India's Deficit Widens: Spending Surges, Revenue Lags

India's fiscal deficit for April-October 2025-26 reached ₹8.25 trillion, accounting for 52.6% of the annual target. This marks an increase from the ₹7.51 trillion recorded in the same period last year, driven by higher capital expenditure and reduced net tax revenue. The government's total expenditure during this period amounted to ₹26.26 trillion, with capital spending showing a substantial rise.

The revenue side faced challenges, partly due to an income-tax rebate introduced in February 2025, which reduced tax liabilities. While non-tax revenue saw an increase, total revenue receipts stood at ₹17.63 trillion. Government spending on subsidies totaled ₹2.47 trillion, with a notable increase in spending on fertilizer subsidies.

Experts suggest that achieving the full-year fiscal deficit target may be challenging, requiring significant growth in tax revenues in the remaining months. However, higher-than-budgeted non-tax revenues and potential expenditure savings could help mitigate shortfalls, preventing a material fiscal slippage.