International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print) Business Studies (IJRMBS 2016) and its Impact on Transforming India’s Economy Kamlesh Goyal Research Scholar (Ph.D.), Dept. of Economics, Punjabi University, Patiala, Punjab, India.

Abstract The phenomenon of globalization has many aspects and implications. It is referred to as a strategy of economic development where borders of the countries do not matter for movement of commodities, services, capital, finance, labour, technology, ideas and information. This strategy generates a process of increasing economic integration and growing interdependence between countries of the world economy. The process of globalization was highly accelerated in India in July 1991 and its implications on Indian economy are many. As every coin has two sides, similarly, there are both positive and negative aspects of globalization. Indian economy is the 12th largest economy in terms of exchange rate (US Dollar) and second fastest growing economy in the world. India’s GDP has touched nearly two trillion in terms of US Dollar. India made a remarkable progress in information technology, services and knowledge process services. The objective of this study is to analyze the impact of globalization on Indian economy in terms of growth, structural transformation, foreign trade, foreign exchange reserves and employment from the period of 1991 to 2015-16 (the period of post reforms). This study is based on the secondary data taken from various reports of Government of India, NSSO, RBI, IMF, WTO, World Bank and other sources.

Key Words Globalization, Structural Transformation, Agriculture Sector, Employment, Foreign Trade, Foreign Reserve Foreign Investment.

Introduction currency reserves had plummeted to almost $ 1 billion; inflation The process of globalization started on a much wider scale with had reported to an annual rate of 17 percent; fiscal deficit was emergence of capitalism as a universal/dominant system in the very high and had become unsustainable; foreign investors and world. This generated a very powerful wave in the Nineteenth NRIs had lost confidence in Indian economy. Capital was flowing century and continued in the Twentieth century till the outbreak of out of the country and the country was close to defaulting on First (1914-18). This was the period when colonialism loans. Along with these bottlenecks at home, many unforeseeable was at its peak and the developing world of today was colonies changes swept the economies of in Western and Eastern of imperial powers. The process of globalization accelerated by Europe, South East Asia, Latin America and elsewhere, around IMF, the World Bank (IBRD) and the US Treasury in the form of the same time. These were the economic compulsions at home an alternative package policy known as “Washington Consensus”. and abroad that called for a compete overhauling of our economic Initially, this set of policies was practiced by Ronald Reagon in the policies and programmers (Somalkar, 2006). Important measures US and Margaret Thatcher in Britain. These policies are also known were initiated as a part of the liberalization and globalization “Neo-liberal” policies. The formation of WTO replacing GATT strategy in the early nineties which included; creates new conditions for better implementation of Washington • Devaluation;-The first step towards globalization was Consensus. Many new areas/activities, which were earlier not taken with the announcement of the devaluation of Indian under the ambit of global trading system, were brought under currency by 18-19 percent against the major currencies in the the purview of WTO. They also included production and trade of international foreign exchange . In fact, this measure agriculture produce, trade in services, Intellectual Property Rights was taken in order to resolve the Balance of Payment (BOP) (IPRs), trade related investment measures etc. At the same time, crisis. quantitative trade barriers have been removed and tariff barriers • Disinvestment;- In order to make the process of globalization have been decisively brought down. The exports subsides have smooth, privatization and liberalization policies are moving also been brought down as they are regarded as trade distorting along as well under the privatization scheme. Most of the in nature. In addition, WTO has been empowered to establish public sector undertaking have been disinvested and sold to dispute settlement mechanism to sort out dispute among the trade the private sector. partners called counteracting parties. • Dismantling of the industrial Licensing Regime; - at present, only six industries are under compulsory licensing Globalization and Indian Economy mainly on accounting of environmental safety and strategic The policies of IMF, World Bank, GATT, ‘Washington Consensus’ considerations. A significantly amended locational policy and WTO have transformed the Indian economy. As every coin has in tune with the liberalized licensing policy is in place. No two sides, similarly, there are both positive and negative impact industrial approval is required from the government for so f globalization on Indian economy. While globalization is a locations not falling within 25kms of the periphery of cities catalyst for and a consequence of economic development and a having a population of more than one million. massy process that creates significant challenges and problems. • Allowing Foreign Direct Investment (FDI);- to encourage When people criticize the effects of globalization, they generally non-debt flows. The department has put in place a liberal and refer not only to , but also to other types transparent foreign investment regime where most activities of concerns, which have emerged over quality of opportunity are opened to foreign investment on automatic route without and unequal distribution of benefits of globalization. Many poor any limit on the extent of foreign ownership. Some of the countries and poor people in many countries have not been able to recent initiatives taken to further liberalize the FDI regime, take full advantage of opportunities brought about by globalization. inter alias, include opening up of sectors such as Insurance The Indian economy was in deep crisis in July 1991 when foreign (up to 26 per cent) development of integrated townships www.ijrmbs.com 17 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2016) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print)

