India’s Fiscal Deficit Remains Manageable As Govt Boosts Infrastructure Investment
Net tax receipts during the period stood at Rs 8.1 lakh crore, which was a tad lower than Rs 8.7 lakh crore collected in the same period of the previous financial year.
India's fiscal deficit for the five-month period from April to August stood at Rs 5.98 lakh crore, which represents 38.1 per cent of the government’s full-year target for the financial year 2025-26, official data released on Tuesday showed.
This indicates that the fiscal deficit is well under control and on its declining glide path, with the economy growing on a stable path.
Net tax receipts during the period stood at Rs 8.1 lakh crore, which was a tad lower than Rs 8.7 lakh crore collected in the same period of the previous financial year. Non-tax revenue, however, jumped to Rs 4.4 lakh crore during April-August, from Rs 3.3 lakh crore in the same period last year.
Total government expenditure increased to Rs 18.8 lakh crore, compared with Rs 16.5 lakh crore in the same period of the previous year. The government’s capital expenditure on big-ticket infrastructure projects in the highways, ports and railways sectors surged to Rs 4.3 lakh crore during the five-month period from Rs 3 lakh crore in the same period last year.
This has played a key role in spurring economic growth in the country amid increasing economic uncertainties triggered by geopolitical developments and the US tariff turmoil.
The Central government has pegged its fiscal deficit target at 4.9 per cent of the gross domestic product (GDP) in its latest budget for FY25, compared with 5.6 per cent in the last fiscal year, which was lower than the revised estimates of 5.8 per cent.
A declining fiscal deficit reflects the strengthening of the fundamentals of the economy and paves the way for growth with price stability. It leads to a reduction in borrowing by the government, thus leaving more funds in the banking sector for lending to corporates and consumers, which leads to higher economic growth.
With the strong emerging fiscal position in 2025-26, the government is likely to have some additional headroom to meet unforeseen expenditure on account of defence, according to a recent Bank of Baroda report.
The observation assumes importance against the backdrop of the tensions with Pakistan following the Pahalgam terror attack and Operation Sindoor.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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