The EY Economy Watch report projects India’s GDP growth at 6.5% for FY26, stressing the need for a balanced fiscal strategy that promotes economic expansion while maintaining fiscal prudence. It highlights the importance of government investment in education and healthcare, a higher revenue-to-GDP ratio, and equalization transfers to reduce regional disparities. Achieving the 6.5% growth target requires a 7.6% Q4 FY25 growth, which may necessitate increased investment expenditure. While the fiscal deficit may widen due to supplementary grants, higher nominal GDP could mitigate fiscal pressures, making strategic capital spending essential.
