THE ROLE OF INFORMATION TECHNOLOGY POLICIES IN PROMOTING SOCIAL

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1 EJISDC (2004) 19, 5, 1-21 THE ROLE OF INFORMATION TECHNOLOGY POLICIES IN PROMOTING SOCIAL AND ECONOMIC DEVELOPMENT: THE CASE OF THE STATE OF ANDHRA PRADESH, INDIA Amitabh Dabla T: E: ABSTRACT An examination of the information technology policies of the state of Andhra Pradesh in India, from 1994 to 2002, reveals the promotion of the three sectors of the information technology industry, technical higher education institutions, and electronic government to attain economic and social development. These three sectors have contributed towards generating and increasing employment and technical education opportunities, and ushered in efficient government services. However, diverse social groups in the state with different levels of skills, access, and education cannot benefit equally from these sectors. Therefore future information technology policies, and the development goals of the state itself, need to be reconstructed and redesigned to generate broader inclusion and participation of underprivileged social groups. ACKNOWLEDGEMENTS I would like to thank Dr. T.N. Chowdary, Information Technology Advisor to the Chief Minister of Andhra Pradesh, for his help in facilitating some of my interviews. 1. INTRODUCTION In 1994, Mr. Chandra Babu Naidu led the Telugu Desam Party (TDP) to power in the state elections of Andhra Pradesh in India, and made the promotion of the information technology sector one of the cornerstones of his administration. However, after winning its first bid for re-election in 1999, Mr. Naidu s TDP lost its second bid for re-election in Andhra Pradesh in 2004 and ceded power to the Congress Party. Further, Mr. Naidu s TDP was a coalition ally of the Bharatiya Janata Party (BJP) for national level elections in 2004, which the incumbent BJP lost to the Congress Party 1. This study employs the case of Andhra Pradesh to examine the vision and goal of the state s information technology policies, released during the period from 1994 until , in promoting economic and social development. In India, after 1991, a new economic policy was implemented by the national government, which emphasized a shift away from a state planned economic system towards free market tenets 3. In this environment the Indian government partially liberalized the national information technology and communication sectors, and emphasized the promotion of these sectors for economic growth and social development. Consequently, while the Indian national government has continued to be the main decision maker in orienting the economy, 1 National elections to elect a ruling political party (or a coalition of parties) to govern the country are different from state elections, which are held to elect a political party (or a coalition of parties) to govern individual states in the country. The BJP, the Congress Party and the TDP fought elections at both the national level to govern the country and at the state level to govern individual states in the country. At the national level elections the TDP was a coalition ally of the BJP. 2 Chief Minister Naidu s government issued its latest information technology policy in 2002, which was to be in effect until These economic reforms were initiated by the Congress Party, which was the political party in power at the national level in 1991 and were continued by the BJP, which succeeded the Congress Party as the ruling party of India.

2 EJISDC (2004) 19, 5, it has increasingly given individual state governments, in the country, greater freedom to liberalize their state economies and to facilitate connections with global markets for local economic sectors. Andhra Pradesh situated in Southeast India, with a population of over 76 million, is endowed with fertile land, water and a range of agro-climatic conditions. The majority of the population of the state is rural and living near or below the poverty line; inequalities in distribution of landholdings are widespread and are more pronounced among tribal groups and people belonging to low castes. In terms of infrastructural facilities such as surfaced roads, electricity and water supply, Andhra Pradesh does not rank among the most developed states in India (National Council of Applied Economic Research, 2001). Statistics from 2000 revealed that the state had a literacy rate of 54%, with the literacy rate at 64% for males and 43% for females (Commissioner and Director of School Education, 2000). After coming to power one of the main thrusts of Mr. Naidu s government was to aggressively promote an economy capable of embracing a wide range of knowledge based industries, and to utilize information technology for the economic and social development of the state. Mr. Naidu s government also implemented a massive economic restructuring program and in 1997 Andhra Pradesh became the first state in India to receive World Bank money, when a US$236 million loan was sanctioned to revamp the state's agricultural sector. In 2004, before the TDP lost its second bid for re-election, the World Bank approved the Second Andhra Pradesh Economic Reform Loan/Credit, to back the state s efforts to achieve better socioeconomic outcomes and reduce poverty. Regardless of the platitudes Mr. Naidu s government received from various international organizations for restructuring its economy and promoting information technology for social and economic development, opposition political parties consistently criticized the TDP government for being anti-poor and pro World Bank. 2. LITERATURE REVIEW The promotion of the use of communications for attaining social and economic development gained prominence after World War II when many scholars produced seminal works regarding the role and importance of this input for achieving modernization 4. Modernization theory placed an emphasis on changing people s attitudes and beliefs and on promoting institutional change at the political, economic and social levels, and advocated the use of communication to achieve these aims. In the last two decades an economic framework promoting free markets has arisen advocating the view that integration with the global economy is a beneficial and necessary factor for economic development, and that the interdependence and economic linkages of advanced economies with less advanced economies provide the best avenue for Third World development. In this context liberalization, privatization, and deregulation of local economies along with trade, specialization in economic sectors, increase in foreign investments, and participation in global markets is the path for developing countries to pursue. Within this economic framework emphasis is placed on promoting information technology and communication sectors to expedite connections with global markets, promote economic growth, and facilitate social development. Subsequently an extensive body of quantitative and qualitative literature has appeared which has delineated the relationships between information and communication technologies 4 Fundamentally modernization theory sought to explain the process of development between two models or ideal types, the traditional society and the modern or industrial society. It referred to the idea that the experience of Western developed countries especially their institutions and values could help change less developed areas for the better, thus developing countries needed to emulate the attitudes, ideas of economic growth, and the social and political institutions that were present in Western developed countries.

