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Union Budget 2009: Govt Job Portal, STB Duty-5%, Smart Cards, DAVP Waiver, Disinvestment, Railways

D-1890(by Preethi J & Nikhil Pahwa)

The Indian Government is banking heavily on “higher receipts from telecommunication sectore vide 3G auction” to shore up its receipts, given a budget that appears to be focused on expenditure. However, the Finance Minister did not mention a base price for 3G Auctions, nor did he specify disinvestment plans. There wasn’t much for the Telecom sector, and no announcement of an outlay towards broadband. However, going through the Budget documents, we came across the statement that a Rs. 28,324 crore ($5.8 Billion) increase in non-tax revenue from Rs.1,11,955 crore to Rs.1,40,279 crore, “primarily on account of anticipated receipts from the telecommunication sector vide auction of 3G spectrum.” So proceeds from 3G auctions alone are expected to be less than $5.8 Billion. However, Reuters reports that the government is looking to raise $7.2 Billion from the auctions. Note that MediaNama was unable to locate any suggestion of an exact amount from the budget documents.

The highlights of government expenditure for the Telecom and Digital Media sector, from the Budget documents, are as follows:


— Rs. 600 crores for establishing National Knowledge Network.
— Rs. 900 crores for e-Governance programme
— Rs. 550 crores for National Informatics Centre to improve infrastructure.
— Rs. 125 crores for Centre for Development of Advanced Computing (C-DAC) for undertaking R&D.
— Rs. 26 crores for Optical Fibre Cable based Network for Defence Services.
— Rs. 300 crores for C-DOT.
— Rs. 61 crores for Undersea Cabling between Mainland and Andaman & Nicobar Islands.
— Rs. 495 for PSLV & GSLV
— Rs. 382 for INSAT System
— Rs. 270 for Navigational Satellite System.
— Rs. 217 for Geo-synchronous Satellite Launch Vehicle (GSLV) Mark-III Development.

Some of the initiatives being taken by the government, and changes in taxation are as follows:


— Setting Up Of Government Job Portal: Taking cue from the success of job portals in India, the Indian government has decided to set up a national level job portal, which will allow job seekers to put up details of skills (i.e. their Resume) online, and on the other hand, allow publishing of available jobs to “enable youth to acquire jobs in realtime basis,” as finance minister Pranab Mukerjee put it. This will be a Public Private Partnership, and is a part of the modernisation of Employment Exchanges

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— Smart Cards: Over 46 Lakh BPL families in 18 states have been issued biometric Smart Cards, under the Rashtriya Swasthya Bima Yojana (RSBY). An amount of Rs.350 crore is being allocated for this scheme in the 2009-10 Budget, up 40 percent from the previous allocation.

Additionally, according to the Budget documents, Excise duty exemption on ‘recorded smart cards’ and ‘recorded proximity cards and tags’ has been made optional. Manufacturers have the option to pay the applicable excise duty and avail the credit of duty paid on inputs.

—  Packaged Software: For packaged software, the levy of taxes (excise duty and CVD) on the transfer of right to use any good has been removed. According to the Finance Minister, “The IT industry has pointed out that it is facing difficulties in the assessment of software which involves transfer of the right to use after the levy of service tax on IT software service.” Last year, Finance Minister Chidambaram had increased the tax on package software from 8 percent to 12 percent, and brought tax on “customized software” on par with IT services.

— Basic Customs duty on LCD Panels has been reduced from 10 percent to 5 percent, in order to support indegenous production of LCD TVs, particularly among the SME sector.

— National Unique ID Project: Rs. 120 crores has been set aside for the project. According to Mukerjee, this “Marks beginning of an era where the top private sector steps forward. We will set up an online database with identity and biometric details, and provide enrollment and verification services. The first cards should be issued in 12-18 months. I have proposed 120 crores for project.” Our coverage if the project:
— Why The SIM Card Should Be India’s National ID Card (interesting comments from our readers)
— Smart Cards For National ID In India; Need For Single ID? Impact On Mobile Biz

— ICT Education: The provision for Mission in Education through ICT has been substantially increased to Rs.900 crore, with increase in provision for setting up and up-gradation of Polytechnics to Rs.495 crore. IITs and NITs will also get more funds: “I am also allocating Rs.2,113 crore for IITs and NITs, which includes a provision of Rs.450 crore for new IITs and NITs”, the Finance Minister said.

