Chapter 5
CHAPTER NO.5 IMPACT OF LIBERALISATION
AND GLOBALISATION
The liberalisation and globalisation have made the
world a global village. It is possible by the latest electronic communication
systems like mobile phones and satellite phones. One can talk to one nears and
dears in a few seconds anywhere in the world. Similarly, many other activities
like business
and getting medical aid etc. can be handled within
few minutes by quick modes of communication.
The intemet service is another example of
globalisation. Through internet one can get informa-tion from any part of the
world on any topic as and when required. The doctors can also discuss the
condition of their patients with another doctor through internet services.
Due to liberalization, the cultural interaction
amongst different countries of the world has in-creased. The student of our
country are going to other developed countries for higher education and for
availing job oppurtunities.
The United Nations and members of SAARC (South Asian
Assosiation for Regional Coopera-tion) countries have set up different agencies
to help the people of the world against terrorism to
provide safe environmet. The issues like
conservation of biological diversity are also being addressed under
liberalisation and globalisation policies.
LIBERALISATION
It literally means the freedom to live as one wishes
without any restrictions from government or any other authority. In the present
context, liberalisation refers to economic liberalizaton and ¢co-nomic reforms
started in 1991. India took a major step towards economic reforms and
liberalisation through some new policies, as follows:
Restrictions on foreign investments and Industrial
licenses were modiefied.
The Foreign Exchange Regulation ACT (FERA) 1973 was
modified. The multinationals are allowed to acquire immovable property,
employment of foreigners and payment of income eamed by them.
To get import license for trade was abolished.
Tax administration has been simplified. Tax rates
have been reduced on domestic industry as well as on foreign companies.
Wealth tax has been abolished on the financial
assets.
India has become a member of Multilateral Investment
Guarantee Agency (MIGA). Asa result, all investments approved by the Govemmment
are insured against expropriation.
The policy of liberalization has brought more
transparency. The markets are now flooded with latest automobiles, electric
gadgets, cosmetics and other consumer items. People have wide range to choose
and select their goods. Many multinational companies have set up their
production and busi-ness units in the developingg countries, including India.
GLOBALISATION
Globalisation is a world-wide exercise that includes
the intemationalisation of communication trade and economic reforms. The
organisations responsible for globalisation are: World Bank Inter-
national Monetary Fund and World Trade Organisation
(WTO). It has created a breakthrough from the rigid national walls to form an
intemational community. In an international community, people
share their ideas for an overall welfare of the
human society. Globalisation has both positive and negative effects.
The positive effects are:
There are close ties between government, companies
and communities that result in the evo-lution of free market economy.
It has bought economic prosperity through buying and
selling of products in an intemational
For a business man, globalization has brought more
market options and better source of profit.
Apart from these positive effects of globalisation,
its negative effects are:
Globalization resulted in great competition and
complexity in the trade world. Many of our domestic companies are facing
problems and unable to cope with international standards because of lack of
qualified labour and financial resources.
Globalisation has enhanced the living standards of
cettain population groups, whereas, for the poor and the marginal population it
has resulted in creating great economy inequality.
Spreading of infectious disease, drug trafficking,
crime, terroriam and uncontrolled migration are also the byproduct of
globalisation.
The impact of liberalisation and globalisation in
various sector like agriculture, industry, disloca-
tion of manpower, unemployment and social harmony
can be discussed as under:
Impact on agriculture : The modem technology
available during liberallisation and globalisation
era has helped the agricultural sector towards
second green revolution, the first one occured during 1960's. Some of the
benefits of this impact are:
There is an increase in the production of food
grains. The grain production in India increased from 50 metric tones n 1950 in
150 metric tone in 1985. The surplus grains can be sold in open market to earn
foreign exchange for the country.
Due to diversification of agriculture, exotic
varieties of vegetables, fruits, orchids, flowers,spices and dry fruits grown
by the farmers are likely to create international demand.
Many food processing and preserving units have come
up where vegetables, jams, jelly and juices ate preserved for domestic and
international market.
Due to advanced technology, unproductive land has
been changed to fertile land. Through drip irrigation method, the sandy soil is
also being brought under cultivation.
