Indian states to spend 150 bn on IT

Monday, 12 April 2004, 19:30 IST
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NEW DELHI: In a move that may create major revenue potential for Indian IT players, state governments are expected to spend a staggering 150 billion on computerising their operations in the next five years, says a study. According to the study conducted by the National Association of Software and Service Companies (Nasscom), the launch of e-governance projects has resulted in a significant increase in the IT budgets of state governments. "In 2003, the central government proposed a total outlay of 25.50 billion for the national plan on e-governance projects," said the study report made available to IANS. "While 14.85 billion has been allocated for the Centre, 8 billion has been kept aside for financial institutions and 2.65 billion for state governments," it said. "It is estimated that in the next five years, state governments in India will spend close to 150 billion on computerising their operations." While deployment of e-governance projects is still in a nascent stage in different parts of India, analysts believe it will snowball into a major opportunity over the next few years. According to industry estimates, the Indian government spent around $1 billion on IT in 2002. This includes the expenditure of the central and state governments on hardware, software, telecom equipment and services, and IT services. "The government accounted for nine percent of the total IT spend in India for the year 2002, which is estimated to go up to 15 percent over the next five years," said the Nasscom report. "Though e-governance is still in its infancy, over 20 states and union territories already have an IT policy in place. "In terms of basic computerisation, police departments, treasury, land records, irrigation and justice are seen as having the maximum potential." Many state governments like Andhra Pradesh, Karnataka and Kerala have already launched e-government projects for land records, filing of taxes and vehicle registration. The Nasscom report said the boost in government expenditure on IT would lead to significant expansion of the domestic technology market in the years ahead. While the Indian IT market's domestic earnings is expected to grow by 11 percent during 2003-04, touching 337 billion, the software and services segment will touch revenues of 154 billion, up from 134 billion in the previous year. "Clearly, companies that invest in the domestic market are bound to reap the rewards as the market opens up further," said the lobby group. Enhanced spending by segments like banking, insurance, government business, manufacturing and healthcare has driven growth in the Indian IT market in the last few years. "Going forward too, these segments are expected to witness escalated IT-related activity and IT deployment, creating a significant business opportunity for both Indian and multinational companies operating in this sector," said Nasscom. Within financial services, IT investments in insurance are expected to grow at a rapid rate.
Source: IANS