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Karnataka
By Nagesh Prabhu
In its latest development policy review (DPR), the bank said the country had emerged a leader among developing countries in providing cross-border IT services. Although the IT industry in India had a history of more than three decades, its take-off into a major software business was a recent phenomenon. Besides Bangalore, more recently Hyderabad, Chennai, Mumbai, and Pune had emerged as competitive hubs. The State had applied IT solutions to address public sector problems and to help expand other sectors such as transport, trade, and financial services, it said. The DPR said: "Some critics assert that India's `new economy' has little to offer to the majority of people who are not engineers and it is essentially an export enclave. Others point out that India cannot live off IT services alone." Although there is some truth in these assertions, India's new economy, beyond making an increasing contribution to GDP and exports, also set an example for the old. IT has grown from $ 1 billion (0.3 per cent of GDP) in 1990-91 to $ 9.6 billion (2 per cent of GDP) in 2001. The share of IT (mainly software) in total exports had jumped from one per cent in the early 1990s to 18 per cent in 2001. According to the Greater Mysore Chamber of Industry (GMCI) sources, software exports from Bangalore touched an all-time high of $ 3 billion in 2002-03 and this is expected to cross $ 5 billion by 2003-04. Several factors contributed to this take-off such as the existence of a skilled, English speaking workforce coming out of India's engineering schools, current account convertibility, and easing of controls and regulations in the early 1990s, the DPR observed. IT-enabled services such as back-office operations, remote maintenance, accounting, public call centres, medical transcription, insurance claims, database, and other bulk standards processing, were also expanding rapidly in the country. While still in the early stages of development, IT-enabled services, which required reliable telecommunications infrastructure, had the potential for broader job creation than IT itself, the DPR noted. The DPR also hailed the administrative reforms introduced in the State. The Government had created a new system of cadre management authorities to approve transfers for the first time in India and posted the number of transfers on a public website. The State had created more objective cadre management committees to approve transfer requests, it said. "The system has succeeded in reducing transfers below five per cent norm in most departments. The success of these initiatives should be followed closely and extended to other States as appropriate," it suggested. Noting the link between investment climate and industrial performance, the DPR said Karnataka and Gujarat were rated "better investment climate" States. The State ranked first in industrial growth rate by registering 8.5 per cent in the 1990s. Punjab, Kerala, West Bengal, Orissa, and Bihar registered below five per cent industrial growth rate. The State also received the highest foreign direct investment (FDI) among the States, it said.
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