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Ict and Its Impact on Economic Growth

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Amol Subhash Kadam Assistant Professor Kamaladevi College of Arts & Commerce Vitthalwadi-East Email-Id :- kadam.a333@gmail.com Contact No:- 9029787363 ICT AND ITS IMPACT ON ECONOMIC GROWTH Exploring the growth potential of ICT
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Abstract:
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Past decade saw the growth of service sector and marveled on the growing potential of the IT industry. This became more relevant if we see the exponential growth of Internet along with T.V and Radio. So Information Technology (IT) along with Communication Technology (C.T) converges to give us a unique combination of ICT-Information and Communication Technology. This paper attempts to understand the contribution of ICT in the growth story of India. It analyzes the contribution towards growth with the help of four major components of ICT: Internet, Telecom, IT sector, T.V and Radio. The paper presents data and statistics providing sample evidence of the ever growing contributions of ICT towards income generation and employment for the country and thus having a major economical impact. Finally the paper concludes with the fact that it is high time to acknowledge the relevance of ICT within the service sector and growth cannot be looked exclusive of it. Information and Communication Technology:- Number of different studies find that there is a positive impact of the spread of ICT on national output (Röller and Waverman 2001, Sridhar and Sridhar 2004).According to a recent World Bank analysis of 120 countries, for every 10 percentage point increase in the penetration of mobile phones, there is an increase in economic growth of0.81 per cent in developing countries. This growth effect is higher than in developed countries, more distinct for mobile phones than for fixed-line phones and even greater for access to broadband internet (Qiang 2009, see table on the left).ICT play a significant role in generating employment, investment, tax and export revenues. A study (Clarke and Wallsten 2006) found that a 1 percentage point increase in the number of internet users is correlated with aboost in exports from low-income to high-income countries of 3.8 per cent. A study on fish markets in India found that the expansion of mobile phone coverage led to a significant reduction of consumer prices (4 per cent) while at the same time the fishermen’s profit increased by 8 per cent (Jensen 2007).

Today, 1 billion people worldwide are unbanked and have mobile phones. The number is expected to grow to 1.7 billion in 2012 (Source: CGAP).
Industry association NASSCOM predicts that by 2020 the business would have tripled in size to about $300 billion and created another 1.5 million jobs. Favorable policies would be welcome in this growth phase, to boost both exports and the domestic market. R Chandrashekhar, president of Nasscom says "The ICT [information and communications technology] sector can contribute to the development agenda of the country. For exports India needs industry-ready talent from colleges. In the local market, the pace and spread of IT implementation of the government has to change." According to the NASSCOM results, the estimated number of business sector workforce involved in the ICT sector - IT-BPO direct employment for the financial year 2009-10 is 2.3 million and the ICT goods exports as percentage of total exports for the year 2009-10 is 27.3%. We need to understand the role of ICT. Greatly there is a real need to measure the digital divide in the country, including the urban-rural and gender divides, and the use of community Internet access centers and mobile phone applications by low -income users.

TELECOM SECTOR AND INTERNET:
One of the biggest networking giants say that globally India has the fastest internet traffic growth and India will be having an estimated 348 million internet users by 2017. With increasing penetration of mobiles and wireless connections we can see the growth of internet media in the country. And today 41% growth could be seen in digital advertising, with earnings of Rs. 1.5 billion in 2011 to Rs. 21.7 billion in 2012.

The Telecom sector has been one of the fastest growing sectors in recent years in India. It is now the second largest telephone network in the world, after China.
Broadband subscribers increased to 14.81million by the end of this financial year. India is expected to have around 130.6 million mobile internet users by March 2014, according to a joint study by the Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB). The number of user accessing internet through mobile device was 8701 million in December 2012.
Gross Domestic product related to Communication sector as a whole is available in the Ministry of Statistics and Programme implementation from their publication National Accounts Statistics. The figures for the last five as shown in chart below indicates that the GDP in this sector has increased from about 581 billions n 2004-05 to 1403.09 billion in 2008-09, which is slightly less than three times. The percentage GDP of this sector of total
GDP has nearly doubled from 1.96 to 3.38. Production and exports for certain components of ICT sector is maintained by the Ministry of Information and Technology. The details of GDP for communication sector for the last few years are as below.
Gross Domestic product from Communication sector

Present Status
The number of telephones increased from 898.02 million in the beginning of the financial year to 933.02 million at the end of March 2014.
Present Status of the Telecommunication Sector (as on March 31, 2014)
● Indian telecom network is the second largest in the world after China.
● The country has 933.02 million telephone connections, including 904.52 million wireless telephone connections.
● Overall tele-density in the country is 75.23%.
● Urban tele-density is 145.46%, whereas rural tele-density is 44.01%.
● The share of wireless telephones in total telephones is 96.95%.
● The share of private sector in total telephones is 87.13%.
● Number of Broadband connections is 60.87 million.
During the financial year 2013-14, telephone connections increased every month except in the month of September, 2013. The Chart below indicates the number of connections at the end of each month during the year 2013-14.

