India needs 1.2-1.5 tax buoyancy to achieve 6.5-7pc growth: EY
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India's fiscal strategy must focus on enhancing tax buoyancy, prudent expenditure management, and continued structural reforms to ensure sustainable growth, EY said.
«EY India Chief Policy Advisor D K Srivastava said the FY26 budget strategically balances fiscal consolidation with growth imperatives.
«However, for India to achieve a medium-term growth trajectory of 6.5-7.0 per cent and realize its Viksit Bharat vision, it must ensure tax buoyancy remains in the 1.2-1.5 range. This would help create the necessary fiscal room to accelerate infrastructure expansion, enhance social sector spending, and maintain fiscal discipline,» Srivastava added.
The EY India Economy Watch report noted that over the past three years, gross tax revenue buoyancy has gently moderated, from 1.4 in FY24 to 1.15 in FY25 (RE) and projected to be 1.07 in FY26(BE). «Maintaining tax buoyancy in the 1.2-1.5 range could help the Government of India achieve 6.5-7.0 per cent GDP growth,» the EY Report said.
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