3 EJISDC (2004) 19, 5, and economic and social development. Antonelli (1991) viewed the speed, direction and determinants of information technology and the communications infrastructure as directly influencing productivity, cost effectiveness and competitiveness in industries. Schmandt et al. (1989) stated that developing modern economies required a commitment to the development of advanced communication systems and to the building of information services, and technologies that could be used to effectively manage and add value to economic activity and simultaneously increase employment opportunities. Hanna et al. (1995) viewed information and communication sectors as providing the infrastructure for the whole information economy, facilitating market entry, improving customer service, reducing costs, and increasing productivity. Kenny and his colleagues (2000) stressed that the promotion of information and communication sectors leads to hitherto disenfranchised people being able to benefit from: health information; distance education dissemination and technical education; better access to services; being able to participate and to make better informed decisions in the economic realm; having an input in government decisions; and being able to bridge distances to interact with remote communities, markets and government agencies. Talero and Gaudette (1996) proposed that national information technology policies, in developing countries, should increase public investment programs in strategic information systems and networks, promote national extension programs for information technology diffusion among high priority user industries and services, and promote technical higher education institutions that can produce technically skilled labor. Further, studies by Mockler et al. (1999), Montealegre (1999), and Wong (1998) have concluded that successive governmental information technology policies represent and demonstrate an evolution of nations toward a developed status via stages. A number of econometric studies also suggest that there is a positive and significant link between the communications infrastructure, the rate of technology investment, and economic growth (see Hardy, 1980; Norton, 1992; Roller & Waverman, 1994; Canning, 1997; Zhu, 1996; Kraemer & Dedrick, 1994). Furthermore, international organizations like the World Bank, the International Telecommunications Union (ITU), and the Organization for Economic Cooperation and Development (OCED) have been very active in producing a policy literature, which provides guidelines for formulating communication and information technology policies; technical expertise; guidelines to follow for liberalizing, privatizing, and deregulating information and communication sectors; guidelines for regulatory oversight; and frameworks for promoting information technology industries. 3. METHODOLOGY The methodological framework of this study consisted of an analysis of Andhra Pradesh s information technology policies from 1994 to Additionally, field research was carried out in Andhra Pradesh in 2001 consisting of interviews with officials from three groups including officials from the government s Department of Information Technology and Communications, officials from private information technology companies, and others including academics and officials from universities and non governmental organizations. Secondary literature and select numerical and statistical data pertaining to the information technology sector, higher education institutions, and various electronic government services were also collected and analyzed. Conducting interviews in Andhra Pradesh enriched the policy analysis as interviews with officials from the Department of Information Technology and Communications helped illuminate the real world trade offs of the policy process and added perspective to the decision making process. Interviews providing insight into the corporate and industry point of view of the policies were conducted with officials from information technology companies. Interviews with academics and officials from universities and non governmental

4 EJISDC (2004) 19, 5, organizations provided an alternate perspective to either government policymakers or private companies. All the interviewees were chosen for the potential insights they could provide into the underlying tensions and competing interests involved in the information technology policies formulations and goals. Every interviewee, from each of the three groups, was asked a set of open-ended questions thereby allowing the respondents to talk freely about the issues posed. During the course of the interviews modifications were made to some questions as they prompted limited answers, while other questions were added as some respondents volunteered additional responses. Table 1 delineates the main open ended questions that were posed to every interviewee from each of the three groups. 