what are the effects of globlisation on indian economy?

 Impact of globalisation on:

  • Producers: Tough competition faced by the producers in the native country by the producers of foreign markets
  • Workers: Job insecurity, denial of fair share in the benefits brought about by globalisation.

Other impacts:

  • Increase in the foreigh trade
  • Increase in foreign investment
  • exchange of technology between countries.
  • Better means of communication have developed alongside globalization
  • Better job opportunities for people gave rise to migration

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 In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model known as Liberalization, Privatization and Globalization in India (LPG), was to make the Indian economy one of the fastest growing economies in the world. An array of reforms was initiated with regard to industrial, trade and social sector to make the economy more competitive. The economic changes initiated have had a dramatic effect on the overall growth of the economy. It also heralded the integration of the Indian economy into the global economy. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1 billion and inflation was as high as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India. Then the following measures were taken to liberalize and globalize the economy. 

Steps Taken to Globalize Indian Economy

Some of the steps taken to liberalize and globalize our economy were: 

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.

Merits and Demerits of Globalization

The Merits of Globalization are as follows:
  • There is an International market for companies and for consumers there is a wider range of products to choose from.
  • Increase in flow of investments from developed countries to developing countries, which can be used for economic reconstruction.
  • Greater and faster flow of information between countries and greater cultural interaction has helped to overcome cultural barriers.
  • Technological development has resulted in reverse brain drain in developing countries.
The Demerits of Globalization are as follows:
  • The outsourcing of jobs to developing countries has resulted in loss of jobs in developed countries.
  • There is a greater threat of spread of communicable diseases.
  • There is an underlying threat of multinational corporations 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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 Largely positive. Globalization has brought many jobs and large sums of investment to India. India's economy has been growing at exceptional rates for the past several years and many new opportunities have opened up for India. Yet, India does remain quite poor. It's GDP per capita is less than $2,000, a fraction of the GDP per capita found in some Latin American and Eastern European nations. Most of those who profit from globalization in India are the upper classes, with many in the lower classes being displaced and suffering from miserable labor conditions. Nonetheless, globalization has created a large economic boom for India with largely positive effects

Globalisation is the trend in large businesses to consider themselves world businesses not US or English or German businesses. So if something can be done in India or Malaysia or wherever cheaper than in Wisconsin or Slough or Dusseldorf then off to India or Malaysia or wherever it goes. Similarly raw materials or components will be bought from wherever in the world they are cheapest. Such a worldwide network of interests also allows large companies to do a great deal of money shuffling to avoid taxes.

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 here some negative points too

Negative effects of globalization on Indian economy have been: 
1. Rise in demand for labor and the rise in wage rates leading to some increase in costs. 
2. Weakening power of the trade unions over labor in emerging industries and growth sectors like IT, entertainment, internet and mobile services, airlines, banking, insurance, banking services. 
3. Too much competition in the market leading to continuous pressure on raising productivity, enhancing consumer service, improving product quality, in order to survive. 
4.Voluntary retirement for many public sector units. 
5. Too many sales person chasing customers. 
6. Too many cars on the road and traffic congestion. 
7. Growth of consumerism. 
8. Instability in profits due to too much choice among customers. 
9. Shortage power and infrstructure affecting industrial expansion. 
10. Closure of inefficient units supplying costly and shoddy products and loss of jobs. 
11. Two years of large increase in textile industry jobs followed by large loss of jobs due to Rupee appreciation making Indian industry uncompetitive. 
12. Problems of dealing with uncertainty in the international market in terms of demand, supply and prices., 
You can generate many such ideas to please the teachers. But the fact is there are hardly any real negative effect of globalisation compared with the pre-globalisation period. 
Notwithstanding the low level of globalization of Indian economy, the impact of globalisation has been highly positive in all most all spheres of economic and social life and virtually no negative effect. It is only because of opening uo of the hitherto closed, govt.-oppressed and controlled economy to the process of globalisation that has helped Indian economy to grow rapidly:in the last 10-12 years, India's economic growth has been high, exports have boomed, incidence of poverty has been reduced, employment has surged, begging by India for economic aid has stopped, long-term inflation rate has gone down, scarcity of goods have disappeared, the quality of products available have improved substantially and overall India has become progressively vibrant and internationally competititive. Indian companies are setting up companies abroad, India has better technological development for the benefit of the common man ( mobiles, road transport, cheap clothes, etc - only because of globalisation. 

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  • Increased rate of growth of the Indian economy which is proceeding presently at around 7%. This is in comparison to the 3.5% average growth rate for the first four decades after independence.

  • Liberalisation of the restrictions upon Foreign Direct Investment in various sectors as well as removal of restrictions on imports in the form of tariffs. This has been done to increase the investments in the economy. Also, many industries that were previously open only for public sector have now been thrown open for the private sector.

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 m so sorry

i posted it by mistake.....


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