Don't read too much into market crash after Budget, says PM's Economic Advisor Sanjeev Sanyal

The Opposition had cited the fall as evidence that the Budget had disappointed markets, particularly in the wake of proposals to raise the securities transaction tax

• Sanjeev Sanyal says market fall post-Budget isn't a verdict on its quality
• Budget focuses on fiscal consolidation and process reforms over headline changes
• India's debt-to-GDP ratio projected to drop below 50 percent by decade's end

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The market's sharp fall after the Union Budget should not be seen as a verdict on the quality or impact of the budget, Sanjeev Sanyal, Economic Advisor to Prime Minister Narendra Modi, said in an interview to NDTV on Sunday.

Speaking to NDTV, Sanyal played down the nearly 2 per cent decline in equity markets following Finance Minister Nirmala Sitharaman's presentation of her ninth consecutive Budget, a drop that erased close to Rs 10 lakh crore in investor wealth.

The Opposition had cited the fall as evidence that the Budget had disappointed markets, particularly in the wake of proposals to raise the securities transaction tax.

Markets naturally move up and down, Sanyal told NDTV, adding that a single day's reaction has little bearing on the long-term outcome of a Budget. Drawing from his own experience of over 25 years in financial markets, he said short-term volatility does not warrant excessive concern.

In his interaction with NDTV, Sanyal described the Budget as a "workman-like" exercise that focused on structural and process-oriented reforms-areas that economists value but which may not always capture public attention.

He pointed to fiscal consolidation as a key achievement highlighted in the Budget, noting that government debt had risen sharply after the Covid-19 pandemic and has been challenging to rein in. As explained to NDTV, the fiscal deficit is now being brought down in a calibrated manner and is projected to fall to around 4.3 per cent in the coming financial year, with a target of moving below 4 per cent in subsequent years.

Sanyal further told NDTV that India's debt-to-GDP ratio is also on a corrective path, expected to be about 56 per cent now and likely to drop below 50 per cent by the end of the decade. He underlined that this progress stands out at a time when many countries-both developed and developing-are struggling with runaway debt levels.

While large, headline-grabbing reforms tend to attract more attention, Mr Sanyal said on NDTV that meaningful reform often happens through incremental changes. He stressed that process reforms-the "nuts and bolts" of governance-are critical even if they appear less dramatic.

Referring to the Budget documents rather than just the speech, Sanyal told NDTV that they contain numerous small but significant changes. He cited reforms in the customs system aimed at speeding up imports and exports, including the use of advanced scanning technologies to ease clearances.

On the taxation front, Sanyal noted in his comments to NDTV that several minor rule changes have been introduced to remove frictions in the income tax system-issues that were frequently misused for harassment and rent-seeking in the past. These adjustments, he said, are intended to make the system smoother and more transparent over time.