Effects of Globalization on Indian Society
Globalisation refers to the integration of markets in the global economy, leading to the increased interconnectedness of national economies. Markets where globalisation is particularly common include financial markets, such as capital markets, money and credit markets, and insurance markets, commodity markets, including markets for oil, coffee, tin, and gold, and product markets, such as markets for motor vehicles and consumer electronics. The globalisation of sport and entertainment is also a feature of the late 20th and early 21st centuries.
Effects of Globalization on Indian society
The economic liberalization in India initiated in 1991 refers to the economic liberalization of the country’s economic policies, with the goal of making the economy more market oriented and expanding the role of private and foreign investment. Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes and greater foreign investment.
Liberalization has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s. Its opponents have blamed it for increased poverty, inequality and economic degradation. There exists lively debate in India as to what made the economic reforms sustainable. Indian Government coalitions have been advised to continue liberalization. Before 2015 India grew at slower pace than China which has been liberalizing its economy since 1978. But in the year 2015 India outpaced China in terms of GDP growth rate.
We have seen landmark shift in Indian Economy since the adoption of new economic policy in 1991. This had far reaching impacts on all spheres of life in India. There can be no concrete conclusion about their impact on Indian people. This turns out to be more of an ideological debate like Capitalism vs. Socialism. But there is no doubt in the fact that those reforms were un-avoidable and very compelling. There was in fact, similar wave all across the globe after disintegration of USSR and end of the Cold War. Many Post – Colonial democratic regimes, which were earlier sheltered by USSR, lost their umbrella.
They had no option, but to fall in the line to new unipolar world order dictated by USA. Even China in late 1980s adopted Open Door Policy “through which it liberalized its economy by shedding communist mentality completely.
Privatization implies induction of private ownership in state owned enterprises. It is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, which usually operates for a profit.
One of the main arguments for the privatization of publicly owned operations is the estimated increases in efficiency that can result from private ownership and business practices. The increased efficiency is thought to come from the greater importance that the private firms make on profit maximization.
India is a mixed economy with both the private sector and the public sector performing various activities in accordance with regulations. But the public sector was affected by inefficiencies and incompetence in a non-sustainable manner by 1991. The New Industrial Policy of 1991 contained several reform measures for the public sector. Some of them are selling of loss making units to the private sector, inviting private participation in PSEs, and strategic sale.
Some of these reform measures included privatization in a low degree. In India, hence privatization was in a unique form in accordance with the priorities of our mixed economy and as well as by considering operational aspects of the PSUs. Privatization in the country was launched mainly to enhance the efficiency of the public sector enterprises as well as to concentrate the operation of the public sector in priority areas.
Foreign Direct Investment (FDI) and Globalization of Financial Market
Foreign Direct Investment (FDI) is money invested in production by a foreign party rewarded with part-ownership of production. Of the three important aspects of liberalisation – finance, trade and investment – financial liberalisation has been the most pronounced.
During this globalisation era there has been progressive and extensive liberalisation of controls on financial flows and markets leading to economic globalisation. Economic globalisation and financial liberalisation centres on the movement of capital of which FDI was a major form.
From the beginning of the 1980s, FDI flows have grown much faster than the world output or trade or domestic fixed investment. The growth of FDI in the 1990s was enormous. The initial burst of FDI in the late 1980s was almost entirely in developed countries (over 80% of the total) and predominantly from five leading developed countries (over two thirds). In the 1990s developing countries began to attract substantial FDI and there has been genuine geographical broadening of FDI. Since early 1990s, FDI flows to the developing countries have raised relatively averaging 32% of the total in 1991-1995 compared to the 17% in 1981-1990.
This was due to the liberalisation of foreign investment policies in most of the developing countries during the 1990s. Private capital flows for direct investment and portfolio investment for developing countries have grown from $ 25 billion in 1990 to $150 billion in 1997. Also, during this period there have been qualitative and quantitative changes in the world of international integration of global markets through the medium of FDI.
International Trade Regulatory Body – WTO
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other.
Multinational and Transnational Companies and their Functioning
Multinational companies, also known as transnational corporations depending on nature of operations, are a very important feature of the modern, globalised economy. A multinational company may be defined as one, which operates in a number of countries and has production or service facilities outside its country of origin. The history of multinational companies could be said to have begun with the founding of the British East India Company in 1600.
According to United Nations estimates, there are 5,000 companies with direct investments outside their headquarters country. The 100 largest of them account for about 40 per cent of cross-border assets. It is possible that they account for about one-quarter of world trade. Much trade is intra-company trade, i.e., taking place between different branches of the same company.
