Dividend income, spending control rein in fiscal deficit

India’s fiscal deficit for April-December 2025 stood at ₹8.6 trillion, or 54.5% of the budget estimate for the year ending March, helped by strong growth in tax and non-tax revenues, data from the Controller General of Accounts (CGA) showed on Friday.

- Subhash Narayan

Fiscal deficit at the end of December shows a moderation from the ₹9.7 trillion, or 62.3% of the budget estimate, at the end of November. Usually, tax revenues pick up close to the end of the financial year, although expenditure gets front-loaded at the beginning of the year, showing a higher fiscal deficit in initial months.

In the nine month of FY26, net tax revenues grew by a modest 5.2%, non-tax revenues expanded by 20.6% and revenue expenditure rose by a tepid 1.8%, whereas capital expenditure (capex) surged 15%.

The government’s gross tax revenues rose by a resounding 32% in December 2025, pulling up the year to date growth to 9% during April-December of the ongoing fiscal year.

Monthly capex over the comparable year-ago period contracted for the third consecutive month in December 2025, marking a fall of 23% in Q3FY26, which may impact the GDP growth in the quarter.