Post-Bud­get Dis­so­nance Blues

The Economic Times - - Breaking Ideas Weak Fdi Flows - Ambi Parameswaran

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-Build­

Be­fore, after, doesn’t mat­ter, shop till you drop

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