There was an expectation at least that the government would push through with deregulation of diesel. Talks were also afoot that the government would look at the Direct Tax Code, which has been pending for long. It seems that political compulsions must have weighed on Finance Minister, Pranab Mukherjee.

Dinesh Trivedi tried to reform the Indian Railways and learnt a hard lesson. The FM seems to have taken it more easy, making the budget a more revenue and expenditure story, rather than incurring Mamata's wrath.

The “aam aadmi” can feel disappointed as the increase in services tax, means he would have to pay higher for a whole range of services. The income tax slab, wherein the tax exemption limit has been hiked to Rs 2 lakhs from Rs 1.80 lakhs has come as a pittance.

There are small small freebies for investors in the stock markets like a reduction in the securities transaction tax, but that again is a negligible benefit. The new Rajiv Gandhi equity scheme to lure retail investors investing directly in equity, will give a 50% tax break for a sum of Rs 50,000. It might just not be enough for crores of Rs flowing into the equity markets.

Pranab da has clearly focussed on small measures rather than the big bang reforms. There are definitely no measures to focus on inflation. The FM has said that it is a structural problem. One thing is sure that if inflation remains elevated the RBI is not going to act on interest rates anytime soon. This means that interest rates would remain elevated and impact India's growth story.

In fact, RBI governor Subbarao may have been watching the Budget closely to see if there is any fiscal consolidation. He may have carefully noted the government's fiscal deficit target of 5.1% of GDP for 2012-2013 which may dissuade him from acting on interest rates.

Clearly, there is nothing worth mentioning in this year's budget. It's clearly an income and expenditure story, which has been a disappointment. The markets too have reacted and were trading more than a 1.5% lower.

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