EFFECTS OF THE GLOBALIZATION ON INDIAN ECONOMY

ABSTRACT

The term ‘globalization’ was first used by social scientists to refer to the evolution of separate human societies into a single global society. Examples of this were ancient empires trading with each other and also the worldwide alliances, during World War I and World War II. By the 1980’s, the term was commonly used for specifically economic globalization. Now, it refers to worldwide trade linking economies together in such a way that they are all interdependent. Simply, it can be said that “Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner.” The process of globalization not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNCs, population migrations and increased mobility of persons, goods, capital, data and ideas, but also infections, diseases and pollution. In present scenario, the term globalization refers to the integration of world economies, through uninhibited trade and financial flows, and also through mutual exchange of technology and knowledge, etc. It contains free inter-country movement of labour as well. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) have made the Indian economy as fastest growing economy and globally competitive. In Indian context, 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. As a development paradigm globalisation is now widely accepted in India. It has changed many fiscal, monetary, trade and industrial practices in India. Their changes reflect the Indian efforts to globalise its economy to achieve higher growth rate.

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