Common man's finances go for a toss with Sinha's budget

Common man's finances go for a toss with Sinha's budget
DEV CHATTERJEE

MUMBAI, MAR 3: * Suhas Patil, a government-owned bank official, submitted his application for a Voluntary Retirement Scheme (VRS) on February 28th when the Union Budget hit him. His Rs 7-lakh VRS booty would fetch him far less interest than what he had planned before accepting the VRS plan.

* Sudha Pai, a school teacher, was expecting the Budget to reduce the prices of her daily groceries with record foodgrains overflowing in FCI godowns. She was in for a surprise, the finance minister has reduced the prices of Coke and Pepsi instead.

* Ananth Shetty, a former stock market jobber, is a distruaght man. His monthly interest income from fixed deposits was his only source of income. With interest rate on deposits tumbling down, he has no other option to enter high-risk stock markets to keep ahead of inflation.

UNION finance minister Yashwant Sinha might have presented a `feel good' budget for the Indian industry, it has disappointed lakhs of Mumbaiites who were expecting the government to reduce the rising cost of living in the metropolis and making daily commuting better by injecting more funds in the sagging infrastructure like railways and roads in the metropolis.

From branded garments to edible oil, small biscuit packets to postal rates, Sinha has seen to it that the misery of common man continues. Barring making the home loans and, of course, cars and bikes cheaper, Mumbaiites are now looking at the prospects of getting lower interest for their savings as well as paying higher interest on loans already taken.

``My monthly budget has gone for a toss,'' says R K Singh, an Office Assistant with a private sector firm. ``I've to pay more for daily items like edible oil and despite reports of record food grain prices, the cost of these products keep shooting up.'' Singh's complaint on high food prices is due to the pre-budget oil price hike which has already made cost of transportation high which, in turn, is making fruits, vegetables and food grains expensive in the city.

Says Ramesh L Shah, a retired bank officer who was eking out a living on interest income: ``I was earning a fixed income per month based on my fixed deposits. With this budget, not only I'll get a lower interest per month, the bank will cut tax deduction at source (TDS) -- if the interest exceeds Rs 2,500 per annum.''

``There is nothing in the Budget which will reduce burden on our monthly monthly budget. By making Coke and Pepsi cheap, I wondor what the government is trying to achieve with this budget,'' he said. The budget has also restricted the investment avenues for a average person. While banks, post office and even his post-retirement egg now fetching 1.5 per cent less interest, an investor will have no other option but to invest in the high-risk stock market or through the mutual funds. ``In the last one year, most of the mutual funds have seen erosion in their wealth. hence, very few investor will really invest in the stock markets.''

And yes, with branded garments costing more, a Mumbaiite's next visit to Benetton showroom or Rupam will make him poorer by 16 per cent. Says N Suresh: ``It would be cheaper to go to a local tailor instead of buying a branded garment... this is for the time, branded clothes have been taxed so heavily and it's quite obvious that they would pass on the entire burden to the consumer.''

The finance minister, however, has removed all the surcharges on income tax (barring Gujarat surcharge), which will increase disposable income for all and provided tax incentives -- should you buy a house.

But what Sinhas has given from one hand has taken it back from the other. He has made tax to be paid on cost to company basis which will include all allowances and not your cheque amount only. So gear up for some hevy taxation from next financial year onwards.

Sums up Mohan Guruswamy, former advisor to the Finance Ministry: ``The only constituency this budget addresses is the Confederation of Indian Industry and and FICCI. It does nothing for the common people and makes little effort to tackle the real problems of widening disparities, increase in the number of poor, decreasing capital expenditure with little for the farmer and the rural economy."