Strong growth outlook raises questions on tax collections

India’s projected 7.4% GDP growth for FY26 has renewed debate over tax revenue sustainability ahead of Budget 2026. Economists argue that while consumption and investment remain resilient, fiscal pressures could emerge if global growth slows. Policymakers face the challenge of balancing growth support with fiscal discipline.

The Reserve Bank of India revised its FY26 GDP growth estimate to 7% and lowered its inflation forecast to 2%. The central bank reduced the policy rate to 5.25%, citing easing price pressures and improved supply conditions. Markets interpreted the move as supportive of growth amid global economic uncertainty.