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Limits of the information 'revolution'

Print edition : Feb 05, 2000 T+T-

India is not about to emerge an "IT superpower", accounting as it does for a mere 1.5 per cent of the world software market, mainly at the low end. For healthy IT growth, the country must return to its neglected basic social priorities.


IF you saw the hype and hoopla in Hyderabad on January 20, with the road from Jubilee Hills to the much-tom-tommed "Hitec City" decorated with buntings and banners, you would think that you were witness to some historic celebration involving at least a d ozen heads of major states, if not the bulk of the United Nations. You would assume that the specially selected paunch-less policemen and the colourfully dressed tribal people thronging the pavements had been mobilised for a truly earth-shaking cause. Al as, there was only Prime Minister Goh Chok Tong of Singapore (population: 3 million) making a brief tour of the Andhra Pradesh capital as part of his six-day visit to India, where he was besieged by leaders begging him for investment and seeking his advi ce on how to acquire instant Tigerhood through Information Technology (IT).

On sober reflection, you would realise that the fuss was about something quite flimsy. "Hitec City" is nothing more today than one single building, which may have been considered "futuristic" a quarter century ago, just about the time Apple first began s elling personal computers (1977) based on microprocessors (first marketed in 1971). A potholed road leads to it. You would also note that while Hyderabad's clubbing with its "twin city" of Secunderabad is natural, the triplet encompassing "Cyberabad" is grossly artificial and vastly exaggerated. The city's software exports run at under $30 million a year, only a fraction of the $300 million or so that is shipped out from Chennai, which makes no such claim.

True, the Andhra Pradesh capital hosts some operations of big transnational companies like Microsoft, Bell, DuPont, Alsthom and Matsushita; it is setting up what aims to be India's biggest IT training institute; the State is advised by Raj Reddy, who is on Bill Clinton's IT advisory panel too; and N. Chandrababu Naidu, with his impressive notebook computer and state-of-the-art graphics programmes, and his success in hooking government offices to an extended network of computers, is undoubtedly India's m ost IT-savvy political CEO. But that is a far cry from the claimed transformation of Hyderabad or Andhra Pradesh into "dotcom" territory where the Internet is supposedly driving a new social and economic revolution. It is doubtful if any such "revolution " is taking place in Andhra Pradesh, with its public finances in a horrible mess, funds diverted from social sector schemes to dubious high-technology projects, its infrastructure in poor shape, and its growth and employment rates stagnating.

The hype about Andhra Pradesh's successful information "revolution" is of a piece with the extravagant hope that India is about to emerge as the world's "IT superpower" in the coming century - a hope frequently expressed not just by A.B. Vajpayee and his Ministers, but even by Opposition leaders, a range of businessmen, technology buffs and sundry journalists, and reflected in Newsweek's inclusion of Bangalore in its list of 10 "hottest" IT cities in the world, and The New York Times' gush ing portrayal of N. R. Narayana Murthy and his remarkable success story, and the rather casual and now-routine description of Bangalore and Whitefield as India's own Silicon Valley.

THE reality, despite the dizzying recent growth of the Indian IT industry, is different. India hardly qualifies for the description of "IT superpower" - no more than winning a few tacky "Miss World" crowns entitles it to be called the world's "beauty su perpower", which sounds particularly grotesque with the country's appalling indices of maternal and neonatal health, which are worse than in Sub-Saharan Africa. India will probably long remain a relatively modest global IT player. Informatics is unlikely to transform this economy and society radically - unless a great deal of attention is paid to the core issues of basic literacy, education and health, as well as such matters as telephone connectivity, IT professionals' training and identification of th e country's strengths and weaknesses.

On the (undeniable) positive side, the IT industry in India has burgeoned at a rate five times higher than the growth rate of industry as a whole. The software market alone has zoomed from $150 million in 1990 to $3.9 billion. The hardware market has now crossed the one million units-a-year mark and is five times bigger than in 1994-95. Computers are making inroads into smaller cities (with a population less than 2.5 million) at a growth rate exceeding 50 per cent. The number of Internet connections has risen from under a lakh four years ago to about eight lakhs today, and is growing. The range of IT applications is widening by the month - from desk-top publishing to industrial design, and from telephony and music on the Net to industrial process contr ol and book-keeping at the point of retail sales. There is some real entrepreneurship in the IT field too. E-commerce is likely to clock a turnover of Rs.300 crores. And most important, computer-based services have tended to bypass some social inequaliti es, providing mobility to young people from underprivileged backgrounds, lacking mastery of the English language.

However, despite its impressive growth, the Indian software market is just about 1/70th (or less than 1.5 per cent) of the world market in software today, of which the U.S. share is roughly one-half. India's share is growing relatively slowly in a sector which has recorded 15 per cent-plus growth worldwide, or at least three times higher than average GDP growth. The penetration of India's households by personal computers (PCs) is under one-fifth the world average. Today it stands at less than five machi nes per 1,000 people. When it comes to Internet access, India firmly remains within the global IT backwater - a 0.1 per cent penetration, or the same level as Sub-Saharan Africa's, as compared to China's 0.6 per cent, Taiwan's 14 per cent, the U.K.'s 18 per cent, or the U.S.' 35 per cent. The reason is not far to seek. A computer costs the equivalent of the average Indian's income for three years, but only a month's salary for an American. Even today, more than 90 per cent of all IT transactions in Indi a are in English, which is spoken by about 5 per cent of the population.

