Globalisation and The Indian Economy notes

Globalisation:

The way in which the world economy is integrated in the modern world is globalization. Take example
of Microsoft. Microsoft is having its headquarters in USA. This company is getting part of its software
developed in India and several other countries. And Microsoft’s software is being used across the
world. Another example can be Ford motors based in USA. Ford is having manufacturing plants in
Chennai and cars manufactured in Chennai go for sale in other countries. Moreover, company may be
getting gear boxes produced in some other country, seat belts from a different country, lights, rear view
mirrors in some other nation by some other company. Almost all the components get supplied by
various vendors to the Ford motor, which assembles them to make the car.

All these activities help in generating employment opportunities across the world. This in turn affects
the world economy. You can think of various activities in the step of final production of a product or a
service which take place around the world at different locations. This results in interdependence of
national economies around the world.

Development of Globalisation

Since early history global trade has been connecting mankind in myriad ways. Silk route of early
history helped in connecting Asia from the rest of the world. This trade route not only facilitated
movement of goods but also movement of people and ideas. If zero traveled from India to rest of the
world then western clothes came to India. Nowadays the way we relish eating pizza or noodles, people
abroad are big fans of the Indian curry and chicken tikka.

Early phase of globalization involved export of raw material from Asia and import of finished products
from Europe. But from mid twentieth century things began to change.

During mid to late twentieth century certain company’s became multinationals as they spread their
economic activities to various parts of the world.

Causes of Globalisation:

Need of Cost Cutting: Suppose a company is having two options to get a particular work done. The
first option is to get it done in the home country but cost involved will be higher. Next option is to get it
done in a different country at a lesser cost. Obviously any company will prefer the second option.
 Labour cost and cost of certain raw materials are cheaper in India, Malaysia, China and Taiwan. This
results in reduced cost of production, which will result in better profit for the company. So you get a
computer with certain parts manufactured in Taiwan or Malaysia, processor manufactured in India and
software supplied from USA. The final product may get assembled in the market where it will be
ultimately used.

Need to find newer markets: If home market’s consumer base has purchased a product and needs
no more of it or little bit of it, then the company has to plan to increase the business. This can be done
by finding newer markets with new consumer base. Especially in today’s scenario when India and
China constitute about one fourth of the world population, any company which wants to get more
business can’t ignore these two markets. Try comparing it with your city or village. If vegetables
produced in a village can only be sold in that village then it may not find many customers, resulting in
low price and may be wastage of vegetables. To get a better price from large customer base the
village vegetable grower needs to move to cities.

Stimulus for Globalisation:

Earlier countries imposed heavy import duties to restrict goods from outside and to promote local
industries. These were part of deliberate trade barriers. But WTO (World Trade Organisation)
convinced all member nations to reduce trade barriers. WTO believes in unrestricted economic
opportunity across the world. In India after 1991, liberalization policies were being followed resulting in
MNCs setting up shops in India. The result is for everybody to see. Earlier car meant an Ambassador
or a Fiat and two-wheeler meant a Bajaj Scooter or Rajdoot Motorcycle. Now people have various
options for car and two wheelers.

Results of Globalisation:

Better Employment Opportunities: At present India is the leader in BPO sector. BPOs provide
backoffice support to many MNCs. A customer calling in USA to sort out his problem may be talking to
a call centre employee in Gurgaon. Because of growing economic activities many new centres of
economic activity have developed in India. These are Gurgaon, Chandigarh, Bangalore, Hyderabad
and Meerut. Earlier Mumbai, Chennai, Kolkata and Delhi used to be major economic centres.

Change in Lifestyle: Eating habits have changed dramatically. Now you may be eating Kellog’s corn
flakes for breakfast and Aloo Tikki Burger for lunch. You may be wearing a Levi’s jeans and if you are
having a BPO employee as neighbour then you may have listened his accented English.
 Uneven Benefits of Development: For every MNC executive there is a larger number of rickshaw
puller and daily wage earner. There are still millions who are unable to get two square meals in a day.
We still hear news of farmers committing suicide in Maharashtra and Karnataka.

