International Journal of Global Business, 5 (1), 1-16, June 2012 1

India’s Economic Performance- Globalisation As Its Key Drive

Dr.M.Dhanabhakyam, Sakthipriya.M.R.G

Bharathiar University, Coimbatore, India

dhana_giri@rediffmail.com, sakthipriyamrg@gmail.com

Abstract

Globalisation is the new buzzword that has come to dominate the world since the nineties

of the last century with the end of the cold war and the break-up of the former Soviet Union and

the global trend towards the rolling ball. The frontiers of the state with increased reliance on the

market economy and renewed faith in the private capital and resources, a process of structural

adjustment spurred by the studies and influences of the World Bank and other International

organisations have started in many of the developing countries. Also Globalisation has brought

in new opportunities to developing countries. Greater access to developed country markets and

technology transfer hold out promise improved productivity and higher living standard. But

globalisation has also thrown up new challenges like growing inequality across and within

nations, volatility in financial market and environmental deteriorations. Another negative aspect

of globalisation is that a great majority of developing countries remain removed from the

process. Till the nineties the process of globalisation of the Indian economy was constrained by

the barriers to trade and investment liberalisation of trade, investment and financial flows

initiated in the nineties has progressively lowered the barriers to competition and hastened the

pace of globalisation. This paper presents the performance of the Indian economy with

globalisation as its key drive. Various sectors of the Indian economy are considered for the

study.

Key words: Globalisation, growth trends, GDP, growth rate of various sectors of the economy,

benefits and pitfalls, future of Indian economy

Introduction

Indian economy had experienced major policy changes in early 1990s. The new

economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG

model) aimed at making the Indian economy as fastest growing economy and globally

competitive. The series of reforms undertaken with respect to industrial sector, trade as well as

financial sector aimed at making the economy more efficient.

With the onset of reforms to liberalize the Indian economy in July of 1991, a new chapter

has dawned for India and her billion plus population. This period of economic transition has had

a tremendous impact on the overall economic development of almost all major sectors of the

economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the

advent of the real integration of the Indian economy into the global economy.

International Journal of Global Business, 5 (1), 1-16, June 2012 2

This era of reforms has also ushered in a remarkable change in the Indian mindset, as it

deviates from the traditional values held since Independence in 1947, such as self reliance and

socialistic policies of economic development, which mainly due to the inward looking restrictive

form of governance, resulted in the isolation, overall backwardness and inefficiency of the

economy, amongst a host of other problems.

Now that India is in the process of restructuring her economy, with aspirations of

elevating herself from her present desolate position in the world, the need to speed up her

economic development is even more imperative. And having witnessed the positive role that

Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the

Southeast Asian countries and most notably China, India has embarked on an ambitious plan to

emulate the successes of her neighbors to the east and is trying to sell herself as a safe and

profitable destination for FDI.

Globalization has many meanings depending on the context and on the person

who is talking about. Though the precise definition of globalization is still unavailable a few

definitions are worth viewing, Guy Brainbant: says that the process of globalization not only

includes opening up of world trade, development of advanced means of communication,

internationalization of financial markets, growing importance of MNCs, population migrations

and more generally increased mobility of persons, goods, capital, data and ideas but also

infections, diseases and pollution. The term globalization refers to the integration of economies

of the world through uninhibited trade and financial flows, as also through mutual exchange of

technology and knowledge. Ideally, it also contains free inter-country movement of labor. In

context to India, this implies opening up the economy to foreign direct investment by providing

facilities to foreign companies to invest in different fields of economic activity in India,

removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to

enter into foreign collaborations and also encouraging them to set up joint ventures abroad;

carrying out massive import liberalization programs by switching over from quantitative

restrictions to tariffs and import duties, therefore globalization has been identified with the policy

reforms of 1991 in India.

Strategies Initiated

Major measures initiated as a part of the liberalization and globalization strategy in the early

nineties included the following:

Disinvestment

Devaluation

Dismantling of The Industrial Licensing Regime

Allowing Foreign Direct Investment

Non Resident Indian Scheme

Throwing Open Industries Reserved For The Public Sector to Private Participation

Abolition of the (MRTP) Act

The removal of quantitative restrictions on imports.

