Highly placed sources told PTI that the Budget may also fix higher disinvestment target of Rs 25,000 crore as most of the bottlenecks in this effort have now been removed.

Though the BJP-led NDA government has committed itself to pushing forward tax reforms, it might have to wait another year in the face of the earthquake. But rationalisation in some areas, particularly in indirect taxes, would be attempted this year, sources said.

When pointed out that Finance Minister Yashwant Sinha had already indicated that there would be a direct tax package, the sources said they did not see any scope except in the case of lowering or reducing of 20 per cent dividend tax, which could perhaps "satisfy" the industry. The sources said that the average import tariffs would, however, be lowered further this year from the present 34 per cent, in a bid to move towards the Asian levels of 12 per cent. Customs duty on farm products were likely to be raised to provide "psychological comfort" to Indian farmers who could face dumping with the total dismantling of Quantitative Restrictions from April 1 this year. When pointed out that disinvestment targets in the past have not been achieved, the sources said that now the situation was different as the country has reached a "take-off" stage for big ticket disinvestment, ie, privatisation of PSUs in non-strategic areas.

But, the sources said, the receipts would have to be used to retire debt as more than half of country's fiscal deficit of Rs 1,11,000 crore went to meet the interest burden.

The Government had no choice but to step up revenue mobilisation efforts, more so in the face of the Gujarat earthquake, as fiscal deficit had doubled from Rs 55,000 crore to Rs 1,11,000 crore in five years.

Expenditure control, downsizing of government, cutting down on subsidies, cross subsidisation of railway fares, abysmally low tution fees for higher education are some of the reform issues that might be addressed in the Budget.

Social infrastructure and development of agriculture are likely to get special attention in the Budget by providing incentives for private sector participation besides apportioning more resources to these sectors, the sources said.

In a bid to prepare the economy to face competition in the post-WTO regime, the sources said, incentives might be provided in the Budget for technological upgradation and research and development.