RESPONDING TO GLOBALIZATION: INDIAS ANSWER

4th Ramanbhai Patel Memorial Lecture on Excellence in Education

by

Dr. C. Rangarajan

Chairman

Economic Advisory Council to the Prime Minister

New Delhi

February 25, 2006

Ahmedabad RESPONDING TO GLOBALIZATION: INDIAS ANSWER

I deem it a great honour to be invited to deliver the 4th Ramanbhai Patel Memorial Lecture on Excellence in Education. Shri Ramanbhai Patel was a true entrepreneur. He came to business from education and set up an indigenous pharmaceutical company, which later became one of the largest manufacturers of drugs and pharmaceuticals. cause. memory. He was deeply interested in the promotion of education and contributed liberally towards this I am indeed happy that the Ahmedabad Management Association has instituted a lecture series to commemorate his

Ahmedabad Management Association is perhaps the most active management association in our country. It has become the forum for a discussion of variety of issues relating to industrial

growth and business education. organised.

Its programmes and seminars

have come to be recognized as being the most useful and well May I take this occasion to congratulate the Ahmedabad Management Association on the excellent work it has been doing. It is a matter of great pleasure for me to be in Ahmedabad and to meet familiar faces.

Globalization has become an expression of common usage. While to some, it represents a brave new world with no barriers, for some others, it spells doom and destruction. It is, therefore, necessary to have a clear understanding of what globalization means and what it stands for, if we have to deal with a phenomenon that is willy-nilly gathering momentum.

Globalization and its Meaning

Broadly speaking, the term globalization means integration of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance and people. Cross border integration can have several dimensions cultural, social, political and economic. In fact, some people fear cultural and social integration even more than economic integration. many. The fear of cultural hegemony haunts Limiting ourselves to economic integration, one can see

this happen through the three channels of (a) trade in goods and services, (b) movement of capital and (c) flow of finance. Besides, there is also the channel through movement of people.

Historical Development

Globalization has been a historical process with ebbs and flows. During the Pre-World War I period of 1870 to 1914, there was rapid integration of the economies in terms of trade flows, movement of capital and migration of people. The growth of globalization was mainly led by the technological forces in the fields of transport and communication. There were less barriers to flow of trade and people across the geographical boundaries. Indeed there were no passports and visa requirements and very few non-tariff barriers and restrictions on fund flows. The pace of globalization, however, decelerated between the First and the Second World War. The inter-war period witnessed the erection of various barriers to restrict free movement of goods and services. Most economies thought that they could thrive better under high protective walls. After World War II, all the leading countries resolved not to repeat the mistakes they had committed previously by opting for isolation. Although after 1945, there was a drive to increased integration, it took a long time to reach the Pre-World War I level. In terms of percentage of exports and imports to total output, the US could reach the pre-World War level of 11 per cent only around 1970. Most of the developing countries which gained Independence from the colonial rule in the immediate Post-World War II period followed an import substitution industrialization regime. The Soviet bloc countries were also shielded from the However, times have process of global economic integration.

changed. In the last two decades, the process of globalization has proceeded with greater vigour. The former Soviet bloc countries are getting integrated with the global economy. More and more

developing countries are turning towards outward oriented policy of growth. Yet, studies point out that trade and capital markets are no more globalized today than they were at the end of the 19th century. Nevertheless, there are more concerns about globalization now than before because of the nature and speed of transformation. What is striking in the current episode is not only the rapid pace but also the enormous impact of new information technologies on market integration, efficiency and industrial organization. Globalization of financial markets has far outpaced the integration of product markets.

Gains from Globalization

The gains from globalization can be analyzed in the context of the three types of channels of economic globalization identified earlier.

Trade in Goods and Services

According to the standard theory, international trade leads to allocation of resources that is consistent with comparative advantage. This results in specialization which enhances productivity. It is accepted that international trade, in general, is beneficial and that restrictive trade practices impede growth. That is the reason why many of the emerging economies, which originally depended on a growth model of import substitution, have moved over to a policy of outward orientation. However, in relation to trade in goods and services, there is one major concern.

Emerging economies will reap the benefits of international trade only if they reach the full potential of their resource availability. This will probably require time. agreements make exceptions That is why international trade by allowing longer time to

developing economies in terms of reduction in tariff and non-tariff barriers. Special and differentiated treatment, as it is very often called has become an accepted principle.

Movement of Capital

Capital flows across countries have played an important role in enhancing the production base. This was very much true in 19 th and 20th centuries. Capital mobility enables the total savings of Under these circumstances, one the world to be distributed among countries which have the highest investment potential. countrys growth is not constrained by its own domestic savings. The inflow of foreign capital has played a significant role in the development in the recent period of the East Asian countries. The current account deficit of some of these countries had exceeded 5 per cent of the GDP in most of the period when growth was rapid. Capital flows can take either the form of foreign direct investment or portfolio investment. For developing countries the preferred alternative is foreign direct investment. Portfolio investment does not directly lead to expansion of productive capacity. It may do so, however, at one step removed. countries want to put Portfolio investment can be That is why investment. on portfolio volatile particularly in times of loss of confidence. restrictions

However, in an open system such restrictions cannot work easily.

Financial Flows

The rapid development of the capital market has been one of the important features of the current process of globalization. While the growth in capital and foreign exchange markets have facilitated the transfer of resources across borders, the gross turnover in foreign exchange markets has been extremely large. It is estimated that the gross turnover is around $ 1.5 trillion per day worldwide (Frankel, 2000). This is of the order of hundred times greater than the volume of trade in goods and services. Currency trade has become an end in itself. The expansion in foreign exchange markets and capital markets is a necessary pre-requisite for international transfer of capital. However, the volatility in the foreign exchange market and the ease with which funds can be withdrawn situations. crisis. from countries have created often times panic The most recent example of this was the East Asian

Contagion of financial crises is a worrying phenomenon.

When one country faces a crisis, it affects others. It is not as if financial crises are solely caused by foreign exchange traders. What the financial markets tend to do is to exaggerate weaknesses. Herd instinct is not uncommon in financial markets. When an economy becomes more open to capital and financial flows, there is even greater compulsion to ensure that factors relating to macro-economic stability are not ignored. This is a lesson all developing countries have to learn from East Asian crisis. As one commentator aptly said The trigger was sentiment, but vulnerability was due to fundamentals.

Concerns and Fears

On the impact of globalization, there are two major concerns. These may be described as even fears. Under each major concern there are many related anxieties. The first major concern is that globalization leads to a more iniquitous distribution of income among countries and within countries. The second fear is that globalization leads to loss of national sovereignty and that countries are finding it increasingly difficult to follow independent domestic policies. These two issues have to be addressed both theoretically and empirically.

The argument that globalization leads to inequality is based on the premise that since globalization emphasizes efficiency, gains will accrue to countries which are favourably endowed with natural and human resources. Advanced countries have had a head start over the other countries by at least three centuries. The technological base of these countries is not only wide but highly sophisticated. While trade benefits all countries, greater This is the gains accrue to the industrially advanced countries.

reason why even in the present trade agreements, a case has been built up for special and differential treatment in relation to developing countries. By and large, this treatment provides for longer transition periods in relation to adjustment. However, there are two changes with respect to international trade which may work to the advantage of the developing countries. First, for a variety of reasons, the industrially advanced countries are vacating certain areas of production. These can be filled in by developing countries. A good example of this is what the East Asian countries

did in the 1970s and 1980s.

Second, international trade is no

longer determined by the distribution of natural resources. With the advent of information technology, the role of human resources has emerged as more important. activities are becoming Specialized human skills will intensive rather than become the determining factor in the coming decades. Productive knowledge resource intensive. While there is a divide between developing and the advanced countries even in this area some people call it the digital divide - it is a gap which can be bridged. A globalized economy with increased specialization can lead to improved productivity and faster growth. developing countries are overcome. What will be required is a balancing mechanism to ensure that the handicaps of the

Apart from the possible iniquitous distribution of income among countries, it has also been argued that globalization leads to widening income gaps within the countries as well. This can The happen both in the developed and developing economies. distribution among countries.

argument is the same as was advanced in relation to iniquitous Globalization may benefit even within a country those who have the skills and the technology. The higher growth rate achieved by an economy can be at the expense of declining incomes of people who may be rendered redundant. globalization In this context, it has to be noted that while may accelerate the process of technology

substitution in developing economies, these countries even without globalization will face the problem associated with moving from lower to higher technology. If the growth rate of the economy accelerates sufficiently, then part of the resources can be

diverted by the state to modernize and re-equip people who may be affected by the process of technology up gradation.

The second concern relates to the loss of autonomy in the pursuit of economic policies. In a highly integrated world Capital and economy, it is true that one country cannot pursue policies which are not in consonance with the worldwide trends. technology are fluid and they will move where the benefits are greater. As the nations come together whether it be in the political, social or economic arena, some sacrifice of sovereignty is inevitable. The constraints of a globalised economic system on the pursuit of domestic policies have to be recognised. However, it need not result in the abdication of domestic objectives.