FDI Inflow
Actual inflow of FDI in Telecom Sector from April 2000 to March 2014 is US $14,163 million.
The Cumulative FDI data for last four years and current year is as under:

Cumulative FDI in Telecom Sector Since 2000 | Up to Year Ending | Cumulative FDI (US $ in million) | March 10 | 8931 | March 11 | 10589 | March 12 | 12552 | March 13 | 12856 | March 14 | 14163 |

GOVERNMENT OF INDIA CONSIDERING THE GROWING IMPORTANCE OF THE TELECOM SECTOR AND ITS CONTRIBUTION TOWARDS THE SERVICE SECTOR HAS INITIATED THE FOLLOWING PROPOSALS VIA 12th Five Year Plan

* Twelfth Plan Targets for the Telecommunication Sector 1. Provision of 1200 million connections by 2017. 2. Mobile access to all villages and increase rural Tele-density to 70 per cent by 2017. 3. Broadband connection of 175 million by 2017. 4. Commissioning of National Optical Fibre Network (NOFN) 5. Make available additional 300 MHz of spectrum for IMT services 6. Making India a hub for telecom equipment manufacturing by incentivizing domestic manufacturers with thrust on IPR, product development and commercialization. 7. Provide preferential market access for indigenously manufactured products. 8. To increase domestic manufactured products in telecom network to the extent of 60 per cent with value addition of 45 per cent by 2017. 9. Adoption of green policy in Telecom and incentivize use of renewable energy sources.

INFORMATION TECHNOLOGY
India’s IT and ITeS Service with exponential growth are unique export-led success story which has put India on the global map. While India has achieved a brand identity in this sector, other developing countries are trying to emulate India’s example. Besides its impact on growth, it is also a provider of skilled employment both in India and abroad. It generated direct employment for nearly 2.8 million people and indirect employment of around 8.9 million in 2011-12. The IT-ITeS industry has 4 major subcomponents:
It Services, Business Process Management (BPM), Engineering services, R&D and software products. The global slowdown had hit the revenue of IT-BPU, the growth of which decelerated from 15% in 2011-12 to an estimated 8.4% in 2012-13. On the domestic front revenue growth decelerated from 9.7% to 1.9% during these years. Indian rupee terms domestic revenue has grown at 14.1% in 2012-13 compare to 16.6% in 2011-12. As a proportion of national GDP IT and Business Process Management (BPM) sector revenues have grown from 1.2% in 1997-98 to an estimated nearly 8% in 2012-13.All of it will contribute to the growth story of India. Overall Growth Performance of the IT-BPM Sector | | Value(US $ Billions) | Growth Rate ( % ) | Year | 07-08 | 08-09 | 09-10 | 10-11 | 11-12 | 12-13E | 13-14P | 11-12 | 12-13L | 13-14P | Total IT-BPM Service Revenue | 52.1 | 59.9 | 64.0 | 76.3 | 87.7 | 95.2 | 106-111 | 15.0 | 8.4 | 13-15 | Exports | 40.4 | 47.1 | 49.7 | 59.0 | 68.8 | 75.8 | 84-87 | 16.5 | 10.2 | 12-14 | Domestics | 11.7 | 12.8 | 14.3 | 17.3 | 19.0 | 19.3 | 22-24 | 9.7 | 1.9 | 13-15 |

ICT usage Indicators (By no. of Employees) Year | Totalestimatedno. offactories/enterprises | % of enterprises usingcomputer | % of enterprises usingcomputer with no. ofemployees | | | Rural | Urban | Total | 0-9 | 10-49 | 50-49 | 250+ | Total | 2005-06 | 140160 | 59.21 | 70.31 | 65.83 | 30.75 | 62.05 | 78.67 | 92.82 | 65.83 | 2006-07 | 144710 | 61.50 | 74.72 | 69.26 | 36.04 | 64.37 | 79.60 | 94.31 | 69.26 | 2007-08 | 146385 | 67.26 | 77.71 | 73.21 | 37.05 | 68.57 | 81.93 | 94.76 | 73.21 |

