With the Economic Survey suggesting "big bang" reforms, expectations run high on the national budget due Saturday, in an exercise being regarded as a test-case for the Narendra Modi government's earnestness to provide policies for "double-digit growth".
"As the new government is to present its first full year budget, it appears India has reached a sweet spot and that there is a scope for big bang reforms now," the survey, tabled by finance minister Arun Jaitley said, setting, in a way, the agenda for this annual exercise.
This will be Jaitley's second annual budget, with the first one coming in the middle of the year after a major victory in the national elections for the Bharatiya Janata Party (BJP). In a way, the finance minister then had himself raised expectations from his second budget due Saturday.
"The steps that I will announce in this budget are only the beginning of a journey towards a sustained growth of 7-8% or above within the next 3-4 years along with macro-economic stabilisation," Jaitley had said in his budget speech delivered July 10.
"Therefore, it would not be wise to expect everything that can be done or must be done to be in the first budget presented within forty-five days of the formation of this government," he said, alluding that he intended to undertake a more comprehensive exercise in the upcoming budget.
Like in the past, the finance ministry has been bombarded with suggestions and expectations from a cross-section of stakeholders, from the corporate sector to individual tax payers, on topics ranging from fiscal discipline and subsidy cuts to concessions in direct and indirect taxes.
To begin with, attention will focus on whether Jaitley has managed to keep the fiscal deficit at the budgeted 4.1% of GDP which he had termed as a difficult target set by his predecesor. The gauge will also be on how much further he intends to bring the deficit down - and how.
The minister will also have his task cut out by the additional burden imposed by the 14th Finance Commission in terms of a 10% hike in the states' share of central taxes, the highest since 1978. This means a whopping Rs 348,000 crore payout in 2014-15 and Rs 526,000 crore in 2015-16.
The government's annual report card on the economy, released on the eve of the Union budget, said growth rate of over 8% is expected in the coming year, and that it can even rise to double-digit levels with the right policy push and reforms.
Indicating towards Saturday's budget, the survey said the country can balance short-term boosting of public investment for economic growth along with "fiscal discipline".
Over the medium-term, India must adhere to the medium-term fiscal deficit target of 3% of gross domestic product (GDP), the survey said.
Major legislation to effect various pieces of reform tabled by the NDA government in Parliament in the ongoing budget session include the contentious ones amending the land acquisition act and for raising the foreign equity limit in the insurance sector.