Globalisation and the Indian Economy — Outcomes, Fairness & WTO

✅ Positive Outcomes of Globalisation

1) 🚀 Boost to Indian Companies

  • Private sector benefited: easier imports of raw materials & technologies from abroad.
  • Many import/export restrictions abolished.
  • Some large Indian firms have themselves become MNCs.

2) 🛣️ Development in Infrastructure

  • Infrastructure improved (roads, telecom, etc.).
  • The government is building the Golden Quadrilateral to connect major cities.
  • Significant advances in the telecom sector.

3) 🛍️ Diverse Products for Consumers

  • Many MNCs invested in India → wider choice of high-quality products at lower prices.
  • Indian firms expanding worldwide, e.g., Tata Motors, Ranbaxy, Infosys, Asian Paints.

4) 🌐 Global Form of Modern Business

  • Businesses now operate across borders; India can freely import/export in many categories.
  • India has entered multiple foreign markets.

5) 💵 Foreign Currency & FDI

  • Foreign currency reserves rose with reforms.
  • FDI increased from ₹174 crore (1991) to ₹9,338 crore (2000) (as stated).

6) 💻 Boost to Service Sector

  • New opportunities, especially in information & communication technology (ICT).

7) 🏁 Increase in Competition

  • More competition pushed up efficiency & productivity in both private and public sectors.

⚠️ Negative Outcomes of Globalisation

  • 🧑‍🏭 Exploitation of workers: Long hours/night shifts in peak season; workers may not get a fair share of gains.
  • 🥣 Poverty persists: Has not solved poverty; gap between rich and poor widened.
  • 🌾 Less focus on agriculture: Agriculture’s role overlooked in new policy approach.
  • 📉 Uncertain employment: Competitive pressure → more flexible/contract hiring; job insecurity.
  • 🏭 Small-scale industries hit: MNCs produce items earlier made by small units → many can’t compete.

⚖️ The Struggle for a Fair Globalisation

Not everyone benefits equally. Those with education, skills, and resources gain more; others may not. We need fair globalisation so progress does not come at the cost of the poor or the environment.

🏛️ Role of Government

  1. Create policies that protect all citizens, not only the wealthy and powerful.
  2. Ensure labour laws are followed; make workers aware of their rights.
  3. Reserve some items for small/local producers.
  4. Use trade & investment barriers (quotas, import tariffs, etc.) when needed.
  5. Negotiate fair rules at the WTO.

🏛️ World Trade Organisation (WTO)

🧭 Introduction

  • The WTO aims to liberalise international trade and sets rules for global trade.
  • It is the successor to GATT (1947), a multilateral treaty among 23 countries to reduce tariff and non-tariff barriers and govern trade relations.
  • India was an original GATT member (anti-dumping, fair practices, reduced protectionism).
  • In 1994, GATT members agreed to form the WTO to implement GATT’s goals and rules.
  • GATT was revised multiple times (e.g., Kennedy Round in 1960s, Tokyo Round in 1970s). The Uruguay Round (started 1986) led to comprehensive reforms; the draft by ex-chairman Arthur Dunkel is known as the Dunkel Draft.

📜 Expectations from Members (under WTO framework)

  • Move beyond bilateral agreements to global rules.
  • Eliminate import/export quotas and reduce other trade barriers.
  • Follow common, fair principles to govern trade among members.

🇮🇳 Effect of WTO on the Indian Economy

👍 Positive

  • More opportunities to trade with foreign countries.
  • Access to latest technology at lower cost.

👎 Negative

  • Benefits to developing/underdeveloped countries may be limited.
  • Domestic firms may struggle to compete with large international firms → possible closures and job losses.
  • Risk of developed countries influencing domestic policy.
  • Prices of some essential/life-saving drugs may rise.

🧾 Key Terms (Quick Recap)

  1. Liberalisation: Reducing/removing government regulations & restrictions to allow greater private participation.
  2. Privatisation: Letting the private sector set up industries earlier reserved for the public sector.
  3. Globalisation: Free interaction & integration of economies of different countries.
  4. Fair Globalisation: Ensuring the benefits of globalisation are more evenly distributed and create opportunities for all.
  5. MNC: A company that owns/controls production in more than one country (e.g., Coke, Apple, Onida, Ponds, LG).
  6. Investment: Money put into assets (land/buildings, plant/machinery, etc.) to earn future profit.
  7. Foreign Investment (FDI): When an individual/company from one nation invests in assets or ownership of a company in another nation.
  8. WTO: Organization that manages global trade rules between nations.

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