Budget 2024: 5 essential questions for investors answered by Goldman Sachs
Also read- Budget 2024: Some modifications in personal tax quite possible, Goldman Sachs expect the central government to announce a fiscal deficit target in the range of 5.2 - 5.4% of GDP (with 5.3% of GDP as their base case) in FY25 given their medium term fiscal consolidation target of reaching 4.5% of GDP by FY26. Goldman Sachs in their report answers five key investor questions before the India Union budget for fiscal year 2025 (April 2024-March 2025): 1: Will the government meet the 5.9% of GDP fiscal deficit target in FY24? Goldman Sachs says that the receipts upside of 0.2% of GDP will help the government meet the fiscal deficit target.
In fact, if spending remains muted in the current quarter, they may end up consolidating to 5.8% of GDP. They expect the upside in receipts of 0.2% of GDP to be driven by higher income and corporate taxes, and higher non-tax revenues on the back of higher-than-expected dividends from the RBI and PSUs On the expenditure side, they expect an upside of around 0.4% of GDP driven by higher expenditure on major subsidies (0.2% of GDP) and higher expenditure on the rural employment program (0.2% of GDP) (MGNREGA).
Putting this together, Goldman Sachs expect the government to meet its fiscal deficit target of 5.9% of GDP despite nominal GDP growth projections of 8.9% year-on-year for FY24 as per the first advance estimates below the growth assumption of 10.5% in the budget document. 2: What are likely to be the spending priorities in FY25? Goldman Sachs expects the focus of the Government on capex to continue, but at a slower pace (we expect 10% yoy growth in capex) than what has been seen in the last few years (over 30% CAGR between FY21 to FY24 BE Also read- Budget 2024: IRCTC, IRFC,
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