In the backdrop of the Kelkar Committee recommendations and the impending elections, this year's Budget was preceded by much speculation over the extent to which it would usher in radical measures.

Though the finance minister's stated focus was on five priority areas of education and health, infrastructure, fiscal consolidation, agriculture and manufacturing, the steps taken in some of these areas seemed inadequate.

While the rate reduction of PPF and small saving was one necessary step towards fiscal consolidation, other anticipated measures such as reduction of subsidies did not find much mention.

For political reasons, the finance minister also lost the opportunity to reduce rates on EPF.

Given the industrial sector's spectacular performance the Budget proposed significant sops for the sector to keep accelerating. With a combination of tax breaks on long-term investments and lower duties on life-saving equipment and drugs, the healthcare sector has plenty to cheer about.

The telecom industry can also expect lower capital expenditures with reduction in duties on network equipment and optical fibres, in addition to the extension of tax holidays for networks established up to April 1, 2004.

For the oil and gas industry, the significant reduction of duty on import of LNG regasification plants from 25 per cent to 5 per cent would increase competitiveness of LNG projects.

The tourism sector has been given a major fillip through the multiple proposals comprising removal of expenditure tax breaks, tax breaks on long-term investments and reorganisations.

The proposal to allow 74 per cent FDI in private banks and lift the 10 per cent limit on voting rights was much awaited.

In the area of infrastructure, much has been proposed for the road sector in terms of outlays, but the electricity sector proposals appeared to fall short of expectations.

The proposals to modernise airports and seaport infrastructure are however very well appreciated.

The removal of surcharge and increased standard deduction is sure to please most salaried taxpayers, though those in the high tax bracket seemed to have been left out.

Most of the Kelkar committee recommendations have been ignored in personal taxation with the rebates and slab rate structure remaining intact. The salaried class is expected to have more disposable income in its kitty.

For corporates, the retention of exemptions and deductions in the face of the Kelkar committee recommendations would come as a reprieve.

In a tribute to the Kelkar suggestions, the Budget proposes a number of changes to tax administration procedures such as outsourcing non-core activities, computer-based selection for return scrutiny, automatic credit of refunds, electronic filings etc to increase efficiency and engender a tax-payer friendly atmosphere.

We must see the outcome of these administrative changes.