Essay on the globalization of Indian Economy

The concept of globalisation was first introduced by Adam Smith, the father of modern economics in the year 1776 through the book titled, “Wealth of the Nations”, and since then the globalisation has been liked yo-yo.

In the days of yore, British, Chinese, Indians and Mughals were involved in global business. The Chinese used to sell silk to the world and buy dynamites. The British used to come to India to buy condiments and in return India used to buy ammunition.

So, the point is that - globalisation is not a new concept. In the good old days, globalisation even more prevalent because Indian spices, silk handicrafts, gold, sliver jewellery, etc., were ubiquitous everywhere in Europea.

In the past globalisation meant quid pro quo i.e., one thing for another. But in the early 20thcentury, everything changed when France introduced the system of protectionism and every nation began to create boundaries.

Protectionism destroyed globalisation in total. But again in the late 20th century the winds of globalisation began to blow. Dr. Allen Green Span as well as Dr. Paul Walker began to egg the nation in favour of globalisation and it was July 1, 1991, when India became the part and parcel of globalisation and today every nation, which happens to be a pursuer of globlisation derives plenty of basketfuls of fruits.

The word "goalisation", which connotes where all the nations join their hands d create a kind of synergy to do business or any commercial, cultural or educational activities, in which every participant nation should beneficiary. Globalisation in a nutshell is "one for all and all for no. The purpose behind globalisation has been to open the portals for each and every nation in different fields. A nation can buy from other nation and sell to other nation.

At the time when many analysts predict a booming future for Indian economy India remains hesitant to fully embrace globalisation India and its neighbour China have been tagged as the world's next economic super powers. Yet while China industriously makes its economy hospitable to foreign capital, Indian reformers continue to grapple with an intransigent domestic opposition to liberalization. Such are the pitfalls of Indian democracy.

"As Nobel Laureate Amartya Sen and many other experts ha pointed out that India, as a geographical, politico-cultural entity has bee interacting with the outside world throughout history and still continues to do so.

India has to adapt, assimilate and contribute." There are numerous experts to tell all who listen, that globalisation opens a tremendous potential for growth and poverty alleviation, and an outward looking model frees up entrepreneurs to innovate and invest.

Globalisation means many things to the hoi polloi, particularly in India, which is the to probably the widest range of anti-globalisation groups in the world Indian economy needs globalisation because it can reduce the poverty also increase India's forex level which means Indian can manage economic crisis through it.

During 1990's India was passing through mammoth economic crisis. The economic crisis of 1991 proved a real turning point for the Indian economy. Indian ambivalence towards markets and free trade has been evident in the way it has dealt with Bretton Woods institutions.

The World Bank and the International Monetary Fund were created with the fundamental premise that protecting and expanding the system of liberal international trade would help avert a third major global conflict. India has been a vibrant participant in these institutions, not only as a major client, but also through its brilliant staff members and its commending executive directors.

Since the days of 1991, India has come a long way. It has comfortable foreign exchange reserves (despite high levels of domestic debt); booming software and services export market, and a burgeoning knowledge economic Clearly, India has tremendous opportunities to benefit from globalisation but there is also consensus that the challenges confronting In development are substantial, even daunting. India remains handicapped by enormous infrastructure and labour and capital constraints.

"Everyone is talking the talk, but not everyone is walking walk". This statement was made by Planning Commission De Chairman, Dr. Montek Singh Ahluwalia, in the closing remarks of his talk,gIobalisation and Indian Economy." Dr. Ahluwalia suggested that most people in India now agree in India's greater participation in the global economy, but more needs to be done to achieve that objective. Even so, there have have been significant changes made, especially compared to the 1980s, when there were much talk of liberalization, but no action.

Before the 1990, India's economic model was dominated by a large public sector, which favoured partitions for domestic industry. There was distrust for private sector and suspicion of foreign investment, with extremely high taxation levels on imported goods and a different business environment for foreign business interests.

However, a balance of payment crisis in —rushed India to seek loans from the International Monetary Fund and liberalise the economy. Dr. Ahulwalia stressed that this economic liberalization led to a rapid paradigmatic shift that significantly reduced suspicion of the private sector. Dr. Ahluwalia argued that India has undoubtedly benefited from the 1990s reforms. His argument was substantiated by two major facts: (1) The reduction of Indian poverty rates in the 90s and (2) India's ranking second next to China, in comparison with growth rates for large developing countries.