(up to 100 per cent) defence industry (up to 26 per cent) when the great reforms initiated in July 1991 were to implement tea plantation (upto100 per cent), subject to divestment of its polices. The National Democratic Alliance (NDA) led by the 26 per cent within five years to FDI) enhancement of FDI Bharatiya Janta Party (BJP) that pushed for privatization of public limits in private sector banking, allowing FDI up to 100 sector companies in India and liberalized trade and investments per cent under the automatic route for most manufacturing in India was rejected by the Electorates in India in the general activities in SEZs; opening up B2B e-commerce3; elections 2004. Hence we may see some reversals or slow down Service Providers (ISPs) without gateways; electronic mail the process of globalization in India, the crash in the stock markets and voice mail to 100 per cent foreign investment subject to fallowing the Congress Party led the general elections 2004 was 26 per cent divestment condition; etc. The department has an indication that the foreign companies pressured policy reversal also strengthened investment facilitation measures through with the UPA Government. The check on privatization of public foreign investment implementation Authority (FIIA) (RBI; sector companies and increased Government’s investment into MOF, GOI) some of the public sector companies in the recent months confirms • Wide-ranging financial sector reforms;- in the banking, capital some expectations of the policy changes in India (Vashit, 2015; markets, and insurance sectors, including the deregulation Nayal, et al, 2006). of interest rates, strong regulation and supervisory systems, The UPA government headed by Dr. Manmohan Singh was in and the introduction of foreign/private sector competition. power for the two consecutive terms since 2004 which was a golden phase in manufacturing, and employment rate increased All these economic reforms popularly known as Liberalization, in growth in India. By opening of trade it lead to creation of new Privatization and Globalization (LPG) aimed at making the Indian jobs but only import induced jobs. Manufacturing employment economy a fastest growing economy and globally competitive. The growth has been of intense debate in India. The dismal record of series of reforms were undertaken with respect to industrial sector, Dr. Singh’s Government was one of the control themes of newly trade as well as financial sector to make them efficient. With the elected NDA Government lead by BJP, Prime Minister Narendra onset of reforms to liberalize the Indian economy in July 1991, Modi who assumed office in May 2014, by campaigning during a new chapter has downed for India its billion plus population. Lok Sabha election in 2014, in his maiden independence day last This period of economic transition has a tremendous impact on year, Prime Minister Narendra Modi announced the ‘Make in the overall economic development of almost all the major sectors India’ initiative to unleash Indian manufacturing powers on the of the economy, and its effects over looked besides, it also marks global level by attracting global investment in India. The foreign the advent of the real integration of the Indian economy into the policy of Modi Government appears geared to reinvent India as a global economy. In the Uruguay round of negotiations of GATT more competitive, confident and secure country. A robust foreign 1994, India signed the agreement on trade related investment policy, however, can sustain itself only on the foundation of a measures that has forced India to do away with protection of Indian strong domestic policy, a realm where Mr. Modi must prove he industry from several global competitions within five years. Of can help transform India (Chellaney, 2014). the 13 investment measures that were identified to distort global No Prime Minister participated in so many high-powered trade, India has been using as many as eleven of them to meet multilateral and bilateral summits in their first months in office the needs of social and economic development of the country. as Mr.Modi. U.S. President Barack Obama’s high-profile visit Signing of this agreement is bound to remove these much needed in January on Republic Day will keep national attention on measures. In the meantime the custom duties on imports have been diplomacy. To create an ease of doing business environment by steadily brought down as per the Industrial Licensing Policy changing a lot of legislative and administrative laws, changes have 1991 subsequently, in January 1995 as a founder member of been taken made by NDA government led by BJP, scrapping the GATT; India joined WTO and agreed to stand by the regulatory Planning Commission and establish the new institution, National framework of free global trade and competition (Somalkar, 2006; Institute for Transforming India (NITI AYOAG), implementing Singh, 2012; Misra & Puri, 2012). Minimum Alternative Tax (MAT) etc. The foreign visits of Prime Foreign Exchange Management Act 1999 (FEMA) Replaced the Minister Narendra Modi also show the increasing process of FERA (1973) that regulated all foreign exchange transactions. globalization in India by multilateral and bilateral trade and another The objectives of FEMA have been to facilitate external trade and agreements and MOU’s with various countries, governments. The payments and to promote orderly development and maintenance BJP Government also wants amendments in lot of legislations like of foreign exchange market. All residents can now put foreign simplification the tax structure of India by introducingGoods and exchange on current account transactions through an authorized Service Tax (GST), allowing 100 per cent FDI in the almost all dealer. Foreign firms also qualify for this, under the resident the areas of the economy, amendment of land acquisition system status, except for sectors like banking, NBFC, and civil aviation, in India to create the environment for ease of doing business and petroleum, real estate, venture capital funds, investing companies to enhance the trade by ‘Make in India’ scheme (Vashit, 2015; in infrastructure and service sector, atomic energy, defence, Chellaney, 2014; Economic Survey, 2014-15). agriculture, and plantation, print media broadcasting and postal services, automatic approval of FDI allowed in all other sectors Impact of Globalization on Indian Economy and secretariat of industrial assistance has become more that of a Globalization in India had a favourable impact on the overall facilitator. The policy indication of Government of India (GOI) 2004 growth rate of the economy. The major improvement gave a Philip on privatization, liberalization, trade and investment will undergo to India’s growth rate in 1970’s which was very low at 3 per some transformation if the newly elected United Progressive cent and GDP growth rate in the countries like Brazil, Indonesia, Alliance (UPA) Government led by Indian National Congress South Korea and Mexico was than twice, that of India. Though Party as the Prime Minister Dr. Manmohan Singh who earlier India’s average annual growth rate almost doubled which was was the Finance Minister during the Narisimha Rao Government lower than Korea and Indonesia. The acceleration in GDP growth

