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As our pages pointed out yesterday the stock market reacted adversely to the budget. The bourse did not crash, but went down nearly 21 points and foreign buyers stayed away as well after the budget proposals were made known.

Most analysts felt that the proposals to increase taxation from 30% to around 42% on the banking sector saw investors pulling out. This decline in the values of banking stocks pulled the indexes down they say.

The budget also did not offer the customary sweeteners to any sector of the economy, nor sops to either prospective voters or commercial backers. One person interviewed by a sister newspaper pithily observed that the budget was like a dish of Snake Gourd, neither harmful nor any good.

This is typical of the reaction from citizens used to the government handing out goodies or snatching the Candy away from them - in the budget. This time there was no such thing because times have changed and the nature of government with it.

For the past 50 years our post-independence governments have been behaving very much the Colonial masters did before that. The state more or less controlled the economy in every form. It was holder of capital, regulator and in many cases trader and manufacturer as well. Even today 25 years after the free-market was introduced the state remains the major player in the economy. Therefore it held the Candy jar in its hands and could serve whom it wanted at will.

This level of control over the economy has given inordinate power to elected representatives. By virtue of office they control enormous budgets. Ministers not only set policy over industry and commerce but also have the luxury of being supra-managers of actual industrial units run by state owned corporations that come under their ministries. Routinely ministers and their close supporters appropriate for themselves resources belonging to these corporations. Vehicles and staff that should be working for corporations are given to the ministers by the management of these organisations to keep the top man happy. This is one of the reasons why state run corporations are inefficient and are a drain on the national wealth.

Successive governments have accepted this sad fact and now subscribe to the new thinking that government has no business running businesses.

The privatisation carried out by the last government of vital sectors including the National Airline and the Telecommunications industry are significant milestones in the path towards the government becoming a regulator and enforcer of laws while the running of the businesses go into the hands of the private sector.

This government is committed to take the process further, launching the second wave of economic liberalisation that will remove the government from all business activity. As promised in its manifesto and taken forward in the budget the government will privatise more industry and invite further participation by the private sector in vital industries.

Therefore we have to view the budget as the first step towards decontrol by the government.

Finance Minister K.N. Choksy's budget was a plan for the future. It also reflected government's new role.

The budget was also a tentative progression towards a post-war economy. Defence spending however declined only marginally as spill over payments from the earlier war years still remain for the government to meet. Total peace is also not achieved as yet and for political purposes the government needs to keep its armed strength at a particular level.

Many areas of the North and East are still volatile in a changing security environment and the government cannot abdicate its role as the prime protector of the people's safety.

Yet infrastructure spending, which had been curtailed by the last government to fund the war, has been increased to 16%.

The effects of this increase will we hope be seen in added growth next year 2003.

We hope that the government will move towards a position where it will set a solid framework for industry, trade and commerce to thrive while remaining as a regulator and not a player. That is what the budget sets out to do.

Welcome, citizens, to the new reality.

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