New Delhi: Finance Minister Nirmala Sitharaman has voiced confidence that India’s fiscal deficit target of 4.4% of GDP (₹15.69 lakh crore) for FY 2025-26 will be met, despite a projected revenue shortfall of ₹48,000 crore. The government is banking on a spurt in consumer spending, especially after the rollout of the new GST regime, to bridge the gap.
Calling the GST revamp a true “people’s reform,” Sitharaman highlighted that simplified slabs of 5%, 18%, and 40% (for sin goods), coupled with exemptions on essentials, will directly ease household budgets. With the new rates kicking in from September 22, just ahead of the festive season, the government expects a surge in demand for goods ranging from dairy and soaps to vehicles and insurance products.
India’s economy already clocked an impressive 7.8% growth in Q1 FY26, outpacing earlier forecasts. Sitharaman noted that the GST-driven consumption push could lift growth beyond the earlier 6.3–6.8% projection, cementing India’s position as one of the fastest-growing major economies.
Despite revenue uncertainties, the Centre has pledged to keep its ₹11.21 lakh crore capital expenditure plan fully intact. Sitharaman reiterated that investments in infrastructure and development will continue without cuts, ensuring momentum in job creation and economic resilience.
While bond yields have surged—India’s 10-year benchmark touched 6.4651% in August—and borrowing costs rise, Sitharaman assured that fiscal discipline will not be compromised. The government remains firm on both the deficit target and its divestment agenda, including the planned IDBI Bank stake sale.
With consumption-led revenue buoyancy, a clear capex roadmap, and structural tax reforms, the government is confident of balancing growth with fiscal prudence. Sitharaman’s message is clear: India’s fiscal journey is on track, powered by reforms designed to ease household spending while sustaining long-term economic momentum.
