APresentation

OnGlobalisation and its impact on India

Stream :- MAM SEM – IIIPrepared By :- 1. Dhorajiya Janvi H. (005) 2. Dodhiya Sophia S. (006)

3. Gami Harita S. (007)Submitted To :- Miss. Charu Gupta

(ASS. Professor in Smt. Shantaben Haribhai Gajera MBA Mahila College )

Globalisation and its impact on

India

Introduction

• Globalisation means integrating the economy of a country with the world economy.

• In India, the process of globalisation picked up with the policy reforms of 1991.

• Globalisation refers to growing economic interdependence among countries in the world with regard to technology, capital, information, goods, services, etc.

Definition

“Globalisation means free movement of capital, goods, technology, ideas, peoples. any globalisation that omits the last the last one is partial and not sustainable.”

- Branko Milanovic

Four parameters of Globalisation

Reduction of trade barriers to permit free flow of good and services across national frontiers.Creation of an environment in which free flow of capital can take place.Creation of an environment permitting free flow of technology among the nation states.Creation of an environment in which free movement of labour can take place in different countries of the world.

Features of Globalisation

Large scale production an marketing inter-linking of economy of countriesCompetitionInterdependence of countriesTransfer capital an technology Inspire of multinational corporation of developed countries

Advantages

Adopting of new production and trade patterns: Globalisation will help in restructuring turning production and trade practices in accordance with the factor intensity of country. Raise foreign capital: globalisation will attract foreign capital which will lead to technological up gradation. Quality improvement: In order to withstand competition offered by other firms, quality enhancement will take place.

Cont…

Rise in employeement: It is expected that integration between different sectors will lead to more production in the home country. This will rise employment will take place.

Reduce poverty: With globalisation , many micro-credit programmes are being implemented to priorities the needs of poor.

Disadvantages

Devastation of local producers: globalisation has devastated local producers since they are unable to compete with cheap imports.

Mounting strikers: Globalisation has led to mounting workers unrest. Workers have protested against low wages, despotic working condition, autocratic management rule, long work days an declining social benefits.

Cont…

Pubic employee are worse off: Globalisation has to made public employees worse off. Public employee are adversely effected by budget cuts, privatisation and massive loss of purchasing price.

Small business are adversely affected: Small business class is aversely affected by cutbacks of public subsidies, de-industrialisation and floods of cheap imports.

Cont…

Decline in income: During the globalisation phase, about half a billion people in south Asia have experience a decline in their income. The record so far shows that it is the poor who have suffered most.Weak social safety net provisions: Since the government`s ability to help he victims of globalisation has been eroded, the provisions of social safety net have been weakened.

Challenges face by global industries

Customer satisfactionAttitude of Indian businessman must change.Improve the quality of products to international standards.Face global competition

Opportunity for industries

Export products on large scale

Effects of Globalisation on Indian economy

1. Indian`s foreign currency reserves were 141 billion dollars in 2005 from 1 billion in 1991.

2. India`s share in world trade rose to 0.86 in 2003 from 0.53 in 1991.

3. Average growth rate of exports has been 10% p.a. during 1992-2004.

4. Current account surplus was between 0.7 and 1.08 percent of GDP in 2001-03.

5. External debt is growing by less than $ 3 billion per year as compared to the earlier figure of $8 billion per year.

Cont…

Foreign investment flows

Foreign investment takes two forms – foreign direct investment (FID) and foreign portfolio investment (FPI).FDI in total foreign investment improved to 54.8% in 1995-96 and FPI was still high at about 45%.During the period of 2000-01 to 2012-13 share of FDI was 60.3% and FPI was 39.7 %.

FDI Inflow

The government of India has been initiating attract FDI inflows into India, certain Indian firm have been undertaking investment project in other countries.FDI inflows reveals that 52.0% of the total inflow are made for developed countries,41.5% to the developing countries.Out of this flows, India received 1.9% in 2012.

