Globalisation And The Indian Economy PDF

Chapter 4 Globalistation And The Indian Economy Before Now Untill middle of the 20th Multinational corporations country, production was emerged organised within countries What crossed the boundries Trade was the main channel...

Chapter 4 Globalistation And The Indian Economy Before Now Untill middle of the 20th Multinational corporations country, production was emerged organised within countries What crossed the boundries Trade was the main channel were raw materials, food connecting countries stuffs and imported finished goods They own or control production Set up offices and factories in more than one nation in region where they can get cheap labour and resources (349) X–Social Science How MNC’s interlink production across counties. MNC’s set up production unit where it is close to the market where skilled unskilled labour is available at low cost, where government poli- cies are favourable. They invest money called foreign investment- At times set up production jointly with local companies. Benefits local companies by providing latest technology and addi- tional investment. They buy local companies and expand production. Place orders to small producers for products like Garments, foot- wear sports items etc. How foreign trade leads to integration of markets? Foreign trade creates an opportunity for the producer to reach beyond the domestic market. Goods can be imported to expand the choice of goods for consum- ers. Producers in two countries now closely compete against each other, prices tend to become equal. X–Social Science (350)  Factors that have enabled Globalisation Aim :- To liberalise international trade Started at the initiative of the developed countries Set up rules regarding international trade. Force developing countries to remove trade barriers, Developed countries have unfairly retained trade barriers. Impact of Globalisation For consumers:- Improved quality, lower prices, variety of choices, higher standard of living. Job have been created. Local companies supplying raw material to MNC’s have become prosperous. Top Indian companies have been benefitted from increased com- petition. Some Indian companies also emerged as MNC’s e.g. Tata Motor, Infosys, Ranbaxy, Asian Paints (351) X–Social Science Struggle for a fair Globalisation Fair globalisation would create opportunities for all. The govt, must protect the interests of all the people in the country. Government can ensure that labour laws are properly implemented and workers get their rights. Government can negotiate at the WTO for fairer rules. It can also align with other developing countries. Liberalisation of foreign trade and foreign investment policy. Starting around 1991, barriers on foreign trade and foreign invest- ments were removed to a large extent. It allowed foreign companies to set up factories and offices in In- dia. Goods could be imported and exported easily. Key Points to Remember: · Globalisation is a process of international integration arising from the interchange of world views, products, ideas and other aspects of a culture. · Multinational Corporation (MNC)is an enterprise operating in several countries but l^anaged from one country or group that derives a quarter of its revenue from operations outside of its home country. X–Social Science (352)  · Liberalization refers to the reduction or elimination of govern- ment regulation or restrictions on private business and trade. · Investment is the purchase of goods (such as machine, house, and other parts etc.) that are not consumed today but are used in the future to create wealth. · Foreign Trade is basically trade between two different coun- tries of the world. It is also known as international trade. · World Trade Organizationis the only global international or- ganization dealing with the rules of trade between nations. The main aim of this organization is to liberalize the law of trade between the nations. · Privatization is the transfer of a business, industry, or service from public to private ownership and control. · Foreign Investment is when a company or individual from one nation invests in assets or ownership stakes of a company based in another nation. · SEZ is a special economic zone of a country that is subject to unique economic regulations that differs from other areas in the same country. These regulations tend to be conductive to foreign direct investment. Very Short Answer Type Questions (1 mark each) 1. What is Globalization? (353) X–Social Science  2. Give one example of Trade Barriers? 3. When did India adopt the new economic policy? 4. Provide one example of Indian MNC’s? 5. Why does MNC’s Invest in different countries? 6. Which sector of economy is still lagged behind even after the Globalization? 7. When did Ford Motors established in India? 8. What is privatization? 9. A company which has ownership or control in more than one country is know as? 10. In which category you will put Indian Economy? ANSWERS 1. Globalization is the integration or interconnection between the countries through trade and foreign investment by multinational corporations. 2. Tax on Import. 3. 1992 4. Tata Motors X–Social Science (354)  5. To earn more profits. 6. Agriculture Sector 7. 1995 8. Privatization means allowing the private sector to set up indus- tries which were earlier reserved for the Public sector. 9. MNC’s 10. Mixed Economy 1 Mark Questions 1. Removing barriers or restrictions set by govt, is called_ 2. Name the Indian manufacturer with which Ford Motors entered the Indian automobile business?. 3. Which Indian company has been bought by Cargill foods and MNC? 4. Globalisation has posed major challenges for (a) big producers (b) small producers (c) rural poor (d) none of these (355) X–Social Science  5. Which of the following is an example of a trade barrier? (a) foreign investment (b) delay or damage of goods (c) tax on imports (d) none of these 6. State the main motive of MNC? Answers 1. Liberalisation 2. Mahindra and Mahindra 3. Parakh Foods 4. Small producers 5. Tax on Imports 6. To earn greater profit LONG ANSWER TYPE QUESTIONS (3 OR 5 MARKS EACH) 1. What do you mean by globalization? What are the effects of globalization in India? 2. What is WTO? What are the aim of WTO? What are the draw- back of WTO? X–Social Science (356)  3. What is MNC’s? How MNC’s can spread and get control over productions? 4. What is investment? How is foreign investment different from it? 5. Why are the trade barriers imposed on the foreign trade and / investment in a country? 6. Describe any five advantages to consumers due to globalization. 7. What are the factors have stimulated the globalization process? 8. How the liberalization policy was gradually adopted in India? 9. What is liberalization? Describe any five effects of liberalization on the Indian Economy. 10. How information technology is encouraging the Globalisation ? Explain. 11. Explain how globalisation can be made fairer? 12. Explain with examples how top Indian companies have benefitted /from globalisation. 13. “Foreign trade integrates the markets in different countries”. Sup- port the statement with argument. 