NEW DELHI: Prices of a wide range of items such as television, steel utensils, electronic items, cigarettes, pan masala, watches and automobiles will go up considerably as a result of the taxation proposals in the budget for 198990 presented by the Finance Minister, Mr. S. B. Chavan in the Lok Sabha on Tuesday. The steep hike in the excise duty on steel and iron items and the five percent in the specific rates of duty of a substantial number of commodities are expected to push up the prices of almost every item. Air Travel will be costlier. So will be passenger cars, jeeps vans and two wheelers, Expenditure tax on hotels has been doubled. However, the Finance Minister has offered marginal benefits to low income salaried class (Rs 18,000 25,000) by reducing the rate of tax by five percent. He also announced a number of saving schemes with tax benefits and raised the quantum of pension to freedom fighters. The budget has provoked Rs 500 crore for the Congress party’s employment program. This has been done by taxing the high income group.

The total revenue yield from the taxation proposals is put at Rs 903 crore to the Centre and rs 384 crore to states. In spite of the heavy taxes, the uncovered gap is estimated at Rs 7337 crore for 198990. This, however, is lower than the deficit of Rs 7940 crore in the revised estimate for 198889.

The Central plan outlay for 198990 at Rs 34.446 crore is up by 20 percent from the current year’s level. Central assistance for states and union territories is up at Rs 10,850 crore against the current year’s level of Rs 9.714 crore.

The Finance Minister justified hike in taxes of consumer items by saying that “kit culture based consumerism is not the objectives of our industrial and trade policies.” He announced decontrol of the prices of cement and aluminum.

The defense budget for 198990 has been placed at Rs 13,000 crore against Rs 13.200 crore in 198889 reducing the outlay on this crucial sector by about 1.5 percent for the first time in this decade.

The budget estimate for 198889 was Rs 13,000 crore and the revised estimates for the year show an increase of Rs 200 crore.

Article extracted from this publication >>  March 17, 1989