Effects of Globalisation on Indian Society
Globalization is a significant factor in competitive world that integrate and mobilize cultural values of people at global level. In the age of rapid technical progression, many countries are unified and transformed due to the process of globalization. Globalization has a huge impact on cultural, social, monetary, political, and communal life of countries. Abundant theoretical studies demonstrated that globalization intercedes in a cultural life of populace that raises numerous critical issues (Robertson, 1992). In broad sense, the term 'globalization' means combination of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance and people. Globalization is described by theorists as the process through which societies and economies are integrated through cross border flows of ideas, communication, technology, capital, people, finance, goods, services and information.
Buy These Notes in PDF Format
Aspects of Globalisation
Cross country incorporation has several aspects and can be political, cultural, social and/or economic, all which equal globalization. Nevertheless, financial integration is the most common aspects. Economic integration involves developing a nation's economy into an international economy. After World War I and II the early trends of globalization decreased throughout the world due to many barriers which restricted the movement of goods and services. In fact, cultural and social integration are even more than economic integration. Globalization increases competitiveness at company level and national level, which leads company management and governments to embrace strategies designed to increase labour effectiveness with reference to productivity, quality and innovation.
Generally, globalization involves economies that are opening up to international competition and that do not distinguish against international capital. Consequently, globalization is often accompanied by a liberalization of the markets and the privatization of productive assets. But globalization also leads to unemployment, increasing casual employment and weakening labour movements. Theoretical literature denotes that Globalization has made countries to realize that they can share their cultural values and economic exchanges to promote business and gain competitive advantage. The fervour of globalization has even enforced Governments to be tuned to the merits of a Global economy. Management studies have defined the process of globalization. Fraser (2007) explained that Globalization is a word on every commentator's lips nowadays, but is very difficult to define satisfactorily, for it arises in so many different contexts like economic, sociological, political, cultural and environmental. Akteruzzaman.Md, 2006 stated that globalization is the interconnectedness of nations and regions in economic domain, in particular, trade financial flows and multinational corporations.
Concept of Globalisation
The concept of globalization means that the world is getting smaller as well as bigger. Akteruzzaman.Md, 2006 described that globalization can contribute to develop pattern of cross border activities of firms, involving international investment, trade and strategic alliances for product development, production, sourcing and marketing. These international activities companies to enter new markets, to exploit their technological and organizational advantages and to reduce business costs and risks. Other theorists stated that globalization is a social phenomenon that defines the geographical boundary in terms of many different issues. According Brinkman, 2002, globalization as a triumphalism light, as the penetration of capitalism into every corner of the world, bringing with it the possibility for all of the world's population to participate in the fruits of the international division of labour and market economy. ALI, 2015 explained the globalization as a process of rapid economic, cultural, and institutional integration among countries. This association is driven by the liberalization of trade, investment and capital flow, technological advances, and pressures for assimilation towards international standards. Globalization has reduced barriers between countries, thus resulting in strengthening of economic competition among nations, dissemination of advanced management practices and newer forms of work organization, and sharing of internationally accepted labour standards.
Challenges of globalization and its effects
Many theorists asserted that change in environment has both positive and negative aspects (Harris, 2002). These stimulate driving or resisting forces toward the change of the status quo. This is most obvious relative to both globalization, and the resulting spread of the global organization. There are four factors that accelerate globalization.
The market imperative: Impact on national economies of larger, transnational markets characterized by free, convertible currencies, open access to banking, and contracts enforceable by law.
The resource imperative: Growing interdependence of nations and their activities on one another, fostered by the depletion of natural resources, misdistributions of arable land, mineral resources, and wealth, as well as overpopulation. The undeveloped nations need the capital, technology, and brainpower of the wealthier countries, while the First World economies are progressively dependent on the natural and human resources of the developing nations.
The IT imperative: Modernizations in glob communications, science and technology contribute toward universalization or planarization.
The ecological imperative: Globalization does have great effect on the ecologies and environments of nations which need to safeguards that lessen the negative effects rather than exploiting without regard to such concerns.
