India, Feb. 13 -- India's annual budget exercise serves dual roles. First, it provides an institutional forum for the central government to state its policy ambitions for the next fiscal year, the financial allocations to back them up and its revenue-generating plans to fund them. Second, the budget provides an early signal of government intentions that the private sector can use to make its own plans for the year ahead.

In terms of this year's budget, the highlights were the additional rebates that made salaried income till Rs.12 lakh free from taxation, and the reduction of some import duties. The effects of these two initiatives are, however, marginal. Even though the tax rebate package will exempt 90% of salaried Indians from paying ...