Page 1 of 6

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 03

March 2019

Available online: https://ejbss.org/ P a g e | 39

Effect of Globalization on Indian Economy

Jai Prakash, Assistant Professor

Pt. CLS Govt. PG College, Karnal

Abstract

Globalization is a significantaspect of economic reform, introduced in India in 1991. Owing to

globalization, it was expected that globalization should be useful for the economy, as a whole

and should raise the welfare of all people throughout the country. It was expected that capital and

technology will inflow from developed countries of the world into India. This implies that it

should raise the rate of Economic growth in country and reduce poverty and that it should not

increase inequalities in the Economy, Also, There should be social integration of the economy

with rest of the world. Accordingly India would have access to the fruits of global growth. The

objectives of the study is to know about the globalization and its impacts on Indian Economy.

The research paper is descriptive in nature and secondary data is used from various books,

journals, magazines and websites. The study concluded that globalization is not equally

beneficial for all countries of the world. So we need a policy of globalization which is beneficial,

creates opportunities with the objective of growth, employment and equity and raise the welfare

of all people throughout the world. Government should adopt measures to ensure fair

globalization policy.

Keywords: Globalization, Indian Economy, Economic growth.

INTRODUCTION

According to the chamber Dictionary, means “to make global, that is worldwide, or effecting or

taking into consideration the whole world or all people”.

Globalization in it totality implies the following:- .

Spread of international trade. People migrate from a country of region to another, temporarily or

permanently. Capital flows from one country to help produce goods and services.

Growth in trade and production of services of all kinds -shipping, insurance banking, healthcare

and of course, finance etc. Technology is trade as between different Countries. In brief,

globalization implies, being able to manufacture in the most cost effective way possible

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European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 03

March 2019

Available online: https://ejbss.org/ P a g e | 40

anywhere in the world: being able to produce raw materials and drawing management resources

from the cheapest source anywhere in the world: having the entire world as a market.

Trends of India’s Foreign Trade after Globalization

After globalization, the pattern, of India’s foreign trade has undergone radical changes mainly as

a result of industrial progress.The volume of India’s foreign trade has increased considerably

after the economic reforms. It has increased from Rs. 19260 crore in 1980-81 and Rs. 434344 in

2000-01. It further grew to Rs. 4336109 crore in 2015-16. The expansion was particularly very

fast after 1970-71. The pattern of India’s foreign trade was completely changed as a result of

economic development and industrialization. It is no longer confined to a few countries or few

commodities. Now India has trade relations with almost all the countries of the world. Exports

cover over 9300 commodities to about 220 countries. Imports from about 180 countries accounts

for over 8200 commodities. Changes in the volume of India’s foreign trade during the planning

period are shown in Table 1.

Changes in the volume of india’s Foreign Trade after Globalization

Table -1 (in crore Rs.)

Year Import Export Total Export –Import

Ratio (%)

1990-11 43193 32553 75746 75.4

1995-96 122678 106353 229031 86.7

1999-2000 204583 162925 367508 79.6

2000-01 280873 203571 434344 88.2

2005-06 660409 501065 1161474 75.8

2010-11 1746135 1165665 2911800 66.8

2011-12 2394647 1482517 3877164 61.9

2012-13 2732146 1667690 2898906 61.0

2013-14 2815918 1931074 4746992 68.6

2014-15 2820072 1934210 4754282 68.6

2015-16 2592820 1743289 4336109 67.2

From Table 1, following results can be drawn:

1. Huge Growth in the Value of Trade: Table 1 reveals that the total value of foreign trade which

was Rs. 75,746 crore in 1990-91increased to Rs. 434444 crore in 2000-01. It touched a level of

43 lakh crores in 2015-16.

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ISSN: 2235-767X

Volume 07 Issue 03

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2. Higher Growth of Imports: The total value of imports is Rs. 12,549 crore in 1980-81 and then

to Rs. 43,193 crore in 1990-91 showing an increase of 130 per cent and 210 per cent during the

last two decades respectively. The factors which were largely responsible for this phenomenal

increase in imports include: huge import of industrial inputs, regular import of food grains, rising

anti inflationary imports, liberal imports of non-essential items, periodic hike on oil prices and

the initiation of liberal import policy by the Government during 1985-86 to 1991-92. During

2000-01 it rose to Rs. 280873 crore against Rs. 43193 crore in 1990-91. it touched a level of Rs.

26 lakh crores in 2015-16.

3. Inadequate Growth of Exports: Total value of exports were Rs. 6711 crore in 1980-81 and

then to Rs. 32,553 crore in 1990-91. In 1990-91, the value of exports rose to Rs. 32553 crore

showing a growth rate of 15.9 percent over the previous year. Again in 2000-01 the value of

exports stood at Rs. 203571 crore showing a growth of 56.9 percent over the previous year. In

2011-12, it stood at 14.82 lakh crore. Due to the introduction of various export promotion

measures since the devaluation of rupee in 1966, the value of Indian exports recorded some

increase but this increase in exports was totally inadequate considering the sizable growth in the

value of imports. This has resulted a persistent and widening trade deficit

Effect of Globalization on Indian Economy:-

Globalization has both positive and negative effects on Indian economy. These are as follow.

Positive effects of globalization on Indian economy: - These are as highlight the positive effect

of globalization policy on Indian economy. As a result of foreign trade policies adopted in the

wake of globalization, India’s share in the world trade has gone up.

Table 2, India’s Share in the World trade.

Year India’s percentage share in the

world

1990-91 0.53

1995-96 0.60

2005-06 1.00

2007-08 1.64

2008-09 1.64

2009-10 1.78

2014-15 1.96

Above table shows that as a result of globalization of India’s foreign trade there has been some

increase in India’s share in world trade. In 1990-91 India’s share in world trade was 0.53 percent.