Last chance for prudence

That's about the three assumptions. The only action to watch out for is on the expenditure front. Chidambaram, one believes, will not succumb to the normal pre-election sentiment of splurging on populist schemes. He may make some real expenditure cuts in some of the schemes whose merits have been widely questioned. This includes the employment guarantee scheme. Also, he will be eagerly watched for any incremental spends, such as those required for food security. Given the precarious situation that India's economy is in — high current account and fiscal deficits — no finance minister can afford mistakes.

Chidambaram knows that there is a very real danger India's ratings can turn junk if we fritter away any opportunity to demonstrate prudence. Poor growth, with no respect for the need to curb the deficit, is a sure recipe for disaster. Clearly, growth is critical, but temporary puff-ups will not help. The economy's fundamentals need to be sorted out first so that growth is sustainable. The budget must attract foreign capital flows, not just to ensure that the rupee remains anchored, but also to finance the bloated current account deficit. It must be sober, credible and austere, all three.

The writer is editor, Mumbai; pv.iyer@expressindia.com

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