In the light of the lower economic and industrial growth and higher fiscal deficit last year, the finance minister had a choice between a low-growth low-inflation budget and a higher-growth marginally higher inflation budget.

He has taken a calculated risk by choosing the latter option. Under the current low-growth high-deficit scenario, it was nearly impossible to kickstart industrial growth as well as keep the deficit under control.

Hence, it is a splendid task under very difficult circumstances.Whether the economy will experience higher inflation would to a large extent depend on how much growth the agricultural sector achieves this year. Depending on the crucial agriculture produce, the economic growth would range between 6 and 8 per cent.

Emphasis on indirect taxes rather than direct taxes would no doubt have a marginally higher cost-push inflationary effect. The finance minister's move to raise more by way of personal income taxes by bringing more assessees under the tax net than by increasing marginal tax rates needs to be applauded. Higher budgetary allocations and incentives for infrastructure would stimulate core sector growth.

Import duty of 8 per cent on imports would benefit a wide cross-section of industry. Last year's well intentioned "ream budget" became a nightmare for the industry due to the persistent decline in international prices of several commodities. However, despite several positives the budget remains marginal and is neither spectacular nor path breaking like the 1993budget of Manmohan Singh which gave a new direction to the economy. The minister may have resisted temptation due to another policy front already on hand. Until that is resolved the economy needs to be geared up to meet any unexpected challenges and surprises.

(The author is CEO, UTI Investment Advisory Services)