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 means integrating a country’s economy with the world economy and treating the world as one single market.
- It involves free flow of goods, services, capital, technology, information, and people across national borders.
- Globalisation goes beyond trade and includes worldwide coordination in production, marketing, finance, and human resources.
- It increases economic integration and interdependence among countries.
- A global company views the entire world as one market and does not differentiate between domestic and foreign markets.
- Globalisation promotes free-market competition and benefits businesses and consumers, but also increases dependence among nations.
- Outsourcing is a result of globalisation, where foreign companies hire Indian firms for services like IT and BPO due to low cost and skilled labour.
Key Points: Privatisation
- Privatisation refers to the transfer of a business from government to private ownership.
- It brings efficiency, accountability, better service, and profit focus.
- Indian examples include Air India, Maruti Suzuki, and Hindustan Zinc.
- Methods include disinvestment, outright sale, and private management contracts.
- Privatisation = government reduces or gives up ownership/management of public sector enterprises.
- Disinvestment = sale of government shares in PSUs to improve discipline, modernisation and efficiency using private capital and management.
- Aims: attract FDI and make PSUs more efficient by giving autonomy.
- Efficient PSUs get Maharatna / Navratna / Miniratna status for greater autonomy and global expansion.
Key Points: Indian Economy During Reforms: An Assessment
- The 1991 reforms opened India’s economy through liberalization, privatization, and globalization. GDP growth accelerated, mainly driven by the service sector, while agriculture and industry lagged.
- FDI and foreign exchange reserves rose sharply, and India became a key exporter of IT and pharmaceuticals. Yet, growth created few jobs, and benefits were uneven. Public investment in agriculture and social sectors declined, and inequality widened.
- Overall, reforms made India more competitive but also less inclusive, highlighting the need for balanced, job-oriented growth.
