Corporate tax collections are also expected to see significant growth, with a 10.4% increase in FY26, surpassing the 7.6% growth in FY25. This growth is linked to a broader economic recovery and higher corporate earnings.

On the expenditure side, the government’s overall spending is anticipated to rise by 7.4%, slightly higher than the previous year’s 6.1%. Capital expenditure (capex), primarily focused on infrastructure, is projected to grow by 10.1% in FY26. However, capex as a percentage of GDP will remain stable at 3.1%.

The report also indicates that the government’s fiscal deficit will be slightly lower than expected, revised to 4.8% of GDP in FY25, down from an earlier estimate of 4.9%. In absolute terms, the fiscal deficit is expected to be Rs 15.6 lakh crore, compared to the Rs 16.1 lakh crore originally projected for FY25.

India’s current account deficit remains moderate, supported by resilient services exports and remittances. Although the trade deficit is set to expand from USD 245 billion in FY24 to USD 277 billion in FY25, the impact on the current account will be limited due to strong remittances and services exports.

Overall, the report suggests a positive economic outlook for FY26, with higher GST collections, strong corporate tax growth, and a manageable fiscal deficit signaling a stable trajectory for India’s economy.

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