Budget 2024: Jobs, Rural India Likely To Be Focus Of Modi Government, Says Goldman Sachs

July 09,2024

Union Budget 2024: The first budget by Prime Minister Narendra Modi’s new government may tilt towards, but not pivot to welfare spending, with a focus on rural economy and job creation, economists at Goldman Sachs said in a note on Monday.

The budget proposal for the financial year ending March 2025 will be presented on July 23.

Goldman economists expect the government to stick to its fiscal deficit target of 5.1% of GDP set in the interim budget but said it will likely make an “overarching statement” about long-term economic policy.

“We see an emphasis on job creation through labour-intensive manufacturing, credit for micro, small and medium enterprises, continued focus on services exports by expanding global capability centres, and a thrust on domestic food supply chain,” news agency Reuters quoted Santanu Sengupta, chief India economist at the Wall Street, as saying in the note.

Goldman expects the budget to push labor-intensive manufacturing through fiscal incentives across sectors like toys, textiles and apparel manufacturing, along with commercial aircraft manufacturing.

Citi, in a report, said the government could consider extending its flagship production-linked incentive scheme with a focus on “more domestic value addition and explicit employment targets.”

Goldman also expects a focus on agricultural infrastructure and incentives to increase domestic production of key crops as a way to target high food inflation, which has been running close to 8% for many months.

(With Reuters inputs)