The Budget 2007-08, the third by the United Progressive Alliance government, will aim at consolidation of programmes launched since it assumed the reigns of power, injecting catalysts wherever necessary.

Indications are that continued emphasis on social sector spending, with new policies for spurting the growth in agriculture are on the anvil.

The understanding in the government is that corrective policy decisions clubbed with focussed thrust on improving implementation will pave the way for enhanced spending on social sectors. The government leadership is of the view that the on-going schemes relating to social sectors have reached a point where absorptive capacities are visible.

Both Planning Commission Deputy Chairman Montek Singh Ahluwalia and Finance Minister P Chidambaram have given sufficient indications of launching new initiatives in agriculture to achieve an average growth rate of 4 per cent per annum.

Sources point out that among the new initiatives to be launched in the Budget would include a comprehensive package, including tax incentives, as well as other changes to bring about a structural shift in the agro-processing industry.

Another major initiative would be the launch of the much-hyped Rainfed Authority. The programme, announced by Prime Minister Manmohan Singh within the first few months of forming a government, would aim at creating regional specific approaches to boost agricultral growth and would primarily be based on the government funding farmers for meeting the water requirements for crops.

Indications are the Horticulture Mission launched last year will be given a major hike in allocation, almost 50 per cent more than last year.

Officials dealing with the sector indicate that the Mission is aimed at improving the horticultural sector and would fund even programmes aimed at improving the quality of seeds. They point out that by the time the horticultural crop gets ready for markets, marketing linkgaes need to be made established. Incentives to the agro-processing sector and other measures to boost this secttor necessitates the need for such linkages even more.

Informed sources say that the Budget may not be a very pleasing affair for the Agricultural Insurance Sector as this is not likely to witness any great hike over last year's allocation. A comprehensive crop insurance scheme has not yet passed the viability test of experts.

When completed, it will have a model under which each State will be running its crop insurance programme with the Centre funding 50 per cent of the crop.

Sources indicate that fiscal prudence will come in the way of demands of expansion of social sector programmes going by the quibbling that went on behind the scenes between Ahluwalia and Chidambaram in the run up to the Budget. Chidambaram has argued that this is the best that he could, given the constraints of the Fiscal Responsibility and Budget Management Act and Ahluwalia making out a case for at least Rs 20,000 crore (Rs 200 billion) for spending on this sector.