UP PCS Mains-2024

Approach Briefly introduce liberalization and globalization, economic growth, and economic development. Discuss the advantages and disadvantages of liberalization and globalization in the Indian economy. Conclude with the impact of liberalization and globalization on inclusive growth.

Introduction

Liberalization means removing the barriers or restrictions imposed by the government in the country’s economy, it has the same meaning in the economy as its root word liberalism. Moving towards the pro-market or pro-capitalist is the process of liberalization.

The World Trade Organization defined the term globalization as the movement of the economies of the world towards unrestricted cross-border movements of goods and services, capital, and labour force.

Liberalization, Globalization, and Privatization are the major focus of the New Economic Policy of India which was introduced in 1991 under the leadership of P. V. Narasimha Rao.

Economic growth is quantitative in nature such as Gross Domestic Product (GDP) whereas economic development is qualitative in nature such as living standards, and per capita income.

Body

Advantages of liberalization and globalization in the Indian economy:

Economic Growth: The growth of GDP increased from 5.6% during 1980-91 to 6.4% during 1992-2001. Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to attain a level of ₹272.41 lakh crore

Foreign Direct Investment (FDI): According to the World Investment Report 2022, India was ranked eighth among the world’s major FDI recipients in 2020, up from ninth in 2019.

Stock Market Appreciation: In the liberalized economy, stock market values also rise. It is like the anticipation and flow of money into an initial public offering (IPO).

Reduced Political Risks: It allows businesses and investors to operate with confidence due to a strong legal foundation to settle disputes, fair and enforceable contract laws, property laws, and others.

Disadvantages of liberalization and globalization in the Indian economy:

Increasing Inequality: The top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%, while 670 million Indians who comprise the poorest half of the population saw only a 1% increase in their wealth.

Less focus on Social Sectors: Because of liberalization and globalization it led to poor health sector development and lousy educational growth.

Rising unemployment: According to the Centre for Monitoring Indian Economy, India’s unemployment rate inched up in April to 8.11% from 7.8% in March 2023 owing to a significant rise in the labour participation rate (LPR) which was the highest in the last three years.

Rising competition: India’s manufacturing sector faces intense competition from other countries, which can make it difficult for domestic businesses to compete in the global market.

Conclusion

Thus, liberalization and globalization in India have enormous potential for economic gains, it shows positive economic growth except during the COVID-19 pandemic, but it lacks to achieve the objectives of economic development. Hence to achieve inclusive growth there is a need to balance economic growth and development.