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(Future) impact of Telecom sector on the Indian Economy

Posted in The Technology Ecosystem by Manas Ganguly on December 1, 2009

Excerpts of a study conducted by National Council of Applied Economic Research (NCAER): “Economic Impact of the Communication Sector in India” by Dr Rajesh Shukla (Senior Fellow) and Mr K.A. Siddiqui (Associate Fellow) on the economic impact of Telecom sector in India

Total employment in the sector to reach 10.3 million in 5 years.Communication will be amongst the Top 3 growth drivers of the economy by 2015

Communication sector is predicted to emerge as the single largest sector of India’s economy, with a 15.4% share (equivalent to Rs.865,031 crore) of GDP by 2014-15. In India’s transformation from an agrarian to a services economy, communication is recognized as the fastest growing sector, growing by 25.7% during 2001-08. The communication sector will thus be one of the major drivers of the Indian economy in the next five years. Its ranking in terms of contribution to total GDP has moved up from #17 in 1980-81 to #8 in 2007-08 and is further expected to surpass all other sectors by 2014-15, assuming that all other sectors grow at the average growth rates observed during 2001-08. Telecommunication sector’s share of total GDP has increased from just 0.7% in the 1980s and 1.0% in the 1990s to 3.6% during 2001-08. In 2007-08, the sector accounted for 5.7% of GDP.

Trade, Communication and Registered Manufacturing have shown more than 10% contribution (16.7%, 12.24% and 11.68%, respectively) to GDP growth during 2001-2008; however, the Communication sector has outperformed the others despite its share of total GDP being only 3.6% as against the shares of Trade (14.0%) and Registered Manufacturing (10.2%). The communication sector has also had a significant impact on employment in the country. The study predicts that the sector will generate an additional 8.5 million jobs by 2014-15, taking the total number of jobs in the sector to 10.3 million.

Thus, the communication sector will continue to be an engine of the Indian economy over the 4/5 next years. The role of communications in accelerating socio-economic development should not be underestimated. Communication is having a positive impact on employment in the services and retail sectors, and helping the country to emerge as a major manufacturing power. It is critical to empower every individual to connect to people, information and services regardless of their location or income. This is a key element in the vision of a truly inclusive knowledge society. Connected people can create, accumulate and disseminate knowledge, eventually leading to enhanced productivity and equitable socio-economic development. This latest study reiterates communication’s growing importance as an agent of transformation.

Table: Sectoral contribution to India’s GDP

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