No longer. Not after the Chidambaram budget. Not after Sinha's roll-back budget. But why be hard on Sinha? The central issue, as every one knows by now, is not tax rates, but collection of taxes from those who must pay them. In 1996-97, the Centre's tax revenues, as a proportion of the GDP, was 10.6 per cent. The estimate for 1998-99 is that the tax GDP ratio has fallen to 9.6 per cent.

There is no point raising tax rates. Nor in levying new taxes. Unless the government has the will to get its tax bureaucracy to collect taxes; unless the government can make the tax bureaucracy honest. Since neither efficiency nor honesty can be expected, it is best to let tax rates remain low and hope that tax payers themselves flood the government's coffers.

Criticise Chidambaram's voluntary income disclosure scheme; laugh at Sinha's Samadhan. But note that both finance ministers relied on voluntary tax compliance/disclosures. The days of tax enforcement are over. The tax strategy now relies on a shrewd assessment of how much can be coaxed out of the tax payer.

The only new instruments that work are the service tax (on telephones) and tax deduction at source (on investors). The collection of both, be it noted, is not in the hands of tax collectors, but of corporates (MTNL, IDBI, ICICI, UTI, etc.)

Let us face it. The tax state has collapsed. This is the saddest commentary on government as we know it. Those jubilant with a state of affairs that requires the government to enter into compromise on tax dues should introspect. If tax enforcement were anywhere near as good as it should have been, tax rates -- excise, direct taxes, customs -- could have been lower. The government could have boldly rationalised tax rates. It could have then reduced its borrowings; this in turn, would have eased interest rates in the economy, and given a fillip to investment.

Ignore the cynical tone of what has been said so far, but the fact remains that there is little point in tinkering with tax rates. Little will be achieved by fiddling with rates, though there is a case for rationalisation of especially indirect tax rates. Period. What are called tax initiatives must be held in abeyance. It is time to wait. Wait and watch.

Go back to Chidambaram's dream budget of 1997-98. The fiscal strategy was to fuel private accumulation-led growth. This did not click, for reasons that are by now fairly clear. The three years ended 1995-96 were a period of aggressively high private investment. There was a very rapid addition to productive capacity. But correspondingly there was no aggressive rise in demand.

Domestic demand continues to grow at a slow but steady pace. So, excess capacity has run through 1997-98. Yes, capacity utilisation has improved, but only somewhat. Maybe 1999-2000 will see the end of somewhat, and the beginning of a real piece of action. There is some indication of this in the share markets. The point is that nothing much can be done except to wait for the economy to gather steam. May be token reductions in excise duties on durable consumer goods, especially, automobiles and three-wheelers, will help.

From Manmohan Singh through Chidamabram, fiscal strategy has taken a certain tilt. This needs time to work. Let the tax system settle down. Let the private sector get its act together. That is where the initiative should come from, not the government.

What the government needs to do is to get its expenditure budget under control. Here is an example of waste, which Yashwant Sinha could look into. Against a cost of Rs 4.25 crore to build a km of road, estimated by experts, the actual incurred by government is close to Rs 8 crore. Focus on real investment in roads, housing, education and health. This leaves the problem of the fiscal deficit open. But improved revenue collection could bring down the deficit by a cool one per cent of the GDP. If Sinha is able to step up tax collection, and plug infructuous expenditure, he will be remembered long after his political wicket falls.