FDI Inflow

years inflows outflows Net FDI inflows

1992-97 1,676(100.0) 96(5.7) 1,580(94.3)

2002 3,449(100.0) 1,107(32.1) 2,342(67.9)

2011 36,190(100.0) 12,456(34.4) 23,734(65.6)

2012 25,543(100.0) 3,583(33.6) 16,960(66.4)

Impact on labour

The latest estimates show that open unemployment has increased over the last decade to about 188 million in 2003.The rate of growth of employment which was of the order of 2.04% year during 1983-94 declined to the low level of 0.98% during the period of 1994-2000.Social and personal services to 055% during 1994-2000 as against 2.90% during 1983-94.

Inequality and poverty

ILO report(2004) states “Income inequality has increased in some industrialized countries, reflected in an increase in the share of capital in national income”The widening inequality has been result of very high compensation paid by MNEs development of new business with a global.

Main organisations for facilitating Globalisation

I. International Monetary Fund (IMF)II. The World Bank or International Bank for

Reconstruction and Development (IBRD)III. World Trade Organization (WTO)

International Monetary Fund

The World Bank

World Bank is an organization affiliated with United Nation and designed to finance productive project that further the economic development of member nation.World Bank headquarters are in Washington, D.C.

United Nation Monetary and Financial Conference at Bretton Wood, in July 1944, the bank officially began operations in June 1946.

Although, its loans were made for post-World War II reconstruction, by 1949 the emphasis had shifted to loans for the purpose of economic development.

Cont…

Current membership: 184 member countries Shareholder: The five largest shareholder of the Bank are USA, Japan, Germany, Great Britin and France. India is the sixth largest contributor. Total Capital: $171 billion World Bank Group: It consists of International Development Association (IDA), International Finance Corporation (IFC), Multi-Lateral Investment Guarantee Agency (MIGA), and International Center for settlement of Investment Disputes (ICSID).

Objective of World Bank

1. Protecting the environment.2. Investing in basic health and education programmes.3. Promoting social development.4. Assistance and encouragement to private business.5. Promoting reforms which will create stable microeconomic

environment.6. Strengthening the ability of the government to deliver

quality services.7. Establishing peace time economy.8. Maintaining equilibrium in the balance of payments.

Function of World Bank

1. To promote foreign investment and credit by providing guarantee of repayment to the private investors.

2. To assist its member countries by facilitating the investment of capital for productive purposes.

3. To promote the long- term balance growth of international trade and equilibrium in balance of payment situation.

4. To settle disputes by ICSID office (International Centre for Settlement of Investment Disputes).

World bank and India

India has been allotted a permanent sent on the Board of Executive Director of the Bank.

India has the privilege of presiding the annual general meeting of the Board.

India is the largest borrower of the world bank. The loan from World Bank has helped India in the development of coal industry, road construction irrigation project, water supply and sanitation, off-petrol and refineries, power project of Domodar Valley Corporation, etc.

World Trade Organisation(WTO)

The General Agreement Tariffs Trade(GATT) WAS established in Geneva to pursue the objective of free in order to help in the growth and development of all member countries.

In 1947, 23 countries signed GATT.India was one of the founder member of GATT.In 1994, 118 countries were member of GATT.

The main purpose of ensure competition in commodity trade by removal of trade barriers. The first seven round of negotiation conducted under GATT aimed on imports imposed by member countries.

Cont…

A preparatory committee was set-up by GATT which in turn set-up the World Trade Organisation (WTO) IN 1995.

The WTO acts as a permanent watchdog of international trade.

GATT was converted from a provisional agreement into a formal international organisation called World Trade Organisation (WTO) with effect from January 1, 1995.

It is directed by the ministerial conference that meets a least once every two years and its regular business is seen by the General council.

Features of WTO1. 150 member countries membership. 2. It is the main organ of implementing the Multilateral Trade

Agreements.3. It has a much wider scope than its predecessor GATT.4. The representatives of the members and all officials of the

WTO enjoy international privileges.5. Single voting right.6. It is a full fledged international organization in its own right.7.The WTO administers a unified package of agreements to

which all member are committed.8. It is the forum for negotiations among its members,

whereby member nations discuss issues related to the MATs and associated legal instruments.

