CIRCUIT BREAKER. Mann ki baat on the Budget

The home stretch to the Budget is usually when the voice of the ordinary consumer, investor or taxpayer is drowned out by the shrill demands of corporate lobbies.

This time, the lobbying has been particularly frenetic given that this government is perceived to be business-friendly. Public platforms have been taken over by corporate chieftains relating tales of woe about Chinese imports, multinationals are airing complicated tax grievances and financial firms are vying for product-specific tax breaks.

But the problem with such corporate wish-lists is that many of them often run counter to consumer interests. So if the voiceless (and PR agency-less) consumer could present her opinion to the FM, what would she say? Here’s a sample.

We like low inflation

Manufacturers lobby: Dear FM, with sharp falls in global commodity prices in the last two years, the raw silk/cooking oil/rubber/stainless steel/electronics industry is in severe distress. We have been facing stiff and irrational competition from Chinese imports, which have led to shut down of domestic capacities and the loss of many thousand jobs. We also find that our industry is beset by an inverted duty structure. Kindly hike the import duty on our product so that we can be shielded from unfair competition. Such duty hikes will also boost the Make in India initiative and kick-start the investment cycle.

Consumer: “FMji, consumer price inflation has just fallen to 6 per cent in 2014, after staying put at 8 to 12 per cent for eight whole years. You don’t know how much we struggled to make ends meet when inflation was rising. We cut back on big-ticket purchases of gizmos and appliances, we tightened our belts (you understand belt-tightening better than anyone else) and took a rain-check on our retirement savings. Now that inflation is finally easing up, we’re looking to finally save up and live the good life once again. I plan to eat out very week, invest in mutual funds and upgrade my Nokia phone. Why do you want to spoil the party by making cooking oil or mobile phones costlier again? Isn’t spending good for the economy? Easy with those duty hikes, Sir”.

Don’t kill e-commerce

Retailers lobby: Dear FM, as the BJP very well appreciates, trade is the life-blood of our economy. India’s retail sector offers direct and indirect employment to lakhs of workers. You too have kindly acknowledged this by not allowing higher Foreign Direct Investment (FDI) in brick-and-mortar retailers.

But what about e-commerce firms? They’ve arrived on the scene without any approvals and are competing with old-world retailers through predatory pricing, heavy discounting and free exchange policies. We also hear that they pay no VAT. We demand that e-commerce be brought under nine different Ministries, so that they find it as difficult to do business as we do.

Consumer: “I luuurrv e-commerce. Shopping online, I’m getting genuine discounts on everything from apparel to appliances that I never used to get in the ‘upto-50 per cent’ sales in retail stores. I also get to compare MRPs across sites so that no manufacturer can rip me off. While buying appliances or durables, I actually get to buy the model that I want without being told it is ‘out of stock’. I get a free-return policy too, which I am yet to see from any real-world store. If some private equity fund out of the US wants to own Flipkart and pay for the losses they make on my branded stilettos or USB drive, why should the Government interfere?”

Freedom to invest

Financial products lobby: Dear FM, we know that the Centre has been quite concerned about the steady decline in the financial savings of Indian households in recent years. As you know, savings have been flowing out of equity assets into physical assets such as real estate and gold. We have several ideas to improve financial savings. Further measures are needed to encourage retail investors to bet on equities.

Then, you could create a separate sub-section for mutual funds under section 80C. A portion of the same section can also be carved out for medical insurance premiums, life insurance and for infrastructure bonds. Today, equities and bonds are treated as capital assets, but why not bank deposits and market linked insurance policies?

Consumer: “I certainly wouldn’t mind a higher savings limit under section 80C, but could you kindly stop telling me where to put my money? If I were 25 years old and just starting on my career, sure, I would enjoy parking all my money in stocks and equity mutual funds and earning tax breaks on them. But as I’m 50 and would like to still make retirement savings, I prefer the comfort of bank deposits and the public provident fund. So, let’s just skip all this hair-splitting and have one 80C limit under which I can invest as I choose.

Plus, I hate all these complicated rules which make some financial instruments taxable at the beginning, some taxable at maturity and some suffer tax on their yearly returns. Why not just have a uniform system? I will decide whether to buy funds, stocks or insurance based on my risk profile and needs. Thank you very much!”

Protection please

Real estate lobby: “The real estate industry is just recovering from a slump. Lower interest rates would also help revive the distressed sector. Given that the PM is keen to ensure housing for all, developers in the affordable housing sector should be given income tax and indirect tax exemptions. Large township projects should be granted ‘Infrastructure’ status and SEZs should not be subject to Minimum Alternate Tax. To open up new sources of funding for developers, REITs should be granted pass-through status. Single window clearance should be assured for construction projects”.

Consumer: “What slump? None of the projects located anywhere near my city has dropped their prices. So, if developers get any tax concessions or cheap loans, could you please ensure that the benefits get passed on to poor home-buyers like me? I’m really not interested in SEZs or REITs but can you quickly pass the new Real Estate Regulatory Bill so that I don’t have to wait for ages for the project to get completed, deal with sudden changes in the project or worry about one-sided contracts with the developer? That would be much better than all the tax concessions put together.”

So, Mr Jaitley, now that you know what consumers think, will we get a more consumer friendly Budget?