This budget was presented at a time when overall growth had fallen to a decade low, there were pressures on both the fiscal side and the external account, inflation was far from under control and investments were drying up.
In such circumstances the sensible thing to do is to be "responsible". That is what finance minister P Chidambaram — caught between a rock (high fiscal deficit) and a hard place (a runaway current account deficit) — has tried to do; create a "responsible budget".
Sops for the farmer, some incentives to save for the aam aadmi and a few positives for the entrepreneur, particularly those from the small and medium-size segments.
What is commendable is the minister's ability to steer clear of the trade-off between growth and equity while addressing the most critical economic challenges India is facing.
After the GDP shocker of 4.5% for the third quarter, the challenge to get the growth rate up between 6.1% and 6.7% looks like a uphill task. The fine print of the budget suggests that receipts will come — Rs. 40,000 crore from telecom spectrum sales, which looks aggressive, Rs. 58,800 crore from disinvestment and Rs. 18,000 crore from direct and indirect taxes.
The balance, Rs. 1 lakh crore, will come from increase in tax revenue due to higher growth, which in effect means about 19-20% growth in tax revenues, suggesting that the economic growth assumption is about 6.5-7%, which looks rather difficult. Without growth at a 6.5% level achieving the fiscal deficit target of 4.8% is a challenge.
In the process of balancing such diverse needs, the finance minister has not lost the plot.