The reduction of the peak customs tariff

International Journal of Global Business, 5 (1), 1-16, June 2012 3

Importance of the Study

Globalisation has brought in new opportunities to developing countries. Greater access to

developed country markets and technology transfer hold out promise improved productivity and

higher living standard. India’s economic growth has been substantially high and India have

become progressly vibrant and nationally competitive. This urged to study the performance of

India in this fiscal year due to the initialisation of globalisation

Objective of The Study

To understand the meaning of globalization.

To analyse the Economic performance and growth of India due to globalization in the

current pace.

To analyse the pleasant and unpleasant side of globalization.

To analyse the pitfalls of globalization.

To estimate the future of the Indian economy.

Methodology

Secondary data is collected for the study. The data is collected from various journals and internet

links in order to

Compare and analyse the growth statistics of various sectors of the economy.

Tabulating and estimating the GDP of the Indian economy.

To estimate the contributions made by the different sectors on India’s growth.

To analyse India’s current position among the world countries in terms of GDP

To determine the contributions made by India to the world economy.

International Journal of Global Business, 5 (1), 1-16, June 2012 4

Growth of GDP

Chart showing the growth in GDP

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 5.5 6 4.3 4.3 8.3 6.2 8.4 9.2 9 7.4 7.4 10.4

The economic scenario in India has been pretty stable over the last 5 years. Despite the economic

downturn two years back the Indian economy has managed to remain stable. The India GDP

recorded for the period December 2010 stood at 7.4 percent. However according to the (CMIE)

or Centre for Monitoring Indian Economy India will record a GDP of 10.4 per cent in the year

2011. India's GDP growth 2010 - 2011 has not been phenomenal but is certainly encouraging.

Growth of Foreign Exchange Reserves

India’s foreign exchange reserves have grown significantly since 1991. The reserves,

which stood at US$ 5.8 billion at end-March 1991 increased gradually to US$ 54.1 billion by

end-March 2002, after which it rose steadily reaching a level of US$ 309.7 billion in March

2008. The reserves declined to US$ 252.0 billion in March 2009. The reserves stood at US$

292.9 billion as on September 30, 2010 compared to US $ 279.1billion as on March 31, 2010.

Although both US dollar and Euro are intervention currencies and the FCA are maintained in

major currencies like US dollar, Euro, Pound Sterling, Japanese Yen etc. the foreign exchange

reserves are denominated and expressed in US dollar only. Movements in the FCA occur mainly

on account of purchases and sales of foreign exchange by the RBI in the foreign exchange

market in India. In addition, income arising out of the deployment of the foreign exchange

reserves and the external aid receipts of the Central Government also flow into the reserves. The

movements of the US dollar against other currencies in which FCA are held also impact the level

of reserves in US dollar terms.

International Journal of Global Business, 5 (1), 1-16, June 2012 5

Chart showing the growth of Foreign Exchange Reserves

Growth of FDI

Chart showing the source of FDI into India between April 2000 and March 2011

During April-February 2010-11, Mauritius has led investors into India with US$ 6,637 million

worth of FDI comprising 42 per cent of the total FDI equity inflows into the country. The FDI

equity inflows from Mauritius is followed by Singapore at US$ 1,641 million and the US with

US$ 1,120 million, according to data released by DIPP.

International Journal of Global Business, 5 (1), 1-16, June 2012 6

Inflow of FDI Into India

Table showing the inflow of FDI into India

2000-01 18406 4029 12609 2760 31015 6789

2001-02 29235 6130 9639 2021 38874 8151

2002-03 24367 5035 4738 979 29105 6014

2003-04 19860 4322 52279 11377 72139 15699

2004-05 27188 6051 41854 9315 69042 15366

2005-06 39674 8961 55307 12492 94981 21453

2006-07 103367 22826 31713 7003 135080 29829

2007-08 140180 34835 109741 27271 249921 62106

2008-09 161536 35180 -63618 -13855 97918 21325

2009-10 176304 37182 153511 32375 329815 69557

Note : 1. Data for 2008-09 and 2009-10 are provisional.

2. Data on FDI have been revised since 2000-01 with expanded coverage to approach

international best practices.

Data from 2000-01 onwards are not comparable with FDI data for earlier years.

4. Negative (-) sign indicates outflow.

5. Direct Investment data for 2006-07 include swap of shares of 3.1 billion.

Also see Notes on Tables.

India has been ranked at the second place in global foreign direct investments in 2010 and will

continue to remain among the top five attractive destinations for international investors during

2010-12 , according to United Nations Conference on Trade and Development (UNCTAD) in a

report on world investment prospects titled, 'World Investment Prospects Survey 2009-2012'.

