First stop the downward plunge, then try to go up.

Why were the pundits expecting a budget with radical reforms? This government has been in office for less than 2 months. That is not enough time to find out the damage to every sector of the economy inflicted by the Congress, before trying to heal it. It is like a car driven up to Shimla by the Vajpayee government and then allowed to freewheel down the mountain by the Congress. If brakes are applied suddenly it will skid out of control down into a ravine. It has to be slowed down gently, brought to a halt and then driven back up. That will take time, so to call it a ' Chidambaram budget with saffron lipstick ' is intellectual dishonesty and utterly shameless sycophancy of the Congress. Those of us with slightly longer memories will remember the panic stricken ' big bang reforms ' of 2012 after threats of a credit downgrade to junk status by Moody's and S&P. That involved raising the prices of diesel and cooking gas which were required to prune the subsidy bill but with the CPI already at over 10% it only added fuel to inflation fire. Foreign investment in insurance was raised to 49%, in defense to 26% and in multi-brand retail to 51%. There was great rejoicing in the Congress about how billions of dollars will pour in as Walmart, Tesco and Carrefour rush in to build huge stores. Farmers would become rich as these stores would source fresh produce directly from farmers, food inflation would fall as they would eliminate middlemen and infrastructure would improve as they would build cold stores. Nothing happened. Only Jet Airways received a lifeline of $600 million from Etihad Airways. That was it. The economy cannot improve without infrastructure but there is no money. So Rs 378 billion has been allocated to the National Highways Authority and Rs 140 billion for rural roads. This will increase employment of labor as well as ease movement of goods. Rs 70 billion has been reserved for building smart cities. You cannot build any city, let alone a smart one, without electricity, water, broadband and cell phone connections. So this maybe a hint of private, public sector cooperation. The lowest slab for income tax has been raised to Rs 250,000 to give a gentle push to consumer spending without adding to inflation. More tax savings have been encouraged by increasing the limits of Public Provident Fund and other small savings. If savings improve it may help reduce the Non Performing Assets in public sector banks. The biggest difference with the Congress is that there is no announcement of more handouts. Instead previous schemes will be made more efficient by reducing theft. First stop going down then go up. Eminently sensible, we say.