© 2014, IJRMBS All Rights Reserved 18 www.ijrmbs.com International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print) Business Studies (IJRMBS 2016) had helped India to improve its globally position consequently on the sectors performance. With more than half the population India’s global position has improved from 8th rank in 1991 to 4th directly depending on this sector, low agricultural growth has rank in 2001, when GDP is calculated on purchasing power parity serious implications for the inclusiveness of growth (Mukherjee, (PPP) basis. As a result of crisis in 1991, 2016; Economic Survey 2014-15). growth in GDP which collapsed to 13 per cent in 1991-92 gained momentums thereafter in the next 5 years period (1992-2001), the Employment annual average growth rate in GDP achieved was 6.1 per cent. Globalization had adverse effect on growth of employment. All However, in the 10th plan period as a whole (2002-07) average the three unemployment rates, namely, unusual status, weekly annual growth achieved 7.8 per cent. Besides, in the last three status and daily status, based on National Sample Survey, years of the 10th plan (2005-06, 2006-07 and 2007-08) growth increased during the period post economic reforms whereas they rate in GDP rose to 9.5, 9.6 and 9.3 per cent respectively. Thus, had declined earlier. The basis of current daily status (CDS) (i.e. it was claimed that policy of liberalization and globalization has unemployment on an average in the reference week) the rate of accelerated economic growth. However, under the impact of crisis unemployment which was 6.1 per cent in 1993-94, rose to 7.3 of 2008-09 GDP growth rate fell to 6.7 per cent in 2008-09. It per cent in 1999-2000 and further to 8.3 per cent in 2004-05. was because of fiscal stimulus provided by the government and With this the number of unemployed which was 20 million in expansionary monetary policy of RBI that economic growth could 1993-94 went up to 26.7 million in 1999-2000 and further to 34.7 be revived to 8.6 per cent in 2009-10 and 9.3 per cent in 2010- million in 2004-05. It may be noted that the growth of employment, 11. However, due to adverse global factors such as slowdown in according to National Sample Surveys, in the post-reform period US economic growth and recession in European countries and from 1999-2000 to 2004-05 increased by 2.62 per cent annum Euro-zone crisis affected our export growth in several months. As as against 1.25 per cent in 1993-94 to 1999-2000. But all this a result our economic growth was badly affected. Growth rate in growth of employment was in the un-organized and informal 2011-12 fell to 6.2 per cent and in 2012-13 to 5 per cent lowest sector. The rate of growth of employment in the organized sector in a decade. Volatility of capital flows added to uncertainty. In in the post-reform period 1994-2008 has been found to be only 2013-14, growth rate is also expected to be around 5 per cent. It 0.05 per cent per annum whereas during the pre-reform period is thus evident that globalization could not ensure sustained rate (1983-94) employment grew at 1.2 per cent per annum. The post- of higher economic growth. In 2013-14 Indian economy is said to reform period have negative employment growth in the public be in crisis due to operation of mainly global factors (Mukherjee, sector, employment in the organized private sector showed some 2016; Economic Survey 2014-15). acceleration in employment growth from 0.44 per cent per annum during 1983-94 to 1.75 per cent per annum during 1994-2008. Structural Transformation However, since the labour force grew at a higher rate of 2.84 Due to globalization not only GDP increased but the growth per cent per annum than the growth in employment during this in the sectors of economy also changed. Earlier the maximum period the unemployment rate on current daily status (CDS) basis contribution was by the primary sector in GDP which has now increased from 7.3 per cent in 1999-2000 to 8.3 per cent in 2004- been overtaken by the service sector is devotion the maximum 05. However, in NSSO surveys for the years 2009-10 and 2011-12 part of GDP. The service sector remains the growth driver of the unemployment on current daily status (CDS) basis fell to 6.6 per economy with the contribution of more than 57 per cent. India is cent and 5.6 per cent of labour force respectively (NSSO, 2012; ranked 18th among the world leading exporter of the services with Mukherjee, 2016; Labour Bureau, 2015). a share of 1.3 per cent in the world total exports. The service sector In fact, even some large-scale corporate firms cut down jobs. is expected to benefit from the on-going liberalization of foreign There has been jobless growth is revealed by 68th round of special investment regime into sector. Software and Business Process employment and unemployment survey, 2011-12. This latest 68th Outsourcing (BPO) sector recorded and exponential growth in the NSSO survey reveals that the percentage of employed persons recent year (Reddy, 2007; Nayyar, 1995; Mukherjee, 2016). to the total population declined in 2011-12. According to this, on the basis of usual principal and subsidiary status approach Agriculture Sector the proportion of population gainfully employed for better part Agriculture sector has been and still remains the backbone of of the year fell from 36.5 per cent of population in 2009-10 to the Indian economy. It plays a vital role not only in providing 35.4 per cent in 2011-12 despite GDP growth of 8.6 per cent in food and nutrition to the people, but also in the supply of raw 2009-10, 9.3 per cent in 2010-11 and 6.2 per cent in 2011-12. material to industries and to export trade. In 1951, agriculture Though in percentage terms fall in employment appears to be provided employment to 72 per cent of the population and small, in absolute numbers it will amount to several lakhs. As a contributed 59 per cent of the gross domestic product. However, result, usual principal and subsidiary status unemployment rose by 2001 the population depending upon agriculture came to 58 from 2.5 per cent in 2009-10 to 2.7 per cent in 2011-12(NSSO, per cent whereas the share of agriculture in the GDP went down 2012; Mukherjee, 2016; NSC, 2012). drastically to 24 per cent and further to 22 per cent in 2005- 10. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness. The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to two per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006 stated that the growth rate of agricultural GDP including forestry and fishing is likely to be below two per cent in the Tenth Plan period. A distorted incentive system and low post-harvest value addition continued to be a drag www.ijrmbs.com 19 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2016) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print)