India attracted FDI equity inflows of US$ 1,274 million in February 2011. The cumulative

amount of FDI equity inflows from April 2000 to February 2011 stood at US$ 128.642 billion,

according to the data released by the Department of Industrial Policy and Promotion (DIPP).

Year A. Direct investment B. Portfolio

investment

Total (A+B)

Rupees

crore

US $

million

Rupees

crore

US $

million

Rupees

crore

US $

million

International Journal of Global Business, 5 (1), 1-16, June 2012 7

The services sector comprising financial and non-financial services attracted 21 per cent of the

total FDI equity inflow into India, with FDI worth US$ 3,274 million during April-February

2010-11, while telecommunications including radio paging, cellular mobile and basic telephone

services attracted second largest amount of FDI worth US$ 1,410 million during the same period.

Housing and Real Estate industry was the third highest sector attracting FDI worth US$ 1,109

million followed by power sector which garnered US$ 1,237 million during April-December

2010-11. The Automobile sector received FDI worth US$ 1,320 million.

Growth of Capital Market

In respect of market capitalization (which takes into account the market value of a quoted

company by multiplying its current share price by the number of shares in issue), India is in the

fourth position with $ 894 billion after the US ($ 17,000 billion), Japan ($ 4800 billion) and

China ($ 1000). India is expected to soon cross the trillion dollar mark.

Growth in the Number of Billionaires

India, presently with exactly 55 "dollar-billionaires" (individuals with a total net worth of one

billion dollars and above), accounts for roughly 4.5% of the global total of 1210 billionaires

across the six continents. The number of billionaires of India has risen to 40 (from 36 last year)

more than those of Japan (24), China (17), France (14) and Italy (14) this year. A press report

was jubilant: This is the richest year for India. The combined wealth of the Indian billionaires

marked an increase of 60 per cent from $ 106 billion in 2006 to $ 170 billion in 2007. The 40

Indian billionaires have assets worth about Rs. 7.50 lakh crores whereas the cumulative

investment in the 91 Public Sector Undertakings by the Central Government of India is Rs. 3.93

lakh crores only.

Growth in Industrial Sector

Chart showing the current Industrial Growth Rate in India on Year-on-Year Basis (Base

Year 2004-05)

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 6 7.5 4.7 6 6.5 7.4 7.9 7.5 8.5 4.8 9.3 9.7

International Journal of Global Business, 5 (1), 1-16, June 2012 8

Sector Wise Growth of GDP

Indian exports increased by 26.8 per cent (y-o-y) and touched US$ 18.9 billion in

November 2010. This rapid growth in the exports from India urged the Indian Government to

conclude that the total shipments in 2010-11 might go up to US$ 215 billion. For the period

April 2010 to November 2010 exports in the country grew by 26.7 per cent to US$ 140.3 billion.

On the other hand imports increased to US$ 222 billion.

India also made a substantial profit from Foreign Exchange Earnings. The number of

Foreign Tourist that visited the country from January- November 2010 was about 4.93 million as

compared to 4.46 million foreign tourists during the same period in 2009, registering a growth

rate of 10.4 per cent. The (FEE) or Foreign Exchange Earnings went up to a whopping US$

12.88 billion during the period January-November 2010 as compared to US$ 10.67 billion during

January-November 2009. The growth rate registered by the Ministry of Tourism was 20.7

percent.

The logistics industry in India is also witnessing enormous activity. According to a study

conducted by the shipping ministry in India, some of the important ports in the country handled

about 44.4 million tons of freight in September 2010. There was a growth rate of 4.5 per cent as

compared to the growth rate in September 2009 which stood at 5.9 per cent. According to

Frost&Sullivan, the traffic in these ports is going to rise from 814.1 (MT) to 1,373.1 MT from

the period 2010 to 2015 at a steady CAGR of 11 percent.

The investment industry in India also showed positive signs of growth in 2010.

According to the reports released by the Association of Mutual Funds in India the total assets

that the mutual fund industry managed accounted at US$ 160.44 billion in September 2010.

According to the reports released by the Telecom Regulatory Authority of India (TRAI)

the total number of telephone users in India reached 742.12 million in October 31, 2010. This

took the total telephone using population in the country to 62.51 percent. The number of wireless

subscribers also increased to 706.69 million.

