INTRODUCTION

The term globalization refers to the integration of economies of the world through
uninhibited trade and financial flows, as also through mutual exchange of
technology and knowledge. Ideally, it also contains free inter-country movement of
labour. In context to India, this implies opening up the economy to foreign direct
investment by providing facilities to foreign companies to invest in different fields of
economic activity in India, removing constraints and obstacles to the entry of MNCs
in India, allowing Indian companies to enter into foreign collaborations and also
encouraging them to set up joint ventures abroad; carrying out massive import
liberalization programs by switching over from quantitative restrictions to tariffs and
import duties, therefore globalization has been identified with the policy reforms of
1991 in India.
BEFORE GLOBALISATION:PHASE 1(1947).
NO INDUSTRALISIM
UNEMPLOYEMENT
NO DEVOLPMENT
NO MONEY
POVERTY
PHASE 2(1948-1990)
APM ACT: - Administered Pricing Mechanism { government control on price of the
products.}
QUOTA: - the quantity of the product will also decide by the government(how many
number of units company has to produced)
LICENCSE: - they need License to start the business
NO INNOVATIONS
NO COMPETETION
MRTP ACT:1. NO EXPANSION
2. NO ACQUISIATION
3. NO MERGERS

CLOSED ECONOMY:1. NO IMPORT EXPORT

2. NO FDI (Foreign Direct Investment) OR FII (Foreign
Institution Investment)

AFTER GLOBALISATION:In 1990 After Globalization there were the quota is not decided more competition
new innovations are also coming due to competition increased in the market.
Import and exports are also allowed the FDI And FII were also allowed that
means indirectly economy is opened and GDP Is also increasing fast as compare to
that economy.

WHAT IS GLOBALISATION
People around the globe are more connected to each other than ever before.
Information and money flow more quickly than ever. Goods and services produced
in one part of the world are increasingly available in all parts of the world.
International travel is more frequent. International communication is commonplace.
This
phenomenon
has
been
titled
"globalization."
The concept of globalization can be traced to the phenomenon of nation states. In
the distant past, there were just human communities. For much of human history,
most people remained confined to their communities, villages or local areas. With
developments in communication and economic activity, it has progressively become
easier to move from the local to the regional and then from the regional to the
national
level,
and
finally
across
nations.

IMPACT ON INDIA
The Important Reform Measures (Step towards Globalization)
Indian economy was in deep crisis in July 1991, when foreign currency reserves
had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17
percent; fiscal deficit was very high and had become unsustainable; foreign
investors and NRIs had lost confidence in Indian Economy. Capital was flying out of
the country and we were close to defaulting on loans. Along with these bottlenecks
at home, many unforeseeable changes swept the economies of nations in Western
and Eastern Europe, South East Asia, Latin America and elsewhere, around the
same time. These were the economic compulsions at home and abroad that called
for a complete overhauling of our economic policies and programs. Major measures
initiated as a part of the liberalization and globalization strategy in the early nineties
included the following:
Devaluation: The first step towards globalization was taken with the
announcement of the devaluation of Indian currency by 18-19 percent against major
currencies in the international foreign exchange market. In fact, this measure was
taken in order to resolve the BOP crisis
Disinvestment: In order to make the process of globalization smooth, privatization
and liberalization policies are moving along as well. Under the privatization scheme,
most of the public sector undertakings have been/ are being sold to private sector
Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries
and encouraging non-debt flows. The Department has put in place a liberal and
transparent foreign investment regime where most activities are opened to foreign
investment on automatic route without any limit on the extent of foreign ownership.
Some of the recent initiatives taken to further liberalize the FDI regime, inter alias,
include opening up of sectors such as Insurance (upto 26%); development of
integrated townships (up to 100%); defence industry (up to 26%); tea plantation (up
to 100% subject to divestment of 26% within five years to FDI); enhancement of FDI
limits in private sector banking, allowing FDI up to 100% under the automatic route
for most manufacturing activities in SEZs; opening up B2B e-commerce; Internet
Service Providers (ISPs) without Gateways; electronic mail and voice mail to 100%
foreign investment subject to 26% divestment condition; etc. The Department has

also strengthened investment facilitation measures through Foreign Investment

Implementation Authority (FIIA).
Non Resident Indian Scheme the general policy and facilities for foreign direct
investment as available to foreign investors/ Companies are fully applicable to NRIs
as well. In addition, Government has extended some concessions specially for NRIs
and overseas corporate bodies having more than 60% stake by NRIs
Throwing Open Industries Reserved For The Public Sector to Private
Participation.
Abolition of the (MRTP) Act, which necessitated prior approval for capacity
expansion
The removal of quantitative restrictions on imports.
Wide-ranging financial sector reforms in the banking, capital markets, and
insurance sectors, including the deregulation of interest rates, strong regulation and
supervisory systems, and the introduction of foreign/private sector competition.

