India's Fiscal Deficit Meets Budgeted 4.4% for FY26, Focus Shifts to Next Year's Target

India’s fiscal deficit met the budgeted 4.4% of GDP in fiscal 2026, official data showed on Monday, easing immediate concerns over government finances while keeping the spotlight firmly on next year’s more ambitious consolidation target. The fiscal deficit amounted to Rs 15.19 lakh crore in FY26, equivalent to 97.5% of the revised annual target, according to government data released on Monday. The revenue deficit, which measures the gap between revenue expenditure and revenue receipts, came in at 1.55% of GDP for FY26, reflecting continued improvement in the quality of government finances as a greater share of borrowing is directed towards capital spending. Data released by the Controller General of Accounts (CGA) showed net tax revenues rose to Rs 26.23 lakh crore in FY26, while non-tax revenues increased to Rs 6.79 lakh crore. Total revenue receipts stood at Rs 33.02 lakh crore, or 98.8% of the revised estimate. Total expenditure during the year was Rs 49 lakh crore, with revenue expenditure at Rs 38.36 lakh crore. Capital expenditure rose to about Rs 10.7 lakh crore from Rs 10.18 lakh crore a year earlier, highlighting the government's continued focus on infrastructure-led growth The Reserve Bank of India (RBI), earlier this month, declared a record surplus transfer of Rs 2.87 lakh crore to the government for FY26, which is notably lower than North Block’s budget estimates for dividend receipts this fiscal. RBI's balance sheet expanded by 20.61% to Rs 91.97 lakh crore at the end of March 31, 2026. The country may struggle to meet its fiscal deficit target of 4.3% in the current financial year as the West Asia crisis drives up spending on food, fertiliser and fuel subsidies. It might hit 4.5% of GDP as the government's policy response to the West Asia conflict could strain public finances, research firm BMI said in April. Fiscal pressure mounts as deficit hits 21.4% of FY27 target in April The Union government's fiscal deficit stood at Rs 3.62 lakh crore at the end of April, accounting for 21.4% of the budgeted target for FY27, according to data released by the Controller General of Accounts (CGA) on Monday. The deficit level is nearly double that recorded in the corresponding period of the previous financial year. The sharp rise comes amid mounting expenditure pressures linked to the ongoing U.S.-Iran conflict, which has fuelled a sustained increase in global crude oil prices. While India has continued to pare the Special Additional Excise Duty (SAED) and other windfall taxes on petroleum products, state-run oil marketing companies and the government have also absorbed part of the price shock. Meanwhile, the revenue deficit reached Rs 1.82 lakh crore, or 30.8% of the full-year target. Revenue expenditure includes recurring government spending such as salaries, pensions, interest payments and subsidies. The widening deficit at the start of the fiscal year underscores the strain on public finances from elevated energy costs and the government's efforts to cushion households from the impact of higher fuel prices. Revenue receipts in April came in at Rs 2.03 lakh crore, representing 5.7% of the full-year budget estimate. Total expenditure during the month stood at Rs 5.75 lakh crore, equivalent to 10.8% of the budgeted outlay for FY27.