As Mr Pranab Mukherjee rose to present the Interim Budget for 2009-10 after a gap of 25 years, he did not look overweighed by expectations from his first budget of the UPA regime.

Unsurprisingly, the budget was more or less in line with my expectations, keeping in mind the brief of an outgoing administration and constitutional requirements of an Interim Budget for seeking a parliamentary vote-on-account to meet expenditure requirements.

He, however, could have taken some bold steps!

Vote-on-account without division

The Interim Budget was presented as an impressive report card of the UPA government -- the FM couldn't help lauding the UPA in pulling off an unprecedented GDP growth during its tenure.

While there was a slew of socio-economic announcements and new schemes targeting the aam admi, the budget would be palatable to statisticians as the minister highlighted key numbers for remarkable growth in GDP, tax-GDP ratio, the country's per capita income etc.

While most of his speech highlighted the initiatives and achievements of the outgoing government, the FM emphasized the need for fiscal and administrative reforms to fight a deepening global recession.

Turning the pages to the current economic scenario and India's strategy to tackle the global slowdown, the FM categorically stated that the current economic crisis was unprecedented and it would be foolhardy to expect India to remain immune to it. Given the past, I am glad that the admission has come in no uncertain terms.

That the forecasts indicate 2009 may be worse than 2008 was manifested in the budget document as the FM underlined the shocking reversal trend in industrial production and exports growth.

He was quick to add that with a robust GDP growth rate of over 7 per cent in the current pandemonium, India remains the world's second fastest growing economy.

As an indication of things to come in the next fiscal, the FM unequivocally articulated the need for stronger fiscal and non-fiscal measures in the regular budget.

The economic regulatory and oversight systems have to be made more efficient and effective to bring the economy back to the 9 per cent growth path which, in my view, seems a distant reality.

Infrastructure remains the driving engine

Given the recessionary trends in domestic consumption, the Interim Budget acknowledged the pivotal role of infrastructure in enthusing demand and spending.

The government spent Rs 70,000 crore (Rs 700 billion) on 37 infrastructure projects in 2008-09 and 54 central infrastructure projects were approved. To bridge the gap in infrastructure spending, the government pledged to increase the investment in infrastructure to more than 9 per cent of GDP by 2014.

I anticipated a slew of fiscal reforms to encourage more infrastructure investment.

Impetus for non-plan expenditure

Another key highlight of the Interim Budget was a significant increase in defence allocation, as part of non-plan expenditure. The enhanced allocation comes at an appropriate time when the internal security of the country has been under unprecedented risk from cross-border terrorism.

The minister made a resounding statement that any further allocation to meet the security requirements of the country shall be provided for adequately -- a comment that assumes significance in light of the 26/11 attacks.

In another instance of increase in non-plan allocation, the revised estimates for 2008-09 have substantially enhanced the allocation towards fertilizer subsidy, food subsidy, agricultural debt waiver and debt relief scheme.

FRBMA targets -- given a miss

Quite notably, the ambitious targets propounded in the Fiscal Responsibility and Budget Management Act for fiscal and budget deficits have been given a miss in the revised estimates for the current fiscal.

Although the fiscal deficit was brought down from 4.5 per cent to 2.7 per cent and revenue deficit from 3.6 per cent to 1.1 per cent during the UPA's tenure, the estimates for the next fiscal are estimated to be higher as the revenue and fiscal deficits have been pegged at 5.5 per cent and 4 per cent, respectively.

This would bring us closer to the FRBM targets set by the UPA regime.

Fiscal reforms -- quite a damp squib!

The Interim Budget did not have any proposal for revision in tax rates, direct or indirect. The revised estimate for tax collections forecast a Rs 60,000 crore (Rs 600 billion) shortfall in the estimated tax collection targets, primarily on account of the government's pro-active fiscal measures initiated to counter the impact of the global slowdown on the Indian economy.

A substantial relief of about Rs 40,000 crore (Rs 400 billion) has been extended through tax cuts, including a fairly steep, across-the-board reduction in central excise rates in December, 2008.

Contrary to populists' expectations, the FM refrained from any tax rate cuts for individual taxpayers. However, the task of carrying out fiscal rationalization to boost spending and investment has been categorically made incumbent on the incoming government in the regular budget.

I, personally, anticipated some strong fiscal steps including a roadmap for GST implementation; guidance on the rollout of a new tax code which would go a long way in streamlining the administrative procedure; tax breaks to encourage infrastructure investment, boosting manufacturing and exports etc.

Having said that, had the FM announced sweeping changes that were well-intentioned, he could have invited the wrath of the opposition. Besides, in light of coalition realities, the government could have been faced with a situation on the passage of the vote, should any of the UPA members have decided to not support the changes.

Given these constraints, I am inclined to believe that the task at hand was deftly executed by the FM. While optimists would still expect the FM to spring a surprise by coming out with beneficial notifications under customs and excise, he is likely to be overly cautious in bypassing parliamentary propriety.

Task well done, Mr 'Fix for all situations'!

Mukesh Butani is partner, BMR Advisors. His views are entirely personal

(With inputs from Sumit Singhania)