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India's Fiscal Strategy Anchors Growth Amid Global Turbulence: Eco Survey

The Economic Survey tabled in Parliament states the government's fiscal strategy has provided stability and anchored growth despite global challenges. It highlights a narrowing fiscal deficit, strengthened revenue receipts, and a significant expansion of the direct tax base. The survey notes a strong focus on capital expenditure, which has risen post-pandemic, alongside robust GST collections. However, it also points to emerging pressures on State finances as their combined fiscal deficit has edged up.

Key Points: Eco Survey: Fiscal Strategy Anchors Growth, Cuts Deficit

  • Fiscal deficit budgeted at 4.4% of GDP for FY26
  • Direct tax base expanded to 9.2 crore returns in FY25
  • Capital expenditure rose to 4% of GDP in FY25
  • GST collections grew 6.7% year-on-year
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Govt's calibrated fiscal strategy has anchored growth with stability: Eco Survey

Economic Survey highlights India's calibrated fiscal policy, rising tax collections, and reduced deficit, anchoring economic stability and growth.

"The government's calibrated fiscal strategy has anchored India's economic growth with stability amid global turbulence - Economic Survey"

New Delhi, Jan 29

The government's calibrated fiscal strategy has anchored India's economic growth with stability amid global turbulence, according to the Economic Survey tabled in Parliament on Thursday.

It highlights that rising tax collections and focus on capital expenditure has reduced the fiscal deficit and strengthened the country's macroeconomic fundamentals.

The Centre's fiscal deficit is budgeted at 4.4 per cent of GDP in FY26 -- down from 4.8 per cent in the previous financial year. Over the same period, the revenue deficit as a proportion of GDP narrowed steadily, reaching its lowest level of 0.8 per cent in FY26, since FY09, thereby leaving a greater allocation for capital expenditure and reflecting a sustained improvement in the quality of expenditure, the survey states.

The Centre's revenue receipts strengthened from an average of about 8.5 per cent of GDP in FY16-FY20 to 9.2 per cent of GDP in FY25. This improvement was driven by buoyant non-corporate tax collections, which rose from about 2.4 per cent of GDP pre-pandemic to around 3.3 per cent post-pandemic, the survey observes.

The direct tax base expanded steadily, with income tax returns filed increasing from 6.9 crore in FY22 to 9.2 crore in FY25. Higher return filings reflect improved compliance, greater use of technology in tax administration, and a growing number of individuals entering the tax net as their incomes rise.

Gross GST collections during April-December 2025 stood at Rs 17.4 lakh crore, registering a year-on-year growth of 6.7 per cent. GST revenue growth is broadly aligned with prevailing nominal GDP growth conditions. In parallel, high-frequency indicators suggest robust transaction volumes, with cumulative e-way bill volumes during April-December 2025 growing by 21 per cent (year-on-year).

The Economic Survey also highlights that the effective capital expenditure of the Central government rose from an average of 2.7 per cent of GDP in the pre-pandemic period to about 3.9 per cent post-pandemic, and to a higher 4 per cent of GDP in FY25.

Through Special Assistance to States for Capital Expenditure , the Centre has incentivised States to maintain capital spending at around 2.4 per cent of GDP in FY25.

Meanwhile, the combined fiscal deficit of State Governments stayed broadly stable at around 2.8 per cent of GDP in the post-pandemic period, similar to pre-pandemic levels, but has edged up in recent years to 3.2 per cent in FY25, reflecting emerging pressures on State finances.

India reduced its general government debt-to-GDP ratio by about 7.1 percentage points since 2020, even while maintaining high public investment.

- IANS

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Reader Comments

R
Rohit P
Good to see fiscal discipline. Reducing the deficit while increasing capex is a tightrope walk, and it seems to be working. The rise in tax filers from 6.9 to 9.2 crore is a massive achievement – shows more people are coming into the formal economy.
A
Aman W
Numbers look good on paper, but is the average person feeling this stability? Petrol prices are still high, and vegetable inflation hits the kitchen budget every other month. Growth needs to be felt by the common man, not just in survey reports.
S
Sarah B
As someone working in the development sector, the increased capital expenditure for states is a very positive signal. It means better public services, schools, and hospitals can be built at the local level. The 21% growth in e-way bills also points to a vibrant domestic trade economy.
V
Vikram M
Reducing the debt-to-GDP ratio by over 7 percentage points since 2020 is no small feat, especially with all the global headwinds. It gives the country much more fiscal space to handle any future crises. Prudent management.
K
Kavya N
The part about state finances edging up to 3.2% deficit is a bit concerning. The centre is doing well, but states need to be careful with their spending too. After all, they are responsible for most day-to-day governance. Hope the incentives for capital expenditure help them stay on track.

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