Inflation, infrastructure and inclusiveness. These were the three "I"s we were expecting the finance minister to focus on in Budget 2007, and that's what he's done. All in some measure.

Could he have done more on inflation? Well apart from cuts in peak duties and reduction in some excise duties, there is not much a finance minister can do to directly target inflation in the Budget. P Chidambaram has done what he could by reducing peak customs duties to 10 per cent, he did have space to bring it down further to the promised ASEAN levels of of between 7 and 8 per cent but not many of us were expecting that. Importantly he's maintained fiscal discipline, bringing down fiscal deficit to 3.3 per cent of GDP.

Applaud an over performance here, the budgetary estimate was 3.8 per cent. Remember better control over the fisc helps dampen the demand pressure on inflation.

His attempt to make the 9 per cent plus growth story more inclusive has been to announce substantial additional spending on social infrastructure, health and education, and agriculture.

Three cheers for that. Chidambaram has tried to take some of the spending out of the hands of the bureaucrats and into agencies like the LIC. Hopefully this will ensure better targetting of these programmes. The accent on Education is welcome and nobody will grudge the 1 per cent cess on corporate and income tax for this. A talent shortage has after all been a huge worry for corporate India.

Infrastructure: a bit of a disappointment, unless I am missing something in the fine print two hours after his speech. He's promised to consider the Deepak Parekh Committee report, which has a lot of good suggestions in it and has also spoken about using our forex reserves to fund infrastructure development.

Now this was a measure first proposed by the Planning Commission a couple of years ago. Then the finance ministry, which was then also headed by Chidambaram, had pooh poohed the suggestion. It will be interesting to see what form this will now take.

But the big disappointment is Chidambaram's absolute silence on reforms. This is the first budget I can remember since the reforms began in 1991 that a finance minister has been so completely silent on reforms in a Budget speech. All others have contained references to at least broad policy thrusts.

This was Chidambaram's last chance to embark on any kind of reform, next year will most likely be the last one before the 2009 general elections. Realists will say that with the pressures of inflation, recent electoral defeats and the Quatrocchi affair, Chidambaram was following instructions to remain firmly on the right side of the Left.

Optimists will say that this is what budgets should be, just a statement of accounts, with all policy changes made outside the Budget.

Unfortunately, though I see very little reforms happening outside the Budget. I am just going by history. There has been very little progress on reforms since the UPA came to power in 2004. As Shankar Acharya, Manmohan Singh's former chief Economic Advisor, points out in a recent paper, privatisation has been halted, reform-inclined legislation like the bill to reduce government ownership in public sector banks to 33 per cent for instance has been allowed to lapse.

The reformist Electricity Act of 2003, which was passed by the NDA has not seen much follow up action. The pricing of petroleum products has become more politically administered than ever before. His worry is that if the growth dividends of economic reforms occur with a lag, that is, if you admit that we are in part today reaping the benefits of reforms initiated in the 90s, then the paucity of reforms in the last three years may take their toll in the years ahead.

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