IT Bellwethers Term Budget Pragmatic, Growth-Oriented

Indian IT bellwethers Infosys, TCS and Wipro termed the union budget for fiscal 2013-14 pragmatic, progressive and growth-oriented.

“Looking at the current global uncertain economic environment, the budget 2014 is a pragmatic one,” said Infosys executive co-chairman S. Gopalakrishnan.

Terming the projection of fiscal deficit at 4.8 percent of the gross domestic product (GDP) for 2013-14 as a positive indicator, he said key reforms to boost investment in infrastructure, and skill enhancement for job creation would revive the economic growth.

“Increased focus on leveraging IT in the public sector will help drive growth for the domestic industry. Similarly, angel fund incentives will help drive innovation and entrepreneurship besides job creation,” the Confederation of Indian Industry (CII)-president designate asserted.

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Echoing Infosys, Tata Consultancy Services (TCS) chief executive N. Chandrasekaran said Finance Minister P. Chidambaram’s intentions were very clear - to move India back to a higher growth plane despite constraints.

“The FM’s intentions are very clear: to move India back to a higher growth plane. And given his lack of runway, he has taken lots of small measures which together could boost growth.

“From a technology perspective, allowing funding for incubators located within academic institutions to qualify as CSR (corporate social responsibility) expenditure as per new the Companies Act will give a boost to entrepreneurs and start-ups and increase the engagement of the corporate sector,” Chandrasekaran said in a statement from Mumbai.

Observing that the budget proposals were prudent and progressive, Wipro executive director Suresh Senapaty said reforms had progressed towards the introduction of the Direct Tax Code (DTC) and Goods and Services Tax (GST), which not only simplify procedures but also rationalise taxes and increase collections with greater transparency and compliance.

“The budget delivers on the promise of fiscal prudence, continues to drive progress on reforms and chalks out initiatives like investment allowance to ensure growth is not ignored,” Senapaty said in a statement here.

Though there was no clarity on the timeline for implementing DTC and GST, Gopalakrishnan said the finance minister’s statement of affirmative action on both the tax reforms was comforting.

“Overall, it is a balanced, pragmatic and realistic budget,” Gopalakrishnan quipped.

On taxation, Chandrasekaran said removing double taxation on dividends received from overseas arms would ease the burden on shareholders.

From the perspective of our (IT) industry, clarifications on taxation rules regarding development centers and safe harbor rules are welcome as are measures to drive skill development, with focus on tier-II and tier-III towns.

“Overall it will be safe to say with this budget, we have started our climb back to higher GDP growth levels,” Chandrasekaran added.

Noting that the budget had kick-started some of the reforms that were overdue, Senapaty said the proposed Tax Administration Reform Commission to usher in a tax regime and a regulatory authority for the road sector would be more proactive in closure of issues rather than litigious.

“The budget also addresses sustainability initiatives through investments in renewable energy, waste to energy projects in PPP (public-private partnership) model and has incentives for wind energy projects,” Senapaty added.