Indra’s Drishtikona (Viewpoint)

Telecom Sector, India and GDP

Posted : March 25, 2005 at 10:18 pm [IST]

A new study by Leanard Waverman of London Business School, and Meloria Mescgi and Melvyn Fuss, of LECG, an economic consultancy, provides the most detailed analysis yet of the relationship between mobile phones and economic growth.

” In a typical developing country, an increase of ten mobile phones per 100 people boosts GDP by 0.6 percentage point.”
To illustrate, Mr. Waverman considers Indonesia (nine mobile phones per 100 people) and the Philippines (27 phones per 100 people). Long-term growth in the Philippines could be a percentage point higher than in Indonesia if the gap is maintained. But if Indonesia closed the gap, its growth rate would match that of the Philippines. However, there is a large education gap between the two countries. His model predicts that bridging this divide would boost Indonesia’s growth rate even more than closing the mobile gap.

India is undergoing a telecom revolution too. Tele-density is reaching around 10 now. I like this for one more reason. It will also serve the purpose of PURA. The hordes of poorly paid self-employed need not live in horrible slums of the cities. They can live in villages nearby or in their own villages and commute as required. An electrician, a plumber, a carpenter, or a mason or a required number of manual workers can be called as required by the necessity. The farmers can take many helps from the service providers in towns including doctors, the tractor repair mechanic. Even the shopkeepers in town can increase their business and supply the items to the villagers ordered through phones.

As reported, the government of India is planning about Rs 300,000 crore of investment for the equipment to roll out broadband services and 150 million new telephone lines over the next three years. The government envisages achieving a target of 40 million Internet and 20 million broadband subscribers by 2010. Naturally, that will mean an increase in GDP and more so for per capita income. India must win the race of GDP growth with its competitors. This is the only way to get respectability in this world today.

Even country like Bangladesh is expanding its telecommunication facilities in big way. Their Grameen Telephone Scheme is praiseworthy. In the scheme, a village woman borrows funds for a mobile phone that is then used throughout the village at a small charge. With the fee she collects, the woman gradually repays the loan. The scheme is expected to provide access to about 23 million villagers. With their relatives numbering 50 million spread all over India to earn better remunerations, the scheme will a real boon to keep in touch.

And with the improved capability of these phones, the future is brighter. Let the barriers of distance get demolished for all- the rich as well as poor. And in process, we can see the end of poverty a possibility

- Indra

Category: Government Policy/Administration |