Govt achieves fiscal deficit target of 4.4% for FY26; deficit at 21% in April

New Delhi: The government has achieved its fiscal deficit target of 4.4 per cent of the GDP for 2025-26, according to data released by the Controller General of Accounts on Monday.

In the revised estimates (RE) presented in Parliament in February, the government pegged the fiscal deficit, or gap between expenditure and revenue, at Rs 15,58,492 crore or 4.4 per cent of gross domestic product (GDP).

The CGA data showed that the fiscal deficit in actual terms was Rs 15,19,169 crore (provisional), or 97.5 per cent, of the RE.

For April 2026, the fiscal deficit stood at 21 per cent of the Budget Estimate, much higher than normal for the first month of a fiscal year. This indicates more expenditure than the revenue mobilisation.

As per the CGA data, the government managed to collect Rs 33.02 lakh crore in revenue, or 98.8 per cent of the revised Budget Estimates (RE).

This comprised Rs 26.23 lakh crore tax revenue (net to Centre), Rs 6.78 lakh crore of non-tax revenue and Rs 83,757 crore of non-debt capital receipts, the CGA data showed.

Non-debt capital receipts consist of recovery of loans (Rs 24,617 crore) and miscellaneous capital receipts (Rs 59,140 crore).

The total expenditure incurred by the Centre is Rs 49.05 lakh crore (98.8 per cent of the corresponding RE 2025-26), out of which Rs 38.36 lakh crore is on revenue account and Rs 10.69 lakh crore is on capital account.

Out of the total revenue expenditure, Rs 12.42 lakh crore is on account of interest payments, and Rs 4.53 lakh crore is on account of major subsidies.

The government's fiscal deficit for 2024-25 was 4.8 per cent of the GDP.

Commenting on the deficit numbers, Icra Chief Economist Aditi Nayar said the government's fiscal deficit trailed the Revised Estimate (RE) for FY26 by Rs 40,000 crore, aided by a Rs 60,000 crore expenditure cut, which more than offset the marginal miss on the receipts front.

This enabled the fiscal deficit to be contained at 4.4 per cent of GDP in FY26, in line with the target for the fiscal, notwithstanding the downward revision in nominal GDP prints, she said.

Interestingly, inflows on account of savings deposits, certificates and PPF exceeded the RE by about Rs 1 lakh crore, higher than Icra's expectations. This led to an increase in the cash balance of the government against the Rs 45,700 crore drawdown that was envisaged as per the RE, she said.

This is expected to provide some cushion to the government's fiscal position in FY27, and prevent any fiscal slippage from translating into an equivalent increase in market borrowings, she added.

For April, the fiscal deficit stood at 21.4 per cent of the Budget Estimate at Rs 3,62,303 crore.

The government has estimated a fiscal deficit of Rs 16,95,768 crore for the entire FY27.

The government collected total revenue of Rs 2,02,785 crore, 5.7 per cent of the Budget Estimate of Rs 35.33 lakh crore for the current fiscal.

However, total expenditure was higher at Rs 5,74,982 crore, 10.8 per cent of the Rs 53.47 lakh estimated in the Budget for FY27.

The government's fiscal started off FY27 on an expectedly sombre note, with an annual dip in tax and non-tax revenues and sharp expansion in both revenue and capital spending, resulting in a near doubling of the fiscal deficit in April 2026 in year-on-year terms, Nayar said.

While fiscal risks abound in the form of higher than budgeted fertiliser and LPG subsidies, and shortfalls in excise duty, corporate tax, and dividend from the OMCs, a portion of the stress would be absorbed by higher import duty on gold and silver, and the balance in the Economic Stabilisation Fund, she said.

"While we estimate the slippage in the fiscal deficit at around 0.3 per cent of GDP relative to the FY27 BE, the incremental borrowing requirement would be softened by the higher opening cash balance vis-a-vis the BE, partly benefitting from the overshooting in small savings collections in FY26," she said.