There are a number of reasons why companies decide to become multinational by investing in overseas operations. There may be a desire to have production facilities nearer to the market or the source of raw materials in order to keep down transport costs. If a country has high tariffs on imported goods, establishment of a factory in that country may be seen as a way of obtaining tariff-free access to that market.
The deregulation of economies and financial markets led to a sharp increase in financial transactions across national boundaries. The process of globalisation has brought to the fore a new set of international actors the multinational corporations (MNCs). The MNCs are often described as corporate giants. The annual turnover of certain MNCs is equal to the combined GDP of a few countries. These institutions have financial activities in different countries simultaneously. During the 1990s the process of globalisation intensified the activities of the MNCs across the world.
Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Bank’s Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries.
Foreign Direct Investment (FDI) received in Construction Development sector (townships, housing, built up infrastructure and construction development projects) from April 2000 to March 2017 stood at US$ 24.3 billion, according to the Department of Industrial Policy and Promotion (DIPP).
Outsourcing of Services
Business process outsourcing to India refers to the business process outsourcing services in the outsourcing industry in India, catering mainly to Western operations of multinational corporations (MNCs). As of 2012, around 2.8 million people work in outsourcing sector. Annual revenues are around $11 billion, around 1% of GDP. Wages are rising by 10–15 percent as a result of skill shortage. Analysts believe that India remains a vital destination for outsourcing and expect its annual GDP to grow at 8–10% for the next decade.
The industry has been growing rapidly. It grew at a rate of 38% over 2005. For the FY06 financial year the projections is of US$7.2 billion worth of services provided by this industry. The base in terms of headcount being roughly 400,000 people directly employed in this Industry. The global BPO Industry is estimated to be worth 120–150 billion dollars, of this the offshore BPO is estimated to be some US$11.4 billion.
India thus has some 5–6% share of the total Industry, but a commanding 63% share of the offshore component. The U.S $7.2 billion also represents some 20% of the IT and BPO Industry which is in total expected to have revenues worth US$36 billion for 2006. The headcount at 400,000 is some 40% of the approximate one million workers estimated to be directly employed in the IT and BPO Sector.
Withdrawal of National Government from Social Sector
Although central allocation for programmes in the social sector has gone up by almost ten times in the last decade, part of the increase is illusory because the Pay Commission Award has added to the salary burden. Thus the budget increase may not have resulted in corresponding increase in the number of teachers or doctors. Second, 70 to 80 per cent of the total expenditure on the social sector is borne by the states, but they have not been able to arrest the decline in social expenditure as a proportion of their total expenditure. It is likely that as Government of India stepped up its share in social sector expenditure, states decided to cut down on the plan schemes that they were supporting till the last decade.
There is enough evidence to show that government’s capacity to deliver has declined over the years due to rising indiscipline and a growing belief widely shared among the political and bureaucratic elite that the State is an arena where public office is to be used for private ends. Weak governance, manifesting itself in poor service delivery, excessive regulation, and uncoordinated and wasteful public expenditure are some of the key factors impinging on development and social indicators.
Government programmes also tend to discriminate against and exclude those who need them most, compounded by state hostility to poor urban migrants, street and slum residents, dispersed hamlets and unorganised workers such as hawkers.
Labour Reforms and Deteriorating Labour Welfare
A proper balance between choices is of utmost importance so that nei¬ther labour welfare is injured nor industrial peace is disturbed. Thus, labour reforms are of great important as the laws enacted in the labour market aim at regulating the market, protecting employment and ensuring social security of workers.
Labour reforms essentially mean taking steps in increasing production, productivity, and employment opportunities in the economy in such a manner that the interests of the workers are not compromised. “Essen¬tially, it means skill development, retraining, redeployment, updating knowledge base of workers-teachers, promotion of leadership qualities, etc. Labour laws are con¬cerned with the trade union rights of the work¬ers, industrial relations and job security and policies relating to wages, bonus and other in¬centive schemes.
A large number of establishments oper¬ate in the organised sector where labourers cannot organise themselves to pursue their common interests due to various constraints. Most importantly, this sector is virtually free from any outside control and regulation with little or no job security.
Feminization of Labour
With more and more women joining the work force in India, questions are arising about working conditions, the casualization of work and a ‘Feminization of Labour’. There has been hope that women’s’ entrance into wage labour could change traditional female roles in society. But as India’s informal sector is growing and absorbing low-paid female workers, the casual nature of the informal economy looks unlikely to fulfil these hopes. How to provide social security services to workers in the informal economy and ensure higher labour standards then becomes a question with a considerable gender impact. This interview gives an outline of the status of working women in the Indian economy and addresses the context for gender-targeted measures of social security.
