India’s Fiscal Deficit Reaches 17.9% of Full-Year Target in Q1 FY26: CGA

India’s fiscal deficit stood at Rs. 2.80 lakh crore in the April–June quarter of FY2025-26, accounting for 17.9 percent of the full-year target, according to data released by the Controller General of Accounts (CGA) on Thursday. This marks a sharp increase compared to the 8.4 percent of Budget Estimates (BE) recorded in the same period last year.

The government has projected the full-year fiscal deficit for FY26 at Rs. 15.69 lakh crore, or 4.4 percent of GDP. The widening gap in Q1 is largely attributed to higher government spending, especially on capital expenditure.

Total government expenditure during the first quarter stood at Rs. 12.22 lakh crore, which is 24.1 percent of the Budget Estimate, up from 20.1 percent in the corresponding period last year. Of this, revenue expenditure was Rs. 9.47 lakh crore, while capital expenditure rose to Rs. 2.75 lakh crore, indicating a strong push toward infrastructure and asset creation.

On the revenue side, the government’s net tax revenue was Rs. 5.4 lakh crore, or 19 percent of the BE, slightly lower than 21.3 percent recorded in Q1 of FY25. Non-tax revenue, buoyed by the Reserve Bank of India’s record dividend earlier this year, contributed Rs. 3.73 lakh crore.

The fiscal picture had started on a strong note earlier this year, with the deficit at just 0.8 percent of the full-year target by the end of May, thanks to the Rs. 2.69 lakh crore dividend payout by the RBI. However, the pace of spending picked up in June, pushing the deficit to its current level.

With a rising expenditure trend and slower tax growth, fiscal management in the remaining quarters will be crucial to stay on track with the 4.4 percent deficit target.