India was main mover of globalization. The government of India made major modifications in its economic policy in 1991 by which it allowed direct foreign investments in the country. As a result of this, globalization of the Indian Industry occurred at large scale. In India, economic expansion was observed in nineteenth century due to major crisis led by foreign exchange. The liberalization of the domestic economy and enhanced incorporation of India with the global economy helped to step up gross domestic product (GDP) growth rates which made good position in global scale. Effects of globalization in Indian Industry are observed as this process brought in large amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As a result, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to offer great opportunities for employment to Indian people. Also this helped to reduce the level of unemployment and poverty in the country. It is observed that the major forces of globalization in India has been in the development of outsourced IT and business process outsourcing services. Since last many years, there is an increase of skilled professionals in India employed by both local and foreign companies to service customers in the US and Europe. These countries take advantage of India's lower cost but highly talented and English-speaking work force, and utilizes global communications technologies such as voice-over IP (VOIP), email and the internet, international enterprises have been able to lower their cost base by establishing outsourced knowledge-worker operations in India. The foreign companies brought in highly advanced technology with them and this made the Indian Industry more technologically advanced. Globalization in India has been beneficial for companies that have ventured in the Indian market. It is recommended by researchers that India has to focus on five important areas to enhance its economic status. The areas include technological entrepreneurship, new business openings for small and medium enterprises, the importance of quality management, new prospects in rural areas and privatization of financial institutions.
In terms of export and import activities, Many Indian companies have expanded their business and became famous at global level such as fast food, beverages, and sportswear and garment industries. Records indicated that Agriculture exports account for about 13 to 18% of total annual export of the country. In 2000-01, agricultural products valued at more than US$6 million were exported from the country of which 23% was contributed to the marine products alone. Marine products in recent years have emerged as the single largest contributor to the total agricultural export form the country accounting for over one fifth of the total agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the other prominent products each of which accounts for nearly 5 to 10% of the countries' total agricultural exports. Globalization speeded export of food items in India in the form of increased consumption of meat, western fast food, sodas and cool drinks, which may result in public health crisis. The rich biodiversity of India has yielded many healthy foods prepared from locally available entities. But the marketing by MNCs with large advertisement campaigns lead the people to resort to their products (Mascarenhas, 2003).
Figure: Indian companies going global:
Technological and Cultural impact of globalization in India
With the process of globalization, there is an access to television grew from 20% of the urban population (1991) to 90% of the urban population (2009). Even in the rural areas satellite television has a grown up market. In the cities, Internet facility is everywhere and extension of internet facilities even to rural areas. There is an increase of global food chain /restaurants in the urban areas of India. Excessive Multiplex movie halls, big shopping malls and high rise residential are seen in every cities. Entertainment sector in India has a global market. After economic liberalization, Bollywood expanded its area and showed a major presence in the global scale. The industry began to explore new ways to become more global and modern. In India, modernity is observed with the West. Therefore, Western philosophy began to be incorporated into Bollywood films. As these new cultural messages began to reach the Indian population, Indian moviegoers were pushed to re-evaluate their traditional Indian cultural ideology. Bollywood movies are also distributed and accepted at international level. Big international companies (Walt Disney, 20th Century Fox, and Columbia Pictures) are investing on this sector. Famous International brands such as Armani, Gucci, Nike, and Omega are also making investment in the Indian market with the changing of fashion statement of Indians.
Impact of globalization on education in India
There is immense effects observed in educational sector due to globalization such as literacy rate become high and Foreign Universities are collaborating with different Indian Universities. The Indian educational system faces challenges of globalization through Information technology and it offers opportunities to evolve new paradigms shifts in developmental education. The distinction between formal, non-formal and informal education will vanish when move from industrial society to information society takes place. Globalization promotes new tools and techniques such as E-learning, Flexible learning, Distance Education Programs and Overseas training.
