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Project Report

On

Impact of Globalization and Liberalization on

Primary Sector of Indian Economy

Submitted in partial fulfillment of the requirements for the award of the Deree of

Post Graduate Diploma in Management

!o

Institute of "anaement Studies# G$%&I%'%D

Guide (ame) Submitted 'y !eam)

Dr. Tapan Kumar Nayak

(Program Chairperson-PGDM)

G*!* +oad# Lal ,uan#

Ghaziabad-./0 //1# (ational 2apital +eion# I(DI%

'"-/030.0

4iran'"-/03055 La6mi 4ant 7ada8

'"-/03059 "anisha Duar

'"-/0303/ (eelish Dinmani

'"-/03031 (ishant 4umar

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2015-17

ACKNOW!DG!M!N"

!his Pro:ect ;or< titled #mpa$t o% Glo&ali'ation and i&erali'ation on

Primar( )e$tor o% #ndian !$onom( is a successful outcome of our hard wor

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#ND!*

)NO+ CON"!N"

1 Globalization

2 Sectorial aspects of Indian economy

Primary

Secondary

!ertiary

, Globalization and its impact on Indian Economy) De8elopments and

2hallenes

5

.

GO/A#A"#ON

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2homslites is the same as

always) they see< to isolate the eneral population from important decision-ma

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bac

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to sell them in the mar

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,+ Pro6iding ood to Millions

?ood is the most basic requirement of life* ;ithout ariculture food production and supply

would be non-e6istent* Indias food requirement is not only 8ery hih but also increasin e8ery

year because of increase in its population* !he total food rain production of India in .//9-1 was

around .5 million tonnes* !his includes wheat# rice and pulses*

+ Pro6iding ra materials to industries

Industries such as suar# :ute# cotton te6tiles# 8anaspati etc* et their raw materials from

ariculture* Do you

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Indian economy into the lobal economy* !he Indian economy was in ma:or crisis in 0110 when

forein currency reser8es went down to K0 billion* Globalization had its impact on 8arious

sectors includin %ricultural# Industrial# ?inancial# $ealth sector and many others* It was only

after the LPG policy i*e* Liberalization# Pri8atization and Globalization launched by the then

?inance "inister "an "ohan Sinh that India saw its de8elopment in 8arious sectors*

Ad6ent o% Ne !$onomi$ Poli$(-

%fter sufferin a hue financial and economic crisis Dr* "an "ohan Sinh brouht a new policy

which is

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mar

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Greater and faster flow of information between countries and reater cultural interaction has

helped to o8ercome cultural barriers*

!echnoloical de8elopment has resulted in re8erse brain drain in de8elopin countries*

Demerits o% Glo&ali'ation :Callenges;8

!he outsourcin of :obs to de8elopin countries has resulted in loss of :obs in de8eloped

countries*

!here is a reater threat of spread of communicable diseases*

!here is an underlyin threat of multinational corporations with immense power rulin the

lobe*

?or smaller de8elopin nations at the recei8in end# it could indirectly lead to a subtle form of

colonization*

Q !he number of rural landless families increased from 53 in 019H to 3 in 0111# further to

33 in .//3* !he farmers are destined to die of star8ation or suicide*

% 2omparison with Bther De8elopin 2ountries)

Q 2onsider lobal trade J Indias share of world merchandise e6ports increased from */3 to

*/H o8er the past ./ years* B8er the same period 2hinas share has tripled to almost *

Q Indias share of lobal trade is similar to that of the Philippines an economy M times

smaller accordin to I"? estimates*

Q B8er the past decade ?DI flows into India ha8e a8eraed around /*3 of GDP aainst 3

for 2hina and 3*3 for 'razil* ?DI inflows to 2hina now e6ceed CS K 3/ billion annually* It is

only CS K billion in the case of India*

Glo&ali'ation in agri$ultural se$tor

In %riculture of the ;!B# was the first multilateral areement# meant to curb unfair practices in

aricultural trade and set off the process of reforms in the aricultural sector* It contained the

followin broad areas )

0*!ariff +eduction ) Pre8iously trade in ariculture was restricted by quotas# import and e6port

licensin and other non-tariff barriers* !he %o% required that all non-tariff barriers be replaced

by a sinle tariff rate called the bound tariff rate and that e6istin tariffs be reduced in a phased

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manner o8er a stipulated period of time* De8elopin countries includin India were e6pected to

reduce bound tariffs by . # minimum of 0/ for each commodity o8er a period of 0/ years*

.*"ar

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considerably constrained primarily due to infrastructure bottlenec

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"oreo8er# coal# the larest mined mineral in India# was ne8er opened to commercial minin#

resultin in zero interest by lobal minin ma:ors* $owe8er# with the promulation of the

""D+ %ct# in8estment in minin and metals sector is e6pected to impro8e*

!he Indian Go8ernment has set the stae for a paradim shift in the Indian minin sector with

the recent Supreme 2ourt directed coal auctions and the proposed auction of other minerals*

!hese broad-based reforms proposed by the Go8ernment would ha8e se8eral implications# some

of them bein) %n increase in mineral e6ploration# production and a8ailability# which are li

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i&erali'ation

!he economic liberalization in India refers to onoin economic reforms in India that started on

. uly 0110*%fter Independence in 01H# India adhered to socialist policies* %ttempts were

made to liberalize economy in01MM and 0193*!ill today %riculture remains a sensiti8e issue in

