The Impact of Globalization on Indian

Economy.
GLOBALIZATION: -

Globalization describes an ongoing process by which regional economies, societies, and

cultures have become integrated through a globe-spanning network of communication and
execution. The term is sometimes used to refer specifically to economic globalization: the
integration of national economies into the international economy through trade, foreign direct
investment, capital flows, migration, and the spread of technology. However, globalization is
usually recognized as being driven by a combination of economic, technological, sociocultural,
political, and biological factors. The term can also refer to the transnational circulation of ideas,
languages, or popular culture through acculturation.
Globalization is the process of removal of removal of restrictions on foreign trade, investment,
innovations in innovations and communication systems. These changes have encouraged the
nations to reduce the high levels of protection between countries and to adopt policies to
liberalize their economies in order to increase their volume of trade. Globalization of the
economy means integrating the economy with the rest of the world. This involves dismantling of
high tariff walls (by reduction of import duties thereby facilitating the transition from the
protected economy to an open economy, removal of non-tariff restrictions on trade such as
exchange control and import licensing, quotas allowing foreign direct investment and foreign
portfolio investment, allowing company to raise capital abroad and encouraging domestic
companies to go beyond national boundaries). In the process of globalization national economies
are integrated in several fundamental ways through,

 TRADE

 FINANCE

 PRODUCTION

 GROWING WEB OF GLOBAL TREATIES AND INSTITUTIONS

Firms go global as part of their business strategy mainly because of three reasons:

1) They get access to more markets and customers

2) They can create better brand by way of expansion so that the acceptance at home market
also increases
 3) Because of the saturation point in the domestic business

There are four primaries inter related factors that have driven globalization in recent past:

1) Increased international trade

2) Growth of multinational corporations

3) Internationalization of finance

4) Application of new technologies like computers and information technologies

The macro factors that seem to underlie the trend towards greater globalization are:

1) The decline in the trade barriers to the free flow of goods, services and capital that has
occurred

2) The dramatic change in the communications, information processing and transportation

technologies

Indian Economy

India is the seventh largest and second most populous country in the world. A new spirit of
economic freedom is now stirring in the country, bringing sweeping changes in its wake. A
series of ambitious economic reforms aimed at deregulating the country and stimulating foreign
investment has moved India firmly into the front ranks of the rapidly growing Asia Pacific
region and unleashed the latent strengths of a complex and rapidly changing nation. GE Capital
terms the Indian Economy unique, PepsiCo finds it one of the fastest growing and Motorola is
sure it will turn into a major sourcing center. Indian operations have occupied center stage in
these giants' global networks. India's process of economic reform is firmly rooted in a political
consensus that spans her diverse political parties. India's democracy is a known and stable factor,
which has taken deep roots over nearly half a century. Importantly, India has no fundamental
conflict between its political and economic systems. Its political institutions have fostered an
open society with strong collective and individual rights and an environment supportive of free
economic enterprise. India's time-tested institutions offer foreign investors a transparent
environment that guarantees the security of their long-term investments. These include a free and
vibrant press, a judiciary that can and does overrule the government, a sophisticated legal and
accounting system, and a user-friendly intellectual infrastructure. India's dynamic and highly
competitive private sector has long been the backbone of its economic activity. It accounts for
over 75 per cent of its Gross Domestic Product and offers considerable scope for joint ventures
and collaboration. Today, India is one of the most exciting emerging markets in the world.
Skilled managerial and technical manpower that match the best available in the world and a
middle class whose size exceeds the population of the USA or the European Union, provide
India with a distinct cutting edge in global competition.

