M P Vijay Kumar, Chief Financial Officer, Sify Technologies

We are currently in a strange position where the Indian economy is doing well but the global economy is yet to complete its recovery. The fiscal stimulus package cannot continue for long and there is a compelling need to bring down fiscal deficit. Having settled down well in the 2nd innings, the Dr. Manmohan Singh Government has a big opportunity on hand to set in motion some path breaking initiatives which can be effectively implemented in next 4 years. The growth in the next decade has to be driven primarily by expanding the digital economy and efficient tax administration. Just as Government expenditure on physical infrastructure has helped economies grow, this time around, the growth will be driven only by investment in digital infrastructure. This growth can be achieved by effective Public Private Partnership. There is lot of private entrepreneurship in the country and the Government only needs to create the right kind of business climate for encouraging young entrepreneurs with simple business laws and processes apart from providing a low cost accessible IT infrastructure. Late in the day for consideration in the budget, but am leaving these thoughts for deliberations for the next budget and any policy making formulation 1.Tax benefits for players in internet space. Absence of stamp duty was one of the reasons for dematerialized shares becoming very successful. For e-commerce to grow, a similar proposition of tax exemption or lower rates of tax could be offered for a defined time frame to encourage more online transactions. The internet economy could be demarcated similar to a SEZ and given the Government support through tax concessions. E-commerce has the potential for exponential and faster growth in volume of transactions and consequently GDP/Per capita income. Eliminating all the costs of physical infrastructure, the benefit of lower costs could be transferred directly to the consumer. In the long run online transactions will lead to transparent, easy and more effective tax collection for the Government. 2. Broadband to home – treat as essential utility similar to power sector. Encourage ISPs with accelerated depreciation/ tax holiday benefits to invest in fiber to home. In the years to come high speed broadband access at home will be critical for economic growth. 3. Administration reforms – effective tax administration friendly to small businessmen and professionals. Just as there is a LTPU for large corporates, a separate tax administration set up who can understand the issues of small businesses and support the growth is the need of the hour. For instance it is unfair to expect start up businesses to incur overheads in understanding complex tax laws and complying with them. There is a visible change in culture of people to spend more and save less. Also as a developing nation we require significant long term sources of funds to finance infrastructure projects. Encourage greater saving with Government (PPF/NSC/ 15 year bonds) where Government could borrow at say half of its current borrowing rates. The individuals will save, social security is ensured and Government could borrow at significantly low cost for long term.

Vijay Kumar