India is facing its worst economic slowdown in years. Consumption and investment have stopped firing. The first advance estimates for fiscal 2020 pegs gross domestic product (GDP) growth at an 11-year low of 5%, down from 6.1% in fiscal 2019. Nominal growth estimate is at a weak 7.5% for fiscal 2020.

If that sounds bad, financial sector stress has been looping into real sector weakness, dragging down growth some more. The external front has landed the domestic economy a few blows, too: slower global growth, falling trade intensity, and uncertainties from trade and geopolitical conflicts.

What makes this ‘shrinking’ feeling stranger and last longer is the long-overdue financial sector clean-up, at a time when the economy is suffering from other ailments.

To be sure, monetary policy has done its bit, but with moderate and slow success. The Reserve Bank of India (RBI) cut the repo rate cumulatively by 135 basis points (bps) through calendar 2019, but lending rates tarried with just ~50-bps decline. Even as credit demand has fallen, risk aversion and weak sentiment have affected the willingness to supply credit, too.

So, with the burden of hauling the economy out of the hole falling squarely on the government and fiscal policy – even if its hands are tied – everyone was looking to Union Budget 2020-21 to read directions for a revival. How has it delivered?