
Sitharaman’s budget speeches have mostly been positive in tone despite covid

Summary
- A quantitative study of budget speeches reveals differences of complexity and sentiment in the FM’s speeches from those made by her predecessors.
India’s first woman finance minister, Nirmala Sitharaman, will deliver her 6th Budget speech on 1 February 2024. She is the fifth finance minister (FM) since the 1980s to have delivered five consecutive budget speeches (for 2019-20 to 2023-24) and now she will present an interim budget ahead of national elections later this year.
Other FMs who delivered five consecutive speeches were Manmohan Singh (1991-92 to 1995-96), Yashwant Sinha (1998-99 to 2002-03), P. Chidambaram (2004-05 to 2008-09), and Arun Jaitley (2014-15 to 2018-19). Here, the years refer to the fiscal year for which the budget was prepared for. For example, the 2019-20 speech is a budget speech delivered in February 2019 for the next fiscal year.
How do the current FM’s speeches compare on length, complexity and sentiment tones with those of her predecessors? And what can be expected this year?
First, the last two budget speeches by Sitharaman were the shortest. The length of her speeches has now fallen for three consecutive years, after peaking in 2020-21. It was this lengthy speech in February 2020 that the FM had to cut short on account of exhaustion. On average, Yashwant Sinha’s speeches were longer than those of others.
Second, while the speeches of the current FM have become shorter, they are not easier to understand. Four of her five speeches have the highest speech complexity in the sample. We calculate the complexity metric for each speech using the Flesch readability ease test. This test’s score ranges from 0 to 100, with a higher score suggesting a lower level of reading difficulty.
Third, according to our text sentiment analysis, India’s incumbent FM has delivered the sample’s top three speeches with the highest share of positive-sentiment sentences. These include the last two speeches and her first speech as a FM in 2019-20. In last year’s budget speech, 39% of sentences had a positive sentiment, while the year before, it was 37%.
While the share of positive sentences fell to 27% during the two fiscal years afflicted by the covid pandemic, 2020-21 and 2022-23, these speeches still had a higher share of positive sentences compared to any of the speeches by Manmohan Singh, Yashwant Sinha or P. Chidambaram. The least share of positive-sentiment sentences (21%) appear in two speeches: the 1991-92 speech by Manmohan Singh in the backdrop of a balance-of-payments crisis and the 2004-05 speech by P. Chidambaram.
Fourth, Chidambaram narrowly beats Sitharaman for the lowest share of negative sentences over the five speeches. On average, 6% of her sentences were negative in sentiment, compared to 5% for her Congress party counterpart. While both experienced a global crisis during their tenure, it was limited to about one year for Chidambaram, who was India’s FM when the global financial crisis of 2008-09 broke out. In contrast, Sitharaman managed to avoid an excessively negative tone in her speeches despite two years of the pandemic that swept economies everywhere during her tenure.
To derive sentence-level sentiment, we extract the tone of each sentence—negative, positive or neutral—using the modified Loughran sentiment lexicon that is suitable for public-finance speeches. We then divide the number of sentences for each sentiment by the total sentences in each speech to determine the proportion of each sentiment.
Which topics does the current FM emphasize in her budget speeches and has this pattern changed after the pandemic?
We find that ‘simplifying the tax regime’ has been a constant focus in the five budget speeches of Sitharaman. ‘Manufacturing’ and ‘affordable housing’ have also found regular mention in contexts related to tax benefits.
‘Growth,’ ‘infrastructure,’ and ‘tax’ are among the most commonly occurring words in all her speeches, which is unsurprising. Words related to health increased during the FM’s covid-year speeches and then fell. Similarly, occurrences of words related to education have fallen over the years. In the latest speech of 2023-24, words related to agriculture and MSMEs saw a significant increase from previous years.
What can we expect of the interim Budget speech due in a little over a fortnight?
With India’s general election due in the first quarter of 2024-25, we can expect the mention of words related to agriculture and farmers to rise. Similarly, job creation and related schemes may find increased mention. References to employment-related words peaked in the February 2021 budget and declined to five sentences in the last speech. This trend may reverse.
Given the ongoing debate in the country over growth led by services versus manufacturing, references in the budget to manufacturing may also increase. If the government believes manufacturing is the way forward, then the budget speech is an opportunity for it to communicate its expectations of ‘new’ factory jobs. Government policies such as its production-linked incentive (PLI) scheme are aimed at output growth as well as job generation, and incentives may divert jobs from non-beneficiaries towards firms and sectors receiving PLI benefits.
Irrespective of the latest Budget’s thrust, we can expect its sentiment tone to maintain high positivity. However, it is unlikely for the upcoming speech to be shorter than the last couple of budget addresses, as its length has already been reduced.