Fiscal Developments

India has shown remarkable fiscal resilience, supported by improved fiscal indicators and stronger revenue performance.

In 2025, India also earned a sovereign credit rating upgrade from S&P to BBB, strengthening investor confidence.

Aspect	Details
Fiscal Deficit Target	India is on track to reach a fiscal deficit of 4.4% in FY26, while the budget estimate for FY27 is 4.3%.
Debt-to-GDP Ratio	The debt-to-GDP ratio is estimated at 55.6% for BE 2026-27, with a medium-term goal to converge to 50±1% by FY31.
Revenue Buoyancy	Revenue receipts rose to 9.1% of GDP during FY22-25, compared with 8.5% in the pre-pandemic period.
GST 2.0	GST 2.0 proposes a radical overhaul by reducing slabs to a primary two-rate structure: a Standard rate of 18% and a Merit rate of 5%.
NUDGE Framework	The framework uses behavioural economics to improve tax compliance without relying on coercive enforcement.
Asset Monetization	InvIT-based monetization yielded Rs. 18,837 crore in FY26.
Fiscal Consolidation	Fiscal consolidation is linked with responsible deficit management, debt sustainability and the broader FRBM framework.

PT Facts

Fiscal Deficit: It is the gap between total government expenditure and total receipts excluding borrowings.
Credit Rating: Sovereign rating upgrades improve investor confidence and reduce perceived risk.
S&P: Standard & Poor’s is one of the major global credit rating agencies.
FRBM Link: Fiscal consolidation is linked with responsible deficit and debt management.

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