The Centre’s fiscal deficit stood at 80.4% of the annual target (Revised Estimates for FY26) during April-February period, compared to 85.8% of the respective target a year ago, according to the government data released on Monday.
The fiscal deficit in April-February of FY26 stood at Rs 12.52 lakh crore compared with Rs 13.46 lakh crore in the year-ago period, the data released by the Controller General of Accounts showed. Economists said the fiscal deficit narrowed during the period due to a lower revenue deficit. The revenue deficit stood at 73.8% or Rs 3.88 lakh crore of the annual target during the 11-month period.
The government has pegged the fiscal deficit for FY26 at Rs 15.58 lakh crore, or 4.4% of GDP. The economists have divergent views over the possibility of meeting the fiscal deficit target for FY26. Aditi Nayar, Chief Economist at Icra, expects the fiscal deficit to print at 4.5% of GDP in FY26, higher than the revised estimates, on the back of a downward revision in the nominal gross domestic product numbers in the 2022-23 series vis-à-vis the 2011-12 series.
However, Devendra Pant, Chief Economist, India Ratings and Research and Gaura Sengupta, Chief Economist at IDFC First Bank expect Union government to meet the fiscal deficit target for FY26.
Sengupta, however, said fiscal slippage risks are seen to FY27 from excise duty cut and higher subsidy cost (fertiliser and LPG). Fiscal slippage risks are estimated at 0.3% of gross domestic product, she said.
During the period under review, capital expenditure rose by 14.46% on year to Rs 9.29 lakh crore or 84.8% of the annual target as against 79.9% of the relevant target achieved in the year-ago period. The Centre’s net tax receipts surged by 6.4% to Rs 21.45 lakh crore.
According to Icra, while the government’s capital expenditure needs to contract by 31% YoY in March, its revenue expenditure needs to expand by a sharp 45% in the month to meet the annual target.
The net cash outgo of Rs 2 lakh crore announced under the second Supplementary Demand for Grants (SDG) for FY26, is likely to ensure that expenditure remains elevated in March, and the fiscal deficit is not undershot relative to the FY26 RE, Nayar said.