GLOBALISATION AND THE INDIAN ECONOMY................Part II

Q7. What is Globalisation?

1. Globalisation is the process of rapid integration or interconnection between countries.
2. More and more goods and services, investments and technology are moving between countries. 
3. Most regions of the world are in closer contact with each other than a few decades back.
4. Besides the movements of goods, services, investments and technology, the countries are also  connected through the movement of people between countries. 
5. Peopl move from one country to another in search of better income, better jobs or better education.
6. The Globalisation is the result of greater foreign investment and greater foreign trade
7. It has resulted in the  greater integration of production and markets across countries.

Q8. What do you undersatand by Liberalisation?

1. Removing barriers or restrictions set by the government is known as liberalisation. 
2. With liberalisation of trade, businesses are allowed to make decisions freely about their trade related  to import or export. 
3. The government imposes less restrictions than and is therefore said to be liberal.

Q9. What is a trade barrier?

1. Tax on imports  is called a trade barrier because some restriction are  set up by the governments. 
2. Governments can use trade barriers to increase or decrease (regulate) foreign trade. 
3. Governments decide what kinds of goods and how much of each, should come into the country.

Q10.What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?
The Indian government after Independence had put barriers to
foreign trade and foreign investment.

1. This was considered necessary to protect the producers within the country from foreign competition.
2. Industries were just coming up in the1950s and 1960s, and competition from imports at that stage would not have allowed these industries to come up. 
3. Thus, India allowed imports of only essential items such as machinery, fertilisers, petroleum etc. 
4. In 1991 the Indian  government decided that the time had come for Indian producers to compete with producers around the globe. 
5. It felt that competition would improve the performance of producers within the country since they would have to improve their quality. 
6. This decision was supported by powerful international organisations.
7. Thus, barriers on foreign trade and foreign investment were removed to a large extent. 
8. This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices in India.