Globalization: An Indian Perspective

Introduction
In current scenario, globalization has not only become an important matter of
discussion among economist but also among the journalists and politicians of every
stripe. It is widely claimed that in current era, globalization has a greater say in our
day to day dealings. National cultures, national economies and national borders are
becoming increasingly fluid. Development of networks and infrastructures has
surfaced to smooth the progress of the interactions, and institutions have emerged
to regulate them. Such developments are rarely uniform and typically display clear
patterns of irregularity. Main elements of globalization includes; free movement of
goods and services, flow of capital, movement of labour and the transfer of
technology across national and international boundaries. These movements have
brought the developed economies closer together and made them more strongly
integrated. Many transition and developing countries through liberalization and
increased openness to trade have benefited from the process. The contemporary
wave of globalization has been driven by the new set of factors, such as,
deregulation of financial services, emergence of modern transportation and
communication technologies, collapse of Eastern Bloc and demonstration of the
success stories of the East Asian economies. One of the main features of this
golden age of globalization is the development of an onwards worldwide
capitalism. It becomes more active and secure up the third generation of
technological change to build up global production network. They were enticed by
the profit and exploited the vulnerabilities in the Third world countries.
Competitive deregulation of financial markets and development of information
technology has influenced the recent wave of globalization. The rapid integration
of financial markets and the emergence of several new instruments of financial
flows and financial management also propelled this process.

Globalization and organizations with global business have turned into reality.
Aspects of globalization brought opportunities along with challenges for all kinds
of business organizations. Employees are being scattered internationally, means the
knowledge engine is working all through, yet biological, geographical and
linguistic restrictions are preventing real-time accessibilities. In case of countries
like those of India, with the space for globalization and liberalization in the recent
past, the provisions are marked as bigger issues. Here, the platform meant for
competition for relevant Indian firms turns up as global, as there is the purely
generated domestic Indian firm facing competition from different kinds of
multinational corporations or imports. In terms of surviving and growing, Indian
firms are developing knowledge assets with better knowledge assets. They are also
realizing the relevance of knowledge and as such the Indian Government appointed
commission for knowledge for the implication of diversified aspects. Indian
President further stresses over the making India one of the global superpowers in
term of knowledge. Economy of India experiences major kinds of changes in the
policy during the early part of 1990s, that has got the newer mode of economic
reform, relevant popularly marked as Liberalization, Privatization and
Globalization (or the model of LPG).
Indian economy is restructuring itself with aspirations towards the elevation from
current desolate position on international map. It is speeding up its economic
developments imperatively and is witnessing positive role under the role of
Foreign Direct Investment (or FDI) by following rapid growth in economy in the
Southeast countries of Asia and China in particular. India has got an ambitious
plan in terms of emulating successes with her neighbours of east and thereby is
trying to sell itself as a profitable destination for FDI. Globalization follows many
diversified meanings as per the relevant context. Precise definition for
globalisation is yet to get nailed. Still, for Guy Brainbant, process of globalization
is about opening up for wide platform of world trade, advanced ways of
communication, internationalization of all the financial markets, MNCs being
important, population migrations and increased mobility of goods, persons, data,
capital and ideas, along with diseases, infections and pollution. Globalization refers
to economic integration of the whole world by uninhibited financial and trading
flows, mutual exchange meant in case of knowledge and technology. Globalization
can be described as a process involving international integration as an outcome of
forums, views, products and services, opinions combined with other aspects of
culture.
A major part of the developing countries which freed themselves from colonial
rule immediately after the 2nd World War choose to follow an import substitution
industrial regime. Even the Soviet countries fell in line and were away from the
global economic integration process we have come much ahead from those times.
There has been active globalization, especially in the past two decade. The Soviet
bloc countries that existed previously are now integrating with the global economy
and with much renewed enthusiasm.