4. THE INFORMATION TECHNOLOGY POLICIES OF ANDHRA PRADESH The inception of the framework to make effective use of information technology for the economic and social development of the state of Andhra Pradesh occurred with the ascent of Chief Minister Naidu to power in 1994 and accelerated from that period onwards. In 1996 a Special Interest Group was formed comprising mainly of government officials and officials from the nascent local information technology industry whose main recommendation was that the state should formulate and release an information technology policy. Before formulating its own information technology policy government officials, besides being guided by the national government, looked at the information and communication technology sectors in developed countries as models. The mechanisms of the Citizens Charter, which had helped in applying the International Standardization Organization s (ISO) standards to the British government, especially from the perspective of providing services to consumers, were considered very applicable to Andhra Pradesh. The state also went through a process of examining the electronic government 5 initiatives and information technology policies of the governments of Singapore, United States, United Kingdom, and Australia. Prior to releasing its first official information technology policy, the state government issued various orders pertaining to the information technology sector. The scope of these government orders consisted of enumerating specific directives, regulations, and incentives to be provided to the information technology and communication sectors. The primary policy to define a vision for Andhra Pradesh entitled Vision was released in 1999 and it included information technology and knowledge activities as major components. The Vision 2020 policy aimed to ameliorate the lives of citizens by using information technology to promote education, employment, electronic government services, and economic well being. According to the Vision 2020 policy (Government of Andhra Pradesh, 1999, p.276): 5 Electronic Government refers to a process, beneficial to both citizens and the business sector, where information and communications technologies (ICT) play a significant role to: improve standards of governance products and services; provide new governance services and products; enhance participation of people in provision of governance products and services; and bring new sections of society, including poor social groups, under the governance rubric. 6 The Vision 2020 policy document was released by the government of Andhra Pradesh in 1999 to set the agenda of the state in generating economic growth, poverty alleviation, universal education, knowledge industries, environmental sustainability, transparency in administration, healthcare and social development. This policy document was meant to be a blueprint for what the government wanted to achieve for the state and its citizens by the year 2020.

5 EJISDC (2004) 19, 5, Table 1 Main Questions Posed to Interviewees from Each of the Three Groups Officials from the Department of Officials from Information Academics and Officials Information Technology and Technology Companies from Universities and Non- Communications Governmental Organizations 1. What are the primary and most How do the IT policies (and the What are the primary and most important goals of the information state government itself) help important goals of the IT technology (IT) policies for and/or hinder the private IT policies for promoting social promoting social and economic development in Andhra Pradesh? industry? and economic development in Andhra Pradesh? 2. What is the role of the state in promoting IT for attaining economic and social development in Andhra Pradesh? 3. What is the role of the IT industry in promoting economic and social development in the state? 4. What is the employment generating potential of the IT industry, and who can avail of this employment? 5. How do the citizens in the state not employed in the IT industry benefit from its growth? 6. Does the predominantly export orientation of IT industry hinder the growth of the domestic IT sector in Andhra Pradesh? 7. What is the role of technical higher education institutions in promoting social and economic development in the state? Who can potentially obtain this education? 8. What is the role of the electronic government (EG) sector in promoting social and economic development in the state? Who can potentially obtain EG services? 9. What measures is the state undertaking to address issues of access to avail benefits from IT? How successful are these measures? 10. What are the problems and limitations in realizing the social and economic development goals of the IT policies? 11. How does (and how will) IT act as a poverty alleviator in Andhra Pradesh? What is the role of the IT industry in promoting economic and social development in the state? What is the employment generating potential of the IT industry, and who can avail of this employment? How do the citizens in the state not employed by the IT industry benefit from its growth? Does the predominantly export orientation of IT industry hinder the growth of the domestic IT sector in Andhra Pradesh? What is the relationship between technical higher education institutions, in the state, and the IT industry? What is the relationship between the EG sector and the IT industry? What are the problems and limitations in realizing the goals of the information technology policies for the IT industry? And for other sectors? How does (and how will) IT act as a poverty alleviator in Andhra Pradesh? What is the role of the state in promoting IT for attaining economic and social development in Andhra Pradesh? What is the role of the IT industry in promoting economic and social development in the state? How do the citizens in the state not employed in the IT industry benefit from its growth? What is the role of technical higher education institutions in promoting social and economic development in the state? Who can potentially obtain this education? What is the role of the EG sector in promoting social and economic development in the state? Who can potentially obtain EG services? What measures is the state undertaking to address issues of access to avail benefits from IT? How successful are these measures? What are the problems and limitations in realizing the social and economic development goals of the IT policies? How does (and how will) IT act as a poverty alleviator in Andhra Pradesh?

