globalisation –impcts on indian economy

8/9/2019 Globalisation impcts on Indian Economy

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GLOBALISATION & ITSGLOBALISATION & ITSIMPACT ON INDIANIMPACT ON INDIANECONOMYECONOMY


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GLOBALISATIONGLOBALISATION

GLOBALISATION REFERS TO A PROCESSGLOBALISATION REFERS TO A PROCESSOF INCREASING ECONOMICOF INCREASING ECONOMICINTEGRATION & GROWING ECONOMICINTEGRATION & GROWING ECONOMICINTERDEPENDENCE BETWEENINTERDEPENDENCE BETWEENCOUNTRIES IN THE WORLD.COUNTRIES IN THE WORLD.


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MODERN GLOBALIZATIONMODERN GLOBALIZATION

BrettonBretton Woods conference:Woods conference:--An agreementAn agreementfor the framework for internationalfor the framework for internationalcommerce and finance & set up of newcommerce and finance & set up of newInternational Institution.International Institution.

GATT & WTO:GATT & WTO:--Works for the promotion ofWorks for the promotion of

the free trade.the free trade.


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PROMOTION OF FREE TRADEPROMOTION OF FREE TRADE

Elimination of tariffsElimination of tariffs

Reduced transportation costReduced transportation cost Harmonization of subsidiesHarmonization of subsidies

Measuring globalization:Measuring globalization:-- Goods, People,Goods, People,Capital & TechnologyCapital & Technology


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Impact of globalization onImpact of globalization on

Indian economyIndian economy LPGLPG model merged in 1990zmodel merged in 1990z

Devaluation of currencyDevaluation of currencyDisinvestmentDisinvestment

FDIFDILiberalize the FDI regime includes openingLiberalize the FDI regime includes openingof d/f sectorsof d/f sectors


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Cont.Cont.

Insurance (up to 26%)Insurance (up to 26%)

Banking ( 100%)Banking ( 100%) Tea plantation (100%)Tea plantation (100%)

Infrastructure (100%)Infrastructure (100%)

Defense (26%)Defense (26%) Manufacturing activities in SEZ,KEZ toManufacturing activities in SEZ,KEZ to

100% FDI subject to 26% Disinvestment100% FDI subject to 26% Disinvestment


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GROWTH IN THE GDPGROWTH IN THE GDPYEAR RATE ( IN PERCENTAGE)

1990-91 5

1990-2001 7

2003-04 7.5

2004-05 8.5

2005-06 9

2006-07 9.2


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105 105 135 145 167103 125

204 231287

682

453398

237191

0

200

400

600

800

1,000

1,200

1999-00 2002-03 2005-06 2006-07 2010*

USDB

illion

Agriculture Industry Services

Contribution of Services -increased from 48% to 62% and

is estimated to contribute 60% by 2010

Growing GDP


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GrowthCustomer Survey


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GDP USD 590 billion

GDP growth rate 9%

Services contribution

54%

Balance of Trade

USD (-)46.2 billion

Investment goal

USD 250 billion

20062006

Growing Indian Economy

GDP USD 1.16 trillion

GDP growth rate 9.5%


60%

Balance of TradeNegative balance should

increase with surging

imports versus exports

Investment goal

USD 305 billion

20082008*

GDP USD 1.36 trillion

GDP growth rate 9%


60-65%

Balance of Trade

Negative balance should

increase with surging

imports versus exports

Investment goal

USD 370 billion

20102010*


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FOREIGN EXCHANGE RESERVESFOREIGN EXCHANGE RESERVES

YEAR IN US$ (BILLION)

2000-01 39

2003-04 107

2005-06 147

2007-08 180


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FDI INFLOWFDI INFLOW

The cumulative inflow of FDI from 1991 to sep.2006 were Rs.1,81,566The cumulative inflow of FDI from 1991 to sep.2006 were Rs.1,81,566(US $ 43.23 billion)(US $ 43.23 billion)

SECTORS PERCENTAGE

ELECTRIC EQUIPMENT 18

SERVICE SECTOR 13

TELECOMMUNICATION 10

TRANSPORTATION 9


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GLOBAL OUTSOURCING MARKET SHAREGLOBAL OUTSOURCING MARKET SHARE

45% (Income $ 50 Billion)45% (Income $ 50 Billion)

MARKET CAPITALIOSATIONMARKET CAPITALIOSATION

44thth

position in the world with $894 billionposition in the world with $894 billion


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Benefits to Indian economyBenefits to Indian economy

Expansion in trade : overall trade higherExpansion in trade : overall trade higherbyby

US $ 745 billion by 2005. largestUS $ 745 billion by 2005. largestincreasesincreases

were seen in clothing ,agriculture,were seen in clothing ,agriculture,

fishery and forestry products andfishery and forestry products andprocessed food products . Service exportsprocessed food products . Service exportsin IT, banking and financial services alsoin IT, banking and financial services also

largely improved.largely improved.


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Cont.Cont.

Phasing out of the MFA benefited IndianPhasing out of the MFA benefited Indiantextile industry substantially.textile industry substantially.

