Mr. Ramesh Loganathan, VP, Products and Managing Director, Progress Software-India

On the primary issue of IT company operations, quite disappointing to note that the budget doesn’t address the stability and growth concerns of the industry that is still smarting from the global recession. An extension of the STPI scheme for atleast another year, and also allowing SEZ benefits to STPI scheme companies, would have helped the companies stabilize their operations and also use internal accruals for expansion and investment in growth and further job creation.

While this may not necessarily affect the macro industry numbers, given that most large players have now begun to utilize the SEZ scheme, it is surely going to affect the SME companies and in that process also reduce the innovation and growth from this sector.

The increase in MAT is another less desired aspect. But as the STPI is not likely to be extended, this may not be of as much impact as one may expect. Both the MAT and not extending the STPI scheme reduces the expansion potential of the SME players in the IT space, which may reduce some of the growth potential. Very inopportune time for this to happen. Another year’s leeway (for both increase in MAT and terminating STPI) would have helped.

Otherwise, from an inward looking view, the budget seems very balanced. Lot of strong stability inducing factors like the reduced deficit, and the clear plans for further reducing the deficit in coming years, the nominal increase in excise duty on fuel thus partly offsetting subsidy effect, and increasing the tax slabs helps offset effects of recession by putting more money in consumers hands and in that process also helps address effects of inflation on lower income groups, and also the social welfare measures introduced for the unorganised sectors are all very welcome. Increased spend on IT in eGovernance is a welcome move.

Already the domestic IT consumption is significant and is providing opportunities for the IT players- both in services as well as in products/technology. This increase in allocation will add fillip to this and in some way probably help offset the effects from not extending the export incentives.

On the social front, apart form the social welfare schemes for unorganizsed sector, the increase in spending on Primary Education, the incentives to promote clean energy and and the very well timed initiatives to shore up the agricultural sector will serve very well in long term sustainability of our economy.

Mr. Suman Reddy Eadunuri, Managing Director,Pegasystems Worldwide India Private Ltd.

 The budget overall seems to be a progressive one. We welcome the tax sops announcement which comes as great news for all the employees. The new tax brackets offer huge incentives to the working professionals and will enhance their purchasing power and to a certain extent saving power, thereby boosting the economy. Though rising inflation will be a worry, people will certainly increase their spending based on informed decisions.

Increased allocation for the education sector is a very good move as India which is one of the fastest growing economy needs to invest majorly in education and training which will help us in creating skilled and industry ready talent.

Announcement to enhance deduction limit for expenses incurred on in house R&D to 200% from 150% earlier is a welcome move again.

While we are positive about most of the initiatives introduced by the Finance Minister, as a representative of IT/ITES industry which is a major contributor to country’s economic growth, we are disappointed to see no announcement regarding the extension of STPI scheme which if not taken care will be a big blow to Small and Mid size companies. Though reduction in service tax for IT/BPO companies is a relieving point but absence of any clear direction on STPI benefits comes as a dampener.

Another disappointment is no change in ESOPS taxation as the profit on share sales should get taxed only when they are sold. No clear direction on CST and other taxes on exports is not very encouraging either.

Mr. Debasis Chatterji, CEO, Netxcell Ltd

Overall this is a growth oriented budget. This budget has come as a delight to the common man and will ensure more money in the hands of common man to spend and save due to the tax reforms. Government is trying to reduce fiscal deficit and has set a very optimistic roadmap for this. Though indirect taxes have gone up but markets are reacting positively to Union Budget 2010. The budget also has identified the potential of the telecom sector and has brought good news for the sector by making mobile phones cheaper which will further boost this already growing sector. Also the telecom sector will garner Rs.36,000 crores by the auction of 3G in the fiscal year 2010-11 which will certainly help the government to reduce the fiscal deficit.

After a very balanced budget, now the key thing is to see how to sustain a GDP growth rate of 7.2% under high inflationary pressure.

