Before 1991, the Indian economy was closed to foreign markets, countries and investors. The idea of self-sufficiency had been a staple in the socio-political discourse. But as the economic situation in India came to a standstill, the then PM, PV Narasimha Rao, decided to ‘open up’ the Indian market and allow worldwide investors to come and kick-start the Great Indian Dream.
This economic globalisation was introduced in structured phases and was led from the front by the dynamic Finance Minister Dr Manmohan Singh, who had studied in the Universities of Oxford and Cambridge.
This impact of globalisation on India was not restricted to the economy. Indians were suddenly flooded with new ideas on cultural, social, socio-economic, monetary and political issues.
Since 1991, India has been leading the economic growth in Asia and across the world. Much of it is thanks to globalisation. Let us first understand what it is.
There are several globalisation definitions laid down by eminent economists. Broadly, globalisation is the intermingling and the combination of societies and economies across the world without any borders.
It is the constant cross-country flow of new ideas, information, technologies, services, goods, capital, people and finance.
Some economists also emphasise that globalisation meaning is the joining of communities, markets, trade and business, ideas and the free dissemination of information.
These eminent thinkers bracket globalisation as turning the world into a single, border-less nation where everyone can share ideas and services.
DIY Exercise: You can research and identify the type of advertisements that were prevalent in newspapers before 1991 and the types seen now.
You will notice a lot more foreign companies in almost every sector. Visit the online archives of popular newspapers and see for yourself!
The Effects Of Globalisation In India
With its enormous population, India was the ideal target for globalisation. Post 1991, almost every sector saw unforeseen changes. One of the effects of globalisation in India was the abundance of personal automobiles. Previously, there were a handful of manufacturers including Hindustan Motors and Maruti Suzuki.
After globalisation, the scenario changed completely. All the big brands available globally entered the market. Low and middle-income groups could buy their budget cars from brands like Honda, Fiat and Hyundai.
Those who had bigger budgets could choose from the likes of Mercedes Benz and BMW.
This is just one sector. Almost every sector has undergone changes ever since the reforms undertaken in 1991. From telecom operators, white goods (refrigerators and ACs) manufacturers to medicines - each sector has different brands that are available worldwide.
Impacts Of Globalisation In India
The impact areas are several. After the economic globalisation started, India’s GDP started to accelerate. Vast amounts of foreign investments were made in India’s various sectors by large companies. These gave rise to the IT boom.
Besides, several key sectors including petroleum, manufacturing and pharmaceutical were modernised and upgraded. Previously, India had to depend on foreign refineries which would swallow crude oil and produce ordinary fuel for daily use. Now, India is self-sufficient in oil refining.
India also had to depend on other nations for crucial medicines and vaccines. Post 1991, the Serum Institute of India (SII) was upgraded and modernised. Although instituted in 1966, it had lagged behind international standards. Post-1991, the picture changed.
The SII is now the world’s largest producers of vaccines in the world. India currently exports several vaccines for diseases like Diphtheria, Rubella, Measles and Mumps.
Interactive Task: Find out more on Cyrus Poonawalla, the founder of SII, and learn how he set up the institute. You can also learn additional details on how India’s precious foreign exchange reserves had to be used earlier to import vaccines.
Advantages of Globalisation in India
India has witnessed rapid and significant economic growth after globalisation began in 1991. Some of the most crucial areas where the country has gained are:
Increased Employment: One of the advantages of globalisation has been the reduction of unemployment in the country. Prior to 1991, the private sector was virtually non-existent. Once the economy opened up, the number of jobs rose exponentially as sector after sector saw new foreign investment.
Later governments have also introduced Special Economic Zones (SEZs) and Special Export Zones to help further employment. Since India has a ready coffer of cheap labour, outsourcing has also given rise to lakhs of jobs.
Better Living Standards: Globalisation saw the accumulation of vast amounts of money in the pre-existing ‘middle-class’ societies. Poverty levels dipped. People had access to better accommodations, services and other luxuries, giving rise to a whole new set of high-income individuals.
Better Salaries And Compensation: With competition, compensation has also increased over the last 3 decades. Highly skilled people draw enviable salaries, while the minimum wages in the country have also seen improvements. These would not have been possible without globalisation.
Superior Technology: Yet another advantage of globalisation is the availability of superior technology. From the cars we drive to the online platforms we use and from the services we rely on to the smartphones that help us in our daily lives, almost everything is here thanks to globalisation.
Does Globalisation have any Negative Effects?
There are several negative effects of globalisation. Here are 2 of the most challenging issues.
An Imbalance In Jobs: Developed countries like the USA, the UK and many European nations have long depended on the cheap labour provided by India and many South Asian countries.
This has resulted in job losses in these First-World countries. The USA, for example, has decided to focus on decreasing the number of H1-B Visas which allow skilled Indians to stay and work in that country.
Overdependence On World Oil Prices: Developing nations need oil in large volumes. But the daily fluctuations in oil prices often eat into precious foreign reserves. At times, crude oil prices shoot up substantially.
Globalisation has thus left the world at the whims and fancies of oil prices, something not always desirable.
Task for you: Russia and OPEC are blaming each other for dropping oil prices. You can follow the developments online or via the print media. For more technical articles on globalisation, you can also refer to Vedantu’s online resources.
You will get an even better idea of how globalisation works in practical life by visiting Vedantu’s pages on the World Trade Organisation or WTO.
What Is Globalisation In Business?
Globalisation in business refers to creating a single and unified market worldwide regardless of geographical boundaries. This single market will have free and unhindered flow of ideas, technologies, goods, services, capital, people & information. Different societies and economies will also come together.
What Do You Mean By Globalisation?
In broad terms, globalisation is the idea where no country exists or operates in a vacuum. It is in the company of other countries and exports/imports goods and ideas. Globalisation can be cultural, political, economic and technological. The importance of globalisation is felt in most countries nowadays.