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Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
Globalisation
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Globalisation
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Globalisation

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  • 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.

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