India is facing its worst economic slowdown in years, but you wouldn’t know it from reading Narendra Modi’s new budget. The Prime Minister may be missing his last best shot at free-market reform.

Investors had hoped for serious stimulus after six quarters of slowing growth, but the Bombay Stock Exchange’s benchmark Sensex index fell 2.4% Saturday after the government introduced the budget. Finance Minister Nirmala Sitharaman mostly offered a list of new spending projects instead of a strategy to boost growth.

The country’s fiscal deficit target will widen to 3.5% of gross domestic product from 3%, but there’s not much in the budget to justify this broken promise. The government says it will increase rural public-works spending some 13%, along with providing more money for education and health care. Much-needed military spending will increase by some 5%, though India still spends only about 1.5% of GDP on defense while China continues a rapid modernization.

One bright spot is a $5.6 billion income-tax cut for those earning roughly between $7,000 and $21,000 a year, but heavily taxed equities still weigh on private investment. Investors hoping for an end to the long-term capital gains levy were disappointed.

Last year’s corporate tax cut to 22% from a 30% base rate was significant but has been undermined partly by Mr. Modi’s protectionism. On Saturday Ms. Sitharaman announced increased tariffs on electronics, furniture, toys and other “low cost” goods and suggested more import taxes to come. Ms. Sitharaman also mentioned privatizing the state-owned airline and life insurance company, though without enough detail to reassure markets.