The biggest challenge before Chidambaram, who will be presenting his eighth budget, would be to keep every constituent happy, arrest decelerating economic growth and bring down fiscal deficit to committed level of 4.8 per cent of the Gross Domestic Product (GDP). Only former Prime Minister Morarji Desai had presented Budget eight times. The Budget is also significant as it would be the last before the general elections due in April-May next year. There can only be an interim budget before the elections.
Among other things, Chidambaram will be under pressure to earmark funds for schemes and programmes to fulfil electoral promises especially with regard of the Food Security Bill which seeks to provide subsidised foodgrain to poor as a matter of legal right.
The Economic Survey, which precedes the budget, is not in favour of imposition of tax on super rich, stating that government should focus on widening tax base in preference to raising rates. The final call, however, will have to be taken by Chidambaram. As regards salary earners, they may get some relief with the Minister likely to raise the income tax exemption limit, which is currently at Rs 2 lakh per annum.
The Parliamentary Standing Committee on Finance had suggested that the limit be raised to Rs 3 lakh and other slabs adjusted to provide relief to people reeling under the impact of high inflation. Chidambaram is also expected to tweak schemes like Rajiv Gandhi Equity Savings Scheme (RGESS) to encourage individuals to invest surplus funds in stock markets. The effort would be to do away with grey areas and make schemes more attractive to first time investors.