22 January, 2012

Shampoo for lunch

It must have happened to you too. Standing in a long checkout line in an Indian "supermarket". Rajalakshmi , in front of you, has 742 items to bill. You wait patiently (as if you can do anything else). The bloke behind you is poking at your spine as he wills you to advance. Rajalakshmi is intently watching the  amount totalling up on the display. It now stands at Rs 3742.50. After 18.5 minutes when all the 742 items have been billed (and not one second before), she digs into her purse and comes out with three fat wads of Sodexho coupons. All in denominations of Rs 5. And then proceeds to count them out laboriously. Being mathematically challenged, each time, she comes up with a different answer. 14 minutes later she discovers that she is Rs 5 short in coupons. She then proceeds to dig in to packed bags, go to the bottom, remove an item and ask the checkout guy to deduct that from the bill. She is now Rs 7 excess. She wants change back. He refuses ........You can do precious little but curse at the injustice in the world.

Forget Foreign Direct Investment. The biggest change required in Indian retail is the banning of Sodexho coupons. I don't mind Walmart not being there. I just want Sodexho to disappear.

For those unfamiliar with the Sodexho problem in India, this is a by product of feeding the thousands of coders who throng Indian cities. The office canteen providing free meals was always a part of the corporate landscape. But when the IT lot descended on the scene, they brought with them the Sodexho coupon. Each employee is given a thick wad of these blasted coupons. She's supposed to exchange them when buying lunch . Of course she does no such thing -she either starves, or has a banana or brings a tiffin box. Saves these coupons which then can be used to buy grocery in shops.

This is tax evasion on a grand scale by the relatively well to do. Food coupons are tax exempt with the ostensibly laudable objective of feeding Rajalakshmis. They are meant to be used to buy food when in office. Not to buy toilet paper for home. By Indian standards, coders are well paid. Their effective rate of taxation is usually low at 10 or 20%. This is blatant tax evasion which everybody indulges in. Before throwing mud at politicians, one should ensure that one's own shirt is white.

The problem has grown into an epidemic. Apparently there are 300,000 people using Sodexho coupons like this. Nobody knows the value , but the speculation is some Rs 3000 crores. This is parallel currency sloshing around along with the rupee. I have sometimes been offered these coupons as change. The look I give the retailer who suggests this, gives meaning to the term kolaveri !

Pre budget consultations are currently going on in India. Here's a free suggestion to the Hon'ble Pranab Mukherjee. Remove the tax exemption on Sodexho coupons. And just watch them disappearing at lightning speed. I shall cheer mightily if Dada would do that.

18 comments:

Shachi said...

I had never heard of these coupons....yes I agree they should either be taxed or be prevented in being used any other way.

Love love your blog!

Asha said...

I was nodding as i was reading the first few paras..

Agree with you on the discomfort posed by sodexho and accor, now many companies have replaced them with prepaid food swipe card.

Ramesh said...

@Shachi - Oh - you must have left India before these started. They are ubiquitous. Thanks for the kind words.

@Asha - Can't see evidence of the swipe card taking over judging by the number of coupons floating around in my locality.

gils said...

hahahaa..another sodexho baiter :D :D i dont mind giving sodexho to the counter but getting it as change in return bugs me off.

Appu said...

Why this kolaveri on sodexo??
0)Sodexho has become Sodexo.
1)Coders are not that well paid. at least not in indian service companies.
2)Shops don't give back change for sodexo coupons. say if you give 100 and the bill was 90, the shop guy will never give back the ten. At least not outside office premises
3)Many shops charge a service charge of 3% for sodexo coupons
4)Many shops say minimum of 200 to use sodexo. [I have been irritated with such rule]
5)Many shops do insist that they will accept sodexo only for food items but not on others.
I am really surprised retailers give back that as change!!!
You can even swap Sodexo coupons for cash with some percent[3-5%] deducted as charge ;) ;)

Ramesh said...

@Gils - :)

@Zeno - Just goes to show how outdated I am. Hadn't kept track of Sodexo's change of name. All your points are true, but why not use the coupon to eat lunch :)

Appu said...

