A creative and intelligent Budget that walks the talk

As a company that has always believed strongly in India and the role IT can play in unleashing the India potential, we feel that the Prime Minister Narendra Modi and finance minister Arun Jaitley’s 2015

As a company that has always believed strongly in India and the role IT can play in unleashing the India potential, we feel that the Prime Minister Narendra Modi and finance minister Arun Jaitley’s 2015 budget is absolutely on the right track. It balances very well the three elements that are essential to any good budget – setting strategic goals for the country’s growth with a clear road map of implementation; ensuring added support or fine tuning initiatives announced in earlier budgets; and providing enough particulars so as to enable execution immediately.

Let’s start with the strategic level. Clearly the focus on “ease of doing business” (one of India’s perennial bugbears); “demand generation” (India’s domestic market is second to none globally); entrepreneurship (the best way to channel our demographic dividend into economic growth); and infrastructure (the enabler for everything else) is highly welcome. If the government can ensure continued focus and support for these four pillars over the next few years, that’s more than half the growth battle won!

Two key initiatives from the last budget that continue to be supported are “Make in India” and “Digital India”.

The new excise duty structures will encourage and aid the manufacturing of tablet computers and mobile phones in India. And to ensure universal broadband access, the government has announced an acceleration of its National Fibre Optic Network (NOFN) plans. Andhra Pradesh has become the first state to go ahead with its own plans to offer broadband to its 12 million households, with the Centre reimbursing it financially. Bihar and West Bengal are said to be mulling the same model and one hopes more states take charge of their own broadband plans similarly.

That said, I would call out two things for the government’s attention when it comes to “Digital India” and “Make in India”. Firstly, we need to view NOFN as more than just infrastructure laying by focusing on applications and usage scenarios for citizens. NOFN will remain a mere pipe unless we first ensure digital literacy for all Indians and then create applications and services that aid them in their daily lives. Secondly, keeping PCs out of the new excise duty structure for tablets will demotivate the existing manufacturing facilities that have been operating in India for long. As the apex industry body MAIT reports, PC OEMs including the likes of HP, Dell, and Lenovo have collectively invested over $2 billion in setting up PC manufacturing facilities in India and today, they are all under-utilised as it’s not financially viable to make PCs in India. Most of the 10 million PCs that Indians buy each year are imported, but they don’t have to be.

Which brings us finally to the new specifics that were announced. A clear timeline for the introduction of GST (April 2016) will pave the way for a common national market across India (instead of the spaghetti of central and state taxes that exist today) and thus make scale a reality for companies. Though not as obvious as the GST, I feel the true master stroke in the budget is the increased shared of tax revenues to states. We often forget that it is the states that are responsible for driving execution and thus many of the impediments faced by companies are “last mile” issues.

Various other initiatives that will do their part in supporting the “digital India” and “ease of doing business” themes were post offices being enabled as payment banks (we have over 1.5 lakh post offices); reduction in regulatory timelines (central excise and service tax registration will take just 2 days now); continued simplification of regulatory steps (businesses can access all requisite processes for starting up from one portal); a new bank that will enable funding of small entrepreneurs; and an expert committee tasked with replacing the plethora of prior permissions with a unified, pre-existing regulatory structure.

This Budget has crossed of most ‘t’s and dotted most ‘i’s but what is required now is for the government and industry to connect the dots in order to increase impact. And an excellent example of this is the announcement of launching the National Skills Mission to consolidate skill initiatives, procedures and outcomes spread across several ministries which will align with ‘Make in India’.

As I said in the beginning, this is a clever budget and the opportunities exist in plenty. However success or failure will be determined by the quality and urgency of execution. And, successful execution will depend on the government’s ability to partner with the industry which requires a drastic change of mind-set on both sides. The hangover of the British Raj is evident in the fact that the governments talks ‘to’ the industry instead of talking ‘with’ the industry. But if Modi’s dream of a Digital India needs to be reality then its high time we started talking and acting professionally as partners who trust each other. In my mind, this is the final missing ingredient that stands between the success and failure of India.

Debjani Ghosh
MD, Intel South Asia

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First published on: 02-03-2015 at 02:21 IST