Centre’s fiscal deficit at 54.5% in April-December 2025

Nine months into the fiscal year, the Centre’s finances appear well-balanced, with healthy capital expenditure and a fiscal deficit under control, although tax collections may be lower than anticipated. The data, which comes days ahead of the presentation of the Union Budget 2026-27, indicates that the government is on track to meet the fiscal deficit target of 4.4% of the GDP in FY26.
 
Analysts expect the fiscal deficit target for FY27 to be at about 4.2% to 4.3% of the GDP.
 
The Centre’s fiscal deficit amounted to Rs 8.55 lakh crore or 54.5% of the Budget estimate (BE) between April and December 2025, as per data released by the Controller General of Accounts. Revenue deficit also remained below trend at Rs 1.13 lakh crore or 21.8% of the BE in the first nine months of the fiscal.
 
While revenue receipts stood at Rs 24.79 lakh crore, accounting for 72.5% of the full-year target in the period, tax revenue was on the lower side. However, non-tax revenue, including healthy dividend income, made up for the shortfall. Total receipts were at Rs 25.25 lakh crore or 72.2% of the full-year target.
 
Net tax revenue in the first nine months of the fiscal year was Rs 19.39 lakh crore or 68.3% of the BE, with healthy growth in both direct taxes and customs duty collections. Non-tax revenue was at Rs 9.39 lakh crore, amounting to 92.6% of the full year target. Dividends and profits had already exceeded the full year target to amount to Rs 3.5 lakh crore, as against the BE of Rs 3.25 lakh crore.
 
Meanwhile, the Centre’s total expenditure was Rs 33.8 lakh crore or 66.7% of the BE, with capital expenditure outpacing revenue expenditure. The Centre’s capex between April and December 2025 was Rs 7.87 lakh crore or 70% of the full year target of Rs 11.21 lakh crore.
 
Aditi Nayar, Chief Economist, ICRA, said the agency expects the potential miss on the taxes side to be offset by higher-than-budgeted non-tax revenues and sizeable expenditure savings on the revenue spending front. “As a result, we do not anticipate the FY2026 RE to indicate a higher fiscal deficit than the FY2026 BE,” she said.
 
ICRA expects the Centre’s fiscal deficit to be pegged at 4.3% of GDP in FY2027, which would entail a net market borrowing number of Rs. 12.2 trillion, somewhat higher than the FY2026 levels.