‘IT boom not resulting in all-round prosperity’ The Times of India, Pune, 26 September, 2006 In Bangalore, Former prime minister H.D. Deve Gowda opposed the expansion of the IT sector and the various sops given to it by the government on grounds that th - September, 2006

In Bangalore, Former prime minister H.D. Deve Gowda opposed the expansion of the IT sector and the various sops given to it by the government on grounds that this sector represented just one face of the city and there was a huge gap between the IT-driven prosperity in Bangalore and the poverty in the slums.

While some corporators in Pune have been murmuring on similar lines, the rising cost of living in Pune is bound to exacerbate such tensions.

According to economist A. Narayanmoorthy at the Gokhale Institute of Politics and Economics, while growth in IT does make certain pockets in society wealthy, it does not result in a trickle-down effect leading to all-round prosperity.

Rohit Gera, Honorary Secretary of the Promoters and Builders Association of Poona (PBAP), said that housing real estate prices in Pune rose sharply in the last one year due to the demand supply gap. Thus, when the demand for housing from the IT sector started rising, “the increase in input cost of construction over the last few years was passed on to the consumer,” he said.

Prices also rose because investors and speculators entered the fray, although the situation has stabilized in the last three months, he said.

Gera said that with high traffic of IT professionals between Pune and Banagalore, people were contemplating buying property in either of the cities. “Pune tends to be preferred because commuting is easier here than in Bangalore.”

Kaustuv Roy, C&W India’s national head (Tenant Strategies and Solutions Transaction Services) told TOI that the abnormal increase in the residential real estate for Pune in the last one year was driven by Pune’s IT growth. Higher pay packets and higher disposable incomes.

Migrant professionals looking to invest in their first home in Pune and rising demand for high-end and premium apartments were the other factor that has led to higher cost of living in Pune, he said.

“Finally, it can be said that the cost of living index has appreciated with the growth of the IT industry,” Roy said, adding that higher salaries resulted in higher disposable incomes and willingness to pay more.

A. Narayanmoorthy said that while growth in IT does make certain pockets in society wealthy and adds substantially to the nation’s foreign exchange reserves, it does not result in a trickle-down effect leading to all-round prosperity. “Such prosperity comes essentially from the growth in the agricultural sector.”

According to the C&W July 2006 review of commercial real estate, IT and ITES sectors will continue to be the primary drivers in the real estate market followed by demand from the financial services sector and research and development establishments.

“Pune is witnessing a steep growth in the financial sector with the allowance of FDI (foreign direct investment) and increase in investment opportunities due to growth in the IT sector and the upcoming SEZ (Special Economic Zone) revolution.” Roy said.

The IT industry in Pune, which smashed previous records by crossing the $1-billion exports in 2004-2005, surpassed Mumbai in IT exports in 2005-06.

According to industry experts, the strength of  IT personnel in Pune is expected to cross 3.5 lakh by 2008, after which future growth would depend essentially on Pune’s ability to scale up on the infrastructure front