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Globalisation and the Indian economy |
- Class: 10th
- Subject: Social Science (Economic)
- Subject: Globalisation and the Indian economy
- Resources: Notes, Important Questions
Class 10 Social Science (Economic) Globalisation and the Indian economy- Get notes here, questions for class 10. Those candidates who are ambitious to pass class 10 with good marks, can check this article for notes, by practicing this resource, the candidates definitely get to know that their weak area and good for the exam How to prepare.
Globalisation :
Globalisation means free interaction of an economy with the economies of the rest of the world.
Impact of Globalisation on Indian
economy
Increase in foreign investment:
Over the post twenty years, the foreign investment has increased.
Emergence of Indian companies as multinational:
Several of the top Indian companies like Tata Motors, Infosys, Ranbaxy have been able to get benefit from the increased competition created as a result of Globalisation.
Creation of new opportunities:
Globalisation has created new opportunities for Indian companies, particularly providing services like IT.
Creation of new jobs:
For those which are Globalisation has created new jobs and has helped in reducing unemployment rate to an extent.
Host services:
A host of services such as data entry, accounting, administrative tasks, engineering are now being done cheaply in India.
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M.N.C |
Multinational Corporations (MNC) :
A MNC is a company that owns or controls production in more than one nation.
features of Multinational
Corporations
Availability of capital and foreign investment
The MNC help to solve the problem of capital and foreign investment of the underdeveloped and the developing countries Most of the underdeveloped countries suffer from lack of capital Consequently, their rate of economic growth is low MNCS set up factories, and offices for the production in these developing and the under developing countries and make huge Investments
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Availability of foreign exchange:
MNC can be helpful in solving the problems of foreign exchange of the underdeveloped and the developing countries. In 90s, India faced a huge shortage of foreign exchange but with the entry of the MNCS, today it has surplus foreign exchange reserves
Increase in Small-scale Industries:
Most of the MNCs take help from small-scale and local industries in manufacturing. The products are supplied to the MNCS which then sell these under their own brand names to the customers.
Foreign Trade and Integration of Markets:
The MNCS increase the foreign trade The MNCS help in the integration of world markets. With the entry of given the small countries have opened up their domestic markets for other countries.
Growth of local producers :
Foreign trade by the MNC create an opportunity for the local producers to reach beyond the domestic markets.
Disadvantages of Multinational
Corporations
Harmful for the host country:
The main objective of the MNCs is to earn maximum profit. To achieve this objective, they invest their capital in the underdeveloped and the developing countries harmful for Economic Equality.
Regional inequality :
Regional inequality has further aggravated because of them The MNCS are interested in setting up industries in particular regions.The MNCS pay more salaries and perks to their employees than the employees of other companies This widens the gap between the income of the labourers giving rise to economic inequality.
Harmful for freedom:
The MNCS also Prove detrimental to the economic and political freedom of the host countries These dabble in the politics of the country The MNCs were at the back of armed insurgence of many host countries.
Investment
Investment The money that is spent to buy assets such as land, buildings, machines and other equipment, is called Investment
Two types of investment
Foreign trade
- Under foreign trade, goods and services travel from one county to another.
- It results in connecting the markets or integration of markets in different countries.
Foreign investment
- Under foreign investment a MNC or a country invests in another country.
- It promotes process of Industrialisation.
The Government of India trying
attract more foreign Investment
Government attract foreign the following ways:
Special economic zones :
Special Economic Zones have been set up to have world-class facilities such as cheap electricity water, roads, transport, storage, recreational and educational facilities etc.
Flexible labour laws :
Labour laws are made flexible so that companies can hire workers easily
Removal of trade barriers :
Government has removed barriers on foreign trade and foreign investment so that goods could be imported and exported easily and also foreign companies could set up factories and offices in India.
Policy of liberalisation and globalisation :
After 1991 Indian government has adopted the policy of globalisation and liberalisation.
Abolition of license :
Under the New Economic Policy only few industries need license to operate.
World Trade Organisation
The WTO or the World Trade Organisation is an organisation which deals with the rules of trade among the nations,
Aims of the WTO
The major aim of the WTO is to conduct the international trade among countries of the world in an open, uniform and non discriminatory manner.
The WTO or the World Trade Organisation also handles trade disputes.
The World Trade Organisation provides technical assistance and training to the developed and the underdeveloped economies.
It forms rules and regulations which all the members have to adopt for the smooth running of trade
Limitations
Developed countries have unfairly retained trade barriers whereas WTO rules have forced the developing countries to remove trade barriers.
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Trade |
Liberalisation of foreign trade
"Liberalisation of the economy means to free it from direct or physical controls Imposed by the government." Prior to 1991, the government of India had imposed any restrictions on the Indian economy like industrial licensing system. import license, etc. All these restrictions were hampering the growth of Indian industry. So in 1991, it was decided to lift all the unwanted restrictions.
For this, the following steps were taken:
- All industries except three industries were exempted from any kind of industrial licensing.
- Under the policy of liberalisation, industries are free to expand and produce according to the need of the market.
Liberalisation of trade and
Investment policies promote
globalisation
Removal of trade barriers :
Under the policy of liberalisation Indian government has removed various restrictions from the import and export of goods and services. Now MNCs are free to import goods in India and Indian companies are free to export goods and services abroad.
Liberalisation of investment :
Under this policy MNCs are free to invest in India. Many MNCS have invested in banking infrastructure, soft drinks, automobiles etc. Even Indian government is also encouraging MNCs to invest in India and for this government has created Special Economic Zones which provide electricity, roads, transport and other facilities.
New Technology :
The process of liberalisation has brought new technology in India which has promoted globalisation Information and communication technology has played a major role in spreading out production of services across countries.
Question Bank
Q. Mention any two advantages of foreign trade.
Ans (1) It creates an opportunity for the producers to reach beyond the domestic markets
(2) Buyers have more choices of goods,
Q. What are the main components of export of India?
Ans. Iron ore and tea
Q. Mention any two characteristics of SEZ.
Ans.
- They have been allowed flexibility in labour law.
- They have been made available world class facilities .
Q State any two factors responsible for globalisation ?
Ans.
- Growth of MNC
- Growth of technology.
Q. Define liberalisation.
Ans. Removing unwanted barriers or restrictions set by the government from trade and industry is known as liberalisation.
Q. Define trade barriers.
Ans Any kind of restrictions which are Imposed by the government of a country to check free flow of goods and services are known as trade barriers
Q. What was the main aim to form World Trade Organisation.
Ans To liberalise international trade.
Q. State any two steps which have been taken by the government to attract foreign investment.
Ans. Special Economic Zones
Q. Name any two Indian MNCS.
Ans. Tata Motors, Infosys, Ranbaxy, Asian Paints, etc.
Q. What is meant by 'Special Economic Zones' (SEZ)?
Ans. It is the industrial zones that are being set-up by the central and state government to attract foreign companies to invest in India.
Q. Which sector has been benefited least because of globalisation in India?
Ans. Unorganised sector.
Q. Why did India set-up SEZs?
Ans. To attract foreign companies to invest in India.
Question Bank
1. How do the MNCs help in the growth of local companies?
2. How do multi national companies (MNCs) control production?
3. Mention any four features of Multinational Corporations?
4. What are the disadvantages of Multinational Corporations? Explain
5. How does government attract foreign investment? Explain different ways
6. Explain any three benefit20 s of Globalisation?
7. What is WTO? Explain aims and limitations?
8. What is liberalisation? What steps were taken by the govt. To liberate the Indian economy?
9. What is the importance of trade?
10. How do the MNCs help in the growth of local companies?