Highly placed sources said the two had exclusive meetings earlier too, but they were impromptu and followed either a Cabinet meeting or an official meeting on the Budget, in which finance ministry officials were involved.

The sources said the two discussed the Budget in the light of the Fiscal Responsibility and Budget Management Act, the rules for which were notified on Saturday.

The FRBM rules, effective July 5, bind Chidambaram to cut the fiscal deficit by 0.3 per cent of the gross domestic product and revenue deficit by 0.5 per cent of GDP in his 2004-05 Budget.

It is customary for the finance minister to meet the prime minister to take the broad political and economic direction before the Budget. But after this, the Budget-making is left to the finance minister and his core Budget team in North Block.

The run-up to this Budget has been extraordinary with Chidambaram having had at least six long sessions with the prime minister in the last three weeks.

The sources said Chidambaram also discussed key resource mobilisation measures with Singh.

The CMP's social obligations, especially pertaining to employment guarantee, health and education, entailed a huge cost for the government, they pointed out.

Accordingly, the sources said, the UPA government has to increase the Budget allocation for health and education by at least 20 per cent a year during the coming five years.

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