According to the NASSCOM's Strategic Review 2010, the IT-BPO sector in India

remained the fastest developing industry churning out total revenue of USD 73.1 billion in 2010.

The Information Technology and software services generated revenues of USD 63.7 billion.

The vehicles industry in India also witnessed a substantial growth in 2010. The

production of vehicles in India grew by 32.4 per cent in August 2010, as against the

corresponding period in 2009. Ranging from the commercial vehicles to two-wheelers to the

Passenger vehicles segment all registered striking growth rates of 49 per cent, 31 per cent and 32

percent.

According to the reports of the Gem and Jewellery Export Promotion Council, the

shipment of jewelry from India was worth US$ 23.57 billion during the April-November 2010,

recording an increase of 38.25 per cent as compared to that of US$ 17.05 billion as against the

same period in 2009.

Even the aviation industry registered a steady growth in 2010 as compared to the

previous year. As per the Ministry of Civil Aviation, the total number of passengers carried by

the domestic airlines during January-November, 2010 were 46.81 million as compared to 39.35

million in the previous year, registering a profit of 18.9 per cent.

International Journal of Global Business, 5 (1), 1-16, June 2012 9

Unpleasant Side of Globalization

Poverty Rate

Chart showing the poverty rate in India

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 35 35 25 25 25 25 25 25 25 25 25 25

Inspite of the decline in the poverty rate, the number of rural landless families increased

from 35 per cent in 1987 to 45 per cent in 1999, further to 55 per cent in 2005. The farmers are

destined to die of starvation or suicide. Replying to the Short Duration Discussion on Import of

Wheat and Agrarian Distress on May 18, 2006, Agriculture Minister Sharad Pawar informed the

Rajya Sabha that roughly 1, 00,000 farmers committed suicide during the period 1993-2003

mainly due to indebtedness.

In his interview to The Indian Express on November 15, 2005, Sharad Pawar said: The

farming community has been ignored in this country and especially so over the last eight to ten

years. The total investment in the agriculture sector is going down. In the last few years, the

average budgetary provision from the Indian Government for irrigation is less than 0.35 percent.

Employment and Unemployment

Agricultural and allied sectors accounted for about 52.1% of the total workforce in 2009–

10. While agriculture has faced stagnation in growth, services have seen a steady growth. Of the

total workforce, 7% is in the organised sector, two-thirds of which are in the public sector. The

NSSO survey estimated that in 2004–05, 8.3% of the population was unemployed, and an

increase of 2.2% over 1993 levels, with unemployment uniformly higher in urban areas and

International Journal of Global Business, 5 (1), 1-16, June 2012 10

among women. Growth of labour stagnated at around 2% for the decade between 1994–2005,

about the same as that for the preceding decade. Avenues for employment generation have been

identified in the IT and travel and tourism sectors, which have been experiencing high annual

growth rates of above 9%.

Chart showing the employment rate in India

Country 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 8.8 8.8 9.5 9.2 8.9 7.8 7.2 6.8 10.7 10.8

Growth in Agriculture

In 1951, agriculture provided employment to 72 per cent of the population and

contributed 59 per cent of the gross domestic product. However, by 2001 the population

depending upon agriculture came to 58 per cent whereas the share of agriculture in the GDP

went down drastically to 24 per cent and further to 22 per cent in 2006-07. This has resulted in a

lowering the per capita income of the farmers and increasing the rural indebtedness.

The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to two

per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006

stated that the growth rate of agricultural GDP including forestry and fishing is likely to be

below two per cent in the Tenth Plan period.

The reasons for the deceleration of the growth of agriculture are given in the Economic

Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a

distorted incentive system and low post-harvest value addition continued to be a drag on the

sectors performance. With more than half the population directly depending on this sector, low

agricultural growth has serious implications for the inclusiveness of growth.

International Journal of Global Business, 5 (1), 1-16, June 2012 11

Social Services

Rate of Literacy

Chart showing the Literacy Rate in India

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 52 52 52 59.5 59.5 59.5 59.5 61 61 61 61 61

Though there is a increase in literacy rate, About the quality of education given to

children, the Approach to the Eleventh Five Year Plan stated: A recent study has found that 38

per cent of the children who have completed four years of schooling cannot read a small

paragraph with short sentences meant to be read by a student of Class II. About 55 per cent of

such children cannot divide a three digit number by a one digit number. These are indicators of

serious learning problems which must be addressed.

