India's post-pandemic fiscal future

Tax collection in the current fiscal year is likely to exceed the Budget estimate by a significant margin. This would not only enable the government to increase growth-enhancing capital expenditure but also help reduce the fiscal deficit to some extent. The Union government is targeting to contain the fiscal deficit at 6.8 per cent of gross domestic product (GDP) in the current fiscal year, compared to 9.5 per cent last year. However, better-than-expected revenue collection in the current year should not lead to an underrating of medium-term fiscal challenges. The general government debt has increased to about 90 per cent of GDP and, according to International Monetary Fund (IMF) projections, it will remain above 85 per cent of GDP by