Budget watch

8226; Budget 2006 is not as rosy as it appears. There is an increase of service tax from 10 to 12 per cent. With an education cess of 2 per cent, the effective rate is 12.24. Since most services are covered under service tax, it will fuel inflation and drive up the prices of almost all commodities. As service tax is on gross receipts unlike income tax 8212; where only the net income is taxed 8212; collections of this tax go to a much higher amount from the same level of business activities of an entrepreneur. To make it simple, no credit/adjustments that are available at present should be allowed and a minimal rate of this tax should be levied, say, 5 per cent. The exemption limit for service tax should have been increased to Rs 10 lakh.

8212; Mahesh Kapasi, New Delhi

8226; The finance minister says in his budget speech that by 8217;06-8217;07, the installed capacity in the power sector will rise by 15,000 MW as the highest in any plan. This is true; but it does not even constitute 50 per cent of the Tenth Plan target of 39,000 MW. The net addition may be only 25 per cent as envisaged in this Plan. This has impacted negatively on growth in power generation in 8217;05-8217;06 other than short supply of gas and coal. The FM, however, has assured us that by the next three years, there will be a further addition of 39,500 MW, including contribution from private sectors. Will we really get these additional megawatts?

8212; C.R. Bhattacharjee, Kolkata

Black flags

8226; I asked some students who were putting up anti-Bush posters in the JNU why they were against an Indo-US deal. They had no better answer than pointing out that we would become slaves of the Americans. This is ironic, coming as it does from those studying in a prestigious university. Many of these students are preparing to join the country8217;s intelligentsia. A few years ago, some religious zealots protested against the Pope8217;s visit. Let8217;s not repeat such misguided acts.

8212; Mukund B.Kunte, New Delhi

Repoll tantrum

8226; The EC8217;s ordering of a repoll in Visakhapatnam came as a shock treatment to the state government. Instead of the state Congress president accepting the moral responsibility for handling the election process ineptly, he chose to vilify the EC. Legal minds in the party like Abhishek Singhvi and Kapil Sibal should counsel Congress state leaders not to behave in an irresponsible manner.

8212; K.R.P. Gupta, Mumbai