Another fear associated with globalization is insecurity and volatility. When countries are inter-related strongly, a small spark can start a large conflagration. Panic and fear spread fast. The downside to globalization essentially emphasizes the need to create countervailing forces in the form of institutions and policies at the international level. Global governance cannot be pushed to the periphery, as integration gathers speed.

Empirical

evidence

on

the

impact

of

globalization

on

inequality is not very clear. The share in aggregate world exports and in world output of the developing countries has been increasing. in 2000. In aggregate world exports, the share of developing Similarly the share in aggregate world output of countries increased from 20.6 per cent in 1988-90 to 29.9 per cent

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developing countries has increased from 17.9 per cent in 1988-90 to 40.4 per cent in 2000. The growth rate of the developing countries both in terms of GDP and per capita GDP has been higher than those of the industrial countries. These growth rates have been in fact higher in the 1990s than in the 1980s. All these data do not indicate that the developing countries as a group have suffered in the process of globalization. In fact, there have been substantial gains. But within developing countries, Africa has not done well and some of the South Asian countries have done better only in the 1990s. While the growth rate in per capita income of the developing countries in the 1990s is nearly two times higher than that of industrialized countries, in absolute terms the gap in per capita income has widened. As for income distribution within the countries, it is difficult to judge whether globalization is the primary factor responsible for any deterioration in the distribution of income. We have had considerable controversies in our country on what happened to the poverty ratio in the second half of 1990s. Most analysts even for India would agree that the poverty ratio has declined in the 1990s. Differences may exist as to what rate at which this has fallen. Nevertheless, whether it is in India or any other country, it is very difficult to trace the changes in the distribution of income within the countries directly to globalization.

Indias Stance

What should be Indias attitude in this environment of growing globalization? At the outset it must be mentioned that There are at opting out of globalization is not a viable choice.

present 149 members in the World Trade Organisation (WTO).

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Some 25 countries are waiting to join the WTO. China has recently been admitted as a member. appropriate framework to What is needed is to evolve an maximum benefits out of wrest

international trade and investment. This framework should include (a) making explicit the list of demands that India would like to make on the multilateral trade system, and (b) steps that India should take to realize the full potential from globalization.

Demands on the Trading System

Without being exhaustive, the demands of the developing countries on the multilateral trading system should include (1) establishing symmetry as between the movement of capital and natural persons, (2) delinking environmental standards and labour related considerations from trade negotiations, (3) zero tariffs in industrialized countries on labour intensive exports of developing countries, (4) adequate protection to genetic or biological material and traditional knowledge of developing countries, (5) prohibition of unilateral trade action and extra territorial application of national laws and regulations, and (6) effective restraint on industrialized countries in initiating anti-dumping and countervailing action against exports from developing countries.

The purpose of the new trading system must be to ensure free and fair trade among countries. The emphasis so far has been on free rather than fair trade. It is in this context that the rich industrially advanced countries have an obligation. They

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have often indulged in double speak. While requiring developing countries to dismantle barriers and join the main stream of international trade, they have been raising significant tariff and non-tariff barriers on trade from developing countries. Very often, this has been the consequence of heavy lobbying in the advanced countries to protect labour. Although average tariffs in the United States, Canada, European Union and Japan the so called Quad countries range from only 4.3 per cent in Japan to 8.3 per cent in Canada, their tariff and trade barriers remain much higher on many products exported by developing countries. Major agricultural food products such as meat, sugar and dairy products attract tariff rates exceeding 100 per cent. Fruits and vegetables such as bananas are hit with a 180 per cent tariff by the European Union, once they exceed quotas. The tariffs collected by the US on $ 2 billion worth of imports from Bangladesh are higher than those imposed on imports worth $ 30 billion from France. In fact, these trade barriers impose a serious burden on the developing countries. It is important that if the rich countries want a trading system that is truly fair, they should come forward to reduce the trade barriers and subsidies that prevent the products of developing countries from reaching their markets. Otherwise the pleas of these countries for a competitive system will sound hollow.

To some extent, conflicts among countries on trade matters are endemic. Until recently, agriculture was a major bone of contention between U.S. and E.U. countries. Frictions are also bound to arise among developing countries as well. When import tariffs on edible oil were increased in India, the most severe

13

protest came from Malaysia which was a major exporter of Palm Oil. Entrepreneurs in India complain of cheaper imports from China. In the export of rice, a major competitor of India is Thailand. If development is accepted as the major objective of trade as the Doha declaration proclaimed, it should be possible to work out a trading arrangement that is beneficial to all countries.

There have been protracted negotiations at WTO in reforming the trade system. Admittedly, the tariff and non-tariff barriers are coming down. concerns adequately. However, there are apprehensions that the countries are not being addressed of developing

Looked at from this angle, the recent Hong Kong Despite reservations, we must Domestic support to

Ministerial is a modest success.

acknowledge that it is a step forward. block to third world trade expansion.

agriculture by developed countries constitutes a major stumbling However, Indias stand in relation to agriculture has been `defensive. We are not a major player in the world agricultural market. The impact of what has been accepted in relation to Non-Agricultural Market Access and services will vary from country to country. significant. Despite some contrarian opinion, the gain to India from services can be However, the Hong Kong Ministerial is only a broad statement of intentions. Much will depend upon how these ideas are translated into concrete actions.

Actions by India

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The second set of measures that should form part of the action plan must relate to strengthening Indias position in international trade. a stronger position India has many strengths, which several to gain from international trade and developing countries lack. In that sense, India is different and is in investment. Indias rise to the top of the IT industry in the world is a reflection of the abundance of skilled manpower in our country. It is, therefore, in Indias interest to ensure that there is a greater freedom of movement of skilled manpower. At the same time, we should attempt to take all efforts to ensure that we continue to remain a frontline country in the area of skilled manpower. India can attract greater foreign investment, if we can accelerate our growth with stability. Stability, in this context, means reasonable balance on the fiscal and external accounts. We must maintain a competitive environment domestically so that we can take full advantage of wider market access. We must make good use of the extended time given to developing countries to dismantle trade barriers. Wherever legislations are required to protect sectors like agriculture, they need to be enacted quickly. In fact, we had taken a long time to pass the Protection of Plant Varieties and Farmers Rights Act. We must also be active in ensuring that our firms make effective use of the new patent rights. South Korea has been able to file in recent years as many as 5000 patent applications in the United States whereas in 1986, the country filed only 162. China has also been very active in this area. We need a truly active agency in India to encourage Indian firms to file patent applications. institutions In effect, we must build the complementary necessary for maximizing the benefits from

international trade and investment.

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Changes in the foreign trade and foreign investment policies have altered the environment in which Indian industries have to operate. The path of transition is, no doubt, difficult. A greater integration of the Indian economy with the rest of the world is unavoidable. It is important that Indian industry be forward looking and get organized to compete with the rest of the world at levels of tariff comparable to those of other developing countries. Obviously, the Indian Government should be alert to ensure that Indian industries are not the victims of unfair trade practices. The safeguards available in the WTO agreement must be fully utilized to protect the interests of Indian industries.

Indian industry has a right to demand that the macro economic policy environment should be conducive to rapid economic growth. The configuration of policy decisions in the recent period has been attempting to do that. It is, however, time for Indian industrial units to recognize that the challenges of the new century demand greater action at the enterprise level. They have to learn to swim in the tempestuous waters of competition and away from the protected waters of the swimming pools. India is no longer a country producing goods and services for the domestic market alone. Indian firms are becoming and have to become global players. At the minimum, they must be able to meet global competition. The search for identifying new competitive advantages must begin earnestly. Indias ascendancy in Information Technology (IT) is only partly by design. However, it must be said to the credit of policy makers that once the potential in this area was discovered, the policy environment became strongly industry friendly.

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Over a wide spectrum of activities, Indias advantage, actual and that which can be realized in a short span of time must be drawn up. Of course, in a number of cases, it will require building plants on a global scale. But, this need not necessarily be so in all cases. In fact the advent of IT is modifying the industrial structure. The revolution in telecommunications and IT is simultaneously creating a huge single market economy, while making the parts smaller and more powerful. What we need today is a road map for the Indian industry. It must delineate the path different industries must take to achieve productivity and efficiency levels comparable to the best in the world.

Globalization, part of the plant.

in

fundamental

sense,

is

not

new

phenomenon. Its roots extend farther and deeper than the visible It is as old as history, starting with the great Only recent migrations of people across the great landmasses.

developments in computer and communication technologies have accelerated the process of integration, with geographic distances becoming less of a factor. Is this 'end of geography' a boon or a bane? Borders have become porous and the sky is open. With modern technologies which do not recognize geography, it is not possible to hold back ideas either in the political, economic or cultural spheres. Each country must prepare itself to meet the new challenges so that it is not being bypassed by this huge wave of technological and institutional changes.

