Effects of Globalization on Indian Economy
1. Liberalization– main features of liberalization policy were:- (i) General reduction in role of state in economic governance. (ii) Withdrawal by state from many economic sectors and its replacement by the private sectors. (iii) Decline in the public sector spending in basic and key industries like banking, insurance and other PSUs. (iv) Decline in the state’s role in provision of public social services like education , housing and health.
2. Privatization– It largely means selling of publicly owned assets to private owners. Indian government adopted various measures such as abolition of license raj, scrapping of MRTP and FERA, disinvestment in PSU etc with the aim of privatization of Indian economy.
3. Globalization of Financial Market– There has been progressive liberalization of controls on financial flows and market leading to increase FDI, FII, etc. It centre around the movement of capital , of which FDI is major form.
4. Role of WTO as International Trade Regulatory Body– India’s increase participation in rule based system in the governance of international trade is the result of its increased foreign trade. It helped to ensure more predictability in trade rules and benefits of features like MFN/ National Treatement etc for its export.
5. Increased penetration of MNCs and TNCs– It results into creation of more job opportunities, improved technologies and improved revenue to state (by way of Corporate taxes etc).
6. Infrastructure Development– Globalization warranted for the world countries, faster and large scale development of infrastructure. It was to ensure and facilitate industries and trade in order to become more competitive in world market.
7. Expansion of Information and Communication Technology– Rapid development of I.T. in different areas of governance, economy, education, banking, etc has improved productivity. Augmentation of I.T. also results in phenomenal growth of “outsourcing” of services. Eg BPO, KPO, back office operations etc.