Kaushik Basu The Union Budget, 1985-86, has taken some positive steps for increasing industrial efficiency and growth. It has, however, an extremely high inflationary potential. It is also likely to worsen income distribution. This has been widely hailed as a 'bold' Budget, presumably because it gives large concessions. But that is precisely what this Budget is not because it does not require any boldness to give concessions to the rich and powerful. Where the Budget saves is in its allocation for rural employment programmes and other Plan items. This paper analyses the implications of these new fiscal policies.