Rose-tinted glasses can produce pleasant figures but not credible ones. Finance Minister P Chidambaram’s interim budget put the fiscal deficit for 2013-14 at 4.6% of GDP, beating his target of 4.8%, and projected next year’s deficit at 4.1%, again beating earlier projections of 4.2%. But this year’s figure was massaged by creative accounting to postpone expenditures to next year while stealing next year’s revenue through massive interim dividends from public sector undertakings.

Chidambaram assumes 19% growth in tax revenue next year against only 12% this year, although nominal GDP growth in both years is projected to be the same — just 13.4%. Meanwhile, total spending is projected to rise only 9.1% next year, less than nominal GDP. The stock market response to these figures was tepid, and the next finance minister will probably complain that he has been sold a pup.

The oil subsidy is projected to be slashed from Rs 85,480 crore this year to Rs 63,427 crore next year. Since next year’s figure includes Rs 35,000 crore postponed from the current year, this assumes a truly draconian cut in the oil subsidy next year. That will require a very brave new finance minister, much braver than Chidambaram himself.

He has prudently refrained from producing an election budget full of freebies. Rather, he aims to convince rating agencies that India is on the path of fiscal virtue, and so should not suffer a credit downgrade (which would be terrible for the rupee and for markets). He has doubtless convinced rating agencies to hold their fire. But India is not out of the woods by a long shot.

Far from producing sops for the aam aadmi, he produced sops for the aam manufacturer, notably in capital goods, autos and mobile handsets. But India’s problems are structural more than cyclical, and history suggests that excise duty cuts cannot remedy structural flaws. The finance minister boasts that the government has cleared Rs 6.6 lakh crore worth of projects. If not even this has sufficed to stimulate capital goods, surely duty cuts cannot do so either.

Project clearances are just not translating into orders for machinery or construction, and the budget speech was clueless about the loss in translation.

While he has met key targets, the quality of his fiscal deficits is poor. Total spending in 2013-14 has been slashed by Rs 75,000 crore below budget, but the cut was borne entirely by Plan spending. In theory, the revenue deficit should fall to zero by 2016-17, but this seems unattainable: it is projected at 3.3% this year and 3.0% next year.

The only two minor concessions to populism are relief to nine lakh students for old student loans, and to defence pensions (where the one-rank, one-pension norm will be implemented).

As expected, Chidambaram’s final budget speech waxed eloquent about India’s many achievements over the last 10 years of UPA rule.

Unfortunately the opinion polls show that voters are not impressed, and will inflict the worstever defeat on the Congress in the coming elections. Chidambaram glossed over the fact that GDP growth has fallen below 5% for two successive years for the first time in three decades. Instead, he spun the tale that India’s long-term growth trend was 6.2% per year, so even UPA-II had exceeded this by averaging 6.6%. It’s pathetic that a government that till recently took 9% growth for granted is now boasting about just 6.6%. Oh, what a fall there was, my countrymen.