India's Stance
India stands at crossroads on the globalization issue and one wonders the attitude it
should opt for in such an environment of increasing globalization. It would be
important to remember that stepping out of the globalization arena is not a good
step. With current strength of 149 members in the World Trade Organization or the
WTO, there are additionally 25 more countries in line to enter the WTO. A new
entrant is China. Furthermore, it is also necessary to create a proper framework to
be able to extract maximum advantages from international trade and investment.
Ideally, the framework ought to:
1) Clearly explain the number of demands that India would expect to make on the
multilateral trade structure,
2) The kind of steps that India should take so as to make use of globalization to the
fullest.
Demands on the Trading System
Developing countries ought to include the following demands on the multilateral
trading system:
a) To establish a balance between capital movement and natural persons,
b) To delink environmental standards and other considerations related to labour
issues from trade negotiations;
c) To have zero tariffs in the industrialized countries for labour-centric exports of
developing countries;
d) To protect genetic or biological matter as well as traditional know-how of
developing countries;
e) To stop any kind of unilateral trade activities or any other extra-territorial
relevance of a country‘s rules, regulations and laws amendments;
f) To exert appropriate restraint on industrialized nations with regard to the
initiation of anti-dumping or nullifying actions against the exports originating from
developing countries.
The new trading system exists in order to bring about a free and fair trade among
different countries. The idea of free rather than fair trade has been emphasized. It is
also in this regard that the rich and industrially-strong countries are at an
advantage. They have been creating major as well as not so major tariff and
nontariff trade hurdles from developing nations.

Actions by India
The action plan that has been chalked out in order to improve India‘s stature in the
international trade has to have the second set of measures. As such, India is a very
stronger play compared to other developing countries. India has immense potential
to gain from international trade and investment. In fact, its strong position in the
global IT industry reflects its huge coffer of skilled manpower. It would therefore
be to
India‘s advantage that it could be one of the frontrunners in this aspect.
In this context, stability refers to a good balance in terms of fiscal and external
accounts. It is important to have a competitive domestic environment for us to be
able to exploit the potential of access to a wider market. The extended time that is
given to developing countries to be able to break down the trade barriers ought to
be made use of well. Legislations meant to defend sectors such as agriculture
should be implemented without delay. It took us a lot of time to clear the
Protection of Plant Varieties and Farmers‘Right Act. It is also very important to be
very active in making sure that our firms are using the new patent rights to the best
of their abilities. There are also certain changes in the foreign trade and investment
policies that have had certain repercussions on the environment where Indian
industries function. The fact that the Indian economy will have to undergo a better
integration with the world is a reality. Indian government will have to ensure that
unfair trade practices do not make a prey out of the Indian industries. For this,
there are strong safeguards that are present in the WTO agreement that are geared
to defend the interests of the Indian industries. In order to ensure that a macro level
economic policy environment encourages fast economic growth, the Indian
industry has to voice its need. India has several activities going on that would work
to its advantage. This would need creating plants on a global scale. The progress
made in the IT field would improve its industrial framework. The telecom and IT
industry are making revolutionary progress which contribute to making it a large
single market economy, simultaneously also making the parts stronger.
Globalization, in its present state, cannot be called an entirely technological
phenomenon. This phenomenon has several dimensions to it which need to be
understood in a holistic manner, if one wants to benefit from it. Technological
progress has only recently shrunk the globe. Thus, to get things done, one does not
have to physically or geographically move. Every country has to ensure that it is
strong enough to handle technological and institutional developments.

