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Nirmala Sitharaman, India’s finance minister, leaves the ministry to present the budget at the parliament in New Delhi, India, on July 23, 2024. Bloomberg | Bloomberg | Getty Images
As the Indian government walks a tight rope between fiscal prudence and reviving growth, experts suggest it will likely favor cutting deficit in its annual budget over spending aimed at turbocharging Asia’s third-largest economy. For the fiscal year ending March 2026, the Indian government could lower the fiscal deficit target by 50 basis points to 4.4% of the country’s gross domestic product from the 4.9% target for the current fiscal year, economists at investment bank UBS said. They also projected the government would set a nominal GDP growth target of 10.5% for the next fiscal year. Indian Finance Minister Nirmala Sitharaman will present the national budget on Feb. 1, in what would be the coalition government’s first full-year budget after assuming power in June. The budget comes against the backdrop of a growth slowdown in the world’s fifth-largest economy, weak domestic demand, a depreciating rupee and rising global uncertainties. The slowdown in the economy has largely been attributed to factors such as unseasonal rainfall, fiscal tightening and tepid credit growth in the private sector as the central bank took steps to curb unsecured lending growth. The upcoming budget is likely to re-emphasize on jobs growth in the labor-intensive manufacturing sector, while promoting rural housing programs and additional steps to control prices volatility, Goldman Sachs said. As domestic consumption and economic activity slows, the budget might focus on
India’s finance minister faces a tough choice
