A robust uptick in India’s tax revenues is fueling optimism for sustained fiscal consolidation in the forthcoming budget, reveals an insightful report. Net direct tax collections have swelled by over 20%, propelled by high corporate earnings and salaried income growth.
Government data paints a promising picture. Advance tax payments by corporates hit all-time highs, while spectrum auctions and disinvestment proceeds add to the coffers. Indirect taxes, led by GST, demonstrate resilience amid supply chain normalizations.
This revenue buoyancy enables calibrated deficit reduction. The FRBM Act mandates a 4.5% fiscal deficit by FY26, and current trends suggest achievability ahead of schedule. Lower borrowing needs have eased bond yields, benefiting the financial system.
Structural enablers deserve credit. PAN-Aadhaar linkage, pre-filled returns, and real-time GST tracking have minimized leakages. The production-linked incentive scheme is nascently boosting manufacturing tax base, with PLI disbursals set to expand.
Forward guidance from the report emphasizes prudence. With elections behind, focus shifts to long-term sustainability. Recommendations include broadening the GST base by including petroleum, and introducing presumptive taxation for professionals.
External factors like monsoon outcomes and rupee stability will influence final numbers. Nonetheless, revenue performance outpaces nominal GDP growth, creating positive fiscal space.
As budget day approaches, eyes are on rationalizing food and fertilizer subsidies through targeted DBT. Enhanced customs duty collections from protectionist measures support ‘Make in India’ ambitions.
In essence, India’s fiscal story is one of redemption. From pandemic depths to revenue peaks, disciplined management positions the economy for inclusive prosperity.