Centre's revenue receipts strengthened from an average of about 8.5 per cent of GDP in FY16'FY20 to 9.2% of GDP in FY25 (PA). This improvement was driven by buoyant non-corporate tax collections, which rose from about 2.4 per cent of GDP pre-pandemic to around 3.3 per cent post-pandemic.

The direct tax base expanded steadily, with income tax returns filed increasing from 6.9 crore in FY22 to 9.2 crore in FY25. Higher return filings reflect improved compliance, greater use of technology in tax administration, and a growing number of individuals entering the tax net as their incomes rise.

Gross GST collections during April'December 2025 stood at ₹17.4 lakh crore, registering a year-on-year growth of 6.7 per cent. GST revenue growth is broadly aligned with prevailing nominal GDP growth conditions. In parallel, high-frequency indicators suggest robust transaction volumes, with cumulative e-way bill volumes during April-December 2025 growing by 21 per cent YoY.

The effective capital expenditure of the Central government rose from an average of 2.7 per cent of GDP in the pre-pandemic period to about 3.9 per cent post-pandemic, and to a higher 4 per cent of GDP in FY25.

Through Special Assistance to States for Capital Expenditure (SASCI), the Centre has incentivized States to maintain capital spending at around 2.4 per cent of GDP in FY25.

The combined fiscal deficit of State Governments stayed broadly stable at around 2.8 per cent of GDP in the post-pandemic period, similar to pre-pandemic levels, but has edged up in recent years to 3.2 per cent in FY25, reflecting emerging pressures on State finances.

India reduced its general government debt-to-GDP ratio by about 7.1 percentage points since 2020, even while maintaining high public investment.

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