Although the fiscal stimulus provided by the government has effectively helped the economy to maintain an impressive growth rate of approximately 7.2%, the major challenge emerging is containing the fiscal deficit which has reached a level as high as 6.9% in 2009-10.

A host of positive indicators are flowing in. The month of December, in 2009, witnessed manufacturing growth rate of a staggering 18.5% -- the highest in the last two decades.

The Union Budget attempts to strike a balance. The government continues the much-required thrust on both rural and urban infrastructure development. However, concerns remain on the quality and speed of implementation.

The downward revision of individual income tax slabs and reduction in surcharge for Companies from 10% to 7.5% is driven on the assumption of higher compliance leading to greater revenue collections. The increase in the rate of Minimum Alternate Tax (MAT) to 18% from the present rate of 15%, on book profits will be a pain point.

The Budget has partially rolled back the fiscal stimuli. Central excise duty on petrol and diesel has been raised by Re 1 per litre. Standard excise duty on non-petroleum products is also raised to 10% from 8%. An increase which is feared to increase the prevailing inflation rate.

The Government has reiterated its endeavor to introduce the Direct Tax Code (DTC), and Goods and Services Tax (GST) with effect from April 2011.

An emphasis on developing social infrastructure with increased outlay for healthcare and education will help in a more inclusive growth. Also, the provision for setting up National Social Security Fund with initial allocation of Rs. 1,000 crore, for providing social security to workers in the unorganised sector, is a welcome move.