Budget Math Looks Realistic

Budget has balanced needs to support growth and continue with fiscal consolidation, says Morgan Stanley

New Delhi: The Union Budget has managed to meet the goals of boosting consumption though tax cuts, increasing capex through transfers to states, and maintaining the path of fiscal consolidation, which is expected to lead to a recovery in the economic growth rate with macro stability in a comfortable range, according to a Morgan Stanley report released on Monday.

The report said that both fiscal and monetary policies are pivoting to support growth, which is in line with “our view of a cyclical recovery in growth”. “The Budget math looks realistic, with nominal GDP assumed at 10.1 per cent for FY26 and gross tax revenue growth of 10.8 per cent. We will remain watchful of income-tax collection growth, which the government expects to be 14.4 per cent, given the income-tax cuts and execution of capex spending to meet the targets,” the report stated.

The report pointed out that the Budget has balanced needs to support growth and continue with fiscal consolidation. As such, the Budget targets a lower fiscal deficit of 4.4 per cent of GDP for F2026 even as it reduced income taxes to support consumption, especially for middle income-tax payers, and expanded capex growth, mainly through a boost in grants to states for capex creation.