Don't expect major announcements in Interim Budget

Finance minister P Chidambaram may dole out some sops while doing a tightrope walk to keep the fiscal deficit under check when he presents the interim budget for 2014-15 in Parliament tomorrow ahead of the Lok Sabha elections.

Along with the budget, he will present a vote-on-account to seek Parliament's sanction for spending till July.

By tradition, the interim budget does not contain proposals seeking to tinker with direct taxes, nor are there any policy announcements, although there may be some sops for the common man and sectors that need help.

Earlier, Chidambaram had indicated he may tweak excise duties and service tax rates in the interim budget in an apparent bid to boost the economy, but he may not pursue key reform legislation due to lack of political consensus.

"In 2004, Mr Jaswant Singh made a 12-page speech. In 2009, Mr Mukherjee made an 18-page speech. So I have two numbers to choose from between 12 to 18. We can make any proposal short of amending any law.

"We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But any proposal short of amending a law can be made. We can also outline a vision for the future," he had said.

It would be interesting to see if Chidambaram continues with the super-rich tax in 2014-15 as well, but indications are he may choose not to since it would need amendment of the law.

In the last Budget, the government imposed a 10 per cent surcharge for a year (2013-14 fiscal) on people earning income above Rs 1 crore. It covered 42,800 individuals and entities.

The minister is expected to use the opportunity to highlight the achievements of the UPA-II government and focus on how the government has been able to contain the fiscal deficit and the current account deficit (CAD), notwithstanding the difficult global situation.

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