Creating a Budget for a country like ours is not an easy task and admittedly the Finance Minister had limited headroom. Stalled reforms, rupee devaluation, high interest rates, etc, had created the current downbeat mood and set high expectations from the Budget. However, the Budget, while taking some welcome steps, did not exhibit the bold reforms and signals that the industry was looking for to rekindle and bring back business confidence.

There were some positive aspects such as doubling the amount for tax-free infrastructure bonds, focus on capital markets and getting the retail investor back. Putting UID back on track was indeed welcome as that can be a game changer for India, direct subsidy transfers being one of the great benefits.

Extending tax deduction of 200 per cent on in-house research and development by another five years was a good step. And providing a fund of Rs 5,000 crore to SIDBI for equity investment in SMEs was an appropriate recognition of the needs and potential of that sector.

The IT industry did not get its asked on MAT on SEZs. There is a cause for concern, as the fine print in the Bbudget proposes several retroactive provisions. The transfer pricing arena appears to get more complex with even domestic transactions under its ambit. There are confusions around software licensing.

Rather than the stated goal of simplification, we seem to be regressing to more discretionary authority, with all the problems it entails. It will hit the industry hard and may impact foreign investment at a time when there is increased competition from China, the Philippines has overtaken us in BPO and our major markets, the US and Europe, are unleashing an anti outsourcing wave.

(The author is Chairman of CA Technologies India and Past Chairman of Nasscom.)

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