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Home > Business > Columnists > Guest Column > Subir Roy

Can ICT be India's growth engine?

March 12, 2003

Can information and communication technology, or more specifically software, deliver for India when all other models have failed?

Is India witnessing, or about to witness, ICT or IT or software led growth the same way as the Asian Tigers rode on export led growth?

This was the subject of an Indo-US workshop organised by the department of management studies of the Indian Institute of Science, Bangalore.

Of all the papers, one of the most esoteric was one by Govindan Parayil (National University of Singapore) who saw two contradictions of ICT-led development, digital divide and increasing returns.

The digital divide is not an accessibility issue but an equity issue.

There is an asymmetric relation between traditional modes of production (manufacturing, etc) and innovation and knowledge-based production.

There is now a dual economy, primary and industrial on one side and information-based on the other. It is constant/decreasing returns versus increasing returns.

The divide between these two modes is the digital divide. Under informational or digital capitalism increasing returns are not an anomaly. But they create an instability.

They have been marked by the most unequal distributions of income and wealth in human history. His conclusion: development theories of the industrial age are inadequate to explain the ground realities of the information age.

K J Joseph (Centre for Development Studies, Trivandrum) feels there is an adverse impact of the strategy of excessive export orientation.

The contribution of the ICT sector can be viewed at two levels, direct and indirect effect. The direct effect is in employment, income and export earnings from ICT.

The indirect effect is in enhanced productivity, competitiveness and growth of other sectors on account of IT diffusion, emergence of altogether new services enabled by ICT and spillovers.

He argues that the direct benefits are laudable. The ICT sector itself has shown remarkable vibrancy in terms of output and export growth as well as technological dynamism. These are often cited as the outcome of the export-oriented growth strategy that was followed.

But the economy as a whole seems not to have benefited because of high regional concentration of ICT activity and low diffusion of ICT to other sectors of the economy. Because of the ICT boom, other sectors of the economy which compete with it for skilled manpower would have been adversely affected.

There are also adverse implications on other services like teaching, training, research and development. These are bound to have long-term implications on the overall growth of the economy and as well as in sustaining the current competitive advantage of ICT.

Joseph calls for a national policy on ICT diffusion which could mitigate the adverse effect of ‘excessive' export orientation.

Tojo Thatchenkery et al (George Mason University) address some very basic questions. Does ICT lead to economic development?

Has it led to investment in infrastructure, institutions and individuals? What are some of the shortcomings of ICT as a development tool and what policy implication does this have?

ICT reduces barriers to knowledge and information asymmetry. It has a large potential for infrastructure, institutional and human development.

It increases transparency in institutions, promotes efficient market outcomes and can create jobs and generate incomes.

The paper notes several examples of developmental use of ICT. Eye care is delivered in Mettur district in Tamil Nadu through web cameras and the Net.

The National Dairy Development Board in Gujarat is digitising milk collection and thereby helping farmers.

Under the Gyandoot scheme in Madhya Pradesh, 20 villages have been wired to the central database for access to both government and agricultural information. SEWA provides women in Gujarat with basic computer education to help them manage micro enterprises.

What are the problems? Uneven regional development leading to greater inequality between states and also greater rich-poor, urban-rural inequalities; and lack of absorptive capacity standing in the way of knowledge filtering to other sectors of the economy.

Importantly, there is poor domestic demand for ICT as it remains outward looking. The paper concludes that ICT can be the answer to unmet demands and needs of Indians.

It has already started to improve infrastructure, education, health, gender, private enterprise, governance, rural development and public services. And there is enormous potential for future development.

W e can turn to T T Srikumaran (Hong Kong University of Science and Technology) for some hard evidence on the ground.

He examines the Gyandoot in Madhya Pradesh, village knowledge centre in Pondicherry (IVRP) and TARA kendras in Punjab.

The model is of multipurpose kiosks in rural areas catering to specific local and clientele-based packaging and delivery of information.

Gyandoot has wider coverage and strong social roots. There are clear signs of empowerment, though still partial and limited. There are instances of local power relations being reinforced.

However, there is relatively better local use because of the unique set of services the project offers.

In Pondicherry, the kiosks which rely heavily on local resources offer highly uneven facilities.

Critically, communities which are backward and poor are unable to acquire the infrastructure required to set up the kiosks.

The reality is that though massive job creation and poverty alleviation may be the lofty goals, it is extremely difficult to pursue them with an overemphasis on the potential of new technologies.

Both the state and social enterprise models have systematically overstated their achievements leading to a glorification of the potential of ICT based initiatives.

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