Techno Blogging

Union Budget 2011

by VARINDIA 2011-03-29

Amit Kumar Kedia, Director, Techcom The Budget this year, although not an exemplary one, is still pretty balanced and will benefit certain sections to a great extent. Unfortunately, the IT industry is not one of them. The best move by the FM perhaps is not increasing the excise rate from 10% for consumer durables. This will provide a good amount of relief to the industry as well as the customers. The target for growth of the national economy to the tune of 9% is a healthy one as well.
Samir Dhir, Sr. Vice-President - Global Delivery Head & Head of India Operations, Virtusa Corporation “The Budget aims to control and reduce the fiscal deficit and inflation which is intended to strengthen macroeconomic fundamentals. The incentives provided to the infrastructure sector are welcomed as these incentives should increase capital investment in this sector. The proposal to reduce the surcharge on corporate income tax should spur additional investment. Levying MAT on SEZ developers and units operating in SEZ will negatively impact their cash flows.”
Arshit Pathak, Managing Director, Kingtech Electronics (India) “There has been a marginal increase in MAT from 18% to 18.5%. This poses a tax burden on telecom service operators who seem to be spending fortunes already in other resource- intensive activities like 3G network rollout etc. This shall have a bearing on their plans to acquire new customers and increase tele-density. Therefore, it has an indirect effect on the sale of new mobile handsets. The Government has increased the duty by 1%. This is inflationary and shall result in increase in the prices of handsets. However, it all depends on the mobile handset brand whether or not it passes this increase completely or partly to the customer or absorbs it fully. Therefore, as a socially responsible brand, we have taken a conscious decision not to burden them further by any resultant or ensuing price rise.”
Rajesh Janey, President - India and SAARC, NetApp “Impressive fiscal consolidation and focus on reviving the pre-crisis growth trajectory seem to define the budget this year. The forecasted growth rate of 9% indicates an optimistic outlook and the objective clearly is to pave the way for building a transparent and result-oriented economic regime. Providing rural broadband connectivity and increasing the reach of banking facilities will provide a strong impetus to this mission. The growing role of technology outlined, in improving governance, will fasten the pace of opportunities for players like us in the technology space. The dynamism we see due to the scaled-up flow of resources (including the intended generation of 10 lakh Aadhaar numbers from October 2011) to rural India will prove to be significant.”
Naresh Wadhwa President & Country Manager, Cisco - India and SAARC “The emphasis on rural development, both through banking and telephony initiatives, is very welcome. I am particularly thrilled about the allocation announced for rural telephony as this will surely give a fillip to boosting connectivity for villages. The move to set up banks in villages of more than 2,000 people, the bill to allow RBI to grant more banking licences and additional support to NABARD are particularly noteworthy. On the overall industry front, there are a few initiatives such as treaties to avoid double taxation and reduction in corporate surcharge which will help in promoting growth.”
Manoj Chugh, President, India and SAARC, EMC Corporation “The Union Budget 2011-12 recognizes the role IT plays in the overall economic development and service delivery. Initiatives such as rural broadband connectivity, IT infrastructure backbone for GST, proposed norms for entry of new banks in the private sector and the mandate for public sector banks to cover rural villages, national knowledge network connectivity of research institutions, building e-courts, implementation of technology advisory group, recommendations and focus on green among others will boost overall expenditure on IT in the country.”
Deepak Kumar Sahu, Publisher, VARIndia “The Finance Minister's announcement of increase in the basic exemption limit from Rs.1.6 lakh to Rs.1.8 lakh is a welcome relief to the “aam admi” and reduction of surcharge from 7.5% to 5% for companies is a step towards transitioning to new Direct Taxes Code effective April 1, 2012. The Budget seems to be positive and pro-reformist. For the education sector, there is an overall increase in the allocation of funds by 24% and a special emphasis on skill development and National Knowledge Network critical for India to be a global leader in the 21st century. The increase in the rate of MAT by 50 bsp and inclusion of units operating in SEZs under MAT would negatively impact companies which presently have or are planning to set up manufacturing units in SEZs. In a nutshell, this is a good balancing Budget and will add to growth in the economy.”
Ashwini K. Aggarwal Executive Director, MAIT “The Hon'ble Union Finance Minister has presented an inclusive Budget for the aam aadmi - and simple corrections for building the industrial impetus for the nation. It is heartening that the Hon'ble Finance Minister has recognized the strong potential of IT to reboot key national projects. The UIDAI implementation, National Knowledge Network and projects like Central Electronic Registry will improve the system efficiency as well as boost demand for IT in the country. Broadband connectivity to 2.5 lakh Panchayats in three years will have a major e-inclusion impact on rural India. The increase of Minimum Alternate Tax (18.5% from 18%) and the reduction of the surcharge for domestic companies(5% from 7.5%) are a typical FM trick - give with one hand and take with another - no surprise there and that is the best thing about the Budget - no major surprise.”
Ambarish Deshpande Director - Sales, McAfee India We are delighted that the Finance Minister has recognized the role of IT in varied aspects of governance. Initiatives mentioned in the Budget towards e-filing, e-payment of taxes, computerisation of commercial taxes and the creation of “Sevottam” - a web-based facility for tax- payers are strong indicators of the country's movement towards a convenient and automated mechanism of tax administration. In respect of the Information Technology sector, the issue of STPI extension has not been addressed in the Budget. But we expect the proposed Direct Tax code which will be enforced in April 2012 to continue catalyzing the growth of this industry. We welcome the Budget's specific and actionable framework towards the enforcement of GST which will work in the industry's favour by bringing about standardization in taxes. The reduction of corporate surcharge from 7.5% to 5% will also amount to greater profitability for Indian companies.
Sunil Dutt, VP & GM, Personal Systems Group, HP India "Budget 2011 has been very lukewarm towards the IT sector with no major alterations directed towards it. While we welcome the initiatives towards increasing the penetration of rural broadband connectivity, its full benefits could have been reaped only if personal computing devices had been made affordable to the masses. No change in excise duty will help maintain prices. However, a reduction in excise duty, central sales tax and the abolition of Special Abolition duty would have helped achieve that end and guarantee inclusivity. Nonetheless, we welcome the steps that had been taken towards ensuring fiscal consolidation which will benefit the government as well as the corporate sector.”
Jeya Kumar CEO, Patni Computer Systems “We believe that the inclusion of SEZs under MAT will reduce the productivity of companies, especially in the small and medium sectors which form a major chunk of the IT industry. While the increase of MAT from 18% to18.5% is notable, it will not have drastic implications among companies. Although new services are included for Service Tax increasing the input costs, the efforts to streamline and simplify the refund mechanism is a welcome step. The much-awaited clarification regarding taxation of Licensed Software has not come which is disappointing. By enabling rural India to harness broadband Internet, the Finance Minister has also provided a fillip towards the cause of penetrating Internet to the grassroots of the country.”
Suresh Senapaty, Executive Director & CFO, Wipro “The experienced and practical man that he is, the Finance Minister has identified all the right focus areas in this budget - pruning fiscal deficit, higher allocation to social sector and education, focus on infrastructure, making Indian markets friendly to foreign investors, etc. Reversal of promised benefits for SEZs by way of imposition of MAT and Dividend tax, increase in the rate of MAT which was already very high are clearly retrograde steps. While there is mention of important matters like corruption, governance deficit, etc., one would have liked to see much more articulation of Government thinking. As in the past, this budget too promises a lot. The overall summary is - the diagnosis is very good, the challenge is now in the treatment!!"