New Delhi, Aug. 19 -- The government's fiscal deficit could see a short-term increase due to proposed changes in the Goods and Services Tax (GST) structure, but the growth boost is expected to outweigh the temporary slippage, according to a report by Emkay Research.

The report highlighted that the fiscal deficit could widen by 0.1 per cent in FY26E to 4.5 per cent and by 0.2 per cent in FY27E to 4.6 per cent. However, this widening is seen as a transient factor that would normalize within two to three years.

"The government should absorb the revenue loss through the higher deficit, as the growth accretion will cover the shortfall within 2-3 years," the report noted.

This shortfall, the report said, will be partially made up by tax buoy...