Globalization in India

The process of globalization has been an integral part of the recent economic progress made by
India. Globalization has played a major role in export-led growth, leading to the enlargement of
the job market in India. One of the major forces of globalization in India has been in the growth
of outsourced IT and business process outsourcing (BPO) services. The last few years have seen
an increase in the number of skilled professionals in India employed by both local and
foreign companies to service customers in the US and Europe in particular. Taking advantage of
India’s lower cost but educated and English-speaking work force, and utilizing global
communications technologies such as voice-over IP (VOIP), email and the internet, international
enterprises have been able to lower their cost base by establishing outsourced knowledge-worker
operations in India. As a new Indian middle class has developed around the wealth that the IT
and BPO industries have brought to the country, a new consumer base has developed.
International companies are also expanding their operations in India to service this massive
growth opportunity. Notable examples of international companies that have done well in
India in the recent years include Pepsi, Coca-Cola, McDonald’s, and Kentucky Fried Chicken,
whose products have been well accepted by Indians at large. Globalization in India has been
advantageous for companies that have ventured in the Indian market. By simply increasing their
base of operations, expanding their workforce with minimal investments, and providing services
to a broad range of consumers, large companies entering the Indian market have opened up many
profitable opportunities. Indian companies are rapidly gaining confidence and are themselves
now major players in globalization through international expansion. From steel to Bollywood,
from cars to IT, Indian companies are setting themselves up as powerhouses of tomorrow’s
global economy.

Impact of globalization on Indian economy

Globalization in India had a favorable impact on the overall growth rate of the economy. This is
major improvement given that India’s growth rate in the 1970’s was very low at 3% and GDP
growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India.
Though India’s average annual growth rate almost doubled in the eighties to 5.9%, it was still
lower than the growth rate in China, Korea and Indonesia. The pickup in GDP growth has helped
improve India’s global position. Consequently India’s position in the global economy has
improved from the 8th position in 1991 to 4th place in 2001; when GDP is calculated on a
purchasing power parity basis.
During 1991-92 the first year of Rao’s reforms program, The Indian economy grew by
0.9%only. However the Gross Domestic Product (GDP) growth accelerated to 5.3 % in 1992-93,
and 6.2% 1993-94. A growth rate of above 8% was an achievement by the Indian economy
during the year 2003-04. India’s GDP growth rate can be seen from the following graph since
independence.

Foreign Trade (Export- Import)

India’s imports in 2004-05 stood at US$ 107 billion recording an increase of 35.62 percent
compared with US$ 79 billion in the previous fiscal. Export also increased by 24 percent as
compared to previous year. It stood at US $ 79 billion in 2004-05 compared with US $ 63 billion
in the previous year. Oil imports zoomed by 19 percent with the import bill being US $ 29.08
billion against USD 20.59 billion in the corresponding period last year. Non-oil imports during
2004-05 are estimated at USD 77.036 billion, which is 33.62 percent higher than previous year's
imports of US $ 57.651 billion in 2003-04.

Thus we find that the economic reforms in the Indian economy initiated since July 1991 have led
to fiscal consolidation, control of inflation to some extent, increase in foreign exchange reserve
and greater foreign investment and technology towards India. This has helped the Indian
economy to grow at a faster rate. Presently more than 100 of the 500 fortune companies have a
presence in India as compared to 33 in China.

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.
With the onset of reforms to liberalize the Indian economy in July of 1991, a new chapter has
dawned for India and her billion plus population. This period of economic transition has had a
tremendous impact on the overall economic development of almost all major sectors of the
economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the
advent of the real integration of the Indian economy into the global economy.

This era of reforms has also ushered in a remarkable change in the Indian mindset, as it deviates
from the traditional values held since Independence in 1947, such as self reliance and socialistic
policies of economic development, which mainly due to the inward looking restrictive form of
governance, resulted in the isolation, overall backwardness and inefficiency of the economy,
amongst a host of other problems. This despite the fact that India has always had the potential to
be on the fast track to prosperity.

Now that India is in the process of restructuring her economy, with aspirations of elevating
herself from her present desolate position in the world, the need to speed up her economic
development is even more imperative. And having witnessed the positive role that Foreign Direct
Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian
countries and most notably China, India has embarked on an ambitious plan to emulate the
successes of her neighbors to the east and is trying to sell herself as a safe and profitable
destination for FDI.