6 EJISDC (2004) 19, 5, Andhra Pradesh will leverage information technology to attain a position of leadership and excellence in the information age and to transform itself into a knowledge society. The state will use information technology to improve the quality of life of its residents and help them achieve higher incomes and employment. It will also aggressively promote the pervasive use of information technology to achieve higher levels of efficiency and competitiveness in both public and private enterprises. The first official policy catering solely toward the information technology sector was released in The Andhra Pradesh First Information Technology Policy 2000 s key objective was to make the state globally competitive in the information technology sector, and to cultivate strategic collaborations with other countries. The first and foremost aim of the policy was to use information technology as an instrument to foster the economic development of the state. This was to be translated into specific action through the: growth of the information technology industry in the state and of software exports; creation of employment; attraction of foreign investment; provision of high quality services; and promotion of knowledge as the key resource for the economic progress of individuals and institutions. The policy stipulated that information technology would percolate to the middle class and people below the poverty line. Efforts listed to realize this vision were to include taking the Internet to the villages, promoting information technology enabled education and local language interface, and initiating and expanding socially relevant extension and outreach programs. Additionally this policy emphasized the importance of electronic government where information technology would be used for improving the internal efficiencies of the government, benefiting the poor indirectly through better planning, and strengthening government programs (Government of Andhra Pradesh, 2000). Two years later the Information and Communication Technology Policy , to be in effect until the year 2005, was released and its main emphasis, as with the two earlier policies, was to promote the private information technology industry and to attract foreign companies; to promote higher education institutions that would produce technically skilled labor for the private information technology industry; and to usher in electronic government. Complimentary to these three main goals was the building of an extensive and modernized communications infrastructure to enable the information technology industry to increase the scope of its operations. This policy also stated that in the sphere of electronic government the size and complexity of the effort involved huge financial, technical, and managerial resources. To address these issues the policy called for a suitable framework for Public Private Partnerships (PPP). The concept of PPP involves the adoption of different managerial capabilities of the private sector to implement a number of electronic government services (Government of Andhra Pradesh, 2002a) 7. An examination of the information technology polices of Andhra Pradesh, from 1994 to 2002, reveals the promotion of three sectors, which were expected to grow and mature in a complimentary manner to usher in economic and social development. The state aimed to enable economic growth, attract foreign investment, and generate employment through the information technology industry. In the sector of technical higher education the state wanted to generate a significant number of technically skilled professionals to be employed in, and to fuel the growth of, the private information technology industry. Therefore the state wanted to 7 Before and after the Vision 2020 policy and in the time periods between the Andhra Pradesh First Information Technology Policy 2000 and the Information Technology Policy different government departments issued various orders pertaining to the information technology sector. The scope of these government orders consisted of enumerating specific directives, regulations and incentives to be provided to the information technology and communication sectors.

7 EJISDC (2004) 19, 5, promote and increase the number of colleges and universities imparting a technical education. In the sphere of electronic government, the state wanted to modernize its system of administration and to provide its citizens with faster and more efficient services. The information technology policies also stipulated a heightened role of the private sector in providing services in the technical higher education and electronic government sectors. Thus, the way was cleared for private entities to set up institutions offering technical higher education, and to provide select electronic government services for a fee to users. The context and environment within which the state s information technology policies were conceived and formulated was dominated by the insights gained from experiences of Western developed nations, recommendations and loans from international institutions such as the World Bank, and from the vision of government officials and officials from local information technology companies. Officials involved with technical higher education institutions had some marginal input in the policy formulation process, but non profit organizations working with rural and poorer social groups in the state hardly had any input. Officials from the three groups, that were interviewed, painted a very clear picture that the foremost aim in devising the state s information technology policies was to kick start the local information technology industry, which would lead the way for the economic and social development of the state. An understanding of the context within which the initial information technology policy and subsequent policies were formulated is very important as it demonstrates the relative input of different social and economic groups, and the key ideas driving the policy formulation process. Over the range of the three policies the government stuck to the same mantra of advocating the idea that the information technology sector will promote economic growth and social