A 6 per cent plus growth gels with Finance Minister Yashwant Sinha's operation feel-good. Doomsayers predicting a stagnation of the growth rate at last year's level may be proved wrong. But the straws in the wind are worrisome.

Business confidence is ebbing. Profit margins are under pressure. Industry prefers to put investment decisions on hold. As of now, the expectation that industrial growth will climb to 8 per cent (6.5 per cent in 1997-98) shows little promise of being realised. Available data for this year suggest that the pace of industrial growth is slowing.

The assumed growth of agricultural output by 4 per cent in 1998-99 seems overoptimistic. True, the latest monsoon was the eleventh consecutive bounty. But the tenth consecutive good monsoon last year saw an output decline by over 3.6 per cent. Hopes thatindustrial growth will be fuelled by a surge in rural demand could take a hard knock.

With two key sectors, which contribute to a half of the GDP, lacking bounce, growth in the services sector seems slated to slow down (from recent highs); growth in financial services seems to have weakened since last year. It is not known if EAC agreed with the Prime Minister's defiant optimism on growth. EAC head IG Patel announced that the economy was not in as bad a shape as was being made out. However, he vaguely referred to steps to revive domestic and foreign investment, thus hinting at an investment slow down. More pointed was Patel's reference to the need for a consensus on economic policy.

To be fair to the Prime Minster, he did talk of reining in the fiscal deficit. The budget projection of a fiscal deficit of 5.6 per cent of GDP assumes a GDP growth of 7 per cent. A lower growth (of even 6 per cent) will automatically push up the proportion of the deficit. This explains Vajpayee's econcern for growth as alsofor accelerated tax revenue collection. The government must be willing to lay its cards on the table for the EAC to be an effective think tank. EAC has promised to make recommendations next month; but the issues it is supposed to address are not clear.Patel talked of political will for reducing revenue expenditure (on subsidies in particular), presumably also for forcing the pace of privatisation, not through equity disinvestment as at present, but through big bang sale of PSU assets.

But if political will is missing, to what end the EAC's confabulations with the Prime Minister?