The IT Bill is a right first step towards the electronification of the Indian economy. Though India has been a late entrant it holds phenomenal eCommerce potential. The IT Bill accords legal recognition to the electronic/digital signatures, authentication and origin of electronic records/communications and electronic commerce transactions. With the changing attitudes of the people from going out for buying goods, busy lives and the increasing population, IT Bill is expected to usher the automation of Indian lives.

In India, companies are trying to take the inventory advantages like JIT available through online trading and have already started planning up e-commerce activities. However, the major impact of E-commerce would be in the capital markets. HDFC Bank has already applied to SEBI for permission to trade in stocks online while sites like www.karvy.com provide online IPO and mutual fund application forms as well as Instant Allotment Query online. The trend towards digitalization of finance has just begun.

On the contrary, there are certain dangers implied in the IT Bill. The world has plenty of hackers and there are people who created a bug in well managed Yahoo services recently. Viruses like the I Love You could be a nightmare for the automated world. There are smart hackers who broke the password of MTNL and created a news and mailed it to the chairman saying that MTNL had reduced the Internet charges. Imagine if they had done some unscrupulous things, what would have happened to MTNL.

There have been instances where credit card accounts have been cracked leading to mounting losses. In US, there was an incident where a person had withdrawn money from Citibank using some one else’s card. Hence there is a danger of hacking the transactions on the net and causing disturbances. So the government has clearly stated in the Bill that people involved in all these cyber crimes would be punished severely and in this direction, the government will appoint a high level special task forces to preempt such instances. IT association are however of the view that since the transactions are not exactly tested till now, a provision should have been given to make the bill flexible enough to take into account the changes in technology.

Moreover, the IT Bill seeks to amend the Indian Penal Code, the Indian Evidence Act 1872, the Bankers evidence Act 1891 and the Reserve Bank of India Act 1934. The changes in the RBI Act are to enable the electronic fund transfers between the financial institutions. The Income Tax act also calls for an amendment since detailed record maintenance could be a hindrance to the growth of eCommerce.

It however needs to be remembered that the passage of the IT Bill is only just the beginning. They need to be backed by supportive laws so that the danger of hacking accounts gets reduced and transactions go smoothly. Also many of Indian acts are outdated and not in consonance with the changing times. A drastic rehaul is called for.

The IT sector has been doing well for the past four years with a CAGR (Compounded Annual Growth Rate) of 56.35 for the past five years. The CAGR for the software export industry has been 60.71% and that for the domestic industry has been 46.05% in the last few years. This is expected to go up in the near future. NASSCOM has estimated e-commerce revenues to touch Rs 2,500 crore in 2001 from Rs 450 crore in 2000. It is expected that, revenues of Indian domestic software market would reach US$ 35 billion by 2008, with the maximum growth coming from banking, e-governance, defense, SOHO, etc. The IT Bill could not therefore could not have come a day earlier.