There were few surprises in the Union Budget on the government finances. The finance minister seems to have pulled a rabbit out of the hat - reducing the tax rate and keeping the fiscal deficit under check at the same time. This appears reasonable even with the reduction in tax rates. For all direct tax assesses, the surcharge has been removed except for the 2 per cent imposed on account of Gujarat. Since much of these are salary payments, the target appears stiff.
Subsidies are a disappointment.
29,801 crore it is the largest growth in the last four years. Interest payments are also budgeted to grow at 11.6 per cent despite the larger than expected cut in contractual savings interest rates. Defence expenditure is budgeted to grow at 13.8 per cent. The Budget takes credit for Rs. 12,000 crore as disinvestment receipts. After this, the fiscal deficit is expected to be Rs.