Disappointed investors sold off Indian stocks yesterday after the newly elected government's national budget fell short of expectations of faster economic reform and fiscal consolidation.
Sensex, the benchmark index of shares on the Bombay Stock Exchange, suffered its worst budget day fall in almost a decade, tumbling 5.8 per cent to 14,043.40 points as investors registered the absence of steps towards structural reform and closing a widening fiscal deficit.
The budget was one of the first opportunities for the ruling alliance led by the Congress party to reflect the strong mandate it won at the polls in May. It launched new fiscal stimulus measures with big spending on infrastructure development and welfare for farmers. It also supported manufacturing export sectors hurt by the global slowdown, raised defence spending, and simplified the tax system.