Impact Of Globalisation On Indian Economy

GLOBALISATION: IT’S IMPACT AND CHALLENGES FOR INDIAN ECONOMY

Abstract:

Now days “Globalisation” is a commonly used term. The word globalisation means integration of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance and people. Also globalisation has brought in new opportunities to developing countries. On the other hand, globalisation has also thrown up new challenges like growing inequality across and within nations. This paper presents the effects of globalisation on Indian Economy. Various sectors of the Indian Economy are considered for the study. Also this paper tries to innumerate the various challenges set by the globalisation for Indian Economy.

Keywords: Globalisation,

In a simple way, it refers to the opening up of the economy for international market by attaining worldwide competitiveness. It means a process of deepening economic integration, increasing economic openness and growing economic interference between countries in the world economy. Globalisation has four parameters.

i) Permitting free flow of goods by removing or reducing trade barriers between the countries. ii) Creating environment for flow of capital between the countries. iii) Allowing free flow of technology transfer. iv) Creating environment for free movement labour between the countries of world.

India is not exception to the policy of globalisation. Many factors like trade deficit, gulf dwindled foreign exchange reserve, gulf war, heavy losses of public sector enterprises, dwindled foreign exchange reserve pushed Indian Economy into deep crisis. Government of India, adopting the policy of liberalisation since 1991 and started the process of dismantling trade barriers, abolishing quantitative restrictions in a phased manner. Exchange rate adjustment and rupee convertibility liberal attitude toward foreign capital and import liberalisation along with economic reforms are other important measures which leads to globalisation and integrate the Indian Economy with global economy. Globalisation in India has a mixed

Impact on Industrial Sector: As per recently released national accounts data, industrial growth was much better in 2012-13 and 2013-14 at 2.4% and 4.5% respectively than earlier years. The industrial growth picture suggests that industrial production which had slowed down since 2011-12, reversed the trend in 2014-15. Total FDI inflows from April 2000 to November 2014 were US$ 350.9 billion. Services, construction, telecommunications, computer software and hardware, drugs and pharmaceuticals, automobile industry, chemicals and power have attracted a disproportionality high share of total inflows.

Impact on Service Sector: India’s services sector remains the major driver of economic growth contributing 72.4% of GDP growth in 2014-15. Services sector growth has increased from 8.0% in 2012-13 to 9.1% in 2013-14 and further to 10.6% in 2014-15. This is mainly due to growth acceleration in financial, real estate and professional services. The services sector is also the dominant sector in most of the states of India with a more than 40% share in the gross state domestic product