The annual circus called the budget has come and gone. As usual the tax and loot party has been true to form.
Many more services will now come under tax and the Education Cess has been increased to 3%. This will naturally increase cost of services to consumers and industry. All utilities will go up adding to our bills. Already there is heavy taxation on air travel, now there is going to be a cess on air tickets to fund upgrading of small regional airports. Needless to say most of the money will be plundered and people will end up poorer. The joke is that the government is very worried about inflation and the effect it will have on the upcoming election in the biggest state, U.P. In an attempt to reduce inflation it has cut duties on patrol, edible oil and a host of other goods including pet food. Having reduced excise on certain commodities it has increased service tax as though this will have no effect on the economy. The stupidity is mind boggling. When will these people understand that taxes increase prices and inflation. To control inflation the Reserve Bank has increased interest rates and will increase them further in the future. With increasing cement prices, service tax on builders and increasing interest rates the housing market is in for some interesting times. A similar asset price bubble happened around 1995 when speculation in the market reached fever pitch. In 2000- 2001 house prices dropped by around 60% and a lot of people were wiped out. People have such short memories. The Sensex is dropping. Will the housing market follow suit?