Government's Fiscal Outlook Brightens with RBI Dividend Windfall

The central government's fiscal deficit saw a significant reduction, down to 0.8 percent of the full-year target by the end of May. This decrease was largely driven by a substantial dividend of Rs 2.69 lakh crore received from the Reserve Bank of India.

Initially at 11.9 percent of the Budget Estimates for 2025-26 in April, equivalent to Rs 1.86 lakh crore, the gap between government spending and revenue narrowed thanks to the RBI's contribution. The fiscal deficit thus reached 0.8 percent of the 2025-26 Budget Estimates, or Rs 13,163 crore, according to data from the Controller General of Accounts.

Overall, the government received Rs 7.32 lakh crore by May 2025, marking 21 percent of the budgeted estimates for total receipts. This income includes Rs 3.5 lakh crore in net tax revenue and Rs 3.56 lakh crore in non-tax revenue. Additionally, Rs 1.63 lakh crore was allocated to state governments as tax shares.

(With inputs from agencies.)