Goldman Sachs Forecasts Government Capex Growth Slowdown Amid Fiscal Consolidation

Goldman Sachs predicts a slowdown in government capital expenditure growth in the upcoming fiscal year. Finance Minister Nirmala Sitharaman is expected to announce a 13% increase in capex, signaling a shift towards fiscal consolidation and a focus on welfare spending and rural transfers.

As the Union budget announcement approaches, foreign brokerage Goldman Sachs forecasts a slowdown in government capital expenditure (capex) growth for the upcoming financial year. Predictions indicate Finance Minister Nirmala Sitharaman will announce a 13% increase in public capex, down from the 17% rise in FY24.

Goldman Sachs highlights a continued commitment to fiscal consolidation, projecting the fiscal deficit to narrow to 4.5% of GDP. Citing the BJP's reduced majority, the brokerage anticipates reallocations towards rural transfers and welfare spending due to sluggish public capex and banking restrictions.

The report emphasizes a strategic focus on job creation, credit for MSMEs, rural housing, and domestic food supply chain management, as part of a broader policy outlook extending towards 2047, when India celebrates 100 years of independence.

(With inputs from agencies.)