Fiscal deficit at 38% of FY26 target in Apr-Aug

Net tax revenues shrink 7.3%; capex at 38.5% of BE

- PRASANTA SAHU

THE CENTRE'S FISCAL deficit widened to $5.98 lakh crore or 38.1% of the annual target in the first five months of 2025-26, compared with 27% of the relevant target in the year-ago period, as net tax revenues continued to contract and capex accelerated.

In April-August 2025, net tax revenues contracted by 7.3% to %8.1 lakh crore as both direct and indirect taxes underperformed.

Non-tax revenues surged by 31.7% on-year following the receipt of the higher-than-budgeted dividend from the Reserve Bank of India.

Analysts said there is still no threat to the Centre’s plan to bring it down to 4.4% of GDP in FY26 due to robust non-tax receipts, which will likely bridge any shortfall in tax revenues, due to income tax cuts and Goods and Services Tax (GST) rate reductions.