Manas Chakravarty: The fall-out from the Budget

WATCHWORD

March 1: Air-conditioners in offices across the city were switched off today on the basis of a rumour that the fringe benefits tax will be applicable to all air-conditioned offices.

"Air-conditioning may be part of employee welfare," said a chartered accountant, "and hence will be subject to the new tax." "98.56 per cent of Indians do not have air-conditioning, so it is clearly a benefit for a very special fringe," pointed out a CPM member.

Meanwhile, sales of newspapers rose sharply as prudent employees used them to fan themselves. "We would prefer not to use electric fans in office," said one such worker, "Who knows, in a country where 75 per cent of the people do not have fans, even fans could be a fringe benefit, and the tax may be recovered from us."

Representatives of the power sector, the air-conditioning industry, and the fan manufacturers said they would request the finance minister to save their industries.

However, newspaper proprietors, encouraged by their higher sales, now want the tax to stay. Efforts to contact the finance minister for a clarification proved futile.

March 1: Several companies in the city have started installing special coin boxes in front of their office toilets. "The scheme is simple," said a personnel manager, "All the employees have to do is pay their employee welfare tax into the coin box. That allows them to open the door of the toilet."

However, he admitted that he wasn't certain whether using the office loo was part of employee welfare. "But it certainly looks like a perk""after all, 70 per cent of the Indian population do not have access to sanitation," he said. At the time of going to print, the finance minister had still not clarified whether loos will be taxed.

March 2: Economists today said that the decision to levy a tax on cash withdrawals of over Rs 10,000 a day is already having a stimulating effect on the economy.

"People now have to go to their banks and ATMs more often to withdraw cash, since they usually withdraw only Rs 9,999.99p every time. These journeys consume fuel, which adds to GDP," pointed out an economist. The finance minister had gone to the bank when we called his office.

March 2: The finance minister's "Knowledge Centre in every village" scheme envisages the setting up of rural knowledge centres all over the country using modern information and communication technology (ICT). The computers are expected to be in place by 2007, ushering in a knowledge revolution in the countryside.

Of course, there may be no electricity in the village, but supporters point out that familiarisation with the computer keyboard is in itself a big step forward. Finance ministry sources say that a high-powered committee will examine ways and means of powering computers by gobar gas. The finance minister has offered no comments on the feasibility of using the gas.

March 3: The Budget speech mentioned the creation of pilot projects in rural areas, which will apply the PURA or Provision of Urban Amenities in Rural Areas principle to develop the countryside.

Those familiar with the subject have told Business Standard that the urban amenities proposed to be provided include potholes, jaundice, hawkers, traffic jams, pollution, and slums. Sources in the finance ministry (not the finance minister) say, however, that discos too are included.

March 3: The finance minister's fiscal arithmetic has been roundly condemned, with economists pointing out that the fiscal deficit for FY 2006 is not 4.3 per cent but 5.1 per cent. BJP supporters say that Congressmen know nothing about arithmetic anyway.

"Look at the Jharkhand elections," said a BJP spokesman, "how can they say they have a majority when we have paraded 41 MLAs before the President?" Congress workers pooh-pooh that claim. "One parade doesn't mean anything," said one of them, "we still have the evening gown and swimsuit rounds to go," he added.

March 5: The debate about the finer points of the fringe benefits tax continues, with several chartered accountants alleging that companies that allowed their employees to watch the finance minister's Budget speech on TV will have to pay the tax for the entertainment provided. The minister, modestly, has offered no comment.

manas@business-standard.com