development in the state, and promoted three sectors with the information technology industry being the lead and focal sector. However many officials and academics from non governmental organizations and universities argued that there was a lack of a critical discussion, in the policy formulation process and within the policies themselves, as to how this development will permeate, overtime, within the specific context of Andhra Pradesh for poor and rural social groups, and how the hurdles to this expected development will be surmounted. Therefore these critics believed that the policies included an immense dose of rhetoric and naïve optimism regarding how information technology would provide benefits for the diverse population of Andhra Pradesh. They also argued that a severe weakness of the policies was that they proclaimed that the state would provide a social safety net for those who could not afford services, and for those who could not avail of the benefits from information technology. However, no specific programs and projects were articulated, specifically in the policies, to realize the government s vision for disadvantaged social groups. Additionally as there were no evaluation mechanisms enumerated in the policies to determine whether the anticipated benefits from information technology were actually being realized at the micro level in the state, some critics were of the view that the policies hardly aimed to benefit the underprivileged population of the state. 5. THREE SECTORS TO PROMOTE ECONOMIC AND SOCIAL DEVELOPMENT 5.1 Information Technology Industry The foremost aim of the information technology policies of Andhra Pradesh was to promote the information technology industry, and the growth of this industry was facilitated by the numerous legal, tax related, infrastructure, and logistical incentives provided by the state. Furthermore, the state was also very active in attracting foreign information technology companies to locate branches and factories in Andhra Pradesh by providing them similar incentives. Since its inception the primary focus of the information technology industry in Andhra Pradesh has been to export software products and services, and this export orientation

8 EJISDC (2004) 19, 5, of the industry has resulted in significant increases in revenues for itself (see Table 2), and according to government officials, tax revenues for the state. Table 2: Growth of Software Companies in Andhra Pradesh Year Number of Companies Export (Rs. Million)* * 1US Dollar is equivalent to 45 Rupees Source: Software Technology Park. Hyderabad: Government of Andhra Pradesh, The growth of the information technology industry has contributed in generating employment opportunities, and the state has viewed this potential of the industry as an immense economic benefit. The rise in demand for professional technically skilled labor by the information technology industry can be demonstrated by the following statistic: In March 1999, 9,400 software professionals were employed in the state, this number increased to 23,000 in March 2000 and to 35,000 in March 2001 (Sudan, 2001). Government officials claimed that the demand for professional technically skilled jobs in the information technology industry would lead to the creation of non professional semi skilled and low skilled jobs. To back up this claim they cited the employment statistics for the first phase of Hi-tech City 8 from , which showed that the information technology companies employed more than a thousand non professional support staff that didn t possess technical skills in this habitat (see Table 3). Table 3: Employment in the Phase I of Hi-Tech City Category of Services Technical Staff Support Staff Total Staff Software Development Information Technology Enabled Services Communication Allied Services Other Commercial Services Support Services N/A Total Source: Hyderabad Software Exporters Association (HYSEA). Retrieved May 2001, from 8 The Hi-tech city is a habitat, located 7 kilometres from the state capital of Hyderabad, with ready availability of space and all the required infrastructure and logistical amenities to enable information technology companies to set up their facilities. The goal of the government was to establish several Hi-tech habitats in the state.

9 EJISDC (2004) 19, 5, In addition to employment in the information technology industry, the building of an infrastructure for the industry was also considered to have an economic impact and to simultaneously contribute to employment generation. According to government officials the creation of high tech habitats, special economic zones, and the communication infrastructure for the industry would provide large-scale employment opportunities for professional skilled workers and non professional low skilled and unskilled workers. While no official data was available for the number of workers needed to build, maintain and expand the infrastructure for the industry, government officials claimed that a significant number of professional and non professional workers were needed for this task. Based on the preceding discussion the employment generation potential of the information technology industry can be placed into the following categories: professional technically skilled employment in information technology companies; non-professional low skilled and non skilled employment in information technology companies; professional and non professional employment in building, maintaining and expanding the infrastructure that supports the information technology industry; and trickle down employment generated by those employed in the information technology industry. Government officials stated that trickle down employment referred to the ability of employees of information technology companies, and the companies themselves, having an indirect effect on employment in the state through their demand for support and auxiliary services. Employment data from 2000 in Andhra Pradesh demonstrated that there were 3.15 million job seekers, constituting 6.67% of the labor force, registered with the employment exchange (Sudan, 2001). Nearly 2.8 million of these jobseekers were literate and had some form of education, the