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'IT alone is not the answer'

The above statement might be heresy in India today, as thousands are trudging off to the nearest NIIT center, everyone sees Infosys and Wipro as companies that will restore India to its rightful place on the world economic map, and it is common belief that we will keep logging IT exports growth of a 100 per cent every year, leading to everlasting riches.

Some of these expectations have been tempered with the recent bubble burst in the United States and its aftermath, but the expectations and mindset have not changed that much.

Now, while I believe that the Internet is far from dead and we have only begun to scratch the surface of IT innovation and that the IT industry will continue to grow, I do not believe we can count on this industry alone to rescue us from the economic morass we find ourselves in since Independence.

I know that people will immediately jump on this with facts like we are the fourth largest economy; we invented the zero, et cetera. But the fact is that we are also bringing up the rear when it comes to per capita gross domestic product.

An interesting statistic pointed out to me was that the total GDP generated by the miniscule amount of Indians outside India is equal to the sum total of India's GDP. Not an ideal situation.

Every time I walk into a Wal-Mart store here - which I have being doing off and on for the past 10 years - I find more and more aisles full of goods made in China.

Mind you, not just more goods, but more aisles. This condition exists in similar stores everywhere in America, Kids-r-us, Toys-r-us, Anything's-r-us, Target, Macy's, et cetera. Anything that has to do with everyday use is more likely than not coming from India's big neighbour to the north.

So while we continue to churn out software geeks by the dozen, our good friends have pretty much cornered the consumer market in the US for everything - from furniture, to clothes to toys to sporting goods to anything with any plastic in it.

A quick glance at Wal-Mart's annual report shows that their cost of sales for the most recent fiscal year was $171 billion. Going by the goods stocked on their shelves, at least $50 billion of that goes to China. That's a whopping Rs 2,450 billion. These are staggering numbers and all of this from just one chain in the US.

Compared to this our best-case figures are for IT exports - at $50 billion by 2008, currently standing at $7.68 billion. Just to put it all in perspective $50 billion, that is the opportunity for Wal-Mart alone, is about four times the annual revenue for India's largest conglomerate (Reliance Industries Ltd), and about 15 per cent of India's current GDP.

Put another way when Infosys and Wipro grow 1,000 per cent from current revenue levels they would total about 10 per cent of this opportunity. In short, the total opportunity for making consumer goods is staggering.

And this is a fairly recession proof industry, people will still buy the same stuff everyday of the week from Wal-Mart, irrespective of the current economic climate. People - unlike businesses - do not have the same flexibility of trimming expenses.

Our IT industry, however global its reach and market are, will always be susceptible to the vagaries of the economic cycle in the US.

None of this is meant to diminish in any way the wonderful achievements of our IT industry and efforts. This investment and continued focus are absolutely necessary and have already brought enormous benefits to the country (in foreign exchange reserves, acclaim, confidence), and to the individuals who are contributing members.

Yet, a significant number of our people would never be proficient in coding "xml dtd's" or in writing Java-based J2EE-compliant software programs. A vast majority of our people will continue to toil in ever-shrinking plots of land, be employed by the government and spend a major part of the day playing cards, be resigned to generating more black money plying the family business, be employed as labourers and work for next to nothing in the most awful conditions, or be just unemployed.

If we are to catapult ourselves into the select group of the world's economic elite, we will have to create opportunities for a vast majority of our people that give them a chance to create some significant, legal, and more importantly export-based economic value.

This is not possible through IT alone; we need to create a significant manufacturing base that leverages our other strengths - especially low-cost labour - and generates significant foreign exchange.

Every time anyone criticises India or compares it unfavorably to China, we have the common comeback: "Oh, but we are a free, democratic country…" Well, this is a huge advantage that we have somehow never translated into economic gains. It is kind of like having Don Bradman in your batting line-up, but never sending him out to the middle.

Businesses, consumers and most importantly Washington would love to have a second source of all of these consumer goods other than China. American business is nothing if not savvy and putting all of their eggs in one basket, I am sure, gives them many a sleepless night.

This is not by design; it is by virtue of China's relentless assault on improving quality and reducing price that has literally tied up this market for them. Given another option, from a country that is more in tune with ideals and values in the US, they would jump at the opportunity.

Not a day goes by when some human-rights activist does not write or call their local congressman about the China's dubious human rights record. Businesses also dread another major social uprising in China as the ghosts of Tianenmen Square rise again and chaos grips the land again.

While our democracy may not be perfect, all else being equal we would be a preferred vendor over China any time.

While it is an exceptionally hard mountain to climb, do we really have a choice? If our aim is to be a world power, we need to do what is necessary to become one. We definitely have the ability, know-how, resources and wherewithal to do it. It is just a question of putting it all together.

It is time for us to collectively rise from our slumber, forget about temples and mosques, and focus on the task at hand. It is now or never; and for the country that invented the zero, it should not be impossible.

Anurag Pal is Director of Business Development at BizGenics, a software start-up in Silicon Valley.

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