February 2013

ICT Deployment Should Find More Favour in Government Fiscal Policies

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Creating an impulsion for ICT deployment has never been a priority in the financial policy-making or budgeting exercise 

February being the month for the Annual Budget of the Government of India, as an ICT for Development practitioner, this column writer considered it worthwhile to take a look at how much the financial and fiscal management system of the government have recognised the importance and impact of the ICT on our economy both in short and long terms.

It is now widely accepted that since the invention of electricity, steam engine, printing press, assembly line and so on, nothing of those could influence the civilisation so much as did the Information & Communication Technology. In this era of technology ICT is prevailing as a real global game changer, getting integrated virtually all aspects of economy and society thereby creating a newly-coined term as Digital Economy. The pace, at which ICT is getting adopted in the society in last fifteen years or so, has actually exceeded most optimistic forecast by the experts. We can say now that ICT is a major driver of global economy as well as improving the quality of life, with a specific centrality to economic growth and prosperity as it impacts most of the key parameters of the same, in both short and long term manner.

In India, or that way in any country, government is the prime ‘activity generator’ for the society. And ICT is impacting every sector of activity, farming to manufacturing to services, for the citizen and for the government as well. There is abundant use of hardware, software, application tools in the internal operations of organisations, governments, businesses, NGOs, CSOs, CBOs and so on. By the use of ICT human productivity is getting increased by 3 to 5 times that of non-IT capital. The key economic activities like productivity, market linkages and creating new markets, employment, higher quality goods and services, innovation and new products and services are impacted to a very high degree. And as the time is progressing it appears that potential of ICT is not to get exhausted very soon! The core technologies are continuously evolving and continue to get better, faster, cheaper, easier to use year-to-year, if not month by month. New applications in various sectors are getting added on a regular basis. Given this impending scenario, establishing nexus between ICT deployment and consequent economic growth and prosperity, it would be order of the day to view a scorecard for our government, in regard to the financial policies, fiscal and tax incentives during budgeting exercises and other indirect finance-related regulations which would have directly or indirectly promoted deployment of ICT in governments and businesses. Was there any specific budgeting exercise happened (although remembering the Planning Commission Guidelines that 2-3 percent of the allocation can be expended on IT-related initiatives) so that a department in the state or in central government gets excited to get into whole hog ICT mode for its businesses? Was there any time any concrete financial policy direction so that a digital content development eco-system is established in an accelerated mode? Or, was there any direct financial policy for a particular social sector, say health, so that all hospitals, government or private, get incentivized to quickly convert to provide health services using various ICT means ? Was there any financial benefit announced for the very large government work force for acquiring an additional training/qualification in the area of ICT or e-government? (compare this proposition with the erstwhile government scheme of acquiring one additional increment for any government servant for adoption of planned family norm) Have we ever mandated the government PSUs, through some time-bound financial reliefs, so that they adopt ICT for their internal functions and also putting ICT for all external interfaces for the stakeholders doing businesses with them? In this context one good example could be to provide a time-bound tax relief regime for the PSUs with a mandate of incorporating total e-procurement solution for all the procurements undertaken by the PSUs. The list of such questions could be long, incisive and also diverse for all possible and feasible propositions, where we could have expected more visible and accelerated changes in the area of ICT deployment in multitude of economic activities. But unfortunately answer to all such questions would be a ‘no’. Creating an impulsion for ICT deployment has never been a priority in the financial policy-making or budgeting exercise. That special thrust from the think-tanks, who prepare the annual fiscal policy directions for the government, is sadly missing.

Accelerated deployment of ICT in all economic activities would be a very effective cause to usher in economic prosperity and to create digital economy for the country. It is high time that government appreciates that and takes pro- active policies to create such regime. To bring in digital economy within a reasonable time and to set in faster pace in the implementation of electronic governance both in public and private sector, government should specifically design some comprehensive taxation and other fiscal incentives and reliefs for a predesignated moratorium period, so that an impetus is created all around to get in to digitally-governed economy. We are yet to create a true ICT era in our country which can bring long term gains in the economy. After all there is a prediction in ‘The Wealth Report 2012’ by M/s Knight Frank (UK) that by 2050 India will climb up the podium from 4th position to the ‘Numero Uno’ – the largest economy. This is not going to happen for sure, unless we accept some initial loss in the short-term revenue battles, to win the long-term war for accomplishing top position of a developed economy!

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