Globalization over Indian economy

Economic reformation of India started at a slower pace since 1980s, and it further
got accelerated as there was the resurge of external crisis in the primitive phase of
1990s. Relaxation offered at diversified external and internal controls over the
private economic activity gets counted as a relevant aspect of this reformation,
where ―licensepermit-quota raj remains predominant. The core aim of this ‖
liberalization is about attaining efficiency in the allocation of resource, and re-
integrates the economy of India on international grounds1. Moreover, there is the
removal of restrictions with the attempt to case by case replacement, through
discretionary controls that got more efficient regulation forms that has got market
and the shape of the informational framework for these regulation as positive input
within smoother approach of functionalities related to markets. Power, finance and
telecom industries have got different where necessary regulation demands for
potential monopolies, problematic information and sometime both. Power and
finance can be noted as the process of redrawing nature related to boundary
between Indian market and the state. Reformation managed within governmental
structures gets noted as a component of reform. There are some activities that
continue in terms of being handled by government, from equity and level of
efficiency. Some noted scope in terms developing effectiveness related to direct
activity of the government in the field of economy, if in case of efficiency that
expends funds for all sorts of public goods or attain redistribution or gets noted for
the efficiency that raises revenue by taxation or borrowing (that ultimately demand
for taxation). Reform attained in government can get clubbed with new regulatory
under ‗institutional reform‘. However, there are reforms related to government
decentralization with added no instrumental objectives, with the motivated aspect
by intrinsic value attained from local democracy for improving efficiency as well
as equity in the decisions related to economy.
Governance reform improve effectiveness and efficiency that get attained by
designing instruments in a much better way, or through the process of changing
internal organization related to government towards the efficient incentives. As for
instance, there are changing approaches in taxation bases as well as rates towards
the reduction of allocate distortions, or the aspects of redesigning the modes of
intergovernmental schemes of transfer in order to avoid distortions towards the
incentives related to the transfer of the recipients. As for instance, there are also the
changes in the latter state and relationships gets noted between judiciary,
bureaucracy, legislature or the governmental branches (with self-interest of the
government actors), which further gets added by the change in the structure of
determined relationships among diversified geographical jurisdictions of the
government. Current governmental jurisdictions have been noted at sub national
levels under the mode of federalism. The changes in the intergovernmental
relations can get inclusive of diversified dimensions, yet most of the things are
possible within India, and here efficiency gets further enhanced and gathered under
decentralization process. There are some modes of decentralization that can come
under efficiency conflict (as tax competition), and get the way to attain equity
goals difficult. The most important concern here with decentralization is about the
fiscal discipline impact. Yet, India‘s centralized nature, offers presumption to
accept decentralization with some dimensions. There were some economic reforms
during 1985-89 and the same offered definite shape and began new economic
reformations under globalization of India. In the budget of 1991-it was declared
that it was after a span of four decades planning marked for industrialization that
we are now capable to welcome instead of being frightened by foreign investment.
The modes of direct foreign investment are subject to offer us with the accessibility
towards capital, technology and relevant market.‘ Government of India assured for
the implementation of economic reforms under consultation with international
bank and its policies. There were successive coalition governments since 1996 to
2004, where different parties led the government and adopted economic policy for
liberalization very faithfully. In 2004, economic policy turned up as the lodestar
for the fiscal outlook of Indian government. India being a fresh entrant to the
globalizing block underwent a number of broad transformations as late as the
initial part of the 1990s even though the consciousness of the requirement of
exposing the national boundaries began in the later part of the 1980s,. In 1991, the
Indian rupee declined by about 20 per cent, the procedure which had started
declined a bit but nobody denied that it had started. The national economy
undergoes several repercussions of the globalization phenomenon. Economies go
through even greater inter-dependence as well as fierce competition in the world
market. Reforms yield many perceptible advantages. There has been a positive
effect on the macro level economic growth rate. Given the fact that India had a
very low economic growth rate of around 3per cent in the 70‘s decade, and that
countries such as Brazil, Indonesia, Korea, and Mexico registered a GDP growth
more than twice India‘s, this is quite a big achievement. India registered a healthy
average annual growth rate when it doubled its own GDP to around 5.9per cent in
the 80‘s but it still could not match that of China, Korea, and Indonesia. India‘s
global position has been further strengthened by its spurt in the growth rate. As a
result, its renewed position in the global scenario has moved from the 8th position
in 1991 to the 4th position in 2001; in which the GDP is evaluated on the basis of
purchasing power parity. The years 1991-92 marked the commencement of Rae’s
reforms initiative. At the time, the Indian economy grew at a snail‘s pace of 0.9per
cent. Despite this, the Gross Domestic Product (GDP) grew to about 5.3per cent in
1992- 93, and then 6.2per cent in 1993-94. The economy achieved a healthy
growth of more than 8per cent in 2003-04.

Important Reform Measures (Step towards Globalization)

July 1991 was a difficult time for the Indian economy, foreign currency reserves
having hit a rock bottom $1 billion, inflation having touch an annual 17per cent
and a very high and unsustainable fiscal deficit. To add to these problems, foreign
investors and NRIs were quite sceptical about the Indian economy‘s potential.
There was no one interested in pumping capital into India and we were almost
defaulting on loans. While we were struggling with these issues on the home front,
there were other unexpected goings-on in Western and Eastern Europe, South East
Asia, Latin America and other places. Such economic upheavals implied a total
restructuring of our economic programs.
Some measures as part of the liberalization and globalization strategy around
the early 90’s included:

Devaluation
The announcement of the devaluation of the Indian currency by about 18-19per
cent against important currencies in the international foreign exchange market
marked the initial move towards the globalization phenomenon. As a matter of
fact, this was done so as to solve the Balance of Payments BOP catastrophe.

