Research · India · Public finance
India's budget gap and the current account
In the latest fiscal year, how wide were the budget gap and the current-account gap, and what financed the external gap?
The desk reads the fiscal monitor, tax and balance of payments snapshots. It does not copy them, and it does not treat the Union cash deficit as the IMF balance.
One April–March year
FY 2025/26
FY 2025/26: the general-government balance was −7.4% of GDP on the IMF basis, and the current account was −0.6% of GDP as RBI printed it.
From FY 2024/25 to FY 2025/26 the general-government balance moved 0.5 points of GDP and the current account 0.0 points of GDP. The two balances moved in opposite directions. This compares the two published ratios. It does not say that the budget moved the current account.
Balance-of-payments identity, transactions basis
What financed the current account
Start from the current-account balance, add each net capital flow and the statistical discrepancy, and the total equals the change in reserves. A negative change means reserves fell. Loans, deposits and trade credit sit inside other investment, so the remaining line is other investment minus those three. Gold-price valuation is not in these steps; it is on the forex topic.
The fiscal year
2025-26. The steps add up to the change in reserves, within US$0.3 billion.
| Step | US$ billion |
|---|---|
| Current-account balance | −US$27.4 |
| Foreign direct investment into India minus Indian investment abroad | US$6.7 |
| Portfolio investment equity and debt | −US$17.9 |
| Financial derivatives | −US$24.0 |
| Loans including external commercial borrowings | US$7.9 |
| Currency and deposits including NRI deposits | US$14.8 |
| Trade credit and advances | US$13.7 |
| Other investment, remaining insurance and other accounts; other investment minus loans, deposits and trade credit | US$5.0 |
| Capital account | −US$0.5 |
| Errors and omissions statistical discrepancy | −US$2.1 |
| Change in reserves (BoP basis) negative means reserves fell; transactions only | −US$23.6 |
The latest quarter, which is not the year
Latest published quarter
Q1 2026-27. The steps add up to the change in reserves, within US$0.3 billion.
| Step | US$ billion |
|---|---|
| Current-account balance | −US$4.2 |
| Foreign direct investment into India minus Indian investment abroad | US$6.1 |
| Portfolio investment equity and debt | −US$9.6 |
| Financial derivatives | −US$9.9 |
| Loans including external commercial borrowings | US$1.4 |
| Currency and deposits including NRI deposits | US$2.8 |
| Trade credit and advances | US$3.5 |
| Other investment, remaining insurance and other accounts; other investment minus loans, deposits and trade credit | −US$0.1 |
| Capital account | US$0.2 |
| Errors and omissions statistical discrepancy | US$1.6 |
| Change in reserves (BoP basis) negative means reserves fell; transactions only | −US$8.1 |
The last twelve fiscal years that published either balance
The two gaps
| Year | General-government balance | Current account | Primary gap | Centre tax / GDP |
|---|---|---|---|---|
| FY 2014/15 | −6.9% | −1.3% | −0.2% | — |
| FY 2015/16 | −7.3% | −1.1% | −0.9% | 10.6% 2011-12 |
| FY 2016/17 | −7.2% | −0.6% | 0.1% | 11.1% 2011-12 |
| FY 2017/18 | −6.3% | −1.8% | 0.6% | 11.2% 2011-12 |
| FY 2018/19 | −6.4% | −2.1% | 0.3% | 11.0% 2011-12 |
| FY 2019/20 | −7.8% | −0.9% | −3.6% | 10.0% 2011-12 |
| FY 2020/21 | −13.1% | 0.9% | −14.1% | 10.2% 2011-12 |
| FY 2021/22 | −9.7% | −1.2% | 4.7% | 11.5% 2011-12 |
| FY 2022/23 | −9.2% | −2.0% | −1.0% | 11.4% 2011-12 |
| FY 2023/24 | −8.3% | −0.7% | 0.0% | 12.0% 2022-23 |
| FY 2024/25 | −7.9% | −0.6% | −0.4% | 11.9% 2022-23 |
| FY 2025/26 | −7.4% | −0.6% | −0.6% | 11.6% 2022-23 |
Three different bases sit on one row only because the year is the same April–March. Tax-to-GDP uses the tax topic's GDP base for that year. The IMF balance uses the IMF's GDP. The current-account ratio is RBI's own print. They are not forced onto one GDP. The full debt ledger is on the fiscal topic.
