Globalization is essentially the process of integrating various national and international activities. This concept is not novel to India, as the country has been part of global trade since the era of the Mughals. Back then, India was considered the world's largest economy with a 32.9% share in global GDP and approximately 17% of the world's population.
Pre-Liberalisation Phase and Isolation
Before the economic liberalisation in 1991, India largely had a closed economy, aiming to achieve self-reliance and shield its budding economic base. Foreign trade was burdened with import and export taxes, import quotas, while Foreign Direct Investment (FDI) was limited through various restrictions such as caps on equity contribution, technology transfer constraints, obligatory export duties, and mandatory government clearances. As a result, FDI averaged only about $200 million annually between 1985 and 1991, with most of the capital inflows directed towards foreign aid, commercial borrowing, and Non-Resident Indian (NRI) deposits.
Post-Liberalisation Era
Post-liberalisation saw a significant transformation in India's market scenario. The country started participating more extensively in global trade, accounting for 2.7% of world trade in 2015, a substantial increase from 1.2% in 2006, according to the World Trade Organization (WTO).
Early years post-independence saw India's exports remain stagnant, largely due to the dominant export of tea, jute, and cotton manufactures. The demand for these goods was generally inelastic. However, post liberalisation, there was a significant diversification in India's international trade. India's major trading partners now include China, the US, the UAE, the UK, Japan, and the EU.
India and World Trade Organization (WTO)
India has been a member of General Agreement on Tariffs and Trade (GATT) since its inception in 1947 and its successor, the WTO. It's an active participant and has played a significant role in voicing the concerns of developing countries. Despite liberalising its trade barriers, India was evaluated by the WTO in 2008 as more restrictive than comparable economies like Brazil, China, and Russia.
Infrastructure and Trade Barriers
It's worth noting that the WTO identified inadequate electricity supplies and poor transport infrastructure as significant barriers to trade in India. These challenges have hindered India's ability to fully capitalize on globalization and strengthen its position in the global market. Despite this, this very protectiveness also shielded India, to a certain degree, from the global financial crisis of 2008-2009.
In conclusion, the effects of globalization have transformed Indian Economy to a significant extent. From being a closed economy, India has gradually opened up its markets to the globe, though there are still several areas where improvements are required. Proper planning and policy implementation can effectively address these issues enhancing India's position in the international market.
Understanding India's Foreign Direct Investment (FDI)
The Growth of FDI in India
Foreign Direct Investment (FDI) in India has made significant strides in the past few decades. In 1990, FDI in India was mere 0.1% of the GDP. Fast forward to the present day, FDI in India accounts for about 2% of our GDP.
Moreover, India's investment in overseas countries has noticeably surged since 2006. This significant economic progress signifies India's growth as a global financial player in the world market.
Strength of the Indian Economy
As the third-largest economy measured by Purchasing Power Parity (PPP), India boasts strengths in various sectors that are particularly attractive for FDIs. Notably, these include information technology, auto components, chemicals, apparels, pharmaceuticals, and jewellery.
However, India's rigid FDI policies in the past did deter some foreign investment. Fortunately, progressive economic reforms aimed at liberating the economy from stringent regulations and stimulating foreign investments have changed the scenario.
India now prides itself as a leading player in the booming Asia-Pacific region. Contributing factors include its pool of professional managerial and technical skills, coupled with a growing middle-class consumer market that currently includes 50 million people.
Reforms in India's FDI Policy
Introduced in 2005, India's liberalized FDI policy permitted up to 100% FDI stake in ventures. Industrial policy reforms were highly beneficial, reducing licensing requirements drastically, lifting restrictions on expansions, and enabling easier access to foreign technology and FDI.
For instance, the real estate sector's significant growth has been partly driven by the liberalized FDI regime and an advancing Indian economy. In 2005, the Indian government amended rules to allow 100% FDI in the construction industry. The amendment was uniformly applied to sectors such as housing, infrastructure development, educational institutions, recreation facilities, and infrastructure at the city and regional levels.
Progressive Changes in FDI Policies
To stimulate economic growth, the government has approved changes in FDI policies to remove investment limits in the majority of sectors. The sectors that have seen FDI limit relaxation include civil aviation, construction development, industrial parks, petroleum, natural gas, commodity exchanges, credit-information services, and mining. Although there is still a need for further relaxation of FDI restrictions in areas such as insurance and retail, which have political sensitivities.
FDI inflows in India achieved a landmark figure of US$19.5 billion in the 2006/07 fiscal year (April–March), according to the Secretariat for Industrial Assistance, Government of India. This was an impressive jump from the preceding year's total of US$7.8 billion. The subsequent years witnessed consistent growth with the fiscal year 2007-08 reporting the FDI inflow as $24 billion, and it was expected to surge above $35 billion in 2008-09.
The Future of FDI in India
The future of India as an economic superpower rides largely on how the government can induce FDI inflows across numerous sectors in the nation. Case in point, despite pushback from coalition parties, in September 2012, the government permitted 51% FDI in multi-brand retail. This came to be viewed as a significant move to liberalize the Indian economy.
