It is within this broad framework that the Union Budget for the year has been drawn up. For the specific purpose of the Budget, the Finance Minister set for himself 12 goals, which are:

It is within this ambit that the Budget proposals will have to be seen, the over-arching thought of course being that by the time the formalities of the House debate, etc, are over and the Finance Bill is passed, not more than six months will remain for implementation of the measures contained in the 2004-2005 Budget document.

As the Finance Minister himself said in his speech: "The UPA Government began its journey in May this year. However, I may note that one-quarter of the year has elapsed and, by the time the Budget is passed and the President gives his assent to the Finance Bill, nearly one-half of the year will be over... The Government has to shift gears; and even if we are able to do so quickly, it would leave us only about six months to achieve our objectives for this year."

Apart from the tax proposals which, if passed by the House, will necessarily take effect till the end of the current financial year, the Finance Minister has indicated several policy measures entailing specific levels of expenditure which will have to be completed by March 31 if they are to be described later as being successful.

The track record of nearly every past Government regarding project implementation has been far from immaculate, and there is no reason to expect that the UPA regime will be a pleasant exception to the rule. Even so, the right noises for effective implementation of such projects have been made by the Finance Minister in his speech. For example, on the new Food-for-Work Programme in 150 districts "classified as most backward and identified as areas in immediate need of such a programme", he said that "Special care will be taken in laying down the guidelines for the programme so that the money and labour expended result in durable and visible assets benefiting the whole community".

As far as tax proposals are concerned, five stand out because of their novelty, scope and the impact they will have on the lives of average citizens. The first is of course the waiving of any income-tax obligation for those with a "taxable income of Rs 1,00,000". This proposal will take as many as 14 million assessees out of a total of 27 million taxable assessees, that is, nearly 52 per cent, out of the tax net. In particular, the political spin-off of the move could be impressive, specially in view of the forthcoming State Assembly elections. Secondly, tractors, dairy machinery and hand tools like "spades, shovels, sickles, etc" (all hitherto attracting 16 per cent excise) have been fully exempt from any levy, which is a direct and substantial incentive to the farm sector.

Thirdly, the full excise exemption granted to computers which now attract an 8 per cent duty should lead to a fall in prices, which, in turn, should constitute a substantial fillip to the IT sector.

Fourthly, the increase in the service tax rate from 8 per cent to 10 per cent and the addition of some more services to the existing list of 58 should lead to an across-the-board increase in the cost of living of the average citizen, which is no doubt worrisome generally speaking but which perhaps is also unavoidable from the Finance Minister's point of view considering the fact that the services sector accounts for as much as 51 per cent of GDP.

Lastly, there is the 2 per cent education cess on all taxes, mandated by the NCMP, which will garner "about Rs 4,000-Rs 5,000 crore in a full year", the most acceptable part of the exercise being the assurance given by the Finance Minister that "The whole of the amount collected as cess will be earmarked for education, which will naturally include providing a nutritious cooked midday meal".

On the policy front, there are three spheres where the Congress(I) — to which the Finance Minister currently belongs — has made a splash, which is bound to set off ripples which could have (though not necessarily) a far-reaching impact on intra-UPA relations, mainly involving the Left constituents.

The first of these is of course the proposal to raise the foreign direct investment cap in telecommunications (from 49 per cent to 74 per cent), civil aviation (40 per cent to 49 per cent), and insurance (26 per cent to 49 per cent).

The Finance Minister has taken refuge behind the NCMP which says that FDI "will continue to be encouraged and actively sought, particularly in areas of infrastructure, high technology and exports", a cover which is bound to come under strain if the Left makes a hue and cry over the proposal during the Budget debate.

Secondly, there is the public sector disinvestment issue, the Finance Minister proposing that the Government would disinvest around 5 per cent of its holding in NTPC, which has already filed a prospectus with SEBI to raise capital through a public issue.

The Finance Minister has tried to sugarcoat this proposal by making announcements on Central assistance to public sector enterprises, on the setting up of a Board for Reconstruction of Public Sector Enterprises, and on restructuring PSEs. It would be surprising if the Left parties within the UPA bit the bait. Even so, the point remains that the Congress(I) has probably done the right thing by stepping up the level of discussion on the vexed subject using the plank that the Government is "deeply committed ...to a strong and effective public sector operating in a competitive environment".

The point has also been made rather bluntly that "Disinvestment and privatisation are useful economic tools. We will selectively employ these tools, consistent with the declared policy".

The third policy decision which the UPA Government has proposed in the Budget is an amendment to the Fiscal Responsibility and Budget Management Act, 2003, which would increase the time limit (from 2007-2008 to 2008-2009) within which the Central Government's revenue deficit will have to be wiped out, as stipulated under the Act.

The Finance Minister's argument is that the extended time period would represent a "more credible terminal year" because it would be coterminus with the life of the UPA Government. The logic is easily accepted but the bottomline is that an extra year would make an almost impossible job a trifle more manageable.

However, considering the vast expanse of the ocean of fiscal profligacy confronting the nation, that extra year may not produce much by way of concrete long-term results.

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