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'This Budget seems to be too piecemeal'

BUDGET 2000

Neeraj Roy

The new VC (Venture Capital) guidelines are a definite welcome for the market. But please understand, that capital in India for the right business has never been a problem. Today, the number of Indian corporates that are announcing incubator funds or capital for dot com start ups is amazing. I believe the same effect that we felt in India when FIIs were allowed in 1994 would be felt with great intensity in the VC community.

My view on the Budget is certainly not on the lines of the 'path breaking' Budget set out by Mr Chidambaram, when the broadening of tax base was one of the key drivers to addressing the fiscal deficit. This Budget, seems to be too piecemeal, and what I am not able to see is how we will achieve the 7 per cent GDP growth to address the ever increasing fiscal deficit. Even on subsidies, I believe the FM could have taken harsher measures, since he has the political will on his side and could have, therefore, really laid the foundations for the coming years.

I believe, too much has been made out of the tax on software exports and like several other people such as Mr Narayana Murthy have said before -- that companies already paying taxes abroad will not be affected. In fact, it is the dubious companies on the stock market of which we have seen several in the past few months that need to worry and investors in such companies are being cautioned.

However, alongwith this tax, the FM should have also raised the limit on the acquisition of companies abroad as companies today have the market cap to consolidate and this would have benefited our truly global software companies to compete better internationally, despite the tax.

This Budget certainly has good news for us from the point of view of the new VC guidelines. However, what we need to work toward is listing norms for dot com companies in India eventually.

It is a tough one, to do away with the three year dividend thing for dot.com start ups such as ourselves, as there are several industries that may want similar concessions. However, the government has to realise that if we are to be players in the global market of any significance and today Indians and dot.com companies started by Indians certainly have that ability and hence we will continue to seek this concession.

Neeraj Roy is Managing Director & CEO, Hungama.com

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