Impact of LPG on

Indian Economy (With reference to Service Sector)

WHAT IS GLOBALIZATION?

The trend toward countries joining together economically,

Education Society Politics and Viewing themselves not only

through their national identity but also as part of the world as a whole.

Impact of Globalization on Indian Economy

highly positive in almost all spheres of economic and social life and virtually no negative effect.

India's economic growth has been high exports have boomed incidence of poverty has been reduced employment has surged begging by India for economic aid has stopped long-term inflation rate has gone down scarcity of goods have disappeared. the quality of products have improved substantially

Overall India has become progressively vibrant and internationally competititive.

Service sector is the lifeline for the social economic growth of a country.The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services.In advanced economies, the growth in the primary and secondary sectors are directly dependent on the growth of services like banking, insurance, trade, commerce, entertainment, etc.

Impact of Globalization on THE SERVICE SECTOR

The Bright Side of Globalization

The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to 7% in the 1993-2001 period.

The foreign exchange reserves (as at the end of the financial year) were $ 39 billion (2000-01), $ 107 billion (2003-04), $ 145 billion (2005-06) and $ 180 billion (in February 2007).

In respect of market capitalization India is in the fourth position with $ 894 billion

WHAT = GLOBALISATION?

PRIVITIZATION

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LIBERALIZATION

LPG –Globalization (Freedom to choose?) Liberalization, Privatization,

LPG surely has the power to do a lot of good. But at what cost?

Pursuing LPG at an alarming rate defeats the very purpose of developing the countries.

Many LPG policies become being an end in themselves instead of being the means to an end.

Privatization (Freedom to choose?)

Govts. have no business to be in business. (Exceptions like steel industry in Korea, Taiwan do exist)

Privatization More efficient. Costs – Trimming payrolls.Replacing unproductive workers.Social costsWhere does privatization leave countries which

have no safety nets in place?

Liberalization (Freedom to choose?)

Removal of government interference in trade, capital markets, financial markets, etc.

The thrust has been on trade liberalization main idea being to utilize comparative

advantage. IMF argues that with liberalization, new and

efficient jobs would be created as they replace the old unproductive ones.

Not instantaneous.

Sequencing and Pacing LPG

Need for safety nets. Adequate regulatory framework. Uniform policies of IMF does not suit all.Thus, customize the policy framework for each

country. Proper sequencing helps in adapting and

responding to the challenges of globalization. Balancing of the trade agenda in favor of

developing countries.

IMPACT ON INDIAN ECONOMY

India’s growth rate in the 1970’s was very low at 3%.

Though India’s average annual growth rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in China, Korea and Indonesia.

The pick up in GDP growth has helped improve India’s global position.

India’s position in the global economy has improved from the 8th position in 1991 to 4th place in 2001; when GDP is calculated on a purchasing power parity basis.

During 1991-92, The Indian economy grew by 0.9%only.

However the GDP growth accelerated to 5.3 % in 1992-93, and 6.2% 1993- 94.

A growth rate of above 8% was an achievement by the Indian economy during the year 2003-04.

India is ranked 18th among the world’s leading exporters of services with a share of 1.3% in world exports

India’s GDP growth rate can be seen from the following graph since independence

Indian Service Sector

Is one of the major contributors to both employment and national income in recent times.

Trading, transportation and communication, financial, real estate and business services, community, social and personal services come within the gambit of the service industry

Services account for more than 60 per cent of world GDP and trade in services has grown.

Indian exports of services

India’s -Export of Commercial Services

India has become one of the top five exporters of services amongst developing countries.

India’s exports of services are mainly to the EU and the US.

India’s export services growth rate was 16.3 in 2005-06, 25.9% in 2006-07,36.9% in 2007-08 and 33.3% in 2008-09.

India has been deemed as a major exporter of services in the world with a market share of 2.72% in 2008 as against 0.6% in 1995.

Conclusion

Indian economy has made rapid strides in the process of globalisation.

Globalisation is increasing:1. the integration of national markets 2. the interdependence of countries world wide for

a wide range of goods, services, and commodities.

The most important lesson that we must learn from the crisis is that we must be self-reliant.

India’s trade reform programme resulted in strong economic growth in the globalization age.

In particular, difficult decisions are to redress the fiscal imbalance, by:

1. reducing subsidies,2. completing the process of tariff and tax reform,3. and stepping-up privatization of state-owned

enterprises.

The efforts are needed to balance the trade and consider expansion of trade in other countries of the world.

THANK YOU

BY GROUP 5:1. AMANDEEP OBEROI

2. AVNEET KAUR 3. KAVERI CHOPRA4. SMRITI BABBAR

5. MEHAK SUKHRAMANI