Recently, the Union Budget 2019 has presented by newly appointed Finance Minister, Nirmala Sitharaman, the first woman full-time finance minister of India. This is the first budget in the second tenure of Prime Minister Narendra Modi led UPA government that presents a strong focus on last-mile connectivity, digital growth, technology skill-building, adoption of electric vehicles, ease of investments for tech firms, enhanced efforts in India’s space exploration program, and fostering the scientific research in India.
It also promoting digital payments, tax benefits on semiconductor, laptop and battery manufacturing in India, and duty exemptions for certain electronic components in addition to raw materials. All of these announcements are designed to fuel the country’s digital economy.
The aim of the government for FY 2019-20 is to develop a $5 trillion economy, from the current $2.8 trillion GDP, with ever cultivating a focus on the utilization and development of technological means in various industries across the country.
According to a recent World Bank report, “India’s long-term GDP growth has become more stable, diversified, and resilient.” The country is projected to have grown 7.2 percent in FY 2018-19, which ended March 31, in contrast to the Central Statistical Office (CSO) that estimates 6.8% growth in the forecast period.
Also, the data from World Bank’s Global Economic Prospects June 2019 report reveals the growth in India is now expected to exceed 7.5 percent in FY 2019-20.
So, let’s see how’s the Union Budget 2019 will impact the growth of the technology sector in India and how experts in the field are reacting.
Focusing on AI, Robotics, Big Data, and Scientific Research
The Union Budget of 2019 has also emphasized on greater focus in higher education and scientific research in the country. For doing so, a National Research Foundation will be created to integrate research grants given by various Ministries. With this proposal, the government hopes to reinforce India’s scientific research ecosystem.
Moreover, it also has proposed that 10 million individuals will be trained in industry-relevant skills like artificial intelligence, robotics, big data, VR and others to address the severe skill shortage which is felt by IT companies.
Commenting on the announcements, Suman Reddy, Managing Director of Pegasystems India says, “The main objective of the Budget as set by the Finance Minister is to set the groundwork for PM Modi’s aspiration of a $5-trillion-dollar economy. Arguably, one of the biggest beneficiaries of this vision would be the technology industry.”
With his further analysis on budget’s impact on the IT industry, Suman says, “Following up from technology-related announcements during the interim budget including a national AI-centre and the Digital India vision, the government has acted on additional expectations from the sector. The elimination of excessive scrutiny through the angel tax through an e-verification process will improve the trust factor in valuation activities. Also, the government has put the first step forward with skilling focus on emerging technologies like artificial intelligence and robotics. However, the government has not elaborated on the latter, further to NASSCOM’s recommendations to show its commitment with an initial fund of Rs. 500 crores, and incentivize corporates to skill training by promoting spending.”
“We also welcome the government’s move to allocate 25% of corporate taxes by increasing the ambit of companies from Rs. 250 – 400 crores of turnover. This will allow spending and boost the economy while driving returns for the government,” Suman added.
More from Budget
• FM predicts a $5 trillion economy by 2024 and $3 trillion by the end of this year.
• Technology to be leveraged to make tax compliance easier for the assesses.
• Income Tax to be paid only when the taxable income exceeds Rs. 5 lakhs.
• Pre-filled tax returns will soon be made available to taxpayers.
• FM proposes interchangeability of PAN and Aadhar, inferring that IT returns can now be filed by either using Aadhar or PAN.
• Rs. 400 crores earmarked to FY19-20 under the ‘World Class Institutions’ program.
• Stand-up India programmed to be extended till 2025.
• No scrutiny by the IT department on the funds raised by Startups.