Impact of globalisation on India’s external sector
Dr. Sunil Kumar Padhi
India depends on the foreign sector for its goods and services, factors of production and livelihood for a considerable portion of the population. Since the starting of 2012, there has been a deceleration in the global economy as most of European economies have been in recession or very close to it. Consequently, unemployment rates have been at record highs leading to very low purchasing power that has badly reduced the demand for Indian goods abroad. Thereby, there has been a sharp fall in exports volume of India. Alternatively, falling commodity prices in European countries owing to recession has been resulted in increase in Indian imports. This has given rise to imbalance between payments and receipts of India vis-à-vis the rest of the world leading to high rate of persistence Current Account Deficit (CAD) and domestic currency depreciation to the record highest extent. On the backdrop of crisis in European economies after globalization, this paper highlights consequential effects on vulnerable Indian economy in the form of CAD and rupee depreciation with facts and figures.