Reflection Paper on

“Is Globalization good for Indian Economy”

Submitted By Submitted to

Aarav Pandya Prof. Shashwat Tiwari

1600250C203 BML Munjal University
CSE-2
Contents
What is Globalization? ....................................................................................... 3
Reforms leading to globalization in India ........................................................... 3
Impact of globalization on Indian society ........................................................... 4
Economic ....................................................................................................... 4
Cultural .......................................................................................................... 5
Political .......................................................................................................... 6
Conclusion ......................................................................................................... 6
Bibliography ....................................................................................................... 7
What is Globalization?

Globalization is often defined as the measure of interaction in economic and

political affairs between different geographically or culturally or otherwise
distinct entities. More generally and mis conceptually, it is regarded as
increase of trade with different countries.
Perhaps the most general and easy to understand definitions have been given
out by Swedish journalist Thomas Larsson as:
“Globalization is the process of world shrinkage, of distances getting shorter,
things moving closer. It pertains to the increasing ease with which somebody
on one side of the world can interact, to mutual benefit, with somebody on the
other side of the world.” (Larsson, 2001)
Globalization occurs at each and every level of human interaction. It relates
with economic, political, cultural, informational, and even environmental.
Modern India has seen an extensive growth in its interaction with the global
world ever since 1991 reforms to liberalize the economy and open up trade
possibilities with the outside world. In the global scene, India has grown from a
3.9% of share in the global word GDP in 1996 to 7.45% in 2017. (World
Economic Outlook Database, 2017)
This paper takes a look at some of the factual impacts observed on the Indian
society combined with my personal opinion.

Reforms leading to globalization in India

1. 1991 reforms are the turning point in India’s economic history. It put an
end to license backed businesses and opened up the market to foreign
investors. It was the result of the condition on which $500mn aid was
taken from the IMF to bail the Indian government out of a financial
crisis.
2. After the 1991 reforms, government started to privatize its under-
performing businesses. Airlines, railways, communication saw immense
growth later on.
3. In 2012, FDI rate of 51% was approved in the retail sector.
4. In 2015, FDI rate of 49% was approved in the insurance sector.
5. In 2017, Global Goods and Services (GST) tax reforms were introduced in
the country which allowed to unify the various forms of taxes levied on
 different stages of production. It increased the ease of doing business
and made India a lucrative market to do business in.
6. Apart from reforms, initiatives have been taken by governments to
increase local production and export rates. A recent initiative, Make in
India, launched in Sept 2014 has been a major boost to local industries.
After the launch India received $230 Billion worth of foreign investment
in the time period (September 2014 to February 2016). As per current
policy, 25 sectors have 100% FDI allowance with exceptions in space,
defense and media.
The world bank’s ease of doing business report 2019 has reported a jump of
23 places to place India at 77th position in ease of doing business among
190 countries. The reforms and initiatives have made it easier for foreign
companies to invest into India. (India Improves Rank by 23 Positions in Ease
of Doing Business , 2018)

