Introduction
Needless to say, people of today have changed the traditions and lifestyle of the current world immensely! The hot topic of today called Globalization is still gaining momentum. But, what actually is globalization? Let’s put some light on it to understand and grasp the concept quickly.
In lay man terms, Globalization is a normal parlance that can be termed as a process that indulges interaction and integration of the people, governments, corporate and companies of different nations across the world. It is a very simple process which is driven due to international trade, business and investment that is backed by information technology. Globalization is quite a wide term that has a great impact on the surrounding environment, culture, political systems, as well as on the economic, social development and prosperity of a nation. Not only this, but it even has its shadow on human physical well-being as well as the current societies exiting in the world!
Globalization, in short, affects everyone and everything as it is a process of international integration that comes into existence due to the interchange of views, ideas, culture and even the products of people spread all around the world! Major factors that contributed to globalization can be listed down as below:
Advancement in transportation
Development in the sector of telecommunications
Development of infrastructure
Rising demand and utility of the Internet – that is information technology
The main credit for globalization being spurred tremendously in today’s time goes only to the technological advancements in the areas of communication as well as transport. Other major reasons includes inter-state and inter-nation relations, emergence of multi-national companies, changes in the investment modes, climate and opening up wide gates and opportunities for international trade as well as investment.
Devoid of the size of the nation – either a small country or a big one, developed or developing one – globalization has now become the need of each and every one! Started back in 1980, the most enthralling aspect of it is that, even the poor countries joined their hands together in order to gather widespread potential opportunities that can lead them to a better position as well as in the improvement of the economy. Thus, they formed a huge labor among themselves to break into the world markets and contribute their maximum in manufacturing various products as well as services.
In one sentence – to frame the effect of globalization, it can be said that its initiation led to rise in the manufactures from less than 25 percent to 80 percent. The major contributors to this open ended word - globalization are India, Brazil, China, Hungary, and Mexico!
Globalization
As far as the concept of Globalization is concerned, it is not at all a newer concept for the country as well as the whole world. As per the statistics, it has been known that India’s share comes to about 32.9 percentage of share of the GDP of the world along with a noted percentage of 32.5% of the total population of the world.
Gone were the days were India was tagged as an under –developed country. Actually, it never was! The only misfortune that led to its failure is the services being exploited through India on a large scale. But now, it has been quite long, that India is self reliant and is engrossed in the export of a variety of products, commodities as well as services to the overseas countries all across the world. Due to this, globalization is not at all considered to be a new concept for the country, but it is an age old thing that started way back! Globalization, for any one, can be termed as a powerful weapon or a force that can contribute immensely for the total development of the country as well as its economy by undergoing transformation of every age old traditions to the use of newer and advanced technologies. It is a messiah in showing the path to millions of poor – guiding them towards attainment of better economical world by rendering them with all the modern facilities and innovations of the world.
A famous author Branson defines globalization as: "Globalization is the process by which geographic constraints on economic, social and cultural arrangements recede, thus increasing our global interdependence."
An Impact of globalization on the economy of India
Globalization is a new buzzword in current times across the entire globe which have served in either ways to the world – it means, the advent of globalization has its own pros and cons! Taking about India, it faced and experienced major changes in the early set of 1990, wherein there was a noticeable change being implemented in the economic policies of the nation. The well known economic reforms famously known all the over the world as LPG - Liberalization, Privatization and Globalization were especially designed in order to target the Indian economy and transform it to one of the fastest growing economy of the world. not only this, the other target that was deemed with this globalization was creating a niche of the Indian economy in the international market and making it as a successful globally competitive nation.
There were many policies and reforms being introduced in the early period of 1990 with a view to change the entire picture of the country in front of the whole world. Some of these globalization and liberalization strategies included in the implementation programme of globalization are listed below:
Devaluation: The first and the foremost step which was taken for globalization was devaluating the Indian currency. As per the data, the Indian currency marked devaluation by about 18 to 19 percentage against the currencies of all major countries which were termed to be powerful developed nations of the world that had widespread operations being carried out in the international foreign exchange market. Particularly, this first step of devaluation was undertaken as a part of globalization program in order to resolve the prolonged crisis of Balance of Payments (BOP) of the nation.
