India’s fiscal deficit for the April-February period of 2025-26 stood at ₹12.5 trillion, or 80.4% of the revised estimates (RE), according to data released by the Controller General of Accounts (CGA) on Monday.
The fiscal deficit for the year-ago period stood at ₹13.4 trillion, accounting for 85.8% of the revised estimate for 2024-25.
With a downward revision in nominal gross domestic product (GDP), the fiscal deficit for 2025-26 is now expected to come in at around 4.5% of GDP, slightly higher than the .
The Centre’s fiscal deficit, in actual terms, for 2024-25 was ₹15.77 trillion, and for 2025-26, the target is ₹15.58 trillion.
Capex
The Centre’s capital expenditure remained strong, growing 15% on-year, with utilization reaching ₹9.3 trillion, or 79.7% of the revised estimates by February.
“February data shows that the fiscal deficit is under control till this month. There is enough leg room on the expenditure side. Capex seems to be on course. There is still 20% of tax revenue to be collected. Any slippage can be covered by expenditure alignment. Also, can slow down expenditure leading to meeting deficit targets,” said Madan Sabnavis, chief economist, Bank of Baroda.
Revenue expenditure accounted for 80.5% of revised estimates during the period, up 1% from a year ago.
Receipts
On the receipts front, net tax revenue rose 6% on-year and stood at 80.2% of the revised estimates. Non-tax revenue grew 18% on-year to 87% of RE, supported by healthy dividend inflows.
However, the recent ₹10 per litre cut in additional excise duty on petrol and diesel is likely to lead to an estimated revenue loss of about ₹1.3 trillion, posing some downside risk to fiscal calculations.
“Gross tax collections could undershoot 2025-26 revised estimates due to direct tax collection. We expect the Centre to meet 4.4% of GDP target with savings on other expenditure items such as just-in-time cash management on transfers to state governments, etc.,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank.
She further added that fiscal slippage risks are seen to 2026-27 from the and higher subsidy cost (fertilizer and liquified petroleum gas). Fiscal slippage risks are estimated at 0.3% of GDP.
“The government of India cut the excise duty on fuels, which is expected to result in a revenue loss of ~ ₹1.0-1.2 trillion in 2026-27, equivalent to ~30 basis points as a proportion of GDP. However, this is likely to be partly offset by the amount allocated towards the Economic Stabilisation Fund (ESF), said Aditi Nayar, chief economist, Icra Ltd.
“Nevertheless, the West Asia crisis has complicated the GoI’s budget math for 2026-27, raising material risks on the expenditure and revenue side, especially if the conflict persists for a prolonged period, keeping crude oil and natural gas prices elevated, beyond our current baseline forecast,” Icra added.