Pranab gifts IT and telecom some, misses a few

BANGALORE, INDIA: Finance Minister Pranab Mukherjee played it safe with the Information Technology (IT) and telecom sectors, sans a reformist agenda, during his 110-minute-long Union Budget 2012-13 address on Friday.

True, there were some announcements interspersed in his presentation, but not anything significant enough to bring about a lot of cheer to the expectant industry.

Lamenting on the lack of infrastructure, Mukherjee termed it "a major concern." He went ahead saying that infrastructure would require Rs. 50 lakh crore in the Twelfth Five Year Plan, to be executed through a public-private partnership (PPP) model, with almost half the investment from private players.

In this context, the Finance Minister mentioned about the inclusion of telecom tower infrastructure in the viability gap funding, as he said the towers would also be made eligible under the scheme.

From his address, there seems more emphasis on rural economy and inclusive growth. Rural infrastructure development has got Rs. 20,000 crore, including Rs. 5,000 crore for creating warehousing facilities.

The  Unique Identification Authority of India (UIDAI) chairman Nandan Nilekani gets more responsibility to head an Empowered Group for the introduction of Goods and Services Tax (GST), for which the National Securities Depository Limited (NSDL) has been selected as technology partner. NSDL would work on incubating the National Information Utility that would establish and operate the IT backbone for the GST.

"GST will be implemented in August 2012. There will be a shared platform for registration and returns filing across all states. It's necessary to take some hard decisions. Some subsidies are inevitable," said Mukherjee.

As for the corporate sector, he said, while the tax rates were remaining unchanged, cheaper access to funds for expansion would be made available, but the excise rates and customs duties for specific items are set to change.

MSMEs had some good news, what with the allotment of Rs. 5,000 crore venture fund and the announcement of credit link subsidy programme for micro enterprises. There will also be capital gains tax from sale of property, if money is invested in an SME. "Our MSME sector is a fertile ground to manufacture medical equipment," said the FM, announcing Rs. 1000 crore for National Skill Development Corporation.

While the corporate tax rate continues to be the same, there is exemption of customs duty on parts of mobile phone and memory cards. But the two per cent increase of service tax and excise duty to 12 per cent might not go down well with the industry.

As IT and telecom sectors hoped for some reforms, the Budget announcement has left them with more questions than answers.