Global ratings agency S&P believes India will remain on its fiscal consolidation path even after implementing income tax cuts in the Union Budget 2025-26. Despite concerns over revenue loss from raising the minimum taxable income threshold and slower economic growth, S&P expects the country to meet its fiscal deficit targets.
The budget, which focuses on stimulating domestic demand, is expected to support economic growth over the next few years. S&P anticipates that tax relief for households will boost consumer spending, while public investments will drive economic momentum. As a result, India’s real GDP growth is projected to be 6.7% in fiscal 2025 and 6.8% in fiscal 2026.
S&P also highlighted that a key factor for upgrading India’s sovereign credit rating would be a meaningful reduction in fiscal deficits. If the government successfully narrows its deficit while maintaining economic growth, it could strengthen India’s fiscal position in the long run.
Stay informed with our financial updates, stocks, bonds, commodities. Get global & political insights. Follow us & enable notifications for the latest updates.