The Upcoming budget is to be passed in the Parliament on 28th February. With the oil prices at an all-time low and commodity prices also going down – the finance minister could not have asked for better macro support. However there are lots of factors, which will rein him down. He needs to undertake a fine balancing act between curtailing expenditure and growth of economy.
The IT Industry was a sunshine sector and contributed exponentially towards GDP growth and has long been the backbone of the country’s export. India is in 142 nd in the ease of doing business. Probably the biggest request from IT industry would be to improve ease of doing Business in India,
and by fair margin. ‘Make in India’ and ‘Digital India’, are two of Government’s pet projects that are opening up a number of fresh business opportunities for IT companies. The expectation from this growth oriented budget is that the government will promote investments on IT infrastructure and motivate entrepreneurs to adopt new technologies. A development focused budget that targets a growth rate of 8 percent and includes measures to infuse positive sentiments for rejuvenating the overall economy. There is a sense of expectation for policies and reforms that will place India Inc. on a growth fast track which will help growth.
Another expectation is the need for a strong Goods and Services Tax (GST) that will include all indirect taxes. The GST regime will be very helpful for curtailing multiplicity of taxation and build a smoother tax regime. Furthermore, to boost the growth of e-commerce in India the industry believes the government should provide exemption from VAT and sales tax for online retailers.
Clarification on service tax between domestic and overseas vendors for e-commerce and SEZ is needed from the budget. Government has announced programs such as Digital India and Smart cities – these require the creation of technological infrastructure that will need budgetary support. The ‘Digital India’ initiative launched by the government places the technology at core of its vision of achieving country transformation. In the upcoming budget, the Modi Government should focus on allocating sufficient resources to accomplish the Digital India dream. Creating and building a digital infrastructure along with delivering services digitally and on digital literacy are critical to help achieve this goal. The government has announced plans for setting up 100 smart cities across the country. The new budget should include specific announcements to further facilitate this program.