Friday, September 19

We need more products

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With the changes in the US economy, India is feeling the ripple effects pretty early on. Even before the financial giants announced to the world that they are either wrapping up or being taken over, the Indian IT sector knew that times were going to be hard. Layoffs are bound to follow. The dotcom bust 2.0 is here :-). I had earlier written about this on my previous blog. A senior management professional at TechMahindra had predicted this as early as August 2006.

If you see the graph above, the dependence of the Indian economy lies largely with the Service sector, and that dependence has been growing constantly over the past years. We had the green revolution to bolster our agricultural sector, over the past decade, we have seen the IT revolution, that has significantly bolstered our services contribution to the GDP. I know this is obvious to most of you ... but did we all see it coming? And if we did see it coming, then how come none of us sat up and took action.

Would we now try to start a belated industrial revolution, giving more priority for a product-based economy instead of a service-based economy? Can we see the contribution of Indian industry to our nation's GDP increase? Or will our aam aadmi continue giving service to the firangs, depending on derived demand to earn his daily bread.

3 comments:

maxmayur said...

this indeed needs a thought. And I'm happy that we both pointed out more or less at the same time :-)

But understand one point. We are bound to be dependent on the services sector due to the volume of population we have. Services easily employ much more people than any other business. We have enough engineers here and we need them to earn their bread and butter.

PS: I know I'm just putting one side of the view.

Prasad said...

Well, they can start by doing what TCS has done. Start supporting the SMEs of the country. I never said stop the services sector ... just that support yourself before extending that much needed support to others. Charity begins at home.

Ashish said...

Prasad, can you dig out the numbers - instead of % - for the sectoral change in GDP contribution?
I am more worried about the drop in the agriculture contribution. I just hope its because other industries grew a lot.
Self-dependence for food is always a #1 criteria for a good economy, followed by fuel-independence.