Union Budget 2025 may focus on controlling govt debt, says Goldman Sachs report

This is because India currently stands out for its high levels of public debt and fiscal deficit, compared to other emerging markets

The Union Budget 2025, which is scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1, has the challenge of balancing growth and fiscal discipline, said a Goldman Sachs report.

Union finance minister Nirmala Sitharaman carrying the Budget tablet. (ANI file photo)

This is because India currently stands out for its high levels of public debt and fiscal deficit, compared to other emerging markets, according to the report.

The fastest growth phase of public capital expenditure may also be a matter of the past and it may fall below nominal GDP growth rates in the coming future, the report read.

The report also says that India is experiencing a cyclical growth slowdown due to fiscal tightening and slower credit growth as a result of the Reserve Bank of India's measures to control consumer loans.

The central government may also target a fiscal deficit to be between 4.4-4.6% of the GDP for the financial year 2025-26, which is down from the 4.9% target for the current fiscal year.

This is due to the government's likely focus on fiscal consolidation due to the high public debt levels.

The budget may also make an important statement about the long-term economic policy of the government towards 2047, focused on job creation through labour-intensive manufacturing, credit for MSMEs, rural housing programs, and sustained focus on the domestic food supply chain and inventory management to control price volatility.

The report also stated that expenditure on rural, welfare, transfer schemes and subsidies may go to pre-pandemic trends (3.0% of GDP in 2025-26 is expected).

With inputs from ANI