Freedom from Budget
2013-03-21Asoke K. Laha
President & MD, Interra IT
As a habit, this year also I was glued to the television to watch the Budget presentation by the Finance Minister. Normally, I do not go through the fine print of the Budget papers, including the Finance Bill. This time, what I read about the Budget was not the highlights of the Budget but an interesting article that appeared in an online version that gave the historical backdrop of the Budget.
Those who thought that the first Budget was presented by the first Finance Minster of India –Shaunmugham Shetty – have to update their knowledge. Yes, he was the first one to present the Interim Budget of Independent India in 1947. But the first Budget was presented on 7th April, 1860 by the East India Company to the British Crown. It was presented by James Wilson, who was the Finance Member of the India Council that advised the Indian Viceroy. He was a Scottish businessman, economist and liberal politician. Importantly, he founded The Economist and the Standard Chartered Bank. Mr Shaunmugham Shetty also had a business background and was the first President of the Southern India Mills’ Association, based at Coimbatore – a powerful body that represents the interests of the textile industry. What he introduced was an Interim Budget in 1947 in the midst of calamities that were let loose in the aftermath of Independence.
Equally significant was the origin of the word Budget. It is derived from a French word “Baguette”, which means a leather bag. That could be the reason why every Finance Minister, when they come to present the Budget would carry a black bag. In the yesteryears, it could have been a leather bag and perhaps, now it could be made of leatherette (artificial leather). Old hats might remember that the Budget used to be presented at 5.30 PM on the last working day of February. But they may be unaware of the reason. Our Budget followed the UK Budget in many ways, including, for many years, timing, since it used to be held at 5:30 PM which was noon in the UK.
That is for history. Now, I deal how Information Technology had impacted the Budget presentation. Not long ago, on the Budget day, there would be winding queues in front of Parliament House from 3 PM onwards in front of appointed gates. There used to be another queue outside Parliament reception for the procurement of the Budget papers. Distribution of Budget papers used to start the moment the Part B presentation of the Budget was over. There used to be a number of vehicles parked outside the Parliament House for distribution to places in Delhi and beyond.
Later, direct telecast of Budget was allowed and that almost left Parliament deserted on the Budget day. Also, Budget papers now can be downloaded at the click of a button. People now sit in the confines of their cosy offices and chambers of commerce to watch the Budget live and to listen to the expert opinions. The proliferation of channels and media houses, these days, are putting their best foot forward to rope in experts, housewives, common man, business leaders, etc to elicit their opinions about the Budget only from India and abroad. What made these things possible? It is the power of Information Technology that revolutionized the media, communication and interactive discussions.
Those who had listened to the Budget speeches some 20 years back or so, would remember that at the end of the Budget speech, there used to be a small paragraph that referred to the Budget of Post and Telegraph, which was discontinued later. Predictably, the focus of the speech would be centred on development issues and a host of sectors like agriculture, manufacturing, rural development, education, empowerment of the poor, health, small-scale industry, etc. One area that is sometimes totally ignored or inadequately addressed is IT. I tried to analyse what could be the reasons for that. Is it because the thinking of the officialdom is that IT need not require any government interventions and it would continue to grow despite any interventions? Or, is it because most of the IT businesses are in the private domain and Budget need not have to address such issues? Or, is it that IT is such an insignificant sector of the economy that a finance minister can afford to ignore. Certainly, I believe that last is not the pliable reason. I sincerely believe that it was IT, which has put India into the centre stage.
The officialdom can easily scotch this argument by mentioning the huge resources committed by the central and state governments in the e-governance. It is a fact that such expenditures are growing by leaps and bounds in the country. Of over 5,000 micro, small and medium IT companies in the country, how many get a pie of this huge expenditure? The fact is that a paradoxical situation is being developed in the country. While the existence of the small and medium enterprises in the IT sector is dependent on the export market, e-governance projects involving billions of dollars are being bagged by multinational companies or big Indian players. Differences are now out in the open. The result is that the apex organization of the IT exporters from the country – NASSCOM – is addressing the issue of adequate representation to the small- and medium-scale operators and the doyens of the IT industry have been called upon to hold parleys with all stakeholders to carve out an amicable solution.
Now, paradigm shifts are taking place in the IT landscape. Low-end IT solutions are not sought after. Contracts take longer time to fructify. Competition among countries to bag contracts is getting overheated. Yes, our IT industry needs a safety valve to hedge its risks against uncertain future. These arbitrary decisions by the host countries are worse than non-tariff barriers, which can be questioned in appropriate forums like WTO. But software exports are not covered under WTO or under any other rule-based international platform. Any country can impose withholding tax on software imports, which can make imports costlier. Or, it can cap the visas or deny visas in the case of on-site operations.
I wish the next finance minister would give a separate section on ICT industry, like other segments of the economy, like agriculture, industry, education, infrastructure and what have you. If he does not do so, I shall again write in the column the need for such treatment to the IT industry.
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