India's fiscal deficit widens to ₹5.73L crore in H1 2025
What's the story
India's fiscal deficit for the first half of the current financial year has widened to ₹5.73 lakh crore, or 36.5% of annual estimates, according to government data. This is a significant increase from the 29.4% recorded during the same period last year. The widening deficit is attributed mainly to increased expenditure and changes in the composition of revenue collection during this period compared to previous years.
Financial overview
Total receipts and expenditure
In the first half of FY26, the government's total receipts were ₹17.30 lakh crore, or 49.5% of this fiscal year's budget target.Meanwhile, total expenditure during April-September stood at ₹23.03 lakh crore, accounting for 45.5% of the annual budget estimate. This shows an increase in expenditure compared to last year, as expenditure widened from 43.8%. The data also reflects changes in revenue collection, with tax revenue being narrower than last year's percentage of the budget estimate, while non-tax revenue increased.
Revenue details
Revenue receipts for the 1st half
The government's revenue receipts for the first half of FY26 stood at ₹16.95 lakh crore. This included tax revenue of ₹12.29 lakh crore and non-tax revenue of ₹4.66 lakh crore. Tax and non-tax revenues accounted for 43.3% and 79.9%, respectively, of the budgeted estimates for this fiscal year. This indicates a decline in the proportion of tax revenue collected compared to last year's budget estimate, but an increase in non-tax revenue performance compared to the previous year's targets.
Fiscal support
RBI dividend boosts non-tax revenue
The Reserve Bank of India (RBI) approved a dividend of ₹2.69 lakh crore to the central government, up from last year's ₹2.11 lakh crore. This increase has significantly boosted non-tax revenue for the government, providing a crucial buffer to manage the fiscal deficit amid rising expenditure pressures. The dividend contributes to the government's fiscal consolidation efforts by offsetting potential shortfalls in tax revenue.
Budget goals
Revenue deficit and fiscal deficit target
The revenue deficit for the first half of FY26 stood at ₹27,147 crore or 5.2% of the fiscal year's budget target. Finance Minister Nirmala Sitharaman set a fiscal deficit target of 4.4% for FY26, aligning with India's commitment to reduce its budget gap to below 4.5% by FY26. This target is based on anticipated strong tax collections and a continued push for capital expenditure, despite rising expenditure pressures.