The first step towards rectifying a problem is recognising that the problem exists. Talk of a 6.3 per cent growth this year, inspite of clear signs of a slowdown, is akin to burying one's head in the sand. Far better to be prepared for the worst, which may help the government take steps to remedy the situation.

But the worrying thing is that there may not be much the government can do. The fiscal situation, with indirect taxes being woefully short of the target, is cause for considerable concern, which is perhaps why the government has little alternative but to try and curtail expenditure.

The prime minister has accordingly called for drastically cutting the fiscal deficit. That will disappoint votaries of the government kick-starting the economy. Given the shortfall in taxes, however, and the runaway rise in inflation, theoptions are very limited.

The government's preoccupation at the moment will obviously be to keep inflation, which has touched the 15 per cent-mark in terms of the consumer price index, under control. On its success in managing inflation may well depend the performance of the party at the state elections. The government may, therefore, go in for tightening the monetary or fiscal belt.

Unfortunately, this will have the effect of contracting demand, deepening an already painful industrial slump. With the bleak outlook on exports and the recent bad news on the kharif front, hopes of a pick-up in demand are fast receding. Under the circumstances, the government can only look to the disinvestment policy as its only, albeit rather forlorn, hope for the year.