Disinvestment: the next step and the important one were to sell all the major public sector undertakings to all the private sectors of the nation! Privatization was the next plan that can lead to a better enhanced economy and an independent state! Thus, disinvestment was undertaken for the betterment of the country.
Opening up the door for foreign direct investment: the third strategy adopted by the nation as a part of improving its state was to increase the number of foreign direct investments that actually happened automatically because of the presence of transparent foreign investment regime. This entire thing directly opened up almost every activity to foreign investments without any limits framed in carrying out the foreign ownership!
Removing all the quantitative restrictions from the imports that were imposed earlier and was been practiced since last many years.
Thus, these were some of the strategies that were implemented to see the better side of the prosperous India. But, as every coin has two sides, similarly, even here, there is a sparkling prosperity on one hand as well as stinking poverty on the other. India has observed both – the best times as well as the worst times as people have tasted both – the success and even the failure.
It goes like, for the people who were rich, educated, with a better standard of living – for them globalization proved to be a boon. Out of all, the sector that was benefitted most out of globalization was information technology i.e. IT sector. But at the same time, the people who tasted the failure, who were financially not sound, and were socially deprived – it led to the emergence of new risks for them!
Following were the significant changes – rather the dark side of globalization on Indian economy.
It led to increase in the numbers of non-persistent poor, who, then had to work too hard to escape poverty and to make both hands meet.
Talking about government and politics, from elected local institutions, the power shifted to unaccountable trans-national bodies.
Western perceptions, that gained momentum with the passing time dominated the global media, yet found it difficult to match with the local perspectives of Indians.
Consumerism was encouraged on a grand level even though the major part of the country was experiencing extreme poverty.
Globalization posed a threat to cultural as well as linguistic diversity of the country.
About small and medium sized enterprises in India
India is a country that has amalgamation of each and everything! There is nothing one thing in particular over here. Similarly, talking about the enterprises over here, it has all – the large scale, the medium ones and even the small sized enterprises. As per the statistical data, it can be seen that a major portion i.e. 95% of the firms belonged to the small and medium sized enterprises! It is quite amazing to know that 60 to 70 % of the employment opportunities of the country are generated through these small and medium sized firms. Not only this, it is even known that these firms have a large share of contribution in creating new jobs in OECD economies - a sector that consists of several strengths along with weaknesses and hence entails special attention through this policy response.
Wide reduction in economies of scale was noticed in many activities – all because of the introduction of various innovative technologies apart from the plan of globalization. This reduction led to the augmentation of the budding inputs made by the small and medium sized firms.
For those who understood that there is an acute need of upgrading the skills and techniques in managing the companies and firms, tasted success as they found out their potentiality and diversified their activities on the basis of the involvement of smart innovative technology.
Seeing the wide scope of the small and medium sized industries in India, the government also should impose policies and measures in their benefits. Moreover, they should take initiative of providing proper best facilities to these small and medium sized firms like:
Strong financing help
strong infrastructure facilities
proper source of information – related to international market
latest technology
Effect of globalization on banking services in India (the small and medium sized banks)
As said earlier, each and every sector is affected by globalization, let us see the effects of it on the banking sector i.e. the small and the medium sized banks of India.
Globalization, in other way round, can be described as an entire globe being converted into single unit and taking decisions for the welfare of mankind and the entire world. Due to globalization, it became possible to have free movement of goods, services and capital in any corner of the world without facing any type of hindrance and difficulties as before!
Along with many positive aspects of globalization, one major benefit that was noticed because of its introduction was a rapid change in the life style and standard of living among the people of India as well as them considering the entire nation as one single unit.
