India's fiscal deficit reaches ₹7.1 lakh crore by August on higher capex and subsidy spending

Key facts

• India's central government fiscal deficit stood at ₹7.1 lakh crore, or 41.9% of the full-year target, at end-August 2026, up from ₹6 lakh crore a year earlier.
• The Centre has set a fiscal deficit target of 4.3% of GDP, or ₹16.96 lakh crore, for FY 2026-27.
• Expenditure on major subsidies rose 24.6% year-on-year to ₹1.87 lakh crore in April-August from ₹1.5 lakh crore.
• Net tax revenue in the first five months was about ₹8.38 lakh crore, or 29.2% of the 2026-27 budget estimate, against 28.6% a year ago.
• Total expenditure during April-August was about ₹20.78 lakh crore, or 38.9% of the budget estimate, compared with 37.1% in the year-ago period.
• Food subsidy expenditure rose nearly 30% to ₹83,510 crore from ₹64,408 crore a year earlier.
• Gross tax revenue grew 6.5% year-on-year in the first five months, while excise duty collections contracted 23% following cuts on petrol and diesel earlier in the financial year.
• ICRA estimates the fiscal deficit may overshoot the budget estimate by ₹1.3-1.4 lakh crore, which could be absorbed by expenditure savings of ₹1.6-1.7 lakh crore in FY26.
• In August 2026, the fiscal deficit was ₹2.5 lakh crore compared with ₹1.29 lakh crore a year ago, driven partly by an extra tranche of devolution to states.