Challenges Loom for India's FY26 Fiscal Targets as Tax Revenues Disappoint

As India sets its sights on achieving its fiscal targets for the Financial Year 2026 (FY26), challenges are mounting. A report by the Union Bank of India has highlighted concerns about subdued growth in corporate and income tax revenues, which are crucial for meeting the reduced fiscal deficit target.

The report pointed out that the government's strategy hinged on strong tax collections, alongside a robust push in capital expenditure to drive consumption and job creation. However, in the first half of FY26, the fiscal deficit widened, reaching Rs. 5.73 lakh crore, mainly driven by increased capital outlay.

While GST collections showed a positive trend with a 9% rise year-on-year in September, overall revenue growth remains sluggish. The government is banking on higher non-tax revenues and divestment proceeds to cushion its fiscal position, but weaker direct tax growth could impede fiscal goals. (ANI)