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Economy: India
Outline the features of globalisation and evaluate the
economic strategies of a country other than Australia in
achieving economic growth and development. (2007)
Globalisation refers to the integration between different
economies as well as the increased impact of international
influences on all aspects of life and economic activity. It is the
process in which each individual country and economy converges
into the global economy prior to factors such as international trade,
capital and labour flows.
The economy of India is currently ranked the seventh largest
(2016) in the world by nominal GDP (has jumped up from being
10th (2012), 8th (2013), and 18th during the 1990s), third
largest by purchasing power parity (PPP) and amongst the top
twenty global traders according to the World Trade
Organisation (WTO). Prior to Indias economic transformation from
a socialist to a more developing country, an economy considered to
be one where the level of material wellbeing is considered to
be low, India has potentially been predicted to be one of the
four largest economies by 2050 (BRIC), outstripping China
and the US in terms of trade. Impact of globalisation on India
however can be seen through economic growth, distribution of
income and wealth, trade, foreign investment (and trade) flows and
transnational corporations, development and quality of life
indicators, financial markets as well as strategies that assist in
promoting economic growth and development within India.
Globalisation has provided India with many benefits over the past
two decades such as the growth in the services and industry
sectors prior to global demand that has contributed to Indias
growth and improvements amongst living standards as well as
increased opportunities (i.e. employment), under the various
reforms of fiscal consolidation by the Indian government. In
addition, globalisation has also brought negative effects upon the
Indian economy such as increases in famine and poverty
impacting upon the sustainability and Human Development
of India.
Indias economic integration prior to globalisation began in the early
1990s due to economic instability where at this time, in particular
the 1991 Solvency Crisis, the countrys deficit was close to $9.7
billion dollars with a population that still currently remains at over
one billion, more than 30% however poverty stricken. Yet, India, a
nation of cultural, social, and economic diversity continues to
remain one of the worlds fastest growing economies giving
economists a perception that a countrys progress depends not only
on the size of its domestic resources, but what it can obtain from
other countries.
Economic Growth refers to the situation in which there is a
sustained increase in a countrys productive capacity over time,
commonly measured by the percentage increase in Real Gross
Domestic Product. Through microeconomic reform, i.e. increasing
employment opportunities for Indian residents, the Indian
government is highly focused on promoting high economic
growth to India with the aim of increasing living standards and
equitable nominal distribution; The annual growth rate of the Indian
economy currently sits at 7.9% (Jan 2016), the International
Monetary Fund (IMF claims this is due to the boom in Indias
services export industry, including telecommunications,
pharmaceuticals, information and software technology, that
has imported a total of $616.7 billion to the economy.
Significant structural adjustments to microeconomic reform has
seen a rapid growth in GDP over the last fourteen years, currently at
2.5 trillion, a Current Account Deficit remaining moderate at 1.3%
of GDP (a 0.3% increase since 2002), also due to the effects of a
sharp decline in oil prices, and inflation remaining at 5.76%
(Apr 2016). Globalisation has therefore enabled India to improve
their economic position through an increase in national output,
income, enhance living standards as continue the
liberalisation of trade and capital/financial flows for over
two decades, in particular supporting economic recovery through
the implementation of fiscal packages since the effects of the GFC
which has contributed significantly to Indias growth, and current
budget deficit of -3.9% (2015-16).