Did the ‘Budget Full of Dreams’ Match the Expectations – Industry Speaks

Finance Minister went into a full-fledge stature harping on the well segregated nine pillars of the budget. The annexures were inscribed to pat the ‘vulnerable sections of the society’. Ratification towards agriculture, rail and roadways, UID emphasis, vowing skill India and startup India got appreciations. Though there are dubious murmurs from the manufacturing and technology sectors withstanding the neglected expectations.

Did the Government completely strand the hopes of the industry? The straight reactions from the industry linchpins:

“The budget is strongly focused on bridging the divide between the ‘haves’ and ‘have not’s’, and good work by the Government in identifying the right priorities for focus under the 9 pillars called out by the FM. This budget, unlike any other, has not treated technology in isolation but integrated the effective use of technology across all the strategic imperatives in keeping with the intent of a Digital India. This budget has laid emphasis on governance reforms and ease of doing business, while highlighting the need for enhancing educational skills in order to make India a knowledge based economy. We are disappointed with announcement of the R&D incentives reducing because we believe that it is critical for India to be one of the most innovative countries in the world and this move could be detrimental in building India as an innovation hub. I strongly urge the government to re-consider this move, as any restrictions on the R&D ecosystem are likely to decelerate innovation in the country and restrain the ambitious Make in India and Digital India vision.”

“The Union Budget 2016 has laid out big investments for the infrastructure sector which is a positive in the transformation of India envisaged by the NDA Government. We hope that the investment in infrastructure sector will also focus on execution of the smart and safe cities initiative. The statutory backing for Aadhaar will reduce leakage and ensure targeted disbursal of subsidies to the needy, eventually driving financial inclusion. Further, we hope that government’s ongoing reform programme will also result in the passing of the Goods and Services Tax bill soon, which in turn will contribute to the ease of doing business in India”.

“The large budget outlay for infrastructure segment, smart cities, Digital India, education, healthcare, citizen service projects, insurance and Skill India will a give boost to modernisation programs. This will create a spinoff effect on an enterprise’s IT spend too. Besides, bank recapitalisation will help in improving the health of banks, and thereby allow them to finance old as well as new-age ventures.”

The Government has tried to keep a healthy balance between inclusive growth and fiscal consolidation amidst global volatility and additional burden on account of the 7th pay commission, OROP. With an important focus on digitation, the government has shown good intent in keeping up the momentum of the Make In India and Digital India Mission. The government has shifted its focus from large cities to rural areas showing a clear intent to uplift those who belong to the bottom of the pyramid, especially the agricultural sector and focus on creating skilled labor. The effort to incentivize the Make In India program by way of  domestic value adding in the Electronics Manufacturing Systems segment is a step in the positive direction as is the removing of custom duties. This augurs well for us as majority of the spending in our industry is on imported ESDM Electronic System Design & Manufacturing items. From a taxation standpoint, lowering of Corporate IT Tax for companies not exceeding Rs. 5 crore turnover to 25% plus surcharge is a positive move as it offers incentives to SMEs and SMBs in the country to focus on their growth. Another proposal that will benefit the country and stimulate start-ups on the growth trajectory is the amendments to the taxation for new manufacturing companies incorporated after are 1ST March 2016 as they will now have the option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked to investment.”

“The overall Union Budget 2016-17 is encouraging for the common man, especially the tax relief in HRA. The announcement of Digital literacy scheme to be launched to cover 6 crore additional rural households is a welcome move. This will not only boost the fast adoption of digital technologies across the country but also encourage digital means to reach out to consumers and different markets. Start-ups getting 100% tax exemption for 3 years except MAT is again a good call taken by the government, as this will entice budding entrepreneurs to start their own business and since we are targeting this sector for our software business, it could prove beneficial for us as well. Besides, it will also help in creation of more and more jobs in the country. Overall, it’s a balanced and realistic budget in difficult times.”

