India's FY26 Fiscal Deficit Target: Spending Cuts Loom Amid Revenue Shortfall

• Government aims for a 4.4% fiscal deficit in FY26, necessitating significant spending cuts.
• Tax revenue and disinvestment earnings are projected to fall short of budget estimates.
• Nominal GDP growth for FY26 is estimated at 8%, lower than the budgeted 10.1%.
• Economists emphasize the need for expenditure reduction, including capital and revenue spending, to meet the target.
• Net tax revenue declined 3.4% in April-November 2025; disinvestment earnings are significantly below target.

Why It Matters: India faces tough choices to meet its FY26 fiscal deficit target, requiring significant spending cuts.