Centre’s Fiscal Deficit Crosses 62% of FY26 Target

India’s fiscal position in the first eight months of FY26 reflects a familiar but important trend strong government spending on infrastructure alongside slower growth in tax revenues. Latest official data shows that while capital expenditure has increased significantly to support growth, revenue collections have not kept pace. This has pushed the fiscal deficit to over 62% of the full-year target, raising questions about budget management in the remaining months of the fiscal year.

Why in the News?

According to data released by the Controller General of Accounts, the Centre’s fiscal deficit stood at ₹9.77 trillion, or 62.3% of FY26 Budget Estimates, during April–November 2025, driven by a 28% rise in capital expenditure and weak net tax revenues.

What Is Fiscal Deficit?

• Fiscal deficit refers to the gap between the government’s total expenditure and its total receipts (excluding borrowings) in a financial year.
• It shows how much the government needs to borrow to meet its spending needs and is a key indicator of fiscal health and macroeconomic stability.

Key Fiscal Deficit Numbers

• Fiscal deficit (April-November FY26): ₹9.77 trillion
• Share of FY26 Budget Estimate: 62.3%
• Indicates faster spending compared to revenue mobilization
• Similar trend seen in previous years due to front-loaded capex

Capital Expenditure Trend

Government spending on asset creation remained strong,

• Capex reached ₹6.58 trillion in April–November FY26
• This equals 59% of FY26 Budget Estimates
• Up from 49% in the same period last year
• Year-on-year growth of 28%

Higher capex reflects the government’s push for infrastructure-led growth.

Tax and Non-Tax Revenue Performance

Revenue collection showed mixed trends,

• Gross tax revenue: Up 3.3% year-on-year
• Net tax revenue: Down 3.4%, at 49.1% of FY26 BE
• Net tax was 56% of BE in the same period last year
• Non-tax revenue: Up 20.8%, reaching 88.6% of FY26 BE

Lower net tax revenue mainly dragged overall receipts.

Impact of IGST Settlement

Economists highlighted the role of IGST adjustments,

• IGST settlement between Centre and states reduced Centre’s gross tax share
• According to ICRA, gross tax revenue may fall short by ₹1.5 trillion in FY26
• This has affected fiscal numbers in the first eight months

Key Summary

Question

Q. India’s fiscal deficit of ₹9.77 trillion in April–November FY26 equals what percentage of FY26 Budget Estimates?

A. 49.1%
B. 56.0%
C. 59.0%
D. 62.3%