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When the Finance Minister presumed that growth was a given, the Central Statistical Organisation has revised down GDP growth from above 9 per cent levels to 8.7 per cent. The Finance Minister, in his last full-fledged Budget before the elections, has to do a balancing act of sustaining growth and yielding to populist demands and coalition partners.

Mr Chidambaram would tend to allocate more funds towards social sectors, such as agriculture, rural employment, etc.

Though these sectors are critical for growth, mere allocation will not help. The Government should strengthen the micro-credit mechanism so that the resources reach the poor and there is an increase in agrarian incomes.

A tracking mechanism, similar to the Outcome Budget, could be put in place to assess the effectiveness of the schemes. This would lead to better farm output and ease pressure on inflation which is, again, showing signs of upward movement.

The Finance Minister, instead of lowering taxes, should scrap the surcharge, and cess that are brought in normally for a limited period.

The Fringe Benefit Tax, which is based on notional expenditure, should be removed. Dividend distribution tax should be reduced. These measures would give big relief to the corporates.

On the individual front, instead of having different exemption limits for women and aged, a single enhanced exemption limit should be brought in, as gender disparities have been greatly reduced.

The Finance Minister had promised earlier a simplified direct taxation Bill which should be tabled before Parliament and approved before the term of the Government.

He should give a thrust for the implementation of GST in the country by 2010 and empower the State-level committee to prepare a detailed roadmap for implementation.

P. Prasanth Associate GM, Finance GMR Group

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