Function of WTO

1. It provides the forum for negotiations among its members concerning their multilateral trade relations.

2. It facilitate the implementation administration and operation of the objective of the multilateral trade agreements.

3. It administers the “trade review mechanism”.4. It administers the “understanding rules and procedures

governing the settlement disputes”.

Cont…

6. It is watchdog of international trade. It examines the trade Regimes of individual members.

7. Trade disputes that cannot be solved through bilateral talks are forwarded to the WTO dispute settlement “court”.

8. It is management consultant for world trade. Its economists keep a close watch on the activities of the global economy and provide studies on the main issues of the day.

Fair Globalization need for policy framework

ILO report states “ The economy is becoming increasing global, while social and political institutions remain largely local, national or regional.”

The rules of world trade largely favor the rich and powerful countries and more often work against or ignore the interest of poor or weak countries.

Cont…

Good political government based on a democratic political system, respect for human rights, rules of law and social equity.An effective state that ensures high and stable economic growth, provide public services, protection, raises capabilities of the people through universal access to education and promotes gender equity.Strong representative organizations of works and employers are essential for fruitful social dialogue.

Objectives fulfill by globalization

1. Macro-economic and employment generation policy

2. Improving the productivity of employment3. Balanced regional development 4. Social sector5. Employment guarantee programme6. Raising the productivity in informal sector7. Promotion of skill development8. Organizations of working poor

1.Macro-economic and employment generation policy

In the period of globalization expansion of public sector employment was restricted, due to the scheme of voluntary retirement and downsizing, private sector in investment failed to fill the gap.The MNCs apply high technology which reduce the scope for enlarging employment.The job can be entrusted to indigenous medium sized industries and co-operatives. there is strong need to provide credit, technology, marketing and other support for purpose.

2.Improving the productivity of employment

The major problem of Indian economy is under- employment. Out of unemployment of 7.32%, open employment was only 2.81%, under employment was only 4.41%.

It is necessary to provide work to unemployment and new entrants to the labour force, and for this purpose, employment strategies have to be woen within the growth strategy.

3.Balanced regional development

Out of 260 million poor in India in 1990-00, 165 million (63.4%) were living in UP, MP, Bihar, Orissa and Maharashtra.

Our infrastructure are in place , it would be possible to attract private sector investment.

The development of backward areas would help to achieve the goal of balanced regional development and lead to reduction in regional disparities.

4. Social sector

Human capital formation helps in promoting capabilities of the people benefits o globalization.For increase its expenditure on education, health and poverty alleviation programmes. It has further increased need for acquiring skill who use in latest high level of technology.It is necessary for state to increase public investment in social sector. India spends 3.74% of GDP on education during 2003-04.

5. Employment guarantee programme

So many programmes for the increase in education rate, under employment were in initiated by the government such as,

Jawahar Rozgar Yojana (JRY) Employment Assurance Scheme(EAS) Pradhan Mantri Gram Sadak Yojana(PMGSY) National Rural Employment Guarnatee Act, 2004

Full employment has to achieved, 1.5 to 1.7% GDP is not high cost for the programme.

6. Raising the productivity in informal sector

The informal sector is major source of employment. It consists of small manufacturing enterprises, services or vending in urban areas, domestic work and agricultural work on small plot of land.

The goal must be make these informal activities part of a growing formal sector that provide job, income and protection and can trade in the international system.

A greater access to public infrastructure can also be helpful.

7. Promotion of skill development

The government has realized the need for skill development and set up a number of institution.

Private institution have also been set up o impart training of computer courses, management courses, technical courses etc.

Social motivated NGOs have to play a part so that younger boys & girls belonging to poorer sections of society are enabled to develop their skills and rise up in the income ladder.

8. Organizations of working poor

To save labour from the exploitation by Indian government and MNCs, the voice of labour should be avoid by government and employers.

Conclusion

Bibliography

Gaurav Datt & Ashwani Mahajan, 2013,Indian economy, S. Chand & company Pvt. Ltd., New delhi.K. Aswathappa,2004,essentials of business environment, Himalaya Publishing House, Mumbai.

Thank you