Budget 2020: IT sector for wider use of artificial intelligence in economy

AI is expected to have a huge impact not only in commerce, but also in health, national security, cybersecurity, food security, education and global warming.

Budget 2020 : With disruptive technologies like Artificial Intelligence (AI) driving businesses, the IT sector wants the Union Budget for fiscal 2020-21 to ensure greater use of these to spur a sluggish economy among other measures for the sector, industry experts said on Friday.

"The budget should announce a fund like Singapore's Temasek that will invest only in early-stage Indian AI start-ups and lower long-term capital gain's tax for investing in AI-based firms," digital intelligence firm Germin8 founder chief executive Ranjit Nair told IANS.

With the US and China racing ahead of India in AI research, AI entrepreneurship and government investment in AI, he said the budget should make it easier for start-ups to access capital, as they face an uphill task in early-stage funding.

"The government bring policies that encourage AI companies. Ease of doing business means less bureaucracy so that entrepreneurs can build solutions without distractions," he said.

AI is expected to have a huge impact not only in commerce, but also in health, national security, cybersecurity, food security, education and global warming.

"The government should announce AI challenges, which make academia and industry solve an important problem in the country. The state's role should give a crisp problem definition, provide access to data and provide a good cash prize," Nair said.

Though thousands of engineering graduates pass out every year across the country, India is behind other nations in AI PhDs and AI research. Hence, the budget should allot more grants for AI research and offer incentives to institutes investing in AI training, he added.

Noting that IT was one of the few sectors that remained growth-driven despite the eonomic slowdown since the last fiscal, Cigniti Technologies chairman C.V. 

Subramanyam said the budget should give relief or reduce dividend distribution tax (DDT) for IT firms operating in the country.

Economic Survey 2020 expects rebound in FY21 with GDP growth at 6-6.5%

The Survey said government interventions seem to be ineffective in stabilising prices of commodities such as onions.

Budget 2020 : The Economic Survey on Friday projected India's economic growth at 6 per cent to 6.5 per cent in the next financial year starting April 1, saying growth has bottomed out.

The growth in 2020-21 compares to a projected 5 per cent expansion in 2019-20.

Weak global growth impacting India as well as investment slowdown due to financial sector issues had led to growth dropping to a decade low in current fiscal, it said, adding 5 per cent growth projected for 2019-20 is the lowest it could fall for now.

Growth slipped to 4.5 per cent in the July-September quarter.

The Survey this year has been printed in lavender colour - the same as the colour of the new 100 rupee currency note, the oldest currency note in circulation in the country.

The pre-Budget Survey said for wealth to be distributed, it first has to be created and called for looking at wealth creators with respect.

ALSO READ: Economic Survey 2020 LIVE

The Survey said government interventions seem to be ineffective in stabilising prices of commodities such as onions.

For boosting growth, it called for new ideas for manufacturing such as 'assemble in India for the world' which will create jobs.

To further make it easier to do business, the Survey called for removing the red tape at ports to promote exports as well as measures for easing the start of business, register property, pay taxes and enforcing contracts.

It also called for improving governance in public sector banks and the need for more disclosure of information to build trust. It also talks about dwarfism in the banking sector.

Economic Survey advocates 10 new ideas that benefit markets as well as the economy.

Nirmala Sitharaman's infrastructure push need not be a pipe-dream: Here's how

The government should be happy that they are still buying civilization by investing in infrastructure bonds instead of paying their full taxes.

Budget 2020 : Build infrastructure first, private investments including Foreign Direct Investments (FDI) would automatically follow is not an audacious or far-fetched dream. China did it with a great deal of success. Finance Minister Nirmala Sitharaman obviously wants to emulate the Chinese model without actually saying so when a few days ago she outlined her government’s plan to launch a massive Rs 102 trillion infrastructure development plan. Skeptics wonder if it is feasible as it would be a quantum jump over the present average of about Rs 8 trillion infrastructure investments per annum.

A combination of public private partnership (PPP), Swiss Challenge Model (SCM) and intelligent tax incentives for investments in infrastructure bonds can realize her dream and break the lack-of-investments-lack-of-employment-opportunities logjam or vicious cycle. This article focuses exclusively on infrastructure bonds as a tax reduction tool. It has been tried in the past but not on a large enough scale. The government must be prepared to enter into a compact with the taxpayers so that they can discharge a large sliver of their tax liability by way of investments in infrastructure bonds.

The above model tax incentive matrix should apply secularly to all types of taxpayers be they individuals, firms or companies subject to the condition that their Total Income (taxable income) should not go below 50% of the Gross Total Income after deducting other qualifying amounts under Chapter VI-A.

Let us consider a hypothetical case of a senior citizen.

Gross Total Income: Rs 10,000,000

Section 80C deduction: Rs 150,000

Section 80TTB deduction on bank interest: Rs 50,000

Total income prior to infrastructure bonds: Rs9,800,000

He has indeed been made to sweat it out. If you tote up the first column, he has been made to invest Rs 77.60 lac so as to be able to knock off Rs 49 lac from his taxable income.

At a time when savings rate has come down, the above incentive would not only shore it up but also improve tax compliance because people while resenting paying tax, which in their perception goes down the drain, don’t mind the vicarious tax of blocking their money in infrastructure bonds. They don’t even mind investing for the next generation. What is galling for them is the prospect of paying tax, period. Not many people share the noble sentiments of Justice Holmes — I like to pay my taxes; with them I buy civilization.

Rajiv Kumar to Krishnamurthy Subramanian: The team behind FM's Budget 2020

A 1984 batch officer from the Jharkhand cadre, Kumar is known as the driving force behind the spate of mergers of state-owned banks.

Budget 2020 : Finance Minister Nirmala Sitharaman will present her second Budget a little more than a month from now. With growth at its lowest in more than six years and a long-lasting slowdown affecting demand and consumption across sectors, Sitharaman and her team are looking to announce measures to boost growth and activity.

Also, after a number of rollbacks following the last Budget, the political leadership is looking to seize back initiative as the government is being criticised by stakeholders for not being able to manage the slowdown, with multiple agencies, including the RBI, slashing growth forecasts for the year.

Like any other FM, Sitharaman will depend on her team of bureaucrats and advisors to frame and present the budget. Arup Roychoudhury compiles brief profiles:

Rajiv Kumar

(Finance and financial services secretary)

According to the norm, being the senior-most of the five secretaries in the Finance Ministry, Financial

Services Secretary Rajiv Kumar also holds the designation of finance secretary. A 1984 batch officer from the Jharkhand cadre, Kumar is known as the driving force behind the spate of mergers of state-owned banks. The ambitious Rs 2.1-trillion bank recapitalisation programme was also announced during his time. The biggest challenge that Kumar has had to deal with during his stint is the level of toxic assets in the banking system and the liquidity crisis in non-banking financial companies (NBFCs). The upcoming Union Budget 2020-21 will be his last, as he is expected to retire from the service at the end of February. Even if the financial services secretary gets an extension, it is likely to be for a few more months, till the Finance Bill is passed.

Ajay Bhushan Pandey

(Revenue secretary)

Replacing Hasmukh Adhia was never meant to be easy. And it hasn’t been for Pandey, who is also the chairman of the Goods and Service Tax Network and, till recently, was heading the Unique Identification Authority of India as well. Pandey has come in for heavy criticism for giving unrealistic tax revenue targets for the year. With growth faltering, all the direct and indirect tax projections are now coming undone, and the Centre is unlikely to meet the fiscal deficit target of 3.3 per cent of gross domestic product for 2019-20. It remains to be seen what sort of a positive impact the recent corporate tax cuts have on investment levels by the private sector.