A blow-by-blow account on Union Budget 2014-15, the NDA government's first one, which will set the tone for the next five years.

Don't think we should be satisfied with this budget, says Jaitley

"I don't think I should be satisfied. We have to take India back to growth rate of 8 to 9 per cent," he said.

Jaitley said he wished he could relieve small income earners of paying tax but his own pockets weren't deep enough to allow it.

"This budget is a roadmap," Jaitley said.

2:45 pm: Need to get back on to path of growth, says Jaitley

Jaitley said he wasn't being dogmatic and wasn't particular about how infrastructure targets were achieved as long as they were done.

"If I can get in the 5-6 percent growth rate then were are back on the growth path...We are back to a situation from where we had slowed down," the Finance Minister said.

He pointed out that they had maintained their allocation for poverty alleviation schemes like MNREGA despite opposition from economists.

No sympathy for smokers, says Jaitley

Speaking after presenting the Budget, Arun Jaitley has said that he has attempted to boost investment in the manufacturing sector, which is why there are tax breaks for multiple industries.

However, for smokers and those fond of aerated drinks who may be bemoaning the additional taxes, Jaitley said he had no sympathy at all for them.

"I don't have much sympathy for cigarettes, pan masala, gutkha. You can live without them," he said.

The Finance Minister said there was a need to respond to the world's renewed interest in the Indian economy.

"I think with all these measures, the impact is slow but there will be an effect," Jaitley said.

Jaitley also said that he wished he could have done more for the common man beyond the Income Tax exemption.

"I can collect more taxes not by expanding rate, but by increasing base," he said.

SIN TAXES ARE UP

Taxes on cigarettes (11-72 percent), cigars, unmanufactured tobacco and gutka to go up. Also on water with sugar content - this means all soft drinks too, up by 5 percent. Coke, Pepsi, please note.

Service taxes going up on online advertising. Radio taxies also to be levied service tax.

INDIRECT TAX PROPOSALS

12.50pm: Most of the concessions for sectors are small and narrow. Wonder why these itsy-bitsy announcements should be read in the budget speech. Small customs duty cuts on some telecom products and petrochem items. This part of the speech is a big yawn, except for those in these industries.

Big customs duty relief has been given to imported coal. Duty on ships imported for breaking attract lower duty of 2.5 percent. This will benefit Gujarat's Alang shipbreaking yard. Export duty on bauxite raised - will benefit local aluminium units. Bauxite is main raw material for aluminium. Auto duty cuts extended for six months till December 2014.

Basic customs duty on crude cut to 5 percent - which will help keep subsidy losses for refineries lower.

TAX PROPOSALS

12.45pm: Basic tax exemption limit raised to Rs 2.5 lakh, and Rs 3 lakh for senior citizens (60-plus). No changes made in corporate or other direct taxes. Limits under section 80C raised to Rs 1.5 lakh - as indicated in raising the PPF limit to Rs 1.5 lakh. EMI exemption for self-occupied property raised to Rs 2 lakh. The Direct Taxes Code to be reviewed and announced.

Companies to get 15 percent investment allowance for fresh investments above Rs 25 crore. Foreign institutional investors to get tax-breaks to entice them to move back from Mauritius. Their incomes will be treated as capital gains - which is 15 percent for short-term gains and zero tax for long-term gains.

Bad news for debt funds: tax-break for long-term capital gains will happen only on three-year holdings. Rate of tax up from 10 percent to 20 percent for long-term gains. Banks will now gain at expense of mutual funds from the elimination of this arbitrage opportunity.

Net revenue loss for direct tax changes if Rs 22,200 crore.

12.25pm: Ganga to receive ocean of funds - for clean-up, ghat development, and NRI contributions. Modi's Varanasi constituency should be happy. Money also allocated for studying inter-linking of rivers.

SOPS FOR SAVERS

12.20 pm: Two big schemes for small savers - Investment limits for public provident fund raised to Rs 1.5 lakh per year. Special natinoal savings certificates and savings instruments for parents to invest in name of girl child also announced. Does this mean the 80C limits will also go up? One-rank-one-pension scheme for retired soldiers also being implemented with allocation of Rs 1,000 crore this year.It's like a senior citizen's scheme in effect.

