Impact of the Information and Communications Technology (ICT) Sector on the economy of a developing country is of prime importance in directing the growth of the economy in the right direction and to the adequate measure. India is one such country which is on the growth path in the ICT sector.
Telecom growth in India has been divided into phases on the basis of policies that are being adopted by the Department of Telecommunications (DoT) of the Government of India (GOI). The Telecom Regulatory Authority of India (TRAI) reports show that the growth rate has exponentially increased during the phases from a negligible quantity to a significant number. India constitutes one of the fastest emerging telecommunications market in the world attracting several foreign investors. With a large number of additional subscribers every month, India could have a potentially high growth rate in the rural undeveloped areas. Hence there is a scope for demand and growth in such areas that are yet to be tapped effectively.
STATE OF INDIAN TELECOM IN THE PAST- 1948-1990
During these 50 years after India’s independence, the TRAI reports have observed that the growth of tele-density has been a mere 1.92%.
Monopoly by BSNL has been one of the important reasons which attribute to low growth rate. The telecom sector was a monopoly until reforms were introduced and liberalization of the economy was effected in the early 90s. BSNL was the incumbent monopoly operator in the telecom sector. Monopolies do not have sufficient incentive to perform. The incumbent firms are generally complacent because there is no threat of new entry. Since the market rates are set by the monopoly, and since the consumer demands are highly inelastic, due to the absence of alternatives, the rates are usually unaffordable by the common public. All these reasons attribute to poor performance and very poor delivery to the consumers.
The ending years of colonial imperial rule had left India in a staggering financial crisis and a pathetic economic condition with a negative growth rate. India groped to rebuild from scratch and certain factors that stunted growth to a great extent were:
- Flawed socialist policies (“Nehruvian Penalty”)
- Ineffective implementation of the 5 year plans made
- Chronic corruption in the government
- Poor quality of human resources.
These factors thwarted economic growth to a very meager rate of just 3.5%, which was 4% less than the projected and planned growth rate of 7.5%.
Another thing to note is the lack of emphasis that was given to telecommunications sector during this time, as the government was aiming at educating its people, removing poverty, improving sanitation and urbanizing villages. Telecommunications was not considered a priority then.
IMPEDIMENTS IN DEVELOPING A STRONG INFRASTRUCTURE
Infrastructure is the structural backbone of the entire country. For a developing country, infrastructure includes power, road, water, etc. Development of infrastructure also aids in the growth of several related sectors like agriculture and transport. Most of the revenue from agriculture and related industries comes from rural India.
Therefore a significant portion of the contribution to the nation’s GDP is from rural Indian industries. Strengthening the infrastructure in these areas would help in contributing to the growth in GDP, which in turn would aid the developing rural areas.
The Communist parties in India have played a principal role in thwarting the government’s proposals on liberalization and privatization of sick industries. Unstable political regimes are a potential hindrance to the progress of the country in general, and it also applies to the communications sector. Corruption and red-tapism at several strata in the government structure is also a cause for hampering progress of the nation. This can only be solved with time and education.
Trained manpower is a great requirement for any developing country. India has a huge manpower base, which requires to be trained. Making new education policies and increasing enrolment in high school is a very effective way to tap this potential. It is well known that the rate of economic growth in a nation is directly proportional to the number of years of technical education imparted to its personnel. Thus India should strongly concentrate on educating its manpower especially in the rural areas in order to make most use of its largest resource – manpower.
CONCLUSION
Telecom growth in India has been divided into phases on the basis of policies that are being adopted by the Department of Telecommunications (DoT) of the Government of India (GOI). The Telecom Regulatory Authority of India (TRAI) reports show that the growth rate has exponentially increased during the phases from a negligible quantity to a significant number. India constitutes one of the fastest emerging telecommunications market in the world attracting several foreign investors. With a large number of additional subscribers every month, India could have a potentially high growth rate in the rural undeveloped areas. Hence there is a scope for demand and growth in such areas that are yet to be tapped effectively.
STATE OF INDIAN TELECOM IN THE PAST- 1948-1990
During these 50 years after India’s independence, the TRAI reports have observed that the growth of tele-density has been a mere 1.92%.
Monopoly by BSNL has been one of the important reasons which attribute to low growth rate. The telecom sector was a monopoly until reforms were introduced and liberalization of the economy was effected in the early 90s. BSNL was the incumbent monopoly operator in the telecom sector. Monopolies do not have sufficient incentive to perform. The incumbent firms are generally complacent because there is no threat of new entry. Since the market rates are set by the monopoly, and since the consumer demands are highly inelastic, due to the absence of alternatives, the rates are usually unaffordable by the common public. All these reasons attribute to poor performance and very poor delivery to the consumers.
The ending years of colonial imperial rule had left India in a staggering financial crisis and a pathetic economic condition with a negative growth rate. India groped to rebuild from scratch and certain factors that stunted growth to a great extent were:
- Flawed socialist policies (“Nehruvian Penalty”)
- Ineffective implementation of the 5 year plans made
- Chronic corruption in the government
- Poor quality of human resources.
These factors thwarted economic growth to a very meager rate of just 3.5%, which was 4% less than the projected and planned growth rate of 7.5%.
Another thing to note is the lack of emphasis that was given to telecommunications sector during this time, as the government was aiming at educating its people, removing poverty, improving sanitation and urbanizing villages. Telecommunications was not considered a priority then.
IMPEDIMENTS IN DEVELOPING A STRONG INFRASTRUCTURE
Infrastructure is the structural backbone of the entire country. For a developing country, infrastructure includes power, road, water, etc. Development of infrastructure also aids in the growth of several related sectors like agriculture and transport. Most of the revenue from agriculture and related industries comes from rural India.
Therefore a significant portion of the contribution to the nation’s GDP is from rural Indian industries. Strengthening the infrastructure in these areas would help in contributing to the growth in GDP, which in turn would aid the developing rural areas.
The Communist parties in India have played a principal role in thwarting the government’s proposals on liberalization and privatization of sick industries. Unstable political regimes are a potential hindrance to the progress of the country in general, and it also applies to the communications sector. Corruption and red-tapism at several strata in the government structure is also a cause for hampering progress of the nation. This can only be solved with time and education.
Trained manpower is a great requirement for any developing country. India has a huge manpower base, which requires to be trained. Making new education policies and increasing enrolment in high school is a very effective way to tap this potential. It is well known that the rate of economic growth in a nation is directly proportional to the number of years of technical education imparted to its personnel. Thus India should strongly concentrate on educating its manpower especially in the rural areas in order to make most use of its largest resource – manpower.
CONCLUSION
On a concluding note, one can say that India is on the right track to becoming a telecom super power. In fact the BRIC reports suggest that India could emerge a super power in the world economy, provided the suggested policies are followed and the assumptions of the author are held in consideration. According to the BRIC Report projections, India will rise from contributing 3.5% to the world economy in terms of GDP to nearly 30% in another 50 years by adopting some fundamental changes to the existing economic structure.
Written By: Srividya Ramachandran, University of Colorado, USA
Written By: Srividya Ramachandran, University of Colorado, USA
No comments:
Post a Comment