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Informist, Sunday, Feb. 1, 2026

 

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--Sitharaman: FY27 nominal GDP estimate of 10% realistic 
--CONTEXT: Comments by Finance Minister Sitharaman at post-Budget briefing 
--CEA: 10% nominal GDP growth view based on current base year, methodology 
--Econ secy: Nominal GDP estimate based on current India-US trade dynamics 
--Sitharaman: Inflation staying down in India for sometime 
--Sitharaman: Need to ensure fisc gap aim responsible, responsive 
--Sitharaman: FY27 fisc gap estimate a responsible number 
--Sitharaman: Need gradual fisc gap to ensure economy not hurt 
--Econ secy: To continue fisc deficit consolidation under debt glide path 
--Econ secy: Anchoring debt reduction trajectory on cutting fisc gap 
--Econ secy: Fiscal deficit to be operational target for debt-to-GDP 
--Econ secy: Have a certain credibility in terms of fiscal mgmt 
--Econ secy: Have fisc credibility, to support capex while being prudent 
--Sitharaman: Public capex push to continue 
--Sitharaman: Can only have conversation with states on their debt levels 
--Sitharaman: Can only nudge states to cut their debt
--Sitharaman: Consulted states to become self-reliant in critical minerals  
--Revenue secy: See direct tax buoyancy at 1.14 
--Revenue secy: Tax revenue to be sufficiently bouyant in FY27 
--Revenue secy: Buyback tax provisions a relief for retail shareholders 
--Revenue secy: Indirect tax growing at healthy pace as base normalises 
--Revenue secy: See increased excise mop-up FY27 on higher excise on tobacco
--Sitharaman: Econ fundamentals strong amid global turmoil 
--Sitharaman on rise in defence spend:Global uncertainty on officials' minds 
--Sitharaman: Global uncertainties not prime reason for any announcement 
--Sitharaman: Laying path for sustained econ growth 
 

 

NEW DELHI – The growth projection of 10% in nominal GDP in 2026-27 (Apr-Mar) is a "realistic" estimate and is based on the current GDP series with FY12 as the base year, according to the top brass of the finance ministry, including Finance Minister Nirmala Sitharaman. The statement comes ahead of the statistics ministry's upcoming release on GDP estimates with FY23 as the base year, expected Feb. 27.  

 

In 2015, when India had last revised the base year for GDP to FY12 from FY05, the size of nominal GDP for FY13 and FY14 underwent an upward revision by INR 6 trillion–INR 8 trillion. If history rhymes, the size of nominal GDP for FY26 may also rise from the current estimate of INR 357.14 trillion, which may further revise the estimates for fiscal deficit and debt-to-GDP ratio. 

 

The government aims to cut the fiscal deficit to 4.3% of GDP in FY27 from 4.4% in the revised estimate for the current fiscal year. This fiscal deficit target is "responsible" and "responsive," Sitharaman told the media at the post-Budget briefing. The government needs to ensure that the fiscal deficit comes down gradually without hurting the economy, Sitharaman said. 

 

The government would continue its endeavour for fiscal consolidation to lower its debt-to-GDP ratio, Economic Affairs Secretary said Anuradha Thakur, who was also present at the briefing. The fiscal deficit will be the operational target, against which the government will anchor its glide path to lower the debt to 49–51% of GDP by FY31. The government had announced its debt consolidation roadmap in FY26 and had mentioned that debt would become its prime focus.   

 

But the government will continue its capital expenditure push, while maintaining a downward trajectory for fiscal deficit and debt, Sitharaman said. The Centre's capital expenditure target for FY27 is INR 12.22 trillion, up 11.5% from the revised estimate of INR 10.96 trillion for the current year. The government has credibility in terms of managing the fiscal deficit, and it would also support capital expenditure while being prudent, Thakur said.   

 

While the Centre's roadmap to cut debt is clear, states are yet to come into action. Sitharaman said that the central government could only have a conversation and nudge states to lower their debt. Among other dialogue with state governments, the Centre has also asked them to become self-reliant in critical minerals. 

 

Questions on the possibility of fiscal slippage and the government sticking to the target gained steam after its revenue stream--particularly direct taxes--showed signs of drying up. For the year starting April, the government has projected gross tax collections to grow 8% on year to INR 44.04 trillion. This means the tax buoyancy for FY27 will be a tepid 0.8.

 

Revenue Secretary Arvind Srivastava, who was also present at the event, said tax revenue would be "sufficiently" buoyant in FY27. According to him, direct tax growth is the accurate metric of measuring tax buoyancy and that is estimated at 1.14, which is sufficient. 

Besides direct taxes, the secretary said that indirect taxes were also seen growing at a healthy pace with the tax base normalising. Excise collections, which are projected to be particularly robust in FY27, are seen higher owing to the excise duty hike on tobacco and related products, he explained. From Sunday, the government will impose higher excise on tobacco products to ensure tax incidence as the GST compensation cess is being discontinued.

 

Speaking about the change in taxation for buybacks, the secretary said that the change, if at all, was a "relief" for taxpayers and not a "burden." In the Budget, Sitharaman proposed taxing buybacks for all types of shareholders as capital gains, with the long-term capital gains attracting a 12.5% tax and short-term capital gains attracting 20%. 

 

Sitharaman also proposed an additional tax on buybacks for promotors to "disincentivise" misuse of tax arbitrage. "This would make effective tax 22% for corporate promoters. For non-corporate promoters, the effective tax will be 30%," Sitharaman said in her Budget speech.

 

"This brings greater tax efficiency to the gains on buyback of shares, other than for promoters, where the tax rate is sought to be differentiated," said Gokul Chaudhri, president - tax, Deloitte India.

 

Explaining her comment on nominal GDP, Sitharaman pointed out that inflation has been low. India's real GDP is projected to grow 6.8–7.2% in FY27, as per the Economic Survey for FY26. That assumes the GDP deflator--a combination of both CPI and WPI inflation rates with a higher share of the latter--at 3.2-2.8%. The nominal GDP growth projection is strictly based on the current economic situation, including India-US trade dynamics, Thakur said. 

 

Besides low inflation, India's other economic fundamentals are also strong amid the tumultuous global landscape, Sitharaman said. While no Budget proposal emanates primarily from global uncertainties, all officials involved in the Budget were cognisant of the geopolitical situation and had global uncertainties on their mind, the finance minister said, while answering a question on defence spending. The government's defence spending estimate for FY27 has jumped 20% to INR 5.95 trillion from INR 4.92 trillion estimated in the Budget estimate for FY26. The government has also raised the defence spending estimate for FY26 to INR 5.68 trillion. The rise in defence spending comes after India's 'Operation Sindoor' last year against terrorist bases in Pakistan.  End

 

Reported by Krity Ambey and Priyasmita Dutta

Edited by Avishek Dutta

 

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