Globalization has many meanings depending on the context and on the person who is talking
about. Though the precise definition of globalization is still unavailable a few definitions are
worth viewing, Guy Brainbant: says that the process of globalization not only includes opening
up of world trade, development of advanced means of communication, internationalization of
financial markets, growing importance of MNCs, population migrations and more generally
increased mobility of persons, goods, capital, data and ideas but also infections, diseases and
pollution. The term globalization refers to the integration of economies of the world through
uninhibited trade and financial flows, as also through mutual exchange of technology and
knowledge. Ideally, it also contains free inter-country movement of labor. 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

The novel Tale of Two Cities of Charles Dickens begins with a piquant description of the
contradictions of the times: It was the best of times, it was the worst of times; it was the age of
wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity;
we had everything before us, we had nothing before us
At the present, we can also 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 Budgets, 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.

Explain the impact of globalization over the last fifteen years on your own life
The term “Globalization” refers to integration of economies and societies through cross country
flow of information, ideas, technologies, goods, services, capital, finance and people. In India
globalization process started in early nineties with adoption of “New Economic Policy” aimed at
creating a competitive economic environment by removing the barriers to entry and growth of
firms Globalization in India had a favorable impact on the overall economic growth. With a GDP
of $3tn, India has become the twelfth-largest economy in the world or sixth largest in
purchasing-power-parity terms.
A growth rate of 9.4% during 2006-07[1] has been an achievement by the Indian economy,
compared to 3% growth during seventies, making India the fastest growing economy next to
China. The direction of growth has also changed from agriculture to service sector which
constitutes 54% of the GDP. India is ranked 10th among the world’s leading service exporters
with a share of 2.8% of global service exports. FDI in India has increased from around $100mn
in 1990-91 to $19.4bn in 2006-07 and India's foreign-exchange reserves have touched $249.69bn
on 13thFeb2009 from paltry $1bn in 1990’s. Globalization has fueled the concept of e-
Governance, which aims at providing good governance to the citizens by utilizing the potentials
of Information-Communications-Technology. India has crossed a milestone by touching 60mn
internet users in 2008, becoming the fourth highest in the world. Internet based projects such as
e-chaupal has touched the lives of many Indian farmers by providing a platform for e-commerce
hub to sell their products at a profitable price & sharing cropping information. Through a
phenomenal telecom revolution India has crossed a landmark in number of mobile phone users
touching 300mn users in 2008 from 1.0mn users in 1998. Frustrating long waits to get a new
telephone connection and traveling miles to make ISD calls have become history.
Globalization has facilitated entry of new management tools, techniques and a spirit of
competition into our organizations. The reorganization of Hindustan Aeronautics Limited on
British Aerospace lines and the renaissance of Indian Railways are paragon of improved
management and professionalism. Due to entry of private sector banks there have been rapid
transitions in banking sector also. ATMs, plastic money, online trading and banking have made
banking easier. The credit card system introduced by Citibank in India in 1998 has touched
millions of lives with an anticipated figure of 73.4mn by 2010. Even the farmers in rural areas
are enjoying flexible credit facilities provided through “Kisan Credit Card Scheme”. Indian
pharmaceutical industry has been a successful player in global market with a share of 8% by
world’s production and 1.5% by value. Further it fulfills around 70% of world's generic demand.
It has become a major force in outsourcing clinical research with 80+ US-FDA approved
manufacturing facilities. Entry of large number of pharmaceutical MNCs due to liberalization
has thrown up new challenges to our business in form of high inventory cost. It has forced us to
maintain much higher level of inventory to accommodate wide range of products, resulting in
lower profitability. To counter this, we are planning to introduce the cash-n-carry concept i.e. in
addition to selling drugs to individual customers the store will cater to small and mid-size
retailers by becoming a sub-wholesaler. Further, supported by FDI, Apollo Hospitals, which
owns the largest retail pharmacy chain in India, opened an outlet next to our retail challenging
our survivability. We braved the challenge by renovating the outlet and providing host of free
value added services such as free home delivery and health check-ups. It has further inspired us
to go for an ISO certification to become more organized and gain stronger consumer confidence.
The development in technology has inspired us to computerize our business operations and run it
efficiently and effectively. Further our internet-based e-chemist service initiative will enable us
to cater to distant parts of Orissa and increase our turnover. The reformed banking & insurance
sector have provided innovative products such as “Business Credit Cards” coupled with flexible
repayment & protective insurance options which have enabled us to avail easy credits for our
business. Inspired by the prospects provided by globalization, I joined our business to take it to
new heights by integrating my technical expertise with business. Further, during my
undergraduate studies my visits to newly started super markets and departmental stores in
Bangalore induced a desire to enter into business. Rising purchasing power and growing health
consciousness of Indian population have induced me to start healthcare malls to provide host of
health services focused on beauty, health and wellness products by bringing services such as
super-specialty pharmacy, healthcare consultations, tele-medicine, health boutiques, health club
and nutrition focused restaurants under one roof. The quality of life in last fifteen years has
improved manifold. Globalization process has helped in developing world-class physical and
social infrastructure which is now the main engine of growth. We have access to world-class
healthcare facilities, communication technology, and quality education at our doorsteps.
Studying overseas for a person from middle class family like ours was a distant dream. Thanks to
liberalized migration and flexible credit policies those have helped us to realize our ambitions of
studying in prestigious institutes. Globalization has propelled ventures such as Indo-US nuclear
agreement, India-China joint bid for oil and proposed Iran-Pakistan-India gas pipeline which
have strengthen the economic & political bonding between countries; however because of
unified world-economy, the current global financial turmoil is impeding India’s economic
stability & growth. Thus we find that the economic reforms have led to fiscal consolidation,
employment creation, increase in foreign exchange reserve and greater flow of foreign
investment & technology towards India. Personally I feel globalization has made our business
competitive and provided the platform to redefine our vision.
Merits and Demerits of Globalization: -

