Monday, February 27, 2006

Budget around the corner

With the Big Daddy of all Household Domestic budget less than 24 hours away, speculating on it seems the most logical thing on earth. Tomorrow the pulses will halt at Dalal Street, NSE & all the Commodity Trading Exchanges at exactly 11:00 AM, when the finance Minister P.Chidambaram will present the Union Budgetfor the Year 2006 - 2007.

There will of course be other sections of socities like housewives, students, Software professionals, Docltors, Engineers and so on who will proceed about the day just as any other working day of the week. But irrespective of who they are or what they do, this is one thing that will have a deep influence on their lives. A lot of things are going to become dearer, a lot of purchases will need to be re-scheduled, a lot of wages will need adjustment and a lot of domestic grocery spendings will need to be re-configured.

The budget holds different concerns for different "agents" of the society. Whether it is an individual, an institution, an organization or an investor. All will be affected someway or the other, some getting a gentle nudge, others getting turmoiled to doldrums. Concerns are hence in-evitable about this. Let me shed some light about the impact on "Indian Middle Class". For ease of description let us take a four member family: Mr. Ram (Aged 38) working as a mid level Marketing Manager in an Indian Company, Mrs. Sita (Aged 34) Housewife by choice and a qualified engineer by qualification, Luv (Aged 12) & Kush (Aged 9) both students at a reputed public school. Although there will be others who will be linked to them, like in-laws at both ends, for the purpose of simplicity, we'll take them to be largely financially independent.

Instead of keeping the analysis at a very generic level, we will take up individual items which are likely to be on the Finance Minister (FM)'s platter.

  1. Fringe Benefit Tax : If this tax is hiked, Ram's official tours will become more expensive for his company. So while till now he was getting to use economy class tickes from regular airlines like Jet or IC, he may have to switch to Low Cost Carriers(LCCs) like Deccan or SpiceJet. This will also mean that he will have to forego the complementary meals both at the aircraft and at the hotels where he is put up by his company. Moreover the free shared cab pickup that his company provides and the fuel allowance for his personal vehicle may become a thing of the past. To top it all, telephone bills re-imbursements would also be subject to taxation. For Sita, it might mean that she may have to forego the weekend drives that Ram used to take her to. With petrol prices heading skywards and company on the verge of retracting the fuel expenses, this could be an acoidable expense. For Luv and Kush this may mean that missing the school bus would attract a harsher reprobation and may sometimes even lead to dropping off from school for a day, as his dad stubbornly refuses to drop him by his car.
  2. Exempt-Exempt-Taxation (EET) : Moving from an EEE to an EET taxation system is widely being anticipated. Simplifying the 'latin' here for the non-financial readers an EET taxation implies that investments made for tax saving (like ELSS Mutual funds/ National Savings Certificate/Public Provident Fund/Infrastructure Bonds etc.) will attract a tax on liquidation at maturity. So to say, after the lock-in period when these aqre exchanged back for cash, the cash will now attract an additional tax. Under the EET system contributions to these scheme are exempt from tax (E), the accumulation/earnings are also exempt (E); however, the withdrawal/benefits are taxed (T). (Hence the E-E-T) An Exempt-Exempt-Exempt(EEE) regime on the other hand implies that such investments remain outside the tax net even at the time of liquidation, as has been the system till now. So this will mean that the lucrativeness of the various tax saving investments will be diminished or removed. So Ram can be expected to spend more than he did the last year and hence it seems that Luv and Kush can now have that Cricket Bat which was pending in the shopping list and Sita will have that lovely Microwave oven. Ram, can also opt to go for a family vacation with his new disposable income.
  3. Customs and Excise duty Cuts : Finally a good news. This would mean almost all the things having imported components will be saving some money. We can expect some of them to be samaritian enough or having significant business foresight enough, whichever way you look at it, to pass on the benefits to the end user. So it finally may be the time for Ram to buy a Santro after bidding farewell to his 7 year old maruti 800. Microwave, cellular phones & Home theater systems are all going to beome cheaper. So all the more reason for Sita to go for that microwave, and in case she is able to spare some money from her day-to-day kitty then she could also opt for a DVD Player Home theater System. Luv and Kush can only hope that Sita would not ditch the plans of the DVD, and so they can finally watch "Lord of the Rings" sitting right at their home!
  4. Inheritance and TOBIN tax not imposed : TOBIN is a tax implemented on International Potfolio Investments. Inheritance tax and TOBIN are two taxes that the left parties were insistent on. This would not have too much of ramifications on Ram's life as his father was a village school headmaster who had a meager salary, of which he spent the most on education of his two saons Ram and Lakshman. Sita, Luv and Kush too are imune to this one element of the tax.
  5. Tax on Aviation Turbine Fuel to come down : This would mean that the tax on ATF that airlines have to pay would some down from the present 40% to a more sane amount. Ram and family would be hence more likely to get that Rs. 500 ticket ( + Rs. 221) of Air Deccan as it is expected that LCCs will pass on the price benefits by increasing the percentage of seats available in the lower priced categories.

So Much for Anticipatory Musings. If this is the state of affairs on the eve of the budget, just imagine the catastrophic length when the budget actually comes out tomorrow. God Help Me !!

Sunday, February 26, 2006

Weekend Trip to Hussain Sagar

With Multiplex pickets evaporating from counters faster than spirit spread out on a petridish, We were left with very little optoins this weekend than to cool our heels at Necklace Road and Eat Street. This is a nice shot taken from there. Beauty , it seems, is also in the lighting of the neclace road. Most Guys of course, wouldn't give a twiddle to this concept of beauty, and more so when we are talking of Hussain Sagar.
"Are you Kiddin? Get Real Dude! There are better things to see there !!" Posted by Picasa

Photos of Hitech City

Cyber Gateway at the Top. One of the earlier Cyber workspaces Built. The First one being Cyber towers whose photos now don every promotional photograaph of Hyderabad

Below comes the latest in the triology the Cyber Pearl One of the best and most grandiose looking TCS offices.
Set in Red brick and in cylindrical shape this is TCS Deccan park for you

After TCS lets come to a rather eye catchy, yet awkward looking building
This is JVP for you. A Building that hosts three companies Kanbay, EIQ Networks and Agami Solutions with Kanbay taking 90% of the volume pie

But with the sparkling new Campus comming
out beside Microsoft, Wipro and ISB, Kanbay
would soon be moving out of this cramped location
to its rather voluminous new address.

Read a more Descriptive account here
See more snaps here
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