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Globalisation- Opportunities and Challenges

GLOBALIZATION- OPPORTUNITIES AND CHALLENGES

(with impact on Indian Economy)

Introduction

Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

Globalization has many meanings depending on the context. In context to India, 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; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.

Impact of Globalization of Indian Economy

At the present, we can say about the tale of two Indias: We have the best of times; we have the worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by globalization.

Though some economic reforms were introduced by the Rajiv Gandhi government (1985-89), it was the Narasimha Rao Government that gave a definite shape and start to the new economic reforms of globalization in India. Presenting the 1991-92 Budget, Finance Minister Manmohan Singh said: After four decades of planning for industrialization, we have now reached a stage where we should welcome, rather fear, foreign investment. Direct foreign investment would provide access to capital, technology and market.

In the Memorandum of Economic Policies dated August 27, 1991 to the IMF, the Finance Minister submitted in the concluding paragraph: The Government of India believes that the policies set forth in the Memorandum are adequate to achieve the objectives of the program, but will take any additional measures appropriate for this purpose. In addition, the Government will consult with the Fund on the adoption of any measures that may be appropriate in accordance with the policies of the Fund on such consultations.

The Government of India affirmed to implement the economic reforms in consultation with the international bank and in accordance of its policies. Successive coalition governments from 1996 to 2004, led by the Janata Dal and BJP, adopted faithfully the economic policy of liberalization. With Manmohan Singh returned to power as the Prime Minister in 2004, the economic policy initiated by him has become the lodestar of the fiscal outlook of the government.

The Bright Side of Globalization

The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to seven per cent in the 1993-2001 period. In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05), 9% (2005-06) and 9.2%(2006-07). Prime Minister Manmohan Singh is confident of having a 10% growth in the GDP in the Eleventh Five Year Plan period.

The foreign exchange reserves (as at the end of the financial year) were $ 39 bn (2000-01), $ 107 bn (2003-04), $ 145 bn (2005-06) and $ 180 bn (in February 2007). It is expected that India will cross the $ 200 bn mark soon.

The cumulative FDI inflows from 1991 to September 2006 were Rs.1, 81,566 crores (US $ 43.29 bn). The sectors attracting highest FDI inflows are electrical equipments including computer software and electronics (18 per cent), service sector (13 per cent), telecommunications (10 per cent), transportation industry (nine per cent), etc. In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient.

India controls at the present 45% of the global outsourcing market with an estimated income of $ 50 bn.

In respect of market capitalization (which takes into account the market value of a quoted company by multiplying its current share price by the number of shares in issue), India is in the fourth position with $ 894 bn after the US ($ 17,000 bn), Japan ($ 4800 bn) and China ($ 1000bn). India is expected to soon cross the trillion dollar mark.

As per the Forbes list for 2007, the number of billionaires of India has risen to 40 (from 36 last year)more than those of Japan (24), China (17), France (14) and Italy (14) this year. A press report was jubilant: This is the richest year for India. The combined wealth of the Indian billionaires marked an increase of 60 per cent from $ 106 bn in 2006 to $ 170 bn in 2007. The 40 Indian billionaires have assets worth about Rs. 7.50lakh crores whereas the cumulative investment in the 91 Public Sector Undertakings by the Central Government of India is Rs. 3.93 lakh crores only.

The Dark Side of Globalization

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On the other side of the medal, there is a long list of the worst of the times, the foremost casualty being the agriculture sector. Agriculture has been and still remains the backbone of the Indian economy. It plays a vital role not only in providing food and nutrition to the people, but also in the supply of raw material to industries and to export trade. In 1951, agriculture provided employment to 72% of the population and contributed 59% of the gross domestic product. However, by 2001 the population depending upon agriculture came to 58% whereas the share of agriculture in the GDP went down drastically to 24 per cent and further to 22% in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness.

The agricultural growth of 3.2% observed from 1980 to 1997 decelerated to two per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006 stated that the growth rate of agricultural GDP including forestry and fishing is likely to be below two per cent in the Tenth Plan period.