The Annual Survey of Industries (ASI) is the principal source of industrial statistics in India. The data is collected through a comprehensive questionnaire, which includes a query related to the use of ICT whether the business is using the computer. The survey covers all factories registered under Factories Act, 1948 employing 10 or more workers using power; and those employing 20 or more workers without using power. We find that over the period of time the usage of computers in industries is on the rise. We also see that the usage of computers in rural areas has increased from 59% in 2005-06 to 67% in 2007-08 whereas in urban areas it has increased from 70% in 2005-06 to 78% in 2007-08. Also it may be seen that about 95% of large enterprises having above 250 employees are using computer. However, only 37% of businesses with less than 10 employees are using computers in 2007-08.

Trend in production and growth of the Hardware and Computer Software Sector

Source: Department of IT, Ministry of Communication and IT

Growth of Exports in IT-ITES/BPO sector

Source: The Ministry of Communication and Information Technology

Percentage of exports / imports of ICT manufacturing goods to total manufacturing exports / imports

* Up to January, 2010 only Source: Ministry of Commerce & Industry

We can infer from the above tables that there has been a substantial growth both production wise and in exports and imports within the IT-ITES/BPO sector. All of it will grant higher inflow of capital to the Indian economy which will further guarantee higher GDP.

RADIO AND TELEVISION

The information related to the core indicators on access to and Use of ICT is also available from the quinquennial surveys of Consumer Expenditure. The latest survey was conducted during the periods 2004-05. As per this survey the information of core indicators is depicted in the following table.
Estimates of % of household in rural and urban India
(a) Possessing radio and (b) Possessing television Year | % Households possessing Radio | % Households possessing Television | | Rural | Urban | Rural | Urban | 2004-05 | 26.3 | 33.6 | 25.6 | 66.1 |

The Media and Entertainment Industry is expected to exceed Rs. 224,500 crore by 2017, growing at a CAGR of 18% from 2012. The size of the Indian M&E sector increased from about Rs. 805 billion in 2011 to almost Rs. 965 billion in 2012 representing as year-on-year growth of 20%. India’s Television market grew at 13% with revenues increasing from Rs. 340 billion in 2011 to Rs. 383 billion in2012. Indian Radio Industry clocked revenue of Rs. 1,530 crore in 2012. Filmed entertainment also demonstrated growth in2012 with sector revenue increasing by about 17% from 9,600 crore in 2011 to 11,200 crore in 2012.

CONCLUSION:-
This paper examines the contribution of ICT to, and its impact on, Indian economic growth. Service sector contributes around 60% towards GDP of India and one cannot imagine this contribution exclusive of the developments occurring in relation to ICT. It’s high time that we give due importance to it and acknowledge the contribution made by it. So efforts need to initiated regarding developing a mechanism to measure, analyze and evaluate the dimensions of this sector.

REFERENCE:- 1. Manorama YEARBOOK 2014, ISSN 0975-2250. 2. Annual report 2013-14, Department of Telecommunications Ministry of Communications & Information Technology Government of India. 3. Information and Communication Technologies for Development, Federal Ministry of Economic Development Nov-2010 4. Why government should focus on Information and Communications Technology (ICT) sector - Economic Times, My 25 2014 5. Mobile phone subscribers per 100 inhabitants.2014 figure is estimated. http://en.wikipedia.org/wiki/Mobile_phone 6. Report No. 509 of the 62nd round survey of National Sample Survey Office. 7. Organization for Economic Co-operation and Development, DSTI/ICCP/IE(2008)7/FINAL Unclassified, 30 June 2010. 8. Performance & Contribution towards Exports by IT-ITES Industry, www.deity.gov.in/print/2376 9. Reports of Annual Survey of industries for different years (2005-06, 2006-07, 2007-08) 10. Reports on Export Import Statistics from Ministry of Commerce and Industry. 11. Official Website of the Ministry of Statistics and Programme Implementation of Government of India, www.mospi.nic.in 12. Ministry of Commerce & Industry 13. Telecom Regulatory Authority of India (2009), The Indian Telecom Services, Performance Indicators July September 2008, 13 January, New Delhi, India, at www.trai.gov.in/WriteReadData/trai/upload/Reports/45/Report13jan09 14. Tata Consulting Services Ltd (TCS), Annual Report, 2006-07.

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