why economists underplay ITs contribution

i have often wondered why economists in india dont stress on the importance IT has played in economic growth and employement. so, i was pretty annoyed see an artcile stating that "IT contribution to employment not so good", which quotes Prof C. P. Chandrasekhar of the Centre for Economic Studies and Planning, Jawaharlal Nehru University.

the article states that: he said National Association of Software and Service Companies (Nasscom) estimates that employment rose from around 2,85,000 in 1999-2000 to just above one million in 2004-05, at a compound rate of about 28.5 per cent per annum.

However, these numbers are deceptive because of the low base from which employment in the IT sector has grown, and it constitutes only 0.21 per cent of the non-agricultural workforce in the country (NSS survey on employment and unemployment)

i hate to use such strong words, but i believe that anyone with a modicum of common sense will think otherwise.

the first thing is we have to agree that a million people are employed in the IT industry. it may not seem much in a country of 1000 million but then only 12 million people are employed by the handloom sector, one of the largest employers in the country after agriculture.

now, lets dig a bit further. each IT job, according to conservative estimates, creates one addition job through direct means. this includes the driver who ferries the staff to and forth and the cleaner at the office. so, IT is directly responsible for employing 2 million people.

now, let say IT has a direct effect on the lives on the 2 million families , considering each IT worker will influence his family. and let us take the average number in the family to be 5 - in india , there is usually an extended family - one own - wife and children and then parents, atleast.that makes it 10 million - or 1% of the population - thats pretty significant i would say.

ITs contribution doesnt end here. in my view one of the greatest benefits of IT to the "common man" is the construction activity it generates. each IT worker occupies 120 square feet of office space. that makes it 120 million square feet and at an extremely conservative rs 1500 per sqare feet that makes it 180,000 million rupees and if a fouth of it goes in labour costs, it amounts to rs 45,000 million in labour , enough to provide lifetime employment to - i dont know how many workers. (i often think the market should begin to view IT cos as real estate plays!)

and then, almost all IT workers in know buy a house, atleast a small apartment through a friendly bank loan. i wonder how much employment that creates.

a lot of IT workers have been exposed to the US culture - so, they splurge on everything from cars to candy. i think that sweetens up the economy quite a bit.

and takes places where IT activity is concentrated like Karnataka. i estimate about 75 % of the incremental GDP growth comes from the sector and allied ones.

this is plain logic which could only escape a blinkered economist. perhaps, they should look beyond the NSS survey and take a trip around blore - or sit in the desk and calculate the direct and indirect employment generated by the sector and its multiplier effect!