Consumption and revenue helped by tax policy reforms, says Economic Survey 2025-26

The survey explained how the government’s policy of rationalizing direct tax slabs and indirect tax rates, coupled with softer inflation, helped improve the real purchasing power of people, giving a boost to consumption amid adverse impacts on the external economy.

FY26 was an unusually challenging year for the economy on the external front. Heightened uncertainty in global trade and the imposition of high, penal tariffs created stress for manufacturers, particularly exporters, and affected business confidence.

The government responded by using this crisis as an opportunity to push through key measures such as GST rationalisation, faster progress on deregulation, and further simplification of compliance requirements across sectors.