Thur Dec 4,
Insights
ICRA Ratings does not expect a material fiscal slippage over the fiscal deficit of 4.4 per cent of GDP as estimated in India's FY26 budget.
Given the steep required growth of 22 per cent in November-March FY26, gross tax revenues may undershoot the budget estimates by nearly ₹1.2-1.5 trillion, it said.
It is apprehensive that GTR will undershoot the budgeted target of ₹42.7 trillion by ₹1.2-1.5 trillion.
ICRA Ratings does not expect a material fiscal slippage over the fiscal deficit of 4.4 per cent of gross domestic product (GDP) as estimated in India’s Union Budget for fiscal 2025-26 (FY26).
Fiscal slippage occurs when a government's actual fiscal performance falls short of its budgeted or targeted figures, particularly in relation to the fiscal deficit.
The Indian government fiscal deficit rose to ₹8.3 trillion during April-October in this fiscal from ₹7.5 trillion in the corresponding period during the last fiscal, reaching close to 53 per cent of the budget estimate (BE) of ₹15.7 trillion.
This stemmed from a strong 32 per cent expansion in its capital expenditure, even as the revenue deficit narrowed on a year-on-year (YoY) basis.
On the taxes front, the growth in gross tax revenues (GTR) was subdued at 4 per cent in April-October FY26, reflecting a modest rise in both direct and indirect taxes.
Given the steep required growth of 22 per cent in November-March FY26, GTR is expected to undershoot the BE by nearly ₹1.2-1.5 trillion, ICRA Ratings said in a note.
However, this would be offset by an upside of nearly ₹0.5 trillion on non-tax revenues and expenditure savings of ministries garnered typically in a fiscal, even as additional allocation may be announced on some accounts.ICRA is apprehensive that GTR will undershoot the budgeted target of ₹42.7 trillion by ₹1.2-1.5 trillion, amid a likely sizeable miss in income tax and central goods and services tax collections.