The new Indian Finance Minister P. Chidambaram presented a mixed budget 2013-14 on February 28, focusing on reinventing economic reforms and pursing fiscal consolidation aimed at improving financial health.

It also aims to reduce the fiscal deficit in the next financial year to 4.8 percent of GDP from the 5.2 percent estimated for 2012-13 and on improving upon tax collections.

Despite having an eye on the next year's general election, which will see a newly elected central ministry, the Indian finance minister has taken a growth-oriented budgetary direction.

Chidambaram has suggested that the current economic direction doesn't leave much room for flexibility and that "in a constrained economy, there is little room to raise tax rates or large amounts of additional tax revenues. Equally there is little room to give away tax revenues or the tax base."

And a tight balance has to be maintained between revenue generation and keeping ordinary people content.

One of the tough measures is to reduce the allocation made for fuel subsidy directly impacting transport and travel, hinting at following a course to an end of price controls for petroleum products.

The budget may not have brought smiles to the faces of the whole of the middle class, but it has brought a sense of relief as they have been spared any additional income tax burden.

Chidambaram is faced with a serious challenge due to low growth, high inflation, the widening fiscal and current account deficits compounded by lower than targeted revenue collection during 2012-13.

The budget appears harmless at first look, but it could prove a tad bitter for the middle class.

Service tax has been imposed on all air-conditioned restaurants, thus become expensive by at least 12 percent, and revision of price lists has already begun.

This will also be compounded by the rising prices of food commodities.

Chidambaram has imposed tax at source on property transaction, making them liable for tax as well complicating the process.

Indians have to now pay more to talk over mobile phones, which have become a necessity for every home. As much as 97 percent of all telephone connections in the country are cellular.

The proposal to impose additional excise duty of 6 percent on smart phones will hit almost the entire population.

Chidambaram has brought in the entertainment industry under an enhanced import duty cover by doubling it to 10 percent for set top boxes.

Four Indian metro centers are compulsorily digitized for cable connections, and other cities are coming under its coverage. Citizens have little choice but to comply given the bitter reality that the country lacks a production scale required.

Also, the budget has not received a favorable comment from economists. They believe that against the background of a slowing economy, the budget presented is a futile exercise as there is no message or intent to carry forward reforms on a large scale, particularly in the form of privatization and disinvestment.

They feel that the budget was expected to provide a direction and entice the investors. But their hopes lie shattered.

Meanwhile, another think tank argues that the ruling Congress party is also drifting toward the urban middle class women and youth as their new support base. They cite the instance of the proposed opening of the All-Women Bank, for which the government has promised initial capital of around $182 million.

How the finance minister will cope with the implications of his budget should be watched closely in the preelection year.

The author is the former Executive President of one of India's largest private sector banks, presently the director of the Jammu & Kashmir State financial Corporation and visiting faculty at the University of Kashmir, specializing in Business and Financial studies. opinion@globaltimes.com.cn