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T W E N T Y
s i x
N
agy Hanna, the principal economist at the
World Bank, has done some extensive research on the Indian IT industry. He has
recently published his paper “Exploiting Information Technology for Development.
A case study of India”.
According to his study, national spending on computer hardware and software in
India is estimated at 0.4 percent of GDP (1990), compared with software competitors.
0.6
for Mexico, 0.8 for Korea, 1.1 for Ireland, 1.3 for Singapore and 1.4 for Israel.
Most OECD countries spend between 3 and 5 percent of their GNP on hardware
and software. India’s information sector is also smaller than other Asian countries.
The total value of output of information goods and services in India is estimated at
11
percent of GDP compared to 26 percent for Singapore, 15 percent for South
Korea and 14 percent for Malaysia. In terms of information penetration in the
various sectors of the economy such as manufacturing, transport and finance, IT remains
relatively marginal to corporate strategy and operations.
The financial sector is one of the largest markets and earliest adopters of information
technology in the world. In many countries, financial applications have been a
driving force for the development of a large local market for informatics. In India,
however, numerous constraints have retarded the adoption and productive use of
modern information and communication systems by financial institutions and
insurance companies.
In an effort aimed at loosening these constraints, the Reserve Bank of India has
carried out two studies on the use of IT in commercial banks. And, interest is now
growing in initiating a modernizing program that would systematically use IT to
redesign current business processes and services. Part of this program would be to
modernize payment systems, reduce floats, improve monetary management and
provide links with fiscal planning and monitoring.
The underdevelopment of information collection, dissemination and analysis in
the commercial banking systems has had the following consequences:
The Observer November 17, 1994
Solutions for the Financial Sector
