India’s April–May Fiscal Deficit Narrows Sharply on RBI Windfall, Higher Revenues

India’s fiscal deficit in the first two months of 2025–26 financial year was at ₹131.63 billion, or 0.8% of the annual target, according to data released today. This compares to 3.1% during the same period last year.

In May, the Centre posted a fiscal surplus of ₹1.73 trillion, slightly higher than the ₹1.60 trillion surplus reported in May 2024.

Revenue receipts totalled ₹7.08 trillion April-May. Of this, ₹3.51 trillion came from tax revenue and ₹3.57 trillion from non-tax revenue. Non-tax revenue collection reached 61.2% of the full-year target, supported by the ₹2.69 trillion surplus transfer from the Reserve Bank of India at the end of May. In the same period last year, non-tax revenue stood at 46.1% of the annual target.

Total receipts were ₹7.33 trillion, and total expenditure was ₹7.46 trillion during the April–May period. These represent 21% and 14.7%, respectively, of the 2025–26 budget estimates.

The government spent ₹512.52 billion on major subsidies, including food, fertiliser, and petroleum. This accounted for 13% of the revised full-year estimate, compared to 14% in the year-ago period.

The fiscal deficit target for 2025–26 has been set at 4.4% of GDP. The target assumes continued growth in tax revenues, alongside planned capital expenditure to support infrastructure and employment.