In India, such conversations often begin with protests that India is a closed economy, and hence globalisation does not matter so much to us. This is an obsolete notion, given the dramatic changes which have taken place particularly in the last decade. The money that moves in and out of India — both current and capital account — now adds up to roughly Rs 20 lakh crore a year. This works out to roughly 60 per cent of GDP. To characterise this as insignificant is wrong. We must wake up to the realisation that we are now a highly open economy, and consequently need to start behaving like one.
A global comparison is instructive. The latest comparable data is for 2001. It shows that while international trade was 31 per cent of GDP in India, it was 29 per cent in the US and 24 per cent in Japan. India continued to lag China, which was at 53 per cent. In 2004, the current account alone works out to 40 per cent of GDP. So it is striking to see that India’s trade integration now well exceeds that of supposedly globalised countries like the US and Japan. If globalisation matters for them, it matters more for us.
The figures were indeed revealing to me!