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Compiled By :
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Aman Agarwal
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Group : G-37
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B.Com (x) 1st year
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   is the abstract phenomenon of various processes that has resulted in more
interconnections of political, socio -cultural and eas an uneven process that strengthens the
dependency of major economies on each other while at the same time increasing the
distance between economies that depart from the major economies of the world.

The implications of the different effects of globalization on different countries show the multi -
faceted effects of the similar processes operating in the different countries that ar e related
through globalization.

Globalization, as a term, is very often used to refer to economic globalization, that is

integration of national economies into the international economy through trade, foreign direct
investment, capital flows, migration, and spread of technology.

The market structure that is typically associated with the process of globalization is market
liberalization while recent World Bank policies seemed to suggest that it is moving towards
neo-liberalism.

Globalization can also be defined as internationalism, however such usage is typically

incorrect as 'global' implies 'one world' as a single unit, while 'international' (between nations)
recognizes that different peoples, cultures, languages, nations, borders, economies, and
ecosystems exist.

The difference between internationalization and globalization is that the former does not
exhibit the interconnected flows that affects different parts of the world one can observe in a
globalized section of the world.
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   is the incidence or process of transferring ownership of business from the
public sector (government) to the private sector (business). In a broader sense, privatization
refers to transfer of any government function to the private sector including governm ental
functions like revenue collection and law enforcement.

The term 'Privatization' also has been used to describe an unrelated, nongovernmental
interaction involving the buyout, by the majority owner, of all shares of a public corporation or
holding company's stock, privatizing a publicly traded stock.

In general, 
   (or liberalisation) refers to a relaxation of previous government
restrictions, usually in areas of social or economic policy. Liberalization of autocratic regimes
may precede democratization (or not, as in the case of the Prague Spring).

In the arena of social policy it may refer to a relaxation of laws restricting for example
divorce, abortion, homosexuality or drugs.

Most often, the term is used to refer to economic libera lization, especially trade liberalization
or capitalmarket liberalization .

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The word "globalization" can be traced back to 1944 . The term has been used by
economists since 1981; however, its concepts did not permeate popular consciousness until
the later half of the 1990

The term globalization encompasses a range of social, political, and economic changes.
Within the section Defining Globalization, we provide an introduction to the key debates. The
materials ask what is new, what drives the process, how it changes politics, and how it
affects global institutions like the UN.

Globalization expands and accelerates the exchange of ideas and commodities over vast
distances. It is common to discuss the phenomenon in highly generaliz ed terms, but
globalization's impacts are often best understood at the local level. Cases of Globalization
explore the various manifestations of interconnectedness in the world, noting how
globalization affects real people and places.

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ne of the main aspects of globalization is foreign investment. India today has emerged as
one of the perfect markets for foreign investors due to its vast market base. More and more
foreign companies are investing in the Indian market to get more returns. The foreign
institutional investments ( II) amounts to around US$ 10 billion in Y 2008 -09, while the rate
of oreign direct investments ( DI) has grown around 8 .1% in 2009 to US$ 46. billion from
US$ 2 .1 billion (2008).

Globalisation has created a very different competitive environment for Indian industry than
existed in 1991, which has led to significant changes. Indian companies have upgraded their
technology and expanded to more efficient scales of production. They have also res tructured
through mergers and ac uisitions and refocused their activities to concentrate on areas of
competence. New dynamic firms have displaced older and less dynamic ones: of the top 100
companies ranked by market capitalization in 1991, about half are no longer in this group.
oreign investment inflows increased from virtually nothing in 1991 to about 0. percent of
GDP. Although this figure remains much below the levels of foreign direct investment in
many emerging market countries (not to mention 4 pe rcent of GDP in China), the change
from the pre-reform situation is impressive. The presence of foreign -owned firms and their
products in the domestic market is evident and has added greatly to the pressure to improve
uality.

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The economic liberalisation in India refers to ongoing economic reforms in India that started
in 1991. After Independence in 1947, India adhered to socialist policies. In the 1980s, Prime
Minister ajiv Gandhi initiated some ref orms. In 1991, after the International Monetary und
(IM ) had bailed out the bankrupt state, the government of P. V. Narasimha ao and his
finance minister Manmohan Singh s tarted breakthrough reforms. The new neo-liberal policies
included opening for inter national trade and investment, deregulation, initiation of
privatization, tax reforms, and inflation -controlling measures. The overall direction of
liberalisation has since remained the same, irrespective of the ruling party, although no party
has yet tried to take on powerful lobbies such as the trade unions and farmers, or
contentious issues such as reforming labour laws and redu cing agricultural subsidies. The
main objective of the government was to transform the economic system from socialism to
capitalism so as to achieve high economic growth and industrialize the nation for the well -
being of Indian citizens. Today India is mainly chara cterized as a market economy.