Foreign Trade Table (1) : International Trade Performance of India Since 1991: (in Rs. Crore) Year Exports Imports Balance of Trade 1991-92 440.42 478.51 -38.09 1992-93 536.88 (21.9) 633.75 (32.4) -96.86 (154.3) 1993-94 697.51 (29.9) 731.01 (15.3) -33.50 (-65.4) 1994-95 826.74 (18.5) 899.71 (23.1) -72.97 (117.8) 1995-96 1063.53 (28.6) 1226.78 (36.4) -163.25 (123.7) 1996-97 1188.17 (11.7) 1389.20 (13.2) -201.03 (23.1) 1997-98 1301.01 (9.5) 1541.76 (11.0) -240.76 (19.8) 1998-99 1397.53 (7.4) 1783.32 (15.7) -385.79 (60.2) 1999-00 1595.61 (14.2) 2152.37 (20.7) -556.75 (44.3) 2000-01 2035.71 (27.6) 2308.73 (7.3) -273.02 -(51.0) 2001-02 2090.18 (2.7) 2452.00 (6.2) -361.82 (32.5) 2002-03 2551.37 (22.1) 2972.06 (21.2) -420.69 (16.3) 2003-04 2933.67 (15.0) 3591.08 (20.8) -657.41 (56.3) 2004-05 3753.40 (27.9) 5010.65 (39.5) -1257.25 (91.2) 2005-06 4564.18 (21.6) 6604.09 (31.8) -2039.91 (62.3) 2006-07 5717.79 (25.3) 8405.06 (27.3) -2687.27 (31.7) 2007-08 6558.64 (14.7) 10123.12 (20.4) -3564.48 (32.6) 2008-09 8407.55 (28.2) 13744.36 (35.8) -5336.80 (49.7) 2009-10 8455.34 (0.6) 13637.36 (-0.8) -5182.02 (-2.9) 2010-11 11429.22 (35.2) 16834.67 (23.4) -5405.45 (4.3) 2011-12 14659.59 (28.3) 23454.63 (39.3) -8795.04 (62.7) 2012-13 16343.18 (11.5) 26691.62 (13.8) -10348.44 (17.7) 2013-14 19050.11 (16.6) 27154.34 (1.7) -8104.23 (-21.7)

