India, Feb. 2 -- The stock market is not a litmus test of a country's annual economic policy statement. The fact that Sensex, the benchmark index of BSE, lost 2.23% on Sunday, the seventh highest fall on a budget day, should, therefore, not be a factor in any budget analysis. The fall was exclusively because market players were unhappy at the increase in securities transaction tax on derivatives - a move prompted by a desire to protect small investors, many of whom have lost money on these instruments. Indeed, the only people to make money on these are large firms using high-frequency trading. Nor is popular sentiment - which is anyway fickle. The analytical framework for budgets needs to be more sophisticated. For starters, it has to see if the budget meets its primary objective - managing the country's finances optimally. Then, it needs to measure whether the budget addresses short-term concerns, especially in light of prevailing external circumstances, plans for the medium-term, and is cognisant of, and responsive to, long-term disruptions that can alter a country's economic trajectory - AI being the obvious example. Management consultants call this horizon planning. The framework also needs to be smart enough to interpret what the budget says about the larger economic philosophy of the government. And finally, it has to scour the finance minister's budget speech, and also the budget documents, for big ideas couched in innocuous language - a committee, for instance, tasked with studying and recommending changes in a sector that could fundamentally change everything. How does Union Budget 2026-27, the eighth (excluding the 2024 interim budget) presented by finance minister Nirmala Sitharaman, fare when measured against this framework? It wasn't a given that the budget would easily meet its primary objective. After all, direct and indirect tax giveaways last year, coupled with low inflation, moderated tax revenue - but other revenue made up, and the budget met its fiscal deficit target for 2025-26 and has set a lower one for 2026-27. It has continued with its capital expenditure push and done enough to assuage markets of its long-term intent to bring down debt to 50% (plus-minus 1%) of GDP by March 2031. It's difficult to see how the budget could have done better on this measure. Despite significant geo-economic and geopolitical disruptions - the most significant being the tariffs levied on India by the US - India's economic performance in 2025-26 didn't really speak of an economy in crisis. The country's export performance (in the first 10 months of 2025-26) shows that it has been able to diversify its merchandise exports successfully. But it still has immediate concerns that need to be addressed in the short- and medium-term. The first is security, both external and internal. The increase in the defence budget and the enhanced allocation to intelligence gathering are a response to this. The other short- to medium-term concern is the ability to be self-reliant, especially in critical sectors. The budget's mention of a rare earth corridor needs to be seen in this context. The budget also references engines of growth across two dimensions - sectors (it lists six where India wants to build a competitive manufacturing base), and regions (the new city clusters); and, while it has steered clear of the customs duty reform the finance minister hinted at in December at the Hindustan Times leadership summit (likely because the FTAs India is signing pretty much obviate that), it has done enough to streamline processes and compliance, both of which should enhance the ease of doing business. Finally, the budget pays its respects to the prevailing deity of the 2020s, AI, and also to its apostle, the data centre. The announcement of two committees, one on services as a driver of Viksit Bharat (the government's deadline for India becoming a developed country is 2047) and another to review the banking sector are significant; the first is an area of immense potential, and the second is one where radical change is possible (it is widely accepted that the country's banking sector, in its current form, cannot fund Viksit Bharat). A reading of the finance minister's speech as well as the budget documents tells us that this government's economic philosophy has not changed. It is built around self-reliance, fiscal prudence, and creating globally competitive industries, not by protecting industry or giving it handouts, but by focusing on the building blocks. And, as the minister laid out at the beginning of her speech, it is premised around growth, aspirations, and inclusion. The budget scores well in this framework; the market reaction to it may suggest that it is not the budget India wants right now, but a more reasoned analysis indicates that it is the one the country needs in its journey to Viksit Bharat....