Will India Government increase IT spend?


Infotech Lead Asia: Indian government spends only about 0.3 percent of the GDP on IT as compared to 1.2 percent by UK and 1.1 percent by the US.

India Government needs to increase its focus on IT-enabled citizen services, improving public sector efficiency, investing in disruptive technologies and promoting shared services across government departments, according to BCG.

Arvind Subramanian, partner and managing director, BCG, said: “The government in its role as a buyer of IT can have significant influence on accelerating the penetration of IT in India.”

According to a recent Gartner report, Indian Government’s IT spending is estimated to be Rs 36,800 crore in 2013. Telecommunications will be the largest expenditure category while software will see highest growth in government spending.

Government of India’s UID program is seen as a key driver of increase in expenditure. Direct cash transfers and a revamped welfare system are some of the ambitious goals of the UID program.

The Rs 20,000 crore National Fibre Optic Network (NFON), electronic chip making and digitization of databases are also seen by Gartner as factors which will drive government spending and benefit the Indian IT sector.

Gartner expects government spending on desktop and infrastructure software to drive a strong rate of growth in expenditure in the software category. Telecommunications, the largest driver of the 10.5 percent forecast increase in IT expenditure will include government spending on telecom/networking equipment and related services.

Meanwhile, the Manufacturers’ Association for Information Technology (MAIT), on Monday said that the Indian electronics market is set to suffer a major slump in fiscal 2013-14 and the industry may lose over Rs 1,000 crore if the government fails to extend the April 3 deadline of Compulsory Registration Order 2012.

Welcoming the government order that makes it mandatory for all manufacturers to get their electronic products certified for compliance with BIS standards, MAIT said that though the companies were ready to comply with these standards and tests, the government needs to address the issues faced by the Industry in meeting the deadline.

The Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order 2012 has put a blanket ban on the sale of certain electronic products unless they meet the standard specified by BIS. The government order lists products under 15 categories ranging from video games, laptop, notebook, tablet and plasma/LCD/LED televisions, to microwave, printers and scanners, telephone answering machines, electronic music systems, etc.

A report by BCG-CII has outlined 8 point action plan to ensure active collaboration of key stakeholders – end user industries, IT providers and the government for greater IT adoption in India.

1.      User industries need to create a clear vision for the role of IT in their organizations with well defined roadmaps

2.      User industries need to strengthen their capabilities to manage IT effectively by enhancing the required IT related systems and processes

3.      IT providers and user industries need to work collaboratively to identify business needs and opportunities and work together to realize them

4.      If not already in place, IT providers should develop a differentiated India strategy

5.      To be successful in India, IT providers need to optimize their delivery model for lower costs

6.      Government to facilitate IT adoption through policies, programs and incentives

7.      Government should also facilitate development of quality IT workforce

8.      Government to partner with the private sector to leverage cutting edge IT and foster innovation along with building the required IT capabilities to orchestrate its IT projects

In recent years, Government has taken the right steps in some areas for example, UID , education. Going forward, Government needs to focus on providing more IT and IT–enabled citizen services, improving efficiencies in the public sector, investing in disruptive technologies, standardizing data, and promoting shared services. These initiatives will need to be supported by a strong execution and governance model to effectively leverage IT.
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