The proposed increase in plan allocation--and budgetary support for it--was the USP of Sinha's budget. Enlarged public investment was the basis on which he had held out the assurance of green shoots sprouting after September. But Sinha's promises to raise receipts--essential to hold the fiscal deficit within target--have turned out to be hollow.

Projections premised on tightening enforcement of excise taxation, selling PSU shares at a discount (to raise more than budgeted) and luring massive revenue under Samadhan were backed neither by homework nor by political will. So, Sinha has given in to pressures to cut the fiscal deficit by cannibalizing the plan. Publicinvestment has been cut despite the on-going slack in private investment. The recession in industry has been given a fresh lease.

That the finance minister had planned to renege on the commitment to enlarge the annual plan has been suspected for some time. Industries like cement and steel were reporting no significant improvement in sales over the previous year's lows. They have continued to complain of deficient expenditure on construction. Sinha ducked this, saying that the recovery he had promised would begin once the kharif harvests were in. Public expenditure would pick up after the rains. Nothing of the sort happened.

It would appear that Sinha has been tight-fisted on plan expenditure from day one. What is now being announced as a prospective cut had already been effected by the simple device of putting plan expenditure on hold.

A roll-back in the plan is considered desirable in a reforming economy. It is assumed that the resources not invested by the government are automatically attracted intoprivate investment. But for the last three years, private corporate investment has flagged. Simultaneously, public investment has come in for compression. The economy has got the worst of both worlds. The consequent recession has held down revenue growth and this, in turn, has enlarged the fiscal deficit. Sinha has not learnt from the failure of Chidambaram's dream budget which hurriedly choked public investment. To contain the fiscal deficit, Sinha has squeezed public investment, trapping the economy in a vicious circle of low industrial growth and high fiscal deficit.