Globalization is the new notion that has come to rule the world since the nineties of the last century with the end of the cold war. The frontlines of the state with increased reliance on the market economy and renewed belief in the private capital and assets, a process of structural alteration encouraged by the studies and influences of the World Bank and other International organisations have started in many of countries. Also Globalisation has brought in new avenues to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard.
Countries around the world have closer over past few decades due to growing integration between economies. The main cause behind this growth has been globalization. There can be various definitions of globalization according to different aspects like economic activities, political, technological, cultural interactions. It brings the countries closer to each other and make them more interrelated through providing unrestrained trade and financial exchange. The process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC’s, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution. Opening up the economy to globalization can have both favourable and unfavourable impact on the country’s economic growth, environment, human capital, cultural dominance etc. Since globalization has been a hot topic over last few decades, it becomes imperative to study its impact on the economic growth of the country.
The case taken in this paper is of India which constitutes about 5th of the population of developing world. The study of globalization is particularly important for a developing nation like India where it has led to a tremendous growth. In 1991, the Indian economy faced a huge cash crunch consisting of high inflation, high and unsustainable fiscal deficit. The foreign exchange crunch of 1991 led India to open up its economy towards other nations. The concurrent processes of liberalization, privatization and globalisation has been going on since
then. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of the monopolies and the restrictive trade practices act, start of the privatization programme, reduction in tariff rates and change over to market determined exchange rates. Over the years there has been a steady liberalization of the current account transactions, more and more sectors opened up for foreign direct investments and portfolio investments simplifying entry of foreign investors in telecom, roads, ports,...