Post-Budget Dissonance Blues
Thursday’s newspapers were filled with nothing else but the news about Union Budget 2017 and analyses of various shades. All kinds of experts were waxing eloquent about how it was a wonderful exercise in continuity and stability. Some newspapers and television channels got B-school students, homemakers, traders and taxi drivers to share their opinions.
The Opposition, as they are wont to doing, were lamenting about the ‘missed opportunity’. And industry leaders were cautious to optimistic, ecstatic to tempered in their comments.
As I went through the numerous reports, I felt that I was missing something. The news and the bits and pieces were not satisfying enough. What was I missing? I could not put my finger on it. None of the reports spoke about my ‘missing piece’.
My doubts continued as I pored over the changes in personal income-tax rates, the huge spends planned on infrastructure, the abolishment of the Foreign Investment Promotional Board, the digital economy drive, the push to the Indian Railway Catering and Tourism Corporation. But I was missing something still.
Then it struck me how this Budget was a tame affair compared to the high drama that Union Budgets of the past used to evoke for the common man, the trading class and the manufacturing majors.
Not so long ago, we used to watch the Union Budget telecast to figure out what we should buy immediately after the Budget and what we should postpone. Yes, the excise duty on colour televisions are going up. Let us quickly junk our old one and buy a new one. Excise duty on cars is heading south. Let us wait a bit before we sell our old one.
Every year, duties and taxes on mundane items like electric irons and shampoos, mixers and bulbs, headache pills and skin creams used to yo-yo: up one year, down the next. I remember reading how in Budget 1992 when excise duty on washing machines were cut from 65% to15%, the Opposition benches lamented that millions of poor women who found employment as maids washing clothes for affluent households would lose their livelihood. It was Prime Minister P V Narasimha Rao who intervened in the debate to say, “Do you want our country to be a country of maids?”
In hundreds of categories, the duty roulette used to make companies hide for cover. If excise duty went up, the trade demanded that the company supply stocks with the old excise duty as long as possible. And they were happy to start selling old stocks at new prices.
If excise duty went down, trade demanded the company compensate them for the stock they had on hand at the old duty. The argument was that consumers, being very knowledgable, will not buy products with the old higher duty. Some smart companies used to even bring out ads in February that guaranteed prices irrespective of excise duty changes. I remember a car manufacturer that had punted that duty on cars were heading down and offered ‘Post-Budget Prices PreBudget’. The ad said that you can buy the car now and if the duty went down, the company will refund you the difference.
It was in the late 1950s that social psychologist Leon Festinger proposed his ‘Theory of Cognitive Dissonance’. Since then, it has become part of all consumer behaviour textbooks. The theory says that we humans try to balance out the internal dissonance and this leads to certain types of behaviour.
For example, if you bought a Brand X car, you tend to view its ads more carefully and speak positively about it to everyone you meet. And chances are you will also get a letter from the managing director of your car company ‘congratulating’ you on your wonderful choice. All these help reduce consumer’s post-purchase dissonance.
In the years gone by, the annual Budget show used to create its own share of post-purchase dissonance in a consumer who may have been perfectly happy otherwise. Oh, I wish I had not bought the mixergrinder in January. Oh, I wish I had bought the mixer-grinder in January. And so forth.
Compared to those days of high drama when consumers used to look at the line items of duties to decide what to buy immediately and what to buy after a wait, this Budget did not create any major cognitive dissonance in buyers of products. So, in a sense, it was a tame affair.
As I was wondering if the goods and services tax (GST) roll-out will create a new arena for excitement, I was told that moves are afoot to ensure that GST will bring in an era of stable duties and taxes. Now I’m suffering from post-Budget absence of dissonance blues.
I’m thankful that the Budget is no longer a debate on the duties of electric irons and skin creams. May those Budgets of the past days never return.
The writer is founder, Brand-Building.com
Before, after, doesn’t matter, shop till you drop