The fiscal position of the Centre and States remained resilient during H1:2025-26. Their receipts were broadly in line with trends observed during H1: 2024-25.
Both the Centre and States have demonstrated commitment to prudent fiscal management through containment of revenue expenditure, while maintaining capital expenditure.
This has resulted in improvement in the quality of expenditure for the Centre as well as States, which bodes well for medium-term growth prospects and fiscal consolidation.
During H1:2025-26, moderation in tax receipts was partially offset by robust non-tax revenue as well as non-debt capital receipts of the Centre.
Overall, the Centre has collected almost half of its budgeted revenue in H1:2025-26 while containing its expenditure to less than half of the budget estimates for 2025-26.
This augurs well for the Centre to meet its Gross Fiscal Deficit (GFD) target of 4.4 per cent of GDP for 2025-26.
In the case of States, their GFD as a per cent of BE during H1:2025-26 was only marginally higher than that of H1:2024-25 mainly attributable to lower growth in their revenue receipts.
On the expenditure front, the States sustained their revenue expenditure while maintaining capex. Going forward, States need to maintain their capex momentum alongside fiscal consolidation to ensure overall stability.