Budget 2009 Elicits Mixed Reactions

Yes, the Finance Minister Pranab Mukherjee might have disappointed the Sensex,
but he has succeeded in winning the accolades of his fellow party men and the IT
industry. When the budget was being announced on June 6, the Sensex bull tanked
869 points. True the Budget, which aimed to build a successful post-election
platform and please the aam janta when there is a worldwide economic downturn,
was successful in doing so. The FM abolished the 10 percent income-tax surcharge
and raised the personal income-tax limit by at least Rs 10,000, which would
obviously pull in some extra money in the 'aam' pockets. While talking about the
industry people, they have actually welcomed the focus on 'inclusive growth and
equitable development' in the Union Budget.

The Unique ID project is the much needed and long overdue project, which can
dramatically change the way citizens interact with various government and
non-government institutions by bringing greater transparency and accountability.

Saket Kapur, General Secretary, PCAIT, Delhi commented that the Budget has
been entirely business-friendly. “Continuation of Exide Duty reduction, doing
away with the Fringe Benefit Tax (FBT), and confirmation of implementation of
Goods and Services Taxes (GST), which will be of a great boost for both print
and all media companies, is definitely a good move,” he opined.

Sharing his reactions to the Budget, Pawan Jajodia, President, Compass,
Kolkata said, “Demand was not there, hence nothing much was expected from this
budget.”

However, there is also a section of people who are not very pleased with the
Union Budget. Prashant Ugemuge, President, VCMDWA, Nagpur said, “Government
should stop misleading people. Because on one hand they are saying that mobile
and PC prices have gone cheaper, on the other hand during the Maharashtra
Budget, the government increased VAT from four to 12 percent. It is us who face
the challenges, because we work on very thin margins.” He added that when the
government is planning to create Internet facilities in the villages, why can't
they give loan wavers to farmers to buy PCs for their children's education. “I
strongly feel that they should build free Internet cafes and give away PCs for
free or at cheap prices, which would also increase our business,” he added.

PN Prasad, President, Confed was of the opinion that there was nothing
IT-centric in the budget. “It will not be a catalyst for growth of the IT
industry. But status quo has been maintained,” he said.

MAIT has appreciated the thrust towards sustaining the national economic
growth and making it inclusive. It even expressed satisfaction over the thrust
given to infrastructure development, upliftment of the rural economy and launch
of several schemes towards promotion of education, especially among the socially
and economically backward. Vinnie Mehta, Executive Director, MAIT, said, “We
welcome the government's decision to maintain the current excise and custom duty
levels on IT products and components.”

The recent budget has even recognized the contribution of the IT-BPO industry
which accelerated India's economic progress and provided necessary measures to
boost the sector. “Many of the initiatives in this year's budget recognize the
role the IT BPO industry in creating substantial employment opportunities. The
industry will be keen to partner with the Government in expanding e-governance
initiatives including moder­nization of employment exchanges, the UIAD project,
and smart cards for healthcare services so as to achieve enhanced governance.
Increased capital outlays on the education and infrastructure sector will also
address growth challenges that the country has faced,” said Pramod Bhasin,
Chairman, Nasscom.

Ramkumar Subramanian, VP-Sales and Marketing, AMD India, said, “The policies
will help social sector spending that is bound to kick start the economy.
Measures like these will create liquidity, and bring money back into
circulation.”

Positives of the Budget were definitely the launch of Unique ID, reduction on
the duty cuts of LCD. “Higher financial inclusion will mean better opportunities
for IT by upgrading the rural exchange, allocation and dependence on IT for
success­fully implementing NREG, infrastructure development etc. Even more IITs
and NITs will lead to enhancing better skill sets which is very positive thing,”
said Girish Trivedi, Deputy Director-ICT Practice, Frost & Sullivan, South Asia
& Middle East Impact.

Sunil Jose, MD, Sybase India added, “The most welcome change is the complete
removal of the FBT. Its provisions were felt to be too burdensome and generated
a huge administrative liability on corporate.”

Naresh Wadhwa, President and Country Manager, Cisco, commented, “On the face
of it, the budget put forth by the government is positive and focuses on
inclusive development. Leveraging technology as a tool for accountability,
better governance, in business and administration is a step in the right
direction. The allocation of funds for e-governance investment schemes like the
unique identity number for every Indian and the formation of a Centralized
Processing Center (CPC) in Bengaluru to process electronically filed tax returns
will enable effective delivery of public services through public private
partnerships.”

The refinancing of 60 percent of commercial bank loans for the PPP projects
in critical sectors like telecommunications, power generation, airports, ports,
roads and even in railways will definitely be very encouraging for software
vendors who predominantly provide IT solutions like business intelligence and
enterprise mobility in these segments.

Nandana Das

nandanad@cybermedia.co.in