New Delhi, Nov 2 — The Centre is likely to achieve its fiscal deficit target of 4.3 per cent of GDP for FY27 because of robust corporate tax collections, according to a report.
As per Goldman Sachs’ report, the fiscal deficit during April-September reached about 3.9 per cent of GDP, accounting for 42.6 per cent of the full-year budget estimate.
While this marks a higher run rate than in recent years, it said the government remains on course to meet its fiscal consolidation goal despite a relatively fast pace of borrowing and spending in the first half of the financial year.
According to the report, stronger-than-expected corporate tax revenues are helping offset pressure from weaker income tax collections, lower fuel tax receipts and higher expenditure commitments.
Moreover, corporate tax collections have risen around 22 per cent year-on-year so far in FY27, significantly above the Budget's projected growth rate of 12 per cent.
The report also highlighted that income tax collections have increased by about 9 per cent, falling short of the government's budgeted expectation of 18 per cent growth.
It noted a sharp improvement in the fiscal position during September when the government's accounts were broadly balanced after recording a deficit of around Rs 2.6 lakh crore in August.
Strong advance tax payments from companies contributed to the improvement, helping absorb the impact of rising interest payments and capital expenditure.
The government is expected to rely on expenditure reprioritisation to remain within its fiscal deficit target, according to the report.
It noted that capital expenditure remained a key focus area, rising 12.7 per cent on a year-to-date basis, although September spending was below year-ago levels due to lower outlays on roads and highways.
Additionally, the report showed some risks to the fiscal outlook.