ACKNOWLEDGEMENT

INTRODUCTIONThe term globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge. Ideally, it also contains free inter-country movement of labour. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.BEFORE GLOBALISATION:-

PHASE 1(1947).NO INDUSTRALISIM

UNEMPLOYEMENT

NO DEVOLPMENT

NO MONEY

POVERTY

PHASE 2(1948-1990)

APM ACT: - Administered Pricing Mechanism { government control on price of the products.}

QUOTA: - the quantity of the product will also decide by the government(how many number of units company has to produced)

LICENCSE: - they need License to start the businessNO INNOVATIONS

NO COMPETETION

MRTP ACT:-

1. NO EXPANSION

2. NO ACQUISIATION

3. NO MERGERS

CLOSED ECONOMY:-

1. NO IMPORT EXPORT2. NO FDI (Foreign Direct Investment) OR FII (Foreign Institution Investment)

AFTER GLOBALISATION:-In 1990 After Globalization there were the quota is not decided more competition new innovations are also coming due to competition increased in the market.

Import and exports are also allowed the FDI And FII were also allowed that means indirectly economy is opened and GDP Is also increasing fast as compare to that economy. WHAT IS GLOBALISATIONPeople around the globe are more connected to each other than ever before. Information and money flow more quickly than ever. Goods and services produced in one part of the world are increasingly available in all parts of the world. International travel is more frequent. International communication is commonplace. This phenomenon has been titled "globalization."

The concept of globalization can be traced to the phenomenon of nation states. In the distant past, there were just human communities. For much of human history, most people remained confined to their communities, villages or local areas. With developments in communication and economic activity, it has progressively become easier to move from the local to the regional and then from the regional to the national level, and finally across nations.

IMPACT ON INDIA

The Important Reform Measures (Step towards Globalization)

Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capital was flying out of the country and we were close to defaulting on loans. Along with these bottlenecks at home, many unforeseeable changes swept the economies of nations in Western and Eastern Europe, South East Asia, Latin America and elsewhere, around the same time. These were the economic compulsions at home and abroad that called for a complete overhauling of our economic policies and programs. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included the following: Devaluation: The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against major currencies in the international foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis Disinvestment: In order to make the process of globalization smooth, privatization and liberalization policies are moving along as well. Under the privatization scheme, most of the public sector undertakings have been/ are being sold to private sector Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries and encouraging non-debt flows. The Department has put in place a liberal and transparent foreign investment regime where most activities are opened to foreign investment on automatic route without any limit on the extent of foreign ownership. Some of the recent initiatives taken to further liberalize the FDI regime, inter alias, include opening up of sectors such as Insurance (upto 26%); development of integrated townships (up to 100%); defence industry (up to 26%); tea plantation (up to 100% subject to divestment of 26% within five years to FDI); enhancement of FDI limits in private sector banking, allowing FDI up to 100% under the automatic route for most manufacturing activities in SEZs; opening up B2B e-commerce; Internet Service Providers (ISPs) without Gateways; electronic mail and voice mail to 100% foreign investment subject to 26% divestment condition; etc. The Department has also strengthened investment facilitation measures through Foreign Investment Implementation Authority (FIIA).

Non Resident Indian Scheme the general policy and facilities for foreign direct investment as available to foreign investors/ Companies are fully applicable to NRIs as well. In addition, Government has extended some concessions specially for NRIs and overseas corporate bodies having more than 60% stake by NRIs Throwing Open Industries Reserved For The Public Sector to Private Participation. Abolition of the (MRTP) Act, which necessitated prior approval for capacity expansion

The removal of quantitative restrictions on imports.

Wide-ranging financial sector reforms in the banking, capital markets, and insurance sectors, including the deregulation of interest rates, strong regulation and supervisory systems, and the introduction of foreign/private sector competition.

