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 | Late cut: But Budget sops won’t help Cong Our Correspondent In his interim Budget speech, Finance Minister Pranab Mukherjee had said on February 16, “Constitutional propriety requires that new Government formulates the tax and expenditure policies for 2009-10.” The leaders of his party tried to climb the high moral ground. The sudden outburst of propriety in the political arena—which is normally afflicted with rank opportunism and unlovely manipulations—engendered surprise and conspiracy theories. There was rumor that the Congress high command did not want Mukherjee—who is the most important member of the Cabinet after Prime Minister Manmohan Singh—to gather accolades for distributing electoral goodies and add inches to his stature. Whatever might have been the drive behind the rather insipid February 16 speech, things are back to normal. A week later, the Congress-led Government decided to offer sops on the eve of the general elections. “It is another stimulus,” he told reporters after the Lok Sabha passed the interim Budget by. “It will have its desired impact, because we have given some concessions for the export sector, particularly those sectors that are employment generating like gems and jewelery, garments and handicraft.” The Rs 30,000-crore package will no doubt help the economy which has been badly hit by slump in demand and financial crunch, though the magnitude of effect in the economy is difficult to grasp. But if the “desired impact” also includes a political element and the Government wants to reap an electoral harvest, the grand old party will not be very successful. For the voters in our country have dumped politicians who announced sops in the run-up to the polls; had that not been the case, incompetent and scheming leaders would never have been voted out of office. People will no doubt benefit. A 2 per cent reduction in service tax means a decline of 1.8 per cent in the services bill; for instance, a mobile user who spends Rs 1,000 per month will now end up paying Rs 982. Over 100 businesses— such as cable TV and broadband service providers, health clubs, beauty parlors and gyms—will cost less. Coming after a couple of earlier stimuli, the new package, by reducing excise, will also help the consumer sector which has been gasping for breath for quite some time. Ditto for the automobile sector, especially the commercial vehicles segment; excise cuts will surely help businessmen in these segments. Naphtha, cement and steel are also likely to cost less. The combined effect of the three stimuli will mitigate the ill effects of global meltdown; they may even help expedite recovery of the economy and bring it back to the 8-9 per cent orbit. This, if it happens, would be serendipitous. Posted on : 2/28/2009 Mail this article to your friend |