Your grocery bill stays same
There will be no changes in your phone bills, restaurant expenses and almost all grocery items and other goods and services you use every day. Finance Minister Pranab Mukherjee left the basic excise duty on most goods untouched at eight per cent and also left the service tax at 10 per cent. See popupbusiness Updated: Jul 07, 2009 02:55 IST
The good news is that there is very little bad news.
There will be no changes in your phone bills, restaurant expenses and almost all grocery items and other goods and services you use every day.
Finance Minister Pranab Mukherjee left the basic excise duty on most goods untouched at eight per cent and also left the service tax at 10 per cent.
Anxious industry captains heaved a sigh of collective relief.
In February this year, Mukherjee had reduced basic excise duty of about 90 per cent of goods to eight per cent as macro-economic managers struggled for options to sustain growth amid the global economic meltdown.
He had also announced a two percentage point cut in the service tax rate to 10 per cent on a host of services, such as couriers, hotels, entertainment, consulting and telecom services from 12 per cent.
He left all these rates untouched.
Expectedly, this step, or the lack of one, has brought cheer to India Inc.
“It is a balanced budget. With the various initiatives announcements, rural consumption will increase,” said Ness Wadia, joint managing director, Bombay Dyeing.
The decision not to increase excise duty rates may have been prompted by the high retail prices of many goods even though the wholesale price-based inflation rate has turned negative — it was at -1.61 per cent for the week-ended June 6 — for the first time in three decades.
For the consumer, however, there was little to cheer, as the negative inflation rate does not mirror the movement of retail prices that continue to rise or remain at elevated levels.
Consumer price inflation has been hovering at around 9 per cent over the last few months, and the recent hike in petrol and diesel prices expected to push prices further up.
“At a macro level, the budget is a terrific job,” said Sunil Alagh, former chairman of Britannia. “However, with prices of commodities like wheat and sugar going up, prices of FMCG products are likely to increase. There is not much that could have been addressed on this front in the budget anyway.”
“The budget has focussed on growth and enhancement at rural levels and this will drive demand for consumer products,” said Saroj Poddar, chairman, Poddar Heritage Enterprises.