The Merits of Globalization are as follows:

• There is an International market for companies and for consumers there is a wider range
of products to choose from.
• Increase in flow of investments from developed countries to developing countries, which
can be used for economic reconstruction.
• Greater and faster flow of information between countries and greater cultural interaction
has helped to overcome cultural barriers.
• Technological development has resulted in reverse brain drain in developing countries.

The Demerits of Globalization are as follows:

• The outsourcing of jobs to developing countries has resulted in loss of jobs in developed
countries.
• There is a greater threat of spread of communicable diseases.
• There is an underlying threat of multinational corporations with immense power ruling
the globe.
• For smaller developing nations at the receiving end, it could indirectly lead to a subtle
form of colonization.

Impact of Globalisation on Developing Countries and India

Impact on India:

India opened up the economy in the early nineties following a major crisis that led by a foreign
exchange crunch that dragged the economy close to defaulting on loans. The response was a slew
of Domestic and external sector policy measures partly prompted by the immediate needs and
partly by the demand of the multilateral organisations. The new policy regime radically pushed
forward in favour of a more open and market oriented economy.
Major measures initiated as a part of the liberalisation and globalisation strategy in the early
nineties included scrapping of the industrial licensing regime, reduction in the number of areas
reserved for the public sector, amendment of the monopolies and the restrictive trade practices
act, start of the privatisation programme, reduction in tariff rates and change over to market
determined exchange rates.
Over the years there has been a steady liberalisation of the current account transactions, more
and more sectors opened up for foreign direct investments and portfolio investments facilitating
entry of foreign investors in telecom, roads, ports, airports, insurance and other major sectors.

The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in
1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched
35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to
be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers
have been dismantled by March 2002, including almost all quantitative restrictions.

India is Global:
The liberalisation of the domestic economy and the increasing integration of India with the
global economy have helped step up GDP growth rates, which picked up from 5.6% in 1990-91
to a peak level of 77.8% in 1996-97. Growth rates have slowed down since the country has still
been able to achieve 5-6% growth rate in three of the last six years. Though growth rates has
slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts in two
decades the growth rates are expected to go up close to 70% in 2003-04. A Global comparison
shows that India is now the fastest growing just after China.
This is major improvement given that India is growth rate in the 1970's was very low at 3% and
GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of
India. Though India's average annual growth rate almost doubled in the eighties to 5.9% it was
still lower than the growth rate in China, Korea and Indonesia. The pickup in GDP growth has
helped improve India's global position. Consequently India's position in the global economy has
improved from the 8th position in 1991 to 4th place in 2001.When GDP is calculated on a
purchasing power parity basis.

