Globalisation in India Essay Example

comprising the reduction of hindrances for new enterprises and foreign direct investment. Consequently, the duration necessary for emerging firms to commence operations diminished considerably from 89 days in 2003 to merely 33 days in 2007. This resulted in multi-brand retailers such as Woolworths channeling investments into wholesalers like Infiniti Retail. The License Raj was a significant industrial reform that eliminated restrictions on private companies' manufacturing undertakings. Additional endeavors encompassed the elimination of price control systems and the privatization of industries solely owned by the public sector, including airports and power.

Privatisation has enhanced firms' efficiency and management, leading to prospective investment of $1 trillion in India's infrastructure sector from 2010 to 2019 (S. Wee, 2010). This has increasingly caught the attention of foreign investors, whereas previously the Indian Government struggled to guarantee infrastructural project implementation. As a result of privatisation, foreign investors are now ensuring project completion. Trade reforms were also introduced primarily to reduce government intervention and encourage increases in imports and exports through the reduction of barriers such as tariff levels and quotas.

The Indian government implemented a "managed" float of the Rupee to improve India's appeal overseas as it was overvalued. This, along with the controlled deregulation of FDI, has attracted MNCs into the country. However, the government has been cautious to ease tariffs and quotas, resulting in restricted international investment in India.

According to M. Wade (2009), the Indian Government prohibits direct investment by multi-brand retailers, like Wal-Mart, to avoid market monopolization and support local industry. Nevertheless, this policy is causing some local industries to become obsolete due to their inability to attract a more skilled workforce.

Efforts to enhance the performance of money

and capital markets formed the main focus of financial sector reforms. The reforms aimed to improve the banking and insurance sectors as well as capital markets. Among these, reforms in the insurance sector had the most significant global impact. The introduction of insurance policies aimed at promoting foreign investments. Private companies could only access the insurance industry if they owned a minimum of 26% foreign equity (M).

According to Helen (2008), capital market reforms had a minor global impact as they promoted foreign portfolio investment. Fiscal reforms aimed to decrease government debt and stabilize the economy by privatizing numerous public sector organizations. This resulted in the implementation of measures to enhance communication between public and private companies. Reduced regulation in infrastructure sectors has attracted foreign investment in industries including power and telecommunications (A).

According to Dhas (2008), India's economic liberalization has both benefits and drawbacks due to globalization. As India becomes a more influential global player, its involvement in organizations like the G20, World Trade Organisation, and South Asian Association for Regional Cooperation will affect international affairs. These relationships enhance trade and investment. Presently, China is India's primary trading partner while the United States and United Arab Emirates are close behind (Consulate General, 2009).

Although India is not a member of numerous trade blocs, it has inked trade agreements with the Association of South-East Asian Nations in 2010 while another one with the European Union is expected to be established in December 2010 (SME Times, 2010). Through these pacts, barriers to trade within India will be reduced and access to global markets for significant Indian products will increase. These recent developments suggest that India's integration into the global

economy is still at its nascent stage. As economic growth unfolds in India, there has been an observable surge in demand for goods and services which consequently resulted in a rise in both labor demand and supply.

According to Earth Trends (2010), the unemployment rate in 2008 was 6.8%, but as a result of the Global Financial Crisis (GFC), it rose to 13%. However, with the worldwide economy recovering, there is hope for a decrease. In India, structural unemployment is caused by technological advancements that render certain trades obsolete. The World Bank (2010) reports that India's annual growth rate has remained above 6% since 1991 and reached an impressive 8% from 2003-2009. Figure 1 demonstrates that over half of India's total yield comes from the services sector.

India's economy was primarily focused on agriculture. However, the Global Financial Crisis caused a major decline in GDP growth from 10% to just above 5%, demonstrating India's involvement in the global economy. Despite this setback, India's IT industry has revolutionized business operations by leveraging technology to achieve economies of scale and maximize production levels, leading to increased efficiency for firms.

India has become the primary destination for offshoring IT technology, thanks to its comparative advantage over other countries. This advantage is mainly attributed to its large English-speaking workforce and liberalized policy regimes (S. Modwel 2006). Nonetheless, globalization in India has caused various negative consequences that are impacting a significant section of the population. Furthermore, the demand for Indian Rupee is adversely affecting exchange rates in India.

According to India Times (2010), Figure 2 illustrates the gradual rise in exchange rates following the floating of the Rupee, causing an appreciation that negatively

affects exports. Despite export growth, it has fallen short of expectations due to this appreciation. However, a stronger Rupee has its benefits including increased opportunities for youth to pursue employment overseas.

Figure 3 indicates that since its integration into the global economy, India's Gini coefficient has risen by over 5 points to reach 36.8. This is almost at par with the highest point in 1997, indicating that globalization has favored higher quintiles more than lower ones. Nevertheless, Figure 4 demonstrates that GDP growth has considerably decreased poverty levels in India.

The increase in MNCs and job opportunities has resulted in a rise of urban migration, causing a significant income gap between rural and urban citizens. The percentage of Indians living in cities has risen from 20% to 30% since 1990, with predictions that it will reach around 40% by 2030 according to a recent UN report. This shift towards urbanization is reflected in Figure 5, which shows the worsening geographic inequality between rural and urban communities since 1995.

The major cause of insufficient growth is the lack of investment in rural capital and adverse effects of urbanization on development due to inadequate infrastructure investments. High migration rates have led to aging systems that cannot meet demands, resulting in impoverished slums like those around major cities such as Bangalore where 26% of people reside. These slums have low levels of literacy, healthcare facilities, and living conditions (S).

Despite India experiencing high economic growth, much of it is being wasted due to the high inflation rates that have caused product overvaluation (Madon 2005, Trading Economics 2010). Inflation in India has continued to rise from 2006 to 2010 as output, productivity,

and employment have all increased; this trend can be traced back to the onset of higher inflationary pressure. Additionally, the growth in disposable incomes has driven consumption and contributed to further inflation growth (Trading Economics 2010). Figure 6 illustrates this trend.

Since early 2010, the Indian Central Bank has implemented interest rate hikes as part of their monetary policy to curb inflation. This strategy has successfully reduced inflation levels from a peak in January 2010. However, with India's rapid growth, inflation is expected to continue being an ongoing issue and this solution may only be temporary. The consequences of globalization have impacted both India and the world socially and environmentally. The Indian government's economic policies do not prioritize the environment's importance to many Indians' livelihoods, resulting in negative impacts on the public. For example, over-farming has caused desertification in various agricultural communities that poses an increasingly difficult problem due to unsustainable population growth (Caritas, N/A).

Equitable Tourism (2009) states that despite government investments in agriculture, farms have not become more efficient. Furthermore, the government's approval of industry taking over vital ecosystems has led to systematic depletion of biodiversity in the region. According to Earth Trends (2010), India's carbon dioxide emissions have increased by over 100% since 1991, making it the third largest emitter globally after China and the United States. This trend was worsened by India's national mineral policy of 2008 which allowed numerous mining projects due to demand from China.

India's increasing importance in the global market for goods, services, and minerals is predicted to cause continued growth in emissions. This has been connected to recent natural disasters such as severe monsoons. The food industry in India

suffers from underdevelopment, inadequate infrastructure, and transport systems which lead to 40% of all food spoiling before purchase (M. Wade, 2009). As India expands its economy and attracts more foreign investment opportunities, particularly in the food sector, this issue will persist.

Despite the government's successful efforts to encourage economic growth, their effectiveness in facilitating development has been inadequate, leading to unequal income distribution. The consequences of globalization have adversely affected many Indians, and without improved policies, these reform-related drawbacks will negatively impact both future growth and living standards.