Govt focus to shift from reforms to social sector in 2018: Report

The government's priority will be to accelerate growth momentum as well as employment generation this pre-election year, and social sectors are expected to see preferential allocations, says a Deutsche Bank report.

According to the global financial services major, the Narendra Modi government's priorities are expected to shift from reforms to specified policy initiatives aimed at improving job opportunities and growth numbers.

"Following the GST implementation, we expect the Modi administration's focus to shift from reforms to policy implementation and adherence to specified policy initiatives aimed at employment generation and growth revival as we head into 2019, when the national election is scheduled," Deutsche Bank said in a research report.

The key focus areas for the government will be growth acceleration, employment generation and improving agricultural income.

As per the report, farming income growth has moderated over the last few years and has resulted in a sharp erosion of rural purchasing power and accordingly, the government is expected to announce "targeted measures" to boost farm incomes and make agriculture remunerative.

Citing the example of 7 per cent increase in minimum support price of rabi crop, the report said this trend is likely to continue.

"In addition, policy measures like increased allocation towards NREGA, direct benefit transfers and other moves aimed at improving agricultural productivity are also expected," it said.

Moreover, the thrust on affordable housing is expected to continue as it has a significant multiplier effect on job creation. "We expect further policy and push for this initiative", it added.

In a pre-election year, social sectors see preferential allocations, and a few ministries that see consistency in preference over others in the budget are: Agriculture, Education, Health & Family Welfare, Labour, Power, MSME and Woman & Child development.
"We expect almost the same trend to continue in the next budget. In addition, we expect the Modi government to focus aggressively on infrastructure investments," it added.