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The absence of any significant investment activity or job creation has further compounded Mr Sinha's problems to the extent of limiting his leeway to contain expenditures to make up for the revenue shortfall.

The Finance Minister, Mr Yashwant Sinha, giving final touches to the Union Budget for 2002-03, as the Secretary, Department of Economic Affairs, Mr C.M. Vasudev, looks on at North Block in the Capital on Wednesday.

NEW DELHI, Feb. 27

IT will perhaps be the toughest call so far for the Finance Minister, Mr Yashwant Sinha, on Thursday as he readies himself to present his fifth successive Budget in Parliament at 11 a.m.

Gone is the feel-good factor, which he often used to harp on, with the Indian economy going through a protracted slowdown in 2001-02.

The statistics look dismal, with the economy expected to grow by a mere 5.4 per cent in 2001-02 as against four per cent the previous year.

The apparent pick-up in overall growth has been entirely due to agriculture and services, which are expected to grow by 5.7 per cent and 6.5 per cent respectively this year.

But, on the other hand, industrial growth is anticipated to grow at 3.3 per cent compared to 6.3 per cent in 2000-01.

Thus, if one allows for the monsoon-driven recovery of agriculture production, there is hardly any fundamental growth impulse in the economy today. The economic slowdown, in turn, has impacted the Centre's tax collections, which are estimated to fall short of the budget estimates by Rs 25,000 crore.

Coupled with the slippage in receipts from divestment, the fisc is under severe strain.

At the same time, the absence of any significant investment activity or job creation has further compounded Mr Sinha's problems to the extent of limiting his leeway to contain expenditures to make up for the revenue shortfall.

On the contrary, the Finance Minister is under considerable pressure from Indian industry to step up capital outlays to stimulate growth.

There is a sudden renewed enthusiasm for Keynesian policies of pump priming the economy, with some think-tanks even advocating printing of money to finance augmented public investments, particularly in infrastructure.

Corporates privately admit that it would be tough for Mr Sinha to meet their demand to cut corporate tax rate from 35 per cent to 30 per cent, due to the precarious revenue position. The case made out by the industry to abolish the minimum alternate tax (MAT) and maintain status quo on customs duties as a measure of protection to the industry also do not appear to be tenable.

The Finance Minister is expected to bring down the peak rate of import duty from 35 per cent to 30 per cent, keeping in line the commitment to bring down tariffs to East Asian levels over the next three years.

He will also have to address the issue of lower borrowing costs for industry, which reckons that the real interest rates are too high.

For the middle class, apprehensions centre around the likely prospects of a further interest rate cut in small savings instruments, on top of the 150 basis points reduction effected in Mr Sinha's last Budget.

On the other hand, there are positive expectations with regard to restructuring of the income-tax slabs to reduce the tax liability and a breather on taxation of perks.

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