Industry & Economy
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Budget
Money for votes
More money to spend
R. Subramaniam
What makes a populist budget? Putting money in the hands of all who can vote would definitely be there. This was as populist a budget as one could make – a hefty Rs 60,000 crore debt waiver for the farmer and tax breaks for the salaried and excise duty cuts for Indian industry. I guess that way this budget has all covered.
The big concern is not what we got and did not. It’s more about whether, in the light of concerns that the global economy has slowed and that India is slowing, one would not have expected substantial stimuli to investment to keep the growth story going, either by pushing down interest rates or by giving sops for investments. One worries about whether debt waivers are a right signal at all. And if this is ok when do we, the urban personal loan and credit card borrowers, get our share of the debt waivers?
While it is disappointing that this has only been a budget for the next year’s election the good thing is that the farmer has gained and the salaried have gained, and therefore there would clearly be more money in the hands of the consumers – from a demand perspective, the economy is taken care of. The lack of negative shocks is a relief given that in the last couple of years, fringe benefit tax and such have been unexpected blows. Hopefully with interest rates also in the retreat the consumer would have more spending power than in the last 12-18 months and that should be positive for the economy. The cut in excise duty is unlikely to affect costs for consumers, except maybe in cars and motorcycles. With a lot of production moved to excise-free zones, there is not much to cut and anyway a 2 per cent excise duty cut on a Rs 20 product would not be passed on to consumers – none would expect a 25 paise cut on a Rs 15 soap – I guess only corporate India will gain from this. Mobiles will cost more with the 1% duty.
There is always the funny piece in every budget – duty cut on dog biscuits last year and on cornflakes this year. One wonders what the funny thing next year will be.
(The writer is Managing Director of Chennai-based discount retail chain Subhiksha.)
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