indiaaN iNdustry-FrieNdly iNdia:bAlAnced budGet/bAlAnced GrowthBy rajaNi BaBurajaNthe 2010-11 unionBudget is significantfor india in manyways. a fast-emergingeconomy, india is oneof the countries thatshowed the first signs of economicrecovery from the global recessionthat struck in 2008. this year, indiais hosting several internationalsports events, so it is preparing toget the infrastructure <strong>and</strong> resourcesready to showcase these extravaganzas.however, india is facing anincreasing number of challengeslike population, security issues,price increases <strong>and</strong> carbon emissions.the 2010-11 budget has specialsignificance because it shouldstrike a balance between the country’sgrowth targets <strong>and</strong> the livelihoodof the common man.“Finance Minister pranab Mukherjee has done a finebalancing act” was the immediate reaction from industryorganizations. the 2010 budget underscores the focuson development, especially on infrastructure, ruraldevelopment, urbanization <strong>and</strong> social welfare, aidingindia’s development <strong>and</strong> further stimulating the vitalindustrial sectors, say experts from the iCt industry.anil Chanana, CFo of hCl technologies, said, “thebudget has been successful in reigning in the fiscal deficitwhile at the same time focusing on inclusive growth.with the enhanced spending on infrastructure, this budgetwill help stimulate domestic dem<strong>and</strong> for it products<strong>and</strong> services.”however, the industry expressed disappointment atthe hike in the Minimum alternative tax (Mat) <strong>and</strong> exciseduties. this year, the government has increased theMat from 15 percent to 18 percent, while the industrywas dem<strong>and</strong>ing a cut down to 10 percent. according toindustry experts, the Mat will be a burden on small <strong>and</strong>medium businesses that are still struggling with the impactof the global recession.surjeet singh, CFo of patni, a leading Bpo company,said, “an increase in the Mat from 15 percent to 18 percenton book profits would result in a higher outflow ofcash in the short term <strong>and</strong> would affect indian corporationsadversely.” however, singh says, this impact hasbeen cushioned to a large extent by the lowering of thecorporate surcharge from 10.0 percent to 7.5 percent.singh also appreciated the support offered for inhouser&d. “we welcome a higher percentage of weighteddeduction on in-house r&d, which has been increasedto 200 percent from 150 percent, as it will incentivize itcompanies’ innovation focus,” singh added.the measures adopted by the government to boostskill development will help nurture a workforce of ahigh caliber. it will have a positive impact on the Bpoindustry, which is people intensive.10 | A-P BUSINESS & TECHNOLOGY REPORT | APRIL 2010AP-11 copy.indd 103/25/10 8:29:37 AM
Bhasin - NassCoMGuruswamy - FreescaleAghi - steria“overall, the budget was wellbalanced <strong>and</strong> responsible,” said ajaiChowdhry, Ceo <strong>and</strong> chairman ofhCl infosystems limited. “Variousprojects <strong>and</strong> schemes announcedby the government will see an increasedrole for information technologyas an enabler towards moreinclusive growth.”the National association of software<strong>and</strong> service Companies (Nass-CoM) termed the 2010-11 budgetproposals as progressive, long-term<strong>and</strong> providing the right thrust on socialsector development, education,infrastructure, managing the fiscaldeficit, the simplification of policies<strong>and</strong> convergence towards gst <strong>and</strong>direct tax Code.pramod Bhasin, chairman ofNassCoM, said, “the announcementof the technology advisorygroup under N<strong>and</strong>an Nilekani, theautomation of central excise, gst<strong>and</strong> commercial taxes will enablethe vision of citizen-centric governance.our industry will partnerwith the government to drive inclusivegrowth within india, whilecontinuing to be the leader aroundthe world in it <strong>and</strong> business processsolutions.”the removal of the anomaly insection 10aa of the sez act <strong>and</strong> theFinance Minister’s reaffirmation onthe importance of sezs will help theindustry move forward with its sezplans across the country, NassCoMofficials said.“while overall the budget is positive,we are disappointed with theincrease in the Mat, which will be aburden on small <strong>and</strong> medium-sizedbusinesses that are still strugglingwith the impact of the global recession,”said som Mittal, NassCoMpresident, in a statement.“there was also no move towardsannouncing parity of incentives betweenthe stpi <strong>and</strong> the sez scheme,which is again necessary for smallcompanies <strong>and</strong> the development oftier-2 <strong>and</strong> tier-3 cities. in line withour recommendation, the it taskforceformed by the department oftechnology (dit) had also stronglyrecommended that the stpis bebrought to par with the sezs.”the reduction in personal incometax is good news to the industry, asemployees in the industry will benefitfrom the extra savings on theirearnings amidst price increases.however, the decision to increasethe excise <strong>and</strong> customs duty on petroleumproducts will result in asharp rise in petrol <strong>and</strong> diesel prices,further aggravating the situation.the stimulus announced by thegovernment has helped the manufacturingsector perform well. withcontinued support from the governmenton stimulating the economicrecovery, the industry will be ableto strengthen itself further, says <strong>and</strong>rewhorne, managing director ofXerox india.“the reduction of customs duty,central excise duty <strong>and</strong> special additionalduty on certain goods <strong>and</strong>commodities critical to sMes <strong>and</strong>sMBs will be beneficial to the indianhousehold,” horne added. “the taxslab for personal income <strong>and</strong> investmentwill also give a boost to the averagemid-level income group.”banking <strong>and</strong> e-initiativesthis year, the Finance Ministerhas acted promptly to offer appropriatebanking facilities to habitationshaving a population in excessof 2,000. it is also proposed to extendinsurance <strong>and</strong> other servicesto the targeted beneficiaries. theseservices will be provided using the<strong>Business</strong> Correspondent <strong>and</strong> othermodels with appropriate technologyback up. By this arrangement, itis proposed to cover 60,000 habitations.in 2007-08 the government setup a Financial inclusion Fund <strong>and</strong> aFinancial inclusion technology Fundin NaBard, to bring banking servicesto the underserved areas. to givemomentum to the pace of financialinclusion, the government proposedan augmentation of rs.100 crore foreach of these funds, which shall becontributed by the government ofindia, rBi <strong>and</strong> NaBard.this move, according to ComvivaCeo Manoranjan Mohapatra, aleading provider of value added servicesfor mobile operators, is highlywelcome as it would enhance bankingfacilities in rural areas so as toprovide financial services to the unbanked.Companies like Comvivasee great potential in the emergingmobile banking market in india.“with over 500 million mobilephones in the country <strong>and</strong> growingrapidly, the mobile phone offers theideal platform to deliver banking<strong>and</strong> financial services to the underservedsections of society,” Mohapatrasaid. in this scenario, Comvivaurges the government to adopt furthermeasures to extend the reach ofmobile commerce in the country inorder to realize the goal of financialinclusion of the masses in the shortesttimeframe.infrastructural boostthis year, the government hasgiven great focus on infrastructuraldevelopment – both rural <strong>and</strong> urban.the it industry has welcomedthe allocation of 1.73 lakh crore forinfrastructure development, as itcontinuEd on PaGE 16APRIL 2010 | A-P BUSINESS & TECHNOLOGY REPORT | 11AP-11 copy.indd 113/25/10 8:29:39 AM
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