Dialling up India’s growth

Dialling up India’s growth
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First Published: Mon, Nov 02 2009. 09 58 PM IST

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Updated: Mon, Nov 02 2009. 09 58 PM IST
Slogans have captured India’s collective imagination in the past. We had Indira Gandhi’s “roti, kapda aur makaan ” (food, clothing and shelter) in the 1970s and, more recently, “ sadak, bijli aur paani ” (roads, power and water) in the 1990s. We now need a new canon, “cellphone, Internet aur growth”, for the next phase of development. Admittedly, this doesn’t have the same desi ring that the previous two possess, but that is perhaps metaphorically appropriate for an India that is globalizing on its own terms. It is a slogan that will remind Indians just how much mobile and Internet penetration can contribute to our gross domestic product (GDP) and the growth of our country.
By any measure, the progress made in driving cellphone penetration has been stunning. We have gone from a million subscribers in 1999 to nearly 450 million today— 45,000% growth in a decade! The challenge for cellular voice connectivity is rural density, with penetration at an impressive 75% in urban areas, but only 12% in rural India. Greater mobile penetration will translate into more rural empowerment and increased efficiency to the rural economy. Farmers, for instance, can communicate with commodity buyers or brokers.
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Every 10% increase in connectivity leads to a 0.61% increase in GDP, as McKinsey noted in 2008. Yet, we still need to improve the coverage and quality of the voice networks and grow the rural subscriber base as dramatically as its urban counterpart. There are a number of policy, service and pricing innovations that can make this a reality.
Given current momentum and focus, both from the government and industry, ubiquitous voice connectivity in the country could be considered a “done deal” during the course of the next four-five years. For all practical purposes, India will be saturated on phone connectivity, with all the attendant benefits of voice communication accruing to the economy. McKinsey calculates that for every 10 million connected via voice (cellphones), there is a positive impact of $1 billion on GDP; while for every 100 million connected via the Internet, there is a $40 billion GDP impact.
Cellphones have already provided an important leapfrog to India. We skipped the fixed-line generation altogether. The net impact was with a much lower investment; India was privy to new technology and pervasive phone connectivity. This happened because we embraced worldwide standards in mobile communication, deployed the latest technology and made it available to all—in other words, we played to our strength in large numbers to bring down costs. India now needs to ensure similar thinking with the Internet. Adopt worldwide standards of definition of broadband (a road map to at least 10 megabits per second, or Mbps, for all), deploy the latest technology (Wimax, or worldwide interoperability for microwave access) and make it available to all.
The next big challenge for the country is to get every Indian connected on a “real” broadband connection—that is, one that offers at least 2 Mbps. Most countries that have taken a lead in building broadband infrastructure define true broadband connections at speeds of at least 10 Mbps. In India, after much debate, we have finally moved the dial from 256 kilobits per second (Kbps) to 2 Mbps. There is still a degree of schizophrenia in the debate since broadband is still viewed as an elitist luxury for the urban middle class. We need to make a clear break from such thinking.
The deployment of a ubiquitous broadband network will actually disproportionately advantage those sections of society that have been otherwise denied the benefits of information and education.
Broadband will find application in a wide range of development activities. As the government aims to migrate National Rural Employment Guarantee Scheme (NREGS) registrants from an unskilled to a semi-skilled (and eventually to a fully skilled) workforce, broadband-enabled community service centres can serve as a key delivery platform. Providing basic healthcare and harnessing the promise of telemedicine can only be made a reality with access to a very high speed data network.
A 2006 study by the Confederation of Indian Industry (CII) had shown that pervasive availability of broadband can add 65 million new jobs and $180 billion to the Indian economy. In today’s scenario, this estimate might be proven conservative: We have the capability to scale this up, given that India has been spending only around 7% of GDP towards information and communication technology (ICT). Increasing this investment to 10% of GDP would deliver an incremental $35 billion per year over the next five years.
However, getting this process right will involve necessary steps such as increasing ICT deployment; mandating the deep use of ICT in key sectors such as education, healthcare and national security; and migrating all government revenue and non-revenue services to an online platform. ICT has to be viewed as a core infrastructure investment and should be an integral part of how we think about physical infrastructure, education and healthcare. We need to think of physical infrastructure as steel plus cement plus ICT; education as classrooms plus teachers plus ICT; healthcare as doctors plus patients plus ICT. This will make the new canon of “cellphone, Internet aur growth” a welcome reality.
R. Sivakumar is managing director, sales and marketing group, Intel South Asia. Comments are welcome at theirview@livemint.com
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First Published: Mon, Nov 02 2009. 09 58 PM IST
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