In trying to maintain a balance between populism and reform, the latest budget has walked the line of cautious prudence. While it has made positive announcements on the infrastructure and agriculture fronts, the reformist zeal was missing in the budget.
As the budget speech drew to a close, it appeared that it did not have anything in particular that the IT industry should rejoice or lament about. In a volatile economic environment, the movement towards greater consistency and rationalisation in policymaking is always welcome. However, the fine print from the budget documents — some of which are still being analysed — seems to add a sting in the tail.
Bringing parts of the proposed Direct Taxes Code into the personal tax structure for the current year is a positive move as it is likely to put more disposable income in the hands of the taxpayers, spurring greater consumption. Besides, the move towards Advance Pricing Agreement (APA) is a long overdue acknowledgment of the fast changing contours of the world economic landscape and India's evolving global status. As the expanding footprint of production chains and trade linkages make territorial boundaries increasingly irrelevant, one hopes the APA will help boost foreign investor confidence by providing for enhanced tax certainty. The announcement around the availability of the UID-Aadhaar platform for validating PDS (public distribution system) ration cards, and enabling greater transparency and effectiveness in government payments, pensions, and scholarships, is reflective of the attention that e-governance is garnering as an idea whose time has arrived.
This is also manifest in the creation of a National Information Utility for the computerisation of PDS. The allocation of more funds will help such initiatives grow and deliver substantial economies of scale, besides catalysing entrepreneurial opportunities for large, medium and small-sized IT firms.
However, several provisions related to international cross-border transactions have been introduced in the Finance Bill, and it is particularly unfortunate that some of them will apply retrospectively. These will add further complexity and uncertainty, and increase the cost of doing business in India.
(The author is Group Chief Executive, Technology and Operations, Cognizant)