Budget to focus on job creation: Goldman Sachs, Citi

Budget 2024-25, to be presented on July 23, will lay considerable emphasis on employment generation, said Goldman Sachs and Citi economists today.

Goldman economists expect the government to stick to its fiscal deficit target of 5.1 per cent of GDP set in the interim Budget but said it will likely make an “overarching statement” about long-term economic policy, said a Reuters report.

“We see an emphasis on job creation through labor-intensive manufacturing, credit for micro, small and medium enterprises, continued focus on services exports by expanding global capability centres, and a thrust on domestic food supply chain,” Santanu Sengupta, chief India economist at Goldman wrote.

Citi also believes that job creation would be a focus area. In a report, it said the government could consider extending its flagship production-linked incentive scheme with a focus on “more domestic value addition and explicit employment targets.”

Citi's chief India economist Samiran Chakraborty, however, is not very upbeat about employment generation. While the Indian economy is seen growing a fast clip of 7.2 per cent this year, he said “Even 7 per cent GDP growth might not be able to fulfill the job requirement over the next decade.”

Goldman expects the Budget to push labor intensive manufacturing through fiscal incentives across sectors like toys, textiles and apparel manufacturing, along with commercial aircraft manufacturing.

Almost two-third manufacturing jobs are in low-skilled labor-intensive sectors, Citi said, without specifying whether these announcements would be made in the budget.