JOIN USFinance Minister Arun Jaitley's warning against "mindless populism" propelled Indian stocks to record highs on Wednesday, as investors bet that his maiden budget next week will stabilise the wobbly public finances.
Jaitley's comments reinforced expectations that he will curb the state's subsidy bill while taking advantage of the strong stock market to raise more than $10 billion by selling stakes in state companies.
On Wednesday, the Sensex closed up 1.27 per cent at 25,841.21 points. Earlier in the day, it surged 1.37 per cent to hit a record high of 25,864.53 points, surpassing its previous life high of 25,735.87 hit on June 11. The Nifty gained 1.18 per cent to close at 7,725.15 points, having hit a fresh record high of 7,732.40 points earlier in the session, breaching its previous peak of 7,700.05, also hit on June 11.
Economists do expect some slippage in the headline budget deficit that Jaitley inherited from the previous government due to a weak economy, but say the asset disposals should avert any need to resort to bigger borrowing.
"(The) fiscal deficit is a major challenge," Jaitley told an audience of accountants on Tuesday evening. "Now India needs a certain amount of fiscal discipline... there is hope that bold decisions will be taken now.
"If you indulge in mindless populism, you burden the exchequer," he added. "It does not work."