The reasons for the deceleration of the growth of agriculture are given in the Economic Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and lo post-harvest value addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.

The number of rural landless families increased from 35 %in 1987 to 45 % in 1999, further to 55% in 2005. The farmers are destined to die of starvation or suicide. Replying to the Short Duration Discussion on Import of Wheat and Agrarian Distress on May 18, 2006, Agriculture Minister Sharad Pawar informed the Rajya Sabha that roughly 1, 00,000 farmers committed suicide during the period 1993-2003 mainly due to indebtedness.

In his interview to The Indian Express on November 15, 2005, Sharad Pawar said: The farming community has been ignored in this country and especially so over the last eight to ten years. The total investment in the agriculture sector is going down. In the last few years, the average budgetary provision from the Indian Government for irrigation is less than 0.35%.

During the post-reform period, India has been shining brilliantly with a growing number of billionaires. Nobody has taken note of the sufferings of the family members of those unfortunate hundred thousand farmers.

Further, the proportion of people depending in India on agriculture is about 60 % whereas the same for the UK is 2 %, USA 2 %and Japan 3 %. The developed countries, having a low proportion of population in agriculture, have readily adopted globalization which favors more the growth of the manufacturing and service sectors.

About the impact of globalization, in particular on the development of India, the ILO Report (2004) stated: In India, there had been winners and losers. The lives of the educated and the rich had been enriched by globalization. The information technology (IT) sector was a particular beneficiary. But the benefits had not yet reached the majority, and new risks had cropped up for the losersthe socially deprived and the rural poor. Significant numbers of non-perennial poor, who had worked hard to escape poverty, were finding their gains reversed. Power was shifting from elected local institutions to unaccountable trans-national bodies. Western perceptions, which dominated the globe media, were not aligned with local perspectives; they encouraged consumerism in the midst of extreme poverty and posed a threat to cultural and linguistic diversity.

Social Services: About the quality of education given to children, the Approach to the Eleventh Five Year Plan stated: A recent study has found that 38 per cent of the children who have completed four years of schooling cannot read a small paragraph with short sentences meant to be read by a student of Class II. About 55 per cent of such children cannot divide a three digit number by a one digit number. These are indicators of serious learning problems which must be addressed. The less said about the achievements in health the better. The Approach to the Eleventh Plan concedes that progress implementing the objectives of health have been slow. The Report gave the particulars of the rates of infant mortality (per 1000 live births) for India as 60 against Sri Lanka (13), China (30) and Vietnam (19). The rate of maternal mortality (per 1, 00,000 deliveries) of India is 407 against Sri Lanka (92), China (56) and Vietnam (130).

Growth of Slum Capitals: In his 2007-08 Budget Speech, Finance Minister Chidambaram put forth a proposal to promote Mumbai as a world class financial centre and to make financial services the next growth engine of India. Of its 13 million population, Mumbai city has 54 per cent in slums. It is estimated that 100 to 300 new families come to Mumbai every day and most land up in a slum colony.

The cumulative FDI inflows (until September 2006) to the New Delhi region were of Rs. 27,369 crores and to Mumbai Rs. 24,545 crores. The two spots of New Delhi and Mumbai received 46 per cent of the total FDI inflows into India. The FDI inflows have in no way assisted in improving the health and environment conditions of the people. On the other hand, the financial capital of India and the political capital of India are set to become the topmost slum cities of the world.

To make Globalization Work

Under the phenomenal growth of information technology which has shrunk space and time and reduced the cost of moving information, goods and capital across the globe, the globalization has brought unprecedented opportunities for human development for all, in developing as well as developed countries. Under the commercial marketing forces, globalization has been used more to promote economic growth to yield profits to some countries and to some groups within a country.

India should pay immediate attention to ensure rapid development in education, health, water and sanitation, labor and employment so that under time-bound programmes the targets are completed without delay. A strong foundation of human development of all people is essential for the social, political and economic development of the country.

