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communication infrastructure: and the lack of a strategy for using software as a
productivity tool. Any plan to accelerate India’s informatics sector and optimize
the sector’s performance will have to address these issues.
If we review the type of computers used, it is evident that we have hardly utilized
automation for better decision-making, for more effective planning to remedy
problems of low productivity and poor quality, and for providing information and
education to our citizens.
The computerization levels in the country are elementary in more ways than
one. In industry services and sectors like banking or transportation, we are not
making use of computers in management and control of operations to achieve
better utilization of resources. Productivity in manufacturing processes, utilities
and services is low, wastages are high and the learning curves are long.
Computerization in these areas could enable the country to produce competitively
and effectively. For small sectors, it could increase their competitiveness and open
new markets to them.
Complex societal problems can no longer be resolved through conventional means to
obtain appropriate and timely solutions. Extensive use of information Technology
can help the country in defining complex problems better.
Small software firms have found it particularly difficult to obtain finance. First,
long-term funding, even by innovative venture capital funds like TDICI and
RCTC, have been geared largely to cover assets, with lenders tending to advance
loans only against the security of fixed assets. Software companies typically have
low fixed asset bases, relying instead on human skills and intellectual property.
Moreover, “sweat” equity (the equity value of the promoter’s organizing efforts,
ideas and knowledge) is not yet recognized in India, and there is thus no practical
“
exit route” for venture capitalists.
Second, lenders of funds for working capital (the commercial banks) have strict
norms of leading only against the collateral of raw material stocks, work in progress,
and finished goods.
Third, some venture capital companies also have minimum investment limits
that do not allow them to invest in small software companies. Fourthly, although
recent regulatory changes have made it easier to raise public funds, most software
companies are too small (unpaid-up capital) to mount public offerings. A welcome
change was witnessed in 1992-93, when as many as 15 software companies
went for public issues!
