Happily, the tidings seem to be improving on that front too, though they remain mixed. How is this so? The realisation seems at last to be sinking in that further economic policy liberalisation is crucial if things are to move forward.

Keynesian-style inflating of the economy through public spending can perhaps produce results in the short term, but it is a high-cost option. Indeed, given the high fiscal deficit, public extravagance is no option at all, though to hear this government go on it may not seem so.

The sooner the BJP acknowledges this the better, if it is not to store up more trouble for the near future. This is why Friday's ``economic package'' -- this being the season of packages -- seems a far better idea than last week's.

To refresh memories, the Prime Minister had then tried to seduce asceptical country with his proposal for a Rs 28,000-crore national highway from Kashmir to Kanyakumari. This may be far less sensible than low-profile but much-needed maintenance and extension work on the existing network, but who said the BJP's economics is sensible?

Even so, movement was at last visible on Friday on some eternally-pending areas. First in these is the Cabinet's clearance for voluntary retirement schemes that would eventually enable the closure of eight ``sick'' public sector companies which continue to bleed public finances. The real thing may yet take ages to happen but at least the ball has been set rolling and political clearance won.

So too, eliminating duty on imports of equipment for mega power projects should significantly boost generation by lowering costs in this crucial structure which is quite possibly the best indicator of overall economic activity.

The government should learn a lesson from its own step and recognise that a lowering of duties on imports which are not indirect competition with domestic producers, and in areas crucial to exports, just now can do a lot for the economy.

But such wisdom is hard to predict for this swadeshi government. As to the Urban Land Ceiling (Regulation) Act, the postponement of its repeal is a pity, but the sensible changes cleared to the Land Acquisition Act should be a major stimulant to the roads sector.

All that said, what the economy really needs is for the government to put its fiscal and monetary house in order. It simply has to put a lid on the fiscal deficit and control inflation. This is indispensable in itself, but in its absence the instrument of monetary policy -- interest rate-setting -- to regulate economic activity will also remain closed.

This is clear in Friday's credit policy announced by the Reserve Bank. The one truly heartening development in all this is the attempt to put banks on a sounder footing by raising their capital adequacy ratio and stipulating better provisioning for bad loans.

It is just as well toremember that behind much of the malaise in the world economy today is a banking crisis -- and that Indian banks recently got a very poor report card from international rating agencies, ahead only of notorious performers such as Russia and China.