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Niti Aayog Vice Chairman Rajiv Kumar expressed surprise over the stock market reacting negatively on the Budget proposals, saying investors probably expected some big bang reforms and ignored the initiatives towards investment and growth.
Kumar in an interview to PTI said the Budget has done nothing wrong, and it has “ticked all the boxes”.
Giving a thumbs down to the Budget, the market benchmark Sensex logged its biggest single-day plunge in more than a decade, wiping out Rs 3.46 lakh crore investor wealth. “I am actually quite surprised by the market’s reactions yesterday, going down 1,000 points. I was trying to understand why did that happen,” he wondered.
Kumar added that ”... the Budget does nothing wrong, it has got nothing anti-private investment or anti-private sector or anti-growth, the Budget is ticking all the boxes”. Probably, the market was expecting some big bang reforms that are associated with huge push for consumption as was witnessed in the aftermath of Lehman Brothers crisis in 2008.
“So my own thought was that market expected so called big bang reforms and by big bang reforms, normally everybody understands in India, a huge impetus for consumption. And I think the best example of that was in 2008 Budget which preceded the Lehman Brothers crisis,” he said.
Pointing out that the UPA-1 gave lot of sops in 2008 Budget because elections were due, Kumar said it had resulted in ballooning of the fiscal deficit to 6 per cent in 2009 from 2.5 per cent.
“If the market had expected that kind of consumption boost without any regard to fiscal discipline, it was not possible,” he said adding that Prime Minister Narendra Modi was very clear that Fiscal Responsibility and Budget Management (FRBM) target should not be breached.
“Therefore, if you notice, we used 0.5 per cent escape clause (under FRBM) and remained within that,” Kumar stressed.
The Niti Aayog vice chairman said the Budget has given a big boost to the investment. “Many steps are announced to improve the investment sentiments.. both foreign and domestic,” he said.
Moreover, Kumar said, the Prime Minister has mentioned it as a inspirational target, more to drive the people together. “And I think, we should keep that intact. Any revision will only create massive discouragement, and not push the people, especially in government to go towards that,” the Niti Aayog vice chairman observed.
On the criticism that the government has not done anything for job creation in the Budget, he said that all investment enhancing measures announced will lead to employment generation.
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