Impact Assessment of Globalisation
and Water Resources in India
India has become a major player in the global economy in recent years. This increase in India’s influence in the global economy has come in part as a result of globalisation. Today, many companies in the developed world outsource their manufacturing to India with the objective of minimising costs and increasing profit margins. However, this rapid growth in multinational activity along side rapid economic growth appears to be having a negative impact on water resources in India. The objective of this paper is to provide a discussion the impact of globalisation on the handling and distribution of water resources in modern day India.
The rest of the paper is organised as follows: Section 2 provides an overview of globalisation; section 3 provides an analysis of the handling and distribution of water resources in India making reference to the impact globalisation and section 4 looks at whether there is a trade-off between sustainability of water resources and rapid economic growth in India.
- Overview of Globalisation and the Indian economy.
Globalisation has been given a number of descriptions by different authors. For example Dunning (2000: 14) considers globalisation to be “a process leading to the structural transformation of firms and nations”. Albrow (1990: 9) cited in Pieterse, (1994) views globalisation as “all those processes by which the peoples of the world are integrated into a single global society”.
Until the late 1990s, barriers to trade and investment liberalisation made in difficult for the Indian economy to undergo the process of globalisation. (Balakrishnan, 2004). In the 1990s, a number of trade and investment flows were initiated thus paving the way for the progressive elimination of trade barriers to competition in India. The elimination of trade barriers has eased the entry of new firms (both domestic and foreign) to different industries in India and has hastened the process of globalisation of the Indian economy. (Balakrishnan, 2004).
Foreign direct investment for example has witnessed a significant increase since the trade liberalisation process began in India. For example, Dunning and Narula (1998) notes that liberalisation of trade policies led to considerable improvement in the investment climate in India with FDI approvals totalling Rs 131 billion over the period 1991 – 1993 compared with a total FDI stock of Rs 27 billion in March 1990. This surge in FDI has contributed significantly toward India’s rapid growth. Having provided a brief discussion of the globalisation process in India, the following section will be looking at how this globalisation has affected water resources in the country.
- Globalisation and Water Resources in India
Globalisation has influenced the privatisation of basic resources in India including water resources. (Shiva, 2004). India is suffering from severe water shortages as a result of multinational activity which has been facilitated by globalisation and subsequent privatisation of basic resources which ought to be better managed by the State if the best interest of all indigenes needs to be satisfied.
It is true that globalisation and subsequent privatisation can contribute enormously to economic growth and development. However, macroeconomic theory notes that certain goods and services cannot be provided efficiently by the public sector. India influenced by foreign companies and governments appears to have embraced globalisation in the wrong way. It appears the activities that need to be privatised are not being evaluated properly. Privatising water resources is not a good policy because water is a basic necessity that can only be provided efficiently by the State.
A project known as the “River Linking” project was launched recently. The project which costs Rs 56 trillion is expected to solve the water crisis. However, Shiva Vandara, an author and environmental and human rights activists notes that the “River Linking” project is more likely to exacerbate water crisis rather than solve it. (Shiva, 2004). This is because the project is based on the “engineering paradigm”, a paradigm that “discounts the ecology of water, river basins as well as ecosystems”. (Shiva, 2004).
Globalisation has also transformed towns into cities, and cities into mega cities. This transformation has led to changes in the growth and demographic dynamics of the population, which have in turn increased concerns about the availability of fresh water. (Shiva, 2004). India accounts for 16% of the world’s population but can only boast of 2.5% and 4% of the world’s land and fresh water resources respectively.
In addition, globalisation has increased industrial agriculture in India, which has significantly increased the depletion and pollution of fresh water resources. Industrial agriculture increases the use of water by 10 fold, a situation that reduces ground water resources beyond top up level. Drinking water sources are contaminated by agrochemicals and fertilisers. This is evidenced by the recent scandals of pesticide residues in soft drinks.
The availability of water in the country witnessed a decline in the per capita volume of 5,180 cubic meters of water in 1951 to 1,820 cubic meters in 2001. Estimates suggests that this figure will witness a further decline to 1340 cubic meters in 2025 and 1140 cubic meters by 2050. (Shiva, 2004). In another paper Arnell (2004) notes that India had less than 1,700 cubic meters per capita as at 1995 indicating that India was suffering from “water resources stress”. India is therefore expected to be operating almost at the threshold per capita value of 1,000 cubic meters by 2050. (Arnell, 2004; Shiva, 2004) This further indicates that after 2050, India may actually be operating below the threshold level if something is not done to sustain discover new resources and conserve or sustain old ones.
- Sustainability of Water Resources and Economic Growth
We have seen that rapid growth in India is promoting the depletion and pollution of water resources in India. This is making life very difficult for the poor at the expense of the elite and privileged. A trade-off seems to exist between rapid growth and sustainability of water resources in India. However, this paper argues against such a trade-off. Developed economies have witnessed rapid growth without suffering from water crisis. This suggests that India’s case can be attributed to poor embracement of globalisation.
Companies especially multinational companies need to demonstrate corporate social responsibility with respect to their use of water and other natural resources. Activities that promote climate change need to be monitored. Irresponsibility activity on the environment by multinational companies is accountable for water shortages. For example, Coca-Cola was extracting 1.5million litres of water per day in its Plant in Plachimada, a situation that led to a decline of the water table, as well as pollution of drinking water. (Shiva, 2004). This situation also caused women to walk several miles just to fetch drinking water. Coca-Cola’s irresponsible activity was however, terminated following an uprising pressure against this behaviour by a local women’s group.
Responsible use of water resources can enable their sustainability while at the same time maintaining economic growth. Companies should be held liable for restoring it after exploiting resources from the region especially if such exploitation leads to environmental damage and climate change. Restoring the region reduces the impact of climate change and ensures the replenishment of fresh water resources by forces of nature.
According to Arnell (2004), the population growth rate can remain constant but to achieve sustainability of water resources and rapid economic growth, development must take a more environmentally friendly and sustainable pathway with global scale corporation and regulation. Clean and efficient technologies need to be introduced in India. For example, industrial agriculture plays an important role in water depletion and pollution in India; employing more efficient and clean farming technologies will help mitigate the adverse effects of industrial farming on water and thus ensure the sustainability of these resources.
The above efforts require the collaboration of a number of actors including the government, civil society organisations, domestic and multinational corporations, and international bodies such as the United Nations (U.N), the World Trade Organisation (WTO), the G8 and G20 countries, the World Bank, the International Monetary Fund (IMF) and others. By working together and putting the interest of the masses first rather than putting corporate profitability first, India can greatly improve both its water resources while at the same time maintaining rapid growth.
Arnell, N. W. (2004), “Climate change and global water resources: SRES emissions and socio-economic scenarios”, Global Environmental Change , vol. 14, pp. 31–52.
Balakrishnan, C. (2004) “Impact of Globalisation on Developing Countries and India”; Article submitted for The 2004 Moffatt Prize in Economics, available online at:
Dunning, J. H. (2000) “Regions, globalization, and the knowledge-based economy”, Oxford University Press.
Dunning, J. H., Narula, R. (1998), “Foreign direct investment and governments”, Routledge Studies in International Business and the World Economy.
Pieterse J. N. (1994), “Globalisation As Hybridisation”, International Sociology, Vol. 9, No. 2, 161-184. DOI: 10.1177/026858094009002003
Shiva, V. (2004), “The Impact of Globalisation on India’s Environment”. Available online at: http://www.ecocouncil.dk/global/english/2004_02_india7_9_UK.pdf