Throwback Budget 2000: Yashwant Sinha's Millennium Budget was a shot in the arm for IT industry

In the first budget of the new millennium, the then Finance Minister Yashwant Sinha earned a lot of flak for not introducing long term economic reforms, but where he scored was on making the India a software export hub.

He phased out Manmohan Singh's incentive for software exporters, which led to the growth of the Indian IT industry.

In his Budget speech, Sinha laid out his objectives, one of them was to “strengthen our role in the world economy through rapid growth of exports, higher foreign investment and prudent external debt management.”

In a Columbia University paper titled “Budget 2000-01 Millennium Budget: Behind Its Time?” the former vice chairman of NITI Aayog and economics professor Arvind Panagariya mostly slammed the budget but approved of his decision on phasing out the exemptions that Manmohan Singh had introduced for software exporters.

“Sinha showed great courage and good economic sense in opting to phase out the exemption. On national welfare grounds, exports subsidies have even less justification than tariffs,” he noted.

Sinha also introduced transfer pricing regulations, which played a big role in the prevention of erosion of the tax base in India.

He also reduced the customs duty in the IT sector including on “Computers, from 20% to 15%, motherboards, from 20 percent to 15 percent, floppy diskettes, from 20 percent to 15 percent, specified capital goods for manufacture of semi conductors and ICs, from 15 percent to 5 percent, microprocessor for computers, from 5 percent to nil, memory storage devices, from 5 percent to nil, CD ROMs, from 5 percent to nil, integrated circuits and microassemblies from 5 percent to nil and  data graphic display tubes for colour monitors for computers from 5% to nil”.