Though at present India appears to be dominant in some fields of development as in IT-ITES, this prosperity may be challenged by other competing countries which are equipping themselves with better standards of higher education. As detailed earlier, our progress in education has been slow and superficial, without depth and quality, to compete the international standards.

The government should take immediate steps to increase agricultural production and create additional employment opportunities in the rural parts, to reduce the growing inequality between urban and rural areas and to decentralize powers and resources to the panchayati raj institutions for implementing all works of rural development. Steps should be taken for early linking of the rivers, especially in the south-bound ones, for supply of the much-needed water for irrigation.

It should be remembered that without a sustainable and productive growth of the agricultural sector, the other types of development in any sphere will be unstable and illusory. Despite the concerted development in manufacturing and service sectors, despite the remarkable inflow and overflow of foreign reserves, agriculture is still the largest industry providing employment to about 60 per cent of the workforce in the country.

Mere growth of the GDP and others at the macro level in billions does not solve the chronic poverty and backward level of living norms of the people at the micro level. The growth should be sustainable with human development and decent employment potential. The welfare of a country does not percolate from the top, but should be built upon development from the bottom

References:

Globalisation and Poverty: Centre for International Economics, Australia. Globalisation Trend and Issues T.K.Velayudham, Globalisation and India Lecture: Prof .Sagar Jain, University of N.Carolina. Repositioning India in the Globalised World Lecture: V.N.Rai. Globalization of Indian economy by Era Sezhiyan Globalisation and India’s Business prospective Lecture Ravi Kastia. Globalisation and Liberalisation Prospects of New World Order Dr.A.K.Ojha, Third Concept An International Journal of Ideas, Aug 2002. Globalisation: Imperatives, Challenges and the Strategies.

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Accessing Zimtu Capital’s connections to opportunities

Booth # 2819 • zimtu.com • 604.681.1568

Ryan Fletcher
Director

Investors are seldom able to invest in, or participate in, resource companies before they hit the public markets. Through a unique business model that involves working with management teams to build new resource issuers and investing in early, private and seed-level opportunities, Zimtu Capital (TSXV: ZC) is indirectly opening an area of the market that has traditionally not been widely available to the public.

Resource Intelligence: Could you discuss briefly what Zimtu does?

Ryan Fletcher: Zimtu Capital is a publicly listed investment issuer that is focused on private, micro- and small-cap resource companies. The company provides a unique way for investors to participate in, and profit from, the public company building process. Zimtu utilizes its capital to help create and grow exploration companies and provides technical, governance and capital expertise where required to maximize their full potential.

We have funded or launched several companies and currently hold equity investments in a number of publicly traded companies. The success of many of these companies and Zimtu’s long-term results and business execution has earned loyalty among our shareholders, partners and associates.

RI: How do you spot these opportunities?

RF: From our team’s years of experience in the venture markets, we are continually brought different opportunities for review. In early-stage companies, there needs to be three main components: project, management and money. Each prospect is evaluated on a case by case basis to identify areas where Zimtu can help to add benefit. This could include making introductions to an existing management team or presenting acquisition opportunities.

RI: What minerals are you exposed to?

RF: Through our current investments, our shareholders are exposed to a number of commodities including rare earths and rare metals, potash, coal, copper and gold. We believe that we are in a bull market for commodities and that being exposed to a number of metals is important.

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Drilling at Western Potash Corp’s Milestone Property in south-eastern Saskatchewan

RI: What successes have you had to date?

RF: Zimtu is pleased with a number of the companies we have helped to launch. Several years ago, we were in involved with the early development of rare earth explorer Commerce Resources, gold explorer Evolving Gold, and potash explorer Western Potash.

Last year Zimtu was involved in a number of transactions which included Quantum Rare Earth Development’s acquisition of the Elk Creek Niobium-REE Project in Nebraska.

RI: What have you found has been the most successful component of Zimtu’s business model in the last year?

