Centre likely to stick to fiscal consolidation path: Barclays

Despite slippage concerns, a Barclays report notes that the government is expected to meet the fiscal deficit target of 4.4% in FY25-26 and is likely to maintain a moderate target of 4.2% in FY26-27.

- TBG NETWORK

It says the government is likely to remain committed to its medium-term fiscal consolidation path.While pressures from higher revenue expenditure and shortfalls in receipts persist, stronger-than-expected nominal GDP growth and stable tax collections could help offset part of the stress.

"We expect the Centre's fiscal deficit in FY26-27 to be pegged at 4.2% of GDP. We estimate that this would take debt-to-GDP down to 55% in FY26-27. For FY25-26, we expect the fiscal deficit target of 4.4% to be met, despite serious slippage concerns," noted the report.

The report added, "At a projected fiscal deficit 4.2% of GDP for FY26-27, we estimate net borrowings at INR 11.1 trn and gross borrowings at INR 16.6 trn."