The budget released by the Modi government this year had some clear-cut agendas, and was categorically termed as pro-business by most experts. But what does being pro-business mean, and what is it going to do for the population of India? Pro-business essentially implies that doing business in India has been made much simpler now. The policies guiding this would eventually be of benefit to the masses due to the creation of employment by new businesses. A related issue that the budget focused on is strengthening the MSME base of India. Several policies pertaining to increase in capital investment ceiling and easier exit options in case of bankruptcy have been introduced. It is evident that one of the government’s major goals is to boost entrepreneurship in the country.
The technology industry is arguably the fastest growing sector in India currently. Past trends show a consistent rise in its revenues.
Estimates forecast a growth of anywhere from 8% to 9% in the sector this year. In spite of great potential however India has failed to catch up with the rest of the nations in the IT sector. The categorical reason for this has been the lack of provision of relevant policies and basic facilities by our government. However, now that the government has recognized the problem at hand and is taking certain measures to resolve the issues, we should ideally be able to attain our capacity as a country. A major influence of these policies will be on the smaller businesses, as is intended by the policymakers. As MSMEs contribute nearly 8% to our nation’s GDP, encouraging their growth is a logical step to take. This can only happen when these businesses have germane and competitive technology, which they often cannot afford. Therefore, it is in the interest of both the entrepreneurs and the government that suitable action is taken to make technology cheaper and more accessible. This has hence become a part of our Prime Minister’s vision, to convert our nation to ‘Digital India’.
The Finance Minister recently revealed that nearly INR 200 crores has been allocated for technology development and broadband penetration for supporting MSMEs. The primary aim of this move might have been promotion of small businesses, but the benefit to the technology industry can’t be ignored. In addition, an allocation of INR 500 crores for Internet connectivity in villages and small towns has also been made. Once again, the benefit to the technological sector might be secondary, but it is undeniably there. The development of smart villages, greater connectivity, and better technology for MSMEs are all road stops towards the march to ‘Digital India’. While the journey promises to be one of digital evolution, there are also economic and social benefits involved. IT industries account for nearly 30% of the country’s GDP and 25% of the employed population. As it boosts and grows, employment levels are set to see higher figures also.
THE FUTURE OF TECH
The evolution of technology is a necessary one for the growth of the economy of a country. It is interweaved with social benefits, growth of MSMEs and of well-established businesses also. While the budget does suggest major allocations for development of technology, both directly and indirectly, it remains to be seen how effective these measures would be. An indirect benefit to the industry comes from measures taken to boost the Manufacturing and Banking sectors. Due to these accounting for nearly 40% of the market for IT services, companies can expect more business in the coming years.
One of the trends in the software industry has been its consistent and definitive orientation towards services rather than product development and research. So far, digital innovation has been a monopoly of the western world by and large. However, with the advent of better policies and greater financial support from the government, this may change soon. Initiatives like a district level incubator network and funding for startups will ensure greater innovation and hence software product research and development is one area where greater penetration can be expected. Influx of outsourced projects from global firms should also see an upward shift as the IT industry grows. Apart from this, companies should also focus on providing low cost software solutions to budding businesses as part of the services sector since the demand for these is on the rise. As part of the new plan, the government will also be reaching out to the industry for leveraging technology for better governance.
Until now, both MSMEs and big businesses have suffered from a lack of Internet connectivity in India in the past and the growth of the industry as a whole seemed to be stagnating in the last few years, with India being ranked at 121 among 157 countries in terms of Internet penetration this year. This was in contrast to 114 in the previous year. The Modi government however has identified the problem and created the required policies. All that remains now is proper execution.