New Delhi, Jan. 5 -- India's much-discussed "Goldilocks" economic narrative is increasingly showing signs of strain, with weak tax buoyancy and shrinking fiscal space creating a policy gridlock, according to a report by Systematic Research.

The report highlighted that while headline growth numbers suggest a strong economy, the underlying momentum remains fragile. This has left policymakers facing difficult choices, with recent fiscal and monetary actions appearing counterintuitive in what is officially projected as a high-growth, low-inflation environment.

It stated, "Headline growth masks fragile momentum, leaving the government trapped in a policy dilemma".

The report shared that one such move is the increase in the basic excise duty...