Globalisation

And
Services Revolution
(With reference to Service Sector)

By
Ankita P. Patkar
Roll no. 36

Introduction

Globalisation is the buzzword that has come to

dominate the world since the nineties of the last
century.
Till 90s the process of globalisation of the Indian
economy was constrained by the barriers to trade
and investment.
Liberalisation of trade, investment and financial
flows initiated in the nineties has progressively
lowered the barriers to competition and hastened
the pace of globalisation.

Impact of Globalization of Indian Economy

The impact of globalisation has been highly

positive in almost all spheres of economic and
social life and virtually no negative effect.
India's economic growth has been high, exports
have boomed, incidence of poverty has been
reduced, employment has surged, begging by India
for economic aid has stopped, long-term inflation
rate has gone down, scarcity of goods have
disappeared, the quality of products available have
improved substantially and overall India has
become progressively vibrant and internationally
competititive.

Impact of Globalization of Indian Economy

Service sector is the lifeline for the social

economic growth of a country.
The real reason for the growth of the service
sector is due to the increase in urbanization,
privatization and more demand for intermediate
and final consumer services.
In advanced economies the growth in the primary
and secondary sectors are directly dependent on
the growth of services like banking, insurance,
trade, commerce, entertainment, etc.

The Bright Side of Globalization

The rate of growth of the Gross Domestic Product of

India has been on the increase from 5.6 per cent during
1980-90 to 7% in the 1993-2001 period.
The foreign exchange reserves (as at the end of the
financial year) were $ 39 billion (2000-01), $ 107 billion
(2003-04), $ 145 billion (2005-06) and $ 180 billion (in
February 2007).
In respect of market capitalization India is in the fourth
position with $ 894 billion
As per the Forbes list for 2007, the number of billionaires
of India has risen to 40 (from 36 last year) more than those
of Japan (24), China (17), France (14) and Italy (14) this
year.

The Dark Side of Globalization

On the other side of the medal, there is a long list of
the worst of the times, the foremost casualty being
the agriculture sector.
Globalisation has lowered the per capita income of
the farmers and increased the rural indebtedness.
The agricultural growth of 3.2 per cent observed
from 1980 to 1997 decelerated to two per cent
subsequently.
With more than half the population directly
depending on this sector, low agricultural growth has
serious implications for the inclusiveness of growth.

Strategy of Globalization

East Asia is witnessing the largest rural-to-urban

shift of population in history. Two million new
urban dwellers are expected in East Asian cities
every month for the next 20 years
The market economy seems to be more concerned
with the growth of consumerism to attract the high
income groups who are mostly in the cities in the
developing countries.
Rural economy and the agricultural sector were out
of focus in the strategy of globalization.

Indian Service Sector

Indian service sector has witnessed a major

boom and is one of the major contributors to
both employment and national income in
recent times.
Trading, transportation and communication,
financial, real estate and business services,
community, social and personal services
come within the gambit of the service industry
Services account for more than 60 per cent of
world GDP and trade in services has grown.

The Modes of service delivery and respective share in

world trade in services

Indian exports of services

Indias -Export of Commercial Services

India has become one of the top five exporters of

services amongst developing countries.
Indias exports of services are mainly to the EU
and the US.
Indias export services growth rate was 33.3% in
2005-06, 36.9% in 2006-07, 25.9% in 2007-08
and 16.3 in 2008-09.
India has been deemed as a major exporter of
services in the world with a market share of 2.72%
in 2008 as against 0.6% in 1995.

Indias -Import of Commercial Services

In terms of imports of services software, miscellaneous,

business and financial services ware adversely affected
suffering a decline of growth rate 11% in 2008-09
compare to 2007-08 that is 33%.
Imports of commercial services have become important in
recent years reaching US$ 52.5 billion in 2007-08 though
its growth moderated to 18.5 percent in 20007-08.
Business service is the most important category of service
in imports, followed by transportation and travel.
Interestingly, good growth of imports was registered in
financial services and communication services despite the
global financial crisis.

Conclusion

Indian economy has made rapid strides in the process of

globalisation.
Globalisation is increasing the integration of national markets
and the interdependence of countries world wide for a wide
range of goods, services, and commodities.
The most important lesson that we must learn from the crisis is
that we must be self-reliant.
Indias trade reform programme resulted in strong economic
growth in the globalization age.
In particular, difficult decisions are to redress the fiscal
imbalance, by reducing subsidies, completing the process of
tariff and tax reform, and stepping-up privatization of stateowned enterprises.
The efforts are needed to balance the trade and consider
expansion of trade in other countries of the world.