Fiscal Deficit Widens to ₹5.73 Trillion in H1 FY26 as Spending Outpaces Receipts

India’s fiscal deficit for the first half of FY26 rose to ₹5.73 trillion, accounting for 36.5% of the full-year target, according to data from the Controller General of Accounts (CGA). The figure marks a sharp increase from ₹4.75 trillion a year earlier, or 29.4% of the annual estimate.

The widening gap reflects a rebound in capital expenditure that was postponed last year due to election-related curbs. This fiscal, the central government has accelerated project disbursements after a subdued first half in FY25.

Finance minister Nirmala Sitharaman has pegged the FY26 fiscal deficit target at 4.4% of GDP, compared to 4.8% last year, in line with the Centre’s consolidation roadmap from a revised 4.9% earlier.

Also Read: Fiscal Deficit at Rs 4.68 Lakh Crore in April–July; Non-Tax Revenue Surges on RBI Dividend | Republic World

Revenue and Spending Snapshot

From April to September, total government expenditure stood at ₹23.03 trillion, or 43.5% of the full-year target, up from ₹21.11 trillion in the same period last year. Net tax collections reached ₹12.30 trillion — 43.3% of the budget estimate — marginally lower than ₹12.65 trillion last year.

Non-tax revenue rose sharply to ₹4.66 trillion, or nearly 80% of the annual target, led by higher receipts from PSUs and dividends. Total revenue receipts stood at ₹16.95 trillion, or 49.6% of the annual estimate.

RBI Dividend Provides Fiscal Cushion

A record ₹2.56 trillion dividend from the Reserve Bank of India has given a vital cushion to the government’s finances, helping absorb revenue gaps while maintaining spending commitments. The transfer, higher than last year’s ₹2.11 trillion, strengthens New Delhi’s ability to stay on course for its 4.4% deficit target for FY26.

Economists believe that sustaining this fiscal trajectory will depend on the government’s ability to balance capital expenditure with fiscal prudence in the second half of the year. With the budget cycle now stabilised post-elections, a stronger inflow from disinvestment and asset monetisation could further ease pressure on the exchequer.