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A pragmatic Budget that favors growth

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CIOL Bureau
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BANGALORE, INDIA: With clear focus on more infrastructure, development and education, Finance Minister Pranab Mukherjee has given the message that the budget will help growth and recovery.

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In his budget speech Pranab Mukherjee said that the economy is in a far better position than it was a year ago when he announced Budget 2009. He said, “The economic recovery will be on a broad base, bringing growth from various sectors. Ten per cent growth is not a distant target and with this budget the final GDP is expected to grow further.”

Both industry and market seem to be welcoming the budget. The sensex went greener by up to 300 points and industry seems to be fairly happy about it. Let's hear from the industry veterans as to how do they see the current Union Budget:

Kris Gopalakrishnan, CEO & MD, Infosys Technologies

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“The budget focused on fiscal consolidation. The projected reduction in the budget deficit to 5.5 per cent – down from 6.8 per cent is a positive development as the country strengthens its growth after the recovery from the global recession. However, the increase in excise duty, crude oil and petroleum products is a cause of concern, as they are inflationary in nature. In addition, there has been no focus on higher education in this year’s Budget.”

N Chandrasekaran, CEO & MD, TCS

“The Finance Minister has given us a pragmatic forward looking budget that provides clarity to business. We appreciate the clarification on Section 10AA and the Direct Tax Code, implementation date. The changes to the personal income tax are very beneficial to all professionals and is in line with overall simplification theme.”

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Manoj Chugh, president, India and SAARC, EMC Corporation

“We are pleased at the earnest effort to introduce GST from April 2011. We are also happy to see significant enhancement in funding for education and rural and urban infrastructure, which will drive demand for Information Technology.”

Ambrish Bakaya, director - corporate affairs, Nokia India

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“The Union Budget 2010 is a progressive and growth-oriented budget reflecting the Government’s commitment towards driving inclusive growth and a strong development focus, along expected lines. The Budget has addressed key areas including education reforms, infrastructure spending, rural sector and supported overall business and consumer concerns, including a focus on bringing back fiscal discipline and prudence.

“We believe this budget reflects the government's disposition towards increasing employment, productivity, skill building and domestic demand and increasing India’s global competitiveness through necessary policy intervention and investments.”

Anil Chanana, CFO, HCL Technologies

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“With the enhanced spending on infrastructure, this Budget would help stimulate domestic demand for IT products and services. It also increases the disposable income in the hands of the employees which is beneficial to the IT Industry in view of its high human capital intensity.”

Ajai Chowdhry, CEO and Chairman, HCL Infosystems

“Budget 2010 is the first budget after the global crisis. Overall the budget was well balanced and responsible. Various projects and schemes announced by the government will see increased role of Information Technology as an enabler towards more inclusive growth.

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I am sure that the various measures announced today will go a long way to ensure proper focus on taking core sectors like education, healthcare, social security, rural development, national security and banking to the grass root levels.

Further to this, deduction on iIn-house R&D has been increased to 200 per cent from 150 per cent, which will definitely help put back focus on R&D. Going forward IT will play an important role in driving these nation building initiatives across sectors.”

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Naresh Wadhwa, president and country manager, Cisco India and SAARC

“The Budget this year would have a broad appeal in India, with a significant focus on inclusive growth and development at all strata. The emphasis on infrastructure development – both urban and rural – is both highly visible and highly welcome. It is heartening to see significant rise of the allocation towards social welfare.

“The ‘National Clean Energy Fund’ will position India as a leading force in finding ways to combat the imminent energy crisis. It will also simultaneously encourage research and technology projects in the clean energy space.

“The proposed provision to simplify the FDI (Foreign Direct investment) model followed in India is also a welcome measure.”

Lakshmi Narayanan, vice chairman, Cognizant

“The proposals around using information technology as a key lever—such as allocation of budgets for the Unique Identification program; the decision to set up a Technical Advisory Group for looking into e-Governance and other projects—are encouraging.

“However, by allowing the STPI/EOU tax benefits to lapse, the competitive edge that the industry has consistently enjoyed over its peers across the globe may have been blunted. While large companies will be able to mitigate the tax pressures arising from the expiry of tax holiday by moving in SEZs, small and medium sized companies, which form the bulk of the companies registered with STPI, may be impacted adversely.”

Rostow Ravanan, CFO, Mindtree

“It is a positive Budget. Positive, because there’s nothing in it to feel concern about. Setting up of a committee to oversee investment in IT infrastructure in the government sector. These steps will not only provide the necessary boost to the domestic IT Services industry but also provide benefits to the common citizen with increased efficiency in delivery. It’s also good to note that the government has reiterated its commitment to SEZs. Anomaly in taxation for SEZ has been corrected with retrospective effect. This has been a long-pending demand of the industry.”

