About one and a quarter months is left for the presentation of the general budget. In such a situation, on one hand, the expectations of the common people increase every time from the budget, while on the other hand, the government has to try to reduce the fiscal deficit and increase development. In such This report indicates that the government can strengthen domestic demand by providing targeted fiscal support through the upcoming Union Budget. This will support economic growth and will be in line with the growth-oriented monetary policy of the Reserve Bank of India.

Domestic demand will have to increase

According to global consulting firm EY, possible cuts in income tax and GST rates in the current financial year may put some pressure on government revenues. But an increase in non-tax revenue and a possible reduction in revenue expenditure will make it possible to achieve fiscal deficit and capital expenditure targets.

The report also said that recently announced measures like excise duty on tobacco products and National Security and Public Health Cess have been approved by the Parliament and will be implemented after notification. EY India’s Chief Policy Advisor D.K. Srivastava believes that going forward, India may have to depend more on its strong domestic demand for economic growth and the general budget for the financial year 2026-27 along with the policies of RBI can provide additional stimulus.

Growth rate likely to strengthen

According to the ‘EY Economy Watch’ report, the contribution of net exports to GDP growth may remain negative in the near future due to global headwinds, as seen in recent quarters. However, India’s growth rate may remain strong in the medium term due to a pick-up in domestic private investment and reduction in global supply chain disruptions.

EY estimates that India can maintain an average growth rate of around 6.5 percent, while RBI has estimated the GDP growth rate to be 7.3 percent for the current financial year.

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