Budget: Bouquets and brickbats

Congrats!

Krishan Dhawan

Managing director, Oracle India

“Given the positive growth trajectory rate, there was no need for a dramatic change in the budget. It is good to see the fiscal deficit under control. I would first like to congratulate the finance minister for boosting the share of education and healthcare, both essential for overall development. Education needs greater attention, as this is where the future lies. Proper training and skill sets need to be imparted to our youth if India is to attain and maintain top rank in the global digital economy. There is continued interest in supporting e-governance initiatives. The increased budget allocation for e-governance at the centre and state levels is a step in the right direction. Also targeted funds allocated for computerisation of the Public Distribution System can aide in enhancing the country’s food supply chain to ensure the supplies reach where they are most needed.”

Disappointing

Rahul Gupta

Vice chairman, Storage Networking Industry Association (SNIA)

"The Budget is very disappointing according to my view. In my opinion IT Industry contributes substantially to the Government tax and other receipts. I felt that the contribution by the IT industry was not even acknowledged suitably in the budget. There is also no such benefit for encouraging the IT industry."

Cheers!

Avnish Datt

Country manager, Orange Business Services, India

“Among the various announcements made by the finance minister in the Union Budget for 2007-08, we especially welcome the move of setting up a special committee that will focus on reducing the levies on telecom services. We hope that during the course of the year, the committee will help create a more conducive environment for global telcos in the Indian market. This will encourage more foreign investment and create avenues for infusion of bleeding edge technologies.”

Insipid

Ranjan Chopra

Chairman and managing director, Team Computers

“Chidambaram's budget is insipid. The reduction in CST by 1 per cent is good news. The FM should have removed the draconian Fringe Benefit Tax, because of which we have been paying tax on genuine expenditure. But the FM disappointed us by only excluding expenditure on free samples and on displays from the scope of FBT, which is insignificant. There has been no relief given to the corporate sector.”

Cybercast: Kiran Karnik speaks on budget

Positive

Ninad Karpe

Managing director, CA India and SAARC

"Budget 2007-08 is more focused towards agriculture, healthcare and education. However this budget has given e-governance its due diligence. State governments across the country have realized the benefits e-governance has to offer. Currently India is on road to enable efficient governing processes, with the Central Government's support of additional Rs 200 crore. This clearly gives a boost to e-governance initiatives across the country. This spend will not only improve services to the citizens but create a ripple effect in the domestic IT industry and may lead to mushrooming of the domestic IT spend. Also, the proposed Rs 33 crore for a new scheme of manpower development for the software export industry is a definite positive for the IT services industry."

Lacklustre

Ramesh A. Vaswani

Executive vice chairman, Intex Technologies (India) Ltd

“I consider it as a lackluster budget. It addresses concerns, which will get resolved by the measures and initiatives announced not in the coming year but over a five year period. Having recognized that manufacturing has been a main driver of growth, no new initiatives were announced. The renewed focus on agricultural growth augurs well for sustainable high growth rates. The emphasis on rural development, vocational education , scholarships for encouraging secondary education amongst SC/ST students will play a substantial role in ensuring inclusive growth and providing skilled manpower for industry and services.”

Mixed bag

Ashank Desai

Non-executive chairman, Mastek

“With regard to the IT sector, the Budget has come as a mixed bag. The increase in allocation for e-governance measures is a commendable measure and should result in benefits for both the sector and the nation as a whole in the longer term. At the same time, we believe that extension of MAT to companies that had earlier been promised 10A and 10B exemptions is likely to have an adverse impact on certain players. In addition to that, the inclusion of ESOPs under FBT will add to the challenges being faced by employers in knowledge-intensive industries in attracting and retaining world-class talent.”

Ignored us!

Amit Gupta

Director of Corporate Development, Prime Focus Ltd

"We are happy to see the focus on education, which will have a very positive impact in the long run. But it is quite disappointing to see that the Government has failed to recognize the Media and Entertainment sector as one of the frontrunners in the Indian economy. This is evident from the lack of sops or incentives to the Media and Entertainment industry which is poised for exponential growth and possibly replicate the IT industry success story.”

Retrograde

Subash Menon

CEO Subex Azure

“The introduction of FBT for ESOP is a retrograde step. ESOP is a key element to reward employees in knowledge industries, particularly in start-ups, and needs to be supported to ensure the growth of these industries by attracting talent. I am quite disappointed with this move.”

Disappointed

Susir Kumar

CEO, Intelenet Global Services Ltd

“We are happy that the fiscal deficit has been reduced to 3.3% in this budget and are positive that the fiscal discipline that the FM has managed to bring about this year in the Union Budget 2007 will help curb inflation. We are also happy that the government has decided to increase expenditure on infrastructure and education, which will have a positive effect on the BPO industry. However, we are disappointed with the introduction of MAT for companies which were formerly exempt from MAT under Sec 10A and 10B.”

