1. Globalisation And Its Impact
On Indian Economy
Omer Maroof
MBA 4th
Semester
110130

2. Definition…
•The IMF defines globalization as:
“ The growing economic interdependence of
countries worldwide through increasing volume and
variety of cross border transactions in goods and
services and of international capital flows, and also
through the more rapid and widespread diffusion of
technology”

3. overview
• 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

4. • Effects of Globalization on Indian Industry started
when the government opened the country's markets to
foreign investments in the early 1990s. Globalization of
the Indian Industry took place in its various sectors such
as steel, pharmaceutical, petroleum, chemical, textile,
cement, retail, and BPO.

5. Strategies Initiated
• Disinvestment
• Devaluation
• Dismantling of The Industrial Licensing Regime
• Allowing Foreign Direct Investment
• Non Resident Indian Scheme
• Throwing Open Industries Reserved For The Public
Sector to Private Participation
• Abolition of the (MRTP) Act
• The removal of quantitative restrictions on imports.

6. • Cultural Changes 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.
• Indian youths leaving education in mid-way and joining
MNC's.
• There has been an increase in the violence, particularly
against women.
Cultural changes

7. • Extension of internet facilities even to rural areas.
• In place of old cinema halls, multiplex theatre are coming
up.
• Old restaurants are now replaced by Mc. Donald’s.
• More availability of cheap and filthy material (CD's or
DVD's) in the name of liberalization.
• Scientific and technological innovations have made life
quite comfortable and enjoyable.

8. • More inflow of money has aggravated deep
rooted problem of corruption.
• More scandals and scams compared to pre-
globalization era.
• In India, land-line or basic phone was a
prestige symbol few years back but now you
find people riding bicycle with a mobile in hand,
talking or listening music.

9. Growth of GDP
• Chart showing the growth in GDP

10. • Aggregate GDP
GDP in current USD India and China (1960-2005)
0
500
1000
1500
2000
2500
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004
Billions
GDPincurrentUSD
China India
Source: World Bank, World Development Indicators (WDI)

11. Growth of Foreign Exchange
Reserves
• Chart showing the growth of Foreign Exchange Reserves

12. Growth of Foreign Exchange
Reserves
• India’s foreign exchange reserves have grown significantly since
1991.
• The reserves, which stood at US$ 5.8 billion at end-March 1991
increased gradually to US$ 54.1 billion by end-March 2002,
• After which it rose steadily reaching a level of US$ 309.7 billion in
March 2008. T
• he reserves declined to US$ 252.0 billion in March 2009. The
reserves stood at US$ 292.9 billion as on September 30, 2010
compared to US $ 279.1billion as on March 31, 2010. Although both
US dollar and Euro are intervention currencies and the FCA are
maintained in

13. Growth of FDI
• Chart showing the source of FDI into India between April 2000 and March 2011

14. FDI
• During April-February 2010-11, Mauritius has led investors into India
with US$ 6,637 million worth of FDI comprising 42 per cent of the
total FDI equity inflows into the country. The FDI equity inflows from
Mauritius is followed by Singapore at US$ 1,641 million and the US
with US$ 1,120 million, according to data released by DIPP.

15. FDI

16. FDI
• India attracted FDI equity inflows of US$ 1,274 million in February
2011. The cumulative amount of FDI equity inflows from April 2000
to February 2011 stood at US$ 128.642 billion, according to the
data released by the Department of Industrial Policy and Promotion
(DIPP).
• The services sector comprising financial and non-financial services
attracted 21 per cent of the total FDI equity inflow into India, with
FDI worth US$ 3,274 million during April-February 2010-11,

17. FDI
• Telecommunications including radio paging, cellular mobile and
basic telephone services attracted second largest amount of FDI
worth US$ 1,410 million during the same period.
• Housing and Real Estate industry was the third highest sector
attracting FDI worth US$ 1,109 million
• Followed by power sector which garnered US$ 1,237 million during
April-December 2010-11. The Automobile sector received FDI worth
US$ 1,320 million.

18. Inward FDI Flows
Inward FDI Flows India and China (1980-2005)
0
10000
20000
30000
40000
50000
60000
70000
80000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
InwardFDIFlows(mlnUSD)
Inw ard FDI Flow s India Inw ard FDI Flow s China

19. Outward FDI Flows
Outward FDI Flows India (2000-2005)
0
500
1000
1500
2000
2500
2000 2001 2002 2003 2004 2005
OutwardFDIFlowsmlnUSD
Outw ard FDI Flow s India

20. Growth in Industrial Sector
• Chart showing the current Industrial Growth Rate in India on Year-on-
Year Basis (Base Year 2004-05)

21. Sector Wise Growth of GDP
• As per the figures available for 2011 fiscal, almost 52%
of India’s GDP comes from the agricultural sector and
the services sector is the second biggest contributor with
34 percent. The industrial sector contributes almost 14
percent of India’s GDP.

