"increase the intrinsic worth of our economy"

An IDC Analysis


New Delhi, 27 December 2004

We are proud to report that the site meter which had crossed 40,000 hits had to be reset and since then (July 2003) is poised to touch the 100,000 mark. We thank all our supporters and value your feedback. Please keep it up. We present an interesting point of view from Rajeev Ayyagari, one of our many visitors, with our comments and analysis.

We are a modest team of three proud Indians and wish to see India become a strong and respected nation, and the more open and clean and healthy our defence forces are, the better for the security and prosperity of every Indian. 

The Indian economy is also a key to our security as the Arth Shastra states. Towards that end we hope we contribute our mite. The Armed Forces spend $16 billion a year and employ over 1.4 million, while the paramilitary forces employ over 800,000 and there should be synergy between the two, which is woefully lacking.  

Till last year the IAF and Army had never ventured out for exercises, thanks to India's professed non alignment policy being thrust unnecessarily on the Defence Forces, but the changed scenario and the exposure in numbers has transformed them so much this year. Their journey has begun and we hope a CDS will be appointed in 2005 and many more forward looking changes will take place. Money seems to be available. The IAF and Army have proved their mettle in exercises abroad and with invited forces in India. 

Now we need to export defence goods and the response to Aero India 2005 at Bangalore commencing from 5 Feb is heartening. Seventy-five Indian companies will take part. 
Hence the feedback we post below is interesting.

We definitely appreciate the massive economic and creative power of the USA. We respect it too as the driver of the world's economic engine. All we can say is that our journey to become an economic power has just begun and Rome was not built in a day. The NDA tried to tell the populace that India was shining and see their fate today. We still have some way to go before we shine, so Rajeev Ayyagari has a valid point to make. 

"Subject =

Dear India Defence Consultants,

Although this is primarily a defense forum, I feel that strengthening India's economy is essential to develop India's military, to move India to a leadership position. I have to agree with the perception of the author of "The Indian Dream" about India's lack of economic clout. Although this is obvious to the 500 million poor in India, the media has concentrated its efforts into painting an unrealistically optimistic picture of India's recent successes in the field of information technology. 

The USA is the greatest contributor to the IT industry. This is not because it has the largest number of programmers. Nor is it because it has the largest number of call-centre employees. It is not because a very large number of Americans are involved in writing application software. The reason America is top is that it CREATES more new, useful technology than any other country. It advances the state of knowledge. American companies push the state of the art; they expand the know-how envelope. 

Our media in India is crying itself hoarse about the phenomenal success of India's "high tech" industry. As a matter of fact, there is nothing high tech about most of our IT industry. A large percentage of IT employees are "language experts" or "software experts". They know how to code in particular languages, and how to use particular software. Many high school students can do the same with no training in an engineering college. 

No Indian organization has created a highly successful language (or any other type of software). No Indian organization has participated (let alone taken the lead in) establishing any protocol widely used in industry. In other words, our IT industry is a consumer, and NOT a producer, of high technology. What the media is doing is akin to calling a couch potato a genius because he knows how to operate his super high-tech television. 

What is worse, except for the IT industry, India is not even a consumer of high technology. Other countries use technology to reduce the cost of living, or equivalently, to increase the standard of living keeping costs fixed. In India, we do not usually do this. (A pleasant exception is the recent proliferation of cell phones.) Almost all high technology is exclusively the province of the well-to-do, with no sign that it will be used to improve efficiency anytime in the future. 

Encouraging widespread consumption of high-tech products is essential to the success of our IT industries. It is the only way we will have a functioning high tech industry. We are earning a lot of money during this IT boom because of the high exchange rate between the rupee and the dollar (and this is a side effect of Americans' productivity), not because we are providing a service which other countries cannot provide. 

Every English-speaking country can do what we are doing. The problem with considering the cash inflow is that it has little to do with intrinsic worth. While the numbers show an expanding economy, we still do not produce any high-tech items or software. We do not develop sophisticated algorithms. We do not write cutting-edge video games. The problem with this is that the intrinsic worth of our economy is not growing, whereas the intrinsic worth of the American economy is. 

Our well-to-do call centre employees' knowledge is still at the same level it was when they passed out of high school, and about the same for many of our web developers and programmers. We hear a lot of reports about jobs moving from the USA to India, and this gives us the feeling that our IT industry is almost as mature as the American one. This is erroneous; we need to understand that most of the jobs moving to India are in the bottom 10% of the American talent pool. Nobody who has written a compiler or done research in a networking protocol has lost his job to an Indian. 

Of course we should be happy that we are able to make money and increase our buying power. However, there should be an effort to encourage the creation of corporations in India that increase the intrinsic worth of our economy. The demand for high tech services must increase. We must start thinking about problems for ourselves and stop simply using the infrastructure invented by a Microsoft or a Sun Microsystems.

Rajeev Ayyagari ("

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