Fiscal deficit for June quarter at 17.9% of full-year target, a quarter of annual capex spent

Fiscal situation for Q1FY26

India’s fiscal deficit rose faster in the June quarter, coming in at 17.9 percent of the full-year target compared to 8.4 percent for the corresponding period a year ago, data released on July 31 showed.

A higher-than-expected RBI dividend played a key role in containing the impact of increased capital expenditure during the quarter, along with reduced tax collection.

Capital expenditure stood at Rs 2.75 lakh crore, amounting to 24.5 percent of the full-year target, higher than the 16.3 percent spent during the first quarter of FY25, according to data released by the Centre.

Tax collection at 19 percent was lower than previous year's figure of 21.3 percent.

Total expenditure by the government came in at 24.1 percent of the full-year target of Rs 50.65 lakh crore, higher than previous year's 20.1 percent.

The RBI had announced a transfer of Rs 2.69 lakh crore for FY25, which was 27 percent higher than the previous year's transfer of Rs 2.11 lakh crore. Experts contend the higher transfer is expected to help keep the fiscal deficit target in check at 4.4 percent, with some suggesting that the year-end number may dip to 4.2 percent.