Bring The Boys Back Home

Written by Subhash Agrawal | Updated: Jan 30 2003, 05:30am hrs
The Indian success story in software is hyper documented and commented upon with regularity in the media, and during the last few years it would be difficult to identify events or circumstances outside of information technology (IT) where India has earned positive mention rather than penalties or homilies. More than 300 of the top Fortune 1000 companies outsource software from India. Bangalore is now the numero uno destination in the country for foreign dignitaries, and perhaps as important a wellspring as New Delhi for bylines in the New York Times or The Wall Street Journal. So much so that the only legacy of a rare state visit by a Japanese Prime Minister is the memory of his golf swing at the Infosys compound. But as many a casual foreign visitor to India has quizzed, errrr, where exactly do I find this industry

It is now a glaring paradox begging for attention. Our IT industry is a perfectly civil but detached spouse who brings home the bacon and pays the bills but rarely sups with the family. Our software DNA abounds abroad but you would be hard pressed to find its trace in India, either as a general citizen, homeowner, patient, litigant or whatever. Consider two recent high profile court cases. In both, the Uphaar cinema and the Mukta-Panna oil deal, important court documents are missing. Yes, two major criminal trials with legal and moral implications beyond the immediate context, and key papers are simply lost.

In any other country, they would have been digitally scanned, stored and authenticated. In fact, the impact of IT in the rest of the country is so abysmally low that India ranked a lowly 53rd place (out of 55 countries) in IDCs 2002 Information Society Index, a composite ranking on the usage of computers in everyday life. Even Saudi Arabia, Egypt, Romania and Costa Rica scored higher.

Why is this One, there is hardly any meaningful citizen-government interface via computers or any effort to streamline procedures. Consider land records, where things are so bad even though a beginning of sorts is underway in Andhra Pradesh that large tracts do not have clear ownership papers. There is no provision for keeping a permanent Record-of-Rights regarding urban land. This is one of the reasons why so much of litigation in India is property related. Explaining the numerous problems in privatising, Arun Shourie disclosed at an international conference two years ago that the title for Ashoka Hotel was not traceable. Foreign investors who were present did not know whether to laugh or cry.

Second, a personal computer (PC) still costs several times the average middle-class salary in India, while in the US it is about a quarter of the monthly average salary. Even assuming that the Indian economy continues to grow at 7 per cent annually for the next 10 years, and most economists would agree that growth is not possible beyond that rate, India is unlikely to have a PC base of more than 30 million by the end of 2010, a figure far short of critical mass required for cost and time saving.

What can be done First, a drastic change in laws related to right to information and in statutes that provide for state certification of property transactions but not state certification of ownership, a wholly regressive and perverse provision which the British introduced a century ago with an intent not to safeguard property rights but to extract more revenue. Second, computerisation of the social economy, such as educational institutes and hospitals. This must be subsidised, perhaps even mandated. Third, customs duty on all computer hardware should be removed. It makes little sense and protects only a few chosen local lads. It may hurt them but the larger benefit to society will be enormous.

Even from a macro perspective, the long-term future of the IT industry really lies in a vibrant domestic market. The thing to keep in mind is that while software exports do provide a comfortable source of hard currency for now, the future will be marked by increased competition from newer countries and newer technology. Already, export growth is slowing. And the really important point to ponder is whether the IT industry has made life simpler and the country more competitive.

The author is an analyst of Indian political and business trends and the editor of India Focus, a political risk report for international investors