The Stock Market Connection To Change In Budget Announcement Timing From 5pm To 11am

Finance Minister Nirmala Sitharaman is expected to present the Union Budget 2022 at 11am today. However, it was not always that the Budget was presented in the morning. Before the year 1999, the Union Budget used to be presented at 5 pm in the Parliament.

Why Was The Budget Timing Changed?

Finance Minister Yashwant Sinha proposed to change the Budget presentation timing from 5 pm to 11 am. The change got implemented on February 27, 1999. Since then subsequent finance ministers followed this tradition and presented their Budgets at 11 am.

This decision to change the timing was made in consultation with various stakeholders who felt that presenting the Budget document at 11 am was more convenient for discussions on the policies and proposals.

“Some of this was an overhang of the British Raj—5 pm was a convenient time at that time. This was changed more than two decades ago in 1999. The feeling was that there would be more time for analysis of data by various stakeholders if the timing was changed to 11 am,” says Lovaii Navlakhi, managing director and CEO of Sebi-registered financial planning firm International Money Matters.

The India Union Budget used to be presented by the British from 1860 until Independence at 5 pm. Since India was in GMT +5.30 time zone hence Great Britain was 5.30 hours ahead of our time. So, the Indian Budget was presented at a time which was convenient for the British Government—5 pm in India was 11 am in Britain. After Independence we adopted a lot of rules and customs from the old British era and the Budget timing was one of them.

The Stock Market Connection

Since the Budget was previously presented at 5 pm, post market hours, the Indian stock market reaction was seen only on the next trading day. But now that the Budget is presented during market hours, all eyes are on how the markets and industry react to the announcements. To find out how the markets performed over the last 10 years on days when the Budget was announced (read more about it here).

“The stock market gives us updates about the formal economy. The government will need to walk a tightrope between managing its fiscal deficit and providing a boost to the economy. In the Economic Survey 2021-22, they have indicated that the government feels there is enough fiscal space to focus on capex which is good to hear,” says Anshul Gupta, co-founder at Wint Wealth, a financial services company.

After the change in 1999, stock markets have remained open even when the Budget announcement was made on a Saturday. For instance, the Budgets in 2015 and 2020 were announced on a Saturday and the market remained open. Normally, the stock market is closed on Saturday and Sunday, except on special occasions.