This IT penetration is extremely uneven, more than two-thirds of it concentrated in the West and the South, mainly in the big cities, with the Hindi belt hugely lagging behind. There is a strong gender bias too. Even in the U.S., five times more boys as girls use computers at home. In India, the disparity is likely to be much wider. Admittedly, the number of computer and Internet users is likely to triple, even quadruple, in the coming years. But the upper limit is likely to prove inflexible at least in the short run. After all, the number of telephone lines in the country is just about 30 million - a drop in the one billion population ocean; and even if everyone who has a phone can get a computer, India will be way behind most Third World countries. T his does not speak of an "IT superpower".

Equally important, India's software exports are primarily in the low-end technology segment. "Body shopping" - or low-paid professionals physically moving to the U.S., and working on H-1B visas - accounts for about half of such exports, a ratio that has not radically changed over the past two decades. Many such people live five or six to a room in American cities and earn only a fraction of U.S. wages. Periodically, they are harassed by immigration officials, as happened in Texas in mid-January to 40 of them.

What is growing especially rapidly in India now is the lowest priced segment of IT work: data entry, medical transcription, airline ticketing, answering services, and so on. This segment lacks strong links with the upper end of the market through technol ogy. It is itself part of a global division of labour based on inequality-enhancing low-paid work in the periphery, coupled with high-quality, value-added work at the centre. The higher-end, high value-addition business is typically controlled from the N orth, which includes non-resident Indians (NRIs) based in Silicon Valley and other importing centres. The dominance of marketing and of intellectual property rights in IT - on which predatory companies like Microsoft have unfairly thrived - is one reason for India's low status. Another is that India seems to be losing some of its historical advantages, and blunting its edge in advanced research & development (R&D) thanks to unfocussed funding and lack of quality work.

Another problem, noted by software consultancy firms QAS and QSM, is that software products developed in India are more susceptible to defects and have a lower reliability at delivery. This disadvantage outpaces the Indian programmer's advantages in (hig h) speed and productivity. Short-term commercial considerations seem to prevail over long-term planning of R&D agendas in India.

LEADING researchers and key decision-makers from research laboratories and industry, who met at the sixth international conference on "high-performance computing" in Calcutta in December, felt that despite possessing world-class talent, Indian computer R &D is yet to have "a commensurate impact in any domain". "Our R&D had produced exemplary results in building digital computers at the Indian Statistical Institute and the Tata Institute of Fundamental Research way back in the 1960s. But it stopped there with no follow-up," says Dr.R.K. Arora, the director of the Pune-based Centre for Development of Advanced Computing (C-DAC). He is quoted as saying: "There were further inputs in the 1970s and 1980s as the country developed a complex operational data han dling system, for instance, for its rail network... But the world scenario has galloped far ahead."

One reason for this may be the absorption of too many researchers into industry for low-end tasks albeit at high salaries. For instance, Pankaj Jalote, head of the computer science department of Indian Institute of Technology (IIT), Kanpur, says: "Even b efore a Ph.D. student finishes his research, he is commissioned into a job today."

None of these problems is likely to be redressed by the Rs.100-crore IT venture capital fund set up in December 1999 by the government, or by its reiteration, under the goading of U.S.-based NRI professionals, of its resolve to "take all measures to repl icate (in India) the highly-developed IT industry of Silicon Valley" (Vajpayee). These problems will persist even if all imposts and duties on IT products are abolished. The long-term solution perhaps lies in developing low-cost access to the Internet (p erhaps by bypassing relatively powerful but costly PCs through "network computers"), and promoting Indian-language interfaces and cheap Internet-based educational material which ordinary schools can afford. But all this means that the focus returns from "Hitec City" to village schools (many of them without even blackboards) - that is, to promoting literacy, basic healthcare and other modest goals determinedly.

Regrettably, the early commercialisation of IT and the runaway market success of some leading companies have served to divert attention from these very priorities. Today's IT bubble has more to do with speculation on the stock exchange - where the IT com panies' market capitalisation can be 20 or 30 times the "normal" ratio to profits, and hence unsustainable - than with a real understanding of India's IT growth potential. This extrovert, export-oriented IT sector could continue to thrive without transfo rming, or seriously affecting, the rest of the economy, and without changing the nature of work or information content in Indian industry or services.

That would be yet another instance of "enclave" development - barely a sign of the balanced and equitable growth of an "IT superpower". What India needs is less emphasis on, or obsession with, "superpower" status, and more purposive, imaginative schemes to harness IT to its basic social priorities - not for their Chandrababu Naidu-style dazzle and demonstrative effect, as for their real nuts-and-bolts contribution to empowering the underprivileged through access to health, literacy and education. IT gro wth will become relevant only when linked to developing the people's true human potential.