The term globalization means International
Integration. Globalization is a process through which the diverse world
is unified into a single society. The rapid industrial development,
opening up of economies and the rapid progress of science and technology
has reduced the world into a global village. Though the term
globalization has been used by the economists since 1980's, but the
concept became popular only in the later half of 1980's and 90's. The
formation of General Agreement on Tariffs and Trade (GATT),
International Monetary Fund and the concept of free trade has boosted
globalization.
Globalization in India
India too is no exception to globalization. The Indian economy
witnessed major changes in the 90's. The new economic reform was known
as Liberalization, Privatizations and Globalization (LPG model). The
main aim was the rapid growth of Indian economy and to make it globally
competitive. The period of economic transition had major impact on the
economic development in all the major sectors. The Indian economy was in
major crisis in 1991 when foreign currency reserves went down to $1
billion and inflation was as high as 17%. Fiscal deficit was also high
and NRI's were not interested in investing in India. Then the following
measures were taken to liberalize and globalize the economy.
Steps Taken to Globalize Indian Economy
Some of the steps taken to liberalize and globalize our economy were:
1. Devaluation: To solve the balance of payment problem Indian
currency were devaluated by 18 to 19%.
2. Disinvestment: To make the LPG model smooth many of the
public sectors were sold to the private sector.
3. Allowing Foreign Direct Investment (FDI): FDI was allowed in
a wide range of sectors such as Insurance (26%), defense industries
(26%) etc.
4. NRI Scheme: The facilities which were available to foreign
investors were also given to NRI's.
Pros and Cons of Globalization
India gained highly from the LPG model as its GDP increased to 9.2%.
Foreign exchange reserves have also gone as high as $180 billion. In
respect of market capitalization, India ranks fourth in the world. But
even after globalization, condition of agriculture has not improved. The
share of agriculture in the GDP is only 22%. The number of landless
families has increased and farmers are still committing suicide. But
seeing the positive effects of globalization, it can be said that very
soon India will overcome these hurdles too and march strongly on its
path of development.
