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Critical Evaluation of

Globalization in IndiaAravind

Preeti Singh

Neha Sharma

Roshan Kumar

Priyanka SinghBidisha Goswami

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What is Globalization?

Globalization has made the world flat as

evidenced by the growing service sector

within India

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Globalization in India

The idea behind the new economic model, LPG

was to make INDIA one of the fastest growing

economies of the world.

The Indian economy was in major crisis in 1991

foreign currency reserves went down to $1 billion

inflation was as high as 17%

Fiscal deficit was also high and NRI's were notinterested in investing in India

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Information Technologys Impact

India produces about 100,000 new engineers a year.

About 3 times the number of the U.S.

But still only 1.6 million people are employed in IT

and Service Center jobs.

Key centers include Bangalore, New Delhi,Gurgaon, and Hyderabad.

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U.S. Companies in India

IT Services-design, support, and or production

Adobe, Cisco Systems, Dell, Google, Hewlett-

Packard, General Motors, IBM, Intel, Microsoft,

Motorola, Texas Instruments, Yahoo

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Disparate Taxation

Only 35 million people pay income tax to the federal

government.

Formal Sector

Over 1 billion pay NO federal taxes!

Informal Sector

Largely agricultural or village based

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Growing Middle Class

Over 200 million people falling into a growing

middle class of consumers.

Technically defined as those earning between$4000-$21,000 a year.

This actually only accounts for 60 M.

Middle class-ness seems to include those going

from living on $5 a day to $10.

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Education is far from Universal

Compulsory and free education (6-14 yrs) guaranteed

with theRight to Education Bill 2005

Virtually un-enforceable

Literacy rate of India stands at 59%

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Realitys Impact

Economic conditionsnecessitate children

as day workers in

cottage industries or

in agricultural.

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Lacking Infrastructure

Major cities are not connected at this point by a

highway system.

Golden Quadrilateral Highway Project will

eventually connect New Delhi-Mumbai-Bangalore-

Chennai-Kolkata. - $12 billion

Currently only 3,700 miles of highways!!!

40% of farm produce goes to waste as a result of poor

transportation

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Scheduled Improvements

New $430 million Bangalore International Airport

to be completed by April 2008. (European built

and operated)

Roads to the airport are uncertain

Vallapardam Ship Terminal in Kochi (southwest

coast of Kerala) to be completed by Dubais DP

World at a cost of $555 million

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The Caste System

Indias source of strength and tragic weakness!

Though outlawed in the constitution; it remains a

strong force controlling upward mobility

Changing laws is easier than changing minds

Compare it to the Civil rights movement in the

United States

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Steps Taken to Globalize Indian Economy

The following measures were taken to liberalize and globalize the

economy.

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.

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Demerits

The outsourcing of jobs to developing countries hasresulted in loss of jobs in developed countries.

There is a greater threat of spread of communicablediseases.

There is an underlying threat of multinationalcorporations with immense power ruling the globe.

For smaller developing nations at the receiving end,it could indirectly lead to a subtle form of

colonization.

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Conclusion

India gained highly from the LPG model

GDP increased to 9.7% in 2007-2008

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 is only 17%

But seeing the positive effects of globalization, it can be

said that very soon India will overcome these hurdles too.

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