Good signs on improving the Supply side?

This is following up on my post on Feb 20 regarding the possibility that India's economy may be Overheating and the urgent need to think long-term by improving India's productive capacity. The Union budget for the 2007-2008 budget was released this Wednesday.

The following made for heart-warming reading...

"Finance Minister Palaniappan Chidambaram said spending on education would be increased by 34.2% in the coming fiscal year, while health and family welfare spending would rise by 21.9%"

The move attempts to boost one of the three key contributors to an economy's productive capacity: Labour. A first good step. Lets hope the strategy is executed well.

Overall, the budget has been well-received with a strong emphasis on increasing output in the agricultural industry, a sector that still employs two-thirds of India's population. Given that I am currently keying this at a transit lounge at the Chennai airport and my flight to Bangalore is 45 minutes away, more on this later...