remaining were unskilled and illiterate. However, only about two percent of these literate and educated job seekers had the necessary degrees to be employed as professional technically skilled workers in the information technology industry (see Table 4). As far as non professional semi skilled and low skilled workers were concerned the employment statistics from 2000 and claims by government officials accentuated the notion that tens of thousands of such workers were available in the labor force each year. Government officials stressed that the information technology industry had and could potentially employ many of these workers to fill jobs such as typists, stenographers, and administrators. Nonetheless, it is difficult to provide actual figures on the jobs created by the information technology industry as there is a dearth of comprehensive official government, or private, statistics pertaining to how many people are, or potentially can be, employed as professional technically skilled workers and non professional semiskilled and low-skilled workers, either directly or indirectly, by the information technology industry every year. Table 4: Broad Categories of Job Seekers Category Total Professional & Post Graduates 50,673 General Educated 1,865,558 Skilled 562,167 Teaching 135,196 Other Educated 138,259 Unskilled & Illiterate 359,811 Source: Director, Employment. Hyderabad: Government of Andhra Pradesh, November 30, Apart from its employment generating potential officials from private information technology companies and government officials claimed that the industry s success could also be reflected by the ascent of entrepreneurial capabilities. Professional technically skilled workers by becoming involved in attempts to commercialize technology in information

10 EJISDC (2004) 19, 5, technology companies led to the transfer of knowledge from state colleges and universities to private companies. Further, individuals in the state took initiatives to set up their own information technology companies, which have been successful as a result of the various incentives provided by the state. The information technology industry, to be able to compete in global markets, incorporated management practices like those practiced by Western firms, and its success also contributed to an increase in the relative value of professional skilled workers, managers, and analysts. Thus an important contribution of the industry in addition to the generation of employment and foreign exchange, which are more visible, is entrepreneurship and corporate governance according to officials from the government and information technology companies. These developments could become models to be emulated by other sectors of the economy, and could have powerful long benefits for Andhra Pradesh s industrialization and growth according to these officials. The state placed a lot of emphasis on the employment generating potential of the information technology industry specifically for professional technically skilled workers, however, it also needs to be emphasized that employment opportunities in the industry are still limited to a small segment of the society of Andhra Pradesh. Further, only a very small percentage of the total workforce in Andhra Pradesh can also be employed as professional technically skilled workers in the information technology industry. Additionally only a very small percentage of the total workforce can be employed as non professional workers, or can seek employment in building the infrastructure for the industry, or gain employment due to the trickle down effects of the growth of the industry. While various officials from non governmental organizations and academics from universities did not belittle the fact that a few thousand jobs were being created, directly and indirectly by the information technology industry, they considered the almost naïve optimism of the government pertaining to the employment generating potential of the industry as making a difference in alleviating the unemployment situation in the state to be unrealistic. These critics also did not doubt that the growth of the industry, and the employment it spurs, would have some ripple and multiplier effects on the society and economy of the state, however they claimed that it was very hard to ascertain what these specific ripple effects will be for the uneducated and unskilled citizens of the state who had no direct or indirect employment connections with the industry. These also wanted the government to be more forthcoming in regard to enumerating the specific effects the growth of the information technology industry was having on poor and rural social groups, and to back up these claims by statistics and evaluations. Other officials criticized the government for providing numerous incentives to local and foreign information technology companies in the state, as they claimed that these incentives only benefited local and foreign companies and a very small percentage of the work force in the state. While not discounting the benefits of these incentives to some professional and non professional workers in the state it was argued that similar incentives were also needed in more crucial sectors such as education, rural development and health. Some officials from non governmental organizations also had questions regarding what had been done with the revenues the government has gained from the information technology industry, and whether these revenues were being used to further disseminate information technology opportunities for poor and rural social groups. As far as issues of technology transfer, corporate governance and entrepreneurship that were manifested in the information technology industry, critics of the policies doubted the dissemination potential of these factors. As the government did not have any empirical evidence to demonstrate the transfer of these factors to other sectors of the economy, its critics panned this scenario as wishful thinking on the government s part. They also argued that other sectors of the economy did not receive similar incentives and did not operate in a similar environment, thus they would not be able to incorporate and sustain these factors.

