What happened: Centre’s fiscal risks in 2026–27 tied to oil prices, weak early revenue, and geopolitical pressure
A commentary by economists C. Rangarajan and D. K. Srivastava examines the central government’s fiscal position for 2026–27 and argues that geopolitical risks and revenue risks may keep fiscal outcomes close to budget targets while still creating vulnerabilities. The commentary highlights weak early-year tax collection signals and connects fiscal stress to oil-price volatility linked to the West Asian crisis.
Gross tax revenue growth in early 2026–27: low growth and the role of 2025–26 tax changes
The commentary reports that gross tax revenue growth in the first quarter of 2026–27 was low. The commentary attributes this weakness to earlier tax changes made during 2025–26, including rate rationalisation, GST rate reductions, and effects on modified personal income tax performance. The commentary also states that earlier revenue-sacrifice reforms were expected to be offset later by base expansion, but early growth signals for 2026–27 remained weak.
Oil-price volatility and excise duty changes: transmission into excise revenue and subsidies
The commentary links fiscal pressure to the West Asian crisis through high and volatile global crude oil prices. The commentary describes a chain of impact: oil-price volatility raises retail fuel prices; the Centre responds by reducing excise duties on fuels; excise duty reductions reduce Union excise duty receipts. The commentary also links oil-price shocks to subsidy increases and warns that annual subsidy overshoot could become large if early-year patterns persist.