As of 2009, about 300 million people ²e uivalent to the entire population of the United
States²have escaped extreme poverty.[6] The fruits of liberalisation reached their peak in
2007, when India recorded its hi ghest GDP growth rate of 9%. With this, India became the
second fastest growing major economy in t he world, next only to China. An rganisation for
Economic Co-operation and Development ( ECD) report states that the average growth rate
7. % will double the average income in a decade, and more ref orms would speed up the
pace.

Indian government coalitions have been advised to continue libe ralisation. India grows at
slower pace than China, which has been liberali sing its economy since 1978. McKinsey
states that removing main obstacles "would free India¶s economy to grow as fast as Chi na¶s,
at 10 percent a year".

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In 1991 our foreign exchange reserve was only 1 billion doller of Import ,GDP growth was
standstill ,economy was in sambles ,No private entrepreneurs were allowed to enter in G V
controlled Industries .India needed desperately developmen ts in all sectors .License raj was
controlling our all growth .Capacity enhansements in all core sectors were stoped . ur Gold
was put to security to foreign countries for money to save India .America was about to kill
economically .No jobs,no telephone,no housing ,virtually no decvelopment . ur present PM
Dr Manmohan Singh was M in 1991 and amids lot of criticism with in party and opposition
,Dr Singh with great support of late PM P.V.Narsimha ao even against the wishes of Sonia
Gandhi ,Chidambaram prese nted a great budget of economic liberisation .This liberisation
was duly supported by the then opposition leader ,another great man Atal Behari Bajpai of
BJP .With in 4 years of liberisation Indian foreign exchange reserve rose to 140 billion doller
,Private entrepreneurship started coming up in a big way in Steel,IT
, oads,infrastructures,housing,telephone and so many sectors and created a base for
further developments .Now after 17 years of liberisation ,you can see the developments in all
the sectors where every men in India 3 have mobile phone ,300 doller foreign exchange
reserve ,GDP growth is 9 % per annum .Despite world recession ,Indian economy stood
resolutely against any odd . nly regret is India could not be free from ugly corruption in
everywhere

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The public sector accounts for about 3 percent of industrial value added in India, but
although privatization has been a prominent component of economic reforms in many
countries, India has been ambivalent on the subject until very recently. Initially, the
government adopted a limited approach of selling a minority stake in public sector
enterprises while retaining management control with the government, a policy described as
³disinvestment´ to distinguish it from privatization.
The principal motivation was to mobilize revenue for the budget, though there was some
expectation that private shareholders would increase the commercial orientation of public
sector enterprises. This policy had very limited success. Disinvestment receipts were
consistently below budget expectations and the average realization in the first five years was
less than 0.2 percent of GDP compared with an average of 1.7 percent in seventeen
countries reported in a recent study (see Davis et.al. 2000). There was cl early limited
appetite for purchasing shares in public sector companies in which government remained in
control of management. c
In 1998, the government announced its willingness to reduce its shareholding to 26 percent
and to transfer management control to private stakeholders purchasing a substantial stake in
all central public sector enterprises except in strategic areas.The first such privatization
occurred in 1999, when 74 percent of the e uity of Modern oods India Ltd. (a public sector
bread-making company with 2000 employees), was sold with full management control to
Hindustan Lever, an Indian subsidiary of the Anglo -Dutch multinational Unilever. This was
followed by several similar sales with transfer of management: BALC , an aluminium
company; Hindustan Zinc; Computer Maintenance Corporation; Lagan Jute Machinery
Manufacturing Company; several hotels; VSNL, which was until recently the monopoly
service supplier for international telecommunications; IPCL, a major petrochemicals unit and
Maruti Udyog, India¶s largest automobile producer which was a joint venture with Suzuki
Corporation which has now ac uired full managerial controls. c
The privatization of Modern oods and BALC generated some controversy, not so much
on the principle of privatization, bu t on the transparency of the bidding process and the
fairness of the price realized. Subse uent sales have been much less problematic and
although the policy continues to be criticized by the unions, it appears to have been
accepted by the public, especial ly for public sector enterprises that are making losses or not
doing well. However, there is little public support for selling public sector enterprises that are
making large profits such as those in the petroleum and domestic telecommunications
sectors, although these are precisely the companies where privatization can generate large
revenues. These companies are unlikely to be privatized in the near future, but even so,
there are several companies in the pipeline for privatization which are likely to be s old and
this will reduce resistance to privatizing profit -making companies. c
An important recent innovation, which may increase public acceptance of privatization, is the
decision to earmark the proceeds of privatization to finance additional expenditure on social
sector development and for retirement of public debt. Privatization is clearly not a permanent
source of revenue, but it can help fill critical gaps in the next five to ten years while longer
term solutions to the fiscal problem are attempted. Many states have also started privatizing
state level public sector enterprises. These are mostly loss making enterprises and are
unlikely to yield significant receipts but privatization will eliminate the recurring burden of
financing losses. c
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Globalization and liberalization has greatly influenced the Indian economy and made it a
huge consumer market. Today, most of the economic changes in the country are based on
the demand supply cycle and other economic factors. Today, India is the world¶s 1 2th largest
economy in terms of market exchange rate and 4th largest in terms of the Purchasing Power
Parity. According to a report by the World Bank, the Indian market is expected to grow at
around 8% in the year 2010.

