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Informist, Monday, Feb. 2, 2026

 

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--S&P: India Budget balances fiscal consolidation with infra, mfg push 
--S&P: See India govt meet FY27 fiscal deficit aim despite lower GST revenue 
--S&P:See higher GST revenues on stronger consumption, collection efficiency 
--S&P: See India govt fiscal deficits around 3.9% of GDP by FY29 
--S&P: See aggregate Indian state fisc gaps 2.7%-2.8% of GDP over next 3 yrs 
--S&P: See India general govt fiscal deficit gradually fall to 6.6% of GDP 
--S&P: See India FY27 GDP growth at 6.7%, FY28 growth at 7% 

 

NEW DELHI – India's general government fiscal deficit, the key measure used to determine sovereign ratings, is expected to gradually come down to 6.6% of GDP from 7.3% in the current financial year, S&P Global Ratings said Monday. The central government's fiscal deficit may fall to 3.9% of GDP by 2028-29 (Apr-Mar) from the government's target of 4.3% of GDP for FY27, S&P said.

 

The Union Budget for FY27, presented on Sunday, pegged the fiscal deficit target at 4.3% of GDP, marking the slowest pace of consolidation since before the COVID-19 pandemic. The fiscal deficit targets for FY26 and FY27 reinforce "our expectation of gradual fiscal consolidation" and are broadly "consistent with our projections", S&P said. The rating agency projects the aggregate fiscal deficit of the state governments to be around 2.7%-2.8% of GDP over the next three years.

 

S&P expects the Centre to meet its fiscal deficit target for FY27 despite the government budgeting lower revenues from the Goods and Services Tax following the September rate cuts. "There is upside to GST revenues coming from stronger consumption and higher collection efficiency, in our view. In addition, support for meeting the deficit target will stem from continued large dividends from the central bank and potential capital underspending," S&P said in a report.

 

The government's revenues should be supported by high growth rates, S&P said. The rating agency projects India's GDP to grow 6.7% in FY27 and 7.0% in FY28, supported by consumer spending and public investments. S&P growth projection for FY27 is lower than the 6.8-7.2% projected by the Economic Survey. "The lowered GST rates will support middle-class consumption and complement income tax cuts. These changes are likely to make consumption a greater driver of growth compared with investment, both in this fiscal year and the next."

 

High growth rates also place India above sovereign peers at similar income levels. S&P upgraded India's long-term sovereign credit rating to 'BBB' from 'BBB-' in August, the first rating upgrade in 18 years.

 

The Budget balances fiscal consolidation with an infrastructure and manufacturing push, S&P said. The Budget announced policies to support a manufacturing push and exports, sectors weighed down by the 50% tariff imposed by the US. "If India can secure a trade agreement with the US, it should reduce uncertainty and enhance confidence, which would boost labour-intensive sectors," S&P said.  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

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