Since FY 2019/20, general-government debt went from 76.5% to 84.3% (+7.7 points). Interest added +31.6 points and the primary balance +24.1 points. Real growth contributed −25.6 points and inflation −18.6 points. The stock-flow residual was −3.7 points.
A partial year, Union only
This year so far
The cash deficit below is the Controller General of Accounts figure for the Union, cumulative, against its own Budget Estimate. It is not the IMF general-government balance in the year above.
India · Union budget execution
Fiscal deficit to date against the annual budget
Cumulative Apr–Sep 2026 · FY 2026/27 · monthly accounts
Share of full-year Budget Estimate42.1%
Cumulative fiscal deficit₹7,14,413 crore
Same point last fiscal year36.5%+5.6 percentage points vs last year
The deficit is cumulative expenditure of ₹25,49,835 crore less non-debt receipts of ₹18,35,422 crore. The denominator is this fiscal year's deficit Budget Estimate of ₹16,95,768 crore, not GDP.
A larger cash deficit can affect borrowing needs and bond yields, while the mix of spending and receipts can influence demand, credit and inflation. This year-to-date reading alone does not establish a fiscal impulse or an effect on RBI policy. Compare matching months and the eventual full-year outcome before drawing a conclusion.
Snapshot india-cga-apr-sep-2026-v1 · source released date not supplied · loaded 1 Nov 2026
Monthly accounts ↗
Budget estimate ↗Prior-year accounts ↗Open the fiscal topic →
Gross GST in Sep 2026 was ₹203,521 crore, +14.7% on Sep 2025. From late 2025 the monthly GSTN report excludes compensation cess. This is not the Centre's GST inside the tax-to-GDP ratio.
Four lines, each with its basis
Watch lines
General-government debt above 60% of GDP
FY 2025/26: IMF gross debt 84.3%. The ceiling compared with is 60% of GDP.
The FRBM Act, as amended in 2018, set 60% of GDP as the general-government debt ceiling. The figure here is the IMF's gross debt, which does not use the Act's liability list. Crossing 60% on this series is not, by itself, a legal determination. The Union fiscal-deficit target of 3% is a different balance and is not applied to this series.Primary balance below the debt-stabilizing level
FY 2025/26: primary balance −2.2% against a stabilizing balance of −1.6% (gap −0.6 points of GDP).
The primary balance that would have held the debt ratio at last year's level, given that year's effective interest rate and nominal GDP growth. Negative means the ratio rises unless the stock-flow residual offsets it. Arithmetic from the published IMF rows, not a forecast.Current-account deficit wider than 3% of GDP
FY 2025/26: current account −0.6% of GDP.
A deficit wider than 3% of GDP. This is a comfort line often cited in RBI and Ministry discussion, not a ceiling in the FRBM Act or the RBI Act. The ratio is the one RBI printed.Reserves financed more than a quarter of the current-account deficit
2025-26: current account −US$27.4 billion, change in reserves −US$23.6 billion. The fall in reserves covered 86% of the deficit.
Editorial. On the balance-of-payments transactions basis, the fall in reserves was more than 25% of a current-account deficit. A rise in reserves is a share of zero. Valuation changes in the forex-reserves topic are not part of this test.Gross-tax buoyancy below 1: FY 2025/26: buoyancy 0.68 on the 2022-23 GDP base. Editorial. Centre gross-tax buoyancy below 1 means collections grew more slowly than nominal GDP, on the tax topic's GDP base for that year. It is not a Budget target.
Whole-system comparison
Did the budget gap and the current account move together?
Four annual series: the general-government balance, the primary gap, the current-account ratio and Centre tax as a share of GDP. The oil bill and the rupee are on the oil-bill desk.
