Glance of Globalization in India - I

(After 20 years of its implementation)

Globalization or Re-Colonization?

What is Globalization and Liberalization?

Globalization:The tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets. Globalization has had the effect of markedly increasing not only international trade, but also cultural exchange.

Liberalization: The removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or reduction of both tariff (duties and surcharges) and non-tariff obstacles (like licensing rules, quotas and other requirements). The easing or eradication of these restrictions is often referred to as promoting "free trade".

Introduction of Globalization

Globalization and Liberalization as such are very less discussed reforms/subjects in India. At the very high level it is accepted by all (intellectuals, economists, traders, entrepreneurs, normal public/aam aadmi) as a necessary means for development of developing countries. It was introduced in 1991 by Indian government under the directions of World Bank and IMF in a planned way. Even before the Indians understand it completely and analyse it how well it suites to our country.

During 1991-1992, India was going through huge financial crisis. The trade deficit (import was more than export) was continuously increasing. So, the then Finance Minister said we have to open our market to the global players in India. He submitted his paper in appreciation of globalization and counted the benefits of Liberalization. He pointed out things like, with globalization the foreign investors would bring capital and invest in India; they will start new industries, and it will bring latest technology into the country, and the employment opportunity will be created. etcetera...

To welcome these multinationals and their capital, Indian government had devalued Indian currency by substantial percent in a very short span. After all that, the actual investment came in India by 1997 is just approximately 20,000 crores, which is exactly 10% of our GDP (Gross Domestic Product). The then GDP was 2 lakh crores. Lot of investment proposals are signed but, actual investment came in was very less in comparison. Then the government started showcasing increase in export quantity rather than actual profit.

For e.g.

Someone is selling 1 KG Rice against 1 KG sugar in exchange is equal trade (where the actual exchange of money is same). Now due to devaluation we had to sell more products, food grains,  etc to maintain no trade deficit or less deficit.

Then the finance Minister said, see how the economy is growing. Investment is flowing, export is increasing. What do you say? How intelligent was he? He was intellect enough to fool Indians. And to our irony we called him the best FM India has ever seen. In fact, if this was the case, any previous FM could have done this long back, but, we did resist for it to maintain our economic sovereignty.

Globalization and Financial Sector

The main investment, that is FDI came in India was mainly into financial institutions and banks. We have seen so many foreign banks started their operations in 90s, like Citibank, Standard Chartered, HSBC, American Express, etc... And lot of Insurance companies also started operating freely in India. Then the first ever biggest scam in Indian history happened Harshad Mehata scam in Citibank. After the scam also Harshad Mehata died a natural death and Citibank is still operating in India.

We all remember that the share prices were touching sky high during second part of 1990s. Every crorepati to the roadpati started investing in shares, to multiply their wealth over night. The inflation rate went high. All of sudden (naturally) the share market took down turn and India (that means Indians) lost its/their hard earned money (over years) within no time. Then there was a committee set to find the losses incured due to the financial down turn. The committee found out that the money flown out was 70,000 crores. This is without establishing any industry, any production, and any technological upgrade.

Globalization in Other Sectors

Other than Financial industry the investment came in was on zero technology products, like chips, beverages, snacks, pickles, redundant technologies like pagers, etcetera... which is of no use for Indian financial growth. Such companies come with very less capital, use our labour, our land, our air and take huge profits back to their countries. Indian governments have such policies like, if some foreign company comes with few thousand dollars and invest in Indian market/trade, they will get tax holidays for certain years, Indian government waived off few taxes for these companies. Whereas Indian companies small or big have to pay all those taxes.

During Morarji Desai’s period (when he was Prime Minister of India), he prepared a list of 870 such daily use products, under which he said no foreign investor will be allowed to invest. But, In the name of growth, within few years Indian government welcomed the foreign investment in all those sectors.

Globalization and Technological Waste

In the name of globalization, several such agreements are signed through which, the technological, bio-chemical and atomic waste is being dumped in areas of southern India. They cause deceases, genetically impact on future generation in that area.

Globalization and Software Industry

The people in software industry and financial industry, will argue that it is only made possible though globalization that the software industry has grown to such a giant level and turned into major contributor in Indian financial sector. They might consider me fool. You may say that people getting jobs easily, money flowing in our hand (What harm, this money doing to youth is a separate chapter in itself), etc, then what is wrong withthis? That all is accepted, even I am from the same industry. But, what in return we gave them? First of all our youth, then health, then sovereignty over family financial condition. Our people always live in fear that what would happen tomorrow, if I lose job, this in larger level surrendered over countries sovereignty to take decisions freely. We depend on overseas countries for everything.

Why these electronics and computer industries invest in software sector only? Why not in hardware sector like, making microchips, mother boards, hardware programming, etcetera? It is because, it requires less number of people and in fact, their lies the actual technology, which they don’t want to outsource.

The software job is in fact, a very monotonous job. Initially the foreigners would have thought that who will do such a monotonous job, let us body shop (outsource) it to developing countries. Then there are lot computer courses introduced in India. In cities, every nook and corner had a training institution. They knew that the work required doesn’t need any brainy or require technology; it just needs a skilled labor. So, people from different streams came and joined computer course and got job. To our surprise even a non degree holder also got job and started earning handsome money within short span. So, we said Globalization is great.

This all looks glittering till everything is smooth, but, say if tomorrow the software industry collapses, what is the road-map for our people? Even people there in foreign countries run back to motherland, then what? We don’t know any other work, posses no other skills. How our families will survive, how we would over come our debts? If you say, it is a hypothetical situation I am discussing here, still it is better to have another career (may be self employment), job option. And let us not follow the trend like borrow, spend and then repay rather first save maximum and then spend. It was Indian original pattern, which saved us from getting into loop of uncertainty. Now, again we have to follow the same. Let us stop pulling/pushing everybody from our families and relatives and friends into these (especially software) sectors. Let us think sustained growth in all sectors.

India had a co-operative model of growth where the motto was you survive even I will survive, whereas this globalization infused competition model, where we find competition in every sector, which makes us restless and growth uncertain and corruption way of Life and last death of humanity.

We have to understand one thing clearly here that no country or foreign investor comes to help us grow and works for development of our nation. No one makes investment in high end or intermediary technological production in other countries. It is a myth created deliberately by our people in power that whatever comes in through foreign investment is of high quality, of high technology, of high research, and most important is for our national growth. But, the facts does always tell different story. They invest to get rid of their recession, loss, reduce labor cost and increase their profit and do dadagiri. What should we call it as, globalization or re-colonization?

-- K. Kalyan

Do Visit : Part - II