The Hindu Business Line : Budget disappoints IT; ‘with incentives, the sector could hit $200-b mark’

(From left) Mr Lakshmi Narayanan, Vice-Chairman, Cognizant; (Seated) Mr G.S.K. Velu, Managing Director, Trivitron Group of Companies; Mr R. Anand, Partner, Ernst & Young; and Mr R. Bhupathy, Partner, R. Bhupathy & Co, at a BL Club meeting on the Budget, in Chennai on Tuesday.

Our Bureau

Chennai, March 4

If sops for the information technology sector such as the software technology parks scheme were extended, the sector could generate revenues of $200 billion in the next 10-15 years, from the $60-billion in revenues it generates now, according to Mr Lakshmi Narayanan, Vice-Chairman, Cognizant Technology Solutions and Chairman of Nasscom.

Addressing a gathering of over 350 students of city colleges at the third edition of the Business Line Club Budget Talk, Mr Narayanan said that the industry was in a sulk that its demand for extending the STPI scheme did not find mention in the Budget. However, he added that there was still hope as the Finance Minister had said he “shall look at it in the next 12 months”.

The industry, which put India on the world map, needs to be nurtured and it was disappointing for the sector and investors that it found no mention in the budget. “Uncertainty leads to inefficiencies,” he said. STP units are exempted from payment of corporate income-tax up to 2010.

Well planned

The Railway Budget 2008, which, Mr Narayanan said, went unnoticed in light of the Union Budget 2008, was far more innovative than the latter. “A number of innovative ideas were announced in the Railway budget including use of smart cards (for passengers), using technology to benefit customers, increasing productivity and initiatives to improve physical infrastructure,” he added.

As the Railways had managed revenues and expenditure well, they were able to reduce costs for passengers and goods transportation. This clearly shows increased productivity and efficiency, he said. “There is a clear vision document behind the Railway Budget and a lot of thought has gone into its making,” he added.

Lacks vision

In contrast, the Union Budget was full of numbers, lacking vision.

Citing the Rs 60,000- crore farmer loans waiver, he pointed out that loan waiver was a routine measure, and the Government should have looked at innovative ways to reduce the farmers’ burden.

“The same Rs 60,000 crore could have been allocated towards increasing agriculture productivity,” he said. India’s productivity per hectare is half that of global productivity.

The Government should encourage land consolidation and urge farmers to give up unproductive arable land, he said.

Tax holiday to hospitals

Mr R. Bhupathy, Partner, R. Bhupathy and Co, said the Budget announcement of a five-year tax holiday to hospitals set up in tier-II and III cities (with at least 100 beds each) was “illusionary”, as hospitals seldom made profits in the first five years of their commencing operations.

“We have put in a request to the finance minister asking that the sop be applicable from the year the hospital starts making profits,” he said.

Medical equipment sector

Mr G.S.K. Velu, Managing Director, Trivitron Group of companies, said the Government was yet to recognise the medical equipment business as an industry. “Every time we approach the Government we are directed to Mr Paswan as officials think we come under the Fertiliser Ministry,” he said, evoking laughter.

The domestic medical equipment industry is estimated to be worth about $3 billion, including imports of $2.7 billion. “Seventy per cent of stethoscopes and 60 per cent of glucometers (used by diabetics) in this country are imported,” he said underlining the need for promoting the sector.

Last year, the Government had announced public-private partnerships in the sector. One year later, there is still no clarity on implementing the same, Mr Velu said, adding that the current budget did not mention anything in this context. “We also expected some regulation in the implementation of health insurance. Though IRDA controls this sector, there is no panel of doctors and other medical professionals who look at implementation aspects,” he said.

Mr R. Anand, Partner, Ernst & Young, said it was time State budgets were integrated with the Union Budget. “We all remember February 28-29. But March 20 (Tamil Nadu State budget) loses significance,” he said.

For students’ benefit

Mr K. Venugopal, Joint Editor, Business Line, said the club, started four years ago with a few institutions and about 1,000 students, had grown to over 125 member-institutions and over 15,000 student-members. He said students must utilise this platform to engage in healthy discussions with industry experts on various topics such as the Budget.

Event sponsors include Hindustan Petroleum Corporation Ltd, Nuveda Learning Institute, Sree Krishna Sweets, Rekha Boutique, Reynolds, Tata Teleservices, Reliance Infocomm, Sabols, L’oreal, Thurakia, Radio One and Wrist World.

Participating colleges include Stella Maris College, St. Joseph’s Engineering College, RK Mission Vivekananda College, SRM Institute of Management Studies and Guru Nanak College.