Women’s economic activity rate has increased in two sectors: in the agricultural and in the realm of the informal economy. It is extremely important here to distinguish between the formal and the informal economy as well as nature of women’s increasing engagement in agriculture sector, as the findings are in fact quite diverse in the different sectors.
Observations can also be made with regards to India’s huge informal sector. 83.8 % of South Asian women are engaged in so called ‘vulnerable employment’. The work that these women are doing can in most cases be qualified as ‘casual labour’, piece-work such as the manufacturing of garments and other small items, produced within the restraints of the workers’ household. Informal labour is generally qualified by the absence of decent labour conditions as recommended by the ILO and a lack of any sort of secure and sufficient wages. Women workers present a considerable share of this so called informal workforce, a share that has in fact risen substantially over the last 20 years.
Precisely this increase in the informal economy has to be critical because it mirrors the developments in the formal economy. Obviously, women’s employment in the official and recognized sphere of the formal economy has to be the desired aim of any economic policy directed at women workers. But while the percentage of women employed in the informal economy remains high, the number of Indian women engaged in formal, secure and recognized labour is still minimal. Only 14-15% of workers in the formal sector are women, their numbers hardly rising over the past years.
This question has particular urgency in India, the world’s largest democracy and home to one-third of the world’s extremely poor. This year marks approximately two decades since India embarked on major economic reforms — and although official poverty rates have declined sharply since then, millions of citizens continue to live in hardship.
Meeting these aspirations will pose an array of challenges for the next government —challenges that require a deeper and more nuanced understanding of poverty.
The Government says that just 22 percent of Indians are poor. This is India’s official poverty rate, but it counts only those in the most abject circumstances — and even a cursory scan of India’s human development indicators suggests more widespread deprivation. The Empowerment Line reveals that 56 percent of Indians, some 680 million, lack the means to meet their basic needs. Just above the official poverty line, some 413 million are “vulnerable.” They have only a tenuous grip on a better standard of living, and shocks such as illness or a lost job can easily push them back into desperate circumstances.
Hunger remains a daily fact of life for the poorest of the poor. But health care, drinking water, and sanitation constitute 40 percent of the population’s unmet needs by value. India’s national debate on poverty tends to focus on calorie sufficiency rather than these critical services. On average, Indians lack access to over half the health care infrastructure and services they need.
India has been committing more resources to social welfare. Public spending for basic services rose by some 11 percent per year in real terms from 2005 to 2012, eventually reaching $118 billion. But about half of this spending did not translate into real benefits for the poor due to waste, corruption, or simple ineffectiveness. Rising government spending did drive about one-fourth of poverty reduction from 2005 to 2012, but jobs and rising incomes accounted for most of the progress that was achieved.
India has already made striking gains against extreme poverty, but the harsh reality is that 680 million of its citizens live with various forms of deprivation. If the country’s recent economic slowdown continues, it is likely that some 470 million of them would remain below the Empowerment Line in 2022, and 12 percent of the population could remain trapped in extreme poverty. But if the new government adopts an ambitious reform agenda and focuses on execution and results, India could be poised to take a historic step forward in its economic and human development — one that not only eradicates extreme poverty but also delivers better living standards to more half a billion people.
Unsustainable Development Practices
India is booming and sustainable development becomes increasingly more important. According to a United Nations report, India’s population currently encompasses about 1.2 billion people and is expected to grow by another 300 million people within next couple of decades. With cities generating two thirds of countries economic out put, an increasing number of Indians are leaving rural areas to seek employment in cities.
By 2030, it is predicted that sixty eight Indian cities will have more than one million inhabitants and six megacities with more than ten million each. The rapid growth of cities causes a large number of challenges, including insufficient power supply, unreliable public transport, limited access to adequate medical treatment. To meet the challenges of continuing growth, without destroying environment and social harmony, city planning for sustainable development is crucial.
Side by side village people, who form two third of population but a meager twenty percent of Indian economy to support them, throw an equally formidable challenge on the nation for sustainable growth of the country as a whole. Villages are to be provided with facilities like good schools, good primary health centers, good sanitation, adequate supply of drinking water and electricity ,good connectivity-both roads as well as internet. Villagers should be provided with job opportunities to improve their living standards. Agriculture on which they mostly depend must be supported with research to improve yield. The farmers should get remunerative price for their produce. In any case the food items produced by them sell at very high prices in the towns and cities. There is a constant demand for wheat, rice vegetables and fruits in the cities and even in foreign lands.
It is for the government and society at large to ensure this. So to make the development truly sustainable, the village population and the the city’s poor population has to be provided with decent standard of living. The environment has to be protected. The women and other weaker sections of the society have to be empowered. In other words, the development has to be inclusive and also environmentally and socially sustainable.
