New Delhi: Global brokerage firm Morgan Stanley expects Finance Minister Nirmala Sitharaman’s upcoming Budget to focus on the government’s road map for ‘Viksit Bharat’ by 2047 and spell out the medium-term plan for fiscal consolidation.

“With fiscal prudence guiding the overall fiscal policy stance, we expect the focus to remain on capex expenditure over revenue expenditure and targeted social sector spending with a focus on improving access to physical, social and digital infrastructure,” said Morgan Stanley’s research report on Wednesday.

Sitharaman is scheduled to present the full Budget for fiscal 2024-25 on July 23, which will be the first major policy document of the new government. The brokerage firm expects the central government’s fiscal deficit target to be retained at 5.1 per cent of GDP in 2024-25 in line with the interim budget (against 5.6 per cent of GDP in 2023-24) and to be on track to attain the target of 4.5 per cent of GDP by the next financial year.

“The fiscal headroom has improved with a larger-than-expected transfer of surplus from the RBI, which, in our view, will help to maintain the momentum on capex expenditure and increase targeted welfare spending. In this context, we see the possibility of a slightly lower fiscal deficit target (tad below 5.1% of GDP), given the support from tax and non-tax revenues,” it said.