Budget 2024: Modi 3.0 may focus on jobs & rural India, says Goldman Sachs

Budget 2024 is likely to emphasise on jobs and rural economy, and Modi 3.0 might also pivot towards welfare spending from capex, a note from the global investment bank Goldman Sachs said on Monday. Finance Minister Nirmala Sitharaman will present the Union Budget for the fiscal year 2024-’25 (FY25) on July 23.

Goldman Sachs in its note predicted that the government would “use the budget as an opportunity to make a big picture statement about the long-term economic policy vision over the next several years, rather than minor stimulus announcements”. The note added that the budgetary policy can be expected to be aligned “with the government’s development agenda for 2047 (coinciding with centennial of Indian independence)”.

“We see an emphasis on job creation through labor-intensive manufacturing, credit for MSMEs, continued focus on services exports by expanding GCCs, and a thrust on domestic food supply chain and inventory management to control price volatility. The budget is also likely to lay out a path for the future of public finance in India, entailing: a) a roadmap for public debt sustainability, and b) green finance: the role of public finance in balancing India’s energy security vs. transition needs,” Goldman Sachs said.

Referring to the 0.3 per cent of extra dividend from GDP that the Reserve Bank of India (RBI) transferred to the government in May, the investment bank said if the government chooses to spend the dividend on increasing expenditure, capex growth has a chance to rise to 21 per cent year on year. The current expenditure growth rate could see a 5 per cent rise on a year-on-year basis if a fiscal deficit target of 5.1 per cent of GDP is maintained for FY25.

On the food sector, the Goldman Sachs note said it expects the budget to focus on agricultural infrastructure. The investment bank feels that government incentives on the domestic production of primary crops should be hiked in order to fight food inflation, which has remained around 8 per cent for months now.