Fiscal status: Centre’s fiscal deficit reaches 36.5% of FY26 target; tax revenue touches nearly half of budget estimate

The Centre’s fiscal deficit stood at 36.5 per cent of the full-year target at the end of the first half of FY26, according to data released by the Controller General of Accounts (CGA) on Friday. In comparison, the fiscal deficit had reached 29 per cent of the Budget Estimates (BE) for 2024-25 during the same period last year.In absolute terms, the fiscal deficit — the gap between the government’s total expenditure and revenue — was Rs 5,73,123 crore in the April-September period of 2025-26, PTI reported. The Centre has projected the fiscal deficit for FY26 at 4.4 per cent of GDP, or Rs 15.69 lakh crore.Up to September, the government received Rs 17.3 lakh crore, accounting for 49.5 per cent of the BE for FY26. This included Rs 12.29 lakh crore in tax revenue (net to Centre), Rs 4.66 lakh crore in non-tax revenue, and Rs 34,770 crore from non-debt capital receipts.According to the CGA, the Centre transferred Rs 6.31 lakh crore to states as their share of taxes during the first half, Rs 86,948 crore higher than the corresponding period last year.The total expenditure of the central government stood at about Rs 23 lakh crore, or 45.5 per cent of the BE 2025-26. Of this, Rs 17.22 lakh crore was on the revenue account and Rs 5.8 lakh crore on the capital account. Interest payments accounted for Rs 5.78 lakh crore of the total revenue expenditure, while Rs 2.02 lakh crore went towards major subsidies, the data showed.Aditi Nayar, Chief Economist at Icra, said a “welcome 40 per cent spike” in capital expenditure widened the Centre’s fiscal deficit to Rs 5.7 lakh crore, or about 37 per cent of the BE, during the first half of FY26, up from Rs 4.7 lakh crore in the year-ago period.“As of now, we expect the typical trend of expenditure savings and higher-than-budgeted non-tax revenues to absorb any shortfall in tax revenues, and do not foresee a material slippage relative to the Government of India’s FY2026 fiscal deficit target of 4.4 per cent of GDP,” Nayar added.