India’s Fiscal Deficit Nearly Doubled In First Four Months Of FY26
The total expenditure incurred by the Centre was Rs 15.63 lakh crore – 30.9 per cent of the corresponding BE 2025-26, out of which Rs 12,16,699 crore was on the revenue account and Rs 3.46 lakh crore on the capital account
New Delhi: Driven by a sharp rise in capital expenditure, the government on Friday said that India’s fiscal deficit nearly doubled in the first four months of FY26, compared with the same period of the previous year, signaling the government’s continued push to support economic growth through public investment.
As per the data released by the Controller General of Accounts (CGA), the Centre’s fiscal deficit increased to 29.9 per cent of the full-year target at the end of July. “The fiscal deficit was 17.2 per cent of the Budget Estimates (BE) of 2024-25 in the first four months of the previous financial year. The same stood at 17.9 per cent of the full-year target at the end of the first quarter (April-June),” the data showed.
In absolute terms, the fiscal deficit, or gap between the government's expenditure and revenue, was Rs 4,68,416 crore in the April-July period of 2025-26. The Centre estimates the fiscal deficit during 2025-26 at 4.4 per cent of the GDP, or Rs 15.69 lakh crore. The CGA data showed that the government received Rs 10.95 lakh crore (31.3 per cent of the corresponding BE 2025-26 of total receipts) up to July 2025.
“It comprised Rs 6.61 lakh crore tax revenue (net to Centre), Rs 4.03 lakh crore of non-tax revenue and Rs 29,789 crore of non-debt capital receipts. Further, Rs 4.28 lakh crore has been transferred to state governments as devolution of share of taxes by the government during the period, which is Rs 61,914 crore higher than the previous year,” the data showed.
The total expenditure incurred by the Centre was Rs 15.63 lakh crore – 30.9 per cent of the corresponding BE 2025-26, out of which Rs 12,16,699 crore was on the revenue account and Rs 3.46 lakh crore on the capital account. Of the total revenue expenditure, Rs 4.46 lakh crore was on account of interest payments and Rs 1.13 lakh crore towards major subsidies.
Commenting on the data, Aditi Nayar, chief economist at ICRA Ltd, said that a contraction in the personal income tax collections in July 2025, owing to the extension of the deadline to file taxes and an adverse base, pulled down the performance of gross tax revenues in the month, even as devolution to states maintained a robust pace, further compressing the performance of net tax revenues.
“While revenue expenditure expanded by 17 per cent, capital expenditure surged by 33 per cent on the last year's election-curtailed base. This fiscal headroom could be cut short by the implications of the proposed GST changes on revenues, more clarity is awaited on the same,” Nayar added.
