can only be in our service. The most eye-catching result is the equal distribution of the prices, products and wages, of the rates of interest and profits, no matter the country in question.

Globalization provides numerous economical and social benefits, by raising the standard of living in the Third World countries and, at the same time, bringing more money to the rich states of the world. The effects of the globalization process cannot only be positive. It is a promoter of the corporate imperialism, which does not care too much about the human rights. Even if it claims to bring prosperity to any country, globalization also involves a sort of cultural imperialism. Not to speak about the fact that it may lead to the destruction or inhibition of authentic local and global communities and cultures. The export of artificial wants can also be listed as a negative effect of globalization. It is often stated that even terrorism has experienced the globalization process, because of the attacks in foreign countries that have no direct relation with the countries the attackers come from.

There are three main categories that globalization includes: immigration, trade and diplomatic relations. In the most positive scenario, all these should only lead to world peace. The personal freedoms, technology and culture globalization also includes, can also be of a great help in maintaining this peace.
The teenagers tend to be the most tenacious sustainer of the globalization process.

They are very positive towards technology, trade , consumption of international goods, cultural exchange and immigration. We should all learn form them!

Post-Copenhagen quest for global warming accord stuck in reverse

With 3-1/2 months left before a United Nations climate summit in Cancun, Mexico, the spade work ahead of the meeting seems to be turning up more boulders than a New England plow.

Last week, negotiators from 194 countries met in Bonn, Germany, and made little progress in any of six broad areas covered by a join-if-you-like plan that emerged from last December's climate negotiations in Copenhagen.

Instead, it appears that the most significant progress on some issues will take place outside the UN process, where key countries are working to set up a "quick-start" adaptation fund for developing countries and approaches to increase efforts to combat deforestation.

Ironically, some specialists say, UN negotiations are becoming the venue for smaller sets of countries to work on these outside efforts.

If the size of the current UN negotiating text is any indication, the process to have been thrown into reverse – at least for now.

"The frustrating thing about the past week in Bonn is that the text doubled in size again," says Andrew Deutz, senior policy advisor for UN affairs at the Nature Conservancy. "If you want to get an agreement on the text by Cancun, we should be narrowing, rather than expanding."

Echoes of Copenhagen The process was in a similar position this time last year, specialists say. One result: Negotiators and UN officials increased their effort to downplay the likelihood that Copenhagen would result in a formal legal document. In the end, the climate conference ended up with a Copenhagen accord. Delegates failed to adopt the accord as an official "decision." Instead, they merely left it as something countries could follow or not as they pleased.

Even then, only the presence of heads of state led to the accord. Unlike Copenhagen, however, no heads of state are coming to November's talks in Mexico.

Moreover, the US Congress has abandoned for now climate legislation – a bill that was expected to define Washington's parameters at the global talks.

After a week of haggling in Bonn, international negotiators made little progress on several key issues such as transparency and guidelines for developing countries.

"Unfortunately, what we have seen over and over this week is that some countries are walking back from the progress made in Copenhagen and what was agreed there," said Jonathan Pershing, who lead the US negotiating team, at a post-meeting briefing on Friday.

For instance, he said, some developing countries continue to press for binding emissions controls only for industrial countries. Yet the Copenhagen accord and the previous Bali agreement on climate change anticipate that developing countries would attempt to at least reduce the rate of increase in their emission as their economies grow.

"Nobody's really expecting at this point that Cancun is going to reach a comprehensive agreement, " Dr. Deutz says. "People are starting to look ahead to South Africa already, or even beyond" for that, which means no sooner than the end of 2011.

Two bright spotsTwo bright spots, however, involve work on deforestation and adaptation aid, observers say.

"There's work that a lot of committed countries are doing" in these areas, says Pipa Elias, a climate-policy analyst with the Union of Concerned Scientists in Washington.

In Copenhagen, negotiators made significant progress on these issues. And they were key elements in the Copenhagen Accord. Developed and developing countries that account for some 80 percent of global carbon-dioxide emissions reportedly have signed on to the non-binding political agreement.

Many of these are working to set up the mechanisms to parcel out adaptation money and to govern anti-deforestation, or REDD, efforts without any formal UN agreement.

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