No Such Thing As Middle Path

RETIRED schoolteacher Kanta Malhotra gulps down her fourth cup of tea as if trying to wash down the bad taste left by Budget '98 in her mouth. "This is the only vice I have," she says, pointing to the empty cup. "Now the finance minister wants me to have black dust that sells in the name of loose tea. In the last couple of months, the price of a 500-gram tea pack has shot up from Rs 65 to Rs 82. With additional excise of 8 per cent, it will further shoot up. Who is Yashwant Sinha to decide that branded tea is a luxury?" she asks, before breaking into a diatribe against each successive government for bypassing the interest of the middle class. "Since the early sixties, I have seen my real income erode every year by 10 to 20 per cent. The poor get sops because they are the vote banks; the rich get away because they bribe politicians or beat the system. Only the educated, middle class, salaried people are getting squeezed."

Malhotra's sentiments are being echoed throughout the country, as the spectre of inflation looms. "Last year the government kept telling us that the inflation rate is under control at 6 per cent but my budget went up by 15 per cent. Now that the media and people-in-the-know are talking of 8-10 per cent inflation, I suspect my budget may go up by 20 per cent," says 45-year-old housewife Punita Garg. "I voted BJP thinking it would think of the swadeshis, who live in this country and are the intellectual capital of this country. But all Budget '98 seems to be doing is to woo the videshi Indians with special privileges. 'Appease NRIs, squeeze the RIs (resident Indians),' is the new mantra. The reason is obviously political, NRIs have long been BJP supporters," says Sunita Palita, a social worker.

The sense of resignation and anger is palpable. A bit surprising, considering the earlier sense of resignation that the Budget would be tough. After all, Sinha has resisted the temptation to raise income tax rates, the most important issue to the middle class. In fact, he has raised the exemption limit, standard deduction and medical reimbursement.

 But. "Mr Sinha seems to be living in a bygone era. The exemption limit should be higher, if for nothing than to factor inflation," says M.K. Sharma, a chartered accountant. "The finance minister has been misguided by bureaucrats. Why should an average citizen be asked to furnish his PAN number or disclose identity to buy a car or phone? Is this a police state? Every citizen has a right to anonymity. These are just cover-up tactics for the inefficiency of tax collectors. Three times in the last year the income tax department has collected photographs from thousands of people for giving numbers but they are lying in the junkyard of the department while numbers are yet to be issued. The income tax department must first put its own house in order before policing tax payers," says income tax expert K. Sampath. "This budget has introduced a 5 per cent tax on interior decorators, architects, chartered accountants, credit rating agencies, management consultants etc. But why have the lawyers and doctors been left out?" questions B.R. Kishore, a chartered accountant.

Even more than direct taxes, it is the indirect tax measures that are raising the hackles of middle class consumers. The Budget has imposed an 8 per cent excise on all packaged or branded food. Protests G.P. Bhatia, a businessman: "I go for branded food products not to make a lifestyle statement but because I do not mind paying a little more for hygienically packed quality products. The finance minister is in effect taxing quality. As a consumer I have a right to choice, but I am being pushed into a corner. I have already reduced my consumption of ketchup from four bottles to one; but now it seems I will have to give it up altogether."

The 8 per cent countervailing duty on imports has also angered the middle class. "The ultimate burden will be borne by us consumers. It's back to the era of the government deciding that BPL or Videocon is better than a Sony or Panasonic," says Rahul Sethi. Price hikes have already been announced for various foreign television brands, while BPL is gearing up to announce a cut in prices through the 'Vande Mataram' advertising campaign. Car and two-wheeler prices are on the up. Omni and Gypsy are already costlier by Rs 6,600 and Rs 9,500. Cielo is talking of a rise of Rs 20,000. "It was alright if our cities had a good public transport system. The trouble is not many do," says Bipin Gupta, a student.

So now the middle class is latching on to small mercies even as they gear up to 'grin-n-bear' the swadeshi Budget. Petrol prices have been rolled back to Re 1 from Rs 4, taxes have not been hiked, the IT form is only one page in length, pension funds will pay a wee bit more. "Chidambaram's budget was all helium, a gas-filled creation for the middle classes. At least, this budget makes no promises to the average Indian and so cannot break any," says Dr L. C. Jain, an advocate for small investors. Small mercies.