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— Electronic Communication, Document Identification Number: The government has proposed the introduction of a computer based system of allotment and quoting of Document Identification Number (DIN) in each correspondence sent or received by it so as to enable tracking of documents and minimize taxpayers grievances, of every notice, order, letter or any correspondence issued by him.

Where the notice, order, letter or any correspondence issued by any income-tax authority does not bear a Document Identification Number, such notice, order, letter or any correspondence shall be treated as invalid. This amendment will take effect from 1st October, 2010.


— Set Top Box Customs Duty of 5% Re-introduced: Pranab Mukherjee has said that customs duty on Set Top Boxes had been exempted in 2006 to provide impetus to the industry, and with free import, enable smooth transition to Conditional Access System (CAS). “Now that Set Top Box production capacity has come up in the country, I’m re-introducing a customs duty of 5 percent to encourage domestic value addition,” the Finance Minister said.

— DAVP waiver extended till 31st December 2009: Last year, according to the Finance Minister, the Print Media had received a stimulus package, comprising for waiver of 15 percent agency commission on DAVP (Government) advertisements from 28-02-2009 to 30-06-2009. The DAVP advertisement rates had also been hiked by 10%, subject to documentary proof of loss of revenue in non-governmental advertisements. Details of the scheme are available here. The stimulus package has been extended to another 6 months to 31st December 2009.


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— Mobile Components, Accessories: Full exemption from CVD of 4 percent had been given to mobile phone manufacturers, for accessories, parts and components imported for production of mobile phones till 30th June 2009. This has been extended for another year, until 6th June 2010

— Disinvestment: will disinvest in certain Public Sector companies, but the government will retain 51 percent control. This is likely to impact BSNL, which has been gearing up for an IPO, but facing stiff opposition from trade unions. The IPO for BSNL is also likely to enable a merger with MTNL.


—  Small businesses with a turnover upto Rs. 40 lakh will have the option to declare their income from business at the rate of 8 per cent of their turnover and will not need to maintain books of accounts.  It is proposed that they be allowed to pay their entire tax liability at the time of filing their return, with no need to pay advance tax.  This new scheme will come into effect from the financial year 2010-11.

Other Key Updates

— Fringe Benefit Tax abolished
— Corporate Tax: No change
— Goods & Services Tax: A roadmap for GST is being prepared, and an agreement on the basic structure has been reached.

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From Railway Budget 2009:

— SMS Updates and Infotainment: The government is planning to offer SMS updates to wait-listed passengers or berth numbers for confirmed tickets on the mobile. This will be rolled out by the end of this fiscal. Long journeys on Rajdhanis, Shatabdis and important long distance inter-city trains are also set to get more entertaining with on-board infotainment services being planned.

— Sam Pitroda as to head Committee on Railways Optical Fibre Network: For eight years, the 30,000 kilometres of optic fibre cables which lie along railway tracks that criss-cross the country have been ignored. Now, the railway budget has picked Sam Pitroda, chairman of the national knowledge commission, to head a committee of experts that will generate schemes to commercialise this cable network. to connect towns and villages with Internet which will enable access to e-governance and national disaster management programs. The network delivers speeds between 64 Kbps to 155 Mbps, according to the website  PSU RailTel Corporation of India. An outdated map, but one that gives an idea of the range of the OFC network owned by RailTel is here. Pitroda was the founding chairman of the telecom commission of India and has headed various technology committees. RailTel’s clients include ISPs, cable operators and telcom operators. The coverage of the fibre will be extended to 40,000 kilometres.

— Vending Machines: The railway budget has announced that 3000 Unreserved Ticketing System (UTS) terminals will be put up. Automatic Vending Machines will also be installed at 200 large and medium sized stations. E-ticket holders will find it easier to cancel their confirmed tickets after charts have been prepared.

— Journalists Get Concessions: Accredited media persons, who were previously issued coupons for travelling, will now be able to use their Press Information Bureau authorised ID cards to reserve and book tickets. The photo ID card will double as a credit card, and will be certified by  competent state and local authorities as well as the PIB. They will also be offered “compact” accommodation for themselves and and family members. Concession on rail travel for members of the press fraternity has been raised to 50% from 30%. In addition, they can travel with their spouse at 50% concession once in a year.

Our take on the Railway Budget: unfortunately non-specific, and we’re significantly more disappointed from a technology deployment perspective. Promises made by the previous Railway minister Lalu Prasad Yadav about RFID cards and Internet on Trains remain unfulfilled, and find no mention in Mamata Banerjee’s speech.

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