Expectations are running high as Modi came into power following a landslide victory on promises of creating jobs, providing relief from price rise and reviving growth.
In the first budget, Jaitley is likely to provide tax relief to common man by raising slabs and unveil measures to spur investments and growth, even though fiscal situation remain fragile amid deepening Iraq crisis and stubbornly high inflation.
The government is widely expected to enhance the basic exemption limit on personal taxation to Rs.300,000 from the current Rs.200,000, with a view to provide some relief to common man, especially the middle class salaried person, who are severely affected by persistently rising prices.
Limit of deductions allowed for some expenditure and investments made in pensions and life insurance is also likely to be increased. Finance Minister is also expected to take a call on reducing duties on gold import, which were raised last year to check ballooning current account deficit.
Jaitley is also likely to announce a slew of measure and tax incentives to revive investments and industrial growth. He has already extended the excise duty concessions for automobile and consumer durable sectors by six months.
Analysts said the finance minister will have a tough task in balancing the needs of economic growth revival and fiscal prudence. The new minister may also outline the road map for roll out of the Good and Services Tax ( GST) but it was not clear what will be his approach on the Direct Taxes Code (DTC) about which the Economic Survey makes a mention today.
Jaitley had recently said that the government would not indulge in "mindless populism" and may take bold decisions to revive growth and follow the path of fiscal prudence.
Jaitley is likely to provide tax relief to common man by raising slabs
The government is also likely to announce a definitive roadmap for implementation of the much delayed indirect tax reform, Goods and Services Tax (GST), that will set the tone of economic reforms.
According to a survey conducted by industry body FICCI, India Inc expect the Budget to be "pro-growth giving due focus on ironing out the issues faced by the industry and investors."
Doing away with retrospective taxation and implementing Goods and Services Tax (GST) and Direct Taxes Code (DTC) as soon as possible are on the wish list of most of the industry people.
Jaitley is also likely to announce price stabilisation fund, as promised in Bharatiya Janata Party (BJP) election manifesto and incentives to boost affordable housing.
The budget comes at a time when the country is passing through a very difficult macro-economic situation. The economy is suffering from its worst slowdown in nearly three decades, inflation remain stubbornly high and the fiscal situation fragile.
The finance minister is likely to keep a higher target of revenue from asset sales that would help bridge financing gap.
Earlier in the day, the finance minister tabled the Economic Survey 2013-14 in parliament. The annual report card on the state of the country's economy said price rise remained a cause for worry and called for a complete rehaul of the subsidy regime and increasing tax revenues.