The central problem with Mr Chidambaram's Budget, which has many good features, is that it more or less kisses good-bye to fiscal correction.
The headline numbers do not show the extent of laxity in fiscal rectitude. Thus, the overall fiscal deficit is shown as contracting marginally from the current year's 4.5 per cent of GDP to 4.3 per cent.
But since this is after transferring Rs 29,000 crore of borrowing to the states (which the finance minister includes in one part of his speech, for a "like-to-like" comparison), the total government system's deficit has not contracted, it has expanded quite sharply by about 0.8 per cent of GDP.
Understanding this point resolves the contradiction between the finance minister's announcements of massive increases in a variety of spending programmes, and the slim 1.7 per cent increase in total spending that the Budget figures show.
The truth is that there is a sharp increase in total spending, and the consequent increase in the central deficit is masked by the way the funding has been structured, by loading the already debt-laden states with still more debt. It is possible therefore to argue that the "like-to-like" deficit is not 4.3 per cent of GDP for next year, but over 5 per cent.
On top of that, there is the contingent liability of Rs 10,000 crore that the government has taken on, by setting up a special purpose vehicle to finance infrastructure investment.
And then there is the risk of the tax revenue falling short, as has happened this year -- because Mr Chidambaram believes in aggressive budgeting.
Overall, therefore, the fiscal position amounts to more than "pressing the 'pause' button" on the fiscal responsibility law.
Having already amended this law last summer to postpone its deficit reduction targets by a year, the government has in substance rolled the clock back. The message is clear: in the trade-off between fiscal rectitude and spending money to honour the government's electoral promises (as articulated through the National Common Minimum Programme), it is the deficit that has to give way.
The government's assumption must be that there is no immediate price to be paid in following this course of action. That may well be true, since there is no pressure on either prices or the balance of payments.
Also, liquidity in the money markets is comfortable, so the government borrowing programme is not raising interest rates and crowding out private investment. For the time being, therefore, this will look like a risk worth taking. But the states will not be celebrating.
Also, it is just as well to bear in mind that when times are good, the government should be building a cushion on the fiscal side so that it can afford to open the tap with counter-cyclical spending when growth slows down. In spending at full stretch in the boom phase of the business cycle, the government has given up the cushion for action when the cycle turns.
Two things can still achieve fiscal correction. The first would be the government failing to spend money as budgeted.
This has been the norm, except that in the current year the revenue outlays have all been spent and it is capital spending that has been cut back (to the extent of nearly 0.2 per cent of GDP -- serving to neutralise the widely predicted shortfall in tax collections).
The second would be if the government undertakes disinvestment, for which the finance minister has assumed zero revenue. This is because of the deal with the Left by which disinvestment proceeds get sequestered in a separate fund. If this can be undone, the deficit will get corrected to some degree.
The second part of the Budget that needs a careful look is the real meaning of the revenue numbers. The finance minister has announced tax relief for both individuals and companies, but says his direct tax measures will garner an extra Rs 6,000 crore.
Some of this has to be from the tighter depreciation norm (be warned, for most companies will find that they have to pay more tax, not less), and some of the rest is because of the increased turnover tax on share trading.
The remainder is on account of the novel idea of taxing bank withdrawals, which has been rightly criticised by every commentator. The issue is not the amount of tax but the principle.
Even the logic is flawed, since you don't need a tax to create a financial trail (this is after all a bank transaction), and those who really have black money will simply find ways of keeping it out of the banking system.
As for indirect taxes, the finance minister says they are revenue-neutral. If that is indeed the case, and there is a drop in customs revenue because of the lowering of the peak tariff, there has to be more money coming in from excise. Is this from petrol or diesel, or something else?
Switching from the accounting issues to the larger macro-economic and political template, the finance minister has done well to deliver on twin agendas.
He has focused on the need for upgrading rural and urban infrastructure, defined in the broadest terms, emphasised spending on the social sector, and (in anticipation of the obvious criticism) talked of working out ways to match outlays with outcomes.
He has dropped the peak tariff despite the discreet lobbying against it, and while paying lip service to the manufacturing sector, focused on broad ranging reform of the financial sector. But there is a strangely half-hearted approach to other initiatives.
The change of income tax slabs is only a partial job. Equally half-hearted is the effort to correct tax policy for synthetic textiles, and to de-reserve areas meant for small industry. The major correction of exemptions in customs and excise laws has not even been attempted.
The desire to open up sectors like mining and trade to foreign investment is cautiously worded to not sound like a commitment, but there is more boldness on display in getting the Reserve Bank to announce 74 per cent foreign ownership and voting rights in banks.
Overall, there is much to be happy about. But if this is the UPA government's big budgetary move, it leaves you with a slight twinge of disappointment.
More from rediff