There were many expectations from the budget from many sides. From an economic perspective, the continuing commitment to fiscal discipline in terms of compliance with the Fiscal Responsibility and Budget Management (FRBM) Act was an important requirement to be fulfilled by the Finance Minister.

Looking beyond the immediate, the process of transition to the Goods and Services Tax (GST) was expected to be firmly set in motion. Although there is no cause for panic on the growth front, concerns about a slowdown, particularly in the manufacturing sector, have been visible in recent months. The ruling coalition has been emphasizing inclusive growth as its paramount objective and this had to be given visible and credible impetus in the Budget. And, of course, this is almost certain to be a pre-election budget, so political associates had to be kept happy.

A strong economy, further reinforced by unprecedented revenue buoyancy, provides the Finance Minister a lot of room to manoeuvre. And, in this Budget, he has used it extremely well. With respect to fiscal discipline, not only has he met the target, he has also left some room to accommodate the likely impact of the Sixth Pay Commission recommendations. He has also squarely addressed the rising anxieties about off-budget liabilities by at least bringing them out into the open and allowing us to assess their full impact on the fiscal position. While not insignificant, as our analysis shows, this impact is not dramatic either.

The critical social sectors, namely, health and education, have also received considerable attention in the Budget. However, in proportionate terms, the increases are not very different from previous years and the old problems of using decrepit delivery mechanisms will continue to hinder achievements in these sectors. Of course, there are some innovative measures in the educational field, with respect to marketable skill creation, for example, which do reflect a welcome change in direction.

Also, there is a significant emphasis in expanding higher education capacity, which will go down well with a growing and increasingly aspirational middle class. Infrastructure has also received attention, across the range of sectors - highways, power and the integrated rural and urban infrastructure missions. The overall availability of resources for these sectors has been enhanced by tapping into extra-budgetary resources, which opens up the opportunity for private participation and market discipline.

Populism has been brought in as well, some harmless, some potentially not. Raising the income tax exemption limit as well as adjusting the rate slabs will make a lot of people, mostly young, happy. The revenue impact will be offset in just a few years as rapidly rising incomes take these people into either the first tax bracket or higher ones in short order. On the other hand, the loan waiver for farmers, whose burden falls entirely on the banking system, is a clear triumph of politics over economics.

Taking everything into consideration, though, this is a very good budget, satisfying many while doing relatively little damage.