A worrisome fact is the negative growth of capital goods production, down by close to 10 per cent from the level of 1996-97. Transport equipment and machinery fell by 18.9 per cent and machine tools by 16.5 per cent. These are clear pointers to an investment recession. The monthwise data show that the industrial slack deepened in the second half of last year. This is precisely the period when the business-friendly Chidambaram budget should have inspired corporates to invest in a big way. Corporate results for 1997-98 have been good, but there is little evidence of major investment programmes in the private sector. Corporate expectations failed to match last year's fiscal optimism. It follows that Yashwant Sinha will have to change the pattern of public expenditure in favour of public investment in the next budget. This will be possible only if he boosts public savings. He must do away with hidden subsidies by rationalising charges on power, transport and water. This will, in turn, attractdomestic and foreign private investment, notably in power and transport. This is a tough (politically unpopular) prescription, but the fiscal reality precludes a big bang public investment strategy. Sure enough, public investment should be raised, but reform of user charges will be a critical enabling condition for mega private investment. A two-track strategy will be Sinha's best bet.