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India to achieve 4.3% fiscal deficit target for FY27 despite GST challenges: S&P Global Ratings
Feb-03-2026

The global rating agency -- S&P Global Ratings has said it is confident that the Indian government will meet its 4.3 percent fiscal deficit target for FY27, despite an anticipated decline in Goods and Services Tax (GST) receipts following the rate streamlining in September 2025. The rating agency said the Union Budget signals a strong commitment to fiscal discipline, reinforcing a trajectory of steady consolidation that aligns with global expectation.  

By outlining a clear roadmap toward narrowing the fiscal deficit targeting 4.4 per cent of GDP for FY26 and 4.3 per cent for FY27, the central government is signaling a balance between growth and responsible spending. It stated ‘We believe India (BBB/Stable/A-2) will hit its fiscal 2027 deficit target despite the government budgeting for lower GST receipts, following the streamlining of GST rates in September 2025. There is upside to GST revenues coming from stronger consumption and higher collection efficiency, in our view.’

Furthermore, it said meeting the deficit target will be supported by large dividends from the central bank and possible underspending on capital. The rating agency expects that consumer spending and public investments will keep India's real GDP growth at 6.7 per cent in FY27 and 7 per cent in FY28. These growth rates keep India ahead of sovereign peers at similar income levels and should continue to support fiscal revenue increase.

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