GLOBALISATION: DEFINITION AND A BRIEF INTRODUCTION
Globalisation can be defined as “the closer integration of the countries and peoples of the world ...brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and people across borders.”1
Globalisation is a giant that has come in this world to stay. It cannot be said as to when globalisation started gripping this world. Experts believe that globalisation started to expand its claws all over the world in the late 19th century. Globalisation is often called a necessary evil. There are many arguments that support globalisation, and at the same time many that oppose it.
GLOBALISATION AND ITS INTRODUCTION IN INDIA (IMPACTS AT THE TIME OF INTRODUCTION)
Beginning haltingly in 1980s, in India, globalisation got a real thrust from the new economic policy of 1991 and it was further pushed forward by the coming up of the World Trade Organisation in 1995. It was believed that globalisation would invite the entry of foreign capital, along with which updated technology would also enter the country which would help the domestic industries to expand technology-wise. It was also believed that with the setting up of Multinational Companies, more employment opportunities will be made available. In 1991, not only was there huge levels of unemployment, but also technological backwardness obstructed the industries to expand its capacities. Thus many steps were taken to promote globalisation. Some of them were:
· Convertibility of Rupee: In order to fully integrate an economy with the world, the currency has to be made fully convertible. As a first step towards it, Indian Rupee was devalued against major currencies twice in 1991. This was followed by the introduction of the dual exchange rate system in 1992-93 and full convertibility of the Rupee on trade account in 1993-94.
· Liberalisation of imports: Import liberalisation is a must to effect globalisation. In India as a measure to liberalise imports, the peak rate of customs duty was brought down from 150% to just 15% in stages and the tariff was brought down from 125% to 15% (in stages). As per the recommendations of the World Bank, free trade of all items except a negative list of imports and exports is allowed.
· Invitation to foreign capital: Many incentives were offered to the foreign investors and the Non-Resident Indians in the new economic policy. Foreign Direct Investment (FDI) up to 51 and 74 percent and even 100 percent were allowed in some of the industries like Drugs and Pharmaceuticals, hotels and tourism, etc.
POSITIVE IMPACTS THAT CAN BE SEEN TODAY
Globalisation has had many positive impacts on our country since it became a major part of our policies. They are:
· Better Technology: India now has a solid technological base, and its industries make use of modern and sophisticated machinery imported from all parts of the world. This state of better technology has not only helped India increase the quantity of production profitably, but it has also helped to increase the quality of production. India today boasts of having the second best technical manpower in the world.
· Foreign Trade and Foreign Exchange reserves: India’s participation in foreign trade has also increased by leaps and bounds which has only been possible due to import and export liberalisations. Our foreign currency reserves which were only about 5.8 billion dollars in 1991 now stands at 143.1 billion dollars.2
· Exports growth rate: The growth rate of exports has went up from -1.5% in 1991 to more than 20% per annum since 2001.3 Today exports finance as much as 80 percent of imports, compared to just 60 percent during the late 1980s.
· Consumer Satisfaction: The Indian consumer now has access to a wide variety of goods and services from all over the world. Thus the exact desires of the consumers can be satisfied completely. This has also given a good degree of competition to the domestic industries that have in turned improved the quality of their goods and services in order to survive the competition.
· Better education and wider scope of professional studies: With the integration of the Indian economy with the world, educational facilities have undoubtedly improved. With many foreign educational institutions setting up their branches in India, and Indian institutions recruiting foreign teachers, the quality of education has improved over the years. Also, various professional education bodies are cropping up in liaison with foreign professional education bodies to give the student only the best possible education.
NEGATIVE IMPACTS THAT CAN BE SEEN TODAY
Globalisation has been criticized on the grounds that it is a mere tool to redistribute economic power and make the powerful even more powerful, and the weak weaker. It is seen that the developed countries dominate the developing and the underdeveloped. In India, the major negative impacts visible are as follows:
· Domination by the first world countries: Globalisation allegedly redistributes economic power by making the first world countries far more powerful than the third world countries. There is no debate on the topic as to whether countries like USA are using their economic power to dominate the decision making of third world countries, which include India. Since a major inflow of technology and investment comes from these first world countries, we become dependent on them and do as they say, so that the inflow doesn’t cease.
· Growing Unemployment: Unemployment has risen steeply. This is ironical, as Globalisation is supposed to create more jobs. However due to globalisation the production technique has become more capital intensive, which has significantly reduced the amount of manpower employed.
· Increasing income inequality between nations: Globalisation has only increased the gap between the rich and the poor countries. It has lead to a spectacular growth of the developed country and a somewhat slower growth of the developing and the developed countries. The GDP of the developed countries are rising at an alarming rate, whereas the GDP rise of India is not that high.
· Unethical behavior of Multinationals: Lack of strictly enforced international laws means that MNCs may operate in a way that may be highly unethical. For example polluting the environment, running risks with safety or imposing poor working conditions and low wages on local workers. This has been the case in India as well. The labourers in many Multinational factories.
CONCLUSION
To conclude we can say that Globalisation, as we all know, has come to stay in India and the rest of the world. Though it has had many positive and negative impacts on the world, we must use it as a positive force. As we become a more developed nation, the negative effects will automatically diminish.
REFERENCES
1 Joseph Stiglitz from Globalization and its Discontents
2 RESERVE BANK OF INDIA PUBLICATIONS (URL: http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=8051)
3 THE HINDU BUSINESS LINE INTERNET EDITION (URL: http://www.thehindubusinessline.com/2006/02/07/stories/2006020700211100.htm)
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