No big ticket incentives for IT in Siddaramaiah's budget

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Bangalore, July 12: While expecting the IT sector to increase its exports from the current level of Rs 1.35 lakh crore to Rs 4 lakh crore by 2020, Karnataka Chief Minister Siddaramaiah today did not give much to the industry.

One noteworthy effort seems to be to request the Centre to restart the software technology parks of India scheme to promote competitiveness and capacity of small IT companies to face global competition.

In his revised 2013-14 state budget, Siddaramaiah said "it is proposed to implement IT Group recommendations in a phased manner starting from the year 2013-14 so as to increase jobs from eight lakhs to 20 lakh during the period."

Full Budget

However, there were no big ticket incentives to the sunrise industry that has given Bangalore its new identity and contributed to its mega development.

Siddaramaiah, who holds the finance portfolio, said it is intended to recast rural BPOs keeping the viability issue in mind.

The government will set up Indian Institute of Information Technology (IIIT) in Dharwad at an estimated capital expenditure of Rs 128 crore for which the Government of India has given 'in-principle' approval. The state government will contribute Rs 45 crore.

The government also proposed to set up incubation centres for ICT sector in collaboration with engineering colleges in selected district headquarters to encourage entrepreneurship and innovation in this sector.

"It is proposed to provide Mobile IT labs to create interest in Information Technology and to enhance knowledge of the school children", the Chief Minister said.

Some IT-enable services were announced by the chief minister but they may not add much value to IT sector.

An effort has also been made to attract investment by proposing establishment of 4 Help Desks in Japan, Taiwan, United States of America and Germany. These units will function with a sole aim of soliciting Foreign Direct Investment.

The budget had some innovative projects, which may go long way in enhancing awareness of students, if implemented properly.

Siddaramaiah proposed establishment of Digital Knowledge Centres in public libraries. He also wanted 'innovation clubs in all universities, colleges and polytechnics.'

On health front the budget proposes to set up a Dialysis Unit at one taluk hospital in each district, which is welcome step.

Showing his concern and boldness, he proposed fee reimbursement to physically challenged for higher and technical education.

Karnataka, which attracts second highest number of tourists in India, will have tourism plazas at world heritage centres - Hampi and Pattadakallu. The plazas will provide all tourist related service under one roof.

Siddaramaiah, who may visited the world famous annual Surajkund Fair near Delhi, has proposed similar handicraft fair in Bangalore.

At administrative level he has announced bifurcation of cities and rural areas as A, B & C on par with Central Government classification. This will result in rational payment of allowances to employees like HRA.

Subsidy and debt burden

What is worrying in the budget is the huge increase in subsidy payment. Food subsidy goes up from Rs 900 crore three years ago to Rs 3,400.00 crore in the current budget. This could be due to the newly introduced rice scheme.

The chief minister discontinued separate agriculture budget introduced by the BJP but did give a large portion of funds to both agri sector and backward class welfare. Due to this the agriculture and horticulture subsidy is going up from Rs 397.60 crore (2010-11) to Rs 621.69 crore under Siddaramaiah.

The government is also slowly slipping into debt with open markets loans rising from Rs 24,564.43 crore (2010-11) to Rs 56,038.22 crore. The borrowing fetish has doubled in three years and the interest burden will make the government compromise on many schemes.

As a afterthought of offering some relief, Siddaramaiah reduced sales tax on diesel resulting in diesel prices going down by 51 paise per litre in Bangalore.

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