Nothing is an unmixed blessing. Globalization in its present form though spurred by far reaching technological changes is not a

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pure

technological

phenomenon.

It

has

many

dimensions

including ideological.

To deal with this phenomenon, we must

understand the gains and losses, the benefits as well as dangers. To be forewarned, as the saying goes, is to be forearmed. But we should not throw the baby with bath water. We should also resist the temptation to blame globalization for all our failures. often, as the poet said, the fault is in ourselves. Most

Risks of an open economy are well known. offer. India.

We must not,

nevertheless, miss the opportunities that the global system can As an eminent critic put it, the world cannot marginalize But India, if it chooses, can marginalize itself. We must More than many other

guard ourselves against this danger. gains from globalization.

developing countries, India is in a position to wrest significant However, we must voice our concerns and in cooperation with other developing countries modify the international trading arrangements to take care of the special needs of such countries. At the same time, we must identify and strengthen our comparative advantages. It is this two-fold approach which will enable us to meet the challenges of globalization which may be the defining characteristic of the new millennium.

The key to Indias growth lies in improving productivity and efficiency. This has to permeate all walks of our life. Contrary to the general impression, the natural resources of our country are not large. India accounts for 16.7 per cent of worlds population whereas it has only 2.0 per cent of worlds land area. While Chinas population is 30 per cent higher than that of Indias, it has

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a land area which is three times that of India. In fact, from the point of view of long-range sustainability, the need for greater efficiency in the management of natural resources like land, water and minerals has become urgent. In a capital-scarce economy like ours, efficient utilization of our capacity becomes even more critical. For all of these things to happen, we need well-trained and highly skilled people. In the world of today, competition in any I am, therefore, happy that the field is competition in knowledge. That is why we need to build institutions of excellence. Ahmedabad Management Association, besides other functions, is also focusing on excellence in education. Increased productivity flowing from improved skills is the real answer to globalisation.

Globalisation & Impact on Indian Society Transcript of Sitaram Yechurys Inaugural Speech At Seminar On Globalisation & Its Impact on Indian Society SV Kendram, Hyderabad, October 2001

The president of this session, Dr. Radhakrishna Murthy garu, eminent intellectuals, leaders of the democratic and Left movement and my dear friends,

It is a great honour to be asked to inaugurate this seminar. From the list of the contributors and those who are going to participate, I notice some of the best creative minds of Andhra Pradesh,

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particularly of Hyderabad. I am, therefore, hesitant because I dont think there is much that I can really add in terms of intellectual caliber to the input that all these contributions would make. But, nevertheless, since I have been asked to inaugurate, I have to fulfill this formality. This seminar has been titled as Globalisation and its impact on Indian Society and I have been asked to give an overview of the developments that are taking place. I will attempt to do that. But, it would not be, I must confess, a very structured lecture. Various aspects of this theme that I would like to touch upon, I am sure in the next two days you will deliberate in greater detail. To understand the entire canvas of the term Globalisation, I think, at the outset, we must be clear about its international dimension, before we talk about its impact in India. Because often there is a misconception that this Globalisation is the result of some sort of a conspiracy by the developed countries. They are coming together to conspire against the rest of the world and what has been put out in the name of Globalisation is nothing else, but a new recipe for the imperialist domination over the world. There is an element of truth in this, but this is not the whole truth. We have to follow, I am afraid, the method of legal proceedings when you say that I shall speak the truth, the whole truth and nothing but the truth. The other two aspects of nothing but the truth and the whole truth also have to be taken into account when we are discussing Globalisation. Because its not only a conspiracy by the imperialist west. This point we must understand in terms of the internal dynamics of capitalism and capitalist development. It was nearly 150 years when Marx, (I am going back to Karl Marx not only because I am a

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Marxist or I belong to the Communist Party. But I sincerely believe that the most penetrating analysis of capitalism was done by him and in a prophetic manner, he said many things which are very very relevant to todays conditions. I will come back to some of these aspects later, particularly when we speak of culture and the impact of Globalisation on that.) analysing the development of capitalism, one seminal point that he made was that as capitalism develops, there is a tendency towards centralisation and concentration of capital and over a period of time, you will have fewer and fewer capitalists but larger and larger capitalists. This, I think, in the era of Globalisation has turned out to be absolutely true. Because, what we see developing particularly before this new offensive which we call Globalisation came into being in the world, is a very high degree of concentration of capital in a few hands. The water shed, in that sense, the distinguishing characteristic of this phase of Globalisation is what is now often defined as Globalisation of finance capital. This finance capital which essentially was capital that used to live of and live on the industrial capital has branched of to become a powerful source on its own. Its dimension can be understood, for instance, by the fact that world trade today is some thing to the tune of seven trillion dollars annually. The financial flows in the world today are to the tune of some thing like 400 trillion dollars. That is more than 50 times the actual trade in the world is actually taking place in terms of financial speculation and financial activity. This finance capital that has grown in such a dimension has specific features. Thanks to the technological advances it is instantly mobile across the globe in its search for profits. It can travel across the globe within seconds. So there is no barrier so to speak for the movement of this financial capital and since the barrier for

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movements dont exist the immediate demand that follows from this development is that no sovereign nation or a country can impose any barrier on this flow. So the development of this phase of Globalisation, with the expansion and concentration of this international finance capital, makes a corollary demand for maximising its profits: There cannot be any conditions, restrictions or barriers for its movement across the countries. This is the first characteristic, the demand on sovereign countries to adopt Financial Liberalisation, i.e., do not impose any conditions on the flow of finance capital. This is one part that the developments taking place. The other part of development that is taking place internationally was the high degree of concentration of industrial capital. All of you are aware about the growth of the multinational corporations and the dominance that they actually have over the world. In fact, some of these corporations have annual sales, which are larger than the GDPs of many countries. American multinational corporations and, in fact, the top 200 companies in the world today are estimated to account for nearly one-third of the worlds income. This concentration of industrial capital also demands that in the search for maximisation of their profits, conditions where there are minimal or no restrictions imposed on the inflow and outflow of this capital into various countries. So therefore, the demand that came in from the internationalisation of finance capital to do away with all restrictions on its flow, is buttressed by the demand that comes from the centralisation of industrial capital which also says restrictions should be removed and no country will have the right to impose any conditions on the entry of this industrial capital into those countries in search of maximisation of

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their profits by exploiting their resources and their cheap labour etc. Therefore from both ends, from the development of finance capital and the development of industrial capital, there was a tendency in the international development of capitalism to move towards this phase of Globalisation, that we see now. Add to this the similar demands on having no restriction on trade flows and the picture of globalisation is complete. This is not happening because of the will of somebody but this is happening because internal dynamics of capitalism itself is such that it brings you to this point where the higher degree of concentration capital demands a newer global order. So that the fundamental aspect of capitalism, that of maximisation of profits, continues unhindered. So this independent sort of development of the internal dynamics of capitalism is some thing that should not be ignored because otherwise it appears as though everything is happening on the basis of the will of human beings: so and so is good and so and so is bad. Since we have bad people governing the world today, you have this sort of economic conditions that are developing. That is not the case. Actual concrete developments are taking place. Remember in `Capital', Marx makes a very very pertinent point, saying that profit is the motive force of capitalist development, he says With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent certain will produce eagerness; 50 per cent positive audacity; 100 per cent will make it ready to trample on all human laws; and 300 per cent and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged." So the objective law of capitalist development is pushing the world

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towards this phase of what we call Globalisation. It is, therefore, the system and not a set of any individuals or countries that are responsible for this development. The second aspect is the subjective utilisation of these objective conditions by the western countries particularly by the United States of America-led imperialism. With the collapse of socialism in the Soviet Union and Eastern Europe, the economic counterveiling power that existed globally collapsed. These former socialist economies were also sucked into the vortex of the global capitalism. Once this happened, the onward march of global capital for maximising its profits did not have any sort of an obstacle that it used to face during the four decades after the second world war. In such a situation, you had a vision of a new world order that was articulated by present Bushs father, i.e., Bush senior, when he was the President of United States of America. This vision envisaged the global domination of the West particularly of imperialism under the leadership of United States of America. It was given a concrete and also a legal shape. The institutions of the IMF, the World Bank, and the later-formed WTO in 1994 -- all became the instruments to put into practice this new world order. This is the current phase of Globalisation what we are talking about. I have noticed various papers by distinguished participants on various sectional impacts of this Globalisation. I am not going into those details, but what is the main objective of this entire process? The main objective in my opinion is to create conditions where by the rest of the world, that is the developing world, is again brought back into a bondage of economic slavery. Globalisation, as it is currently envisioned by imperialism, is

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actually a blueprint for the economic recolonisation of the developing world. Keeping both these objective and subjective aspects in mind, we will have to actually evaluate what is happening at the global level and the impact that is taking place on our country. In the last ten years you find that the lowest one-third of the world's people's average per capita income declined from 3 percent of the top onethird to 1.9 per cent and for the middle one-third, it declined from 12.5 per cent to 11.4 per cent of top one-third. That is the lowest one-third population of the world today gets per capita 1.9 per cent, what the top one-third earns and the middle one-third gets about 11.4 per cent of what the top one-third earns. That is put together 13 per cent goes to two-thirds of the humanity and 87 per cent goes to the top one third and this trend that is widening. The essential point that emerges is the intensification of the exploitation of the people on a global scale. There are more than 100 countries who are actually poorer today than they were 15 years ago. That is, in absolute terms, there is a decline in their incomes correspondingly, in absolute terms, there is increase in profits generated by the global capital from their countries. This process of Globalisation, therefore, represents the classical shift in the balance of forces away from the people towards big capitalists. This is the political impact of this Globalisation: shift in favour of multinational capital and their profits at global level and, in the process, economic exploitation of third world countries or the developing world has been intensified. Therefore, the singulardefining feature of Globalisation at the international scale is the growing of inequalities. The growing of inequalities between countries and the growing of inequalities inside countries between the rich and the poor.

