India’s fiscal deficit at Rs 5.73 lakh crore in H1 FY26, 36.5% of full-year target

India’s fiscal deficit for the first six months of the current financial year (April–September) stood at Rs 5.73 lakh crore, which constitutes 36.5 per cent of the annual estimate in the budget, government data released on Friday showed.

The figures indicate that the fiscal deficit remains well under control, paving the way for stable and sustainable economic growth. The total receipts for the period April to September amounted to Rs 17.30 lakh crore, and the total expenditure was Rs 23.03 lakh crore. These figures correspond to 49.5 percent and 45.5 percent of the targets established in the Union Budget for FY2025-26, respectively.

Total revenue receipts were Rs 16.95 lakh and the breakdown was as follows: tax revenue was Rs 12.29 lakh and non-tax revenue was Rs 4.66 lakh.The RBI's dividend was a factor in the non-tax revenue increase.

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A major contributor to the non-tax revenue hike was the Reserve Bank of India (RBI), whose dividend payout to the central government reached Rs 2.69 lakh crore for the fiscal year, up from Rs 2.11 lakh crore in the previous one.

In addition, the RBI’s sizable transfer is seen as the government’s ally when it comes to fiscal deficit reduction in the near future. The government’s total outlay in the first half of the current year was Rs 23 lakh crore, which is higher than Rs 21.1 lakh crore the previous year.

The rise is a signal that the government is channeling its attention to mega infrastructure works such as bridges, airports, and railways that are yielding no less than the very investments that have kept the economy turning over amidst the global uncertainties brought about by geopolitical frictions and the ongoing wars of tariffs led by the US.

Also Read: India’s fiscal deficit at 38.1% of annual target, signals strong economic stability

Fiscal deficit target and economic outlook

The central government has set its fiscal deficit target for fiscal year 2025 at 4.9 percent of GDP, down from 5.6 percent in the previous year, which was a decline compared to the original estimate of 5.8 percent.

A decreasing fiscal deficit is a sign of the strengthening of India's economic fundamentals, which are combined to the result of price stability. The government’s borrowing requirements are also lower, which means that the banks will have more liquidity available for lending to both the corporate sector and consumers, thus aiding the economy further in the process of expansion.

Additional fiscal headroom likely

According to a recent report by Bank of Baroda, with the strong fiscal position that is likely to be established in FY2025–26, the government could be in a better position to meet the additional cost of, for instance, defence and thus gain additional flexibility. This statement is particularly relevant in the context of increased tensions with Pakistan following the Pahalgam terror attack and Operation Sindoor.