Budget 2019-20 Presented In Parliament

Finance Minister, Nirmala Sitharaman on July 5, 2019 presented her maiden Budget in the Parliament. She committed that the Indian economy will grow to become a 3 trillion dollar economy in the current year. It is now the sixth largest in the world. She said in her speech,  “Five years ago, it was at the 11th position. In Purchasing Power Parity terms, we are in fact, the 3rd largest economy already, only next to China and the USA.

The government Friday increased revenue expectation from the telecom sector, which is reeling under financial stress, to Rs 50,519 crore in 2019-20 without accounting for spectrum auction payment.

The Budget documents presented in Parliament on Friday showed provision of Rs 50,519.81 crore as non-tax revenue from the communication sector for 2019-20 which was kept at Rs 41,519 crore in the Interim Budget 2019-20 in February.

“They (Department of Telecommunications) are still working on it (spectrum auction) so we have not taken it into account in the budget,” Department of Economic Affairs Secretary S C Garg told reporters.

The fresh estimates are nearly 29 percent higher compared to Rs 39,245 crore achieved in the previous fiscal. Receipts from the telecom sector mainly relate to the licence fees from operators and spectrum usage charges.

“Spectrum-related payments are estimated to be around Rs 28,000 crore which includes approximately Rs 11,000-12,000 crore from licence fee and spectrum usage charge (SUC). Around Rs 21,000 crore is estimated from repayment of debt (pending spectrum auction payments),” industry body COAI Director-General Rajan S Mathews said.

Mathews added, “I am not sure from where rest of the payments will come if auction proceeds are not included in it.”

The collection from the sector in the previous financial year fell short of Rs 9,416.42 crore at Rs 39,245 crore from the budgeted provision of Rs 48,661.42 crore.

The telecom sector is reeling under debt of around Rs 7.8 lakh crore and at the same time, margin earned by incumbent operators have been under pressure since the last three years due to ongoing tariff war.

When asked if there is any indication of reduction in licence fee and SUC, Mathews said the new estimates do not reflect any sign of lowering these charges.

The government is planning to go for spectrum auction this year that also involves sale of frequencies for 5G services.

Telecom regulator TRAI has recommended auction of about 8,644 MHz of telecom frequencies at an estimated total base price of Rs 4.9 lakh crore. The DoT has recently decided to refer the recommendations back to the Telecom Regulatory Authority of India for review.

Also, in order to provide domestic industry a level playing field, in keeping with the Make in India initiative, basic customs duty is being increased on optical fiber cable from 10 percent to 15 percent.

Some responses from the industry

“We completely hail the government’s vision of a New India that will thrive on the confluence of new age digital technologies, quality education and apt skilling. We look forward to partnering with the industry and academia to nurture the start-up ecosystem, and to fuel a culture of research and innovation that will help travel the road to India becoming a five trillion dollar economy.”—CP Gurnani, MD & CEO, Tech Mahindra

“We are pleased with the government’s thrust on improving infrastructure and technology as catalysts for the economy going ahead. For India to be  on the path to being the 3^rd largest economy by 2030 , the budget’s rightfully emphasizes  that robust improvements are required in social infrastructure and education. The plan to set up 20 technology incubators to push rural development opens the stage for new initiatives that will enable India to become a $5 trillion economy in the years ahead. Additionally, the budget has emphasized on 17 ‘iconic sites’ which will be transformed into world-class destinations to provide an impetus to the tourism sector. All these initiatives, I believe, will assist in reshaping and empowering the country and will help to drive and sustain long-term growth for India.”—Rajiv Bhalla, Managing Director, Barco India

“Within just four years since its launch, impact of the Prime Minister Modi’s visionary program Digital India is visible everywhere, from accelerated growth in digital payments to increasing simplification of tax returns. No wonder, it is one of the ten pillars for realizing his vision of India’s evolution and development over the next decade.

Accordingly, Union Budget 2019 highlights the crucial role of interoperable and digitally enabled platforms and grids from energy and taxation to highways. In addition, the focus on fostering and supporting technological innovation is loud and clear whether one looks at Artificial Intelligence and Robotics or 3D printing and Virtual Reality.

