Sucheta Dalal :Converting dreams to reality
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal

 

MoneyLife
You are here: Home » Column Topics » The Rediff columns » Converting dreams to reality
                       Previous           Next

Converting dreams to reality  



Jnuary 31, 2000

There isn't a public meeting these days where one speaker or the other thumps his chest and declares that the 21st century belongs to India. Everybody knows the names of the Indian billionaires in Silicon Valley and even their faces are commonly recognisable thanks to their frequent trips to the home country. They are everywhere. Sabeer Bhatia, K B Chandrashekhar, Kanwal Rekhi, Gururaj 'Desh' Deshpande, Vinod Gupta and several others — they are advising the Prime Minister, addressing elite industry associations, setting up business schools and polytechnics, judging beauty contests, and even raking up the odd controversy by talking about the taking over of the IITs.

Indians hope that information technology (IT) will provide just the revolution that India needs to decisively discard 50 years of license raj, bureaucratic tyranny and strangling red tape. Indian success stories are a big confidence booster and prove that given the opportunity we can take on the world. The domestic successes such as Infosys Technologies are equally inspiring in terms of the standards they have set in corporate accountability. N R Narayana Murthy and Nandan Nilekani, the Infosys duo, also believe in sharing their wealth with employees and investors, and have donated fairly large sums to their respective alma maters — IIT, Kanpur and IIT, Powai.

IT and the Internet together spell transparency, networking and access to information. Businesses such as call centres and documentation take advantage of the lower Indian costs of a skilled workforce, and consequently, the vast Indian population is less of a liability.

But let's do a reality check. IT alone cannot be the magic wand which eliminates poverty, illiteracy and the growing gap between the middle class and the poor. (Forget the rich-- at one percent of the population they needn't even be counted.)

On Republic Day, I participated in a panel discussion to discuss the role of Maharashtra in the context of the world of the 21st century. At least three out of our five-member panel spoke about the magic of IT. A senior banker told the audience that IT will transfer power from the neta and the babu (politician and bureaucrat) to IT-based industrialists. It is politicians who will have to queue up to meet industry heads, he thundered.

The minister on the panel spoke about the right to information, even as his government hiked petrol rates without the mandatory public announcement. The head of an IT company spoke about how pained he was to see humiliating long queues outside the US embassy of people struggling to get away from India and dreamt of the day when Americans would queue up outside the Indian embassy for a visa.

It is a wonderful dream but it took me back to a conversation with F C Kohli, chairman of Tata Consultancy Services, and a man who could truly be called the doyen of the Indian software Industry. TCS, under the long leadership of Mr Kohli, has not only built up a formidable reputation overseas but is also involved in a whole range of community related projects — commercial and experimental, which are pushed, nurtured and encouraged by Mr Kohli.

TCS's latest profit figures are larger than the turnover of Infosys and if he does not figure in the list of the richest Indians in the world, it is only because TCS happens to be a division of Tata Sons, the holding company of the Tata group. (I find Ratan Tata's decision not to spin off TCS into a separate company and go public rather strange; however, I am even more impressed at F C Kohli and his top team staying on as employees of TCS and not take their formidable bank of contacts elsewhere).

Mr Kohli's view is that IT or-- as touted in the context of the Indian dream-- the software industry cannot work miracles in isolation. For the country to move forward, government departments and policy makers have to become technology savvy and begin to use computers for all their operations.

Entrepreneurial freedom and funding of potentially good businesses will certainly increase the number of wealthy Indians, create employment and have some cascading effect in the economy.But it will not be enough. Computerisation of government departments has to be at the core of the IT dream.

Environmental records and data, infrastructure clearances, land and property records and government contracts handled by the Public Works Department and municipalities are areas crying out for computerisation. Income tax, excise and sales tax evasion can be caught and the system cleaned up if all files are computerised and the data put in a manner which will allow transactions to be cross-checked. For instance, fake bills submitted for sales, export and purchase can easily be cross-verified if all statements are on computer. It will increase revenue collections substantially, create room for tax reduction and make it cheaper to pay up rather than avoid them. And this is precisely why the neta/babu class will prevent such reform.

Then there are the practical problems such as the lopsided growth of the IT industry. Almost all Indian hardware requirements are met through import and assembly. The government attempted to set up a semiconductor complex at Chandigarh in the public sector which is defunct and irrelevant. The cost of hardware is thus very high.

Computerisation of government records alone will require vast investment in hardware.But instead of setting up a timetable and budget for this, the Prime Minister has found it necessary to set aside Rs 100 crore for a venture capital fund, when there is already too much money chasing new ideas.

Those who are more pragmatic about the IT euphoria point out that nobody is even doing back-of-the envelope calculations about the investment required in IT hardware to achieve any reasonable milestones in the business. India today accounts for just half a per cent of the world IT business. We need to set up achievable targets, work on a game plan and chalk out investment requirements in order to go forward, say professionals such as Mr Kohli.

Technology is changing so fast that investment in hardware is getting riskier everyday. On the other hand, whether it is traditional computers or smart gadgets which are part of the convergence technologies of the future, some planning of hardware needs is still important.

Finally, the growing industry will need an ever increasing pool of qualified software professionals and more educational institutions will have to be set up to feed the requirements of the IT industry. This will also require a renewed attack on the problem of illiteracy and a fresh focus on adult literacy — otherwise a large chunk of the Indian population will remain outside the development process and create a fresh divide between the educated and the illiterate.

As Mr Kohli would say, it is wonderful to dream but it will require vision and pragmatism to convert it into reality.


-- Sucheta Dalal



 



Recent Comments