Unfair Means Adopted by Developed Countries: Developed countries still give huge subsidies to
their farmers and impose heavy trade barriers. In the bargain developed nations don’t get the desired
benefit out of WTO negotiations.

Conclusion:

Globalisation is a reality which is here to stay. Globalisation has given more benefits than problems.
The economists and policy makers of the world need to fine tune their strategy so that benefits of
globalization can reach the masses. The ultimate success of globalization can only be realized when it
helps achieve all the parameters of development. These parameters or goals of development are not
only about monetary income, but also about better healthcare, education, security and overall quality of
life for all.

VArious ways By which MNCs set up or control production in other countries

Set up production jointly with some of the local companies. Joint production provides
money for additional investment and latest technology for production.
To buy up local companies and then expand production.
Place orders for production with small producers.
By setting up partnerships with local companies, by using the local companies for
supplies, by closely competing with the local companies or buying them up, MNCs
are exerting a strong influence on production at these distant locations. As a
result, production in these widely dispersed locations is getting interlinked.

Foreign Trade and Integration of Markets

Exchange of goods – purchase and sale – across geographical boundaries of the

countries.
Goods travel from one market to another.
Choice of goods in the market rises.
Prices of similar goods in the two markets tend to become equal.
 Producers in the two countries closely compete against each other even though they
are separated by thousand of miles. Thus foreign trade results in connecting the
markets or integration of markets in different countries.

Trade Barriers and its importance

Various restrictions which are used by the government to increase or

decrease Foreign Trade.
Government uses trade barriers to increase or decrease Foreign Trade and to decide
what kinds of goods and how much of each, should come into the country.

Special Economic Zones

Setting up of industrial zones by the central and state governments to attract Foreign
Companies to invest in India which have world class facilities, electricity, water, roads,
transport, storage, recreational and educational facilities.

Impact of Globalization in India

Greater competition among producers – both local and foreign producers has been of
advantage to consumers.
There is greater choice before these consumers who now enjoy improved quality and
lower prices for several products.
Foreign investment has increased.
Increased competition has encouraged top Indian Companies to invest in
newer technology and production methods and raise their production standards.
Globalisation has enabled some large Indian Companies to emerge as Multinational.
Created new opportunities for companies providing services particularly
those involving Information Technology.

Important Questions

1. What are the various ways in which multinational companies set up, or
control, production in other countries?
2. What is Foreign Trade? How does Foreign Trade lead to integration of markets across
countries?
3. What are trade barriers? Why does Government uses Trade Barriers?
4. What are special economic zones? Why is the government setting up special economic
zones?
5. What is the impact of Globalisation in India?

Notes of Ch 5 Consumer Rights|

Class 10th Economics
0

Study Material and Notes of Ch 5 Consumer Rights Class 10th Economics

Topics in the chapter

• Introduction
• The consumer in the market place
• Consumer movement
• Consumer rights
• Taking the consumer movement forward

Introduction

(i) Issue of consumer rights.

(ii) Unequal situations in a market.
(iii) Poor enforcement of rules and regulations.
(iv) Consumer protection councils.
(v) Consumer organizations.
(vi) Consumer court.

The consumer in the market place

People participate in the market both as producers and consumers. As a producer they sell their goods and
provide services to the needy people.

Producers provide service in the sector like, agriculture sector or primary sector, secondary sector or
manufacturing sector and service sector or tertiary sector.
As a consumer, a person purchase goods and services that he/she need.

Consumers exploited in the marketplace by the producers in various ways. In informal sector, borrowers are
exploited by the moneylenders.

People borrow money from moneylenders at high rate of interest and also forced by the moneylenders to pay
the loan timely.

In unorganized sector, people have to work at a low wage which is not fair.

Sometimes, consumers get less weigh than what they should get and the producer also charged the price
which is not maintained.

Some big companies are manipulated the market in various ways like, by passing false information about the
product through media and other sources to attract consumers. So, there is a need for rules and regulations to
ensure protection for consumers.

