Globalisation has raised questions in terms of emerging volatility, uncertainty, rise in poverty, and inequality in economic status of people in developing countries. It is said that globalisation is a hallow gift for the developing world and an award for rich countries from the WTO—hence a painful gap is visible between haves and have nots. However, globalisation is not a recent phenomenon; it started since the dawn of colonisation, including of India, when traders of the British Empire took away raw materials like cotton and jute for production in Lancashire and the same returned to India in the form of fine fabrics. Because India was a colony of Britain, this trade was imposed upon us. The same process was taking shape in the colonies of Portugal and Spain, especially in Africa.
But this form of trade changed after independence of India and other countries, and since then, a new turn took place in the structure of global trade—a kind of distortion of global trade on account of cut-throat competition that was followed by the forming of regional trading blocks such as the European Economic Community and European Free Trade Association, Latin American Free Trade Association, Andean Group, ASEAN, and COMECON. We can call this movement regional globalisation, which partially related to the whole world in terms of trade and technology. Later on, these regional trading blocks started intervening among each other’s trade, shifting their professional labour and technology. Following the birth of the WTO came professionalised globalisation—the age we are living in today.
Of course, globalisation offers advantages such as production-scale efficiency, innovative technology, efficient utilisation of labour, net of tax price equalisation, and equalisation of productive world savings and investment resources. In fact, the WTO provided incentives to free flow of investment, technical knowledge, professionals and consumers.
However, globalisation has facilitated both investing and withdrawing funds at such speed that even financial growth finds it hard to keep up with the frequency of volatility in financial markets. Take the example of Intel. The company has been making its microchips faster while lowering the cost per chip to gain market share at an accelerated rate. It’s nothing but expelling rivals to retain competitiveness and achieving monopolisation. Intel also moved most of its manufacturing capacities from the West to countries like Malaysia, Ireland, Israel, Turkey, North Korea and China, giving the company access to cheap and trained labour, and making it geographically close to its major markets.
In India, globalisation is leading to growth of a new generation of young and rich, and then there are millions of rural and urban poor—and this inequality is growing. The rich are becoming preoccupied with their own advancement, given global complexities, the poor are in a state of existential poverty. A step to improve the excessively low poverty line in India is to base it on a “nutritious” food security line, and then include education, sanitation, permanent housing and so on as part of the criteria.
Considering the size of India and her economic growth, poverty differs greatly from one state to another, so poverty lines should be adapted to each state and updated regularly. India is also infamous for child labour and underpayment. Solving this issue requires a different approach for towns and cities (factories) and for rural areas (agriculture).
For the last few years, India has not been able to attract substantial foreign capital, its exports have slowed, and agriculture and manufacturing are registering muted growth. If a major part of the population remains poor and is denied opportunities to become self-sufficient, the impact would be felt across the country and the results could be destabilising.
Yet another unrest is seen among retired citizens. Public expenditure on pensions and healthcare could double by 2040. So, India has to focus on two issues—slowing of population growth and increasing employment opportunities by augmenting agricultural and industrial production. Agricultural sector would need better irrigation resources, fertilisers and mechanisation. India also lacks skilled staff in sectors like manufacturing, transport and financial. The government is working to reduce inequality and is extending its forces to unite the scattered countries into one universe of peace and productivity.
Former Economic Advisor, Sebi