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As someone remarked, finance capital is the single player in the world casino. The world is a gambling place and this finance capital is on its speculation march making super profit. So the first direct impact on us are growing pressures to remove all restrictions on inflow and outflow of financial capital. The second, which is currently being negotiated in the WTO, which is called the multinational agreement on investment MAI, i.e. remove all restrictions on the inflow of industrial capital and remove all restrictions on the repatriations of profits. We, in India, have implemented this to a large extent allowing the free flow of FDI. This Vajpayee government has gone to the extent of opening up every sector. The strangest thing you will find with this government is it has opened up 100 per cent access to FDI in real estate. Even countries, which are advocates of liberalisation, Globalisation etc, have restrictions on property. The third area of globalisation is the removal of all restrictions on foreign trade and provide access of your markets for the products produced by the industrialised world. Bending over backwards to appease US imperialism, this Vajpayee government has already, not only removed quantitative restrictions, but also progressively reduced import duties so that virtually we move towards a zero import duty regime. That is the goods from the advanced countries can come and take over our markets and maximise profits. As a result, India is moving dangerously towards being enslaved again economically by the industrialised west. You are aware, from the 9th of this month, the WTO meeting is going to take place at Doha. Though we dont know whether the venue will be Doha or some other place because Americans have decided to land their foreigners acquiring

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land troops in Afghanistan yesterday so what happens in that area we dont know, but in any case it is very clear that Americans dont want postponement because they see a very opportune moment because of this so called war against terrorism. There will be very few countries that will be able to standup to US pressures. Let us specifically discuss the impact on India. that You have

circulated, I notice, Prof. Prabhat Patnaik's paper, which tells us in ten years of reforms what has happened to Indian economy. Therefore, I do not want to deal with the economy in greater detail. Other aspects of Globalisation and its impact on India, I think, also merit attention. But on the economic front, let us to sum up what has happened as a result of globalisation. If you look at it sector wise or if you look at its macro-picture, one myth that has been exploded is that Globalisation has lead to a higher growth rate in India. The pundits of Globalisation have been saying we have broken out of the so-called Hindu rate of growth. The Hindu rate of growth they define between 2 and 3 percent and they say that Globalisation has given us growth rate of more than 6 percent. Now this point is brought out in Prabhat Patnaik's paper. When you look in to it, in terms of the five year averages, the highest growth was between 1986 and 1990, when you crossed 8 percent and after that in the next 5 year averages you will actually find a decline. That you come down to from 8 to 7 and then to 6 percent by year 2000. We have had an actually declining growth rate during this decade of reforms -- one. Second, in macro terms you see particularly the accentuation of inequalities between the rich and the poor. This has in a glaring manner lead actually to a contraction of the domestic demand. `Rich have become the richer and the poor have become the poorer' is unfortunately regarded a clich. But as most cliches do it makes sense. In the process of the

27

poor becoming poorer the actual domestic aggregate demand declined. The net result has been the inability of large sections of the people to buy leading to the inability of industry to sell what it has produced resulting in a recession. This, in turn, is resulting in decline in employment. This, in turn, again is strengthening the process of declining domestic demand. This completes the vicious circle of the recession and unemployment. The worst situation currently facing our country. In the first two quarters of this financial year, if you take your core sector, that is basic sectors in the economy; steel, cement, coal etc they have grown by 0.1 percent as compared to 6.3 percent in the corresponding period last year. So if your core sector has declined like this means that your entire industrial sector is in a big crisis. And that is why the captains of industry when the budget was being presented I am sure all of you were seeing on TV Mr. Rahul Bajaj was giving 9.8 points out of 10 points to this budget. I remember, on the Doordarshan, I was called for the last session in the night. The anchor when he called me said Sitaram its been a boring day because there has not been a single person who opposed the budget." Then I said you called me late you know, if you could have called me earlier I could have opposed it earlier. He said Mr. Rahul Bajaj gave 9.8 points out of 10 to this budget so I said I would not give more than 2. I said within 6months you will find this budget instead of reviving or kick-starting the economy will push the economy into greater recession. That has been vindicated. The classic feature of liberalisation has been the intensification of exploitation, capitalist exploitation of the Indian people where by profits have grown , peoples capacity to spend has decreased, as a result of which, overall economy is in a phase of recession. This

28

is very typical of a liberalised economy, because the objective is not overall economic growth but to maintain and increase the levels of profits of your capitalist class. This impoverishes a large section of the people to the extent that the economic survey of this year has shown as that the employment growth rate of last year has been close to 0 percent. And if you look NSS data, it shows you that during this phase of liberalisation, there is a drastic fall both in rural and urban employment. If you look at the primary sector, that is agriculture, for the first time, you have the growth of foodgrain output, actually falling below the population growth rate and nothing typifies the actual graphic description of this liberalised economy as the mountain of food stocks you have on one hand and the starvation deaths and distress suicides of farmers on the other. This is that glaring inequality that we talk of which is exacerbated after these policies have been brought in. Agriculture in that sense has been going through a very serious crisis, with a third continuos year of either stagnation or decline in its growth. Now, this is typical again of Globalisation. One important feature of liberalisation is the States withdrawal form economic activity in the name of free market -- the philosophy , the ideological tenet of Globalisation. This, in other words, means the States capacity to invest in the economy declines leading to a decline in capital formation. Declining domestic capital formation adversely affects the future health of economy. That is actually what is happening. States withdrawal has two types of impact. One is that the gross domestic capital formation declines, which impacts on the general economic growth. Secondly states withdrawal means whatever little responsibility that the state has towards the people in terms of education, health, in terms of other social obligations, are

29

progressively abandoned by the government. In other words, the people have a double pronged attack on them. Because of decreased economic activity the employment opportunities and their livelihood get adversely affected. Secondly, because of the State's withdrawal from social sector what ever relief they were getting that also gets reduced. The livelihood of the vast masses of the people deteriorates sharply. Impact of Globalisation in India has also many other dimensions. It has wide ranging impact on everything else connected with our lives. It impacts our entire culture or the entire value system, on the milieu in which we are living. Again I go back to Marx. 150 years ago, he actually said that capitalism not only produces the object for the subject but it also produces subjects for the object. He made a very penetrating statement. In todays advertising world if you see this what is actually being created. You are creating human beings who are capable of consuming certain products. The emphasis is no longer on creating the products that are required by the human beings rather creating human beings that are required for the products. This is essentially the defining feature of culture under Globalisation. Human beings are reduced to the status of products who will consume the other products that capitalism produces. This entire trend of culture -- consumerism, degeneration etc -- creates its own atmosphere which effects every aspect of our life and society. One immediate impact can be seen in the declining political culture. Globalisation has thrown up in India absolutely newer avenues for corruption, which were unheard of or unconceivable ten years ago. The entire range of corruption that you find in our country today and the political corruption that you find as a

30

consequence -- flood gates have been opened by this process of Globalisation. Globalisation and liberalisation mean the opening up of areas for kickbacks and commissions to a large extent. In the process, the entire culture of corruption if we may call it, has undergone a `revolutionary' change where you find the ways in which money can be made has not only expanded but it is having a tremendous impact on the political life of this country. This is an important aspect because the causality here is actually genuine democracy and the obvious consequence is the very sharp rise in political opportunism. This sharp rise in political opportunism also is creating a degree of political instability which will seek to move the polity towards authoritarianism. The degeneration of polity seeks to divorce politics from all democratic content and reduce it to sordid bargaining and manouvering. Very often, we see now a days, the corporate world saying separate economics from politics. This is their politics! They are actually saying that reform process should take place independent of what is happening in our political life. They want to separate reforms from politics so that nobody can interfere and the politicians are told that you can confine yourself either to destroying Masjids and building temples or giving reservations! That is your agenda and do not talk of economics. So the attempt to separate economics from politics in other words separate the political life of the country form the actual economic decisions that are being taken, is a very important consequence of the process of Globalisation. How this is impacting on our political life we are able to see in various aspects of the type of governance that we are seeing in the last few years both at the center as well as in your state Andhra Pradesh.

