New Delhi, Jan 29 The government’s calibrated fiscal strategy has anchored India’s economic growth with stability amid global turbulence, according to the Economic Survey tabled in Parliament on Thursday.
It highlights that rising tax collections and focus on capital expenditure has reduced the fiscal deficit and strengthened the country’s macroeconomic fundamentals.
The Centre’s fiscal deficit is budgeted at 4.4 per cent of GDP in FY26 -- down from 4.8 per cent in the previous financial year. Over the same period, the revenue deficit as a proportion of GDP narrowed steadily, reaching its lowest level of 0.8 per cent in FY26, since FY09, thereby leaving a greater allocation for capital expenditure and reflecting a sustained improvement in the quality of expenditure, the survey states.
The Centre’s revenue receipts strengthened from an average of about 8.5 per cent of GDP in FY16–FY20 to 9.2 per cent of GDP in FY25. This improvement was driven by buoyant non-corporate tax collections, which rose from about 2.4 per cent of GDP pre-pandemic to around 3.3 per cent post-pandemic, the survey observes.
The direct tax base expanded steadily, with income tax returns filed increasing from 6.9 crore in FY22 to 9.2 crore in FY25. Higher return filings reflect improved compliance, greater use of technology in tax administration, and a growing number of individuals entering the tax net as their incomes rise.
Gross GST collections during April–December 2025 stood at Rs 17.4 lakh crore, registering a year-on-year growth of 6.7 per cent. GST revenue growth is broadly aligned with prevailing nominal GDP growth conditions. In parallel, high-frequency indicators suggest robust transaction volumes, with cumulative e-way bill volumes during April-December 2025 growing by 21 per cent (year-on-year).
The Economic Survey also highlights that the effective capital expenditure of the Central government rose from an average of 2.7 per cent of GDP in the pre-pandemic period to about 3.9 per cent post-pandemic, and to a higher 4 per cent of GDP in FY25.
Through Special Assistance to States for Capital Expenditure , the Centre has incentivised States to maintain capital spending at around 2.4 per cent of GDP in FY25.
Meanwhile, the combined fiscal deficit of State Governments stayed broadly stable at around 2.8 per cent of GDP in the post-pandemic period, similar to pre-pandemic levels, but has edged up in recent years to 3.2 per cent in FY25, reflecting emerging pressures on State finances.
India reduced its general government debt-to-GDP ratio by about 7.1 percentage points since 2020, even while maintaining high public investment.
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