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    Government reports fiscal gap at 38.1% of FY26 target as of August

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    By Martin Shwenk Leade

    Copyright indiatimes

    Government reports fiscal gap at 38.1% of FY26 target as of August

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    New Delhi: Higher spending and lower net tax collection widened the Centre’s fiscal deficit up to August in this financial year to 38.1% of the annual target, compared with 27% a year before, showed the official data released on Tuesday.In absolute terms, the fiscal gap stood at ₹5.98 lakh crore until August, against ₹4.35 lakh crore a year before, the data showed.The Centre front-loaded its spending this fiscal, especially on capital projects, to support economic growth, unlike in the initial months of the last fiscal when expenditure got hit by the usual administrative slowdown around the general election.Economic affairs secretary Anuradha Thakur last week told ET that the Centre would realise its target of containing its 2025-26 fiscal deficit at 4.4% of gross domestic product. This means the pace of expenditure could moderate in the coming months to remain within the budgetary target, while overall tax mop-up may improve, experts said.Live EventsHigher spending, lower net tax collection push up deficit to ₹5.98 L cr from ₹4.35 L cr a year beforeBetween April and August, revenue spending increased 7.2% to ₹14.49 lakh crore and capital expenditure jumped 43.4% to ₹4.32 lakh crore. Overall expenditure rose 13.8% to ₹18.81 lakh crore.Net tax revenue contracted 7.3% until August this fiscal from a year before to ₹8.1 lakh crore. However, non-tax revenue jumped 31.7% to ₹4.40 lakh crore in the wake of a record ₹2.69 lakh crore dividend transfer by the central bank. Total receipts increased 5.4% year-on-year until August to ₹12.83 lakh crore.In August alone, the Centre’s fiscal deficit touched ₹1.30 lakh crore, against ₹1.58 lakh crore a year earlier. India Ratings chief economist DK Pant said, “The fiscal arithmetic hinges on how the GST (goods and services tax) rate rationalisation (effective September 22) impacts consumption demand in the economy. If the revenue collections remain subdued, the government may look at rationalisation of expenditure to control deficit.” ICRA chief economist Aditi Nayar pointed out that the Centre’s non-interest revenue spending contracted by 3.2% in the April-August period. Such spending now needs to expand by 14% during the remaining seven months of the fiscal to meet the 2025-26 budget estimate.This augurs well for the growth in the “public administration, defence and other services” segment of the gross value added in the second half, Nayar said.Add as a Reliable and Trusted News Source Add Now!
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