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Globalization and Its Impact on Indian Economy

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DOI: 10.25215/2455/0502015

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 International Journal of Social Impact
ISSN: 2455-670X
Volume 5, Issue 2, DIP: 18.02.015/20200502
DOI: 10.25215/2455/0502015
www.ijsi.in |April - June, 2020

Globalization and Its Impact on Indian Economy

Neeraj Singh Manhas1*

ABSTRACT
India benefited greatly from the LPG boom, rising to 9.7% in 2007-2008. The fourth-place
capitalization of India. Agriculture has not improved since globalisation. Agriculture accounts for
17% of GDP. Landless households rose, suicidal farmers. Despite the positive results of
globalization, rising India is being pushed to address these challenges and to move towards growth
early. A prompt message from the visit is that a nation must deliberately choose a policy balance
that helps it seize the opportunity while avoiding crashes. The US has remained the world's largest
country for a century, but massive shifts in the global market have led to a transition from rich
countries in the US and Europe to two Asian giants – India and China. Ac-cording to economic
experts and global surveys, the 21st century is dominated by India and China. India, currently the
fourth-largest measure of purchasing power, overtakes Japan, making it the third-largest economy
in 10 years. They may also claim that the transformation of everyday life around us responds to
globalization. Globalization has positive and negative consequences for the Indian economy.
Globalization has taken us a long way since 1991, boosting the development of our country.

Keywords: Globalization, Indian Policies, GDP, Economy, Liberlization

Globalization defines a mechanism for integrating economic growth, communities and cultures
into a global network of communications, transport and trade. The concept often refers explicitly
to economic globalization: financial integration, foreign direct investment, capital transfers,
relocation, and technical growth in the economies of the world. Globalization as a geographical
globalization of international affairs, he said, "Globalization is defined as an intensification of
global social relations that connect remote locations in such a way that local practices are
influenced by events taking place a few miles away and vice versa." After foreign-currency
reserves fell to $1 billion in 1991, India's economy faced significant contraction. Globalization has
influenced a number of industries, including livestock, fruit, finance, security, etc. Accompanied
by the LPG, i.e. Man Mohan Singh, then Minister of Finance, advocated liberalization,
privatization and globalization, with India growing across sectors.

1
M.Phil Research Scholar, Political Science, Sardar Patel University, V.V. Nagar, Gujarat-388120, India
*Responding Author
© 2020 I licensee IJSI. This is an Open Access Research distributed under the terms of the Creative Commons
Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and
reproduction in any Medium, provided the original work is properly cited.
 Globalization and Its Impact on Indian Economy

ADVENT FOR NEW ECONOMIC POLICY

After a global political and economic upheaval, Dr. Man Mohan Singh launched a radical strategy
called the LPG (Liberalization, Redistribution and Globalization Program), also known as the New
Economic Policy 1991. Liberalization and Globalization:
1. Devaluation: Indian currency was devalued by 18-19 per cent in order to overcome the
balance of payments.
2. Disinvestment: some urban utilities have moved to change the flow of LPG to the
private sector.
3. Allowing FDI: FDI has been approved in many fields, including insurance (26%),
defense (26%), etc.
4. NRI: NRIs have also offered global investment facilities.

New Economic Policy (NEP-1991) has implemented improvements in international , regional and
fiscal reforms, investment, delivery and institutional reforms. The main facets of NEP-1991 are:
internal and external liberalization; (ii) privatization; (iii) redirecting new public sector funds to
areas where the private sector is reluctant to enter; (iv) global convergence and (v) market-friendly
legislation.

CONSEQUENCES OF GLOBALIZATION
Global development has consequences, too. Globalization has increased interdependence as well
as global competition. It illustrates the interdependence of goods-service and capital-transport.
This will not follow global economic trends along all regional strategies and circumstances. They
are affected by international, global and economic causes. It is therefore clear that, when
formulating such a revised domestic strategy, a globalizing economy could not disregard future
strategies and patterns in the rest of the world. This limited policy options, indicating a lack of
systemic authority in national decision-making.
We are now investigating the impact of the Indian economy on globalization.

GLOBALIZATION EFFECT ON AGRICULTURE SECTOR

In rural Indian communities, agriculture is a major factor that revolves from around socio-
economic rights and poverty, and if the paradigm changes, it may affect the existing social equity
system. India started to liberalize trade in 1991. India approached the IMF as a creditor faced with
the global economic crisis and approved the so-called 'systems reform' loan, a debtor with a few
significant policy changes. Reforms focus gradually on the elimination of regulatory
(liberalization), the privatization of agencies in the public sector (privatization) and customer
opportunities and trade barriers (globalization). Sanitary globalization:

• Enhanced performance of the job;

• Remove violence;

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 Globalization and Its Impact on Indian Economy

• Secure preparedness,
• Technology and infrastructure enhancing
• Improve domestic growth significantly.

