The only Budget analysis you'll need: The government's tight fiscal math, explained in 8 charts

Subscribe to enjoy similar stories. If 2025 was about putting money in the hands of the common people through large-scale and much-celebrated cuts in both direct and indirect taxes, the new year appears to be about its after-effects—on the government’s fiscal math, not so much on consumption-led growth wheels. Several figures point towards a lack of optimism in the economy.

Firstly, the government believes that GDP, in nominal terms, will grow 10% during fiscal year 2027 (FY27), the lowest budget projection since the pandemic-hit FY21. While this will be better than the 8% growth estimated in FY26, the truth is that a large part of this increase could simply be attributed to inflation climbing back to normal from ultra-low levels. Secondly, the Centre’s tax collections are expected to grow by just 8%.

The crucial goods and services tax (GST) component is, in fact, estimated to shrink, signalling a lack of momentum in consumption. Thirdly, despite non-tax revenue continuing to act as a cushion, fiscal consolidation will slow down significantly. Starting this year, the Centre’s fiscal north star is the debt-to-GDP ratio, which it aims to cut by 52 basis points (bps) to 55.63% in FY27.

That is nearly half the rate of around 100 bps reduction needed each year to reach the 50% target by 2031. While there’s ample time to pace this up in the coming years, the start has clearly been slow. Meanwhile, the traditional measure of fiscal health—fiscal deficit as a percentage of GDP—is set to go down by just 5 bps to 4.31%.