Pranab Mukherjee’s budget has come and gone, and is taking the Sensex down with it. This was caused by the irrational exuberance in the days after the UPA came back to power, and an unreal expectation of path-breaking reforms. In the end, most of these myths were dispelled. Here are the big five:

Myth #1: Big-bang reforms
Forget about big-bang reforms, dada produced a budget the left would have applauded but for the fact that they are now in the opposition. I don’t know where some analysts and pundits got this idea that UPA-2 would launch into far-reaching reforms because a) they are not reined by the communists, b) have a better mandate and c) are actually overzealous reformists chafing at the reins.

There have been some like Surjit Bhalla (Oxus Research and Investments) who have seen a “reformist touch,” but that is more due to a predisposition to find something good in the budget. In contrast, Subarn Gokarn of Standard & Poor’s concluded, in an article in Business Standard, that the “absence of a clearly articulated economic vision and strategy for the government detracts from the impact.” Fabled investor Rakesh Jhunjunhwala, writing in The Economic Times,  lamented: “Where are the policy initiatives?”

Myth #2: Quick correction of fiscal deficit
There was a large group of analysts that expected Pranab Mukherjee to take serious measures to address the soaring fiscal deficit, or at least demonstrate a vision of how he would scale it down. Mukherjee just ignored it for now, believing the economy still needs tender love and care to be nourished back to health. Business Standard  was spot-on in its Page One headline: Pranab gambles with big stimulus, and in its leader article it questioned if the stimulus would be counter-productive.

The significant hike in spending, about Rs. 67,000 crore, is to further recharge the economy and avoid potential deterioration by external factors. A noteworthy point is that the two major credit rating agencies – Moody’s and S&P – are comfortable with this strategy. They also said they are comfortable with the 6.8% deficit, a level they had anticipated.

Myth #3: Large disinvestment program
Speculation raged about a disinvestment program running up to an annual Rs. 25,000 crore. This was seen for two reasons: one, the reformist approach, and two, that the disinvestment program would be used to reduce the fiscal deficit. It is not clear if the government has any such plans. This was seen as a win-win situation – for the government as well as the investors. Mukherjee has not provided any clarity on this. One of the Congress allies, the DMK, has expressed some opposition to the disinvestment program but, by and large, it is safe to assume there will be no major hurdles if the government chooses to selectively sell shares in several PSUs. What’s stopping it?

Myth #4: Further liberalisation of FDI norms
Many expected foreign direct investment limits to be raised in insurance (from 26% to 49%) and in telecom too. It didn’t happen but it can happen outside the budget too.

Myth #5: Oil prices decontrol
Finally, free pricing of petroleum products. Again, liberals in industry have asked for too much too soon. It was always unrealistic for such decontrol to brought in overnight. But that didn’t stop many to dream, and for investors to drive up the market to unrealistic levels. Mukherjee has been pragmatic on this front, appointing a panel that will study the issue at length and make recommendations. With its pledge to the aam aadmi, the Congress could never have carried this out in a hurry. The key question is what happens if global crude oil prices claws its way back to historic highs of $140+.

Overall, the budget has been pragmatic though why Mukherjee chose not to lay out any roadmap for UPA-2 is a mystery. Even if he did nothing this year, he could have laid out a vision, unless one is to assume that inclusive growth, and not reform, would be the buzz phrase for the next five years.