The Union Budget 2016-17 has been focusing on supporting existing government initiatives like ‘Make in India’, ‘Digital India’ and ‘Start-up India’. There are several incremental steps being taken in this direction though no major or path breaking policy initiatives. Government’s commitment to encourage investment in manufacturing and infrastructure will propel growth and there are measure to boost the start-up ecosystem and IP development in Country. Furthermore, the government has initiated additional steps on increasing local value addition for the Make in India of few electronic products such as set-top boxes, mobile phones, routers, telecom equipment’s, electric vehicles, solar products , Computer’s, etc. with due importance as they hold the key to the nations’ inclusive development. Though, in short term the prices of these products may go up marginally. The initiatives to accelerate digital literacy in rural India and e – Learning platform is a good step towards skilling India. We expect that some of the funds made available for MoRT&H will be utilised for the road safety and infrastructure through use of technologies and we also expect All India Radio to speed up Digital Radio transmission in the spirit of Digital India. Overall, there are several policy measures and initiatives, if implemented rightfully would have a transformative impact on our economy and the lives of people in the longer run. However, our country still needs to rely on the existing policies and this may pose some challenges in accelerating the Make in India momentum.

“It is commendable work by the Government to underline the right priorities to focus on under the nine pillars called out by the finance minister. This budget, has inculcated the effective use of technology across all the tactical essentials, keeping in line with the Digital India initiative. The positive call for large investments in the infrastructure sector is indeed a great step forward. The promise of increased investment in the infrastructure, agriculture, rural and social sectors would back India’s continued journey of comprehensive and sustainable growth. Secure technology infrastructure enabling trust will be important for the successful implementation of projects like e-marketplace, digital treasuries for certificates and e-procurement. Governmental backing for Aadhaar should have obligatory privacy provisions. Additionally, the announcements on the Rural Digital Literacy and the Digital Saksharta Abhiyan are positive initiatives to boost the ‘Digital India’ vision. Overall undoubtedly a popular  budget, with all aspects around rural distress, concerns around the need to boost public investments in infrastructure, ease of doing business in the country and tax reforms being covered.”

“The Indian economy is growing at a rapid pace despite the global slowdown. The Finance Minister has clearly highlighted the growth pillars of the Indian economy in Agriculture, Rural, Social sector, Skills, Ease of Doing Business and Tax and Compliance reforms. We are happy with the government impetus on Make in India by providing tax and duty benefits and these will go a long way in strengthening the manufacturing capabilities of India. Another important milestone has been the use of technology to increase accountability of the government, authorities, and courts is a welcome step and will provide the right fillip to fast track procedures and will become the growth engine of the country. Skilling of youth of India by way of multi-skilled training institute and MOOCS will go a long way in tying the India growth story with the demographic advantage of India. Like always, we will continue supporting the government in its endeavour to fast track growth.”

The budget 2016 is conservative, with no big-bang reforms, essentially holding the rudder steady with a strong tilt towards infrastructure, rural, agriculture and social equality. Tax reduction, exemptions and speedy registrations for startups, delivery of more financial services by Aadhar scheme and direct transfer of fertilizer subsidy, were all on expected lines and positive steps. Long term irrigation fund, management of ground water resources and soil health card schemes are right steps keeping into consideration our over-reliance on nature in a volatile climate change reality. Obvious positives are the outlay on infrastructure and power sector, digital literacy for rural India and target for electrification of villages. Allocation of a huge amount for Swacch Bharat scheme is a necessity but we need to see additional details on how and where the spend is going to be to see visible improvements. Skill Development, job creation, better governance and ease of doing business are steps in the right direction, but further details of the programs awaited. Make in India program did not get any new and  additional face lift from the budget, but it is now all about execution with the direction already set last year.

We’re pleased with the broad expansion of the social net for those at the bottom of the pyramid. Such support via healthcare, employment and skills development is broadly acknowledged as a means of poverty alleviation. We applaud the government for the move towards organic farming and the general support for farmers, which will not only support environmental sustainability but strengthen the rural backbone of the country.  The digital literacy scheme for rural households is a key element of these activities and can play a significant role in their successful implementation.

We believe that the manufacturing sector should get the required thrust.  Enabling the frame-work of setting up 1,500 institutes of skill development will help augment the numbers of those entering the labor market for the first time and those employed in the organized sector. Doing away with the multiplicity of taxes will create a much needed boost to investor sentiment.

We are happy that the government is expected to streamline or eliminate the inverted duty structure for several sectors which will embrace the needs of privately owned manufacturing companies. Overall, the Finance Minister has attempted to cover the needs of the country in totality within inherent limitations. The world would be watching closely as the expectations set out will be translated to action.