11 EJISDC (2004) 19, 5, Furthermore these critics even stated that even if these factors were to be emulated by other sectors of the economy they would only impact professional skilled workers, and once again would ignore rural and poor social groups in the state. Another criticism facing the information technology industry, producing both products and content, was its predominant focus on exports and a lack of domestic focus, even though admittedly the domestic market in Andhra Pradesh is small and lacks great purchasing power. Officials from information technology companies and from the government argued that there was no undermining of the domestic information technology market on account of the export of software and services. They claimed that in a global economy the export of software and services helped local companies benchmark themselves internationally, which would contribute to the development of local capabilities and consequently exports have contributed positively to the development of domestic labors talents. It was also suggested that the domestic market could become a source of a particular type of differentiation as an emphasis on software in the local languages of the state could provide a domestic niche to many companies. Nevertheless, it is also a reality that due to the emphasis on software exports, with numerous services carried out onsite, there is less of a need for information technology companies to cater to or to aid in building the domestic market in the state. Compounding this situation were the state s information technology policies, which were predominantly concerned with facilitating the export promotion mechanisms of the industry and hence served to reinforce the deficiencies of the domestic information technology market. 5.2 Technical Higher Education Institutions The government of Andhra Pradesh viewed one major benefit emanating from the promotion of the information technology industry to be its employment generating potential, primarily the industry s demand for professional technically skilled labor. To meet this demand successfully the development of higher education institutions providing technical education and training had to be given the highest emphasis. Creating new technical higher education institutions, introducing additional technical courses in existing higher education institutions, and utilizing training facilities of polytechnics were measures the state planned to employ to meet this objective. Given the magnitude of the task involved the state felt it was not in a position to undertake all the interventions required to reorient technical higher education on its own, therefore it decided to actively encourage private investors to partner in its effort. A State Board of Technical Education and Training was constituted to have effective control over the maintenance of quality and standards for technical education and for promoting and coordinating training services. The function of the board is to advise the state and to establish and develop relationships with the information technology industry. Thus, as the information technology policies stipulated, private entities equipped with the necessary government certification could begin to operate institutions offering a technical higher education. Complimentary to these developments the state decided to make computer education compulsory in all degree granting colleges from the academic year , and degrees such as B.C.A. (Bachelor in Computer Applications) and B.B.M. (Bachelor in Business Management) were introduced. Two technical higher education institutions were also created with the aid of the state. The Master of Science in Information Technology Program (MIST) was set up in collaboration with Carnegie Mellon University, in the United States, and local information technology companies. MIST aims to prepare information technology professionals by grooming them in skills to enable them to gain employment in the information technology industry, as well as to take up entrepreneurial ventures. The International Institute of Information Technology (IIIT) Hyderabad aims to train engineers at both the undergraduate and postgraduate levels; carry out advanced research and

12 EJISDC (2004) 19, 5, development in information and software technologies; and to work closely with information technology companies and to help them in undertaking training programs 9. As most institutions providing a technical education were located in Hyderabad, the state planned to help set up similar institutions in other districts to spread the avenues for a high quality information technology education (Department of Higher Education, 2001). An examination of the data from the year 2000 shows that there were a total of 1,049 colleges in the state including 176 government colleges, 181 private aided colleges, and 654 private un-aided colleges (Sudan, 2001). In the state had 122 engineering colleges, the number of which was expected to rise to 245 by 2005, annually enrolling 35,323 students (see Table 5), with nearly 40 percent of these students pursuing computer science degrees (Sudan, 2001). In addition, colleges offering Masters in Computers Applications (MCA) courses numbered 212 and annually enrolled 8,555 students, and colleges offering Bachelors in Computers Application (BCA) courses numbered 468 and annually enrolled 2,800 students. There were also 103 Polytechnics annually enrolling 17,860 students, with nearly 10 percent of these students enrolled in information technology related courses (Department of Information Technology and Communications, 2001). Hence, nearly 30,000 to 40,000 engineers and thousands of students skilled in computer application and information technology related courses were graduating yearly, and this number was only expected to increase as more engineering colleges came into existence. Government officials stressed that a majority of these graduates would be employed as professional technically skilled workers in the information technology industry. Table 5: Engineering Colleges Year Number of Engineering Students Colleges Source: Randeep Sudan (2001). Use of Information Technology for Poverty Reduction: A focus on Andhra Pradesh. Hyderabad: Government of Andhra Pradesh. The sector of technical higher education sector is a conduit for providing technically skilled labor to the information technology industry, however, it also needs to be stressed that the segment of the population that is able to gain a technical education, through either public or private higher education institutions, is a very small percentage of the state s educated population. Further, the impact on this sector on the population of the state that does not pursue a technical education, and which does not have any education, is negligible. Some officials pointed out that even though the state had innovatively and successfully involved the private sector in disseminating opportunities to attain a technical education, mechanisms to further primary and secondary education and even basic literacy lacked similar resources, incentives, and commitment. Other officials argued that the technical higher education sector only benefited local and foreign information technology companies and their employees. They did not deny that 9 More information on these institutions can be obtained at &

