The Economic Survey presented in Parliament underscores that India’s economic growth has been stabilized by the government’s careful fiscal approach amidst global uncertainties. Notably, the fiscal deficit has decreased to 4.4% of GDP in FY26 from 4.8% in the previous year, while the revenue deficit has also lessened, allowing for increased capital expenditure and enhancing macroeconomic fundamentals.
The survey points out a positive trend in revenue receipts, which have risen from 8.5% of GDP in FY16–FY20 to 9.2% in FY25. This improvement is attributed to robust non-corporate tax collections, which have increased significantly post-pandemic. Moreover, the expansion of the direct tax base, with a rise in income tax returns filed, reflects improved compliance and technological advancements in tax administration.
Furthermore, the survey highlights the growth in GST collections, reaching Rs 17.4 lakh crore during April–December 2025, with a 6.7% year-on-year increase. This growth aligns with the nominal GDP conditions, indicating healthy transaction volumes. The effective capital expenditure of the Central government has also seen a rise, reaching 4% of GDP in FY25, showcasing a commitment to boosting infrastructure and development.
The combined fiscal deficit of State Governments has remained relatively stable post-pandemic, standing at around 2.8% of GDP, but has slightly increased to 3.2% in FY25, signaling some financial challenges. Despite this, India has managed to reduce its general government debt-to-GDP ratio by 7.1 percentage points since 2020, demonstrating prudent fiscal management.