It is observed in current Indian society that through globalization, women have gained certain opportunities for job options and to recognize women's rights as a part of the human rights. Their empowerment has given considerable opportunities and possibilities of improving employment conditions through global solidarity and co-ordination. It is found that the growth of computer and other technologies enabled women with better waged, flex timings, and capacity to negotiate their role and status in home and at corporate level.
There are some negative impact of globalization such as this process made disparity between rural and urban Indian joblessness, growth of slum capitals and threat of terrorist activities. Globalization increased competition in the Indian market between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods, the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies. This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labour required are decreased and this resulted increasing unemployment especially in the arena of the pharmaceutical, chemical, manufacturing, and cement industries. Some section of people in India that are poor do not get benefit of globalization. There is an increased gap between rich and poor that lead to some criminal activities. Ethical responsibility of business has been reduced. Another major negative effect of globalization in India is that youngsters of India leaving their studies very early and joining Call centres to earn fast money reducing their social life after getting habituated with monotonous work. There is an increase of every daily usable commodities. This has an adverse effect on cultural aspect. The institution of marriage is breaking down at fast rate. There are more people approaching divorce courts instead of maintaining marital life. Globalization has considerable impact on the religious situation of India. Globalization has brought about raising a population who is agnostic and atheist. People visiting places of worship are reducing with time. Globalization has reduced nationalism and patriotism in country.
It can be said that Globalization is motivating factor in current business environment. There are few challenges for companies due to globalization such as Migration, relocation, labour shortages, competition, and changes in skills and technology. Globalization powerfully influences the social partners' attitudes since traditional labour relations have to cope with completely new and very dynamic situations. In political field, globalization helps to eradicate poverty, malnutrition, illiteracy, ill-health and fighting cross border terrorism and global terrorism. Globalisation in context of status of women implicates the relegation of the stereotypic pattern of duties of the women like rearing and caring the children to the back ground and taking up the various diversified occupation and thus making their living quite vibrant and alive. Globalisation benefits the schedule caste people in promoting cultural homogeneity in the way of loosening of the ideas of pollution and purity and eradication of untouchability and so many socio-cultural and economic disabilities associated with them. Globalisation of goods has developed enthusiasm in India for western brand names. A consumerist mentality has been carefully fostered. This leads to an adversative impact on the tendency to save or the domestic accumulation of capital. Lastly, in Indian scenario, globalization developed a consumer credit society. Today, people can buy goods and services even if they do not have sufficient purchasing power and the prospect of raising a loan has become easy in the age of globalisation. Credit cards have given boost to consumerism and pushed many households into indebtedness. At the same time globalization has unfavourable impact on mass-media in India. Currently, realistic coverage of events and happening doesn't receive much importance because it doesn't determine the standing of a newspaper or TV channel. Globalisation has brought violation of journalistic ethics in India.
To summarize, the process of globalization has changed the industrial pattern social life of global people and it has immense impact on Indian trade system. The globalization of the economic, social and cultural structures happened in all ages. Previously, the pace of process was slow. Today with the start of the information technology, new ways of communication have made the world a very small place. With this process, there is a big market place. Globalization has resulted in increase in the production of a range of goods. MNCs have established manufacturing plants all over the world. It has positive effects and India will overcome many obstacles and adopt global policies to expand business at international scale. India is gaining international recognition and strengthening in economic and political areas.
Buy These Notes in PDF Format
India’s Economic Globalization: Crisis in Indian Economy and Emergence of Federal Market Economy!
International trade has always been a part of India’s history. Right from ancient time to medieval and modern, there has been international trade. In a limited sense, we always had some kind of globalization. This globalization was never without its social and cultural consequences.
Buddhism spread to most of the Asian countries. South-East Asia was a fertile land for the spread of Hinduism. The globalization that we find in the world today emerged in India during the year 1990s. The scope of trade and market which has been accelerated by the process of globalization, poses formidable cultural problems in both the developed and the developing societies.
