Just before P Chid­ambaram assumed off­ice as finance minister in the month of August 2012, there were lot of uncertainties in all fronts, raising inflation, fall in the value of rupee, slowdown in the economy, steep fall in exports, huge deficit in balance of payments, fall in FDI, global uncertainties, uncertain tax policies because of retrospective amendments, uncertain fiscal policies i.e. government expecting rate reduction and RBI not convinced about interest rate reduction etc. Over and above internal uncertainties, ext­ernal environment were also very gloomy. Under these circumstances, when he took over as finance minister again he promised stable tax and fiscal policies. We have seen interest rates has started to come down, FDI started flowing in to India, rupee started strengthening and stock markets shown some signs of recovery.

As rightly told by the finance minister the immediate goal is higher growth leading to inclusive and sustainable development. That is the mool mantra. The purpose of the budget and job of the finance minister is to create the economic space and find the resources to achieve the socio-economic objectives. At present, the economic space is constrained because of a high fiscal deficit; reliance on foreign inflows to finance the current account deficit, lower savings and lower investment, a tight monetary policy to contain inflation and strong external headwinds. Hence, the task was not simple and it was double-edged. With the prevailing economic scenario, he constrained to increase revenues. By imposing taxes then it will have negative impact on the economy, which is already stressed. And he cannot reduce taxes since lot is going to be spent on development activities to stimulate the economy.

Even though he could not provide many measures to stimulate the economy, at least, continuing the tax and fiscal policies will not do any greater damage to the present state of affairs. Whatever increase in taxes has been proposed by way of levying surcharge will be offset by the companies taking advantage of investment allowances provided in the budget. He mentioned revival of investment in the industrial sector, especially manufacturing, it is a key challenge, because many projects are stalled, as they are unable to clear regulatory hurdles. The cabinet committee on investment has been set up to monitor investment proposals as well as projects under implementation, including stalled projects, and guide decision-making in order to remove bottlenecks and quicken the pace of implementation.

Many analysts and financial experts comment that this budget is a non-event, since it does not contain any stimulation to kickstart the economy, but I feel nothing can be done more than what he has done.