India and Globalisation

India and Globalisation

The general idea of Globalisation in India is related to the integration of the national economy with the world economy. Hence, it underscores the opening up of the domestic economy to foreign direct investment (FDI) which requisites a conducive environment for foreign firms to invest in various fields of economic activities. This calls for the removal of restraints and barriers for allowing the entry of multinational corporations (MNCs) into the domestic market.

India’s present ascendancy in the economic trajectories is a consequence of the New Economic Policy (NEP) which initiated a massive scheme of fiscal reforms following the 1991 financial crisis. It liberated the country from the shackles of the socialist model and reconfigured the domestic economic structure which helped improve the poor standards of living. The balance of payments crisis gave an impetus for a new economic discourse in the country which in turn led to policy development that embraced an export-friendly ecosystem along with the inflow of foreign capital. The crisis was a result of the soaring currency reserves which reached up to a mark of almost billion which took inflation to an upsurge at an annual rate of 17 per cent. Furthermore, the fiscal deficit was surging and an unstable economy reigned in.

The NEP, popularly known as the Liberalisation,PrivatisationandGlobalisation (LPG), that came up in July 1991, sought to transform the national economy to a globally competent and fast growing economy. Industry, trade and finance constituted the major sectors which underwent a dramatic change. The economic compulsions both at home and abroad necessitated a reorientation that would fasten the country with the global market on a rapid pace. As initiated in the 1990s, the most important measures taken up as part of the LPG can be summarised as follows:

The three industries reserved for the public sector are:

1. Arms and ammunition and allied items of defence equipment, defence aircraft and warships.

2. Atomic energy.

3. Railway transport

a) Devaluation: The foremost attempt towards globalisation was devaluating the national currency by 18-19 against major currencies in the foreign exchange market. The measure sought to help survive the balance of payment crisis.

b) Disinvestment: In a bid to boost privatisation, the government began selling the shares of the public sector undertakings (PSUs) to private players.

c) Elimination of License Raj: Doing away with industrial licensing constituted another strategy to boost the spirit of a liberal market. As a result, most of the industrial initiatives were exempted from license from the government.

d) Foreign Direct Investment (FDI): This opened the vistas of foreign capital flow, by allowing overseas companies to invest directly into the Indian market. In 2018, the Government of India allowed 100% FDI in some sectors like single-brand retail and construction.

e) Abolition of MRTP Act: In pursuance of liberalisation, the Monopolies and Restrictive Trade Practices (MRTP) Act (1969), which regulates monopolistic, restrictive and unfair trade practices, was abolished by the Government of India. It was replaced the Competition Act in 2002, which introduced a new focus of promoting competition instead of anti-monopoly measures.

List of industries which mandatorily require licensing are as follows:

·           Distillation and brewing of alcoholic drinks.

·           Cigars and Cigarettes of tobacco and manufactured tobacco substitutes.

·           Electronic Aerospace and Defence equipment: all types.

·           Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches.

·           Hazardous chemicals.

·           Drugs and Pharmaceuticals.

Activity

Identify the top ten MNCs functioning in India.

Activity

1. Students are requested get some insight on the presence status of Globalisation, concerns of world and India with regard to Globalisation.

2. Students are requested understand the importance of World Trade Organisation (WTO) in the context of Globalisation.

3. Analysis the world Trade scenario in context of World Trade War (WTW).