Social sector offers 10k Crore business to IT sector

Mumbai: Government spending on different social sector schemes has opened up a 10,000 crore opportunity in annual revenues for IT hardware and software vendors over the next few years. According to a recent study by industry association FICCI and consultancy Ernst & Young (E&Y), which is the first on the role and potential use of technology in education, rural employment and power reforms since the government became a major IT buyer, reports Economic Times.

The government's Unique ID (UID) project has attracted a lot of attention among vendors locally and globally. However, less publicised social sector programmes such as the Sarva Shiksha Abhiyan (SSA) in education and National Rural Employment Guarantee Scheme (NREGS) for rural employment also have significant technology spends.

"The three flagship schemes - SSA, NREGS and Accelerated Power Development and Reform Programme (APDRP) - could alone generate $1 billion in revenues," said Milan Sheth, Partner, Business Advisory Services, E&Y.

The penetration of ICT (information, communication and technology) in Indian schools is currently only 17 percent, and there is a specific allocation of 5,000 crore to improve use of technology and communication in education. In addition, technology can also be used to overcome many of the challenges being faced in the education sector and in implementing programmes like the SSA to universalise elementary education by 2010.

Under the Eleventh Five Year Plan, the outlay for education is 2,70,000 crore, and E&Y estimates that around 3-4 percent of social sector outlays are spent on ICT, both directly and indirectly. The potential opportunity for IT vendors in this sector can include virtual universities, telecentres for education, and even biometric technologies.

The FICCI-E&Y study recommends setting up virtual classrooms and universities to ensure continuing education, since working population in India will remain relatively younger for many years. Similarly, exclusive educational telecentres can help to reach education to rural areas.

Sheth said that social-sector schemes are not seen as commercial opportunities by vendors and attract only fringe players. "We wanted to show this is not the case and have taken three flagship schemes of the government to illustrate this," he added.

The Restructured-APDRP programme during the Eleventh Five Year Plan also envisages extensive use of IT for power reforms. The government has budgeted 50,000 crore for the modernization of the power sector of which 10,000 crore will be spent on IT. Many state electricity boards (SEBs), which will be the primary beneficiaries of the project, have already invited bids from eligible vendors.