In 2019, the government further allowed 100% FDI in the Coal mining sector, reinforcing India's commitment towards economic growth. Thus, it is clear that FDI forms a critical part of India's growth strategy to fast-track its journey towards becoming an economic superpower.
Understanding Remittances to India
Remittances to India refer to financial transfers made by Indian employees working abroad, back to their friends or family in India. The remittance process involves sending money across national borders, mainly to support loved ones who live in the homeland, support the local economy, or for investment purposes.
Growth in Remittances Since 1991
After 1991, there was a surge in the remittances received by India. According to the data, remittances in 1991 accounted for approximately USD 2.1 billion. The numbers significantly grew, and the remittances in 2006 were estimated to be around USD 22 billion to USD 25.7 billion, which was roughly 3% of India's Gross Domestic Product (GDP). This indicates how important remittances have become to the Indian economy.
India as a Top Receiver of Global Remittances
As of 2007, India had more than 12% of the world's total remittances. This has positioned India as the world's top recipient of overseas remittances. By 2017, remittances had reached about USD 69 billion, demonstrating continual growth.
Role of the Ministry of Overseas Indian Affairs (MOIA)
The Ministry of Overseas Indian Affairs (MOIA) oversees matters related to remittances. It caters to the wider Indian diaspora, estimated to be around 35 million people, many of whom regularly send money back home. Therefore, it is instrumental in managing and facilitating these large-scale international financial transactions.
The Impact of Remittances on India's Economy
While remittances have aspects of personal finance, they also have a substantial impact on India's economy. These foreign remittances represent a substantial influx of foreign currency, which enhances the country's foreign exchange reserves and strengthens its financial position. Additionally, these funds augment household incomes in many families, fuelling consumption and contributing to economic growth.
Regulation and Monitoring of Remittances
In India, organizations like the Reserve Bank of India (RBI) and the Banking Codes and Standards Board of India (BCSBI) have outlined strict criteria and standards to govern cross-border remittances. These regulations ensure the legitimacy and safety of the process and help to prevent cases of money laundering and misuse of funds.
In conclusion, remittances are instrumental in shaping India's economy, influencing the country's foreign exchange reserves, and contributing to its GDP. MOIA and other regulatory bodies work towards streamlining the process and maintaining the transparency, reliability, and safety of these transactions, thereby securing India's position as the world's leading recipient of remittances.
Introduction
The incorporation of technology within Indian market sectors has lead to a significant evolution in job roles over time. In the past, many roles were specialised, with defined responsibilities, typically lacking strategic decision-making capabilities. This has shifted significantly to roles requiring broader skills including numerical, analytical, communication, and interpersonal skills. The shift also brought an increase in the level of job accountability.
Influence of Technology on Work Culture
The permeation of technology into the Indian workplaces greatly affected the dynamics of the work environment. It not only changed the skill requirements but also influences the work policies and structures that companies have. Many firms started granting more autonomy to their employees, especially those engaged in non-routine tasks, resulting in amplified work productivity and employee satisfaction.
The Role of Netscape
The public offering of Netscape to investors on August 9, 1995, has been paramount in connecting India to global markets. This significant move impacted the technology sector in India in three main ways. Firstly, Netscape allowed browsers to view images from websites, enhancing web interactivity and user experience. Secondly, due to the dot-com boom and bubble, there was massive investment in fibre-optic telecommunications technology. This influx of investment brought in a substantial amount of hard currency into the Indian economy. Lastly, excessive investment in technology infrastructure led to a global fibre network. This made data transmission much more accessible and quicker, effectively revolutionising communication and information exchange.
Job Opportunities and Outsourcing
Following Netscape's move, India saw a sharp increase in job opportunities, with some functions being outsourced from developed nations. India's ability to offer these opportunities played a significant role in altering its international image. A crucial event in these developments was when the nation hired thousands of Indian engineers to fix the Y2K bug. This task could have potentially been carried out by numerous other global corporations, but it was outsourced to India. The successful handling of this event demonstrated India's readiness to join and compete in the global workforce against developed nations.
Impact on Indian Economy
The integration of technology into India's economy shaped the country's growth and development significantly. It boosted the national economy by creating more jobs, facilitating digital transactions, promoting innovation, and driving growth in the digital economy. The Reserve Bank of India introduced policies like Unified Payments Interface(UPI) and Immediate Payment Service(IMPS), which further boosted the digital economy.
Furthermore, it led to the advent of several new-age businesses; startups specializing in e-commerce, FinTech, Edtech were born. This technological growth also attracted more foreign investors, as evidenced by the increasing Foreign Direct Investment (FDI) in Info-tech services.
In conclusion, technology integration has been a transformative force in India, affecting job creation, work culture, and economic growth. The country continues to innovate and adapt to leverage the benefits of technology, paving the way for a promising digital future.