RF: Zimtu’s management team made a call to put greater attention on rare earth and rare metal projects. That has proven to be a smart decision.

In addition, we expanded our business model to include property vending. We identified or acquired a number of mineral properties, and helped to connect them with public resource companies. Projects are usually acquired on a 50-50 basis with geological and prospecting partners. Within the last year, we have completed 17 such transactions, which have added significantly to our equity assets.

RI: What are your milestones for this year?

RF: Particularly due to our mineral property transactions, our asset base has grown considerably in 2010. We intend to build on the strong foundations and continue the momentum in 2011. I would like to see us expand our partnerships with geological and prospecting partners as well as increase the number of different metals we are exposed to.

Dan Mershon (Wolcott LLC), Erin Chutter (Quantum Rare Earth) and Ryan Fletcher (Zimtu Capital) at Quantum Rare Earth’s Elk Creek Project, which Zimtu helped launch

RI: What are the company’s major shareholdings?

RF: Our core holdings include Western Potash, Commerce Resources, Quantum Rare Earth, Triple Dragon Resources and Equitas Resources.

Western Potash was a major shareholding of ours in 2008 when they completed their initial public offering, and that is still true today. The company has experienced great success at their Milestone property in Saskatchewan and recently completed a positive preliminary economic assessment and -million bought-deal financing.

Commerce Resources is also a major shareholding. Zimtu is actually the former parent company of Commerce. They have been very active in the exploration of rare metals and rare earth elements and are focusing their attention on two major projects: the Blue River Tantalum-Niobium, and the Eldor Rare Earth Projects.

Another one of our major shareholdings is Quantum Rare Earth. We originally helped to acquire the Elk Creek deposit which was later sold to Quantum. The Elk Creek deposit will be explored for its potential regarding the rare metal niobium as well as rare earth elements. The property is one of the largest known carbonatites in North America, and was previously explored by MolyCorp in the 1980s.

RI: What do you feel will be the biggest challenge you will face?

RF: Our experience has taught us that management is the key component to the long-term success of an exploration company. I believe the biggest challenge we will face is continuing to find management teams that we believe have the required strengths in geology and finance to be successful.

RI: I see that Zimtu Capital has less than 10 million shares issued and outstanding.
Why so few?

RF: Yes, that is correct. There are 9.9 million shares outstanding in the company. At the moment we have no plans for future financings. The company is well-funded, and currently has the cash flow to continue to execute our business plan.

Investor Highlights:

Stage: Investment Company – Venture Capital
Market cap: .1 million
Share price: .10 as of February 23, 2011
Commodity: Rare Earths/Rare Metals, Potash, Precious and Base Metals, Coal
Cash & equity: million as of February 18, 2011

Highlights:

Successful track record of asset growth
Provides exposure to pre-IPO investments
Upside from current equity holdings and core positions

Trends and Opportunities in Indian Real Estate

The Indian economy has witnessed pivotal changes in the last 15 years. Consequently all industrial sectors have felt the influences and after-effects of this dynamic activity. India is one of the fastest growing economies in the world, with an 8% GDP growth in the last three years and with that has flourished the Indian Real Estate industry. In the last fifteen years, and more specifically in the last 3 years, Real Estate in India has observed a boom. The graph is on the rise. The growth may be attributed to several factors such as economic reform and liberalization, increased globalization, increase in business opportunities, heightened equity market activity, increasing demand, enhanced transparency, legitimized funding and favorable demographics. New reforms such as opening of FDI in the Real Estate sector and Real Estate Venture capital funds have propelled Indian Real Estate industry to become one of the highest investment generating avenues.

In a recent survey conducted by AT Kearney, India bags the second place in the list of attractive investment destinations. China takes the first place! This is because Indian real estate has transformed into an organized industry with global standards, contrary to the erstwhile industry that had been marked by fragmentation, disorganization and poor governance. The credit for this metamorphosis must go to the significant rise in investment, not only from within India but from offshore as well. The last couple of years have witnessed the increasing interest of international property consultants, developers and commercial banks in investing in real estate in India. This keen attention has brought into focus the emergence of private real estate funds. The result is an industry growth of 20% per annum! This unabated growth has raised the brows of skeptics who are worried that this spurt may at the end turn out to be a mere bubble. However, experts say that this growth is here to stay!

