Union Budget 2017 Puts Thrust On Digital India

In Union Budget 2017, the first one to be presented on February 1 instead of February 28 traditionally, Finance Minister Arun Jaitley laid strong emphasis on digital India. Moving towards a digital economy for speed, accountability and transparency was part of Jaitley’s 10 distinct themes. In his budget speech, Jaitley talked about the ‘Swayam’ platform through which students will be able to virtually attend courses, access reading resources, and take tests with increased access through DTH channels dedicated to education.

While the budget did not have any direct sops for the Indian IT industry, experts are of the view that this is a reflection of the sector’s maturity. “In another sign of the fact that the IT industry has become quite mature and does not need sops to continue its growth trend (other factors like Trump notwithstanding), there were no overt steps taken – and none expected – for the industry, and there is no hue and cry about it. In a sense it is a no-news is good-news story for the sector from a budget perspective,” says Partha Iyengar, VP and Gartner Fellow, India.

On Jaitley’s comments on digital economy, Iyengar said, “The continued focus on moving India towards a more transparent and digital economy is encouraging, in order to really capitalise on the long-term gains of the painful demonetisation exercise. The move to curb the black economy also bodes well for accelerated GDP growth as more of the ‘shadow economy’ becomes visible and integrated into the overall economic activity.”

Bipin Preet Singh, founder & CEO, MobiKwik, says, “The focus on digital payments will lead to revolutionary transformation in Indians’ payment habits. Digital payments will be the new normal in 2017 and we are very excited about this. As we become more digital, India will see new taxpayers and better transparency in incomes…Upgrading digital infrastructure to support cashless transactions in rural and semi urban areas will encourage more merchants and consumers to transact on non-cash and online platforms.”

Singh however thinks the government must have also considered promoting startups in the digital payments and digital security areas. “Secure digital transactions is the only way to sustain India’s habit of cashless payments.” He said the budget also promoted the startup ecosystem with tax benefits. “Reduction in the corporate tax for medium and small scale enterprises (MSMEs) to 25 per cent will also go a long way in attracting more investment in the country. It will surely give the domestic sector a massive push and indirectly help the country in restoring its healthy GDP growth forecast.”

Neha Punater, partner and head of Fintech, KPMG in India says the government has continued the demonetisation initiative to promote digital and cashless payments with a slew of initiatives. “It has addressed all the components– from incentivising the customers and merchants for using BHIM to furnishing of PAN for cash transactions over Rs. 3 lakh to promoting infrastructure creation by duty exemption on POS machines and iris readers…The Aadhaar enabled merchant payments would ensure that supply side is also addressed for a digital transaction. We see this as a definitive boost for the digital economy.”

The budget season began with the Economic Survey presented in the Parliament on Tuesday which projected the Indian economy to grow between 6.75 and 7.5 per cent in 2017-18. “The range comes due to uncertainties in the world, including protectionist tendencies. While demonetisation’s short-term negative impact has been acknowledged, its long-term benefits have been highlighted, particularly in terms of digitisation, tax compliance and revenues…,” says Richard Rekhy, CEO, KPMG in India. “The survey scores on recognising the economy’s shortcomings, prescribing the required action and setting an optimistic and expectant tone for tomorrow’s budget.”

The markets which were flat in the opening hours before the presentation of the budget ended much higher at the close of market hours. The Nifty closed up 1.81 per cent at 8716.40 while the Sensex closed up 1.76 per cent at 28141.64.