A Peep Into the Future Through My Weekly Home-Buys Basket

Is it reading too much in small things and being an alarmist or is it an indicator of things to come? Like every weekend, I went buying vegetables and groceries earlier in the day today. I didn't return home too thrilled at how light my wallet had become. Vegetable prices and food inflation in general are up once again and big time. We got the government's higher inflation figures late last week. But I didn't realise just how bad things had become. Vegetable prices have practically doubled in Delhi and the National Capital Region ijn the past one month. Worse, the quality of supply is dreadful. Things are probably as bad as middle of last year. While oine can blame local and seasonal factors for rise in vegetable prices which may not be the case here but what about groceries? Their prices, especially branded ones, are also shooting up. For example,. the branded rice bag that my family uses is now costing 10 per cent more since the last time I bought it 45 days back. There seems to be price increases on this front too every 45-60 days. Smart FMCG companies are reducing amount and weights in their packs quietly. And when the Prime Minister tells you that the government needs to raise fuel prices, you can be quite sure that this madness will continue for long. The effect of the Budget 2012's increase in service tax and excise will not have percolated to the system still. It might take a month or 45 more days. So, where does this leave the country's and individuals' finances? I, for one, feel that chances of any further cut in interest rates during 2012 is diminishing by the day. We can expect the economic sentiments to continue to weaken with impact being felt both on the rupee, making imports costlier. Like last year, in high inflation times, people will continue to take refuge of  gold and real estate so that they can preserve the value of invested rupees. Of course, people will end up saving less thanks to high inflation and moderate or no pay hikes. What about stock markets? I suspect that we will need to look for goodies like more currency pumping by central banks abroad. Well, I guess its time to change the topic. "Avengers"  anyone? 

DTC by Frontdoor or Backdoor?

Will the Direct Taxes Code (DTC) make it to the Budget later this week or we will see bits and pieces as some of us had been suspecting? The recommendations of the Parliamentary Standing Committee is now out. Call it the perils of living in a democracy that we have had to wait almost two years to reach where we have now. The delay has meant that many of the original recommendations such as that of slabs individual taxes look less attractive that what they would have thanks to high inflation. By telling the world that tax reforms are being pushed via application of DTC might shore up sentiments. This also gives some momentum to implement the indirect taxes reforms by applying the GST regime which according to some, will not see the light of the day till end-2013. Will the government take the plunge? Well, we all know that government decision making is not necessarily dictated by economic rationale that makes sense to many.