On July 6, finance minister Pranab Mukherjee presented the Union governments 2009-10 budget. It was a staid and sober effort, representative of the personality of the man himself. Its highlight was his focus on the governments determination to spend on projects targeting the poorest of the poor — the National Rural Employment Guarantee Scheme, Bharat Nirman and Sarva Shiksha Abhiyan (Education for All), among others. He clearly told Parliament that the government proposed to allocate significant revenue to these programmes, and warned upfront this would make a hole in the governments balance sheet.What he didnt say, and rightly, was what government will do to bridge the gap. The revenue details were included in the Presidents address to Parliament a few weeks before. In her address, which is a speech vetted by the cabinet, President Pratibha Patil spoke about disinvestment in public sector units, reforms in the foreign investment regime and various other plans the government has formulated to provide a big stimulus to stave off global recessionary trends. It made little sense, as Mukherjee said later, to repeat what was placed before Parliament earlier. However, the media reacted with irrational pessimism as journalists and commentators went hammer and tongs at the government, prompting the stock market to tank. Judging from its reaction, the media responded to Budget 2009-10 in the manner of Chicken Little, the apocryphal bird who felt an acorn fall on her head. Alarmed, she assumed that the sky was falling and ran aflutter to tell the king. On the way, she met other subjects of the avian species and alarmed an excited flock. In the event, they didnt meet the king but bumped into a fox who made a meal of them all. The impact of the media hype about a perfectly sensible budget was immediate and palpable. As the finance minister spoke in Parliament, hysterical media coverage and analyses on television and websites projected the speech as a throwback to the bad old days of socialism. The markets reacted instantly and indices went into a dive which resulted in investors losing billions of rupees. With no sense of irony, several political parties accused the government of not doing enough for the poor and disadvantaged. Mercifully, sanity has been restored following the governments efforts to calm things down. The media have also quieted down and moved on to their usual trivial stories, and the markets have regained a sense of balance. In his presentation, finance minister Mukherjee did what many proponents of free markets have always demanded: reduced the budget speech into a dry recitation of the govern-ments spending and taxation plans for the next fiscal year. In no country is the budget a major media event or market mover. Only in India, do captains of industry appear on television with notebooks in hand jotting points as the finance minister speaks. Media hype feeds market hysteria. On July 6, the two combined to send stockmarket indices plummeting. Viewed in conjunction with similar exuberance with which the markets…