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The type and scope of corruption in the Globalisation period is enormously enlarged. This is having a direct impact on the polity: who will form the governments and who will not form the governments. In 1998 when the Vajpayee government fell by one vote, what ever be the other political aspects, the prospect of an alternate government with the support of left was some thing, that the corporate world actively worked to make sure does not happen. Why? Because you had on the agenda the privatisation of insurance sector, you had on the agenda the changes in the patent laws that had to be brought about. Now the moment a government comes with the support of the left then this entire process of economic reforms or liberalisation will not proceed at the same pace that the corporate world wants. There are rumors of large amounts of money that were transferred to make sure that such a possibility does not occur. So, with this Globalisation, liberalisation you have an active involvement of the corporate sector and big money in defining or deciding on what type of government you will have, what sort of parties will come together with whom and there fore the entire process of your political institutions and the political structure of our country itself is being altered significantly. Globalisation is having a serious impact on the content of democracy that we have, spread of democracy that we have. Let us return to culture at large. Globalisation is accompanied by a need to homogenise the product, even the cultural product. The more homogenous the product, the greater the market it has whether. Where ever you go in the world, you will have the same soaps, same toothpaste, and the same sort of other products that you will find in our country. The homogenisation of the product is the first step in a globalised economy for maximisation of profits by the multinational corporations. Homogenisation of products also

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has a natural consequence in the homogenisation of culture. Studies have shown that in Sub-Saharan Africa, people may not have anything to eat, they may not know how to read and write but the moment you show them Walt Disney's mickey mouse, they will recognise it. This is homogenisation of a certain thought process and homogenisation of certain symbols. Homogenisation of symbols requires cultural products to be produced on mass scale. One immediate impact is that all the rich variations in the cultural legacies will be eliminated in order to create the homogenised product. This is the essence of culture of globalisation -- homogenisation of cultural products and symbols. In India, the communal forces and communalism in a way also requires the homogenisation of culture. For them, this is essential to portray that the entire cultural heritage of this country is a monolithic heritage that is derived only from the Hindu religion. The plurality and the diversity and all that variety that we have is actually sought to be erased by giving a communal interpretation of culture. The impact you will find also in education and in the entire area of knowledge. Therefore, to homogenise this culture requires efforts to actually rewrite or redefine our own diverse cultural heritage and put it into one singular monolith. This is the ideological project of the communal forces. So globalisation's need for homogenisation of cultural products globally dovetails with the communal forces need to homogenise cultural products domestically. Saffronisation of education, rewriting of Indian history, or the symbolism that is constantly being shown or assimilation of non Hindu religions into the Hindu fold, this entire process that is taking place at the ideological subterrian is directed towards this project of creating a

33

homogenised

culture

which

actually

suits

the

agenda

of

communalism. This is having a very deep impact on India and Indian society. Ramjanma Bhoomi movement that is taking place in UP today or in what happened to the Taj Mahal the other day when the BJP youth went and attacked it. I mean, Taliban attacks the Bamian Buddha's in Afghanistan the BJP attacks the Taj Mahal in Agra. What type of difference do you find between the two? They are two sides of the same coin. Mr. V.P. Singh, the other day, called Bal Thackeray, the Osama bin Laden of India. The culture that is paraded by globalisation actually finds a very strong ally in fundamentalists of all hue's and cries the world over. Incidentally it is an irony of history that today the country that is being bombed, Afghanistan, its people are probably the only people in the world who have not seen the destruction of WTC on the television because the Taliban banned TV some years ago saying it is antiIslam! So In Afghanistan no body saw the terrorist attacks. The poor Afghan who is being attacked by bombs does not even know what happened. Globalisation of Indian society, taken on the whole, we see the direct impact that is taking place on the economy which is leading, on one hand, to the ruination of millions of people and, on the other hand, to severely mortgaging our country. The Comptroller and Auditor General of India, reviewing the accounts for last year has shown that India, a) is already in a foreign debt trap, b) the outstanding debt and liabilities of government of India today stand at more than 16 lakh crores of rupees and the interest being paid is one and half lakh crore rupees annually. The country is being mortgaged, millions of people being ruined, the economic fundamentals in terms of infrastructure, the countries economic wealth being ruined and the assets and wealth of the people of the

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country being looted. Public sector is being sold for a song. In other words, bolstering the private capitalist class and their profit making capacities at the expense of the country and the people. This is the impact in the economic sphere. In the sphere of polity, we have situations where political alignments are decided by which type of economic policies will be pursued. The nature of political culture is defined on the basis of your commitment towards liberalisation and to that extent the fall in political morality also takes place correspondingly with a higher dosage of liberalisation and globalisation that takes place. The latest example of this is the re induction of Mr. George Fernandez into the cabinet. Today no questions are asked, except by people like us who keep on shouting. The government says go to hell. As long as big business and capitalists are supporting this government because of the reforms that are being implemented they do not care too much for peoples opinion. Three more years are there when the elections are due. May be that year, they will consider the views of the people but otherwise satisfying corporate sector and the capitalist world and foreign capital has become the defining yard stick of political culture today. The third area of this impact we have to take it into account is in the sphere of culture. It is having a very very deep impact in India and is ably aided and assisted by the communal forces in the country. They also seek the same objective of homogenising the cultural product or homogenising the cultural milieu that is there in our country which the communal forces seek to utilise for their agenda. Globalisation uses it for its agenda of mass production of cultural products. Together they are wreaking havoc with Indian society. It is a serious danger for India's unity and integrity.

35

Regarding globalisation, in that sense, there are various other aspects that we can talk about. How it is impacting the State; how it is eroding the national sovereignty of independent countries; whether the `nation-state' itself is a viable concept under globalisation or not. These are issues which you will be discussing in your papers and I have not gone into it. Broadly speaking, these are the three main areas of impact of Globalisation, that I wanted to share with all of you, of course, in the background of the independent process of the dynamics of world capitalist system itself which is being utilised in the present phase by the advanced capitalist countries particularly the U.S.A to strengthen its hegemony over the world and extract the maximum exploitation of the third world countries. I said earlier that what they seek is actually a blueprint for economic recolonisation of the developing world. That is the actual purpose and intent of the present phase of Globalisation. In this light, our struggles against this will have to be defined. So finally, I would end by talking about how do you struggle against this? One aspect is to resist the governmental policies and oppose this government's succumbing to the interest of foreign capital and to prevent the government from going the whole hog that it wants to go in mortgaging our country and putting the burdens on the people. Yes, we have our traditional forms of struggle and these are growing both internationally and nationally, as you all know. However, I would like to refer to what many people are saying that in todays world of modern information technology where you have now, 6.1 billion e-mails being sent every day, your enemy also appears illusionary. It doesnt appear tangible. I mean how are you going to determine against whom to have a demonstration. At a

36

point of time, a good friend of ours, Mr. George Fernandez, thats why I said at one point of time he was a good friend and not at the moment. In those days, we used to go for joint conventions. Whenever the organisers used to bring cool drinks, he would always look for thums-up or something domestic, pick it up and show me and say you Marxists will drink Coca-Cola but I will drink only Campa Cola, I am nationalist! Then I used to tell him, you may be drinking Campa Cola, but tell me where is the profit going. Coca-Cola has bought up Campa Cola! You can have your symbol of being nationalistic but basically the profit has gone to the same multinational because he has already bought up the other company. Many may say now comrades in this present new world how are you going to struggle against the intangible forms. That is wrong. I mean to say that the enemies are very tangible, they are actual class forces that will have to be fought and the class battle will have to be sharpened. That is one aspect. However, as the situation develops, new forms of struggles will also develop. All those of you who are familiar with computer technology and use your e-mails will know a big movement is growing today and has millions of followers world wide called the free software movement -- the Linnux/GNU movement. What is that? It is a revolt taking place at one level. We have to recognise that this is a revolt that is taking place against new manifestation of capitalistic exploitation. This is telling Microsoft that we will not give you super profits for your control of your copy right of the software. We will have our alternative and millions of people are doing this all over the world voluntarily, not really connected with each other through any party or through any mass organisation. But their voluntary response, that is the essence of what Marx said, capitalist exploitation by