Globalisation and Poverty:

Globalisation in the form of increased integration though trade and investment is an important
reason why much progress has been made in reducing poverty and global inequality over recent
decades. But it is not the only reason for this often unrecognised progress, good national polices,
sound institutions and domestic political stability also matter.
Despite this progress, poverty remains one of the most serious international challenges we face
up to 1.2 billion of the developing world 4.8 billion people still live in extreme poverty.
But the proportion of the world population living in poverty has been steadily declining and
since 1980 the absolute number of poor people has stopped rising and appears to have fallen in
recent years despite strong population growth in poor countries. If the proportion living in
poverty had not fallen since 1987 alone a further 215million people would be living in extreme
poverty today.
India has to concentrate on five important areas or things to follow to achieve this goal. The
areas like technological entrepreneurship, new business openings for small and medium
enterprises, importance of quality management, new prospects in rural areas and privatisation of
financial institutions. The manufacturing of technology and management of technology are two
different significant areas in the country.
There will be new prospects in rural India. The growth of Indian economy very much depends
upon rural participation in the global race. After implementing the new economic policy the role
of villages got its own significance because of its unique outlook and branding methods. For
example food processing and packaging are the one of the area where new entrepreneurs can
enter into a big way. It may be organised in a collective way with the help of co-operatives to
meet the global demand.
Understanding the current status of globalisation is necessary for setting course for future. For all
nations to reap the full benefits of globalisation it is essential to create a level playing field.
President Bush's recent proposal to eliminate all tariffs on all manufactured goods by 2015 will
do it. In fact it may exacerbate the prevalent inequalities. According to this proposal, tariffs of
5% or less on all manufactured goods will be eliminated by 2005 and higher than 5% will be
lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated
by 2015.

GDP Growth rate:

The Indian economy is passing through a difficult phase caused by several unfavourable
domestic and external developments; Domestic output and Demand conditions were adversely
affected by poor performance in agriculture in the past two years. The global economy
experienced an overall deceleration and recorded an output growth of 2.4% during the past year
growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in 2000-01. The
performance in the first quarter of the financial year is5.8% and second quarter is 6.1%.

Export and Import:

India's Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million
respectively. Many Indian companies have started becoming respectable players in the
International scene. Agriculture exports account for about 13 to 18% of total annual of annual
export of the country. In 2000-01 Agricultural products valued at more than US $ 6million were
exported from the country 23% of which was contributed by the marine products alone. Marine
products in recent years have emerged as the single largest contributor to the total agricultural
export from the country accounting for over one fifth of the total agricultural exports. Cereals
(mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the other prominent
products each of which accounts from nearly 5 to 10% of the country’s total agricultural exports.

Where does Indian stand in terms of Global Integration?

India clearly lags in globalisation. Number of countries has a clear lead among them China, large
part of east and far east Asia and Eastern Europe. Let’s look at a few indicators how much its
lag.
• Over the past decade FDI flows into India have averaged around 0.5% of
GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China
now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of
India
• Consider global trade - India's share of world merchandise exports increased
from .05% to .07% over the past 20 years. Over the same period China's share
has tripled to almost 4%.
• India's share of global trade is similar to that of the Philippines and economy 6
times smaller according to IMF estimates. India under trades by 70-80% given
its size, proximity to markets and labour cost advantages.
• It is interesting to note the remark made last year by Mr. Bimal Jalan,
Governor of RBI. Despite all the talk, we are now where ever close being
globalised in terms of any commonly used indicator of globalisation. In fact
we are one of the least globalised among the major countries - however we
look at it.
 • As Amartya Sen and many other have pointed out that India, as a
geographical, politico-cultural entity has been interacting with the outside
world throughout history and still continues to do so. It has to adapt,
assimilate and contribute. This goes without saying even as we move into
what is called a globalised world which is distinguished from previous eras
from by faster travel and communication, greater trade linkages, denting of
political and economic sovereignty and greater acceptance of democracy as a
way of life.

