Nominal growth target set higher at 10.1%, income tax steals the show in FY26 Budget

GDP

Finance minister Nirmala Sitharaman has pegged India’s nominal growth at 10.1 percent for FY26, higher than 9.7 percent in the previous fiscal.

The Budget estimate is marginally lower than the MC poll forecast of 10.4 percent.

The Indian economy performed below expectations in FY25. While the Budget set a target if 10.5 percent, data released on January 7 showed that growth likely slipped to 9.7 percent on a disappointing second quarter.

India’s real GDP growth slipped to a near two-year low of 5.4 percent in the September quarter of FY25.

Achieving the FY26 nominal growth target will be a task for the government, with some agencies predicting a slowdown.

Earlier this week, Moody’s Analytics said growth in 2025 will likely slow to 6.4 percent amid inflationary pressures and moderating demand.

A Moneycontrol analysis has shown that the nominal growth target has been lower than budgeted in the last 10 of 13 years.

The government projected a nominal GDP of Rs 326.37 lakh crore for FY25 but the first advance estimate puts the number at Rs 324.11 lakh crore.

The government has missed the 10.5 percent nominal GDP target for the past two years.

Barring the four years between FY20 and FY23, when the difference between the budget estimate and GDP number varied by an average of 6 percentage points, all other years have seen an average 0.9 percent diversion between the budget estimates for growth and the final numbers.