India 3.0 Ahoy!

DQC Bureau
New Update


When the PSLV

When the PSLV (Polar Satellite Launch Vehicle) lifts-off from Sriharikota range in the Bay of Bengal, all the scientists monitoring the launch hold their breath. For the payload to be successfully placed in orbit, all the four stages of the rocket must work in precise sequence. The first stage is the largest; the second stage a bit lesser and so on. As the rocket crosses one stage after another, the probability of success increases in geometric progression. 

The story of Indian economy is quite similar to the PSLV launch. The first stage was the post independence Nehruvian era, stretching right up to the nineties. The stage was set for the second stage with the liberalization of the economy in 1991. And now, we are some where in between the second and third stage (3.0), the country needs to consolidate on the gains of the previous stages and add more thrust.

A closer analysis of the World Economic Forum (WEF) latest Global Information Technology Report (GITR) 2005-06 reveals the same. For the past five years, WEF has been publishing this report, assessing the impact of information and communication technology (ICT) on the development process and the competitiveness of nations. 

The most awaited aspect of the report is the Networked Readiness Index (NRI) that ranks different countries on level of ICT penetration, implementation, policies, etc. 

In the current global scenario, ICT is a good parameter of a country's progress. While gross domestic product (GDP) is a good indicator of a country's economic muscle, per capita income (PCI) a sign of individual economic weightage, NRI is for the future. NRI displays how well the country is geared up for the future, and tells if all the different modules like the Internet, telephone, investment environment, domestic markets and foreign policies are in place, so that the country can accelerate towards higher growth.

Coming back to the latest report, of the 115 assessed, the U.S. regained the top slot after a gap of a year, followed Singapore and Denmark. India is ranked at 40 on a global scale, it stood at 39 last year and 45 the year before. Indeed the index could have been better, as the data used to extrapolate the index seems to be dated. 

For instance, India is ranked at 107 on the parameter “cellular telephones, 2003”, whereas India is the fastest growing cellular market with over 54 million connections currently. Similarly, the country is ranked as 95 on the parameter “telephone lines, 2004”; things are surely different now.

Over the last few years there has been a visible change in the way ICT has become a part of the Indian lifestyle. Most of the latest gizmos are available at the different malls, mobile companies are setting up manufacturing plants to cater to domestic markets, every month a couple of companies are releasing new laptops, etc. The time is ripe for India to move on to the third stage. 

The report recognizes India's immense talent pool; the country is ranked as first on the parameter “availability of scientists and engineers, 2005” or fifth globally on “quality of math and science education, 2005”. 

Says Dr Sumon Kumar Bhaumik, Economics and Finance Group, Brunel Business School, UK, “It is a familiar story, namely, that India ranks high in human capital but has pitiful infrastructure. To the extent that human capital and infrastructure are complements, a significant improvement in the latter is required to realize the potential embedded in the former.“

Post-liberalization, the chief focus has been the international markets. Indian has become an IT services powerhouse. Yet, the benefits have not percolated to the lower strata of the society, there has been no big initiative push for development in tier-two and three cities, though there has been a lot of talk. The infrastructure in the big cities has been stretched to point of collapse. 

The government needs to look inwards now, start promoting the cause of domestic markets. Our economy has been too closely linked to the fortunes of developed nations, chiefly the US Export economy models like Singapore or erstwhile Hong Kong. This cannot be replicated in Indian context as the country's population is pegged at 1.079 billion, far above these economies. 

Think global, work local is the right approach. For that to happen, it goes without saying the infrastructure needs to be improved by leaps and bounds, WEF ranks India as 98 on “infrastructure environment” parameter and as 103 on “time required to start a new business, 2005” parameter. As Dr Bhaumick says, “There is the added problem that the policy initiatives taken on the ICT front are not necessarily backed up by policies and institutions that sustain a business friendly environment. A good example of this is India's low rank with respect to time taken to start new businesses.” 

Yet, not many seem to be paying attention to these facts. Why else can a country like Taiwan improve its ranking by 15 positions and India still languish at the same position for the last few years in spite of having 8% economic growth, one of the best globally.

But then, isn't it the same old story, time after time? An august body releases its global report; the media will fish out the details on India and also details on China (incidentally ranked 50) and other neighboring countries; compare the different countries; achievements will be highlighted; pitfalls pointed out; various analysts will pronounce the onward course and shortly everything will be forgotten. Only to be repeated all over next time round. 

A maxim goes, “those who do not learn from history are condemned to repeat it”. Let's hope that is not the case with India.