Spend more

Rajendra Pawar, the NIIT chief has made a fervent plea for more government spending on Information Technology (IT). Pawar has chosen the forum of the IT Asia conference in Mumbai to air his views. The NIIT chief has made a valid point. 

For the nation has set a goal of becoming an IT superpower by 2008. To make this happen, the industry size at that time should be around $ 100 billion. Policy makers and industry representatives have estimated that the booming software exports segment would contribute to nearly half of this ($ 50 billion). The software export figures have caught the national imagination.

In turn, the government too has announced a series of initiatives such as privatization of ISPs, substantial increase in bandwidth, enactment of cyber laws, removal of fiscal and administrative restrictions that impede the software export segment.


However, not much attention has been paid to the other half of the target that has the potential to make India an IT superpower. Pawar has now reminded the nation about this anomaly. We have an equally tough task to achieve this part of the goal. It will have to be done by the domestic IT industry. Here, the largest part of it will come from the hardware industry.

The software and services form a small part of the domestic IT spends now. 

Corporates, individuals and governments account for the bulk of IT buying in the country. Both corporates and individuals have been lapping up IT products in a big way. The best indicator is the PC sales figures which is likely to reach the two-million mark this year.

The government has not been a big buyer of IT products in recent years. Presently, only three percent of the total government expenditure is spent on IT products. Pawar estimates that the government will have to increase to nine percent to enable the domestic IT industry to reach the superpower-target.

There is every reason for the government to listen to Pawar. Another industry veteran, FC Kohli, too has urged greater thrust to domestic hardware sector. The national hardware industry is estimated at Rs 8,000 crore. Nearly three-fourths of this is accounted for by the import of PCs and key components for local assembly purposes. Increased government spends will have a major impact on the industry. It will take the industry closer towards economies of scale, which will make manufacturing of more parts within the country viable.

There are other multiplier effects. If government decides to increase IT spends, most of it will go towards increasing the efficiency of mandatory services provided by it to the citizens. This in turn will reduce transaction costs and improve efficiency of citizens and industries across various segments. This will ultimately lead to more transparency in government operations. It will also give fillip to the computer training industry, boost demand for software and hardware maintenance services, telecom services and more. Every one will be a gainer by increased government IT spends. Does the government need any other reason to follow a sensible advise by an IT veteran?