However, if not protected well against vulnerabilities and malicious actors, crippling of digital systems or data breaches can have far-reaching and devastating impact, especially in critical information infrastructure sectors. Hence, the government must set aside ten percent of technology budgets exclusively towards cyber security. In addition, cyber safety must become part and parcel of the Digital Literacy and Financial Inclusion initiatives.”—Deepak Maheshwari, Director of Government Affairs, India, ASEAN & China, Symantec

 “The Government has earmarked Rs. 50 lakh crore for the development of railway infrastructure. A sizeable part of it will be diverted towards avant-garde surveillance solutions for smart management across railway stations as well as various nodes in railways. The Union Government’s focus is also on rural infrastructure expansion and we believe that surveillance will be an integral element in this development. Another key takeaway for the surveillance industry is that the Government also has a positive view towards the Artificial Intelligence technology and will be promoting indigenous research and development around AI, Big Data, and Robotics. Further, it has taken a slew of measures aimed at the Indian startup ecosystem, who will be looking towards the AI technology and security for development of high-end products and ensuring seamless processes. We appreciate the Finance Minister and her team for meticulously balancing all dynamics to bring about favourable market results.”—Abhishek Kumar, Regional Director, South Asia, Oncam

As per the various reports, India imported optical fibre cable from 60 countries with the total value of import being 73.75 US$ million in 2017. The largest exporter of optical fibre cable to India are China, Japan, Germany, USA and Denmark.

Further, the Indian market for OFC in 2018 is estimated at 29 million fkm, projected to grow at a CAGR of 17 percent through 2023.

With 5G and other emerging technologies, fibre is the most significant component to enhance the network connectivity. Currently, less than 25% of the telecom towers are fiberized as compared to the global counterpart such as China, USA and Japan wherein more than 80% of the telecom infrastructure are fiberized.

It is time when the nation is gearing up to unfold socio-economic benefits to governments, citizens, end-users and businesses through increase in productivity and competitiveness, improvements in service delivery, and optimal use of scarce resources like Spectrum through fiberisaiton.

In a nutshell, it is a lacklustre budget as hike in the basic custom duty will result in higher capital expenditure eventually burning a hole in the pockets of telecom industry which is already facing financial turmoil. The development will seriously impede the rollout of 5G in India.―Tilak Raj Dua, Director General, TAIPA

We laud the government for a progressive and forward looking budget that has provided the building blocks for a $5 trillion economy. In many ways, the budget encompasses the vision of Hon’ble Prime Minister Shri Narendra Modi, particularly in the areas of Infrastructure, Rural Connectivity, Women Empowerment, Housing, Power and Cooking Gas in rural areas, and creating a robust Digital economy. The special emphasis on boosting electric vehicles in the country by reducing GST as well as incentivising their purchase is a big step towards curbing vehicular pollution. The emphasis is on domestic manufacturing is also welcome.

It is also heartening to note that the budget has focused on evolving technologies like Artificial Intelligence, Big Data, and Robotics etc and acknowledges their critical role in the Indian economy in the coming years. We are hopeful that the government will also roll out specific measures to harness these technologies of the future so that digital India reaches every segment of the economy.

It has been shown categorically that the Telecom industry has been a significant engine for GDP growth, rural inclusion, women empowerment and affordable communication services and ubiquitous connectivity. As such, the industry hoped the Union Budget would provide relief from the high taxes and fee on the industry. Given the importance of the industry in driving inclusive growth, we remain optimistic the government will provide the much needed financial relief and impetus to the industry in post budget review.―Rajan S Mathews, Director General, COAI

“India is entering an era of technology-led disruption and innovation, heralded by the 5G revolution and digital connectivity, which will transform communities, open up business and collaboration opportunities that we can’t yet imagine, and become a critical lever to creating a better world.

The Interim Budget which was announced early this year paid attention to strengthening the digital transformation and development of disruptive technologies across various sectors. The successful implementation of the Digital Village project will play a vital role in India’s digital transformation and vision to become a USD 5 trillion economy in the next 5 years.

With this in mind, it is important for the Government to continue to work with the private sector and to encourage technology research, digital infrastructure development and initiatives towards training and skills development to take advantage of the next-generation of technologies.

Technological development has outrun regulatory development but the tech industry deserves a strong and balanced regulatory framework which is technology neutral, flexible, dynamic, transparent and future-proof. The right regulatory and public policy environment is critical for driving investment – and investment which will, in turn, fuel the innovation which will be needed to bridge the digital divide.”―Anjali Amar, Country Manager at Verizon Enterprise Solutions

“As government has taken so many remarkable reforms with this budget for boosting the economy, we are on the path of achieving a sustainable GDP growth rate of 8% in becoming a $5 trillion economy by 2024-25. Government focus on aggregating the services of key sectors such as infrastructure, energy, developing model for public-private partnership intending towards lot of collaborations by way of leveraging emerging technologies, FDI, ease of doing business, focus on R&D and digital economy shall definitely change the functioning of industry verticals and increase their productivity, which, in turn, will help in creating massive job opportunities and ensure all-inclusive growth of the countrymen. This development will eventually bring less-privileged people into the mainstream of the society.”―Dr. Omkar Rai, Director General, Software Technology Parks of India (STPI)