Indian comms sector to become largest GDP contributor by 2014-15: Nokia study

BANGALORE, INDIA: Nokia India shared the findings of a study that highlights the increasingly significant role of the communication sector in driving growth across rural and urban India.

The study – “Economic Impact of the Communication Sector in India” – has been carried out by Dr Rajesh Shukla (Senior Fellow) and K.A. Siddiqui (Associate Fellow) of the National Council of Applied Economic Research (NCAER).

The study indicates that the communication sector is predicted to emerge as the single largest sector of India’s economy, with a 15.4 percent share (equivalent to Rs.865,031 crore) of GDP by 2014-15. In India’s transformation from an agrarian to a services economy, communication is recognized as the fastest growing sector, growing by 25.7 percent during 2001-08.

The findings of the study indicate that the communication sector will be one of the major drivers of the Indian economy in the next five years. Its ranking in terms of contribution to total GDP has moved up from #17 in 1980-81 to #8 in 2007-08, and is further expected to surpass all other sectors by 2014-15, assuming that all other sectors grow at the average growth rates observed during 2001-08.

At the same time, the communication sector’s share of total GDP has increased from just 0.7 percent in the 1980s and 1 percent in the 1990s to 3.6 percent during 2001-08. In 2007-08, the sector accounted for 5.7 percent of GDP.

Trade, Communication and Registered Manufacturing have shown more than 10 percent contribution (16.7 percent, 12.24 percent and 11.68 percent, respectively) to GDP growth during 2001-2008; however, the Communication sector has outperformed the others despite its share of total GDP being only 3.6 percent as against the shares of Trade (14 percent) and Registered Manufacturing (10.2 percent).

The communication sector has also had a significant impact on employment in the country. The study predicts that the sector will generate an additional 8.5 million jobs by 2014-15, taking the total number of jobs in the sector to 10.3 million.

Olli-Pekka Kallasvuo, President and CEO of Nokia said: “This study reinforces the view that the communication sector will continue to be an engine of the Indian economy over the next years. There is plenty of potential for growth in the sector considering that teledensity is currently only around 39.8 percent.”

Kallasvuo continued: “The role of communications in accelerating socio-economic development should not be underestimated. In India, communication is having a positive impact on employment in the services and retail sectors, and helping the country to emerge as a major manufacturing power.

"It is critical to empower every individual to connect to people, information and services regardless of their location or income. This is a key element in the vision of a truly inclusive knowledge society. Connected people can create, accumulate and disseminate knowledge, eventually leading to enhanced productivity and equitable socio-economic development. This latest study reiterates communication’s growing importance as an agent of transformation.”