S&P: Tax cuts boost demand, growth.

• S&P Global Ratings predicts a boost in India’s growth due to domestic demand driven by income tax cuts.

• The growth forecast for 2025-26 is raised to 6.8% from 6.7% projected last November, indicating a higher end of the 6.3%-6.8% real GDP growth projected for 2025-26 in this year’s Economic Survey.

• India is expected to meet fiscal deficit targets of 4.8% of GDP for this year and 4.4% of GDP in 2025-26, despite revenue losses from income tax breaks and slower economic growth.

• The expected growth rates will continue to support fiscal revenue increase despite income tax cuts.

• The agency is not optimistic about the government’s move to a new fiscal anchor of debt to GDP ratio from 2026-27.

• The agency warns that a lower debt-to-GDP ratio for India would not necessarily lead to an improved debt burden score due to the country’s high ratio of government interest servicing to revenue.