Positive effects of Globalization

Prior to The 80s when the Indian government undertook major reforms to relax restrictions on
foreign trade and investment it suffer from a very low GNP growth rate of below 3.5%, but as a
result of opening up to the global market GNP growth is averaged at 5-6% per year. Indian
Businesses are able to find new markets overseas to sell their products to; they will have the
advantage of cheap resources such as labor. Entrepreneurs from foreign nations are also able to
make efficient use of these resources when they set up business in India. This of course leading
to greater employment levels, greater output and overall economic development and growth.
Average real wages of unskilled labour has increased, which will lead to an increase in the
standard of living. There have been signs of improvements in living standards in the general
population a s a result of economic growth and globalization. Poverty ratio has declined
dramatically from 56.4% of the rural population in 1973-74 to 37.3% in 1994. The urban poverty
ratio has also fallen significantly from 49% in 73-74 to 32.4 in 1993-94. These are all results of
job creation and developments undertaken by the government and private institutions. Due to the
reduction in barrier import competing businesses have become more competitive leading to
greater efficiency and better-priced and quality goods.

Negative effects of Globalization

Globalization has lead to environmental damage in India (as with many developing nations).Due
to large-scale industrialization urban slums have formed, air and water pollution has dramatically
increased. Multinational firms have exploited resources belonging to the country and lead to land
degradation. Delhi for example is the 4Th most polluted city in the world.

Though foreign investment will promote economic development in the short term, the profits
earned from the business venture move out of the country. There is also a possibility that at times
of recession investors (in portfolio investment) may withdraw their funds causing further
problems.
Domestic resources such as labor maybe exploited my large production based firms. These firms
may also abuse natural resources and use them inefficiently.
Domestic producer being overpowered my overseas giants, who already have competitive
advantages over the domestic producers, and have more funds to invest. This will lead to the
closure of many domestic owner firms.

Globalization and growth of employment

Globalization has also put a favorable effect on the employment scenario of the country. Over
the years, due to the liberalization policies, India has become a consumer oriented market where
the changes are brought by the demand and supply forces. Due to the high demand and the
supply chains, there has been significant growth in the market. As such, more and more job
opportunities are being created in different sectors. This has increased the per capita income
considerably which has improved the poverty level to a great extent. The growth of the various
sectors has also opened up new employment opportunities which have put a positive impact on
the overall poverty situation of the country. More and more industries are being introduced in the
market to cater to the growing demand. Some of the well known industries that have recently
become very popular in the country are personal and beauty care, agro products, health care,
information technology and some other sectors. The service sector has a share of around 54% of
the annual Gross Domestic Product (GDP). The share of the agricultural and industrial sectors in
the annual GDP is 17% and 29%.

Growth of the agriculture sector and poverty

A major portion of the poverty level in India is from the rural areas whose staple form of income
is agriculture and farming. Due to the globalization, Indian agriculture has improved to some
extent which has helped to reduce the poverty problems of the rural masses.

Over the years, with the advent of more technology, there has been a significant change in the
process of agriculture in the country. Earlier farmers used traditional farming techniques for
growing crops. As such, they suffered a lot and the output was affected by a number of factors
like pest problems, weather situations and lots more. Due to the globalization and introduction of
better equipments, there has been a stark improvement in the techniques of agriculture. Today,
farmers are using gadgets like rowers, tractors, electric pipelines and lots more for the cultivation
of crops. This has increased the produce in terms of quantity as well as quality. As such, farmers
have started earning more and have improved their per capita income and the standard of living.

The government has also taken several positive steps to improve the poverty situation in the rural
areas. Irrigational projects have been undertaken, dams have been built and more facilities have
been provided to the farmers to increase their agricultural produce. As lots of farmers are poor,
they are not in a position to buy expensive equipments. To solve this problem and make them
self sufficient, the government also grants financial help and loan to the farmers at very cheap
rates. The government has set up the National Bank for Agriculture and Rural Development
(NABARD) and various other Regional Rural Banks (RRBs) to financially help the farmers in
need. Housing projects are also being undertaken to solve the accommodation problems of the
poor.

BIBLIOGRAPHY

http://economics.about.com/od/globalizationtrade/l/aaglobalization.htm

http://www.tradechakra.com/indian-economy/globalization.html

http://www.indiastudychannel.com/resources/74993-Globalization-Indian-
Economy.aspx

http://www.fibre2fashion.com/industry-article/8/738/impact-of-
globalization1.asp

http://business.mapsofindia.com/globalization/indian-poverty-level.html