May end fiscal deficit eases to 0.8%, says CGA

India’s fiscal deficit for the first two months of FY26 fell to just 0.8% of the full-year target, buoyed by a record dividend transfer from the Reserve Bank of India (RBI), data released by the Controller General of Accounts (CGA) showed on Monday.The fiscal deficit, or the gap between the government's total expenditure and total revenue (excluding borrowings), narrowed to Rs13,163 crore at the end of May 2025, significantly down from Rs 1.86 lakh crore in April, which then stood at 11.9% of the Budget Estimates (BE) for FY26,according to estimates.
This decline was mainly due to a large Rs 2.69 lakh crore dividend payout from the RBI, pushing total receipts under the 'dividends and profits' head to Rs 2.78 lakh crore, or 86% of the full-year estimate.The Union Budget 2025-26 has estimated the fiscal deficit at Rs 15.69 lakh crore, or 4.4% of the GDP, aiming to stay on the consolidation path. By comparison, the fiscal deficit had reached 3.1% of BE in the first two months of the previous fiscal (FY25).
As per the CGA report, the government’s total receipts up to May 2025 stood at Rs 7.32 lakh crore, accounting for 21% of the BE 2025-26. This included:
•Rs 3.5 lakh crore in net tax revenue to the Centre,
•Rs 3.56 lakh crore in non-tax revenue, and
•Rs 25,224 crore from non-debt capital receipts.
The Centre transferred Rs 1.63 lakh crore to state governments as their share of central taxes Rs 23,720 crore more than the same period last year — indicating a rise in tax collections and stronger fiscal transfers.
Total government expenditure till May-end stood at Rs 7.46 lakh crore, or 14.7% of BE. This comprised:
•Rs 5.24 lakh crore of revenue expenditure, and
•Rs 2.21 lakh crore in capital expenditure.
Notably, within the revenue expenditure, Rs 1.47 lakh crore went towards interest payments, while Rs 51,253 crore was spent on major subsidies.
The early boost in non-tax revenue due to the RBI dividend has provided the Centre with significant fiscal headroom in the initial months of FY26. However, analysts caution that sustaining the deficit at such low levels would depend on continued momentum in tax collections and discipline in expenditure through the year.

(Business Correspondent)