The Indian Government's fiscal deficit reached 38.1% of its full-year target by the end of August 2025, according to provisional data from the Controller General of Accounts (CGA). In absolute terms, the deficit stood at ₹5,98,153 crore for the April-August period of fiscal year 2025-26, reflecting the gap between total expenditure and non-debt receipts.
This marks a higher proportion compared to 27% in the corresponding period of the previous year, though CGA officials cautioned that monthly figures can fluctuate due to timing mismatches in revenue inflows and outlays. The Union Budget for 2025-26, presented in July, projects the deficit at 4.4% of GDP, or ₹15.69 lakh crore, as part of a broader fiscal consolidation roadmap aiming to reduce it to below 4.5% by 2025-26 amid post-pandemic recovery efforts.
Total receipts up to August totalled ₹12.82 lakh crore, equivalent to 36.7% of the budgeted estimate for the year. This includes ₹8.1 lakh crore in net tax revenue to the Centre, ₹4.4 lakh crore from non-tax sources such as dividends and fees, and ₹31,970 crore in non-debt capital receipts like disinvestment proceeds.
The CGA highlighted a year-on-year increase in tax devolution to states, with ₹5.3 lakh crore transferred so far—₹74,431 crore more than in the prior year—underscoring the Centre's commitment to fiscal federalism under the Finance Commission's recommendations. These receipts form the backbone of funding for welfare schemes, infrastructure, and debt servicing in an economy projected to grow at 7% this fiscal year, per Reserve Bank of India estimates.
On the expenditure side, the Centre disbursed ₹18.8 lakh crore through August, accounting for 37.1% of the annual budget. Revenue expenditure dominated at ₹14.49 lakh crore, including ₹5,28,668 crore for interest payments on past borrowings and ₹1,50,377 crore for major subsidies covering food, fertilisers, and petroleum. Capital outlay, crucial for long-term growth, reached ₹4.31 lakh crore, focused on sectors like roads, railways, and defence modernisation. While the early-year spending pace aligns with budget allocations, economists note that capex absorption often accelerates in the latter half, influenced by monsoon performance and global commodity prices.
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The CGA emphasised that these interim metrics are not definitive predictors of the annual outcome, as revenue collections—particularly from direct taxes and GST—tend to peak toward year-end. With inflation cooling to 4.5% and foreign exchange reserves at record highs, the government remains on track for its deficit glide path, though risks from geopolitical tensions and climate events loom. As the fiscal year progresses, sustained revenue buoyancy and prudent spending will be key to balancing growth imperatives with debt sustainability in India's $3.9 trillion economy.
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