On the whole, the budgetary proposals are likely to achieve a marginal increase in the growth rate of GDP from around seven per cent this year to 7.5 per cent in the coming year, with average annual rate of inflation of around five per cent.

After the initial volatility, the overall impact of the budget on the capital market is likely to be positive. The Budget is also expected to facilitate relative stability of interest rates and exchange rates during 2005.

The disappointing aspect is the uncertain picture relating to the fiscal consolidation process.

While no information has been provided in the Budget documents on the estimated impact of specific exemptions in direct and indirect taxes, there is a clear evidence of a significant degree of over estimation of tax revenues especially in the case of corporate tax, personal tax and excise.

Moreover, the Budget estimates of the residual components of expenditure, such as total expenditure excluding interest, defence, subsidies and transfer to states, contain a substantial element of underestimation.

Hence, there is a strong possibility of a major slippage in the revenue deficit and fiscal deficit targets.

However, if the Budget proposals are rigorously implemented, it is possible that this Budget would usher an era of high growth with a reasonable degree of macroeconomics stability over a longer period and it would also pave the way for a more effective globalisation of Indian economy."