Mr Jaswant Singh was the reluctant finance minister. So, as might be expected when enthusiasm is lacking, and although his speech went on for over two hours, he has actually produced a minimalist Budget.

However, even if he had been brimming over with zeal, it is unlikely that he could have produced anything very different.

The reason is that this year's Budget was framed in the context of six major factors.

First, for a variety of well-known reasons, Mr Singh had to make it 'nice'. That meant fewer complications and a clear focus, with a few objectives that are immediately achievable.

It also meant raising the disposable incomes of the taxpaying classes by adjusting the rates and exemptions in a manner that was politically acceptable. These objectives have been generally achieved, in spite of the increase in service tax from 5 to 8 per cent and a wider coverage, not to mention the cess on diesel and petrol.

Second, whether one takes it with a pinch of salt or not, there was the proclaimed poor agricultural growth. Combine this with the need to keep voters happy and it was logical that the Budget would pump in money into agriculture.

If one recalls, the Budgets for 1988 and 1996 had done the same thing. Mr Singh, although he has tried to increase the price of fertiliser slightly to reduce the subsidies, has announced major plans for investment and for increasing the business opportunities in value-added farming like horticulture.

But, third, public finances are in a mess and the combined fiscal deficit of the central and state governments has grown to almost 10 per cent of GDP.

Interest on past debt has become a major problem, so borrowing is a problem and this is reflected in the government's borrowing programme for next year.

It ought, perhaps, have been a bit more ambitious to finance a large investment plan. But he has chosen the path of prudence. The continuing cuts in interest rates, especially small savings ought to help, however.

However, fourth, in spite of all the inducements and incentives, private investment was not growing. So the government had to step up public sector investment, if necessary through increased borrowing. The timidity that Mr Singh has shown here is a little disappointing.

Nevertheless, Mr Singh has tried to improve the business environment by cutting excise and customs duties. This should sustain the fledgling revival in industry.

Fifth, on the excise duty front, with the states agreeing to implement VAT, Mr Singh has had to do a lot less now on rate adjustments. The sigh of relief from industry was loud and clear.

Sixth, the customs duty structure was in need of rationalisation and the Kelkar Report had said that the multiplicity of levies must be reduced.

Accordingly, it had recommended that only three types of duties -- basic, countervailing and anti-dumping, with all other duties being removed. This has been done but not to the extent required.

Obviously, lobby pressure has been at work. But the reduction of the peak rate to 25 per cent is a step in the right direction and needs to be sustained.

A neglected aspect of the Kelkar recommendations was the tax collection mechanism. It is good to see that Mr Singh has done something to simplify it. He has announced many important initiatives but it remains to be seen if the vested interests in the tax departments will allow the simplification to happen.

From a purely macroeconomic view, the Budget is designed to give a boost to investment, which has been lagging badly for the last 6 years. Indeed, India has now the dubious distinction of its savings rate exceeding its investment rate, doubtless a first for a developing country.

The massive expenditure that is planned on infrastructure was long overdue and even if there are worries over the capacity of the government to spend this money, the idea of fostering a partnership with the private sector should help.

Much, however, is going to depend on the speed with which investment plans are cleared and begin to be executed.

One of the major worries in recent years has been the rapidly worsening fiscal situation of the states.

The debt reduction initiatives announced by Mr Singh, if they go according to plan, will make a major difference. No care, however, has been taken to ensure that after availing of all this, the states do begin to observe fiscal discipline.

The announcements in respect of the banking sector should help the weaker banks to regain their balance. But a great deal more needs to be done to invite more foreign investment in public sector banks, and not private sector ones alone. This is politically difficult but will have to be attempted some time soon.

In sum, the Budget is no more or no less than what was expected. There will, as usual, be some aggrieved parties. But on an overall view, the fact that it has left people less angry than they were till now and that it has genuinely attempted to improve the business environment will prove useful in the medium term.

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