Following a major economic crises, India liberalised it’s economy in the early nineties. Inflation had rocketed to an annual rate of 17%, high fiscal deficit had become unsustainable and foreign investors confidence in Indian Economy was low (Goyal, 2006, p. 167). It was these factors that put pressure on the Indian government to call for a complete revamp of their economic policies. Some of the major changes made, as part of the economic liberalisation and globalisation strategy, included government’s privatisation and disinvestment in a majority of the public sector undertakings, allowing foreign direct investment (FDI) across many industries, the removal of quantitative restrictions on imports and the reduction of customs tariff from over 300% to 30 % (Goyal, 2006, p. 167). The main purpose of India’s economic reform is to ultimately “integrate Indian economy with world economy” (Singh, 1995, p. 36). This liberalisation and globalisation of the economy can help solve India’s major problems of unemployment and poverty.
India’s economic reform favours a more open and market orientated economy (Goyal, 2006, p. 166). India’s new economic structure emulates the principals of neo-liberal Hyperglobalism. Neo-liberal Hyperglobalism “celebrates the global dominance of market principals over state power” (Lofgren & Sarangi, 2009, pg.70). This means that decisions about allocation, production and distribution in the economy are left to the global economy rather than the government. (Burke, Devetak & George, 2008, p. 299). States are increasingly the 'decision- takers' and not the 'decision-makers' (Goldblatt, Held, McGrew & Perraton, 1999). Three key terms that come out of neoliberalism are deregulation, liberalisation and privatisation all of which India’s new economic policies draw on. Neo-liberal Hyperglobalism favours globalism as beneficial process for a developing country. The benefits that Neo-liberal Hyperglobalism can provide are evident in India.
India’s steps towards globalisation through new economic reforms have produced some significant benefits for the country. The privatisation of particular state-owned enterprises provides the government with an increased amount of cash which they can then spend on increasing their citizen’s quality of life through increased food supplies and the development of hospitals, schools, infrastructure etc in poverty stricken regions. The domestic economy has been freed up from state control, virtually abolishing state monopoly in all sectors (Panagariya, 2001). This has lead to greater competition in industries; resulting in lower prices, a greater supply of goods which benefits the citizens (Goyal, 2006, p. 168).
Another step towards globalisation that has proven beneficial for India is the decision to allow foreign direct investment in the Indian industry. The huge amounts of foreign investment that now enter India have significantly boosted the country’s economy. Many foreign companies have set up industries in India, mainly in pharmaceutical, BPO, petroleum, manufacturing and chemical sectors, which have created greater employment opportunities for Indian people, decreasing unemployment and poverty...