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Effect of globalisation on Indian economy

  • India’s share in the world exports has risen to 1% in 2005 and further to 1.6% in 2012 in comparison to 0.53% in 1991 and 1.78% in 1950 (See chart 1) 
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  • ƒOur foreign currency reserves which were 1 billion USD in June 1991 rose to 294 billion USD at the end of March 2012
  • ƒSince 2002-03, exports have picked up and the average growth of export has been more than 24 % p.a. since 2002-03. During 10th FYP export has increased about 24% per annum
  • ƒOur exports which financed only about 60% of our imports in the latter half of the eighties, now finance nearly 80% of imports. The current account deficit which was 3% of GDP in 1990-91 had fallen to less than 1% in 2000-01. However, during 2001-04, we had a surplus in our current account (0.7-2.3% of GDP). The current account deficit reached (-) 4.2 of GDP in 2011-12
  • ƒThe exchange rate for the rupee has remained quite stable
  • ƒOur FDIs which were just 155 million dollars in 1991, have risen to about 8.9 billion dollars in2005-06 and further to 22 $ in 2008-09. This exhibits international confidence in India. However, it fell to 18 billion U.S. dollars in 2009-10 as a result of global financial disturbances but increased to US 22 $ billion in 2011-12. (See chart 2) 
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  • ƒAvailability of larger variety of consumer goods, improved quality of goods and reduced prices of consumer durables are some of the advantages that Indian consumers now enjoy
  • ƒIndia’s rating has been upgraded by the rating agencies which rate investment risks in countries for global investors
  • ƒIndian market’s responses are in line with the fluctuation in U.S. or U.K. markets and the stock market indices of countries across the globe show significant corresponding movements in Indian market
  • ƒThere has been an increased focus on quality management and Human Resources and Development programmes
  • ƒThere have been a large number of takeovers, foreign collaborations, technology transfer agreements between Indian and multinational companies
  • ƒMany Indian companies like Asian Paints, Tatas, Infosys, etc. are now operating abroad
However, it is argued that the competition was not among equals, but between 2 sections which are poles apart in terms of their financial ability the financially strong corporations and the economically weak Indian corporate. Also, globalised economies perform well during a period of dynamism and high growth, whereas they are prone to collapse and downturn in international economic activity.

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