The World since 1991
Key Concepts and Issues since 1991: Globalisation
Key Concepts and Issues since 1991: Humanitarian Issues
Contemporary India: Challenges to Peace, Stability and National Integration
Contemporary India: Good Governance
India and the World
Economic issue since 1991:
Some of the important changes that have occurred in the area of economic issues are as follows:
1. Free flow of finance capital:
Investment is an important aspect of the economic system. Industries need finance. Investments help to build industries as they provide finance. Investments are done by both, the government and the private sector. Today you may have read about how Indian companies are investing in foreign countries. Private companies like Tatas, Reliance, etc have invested in various industries in America, Europe, Africa, and other places. Even government companies like ONGC have made investments abroad.
Oil and Natural Gas Corporation (ONGC) is an Indian public sector multinational crude and gas company. Its registered office is in New Delhi. It is owned by the Government of India, under the administrative control of the Ministry of Petroleum and Natural Gas. It is the largest oil and gas exploration and production company in the country and produces around 70% of India's crude oil (equivalent to around 57% of the country's total demand) and around 84% of its natural gas In November 2010, the Government of India conferred the Maharatna status to ONGC.
In a survey by the Government of India for the fiscal year 2019–20, it was ranked as the largest profit-making PSU in India. It is ranked 7th among the Top 250 Global Energy Companies by Platts.
Similarly, a lot of foreign companies are investing in India. These investments take place in both the infrastructural sector and consumer sector. Foreign companies have invested in building airports, nuclear power plants, etc. in India. They have also invested in consumer food chains like MacDonald’s, Burger King, Pizza Hut, etc.
Prior to the 1990s, such investments were rare. There used to be several governmental rules that made investments difficult. This has now changed. This change is looked at as the free flow of financial capital. This capital flows both ways, from India to foreign countries and from foreign companies into India.
India is a developing country; it needs financial investment in industry for its development. There are limitations to domestic financial investment in India. Therefore, foreign investment is always welcome. But we must also remember that this investment in the infrastructure sector is more important than that in the consumer sector. Real development will take place with the building of communication networks through road, rail, water, and air travel.
2. Change in the concept of trade:
Several changes have taken place in the approach to trade since the 1990s.
- International trade was governed by rules and regulations under the General Agreement on Tariffs and Trade (GATT) since 1948. GATT was not an organization, it was an agreement amongst nations regarding trade. In 1995 GATT was replaced by the World Trade Organisation (WTO). WTO is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. The WTO is the only international agency overseeing the rules of international trade. It promotes free trade agreements, settles trade disputes between governments, and organizes trade negotiations.
- Trade is normally done in commodities. These can be commodities like iron ore, coal, oil, or such perishable commodities like fruits, flowers, seeds, etc. In the 1990s the scope of the term ‘trade’ widened and we talked of trade in services. Thus banking, insurance, etc. were services and they were also looked at as matters in which trade can be done. Today we talk of trade in intellectual property. This includes copyrights, trademarks, patents, etc.
Examples of Intellectual Property:
- Another change that has occurred in the area of trade is the use of container cargo ships. Container ships are able to carry huge amounts of goods across the world. There are special port facilities for container ships. The container cargo revolution has changed the manner in which trade takes place in the world today.
3. Rise of transnational companies:
Until the 1990s the government had a lot of control on the economic sector. There was a limited scope for the private sector. Globalisation has changed this situation. We have seen the growth of private companies. Companies that used to operate within the nation started operating in foreign lands. They became multinational companies. Today we also see the growth of transnational companies. This development is mainly in the private sector.
- One impact is seen on the labour market. There is a migration of skilled and semi-skilled labour from one country to another. For example, these companies recruit both, skilled and semi-skilled employees. There is a lot of skilled and semi-skilled Indian labour working in West Asia, Africa, the United States, Europe, etc. The growth of the private sector has also increased employment in the service sector. Various services like providing catering, delivery of goods, transport, etc. are being provided.
- A second impact is seen on the small industries and shops. They have to face competition from the big multinational companies. Shops and small industries that are efficient are able to compete. For example, we have seen big grocery stores and malls in cities, but despite these, the small shopkeepers, vegetable, and fruit sellers continue to attract clientele. This is because they provide the necessary services to the people.
- A third impact is on the agricultural sector. Today farmers are able to sell their goods directly to companies. Multinational companies have brought in new technology and opened up markets for Indian agricultural products. For example, India exports marine products, meat, rice, spices, cotton, fresh fruits and vegetables, sugar, coffee, groundnut, cashews, etc.
A multinational corporation (MNC) is a corporate organization that owns or controls the production of goods or services in at least one country other than its home country.
Transnational corporations share many qualities with multinational co-operations with the subtle difference being that multinational corporations consist of a centralized management structure, whereas transnational corporations generally are decentralized, with many bases in various countries where the corporation operates. While traditional multinational corporations are national companies with foreign subsidiaries, transnational corporations spread out their operations in many countries to sustain high levels of local responsiveness.
The service sector, also known as the tertiary sector, is the third tier in the three-sector economy. Instead of product production, this sector produces services maintenance and repairs, training, or consulting. Examples of service sector jobs include housekeeping, tours, nursing, and teaching. By contrast, individuals employed in the industrial or manufacturing sectors produce tangible goods, such as cars, clothes, or equipment.