Globalization in India - Essay Example

? Analytical Paper Introduction Globalization is the process of exchanges of national resources, culture, views, technology, trade, ideas and products across the national borders. In simple terms, globalization is the process of integration among different countries to develop the global economy. In order to accrue the benefits of globalization, many countries agreed to open up their economy and lower their import tariff. In the era of globalization, there are no cultural boundaries between the countries or free exchange of cultures between the countries. Everything is available throughout the world with the help of internet and telecommunications. In the global economy, anyone can buy and sell anything using the advanced technologies. Globalization increases the interaction, cooperation and communication among different countries. A successful globalization will not only provide economic prosperity and development but also will provide social justice and equality to all kinds of people of the society. It should bring success for the poor people also. When some of the countries are working together for a common goal then it is called internationalization. But globalization is a broader term where there is no border, no barriers for people to do trade. Globalization is the process of converting the national economy into a global economy. Critics sometimes said that globalization is only good for the developed nations as it does not create positive impacts on the developing countries. India is one of the examples of developing countries and the effect of globalization in India will be discussed in this report. From the discussion of globalization in India, it will be clear how far the globalization has created positive as well negative impacts in Indian socio-economic and cultural platform. Discussion India opened up their economy in the early nineties after facing an exchange crunch. As a result, Indian economy felt the necessity of the presence of the multinational companies for overall growth and development. In 1991, the liberalization and globalization policies marked the beginning of a new era in Indian history. Economic effect Indian economy from the time of independence was a close economy. The different political parties came into the power but the type of economic inclination was same for India. In 1991, the new era in Indian economy started with three key words - Liberalization, Globalization and privatization. With the globalization process the restructuring of Indian economy started and some major reforms were observed. Globalization brings a favorable impact on Economic growth. In 1970, the GDP growth was only 3 % in India. The countries like Mexico, Brazil achieved more than twice growth rate than India. In the eighties, a significant annual growth was observed from 3% to 5.9% but still it was comparatively very low compared to countries like China, Korea. In 1991, the GDP was calculated on purchasing power parity basis and Indian economic growth was 0.9 % only. Indian economy achieved a growth rate of 8% in the year 2003-2004. Not only the high GDP growth was noticed but also a significant structural change was noticed in Indian economy. Before the globalization, the maximum amount of GDP was generated from the primary sector. But after globalization, the maximum part of the GDP contribution comes from the service sector. ITES-BPO, software services providers has achieved a significant growth in recent years. GDP from the major sectors The service sector is the major employment provider also in Indian Economy. In recent times, the service sector has a great contribution in the national income also. The reason for growth of service sector is urbanization, privatization and high demand for consumer service. Significant high growth rate was observed in 2006-2010. The growth rate and service sector contribution have been shown in the above diagram. The government of India formulated policies to make foreign direct investment in the manufacturing sector. The FDI in manufacturing sector was 40% in 1950 and it was increased to 90% in the year 1990. The overall foreign direct investment increased from US$100 million during 1990-1991 to US$5536 million in 2004-2005. In 2012, India has received 4.67 billion US dollars as inflows. The hotel and tourism received 2.32 billion US dollars inflows, chemicals received 51 million US dollars; pharmaceuticals received 987 million US dollars. Indian imports in 2004-2005 were US$ 107 billion. From 1991 to 2008, a huge increase in the export took place in Indian economy. In 1991, it was US$ 17865 million and in 2008, it was US$ 182631million. The growth of export was comparatively lower than the growth of import and as a result of it, the trade balance was negative. India’s share in World export was 0.5% in 1990-91 and it was 0.6% in 1999-2000. During 2011-2012 export is US$ 303.7 billion. In 2011-12, the import was US$ 488.6 billion. Though due to of globalization Indian agricultural exports increased but the overall agricultural performance decreased. The farmer’s per capital income decreased as an effect of globalization. The Indian economy largely depends on agriculture but government failed to take any major initiatives to extent agricultural service. The lack of irrigation and lack of service extension in the rural areas contributed to the purpose. There are various policies in which government could have taken initiatives to eradicate property and to develop the agriculture sector. But the implementation was not proper. Importantly, the tribal class is very much neglected by the government while formulating the policies for rural development. Population of India India is the second largest country of the World in terms of population. As per the 2011, census report, Indian population is 1.21 billion. India contains 17.5 % of the world’s population and it is projected that by 2025, the Indian population will be the world’s largest population. As per the census report, 72.2 % of the Indian population lives in villages and remaining 27.8 % lives in urban area. Indian population growth is 1.41% and it ranks 102nd in World. The birth rate is 20.22/1000 population. The death rate is 7.4/1000 population. The life expectancy rate is 68.8 years, the male life expectancy rate is 67.46 years and female is 72.61 years. The infant mortality rate is 30.15deaths/1000live births. There is a consistent decrease in the birth rate of Indian population. Indian population is known as young population. 