Paper short abstract:

Modern structural change often involves information technology. India has a head-start relative to other developing countries but has this contributed to development, or only benefited a few already well-off people? This paper evaluates and quantifies linkages into Indian firms and households.

Paper long abstract:

Literature on India's software and information technology services (SWIS) sector is doubtful about its role in development because it finds that the sector's forward and backward linkages predominantly lead abroad. The only beneficiaries are the already well-educated workers in the SWIS sector itself and some SWIS firms. Using new data, this paper re-evaluates the sector's role and finds that there is now much more room for optimism. Domestic forward linkages have been growing very quickly and they are responsible for significant output and productivity gains in Indian sectors like telecoms, banking, and retail. Additionally, backward linkages from the sector and its employees stimulate demand for domestically produced goods and services like construction, catering, and travel. There is an increasing knock on effect on creation of low skilled jobs. Together, these effects add up to a significant contribution to India's economy, and increasingly India's people too.