22. Growth in Agriculture
Share of Agriculture in GDP India and China (1990-2005)
0
5
10
15
20
25
30
35
1990 1992 1994 1996 1998 2000 2002 2004
Agriculturevalueadded(%ofGDP)
China India

23. Growth in Agriculture
• In 1951, agriculture provided employment to 72 per cent of the
population and contributed 59 per cent of the GDP.
• By 2001 the population depending upon agriculture came to 58 per
cent whereas the share of agriculture in the GDP went down
drastically to 24 per cent and further to 22 per cent in 2006-07.
• The agricultural growth of 3.2 % observed from 1980 to 1997
decelerated to 2 % subsequently.

24. Growth in Agriculture
• The share of Indian manufacturing industry towards India
GDP has grown from 25.38% in 1991 to 27% in 2004.
• The contribution of the Indian manufacturing sector to
the Indian export sector has increased from 52% in 1970
to 59% in 1980 and 71% in 1990 and 77% in 2000-01.
• Furthermore, the Indian manufacturing exports
accounted for a little over 5% (in 1990) of the value of
output of the Indian manufacturing sector but today it is
close to 10%.

25. The Indian sectors which grew tremendously as a result of
globalization of the Indian manufacturing sector are as:
• Capital goods
• Engineering goods
• Chemicals
• Petroleum
• Chemicals &
fertilizers
• Packaging
• Consumer non-
durables
• Electronics
• IT Hardware &
peripherals
• Gems & jewelry
• Leather & leather
products
• Mining
• Steel & non-ferrous
metals
• Textiles & apparels
• Water equipment

26. Share of Manufacturing in GDP
Share of Manufacturing in GDP India and China (1990-2005)
0
5
10
15
20
25
30
35
40
1990 1992 1994 1996 1998 2000 2002 2004
Manufacturingvalueadded(%ofGDP)
China India
Source: World Bank, World Development Indicators (WDI)

27. Growth in Industrial Sector
• The vehicles industry in India witnessed a substantial growth in
2010. The production of vehicles in India grew by 32.4 per cent in
August 2010, as against the corresponding period in 2009.
• Ranging from the commercial vehicles to two-wheelers to the
Passenger vehicles segment all registered striking growth rates of
49%, 31% and 32%.
• According to the reports of the Gem and Jewellery Export
Promotion Council, the shipment of jewelry from India was worth
US$ 23.57 billion during the April-November 2010, recording an
increase of 38.25 per cent as compared to that of US$ 17.05 billion
as against the same period in 2009.

28. Growth in Industrial Sector
• Indian exports increased by 26.8 % (y-o-y) and touched US$ 18.9
billion in November 2010.
• This rapid growth in the exports from India urged the Indian
Government to conclude that the total shipments in 2010-11 might
go up to US$ 215 billion.
• For the period April 2010 to November 2010 exports in the country
grew by 26.7 % to US$ 140.3 billion. On the other hand imports
increased to US$ 222 billion .

29. Growth in Industrial Sector
• The logistics industry in India is also witnessing enormous activity.
• According to a study conducted by the shipping ministry in India,
some of the important ports in the country handled about 44.4
million tons of freight in September 2010.
• There was a growth rate of 4.5 per cent as compared to the growth
rate in September 2009 which stood at 5.9 per cent.
• According to Frost&Sullivan, the traffic in these ports is going to rise
from 814.1 (MT) to 1,373.1 MT from the period 2010 to 2015 at a
steady CAGR of 11 percent.

30. Share of Services in GDP
Share of Services in GDP India and China (1990-2005)
0
10
20
30
40
50
60
1990 1992 1994 1996 1998 2000 2002 2004
Servicesvalueadded(%ofGDP)
China India

31. Share of Services in GDP
• India also made a substantial profit from Foreign Exchange
Earnings.
• The number of Foreign Tourist that visited the country from January-
November 2010 was about 4.93 million as compared to 4.46 million
foreign tourists during the same period in 2009, registering a growth
rate of 10.4 per cent.
• The (FEE) or Foreign Exchange Earnings went up to a whopping
US$ 12.88 billion during the period January-November 2010 as
compared to US$ 10.67 billion during January-November 2009.
• The growth rate registered by the Ministry of Tourism was 20.7%.

