India’s gross tax revenue is projected to improve in FY27, rising by 9.6 per cent, marginally lower than projected nominal GDP growth of 10.1 per cent, a report said on Friday. The report from CareEdge Ratings said that direct tax collections are expected to see some improvement in FY27, aided by recovery in income and corporate tax collections.
The government’s capex is projected to grow 10 per cent to Rs 12.3 trillion in FY27, while the fiscal deficit is expected to be budgeted at 4.2–4.3 per cent in FY27. “We expect gross borrowing to be in the range of Rs 16-17 trillion in FY27; Net borrowing likely at Rs 11.5-12 trillion,” the report said.
Though GST rate rationalisation is expected to weigh on collections, GST revenues are likely to show signs of improvement. Non‑tax collections have been healthy this fiscal year aided by a higher Reserve Bank of India dividend, with non‑tax revenues up 20.9 per cent during the first eight months of FY26.
The RBI dividend transfer is likely to remain high at Rs 2–Rs 2.5 trillion in FY27 compared to Rs 2.7 trillion in FY26 and non‑debt capital receipts may fall short by Rs 0.2 trillion in FY26, the firm forecasted. The ratings agency noted that excise duty on tobacco products, effective February 1, 2026, is expected to support union excise duty growth in FY27.
“With higher-than-expected dividend transfer by RBI, we expect the non-tax revenues to overshoot the budgeted amount of Rs 5.8 trillion, by Rs 0.3 trillion in FY26,” the report said. Another recent report said that Budget 2026 will maintain fiscal prudence and prioritise strategic, capex‑heavy sectors making defence sector the top beneficiary.
A pre‑budget survey of over 50 investment managers found that infrastructure ranked second at about 29 per cent, reflecting confidence in public capex and long‑term growth multipliers.
