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Fiscal deficit in April-December kept at 54.5% of Budget Estimates

India contained its FY26 fiscal deficit at 54.5% of Budget Estimates for April-December, aided by higher non-tax revenues and controlled spending despite a December capex dip

While Nirmala Sitharaman already holds the record for presenting record number of consecutive Budgets, she will come a step closer to Morarji Desai who has the record of presenting a total of 10 Budgets

The government managed to keep revenue expenditure in check at 65.6 per cent of the Budget Estimate over 68.7 per cent last year

Ruchika Chitravanshi New Delhi

2 min read Last Updated : Jan 30 2026 | 11:27 PM IST

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The government has contained the fiscal deficit for the first nine months of FY26 at 54.5 per cent of the Budget Estimates as against 56.7 per cent the previous financial year amid expansion in corporation tax and Customs duty and a year-on-year contraction in capital expenditure (capex) in December.

However, capex in April-December was higher at 70 per cent of the Budget Estimates compared to 61.7 per cent in FY25. The decline in December was 24.5 per cent over the corresponding month of the previous year. For the first nine months, it rose 15 per cent compared to the corresponding period in the previous financial year.

The fiscal deficit eased from ₹9.1 trillion in April-December FY25 to ₹8.55 trillion in April-December FY26, registering a year-on-year decrease of 6.4 per cent.

“Icra expects the fiscal deficit to be pegged at 4.3 per cent of gross domestic product in FY27, which will entail a net market borrowing number of ₹12.2 trillion, somewhat higher than the FY26 levels. This, along with a substantial increase in redemption, is set to push up gross market borrowing sharply to ₹16.9 trillion in FY27 from ₹14.6 trillion in FY26,” said Aditi Nayar, chief economist, Icra.

Net tax revenues in the first nine months of FY26 increased 5.2 per cent over those in the previous financial year while non-tax revenues were up 20.6 per cent.

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The government managed to keep revenue expenditure in check at 65.6 per cent of the Budget Estimate over 68.7 per cent last year.

Revenue expenditure grew 1.8 per cent in April-December over the corresponding period last year.

Income-tax collection in December 2025 showed a decline of 9.2 per cent over the same month of 2024, with experts anticipating a sizeable shortfall in the government’s gross tax revenues in FY26 compared to the Budget Estimates.

“As seen in earlier months too, the non-tax revenue ratio has been higher at almost 93 per cent due to the transfers from the Reserve Bank of India, and those have steadied the boat. On the whole it may be expected that the government will maintain the fiscal target for FY26,” said Madan Sabnavis, chief economist, Bank of Baroda.