Direct taxes hold key as spending runs ahead
New Delhi: India's fiscal trajectory will increasingly rely on direct tax collections, as reduced customs duties and weaker excise revenues may hinder indirect tax income, while government spending continues to be ahead of previous years, according to a Dolat Capital report. The fiscal deficit for April-August 2026 reached Rs 7.10 lakh crore, or 41.9% of the fiscal year's target, up from Rs 5.9 lakh crore in the same period last year, marking an 18.7% increase.
Total government expenditure grew by 10.1% year-on-year to Rs 20.7 lakh crore, with capital expenditure increasing by 18.6% to Rs 5.1 lakh crore. The report indicates that government spending has been front-loaded during the first five months, with subsidies accounting for 37% of the budget estimate, up from 30% last year, driven by higher food and fertilizer subsidies.
Despite this, total receipts increased by 7% year-on-year to Rs 13.7 lakh crore, with net tax receipts growing by 2.04% to Rs 8.3 lakh crore, while non-tax receipts rose by 9.7% to Rs 4.5 lakh crore.
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