Victims of Globalization
IN his Making Globalization Work, Nobel Laureate Stiglitz wrote: Trade liberalizationopening up markets to the free flow of goods and services was supposed to lead to growth. The evidence is at best mixed. Part of the reason that international trade agreements have been so unsuccessful in promoting growth in poor countries is that they were often unbalanced. The advanced industrial countries were allowed to levy tariffs on goods produced by developing countries that were, on average, four times higher that those on goods produced by other advanced industrial countries.
In his foreword to The Dynamics and Impact of Globalization by Dr. M. V. Louis Anthuvan, Justice V. R. Krishna Iyer pointed out pithily: The New World Order is the product of what is now familiarly described as globalization, liberalization and privatization. The weaker sectors like the Asian and African countries are victims, whose economic welfare is slavery, at the disposal of the White world. When World War II came to a close, commercial conquest and trade triumph became the major goal of the United States and the other giant trade powers. Indeed, these mighty countries and companies even made world hunger as Big Business. The poorer countries with natural resources have been made banana republics and cucumber vassals.
The Human Development Report 2006 recorded: Globalization has given rise to a protracted debate over the precise direction of trends in global income distribution. What is sometimes lost sight of is the sheer depth of inequalityand the associated potential for greater equity to accelerate poverty reduction. Measured in the 2000 purchasing power parity (PPP) terms, the gap between the incomes of the poorest 20 per cent of the worlds population and the $ 1 a day poverty line amounts to about $ 300 billion. That figure appears large, but it is less than two per cent of the income of the worlds wealthiest 10 per cent.
To make Globalization Work :
Under the phenomenal growth of information technology which has shrunk space and time and reduced the cost of moving information, goods and capital across the globe, the globalization has brought unprecedented opportunities for human development for all, in developing as well as developed countries. Under the commercial marketing forces, globalization has been used more to promote economic growth to yield profits to some countries and to some groups within a country.
India should pay immediate attention to ensure rapid development in education, health, water and sanitation, labor and employment so that under time-bound programmes the targets are completed without delay. A strong foundation of human development of all people is essential for the social, political and economic development of the country.
Though at present India appears to be dominant in some fields of development as in IT-ITES, this prosperity may be challenged by other competing countries which are equipping themselves with better standards of higher education. As detailed earlier, our progress in education has been slow and superficial, without depth and quality, to compete the international standards.
The government should take immediate steps to increase agricultural production and create additional employment opportunities in the rural parts, to reduce the growing inequality between urban and rural areas and to decentralize powers and resources to the panchayati raj institutions for implementing all works of rural development. Steps should be taken for early linking of the rivers, especially in the south-bound ones, for supply of the much-needed water for irrigation.
It should be remembered that without a sustainable and productive growth of the agricultural sector, the other types of development in any sphere will be unstable and illusory. Despite the concerted development in manufacturing and service sectors, despite the remarkable inflow and overflow of foreign reserves, agriculture is still the largest industry providing employment to about 60 per cent of the workforce in the country.
Mere growth of the GDP and others at the macro level in billions does not solve the chronic poverty and backward level of living norms of the people at the micro level. The growth should be sustainable with human development and decent employment potential. The welfare of a country does not percolate from the top, but should be built upon development from the bottom.
Foreign Trade (Export- Import)
India’s imports in 2004-05 stood at US$ 107 billion recording Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high andhad become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capitalwas flying out of the country and we were close to defaulting on loans. Along with these bottlenecks athome, many unforeseeable changes swept the economies of nations in Western and Eastern Europe,South East Asia, Latin America and elsewhere, around the same time. These were the economiccompulsions at home and abroad that called for a complete overhauling of our economic policies and programs.
Major measures initiated as a part of the liberalisation and globalisation strategy in the earlynineties included the following:
• Devaluation: The first step towards globalization was taken with the uncement of the
• devaluation of Indian currency by 18-19 percent against major currencies in the international
• foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis
• Disinvestment-In order to make the process of globalization smooth, privatization and
• liberalisation policies are moving along as well. Under the privatization scheme, most of the
• public sector undertakings have been/ are being sold to private sector
• Dismantling of The Industrial Licensing Regime At present, only six industries are under
• compulsory licensing mainly on accounting of environmental safety and strategic
• considerations. A significantly amended locational policy in tune with the liberalized licensing
• policy is in place. No industrial approval is required from the government for locations not
• falling within 25 kms of the periphery of cities having a population of more than one million.
• Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries and
• encouraging non-debt flows. The Department has put in place a liberal and transparent foreign
• investment regime where most activities are opened to foreign investment on automatic route
• without any limit on the extent of foreign ownership. Some of the recent initiatives taken to
• further liberalise the FDI regime, inter alias, include opening up of sectors such as Insurance
• (upto 26%); development of integrated townships (upto 100%); defence industry (upto 26%);
• tea plantation (upto 100% subject to divestment of 26% within five years to FDI); enhancement
• of FDI limits in private sector banking, allowing FDI up to 100% under the automatic route for
• most manufacturing activities in SEZs; opening up B2B e-commerce; Internet Service
• Providers (ISPs) without Gateways; electronic mail and voice mail to 100% foreign investment
• subject to 26% divestment condition; etc. The Department has also strengthened investment
• facilitation measures through Foreign Investment Implementation Authority (FIIA).
• Non Resident Indian Scheme the general policy and facilities for foreign direct investment as
• available to foreign investors/ Companies are fully applicable to NRIs as well. In addition,
• Government has extended some concessions specially for NRIs and overseas corporate bodies
• having more than 60% stake by NRIs
• Throwing Open Industries Reserved For The Public Sector to Private Participation. Now
1. there are only three industries reserved for the public sector
• Abolition of the (MRTP) Act, which necessitated prior approval for capacity expansion
• The removal of quantitative restrictions on imports.
• The reduction of the peak customs tariff from over 300 per cent prior to the 30 per cent rate
• that applies now.
• Severe restrictions on short-term debt and allowing external commercial borrowings based on
• external debt sustainability.
• Wide-ranging financial sector reforms in the banking, capital markets, and insurance sectors,
• including the deregulation of interest rates, strong regulation and supervisory systems, and the
• introduction of foreign/private sector competition.
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