IT major Infosys Technologies' CEO Nandan M. Nilekani said though the budget had been neutral on the IT front, the enhanced focus on infrastructure spending and the national urban renewal mission was heartening.
"The move to increase investment in the social sector is encouraging, as it will put India on the growth path. What is significant is the reining of the fiscal deficit with a lower growth in non-plan expenditure that will help the government not to strain on public savings for its spending," Nilekani said in a statement here.
On the fringe benefit tax (FBT), Nilekani said the modifications would remove genuine business expenditure from its purview. But the larger administrative issue has not been addressed in the budget.
"Similarly, the proposed 8 percent duty on over the counter packaged software will impede IT penetration to the masses," Nilekani pointed out.
Infosys chief financial officer T.V. Mohandas Pai said the reduction in the FBT rates and increase in the superannuation limit would benefit the BPO sector in a small way. But the demand to simplify the procedure and assessment has not been addressed. The burden of filing the returns of FBT will continue.
Wipro executive vice president Suresh Senapaty said the budget would spur macro economic growth. Given the momentum in the economy, the budget has rightly focused on investment, employment, infrastructure and social sectors, including education and health, he said.
"At a macro-economic level, managing fiscal deficit augurs well for the long-term health of the country. Stability in direct taxes and rationalisation in indirect taxes will signal continuity in policy," Senapaty said.
"On the IT front, the encouragement to make India a manufacturing hub for IT products is welcoming. The move to simplify FBT is also a step in the right direction. But the excise duty on software products can impact the general demand, especially the education sector," he said.
Mphasis president Anant R. Koppar said it was unfortunate Chidambaram had decided to continue with the FBT regime.
"We hoped the minister would abolish the FBT. Though the rates have been simplified marginally, there is nothing on assessment and filing procedure," Koppar lamented.
The two percent increase in the service tax will have a major impact on the IT and export oriented industries as they would not be able to claim setoff in the absence of taxable output services, he said.
"The budget on the whole has maintained the status quo, but could have done more to augment and sustain the long-term growth prospects," Koppar said.
Meanwhile, the Indian Semiconductor Association (ISA) has termed the move to formulate the national semiconductor policy timely.
ISA president Poornima Shenoy said the policy would take the industry beyond VLSI (very large system integration) and embedded design, making India a preferred destination for the manufacturing of semiconductors and high-tech IT products, including wafer, LCD panels and storage devices.
"The proposal to use the existing vehicles of viability gap funding and the India Infrastructure Finance Company (IIFC) to provide equity participation to new ventures will help us to become globally competitive. The three-year window will help accelerate early investment," Shenoy said.
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