Is it time to bury the buy-before-budget ritual? In the run-up to the budget, in the days and the weeks before the Finance Minister would present his annual statement of the government's finances, people would rush to buy consumer products. Budgets, in those days, meant only one thing to the middle class-higher prices. That is no longer the case. For the past decade, with few exceptions, budgets have meant more competition, lower tariffs and, ergo, lower prices. In the last eight to 10 years prices of consumer durables have more or less been on a slide or in some cases moved up marginally (See Eroding Price Tags). "Earlier it was perceived that the government's duty is to raise taxes, now the approach seems much more rational," says Anushree Sinha, Principal Economist, National Council for Applied Economic Research (NCAER).

Sample this: the price of colour televisions has gone down 40 per cent; airconditioners, 38 per cent; and PCs, a whopping 60 per cent. Last month, Prithipal Singh, the Chairman and Managing Director of Bharat Sanchar Nigam Limited (bsnl) announced the mother of all price-cuts when he slashed long distance telephone call rates for the second time in three years. Today, a Delhi-Mumbai call costs a mere Rs 4.80 a minute, down almost 85 per cent from the peak-rate of Rs 30 a minute prevalent till 1999.

So just what's driving down prices? "The technological revolution, drastic reduction in duties and intense global competition," answers B.B. Bhattacharya, Director of the Delhi-based Institute of Economic Growth. Even Budget 2003's tariff rationalisation works to the advantage of the consumer durables industry: the excise duty on airconditioners has been reduced from 32 per cent to 24 per cent and the customs duty on key components such as colour picture tubes and compressors has been brought down from 30 per cent to 25 per cent. "The custom duty on telecom equipment has come down drastically ," says Anil Jain, Head (Marketing), BSNL, by way of explaining the recent price-cuts. He's forgotten competition: BSNL's first price cut in domestic long-distance tariffs followed the entry of private competition, in the form of IndiaOne. The public sector TELCO still boasts a 75 per cent share of the domestic long-distance telephony market, but tariffs are now comparable to the global standard of between two and four times local call charges.

Volumes, a natural progression in a developing country like India, help too. "In the early- and mid-nineties the market for durables like air conditioners was minuscule. Now we have achieved economies of scale," explains K.J. Jawa, Vice President (Sales) Voltas.

PCs present a classic case where all three factors-reduction in tariffs, technological innovation and cut-throat competition-have been bringing down prices year after constant year. PCs built around Intel's p4 chip came with a price tag of around Rs 75,000 when they were launched in 2001. Today, they cost around Rs 35,000. "As we settle down and perfect processes, we drive down the cost of our own product as well as that of peripherals," says Amar Babu, General Manager (Sales), Intel India.

So, can Mr and Mrs Bharat expect a consistent fall in prices? "Not for too long," cautions IEG's Bhattacharya. "Tariffs (on import) of most consumer durables are already at a low." That may be the case, but the effects of technology and competition are likely to erode prices regularly. If you are a resident of Mumbai and still not convinced, call Delhi.

CHRONICLES
One Funeral And A Celebration

Both are, essentially, technology magazines that rode the new economy wave. Now, with the bubble long gone, one, Red Herring, has decided to down shutters-its March issue was its last. The other, Wired, however, reinvented itself sometime back. Now more a tech-, science-, lifestyle-, and workstyle-publication, it celebrated its tenth birthday in March. It has slimmed down some since its glory days, but we hope it is keeping fit.

D-DAY
Banks To Go Bust in 2006

If credit rating agency CRISIL forecasts doom in public-sector banks-didn't they show a small-but-significant 0.30 per cent increase in profits for the nine months ended December 2002 as compared to the 12 months ended March 31, 2002-there's sure to be a good explanation. The logic behind the rating agency's prediction that public sector banks will witness a 40 per cent drop in profitability by 2005-06 goes thus: Much of a bank's investments is in the form of government securities. And while yields on G-secs have fallen precipitously, interest rates on bank deposits haven't. By October 2002, says the CRISIL report, the interest rate offered by banks on a one-to-three year deposit was between 0.75 and 1 per cent higher than the yield on G-secs with a 7-10 year maturity. Since then banks have pruned interest rates on deposits to 6.5 per cent, but they continue to make incremental investments in G-secs at zero spread. Ergo, CRISIL expects a reduction in their interest income on investments. It's that simple.

-Roshni Jayakar

The Cost Of Shock And Awe
The impact of Gulf War II on the Indian economy.

Gulf War II: India is already feeling the heat

As this magazine goes to press, gulf war II has entered its sixth day, and looks good for more. The government of India and the two voices of Indian industry, Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry have ruled out any negative impact of the conflict on the economy but their sanguineness stems more from hope than factual knowledge. As Kirit Parikh, the Director of the Indira Gandhi Institute of Development Research puts it: ''We have been suffering from the war for the past six months.'' His reference is to the 15 per cent hike in oil prices since last September. At the onset of the war, on March 20, oil prices crashed by $3 (Rs 143.34) to a barrel on the hope of a quick victory. Now, with the possibility of that fading, they could increase to between $35 to $40 (Rs 1,672-1,911) a barrel. And coupled with higher freight charges India's oil import bill could swell by anything between $4 billion (Rs 19,112.8 crore) and $6 billion (Rs 28,669.2 crore)-something a country with a fragile fiscal situation can do without. Exports could suffer too. Rafeeque Ahmed, President, Federation of Indian Exporters Organisation claims that apart from not being able to export to Iraq and the Middle East, exporters will have to live with higher ''tariffs for shipments to Europe as ships will have to take a much longer route.'' And economists are rewriting their GDP estimates. ''We had predicted a GDP growth rate of 6.5 per cent,'' says Jiban K. Mukhopadhyay, Chief Economist, Tata Group, ''but are now lowering it to 6 per cent.'' Cost of War: 0.5 per cent off the GDP growth rate.

-Ashish Gupta

LICKS
Rolling With The Stones
ICICI Bank's K.V. Kamath wants telcos to unite.

Mick Jagger: A closer look

The stones will perform in Bangalore (April 11th) and Mumbai (14th). Here's why you should make the pilgrimage:

1. The Stones have such cute songs to their credit as ''Bitch'', ''StarF***er'' and ''C**ks****r Blues''.

2. Get a glimpse of a band that's regularly rubbed the law the wrong way, mostly for possession of mind-altering substances.

3. Find out whether the Rolling Stones' tongue-and-lip logo was actually inspired by Goddess Kali.

4. Find out whether Mick Jagger was really born way back in 1943. He terms his wrinkles ''laughter lines''. The good news is that with Rs 500 tickets you won't see them.

-Brian Carvalho