Budget 2012 Analysis
Technology for Growth Once again the Indian government did not digress from investing in inclusive growth, it has also tacitly tried to woo the private investors
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he Indian Union Budget 2012 is crucial because it is the first of the 12 Five-Year-Plan budgets, which aims for ‘faster, sustainable, and more inclusive growth’. One of the 12 strategy challenges identified as part of the 5-year plan is: ‘Technological and organizational innovation’—the key to higher productivity and competitiveness. On the face of it, Budget 2012 has been good for the IT industry, but the government has missed the opportunity to position India as a global VAS destination by taking some strong steps in reforming the sector for emerging technologies. The emerging technology trends in electronics hardware, telecom connectivity, and IT will make it possible for millions of citizens to access 18 | April 15, 2012
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services electronically in self-service mode using mobile phones and the internet. The cost of mobiles is a major factor for this.
Exemption from the Basic Duty
The FM’s proposal to exempt mobile phone memory card parts from basic excise duty will provide some boost to manufacturing of mobile phones in India. While there is a proposed hike of the basic excise duty from 10% to 12% on the cards, it will not affect the prices of mobile phones as mobile phones continue to pay excise duty of 1% like the previous financial year because they come under special category. Most of the handsets in India are imported. So the prices of most devices would not be impacted. However there are several entry level or feature phones which are being assembled in India by companies like Nokia, LG, and Samsung, which are likely to benefit from this move by the government. The FM’s proposed exemption for memory card parts for mobile from basic customs duty is aimed at promoting handset manufacturing in India. The government has also introduced a mobile based Fertilizer Management System which has been designed to provide an end to-end information on movement of fertilizers and subsidies. This is a good move on the part of the government to leverage emerging technology for the benefit of the masses.
Technology for Larger Service
The decision to increase investment in Aadhaar and leverage technology more in larger service delivery initiatives will also provide impetus to the domestic IT sector. This is definitely a sign of a stance towards pro-digitization. The budget highlights the progress and has encouraged egovernance initiatives to improve DATAQUEST | A CyberMedia Publication
India’s competitiveness in the areas of manufacturing, research, and innovation for the overall social development and inclusive growth of the economy. The extended incentive for weighted deduction of 200% for R&D in an in-house facility for a further period of 5 years will also boost investments and the scope of technology adoption further in the country.
Know Your Customer
One should not oversee the implications of a central ‘Know Your Customer’ (KYC) repository which is to be developed in 2012-13 to avoid multiplicity of registration and data upkeep. This is slated to not only reduce duplicity in our system but also help the banks in maintaining the correct financial requirements of every individual. This will go a long way in the financial inclusion movement. The success of this project will give the government much-needed experience in collecting and developing a common repository for other critical services (BFSI sector). The success of the KYC project will be critical in paving the way for similar projects in the future. This is also an opportunity to tap the emerging opportunities in the areas of information technology (IT) such as cloud computing and big data. More details are required regarding the increased outlays on education with an emphasis on enhancing the skills of the youth and understanding how this will affect the emerging technologies. It will be worthwhile to check the actual implementation of the proposed outlay of `516 crore for IT induction and modernization for Indian Post. Overall, the Budget 2012 does not hit the ball out of the park when it comes to emerging technologies but does not disappoint us altogether. n visit www.dqindia.com
The need to stay connected and informed is propelling the growth of new technologies such as mobility, social media, collaboration, cloud services, and communication. So, executives will need to look seriously into how to mitigate risks
RAJESH RAJAN The author is leader, emerging technologies, PwC India maildqindia@cybermedia.co.in April 15, 2012 | 19