The Hindu Business Line : Spare the knife to let the golden goose lay on

THE Gowda-Murthy spat has spilled over to the streets. People are joining issue, voicing both pro- and anti-IT (information technology) views. Now, hot in my inbox is this mail from Ramachandran Balachandran (rbalachan@gmail.com) who takes on allegations that tax concessions being fed to an industry of millionaires. "In India, IT sector is new. It started in mid 1990s, picked up slowly and then had a big slump in 2000-01, only to pick up again in 2002. To encourage this nascent sector, various governments give incentives; as the industry grows, incentives can be scaled back," writes Bala.

That is already happening. For instance, Wipro's 2004-2005 Annual Report (www.wipro.com) states that the company enjoyed tax benefits of Rs 226.3 crore, Rs 292.5 crore and Rs 459.1 crore for the years ended March 31, 2003, 2004 and 2005 respectively.

"We are currently also eligible for exemptions from other taxes, including customs duties. The Finance Act, 2000 phases out the tax holiday over a ten-year period from the financial year 1999-2000 to financial year 2008-2009. Our current tax holidays expire in stages by 2009. For companies opting for the 100 per cent tax deduction for profits derived from exporting information technology services, the Finance Act, 2000 phases out the income tax deduction over a period of five years from April 1, 2000."

The reader mail on hand hastens to point out that the high salary levels in IT, targeted by many antagonists, are determined by the companies' ability to pay, rather than the tax benefits. "Also, not all software personnel earn hefty sums. Things are not rosy as we see from outside," reads the mail. I'm sure that many boys and girls slogging it out in BPOs would agree.

As if to add to the muddle, there is this pollution angle too. Some people are of the view that despite the claim to be a non-polluting industry, IT sector contributes an increased load on the city's infrastructure, be it of roads or drains, and also adds heavily to water and air pollution because of its labour-intensive nature. How weird, wonders my letter-writer. Pollution is a function of fuel standards and vehicular emission norms, he notes.

An effective public transport system can lead to reduced use of private transport, and consequently levels of pollution, says Bala.

Before taking cudgels against the industry, one has to consider the fall-out benefits in the form of growth in other sectors such as real estate, transportation, tourism, electronics, and communications, he notes.

Infosys' CFO, T. Mohandas Pai, is reported (http://bangalorebuzz.blogspot.com) to have drawn attention to the fact that Karnataka's 70 per cent revenue comes from Bangalore.

"Maharashtra's 58 per cent revenue comes from Mumbai; and Tamil Nadu's 40 per cent revenue comes from Chennai," adds Bala. You may check those numbers, but I guess it is reasonable to argue for priority attention towards the betterment of the metropolises, even as there are many who are sharpening their knives to kill a goose that lays golden eggs. Spare the knives, please.

The B bomb!

Even as I write this, `pop' lands in a mail from Ram Guduru (ramkrishnaguduru@yahoo.co.uk) about `Scam in B-School!' He asks me to check www.kautilya.com (`Opinionated News, Views and Analysis of Indian Economy, Politics and Society') for recent posts about a much-advertised institution and the plight of a blogger named Gaurav Sabnis.

"I support Gaurav because somewhere I triggered the mechanism for him. I was his faculty at IIML and I stand by him and support him," reads one such... Check it out!

Worried and vigilant

"Time has come for all of us to become extra vigilant for ourselves in our old age and safety of our children because we are aboard titanic banks that can sink us or push down the interest rate," exhorts Pankaj Mody (psmody@yahoo.com) in a mail that pleads for transparency in bank supervision.

"Recent Mumbai rains have exposed the sloth, indifference, inefficiency and ineffectiveness prevailing in the administration. We may not know when we get affected too. It is time to wake up and take action," writes Mody in his mail campaign, that has, among its many attachments, a letter dated October 28, written to The Chairman, Bank for International Settlements, Switzerland, on the subject of Basel norms and their efficacy in India in light of `complacent' banking supervision here. Disturbing.

E&OE@TheHindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Spare the knife to let the golden goose lay on

`Engineers don't need MBA tag always'

Lighting up the sky

Cybercafes rake in extra profits from game zones