Budget ’25 to meet fiscal targets at 4.5%, say analysts

On the revenue front, she expects gross tax revenue collection to grow at 11.5-12% in FY26 vs 10.7% so far this fiscal, in line with the improvement in nominal GDP growth to 10.5% in FY26.

This implies tax buoyancy of 1.1, which is lower than the average 1.4 during FY22-24, but similar to the pre-pandemic period of FY11-19.

On the other hand, the key focus area of the budget will be higher capex, consumption and employment but within fiscal boundaries.

She expects capex to grow slightly better than nominal GDP at 12-14%.

Rahul Bajoria, India economist at Bank of America Securities in a report titled ‘From Red Light to Green Light,’ said the country is well-placed to hit its fiscal targets.