Impact of globalization on Indian society

Economic

Following the reforms, the Indian economy has boosted. Before 1991 reforms
India averaged about 2% annual GDP growth. Pro-1991 era saw the growth
rate increase to about 7.5% and even reaching as high as 9.6% in 2006 making
India as the 2nd fastest growing country in the world, behind only to China. The
per capita GDP gives a better picture than the overall. The pcGDP has
increased from $1,255 in 1978 to $3,452 in 2005 and finally to $3900 in 2012.
Some facts and figures to this boost are:
Year Ratio of Ratio of Foreign Foreign Ratio of
Trade Current Exchange Exchange Trade
Account of Account Reserves Reserves (Goods and
Deficit to Deficit to Million $ (Months of Services) to
GDP GDP (at the end Imports GDP
of fiscal Equivalent)
year)
 1990/91 -2.89 -2.96 5834 2.04 14.13
1991/92 -0.96 -0.33 9220 2.92 14.93
1995/96 -3.10 -1.60 21687 5.13 22.29
2000/01 -2.61 -0.53 42281 6.12 23.77
2005/06 -6.22 -1.18 151622 8.52 36.47
2010/11 -7.46 -2.82 304818 7.76 42.04
2015/16 -6.21 -1.05 360176 6.61 36.87
Source: RBI, Handbook of Statistics on Indian Economy, various Issues; World
Bank, World Development Indicators, various issues.
While the inflow of foreign reserves has certainly increased, job opportunities
have also increased in technology and business sectors. The annual job growth
rate is measured to be at 2.5%. FDI has increased from $132 million in 1991-92
to $22bn in just the first half of 2018.
Statistics show a very good picture of economic boom and even predicts for
more growth in the coming decade. Several economic research groups have
claimed India might achieve a double figure growth rate in the coming future.
India’s involvement in global trade is set to only increase.
Cultural
With the rapid development in communication technologies in late 20th
century, the gap between different communities have decreased. Every person
on the global scenario now finds a platform in the form of internet and
telephony to express himself. In this increasingly connected world, India is not
behind. As of 2016, 26% of Indian population is an internet user on a daily
basis. With introduction of cheap plans, Indians are now exploring the global
information at an exponential rate.
Cultural globalization in India has happened on many layers. While western
companies in clothing, automobiles, technology, groceries and basic
necessities have invaded the generic Indian’s shopping list, entertainment
forms in the shape of movies, music, dance and literature have invaded their
time spending habits. India is a massive consumer market and they are
consuming everything that is thrown at them.
Certain groups in India claim that due to this “westernization” of the daily
lifestyle, India is losing its identity and culture. While it is a fact that the
lifestyle in India is slowly changing, but attributing it to a culture of certain
community is wrong in my opinion. I think that India is developing its own
culture. By blending the “modern” and the “traditional”, we are creating
something new. We are taking the best of both worlds and creating our
identity at the global stage. We are adopting the technology of the western
world to make ours and others life easy, while also following our moral and
values that define us to be Indian and showing the world a new way to
implement the technology. While the debate of whether cultural globalization
is good or bad will always be ongoing, it itself is unstoppable and will always
happen due to human curiosity.
Political
Political globalization involves the worldwide growth of politics and
involvement in its matters. India participates in a lot of supranational
organizations and with the aid of other partner countries focuses on issues like
terrorism, environment, economics, infrastructure etc. Some of the notable
organizations are United Nations (UN), BRICS, Commonwealth, SAARC etc.
Major focus of India in participating in world economics is to combat terrorism
and external involvement in its state affairs by foreign countries for which it
uses the global platform to advocate its stand, combating environmental
pollution for which it receives financial aid from a multitude of countries under
Paris Climate Agreement which is an agreement under United Nations
Framework Convention on Climate Change.
India is also trying to setup its own cross-oceans fibers and its participation in
BRICS enables this. It’s also providing humanitarian aid in regions of crisis and
improving its global image. Current prime minister Narendra Modi installed a
new foreign policy under which he made extensive agreements with foreign
governments not only for financial investments, but technology sharing and
improving education standards in the country.

Conclusion

With the advent of globalization, India has seen a tectonic shift in economic,
cultural and political scene. The economy is booming and it is expected that
the country will reach double figure growth rate by the end of the next decade.
We are experiencing increased investments and some local industries are
thriving because of the intake of cash and technology while some other are
facing stiff competition. Jobs are increasing and so is the average income.
Lifestyle of people is becoming better and consumer choice is increasing
thanks to multiple brands competing for the same products. The shift from a
closed country to an open market has been for good.

Bibliography

India Improves Rank by 23 Positions in Ease of Doing Business . (2018).

Retrieved from Press Information Bureau:
http://pib.nic.in/newsite/PrintRelease.aspx?relid=184513
Larsson, T. (2001). The Race to the Top: The Real Story of Globalization. CATO
Institute.
World Economic Outlook Database. (2017, July). Retrieved from Internation
Monetary Fund:
https://www.imf.org/external/pubs/ft/weo/2017/01/weodata/index.as
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