The common man is euphoric that the FM has doled out a bag of "sops and benefits". One must however remember that this timing is opportunistic and the UPA Government has done it with the elections in mind. It is therefore a populist and opportunistic budget and not really one they would have otherwise announced. Close on the heels of the railway Minister delivering sops is the FM. It should be evident to the common man that this is only a short term benefit and whosoever comes in next will need to impose fresh cuts on subsidies and withdraw some of the concessions issued by the FM.
It is going to be a huge challenge for the next FM and the Government to show "consistency" in thinking and implementation - something which successive Governments are not known for.
Take the case of the Pharma Industry. It has reduced the Excise duty from 16% to 8% - but what it said in fine print was that the abatement which was earlier 42.5% got reduced to 35.5%. This, therefore, has resulted in only a marginal 4% reduction in overall price to consumer. Had the abatement increased to 50 %, it would have brought down pharmaceutical prices by over 5%. But what would be interesting to see in the coming months is the negative impact of this reduction in Excise on tax holiday zones in Himachal, Uttaranchal and Sikkim and what those who have invested in these zones would do. For the salaried class, the increase of the taxable limit to Rs 1.5 lakhs is welcome but the Corporate Class must be disappointed with no change in the tax structure.
Nitin Gokarn, Mumbai
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