Fiscal Deficit | 01 Apr 2026

Source: BS 

India’s fiscal deficit reached Rs 12.52 trillion by the end of February 2026, accounting for 80.4% of the annual budgetary target. It is notably lower than the 85.8% recorded during the same period in 2024-25. 

• For the full 2025-26 fiscal year, the Centre has set a fiscal deficit target of 4.4% of the GDP, amounting to an absolute value of Rs 15.58 trillion. 
• These monthly accounts were compiled and released by the Controller General of Accounts (CGA), which functions under the Department of Expenditure, Ministry of Finance. 

Fiscal Deficit 

• About: Fiscal Deficit is the difference between a government's total expenditure and its total revenue (excluding borrowings). It represents the total borrowing requirement of the government. 
• Equation: It is calculated as the Total Expenditure minus (Revenue Receipts + Non-debt Capital Receipts), effectively showing the gap the government must fill through borrowing. 
  • Expenditure accounts for both Revenue Expenditure (recurring costs like salaries and interest) and Capital Expenditure (productive investments in infrastructure like roads and bridges). 
  • Revenue includes Tax and Non-tax revenue (dividends/fees) and Non-debt Capital Receipts (disinvestment proceeds and loan recoveries). 
• Economic Implications: High deficits can lead to "Crowding Out" (reducing capital available for private investment), inflationary pressure, or a "Debt Trap" where a majority of revenue is consumed by interest payments. 
• FRMB Act, 2003 Target: The FRBM Act’s 2003 original 3% fiscal deficit target for March 2021 was relaxed due to the pandemic, leading to a post-2021 consolidation glide path. This commitment to bring the deficit below 4.5% of GDP by 2025-26 has now been achieved. 
• Fiscal Deficit vs. Revenue Deficit: While Fiscal Deficit indicates total borrowing, Revenue Deficit specifically measures the shortfall in the government's daily operational expenses compared to its current income.