On the heels of Railway Minister Lalu Prasad presenting a populist Rail Budget, Finance Minister P Chidambaram too is expected to come out with a please-all Budget on Friday.

Since this will be the last full budget of the United Progressive Alliance government, every segment of the society, including individual taxpayers and corporate, can expect some relief.

The skills of Harvard-educated Chidambaram, who by profession is a lawyer, would be put to test when he rises to present in Lok Sabha the Budget for 2008-09 -- a year that will see assembly elections in seven states followed by general elections.

The Budget will offer the last opportunity to the Congress-led UPA government to win the confidence of voters after the party's drubbing in assembly elections of Gujarat and Himachal Pradesh. The government is also faced with a growing protests over farmers' suicides in some parts of the country.

With buoyancy in tax collections, Chidambaram is expected to announce bonanza for each constituency through personal and corporate income tax cuts, excise duty relief and simplification of taxes and massive funds for farm, rural employment and other social projects.

Chidambaram, who will be presenting his seventh Budget in Parliament, will have a tough time balancing conflicting interests while presenting the Budget.

Railway Minister Lalu Prasad has already presented a populist Rail Budget which announced cuts in passenger fares and selective reduction in freight rates, while painting a rosy picture on its earnings.

The Economic Survey, tabled in the Parliament on Thursday, has projected fiscal deficit to be further pruned to 3 per cent in the next fiscal.

The middle-class and the industry remember his 'dream' Budget of 1997-98 and expect a bonanza from Chidambaram in terms of relief in income tax and excise duties.

Government servants are expecting an announcement on implementation of the Sixth Pay Commission.

Chidambaram is also expected to announce massive funds for social sector projects like National Rural Employment Guarantee (NREG), Sarva Shiksha Abhiyan, rural health and power sectors and big debt-relief package of around Rs 30,000 crore (Rs 300 billion) for farmers without disturbing the fiscal discipline.

Sources said Chidambaram may announce cut in excise duty rates across the board from 16 per cent to 14 per cent or sector-specific duty cuts in the Budget, while customs duty rates could be retained to please domestic industry.

Sectors like pharmaceuticals, textile machinery, food processing, paper and auto, including two-wheelers and tyres, are expected to get relief in excise duty, but like last year, Chidambaram could also prune excise duty exemptions to maintain revenue collections, sources said.

According to the Finance Ministry, due to various excise duty exemptions, the estimated revenue foregone touched Rs 99,690 crore (Rs 996.90 billion) in 2006-07 as against Rs 66,760 crore (Rs 667.60 billion) in the previous year. On income tax cuts, the minister himself has acknowledged that with better tax compliance, there could be a case for cut in rates.

The minimum income threshold limit for income tax payer could be raised from Rs 110,000 to Rs 125,000 or Rs 130,000, sources said. More income in the pockets of consumers will boost demand for consumer goods as well as household savings for investment.

Concerned over the slump in industrial production and to maintain inflation around four per cent, he is also likely to provide relief to the manufacturing sector by marginally cutting excise duty rates or sector-specific duties in the Budget 2008-09 besides sops for exporters.

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