India's Fiscal Tides: Understanding the Deficit Dynamics

India's fiscal deficit reached Rs 9.8 lakh crore by January, hitting 63% of the annual budget target for 2025-26. The Centre projects the deficit to be 4.4% of GDP for the year. Government expenditure reached Rs 36.9 lakh crore, primarily driven by revenue and capital accounts.

In an update released on Friday, India's fiscal deficit for January was reported at Rs 9.8 lakh crore, aligning with 63% of the annual budget target for the fiscal year 2025-26—an improvement from last year's 74.5%. The government anticipates the deficit to arrive at 4.4% of GDP, amounting to Rs 15.58 lakh crore for the year.

The monthly figures from the Controller General of Accounts reveal that until January 2026, the Centre garnered Rs 27.08 lakh crore in total receipts, covering 79.5% of the revised estimate. This includes Rs 20.94 lakh crore in tax revenue, Rs 5.57 lakh crore in non-tax revenue, and Rs 57,129 crore from non-debt capital receipts.

The data also indicated that Rs 11.39 lakh crore was dispatched to state governments as part of the devolution of tax shares, marking an increase of Rs 65,588 crore from the previous year. The total expenditure by the Indian government reached Rs 36.9 lakh crore, with significant allocations for revenue and capital accounts, including Rs 9.88 lakh crore in interest payments.

(With inputs from agencies.)