Model Question and Answers for APSC | How globalisation has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

How globalisation has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

Model Question and Answers for APSC | How globalisation has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

Ans: Globalisation has led to the reduction of employment in the formal sector of the Indian economy in several ways:

  • Competition from cheaper imports: Globalisation has led to an increase in the number of cheaper imports entering the Indian market, making it difficult for domestic industries to This has led to many domestic industries shutting down, resulting in a reduction of employment in the formal sector.
  • Outsourcing: Globalisation has led to an increase in the number of companies outsourcing their operations to other countries, where labor is cheaper. This has led to many jobs in the formal sector being lost to other countries, resulting in a reduction of employment in the formal sector in India.
  • Automation: Globalization has led to an increase in the use of technology and automation in various industries. This has led to many jobs in the formal sector being replaced by machines, resulting in a reduction of employment in the formal sector.
  • Foreign Direct Investment: Globalization has led to an increase in the number of foreign companies setting up operations in India. While this has led to an increase in jobs, it has also led to a reduction in jobs in the formal sector as many foreign companies prefer to employ their own expatriate staff.

The increased informalization of the Indian economy can be detrimental to the development of the country in several ways:

  • Lack of job security: Informal jobs are usually characterized by low wages, poor working conditions, and lack of job security. This can lead to a lack of motivation and a lack of investment in human capital.
  • Lack of social protection: Informal workers are usually not covered by social protection schemes such as health insurance, pension schemes, and unemployment benefits. This can lead to a lack of income security and an increased risk of poverty.
  • Lack of bargaining power: Informal workers usually have little or no bargaining power and are at the mercy of their This can lead to exploitation and discrimination.
  • Lack of productivity: Informal workers usually lack the necessary skills and knowledge to be productive. This can lead to a lack of innovation and a lack of competitiveness.

 

In conclusion, globalization has led to the reduction of employment in the formal sector of the Indian economy through competition from cheaper imports, outsourcing, automation and foreign direct investment. Increased informalization can be detrimental to the development of the country as it can lead to a lack of job security, lack of social protection, lack of bargaining power, and lack of productivity.