Chidambaram had to ensure short-term risks are taken care of while the long-term health of the economy is restored
While the budget pays significant attention to the long-term health of the economy, it does not adequately address some of the key risk factors the country confronts in the short term. Recall that the budget has been presented against the backdrop of a possible sovereign ratings downgrade to junk status, on the one hand, and a significant economic slowdown, on the other, with growth forecast to slump to 5% in the current year—the slowest pace in a decade. Given this background, the finance minister had to perform a difficult balancing act between ensuring that the short-term risks are taken care of while the long-term health of the economy is restored. Since the short term provides the bridge to the long term, addressing short-term risks was paramount. My initial impression—remember that the devil lies in the details, which require more time for one to assimilate—is that the finance minister has been unable to strike the appropriate balance.