India with almost H/ of its population still directly dependent on it* Indian ariculture# unli

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this period* $owe8er# both of these strateies# which in8ol8ed raisin the prices for consumers of

both food and 0/ fertilizers# had undesirable and e8en counter-producti8e effects# leadin to the

parado6ical results of reducin consumption and simultaneously increasin subsidies*

#mpa$t o% i&erali'ation on Agri$ulture in #ndia

!he economic liberalization in India refers to onoin economic reforms in India that started on

. uly 0110* %fter Independence in 01H# India adhered to socialist policies* %ttempts were

made to liberalize economy in 01MM and 0193*!ill today %riculture remains a sensiti8e issue in

India with almost H/ of its population still directly dependent on it* Indian ariculture# unli

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which affected both aricultural producers and consumers# and the reduction of public

e6penditure which would ha8e benefited culti8ation* !hus# both food and fertilizer subsidies

were souht to be reduced o8er this period* $owe8er# both of these strateies# which in8ol8ed

raisin the prices for consumers of both food and 0/ fertilizers# had undesirable and e8en

counter-producti8e effects# leadin to the parado6ical results of reducin consumption and

simultaneously increasin subsidies*

Indian ariculture today) % snapshot

%riculture employs M/ of the Indian population today# yet it contributes only ./*M to the

GDP* @Isaac# .//3A %ricultural production fell by 0.*M in .//5# one of the sharpest drops in

independent Indias history* %ricultural rowth slowed from *M1 in 0110 to .*M in 011H-

0119 and to 0*0 in .//.-.//5 @%ricultural Statistics at a Glance# .//MA* !his slowdown in

ariculture is in contrast to the M rowth rate of the Indian economy for almost the whole of the

past decade* ?armer suicides were 0. of the total suicides in the country in .///# the hihest

e8er in independent Indias history* @Cnofficial estimates put them as hih as 0//#/// across the

country# while o8ernment estimates are much lower at .3#///* !his is larely because only

those who hold the title of land in their names are considered farmers# and this inores women

farmers who rarely hold land titles# and other family members who run the farms* %ricultural

waes e8en today are K0*3 J K.*/ a day# some of the lowest in the world* @Issac# .//3A

Institutional credit @or reulated creditA accounts for only ./ of credit ta

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and a lac< of proper credit facilities# which ma

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e6chane to a series of reforms in %Ps industry and o8ernment* (aidu en8isaed corporate

style ariculture in %P# and implemented ;orld 'an< liberalisation policies with reat

enthusiasm and usto* $e drew se8ere criticism from opponents# sayin he was usin %P as a

laboratory for e6treme neo-liberal e6periments* $ence# %Ps e6perience with liberalization is

critical*

Liberalization and its effects on %riculture) !he neo-liberal economic policy pac

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Q Liberalization and remo8al of restrictions on internal trade in aricultural commodities#

across states within India*

Q Liberalization of e6ternal trade# first throuh liftin restrictions on e6ports of aricultural

oods# and then by shiftin from quantitati8e restrictions to tariffs on imports of aricultural

commodities* % rane of primary imports was decreases and thrown open to pri8ate aents*

Import tariffs were 8ery substantially lowered o8er the decade* E6ports of important

culti8ated items# includin wheat and rice# were freed from controls and subsequent

measures were directed towards promotin the e6ports of raw and processed aricultural

oods*

In terms of fiscal policies# the reduced spendin of central and state o8ernments was the most

sinificant feature* Due to ta6 reforms# the ta6UGDP ratio declined at central le8el* 2entral

transfers to state o8ernments also declined* State o8ernments were forced to borrow in the

mar

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mar

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en8ironmental reasons and items of elitist consumption* $owe8er# of these 09 industries# 05

cateories ha8e been remo8ed from the list radually and currently only 3 cateory of

health# strateic and security considerations industries needs license 8iz* %lcohol# ciarettes#

hazardous chemicals# electronic# aerospace and all types of defense equipment*

Policy on Public Sector J !he 013M +esolution had reser8ed 0H industries for the public

sector* !he 0110 industrial policy reduced this number to 9* %s of now only 5 industries are

reser8ed for o8ernment J 0A %tomic Enery .A "inin of %tomic "inerals 5A +ailway

!ransport*

!he policy also suested that those public enterprises which are chronically sic< and

which are unli

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forein in8estment up to 30 percent forein equity* !he industries in which automatic

appro8al was ranted included a wide rane of industrial acti8ities in the capital oods and

metallurical industries# entertainment electronic# food processin and the ser8ices sectors

ha8in sinificant e6port potential* List is bein e6panded since then* 2urrent situation of

?DI norms will be discussed in ne6t article*

%bolition of Phased "anufacturin Prorams for (ew Pro:ects J !hese prorams was

aimed at indienization of technoloy* !hese were in force in a number of enineerin and

electronic industries* !he new policy abolished such proram for future*

+emo8al of "andatory 2on8ertible 2lause J In pre liberalization era# there was a

mandatory con8ertible clause in loan areement with borrower @industries in this caseA*

%s per this clause# ban

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throuh automatic route* $owe8er# post 0110 rowth is accused of lopsided rowth with

de8astatin social impact as o8ernment rolled bac< e6penditure from social sectors too*

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4e%eren$es

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Con$lusion8