Budget without aim

Contrary to what the industry was expecting, the Union Budget 2007-08
presented by P Chidambaram, Finance Minister, turned out to be fairly pedestrian
for the Indian IT industry. Should it be called the most insipid budget or
should it be termed as a very heartening budget? The answer would depend on how
you look at it.

The overall expectation was that the budget would be liberal and growth
oriented, considering the prevailing buoyant economic scenario. If you go

by this yardstick, then it was pretty disappointing. On the other hand, if you
consider the big thrust on agriculture and education, then it was a pretty good
budget.

Asim Raina Editor

But if you go by what the industry was expecting, this has turned out to be a
budget, which seems to have maintained status quo. Except for the software
industry, which has now come under the tax net. With the introduction of minimum
alternate tax (MAT), software companies who were living in a different world
have now got their feet grounded. While MAT is hardly going to affect the
software biggies who earn fat profits, the going will now be rough for the
smaller software companies whose profits are rather meager.

As expected, the software companies have gone into an aggressive mode
protesting against the tax. They consider themselves above everyone else and
think that they should keep getting some sops or the other. However, they need
to understand that they also have to contribute their share of taxes, just like
others do. In any case, the top five biggies make profits in excess of Rs 1,000
crore per annum. So, MAT should be a drop in the ocean for them.

Overall, the industry seems to have reached from where it had started. Which
means that it should continue with business as usual. Now, that itself is very
heartening considering the fact that nothing substantial was expected anyway.
Notwithstanding the fact that Chidambaram ended his rather boring speech by
saying that this was a budget devoted to development.