Disinvestment
Privatisation and liberalization policies have to keep moving on if the globalization
process is to be kept moving smoothly as well. Moreover, a large part of the public
sector undertakings have been or are in the process of being sold to the private
sector.
The trajectory of India‘s globalizing has been traced out in the following stages

Section 1: The Big Move toward Protectionist Posture

Obviously, it became difficult to make the regulation framers believe that trying to
be only self was not cheap or efficient in any case though in political terms it
appears to be a good move of patriotism. This radical form of nationalist behaviour
was manifest and apparent in the short sighted financial development that
happened in those times.

Section 2: Emergence of Globalization

During the 1980s, some indication of transformation regulations took place while
Rajiv Gandhi was PM however; the broader principles had borne the brunt of
previous mistakes. Aggarwal (2004) says that the macro level financial difficulty
peaked in 1990s with the clubbed debt of the Central Government and states at 10
per cent of the gross domestic product, the reserves were 3.3. per cent of the GDP
in addition to an inflation high of 9.9 per cent, this was notwithstanding India‘s
good faring with regard to its Gross Domestic Product which was 6 per cent owing
to the elevated pace of industrial development of 5.0 per cent and local saving
ration of 21.9 per cent of the Gross Domestic Product (Aggarwal, 2004). Still this
development also saw puzzling national level indicators thus bringing about the
need for taking a lot of outside money and cause a staggering outside liability of
28.7 per cent.147 Joshi-Little said in 1997 that it was the foremost time ever that
India had to face the looming possibility of not being able to meet her global
economic liabilities.
The additional pressure of the fuel crisis owing the 199 Gulf War further pushed
the nation to a dangerous situation and we had forex currency for just three weeks
of buying goods from outside. Radical changes were needed.

Socio-economic Dimensions of Globalization in India

During the post-Independence phase, the managers from Indian economy got very
cautious proceedings and derived the aspect that world has been divided into two
determined blocs; which are capitalist economies (especially, US) and communist
economies (especially, USSR). A cold war among these blocs is identified by these
managers. There are less developed economies that were bound to join any of these
two blocs; especially those economies being under British Empire and got
independence in near past. These economies were finding it difficult to make a
selection. India opted to maintain a safer distance from both of these so-called
blocs by the adoption of mixed economy. In this process, India invited suspicion
from the blocs. There were some economists that considered Indian economy
being procapitalism with the facade of appearing a socialistic economy. State-
managed economic were subject to endeavour the form of capital formation within
private sector, at the cost of resources and public sector to attain relevant transition
towards the mode of opening up capitalism in the future that got the conditions of
transition.
As per Bardhan (1984)153 there appear vivid pictures under this possibility.
Process of improving productivity came up as the way to strengthen roles led by
the of market forces. However, the reforms forcing the market in terms of
assuming greater role is meant to signify the process of lessening control and
authority led by the planning hierarchy and determined diminution within social
services. India very closely was keeping an eye on these developments and was
channelizing same in reference to its economy that was facing difficult conditions.
Its efficacy over the management of the economy over socialistic pattern is
offering serious malaise, though there were higher amount of growth rates in
Indian economy of 1980‘s, with huge foreign borrowings. As per Joshi and Little
(1994)154 higher rate of growth during 1980‘s towards fiscal expansion was
financed and initiated by internal and external borrowings. Sector for agriculture
performed miserably during 1987 to 1989 and the same was followed by the
assassination of former Prime Minister Rajiv Gandhi. Consecutively, the Prime
Minister who was in power in June 1991, when the condition of India over foreign
exchange reserves remained relevantly poor and unstable. NEP can get classified
into two parts - stabilisation programmes added by structural adjustment with
reform programmes. Stabilisation programmes is meant for the reduction of
macroeconomic imbalances (like current and fiscal account deficits) led under
demand of restraining aggregate, whereas the latter aims at the process of
increasing growth through the process of eliminating supply of bottlenecks which
were actually hindering efficiencies, competitiveness and dynamism towards the
economic system.