IMPACT OF GLOBALIZATION ON INDIAN SOCIETY

 

IMPACT OF GLOBALIZATION ON INDIAN SOCIETY

 

• ü  Many of us have a misconception that globalization started in the year 1991.
• ü  Globalization is a concept which is centuries old. When Christopher Columbus discovered America, it was an economic mission. It was also the part of globalization process.
• ü  When Vasco da Gama came to India he was also on economic mission. He was following the pursuits of globalization.
• ü  Economic history suggests that presently some of the historians are saying that we are passing through 5^th phase of globalization.
• ü  Some of the economist says that we are passing through 3^rd phase of globalization.
• ü  At the world level this phase of globalization which started in early 80s globally is primarily driven by information and communication technology.
• ü  But in India this process of globalization, liberalization and privatization started from the year 1991. In fact India was lagging behind in terms of introducing these economic reforms. Because in 1991 the kind of mess which was created in economy, our economy was passing through a very bad phase.
• ü  Fiscal deficit was at all time high. Foreign exchange reserve had also depleted substantially. Capital flow was also on the negative side. So many issues which were seriously effecting our economy. To regale out of such crisis the government in power undertook major structural reforms in the name of liberalization, privatization and globalization policies under the able guidance of Dr Manmohan Singh our former Prime Minister of India.
• ü  Globalization is one of such economic reform that have changed not only the structural aspect of trade and service industry but also the attitude of worldwide economies towards India.
• ü  In simple terms globalization refers to economic integration of worldwide economies for the exchange of goods, services, capital, labor across the international boundaries.

 Meaning

According to Oxford Dictationary “Globalization is a process by which business or other organizations develop international influence or start operating on an international scale”

FEATURES OF GLOBALIZATION

Integration of International economies: Globalization integrate domestic economies with international economies which increase cross border trade relations.

Liberalization for an effective implementation of globalized practices, freedom of trade, goods, services, technology, capital and labor across the international border act as a precursor.

Free trade : the term free trade does not means trade between the countries without paying any custom duty or levis. It simply means reduction in the governmental procedures and duties.

Globalization leads to the transfer of technology from developed nations to developing nations. The developed countries like U.S. U.K., Germany, Japan etc are more advanced and rich in technology which can be further transferred to the developing economies like India. For example Indian automobile industries especially the Car industry. The Indian automobile industries developed and makes its ability at international level because of the transfer of technology which has taken place from the developed countries. Hyundai which is a Korean company, after establishing their base in India Hyundai is developing such an advance level cars that more than 60% of the total output of Hyundai is being exported to rest of the world. So the developing countries like India benefitted out of the process. Most of the companies like Suzuki, Honda etc have established their manufacturing base in India. From India they are supplying their products to other countries.

It leads to international financial flows. The globalization makes possible financial flows or movement from one country to another. Ex. When a consumer in Taiwan imports goods from India then he supposed to make payment to the Indian exporter in the Indian currency after converting its domestic currency. Taiwan dollars can also be paid as the agreement according. Thus globalization involves movement of international funds from one country to another.

International cooperation: Another important feature of globalization is that it leads to international cooperation. To provide and equal platform to all the international players, international trades as well as the financial cooperation is required among the countries. The international financial institutions like WTO, IMF and the WORLD BANK , they are working in this regard.

There are so many other groups which are also working towards the international cooperation. These organization not only provide platform for the settlement of disputes among the countries but they also channelize the trade as well as financial linkages among the countries. Ex BRICS  

Globalization leads to the transnational economies, transnational companies: A new concept of transnational companies has come into existence. Apart from the multinational companies the transnational companies treat the entire world market as on single market having decentralized decision making system across international boundaries.

Ex -- Coca Cola : The product is same across countries.

Ex—In Indian automobile sector new models of car launched all over the world at the same time. So this is another advantage that India is getting benefit out of this process of globalization that whatever new products with the new technologies are available or launched by developed countries they are made available to the developing countries consumer at the same time as developed countries.

IMPORTANCE OF GLOBALIZATION

World class services: A country can enjoy world class services through globalization. For instance, in India, the Banking activities have undergone a major transition through the introduction of world class technology. People can perform banking transaction at anytime and anywhere.

 Standard of living: Living standard is a byproduct of globalization. Owing to availability of affordable goods and services, the standard of living of people increases.

Infrastructure development: Globalization promotes development of infrastructure through the transfer of technology from one country to another.

Foreign exchange reserves: Another important aspect of globalization is that it leads to enhancement of foreign reserves. Through globalization countries can build foreign exchange reserves owing to international financial flows.

Economic growth: Globalization entails to optimum utilization of resources wherein deficit resources are procured and surplus resources are exported to other countries. This ensures overall economic growth of a country.

Contribution to World GDP growth rate: Globalization ensures contribution of every country to world GDP growth rate.

Affordable products: With the access to latest technology, the countries can provide products to its countrymen at affordable prices. Globalization promotes competition in domestic economies and in their endeavor to compete against competition, companies reduce product price or follow penetrating pricing strategies.

Extension of markets: Above all globalization promotes extension of markets. It provides an opportunity to the domestic companies in going global. For instance, Domestically, companies can witness a saturation in the demand for their products or services but through globalization the domestic companies can sustain and satisfy the growing demands of foreign customers.   

IMPACT OF GLOBALIZATION

Impact of globalization on agriculture sector: Agriculture sector is the backbone of Indian economy. The globalization has resulted in large number of benefits for the agriculture sector.

1        Special assistance and loans from World Bank as well as other international financial institutions are provided to agriculture sector.

2        This has increased in the standard of living of people.

3        World class seeds as well as technologies are available to the farmers at their door step.

4        This has also led to proper implementation of subsidy programs. Domestic subsidy programs are properly marginalized considering the requirement of WTO.

5        Globalization has provided an international platforms to the farmers so as to sell their produce at competitive prices.

Impact of Globalization on Industrial sector:

1        Globalization has resulted in extension of markets for the domestic companies.

2        Highly advanced technologies are available to the companies at much cheaper price now a days.

3        Foreign investments are allowed to indigenous companies in the form of Foreign Direct Investment (FDI)

4        Globalization led to industrial revolution in 1990’s thereby creating large number of employer for the workers.

5        Incorporation of transnational as well as multinational corporations have increased over a period of time

6        The contribution of export sector has increased in the overall GDP growth rate.

7        Globalization has provided special platform to the small and medium enterprises in the context of international markets and technology transfers.

Impact of globalization on financial sector

1        Free flow of financial capital (both portfolio as well as direct investment) led to the development of the financial service industry.

2        Globalization has made the banking sector more technologically as well as operationally efficient.

3        Foreign investors can invest their money in domestic financial markets and further in its various products like equity, debt, mutual fund etc.

4        Foreign insurance companies undertake insurance ventures in the domestic economy through joint ventures or partnerships.

5        Globalization has led to building up of huge foreign exchange reserves.

6        International payments have become far more convenient and efficient.

Impact of globalization on social and cultural sector

1                    People’s taste and preferences are changing at a rapid pace over a period of time.

2                    Clothing patterns are also witnessing a drastic spillover of western styles.

3                    Electronic gadgets are in huge demand not only in urban areas but in rural areas as well.

4                    Above all globalization is having an impact on society’s value system as well.

5                    Creation of a globalized civil society having common thoughts as well as appearances

Impact on Export and Import

1              Export and import has increased over a period of time followed by a very high current         account deficit.

2           Due to financial and trade related linkages among the countries domestic economies have become more prone to external shocks.