India’s Economy Showcases Resilience Amid Global Challenges
The Economic Survey for 2025-26 was presented in Parliament today by Smt. Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs. The report emphasizes that India’s economy is standing strong amidst current global economic turbulence, primarily owing to its macroeconomic stability. This stability has been achieved thanks to a well-calibrated fiscal strategy and a sustained reduction in fiscal and revenue deficits.
The Centre’s fiscal management has bolstered its credibility and strengthened confidence in India’s macroeconomic framework. States play a crucial role in this economic consolidation, with collaboration being key to achieving fiscal sustainability while also fostering growth.
Improving Fiscal Health
The fiscal deficit for the fiscal year 2026 is projected at 4.4% of GDP, a decline from 4.8% in the previous year. Simultaneously, the revenue deficit has decreased significantly, reaching its lowest level at 0.8% since fiscal year 2009. This indicates a higher allocation for capital expenses, allowing for quality improvements in government spending.
Revenue expenditure as a percentage of GDP has dipped from 13.6% in fiscal year 2022 to 10.9% in fiscal year 2025. Notably, expenditures on major subsidies were rationalized from 1.9% in fiscal year 2022 to 1.1% in fiscal year 2026, all while ensuring food security for approximately 789 million beneficiaries as of October 2025. Additionally, the number of income tax returns filed increased significantly, from 69 million in fiscal year 2022 to 92 million in fiscal year 2025, highlighting better compliance and efficiency in tax administration.
Sustained Revenue Mobilization
The Centre’s revenue receipts improved from an average of around 8.5% of GDP between fiscal years 2016 and 2020 to nearly 9.1% from fiscal years 2022 to 2025. This growth is attributed to a surge in non-corporate tax collections, rising from 2.4% pre-pandemic to approximately 3.3% post-pandemic. Employing technology-driven measures, the Centre raised revenue receipts to 9.2% of GDP in fiscal year 2025.
The Gross Goods and Services Tax (GST) collections also reflected this growth. With taxpayer numbers climbing from 6 million in 2017 to over 15 million currently, gross GST collections during the period of April to December 2025 amounted to ₹17.4 lakh crore, marking a year-on-year growth of 6.7%.
Capital Expenditure and Debt Management
In alignment with Prime Minister Narendra Modi’s vision of a “Viksit Bharat,” capital expenditure by the Central government averaged around 4% of GDP in fiscal year 2025, a noticeable rise from the pre-pandemic period. Major allocations were made in key sectors such as road transport, railways, and housing.
The government is also focusing on prudent debt management with a public debt-to-GDP ratio targeted to stabilize around 50% by fiscal year 2031. Currently, this ratio stands at 55.7%, translating to a reduction of 7.1 percentage points since 2020, while maintaining robust public investments.
Future Outlook
The Economic Survey suggests ongoing reforms to reduce cross-subsidies and enhance the efficiency of public expenditure. Upcoming changes in taxation, particularly with GST 2.0, are anticipated to simplify the tax system, reduce compliance costs, and broaden the tax base, thereby stimulating economic activity and revenue collection.
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