Even when the government of India increases public investment at a rapid pace, the country's fiscal situation remains stable. Thanks to a windfall dividend payout of ₹2.56 trillion from the Reserve Bank of India (RBI), the Centre has been able to keep its fiscal deficit comfortably below the halfway point of the annual target, even though capital expenditure (capex) increased by 40% in the first half of FY26 due to a low base.
In April-September 2025, India's fiscal deficit was ₹5.73 trillion, which was only 36.5% of the current fiscal year's (FY26) budget forecast.
Due in large part to weak government spending following elections, the deficit in the first half of the preceding fiscal year was 29.4% of the budgeted aim.

Stress is indicated by an H1 score above 50%, whereas comfort is indicated by a figure below 50%. Despite a 40% increase in capital expenditures and a slight 2.8% increase in gross tax revenues, the central bank's dividend payment filled the void, causing non-tax collections growth to soar 30.5% year over year and reach 79.94% of the budget target at that time.
In the Union Budget for FY26, Finance Minister Nirmala Sitharaman revealed the Center's budget deficit target of 4.4% of GDP for 2025–2026. This is lower than the 4.8% of FY25 and lower than the pandemic-era high of 9.3% in 2020–2021. Sitharaman has reaffirmed his belief that the FY26 target will be met, characterising it as a component of a larger plan to maintain post-pandemic growth while enforcing budgetary restraint.

The Centre seems to be on track. The most recent budget documents predict that India's nominal GDP will increase by 10.1% to ₹356.98 trillion in FY26 from ₹324.11 trillion the year before. This would result in a fiscal deficit of 4.4% of GDP, or roughly ₹15.7 trillion. Indeed, analysts have cautioned about a weaker nominal GDP growth rate of about 8%.
Despite external constraints on revenues, the administration is confident in its ability to preserve the budgetary trajectory, according to a senior finance ministry official. "The Centre is striving to reach the FY26 goal. Despite difficulties, we have already exceeded our goals in recent years," the person, who asked to remain anonymous, stated.

Spending and receipts
The difference between government revenue and spending is known as the fiscal deficit, and it indicates how much the centre must borrow to pay for its expenses.
According to figures from the comptroller and auditor general (CGA), net tax income for the April–September 2025 period was ₹12.30 trillion, or 43.3% of the yearly target set in the February budget, as opposed to ₹12.65 trillion during the same time the previous year.

From April to September, non-tax revenue totalled ₹4.66 trillion, or 79.9% of the projected budget. The total amount of revenue received was ₹16.95 trillion, which was 49.6% of the fiscal expectations. During the same time last year, overall revenue receipts were ₹16.22 trillion, or 51.8% of the estimates for 2024–2025, while non-tax revenue was ₹3.57 trillion, or 65.5% of the yearly budget predictions.