Budget 2015-16: No cohesive vision for Digital India

While the Budget mentioned the National Optic Fibre Network connecting 2.5 lakh villages with 7.5 lakh km of optic fibre, it needs to be noted that simply laying fibre will not make it an operational 'network' without huge private sector investments.

Kallol Borah        Last Updated: March 2, 2015  | 15:23 IST

Kallol Borah
Finance Minister Arun Jaitley's Budget speech had a section titled 'Digital India' , but it did not have much of a vision or content on implementation that reflects serious thinking.

In the absence of a cohesive vision for Digital India, I am trying to put together the elements that either got or have not got the attention they deserved in this year's Budget.

Infrastructure: The Finance Minister announced an additional Rs 70,000 crore in infrastructure spends. While internet/cable networks for provision of broadband services come within the definition of 'infrastructure', most pronouncements in the Budget were about roads, ports, and irrigation. Since cable TV digitisation is in Phase III and IV areas in India and massive investments are required to digitise poorly connected areas where digitised cable can deliver broadband as well, linking infrastructure financing provisions to building out of digital infrastructure would have given these efforts a much needed boost.

UNION BUDGET 2015-16:Key highlights | Full coverage | Full speech | Video

While the Budget mentioned the National Optic Fibre Network connecting 2.5 lakh villages with 7.5 lakh km of optic fibre, it needs to be noted that simply laying fibre will not make it an operational 'network' without huge private sector investments.

Cost of Access: Basic services such as internet and cable broadband services should have been kept out of the ambit of increase in service tax from 12.36 per cent to 14 per cent.

Investments in Technology: The lowering of taxes to be paid for technology services from 25 per cent to 10 per cent will benefit firms that are bringing in new technology to set up digital infrastructure in India.

Multiplier effects from Make in India: In addition to infrastructure, Digital India comprises millions of devices and gear that consumers use to access digital networks and that service providers use to build such networks. As India imports most of its electronics, both devices and gear, the reduction in special additional duty will bring down the cost of importing components to 'Make in India' and reduce imports. However, the exemption from basic customs duty and countervailing duty in the case of parts and accessories to manufacture tablet computers should have been extended to most electronics devices that constitute a large part of India's import bill.  

In conclusion, the development of Digital India will only yield real benefits when the government's plan on delivering services - be it education, health care, financial inclusion, or social security benefits - involve digital infrastructure, service providers and consumers.

The author is Founder, Lukup Media

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