India, A Hub for Globalisation", is timely. India fever has caught on in the world's investment community. Nowadays the Western press rarely mentions that certified growth miracle, that leviathan of global trade, Car: without adding India".

India and China are amongst the most pro-competition countries. India produces bountiful of software engineers and software analysts, while China supplies all kinds of equipments. So, as per the current scenario, the conclusion has been derived, "India as back office supplier, China as front office supplier." Globalisation involves FDIs & FIIs.

FDIs. India is the 'best destination' for Foreign Direct Investment (FDI) and joint ventures, claims country's Commerce and Industry Minister Mr. kamal Nath. Addressing an audience of United States investors at  the focus  India Show in Chicago recently, he said that India had emerged as an across the board low cost base, attractive enough to multinationals, to relocate in the country More than one hundred of the Fortune 500 companies have a presence in India, as compared to only 33 in China.

Reiterating that India promises high returns on investments, Mr. Kamal Kar said that repatriation of profits was freely permitted, while according to a survey conducted by the Federation of Indian Chambers of Commerce  and industry (FICCI) a few months ago, 70 percent of foreign investors were making profit and another 12 percent were breaking even. These figures would have since improved further, adding that FDI policies in India were among the most liberal, lucrative and attractive in emerging economics.

Mr. Kamal Nath listed out the policy initiatives taken by the Government in specific sectors such as telecom, ports, airports, railways, roads, and energy construction development with a view to improving competitiveness of the Indian economy.

Further, lucrative investment opportunities were being offered to investors through tax incentives and customs duty concessions for import of plant and machinery needed for the projects. The Special Economic Zone (SEZ) Act was also in place facilitate this process.

India has an open system with social and politic safety valves, and a regulatory mechanism that provides comfort, Ion term stability and security to the foreign investors. FDI plays an important role in the long-term economic development of the country, not only as a  source of capital but also for enhancing competitiveness of the domes economy through transfer of technology, strengthening infrastructure raising productivity and generating new employment opportunity.

According to a survey by the global consultancy firm KMPG, India has emerged as the top FDI destination on the basis of higher returns - investment that foreign investors earn in the country compared to the other emerging markets like China, Brazil and Mexico.

The Foreign Institutional Investment flows to India are very high India is believed to be a good investment destination among the Europe investors, despite political uncertainty, bureaucratic hassles, shortage power and infrastructural deficiencies.

India presents a vast potential overseas investment and is actively encouraging the entrance of foreign players into the market. A report published by Goldman Sachs shows that India has grabbed the major share of the $1 billion of investment made by Foreign Institutional Investors (FIIs) in emerging market; the last week of July 2006.

Due to globalisation, the Gross.Domestic Product (GDP) increase with meteoric speed. GDP is the value of all goods and services produced in a country during a given period. Today, India's rank is 10th in the top ten economies (GDP). The USA is numero uno in this. India is 5th largest economy in the world (ranking above France, Italy, the United Kingdom and Russia)

Indian exports grew by 27.08 percent during April 2006, while imports registered a growth of 20.52 percent during the same year. The exports of India are increasing due to globalisation.

Commerce and Industry Minister Mr. Kamal Nath announced fresh trade initiatives to give incentives to make a India global hut gems and jewellery as well as auto components and to tailor expo; create more jobs. Mr. Kamal Nath launched two new schemes aimed creating more jobs in rural and semi-urban areas with diversifying trade basket to emerging markets of Africa and Latin America.

To take the benefits of foreign trade to rural areas, Krishi Vishesh Yojana is being expanded to include village and cottage industries while being renamed as the Krishi Vishesh Upaj Aur Gram Udyog Yojana. Now in rural  areas, denizens can also get benefit of the gloabalisation can get employment also.

Today, the foreign universities and different educational institutions are establishing their branches in other nations. Due to gloablisation in — a student gets foreign education in his own country. India has also lunched many sub-centres of different educational institutions in other countries. The Indian Institutes of Management (IIMs) are its best

The RBI recently formed a six-member committee headed by former Deputy Governor Mr. S.S. Tarapore to prepare a roadmap towards capital account convertibility (CAC), the first step towards making the Rupee fully convertible. The committee was formed to review the experience of measures of capital account liberalization in India, examine: implications of fuller capital account convertibility on monetary and exchange rate management and provide a comprehensive medium term operational framework. The committee has already submitted its report.

Now a days globalisation has become laissez faire i.e., unrestricted commerce. Today, Indian economy is burgeoning due to globalisation, ergo contribution of globalisation in the progress of Indian economy crucial.