IT is special, because it is at the cutting edge of technology. It is, without reservations, a sunrise industry. Its products are capable of wide application, in practically every industry. It is a sector where gains spill over from the industry into the wider economy, and it could foment a revolution in productivity. Computers linked in a network, for example, could overcome the effects of poor transport infrastructure. The government should pull out all stops toencourage growth in IT.

This is especially so because our export performance at the moment is hardly anything to boast about. In sharp contrast to trends in other industries, India's software exports jumped from $1.1 billion to $1.75 billion last fiscal, and revenues are expected to be around $4 billion by the end of the century. Job creation will grow concomitantly. Software export growth has been more than 55 per cent annually over the last five years. And it's not all at the bottom end of the value chain or just Y2K or Euro problem-fixing.

Large Indian software systems now have quality standards which equal the best worldwide. The industry has also so far been immune to cyclical downturns, as evidenced by the latest quarterly results of NIIT, Satyam, Infosys and Pentafour. The recent bout of depreciation in the value of the rupee has helped keep profit margins intact, even though salaries have been skyrocketing. A host of global software firms are setting up shop in India, including companies likeMicrosoft and Baan.

But apart from the fiscal sops to the IT industry, the government must also realise that development in telecommunications is intimately linked to IT development. Treating IT as a thrust area while continuing with a dysfunctional telecommunications system will not work. If information technology is to realise the hopes placed upon it, we need an immediate change in telecom policy, including getting rid of licensing, which has proved pernicious. The key principle in telecom policy, as in any other industry, should be to choose a structure which maximises telecom consumption by households and companies.