Another factor that plays a critical role in the current trend in the Indian Real Estate industry is the development of physical and social infrastructure. Residential, commercial offices, retail and hotels have their own place in the market. The presence of real estate majors from within India as well as abroad have ensured constant supply of capital which is absolutely necessary for the large scale of development that has been undertaken, especially in the infrastructure expansion of roads, airports, ports and SE’s that require large funding. Total investment required in the tenth plan period, has been estimated to total Rs 1,108,800 crore, approximately. The committee on infrastructure, headed by the Prime Minister has come up with a figure of Rs. 1, 72,000 crore as the estimated amount to be invested in the National Highways Sector by the year 2012. Furthermore, it has been revealed in the Economic Survey (2005-2006) that India, in the next five years will attract as much as US $ 150 billion of FDI in the infrastructure sector alone.

Thus, the Indian Real Estate industry is lined up for a complete revolution. This revolution shall not restrict itself to the metros but has already seeped into interiors and smaller and new towns and cities. Moreover, this expansion will not be confined to a particular sector but will encompass residential, commercial, infrastructure and logistics, in terms of space and range. This growth is expected to continue, at least for the next few years.

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Vision Shopsters – Mexico Gas Markets, 2010: Investment Opportunities, Market Analysis and Forecasts to 2020

This profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Mexico. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the natural gas assets (gas fields, LNG terminals, pipelines and underground gas storage terminals) in Mexico. The report also analyses the fiscal regime relevant to the natural gas assets in Mexico and compares the investment environment in Mexico with other countries in the region. The profiles of the major companies operating in the natural gas sector in Mexico together with the latest news and deals are also included in the report.

Scope

– Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 1996-2020.
– Historical and forecast data and information for all the major gas fields, LNG Terminals, pipelines and underground gas storage terminals in Mexico for the period 2000-2013.
– Operator and equity details for major natural gas assets in Mexico.
– Key information relating to market regulations, key energy assets and the key companies operating in the Mexico’s energy industry.
– Detailed information on key fiscal terms (such as rents, bonuses, royalty, cost recovery and corporate taxes) pertaining the geography is also provided. A sample calculation detailing how fiscal terms apply to a typical asset in the regime is included.
– Information on the top companies in the Mexico including business description, strategic analysis, and financial information.
– Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.
– Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs.

Reasons to buy

– Gain a strong understanding of the country’s energy market.
– Facilitate market analysis and forecasting of future industry trends.
– Evaluate the attractiveness of the geography for gas investment in the light of government policies and the fiscal environment.
– Facilitate decision making on the basis of strong historic and forecast production, reserves and capacity data.
– Understand the geography’s policies and fiscal terms, and their impact on contractor’s profits from upstream gas assets.
– Assess your competitor’s major natural gas assets and their performance.
– Analyze the latest news and financial deals in the gas sector of each country.
– Develop strategies based on the latest operational, financial, and regulatory events.
– Do deals with an understanding of how competitors are financed, and the mergers and partnerships that have shaped the market.
– Identify and analyze the strengths and weaknesses of the leading companies in the country.

To know more about this report & to buy a copy please visit :
http://www.visionshopsters.com/product/7901/Mexico-Gas-Markets-2010-Investment-Opportunities-Market-Analysis-and-Forecasts-to-2020.html

Contact us:

Visionshopsters
Ph : 91-22-40583020
Emailid: marketing@visionshopsters.com
Website : www.visionshopsters.com

Peru Oil Markets, 2010: Investment Opportunities, Market Analysis and Forecasts to 2020

This profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Peru. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the crude oil assets (oil fields, refineries, pipelines and storage terminals) in Peru. The report also analyses the fiscal regime relevant to the crude oil assets in Peru and compares the investment environment in Peru with other countries in the region. The profiles of the major companies operating in the crude oil sector in Peru together with the latest news and deals are also included in the report.

