This brigade will charge India into glory!

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: The contribution of IT and BPO sectors to India’s economy is much bigger than its export achievement or the brand equity in foreign markets that has raised India’s economic profile abroad. Over the years, it has become a key driver of both growth and diversification of the economy. What started as a small phenomenon has now acquired sufficient momentum to pull up other sectors. Indeed, IT has emerged as a good example of a “leading sector” that generates unbalanced growth in the beginning but develops strong linkages over time to make a difference to the growth performance of the entire economy. It is time development theorists and policy makers analysed the true contribution of the IT sector in India’s march towards becoming a trillion-dollar economy.

First, we must note the IT industry’s contribution to altering the risk profile of India’s economy by providing strong support to India’s foreign account. The foreign exchange earnings of around $22.5 billion this year have helped us to sustain our reserves, despite the high level of global crude oil prices. India had failed to survive the global oil price shocks of 1973, 1980 and 1990. Unlike IT now, there was no sector then that could cushion the impact of an external shock by its strong presence in global markets.

Thus, IT has ensured exchange rate stability and insulated our overall business climate from uncertainties that could have arisen otherwise. While India’s manufacturing has revived in recent years, the fact remains that we are faced with a merchandise trade deficit of nearly $45 billion in the current year. Few countries can cope with both large energy and merchandise trade deficits. The US manages because of its strong service sector. We have done it because of our IT industry.