India’s fiscal position remained strong in the first two months of FY26, thanks to a sharp rise in revenue collections and a record dividend payout from the Reserve Bank of India. The fiscal deficit stood at just Rs 13,163 crore as of the end of May, only 0.8% of the full-year target of Rs 15.69 lakh crore. A year ago, the deficit for the same period was much higher at Rs 50,600 crore.

Total receipts during April–May rose to Rs 7.33 lakh crore, compared to Rs 5.73 lakh crore in the same period last year. This increase was driven by strong growth in both tax and non-tax revenue.

Gross tax revenue stood at Rs 5.15 lakh crore, up from Rs 4.60 lakh crore a year earlier. Non-tax revenue jumped to Rs 3.57 lakh crore from Rs 2.52 lakh crore. This growth was largely due to the RBI’s Rs 2.69 lakh crore dividend payout at the end of May. This single transfer is 27% higher than last year’s Rs 2.11 lakh crore. It has significantly strengthened the government’s cash position.

The dividend windfall is expected to help reduce the fiscal deficit by 20–30 basis points. This could potentially bring it below the 4.4% target for FY26. Last year, the government ended the fiscal year with a deficit of 4.8 per cent.

Expenditure during the two months rose to Rs 7.46 lakh crore from Rs 6.24 lakh crore in the same period last year. Capital expenditure saw a notable jump to Rs 2.21 lakh crore, up from Rs 1.44 lakh crore. This reflects the government’s continued push for infrastructure and long-term growth.

Spending on major subsidies, including food, fertiliser, and petroleum, stood at Rs 51,252 crore in April–May. That’s 13% of the revised full-year target—slightly lower than 14% during the same period last year.

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