Fiscal Target
Govt on track to meet FY26 fiscal gap aim despite slower nominal GDP growth
This story was originally published at 12:40 IST on 8 January 2026
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NEW DELHI – The government is on track to meet its fiscal deficit target of 4.4% of GDP for 2025-26 (Apr–Mar) despite nominal GDP growth being seen at 8.0%, as per the National Statistics Office's first advance estimate, compared with the Budget assumption of 10.1%. This is primarily due to an upward revision in nominal GDP for the previous year to INR 330.68 trillion from the earlier estimate of INR 324.11 trillion.
The FY26 Budget, based on the NSO's first advance estimate for FY25, assumed nominal GDP growth of 10.1% to INR 356.98 trillion from INR 324.11 trillion. However, as nominal GDP for FY25 expanded to INR 330.68 trillion, even an 8% growth could take nominal GDP to INR 357.14 trillion in FY26. This effectively rules out the possibility of the government missing its fiscal deficit target for the year due to a slower pace of nominal GDP growth.
If at all, the dynamic gives the government room for marginal fiscal slippage without missing the target of 4.4% of GDP for FY26. With nominal GDP rising to INR 357.14 trillion, the government can overshoot the Budget estimate of INR 15.69 trillion for fiscal deficit by INR 24.8 billion and still meet the 4.4% target.
The government's fiscal deficit grew 15.4% to INR 9.77 trillion in Apr-Nov, accounting for 62.3% of the Budget estimate. Meanwhile, total expenditure rose 6.7% to INR 29.26 trillion during the first eight months of the year, and total receipts increased 2.9% to INR 19.49 trillion. End
Reported by Krity Ambey
Edited by Tanima Banerjee
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