14. “A wide ranging choice of goods are available in the Indian mar- kets”. Support the statement with examples in context of globalisation. (357) X–Social Science 15. Explain the steps taken by government to attract foreign invest- ment. 16. “Not every state of India has benefitted from globalisation”. Examine the statement. Answers 1. Globalization is the integration or interconnection between the countries through trade and foreign investment. Positive Impacts:  Greater choice and improved quality of goods at competitive price and hence raises standard df living.  MNC’s have increased investment in India.  Top Indian companies emerged as multinationals.  Created new opportunities for companies providing services like IT sector.  Collaboration with foreign companies help a lot to domestic entrepreneurs. Negative Impacts: Indian economy faced the problem of brain drain. Globalization has failed to remove unemployment and poverty. X–Social Science (358)  Cut in farm subsidies. Closure of small industries. 2. WTO is World Trade Organization. It is an organization which is in favor of increasing the world trade through globalization. The aims of WTO: To liberalize International trade by allowing free trade for all. To promote international trade among the countries of the world in an open uniform and non-discriminatory manner. Removal of both the import and export restrictions. The Draw backs of WTO: It is dominated by developed countries. It is used by developed countries to support globalization in areas that are not directly to trade. 3. MNC’s are Multinational Corporations. It is a company that owns or controls production in more than one nation. MNC’s can spread and control by: Setting up joint production units with local companies. To buy up local companies and expanding its production base. (359) X–Social Science  Placing orders with small producers. By using their Brand. 4. The money that is spent to buy assets such as land, building, machines and other equipment is called investment. Investment made by MNC’s is called foreign investment. Every investment is made with the hope that the assets will earn profits for these companies. 5. Trade barriers are used by the government: To increase, decrease or regulate foreign trade. To decide what kinds of goods and how much of each, should come into the country. To protect the producers within the country from foreign com- petition. 6. There is a greater choice before consumers along with com- petitive price. They enjoy improved quality and lower prices for several prod- ucts. They enjoy much higher standards of living that was possible earlier. Strengthening of Consumers Right like — Right to Information, X–Social Science (360)  Right to choose, Right to Be Heard, Right to Seek Redressal has been given to consumers. Consumers can get quality products from other parts of the words. 7. Improvement in Transportation Development of Information Technology Telecommunication Computers Internet 8. After Independence, the Indian government put barrier on for- eign trade and foreign ‘investment. Initially, Indian Industries were just coming up after Indepen- dence, so competition from imports wouldn’t have allowed these industries to come up. In 1991, the government decided that the time has come for Indian producers to compete the producers around the globe. 9. Removing barriers or restrictions set by the government is known as liberalization. Competition would improve the performance of producers within the country. (361) X–Social Science  Barriers on foreign trade and foreign investment were removed to large extent. This meant that goods could be imported and exported easily. Foreign companies could set up factories and offices to boost up production. It allows making decision freely. The competition would improve the performance of producers within the country since they have to improve their quality. 10. With Improvement in transportation technique now It become easier to send good at distance place at lower cost. Sending and receiving information are now become easier. There is rapidly increase in trade with the help of information and Technology. 11. From Notes 12 a) Several of the top Indian companies have been able to ben- efit from the increased competition b) They have invested in newer technology and production meth- ods and raised their production standards. c) Gained from successful collaborations with foreign compa- nies. d) Some large Indian companies emerged as multinationals themselves. X–Social Science (362)  e) Created new opportunities for companies providing services particularly those involving IT. 13. From notes. 14. A wide ranging choice of goods are available in the Indian market. a) The latest model digital cameras, mobile phones and televi- sion made by the leading manufactures of the world are within our each. b) Every season, new models of automobiles can be seen on Indian roads. c) A similar explosion of brands can be seen for many other goods. 15. Government can take following steps to attract foreign invest- ment: a) Industrial zones called SEZ (Special economic zones) are being set up to provide world class facilities-electricity, wa- ter, roads, transport, storage etc. b) Govt, has also allowed flexibility in the labour laws to attract foreign investment. c) Instead of hiring workers on a regular basis companies can hire workers ‘flexibly’ for short provide when there is intense pressure of work. d) Exemption from paying tax in early 5 years (363) X–Social Science 16. Do it your self from the notes. A Garment Worker 35 year old Sushila has spent many years as a worker in garment export industry of Delhi. She was employed as a ‘permanent worker’ entitled to health insurance, provident fund, overtime at a double rate, when Sushila’s factory closed in the late 1990s. After searching for a job for six months, she finally got a job 30 km. away from where she lives. Even after working in this factory for several years, she is a temporary worker and earns less than half of what she was earning earlier. Sushila leaves her house every morning, seven days a week at 7:30 a.m. and returns at 10 p.m. A day off from work means no wage. She has none of the benefits she used to get earlier. Factories closer to her home have widely fluctuating orders and therefore pay even less. Factory workers folding garments for export. Though globalisation has created opportunities for paid work for women, the condition of employment shows that women are denied their fair share of benefits. The conditions of work and the hardships of the workers described above have become common to many industrial units and services in India. Most workers, today, are employed in the unorganised sector. Moreover, increasingly conditions of work in the organised sector have come to resemble the unorganised sector. Workers in the organised sector such as Sushila no longer get the protection and benefits that they enjoyed earlier. X–Social Science (364) 1. In what ways has competition affected workers, Indian exporters and foreign MNCs in the garment industry? 2. What can be done by each of the following so that the workers can get a fair share of benefits brought by globalisation? (a) Government (b) Employers at the exporting factories (c) MNCs (d) Workers. 3. One of the present debates in India is whether companies should have flexible policies for employment. Based on what you have read in the chapter, summarise the point of view of the employers and workers. (365) X–Social Science