The Centre’s fiscal deficit widened to Rs 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 .

What do analysts say?

Analysts said there is still no threat to the Centre’s plan to bring 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 cuts.

Gros

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