It was required to provide major stimuli to growth, restore order in government finances, hold the price line, guard the rupee, address swadeshi fears and reformist hopes, and demonstrate in the face of an uncertain external environment that everything was under control. In the event, the basic budget strategy is to build confidence at home by spending its way out of an economic slowdown and avoid too many unpopular decisions.

Reform is more or less on track. There are some cautious openings, a concerted effort to cut down red tape and more reformist zeal with the public sector than any previous government has shown. The fiscal deficit is allowed to slide, the GDP growth target and major newpolicy announcements conspicuous by their absence. With luck, tough measures in government departments, cooperative allies, a good monsoon and no worsening of external factors in the course of the year, Sinha may just be able to prevent things from getting worse. But make no mistake. It is going to be a very long, hot year.

Pushing economic growth is very much on the Finance Minister's mind, as it should be. Whether his bag of measures is the ideal way is highly debatable. Time has not been on his side. His gamble on growth, on the back of a high fiscal deficit, stokes inflation which threatens to undo his calculations.

He is prudent in avoiding any reference to the seven percent growth rate promised in the National Agenda. Sinha's ``largest ever increase in expenditure'' is exactly the kind of tonic business and industry, agriculture and the social sectors have been waiting for. The hikes in expenditure in percentage terms on agriculture, health, education, welfare and other heads are mind-boggling. Allthis and an increase in food subsidies too.

Defence, atomic energy and space research all benefit from higher outlays, as was to be expected. The defence budget is up a hefty Rs 5,000 crore (over the revised estimates for last year) and more is promised if necessary in the course of the year. That is not all. Internal security expenses for the Northeastern states will now come out of funds earmarked for the region which means there will be some savings under that head for the defence ministry. In short, proposed outlays satisfy every conceivable sectoral demand. It is almost too good to be true.

In finding the resources for his spending programme, Sinha goes beyond the protectionist expectations of business and industry lobbies and swadeshiites by raising general customs duties by eight percent. Steep cuts in customs levies over previous budgets give him scope to do this and still not fall foul of the WTO. But it is not in the reformist spirit to protect the relatively inefficient at the expense of thecompetitive. Nor, after the depreciation of the rupee, was it absolutely essential for revenue purposes, unless one is chasing exceptionally high expenditure targets as is the case here.

Sinha has been far bolder on PSU reform, going so far as to propose closure of loss-making units and major disinvestment in Indian Airlines. It is the kind of shock therapy the public sector has had coming to it for a long time. The Congress and United Front dithered, unwilling to take on the unions.

The BJP with its political base elsewhere has no such qualms and can afford to take a more rational view of the situation where the average return to the government from the public sector is lower than its cost of borrowing.

On the other hand, Sinha is relutant to get tough in others where it is essential. Even though he insists that widening the tax base is the single most important way of raising tax revenues (which fell drastically last year), he lets off the service sector lightly. Transport operators are absolved ofthe need to pay services taxes. No doubt, part of the reasoning behind this is that the country cannot afford any more disruptions.

Nevertheless, it means the exchequer forgoes something in the regions of Rs 2,000 crore. Sinha has similarly been satisfied with a little tinkering on personal income taxes and exhortations to citizens' patriotic duty to achieve higher tax compliance. At this time of what he calls ``national resurgence'', this amounts to missed opportunities.

Most of the government's ideas on speeding up reforms especially in the area of infrastructure development were made available pre-budget and post-Pokharan. The Budget offers special efforts to remove the bureaucratic hassles which domestic and foreign investors suffer and which have been one of the main impediments to accelerating investment in the infrastructure.

Financial system reforms continue the process begun earlier and recommended by the Narasimhan committee, notably on dealing with weaker banks, reducing non-performingassets and raising capital adequacy ratios. These are sound ways of strengthening the banking system. All these and delicensing of coal and petroleum products sectors are a clear signal that the reform process is continuing. The country and the world were however looking for evidence in the government's policy on insurance of an acceleration of reforms.

Although opening up insurance to the private sector is welcome, there is bound to be disappointment over the failure to open it even modestly to foreign investors. It cannot be said that the 35 percent hike in expenditure on power, transport and communications, handsome as it is, is enough.

Every possible addition to investment in this sector should have been pursued given the huge backlog and bottlenecks. Political compulsions appear to have got in the way of bolder opening up and an opportunity lost to increase investment.

Instead Sinha has taken the relatively easier course of an enabling measure for public provident funds to invest in high-ratedprivate sector securities. It is encouraging to find legislation will be introduced in the current session on FEMA and money laundering but there is no sign yet of a new companies act.

If two special constituencies in the Budget are NRIs and small scale industry who can blame the Finance Minister for going for what is achievable and making up for past neglect. There would have been risks attendant on any course of action to boost the economy, circumvent the psychological and real effects of international sanctions. Sinha has chosen a course which involves unacceptably high government borrowing and risks inflation and possibly pressure on the balance of payments position. The belief is that the re-emergence of growth will alter all those equations.

A more conservative approach would run the opposite risk of deepening the recessionary tendencies which have been growing over the last two years. In any case, these are uncertain times. The budget should be seen as a response to the situation at the presentmoment. Several corrections in the course of the next few months may be necessary. Sinha has given industry and business, agriculture and the infrastructure far more than those sectors could have hoped for. It is now up to them to prove him right.