IT industry welcomes the Union Budget

New Delhi: 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 people. 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 Finance Minister 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.

MAIT has appreciated the thrust given towards sustaining the national economic growth and making it inclusive. It even expressed satisfaction for 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.”

Even NASSCOM welcomed the Union Budget which aims at achieving the dual objective of enhancing the inclusive growth and boosting economic activity in India. 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 announced today 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.”

Aricent said that the budget delivers on quite a few of the expectations of the IT industry. “We are particularly pleased with the one year extension granted to the tax holiday scheme as it would greatly benefit the SMEs especially given the tough market conditions faced due to the downturn. It is heartening that the Finance Minister has abolished the Fringe Benefit Tax and double taxation on the packaged software which will simplify business. But the increase in MAT is a bit of a concern as it could impact current cash flow for companies. Although, as we come out of tax holiday and the effective tax rate increases, this increase in MAT could eventually get offset against higher taxes in future years,” commented Sudip Nandy, CEO, Aricent.

Positives of the Union 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, “On the 'corporate common man's' space, the most welcome change is the complete removal of the Fringe Benefit Tax. Its provisions were felt to be too burdensome and generated a huge administrative liability on corporate.”

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.

Other encouraging measures include the Mission in Education through ICT, which has been substantially increased to Rs 900 crore and the provision for setting up and up-grading of Polytechnics under the Skill Development Mission has been enhanced to Rs 495 crore. Ajai Chowdhury, CEO and Chairman, HCL Infosystems feels that the overall this budget is good for the IT sector with certain facets which are especially encouraging for this sector.

"We are going through a very crucial time hence we weren't expecting much more from this budget. Overall it has pleased us. Our pre-budget wish list has been fulfilled. Some more insight into source of revenue to fund 6.8 percent deficit from earlier 2.6 percent and disinvestment plans would have been appreciated. Otherwise this budget is more in keeping the long-term perspective in mind," said Gautam Ghosh, Country Manager, ViewSonic.