Globalization and liberalization ha s also made a positive impact on various important

economic segments. Today, the service sectors, industrial sectors and the agriculture sector
have really grown to a great extent. Around 4% of the annual Gross Domestic Product
(GDP) of India comes from t he service industry while the industrial and agriculture sector
contributes around 29% and 17% respectively. With the improvement of the market, more
and more new sectors are coming up and reaping profits such as IT services, chemical,
textiles, cement ind ustry and so on. With the increase in the supply level, the rate of
employment is also increasing considerably.

There has been an improvement in the manufacturing sector as well which grew from 8.98%
in 200 to around 12%. The communication segment has gro wn up to around 16.64%. The
condition is expected to improve further with more demand and increase in customer base.
The yearly growth of the industrial sector has been around 6.8 % which will rise more in the
future. India is one of the well known industr ial markets in the Asia -Pacific region.

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When privatisation is achieved, India will benefit because the private buyer will produce
more GDP using the same resources, and the flow of budgetary support to these firms will
cease. The government should be happy to get these firms out of its hands with negative
bids.

The next and most interesting category comprises industries like telecom and airlines. In
these areas, India has witnessed the dramatic benefits that come from the entry of private
players.

Telecom and airline services in India are now dramatically improved, if not yet up to world -
class, by changing rules in a way that permitted limited entry to domestic and foreign
players. The privatisation of VSNL [ Get Quote ] was critically important because it was part
of the opening up of the ILD sector to competition: the government would arguably have
been more tardy in opening up if it had a vested interest through ownership of VSNL.

However, the key innovation , which broke with the stasis of socialism was opening up entry
barriers - not privatisation.In both sectors the full benefits from permitting foreign
competitors, which are only present in very muted fashion, remain to be harnessed. While
Spicejet is a good airline, there are bigger benefits waiting to be obtained by having
domestic flights run by Lufthansa and Singapore Airlines. In both sectors, the defining issue
in policy is the removal of entry barriers, not privatisation.

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The phenomenon of sweeping privatization as a µstrategic instrument of globalization of
capital¶. Using a political economy analysis, it argues that, among other things, but most
importantly, privatization should be understood in a direct correlation with the globalization of
capital under late or corporate capitalism. It argues that privatization has been conceived by
design, not by chance and haphazard events, and that its implementation has been pursued
purposely, deliberately and vigorously around the world to accomplish the objectives of the
globalization of capital.

This has been happening despite evidence of extremely successful experiences with public
enterprise management and government -owned enterprises worldwide. The article also
treats the phenomenon of globalization as a globally transcending process towards a more
rapid accumulation of surplus value of advance or corporate capitalism; hence a change
within the continuity of the process of surplus accumulation by global capitalism. To
understand this direct relationship between change and continuity and between privatization
and globalization, we must first understand what globalization means, and then explain its
corollary strategy of privatization worldwide.

In India the overall direction of l iberalisation has remained the same, irrespective of the
ruling party, although no party has yet tried to take on powerful lobbies such as the trade
unions and farmers, or contentious issues such as reforming labour laws and
reducing agricultural subsidies. The main objective of the government was to transform
the economic system from socialism to capitalism so as to achieve high economic
growth and industrialize the nation for the well -being of Indian citizens. Today India is mainly
characterized as a market economy.

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