The FM doesn't get IT!

All over the world, India is known for its prowess in Information Technology (IT), that is driven by our youngsters. They got nothing out of this budget, except an assurance at the end that the FM would provide firm foundations for their castles in the air.

Last year foreign companies set up over nine million sq ft space in Bangalore alone. This implies an investment of Rs 27,000 crores and jobs of over 150,000 for our youngsters. The country faces acute shortage of good trained graduates and woefully inadequate infrastructure. IT can offer hundreds of thousands jobs to people in rural and semi urban areas. It can be one of the prominent drivers for eradicating rural poverty via job creation.

Except for an announcement (reality could be different) on e-governance, the IT industry got nothing to boast of. A few peanuts in the form of fringe benefits tax at the rate of 5%, no duties on customized software were thrown around. The budget however had a few promises. A bill that would eventually eliminate digital divide was promised. The budget also promised to bring in uniform VAT via the empowered committee of the state finance ministers next year. One more promise on a special policy to encourage semiconductors was a consolation.

While the budget increase for education department is a welcome step, people won't benefit without fundamental reform in the education sector. Some more money will be hopefully spent on classrooms and mid day meal schemes. There is no scheme to attract private investment to the education sector.

Last year the FM announced Rs 100 crores for research at IISc. This year the Punjab Agricultural University got it. The FM wants us to get excited with these one off announcements. The industry would have liked to see a comprehensive R&D policy that can effectively counter China's annual spend of Rs 900,000 crores on research.

The FM talks quite often of 8% GDP growth. He should know that the youngsters who get jobs in IT industry really imply often over 100% increases in GDP, for their families. Let me elaborate with an example. I got to talk to a taxi driver while taking a few American clients to a restaurant. In spite of years of experience, drivers don't get paid much. He earns just Rs. 6000 a month. But he is the proud father of two sons and a daughter. These youngsters work for IBM, i-flex and Citi Bank and earn almost Rs 20,000 a month each. This taxi driver's family now makes Rs 65,000 a month and that is 1300% increase in GDP for them. The taxi driver could do it since his children could study in an English medium school.

All over India, the poor people spend lots of money on their children's education. They have to give donation to find a good school for their kids. Most states give license to run schools to be run only in vernacular. In reality these private schools teach English. But the managements have to know how to manipulate the politicians and bureaucrats. Since the education sector has not been liberalized, most investment in this sector is from people close to the politicians and bureaucrats. Not many respectable groups are investing in education.

Most foreign companies come in search of Indian talent. The IT industry can not be nurtured without proper supply of graduates. While China is marching ahead with over 30,000 training centers in English, we seem to have no real liberalization in sectors that really matter. This budget is a treat for investment bankers, accountants, and advocates etc. who can endlessly discuss & make money over changes in tax regime, which should really be stable all the time. The budget is not for the taxi drivers who struggle to admit their children into an English medium school. The FM does not get IT!

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