Fiscal deficit widens to 38% of FY26 target on muted revenue receipts

The fiscal deficit for the first five months of the current financial year was up at ₹5.98 lakh crore, or 38.1% of the FY26 budget estimate of ₹15.68 lakh crore, compared with 27% during the same period last year, as per government data released on September 30.

“This uptick was led by a muted 4% growth in revenue receipts, amid a 7% contraction in net tax revenues, even as the GoI’s total expenditure rose by 14% on account of a 43% spike in its capex during this period,” said Aditi Nayar, Chief Economist, ICRA Ltd. 

According to the monthly accounts up to August this year, the government has received ₹12,82,709 crore (36.7% of the corresponding BE 2025-26 of total Receipts), comprising ₹8,10,407 crore of Tax Revenue (Net to the Centre), ₹4,40,332 crore of Non-Tax Revenue and ₹31,970 crore of Non-Debt Capital Receipts.

“₹5,30,148 crore has been transferred to state governments as devolution of share of taxes, which is ₹74,431 crore higher than the previous year," the finance ministry said in a release. 

“Total Expenditure incurred by Government of India is ₹18,80,862 crore (37.1% of corresponding BE 2025-26), out of which ₹14,49,283 crore is on revenue account and ₹4,31,579 crore is on capital account,” the ministry said. 

“Out of the total revenue expenditure, ₹5,28,668 crore is on account of interest payments and ₹1,50,377 crore is on account of major subsidies,” it added.