Source: Economic Survey 2014-15. ** Figures in parentheses indicates annual growth rate in percentage. Table (1) shows the international trade position of India since 1991 (the period of great reforms). In the above table the combined annual growth rate of exports is less i.e. 17.8 per cent than imports 19.2 per cent and balance of trade is growing at a negative pace -26.2 per cent annually. In terms of annual growth rate the highest growth rate of exports was highest 35.2 per cent in 2010-11, followed by 29.9 per cent in 1993-94, it was 28.2 per cent, in 2008-09, and it was lowest in 2009-10 about 0.6 per cent followed by 2001-02 was 2.7 per cent. The annual growth rate of India’s imports was maximum in 2004-04 (39.5 per cent) followed by 2011-12 was 39.3 per cent, 1995-96 was 36.4 per cent and 2007-08 was 35.8 per cent and lowest was in 2009-10 -0.8 per cent, the year after world economic crisis where both imports and exports of India was very low. The position of balance of trade of India after 1991 was in deficit in almost all of the years. The maximum deficit was in the year, 1993-94 that was -65.4 per cent followed by -51 per cent in 2000-01 and -21.7 per cent in 2013-14.

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Foreign Investment: Table (2): Foreign Investment Inflows and Outflows in India since 1991: (in Rs. Crore) Year Foreign Direct Foreign Direct Investment Foreign Direct Portfolio Investment Foreign Investment (FDI) Investment (FDI) (FII) (Net) Investment (FDI) (inflows) (outflows) (Net) (Net) 1990-91 192 19 173 10 183 1992-93 1051 447.4 92 384.2 959 741 7310 1700 829.0 1993-94 2042 94.3 203 120.7 1839 11445 1444.5 13282 681.3 1994-95 4241 107.7 25 -87.7 4216 11233 -1.9 15087 13.6 1995-96 7316 72.5 101 304.0 7215 9097 -19.0 15662 3.8 1996-97 10171 39.0 76 -24.8 10094 11735 29.0 21161 35.1 1997-98 13317 30.9 124 63.2 13194 6767 -42.3 19832 -6.3 1998-99 10550 -20.8 163 31.5 10387 -219 -103.2 9737 -50.9 1999-00 9409 -10.8 13 -92.0 9396 13105 -6084.0 22184 127.8 2000-01 18513 96.8 99 661.5 18414 12609 -3.8 27245 22.8 2001-02 29212 57.8 20 -79.8 29192 9617 -23.7 31877 17.0 2002-03 22853 -21.8 278 1290.0 22575 4679 -51.3 21918 -31.2 2003-04 19830 -13.2 0 -100.0 19830 51898 1009.2 62842 186.7 2004-05 27134 36.8 287 0.0 26947 41419 -20.2 58057 -7.6 2005-06 39457 45.4 273 -4.9 39457 55357 33.7 68782 18.5 2006-07 102652 160.2 67742 24713.9 34910 31881 -42.4 66791 -2.9 2007-08 139420 35.8 75644 11.7 63776 110619 247.0 174395 161.1 2008-09 190600 36.7 90500 19.6 100100 -65000 -158.8 35100 -79.9 2009-10 157819 -17.2 71835 -20.6 85984 153967 -336.9 239951 583.6 2010-11 132358 -16.1 78257 8.9 54100 139381 -9.5 193482 -19.4 2011-12 154961 17.1 51794 -33.8 103167 85571 -38.6 188738 -2.5 2012-13 146954 -5.2 38768 -25.1 108186 146467 71.2 254653 34.9 2013-14 186830 27.1 56860 46.7 129970 29680 -79.7 159650 -37.3

Source: Economic Survey, various issues, & RBI. ** In Annual Growth Rate in Percentage in every column. Table (2) indicates the foreign investment position of India after 1991 in terms of foreign direct investment (FDI), foreign portfolio investment (FII) and foreign investment net inflows and out flows. The combined annual growth rate from (1990-91 to 2013-14) of foreign direct investment inflows was 34.9 per cent and FDI outflows was 41.6 per cent, out of this the maximum annual growth rate of FDI inflows was 447.4 per cent in 1992-93. followed by 160.2 per cent in 2006-07 (By 2003-2004 the non-comparability of the Indian FDI statistics was addressed by a committee constituted in May 2002 by Department of Industrial Policy & Promotion (DIPP), in order to bring the reporting system of FDI data in India into alignment with international best practices ), 107.7 per cent in 1994-95 (pre WTO year) and 27.1 per cent 2013-14, the highest negative annual growth rate of FDI inflows was in the year 2002-03 was -21.8 percent followed by -20.8 per cent in 1998-99 and -5.2 percent in 2012-13. FDI outflows annual growth rate was highest in 24713.9 per cent in 2006-07 (when the new definition of FDI has been adopted) followed by 384.2 per cent in 1992-93 and 46.7 per cent in 2013-14; it was zero in the year 2003-04 and maximum negative in 92 per cent in 1999-2000 and 25.1 per cent in 2012- 13. The net foreign investment in India was maximum in 1992-93 that was 829 per cent followed by 681.3 per cent in 1993-94 and www.ijrmbs.com 21 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2016) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print)

583.6 per cent in 2009-10 in terms of annual growth rate, it was negative -37.3 per cent in 2013-14 and -50.9 per cent in 1997-98.

Foreign Exchange Reserves and Gross National Product:

