India’s Fiscal Deficit Hits 36.5% of FY26 Target
India’s fiscal deficit for the first half of the 2025-26 financial year stood at ₹5.73 lakh crore, or 36.5% of the full-year target, the government reported. The gap widened compared to the same period last year, indicating that revenue growth is lagging while expenditure remains elevated.
Revenue and Expenditure Drivers
Net tax receipts during April-September were ₹12.3 lakh crore, a drop from ₹12.7 lakh crore collected during the same period a year earlier. Non-tax revenue rose to ₹4.7 lakh crore from ₹3.6 lakh crore, driven by higher dividends and other receipts. On the expenditure side, total government spending breached ₹23 lakh crore, up from ₹21.1 lakh crore a year ago. Capital expenditure jumped to ₹5.8 lakh crore compared with ₹4.1 lakh crore, underscoring the front-loaded infrastructure push.
Significance for Fiscal Trajectory
Reaching 36.5% of the annual target halfway through the year places pressure on the government to maintain its deficit cap of 4.4% of GDP. Analysts say achieving that will require revenue acceleration or tighter expenditure in the second half. The higher capital spending, while growth-oriented, makes the glide-path to fiscal consolidation more challenging.
