The Hindu Business Line : Consumer goods prices to stay put

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Chennai Feb. 28 If you thought the Budget would have that big bang effect on prices of consumer goods and durables, think again. Prices of most goods are going to stay put, say a host of manufacturers Business Line spoke too. But if they do a few months later, it would have nothing to do with the Budget but because of a rise in input costs, and additional taxes that industry will have to bear.

While the Budget will have a neutral impact on prices of most items of daily consumption, at least for now, it's edible oils that will see a price cut. As Mr Pranav Adani, MD, Adani Wilmar, which makes the Fortune brand of oils, says with the exemption of crude and refined edible oils from additional countervailing customs duty of 4 per cent, prices of edible oils such as groundnut would come down by about Re 1 per kg or Rs 1,000 per tonne. Sunflower oil, which too has seen a steep cut in duties of 15 per cent, could come down by Rs 5 a kg.

The other product category which could be cheaper are instant mixes, not just of idlis and dosas, as the FM cheerily pointed out. An official at MTR, one of the largest makers of these mixes, said that prices would see a cut, even though the processed foods industry also demanded exemption on ready-to-eat foods.

Mr M. C. Anand Kumar, Senior VP of Dorcas Market Makers, which markets Medimix soaps, puts it succinctly: "Beyond the adverse impact of the one per cent increase in education cess and the positive move of reduction of one per cent central sales tax which impacts all sectors, there is no specific cause for cheer or concern for us!"

If prices of consumer goods are going to stay put, so will the prices of durables. Says R. Zutshi, Deputy MD, Samsung, "Considering the fact that the education cess has been increased from two per cent to three per cent, I think even this marginal relief has been further reduced. On the overall impact of this Budget on prices of consumer electronics, I see no relief coming to consumers from this Budget." So, you may need to take a call on whether you want to go out and buy that washing machine!