India’s fiscal deficit for April-January FY26 stood at ₹9.81 trillion, or 63% of the revised estimate (RE) for 2025-26, according to provisional data released by the Controller General of Accounts on Friday, indicating a contained fiscal position with two months left in the financial year. This compares with 74.5% of the full-year target utilised in the corresponding period last year, suggesting tighter fiscal management so far in FY26.
The deficit was driven by total expenditure of ₹36.90 trillion against total receipts of ₹27.09 trillion during the first 10 months of FY26. The government has received ₹27.09 trillion, or 79.5% of the corresponding RE for total receipts. Revenue receipts stood at ₹26.52 trillion (79.3% of RE), comprising ₹20.94 trillion in net tax revenue (78.3% of RE) and ₹5.57 trillion in non-tax revenue (83.5% of RE).
Non-debt capital receipts were ₹0.57 trillion, already achieving 89.2% of the full-year target. The relatively stronger performance of non-tax revenue indicates support from dividends and other receipts, helping cushion the fiscal position even as tax collections track slightly lower than overall receipt growth.
The pace of receipts suggests steady revenue mobilisation, with non-tax collections showing relatively stronger progress compared to tax revenue. With nearly 80% of annual receipts already realised, revenue flows appear broadly aligned with the fiscal glide path outlined in the Budget.
On the expenditure side, total spending stood at ₹36.90 trillion, or 74.3% of the RE. Revenue expenditure accounted for ₹28.48 trillion (73.6% of RE), while capital expenditure stood at ₹8.42 trillion (76.9% of RE), indicating continued front-loading of capex in line with the government’s infrastructure push. The higher proportion of capital spending relative to overall expenditure signals sustained focus on asset creation, even as the government balances consolidation goals.
Interest payments during the period amounted to ₹9.88 trillion, or 77.6% of the annual target, underscoring the weight of committed liabilities in the fiscal arithmetic. Major subsidies totalled ₹3.55 trillion, or 83% of the RE. Of this, food subsidy stood at ₹1.63 trillion (71% of RE), nutrient-based fertiliser subsidy at ₹0.58 trillion (96%), urea subsidy at ₹1.25 trillion (99%), and petroleum subsidy at ₹0.09 trillion (58%). The near-full utilisation of fertiliser subsidy allocations suggests limited headroom in that segment, while food and petroleum subsidies remain comparatively moderate.
The revenue deficit for April-January narrowed to ₹1.96 trillion, or 37.3% of the RE, sharply lower than 72.4% utilisation in the corresponding period last year. The primary deficit — fiscal deficit minus interest payments — clocked a marginal surplus of ₹0.07 trillion, indicating that the government’s non-interest expenditure was broadly aligned with revenue flows. A primary surplus at this stage of the fiscal year points to improved underlying fiscal balance before accounting for interest obligations.
Fiscal discipline bears fruit
Economists said the improved fiscal metrics were largely driven by revenue discipline rather than revenue buoyancy.
Aditi Nayar, chief economist at ICRA Ltd, said, “The fiscal deficit at 63% of the revised estimate reflects a clear improvement over last year, largely due to compression in the revenue deficit. Non-tax revenues have provided strong support, while revenue expenditure growth has remained muted. Although capex has expanded 11% year-on-year so far, the recent monthly contraction suggests spending will need to be carefully managed in the final quarter to remain within the revised estimates. Overall, we do not expect fiscal slippage in FY26.”
In terms of financing, domestic sources accounted for the bulk of deficit funding at ₹9.78 trillion (64% of RE), including ₹7.51 trillion through market borrowings. External financing remained limited at ₹0.03 trillion.
Compared with last year, when 74.5% of the fiscal deficit target had already been exhausted by January, the current 63% utilisation points to improved fiscal pacing. With receipts already at nearly 80% of the annual target and expenditure at about 74%, the fiscal gap has remained broadly stable in recent months. The marginal movement in the deficit ratio since November suggests that revenue inflows in December and January have largely offset incremental spending.
While monthly deficit numbers are subject to timing mismatches between receipts and expenditure, the January position suggests that the Centre retains headroom in the final quarter to manage spending without breaching the revised deficit target of ₹15.58 trillion for FY26. Much will now depend on tax buoyancy in the final months and the pace of capital expenditure rollout in Q4, which typically sees a spending push.