HAS GLOBALIZATION LED TO CONVERGENCE IN THE ECONOMIC ROLE OF THE STATE ACROSS THE WORLD?
In this era of globalization, each nation state wishes to advertise itself as a promising candidate, especially to independent first world countries. Thus, states across the world are dawning upon themselves the responsibility of combating issues like the partial balance of payments and trade balances. It is widely accepted that globalization requires efficiency and hence the involvement of private partners which can be made possible by incorporating the virtue of minimal state intervention.
Since each country wants to bolster its relations with prosperous countries across the globe, providing impetus to private spending is increasingly becoming the economic agenda of states. Some states might provide subsidies and financial relaxations to further private companies, while others might hand state owned assets and exploitable property to private interests. Though nation states might adopt different paths, the ultimate goal remains the same, strengthening the clutches of privatization.
That pursuing exclusionary policies (mostly aimed at the private sector) only broadens the loopholes in the economy has been seen as a tried and tested postulate. States around the world have learned lessons from the economic floundering tendencies of the Pink Tide which led to the downfall of Soviet Union in the late 20th century and the more recent humanitarian crisis surfacing in Venezuela. Therefore, to extend partnership to the world hegemons, nation states have adopted a flexible approach to free markets opening doors to more welcoming fiscal and monetary policies.
Analyzing the trajectory of the economic role of the Indian state from 1991, till date the trend not only points at the accelerating participation of the private firms in maximizing India’s share of globalization but also the diversion of various resources at the dispense of the government. Going beyond physical resources to include diplomatic negotiations and political charisma devoted to helping achieve maximum global partners.
The tradition of Indian leaders traveling across seven seas to promote interests favourable to the country has been in place ever since the Congress empire was in power. The Modi government has only catapulted the cult of inviting world leaders like Barack Obama, Vladimir Putin into Indian territories as homecoming warriors and embarking on world tours as a means to accomplish the larger aim to cement India’s economic position in the globalized world.
Thus, the economic role of states across the world is tapering towards optimizing privatization with the intention to maximize their respective gains from globalization.
HAS THE STATE BEEN 'SHRUNK'?
Ever since the economic reforms of 1991 (liberalization, privatization and globalization policies) the Indian state has shrunk to accommodate the expanding private sector.
Amidst foreign exchange crisis and rising inflation, India learned the importance of openness to world trade. The public sector has facilitated the large looming figure of the private firms by either disinvesting the government’s equity in public sector undertakings or opening the previously closed areas to private participation. For this purpose, a plethora of areas were examined to test their potential performance if brought under the folds of privatization.
The policy makers realized that emboldening the Indian Economy to bring it at the pace of other fast developing and even developed economies, it had to put a significant portion of the matter in private hands.
There was a decision that privatized companies would start by investing in quality infrastructure facilities since it was accepted as a crucial indicator of a country’s progress and India was lagging far behind in this area. Furthermore, since the government did not have enough resources, areas like transportation, banking services, metal industries and broadband communication were explicitly brought under the private vicinity.
Fast forward into the 21st century, the Indian government undertaking policy initiatives to encourage private participation (like, Make In India) and loosening its hold in the provision of major facilities has become the undercurrent of India’s status as a country attracting desirable Foreign Direct Investment (FDI).
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