Tariff-led global headwinds likely to dent govt revenues in FY26

Economists have projected the growth impact of slowdown in exports on India to be up to 50 basis points in FY26

The government’s revenue collection in 2025-26 (FY26) is likely to be affected if there is an economic slowdown in India, triggered by the mounting global headwinds following American President Donald Trump’s sweeping reciprocal tariffs. 

Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, in a research note on Tuesday said she expected a tax shortfall of around ₹1 trillion in FY26, given the downside risks to growth.   

Economists  say the increase in cooking gas prices and the special additional excise duty on fuel products on Monday,  appear to be preemptive steps by the government to cushion a potential shortfall in revenue.