Globalization and its

impact on Indian Economy

By
Shaji Berjin M.S
G. Sathya sree
P. Helen jasmine
M. Josephine Amala Jothi
A. Arockia Paul Jennifer
INTRODUCTION
Globalization has brought in various changes in the
following areas. They are,

Privatization
Liberalization
Global economy
Political and social changes
Impact on consumers and consumerism
Privatization
Privatization is the incidence or process of transferring ownership of a
business, enterprise, agency or public service from the public sector (the
state or government) to the private sector (businesses that operate for a
private profit) or to private non-profit organizations.
In a broader sense, privatization refers to transfer of any government
function to the private sector - including governmental functions like
revenue collection and law enforcement. [1]
The term "privatization" also has been used to describe two unrelated
transactions.
 The first is a buyout, by the majority owner, of all shares of a
public corporation or holding company's stock, privatizing a publicly
traded stock, and often described as private equity. The second is a
demutualization of a mutual organization or cooperative to form a
joint stock company.[2]
Advantages
1. privatization is accurateness and commitment towards
the service as they private organizations are very much
concerned about the profits they make ultimately which
depend on the quality of service being provided by them
and the public response to it.
2. 2. Privatization generates more revenue compared to
government enterprises, thus govt can indirectly earn a
bit more by leasing out enterprises to private
organizations.
3. 3. Customer support and satisfaction basically is of
much interest in private enterprises comparatively.
Disadvantages
1. The biggest threat is reliability. There is nothing that
backs up the private organizations, where as govt can
back up its enterprises easily in terms of funds. There
are more chances of bankruptcy in private orgs where
are 0 to few in govt orgs.
2. Though the quality of service may be little
compromised, its reliable.
3. Some departments need social responsibility which
can be done only by government like police
department, traffic management
Liberalisation
In general, liberalization refers to a relaxation of
previous government restrictions, usually in areas of
social or economic policy
Various forms of liberalisation are
1. Reduction of tariff and non-tariff barriers
2. Deregulation of domestic regulatory measures
3. Enhanced transparency of trade policies/regulations.
4. Trade facilitation
Objectives of liberalization
Acceleration of industrial development.
Better capacity utilization.
 Achieving economies of scale.
Removing and reducing procedural implements.
Development of backward areas.
Export promotion and import substitution.
Increasing competitiveness and competition.
ADVANTAGES
Promote a conductive economic and business climate necessary for
continuous growth.
Promote a cost effective environment, encourage competition and
enhanced efficiency.
Liberalisation of trade and investment regimes as well as deregulation
and privatisation of government business activities generate
opportunities for expansion of trade investment and technology flows.
Obtain market openings by trade partners particularly in the context
of multi-national, regional and bilateral negotiations.
Wider choice of goods and services.
Reduced prices resulting from increased competition and
specialisation.
Disadvantages
Loss of jobs-high rate of downsitting, rightsitting.
Increasing need of new skill sets.
Hire and fire policies.
Continuous struggle to prove one`s worth.
Transfer to new geographic locations.
Negative changes in remuneration and benefits.
Constantly changing peers, supervisors and
subordinates.
The stability and security factor of life has deteriorated.
Globalization
Globalization means integrating the economy of a
country with world wide economy with a view to
eliminate supply bottlenecks, improving investment
climate and improving the quality of the products and
services provided to the ultimate customers.
Advantages
Allows for greater realization of potential.
Economies of scale of operations.
Technological and productivity improvements to cross
border specialisation.
Utilisation of global factors of production and
technology.
Allows for more productive applications of capital.
World wide increased standard of living.
Maximum rates of return on savings and investments.
Disadvantages
Perceived loss of employment.
Production shift to low wage countries.
Globalisation has led to environmental damage in
India as with many developing nations.
Due to large scale industrialisation, urban slums have
formed air and water pollution has dramatically
increased.
Globalization and its opportunity
With regard to the dimensions of the labor force, we must be aware
of the following aspects :
The demographic component will continue to exert strong
pressure on the labor market over the next 15 years.
The socio-cultural impact of the rise of the participation of
women in the labor force.
With regard to the dimensions of the supply of jobs, it is important
to stress that :
As a result of opening of the economy and the imperative of
competitiveness and productivity.
An organizational restructuring of the productive sector will
demand the abolition of certain intermediate categories of jobs.
On the side of the demand for labor, our actions are to be
concentrated on :
Sustained economic expansion by means of policies to
promote growth conciliated with stabilization.
The development of specific policies for the generation
of employment, with a resumption of large scale
investments in the infrastructure and social areas.
Technical and financial support for better training in
labor intensive sectors.
