The tobacco industry welcomes the retention of the excise duty structures. Although the micro-cigarette segment has seen an increase on duty from Rs. 100 to Rs. 110 per thousand. This is an increase that will hurt the rural and urban poor smokers and who then would be compelled to shift the non-revenue earning tobacco products.

Most tobacco products including filter, paper, board have also seen a marginal increase in excise duty from 15% to 16%. This will be a burden to manufacturing units. In addition, the increase of freight rates and diesel rates by 5 % will add to the increased cost of production of cigarettes in India.

Mr.Poddar is considered an authority on the tobacco industry and intrinsically understands the various issues related to the industry. As an industry spokesperson he actively speaks on issues of prohibition, advertising, excise and taxes at various public platforms. 

The announcements relating to the Long Term Capital Gains tax and the concessions given to the Mutual Funds are sure to attract those retail investors who had earlier burnt their fingers in the debt and equity market. Infact, the mutual funds had already been showing signs of picking up, but following today’s announcements, the recovery is bound to be swift. · The only negative that stands out at the first hearing is the 10% surcharge on the all tax. As an immediate (over) reaction, the stock market may show a slump. However, as a result of the measures announced, over a reasonable period of time this will be adjusted and the market is sure to pick up.

However, on the tax front, the decision to increase corporate tax by 10% is not desirable under the prevailing recessionary conditions in the industry. This decision has probably been necessitated by fiscal deficit compulsions.

What is commendable is simplification of systems and procedures and rationalization of the duty structures. This is a step in the right direction.

The FM’s experiment of providing discounts to farmers picking up fertilizers during the lean months sounds good on paper, but we can comment on this only when we have more details about its implementations. Approach to water shed management is positive.

The FM has introduced many schemes like involving the Gram Panchyat for activities in their area, providing food security for senior citizens and others. But the questions is do we have the necessary administrative mechanism in place to implement them successful?

The proposal to make investments in UTI and other Mutual Funds attractive will definitely encourage the return of small investor to the capital market and revive confidence. The decrease in capital gains tax from 20 % to 10% on transfer of shares too is a good sign. Making business reorganization tax neutral is a very positive step.

They have retained the specific duty structure and existing tax rates except for the mini-cigarettes slab. We feel that they should have applied the principle of stability in rates to this slab also. Infact the Commerce Ministry had specifically made a plea for reduction in the rate of duty on the mini-cigarettes so as to help relieve the tobacco farmers from the distressing situation of excess stocks of tobacco.

This aspect is very important for the rural economy and would have fitted in with the initiatives for the rural sector. “