DIFFERENT EFFECTS OF GLOBALISATIONGlobalization has opened up broader communication lines and brought more companies as well as different worldwide organizations into India. Globalization of the economy and the resultant liberalization within the economic system of the country cannot any longer be reversed. These forces have emerged due to the complex nature of the interaction between the growth of economies of most countries, the resultant trade and market patterns which are unfolding. Both of these (i.e. economic growth and trade and market patterns) which, to a great extent, have been shaped by the nature of scientific and technological changes. Increasingly in all the products and services, the scientific and technological intensity will continue to increase and the rate of change will be such that the elements of scientific and technological contents will continue to change. This means more and more investments in technological innovation and the market processes. Which, in turn, means that within a short period, business organizations have to reap the benefits of their investments as otherwise the technological changes introduced by the competitors would displace them out of market and therefore business. Therefore their aim is: More and more investments in technology and innovation in shorter and shorter periods and reaping the benefits within the shorter product cycles. This process necessitates a much larger market size than what business organizations use to be content with in earlier years. In other words, every firm in the world has to think in terms of reaching a global market even though it may be producing only a part of a product or a service. This is what is called an integration of the production process.EFFECT ON CULTURAL SECTORglobalization promotes integration and the removal not only of cultural barriers but of many of the negative dimensions of culture. Globalization is a vital step toward both a more stable world and better lives for the people in it. our new generation has already accepted westen culture upto some extend like their dressing style, their language

EFFECT ON EDUCATIONAL SECTOREducation is undergoing constant changes under the effects of globalization.-Globalization has had many obvious effects on educational technology and communication systems change the way education is delivered as well as roles played by both teachers and students. The development of this technology is facilitating the transition from an industrial based society to an information-based one. At the same time, there is a dark side to globalization and to the very openness of the new information systems. While the richest countries grow richer, the poor are becoming poorer. Income, information and education gaps between the rich and the poor are widening not narrowing; economic crises, trade imbalances and structural adjustments have precipitated a moral crisis in many countries, tearing the basic social and cultural fabric of many families and communities apart, resulting in increasing youth unemployment, suicide, violence, racism and drug abuse and anti social behavior form schools In the 21st century, education systems face the dual challenge of equipping students with the new knowledge, skills and values needed to be competitive in a global market while at the same time producing graduates who are responsible adults, good citizens both of their country and of the world. Thus globalization challenges us to rethink not only how much education is needed but also its ultimate purposes.

EFFECT ON SOCIAL SECTORthe most serious effect of globalization is in the widening of the gap between the rich and the poor in societies worldwide. This will be done by studying the ability of different social groups to meet their basic needs as the role of the government is increasingly diminishing. OTHER EFFECTS:-Trade:- Developing countries as a whole have increased their share of world tradefrom 19 percent in 1971 to 29 percent in 1999. it shows great variation among the major regions. For instance, the newly industrialized economies (NIEs) of Asia have done well, while Africa as a whole has fared poorly. The composition of what countries export is also important. The strongest rise by far has been in the export of manufactured goods. The share of primary commodities in world exportssuch as food and raw materialsthat are often produced by the poorest countries, has declined.

Capital movements: Chart 3 depicts what many people associate with globalization, sharply increased private capital flows to developing countries during much of the 1990s. It also shows that (a) the increase followed a particularly "dry" period in the 1980s; (b) net official flows of "aid" or development assistance have fallen significantly since the early 1980s; and (c) the composition of private flows has changed dramatically. Direct foreign investment has become the most important category. Both portfolio investment and bank credit rose but they have been more volatile, falling sharply in the wake of the financial crises of the late 1990s.

Movement of people: Workers move from one country to another partly to find better employment opportunities. The numbers involved are still quite small, but in the period 1965-90, the proportion of labor forces round the world that was foreign born increased by about one-half. Most migration occurs between developing countries. But the flow of migrants to advanced economies is likely to provide a means through which global wages converge. There is also the potential for skills to be transferred back to the developing countries and for wages in those countries to rise.

Spread of knowledge (and technology): Information exchange is an integral, often overlooked, aspect of globalization. For instance, direct foreign investment brings not only an expansion of the physical capital stock, but also technical innovation. More generally, knowledge about production methods, management techniques, export markets and economic policies is available at very low cost, and it represents a highly valuable resource for the developing countries.

