Goldman Sachs Bullish on India: FY27 Budget Fuels Macroeconomic Optimism

• Goldman Sachs maintains a constructive outlook on India's medium-term macroeconomic prospects, citing the FY27 Union Budget's focus on capital expenditure continuity and fiscal consolidation.
• The budget reaffirms the government's commitment to reduce central government public debt to around 50% of GDP by FY31, a crucial signal given India's high public debt.
• The fiscal deficit is projected to decrease to 4.3% of GDP in FY27, with public capital expenditure sustained at 3.1% of GDP, prioritizing infrastructure-linked sectors like defence, railways, and roads.
• Defence capital expenditure is set to grow by 17% year-on-year, and transfers to states for capex will increase by 33%, supporting investment-led growth.
• Despite elevated net market borrowing, Goldman Sachs anticipates RBI policy support to manage liquidity, with the central bank likely to be a net buyer in FY27.

Why It Matters: Goldman Sachs remains optimistic about India's economy, driven by the FY27 Budget's fiscal prudence and infrastructure focus.