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The Indian government has presented a populist budget, clearly trying to please as many sections of society as possible before the next general elections due in 2009.
It is reaching out to 40 million poor farmers with a $15 billion (Dh55 billion) debt relief.
However, there are doubts about how far this debt write-off will help poor farmers as the poorest among them are trapped with informal loans provided to them by local money lenders, not banks.
For the middle class, raising the income-tax thresholds will allow many to slip out of the tax bracket, and people will welcome the reduction of excise duties on several goods, including small cars, motorbikes and pharmaceuticals.
Finance Minister Palaniappan Chidambaram has offered a mix of good economics and good politics in the budget. The hike in social outlay stands out. The government has proposed 30 per cent more spending on education, and has announced a number of health and welfare programmes.
Another key proposal was to increase defence spending by 10 per cent to $26.4 billion, a sign that India is keen to boost its military resources in tandem with its economic strength. The Congress-led government has focused on sustaining the strong economic growth, while refraining from major policy reforms that could upset ruling partners.
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