Many small and medium sized banks were launched in the mid of the 1980's by a joint collaboration and decision of the RBI and the Rangarajan Committee Report! This was done in order to facilitate the modern computerized services to the people in areas of banking. The major motive was to promote competition as well as to offer the people with the latest developments of technology. At initial stages of this computerized banking, a huge opposition was faced from many sectors, but later on, the facilities changed the perception of people that led to acceptance of the presence of e-banking. Gradually, India rose to become a super power in the world of information technology as every individual understood the importance of modern computerized services in every sector. Now, in the 21st century, the scenario is like, every normal activity of anyone’s life has the presence of computers in it!
The most important security issues which are being faced by the small and medium sized business due to globalization!
Today, because of the presence of globalization, the small and medium sized business is using internet and all the modern technological advancements in order to cater their existing clients as well as attracting the new ones. Thus, at this stage, it becomes mandatory for them to provide with high level of security in the system! Looking to its need, various organizations like Cisco Systems provide their top level security solutions to maintain the privacy and security of the small and medium sized firms. The security issues that can pop up in the firm and hinder their development are many! Some of them are mentioned below:
Worms and Viruses: It can pose a high level danger to the firms in terms of security as it has the ability to cause a wild destruction to both: its existence as well as its profitability!
Theft of the information: Hacking is the thing that is quite common nowadays. In normal parlance, it means theft of data of the company that can cause great damage as a whole. The theft of information especially works worst for the small sized firms as they rely on the satisfied customers a lot and it is through their satisfaction that helps the firm to grow in a better and prospective manner.
The business Availability: the security question arises largely when the entire e-commerce operation shuts down because of the attack of Denial-of-service (DoS).
Existing challenges being faced by the Micro and Small Enterprises in India:
Not having enough finance to get the fruits of modern and latest introductions in the technology.
Lack of skilled, knowledgeable expertise in the service sector.
Lack of proper resources that can easily help in adoption of latest technologies
Lack of proper understanding towards the benefits attached with using these latest technologies.
Doubts as well as fear related to security of data and other important information
Improper implementation of infrastructure, including connectivity as well as broadband internet facilities.
Solutions to overcome the barriers identified which are being faced by the Micro and Small Enterprises in India:
Trying to avail the latest technologies at an affordable cost and creating proper resources to implement the same in the most fruitful manner.
Creating more number of finance options for these firms at lower interest rates so that they can buy the newer technologies introducing in the market.
Spreading more awareness regarding return on investments.
Key Recommendations:
Proper implementation of the policies can help the SME’s to grow by leaps and bounds.
Providing reasonable market flexibility along with fiscal incentives can really give a spark to these SME’s.
Encouragement and appreciation - a well needed aspect for every one! Government should encourage and fully support to the activities of these SME’s. They should even appreciate to the efforts of these firms that contributed highly in changing the economy of the country.
Continuous focus on profitability aspect can become one of the most potential sources for curbing the internal finance problems of the firms.
Conclusion:
Thus, the above points clearly depict the challenges and the problems faced by the small and medium sized enterprises as well as the pros and cons, effects of globalization and the measures to be taken for enhanced growth and better economy of the country!
References:
Press releases (2012). Intuit and ministry of micro and small enterprises reveal research that uncovers barriers to technology adoption. 7 August 2012. Retrieved from http://www.intuit.in/html/msme-intuit.html
Jais V. (2012). Exploring small and medium businesses in India. 6 November 2012. Retrieved from http://ezinearticles.com/?Exploring-Small-and-Medium-Businesses-in-India&id=4797141
Manik S. (2012). Small and medium-sized enterprise and SAP contribution to Indian market. 6 November 2012. Retrieved from http://ezinearticles.com/?Small-and-Medium-sized-Enterprise-and-SAP-Contribution-to-Indian-Market&id=307588
Viswanathan G. (2012). Globalization- Challenges and opportunities. 6 November 2012. Retrieved from http://ezinearticles.com/?Globalisation---Challenges-And-Opportunities&id=1092581
General Economics (2012). Liberalization, Privatization, Globalization. 6 November 2012. Retrieved from http://220.227.161.86/16785Liberalization_Privatization_Globalization.pdf
