The Union Budget of July 2014 was prepared in the b a c k d r o p o f a difficult economic situation. Globally, economy recovery has not been consistently robust and financial markets are not stable. ECB has recently announced negative interest rates while the US has yet not finalized its tapering plan. The scenario in the emerging countries is dismal with growth in BRICS not following a steady trend. India was one of the countries to have been relatively shielded in the initial years from the global financial crisis, but the growth rate of the economy dropped to sub-5 per cent levels in 2012-13 and 2013-14. The downward trend in growth was recorded in all sectors of the economyagriculture, industry and services. Along with dismal growth, inflation has persistently been high. Though, the average inflation rate measured by Wholesale Price Index (WPI) dropped to 6 per cent in 2013-14, it was still above comfort levels. Also high food inflation has been a cause of concern for quite some time now. While enforcement of policy measures lead to curbing of the gold imports, depreciation of the Indian rupee aided India in boosting its exports in 2013- 14. Consequently, current account deficit (CAD) recovered from 4.7 per cent of GDP during 2012-13 to 1.7 per cent in 2013-14.