Scope

– Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 1996-2020.
– Historical and forecast data and information for all the major oil fields, refineries, pipelines and storage terminals in Peru for the period 2000-2013.
– Operator and equity details for major crude oil assets in Peru.
– Key information relating to market regulations, key energy assets and the key companies operating in the Peru’s energy industry.
– Detailed information on key fiscal terms (such as rents, bonuses, royalty, cost recovery, profit oil, petroleum and corporate taxes) pertaining the geography is also provided. A sample calculation detailing how fiscal terms apply to a typical asset in the regime is included.
– Information on the top companies in the Peru including business description, strategic analysis, and financial information.
– Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.
– Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs.

Reasons to buy

– Gain a strong understanding of the country’s energy market.
– Facilitate market analysis and forecasting of future industry trends.
– Evaluate the attractiveness of the geography for oil investment in the light of government policies and the fiscal environment.
– Facilitate decision making on the basis of strong historic and forecast production, reserves and capacity data.
– Understand the geography’s policies and fiscal terms, and their impact on contractor’s profits from upstream oil assets.
– Assess your competitor’s major crude oil assets and their performance.
– Analyze the latest news and financial deals in the oil sector of each country.
– Develop strategies based on the latest operational, financial, and regulatory events.
– Do deals with an understanding of how competitors are financed, and the mergers and partnerships that have shaped the market.
– Identify and analyze the strengths and weaknesses of the leading companies in the country.

To know more about this report & to buy a copy please visit :
http://www.visionshopsters.com/product/2576/Peru-Oil-Markets-2010-Investment-Opportunities-Market-Analysis-and-Forecasts-to-2020.html

Contact us:

Visionshopsters
Ph : 91-22-40583020
Emailid: marketing@visionshopsters.com
Website : www.visionshopsters.com

Globalisation- Opportunities and Challenges

Globalisation- Opportunities and Challenges

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Home Page > Business > Globalisation- Opportunities and Challenges

Globalisation- Opportunities and Challenges

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Posted: Dec 15, 2008 |Comments: 1
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GLOBALIZATION- OPPORTUNITIES AND CHALLENGES

(with impact on Indian Economy)

Introduction

Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

Globalization has many meanings depending on the context. In context to India, 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; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.

Impact of Globalization of Indian Economy

At the present, we can say about the tale of two Indias: We have the best of times; we have the worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by globalization.

Though some economic reforms were introduced by the Rajiv Gandhi government (1985-89), it was the Narasimha Rao Government that gave a definite shape and start to the new economic reforms of globalization in India. Presenting the 1991-92 Budget, Finance Minister Manmohan Singh said: After four decades of planning for industrialization, we have now reached a stage where we should welcome, rather fear, foreign investment. Direct foreign investment would provide access to capital, technology and market.

In the Memorandum of Economic Policies dated August 27, 1991 to the IMF, the Finance Minister submitted in the concluding paragraph: The Government of India believes that the policies set forth in the Memorandum are adequate to achieve the objectives of the program, but will take any additional measures appropriate for this purpose. In addition, the Government will consult with the Fund on the adoption of any measures that may be appropriate in accordance with the policies of the Fund on such consultations.

The Government of India affirmed to implement the economic reforms in consultation with the international bank and in accordance of its policies. Successive coalition governments from 1996 to 2004, led by the Janata Dal and BJP, adopted faithfully the economic policy of liberalization. With Manmohan Singh returned to power as the Prime Minister in 2004, the economic policy initiated by him has become the lodestar of the fiscal outlook of the government.

The Bright Side of Globalization

The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to seven per cent in the 1993-2001 period. In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05), 9% (2005-06) and 9.2%(2006-07). Prime Minister Manmohan Singh is confident of having a 10% growth in the GDP in the Eleventh Five Year Plan period.

