India’s Fiscal Deficit Rises 21% to Rs 5.73 Lakh Crore in H1 FY26; Govt Spending and RBI Surplus Boost Receipts

The Indian government’s fiscal deficit — the gap between its total expenditure and total revenue — rose 20.8% year-on-year to ₹5.73 trillion during the period April to September 2025, according to data released by the Controller General of Accounts (CGA) on Friday. At this level, the deficit for the first half of the current financial year has already reached 36.5% of the full-year target set in the Union Budget for FY2025–26. During the same period last year, the fiscal deficit had accounted for 29.4% of the yearly target.

Expenditure and Receipts

The government’s total expenditure increased 9.1% from last year to ₹23.03 trillion in the April–September period. Of this, capital expenditure (spending on infrastructure and asset creation) rose sharply by 40% to ₹5.81 trillion. With this, the government has already completed 51.8% of its capital expenditure target of ₹11.21 trillion for the entire fiscal year.

However, economists believe that since much of the spending was front-loaded (done early in the year), the government may need to reduce its capital spending by about 15% in the second half to stay within the budget limits — unless more funds are allocated.

Revenue Trends

The government’s total receipts grew 5.7% to ₹17.30 trillion during April–September. Non-tax revenue rose a strong 31% to ₹4.66 trillion, mainly because of the record surplus transfer of ₹2.69 trillion from the Reserve Bank of India (RBI) in May 2025. On the other hand, net tax revenue fell 2.8% to ₹12.29 trillion as gross tax collections increased only slightly by 2.8% to ₹18.65 trillion.

Even though tax revenue growth has been slower, higher non-tax income and controlled spending should help the government maintain its fiscal deficit target of 4.4% of GDP for FY26.

September 2025 Performance

For the month of September, the government recorded a fiscal surplus of ₹250.3 billion, compared to a deficit of ₹393.4 billion in the same month last year. This surplus was achieved due to an 8% fall in total expenditure to ₹4.23 trillion, led by a 21% drop in revenue expenditure to ₹2.73 trillion and Continued focus on investments, as capital expenditure rose 31% to ₹1.49 trillion during the month.

On the revenue side, total receipts rose 6.6% to ₹4.48 trillion. Revenue receipts grew 7.4% to ₹4.45 trillion. Net tax collections increased 7.1% to ₹4.19 trillion, and Non-tax revenue surged 13.2% to ₹257.4 billion.

	September 2025	August 2025	September 2024	Year-on-year % change
Revenue receipts	4,447.07	1,853.19	4,140.61	7.4
Net tax revenue	4,189.63	1,485.95	3,913.14	7.1
Non-tax revenue	257.44	367.24	227.47	13.2
Recovery of loans	28.00	14.15	33.88	(-)17.4
Other receipts	0.00	7.66	23.47	(-)100.0
Total receipts	4,475.07	1,875.00	4,197.96	6.6
Revenue expenditure	2,733.10	2,325.84	3,451.61	(-)20.8
Capital expenditure	1,491.67	846.53	1,139.79	30.9
Total expenditure	4,224.77	3,172.37	4,591.40	(-)8.0
Fiscal deficit	(-)250.30	1,297.37	393.44	—
Revenue deficit	(-)1,713.97	472.65	(-)689.00	—

	Apr-Sept FY26	Apr-Sept FY25	Year-on-year % change	Budget estimates	% of actuals to Budget estimates
					FY26	FY25
Revenue receipts	16,954.46	16,224.00	4.5	34,204.09	49.6	51.8
Net tax revenue	12,293.70	12,652.00	(-)2.8	28,374.09	43.3	49.0
Non-tax revenue	4,660.76	3,572.00	30.5	5,830.00	79.9	65.5
Recovery of loans	113.53	114.34	(-)0.7	290.00	39.1	40.8
Other receipts	234.17	31.67	639.4	470.00	49.80	6.30
Total receipts	17,302.16	16,370.00	5.7	34,964.09	49.5	51.0
Revenue expenditure	17,225.93	16,965.00	1.5	39,442.55	43.7	45.7
Capital expenditure	5,807.46	4,150.00	39.9	11,210.90	51.8	37.3
Total expenditure	23,033.39	21,115.00	9.1	50,653.45	45.5	43.8
Fiscal deficit	5,731.23	4,745.00	20.8	15,689.36	36.5	29.4
Revenue deficit	271.47	741.55	(-)63.4	5,238.46	5.2	12.8