37

itself generates the rebellion against exploitation and that is what has to be organised in order to over throw capitalism. But the fact that it is triggering a rebellion is something we will have to understand. What is it the other new area where the struggles are emerging? I am sure many of you are familiar with a book called NOLOGO by a person called Naomi Klien. If you are not, I seriously suggest you procure a copy and read it. Two weeks ago, the London Economist, one of the most respected but right wing journals of the world, had a cover story on this NOLOGO calling it PROLOGO. The book is against corporate brands and the main point it makes is that modern day capitalism is no longer interested in producing products, as I told you earlier. It is interested in familiarising brands like Nike, Coca-Cola etc. Where the product is produced is not important. The product might be produced in Thailand or it may be produced in Malaysia or produced anywhere but it is the brand that is important because it is the brand that sells. As a result, in the advanced countries, millions of people are loosing jobs. She explains the whole situation and then she notes the protests that are emerging in the universities of the west. How are these protests emerging? Suddenly in the night, she says, in Toronto a group of youngsters decided to go and blacken all the logos, all the major advertisements and destroy their Neon signs. Who are these youngsters? Why are they doing this? Behind this is the expression of revolt against capitalist exploitation under new conditions. It is finding newer forms. People through their own experience will find these newer forms and these newer forms are emerging and it is through this newer forms, I think, the struggle against this entire process of globalisation will strengthen. From Seattle to Genoa, if you see,

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who are these people; people of the first world. We have not been there. They always invite us saying why dont you come. We can take even lakhs of people from here but how do you reach these countries with such expensive travel costs! Ticketless travel is not possible on planes! Now they are forcing the G-8 countries to go underground! The next summit of G-7 and G-8 was supposed to be held in Toronto in Canada. They have now decided to hold it at a hill resort where the kings used to meet earlier where nobody can reach. One will have to be dropped by helicopter or something so that people cannot reach there. So the leaders of the capitalistic world if they have to meet, they have to meet in isolation. They cannot meet amongst the people. Such a situation is also coming where this struggle against these policies is on the rise. This is what we will have to note and work out how we in our country, I am sure that you will discuss in next two days, how we will be able to promote these struggles into growing struggles world wide against the process of Globalisation. These were some of the thoughts which I wanted to share with you and I am sure that in the next two days you will discuss many of these issues in greater depth and come to some conclusions. With this, I formally inaugurate this seminar. Thank you for your attention. Impact of globalization on Indian economy- An overview By : Tanveer Malik Free Download Email Article Discuss Article Print Article Rate Article

Introduction

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Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

With the onset of reforms to liberalize the Indian economy in July of 1991, a new chapter has dawned for India and her billion plus population. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the advent of the real integration of the Indian economy into the global economy.

This era of reforms has also ushered in a remarkable change in the Indian mindset, as it deviates from the traditional values held since Independence in 1947, such as self reliance and socialistic policies of economic development, which mainly due to the inward looking restrictive form of governance, resulted in the isolation, overall backwardness and inefficiency of the economy, amongst a host of other problems. This, despite the fact that India has always had the potential to be on the fast track to prosperity.

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Now that India is in the process of restructuring her economy, with aspirations of elevating herself from her present desolate position in the world, the need to speed up her economic development is even more imperative. And having witnessed the positive role that Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian countries and most notably China, India has embarked on an ambitious plan to emulate the successes of her neighbors to the east and is trying to sell herself as a safe and profitable destination for FDI.

Globalization has many meanings depending on the context and on the person who is talking about. Though the precise definition of globalization is still unavailable a few definitions are worth viewing, Guy Brainbant: says that the process of globalization not only includes opening up of world trade, development of advanced means of communication, internationalization of financial markets, growing importance of MNCs, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution. The term globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge. Ideally, it also contains free inter-country movement of labor. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import

41

liberalization

programs

by

switching

over

from

quantitative

restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.

The

Important

Reform

Measures

(Step

Towards

liberalization privatization and Globalization)

Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capital was flying out of the country and we were close to defaulting on loans. Along with these bottlenecks at home, many unforeseeable changes swept the economies of nations in Western and Eastern Europe, South East Asia, Latin America and elsewhere, around the same time. These were the economic compulsions at home and abroad that called for a complete overhauling of our economic policies and programs. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included the following:

Devaluation: The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against major currencies in the international foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis

42

Disinvestment-In order to make the process of globalization smooth, privatization and liberalization policies are moving along as well. Under the privatization scheme, most of the public sector undertakings have been/ are being sold to private sector

Dismantling of The Industrial Licensing Regime At present, only six industries are under compulsory licensing mainly on accounting of environmental safety and strategic considerations. A significantly amended locational policy in tune with the liberalized licensing policy is in place. No industrial approval is required from the government for locations not falling within 25 kms of the periphery of cities having a population of more than one million.

Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries and encouraging non-debt flows. The Department has put in place a liberal and transparent foreign investment regime where most activities are opened to foreign investment on automatic route without any limit on the extent of foreign ownership. Some of the recent initiatives taken to further liberalize the FDI regime, inter alias, include opening up of sectors such as Insurance (upto 26%); development of integrated townships (upto 100%); defense industry (upto 26%); tea plantation (upto 100% subject to divestment of 26% within five years to FDI); enhancement of FDI limits in private sector banking, allowing FDI up to 100% under the automatic route for most manufacturing activities in SEZs; opening up B2B e-commerce; Internet Service Providers (ISPs) without Gateways; electronic mail

43

and voice mail to 100% foreign investment subject to 26% divestment condition; etc. The Department has also strengthened investment facilitation measures through Foreign Investment Implementation Authority (FIIA).

Non Resident Indian Scheme the general policy and facilities for foreign direct investment as available to foreign investors/ Companies are fully applicable to NRIs as well. In addition, Government has extended some concessions especially for NRIs and overseas corporate bodies having more than 60% stake by NRIs

Throwing Open Industries Reserved For The Public Sector to Private Participation. Now there are only three industries reserved for the public sector

Abolition of the (MRTP) Act, which necessitated prior approval for capacity expansion

The removal of quantitative restrictions on imports.

The reduction of the peak customs tariff from over 300 per cent prior to the 30 per cent rate that applies now.

Wide-ranging financial sector reforms in the banking, capital markets, and insurance sectors, including the deregulation of

44

interest rates, strong regulation and supervisory systems, and the introduction of foreign/private sector competition.

Impact of Globalization of Indian Economy The novel Tale of Two Cities of Charles Dickens begins with a piquant description of the contradictions of the times: It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; we had everything before us, we had nothing before us

At the present, we can also say about the tale of two Indias: We have the best of times; we have the worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by globalization.

Though some economic reforms were introduced by the Rajiv Gandhi government (1985-89), it was the Narasimha Rao Government that gave a definite shape and start to the new economic reforms of globalization in India. Presenting the 1991-92 Budget, Finance Minister Manmohan Singh said: After four decades of planning for industrialization, we have now reached a stage where we should welcome, rather fear, foreign investment. Direct foreign investment would provide access to capital, technology and market.

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In the Memorandum of Economic Policies dated August 27, 1991 to the IMF, the Finance Minister submitted in the concluding paragraph: The Government of India believes that the policies set forth in the Memorandum are adequate to achieve the objectives of the program, but will take any additional measures appropriate for this purpose. In addition, the Government will consult with the Fund on the adoption of any measures that may be appropriate in accordance with the policies of the Fund on such consultations.

The Government of India affirmed to implement the economic reforms in consultation with the international bank and in accordance of its policies. Successive coalition governments from 1996 to 2004, led by the Janata Dal and BJP, adopted faithfully the economic policy of liberalization. With Manmohan Singh returned to power as the Prime Minister in 2004, the economic policy initiated by him has become the lodestar of the fiscal outlook of the government.

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 seven per cent in the 1993-2001 period. In the last four years, the annual growth rate of the GDP was impressive at 7.5 per cent (2003-04), 8.5 per cent (2004-05), nine per cent (2005-06) and 9.2 per cent (2006-07). Prime Minister Manmohan Singh is confident of having a 10 per cent growth in the GDP in the Eleventh Five Year Plan period.

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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). It is expected that India will cross the $ 200 billion mark soon.

The cumulative FDI inflows from 1991 to September 2006 were Rs.1, 81,566 crores (US $ 43.29 billion). The sectors attracting highest FDI inflows are electrical equipments including computer software and electronics (18 per cent), service sector (13 per cent), telecommunications (10 per cent), transportation industry (nine per cent), etc. In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient. India controls at the present 45 per cent of the global outsourcing market with an estimated income of $ 50 billion.

In respect of market capitalization (which takes into account the market value of a quoted company by multiplying its current share price by the number of shares in issue), India is in the fourth position with $ 894 billion after the US ($ 17,000 billion), Japan ($ 4800 billion) and China ($ 1000). India is expected to soon cross the trillion dollar mark.

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. A press

47

report was jubilant: This is the richest year for India. The combined wealth of the Indian billionaires marked an increase of 60 per cent from $ 106 billion in 2006 to $ 170 billion in 2007. The 40 Indian billionaires have assets worth about Rs. 7.50 lakh crores whereas the cumulative investment in the 91 Public Sector Undertakings by the Central Government of India is Rs. 3.93 lakh crores only.

