Budget Reactions – Sandeep Nair, Emerson Network Power in India

by CXOtoday Staff    Mar 01, 2011

Sandeep Nair  Emerson Network PowerSandeep Nair, President & MD, Emerson Network Power, shares his post Union Budget 2011 reactions with CXOtoday.com.

“Overall it’s a development and growth oriented budget with strong impetus on education, infrastructure, rural growth, leveraging technology for increased efficiencies and PPP to continue the momentum.

The government acknowledges the significance of the manufacturing sector and is keen to make the sector competitive. The government intends to increase manufacturing sector’s contribution to the Indian GDP from 16% to 25% over next decade which is an encouraging move and will benefit the economy both in terms of employment and self sustenance. The commitment to simplify the process of procurement, pricing and simplification of the import export process is a welcome move. The challenge is the execution.

Another welcome move is increase in weighted deduction from 150% to 200% on expenditure incurred on R&D by manufacturing businesses.

The setting up of the National Innovation Council and the process of setting up state innovation councils and sectoral innovation councils is a path breaking initiative. The grants to academic institutions and universities should help build an innovative environment for industries to remain long term competitive. Innovation measured as patents in the country would be a long term goal for the country to start measuring innovations and reap the benefits to the economy. The IT industry looks forward to benefitting from this focus on innovation.

Infrastructure has been benefited the most in this budget; the government has significantly increased the allocation by 23 percent in 2011-12. Though the intent is right, the success will lie in the effective execution of such developments. Definitely a positive for growth and economic development

The sizeable increase in funds allocated to the education sector will help create a strong talent pool. The move will also demand for various sectors to help the government with adequate infrastructure and set-up the network to achieve the set goal. Education plays a pivotal role in the development in the country and most of the sectors require specialized talent. This will help us create a ready talent pool which will be good for the industry and the country.

It is encouraging to see that the government has given due impetus to the environmental concerns and has allocated significant amount to protect the environment. This shows governments intent to promote and encourage environment friendly measures in future.

The road map to DTC is welcome while the uncertainty on GST is a concern. These simplifications on tax structures should help the economy on the long run.

The National Knowledge Network, Central Electronic Registry and the UIDAI implementation will improve the system efficiency as well as boost demand for IT in the country. Broad band connectivity to 2.5 lakh panchayats in 3 years and the focus on financial inclusion should help stimulate productivity, growth opportunities and significant IT inclusion in the rural economy

The intent to expand E courts and build judicial infrastructure should help speed up justice and productivity of the judiciary.

Inflation remains a concern and would clearly rely on effective execution on both supply and demand side to contain. The expectation of income tax slab rates for individuals to offset some impact of inflation was a bit disappointing in terms of the relief versus the expectations. Indexing wages to the CPI under the MGNREGA program though is a welcome move for the rural economy.

As for the IT industry specific to manufacturing the long term demand of a higher MRP rebate of 35% from the existing lower rebate and the full exemption from SAD for IT manufacturing remains an unfulfilled wish. These initiatives to boost the IT penetration will have to wait for another budget.

No excise duty on equipments for UMPP projects is positive news for power generators and domestic equipment manufactures.

Overall, the budget is positive and beneficial for the economy in the long run.

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