Budget set to focus on long-term economic policy vision
New Delhi: According to a report by Goldman Sachs economists, the upcoming Budget is expected to make a bold statement about the government's long-term economic vision for the next several years, rather than just announcing minor stimulus packages.
The report suggests that the Budget will go beyond mere fiscal numbers and instead provide a comprehensive outline of the government's economic policy direction towards 2047, marking 100 years of Indian independence.
The economists predict that the Budget will prioritize job creation through labor-intensive manufacturing, provide credit support to Micro, Small, and Medium Enterprises (MSMEs), and continue to focus on services exports by expanding Global Capability Centers (GCCs). Additionally, the Budget is likely to emphasize the development of domestic food supply chains and inventory management to mitigate price volatility.
Furthermore, the report anticipates that the Budget will chart a course for the future of public finance in India, including a roadmap for public debt sustainability and the role of green finance in balancing the country's energy security and transition needs.
In terms of fiscal consolidation, the economists expect the government to stick to its announced fiscal deficit target of 5.1% of GDP for FY25, and possibly even aim for a lower deficit. They also predict that the government will announce further consolidation to a deficit of below 4.5% of GDP by FY26. Any additional expenditure allocation towards welfare spending is unlikely to require a reduction in capital expenditure, thanks to the higher-than-expected dividend transfer from the Reserve Bank of India (RBI).
