The low disinvestment target also takes a lot away from transparency. In the last two days, government officials have discreetly stated that stake sale in PSUs could fetch them at least Rs 10,000 crore. Given that the finance ministry is already exploring ways to use these proceeds for funding social sector schemes, mention of a realistic target would have had a sober effect on the markets. For the bond trader, it means lower borrowings. Bond markets respect transparency in numbers, not convoluted logic on why it has not been possible.

The other big doubt is on the government’s ability in spotting the recovery as and when it happens, and then its willingness to step back. There are doubts on both, and it is this uncertainty that keeps the market spooked. It is easy for Mukherjee or any government for that matter to let deficits slip out of their hands. But sticking to targets — of paring the fiscal deficit by 1.5 per cent of GDP a year over the next two years — is really sticking the neck out. It assumes India will return to the 8-9 per cent growth target next year itself and not need any stimulus.

Mukherjee could have, at least, reaffirmed the UPA’s commitment to set up an independent debt management office, relieving the RBI of at least one of its many mandates — that of being the government’s investment banker. But he has chosen to keep quiet, letting the central bank handle multiple and conflicting roles of managing the government’s burgeoning funding requirement, keeping inflation and interest rates low and also ensuring growth.

... contd.