What 4.4% Fiscal Deficit Hides: Revenue is Down, and Union’s Essential Spending Even Lower
New Delhi: Both capital and revenue receipts for the government of India have fallen, the Union budget 2026 has shown.
Rs 16.4 lakh crore was the budget estimate for this year for capital receipts, but the revised estimate, is down to Rs 16. 2 lakh crore. Revenue receipts have fallen more significantly that that. From an expected Rs 34.2 lakh crore, the receipts are down to Rs 33.4 lakh crore.
Source: Budget 2026-27, Government of India.
Meanwhile, government expenditure has also fallen.
Effective capital expenditure from an estimated Rs 15.5 lakh crore, is down to Rs 14 lakh crore. Revenue expenditure was expected at Rs 39.4 lakh crore but is down to Rs 38.7 lakh crore.
Source: Budget 2026-27, Government of India.
The much lower levels of both government revenue and expenditure notwithstanding, the government has not hesitated to project much higher amounts, under both heads.
The fiscal deficit has been reined in and kept at 4.4%, for FY25-26, as expenditure has been kept down.
Source: Budget 2026-27, Government of India.
Analysts and economists have said that this shortfall in government’s ability to raise resources has resulted in considerable underspends in major schemes vital for well being, like drinking water, sanitation and others.
Professor Arun Kumar, in one of his pre-budget pieces for The Wire, titled Need to Escape Confused Policy Making, had said, “Budget needs to prioritise labour intensive sectors like, education, health, agriculture and rural areas. MGNREGA needs to continue rather than be replaced by the supply driven VB G RAM G bill and allocations to it need to be increased. Resources for all this need to be raised via direct taxes by eliminating concessions and implementing effective wealth tax, etc.”
Economist and Congress spokesperson Salman Soz said, “During the Budget 2026 speech, you must have heard the Finance Minister talk about the fiscal deficit (4.4% of GDP). But tax revenues were less than budgeted, So, how did we meet the target? Key ministries spent less - far less. Imagine Drinking water and sanitation department underspends while triple engine sarkar of Delhi can't supply water for millions. Don't be fooled!”
This article went live on February first, two thousand twenty six, at sixteen minutes past four in the afternoon.During the #Budget2026 speech, you must have heard the Finance Minister talk about the fiscal deficit (4.4% of GDP). But tax revenues were less than budgeted, So, how did we meet the target? Key ministries spent less - far less. Imagine Drinking water and sanitation department… pic.twitter.com/6f1PH9rBAy
— Salman Soz (@SalmanSoz) February 1, 2026
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