Mr. Narsimha Rao
President.ITsAP
(Information Technology & Services Industry Association of Andhra Pradesh -
Formerly HYSEA)


Balanced budget, but IT industry expected more
“The budget presented by the Finance Minister today is balanced with focus on Growth, Infrastructure development, Inclusive growth and fiscal discipline. There are number of positives in this budget including a clear roadmap for controlling fiscal deficit. The Technology Development authority headed by Mr. Nandan Nilekani to bring focus in the Government for implementing IT projects for Tax Administration (IT and Service Tax) and other Governmental initiatives is a good step. He has proposed significant funding for the UID project, has increased allocations for School Education & Infrastructure development, has announced a program for skill building in 50Cr people by 2012 and higher allocations for rural development. The reduction in Personal Income tax and introduction of additional investment incentives is a welcome relief for the large IT industry employees. However the IT industry would have liked to see the extension of the tax benefits under the STPI scheme beyond 2011 and no increase in the MAT. The increase in MAT is likely to impact the SMEs the hardest and was avoidable atleast for the IT industry. Both these are missed opportunities for the Government to further boost the IT industry which is recovering very well in the last 3 months and we hope these will be considered by the Government in the coming days.”
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Mr. Debasis Chatterji
CEO,Netxcell Ltd


Growth oriented budget; positive for Telecom
Overall this is a growth oriented budget. This budget has come as a delight to the common man and will ensure more money in the hands of common man to spend and save due to the tax reforms. Government is trying to reduce fiscal deficit and has set a very optimistic roadmap for this. Though indirect taxes have gone up but markets are reacting positively to Union Budget 2010. The budget also has identified the potential of the telecom sector and has brought good news for the sector by making mobile phones cheaper which will further boost this already growing sector. Also the telecom sector will garner Rs.36,000 crores by the auction of 3G in the fiscal year 2010-11 which will certainly help the government to reduce the fiscal deficit.

After a very balanced budget, now the key thing is to see how to sustain a GDP growth rate of 7.2% under high inflationary pressure.

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Mr. Suman Reddy Eadunuri
Managing Director,Pegasystems Worldwide India Private Ltd.



Union Budget 2010 brings cheer to most with its progressive approach
The budget overall seems to be a progressive one. We welcome the tax sops announcement which comes as great news for all the employees. The new tax brackets offer huge incentives to the working professionals and will enhance their purchasing power and to a certain extent saving power, thereby boosting the economy. Though rising inflation will be a worry, people will certainly increase their spending based on informed decisions.

Increased allocation for the education sector is a very good move as India which is one of the fastest growing economy needs to invest majorly in education and training which will help us in creating skilled and industry ready talent.

Announcement to enhance deduction limit for expenses incurred on in house R&D to 200% from 150% earlier is a welcome move again.

While we are positive about most of the initiatives introduced by the Finance Minister, as a representative of IT/ITES industry which is a major contributor to country’s economic growth, we are disappointed to see no announcement regarding the extension of STPI scheme which if not taken care will be a big blow to Small and Mid size companies. Though reduction in service tax for IT/BPO companies is a relieving point but absence of any clear direction on STPI benefits comes as a dampener.

Another disappointment is no change in ESOPS taxation as the profit on share sales should get taxed only when they are sold. No clear direction on CST and other taxes on exports is not very encouraging either.

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Mr. Ramesh Loganathan
VP, Products and Managing Director
Progress So ftware-India


Extension of the STPI scheme and allowing SEZ benefits to STPI scheme companies, would have helped IT sector

On the primary issue of IT company operations, quite disappointing to note that the budget doesn’t address the stability and growth concerns of the industry that is still smarting from the global recession. An extension of the STPI scheme for atleast another year, and also allowing SEZ benefits to STPI scheme companies, would have helped the companies stabilize their operations and also use internal accruals for expansion and investment in growth and further job creation.

While this may not necessarily affect the macro industry numbers, given that most large players have now begun to utilize the SEZ scheme, it is surely going to affect the SME companies and in that process also reduce the innovation and growth from this sector.


The increase in MAT is another less desired aspect. But as the STPI is not likely to be extended, this may not be of as much impact as one may expect. Both the MAT and not extending the STPI scheme reduces the expansion potential of the SME players in the IT space, which may reduce some of the growth potential. Very inopportune time for this to happen. Another year’s leeway (for both increase in MAT and terminating STPI) would have helped.


Otherwise, from an inward looking view, the budget seems very balanced. Lot of strong stability inducing factors like the reduced deficit, and the clear plans for further reducing the deficit in coming years, the nominal increase in excise duty on fuel thus partly offsetting subsidy effect, and increasing the tax slabs helps offset effects of recession by putting more money in consumers hands and in that process also helps address effects of inflation on lower income groups, and also the social welfare measures introduced for the unorganised sectors are all very welcome.


Increased spend on IT in eGovernance is a welcome move. Already the domestic IT consumption is significant and is providing opportunities for the IT players- both in services as well as in products/technology. This increase in allocation will add fillip to this and in some way probably help offset the effects from not extending the export incentives.

On the social front, apart form the social welfare schemes for unorganizsed sector, the increase in spending on Primary Education, the incentives to promote clean energy and and the very well timed initiatives to shore up the agricultural sector will serve very well in long term sustainability of our economy.

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V. Laxmikanth
Managing Director
Broadridge Financial So lutions ( India ) Private Limited


Union Budget in line with theme of ‘Inclusive growth’

Overall the budget has attempted to balance growth and fiscal prudence. The UPA government’s theme of "Inclusive Growth" is apparent with the focus on rural spending, expansion of the National Rural Employment Guarantee Scheme, credit support to farmers, etc. Hopefully these will go a long way in putting more money in rural pockets and ensuring that rural demand as another component of the growth engine. Also the raising of income tax slabs and the marginal hike in exemption limit should also result in higher disposable income.

The focus on fiscal deficit is in line with expectations. However it remains to be seen how well this is executed. With the country already reeling under pressure of food price inflation, hike in fuel prices and across the board increase in excise duty are bound to have inflationary effects and no clear cut plan for tackling the same. Also increase in MAT is going to impact the small and medium scale set ups.

The IT industry would have benefited with the extension of the STPI tax holiday under section 10A/10B.
 

Reachout's News Bureau
March' 2010