Tax incentives, improved conditions of financing for
productions and technical support for small and
medium companies
The stimulus through financing from state development
banks, of programs which preserve and create jobs.
Political changes and social changes due to
globalization
Effects that took place due globalization is increase in
inequalities across the countries as well as within the
countries.
So far globalization has created global economy, but it
has not created global community.
The rules of world trade largely favor the rich and
powerful countries and more often work against 0r
ignore the interests of the poor or weak countries.
New Industrial Policy
National Renewal fund (NRF)
Main objective – training and deployment of workers.
Voluntary retirement scheme (VRS)
To make it better, people should concentrate on public
distribution system.
The poor did not benefit from policies of liberalisation
& globalization and only a small section of people are
benefitted.
Macroeconomic policy & Employment
Generation Policy
This policy emphasizing acceleration of growth rates
& presumed that employment generation would be a
concomitant of growth.
During 1983-1993, GDP rate grows lesser as to that of
employment rate.
Restriction of expansion of public sector due to VRS &
downsizing took place. Private sector failed to fill the
gap.
Later employment in agriculture dried. So, private
sector investment is essential
It provides infrastructure, water management, credit &
marketing strengthenment.
It is essential to tap the backward people to direct
investment.
It is a strong need to provide Revival in agriculture.
Improving productivity of Employment
In India, open employment is small than the under-
employment.
Bulk of under-employment people lies behind poverty
line.
Many awareness programmes were conducted by the
government. But this has to be strengthened.
Relatively higher employment elasticities should be
promoted.
With appropriate policies, higher employment growth
objectives can be simultaneously furthered.
Balanced Regional Development
Regions – UP, MP, Bihar, & Maharashtra.
Largely populated dependent on agriculture.
Development strategy-agriculture modernization,
rural industrialization, rapid rural
development(educational, health & skill development)
If supported by programmes, benefit on both growth
rate and employment.
Leads to expansion of industries with the need of huge
Investments that leads to reduction in regional
development.
Social sector
Human capital formation help in promoting capabilities of
the people to reap the benefits of globalization.
Globalization increases needs of skills & MNCs are the
main people who uses latest technologies.
To save poor, public sector investment should be increased
Important to promote employment growth & social
security, education, health & an effective poverty reduction
programme.
Programmes-Jawahar Rozgar Yojana, Employment
Assurance Scheme(EAS), PM`s Rosgar Yojana etc,.
Impact of Globalization on Consumer &
Consumerism
Indian consumerism is not well educated and hence
unable to understand the complex methods of marketing.
They often become victims of false claims for products
misled by deceptive advertisements, misled by packaging,
poor after sales and service and so on.
Consumerism today, as a collective action of the
consumers to protect their own interest indicates failure
on the part of the business system.
To ensure consumer protection the responsibilities lies on
the shoulders of the business, the government and the
consumer themselves.
The global consumer
This impact was felt by 1980. certain changes took place in
socio-economic environment to adopt unethical practices.
Since market flooded with goods, difficult for customer to
ascertain Quality or utility of G`s & S`s.
To capitalize unethical practices like fictitious pricing,
unsafe products, adulteration, misleading advertisements,
black marketing and false warranties.
Entry of new competitors willing to make enormous long
term investments cut into the profitability of marketers.
Rapid rise in consumer earning. Fall in savings.
Generating increasing disposable income to be sent on
consumer products and services.
Factors responsible for sad plight of consumerism
1. Severe imbalance in demand and supply of essential
commodities. Produced evils in the form of
hoarding, black marketing, profiteering, corruption
nepotism, red tapism, irresponsibility and arrogance
in dealing with customers.
2. Consumers are not aware of their rights because of low levels of
literacy.
3. Flooded marketed goods and services leads to imperfect and
inefficient competition. Consumers forced to make a choice of
alternative G`s & S`s.
4. Absence of proper information, leads consumers become easy
victims and accept substandard, inferior and even defective
products.
5. Consumerism is still in infancy stage and hence, not well
organized.
6. Legal frame work is still a time consuming and tiresome
process.
Hence, consumers seek redressal of their grievances
by taking the help of judiciary.
To succeed, international marketers must understand
the nature and extend of differences between
consumers of different societies.
So, that they can develop effective targeted marketing
strategies to use in foreign market of interest.
Consumers should themselves assert their rights and
protect themselves from business malpractices.
Conclusion
Globalization has brought different changes in the different
walks of life of people. To sum up,
a) Increased of imports than exports.
b) Increased foreign investment.
c) Increased self employment
d) Inequality and poverty has reduced.
e) More employment for women.
f) Promotion of skill development.
On the whole , India has been forced to depend upon foreign
MNC`s and the initiative to introduce new organizations in
India by Indians has declined.