The cut in excise and service tax levies hasn’t come a day too soon.
It will help revive customer demand and ensure that India’s growth will not suffer too much. The big question, however, is how sensitive India’s consumption is to prices and interest rates. In a normal situation where the economy is growing, the demand-response is obvious. But these are not normal times. With millions losing jobs in the unorganised sector, and lakhs in the organised sector, you can smell the fear on the street. In such a situation, where there may not be a pay cheque next month, or it may be substantially reduced, it is doubtful if customers will go out and splurge. In which case, the expected boost to demand may not happen — all that will happen is that government revenues will collapse.
Sunita Sharma, New Delhi