The foreign exchange reserves (as at the end of the financial year) were $ 39 bn (2000-01), $ 107 bn (2003-04), $ 145 bn (2005-06) and $ 180 bn (in February 2007). It is expected that India will cross the $ 200 bn mark soon.

The cumulative FDI inflows from 1991 to September 2006 were Rs.1, 81,566 crores (US $ 43.29 bn). The sectors attracting highest FDI inflows are electrical equipments including computer software and electronics (18 per cent), service sector (13 per cent), telecommunications (10 per cent), transportation industry (nine per cent), etc. In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient.

India controls at the present 45% of the global outsourcing market with an estimated income of $ 50 bn.

In respect of market capitalization (which takes into account the market value of a quoted company by multiplying its current share price by the number of shares in issue), India is in the fourth position with $ 894 bn after the US ($ 17,000 bn), Japan ($ 4800 bn) and China ($ 1000bn). India is expected to soon cross the trillion dollar mark.

As per the Forbes list for 2007, the number of billionaires of India has risen to 40 (from 36 last year)more than those of Japan (24), China (17), France (14) and Italy (14) this year. A press report was jubilant: This is the richest year for India. The combined wealth of the Indian billionaires marked an increase of 60 per cent from $ 106 bn in 2006 to $ 170 bn in 2007. The 40 Indian billionaires have assets worth about Rs. 7.50lakh crores whereas the cumulative investment in the 91 Public Sector Undertakings by the Central Government of India is Rs. 3.93 lakh crores only.

The Dark Side of Globalization

On the other side of the medal, there is a long list of the worst of the times, the foremost casualty being the agriculture sector. Agriculture has been and still remains the backbone of the Indian economy. It plays a vital role not only in providing food and nutrition to the people, but also in the supply of raw material to industries and to export trade. In 1951, agriculture provided employment to 72% of the population and contributed 59% of the gross domestic product. However, by 2001 the population depending upon agriculture came to 58% whereas the share of agriculture in the GDP went down drastically to 24 per cent and further to 22% in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness.

The agricultural growth of 3.2% observed from 1980 to 1997 decelerated to two per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006 stated that the growth rate of agricultural GDP including forestry and fishing is likely to be below two per cent in the Tenth Plan period.

The reasons for the deceleration of the growth of agriculture are given in the Economic Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and lo post-harvest value addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.

The number of rural landless families increased from 35 %in 1987 to 45 % in 1999, further to 55% in 2005. The farmers are destined to die of starvation or suicide. Replying to the Short Duration Discussion on Import of Wheat and Agrarian Distress on May 18, 2006, Agriculture Minister Sharad Pawar informed the Rajya Sabha that roughly 1, 00,000 farmers committed suicide during the period 1993-2003 mainly due to indebtedness.

In his interview to The Indian Express on November 15, 2005, Sharad Pawar said: The farming community has been ignored in this country and especially so over the last eight to ten years. The total investment in the agriculture sector is going down. In the last few years, the average budgetary provision from the Indian Government for irrigation is less than 0.35%.

During the post-reform period, India has been shining brilliantly with a growing number of billionaires. Nobody has taken note of the sufferings of the family members of those unfortunate hundred thousand farmers.

Further, the proportion of people depending in India on agriculture is about 60 % whereas the same for the UK is 2 %, USA 2 %and Japan 3 %. The developed countries, having a low proportion of population in agriculture, have readily adopted globalization which favors more the growth of the manufacturing and service sectors.

About the impact of globalization, in particular on the development of India, the ILO Report (2004) stated: In India, there had been winners and losers. The lives of the educated and the rich had been enriched by globalization. The information technology (IT) sector was a particular beneficiary. But the benefits had not yet reached the majority, and new risks had cropped up for the losersthe socially deprived and the rural poor. Significant numbers of non-perennial poor, who had worked hard to escape poverty, were finding their gains reversed. Power was shifting from elected local institutions to unaccountable trans-national bodies. Western perceptions, which dominated the globe media, were not aligned with local perspectives; they encouraged consumerism in the midst of extreme poverty and posed a threat to cultural and linguistic diversity.

