On track to achieving deficit target of 4.4% for this fiscal, says DEA Secy

Addressing concerns around the fiscal deficit target of 4.4 per cent, Department of Economic Affairs Secretary Anuradha Thakur on Saturday expressed confidence in achieving India’s fiscal deficit target for 2025-26, despite a higher deficit in the first quarter as compared to last year.

She reaffirmed the government’s commitment to fiscal discipline and highlighted the robustness of India’s economic fundamentals. “We are confident we will meet the fiscal deficit target and maintain it,” Thakur told the news agency, ANI.

Her statement assumes significance in the light of the Centre’s fiscal deficit rising to 29.9 per cent of the full-year target at the end of July in comparison to 17.2 per cent of the Budget estimates in the same period last year.

According to the government data, India’s fiscal deficit for April-July 2025-26 reached Rs 4.68 lakh crore, while the full-year estimate is Rs 15.68 lakh crore for the current financial year.

Total expenditure during April-July climbed 20.2 percent year-on-year to Rs 15.63 lakh crore, while receipts grew by 7 percent to Rs 10.95 lakh crore.

Meanwhile, capital expenditure saw a robust 32.8 percent increase to Rs 3.46 lakh crore, though it dipped by 10.5 percent in July to Rs 71.8 thousand crore.

Revenue expenditure rose 17.1 percent to Rs 12.16 lakh crore, with a 7.8 percent increase in July to Rs 2.69 lakh crore, boosted by a low base from the last year’s election period. However, net tax revenue fell 7.5 percent to Rs 6.61 lakh crore, driven by a 26.6 percent drop in July collections to Rs 1.21 lakh crore. Gross tax revenue edged up by just 0.8% to Rs 10.92 lakh crore, with income tax collections declining 9.9 percent to Rs 3.55 lakh crore, while corporate tax collections grew 7.6 percent to Rs 1.98 lakh crore.

Aditi Nayar, chief economist at ICRA Ltd, attributed the weak tax performance in July to an extended tax filing deadline and an unfavourable base, alongside robust devolution to states, which further strained net tax revenues.

Non-tax revenue soared 33.7% to Rs 4.03 lakh crore, largely due to a record Rs 2.69 lakh crore surplus transfer from the Reserve Bank of India in May.

While presenting the Budget for the current fiscal year, Finance Minister Nirmala Sitharaman announced a fiscal deficit target of 4.4% for 2025-26, aligning with the Indian government’s goal to reduce the Budget deficit to below 4.5% by fiscal 2026. The fiscal deficit for FY25 was 4.8% of the GDP, in line with the revised estimate.