Mr. Narsimha Rao. President, ITsAP (Information Technology & Services Industry Association of Andhra Pradesh - Formerly HYSEA)

“The budget presented by the Finance Minister today is balanced with focus on Growth, Infrastructure development, Inclusive growth and fiscal discipline. There are number of positives in this budget including a clear roadmap for controlling fiscal deficit. The Technology Development authority headed by Mr. Nandan Nilekani to bring focus in the Government for implementing IT projects for Tax Administration (IT and Service Tax) and other Governmental initiatives is a good step. He has proposed significant funding for the UID project, has increased allocations for School Education & Infrastructure development, has announced a program for skill building in 50Cr people by 2012 and higher allocations for rural development. The reduction in Personal Income tax and introduction of additional investment incentives is a welcome relief for the large IT industry employees. However the IT industry would have liked to see the extension of the tax benefits under the STPI scheme beyond 2011 and no increase in the MAT. The increase in MAT is likely to impact the SMEs the hardest and was avoidable atleast for the IT industry. Both these are missed opportunities for the Government to further boost the IT industry which is recovering very well in the last 3 months and we hope these will be considered by the Government in the coming days.”

Mohandas Pai, HR Head, Infosys:

MAT hike to 18 per cent will impact smaller players in IT industry… We may see job losses of up to 50,000. Multinational companies look for low cost of doing business. Manufacturing is going to be affected with the rise in indirect taxes. One crore people have been saved the tax burden but 100 crore people will be paying more. Two challenges are facing us: higher education and skills development. The government’s focus on primary education is good but we need more money to be spent on higher education. Similarly, enough attention is not paid to skill development.

Vikram S. Mehta, CMD, Shell India:

The notable thing in this budget is the limit on subsidy to Rs. 10,400 crore which is also the figure recommended by the 13th Finance Commission. In some sense, there was an attempt to be transparent by deregulating prices in an open way. Earlier, oil bonds were used to push the subsidy bill under the carpet. The intent to be transparent is clear.

Shanti Ekambaram, Kotak Mahindra:

Lack of negative surprises is a relief to me. This was a balanced budget, with continuity on NREGA and other social sector programmes, which is very important. I think no bad news is good news in itself. The budget’s sheer balance, going with the flow, bodes well.

Venu Srinivasan, CII President:

Leaving MAT aside, the budget has delivered without being euphoric about anything. There are road maps for fuel prices, fertilisers, Goods and Services Tax, etc. All in all, the budget is broadbased and quite good.

Karl Slym, MD, General Motors India:

A 2 per cent hike in excise duty is probably less than expected. I think it can be absorbed.

R. Seshasayee, MD, Ashok Leyland:

We have to pass on the excise duty hike as we did with reduction. But what concerns me is that we are becoming a welfare state, with several schemes being run directly by the government. It raises concerns about productivity, leakages, etc.

The trend of domestic IT growth surpassing the IT exports growth is more certain, especially with the current focus on the domestic market and measures that will leave more money in the hands of the consumer. The broad-based growth in various industry segments will have a derived effect on the IT market. This, coupled with the government’s commitment to spend on IT, will augur well for the IT players focused on the domestic market.

Developers have looked forward to more sops to make housing affordable to all sections of society. However, we welcome the provision of Rs. 700 crore and extension of interest subvention scheme of 1 per cent on all individual housing loans up to Rs 10 lakh for units costing up to Rs 20 lakh till March 30, 2011. It would have been better for the buyers and developers had the limit been increased from units costing up to Rs 20 lakh to units costing up to Rs 30 lakh.

Rise in petrol/ diesel excise duty could be seen as a right step in the direction of reducing deficits. Both international prices as well as Government's targets for fiscal deficit point to higher fuel prices in the very short-run. Rubber traders took a positive stance after weighing the impact of higher vehicle prices and tyre demand. A section of traders had reckoned a reduction in natural rubber's customs duty, but the move was less expected as international prices continue to remain high.

Ajay Srinivasan, Chief Executive - Financial Services, Aditya Birla Group:

Opening up the banking sector to NBFCs and the private sector is a significant step towards further strengthening and broadening the banking sector and bringing it closer to the aam aadmi. We wholeheartedly welcome this initiative and will definitely apply for a licence. We are confident that we will meet any eligiblity criteria that might be set.

