Govt Reports Fiscal Surplus In May 2025 As RBI Dividend Boosts Revenues, Capex Up 39%
For the two months of April-May 2025, India's fiscal deficit stands at Rs 13,163 crore, or 0.8% of the full-year target, signalling a robust start to the fiscal year.
India recorded a sizeable fiscal surplus in May 2025, aided by a record dividend payout from the Reserve Bank of India (RBI) and strong growth in non-tax revenues, even as capital expenditure continued to surge. It has brought down the April-May fiscal deficit to 0.8% of the full-year target.
According to the latest data released by the Controller General of Accounts (CGA) on June 30, the capital expenditure (capex) also rose in May, as spending remained 39 per cent higher than the previous year's number.
For the first two months of the financial year 2025-26 (April-May 2025), India's fiscal deficit stood at just Rs 13,163 crore, or 0.8% of the full-year target, signalling a robust start to the fiscal year, the data showed.
For the current financial year (2025-26), the government estimates the fiscal deficit at 4.4 per cent of the GDP, or Rs 15.69 lakh crore.
The central bank transferred a bumper dividend of Rs 2.69 lakh crore, significantly exceeding the government's budgeted estimate of Rs 2.56 lakh crore from the RBI and public sector financial institutions. This marks a 27% jump from the Rs 2.11 lakh crore dividend transferred in the previous fiscal year, when the government managed to meet a fiscal deficit target of 4.8%.
Key Fiscal Numbers for April-May FY26:
Aditi Nayar, chief economist at ICRA Ltd, said, 'Following the receipt of the higher-than-budgeted dividend from the RBI, the Government of India (GoI) reported a sizeable fiscal surplus in May 2025, which is sure to be a fleeting phenomenon, as expenditure picks up in the later months. This pulled down the fiscal deficit to just Rs 13,200 crore or 0.8% of the FY2026 BE for the months of April-May 2025."
In the first two months of FY2026, tax revenues rose by 10%, while non tax revenues surged by 41.8% on a YoY basis. While revenue expenditure increased by 9.4%, capital expenditure surged by 54% on last year's election-curtailed base, she added.
'Although the GoI's capital expenditure surged by 54% in April-May 2025, this was on a low base, and the extent of the growth was somewhat lower at 32% as compared to the levels seen in April-May 2023. Nevertheless, the capex amounted to a healthy about 20% of the FY2026 BE, and the same can now contract by 1% in the remaining 10 months of FY2026 and still meet the target," Nayar said.
Given the buffers on the receipts side, ICRA believes that the GoI could push up capex by Rs 0.8 lakh crore in FY2026 relative to the BE, boosting the headline figure to nearly Rs 12 lakh crore (vs FY2026 BE of Rs 11.2 lakh crore) and take the YoY growth in the same to a healthy 14.2%, she added.
Economists estimate that the higher-than-expected dividend windfall could lower the Centre's fiscal deficit by 20-30 basis points from the government's FY26 target of 4.4% of GDP.
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