Global Agencies Confident in India's Growth Rate Despite Tax-to-GDP Concerns

 

Despite some fiscal concerns, global financial agencies continue to express strong confidence in India’s growth trajectory for the year 2025–26. According to the latest report from the Ministry of Finance, India's economic fundamentals remain robust, with GDP growth projected between 6.5% to 7%, making it one of the fastest-growing major economies in the world.

The government has stated that India's development pace remains consistent, and global agencies are aligning their forecasts accordingly. However, these agencies have also highlighted the need for India to further improve its tax-to-GDP ratio, which remains relatively low compared to other emerging economies.

For 2024–25, India's tax collection has been encouraging, but a substantial gap remains in terms of overall tax revenue generation, especially from the non-direct tax sector. The Ministry of Finance acknowledged that improving the tax base and compliance is essential to support rising public expenditure, especially in infrastructure, education, and social welfare.

Key Highlights:

• India's tax-to-GDP ratio is expected to hover around 11.2% in 2024–25.
• Global agencies suggest increasing this ratio to ensure sustainable fiscal growth.
• The government is considering both policy reforms and administrative tightening to broaden the tax base.
• India remains an attractive investment destination, with stable inflation, improving exports, and a growing industrial base.

While India has shown resilience amid global economic turbulence, the Ministry stressed that fiscal discipline, efficient tax reforms, and greater formalization of the economy will be critical to sustaining long-term growth and meeting international benchmarks.