Infant Mortality Rate

Chart showing the infant mortality rate in India

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India 64.9 63.19 61.47 59.59 57.92 56.29 54.63 34.61 32.31 30.15 49.13 47.57

International Journal of Global Business, 5 (1), 1-16, June 2012 12

The Approach to the Eleventh Plan concedes that progress implementing the objectives

of health have been slow. The Report gave the particulars of the rates of infant mortality (per

1000 live births) for India as 60 against Sri Lanka (13), China (30) and Vietnam (19). The rate of

maternal mortality (per 1, 00,000 deliveries) of India is 407 against Sri Lanka (92), China (56)

and Vietnam (130). Compared to other countries, the mortality rate is high. This should be taken

care

Growth of Slum Capitals

Slum Population in India –

Slum Population simply refers to people living in slum areas below the poverty line. As

India is still on the path of development, there is large number of people living below the poverty

line. These people usually live in slum areas connected to the city. According to Government

sources, the Slum Population of India have exceeds the population of Britain. It has doubled in

last two decades. According to last census in 2001, the slum-dwelling population of India had

risen from 27.9 million in 1981 to 61.8 million in 2001. Indian economy has achieved a

significant growth of 8 percent annually in last four years, but there is still large number of

people nearly 1.1 billion still survives on less than 1 $ (around 46 INR) in a day.

Increase in Indian Population over a period of time has also resulted in slum population

growth. Despite of Government efforts to build new houses and other basic infrastructure, most

of the people living in slum areas do not have electricity, water supply and cooking gas.

Slum Population in Mumbai –

The financial capital of India known as Mumbai is home to estimated 6.5 million slum

people. Nearly half of Mumbai's Population lives in small shacks surrounded by open sewers.

Nearly 55% of Mumbai's population lives in Slum areas.

Slum Population in Delhi –

After Mumbai, Delhi has the second largest slum Population in India. Nearly 1.8 million

people lives in slum areas in capital of India - New Delhi. These people are mostly unemployed

or daily wage workers who cannot even afford basic necessities of life.

India’s Current Position Among the World Countries in Terms of GDP

The Economy of India is the tenth largest in the world by nominal GDP and the fourth

largest by purchasing power parity (PPP). The country's per capita GDP (PPP) is $3,339 (IMF,

129th) in 2010. Following strong economic reforms from the post-independence socialist

economy, the country's economic growth progressed at a rapid pace, as free market principles

were initiated in 1991 for international competition and foreign investment.

The country which was termed underdeveloped till a few decades back has shown the

world its great potential. Moving along slowly with accurately measured footsteps India is surely

treading on. The policy-makers of the country realized at the right time their age old ideas and

beliefs and started moving towards the direction of growth. Over the years numerous steps have

been taken to rationalize taxes and reduce red-tapism in the country.

The recent all round growth and development has made people across the globe realize

the importance of the country as a well read and powerful economy. With its galloping GDP

International Journal of Global Business, 5 (1), 1-16, June 2012 13

figures India forced other powerful economies to sit up and take notice of it. The country today,

despite all odds is showing signs of health, wealth and vigor.

Backed by sound economic policies and information technological advancements, the

South-East Asian countries have prospered as their employment growth rate has increased

tremendously. One fine example of this phenomenon is India which continues to have a

economic growth rate of 8 percent or more per year.

Easy access to foreign capital and increased foreign direct investment lays down the

foundation for a competitive and yet, thriving market.

Since the players increase in the market, the consumers not only get better products but

also at a cheaper price. And hence, one of the benefits of globalization is low inflation

rate which helps the country to have a stabilized economy.

Poverty has reduced in the Asian countries which have adopted liberalized economic

policies.

Companies from other countries bring their products with their technologies. Newer

technologies in IT, production and research cuts down the production cost, and increases

sales. Moreover, it also sharpens the skills of the local labor force.

The Negative Effects of Globalization

Developed nations have outsourced manufacturing and white collar jobs. That means less

jobs for their people. This has happened because manufacturing work is outsourced to

developing nations like China where the cost of manufacturing goods and wages are

lower. Programmers, editors, scientists and accountants have lost their jobs due to

outsourcing to cheaper locations like India.

Globalization has led to exploitation of labor. Prisoners and child workers are used to

work in inhumane conditions. Safety standards are ignored to produce cheap goods.

Job insecurity. Earlier people had stable, permanent jobs. Now people live in constant

dread of losing their jobs to competition. Increased job competition has led to reduction

in wages and consequently lower standards of living.