Consumer movement

There are no for rules and regulations to ensure protection for consumers. The consumers are exploited by the
producers.

For example, if a consumer is not satisfied with the product of any brand or shop. Then he/she avoid and stop
to purchase from that particular brand or shop.

In this case, all the responsibilities are shifted to the consumer for purchasing of the products.

When the consumers are dissatisfied with unfair rule and regulation for purchasing of goods and services, then
the consumer movement is arisen.

Here, unfair rule and regulation is indulged by the sellers. It is a type of social force.

During 1960, Rampant food shortages, hoarding, black marketing, adulteration of food and edible oil gave birth
to the consumer movement in an organized form in India.

This organization receives financial support from the government for creating awareness among the people.

Till the 1970s, consumer organizations formed consumer groups with increasing number of consumer
organization.

This group found to look into the malpractices in ration shops and overcrowding in the road passenger
transport.

In 1986, a major step was taken by the government of India in the form of the Consumer Protection Act 1986.

Consumer rights

(i) Safety is everyone right

There are many goods and services which are hazardous for the health and property. So, that goods and
services require special attention to safety. Consumers have the right to be protected against the marketing of
goods and delivery of services which are hazardous for the health and services. Producers also need to follow
the required rules and regulations for safety of consumers.

(ii) Information about goods and services

Manufacturer of goods and services should have maintained information about the ingredients used, price,
batch number, date of manufacture, expiry date, the address of the manufacturer, directions for proper use’ and
information relating to side effects and risks associated with usage of that particular goods and services.
Consumers have right to know about the details of that particular goods and services that they purchased.

Right to Information Act

“Right to Information Act”, was enacted by the government of India in October 2005. The objective of this act is
to ensure its citizens all the information about the functions of government departments. There are three
reasons for formation of “Right to information”.

(i) When choice is denied

When a consumer is not satisfied with Purchasing of a particular goods and services then he/she have right to
deny the choice.

(ii) Where should consumers go to get justice?

When a consumer deny the choice. Then he/she has the right to seek redressal against unfair trade practices
and exploitation. She/he has the right to get compensation depending on the degree of damage. For
compensation she/he has to go consumer forums or consumer protection councils. This organization guide
consumers on how to file cases in the consumer court.

A three-tier quasi-judicial machinery at the district, state and national levels was set up for redressal of
consumer disputes, under Consumer Protection Act.

The district level court deals with the cases involving claims upto Rs 20 lakhs, the state level courts deal with
cases between Rs 20 lakhs and Rs 1 crore and the national level court deals with cases involving claims
exceeding Rs 1 crore.

When a case is dismissed in district level court, then consumer can appeal in state and then in National level
courts. This act provides “Right to Represent” to the consumer.

(iii) Learning earning to become well-informed consumer

For well-informed the consumer about their rights, Consumer Protection Act has led to the setting up of
separate departments of Consumer Affairs in central and state governments.

Taking the consumer movement forward

Indian Parliament enacted the Consumer Protection Act on 24 December 1986. After that every year 24
December is celebrated as the National Consumers’ Day.

There are 20-25 are well organized and recognized consumer groups in India out of 200 consumer groups.
After the enactment of “Consumer Protection Act” in India consumer awareness is spreading but slowly.

The consumer redressal process is becoming cumbersome, expensive and time consuming.
(i) Consumers are required to engage lawyers.
(ii) In most purchases cash memos are not issued hence evidence is not easy to gather.
• ISI and Agmark
ISI and Agmark is quality certification for many products like, LPG cylinders, food colours and additives, cement
or packed drinking water. It is compulsory for the producers to get certified by these organizations.

• Hallmark
Hallmark is quality certification for jewelry. This mark is issued by Indian Standard Organization which is
located in New Delhi.

• ISO certification
International organization for standardization is quality certification which indicates companies, goods or,
institutions having this certification meet the specific level of standard. The headquarter of ISO is situated in
Geneva, which was established in 1947.