Implications of Globalisation For India
Globalisation can be defined as the tuning of the economic policies of a nation with the current economic policies adopted and implemented by most nations of the world. It is a term coined basically by the western nations. It has become the most trusted philosophy for achieving economic prosperity of any nation. Globaliation also means elimination of trade barriers, trade with most of the nations of the world and adoption of globally accepted duty structures and tariffs. Trade protectionism and supermacy of a few nations in world trade are eschewed by the propounders of this phenomenon. Trade barriers are minimised and import as well as exports of all types of commodities (barring only a few) can he effected by all the nations.
Globalisation was the natural outcome of the creation of a free market system in the west. The Western markets do not value poor-quality products and services: they value merit of goods and people. Further, technology plays a vital part in all the processes of industry, business and society. Free market economics was based on the concept of human efficiency; the Western nations expected it to be at its maxima. Quality was emphasised upon and the free market system followed the age-old maxim, “survival of the fittest.”
However, the west could not meet all the demands of their peoples. So, Western nations moved out of their limited markets and headed towards the East, the Far East. the Orient and the African subcontinent. Thus, they took the concept of a free market system, along with their products. technologies and processes, to those nations. Therefore. the concept of free market economics was transformed into a new phenomenon with this transition. This new phenomenon is fondly termed as ‘globalisation.’
In India, the free market system was introduced with some reluctance on the part of the government. Mr. Rajiv Gandhi took over the reins of the government in 1986. In 1987 he started the slow and painful process of economic reforms. In 1990 the government committed itself to the policies of economic reforms and the world welcomed these moves. In 1991 Mr. Narasimha Rao took over and continued economic reforms. The political upheavals during 1992-97 period did give some setbacks to the economic reforms but the process continued. The chief characteristics of the economic reforms process were as follows:-
- Revival of loss-making PSUs.
- Opening up of the Indian economy to global market system.
- Stressing efficiency in PSUs.
- Liberal international trade norms.
- Flexible annual budgets.
- Gradual elimination of subsidies.
- Establishment of stock exchanges all over India.
- Entry of MNCs on a large-scale.
- Participation of foreign firms in projects related to infrastructure development.
The Indian Rupee was made to float freely vis-a-vis the US Dollar and other hard currencies. During the tenure of Mr. A.B. Vajpayee, far-reaching decisions were taken regarding the implementation of WTO norms. On April 1, 2001 the norms of WTO were fully implemented. Thus, the nation became a “free country” for importing and exporting all the vital trade items, except only a few. The EXIM policy was revised in 2000. New EXIM policy was declared again in 2001. Further, the government sold off its shares in BALCO in a value of Rs. 525 crore. It also proposes to privatise many loss-making PSUs, like Air India. Cash-Reserve Ratio was monitored carefully by RBI and revised according to the needs of the economy. The finance minister put forth an ambitious target of Rs. 10,000 crore in terms of receipts of disinvestments. But this target could not be achieved. During the nineties of the last century, the GDP grew at the rate of 5-6 per cent per annum (average value).., Retirement scheme was implemented in, several PSUs so as to make them efficient and cost effective.
The reforms mentioned in the preceding text proved the commitment of the State to liberalise the economy. The private secor firms were allowed to make deep forays in those areas, which were hitherto the bastions of the PSUs. Banking and insurance are two glaring examples in this context. So much so, foreign firms were also allowed to operate in these two sectors as well as in power, infrastructure development and telecommunication equipment.
Thus, we can conclude that the Indian economic system tried to align itself with the global economic system. This move has paid rich dividends. Although we are fking teething troubles, yet the long term benefits accrued to our economy will far outweigh the costs of such changes. Thus, globalisation of Indian economy would make her strong, stable and reversed around the world. These are, in sum, the positive implications of globalisation for our economy.
The nagative implications are also worth a careful study. The global recessionary trends have affected Indians too. As we are fully aligned with the major economies of the world, we will sink or swim along with them. The crashes of stock markets in New York, Tokyo and Shanghai reflect themselves within twenty-four hours in the fall of the sensex at Mumbai Stock Exchange. Transnational trade is also affected by the economic health of other nations. The software industry has seen the maximum number of lay-offs from April to August, 2001. These lay-offs would make our programmers redundant. There were major job cuts in manufacturing sector during the month of August, 2001. They were precisely due to global recession. So. unemployment or partial employment may be more prominent. Further, the Rupee is getting weakened vis-a-vis other hard currencies. In the absence of globalisation, the Rupee could have fetched higher values (say Rs. 26 to a US Dollar). But today, it threatens to hit and abyss; it could reach the ratio of Rs. 50 to a US Dollar within six months. Further. the government has not been able to sell its loss-making PSUs. Finally, the MNCs are walking out of infrastructure projects, especially power projects. Enron is on its way out as it could not give good rates per kWh to .the government of Maharashtra. Congentrix is another firm that has faced rough weather in India and will walk out forever. If such types of incidents continue, we may not be able to maintain a healthy image of “a dependable nation to invest in.” And as on dates what we need is investments by FIIS and MNCs. The Chinese, despite their bad image and communist policies, have been able to garner better financial support from Els for their industries and trade.
Every rose has a few thorns. We have learned from the mistakes of the past and would not repeat them in future globalisation, would be the key to success of every economy of the world. We cannot ward it off by stating that it is a western concept. We have to embrace it fully. For this purpose, we may have to shut down old and sick PSUs (like NTC). We may also have to reduce the human inventory in the profit-making PSUs to optimum levels. The ration card system has been eliminated for the privileged sections of our society. The prices of fuels also in line with those in other developing nations. The State would not provide easy loans. subsidies and grants-in-aid to individual, firms and manufacturing units with some strings. Every firm or individual would be required to be efficient, productive and a part of the real economic growth of the nation.
Even if some critics may eschew the concept of globalisation, the economic liberalisation process would continue. Ultimately, it would lead to nearly 100 per cent globalisation of the Indian economy.