Definitions [1]
Definition: Globalisation
Integration of national economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance, and people.
Key Points
Key Points: Globalisation
- Globalisation = integration of the domestic economy with the world economy through free flow of goods, services, capital, information, and people.
- It differs from mere internationalisation - it involves deeper economic integration and global governance.
- India's key measures for globalisation include removal of quantitative restrictions, foreign capital inflows, rupee convertibility, trade policy reforms, and SEZs.
- Forms of globalisation include foreign trade reforms, export promotion, tariff reduction, repatriation, and open competition.
- Outsourcing is a key outcome - Indian firms like ONGC Videsh, Tata Steel, HCL, and Dr. Reddy's expanded globally.
- Positive impacts include foreign capital inflow, technology access, export growth, and greater consumer choice.
- Globalisation is closely linked to Liberalisation and Privatisation as part of the New Economic Policy framework.
Key Points: Privatisation
- Privatisation = reducing state ownership/management in favour of private sector.
- Key reasons: inefficiency, losses, political interference, mismanagement in PSUs.
- Main measures: disinvestment, dereservation, full sale, MoU system, BIFR, NRB.
- Disinvestment beyond 51% transfers both ownership and management to private sector.
- PSUs are classified as Maharatna, Navratna, and Miniratna (I & II) based on autonomy levels.
- Real examples include Air India, Maruti, Hindustan Zinc, BALCO, and IPCL.
- Privatisation is one of the three components of the New Economic Policy (along with Liberalisation and Globalisation).
Key Points: Impact of the Economic Reforms
- GDP growth rate improved to 5.6% per annum post-reforms but employment growth lagged behind.
- Service sector grew significantly; agriculture and industry underperformed.
- FDI inflows rose sharply from $100 million (1990–91) to $4,029 million (2000–01).
- Forex reserves jumped from $6 billion to $54.1 billion within a decade.
- Reforms hurt small industries and farmers through cheaper imports and reduced subsidies.
- PSU disinvestment was criticised for undervaluation and non-utilisation of proceeds.
- Globalisation widened income inequality, with the poor not benefiting proportionately
