Powering inclusive growth through technology

The interim budget charts a transformative path, leveraging telecom, technology, and infrastructure for inclusive growth and a developed India by 2047.

 By Jaideep Ghosh

In her recent interim budget speech, Finance Minister of India Nirmala Sitharaman provided a comprehensive overview of the nation’s progress over the past decade and outlined a visionary path toward achieving Developed Nation status by 2047, marking a century of independence.

The government’s fiscal strategy emphasises prudence, reinforcing a resilient domestic economy, and directing increased resources toward critical infrastructure development while maintaining a focus on socioeconomic development. Key sectors such as transportation infrastructure, housing, water supply, sanitation, green energy, health, education, skilling, agriculture, and rural development take precedence.

The specific focus is on uplifting the underprivileged segments: the poor, women, youth, and farmers.

To achieve this, the government recognises the transformative power of technology and robust telecom infrastructure in creating a synergy that uplifts marginalised communities and propels the nation toward a digitally inclusive future.

The industry’s wish list centred on tax reduction and rationalisation, including telecom operator license fees, must wait due to the status quo in tax rates.

Digital infrastructure as an engine of growth and social upliftment

The robust interdependence between growth and technology is evident as technology becomes a driver of social upliftment. Reciprocally, social upliftment schemes fuel technological innovation, creating a high synergy between the two.

Major government initiatives, such as Direct Benefit Transfer, UPI, DigiLocker, and the vaccination portal CoWIN, have effectively harnessed technology platforms and telecom connectivity to swiftly and reliably reach the intended audience. By intertwining technology with social upliftment schemes, India is creating an environment where the benefits of technological advancements can permeate every corner of the nation. This integrated approach holds significant potential for empowering underserved communities.

For instance, technology and robust connectivity empower women to participate more actively in the economy through remote work, online skill development, and access to financial services, thereby contributing to women’s empowerment. Similarly, technology-driven educational initiatives, including virtual classrooms and interactive content, equip the younger generation with the skills needed for the digital age.

It also helps boost agriculture and drive rural transformation. Precision agriculture enabled by IoT and 5G has the potential to optimise resources, enhance productivity, and improve food security and livelihoods. High-speed internet connectivity, delivered through mobile and satellite communication, can revolutionise rural lives, unlocking new entrepreneurial avenues from any corner of the nation.

This integrated approach addresses socio-economic disparities and positions India at the forefront of the global digital-first revolution, exemplified by the success of India’s Digital Public Infrastructure, internationally recognised as India Stack.

What does the budget have for technology and telecom sectors?

A massive boost of Rs 1 lakh crore (USD 12 billion) corpus for long-term financing at low or nil interest rates aims to support research and innovation in sunrise sectors, potentially elevating India’s global standing. This is a game changer, similar to what China and Japan have pursued.

The budget also promises to introduce a new scheme focusing on strengthening deep-tech technologies in the defence sector, aligning with the goal of a self-reliant India. Specifically, this scheme supports the initiative to make India self-reliant, Atmanirbhar Bharat in defence.

The Finance Minister also announced a significant allocation, a 71.4% increase, aimed at reducing the gap in chip and electronics manufacturing compared to other countries. Funds allocated for compound and chip assembly have increased by 133%, totalling Rs 4,203 crore. Additionally, the allocation towards semiconductor fab stands at Rs 1,500 crore, reflecting a 50% increase.

Reduced import duties, announced a day before the interim budget (10% from 15%), aim to enhance the competitiveness of smartphone exports. Furthermore, the customs duty exemption granted to vessels laying submarine communication cables in India has been extended by six months, up to 30 September 2024.

While the industry had a wish list largely around reduction and rationalisation of taxes and other fees such as reduction of telecom operator license fees, given the status quo maintained on tax rates, those have to wait for consideration at a later stage. While tax and other reforms are awaited later this year, the growth generated by government initiatives will create significant benefits for the technology and telecom sectors.

With its focus on infrastructure creation and social upliftment, the Interim Budget sets India on a path towards economic renaissance and a Viksit Bharat by 2047.

The author is a former Partner at KPMG in India.

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