For telecom sector, it's disappointing: Sunil Mittal | india | Hindustan Times
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For telecom sector, it's disappointing: Sunil Mittal

For the telecom sector, I am afraid the budget has been a disappoint-ment, writes Sunil Mittal, Chairman Bharti Group.

india Updated: Mar 01, 2006 15:50 IST

For the telecom sector, I am afraid the budget has been a disappointment. All of us were expecting a reduction in the tax burden on the consumer by way of reduced license fee which has not happened, despite the service tax having been increased from 10 per cent to 12 %.

Once again, the Finance Minister has done a brilliant job in providing a balanced budget to the nation. The budget takes into account the aspira tions of new India and ensures that while the purse strings are open for all segments of the society, the fiscal discipline is maintained.

The Finance Minister’s commitment to the development of the agriculture sector is commendable. In particular, the level of enhancement of credit to farmers at Rs. 175,000 crore will give impetus to growth of the agricultural sector.

At the same time the Finance Minister has rolled out several schemes for the rural and poor of India, which will ensure that the benefits of development reach every corner of the nation. The big thrust on education and healthcare is welcome as this is one area where a lot needs to be done and the budget has outlined the government’s vision in this regard. Thrust on further foreign direct investment, especially in the infrastructure area, is welcome.

In particular, the Finance Minister’s statement to kickstart investments in semiconductors, wafer and storage devices will ensure that India uses the opportunity to create its own electronics component supply industry in the country.

On the telecom front, the Finance Minister recognises this to be the fastest growing sector in the world and has indicated a thrust towards rural connectivity and bridging the digital divide. The reduction in the peak rate of customs duty is in line with the commitments made earlier. The simplification of tax administration continues and the abolition of 1/6 scheme is welcome.

The commitment to move towards GST by 2010 is a welcome step and the Finance Minister’s desire to convert the service tax and CENVAT by that period has resulted in the service tax going up by two per cent.

While the telecom customers will also have to suffer this extra burden of two per cent, I guess this is unavoidable if the country has to achieve the GST in the next few years. On direct taxes, an increase in MAT by more than 20 per cent is most unwarranted and is not in line with the intent of the government to seek investment in long gestation infrastructure projects which, while enjoying tax holiday, get hit by MAT.

For the telecom sector, I am afraid the budget has been a disappointment. All of us were expecting a reduction in the tax burden on the consumer by way of reduced license fee which has not happened, despite the service tax having been increased from 10 per cent to 12 per cent.

Telecom is an extremely important infrastructure sector which does not require any subsidy from the government (in fact, it subsidises the public sector entity competing against it).

The only demand of the sector has been to reduce the burden on the consumer so that there is increased telecom penetration.

It is widely acknowledged that increased penetration is vital for the economic development. I do hope that there is a reconsideration of this matter by the Finance Minister.

Overall, a fantastic and growth-oriented budget and the Finance Minister deserves to be congratulated.

(Sunil Mittal is Chairman Bharti Group)