‘Growth of government capital expenditure to slow in FY2026’, Goldman Sachs predicts
New Delhi| Ahead of the announcement of the Union Budget, ‘Goldman Sachs’ said that there is a possibility of a slowdown in government capital expenditure growth in the new financial year. Golman Sachs is an American multinational investment bank and financial services company.
Union Finance Minister Nirmala Sitharaman may announce a 13 per cent increase in public spending in the upcoming budget, Goldman Sachs said in its report. Whereas in FY 2024 it was 17 percent. Moreover, this growth had been good in the three years before.
The report said the government would stick to the roadmap of fiscal discipline and aim to reduce the fiscal deficit to 4.5 per cent of GDP. The brokerage company said that in view of the BJP’s declining majority in Parliament, a part of the expenditure may be reallocated to rural areas and welfare schemes.
It further said, India’s real GDP growth rate in September has been at the level of 5.4 per cent. The reason for this was that government expenditure was increasing at a slow pace and the Reserve Bank of India had imposed restrictions on loans.
Goldman Sachs projected that government spending could now grow at a 13 percent rate, having previously been growing at 30 percent. Additionally, the government can now focus more on welfare spending (such as schemes for the poor, subsidies, etc.) and payment transfers (such as sending money directly to farmers, the poor, or other needy).
The brokerage firm also said that the boom period in government spending has now been left behind and the growth of spending in the coming years is likely to be less than or equal to the GDP growth rate.
