The problem of expecting very little from a budget is that we seem to have got what we expected. A bit given away in terms of personal taxes and a bit taken in terms by service tax increases?at the end of it all, what is missing are the bold steps needed to really move the needle for the Indian economy. The road map for GST and DTC is still unclear and the message to foreign investors cannot be reassuring for anybody who is considering India as a continuing or future investment destination.

One of the biggest concern areas is that this seems to be a budget full of retrospective provisions. The Vodafone matter where the Supreme Court judgment has been countered by new provisions is a matter that would cause alarm for many investors. The definition of royalty is a matter of specific concern for the IT sector with a number of domestic companies affected. The lease line payments could also be impacted which can affect IT companies unless specific clarifications are forthcoming soon. The transfer pricing applicability even to intra-company transactions between domestic resident companies seems retrograde though the advance pricing agreements may provide some predictability to transfer pricing between countries. Of course the implications for companies which are already in litigation are still to be studied in detail.

The other big dampener is the provisions for tax that could cause a dampener on overseas private equity investments. While domestic venture capital may be exempt from this and the announcement of a large fund focused on MSMEs may help the overall industry with some potential impact on the IT sector, these provisions as well as the large discretion given to enforcing authorities does not bode well for the confidence level of investors, from angels to global VCs to PE players. What these steps will do for entrepreneurship in the country remains to be seen but the prognosis cannot be good.

A clear agenda for all associations?Nasscom, CII and many of the sectoral groups should be to ensure that the doubts created in the minds of investors in start-ups and small companies are cleared up in the next few weeks and there is no room left for interpretation in these matters. In this budget, a lot could have been done for growth of IT and other services industries but very little has changed. One hopes that the priorities that are clear for enabling this industry to scale to its promised $200 billion exports goal in 2020 will be delivered in future budgets or policy pronouncements. Removal or minimisation of MAT on SEZs would make it feasible for large units to be developed, particularly in smaller cities and create large employment and city infrastructure improvement. For an industry which has been till recently very dependent on just seven cities, a move towards lower cost locations needs to be enabled and one hopes that some incentives will be announced soon. Let us not take Vietnam, China and Philippines for granted even as we celebrate our continued supremacy in global IT.

A related area where there is much we can learn from wise policy planners like the Philippines is the incentives given for skills development. While the efforts of the

National Skills Development Corporation are laudable and the formation of sector skills councils will hopefully pave the way for a better vocational qualification framework and produce the much needed employability in our young countrymen, reimbursements for skills would surely go a longer way than NREGA type handouts. A joint Centre-State initiative to train tens of millions of people should be undertaken in the very near future and one would have hopes to see some of this appearing in this budget.

All in all, the only saving grace of Friday was Sachin?s much awaited hundredth ton albeit against Bangladesh. There have been some moves to simplify tax rules but a

resurgence of tax activism can be expected which is unfortunate. With the budget

presenting nothing much to whet the

appetite of either the corporate sector or the stock markets, it will be interesting to see how the next few months shape up?for the corporate sector, for the government, and the nation as a whole!