W. S. Mukund, MD, Acer India

"Its been a fairly balanced, yet progressive Budget with focus on education, health and Infrastructure. For the PC industry there are some positive things in terms of scope for adoption of IT. For the PC industry, which had shown a de-growth in the year 2009-10, the roll back of Excise/CVD to 10 per cent is a big dampener. Also some of the inconsistencies, that have been highlighted for redressal in the last many months, such as MRP based abatement, phased reduction of CST to 1 per cent continue to persist."

Lakshman Narayanaswamy, co-founder and VP - Products, Sanovi Technologies

"We welcome the FM's focus on IT in all aspects of governance. The UID scheme which had been announced last year is a step towards "inclusion". We are very happy that the FM has announced the setting up of the Technology Advisory Group under the UIDAI Chief Nandan Nilkeni, which will expedite the technological roll-out in the Government".

Jayesh Kotak, VP - Product Marketing, D-Link (India)



“It was expected that the government would announce some benefits for adopter/users of green technology, besides just solar panels. Either the green products should have had some concessional / lower duty or corporate adopting proven green standards / compliance should have been given some tax benefits. This would have encouraged higher / faster adoption of green technology amongst end-consumers.”

Vivekanand Venugopal, vice president and GM, Hitachi Data Systems, India



“Overall a positive budget. Growth schemes in banking, investments in e-governance and infrastructure will drive investments in IT. The revision in income tax slabs and investments in rural sector development is encouraging.”

 

Rajan Sharma, Sales and Marketing MB BU, Gigabyte India



“The rolling back of excise duties may affect sales. There has been no proposal to abolish Special Additional Duty (SAD) across products which is discouraging. We hope for better involvement and engagement of the Government with the industry as the finer details of the GST is worked out."

Atul Hemani, MD, Omnitech InfoSolutions

“Overall the Budget has been satisfactory but I feel that the STPI benefits should have been extended by one more year considering the economic scenario outside India. Also a booster for the research and development in Indian IT industry would have added to the flavor. Furthermore MAT should not have been increased as it will have a serious impact on the 100 per cent export oriented units in India across industry verticals.”

Amit Maheshwari, founder & CEO, Softlink Logistic Systems

“For a long time software 'product' industry has been given step motherly treatment by the government. This year’s Budget has provided some exemption on excise duty, customs duty and service tax for imported packaged software, but have ignored domestic industry completely.

“Because of the nature of their business, software product companies are not located inside a STPI or SEZ to enjoy the income tax and other benefits which are enjoyed by software service segment. More and more domestic software companies are offering their products as SaaS, while they are subjected to service tax, similar services by international companies do not have to pay any tax. Hence to encourage the industry government should announce special measures.”

Sandeep Menon. Country Head - Novell India

“All in all, I would call it a pragmatic Budget. I am particularly pleased to note that there has been no knee jerk reaction to withdrawing the fiscal stimulus, as I don't think the time is right yet. From a packaged software industry perspective, it would have been good to see a move towards rationalization of levies and taxes. But we'll perhaps need to wait and watch how the GST roll out progresses, for that issue to be addressed.”

Tiger Ramesh, CEO & MD, Vignani Solutions

“We applaud the government’s decision of lowering the central excise duty from 8 per cent to 4 per cent, as this will accelerate adoption rates for LEDs by reducing the capital expenditure for the end-users. This encouragement of the LED industry is significant as we expect the market share of LEDs to rise to 15-30 per cent of the overall lighting industry by 2014 from a current 2-3 per cent market share. These steps can act as important catalysts for energizing the LED market in India as well as stimulating R&D in clean energy technologies in India.”

R.S. Rethinasamy, CFO, Aditi Technologies

“The Government's commitment to growth of SEZ is good news for the IT Industry. Through this reassurance, we can now expect a smoother transition from STPI to SEZ regime. Also, the initiatives to refund the accumulated credit for exporters especially in IT industry will help this industry and in particular, the small and medium sized companies.”

Lokendra Tomar, COO, APAC, Integreon

“The Budget is disappointing Budget for the outsourcing industry with no mirroring of SEZ benefits for STPI units. This will specially affect small and medium players in the industry who have not yet moved to SEZ, unlike bigger players. Increase in MAT from 15-18 per cent is also bad news for most of the firms in outsourcing industry. While overall education outlay has been increased to a good move, higher education has not got the attention it needs to.”

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