HPAS/Allied Mains 2022 Answer Writing Challenge Day 203: Model Answer

Question: Discuss the Impact of Globalization on Indian Economy. (8 marks/120 words)

Answer:

Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.

Positive effects of globalization on Indian economy

Increase in Foreign Trade: As a result of foreign trade policies adopted in the wake of globalization, India’s share in the world trade has gone up. India’s percentage share in the world trade in 1990-91 was 0.53 which has increased to 2.76 in 2020.

Increase in Foreign investment: – As a consequence of globalization in forging investment policy 1991, our govt. started encouraging the entry of foreign investment; there has been a considerable increase in foreign direct investment as well as foreign portfolio investment.

Increase in Foreign Collaborations: – Globalization has promoted collaboration of foreign companies with many Indian companies. These collaboration agreements can be technical. Financial or both.

Expansion of Market: – globalization has expanded the size of market, it has permitted Indian business unit to expand their business in the whole world. Indian companies like Infosys, Tata consultancy, Wipro, Tata Steel, reliance etc, are doing their business in many countries of the world.

Technological Development: – globalization has promoted the technical collaboration of foreign companies. This collaboration enabled the inflow of modern advanced and superior foreign technology in India. Now Indian business units use this modern technology. It has resulted technological development of Indian business units.

 Brand Development: – Globalization has promoted the use of branded goods. Now not only durable goods are branded but products like garments, Juices, Snacks, food grains etc. are also branded. Brand development has led to quality improvement.

 Development of Capital Market: – Globalization has helped in Indian capital market development now many foreign investors invest in Indian capital market recently there has been substantial increase in inflow of foreign direct investment and portfolio investment.

Increase in Employment: – As a result of Globalization foreign companies are establishing their production and trading units in India. It has increased employment opportunities for Indian. E.g. many Indian’s are employed in foreign insurance companies, mobile companies etc.

Reduction in brain Drain: – as a result of globalization, many multinational corporations have set up their business units in India. These MNCs provide attractive salary package and good working conditions to efficient, Skilled Indian get good employment opportunities in India. It has resulted in reduction in brain- drain.

Negative Effect of Globalization on Indian economy:

Loss of Domestic industries: – as a result of Globalization foreign competition has increased in India. Because of better quality and low cost of foreign goods, many Indian industrial units have failed to face competition and have been closed.

Problem of Unemployment: – as a result of globalization foreign companies or even some Indian companies use capital intensive technology. With the increasing use of capital-intensive technology, the employment opportunities are reduced and increase the problem of unemployment in Indian economy.

Exploitation of Labour: – Globalization is exploiting unskilled workers by giving lower wages, less job security long working hours and worse working condition.

Increase in Inequalities: – Globalization has benefited MNCs and big industrial units but small and cottage industries are adversely hit by it. It has increased inequalities in India.

Conclusion:  The globalization is a mixed bag of success and failures. So, we need a policy of globalization which is beneficial, creates opportunities with the objective of growth, employment and equity and raise the welfare of people. We should adopt measures to ensure fair globalization policy.