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. Agriculture has been and still remains the backbone of the Indian economy. It plays a vital role not only in providing food and nutrition to the people, but also in the supply of raw material to industries and to export trade. In 1951, agriculture provided employment However, by to 72 per the cent of the population depending and upon contributed 59 per cent of the gross domestic product. 2001 population agriculture came to 58 per cent whereas the share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness.

The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to two per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006 stated that

48

the growth rate of agricultural GDP including forestry and fishing is likely to be below two per cent in the Tenth Plan period.

The reasons for the deceleration of the growth of agriculture are given in the Economic Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and lo post-harvest value addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.

The number of rural landless families increased from 35 per cent in 1987 to 45 per cent in 1999, further to 55 per cent in 2005. The farmers are destined to die of starvation or suicide. Replying to the Short Duration Discussion on Import of Wheat and Agrarian Distress on May 18, 2006, Agriculture Minister Sharad Pawar informed the Rajya Sabha that roughly 1, 00,000 farmers committed suicide during the period 1993-2003 mainly due to indebtedness.

In his interview to The Indian Express on November 15, 2005, Sharad Pawar said: The farming community has been ignored in this country and especially so over the last eight to ten years. The total investment in the agriculture sector is going down. In the last few years, the average budgetary provision from the Indian Government for irrigation is less than 0.35 percent.

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During the post-reform period, India has been shining brilliantly with a growing number of billionaires. Nobody has taken note of the sufferings of the family members of those unfortunate hundred thousand farmers.

Further, the proportion of people depending in India on agriculture is about 60 % whereas the same for the UK is 2 %, USA 2 %and Japan 3 %. The developed countries, having a low proportion of population in agriculture, have readily adopted globalization which favors more the growth of the manufacturing and service sectors.

About the plight of agriculture in developing countries, Nobel Prize-winning agreements agricultural economist now forbid This Joseph most Stiglitz said: of Trade for those subsidies excepted

goods.

depresses

incomes

farmers in the developing countries who do not get subsidies. And since 70 per cent of those in the developing countries depend directly or indirectly on agriculture, this means that the incomes of the developing countries are depressed. But by whatever standard one uses, todays international countries. trading regime is unfair to developing

He also pointed out: The average European cow gets a subsidy of $ 2 a day (the World Bank measure of poverty); more than half the people in the developing world live on

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less than that. It appears that it is better to be a cow in Europe than to be a poor person in a developing country.

Demoting Agriculture

The Economic Survey reports released till 1991 contained the Chapters in the following order: (1) Introduction, (2) Agricultural Production, (3) Industrial Performance and Policies, (4) Infrastructure, (5) Human Resources, (6) Prices, Price Policy and Public Distribution System, (7) Fiscal Policy and Government Budget, (8) Monetary and Credit Developments, (9) The External Sector and (10) Problems and Prospects.

In the Economic Survey 1991-92, Finance Minister Manmohan Singh recast the Chapters in the following order: (1) Introduction, (2) Public Finance, (3) Money and Credit, (4) Prices and Distribution, (5) Balance of Payments, (6) Industry, (7) Agriculture, (8) Infrastructure and (9) Social Sectors.

It is not known as to why the Finance Minister demoted the importance of agriculture that has about 90 per cent population from the second place to the seventh in the annual Economic Survey of the country. In a way does it symbolize the low importance deliberately given to the growth of the agriculture sector in the scheme of globalization?

Strategy of Globalization

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In the Report (2006) East Asian Renaissance, World Bank Advisor Dr Indermit Gill stated: Cities are at the core of a development strategy based on international integration, investment and innovation. 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. This will mean planning for and building dynamic, connected cities that are linked both domestically and to the outside world so that economic growth continues and social cohesion is strengthened.

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 globalization. sector were out of focus in the strategy of

Growth of UnemploymentPoverty

The proportion of the unemployed to the total labor force has been increasing from 2.62 per cent (1993-94) to 2.78 per cent (19992000) and 3.06 per cent (2004-05). In absolute figures, the number of unemployed had been in those years 9.02 million, 10.51 million and 13.10 million respectively. (Economic Survey 2006-07, Table 10.4)

In reply to a question, the Minister for Labor and Employment informed the Lok Sabha on March 19, 2007, that the enrolment of

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the unemployed in the Employment Exchanges in 2006-07 was 79 lakhs against the average of 58 lakhs in the past ten years. About the impact of globalization, in particular on the development of India, the ILO Report (2004) stated: In India, there had been winners and losers. The lives of the educated and the rich had been enriched by globalization. The information technology (IT) sector was a particular beneficiary. But the benefits had not yet reached the majority, and new risks had cropped up for the losersthe socially deprived and the rural poor. Significant numbers of non-perennial poor, who had worked hard to escape poverty, were finding their gains reversed. Power was shifting from elected local institutions to unaccountable transnational bodies. Western perceptions, which dominated the globe media, were not aligned with local perspectives; they encouraged consumerism in the midst of extreme poverty and posed a threat to cultural and linguistic diversity.

Social Services

About the quality of education given to children, the Approach to the Eleventh Five Year Plan stated: A recent study has found that 38 per cent of the children who have completed four years of schooling cannot read a small paragraph with short sentences meant to be read by a student of Class II. About 55 per cent of such children cannot divide a three digit number by a one digit number. These are indicators of serious learning problems which must be addressed.

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The Approach paper added further: Universalisation of education will not suffice in the knowledge economy. A person with a mere eight years of schooling will be as disadvantaged in a knowledge economy by ICT as an illiterate person in modern industry an services.

The less said about the achievements in health the better. The Approach to the Eleventh Plan concedes that progress implementing the objectives of health have been slow. The Report gave the particulars of the rates of infant mortality (per 1000 live births) for India as 60 against Sri Lanka (13), China (30) and Vietnam (19). The rate of maternal mortality (per 1, 00,000 deliveries) of India is 407 against Sri Lanka (92), China (56) and Vietnam (130).

Growth of Slum Capitals

In his 2007-08 Budget Speech, Finance Minister Chidambaram put forth a proposal to promote Mumbai as a world class financial centre and to make financial services the next growth engine of India.

Of its 13 million population, Mumbai city has 54 per cent in slums. It is estimated that 100 to 300 new families come to Mumbai every day and most land up in a slum colony. Prof R. N. Sharma of the Tata Institute of Social Science says that Mumbai is disintegrating into slums. From being known as the slum capital of

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India and the biggest slum of Asia, Mumbai is all set to become the slum capital of the world. The population of Delhi is about 14 million of which nearly 45 per cent population lives in slums, unauthorized colonies, JJ clusters and undeveloped rural parts. During dry weather these slum dwellers use open areas around their units for defecation and the entire human waste generated from the slums along with the additional wastewater from their households is discharged untreated into the river Yamuna.

The cumulative FDI inflows (until September 2006) to the New Delhi region was of Rs. 27,369 crores and to Mumbai Rs. 24,545 crores. The two spots of New Delhi and Mumbai received 46 per cent of the total FDI inflows into India.

Victims of Globalization

IN his Making Globalization Work, Nobel Laureate Stiglitz wrote: Trade liberalizationopening up markets to the free flow of goods and services was supposed to lead to growth. The evidence is at best mixed. Part of the reason that international trade agreements have been so unsuccessful in promoting growth in poor countries is that they were often unbalanced. The advanced industrial countries were allowed to levy tariffs on goods produced by developing countries that were, on average, four times higher that those on goods produced by other advanced industrial countries.

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In his foreword to The Dynamics and Impact of Globalization by Dr. M. V. Louis Anthuvan, Justice V. R. Krishna Iyer pointed out pithily: The New World Order is the product of what is now familiarly described as globalization, liberalization and privatization. The weaker sectors like the Asian and African countries are victims, whose economic welfare is slavery, at the disposal of the White world. When World War II came to a close, commercial conquest and trade triumph became the major goal of the United States and the other giant trade powers. Indeed, these mighty countries and companies even made world hunger as Big Business. The poorer countries with natural resources have been made banana republics and cucumber vassals.

The Human Development Report 2006 recorded: Globalization has given rise to a protracted debate over the precise direction of trends in global income distribution. What is sometimes lost sight of is the sheer depth of inequalityand the associated potential for greater equity to accelerate poverty reduction. Measured in the 2000 purchasing power parity (PPP) terms, the gap between the incomes of the poorest 20 per cent of the worlds population and the $ 1 a day poverty line amounts to about $ 300 billion. That figure appears large, but it is less than two per cent of the income of the worlds wealthiest 10 per cent.

