Globalisation — Impact on India
How the world became one marketplace — definition, advocacy, India’s journey post-1991, fair globalisation pillars, protectionism, deglobalisation, and why the world is now pulling back.
Banky Goes Global! 🌍
Every time you process a foreign remittance, handle an NRI account, or see ‘Made in China’ on your phone — that’s globalisation at work. This chapter explains how India went from a closed economy to a global player.
Why Read This Chapter?
Your branch handles global money every day
Exam Marks
2-4 direct questions — globalisation definition, OECD, protectionism types, fair globalisation pillars. Easy marks!
Career Growth
Understanding global trade dynamics makes you the officer who can handle NRI business, export credit, and forex transactions
Real Life
You’ll understand why iPhone prices change with tariffs, why IT jobs go abroad, and why chai costs more when crude oil rises
How Will It Benefit You?
Real career advantages
What Is This Chapter About?
30-second summary
Key Definitions — Banky Asks, Mentor Explains
Every term explained like you’re 10
Banky’s Understanding: The term refers to the increasing interconnectedness of world economies, cultures, and inhabitants through cross-border trade in goods/services, technology, investment flows, people, and knowledge. WTO defines it as development towards ‘unrestricted cross-border flows of goods, services, capital, and labour force.’ The concept dates to the 18th century but OECD popularised it in the mid-1980s. Formally introduced in India with the New Economic Policy 1991-92.
Banky’s Understanding: The process of reducing dependency and integration amongst countries. Countries are now pursuing inward-looking policies — prioritising domestic production, protecting local industries, restricting imports. Triggered by: Brexit, US withdrawal from Trans-Pacific Partnership, US-China Trade Disputes, COVID-19 pandemic, Russia-Ukraine conflict. As Michael O’Sullivan wrote: ‘globalisation is already behind us.’
Banky’s Understanding: When a government enacts laws to restrict or prohibit international trade, it’s protectionism. Takes 3 main forms: (1) Tariffs (taxes on imports), (2) Import Quotas (limits on quantity), (3) Non-Tariff Barriers (regulations, standards, subsidies). Results: decline in trade, price rise, and necessity of subsidy for protected industries. Some jobs in protected industries are saved, but jobs in other industries are lost.
Banky’s Understanding: Fair globalisation must be supported by 3 interdependent pillars: (1) Economic Development, (2) Social Development, (3) Environmental Protection. It must be fair, inclusive, democratically governed, and provide opportunities to ALL countries and people. The cornerstone: addressing the wants and needs of ALL people, not just corporations. Government measures must safeguard workers’ rights.
Banky’s Understanding: WTO describes globalisation as the development towards ‘unrestricted cross-border flows of goods and services, capital, and labour force.’ This is the most cited definition in exams. Key words: unrestricted, cross-border, goods/services/capital/labour. Remember: WTO DEFINES it, but OECD POPULARISED it (in mid-1980s).
Banky’s Understanding: International trade (exports + imports) as % of GDP: 15.5% in 1991 → 55.6% in 2011 → 37.9% in 2020. The ratio rose sharply after 1991 reforms, peaked around 2011, then declined as GDP growth outpaced trade growth. FDI net inflows: 0.03% of GDP (1991) → 2.42% (2020). India’s gradual and calibrated capital account liberalisation helped protect against external shocks.
Chapter Explained in Simple Stories
So easy even Banky’s nephew understands
🌍 Block 1: How the World Became One Marketplace
Imagine India in 1990: you could only buy Indian-made goods. No foreign cars, no international brands, no imported electronics. Your bank couldn’t do foreign transactions easily. Then came 1991 — India opened up to the world!
What happened? Foreign companies entered India — bringing technology, capital, and jobs. Indian IT companies started serving American clients. Indian farmers could export their produce globally. Your bank got NRI deposits, forex business, and international trade finance. The effects: increased per capita income, better employment opportunities, more options for customers.
International trade jumped from 15.5% of GDP (1991) to 55.6% (2011). FDI went from 0.03% to 2.42% of GDP. India became one of the world’s fastest-growing economies!
🤝 Block 2: The Good, The Bad, and The Fair
The Good: Technology transfer, job creation, economic development, higher living standards, more consumer choices. Your customers now have international credit cards, can remit money abroad, and invest in global markets — all because of globalisation.