32. Telecom/IT-BPO
• According to the reports released by the Telecom Regulatory
Authority of India (TRAI) the total number of telephone users in India
reached 742.12 million in October 31, 2010.
• This took the total telephone using population in the country to
62.51 percent. The number of wireless subscribers also increased
to 706.69 million.
• According to the NASSCOM's Strategic Review 2010, the IT-BPO
sector in India remained the fastest developing industry churning out
total revenue of USD 73.1 billion in 2010.
• The Information Technology and software services generated
revenues of USD 63.7 billion.

33. Growth in IT Services/ GDP
Telecommunications Revenue in % of GDP India (1990-2005)
0
0.5
1
1.5
2
2.5
1990 1992 1994 1996 1998 2000 2002 2004
Telecommunicationsrevenue(%GDP)

34. Trade, Hotel, Transport and Communications Contribution to India
GDP
Year
1st Quarter statistics in INR
crores
2nd Quarter statistics in INR
crores
3rd Quarter statistics in INR
crores
4th Quarter statistics in INR
crores
2004
-05
166536 173240 186971 200973
2005
-06
189062 194038 208192 225403
2006
-07
208411 217544 233919 251680
2007
-08
234697 239445 258240 279431
2008
-09
257700 261944 272156 295776
2009
-10
279250 289020 301003 327941
2010
-11
314546 319798 330117 365994
2011
-12
357883 350263 363101 391527

35. • The investment industry in India also showed positive
signs of growth in 2010. According to the reports
released by the Association of Mutual Funds in India the
total assets that the mutual fund industry managed
accounted at US$ 160.44 billion in September 2010

36. Finance, Insurance, Real Estate and Business
Services Contribution to GDP
Year
1st Quarter statistics in INR
crores
2nd Quarter statistics in INR
crores
3rd Quarter statistics in INR
crores
4th Quarter statistics in INR
crores
2004
-05
105870 106130 110428 114744
2005
-06
117760 119871 123364 131482
2006
-07
133638 136440 141377 149923
2007
-08
150540 153509 158429 165897
2008
-09
168259 170953 177881 189619
2009
-10
187106 189145 192558 201074
2010
-11
205861 208815 214205 221114
2011
-12
225165 229498 233758 243294

37. Investment / GDP
Gross Capital Formation / GDP India and China (1990-2005)
0
5
10
15
20
25
30
35
40
45
50
1990 1992 1994 1996 1998 2000 2002 2004
GrossCapitalFormation(%ofGDP)
China India

38. Share of Global Trade (Goods)
Indian Share and Rank of Global Merchandise Trade (2005)
Rest of the World
37%
India
16th
1%
Korea
7th
3%
Hong-Kong
6th
4%
EU
1st
18%
US
2nd
17%
China
3rd
9%
Japan
4th
7%
Canada
5th
4%

39. Share of Global Trade (Service)
Indian Share and Rank of Global Services Trade (2005)
Rest of the World
36%
Korea
7th
3%
India
6th
3%
Canada
5th
3%
China
4th
4%
Japan
3rd
7%
US
2nd
18%
EU
1st
26%

40. The Negative Effects of Globalization
• Globalization has led to exploitation of labor. Prisoners and child
workers are used to work in inhumane conditions. Safety standards
are ignored to produce cheap goods
• Job insecurity.
• Terrorists have access to sophisticated weapons enhancing their
ability to inflict damage. Terrorists use the Internet for
communicating among themselves.
• The number of rural landless families increased from 35 per cent in
1987 to 45 per cent in 1999, further to 55 per cent in 2005.
• Our progress in education has been slow and superficial , without
depth and quality, to compete the international standards.

41. Contt…
• Companies have set up industries causing pollution in countries with
poor regulation of pollution
• Fast food chains like McDonalds and KFC are spreading in the
developing world. People are consuming more junk food from these
joints which has an adverse impact on their health.
• Bad aspects of foreign cultures are affecting the local cultures
through TV and the Internet.
• Enemy nations can spread propaganda through the Internet.

42. Contt…
• Deadly diseases like HIV/AIDS are being spread by travellers to the
remotest corners of the globe.
• Local industries are being taken over by foreign multinationals.
• There is increase in human trafficking.
• Multinational Companies and corporations which were previously
restricted to commercial activities are increasingly influencing
political decisions.
• Share of agriculture in the GDP went down drastically to 24 per cent
and further to 22 per cent in 2006-07.