India’s impressive tax revenue growth trajectory signals room for ongoing fiscal tightening in the next budget, as per a detailed analytical report. Year-to-date collections surpass budget estimates by 12%, blending volume expansion with yield improvements.
Breakdown reveals balanced contributions. Direct taxes benefit from profit booms in IT, pharma, and banking sectors. Indirect taxes ride on urban consumption and e-commerce proliferation, with GST 2.0 upgrades curbing fraud.
Fiscal consolidation has been exemplary. GSDP-linked deficits have contracted steadily, with off-budget borrowings curtailed. This orthodoxy reassures investors, reflected in falling 10-year G-Sec yields and robust FPI flows.
The report forecasts FY25 tax buoyancy exceeding 1.1, implying organic growth above GDP. Dividend windfalls from PSUs and RBI surplus transfers amplify resources. Capex efficiency gains allow reallocation without cuts.
Policy levers for optimization include sin tax hikes, property tax reforms at municipal levels, and wealth tax revisits. Digital public infrastructure like ONDC promises indirect revenue multipliers via formalization.
Budgetary pressures from defense modernization and climate resilience investments loom large. However, expenditure compression in overlapping schemes offers offsets.
Consensus builds around middle-class sops like higher standard deductions, balanced by sin goods duties. Strengthening tax tribunal efficiency could accelerate dispute resolutions, unlocking deferred revenues.
Concluding, this revenue renaissance empowers strategic choices. India’s fiscal credibility, once questioned, now stands fortified, underpinning the journey to upper-middle-income status.