Fiscal consolidation: Govt meets FY26 fiscal deficit target of 4.4% of GDP

The Centre achieved its fiscal deficit target of 4.4 per cent of GDP for 2025-26, according to provisional data released by the Controller General of Accounts (CGA) on Monday, marking an improvement from the previous financial year's deficit level, PTI reported.The fiscal deficit for FY26 was estimated at Rs 15,68,936 crore in the Budget and later revised down to Rs 15,58,492 crore in the revised estimates presented by Finance Minister Nirmala Sitharaman in Parliament in February.According to the CGA data, the government collected Rs 33.42 lakh crore in revenue during 2025-26, amounting to 98.8 per cent of the Revised Estimates (RE).The Centre's total expenditure stood at Rs 49.64 lakh crore during the financial year, also accounting for 98.8 per cent of the revised target.Fiscal deficit is the gap between the government's total expenditure and its total receipts excluding borrowings, and is a key indicator of fiscal health.The fiscal deficit for 2024-25 had stood at 4.8 per cent of GDP.Commenting on the fiscal numbers, DK Srivastava, Chief Policy Advisor, EY India, said the Centre's achievement was significant as the fiscal deficit was reduced not only as a share of GDP but also in absolute terms. "As per CGA data released on 1 June 2026, GoI has been successful in achieving the fiscal deficit target of 4.4% of GDP as per the revised estimate given in the 2026-27 budget. What is remarkable is that fiscal deficit has been lowered in absolute terms in 2025-26 to INR15.2 lakh crore from INR15.8 lakh crore in 2024-25," he said. Srivastava noted that the adjustment was achieved despite a gross tax buoyancy of 0.7 in FY26 following personal income tax and GST reforms. He added that capital expenditure growth moderated to 1.6% in FY26, but remained a key support for infrastructure creation, with average capital expenditure growth of 25.9% during FY22-FY25. Looking ahead, he said achieving the FY27 fiscal deficit target of 4.3% of GDP would depend on improving tax buoyancy and accelerating capital expenditure growth to the budgeted 11.5%, while balancing the impact of global crude oil prices on excise duty revenues.