Economical Essay

India and Globalization

(i) India and Globalization
(ii) Liberalisation

          Integration of national economies on global bases has become indispensable. The term liberalisation is synonymous with globalization & privatization. Liberalisation implies shift from command economy to market economy. The honeymoon with socialism is over all over the world.
          During the last ten years sweeping changing have been going on in the economy of the world. Under the new economic order no nation can survive in isolation. Therefore, no country can escape the process of globalization. Globalization implies that a government must introduce liberalisation in its economy. It means that phase of globalization in the economy which aims at unification with the global economic order. For this purpose, free imports, curtailment of custom duties and free and direct in-flow of foreign investment should be allowed. In addition to this, full convertibility of Indian rupee has also been undertaken as one of the measures adopted under the present phase of globalization in India.
          For developed economies globalization is an aspect where there are no constraints in dealing with national and international trade policy. Globalization has affected not only economic order of the world but also social and cultural aspect of the countries. America is the leader of the process of Globalization since the last decade of the 20th century. It has been made clear to all and one that no country can survive without abiding by the process of globalization. Liberalisation is the natural outcome of the policy of globalization. The 19th and 20th centuries belonged to England and 21st century belongs to America. It is no exaggeration to state that economic imperialism is the cult of American policy. Every big and small country has to follow the dictates of economic policies laid down by America. The result is very obvious. WTO is the manifes¬tation of this policy and almost every country is a member of WTO.
          In the Indian context, the year 1990-91 would go down as an unprecedent¬ed year. Indian economy was under stress. Our economic growth was an all time low level of 1.1%. Foreign investors had lost faith in Indian market. Capital was flowing out. So it was very essential for us to form a multi directional programme. As a result of this we decided to do away with license system. We undertook operation Globalization with a view to bringing our economic policies in line with the developed nations in the international field.

          The first step towards globalization was taken in the form of devaluation. By this the value of the rupee declined by 18 to 19% against major currencies in the world. Secondly, sweeping changes were made in trade policy. In 1991 the govt, of India announced a package of trade policy reforms. Under this, exports and imports procedure were simplified. Even 51% foreign equity was permitted in trading houses. Thirdly, India undertook the policy of convertibility of rupee, under which foreign exchange access was liberalised for current business transactions. Fourthly, Industrial policy reforms were also under tak¬en. These positive signals gave further thrust to our economy. The encourage¬ment to private enterprises was adopted as a matter of policy. The disinvestment in public sector undertakings was also encouraged. Golden hand shake policy was introduced to get rid of surplus staff.
          However, the brief account of the impressive reforms given above must not lead us to conclude that our economy has improved. The core of International economy order are the benefits that must pass on to America and other devel¬oped countries. So far we have taken very bold steps in the field of globalization. Sadly enough, there is no national consensus on the need of globalization and the role of multinationals and foreign capital in the country. At present econom¬ic scenario in the country is gloomy. Unemployment is one of the dangerous threats to Indian society. Poverty, illiteracy, corruption in politics play a major role in depriving the country of the benefits of Globalization.