Table (3): Foreign Exchange Reserves and Gross National Product. From 1991-92 to 2013-14: (inRs. Crore) Year Gold RTP SDRs Foreign Total Gross National Income at (Rs. (Rs. (Rs. Currency Assets (Rs.Crore) Market Prices (Constant Prices) Crore) Crore) Crore) (Rs.Crore) 2004-05 Series 1991-92 9039 --- 233 14578 23850 1485707 (5.3) 1992-93 10549 --- 55 20140 30744 (28.9) 1567944 (5.5) 1993-94 12794 --- 339 47287 60420 (96.5) 1644886 (4.9) 1994-95 13752 --- 23 66006 79781 (32.0) 1755272 (6.7) 1995-96 15658 --- 280 58446 74384 (-6.8) 1888228 (7.6) 1996-97 14557 --- 7 80368 94932 (27.6) 2032837 (7.7) 1997-98 13394 --- 4 102507 115905 (22.1) 2118975 (4.2) 1998-99 12559 --- 34 125412 138005 (19.1) 2250012 (6.2) 1999-00 12973 --- 16 152924 165913 (20.2) 2448654 (8.8) 2000-01 12711 --- 11 184482 197204 (18.9) 2535911 (3.6) 2001-02 14868 --- 50 249118 264036 (33.9) 2661819 (5.0) 2002-03 16875 3190 19 341476 361470 (36.9) 2766298 (3.9) 2003-04 18216 5688 10 466215 490129 (35.6) 2983497 (7.9) 2004-05 19686 6289 20 593121 619116 (26.3) 3219835 (7.9) 2005-06 25674 3374 12 647327 676387 (9.3) 3518348 (9.3) 2006-07 29573 2044 8 836597 868222 (28.4) 3841974 (9.2) 2007-08 40124 1744 74 1196023 1237965 (42.6) 4233768 (10.2) 2008-09 48973 5000 6 1230066 1283865 (3.7) 4390966 (3.7) 2009-10 81188 6231 22596 1149650 1259665 (-1.9) 4763090 (8.5) 2010-11 102572 13158 20401 1224883 1361013 (8.0) 5227739 (9.8) 2011-12 138250 14511 22866 1330511 1506139 (10.7) 5586683 (6.9) 2012-13a 139737 12513 23538 1412631 1588419 (5.5) 9172925* (4.8) 2013-14a 129616 11019 26793 1660914 1828342 (15.1) 9800813* (6.8) Source: Economic Survey 2014-15. **Figures in parentheses indicates annual growth rate in percentage. (a) Advance estimates. *measured on 2011-12 prices. RTP: Reserve Tranche Position in IMF

Table (3) reveals the position of foreign exchange reserves and its relation with gross national product from 1991 to 2013-14. Foreign exchange comprises gold, RTP Reserve Tranche Position in IMF, special drawing rights and foreign currency assets. The combined annual growth of foreign exchange reserves from (1991-92 to 2013-14) was 20.8 per cent and 8.5 per cent of gross national product. In terms of annual growth rate the maximum growth rate of foreign exchange reserves was 96.5 per cent in 1993-94, where as in

© 2014, IJRMBS All Rights Reserved 22 www.ijrmbs.com International Journal of Research in Management & ISSN : 2348-6503 (Online) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print) Business Studies (IJRMBS 2016) the same year GNI (constant prices) was growing at 4.9 per cent, followed by 32 per cent in 1994-95, and 15.1 per cent in 2013-14 of foreign exchange reserves. The highest annual growth rate of gross national product was 10.6 per cent in 2007-08 (year of world economic recession) throughout where the foreign exchange was 42.6 per cent.

