A week ago, the acting finance minister Mr.Pranab Mukherjee said it is not necessary to announce any fiscal measures in the budget as the government is going to face general election in few months. But, within seven days he realised that, country needs a third stimulus package amounting to Rs.30000 crores.
Govt reduced excise duty by 2pc, a cut in service tax, cut in excise duty on bulk cement and many more such sops are added in the recent package. All these measures will cost exchequer Rs.30000 crores. But, in reality, will these measures put an impact on the consumption and demand pull???
Answer is BIG NO... Because these measures are insignificant. A 2 pc reduction in the excise duty will reduce the price of TV worth Rs.15000 by Rs.300/-, an air conditioner was costing Rs.25000/- will be cheaper by Rs.500/- and a flat costing Rs.24 lakh will be cheaper by Rs.12000/-, if at all the manufacturer pass on these benefits to the end consumer.
When the fiscal deficit is expected to be around 12% of the GDP. Do we really need a third stimulus package???
Govt reduced excise duty by 2pc, a cut in service tax, cut in excise duty on bulk cement and many more such sops are added in the recent package. All these measures will cost exchequer Rs.30000 crores. But, in reality, will these measures put an impact on the consumption and demand pull???
Answer is BIG NO... Because these measures are insignificant. A 2 pc reduction in the excise duty will reduce the price of TV worth Rs.15000 by Rs.300/-, an air conditioner was costing Rs.25000/- will be cheaper by Rs.500/- and a flat costing Rs.24 lakh will be cheaper by Rs.12000/-, if at all the manufacturer pass on these benefits to the end consumer.
When the fiscal deficit is expected to be around 12% of the GDP. Do we really need a third stimulus package???
2 comments:
Good One... circulate it our singapore contacts..
Stimulus is a bribe given to under performers by stealing from those who perform. It is meaningful only when spent to save intellectual property or sustain value added by industry.
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