Casting the growth net wider

Whenever there is a debate about India’s macroeconomic picture, our economists, and the investment community at large are always fond of quoting a combination of financial metrics and indexes from the mundane to the esoteric to justify their arguments. The latest numbers on interest rate, inflation, consumer spending, balance of payments, GDP, IIP, HDI are always thrown around, as also carbon footprint. But, a critical index is still largely missing — the Information and Communication Technology (ICT) development index (IDI).

The ICT global index comprises several metrics reflecting the quality and reach of ICT in a particular country. In the recently released ICT index by International Telecommunications Union, India has been ranked a low 131 out of 167 nations, dropping six notches compared to the 2010 ranking. We can’t dismiss these claiming they are promoted by vested interests, because the same report also highlights that Asia-Pacific is the most diverse region in terms of ICT development. Six economies in the region — including South Korea, Hong Kong and Japan — have IDI rankings in the top 20 globally.

India’s IT-related revenue has reached a record $150 billion and this sector contributes to 7.5 per cent of overall GDP, next only to the US IT industry. While our export focused IT infrastructure boasts advanced data centres and sophisticated disaster recovery centres (DRCs) catering to the needs of global clients, our domestic focused ICT infrastructure catering to local needs did not receive enough attention. This is akin to the differences that existed between produces for export and domestic consumption in sectors such as apparel, beverages and so on.

Over the last two decades, our spectrum demand was linearly connected to the incremental voice-based mobile subscriber growth and even legacy poor spectrum forecasting issues did not bring our networks to a grinding halt. But the sudden growth of smartphones and associated high data transfers are no longer linearly connected to data spectrum bandwidth anymore. As a result, in addition to mobile call drops, we are faced with grim realities such as frequent slow broadband networks deeply impacting our economic growth. Our future domestic economic growth engines hinge on technology-driven platforms such as e-commerce, integrated payment gateways and a thriving startup ecosystem requiring a robust and efficient ICT back-end infrastructure.

While we cheer that India skipped the landline revolution and leapfrogged to the mobile revolution, that puts more pressure on our mobile network. An empirical formula suggests that once the smartphone penetration exceeds 25 per cent, “data explosion” takes on a new dimension. India’s smartphone penetration is at 17 per cent and the country is poised to enter the era of data explosion in the next year or two. Data hungry applications require adequate bandwidth and it is estimated at about 10 Mbps (download), so content is delivered within 3 seconds. While the smartphone’s explosive growth may be good news to economic drivers and digital India, more spectrum demanded by data services would not only lead to call drops, but may possibly lead to call stoppages.

Reflecting the technology advances, the US FCC updated its broadband benchmark to 25 Mb/s (download)/3Mbps (uploads), whereas TRAI’s benchmark has been 512Kbps (with a new roadmap to 2Mbps), a speed almost 50 times lower!

Going beyond economic growth, Digital India, a flagship initiative by the Centre, promises to bring an efficient citizenship engagement platform. This ambitious project aims to transform governance by improving efficiency, bringing transparency, integrating crucial documents and identities, and providing connectivity covering the length and breadth of the country. An advanced ICT infrastructure is a must to meet these objectives.

So, it is important we start accurately forecasting future ICT infrastructure needs and track the ICT index in this new age of tech-driven economy and governance initiatives.

The writer is partner and CTO at Exfinity VC fund (with inputs from V Sridhar, a professor at IIIT-Bangalore)