Conclusion behind. Therefore, such policies, and rules should be adopted Summing up the debate on globalization is not easy. It comprises of in service sector that can generate employment. liberal microeconomic policies such as deregulation, liberalization, • The policies of Government of India should be able to push and privatization. In India it was conceived and initiated by Prime foreign direct investment into manufacturing sector and high Minister Rajiv Gandhi in 1985 and is known as New Economic technology areas through which the Indian economy can Policy. However, as a system it was officially adopted by former effectively be part of the globalization process worldwide. Prime Minister P. V. Narasimha Rao with Dr. Manmohan Singh • Since the independence the share of employment was high as his Finance Minister in July 1991 which is popularly known in agriculture sector, so there is need to give special attention as New Economic Reforms (i.e. LPG) and now it is highly to agriculture sector. New agro-processing plants should be accelerated by Prime Minister Narendra Modi through Make in established at different places to boost agricultural growth. India, scrapping Planning Commission and establishing NITI • Foreign investment should be allowed in the manufacturing AYOAG, introducing Goods and Services Tax (GST) etc. The sector with only maximum 49 per cent cap this will lead to process of globalization is hamstrung as there are misgivings, dual benefits, firstly, it will increase the employment and some genuine and some imagined. Globalization had a favourable secondly, it will provide goods which we are importing impact on the overall growth rate of the economy. Indian economy consequently increasing current account deficit. is the 12th largest economy in terms of exchange rate (US Dollar) and second fastest growing economy in the world. India’s GDP has References touched US $ 1.25 trillion. India made a remarkable progress in [1]. Chellaney,B. (2014). De Construction the Modi Foreign information technology, services and knowledge process services. Policy.The Hindu, 4th December, 2014, 10, Mohali. Due to globalization not only GDP increased but the growth [2]. Dipendra, S. (2001).A Note on Trade Elasticities in Asian in the sectors of economy also changed. Earlier the maximum Countries.The International Trade Journal, 15 (2), 221- contribution was by the primary sector in GDP which has now been 237. overtaken by the service sector is devotion the maximum part of [3]. Economic Survey, various issues, Ministry of Finance, GDP. Globalization had adverse effect on growth of employment. Government of India All the three unemployment rates, namely, unusual status, weekly [4]. Gill, S. S., Singh, S.,&Brar, J. S. (2010).Globalization and status and daily status, based on National Sample Survey, increased Indian State Education, Health and Agriculture Extension during the period post economic reforms whereas they had declined Services in Punjab.Aakbar Books, Delhi. earlier even that period of growth showing jobless gwowth. It is [5]. Goyal, K. (2016). Globalization and its impact on believed that globalization will lead to marginalization of some