Terrorists have access to sophisticated weapons enhancing their ability to inflict damage.

Terrorists use the Internet for communicating among themselves.

Companies have set up industries causing pollution in countries with poor regulation of

pollution.

Fast food chains like McDonalds and KFC are spreading in the developing world. People

are consuming more junk food from these joints which has an adverse impact on their

health.

The benefits of globalization are not universal. The rich are getting richer and the poor

are becoming poorer.

Bad aspects of foreign cultures are affecting the local cultures through TV and the

Internet.

Enemy nations can spread propaganda through the Internet.

Deadly diseases like HIV/AIDS are being spread by travellers to the remotest corners of

the globe.

International Journal of Global Business, 5 (1), 1-16, June 2012 14

Local industries are being taken over by foreign multinationals.

The increase in prices has reduced the government’s ability to sustain social welfare

schemes in developed countries.

There is increase in human trafficking.

Multinational Companies and corporations which were previously restricted to

commercial activities are increasingly influencing political decisions.

Future of Indian Economy

Indian Economy: Future Challenges

Experts believe that the contribution of India in the world GDP is estimated to increase

from 6% to 11% by the year 2025, while on the flip side the contribution of US in world

GDP is presumed to decline from 21% to 18%. This indicates towards the emergence of

India as the third biggest global economy after US and China. The evaluation is

supported by the overall development in all the sectors in India.

Sustaining the growth momentum and achieving an annual average growth of 9-10 % in

the next five years.

Simplifying procedures and relaxing entry barriers for business activities and Providing

investor friendly laws and tax system.

Boosting agricultural growth through diversification and development of agro processing.

Expanding industry fast, by at least 10% per year to integrate not only the surplus labour

in agriculture but also the unprecedented number of women and teenagers joining the

labour force every year.

Developing world-class infrastructure for sustaining growth in all the sectors of the

economy

Allowing foreign investment in more areas.

Effecting fiscal consolidation and eliminating the revenue deficit through revenue

enhancement and expenditure management.

Some regard globalization as the spread of western culture and influence at the expense

of local culture. Protecting domestic culture is also a challenge.

Global corporations are responsible for global warming, the depletion of natural

resources, and the production of harmful chemicals and the destruction of organic

agriculture.

The governmentshould reduce its budget deficit through proper pricing mechanisms and

better direction of subsidies.

Empowering the population through universal education and health care, India must

maximize the benefits of its youthful demographics and turn itself into the knowledge

hub of the world through the application of information and communications technology

(ICT) in all aspects of Indian life although, the government is committed to furthering

economic reforms and developing basic infrastructure to improve lives of the rural poor

and boost economic performance. Government had reduced its controls on foreign trade

and investment in some areas and has indicated more liberalization in civil aviation,

telecom and insurance sector in the future.

The lesson of recent experience is that a country must carefully choose a combination of

policies that best enables it to take the opportunity - while avoiding the pitfalls. For over

International Journal of Global Business, 5 (1), 1-16, June 2012 15

a century the United States has been the largest economy in the world but major

developments have taken place in the world economy since then, leading to the shift of

focus from the US and the rich countries of Europe to the two Asian giants- India and

China. Economics experts and various studies conducted across the globe envisage India

and China to rule the world in the 21st century. India, which is now the fourth largest

economy in terms of purchasing power parity, may overtake Japan and become third

major economic power within 10 years.

Conclusion

For those who predicted otherwise, India is one of the fastest growing countries today. Its

population which was once the most talked about subject has actually turned the tables for India.

With a host of economic advantages, a well educated and young population India is all set to rule

and give the superpowers a run for their money.

As far as the economic scenario is concerned India is surely on a roll. The last twenty

years have really proved extremely beneficial for India. The country now stands only after Brazil

as far as GDP ranking is concerned. India has replaced Russia and grabbed the second position in

the global forefront mostly due to the strategic planning and huge amount of expenditures on

education in India. India GDP 2011 is expected to cross the 8 percent mark and move to 9

percent GDP growth rate.

India is the second largest populated country in the world sheltering over one billion

people. Although India has not had a striking 10 percent year over year economic growth as its

neighbor China it has still managed to grow at a nominal rate. India's GDP growth has been slow

but careful.

According to trade pundits India will take the third position as Far as GDP growth in

concerned by 2020 replacing Germany, the UK, and Japan. Only United States and China will be

ahead of it.

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