Fiscal Deficit at 36.5% of FY26 Target as Spending, Revenues Grow at a Slower Pace

India’s fiscal deficit for the six months through September stood at 36.5% of the FY26 target, in contrast to 29.4% for the corresponding period a year ago, data released on Thursday showed. The government spent 51.8% of the full-year capex target of ₹11.2 trillion, compared to 37.3% it had achieved in the first half of FY25.

According to reports, ₹1.5 trillion of the ₹5.8 trillion was spent in September alone, posting a 30% on-year increase. The government spent ₹1.6 trillion in the month of April. Loan disbursal under capex spending doubled from last year’s ₹55,390 crore during April–September.

However, the government’s total spending rose at a slower pace, having utilised 45.5% of the FY26 Budget target of ₹50.7 trillion, dropping from 43.8% for the same period a year ago. Net tax revenue was also lower at 43.3%, as against 49% during the first half of FY25.

What Was the Centre’s Fiscal Deficit in April–July

For the first four months, the Centre’s fiscal deficit expanded to 29.9%, or ₹4.7 trillion, of budget estimates. The net tax revenue was at 23.3% of the budget estimate in April–July. Capex spending for the four months through July stood at 30.9%, while revenue expenditure was 30.8% of the budget estimate for FY26.

Govt to Seek Extra Spending for GST Reliefs

Union Finance Minister Nirmala Sitharaman will likely seek Parliament’s approval for additional government funds for FY26 in the upcoming winter session, Mint reported. In the ₹50 trillion annual budget, revenue receipts were seen falling owing to personal income tax and goods and services tax (GST) cuts.

“A significant cut in the personal income tax rate and GST rates, a higher fiscal deficit seen so far as a percentage of the target compared to the previous fiscal year, the impact of cooling inflation on nominal gross domestic product (GDP) growth, and higher spending requests from different ministries appear to have necessitated the supplementary demand,” the report said.

In FY25, the Centre sought parliamentary nod for net additional spending of ₹95,605 crore in two tranches.