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India's Deficit Widens: Spending Surges, Revenue Lags
28 Nov
Summary
- Fiscal deficit reached ₹8.25 trillion, 52.6% of the annual target by October 2025.
- Higher capital expenditure and lower net tax revenue contributed to the deficit.
- Government spending on subsidies was ₹2.47 trillion, nearing last year's figures.
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.
