The Vote-on-Account for 2014-15 and indeed its presentation by P Chidambaram was along expected lines. The Finance Minister gave himself and the UPA-II government a big pat on the back by recounting the achievements of the last 10 years.

He lectured us on the 10 steps to be taken for good economic policymaking in the future, and above all asserted that he had brought about a recovery in economic growth in the second half of this fiscal year.

The assertion that economic growth is on the rebound and that we are in for a sharp recovery, is particularly galling as it is surely based on a wrong assessment of growth impulses in the economy.

According to the CSO’s latest estimates, both private final consumption and gross fixed capital formation are stagnant. Indian investors are investing abroad and foreign investors have been scared away.

It is patently optimistic and indeed wrong to assume that nominal GDP growth in 2014-15 will be 13.5 per cent --- with CPI inflation at 6 per cent next year, it implies a real GDP growth of higher than 7 per cent.

This is impossible, given the present slump in the investment cycle. Given that the Finance Minister is known for his sensitivity to the market, he was expected to surprise it positively by achieving a fiscal deficit number lower than what was targeted.

And so he did with the fiscal deficit for 2013-14 coming in at 4.6 per cent and the revenue deficit at 3.3 per cent.

These are still significantly above the FRBM (Fiscal Responsibility and Budget Management Act) norms and perhaps achieved by window dressing and pushing expenditures to the next fiscal year.

And by over-achieving the fiscal deficit target by ferociously cutting Plan expenditure by as much as ₹79,790 crore, the Finance Minister has further weakened the prospects for an investment-led recovery.

An acceptance of the economic stress in the system, a degree of contrition and a more honest and stronger attempt to shore up the investment sentiment would have brought greater kudos for the Finance Minister.

(The writer is a Senior Fellow, Centre for Policy Research, New Delhi)