Social Services: About the quality of education given to children, the Approach to the Eleventh Five Year Plan stated: A recent study has found that 38 per cent of the children who have completed four years of schooling cannot read a small paragraph with short sentences meant to be read by a student of Class II. About 55 per cent of such children cannot divide a three digit number by a one digit number. These are indicators of serious learning problems which must be addressed. The less said about the achievements in health the better. The Approach to the Eleventh Plan concedes that progress implementing the objectives of health have been slow. The Report gave the particulars of the rates of infant mortality (per 1000 live births) for India as 60 against Sri Lanka (13), China (30) and Vietnam (19). The rate of maternal mortality (per 1, 00,000 deliveries) of India is 407 against Sri Lanka (92), China (56) and Vietnam (130).

Growth of Slum Capitals: In his 2007-08 Budget Speech, Finance Minister Chidambaram put forth a proposal to promote Mumbai as a world class financial centre and to make financial services the next growth engine of India. Of its 13 million population, Mumbai city has 54 per cent in slums. It is estimated that 100 to 300 new families come to Mumbai every day and most land up in a slum colony.

The cumulative FDI inflows (until September 2006) to the New Delhi region were of Rs. 27,369 crores and to Mumbai Rs. 24,545 crores. The two spots of New Delhi and Mumbai received 46 per cent of the total FDI inflows into India. The FDI inflows have in no way assisted in improving the health and environment conditions of the people. On the other hand, the financial capital of India and the political capital of India are set to become the topmost slum cities of the world.

To make Globalization Work

Under the phenomenal growth of information technology which has shrunk space and time and reduced the cost of moving information, goods and capital across the globe, the globalization has brought unprecedented opportunities for human development for all, in developing as well as developed countries. Under the commercial marketing forces, globalization has been used more to promote economic growth to yield profits to some countries and to some groups within a country.

India should pay immediate attention to ensure rapid development in education, health, water and sanitation, labor and employment so that under time-bound programmes the targets are completed without delay. A strong foundation of human development of all people is essential for the social, political and economic development of the country.

Though at present India appears to be dominant in some fields of development as in IT-ITES, this prosperity may be challenged by other competing countries which are equipping themselves with better standards of higher education. As detailed earlier, our progress in education has been slow and superficial, without depth and quality, to compete the international standards.

The government should take immediate steps to increase agricultural production and create additional employment opportunities in the rural parts, to reduce the growing inequality between urban and rural areas and to decentralize powers and resources to the panchayati raj institutions for implementing all works of rural development. Steps should be taken for early linking of the rivers, especially in the south-bound ones, for supply of the much-needed water for irrigation.

It should be remembered that without a sustainable and productive growth of the agricultural sector, the other types of development in any sphere will be unstable and illusory. Despite the concerted development in manufacturing and service sectors, despite the remarkable inflow and overflow of foreign reserves, agriculture is still the largest industry providing employment to about 60 per cent of the workforce in the country.

Mere growth of the GDP and others at the macro level in billions does not solve the chronic poverty and backward level of living norms of the people at the micro level. The growth should be sustainable with human development and decent employment potential. The welfare of a country does not percolate from the top, but should be built upon development from the bottom

References:

Globalisation and Poverty: Centre for International Economics, Australia. Globalisation Trend and Issues T.K.Velayudham, Globalisation and India Lecture: Prof .Sagar Jain, University of N.Carolina. Repositioning India in the Globalised World Lecture: V.N.Rai. Globalization of Indian economy by Era Sezhiyan Globalisation and India’s Business prospective Lecture Ravi Kastia. Globalisation and Liberalisation Prospects of New World Order Dr.A.K.Ojha, Third Concept An International Journal of Ideas, Aug 2002. Globalisation: Imperatives, Challenges and the Strategies.

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1. durgambini 14/09/2009

brief and precise good issues focused

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