Tough decisions likely before February 28

NEW DELHI: In January 2004, Jaswant Singh, who was finance minister in the NDA regime, had announced a mini-Budget of sorts, including tax sops, to boost “feel good” sentiments.

Nine years later, when shining India is a distant memory, the UPA government may just be trying to push through some of the politically sensitive decisions, billed as reform moves, ahead of what will be the last fullfledged financial exercise ahead of the 2014 general elections.

On Wednesday, railway minister Pawan Kumar Bansal surprised many with the timing of an across-the-board fare hike, the first in a decade. Next up is an increase in fuel prices, including for cooking gas cylinders.

The overall mood seems to be of pushing through tough decisions before the February 28 Budget.

Apart from improving government finances, it will send a fresh signal to ratings agencies that have reiterated the threat of a sovereign rating downgrade in recent weeks.

The calculation in government circles is that next year, finances are not going to be under so much strain. After all, spectrum licence fee renewal alone is expected to generate more than the Rs 40,000 crore budgeted for the current fiscal.

Similarly, the stock market mood is widely perceived to be better, raising the prospects of raising more from stake sale in PSUs. Also, with an expected improvement in economic fundamentals, tax collections are also not going to be such a tough ask.