Centre's Fiscal Deficit Challenges Amid Growing Revenue Gaps

The central government's fiscal deficit reached Rs 9.76 lakh crore by November 2025, accounting for 62.3% of the annual budget target. Although projected at 4.4% of GDP, challenges arise from a shortfall in gross tax revenues. However, non-tax revenues and expenditure savings may help offset this gap, preventing fiscal slippage.

The central government's fiscal deficit at the close of November reached Rs 9.76 lakh crore, which constitutes 62.3 percent of the annual budget goal for the financial year 2025-26, according to official figures released on Wednesday. This marks a notable increase compared to 52.5 percent during the same period last year.

The estimated fiscal deficit for 2025-26 stands at 4.4 percent of GDP or Rs 15.69 lakh crore. Data from the Controller and Auditor General of India revealed that the government had received Rs 19.49 lakh crore, representing 55.7 percent of the budget estimate for total receipts up to November 2025. Tax revenues contributed Rs 13.93 lakh crore, while non-tax revenues accounted for Rs 5.16 lakh crore.

During the period, Rs 9.36 lakh crore was transferred to state governments as part of their share of taxes, marking an increase of Rs 1.24 lakh crore year-on-year. Overall expenditure was recorded at Rs 29.26 lakh crore, with significant portions directed at revenue account and capital account. Despite faced with shortfalls, these may be counterbalanced by better non-tax revenues and expenditure savings, according to Icra's Chief Economist, Aditi Nayar.

(With inputs from agencies.)