India meets FY26 fiscal deficit target at 4.4 pc of GDP
New Delhi, June 1
India has succeeded in restricting its fiscal deficit to the 4.4 per cent of GDP target fixed for the financial year 2025-26, reflecting the robust state of government finances at the end of the year, official data released on Monday showed.
The fiscal deficit, which shows the difference between government revenue and expenditure, stood at Rs 15.19 lakh crore in FY26.
Data released by the Controller General of Accounts (CGA) showed revenue collections remained strong during FY26, with net tax receipts rising to Rs 33 lakh crore, compared with Rs 30.87 lakh crore in the previous financial year. Non-tax revenues also registered a sharp increase to Rs 6.8 lakh crore, from Rs 5.31 lakh crore a year earlier.
Total expenditure during the year was Rs 49 lakh crore, with revenue expenditure at Rs 38.36 lakh crore. Capital expenditure rose to about Rs 10.7 lakh crore from Rs 10.18 lakh crore a year earlier, as the government continued investing heavily in big-ticket infrastructure projects such as highways, railways, and ports to accelerate economic growth and create more jobs.
Finance Minister Nirmala Sitharaman set the fiscal deficit target for 2025-26 at 4.4 per cent of GDP, amounting to Rs 15.7 lakh crore. This is part of the government's commitment to follow a descending gliding path on the deficit to strengthen the country's fiscal position. India's fiscal deficit for 2024-25 stood at 4.8 per cent of GDP as part of the revised estimate.
A decline in the fiscal deficit strengthens the economy's fundamentals and paves the way for growth with price stability. It reduces government borrowing, leaving more funds in the banking sector for lending to corporates and consumers, which in turn drives higher economic growth.
Meanwhile, government accounts for April indicated that the fiscal deficit for the first month of FY27 reached 21.4 per cent of the full-year budgeted target. This has raised concerns, as subsidy payments are expected to increase amid the Middle East conflict due to rising costs of petroleum products such as LPG and fertilisers. This is expected to increase outgoings on LPG subsidies for the poor and fertiliser subsidies to cushion farmers from global cost rises in crucial crop-production inputs.
— IANS
Reader Comments
Impressive that India kept a 4.4% deficit target. Back in the US we're used to deficits north of 6% routinely. The capex push on highways and railways could be a gamechanger for manufacturing and logistics. But I wonder if the revenue projections for FY27 are realistic given global headwinds.
This is good but I wish the government would spend more on healthcare and education. Capital expenditure on roads is fine but what about rural infrastructure? Many villages still lack proper roads and schools. Also, the 21.4% deficit in April suggests the first month itself is off to a shaky start. Need to watch the next few months closely. 🤔
Finally some fiscal responsibility! For years we used to see fiscal deficits of 5-6% during UPA era. Now 4.4% is a sign of a maturing economy. But the April spike concerns me - if oil prices go up due to Middle East tensions, the subsidy burden could blow the FY27 target. Need robust tax collections and divestment to compensate. Overall, a balanced report card. 👏
Good to see the target met, but the real test will be how much of this infra spending actually reaches the ground. I've seen projects in my district get delayed due to red tape. The 21.4% deficit in April is also alarming - seems like the government is front-loading spending but revenue may not keep pace. Hope the RBI and FM have a contingency plan for oil shocks. 🙏
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.