Budget Blues

Shall we call it the most insipid budget or should it be termed as a very heartening budget. The answer would depend upon whom you talk to. On the one hand, Indian industry in general-led by CII-has called it the best budget presented by Yashwant Sinha, the Finance Minister. In fact, it is being rated as high as nine out of ten.

On the other hand, for the hardware industry, there is nothing to write home about. The widespread expectation that there would be some reduction of duties and consequently downward revision of PC prices has come to naught. Nothing of that sort is going to happen.

Perhaps the biggest step as announced by Sinha and which the industry is certainly going to applaud, is the proposal to computerize all government activities with large public interface to promote efficiency. Accordingly, operations like GPF, pension, pay and accounts offices, passports, income tax, customs, central excise etc will be fully-computerized by March 31, 2002. In addition, public sector banks and insurance companies are also being asked to complete computerization of their operations within this period.

Now, this step will have a dual (positive) impact-one on the industry in general and also on the public. For the industry in general, this step opens up a big business opportunity as the requirement for all kinds of IT products including hardware, software and peripherals will be mind boggling. And the big benefit for the public will be the efficient as well as better service, which they will now be able to get from all these public utilities.

Another very significant and laudable step announced by the finance minister pertains to education. In fact, in the education sphere several significant steps have been announced which should go a long way to help the manpower gap existing in the industry. The first and foremost is the launch of the new centrally sponsored scheme for computer literacy and studies in schools.

The second major step is the new comprehensive education loan scheme, which will cover all courses in schools and colleges in both India as well as abroad. Loans will be available under this scheme up to Rs 7.5 lakh for studies in India and Rs 15 lakh for studies abroad. Interestingly, no collateral or margin will be stipulated for loans up to Rs 4 lakh and the interest will not exceed the prime-lending rate. Further, the loan would be repaid over a period of five to seven years with provision of a grace period.

In addition, the fact that the base of IITs will be expanded, regional engineering colleges will be strengthened and new institutes will be set up with private participation should act as a huge boost for the industry.

Overall, this year's budget has some sops for the software industry which again will be welcomed by NASSCOM as it had been saying that the software industry doesn't want anything--rather things should continue as usual. Well, they have got what they wanted. It's only the hardware industry, which seems to have got nothing. So, who is the winner and who the looser? As usual, the answer is clear.