Baba Kalyani, CMD, Bharat Forge:

That the government is committed to continuing economic reform is clearly visible in this Budget. It is evident in the announcement of a firm date for implementing the Direct Tax Code, intention to introduce GST in the same timeframe, the Rs. 25,000-crore disinvestment target for this year, increased allocations for agriculture, defence, infrastructure with emphasis on roads, power and solar energy, education, skill development etc.

The increase in prices of petroleum products, however, is quite significant and would lead to higher inflation. Taking all the positives and negatives into account, we still believe that this is a visionary Budget.

Russell Parera, CEO, KPMG in India:

The Budget appears to be reasonable and close to expectations. Stating a roadmap for fiscal prudence, reaffirmation of commitment for GST and DTC rollouts, rate alignments, continued focus on its divestment agenda and infrastructure thrust are all encouraging news. The extension of new banking licences to private sector banks and eligible NBFCs should harness good news for the financial sector. Overall I would think the FM has delivered a positive budget which should go towards helping him achieve his targets of curtailing the fiscal deficit and return to the 9 per cent plus GDP growth rate.

R. Zutshi, Dy MD, Samsung, India:

I term it as a good budget since it seeks to make economic growth more inclusive. There is a thrust on infrastructure, urban development and focus on rural economy. The changes in tax slabs will put more money in the hands of the common man, which should spur the overall economic growth

As far as the Consumer Electronics sector is concerned, the increase in excise duty by 2 per cent coupled with the increase in commodity and petrol prices will lead to a cost increase which will be passed on to consumers. Thus, as far as the Consumer Electronics sector is concerned, I see the prices going up.

Gaurav Dua,Head (Research), Sharekhan Limited:

The Finance Minister has addressed the key issues of containing fiscal slippage, and outlined a clear roadmap for the next three years. The net government borrowing programme for 2010-11 is also well under control and allays fears of crowding out of bank credit for private sector. Tax proposals related to corporate and capital markets were benign and in line with expectation with no negative surprises. The thrust on reforms and announcement like banking licences for private sector non-banking companies were unexpected positive moves.

Dr.Prakash Gupta, Director, Healis - Sekhsaria Institute for Public Health:

The important part in the increase in excise duty on cigarettes and other non-smoking tobacco products is rather non-specific. This provides no idea of the quantum of increase. Looks like it is non-substantive or very low and is directly playing into the hands of the tobacco industry. 

Without a substantial increase in tax, the consumption of tobacco products will continue to increase as has been demonstrated in several countries.  This would have disastrous effect on public health due to increase in disease and deaths caused by tobacco use.

Kaushal Sampat,COO, Dun & Bradstreet India:

The continued thrust on agriculture, infrastructure and rural development will unlock much of the economic growth potential in the medium-term. Although the excise duty rates have been hiked, they still remain at the pre-crisis level and should not be a deterrent in the process of economic recovery. Along with maintaining the focus on broadbased growth, the budget has addressed concerns on the fiscal deficit front.

Vikas Khanvelkar, MD, DesignTech Systems Ltd:

The Budget has nothing new for the IT Industry. A 2 per cent increase in excise duty on all the products will not have a very significant impact on the demand and hence the production. Rise in petrol and diesel prices will increase inflation which is already very high.

Substantial increase in the budget allocations for infrastructure and energy segments is a really good move which will create positive impact on the GDP and economy in the long run.

I am in particular excited at the prospect of the RBI providing banking licences to select NBFCs and private entities in order to expand financial inclusion. For the infrastructure financing sector, the increase in MAT from 15% to 18% would, however, act as a deterrent. We were expecting reinstatement of the benefits under Section 10-23(G) of Income Tax Act, which did not happen.

G Bala Reddy CMD, ICSA India Limited:

Weighted deduction on R&D brings some relief for Pharma industry. The scratch caused by the budget is in increasing the MAT that might be a bit of a disappointment for FMCG and Pharma sectors while cement, petrol and cigarette industries will see the effect of a price hike due to increase in excise duty.