Globalization is this process of rapid integration or interconnection between countries. More and more goods and services, investments, technology and people are moving between countries due to globalization.
Globalization has propelled the Indian economy in the following ways:
- Rapid growth: India’s GDP has risen from $270 billion in 1991 when it liberalised and globalised its economy to $3.94 trillion in 2024.
- Increased exports: India accounted for only 0.53% of world trade in 1991, which rose to 2.4% in 2024.
- Increased foreign investments: Foreign direct investment (FDI) in India reached 2.6% of GDP in 2024, compared to 0.1% in 1990.
- Employment creation: LPG reforms attracted many multinational corporations (MNCs) in India, which led to creation of job opportunities, especially for women.
- Growth of the service sector: India has become a hub for outsourcing of various services such as IT, customer support, etc. The IT sector has increased its contribution to India’s GDP from 1.2% in 1998 to almost 7.8% in 2024.
- Improved quality of products and services: Increased competition due to foreign companies is pushing companies across the board to invest in newer technology and production methods and raise their production standards.
However, at the same time, globalization has widened socio-economic inequalities, as it adds new dimensions to the vulnerability of India’s downtrodden by exacerbating their social exclusion. This is done in the following ways:
- Concentration of wealth: Globalization has led to a concentration of wealth in the hands of a few individuals and corporations. For example, the top 1% of India’s population owns more than 50% of the country’s wealth, according to the Oxfam report 2024.
- Displacement: The people from tribal communities are facing social uprooting by the state due to development projects, special economic zones, and displacement from traditional occupations caused by economic liberalization and globalization.
- Fragmented labour: Multinational corporations have dismantled local industries with business process outsourcing resulting in fragmented industrial labour, which has weakened the organizational ability and bargaining power of the working class.
- Digital exclusion: Lower literacy rate excludes the marginalised from digital revolution thereby preventing them from reaping benefits of increased competition and rapid technological innovation in a globalized world. For example, local street vendors.
- Jobless growth: Rapid growth post-globalisation was not accompanied by adequate growth of jobs to absorb the new entrants to the workforce. Moreover, demand for skilled personnel has increased leaving unskilled workers more vulnerable.
- Regional disparities: Globalization has benefited some regions more than others. For example, the growth of the IT industry has led to the development of Bengaluru and Hyderabad, unlike Bihar, Uttar Pradesh, etc.
It should also be noted that globalization has weakened the caste system through economic opportunities, education, and liberal thoughts, made inter-caste marriages more acceptable, broken down the traditional division of labour, increased global job opportunities, improved socioeconomic mobility, reduced overall poverty and has helped women to demand equal rights.