New Delhi, Feb. 3 -- This budget has been commendably prudent and tries to alleviate the harassment that marks India's exploitative and litigious tax system. It does little else. This is because the government is severely fiscally-constrained and lacks a coherent economic narrative.

The structural fiscal constraint: The government of India has been shrinking. While its total expenditure-to-GDP ratio was 12.8% in 2016-17 and will be 13.6% in 2026-27, this 0.8-percentage-point increase exactly matches the increase in its fiscal deficit during that period. The covid jump in expenditure (and deficits) and subsequent correction masks this long-term trend.

Despite reasonable growth, there has been no tax buoyancy. Non-tax revenue is largely d...