ADVANTAGES OF GLOBALISATION

* Increased free trade between nations

* Increased liquidity of capital allowing investors in developed nations to invest in developing nations

* Corporations have greater flexibility to operate across borders

* Global mass media ties the world together

* Increased flow of communications allows vital information to be shared between - individuals and corporations around the world

* Greater ease and speed of transportation for goods and people

* Reduction of cultural barriers increases the global village effect

* Spread of democratic ideals to developed nations

* Greater interdependence of nation-states

* Reduction of likelihood of war between developed nations

* Increases in environmental protection in developed nationsDISADVANTAGES OF GLOBALISATION

* Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor

* Increased likelihood of economic disruptions in one nation effecting all nations

* Corporate influence of nation-states far exceeds that of civil society organizations and average individuals

* Threat that control of world media by a handful of corporations will limit cultural expression

* Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage

* Greater risk of diseases being transported unintentionally between nations

* Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity

* International bodies like the World Trade Organization infringe on national and individual sovereignty

* Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources

* Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries

GDP GROWTH RATEThe implications of globalization for a national economy are many. Globalization has intensified interdependence and competition between economies in the world arket. These economic reforms have yielded the following significant benefits:Globalization in India had a favorable impact on the overall growth rate of the economy. This is major improvement given that Indias growth rate in the 1970s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though Indias average annual growth rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve Indias

Global position. Consequently Indias position in the global economy has improved from the 8th Opposition in 1991 to 4th place in 2001; when GDP is calculated on a purchasing power parity basis. During 1991-92 the first year of Raos reforms program, The Indian economy grew by 0.9%only. However the Gross Domestic Product (GDP) growth accelerated to 5.3 % in 1992-93, and 6.2% 1993- 94. A growth rate of above 8% was an achievement by the Indian economy during the year 2003-04. Indias GDP growth rate can be seen from the following graph since independence

Due to globalization not only the GDP has increased but also the direction of growth in the sectors has also been changed. Earlier the maximum part of the GDP in the economy was generated from the primary sector but now the service industry is devoting the maximum part of the GDP. The services sector remains the growth driver of the economy with a contribution of more than 57 per cent of GDP. India is ranked 18th among the worlds leading exporters of services with a share of 1.3 per cent in world exports. The services sector is expected to benefit from the ongoing liberalization of the foreign investment regime into the sector. Software and the ITES-BPO sectors have recorded an exponential growth in recent years. Growth rate in the GDP from major sectors of the economy can be seen fromthe following Table.

IMPORT AND EXPORT

Foreign Trade (Export- Import)

Indias imports in 2004-05 stood at US$ 107 billion recording an increase of 35.62 percent compared with US$ 79 billion in the previous fiscal. Export also increased by 24 percent as compared to previous year. It stood at US $ 79 billion in 2004-05 compared with US $ 63 billion in the previous year. Oilimports zoomed by 19 percent with the import bill being US $ 29.08 billion against USD 20.59 billion in the corresponding period last year. Non-oil imports during 2004-05 are estimated at USD 77.036 billion, which is 33.62 percent higher than previous year's imports of US $ 57.651 billion in 2003-04

Thus we find that the economic reforms in the Indian economy initiated since July 1991 have led to fiscal consolidation, control of inflation to some extent, increase in foreign exchange reserve and greater foreign investment and technology towards India. This has helped the Indian economy to grow at a faster rate. Presently more than 100 of the 500 fortune companies have a presence in India as compared to 33 in China.

CONCLUSION

As globalization has progressed, living conditions (particularly when measured by broader indicators of well being) have improved significantly in virtually all countries. However, the strongest gains have been made by the advanced countries and only some of the developing countries.

That the income gap between high-income and low-income countries has grown wider is a matter for concern. And the number of the worlds citizens in abject poverty is deeply disturbing. But it is wrong to jump to the conclusion that globalization has caused the divergence, or that nothing can be done to improve the situation. To the contrary: low-income countries have not been able to integrate with the global economy as quickly as others, partly because of their chosen policies and partly because of factors outside their control. No country, least of all the poorest, can afford to remain isolated from the world economy. Every country should seek to reduce poverty. The international community should endeavorby strengthening the international financial system, through trade, and through aidto help the poorest countries integrate into the world economy, grow more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access to the benefits of globalization.

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