Budget can put in force the divestment of public sector units

D R Dogra, MD and CEO, CARE

We can expect the budget to start the process back to fiscal consolidation. Combined centre-state fiscal deficit is already estimated at around 11.8 per cent of GDP in FY10, which is significantly high.

So, expect some rationalising of public expenditure, including consolidation of flagship development intervention programmers', rationalising of subsidies, better targeting of expenditure, among others.

Given the nascent and uneven nature of recovery, the time may not be ripe to withdraw all tax incentives immediately. A viable plan for divestment of stake in public sector entities would hence assume crucial importance.

Managing the economic recovery would be the biggest issue. We have supply side inflation along with a nascent yet uneven recovery in demand. On the other hand the expenditure commitments of the government are towards flagship social development programmes. How the finance minister negotiates through the various policy constraints that these various facets have brought with them will be closely watched.

The other issue is the focus in infrastructure, which should not only continue but also be strengthened in the budget 210-2011.

The Eleventh Plan had projected about $500 billion investment in infrastructure between 2007 and 2012. Given the actual investment so far, a significant ramp up would be required in this area.