FINANCIAL SECTOR REFORMS

12.15pm: Jaitley to move forward on the Financial Sector Legislative Reforms Committee (FSLRC) to adopt Indian Financial Code after talks with stakeholders. The RBI is bitterly opposed to some steps - especially shifting the powers of Governor to a monetary policy committee where the finance ministry has more nominees. Indian Depository Receipts to be revamped. Insurance sector regulations to be improved.

Consolidation of banks - government will consider it. But this means nothing till he actively promotes it. But a big change is banks will be allowed to raise long-term funds with no CRR/SLR obligations. This means more funds will flow to infrastructure sector. Six debt recovery tribunals also to be set up to improve banks' bad loans situation.

12.10pm: Here comes the oil and gas bits - key to budget subsidies. Gas grid to be built for another 15,000 km, double current level. Royalty rates on minerals to be revised this year.

12.05pm: Allahabad-Haldia inland waterways being planned. To be done in six years at cost of Rs 4,200 crore. Plans for new airports also announced under Airports Authority of India. Road transport and national highways to get Rs 37,500 crore - including Rs 3,000 crore for north-east. NHAI to target 8,000 km this year

Rs 10,000 CRORE FOR START-UPS

12.00 noon: Policy approaches on PPP coming up - public private participation projects - being outlined. Allocations being made for new port projects.

11.59am: Jaitley is making allocations for industrial corridors to help manufacturing. Rs 10,000 crore fund for start-up capital for small enterprises and start-ups. Announces six new textile clusters. But little allocations dominate speech - for hast-kala, and pashmina, etc.

11.51am: More money for Nabard for rural infrastructure - Rs 5,000 crore more. This will benefit banks who can't lend to priority sectors too. There will be measures to boost agricultural credit. Nabard to get another Rs 5,000 crore for long-term farm credit. There's an additional 3 percent subsidy on farm loans - better than a waiver at least.

Budget speeches become a bore primarily because all kinds of scheme get allocations - these may be important, but can easily be done outside the budget speech. It's simply too much verbiage and not worth the time devoted in the speech.

HE'S BACK - LIKE ARNIE

11.50am: Like Schwarzenegger, he's back. Jaitley is back to his speech announcing more itsy-bitsy schemes for farmers, etc. The important policy statement is to encourage a national farm products market.

11.45am: So far there are too many small allocations for diverse schemes covering the poor, farmers, marginalised sections, etc, but none looks like having a major impact. But meanwhile, at the request of the finance minister, the speaker offers a break in the middle of budget speech. This is probably a first in many decades - though some budgets have had interruptions from opposition benches.

11.35am: The budget starts the process of the de-Nehru-fication of government schemes. Thus new schemes will be named after BJP and non-Congress icons - Sardar Patel, Madan Mohan Malaviya (of Benares Hindu University fame), Deendayal Upadhyaya (one of the leading lights of the Jana Sangh) and Loknayak Jayaprakash Narayan (godfather of the first non-Congress government at the centre in 1997). We have seen last of Nehru-Gandhi schemes at least for the next five years.

11.31am: Jaitley is in the populist phase, announcing all kinds of small state-level schemes. AIIMS medical centres in more states, and ultimately to reach all states. Five more IITs, and five more IIMs. Rs 4,000 crore for urban poor housing routed through the National Housing Bank. Slum development to be part of corporate CSR activities - mandated at 2 percent of profits under new Companies Act.

11.30 am: Here comes the change to MNREGA. Scheme to be modified to make it more asset-creation oriented. UPA's flagship will be restructured.

11.25am: Minimum pension under EPF scheme is Rs 1,000 per month. Government to subsidise the EPFO.

11.20am: Jaitley pleases his boss by making allocations for smart cities, sanitation (Swachch Bharat Abhiyan) and Pradhan Mantri Krishi Sinchayi Abhiyan for agriculture. Power will be 24x7 - Deendayal Upadhyaya scheme of Rs 500 crore to separate subsidised power from full-price power. Gujarat model in power. There's money for Sardar Patel statue of Rs 200 crore. Money is there for SC/ST schemes, and beti-bachao-beti-padhao yojana, and benefits for senior citizens.

11.17am: FDI being liberalised for insurance to 49 percent. Defence also get to get 49 percent composite limit. FDI in ecommerce allowed through automatic route. Banks to get more autonomy, and government will dilute upto 51 percent, not below. Wants to create a "virtuous investment cycle" by further public share sales.

