Facing a severe economic crisis, India approached the IMF for a loan, and the IMF granted what is called a ‘structural adjustment’ loan, which is a loan with certain conditions attached which relate to a structural change in the economy. The liberalization of India’s economy was adopted by India in 1991. Impact of Globalization on Agricultural Sector:Īgricultural Sector is the mainstay of the rural Indian economy around which socio-economic privileges and deprivations revolve and any change in its structure is likely to have a corresponding impact on the existing pattern of Social equity.
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Now for Further analysis we take up Impact of Globalization on various sector of Indian Economy. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. Rather, they are influenced by both domestic and international policies and economic conditions. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. Globalisation has intensified interdependence and competition between economies in the world market. The implications of globalisation for a national economy are many. The salient features of NEP-1991 are (i) liberalization (internal and external), (ii) extending privatization, (iii) redirecting scarce Public Sector Resources to Areas where the private sector is unlikely to enter, (iv) globalization of economy, and (v) market friendly state. The New Economic Policy (NEP-1991) introduced changes in the areas of trade policies, monetary & financial policies, fiscal & budgetary policies, and pricing & institutional reforms. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%), defense industries (26%) etc.Ĥ. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector.ģ. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19%.Ģ. The following measures were taken to liberalize and globalize the economy:ġ.
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Man Mohan Singh brought a new policy which is known as Liberalization, Privatization and Globalization Policy (LPG Policy) also known as New Economic Policy,1991 as it was a measure to come out of the crisis that was going on at that time. Liberalization, Privatization and Globalization launched by the then Finance Minister Man Mohan Singh that India saw its development in various sectors.Īfter suffering a huge financial and economic crisis Dr. Globalization had its impact on various sectors including Agricultural, Industrial, Financial, Health sector and many others. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1 billion. It also heralded the integration of the Indian economy into the global economy. The economic changes initiated have had a dramatic effect on the overall growth of the economy.
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Globalization as a spatial integration in the sphere of social relations when he said “Globalization can be defined as the intensification of worldwide social relations which link distant locations in such a way that local happenings are shaped by events occurring many miles away and vice – versa.” Globalization generally means integrating economy of our nation with the world economy. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. Globalization (or globalization) describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. Globalization and its impact on Indian Economy: Developments and Challenges Article explains the reason behind the major development of India i.e.