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Transformational Globalization

India is at the cusp of this transforming world. It has to catch the global trends correctly & swiftly& make appropriate policy changes accordingly.

Photo Credit : Reuters


Mckinsey Global Institute talks of 10 global insights in a fast-shrinking physical world
 where people are getting connected through trade & commerce every second. 6 of these trends, in this new phase of globalization, are pertinent to India.
While merchandise trade is growing across continents to meet varied demand with specific locational supplies, certain services are expanding so rapidly that their magnitude is tripling. Telecom & IT, Business services, IP related services, travel, financial & insurance, & transport & logistics are gaining huge importance. So much so that there is a noticeable shift from manufacturing to these Services in many countries. One reason why RCEP did not find favour with India is that our growing Services sector concerns were not addressed by other trading partners.
Another significant feature perceptible in the global arena is the rise of Asia's role in global commerce. Both in GDP & Consumption value North America & EU are sliding, while Asia strides forward, creating higher disposable incomes & greater consumption. Visual Capitalist reports that the trends clearly suggest that the future belongs to Asia, prominently China & India. No wonder the top Multinationals look at these 2 countries squarely, while strategizing their growth prospects.
China shows its hegemononistic might by a subtle change in its global dynamics. Between 2000 to 2017, McKinsey Global Institute found that the Rest of the world (ROW)'S exposure to China rose 3 times indicating their acute dependence on the new Superpower. Concurrently & cleverly, China quietly reduced it's own exposure to the ROW by 25%, making it look more inward to meet its domestic consumption for the future. It enlarged this concern to include technology & capital flows internally for apparent insulation.
India's rise is personified in its global number 1 position, through a 1. 2 billion strong Aadhar database providing a unique digital identity to its population. The digitization effort continues & leads on several fronts. . . . . 12. 3 billion app downloads, 1. 17 billion wireless phone subscribers, 560 million internet subscribers, 354 million smartphones, & a whopping 294 million social media users. Collectively these figures are too overwhelming for India to be ignored as one of the world's largest consumer markets now and even to a far greater degree in future.
Another facet of globalization pointed out by McKinsey Institute is that large scale growth & development has taken place all over 5 continents, narrowing inequalities between countries. However, within the developed world, the top 1% has grown fast leading to feelings of deprivation in the remaining 99%. The low & middle class has remained stagnant with their debts & basic costs of living on the incline. No wonder many western countries show very low rates of GDP growth year after year. They need to put their act together, if they are to remain in the global reckoning, for long.
Finally, world consumption patterns are getting altered as costs of many discretionary goods & services like communication, recreation, clothing & furnishing, are sliding down consistently. At the same time, there's a huge upward trend universally in costs of education, housing & healthcare implying that govt has to give a close relook to these sectors, with consequent huge budget enhancements.
India is at the cusp of this transforming world. It has to catch the global trends correctly & swiftly& make appropriate policy changes accordingly. The vision of a $ 5 trillion economy by 2025 is long on delivery, but given the fact that the whole world is looking at India & every week a big business leader & ahead of State is here, means that we are creating confidence in our value. Sustaining this confidence requires steady reforms in legal, taxation, land & labour sectors. But most of all the precondition is that there are no glitches, blemishes & shocks in running the economy stably, professionally & judiciously. Incredible India will then show its teeth.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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J.K. Dadoo

The author is a retired IAS officer

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