So Far Too Good

The first condition for continued national success in information technology is that the country's social infrastructure must become internationally competitive

Wipro has put in a stellar performance in the first half of this fiscal year. While sales rose 39 per cent, profits more than doubled. Its splendid performance is only the latest in a series of good news from India's premier IT companies. Nor is the strong upward trend confined to the leading companies.

NASSCOM reports export growth of 63 per cent for the first half. Even if the figures are corrected for the falling value of the rupee, the trend growth of 50 per cent has been exceeded. This is at a time when IT companies in the US have published mixed results and are announcing negative news day after day. Even the most choleric Indian cassandra will have to recognise that our IT companies show tremendous strength and continue to forge ahead in a world market that has laid many of the competitors low.

These figures formed an exuberant backdrop for the IT.com mela in Bangalore. Everybody who is anybody in the industry was in Bangalore. Much celebration occurred, much partying was indulged in this cheerful city.

Not quite the way our devout Delhi leaders would organise their celebrations, but all the more enjoyable for that. Along with the partying there was much networking. This peculiarly American phenomenon is entering India through its southern back door. It is an essential ingredient of the IT industry internationally, and India.com is gladly beginning to follow the global trend.

Amidst all this celebration there will no doubt be some sneaking fears: Can this show go on? How will it end? If the IT industry were given free rein, it would go on for a long time. What the Bangalore get-together will, however, bring out is that there is no Indian IT industry.

It just happens to be located in India, because this is where its workforce was educated, this is where these guileful engineers live and like to live. But they do not have to. Other countries beckon them with open arms; worse, they can offer them better living conditions "" better law and order, better housing, better schools for their children.

So the first condition for continued national success in information technology is that the country's social infrastructure must become internationally competitive. The land laws should be changed so as to make land cheaper and houses more affordable.

The police must be rid of corruption and lazy habits to provide honest citizens with more effective protection. Parents should be able to find good schools for their children without standing in queues, presenting themselves for interviews and paying through the nose once they have got through the hoops and placed their kids in school. The standards we achieve in the IITs should be applied to our entire tertiary educational establishment.

Even if we create a first-class environment for our engineers, the software boom can be derailed by macro-economic mismanagement. The flood of dollars may bring with it massive inflation that would price the IT workers out of the world market. Or it may lead to an improvement in the real effective exchange rate and kill our other industries. The quality of macro-economic policy-making will decide the fate of this star industry beyond the immediate future.