Inside the fiscal consolidation numbers

RAISINA HILL

- A K BHATTACHARYA

The fiscal numbers of Budget 2026 raise hopes as well as many questions.

The hopes are implicit in the aggregate fiscal deficit figure of 4.4 per cent of gross domestic product (GDP), as indicated in the revised estimates (RE), for the current financial year. That the target has been met despite a year of turbulence, with a 4.5 per cent drop in gross tax collections over the Budget estimates (BE), is laudable. But don’t forget that this has been achieved through a sharp compression in expenditure (revenue expenditure shrank by 1.9 percent and capital expenditure fell by 2.2 per cent over BE) and a healthy 14.6 per cent rise in non-tax revenue, thanks largely to higher dividends from the Reserve Bank of India (RBI) and state-owned banks.

Questions, therefore, will arise when you take a close look at the composition of the government's receipts and expenditure in 2025-26. Barring a few sectors like defence, railways and roads, the government has been unable to spend a large chunk of the budgeted outlay during the current year. The shortfalls, ranging between 100 per cent and 25 per cent, are disturbing, particularly when the impacted sectors include health infrastructure, urban and rural housing, irrigation, interlinking of rivers, drinking water mission, rural roads, rural livelihood schemes, nuclear power projects, telecom infrastructure, artificial intelligence mission, semiconductor development project, production-linked incentive schemes, investment and infrastructure fund, research, development and innovation scheme, and emergency credit lines for micro, small and medium enterprises.