NO TAX TERRORISM, NO MORE RETRO TAXES

11.15 am: No retrospective amendments to be done in future, says Jaitley, but sidesteps what will be done with Vodafone case. But "tax terrorism" will end. As for the goods and services tax, Jaitley say fully committed. This means retro tax stays. Probably retained as a bargaining lever to deal with Vodafone.

11.10am: Motherhood statements coming up on fiscal prudence. We can't spend beyond our means. Fiscal prudence is paramount. But he retains Chidambaram's 4.1 percent fiscal target for this year. This is bold. Key is to find how this is achieved. Next year's target is 3.6 percent, and 3 percent the year after. Minimum government, maximum governance is his mantra. New expenditure management commission to be constituted.

Jaitley says subsidies will be targeted, but not how. Urea pricing to be reformed, but not how. Good intent, but not clear how.

11am: Jaitley starts delivering the budget. Says India unhesitatingly wants to grow. Country is in no mood to suffer apathetic governance. His goal is to have higher growth, lower inflation, sustained external balance, and fiscal prudence. He lowers expectations by saying nothing should be expected in very first budget, and he wants growth to rise to 7-8 percent over three to four years. Achche din are some time away.

1055am: The Sensex is back from the red in nervous excitement as Jaitley enters parliament, black box in hand. Any bets where the index will end the day? My guess is in the red. High expectations budgets always tend to disappoint.

10.50am: The cabinet has approved the Union budget, we hear. But this is a formality. There has been no instance in Indian history when a cabinet failed to approve the budget. Anyway, H-Hour for the budget is only minutes away.

If you want a clue to what Jaitley thinks of his challenges, you could read his interview to Firstbiz here - a few days before he took over as finance minister. He seemed to think the important thing is to revive growth and get interest rates down, even though he has subsequently talked of fiscal consolidation and tackling inflation first. Will we see the growth tiger today or the subdued elephant seeking to fix the fiscal deficit?

SHORTER BUDGET SPEECHES ARE BETTER

10.45 am: The length of the budget speech is often an indication of the state of the economy. Consider UPA-2 speeches by two finance ministers. Pranab Mukherjee started his first budget (2009-10) with high optimism and extensive sops for business and his budget speech was all of 11,700 words. Next year, as inflation worsened and problems started appearing on the horizon, his speech extended to 12,591 words. The year after, as stagflation was visible, his speech length increased to 13,877 words. His swansong budget of 2012-13 stretched to 14,157 words. Luckily, we were spared longer speeches by sending him off to R Bhavan. Chidambaram brought the verbiage down to 12,749 last year (2013-14), and his interim budget, was down to 6,586. The economy is now less worse off than before, but not yet out of the woods.

What will Arun Jaitley do? In his maiden budget, he may want to wax eloquent, but Chidu's last figure (around 6,000 words) is a good benchmark to follow. The more he yaks, the less he is likely to deliver in terms of his promises. The moral: make fewer but more believable promises.

HOW TO RATE THE BUDGET

10.35 am: Not surprisingly, the markets are flat. But market mavens are not sitting idle. They have their scoresheets ready, and if Arun Jaitley does not get a decent grade in their scoresheet, they will vote with their feet.

But you need not sit twiddling your thumbs either. Apart from getting yourself a packet (or packets) of chips and some soft drinks (the hard drinks should be left for the end and depend on the quality of the budget), you can make your own scorecard. Here I am sharing mine. These are the things to look for in the budget, beyond you tax breaks. Score 1 for bad, and 5 for very good, and the rest for budget elements somewhere in between.

#1: The level of fiscal deficit projected for 2014-15. P Chidambaram indicated 4.1 percent; Jaitley, after restating accounts, may peg it higher. Possibly around 4.3-4.5 percent. Score 5 if he retains it at 4.1 percent, and 1 if it goes well beyond 4.7 percent.

#2: Check the level of subsidies: The ideal is 2 percent of GDP. but they are currently at 2.26 percent - but after shifting many unpaid bills to 2014-15. The actual level may be above 2.5 percent of GDP. A retained level of 2.26 percent would still be good. Anything below that would be a 5. A subsidy level beyond 2.56 is bad.

#3: Look for the amounts to be raised from public sector share selloffs. Anything above Rs 70,000 if good (score 3), anything touching Rs 1,00,000 croe is excellent. Score 5. Below Rs 60,000 crore, give it a 1. This money is key to any kind of investment in capital spending, which holds the key to reviving the economy.