DIFFERENT EFFECTS OF GLOBALISATION

Globalization has opened up broader communication lines and brought more
companies as well as different worldwide organizations into India. Globalization of
the economy and the resultant liberalization within the economic system of the
country cannot any longer be reversed. These forces have emerged due to the
complex nature of the interaction between the growth of economies of most
countries, the resultant trade and market patterns which are unfolding. Both of these
(i.e. economic growth and trade and market patterns) which, to a great extent, have
been shaped by the nature of scientific and technological changes. Increasingly in
all the products and services, the scientific and technological intensity will continue
to increase and the rate of change will be such that the elements of scientific and
technological contents will continue to change. This means more and more
investments in technological innovation and the market processes. Which, in turn,
means that within a short period, business organizations have to reap the benefits
of their investments as otherwise the technological changes introduced by the
competitors would displace them out of market and therefore business. Therefore
their aim is: More and more investments in technology and innovation in shorter and
shorter periods and reaping the benefits within the shorter product cycles. This
process necessitates a much larger market size than what business organizations
use to be content with in earlier years. In other words, every firm in the world has to
think in terms of reaching a global market even though it may be producing only a
part of a product or a service. This is what is called an integration of the production
process.
EFFECT ON CULTURAL SECTOR
globalization promotes integration and the removal not only of cultural barriers but of
many of the negative dimensions of culture. Globalization is a vital step toward both
a more stable world and better lives for the people in it. our new generation has
already accepted westen culture upto some extend like their dressing style, their
language
EFFECT ON EDUCATIONAL SECTOR
Education is undergoing constant changes under the effects of globalization .

Globalization has had many obvious effects on educational technology and

communication systems change the way education is delivered as well as roles
played by both teachers and students. The development of this technology is
facilitating the transition from an industrial based society to an information-based
one.
At the same time, there is a dark side to globalization and to the very
openness of the new information systems. While the richest countries grow richer,
the poor are becoming poorer. Income, information and education gaps between the
rich and the poor are widening not narrowing; economic crises, trade imbalances
and structural adjustments have precipitated a moral crisis in many countries,
tearing the basic social and cultural fabric of many families and communities apart,
resulting in increasing youth unemployment, suicide, violence, racism and drug
abuse and anti social behavior form schools In the 21st century, education systems
face the dual challenge of equipping students with the new knowledge, skills and
values needed to be competitive in a global market while at the same time
producing graduates who are responsible adults, good citizens both of their country
and of the world. Thus globalization challenges us to rethink not only how much
education is needed but also its ultimate purposes.
EFFECT ON SOCIAL SECTOR
the most serious effect of globalization is in the widening of the gap between the rich
and the poor in societies worldwide. This will be done by studying the ability of
different social groups to meet their basic needs as the role of the government is
increasingly diminishing.
OTHER EFFECTS:Trade:- Developing countries as a whole have increased their share of world trade
from 19 percent in 1971 to 29 percent in 1999. it shows great variation among the
major regions. For instance, the newly industrialized economies (NIEs) of Asia have
done well, while Africa as a whole has fared poorly. The composition of what
countries export is also important. The strongest rise by far has been in the export of
manufactured goods. The share of primary commodities in world exportssuch as
food and raw materialsthat are often produced by the poorest countries, has
declined.

Capital movements: Chart 3 depicts what many people associate with

globalization, sharply increased private capital flows to developing countries during
much of the 1990s. It also shows that (a) the increase followed a particularly "dry"
period in the 1980s; (b) net official flows of "aid" or development assistance have
fallen significantly since the early 1980s; and (c) the composition of private flows
has changed dramatically. Direct foreign investment has become the most important
category. Both portfolio investment and bank credit rose but they have been more
volatile, falling sharply in the wake of the financial crises of the late 1990s.
Movement of people: Workers move from one country to another partly to find
better employment opportunities. The numbers involved are still quite small, but in
the period 1965-90, the proportion of labor forces round the world that was foreign
born increased by about one-half. Most migration occurs between developing
countries. But the flow of migrants to advanced economies is likely to provide a
means through which global wages converge. There is also the potential for skills to
be transferred back to the developing countries and for wages in those countries to
rise.
Spread of knowledge (and technology): Information exchange is an integral, often
overlooked, aspect of globalization. For instance, direct foreign investment brings
not only an expansion of the physical capital stock, but also technical innovation.
More generally, knowledge about production methods, management techniques,
export markets and economic policies is available at very low cost, and it represents
a highly valuable resource for the developing countries.

