Countries such as India (and china, for that matter) can go about the business of economic policymaking in two ways: one, they can toe the International Monetary Fund line and make fiscal reform the core of their policies. That should, as classical economic theory goes, make an economy more efficient and companies and individuals, we are told, like to invest in such economies. A finance minister who does this can expect to receive good press, a good word or two from statesmen in the western world, an award or more, even a berth in the IMF when they retire. Two, they can ignore IMF's dire warnings of economic doom and focus on growth, typically by investing their government's all in infrastructure projects and by boosting demand. China is a notable example of a country that has followed the second path-in 2001, when it was clear that government-spend alone wouldn't do the trick, the country declared an extended Chinese New Year holiday. Businesses ground to a halt for two weeks, and consumers went out, visited relatives, ate, drank, made merry, and bought a few products, giving the economy a hand up along the way.

Finance Minister Jaswant Singh's inaugural budget displays neither of those strands. Instead, the man has presented a carefully woven tapestry calculated to satisfy all. A populist weave is balanced by a reformist weft, but only just. There's evidence of Singh having held himself back: Rs 60,000 crore is a lot of money to spend on infrastructure but it could have been more, and would have probably resulted in faster economic growth had it been so; and while the restructuring of state debt is a honest effort at fiscal consolidation, it isn't really enough to contain the country's looming fiscal deficit, projected to touch 5.6 per cent of GDP in 2003-04.

When he stands up to present his next budget next year, then, Singh could find no major difference in India's macro-economic metrics. He could, and we're hoping he does, but that is contingent on external factors-on a medium-term global recovery; on India Inc.'s ability to leverage the budget's positives (and more importantly, lack of negatives) into a winning competitive position; and on the Indian consumers' confidence remaining high for at least the better part of the coming fiscal. Only the last of these variables falls within Singh's span of control. He's done enough to boost consumer sentiment, but a year is a long time and the Indian consumer, like most others in the genus, is fickle.

If Singh does find the economic context unchanged next year, he will have no one but himself to blame. A whole-hearted subscription to either the IMF-school or the China-school of policymaking would have helped. As would have the complete acceptance of Dr Vijay Kelkar's recommendations on taxes-particularly his views on exemptions and agricultural income. Indeed, if there's one thing completely missing from Budget '03 it is the recognition of the need for second-generation reforms-Singh's script lacks even the customary lip service to this. For India to become an economic powerhouse and grow at the 8 per cent a year Prime Minister Vajpayee would like it to-something Singh says is not impossible-the finance minister will have to address issues related to power-sector and labour reforms, prune and, eventually, phase out subsidies, introduce user charges, and create an efficient tax machinery. Many of these are under the control of various administrative ministeries but since everyone (and that includes the people who frame it) views the budget as a statement of the government's economic intent, Singh would have done well to address these issues there. That's the one true path to economic growth. And it's one that the current finance minister, like the 24 men who served in that position before him, has been loath to take. Budget '03 is well begun, but as the cliché goes, it remains half done.