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Indian Economy

Essay by   •  June 15, 2011  •  Essay  •  1,116 Words (5 Pages)  •  1,421 Views

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Indian economy has grown in recent times at a very fast pace and IT has been an important industry that has taken India into the global arena. There is no doubt that in recent times, information technology has emerged as the most fundamental strategic tool for an organization. It has influenced every aspect of commercial enterpriseÐ'--its structure, its products and services, its markets and processes. "However, in the beginning, I would like to dwell upon the strategic role of IT in building a nation." Information technology has been contributing significantly to productivity and growth in the global economy. A 2001 study of major technological revolutions over the last three centuries by the IMF (International Monetary Fund) has revealed that IT enhanced the growth rate of the United States economy by 1.8 percent per annum between 1995 and 2000. "During the same period, IT contributed to improvement in labour productivity by 1.6 percent annually. The IMF study states that even though the IT spending environment has weakened in the short term, the benefit of IT revolution to the global economy will continue if not accelerate in the long term.

The Indian IT industry was $ 16.5 billion in 2002-03. It constitutes 3.2 percent of the Indian GDP (gross domestic product). "While the size is attractive, it is significantly short of our potential. This has brought in precious foreign currency and developed the local economies of the places where IT companies are situated. With the emergence of IT- enabled services (ITES) industry, a new avenue of employment has been opened up for graduates. "This has contributed to mitigating the unemployment problem as well. In the next five years, the IT exports industry has the potential to grow to over $50 billion, contributing to 35 percent of India's exports and nearly 7 percent of our GDP. "Often when one speaks about Indian IT, the discussion tends to begin and end with software and services exports. The latent potential of the hardware sector appears to be completely ignored. Yet it is an area of enormous contribution potential. "the truth is that 47 percent of Singapore's GDP and 65 percent of Malaysia's GDP come from IT/electronic exports. "The tremendous economic growth that China has witnessed in the recent decade has been fueled to a large extent by the growth in hardware industry there. "China exported hardware worth $36 billion in 2001 and is the world's third largest electronics hardware manufacturer. Most importantly, a nation cannot be self-sufficient in strategic sectors like defence, unclear and space technologies without domestic capabilities in hardware development and manufacturing. No wonder, then, that IT accounts for 5.6 percent of spends in the US and 4.4. percent of spends in Singapore. "Initiatives like e-governance bring in transparency, improve internal efficiencies and enhance the quality of citizen services. "IT is certainly one area where with

significant synergies we can achieve for our country. "

A robust hardware industry is required to sustain a growing software industry has long been argued by experts. Yet, such arguments have met with little enthusiasm from policy makers who continue to dither on adopting a Hardware Policy. In the interim, hardware manufacturing stumbles along in insignificance. RAJNEESH DE reports India's $10 billion, globally oriented software services industry might have put India on the world's IT map, but its IT hardware manufacturing industry is barely visible even within the country. Despite a production target of Rs. 17,850 crore set for the computers and peripherals segment for the last year of the Ninth plan (2001-2002), indigenous manufacture of this category of products aggregated to a mere Rs.3,400 crore ($0.6 billion) in 2000-01, compared to China's $20 billion, Taiwan's $30 billion and tiny Malaysia $5 billion. Why does hardware manufacturing remaining insignificant in the world's fourth largest manufacturing economy? Comments Manoj Chhura, country manager-manufacturing, IBM India, " The manufacture of if related components and finished goods is a critical element in the overall economic growth strategies of many newly industrialized or industrializing nations, including China. Exports of electronic equipment and components represent 47 percent

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