Any growth rate above 7 per cent in India, however, is often linked to some significant advance on the promised, though elusive, reform path. That is how investors abroad, even domestic corporates, keep calculating, meanwhile holding off making significant commitments.

Government inevitably has to play a larger part with capital expenditure to create and update key infrastructure like power, roads, railways etc. This could inject some new energy and perhaps trigger investment revival. Claims of such step-up in current fiscal and outcome thereof could be known in the awaited mid-year review of economy.

But un-fulfilled reform promises of the Modi Government, as it enters a politically crucial third fiscal year, assume greater importance, while an inevitable rise in public spending would pose tougher challenges for budget-makers. Social development commitments cannot be lost sight of as also mounting rural distress if there has to be credibility on NDA Government’s professed concerns for the poor.

With lacklustre investor response, whether of those courted abroad or home corporates, many debt-ridden, and a seemingly endless process of making 'doing business easier' for them, with one enticing step after the other, India has still to ride out of a twilight zone for clearer signs of growth. This is where GST gains desperate urgency to chalk up at least one key reform.

There may be varying perceptions of how well GST would impact for business or how badly consumers would fare, and irrespective of current efforts to get it through in winter session so as to usher this major tax reform by April 2016, not all states to be compensated see eye to eye with the Centre on reform details.

As important as GST, is direct tax policy clarity, which has proved a mirage in the first two years of this government, despite all the reassuring notes from Finance Minister Arun Jaitley. Besides the Shah Committee's recommendations in favour of foreign firms, another taxation committee is also at work for longer-term recommendations.

Mr Jaitley will have three priorities - one to clear up the tax policy mess, another to restructure corporate tax, as announced, eliminating several exemptions, and a third to advance unfinished reform agenda (land, labour etc). He sets great store by fiscal consolidation, not to swerve from the committed road-map 2017-19.

All this at a time when Government expenditure will mount in fiscal 2017, with the implementation of revised pay scales of central government employees, proposed by the Seventh Pay Commission and with more states pressing for special drought and disaster assistance after successive monsoon shortfalls and natural disaster, notably in Tamil Nadu.

Other non-developmental outlays include rising defence and interest payments. Even as 'plan' and non-pan' expenditure distinctions are sought to be obviated, the states would be coaxed to share to a greater extent spending on development under ‘cooperative federalism’.

Centre’s revenue cannot be linked to more ambitious GDP growth projections and what looks feasible is not less than a minimum of 8 per cent after an estimated 7.2-7.5 per cent growth in the current year. Even so, the fiscal policy strategy in 2016/17 is bound to rely not only on step-up in both tax and non-tax revenues but also enlarge the sphere of ‘cesses and levies’ in blind pursuit of ‘user pays’ principle.

As the NDA Government enjoys the boon with lower oil prices, set to continue into 2016, Mr Jaitley could cut subsidies further. He is also toying with the idea of reducing post office savings rates for the people affecting the poor and senior citizens alike. Nevertheless, the budget cannot go short on reforms and development without a vision.

The bait of reforms to benefit people - whatever time it may take to arrive at the 'achhe din' - with power for all, houses for millions, high speed trains, 'smart' cities, 'make in India' with capital and technology inflows, if adequately forthcoming, on terms set by investors, and translating other catch-phrases into workable propositions - cannot be ignored in the Budget.

The implicit burdens for the common people have to be clothed nicely, and 'inclusive development' is the most convenient jargon. A robust growth is supposed to translate into higher revenues and more revenues should mean more good to the people - though the people are no longer prepared to buy into these faulty aphorisms.

This Government has been gloating about having restored macro-economic stability, 'conquered inflation' and controlled deficits and launched reforms galore, but results on the ground are not visible at all. CPI is on rise with prices of pulses, edible oils and other essentials nearly doubling up.

A sustained manufacturing growth is awaited but this also depends on demand pick-up. As expenditures grow and demand begins to build up, growth would be accompanied by inflationary pressures. Let it not be overlooked that lowered inflation indices do not reflect price stability or lowered prices for the basic food or other consumer goods. With service tax also enhanced and its cascading effect, India is now well-entrenched into a high cost economy for its billion plus people.

Externally, despite the US Fed moving to hike interest rate, the first after seven years of crisis, by mid-December, and consequent spillovers like capital outflows, India seems equipped to counter the negative impact. Dr Raghuram Rajan, Governor of RBI, has said the central bank is prepared to meet any eventuality arising out of US Fed actions but there are other imponderables in the evolving global context.

The new source of risk haunting economies all over had been the market turmoils in China and its abrupt currency depreciation in August, triggering volatile movements in global exchange rates. 2015 was already one of the worst post-crisis years with growth slowing to 3 per cent due to uneven growth among major economies, a distinct slowdown in emerging economies and revival of financial market instability fears.

Continuing low commodity prices hurting oil and other producers and depressed demand for minerals and metals have also lowered global trade volumes. The overall outlook for 2016 is not materially changing with the added likelihood of capital outflows from emerging and developing countries as interest rates harden in major economies. These together may operate to India's disadvantage in terms of trade and capital flows. (IPA Service)