• The Union Budget of 2023-24, India’s final full-year Budget before the Lok Sabha polls in 2024, is unlikely to see any major reforms and could see higher allocations for welfare measures as well as capex along with cuts in defence expenditure, as witnessed in recent pre-election Budgets, Goldman Sachs said in a report on Tuesday.
  • “Given the general elections scheduled to take place in 2024, we expect the government to increase rural and welfare spending as seen in pre-election Budgets… Rural employment and housing are likely to be in focus,” Goldman reckoned.
  • Based on an analysis of pre-poll Budgets over the last 15 years, Goldman noted that typically, there is an increase in capex allocation towards infrastructure, mainly roads and railways, and a cut in defence spending. “In the case of current expenditures, we have typically seen an increased allocation towards rural spending or welfare schemes (mainly in education and healthcare).”
  • In the 2018-19 Budget for instance, defence capital expenditure had been slashed from 36% of total capex averaged in the previous four years to 32%, while infrastructure’s capex share rose from 29% averaged in the previous four years to 40%, it noted. Welfare spending rose from 8% of current expenditure averaged between 2014-15 and 2017-18, to 19% of total expenditure.
  • “We do not expect any significant reforms… but some measures to watch out for include any details on incentives for ‘Make in India’, a roadmap on direct tax code implementation,” Goldman added.


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