The growth in the IT sector has not happened by accident. Contrary to the popular perception, the way the industry has grown over the years is entirely because of the policy decisions taken by the Indian government in the 1990s, said C.P. Chandrasekhar, professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University.
The policy decisions included liberalising rules to promote the sector even at the cost of domestic hardware and software sector, leading to a near-complete import dependence on hardware, he said. Prof. Chandrasekhar was delivering a lecture on “Wealth and welfare: an IT industry perspective” at a seminar here on Sunday.
While the industry tends to gauge the success of the sector entirely on the quantum of software exports generated, “we should really be focussing on net exports, a more accurate indicator of the impact of the industry,” he said.
“As we have completely stopped focussing on domestic hardware and packaged software — both imported heavily — a close look at those figures will show that we have driven the net exports (on the balance of payments) to zero or even into negative (figures),” he said. This dependence on imports for hardware has meant that the government now has to make huge outlays for its e-governance projects linked to the social sector.
Further, the popular perception that drastic growth in revenue has led to an equally impressive growth in employment figures is clearly belied by the National Sample Survey Organisation statistics, which in 2004-2005 show that employment generated by this “booming sector” accounts for just 0.2 per cent of total employment. However, the revenue has grown from 214 million to 963 million in five years.