First, from the perspective of the finance ministry's own domain, we need to look at what it does on the fiscal front. Mr Chidambaram has shown complete commitment to the mandate of the Fiscal Responsibility and Budget Management (FRBM) Act, to cap the fiscal deficit while eliminating the revenue deficit.
The latter is the greater challenge and his convergence towards the zero-deficit target will be a significant yardstick. Beyond the aggregate numbers, he has also indicated his commitment to taking the country to a full-fledged Goods and Services Tax (GST), which will involve a series of rate rationalisations and re-balancing as far as indirect taxes are concerned. These should be watched out for.
Second, broadening the scope of evaluation to macro-economic performance, the Budget must be seen in terms of what it does to sustain rapid economic growth, especially in the context of the global as well as Indian slowdown that has set in.
To deal with the cyclical effects, he needs to pump money into programmes that will quickly spend it, thus achieving pump-priming. Critical to longer-term growth is the stepping up of investment in infrastructure, not just in terms of financial commitments but also in creating effective vehicles for implementation in the public and private sectors. Even with all the good intentions of the government in play, the infrastructure gap is not narrowing.
Third, the ruling coalition's emphasis on inclusive growth is beyond being a political slogan; inclusiveness is a critical component of a sustainable growth path. This needs to be tackled at several levels.
Transfer payments to provide households a secure and minimum level of subsistence need to be combined with longer-term programmes that build capabilities and earning capacity.
The Economic Survey has shown that, despite doubling social sector spending over the past four years, the country's position vis-à-vis the Human Development Index does not show much change.
The budget needs to reinforce successful programmes and streamline the entire delivery system, including providing strong incentives to state governments. Fourth, the budget should be evaluated on its anticipation and provision for several threats looming on both the fiscal and macro-economic fronts.
In the former category, apart from the impact of several off-budget items - oil bonds, fertiliser bonds and the like, there is the impact of the recommendations of the Sixth Pay Commission on public finances to consider.
On the latter, the global food supply and price situation is looking increasingly ominous and may well precipitate into widespread domestic distress in the event of a weak monsoon this year.
Finally, in a year before the scheduled general elections, whatever else the informed and lay observer may think about the budget, the sharpest reactions will come from Mr Chidambaram's political colleagues.
His party's and his allies' sorrow will be the opposition's joy. He clearly cannot do anything that, even while being applauded by professional analysts, is condemned by politicians gauging their prospects for re-election.
Some populist grand-standing is therefore to be expected, and it should be evaluated on how much damage it does to the fiscal.
The big danger to watch out for is a string of giveaways, including a write-off of banks loans. Serious damage here could undo much of the good work that Mr Chidambaram has done over the past four years.
