The Chidambaram's budget has been a good one for the middle class. By way of tax cuts, it has given a good salary hike to every one and for people particularly employed in the IT/ITES industry as they are fearing a salary cut due to raising rupee and the US recession. The tax cuts in the form of enlarged income slabs has really helped people to save a substantial sum of money on a monthly basis. If you take a typical middle income family with an income of Rs600,000/- per annum, the tax savings per month would easily amount to Rs4000/- per month. The tax cuts are a pleasant surprise for most of the salaried class and you cant ask for more!! Now they have more money in their hands to spend, which is exactly what Chidambaram wants. He expects that the consumption lead economic activity in India from automobiles to garments would propel the economy to sustain or improve the GDP growth.
This was more evident when I visited the Mega Mart retail showroom at Valasaravakkam yesterday to pick up some shirts. As usual with Mega Mart, there were good discounts on select brands like Arrow and Park Avenue. For Arrow shirts and trousers, they were offering a straight 40% discount and for Park Avenue they were offering 50% discounts when you buy two. I think these are real good bargains!!
I spent close to couple of hours and one thing which caught my attention was the constantly increasing crowd in Mega Mart. There was a good influx of crowd during the two hours I spent and when I finally left, the car parking was full, two-wheelers were asked to park in the road outside as 2 wheeler parking was also full. Mind it, this is not a peak season for buying clothes as there are no festivals coming in the near future. Inspite of that, people are visiting outlets like Mega Mart to buy clothes.
The other area where I think the tax savings would flow would be electronic consumables like computers. India has a very low peneteration on home PC's and I believe households would look at buying computers to help their kids sharpen their skills. Telecom would be another major beneficiary due to the higher disposable income.
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