The Bad: Not everyone benefits equally. Rich countries and corporations gained more. Workers in some industries lost jobs to cheaper imports. Inequality increased. Small farmers couldn’t compete with subsidised foreign agriculture.
The Fair Solution: Fair globalisation rests on 3 pillars: economic development + social development + environmental protection. Governments must protect workers’ rights, ensure inclusive growth, and safeguard the environment. It must provide equal opportunity to ALL nations.
⚠️ Block 3: Globalisation in Reverse Gear — The World Pulls Back
Something strange is happening: after decades of opening up, countries are now closing down! This is called deglobalisation. Why?
Brexit (UK left EU), US withdrew from Trans-Pacific Partnership, US-China Trade War (massive tariffs both ways), COVID-19 (exposed supply chain vulnerabilities — remember India couldn’t get PPE kits?), Russia-Ukraine conflict (energy crisis, food shortage). All these events showed: too much dependency on other countries is risky.
So countries are now pursuing inward-looking policies — prioritising domestic production (like India’s ‘Atmanirbhar Bharat’), imposing tariffs, and restricting foreign companies. Protectionism takes 3 forms: tariffs, import quotas, and non-tariff barriers. The result? Decline in trade, higher prices, but more domestic jobs.
Exam Angle — Every Testable Point
All facts, numbers, definitions JAIIB tests
✅ Must-Know Facts — Highest Probability
- Globalisation definition: increasing interconnectedness of world economies through cross-border trade, technology, investment
- WTO definition: ‘unrestricted cross-border flows of goods and services, capital, and labour force’
- OECD popularised globalisation concept in mid-1980s (NOT IMF, NOT World Bank, NOT ECB)
- Formally introduced in India: New Economic Policy 1991-92
- Effects on India: increased per capita income, better employment, more consumer choices, agriculture export opportunities
- Fair Globalisation 3 pillars: Economic Development + Social Development + Environmental Protection
- Deglobalisation: reducing dependency and integration — opposite of globalisation
- Protectionism: 3 forms — Tariffs, Import Quotas, Non-Tariff Barriers
- Protectionism results: decline in trade, price rise, subsidy for protected industries
- Anti-globalisation triggers: Brexit, US-TPP withdrawal, US-China Trade War, COVID-19, Russia-Ukraine
- India’s trade openness: 15.5% of GDP (1991) → 55.6% (2011) → 37.9% (2020)
- FDI net inflows: 0.03% of GDP (1991) → 2.42% (2020)
- India’s capital account liberalisation: gradual and calibrated — helped protect against external shocks
- Political stability is NOT a benefit of globalisation (exam trap!)
- Increased capital account convertibility is NOT a protectionism measure (exam trap!)
📝 Previous Year Questions
Memory Tricks That STICK
Lock every fact permanently
🧠 Trick 1 — Who Did What?
🧠 Trick 2 — Fair Globalisation Pillars
🧠 Trick 3 — 3 Forms of Protectionism
🧠 Trick 4 — India’s Trade Journey
🧠 Trick 5 — Anti-Globalisation Events
🧠 Trick 6 — Political Stability Trap
Visual Summary — Chapter Map
Entire chapter in one diagram
Flash Revision — Last-Minute Cards
Read these 10 minutes before exam
⚡ Chapter 6 Complete — Globalisation — Impact on India
- Globalisation = increasing interconnectedness of world economies through trade, investment, technology
- WTO DEFINES it, OECD POPULARISED it (mid-1980s) — exam tests this distinction!
- India formally adopted globalisation with New Economic Policy 1991-92
- Effects: increased PCI, better employment, more consumer choices, agriculture export opportunities
- Fair globalisation: 3 pillars — Economic + Social + Environmental development
- Deglobalisation = reducing dependency — triggered by Brexit, US-China war, COVID, Russia-Ukraine
- Protectionism: 3 forms — Tariffs, Import Quotas, Non-Tariff Barriers (TQN)
- India’s trade: 15.5% GDP (1991) → 55.6% (2011) → 37.9% (2020)
- FDI: 0.03% → 2.42% of GDP (1991→2020) — 80× growth!
- Political stability is NOT a benefit | Capital account convertibility is NOT protectionism — exam traps!
Banky says: “Now I understand why my NRI customers are worried about trade wars!” 🎉
You now know the full globalisation story — from WTO’s definition to India’s 1991 opening to today’s deglobalisation trend. Next time there’s global news, you’ll explain it like an economist! 🌍💪