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Saturday, Mar 01, 2003

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Opinion - Budget

More to spend, but...

R. Subramaniam

THE Budget, a mixed bag for consumers and households, has more positives. While big ticket items such as cars and two-wheelers have seen duty cuts, the spend on day-to-day essentials seems slated to go up: That the benefits estimated for consumers in the form of direct taxes is less than the additional costs imposed (gains to government) is a clear indicator of who wins and who loses.

The biggest direct hit is clearly on packaged edible oils which now attracts an excise duty of 8 per cent from nil — a big blow to the family budget. Quite ironically the same Government which mandated use of packaged oils, in the aftermath of the mustard oil adulteration issue two years ago, now says that the 8 per cent excise duty will apply only to branded packaged oils and not to loose oils which anyway are not supposed to be sold at all! This excise hit comes on the back of sharp rises in import duty which has pushed upedible oil prices 65 per cent in two years.

The other clear higher cost to consumers is on account of higher service tax on telephone bills (up from 5 per cent to 8 per cent and the Rs 0.50 paise per litre cess on fuel).

Conversely the only direct savings for consumers are on biscuits (excise duty cut from 16 per cent to 8 per cent), life-saving drugs and maybe on some perfumes (excise duty on alcohol-based cosmetics has been cut).

The spectre of resumed high inflation may lead to a scenario where whatever more the Budget gives us (if at all) is not enough to meet the increased spends.

(The author is Director, Subhiksha, a Chennai-based retail chain.)

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