With removal of trade barriers toWith removal of trade barriers toagriculture, exports from the sectoragriculture, exports from the sectorimprove .improve .

Multilateral rules and disciplinesMultilateral rules and disciplinesintroduced reforms in anti dumpingintroduced reforms in anti dumping,subsidies & countervailing measures,subsidies & countervailing measures

safeguards and dispute settlementssafeguards and dispute settlements


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DARK SIDE OF GLOBALIZATIONDARK SIDE OF GLOBALIZATION

AGRICULTUREAGRICULTURE

1)1) Reduction in the EmploymentReduction in the Employment

2)2) CAUSESCAUSES::-- Low investment, imbalance inLow investment, imbalance infertilizer use, low seeds replacement rate,fertilizer use, low seeds replacement rate,a distorted incentive systema distorted incentive system

3)3) starvation & suicide, Import of Wheatstarvation & suicide, Import of Wheatand riseand riseYEAR PEOPLE GDP

1951 72 59

2001 58 24


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PREPRE--POST EFFECT OF GLOBALISATIONPOST EFFECT OF GLOBALISATION

ON INDIAN CHAPTERSON INDIAN CHAPTERSBEFORE GLOBALISATION AFTER GLOBALISATION

1) INTRODUCTION 1) INTRODUCTION

2) AGRICULTURAL PRODUCTION 2) PUBLIC FINANCE

3) INDUSTRIAL PERFORMANCE 3) MONEY & CREDITS

4) INFRASTRUCTURE 4) PRICES & DISTRIBUTION

5) HUMAN RESOURCE 5) BALANCE OF PAYMENT

6) PUBLIC DISTRIBUTION SYSTEM 6) INDUSTRY

7) FISCAL POLICY, GOVT BUDGET 7) AGRICULTURE8) MONETARY & CREDITDEVELOPMENT

8) INFRASTRUCTURE

9) EXTERNAL SECTORS 9) SOCIAL SECTOR

10) PROBLEMS & PROSPECTS 10) PROBLEMS & PROSPECTS


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INCOMEINCOME Distribution ofDistribution of

world GDP, 1992world GDP, 1992Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

Fourth 20% 2.4%

Poorest 20% 0.2% (BY U N DEVELOPMENT PROGRAM)


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TO MAKE GLOBALISATION TOTO MAKE GLOBALISATION TOWORKWORK

Need for the rapid development inNeed for the rapid development ineducation, health, water and sanitation,education, health, water and sanitation,labor and employment.labor and employment.

Education to compete the internationalEducation to compete the internationalstandards.standards.

increase agricultural production and createincrease agricultural production and create

additional employment opportunities inadditional employment opportunities inthe rural parts.the rural parts.

To reduce the growing inequality betweenTo reduce the growing inequality between

urban and rural areas.urban and rural areas.


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IMPACT OF GLOBALISATIONIMPACT OF GLOBALISATION

ON EMPLOYMENT IN INDIAON EMPLOYMENT IN INDIA Overall employment & unemploymentOverall employment & unemployment

Employment in organized sectorEmployment in organized sector

Flexibility of laborsFlexibility of labors

Increasing inequalitiesIncreasing inequalities

Increase in employment in service sectorIncrease in employment in service sector Minimum role of state & maximum role ofMinimum role of state & maximum role of

marketmarket

Lockouts in INDIALockouts in INDIA


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Globalization is a double edged Globalization is a double edged

sword Josephsword Joseph StiglitzStiglitz While globalization offers opportunities forWhile globalization offers opportunities for

unprecedented growth , it is not universal or uniformunprecedented growth , it is not universal or uniform

For liberalizing the global trade regime ,the UruguayFor liberalizing the global trade regime ,the UruguayRound was negotiated and the WTO was born onRound was negotiated and the WTO was born onJanuary 1,1995.January 1,1995.

India is a founding member of WTO since its inception.India is a founding member of WTO since its inception.India has attempted to capture the benefits ofIndia has attempted to capture the benefits ofglobalization fast over the past decade.globalization fast over the past decade.

The most important question is however ,has IndianThe most important question is however ,has Indianeconomy really benefited ?economy really benefited ?


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IndiaIndia co. goingco. going GlobalGlobal

"Toyota Motor haschosen to source fromIndia due to itscompetitive cost ofmanufacture, availabilityof abundant engineeringtalent, and strong

indigenous machinetool."

Buyer Acquisition Price

Reliance Industries Flag Telecom, Bermuda US$ 212m

Tata Motors Daewoo, Korea US$ 118m

Infosys

Technologies

Expert Information Services,

Australia US$

Wockhardt CP Pharmaceuticals, UK US$ 18m

Cadila Health Alpharma SAS, France US$ 5.7m

Hindalco Straits Ply, Australia

US$

56.4m

Wipro NerveWire Inc, USA

US$

18.5m

Aditya Birla Dashiqiao Chem, China US$ 8.5m

United Phosphorus Oryzalin Herbicide, USA

US$

21.3m


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globalisation –impcts on indian economy

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