Nor, given the fragile nature of the government, does I-Sec expect any major reduction in subsidies, with the major moves on food and LPG already taking place a few weeks ago. I-Sec analysts expect the government will try and boost the capital market by getting Parliament to pass various bills such as the ones on insurance, patents, share buyback, and urban land ceiling. Further relaxation of capital controls are also expected.

The political uncertainty and a slowing economy have killed the enthusiasm of the industry as the finance minister gears up to present his second budget."If the finance minister presents yet another bad budget... history will repeat and the market would crash," warns senior broker and analyst Pawan Dharnidharka on the eve of the Union budget.

The process of liberalisation needs to be speeded up further especially to put all infrastructure project execution on the fast track, they add. The chief executive of UTI Investment Advisory Services Ltd Dr S S Nayak says that there is an imperative need for this year's budget to focus on stimulating investment and industrial growth. "In the light of this, the emphasis on reducing budget deficit should be targeted towards reducing non-development expenditure on the revenue account," he said.

HDFC chairman Deepak Parekh says the housing sector needs urgent government attention to facilitate cheaper housing finance and at the same time banks should be encouraged to provide working capital to developers. "Since real estate prices have reached rock-bottom, there is going to be a considerable upsurge in the number ofbuyers in the property market. Housing finance can also be made cheaper by increasing the ceiling of interest component that can be absorbed from the consumer's income,'' he said.

"The industries which are reeling under the pressure of international dumping, like steel, aluminium, paper and sugar need higher countervailing duties. Excise relief needs to be given to synthetic textile, cement and automobile. There should not be any attempt to raise taxes further, but in respect of direct taxes better tax compliance would be more beneficial," Nayak said.

Dharnidharka says that the government should take steps to revive the sagging capital market. ``Or like last year the market would crash soon after the presentation of budget. The government should give more sops to mutual funds so that fresh funds can flow to the stock markets. Besides, double taxation on dividends should be removed,'' he said. Nasscom President Dewang Mehta says the withdrawal of Section 80 HHE can be disastrous to software exports fromthe country. I-Sec, on the other hand, does not feel any major excise concessions will be available either, due to paucity of reserves. A lowering of excise on cars by to 25 per cent, as desired by industry, for example, would reduce revenue by Rs 700 crore. I-Sec expects a reduction in duty on commercial vehicles, a 5 per cent hike in steel import duties, and minor rationalisation in other areas.