What Does Budget 2012 Say & Mean For Technoholics

16 Mar, 2012

Union Finance Minister (FM) Pranab Mukherjee has announced the Budget for 2012 in Lok Sabha today and it has been received with mixed reactions from both the industry people and the common man. Here's a look at the key points of the budget from a technology point of view (also check out VCCircle's coverage of the budget).

Made In India Mobile Phones Will Become Cheaper

The mobile phones that are manufactured in the country will get cheaper, because memory card parts for mobile phones will be exempted from basic excise duty. But don't expect a revolution in the mobile phone market since as of now most of the top smartphones are imported and there is no change in their custom duty (yes, the iPhone 4S will still cost a bomb).

Mobile Bills Will Increase

You will have to say bye-bye sooner during late night chats with friends since the mobile tariffs are set to increase. FM has proposed increasing the service tax from the current 10 per cent to 12 per cent. Everyone in the telecom sector (from Airtel to MTS, etc) has spoken against the increase, clearly stating that the end consumer will suffer the most from it. And the impact will definitely be felt all over since as of now, there are more than 800 million pre paid and post mobile subscribers in India.

Aadhaar Receives A Boost

The Aadhaar project has been boosted in a big way since the FM has approved around Rs 14,000 crore for the scheme with the aim of enrolling around 40 crore Indian residents by mid next year. Aadhaar will also be used for fertilizer management system and a mobile-based Fertilizer Management System (FMS) will be rolled out across the country during 2012. Aadhaar Tablet enabled payments for various government schemes in at least 50 districts will also be rolled out within next six months.

Also, here's a look at some of the industry reactions-


Sanjay Kapoor, CEO, Bharti Airtel, India & South Asia said, "The telecom sector is already burdened with multiple and high tax levies which account for 30 per cent of the telecom services revenue and the rise in service tax from 10 per cent to 12 per cent will further increase the cost of services to customers and also impact the profits and losses of telecom companies."

Research In Motion (Blackberry)

Sunil Dutt, managing director, Research In Motion India said, "The proposed full exemption on mobile phone parts may further make the smartphone affordable to larger section of the masses. The budget is expected to stimulate growth for agriculture, banking and m-payments industry with development of tier II, III markets. This will in turn enhance the adoption of mobility contributing to the overall growth of the economy.  Introduction of a constitutional amendment for Goods and Services Tax (GST) is also a positive development."

Infrasoft Technologies Ltd

Hanuman Tripathi, group managing director, Infrasoft Technologies Ltd said, "With global downturn, IT sector should have been given some benefits so as to boost the segment. The increase of service tax from 10 per cent currently to 12 per cent will cause further burden. There is a commitment of government to IT enable several sectors like LPG distribution, payments for government schemes and continued investments in Aadhar (UID) which is heartening to note as it will create more projects in domestic IT business."


Dippak Khurana, co-founder and CEO, Vserv.mobi said, "Overall, the government realises the role that mobile devices have to play in enhancing and streamlining IT oriented citizen centric governance framework. This is reflected by two provisions in the government, firstly, creation of a mobile-based fertilizer management system that will provide end to-end information on movement of fertilisers and subsidies. Secondly, the roll out Aadhaar Tablet enabled payments for various government schemes in at least 50 districts within next 6 months."

Citrix Systems India Pvt Ltd

Sanjay Deshmukh, area vice president, India Subcontinent, Citrix Systems India Pvt Ltd said, "As a foreign corporation with an Indian subsidiary, the government's plan to introduce tax reforms for the enactment of Direct Tax Code Bill is encouraging for us. The move to set up the GST network as a National Information Utility and operationalise it by August 2012 is also favourable for the industry. The budget has also recognised the role of technology in creating a citizen centric governance framework, reflected in the subsidy provided for Aadhaar tablet enabled payments for various government schemes in at least 50 districts within next 6 months."