Analyzing the budget

Every year, during this time, when the union budget is announced, there is a lot halla over it. Is the budget good? Will it help the common man? Will it be good for the industries, and the IT sector? Many economists believe that the best way to evaluate the budget is understanding behaviour of the stock market.

If the stock market goes up, the budget is described as successful. If  it moves sideways, it is said that the market has absorbed it well. If it moves down, it becomes bad news for the market, hence a bad budget. Stock market follows a very complex pattern. If stimulus is withdrawn, it is not considered good by many, since it means more taxes and hence less profit. But it also means more revenue and less government borrowing, which in turn creates more scope for private borrowing and private investment. The point is this- Stock market is not the ultimate way to judge the union budget, as many believe. In-fact, stock market, more often than not, is inversely proportional to the happiness index of the Indian common man.

The country gets on its feet, when the budget is announced, but the same people eventually forget about it for the rest of the year. Please understand- the annual budget is a briefcase full of guidelines, promises and expectations, and nothing else. It is merely a plan, and the success and failure completely lies in its implementation. One day, week or month is too early to analyse it!