In a few hours from now, all eyes will be on the Finance Minister Pranab Mukherjee as he presents the Union Budget 2011. Last year's Budget was presented by a newly re-elected government with the global economic slowdown knocking on the doors. Little wonder then that it was painted in a decidedly socialistic hue.
This time around though, the focus should be different. With economic growth no longer a worry, it is time to start rolling back the stimulus package. Certainly, the Economic survey points in that direction . It will help contain the burgeoning fiscal deficit and slowly move us towards the target of 3% of the GDP in the next four years. Inflation in food prices also needs urgent attention. Closely linked is the question of government control over food prices. In any case, the benefit from such indirect subsidies remains doubtful. Another area that will be keenly watched is the freeing of fuel prices. Recently the Kirit Parikh committee recommended such a move, but nothing has happened on that front.
Then there will be expectations on the direct tax structure – the exemption limits, the deductions on investment and specific sops for various industries. Changes in indirect taxes and their impact will also be keenly awaited.
But what are even more important for the long term are policy announcements relating to education and infrastructure. The Economic Survey has pointed out the worrying pace of execution in road and power projects, which should also figure in the budget speech. There will also be expectations on the reforms front. From auction of 3G spectrum to investment in the insurance sector. From increased participation in the retail sector to public sector disinvestment. As mentioned earlier, the government was just settling down during last year's budget. In the previous term, the presence of the Left parties in the coalition put limitations on the government. No such excuses apply this time.
Given the space in which the government finds itself and given that the Union Budget is its main policy document for the year, it is natural to have great expectations from the announcements today. We hope they will come through and even more importantly, will be implemented thereafter.