Wednesday, September 17, 2008

Why does Govt give sops to industries that do not matter?

Everyone has heard about the software boom, BPO boom and Outsourcing boom and how it is helping India. The software companies, BPO, KPO, LPO, Outsourcing advocates, Nasscom Foundation, CII shout from the rooftops that we should continue income tax benefits for this industry as it is good for India's poor. The same CII and FICCI said the same slogans for Exporters in last decade trying to fool us all and continue the income tax benefits to few privileged Exporters saying that export is what is helping India alleviate poverty. Good thing is govt did not listen and poor people won and now exporters have to pay taxes. Its time Govt does not listen to these lobbyists who this time are advocating for software and outsourcing companies. All these companies need to be treated the same way as the rest and no incentives are required for them. Look at some of the facts below:

- For Mar 2007, Software and Outsourcing companies put together exported $32 billion worth of services while the manufacturing and agriculture sector together exported $160 billion worth of goods
- Today, IT (Information technology) and ITES (Information technology enabled services) companies together employ a total of 25,00,000 persons all across India while just the security guard industry in India employees 63,00,000 persons. By 2010, entire IT & ITES industry will employ 29,50,000 persons.
- Entire ITES industry employs, 5,00,000 persons while Reliance Retail alone will employ 5,00,000 persons in next 2 years

India needs to create 60,00,000 jobs a year to be able to keep unemployment below 10%. After 25 year of software and outourcing industry growth, they have only employed 15,00,000, a miniscule 60,000 new jobs every year while we need 100 times more jobs than that to employ our growing adult population.

Software and outsourcing industry is creating jobs for middle and higher middle class while we actually need lots of new jobs for lower middle class and poor people. Security guard industry, retail industry, petrol pumps, food processing, restaurant are the industries which are creating jobs for these people and also in quantities that we need. Should govt not be giving incentives to these industries?

Instead of blocking foreign investors to come into retail sector, if we allow them, we can create millions of new jobs for really poor people. Imagine Walmart, Tesco, Metro if are allowed to setup stores in India, they will employ at least 1,00,00,000 in less than 3 years in their stores and on the manufacturing floors of their suppliers.

1 comment:

suresh pramar said...

Government should pandering to the dictates of big business. There is need for government to ensure that industries which have developed and continue to thrive on public doles,(what else are you going to call subsidies and tax concessions)contribute to the well being of society. Expectations of the people from business has increased but the response from business has been poor.
Instead of looking towards big business for remedies to unemployment etc Government needs to pay greater attention to the development of small industries.
Government needs to provide greater incentives to the social section to help them create social entrepreneurs who will not only require small amounts of seed capital but will be able to create social value and provide employment. This would be one way of spreading wealth in the society. Yes IT has done good for the country but it has also brought in considerable amount of unhappiness and social tensions.
I hope the new government will take up the policy of creating a million Social entrepreneurs who will help provide relief for social needs and also create jobs for those who are in urgent need
Suresh kr Pramar