Union Budget 2021: Here’s what the IT sector had to say about the budget

Team Udayavani, Feb 1, 2021, 5:38 PM IST

Finance Minister Nirmala Sitharaman presented Union Budget 2021-22 today. The Budget assumes great significance as it comes amid the Covid-19 pandemic, which has led to massive economic disruption in India

The budget rests on six pillars, health and well-being, physical, financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.

Although the budget has just been announced and needs a detailed analysis, initial reactions from the industry are as follows:

Announcements Made in Healthcare, Banking and Infrastructure Sectors

S Sriram, Chief Strategy Officer at iValue InfoSolutions

Budget 2021 was positive given the challenge around higher fiscal deficit due to lower income.
It is great to see emphasis on growth front keeping fiscal deficit priority low for the next 2-3 years. The key highlights of the budget include additional allocation to health and wellbeing in a Covid ravaged year with Rs 35,000Cr allocation to Covid vaccination with 4 Indian vaccines shortly. It is also great to see 35% enhancement of Government capital expenditure at Rs 5.54 lac Cr to revive economy around Road, Rail and Metro infrastructure. It is encouraging to see focus around disinvestment with 2 PSU banks and 1 Insurance company being planned for the year with Rs 1.75 lac Cr target. FDI in insurance enhancement from 49% to 74% augers well for a country with very low penetration. The voluntary vehicle scrapping policy is set to help auto sector and address the pollution challenges. While Rs 20,000Cr PSU bank recapitalisation looks on the lower side, reopening of IT assessment cases period reduction from 6 to 3 years should give comfort to tax payers on documentation. Planned LIC IPO should set the mood right on disinvestment. The government could have put more money in the hands of people to sustain the recovery along with sops to Business on CapEx investments.

Prashanth GJ, CEO at TechnoBind

Increased spend on Healthcare and Infra are welcome moves – as this will have a cascading effect on the economy in the medium term. Whether it is Highways or Railways the enhanced allocation is very encouraging. Also interesting is the ‘Bad Bank” which will help address the stressed assets through an ARC model. This will help keep the Banking system insulated from the spike of bad loans that are expected now – thereby allowing them to do business as usual by giving the much-needed support of credit in the system. The MSME allocation has been doubled – this too will help SME businesses in general which is a big market for us in the country.

Support for furthering the idea of Digital India is also seen and it is very welcome – encouraging digital payments and the use of AI/ML in governance is exciting. Emphasis on Digital Payment is very good as this will go a long way in bringing in financial inclusion. Provisions in the GST and customs duty rationalization is something we look forward to.

Tackling Bad Loans, Emphasis on Digital India and Green Energy Gets a Thumbs Up

Shibu Paul, Vice President – International Sales at Array Networks

“The fiscal deficit for 2020-21 was estimated at 9.5% of GDP, the government’s aim is to bring it down by 5% of the GDP by 2025-26 which is ambitious and certainly a welcoming initiative. The highlight in this budget is the announcement of the Asset Reconstruction Company and Asset Management Company to help banks tackle bad loans which have been a call by economists for many years. The significance given to the investments and initiatives in the infrastructure development with a few coming under the PPP model will boost the overall development which includes increased investment opportunity from various sectors.

The government’s proposal to use data analytics, artificial intelligence, machine learning-driven for the Ministry of Corporate Affairs’ database is a boost to the digitalization where the Version 3.0 of MCA-21 includes additional modules for e-scrutiny, e-adjudication, e-consultation and compliance management. Connecting more than 1,000 mandis into E-NAM is an excellent move. Setting up a separate administration structure for ease of doing business would help many organizations from various sectors. The faceless dispute resolution panel would help the citizens by keeping them safe from tax harassment. The importance given to healthcare sector to fight Covid and any future healthcare issues, the stress made in green energy projects like keeping aside Rs 1,000Cr for solar energy and Rs 1,500Cr for renewable energy along with voluntary scrapping policy and the weightage given to education has made this budget wholesome.”

 FDI, Ease of Doing Business and Tax Reforms to Instil Confidence

Gurpreet Singh, Managing Director at Arrow PC Network (Titanium Partners – Dell Technologies)

“Regressive rules had certainly affected the ease of doing business for many organizations and start-ups. However, the government’s announcement of establishing a separate administrative structure especially for ease of doing business will help many organizations benefit in the future. Revision of the definition of small companies by raising the capital base to Rs 2 Cr from the current limit of Rs 50 lakh will give a big boost to companies affecting their monetary status. Though not much of changes have been made in terms of income tax slabs, the move to make changes in tax evasion has instilled confidence in common man that they would not be facing tax harassment. Earmarking Rs 1,500Cr for promoting digital mode of payment and changing the tax audit limit from Rs 5Cr to Rs 10Cr will benefit many and will allow transparency. Hiking of FDI from 49% to 74% is a good move. The announcement that the forthcoming census would be digital shows the government’s initiative to practice what is being preached. On the other end, the emphasis on education, power and infrastructure sector will support the overall development of the nation.”

Government’s Holistic Approach to Digital Transformation is Heartily Welcomed

Rajendra Chitale, CFO at Crayon Software Experts India

It is a welcoming move that the government is emphasizing on the implementation of data analytics, artificial intelligence, machine learning for the Ministry of Corporate Affairs (MCA)’ database. We also welcome the digitization process and the introduction of e-scrutiny, e-adjudication, e-consultation and compliance management in MCA 3.0.

After the adversities of 2020, tax holiday for another year to startups is a commendable move for the government. Again, the tax audit bar raised to Rs 10 cr for those transacting 95 per cent digitally shows the government’s commitment towards bringing in greater transparency. Apart from that the government’s promise on removing GST anomalies and the amount of Rs 1,500 crore earmarked for a scheme to boost digital payments are other welcoming moves for a stronger digitized India.

Extended Tax Holidays for Startups is a Step Towards Building Strong Economy

V Satish Kumar, CEO at EverestIMS Technologies

The Union Budget 2021 augurs well for the economy and markets overall. With the aggressive investment, monetization, and recapitalization initiatives, the Government is taking steps towards getting the economy back on the rails. The focus on infrastructure, public transport, and highways will see a jump-starting of multiple tracks of the economy. For the IT Sector, this will translate into an increase in projects, business, and interventions that will be needed to support all these economic programs. Another good move for the IT sector was that the Tax holiday for start-ups has been extended by one year and exemption on capital gains on investment in start-ups extended by one year. India has always been a resilient economy and these efforts will provide the elevation we need to take off and lead in the coming years.