Case Study on Effects of Neoliberal Globalization in India - 3300 Words

Case Study on the Effects of Neoliberal Globalization in India (Essay Sample) Content: NameTutorCourseDateNeoliberal GlobalizationIntroduction Neoliberal globalization can be defined as integration policies involving segregation of economic affairs and ethical principles, deregulation and privatization of government companies and corporations, promotion of self-individualism and self-interest as well as separation of individual responsibility from public goods. This later on creates inequality and discontentment in the nation where it is practiced. In India, neo-liberal globalization has seen the country experience class biased economic growth. Therefore, the effects of neoliberal globalization in India are negative and have brought nothing but chaos in that particular nation.Case Study on the Effects of Neoliberal Globalization in IndiaFinancialization of the Indian Economy Liberalization started in the early 1980s but most of its effects started being seen as soon as India borrowed money from the International Monetary Fund and the World Bank in 1991 . The loans came on condition that the nation starts using neoliberal economic policies. Apparently, it was supported by the Indian elite. The neoliberal global policies put in place by under Thatcher and other foreign leaders made India be under control of the World Bank and the IMF (Aseem 153). The growth strategies saw India accept the Financial Responsibility and Budgetary Management Act in 2003 and restricted deficit budgets. With that, the public expenditure on education, health, environmental protection, and public housing saw the government take exceptions for boosting business activities rather than focusing on employment for productivity. Trade deficits Moreover, after the reforms, the trade deficit accumulated to $57 billion in the recession from just $6 billion and this constituted 5 percent of their GDP. The liberalization of imports had allowed too much demand to go away from the nations economy (Aseem 157). The deficit became worse five years later with the toll risin g to 7.8 percent of the nations GDP. The foreign exchange reserves had just about $300 billion during the start of the millennium. Indias reserves later on became dependent on speculative capital purely owned by foreigners and Non-Resident Indians. Investment Issues The global finance affected the real domestic economy to the point that production of goods and services started being relegated to a lower priority. Therefore, the centre of gravity of Indias economy moved from real production of goods and services towards finance. In the period 2007, Indian markets yielded a 33 percent turn over to the nations investors (including foreign ones). However, this was the time that Indians were suffering most since this boom brought profits to the upper elites and they in turn deprived many needed sectors of the funds (Aseem159). The liberal tax regimes on the other hand did not tax the dividends to attract foreign investment and this led to greed and serious industrial capitalism in the na tion. In effect, the nations secondary market transactions began growing in volume compared to the primary transactions. The Governments Budget Indias budget focus shifted from maximization of primary surplus to that of minimizing the primary deficit on the nations budget. In fact, the country faced so much pressure from the IMF and the World Bank that policy makers had to deal with a 1-4 percent trade deficit per year due to the balance budget regime (forcing them to rely on the World Bank and the IMF and indirectly suffering from the banks market control). No policy that could slow down investors financial transactions was ever put in place due to the globalization and neo liberalization of the nations funds (Aseem 167)Imbalanced Growth, Stagnation of Real Wages and Jobless Growth In India, it was expected that the nation face an increase in employment rates in the growth rates because this was the case in other countries. It is important to note that the opposite happened. In the year 2006, the employment growth rate was negative (-0.3), whereas in 2005 it was approximately 7 percent and then plunged deep into the negatives when the recession started. In the pre-reform period, the growth rate was quite acceptable with the period 1983-1994 facing an increased growth of over 4 percent to 5 percent each year. In 1991, the total employment was 26.8 million individuals and of these, 7.9 million were in the private sector. In 2006, the total work force was approximately 27 million people but this time, 8.8 million of these were working in the private sector. This are the effects of neo liberalization policies (Aseem 172). Liberating labor markets is unlikely to yield more employment. In addition, the rate of growth of employment was always above the population growth after the reforms were introduced. Rejection of Agriculture Another damage caused by neoliberal globalization was the rejection of the millions of small-scale farmers and prioritization of the alrea dy wealthy few corporations. In fact, the government was failing in its duty under the countrys constitution. Consequently, many farmers were under pressure of decimating. Most developing economies usually depend on agriculture. Given that India is a developing economy and the fact that agriculture is dropping by the highest rate, there is likely to be massive destruction of traditional livelihood in the next decades to come. This leaves India to a trap since there are literally no opportunities for food companies to make profits while controlling the nations food chain and bureaucrats and politicians do not have their usual opportunities to do so. Resistance to Neoliberal Globalization in India The global neo-liberalization did not bring any positive conditions to the people of India. Therefore, resistance was underway. The political parties in that nation are divided by ideology regarding their support base. Two out of the four political parties in India were responsible for major ity of the resistance efforts. They are the Communist Party of India-Marxist (CPIM) and the Communist Party of India (CPI). These two parties have strong organizations and a large support base from the public sector employees. Other peasant organizations, community organizations, and civil societies were also responsible for part of the resistance movements. The very first anti-privatization movement was against the Enron Corporation Project in Maharashtra. It began immediately the corporation started to set up its company in 1992 (Kanchan 427). The resistors were the Bombay Environment Action Group, followed by consumer groups, and subsequently protection groups and citizens. All these groups formed the Enron Virodhi Sangram Manch (Forum for Struggle against Enron Umbrella Movement). They won and Enron was compensated by the government. On March 2006, approximately 10,000 or more people marched to parliament to protest against privatization of electricity (Kanchan 429). They were under the umbrella of the National Coordiation Committee of Electricity Employees and Engineers. Punjab State Electricity was about to be privatized and people resisted against this in 2010. Narmada Bachao Andolan/Save the Narmada was the first major movement in India and questioned a lot into the neoliberal global policies. India has always resisted the neoliberalist policies. In fact, resistance started soon after it had been signed into the WTO in 1991. Farmers, villagers, fishermen and many other people resisted against the opening up and resultant subsidization of their crops to the outside world. Most of the protests were against multinational corporations that were entering the nation. Some of the strongest resistance organizations were the Karnataka State Farmers Organization, the Indian Farmers Union, the Organization for Saving Agricultural Land, and many others. They were led by CPI and CPIM and formed the majority of the parties supporters. Most of the resistance came f rom the privatization efforts of certain sectors of the economy. For example water, higher education, and the general health care system. Labor resistance movements were also present (Kanchan 431). Organizations such as the Water Workers Alliance has been responsible for the resistance movements when the government sold the Sheonath River to a private company in 1998. The government in this case was publicly declaring that the privatization will be useful in future because there would be diverse use of the water (which was actually false). The organization also spear headed the attempt to privatize water resources in New Delhi and Tirpur. The National Forum in Defense of Education protested against the commercialization and decentralization of the education sector in India. Teachers, students, and non-teaching employees were also part of the protests. Majority of the protests happened in 2010. Majority of the student unions were also amazed by the growing number of private instituti ons, some that were not even chartered. However, while all these protests ensued, there was very little resistance to the privatization of the health care system (Kanchan 431). There has also been a lot of resistance in the wages section. The minimum wages act of 1948 provides for the enforcement of minimum wages and is against the exploitation of workers. However, no matter how many times the Unorganized Workers Social Security Union protests against the minimum wage ceiling, nothing has been done about it. This is because there is general lack of organization strength, improper employee attitudes, and inadequate inspecting staff in that nation. One of the most important resistance efforts is the peasant movement. Peasant movements contribute to about 13 national strikes ag...