Budget: 8/10

Ravi Sharma

President, Alcatel- Lucent, South Asia

“The budget is a balanced one from both personal and telecom industry perspective except one concern. While the economy is growing over 9 per cent, the growth in agriculture at 2.3 per cent is at half of what was expected. As the majority of the population in India is dependent on the Agriculture sector, the government needs to closely monitor the targets for agriculture growth this year in order to maintain the momentum in overall growth.

From Telecom industry perspective, lot of focus is going in the rural areas this year, which will proactively contribute in making communication as a vital tool in the hands of the farmers. This will enable the farmers to have relevant information available faster such as weather conditions, prices etc, positively impacting their life.

The industry would respond positively to all sustainable growth initiatives especially in rural areas, bringing it to the main stream. From Telecom perspective, introduction of new technologies like WiMAX, can accelerate the rural growth and help further in such initiatives.

Therefore I rate this budget 8/10. A big challenge though is to keep the inflation under control.”

Negative impact

Deepak Ghaisas

CEO – India Operations and CFO, i-flex solutions

“This budget from long-term perspective provides positive incentives to increase investment in the educations system - both in secondary and higher education. That is a vital requirement for the IT industry in the coming years as the shortage of talent is a major constraint. However, there have been no major signals on upgrading infrastructure especially as we need large investments in infrastructure. Some estimates put the requirements at over $100 billion and the IT industry need infrastructure if it is to continue to grow.

The IT industry had some expectations – I don’t think the finance minister has taken them into account and if he has introduced any measures that affect the IT industry the impact of the these measures is negative. One of the hopes was the government would consider extension the Software Technology Park scheme and Section 10A of the Income Tax Act beyond 2009. This would be especially important for IT SME sector. The MAT imposition on the IT industry would negatively impact those of SME enterprises who are not paying any tax.

The imposition of fringe benefit tax on ESOPs is most surprising. This will make current ESOPs expensive and would also make it difficult for IT industry that uses ESOP as a major tool to attract talent.”

Beneficial

Raju Vegesna

Chairman & CEO, Sify Limited

“The focus on Central and State eGovernance Programs will benefit everyone with better governance that is transparent, efficient and citizen friendly. So it is a little disappointing to see that, despite the need to ensure more citizens have access to the Internet to participate in eGovernance, cyber cafes and Internet access services have not been made exempt from service tax. Such a measure would have given a boost to the government's efforts to rapidly increase Internet penetration and use, as well as contributed to the success of the eGovernance services being rolled out.”

Upset

R Chandrasekaran

President and managing director, Cognizant

“Frequent modifications to tax exemption provisions such as the introduction of the MAT upsets business plans and investment direction of companies. While the industry was expecting an extension of tax holiday beyond 2009, this modification of the tax provision is counter-intuitive. With the IT industry seeing newer levels of buoyancy and robustness, a move of this nature will only divert funds to MAT rather than channelize them for growth and leadership. Further, this will severely affect small and medium enterprises which constitute a large proportion of the IT industry.

Service tax on commercial leased premises will have a direct bearing on the cost of operations and will adversely impact small and medium sized companies, specifically in the IT and BPO segment which are large consumers of leased space. As most small companies in the knowledge industry initially start off in leased premises, a move in this direction would not help in nurturing and sustaining such companies.”

Good n’ bad

Ananda Mukerji

MD & CEO, Firstsource

The emphasis on education and infrastructure in the Budget is good news and to be welcomed. Also encouraging is the fact that in general the tax rates have been left unchanged particularly corporate income tax, service tax or STT. Specifically for the BPO industry the imposition of MAT is disappointing as is the lack of any announcement on the exemption of the 10A-10B benefit beyond 2009.

Fine

Amar Chintopanth

Executive director and CFO, 3i Infotech

“At the macro level the two objectives, which have driven budgetary proposals are a growth target of 9.5 per cent and containing of inflation. This has been done by infrastructure investments being increased and lowering of some duties. This is fine.

On IT industry in particular government spend on E governance is very encouraging. With respect to MAT, though there is an increase in coverage of MAT for 10A/10B companies, there is the facility of carry forward of MAT which is available to all companies.

Dividend tax is a cost, which will have to be borne - exact impact will actually depend on the quantum of dividend distributed by companies.

FBT on ESOP is something, which may impact - but till we get to understand the exact tax rate for this (not yet announced) -- we may not know the impact. However it is payable only in the year the employees exercise the options and not when they are granted the options.”

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