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It is heartening to observe a movement away from the glib posturing for or against the process of globalisation. It is, after all...

Written by Dhanmanjirisathe

June 17, 2007 12:00 AM IST

5 min read

It is heartening to observe a movement away from the glib posturing for or against the process of globalisation. It is, after all, a very complex process affecting very many things in different and unexpected ways. It is increasingly being accepted that much of the benefits of globalisation depend on how it is handled. The responses of the 8216;entrenched interests8217; play a dominant role as the experience from countries as disparate as Russia and Ghana shows us. We can ignore these examples only at our peril.

India now has the experience of almost 15-16 years of 8216;officially accepted8217; globalisation. However, in the pre-1991 period, India did engage with globalisation, although it was not regarded as such. The first time this happened was during the Green Revolution. As the scarcity of food grew by the mid-sixties and prices rose sharply, the Government of India had to think up new strategies. One way was to seek a technology upgrade and this meant looking at the advanced economies. India did not have the required knowhow and therefore the technical skills and high-yielding varieties had to be imported from the advanced, 8220;capitalist8221; economies. The government decided to allow seeds to be imported. The West helped us because it was widely believed then that if the food situation in India worsened, there was the distinct possibility of a communist revolution. The 8216;real8217; revolution, in fact, was the rise in food production and improvement in the conditions of some, if not all, farmers. When some of us now oppose the import of seeds and technology, it would do us good to remember the Green Revolution experience.

The second episode dealt with the globalisation of the labour market. In the early seventies, as the oil prices soared by more than four times, the Gulf economies experienced a boom. This led to a surge in the demand for skilled and unskilled labour. It is intriguing to note that while India was definitely following an inward-looking policy then, there was no bar on the movement of labour. What could be the reason for so much of 8216;openness8217;? In the fifties and the sixties, the elite was already sending its children to the UK and the US. They first went for higher education and then, invariably, stayed on. Thus, there was no bar on the movement of educated labour 8212; even though the government had given education at almost zero cost to these young people and there was a scarcity of skilled labour within the country. Probably this was because when the demand from the Gulf economies came, it was perceived just as an extension of the earlier movement of labour and was therefore allowed. While the movement of labour to the advanced economies did not help the Indian economy in any way, movement to the Gulf led to a surge in remittances. These continue to be a strong component of India8217;s forex earnings today. Whatever may be the reason, India took the opportunity available in the Gulf economies and benefited from it. It is important to note that there was nothing obvious about this then. Many economies like China, the erstwhile USSR, all the Eastern European economies and some Latin American economies, although similarly endowed in terms of labour as India was, did not take advantage of this boom. This experience in the movement of labour has stood us in good stead 8212; the issue has assumed significance at the WTO negotiations.

The third episode involving globalisation deals with the policy, followed since the mid-eighties, of allowing imports of computers freely and keeping tax rates on them very low. This is an example of technology being freely allowed in and the private sector allowed free play. In this case, the government did not interfere by putting a cap on the size of the company, the number of its employees, the manner in which it chooses to shut down, and the like. The results of this policy are there for all to see. The software industry has continued to boom and has contributed to growth of output, employment and forex earnings.

All this shows that India experimented with globalisation before 1991 as well and it policies were in no way pristine and inward-looking. India took advantage of some opportunities and lost others. It gained in some cases and floundered in others. The point to note, however, is our inability to develop labour-intensive, light manufacturing industries 8212; something that South Korea and China succeeded in doing.

We need to look at our record of globalisation. It helps us in identifying continuities where they exist, or starting afresh where they do not.

The writer is professor and head of department of economics, University of Pune

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