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Globalization and the Indian economy UPSC |Contemporary Issues | Geography of India

What is globalization? 

  • Today, most regions and countries of the world are getting interconnected( for example, recently RECP trade group) interconnection has many dimensions such as cultural, political, social, and economic.
  • In economic terms, Globalization can be defined as integration between countries through foreign trade and foreign investment led by Multi-National companies (MNCs). It leads to the integration of production and market.

The following factors facilitate globalization:

  • Rapid improvement in technology:
    • Improvement in transport and communication. Faster delivery of goods and services at a lower cost.
  • Liberalization of trade and investment by removing trade barriers.
  • Pressure from the international organization such as WTO( World trade organization)

Impacts of Globalization on the Indian Economy:

  • Positive outcomes
  • Negative outcomes

The positive outcome of Globalization:

Free flow movement :

  • More and more goods and services, investment, and technology movement between the countries.
  • More people move for better jobs, health, and education in the countries.

Consumer benefitted:

  • Competition between local and foreign companies leads to cheap and good quality goods and services.
  • The consumer gets greater choices with goods quality leads to rising in a higher standard of living. For example, in the automobile sector, earlier we had a choice only of Ambassador cars, but now we have many.
  • Consumers can get many items that are not produced in India.

Companies benefitted:

  • Local companies are able to get new technology and investment from abroad as a joint venture.
  • Globalization created new opportunities for Indian companies such as IT, call centers, data entry jobs,  administrative work, and engineering.

  • Average GD grew above 7 % after LPG reforms
  • Increase in forex reserve

Negative sides of globalization on the Indian Economy:

  • The gap between the rich and poor increased:
    • Not everyone is benefitted from the same. Educated and skilled people benefitted more than other people.
  • Increase in the trend of contract workers and reduction of job security
  • Many companies shut down which were not able to compete.
  • Indian economy now more dependent on the global economy
  • Shrinking agriculture sector or agriculture sectors, not attached investment from abroad.

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