On one hand, globalisation has brought economic
prosperity for the rich farmers and on the other hand, the marginal farmers are
sufferers because they do not have facilities to compete
globalisation due to financial constraints. Some of
the other draw backs are:
Most of the chemical fertilizers used in modern
agriculture contain micronutrients like
potas-sium, phosphorus and nitrogen. Their excessive use cause deficiency of
micronutrients in the soil. For example, in large tracts of high yielding belt
of Punjab and Haryana, deficiency of zinc has caused a decrease in the
productivity of the land. The excess fertilizers reach into the
Various type of pesticides are sprayed upon the
crops, food grains, fruits, vegetables and oil seeds to protect them from
damage by pests. The non-biodegradable pesticides persist for
the long time after their entry into the food
chains. Such harmful chemicals enter the human body through fruits, vegetables,
grains, milk, meat, eggs, fish products, polluted water, etc.
For example, samples of wheat from Delhi, Haryana,
Punjab and Mumbai have been found to contain very high level of toxic pesticide
residues. These residues cause indigestion, ner-vous disorders, cancer, etc. in
man. Sometimes, instantaneous deaths have been reported
due to spraying of these chemicals.
Inapact on industries : Globalisation and
liberalisation have caused a speedy growth of industries not only in the
developed countries, but also in the developing countries, including India.
The following data clearly shows the impact on
industries:
Large industries have come up in the different
regions. They are involved in mass production of the goods, which is economically
more viable.
Industrial sector has increased the job
opportumities that reduce the unemployment.
Industrial being set up in backward areas, improve
the living standard of the people there.
With the establishment of industries, some other
allied businesses like transport and comm-nication have also got developed in
backward areas.
Globalisation has given access to the exchange of
latest technology and information amongst different countries, so that
developing countries can survive in the international market.
The fast developing technology has helped the
industries to reduce their cost of production and provide more varieties. The
industry has now become consumer oriented.
Agro-based industries have come up near villages to
provide agricultural raw material at affordable prices.
India has created a place for itself in the
international market in the field of information tech-nology because of
globalization.There are some negative aspects also"
Small and cottage industries are closing their
business duc to uneven play field.
Environment is being drastically degraded by
industrialisation.
Pollution of land, water, air, noise is increasing
day by day.
Dislocation of manpower and unemployment :
Globalization no doubt has improved the economic conditions of the society, yet
it has also created unemployment and dislocation of man-power. For example, a
single automatic machine can do the work of many persons, which results in
unemployment. Similarly, in banking industry, a
single computer can perform many functions regard-ing accounts and that is why
many banks have started voluntary retirement schemes (VSR) for their employees.
The unemployment leads to dislocation of manpower
i.e., they move from one job to another or from one country to another country.
A number of skilled and unskilled young people from India are
now moving to othe countries to carn their bread and
butter. It has created frustration and social unrest in the society.
Impact on social harmony : Like two faces of a coin,
globalization can favour or disfavour the social harmony. The positive roles
played by globalisation on social harmony are:
Globalization has provided better medical facilities
that reduced infant mortality rate and has increased the life span.
Due to globalization, many students in developed
countries are coming to India for their education. Similarly, India students
are going to the developed countries for higher and specialised education.
The nmlltinational companies setting up their units
in different countries, including India follow the labour laws strictly. They
do not employ child labour. Also they maintain the quality and standards of
their products. Above all, the tend to keep the environment clean and healthy.
Some of the negative effects of globalisation on
social harmony are:
Free access fo print media and television has
changed the eating habits and life style that has
created health problems. It has also brought a
drastic change in family bonds due to degrada-tion of social value and traditions.
Nuclear families are the result of globalisation as
every one wants its own privacy.
Dueto globalisation, some festivals and other
cultural practices have lost their sheen.Thus it can be concluded that
liberalisation and globalisation have created many beneficial im-pacts, some
harmful too.
EXERCISE
(A) Very short answer type questions (1
mark each) :
1, What is globalisation?
2, Name two organisations responsible for
globalisation.
3. How does the excessive use of fertilizers
contaminate the underground water?
(B) Short answer type questions (2
marks each) :
1. What do you understand by liberalisation?
2. How does globalisation lead to dislocation of man
power?
3. Why are the marginal farmers considered as
suffers of globalisation?
(C) Short answer type questions (4
marks each):
1. Make a mention of some economic reforms started
by India in 1991.
2. Write a short note on impact of globalisation on
social harmony.
3. How do the pesticides influence human health?
4. What are the negative impacts of globalisation on
agriculture?
(D) Long answer type questions: (5
marks each):
1. What are the positive and negative impacts of
globalisation?
2. Write about the impact of globalisation and
liberalisation on industry.
3. Discuss the impact of globalisation and
liberalisation on agriculture.
