India’s Fiscal Deficit: A Tighter Grip on Economic Balance

At the end of February, India's fiscal deficit reached Rs 12.52 lakh crore, which is 80.4% of the annual budget target for the financial year 2025-26. This is a slight improvement from 85.8% recorded in the previous year, according to data released by the government on Monday.

The Controller General of Accounts (CGA) reported total receipts of Rs 27.91 lakh crore or 82% of the budget target by February 2026, including Rs 21.45 lakh crore in net tax revenue. Notably, Rs 12.66 lakh crore was transferred to state governments as tax share, marking a significant increase from last year's figures.

Aditi Nayar, ICRA's chief economist, highlighted that while the excise duty cut on fuels could reduce revenue by Rs 1-1.2 lakh crore in FY2027, the Economic Stabilisation Fund might offset this. Yet, the West Asia crisis poses risks to India's fiscal calculations, potentially affecting both revenue and expenditure projections.