On track to achieve fiscal deficit target of 4.4% for FY26: DEA Secy Thakur

Dispelling fears that the government may miss its ambitious fiscal deficit target of 4.4 per cent for the current financial year, Economic Affairs Secretary Anuradha Thakur on Saturday said the government is on track to meet the goal set in the Budget despite temporary mismatches which may have been exhibited in the latest monthly numbers.

The statement from the Department of Economic Affairs (DEA) Secretary assumes significance in the light of Centre's fiscal deficit rising to 29.9 per cent of the full-year target at the end of July as against just 17.2 per cent of the Budget Estimates (BE) in the same period of the last financial year.

"So this question (of achieving the target) has been coming up because of the latest numbers. I would like to say that quarter-by-quarter or month-by-month assessments of fiscal deficit numbers may not give a correct picture because of temporal mismatches, which may come in on the receipt and expenditure side.

"On the overall fiscal deficit numbers, our assessment so far is that we will be able to achieve the target," she told PTI in an interview.

The Centre estimates the fiscal deficit during 2025-26 at 4.4 per cent of the GDP, or Rs 15.69 trillion.

Thakur emphasised that the fundamentals of the economy remain strong even private consumption numbers which came out yesterday are showing positive movement.

The gross capital formation numbers also showed that both public and private capex are strong and there is an anticipation these should be steadfast in the coming quarters as well.

"Government capex has been a big factor in holding up our numbers so far and not only on the fiscal deficit side but the growth numbers also remains robust as of now," she said.

Commenting on the Q1 FY26 GDP growth of 7.8 per cent, Thakur said it reflects the broad-based nature of the economic expansion.

"Q1 numbers reflect the basic resilience of our economy. It reflects strengthening of the momentum in the economy and it is anchored in strong macroeconomic fundamentals," she said.

Going forward, Thakur said, "We feel that the basic features or factors which have held us in good stead in Q1 are good performance of manufacturing, construction and service sectors and strong growth on the agriculture side, as well as the domestic demand factors which have bolstered the growth numbers.

She exuded confidence that the momentum would continue in the coming quarters as well.

India's economy grew by a stronger-than-expected 7.8 per cent in April-June, its fastest pace in five quarters.

The gross domestic product (GDP) growth in the first quarter of the ongoing fiscal year was mainly driven by good showing by the farm sector, and also helped by services like trade, hotel, financial and real estate, according to the latest government data released on Friday.

The previous highest pace of growth in the country's GDP was recorded at 8.4 per cent during January-March 2024, as per the data.

India remains the fastest-growing major economy, as China's GDP growth in the April-June period was 5.2 per cent.