In last lap, the poll vault

The UPA8217;s unprecedented budgetary allocation to welfare had its leaders meekly approving of these measures even while expressing their token disappointment over the 8220;liberalization thrust of the government.8221;

After it was tabled in Parliament, Prime Minister Manmohan Singh commended the Budget and referred to the farm loan waiver as 8220;unorthodox8221; but 8220;fully justified8221; given the growing need to alleviate the anguish of distressed farmers, the 8220;biggest businessmen in the country.8221;

Congress leaders lost no time in emphasizing the point that such increase in allocation to UPA8217;s flagship schemes and the agriculture sector is funded by growth sustained by liberalization. Union Finance Minister P Chidambaram said the debt waiver scheme was an expression of gratitude to Indian farmers and would trigger further economic expansion by creating new demands.

Saying he was confident that India8217;s growth story would continue, Chidambaram said containing price pressures was a cornerstone of the government8217;s policy, adding: 8220;Management of the supply side of food articles will be the most crucial task in the ensuing year.8221;

While he stuck to fiscal goals and pledged to keep inflation under control 8212; his biggest headache 8212; he pledged higher spending on health and education. Data on Friday showed annual wholesale price inflation in mid-February jumped to an eight-month high of 4.89.

Chidambaram pledged reforms in coal and power, and said financial sector reforms would continue, including developing a market for exchange-traded currency and interest rate futures.

High capital inflows last year complicated monetary policy by pushing the rupee up against the dollar, and Chidambaram said in the long term the economy must be able to absorb more capital.

Even as he increased outlays on social sector projects, especially in health, education and rural development, Chidambaram set a fiscal deficit target of 2.5 of Gross Domestic Product for 2008-09, a full 50 basis points lower than the 3 per cent enshrined in the Fiscal Responsibility and Budget Management Act.

This leaves the government with 8220;headroom8221; if more borrowing was needed 8212; especially since the Finance Minister said the Sixth Pay Commission8217;s report is expected by the end of March.

While headline corporate taxes were left untouched, the Budget sought to spur manufacturing and consumption by dropping the CENVAT rate on all goods from 16 to 14 and cutting excise duties on small cars, two and three-wheelers and buses. To boost the services sector that now contributes 55 of the GDP, the FM hiked by a quarter the tax-exempt income limit on small services players and allowed them to amortise preliminary business expenses.

However, the bellwether stock market index, the BSE Sensex wasn8217;t exactly favourable in its verdict, ending 245 points or 1.38 down at the close of trading hours. But that stems largely from the increase in short-term capital gain tax to 15 per cent, the same level as the dividend distribution tax 8212; a move that removes an obvious disincentive for long-term investors.

Apart from reaching out to the farmers, the rural poor and the salaried class, the Budget also reached out to minorities, Scheduled Castes and Tribes, backward classes, the youth and the homeless.