transforming India's economy. Department of Economics, groups, causing large-scale unemployment and inequalities, as Punjabi University Patiala. also upsurge of consumerism and damage to the environment. If [6]. Gupta, H., & Jaiswal, N. (2011). Globalization and its adopted without checks it can cause loss to country’s sovereignty. Impact on Indian Economy. Poineer Journal of IT and It is also presumed that free market system tends to become a Management. source of economic and political corruption. India’s experience [7]. Misra, S. K., &Puri, U. K. (2012). Indian Economy. Himalaya so far has been mixed. How far the country’s -builders take Publishing, Mumbai. us is still under an interrogation mark. [8]. Mukherjee, S. (2016). Globalization and Indian Economy. Retrieved from, http://www.economic sdiscussion.net/ Suggestions globalization/india-globalization/globalisation-and-india- • Due to globalization the share of service sector in GDP is economy/10945, accessed on 1/4/2016/06:30pm. increasing but in terms of employment generation it is lagging [9]. Nayak, A., Chakravati, K., &Rajib, P. (2006). Globalization www.ijrmbs.com 23 © All Rights Reserved, IJRMBS 2014 International Journal of Research in Management & ISSN : 2348-6503 (Online) Business Studies (IJRMBS 2016) Vol. 3 Issue 4 Oct. - Dec. 2016 ISSN : 2348-893X (Print)

Process in India: A History P r o s p e c t i v e S i n c e Independence. South Asian Journal of Management, 12(Q). [10]. Nayyar, D. (1995). Economic Liberalization in Indian Economy: Analytics, Experience and Lesson. Orient, Calcutta. [11]. Nayyar, D. (1995). Globalization: The Past in Our Present. Indian Economic Journal, 43 (3), 1- 18. [12]. NSC (2012).Report of the Committee on Unorganized Sector. National Statistic Commission, Government of India. [13]. NSSO (2012).Informal Sector and Conditions of Employment in India. 68th Round of National Sample Survey Office, Report No. 557. [14]. Nurkse, R. (1953). Capital formation in Under-developing Countries. Oxford University Press, New York. [15]. Reddy, Y.V. (2007). Understanding Economic Reforms for India.Indian Economic Review, 48, 33-38. [16]. Reddy, D. N. (2005). Challenges of Decent Work in the Globalization world. India Journal of Labour Economics, 48 (1). [17]. Rosenstein-Rodan.,& N. P. (1943). Problems of Industrialization of Eastern and South Eastern E u ro p e . Economic Journal, 53 (210-211), 202-211. [18]. Sharma, A. (2012). Globalization, Balance of Payments and Foreign Exchange Reserves in India: A Past Reform Study. Ph.D. Thesis, Institute of Management Studies and Research, Maharishi Dayanand University, Rohtak, Haryana. [19]. Singh, K. (2009). What is Restraining the Process of Globalization? Indian Management Journal Studies, (13), 71-77. [20]. Singh, S. S. (2012). Impact of Globalization on Indian Economy. Arth Prabhand: A Journal of Economics and Management (APJEM), 1, (1) Lecture in Institute of Management studies. [21]. Somalkar, P. (2006). Impact of Globalization on Indian Economy. ABHINAV National Monthly Refereed Journal of Research in Arts and Education, 1,(8), ISSN 2277 Sardar Patel college, Chandpur.

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