ADVANTAGES OF GLOBALISATION
* Increased free trade between nations
* Increased liquidity of capital allowing investors in developed nations to invest in
developing nations
* Corporations have greater flexibility to operate across borders
* Global mass media ties the world together
* Increased flow of communications allows vital information to be shared between individuals and corporations around the world
* Greater ease and speed of transportation for goods and people
* Reduction of cultural barriers increases the global village effect
* Spread of democratic ideals to developed nations
* Greater interdependence of nation-states
* Reduction of likelihood of war between developed nations
* Increases in environmental protection in developed nations

DISADVANTAGES OF GLOBALISATION
* Increased flow of skilled and non-skilled jobs from developed to developing
nations as corporations seek out the cheapest labor
* Increased likelihood of economic disruptions in one nation effecting all nations
* Corporate influence of nation-states far exceeds that of civil society organizations
and average individuals
* Threat that control of world media by a handful of corporations will limit cultural
expression
* Greater chance of reactions for globalization being violent in an attempt to
preserve cultural heritage
* Greater risk of diseases being transported unintentionally between nations
* Spread of a materialistic lifestyle and attitude that sees consumption as the path to
prosperity
* International bodies like the World Trade Organization infringe on national and
individual sovereignty
* Increase in the chances of civil war within developing countries and open war
between developing countries as they vie for resources
* Decreases in environmental integrity as polluting corporations take advantage of
weak regulatory rules in developing countries

GDP GROWTH RATE

The implications of globalization for a national economy are many. Globalization has
intensified interdependence and competition between economies in the world arket.
These economic reforms have yielded the following significant benefits:
Globalization in India had a favorable impact on the overall growth rate of the
economy. This is major improvement given that Indias growth rate in the 1970s was
very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and
Mexico was more than twice that of India. Though Indias average annual growth
rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in
China, Korea and Indonesia. The pick up in GDP growth has helped improve Indias
Global position. Consequently Indias position in the global economy has improved
from the 8th Opposition in 1991 to 4th place in 2001; when GDP is calculated on a
purchasing power parity basis. During 1991-92 the first year of Raos reforms
program, The Indian economy grew by 0.9%only. However the Gross Domestic
Product (GDP) growth accelerated to 5.3 % in 1992-93, and 6.2% 1993- 94. A
growth rate of above 8% was an achievement by the Indian economy during the
year 2003-04. Indias GDP growth rate can be seen from the following graph since
independence

Due to globalization
not only the GDP has
increased but also the
direction of growth in
the sectors has also
been changed. Earlier
the maximum part of
the
GDP
in
the
economy
was
generated from the
primary sector but now the service industry is devoting the maximum part of the
GDP. The services sector remains the growth driver of the economy with a
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contribution of more than 57 per cent of GDP. India is ranked 18th among the
worlds leading exporters of services with a share of 1.3 per cent in world exports.
The services sector is expected to benefit from the ongoing liberalization of the
foreign investment regime into the sector. Software and the ITES-BPO sectors have
recorded an exponential growth in recent years. Growth rate in the GDP from major
sectors of the economy can be seen fromthe following Table.

IMPORT AND EXPORT

Foreign Trade (Export- Import)
Indias imports in 2004-05 stood
at US$ 107 billion recording an
increase of 35.62 percent
compared with US$ 79 billion in
the previous fiscal. Export also
increased by 24 percent as
compared to previous year. It
stood at US $ 79 billion in 200405 compared with US $ 63 billion
in the previous year. Oilimports
zoomed by 19 percent with the
import bill being US $ 29.08
billion against USD 20.59 billion in the corresponding period last year. Non-oil
imports during 2004-05 are estimated at USD 77.036 billion, which is 33.62 percent
higher than previous year's imports of US $ 57.651 billion in 2003-04

Thus we find that the economic reforms in the Indian economy initiated since July
1991 have led to fiscal consolidation, control of inflation to some extent, increase in
foreign exchange reserve and greater foreign investment and technology towards
India. This has helped the Indian economy to grow at a faster rate. Presently more
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than 100 of the 500 fortune companies have a presence in India as compared to 33
in China.

CONCLUSION
As globalization has progressed, living conditions (particularly when measured by
broader indicators of well being) have improved significantly in virtually all countries.
However, the strongest gains have been made by the advanced countries and only
some of the developing countries.
That the income gap between high-income and low-income countries has grown
wider is a matter for concern. And the number of the worlds citizens in abject
poverty is deeply disturbing. But it is wrong to jump to the conclusion that
globalization has caused the divergence, or that nothing can be done to improve the
situation. To the contrary: low-income countries have not been able to integrate with
the global economy as quickly as others, partly because of their chosen policies and
partly because of factors outside their control. No country, least of all the poorest,
can afford to remain isolated from the world economy. Every country should seek to
reduce poverty. The international community should endeavorby strengthening
the international financial system, through trade, and through aidto help the
poorest countries integrate into the world economy, grow more rapidly, and reduce
poverty. That is the way to ensure all people in all countries have access to the
benefits of globalization.

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