NEW DELHI, APRIL 23: The growing tendency in India to perceive the `new economy' to mean only Information Technology and dotcom companies could have disastrous consequences for the economy, a leading industrial chamber has said."Everywhere new economy is understood as a knowledge economy where IT and dotcom industries are some essential tools of knowledge-driven economy and must not be understood as constituting the new economy or knowledge-driven economy," Confederation of Indian Industry (CII) has said in a background paper for its annual session.No economy can be competitive and high growth, nor can it enter a new economy, simply by developing a cluster of IT and dotcom companies, the chamber said, adding the new economy should not be embraced by discarding the traditional manufacturing industries.The new economy would generate greater incomes which in turn would translate into greater demand for services most of which would come only from the traditional industries, it said.No amount of IT or dotcom companies will secure the country us a place of prominence in the emerging knowledge economy if it does not focus on `production, distribution and use of knowledge and information', the chamber said.India is developing a tendency to judge the economy and its trends purely from the perspective of the investors and capital market behaviour, it said."We tend to conclude the future of industries almost entirely on the basis of investors preferences. If this tendency is allowed to go unchecked, we may miss the bus of the knowledge economy," the chamber said.CII said that the new economy had revived the dormant capital market in the country. "In India, if the market for the IPOs has revived it is because of the knowledge-based industries," it said, adding that investors in the capital market were preferring the new economy stocks to the old economy stocks.The chamber, however, warned that though the new economy stocks were generating returns beyond expectations, the Government needed to focus on building, protecting and developing intellectual capital rather than mearly establishing more knowledge industries."Development of knowledge industries and preparing for a knowledge-driven economy, a new economy are different things. Establishment of knowledge industries does not necessarily make a knowledge-driven economy," the chamber said.India's strategy for new economy suffers from fundamental deficiencies namely lack of a strategy to build competitive intellectual assets, it said, adding India could learn from its neighbours in the Asian region especially countries like China, Korea and Singapore all of whom have developed strategies for building knowledge-driven economies.The chamber said India could use application of knowledge to turn-around the traditional sectors which were being ignored because of their low return activities."If we do not rectify ourselves and look at knowledge industries only in isolation, the benefits of having knowledge industries would accrue to others and the benefit to us will at best in the form of foreign exchange earning," it said.
