Cuts in excise duty and service tax-anyone benefiting out there?

Yesterday the government came out with its reaction to the criticism over the disappointing interim budget. The 2% cuts in both excise duty and service tax, touted as the "final stimulus package" comes in at a time when the Obama government is rolling out the USD 780 Billion package. Comparing the two may not be the right thing to do, but then the kind of effort put in by the US government in these times is aimed at creating more credit flow to the struggling industries. The Indian government's reaction to the credit crunch ( certainly not as severe as in the US) isn't really optimal. Indian firms even today (despite cuts in interest rates by the RBI) are struggling to raise funds at reasonable rates(under 15%).

Coming back to the 2% cuts, they certainly do not translate to an increase in demand or a significant reduction in the costs. From all this, one thing is very clear. The India's fiscal deficit is not only large, but is getting wider. The S&P's downgrade of Indian economy only strengthens the point. Whoever is going to win the election, not only has a huge task of pushing the economy into a revival mode, but also look for additional sources of revenue to bridge the fiscal gap. And it is a huge challenge given the already wide deficit, because the coming government cannot go on a spending spree, say on infra or other areas.

So what if inflation touches 3.92%

Yesterday evening we got the inflation numbers for this week. The number is 3.92%. I heard experts confident that it's going to touch 3% by next week, and 2% by next month. Sounds pretty good? Not really.

Take a look around and see for youself how much of this reduction in inflation is helping you go back smiling after you shop for your household. I'm not for a moment saying that these numbers don't mean anything. But then for an average consumer why can't we have an indicator that is more in line with his spending?

Welcome to Finman's corner

Hi!
Welcome to you! You might be wondering what is the need for this blog now.
I'll explain. i had this urge for a long time to run my blog. And what better time to start a blog on finance than this recession (or depression?). Don't jump the gun yet. I'm not going to write about the subprime or the bailouts. This blog is an attempt to eradicate financial illiteracy, develop a sense of financial responsibility, and most importantly to learn finance myself. One more thing. I'm not a specialist in any field (including finance) and the ideas and thoughts shared in this blog would not necessarily be my own. I would certainly add my touch to whatever I write here.
Wish me all the best!
Happy reading!