13 EJISDC (2004) 19, 5, thousands of citizens of the state could avail of these institutions to attain employment opportunities; however the government was criticized for being unrealistic by continuously stating that this sector would benefit diverse social groups in the state. Further, these critics also questioned the sustainability of this sector as they argued that it was dependent on the growth and hiring demands of the information technology industry, which in turn was dependent on global demands and fluctuations. Additionally, there were concerns that students from other states in the country would avail of these institutions to gain employment in Andhra Pradesh s information technology industry. Government officials tried to assuage this concern by placing a limit on the number of students, from other states, that could be enrolled in Andhra Pradesh technical higher education institutions. The information technology policies stated that as most institutions providing a technical education were located in Hyderabad, the state planned to help set up similar institutions in other districts. However critics of the policies argued that very little action had been taken to back up these plans. Laying strength to these critics claims were a lack of specific mechanisms or timelines in the policies themselves to expand technical higher education institutions beyond urban areas. 5.3 Electronic Government Sector Electronic government was the third major sector promoted by the information technology policies. The state wanted to bring to the citizens of Andhra Pradesh a SMART government, which was defined as a government that is simple, moral, accountable, responsive and transparent (Government of Andhra Pradesh, 1999). This aim was to be achieved thorough decentralizing planning and administration, revising performance evaluation mechanism at all levels of government functions, and by integrating service provision with information technology. As far as possible the state intended to utilize the capabilities and resources of the information technology industry to usher in electronic government by designing a suitable framework for Public Private Partnership (PPP). To enable PPP, the state planned to create suitable applications and initiate requests for proposals for electronic government services, and then open the bidding process to information technology companies. Companies that won contracts could then collect user fees for the electronic government services they provided under this mandate. Various electronic government programs were implemented by the state, from 1994 to 2002, including: Computer Aided Administration of Registration Department (CARD) CARD was implemented on 4 November 1998 at 239 offices of the sub-registrar in the state and has over 300 features providing for automation of the registration process. The entire project was implemented with a budget of Rs.18 crores 10 and consists of 2000 computers. The various function of CARD are: registration of documents; valuation of immovable properties; collection of revenue stamp duty, transfer duty and registration fee; preservation of copies of documents; issuance of certified copies of documents and encumbrance certificates; and registration of societies, firms, chit funds, non-trading companies and marriages. By 2002 CARD had registered 3,488,630 documents; issued 1,866,070 encumbrance certificates, 62,428 certified copies, and 1,268,232 market value check slip; and enabled 1.6 million title searches (Government of Andhra Pradesh, 2002b). Multi-purpose Household Survey (MPHS) 10 1 US Dollar is equivalent to Indian Rupees (Rs.) 45. A crore is a unit of measurement and 1 crore is equivalent to 10,000,000 units.

14 EJISDC (2004) 19, 5, MPHS is a database, which covers all 1,125 mandals of the 23 districts of Andhra Pradesh and contains a total of 76.5 million records with each record providing personal, social and economic information of a citizen. MPHS was launched in August 1998 at the cost of Rs.50 crores and its objectives are to: computerize operations at the pivotal field unit of administration namely at local revenue offices; create databases on socio-economic information of all citizens of the state; create details of all agricultural landholdings in the state; create an unique ID for each citizen; and issue various certificates relating to land and socio-economic status of citizens. By 2002 MPHS had issued 356,542 certificates on socioeconomic status to the citizens of Andhra Pradesh (Government of Andhra Pradesh, 2002c). eseva eseva was launched in 1999 at a cost of Rs.1 crore and has 27 sites in the twin cities of Hyderabad and Secunderabad. The objective of eseva is to provide efficient services to citizens in an integrated manner and some of the 43 different services being offered include: payments of utility bills and taxes; registration of births and deaths and applications for passports; issuance of birth and death certificates; and filing of sales and tax returns. By 2002 the total number of citizen transactions in eseva stood at lakhs 11 and the total value of the transactions was Rs.1,906 crores. The government plans to establish 229 eseva centers in all 23 districts in Andhra Pradesh (Government of Andhra Pradesh, 2002d). Fully Automated Services of Transport Department (FAST) FAST was launched in May 2000 at a cost of Rs.4 crores and consists of 35 sites. The objectives of FAST are to improve citizen services by: issuing learner licenses, driving licenses, tax tokens, permits and international driving permits; renewing driving licenses; registering vehicles; and endorsing purchase agreements. By 2002 FAST had issued 552,957 driving licenses and 369,694 learner s licenses; registered 609,864 vehicles; and carried out 1,048,641 other transactions (Government of Andhra Pradesh, 2002e). Andhra Pradesh Network- MANA TV (APNET) APNET was launched in October 2000 and its goal is to develop an information technology infrastructure for the social development in the state. APNET consists of a multi channel approach for promoting the creation and utilization of bandwidth in terrestrial, satellite and wireless modes to be utilized in the following areas: distance education, telemedicine, agricultural extension, electronic governance, and human resource development. 276 Ku-band receivers (46 primary and 230 secondary) have been installed and commissioned in schools, colleges and government offices across the state. By 2002 three channels had been made operational and three more are planned in the future (Government of Andhra Pradesh, 2002f). Saukaryam Saukaryam, carried out through a Public-Private Partnership arrangement, enables the city of Visakhapatnam to deliver a host of civic services. This project provides services like: online payment of municipal dues; payment of trade license fees, advertisement charges, 11 A lakh is also a unit of measurement and 1 lakh is equivalent to 100,000 units.