Budget 2009-10 was long on promises, but as the UPA government?s response to the most difficult year for the Indian economy in a decade, it fell short on action.

The finance minister eschewed politically sensitive topics like setting a disinvestment target, but held out the promise that all public sector companies would have to tap the stock markets more.

Similarly, he set up an expert committee to advise the government on a sustainable system of pricing petroleum products without acting on the suggestions in the Economic Survey. And, even as he set a fiscal deficit target of 6.8% ? the highest in 16 years?he said the government remained committed to fiscal prudence and would act on the recommendations of the 13th Finance Commission due in October.

Mukherjee?s stimulus package for the economy too was rather limited at just Rs 60,000 crore, about 6% of total government spending for 2009-10. ?A single Budget speech cannot solve all our problems, nor is the Union Budget the only instrument to do so,? he said.

The minister?s arithmetic is, instead, based on the presumption that increased private consumption would help sprout ?green shoots? of economic recovery. So the much-reviled fringe-benefit tax now stands scrapped and the 10% surcharge on personal income tax has been done away with, even as taxable income thresholds have been raised. He also decided to retain service tax and excise duty rates at the levels slashed to in earlier stimulus packages ? a move that would help industry to keep prices low.

Mukherjee will still end 2009-10 with an unprecedented Rs 10,20,880 crore in government expenditure, but an almost flat tax revenue projection of 2% over the revised estimates. Compared with the budget estimate of 2008-09, there is a decline in revenue of 6%.

So, with allies like the DMK and the Trinamool Congress replacing the Left parties as the UPA?s ?anti-reform? brigade, Mukherjee, a self-confessed gardening enthusiast, had to remain content with planting the seeds of gradual change in India?s economic landscape. And just as chief economic adviser Arvind Virmani said that the radical reform ideas in the Economic Survey for 2008-09 are to be considered over a five-year period rather than in a

single annual exercise, Mukherjee?s first Budget in the UPA?s second innings was more about intent for this ?five-year journey? as he stressed right in the beginning of his speech.

Finance secretary Ashok Chawla, speaking at a post-Budget press conference, attributed the slide in the BSE Sensex to marketmen driving themselves ?into a frenzy? over what the Budget might contain. Virmani said, ?The surge in the fiscal deficit is by itself the biggest economic stimulus for industry. That we have allowed the deficit to soar from 2.7% in 2007-08 to 6.8% in 2009-10 is because private investment has been dipping. The rise in public spending and the reduction in taxes should help increase private consumption.?

While the Budget itself steered clear of too many grand reforms, Chawla said that in the medium term, the government would be working towards implementing the laundry list of reforms contained in the Economic Survey. ?The Survey may be the vision and dream of economists advising the finance minister, but their views are also part of the ministry?s view,? he said. Introducing a new chapter on challenges, policy response and medium-term prospects, the Survey had mooted far-reaching reforms across sectors the best medium-term response to the global financial crisis.

Mukherjee expressed the hope that India would return to a 9% growth rate by 2011-12, by when his officials expect to rein in the fiscal deficit to 4% of GDP. But given the constraints this year, the Budget still paid reasonable lip service to social sector and infrastructure spends. The Jawaharlal Nehru National Urban Renewal Mission got an 87% jump in allocation; expenditure in the Accelerated Power Development Reform Programme was upped 160%. Allocations to the National Rural Employment Guarantee Scheme were increased by 144%, Indira Awas Yojana by 63% and Bharat Nirman by 45%. The minister also promised a model village scheme for 44,000 villages with over 50% of population belonging to scheduled castes–reminiscent of former President APJ Abdul Kalam?s pet scheme called PURA (Providing Urban Amenities in Rural Areas).

The National Highway Authority of India got 23% more funds than it received for the National Highway Development programme in 2008-09. But the onus for infrastructure upgrades still seems to be on the private sector and Mukherjee sought to make it easier for them to partner the government in its efforts. Urging central and state governments to remove policy, regulatory and institutional bottlenecks, he promised to tweak the refinance facility available from the India Infrastructure Finance Corporation Ltd (IIFCL) that has yet to take off seven months after it was introduced. ?IIFCL would, in consultation with banks, evolve a ?takeout financing? scheme which could facilitate incremental lending to the infrastructure sector,? the minister said.