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After budget comes the real thing: somethings become cheap
WSN Network

NEW DELHI: Days after India skipped a full budget and Finance Minister Pranab Mukerjee presented a vote on account, the UPA government, possibly under pressure from the grassroot politicians with a clearer understanding of the lay of the electoral ground, came out with a stimulus package. So phone bills will go down, restaurant outings will cots less and cement, steel, tyres, and TV sets all became a bit cheaper.

Whether it is sound economics is a moot point, but it certainly was smart politics. Excise duty on several products was rolled back and service tax on 100 services wen down by 2 percent.

Goods that attract 10 per cent excise duty would now be charged 8 per cent. However, excise rates on items that attract 8 per cent and 4 per cent excise duty will not be changed.

Almost 96 per cent of all excise duty collections come from the category that currently attracts the 10 per cent bracket.

This translates into Rs 30,000 crore of tax revenue foregone by the government. Paper, leather products and bottled water, refrigerators and microwave ovens will all become cheaper.

Tax on about 100 services — such as courier, hotel, Acquisition of thousands of acres, from special economic zones to industries, is stuck in anticipation of the law that will provide farmers a forum to air their grievances.

Till last year, the commerce ministry had approved 57,412 hectares of land (574 square km) to build 404 SEZs. There are no authoritative figures on the number of farmers in the country affected by acquisition of farmland for industries.

A parliamentary panel recommended that the government acquire land required by private parties and hand it over to them. But the UPA does not want to be seen to be acquiring land for private industrial groups and intends to make land acquisition conditional to the private entity buying 70 per cent of the project land.

25 February 2009
 

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