Yogendra Singh (2000) identifies the development of globalization in India as under:
In India, which traditionally had quite a developed pre-industrial base of trade and market, the impact of the changing role of these institutions has been gradual. The market and trade relations continue to be located in local cultures even today.
Also, the economic policy of India up to the 1980s has been that of import substitution and protectionism in trade and market. The full momentum of the globalization of economy started from 1990s onwards, but many checks and balances continue to persist. The history of globalization in India has gained specificity. Here, it is linked with liberalization and privatization. Both the sociologists and economists talk about liberalization though inevitably their reference is to economic liberalization.
They hardly discuss modernization and its extension. However, they focus heavily on the status of nation-state in the new situation of liberalization. Normally, it is asked in India: what is the role of the nation-state in globalization? Do we say the state is dead and publish an obituary to that effect?
Thus, the political globalization in India ends up with the discussion on the survival and weakening of nation-state. Besides the nation-state, another issue relating to globalization is that of political ethnocentrism. We are scared in India that the U.S. would exercise its power over our political decisions. The fear is perpetual about the Americanization of India in most of its political decisions. Amit Bhaduri and Deepak Nayyar have characterized economic globalization in Indian perspective.
According to them, there are three important dimensions of globalization:
(a) Openness to international trade,
(b) Openness to international investment, and
(c) International finance.
Commenting on trade, investment and finance, which are the cutting edge of globalization, Bhaduri and Nayyar (1996) write:
All these (trade, investment and finance) three aspects of openness have increased with equal or even similar speed. In such a pattern of economic globalization, which is basically European, the multinational corporations organize the production operations on a global scale. With their branches spread out across different countries of the world, these multinational corporations can also choose, relatively freely, their global investment and employment pattern.
The globalization, as it has developed all over the world, gave dominant status to multinationals over the nation-state and national economy. In fact, there emerged a new ideology of economic liberalization in the west and other parts of the world. Let us see how globalization came to India in the form of liberalization and privatization.
Crisis in Indian economy: Liberalization and structural adjustment Liberalization in India is a crisis-driven response. There was fiscal crisis with the government. The fiscal gap between growth in output and the rate of interest widened.
Explaining the Indian fiscal crisis, Bhaduri and Nayyar (1996) observe:
The external debt crisis, which surfaced in early 1991, brought India close to default in meeting its international payments obligations. The balance of payments situation was almost unmanageable. The fear of acceleration in the rate of inflation loomed large. The underlying fiscal crisis (an imbalance between income and expenditure of the central government) was acute.
The crisis which the central government had to face in 1991 was not a bolt from out of the blue. It accumulated over several years through negligent policies driven by a short-sighted politics of convenience. A short span of four months, from November 1990 to March 1991, witnessed the fall of two governments. During the period when Narsimha Rao was Prime Minister and Manmohan Singh was Finance Minister, the central government had accepted liberalization as its economic policy. All this happened in 1991.
Economic globalization and structural reforms in Indian economy:
In conformity with the orthodox wisdom of the IMF and the World Bank, the government set in motion a process of macro-economic stabilization combined with fiscal adjustment and structural reform. The meaning of stabilization in economics is much the same as m medicine: just as medical treatment seeks to stabilize the health of a patient in a critical condition, economic management attempts to stabilize an economy in deep crisis.
Explaining the method of economic stabilization adopted by the Government of India, Bhaduri and Nayyar (1996) write:
Any programme of economic stabilization has two fundamental objectives: its first aim is to pre-empt a collapse of the balance of payments situation in the short term by reducing the deficit on current account as much as possible. Its other objective is to curb inflation. While the balance of payments and inflation are deemed as problems, unemployment, poverty or economic deprivation – India’s million mutinies – receive no more than passing mention in stabilization.
Structural adjustment of economic globalization:
Economic globalization has two basic components: liberalization and privatization.
In order to win over the problems of cultural crisis, the government made two structural adjustments:
(1) Structural adjustment and reform seeks to shift resources from the non-traded goods sector to the traded goods sector and within the latter from import competing activities to export activities, and from the government sector to the private sector. Apart from such allocation of responses, structural reform seeks to improve resource utilization.