Good question
Me the single guy used sodexo for breakfast,lunch,snacks and dinner in oppice.You at least have some idea how i look and is directly proportional to how much i eat. Hence i used to have too much of sodexo even after eating I did not use it outside as Chennai hotels which accept sodexo are tad expensive(lowly paid coder you see) hence the no choice but to use sodexo to buy shampoo :) [I was lucky to have a shop which will accept even 5 rupee sodexo with out charge]

Appu said...

Recently in Bangalore, some shops stopped accepting sodexo coupons. Since you mentioned a word called parallel currency, here we go with the link ;) http://www.forbes.com/sites/georgeanders/2012/01/20/is-facebook-a-central-bank-too/
you might have already read it :)

Ramesh said...

@Zeno - As always, I am amazed at the breadth of your reading !

RamMmm said...

Ahem to Asha, my company switched to a Visa card for food coupons. :-) :-) You can only buy grocs with it, no withdrawal of cash. Happy, happy! :-) Nothing beats the smell of money (fresh mint notes), maybe Sodexo coupons for the rest. :-)

Ramesh said...

@RamMmm - Crisp notes disappeared long ago, alas. Agree that there's nothing to beat that touch and smell.

rads said...

I thought sodexho coupons were a part of salary, I mean they're not free...and yes employers only accept them for tax exemption reasons, and they do use them for lunch as far as i've seen...and no coders are not the well to do or well paid even by Indian standards...but i guess i understand your irritation with the supermarket queues, reminds me of food world.

Sandhya Sriram said...

I was ROTFL on Sunday when i read this post because i had just completed shopping slightly lesser than 742 items at hyper city and billed for slightly less than 18.5 Minutes. b.t.w i didnt pay through sodexo, ok ;-)

I agree with all that you have stated. but do you think it is required to add one more 8th proviso to sub section 125 to section 566 on the already complex Income Tax Act to take care of some 3000 Rs per month that poor Rajalakshmi spends.

Let it be Ramesh. Let Mr. Pranab Mukherjee spend 0.001% of time and energy invested in operationalizing the provision and plugging the loop holes in raiding a few high profile politicians and make that 900 Crores that he will add to the exchequer by taxing the sodexho coupons.

Ramesh said...

@Rads - Come back and shop at Food World . Nowadays there are 10 other similar guys. Thankfully, no Walmart as yet !!

@Sandhya - Yeah - we can be magnanimous, but then Rajalakshmi is throughly undeserving of tax breaks. The real poor gets nothing. Madam R, is actually counted among the rich - relatively in India.

Vishal said...

Had always wondered Ramesh on this sodexho coupon thing. Now, I get the rationale and REAL idea behind this. I have seen companies offering these coupons just as compensation component. They do not even realize if at all there are places to eat nearby office where these coupons could actually be redeemed. Makes no sense honestly and all the more difficult to keep track of - kind of the cash which govt. can hardly control.

Actually, it is easy to do away with 0.000001% of time by Pranab da and especially when suggested by you :) On the other side, just imagine the PAN requirements of landlord from employees for rental above 15K p.m. and how govt. intends to bring something to its kitty... I have huge doubts there!

Ramesh said...

@Vishal - Oh companies know this use very well and its all a nice collusion of tax avoidance.

THe PAN requirement and TDS rules in India are a joke. No sane individual can follow this - only corporates can attempt to do so.

Reflections said...

Hahahahaaaaa.....I was guffawing my way thru this....u see my sister gets these Sodexo coupons but since she takes a dabba to work[outside food doesnt agree with her] she gives them to my mom. And my mom now sounds just like Rajalakshmi, mathematically challenged and all;-D.
Earlier we used to get so impatient with her when she insists on counting her money 2-3 times, etc, we'd be giving the people standing behind apologetic looks & then swear on everything holy never to go shopping for groceries with her again;-D. Now I miss all tht;-(.

I know I didnt say anything abt the issue u addressed;-D

Ramesh said...

@Reflections - N's mom exempted from all insinuations on the grounds that her daughter brings so much cheer to the blog world :)