Central Government's gross fiscal deficit stood at 4.4% of GDP in FY26

Reserve Bank of India (RBI) has stated in a latest monthly update that the Central Governments gross fiscal deficit (GFD) stood at 4.4 per cent of GDP in 2025-26 (RE) adhering to its medium-term target of a GFD below 4.5 per cent by 2025-26 (as announced in the Union Budget 2021-22). This was achieved through rationalisation of expenditure, and higher than budgeted non-tax revenue receipts. For 2026-27, the Central Government budgeted a lower GFD at 4.3 per cent of GDP, thus adhering to the path of fiscal prudence. Further consolidation is budgeted mainly through containment of revenue expenditure to 10.5 per cent of GDP [from 10.8 per cent in 2025-26 (RE)], while maintaining capital expenditure at 3.1 per cent of GDP. Revenue expenditure to capital outlay ratio (RECO) has remained low at 4.4, suggesting the preservation of expenditure quality.