To make Globalization Work

Under the phenomenal growth of information technology which has shrunk space and time and reduced the cost of moving

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information, goods and capital across the globe, the globalization has brought unprecedented opportunities for human development for all, in developing as well as developed countries. Under the commercial marketing forces, globalization has been used more to promote economic growth to yield profits to some countries and to some groups within a country. India should pay immediate attention to ensure rapid development in education, health, water and sanitation, labor and employment so that under time-bound programmes the targets are completed without delay. A strong foundation of human development of all people is essential for the social, political and economic development of the country.

Though at present India appears to be dominant in some fields of development as in IT-ITES, this prosperity may be challenged by other competing countries which are equipping themselves with better standards of higher education. As detailed earlier, our progress in education has been slow and superficial, without depth and quality, to compete the international standards.

The

government

should

take and

immediate create

steps

to

increase

agricultural

production

additional

employment

opportunities in the rural parts, to reduce the growing inequality between urban and rural areas and to decentralize powers and resources to the panchayati raj institutions for implementing all works of rural development. Steps should be taken for early linking of the rivers, especially in the south-bound ones, for supply of the much-needed water for irrigation.

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It should be remembered that without a sustainable and productive growth of the agricultural sector, the other types of development in any sphere will be unstable and illusory. Despite the concerted development in manufacturing and service sectors, despite the remarkable inflow and overflow of foreign reserves, agriculture is still the largest industry providing employment to about 60 per cent of the workforce in the country.

Mere growth of the GDP and others at the macro level in billions does not solve the chronic poverty and backward level of living norms of the people at the micro level. The growth should be sustainable with human development and decent employment potential. The welfare of a country does not percolate from the top, but should be built upon development from the bottom. Acknowledgement: I would like to express profound gratitude to Dr. S. L. Kale and Head Prof. Dr. C. K. Goyal for giving encouragement and guidance to work on Impact of Globalization on Indian Economy An Overview. Also I would like to express thanks to Mr. Balwant Salunke, Mr. Keshav Anand, Mr. Dashrath Sharma, Mr. Rahul Joshi and Mr. Ankur Jain.

References: Globalisation and Poverty: Centre for International Economics, Australia. Globalisation Trend and Issues T.K.Velayudham,

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Globalisation and India Lecture: Prof .Sagar Jain, University of N.Carolina. Repositioning India in the Globalised World Lecture: V.N.Rai. Globalization of Indian economy by Era Sezhiyan Globalisation and Indias Business prospectives Lecture Ravi Kastia. Globalisation and Liberalisation Prospects of New World Order Dr.A.K.Ojha, Third Concept An International Journal of Ideas, Aug 2002. Globalisation: Imperatives, Challenges and the Strategies.

Introduction: Globalisation is the new buzzword that has come to dominate the world since the nineties of the last century with the end of the cold war and the break-up of the former Soviet Union and the global trend towards the rolling ball. The frontiers of the state with increased reliance on the market economy and renewed faith in the private capital and resources, a process of structural adjustment spurred by the studies and influences of the World Bank and other International organisations have started in many of the developing countries. Also Globalisation has brought in new opportunities to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard. But globalisation has also thrown up new challenges like growing inequality across and within nations, volatility in financial market and environmental deteriorations. Another negative aspect of globalisation is that a great majority of developing countries remain removed from the process. Till the nineties the process of globalisation of the Indian

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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 Ads Download Google ChromeSearching is fast and easy with Google's web browser.www.Google.com/Chrome I write what I FeelThis is my space I know am right!

www.beckynerdynerds.blogspot.com Free Classifieds in IndiaEverything you want, everything you need: Try OLX Free Classifieds!www.olx.in Definition: Globalised World - What does it mean? Does it mean the fast movement of people which results in greater interaction? Does it mean that because of IT revolution people can be in touch with each other in any part of the world? Does it mean trade and economy of each country is open in NonIntrusive way so that all varieties are available to consumer of his choice? Does it mean that mankind has achieved emancipation to a level of where we can say it means a social, economic and political globalisation? Though the precise definition of globalisation is still unavailable a few definitions worth viewing, Stephen Gill: defines globalisation as the reduction of transaction cost of transborder movements of capital and goods thus of factors of production and goods. Guy

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Brainbant: says that the process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution Impact on India: India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilateral organisations. The new policy regime radically pushed forward in favour of amore open and market oriented economy. Major measures initiated as a part of the liberalisation and globalisation strategy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of the monopolies and the restrictive trade practices act, start of the privatisation programme, reduction in tariff rates and change over to market determined exchange rates. Over the years there has been a steady liberalisation of the current account transactions, more and more sectors opened up for foreign direct investments and portfolio investments facilitating entry of foreign investors in telecom, roads, ports, airports, insurance and other major sectors. The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 199697.Though tariff rates went up slowly in the late nineties it touched

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35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantled by march 2002, including almost all quantitative restrictions. India is Global:

The liberalisation of the domestic economy and the increasing integration of India with the global economy have helped step up GDP growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have slowed down since the country has still bee able to achieve 5-6% growth rate in three of the last six years. Though growth rates has slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts in two decades the growth rates are expected to go up close to 70% in 2003-04. A Global comparison shows that India is now the fastest growing just after China. This is major improvement given that India is growth rate in the 1970's was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though India's average annual growth rate almost doubled in the eighties to 5.9% it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India's global position. Consequently India's position in the global economy has improved from the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a purchasing power parity basis. Globalisation and Poverty: Globalisation in the form of increased integration though trade and investment is an important reason why much progress has been

62

made in reducing poverty and global inequality over recent decades. But it is not the only reason for this often unrecognised progress, good national polices , sound institutions and domestic political stability also matter. Despite this progress, poverty remains one of the most serious international challenges we face up to 1.2 billion of the developing world 4.8 billion people still live in extreme poverty. But the proportion of the world population living in poverty has been steadily declining and since 1980 the absolute number of poor people has stopped rising and appears to have fallen in recent years despite strong population growth in poor countries. If the proportion living in poverty had not fallen since 1987 alone a further 215million people would be living in extreme poverty today. India has to concentrate on five important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business openings for small and medium enterprises, importance of quality management, new prospects in rural areas and privatisation of financial institutions. The manufacturing of technology and management of technology are two different significant areas in the country. There will be new prospects in rural India. The growth of Indian economy very much depends upon rural participation in the global race. After implementing the new economic policy the role of villages got its own significance because of its unique outlook and branding methods. For example food processing and packaging are the one of the area where new entrepreneurs can enter into a big way. It may be organised in a collective way with the help of co-operatives to meet the global demand.

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Understanding the current status of globalisation is necessary for setting course for future. For all nations to reap the full benefits of globalisation it is essential to create a level playing field. President Bush's recent proposal to eliminate all tariffs on all manufactured goods by 2015 will do it. In fact it may exacerbate the prevalent inequalities. According to this proposal, tariffs of 5% or less on all manufactured goods will be eliminated by 2005 and higher than 5% will be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by 2015. GDP Growth rate: The Indian economy is passing through a difficult phase caused by several unfavourable domestic and external developments; Domestic output and Demand conditions were adversely affected by poor performance in agriculture in the past two years. The global economy experienced an overall deceleration and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in 2000-01. The performance in the first quarter of the financial year is5.8% and second quarter is 6.1%. Export and Import: India's Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million respectively. Many Indian companies have started becoming respectable players in the International scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural products valued at more than US $ 6million were exported from the country 23% of which was contributed by the marine products alone. Marine products in recent years have emerged as the single largest contributor to the total agricultural

64

export from the country accounting for over one fifth of the total agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the other prominent products each of which accounts fro nearly 5 to 10% of the countries total agricultural exports. Where does Indian stand in terms of Global Integration? India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag. Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of India Consider global trade India's share of world

merchandise exports increased from .05% to .07% over the pat 20 years. Over the same period China's share has tripled to almost 4%. India's share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and labour cost advantages. It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI. Despite all the talk, we are now where ever close being globalised in terms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries however we look at it.

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As Amartya Sen and many other have pointed out that India, as a geographical, politico-cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life. Consequences: The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level. ~ References:
1.

Globalisation

and

Poverty:

Centre

for

International

Economics, Australia.

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2.

WIDER ANNUAL LECTURE 6: Winners and Losers over two centuries of Globalisation: Jeffery G. Williamson.

3. 4.

Globalisation Trend and Issues - T.K.Velayudham, Page 3, 66. Globalisation and India -Lecture : Prof .Sagar Jain, University of N.Carolina.

5.

Repositioning India in the Globalised World - Lecture : V.N.Rai.

6.

Globalisation and India's Business prospectives - Lecture Ravi Kastia.

7.

"Globalisation and Liberalisation" Prospects of New World Order - Dr.A.K.Ojha, Third Concept - An International Journal of Ideas, Aug 2002.

8. 9.

The Indian and Global Business - Jan 2004, Page 30. Globalisation: Imperatives, Challenges and the Strategies, Page 39.

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