Economy June 1, 2026 07:59 AM

India’s 2025/26 Fiscal Shortfall Matches Revised Estimate at 4.4% of GDP

Deficit reached 15.19 trillion rupees as revenues and spending both rose; April progress equal to just over one-fifth of 2026/27 budget target

By Marcus Reed

India’s fiscal deficit for the year ended March 31, 2026, stood at 4.4% of GDP, equal to the government’s revised estimate. The shortfall was 15.19 trillion rupees ($159.91 billion), or 97.5% of the revised target presented in February. Net tax and non-tax receipts rose year-on-year while total and capital spending increased modestly.

India’s 2025/26 Fiscal Shortfall Matches Revised Estimate at 4.4% of GDP

Key Points

  • Fiscal deficit for 2025/26 was 4.4% of GDP, equal to 15.19 trillion rupees and 97.5% of the government's revised estimate.
  • Net tax receipts rose to 33 trillion rupees from 30.87 trillion rupees year-on-year; non-tax revenue increased to 6.8 trillion rupees from 5.31 trillion rupees.
  • Total government expenditure was 49 trillion rupees, with capital expenditure at 10.7 trillion rupees; April outturn was 21.4% of the 2026/27 budgeted target.

India closed the fiscal year ended March 31, 2026, with a budget shortfall equal to 4.4% of gross domestic product, according to published figures. The deficit reached 15.19 trillion rupees ($159.91 billion), which represents 97.5% of the government's revised estimate announced in February.

For the month of April, the fiscal deficit measured 21.4% of the budgeted target for the full year ending March 2027, reflecting the pace of outturn relative to the next fiscal year's planned ceiling.

Key fiscal aggregates for 2025/26

  • Net tax receipts: 33 trillion rupees ($347.40 billion), up from 30.87 trillion rupees in the prior year.
  • Non-tax revenue: 6.8 trillion rupees, compared with 5.31 trillion rupees a year earlier.
  • Total government expenditure: 49 trillion rupees, versus 47.16 trillion rupees the previous year.
  • Capital expenditure: 10.7 trillion rupees, against 10.18 trillion rupees a year ago.

The data set also includes the exchange rate used for dollar conversions: $1 = 94.9900 Indian rupees.

These figures show both sides of the public finances expanding in 2025/26. Receipts from net taxes and non-tax sources increased compared with the prior year, while government spending rose across total outlays and capital investment in physical infrastructure.


Summary

The government recorded a fiscal deficit of 4.4% of GDP for the year ended March 31, 2026, amounting to 15.19 trillion rupees. This outcome aligns with the revised estimate put forward in February, with the realized deficit equaling 97.5% of that estimate. Revenue lines - both net tax and non-tax - climbed year-on-year, and spending increased for total and capital outlays. The April fiscal position represented 21.4% of the budgeted target for the year ending March 2027.

Risks

  • The fiscal outcome for 2025/26 being 97.5% of the revised estimate leaves limited buffer relative to that target - an uncertainty for fiscal flexibility going forward. (Relevant to public finance and fiscal management)
  • April's deficit at 21.4% of the full-year 2026/27 budgeted target indicates that a substantial portion of the fiscal year remains to deliver on budgeted plans, creating uncertainty about meeting next year's targets. (Relevant to budget execution and infrastructure spending)

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