GLOBALIZATION IMPACT ON INDUSTRIAL SECTOR

Once the government opened up foreign investment markets, the effect of globalization on Indian
demand started in the early 1990s. Indian development has globalized many industries, including
steel, medicine, power, milk, clothing, cement, food and BPO.

Globalization means widening trade disparities between nations, merging national exchange rates,
goods and services trade and regional business investment. In recent years globalisation, due to
rapid technological developments , particularly in communications and transportation, has
increased worldwide. In 1991, the Indian Government revised its economic policy to allow
domestic foreign direct investment. Several foreign enterprises , especially in the pharmaceutical,
BPO, oil, textile and chemical industries, have established industries in India that have contributed
to the development of jobs for many Indians through globalization in the Indian economy. This
has led to rising unemployment and poverty. Foreign companies use state-of-the-art technologies
to help the Indian industry to grow technology and profit from the effect of globalization on Indian
business.

As technology has evolved, the negative impact of globalization on Indian manufacturing had also
declined and many citizens have been driven away from their jobs. In the chemical and cement
industries in particular.

GLOBALIZATION IMPACT ON FINANCIAL SECTOR

Reforms in the financial sector are essential to the liberalization agenda of India. Recent
liberalization measures had also opened the door to foreign companies for our domestic
enterprises. Life was innovative. The traditional approach resulted in financial intermediaries
facing potential collateral threats. As a result, some developments in global financial markets have
affected the domestic economy. Controversies have volatilized and suspicious many financial
institutions and authorities in the financial services business. This sector is currently facing
growing challenges. In this changed context, India has a very positive and competitive role to play
in the coming years by offering a variety of creative solutions for both the diverse needs of millions
of potential global investors. Changes in the financial market are vital to the economic
liberalization agenda of India. Financial services (including finance , insurance, immovable and
corporate services) declined to 8.7% in 2004-2005 and to 10.9% in 2005-2006. The average
increase in 2006-07 was 11.1 percent. Finance is shifting financial globalization. There are
considerable changes in the effects of political dynamics, creative thinking and global capital
markets.

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 Globalization and Its Impact on Indian Economy

IMPACT ON EXPORT AND IMPORT

India produced 42,572 and 48,362 million in 2001-02. Some Indian companies are internationally
renowned. Agricultural exports represent 14-18% of the annual global exports of the country. Sea
goods provided by themselves in 2000-01 more than 6 million dollars in agricultural products out
of a population of 23 per cent. Recently, major producers have been the largest contributor to
overall food products of production, adding approximately a fifth to total food products. These
common products include cereal (mainly basmati rice and non-basmati), oil seeds, coffee or tea,
5-10 % of total country exports.

ADVANTAGES OF GLOBALIZATION
1. Competition is growing as more products become available to consumers.
2. Increased demand from developed countries.
3. Larger and wider exchange of information has helped bridge geographical disparities and
improve international exchange.
4. Developments in advanced nations have reversed brain damage.

DEMERITS OF GLOBALIZATION (CHALLENGES)

1. In emerging countries, job destruction has led to a reduction in workers in industrialized
countries.
2. Most communicable diseases.
3. Big multinationals are in charge of the globe.
4. It would lead to less tacit domination by developing nations.
5. Rural landless families increased from 35 per cent in 1987 to 45 per cent in 1999, 55 per cent
in 2005. Farmers are starving.

COMPARISON WITH OTHER COUNTRIES

Given world commerce, India's share of world exports has risen from 55% to 77% over the last 20
years. Simultaneously, China's production increased to almost 4%.

India's existing trade is six times smaller than the Philippines' estimates in the IMF.

FDI flows to India remained below 0,5% of GDP in the past decade, compared with 5% to beijing
and 5,5% to Brazil. The estimated contribution from the Chinese FDI is USD 50 billion a year. It's
just $five million in India.

CONCLUSION
India has profited substantially from the LPG framework as its GDP in 2007-2008 soared to 9.7%.
The fourth place is Indian market capitalization. Agricultural production has not improved despite
globalization. Agriculture contributes 17% of GDP. Also homes and factories without land commit
suicide. And, in spite of the positive effects of globalization, India will also soon solve these
© International Journal of Social Impact | ISSN: 2455-670X | 173
 Globalization and Its Impact on Indian Economy

obstacles and mark its path towards growth. The message from recent session is that a nation
should choose a policy mix intentionally to help improve efficiency and avoid crashes. The United
States was less than 100 years and has been the biggest country, with massive shifts from the U.S.
to two Asian nations, India and China, since then. Economic analysts and global studies expect
that the 21st century will be driven by India and China. In ten years , India, now the fourth largest
acquisition-power sector, will overtake Japan and be the third largest economy. Ultimately, the
transition to globalization leads to our daily life. In the growth of India, globalization has a positive
and negative effects.

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