The Hindu Business Line : What is ICT's contribution to economic growth?

The national income from the ICT sector remains unestimated. Neither the corporate sector nor the policy-makers seem serious about this in the context of the booming ICT-led New Economy.

The Information and Communication Technology (ICT) sector comprises both manufacturing and service activities. Manufacturing includes computer hardware (that is, personal computers, notebooks, servers, printers and other peripherals), and telecommunication equipment and networks materials and the services comprise training people for manufacture and operations of computer equipment; use of computers in government, health, education and research, financial services, IT (information technology)-enabled services BPOs; and telecom services. ICT manufacturing comes under the Concurrent List, and services in the Central List. Number and licensing of private providers, nature and extent of foreign investment, and pricing of services are federal policies. At the State level, provision for infrastructure for planning and establishment of adequate infrastructure and competitive delivery of quality services to meet with access and utilisation demands are important.

11th Plan Emphasis

The Planning Commission's Approach to the Eleventh Five Year Plan emphasises concentrating ICT services towards faster and more inclusive growth by aiming at increases in (a) the tele-density in comparison with other countries; (b) rural tele-density compared with urban through private sector and mobile telephone expansions; (c) Internet connectivity for text, data and image communications; and (d) larger and speedy connectivity through wireless technology and on fibre optic cables.

At the State level, for instance, Karnataka's Draft Eleventh Plan aims to encourage and sustain past growth of location and production by providing infrastructure and facilitation for IT sector; create awareness on use and applications of IT; promote computer literacy and IT skills; and build electronic localand socio-economic data bases for scientific decision-making. It proposes to spend Rs 48,602 lakh on this initiative, about eight times the Tenth Plan's outlay.

The ICT sector is the creator of jobs for knowledge professionals and skilled persons, producer of goods and services by small, medium and large enterprises, payer of taxes and recipient of subsidies, earner of foreign exchange through exports, attractor of foreign investment and business, and earner of quick and high returns on investment in higher technical education.

Consequently, the growth of the ICT sector contributes to overall economic growth and higher ranking in global competitiveness indices, such as, Global Competitiveness Index, World Competitiveness Yearbook, KFP Globalisation Index, Digital Access Index, and Networked Readiness Index.

India is included in the construction and comparison of these international indices. Hence, there is evidence for the role of ICT sector in India's ranking by globalisation and international competitiveness.

Contribution to growth

Surprisingly, there is no practical evidence on the nature and extent of ICT sector's contribution to economic growth in India. The communication sector in India's national income estimations is classified under the tertiary/service sector.

This includes telecommunication, posts and telegraph services, but completely excludes the manufacturing sector. On the other hand, no sector explicitly accounts for the national income from information technology in manufacturing and service sectors. Implicitly, business services include computer related services in the form of software development.

Thus, the national income from the ICT sector remains unestimated in India. Neither the corporate sector nor the policy-makers seemto be curious and serious aboutthis important estimation in the context of booming ICT-lead New Economy in India.

For instance, outside India, OECD estimates that the ICT sector typically contributes 3 to 5 per cent of GDP. India's performance cannot be compared and challenged with these countries for lack of estimates.

New approach

During the Eleventh Plan period, data and policy research on ICT sector must get priority so as to estimate the sector's contribution to national income by newer approaches.

First, communication may be redefined as ICT by excluding postal and including IT services. Further, ICT manufacturing may be identified by industry/commodity groups.

Second, Input-Output Table (IOT) is essential to determine the nature and extent of interdependence and linkages between ICT producing and consuming sectors. The IOT 1998-99 does not have an explicit sector for ICT manufacturing and/or services. Its `other services' does not include business services. These gaps clearly imply a need for a new approach in future construction of IOT in regard to the ICT sector.

Third, the ICT sector is especially relevant for regional economic growth for States such as Karnataka. More than 50 per cent of that State's total exports and foreign direct investment is contributed by the ICT sector.

Bangalore tops the membership of Nasscom (24 per cent). In coordination with the national level efforts, Karnataka's Eleventh Plan may take steps to adopt the above newer approaches to independent estimation (rather than allocated by the CSO under supra-regional sectors) of ICT sector's contribution to State income.

In addition, data on access and usage of Internet and mobile telephony are absent at the district level and below. Efforts to fill this data gaps will be most helpful for construction of Digital Access Index at sub-national levels.

This Index will be useful to monitor the progress of the Eleventh Plan's "inclusive growth" strategy of the ICT sector.

(The author is Professor of Economics, Institute for Social and Economic Change, Bangalore.)

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