Fiscal years in the widest pair15, FY 2011/12 to FY 2025/26
Coefficients need at least 8 matched fiscal years. ★ marks a Pearson 95% interval that excludes zero after allowing for fiscal year-to-fiscal year persistence; ⊂ marks a pair linked by construction, so the two are not independent evidence.
Correlation matrix
Same-fiscal year co-movement
Pearson r on exact fiscal year matches; each cell shows its own sample size, because the series start at different dates. Select a cell to read the pair in full below. Teal is positive, rust is negative; darker is stronger.
| X ↓ / Y → | Budget balance | Primary gap | Current account | Centre tax / GDP |
|---|---|---|---|---|
| Budget balance | ||||
| Primary gap | ||||
| Current account | ||||
| Centre tax / GDP |
−1 · inverse0 · little linear relation+1 · positive
Budget balance and current account
General-government overall balance (% of GDP) against current account (% of GDP), same fiscal year
- Pearson r
- −.51
- Spearman ρ
- −.46
- Matched fiscal years
- 14
- Independent fiscal years, about
- 11
- 95% interval for r
- −.85 to .13
A strong negative same-fiscal year co-movement in this sample; the interval includes zero, so the fiscal years are consistent with no linear relation. Co-movement is not cause: a common shock can move both.
Inspect the 14 matched fiscal years and serving row IDs
| Fiscal year | Budget balance | Current account | Observation IDs |
|---|---|---|---|
| FY 2012/13 | -7.32 | -4.70 | 5b2bd876-3ef1-5071-95dc-82355e2661fe · 7a54a3ec-1f83-58d8-9f13-df335f522f4f |
| FY 2013/14 | -6.78 | -1.70 | 94d5781f-311e-5f53-a5da-84b78ff3e174 · 54400129-249d-50ba-8de3-14e6a016d7cd |
| FY 2014/15 | -6.90 | -1.30 | 54e4b9dd-37b1-59fa-bf58-ccda8fb59764 · 2aeecbb5-85e3-5ae3-9946-c18a7f2febeb |
| FY 2015/16 | -7.28 | -1.10 | 393eafc0-02d9-530a-92b2-a88d531410ae · 80e07f5b-c8e4-5cc5-9085-bed2ab5335df |
| FY 2016/17 | -7.21 | -0.60 | faf82f29-20b1-5fd1-8f46-901e757ffe08 · b434fdbe-818c-579c-966e-cad8bcdf2084 |
| FY 2017/18 | -6.32 | -1.80 | 13aec880-23fb-5b94-ac01-81af14e201ae · afa9c791-d229-5cce-8571-08277f539e8f |
| FY 2018/19 | -6.45 | -2.10 | d9b3dfd5-1c39-5d03-8476-b319ef96c0da · 60aac469-ed7a-5aa0-ae2f-535694b775b6 |
| FY 2019/20 | -7.85 | -0.90 | 544359d7-051f-5a8e-ab52-d1d477def217 · 1c009d7a-974e-5b35-94fa-900db3ffcd73 |
| FY 2020/21 | -13.15 | 0.90 | dc979989-1187-5035-9410-3eef94ca94bc · aad8e965-7e7f-582c-b7ab-84d607f6f87d |
| FY 2021/22 | -9.68 | -1.20 | 57de28e6-0d4e-5c99-bd1b-d31493ed304b · 8d86e298-b576-5c51-bc13-013867f1faaf |
| FY 2022/23 | -9.21 | -2.00 | 01d1fa25-3888-5d3a-8bed-b3a7dcb3bfaf · 20d87eb0-1fd1-586c-8e9a-724e05ecf9d6 |
| FY 2023/24 | -8.35 | -0.70 | fbab5e95-4881-5d3f-aebd-19cee14d30a9 · 7ac0585d-4d77-5492-98ca-f858f96ee03e |
| FY 2024/25 | -7.87 | -0.60 | c90d88d0-9576-5646-adbe-ee7e42c755ac · bf6437f2-a307-54c4-b2f7-dcb37fd8e09e |
| FY 2025/26 | -7.37 | -0.60 | c988a442-94e6-5620-8e1e-78aa09f1f422 · 25d58dfb-e922-5172-a8f5-ef1b14251e9b |
Lead–lag: Budget balance against everything else
Pearson r between general-government overall balance (% of GDP) in one fiscal year and each other series the stated number of fiscal years later. Lead 0 is the same fiscal year.
