Aloysius Xavier Lopez gatecrashes a home that eagerly followed the Budget speech and was weighing its pros and cons (only to find more cons than pros)

D. Ganesh Babu (34) and his wife R. Shanmugapriya (33) agreed with finance minister P. Chidambaram’s observation in his Budget speech that “the Indian economy is challenged.” But the couple did not agree with Chidambaram when he insisted that “there is no reason for gloom or pessimism.”

“Since prices are shooting up, we expected some change in the tax slabs or rates. Requests were made for tax exemption up to Rs. 5 lakh but in vain,” said Mr. Babu, who works in a public sector bank, earning a gross salary of around Rs. 30,000 a month besides perks. Ms. Shanmugapriya, who is an IT professional, earns nearly Rs. 50,000 a month, not including benefits.

Their household consists of their one-year-old son and an aunt who manages domestic affairs. Because of increased expenditure due to price rise, the couple’s savings — around 30 per cent of their income — have started to pinch now.

“Saving for a rainy day is becoming a challenge,” said Ms. Shanmugapriya, who pays Rs. 23,000 as EMI for home loan. This, when the finance minister, in his speech, stressed the need for increasing savings and their optimal allocation for higher economic growth.

As it is, the family complained, the rise in rail fares and petrol and food prices had thrown the household budget out of gear. “The price of good quality sesame oil has increased by Rs. 80 a litre in the past two months. It was around Rs. 190 before Pongal,” said Ms. Shanmugapriya. The Budget did not address such minute aspects that bothered middle-class households, she said.

Some of the measures announced by Mr. Chidambaram to promote household savings did not enthuse the Babu household. There is a proposal to liberalise the Rajiv Gandhi Equity Savings Scheme to enable first-time investors to invest in mutual funds as well as listed shares. This, however, is aimed at higher middle-income groups with earnings greater than those of the Babu family.

The other proposal, to offer additional deduction of interest up to Rs. 1 lakh on first home loan of not more than Rs. 25 lakh, won’t matter much either as Ms. Shanmugapriya has already availed of housing loan.

The silver lining here could be the government’s proposal to introduce instruments that will protect savings from inflation.

“These could be inflation indexed bonds or inflation indexed national security certificates. The structure and tenor of the instruments will be announced in due course,” the finance minister said.

Mr. Babu’s eyes were glued to the laptop screen as he read online the full text of the Budget speech. Towards the end, he came across the lines: “All the strength and succour you want is within yourself. Therefore, make your own future.”

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