This “Union Budget” has been applauded, called going towards a more stable 3 to 5 year Financial Plan structure, given 8.2 on 10 by analysts. Lots of discussion, lots of excitement. This post budget noise always brings to mind a question a lady once asked me. This middle aged homemaker asked me “What does all this jargon mean to me and my family?”. This article is my answer to her from this budget.
In the immediate future, the budget has increased service tax from 12.36% to 14% which means your hotel bills, salon bills, every other service you take will be a little more expensive. For example, a restaurant bill of 500/- which used to come to 562/- inclusive of tax, it will now be 570/-. All your insurance premiums will go up, mobile phone bills, broadband or data charges, DTH services will become expensive. Little pennies in all these areas will add to the householder’s expenditure budget.
There is an incentive in the budget to save more. Previously the Income Exempt from Tax under 80c was 1 Lakh, now it is 1.5 Lakh. Additionally another 50000/- is exempt through 80CCD that is through investment in pension schemes. Another 10000/- can be had from health insurance premiums. This extra tax saving investment will take away liquid cash from your hands.
In the short run this Union Budget will squeeze your family budget by reducing your liquidity, or the cash you have in hand to spend. It will also make sure you have larger accumulations for the future through your tax saving investments.
This budget has strong incentives for the Make in India campaign, developing of skill sets among youth, incentive for Corporates and Entrepreneurs. This means you can expect the economy to grow, which means in the short term all of us must look at having a part of our investments in market related instruments. Find advice build portfolios and start investing in the market and reap the benefit of this growth opportunity.
In the long run this growth story may mean better jobs or earning opportunities, better education, a better lifestyle.
As of now, revisit your budget, increase your allocation to expenses, reduce wastage and build a buffer into your budget to manage changes. Channelize a part of your surplus towards market related instruments. Make sure this year you build yourself an emergency fund. Maybe more on that later!