(Deleted Part 2 and Part 3 DP's and instead posted their contents into the comments section of this DP)
While I was reading the fine print of the budget, I was unfortunately reminded of 2 english proverbs, both of which tend to be used in regrettable circumstances ; putting the cart before the horse and putting all the eggs together in one basket. To be fair to the FM, he has tried his best to do a fine job and has infact according to me, done it quite well. And that too while giving adequate justification. But like the word itself suggests ; its a budget. It contains some of the finer nuances which bona fide make absolute complete sense, but when you try to imagine the whole picture with relevant connections between each and every item, everything just doesnt look as hunky dory as it it did before.
Let me take you through some of the Good News, the Bad News and the 'I-dont-know-how-it-affects-me' News
Firstly, Individuals rejoice. Wait a minuite, dont start working the phones just yet trying to arrange a party or you might just end up blowing away in one night half the good news which will be due to you. As per the new Budget, the maximum tax exemption limit is now 1.6 lakh rupees. From 1.6-5 lakh rupees, tax will be charged at 10% + SHEC. From 5-8 lakh rupees, tax will be charged at 20% + SHEC. Above 8 lakh rupees, tax will be charged at 30% + SHEC. So a person having an income of 5 lakhs will effectively end up saving 20 thousand Rupees. While a person earning 10 lakhs will end up saving 50 thousand rupees. That means more purchasing power to the aam aadmi. You're pockets will be heavier to the tune of 20-50 thousand rupees per annum.
Now for the slightly bad news. What were you planning to do with that 20-50 thousand rupees? Buy a LCD TV or some other hot electronic gizmo which was catching your eye everytime you passed your neighbourhood Croma. Or maybe you could upgrade to one variant higher of the car you were planning to buy (Say you were planning to buy a Swift Lxi, now you can buy a Swift Vxi. Or If you were planning to buy a Swift VXi you can buy a Swift ZXi). But here's a slight downer for you.
With an increase in tax savings also comes a increase in excise duty (or if you'd prefer I talk like an optimist - a partial rollback in the stimulus packages offered last year). The Excise duty has now been hiked from 8% to 10%. So your average hatchback car will now be costlier by around 10 thousand rupees. While i'm talking about bad news here's another dampner, the petrol and diesel prices are likely to increase tonight by around 2.67 rupees per litre of petrol and 2.58 rupees per litre of diesel. So if you consider the increase in your total annual expenditure due to the rise in fuel prices considering a normal daily driving range of 50 kilometeres per day, your outlay will be an additional 8000 rupees per year. Maybe you should just stick to that lower variant of the car you had decided!
Whew, You Mr. X who were planning to buy the LCD, having a sigh of relief? Yeah I know that 2 percent hike on Excise duty on a 40-50 thousand LCD wont amount to a lot. But oops, weren't you planning to buy a full home theatre to compement the LCD? And a better digital wireless cable connection which gives you extra clarity compared to the old cable-connections? And say a Digital camera to view your images in crystal-clarity on the LCD? Yes, the full impact of all the electronic items extra excise duty will eat up a significant part of your tax savings. But then, thats what the FM proposed to do without you knowing about it. Increase your purchasing power by decreasing the direct tax liability but simulataniously increasing the indirect tax so as to eat up the savings of your direct tax. Whats a better way to bring up an economy than by ploughing back into it all the money that the consumers save. Aah, now only if the consumers spent all the additional money buying Indian products instead of foreign brands (say a Tata instead of a Hyundai or a Onida instead of a Sony), the Indian economy would really bounce back. Because these mammoth international corporations invest only a specified percentage of their profits back into India, instead preffering to take most of them back to their own country. So here's where the FM's policy could hit a significant hurdle and he might just have ended up increasing the outflow leading to a higher financial deficit.
CONTINUED IN COMMENTS SECTION
