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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In particular, the budget highlights the government’s focus on flagship programs like the PM Surya Ghar Muft Bijli Yojana, aimed at installing 10 million solar rooftops in residential areas. This initiative saw an 80% increase in funding, bringing its allocation to Rs 200 billion for FY26. The scheme offers subsidies for solar systems, with up to Rs 78,000 available for larger installations. The budget allocation for rooftop solar installations has surged nearly three times higher than the initial FY25 estimate, reflecting the government’s drive to expand access to clean energy.

The PM-KUSUM scheme, which provides solar-powered pumps for farmers, also saw a significant funding rise, with the allocation increased to Rs 26 billion for FY26, up from Rs 15 billion in FY25. This boost is part of the government’s effort to integrate solar energy into agriculture, benefiting both farmers and the environment.

In addition, the government’s push for clean tech manufacturing through the National Manufacturing Mission is expected to promote domestic production of solar equipment, further reducing reliance on imports and supporting India’s clean energy goals.

However, the budget did leave some gaps, particularly in incentives for battery energy storage, which are crucial for balancing renewable energy supply and demand on the grid.

With these investments, India is set to accelerate its transition to a sustainable energy future, providing significant support to both residential users and the agricultural sector, while also strengthening its position as a leader in the global solar market.

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