| Series | Same fiscal year | 1 fiscal year later |
|---|---|---|
| Primary gap | .70★n=15 | −.31n=14 |
| Current account | −.51n=14 | −.02n=14 |
| Centre tax / GDP | .27n=11 | −.48n=11 |
Of the 4 cells with an interval, about 0 would exclude zero by chance alone; 1 do. Reading across many leads and series is a search, so treat an isolated ★ with no neighbouring support as likely noise.
Outside pairs linked by construction, the strongest same-fiscal year co-movement is budget balance with primary gap (r .70 over 15 fiscal years, interval excludes zero). 2 of the 3 independent pairs with an interval exclude zero; about 0 would by chance. No later lead of budget balance clears its interval against another series.
Methods and reproducible inputs
Pairs match exact fiscal years; a fiscal year without both values is dropped, never filled. Pearson r is computed on the values and Spearman ρ on their ranks. The 95% interval uses the Fisher transform with an effective sample size n × (1 − ρx·ρy) / (1 + ρx·ρy), where ρx and ρy are each series' lag-1 autocorrelations over consecutive matched fiscal years; it needs 12 consecutive links and is not shown otherwise. Coefficients are suppressed below 8 matched fiscal years.
Each point is a fiscal year ending 31 March. Eight shared years are a small sample. A coefficient is not an estimate that the budget caused the current account.
- Budget balance · General-government overall balance (% of GDP). IMF general government, percent of GDP. Not the Union cash deficit and not the FRBM 3% target, which applies to the Union. fiscal-deficit-monitor
- Primary gap · Primary balance minus the debt-stabilizing primary balance (points of GDP). Negative means the ratio rises unless the stock-flow residual offsets it. The stabilizing balance uses that year's interest and nominal growth. fiscal-deficit-monitor
- Current account · Current account (% of GDP). As RBI printed it. Not recomputed from the dollar balance and another GDP. india-balance-of-payments
- Centre tax / GDP · Centre gross tax revenue (% of GDP). The tax topic's GDP base for that year: 2011-12 through FY2022-23, 2022-23 after that. Not the IMF revenue ratio. india-tax-collections
fiscal-deficit-monitor refresh afb47f4c-bb36-59e4-9961-5661443e1643 (global-fiscal-2001-2025-612595a0db04) · india-tax-collections refresh 95793fba-55bf-58c2-bfce-f7c29a3adad2 (india-tax-0d8d5d362368f82c) · india-balance-of-payments refresh 773e76c9-a686-541d-89e1-aeeb0f8e1eb3 (india-bop-2026-27q1-20261031-18175ee6)
Not estimated
What this desk does not answer
| Question | Why it is not here |
|---|---|
| Did the Union meet the 3% FRBM target? | That target is the Union's own full-year deficit. The IMF series is general government, and the cash figure above is a partial year. |
| Did the budget gap cause the current-account gap? | A correlation of annual ratios cannot separate the budget from oil, growth and the exchange rate. |
| How much of the reserve change was the gold price? | That stock is on the forex topic. This identity is transactions only. |
Linked evidence
Linked topics and series
Fiscal Deficit Monitor
The budget: IMF general-government balance, primary balance, debt and the debt arithmetic. Projections are excluded. The Union cash accounts are the partial-year pulse, not this balance.
India — Tax Collections
The tax take: Centre gross tax and Centre-and-States tax as a share of GDP, gross-tax buoyancy, and monthly GST. The GDP base is the tax topic's own base for that year.
India — Balance of Payments
The external gap: the current account in dollars and as the share of GDP RBI printed, and the financing lines that add up to the change in reserves on a transactions basis.
Research notes
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