50%-60% of the Indian population is belonging under the age group of 30. Around 50% of population is below the age of 20. The foreign investors get attracted by the large Indian market for two main reasons. The huge population of Indian economy can supply them cheap labor for manufacturing products. India is feeling the IT boom now where anyone can get skilled technical staffs. Secondly, as the population is large there is a huge potentiality for earning high revenue from the market by producing more output. Cultural Effect of globalization There is a huge transformation in Indian culture after globalization. No doubt the Western cultural values have entered into India through capitalism and media influence. The hybridization of Western and Indian cultural values took place especially in the mind of Indian young generation. The Indian children grew up in the period of liberalization so they are called as, “Liberation” children. After 1991, suddenly liberalization took place in Indian economy and an international movement of media took place. With the Hindi channels and state channels the Hollywood channels were also watched by Indians in Indian cable television. The access to television was 10% for urban population in 1991 and it reached to 75% by 1999. The youth got highly influenced by the change in consumer life style which was encouraged by media and was reflected in their dress code, behavior. Due to of the globalization, the food habits have also changed specially in urban areas. People prefer Pizza than traditional foods. Women are getting more opportunity for work but there is an increase evidence of violence against women (Gupta, 2009). Land line telephones were a prestige symbol in India few years back but the mobile technology has replaced the land line services in India. Society has become more open than earlier conservativeness. Now boys and girls even can share a single room in hostel. There is a trend observed in the young generation that they leave their study in between for doing a job in MNC companies. Youth are more interested to do a MNC job rather than government job. The technology brings all the cultures under one roof, people can easily share their ideas views and even can protest through using different social networks. Today, Indian urbanized society is gaining the maximum benefits of globalization. The rural India is not flooded with the benefits of globalization. Though the popularity of Mc. Donald’s, Pizza Hut, Chinese restaurants have changed the food hobbits and life style of Indian people to some extent but the basic deep routed problem like dowry system, inequality with women still persists in the society (Gupta ,2009 ). Environment The rapid adaptation of the worldwide trend in India has created a new horizon for marketers to develop new business in India. Indian market is attracted in few respects like the population, the GDP growth rate, the demography of population. But the globalization has created a favorable business environment. Indian economy was known as a closed economy after independence. Various restrictions were imposed in the form of entry and exit barriers. Indian economy always protects their domestic economy from the international market. But in 1991, India realized the importance of global presence in their economy (Mahajan, 2006). Multinational companies find attractive to deal with Indian economy as the huge population can provide them better opportunity to grow. The investment in one sector leads to the growth of another sector. People can buy the products of another sector by the wages earned in another sector. This can bring a multiplier effect in Indian economy. The small scale industries of global India are facing a tough competition from the global players but in the same time, they are getting an opportunity to develop themselves (Egesimba, 2013). The rural market of India is gaining a global branding facility. The introduction of co-operative society and export of processed food is also a major dimension in Indian economic environment (Tiplady, 2003). There were various steps towards the globalization liberalization and privatization in India. Devaluation – The first step of Indian Government towards globalization was to devaluate the currency by 18%-19% against the other major currencies in international foreign exchange market. Disinvestment- Under the scheme of Privatization, most of the public sector undertakings were sold to private sectors. The policies of globalization in UK High level of foreign direct investment in UK economy is a way of globalization in UK economy. Conclusion The globalization in India has positive as well as negative impacts. The globalization helps Indian economy to improve a lot. It has been discussed that there is a significant increase in the GDP growth rate in Indian economy after the globalization. The globalization has created new employment opportunities for urban and rural areas both. By the liberalization policy, new investment opportunities are created. Foreign direct investment increases the overall growth rate and employment opportunity in India. A change in life style has opened up new horizon of trade. As the popularity of internet is increasing, the e-commerce companies have shown a drastic growth. The cultural transformation is allowing Indian customers to buy the western products. The Indian youth buys the majority of lifestyle product. With the increase in consumerism, people are asking for more materialistic products. There is evidence that for achieving the materialistic needs people are often engaging themselves in crime. Globalization neglects the rural India to a large extent. Some positive changes in terms of introduction of Cooperative Society, advanced packaging systems are developing in rural India but mainly the agriculture, which is considered as the back bone of Indian economy is still being neglected. The Indian women are not gaining from globalization. They are working now but they are not properly paid by the entrepreneurs. In some areas of India women workers are preferred because it is easy to control the women workers and they work below the minimum working environment. Reference Egesimba, G., (2013). The comparative Impact of globalization of Clinical Trials in India and China Munich: GRIN Verlag. Gupta, S., (2009). Globalization and Literature. Cambrigde: Polity Press. Mahajan, S., (2006). Globalization and social change New Delhi: Lotus Press. Shah, G., (2008). The impact of Economic Globalization on Work and family values in India Newark: Rutgers The State University of New Jersey. Tiplady, W., (2003). One World Or Many?: The Impact of Globalization on Mission. USA: William Carey library. Read More