India’s government spending gap, known as the fiscal deficit, hit Rs 5.98 lakh crore from April to August this year. That’s just 38.1% of the full-year target for the 2025-26 financial year, according to fresh official data. Experts say this keeps things on track for a steady drop in the deficit while the economy stays strong.
Tax collections tell part of the story. Net tax receipts came in at Rs 8.1 lakh crore over these five months, a slight dip from Rs 8.7 lakh crore in the same period last year. But non-tax revenue more than made up for it, jumping to Rs 4.4 lakh crore from Rs 3.3 lakh crore. Overall, total government spending rose to Rs 18.8 lakh crore, up from Rs 16.5 lakh crore a year ago.
A big driver here is capital expenditure on major infrastructure. The government poured Rs 4.3 lakh crore into projects like highways, ports, and railways— that’s a solid increase from Rs 3 lakh crore last year. This push is helping fuel India’s economic growth, even as global worries mount from geopolitical tensions and U.S. tariff changes.
Looking ahead, the Central government set its fiscal deficit target at 4.9% of GDP for FY25, down from 5.6% in the previous year (and below the revised 5.8% estimate). This trend signals a healthier economy with stable prices. By borrowing less, the government frees up more money in banks for businesses and people, sparking even more growth.
A recent Bank of Baroda report points out that this solid fiscal position gives India extra flexibility for surprise costs, like ramped-up defense spending. That matters now more than ever, with ongoing strains from the Pahalgam terror attack and Operation Sindoor tensions with Pakistan.
Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in world News on Latest NewsX. Follow us on social media Facebook, Twitter(X), Gettr and subscribe our Youtube Channel.
