Globalization--Still Is The Best Way Ahead
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    • Globalization--Still is the best way Ahead
    Financial Crisis in USA has already taken a large number of economies all over world into distress like a thunderstorm and strong Asian economies like Japan, China also have already become its prey. Previously, the effect was not so much distinct in Indian economy, but by and large and slowly the financial crisis is exposing its ugly face here also. Economic crisis in Asian economies due to global economic turbulence is not a new phenomenon. It happened ten years before also but at that time Indian economy was completely unaffected. During that period, Indian economy was not much linked to the globalized market and that saved us from feeling the heat of global economic turbulence. However, much water has passed since then and Indian economy has become completely globalized with entry of large and large number of foreign players with huge investment. Globalization had brought huge capital in Indian financial and other sectors advancing our economy to a huge extent in a very short period of time. However, the time has changed now completely. The same globalization has brought typhoon in our economy. Now, what is the way ahead? Will we discard globalization?
    It is a general perception that the crisis will affect only the creamy layer in Indian economy. However, unfortunately it is not true. The crisis is first targeting the financial and banking sectors, IT industries and other sectors which were more connected to the globalized world. In these sectors, many young people joined and got immense success within a very short period of time. The job prospects in those sectors have decreased considerably and wide lay-off is also taking place in some cases.

    The effect of lay-off and pay-cuts are spreading other sectors also. Demand is decreasing and it is affecting the automobile and housing sector widely. Visitors in the malls are gradually become scarce; hospitality industry is also gradually feeling the burnt and airlines industry have already felt it since the time of high rise in oil prices. Now, people associated with these sectors have directly become susceptible to the crisis due to decrease in the demand for their service. Though two-third of our population is stilling living on the agriculture, however, agro-production contributes only one-fourth of the gross production of our country. So, the danger is also looming large on our economy.

    he significant outcome from this crisis is that everybody is asking for Governmental control more and more. However, during the high time of economic boom, people were against Governmental involvement in the open economy. But, now, the same people are asking for the Governmental help to come out of the present crisis. In a globalized open economy, it is true that the standard of living of people takes a huge rise. Lot of opportunities comes our way in a globalized economy with lot of inflow of foreign currency. New recruitment opportunities come and make the economy more and more versatile increasing the gross national income and subsequently raising the life of the people. What happens then when the crisis like the present one comes? The multinationals who had made wide investments in the economy want to take back their money. They take the money back in foreign currency to strengthen their position in the global economy. They draw the capital in Indian currency from the market and exchange it in the reserve bank to get the foreign currency. As a result, large amount of Indian currency is absorbed away from the market and as a result the money needed to buy products also decrease a lot decreasing the demand for the products. Sectors like automobile, housing, electronic goods etc are worst affected by these and thus demand for the service for those employed there also decreases a lot. All these occur as a chain reaction.

    What is the Government’s Role in a Globalized Economy? Government has a huge and responsible role to play in the globalized economy. In a globalized economy also, the main weapons to tackle the crisis lie in the Government hand. By cutting the CRR rate to large extent, Government can supply huge capital and can increase the liquidity condition of the market. Apart from this, Government can expend hugely on developing infrastructure and this type of investments increases the liquidity condition of the market to a large extent. These generate the demand for goods as more capital comes in the market. Service for more people are required and thus it becomes possible to minimize the crisis effect to a large extent. Globalization with responsible Government control is a boon for any economy. We cannot neglect globalization but Government should have to be more responsible and tactful in dealing with the crisis when it comes.
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