India’s Fiscal Deficit at ₹5.98 Lakh Crore in April-August, 38.1% of FY26 Target

India’s fiscal deficit stood at ₹5.98 lakh crore during the April-August period of FY26, according to official data released on Tuesday. This represents 38.1% of the full-year budget estimate of ₹15.68 lakh crore. The fiscal deficit measures the gap between total expenditure and receipts excluding borrowings. It is a key indicator of the government’s borrowing needs and fiscal position.

Revenue Deficit

The revenue deficit during the five-month period came in at ₹1.9 lakh crore. This figure reflects the shortfall between revenue receipts and total revenue expenditure. It provides insight into the government’s ability to meet its day-to-day expenses. The number highlights the continued gap despite growth in both receipts and expenditure.

Expenditure Trends

Government expenditure rose on a year-on-year basis in the April-August period. Capital expenditure increased to ₹4.31 lakh crore, compared with ₹3.01 lakh crore in the same period last year. This sharp rise underscores the administration’s focus on infrastructure and growth-led spending. It aligns with policy priorities of boosting long-term economic productivity.

Revenue expenditure also expanded, reflecting welfare programmes and administrative costs. The balance between capital and revenue spending remains important for sustainable growth. Higher capital expenditure indicates more focus on asset creation. This in turn can help crowd in private investment and strengthen the economic cycle.

Revenue Receipts

On the receipts side, non-tax revenue rose strongly in the first five months of FY26. It reached ₹4.40 lakh crore, compared with ₹3.34 lakh crore a year earlier. The increase was supported by dividends, profits, and fees from public sector undertakings. This boost provided additional fiscal space to the government.

Tax-related transfers to states also increased in the same period. State tax devolution rose to ₹5.30 lakh crore from ₹4.55 lakh crore in the year-ago period. This enhances the fiscal capacity of states to fund their development and social programmes. It reflects the centre’s commitment to strengthening cooperative federalism.

Fiscal Consolidation

The FY26 budget has set a fiscal deficit target of 4.5% of GDP. This is lower than the 4.9% recorded in FY25 and signals a path toward gradual consolidation. The government is balancing growth imperatives with fiscal discipline. Global economic headwinds and domestic spending priorities pose challenges to this trajectory.

Conclusion

India’s fiscal data for April-August highlights progress in revenue growth and infrastructure spending. The fiscal deficit remains in line with the budget’s projected path. Higher capital outlays and stronger non-tax revenue are supporting the fiscal position. Continued discipline will be key to meeting the FY26 target and sustaining economic growth momentum.

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