Migration and Urbanization
Global and Indian experiences (across states) show that productivity and growth are strongly correlated with urbanization. Given that urban productivity is much higher than rural, a shift in labour force from rural to urban activities is a key source of growth. International evidence also suggests that allowing existing urban agglomerations to grow may be a more efficient strategy than creating new urban areas.
The theory in favour of urbanization is also quite compelling. There are three economic explanations for the link between urbanization and productivity. First, it deepens local product and labour markets, leading to greater competition and efficiency. Second, it permits more specialization and division of labour and, hence, productivity improvements. Third, it enables greater learning at all levels of workers, and better technology adoption and innovation. Also, urbanization lowers transaction and logistical costs, and permits greater economies of scale and scope, all of which contribute to growth.
Urbanization is also strongly linked to rapid improvements in social indicators, such as health and education, as economies of scale and scope are more pronounced in the supply of these services than even in industry. Health and education indicators are persistently higher in urban areas relative to rural, across and within Indian states.
Commercialization of Indigenous Knowledge
As the the inventor of traditional knowledge is usually a group of people, and because the knowledge is usually historical in nature, the majority of traditional knowledge is held by indigenous communities. traditional knowledge has an important role for indigenous people who use and develop it, as traditional knowledge ensures its continuity as a dynamic, evolving system that reflects and regulates the lives of indigenous people.
However, as a dynamic knowledge, traditional knowledge also has an interesting role for scientific discovery, which puts it in a unique position for scientific use. A notable example of the use of traditional knowledge in attributing to modern development is the use of traditional knowledge in primary sectors of the economy including agriculture, pastoralism, forestry, fisheries, water and products made from natural resources.08 The role of traditional knowledge in the secondary and tertiary sectors has become increasingly important as the growing trend of people using organic products encourages big corporations to spend and direct significant portions of its budget to research and development to look for ways to produce more natural and environmentally-friendly products, hence exploiting traditional knowledge to increase their profits.
Overall, the use and exploitation of traditional knowledge can establish community enterprise, improve livelihoods and alleviate poverty with its unique characteristic that prioritizes sustainable environment. As a result of its wide range of commercial and scientific uses, traditional knowledge has become valuable knowledge to non-indigenous outsiders making it vulnerable to abuse by means such as unauthorized commercialization, photographing indigenous people without permission or claiming traditional knowledge as a personal invention.
Rising Inequality in Wealth Concentration
In signs of rising income inequality, India’s richest one per cent now hold a huge 58 per cent of the country’s total wealth — higher than the global figure of about 50 per cent. India suffers from huge gender pay gap and has among the worst levels of gender wage disparity — men earning more than women in similar jobs — with the gap exceeding 30 per cent.
In India, women form 60 per cent of the lowest paid wage labour, but only 15 per cent of the highest wage-earners. It means that in India women are not only poorly represented in the top bracket of wage-earners, but also experience wide gender pay gap+ at the bottom. More than 40 per cent of the 400 million women who live in rural India are involved in agriculture and related activities. However, as women are not recognised as farmers and do not own land, they have limited access to government schemes and credit, restricting their agricultural productivity.
Increased Pace of Cultural Penetration
New forms of online cultural participation have emerged with the development of digital technologies and the spread of internet.
With the development of streaming technology and smart TV, more and more films, videos, TV programs and series can be accessed via internet. Specifically dedicated platforms offer streaming services but also traditional TV broadcasters adapt their offer and propose their content to be viewed on internet in time-delayed form. It must be noted that downloading is not included in this variable. Like films and videos, music and radio broadcasting are also available on streaming.
The Globalization of Culture
Cultural globalization involves the spread of language, the arts, food, business ideas, and technology, and therefore, its impact is felt by almost everybody in the world. The globalization of the production and distribution of goods and services is a welcome development for many people in that it offers them access to products that they would not otherwise have. However, some are concerned that the changes brought about by globalization threaten the viability of locally made products and the people who produce them. For example, the new availability of foreign foods in a market—often at cheaper prices—can displace local farmers who have traditionally earned a living by working their small plots of family-owned land and selling their goods locally.
Globalization, of course, does more than simply increase the availability of foreign-made consumer products and disrupt traditional producers. It is also increasing international trade in cultural products and services, such as movies, music, and publications. The expansion of trade in cultural products is increasing the exposure of all societies to foreign cultures. And the exposure to foreign cultural goods frequently brings about changes in local cultures, values, and traditions. Although there is no consensus on the consequences of globalization on national cultures, many people believe that a people’s exposure to foreign culture can undermine their own cultural identity.
Development of Hybrid Culture
India never had a concept of multi-lingual as we did not have a concept of monolingual right from the early ages of civilisation. Diversity of languages was a natural extension of the diversity of the places.