Give IT industry a chance to fulfill dreams

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Give IT industry a chance to fulfill dreams

Ask the IT industry to directly set aside funds it would have paid in taxes and to sponsor projects that help raise the human potential of India, with special emphasis on inclusive growth

Dr. Anil Gupta

Wednesday, February 20, 2008

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Before we speculate on the outlook for the IT sector in the Union Budget, let us first look at the pressures on the Finance Minister: Inclusive growth remains a top priority for the UPA government, as it should.

India's economic growth is impressive, but remains lopsided. We have already seen social tensions due to the economic gap and a political backlash.

Given the losses for Congress recently in several states and the general elections, measures popular with the aam aadmi can be expected to take priority.

The government continues to pursue liberalization and India's participation in a global economy. This favors general tax relief measures rather than those specific to certain sectors, such as Information Technology (IT).

In theory, the US slowdown could reduce the growth in the IT sector. However, the IT sector has achieved a high level of maturity, is fundamentally strong and could actually see increased business if the slowdown in US is moderate.

IT Application Development and Maintenance, the bread and butter of most IT companies in India, is becoming saturated. IT Infrastructure Management and Outsourced Product Development will be the two major areas of growth by Indian companies.

With these considerations, I expect the following:

No major sops or new initiatives for the IT sector specifically STPI scheme may get extended for small and medium IT companies, especially given the decline in US dollar.

While this is desirable, there are pressures for incentives in other areas. As such, I would not bet money on any extension.

In November 2007, NASSCOM provided the Ministry of Finance a great list of "Top Five Most Critical Issues" and another 10+ critical issues requiring urgent attention of the government.

This is a reasonable list and most items do not reduce taxes collected by the government. Hence, I expect most of the suggestions will be approved.

Tax relief for the aam aadmi.

While one can speculate on the rates and slabs, it is almost certain there will be relief on the personal income tax front and continued general liberalization of duties with the expectations that Indian industry needs to be competitive globally

If I had a wish, I would add only one item: India has successfully changed its large and young population from a liability to an asset. Yet, when we look at our young generation with the hope in its eyes, the smart, with a desire to learn, and willingness to work hard - we have a long way to go in fulfilling their dreams and achieving India's human potential.

Government schools remain dismal. A large fraction of graduates from colleges and universities don't have the skills to become productive citizens beneficial for the economy.

I think we will all agree that the government's ability to show solid results through increased investment in education is tried, tested, and failed.

At the same time, the IT sector has shown remarkable ability to take our young minds and convert them into productive citizens. Citizens who pay taxes; citizens who generate secondary employment; citizens who care about the communities they live in. 1.6 million and growing! Citizens who make the nation proud.

Instead of bringing the IT industry under government taxes, here is my wish: Ask the IT industry to directly set aside funds it would have paid in taxes and to sponsor projects that help raise the human potential of India, with special emphasis on inclusive growth.

Give the IT industry a chance to fulfill the dreams of our young generation. We know how to guide young minds. We are tried, tested, and successful. The IT industry can help take India to a day when every child has access to high-quality education. To the day when we won't need reservations because every child will be able to compete fairly on merit. What do you say?

(The author is COO, Aditi Technologies)

(cmn@cybermedia.co.in)

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