Andhra Economy: A Call for Structural Readjustment via the IT Sector

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The IT Boom in A.P/Telangana

Even a schoolchild today knows that the sector which has been marching ahead in the federal economy of Telangana are tertiary industries in general (which has accounted for 59.03 % share in the overall GSDP, as of May 2018) with the IT sector, in particular, continuing its ascendancy (during 2016-2017 alone the export revenue generated by IT products from Telangana are valued to be $12.74 billion.)

The Persistent Challenges

Within such circumstances, it is easy to be blinded in a myopic euphoria and ignore the fact that India and the world at large have, within the same duration, been in the grips of a global economic slowdown which we are still recovering from. Job creation in India, for example, has been at its lowest level in 2017 as compared to the previous eight years. So what may be some of the ground level impediments to the social and economic development that is so required in this country?

Illiteracy

Illiteracy has remained, sadly, a widespread phenomenon. A report by UNESCO suggests that one in every third illiterate in the world is from India. Today, in a world which is being increasingly geared towards the digitization of our economy, we may no longer be able to afford an illiterate workforce. There are tools at hand which are more than capable of providing access, if not disseminating the levels of literacy required to be an able and productive worker in our world.

Gadgets Craze – But not for the ‘Have-Nots’

Prime amongst these are telecommunication technologies such as mobile phones and computers. Even the poorer sections of our society aspire as they recognize the degree of mobility such gadgets have facilitated.

Within these coordinates, is it not fair to ask of our computer and mobile companies to offer their wares at discounted rates to the underprivileged? The immediate argument put against this will be that these companies are of course, in most cases, private profit-making enterprises. But if we keep going the present way, aren’t we moving towards a wider socio-economic divide?

SEZ Bubbles

The circumstances within which these revenues were generated were hardly autonomous of public facilitation. However, SEZs or Special Economic Zones have been created all across India in an effort to stimulate core industries like Telecoms and Software which have led to the founding of IT parks such as High Tech City in Hyderabad, a joint venture between the erstwhile Andhra Pradesh Government and L&T Cements. These zones have enormously benefitted from the privileges afforded to them on state land and often enjoying tax benefits other industries could only dream of. Most notable amongst these are the 15 year tax holidays on export profits that all of them enjoy. We need to look at the wider picture, would these companies survive even without the incentives being provided in SEZs?

Conclusion: A Call for Structural Readjustment

Having accounted for the benefits that such enterprises have garnered while benefiting from the tax incentives can we now not expect them to give back to the society, in the form of seasonal discounts on their gadgets, that have come to hold the value that they do in today’s world? Shouldn’t it be the duty of these companies to narrow the socio-economic divide rather than widening it? This, I believe is not an unreasonable demand.