Savings will dip further, says mechanic

The proposal to increase the investment limit, from Rs.1 lakh to Rs.1.5 lakh, under section 80C of the Income Tax Act may also not be of use to this household.

July 11, 2014 05:55 am | Updated 05:55 am IST - CHENNAI:

Mathivanan, a bicycle mechanic in Chintadripet, earns around Rs. 21,000 a month and supports a family of four — Photo: R. Ragu

Mathivanan, a bicycle mechanic in Chintadripet, earns around Rs. 21,000 a month and supports a family of four — Photo: R. Ragu

A. Mathivanan (39) says the first few sentences of the Budget speech referred to people like him who ‘decisively voted for a change’ and ‘want to be part of the neo middle class’.

The bicycle mechanic, who earns around Rs. 21,000 a month, looks forward to lower levels of inflation.

He is concerned about the proposal to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted.

“We wanted the budget to offer a solution to price rise,” says Mr. Mathivanan. “High fuel costs are affecting us. Bus and train fares are becoming unaffordable,” says his wife M. Vasanthi.

Owing to a an increase in expenditure due to price rise, their household savings — around 10 per cent of their income — are likely to reduce further.

Being above the minimum income net, Mr. Mathivanan is unlikely to benefit from announcements pertaining to increase in personal income tax exemption limit from Rs. 2 lakh to Rs. 2.5 lakh.

The proposal to increase the investment limit, from Rs.1 lakh to Rs.1.5 lakh, under section 80C of the Income Tax Act may also not be of use to this household.

Mr. Mathivanan’s dream of constructing a house on a 1,200 sq. ft. piece of land in the suburbs is unlikely to be fulfilled this year. Increase in the deduction limit, from Rs. 1.5 lakh to Rs. 2 lakh, on interest for loan of self-occupied property will not improve household financial conditions, he says.

“We pay a rent of Rs. 4,000 every month. We have to spend Rs. 25,000 a year on our seven-year-old daughter’s education,” says Ms. Vasanthi.

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