Minutes before finance minister Yashwant Sinha was to present his Budget 2002 to the Lok Sabha, the Confederation of India Industry's secretary general Tarun Das told television audience what he expected of Budget 2002: ''Last year we expected the finance minister's budget to perk up industry, but that didn't happen. This year we are keeping our expectations modest.''

It's a sad commentary on the state of affairs that even a decade after India liberalised its economy and threw open a host of industries previously controlled by State-owned companies, Indian industry still expects the finance minister to guide its fortunes. Every year, before and after the budget, the finance minister-his team included-is hauled over burning coal for not doing enough, and industry itself sits back to either whine about how bad things are or to lobby for more protection. That, unfortunately, is helping neither the economy nor the companies themselves.

Consider: The rate of industrial growth at 2.3 per cent (April-December 2001) is the lowest in the decade. Over all, the economic growth has slowed to 5.4 per cent constrained, as Sinha noted in his speech, by industry's dismal performance. (China, on the other hand, is clipping at 9 per cent year on year.) Worst affected are some sectors like textiles, steel, auto-ancillaries, chemicals, and capital goods, where local production is actually shrinking. Even in traditionally strong export segments such as garments, India has been losing out to newer players like Bangladesh, Sri Lanka, and Taiwan. As a result, economic growth has not translated into many new jobs (See Employment Generated) for the people of India.

No doubt, there are several genuine problems relating to infrastructure and cost of capital. But little seems to have been done in areas of product development, design, quality, or manufacturing systems. Indeed, few companies even want to compete globally. Instead, they are still clamouring for tariff-led protection. Notes Rajendra S. Lodha, President of FICCI: ''One reason why India Inc. has failed to make the most of the liberalised scenario is the mindset of family-run businesses. Despite their best intentions, payback on investment was the key. But that's not the way to go about things, especially now.''

The early 90s did see a rash of private sector investment into industries newly opened up. For example, steel, power, automobiles, and refining were some industries where big-ticket investments happened. But most of these new projects ran into trouble because of either the promoter's ineptitude or bureaucratic bottlenecks. In the power sector, the precarious health of state electricity boards and the lack of payment guarantees from state governments kept projects from achieving financial closure. Similarly, in ports and roads, the uncertainty over collection of user fee has kept private investors away. Says Ravi Uppal, Managing Director, ABB (India): ''Private sector participation is dependant on a secure revenue model, and freedom from political interference.''

One of the pet peeves of industry for not investing is the high cost of capital in India. But is that really as serious a problem as it is made out to be? Apparently not. According to Oxus Research, headed by economist Surjit Bhalla, the real rate of interest (nominal rate of interest minus inflation) in the country over the last five years has more or less tracked global rates. For instance, between 1997 and 1999, real interest rate was 2.2 per cent, compared to 7.1 per cent in China and 3.2 per cent in the US. The following year too, India's interest rate at 3 per cent was comparable to that of the US and China. Now may be with inflation sinking to 1 per cent, there is a real case for interest rate cuts.

Perhaps the biggest reason why Indian companies had to fund projects with relatively expensive capital is the way in which they used and then dumped the primary market. Thousands of crores were raised in fresh equity, but little was returned to the investors. The money was either invested in unviable projects or, as a new report from the Reserve Bank of India points out, simply diverted to other activities. Points out Shitin Desai, Managing Director, DSP Merrill Lynch: ''Once that confidence was shaken, it became very hard for companies to raise equity, thus bringing down the whole business of capital investment.''

That all is not well with industry's management skills is also evident from bad loans that banks and financial institutions have been racking up since the boom years of early and mid 90s. At last count, the total stock of NPAs in India stood at Rs 60,000 crore. Is it possible that India Inc. did not fully comprehend the force with which a free market economy would hit at it?

Sanjiv Goenka, President of CII and Vice Chairman of RPG Enterprises, makes a candid admission: ''It is a fact that it took us a while to understand it.'' Citing an example from his own group, Goenka explains how his power company, CESC, had drawn up ambitious plans, but now realises that much of it was untenable. ''We could not function with the licence raj attitude. We had to reinvent ourselves and on occasions we were unable to do so,'' says Goenka with rare candour.

What India Inc. has to realise is this: that budgets are only a book-keeping exercise for the government. In fact, in mature economies like the US, budgets are a non-event. In another few years, once customs and excise duties have been fully rationalised and made WTO-compatible, there will be little for corporates to look forward to in a budget. Survival is a battle that companies need to fight on their own. And it's time India Inc. woke up to that reality.