(2) It changes the structure of incentives and institutions in favour of private initiative and against state intervention. The general economic philosophy is to rely more on market forces, and wind down the public sector in the hope that the vacuum will be filled by the private sector.
Liberalization and market forces occupy the front seat:
With the adoption of liberalization as a part of economic globalization, the private sector is given priority for investment and trade. Now, license and permit system which rested with the government has been liberalized in favour of private sector. In simple words, liberalization means lesser control of government in matters of trade and investment. It is the beginning of the death of state.
Second, market has been given prior position in the economic globalization. Trade, investment and exchange are determined by the market. All in all, in the context of liberalization, the state has been given the fear seat.
The policy does not take into consideration the priorities of the ordinary people, nor does it have a long-term view of development objectives. The public sector, which was considered to be a vehicle to bring socialism by Nehruji, has been given a death blow. It is now closing its shutters.
Privatization: A part of liberalization:
The experience of government working in the public sphere has proved that it is inefficient in the management of things. A notion goes around that anything which is running smoothly, if given to the state, it will surely worsen. It would be shattered; doomed. Despite giving enormous subsidies, the public gets degenerated.
Indeed, the subsidy is often so large that it provides a basis for some to argue that the state-run system should be abandoned altogether. In fact, the general public is wary of government intervention in the market and see virtue in privatization.
Those who are champions of economic liberalization and privatization believe that most economic problems should be left to the market. These ideologies favour the minimalist state and wish to roll back the government wherever possible. Liberalizations, privatization and market constitute the central part of India’s perspective on economic globalization.
Arundhati Roy (2001), a top-most fiction writer and the one who is associated with a large number of non-government organizations, defines privatization in the context of contemporary economic globalization:
Privatization is the transfer of public productive assets from the state to private companies. Productive assets include natural resources, earth, forest, water, air. These are assets that the state holds in trust for the people it represents.
Arundhati narrates the story of Enron of the U.S., the private power project in India. The Maharashtra government enter into contract with this company. The power that the Enron plant produced was twice as expensive as the cheapest electricity available in Maharashtra.
At last long, being caught in several technicalities, the contract with the Enron was cancelled. She makes severe charges on such a kind of privatization adopted by the government. It is looting through liberalization, she says. Privatization is presented as being the only alternative to an inefficient, corrupt state.
She gives her assessment of privatization as below:
India’s politicians have virtually mortgaged their country to the World Bank. Today, India pays back more money in interest and repayment installments it receives. It is forced to incur new debts in order to repay old ones. In other words, it is exporting capital.
Emergence of federal market economy:
When Jawaharlal Nehru was the Prime Minister of the country in 1950s, the nation had a centrally planned economy. It was called command economy. The construction of big dams, public sector factories and development programmes of industrial development were planned and implemented by this command economy. The planned economy received a shift in 1991 when the government accepted liberalization and privatization. This shift is towards federal market economy.
Lloyd Rudolph and Susanne Rudolph (2001) define federal market economy as under:
Our use of the term ‘federal market economy’ is meant to draw attention to the fact that the new imagined economy evokes not only the decentralization of the market but also new patterns of shared sovereignty between the states and the centre far economic and financial decision-making. This increasing sharing shifts India’s federal system well beyond the economic provisions of its formal constitution.
The federal market economy has some crucial consequences. It strikes at the centrally planned command economy. Of the last decade, it has become clear that if economic liberalization is to prevail, it is the state governments and their chief ministers that can and must break the bottlenecks holding back economic growth.
If state chief ministers have become marquee players in the drama of the federal market economy, business leaders, economic regulators and a new breed of policy intellectuals can be found in conspicuous supportive roles.
Federal market economy has also dismantled the permit-license-raj and has put an increasing reliance on markets. All these developments – liberalization, privatization and decentralization of command economy – have given a serious blow to the sovereignty of India’s nation-state.