One year ago, it was suggested that if Union Finance Minister Pranab Mukherjee wished to leave a lasting policy legacy behind, the Budget for 2010-11 was the opportunity to be used.
In the event, he crafted a rather pedestrian Budget in policy terms, with a lot of 1970s-type exemptions and exceptions in tax policy. Few can now recall what Budget 2010 was all about.
Mr Mukherjee missed that last call, but Indian politics is as accommodative as an Indian airport. There is always a second announcement, a last and final call! Is Mr Mukherjee ready to fly?
As someone who has himself said on more than one occasion that he is ready for retirement, Mr Mukherjee must make the best use of the opportunity at hand.
What can Mr Mukherjee do in Budget 2011 to make a difference? In terms of fiscal housekeeping, he must summon all his political authority to ensure credible fiscal consolidation.
An unnerved Congress party may be tempted to opt for a hefty dose of populism with new spending commitments. The politically astute Mr Mukherjee should remind his party that in at least three out of the four assembly elections due this year, the final result will be more a state-level anti-incumbency vote, favouring the Congress, rather than a vote against the government at the Centre.
Hence, there is no point throwing good money after bad politics.
Battling inflation is the biggest macroeconomic challenge today. It is also the best pro-poor step to take. It requires prudent fiscal management, not fiscal populism. Moreover, the global economic environment remains uncertain.
Commodity prices are rising and anything from an uprising in Cairo to a cyclone in Australia is able to push global inflation up.
Getting better control on domestic sources of inflation and current account deficit is, therefore, a must.
Equally, reducing public debt and ensuring sustainability of capital flows and stability of the currency are vital to medium-term economic stability.
Within this overall macroeconomic environment, taking decisive steps forward on economic and fiscal reform would be advisable. It is, therefore, encouraging to see that Mr Mukherjee is still trying to organise required political consensus to go ahead with the eventual introduction of a goods and services tax (GST).
Apart from a GST rollout, Mr Mukherjee can clean up the tax system, eliminating exemptions (reversing last year's bad habit), and also bring Indian tariffs closer to, if not entirely in line with, East Asian levels.
He can also take the next steps in retail trade liberalisation aimed at helping reduce the margin between wholesale and retail food prices.
Indian manufacturing needs a boost and using the budget speech to make a pitch for import-substituting industrialisation in defence and strategic industries would be a good idea.
Reducing avenues for corruption in tax administration and in government clearances would be hugely popular with the middle class.
A Budget that meets these objectives will ensure a decent place for Mr Mukherjee in the history books.
