The main issue facing the economy is sluggishness in demand. In this context, the Finance Minister’s emphasis this year on issues relating to agriculture and infrastructure is welcome. This Budget is correctly focused on measures to boost agricultural income by raising farm productivity and reducing the impediments to the free movement of farm produce, and to improving the quality of the country’s infrastructure, particularly the proposal for a significant increase in the outlay on roads. These measures, which are central to second-generation reforms, will provide much-needed fillip to aggregate demand in the economy.

The slowdown in industrial growth, reflecting the economy’s demand sluggishness as also the challenges of globalisation, is the other significant issue facing the Indian economy. The Budget proposal of additional depreciation to encourage new investment and expand capacity is welcome, but may not go very far in addressing the concerns of Indian industry of rapidly becoming globally competitive.

There is concern at the return of the dividend tax at the hands of the recipients. Just when the capital market was regaining its momentum and needed a boost to its sentiment, comes a measure which investors — whether corporates, mutual funds or individuals — will find difficult to regard in a positive light.