New Delhi. Two leading global rating agencies have once again made major revelations about India’s economy. Global rating agency Moody’s said on Tuesday that the cuts in income tax and GST in the current financial year have weakened the government’s revenue growth, limiting the scope for providing additional fiscal support to the economy. On the other hand, India Ratings and Research has said that despite all these difficulties and decisions, there is every possibility of India’s growth rate being around 7 percent.
Martin Petch, vice president and senior credit officer (sovereign risk) at Moody’s Ratings, said in a webinar that revenue growth has been much weaker than expected. The tax cuts that have taken place in the last months have also had an impact on revenue collection. For this reason, pressure on financial empowerment has increased and the scope for providing additional incentives has reduced. According to the data released by the Controller General of Accounts (CGA), the net tax revenue by the end of September 2025 declined to Rs 12.29 lakh crore, which was Rs 12.65 lakh crore in the same period last year.
What target of the budget has been achieved?
Moody’s said that revenue receipt this year is only 43.3 percent of the government’s budget estimate for the year 2025-26, whereas 49 percent of the target was achieved in the same period of the last financial year. Under the new tax structure in the budget this year, the government had increased the income tax exemption limit from Rs 7 lakh to Rs 12 lakh. Due to this, the middle class has got tax relief of about one lakh crore rupees.
Revenue reduced due to GST exemption
Apart from this, GST rates on about 375 items were also reduced from September 22, due to which consumer goods became cheaper and an attempt was made to increase demand. Petch said that domestic consumption is expected to strengthen further due to falling inflation and softening of monetary policy. Along with this, the Reserve Bank of India had reduced the policy interest rates by 0.50 percent in June, bringing them to a three-year low of 5.5 percent. Retail inflation fell to a record low of 0.25 percent in October.
American tariff also has no effect
Moody’s official said that domestic consumption and infrastructure investment remain the main drivers of India’s economic growth and will largely balance the impact of the 50 percent import duty imposed by the US. However, he also said that if these charges continue for a long time, investment may be adversely affected. Moody’s had estimated last week that India’s economy will grow at the rate of 7 percent in the year 2025 and 6.5 percent next year.
What will be the growth rate?
Domestic rating agency India Ratings and Research on Tuesday also increased India’s gross domestic product (GDP) growth forecast for the current financial year to 7 percent. This estimate has been raised in view of higher growth in the June quarter and lesser impact of US tariff increase on global growth and trade. According to the statement of India Ratings, it expects the GDP to grow at the rate of 7 percent on an annual basis in the financial year 2025-26. This is 0.7 percent more than its previous estimate of 6.3 percent (released in July, 2025).
What is the growth rate stated by RBI?
The Reserve Bank of India (RBI) has estimated India’s GDP growth rate to be 6.8 percent in the current financial year, which is more than 6.5 percent in the last financial year. India’s real gross domestic product (GDP) growth rate stood at 7.8 percent in the April-June quarter of financial year 2025-26, which is the fastest growth in 5 quarters. The official data of GDP growth for the second quarter (July-September) will be released on November 28. India Ratings said that both the domestic and global scenarios have changed significantly since its last estimate in July 2025.