#4: Direct taxes. If Jaitley makes only marginal changes in basic tax exemptions and 80C, you may want to throw something at your TV. But it may be good for the economy since this is a difficult year for tax revenues. Score 5 if there is no change or only a marginal change in basic exemptions. An increase in 80C limits is also good, since this will force you to save more. India needs more saving to revive the investment cycle.

#5: Look for signals on changes in laws: land laws, labour reforms, food security and NREGA changes. These have to be tweaked to get the economy back in shape. Better targeting of subsidies - through direct cash transfers, for example - will also be a good thing. Every time the opposition cries foul, score higher for the government. It means populism is being eschewed.

10 THINGS THAT WILL BE DIFFERENT ABOUT JAITLEY BUDGET

10 am: In a short while from now, Arun Jaitley will present the first budget of the NDA government headed by Narendra Modi. Will it make a break with the past, or will it be more of a continuity with budgets in the recent past, presented by the UPA.

We will know the answers to that shortly, but there are several reasons why Union Budget 2014-15 will be - has to be - different from the ones presented in the recent past, and especially the ones presented by the UPA.

First, and most obvious, this budget will set the tone and tenor of the new NDA government's approach to the economy. Though there has been one NDA government before led by Atal Behari Vajpayee, this is the first one to be presented by a government with a clear majority of its own since 1989. It has been called a right-wing government - one that is expected to be business-friendly even without abandoning the poor.

Second, the 2014-15 budget will be presented by someone who has never done it before. Finance Minister Arun Jaitley's area of expertise is law – though he has led debates in the Rajya Sabha on the economy. His predecessor P Chidambaram had tonnes of experience working in economic ministries - finance and commerce - and dished out nine budgets in three stints - including two during the United Front government of the 1990s and the recent two under UPA-2. But the NDA has a precedent to Arun Jaitley in having a fresh hand presenting the budget: Jaswant Singh, a former army man, presented the last two Vajpayee budgets without ever having a financial background. And he did quite well.

Third, this budget has huge public expectations built into it, thanks to the clear mandate given to Narendra Modi. So no matter what Jaitley does, there will be someone who will think his concerns have not been addressed. We saw that happen with the railway budget last Tuesday. It is guaranteed to happen today (10 July) after Jaitley presents his first one. The markets, which rose nearly 50 percent over the last one year in the expectations of a Modi win, are now shuffling nervously.

Fourth, this budget is being unveiled in the context of negative economic signals in many directions - slowing growth and high inflation, the possibility of a weak monsoon, and a potential adverse change in oil prices due to the Syria-Iraq civil wars and the rise of another al-Qaeda in ISIS. In contrast, the UPA inherited an economy and global economy about to take off vertically. Jaitley inherits Chidambaram's bad karma.

Fifth, this year is like 1991 but without the spectre of external bankruptcy forcing changes. In short, this situation is more dangerous politically than 1991 because there is no sense of crisis – except among economists. This is why a Rahul Gandhi, despite his government running the economy into the ground, can still crib about the railway budget not being “pro-poor.”

Sixth, this will be the first budget in recent years being produced without the finance ministry having a Chief Economic Advisor (CEA). Even the Economic Survey presented yesterday (9 July) was created without a CEA.

Seventh, this budget is coming up in a context where the global economic recovery is far from certain. Unlike 1991, the external environment is not conducive for a sharp rebound no matter what the government does in this budget. The US, Europe and China are still recovering from the Lehman crisis and the global meltdown.

Eighth, in common with budgets presented by an incoming government in mid-year, this budget will have only a half-year run, with another one due in February. Work on the next budget will have to begin as soon as the current one is passed by August. This budget will find its full form only in February 2015. It will be a work-in-progress all the way to February.

Ninth, despite the fact that people invest undue importance in the budget, the real game-changers lie outside it. Most of the structural changes India needs – whether it is changes in land and labour markets, or easing of business and regulatory rules – have to be done either administratively or by legislation. This budget is not the last word of the Modi government’s approach.

Tenth, there is a good chance that this budget will be criticised in the Rajya Sabha and tinkered with there since the NDA is nowhere near a majority. This can happen if the political conflict between BJP and Congress worsens in the coming days over issues such as giving Congress leader of Opposition status – which it is not entitled to. But budgets can’t held hostage in the Rajya Sabha. The Lok Sabha can pass it again and that will be that.