Liberalization vs. Globalization
Dr. Surajit Bhattacharyya
Mittal's bid for Arcelor was a hostile bid. A takeover is considered "hostile" if either the board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer without informing the board of the target beforehand. On the other hand, Gujarat Ambuja deal was a friendly deal where both parties agreed to the price and the deal was done. It was totally different from the Mittal Steel one. Mittal Steel can be compared with ITC-BAT (British American Tobacco) deal where Mr. Yogesh Chandra Deveshwar (Chairman, ITC) was highly appreciated on the deal not being done.
Let me talk about Mr. Laxmi Narayan Mittal (CEO & Chairman, Arcelor Mittal). He is known as the world's largest steel producer and the fifth-richest person (wealth: $32 billion). He moved from India to London after a default to Indian financial institutions. But his tremendous success outside India confirms that license-permit raj did not let the entrepreneurship develop. It is only now when we got free after 50 years of insular policies and illogical trade protectionism. If they did not exist, we could have produced a few more entrepreneurs like Mr. Laxmi Mittal.
India is really an emerging economy power in South-East Asia. This success should be credited to late Rajiv Gandhi and Mr. Manmohan Singh. Rajiv launched the IT revolution during his Prime Minister's tenure. Manmohan Singh initiated the process of globalization and opened the economy. However, the corruption has increased manifold even among ministers, capitalists and bureaucrats and the Indian democracy has converted into a 'mobocracy'. The high level of terrorism also can be attributed to our politicians and misguided governance.
Our economy got liberalized in 1991 and it was called a seminal event in Indian history. We got rid of Fabian socialism and accepted the free markets. India opened up its markets not because of any political reason but because of the "balance of payments crisis". India asked the IMF for a loan and the IMF granted what's called the "structural adjustment loan". We entered in a new era of economic reforms based on the structural changes in the economy. These reforms can be classified into three major areas: Liberalization (to remove the government's control of the market), Globalization (to reduce import barriers and export subsidies in order to enable free trade), and Privatization (to privatize the public sector undertakings).
India is a net beneficiary of globalization. We need to come close to the Western economies in terms of liberalization. One more thing I would like to add here that we are much more willing to accept the consequences of globalization more than the Western nations who keep lecturing us on the needs of globalization and tell us why we should open up our economy.
Many of the European people had to lose their jobs because Indian companies were paying such low emoluments that made it conducive for multinationals to outsource jobs to India. As an aftermath, the Western countries started fearing India and took a few steps to protect themselves. But it was the West who invented globalization, not India.
It has been years since we are being taught the plus points of globalization by them. We have been asked to remove tariffs and to permit cheaper Western products to enter our market-places. Multinational giants' entry in India could be facilitated primarily through new Indian economic liberalization policies.
Indian outsourcing industry is already booming and shining. Globalization is the fundamental driving force behind the outsourcing boom. Globalization is a two-way process. Japan has also not remained untouched by the wave of globalization. Japanese consumer electronics and cars are dominating the American market today. Being a developed economy, Japan is as global as...
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