India has successfully limited its fiscal deficit to the targeted 4.4% of GDP for the financial year 2025-26, as per official data released. The fiscal deficit, indicating the variance between government revenue and expenditure, amounted to Rs 15.19 lakh crore in FY26.
According to data from the Controller General of Accounts (CGA), revenue collections remained robust in FY26, with net tax receipts reaching Rs 33 lakh crore, up from Rs 30.87 lakh crore in the previous fiscal year. Non-tax revenues also saw a significant rise to Rs 6.8 lakh crore from Rs 5.31 lakh crore in the prior year.
Total expenditure for the year stood at Rs 49 lakh crore, with revenue expenditure at Rs 38.36 lakh crore. Capital expenditure increased to around Rs 10.7 lakh crore from Rs 10.18 lakh crore in the previous year, with a focus on substantial investments in infrastructure projects like highways, railways, and ports to boost economic growth and employment.
Finance Minister Nirmala Sitharaman had set the fiscal deficit target for 2025-26 at 4.4% of GDP, totaling Rs 15.7 lakh crore. This move aligns with the government’s strategy to gradually reduce the deficit and fortify the nation’s fiscal health. In the revised estimate, India’s fiscal deficit for 2024-25 was 4.8% of GDP.
A decrease in the fiscal deficit enhances the economy’s foundation, fostering growth while maintaining price stability. It curtails government borrowing, freeing up more capital in the banking sector for lending to businesses and individuals, thereby stimulating economic expansion.
Recent government accounts for April revealed that the fiscal deficit for the initial month of FY27 reached 21.4% of the annual budgeted target. This development has sparked concerns, particularly with anticipated increases in subsidy payments due to the Middle East conflict, leading to elevated costs of petroleum products like LPG and fertilizers. The surge is expected to heighten expenditures on LPG subsidies for the underprivileged and fertilizer subsidies to support farmers against global price escalations in vital crop inputs.
