IT and ITES as an Engine of Growth : An Exploration into the Indian Experience
India emerged as one of the fastest growing economies of the world during the 1990s because of the spectacular dynamism shown by the services sector. Indias services sector has been burgeoning fast and one of the major drivers of the growth of services sector is information technology (IT) and information technology enabled services (ITES). It is well documented in literature that IT impacts growth by different channels. In this study we try to empirically verify the question : Can IT and ITES be an engine of growth? Using micro-level data of 100 households of 20 IT and ITES firms along with secondary data we tried to estimate the extent of indirect employment generation at macro level and the share of IT and ITES in total employment and total value added. According to our study, one job for skilled professional employed in IT and ITES spins off jobs for 0.48 semi-skilled, low skills or unskilled workers. As per our estimates, the 16 lakh workers who are expected to be directly employed in IT sector in the FY 2008 would generate secondary employment for 7,68,000 people which would constitute 0.16 % of total employment. However, the share of consumption expenditure of 16 lakh professionals would be 20% of total value added. Assuming the consumption expenditure of the IT and ITES workers and total value added to be the same/constant when we tried to assess the contribution of consumption expenditure of 2.3 million workers (who are projected to be directly absorbed by IT sector by 2010, NASSCOM, 2005) to total value added it comes out to be 29% of total value added. The study says that the proportion of IT-ITES in total employment may be small but its contribution to total value added is still very high. Indeed IT and ITES can be an engine of growth in Indias economy by way of generating demand impulses in the economy as has been hypothesized and shown through the present study. Keeping in view the contributions of this sector and its huge untapped potential as evident from the present study and various other studies, there is a need for introduction and implementation of policy initiatives to address the challenges faced by this sector and to sustain the growth driven by the services sector.
|Date of creation:||Jan 2009|
|Contact details of provider:|| Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200|
Web page: http://www.eaber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lars-Hendrik Roller & Leonard Waverman, 2001.
"Telecommunications Infrastructure and Economic Development: A Simultaneous Approach,"
American Economic Review,
American Economic Association, vol. 91(4), pages 909-923, September.
- Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Röller, Lars-Hendrik & Waverman, Leonard, 2000. "Telecommunications Infrastructure And Economic Development: A Simultaneous Approach," CEPR Discussion Papers 2399, C.E.P.R. Discussion Papers.
- Arora, Ashish & Athreye, Suma, 2002. "The software industry and India's economic development," Information Economics and Policy, Elsevier, vol. 14(2), pages 253-273, June.
- Arora, Ashish & Athreye, Suma, 2001. "The Software Industry and India's Economic Development," WIDER Working Paper Series 020, World Institute for Development Economic Research (UNU-WIDER).
- Martin L. Weitzman, 1998. "Recombinant Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 331-360.
- Martin L. Weitzman, 1995. "Recombinant Growth," Harvard Institute of Economic Research Working Papers 1722, Harvard - Institute of Economic Research.
- Weitzman, Martin L., 1998. "Recombinant Growth," Scholarly Articles 3708468, Harvard University Department of Economics.
- Pohjola, Matti (ed.), 2001. "Information Technology, Productivity, and Economic Growth: International Evidence and Implications for Economic Development," OUP Catalogue, Oxford University Press, number 9780199243983. Full references (including those not matched with items on IDEAS)