Globalization

The International Monetary Fund defines globalization as the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. Globalization has economic, political, cultural, and technological aspects that may be closely intertwined. The economic aspects stressed in globalization are trade, investment and migration. The globalization of trade entails that human beings have greater access to an array of goods and services never seen before in human history. The globalization of investment takes place through Foreign Direct Investment, where multinational companies directly invest assets in a foreign country, or by indirect investment where individuals and institutions purchase and sell financial assets of other countries. Free migration allows individuals to find employment in jurisdictions where there are labor shortages.

ADVANTAGES AND DISADVANTAGES:

The Advantages

GDP Increase: If statistics are of any indication, the GDP of the developing countries has increased twice as much as before. Per Capita Income Increase: The wealth has had a trickling effect on the poor. The average income has increased to thrice as much. Unemployment is Reduced: This fact is quite evident when you look at countries like India and China. Education has Increased: Globalization has been a catalyst to the jobs that require higher skill set. This demand allowed people to gain higher education. Competition on Even Platform: The companies all around the world are competing on a single global platform. This allows better options to consumers.

The Disadvantages

Uneven Distribution of Wealth: Wealth is still concentrated in the hands of a few individuals, and the common man in a developing country is yet to see any major benefits of globalization. Income Gap between Developed and Developing Countries: The wealth of developed countries continues to grow twice as much as the developing world. Different Wage Standards for Developing Countries: A technology worker may get more value for his work in a developed country than a worker in a developing country. Reversal of Globalization: In future, factors such as war may demand the reversal of the globalization (as evident in inter world war years), and current process of globalization may just be impossible to reverse.

Effects on Indian Society Globalization has resulted in tremendous change in the Indian society. In the last few decades, various social and cultural changes have taken place in the Indian social environment. Indian culture which in effect means Hindu culture, Hindu religion, Hindu society, Hindu civilization, and Hindu way of life are under the lethal threat of the ruthless forces of Globalization today. What went by the name of Colonialism in classical history textbooks produced in the days of British Raj has been replaced today by the synonym of Globalization. In agrarian economies like ours, globalization is doing its bit in promulgating ethnic hegemony and fostering economic divide. Rural economies have collapsed, agrarian crisis has amplified, and inequality has intensified while public expenditure in agriculture has shrunk to less than 2% of the GDP. For every millionaire that we produce, there are 700 others who go without food. For a country whose 60% population depends on agriculture, the price of neo-liberalism has indeed been very high.

Some salient features of globalization in India are: Changes in social and cultural life: Access to television grew from 10% of the urban population (1991) to 75% of the urban population (1999). Cable television and foreign movies became widely available for the first time and have acted as a catalyst in bulldozing the cultural boundaries. All these technologies have changed perceptions and dreams of ordinary people. Indian youths leaving education in mid-way and joining MNC's There has been an increase in the violence, particularly against women. Scientific and technological innovations have made life quite comfortable, fast and enjoyable Extension of internet facilities even to rural areas Old restaurants are now replaced by Mc. Donald. Fast food and Chinese dishes have replaced juice corners and Parathas. More inflow of money has aggravated deep rooted problem of corruption? More scandals and scams compared to pre-globalization era. There is deterioration in social values as evident from less respect for ladies, older people Globalization has also positively affected the overall health care situation in the country. More and more medical innovations are coming in which are improving the health situation in India. The infant mortality rate and the malnutrition rate have significantly come down since the last decade.

Notwithstanding what has been listed above, globalization has definitely brought positive changes and been helpful in improving living conditions of people. The solution lies in alternate globalization that depends on human rights movements, women rights movements and pro environment movements. Globalization is welcome in the Indian society but not at the cost of unemployed peasants, landless laborers, dying farmers, hordes of hungry millions and debt inducing suicidal agrarian policies. The concept of flat globe has oodles of eye appeal, but the sight of countless, nameless dying souls-the victims of globalization- is too high a cost to entail.

EVOLUTION OF INDIAN BUSINESS

The known Economic history of India begins with the Indus Valley civilization. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 B.C., the Maurya Empire united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity. For the next 1500 years, India produced its classical civilizations such as the Rashtrakutas, Hoysalas and Western Gangas. During this period India is estimated to have had the largest economy of the ancient and medieval world between the 1st and 17th centuries AD, controlling between one third and one fourth of the world's wealth up to the time of the Marathas, from whence it rapidly declined during European rule. Under government-led planning process with widespread controls, India achieved industrial growth of more than 8 per cent per annum on average between 1954-55 and 1964-65. And then, it all fell apart. The next 10 years, 1965-66 to 1974-75, were perhaps the darkest period in India's post-Independence history. Industrial growth declined to around 3 per cent per annum, overall growth rate fell to about 2 per cent, and India was faced with frequent balance of payments crises. By the mid-1970s, there was growing disenchantment with planning and call for liberalization of the economy. Thus during the presidential address to Parliament on January 5, 1976, the government announced its intention to 'remove controls which were no longer relevant to increase production and widen entrepreneurial base'. However, nothing much really happened to overhaul the prevailing system.

Now, Instead of being a borrower, India is now a lender to the International Monetary Fund (IMF). Its foreign exchange reserves exceed $270 billion -- one of the highest among developing countries. This would have been unimaginable even 10 years ago. India is expected to show a growth rate of 8 to 10 per cent, and may emerge as one of the largest economies in the world in the not-too-distant future. Foreign capital inflows are plentiful, and investments exceed one-third of its GDP.

Some major changes in the Indian business environment, especially after 1991, made the domestic markets for many consumer and industrial products more competitive:

1. For the first time, several business firms that were well entrenched in their markets felt the heat of competition. It was now essential for them to get closer to the customers to protect their markets. 2. Many of them, such as Onida, HMV, BPL and Titan who were selling their products only through agents and middlemen, switched to a parallel channel of direct marketing by opening several exclusive retail shops. 3. The aim was to keep in direct touch with the customers and provide certain services that were not being provided by the middlemen. 4. Another objective of opening exclusive showrooms was to build an up-market image of the company by demonstrating the full range of products. 5. The ambience and dcor of the exclusive showrooms also helped these firms in adding value to their brands. LML Vespa, Liberty shoes, Bausch& Lomb eye care products and several others ventured into direct retailing probably due to this reason alone. 6. Service firms such as ITC Hotels and ANZ Grindlays Bank found direct marketing very effective in retailing customers and weathering competition.