Despite being a global leader in information technology, India remains under-invested with its IT capital share being a mere 3.5 per cent of the total capital — lowest among 30 global economies — says a Nasscom report. The report — prepared by Sallstrom Consulting & Nathan Associates and released by Planning Commission Deputy Chairman Montek Singh Ahluwalia — emphasises on how strengthening of IT capital can reap benefits for the country’s GDP. As IT capital deepens in an economy, it adds more to the GDP, resulting in increased labour productivity, the report states. A 10 per cent surge in IT capital increases GDP by 3.6 per cent. In contrast, in economies under-invested in IT capital, a 10 per cent increase in IT capital increases GDP by 1.6 per cent GDP. Nasscom President Kiran Karnik explains, ‘‘The domestic IT market has grown by 25 per cent, but this does not give us the satisfaction. We need to understand how IT can act as a stimulus to economic growth.’’ Giving a synopsis of the report, Nathan Associates V-P Robert Damuth said, ‘‘When I think of IT, I think of India because its investment in IT capital is less than that of Columbia, Turkey, Thailand and the Philippines.’’ IT-friendly economies have a figure of 24 per cent of the total capital as against 5.4 per cent for IT under-invested economies. Here too India fares least with only 3.5 per cent spend on IT capital. Turkey’s expenditure on IT capital is 4.4 per cent, while Columbia spends 5.3 per cent. Thailand’s expenditure is at 5.9 per cent. Presenting the report, Ahluwalia said, ‘‘Nasscom should create pressure for incorporation of IT via competition. The software body should create an environment for more productivity in the Indian economy.’’ According to Laura Sallstrom of Sallstrom Consulting, for India’s economy to become invested in IT capital, the government must develop and implement policies that promote investment in IT by businesses, households, educational institutions, and the government itself. ‘‘There is a need for strong intellectual property rights (IPR) protection, a good flow of human capital, access to finance capital for domestically-focussed IT companies and research and development.’’ Commenting on the increased rate of software piracy in India, at 73 per cent, Sallstrom said it has resulted in a loss of $371 million. She also alerted on the increased outflow of the Indian talent pool to the Silicon Valley. Microsoft India Chairman Ravi Venkatesan stressed on the need to curb software piracy as that affected small IT companies the most.
